Aerial View : More on the DGL for MoD Corrigenda dated 24 Jul 14

Friday, 3 October 2014

More on the DGL for MoD Corrigenda dated 24 Jul 14

On line Request dated 10.6.2014

Reply dated 01.08.2014, Posted on 05.08.2014 & received on 16.8.2014

Online RTI Request Form Details

Public Authority Details:-

* Public Authority Department of Defence

Request Details:-

Citizenship Indian

* Is the Requester Below Poverty Line? No

(Description of Information sought (upto 500 characters)

* Description of Information Sought

Sir,

MoD, vide No. 35(1)/2013/D (Pay/Services) dated 23rd May 2014 provided me a photocopy of a hand corrected Draft Government Letter (DGL) No.34(10)/2013-D(Pay/Services) with no date of March 2014 in reply to my online request no. MODEF/R/2014/60846ated 01 May 2014 and received by CPIO (D-Pay/Services) on 5th May 2014.

However, MoF/DoE vide No.7/1/2014-E.III(A)/224 dated 6th June 2014 in reply to my online RTI request DOEXP/R/2014/60225 dated 13th March 2014 has stated in Para 2 that the file No. 34(10)/2013-D(Pay/Services) was received from the Ministry of Defence on 24.4.2014. The file was withdrawn by Ministry of Defence on 7.5.2014 before any decision was taken by the Ministry of Finance.

It appears that the matter was known to CPIO that MoD had been withdrawn from Mof/DoE before the ibid reply dated 23rd May 2014.

Please provide me information in terms of Section 2(f) of the RTI Act 2005 on the notings, discussions, deliberations, additional factors and related information based on which the file was withdrawn and the present status of the file.

* * * * *

Immediate

RTI matter

No. 35 (1)/2013/D (Pay/Services)

Government of India

Ministry of Defence

New Delhi, the 1^st August, 2014

Subject: Seeking information under RTI Act - 2005

Sir,

This is with reference to MoD letter of even number dated 4.7.2014 on the above subject.

2. MoD File No. 34 (10)/2013- D (Pay/Services) has since been received from Ministry of Finance (Deptt of Expenditure). The relevant notings/correspondence of file No. 34 (10)/2013-D (Pay/Services) are forwarded herewith. The corrigendum to MoD order dated 27.12.2012 has also been issued on 24.7.2014 to modify certain provisions as per advice of Ld. Attorney General, a copy of which is also forwarded herewith.

Yours faithfully,

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

(P.S. Walia)

Under Secretary & CPIO

Encl: as above (27 pages)

F No. 34 (10)/2013-D(Pay/Services)

Receipt Encl. 83-A

-84-

Ministry of Defence

D (Pay/Services)

Reference Encl 83-A.

2. The subject matter relates to examination of issues raised by the Services arising out of implementation of the Order dated 4.9.2012 of the Hon’ble Supreme Court in the Rank Pay case. Note 77 brings out the detail of the case.

3. On the two issues which were agreed to by the Ld Attorney General it was decided to amend MoD letter dated 27.12.2012 and the matter was placed before the Ministry of Finance. MoF raised certain issues vide their UO Note dated 19.3.2014 (Encl 74A). The issues/queries raised by Ministry of Finance have been examined in Note 77 (Para 5) wherein replies proposed to be given by MoD were also recorded. The matter was also brought to the notice of Defence (Finance). Their views are available in Note 79/ante. The matter being pursued in light of the opinion of Ld Attorney general has been shown to LA (Defence). He is of the view that the proposal may be forwarded to MoF for their comments as per their policy and past practice followed in the matters of like nature. In case any legal issue comes up, the same may be referred to him for his legal opinion.

4. Ministry of Finance has also sought financial implications of the proposed changes. The same has been sought from CGDA and vide their ID Note dated 24.4.2014 (Encl 83A), they have replied that for the Army and Navy, pay arrears amounting to Rs 5.75 crore would have to be paid while in case of Army certain recoveries amounting to Rs 43.35 lakhs would have to be made from concerned officers. Relevant information from Air Force has not been provided by their Pay office.

5. In light of the above, it is proposed to refer the matter to Ministry of Finance (Deptt of Expenditure) seeking their approval to the DGL placed at Encl – 77A.

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

P S Walia

24042014

Dir (AG-I)

-85-

With reference to MoF UO note dated 19.3.2014 the response to their comments/observations is prepared and is available at note 77 ante. The financial implications due to proposed modifications in DGL obtained from CGDA and indicated above. In view of the above we may forward the file for consideration and approval of Min of Finance.

Submitted for kind approval pl.

d/----------------

24.04.2014

JS (E) Sd/--------------

24.4.14

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

25/4

DS /E.III-A Sd/----------

25/4

SO E.III A

-86-

Deptt of Expenditure

E.III A

The case was discussed with Dir (AG) MoD today.

2. Based on the discussions, MoD is requested to have a fresh look at the issue and may also like to have legal opinion on the methodology for fixation of pay w.e.f. 1.1.1996, especially whether it would be in accord with the legal opinion of the Ld AG.

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

7/5/14

Dir (AG) MoD (in meeting)

US P/S Sd/-------------- 8/5/2014

-87-

Ministry of Defence

D (Pay/Services)

The matter under examination here relates to certain issues raised by the Services in the Rank Pay matter.

2. The rank pay matter (also known as Dhanapalan case) was a long pending court case relating to methodology of pay fixation w.e.f. 1.1.1986. On the basis of 4^th Pay Commission recommendations which were accepted by the Government rank pay was deducted for re-fixing pay in the revised scale for officers in the rank of Captain to Brig. Thereafter in addition to pay so fixed, rank pay was being paid in addition.

3. Initially it was only one officer, Major Dhanapalan who contended that there should not be any deduction of rank pay while fixing pay w.e.f. 1.1.1986. The Hon’ble Kerala High Court decided the case in favour of Major Dhanapalan. It was implemented for him, the sole petitioner. However, as many other officers had sought the same benefit, the issue – deduction of rank pay for fixation of pay w.e.f. 1.1.1986 – was placed before the Hon’ble Supreme Court. The Hon’ble court decided this long pending matter vide its order dated 4.9.2012 in favour of the service officers. In consultation with Ministry of Finance, Ministry of Law & Justice, CGDA and Def (Fin) orders were issued by MoD on 27.12.2012 for implementing the Supreme Court Order dated 4.9.2012. Arrears of pay/pension from 1.1.1986 with interest @ 6% p.a. w.e.f. 1.1.2006 are being paid to the relevant beneficiaries by the concerned authorities as ordered by the Hon’ble Court. However, the Services raised certain issues – as detailed hereunder – after the Supreme Court order was implemented: -

I (i) Applicability of order with effect from 1 Jan.,1986 with consequential benefits

(ii) Refixation of pay on promotions subsequent to 1.1.1986

II Revision of minimum pay for each rank

III Adjustment of top of the pay scale in 4^th CPC

IV Applicability of provisions in 5^th CPC and consequentially in 6^th CPC, in the spirit of the judgment.

4. Hon’ble RM took a meeting in the Rank Pay case on 14.6.2013 and directed that the Services Statement of case dated 2.4.2013 in this matter along with the views of CGDA, Def (Fin) and Ministry of Finance thereupon may be placed before the Ld Attorney General for his legal opinion. Accordingly a brief was prepared in MoD. The following four issues as phrased by LA (Def) were referred to Ld Attorney general for his legal opinion:

(a) Whether the MoD orders dated 27 Dec 12, have modified the Special Army Instructions 1/S/87 and corresponding Special Navy and Air Force Instructions insofar 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 05.10.1998 passed by the High Court of Kerala, instead of using ‘as on 1.1.1986’? What consequences this change in the term will entail?

(b) Whether the minimum pay for each rank given in Para 6 (a) (ii) of SAI 1/S/87 needs to be re-fixed/changed?

(c) Whether the Basic Pay ceiling of Integrated Scale in IV CPC for officers upto Brigadiers, which is Rs 5100/- also needs to be modified to give effect to the court’s orders?

(d) Since the treatment of Rank Pay while pay fixation carried out in 5^th CPC was similar to that of the 4^th CPC, whether orders of the Apex Court dated 4.9.2012 be applied to all subsequent Pay Commissions i.e. V & VI CPC under such circumstances.

5. The Learned Attorney General examined the matter and tendered his legal opinion dated 03.9.2013. The Ld AG held favourably the Services contentions on the two issues i.e. for implementation of court orders w.e.f. 01.01.1986 and application of legal principles of the case to subsequent Pay Commissions but did not agree with the remaining two issues, namely (ii) and (iii) that minimum and top of the Integrated Scale be also corrected. The Services wanted the matter again to be referred to the Ld Attorney General for reconsidering his advice on the latter two issues, but LA (Defence) having examined the matter again stated that the matter may not be referred again to the Ld Attorney General. JA & LA in M/o Law & Justice supported this move.

6. In light of the position stated above, Defence (Finance)’s comments were sought in this regard which are available in their note dated 04.03.2014 (Note 66). They supported that MoD stand that in light of the observations made by LA (Defence) the matter may not be referred back to the Ld Attorney general for his second opinion. They also agreed with MoD that the matter may be referred to MoF for their views so that the order of the Hon’ble Supreme Court dated 04.9.2012 may be implemented in accordance with the opinion of the Learned Attorney General which has been duly approved by Minister of Law & Justice. As such, the matter as emerging from the legal opinion dated 03.09.2013 tendered by the Learned Attorney General was submitted for approval of RM for referring the same to Ministry of Finance for their views.

7. MoF examined the matter and raised certain queries vide their ID Note dated 19.03.2014 (Encl 74/A). The matter was further examined in consultation with Defence (Finance) and CGDA and accordingly a further revised DGL was prepared in MoD and was referred to LA (Defence). He expressed the views that the proposal may be forwarded to MoF for their comments as per their policy and past practice followed in matters of like nature and in case any legal issue comes up, the same may be referred to him for his legal opinion. Accordingly the DGL and MoD response to their queries were again referred to the MoF on 25.04.2014 for their approval of the DGL.

8. The DGL was discussed with DS (E.IIIA)/MoF on 07.05.2014 afternoon. Director (AG.I), ACGDA, DFA (AG/PA) and the undersigned attended the meeting. DS (E.III A)/MoF pointed out that the required DGL should be limited in its application in the present matter strictly with reference to the legal opinion tendered by the Ld AG. As the said legal opinion favoured applicability of the orders dated 4.9.2012 of the Hon’ble court w.e.f. 1.1.1986 and not as on 1.1.1986 amendment proposed in the DGL on this counts seems appropriate. However on the issue of applicability of the same methodology of pay fixation (without deduction of Rank Pay) w.e.f 1.1.1996, the following views emerged from the discussion: -

In the illustrative examples given in the file, the methodology proposed to be applied w.e.f 1.1.1996 does not appear to be similar as to the one adopted for pay fixation w.e.f. 1.1.1986 as much as the legal opinion of the Ld Attorney General only approves applicability of provisions as ordered by the Hon’ble Court. As such the only change which is required in the existing methodology of pay fixation w.e.f. 1.1.1996 is the removal of the step deducting rank pay there from. The existing rank pay and benefits thereupon (DA, IR etc) may thus, continue to remain in the revised methodology as well. In this context, another illustrative statement is placed in the file beside the existing one. This will, MoF suggests, that the Government has fully implemented the Hon’ble Court’s Order at the subsequent pay revision w.e.f. 1.1.1996 (i.e. 5^th CPC) and as advised by the Ld Attorney General without any dilution of the intentions of the Hon’ble Court.

