Monday 19 August 2013

Would the Reference to Ld Attorney General Be Something Like This?



A CASE SEEKING THE OPINION OF
THE ATTORNEY GENERAL OF INDIA
BY
THE ARMED FORCES OF THE UNION OF INDIA
ON THE INTERPRETATION OF THE JUDGMENTS OF

THE HON’BLE HIGH COURT OF KERALA IN
O.P.2448 OF 1996 DATED 05 OCT 98, W.A. 518 OF 1999
& SLP (CC) 5908/2005 IN HON’BLE SUPREME COURT
in MAJ (RETD) A K DHANAPALAN Vs. UOI
AND
THE HON’BLE SUPREME COURT OF INDIA IN
TP(C) 56 OF 2007 DATED 08 MARCH 2010 &
IA No. 9 OF 2010 IN TP (C) 56 OF 2007 DATED 04 SEP 12
UOI & OTHERS Vs. N. K. NAIR & OTHERS

RANK PAY CASE

INTRODUCTION

1.                  The Rank Pay issue (also known as Maj Dhanapalan case) refers to extension of the judgment given in the case of Major AK Dhanapalan by a Ld Single Judge and then a Division Bench of the Hon’ble High Court of Kerala to correct his pay fixation which was wrongly carried out under the provisions the pay instructions SAI No. 1/S/87 issued by MoD for implementing the 4th Central Pay Commission (4th CPC) award.  On appeal by UoI in N. K. Nair & Others, the Hon’ble Supreme Court of India has upheld the judgment of the Hon’ble High Court while extending it to all officers irrespective of the fact whether they had approached the court or not along with interest on arrears.

2.                 The government has decided to implement the order of Hon’ble Supreme Court of India.  However, the interpretation of the Order of the Hon’ble Supreme Court by the Armed Forces and the Ministry of Defence are different. Hon’ble Raksha Mantri has directed the Ministry and the Armed Forces to obtain the interpretation of the learned Attorney General of India by processing their cases separately.

3.                 The Hon’ble High Court of Kerala in the said case had held that the Rank Pay is something which has been given to Army Officers in addition to the existing pay scales. That is not an amount which has to be deducted in order to arrive at the total emoluments which an Army Officer is entitled to get. It directed UoI that the pay of Maj AK Dhanapalan to be re-fixed from 01.01.86 by paying him the rank pay over and above the basic pay. It also directed a second re-fixation on his promotion stating, “The petitioner is also entitled to get his pay re-fixed in accordance with the pay fixation of 1987”.  Based on this judgment other affected officers also filed petitions in various High Courts which were consolidated by the Hon’ble Supreme Court based on a request by MoD.

4.                 A Bench of the Hon’ble Supreme Court comprising Justice Markandey Katju (since retired) and Justice R M Lodha heard these appeals on 08 Mar 10 and upheld the reasoning in the judgments of the Hon’ble High Court of Kerala.  It directed that relief similar to Maj Dhanapalan be given along with interest computed @ 6% per annum with retrospective effect from 1.1.1986.  The UoI filed an Interlocutory Application No. 9 of 2010 against the Order of the Hon’ble Supreme Court which was finally disposed of on 04 Sep 12 by Justices R M Lodha, T S Thakur and Anil R Dave of the Hon’ble Supreme Court. The Hon’ble Court upheld the Hon’ble High Court of Kerala’s judgment that the Rank Pay which was deducted from the total emoluments and granted separately is not to be deducted from the emoluments as was done in the impugned Govt orders.  The Hon’ble High Court of Kerala had also held that Rank Pay is in addition to the Pay fixed in the integrated pay scale i.e. after the application of the fixation formula, the pay so arrived at will, in addition, be enhanced by the rank pay with effect from 01.01.1986. The Hon’ble Supreme Court also directed payment of interest on arrears so calculated @ 6% which will be payable to all similarly situated officers with effect from 01 Jan 2006. The MoD was given a period of 12 weeks to implement the court order. The time was extended till 31 May 13 by the Hon’ble Supreme Court based on an Interlocutory Application No. 11 of 2013 filed by UoI.

5.                 The matter at hand pertains to implementation of the Hon’ble Supreme Court’s order for all similarly situated officers, upholding the reasoning in the judgment of the Hon’ble High Court of Kerala in the case of Maj A K Dhanapalan. The MoD order dated 27 Dec 12 hereinafter called implementation order has been issued to authorise the re-fixation of pay of affected officers as directed by the Hon’ble Supreme Court. However, the implementation order issued denies justice to the affected officers, both serving as well as retired and the NoK of deceased officers. It is contended by Service HQ that the implementation orders are not in keeping with the letter and spirit of Hon’ble Supreme Court’s order.  Thus, a need has been felt to put the matter in its correct perspective and to take it to its logical end. The issue is discussed at length in the succeeding paragraphs.

