Combined service pensioners under IDA scale are not entitled to pension revision under Central Pay Commission recommendations.

The respondents are erstwhile employees of the Department of Telecommunications (DoT) who were permanently absorbed into Public Sector Undertakings (PSUs), specifically BSNL and MTNL, following the corporatization of telecommunication services.

Upon absorption, they opted for a "combined service pension" governed by Rule 37A of the CCS (Pension) Rules, 1972, rather than a pro-rata pension.

While their pay and pensions were revised in 2007 following the 2nd Pay Revision Committee (PRC) recommendations for PSUs, their pensions were not revised in 2017 because BSNL/MTNL did not implement the 3rd PRC due to financial non-affordability.

The respondents approached the Central Administrative Tribunal (CAT) seeking revision of their pension at par with Central Government pensioners under the 7th Central Pay Commission (CPC). The CAT allowed the Original Applications, directing parity. The Union of India assailed this order before the High Court.

1. Whether the respondents, as combined service pensioners absorbed in BSNL/MTNL and fitted into the IDA pay scale, are entitled to pension revision in accordance with the 7th CPC recommendations applicable to Central Government employees.

2. Whether the "assurance" of retaining government service conditions under Rule 37A(8) extends to subsequent pension revisions beyond the initial fixation at the time of retirement.

The court primarily interpreted Rule 37A of the CCS (Pension) Rules, 1972, particularly sub-rule (8), which mandates that absorbed employees are eligible for pension based on combined service using the government formula "in force at the time of retirement".

The Court relied on A.K. Bindal v. UOI, establishing that PSU employees are not civil servants and cannot claim government-funded salaries/benefits as a matter of legal right.

It further applied principles from VSNL v. Ajit Kumar Kar, which distinguishes between Industrial Dearness Allowance (IDA) and Central Dearness Allowance (CDA) scales.

UOI v. M.V. Mohanan Nair, emphasizing judicial deference to expert bodies like Pay Commissions in matters of economic policy.

The Court reasoned that upon permanent absorption, the respondents ceased to be Government servants and became PSU employees governed by the IDA pay scale.

Rule 37A(8) provides a "limited statutory protection" by ensuring the formula for calculating pension is identical to that of Central Government employees at the time of retirement; it does not promise perpetual parity for future revisions.

The Court noted that pension is intrinsically linked to pay (emoluments).

Since the respondents' IDA pay scales were not revised (due to the 3rd PRC's affordability clause), there was no legal basis to revise their pensions.

Furthermore, the 7th CPC OMs specifically distinguished between pro-rata pensioners (who draw pension from the Government for pre-absorption service under the CDA scale) and combined service pensioners (like the respondents), excluding the latter from automatic CPC-based revisions.

The Court set aside the CAT order dated 20.09.2023, ruling that Rule 37A does not entitle absorbees to future benefits or revisions after their retirement in the absence of a corresponding pay revision. The writ petitions were allowed.