MACP: Promotional benefits due to merger of pay scales must be ignored.

The applicant, Sunil Kumar Bhatnagar, was appointed as a Permanent Way Mistry (PWM) on November 26, 1989, and retired as an SSE/PW/ROK on June 30, 2023.

During his career, he received three financial upgradations under the MACP scheme: the first in GP-4600 effective September 1, 2008, the second in GP-4800 effective December 9, 2009, and the third in GP-5400 effective December 9, 2019, resulting in a final basic pay of ₹82,600.

After his retirement, the respondents issued an order on July 4, 2023, reducing his Grade Pay from Rs.5400 to Rs.4800 and his basic pay from Rs.82,600/- to ₹75,600 effective July 1, 2022, until his superannuation.

This led to a recovery of Rs.3,16,143 from his DCRG without a show-cause notice.

The applicant contends this action is illegal and violates natural justice, citing Supreme Court decisions and Railway Board instructions that prohibit recoveries from retired employees if no fraud or misrepresentation was involved.

The respondents justified their action by stating that the initial appointment as Mistry/Supervisor in the 4th CPC, which was later upgraded to JE-II in the 5th CPC with GP-4200, is considered a promotion, making the applicant eligible only for MACP benefits up to GP-4800, rendering the 3rd MACP in GP-5400 untenable.

1. Whether the respondents' action of reducing the applicant's Grade Pay and Basic Pay and recovering amounts post-retirement was valid.

2. Whether the upgradation of the post of Mistry/Supervisor to Junior Engineer-II should be treated as a promotion or a merger of pay scales for the purpose of granting MACP benefits.

3. Whether the applicant was entitled to the 3rd financial upgradation in GP-5400 under the MACP scheme.

The court primarily applied Clause 5 of Annexure-I of the MACP Scheme, as published by DOP&T vide OM dated May 19, 2009, which states that "Promotions earned/upgradation granted under the ACP Scheme in the past to those grades which now carry the same grade pay due to merger of pay scales/upgradations of posts recommended by the Sixth Pay Commission shall be ignored for the purpose of granting upgradations under Modified ACPS."

The court also referenced the Supreme Court decisions in State of Punjab and Ors. Versus Rafiq Masih (White Washer) (2015) 4 SCC 334 and Thomas Daniel v. State of Kerala, 2022 SCC OnLine SC 536, and Railway Board instructions (RBE No. 72/2016) regarding restrictions on recovery from retired employees.

It further considered its prior decision in Javed Ahmed and ors. Vs. Union of India and ors., OA No.1386/2013, and the Delhi High Court's affirmation in WP(C) No.10995/2016 which held that the upgradation of Mistries to JE was a merger, not a promotion.

The court analyzed the facts in light of Clause 5 of Annexure-I of the MACP Scheme (OM dated May 19, 2009), which explicitly states that promotions earned or upgradations granted due to the merger of pay scales recommended by the Sixth Pay Commission are to be ignored when granting upgradations under the Modified ACPS.

The court found that the respondents admitted in their counter affidavit that the post of PWM was upgraded to that of JE with the same grade pay, indicating a merger.

Therefore, the applicant's promotion to the rank of JE should be ignored as per Clause 5.

The court relied on its previous ruling in Javed Ahmed and ors. Vs. Union of India and ors., upheld by the Delhi High Court, which established that the grant of pay scale of Rs.5000-8000 to erstwhile Mistries (Supervisors) was an upgradation and merger, not a promotion, making the earlier promotion inconsequential for MACP purposes.

Consequently, the court determined that the applicant was entitled to the 1st, 2nd, and 3rd financial upgradations after completing 10, 20, and 30 years of service, respectively, dating from his entry into PWM.

The respondents' action of treating the upgradation from PWM to JE as a promotion and thereby limiting the MACP benefits was deemed impermissible under Clause 5 of the MACP Scheme.

The re-fixation of pay and recovery order dated July 4, 2023, is quashed, and the applicant's pre-revised pay is restored.

The respondents are directed to revise the PPO, recalculate the DCRG, and leave encashment according to the restored pay scales, and pay the differential amounts to the applicant along with simple interest as per prevailing GPF rates.

This exercise must be completed within eight weeks from the date of receipt of the certified copy of the order.