BACKGROUND
6.                 The concept of Rank Pay was first introduced by the 4th Central Pay Commission hereinafter referred to as 4th CPC vide Para 28.12 and 28.13 of its report attached as Annexure-I. The 4th CPC recommended a running pay scale called the integrated pay scale for officers’ ranks from 2nd Lieutenant to Brigadier. The relevant recommendation of 4th CPC is given below: -

“28.12  ….  Taking all factors into account, we recommend the integrated pay scale for all officers upto the rank of Brigadier and equivalent in the three services : -
                        Rs. 2300 – 100 – 4200EB – 100 – 5000

28.13.    We also recommend that, in addition to pay in the above integrated scale, the following rank pays may be given to officers in Army and their equivalent in the other services: -…“

7.                  The Government accepted the recommendation of the 4th CPC vide Gazette of India Extraordinary Resolution no 9-E dated 18 Mar 87 which is attached as Annexure II. The decision of the Government was later promulgated for implementation in the form of Special Army Instructions (for short SAI) 1/S/1987 which is attached as Annexure-III. Similar instructions were separately issued for the Navy and Air Force. The important features of these instructions were: -

(a)              The increased rate of annual increment of Rs 150 which was applicable to the civilian scales from Rs 3900 onwards and ignored for Armed Forces pay scales was extended to the integrated Scale. It also resulted in slight change in the top of scale as the stage of Rs 5000/- was not present in the integrated scale. It further resulted in reducing the time span of 28 years for promotion from 2nd Lt to Brig as envisaged by 4th CPC to 23 years. The integrated pay scale for the ranks of 2nd Lt to Brigadier was, therefore, changed to: -           
                        Rs. 2300 – 100 – 3900 – 150 – 4200 – EB – 150 – 5100

(b)              For fixation of pay, the following methodology was promulgated vide Para 6 (a) of SAI 1/S/87:-

Para 6 (a) (i). An amount representing 20% of the basic pay in the existing scale shall be added to the existing emoluments of the officer.

Para 6 (a) (ii). After the existing emoluments have been so increased, an amount equivalent to the rank pay, if any, appropriate to the rank held by officer on 01 January 1986 at the rates prescribed in Para 3 (a)  (ii) above, will be deducted. Thereafter, the officer’s pay will be fixed in the revised scale at the stage next above the amount thus computed. In case the stage of fixation falls below the minimum pay for the rank held by the officer on 01 January 1986 as prescribed in the table below, the pay will be stepped up to such minimum provided the officer has completed the length of reckonable commissioned service indicated in the same table: -


Rank
Minimum Pay in the Integrated Scale
Completed years of service
Lieutenant
2500
2
Captain
2800
5
Major
3400
11
Lt Col(Selection)
3900
16
Colonel
4500
20
Brigadier
4950
23

(c)               A minimum pay was thus introduced, within this integrated pay scale for each rank linked to length of service required to attain that rank. This was an integral part of the fixation process as it provided a minimum for each rank linked to the number of years of service. In case the stage of fixation was below the minimum pay for the rank held, it was to be raised to the minimum thus specified. No such recommendation was made by the 4th CPC nor any table as given above. Therefore, the methodology for calculation of this minimum pay as given in column 2 of the table is not available in the report of 4th CPC. This methodology can, however, be established by simple arithmetic as shown subsequently in this document.

(d)              Another relevant provision of SAI 1/S/87 was the definition of rank pay given in para 2 (d) of SAI 1/S/87. It was defined as: -
“Rank Pay” means the pay admissible to an officer appropriate to the rank actually held, either in acting or substantive capacity, in addition to the pay in revised scale. Rank pay forms part of basic pay.

THE JUDGMENT OF HON’BLE HIGH COURT OF KERALA
AND
THE HON’BLE SUPREME COURT

8.                 Aggrieved by the provisions of SAI No. 1/S/87, Maj A K Dhanapalan filed O. P. No. 2448 of 1996 in the Hon’ble High Court of Kerala. The case filed by Maj Dhanapalan was decided by Hon’ble Mr. Justice C. S. Rajan on 05 Oct 98. A copy of the judgment is attached as Annexure -IV. The Hon’ble Court held that the deduction of Rank Pay from the amount arrived at by the fixation formula was incorrect. It directed that the petitioners pay be re-fixed from 01.01.86 by paying him the rank pay over and above the basic pay. An appeal against this judgment of learned single judge was filed by UoI in a Division Bench of the Hon’ble High Court of Kerala vide writ appeal No. 518/1999.  The Division Bench of Hon’ble High Court of Kerala affirmed the judgment of learned single Judge vide its order dated 04 Jul 2003. A copy of the Division Bench of High Court of Kerala Judgment is placed as Annexure - V. After dismissal of appeal in the Supreme Court (No. 5908 (CC) of 2005) in the case of Maj A K Dhanapalan, arrears amounting to Rs 28,031 were paid in 2006.

9.                 Meanwhile a large number of petitions were filed in several High Courts seeking the benefit of the judgment of the High Court of Kerala in the case of Maj A K Dhanapalan. These petitions were transferred to Supreme Court on the request of UOI as Transfer Petition (Civil) No. 56 of 2007. The combined cases were adjudicated upon by the Hon’ble Supreme Court with Mr. Justice Markandey Katju and Mr. Justice R M Lodha in the bench. In Writ Petition (C) No 96 of 2009 tagged with TP (C) N0 57 of 2007. the Hon’ble Supreme Court agreed with the reasoning given in the judgment of Hon’ble High Court  of Kerala and upheld the judgment in its order dated 08 Mar 2010. The copy of the Order is placed as Annexure -VI.

