Saramma Simon vs Union Of India & Ors.

HON'BLE Ms.V.RAMA MATHEW, ADMINISTRATIVE MEMBER

The brief facts of the case are as follows – the applicant joined the Railway service as a Junior Clerk in the South Central Railway on 01.12.1980 and was transferred to the Southern Railway, Chennai in December 1981. She was promoted as Senior Clerk on 18.02.1987 and subsequently transferred to the Thiruvananthapuram Division as a Junior Clerk, on reversion, pursuant to her request for transfer on 23.03.1992. As evidenced by Annexure A-1, the Railway Board, the apex administrative body of the Indian Railways, advised the Southern Railway that she was eligible for the first financial upgradation under the Assured Career Progression (ACP) Scheme with effect from 01.10.1999 and the second financial upgradation under the ACPS with effect from 01.12.2004. The said upgradations were duly implemented by the Southern Railway. Subsequently, upon the introduction of the Modified Assured Career Progression (MACP) Scheme, she was granted the third financial upgradation with effect from 01.12.2010. She ultimately retired from service on 30.06.2020.

It is submitted that, on the date of her retirement, the applicant was neither furnished with the requisite pension papers nor paid her retirement settlement benefits. The benefits were withheld without issuing any prior notice or communicating the reasons therefor. The respondents did not even inform her of the grounds on which her settlement benefits were withheld. The applicant accordingly submits that the withholding of her retirement benefits without prior notice or communication of reasons was arbitrary and prejudicial to her legitimate interests.

The respondents issued the applicant's Pension Payment Order, produced as Annexure A-8, only on 19.08.2020, nearly two months after her retirement. Even thereafter, her regular pension was withheld until November 2020, without any notice or explanation. No provisional pension was paid to her during the intervening period. She was thus deprived of both her regular pension and provisional pension during a period immediately following her retirement, when she was entitled to receive her pensionary benefits in accordance with the applicable rules. She submits that the unexplained withholding of pension was contrary to the applicable pension rules and caused serious financial prejudice to her.

Although the applicant retired on 30.06.2020, the respondents communicated the withdrawal of the third financial upgradation granted with effect from 01.12.2010 only on 25.03.2021, through Annexure A-18. Thus, nearly nine months after her retirement, she was informed that the third financial upgradation had been granted erroneously and that her pay was being reduced retrospectively with effect from 01.12.2010. Consequentially, her pension was also reduced. No prior notice was issued to her, nor was she afforded an opportunity of being heard before this adverse decision was taken. The applicant contends that the impugned action is arbitrary, procedurally unfair and violative of the principles of natural justice.

The applicant submits that the retrospective reduction of her pay and the consequential reduction of pension after retirement cannot be sustained unless the action is supported by the applicable statutory provisions and undertaken in accordance with the prescribed procedure. She relies upon Rule 9 of the Railway Services (Pension) Rules, 1993, insofar as applicable to the facts of the case, and contends that the respondents could not unilaterally impose adverse consequences upon her pensionary entitlement without complying with the governing legal requirements. No opportunity of hearing was afforded before the impugned action was taken. She accordingly challenges the legality of the retrospective reduction and seeks its annulment.

The applicant submits that the respondents have adopted a materially different stand in their reply statement before this Tribunal. Whereas she had earlier been granted the first and second ACP upgradations pursuant to the Railway Board's advice and was subsequently granted the third MACP upgradation, the respondents now contend that she was not eligible for the first and second financial upgradations but was eligible for the third upgradation. They further contend that the grade pay admissible in the third upgradation was only Rs.4200/- and not Rs.4600/-. This revised position has been advanced in the present proceedings, notwithstanding the earlier implementation of the financial upgradations and the passage of several years. This change in stand raises serious questions regarding the consistency, evidentiary basis and procedural fairness of the impugned action.

Without prejudice to the applicant's other contentions, even assuming that the revised stand taken by the respondents is legally sustainable, the respondents were required to follow the principles of natural justice before taking any adverse decision affecting her pay and pension. Having earlier communicated the impugned decision through Annexure A-18, the respondents could not introduce a materially different basis for denying or modifying her financial entitlements without affording her a reasonable opportunity to respond. The revised stand was taken in the reply statement filed during the pendency of the O.A in 2023. Nevertheless, no fresh notice was issued and no opportunity of hearing was afforded to her. She submits that such a procedure is contrary to the requirements of procedural fairness and warrants interference by this Tribunal.

