Aerial View : Statement of Case 2 for Learned Attorney General

Air HQ/xxxxx/xx/AFPCC (Ty BM-XIII)

Copy of Note 38-43 of MoD F No 34(10)/2013-

D(Pay/Services) Air HQ/25450/1/LGL -1A

Copy of Note-44 on Air HQ/25450/1/Lgl Vol I (PC) -2A

1. Please refer copy of Note 38-43 (Encl-1A) and the discussions of RM with the undersigned.

2. Armed Forces had brought out four substantive infirmities arising out of the executive order issued by MoD on 24 Dec 12 to implement Hon’ble Supreme court judgment dated 04 Sep 12. On reference from the Ministry of Defence, Ld AG rendered his opinion on these issues on 03 Sep 13.

3. It can be discerned that out of the four issues, Ld AG has agreed with Armed Forces on two issues. The Armed Forces have endorsed the opinion of Ld AG on these issues.

4. It is felt that the opinion of Ld AG on the remaining issues ie ‘minima for each rank’ and ‘top of the integrated scale’ was premised upon certain inputs provided by CGDA, which are incorrect.

5. Accordingly, a Note on file bringing out specific legal issues has been put up for consideration by RM to process the remaining issues for reconsideration by Ld AG, (a copy thereof is placed at Encl-2A).

6. Implementation of the already agreed issues will involve the following steps: -

(a) Examination of the opinion of Ld AG by CGDA, MoD (Fin) and MoF.

(b) Preparation of DGL incorporating the changes necessitated by the two issues.

(d) Issuance of Government Orders for implementation of the twin issues by MoD.

(e) Implementation of the orders by CDA(O), NPO, and AFCAO.

7. It is opined that before all the above steps are completed, the opinion of Ld AG on the remaining two issues is also likely to be available. This would require revisiting the sequence of issues described at para 6 above.

8. An expeditious opinion by Ld AG on the remaining issues would therefore, facilitate a holistic and all encompassing implementation of Hon’ble Supreme Court verdict in the case.

9. It is therefore, the considered opinion of the undersigned that implementation of the issues on which agreement has been reached should await the final opinion of Ld AG on the remaining two issues for comprehensive resolution encompassing all issues. Piecemeal implementation of some of the issues may lead to further complexities and unforeseen anomalies.

10. For the consideration of RM.

Chairman COSC & CAS

25 Nov 13

1. Please refer Note-38 to Note-43 ante.

2. In respect of the Rank Pay case for officers, while endorsing the opinion of Ld AG on the two issues agreed by him in his opinion i.e. “implementation of Court Order wef 01 Jan 86” and “application of legal principles of the judgment to subsequent Pay Commissions”, this Note seeks to raise certain legal issues related to the conditional opinion of Ld AG on the remaining two issues of Minimum and Top of the Scale. In the Armed Forces view, the Rank Pay has been deducted from the Minimum and Top of the Scale for affected ranks in the integrated Pay Scale of 4^th CPC.

Background

3. The long drawn Rank Pay Case was finally adjudicated upon by Hon’ble Supreme Court on 04 Sep 2012 by upholding the Kerala High Court order. The Government decided to implement the judgment and issued orders to give effect to the judgment on
27 Dec 12.

4. The implementation orders however, had certain infirmities. The infirmities were taken up by the undersigned with RM vide
PC-4-PA/5437 dated 18 Jan 13. In addition, a detailed Statement of Case and a background note on these infirmities was also forwarded to MoD on 02 Apr 13 for further action.

5. In the absence of any visible progress, the matter was again taken up with RM on 27 May 13. Subsequently, a meeting was taken by RM with Service Chiefs and representatives of the Ministries of Defence, Finance and Law as well as the CGDA on
14 Jun 2013 to resolve the infirmities in the ibid Govt letter.

6. The RM directed MoD to obtain the opinion of Ld AG on differing interpretations of the court order. He also directed the Armed Forces to take up a case separately and independently with Ld AG to obtain his opinion.

7. Accordingly, a detailed Statement of Case (SoC) with elaborate justifications and actual examples along with six specific queries, was forwarded by the undersigned as the Chairman COSC & CAS to Ld Attorney General on 01 Jul 13. Ld AG returned the case advising Armed Forces to route the matter through Ministry of Law. The case was then forwarded to MoD on 19 Jul 13 on this file for further processing.

8. However, it subsequently emerged that during the intervening period, MoD had processed the first case with Ld AG who rendered his opinion on this SoC on 03 Sep 13. This fact was brought to the knowledge of Def Secy by the undersigned.

