Union Of India Through Its Secretary Department Of Telecommunication & Ors. vs All India Retired Bharat Sanchar Nigam Limited Executive Welfare Association And Ors.
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 21.05.2026
Judgment pronounced on: 01.07.2026
+ W.P.(C) 4946/2024, CM APPL. 20274/2024
UNION OF INDIA THROUGH ITS
SECRETARY DEPARTMENT OF
TELECOMMUNICATION & ORS. .....Petitioners
Through: Mr. Kirtiman Singh, Sr. Adv.
with Ms. Laavanya Kaushik, GP with Mr.
Maulik Khurana, Mr. Ritik Saha and Ms.
Khyaati Bansal, Advs.
versus
ALL INDIA RETIRED BHARAT
SANCHAR NIGAM LIMITED EXECUTIVE
WELFARE ASSOCIATION AND ORS. .....Respondents
Through: Mr. Ankur Chhibber, Ms. Gauri
Puri and Mr. Kashish Bhardwaj, Advs.
+ W.P.(C) 4955/2024, CM APPL. 20291/2024
UNION OF INDIA & ORS. .....Petitioners
Through: Mr. Kirtiman Singh, Sr. Adv.
with Ms. Laavanya Kaushik, GP with Mr.
Maulik Khurana, Mr. Ritik Saha and Ms.
Khyaati Bansal, Advs.
versus
ALL INDIA BSNL PENSIONERS
WELFARE ASSOCIATION & ORS. .....Respondents
Through: Mr. Sanjoy Ghose, Sr. Adv.
with Ms. Asmita Singh, Mr Shashank Jain,
Mr. Rohan Mandal and Ms. Ankita Makan,
Advs.
+ W.P.(C) 4985/2024 & CM APPL. 20392/2024
UNION OF INDIA & ORS. .....Petitioners
Through: Mr. Kirtiman Singh, Sr. Adv.
with Ms. Laavanya Kaushik, GP with Mr.
Maulik Khurana, Mr. Ritik Saha and Ms.
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Khyaati Bansal, Advs.
versus
RETIRED TELECOM OFFICERS
WELFARE ASSOCIATION & ORS. .....Respondents
Through: Mr. Ankur Chhibber and Ms.
Gauri Puri, Advs.
CORAM:
HON'BLE MR. JUSTICE C.HARI SHANKAR
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT
% 01.07.2026
OM PRAKASH SHUKLA, J.
1. This batch of writ petitions preferred under Article 226 of the
Constitution of India assails the order dated 20.09.2023 passed by the
1
Central Administrative Tribunal, Principal Bench, New Delhi ,
2
whereby three Original Applications filed by the respondents herein,
were heard together and came to be allowed.
2. By the impugned order, the Tribunal, while acknowledging
parity with Central Government employees, directed the petitioners to
revise the pension of the respondents in accordance with the
3
recommendations of the Central Pay Commission .
3. It must be noted at the outset that this batch of writ petitions
raises a common question of law and fact, namely, whether the
respondents, being erstwhile employees of the Department of
1
“CAT” or “Tribunal” alternatively
2
O.A. No. 1272/2020 (lead), O.A. No. 1271/2020 and O.A. No. 1329/2020
3
“CPC”, hereinafter
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4
Telecommunications and thereafter choosing to be permanently
5
absorbed in Bharat Sanchar Nigam Limited and Mahanagar
6
Telephone Nigam Limited , are entitled to revision of pension in
th
accordance with the recommendations of the 7 CPC.
4. In view thereof, since the present batch of petitions rests on the
same set of facts and legal framework, they have been heard together
and are being disposed of by this common judgment, with W.P.(C) No.
4946 of 2024, titled as, “ Union of India Through its Secretary
Department of Telecommunication & Ors. v. All India Retired
Bharat Sanchar Nigam Ltd. Executive Welfare Association & Ors. ”,
being treated as the lead matter for the purposes of adjudication.
COMMON FACTUAL BACKRGOUND
5. These writ petitions are brought before us by the Union of
India, through DoT. The respondents, who were applicants before
CAT, were erstwhile employees of DoT and were subsequently
absorbed in BSNL/MTNL.
6. The respondents in W.P.(C) Nos. 4946/2024 and 4955/2024 are
pensioners of BSNL, whereas the respondents in W.P.(C) No.
4985/2024 are pensioners of MTNL. Pertinently, all the respondents
herein are combined service pensioners.
4
“DoT”, hereinafter
5
“BSNL”, hereinafter
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7. The facts necessary for adjudication qua the controversy may be
summarized as follows.
8. The Government of India, in the interest of efficiency and
corporatization of telecommunication services, transferred the service
provision and commercial functions of DoT into two separate entities,
namely, MTNL and BSNL.
9. MTNL was incorporated on 01.04.1986, comprising the DoT
branches in Delhi, Bombay, New Bombay, and Thane districts.
7
Thereafter, the Department of Telecommunication Services and the
8
Department of Telecommunication Operations were merged and
corporatized into BSNL, which commenced operations on 01.10.2000.
9
Both MTNL and BSNL are Public Sector Undertakings .
10. The seeds of this controversy stem from the en masse transfer
of DoT employees to BSNL on an ‘as is where is’ basis, on deemed
deputation without deputation allowance, effective from 01.01.2000,
10
in accordance with the Office Memorandum dated 30.09.2000 issued
by DTS. This OM stipulated that these employees would continue to
be governed by all Rules and Regulations applicable to Government
11
servants, including the Central Civil Services (Pension) Rules, 1972
until they opted for permanent absorption in BSNL. However, the said
6
“MTNL”, hereinafter
7
“DTS”, hereinafter
8
“DTO”, hereinafter
9
“PSU”, hereinafter
10
“OM”, hereinafter
11
“CCS (Pension) Rules” or “Rules” alternatively
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OM did not explicitly address the aspect of pension, gratuity, or other
retiral benefits.
11. On the same date as the aforesaid OM i.e., 30.09.2000, Rule
37A came to be inserted in the CCS Pension Rules in light of the
aforesaid transfer.
12. Rule 37A lays down the conditions for payment of pension
upon absorption of Government employees into a PSU or a Central
12
Autonomous Body . In essence, it provided that at the time of
retirement from a PSU/CAB, Government servants who are
permanently absorbed in the PSUs/CABs shall be entitled to a pension
calculated on a “combined service” basis, which includes service
rendered under the Government and PSU both, using the same
formula applicable to Central Government employees.
13. Following the en masse transfer, the deputed employees were
granted the option to either seek permanent absorption in the PSU or
revert to Government service. The officers who opt for the former
would be governed by the aforesaid Rule 37A alone and the ones who
choose the latter would continue to be governed by the standard
framework under the CCS Rules.
14. As per Rule 37A, if an employee opts for absorption in the
PSU, three consequences would follow: (i) they cease to be a
Government employee from the date of acceptance of their option, (ii)
12
“CAB”, hereinafter
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the post held under the Government by such employee will be
abolished, and (iii) they would be governed by the rules of the PSU.
15. On the other hand, if an employee chose to revert to
Government service, they would be placed in a surplus cell on account
of their post being abolished under the Government and would be re-
deployed accordingly.
16. These options were crucial in crystalizing the respective
liabilities of the Government and the PSUs pertaining to the payment
of pensionary benefits.
13
17. Rule 37A (22) provides that the Government shall pay the
pension of BSNL employees, and for other PSUs, a Pension Fund was
to be established in accordance with the sub-Rules 13 to 21. The
Government would make a one-time lumpsum contribution, and the
PSU concerned would contribute towards the pensionary benefits for
service rendered by an employee.
18. In this regard, the aforesaid special dispensation granted to
BSNL employees that pensionary benefits would be paid by the
Government, was also extended to MTNL vide amendment dated
03.03.2014.
13
As it stood on 21.12.2012
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19. In furtherance of such absorption, the DoT, vide OM dated
14
28.07.2003, implemented the IDA pay scale as applicable for PSUs
15
corresponding to the CDA pay scale for Central Government
employees.
20. It is the petitioners’ case that the respondents chose to opt for
such absorption because service in the PSU was more lucrative since
IDA pay scale was higher and there were greater chances of career
progression in PSUs than under Government service. On the other
hand, the respondents maintain that they were assured that the rules
under Government service would continue to apply to them even after
absorption, hence they opted for such absorption.
21. It is relevant to note that as per the record before us, while
exercising the aforesaid option to be permanently absorbed in the PSU
or revert to Government service, the respondents were furnished with
the terms and conditions governing such transfer. Clause 5 of these
terms and conditions stipulates that the officers who opt for permanent
absorption, i.e., the respondents, would be governed by Rule 37A
under IDA pay scale.
22. After having explained the underlying procedure for the en
masse transfer of Government employees to BSNL/MTNL in the
preceding paragraphs, we now turn to the genesis of the dispute at
hand.
14
Industrial Dearness Allowance
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23. According to the petitioners, the present dispute has arisen due
to the respondents’ misplaced claim of parity with Central
Government employees. It is their case that since the pensions of
Central Government employees have been timely revised as per CPCs,
and the pensions of the respondents have plateaued after 2007 because
rd 16
the 3 Pay Revision Committee for PSUs did not come into effect,
th
the respondents are now claiming entitlement under 7 CPC for
revision of their pensions. A claim which, as per the petitioners, was
never earlier sought by the respondents since they were receiving
comparatively greater benefits under the IDA pay scale.
24. Coming back to the present dispute, we shall now delineate the
parallel timelines of CPC and PRC recommendations and their
consequential effects on pension revision.
th
25. The 6 CPC was introduced with effect from 01.01.2006,
pursuant to which the pay scales of Central Government employees
were revised. Accordingly, pensions were revised for pensioners who
retired prior to 01.01.2006.
26. Significantly, PSUs are generally governed by PRC
recommendations and not CPCs. However, at this juncture we note
th
that DoT did indeed apply the revised rules as per the 6 CPC to the
17
absorbed BSNL pensioners with respect to DCRG , pension and
commutation of pension vide OM dated 12.08.2009.
15
Central Dearness Allowance
16
“PRC”, hereinafter
17
Death-cum-Retirement Gratuity
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st
27. With respect to PSUs, the 1 PRC was effected from
01.01.1997 for a period of ten years. Thereafter, by OM dated
nd
26.11.2008, the 2 PRC was notified w.e.f. 01.01.2007.
28. According to the petitioners, the pay scales of the respondents
nd
were revised pursuant to the 2 PRC w.e.f. 01.01.2007. This created a
situation where BSNL/MTNL employees who retired after 01.01.2007
were receiving a higher pension than the employees who retired prior
to that date. To remove this anomaly, the Government extended
corresponding revision of pensions for the BNSL/MTNL combined
service pensioners prior to 01.01.2007 as well. The aforesaid was done
by OM dated 15.03.2011 for BSNL and for MTNL, vide OM dated
01.10.2012.
29. The respondents claim that their pensions were revised pursuant
th
to the 6 CPC whereas the petitioners maintain that this revision was
nd
made pursuant to the 2 PRC. This distinction is material for the
dispute at hand because the basis of the respondents’ claim in the
underlying OAs before the CAT was that they are entitled to revision
th th
as per 7 CPC as they were extended benefits under the 6 CPC as
well.
th
30. Thereafter, with the advent of the 7 CPC, the pay scales of
Central Government employees were again revised, and accordingly,
their pensions stood revised w.e.f. 01.01.2016. This revision was
notified under four OMs, as follows:
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th
(i) Resolution dated 04.08.2016 accepts 7 CPC
recommendations.
(ii) OM dated 04.08.2016 for post-01.01.2016 retirees based
on the fitment formula.
(iii) OM dated 04.07.2016 for pre-01.01.2016 retirees based
on the fitment formula.
(iv) OM dated 12.05.2017 approved the fitment formula and
directed that either formula, whichever is higher, could be opted
for pre-2016 pensioners.
31. Although CPC recommendations do not ordinarily apply to
PSUs, by OM dated 21.03.2017, the rate for death gratuity revised as
th
per 7 CPC was extended to the combined service pensioners of
BSNL/MTNL.
32. From a bird’s eye perspective, it is on the strength of the OMs
th
dated 12.08.2009 and 21.03.2017, whereby certain benefits of the 6
th
CPC and 7 CPC respectively were extended to the respondents, that
the respondents claim entitlement to pension revision of pension in
th
terms of 7 CPC.
nd th rd
33. After the 2 PRC and 7 CPC, the 3 PRC for PSUs was
notified by way of OM dated 03.08.2017. However, as per its
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paragraph no. 3, its implementation was subject to the financial
affordability of the PSU.
34. It is undisputed that since BSNL/MTNL were incurring losses,
rd
the recommendations of the 3 PRC could not be extended to the
respondents.
35. It is in view of the aforesaid that the petitioners claim that since
rd
the 3 PRC did not come into effect, there was no change in pension
drawn after 01.01.2017, hence there existed no anomaly in pensions
drawn between pre- and post-01.01.2017 pensioners of BSNL/MTNL
in order to warrant revision.
36. Aggrieved by the lack of revision of their pension, the
respondents submitted multiple representations, but to no avail.
37. It was in this backdrop that the respondents approached CAT by
filing three OAs, which were heard together, seeking the following
reliefs in the lead O.A. No. 1272/2020:
“(a) Pass an Order directing the Department of
Telecommunications to revise the pension/family pension/minimum
pension w.e.f. 01.01.2017 for the BSNL combined service
Pensioners, who were absorbed from DOT/DTS/DTO w.e.f.
01.10.2000 and retired prior to 01.01.2017 by applying the fitment
formula on IDA pension as on 01.01.2017;
(b) Pass an Order directing the Department of Telecommunications
to revise the pension/family pension/minimum pension w.e.f.
01.01.2017 for the BSNL
combined service Pensioners, who were absorbed from
DOT/DTS/DTO w.e.f. 01.10.2000 analogous to the revision of
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pension/family pension/minimum pension for the Central
Government Pensioners based on the recommendations of the 7th
Central Pay Commission;
(c) Pass an Order directing the Department of Telecommunications
to revise the pension for BSNL combined service pensioners
parallel to the revision of pension of the Central government
servants without linking with Pay revision in BSNL”
38. The Tribunal, by way of the impugned order, allowed the OAs
and returned the following findings:
(i) At the time of absorption in BSNL/MTNL, it was assured
that the respondents would continue to be governed by their
existing terms and conditions of service, i.e., they shall be
treated as Government employees.
(ii) Rule 37A of CCS (Pension) Rules shall govern the
payment of pension to the respondents. Sub-Rule 21 thereunder
mandates that their pension shall be paid by the Government.
(iii) Since BSNL/MTNL are corporate entitles, the liability of
pension shall be borne by the Government.
(iv) Certain CPC recommendations applicable to Government
servants were also extended to the respondents.
(v) The various OMs boil down to only one inference that it
was consciously decided to retain the respondents’ terms and
conditions under Government service even after their
absorption into BSNL/MTNL, including the aspect of pension.
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Further, no document was shown to support the argument that
the protection granted to the respondents was only limited to a
specific period.
(vi) The government made a promise in black and white and
cannot retract at this stage.
39. In view of the aforesaid findings, the Tribunal directed the
petitioners to revise the pension of the respondents in parity with
Central Government pensioners, within a period of ten weeks, as
follows:
“28. In view of the elaborate discussion above, the OA stands
allowed. The competent authority amongst the respondents is
directed to forthwith revise the pension and family pension
wherever applicable, strictly in accordance with the relevant rules
and the entitlement governing pension to various sets of employees
of the Central Government, maintaining strict parity. It is clarified
that the benefits of revision of pension and family pension as
notified by the Central Government on the recommendations of the
Pay Commission, shall stand extended in favor of the applicants,
analogous to the revision of such pension in case of Central
Government pensioners.”
40. Aggrieved by the aforesaid directions issued by the Tribunal,
the petitioners preferred the present writ petition.
SUBMISSIONS
41. Mr. Kirtiman Singh, learned Senior Counsel appearing on
behalf of the petitioners in all connected petitions, advanced his
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arguments with force and eloquence to highlight fatal errors in the
impugned order.
42. Mr. Singh laid down the backdrop of the dispute by explaining
the process governing revision of pay and pensions of Central
Government and CPSUs employees. It was submitted that after every
10 years, the Central Government ordinarily constitutes a CPC for
revision of pay, allowances and pensionary benefits of Central
Government employees, and similarly, PRC is constituted for PSUs.
However, the recommendations of the PRC are only extended if the
concerned PSU meets the profitability criteria. It was clarified that
CPC also covers the aspect of revision of pension for absorbees in
PSUs who opt for pro-rata pension. Whereas the employees who are
permanently absorbed and choose to draw combined service pension,
i.e., pension based on service jointly rendered under the Government
and the PSU, is regulated by Rule 37A of the CCS (Pension) Rules,
1972.
43. The learned Senior Counsel further sought to explain the
distinction between the CDA and IDA scale pattern: CDA applies to
Central Government employees. Upon superannuation, the pension is
fixed at 50% of the last drawn basic pay and is also granted Dearness
Relief (DR) at the same rate as Dearness Allowance (DA) for serving
employees. On the other hand, IDA scale is applicable to CPSU
employees. Such employees may either opt for pro-rata pension,
which is governed under CDA as per CPC recommendations, or for
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combined service pension, as per Rule 37A under IDA pay scale
which is governed by the PRC framework.
44. Mr. Singh largely pivoted on the premise that as per Rule 37A
(8), the respondents are only entitled to the same formula as Central
Government employees for calculation of pension at the time of
retirement and not to any other benefit subsequent to such retirement
including revision of pension. Hence, it was submitted that the
th
respondents cannot claim revision of pension under the 7 CPC as a
matter of right.
45. Mr. Singh further submitted that the present dispute circles
around the respondents’ claim for revision of pension on account of
parity with Central Government employees. It was averred that the
impugned order has proceeded on a very simplistic understanding of
the situation and that the Tribunal failed to acknowledge that CPC
recommendations are only applicable to Central Government
employees and not CPSUs, which are instead governed by PRCs. It
th
was hence submitted that the formula for revision of pension under 7
CPC only applies to Central Government employees under CDA scale,
whereas the respondents fall under the IDA scale and are subject to
PRCs. It was further submitted that the respondents’ pensions were
nd
revised as per the 2 PRC and thereafter remained unchanged since
rd
the recommendations of the 3 PRC were not effected due to financial
constraints of the PSU. Consequently, it was submitted that the
th
respondents cannot seek pension revision under the 7 CPC merely on
the basis of parity with Central Government pensioners.