It is submitted that the records referred to by her establish that she was granted the first ACP upgradation with Grade Pay of Rs.2800/- with effect from 01.10.1999 and the second ACP upgradation with Grade Pay of Rs.4200/- with effect from 01.12.2004. She was thereafter granted the third financial upgradation under the MACP Scheme with effect from 01.12.2010, carrying Grade Pay of Rs.4600/-, as reflected in the relevant service and pay-fixation records relied upon by her. She relies upon Annexure A-1 and the other relevant annexures, including Annexure A-10, Annexure A-11, Annexure A-12 and Annexure A-15, in support of her claim.

It is further submitted that the respondents' own reply statement, particularly the tabular particulars appearing at page 3 thereof, records that the applicant was drawing Grade Pay of Rs.2800/- with effect from 01.10.1999 pursuant to the first ACP upgradation. The relevant question is whether the financial upgradations granted and implemented earlier were lawfully withdrawn in accordance with the applicable rules and procedures. She contends that the respondents have not demonstrated any valid basis for retrospectively unsettling the earlier benefits granted to her pursuant to the Railway Board's advice. Nor can the respondents merely rely upon a subsequent interpretation of the applicable provisions to justify retrospective reduction of pay and pension without addressing the original grant, the relevant service records and the procedural safeguards available to her.

The applicant further relies upon Railway Board letter RBE No.256/2004 dated 13.12.2004, which, according to her, supports the contention that past cases need not be reopened in the circumstances covered by the said instruction. The applicability of this instruction must be considered in the light of the nature and dates of the financial upgradations granted to her. She also contends that Railway Board Circular No.45/2016 dated 26.04.2016, relating to the MACP Scheme, cannot automatically be applied to invalidate financial upgradations earlier granted under the ACP Scheme without examining the precise scope of the circular and the applicable transitional provisions. The respondents are, therefore, required to establish that the instructions relied upon by them actually govern her case and authorise the retrospective action taken against her.

It is submitted that an adverse decision affecting the applicant's pay and pension cannot lawfully be sustained merely on the basis of assumptions or an isolated interpretation of the financial-upgradation scheme. The respondents must consider the Railway Board's advice, the actual dates on which the upgradations were granted, the grade pay attached to each upgradation, the relevant service records and the applicable Railway Board instructions. It is further submitted that the respondents' action has resulted in the withholding or recovery of Rs.347810/- from her, as reflected in the relevant records and Annexure A-17. She contends that the recovery is unlawful, particularly because the financial upgradations had been granted and implemented by the department and the impugned action was taken without prior notice or an opportunity of hearing. She relies upon the principles laid down by the Hon'ble Supreme Court in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, concerning circumstances in which recovery of excess payments from employees is impermissible because of the hardship and inequity involved. She submits that the protections recognised in the said judgment must be considered in the light of her retirement, the nature of the alleged excess payment, the period to which the payment relates and the circumstances in which the benefits were granted. The respondents must establish the legal basis for the recovery and demonstrate that it falls within the limits permitted by the applicable rules and judicial precedents. In the absence of such justification, the applicant seeks quashing of the impugned recovery and restoration of the amount withheld or recovered, together with consequential relief as may be admissible in law.

In view of the foregoing facts and circumstances, the applicant seeks the following reliefs -

