COL JAMSHAID AKHTAR (RETD.) v. GENERAL MANAGER (HR) ENGINEERING PROJECTS (INDIA) ATD. AND ORS.

Judgment

#1. These matters concern retired defence officers who, after leaving military service, were selected by Engineering Projects (India) Ltd.,1 a Central Public Sector Enterprise,2 through a recruitment advertisement. 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. Years later, EPIL sought to deduct the defence pension drawn by the Petitioners from the salary paid by EPIL and, for that purpose, directed them to furnish pension particulars for refixation of pay. The Petitioners challenge that course of action as arbitrary, unreasonable, contrary to the governing policy framework, and irreconcilable with the pay fixation consciously made and acted upon by EPIL itself.

#2. Both writ petitions assail individual communications dated 27th May, 2019 issued to each of the Petitioners, as well as the common order dated 1 “EPIL” 2 “CPSE” Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 2 of 27 12th June, 2019. The communications dated 27th May, 2019 required the Petitioners to furnish pension details so that their pay could be refixed after subtracting pension. Thereafter, by the communication dated 12th June, 2019, the Respondents directed withholding of the Petitioners’ salaries on account of non-furnishing of documents. The legal foundation pleaded by the Respondents is principally the Office Memorandum dated 14th December, 2012 issued by the Department of Public Enterprises,3 read with DPE clarification dated 28th March, 2019.

#3. The two writ petitions arise from substantially similar facts. Col. Jamshaid Akhtar (Retd.) retired from the Indian Army in the rank of Colonel and later joined EPIL as General Manager (Civil). Wg. Cdr. Sandeep Malhotra (Retd.) retired from the Indian Air Force in the rank of Wing Commander and later joined EPIL as Deputy General Manager (Finance). While their ranks, dates of appointment, posts and pay scales differ, the impugned action, the policy framework invoked by the Respondents, the interim protection granted by this Court, and the central legal issue are common. The matters have, therefore, been heard together and are being decided by this common judgment. Separate factual features shall be noticed where they have a bearing on the relief to be granted.

#4. CONT.CAS(C) 883/2022 arises from the interim order passed in W.P.(C) 7625/2019. Since the writ petitions themselves are being finally decided, that contempt petition is also taken up and disposed of by the present judgment.

Factual background in W.P.(C) 7625/2019

#5. Col. Jamshaid Akhtar (Retd.), was commissioned in the Indian Army 3 “DPE” Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 3 of 27 and retired voluntarily on 2nd June, 2012 in the rank of Colonel. According to him, at the time of retirement, he was drawing pay in Pay Band-4 with grade pay and military service pay. Upon retirement, he became entitled to defence pension.

#6. In response to an advertisement issued by EPIL, the Petitioner applied for the post of General Manager (Civil) on 2nd August, 2013. His case is that, at the stage of application and interview, he disclosed his previous military service, last pay drawn, and defence pension. He also states that he had expected pay protection with reference to his last military pay, but EPIL informed him that he would be appointed at the minimum of the applicable pay scale.

#7. EPIL issued a communication dated 2nd December, 2013, informing the Petitioner that he had been selected as General Manager (Civil) in the IDA pay scale of ₹43,200-66,000/-. The terms and conditions followed on 13th December, 2013. His basic pay was fixed at ₹43,200/- per month, namely, the minimum of the E-7 scale.

#8. The terms of appointment did not provide that the defence pension drawn by the Petitioner would be deducted from his pay in EPIL. Nor was there any stipulation that his salary would be liable to retrospective refixation on that basis. One clause required him to declare that he was joining EPIL on a straight appointment and was not holding lien on his previous employment.

#9. The Petitioner joined EPIL on 9th December, 2013. After completion of probation, he was confirmed with effect from 9th December, 2014. EPIL thereafter continued to treat him as a regular employee and paid salary on the basis of the pay fixation made at the time of appointment. Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 4 of 27

#10. In December, 2017, EPIL addressed a communication to the Petitioner, seeking proof that he was not drawing dearness allowance on his defence pension. The Petitioner replied that he was aware that a re- employed pensioner could not draw dearness allowance from two sources and that the pension disbursing authority had been informed to discontinue dearness relief on pension. He furnished a pension pay slip to show that dearness relief on pension was not being drawn.

