Aerial View : Reply from MoF to First Appeal

Please note:

The First Part of this post is Request for information, Reply of the CPIO. E.III-A of MoF and consequent First Appeal.
Italics are used by this author to draw attention of readers to certain aspects and contradictions.
Otherwise this is faithful re-production of reply received on 6^th April 2013 to First Appeal to MoF vide F. No. 7/1/2-13-E.III (A)/AA/12 dated 4^th April 2013 to RTI application dated 14.2.2013 where an incomplete/unsatisfactory reply was received .
These are Notes on MoF file No. 2458/JS (Per)/09 Vol III.

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PART I

REGISTERED POST – ACK DUE

RIGHT TO INFORMATION ACT, 2005

FIRST APPEAL FOR CENTRAL GOVERNMENT

I.D. No_________ Date: _________ [For office use]

To,

Shri Amar Nath Singh, Deputy Secretary & The First Appellate Authority,

Branch E.III-A, Dept of Expenditure,

Ministry of Finance, Govt of India,

Room No. 74-C, North Block,

New Delhi - 110011

Sir,

As I am aggrieved by decision of Under Secretary & Central Public Information Officer, Branch E.III-A, Department of Expenditure, Ministry of Finance, North Block, New Delhi – 110 011 dated 6^th February 2013 and received by me via speed post on 8^th February 2013. I hereby file this appeal for your kind decision.

2. Details of CPIO: -

2.1 Name/Designation: Shri Manab Ray, Under Secretary & CPIO

2.2 Full Address: Branch E.III.A, Department of Expenditure,

Ministry of Finance, Govt of India, North Block, New Delhi - 110011

2.3 Name of Public Authority: Ministry of Finance

3. Details of RTI application to CPIO: -

Date of Application: 22.12.2012

Mailed on: 22.12.2012

By registered post No. A RKO 79301870 IN

Date of receipt by CPIO: through US & CPIO (Pay/Services), Min of Defence and DS (RTI) Dept of Exp on 1.2. 2013.

4. Details of information sought: -

4.1. Please provide me with copies of notings by any and all officers/persons including and not confined to those of MoD, CGDA, PCDA (O), CDA (N), CDA (AF), Def/Fin, Min of Finance that led to filing of Interlocutory Application (IA) Number 9 of 2010 requesting the Hon’ble Supreme Court to recall, re-hear, change/modify, make variations in its order dated 8.3.2010.

4.2. Please provide me with copies of notings, briefs, and designations of any and all officers of MoD, CGDA, Def/Fin, Min of Finance who prepared, checked, vetted, and approved the contents of the original affidavit as well as of the additional affidavit in IA No. 9 of 2010.

4.3. Please confirm whether the deponent of the additional affidavit, namely Shri Paramjit Singh Walia, Under-Secretary in the MoD was consulted and informed of the seriousness of his solemn declaration in the Hon’ble Supreme Court? If so what were the notings and what was Shri Paramjit Singh Walia’s response?

4.4. Please confirm is the deponent was apprised that UoI/MoD subsequently may modify, restrict, change, negate implementation of the averments, especially of Paragraph 30, in case the Hon’ble Supreme Court upheld its order of 8^th March 2010?

4.5. Please confirm whether the deponent (Shri Paramjit Singh Walia), being aware of the above, still solemnly affirmed his competence and knowledge when signing the additional affidavit?

4.6. Please provide me with copies of notings and responses of all officials during the hearing wise progress of the case that finally led to the Learned Solicitor General making a statement as stated in Paragraph 4 of the Orders of the Hon’ble Supreme Court on 4.9.2012. (Please see Para 8 above).

4.7. Please provide me with notings, briefs, basis, with names of the officials, their designations who assured the Learned Solicitor General that the order of the Hon’ble Supreme Court of 4^th September 2012 would be implemented within 12 weeks thereby assuring him to make the statement as reflected in Paragraph 4 of the said order.

4.8. Please provide me with copies of file notings leading to decision(s) and who was responsible and accountable for the inability of the UoI/MoD to fulfil assurance made to the Hon’ble Supreme Court on behalf of the UoI/MoD by the Learned Solicitor-General in his statement so recorded by the Hon’ble Supreme Court on 4.9.2012. (Please refer to Para 8 above.)

4.9. GoI/MoD letter reference number 34(6)/2012-D (Pay/Services) states that

“instructions regarding modalities and methodology of payment to the affected officers of the armed forces and provisioning funds for the same are being issued separately in consultation with Service Hqrs (sic), CGDA, Defence (Finance) and Ministry of Defence.”

4.10. What is the delay/reason preventing UoI/MoD from implementing the clear and succinct orders of the Hon’ble Supreme Court by not disbursing arrears within the promised 12 weeks?

4.11. GoI/MoD letter reference number 34(6)/2012-D (Pay/Services) dated 26^th November 2012 further goes on to state “2. TRIPAS is requested to prepare a DGL regarding modalities and methodology of payment to the affected officers of the armed forces and submit it to the Ministry of Defence immediately.”

Please let me know what action(s), meetings taken, and notes thereof between 4^th September 2012 and 26^th November 2012 to ensure that the compliance was not completed when the 12 weeks elapsed.

