Union Of India vs. Jossy Thomas

Court:Supreme Court of India

Judge:Hon'ble Hon'Ble The Chief Justice, Bela M. Trivedi

Case Status:Unknown Status

Order Date:22 Aug 2022

CNR:SCIN010187762021

AI Summary

Supreme Court clarifies the Modified Assured Career Progression Scheme implementation date and financial upgradation entitlements for government employees. The landmark judgment addresses three critical issues: the effective date of MACP Scheme (1.9.2008 vs 1.1.2006), the quantum of financial upgradation (next grade pay vs next promotional post), and relaxation of pre-promotional course requirements for Central Armed Forces personnel.

Ratio Decidendi:

The Modified Assured Career Progression Scheme is an incentive scheme for relief against stagnation, not part of the pay structure. It is applicable with effect from 1.9.2008 as per the Office Memorandum dated 19.5.2009. Under the MACP Scheme, employees are entitled to financial upgradation equivalent to the immediate next grade pay in the hierarchy of pay bands as stated in Section 1, Part A of the First Schedule to the Central Civil Services (Revised Pay) Rules, 2008, not the pay of the next promotional post. For Central Armed Forces personnel, pre-promotional course requirements shall not be insisted upon where administrative or other reasons prevented participation.

Obiter Dicta:

The Court observed that courts should be reluctant to interfere with well-deliberated decisions by expert bodies like the Central Pay Commission unless the adoption is bad on account of statutory violation, contravenes constitutional mandate of equality, is discriminatory, manifestly arbitrary, or negates fundamental rights. In fiscal matters including pay fixation and terms of service, courts must tread carefully as interference may have serious impact on public exchequer and grave financial implications. The doctrine of legitimate expectation has no application in the facts of this case.

Case Identifiers

Primary Case No:SLP(C) No. 16442/2021

Case Type:Special Leave Petition (Civil)

Case Sub-Type:SLP - Modified Assured Career Progression Scheme Implementation

Secondary Case Numbers:SLP(C) No. 16065/2021, SLP(C) No. 16179/2021, SLP(C) No. 4279/2022, Diary No. 14322/2020

Order Date:2022-08-22

Filing Year:2021

Court:Supreme Court Of India

Bench:Division Bench

Judges:Hon'ble Sanjiv Khanna, Hon'ble Bela M. Trivedi

Petitioner's Counsel

Madhavi Divan

Additional Solicitor General - Appeared

Vikramjit Banerjee

Additional Solicitor General - Appeared

Vimla Sinha

Advocate - Appeared

Rajesh K Singh

Advocate - Appeared

Seema Bengani

Advocate - Appeared

Prashant Singh

Advocate - Appeared

Shyamal Kumar

Advocate - Appeared

Amit Sharma

Advocate - Appeared

Vaishali Verma

Advocate - Appeared

Varun Chugh

Advocate - Appeared

Nidhi Khanna

Advocate - Appeared

Arvind Kumar Sharma

Advocate on Record - Appeared

Respondent's Counsel

V Mohana

Senior Advocate - Appeared

Manoj V George

Advocate - Appeared

Vignesh Ram

Advocate - Appeared

Renjit Philip

Advocate - Appeared

Shilpa Liza George

Advocate on Record - Appeared

Richa Ojha

Advocate - Appeared

Satish Kumar

Advocate on Record - Appeared

K.K. Sharma

Advocate - Appeared

Rupali Sharma

Advocate on Record - Appeared

Renjith B. Marar

Advocate - Appeared

Lakshmi N. Kaimal

Advocate on Record - Appeared

M. J. Santhosh

Advocate - Appeared

Arun Poomulli

Advocate - Appeared

Prashant Bhushan

Advocate - Appeared

Om Prakash Agarwal

Advocate - Appeared

Manjeet Chawla

Advocate on Record - Appeared

E. C. Vidya Sagar

Advocate on Record - Appeared

Advocates on Record

Arvind Kumar Sharma

B. V. Balaram Das

Shilpa Liza George

Satish Kumar

Rupali Sharma

Lakshmi N. Kaimal

Manjeet Chawla

E. C. Vidya Sagar

eCourtsIndia AI^TM

Brief Facts Summary

The Union of India filed Special Leave Petitions challenging High Court orders that had granted financial upgradation benefits to government employees under the Modified Assured Career Progression Scheme. The High Court had held that MACP Scheme applies from 1.1.2006 and that employees are entitled to financial upgradation equivalent to the next promotional post. The Union of India contended that MACP Scheme applies from 1.9.2008 and that financial upgradation should be only to the next grade pay. The respondent employees, including Central Armed Police Forces personnel, sought to maintain the High Court's favorable orders. The Supreme Court heard arguments over multiple dates and reserved judgment.