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46. Mr. Singh categorically submitted that the finding of the
Tribunal that there existed no ambiguity in the terms and conditions of
service of the respondents, and that they would continue to be
governed as per Central Government rules even after absorption, is
blatantly incorrect. Reference was made to paragraph no. 8 of the
Notification dated 14.01.2002, whereby options were called from
Group ‘B’ officers. It explicitly stipulated that once the employee
chose to be absorbed into the PSU, they would be moved to the IDA
scale and only till such option is exercised will these employees be
governed by the CDA scale. This was also mentioned in Clause 4 of
the terms and conditions for absorption of Group ‘B’ officers. Further,
Clause 5 of these terms clarified that payment of pension shall be
payable under the IDA scale. It was further submitted that the
aforesaid Option Form clearly indicated to the respondents that, they
would cease to be government servants, their terms of service after
absorption would be governed by the rules of BSNL/MTNL, they
would be fitted under the IDA scale, and their pension would be
regulated under Rule 37A. Mr. Singh also highlighted that the
legislative intent behind Rule 37A was that upon absorption into
BSNL/MTNL, the absorbees/transferees would no longer remain
Government servants.
47. It was submitted that the Tribunal largely relied on Rule 37A
(21), however, the said provision does not have much bearing on the
present dispute. In this light, Mr. Singh drew our attention to the bare
words of Rule 37A, particularly sub-Rules (4) & (5), which stipulate
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that once employee’s option is accepted, they cease to be Government
servants, they are deemed to have retired from Government service,
and upon absorption, their post held under the Government stands
abolished. It was submitted that sub-Rule 8 only promises the same
formula for pension as Government servants as on the date of
absorbee’s retirement. Emphasis was laid on “at the time of his
retirement” to submit that this restricts the applicability of the formula
to the date of retirement and do not extend to subsequent revisions.
48. Mr. Singh further relied on Rule 37A (13) to (21) to explain the
corpus of the Pension Fund to be maintained by PSUs. It was
submitted that as far as BSNL is concerned, sub-Rules 22 and 23
provide that the payment shall be made by the Government, and the
Government may specify the manner of contribution by BSNL.
Hence, the reliance of the Tribunal on sub-Rule 22 (quoted as sub-
Rule 21 in the impugned order) is therefore misleading and it is the
finding in para no. 22 that the respondents would continue to be
governed by rules of government service is starkly contradictory to the
scheme of Rule 37A.
49. The learned Senior Counsel further contested the finding of the
impugned order that it was a conscious decision to protect the
respondents’ terms and conditions under DoT post-absorption. It was
submitted that the circulars and OMs referred to by the Tribunal had
no consequence on the entitlement of the respondents. Mr. Singh
further contested the finding in para no. 24 that no document was
placed on record to substantiate the claim that the respondents could
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not claim protection in perpetuity. It was also submitted that the
finding that BSNL/MTNL are corporate entities, hence the
government must pay pension, has no consequence on the issue of
revision of pension of the respondents.
50. Mr. Singh averred that the Tribunal’s direction to grant pension
to the respondents at par with Central Government employees will
open the Pandora’s box and is contrary to the Scheme of Rule 37A,
particularly since Rule 37A stipulates that on absorption, these
employees shall cease to be Government servants, and therefore,
claims for revision based on CPC parity are not tenable.
51. It was argued that two circulars dated 09.11.2000 and
27.04.2009, referred to in para no. 16 of the impugned order, were not
dealt with by the Tribunal. It was highlighted that para no. 2 of the
circular dated 27.04.2009 stipulated, “this OM contains instructions
for revision of pension of pre 2006 Central Government pensioners
only” . Hence, it did not apply to the respondents.
52. Attention was drawn to para nos. 19 and 20 of the impugned
18
order, which relied on three CAT Orders from Ernakulum ,
19 20
Bangalore and Hyderabad Benches, specifically on the point of this
dispute, however, they were not properly considered and overlooked
by CAT. Out of these decisions, it was submitted that the respondents
had filed the OA before the Ernakulum Bench, which was dismissed,
18
Order in O.A. No 346/2018 dated 30.10.2019 by the Ernakulam Bench, Central Administrative Tribunal
19
Order in O.A. No 116-134/2018 dated 27.11.2019 by the Bangalore Bench, Central Administrative
Tribunal
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21
and the High Court subsequently reversed the decision . Thereafter,
they filed an SLP, which was withdrawn with liberty to file a review
22
before the High Court . This review petition was dismissed on
23 th
24.03.2026 . It was further submitted that the 7 CPC recommended
two formulae for revision of pension: “notional fixation” and “fitment
method”. Before the Ernakulum Bench, the respondents sought
revision based on the notional fixation method as per OM dated
12.05.2017. However, the respondents submitted before this Court on
19.11.2025 that they are claiming revision as per OM dated
04.08.2016, i.e., by applying multiplier of 2.57.
53. Thereafter, our attention was drawn to an order dated
19.08.2025 of this Court, wherein the respondents had undertaken to
not rely on the Kerala High Court judgment. Even otherwise, it was
submitted that this judgment was not applicable because: (i) it was
passed on the basis that OM dated 12.05.2017 does not exclude its
applicability to IDA pensioners, without considering the entire scheme
of OMs or the distinction between IDA and CDA; (ii) para no. 2
therein holds that a petition filed by an Association is otherwise not
maintainable, which principle is also applicable in the present case;
(iii) similar claims cannot be agitated repeatedly, since the present
O.A. and the O.A. before Ernakulum Bench were both filed by the
respondents.
20
Order in O.A. No 21/813/2017 dated 10.12.2018 by the Hyderabad Bench, Central Administrative Tribunal
21
Judgment dated 07.02.2025 passed by the High Court of Kerala, Ernakulam in OP (CAT) No.60/2020
22
Order dated 08.08.2025 in SLP (C) Diary No. 39478/2025
23
Judgment dated 24.03.2026 in R.P. No. 1158/2025 in O.P. (CAT) No. 60/2020
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54. It was submitted that there exists precedent on this issue. In
nd
2007, 2 PRC was effected with fitment factor of 2.19, which was
th
revised to 2.31. In contrast, 6 CPC was effected with a fitment factor
of 1.86. Reliance was placed on the following chart to submit that the
nd
respondents did not have any grievance at the time of 2 PRC, and
rd
only because the 3 PRC is not given effect due to financial health of
BSNL/MTNL that the respondents seek entitlement of the 2.57
th
multiplier as per the 7 CPC, which notably only applies exclusively
to CDA pensioners and not IDA pensioners:
55. It was also submitted that the IDA pay scale was higher and the
respondents were in fact receiving a higher pension than their Central
rd rd
Government counterparts even without the 3 PRC. But since 3 PRC
did not come into force, there was no consequent revisions; hence, the
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th
respondents seek revision as per the 7 CPC, which grants a higher
fitment. This calculation is as follows:
56. Based on the aforesaid comparative calculation, it was
submitted that basic pension of Employee A under the IDA scale was
more than that of Employee B under the CDA scale. However, the
gross pension of Employee B was more due to higher IDA scale.
Further, the respondents seek to apply the fitment factor as provided
th
by 7 CPC to their IDA pay scale, which will give them an even
higher pension. It was also submitted that if the respondents were
granted relief, the resultant financial liability to the Government
would be north of Rs. 16,938 crores.
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57. In support of their contentions, reliance was placed on S.I.
24 25
Roop Lal v. UOI and K. Ajit Babu & Ors. v. UOI , and certain
26
decisions rendered by CAT.
58. Lastly, Mr. Singh emphasized the distinction between fixation
of pension at the time of retirement, as provided under Rule 37A and
the revision of pension pursuant to a subsequent revision of pay. It was
submitted that Rule 37A (8) & (9) provide that the pension of
absorbees shall be calculated using the same formula applicable to
Central Government employees retiring on the same date. It was
submitted that this formula has been extended to absorbees for
fixation of pension at the time of their retirement; Rule 37A does not
envisage revision of pension subsequent to retirement. It was
categorically submitted that the respondents are not entitled to
revision because: (i) pay scale was not revised; (ii) lack of a provision
allowing for revision of pay under the IDA scale. Therefore, the
direction of the Tribunal, being directly in the teeth of the present
legal framework, is liable to be set aside.
59. Per contra, the arguments on behalf of the respondents were
advanced by learned Senior Counsel Mr. Sanjoy Ghose in W.P.(C) No.
4955/2024 and by learned Counsel Mr. Ankur Chhibber in W.P.(C)
Nos. 4946/2024 and 4985/2024.
24
(2000) 1 SCC 644
25
(1997) 6 SCC 473
26
Order in O.A. No 2287/2008 dated 03.06.2009 by the Principal Bench, Central Administrative Tribunal;
Order in O.A. No 533/CH/2013 dated 05.11.2014 by the Chandigarh Bench, Central Administrative Tribunal;
Order in O.A. No. 526/1988 dated 03.10.1989 by the Ahmedabad Bench, Central Administrative Tribunal
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60. Mr. Chhibber, the learned Counsel on behalf of the respondents,
ably assisted the Court and resisted the present petition with
considerable force. He submitted that the impugned order was cogent
in its reasoning and did not warrant our interference. It was submitted
that the pension of the respondents was last revised almost 17 years
ago, as on 01.01.2007.
61. Mr. Chhibber submitted that the respondents were given
assurance that their service conditions would remain unchanged post
absorption and that this assurance was embodied in Rule 37A, in
terms of which, the respondents are entitled to the same pension
scheme as Central Government employees. In this regard, reliance
was placed on various OMs dated 05.07.1989, 25.09.2000,
30.09.2000, 09.11.2000, 14.01.2002 and 20.07.2016. Mr. Chhibber
sought to specifically bring our attention to the abovementioned
documents, as follows:
(i) OM dated 05.07.1989 mandates that the government
servants who opt for absorption in a PSU would be governed by
Central Government rules at the time of their retirement.
(ii) Note dated 25.09.2000 issued by DTS for Cabinet
approval states that absorbees are entitled to the Government
pension scheme post absorption and in this regard, Rule 37A
was inserted.
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(iii) Circular dated 09.11.2000 stipulated that the employees
absorbed in BSNL shall be entitled to the Government’s pension
scheme even after their absorption and the payment will be
made by the Government.
(iv) Notification dated 14.01.2002 called for options from
Group B employees. Para 8 stipulates that till they are absorbed,
they will remain under CDA scale. Clause 5 of the terms and
conditions therein, states that the officers who opt for
permanent absorption in BSNL would be governed by Rule
37A.
62. Mr. Chhibber relied on OM dated 20.07.2016 to aver that the
liability for pensionary benefits of BSNL employees except those
recruited after 01.10.2000, shall be borne by the Government, and
BSNL shall continue to pay pension contribution in accordance with
Fundamental Rule 116. Hence, the respondents are entitled to pension
revision irrespective of the financial condition of the PSU.
63. Mr. Chhibber clarified that the respondents do not seek
enhancement of their pay scale, but only application of the pension
formula extended to Central Government employees for revision of
pension, as promised under Rule 37A. It was argued on the strength of
Rule 37A (8) and (9) and its accompanying explanation, that the
respondents were clearly entitled to revision of pension equivalent to
Central Government employees.
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64. It was categorically submitted that the respondents’ pensions
th
were revised as per 6 CPC by OM 15.03.2011 and as per OM dated
04.05.2009, including other benefits such as limits of DCRG,
commutation table, emoluments, qualifying service, etc. were
extended to them. Emphasis was laid on para no. 3.1 which stated
these orders were to apply to all combined service pensioners entitled
to draw pension on 01.01.2007 as per Rule 37A (21). It was also
argued that para no. 11 demonstrated the intent that pensions were to
be disbursed expeditiously. Emphasis was also laid on a
communication dated 27.04.2009 from the Department of Pension &
27
Pensioners’ Welfare , which in its para no. 2 clarified that since the
formula applicable to Central Government pensioners was revised by
th
OM dated 02.09.2008 after 6 CPC, the same will apply to combined
service pensioners who were absorbed in PSUs.
th
65. It was contended that the recommendations of the 6 CPC did
not discriminate or create a separate class for the respondents, as was
evident by OM dated 01.09.2008 which blanketly applied to “all
pensioners/family pensioners who were drawing pension/family
pension on 1.1.2006” under CCS Rules. Since the respondents drew
pension under Rule 37A of CCS (Pension) Rules, they were also
entitled to the implementation of these recommendations on the same
basis as other combined service pensioners.
th
66. With respect to 7 CPC, it was submitted that it applied
uniformly to all CCS pensioners without creating a separate class for
27
“DP&PW”, hereinafter
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absorbees such as the respondents, as evident from OM F. No.
38/37/2016-P&PW(A)(ii) dated 04.08.2016. This OM granted a 2.57
multiplier to pre-01.01.2006 pensioners. Reliance was placed on para
no. 7, which stipulated that the pensions of Central Government
employees who were permanently absorbed in PSUs would be revised
th
as per 7 CPC. It was submitted that this multiplier is particularly
what the respondents are seeking before this Court. It was further
th
submitted that the rate of death gratuity as per 7 CPC was also
extended to the respondents by OMs dated 16.03.2017 and
th
21.03.2017. It was argued that if recommendations of the 7 CPC
were not to be applied to the respondents, then how were they
th
extended gratuity under 7 CPC. Reliance was also placed on OM
dated 12.05.2017, which issued revision of pension of pre-2016
th
pensioners as per 7 CPC, to submit that para no. 12 therein stated
that it applied to pensioners who were absorbed in PSUs i.e., the
respondents.
67. With respect to the contention that respondents’ pensions cannot
be revised since their pay is not revised, it was submitted that pay
revision under a PSU is dependent upon profitability and affordability
of the PSU and has no connection with pension revision, which is
rather governed by Rule 37A. It was also submitted that PRC do not
govern revision of pension for the respondents, since no reference was
made in this respect in the PRC recommendations.
68. It was submitted that non-consideration of the 3 CAT decisions
(Ernakulam, Hyderabad, and Bangalore Benches) in the impugned
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order was not fatal since those Orders were passed by Single Benches
of CAT at Ernakulum and Hyderabad and the Division Bench at
Bangalore Bench had passed a non-speaking order. It was submitted
that these decisions were otherwise also distinguishable on facts. It
was further submitted that the High Court of Kerala upheld the
applicability of OM dated 12.05.2017 to an absorbee, similarly placed
28
as the respondents. It was submitted that the SLP filed by the
petitioners against this decision was withdrawn with the liberty to file
a review before the Kerala High Court, which was ultimately
dismissed. Mr. Chhibber relied on para no. 10 of the judgment
29
rendered in review . Further, it was averred that the petitioners were
taking the respondents’ undertaking of 19.08.2025 out of context; they
undertook to not rely on the Kerala judgment in light of petitioners’
submission that they were challenging the same before the Supreme
Court and did not waive their substantive entitlement.
69. It was submitted that the petitioners were seeking to bring on
record certain documents dated 17.07.2018 and 27.03.2025, which
were not placed before CAT. It was also submitted that the Kerala
High Court, in para no. 20 of the review decision, rejected these very
documents by observing that they were internal in nature and to
agitate a review on their basis would be far-fetched. It was submitted
that presently, there exists a High Court judgment in favor of the
respondents directly on the point of controversy.
28
SLP(C) Dairy No. 39478/2025, order dated 07.02.2025
29
RP No. 1158/2025, order dated 24.03.2026
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70. Conclusively, Mr. Chhibber submitted that as such, payment of
pension has no link with pay revision or the fact that the respondents
ceased to be Government employees in light of Rule 37A. The failure
to revise pension has caused grave prejudice to the respondents herein,
who are all senior citizens. It was submitted that a Group ‘D’ retiree
was drawing a meagre pension of Rs. 3500/- per month, whereas the
th
minimum pension as per the 7 CPC is Rs. 9000/- per month.
71. Mr. Sanjoy Ghose, the learned Senior Counsel appearing on
behalf of the respondents in W.P.(C) No. 4955/2024, advanced certain
submissions in addition to the arguments put forth by Mr. Chhibber.
72. Mr. Ghose submitted that since 2007 the pension of the
respondents has not been revised. It was argued that the contention
regarding difference between IDA and CDA pay scale was a red
herring since the respondents do not seek pay revision; revision of
pension can be done regardless, as per the formula under Rule 37A. It
was also submitted that it is not within the remit of PRC to revise
pension. It was submitted that the respondents should be extended the
benefit of the same formula for fitment of 2.57 in view of the
assurance of similar treatment with Central Government employees. It
was argued that the Tribunal did not direct any alteration of IDA or
CDA pay scales, but it only directed parity to be maintained, as was
assured to the respondents at the time of their absorption.
73. It was also submitted that it is fallacious to suggest that IDA
pensioners receive more pension than CDA counterparts; since IDA
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pay scale is higher than CDA, the DR for CDA is higher than in IDA
and hence the multiplication factor for pay revision in CDA is greater
than for IDA to balance out the difference.
74. With respect to the petitioners’ contention before CAT that
granting relief to the respondents will create a rift with other
BSNL/MTNL employees, it was submitted that the same was not
tenable since the respondents constitute a separate class, i.e., erstwhile
Government employees absorbed in BSNL/MTNL, and hence, there
exists intelligible differentia for such differential treatment.
75. It was asserted that the respondents were not seeking general
parity with central government employees but merely seeking revision
of pension pursuant to the revision granted to central government
employees based on the assurance of similar treatment. It was further
submitted that classification of absorbees and the ones who were
recruited in BSNL is overinclusive and violative of Article 14 since
only the absorbees were granted protection under Rule 37A and
therefore constitute a suis generis class and that this suis generis class
has been consistently granted parity with central government
pensioners by virtue of Rule 37A. Reliance was placed on OMs dated
27.04.2009, 04.05.2009, 12.08.2009, 15.03.2011 and 20.07.2016. To
demonstrate the assurance granted to respondents at the time of their
absorption, reliance was placed on OM dated 05.07.1989, Note dated
25.09.2000 and Circular dated 09.11.2000. To demonstrate parity, it
30
was highlighted that the absorbees continued with GPF post
30
General Provident Fund
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absorption, which was not permitted for other PSU employees and
were eligible for CGHS facilities (OM dated 20.02.2014), this is
because their pensions are disbursed from the Central Civil Estimates
at power with Central Government pensioners.
