Please note that the Ld AG refers to a letter of 18.1.2013 from Chairman, CoSC and a SoC was sent on 2.4.2013 (Paragraphs 17, 18 & 25 refer). Also, CGDA has provided clarifications on 23.5.2013 Paragraph 37 etc).
So is there a second letter/SoC after the RM's directions of 14.6.2013?
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OFFICE OF MR GOOLAM E. VAHANVATI,
ATTORNEY GENERAL FOR INDIA
MLJ No. AG QW/2013-ADV. ‘C” DT. 1408.2013
AG Dy. No. 325/AG/OPIN DT 14.8.2013
Subject: Implementation of Supreme Court order dated 4.9.2012 –
Rank Pay Case (Major A. K. Dhanapalan, Retd. Reg
1. I have perused the file. My opinion has been sought on the following issues:
(i) Whether the MoD orders dated 27 Dec.12 have modified the Special Army Instructions 1/S/87 and corresponding Navy and Air Force Instructions in so far as it relates to deduction of Rank Pay and direct to re-fix the initial pay of the concerned officers of the three services in the revised scale (integrated scale) as on 1.1.1986. Whether the term ‘with effect from 1.1.1986’ should be used as given in the Single Bench’s order dated 05.10.98 passed in the High Court of Kerala, instead of using ‘as on 01.01.1986’? What consequences this change in term will entail?
(ii) Whether the minimum pay for each rank given in Para 6 (a) (ii) of SAFI 1/S/87, needs to be re-fixed/changed?
(iii) Whether the Basic Pay ceiling of integrated Scale in IV CPC for officers up to Brig/equivalent, which is Rs 5100/- also needs to be modified to give effect to the Court orders?
(iv) Since the treatment to Rank Pay while pay fixation carried out in 5th CPC was similar to that of the 4th CPC, whether orders of the Apex Court dated 04.09.2012 be applied to all subsequent Pay Commissions i.e. V and VI CPC under such circumstances.
2. The above queries have arise in the following factual background:
3. By resolutions dated 04.10.1986 and 18.03.1987, the Ministry of Defence, Government of India decided to accept the recommendations of IVth Pay Commission relating to the structure of emoluments and allowances of Commissioned Officers. These included creating of an integrated pay scale for officers upto the rank of Brigadier and equivalent in the Navy and Air Force, and for provision of rank pay in addition to pay in the integrated scale. The decision was to operate retrospectively with effect from 1.1.1986.
4. One A. K. Dhanapalan, a retired Commissioned Officer (Major) in the Indian Army, filed O.P. No. 2448 of 1996 before the High Court of Kerala, claiming that while revising his pay, instead of adding Ran Pay to his emoluments, the Government had deducted the same.
5. The Government justified the action of deducting Rank Pay on the basis of instructions dated 26.05.1987, which provided in para 6 (a) (ii) that rank pay could be deducted in order to fix the revised scale of pay at the stage next above the amount arrived at.
6. The learned Single Judge, in its judgments dated 05.10.1998, found that the Government has totally misunderstood the nature of rank pay, and it was not justified in deducting the same while fixing the total emoluments payable to an officer.
7. Accordingly, it was directed that the writ petitioner’s pay would be re-fixed with effect from 1.1.1986 without deducting the rank pay of Rs 200/-.
8. The Writ Appeal filed by Government of India against the judgment of the Single Judge was dismissed by the Division Bench vide its judgment dated 04.07.2003.
9. The Special Leave Petition filed by the Government of India against the Judgment of Division Bench was dismissed by the Hon’ble Supreme Court on 12.07.2005 on the ground of delay.
10. Thereafter, the judgment of the Single Judge was implemented by the Government qua Mr. Dhanapalan, and an amount of Rs 28,031 was ordered to be releases to him.
11. Subsequently, several writ petitions came to be filed before different High Courts as well as before the Supreme Court, seeking similar benefits as granted in Dhanapalan’s case. The Union of India moved a Transfer Petition for transfer of all these matters to the Supreme Court.