9. Consequently, with the approval of Hon’ble RM, it was decided that the initial SoC of 02 Apr 13 along with the Armed Forces SoC of 01 Jul 13 and the legal opinion of Ld AG dated
03 Sep 13, be resubmitted to Ld Attorney General to seek his opinion de-novo.

10. LA (Def) discussed the matter along with JS & LA with Law Secretary who opined that ‘it will not be proper to bother Ld AG again with regard to same or similar issues on which he has already tendered his opinion in detail. However, in case MoD finds any material difference between the fresh Statement of Case and the earlier one, by point of the view of its understanding, then specific legal issues, if any, may be framed on which the opinion of Ld AG is required’.

11. The views of Law Secy were put up to RM for decision. RM has asked Service HQs to submit a statement on framing of legal issues for seeking the opinion of Ld AG.

Opinion by Ld AG

12. Ld AG gave his opinion on 03 Sep 2013 on the infirmities presented to him by MoD and the following important points emerge from the opinion :-

(a) While the Armed Forces had raised six queries in their independent Statement of Case dated 01 Jul 13, only four queries were presented by MoD in its initial SoC for opinion by Ld AG.

(b) Two out of four issues so referred, namely the clause relating to “with effect from” and “extension of the ratio of the judgment to subsequent pay commissions” have been clearly accepted by Ld AG. Others have not been opined favourably.

(c) Going beyond the points referred to him, Ld AG has given guidelines on the spirit in which the court order needs to be interpreted.

Guidelines for Interpretation

13. Ld AG has dwelt and elucidated at para 21 of his opinion as to how the Hon’ble Supreme Court order should be interpreted. It
states :-

“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 deduction must be undone and pay fixed accordingly. The approach that the benefit would only apply to those who are directly covered by orders of the court would force members of the Armed Forces 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.”

14. It is important that the spirit laid down by Ld AG is followed while implementing the order of Hon’ble Supreme Court. Essentially, the
Ld AG’s opinion contains three important elements. These are: -

(a) Hon’ble Supreme Court’s order is to be implemented granting the same benefit to all similarly situated officers both in letter and spirit.

(b) The Government cannot take a restrictive view of ‘who is similarly situated’.

Issues Opined Favourably

15. Ld AG has agreed with the view of Armed Forces on the following issues: -

(a) With Effect From 1.1.1986. The issue was whether the implementation orders dated 27 Dec 12 should be implemented ‘with effect from 1.1.86’ instead of ‘as on 1.1.86’. Ld AG has opined that the Government cannot restrict the benefit of the orders only to those officers whose pay was fixed as on 1.1.1986 after deduction of rank pay in terms of para 6 (a) (ii) of SAI 1/S/87. 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.

(b) Application of Court Orders to Subsequent Pay Commissions. The issue was whether the legal principles of the judgment should be applied to subsequent pay commissions or confined to 4^th CPC only. Ld AG has opined that Government needs to implement the underlying principles laid down in Major Dhanapalan’s case in 5^th and 6^th CPC also. He has opined that it is immaterial that in Major Dhanapalan's case, only the IVth pay commission was involved. The principle of law laid down is that rank pay cannot be deducted while 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 Vth and VIth Pay Commissions cannot be expected to approach the Courts for orders in the same terms.

16. The Armed Forces endorse the views of Ld AG and have nothing more to add on these two issues.

Issues Not Opined Favourably: Changes in Minimum of Pay for Each Rank and Top of Integrated Scale of Pay

17. Ld AG has commented conditionally on the issues involving changes in the ‘Minimum’ and ‘Top’ of pay scales for the ranks in receipt of Rank Pay. These two issues are intertwined as both have the same genesis and any decision on one issue inevitably impacts the other.

18. Ld AG has stated (para 34 of his opinion), “The CGDA has indicated that the minimum of pay for each rank has not been arrived at after deduction of rank pay.” Based on this contention put forth by CGDA, Ld AG at para 36 has opined “There is no need to revise the minimum, if as stated by the CGDA, it has been fixed on another basis.”

19. From the above, it may be noted that the opinion of Ld AG is premised on the CGDA’s contention – which, as a basis in itself, is incorrect. The present Note seeks to address this principle issue since it is at gross variation to the CGDA’s contention and therefore, gives rise to the following legal issue: -

LEGAL ISSUE: To establish whether Rank Pay was deducted to fix the minimum pay of each rank and top of the pay scale for affected ranks in the integrated scale prescribed by the 4^th CPC?