76. It was submitted that once it is accepted that the Government is
to bear the liability for pension of the respondents, it is
counterintuitive to suggest that their revision of pension would be
dependent on recommendation of PRC or the financial health of the
PSUs. By OM dated 20.07.2016, DoT reaffirmed this position by
rescinding its earlier OM whereby liability of the Government was
rd
restricted to 60%. It was clarified that as per 3 PRC, pay revision is
dependent on the financial health of BSNL and does not govern
revision of pension. This distinction was acknowledged by DP&PW in
its OM dated 08.03.2019 whereby it sought clarification from DoT
regarding revision of pension for pre-2017 BSNL pensioners.
77. It was submitted that the General Terms and Conditions floated
along with the option forms, did not provide any option to opt for pro-
rata pension and, therefore, there are no pro-rata pensioners in BSNL,
and all absorbed employees, including the respondents, are combined
service pensioners.
78. Reliance was also placed on sub-Rule 8 to submit that
respondents are entitled to revision of pension. It was averred that the
Explanation inserted on 21.12.2012 to Sub-rule 8 of Rule 37A, which
clarifies that pension for absorbees must be calculated on the same
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basis as for Central Government pensioners. It was contended that
IDA scales, granted in light of Rule 37A (10), relate solely to pay and
have no bearing to the aspect of revision of pension.
79. With respect to petitioners’ submission that combined service
pensioners are receiving more pension than their Central Government
counterparts, it was submitted that as per OM dated 15.03.2011,
respondents are drawing minimum pension of Rs. 3500/-, whereas the
Central Government employees draw a minimum of Rs. 9000/- as per
th
7 CPC.
80. Pertaining to the CAT decisions cited by the petitioners, it was
submitted that issues of interpretation of statutes or statutory rules
31
should be considered by Division Bench of the Tribunal .
Nevertheless, both decisions fail to appreciate the explanation to Rule
37A(8) and writ petitions against both are pending before respective
High Courts. Further, the decision of the Division Bench at Bangalore,
32
is sub-silento enhanced does not constitute a binding precedent .
th
81. It was reiterated that all benefits as per 7 CPC, except for
revision of pension, were extended to the respondents.
31
Mahabal Ram (Dr) v ICAR, (1994) 2 SCC 401; L Chandra Kumar v Union of India, (1997) 3 SC 261;
Govt. of T.N. v. S. Balasubramanian, (1995) 6 SCC 642; State of M.P. v. B.R. Thakare, (2002) 10 SCC
338; Union of India v. Madras Bar Assn., (2010) 11 SCC 1
32
Municipal Corporation of Delhi v Gurnam Kaur, (1989) 1 SCC 101
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82. In rejoinder, Mr. Singh submitted that the reliance on the OM
dated 05.07.1989 Cabinet Note dated 25.09.2000 is of no avail, since
they have materialized into Rule 37A.
83. Mr. Singh clarified that there were two kinds of pensioners
absorbed into BSNL/MTNL: (i) pro-rata pensioners who draw pension
separately from the Government for the period for their service till
their date of absorption under CDA scale. They are defined in Para
d(ii) of the OM dated 05.07.1989. It was submitted that the OMs dated
02.09.2008 and 04.08.2016 pertain to these pensioners; (ii) combined
service pensioners are governed under Rule 37A. Their pension
becomes payable once they retire from the PSU and is calculated
based on the service rendered under both the Government and the
PSU together. These employees are fitted into the IDA scale. All
respondents fall under this latter category. In this light, Mr. Singh
sought to distinguish the OMs/communications relied upon by the
respondents as follows:
th
(i) OM dated 01.09.2008 gives effect to 6 CPC. applies to
pre-01.01.2006 retirees. It pertains to pro-rata pensioners, not
combined service pensioners as per para no. 7.
(ii) OM dated 02.09.2008 applies to post-01.01.2006 retirees
th
for revision of various provisions in terms of 6 CPC. It will not
apply to respondents since they ceased to be Government
employees after absorption.
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(iii) OM dated 15.03.2011 was issued for revision of pension
nd
of BSNL pensioners pursuant to the 2 PRC and has nothing do
to with CPC recommendations.
84. It was submitted that the OMs dated 01.09.2008 and
02.09.2008 operates as a cohesive scheme. Since the former applies to
pre-01.01.2006 retirees, it pertains to revision of pension and the latter
applies to post-01.01.2006 retirees, therefore, it is for fixation. In this
regard, it was submitted that the OM dated 27.04.2009 is only a
clarification on OM dated 02.09.2008 (fixation), It only clarifies that
that the formula revised as per OM of 02.09.2008 shall also be applied
to combined service pensioners and that the previous OM dated
01.09.2008 has no application whatsoever since it deals with revision
of pension of pre-2006 Central Government retirees. In other words,
the change in formula for fixation of pension (02.09.2008) will be
applicable to the respondents but not the formula for revision of
pension (01.09.2008). It was submitted that this mechanism is indeed
th
aligned with Rule 37A and was mirrored in the 7 CPC framework.
85. Mr. Singh argued that 3 OMs issued on the same date
th
(04.08.2016) gain significance for the purpose of 7 CPC, as follows:
(i) OM No. 38/37/2016-P&PW(A) is a resolution by which
th
7 CPC recommendations were accepted. It provides two
formulae: fitment and notional fixation. Fitment factor of 2.57
was to be applied immediately, and the latter was subject to
feasibility.
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(ii) OM No. 38/37/2016-P&PW(A)(i) is for revision of
pension for post-01.01.2016 retirees. Hence, it was submitted
that it essentially fixates pension.
(iii) OM No. 38/37/2016-P&PW(A)(ii) applies to revision of
pension of pre-01.01.2016 retirees.
86. In light of these three OMs, it was submitted that the OM
12.05.2017, (ultimately relied upon by the respondents), completes the
chain. It was highlighted that this OM accepted the notional fixation
method to revise pension for pre-01.01.2016 Central Government
retirees. It was also submitted that these OMs did not apply to
BSNL/MTNL combined service pensioners governed by the IDA pay
pattern, as also clarified by the Department by OMs dated 17.07.2018
and 27.03.2025. It was, however, also submitted that these
clarifications were not part of the record in the underlying OAs but
were subsequently placed before the High Court of Kerala at
Ernakulum in the proceedings arising from a similar dispute.
87. Mr. Singh submitted that the respondents were extended the
th
benefit of enhanced gratuity pursuant to the 7 CPC as per OM dated
16.03.2017 because gratuity form part of the pensionary formula
under Rule 37A (8). This OM also clearly stipulates that there is no
th
change in the existing formula for pension post 7 CPC and the
absorbees shall remain on the existing formula.
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88. It was submitted that there is a direct link between revision of
pension and revision of the pay scale. Accordingly, if the pension of
the respondents were to be revised in the manner claimed, it would
result in an anomalous situation whereby employees who retired
earlier would get a much higher pension as opposed to the employees
who retire now on the same pay scale. It was further submitted that
this anomaly was covered by the OM dated 18.03.2019.
89. Reliance was also placed on Section 149 of the Finance Act,
2025 to contest the argument of parity since this provision entitles the
Central Government to differentiate between different classes of
pensioners.
90. Lastly, it was submitted that the benefits as envisaged by Rule
37A have already been extended to the respondents. Further, it was
again clarified that the respondents were never extended the benefit of
th
the 6 CPC, which only applies to Central Government employees
nd
and pro-prata absorbees, instead, they received benefits of the 2 PRC
and therefore, cannot claim entitlement to pension revision under the
th
7 CPC.
th th
91. In surrejoinder, Mr. Chhibber submitted that the 6 or the 7
CPC do not create any distinction between the IDA and CDA
pensioners, as evident from para no. 19 of the OM dated 12.05.2017
which explicitly applies uniformly to all pensioners drawing pension
before and after 01.01.2016 under the CCS (Pension) Rules. It was
further submitted that the IDA-CDA distinction is a legal fiction and
was not argued by the petitioners before the Tribunal.
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92. Mr. Chhibber reiterated that the respondents were guaranteed
parity with their Central Government counterparts at the time of their
absorption, which was solidified by insertion of Rule 37A. It was
averred that Mr. Singh’s contention that pension revision was only
applicable to Central Government employees under CDA scale was
fallacious since no such classification has been made in the statute or
the various Orders/OMs. These orders instead apply to
“pensioners/family pensioners” governed by CCS Rules.
93. It was highlighted that a conjoint reading of sub-Rules 8 and 10
of Rule 37A provides that the respondents are entitled to revision of
pension after retirement in the same manner as Central Government
employees. It was reiterated that the respondents were extended
th
various benefits in furtherance of 7 CPC, thereby evidencing
continued parity in matters of pensionary benefits.
94. With respect to the finding of the Kerala High Court that an OA
by an Association is not maintainable, Mr. Chhibber sought to clarify
that an Association can indeed file an OA as per Rule 5 of the
Administrative Tribunal Rules, also evident from the fact that their
OA was allowed and regardless, there were also independent
applicants in the present matter.
95. While concluding, it was contended that a mere difference in
pay structure (IDA-CDA) does not amount to forfeiture of the
statutory right to draw an equivalent pension under Rule 37A. The
th
respondents were extended the benefit of 6 CPC and various benefits
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th
under 7 CPC except pension revision. The respondents have a
legitimate expectation for pension revision since they were assured at
the time of their absorption that they would be at par with government
employees. Hence, they cannot be denied revision of pension by
linking it with IDA pay revision (especially since IDA pay revision of
working employees does not deal with pensioners governed under
CCS Rules). The Tribunal has only ordered adherence to the scheme
envisaged under Rule 37A and committed no error warranting
interference under Article 226 of the Constitution of India.
REASONING AND ANALYSIS
96. We have heard the learned Counsel appearing for all parties at
great length and carefully perused the material on record. We record
our appreciation for the valuable assistance rendered by the learned
Counsels before us, which has been of significant aid in adjudicating
this matter.
97. Notice in the present matter was issued on 01.08.2024.
Thereafter, on 19.08.2025, the learned Senior Counsel and Mr. Ankur
Chhibber on behalf of the respondents, submitted that they will not
place reliance on the judgment of the High Court of Kerala,
Ernakulum in OP (CAT) No. 60/2020. Subsequently, on 19.11.2025, it
was submitted on behalf of the respondents that they only seek
revision of their pension as per the same formula extended to Central
Government employees in terms of OM No. F.No.38/37/2016-
P&PW(A)(i) dated 04.08.2016, i.e., by applying the multiplier of 2.57
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and categorically submitted that they do not seek re-fixation of pay in
rd
terms of the 3 PRC.
98. After having given due consideration to the present lis, we can
safely deduce that the primary grievance of the petitioners is that the
respondents cannot be treated at par with Central Government
th
employees for the purposes of revision of their pension as per the 7
CPC recommendations, particularly since: (i) the respondents ceased
to be Government employees upon their permanent absorption in
BSNL/MTNL; (ii) they are governed by PRC recommendations and
not CPC recommendations; (iii) they are fitted under a different pay
scale, i.e., the IDA scale; and (iv) Rule 37A only grants them the same
formula as Central Government employees for calculation of pension
at the time of retirement. On the other hand, the respondents maintain
that they were assured that their service conditions as under the
Government shall remain intact even after their absorption. It is their
case that such assurance also materialized in the form of Rule 37A of
the CCS (Pension) Rules, 1972, specifically sub-Rule (8).
99. While this Court has met with the opportunity to interpret and
apply Rule 37A on numerous occasions since its advent, the question
before us today is quite peculiar.
100. As per the aforenoted facts, the question of the hour is whether
the respondents before us, who were erstwhile DoT employees, and
thereafter permanently absorbed into BSNL/MTNL and fitted in the
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IDA pay scale, are entitled to revision of their pension as per the 7
CPC, in light of Rule 37A?
101. In our endeavor to fairly adjudicate the present dispute, we are
required to undertake a comprehensive reading of the rigmarole of the
legislative framework, relevant Circulars, Office Memoranda, and
other communications issued by the Government of India and
BSNL/MTNL, so as to arrive at a coherent and harmonious
understanding of the entire statutory and administrative scheme
governing pension of absorbees as envisaged by the Government and
Legislature.
102. Needless to state, that this Court must exercise its extraordinary
jurisdiction under Article 226 of the Constitution of India sparingly
and in a circumscribed manner. Further, re-appreciation of evidence is
impermissible unless the impugned decision of the learned Tribunal is,
inter alia, rendered dehors its jurisdiction, is perverse or suffers from
33
manifest illegality or procedural irregularity . Judicial review in
matters of economic policy should be exercised on the anvil of, inter
alia, manifest arbitrariness, patent illegality, and legislative
34
competence.
103. Before embarking on this journey, we deem it appropriate to
refer to judicial precedents relevant to the dispute at hand. However,
33
Ajay Singh v. Khacheru, (2025) 3 SCC 266; Chandavarkar Sita Ratna Rao v. Ashalata S. Guram,
(1986) 4 SCC 447; Subhash Chander v. UOI in W.P(C) No. 2468/2025
34
Rattan Chand v. Bhakra Beas Management Board & Ors., MANU/PH/1158/2002; UOI & Ors v Sub
Trilok Chand Retd No. JC374073A & Anr., W.P.(C) 12781/2024, pronounced on 29.05.2026
(2026:DHC:4843-DB)
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we do not wish to burden this judgment with innumerable excerpts.
Hence, we deem it fit to objectively recapitulate the relevant
precedents without reproduction as far as possible.
104. It is well settled that pension is neither a bounty nor an act of
grace of the employer, instead, it is a valuable right of a government
employee for the service rendered by him. It is the legal obligation of
35
an employer to pay pension as it accrues . However, this right is
subject to the provisions of Rule 9 of the CCS (Pension) Rules, which
reserves the power to withhold or withdraw pension under certain
36
circumstances .
105. It is also well settled that any discriminatory action of the
Government is liable to be quashed unless it can be established that
such action was based on some rationale and cogent principle and was
37
not arbitrary .
38
106. The Supreme Court in A.K. Bindal v. UOI recognized that a
government company is legally distinct from the Government and that
employees of the Government company are not civil servants and,
therefore, are not entitled to protection under Article 311 of the
Constitution of India. It was also held that since these employees are
not Government servants, they have no legal right to claim that their
35
D.S. Nakara v. UOI, 1983 SCC (L&S) 145
36
BSNL v. Manilal Ambalal Patel, (2019) 14 SCC 232 : (2020) 1 SCC (L&S) 845 : 2019 SCC OnLine
SC 344
37
Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489, 506 : AIR
1979 SC 1628
38
(2003) 5 SCC 163 : 2003 SCC (L&S) 620 : (2003) 114 Comp Cas 590 : 2003 SCC OnLine SC 580;
Pyare Lal Sharma v. Managing Director, (1989) 3 SCC 448 : 1989 SCC (L&S) 484 : AIR 1989 SC 1854
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salaries should be paid by the Government. This responsibility is to be
borne by the Government company, and if such company is not
financially viable, the employees cannot claim any legal right to ask
for a direction to the Central Government to meet this expenditure.
107. However, in the present case, we note that the liability to pay
pensionary benefits for BSNL/MTNL absorbees lies with the
Government itself in terms of Rule 37A. Hence, the aforementioned
decision is applicable to the extent that it carves out a distinction
between government servants and employees of government
companies.
108. Further, the Supreme Court has consistently highlighted that the
financial ability of an employer/government undertaking is crucial and
cannot be ignored, as otherwise, the unit itself may not be able to
39
function . We note that while these decisions were rendered in
context of fixing of wages/pay to workers and revision thereof, the
reasoning adopted squarely applies to the dispute at hand.
40
109. The Supreme Court in VSNL v. Ajit Kumar Kar duly
recognized that IDA and CDA scales are distinct. It was held that the
respondent-retirees therein did not have any right to receive Dearness
Relief as per CDA scale on the pension drawn by them under IDA
scale.
39
Officers & Supervisors of I.D.P.L. v. Chairman & M.D., I.D.P.L., (2003) 6 SCC 490 : 2003 SCC
(L&S) 916 : 2003 SCC OnLine SC 738; A.K. Bindal (supra)
40
(2008) 11 SCC 591 : (2008) 2 SCC (L&S) 1047 : 2008 SCC OnLine SC 599
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110. Significantly, a three-Judge Bench of the Supreme Court held
that classifications created by an expert body after detailed study
should not be disturbed except for compelling reasons which may
41
indicate arbitrariness or unreasonableness . It was further clarified in
42
UOI v. M.V. Mohanan Nair that the Pay Commission is an expert
body, and when such body has comprehensively examined all issues to
arrive at a conclusion, the court should not interfere with its
recommendations. Once the government has accepted its
recommendations and implemented the same, any interference by the
court would have grave impact on public exchequer. Since the Pay
Commission goes to the root of the matter, it is the proper authority,
and interference is only warranted if there is “hostile
43
discrimination” . The decision of the Pay Commission should not
44
ordinarily be subject to judicial review . The Supreme Court and this
Court have held that the Tribunal cannot substitute its own views for
the views of the Government or direct a new policy based on its
45
views .
111. Further, it is trite that a classification is within the bounds of
Article 14 if it is based on some intelligible differentia and has some
rational nexus with the object sought, and Article 14 of the
Constitution of India will only get triggered if there is discrimination
41
Shyam Babu Verma v. Union of India, (1994) 2 SCC 521
42
(2020) 5 SCC 421
43
Union of India v. M.V. Mohanan Nair, (2020) 5 SCC 421 : (2020) 2 SCC (L&S) 1 : 2020 SCC OnLine
SC 302
44
State of U.P. v. U.P. Sales Tax Officers Grade II Assn., (2003) 6 SCC 250; State of
Haryana v. Haryana Civil Secretariat Personal Staff Assn., (2002) 6 SCC 72 : 2002 SCC (L&S) 822
45
State of T.N. v. S. Arumugham, (1998) 2 SCC 198 : 1998 SCC (L&S) 493; UOI v. M.V. Mohanan
Nair, (2020) 5 SCC 421; Ekta Shakti Foundation v. Govt. of NCT of Delhi, (2006) 10 SCC 337 : AIR
2006 SC 2609; UOI v. P.V. Hariharan, 1997 SCC (L&S) 838; and UOI v. Makhan Chandra Roy (1997)
11 SCC 182 : AIR 1997 SC 239; Virendra Kumar v. UOI, 2024 SCC OnLine Del 1059
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between same classes of employees. On similar lines, it was held that
the State, while implementing a new scheme for pensionary benefits,
may deny the same to a class of retired employees who were governed
46
by different set of rules .