#11. Thereafter, EPIL addressed communications dated 19th March, 2018 and 20th December, 2018, requiring the Petitioner to submit documents showing pension received from the date of joining EPIL, so that his pay could be refixed. In response, the Petitioner contended that his appointment had been made through an open selection process; that his pay had been fixed at the minimum of the entry level applicable to the post; and that neither any advance increment nor any pay protection had been extended to him. It was accordingly asserted that no deduction on account of pension could be effected from the pay so fixed.

#12. EPIL issued communication dated 3rd January, 2019 stating, in substance, that since the Petitioner had neither been appointed on absorption basis nor come from a PSU, CPSE or Government organisation, there was no question of pay protection or advance increments. It was further stated that, as per Paragraph No. 6 of the DPE Office Memorandum dated 14th December, 2012, his pension amount would be subtracted from his pay in EPIL. EPIL also indicated that clarification would be sought from the DPE on the Petitioner’s representation.

#13. On 27th May, 2019, EPIL informed the Petitioner that DPE had clarified that the total admissible pension amount of Government retired Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 5 of 27 personnel would be subtracted from the pay, and that pay fixation of re- employed Government pensioners would be done accordingly in the CPSE. The Petitioner was asked to submit proof of pension drawn from the date of joining. The communication further stated that, if the documents were not submitted within 15 days, his monthly salary would be held up.

#14. On 12th June, 2019, EPIL addressed its Finance Division stating that, since the Petitioner and another similarly situated officer had not furnished pension documents, their monthly salary was to be withheld till further communication.

#15. These two communications are impugned in W.P.(C) 7625/2019. Facts in W.P.(C) 7598/2019

#16. Wg. Cdr. Sandeep Malhotra (Retd.), retired voluntarily from the Indian Air Force on 31st October, 2013 in the rank of Wing Commander. He was thereafter granted defence pension, which, according to the pleadings, was approximately ₹32,490/- per month.

#17. In November/December, 2015, the Petitioner applied for the post of Deputy General Manager (Finance) in EPIL pursuant to an open recruitment process. He was interviewed on 18th February, 2016. EPIL issued an offer of appointment dated 8th March, 2016 appointing him as Deputy General Manager (Finance) in E-5 grade in the IDA scale of ₹32,900-58,000/-.

#18. The terms of appointment fixed his basic pay at ₹32,900/- per month, i.e., the minimum of the applicable E-5 scale. Like the Petitioner in W.P.(C) 7625/2019, he was also not given pay protection with reference to his last military pay. The appointment terms did not state that his defence pension would be deducted from his EPIL pay.

#19. The Petitioner joined EPIL on 21st March, 2016. His appointment was Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 6 of 27 subsequently confirmed with effect from 21st March, 2017.

#20. The Petitioner states that he had disclosed his status as a retired defence officer and his pension particulars during the pre-interview and pre- joining process. He also states that EPIL was fully aware that he was drawing defence pension when it issued the appointment letter fixing his pay at the minimum of the E-5 scale.

#21. Upon joining EPIL, the Petitioner requested his pension disbursing bank to stop dearness allowance on pension. Canara Bank, by letter dated 22nd January, 2018, informed him that dearness relief had been stopped from 1st January, 2018 and excess dearness relief paid from 21st March, 2016 to 31st December, 2017 had been recovered.

#22. EPIL thereafter issued communications dated 8th March, 2018, 19th March, 2018 and 20th December, 2018, requiring the Petitioner to submit pension particulars for refixation of pay. The Petitioner responded that the requisite details had already been furnished at the time of appointment and, in any event, no deduction towards pension could be made since his pay had been fixed at the minimum entry level without pay protection and dearness allowance was being drawn only on the pay received from EPIL.

#23. EPIL then issued communication dated 27th May, 2019, followed by office note dated 12th June, 2019, seeking to implement deduction of pension from pay and to withhold salary in the absence of pension documents. These communications are impugned in W.P.(C) 7598/2019. Interim Orders and Subsequent Developments

#24. In both writ petitions, this Court passed interim orders on 26th July, 2019 directing the Respondent to maintain status quo and restraining them from giving effect to the impugned communications. Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 7 of 27

#25. By virtue of those interim orders, no deduction pursuant to the impugned communications was effected from the salaries payable to the Petitioners during the pendency of the writ petitions.