MoF is also of the view that as rank pay has been taken as part of basic pay, as defined in the relevant SAI dated 19.12.1997 it is apt to include it in the proposed methodology. In subsequent Pay Commission (i.e. 6^th CPC) rank pay plus basic pay were collectively multiplied by a factor of 1.86 to arrive at pay in the relevant pay band. As such, rank pay and benefits thereupon should continue to be included in the proposed methodology as well was the view of the MoF.

A view similarly expressed by MoF that the proposed DGL should only be limited to amend the SAI dated 19.12.1997 and relevant special instructions of Air Force and Navy for only amending the methodology of pay fixation of the concerned officers when transiting from 4^th CPC to 5^th CPC regime as suggested above. No other changes like changing the formula/methodology of calculation of NPA should be included in the proposed amendment as such changes do not appear to flow from the Ld AG legal opinion.

9. In light of the above facts MoF expressed views that the proposed amendment to MoD letter dated 27.12.2012 should be strictly in line with the legal opinion dated 3.9.2013 tendered by the Ld Attorney General. It was also suggested by the concerned officer in MoF that it would be better if the draft amendment proposed by MoD incorporating the suggestions above may also be shown to the Ld AG to ensure that the proposed amendments are in line with the views expressed by him in his legal opinion dated 3.9.2013. MoF also desired that before the matter is referred back to them, MoD should also indicate the financial implications arising from the changes proposed above. This information has been asked from CGDA and would be placed in the file before the matter is referred back to MoF.

10. In light of the above position, a revised DGL has been prepared and is placed opposite for perusal of JS (E). However, it is felt that including the tehn existing rank pay and benefits thereupon in the revised methodology of pay fixation w.e.f. 1.1.1996 – as suggested by MoF – would amount to double benefit to the concerned officers as they are also being paid rank pay at the revised rates in addition to the basic pay. This approach would not be in conformity with Rule 7 (C) of the CCS (Revised Pay) Rules 2008. But not including rank pay and benefits thereupon in the revised methodology would require redefining rank pay. It is seen that the matter could be resolved by deducting pre-revised rank pay instead of revised rank pay. Therefore, it is proposed that this option should also be examined by Def (Fin) before the matter is placed before the Learned Attorney General, as desired by MoF.

11. It is therefore proposed that the DGL revised as per the suggestions/views of MoF may now be referred to Defence (Finance) for their approval/vetting of the same. They may also examine the option given in the preceding para. Thereafter the matter would be submitted to RM for his approval for making a reference to Ministry of Finance.

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

(P. S. Walia)

Under Secretary

08.05.2014

Director (AG.I)

On next page pl

-88-

Noting on pre-page regarding Rank Pay case (Major Dhanapalan case) may kindly be referred.

2. The above case was referred to Ministry of Finance (MoF) for their approval. The file was received with certain observations/comments of MoF, including reference to Rule 7 (b) of CCS (Pay Revision) Rules 1997. The case was again examined in this ministry and file was forwarded with reply to their comments. The DGL was revised, since it was found that Rule 7 (b) has relevance only to fixation of Pay with reference to Sixth CPC as Rank Pay was included for pay fixation as on 1.1.2006. However, it was felt that Rule 7 (c) of CCS (Pay Revision) Rules 1997 was more closer to Pay fixation under 5^th CPC because Rank Pay was revised separately (Rs 200 to Rs 400 in case of Captain) and also included as part of basic pay while calculating fitment in new scale, thus resulting in double counting or revision. Thus, DGL was revised and forwarded to MoF along with reply to their observations.

3. As stated in para of the above note, during the above discussion in MoF on 6^th May 2012 (2014?), it was observed that in case the proposed DGL, as was revised in MoD, is followed, then it would require affecting change in definition in ‘Basic Pay’ and also result in recovery in a number of cases. This might be termed as twisting, modification in basic definition in order to avoid benefit of Court Orders, therefore, it was felt that the DGL may be revised again and may be proposed without resulting change in definitions etc. The revised financial implications may be worked out and Legal opinion of may be obtained in order to confirm that the revised proposal shall meet the basic principle set by the Hon’ble court and is as per advice of Ld. AG.

4. Therefore, in view of the above, revised proposals & DGL is submitted for kind approval. The file also needs to be forwarded to Defence (Finance) for their concurrence and Legal Advisor for their opinion on the proposal.

Submitted for kind consideration and approval.

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

Pradeep Kumar

09/05/14

Director (AG-I)

Joint Secretary (E) Sd/------------ 9-5-14

AS (B) Sd/------------ 13/5

Defence Secretary OK, Please follow it up closely Sd/---------

13/5

(R K Mathur)

Defence Secretary

AS (B) Sd/------- 15/5

JS (E) Sd/---------- 15-5-14

Dir (AG-I) – in meeting

US P/S

-89-

- Referring note on pre page and approval of Defence Secretary on pre-page

- Forwarded for necessary action as per approval pl

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

15/04/14

DFA – AG/PA, MoD (Finance) Sd/----- 15/5/14

AFA (AG/PA)

-90-

Ref: Preceding mote nos. 87-89/ante recorded by MoD/D (Pay/services) on Air HQ file No. Air HQ /25450/1/Lgl.

2. The case relating to issuance of a Corrigendum in respect of MoD letter dated 27.12.2012 (vide which Supreme Court order dated 04.09.2012 in the Rank Pay matter was implemented by MoD) has been examined in the light of views expressed by Ministry of Finance (MoF) (Department of Expenditure) during discussions held with representatives of MoD, MoD (Fin) and CGDA on 07.05.2014.

3. This Division is of the opinion that the views expressed by MoF appear to be logical and in accordance with the legal opinion of Ld Attorney General. Therefore, this Division concurs in the revised draft Corrigendum/DGL (Encl 87-A), which is found to be in order. Accordingly, MoD/D (Pay/Services) may take further necessary action in this matter.

4. This has the approval of FA (DS).

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

(K K Sinha)

AFA (AG/PA)

20.05.2014

Director (AG-I) MoD Sd/-------- 20.5.14

US (P/S) Sd/-------------- 20/5/2014

-91-

Ministry of Defence

D (Pay/Services)

Issues raised by the Services in the Rank Pay matter are being considered in the instant file.

2. The rank pay matter (also known as Major Dhanapalan case) was along pending court case relating to the methodology of pay fixation w.e.f. 1.1.1986. On the basis of 4^th Pay Commission recommendations which were accepted by the Government, rank pay was deducted for re-fixing pay in the revised scale for officers in the rank of Captain to Brig. Thereafter in addition to pay so fixed, rank pay was being paid in addition.

3. Initially it was only one officer in Army, Major Dhanapalan who contended that there should not be any deduction of rank pay while fixing pay w.e.f. 1.1.1986. The Hon’ble Kerala High Court where Major Dhanapalan had raised this issue decided the case in favour of the petitioner. Later it was implemented for him after the Division Bench of the Kerala High Court as well as the Supreme Court rejected department appeals. However, as many other officers had also sought the same benefit, the basic issue – deduction of rank pay as recommended by 4^th CPC and accepted by the Government for fixation of pay w.e.f. 1.1.1986 – was placed before the Hon’ble Supreme Court. The Hon’ble Court decided this long pending matter vide its order dated 4.9.2012 in favour of the service officers. In consultation with Ministry of Finance, Ministry of Law & Justice, CGDA and Def (Fin) orders were issued by MoD on 27.12.2012 for implementing the Supreme Court Order dated 4.9.2012. Arrears of pay/pension from 1.1.1986 along with interest @ 6% p.a. w.e.f 1.1.2006 are being paid to the relevant beneficiaries by the concerned authorities as ordered by the Hon’ble court. However the Services raised certain issues – as detailed hereunder – even after the Supreme Court Order was implemented: -

I (i) Applicability of order with effect from 1 Jan.,1986 with consequential benefits

(ii) Refixation of pay on promotions subsequent to 1.1.1986

II Revision of minimum pay for each rank

III Adjustment of top of the pay scale in 4^th CPC

IV Applicability of provisions in 5^th CPC and consequentially in 6^th CPC, in the spirit of the judgment.

(b) Whether the minimum pay for each rank given in Para 6 (a) (ii) of SAI 1/S/87 needs to be re-fixed/changed?

(c) Whether the Basic Pay ceiling of Integrated Scale in IV CPC for officers upto Brigadiers, which is Rs 5100/- also needs to be modified to give effect to the court’s orders?

5. The Learned Attorney General examined the matter and tendered his legal opinion dated 03.9.2013. The Ld AG held favourably the Services contentions on the two issues (a) and (d) i.e. for implementation of court orders w.e.f. 01.01.1986 and application of legal principles of the case to subsequent Pay Commissions but did not agree with the remaining two issues, namely (b) and (c) that minimum and top of the Integrated Scale be also corrected. The Services wanted the matter again to be referred to the Ld Attorney General for reconsidering his advice on the latter two issues, but LA (Defence) having examined the matter again stated that the matter may not be referred again to the Ld Attorney General. JA & LA in M/o Law & Justice supported this move.

6. Defence (Finance) supported the MoD stand that in light of the observations made by LA (Defence) the matter may not be referred back to the Ld Attorney General for his second opinion. They also agreed with MoD that the matter may be referred to MoF for their views so that the order of the Hon’ble Supreme Court dated 04.09.2012 may be implemented in accordance with the opinion of the Learned Attorney General which has been duly approved by Minister of Law & Justice. As such, the matter emerging from the legal opinion dated 03.09.2013 tendered by the Learned Attorney General was submitted for approval of RM for referring the same to Ministry of Finance for their views.

7. MoF examined the matter and raised certain queries vide their ID Note dated 19.03.2014 (Encl 74/A). The matter was further examined in consultation with Defence (Finance) and CGDA and accordingly a further revised DGL was prepared in MoD and was referred to LA (Defence). He expressed the views that the proposal may be forwarded to MoF for their comments as per their policy and past practice followed in the matters of like nature and in case, any legal issue comes up, the same may be referred to him for his legal opinion. Accordingly the DGL and MoD response to their queries were again referred to the MoF on 25.04.2014 for their approval of the DGL.

8. The DGL as prepared by MoD was discussed with DS (E.IIIA)/MoF on 07.05.2014 afternoon. Director (AG.I), ACGDA, DFA (AG/PA) and the undersigned attended the meeting. DS (E.IIIA)/MoF pointed out that the required DGL should be limited in its application in the present matter strictly with reference to the legal opinion tendered by the Ld AG. As the said legal opinion favoured applicability of the orders dated 4.9.2012 of the Hon’ble Court “w.e.f.1.1.1986” and not “as on 1.1.1986” amendment proposed was taken as appropriate. However on the issue of applicability of the same methodology of pay fixation (without deduction of Rank Pay) w.e.f. 1.1.1996, the following views emerged from the discussion: -

In the illustrative examples given in the file, the methodology proposed to be applied w.e.f 1.1.1996 does not appear to be similar as to the one adopted for pay fixation w.e.f. 1.1.1986 as much as the legal opinion of the Ld Attorney General only approves applicability of provisions as ordered by the Hon’ble Court. As such the only change which is required in the existing methodology of pay fixation w.e.f. 1.1.1996 is the removal of the step deducting rank pay there from. The existing rank pay and benefits thereupon (DA, IR etc) may thus, continue to remain in the revised methodology as well. In this context, another illustrative statement is placed in the file beside the existing one. This will, MoF suggests, that the Government has fully implemented the Hon’ble Court’s Order at the subsequent pay revision w.e.f. 1.1.1996 (i.e. 5^th CPC). This would be as advised by the Ld Attorney General without any dilution of the intentions of the Hon’ble Court.