112. The Supreme Court held that pension is akin to a right of
property and has a direct nexus with the salary payable to the
47
employees as on the date of retirement . The formula adopted for
determining last average emoluments drawn has an impact on the
48
quantum of pension . It is also settled that in order to get similar pay
there must be “complete and wholesale identity between two
49
groups” . To find out such identity, the competent authority is an
expert body, not the writ court. It was further warned that granting pay
50
parity by a court may result in an adverse cascading effect .
113. With respect to entitlement to revised pension, the Supreme
51
Court in V. Kasturi v. Managing Director, State Bank of India ,
carved out two categories, of which Category-I is relevant to the
present dispute. Hence, it merits reproduction hereinbelow:
“Category I
22. If the person retiring is eligible for pension at the time of his
retirement and if he survives till the time of subsequent amendment
of the relevant pension scheme, he would become eligible to get
enhanced pension or would become eligible to get more pension as
46
U.P. Raghavendra Acharya v. State of Karnataka, (2006) 9 SCC 630
47
U.P. Raghavendra Acharya v. State of Karnataka, (2006) 9 SCC 630
48
D.S. Nakara case [(1983) 1 SCC 305 : 1983 SCC (L&S) 145
49
S.C. Chandra v. State of Jharkhand, (2007) 8 SCC 279 : (2007) 2 SCC (L&S) 897; State of
Haryana v. Tilak Raj, (2003) 6 SCC 123 : 2003 SCC (L&S) 828; State of Bihar v. Bihar Veterinary
Assn., (2008) 11 SCC 60 : (2008) 2 SCC (L&S) 1111 : 2008 SCC OnLine SC 361
50
S.C. Chandra v. State of Jharkhand, (2007) 8 SCC 279
51
(1998) 8 SCC 30 : 1999 SCC (L&S) 78
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per the new formula of computation of pension subsequently
brought into force, he would be entitled to get the benefit of the
amended pension provision from the date of such order as he
would be a member of the very same class of pensioners when the
additional benefit is being conferred on all of them. In such a
situation, the additional benefit available to the same class of
pensioners cannot be denied to him on the ground that he had
retired prior to the date on which the aforesaid additional benefit
was conferred on all the members of the same class of pensioners
who had survived by the time the scheme granting additional
benefit to these pensioners came into force. The line of decisions
tracing their roots to the ratio of Nakara case [(1983) 1 SCC 305 :
1983 SCC (L&S) 145] would cover this category of cases.”
114. In light of the aforementioned excerpt, we note that in the
present case, while the respondents fall in this category, their
th
entitlement to revision of their pension as per the 7 CPC stands on
rd
murky waters, since the 3 PRC has not been given effect, i.e., there is
no “new formula of computation of pension” or amendment in the
pension scheme in order to give rise to their right to enhancement of
pension.
115. Pertinently, the Supreme Court in Sureshchandra Singh v.
52
Fertilizer Corpn. of India Ltd. , held as follows:
“ 4. By OMs dated 25-1-1991 and 8-4-1991, the Ministry of
Programme Implementation and Department of Public Enterprises
made it clear that all instructions/guidelines issued by the
Government of India would be of two kinds: (a) directives issued
in the name of the President of India, and (b) guidelines.
Directives would be issued by the Administrative Ministry in the
name of the President while all other instructions issued by the
Department of Public Enterprises or by the Administrative
Ministry are only advisory which the Board of Directors of the
public sector undertakings concerned may in their discretion adopt
or not for reasons to be recorded in writing.
52
(2004) 1 SCC 592 : 2004 SCC (L&S) 244 : 2003 SCC OnLine SC 1406
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5. Here the Government of India took a policy decision to
increase the retirement of Central Government employees.
Application of that decision in respect of employees of public
sector enterprises is dependent upon so many factors that are to
be taken into account in the light of the peculiar characteristics
of each company or corporation or department. So the first OM
itself provides that the order will come into force only with effect
from the date of notification of amendment to the relevant rules
and regulations. So it is for the authority concerned to make
necessary changes in the rules and regulations after taking into
account all the relevant aspects. Immediately after the first OM
dated 13-5-1998 the Department of Public Enterprises, Ministry of
Industry , Government of India issued OM dated 19-5-1998
wherein the modalities of the implementation of the first OM in this
Department was detailed. Here it is pertinent to note that the OM
dated 19-5-1998 is not an instruction issued in the name of the
President. On the other hand, it was issued by the Department of
Public Enterprises, which is advisory in nature. It accorded a
broad discretion to the corporations or companies for the
implementation of the enhanced retirement age after taking into
account all the relevant factors…
6. It is also to be noted that the OM dated 19-5-1998 itself
does not raise the retirement age to sixty years. It is only an
administrative direction and court cannot issue a writ to enforce
such administrative instructions that is not having the force of
law . The appellants do not have any right to continue in service till
the age of sixty years. The decision of the Board of Directors is not
arbitrary or unreasonable or unrelated to the question of
enhancement in the age of retirement. Hence the first contention
stands rejected.”
116. It is evident from the aforesaid extract that the
instructions/guidelines issued by the Government through Department
53
of Public Enterprises are of two categories: instructions/guidelines
issued by the Government of India and directives issued in the name
of the President of India. The former is only advisory in nature.
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117. Having considered the judicial precedents relevant to the
present dispute, we now deem it fit to delineate Rule 37A, as it lies at
the center of the controversy.
Scheme of Rule 37A of CCS (Pension) Rules, 1972
118. On 30.09.2000, OM No. 2-29/2000-Restg. was issued by DTS
regarding setting up of BSNL. In pursuance thereof, Rule 37A was
inserted in the CCS (Pension) Rules, 1972.
119. While interpreting Rule 37A, a co-ordinate Bench of this Court
54
in Indian Telecom Service Association v. UOI , held that the Court
must give a meaningful effect to all provisions of this Rule, as much
as possible, and not read it in isolation without considering the intent
and purpose behind the sub-Rules.
120. In the aforesaid light, we deem it fit to analyse Rule 37A, as
inserted in 2000, to understand the Scheme which would have formed
the basis for the respondents’ choice to be absorbed in the PSUs. The
relevant sub-Rules are reproduced thus:
“(1) On conversion of a department of the Central Government
into a public sector undertaking or an autonomous body, all
Government servants of that Department shall be transferred en-
masse to that public sector undertaking or autonomous body, as
the case may be, on terms of foreign service without any deputation
allowance till such time as they get absorbed in the said
undertaking or body, as the case may be and such transferred
Government servants shall be absorbed in the public sector
53
“DPE”, hereinafter
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2012 SCC OnLine Del 2168
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undertaking or autonomous body, as the case may be, with effect
from such date as may be notified by the Government.
(4) The permanent absorption of the Government servants as
employees of the Public Sector Undertaking or Autonomous Body
shall take effect from the date on which their options are accepted
by the Government and on and from the date of such acceptance ,
such employees shall cease to be Government servants and they
shall be deemed to have retired from Government service.
(5) Upon absorption of Government servants in the public
sector undertaking or autonomous body, the posts which they
holding in the Government before such absorption shall stand
abolished .
(7) The employees including quasi-permanent and temporary
employees but excluding causal labourers, who opt for permanent
absorption in the Public Sector Undertaking or Autonomous Body,
shall on and from date of Absorption, be governed by the rules
and regulations or bye-laws of the Public Sector Undertaking or
Autonomous Body , as the case may be.
(8) A permanent Government servant who has been absorbed
as an employee of a Public Sector Undertaking or autonomous
body shall be eligible for pensionary benefits on the basis of
combined service rendered by him in the government and the
Public Sector Undertaking or autonomous body in accordance
with the formula for calculation of such pension/family pension
under these rules as may be in force at the time of his retirement
from the public sector undertaking or autonomous body, as the
case may be .
(9) The pension of an employee under sub-rule (8) shall be
calculated on the basis of his last ten months’ average pay.
(10) In addition to pension or family pension, as the case may
be, the employees shall also be eligible to Dearness relief as per
Industrial Dearness Allowance pattern.
(21) Nothing contained in sub-rules (12) to (20) shall apply in
the case of conversion of the Departments of Telecom Services and
Telecom Operations into Bharat Sanchar Nigam Limited, in which
case the pensionary benefits including family pension shall be
paid by the Government.
(22) The arrangements under sub-rule (22) shall be applicable
to the existing pensioners and to the employees who are deemed to
have retired from the Government service for absorption in Bharat
Sanchar Nigam Limited and shall not apply to the employees
directly recruited by the Bharat Sanchar Nigam Limited for whom
it shall devise its own pension scheme and make arrangements for
funding and disbursing the pensionary benefits.”
(emphasis supplied)
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121. Upon a plain reading of this Rule, it can be discerned that once
the transferees opt to be absorbed in the PSU, they shall cease to be
Government servants and are deemed to have retired from
Government service. The Government post held by them would also
stand abolished. From the date of such absorption, they shall be
governed by the rules of the PSU. The heart of this Rule is sub-Rule
(8), which mandates that a government servant who has been absorbed
in a PSU shall be eligible for pensionary benefits at the time of his
retirement based on combined service rendered by him under the
Government and the PSU, as per the formula provided under the CCS
Rules. It is stipulated that Dearness Relief would be ascertained as per
the IDA scale. Further, the pensionary benefits shall be paid by the
Government.
122. Therefore, we note that Rule 37A, as it stood on 30.09.2000,
created a legal fiction that upon absorption, such employees would
deemed to have retired from Government service. It also mandated
that upon such absorption, the employees would be governed by the
rules of the PSU. There is a stipulation that absorbed employees are
not Government servants. Notably, sub-Rule (8) only provided for
combined service pension and does not contemplate other ancillary
benefits beyond those specified.
123. Further, the words in sub-Rule (8), “in accordance with the
formula for calculation of such pension/family pension under these
rules as may be in force at the time of his retirement from the public
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sector undertaking”, clearly stipulate that the formula extended to
Central Government servants will be applied to such absorbed
employee for the purposes of calculation of pension which is in force
at the time of retirement of the absorbed employee from the PSU. The
provision does not extend any entitlement to subsequent revisions
arising from future Pay Commissions.
124. Since an employee ceases to be a Government servant upon
absorption and is arguably promised retention of his Government
service conditions post such absorption, the same formula as that of
Central Government servants is extended to such absorbee by way of
Rule 37A (8) in furtherance of this promise. Sub-Rule 8, therefore,
only extends the formula for calculating pension, which is applicable
at the time of his retirement from the PSU. Thus, this promise of
retention of the same conditions as under government service is only
with respect to the calculation of pension and is restricted to the time
of retirement. To extend any other subsequent benefits would be
giving an expansive reading to the black and white letters of this
provision, which may have not been envisaged by the Legislature.
125. We also note that a co-ordinate Bench of this Court in UOI v.
55
All India BSNL Pensioners Welfare Assn. , while interpreting Rule
37A, noted as follows:
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“13. A clarification was issued by the DOT on 19 February,
2001 stating that “the word formula in clause ‘8’ of rule 37-A
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means payment of pension as per Government rules in force at
the relevant time” and further stating that “for the purpose of
reckoning emoluments for calculation of pension and pensionary
benefits, the emoluments as defined in CCS (Pension) Rules,
in PSU in the IDA pay scales shall be treated as emoluments”.
*
th
15. On 20 December, 2002 a clarification was issued by the
DPPW in respect of Rule 37A(8), (9) & (10) of the CCS (Pension)
Rules to the effect that “for the purposes of calculating the average
emoluments for determining the pension the same shall be done on
the IDA pattern of scale with dearness relief in IDA pattern.”
126. Therefore, as per DoT, sub-Rule 8 refers to payment of pension
as per Rules in force “at the relevant time” and further that
emoluments for this purpose would be calculated under the IDA scale.
127. We now take the liberty to reproduce this Rule as it stood on
56
21.12.2012 after various amendments overtime, as follows:
“(8) A permanent Government servant who has been absorbed
as an employee of a Public Sector Undertaking and his family shall
be eligible for pensionary benefits (including commutation of
pension, gratuity, family pension or extra-ordinary pension), on
the basis of combined service rendered by the employee in the
government and in the Public Sector Undertaking in accordance
with the formula for calculation of such pensionary benefits as may
be in force at the time of his retirement from the Public Sector
Undertaking or his death or at his option, to receive benefits for
the service rendered under the Central Government in accordance
with the orders issued by the Central Government.
"Explanation:- The amount of pension or family pension in respect
of the absorbed employee on retirement from the Public Sector
Undertaking or on death shall be calculated in the same way as
calculated in the case of a Central Government servant retiring or
dying, on the same day".
56
(i) On 28.12.2002, by OM No.4/61/99-P&PW(D) issued by DP&PW, the Explanation to sub-Rule 8 was
inserted; (ii) On 21.12.2012, sub-Rule 9 was modified and sub-Rule 22 was modified to incorporate the
content of sub-Rule 21
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(9) The pension of an employee under sub-rule (8) shall be
calculated on fifty percent of emoluments or average emoluments,
whichever is more beneficial to him.
(10) In addition to pension or family pension, as the case may be,
the employee who opts for pension on the basis of combined
service shall also be eligible to dearness relief as per industrial
Dearness Allowance pattern.
(22) Nothing contained in sub-rules (13) to (21) shall apply in the
case of conversion of the Departments of Telecom Services and
Telecom Operations into Bharat Sanchar Nigam Limited, in which
case the pensionary benefits including family pension shall be paid
by the Government.”
128. It is evident from sub-Rule (8) and its accompanying
explanation that a permanent Government servant absorbed into a
PSU may get pension in two ways. The first is based on the combined
service rendered by the employee, i.e. for the purposes of pension, the
employee’s service under the Central Government and the PSU would
be counted together. The second way of computation is based on
government service alone, i.e. the employee would draw pension for
the service rendered under the Government till the date of his
absorption and draw a separate pension from the PSU upon retirement
therefrom. It is an admitted position that the respondents are not pro-
rata pensioners, i.e., they fall under the first category. The explanation
to sub-Rule (8) further clarifies that the method of calculation of
pension for absorbed employees will be the same as adopted for
Central Government employees.
129. Further, sub-Rules (13) to (21) shed light on the framework of
liability shared by the PSU and the Government with respect to
pension. It provides that the Central Government shall create a
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Pension Fund in the form of a Trust, and the pensionary benefits are to
be paid from this Fund. Further, the Government shall make a one-
time lumpsum payment to this Fund for the service rendered till the
date of absorption of the employee in the PSU. The PSU is also
required to make contribution to this Fund for the period of service to
be rendered by the employees of the said PSU. This Fund is envisaged
to be self-sustaining. If the pension liability cannot be fulfilled by the
Fund and the PSU is also not able to cover-up the shortfall, the
Government is liable to meet such expenditure. However, by virtue of
sub-Rule 22, this aforesaid framework shall not apply to
BSNL/MTNL; the consequence being that for BSNL/MTNL, pension
shall be paid by the Government directly.
130. In this light, we also note that MTNL was brought at par with
BSNL, as notified by DP&PW by G.S.R. No. 138(E) dated
03.03.2014. Consequently, for the purposes of pensionary liability,
employees absorbed in BSNL and MTNL shall stand on the same
footing, and the obligation to disburse pensionary benefits in both
cases rests upon the Central Government.
131. Further, Rule 3(c) of the Rules defines “emoluments” to mean
emoluments as stipulated under Rule 33. Hence, Rule 33 is as follows:
“33. Emoluments.—The expression ‘emoluments’ means basic
57
pay as defined in Rule 9(21)(a)(i) of the Fundamental Rules
57
Rule 9 (21)( a )( i ) the pay, other than special pay or pay granted in view of his personal qualifications,
which has been sanctioned for a post held by him substantively or in an officiating capacity, or to which he is
entitled by reason of his position in a cadre, and ( ii ) overseas pay, special pay and personal pay, and ( iii ) any
other emoluments which may be specially classed as pay by the President.
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which a government servant was receiving immediately before his
retirement or on the date of his death, and also includes non-
practising allowance granted to medical officers in lieu of private
practice.”
Note 10 below Rule 33 provides:
“Note 10.—When a government servant has been transferred to an
autonomous body consequent on the conversion of a department of
the Government into such a body and the government servant so
transferred opts to retain the pensionary benefits under the rules of
the Government, the emoluments drawn under the autonomous
body shall be treated as emoluments for the purpose of this Rule.”
132. Thus, the aforesaid Note clarifies that if an absorbee opts to
retain pensionary benefits under the Government (pro-rata pension),
they shall draw emoluments as per the CCS Rules i.e., CDA scale.
133. After laying down the scope of Rule 37A and relevant judicial
precedents, we shall now proceed to give a comprehensive reading to
the various OMs and Circulars relied upon by the parties.
(i) OM dated 05.07.1989
134. The genesis, as per the respondents, is the OM No.4/18/87-
P&PW(D) dated 05.07.1989 issued by DP&PW, inasmuch, it provides
the overarching framework for absorption of Government servants to
PSUs. The relevant excerpt is reproduced below for convenience:
“Subject:- Settlement of pensionary terms etc., in respect of
Government employees transferred en masse to Central Public
Sector Undertakings/Central Autonomous bodies.
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*
The President is now please to decide that, in a partial
modification of above mentioned Office Memoranda, the following
terms and conditions will be applicable in the case of en masse
transfer of employees:
a) The permanent Government servants shall have an option to
retain the pensionary benefits available to them under the
Government rules or be governed by the rules of the Public
Sector Undertaking/Autonomous Body, This option shall also be
available to quasi-permanent and temporary employees after they
have been conformed in the Public Sector
Undertaking/Autonomous Body.
b) The Government servants who opt to be governed by the
pensionary benefits available under the Government, shall at the
time of their retirement, be entitled to pension etc. in accordance
with the Central Government rules in force at that time.