The respondents have filed their reply statement wherein it is stated that as per the ACPS, the applicant was not entitled to the first financial upgradation with effect from 01.10.1999, since she had already earned a regular promotion to the post of Senior Clerk (Grade Pay of Rs.2800/-) on 18.02.1987, within 12 years of her initial entry into service on 01.12.1980. Similarly, she was not entitled to the second financial upgradation with effect from 01.12.2004, as she had earned another promotion to the post of Senior Clerk (Grade Pay of Rs.2800/-) on 01.11.2003, before completion of 24 years of service from the date of her initial entry into service. Under the MACP Scheme, she would be entitled to the third financial upgradation with effect from 01.12.2010, on completion of 30 years of service reckoned from 01.12.1980, in the next higher Grade Pay of Rs.4200/- and not Rs.4600/-. It is submitted that the applicant, at her own request and on her own volition, sought transfer to the Trivandrum Division of Southern Railway in the initial recruitment grade of Junior Clerk, on bottom seniority. Consequent upon such transfer, the promotion to the post of Senior Clerk, which she had earned in South Central Railway, Secunderabad, on 18.02.1987, was foregone. However, her pay of Rs.1350/- was protected. Thereafter, on 01.11.2003, she was promoted to the post of Senior Clerk in the Trivandrum Division of Southern Railway pursuant to restructuring. The said promotion is required to be reckoned as her second regular promotion for the purpose of determining her entitlement to financial upgradations under the ACP/MACP Schemes. Any contrary interpretation would enable her to derive an undue double benefit from her own-request transfer from South Central Railway, while simultaneously retaining the benefit of her earlier protected pay and obtaining the benefit of seniority and promotion in the cadre of Senior Clerk in Southern Railway. Such a position would be inequitable and contrary to the applicable rules governing financial upgradations.

In view of the foregoing facts and circumstances, it is evident that she was erroneously granted financial upgradations under the ACP/MACP Schemes, resulting in excess payment of pay and allowances. Upon detection of the error during verification of the service records, the respondents rectified the mistake and adjusted the excess amount from her retirement benefits, purportedly in accordance with the applicable provisions of the Railway Services (Pension) Rules, 1993.

With reference to the contention that promotions earned by employees before their transfer on own request and placement at the bottom of the seniority list in the initial recruitment grade should not be reckoned for the purpose of ACP/MACP benefits merely because such employees are no longer working in the promoted grade is misleading and is, therefore, denied. It is submitted that, where an employee seeks transfer on own request to a lower grade in another organisation, the treatment of the promotion earned in the parent organisation must be determined in accordance with the applicable transfer conditions and the governing ACP/MACP provisions. In the present case, her earlier promotion and the protection of her pay in the higher scale are material considerations while determining her entitlement to financial upgradations in the new organisation. Failure to take these circumstances into account would place her in a more advantageous position than an employee who earned a promotion in the parent organisation and continued to serve there, thereby resulting in an unintended disparity in the grant of financial benefits. Since her transfer was effected at her own request, she was placed at the bottom of the seniority list in the corresponding initial recruitment grade. However, instead of refixing her pay in the lower scale applicable to the post to which she was transferred, she was allowed protection of the higher pay that she had been drawing following her promotion as Senior Clerk in South Central Railway. It is, therefore, submitted that she cannot claim that her earlier promotion in the parent organisation should be wholly disregarded while determining her entitlement to financial upgradations in Southern Railway, particularly when the benefit of pay protection arising from her earlier service was retained. Consequently, the applicant cannot claim an unconditional entitlement to the benefits under Annexure A-1 without examining her actual service history, the promotions earned before and after transfer, and the applicable provisions of the ACP/MACP Schemes.

During verification of the applicant's service records, it was found that the benefits granted under the ACP/MACP Schemes had been incorrectly computed, resulting in the applicant receiving financial upgradation in the Grade Pay of Rs.4600/- instead of the admissible Grade Pay of Rs.4200/-. The respondents, therefore, contend that the correction of the erroneous grant was necessary to ensure that the applicant received only the financial benefits admissible under the applicable scheme.

The contention that previously settled cases cannot be reopened is not sustainable in the facts of the present case. The respondents submit that a distinction must be drawn between cases in which an employee initially appointed to a higher scale seeks appointment to a lower post on own volition; and cases in which an employee earns a promotion in the parent organisation and subsequently seeks transfer to a lower post in another organisation on own request. In the former category, the treatment of past service in the higher grade for the purpose of determining entitlement to financial upgradation must be examined with reference to the applicable scheme and the grade in which the employee is appointed after transfer. In the latter category, although the past service may be counted in accordance with the applicable provisions, the promotion earned in the parent organisation must also be considered while determining entitlement to financial upgradations in the new organisation. Such a promotion may affect the employee's entitlement to the first financial upgradation, subject to the governing rules and transfer conditions. In the present case, the third MACP was granted in the Grade Pay of Rs.4600/- without properly accounting for the relevant service history and the applicable conditions governing financial upgradations. The respondents, therefore, contend that the withdrawal of the erroneous benefit and correction of the excess payment were justified.