4.12. Please provide me with copies of notings and comments of any and all officials including and not confined to MoD, CGDA, PCDA (O), CDA (N), CDA (AF), Def/Fin, Min of Finance from 4^th September 2012 to 26^th November 2012,

4.13. Please refer to GoI/MoD letter No. 34 (6)/2012-D (Pay Services) dated 26^th November 2012, particularly the following statement: -

“In compliance of the Supreme Court order dated 4.9.2012 on the above subject, I am directed to convey that the Government of India has decided to refix the pay without deduction of rank pay w.e.f. 1.1.1986 in respect of officers of the armed forces in conformity with the orders of the Kerala High Court dated 5.10.1998 in the case of Maj A K Dhanapalan versus Union of India & others.”

Was the Director (AG.1) who signed the above informed and if so, by whom that there are the following dissimilarities: -

(i) Neither does the Hon’ble Supreme Court’s order of 8.3.2010 nor its order of 4.9.2012 state that payment of arrears is to be in conformity with the Kerala High Court’s judgment.

(ii) The Orders of the Kerala High Court did not grant any interest but the Orders of the Hon’ble Supreme Court dated 4^th September 2012 has granted interest @ 6% from 1.1.2006.

4.14. Were all the officers who processed the GoI/MoD letter of 26^th November 2012 aware that the Hon’ble Supreme Court’s judgment of 4.9.2012 only changes the date for commencement of payment of interest because the Hon’ble High Court of Kerala did not impose interest on the arrears in UoI vs Major Dhanapalan. That therefore the Hon’ble Supreme Court has amended its order of 8.3.210 only about the date of payment of interest from 1.1.1986 to 1.1.2006 and nowhere referred to 4^th , 5^th or 6^th Pay Commission.

5. Particulars of Decision of CPIO: -

Letter reference No: F. No. 7/1/2013 – E.III – A/ (65)

Date of CPIO’s Decision: 6^th February 2013

Date of receipt of decision by the appellant: 8^th February 2013

6. Brief facts of the case: -

6.1. On behalf of the Union Of India, the then learned Solicitor General of India stated in the Hon’ble Supreme Court that payment of arrears of Rank pay with retrospective effect from 1.1.1986, would be paid within 12 weeks of the date of the order dated 4.9.2012.

6.2. The 12 week time-frame ended on 26.11.2012.

6.3. Till the date of the RTI application i.e. 22.12.2012, no Govt order was issued for the compliance of the order of the Hon’ble Supreme Court dated 4.9.2012.

This applicant requested information to know the process followed by the MoD, MoF, Def/Fin CGDA, etc that delayed the process.

7. Reasons/grounds for this appeal: -

Under Secretary and CPIO of E.III- A branch of the Department of Expenditure, Ministry of Finance, Govt of India vide impugned letter dated 6^th February 2013 states in para 2: -

2. In this connection it is stated that the Ministry of defence being the nodal Ministry had already provided the information to you vide their letter No. 35 (1) – 2013 – D (Pay/Services) dated 9.1.2013. This branch has no further information to provide w.r.t. the RTI application dated 22.12.2012.

The above statement of the US & CPIO, E.III.A branch is incorrect and not in consonance with facts.

Ministry of Defence letter No. 35 (1) – 2013- D (Pay/Services) (copy attached and marked ‘C’) in fact states in para 3 on page 1

3. As far as M/O defence is concerned in this matter (Rank Pay issue(, it is stated that the information sought by you vide application dt. 22.12.2012 is quite extensive and spread over a number of files

And sends, vide page 2, containing other addressees, a copy of the RTI application to CGDA, Def. (Fin/AG/PA) and Ministry of Finance (E.III.B) with a statement “Although the RTI application has been treated as a normal case presently, it is requested that CGDA remain ready with the requisite information with –do- for Def (Fin/AG/PA) and Branch E.III. B through DS (RTI) Min of Fin who has sent the same on 14.01.2013 vide No. 12 (18)/ 2013 RTI (copy attached and marked ‘D’) to US (E-III-B) & CPIO.

In turn, US & CPIO E.III (B) Branch has sent the same to US & CPIO (E.III.A) Branch on 30.1.2013 vide F. No. 63 (02)/E.III (B)/ 2013 (copy attached and marked ‘E’).

8. Prayer/relief sought for:

US & CPIO (E.III.A) branch provide me with copies of the facts with dates of references by MoD and the action taken along with file notings, minutes of deliberations etc, relevant to para 5 of this appeal.

9. Grounds for prayer/relief sought for:

US & CPIO (E.III. A) precipitately dismissing my request for information citing that the MoD letter of 9.1.2013 (marked ‘B’) contains all the information which in not the truth. The MoD does not provide any information of the notings etc of E.III.A branch or any other entity named in my application.

PART II

F. No. 7/1/2013-E.III (A)/AA/12

Ministry of Finance
Department of Expenditure

E.III (A) Branch

North Block, New Delhi,

Dated 4^th April 2013

To,

-----

Subject: First Appellate Authority and Deputy Secretary (E.III.A) Deptt of

Expenditure’s order dated 18.3.2013 - regarding

Sir,

Please refer to First Appellate Authority and Deputy Secretary (E.III.A)’s order dated 18.3.2013 in Case No. AA/12/2013 regarding appeal application of the appellant dated 14.2.2013.

In compliance of the aforesaid order of the First Appellate Authority, the information/documents as available in F. No. 2548/JS (Per)/09 Vol. III on following points are enclosed: -

Para 9.1 & 9.2:- Copy of note page 55 and ID dated 19.8.2011 issued to Ministry of Defence.

Para 9.6: - Copy of note portion at page 62.