*
d) The permanent Central Government servants who have
completed 10 years or more of service and who opt for the
retirement benefits of a PSU/Autonomous Body will receive pro-
rata retirement benefits for the service rendered under the
Government . These will be regulated as follows:-
i) Employees who have an option either to draw pro-rata
pension monthly or to draw a lump sum amount in lieu of
100% pro-rata pension.
ii) Where the employees opt in favor of monthly payment of
pro-rata pension, the same shall be allowed to be drawn with
effect from the date of permanent absorption in a
PSU/Autonomous Body. No part of pro-rata pension will be
allowed to be commuted either at the time of permanent
absorption or any time thereafter.
iii) In the case of employees who opt in favor of a lumpsum
amount in lieu of 100% pro-rata pension, the lumpsum value
shall be worked out on the basis of table prescribed under the
CCS (Commutation of Pension) Rules, 1981.
iv) In the case of employees covered by clause (if), the
retirement gratuity and for those covered by clause (iii)
above, both retirement gratuity as well as lumpsum
commuted value shall be paid on the expiry of a period of 7
years from the date of permanent absorption. The amounts,
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however, can be paid earlier in the event of
death/retirement/resignation/discharge from service.
v) The amounts of retirement gratuity and lump sum value in
lieu of pension mentioned in clause (iv) above shall remain
with the Government, and earn interest at the rate prescribed
for General provident Fund deposits from time to time for the
period they remain with the Government.
2. The family pension entitlements will be regulated in accordance
with the instructions being issued separately.
3. As soon as a Central Government Department, Office or
segment of a Government Department is converted into a
PSU/Autonomous Body, the concerned Government servants will
be transferred to such new organisation on foreign service terms
in the initial period. The Government servants will be permanently
absorbed in the PSU/Autonomous Body with effect from
prospective date to be fixed by the concerned administrative
Ministry/Department and from that date they will cease to be
Government servants . Such of the Government servants who are
not willing to be absorbed will have an option to revert back to
Govt. service. In that event, if no suitable vacancies are available
in the Office/Department/Ministry for such employees, their names
will be transferred to Surplus Staff Cell.
4. The Public Sector Undertaking/Autonomous Body will formulate
the terms and conditions of service in the new body at the earliest
possible date. The employees will however have an option to retain
Government pay scales till their promotion or retirement
(whichever is earlier) or to come over to the service conditions of
the PSU/Autonomous Body. However, until the exercise of this
option, they will continue to be governed by the pay scales, leave
entitlements and terminal benefits under the Government. ”
135. A plain reading of this OM provides that Government servants
shall have the option to retain pensionary benefits of Government
service or be governed by the rules of the PSU. Those who opt for the
former shall, at the time of their retirement, be entitled to pension in
accordance with the Central Government rules in vogue. Paragraph
No. 3 provides that those who opt for the latter option i.e., permanent
absorption in the PSU, will cease to be Government servants and those
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who are not willing to be absorbed, shall have the option to revert to
government service. However, till this option is exercised, the
Government service rules shall remain applicable to them. It is
noteworthy that this OM provides pro-rata pensionary benefits under
clause (d) and is silent on combined service pension.
136. It is clear as day from the said OM that an alternative was
extended to the respondents that either be absorbed in the PSU and
hence be governed by its rules and cease to be Government servants or
to remain in Government service. By the very fact, that such an option
was extended, does not leave room for the possibility that the
absorbees were promised retention of their Government service
conditions post absorption, especially in the light of the explicit
disclaimer that they shall cease to be Government servants.
(ii) Note dated 25.09.2000
137. A Note bearing No. 2-2/00-Restg. (Vol. I) dated 25.09.2000 was
sent for Cabinet approval regarding formulation of BSNL. It was
submitted seeking additional approvals highlighting the financial
ramifications, the change in structure of DTS and DTO and the
conditions of the vast number of the employees absorbed in BSNL. In
this regard, it was suggested that all employees would be entitled to
the Government scheme of pension, even after their absorption, and
that the payment would be made by the Government. The Note also
proposed the insertion of the relevant pension framework into the CCS
Rules by amending Rule 37.
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138. It is, however, well settled that a Cabinet Note is only an
administrative proposal and does not carry the force of law. Therefore,
it is needless to state that this Note is merely an approval sought by
DTS. Nevertheless, the respondents have laid reliance on the same as
it may reveal the intent of DTS and may have also formed the basis of
the information available to the respondents while exercising their
options. In this context, we deem it important to analyze the same.
139. With respect to pension and retirement benefits, it stipulated
that, “ all employees will be entitled to Government's scheme of
pension/family pension even after their absorption” and further that,
pensionary framework in this respect was to be incorporated in the
CCS Pension Rules by inserting Rule 37A.
140. Paragraph No. 12 of this Note delineates the approvals
ultimately sought, as follows:
“12. Approvals sought
Accordingly, approval of the cabinet is sought to the following:-
(A) Approval for HRD Issues
(reference para 4 above)
(a) All officers and employees other than those being retained
in Department of Telecommunications (DoT), would be transferred
w.e.f. 1.10.2000 on deemed deputation without deputation
allowance to Bharat Sanchar Nigam Ltd. On as is where is basis
along with their posts on existing terms and conditions. Their
status as Central Government employees would continue till the
date of absorption.
(b) As per agreement with the ‘C’ & ‘D’ categories of
employees, such of those who agreed to get absorbed w.e.f.
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1.10.2000 would be given the benefit of pay scale of PSUs as and
when they get fixed and an ad hoc sum of Rs.1000/- would be given
to be adjusted against their future salary. A cutoff date would be
given for giving their options.
*
(e) Pension & retirement, job security benefits would be as per the
scheme at Annexure-I .
(i) All employees will be entitled to Government’s scheme of
pension/family pension even after their absorption .
(ii) Payment of pension would be made by the Government. …”
(emphasis supplied)
141. The reference made hereinabove to Annexure-I, is nothing but
the draft of Rule 37A. The relevant portion of this Rule, as reproduced
in this Note, reads as under:
“(2) The transferred employees shall be given the option to revert
back to Government or to seek permanent absorption in the
PSU/Autonomous Body. They shall exercise the option in such
manner and within such period as maybe stipulated by the
Government. The permanent absorption in the PSU/Autonomous
Body shall take effect from the date their option is accepted by the
Government and from that date, they will cease to be Government
servants . They shall be deemed to have retired from the
Government service and their posts in the Government will
automatically stand abolished. Such of the Government servants
who opt to revert back to Government shall be redeployed through
the Surplus Cell.
(3) Those employees including quasi permanent and temporary but
excluding casual labourers who opt to be permanently absorbed in
the PSU, shall, from the date of such absorption, be governed by
the service rules etc. of the PSU. The permanent employees shall,
however, be eligible for pensionary benefits on the basis of
combined service in the Government and the PSU, in accordance
with the formula for calculation of pension/family pension under
the Central Government Rules in force at the time. The benefits
will be calculated on the last ten months' average pay drawn in
IDA scale in the PSU. In addition to pension/family pension, they
shall also be eligible to dearness relief as per IDA pattern. These
benefits shall also be available to quasi permanent/temporary
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employees after they have been confirmed in the PSU/Autonomous
Body.”
142. It is evident from the above that approval was sought for
retaining the Government scheme of pension even after absorption,
but only in the context of calculating pension under combined service.
143. We note that the proposed Rule 37A clarified that the
employees choosing to be permanently absorbed, though will be
governed by service rules of the PSU, they will also be eligible for
pensionary benefits based on their combined service in accordance
with the formula for calculation of pension under the Central
Government rules in force. However, the proposal also clarified that
their status as Government employees would cease after such
absorption.
144. Therefore, the aforesaid clearly implies that, the absorbed
employees, do not stand on the same footing as Central Government
employees. The only aspect where they are extended an equitable
treatment is for the calculation of their pension, which will also be
calculated on their pay drawn under the IDA scale in the PSU.
(iii) OM and Notification dated 30.09.2000
145. OM No. 2-29/2000-Restg dated 30.09.2000 was issued by DTS
pertaining to establishment of BSNL pursuant to the New Telecom
Policy, 1999.
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146. On the same date, a Notification was issued by DP&PW by
which Rule 37A was inserted in CCS (Pension) Rules. The
respondents placed reliance on sub-Rule (8) and accompanying
Explanation to assert that it guarantees the application of the same
pension formula as extended to Central Government employees. They
seek revision of pension in light of the similar treatment granted by
this Rule.
147. However, in order to ascertain the assurance granted to the
respondents, we must look at the Rule as it stood in 2000 at the time
during the en masse transfer, and not in its subsequent amended form
of 2012.
148. We have taken the view in the preceding discussion that Rule
37A (8) (the Explanation was inserted on 28.12.2002) only extend the
formula for calculation of pension applicable to Central Government
servants to the absorbees on the date of their retirement from the PSU.
It does not confer entitlement to subsequent revisions, nor does it
preserve any other aspect of Government service beyond pension
calculation, nothing more and nothing less.
(iv) Circular dated 09.11.2000
149. The DoT Circular No. 36-15/2000-Pen(T) dated 09.11.2000 was
issued stating that the employees of DoT who will be absorbed in
BSNL, will be entitled to the government pension scheme post
absorption. It was further stated that payment of pension will be made
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by the government, and that in this regard, Rule 37A was inserted on
30.09.2000. However, as we have noted in the preceding paragraphs,
the entitlement flowing from Rule 37A is required to be understood in
the context of the scheme of the Rule itself as it stood on 30.09.2000.
The Circular cannot confer a benefit beyond that contemplated under
the statutory framework. Consequently, the reference to the
Government pension scheme must necessarily be read as an extension
of pensionary benefits in terms of Rule 37A and not as a continuation
of the respondents’ status as Central Government employees after
absorption. This entitlement, thus, is restricted to calculation of
pension of the absorbed employees at the time of their retirement.
150. After the en masse transfer, BSNL/MTNL called for options
from the transferees. In this regard, only the Notification dated
14.01.2002 calling for options from Group ‘B’ officers is placed on
record. This Notification, in para 8, provided that the optees will be
governed by CDA scale till the IDA scale is announced and will be
paid arrears after fixation of pay in IDA. The Option Form and
accompanying General Terms and Conditions were made part of the
record before us. It is reproduced as follows:
“GENERAL TERMS & CONDITIONS
FOR ABSORPTION OF GROUP ‘B’ OFFICERS IN BSNL
4. Change over to IDA Pay Scales
The IDA pay scale and the fitment formula will be announced by
BSNL separately. Till that time the optees will continue to remain
in CDA pay scale. The IDA pay scales will be effective from
01.10.2000. After fixation of the pay of the absorbed employees in
IDA pay scale, they will be paid arrears.
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However, after their absorption is finalized by BSNL and till they
are fitted in the IDA pay scale such officials will be paid an ad-hoc
sum of Rs.2000 per month by BSNL. This will be an advance
payment against the arrears receivable by them on their fitment in
the IDA pay scales. This advance payment will be adjusted from
their IDA emoluments, perks and benefits on fixation of their pay in
IDA pay scales. In case of optees accepted for absorption from
MTNL any ad-hoc amount paid to them by MTNL would also be
adjusted against their IDA emoluments, perks and benefits on
fixation of their pay in IDA pay scales.
5. Payment of Pension
The officers who opt for permanent absorption in BSNL would be
governed by the provisions of Rule 37 - A of CCS (Pension) Rules,
notification for which was issued by the Department of Pension &
Pensioners Welfare on 30.09.2000. For the purpose of reckoning
emoluments for calculation of pension and pensionary benefits, the
emoluments as defined in CCS (Pension) Rules, in PSU in the IDA
pay scales shall be taken.
DOT has already clarified that the word "formula" mentioned in
clause 8 of Rule 37 - A means payment of pension as per
Government Rules in force at that time. BSNL will not
dismiss/remove an absorbed officer without prior approval of the
Administrative Ministry/Department.”
151. These conditions leave little room for ambiguity. A plain
reading of these terms clarifies that the respondents, after absorption,
would be governed under the IDA scale applicable to PSU employees.
Only till the time of their absorption will they remain in the CDA
scale. It is also clear that post such absorption, their pension would be
governed by Rule 37A but under the IDA pay scale.
152. At this juncture, it is relevant to note the well-recognized
distinction between the CDA and IDA scales. The Central
Government employees are fitted in the CDA scale, and their service
conditions are revised by the CPC. It is trite that CPC
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recommendations only apply to Central Government servants.
Conversely, CPSU employees are governed by the IDA scale, and
revision of their pay structure are ordinarily considered based on the
recommendations of the PRC.
153. Moreover, 01.01.1989 onwards, all PSUs employees fall under
the IDA pay scale following the judgment of the Supreme Court in
58
Jute Corpn. of India Officers' Assn. v. Jute Corpn. of India , and
59
the subsequent OM No. 2(43)/90-DPE(WC) dated 12.06.1990 issued
by DPE. It is also trite that PRCs issue recommendations for the
service conditions of CPSU employees. Therefore, without any
legislative or administrative direction to the contrary, in ordinary
course, CPC recommendations do not apply to PSU employees and
PRC recommendations do not apply to Central Government
employees.
154. Viewed in this backdrop, coming back to the aforementioned
General Terms and Conditions, they clearly stipulate that absorbees
will be governed under IDA scale and Rule 37A, which entails that: (i)
absorbees cease to be Government servants after absorption; (ii) CDA
scale is not applicable to absorbees after absorption; (iii) only for
calculation of their pension at the time of their retirement, the
absorbees are entitled to the Central Government formula. The terms
do not indicate that the absorbees would continue to receive every
future benefit extended to serving or retired Central Government
58
(1990) 3 SCC 436
59
The OM in Para 3(iii) stipulates that appointments of all categories of employees in CPSEs on or after
01.01.1989 will be under IDA pay scale.
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employees irrespective of the statutory and administrative distinctions
between the CDA and IDA pattern.
155. Therefore, the Circular dated 09.11.2000 and the absorption
conditions, when read harmoniously with Rule 37A, support the
conclusion that the respondents were assured continued pensionary
protection through the mechanism of combined service pension, but
were not assured perpetual assimilation with Central Government
employees for all future purposes. Any such interpretation would
render otiose the express provisions of Rule 37A which provide that,
upon absorption, the employees cease to be a Government servant and
becomes subject to the rules governing the PSU.
156. It is noted that the options for Group ‘B’ officers were again
floated on 29.08.2003 in furtherance of the Tribunal’s order dated
06.08.2003 in O.A. No. 298/2002, which directed timely completion
of the absorption process. Hence, the process of calling for options
60
was revived by OM dated 02.09.2003 , whereby the aforesaid
General Terms and Conditions remained the same with respect to
application of IDA scale for absorbed employees.
157. Thereafter, by OM No. 616/2002-SU dated 28.07.2003, DoT
issued the corresponding IDA pay scales and the method for fixation
of pay to be implemented w.e.f. 01.10.2000. Paragraph No. 2 therein
clarified that the scales of pay prescribed were only an indicative
60
OM No. BSNL/11/SR/2003 dated 02.09.2003 issued by BSNL
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ceiling and the actual fixation and payment would depend on the
PSU’s financial capacity.
158. In the interregnum, the DP&PW by OM No. 4/61/99-P&PW(D)
dated 20.12.2002 clarified that for calculation of pension of absorbees
in terms of Rule 37A (9), the average emoluments would be based on
the pay drawn in the PSU, i.e., under IDA scale.
159. Now that we have delineated the various Office Memoranda
surrounding the corporatization of BSNL/MTNL and the en masse
transfer of erstwhile DoT employees, we proceed to the effect of the
CPC and PRC recommendations on the present dispute.
th
(v) 6 CPC – OM dated 01.09.2008 (Pre-01.01.2006 Pensioners)
th
160. The recommendations of the 6 CPC were to be given effect
from 01.01.2006.
161. By OM F.No. 38/37/08-P&PW(A) dated 01.09.2008, DP&PW
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sought to implement the recommendations of the 6 CPC with respect
to revision of pension for pre-2006 pensioners. It categorically did not
apply to employees retiring on or after the cut-off date, i.e.,
01.01.2006.
162. Paragraph no. 2.1 clarified that the OM applied to all pensioners
drawing pension as on 01.01.2006 under the CCS (Pension) Rules,
i.e., Central Government servants. Pertinently, it is the contention of
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the respondents that they are also pensioners who are drawing pension
under the CCS Rules by virtue of Rule 37A, hence, this OM applies to
them.
163. Further, paragraph no. 4.2 provided that under no circumstance
will the revised pension be lower than 50% of the minimum of the pay
in the pay, plus the grade pay corresponding to the pre-revised pay
scale from which the pensioner had retired. Paragraph no. 4.5
stipulates the quantum of pension. Paragraph no. 7 is most relevant, as
follows:
“7. The cases of Central Government employees who have been
permanently absorbed in public sector undertakings/autonomous
bodies will be regulated as follows:-
(a) PENSION
Where the Government servants on permanent absorption in
public sector undertakings/autonomous bodies continue to draw
pension separately from the Government, the pension of such
absorbees will be updated in terms of these orders. In cases where
the Government servants have drawn one time lump sum terminal
benefits equal to 100% of their pensions and have become entitled
to the restoration of one-third commuted portion of pension as per
Supreme Court Judgement dated 15.12.1995, their cases will not
be covered by these orders.
(b) FAMILY PENSION
In cases where, on permanent absorption in public sector
undertakings/ autonomous bodies, the terms of absorption permit
grant of family pension under the CCS (Pension) Rules, 1972 or
the corresponding rules applicable to Railway employees/members
of All India Services, the family pension being drawn by family
pensioners will be updated in accordance with these orders.”
(emphasis supplied)
th
164. It is evident from the above that while the 6 CPC
recommendations were to apply to all pre-01.01.2006 pensioners
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drawing pension under the CCS Rules; however, a separate class was
created under Paragraph No. 7 for the erstwhile Central Government
employees who stand permanently absorbed in PSUs, i.e., including
the respondents. It is also manifest from Clause (a) of Paragraph No. 7
that the OM only pertains to government servants permanently
absorbed in PSUs who continue to draw pension separately from the
government, i.e., pro-rata pensioners and not combined service
pensioners. The respondents, as combined service pensioners, are
therefore not covered under this category.
165. In our considered view, such classification is based on
intelligible differentia , particularly since the absorbees who opt for
combined service pension draw pension at the time of their retirement
from the PSU, based on service rendered under both the Government
and the PSU, and received pay under the IDA scale, as opposed to
absorbees who draw separate pension from the Government, in which
case they fall under CDA scale for the service already rendered. The
distinction is rational, directly correlates to the nature of the pension
elected, and does not violate Article 14 of the Constitution of India.
th
(vi) 6 CPC – OM dated 02.09.2008 (Post-01.01.2006
Pensioners)
166. The OM F. No. 38/37/08-P&PW(A) dated 02.09.2008 sought to
th
implement 6 CPC recommendations with respect to, inter alia,
revision of pension/gratuity/commutation of pension for Government
servants governed by CCS Rules retiring on or after 01.01.2006.