It is submitted that Rule 15(4)(i)(b) of the Railway Services (Pension) Rules, 1993, provides for the recovery of specified Government dues, including overpayments of pay and allowances and other dues, in accordance with the prescribed procedure. Rule 15(4)(ii) deals with the recovery of such dues from retirement, death, terminal or service gratuity, subject to the conditions stipulated therein. The respondents contend that the adjustment of the excess payment from the applicant's retirement benefits was permissible under the aforesaid provisions. The contention that no recovery can be made in the absence of fraud or misrepresentation on the part of the applicant is denied. In Chandi Prasad Uniyal v. State of Uttarakhand, 2012 (8) SCC 417 the Hon'ble Supreme Court emphasised that excess payments made from public funds cannot be treated as payments to which the recipient is automatically entitled merely because the recipient was not responsible for the error. The respondents, therefore, submit that the absence of fraud or misrepresentation, by itself, does not render every recovery of excess payment impermissible. The applicant's entitlement to relief must be determined in the light of the applicable rules and the principles laid down by the Hon'ble Supreme Court concerning recovery of excess payments. The respondents submit that the principles laid down in Rafiq Masih (supra) must be considered along with the subsequent and other relevant judicial pronouncements, including the decision in Chandi Prasad Uniyal (supra), as well as the applicable provisions of the Railway Services (Pension) Rules, 1993.

We have heard learned counsel for the parties and perused the pleadings and documents available on record. The Railway Board's letter dated 18.04.2016 provided that an employee who had been granted pay protection on own-request inter-railway transfer between two divisions would not be eligible for the benefits of the Modified Assured Career Progression Scheme (MACPS). However, after the implementation of the 7^th Central Pay Commission, the Railway Board issued consolidated MACPS guidelines dated 22.10.2019, which specifically clarified that, in cases of inter-railway transfer involving reversion to a lower grade, the service rendered in the previous cadre shall be counted for determining eligibility under the MACPS and that such transfer shall not operate as a bar for grant of MACPS. Consequently, the earlier instructions contained in the Railway Board's letter dated 18.04.2016, to the extent they are inconsistent with the consolidated guidelines dated 22.10.2019, stand superseded and cannot be relied upon to deny MACPS benefits.

It is pertinent to note that, on own-request inter-railway transfer, pay protection is granted only in respect of the employee's total emoluments, while the Grade Pay is reduced to the Grade Pay applicable to the lower post in the new division. In contrast, the MACPS provides financial upgradation by granting the next higher Grade Pay where no regular promotion has been received after 10, 20 or 30 years of service. Therefore, the premise of the earlier Railway Board clarification was flawed, as it treated pay protection as equivalent to financial upgradation, even though the higher Grade Pay was not protected. In any event, this issue has become academic in view of the consolidated MACPS guidelines dated 22.10.2019, which clarify that such inter-railway transfer does not bar eligibility for MACPS.

Learned counsel for the applicant submitted that the issue is no longer res integra and in a catena of decisions this Tribunal has categorically held that the service rendered in the previous organization/unit is required to be counted and that financial upgradation under the ACP Scheme is to be granted in the promotional hierarchy applicable in the new organization/division. This would entitle the applicant to the first financial upgradation under the ACP Scheme. The learned counsel has also brought to notice a recent order of this Tribunal in O.A.No.180/00077/2017 dated 27.07.2026 wherein in a similar situation it was held as follows -

We are in complete agreement with the above order. There are no grounds existing for denial of 3^rd financial upgradation under the MACP Scheme to the applicant. Accordingly the O.A is disposed of. We quash and set aside Annexure A-6 and Annexure A-18. The respondents are directed to reimburse the withheld amount of Rs.347810/- from the DCRG payable to her on retirement. They are further directed to refix the pay and pension in the light of the aforesaid direction and arrears flowing therefrom shall be paid to her within a period of three months from the date of receipt of a copy of this order, failing which interest at the rate of 8% shall be payable. However, arrears, if any, payable will be restricted to a period of three years prior to the date of filing of the O.A in terms of the judgment of the Hon'ble Supreme Court in Union of India & Ors. vs. Tarsem Singh (2008) 8 SCC 648. No order as to costs.