Para 9.10 & 9.11 : - Copies of notes from page 63 to 75.

Sd/-------------------------

02.04.2013

(Manoj Kumar)

Under Secretary & CPIO

Copy to: (1) FAA & DS (E.III.A), Deptt of Exp

(2) DS (RTI), Deptt of Exp.

-55-

PUC is a letter received from Ministry of defence pertaining to the Rank Pay matter on which a court case has been filed bearing No. I.A. No. 9 of 2010 in Transfer Petition (Civil) No. 56/2007 – UoI Vs. N. K. Nair & Ors.

2. It may be recalled that this matter came up for hearing in the Supreme Court on 1.8.2011 wherein the Ld Solicitor General of India appeared on behalf of the Union of India.

3. It appears that during the said hearing the court desired to know the rationale for deducting Rank Pay from the revised emoluments as per 4^th CPC’s recommendations before fixing pay in the integrated scale.

4. It might be relevant to add that the petitioners are submitting before the court that as per para 28.112 of the 4^th CPC Report, it has been explicitly stated that “In chapter 30 we have recommended the method for fixation of pay in proposed scales for civilian employees, we recommend that the same method may be adopted for fixation of pay of armed forces personnel also.” As per para 30.2.of Chapter 30 of the same report, it has been recommended that “for all employees an amount representing 20% of the basic pay in the existing scale subject to a minimum of Rs 50/- may be added to the existing emoluments. Pay may thereafter be fixed in the proposed scale at the stage next above the emoluments this computed.” In view of these recommendations, the petitioners are arguing before the court that no deduction of Rank Pay should take place from their revised emoluments and that their pay should be fitted in the integrated pay scale as per the revised emoluments arrived at after adding 20% fitment benefit to the basic pay as in the case of civilians. The figures so arrived at may be fixed in the integrated pay scale and the Rank Pay may be added to the amount so computed.

5. The draft affidavit prepared by Ministry of Defence containing the reasons for deducting Rank Pay from the revised emoluments as per 4^th CPC’s recommendations before fixing the same in the integrated pay scale, may kindly be perused. Certain corrections have been carried out in this draft.

6. Submitted for consideration please.

Sd/-------------------

(Renu Jain)

Director (E.III.A)

18.08.2011

JS (Pers)

Sd/-

Madhulika Prasad

19.8.11

Dir (RJ)

Please ensure it is issued immediately and return the file to me thereafter.

Sd/- R Jain

19.8.11

SO (E.III.A) – on leave

F. No. 2548/JS (Pers.)/09-Vol.II

Ministry of Finance

Department of Expenditure

(E-III A Branch)

********

Please refer to Ministry of Defence’s ID No 34 (11)2010-D(Pay/Services) dt. 8.8.2011 regarding Court case bearing No. IA No. 9 of 2010 in Transfer Petition (Civil) No. 56/2007 – UoI Vs N. K. Nair & Ors – pertaining to the subject Rank Pay.

2. The draft affidavit enclosed with the above referred letter has been examined and modifications/comments thereon have been indicated in pencil in the draft itself.

3. Ministry of Defence is requested to incorporate the modifications/comments of Department of Expenditure in the final version of the proposed affidavit and send a copy of the same to Department of Expenditure for its record.

4. This issues with the approval of JS (Pers).

Sd/-----------------

(Renu Jain)

Director, E-III A

19.8.2011

Shri Naveen Kumar, Director (AG), Ministry of Defence, South Block, New Delhi

Ministry of Finance, Department of Expenditure, U.O. No. 2548/JS (Pers.)/09-Vol. II dt. 19.8.2011

-62-

Ref: - F/R

Notings at pre-pages would recall the case.

M/O Defence vide F/R have informed that the case (Rank Pay case – Transfer Petition (C) 56/2007 UoI Vs N.K. Nair & Ors) is coming up for final hearing on 21.3.2012 in the Hon’ble Supreme Court.

The Ld Solicitor General who is appearing on behalf of UoI will be taking a briefing in the matter. MoD has informed that the briefing may take place on 2oth or 21^st March 2012 morning. Exact date, time and locations will be intimated in due course.

Submitted for information, pl.

Sd/--------------

16/3/12

US (E-III A)

Dir (RJ)

-63-

Department of Expenditure

E.III (A) Branch

……..

This relates to the implementation of Hon’ble Supreme Court’s Order dated 4.9.2012 regarding counting of Rank Pay in pay fixations in respect of Armed Forces.

2. The judgment of the Hon’ble Supreme Court may please be seen at page 455-499/cor. (Flag ‘A’)

3. Ministry of Defence vide their Note at page 451/cor(PUC) has informed that the Additional Secretary (A), Ministry of Defence will take a meeting on 29.10.2012 at 5 PM to discuss issues relating to the implementation of SC’s orders. DS (E-III-A) has been invited to attend the meeting.

4. It has been stated in the brief at page 466-467/cor that an approximate amount of Rs 861.00 crore would be required to implement the orders of Supreme Court. Revised financial implications as worked out by o/o CGDA alongwith brief is placed at F/B.

Submitted please.

Sd/----------------------

29/10/12

SO (E-III-A)

US (E-III-A)

For perusal of DS (E-III-A) pl in connection with today’s meeting with AS, MoD.

Sd/ Manab Ray

29/10/12

DS (E-III-A) May kindly see for information.