12. On 08.03.2010, the Transfer Petition was allowed, and the Hon’ble Supreme Court vide the same order also disposed off the writ petitions directing grant of rank pay retrospectively with effect from 1.1.1986. In addition, the Hon’ble Court also directed payment of interest @ 6% per annum.
13. Thereafter, the Union of India filed an I.A. for modification of the order dated 08.03.2010, citing the huge financial implications involved in implementing the same. Vide its order dated 04.09.2012, the Supreme Court modified its order dated 08.03.2010 with respect to the interest part, and directed that instead of from 1.1.1986, interest would have to be paid from 1.1.2006.
14. Thereafter, the matter was referred to the learned Solicitor General for opinion, indicating certain difficulties in implementing the Supreme Court order. The then learned Solicitor General in his opinion dated 17.10.2012 opined that the Supreme Court order has to be compiled with, and all consequential benefits granted to the concerned officers.
15. On 27.12.2012, the Ministry of Defence has issued instructions for implementation of the Supreme Court’s order. It has declared that Para 6 (a) (ii) of the Special Instructions dated 26.5.1987 which permitted deduction of rank pay at the time of fixing initial pay in revised scale is modified and no deduction of rank pay is to be made. The instructions also provide for granting certain consequential benefits and interest after re-fixation of pay.
16. It is stated in the file that an amount of Rs 320.06 crores has been paid till 5.7.2013 to 2820 serving and 31, 125 retired beneficiaries.
17. On 18.01.2013, the Chairman, Chiefs of Staff Committee addressed a letter to the Hon’ble Defence Minister, raising certain issues that have arisen in implementation of the Supreme Court order.
18. The matter was examined in the Ministry and the Services were asked to send a detailed Statement of case in the matter which would be examined in consultation with Ministry of Finance, Ministry of Defence, Ministry of Law and Controller General of Defence Accounts. Accordingly, the Services submitted a Statement of Case dated 02.04.2013, raising four issues.
19. These issues have been responded to by the Ministry of Finance, CGDA, and Ministry of Defence.
20. The Hon’ble Minister of Defence, taking note of divergent views of the various issues, decided that the matter may be referred to me for opinion. It is in this regard that the above noted four queries have been raised for my opinion.
21. Before I answer the queries raised, it is important to state that the Government must implement the Supreme Court’s order of granting the same benefit to similarly situated officers both in letter and in spirit. The Government cannot take a restrictive view of who is similarly situated, and must grant benefit on the basis of the underlying principle affirmed by the Supreme Court i.e. wherever rank pay has been deducted at the time of fixation of pay, the deducting must be undone and pay fixed accordingly. Members of the armed forces should not be forced to approach the Court for each individual claim when the same has already been granted to all similarly situated officers by the Hon’ble Supreme Court. This would be unfortunate.
22. With these observations in mind, I shall now answer the queries raised for my opinion.
Query (I) Whether the MoD orders dated 27 Dec.12 have modified the Special Army Instructions 1/S/87 and corresponding Navy and Air Force Instructions in so far as it relates to deduction of Rank Pay and direct to re-fix the initial pay of the concerned officers of the three services in the revised scale (integrated scale) as on 1.1.1986. Whether the term ‘with effect from 1.1.1986’ should be used as given in the Single Bench’s order dated 05.10.98 passed in the High Court of Kerala, instead of using ‘as on 01.01.1986’? What consequences this change in term will entail?
23. In the judgment dated 05.10.1998 passed by the Learned Single Judge, the direction issued was as follows:
Rest of the paragraph missing
24. Part of paragraph missing …..scale (integrated scale as on 1.1.1986 as per para 6 of the above instructions without deduction of Rank Pay appropriate to the rank held by the officer on 1st January 1986 from the amount worked out under para 6 (a0 (ii) thereof.”
