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Judgment
O R D E R
Delivered by: Mr. Justice Rajiv Joshi, Member (J)
Heard Shri Jaswant Singh, learned counsel for the applicants and Shri Chakrapani Vatsyayan, learned counsel for the respondents and with the consent of learned counsel for the parties, the case is being decided at this stage itself.
The instant Original Application, under Section 19 of the Administrative Tribunals Act, 1985, has been filed by the applicant, seeking following reliefs:
“a)That this Hon'ble Tribunal be pleased to quash and set aside the PAO/ CBIC /MRT /Pen /S.A.25-impugned letter / circular F.No. 26/1067/dated 15-04-2026 issued by the Pay & Accounts Officer, CBIC, Meerut Zone, Meerut and Copy of Impugned Last Pay Certificate dt. 08-07-2026 issued by the Chief Accounts officer Meerut Zone, Meerut. (Annexure No.1 and 2 to this O.A. in compilation No.1)
b)That this Hon'ble Tribunal be pleased to hold and declare that the promotion given to the applicant w.e.f. 06-12-2002 by the respondent themselves in terms of various directions issued earlier or in compliance of Hon'ble Andhra Pradesh High Court's order dated 02-03-2005 in WP No. 7963/2004 which has been protected by the Hon'ble Apex Court in CA No. 1970-75/2009 under Para no. 119(22) by the order dated 05-02-2020, now attained finality and cannot be disturbed in any manner and applicant is also eligible for all consequential benefit.
c)That this Hon'ble Tribunal be pleased to hold and declare that the applicant have not hit by the provision of the MACP Scheme referred to in the impugned letter/order dated 07-02-2018 & 14-07-2021 issued by the CBIC which have already been quashed and set aside in the Original Application No. 1085/2018, 691/2023, 143/2024, 717/2024, 937/2024 & 1062/2025 by this Hon'ble Tribunal.
d)That this Hon'ble Tribunal be pleased to hold and declare that the applicant is also eligible for grant of Non Functional Upgradation (NFG) of Rs. 5400/- in PB-2 w.e.f. 06-12-2016 after completion of 4 years regular service in grade pay of Rs. 4800/- as he was already awarded the Grade Pay of Rs. 4800/- w.e.f. 06-12-2012 being identical case of M. Subramaniam vs UOI and others.
e)To issue a writ in the nature of mandamus or any other appropriate writ, order, or direction, commanding the Respondents no. 03, 04, 05, 06 & 07 to release all the outstanding dues to the applicant herein without any further delay.
f)To direct the Respondents to pay simple interest at the rate of 6% per annum on the outstanding amount held back by the respondents unilaterally without any valid reason from the date of due the payable of outstanding amount until the date of actual payment.
g)That this Hon'ble Tribunal be pleased to grant such other relief, as the applicant might be found entitled to in the facts and circumstances of the case.
h)That this Hon'ble Tribunal be pleased to award the costs of this Original Application in favour of the applicant, throughout.”
Learned counsel for the applicant submitted that the grievance of the applicant is that despite his promotion to the post of Inspector having been granted on regular basis w.e.f. 06.12.2002 pursuant to judicial directions and the said promotion having been expressly protected by the Hon‟ble Supreme Court in D. Raghu v. R. Basaveswarudu, the respondents have arbitrarily refused to grant and/or restore the consequential service benefits flowing therefrom. The applicant granted benefit of 3rd financial upgradation under the MACP Scheme in Grade Pay ₹4800/- w.e.f. 06.12.2012, after completing ten years of continuous regular service. Upon further completion of four years in Grade Pay ₹4800/-, he became entitled to Non-Functional Selection Grade (NFSG) in Grade Pay ₹5400/-w.e.f 06.12.2016. However, the respondents have withheld these benefits contrary to binding judicial pronouncements and despite this Tribunal having already granted identical relief to similarly situated employees in O.A. No. 717/2024 and connected matters. The applicant is thus aggrieved by the denial of MACP and NFSG benefits, discriminatory treatment vis-à-vis similarly placed officers and the arbitrary refusal to extend consequential financial and service benefits, which has compelled him to file the present Original Application seeking enforcement of their lawful entitlements.
The submissions of the learned counsel for the applicant in support of his case are as under:-
The applicant was initially appointed as Lower Division Clerk and thereafter promoted to the post of Upper Division Clerk, which was the feeder cadre for promotion to the post of Inspector under the Central Excise and Land Customs Department Group „C‟ Posts Recruitment Rules, 1979.
During Cadre Restructuring–2001, large-scale promotions were made to the post of Superintendent, resulting in substantial vacancies in the cadre of Inspector prior to 07.12.2002. Litigation ensued regarding the manner in which such resultant vacancies were to be filled, culminating in the judgment of the Andhra Pradesh High Court in WP No. 7963/2004, wherein it was directed that vacancies which arose prior to 07.12.2002 be filled in accordance with the 1979 Rules.