Timeline of Events

2008

Sixth Central Pay Commission recommended Modified Assured Career Progression Scheme with financial upgradation to next immediate grade pay

30-08-2008

Government of India issued Resolution accepting recommendations of Sixth Central Pay Commission regarding revised pay structure and MACP Scheme

29-08-2008

Central Civil Services (Revised Pay) Rules, 2008 were notified with effect from 1.1.2006

19-05-2009

Office Memorandum issued operationalizing MACP Scheme with effect from 1.9.2008

2019-09-13

High Court of Delhi passed orders in multiple WPC cases granting financial upgradation benefits to government employees

2019-2021

Multiple High Court orders passed in favor of government employees on MACP Scheme issues

2021-08-13

Union of India filed Special Leave Petition No. 16442/2021 in Supreme Court

2021-10-04

Supreme Court first heard the matter

2021-10-29 to 2022-08-22

Supreme Court heard the matter on 19 separate dates

2022-08-02

Supreme Court heard arguments and reserved judgment

2022-08-22

Supreme Court pronounced judgment partly allowing the appeals

Key Factual Findings

The Sixth Central Pay Commission recommended MACP Scheme with financial upgradation to next immediate grade pay to address inter-departmental disparities

Source: Recited from Sixth Central Pay Commission Report

The Government of India issued Resolution dated 30.8.2008 accepting the recommendations of the Sixth Central Pay Commission

Source: Recited from Government Resolution

The Central Civil Services (Revised Pay) Rules, 2008 came into force on 1.1.2006 but did not contain any provision for MACP Scheme

Source: Current Court Finding

The Office Memorandum dated 19.5.2009 operationalized the MACP Scheme with effect from 1.9.2008

Source: Recited from Office Memorandum

The Government Resolution of 30.8.2008 was not notified and enforced as law and therefore did not confer legal rights

Source: Current Court Finding

The ACP Scheme was superseded by MACP Scheme with effect from 1.9.2008

Source: Recited from M.V. Mohanan Nair judgment

The High Court of Delhi had ruled that MACP Scheme applies from 1.1.2006 and that employees are entitled to financial upgradation equivalent to next promotional post

Source: Recited from Impugned High Court Orders

Multiple government employees from Central Armed Police Forces and other departments were affected by the MACP Scheme implementation

Source: Recited from Party Information

Primary Legal Issues

1.Effective date of implementation of Modified Assured Career Progression Scheme - whether 1.1.2006 or 1.9.2008

2.Quantum of financial upgradation under MACP Scheme - whether equivalent to next grade pay or next promotional post

3.Applicability of pre-promotional course requirements for Central Armed Forces personnel in MACP Scheme

Secondary Legal Issues

1.Nature of MACP Scheme - whether it is part of pay structure or an incentive scheme

2.Distinction between Assured Career Progression Scheme and Modified Assured Career Progression Scheme

3.Scope of judicial review in matters of government pay policy and pay commission recommendations

4.Applicability of doctrine of legitimate expectation in pay-related matters

5.Principles of statutory interpretation in pay-related rules and government resolutions

Questions of Law

Is MACP Scheme applicable with effect from 1.1.2006 or 1.9.2008? ANSWERED: 1.9.2008

Are employees entitled to financial upgradation equivalent to next promotional post or next grade pay? ANSWERED: Next grade pay

Should pre-promotional course requirements be relaxed for Central Armed Forces personnel? ANSWERED: Yes, with relaxation

Statutes Applied

Central Civil Services (Revised Pay) Rules, 2008

Rule 1(2), Section 1 Part A First Schedule

The Rules came into force on 1.1.2006 for pay and dearness allowance, but MACP Scheme as an incentive scheme was operationalized from 1.9.2008 through Office Memorandum. The Court held that MACP Scheme is not part of the pay structure but an incentive scheme operating independently.

Constitution of India

Article 309, Article 148(5)

These provisions confer power on the Executive to make rules regarding conditions of service of government employees. The Court emphasized that pay fixation and incentive schemes are matters of executive discretion based on expert recommendations.

Petitioner's Arguments

The Union of India argued that: (1) MACP Scheme should be applicable from 1.9.2008 as per the Office Memorandum, not from 1.1.2006, as it is an incentive scheme not part of pay structure; (2) Financial upgradation should be to the next grade pay in the hierarchy, not to the next promotional post, as this was the deliberate change made by the Sixth Pay Commission to address inter-departmental disparities; (3) The ACP Scheme was superseded by MACP Scheme and employees cannot cherry-pick benefits from both schemes; (4) Implementing MACP from 1.1.2006 would result in large-scale recoveries from retired employees and create administrative chaos; (5) The Government Resolution of 30.8.2008 did not confer legal rights as it was not notified; (6) Courts should defer to expert recommendations of the Pay Commission in fiscal matters.