25. According to the armed forces as mentioned in letter dated 18 January 2013 written by Chairman, Chiefs of Staff Committee, the change of wording from “with effect from 1.1.1986” to “as on 1.1.1986” has led to the following anomalies: -
(i) Officers promoted to the rank of Captain and equivalent after 1.1.1986 have not been granted the benefit of Court’s order, even though rank pay in their case had also been deducted at the time of fixation of their pay in the integrated scale.
(ii) Re-fixation of pay in case of certain Colonels and Brigadiers, the ceiling fixed in pay scale in terms of Para 6 (c) of the instructions would lead to a situation where either complete benefit is not granted to these officers, or there would even be reduction of pay in some cases.
(iii) The Government has not granted benefit of the Court’s order to those officers whose rank pay was deducted at the time of implementation of Vth and 6th Pay Commissions.
26. The CGDA has opined that in this case, the affected officers are those who were drawing pay in the rank of Captain to Brigadier as per 3rd CPC on 31.12.1985 and whose pay was re-fixed as per SAI 1/S/87 and corresponding Navy and Air Force Instructions on 01.01.1986 after deducting rank pay. They submit that the wording “as on 1.1.1986” or “with effect from 1.1.1986” does not, in effect, make any difference. It has also been stated by CGDA that the pay of officers commissioned after 1.1.1986 and officers promoted after 1.1.1986 has been fixed with reference to rank and qualifying service, and that no rank pay has been deducted while carrying out such fixation. They have been admitted rank pay of the rank held, in addition.
27. The Ministry of Finance has stated in para 16.1. and 16.2. of the document marked as Annexure XVI in the file that Special Army Instructions dated 26.05.1987 do not provide for deduction of rank pay as the stage of promotion subsequent to 1.1.1986 and that on a matter of fact, fixation of pay on promotion is the revised structure subsequent to 1.1.1986 was never after deduction of rank pay.
28. For the sake of clarity, I may indicate what has been decided by the Court:
(i) Section II of Special Army Instructions No. 1/S/87 dated 26.05.1987, deals with fixation and regulation of pay of officers commissioned prior to 01.01.1986.
(ii) Para 6 of Section II deals with Fixation of initial pay in the revised scales.
(iii) Para 6 (a) (i) provides that an amount representing 20 percent of the basic pay in the existing scale shall be added to the existing emoluments of the officer.
(iv) Para 6 (a) (ii) provides that after adding the aforesaid 20 percent, an amount equivalent to the rank pay, if any, appropriate to the rank held by the officer on 1.1.1986 will be deducted. Thereafter, the officer’s pay will be fixed in the scale at the stage next above the amount thus computed.
29. The Kerala High Court deduction of rank pay, in terms of Para 6 (a) (ii) to be unlawful, and this view has been upheld by the Supreme Court.
30. Thus, the effect of decisions of the Kerala High Court and the Supreme Court is that at the time of fixation of pay in the revised scale, rank pay should not be deducted. The underlying principle is that rank pay is an emolument, and therefore, cannot be deducted when revised pay is fixed with reference to the pay being drawn earlier.
31. The Government needs to implement the orders of the Supreme Court in this spirit. It cannot confine the benefit of the orders to those officers whose pay was fixed as on 1.1.1986 after deduction of rank pay in terms of Para 6 (a) (ii). It must grant benefit to all those officers whose pay has been fixed after deducting rank pay, whether as on 1.1.1986 or after 1.1.1986. This must be done after properly verifying the facts.
Query (II) Whether the minimum pay for each rank given in Para 6 (a) (ii) of SAFI 1/S/87, needs to be re-fixed/changed?
32. Para 6 (a) (ii) of the Instructions dated 26.05.1987 refers to officers in the ranks of Captain, Major, Lt Colonel, Colonel and Brigadier and indicates minimum pay in the integrated scale against each rank.
33. According to the armed forces, the minimum pay for each rank needs to be revised after taking into account the non-deduction of rank pay in terms of the Court’s order.