10.             Thereafter, Ministry of Defence on the advice of the then Solicitor General of India dated 31 Mar 10, constituted a High Powered Committee (HPC) on 05.04.2010 to assess the financial impact in the implementation of the order of Hon’ble Supreme Court in the rank pay case in the Writ Petition (c) No. 96/2009- Sunil Kumar Chand and Ors Vs UOI and Ors dated 08 Mar 2010. The HPC consisted of Def Secy, Expenditure Secy, and Secy Def (Fin). Based on the Report of the HPC, the Hon’ble Supreme Court was again approached by UOI by way of Interlocutory Application (I. A.) No 9 of 2010. UOI, in its submissions before the Hon’ble Supreme Court on the interpretation and effects of implementations of the Hon’ble High Court of Kerala’s judgments, submitted Affidavits and Additional Affidavits. Copies of the Affidavit and Additional Affidavit is placed as Annexure -VII  & VIII respectively. The report of the HPC was also submitted to the Hon’ble Supreme Court and a copy of the same is placed as Annexure - IX.

11.                The case, after taking due cognizance of all submissions, was finally disposed of by a larger Bench of the Hon’ble Supreme Court vide its order dated 04 Sep 2012. The copy of the Order is placed as Annexure-X.

Developments After Supreme Court Judgment
12.             UOI then sought the opinion of the then Solicitor General on certain aspects of interpretation of the Order dated 04 Sep 12 and his opinion was received on 17.10.2012 and is placed as Annexure XI. UoI then decided to implement the verdict of the Hon’ble Supreme Court. Government Orders have been issued vide MoD No. 34(6)2012-D(Pay/Services) Dated 27 Dec 12, a copy of which is placed as Annexure - XII. 

Interpretations of the Order of the Hon’ble Supreme Court
13.              The Chairman COSC and Chief of Air Staff, Air Chief Marshal N A K Browne PVSM AVSM VM ADC has written to Hon’ble RM stating that the ibid implementation order is not in compliance with the Hon’ble Supreme Court’s Order. The DO from Chairman COSC & CAS is placed as Annexure-XII. When no action was forthcoming, Chairman COSC & CAS wrote another DO to Hon’ble Raksha Mantri on 27 May 13 which is placed as Annexure-XIII. 
14.             To appreciate the issue, it is necessary to examine the order of the Hon’ble High Court of Kerala’s judgment in more detail. The ratio (legal principle) of the judgment given in their order dated 05 Oct 98 is as follows: - 
"Under these circumstances, I am of the view that respondents 2 and 3 had completely misunderstood the scope of extending the benefit of the payment of rank pay to the Army Officers. Rank Pay is something which has been given to Army Officers in addition to the existing pay scales. That is not an amount which has to be deducted in order to arrive at the total emoluments which an Army Officer is entitled to get.”
15.              Based on the afore stated ratio,  the operative part of the Hon’ble High Court of Kerala’s judgment (Annexure –III) reads as under:-        
"Under these circumstances, the respondents 2 and 3 are directed to re-fix the pay of the petitioner with effect from 1.1.86 without deducting the Rank Pay of Rs.200/- as has been done by the respondents 2 and 3. The petitioner is also entitled to get his pay re-fixed in accordance with the pay fixation of 1987 evidenced by Ext. P1. Respondents 2 and 3 are directed to complete the process of re-fixation of the pay of the Petitioner as directed above, within three months from the date of receipt of a copy of this judgment."

