One-time increments granted under the pay-fixation clarification cannot be withdrawn from similarly situated employees.

The applicant, a retired Deputy Commissioner of Central Tax and Central Excise, had joined service as an Inspector in 1984 and was subsequently promoted as Superintendent and Assistant Commissioner. His pay was fixed under the CCS (Revised Pay) Rules, 2008, including a one-time increment granted pursuant to the Department of Expenditure’s Office Memorandum dated 19 March 2012. He was also granted non-functional upgradation to PB-2 with Grade Pay of ₹5,400 with effect from 1 January 2006.

Shortly before his retirement on 31 May 2020, the respondents retrospectively revised his pay fixation by withdrawing the increment granted with effect from 1 January 2006. The revision was based on the view that, because the applicant received NFU in the higher grade pay of ₹5,400 from that date, his earlier PB-2 grade pay of ₹4,800 had become inoperative. A sum of ₹1,19,871 was recovered from his retirement benefits.

The applicant contended that the increment was validly granted under the Department of Expenditure’s 19 March 2012 OM, which addressed employees whose annual increments fell between February and June 2006. He also relied on a subsequent clarification issued in the case of Balraj Menon and on the Tribunal’s decision in OA No. 77 of 2022, holding that the clarification applied to all similarly situated employees.

The respondents defended the revision and recovery, relying, inter alia, on an undertaking obtained from the applicant before retirement authorising deduction of government dues.

Whether the retrospective revision of the applicant’s pay fixation, by withdrawal of the increment granted from 1 January 2006, was legally sustainable?

Whether the Department of Expenditure’s clarification in the case of Balraj Menon constituted a clarification applicable to similarly situated employees, rather than a person-specific benefit?

Whether the respondents could recover ₹1,19,871 from the applicant’s retirement benefits without prior notice and on the basis of a general undertaking obtained immediately before retirement?

The Tribunal applied the CCS (Revised Pay) Rules, 2008 and the Department of Expenditure’s OM dated 19 March 2012, under which employees whose increments fell between February and June 2006 were entitled, as a one-time measure, to an increment in the pre-revised scale on 1 January 2006 and the next increment in the revised pay structure on 1 July 2006.

It relied on the Department of Expenditure’s clarification dated 15 February 2023 in the case of Balraj Menon and the Tribunal’s ruling in OA No. 77 of 2022, which held that the clarification explained the general principle of pay fixation and was therefore in rem, applicable to similarly placed employees, rather than in personam.

The Tribunal further applied the principles of natural justice, holding that an employee was entitled to notice before an adverse pay refixation resulting in reduction of pay and recovery from retirement benefits.

A blanket undertaking obtained on the eve of retirement, without informing the employee of the proposed adverse revision or obtaining it at the time of payment, could not validly justify the recovery.

The Tribunal found that the applicant’s increment had been granted pursuant to the 19 March 2012 OM and that the respondents’ interpretation—that the grant of NFU rendered the earlier grade pay inoperative and consequently invalidated the increment—was contrary to the principle clarified by the Department of Expenditure and applied in OA No. 77 of 2022.

Since that clarification concerned the interpretation of pay-fixation rules in a particular factual situation and was not merely a personal concession to Balraj Menon, it applied equally to the applicant.

Independently, the revised pay fixation was procedurally defective because it was issued shortly before retirement without giving the applicant notice or an opportunity to explain the proposed reduction.

The undertaking relied upon by the respondents was obtained only on 18 May 2020, after the decision to revise the pay had effectively been taken, and was too general to authorise recovery based on an undisclosed adverse revision.

Accordingly, the revised fixation and consequential recovery could not be sustained.

Although Annexures A1 and A2 were treated as interdepartmental communications, the revised pay-fixation order, Annexure A3, was quashed as legally unsustainable.

The applicant’s earlier pay fixation dated 4 December 2012 was restored, and he was held entitled to all consequential pay and pensionary benefits.

The respondents were directed to refund ₹1,19,871 and pay any differential amount arising from the restoration of the earlier fixation within two months. In default, the entire amount would carry interest at 8% per annum until payment.