34. The CGDA has indicated that the minimum pay for each rank has not been arrived at after deduction of rank pay. It was in fact a recommendation of 4th CPC. Minimum pay has not been depressed due to deduction of rank pay. Further, there is no court order directing change in minimum pay for the rank.
35. The Ministry of Finance has indicated its agreement with views of CGDA.
36. The issue of revision of pay scale did not arise and was not decided in Major Dhanapalan’s case. The issue of the minimum pay scale does not pertain to the real issue dealt with above. When the officer’s pay is revised I implementation of the Court’s order, the minimum of the pay scale does not come in the way, because if the pay has to be fixed at a stage next higher than the minimum, the same can be done. There is no need to revise the minimum, if as stated by the CGDA, it has been fixed on another basis.
Query (III) Whether the Basic Pay ceiling of integrated Scale in IV CPC for officers up to Brig/equivalent, which is Rs 5100/- also needs to be modified to give effect to the Court orders?
37. The differing views on this issue are as under:
ISSUE 3: REVISING THE TOP OF INTEGRATED SCALE.
Armed Forces Views: The top of the integrated scale as recommended by Pay Commission was Rs 5000. However the issue was further examined by the Government and it was decided to change the integrated scale to Rs 2300-100-3900-150-4200-EB-5100. The services now contend that the top of the scale of Rs 5100 should also be increased to remove the effects of deduction of rank pay. They have drawn equivalence between Brig (on armed forces side) and DIG (Police) on civilian side to draw pay comparison. It is submitted that while DIG (Police) got Rs 6150 basic pay, the Brigadier’s pay in the integrated scale ws Rs 4950 with an additional amount of rank pay of Rs 1200.
The services point out that now with no deduction of rank pay, senior Cols and Brig would not be able to get full pay fixation benefit (20% of emoluments) as in their case revised emoluments go beyond the top of integrated scale from day one. The Services have proposed to adjust the top of the scale suitably to relate the original span of the integrated scale of 29 years as recommended by Pay Commission. Grant of stagnation increments or personal pay to the concerned officers have not been favoured by the services as they are not considered for purpose of determining corresponding replacement scale in subsequent CPCs.
Amendment Sought by Armed Forces. The Armed Forces have asked that the anomaly can be resolved by enhancing the upper limit of Rs 5100 in the integrated pay scale of IVth CPC, which has been arrived at after making allowance for the Rank, to ensure effective implementation of the Govt orders.
CGDA’s views. CGDA has pointed out that in order to benefit such officers an element of personal pay was projected in the instant case to MoF. But it was not agreed to by Ministry of Finance. In view of para 6 (o) of SAI 1/S/87 (Annexure XX) which states as under: -
‘If the amount so computed as at sub-para a (ii) above is more than the maximum of the revised scale, the pay will be fixed at the maximum of the revised scale.’
The relevant Service Instructions provide for maximum three stagnation increments upto the rank of Brig, after completion of every two years qualifying service once the officer reaches the maximum of the scale. However, it is ensured that Basic Pay plus Dearness Allowance plus stagnation increments do not exceed the maximum of Basic Pay plus rank pay of the next higher rank i.e. Major General – Rs 5900-200-6700.
Further, there is no court order directing changing of the integrated pay scale. In case the demand is met, the pay scale of next senior officer s will get burst, disturbing the horizontal and vertical relativity pay scales on Services side, paramilitary forces and civilian side also.
MoF views. This Ministry agrees with the view of the office of CGDA on this issue as contained in their note No. AT/1/1483/RB/X (PC)/V dated 23.5.2013 (Annexure XVII).
However, it has been mentioned in the said Note of the CGDA that in cases where emoluments (revised pay) computed without deducting rank pay crosses the maximum of the revised integrated scale, the Ministry of Defence has proposed that the difference by which the revised pay of the integrated pay scale may be protected by way of Personal Pay to be absorbed in stagnation increments or pay on promotion, but the same was not agreed to by the Ministry of Finance. The Ministry of Finance did not agree to the same for the following reasons: -
(i) At the outset, this issue was neither prayed for by Major Dhanapalan in his petition nor was it considered by the Hon’ble Kerala High Court nor is it covered in the order passed by the Hon’ble Court dt 5.10.1998.