ISSUE - 1 : “WITH EFFECT FROM 01.01.86” OR “AS ON 1.1.86”
16.             Issue. The implementation orders dated 27 Dec 12, at Para 6 and 8 have modified the Special Army Instructions 1/S/1987 and corresponding Special Navy and Air Force Instructions in so far as it relates to deduction of Rank Pay and 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.  It is noticeable that the court in its judgment has used the term with effect from 1.1.86 which has been changed to as on 1.1.86 in the ibid Govt order. This subtle change in language narrows down the scope to the extent that it only partially implements the court’s judgment.  The Armed Forces have objected to the use of words ‘as on 1.1.86’.  They are of the opinion that the words ‘with effect from 1.1.86’ which have been used by the courts should be used in these orders to give effect to the Court Orders correctly in letter and spirit.
Armed Forces Views
17.                         In the implementation orders, only the first sentence of the court direction has been mentioned ignoring the remaining part of direction of Hon’ble High Court of Kerala.  Whilst, in the order, the Hon’ble Court has used the words “with effect from 1.1.86” the implementation order reads “as on 1.1.86”.  It is felt by the Services that the term “with effect from” connotes an ongoing application where as the term “as on” implies one time application of the direction of the court.  Therefore, “with effect from” will require re-fixation of pay of all officers on 1.1.86 and thereafter on promotions as well e.g. an officer promoted on 01 Feb 1886 will also be entitled to the benefit of the court order like those who were already in the higher rank on 1.1.86.  The term “as on” on the other hand restricts it only to one time application for those officers who held the rank of Capt to Brig and equivalent on 1.1.86.
18.                         To substantiate the point it is necessary to examine the second sentence of the directive part of the order. The Services have pointed out that MoD has inexplicably omitted this sentence from the judgment quoted in the Govt order.  As per the order of the Hon’ble High Court of Kerala, after having directed to re-fix the pay of the officer with effect from 1.1.86 in the first sentence, the directions continued and stated “The petitioner is also entitled to get his pay re-fixed in accordance with the pay fixation of 1987 evidenced by Ext. P1”. Clearly the court has directed re-fixation of the pay for Maj AK Dhanapalan to be done twice.  It is conceded that the pay cannot be re-fixed twice on the same day i.e. 1.1.86.  The occasion to carry out this second re-fixation can be deduced from the first paragraph of the Hon’ble High Court of Kerala’s judgment which considers the facts of the case and reads: -
“The Petitioner is a retired Commissioned Officer (Major) in the Indian Army.  As per Ext P1 resolution issued by the Government of India, Ministry of Defence, in addition to pay in the integrated scale, rank pay are admissible to the Army officers.  The amount of rank pay for officers in the Rank of Major and equivalent is Rs 600/-.  This is the pay revision of 1987.  In an earlier pay revision with which we are concerned the above amount was Rs 200/-.  But the petitioner was not granted the benefit of the above rank pay…….”
19.                         Therefore, the Hon’ble court has mentioned about two revisions of pay for Maj AK Dhanapalan ie when the rank pay was Rs 200/- and when it became Rs 600/-.  During the 4th CPC regime, the rank pay changed from Rs 200/- to Rs 600/- on promotion from the rank of Captain to Major. Therefore, the court has directed the second re-fixation on the promotion of the then Capt AK Dhanapalan to the rank of Major be also carried out. The MoD order dated 27 Dec 12, however, has not provided for the pay re-fixation again on promotion.  This presumably is due to the fact the MoD letter mentioned the phase “as on” instead of ‘with effect from’.  The phrase ‘as on’ neither relates to nor implements the direction of the judgment in its entirety. The moot issue is that the court order is to be implemented conforming to the principles of law established by the Apex Court’s verdict to give a treatment to “Rank Pay” in fixation of pay of officers in 4th CPC.
20.                       The fact that now needs consideration and opinion is whether the language of the Hon’ble Supreme Court’s Order can be changed by MoD. The consequential effect of replacing the phrase ‘with effect from’ to ‘as on’ also needs validation from legal point of view. Further, it also needs to be considered whether the second line of the judgment of Hon’ble High Court of Kerala as mentioned in Para 18 above needs to be included in the MoD order.
21.             It is pertinent to mention that while upholding judgments of the Hon’ble High Court of Kerala, Hon’ble Supreme Court in its order dated on 04 Sept 2012 has further clarified that:-     
"It is clarified that this order shall govern all similarly situated officers who have not approached the court and also those who have filed writ petitions which are pending before various High Courts/AFT".
22.                       It may be mentioned, in this regard, that in April 2010, a Committee headed by the Defence Secretary which comprised Secretary (Department of Expenditure) and Secretary Defence (Fin) as members in it’s Report had stated that pay fixation needs to be done for Officers on 1.1.86, 1.196 and 1.1.06.  This report was also submitted as a part of the additional affidavit in the Hon’ble Supreme Court.  In the Additional Affidavit, MoD had further submitted that the instant  court order will entail re-fixation of pay of not only the officers entitled to Rank Pay, but pay  scales of other personnel above and below such officers will have to be revised with effect from 1.1.86 firstly, and then from 1.1.1996 and 1.1.2006. i.e. at the time of subsequent pay revisions.  It is for consideration that the Government interpretation of the court order in its submissions to the Hon’ble Supreme Court as part of Affidavits and while implementation of the same order needs to be similar or not. Whether the change in Govt’s stand in the matter as occasioned above is judicially/legally correct may be clarified and commented upon.
23.            The view of Controller General of Defence Accounts (for short CGDA) on this matter has been that whatever was done by Controller of Defence Accounts (Officers) in the case of Maj AK Dhanapalan is to be done now for implementing the court order for affected officers.  This may not be the correct stand to adopt.  If, in the case of Maj AK Dhanapalan (Retd), the judgment has been applied incorrectly that cannot be justifiably extended to all officers.  It may be noted that Maj AK Dhanapalan (Retd) had represented repeatedly against the manner in which the court order was implemented, but he did not move the court for the same when the CDA (O) informed him that the impugned methodology has been incorporated even in the 5th CPC and consequent SAI No. 2/S/98 dated 19th December 1997, i.e. ten months before the Hon’ble High Court of Kerala passed its judgment on 5th October 1998.  It may be appreciated that a retired soldier will have his financial and other limitations in moving the courts on each wrong.  Just because Maj Dhanapalan did not appeal to the Courts cannot mean that he accepted that the Hon’ble High Court’s order has been implemented correctly in his case also.
24.                       Consequential Effect. The implementation orders issued on 27 Dec 12 has used a particular interpretation of the court orders which is not in conformity  with the many sworn submissions of MoD to Hon’ble Supreme Court. This deviation would result in the following inconsistencies in the Govt Order:-
(a)        It will lead to different officers of the same rank drawing different pay with same years of service in the currency of the same pay commission thus violating the basic principle that personnel belonging to a particular rank with equal years of service are remunerated equally in terms of pay and pension.