The Ministry of Finance accepted the said judgment, issued implementation instructions and called for vacancy position from all Cadre Controlling Authorities. Pursuant thereto, Review DPCs were convened and the applicant was promoted to the post of Inspector on regular basis w.e.f. 06.12.2002 against regular vacancies.
The promotion order specifically recorded that the promotion was made against regular vacancies and were subject only to the final outcome of pending proceedings before the Hon‟ble Supreme Court. His pay was fixed under FR 22(1)(a)(i) in the applicable pay scale by treating him as regularly promoted from 06.12.2002, thereby recognizing continuous regular service from that date.
The challenge to the High Court judgment ultimately culminated in the decision of the Apex Court in D. Raghu v. R. Basaveswarudu. While the Apex Court did not affirm the reasoning of the High Court, it categorically protected the promotions already granted in respect of vacancies that arose prior to 07.12.2002 and had been filled pursuant to the High Court judgment. In paragraph 119(22), the Apex Court specifically declined to disturb such promotions, taking into account the long passage of time, the fact that vacancies had already been filled and that further promotions had also been effected on that basis. Thus, the promotions of the applicants stood judicially protected and attained finality. After the said judgment, the respondents continued to treat the applicant as regular Inspector for all purposes, including seniority, pay fixation, and further promotional avenues.
On the strength of such regular promotion w.e.f. 06.12.2002, the applicant completed ten years of continuous regular service in Grade Pay ₹4600/-. In terms of DoP&T O.M. dated 19.05.2009 governing the MACP Scheme, financial upgradation is admissible upon completion of ten years of continuous regular service in the same Grade Pay. After due verification of service records and consideration by the Departmental Screening Committee, the applicant was granted the benefit of 3rd financial upgradation under MACP in Grade Pay ₹4800/- w.e.f. 06.12.2012. The benefit was granted through formal establishment orders issued by the competent authority and was acted upon, pay was fixed accordingly and the applicant continued to draw salary in the upgraded Grade Pay without any objection from the respondents for several years.
Thereafter, upon completion of four years of regular service in Grade Pay Rs. 4800/-, the applicants became entitled to Non-Functional Selection Grade (NFSG) in Grade Pay Rs. 5400/- in PB-2 in accordance with settled service jurisprudence and consistent judicial interpretation. The entitlement flows consequentially from the valid grant of Grade Pay Rs. 4800/- and completion of the prescribed residency period.
The applicant‟s claim is thus not based on any fresh or independent cause but is a natural and automatic progression of service benefits flowing from the regular promotion.
However, relying upon subsequent clarificatory letters dated 07.02.2018 and 14.07.2021, the respondents have sought to deny and/or withhold the MACP benefit and consequential NFSG by contending that the applicants‟ service cannot be treated as “regular service” for the purposes of MACP. This stand is wholly contrary to the express terms of the promotion orders, the pay fixation already granted, and the judicial protection extended by the Hon‟ble Supreme Court. The respondents, having themselves treated the applicant as regularly promoted from 06.12.2002 for all purposes, cannot now take a contradictory position to the prejudice of the applicants.
Further, the very clarifications dated 07.02.2018 and 14.07.2021, on the basis of which the respondents are attempting to deny the benefits, have already been quashed by this Tribunal in multiple Original Applications, including O.A. No. 717/2024 and connected matters. In those cases, which involved identically situated Inspectors promoted under the same Review DPC and protected by the same Supreme Court judgment, this Tribunal categorically held that the period of service reckoned from 06.12.2002 is to be treated as regular service for the purposes of MACP and directed restoration of Grade Pay Rs. 4800/- and consequential benefits including NFSG in Grade Pay Rs. 5400/-. Despite the existence of such binding and coordinate Bench decisions, the respondents have issued letter dated 16.04.2026 with regard to returning of pension case of the applicant stating therein that the MACP granted w.e.f 06.12.2012 on the basis of notional promotion is to be revised in accordance with the actual joining on the post of inspector. The respondents have failed to extend the same relief to the present applicant as has been extended to similarly placed employees, thereby subjecting him to hostile discrimination and unequal treatment.
The applicant has neither committed any fraud nor misrepresented any material fact. His promotion was granted strictly in compliance with judicial directions and accepted by the Government itself. The pay fixation and MACP benefits were granted after due scrutiny by competent authorities. The applicant has been functioning as regular Inspector for more than a decade, their seniority has crystallized and further promotions in the cadre have been made on that basis. It is a settled principle of service jurisprudence that long-standing promotions, seniority, and financial benefits cannot be unsettled after an inordinate delay, particularly when the employee is not at fault. The respondents are estopped from withdrawing or withholding consequential benefits after having allowed the applicant to continue on the basis of regular promotion and upgraded pay for several years.
