Pay protection extends to retrospectively revised notional pay effective prior to an employee's resignation from the parent organization.

The applicant, initially a Junior Accounts Officer at Mahanagar Telephone Nigam Limited (MTNL), a Public Sector Undertaking (PSU), was selected as Deputy Director (Finance) in the Employees' State Insurance Corporation (ESIC) through a UPSC interview

He joined ESIC on December 27, 2012, following a technical resignation from MTNL

His pay was initially protected based on the Last Pay Certificate (LPC) from MTNL.

Subsequent to his joining ESIC, MTNL retrospectively upgraded his pay scale and issued a revised LPC in 2017, which ESIC honored

However, following Presidential Directives in 2018, MTNL further revised the fitment formula (merging 5% additional IDA) effective notionally from January 1, 2007, with actual financial benefits from January 1, 2018

MTNL issued a new LPC on January 24, 2019, reflecting a higher basic pay as of December 10, 2012

ESIC rejected the applicant’s request to revise his initial pay based on this 2019 LPC via orders dated March 19, 2019, and April 8, 2019, contending that "notional" fixation does not constitute "pay drawn" under Fundamental Rules (FR) and that pay protection is only for actual pay drawn at the time of resignation

1. Whether a notional revision of pay in the parent department (MTNL), effective from a date prior to the employee's resignation, entitles the employee to a revision of protected pay in the new department (ESIC)

2. Whether the distinction between selection via "interview" versus "open competitive examination" serves as a valid ground to deny pay protection benefits

The Tribunal primarily applied Fundamental Rule (FR) 22 regarding pay fixation and FR 9(21)(a)(i), which defines "Pay" as the amount sanctioned for a post held substantively or in an officiating capacity

It relied on Department of Personnel and Training (DoPT) O.M.s dated August 7, 1989, and August 13, 2020, which mandate pay protection for candidates moving from PSUs to Central Government posts regardless of the recruitment mode (interview or exam)

Furthermore, the Tribunal followed the precedent set by the Delhi High Court in Sanjog Kapoor v. Union of India (WP(C) 5518/2004), which held that denying pay protection based on the method of selection is arbitrary and lacks rational justification

The Tribunal examined the definition of "pay" under FR 9(21)(a)(i), concluding that "pay drawn" refers to pay "sanctioned" for the post

Since the applicant's pay in MTNL was notionally revised effective from December 10, 2012—a date prior to his resignation on December 26, 2012—the revised rate was deemed the sanctioned pay he was entitled to at the time of joining ESIC

The Tribunal reasoned that while "notional pay" does not involve immediate cash arrears, it fundamentally alters the salary base used for prospective financial calculations, including pay protection in a new department

Regarding the mode of recruitment, the Tribunal noted that the DoPT O.M. dated August 13, 2020, clarified that pay protection applies to direct recruits from PSUs irrespective of whether they were selected via interview or competitive exam

Consequently, ESIC's refusal to recognize the 2019 LPC was found to be an overly strict and incorrect interpretation of the term "drawn"

It held that notional pay fixation in the parent department, effective prior to resignation, must be protected in the new department for the purpose of prospective benefits

The respondents were directed to revise the applicant's initial pay based on the latest LPC dated January 24, 2019, with actual consequential financial benefits flowing from January 1, 2018, in alignment with the Presidential Directives

The exercise must be completed within three months