#26. During pendency of the proceedings, both Petitioners resigned from EPIL. Col. Jamshaid Akhtar stood relieved with effect from 15th July, 2021, and Wg. Cdr. Sandeep Malhotra on 30th September, 2022. The controversy, therefore, no longer concerns prospective monthly salary deduction. It now concerns the legality of retrospective recovery and withholding of consequential dues, including terminal benefits or arrears, on the basis of the impugned decision.

#27. The Petitioners submit that the Respondents continue to maintain that substantial amounts are recoverable from them on account of defence pension drawn during service with EPIL. The Respondents, on the other hand, state that the amounts received by the Petitioners during service cannot be finally settled unless pay is refixed in accordance with DPE instructions. Petitioners’ Case

#28. Mr. Indra Sen Singh, counsel for the Petitioners, submits that the impugned action proceeds on a fundamental misunderstanding of the concept of re-employment and the pay fixation regime applicable to retired defence officers. His submissions are summarised as follows:

28.1 The Petitioners 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 issued by EPIL, participated in an open selection process, and were thereafter appointed as regular employees to civil posts Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 8 of 27 under EPIL.

28.2 EPIL was fully aware of the Petitioners’ status as retired defence officers. Details regarding their previous service, last pay drawn, and pension were duly disclosed during the recruitment process itself. In such circumstances, the Respondents cannot now seek to treat facts which were fully disclosed and within their knowledge as constituting suppression on the part of the Petitioners.

28.3 The Petitioners were not granted any advantage on account of their previous military service while fixing pay in EPIL. Their pay was consciously fixed at the minimum of the applicable pay scale corresponding to the post to which they were appointed. No advance increments were granted, no higher stage fixation was allowed, and no element of military pay or previous service benefit was protected or carried forward.

28.4 The entire rationale of deducting pension arises 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 so that the employee does not receive double benefit. However, where the employee is treated as a fresh recruit and fixed at the bare minimum of the scale, there is no occasion to deduct pension once again. This approach is internally inconsistent and arbitrary in law.

28.5 The terms and conditions governing appointment contained no stipulation that defence pension would be deducted from the salary payable by EPIL. The Petitioners accepted appointment on the basis of the terms expressly offered to them. If the Respondents intended to apply pension deduction even where pay had been fixed at the minimum entry level, such Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 9 of 27 condition ought to have been incorporated in the appointment terms at the threshold. Having remained silent at the time of appointment and having permitted the Petitioners to continue in service for several years, EPIL cannot now reopen the issue to the serious financial prejudice of the Petitioners.

28.6 The Petitioners place particular emphasis on the consequences of the interpretation advanced by the Respondents. The basic pay of Wg. Cdr. Sandeep Malhotra was fixed at ₹32,900/- per month, while his defence pension was approximately ₹32,490/- per month. If EPIL’s interpretation is accepted, his effective salary would stand reduced to approximately ₹410/- per month. Similarly, in the case of Col. Jamshaid Akhtar, the effective pay would be approximately ₹10,505/- per month. Such salaries are wholly inconsistent with Grade-A posts such as General Manager and Deputy General Manager, and an interpretation producing such anomalous results cannot be regarded as reasonable unless the language admits of no other construction.

28.7 The Respondents’ own conduct over the years militates against the stand now sought to be taken. The Petitioners were appointed; continued in service; and confirmed in their respective posts, without objection. The issue regarding deduction of pension was sought to be reopened only after several years. This is not a case involving immediate rectification of a clerical or inadvertent error, and the allegation that the Petitioners were deriving an impermissible double benefit is therefore overstated and unfair.

28.8 The Petitioners also place reliance upon various Office Memoranda issued by the DoPT, governing re-employed pensioners, including Office Memorandum dated 1st May, 2017 and earlier instructions issued in the Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 10 of 27 years 1999 and 2010. It is urged that these instructions show that the pay minus pension principle must be understood as part of a structured pay fixation exercise and not as a blunt deduction from minimum entry pay.

