The Delhi High Court has ruled that the amount of pension drawn by defence officers cannot be deducted from the salary paid by Central Public Sector Enterprises if the post-retirement appointment through open advertisement is not linked to past military service and no subsequent pay protection is granted.

Two retired officers, a Colonel and a Wing Commander, were selected by Engineering Projects (India) Limited (EPIL), a Central Public Sector Enterprise in 2013 through a recruitment advertisement and their pay was fixed at the minimum of the applicable pay scales and no pay protection with reference to their last drawn military pay was granted. All details about their past service and defence pension drawn were duly furnished.

In 2019, EPIL sought to deduct the defence pension drawn by them from the salary paid by the organisation and for that purpose, directed them to furnish pension particulars for refixation of pay. They challenged the action as arbitrary, unreasonable, contrary to the governing policy framework and irreconcilable with the pay fixation consciously made and acted upon by EPIL itself at the time of their appointment.

“The officers were not absorbed into EPIL from the Armed Forces or any government department, nor were they appointed on deputation or with continuation of any lien from their previous service. They responded to public advertisements, participated in an open selection process and were thereafter appointed as regular employees to civil posts,” Col Indra Sen Singh (retd) counsel for the petitioners told The Tribune.

“Pension can be deducted only where an employee receives the benefit of past service by way of pay protection or fixation at a higher stage. If pay is fixed after reckoning last pay drawn, the non-ignorable portion of pension may be deducted to prevent double benefit. However, where the employee is treated as a fresh recruit and salary is fixed at the bare minimum of the scale, there is no rationale to deduct pension,” he added.

EPIL maintained that as per departmental rules the pay of re-employed government pensioners in CPSEs is to be fixed at the minimum of the applicable scale and that pension admissible to the retired employee is to be subtracted from admissible pay. It further averred that the petitioners had failed to furnish complete pension particulars, thereby preventing proper pay fixation in accordance with the applicable policy, and payments made contrary to applicable rules can be recovered.

Observing that pension earned for past service cannot be subjected to unilateral adjustment or deduction unless the rules clearly and fairly authorise such consequence, the Bench of Justice Sanjeev Narula, in its order of May 8, held that where the employer has consciously declined to grant pay protection or any corresponding advantage, the rationale for deducting pension does not operate with force.

The Bench also pointed out that the petitioners entered EPIL through open selection and the terms of appointment did not state that the defence pension drawn by them would be subtracted from their salary. No pay protection was granted and EPIL accepted and acted upon these terms for several years and the issue regarding deduction of pension was sought to be reopened only thereafter.

Finding it ‘considerably difficult’ in accepting EPIL’s interpretation of the said rules, the Bench said that if the organisation considered the provision applicable to the petitioners, the same ought to have been applied at the stage of appointment itself, or at least within a reasonable period.

“In the absence of fraud, concealment or misrepresentation on the part of the petitioners, the provision could not remain unacted upon for years together and thereafter be invoked retrospectively to unsettle service conditions which had been consciously fixed and acted upon,” the Bench remarked. “EPIL was not justified in seeking to deduct the defence pension drawn by the Petitioners from the salary fixed and paid by EPIL,” the Bench ruled.