Notional promotion period counts as regular service for MACP/NFSG benefits.

Neeraj Saxena, aged 55, and Nirmala Devi, aged 57, were initially appointed as Lower Division Clerks and later promoted to Upper Division Clerk, which was the feeder cadre for promotion to Inspector under the Central Excise and Land Customs Department Group 'C' Posts Recruitment Rules, 1979.

During Cadre Restructuring–2001, substantial vacancies arose in the cadre of Inspector prior to December 7, 2002.

Litigation regarding filling these vacancies led to the Andhra Pradesh High Court's judgment in WP No. 7963/2004, directing that pre-December 7, 2002 vacancies be filled according to the 1979 Rules.

The Ministry of Finance accepted this judgment, leading to Review DPCs in 2011–2012, where the applicants were promoted to Inspector on a regular basis with retrospective effect from December 6, 2002, against regular vacancies.

The promotion orders stated they were subject to the final outcome of pending Supreme Court proceedings.

The Supreme Court, in D. Raghu v. R. Basaveswarudu, protected promotions already granted for pre-December 7, 2002 vacancies, specifically declining to disturb them in paragraph 119(22).

Following this, the applicants were treated as regular Inspectors for all purposes, including seniority and pay fixation.

They were granted 3rd financial upgradation under the MACP Scheme to Grade Pay ₹4800/- with effect from December 6, 2012, after completing ten years of continuous regular service in Grade Pay ₹4600/-.

Upon completing four years in Grade Pay ₹4800/-, they claimed entitlement to Non-Functional Selection Grade (NFSG) in Grade Pay ₹5400/- with effect from December 6, 2016.

The respondents subsequently sought to deny/withhold MACP and consequential NFSG benefits, relying on clarificatory letters dated February 7, 2018, and July 14, 2021, contending that the applicants’ service from December 6, 2002, could not be treated as “regular service” for MACP purposes.

The applicants contended that these clarifications had been quashed by the Tribunal in multiple Original Applications involving identically situated Inspectors.

1. Whether the promotion granted to the applicants with retrospective effect from December 6, 2002, pursuant to judicial directions and protected by the Supreme Court, can be considered "regular service" for the purpose of granting financial upgradations under the MACP Scheme and consequential benefits.

2. Whether the clarifications issued by CBIC/DoP&T on February 7, 2018, and July 14, 2021, can override binding judicial pronouncements and curtail vested service rights.

3. Whether the applicants are eligible for the grant of Non-Functional Upgradation (NFG) of ₹5400/- in PB-2 with effect from December 6, 2016, after completing four years of regular service in Grade Pay ₹4800/-.

The Tribunal applied the principle of judicial finality, relying on the Supreme Court's decision in D. Raghu v. R. Basaveswarudu, which protected promotions granted against vacancies arising prior to December 7, 2002.

It clarified that "regular service" under paragraph 9 of the MACP Scheme distinguishes from ad hoc or temporary service, but does not exclude periods where promotion, even if notional for monetary benefits, confers regular status through due process.

The Tribunal also applied the doctrine of res judicata and judicial precedent, noting that administrative instructions cannot override the effect of a Supreme Court judgment or curtail vested service rights.

Furthermore, it relied on the Madras High Court's judgment in M. Subramaniam v. Union of India, affirmed by the Supreme Court, concerning the grant of Grade Pay ₹5400/- upon completion of four years in Grade Pay ₹4800/-, classifying this as a judgment in rem.

The Tribunal found that the applicants' promotion to Inspector from December 6, 2002, was based on recommendations of Review DPC and was expressly protected by the Supreme Court in D. Raghu v. R. Basaveswarudu, thus attaining finality.

The promotion orders explicitly granted "regular basis" promotion, with pay fixed under FR 22(1)(a)(i).

The Tribunal interpreted "regular service" in the MACP Scheme as referring to the status conferred by a regular appointment, not merely the period after physical assumption of charge, particularly when the promotion was granted through due process.

To exclude the notional period would negate a judicially protected promotion.

The Tribunal held that administrative clarifications from CBIC/DoP&T (dated February 7, 2018, and July 14, 2021) could not supersede binding judicial pronouncements, especially given that similar clarifications had already been quashed by the Tribunal and affirmed by the High Court.

Regarding NFSG, the Tribunal stated that the issue was settled by M. Subramaniam v. Union of India, which applies in rem, establishing that employees completing four years in Grade Pay ₹4800/- are entitled to Grade Pay ₹5400/-.

The respondents’ arguments of notional promotion and audit objections were dismissed, as no fraud or misrepresentation by the applicants was found, and the benefits were granted by competent authority.

The Tribunal held that the action of the respondents in revising/withholding the 3rd MACP granted from December 6, 2012, and denying consequential NFSG in Grade Pay ₹5400/- from December 6, 2016, was unsustainable in law.

The impugned actions based on letters dated February 7, 2018, and July 14, 2021, were set aside insofar as they related to the applicants.

The respondents were directed to restore the 3rd MACP granted to the applicants from December 6, 2012, and grant them the benefit of NFSG in Grade Pay ₹5400/- in PB-2 from December 6, 2016, with all consequential benefits, including re-fixation of pay and revision of pensionary benefits, if applicable.

This exercise must be completed within four months, with simple interest at 6% per annum on outstanding dues if not complied with in time.