2. I will attend the meeting.

Sd/-----------

29/10/12

JS (Pers) Sd/---------

29.10.12

DS (E-III-A) Attended the meeting

US (E-III-A) Sd/---------- 30/10

SO (E-III-A) Sd/----- 30/10

-64-

Department of Expenditure

E-III (A) Branch

*********

Subject: Counting of Rank Pay in pay fixations in respect of Armed Forces

This relates to a proposal received from Ministry of Defence for implementation of the judgment of the Hon’ble Supreme Court dated 4.9.2012 in the Rank Pay case of Union of India & Ors v/s N.K. Nair & Ors.

2. The Brief of the case is as given under:

(i) The 4^th Central Pay Commission recommended integrated pay scale for all Service Officers up to the rank of Brigadier and equivalent in the three Services. In addition, the Rank Pay ranging from Rs. 200/- (for Captain) to Rs 1200/- (for Brigadier) was also proposed to be given to these officers.

(ii) The Special Army Instructions (SAI) dated 26.5.1987 were accordingly issued by the Ministry of Defence, in the matter regarding revision of pay scales in pursuance of the recommendations of the 4^th CPC.

(iii) In 1997 (error by MoF; he filed case on 6.2.1996), one Officer, Maj. A.K. Dhanapalan filed a Writ Petition (error by MoF, it was Original Petition) in the High Court of Kerala praying that his pay be re-fixed in the rank of Captain as on 1.1.1986 without deducting the amount of Rank Pay of Rs 200/- from his emoluments and that Rank Pay appropriate to his Rank should be paid to him over and above the pay so fixed. The Petition was decided by the Hon’ble High Court vide its judgment dated 5^th October, 1998 holding that Union of India had completely misunderstood the scope of extending the benefit of Rank Pay to the Army Officers. Rank Pay is something, which has been given to the officer in addition to the existing pay scales.

(iv) By virtue of the High Court Order, the pay was re-fixed. The pay earlier fixed and re-fixed based on the High Court Orders are given as under: -

S No.		Pay fixed as per 4^th CPC	Pay fixed on the basis of High Court Orders
1	Rank	Captain	Captain
2	Basic Pay existed	Rs 1300	Rs 1300
3	DA/ADA on Basic Pay	Rs 1650	Rs 1650
4	Emoluments existed	Rs 2950	Rs 2950
5	(+) 20% of Basic Pay	Rs 260	Rs 260
6	Total	Rs 3210	Rs 3210
7	Pay fixed in the integrated scale	Rs 3100 + Rank Pay Rs 200/-	Rs 3300 + Rank Pay Rs 200

(v) An appeal against the said judgment filed by UOI was also dismissed by the Division Bench of the Kerala High Court. A Special Leave Petition filed in the Supreme Court was dismissed vide Supreme Court order dated 12^th July 2005 on account of inordinate delay.

(vi) The matter was considered in the Ministry of Defence and sanction for Rs 28,031/- was issued to Maj (Retd) Dhanapalan on 26.8.2005 in compliance of the Supreme Court order.

(vii) A number of petitions were, thereafter, filed in various High Courts seeking similar relief as given by the Kerala High Court. The matter was examined in consultation with concerned Ministries/Departments including Department of Expenditure and it was decided in consultation with the then Additional Solicitor General Shri Gopal Subramanium to file a Transfer Petition seeking transfer of 11 Writ Petitions filed in various High Courts in the Hon’ble Supreme Court.

(viii) During the pendency of the aforesaid Transfer Petition, some petitions were filed in the Hon’ble Supreme Court directly seeking the benefit granted to Major Dhanapalan and were tagged together with Transfer Petition. The matter came up for hearing in the Supreme Court on 8.3.2010 when the Hon’ble Court ordered that they have carefully examined the judgments given by Kerala High Court and agrees with the reasoning given therein for grant of rank pay retrospectively from 1.1.1986 alongwith interest thereon at 6% per annum.

(ix) Upon receiving the order of the Hon’ble Supreme Court, a High Powered Committee was set up by the Government, in accordance with the legal advice received by Ministry of Defence, to study the financial implications arising out of the said judgment. A three Member Committee consisting of Secretary (Defence), Secretary (Expenditure) and Secretary (Defence Finance), was set up for this purpose, who came to the conclusion that there would be a financial burden of Rs 1623.71 crores (approximately) on account of arrears of pay, as well as corresponding corrections in pension as well as interest to be paid w.e.f. 1.1.1986.

(x) After taking legal advice, the Government filed an Interlocutory Application (IA) in the Hon’ble Supreme Court in April 2010 for modification of the Supreme Court order dated 8.3.2010. A Counter-Affidavit was filed by the Respondents in July, 2010. During pendency of this IA, yet another Writ Petition was also filed in the Hon’ble Apex Court which was tagged with the Transfer Petition. In its order dated 15.11.2010, the Hon’ble Court ordered that this matter may be listed before another Bench of which Hon’ble Mr. Justice Marakandey Katju is not a member.

(xi) When the matter was listed for hearing on 24.02.2011, the Hon’ble Court wanted to know the comparative position in the matter of pay fixation of Armed Forces officers vis-à-vis civilian employees. An affidavit explaining the position was filed on 21.4.2011. This affidavit prepared in consultation with Department of Expenditure and CGDA clearly showed that the Service Officers are not placed in disadvantageous position on account of deduction of Rank Pay. An additional Affidavit was also filed by the Respondents on 8.4.2011. When the matter came up for hearing on 1.8.2011, the Learned Solicitor General (Shri Rohinton F. Nariman) explained the case. After the hearing, he directed the Ministry to file an additional affidavit explaining the reasons of deduction of rank pay by the 4^th CPC. An affidavit was accordingly filed on 14.11.2011.