Respondent's Arguments

The respondent employees argued that: (1) MACP Scheme should apply from 1.1.2006 as it affects pay structure and pension, and the Government Resolution of 30.8.2008 clearly stated implementation from 1.1.2006 for pay and dearness allowance; (2) Financial upgradation should be equivalent to the next promotional post, as this was the benefit under the ACP Scheme and there was no clear indication of change; (3) The principle of equal pay for equal work should apply, and purposive interpretation should be used to grant maximum benefits to employees; (4) The MACP Scheme should be interpreted to provide relief against stagnation, which requires higher financial benefits; (5) Pre-promotional course requirements should be relaxed for Central Armed Forces personnel who could not attend due to administrative reasons.

Court's Reasoning

The Supreme Court held that: (1) MACP Scheme is an incentive scheme for relief against stagnation, not part of the pay structure. The Office Memorandum dated 19.5.2009 operationalized the MACP Scheme with effect from 1.9.2008. The Central Civil Services (Revised Pay) Rules, 2008 came into force on 1.1.2006 but did not contain any provision for MACP Scheme. The Government Resolution of 30.8.2008 did not confer legal rights as it was not notified and enforced. Therefore, MACP Scheme is applicable from 1.9.2008. (2) The Sixth Central Pay Commission deliberately recommended MACP Scheme with financial upgradation to the next immediate grade pay to address inter-departmental disparities that existed under the ACP Scheme. This was a well-considered policy decision after expert examination. The Court should not substitute its views on pay policy matters. Financial upgradation under MACP Scheme is to the next grade pay in the hierarchy, not the next promotional post. (3) For Central Armed Forces personnel, a liberal and pragmatic approach is required. Where administrative or other reasons prevented participation in pre-promotional courses, the requirement should be relaxed. The Court accepted the directions given by the Delhi High Court in Ram Avtar Sharma case. (4) The Court distinguished between the ratio in M.V. Mohanan Nair (which held MACP is an incentive scheme) and Balbir Singh Turn (which held MACP applies from 1.1.2006), noting that the entire reasoning in M.V. Mohanan Nair cannot be reconciled with Balbir Singh Turn. The Court followed M.V. Mohanan Nair and R.K. Sharma.

Statutory Interpretation Method:

Literal Interpretation - The Court read the Office Memorandum literally to determine the effective date of MACP SchemeHarmonious Construction - The Court harmonized the Government Resolution with the Office Memorandum and the Central Civil Services RulesPurposive Interpretation - The Court rejected purposive interpretation arguments and held that MACP Scheme must be interpreted according to its express terms

Judicial Philosophy Indicators:

Deference to Executive Expertise - The Court deferred to the Sixth Central Pay Commission's expert recommendations
Restraint in Fiscal Matters - The Court emphasized caution in interfering with government pay policy decisions
Pragmatic Approach - The Court adopted a pragmatic approach for Central Armed Forces personnel regarding pre-promotional course requirements
Emphasis on Finality - The Court was concerned about reopening past cases and creating large-scale recoveries

Order Nature:Substantive

Disposition Status:Disposed

Disposition Outcome:Allowed (Partly)

Impugned Orders

High Court Of Delhi

Case: WPC No. 402/2021

Date: 2021-01-12

Specific Directions

1.MACP Scheme is applicable with effect from 1.9.2008
2.Financial upgradation under MACP Scheme is equivalent to the immediate next grade pay in the hierarchy of pay bands as stated in Section 1, Part A of the First Schedule to the Central Civil Services (Revised Pay) Rules, 2008
3.For Central Armed Forces personnel, pre-promotional course norms shall not be insisted upon where administrative or other reasons prevented participation
4.Impugned judgments set aside to the extent they hold MACP Scheme applies with effect from 1.1.2006 and that employees are entitled to financial upgradation equivalent to next promotional post

Precedential Assessment

Binding (SC)

This is a Supreme Court judgment on a matter of significant public importance affecting a large number of government employees. The judgment clarifies the law on MACP Scheme implementation and is binding on all lower courts and government authorities. The judgment also reconciles conflicting precedents and establishes clear legal principles.

Tips for Legal Practice

1.MACP Scheme is an incentive scheme for relief against stagnation, not part of pay structure, and applies from 1.9.2008. This distinction is critical for determining applicable rules and calculating benefits.

2.Financial upgradation under MACP Scheme is to the next grade pay in the hierarchy, not the next promotional post. This significantly reduces the quantum of benefits compared to what employees may have expected.

3.Courts should defer to expert recommendations of Pay Commissions in fiscal matters and should not substitute their views on pay policy. This principle limits the scope of judicial review in pay-related disputes.

4.Pre-promotional course requirements can be relaxed for Central Armed Forces personnel where administrative reasons prevented participation. This pragmatic approach should be applied liberally in similar cases.

