Himachal HC Orders State To Pay Retirees’ 2016 Pay-Revision And Pension Arrears In Two Instalments, With 6% Interest For Those Who Sued

The petitioners were State Government and public-sector retirees whose pay and pensionary benefits were revised retrospectively from 1 January 2016 under the Himachal Pradesh Civil Services (Revised Pay) Rules, 2022, and a Government Office Memorandum dated 25 February 2022.

Rule 13 of the Rules and paragraph 10 of the Memorandum left payment of arrears to the manner and timing determined by the Government.

The State released arrears in instalments and prioritised certain groups, including older retirees and Class-IV employees, citing financial constraints.

Madhu Deshta, who retired on 31 January 2021, challenged the provisions and sought payment of arrears and interest.

The High Court heard her petition together with connected matters raising common issues.

The Court applied Articles 14 and 300-A of the Constitution: State action must not be arbitrary or discriminatory, and a vested monetary entitlement recognised by law cannot be taken away without authority of law.

It relied on Rule 13 of the Himachal Pradesh Civil Services (Revised Pay) Rules, 2022, and paragraphs 8.2 and 10 of the 25 February 2022 Office Memorandum, while holding that executive directions cannot override statutory service rules.

The Court referred to the CCS (Pension) Rules, 1972—including Rules 9, 50, 68, 83 and 85—on pension, gratuity, withholding and payment; the CCS (Leave) Rules, 1972, Rule 39, on leave encashment; and the CCS (Commutation of Pension) Rules, 1981, Rules 5 and 10, on commutation and revised commuted value.

It relied on *Deokinandan Prasad v. State of Bihar* and *State of Jharkhand v. Jitendra Kumar Srivastava* for pension as a protected property right; *All Manipur Pensioners Association v. State of Manipur* for the requirement that differential treatment satisfy the tests of intelligible differentia and rational nexus; and *State of A.P. v. Dinavahi Lakshmi Kameswari* and *Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh v. State of Bihar* for compensatory interest on delayed monetary entitlements.

The State’s Rules and Memorandum had recognised the petitioners’ entitlement to revised pay and retiral benefits retrospectively; the dispute concerned the State’s discretion to defer payment.

The Court held that the relevant provisions gave the State excessively broad discretion without adequate guidelines and could not be used to defeat rights arising under the applicable service rules.

It found that statutory provisions required gratuity to be paid in a lump sum, prescribed payment of leave encashment, and provided for revised commutation; executive directions could not displace those requirements.

The State’s age- and category-based prioritisation also treated members of the same retiree class differently without a sufficient rational basis.

The Court rejected financial constraints as justification for withholding the accrued benefits and awarded interest as compensation for delayed payment.

It read down and declared inoperative Rule 13 to the extent that it permitted unfettered postponement of revised-pay arrears; it quashed paragraph 10 of the Office Memorandum and paragraph 8.2 insofar as they authorised deferment of revised retiral benefits and commutation arrears, and set aside the State’s withholding or delaying of revised leave encashment.

The State and relevant Boards or Corporations were directed to release the admissible arrears in two equal instalments, by 15 December 2026 and 28 February 2027, and to pay simple interest at 6% per annum from 1 June 2022 until payment.

Retirees who had not pursued legal proceedings by the date of judgment were held entitled to substantive benefits, but not interest.