3. This matter was heard in the Supreme Court on 4.9.2012 when the Ld Solicitor General appeared on behalf of the Government. After hearing the matter in a detailed manner, the three Judges Bench did not find any infirmity with the Court order dated 8.3.2010 and pronounced the judgment which contained the following four directions: -

(a) Order dated 8.3.2010 of the Supreme Court does not require any modification or variation save and except the interest part.

(b) Interest shall be paid by the petitioners to the respondents at 6% per annum from January 1, 2006.

(c) The order shall govern all similarly placed officers who have not approached the Court and also those who have filed writ petitions which are pending before various High Courts/Armed Forces Tribunals.

(d) Arrears or pay with interest as directed above shall be paid to the concerned officers expeditiously and positively within 12 weeks of the date of the order.

4 (erroneously number as 3 again in the original). Pursuant to the judgment of the Hon’ble Supreme Court dated 4.9.2012, the legal opinion was sought by the Ministry of Defence and the Legal Adviser (Defence) opined that there was no other option left but to implement the order dated 4.9.2012 within the stipulated time.

5. The Solicitor General rendered the following legal opinion: -

(i) The order dated 4.9.2012 is to be implemented by the Government in respect of the persons referred to in the order, in the same manner as the Court’s order was implemented in the case of Maj (Retd) Dhanapalan.

(ii) Order of the Supreme Court should be implemented by re-fixing the pay of the Officers w.e.f. 1.1.1986 without deducting rank pay in terms of the orders passed by the Kerala High Court and the Supreme Court. The application of the Apex Court order dated 4.9.2012 is not excluded in respect of the officers in respect of whom the rank pay deduction was only in part and not in full (emphasis by author of this blog). Such persons would also be covered by the order dated 4.9.2012.

(iii) Once the revised pay is determined, the legal consequences thereof vis-à-vis payment of benefits which are determined on the basis of pay including rank pay, would naturally follow.

(iv) The requirement for making difficult calculations would not constitute a sufficient ground for delaying compliance with an order of the Supreme Court.

(v) In so far as legal heirs of deceased retired officers are concerned, the Government should issue an advertisement in the newspapers so that such persons can come forward and approach the Government on their own in this regard.

(vi) The Government should comply with the order dated 4.9.2012 passed by the Supreme Court within the period stipulated in that order (underlined in original note).

5. The legal opinion of the Solicitor General on the order dated 4.9.2012 of the Hon’ble Supreme Court, duly approved by the Hon’ble Law Minister, was deliberated in the Ministry of Defence on 29.10.2012 under the Chairmanship of Additional Secretary (A). Consequent on the deliberations, it was recommended to undertake various initiatives to implement the orders of the Supreme Court.

6. The Hon’ble Raksha Mantri has approved the implementation of the order of the Supreme Court dated 4.9.2012.

7. Concurrence of Ministry of Finance has been solicited by Ministry for Defence for implementing the judgment of the Hon’ble Supreme Court dated 4.9.2012.

8. Considering the order of the Supreme Court dated 4.9.2012, the advice of the Solicitor General to implement the orders expeditiously, approval of the Hon’ble Law Minister and Hon’ble Defence Minister, we may, perhaps, agree to the implementation of the Supreme Court Order dated 4.9.2012 and convey our concurrence to Ministry of Defence.

9. It was earlier informed by the Ministry of Defence that as estimated amount of Rs 861.00 crore would be required to implement the orders of the Supreme Court. However, the exact financial implications would be available only after the complete data is collected from field organisations.

10. Proposal at para 8 on pre-page is submitted for consideration please.

Sd/--------------------

(Balachandran B.S.)

Section Officer (E-III-A)

06-11-2012

US (E-III-A) Sd/_______

Manab Ray

6/11/12

DS (E-III-A)

The genesis of the long-drawn litigation in this case goes back to 1986, when the recommendations of the 4^th Central Pay Commission were implemented. The bone of contention is the fixation of pay formula from pre-1986 scales to post-1986-4^th CPC-based scales, pertaining to treatment of Rank Pay in case of commissioned officers of the Armed Forces.

2. The crux of the matter is that the 4^th Central Pay Commission introduced the concept of Rank Pay of varying rates ranging from Rs 200 pm to Rs 1200 pm, beginning with the rank of Captain & equivalent and ending with that of Brigadier & equivalent. Coupled with this, the 4^th Pay Commission also recommended a running integrated pay scale for commissioned officers up to the rank of Brigadier (from 2^nd Lieutenant to Brigadier), in contrast to specific and different scales of pay applicable in case of these ranks prior to 1.1.1986. The integrated scale adopted and implemented was Rs 2300-100-3900-150-4200-EB-150-5100.

3. On fixation of pay from pre-1986 to revised scales from 1.1.1986 in case of these commissioned officers, the 4^th Pay Commission recommended for the same formula of fixation of pay as in case of civilian officers. This formula envisaged addition of 20% of basic pay to the existing emoluments (Basic Pay + DA/ADA+ IR) and then fixing the pay in the revised scale at the same (? Stage) just above the total thus obtained.