The impugned action is thus arbitrary, unreasonable, and violative of Articles 14 and 311(2) of the Constitution of India. It has been taken without affording any opportunity of hearing and in disregard of binding judicial precedents of the Hon‟ble Supreme Court and this Tribunal. The applicant has acquired a vested right and legitimate expectation that his service from 06.12.2002 would be reckoned as regular service for all consequential purposes including MACP and NFSG. The continued refusal of the respondents to grant and restore these benefits, despite identical relief having been granted to similarly situated officers, is unsustainable in law. The applicant, therefore, has been compelled to invoke the jurisdiction of this Tribunal seeking enforcement of their lawful and consequential service entitlements in accordance with settled legal principles.
Learned counsel for the respondents advanced oral submissions opposing the reliefs sought. It is contended that the promotion of applicant w.e.f. 06.12.2002, though granted pursuant to Review DPC proceedings, was notional in nature and subject to judicial outcomes and therefore such notional period cannot be treated as “regular service” for the purpose of financial upgradations under the MACP Scheme.
Further, the clarifications dated 07.02.2018 and 14.07.2021 issued by CBIC/DoP&T merely reiterate the settled position that regular service for MACP purposes is to be reckoned from the actual date of assumption of charge and not from a notional date, and thus cannot be termed arbitrary or illegal.
The revision of pay was carried out in accordance with applicable rules and administrative instructions and the same does not suffer from any illegality.
We have considered the rival submissions advanced by learned counsel for both the parties and have perused the pleadings on record as well as the judgments relied upon by the learned counsel for the applicant.
It is not in dispute that the applicant was promoted to the post of Inspector pursuant to the recommendations of the Review DPC and the promotion order specifically granted him promotion on regular basis w.e.f. 06.12.2002 against vacancies which had arisen prior to 07.12.2002. His pay was fixed under FR 22(1)(a)(i) and he was treated as regular Inspector for all service purposes. The only stipulation in the promotion order was that the same would be subject to the outcome of the proceedings pending before the Hon‟ble Supreme Court.
The controversy before us is whether the period of service reckoned from 06.12.2002, though initially granted notionally pursuant to Review DPC proceedings, can be treated as “regular service” for the purposes of financial upgradation under the MACP Scheme. It is pertinent to clarify that the benefit of 3rd MACP was granted to the applicant on 06.12.2012. The subsequent action of the respondents seeks to exclude the notional period from reckoning regular service, thereby revising the MACP and consequential benefits.
The Apex Court in D. Raghu v. R. Basaveswarudu (supra) has categorically protected the promotions granted against vacancies which arose prior to 07.12.2002. Once the Apex Court declined to disturb such promotions, the legal consequence is that the status of the applicant as regular Inspector from 06.12.2002 stands affirmed and cannot be reopened indirectly through administrative actions. The respondents, having implemented the promotion and fixed pay accordingly, cannot now treat the same as irregular or non-est for the limited purpose of denying MACP benefits.
The expression “regular service” occurring in para 9 of the MACP Scheme has to be interpreted in contradistinction to ad hoc, stop-gap or purely temporary service. It does not mean that only the period after physical assumption of charge can be counted if the promotion itself has been granted on regular basis pursuant to due process. The notional aspect of promotion pertains to monetary benefits, but the status conferred is that of a regular appointment. To exclude such period altogether would amount to negating the very promotion granted and protected judicially.
The respondents‟ reliance upon clarifications dated 07.02.2018 and 14.07.2021 cannot override the binding judicial pronouncements. It is also a matter of record that similar clarifications have already been set aside by this Tribunal in earlier matters involving identically situated officers. Administrative instructions cannot defeat the effect of a judgment of the Apex Court nor can they curtail vested service rights accrued over a decade.
In so far as the grant of Non-Functional Selection Grade (NFSG) in Grade Pay Rs. 5400/- is concerned, the short question for determination is whether the applicant, having completed four years of regular service in Grade Pay Rs. 4800/- is entitled to be placed in Grade Pay Rs. 5400/- w.e.f. 06.12.2016.
The issue is no longer res integra in view of the judgment of the Madras High Court in M. Subramaniam vs. Union of India, which stands affirmed by the Hon‟ble Supreme Court. The principle laid down therein has been consistently followed by various Benches of this Tribunal. At this stage, reference may also be made to the order dated 24.05.2024 passed in O.A. No. 558/2024, wherein a Co-ordinate Bench, applying the aforesaid binding precedent, directed grant of Grade Pay Rs. 5400/- upon completion of four years in Grade Pay Rs. 4800/-. The said decision squarely applies to the facts of the present case. The relevant extract of the order dated 24.05.2024 is reproduced herein below for ready reference:
“6.The short question involved in this case is that whether the applicant, who has completed four years‟ service in the Grade Pay of Rs. 4800/- are entitled to get the Grade Pay of Rs. 5400/- or not?