(b)        Extending provisions of judgment to the officers who were in the service as on 1.1.86 in the rank of Captain to Brigadier only is in violation of judgment and spirit of the judgments of Hon'ble High Court/ orders of Hon’ble Supreme Court which have implied that it should be an ongoing process applicable with effect from 1.1.86 to all similarly situated officers and not only to officers in service as on 01.01.86.
25.            Amendment Sought by Armed Forces in implementation orders.  Re-fixation of pay be done with effect from 01.01.86 in respect of all defence officers who were in service as on 01.01.86 as well as for those who joined/promoted thereafter as per the documented verdict of Hon'ble Supreme Court.
ISSUE - 2 : REVISION OF MINIMUM PAY OF RANKS IN THE INTEGRATED SCALE
26.           Issue. The Govt order issued for implementing court order has no provision to change the Integrated Pay Scale (Para 3(a)(i) of SAI/SNI/SAFI 1/S/87) and the minimum pay for each rank in the Integrated Pay Scale ( Para 6 (a) (ii)of SAI/SNI/SAFI 1/S/87). This in fact has resulted in two different pay scales for the same rank in the currency of the 4th CPC.  A large number of officers who were promoted to the rank of Capt and Equivalent after 01.01.86 as well as those who joined service after that date and became entitled for Rank Pay subsequently will be adversely affected by the implementing order and no change in their pay is envisaged and they will continue to draw the pay as given in the existing SAI/SNI/SAFI relating to 4th CPC.
Armed Forces Views
27.            As per Armed Forces, the provision of deduction of rank pay as mentioned in para 6 (a) (ii) of the Special Army Instruction and corresponding instructions for the other two services is just one sentence of the ibid para.  This sub-sub Para lays down the methodology of deduction of rank pay from the total emoluments of an officer and the process to be adopted thereafter.  It also states that in case the stage of fixation falls below the minimum pay for the rank held by the officer on 01 Jan 1986 as prescribed in the tables below, the pay will be stepped up to such minimum provided the officer has completed the length of reckonable commissioned service indicated in the same table. The ibid Para contains a table which specifies, within the integrated scale, the minimum pay for each rank.  It may be pertinent to note that neither such table was recommended by the 4th CPC nor was it published in the Government resolution approving the recommendations of the 4th CPC.  These have been added in SAI/SNI/SAFI No. 1/S/87 by MoD.  These minimums for each rank had also been depressed by an amount equal to the rank pay only due to deduction of rank pay.   This is borne out by simple arithmetic and comparing equivalent pay scales of civil and military and also Para 2.3.10 (iv) of the report of the 6th CPC which while analysing the Rank Pay noted: -
“(iv) The Fourth CPC had continued this edge in devising the running pay band for Defence Forces officers up to the rank of Brigadier and had revised the integrated pay scale taking in account the time taken for promotion to different pay scales. The element of rank pay was carved out of the pay scales so revised after giving the edge vis-à-vis civilian group A officers.”
28.           It is imperative that the rank pay which was carved out of the pay scales by the impugned SAI/SNI/SAFI No. 1/S/87 is added back.  Only this will implement the Hon’ble Courts’ orders in letter and spirit.  The minimum for each rank represents its pay scale and need to be revised to give effect to re-fixation with effect from 1.1.86.  Deletion of only the clause related to deduction of rank pay without changing the minimum for each rank, which has also been arrived at by deducting the rank pay, gives rise to a situation where Officers who were promoted to the rank of Capt and equivalent or joined service after 1.1.86 and rose to the ranks of Capt/equiv will draw lesser pay than those who got promoted before that date with same years of service. This is because the implementation orders has not addressed this aspect by due modification of para 6 (a)(ii) table and it has resulted in enhancing the pay of the rank only for those who held the rank as on 01 Jan 86.
29.           The Division Bench of Hon’ble High Court of Kerala, while dismissing the appeal of UoI against the judgment of Learned single judge directed: -
“It is clear that for Civilian officers, there is no rank pay.  But for Army Officers, there is rank pay admittedly as mentioned above.  Necessarily, when the principles as mentioned above applies to Army Officers, the rank pay shall also be added to substantive pay.  That is what has been directed in the impugned judgment.  Therefore, there is no merit in the appeal.  The appeal fails.”
30.            The implementation orders dated 27 Dec 12 ignores this judgment and fails to add Rank Pay to the substantive pay for each rank tabulated in Para 6 (a) (ii) of SAI 1/S/87 which additionally contains the provisions for deduction of rank pay.
31.             To understand this anomaly, the pay fixation of officers commissioned in Dec 80 and Jun 81, who will get different pay is exemplified below :-


DOC : DEC 80
DOC : Jun 81
Rank on 1.1.86
Flt Lt
Fg Offr
Existing Basic Pay (Min of the scale)
1200
910
DA, ADA, Ad Hoc DA, IR
1640
1514
Existing Emoluments
2840
2425
20% of Basic Pay
240
182
Total Emoluments
3080
2607
Pay Fixation 1.1.86 (Revised Minimum)
3100
2700
Pay after 5 yrs of Service As on 01/06/1986
3100
2800
32.            This is also against the basic principle enunciated by pay commissions which ensures that officers of the same rank and length of service are remunerated equally.  5th CPC, at Para 147.12 of their report elucidating this principle have observed: -
“147.12:  Armed Forces officers up to the rank of Brigadier are presently paid on the basis of an integrated pay scale introduced on the recommendations of the Fourth CPC so as to provide reasonable career progression to service officers. To compensate for ranks attained, rank pay is also granted which attracts dearness allowance and is reckoned for pensionary benefits. The integrated pay scale has a fixed minimum pay for each rank linked to number of years taken to achieve such rank. The resultant effect is that personnel belonging to a particular rank with equal number of years of service are remunerated equally….” 