4. In respect of Rank Pay, the Commission observed thus:

“…Since Rank Pay is a separate element for officers up to the rank of Brigadier and equivalent, the same may be taken into account for fixing of pay in the integrated scale of pay recommended by us.”

5. The Commission then went on to give an illustration as to how to fix the pay of these officers in the revised pay (scale). As per illustration, the rank pay is to be deducted from the pay in the revised pay, arrived at after applying the above 20%of basic pay fitment formula. After such a deduction, again the element of the Rank Pay was to be added to the revised pay.

6. The Pay Rules in case of Army, known as the Special Army Instruction dt. 23.6.1987, adopted the formula for fixation of pay as per illustration given in the 4^th CPC – deduction and then addition procedure.

7. The (This?) was challenged by one Major AK Dhanapalan in the Kerala High Court in OP No. 2448 of 1996. The Court in its order of 5.10.1998, while observing, inter-alia, that the Government completely misunderstood the scope of extending the benefit of the payment of rank pay, which is to be given in addition to the existing pay scales, directed to re-fix the pay of the petitioner from 1.1.86 without deducting the rank pay of Rs 200/-. An appeal filed in the High Court was dismissed vide order of 4.7.2003. A SLP filed before the Supreme Court was also dismissed on 12.7.2005 on the ground of delay of 561 days.

8. In view of this, order dt. 5.10.1998 passed by the Kerala High Court was implemented in case of the petitioner (a copy of the relevant office order has not been made available by MoD.)

9. In the meanwhile, a number of petitions were filed in various High Courts seeking similar benefit. The MoD filed a Transfer Petition (56 of 2007) in the Supreme Court for transfer of all such petitions to the Supreme Court. Additionally, a few more petitions were filed directly in the Supreme Court. All these petitions were tagged together and the Supreme Court disposed off all these on 8.3.2010, agreeing with the judgment dt. 5.10.2008 passed by the Kerala High Court and also ordering interest @ 6% on arrears from 1.1.86.

10. Later, an IA No. 9/2010 was filed by the Ministry of Defence before the Supreme Court for recall of their aforesaid order of 8.3.2010, contending, inter-alia, that the pay was correctly fixed as per recommendations of the 4^th CPC. It was also stated in the affidavit that the financial implications involved in implementation of the judgment in case of similarly placed persons was to the tune of Rs 1623.71 crore. This estimation of financial implications is based on the report of the High Powered Committee (comprising Defence Secretary, Expenditure Secretary & Secretary (Defence Finance.)

11. The Supreme Court has now passed an Order on 4.9.2012, observing that its order of 8.3.2010 does not require any modification, except in regard to the interest part. The Court has ordered interest @ 6% from 1.1.2006 and not from 1.1.86, as earlier ordered. The Court has also ordered that this will govern all similarly placed officers who have not approached the Court, as also those who have filed petitions before various High Courts/Armed Forces Tribunals.

12. This Order is to be implemented within 12 weeks, i.e. by 4.12.2012.

13. Soon after the delivery of this judgment, the concerned Director in the MoD discussed the issue with the undersigned on 11.9.2012. I advised them to (i) seek legal opinion as to the legal remedies/options available with the Government to further contest the case in a larger Bench and (ii) to correctly estimate the financial implications.

14. The Ministry of Defence have accordingly obtained the legal opinion of the Solicitor General dt. 17.10.12, as approved by the Minister for Law. The opinion, in brief, is to comply with the order of the Supreme Court within the stipulated time.

15. Accordingly, the Ministry of Defence with the approval of the Raksha Mantri has now sought our concurrence for implementation of the said order dt. 4.9.2012 passed by the Supreme Court, which, in effect, is o apply the principle of the judgment of the Kerala High Court dt. 5.10.1998 for fixation of pay as on 1.1.86 without deducting the rank pay, alongwith the arrears from 1.1.86 and also interest thereon @6% calculable from 1.1.2006.

16. In this connection, the following observations are made: -

Merit of the case

i. Considering the legal opinion of the SG and the tone and tenor of judgments of the High Court and the Supreme Court, we don’t seem to have any option but to implement the order of the Supreme Court. If Rank Pay was not part of the 4^th CPC emoluments and if pre-4^th CPC emoluments were to be taken into account for fixation of pay in the revised scale based on 4^th CPC, it appears indefensible to deduct the element of Rank Pay meant to be given effect post- 4^th CPC from the emoluments and then add in the same vein. There is no explanation in the 4^th CPC report for such a circuitous procedure. In the defence before the Courts, the plea taken by us is to refer to the illustration given by 4^th CPC for such a procedure. This has obviously not curried favour with the legal determination by the Courts.

ii. Incidentally, the 5^th Central Pay Commission, whose recommendations were implemented from 1.1.1996 also recommended the similar formula for fixation of pay after deducting and then adding the revised rank pay recommended by the 5^th Pay Commission. However, there is one vital difference between the fixations at the time of the 4^th CPC and that at the time of the 5^th CPC. The difference was that while Rank Pay was not part of the pre-revised emoluments prior to 4^th CPC, as it was introduced by the 4^th CPC, it was very much part of the pre-5^th CPC emoluments and taken into account (pre-revised rates) for fixation of pay. However, it is a moot point if, encouraged by the present case, litigants come to the fore, challenging the 5^th CPC fixation too. It is not clear from the file of the MoD, if they have received any representations or notices for litigation in this regard and if so, what the stand of the MoD has been to defend this. We need to take this into account and MoD may clarify this position too.