7.Since the issue, in hand, has already attained finality up to the Hon‟ble Supreme Court and as such there is no necessity to give time to the respondents to file their response/Counter Reply by keeping the O.A. pending for long. We may also observe that the judgment passed by Hon‟ble Madras High Court in the case of M. Subramaniam, which has been affirmed by Hon‟ble Supreme Court is not a judgment in „personam‟ but a judgment „in rem‟. We have also carefully perused the judgments as annexed by the learned counsel for the applicant in the O.A. As such, a prayer has been made that the instant O.A. be also disposed of in the light of the directions given by Hon‟ble Madras High Court in the case of M. Subramaniam (supra), which has been upheld by Hon‟ble Supreme Court.
8.It is absolutely evident from the facts on record that the applicant has got the benefit of financial upgradations after rendering 10 years of regular service so much so that he is absolutely eligible to be granted the benefit of Non Functional Grade (NFG) by placing him in the Grade Pay of Rs. 5400/- due to the fact that he has also completed four years of regular service in the grade pay Rs. 4800/- w.e.f. from the dates as has been already recorded in paragraph 3.2. of this judgment. Furthermore, in the instant case, applicant is in service and accordingly he is entitled to be granted the benefit of NFG.
9.In view of the discussions made hereinabove, O.A. deserves to be allowed and is accordingly, allowed at the admission stage itself. The competent authority amongst the Respondents must ensure that the benefit of judgment passed by Hon‟ble High Court of Madras in the case of M. Subramaniam, which has been upheld by Hon‟ble Supreme Court, be also given to the applicant. Accordingly, they are directed to re-fix the pay of the applicant in the Non-Functional Grade (NFG) Pay Scale of Rs. 9300-34800 in Pay Band – II, with Grade Pay of Rs. 5400/- with all consequential benefits, with effect from the dates that he had completed four years of regular service in the Grade Pay of Rs. 4800/-. All the consequential benefits shall also accrue. The aforesaid exercise must be carried out by the respondents within a period of five months from the date of receipt of certified copy of this order.”
Similar matter also came for consideration before the Ernakulam Bench of this Tribunal in OA No. 180/00161/2019 - A.S Peethambaran Vs. U.O.I & Ors and the aforesaid OA was also allowed vide order dated 21.03.2022 following the judgment dated 06.09.2010 in WP (C) No. 13225/2010 of the Hon‟ble High Court of Judicature at Madras in the case of M. Subramaniam Vs. Union of India & Ors. Although the aforesaid order of the Tribunal was challenged by the Union of India in OP (CAT) NO. 109 OF 2023 before Hon‟ High Court of Kerala, the same was dismissed vide judgment dated 21.09.2023. Thereafter, the Union of India filed SPECIAL LEAVE PETITION (CIVIL) Diary No(s).12304/2024which was also dismissed on 13-05-2024.
Accordingly, the respondents are directed to grant applicant the benefit of NFSG in Grade Pay Rs. 5400/- in PB-2 w.e.f. 06.12.2016 i.e. the date of completion of four years of service after grant of 3rd MACP, with all consequential benefits including re-fixation of pay and revision of pensionary benefits, if applicable.
The plea of objection or excess payment also does not sustain in the absence of any finding of misrepresentation or fraud on the part of the applicant. The benefit was granted after due consideration by the competent authority. Long-standing service benefits cannot be unsettled after inordinate delay, particularly when the employee has acted bona-fide. Accordingly, the impugned letter dated 15.04.2026 (appended as Annexure A-1) and the impugned Last Pay Certificate dated 08.07.2026 issued in respect of the applicant (appended as Annexure A-2) are set aside.
Accordingly, the impugned actions based on letters dated 07.02.2018 and 14.07.2021, in so far as they related to the applicant, are set aside. The respondent are directed to treat the restore the 3rd MACP granted to the applicant w.e.f. 06.12.2012 and grant him the benefit of NFSG in the Grade Pay of Rs. 5400/- w.e.f. 06.12.2016 with all consequential benefits including re-fixation of pay and revision of pensionary benefits.
The aforesaid exercise shall be completed within a period of four months from the date of receipt of a certified copy of this order.
In so far as the claim of interest at the rate of 6% per annum is concerned, we are of the view that though the applicants are entitled to consequential monetary benefits, the claim of interest is not warranted in the facts and circumstances of the case. However, if the respondents fail to comply with the directions within the stipulated period, the outstanding dues shall carry simple interest @ 6% per annum from the date of expiry of the compliance period till actual payment.
The Original Application stands allowed in the above terms. No orders as to cost.
All pending M.As, if any, shall be treated as disposed of.