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Notably, there is no separate provision for permanently absorbed
employees in PSUs, as under OM dated 01.09.2008.
167. The petitioners contend that these OMs pertain to pro-rata
pensioners and not the respondents, who are admittedly combined
service pensioners. Further, it is also their contention that since the
OM dated 02.09.2008 applies to post-01.01.2006 pensioners, it will
not apply to the respondents who ceased to be government employees
post their absorption in BSNL/MTNL. On the other hand, the
respondents maintain that their pensions were revised pursuant to the
th
6 CPC and that the formula prescribed for the same was stipulated in
these OMs, formed the basis of such revision.
168. We have already noted that the respondents are admittedly
combined service pensioners and do not draw pension separately from
the Government in respect of their pre-absorption Government
service. Hence, the OM dated 01.09.2008, as per Paragraph No. 7(a),
which expressly applies to Government servants permanently
absorbed in PSUs who continue to draw pension separately from the
Government, has no direct application to the present dispute.
169. Further, we are equally cognizant that no such categorical
exclusion exists in OM dated 02.09.2008. Therefore, the contention of
the petitioners that this OM does not apply to the respondents because
they ceased to be Central Government employees, does not come to
their rescue as this OM clearly applies to all “Central Government
Employees governed by the CCS (Pension) Rules, 1972” . The
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respondents are governed by Rule 37A of CCS (Pension) Rules,
therefore, they prima facie fall under the broad ambit of this OM.
170. However, it would be anomalous to hold that persons of the
same category (absorbed PSU employees), who retired prior to
01.01.2006 stand excluded by OM dated 01.09.2008, while those
retiring after the cut-off date are entitled to the benefits solely because
the subsequent OM does not expressly reiterate the exclusion. It is
trite that a pension scheme cannot create an artificial divide by
bifurcating an otherwise homogenous group solely based on cut-off
date without any discernible rationale, as also held in D.S. Nakara
(supra) .
171. The earlier OM dated 01.09.2008 expressly confines its
applicability to pro-rata pensioners. No such restriction is stipulated in
the OM dated 02.09.2008. However, the mere absence of this
stipulation does not imply that the intent was to enlarge the class of
beneficiaries, particularly when no such intention is discernible from
the scheme of the OMs.
172. It is also to be borne in mind that the subsequent OM is an
extension of the earlier OM, both were issued contemporaneously for
th
the implementation of the 6 CPC recommendations and therefore
constitute integral parts of a single scheme. Hence, they cannot be
read in isolation and must be construed harmoniously as a composite
whole rather than as independent and disconnected instruments. In the
clear absence of any indication that the latter OM dated 02.09.2008
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was intended to enlarge the class of beneficiaries, the lack of
reiteration of the excluding provision cannot be construed in a way to
confer benefit upon the respondents who are combined service
pensioners. Pertinently, the aspect of pension for PSU employees is
governed by the PRC, not CPC.
173. Hence, in our considered view, the OM dated 02.09.2008, akin
to OM dated 01.09.2008, only applies to pro-rata pensioners in PSUs
and not to combined service pensioners such as the respondents.
(vii) Clarification dated 27.04.2009
174. A clarification was issued by DP&PW vide OM No. 4/19/2009-
P&PW(D) on 27.04.2009 regarding the applicability of revised
th
pensionary rules in light of 6 CPC. The relevant part is reproduced
thus:
“ 2. The en-mass transferred absorbees opting for pension for
combined service in Govt. and PSU/CAB are entitled for pension
in terms of Rule 37 A(8) "in accordance with the formula for
calculation of pension/ family pension under these rules as may be
in force at the time of his retirement from fer the PSU/CAB". The
formula applicable to Central Govt. pensioners has been changed
vide DoP&PW O.M. dated 2.9.2008 and therefore, the changed
formula provided in O.M. dated 2.9.2008 is applicable to such
absorbees also . The DoP&PW OM dated 1.9.2008 referred to in
Deptt. Of Telecommunication reference has no relevance as this
the OM contains instructions for revision of pension of pre 2006
central Government pensioners only ”
(emphasis supplied)
175. A plain reading of the aforesaid clarification clearly states that
the formula for calculation of pension of Central Government
pensioners was revised, therefore, such revised formula is applicable
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to the absorbed employees of PSUs. It further states that the OM dated
01.09.2008 has no relevance in this regard because it pertains to
revision of pension of pre-2006 Central Government pensioners. The
clarification expressly states that it is only the changed formula
contained in the OM dated 02.09.2008 which would apply to
absorbees governed by Rule 37A.
176. The respondents relied heavily on this clarification to contend
that it reaffirmed that since the formula applicable to Central
th
Government pensioners was revised after the 6 CPC, it shall also
apply to absorbees drawing combined service pension. Whereas the
petitioners maintain that this clarification if of no consequence in this
dispute as it only clarifies the applicability of the OM dated
02.09.2008 and merely reiterates the position already contemplated
under Rule 37A (i.e., the formula for calculating pension of Central
Government employees would be extended to absorbees governed by
Rule 37A) and does not confer any independent right of pension
revision.
177. In this regard, the petitioners advanced a premise that OM dated
01.09.2008 applied to pre-01.01.2006 pensioners and OM of
02.09.2008 pertained to post-01.01.2006 pensioners; hence, the logical
corollary is that the former OM is for revision of pension and the latter
is for fixation (because it applies to employees who have not yet
retired). They further submitted that this clarification only provides
that the formula to calculate pension, as revised by OM dated
02.09.2008, shall also be applied to combined service pensioners,
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which is squarely in terms of Rule 37A, but OM dated 01.09.2008 had
no relevance since it dealt with revision of pension of pre-01.01.2006
Central Government retirees. The petitioners’ submission, in essence,
was that the formula for fixation of pension as revised by OM of
02.09.2008 was to be extended to the respondents, but not the formula
for revision of pension, as per OM dated 01.09.2008.
178. In our considered view, fixation and revision of pension are
distinct concepts. Fixation determines the initial pension at the time of
retirement, whereas revision enhances the already existing pension,
usually due to a revision in underlying pay.
179. As we have noted in the forgoing discussion, Rule 37A (8) only
extends the formula at the time of retirement, i.e., with respect to
fixation of pension. This Rule cannot automatically mean that the
absorbees (combined service pensioners) in PSUs are entitled to
revision of their pension pursuant to CPC recommendation for such
revision in respect of Central Government employees under the CDA
scale. To read such a right into Rule 37A would amount to enlarging
its scope beyond the intent and language employed by the competent
legislative authority.
180. Hence, in our considered view of the OMs dated 01.09.2008
and 02.09.2008 along with the clarification of 27.04.2009, we are
inclined to agree with the stance advanced by Mr. Singh on behalf of
the petitioners. Therefore, all that this clarification provides is that the
formula applicable to Central Government employees, as it stood
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revised by OM of 02.09.2008, would be extended in its revised form
to the absorbed PSU employees in furtherance of Rule 37A. Equally
significant is the categorical observation that the OM dated
01.09.2008, dealing with revision of pension of pre-2006 Central
Government pensioners, had “no relevance” to such absorbees. The
clarification, therefore, reinforces the distinction between fixation of
pension under Rule 37A and subsequent revision of pension under the
CPC framework.
(viii) OMs dated 04.05.2009 and 12.08.2009
181. It is noteworthy to mention that the DoT by OM No. 40-
31/2008-Pen(T) dated 04.05.2009 extended the revised rules of
th
pension calculation as per 6 CPC with respect to the limit of DCRG,
revised commutation tables, revised treatment of emoluments,
qualifying service and allied matters, to IDA pensioners of BSNL
governed by Rule 37A w.e.f. 01.01.2006. Further, by a subsequent
OM F. No. 40-31/2008-Pen(T) dated 12.08.2009, DoT issued
clarifications in this regard.
182. In our view, the extension of the revised rules of pension
calculation is aligned with the aim and object behind Rule 37A. This
OM is only concerned with the method of pension calculation and
extends the same to the absorbed employees, as was envisaged by
Rule 37A(8). It does not, by itself, revise the underlying pay scale in
order to warrant a consequential revision of pension.
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183. Significantly, neither the OM dated 04.05.2009 nor the
clarification dated 12.08.2009 directs a revision of the basic pension
payable to combined service pensioners. They do not alter the
underlying pay structure, revise the pension already fixed, or confer a
th
fresh entitlement analogous to that granted pursuant to the 6 CPC.
Rather, they merely regulate ancillary pensionary components and the
manner of calculation of pensionary benefits.
184. In ordinary course, the revision of pension flows from specific
orders, linked to the recommendations of CPC. In the present case, it
was clarified by the afore-noted communication dated 27.04.2009 that
the “OM dated 1.9.2008 referred to in Deptt. Of Telecommunication
reference has no relevance as this the OM contains instructions for
revision of pension of pre 2006 central Government pensioners only”.
The referenced OM dated 01.09.2008 essentially pertains to revision
of pension. In the clear absence of a statutory mandate or executive
order, directing the revision of pension, the extension of the revised
th
rules as per 6 CPC cannot be construed in a way to confer a right of
pension revision. Therefore, the OM dated 04.05.2009 does not, by
itself, give rise to any entitlement of revision of the basic pension.
185. We are therefore unable to accept the respondents’ contention
that the OMs dated 04.05.2009 and 12.08.2009 constitute recognition
th
of a right to pension revision under the 6 CPC. These OMs merely
facilitate implementation of revised pensionary parameters for the
purposes of computation and disbursement of benefits under Rule 37A
and do not, by themselves, create any entitlement to revision of
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pension analogous to that granted to Central Government pensioners
under the CPC.
nd
(ix) 2 PRC
nd
186. On parallel lines, the 2 PRC was notified by the DPE on
26.11.2008, whereby the revised pay scales and allowances were
approved w.e.f. 01.01.2007 for CPSUs. However, it stipulated that
revised pay scales would be adopted subject to the profit before tax
not falling below a certain level, as follows:
“3. Affordability for implementation of pay revision:- The revised
pay scaled would be adopted, subject to the condition that the
additional outgo by such a revision for a period of 12 months
should not result in more than 20% dip in profit before tax (PBT)
for the year 2007-08 of a CPSE in respect of executives as well as
non-unionized supervisory staff taken together in a CPSE. CPSEs
that cannot afford to pay full package, can implement with either
part PRP or no PRP. These CPSEs may pay the full package
subsequently, provided the dip in the profit (PBT) is fully recouped
to the original level.
4. The CPSEs, which are not able to adopted revised pay scales
(2007), may give an increase on the basic pay plus DA drawn in
the pre-revised scale as on 01.01.01.20007, with a uniform lower
fitment of 10% or 20%, depending upon their affordability, with the
approval of their Ministry/Department.”
61
187. Thereafter, on 29.12.2010, DoT submitted a Note for Cabinet
approval for revision of IDA pension for employees of BSNL, who
retired after 01.10.2000 but before 01.01.2007. This Note highlighted
that DPE issued orders for revision of pay of BSNL employees w.e.f.
01.01.2007, however, no such orders were issued by the Government
61
Note bearing F.No. 40-17/2008-Pen(t) dated 29.12.2010
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for revision of pension and as a result, the employees who retired after
this date received 30% higher pension than employees who retired
before the cut-off date.
188. Upon perusal of this Note, it is pertinent to note that the
nd
proposal was in line with the 2 PRC recommendations.
(x) OM dated 15.03.2011
189. Subsequently, DoT issued OM F. No. 40-17/2008-Pen(t)-Vol.III
dated 15.03.2011, whereby DoT ordered revision of pension of pre-
01.01.2007 pensioners of BSNL. The OM applies to the DoT
employees permanently absorbed in BSNL who were entitled to draw
pension from 01.01.2007 based on combined services rendered under
the Government and BSNL.
190. By Circular No. 09 dated 04.04.2011, BSNL initiated the
process for revision of pension of eligible pre-2007 pensioners in light
of this OM dated 15.03.2011.
191. The respondents have vehemently submitted that their pensions
th
were revised pursuant to the 6 CPC, as evident by this OM of
15.03.2011. They further contended on the strength of this OM that
th
since their pensions were revised pursuant to 6 CPC, they were
th
equally entitled to revision of pension as per the 7 CPC.
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192. We are afraid that we cannot accept this contention of the
nd
respondents after a collective reading of the 2 PRC
recommendations, the Note for Cabinet approval dated 29.12.2010,
and this OM dated 15.03.2011.
193. In our view, the OM of 15.03.2011 is nothing but the
acceptance of the recommendations of the 2nd PRC, as also evident
from the proposal submitted by Note dated 29.12.2010 seeking
nd
revision of pension consequent to 2 PRC.
nd
194. The 2 PRC recommended a fitment benefit of 30% on basic
pay plus DA at 68.8% as on 01.01.2007, which is what has been
granted by OM dated 15.03.2011. To buttress, even the cut-off date
stipulated in OM dated 15.03.2011 is 01.01.2007, i.e., the cut-off date
nd
as per the 2 PRC. It is evident from OMs dated 04.05.2009 and
th
12.08.2009 that if the recommendations of the 6 CPC were to be
extended, the benefits would have been granted from the cut-off date
th
as per the 6 CPC i.e., 01.01.2006.
62
195. Subsequently, on 20.07.2016 , the liability of BSNL towards
the payment of pensionary benefits was modified in the following
terms:
“As stipulated in Rule 37-A of CCS (Pension) Rules, 1972, the
pensionary benefits in the case of BSNL shall be paid by the
Government, and the Government shall specify the arrangement
and the manner including the rate of pensionary contribution to be
made by BSNL and the manner in which financial liabilities on this
62
OM No. 43-13/2013-Pen(T) dated 20.07.2016 issued by DoT
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account shall be met. As per sub-rule 24 of the said Rule, the
arrangement thus worked out shall be applicable to the existing
pensioners and to the employees who are deemed to have retired
from Government.
The instructions with regard to the financial liability on this
account were issued vide DoT's letter no. 1-45/2003-B dated
15.06.2006. Subsequently, the matter of modifying the Pension
liability of BSNL towards the payment of pensionary benefits
including family pension to the retired employees has been
considered by the Government, and the following has been
decided.
(a) The pension liability in respect of employees of
DOT/DS/DTO who retired prior to 01.10.2000 is solely borne by
Government of India and the BSNL will have no liability in respect
of these employees.
(b) The liability towards pensionary benefits including family
pension to the BSNL employees (excepting those recruited after
01.10.2000) as per sub-Rule 22 of Rule 37-A of CCS (Pension)
Rules, 1972, lies with the Government of India. The condition that
the annual pension liability of the government shall not exceed
60% of the annual receipts to Government from the items specified
in the O.M. dated 15.06.2006 is hereby rescinded.
BSNL will continue to discharge pension liability by way of
pension contribution in accordance with FR 116.”
196. While the aforesaid communication unequivocally affirms that
the liability for payment of pension to BSNL absorbees rests upon the
Central Government, it does not deal with, much less confer any
entitlement to revision of pension in accordance with
recommendations of CPC. The communication pertains solely to the
incidence of pensionary liability and the financial arrangement
between BSNL and the Government. Consequently, the respondents
cannot derive any substantive right of pension revision from the said
communication.
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th
(c) 7 CPC
197. The pension of Central Government employees was again
th
revised with the advent of the 7 CPC from 01.01.2016. We note that
th
the recommendations of the 7 CPC were given effect by way of 3
OMs issued on the same date, i.e., 04.08.2016 and a subsequent OM
dated 12.05.2017.
198. The Resolution F. No. 38/37/2016-P&PW(A) indicated that the
th
terms of the 7 CPC recommendations were accepted by the
Government. With respect to revision of pension, two methods were
recommended: (i) Notional Fixation and (ii) Fitment Multiplier of
63
2.57 . It was stated that the first method may be applied if found
feasible after scrutiny by the competent authority, while the second
method was implemented with immediate effect.
199. OM F. No. 38/37/2016-P&PW(A)(i) was issued to revise the
th
existing conditions of service as per 7 CPC for the employees
governed by CCS (Pension) Rules who retire or die after 01.01.2016.
As per an Order of this Court of 19.11.2025, it is on the basis of this
OM that the respondents confined their prayer to revision of pension
rd
by applying the 2.57 multiplier instead of 3 PRC.
63
(i) All the Civilian personnel including CAPF who retired prior to 01.01.2018 (expected date of
implementation of the Seventh CPC recommendations) shall first be fixed in the Pay Matrix being
recommended by this Commission, on the basis of the Pay Band and Grade Pay at which they retired, at the
minimum of the corresponding level in the matrix. This amount shall be raised, to arrive at the notional pay of
the retiree, by adding the number of increments he / she had earned in that level while in service, at the rate of
three percent. Fifty percent of the total amount so arrived at shall be the revised pension.
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200. OM F. No. 38/37/2016-P&PW(A)(ii) was issued for revision of
pension of pensioners drawing pension under CCS (Pension) Rules
before 01.01.2016, by applying the fitment method. The respondents
have placed reliance on this OM to contend that by virtue of paragraph
th
no. 7 therein, they are entitled to revision of pension in terms of the 7
CPC. We deem it fit to reproduce this paragraph hereinbelow:
“7. The cases of Central Government employees who have been
permanently absorbed in public sector undertakings/autonomous
bodies will be regulated as follows:-
(a) PENSION
Where the Government servants on permanent absorption in public
sector undertakings/autonomous bodies continue to draw pension
separately from the Government, the pension of such absorbees
will be updated in terms of these orders. In cases where the
Government servants have drawn one time lump sum terminal
benefits equal to 100% of their pensions and have become entitled
to the restoration of one-third commuted portion of pension as per
the instructions issued by this Department from time to time, their
cases will not be covered by these orders. Orders for regulating
pension of such pensioners will be issued separately.
(b) FAMILY PENSION
In cases where, on permanent absorption in public sector
undertakings/autonomous bodies, the terms of absorption and/or
the rules permit grant of family pension under the CCS (Pension)
Rules, 1972 or the corresponding rules applicable to Railway
employees/members of All India Services, the family pension being
drawn by family pensioners will be updated in accordance with
these orders.”