Amount of Minimum of Scale/Rank Pay
33.            The pay commission has not given the arithmetic or the logic as to how it arrived at the amount (quantum) of Rank Pay. This can be derived by examining the report in a holistic manner. It is important to know that all Pay Commissions decide principles for enhancing the pay scales which may or may not be discussed in detail in their report. These principles are common to all pay scales irrespective of the cadre save some exceptions which are explained in the text of the report.
34.             Senior Time Scale for civil services, before 4th CPC, started at Rs 1100/1200.  On the other hand, the pay scale of a Captain in the Army and his equivalents in other services, started at 1200.  The start of the scale recommended by 4th CPC for STS was Rs 3000.  If the Rank Pay was not introduced by the 4th CPC, the new pay scale recommended by the 4th CPC would have started at the same level for both, the STS in the civil and the Captain in the Army i.e Rs 3000/-.  The table at Para 6 (a) (ii) of SAI/SNI/SAFI No. 1/S/87 gives the start of scale of a Capt at Rs 2800/-.  This along with the Rank Pay of Rs 200/- makes it equal to the start of scale of the STS at Rs 3000/. These figures clearly show that Rank pay element has also been deducted from the start of the scale of the rank and needs to be added back keeping in mind the Judgment in Maj Dhanapalan’s Case.  It is also relevant that Para 6 (a) (ii) of SAI/SNI/SAFI No. 1/S/87, which has the table specifying the minimum pay for each rank deals with the provision of deduction of rank pay in pay fixation.
35.            Consequential Effect.  The genesis of the term minimum pay of the rank is that It was given as a protection in the pay fixation if the total emoluments after deduction of rank pay were below the prescribed amount. It was also identified and notified in pay instructions to ensure that officers with same years of service and rank draw same pay.  To put the matter in its perspective, it is stated that there has so far been no instance wherein officers of same rank and length of service had two different pay scales in the same pay commission.  The minimum re-fixed pay in the revised pay scales for a Capt /equiv promoted on or before 01.01.86 will be fixed at Rs 3000+200 (Rank Pay) as per the Govt order. However, as per the same Govt letter officers promoted to the same rank after 1.1.86 with corresponding length of service would get Rs 2800+200 (Rank Pay) only as no minimums have been changed. Provisions of the Govt letter also effectively means that officers promoted to the rank of Capt and equivalent after 01 Jan 86 will not be covered by this order. This will lead to officers with same years of service and rank drawing different pay (lesser pay for those officers who joined/promoted as Capt/equiv after 01 Jan 86) in the currency of the same pay commission. Therefore, it violates the basic principle that personnel holding similar rank with equal years of service are remunerated equally in terms of pay and pension. It is illustrated through the following example:-
37.              
Rank
Pay in
 III CPC
Minimum Pay in IV CPC
(Prior to Court verdict)
Pay to be Revised for Offrs as on 01 Jan 86 (As per MoD letter)
Anomaly in Pay for other offrs who join/promoted to the rank of Capt/equal after 01 Jan 86)
Capt
1,200
2800 + 200 (Rank Pay)
3000 + 200(Rank Pay)
2800/- + 200/- (Rank Pay)
STS (Civ)
1100-1200
3000/-
3000/-
3000/-
Maj
1500
3400+600
3700/3950+600
3400+600
Dy Secy
1500
3700/3950
3700/3950
3700/3950
Lt Col
1800
3900+800
4500/4800+800
3900+800
Director
1800
4500/4800
4500/4800
4500/4800
36.            Amendments Sought by Armed Forces.  The Services have stated that the minimum of pay for each rank in the Integrated Pay Scales of IVth CPC, which were then arrived at by deducting the Rank Pay, needs to be re-fixed after adjustment for the Rank Pay to ensure single pay scale for same rank and length of service. This would also restore the modified parity for pre-1986 retirees.
ISSUE - 3 : REVISING THE TOP OF INTEGRATED SCALE
37.            Issue.  The top of the 4th CPC integrated scale of Rs 5100 has not been amended to remove the effects of deduction of rank pay.

