Re-employed retired personnel are entitled to full minimum pay without pension deduction if pay protection is denied.

The petitioners, retired military officers (a Colonel and a Wing Commander), were recruited by Engineering Projects (India) Ltd. (EPIL), a CPSE, through an open selection process.

Their pay was fixed at the minimum of the applicable IDA pay scales without pay protection for prior military service.

After several years of service and confirmation, EPIL issued communications on 27th May 2019 and 12th June 2019 seeking to retrospectively refix their pay by deducting their military pension from their salary and withholding current salaries for non-submission of pension documents.

EPIL relied on a DPE Office Memorandum (OM) dated 14th December 2012.

During the pendency of the writs, both petitioners resigned.

1. Whether EPIL was justified in deducting defence pension from salary fixed at the minimum pay scale without pay protection under the DPE policy.

2. Whether the respondents could legally reopen pay fixation and effect retrospective recovery after years of service in the absence of fraud/misrepresentation.

3. Whether the writ petitions were maintainable despite preliminary objections regarding non-joinder of the company as a formal party.

The Court applied the principles governing pension as a vested right rather than a bounty, citing Deokinandan Prasad v. State of Bihar and D.S. Nakara v. Union of India.

Regarding the recovery of excess payments, it relied on the "inequitable recovery" doctrine from State of Punjab v. Rafiq Masih and Thomas Daniel v. State of Kerala, which prohibits recovery where excess payment resulted from the employer’s own interpretation error rather than employee fraud.

It also interpreted Paragraph 6 of the DPE Office Memorandum dated 14th December 2012, which mandates that for re-employed pensioners, initial pay be fixed at the minimum of the scale and pension subtracted from admissible pay.

The Court found that EPIL's interpretation was internally inconsistent; EPIL denied the petitioners pay protection on the basis that they were "fresh recruits" via open selection, yet sought to apply the "pay minus pension" rule applicable to re-employed pensioners.

The Court noted that applying this deduction to minimum pay would reduce senior executive salaries to nominal amounts (e.g., ₹410/month), which is an anomalous result.

Critically, the Court held that since the petitioners disclosed all facts at the time of recruitment, there was no fraud or misrepresentation.

Citing Rafiq Masih, the Court determined that retrospective recovery after five years (for Col. Akhtar) and three years (for Wg. Cdr. Malhotra) was arbitrary and inequitable.

The Court reasoned that the pension-subtraction principle is intended to prevent double benefits when past service is protected, not to penalize employees recruited at entry-level scales without such protection.

The Court quashed the communications dated 27th May 2019 and 12th June 2019 and directed EPIL to re-compute the petitioners' dues without deducting pension and release all withheld terminal benefits within twelve weeks.

Failure to comply within the timeline attracts 8% per annum interest.