201. A bare reading of this paragraph indicates that, akin to 6th CPC
recommendations, the OM has created a separate class for Central
Government employees who have been permanently absorbed in
(ii) The second calculation to be carried out is as follows. The pension, as had been fixed at the time of
implementation of the VI CPC recommendations, shall be multiplied by 2.57 to arrive at an alternate value
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PSUs, and para 7(a) therein refers to Government servants who
“continue to draw pension separately from the government” even after
absorption in a PSU. It is an admitted fact that the respondents do not
draw a separate pension from the Government; instead, they are
combined service pensioners i.e., they will draw pension at the time of
retirement from the PSU based on the service rendered under the
Government and the PSU together. Hence, the reliance placed by the
th
respondents on this OM to claim revision of pension in terms of 7
CPC, is of no avail.
th
202. The last OM by which the 7 CPC was given effect is OM No.
38/37/2016-P&PW(A) dated 12.05.2017. By this OM, the first method
to revise pension i.e., notional fixation, was approved for pre-2016
pensioners. It was also decided that the higher of the two formulations
(notional and fitment method) would be granted to pre-2016
pensioners. We note that paragraph no. 4 applies to “all Central civil
pensioners”. Further, paragraph no. 12 states thus:
“ 12. The pension of the pensioners who are drawing monthly
pension from the government on permanent absorption in public
sector undertakings/autonomous bodies will also be revised in
accordance with these orders. However, separate orders will be
issued for revision of pension of those pensioners who had earlier
drawn one time lump sum terminal benefits on absorption in public
sector undertakings, etc. and are drawing one-third restored
pension as per the instructions issued by this Department from time
to time.”
203. We are of the view that this OM dated 12.05.2017, however,
does not apply to the respondents for two reasons: (i) As per the Order
for the revised pension.
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of this Court dated 19.11.2025, the respondents confined their prayer
to revision of pension based on multiplier of 2.57 in terms of OM
dated 04.08.2016; (ii) the respondents are combined service
pensioners and do not draw separate monthly pension from the
Government after permanent absorption in BSNL/MTNL in terms of
the aforesaid para no. 12.
th
204. After the advent of 7 CPC but before the issuance of the
aforesaid OM, the DoT by OM F. No. 47-63/2015-Pen(T)(pt) dated
16.03.2017, clarified that revised rates for payment of death gratuity
th
pursuant to 7 CPC (as per OM F. No. 38/37/2016-P&PW(A)(i) of
04.08.2016) was indeed applicable to BSNL/MTNL absorbees, who
were combined pensioners governed under Rule 37A.
205. It is pertinent to note that this OM dated 16.03.2017 stated in its
para no. 3 that, “there is no change in the formula for pension/family
pension w.e.f. 01.01.2016. BSNL/MTNL absorbees will, therefore,
continue to get pension based on the same formula”. Hence, it is
evident that there was no change in the formula of pension of the
th
respondents pursuant to the 7 CPC.
206. We note that the aforesaid direction with respect to death
gratuity was implemented by BSNL by Order No. 48-11/2016-Pen(B)
dated 21.03.2017.
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207. It is also relevant to note that the DPE vide OM dated
64 th
10.07.2018 clarified that the enhanced gratuity ceiling in terms of 7
65
CPC was not applicable to CPSEs employees. This further
underscores the distinction between the Central Government
employees and PSU absorbees with respect to application of CPC
recommendations.
th
208. In summary, while the 7 CPC revised pension for Central
Government employees, the combined service pensioners of
BSNL/MTNL governed by Rule 37A continue to receive pension in
accordance with the formula applicable at the time of their respective
retirement. No provision in any OM or Circular confers on such
th
absorbees a right to revision of their pension under the 7 CPC
analogous to Central Government employees.
rd
(xi) 3 PRC
nd
209. After the 2 PRC (as effective from 01.01.2007), pay revision
rd
for CPSUs again became due on 01.01.2017. In this regard, the 3
PRC was constituted under the Chairmanship of Justice Satish
Chandra (Retd.).
rd
210. The recommendations of the 3 PRC were approved by the
DPE on 03.08.2017 vide its OM No. W-02/0028/2017-DPE(WC)-GL-
XIII/17. However, paragraph no. 3 subjected the implementation of
64
OM No. W-02/0036/2018-DPE(WC)-GL-XIX/18
65
Central Public Sector Enterprises
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these recommendations to the financial health of the PSU in the
following terms:
“3. Affordability: The revised pay scale would be implemented
subject to the condition that the additional financial impact in the
year of implementing the revised pay-package for Board level
executives, Below Board level executives and Non-Unionized
Supervisors should not be more than 20% of the average Profit
Before Tax (PBT) of the last three financial years preceding the
year of implementation.”
rd
211. It is an undisputed position that the recommendations of 3
PRC were not given effect due to the financial constraints of
BSNL/MTNL.
212. One of the contentions advanced by Mr. Ghose, learned Senior
Counsel for the respondents in W.P.(C) 4955/2025, was that it was not
within the remit of the PRC to revise pension. However, it is apparent
rd
from a plain reading of OM dated 03.08.2017 that the 3 PRC was not
silent on the aspect of revision of pension. It is also evident that DoT
issued OM dated 15.03.2011 for the revision of pension pursuant to
nd
2 PRC as noted in the preceding discussion. However, no statutory
provision or executive order has been placed before us to substantiate
that the aspect of revision of pension is ultra vires the authority of
PRCs.
213. We note that the respondents categorically submitted before this
Court on 19.11.2025 that they do not seek revision of pension as per
rd
3 PRC. However, for the sake of clarity we shall express our views
on the same hereinbelow.
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214. In the present case, PRC recommendations are issued by the
DPE. In light of Sureshchandra Singh (supra) , it is clear from para
rd
no. 13 of DPE OM dated 03.08.2017 with respect to the 3 PRC, that
Board of Directors of each CPSU is required to consider the proposal
of pay revision based on their affordability to pay and submit the same
to the concerned Ministry for approval. Thereafter, the concerned
Ministry will issue the Presidential Directive for each PSU separately.
Thus, it is evident that this OM dated 03.08.2017 falls under the
former category, i.e., it is an administrative direction and therefore,
this Court cannot issue a writ to enforce such directions which does
not carry the force of law.
215. Now that we have delineated the relevant legal framework and
taken a comprehensive view of the numerous OMs, Circulars etc.
placed before us, we shall now advert to the facts of the case.
216. It is not in dispute that the respondents opted to be permanently
absorbed in BSNL/MTNL. It is also not disputed that the respondents
are combined service pensioners. It is also a matter of fact that the
respondents are fitted in the IDA pay scale.
217. It is not the respondents’ case that they are not receiving
pension altogether, but only that their pensions have not been revised
since 2007. Consequently, they seek revision of pension by applying
th
multiplier of 2.57 in terms of the 7 CPC. They seek this relief
primarily on three grounds:
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(i) They were assured that the terms of their service will
remain intact post absorption in BSNL/MTNL.
(ii) They are entitled to revision of pension by virtue of Rule
37A, particularly sub-Rule (8).
(iii) On strength of various OMs which have either granted
th th
them benefits of 6 and 7 CPC or are applicable to all
pensioners governed by CCS (Pension) Rules without any
discrimination on grounds of being absorbed in PSUs.
218. Thus, the bone of contention that runs to the core of this dispute
is whether the respondents are entitled to be treated at par with Central
Government employees for the purposes of pension revision based on
CPC recommendations.
219. With respect to the first ground, the respondents have heavily
relied on various documentary evidence to demonstrate that they were
granted assurance that their terms of Government service will be
retained after their absorption. We are of the view that this ground is
untenable for the reasons to follow.
220. The OM dated 05.07.1989 ceases to hold any relevance since it
has materialized into Rule 37A. Even if taken at face value, it clarifies
that the Government servants who opt to be absorbed in PSUs will, as
per a date fixed by the concerned Ministry/Department, will cease to
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be Government servants. Further, the Note dated 25.09.2000 also does
not hold any binding force since it is merely a Note submitted for
Cabinet approval and even this Note clarified that upon absorption,
the transferees will cease to be Government servants and that their
pensionary benefits would be calculated in the IDA scale. Similarly,
the Circular dated 09.11.2000 clarifies that the absorbed persons in
BSNL would be entitled to the Government pension scheme post their
absorption and, in this regard, Rule 37A was inserted on 30.09.2000.
We reiterate that this Rule only extended the formula for the
calculation of pension to these absorbed employees which was
applicable to Central Government servants at the time of retirement.
The OM dated 14.01.2002 by which options were called from Group
‘B’ officers provided that the optees would fall under CDA scale only
till they are absorbed and the IDA scale is announced, after which they
would fall under the IDA pay scale.
221. Therefore, it is evident from the aforesaid that the respondents
were aware that upon absorption, they would cease to be Government
servants and fall under IDA scale. The only promise under Rule 37A
was with respect to calculation of pension at the time of retirement
from the PSU.
th
222. With respect to the OMs that gave effect to the 6 CPC, as
relied upon by respondents, we reiterate that these OMs categorically
apply to employees absorbed in PSU drawing pension on pro-rata
basis, not combined service pensioners. The clarification issued in this
regard on 27.04.2009 also states that only the formula that was revised
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as per the 6 CPC was applicable to these absorbees and that the OM
dated 01.09.2008, which pertains to revision of pension, did not apply
to such persons. The respondents further relied on OM dated
04.05.2009 and 12.08.2009 to contend that they were extended the
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various benefits following from the 6 CPC. In this regard, we are of
the view that these OMs only furthered the aim and object behind
Rule 37A, i.e., extending the pensionary benefits to the absorbees,
without creating entitlement to pension revision based on CPC
recommendations. Further, the OM dated 20.07.2016 only stipulates
the liability of the Government with respect to pensionary benefits of
the BSNL, which has no bearing on entitlement to revision of pension
and does not, by any stretch of imagination, create a substantive right
to revision of pension.
223. The OM dated 15.03.2011, which allegedly revised the pension
th
of the respondents as per 6 CPC, in our view, actually extended the
nd
benefits in terms of 2 PRC from the effective date of 01.01.2007,
consistent with the cut-off date stipulated therein.
th
224. The OMs that gave effect to the 7 CPC also do not come to the
rescue of the respondents since they explicitly apply to the absorbed
employees of PSUs who draw separate pension from the Government,
i.e., pro-rata pensioners. The OM dated 21.03.2017 only extended the
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rates for payment of death gratuity pursuant to 7 CPC and does not
alter the formula for pension of combined service pensioners. This, in
our view, is aligned with Rule 37A, i.e., it extends pensionary benefits
to the respondents as applicable to Central Government employees.
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225. Based on our comprehensive analysis of the numerous OMs, we
have arrived at the conclusion that at the time of absorption, what the
absorbees were granted was an option to either be permanently
absorbed in the PSU or remain in Government service. There were
explicit stipulations that once they chose to be absorbed, they shall
cease to be Government servants and that their benefits would be
calculated in the IDA scale. We reiterate, that IDA and CDA scales are
distinct, as also recognized in Ajit Kumar Kar (supra) , whereby it was
held that retirees falling under the IDA scale did not have any right to
receive dearness relief as per the CDA scale. We also emphasize that
employees of PSUs and that of Central Government are subject to
distinct systems of rules and regulations and that they stand on
different footing, as also reiterated in A.K. Bindal (supra) . The only
aspect that overlaps for the respondents herein is the formula for
calculation of their pension, which is to be employed at the time of
their retirement as per Rule 37A.
226. In the light of the foregoing discussion, the reliance placed by
the respondents on OMs dated 05.07.1989, 25.09.2000, 30.09.2000,
09.11.2000, 14.01.2002, 01.09.2008, 02.09.2008, 27.04.2009,
15.03.2011, 20.07.2016, 04.08.2016, 21.03.2017, and 12.05.2017 to
contend that they were assured at the time of their absorption that their
Government service conditions would be retained post absorption, is
of no avail.
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227. Consequently, the finding returned by the learned Tribunal in
the impugned order that the respondents were extended an
unequivocal and perpetual assurance that their terms and conditions of
service shall remain intact post absorption in the PSU is erroneous and
cannot be sustained. Such finding overlooks the express stipulations
contained in Rule 37A and the terms governing absorption, which
clearly contemplate cessation of Government service upon acceptance
of the option for absorption.
228. Tuning to the second limb of the respondents’ case, we note that
Rule 37A undoubtedly lies at the heart of this dispute. To reiterate the
preceding discussion and upon a holistic reading of the provision, we
are of the considered view that Rule 37A embodies a limited statutory
protection. This Rule grants: (i) a formula to absorbees for calculation
of their pension, (ii) this formula is applicable to Central Government
servants under CCS (Pension) Rules, and (iii) this formula is applied
at the time of retirement/death of the absorbee.
229. Beyond the aforesaid limited protection, we cannot give any
other expansive meaning to this Rule so as to confer subsequent
benefits to the respondents which accrue to Central Government
employees, particularly in view of the categorical mandate that they
have ceased to be Government employees after absorption. Any
interpretation to the contrary would not only render otiose the express
declaration that the absorbee ceases to be a Government servant upon
absorption but would also amount to judicial legislation.
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230. Significantly, there is nothing in Rule 37A to suggest that it
envisaged the grant of future benefits, especially revision of pension
without revision in the underlying pay structure. The only entitlement
created by the Rule is with respect to the formula for calculation of
pension at the time of retirement. This entitlement, by no stretch of
imagination, extends to revision of pension under the IDA scale solely
on the ground that pension of Central Government employees under
the CDA scale has undergone revision.
231. Thirdly, with respect to entitlement based on the various OMs,
in our view, the basis of this claim stands on murky waters.
232. It is true that, by virtue of Rule 37A, the respondents continue
to draw pension under the CCS (Pension) Rules notwithstanding their
absorption. However, upon absorption, the respondents have ceased to
be Government servants for every purpose except calculation of
pension at the time of their retirement. Therefore, it may be argued
that for this limited purpose CPC recommendations shall apply to
them. It cannot be construed as preserving in perpetuity, their status or
parity as Central Government employees for all pension related
matters.
233. It is trite that IDA and CDA scales are distinct and exclusive of
66
one other . Employee governed by either structure form separate
classes for the purposes of service jurisprudence.
66
Ajit Kumar Kar (supra)
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234. In this light, we acknowledge that the respondents are entitled
to the formula for calculation of their pensions as per CPC
recommendations by virtue of Rule 37A, but they are not entitled to
any consequential revision thereunder since revision of pension under
CPC arises out of revision of the CDA pay scale. Pertinently, being
granted the same formula for fixation of pension does not by default
th
entail automatic extension of 7 CPC to the respondents. It does not
grant parity for any other purposes including revision of such pension,
particularly, since the basic scale is different.
235. The principle that pension bears a direct nexus with the pay last
drawn stands firmly recognized in service jurisprudence. As per U.P.
Raghavendra Acharya (supra) and D.S. Nakara (supra) , the
Supreme Court underscored the relationship between emoluments and
pension. Even the Cabinet Note dated 29.12.2010 seeking revision of
nd
pension consequent to 2 PRC duly acknowledges in para 2.5 that
pension is linked to the pay drawn at the time of retirement and hence,
revision of pension is linked to pay revision of existing employees. We
find no reason to depart from this settled principle and affirm this
view that pension revision is dependent on the revision of pay, i.e.,
pension cannot be revised in vacuum in ordinary course, divorced
from revision in the underlying pay structure, unless expressly
authorized by stature or executive policy.
236. In the present case, the respondents’ pay scales have admittedly
nd
not been revised after the 2 PRC owing to the non-implementation of
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the 3 PRC since BSNL/MTNL do not have the requisite financial
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health. This Court must exercise judicial restraint and refrain from
directing revision of pay in view of the affordability requirement for
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implementation of the 3 PRC. The grant of pay scale lies in the
67
domain of the executive and it is a well-informed decision of an
expert body, which has been accepted by the Government. Judicial
review in such matters is necessarily limited. It was also held in M.V.
Mohanan Nair (supra) that recommendations of expert bodies such
as Pay Commissions ordinarily warrant judicial deference. Courts
ought not to substitute their views for those expert bodies or
governmental policy-makers unless the decision suffers from manifest
arbitrariness or perversity. Therefore, no interference is warranted
68
unless there exists unreasonableness or hostile discrimination .
237. The position that emerges is thus clear; when an absorbee
retires from the PSU, his pension is fixed as per the formula employed
for Central Government servants, even though he is not a Central
Government employee, by virtue of Rule 37A. He will continue to
draw this pension after retirement. However, the enhancement in his
pension must necessarily stem from enhancement in his pay scale.
Upon such enhancement of his pay, the same formula as for Central
Government servants will be employed by using the enhanced basic
pay under IDA. This is also evident from the clarificatory OM dated
27.04.2009.
67
S.C. Chandra v. State of Jharkhand, (2007) 8 SCC 279
68
Shyam Babu Verma (supra)
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238. The respondents do not stand on the same footing as Central
69
Government employees . Upon absorption, they ceased to be
Government servants; they are fitted in the IDA scale and are subject
to the rules of the PSU. They are subject to the rules of BSNL/MTNL
and commercial viability of the concerned PSU is a considerable
70
factor in enhancement of pay and pension . Their pensionary
framework, though protected under Rule 37A, continues to operate
within that distinct statutory and administrative setting.
239. It may be argued that commercial viability of BNSL/MTNL is
irrelevant since the Government has to bear the liability of their
pension. While the proposition regarding liability may be correct,
however, it is not the respondents’ case that they are not receiving
pension. Their case is embellished in the sense that they seek a
revision (not fixation) of their pensions, notwithstanding, the clear
absence of any corresponding revision to their pay.
th th
240. The recommendations of the 6 and 7 CPC explicitly only
apply to: (i) Central Government employees drawing pension under
CCS (Pension) Rules, and (ii) those absorbees who draw separate
pension from the Government. Evidently, this refers to pro-rata
pensioners and not combined service pensioners. The respondents
admittedly do not fall under either category since they are combined
service pensioners drawing pension under the IDA scale pursuant to
Rule 37A.
69
A.K. Bindal (supra)
70
Officers & Supervisors of I.D.P.L. v. Chairman & M.D., I.D.P.L., (2003) 6 SCC 490; A.K. Bindal v.
UOI, (2003) 5 SCC 163
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241. This is a careful and cogent distinction carved out by the expert
body since the aforesaid class of beneficiaries’ fall under CDA scale
for the purposes of their pension. Such classification has rational
nexus with the object sought, i.e., revising pay, pensions and
allowances of Central Government employees. Thus, in our view, such
stipulation lies within the bounds of the discipline mandated by Article
14.