Armed Forces Views
38.            In support of the issue stated above, the Armed Forces have stated that the Fourth Pay Commission vide para 28.12 of its report, had recommended the following Integrated Scale for all officers upto the rank of Brigadier and equivalent in the three services spanning over a period of 29 years: -
Rs 2300-100-4200 EB-100-5000
39.             Even though all the pay scales on the civilian side, starting from Rs 3900/- onwards, had an increment of Rs 150, the pay commission kept the rate of increment for defence officers at Rs 100 throughout this integrated scale. This aberration was later rectified by the Government and the following integrated scale was finally approved: -
Rs 2300-100-3900-150-4200 EB-150-5100
40.           The final orders not only changed the rate of increment but also raised the top of the scale to Rs 5100 but this resulted in reducing the time-span of the integrated scale from 29 yrs to 25 yrs. 
41.             In view of the above it has been brought out that similar to the minima for each rank, the maximum was also depressed to the extent of the Rank Pay.  To emphasise the issue it may be seen that the top of the scale on the civil side for DIG Police, who is considered to be equivalent to a Brigadier (and equivalent) was Rs 6150/- whilst the Brigadier’s top of scale was retained at Rs 5000 which is the next stage from Rs 4950/- which was not present in integrated scale recommended by the 4th CPC.  The Brigadier was given a rank pay of Rs 1200/- making a total of Rs 6200/- (the nearest possible stage to Rs 6150/-). This is how the pay scale of Brig/equiv was depressed. Now with the Hon’ble Supreme Court order that RP is to be given over and above the Basic Pay, there is an imperative to relook at the top of the integrated scale.
42.           It has been also pointed out that the above stated arrangement did not pose any practical problem earlier when the Rank Pay was deducted from the emoluments of officers of the Rank of Brigadier/equivalent.  But now with the re-fixation occasioned by deletion of the clause relating to deduction of Rank Pay, the re-fixation of pay of all officers who were drawing top of the scale for Col/equivalent in 3rd CPC and all officers of Brigadier Rank irrespective of seniority will be restricted at the top of integrated scale of Rs 5100. Thus Brigadiers/equivalent will be deprived of the fixation benefit (20% of emoluments of 3rd CPC) given to Defence and Civilian officers and in effect would be denied the legitimate fixation benefit.  A live example of pay fixation of two officers on top of Brigadier scale is given below: -
Name & No                            :  Air Cmde A
                                                               Air Cmde B                                                                                                  As per SAI                 As per Implementation Order
Basic pay on 31.12.85          :           2400                           2400
DA+ADA+IRs                       :           2572                           2572
Existing Emoluments           :           4972                           4972
20% of BP                              :           480                             480
Less: Rank Pay                     :           1200                               0
Total Emoluments                :           4272                           5472
Pay in Integrated Scale       :           4950                           5100 (Top of Integrated
                                                                                    Scale)
43.            Further, as per  the above example the said officers will not get any benefit of fixation because as per Para 6 (c) of SAI/SNI/SAFI No. 1/S/1987, if the total emoluments computed for fixation are more than the maximum of the revised scale, the pay will be fixed at the maximum of the revised scale.  There is no provision of even personal pay for these officers as per the CGDA.   In other words, these officers would get fixed on the top of the scale but without fixation benefit and stagnate from the day of fixation itself i.e. 1.1.86. 
44.           Consequential Effect. This interpretation by MoD defeats the very purpose of integrated scale which was to provide reasonable pay progression to officers. There is no parallel of such an example in AIS or Gp A services where benefit of fixation has not been given to all officers in a Rank/Post whereas all officers of the rank of Brig and equiv stagnate from the date of initial fixation. To remedy this unjust disadvantage and also to rectify the shortened length of integrated scale, the top of scale needs to be suitably enhanced/extended to restore the original span up to 29 years by due extrapolation of integrated scale. Further, it may be relevant to bring out here that resolving the stagnation through grant of personal pay is fraught with two distinct disadvantages to the effected Officers - firstly, the Stagnation increment accrues once in two years and secondly personal pay is not considered for the purpose of determining corresponding replacement scale in subsequent Pay Commissions, perpetuating the financial loss to concerned officers as long as they are in the service of the Nation and thereafter in their pensions. 
45.            Amendments Sought by Armed Forces.  The Armed Forces have asked that this anomaly can be resolved by enhancing the upper limit of Rs 5100 in the integrated pay scale of IVth CPC, which was arrived at after making allowance for the Rank, to ensure effective implementation of the Govt orders.
ISSUE - 4 : APPLICATION OF COURT ORDERS TO SUBSEQUENT PAY COMMISSIONS
46.           Issue.  During the implementation of Vth CPC, the pay scales of officers of the rank of Capt to Brigadier and equivalent, were downwardly adjusted by an amount equal to Rank Pay (revised), thereby causing a consequential effect on getting lesser replacement pay for defence officers in Vth CPC as well. This further lead to obtaining lower replacement scales and Grade Pay in the VIth CPC. Even the pay fixation formula of Vth CPC, which was similar to that of IVth CPC, has not been amended by deleting the provisions relating to deduction of Rank Pay on 01 Jan 96. It is for consideration whether the adoption of the impugned methodology in SAI/SNI/SAFI No. 2/S/98 before the Hon’ble High Court delivered its judgment on 5th October 1998 and UoI not referring to it in its many affidavits in the Hon’ble High Court of the Hon’ble Supreme Court justifies continuing with that deduction from 01 Jan 96 to 31 Dec 2005.   The Govt letter does not address these aspects and thus violates the spirit of the apex court's judgment. There is thus a need to take a view on the demand of Services seeking deletion of the provision relating to deduction of Rank Pay from the total emoluments for re-fixation in revised pay scales as on 1.1.96.
Armed Forces Views
47.            In support of the above anomaly Armed Forces have stated that it is a well settled position that the decision of the apex court becomes law of the land which needs to be applied equally to other similarly placed cases/situations. The ratio of this case has to be applied to subsequent Pay Commissions in similar situations.
48.           Treatment of Rank Pay in 4th CPC.  As per fixation formula enshrined at Para 6 (a) (i) & (ii) of SAI 1/S/87 {IV CPC}; an amount representing 20% of the basic pay in the existing scale shall be added to the ‘existing emoluments’ of the officer.  After the existing emoluments have been so increased, an amount equivalent to the rank pay, if any, appropriate to the rank held by the officer on 01 January 1986 will be deducted.
49.           Treatment of Rank Pay in 5th CPC.  Similarly the fixation formula of the 5th CPC, as given at Para 5 (a) (i) & (ii)  of SAI 2/S/98, enunciated that an amount representing 40% of the pay including stagnation increments, if any, and rank pay where applicable, in the pre-revised scale, shall be added to the ‘emoluments’ of the officer.  After the existing emoluments have been so increased, an amount equivalent to the rank pay prescribed at Para 3 (a) (ii) above shall be deducted…’
50.            It can be seen that the fixation formula of the SAI 1/S/87 (4th CPC) which was verbatim adopted in the SAI 2/S/98 (5th CPC) except that the fixation benefit of 20% given by the 4th CPC was changed to 40%.  This change was common to all central government employees.  But the clause for deducting Rank Pay continued in the 5th CPC also. This deduction of Rank Pay, held illegal in 4th CPC as per court orders should automatically get struck down in the 5th CPC as MoD did not disclose this to the Hon’ble High Court of Kerala in its W.A. No 518 of 1999 or any other case including IA No. 9 of 2010 in TP (C) 56 0f 2007 dealing with Rank Pay.
51.             It is also relevant to mention here that Maj AK Dhanapalan had filed the case in Kerala High Court in 1996 which was decided on 05 Oct 98.   The SAI on the 5th CPC award was issued on 19 Dec 97.  It is pertinent that the case remained sub judice till it was finally decided by the Supreme Court on 04 Sep 12.  Further as the case was filed in 1996 even before the recommendations of the 5th CPC were made, neither Maj AK Dhanapalan (Retd) could have raised the anomalies of similar nature in the 5th CPC nor the court could have passed any orders restraining GoI regarding treatment of Rank Pay in 5th CPC.  Till 04 Sep 12 when the Supreme Court finally settled the issue, the government did not take any cognizance of court direction whilst issuing orders for implementation of 5th CPC awards, or refer to it in the Hon’ble Courts.  The moot issue that needs to be noted is that revised scales promulgated for implementation of a fresh pay commission have their basis in the old pay scales of the previous pay commission.  In no circumstance, without the reasons explained in the report, can the revised pay of two employees of the Govt drawing same pre-revised Pay Scale be different. This cardinal principle has however, been flouted in the case of Armed Forces Officers, both in the 4th and 5th CPC. An example as appended here under showing sequential progression of the pay of an Armed Forces officer and a similarly placed civilian will substantiate this fact:-

