En masse transfer on deemed deputation without consent or allowance during PSU corporatization is a valid policy decision.

The applicants, comprising Group ‘A’ officers and industrial employees of the Ordnance Factory Board (OFB), were recruited into government service, many after 01.01.2004 under the National Pension System (NPS)

Following a Union Cabinet decision on June 16, 2021, the government corporatized 41 production units of the OFB into seven Defence Public Sector Undertakings (DPSUs)

Via Office Memorandum (OM) dated 24.09.2021, the government transferred all employees en-masse to these DPSUs on "deemed deputation" for an initial period of two years without deputation allowance

The applicants challenged these orders, contending that they were transferred without consent, were denied deputation allowance, and that Rule 37-A of the CCS (Pension) Rules—cited by the government—did not apply to NPS subscribers

1. Whether the en-masse transfer of employees to DPSUs on "deemed deputation" without consent or deputation allowance is legally valid

2. Whether the protections under Rule 37-A of the CCS (Pension) Rules, 1972, or similar parity, can be extended to employees recruited after 01.01.2004 under the NPS during this transition

3. Whether the court can interfere with the government’s policy decision to corporatize the Ordnance Factory Board

Fundamental Rule 110(a), which empowers the government to transfer a servant to foreign service against their will if the body is wholly owned or controlled by the government

Rule 37-A of the CCS (Pension) Rules, 1972, regarding the transition of employees upon conversion of a government department into a PSU

Precedent set in Balco Employees Union v. Union of India, which established that courts should not interfere with economic policy decisions unless they are transparently arbitrary

Reasoning of the Delhi High Court in Bhartiya Pratiraksha Mazdoor Sangh v. Union of India and the Madras High Court in All India Defence Employees Federation v. Union of India, which upheld the corporatization of the OFB as a valid policy move in the national interest

The Tribunal reasoned that the dissolution of the OFB was a high-level policy decision aimed at functional autonomy and national interest, placing it outside the scope of judicial review

The Tribunal noted that under FR 110(a), the Union has the authority to transfer employees to 100% government-owned entities without their consent

It found that while Rule 37-A technically applies to pre-2004 recruits, the government adopted a standardized "deemed deputation" procedure to ensure parity for NPS employees during the transitional phase while new recruitment rules are framed

The Tribunal dismissed the claim for deputation allowance by citing DoPT instructions (OM dated 17.06.2010), which stipulate that such allowances are not admissible in "interim arrangements" during the conversion of a government office into a PSU/autonomous body

The court highlighted a contradiction in the applicants’ prayer: challenging the transfer order while simultaneously seeking benefits (allowances) arising from that same order

The court held that the interests of the employees—including pay scales, career progression, and NPS benefits—are adequately protected during the transition as they remain Central Government servants until they opt for permanent absorption

Consequently, no directions were issued for the payment of deputation allowance or the quashment of the impugned OMs