242. In addition to the above, since CPC is an expert body, once its
recommendations have been accepted and implemented by the
71
Government, courts should interfere sparingly and judicial
interference must remain circumspect and exceptional.
243. Even on a demurrer, if the respondents are indeed entitled to
CPC recommendations, there is nothing on record to show that they
th
agitated this claim before the 7 CPC. On the contrary, the record
suggests that the respondents continued to receive benefits flowing
st nd
from the IDA and the recommendations as per the 1 and 2 PRCs.
244. At this juncture, since the respondents had submitted various
representations and RTIs applications to the concerned Government
authorities, we deem it relevant to advert to the responses issued by
these authorities as they not only provide valuable insight into the
71
Shyam Babu Verma v. Union of India, (1994) 2 SCC 521; UOI v. Mohanan Nair, (2020) 5 SCC 421;
State of U.P. v. U.P. Sales Tax Officers Grade II Assn., (2003) 6 SCC 250; State of Haryana v. Haryana
Civil Secretariat Personal Staff Assn., (2002) 6 SCC 72 : 2002 SCC (L&S) 822; Virendra Kumar v.
UOI, 2024 SCC OnLine Del 1059; State of T.N. v. S. Arumugham, (1998) 2 SCC 198
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Government’s position but also lend support to the interpretation
adopted by us.
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245. The DoT, on 27.12.2016 , clarified that OM F. No. 38/37/2016-
th
P&PW(A)(ii) dated 04.08.2016 pursuant to 7 CPC only applied to
Government servants permanently absorbed in PSUs and drawing pro-
rata pension from the Government, as was evident from para 2.1 and
7(a) therein.
246. The Minister of State (Independent Charge) for
73
Communications similarly issued a clarification regarding revision
of pension for MTNL absorbees who were drawing combined service
th
pension under Rule 37A in accordance with 7 CPC. It was stated that
pension revision is consequent to pay revision. Accordingly, revision
rd
of pension of MTNL employees would be taken up when 3 PRC is
implemented in MTNL.
74
247. On 23.10.2017 , the Minister of State (Independent Charge) for
Communications again issued a clarification with respect to
th
applicability of 7 CPC to the absorbees of BSNL. It was stated that
OM No. 38/37/2016-P&PW(A) dated 12.05.2017 was in continuation
th
of OM dated 04.08.2016 implementing the recommendations of the 7
CPC. As per Paras 7(a) and 12 thereunder, it is clear that OM dated
72
In response to RTI application dated 07.09.2016 by one Mr. Amit Kumar Gupta
73
In response to letter dated 12.03.2018 by one Mr. Gopal Shetty; vide D.O.No. 34-19/2018-Pen(T) issued
from O/o Minister of State (Independent Charge) for Communications and Minister of State for Railways,
GoI (Manoj Sinha) [Date is illegible]
74
In response to D.O. letter No. 738/MP/AN/17 dated 28.08.2017 by one Mr. Ajay Nishad; vide D.O. No. 40-
16/2017-Pen(T) dated 23.10.2017 O/o Minister of State (Independent Charge) for Communications and
Minister of State for Railways, GoI (Manoj Sinha)
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12.05.2017 applied to absorbees who are drawing pension on pro-rata
basis under CDA scale solely for the Government service rendered by
them, whilst the absorbees drawing combined service pension under
IDA scale were governed by Rule 37A. Since revision of pension in
linked to revision of pay, their case for pension revision would be
rd
taken up when 3 PRC is implemented in BSNL.
248. The DP&PW issued its response vide Order No. 4/1/2018-
P&PW(D) dated 04.07.2018. It was stated that OM F. No. 38/37/2016-
P&PW(A)(ii) dated 04.08.2016, as per para nos. 2.1 and 7(a), the
absorbees who are entitled to pension under IDA scale based on
combined service are not covered by these orders, and are instead
subject to the decision of the concerned PSU/Administrative Ministry
75
for revision of pension. Notably, this RTI was forwarded to DoT and
76
in response , DoT clarified that the aforesaid OM was only applicable
to absorbees drawing pro-rata pension. It was further clarified that the
th
orders for revision of pension in pursuance of 6 CPC were not
applicable to absorbees of BSNL/MTNL drawing pension under IDA.
Instead, a separate order was issued by DoT for revision of their
pensions vide OM dated 15.03.2011. Therefore, revision of pension of
th
BSNL/MTNL combined service pensioners after 7 CPC is to be
taken up by DoT.
77
249. On 13.07.2018 , DoT issued a response with respect to revision
th
of pension of BSNL/MTNL absorbee pensioners after 7 CPC. It was
th
explicitly clarified that 7 CPC as per OMs dated 04.08.2016 and
75
Forwarded by letter no. 4/1/2016-P&PW(D) dated 31.10.2016/25-11/2016
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Response of DoT issued by letter no. 47-35/2014-Pen(T) dated 27.12.2016
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12.05.2017 only applied to CDA pensioners and the pensioners,
drawing monthly pension from the Government upon permanent
absorption in PSUs on pro-rata basis (based on Government service
only) under CDA scale. It was explicitly stated that these orders were
not applicable for revision of pension of BSNL/MTNL absorbees who
are drawing pension on combined service basis under IDA scale in
terms of Rule 37A. It was reiterated that pension revision follows pay
nd
revision and that pension of BSNL absorbees was revised as per 2
rd
PRC in 2007. Accordingly, such revision will be taken up when 3
PRC is implemented in BSNL/MTNL.
250. Further, the Minister of Communications on 11.03.2020
answered an unstarred question put to him in the Lok Sabha pertaining
to revision of pension of absorbed BSNL employees. In response, it
was stated that pension revision of such employees of BSNL was
linked to the pay revision of the serving employees since pension is
calculated on the basic pay which the retired employee was earning at
the time of retirement.
251. Consequently, drawing from the aforesaid responses of the
th
Government, we are of the view that the recommendations of the 6
th
and 7 CPC were only applicable to absorbees of BSNL/MTNL
drawing pro-rata pension under CDA scale, especially considering that
CPC recommendations pertain to Central Government service and
therefore, have no bearing on PSUs or its employees falling under
IDA scale in ordinary course. The respondents, however, are
77
Communication No. 47-35/2014-Pen(T) issued by DoT on 13.07.2018
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admittedly combined service pensioners governed by Rule 37A and
drawing pension under the IDA scale.
252. Notably, the OM dated 04.05.2009 extended revised rules of
th
pension calculation as per 6 CPC in terms of Rule 37A and OM
dated 16.03.2017 extended the revised rates for payment of death
th
gratuity pursuant to 7 CPC to the absorbees of BSNL/MTNL. In our
view, these OMs extend a limited aspect of pensionary benefits as per
th th
the 6 and 7 CPC recommendations to the absorbees and such
extension is aligned with the object of Rule 37A(8), i.e., pension of
absorbees shall be calculated in the same manner as that of Central
Government employees. However, these OMs cannot be read so
expansively so as to entitle the respondents to revision of their pension
under IDA scale, particularly in the clear absence of revision of their
underlying IDA pay scale. It is trite that CDA and IDA scales are
distinct and exclusive of one other. It is also trite that pension is
intrinsically linked with pay, as also expressed by the Government in
their aforementioned responses, and no revision of the respondents’
nd
IDA pay scales have admittedly taken place after the 2 PRC.
253. This Court is mindful that the respondents’ pensions have not
nd
been revised since the 2 PRC. In this regard, the law laid down in
D.S. Nakara (supra) is well-settled that pensioners cannot be
subjected to arbitrary discrimination. However, in the same breath we
note that it was rendered in its own specific facts and circumstances.
The Supreme Court has time and again held that this decision cannot
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78
be applied in a blanket manner . It is trite that a judgment cannot be
read like Euclid’s theorem. The most pertinent distinction being that
the present case involves a PSU. Since BSNL/MTNL are granted
special dispensation, not only the respondents are governed by the
PSU’s own rules, various OMs, Circulars etc. issued by the DPE, but
also under Rule 37A of CCS (Pension) Rules, thereby creating a
unique arrangement. Hence, though there is an overlap with respect to
the applicability of CCS (Pension) Rules, the Central Government
employees and the respondents, i.e., employees of PSUs do not
constitute a homogenous class for all purposes relating to pay and
pension revision.
254. The only continuing link keeping the respondents under the
umbrella of CCS (Pension) Rules is the aspect of pensionary benefits
in terms of Rule 37A. The “assurance” granted at the time of their
absorption was admittedly materialized in the form of this Rule and
this Rule only extends a limited promise, i.e., when absorbees retire
from a PSU their pension will be calculated like that of Central
Government servants at the time of their retirement by employing the
same formula. The Rule does not go further.
255. This promise does not negate the fact that absorbees ceased to
be Government servants or that they are governed by the rules of the
PSU under IDA scale post such absorption.
78
Krishena Kumar v. Union of India, (1990) 4 SCC 207; Indian Ex-Services League v. Union of
India, (1991) 2 SCC 104; Commander Head Quarter, Calcutta v. Capt. Biplabendra Chanda, (1997) 1
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256. At the cost of repetition, Central Government servants are
governed by CCS (Pension) Rules and the recommendations of the
CPC. On the other hand, absorbees of BSNL/MTNL are also governed
under these Rules for the limited purpose of calculation of their
pension at the time of their retirement, however, they cease to be
Government servants upon their permanent absorption and therefore,
are not subject to recommendations of the CPC since they are
governed by the Rules of the concerned PSU after such absorption. A
logical corollary is that they are subject to the various Circulars, OMs
etc. issued by DPE including the PRC recommendations.
257. Acceptance of the respondents’ contention would require this
Court to disregard the clear distinction maintained throughout the
statutory and administrative framework between CPC-governed
Central Government employees and PRC-governed PSU employees.
Such an approach would not only run contrary to Rule 37A but would
also amount to rewriting the scheme consciously established by the
Government. In the absence of any statutory mandate, executive
direction, or constitutional infirmity, no legal basis exists to extend the
th
benefits of pension revision under the 7 CPC to the respondents.
258. To subject the respondents to CPC recommendations or conflate
the recommendations of the CPC and PRC is an approach alien to this
Court. Where there is no right, there lies no remedy. Thus, the
respondents cannot claim any entitlement to the benefits arising from
th
the 7 CPC recommendations.
SCC 208; K.L. Rathee v. Union of India, (1997) 6 SCC 7; T.N. Electricity Board v. R.
Veerasamy, (1999) 3 SCC 414
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259. In view of the aforesaid, we are unable to concur with the view
adopted by the learned Tribunal. The impugned order proceeds on an
erroneous understanding of the scope of Rule 37A and the legal
consequences of absorption in BSNL/MTNL and, therefore, cannot be
sustained.
260. We shall now advert to the remaining contentions of the
respondents.
261. It was contended that pay revision under a PSU is dependent
upon profitability and financial viability of the PSU and has no
connection with revision of pension, which is instead governed under
Rule 37A. We are unable to accept this submission. This contention
stands belied in view of the very basis for calculating pension. Pension
is not an isolated entitlement divorced from the pay structure of the
employee. As held in U.P. Raghavendra Acharya (supra) and D.S.
Nakara (supra) , pension bears a direct nexus with the emoluments
drawn by an employee. The Note dated 29.12.2010, as well as the
consistent stand adopted by the relevant Government authorities, also
proceeds on the premise that revision of pension ordinarily follows
revision of pay. We, therefore, find no merit in the contention that
pension can be undertaken independent of the underlying pay
structure applicable to the respondent. We are of the view that pay and
pension are intrinsically related.
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262. It was further advanced on behalf of the respondents that the
ground taken by the petitioners regarding difference in IDA and CDA
scales was a red herring and that revision of pension can be done
regardless by applying the formula provided under Rule 37A. The
submission overlooks the fundamental premise underlying this Rule.
Rule 37A extends the formula for determination of pension to
absorbed employees; it does not transplant them into the CDA scale
nor confer upon them a right to claim every consequential benefit
flowing from subsequent CPC recommendations. In this regard, in the
absence of any revision of the respondents’ IDA pay scales, this Court
cannot grant revision of pension under IDA scale based on CPC
th
recommendations pertaining to CDA pensioners under the 7 CPC
scale since their underlying pay has not been revised. If the
respondents’ pay were revised, they would be entitled to consequential
revision in pension in terms of Rule 37A.
263. It was also submitted that classification between absorbees and
recruits is overinclusive and violative of Article 14 of our Constitution
since only the absorbees were granted protection under Rule 37A and
therefore constitute a suis generis class. It was submitted that this suis
generis class has been consistently granted parity with central
government pensioners by virtue of Rule 37A, as evident from OM
dated 27.04.2009, circular dated 04.05.2009, OM dated 12.08.2009,
OM dated 15.03.2011 and OM dated 20.07.2016. In our view, the
argument proceeds on a misplaced premise. In this regard, it is not the
distinction between absorbees and recruited persons that is relevant
for this dispute, but the distinction amongst the absorbees itself. As
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noted in the foregoing discussion, the employees absorbed in
BSNL/MTNL are of two kinds i.e., pro-rata pensioners and combined
service pensioners. It is this distinction that is material for the present
dispute. Further, as noted above such distinction is reasonable and
stands the test of Article 14. Additionally, the various OMs relied
upon, do not come to the rescue of the respondents in light of the view
taken by us hereinabove.
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264. Reliance was placed on communication dated 20.02.2014 to
assert that the respondents were also extended CGHS facilities. This
communication states that, “the retired employees, who are in receipt
of central civil pension/pro-rata pension only from Central Civil
Estimates are eligible for joining CGHS, other retired employees of
BSNL are not eligible for CGHS” . A plain reading of the said
communication shows that the benefit was extended only to retired
employees who were in receipt of Central Civil Pension or pro-rata
pension paid from Central Civil Estimates. Hence, in our view, it
clearly only applies to pro-rata pensioners of BSNL and not combined
service pensioners. The respondents, being combined service
pensioners governed by Rule 37A, do not fall within the category
contemplated therein. The said communication, therefore, does not
advance their case.
265. It was next submitted that, at the time of absorption, there was
no option to opt for pro-rata pension and therefore, there are no pro-
rata pensioners in BSNL, all absorbed employees are on combined
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File No. 4-12(11)/2012-PAT
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service pension. Even assuming this contention to be correct, it does
not alter the legal position.
266. We note that the option of drawing pension on pro-rata basis
was inserted in sub-Rule (8) vide S.O. 1487(E) dated 14.10.2005. This
contention does not change our view since irrespective of this option,
the respondents upon absorption would cease to be Government
servants and fall under the IDA scale therefrom and hence, cannot
claim revision of pension consequent to CPC recommendations
without revision of their IDA pay. It does not negate the fact that, upon
absorption, such absorbees will become PSU employees and therefore,
will be subject to PRC recommendations for all purposes except
calculation of pension at the time of their retirement. Even the
subsequent insertion of an option for pro-rata pension by the said
notification does not dilute the legal consequences of absorption.
Further, as duly recognized in M.V. Mohanan Nair (supra) , this court
ought to exercise restraint in interfering with the decisions of an
expert body, particularly in the absence of any manifest arbitrariness
or illegality, especially where such interference may also lead to
adverse effects on public exchequer.
267. The respondents also resisted the additional affidavit filed by
the petitioners by way which the latter sought to bring on record
clarifications dated 17.07.2018 and 27.03.2025 which state that the
OMs relied upon by the respondents only do not apply to them. We
note that these clarifications were not part of the record before the
Tribunal, we do not propose to place reliance upon them. The
conclusions reached by us are independently supported by the
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statutory framework, the contemporaneous OMs and the material that
formed part of the record before the Tribunal.
268. Although the respondents have submitted that they shall not
place reliance on the decision of the High Court of Kerala,
Ernakulum; nevertheless, we shall deal with the same for the sake for
completeness. Before Ernakulum Bench, the respondents sought relief
based on OM dated 12.05.2017 and before this Court, they seek
multiplier of 2.57 as per OM dated 04.08.2016. This decision, in our
view, overlooks the inherent distinction between IDA and CDA scales
and gives Rule 37A (8) a more expansive reading that what it actually
provides. We have already rendered our view as to why OM dated
12.05.2017 does not apply to the respondents and shall not repeat the
same for the sake of brevity. Needless to state that a decision of a
coordinate Bench of a different High Court only has persuasive value.
CONCLUSION
269. Rule 37A of the CCS (Pension) Rules, 1972 prescribes special
statutory framework governing erstwhile Government servants who
were permanently absorbed in PSUs. Upon such absorption, the
respondents ceased to be Government employees, their posts under the
Government stood abolished and they were fitted under the IDA scale.
Accordingly, consequent to such absorption, they shall be governed by
the rules of the concerned PSU and be subjected to recommendations
of the Pay Revision Committee. Hence, they cannot claim benefit of
recommendations of the Central Pay Commission.
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270. As per Rule 37A, while the Government bears the pensionary
liability of the absorbed employees, such employees are still subject to
sub-Rule 8 for the calculation of their pension. The source of payment
does not determine the nature or extent of the right.
271. Properly construed, Sub-Rule 8 is nothing but a promise of
extending the same formula to the absorbed employees which is
applied for Central Government employees for the calculation of
pension. The formula referred to is the one which shall be in force at
the time of retirement or death of such absorbed employee. The Rule
neither preserves the status of the absorbee as a Government servant
nor creates a continuing right to claim every future benefit that may be
extended to Central Government pensioners. Accordingly, this Rule
does not entitle the respondents to any other benefit that may arise in
the future after their retirement.
272. We accordingly hold that neither Rule 37A nor any of the Office
Memoranda relied upon by the respondents confer a right upon
combined service pensioners governed by the IDA regime to claim
th
revision of pension pursuant to the recommendations of the 7 CPC.
th
This is because the recommendations of the 7 CPC only apply to
Central Government employees and absorbees of BSNL/MTNL who
draw pension on pro-rata basis from the Government. The respondents
do not fall under either category. Moreover, since the underlying pay
structure applicable to the respondents has not been revised as per the
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rd
3 PRC, the question of consequential revision of pension does not
arise.
273. For all the aforesaid reasons, the impugned order dated
20.09.2023 passed by the learned Tribunal cannot be sustained and is
set aside. Accordingly, this batch of writ petitions stands allowed in
the aforesaid terms. Pending applications, if any, stand disposed of.
There shall be no order as to costs.
OM PRAKASH SHUKLA, J.
C.HARI SHANKAR, J.
JULY 1, 2026/pa/gunn
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