(ii) Para 6 (o) of Section II of the Special Army Instructions dated 26.5.1987 (Annexure XX) already provided that if the amount so computed as at pata 6 (a) (ii) is more than the maximum of the revised scale, the pay shall be fixed at the maximum of the revised scale. In other words, if the initial pay fixed in the revised integrated scale exceeds the maximum thereof, pay cannot be more than the said maximum. Thus now that the …. Pertaining to deduction of rank pay part at para 6 (a) (ii) from existing emoluments (or revised emoluments) as on 1.1.1986 has been removed, the amount computed without deduction for the fixation of initial pay/fitment in the revised pay scale as on 1.1.1986 also cannot exceed the maximum of the revised integrated scale effective from 1.1.1986 as the principle laid down in said para 6 (c) is not part of judicial pronouncement based on which the order of 27.12.2102 has been issued.
Thus the demand of Service Headquarters does not flow from the judicial pronouncement in this case. This being so, its implementation as part of the order dt 27.12.2012 does not arise.
Apart from the above, the proposal of the Ministry of Defence for Personal Pay, in such a case is not justified on merits also as brought out below: -
(i) A person drawing pay in a particular scale of pay attached to the post held by him, cannot draw pay in excess of the maximum of the connected scale of pay. This is the concept of a Specific pay scale. Of course since the rank pay is a separate element, the total pay (Pay in the integrated scale + rank pay) can very well exceed the maximum of the integrated pay scale and that is exactly what is happening here. It is being …. that Rank Pay is a separate element in addition in the pay in the integrated scale and as such Pay + rank pay is not restricted to the maximum of the integrated scale. It is only the pay in the integrated scale that is not to exceed the maximum thereof.
(ii) A similar provision exists in proviso (b) to Rule 7 (1) (A) of the CCS (RP) Rules 1968 relating to fixation/fitment of initial pay of civilian Government servants in the revised pay scales as on 1.1.1986. A copy of the relevant extract from the said Rules is at Annexure XXII. Therefore, no special dispensation can be allowed in this case now that the pay to be fixed in the integrated pay scale as on and w.e.f 1.1.1986 exceeds the maximum of the integrated scale.
(iii) In case a person stagnates at the maximum of the scale, stagnation increments in the concerned pay scale as preapproved Rules are applicable. Office of CGDA has confirmed that stagnation increments are admissible to Armed Forces officers as per orders of 11.9.1987.
(iv) In fact the phenomenon of initial pay fixed in a revised pay scale at the maximum from the very date of implementation of the revised pay scales has been specially taken note of by the 6th CPC. The 6th Central Pay Commission noted that many of the pay scales recommended by the 5th Central Pay Commission got “burst” at the time initial fixation where revised pay of some of the employees became higher than the maximum of the revised pay scales and these employees, therefore, had started to stagnate right from the time of implementation of the 5th Central Pay Commission pay scales. It is for this reason that the 6th Central Pay Commission has recommended the concept of running pay band instead of specific pay scales. The Commission noted that since the individual pay scale has a limited span, it often leads to stagnation. The Commission, therefore, recommended the concept of running pay bands to address these issues. In this connection, the recommendations of the Pay Commission contained in para 1.2.7, 1.2.8. and 2.2.4 are collectively placed at Annexure XXIII.
(v) Thus the situation as it existed upto 1.1.2006 was that there were cases of the employees reaching at the maximum of the individual pay scale and this did not by itself mean allowing them to draw pay more than the maximum of the pay scale by way of Personal pay. They were only allowed stagnation increments and that is admissible in case of Armed Forces personnel also. Therefore, any benefit in the form of personal pay is the instant matter is against the normal and general policy.