9. In light of the above facts MoF expressed views that the proposed amendment to MoD letter dated 27.12.2012 should be strictly in line with the legal opinion dated 3.9.2013 tendered by Ld Attorney General. It was also suggested by the concerned officer in MoF that it would be better if the draft amendment proposed by MoD incorporating the suggestions above may also be shown to the Ld AG to ensure that the proposed amendments are in line with the views expressed by him in his legal opinion dated 3.9.2013. MoF also desired that before the matter is referred back to them MoD should also indicate the financial implications arising out of the changes proposed above. The information is still awaited from CGDA and would be placed on file when the matter is referred back to MoF.

10. Taking cognisance of the views emerging from the meeting on 7.5.2014 in the MoF, the DGL was further revised by MoD.

11. The position emerging above was brought to the notice of Defence Secretary and the matter was referred to Def (Fin). Def (Fin) has given their opinion (Note-90) in the matter expressing that MoF views appeared to be logical and in accordance with the legal opinion of the Ld Attorney General. DGL (Encl: 87) was also concurred to.

12. In light of the position stated above it is proposed that the DGL prepared by MoD and approved by Def (Fin) which is in line with the MoF may now be referred to the Ld Attorney General for his approval through the office of LA (Def). This is as per line of action proposed by MoF in the meeting on 7.5.2014.

Submitted for approval of JS (E)

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

(P S Walia)

Under Secretary

21.05.2014

Director (AG-I)

-92-

The note 75 onwards may kindly be referred as has been mentioned above with regard to comments/observations of MoF, Defence (Finance) and their reply, along with the issues discussed during a meeting in MoF on 07.05.14.

- The DGL has now been revised and has been vetted by Defence (Fin) also. As desired by MoF and also approved by Defence (Secretary) we may send the file through LA (Defence) to Ld AG for his approval before forwarding to MoF for their approval.

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

21.05.14

JS (E) Sd/-------------- 21/05/14

-93-

LA (Defence)

-94-

May pl be discussed by Dir (AG-I)

Sd/--------- 21-5-14

LA (Defence) Sd/--------------- 28 5 14

Air HQ/25450/1/Lgl

-95-

Dy No. 1418/XIV/LA (Def)

Ministry of Law & Justice

Department of Legal Affairs

The proposed draft corrigendum relating to the implementation of the Apex Court order dated 4^th September 2012 in IA No. 9 of 2010 in Transfer Petition (C) No. 56 of 2007 Union of India and Others vs N K Nair & others has been perused and discussed with the concerned Director and Under Secretary. It has been observed that the formulation which is being inserted for the existing para 5 (a) (ii) is not giving an appropriate meaning. The same is required to be reformulated so as to reflect the proper intention of the Ministry of Defence. Further, the sentence at the end of para (iv), being inserted in place of the existing para 7 needs to be deleted as shown with pencil in the draft.

2. Para (v) related to the replacement of the existing Para 8, which provides that there shall be no change in respect of Special Instructions of Army, Navy and Air Force issued on 11.10.2008 (Army) and 18.10.2008 (Navy and Air Force) for implementation of the recommendations of the 6^th Central Pay Commission, except to the extent of the need for re-fixation of pay w.e.f. 01.01.2006, necessitated due to re-fixation of pay w.e.f. 1.1.1986 and 1.1.1996 in terms of these orders.

3. Subject to the changes made above, the proposed draft corrigendum appears to be formally in order. In this regard, there appears to be no legal objection. However, the final concurrence of the Ministry of Finance, Department of Expenditure may be obtained before finalising and issuance of the corrigendum.

3. In view of the above, there appears to be no legal requirement of showing the draft corrigendum to the Ld AG.

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

(M S Tariq)

Legal Adviser (Defence)

02.06.2014

JS (E) Sd/----------------- 2-6-14

(Navin K Choudhary)

Dir (AG-I)

File No. 34(10)/2013. D (Pay/Services)

-96-

The proposal in the file deals with the implementation of orders of the Hon’ble Court in the case of Major A K Dhanapalan, also referred as ‘Rank Pay Case.’ Noting on pre-pages may kindly be seen in this regard and for background and history of the case.

2. It may be mentioned here than on the four issues, as mentioned in para 3-5 of the note 91, legal opinion of the Ld Attorney General was obtained. Ld AG in his legal opinion held that two issues (a) and (d) i.e. replacement of ‘as on 1.1.1996’with ‘w.e.f. 1.1.1986’ and ‘applicability of legal principle of the case to subsequent Pay Commission’, but did not agree with the two remaining issues namely (b) and (c) that minimum and top of the Integrated Pay Scale be also corrected.

3. The matter was last referred to Department of Expenditure (DoE), Ministry of Finance (MoF), vide note 84 ante, for approval of the DGL at their end. Approval of Hon’ble RM is also available vide note 69 for forwarding the case for approval of Ministry of Finance. The reply to comments/observations of DoE, MoF received vide UO Note dated 19.03.2014 has also been furnished vide note 77. The latest comments of DoE, MoF may kindly be seen at note 86-ante, wherein the case and the proposed DGL was discussed with them.

4. Based on discussion in DoE, MoF, as stated above, the DGL was revised and the same has been concurred by defence (Finance) vide Note 90-ante. Thereafter legal opinion on the same has also been obtained vide Note 95. In order to bring clarity the small correction as suggested by Legal Adviser has been incorporated in the proposed DGL (Encl 96 A).

5. It is also mentioned here that with the implementation of the orders of the Hon’ble Court and as opined by Ld AG, as stated above, the estimated financial implication would be around Rs 340 crore due to payment of arrears resulting from revision of pay, leave encashment, terminal gratuity etc and interest @ 6% p.a. as has been ordered by the Hon’ble Supreme Court.

6. Submitted for kind consideration and approval for forwarding the case to Department of Expenditure, Ministry of Finance for approval at their end.

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

(Pradeep Kumar)

Director (AG-I)

JS (E) Sd/-------------- 4/6

JS (Pers), DoE, Ministry of Finance

May please see in date(?) Sd/------------

DS/E III A Sd/-------------------- 5/6

JS (Pers) Sd/----------------5.6.14

DS E III A

SO E III A Sd/------------ 5/6

-97-

Ministry of Finance

Department of Expenditure

Reference: Note 96 of Ministry of Defence recorded on their file No.

34 (10)/2013 – D (Pay/Services) LF No. 34 (2)/2013- D (Pay/Services)

Ministry of Defence may please refer to the aforesaid note, proposing issue of a revised DGL amending the previous Order issued by Ministry of Defence on 27.12.2012, relating to implementation of the order of the Hon’ble Supreme Court dated 4.9.2012 in regard to the Rank Pay case.

2. The draft DGL of the Ministry of Defence proposes to amend the sanction letter dated 27.12.2012 in the following two respects based on the advice of the Ld. Attorney General as contained in his opinion dated 3/9/2013:

(i) To substitute the words “as on 1.1.1986” as per para 1(i) of the draft revised DGL, by the words “with effect from 1.1.1986,” and

(ii) To provide re-fixation of pay with effect from 1.1.1996 in the context of revised pay scales based on the 5^th Central Pay Commission, without deduction of Rank Pay as earlier provided in the Special Army Instruction dated 19.12.1997 and the corresponding Instructions in case of Navy and Air Force.

3. The matter has been considered in the light of the points brought out by the Ministry of Defence as well as the advice of LA (Defence) dated 2.6.2014 contained in Note 95 of the aforesaid file of Ministry of Defence.

4. So far as the first issue, as mentioned in para 2 (i) above is concerned, Ministry of Defence has clarified that such a modification will have no additional financial liability so far as fixation of pay with effect from 1.1.1986 till 31.12.1995 is concerned. In other words, there would be no extra financial implications on this account other than the implications already incurred on issue of the order dated 27.12.2012 for re-fixation of pay with effect from 1.1.1986 on account of switch over from 3^rd CPC to 4^th CPC pay scales.

5. As regards the second issue contained in para 2 (ii) above, it is seen that the same is in accordance with advice of Ld. AG. The advice of LA (Defence) dated 2.6.2014 is also that there is no legal objection in this regard.

6. Accordingly, this Ministry concurs in the proposal of the Ministry of Defence and also in the revised DGL prepared by the Ministry of Defence.

7. This issues with the approval of Hon’ble Finance Minister.

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

09.07.14

(Manoj Kumar)

Under Secretary

Ministry of Defence (Joint Secretary (E) South Block, New Delhi

MoF, Doe, UO No. 94466/E.III(A)/2014 dated 09-07-2014

-98-

The concurrence of MoF to our proposal in the case of Major Dhanapalan, also know as ‘Rank Pay Case’ may be seen on pre-page. This settles the long pending issue. DGL as concurred by LA (Defence) as well as MoF will be issued accordingly.

Sd/-----------9.7.14

(Navin K Choudhary)

AS (B) Sd/----------- 10/7

Defence Secretary

-99-

For kind approval. DGL shall be issued after vetting by MoD (Fin)

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

(R K Mathur)

Defence Secretary

10/7

R M Sd/------------ 15/7

Def Secy Sd/------- 15/7

AS (B)

JS (E) Sd/--------- 16/7/14

Dir (AG-I)

-100-

As approved by Hon’ble RM, the DGL is forwarded for vetting and countersignature pl. MoF has already concurred for the case.

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

16.07.14

Pradeep Kumar

Director (AG-I)

Def (Finance) – AG/PA

-101-

Ministry of Defence (Finance)

(AG/PA)

Ref: preceding note nos. 91 -100/ante recorded on Air HQ File No. Air HQ/25450/1/Lgl. Another relevant file of MoD viz. No PC 34 (2)/2013 – D (Pay/Services) is also linked herewith.

2. The revised draft Corrigendum/DGL (Encl 96-A) in respect of MoD letter dated 27.12.2012 [vide which Hon’ble Supreme Court order dated 04.09.2012 in the Rank Pay matter was implemented by MoD], as concurred in by the Ministry of Finance (MoF) (Department of Expenditure) vide their UO Nre dated 09.07.2014 (Note 97/ante) has been perused/examined in this Division. The same is also concurred in by this Division and has accordingly been vetted.