20. This issue has invited attention of various agencies of the Govt a number of times during the litigation and outside it. It is a documented fact that Rank Pay has been deducted from the Pay Scale, both at the minimum and top of the scale. The following comments and views are available on record to substantiate this fact:-

(a) 6^th CPC Report. The report of the 6^th CPC accepts that rank pay was deducted from the Pay Scales of commissioned officers. While analysing the issue of Rank Pay, it has noted at Para 2.3.10 (iv) of its report that ….

“(iv) …The element of rank pay was carved out of the pay scales so revised after giving the edge vis-à-vis civilian group A officers.”

(b) Additional Affidavit by UoI. In the instant case, the Govt formed a High Powered Committee (HPC) comprising the Def Secy, Secy Expenditure and Secy Def (Fin) to assess the financial impact of implementing the order of Hon’ble Supreme Court dated 08 Mar 2010. Based on the report of the HPC, MoD submitted an additional affidavit to Hon’ble Supreme Court. Para 30 (a) of the additional affidavit reads, “In the present matter, implementing the Hon’ble Supreme Court order dated 08 Mar 2010 would mean re-fixation of not only the officers entitled to Rank Pay, but pay scales of other personnel above and below such officers would have to be revised wef 1.1.1986 firstly, and then from 1.1.1996 and 1.1.2006, i.e. at the time of subsequent pay revisions. Similar process would be carried out for the revision of pension of the retired personnel. Any change at one place will inevitably have impact on horizontal and vertical parities thereby changing the overall pay structure envisaged by the 4^th CPC.”

Analysis: The ibid Judgment of Hon’ble Supreme Court held that rank pay is in addition to pay scales. Therefore, deduction of rank pay from the pay scales needs to be undone. The UoI in the additional affidavit stated that implementing the judgment would require revision of pay scales and pensions across three pay commissions for not only the entitled officers but also those above and below them, thereby clearly indicating that the deduction of Rank Pay in 4^th CPC and its subsequent restoration would impact on the Pay Scales of 4^th, 5^th and
6^th CPC as well.

(c) Opinion of Ld SG. This issue was also referred to Ld Solicitor General by Ministry of Defence after the final disposal of the case by Hon’ble Supreme Court on
04 Sep 2012. In this case, the query referred to Ld Solicitor General by MoD had explicitly stated that the rank pay was deducted from the Minimum of the pay in the integrated pay scale.

CGDA Views in the Background Note and its analysis

21. It is relevant to examine the views of CGDA on the subject since Ld AG has based his opinion on these views.

(a) CGDA’s Contention “…These minima were not fixed after deduction of Rank Pay…” This is factually incorrect as can be seen from 6^th CPC Report para 2.3.10 (iv) which states, “…The element of rank pay was carved out of the pay scales…”

(b) CGDA’s Contention: “… the integrated scale for the Armed Forces Officers is devised considering the total service span of 23 years from Lt to Brig/Equivalent.” This is also factually incorrect as Annexure 28.1 of 4^th CPC report clearly indicates that the span extends upto 28 years and not 23 years.

22. CGDA’s Contention “…Even otherwise, comparison with civilian side is not relevant as far as the apex court order is concerned….” This contention of CGDA is again, incorrect. As a matter of fact Pay Commissions devise a common methodology for up-gradation of the pay scales across categories of employees. The manner in which comparison with civilian counterparts is relevant is as follows :-

(a) The pay scales recommended are functions of existing pay scale and the same mechanism/formula is used to revise the pay scales across various categories of government employees. Exceptions, if any, are clearly stated in the report. The 4^th CPC while devolving on internal relativities of pay scales within the government, at para 7.62 of its report, has stated, “It has to be appreciated that where an effort is made to reduce the scales of pay, it sometimes becomes inevitable that internal relativities should be affected, but we will like to maintain them as far as possible.” Therefore it can safely be assumed that 4^th CPC had tried to maintain internal relativities between various categories including Armed Forces.