Legal Tags

Modified Assured Career Progression Scheme implementation date Supreme Court IndiaFinancial upgradation next grade pay versus next promotional post government employeesCentral Civil Services Revised Pay Rules 2008 MACP Scheme application Supreme CourtSixth Central Pay Commission recommendations deference judicial review government policyPre-promotional course requirements Central Armed Forces personnel MACP Scheme relaxationIncentive scheme versus pay structure MACP Scheme Supreme Court interpretationGovernment employee stagnation relief MACP Scheme Supreme Court guidelines IndiaInter-departmental disparities pay scales MACP Scheme Supreme Court analysisAssured Career Progression Scheme supersession MACP Scheme Supreme Court rulingGovernment Resolution versus Office Memorandum legal rights conferment Supreme Court

(2020) 5 SCC 421

Union of India and Others v. M.V. Mohanan Nair

2020Supreme Court of IndiaThree Judge Bench

MACP Scheme is an incentive scheme for relief against stagnation, not part of pay structure. Financial upgradation is to next grade pay in hierarchy, not next promotional post. ACP and MACP Schemes are different with different benefits. Courts should not substitute policy decisions of expert bodies like Pay Commission.

Relied Upon

(2021) 5 SCC 579

Union of India v. R.K. Sharma and Others

2021Supreme Court of IndiaTwo Judge Bench

MACP Scheme is applicable from 1.9.2008, not 1.1.2006. The ratio in M.V. Mohanan Nair cannot be reconciled with Balbir Singh Turn. Courts should not reopen past cases or create large-scale recoveries by applying MACP from 1.1.2006.

Relied Upon

(2018) 11 SCC 99

Union of India and Others v. Balbir Singh Turn and Another

2018Supreme Court of IndiaTwo Judge Bench

MACP Scheme should be applicable from 1.1.2006 as it affects pay structure and pension. The Court distinguished this from R.K. Sharma but noted the ratio cannot be reconciled with M.V. Mohanan Nair.

Distinguished

W.P. (c) No. 5278 of 2013 decided on 12.8.2014

Ram Avtar Sharma v. Director General of Border Security Force

2014Delhi High CourtNot specified

Pre-promotional course requirements should be relaxed for Central Armed Forces personnel where administrative or other reasons prevented participation. This pragmatic and ameliorative approach was accepted by the Supreme Court.

Relied Upon

AIR 1963 SC 395

Bachhittar Singh v. State of Punjab & Another

1963Supreme Court of IndiaNot specified

A resolution or order does not confer legal rights unless it is notified and enforced as law. The Government Resolution of 30.8.2008 was not notified and therefore did not confer legal rights.

Relied Upon

AIR 1967 SC 459

State of Assam Etc. v. Kripanath Sarma and Others Etc.

1967Supreme Court of IndiaNot specified

Doctrine of legitimate expectation has limited application in pay-related matters. The Court noted this doctrine was not invoked by respondents and had no application in the facts of this case.

Relied Upon

Disclaimer: eCourtsIndia (ECI) is not a lawyer and this analysis is generated by ECI AI, it might make mistakes. This is not a legal advice. Please consult with a qualified legal professional for matters requiring legal expertise.

Order Issued After Hearing

Purpose:

Case Registered

Listed On:

22 Aug 2022

Order Text

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2022 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 16442 OF 2021)

UNION OF INDIA AND OTHERS ..... APPELLANTS

VERSUS

EX. HC/GD VIRENDER SINGH ..... RESPONDENT

W I T H

CIVIL APPEAL NO. OF 2022 ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. _______ OF 2022 (DIARY NO. 14322 OF 2020)

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J U D G M E N T

SANJIV KHANNA, J.

Delay is condoned and leave is granted.

1. These appeals by way of special leave raise three issues, all of which are connected and relate to the Modified Assured Career Progression Scheme1 , namely:
- (a) Whether the MACP Scheme is applicable and to be implemented with effect from 1st January 2006, the date from which the Central Civil Service (Revised Pay) Rules, 2008 were enforced, or in terms of O.M. dated 19th May 2009 with effect from 1st September 2008?
- (b) Whether under the MACP Scheme the respondents are entitled to financial upgradation equivalent to the pay

1 For short, the 'MACP Scheme'.

scale/grade pay of the next promotional post in the hierarchy, or the immediate next grade pay in the hierarchy of the pay bands as stated in Section 1, Part A of the First Schedule to the Central Civil Services (Revised Pay) Rules, 2008?