4. FA (DS) has seen and approved.

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

( K K Sinha)

AFA (AG/PA)

23.07.2014

Director (AG-I) MoD

-102-

For n/a please

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

23.07.14

-103-

Issue Encl 103/A

* * * * *

BY REGD POST ACK DUE – RTI MATTER

SYS/MoD/RTI/ 8^th September 2014

To,

(1) Shri Pradeep Kumar,

Director (AG –I) & Appellate Authority,

Ministry of Defence,

Room No. 102 Sena Bhavan,

New Delhi – 110011

(2) Shri P S Walia,

Under Secretary & CPIO

D – Pay/Services,

Ministry of Defence,

Sena Bhavan, New Delhi – 110011

NOTICE REQUIRED TO BE SERVED PRIOR TO LODGING SECOND APPEAL AS REQUIRED BY CENTRAL INFORMATION COMMISSION ORDER

Sir,

Please refer to

1.1. Order vide No. 35 (1)/2013/D (Pay/Services) dated 28^th August 2014, postmarked despatch on 1^st September 2014 and received by me on 3^rd September 2014 in reference to First Appeal No. MODEF/A/2014/60185,

1.2. Request for information to US (D-Pay/Services) & CPIO reference number MODEF/R/2014/61069 dated 10^th June 2014 and incomplete reply vide ibid file number dated 1^st August 2014 and received on 16^th August 2014,

2. Vide intimation of even reference dated 18^th August 2014 and quoted in Order by Appellate Authority, the CPIO and also the Appellate Authority were informed that the following information germane to the issue of Rank Pay corrigendum, though quoted in the MoD’s file notings, has not been provided by CPIO: -

Encl 74 A, notes 66 to 82, Encl 83A, and illustrations mentioned in Note 87

3. The MoD’s ibid Order dated 28^th August 2014 does not redress the issue of incomplete information, concise details of which were provided in letter dated 18^th August 2014.

4. If the information held back is not provided, it is my bounden duty to inform you, as required by CIC, that I intend to lodge a complaint under Section 18 and a prayer for action under Section 20 of the RTI Act, 2005 within 90 days from 16^th August 2014.

5. It is well settled that for complete information to be provided, the CPIO as well as Appellate Authority must apply their minds to the facts before them. Therefore, for denying the complete information and the Order, a complaint under Section 18 (e), & (f) is proposed to filed with a prayer to the CIC for action under Section 20, within the 90 days time permitted by the RTI Act, 2005 from date of receipt of information: -

(e) “who believes that he or she has been given incomplete, misleading or false information under this Act,” and

(f) “in respect of any other matter relating to requesting or obtaining access to records under this Act have been infringed

6. As original copies of RTI online request for information no. MODEF/R/2014/61069, RTI Online First Appeal no. MODEF/A/2014/60185 and the replies thereof are available on MoD files, photocopies are not being enclosed with this notice but will be attached with the complaint which is being prepared.

Yours faithfully,

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

(S Y Savur)

Nil Enclosures

* * * * *

Reply received by Speed Post on 01 Oct 14

No. 35 (1)/2013/D (Pay/Services)

Government of India

Ministry of Defence

New Delhi, the 25^th September 2014

To, ………………….

Subject: Seeking information under RTI Act, 2005

Sir,

Reference your letter dated 8.9.2014 on the above subject.

2. The information sought in para 2 of your letter dated 8.9.2014 is enclosed.

Yours faithfully,

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

25.09.14

(V. N. Raveendran)

Under Secretary & CPIO

Encl: as above (28 pages)

F No. 34 (10)/2013-D (Pay/Services)

-66-

Ref: Preceding note Nos. 61-65/ante recorded by MoD/D (Pay/Services) on Air HQ’s file No. Air HQ/25450/1/Lgl.

2. The case relates to certain issues arising from implementation of Hon’ble Supreme Court order dated 04.09.2012 in IA No. 9 of 2010 in Transfer Petition (C) No. 56/2007 in Rank Pay case.

3. It is observed that MoD/D (Pay/Services) have proposed that in view of the legal opinion given by LA (Def), the instant case need not be referred to Ld Attorney General for his second opinion in the matter and the case may now be referred to Ministry of Finance (MoF) for further necessary action in the matter. It is also seen that MoD/D (Pay/Services) have proposed to obtain approval of Hon’ble RM in this regard. The case has, however, been referred to this Division for comments.

4. The matter has been examined in this Division. This Division also endorses the stance of MoD/D (Pay/Services) that in view of the advice rendered by LA (Def), there is no case for referring the matter to Attorney General again for his second opinion. As such, this Division is in agreement with the proposal of MoD/D (Pay/Services) that the case may now be referred to MoF for further necessary action in respect of the issues [i.e. issue (i) and issue (iv) relating to non-deduction of Rank Pay in V CPC dispensation] on which the Attorney General has agreed to the views of the Services.

5. As regards the points raised by Chairman, CoSC & CAS, this Division has already furnished its comments earlier vide ID Note No. 1(76)/2013-AG/PA dated 09.12.2013. This Division has no further comments to offer in the matter.

6. This has the approval of FA (DS).

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

(K. K. Sinha)

AFA (AG/PA)

04.03.2014

Director (AG-I), MoD

ID Note No. 1(76)/2013-AG (124-PA)-II dated 4.3.2014

-67-

In view of the above, case required to be put up for approval of Hon’ble RM.

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

04.03.14

-68-

Notes 61 ante onwards refer.

2. The matter under examination in this file relates to the issues raised by the Services in the Rank Pay case. In a meeting taken by RM on 14.06.2013 he directed the Services Statement of Case dated 02.04.2013 alongwith the views of CGDA, Defence (Finance) and Ministry of Finance may be placed before the Learned Attorney General for his legal opinion. Briefly speaking, the four issues phrased by LA (Def) in his brief to the Ld Attorney General for his legal opinion were as under: -

(i) Whether the MoD orders dated 27 Dec 12 have modified the Special Army Instructions 1/S/87 and corresponding Special 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 01.01.1986. Whether the term ‘with effect from 1.1.1986’ should be used as given in the Single Bench’s order dated 05.10.1998 passed by the High Court of Kerala, instead of using ‘as on 01.01.1986’? What consequences this change in the term will entail?

(ii) Whether the minimum pay for each rank given at Para 6 (a) (ii) of SAI 1/S/1987 needs to be re-fixed/changed?

(iii) Whether the Basic Pay ceiling of integrated scale in IV CPC for officers upto Brig/equal, which is Rs 5100/- also needs to be modified to give effect to Court orders?

(iv) Since the treatment of Rank Pay while pay fixation carried out in 5^th CPC was similar to that of the 4^th CPC, whether orders of the Apex Court dated 04.09.2012 be applied to all subsequent Pay Commissions i.e. V & VI CPC under such circumstances.

3. The Learned Attorney General examined the matter and tendered his legal opinion dated 03.09.2013 (in F No. 34(2)/2013-D (Pay/Services linked below). The Ld AG holding favourably the Services’ contentions on the two issues (i.e. (i) and (iv) above) for implementation of court orders w.e.f. 01.01.1986 and application of legal principles of the case to subsequent Pay Commissions, did not agree with the two remaining issues, namely (ii) and (iii) that minimum and top of the Integrated Scale be also corrected.

4. In this context, Chairman CoSC & CAS expressed his considered opinion that while the Ld Attorney General has opined favourably in the context of the two issues, the other two issues should again be referred to the Learned Attorney General for reconsideration.

5. With the approval of RM (Note 47), CGDA, Defence (Finance) and Ministry of Finance were asked to offer their comments on the points raised by the Chairman, CoSC & CAS. The requisite comments/views received from CGDA, Defence (Finance) and Ministry of Finance are available in the file at Flags A, B and C respectively. These views were laid out in note 52 and brought to the notice of RM before the matter was referred back to the Learned Attorney General for hs opinion on the two remaining issues as stated above at (ii) and (iii).

6.1. The matter has been examined by LA (Defence) in consultation with JS & LA in M/o Law & Justice as explained in the detailed (mis-spelt as derailed) note dated 03.02.2014 (Note 59). Quoting from the comments of CGDA/Defence (Finance)/Ministry of Finance, the following observations have been made on the two issues (ii) and (iii) above in para 1: -

(ii) Revision of minimum pay for each rank: The minimum pay for each rank in the integrated scale was recommended by 4^th CPC. These minima were not fixed after deduction of rank pay.

(iii) Adjustment at the top of the pay scale in 4^th CPC: On the Services point that now with no deduction of Rank Pay, senior Cols and Brigs/eq would not get the full pay fixation benefit (20% of emoluments), it has been noted that a proposal to grant Personal Pay in such cases was initially made by MoD but was not agreed to by MoF. Further, there is no court order directing the change on the integrated pay scale. In case the demand of changing the integrated scale is met, the pay scale of next senior officers will get burst (sic), disturbing the horizontal and vertical relativity of pay scales on Services side, para-military and civilian side as well.

6.2. In light of the above stated factual and legal positions, the two issues as mentioned above on which the Ld Attorney General has already tendered his legal opinion dated 3.9.2013 may not be referred again to him, LA (Def) has proposed in his detailed note dated 3.2.2014 (note 59). JS & LA in Ministry of Law & Justice approved this proposal.

7. Defence (Finance)’s comments have also been sought in this regard which are available in their note dated 04.03.2014 (Note 66). They have supported that MoD stand that in light of the observations made by LA (Defence), the matter may not be referred back to Ld Attorney General for his second opinion. They have also agreed with MoD that the matter may now be referred to MoF for their views so that the order of the Hon’ble Supreme Court dated 04.09.2012 may be implemented in accordance with the opinion of the Learned Attorney General which has been duly approved by Minister of Law & Justice.

8. In light of the position stated above, the matter as emerging from the legal opinion dated 03.09.2013 tendered by the Learned Attorney General is submitted for approval of RM for referring the same to Ministry of Finance for their views.

9. A DGL is under preparation in consultation with CGDA and would be added to this file before forwarding to MoF.

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

(P. S. Walia)

Under Secretary

05.03.2014

Director (AG-I)

-69-

This refers to four issues related to Rank Pay case, framed for advice of Ld ASG (actually Ld AG) for his legal opinion. Noting on pre-pages may kindly be seen in this regard. As desired the comments of Defence (Finance) have been obtained and are available on Note 66 ante. As stated in advice of Defence (Finance) and under Para 8 above, approval of RM is requested for forwarding the case to Ministry of Finance for their views/comments on the same.

Submitted please. Sd/----------------

05.03.14

JS (E) – out for a meeting

AS (A) Sd/------------ 5/3

Defence Secretary Sd/-------7/3

(R. K. Mathur)

Defence Secretary

RM Sd/------------7/3

Def Secy ---------- in meeting

AS (A)

JS (E) Sd/----10/3

-70-

Issue (MoD ID Note dated 05.03.2014) Encl 70A

-71-

Receipt (CGDA ID Note dated 05.03.2014) Encl 71A

-72-

Receipt (CGDA ID Note dated 10.03.2014) Encl 72A

-73-

Notes 68-69 refer. The matter related to the issues raised by the Services in Rank Pay case. With approval of RM it has been decided to refer this matter with a DGL to the Ministry of Finance. A copy of the DGL drafted by CGDA is available at Encl 72.

2. The DGL seeks to amend MoD letter dated 27.12.2012. It has been gone through and appears to be correctly drafted except for the following: -

“The position being amended in SAI dated 19.12.1997 relating to 5^th CPC has to be clarified to the extent that in line with the procedure adopted at the time of 4^th CPC as ordered by the Hon’ble Court, the same procedure would be adopted at the time of 5^th CPC. In the calculation for corresponding pay fixation existing rank pay and benefits thereon (DA, IR and 40% cushion) would not be taken into account and Rank Pay would also not be deducted. After the basic pay is fixed, Rank Pay as revised would be indicated separately.”

3. In view of the facts stated above, the matter as approved by RM may now be placed before the Ministry of Finance for their approval.