RANK
3rd CPC PAY
4th CPC PAY
5th CPC PAY
GRADE PAY IN 6th CPC
CAPT
1200
2800 + 200 (RP) = 3000*
9600 + 400 (RP) = 10000*
6100
STS (CIVIL)
1100/1200
3000
10000
6600

Note.  * The Rank Pay has been carved out of the pay scale and only if it is added back, does the pay become equal to civilians. In 5th CPC the scale has been lowered to Rs 9,600-11,400 as against Rs 10,000-15,600 to for STS. This deficiency in pay scales and fixation is rectified by SC judgment and needs to be given effect in this spirit alone.
52.            Consequential Effect. The implementation order of GoI dated 27 Dec 12 does not incorporate any change for subsequent pay commissions i.e. 5th and 6th CPCs.  This is despite the fact that the treatment of Rank Pay at the time of re-fixation of pay for transition from one CPC to another has been exactly similar and has resulted in depressed replacement pay scale on both occasions. This will certainly invite unnecessary and avoidable litigation whose outcome is likely to go against the Government.  It is, therefore, imperative that all consequential effects of the Supreme Court Judgment as brought out above are carefully analysed and incorporated in the implementation order to give effect to the verdict in its letter and spirit. 
53.            Moot Issue.  The Ratio of the judgment needs to be applied in subsequent pay commissions or not?
QUERIES RAISED
54.            UoI has obtained relaxation in the interest by giving an interpretation of the court order submitted by its officers in the form of affidavits.  Is it bound to implement those steps which, it informed the court, would be required to implement the judgment?
55.            Does the following part of the judgment make it obligatory for the government to give rank pay in addition to the existing pay scales: -
"Under these circumstances, I am of the view that respondents 2 and 3 had completely misunderstood the scope of extending the benefit of the payment of rank pay to the Army Officers. Rank Pay is something which has been given to Army Officers in addition to the existing pay scales. That is not an amount which has to be deducted in order to arrive at the total emoluments which an Army Officer is entitled to get".
56.            The High Court of Kerala in its judgment dated 05 Oct 98 has used the term “re-fix the pay of the petitioner with effect from 01 Jan 86”.  It has also stated that “The petitioner is also entitled to get his pay re-fixed in accordance with the pay fixation of 1987”.  Does the term ‘with effect from’ denote a continuum? Does the ibid judgment grant the benefit only on one day ie “as on 01 Jan 1986” or on a subsequent day also?
57.            If the amount of rank pay has also been deducted while determining the minima for each rank as specified at Para 6 (a) (ii) of SAI 1/S/87, is the rank pay to be added back to these minima?
58.            If the rank pay has been deducted from the top of the scale, is it be added back to such top of scale?
59.            If the court order has corrected the fixation formula by striking down deduction of rank pay clause in 4th CPC, is it obligatory to strike down deduction of rank pay clause in a similar formula in the subsequent pay commission?
60.           Is there any legality in MoD notifying SAI/SNI/SAFI No. 2/S/98 on 19 Dec 97 when the matter (O.P. No. 2448 of 1996) was still sub-judice in the Hon’ble High Court of Kerala?
61.             Is there any legality in MoD continuing with the impugned methodology when MoD did not disclose to the Hon’ble High Court of Kerala in W.A. No. 518 of 1999 filed after enacting the ibid SAI/SNI/SAFI No. 2/S/98 and affidavits in year 2000 onwards till the Division Bench passed its judgment on 04 Jul 2003?
62.           If SAI/SNI/SAFI No. 2/S/98 has no legal legs to stand on, should MoD incorporate the same methodology of restoring the deducted Rank pay in its implementation order?  

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