(b) As 4^th CPC has attempted to maintain internal relativities, it is logical to assume that the same yardstick was used for similarly placed pay scales. On the other hand, IVth Pay commission report does not mention that it intended to disturb the pay scale relativities between the Armed Forces and their civilian counterparts. A comparison of similarly placed Commissioned Officers’ pay scales with that of the Civilian Officers’ pay scales will therefore conclusively establish that Rank Pay had been deducted from the minimum and top of the pay scales. Following example will illustrate this fact :-

(i) The pay scales of a Capt and an STS were similar and comparable before the 4^th CPC. Promotion to both these posts was time bound for both categories. On promotion to such a rank/post, if there was parity in the pay scale of Commissioned Officer (Capt) and Gp ‘A’ Service Officer (STS) before 1.1.86, their parity should have continued post 1.1.86 disregarding Rank Pay which is an additional element not forming part of pay scale. This parity has been disturbed for officers assuming this rank/post after 1.1.86 as shown below:-

Rank	Pay in 3^rd CPC Jan 1973-Dec 1985	Minimum Pay in 4^th CPC for Pre & Post 1.1.86 officers (Prior to Court verdict)	Revised Pay for Offrs promoted before 01 Jan 86	Pay for offrs who joined/ promoted after 01 Jan 86
Capt	1,200	2800	3000	2800
STS(Civ)	1100-1200	3000	3000	3000

(ii) The rank pay for Captain was ` 200. The above table clearly shows that the Captain’s pay scale after 1.1.86 is depressed by ` 200 which is equivalent to the rank pay for Capt. Similar situation exists for all other affected ranks. This conclusively establishes deduction of rank pay from the minimum pay of the rank in integrated pay scale prescribed by 4^th CPC.

23. As in the case of ‘minimum of the scale’, the rank pay has also been deducted from the ‘top of the scale’ as can be seen by comparing the pay scales of a Brigadier and his equivalent in civil who is a DIG Police. Top of the scale of a DIG Police in 4^th CPC was ` 6,150/-. But the top of the scale for Brigadier was recommended at ` 5,000/-, which had been arrived after deducting the Rank Pay of ` 1200/- i.e. 6150-1200=4950/-, rounded off to
` 5000/-. Thus the Top of the pay scale, like the Start of the Scale for Brig/equiv was also depressed in the same manner.

24. The contention of CGDA at Note 30 ante is that “if top of the integrated pay scale is changed, it would burst the next higher scale of Major General”. This contention is not based on facts as shown in the following example. In the 3^rd CPC, the existing pay scale of Brigadier on 1.1.86 was 2200-2400 while that of a DIG police was 2000-2250 with a special pay of ` 100. These two scales were therefore, comparable. In the 4^th CPC, the revised top of the pay scale of DIG police was ` 6150/- which is well below the top of scale of IG which was ` 6700. If the existing relativities of Brigadier and DIG are retained, Brigadier would have his top of the scale at least at ` 6150. This is also well below Major General top of scale of
` 6700. Thus, in no case the top of scale of Brigadier can burst the top of the scale of Major General, as contended by CGDA. The Rank Pay, which has now been clearly established, is in addition and does not form part of the pay scale and hence cannot be considered while calculating top of the pay scale.

25. CGDA’s Contention “… the minimum pay, as stipulated at para 6(a)(ii) of SAI 1/S/87 for each rank in the integrated scale of pay, was recommended by 4^th CPC”. This contention is also not correct. Such stipulation are nowhere found in the report of
4^th CPC. A copy of Annexure 28.1 is placed opposite.

Summary

26. Therefore, it can be surmised from the above facts that Rank Pay was indeed deducted from the Minimum and Top of Pay Scales thereby depressing the entire pay scales for the affected ranks. This can also be seen from the extracts of 4^th CPC report and other official communications brought out above. I would also like to refer to the order of Hon’ble Kerala High Court (quoted below) which makes it amply clear that the rank pay is in addition to the existing Pay Scales.

"Under these circumstances, I am of the view that respondents
2 and 3 had completely misunderstood the scope of extending the benefit of the payment of rank pay to the Army Officers. Rank Pay is something which has been given to Army Officers in addition to the existing pay scales. That is not an amount which has to be deducted in order to arrive at the total emoluments which an Army Officer is entitled to get."

27. It is the considered opinion of the undersigned that while the Ld AG has opined favourably in the context of the earlier two issues of ‘implementation of Court Orders wef 01 Jan 86’ and ‘application of the legal principles of the case to subsequent pay commissions’, in the light of the clarifications provided, the other two issues of Minimum and Top of Scale be also corrected and a favourable decision be given to the Armed Forces.

28. May I request the Hon’ble RM to kindly forward the above Note for Ld AG’s re-consideration in the specific two issues of Minima for each rank and Top of the Integrated scale for officers.

Chairman COSC

Aerial View

Wednesday, 5 February 2014

Statement of Case 2 for Learned Attorney General - Rank Pay

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