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

(P. S. Walia)

Under Secretary

11.03.2014

Director (AG-I) Sd/--------11.03.2014

JS (E) Sd/---------11/3

JS (Pers)/MoF Sd/---------11.3.14

DS/E.IIIA Sd/---------11/3

SO E.III.A

-74-

Receipt E-74/A

Ministry of Finance

Department of Expenditure

Reference: Note 73 of Ministry of Defence recorded on their file No. Air HQ/25450/1/Lgl

Ministry of Defence may please refer to their aforesaid note, proposing issue of a revised Government sanction amending the previous sanction issued by Ministry of defence on 27.12.2012, relating to implementation of the order of the Hon’ble Supreme Court dated 4.9.2012 in regard to the Rank Pay case.

2. The proposed sanction, as prepared by the office of CGDA vide their note dated 10.3.2014, proposes the following two main modifications: -

(i) The first modification is that the words “as on 1.1.1986” occurring in para 6 of the previous sanction dated 27.12.2012 would be substituted by “w.e.f. 1.1.1986” and

(ii) The non-deduction of Rank Pay would also be allowed at the time of fixation of pay w.e.f. 1996 at the time of fitment in the revised pay scales based on 5^th Central Pay Commission.

3. The above two modifications have been proposed based on the advice of the Ld AG dated 3.9.2013. This Ministry agrees with the stand of the Ministry of Defence that action based on the advice of the Ld AG needs to be taken.

4. In regard to the first issue at para 2 (i) above, the Ld AG in Para 31 of his aforesaid opinion dated 3.9.2013 stated that “…..grant benefit to all those officers whose pay has been fixed after deduction (of) Rank Pay whether as on 1.1.1986 or on after 1.1.1986. This must be done after properly verifying the facts.” In view of this, while intimating the comments, this Ministry vide ID Note of even no. dated 12.12.2013 sent to the Ministry of Defence, requested M/o Defence that information in this regard after verifying facts as mentioned by the Ld AG may be sent to this Ministry, if any further reference is required. However, there is no indication in the reference of the Ministry of Defence as to whether such verification has been done by them.

5. Therefore, in order to enable this Ministry to appreciate the issue in the light of the Order of the Hon’ble Supreme Court and the advice of the Ld AG, the following points need clarity: -

(i) What action has been taken by M/o Defence to verify facts, as stated by the Ld AG as to whether deduction of Rank Pay for fixation of pay after 1.1.1986 (except on 1.1.1986) was made or not. If so, the outcome of such verification may be indicated.

(ii) Whether such a modification will result in any extra financial implications so far as fixation of pay w.e.f. 1.1.1986 till 31.12.1995 is concerned. If so, details thereof.

6. So far as proposed modification at para 2 (ii) above is concerned, the Ld AG in para 42 of his opinion dated 3.9.2013, while discussing the matter whether the question of non-deduction of Rank Pay could be restricted to 4^th CPC only or extended to 5^th CPC and 6^th CPC, opined that 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 needs to be applied at the time of 5^th & 6^th CPCs also. Therefore, while intimating comments, this Ministry vide aforesaid ID Note dated 12.12.2013 requested Ministry of Defence to explain the method of fixation of pay in the 5^th CPC pay scales on 1.1.1996(wrongly typed as 1.1.1986), along with the relevant Rules. In fact in the subsequent ID Note dated 3.2.2014 this Ministry again requested M/o Defence to verify the principle of fixation of pay as adopted by them in the relevant instructions on implementation of 5^th CPC and also verify whether the method of fixation of pay, contained in Rule -7(B) of the CCS (RP) Rules 1997 was adopted by them. However, no information has been given on this count also.

7. Therefore, in order to enable this Ministry to appreciate the issue in the light of the Order of the Hon’ble Supreme Court and the advice of the Ld AG, the following points need clarity: -

(i) The formula for fixation of pay as part of the relevant Army Instructions issued by M/o Defence for implementation of the 5^th CPC recommendations, in so far as it relates to Rank Pay, may be indicated alongwith the copies of the relevant instructions.

(ii) Whether the provision contained in Rule 7 (B) of the CCS (RP) Rules, 1997 was adopted in the relevant Army Instructions?

(iii) It is presumed that the modification suggested in para 2 of the MoD’s note 73 takes into account the existing provision of the relevant Army Instructions. Thus a revised sanction needs to be prepared by the Ministry of Defence.

(iv) A concrete example of fixation of pay obtaining at present as per the relevant Army Instructions of 1997 compared to the fixation of pay based on the proposed modification may be given as illustration to help appreciate the issue, indicating the pay fixed as at present and the pay now to be fixed w.e.f.1.1.1996.

(v) The additional financial implications on this count may be intimated, both on account of arrears and recurring.

8. The present status of the contempt proceedings in the Hon’ble Supreme Court may also be indicated.

9. Accordingly, Ministry of Defence is requested to provide the information as sought in paras 5, 7 & 8 above to enable taking of action as advised by the Ld AG in light of the Order of the Hon’ble Supreme Court.

10. This has the approval of Secretary (Expenditure).

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

19.03.2014

(Manoj Kumar)

Under Secretary

Ministry of Defence (Joint Secretary (E)

MoF, DoE, UO NO. 152266/E.-III (A)/2014 dated 19-03-2014

Urgent, May show me pps on 21/3 Sd/------------19/3//

Dir (AG-I) Sd/-----------20/3

US (P/S)

-75-

Receipt (ID Note dated 21.03.2014 to CGDA) Encl 75

-76-

Receipt (CGDA UO Note dated 25.03.2014) Encl 76

-77-

Ministry of Defence

D (Pay/Services)

Ministry of Finance UO Note dated 19.03.2014 refers (Encl 74). The case relates to examination of issues arising out of implementation of the Order dated 04.09.2012 of the Hon’ble Supreme Court in Rank Pay case and issuing the Government sanction on two of these issues whereupon the Ld Attorney General has given his advice favouring the stand taken by the Services. Detailed note in this regard may be seen at note-68.

2. A copy of DGL prepared by CGDA on the two issues was referred to Ministry of Finance with the approval of RM. Ministry of Finance (Deptt of Expenditure) have examined the matter and vide their UO Note No. 152266/E.IIIA/2014 dated 19.03.2014 (Encl 74) raised certain queries before they could examine the matter further.

3. It is submitted here that these issues are being examined in MoD in consultation with Def (Fin), CGDA, and Ministry of Finance for a long time. Even before these issues were placed before the Ld Attorney General for his advice MoF inputs were obtained on the four individual points and the inputs were provided by them vide their ID Note dated 05.07.2013. These inputs were quite exhaustive in their contents. However now when it has been decided to go ahead with the Ld Attorney General’s advice on the two issues MoF queries had to be seen in the larger context of the contempt case which is presently pending before the Hon’ble Supreme Court. In this contempt case Defence Secretary, Expenditure Secretary, Secretary FA (DS) and CGDA have been ordered to appear in person. An application seeking exemption from personal appearance has been filed in the Hon’ble Court on 17.02.2014. This case is coming up for hearing on 31.03.2014.

4. This matter was discussed with CGDA and Def (Fin) reps in the room of Director (AG-I) yesterday in light of the queries of Ministry of Finance. Representatives of the CGDA expressed views that as the rank pay existed before implementation of 5^th CPC recommendations, relevant SAI of December 1997 has to be examined minutely and then amended to convey the full import of Ld Attorney General’s opinion on this particular issue. Accordingly, the DGL was further revised proposing seven amendments in the SAI dated 19.12.1997 and corresponding instructions for Air Force and Navy. An example of methodology fixation w.e.f 1.1.1996 is also placed on file. In this regard it is proposed that in line with the methodology adopted vide Section 7 (C) of the CCS (RP) Rules 1997 revision should start with the basic pay and stagnation increments, if any and after all benefits (DA, IRs, and 40% benefit) are given there to the revised pay would be arrived at and in addition to that the officer would be paid rank pay at the revised rates. Such a process will be in conformity with the process adopted on the civilian side and relevant army officers would get to be paid rank pay additionally. As rank pay forms part of basic pay these officers would get usual benefits available in the case of basic pay component also. CGDA rep also pointed out after a clear decision is taken on the methodology of pay revision w.e.f. 1.1.2006 is taken only then the financial implications could be calculated. He further pointed out that suitable change in the SAI dated 19.12.1997 may also be carried out wherever rank pay is taken alongwith basic pay for calculating some benefits. Accordingly some changes have also been made in the portion relating to NPA in respect of doctors in armed forces [para 5 (e) of the SAI]. Def (Fin) rep supported these contentions. These amendments relating to NPA may have also to be shown to D (Med) to seek their views before they are referred to Ministry of Finance. It was also discussed in the meeting that pay fixation formula w.e.f.1.1.2006 should also be clarified in the DGL stating that while rank pay has been take into account along with basic pay to arrive at revised pay in the relevant pay band, no deduction of rank pay has been carried out. In addition to grade pay as per the rank the armed forces officers have also been paid military service pay at Rs 6000 per months in case of officers up to the rank of Brigadier/eq. MSP is treated as pay for all purposes except for computation of increments and determination of status. Accordingly in light of the discussions the DGL has been revised and is placed opposite (Aerial View: DGL was in an earlier post, hence not placed here.)

3. On the basis of the information/records available the queries raised by Ministry of Finance are proposed to be replied as under: -