(c) Whether the respondents, who belong to the Central Armed Police Forces, are entitled to grant of financial upgradation under the MACP Scheme, if for administrative reasons they were unable to fulfil the pre-proportional norms?
1. The second question is covered by a three Judge Bench decision of this Court in Union of India and Others v. M.V. Mohanan Nair2 , which judgment explicates the similarities and the difference between the Assured Career Progression Scheme3 , the erstwhile scheme which was replaced by the MACP Scheme. In a nutshell, it can be stated that the MACP Scheme, like the ACP Scheme, is an incentive scheme devised with the object of ensuring that the employees who have stagnated for lack of adequate promotional avenues are given benefit in the form of financial upgradation. The financial upgradation is personal, does not amount to regular or actual functional promotion, and does not require creation of a new post. It has no relevance to the seniority position and principles of reservation are not applicable. Financial upgradation

2 (2020) 5 SCC 421

3 For short, the 'ACP Scheme'

is granted to only those employees who have not received actual or functional promotion even after completion of the requisite service period, though otherwise, they fulfil the prescribed conditions for promotion4 . Having said so, the ACP Scheme and the MACP Scheme differ significantly. Under the ACP Scheme, a government servant is entitled to financial upgradation on completion of 12 and 24 years of her/his regular service, to the pay scale of the next promotional post in the hierarchy. Under the MACP Scheme, an employee is entitled to three financial upgradations on completion of 10, 20 and 30 years of regular service to the next higher grade pay in the hierarchy of the pay bands and grade pay as given in Section 1, Part A of the First Schedule of the Central Civil Services (Revised Pay) Rules, 2008.

The difference between the two Schemes, and in the form of financial upgradation, has been lucidly explained by this Court in M.V. Mohanan Nair (supra) by observing that the MACP Scheme has been implemented after due deliberation and on consideration of the recommendations made by the Sixth Central Pay Commission to bring systematic changes in the erstwhile ACP Scheme so that all employees, irrespective of the existing hierarchical structure in their organisations/cadres, get identical

4 For upgradation under the MACP Scheme, the benchmark of 'good' and 'very good' is applicable till the grade pay of Rs.6600/- in pay band 3 and for grade pay of Rs.7600/- and above, respectively.

financial benefit of the next immediate grade pay instead of the pay/grade pay applicable to the next promotional post. The MACP Scheme puts an end and rectifies the problem arising from interdepartmental disparities in re the pay scales of the next promotional post. The objective of the change is analysed and decoded in M.V. Mohanan Nair (supra), in the following words:

"29...Under the MACP Scheme, financial upgradations are granted at three regular intervals on completion of 10-20-30 years of service without promotion. Hence, it is also intended to ensure that the employees are adequately incentivised to work efficiently despite not getting promotion for want of promotional avenue. The change in policy brought about by supersession of the ACP Scheme with the MACP Scheme is after welldeliberated and well-documented recommendations of the Sixth Central Pay Commission. Considering the various issues in the implementation of the ACP Scheme, the Pay Commission expressed its views "the only other way is to bring systematic changes in the existing Scheme of ACP so that all the employees irrespective of the existing hierarchy structure in their organisations/cadres, get some benefit under it". The Commission therefore, recommended that the existing scheme of ACP be continued with the modifications indicated thereon in the report that the financial upgradation has to be in the next immediate grade pay. One of the reasons for the expert body recommending the MACP Scheme was that there were inter-departmental disparities where several departments had varying promotional hierarchies. As a result, the working of ACP Scheme under which an employee who stagnated for 12 years, was entitled to pay in the pay scale of the next promotional post, led to inter-departmental anomalies. The Pay Commission therefore, recommended MACP Scheme with a view to putting an end to the problem ensuing from interdepartmental disparities.

30....By perusal of the MACP Scheme extracted earlier, it is seen that the words used in the Scheme are "placement in the immediate next higher grade pay in the hierarchy of the recommended revised pay bands". The term "grade pay in the next promotional post" is conspicuously absent in the entire body of the MACP Scheme. The argument of the respondents that the benefit of MACP Scheme is referable to the promotional post, is dehors the MACP Scheme and cannot be accepted. Though ACP and MACP Schemes are intended to provide relief against stagnation, both the schemes have different features. Pay scales under the Sixth Pay Commission and the MACP Scheme are stated to be more beneficial since it extends to the employees with time intervals with higher pay bands and various facilities which were not available under the ACP Scheme including the three financial upgradations in shorter time span. In any event, MACP Scheme has not been challenged by the respondents. As rightly contended by the learned ASG, the respondents cannot be permitted to cherrypick beneficial features from the erstwhile ACP Scheme and also take advantage of the beneficial features in the MACP Scheme.

