Director General, Esi Corporation, New Delhi And Another v. M.P John And Others, Supreme Court Of India, Judgment, Law, casemine.com

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Equivalent Citations

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Case Number

Civil Appeals Nos. 6872-6875 of 1994 with Nos. 7622-7623 of 1994 and 6890 of 1994, decided on December 1, 1998

Disposition

allowed

Advocates

S.K Gambhir and Diwakar Chaturvedi, Advocates, for the Appellants;
V.C Mahajan, Senior Advocate (Roy Abraham, Sudhir P.S, M.M Kashyap, Ms Amita Verma, S.W.A Qadri and Ms Anil Katiyar, Advocates, with him) for the Respondents.

Judges

Justice Sujata V Manohar

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Smart Summary

Factual and Procedural Background

The judgment consolidates two sets of matters. Civil Appeals Nos. 6872-6875 & 7622-7623 of 1994 were withdrawn by the appellants after noting the Supreme Court’s earlier ruling in Union of India v. G. Vasudevan Pillay, and were therefore dismissed as not pressed.

Civil Appeal No. 6890 of 1994 concerns Respondent 1, an ex-serviceman who was re-employed by the appellant-Corporation as a Lower Division Clerk on 29 January 1985. His initial pay on re-employment was fixed at the minimum of the applicable scale, with entitlement to draw his full military pension. Relying on a Government Order dated 8 February 1983 and an Office Memorandum (OM) dated 25 November 1958 (as later clarified), the respondent sought additional increments on the ground of “hardship” — i.e., that his combined re-employment pay, pension and pension-equivalent of gratuity fell short of his last pay drawn in military service. The Central Administrative Tribunal accepted this plea and directed that one increment for each completed year of prior military service be added. The appellant-Corporation challenged that decision before the Supreme Court.

Legal Issues Presented

Whether, under the Government Order of 8-2-1983 read with the OM of 25-11-1958, the respondent’s military pension must be ignored when determining “hardship” for the purpose of granting advance increments on re-employment.
Consequently, whether the Tribunal was justified in directing fixation of the respondent’s initial pay by granting one increment for each completed year of military service.

Arguments of the Parties

Respondent’s Arguments

The 8-2-1983 Government Order mandates that the entire pension of an ex-serviceman be ignored while fixing pay on re-employment; therefore, pension should also be ignored when assessing “hardship” under the OM of 25-11-1958.
By excluding pension from the hardship calculation, his combined emoluments on re-employment fall below his last drawn military pay, entitling him to increments.

Appellant-Corporation’s Arguments

The pension may be ignored for the limited purpose of initial pay fixation, but must be included when evaluating hardship under the OM of 25-11-1958, which expressly refers to pension “whether ignorable or not.”
No hardship arises because the respondent already receives the minimum pay of the scale plus full pension; hence the Tribunal’s order granting additional increments is unsustainable.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Union of India v. G. Vasudevan Pillay, (1995) 2 SCC 32	Guiding authority relevant to the subject-matter of Civil Appeals Nos. 6872-6875 & 7622-7623 of 1994	The appellants, acknowledging this precedent, chose not to press those appeals; the Court dismissed them as not pressed.

Court's Reasoning and Analysis

The Court distinguished between the two policy instruments:

Government Order dated 8-2-1983: Governs the normal rule of pay fixation for re-employed ex-servicemen, stipulating that they receive the minimum of the pay scale plus their full pension (the pension being “ignored” for the act of fixing pay).
Office Memorandum dated 25-11-1958 (with clarification): Creates a discretionary mechanism to alleviate “hardship” by granting advance increments where the re-employed officer’s total income (minimum pay + pension + pension-equivalent of gratuity) falls below his last drawn military pay.

The Court observed that the OM explicitly refers to pension “whether ignorable or not,” demonstrating the drafter’s intent that pension — even if ignored for initial fixation — must nonetheless be counted when assessing hardship. Therefore, reading the two instruments harmoniously, the pension is:

Excluded for the limited purpose of calculating the starting basic pay, but
Included when determining whether the hardship threshold is reached.

Because the respondent’s combined remuneration (minimum pay plus full pension) did not fall short of his last military pay, the statutory condition of hardship was not met. Consequently, the Tribunal’s grant of additional increments was contrary to the regulatory framework.

Holding and Implications

Civil Appeals Nos. 6872-6875 & 7622-7623 of 1994: DISMISSED AS NOT PRESSED.

Civil Appeal No. 6890 of 1994: ALLOWED. The order of the Central Administrative Tribunal directing fixation of respondent’s initial pay with additional increments is set aside. No order as to costs.

Implications: The decision reaffirms the distinction between (a) ignoring pension for initial pay fixation and (b) including pension when evaluating financial hardship under the 1958 OM. It clarifies that ex-servicemen re-employed in civil posts cannot claim advance increments unless their combined pay and pension actually fall below last drawn military pay. The ruling applies the existing regulatory scheme without creating new precedent.