S No.	MoF Query	Proposed MoD reply
1	What action has been taken by M/o Defence to verify facts, as stated by the Ld AG, as to whether deduction of Rank Pay for fixation of pay after 1.1.1986 (except on 1.1.1986) was made or not. If so, the outcome of such verification may be indicated.	As per available records & instructions deduction of rank pay was earlier being done when pay of the relevant officers was revised on transition from 3^rd to 4^th Central Pay Commission. CGDA has clarified that pay fixation on promotion did not involve deduction of rank pay subsequent to 01.01.1986. As such no rank pay has been deducted on refixing pay on promotion. In such promotion cases the officers have been paid Rank Pay of the new rank they held, in addition to pay in the integrated scale.
2	Whether such a modification will result in any extra financial implications so far as fixation of pay w.e.f.1.1.1986 till 31.12.1995 is concerned. If so, details thereof.	Since the effect of the decision is only to reverse deduction of rank pay during transition from 3^rd to 4^th Pay Commissions, which was reckoned on the basis of pay drawn as on 1.1.1986, there is no additional financial liability expected to accrue as a result of the change. The next pay revision was only on 1.1.1996.
3	Regarding the question of non-deduction of Rank Pay, Ld Attorney General has opined that 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 needs to be applied at the time of 5^th and 6^th CPC also. Therefore, Ministry of Defence is to explain the method of fixation of pay in the 5^th CPC pay scales. Ministry of Finance also sough copies of relevant instructions of MoD in this regard.	A copy of Special Army Instructions dated 19.12.1997 relating to implementation of 5^th CPC recommendations is placed in file. In the said instructions method of fixation of pay has been illustrated. Rank pay at the revised rates was deducted during the process of fixation of revised pay.
4	Whether the provisions contained in Rule 7(B) of the CCS (RP) Rules 1997 were adopted in the relevant Army Instructions?	A copy of CCS (Revised Pay) Rules 1997 is placed in the file. The definition of basic pay is given in Rule 3 thereof as “pay drawn in the prescribed scale of pay including stagnation increment(s), but does not include any type of pay like “special pay,” “personal pay” etc. Since rank pay is granted in addition to basic pay and was revised by the 5^th CPC at a new rate, it is pointed out that it is Section 7 (C) and not Section 7 (B) that is relevant in the present matter. Section 7 (B) deals with the special pay/allowances which were merged into the new scales. But here the concerned armed forces officers were getting Rank Pay in addition to their pay in the pre-revised scale and the amount of Rank Pay has been revised by 5^th CPC. In such cases on the civilian side, the CCS (RP) Rules 1997 state that the pay in the revised scale shall be fixed in accordance with the provisions of clause (A) above and the allowance at the new rate as recommended shall be drawn in addition to pay in the revised scale of pay. However, on the Armed Forces side, the pre-revised Rank Pay was added to the pre-revised pay, all benefits (i.e. DA, IRs and 40% benefit) were given thereon before revised Rank Pay was deducted. Therefore, basic pay in the revised pay scale was fixed and revised Rank Pay was given in addition. Now, in light of the Hon’ble Court’s order dated 04.09.2012 and the Ld Attorney General’s opinion, while doing away with the deduction of Rank Pay during the pay fixation process, it has been proposed to not add Rank Pay (to the pre-revised pay) in the methodology given in SAI dated 19.12.1997. This will be in conformity with the process adopted on civilian side. With the revised pay, Rank Pay at revised rates would also be paid for the relevant Armed Forces officers. Illustrative example is placed in the file.
5	It is presumed that the modification suggested in para 2 of the MoD’s note-73 takes into account the existing provision of the relevant Army Instructions. Thus, a revised sanction needs to be prepared by the Ministry of Defence.	Revised DGL incorporating the changes proposed in para 2 of note-73 is placed in the file. A separate para on the pay revision as per 6^th CPC has also been added in the DGL. It has been stated therein that as Rank Pay was not deducted in the process of pay fixation in revised scales w.e.f. 1.1.2006, there is no need to change the pay fixation formula laid down in the relevant Services Instructions. Grant of additional component of MSP has also been explained in the DGL.
6	A concrete example of fixation of pay obtaining at present as per relevant Army Instruction of 1997, compared to the fixation of pay based on the proposed modification may be given as an illustration to help appreciate the issue, indicating the pay fixed as at present and the pay now to be fixed w.e.f. 1.1.1996.	Illustrative examples of pay fixation in 1986, 1996 and 2006 as per the understanding of MoD are placed in the file. CGDA may also be asked to give similar illustrative examples of pay fixation w.e.f. 1.1.2006 as per 6^th CPC.
7	The additional financial implications on this count may be intimated, both on account of arrears and recurring.	The financial implications would be provided by CGDA after draft DGL is settled.
8	The present status of the Contempt proceedings in the Hon’ble Supreme Court has also been sought by MoF	Regarding present status of contempt proceedings in the Hon’ble Supreme Court, it is stated that the application for exemption from personal appearance of Defence Secretary, Secretary (Expenditure), Financial Adviser (Defence Services) and CGDA which was filed on 17,02.2014 is likely to come up for hearing on 31.03.2014. Reply against the Contempt Petition as settled by the Ld Solicitor general has also been filed.

6. On the issue of additional financial implication issues as raided by Ministry of Finance (ii) and (iii) it is stated that the Government has already implemented the Hon’ble Supreme Court order dated 04.09.2012 and more than Rs 350 crores have already been paid to the armed forces officers of the three services – serving as well as retired. In many cases of retired officers, PPOs have also been revised. Only in some cases where the paying authorities do not have bank account/PAN details the payments have not been made. All efforts are being made to get these details so that the payments alongwith interest may be credited in the bank account of proper beneficiaries. The additional financial implications figures would be calculated by CGDA after DGL is settled in MoD in consultation with Def (Fin) as stated above. The draft DGL is proposed to be referred to Def (Fin) for their concurrence.

7. Proposals contained in para 4 and 6 are submitted for approval of JS (E).

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

(P. S. Walia)

Under Secretary

26.03.2014

Director (AG-I)

-78-

The reply to the observations/comments of MoF may kindly be seen above. The modified DGL proposed to be issued is placed opposite in file. It is suggested that financial implications in respect of 5^th CPC may be worked out by CGDA once DGL is firmed up/concurred. We may forward the case and proposed DGL to Def (Fin) for their concurrence before referring to MoF.

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

26.03.14

Joint Secretary (E) Sd/------------27/3

Addl FA & JS (RS) Sd/----------27/3

DFA (AG) Sd/----------28/3/14

AFA (AG/PA)

-79-

Ministry of Defence (Finance)

(AG/PA)

Ref; Preceding note Nos 77-78/ante recorded by MoD/D (Pay/Services) on Air HQ’s File No. Air HQ/25450/1/Lgl.

2. The case pertains to certain issues arising from implementation of Hon’ble Supreme Court order dated 04.09.2012 in IA No. 9 of 2010 in Transfer Petition (C) No. 56/2007 in Rank Pay case.

3. Earlier this Division had furnished its view in the matter vide note dated 04.03.2014 (note No. 66/ante). It is now observed that MoD/D (Pay/Services) have obtained views/comments of MoF, which have been furnished by the latter vide their UO Note dated 19.03.2014 (Encl 74-A), wherein MoF have stated they agree with the stand of MoD that action based on the advice of Ld Attorney General needs to be taken. However, MoF have sought clarifications from MoD/D (Pay/Services) on certain points (as indicated in para 7 of MoF’s ibid UO Note). It is further see that MoD/D (Pay/Services) have clarified these points (raised by MoF) vide para 5 of their Note No. 77/ante. The case has now been referred to this Division by MoD/D (Pay/Services) for concurrence to the draft Corrigendum/DGL (Encl-77-A) in respect of MoD letter dated 27.12.2012, which is proposed to be issued for giving effect to the advice of Ld Attorney General in the matter.

4. The matter has been examined in this Division. This Division is of the view that the draft Corrigendum/DGL (Encl – 77A) is in accordance with the comments/views of this Division on the relevant issues [i.e. issue (i) and issue (iv)] as furnished by MoD/D (Pay/Services) by this Division vide ID Note No. 1(76)/2013-AG/PA dated 09.12.2013 . However, it is suggested that before final views are taken, LA (Def) may also be consulted before issuing the orders. Further, as regards the contents of the ibid draft Corrigendum/DGL, a minor modification may be made in para 1 (v) thereof (as done therein in pencil) in order to reflect the position regarding stand of the Govt regarding non-deduction of Rank Pay as on 1.1.1996 in a better manner.

5. This has the approval of FA (DS).

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

(K K Sinha)

AFA (AG/PA)

28.03.2014

Director (AG-I)

MoD (Fin) ID No. 1(76)/2013 –Vol II (157-AG/PA). Sd/-------------

31.03.14

US (P/S)

-80-

This is with reference to issues raised by Services after issuance of MoD letter dated 27.12.2012 for implementing the Hon’ble Supreme Court Order dated 4.9.2012 in the matter of rank pay. Note 77 brings out the detail in the matter.

2. The DGL as prepared by Mod vide its note (No. 77) was shown to Def (Fin). The Finance Division has approved the draft letter with certain modifications. But ther have suggested that this may also be brought before LA (Def) before issuance.

3. In light of the remarks of Finance Division the draft DGL may be referred to LA (Def) for his views. This is more so as the draft DGL is in pursuance of the opinion of the Ld Attorney General which he gave on 3.9.2013.

Submitted please.

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

(P S Walia)

Under Secretary

01.04.2014

Director (AG-I)

-81-

The Defence (Finance) have seen the proposed reply to the observations/comments of MoF and the proposed DGL related to compliance of the Hon’ble Court orders dated 04.09.2012 and w.r.t the advice of Ld AG on these issues. Now, as suggested by Defence (Finance) the DGL and proposed reply (Note 77) may also be referred to LA (Defence) for his views.

In view of the above, we may refer the file to LA (Defence) before forwarding to MoF.

Submitted for kind consideration and approval please.

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

01.04.2014

JS (E) Sd/------- 01/4

LA (Defence)

-82-

The proposal may be forwarded to Min of Finance for their comments by the point of the view of their policy and past practice followed in the matters of the like nature. However, if any legal issue comes up then the same may be sent to this office for seeking legal opinion.

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

(M S Tariq)

Legal Adviser (Def)

Ministry of Defence 24/4/14

Dir (AG-I) Sd/-------------24/4/14

US (P/S)

-83A-

Total Pages:9

Urgent/Court Case

Office of the CGDA, Ulan Batar Road, Palam, Delhi Cantt-10

Subject: Financial implications on implementation of the issues opined favourably by the Ld AG in the Rank Pay case on issues raised by the Services on implementation of Hon’ble Supreme Court Order dated 04/09/2012 on the matter of Rank Pay.

Reference: MoD, D (Pay/Services) ID No. 34 (6)/2013- D (Pay/Services) dated 04/04/2014

The subject matter was taken up with the concerned Controllers offices for working out financial implication as desired by the MoD vide their ID referred above.

2. The financial implication in respect of Army Officers as received from the O/o the PCDA (O) Pune and in respect of Navy Officers as provided by PCDA (N) Mumbai by the Naval Pay Office Mumbai is as under: -

Arms	Pay Arrears	Recovery of P & A	Remarks
Army	Rs 5 crores	Rs 43.35 lakhs	Sample cases checked. It was found that arrears will occur in the rank of Capt only, and recoveries may be in the rank of Maj. Other officers are found to be non-affected (sic). Arrears include Leave Encashment, Terminal Gratuity, etc and interest @ 6& w.e.f. 01/01/2006
Navy	Rs 75 lakh (as intimated by NPO*	Not projected by the NPO Mumbai	Pay arrears are in respect of ranks from Lt to Commodores as intimated by the NPO Mumbai. Arrears include Leave Encashment and interest @6% w.e.f. 01/01/2006

* Payment is made by NPO, not by this Department.

3. The financial implication in respect of Air Force Officers has not been provided by the concerned Pay Office i.e. Air Force Central Accounts Office, Delhi Cantt. Copy of their letter No. CAO/10230/7/OPS/VIII dated 04/04/2014 received through the Jt CDA (AF) New Delhi is forwarded herewith. Naval Pay Office Mumbai has provided financial implication, however they have expressed certain reservations in the matter. Copy of their letter No. RPIC/100 dated 15/04/2014 is forwarded herewith.

4. The methodology adopted by PCDA (O) Pune for calculating financial implications of pay in respect of Army Officers has been incorporated in Annexure A. PCDA (O) Pune has expressed certain constraints on the whole matter, which are summarised at Annexure B.

5. As regards regulation of the element on Non-Practicising Allowance (NPA) and also fixation of pay on 01/01/2006 as per 6^th CPC consequent to implementation of subject DGL, PCDA (O) Pune has brought out certain points which have been mentioned in Annexure C.

6. Keeping in view the limitations brought out as above, it is stated that the above figures are approximate and may undergo substantial changes.

Addl CGDA (SLS) has seen.