Financial Implications

iii. The Ministry of Defence has not indicated the extent of financial implications involved. Nowhere in their notes on 9 to 18/N of their LF is there any mention about financial implications. However, it is seen that the CGDA in their note dt. 12.10.2012 have made a rough estimation of Rs 861 crore covering Army, IAF and the Navy. However, it is also seen from the Annexure of this Note that various Field Level PCDAs have expressed their inability to exactly calculate the financial implications in view mainly of non-availability of accurate data and practical difficulty in timely collection and collation of material to do so.

iv. The financial implications indicated before the Supreme Court based on the report of the High Powered Committee was Rs 1623.71 crore. Thus, there is a wide variation between this figure and the figure being indicated by CGDA now. This will require reconciliation by the MoD.

v. The fact remains that the financial implications will be too huge – as it falls somewhere between Rs 861 crore and Rs 1623.71 crore. Ministry of Defence have not indicated as to how it proposes to meet such a substantial liability – whether it has cushion to this effect or scope for re-appropriation from its large overall budget. This is an extraordinary situation, putting the Govt. to an unforeseen spectre of too large a financial outgo. This, thus, requires extraordinary efforts by the administrative Ministry of Defence to locate funds internally to meet this extraordinary funds requirement as best as it can do. The Ministry must make this point clear.

vi. It is seen from para 5 of MoD note 8/n of their LF that the arrears paid to Major Dhanapalan was Rs 28, 031 from 1.1.86. This was paid after the SLP filed in the Supreme Court against the order of 5.10.1998 of the Kerala High Court in his favour was dismissed in 2005. However, the CGDA is now computing arrears to the tune of Rs 65, 578 in case of one Major. This is too wide a variation. Since the present order of the Supreme Court dt. 4.9.2012 is for following the principle of Kerala High Court order of 5.10.1998, the MoD must ensure that re-fixation of pay from 1.1.986 is done on the same basis as allowed in case of Major Dhanapalan.

Scope of “Similarly placed persons”

vii. It is seen from the Order of the Supreme Court dt. 4.9.2012 that all the petitions that were tagged along were filed by Army officers. It is also seen that the Pay Rules of 1987, which have been challenged and quoted by the MoD in its affidavit before the Supreme Court, are Special Army Instructions dt. 23.6.2007. It, thus, appears that so far the petitioners and the litigation have been Army-centric. This being so, the whole implications of the phrase “similarly placed person” may confine to similarly placed persons from the Army alone. This will soften the financial impact. However, the MoD will have to check the details from the list of petitioners and if all are Army men, then MoD may consult the Law Ministry on an urgent basis if the implementation could be made only in case of similarly placed officers of the Army at this stage.

17. To conclude, it is proposed as under:

(i) While “in principle” we may have no option but to implement the judgment dt. 4.9.2012 passed by the Supreme Court, the MoD may examine its implications in the context of the 5^th CPC, as mentioned in para 16 (ii) above.

(ii) Since the judgment is for following the principle of the order dt. 5.10/1998 (year has been mentioned as 2008 in the note) passed by the Kerala High Court for re-fixation of pay as on 1.1.86 in exactly the same way, the benefit is to be given only on the same basis for others. MoD may place a copy of the order issued in case of the petitioner (Major Dhanapalan) and the proposed order to be issued.

(iii) MoD may explain the issues relating to financial implications as mentioned in para 16 (iii) & (vi) above.

(iv) MoD may also take action on the connotation of the term “similarly placed persons” as mentioned in para 16 (vii) above.

(v) MoD may do the needful as above and refer the case back to us for final concurrence of this Ministry. The file must reach this Ministry at least by 20.11.12.

Sd/----------------------------

(Amar Nath Singh)

DS (EIIIA)

8.11.2012

JS (Pers)

Notes from N 64 – N 72 refer.

The case under discussion is implementation of an order of Hon’ble Supreme Court dt.4.9.2012 in the Rank Pay case UoI vs N.K. Nair &N Ors. Legal opinion was sought by M/o Defence, and the Solicitor General in his opinion dt 17.10.2012 has stated that “the Querist should comply with the order dt. 4.9.2012 passed by the Hon’ble Supreme Court within the time period stipulated in that order.” This opinion has been approved by Hon’ble Minister for Law & Justice on 22.10.2012.

The order of Hon’ble Supreme Court is to be implemented with 12 weeks from 4.9.2012 and there is no option but to implement the orders of the Court. The financial implications of this order are as yet unclear, and may lie between Rs 861 crore to Rs 1623.71 crores. Ministry of Defence would need to clarify from where the additional expenditure would be met and the connotation of the term “similarly placed persons” in the order of the Hon’ble Supreme Court.

Course of action as proposed at para 17 (i) to (v) is for consideration and approval at this stage.

Sd/- Sudha Krishnan

8.11.12

F.S. Sd/------------ 8/11

JS (Pers) Sd/--------------- 8-11-12

DS (E.III A) I’ve signed the endorsement placed below. Pl ensure that it reached MoD (Pl put illegible)

Sd/------------- 9.11.12

US (E IIIA) Please issue by hand today Sd/---------- 9/11

Mr. Pal

-74-

Ministry of Finance

Department of Expenditure

Subject: - Implementation of the Order of 4.9.2012 passed by the Hon’ble Supreme Court – IA No. 9 of 2010 – Union of India Vs. N .K. Nair & Ors – Rank Pay Case

Ministry of Defence may please refer to their note on pp 16-19/N recorded on their F. No. 34(6)/2012-D (Pay/Services), having approval of RM, seeking concurrence of this Ministry for implementation of the aforesaid order of the Hon’ble Supreme Court.