The object behind the MACP Scheme is to provide relief against the stagnation. If the arguments of the respondents are to be accepted, they would be entitled to be paid in accordance with the grade pay offered to a promotee; but yet not assume the responsibilities of a promotee. As submitted on behalf of Union of India, if the employees are entitled to enjoy grade pay in the next promotional hierarchy, without the commensurate responsibilities as a matter of routine, it would have an adverse impact on the efficiency of administration."
The judgment in M.V. Mohanan Nair (supra) defers to the Sixth

Central Pay Commission recommendations as an expert body that

had threadbare examined all the issues, disparities and even

representations by employees before making their proposal, which thereafter upon careful consideration was accepted by the government with modifications. The courts would not normally interfere with well deliberated decisions by experts in the field, unless adoption is bad on account of statutory violation, the policy contravenes the overriding constitutional mandate of right to equality, is discriminatory, manifestly arbitrary or negates other fundamental rights. The Executive, by the Constitution, has been conferred the right to choice as it has a duty to discharge, and is responsible and accountable for their action. The court examines the validity challenge, albeit, while performing the constitutional duty and exercising the power of judicial review, does not substitute its views on the choice of policy on merits. In fiscal matters, including pay fixation and terms of service, several factors like prevailing financial position, capacity to bear the additional liability are relevant and, therefore, the courts do tread carefully as interference may have serious impact on the public exchequer and have grave financial implications.

In M.V. Mohanan Nair (supra), the argument to adopt "purposive interpretation" or to apply the principle of 'equal pay for equal work' for grant of financial upgradation to the pay in the next promotional post as under the ACP Scheme, viz. financial upgradation to the next grade pay in the hierarchical pay scale, was rejected as financial upgradation cannot be equated with promotion. On merits, it has been held that the financial upgradation envisaged as per the MACP Scheme is not a case of hostile discrimination. The MACP Scheme is not irrational, unjust and prejudicial to a section of the employees, but a wellconsidered decision which has taken all material and relevant factors into consideration. Prescription of pay scales and incentives are a matter of decision taken by the government which, when based upon the recommendation of an expert body like the Central Pay Commission, should carry weight and the courts should be reluctant to substitute the policy with their own views on what would be more equitable and just. It is to be noted that the MACP Scheme postulates grant of three financial upgradations after a period of 10, 20 and 30 years, whereas the ACP Scheme had postulated grant of only two financial upgradations after a period of 12 and 24 years of regular service. Thus, the claim for grant of financial upgradation in the grade pay of the promotional hierarchy was rejected. Further, with effect from 1 st September 2008, the ACP Scheme stands superseded by the MACP Scheme as a matter of government policy and hence, the employees, on and from the date of implementation of the MACP Scheme, cannot claim any benefit of the ACP Scheme. To hold so, this Court referred to the Joint Committee meetings held on 15th September 2010, 15th March 2011 and 27th July 2012, which were followed by a letter dated 4th November 2013. Minutes of these meetings reveal that some alternatives, including giving of individual option to choose between the ACP Scheme and MACP Scheme, were considered but not favoured as impracticable.

7. The first question has been answered by this Court in Union of

India v. R.K. Sharma and Others5 in the following words:

"8. Ms Madhavi Divan, learned Additional Solicitor General of India appearing for the appellants submitted that this Court in Balbir Singh Turn held that payment under the ACPS is a part of the pay structure whereas in a later judgment in Union of India v. M.V. Mohanan Nair this Court was of the opinion that both ACP and MACP Schemes are in the nature of incentive schemes. These appeals deserve to be dismissed in terms of the judgment of this Court in M.V. Mohanan Nair. The contention of the appellant is that a policy decision was taken to implement the recommendation of the 5th Pay Commission in respect of revised scales of pay and dearness allowance for civilian employees with effect from 1-1- 2006 and that revised allowance other than dearness allowance with effect from 1-9-2008. The learned Additional Solicitor General argued that the respondent is entitled to the incentive under the ACP Scheme which was in vogue till 31-8-2008. The respondent cannot seek applicability of MACPS with effect from 1-1-2006. According to the MACPS the financial upgradation is in the higher grade pay in the same pay band whereas financial upgradation as per the ACP Scheme was to the next grade pay of

5 (2021) 5 SCC 579

promotional post. The learned Additional Solicitor General stated that revision of financial upgradation granted to civilian officers by implementing MACPS from 1-1-2006 would be detrimental to the respondent and other similarly situated persons as huge amounts of money would have to be recovered from them.