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

(Sandeep Verma)

Accounts Officer (AT-I)

Shri Pradeep Kumar, Director (AG-I)

MoD, D (Pay/Services), Sena Bhawan, New Delhi

UO No. AT/1/1483-Army/X (PC)/IX dated 24/04/2014

Annexure A

Methodology adopted by PCDA (O) Pune for working out financial implication

The pay details of Army Officers selected randomly who were in service as on 01/01/96 in the ranks of Captain to Brigadier and the available stages of pay scale in their cases have been considered. The approximate financial implication has been worked out based on the illustration received alongwith the DGL in respect of some of the randomly selected officers is as follows:

Rank	No. of cases where pay revision carried out as per DGL	Cases where change in pay observed after pay revision as per DGL
Capt	11	5
Major	10	3
Lt Col	13	0
Col	16	0
Brig	05	0
Total	55	8

Rank	Approx average arrears per rank (Rs)	Cadre Strength	Amount estimated (Rs)
Capt	3047	8337	2,54,02, 839
Major	----	9224	See para 2 below
Lt Col	Nil	8534	Nil
Col	Nil	6337	Nil
Brig	Nil	1786	Nil
Total	-	34218	2,54,02,839

Approximate Financial Implication as per table above: Rs 2.60 crore

Add 10% of above arrears for terminal gratuity, leave

Encashment etc Rs 0.26 crore

Total Rs 2.86 crore

Add interest for 100 months @6% p.a w.e.f 01.01.2006 Rs 1.43 crore

TOTAL ESTIMATES (APPROX) Rs 4.29 crore*

* Rounding off to Rs 5 crore.

Note: (i) This being a sample check, the financial implication may vary widely; in case a larger variety of cases comes up for fixation at the time of actual implementation of DGL. Also refer to Appendix B.

(ii) The average arrears per rank for regular cadre officers have been applied to entire cadre strength in the rank including Medical Officers.

2. The pay revision carried out as per DGL for the officers in the rank of Major for regular officers as on 01/01/96 is resulting either into recovery of pay or there is no change in pay already drawn as per SAI O2/S/08 after the revision. The details of recovery may be approximately to the tune of Rs 43.45 lakh.

Rank	Approx average arrears per rank (Rs)	Cadre strength	Amount estimated for recovery (Rs)
Major	470	9224	43.35 lakh

a. It is mentioned that the above quoted approximate amount of recovery resulting due to revision as per the DGL may not give the correct picture since the average recovery for Medical Officers in the rank of Major may be more than that of regular officers due to the facts vide Annexure C.

b. Even though it is mentioned that there may not be any change in Basic Pay already admitted to regular officers to the rank of Lt Col, Col and Brig as per SAI 2/S/08 as revised as per the DGL ibid, the possibility of arrears payment or recovery of pay may not be ruled out due to the initial fixation of pay carried out as per SAI 2/S/98 and subsequent revision thereof with reference to stepping up of pay with junior officers/batch mates in the same Corps, preponement of annual increment with that of juniors, effect of admittance of additional increments due to various options exercised on promotions/switching over to revised pay structure of pay fixation/revision carried out incorrectly, etc.

Annexure B

Complexities and Constraints brought out by PCDA (O) Pune

The financial implications could be calculated only on the abbreviated approximation based on randomly selected cases in various stages of pay scale in each rank from Captain to Brigadier. It was practically impossible to identify the actual/real cases affecting the arrears of pay due to various reasons.

2. There are different dates of annual increments due to various reasons i.e. antedate seniority for pay and promotion, stepping up of pay carried out with reference to other officers in same Corps/Arm of Service.

3. There are varieties of cases like grant of benefit of additional increments to officers who have completed more than 1 year after reaching the maximum scale and also to the officers whose date of increment in pre-revised scale was on 01/01/96 affecting pay.

4. There are different date(s) of promotion to higher rank(s) due to various reasons such as requisite conditions of EB, medical SHAPE, grading of ACRs, passing of Part B & D exams etc.

5. There are cases of admittance of scale of pay of higher rank on grant of acting promotions on completion of reckonable qualifying service for promoted rank for one officer whereas another officer not getting the same benefit due to non-grant of acting promotion due to non-availability of vacancy or serving in peace area etc.

6. There are cases of officers not qualifying for substantive promotion to the rank of Lt Col (S) and Col (S) subsequently promoted as Lt Col (TS) and Col (TS) respectively.

7. The benefit of additional increment in pre-revised scale was admissible to the officers whose annual increment was due between February and June 2006, however, actually the benefit of this increment could not be given since the pay was fixed in the same stage of pay in revised scale admissible as per fitment table provided vide SAI 02/S/08 due to bunching for two stages of pre-revised scale. This has resulted in no change in revised pay due as per DGL/pre-revised pay as per SAI 02/S/08.

8. Different service periods put by the officer after 01/01/96 due to pre-mature retirement, release from short service commission, invalidment, death, cashiered, dismissal, deserter etc.

9. The arrears/recovery may get affected with reference to the promotions granted in selection grade and in time scale, non-qualifying service for pay, furlough leave, furlough rates of pay during hospitalisation etc.

10. For regular Captains, the pay revision is resulting in arrears payment till the date of promotion to the rank of Major and in some cases Lt Col. In those cases, arrears of leave encashment or revision of LPC-cum-Data sheet may not arise, However, there may be possibility where the change of pay continued till retirement, and therefore, payment of leave encashment and revision of pension and pensionary benefits based on amendment to LPC-cum-DS will be required to be done. Also for Short Service Commissioned Officers, there may be arrears due on account of terminal gratuity and leave encashment payable on release from service.

Annexure C

Points brought out by PCDA (O) Pune in regard to regulation of the element of Non-Practicising Allowance (NPA) and also fixation of pay 01/01/2006 as per 6^th CPC Orders consequent to implementation of subject DGL

1. It is seen from the DGL that as per sub-para (ii) (g) mentioned therein, the words “including rank pay” are proposed to be deleted from the existing sub-para 5 (c) (iv) of SAI 02/S/08 regarding calculation of NPA at the rate of 25% of Basic Pay including Rank Pay. In this connection, the following points need to be taken into consideration in respect of Medical Officers.

i. On introduction of Rank Pay vide SAI 1/S/87 as per 4^th CPC orders, the definition of Rank Pay as mentioned in para 2 (d) states that ‘Rank Pay forms part of Basic Pay.’

ii. It has been clarified vide MoD letter No. 1(26)/97/1/D (Pay/Services) dated 29/02/2000 during 5^th CPC that Rank Pay is that element of pay identified with the rank which in turn has a relationship with the scale of pay of officers. It is granted separately in recognition of the specific needs of their conditions of service and command structure. It will consequently be taken into account for determining their entitlement to such of those financial benefits, as are directly related to the basic pay or their pay scales.

iii. As per MoD letter No. 1(44)/87/D (Pay/Services) dated 2^nd November 1987 and 1(45)/87/D (Pay/Services) dated 12.1.1988 regarding revision of rates of NPA to AMC/ADC & RVC officers, NPA will be treated as pay for all service matters. In other words, the non-practising allowance will be taken into account for computing Dearness Allowance, entitlement of Travelling Allowance/Daily Allowance and other allowances as well as for calculation of retirement benefits. Incidentally, it is mentioned that retirement & pensionary benefits include annual leave encashment, pension, DCRG etc.

iv. Maximum ceiling for payment of NPA as per para 5 (e) (iv) of SAI 02/S/08 is Rs 29,500/- which included “pay” plus NPA. The term “pay” mentioned here is inclusive of Rank Pay.

v. Consequent on merger of 50% of DA with Basic Pay w.e.f. 01.04.2004 as Dearness Pay (DP), MoD vide their letter No. 1(10)/97/D (Pay/Services) dated 8^th November 2004 have extended the provisions of MoF, Deptt of Expenditure OM No. 105/1/2001-IC dated 6^th October 2004 mutatis mutandis to Armed Forces officers. The ibid OM, while giving an example of calculation of NPA, DP, revised NPA considering the DP element, and revised DA thereon, have mentioned that the limit of Basic Pay + NPA which was Rs 29500/- earlier be modified to the extent that Basic Pay + DP + NPA for doctors shall not exceed Rs 44250/-.

vi. It is needless to mention that the pre-revised NPA is calculated as 25% of Basic Pay + Rank Pay. The same has been considered for calculation on DP. Further, revised NPA has been worked out considering the DP so calculated. Further, the revised NPA has also been considered for calculation of revised DA.

vii. Rank Pay has been discontinued consequently on implementation of 6^th CPC orders and Grade Pay has been introduced as fixed amount corresponding to a pre-revised pay scale/rank. Sub-para 3 (f) of SAI 02/S/08 refers. Sub-para (h) of SAI 02/S/08 states that Basic Pay in the revised pay structure means sum of Pay in pay band and Grade Pay applicable. Provision of Para 7(d) regarding NPA to medical officers states for revision of pay in revised pay structure as per 6^th CPC orders, considering DA and DP calculated on NPA also, based on 25% of Basic Pay + Rank Pay in the pre-revised pay as per 5^th CPC orders subject to ceiling of Rs 44250/-. Further, the Para ibid states that Pay + NPA should not exceed Rs 85000/-. Incidentally, pay mentioned therein is Pay in the Pay Band + Grade Pay +MSP.

2. In view of the above, the following is brought to the notice of MoD: -

i. As per the amendment proposed to Para 5 (e) (iv) of SAI 2/S/98, the entire structure of payment of NPA would undergo a change. Since percentage based NPA has been introduced as per Para 5 (e) (iv), the NPA admitted on Rank Pay, treating the same as part of Basic Pay from 01.01.1996 onwards till 31.12.2005 to medical officers of all ranks in receipt of Rank Pay will invariably get reduced, which in turn will result in reduction in the DA admitted on NPA, DP merged with Basic Pay and DA thereon w.e.f. 01.04.2004.

ii. Since the amount of DP and DA admitted on NPA was also part of the existing emoluments in pre-revised scale considered for calculating a factor of 1.86 for revision of pay as per Sixth CPC orders, this will adversely affect the fitment tables annexed to SAI 01/S/08, resulting in recovery of pay from all affected officers.

iii. The reduction in amount of NPA admissible now as per proposed DGL, not considering Rank Pay as part of pay will not only lead to recovery of NPA and DA & DP thereon but also recoveries of other entitlements of retirement & pensionary benefits admitted based on NPA calculated treating Rank Pay as part of Basic Pay.

iv. In the given situation, a doubt has arisen as to whether Rank Pay will be considered for working out the ceiling limit of maximum pay for restricting amount of NPA, when it is not considered for calculating the entitlement of NPA itself.

3. Regulation of Rank Pay on 01.01.2006:

Vide sub-para (iii) of DGL, a new Para 6 (c) regarding retaining the element of Rank Pay as part of Basic Pay in pre-revised emoluments for revision of pay as per Sixth CPC orders has been added, whereas the element of Rank Pay is being considered for deletion from pay revision formula for 4^th and 5^th CPC orders in the changed scenario. This seems to be contradictory.