2. The matter has been considered in this Ministry having regard to the opinion of the Learned SG tendered by him on 17.10.2012, as approved by the Minister for Law & Justice on 22.10.2012 (Note 14 recorded on the file of MoD cited above), and other records made available by the Ministry of Defence.

3. At the outset, considering the legal opinion of the Learned SG, as approved by the Minister for Law & Justice, as also having regard to the judicial pronouncements made by the Hon’ble Supreme Court in the matter, this Ministry “in principle” agrees at this stage to implement the order dt 4.9.2012 of the Hon’ble Supreme Court. However, before this Ministry conveys its final concurrence in the matter, the Ministry of Defence is requested to take the following action/furnish the following on an urgent basis:

a. The 5^th Central Pay Commission, whose recommendations were implemented from 1.1.1996, also recommended for the similar formula for fixation of pay pertaining to Rank Pay. It is not clear if the implementation of the instant Court order pertaining to the fixation of pay from 1.1.1986 based on the 4^th CPC recommendations, may have any impact on the formula adopted from 1.1.1996 based on the 5^th CPC recommendations. It is also not clear from the file of the MoD if they have received any representations or notices for litigation in this regard and if so, what the stand of MoD has been to defend this. MoD may clarify the position in this regard, also clarifying how the fixation of pay pertaining to rank pay based on 5^th CPC could be distinguished from that based on the 4^th CPC.

b. (i) The Ministry of Defence has not indicated the extent of financial implications involved on implementation of the Order dt. 4.9.2012 in question. Nowhere in their notes on 9 to 18/N of their aforesaid File is there any mention about financial implications. However, it is seen that the CGDA in their note dt. 12.10.2012 have made a rough estimation of Rs 861 crore, covering Army, IAF and the Navy. However, it is also seen from the Annexure of this Note that various Field Level PCDAs have expressed their inability to exactly calculate the financial implications in view mainly of non-availability of accurate data and practical difficulty in timely collection and collation of material to do so.

(ii) The financial implications indicated before the Supreme Court based on the report of the High Powered Committee was Rs 1623.71 crore. Thus, there is a wide variation between this figure and the figure being indicated by the CGDA now. This will require reconciliation by the Ministry of Defence.

(iii) The fact remains that the financial implications will be huge – as it falls somewhere between Rs 861 crore and Rs 1623.71 crore. Ministry of Defence have not indicated as to how it proposes to meet such a substantial liability – whether it has scope for re-appropriation from its large overall budget. This is in an extraordinary situation, putting the Govt. to an unforeseen spectre of too large a financial outgo. This, thus, requires extraordinary efforts by the administrative Ministry of Defence as best as it can do to locate funds internally to meet this extraordinary funds requirement. The Ministry of defence may make this point clear.

(iv) It is seen from para 5 of MoD Note 8/N of their aforesaid file that arrears paid to Major Dhanapalan was Rs 28, 031 from 1.1.1986. This was paid after the SLP filed in the Supreme Court against the Order dt. 5.10.1998 of the Kerala High Court in his favour was dismissed in 2005. However, CGDA is now computing arrears to the tune of Rs 65, 578 in case of one Major. This is too wide a variation. Since the present order of the Supreme Court dt. 4.9.2012 is for following the principle of the Kerala High Court order of 5.10.1998, the MoD must ensure that re-fixation of pay from 1.1.1986 is done on the same basis as allowed in case of Major Dhanapalan. A copy of the order issued by the Ministry of Defence for implementation of the order dt. 5.10.1998 passed by the Hon’ble Kerala High Court in case of Major Dhanapalan, may be provided, along with the draft of the proposed order being prepared by the Ministry of Defence to implement the Order dt. 4.9.2012 in question.

(c) It is seen from the Order of the Hon’ble Supreme Court dt. 4.9.2012 that all the petitions that were tagged along were filed by the Army officers. It is also seen that the Pay Rules of 1987, which have been challenged and quoted by the MoD in its affidavit before the Supreme Court, are Special Army Instructions dt. 23.6.2007. It, thus, appears that so far the petitioners and the litigations have been Army-centric. This being so, the whole implication of the phrase “similarly situated/placed person” may confine to similarly placed persons from Army alone. However, MoD will have to check the details from the list of petitioners and if all are Army men, then Ministry of Defence may consult Law Ministry on an urgent basis if the implementation could be made only in case of similarly placed officers of Army, keeping in view that the petitioners are/were from the Army. This consultation with the Law Ministry may be made urgently and concurrently with the other action, as per (a) and (b) above.

4. Ministry of Defence is requested to do the needful as above and refer the case back to this Ministry at least by 20.11.2012 for final concurrence of this Ministry, so that there is adequate time for completing the process by 4.12.2012.

5. This has the approval of Finance Secretary.

Sd/-----------------------------------

(Amar Nath Singh)

Deputy Secretary (EIII A)

9.11.2012

Ministry of Defence (Shri Shankar Agarwal, Additional Secretary)

MOF. DOE ID Note No. 187654/E.III (A)/2012, dt 09/11/12

Aerial View

Saturday, 6 April 2013

Reply from MoF to First Appeal - Rank Pay Matter

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