For a better understanding of the dispute in these cases, it is necessary to examine the judgments of this Court in Balbir Singh Turn and M.V. Mohanan Nair. The point that was considered by this Court in Balbir Singh Turn relates to the applicability of the benefit of MACPS from 1-1-2006. The respondents therein approached the Armed Forces Tribunal which held that the benefit of ACP granted to an employee is part of the pay structure which affects the pay and also his pension. The Armed Forces Tribunal held that an ACP is not an allowance but a part of pay and therefore, in terms of the government resolution, the employees were entitled for MACP with effect from 1-1-2006. This Court in Balbir Singh Turn upheld the said finding recorded by the Armed Forces Tribunal. Instructions issued on 30-5-2011 were found to be contrary to the Resolution dated 30-8-2008 as, according to the resolution 1-1-2006 was the effective date for implementation of MACPS in matters relating to pay and dearness allowance.
In M.V. Mohanan Nair a three-Judge Bench of this Court considered the ACPS as well as the MACPS to hold that the schemes are in the nature of incentive schemes which were brought into force to relieve stagnation. This Court was of the considered view that the respondents therein were entitled only to the benefit of next grade pay in the pay band and not to the benefit of grade pay of next promotional post. As the MACPS is a matter of government policy pursuant to the recommendations made by the Pay Commission, this Court refused to accept submissions of the employees that MACPS should be made applicable with effect from 1-1-2006.
In view of the judgment of this Court in M.V. Mohanan Nair, the respondents and other similarly situated employees are entitled for financial upgradation under MACPS only to the next grade pay and not to the grade pay of next promotional post. It is clear from the Resolution dated 30-8-2008 that the recommendation of the 6th Pay Commission was accepted by the Government and was made effective from 1-1-2006 in respect of civilian employees with regard to revised scales of pay and dearness allowances. Insofar as the revised allowances other than dearness allowance, recommendations of the 6th Pay Commission were given effect from 1-9-2008. The judgment in M.V. Mohanan Nair clinches the issue. Benefits flowing from ACP and MACP Schemes are incentives and are not part of pay. The Resolution dated 29-8-2008 is made effective from 1-9-2008 for implementation of allowances other than pay and DA which includes financial upgradation under ACP and MACP Schemes. Therefore, the respondents and other similarly situated officers are not entitled to seek implementation of the benefits of MACPS with effect from 1-1-2006 according to the Resolution dated 29-8- 2008. Moreover, the implementation of MACPS by granting financial upgradation only to the next grade pay in the pay band and not granting pay of the next promotional post with effect from 1-1-2006 would be detrimental to a large number of employees, particularly those who have retired. We find force in the submission made by the learned Additional Solicitor General that uniform implementation of MACPS for civilian employees with effect from 1-1- 2006 would result in large-scale recoveries of amounts paid in excess."
The aforesaid paragraphs refer to the decision by a three Judge Bench of this Court in M.V. Mohanan Nair (supra), which we have quoted and referred to above. It also refers to a two Judge Bench decision in the case of Union of India and Others v. Balbir

Singh Turn and Another, 6 which holds that notwithstanding O.M. 6 (2018) 11 SCC 99

dated 19th May 2009 stating that the MACP Scheme would be applicable with effect from 1st September 2008, the MACP Scheme would be applicable with effect from 1st January 2006. The judgment in Balbir Singh Turn (supra) reasons that the Central Government, on 30th August 2008, had resolved to accept the recommendations of the Sixth Central Pay Commission with regard to the personnel below the officer rank, subject to certain modifications. Reliance was placed upon clause (i) of the Resolution of the Central Government dated 30th August 2008, which reads as under:

"(i) Implementation of the revised pay structure of pay bands and grade pay, as well as pension, with effect from 1-1-2006 and revised rates of allowances (except dearness allowance/relief) with effect from 1-9-2008;"

It also refers to clause (ix) of the Resolution which reads as follows:

"(ix) Grant of 3 ACP upgradations after 8, 16 and 24 years of service to PBORs;"

Thereafter, the judgment in Balbir Singh Turn (supra) says that the Sixth Central Pay Commission had recommended grant of benefit of the ACP Scheme after 10 and 20 years of service, but the Central Government had decided to grant ACP Scheme after 8, 16 and 24 years of service. Lastly, it holds that perusal of clause (i) of the Resolution dated 30th August 2008 indicates that the

Central Government had decided to implement the revised pay scales of pay bands and grade pay, as well as pension, with effect from 1st January 2006. The second part of the said clause lays down that all allowances, except dearness allowance/relief, will be effective from 1st September 2008. The MACP Scheme, being a part of the pay structure and having effect on the grade pay of the employees, cannot be said to be part of allowances. Benefit of MACP Scheme, if given to employees, would affect their pension and thereby also means that it has to be applied and given effect from 1st January 2006 as it is a part of the pay structure.