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Director General, Esi Corporation, New Delhi And Another v. M.P John And Others

Civil Appeals Nos. 6872-6875 & 7622-23 of 1994

1. Learned counsel for the appellants states that in view of the decision of this Court in Union of India v. G. Vasudevan Pillay (1995) 2 SCC 32, (1995) 29 ATC 180, JT (1995) 1 SC 417 they are not pressing these appeals. The appeals are dismissed as not pressed.

Civil Appeal No. 6890 of 1994

2. Respondent 1 who was an ex-serviceman was re-employed by the appellant-Corporation as a Lower Division Clerk. His pay was fixed at the minimum of the pay scale and he was also entitled to his full pension as an ex-serviceman. The government order of 8-2-1983, inter alia, provides that in the case of ex-servicemen who retire before attaining the age of 55 years and are re-employed (in the case of personnel below the rank of a commissioned officer) the entire pension may be ignored in fixing the pay on re-employment. This government order was in operation at the material time along with the office memorandum of 25-11-1958.

3. Under the office memorandum of 25-11-1958, re-employed pensioners were allowed only the prescribed scales of pay. The initial pay, on re-employment, was required to be fixed at the minimum of the scale of pay prescribed for the post in which the ex-serviceman was re-employed. However, it was provided that where the fixation of initial pay of a re-employed person, at the minimum of the prescribed scale of pay, would cause hardship, the pay may be fixed at a higher stage in the scale by allowing one increment for each year of service which the officer had rendered before retirement in a post not lower than that in which he was re-employed. Under the clarification which was issued pertaining to this office memorandum, “hardship” was defined as follows:

“There would be a case of hardship if on re-employment, the total amount received by the ex-serviceman, namely, the minimum of the pay scale plus pension and pension equivalent of gratuity, whether ignorable or not, is less than the last pay drawn at the time of the retirement.”

4. On 19-9-1985, another office memorandum was issued pertaining to the fixation of pay of re-employed pensioners (ex-servicemen). Under clause I, the pay of ex-servicemen up to the rank of non-commissioned officers re-employed on 25-1-1983 or thereafter, may be fixed at the minimum of the pay scale under the Government of India order dated 25-11-1958 and they will be entitled to draw full pension from Military Authorities subject to the fulfilment of other conditions as laid down in the order.

5. The respondent, in the present case, was re-employed on 29-1-1985 and his pay fixation on re-employment was done in accordance with the GO of 8-2-1983 and office memorandum of 25-11-1958. It is the contention of the respondent that under the GO of 8-2-1983, his pension has to be ignored in fixing his pay on re-employment. Hence his pension cannot be taken into account for the purpose of determining hardship under office memorandum of 25-11-1958. This contention does not appear to have any substance. The pension is required to be ignored for the purpose of pay fixation under the GO of 8-2-1983. The ex-serviceman who is so re-employed will get the minimum of the pay scale and in addition, he will also get his full pension as ex-serviceman from the Military Authorities. This is what is meant by stating that the pension will be ignored while fixing the pay on re-employment.

6. Office memorandum of 25-11-1958 is for a very different purpose. The GO of 25-11-1958 enables the employer to give certain increments in the prescribed pay scale to a re-employed ex-serviceman at the time of his joining in a case of hardship. This hardship is defined as arising if his pay on re-employment together with his pension falls short of his last-drawn pay while in military service. The office memorandum quite clearly refers to pension “whether ignorable or not”. Therefore, pension which is ignored for the purpose of determining the pay, may be considered under the GO of 25-11-1958 for the purpose of deciding if there is any financial hardship to the ex-serviceman. This cannot be considered as in any way in conflict with the GO of 8-2-1983 prescribing the grant of pay at the minimum of the scale on re-employment. The latter governs the pay which an ex-serviceman will draw in the ordinary course on re-employment. It also prescribes that in addition, he will get pension which has to be ignored for pay fixation. A departure from this norm of granting minimum in the pay scale is permissible only in the case of hardship and that too, to the extent permitted. There is no hardship as contemplated under the GO of 25-11-1958, in the case of the respondent. Hence his pay fixation under the GO of 8-2-1983 is proper.

7. The Tribunal was, therefore, not right in coming to the conclusion that the respondent's initial pay should be fixed by giving him one increment for each completed year of military service, ignoring his pension. The impugned order of the Tribunal is, therefore, set aside and the appeal is allowed. There will, however, be no order as to costs.

Director General, Esi Corporation, New Delhi And Another v. M.P John And Others

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Respondent’s Arguments

Appellant-Corporation’s Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Director General, Esi Corporation, New Delhi And Another v. M.P John And Others

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