Illustrative Example of Pay Fixation from CGDA

Rank: Captain

4^th Pay Commission			5^th Pay Commission
Existing Pay Scale= Rs 1100-50-1550 Revised Pay scale: 2300-100-3900-150-4200-EB-150-5100			Existing Pay scale: 2300-100-3900-150-4200-EB-150-5100 Revised Pay Scale: 9600-300-11400
	Before implementation of Supreme Court order dated 4.9.2012	After implementation of Supreme Court order dated 4.9.2012		Before implementation of Supreme Court order dated 4.9.2012	After implementation of Supreme Court order dated 4.9.2012	As per AG’s opinion
Existing Basic Pay	1300	1300	Existing Basic Pay	3100	3300	3300
Existing Rank Pay	Nil	Nil	Existing Rank Pay	200	200	Nil
DA/ADA/IR	1650	1650	DA/IR	5314	5630	5314
Existing emoluments	2950	2950	Existing emoluments	8614	9130	8614
Add 20% of Basic Pay	260	260	Add 40% of Basic Pay + Rank Pay	1320	1400	1320
Total	3210	3210	Total	9934	10530	9934
Less Rank Pay	200	Nil	Less Rank Pay	400	400	Nil
Total	3010	3210	Total	9534	10130	9934
Basic Pay to be fixed + Rank Pay	3100+200	3300+200	Basic Pay to be fixed + Rank Pay	9900+400	10200+400	10200+400

Appendix B to SAI 2/S/2008

Illustration 1

Fixation of initial pay of a Captain in the revised pay structure (Refer Rapa 7 (a) (ii)

(a) Existing scale of Pay Rs 9600-300-11400

(b) Existing Basic Pay as on 1.1.2006 Rs 10200

(d) Pay Band applicable PB-3 Rs 15600-39100

(e) Pay after multiplication by factor Rs 19716

Of 1.86 (Rounded off to) Rs 19720

(f) Pay in the Pay Band 3 Rs 19720

(g) Pay in the Pay Band after including Rs 19720

Benefit of bunching if admissible

(h) Grade Pay Rs 6100

(i) Revised Basic Pay (total of pay Rs 25820

In the pay band and grade pay)

(j) Military Service Pay Rs 6000

(k) Total emoluments pay for DA, Pension etc Rs 31820

Illustrative Example of Pay Fixation from CGDA

Revised as per discussion in MoF on 07.05.2014

Rank: Captain

4^th Pay Commission			5^th Pay Commission
Existing Pay Scale= Rs 1100-50-1550 Revised Pay scale: 2300-100-3900-150-4200-EB-150-5100			Existing Pay scale: 2300-100-3900-150-4200-EB-150-5100 Revised Pay Scale: 9600-300-11400
	Before implementation of Supreme Court order dated 4.9.2012	After implementation of Supreme Court order dated 4.9.2012		Before implementation of Supreme Court order dated 4.9.2012	After implementation of Supreme Court order dated 4.9.2012	As per AG’s opinion
Existing Basic Pay	1300	1300	Existing Basic Pay	3100	3300	3300
Existing Rank Pay	Nil	Nil	Existing Rank Pay	200	200	Nil
DA/ADA/IR	1650	1650	DA/IR	5314	5630	5630
Existing emoluments	2950	2950	Existing emoluments	8614	9130	9130
Add 20% of Basic Pay	260	260	Add 40% of Basic Pay + Rank Pay	1320	1400	1400
Total	3210	3210	Total	9934	10530	10530
Less Rank Pay	200	Nil	Less Rank Pay	400	400	Nil
Total	3010	3210	Total	9534	10130	10530
Basic Pay to be fixed + Rank Pay	3100+200	3300+200	Basic Pay to be fixed + Rank Pay	9900+400	10200+400	10800+400

* * * * *

Tele: 2330-7330 AFCAO

Subroto ParK

New Delhi-10

CAO/10230/7/OPS/OPS/VIII 04 Apr 14

Sr AO (AF)

O/o JCDA (AF)

Subroto Park

New Delhi -10

IMPLEMENTATION OF HON’BLE SUPREME COURT ORDER DATED

04 SEP 12 IN THE RANK PAY CASE: ISSUES RAISED BY SERVICES

1. Reference is made to your letter No. DCA/O-Audit/438/Rank Pay dated 06 Mar 14.

2. The issue was referred to Air HQ (Dte of Accts) for opinion and it is intimated two issues namely ‘minimum of each rank’ and ‘top of integrated pay scale’ have been put up to Raksha Mantri for reconsideration. Hence, the financial effect assessment at this stage will be pre-mature as agreement on remaining two issues by Ld AG grossly change the quantum of financial effect involved and number of officers in respect of whom pay fixation has to be carried out.

3. Further, modalities of refixation may be intimated when a final decision on the subject is received from Govt.

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

(JPM Dias)

Gp Capt

Oi/c OPW

* * * * *

Tele: 022 – 22751055 REGISTERED

Naval Pay Office

Shahid Bhagat Singh Road

Mumbai 400 023

RPIC/100 15 Apr 14

The PCDA (N)

IRLA Section, INS Angre

SBS Road

Mumbai - 400023

IMPLEMENTATION OF HON’BLE SUPREME COURT ORDER DATED

04/09/2012 IN THE RANK PAY CASE: ISSUES RAISED BY SERVICES

1. Refer to your leter IRLA/O/242 dated 07 Apr 14.

2. Comments offered on scrutiny of DGL are as follows: -

(a) The maximum scales in respect of Lieutenant and Lieutenant Commander are required to be increased to carry out the fixation as per Supreme Court order to maintain all the provisions if CPC recommendations in vogue.

(b) The provision of V CPC that is “Fixation made shall ensure that every officer will get one increment in the revised scale of pay for every three increments in the existing pay” cannot be implemented for the ranks of Lt, Lt Cdr, Cdr and Capt. Detailed calculations for each rank attached.

(c) As per CPC rank pay is integral part of Basic Pay for all calculations and it should not be treated separately. Same has been upheld by Hon’ble Supreme Court. However opinion of Ld Attorney General does not conform to the said orders and interpretation is unfounded.

3. It is therefore considered imperative to refer the matter to the Government of India for reconsideration as its implementation in the present form is likely to be contested in the Court of Law. Accordingly, it would be prudent to determine the exact number of officers who would be affected and the consequent financial implication only after the case is reviewed in consideration of the illustration attached.

4. However, as per details available the individuals who will be affected will be approximately 4286 (i.e. Lt to Cmde) and approx financial implication as per Supreme Court order would be Rs 1.5 crores as per Ld Attorney General would be 75 lakhs which is including arrears, leave encashment difference and interest wef 01 Jan 06. The likely time for implementation if all documents are received in time is 05 months from the date of issue of final DGL. Sd/---------

(Charanbir Singh)

Commander NAVPAY

For Logistics Officer-in-Charge

Encl: as above

(Illustration not provided in reply to RTI)

******************************

9 comments:

aaa3 October 2014 at 14:24
It is surprising to see that by some weird logic the 2 remaining issues were not referred again to Ld AG as these babus were afraid that their nefarious design will be undone. Also, it is beyond comprehension that these one exam wonders and accountants could not read the opinion of Ld AG on these remaining issues whereas he has qualified his comments by saying that "if what cgda said is correct" or something to this effect. As regards some babus comments that judgement does not ask for change of payscales , well it is administrative ministry's responsibility to implement the judgement in letter and spirit. Judgements do not give detailed calculations as to how the effect is to be calculated. In this case it involves change of pay scales due to wrong deduction of rank pay while devising payscales.
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Unknown3 October 2014 at 18:40
Sir,
The babus re taking us for a ride as usual, hope this is exposed in the Contempt hearing. The stake holders ie the Services have not been heared or reffered to, the decision of the Babus is being forced upon the Services/ Veterans
Regards
Col Ravi Rao (Retd)
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Unknown4 October 2014 at 12:16
Quoting from one of the letters above
"Reply against the Contempt Petition as settled by the Ld Solicitor general has also been filed."
It is very evident that the Def ministry woke up only due to the contempt petition & tried to shift blame away from itself in trying to involve the SG.I am sure the SG was certainly aware of the contempt petition & in trying to give his opinion,may himself committed contempt.
Does he has the authority to interpret the SC's decision specially after the contempt was initiated.Even now his opinion seems to toe the govt way of thinking & not follow the judgement in letter & spirit
From the examples given for Capt it can be seen that many Captains may get more than a Major in 5th pay commission initial fixation if there is no minimum for each rank laid down.The ld SG seems to have over looked this (deliberately or otherwise is a matter for the SC to decide)
Any how the final savior is the SC & hope the procedure for appointment of judges remains as it is & not changed as the politicians want
I also remember of the FM's words regarding power of the parliament to make retrospective laws & he specifically mentioned about over ruling SC's judgement through retrospective legislation in case of taxes already collected & SC orders a refund
I wont be surprised if he tests the water through retrospective legislation on the govt employees including the Services for not changing already implemented pay scales
This may look far fetched.How ever the babus are wily & not going to lose their rule making powers
See
https://www.youtube.com/watch?v=qySTbfOE8i8
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Unknown4 October 2014 at 15:43
Some clarifications.

It is not contempt for a reply to be vetted - settled in legal language. SG gives no opinion but vets the affidavit prepared by one of the law officers on the correctness in terms of the Rules in the Hon'ble Supreme Court handbook.

Does he have the authority to interpret? There was an interpretation on 31.3.2010 by then SG, Gopal Subramanium which was followed by the HPC report.

Then there was another opinion sought from the next SG, R F Nariman (now Judge of the Apex Court) which was conveyed on 17.10.2012.

In the contempt petition the "necessary parties" are the Defence Secretary and the CGDA.

FM reiterated the Parliament's powers to make tax laws applicable retrospectively and levied tax on Vodafone after the Apex Court struck down the tax levied. No refund has been ordered and even this Govt is still plodding to arrive at a solution.

Any retrospective legislation must also change the terms and conditions of service with retrospective effect and it will be up to the Apex Court whether there have been violations of the Constitution because a law cannot be changed for one set of Govt employees (Armed Forces) without the other being subjected to the same change.

You are absolutely right - far fetched is actually an understatement. Lack of understanding would have been more appropriate
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RC6 October 2014 at 12:55
Sir,

I do not know details of the earlier court proceedings and therefore my understanding as given in the following para may not be fully correct. Taking the liberty of verifying it with you. If the understanding is correct then may be RODA can consider the issue in the Contempt Proceedings.

The total amount due to officers as given in above mentioned documents is at a very wide variation from the calculations given by Govt earlier to the Hon'ble Supreme Court. Based on the earlier figures submitted the Govt had pleaded before the Court that implementation of orders would result in huge cost to exchequer and had sought waiver of interest payments on the amounts due. Accordingly, the Hon'ble Supreme Court changed the date for payment of interest from the date on which amount become due to 1.1.06. Now the Govt is saying that there is hardly any payment due. In light of current projected figures does it not amount to misleading the Court by making incorrect submission. Should this also not be part of our Contempt Petition and probably we should seek court directions to revert to interest payments from the day the amount became due to the officers rather than from 1.1.06.

Probably the earlier calculations would be correct as the government has cheated a very large number of officers over an extended period of more than twenty years. Still we may decide to bring the date of interest payment before the Hon'ble Supreme Court.

Regards,

RC
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RC8 October 2014 at 12:54
Sir,

One serving offr has got Rs 14000/- as arrears. It is listed as Arrears of P&A in his Sep salary slip.Period shown is 1/1/96 to 31/8/14. The break up amount is also given and the period is fromfrom 1/1/96 to 5/11/97.

The officer became substantive Maj on 5/11/97 and therefore the arrears are for the period when he was Capt or Actg Maj. His date of Commission and senirity was Mar 86 and Nov 86 respectively. Surprising nothing for the period when he was Subs Maj or Lt Co.

Hope it throws some light on CDA's mischievous calculations.

Rgds,

RC
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Sqn.Ldr.(Dr.) J.P. Singh16 September 2020 at 14:43
Sir,
I became substantive Sqn. Ldr. in 1988. On fixation of my pay as on 01.01.1996, AFCAO/Dy.CDA has not taken into account of my increments earned in the regime of 4th Pay Commission. Despite my request to correct the mistake, they are adamant on their stand and say everything is fine. As per 5th Pay Commission Corrigendum, I am supposed to one increment on the basic fixation and one increment on each of three increments in the pay of 4th Pay commission regime. I hope DAV, AFCAO and Dy. CDA wakes up
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