(vi) Also, the initial pay fixed in this as on 1.1.1986, which is of course w.e.f 1.1.1986 after the order dated 27.12.2012 in implementation of the judicial pronouncement in this case, does not fall below the initial pay earlier fixed in the integrated pay scale before issue of the order dt 27.12.2012 and, therefore, this is no actual loss in the initial pay and hence, there is no basis for grant of personal pay in such cases.”
38. Para 6 (a) (c) of the Instructions dated 26.05.197 provides as follows: -
“If the amount so computed as at sub-para (ii) above is more than the maximum of the revised scale, the pay will be fixed at the maximum of the revised scale.”
39. It is clear from the above that ceiling on pay scales rises out of Para 6 (a) (c), which did not arise nor was considered in Major Dhanapalan’s case.
40. The only issue decided by the Kerala High Court and consequently the Supreme Court is whether rank pay is to be deducted at the time of fixing pay in the integrated scale in terms of Para 6 (a) (ii). Ceiling fixed under Para 6 (c0 is not subject matter of these judgments.
Query (IV) Since the treatment to Rank Pay while pay fixation carried out in 5th CPC was similar to that of the 4th CPC, whether orders of the Apex Court dated 04.09.2012 be applied to all subsequent Pay Commissions i.e. V and VI CPC under such circumstances.
41. The divergent views on this issue are as under:
ISSUE – 4: APPLICATION OF COURT ORDERS TO SUBSEQUENT PAY COMMISSIONS
Armed Forces views: The Services contend that deduction of rank pay at the time of the 4th CPC implementation which has been set aside should also be followed at the next pay revision i.e. 5th CPC. They have stated that deduction on rank pay in 1996 also have led to lower pay scales granted to relevant army officers.
Armed Forces have stated that the decision of the Apex Court having been agreed to and implemented has now become law of the land which needs to be applied equally to other similarly placed cases/situations. The ratio of this case has to be applied to subsequent Pay Commissions in similar situations
Amendments sought by Armed Forces: The Armed Forces have maintained that to resolve the above issue corresponding amendments to the relevant Special pay Instructions for the 5th and 6th CPCs are also required so as to give effect to the verdict of Hon’ble Supreme Court/Kerala High Court in letter and spirit.
CGDA’s views: CGDA has stated that Major Dhanapalan sought revision of pay from 1.1.1986 citing court orders in the present matter. He was informed that the Hon’ble Kerala High Court order was for not deducting rank pay as on 1.1.1986 when Rank Pay was introduced for the first time based on IV CPC recommendations ad not as on 1.1.1996. An element of rank pay was already included in the pay at the time o pay fixation as on 1.1.1986 and 40% fitment benefit was given thereon.
No further communication from him or any court was received thereafter. The case was before courts from 1998 to 2012 and it was never an issue. Neither the Kerala High Court nor Supreme Court has issued any directives for revision of pay fixation formula for Fifth Pay Commission or the Sixth Pay Commission.
Def (Fin) views: The issue raised is not covered under the Supreme Court order dated 4.9.2012. The change in pay due to this order would automatically be accounted for in subsequent pay commissions revision with reference to orders issued on such recommendations.
MoF views: The Ministry of Finance agrees with the views of the office of CGDA on the issue contained in their Note No. AT/I/1483-RB/X(PV)/V dated 23.5.2013 (Annexure XVII).
This issue does not form part of the Order of the Hon’ble Kerala High Court dt 5.10.1998”
42. In my opinion, the Government needs to implement the underlying principle laid down in Major Dhanapalan’s case i.e. rank pay cannot be deducted at the time of fixing pay in the revised scale. It is immaterial that in Major Dhanapalan’s case, only 4th Pay Commission was involved. The principle of law laid down is that rank pay cannot be deducted by fixing pay in the integrated scale. Since rank pay has been deducted at the time of fixing pay in subsequent pay commissions, the same would definitely have to be corrected. The officers covered by 5th and 6th Pay Commissions cannot be expected to approach the Courts for orders in the same terms.
43. I have nothing further to add.
(GOOLAM E. VAHANVATI)
Attorney General of India
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