As rightly held in R.K. Sharma (supra), the aforesaid reasoning given in the case of Balbir Singh Turn (supra), in our opinion, has not been accepted by the three Judge Bench decision in the case of M.V. Mohanan Nair (supra), which in clear terms holds grant of financial upgradation under the MACP Scheme is not a matter of pay structure, but an incentive scheme brought into force to relieve stagnation which operates on its own terms. We may add that the pay scales are fixed and revised by the rules which are enacted in exercise of powers conferred by the proviso to Article 309 and clause (5) of Article 148 of the Constitution of India. Therefore, vide Notification dated 29th August 2008, the Central Civil Services (Revised Pay) Rules, 2008 were enacted vide G.S.R. No. 622(E). Rule 1(2) states that the Rules, as enacted, shall be deemed to have come into force on 1st January 2006. The aforesaid Rules neither postulate nor have any provision for grant of financial upgradation under the MACP Scheme. It is to be further noted, and it is an accepted position of both parties, that the MACP Scheme, as implemented, postulates grant of financial upgradation after 10, 20 and 30 years of regular service and not after 8, 16 or 24 years of regular service, as was originally envisaged in terms of Government Resolution dated 30th August 2008, or for that matter, 10 or 20 years of service, as was recommended by the Sixth Central Pay Commission. In our opinion, the Resolution of the Central Government dated 30th August 2008 cannot be read as conferring any right on the government employees. The resolution was not notified and enforced to confer a legal right.7 The Office Memorandum dated 19.05.2009 promulgates and operationalises the MACP Scheme with effect from 01.09.2008. The Office Memorandum states that financial upgradations as per the provisions of the earlier ACP Scheme would be granted till 30.08.2008. Further, past cases would not be re-opened and the difference in pay scales on

7 See – Bachhittar Singh v. State of Punjab & Another, AIR 1963 SC 395, State of Assam Etc. v. Kripanath Sarma and Others Etc., AIR 1967 SC 459, and other cases on the aspect of when an order/resolution would confer a legal right. It is to be noted that the doctrine of legitimate expectation has not been invoked and has no application in the facts of this case.

account of grant of financial upgradation under the old ACP Scheme and the MACP Scheme shall not be construed as an anomaly.

Learned counsel for the government employees, inspite of being correct that M.V. Mohanan Nair (supra) does not refer to Balbir Singh Turn (supra) and does not overrule it specifically, misses the point that the entire ratio and reasoning given in M.V. Mohanan Nair (supra), as rightly observed in R.K. Sharma (supra), cannot be reconciled with the ratio in Balbir Singh Turn (supra). M.V. Mohanan Nair (supra) has examined the MACP Scheme in depth and detail to settle the controversy, inter alia holding that supersession of the ACP Scheme by the MACP Scheme is a matter of government policy, and that "after accepting the recommendation of the Sixth Central Pay Commission, the ACP Scheme was withdrawn and the same was superseded by the MACP Scheme with effect from 1.9.2008."8 The ACP Scheme and MACP Schemes were held to be in the nature of incentive schemes to relieve stagnation and not as a part of pay structure, which had revised the pay and the dearness allowance with effect from 1.1.2006. In these circumstances, we do not think a case for reference to a larger Bench of three Judges to reconsider the ratio

in the decision of R.K. Sharma (supra) is made out. Therefore, we 8 See paragraph no. 32 in M.V. Mohanan Nair (supra) as reported in (2020) 5 SCC 421.

reject the contention of the learned counsel for the respondents/government employees for reference of the matter.

1. On the third aspect, we should record the concession rightly made by the Additional Solicitor General during the course of the hearing that the personnel working in the Central Armed Forces would be granted financial benefit under the MACP Scheme on completion of prescribed years of regular service by relaxation in cases where, on account of administrative or other reasons, they could not be sent for participation in pre-promotional course. The appellant-Union of India has agreed to accept the directions given by the Delhi High Court in the case of Ram Avtar Sharma v. Director General of Border Security Force9 in this regard. A liberal, pragmatic and ameliorative approach is required to succour genuine grievances of the personnel doing duty for the nation, owing to which they forgo participation in pre-promotional courses. Accordingly, the third question is answered against the appellant-Union of India.
1. In view of the aforesaid discussion, the appeals filed by the Union of India are partly allowed and impugned judgments, to the extent they hold that the MACP Scheme applies with effect from 1.1.2006 and that under the MACP Scheme the employees are

9 W.P. (c) No. 5278 of 2013 decided on 12th August 2014

entitled to financial upgradation equivalent to the next promotional post, are set aside. MACP Scheme is applicable with effect from 1.9.2008 and as per the MACP Scheme, the entitlement is to financial upgradation equivalent to the immediate next grade pay in the hierarchy of the pay bands as stated in Section 1, Part A of the First Schedule to the Central Civil Services (Revised Pay) Rules, 2008. The third issue, which relates to the fulfilment of prepromotional norms for grant of financial upgradation, is decided against the appellant-Union of India to the extent that this would not be insisted in the case of the Central Armed Forces personnel where, for administrative or other reasons, they could not be sent or undergo the pre-promotional course.

All pending applications are disposed of.

......................................J. (SANJIV KHANNA)

......................................J. (BELA M. TRIVEDI)

NEW DELHI; AUGUST 22, 2022.

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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

W I T H

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J U D G M E N T

SANJIV KHANNA, J.

7. The first question has been answered by this Court in Union of

India v. R.K. Sharma and Others5 in the following words:

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