28.9 The Petitioners submit that DPE’s Office Memorandum dated 14th December, 2012 cannot be read in isolation. It must be harmonised with the DoPT regime, particularly because the DPE instructions themselves refer to pension being regulated as per DoPT orders.

28.10 Even if the Respondents’ interpretation is assumed to be correct, retrospective recovery after years of service is barred by settled principles of service law. Reliance is placed on the judgements of the Supreme Court in State of Punjab v. Rafiq Masih4 and Thomas Daniel v. State of Kerala,5 to submit that recovery of excess payment is impermissible where the employee has not practised fraud or misrepresentation and the payment resulted from the employer’s own interpretation of rules. Respondents’ Case

#29. Mr. Debarshi Bhadra, counsel for Respondent Nos. 2 and 3, defends the impugned decision on the following grounds;

29.1 EPIL is a CPSE and is governed by instructions issued by the DPE. The applicable instructions are contained in DPE Office Memorandum dated 14th December, 2012. Paragraph No. 6 of that Office Memorandum expressly provides that re-employed Government pensioners in CPSEs shall draw pay only in the prescribed scale of the post, that no protection of pay of the previous post shall be given, that initial pay shall be fixed at the minimum of the applicable CPSE scale, and that pension admissible to the 4 (2015) 4 SCC 334. 5 2022 SCC OnLine SC 536. Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 11 of 27 retired employee shall be subtracted from admissible pay.

29.2 Paragraph No. 9 of the said Office Memorandum, extends the pay fixation principles applicable to Board-level executives to below Board- level executives and non-unionised supervisors. Since the Petitioners held executive posts below Board level, Paragraph No. 9 brings them squarely within the policy.

29.3 The DPE clarified the position on 28th March, 2019, stating that 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. The language of the DPE Office Memorandum is plain and binding, leaving no discretion with the EPIL. It is contended that the Petitioners cannot rely upon Office Memoranda issued by the DoPT governing Central Government civil posts in preference to specific DPE instructions applicable to CPSEs.

29.4 The Petitioners continued to draw full defence pension while simultaneously receiving salary from EPIL and that the object of the DPE policy is to prevent such double financial benefit from public funds. It is contended that despite repeated communications, the Petitioners failed to furnish complete pension particulars, thereby preventing proper pay fixation in accordance with the applicable policy.

29.5 The payments made contrary to applicable rules can be recovered. A mistaken or erroneous pay fixation does not confer a vested right. Reliance is placed on the judgement of the Supreme Court in Chandi Prasad Uniyal v. State of Uttarakhand,6 to contend that excess payments of public money made without authority of law are ordinarily recoverable. Signature Not Verified Digitally Signed By:AKANSHA SINGH Signing Date:12.05.2026 19:57:05 W.P.(C) 7625/2019 & connected matters Page 12 of 27

29.6 Preliminary objections raised regarding maintainability of the writ petitions. It is contended that EPIL itself has not been impleaded despite the substantive reliefs being directed against it. Respondent Nos. 2 and 3 are merely officers or employees of EPIL and cannot be treated as representing the company in their individual capacity. It is further submitted that the writ petitions suffer from misjoinder and non- joinder of necessary parties and that the Petitioners ought to have first pursued appropriate remedies within the organisation.

29.7 In the contempt proceedings, the Respondent contends that the interim order merely restrained giving effect to the impugned communications. It did not direct release of terminal benefits to the Petitioners after resignation. Reliance is placed on Sudhir Vasudeva v. M. George Ravishekaran,7 to submit that contempt jurisdiction cannot travel beyond the four corners of the order alleged to have been breached. An objection regarding limitation under Section 20 of the Contempt of Courts Act, 1971 has also been raised. Questions for Determination

#30. The following questions arise for determination: (i) Whether the writ petitions are liable to be declined on the preliminary objections of non-joinder, misjoinder, or availability of an internal remedy. (ii) Whether, on a proper construction of the DPE Office Memorandum dated 14th December, 2012 and the connected policy framework, the Respondents were justified in seeking to deduct the defence pension drawn by the Petitioners from the salary fixed and paid to them by EPIL, despite their pay having been fixed at the minimum entry-level scale without pay