[2024] 12 S.C.R. 1517 : 2024 INSC 1042 Union of India & Ors. v. N.M. Raut & Ors. (Civil Appeal No. 14380 of 2024) 12 December 2024 [Sanjiv Khanna, CJI and Sanjay Kumar, JJ.] Issue for Consideration Issue arose as regards interpretation and implementation of the Modified Assured Career Progression Scheme, 2008, and the financial upgradations granted under the MACPS. Headnotes† Service Law – Central Civil Services (Revised Pay) Rules, 2008 – Modified Assured Career Progression Scheme, 2008 – Financial upgradation – Non-functional financial upgradation – Counting of, to determine eligibility for financial upgradation under the MACPS – On implementation of the Revised Rules, some of the respondents working as Pharmacists in the Ordnance Factory, and Superintendents in the Central Board of Excise, became entitled to non-functional upgradation, on completion of two or four years of service respectively – One of them given three financial upgradations in terms of Grade Pay in less than 30 years of service but was again granted a further upgradation on 16.09.2012, upon completing 30 years in service – Correctness:

Held: Is clearly erroneous – Incumbent eligible Government employee should not take the benefit of both the timebound promotion scheme or in-situ promotion scheme as well as the benefit of financial upgradation under the MACPS – Respondents entitled to the benefits of the MACPS only after taking into consideration all the financial upgradations earned by them in terms of the CCS RP Rules – Financial upgradations under the Rules have to be accounted for and will be treated as financial upgradations earned for reckoning the 10-year intervals and the three assured financial upgradations, in terms of Grade Pay, under the MACPS – Non-functional higher Grade Pay has been awarded to employees on completion of a certain length of service in the lower pay-scale/ Grade Pay – Financial upgradation granted, after two or four years 1518 [2024] 12 S.C.R. Supreme Court Reports

of service, to Pharmacists or Superintendents, would indicate that they availed financial upgradation, which cannot be ignored for deciding the entitlement to the next financial benefit under the MACPS – To ignore the same would be contrary to the intent and purpose of the scheme, the language employed – In their cases, because of service conditions, the Government thought it proper to grant them such financial upgradation after they completed two or four years of service in the lower pay-scale/Grade Pay – Not the intention of the Government to ignore the said upgradation under the CCS RP Rules – Doing so, would be granting them additional benefits beyond what was envisaged and stated in the MACPS – Revised Pay Rules, including a grant of financial benefits, and the MACPS are not two watertight or separate compartments, each conferring independent benefits without reference to the other – Grant of financial upgradations as well as promotions are to be duly accounted for and taken into consideration in the MACPS – Anomalies arising because of the ACPS and MACPS operated during different periods cannot be a ground and reason to re-write or ignore the language and the intent and purpose behind the scheme – MACPS implemented and executed by granting benefits to the respondents and, later on, recoveries initiated – Recovery not to be effected from the retirees or those who retiring within one year from the date of the judgment – Recoveries may be made after issuing notice to the employee concerned – No interest to be charged on the amount to be recovered – Pension and the pay scale to be re-determined on the basis of the said judgment and to apply prospectively wef 01.01.2025 – Impugned judgments set aside. [Paras 11, 13-25]

Service Law – Modified Assured Career Progression Scheme, 2008-MACPS – Interpretation and implementation – Financial upgradation under – Criteria of eligibility – Explanation: Held: Objective purpose of the MACPS is that an employee should not remain stagnant in the same pay scale/Grade Pay for periods of 10, 20 or 30 years – Employee would be entitled to financial upgradation to the immediate next higher Grade Pay, as mentioned in Section 1, Part-A of the first Schedule to the CCS RP Rules – Benefit under the MACPS is available where the eligible employee has not got regular promotion, in such cases, he/she will be given financial upgradation – However, such financial upgradation is not the same as a pay-scale/Grade Pay, which is applicable to the next promotional post in the hierarchy of the concerned cadre/ organization. [Paras 12, 13] [2024] 12 S.C.R. 1519 Union of India & Ors. v. N.M. Raut & Ors. Service law – Modified Assured Career Progression Scheme, 2008 – Assured Career Progression Scheme – Difference – Explanation:

Held: Assured Career Progression Scheme-ACPS was introduced with effective from 09.08.1999 and continued to remain till 31.08.2008 – ACPS envisaged financial upgradations on completion of 12 years and 24 years of regular service without one or two promotions – Modified Assured Career Progression Scheme-MACPS envisaged three financial upgradations after completion of regular service of 10, 20, and 30 years without promotions and continuing on the same Grade Pay for a decade – Financial upgradation under the ACPS was to the pay scale of the next higher promotional post in the service – Under the MACPS, financial upgradation was not with reference to the next higher promotional post but to the next higher grade pay in the scale of pay, as notified upon the implementation of CCS RP Rules, 2008. [Para 3] Case Law Cited Union of India and Others v. M.V. Mohanan Nair [2020] 7 SCR 851 : (2020) 5 SCC 421; State of Punjab and Others v. Rafiq Masih (White Washer) and Others [2014] 13 SCR 1343 : (2015) 4 SCC 334 – relied on. Union of India v. R.K. Sharma and Others (2021) 5 SCC 579; Director, Directorate of Enforcement and Another v. K. Sudheesh Kumar and Others [2022] 2 SCR 720 : (2022) 3 SCC 649; Union of India and Others v. Ex.HC/GD Virender Singh [2022] 10 SCR 215 : (2022) SCC OnLine SC 1058; Union of India and others v. Balbir Singh Turn and another [2017] 12 SCR 421 : (2018) 11 SCC 99 – referred to. List of Acts Central Civil Services (Revised Pay) Rules, 2008.

List of Keywords Modified Assured Career Progression Scheme, 2008; Assured Career Progression Scheme, 1999; Non-functional financial upgradation; Time-bound promotion scheme; In-situ promotion scheme; Financial upgradation to next higher promotional post; Financial upgradation to next higher grade pay; Merger of pay scales; Financial upgradation; Schemes not run concurrently with MACPS. 1520 [2024] 12 S.C.R. Supreme Court Reports Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14380 of 2024 From the Judgment and Order dated 30.04.2020 of the High Court of Madhya Pradesh Principal Seat at Jabalpur in MP No.6012 of 2018 With Civil Appeal Nos.14378-14379, 14376-14377, 14374-14375, 14372-14373, 14370-14371, 14368-14369, 14366-14367, 14364-14365, 14362-14363, 14360-14361, 14359, 14358, 14353, 14354, 14355, 14356 and 14357 of 2024 Appearances for Parties

Ms. Aishwarya Bhati, Satya Darshi Sanjay, A.S.Gs., P. S. Patwalia, R Balasubramanian, V. Giri, Sr. Advs., Arjun Garg, Vikas Mehta, D.J. Bhanage, Nishant Anshul, Ms. Deveshi Chand, A Velan, Ms. Navpreet Kaur, Nilay Rai, Prince Singh, Ms. Shreya Jain, Ms. BLN Shivani, Mukesh Kumar Maroria, Shyam Gopal, Chinmayee Chandra, Siddhant Kohli, Pratyush Shrivastava, Siddhartha Dharmadhikari, R. Balasubranian, Gurmeet Singh Makker, Ms. Nidhi Khanna, Ms. Vimla Sinha, Ms. Aakanksha Kaul, Santosh Kumar, Annirudh Sharma-ii, Ms. Ruchi Kohli, Amit Sharma- B, Harshad Sundar, Mayank Kshirsagar, Ms. Kriti Gupta, Ms. Sagun Srivastava, Brahma Prakash Soni, Ponnam Mahesh Babu, Pratik R. Bombarde, Jitendra Kumar, Subhash Kumar, Ms. Kirti Anand, Rohit Verma, Samir Malik, Ankit Vashisht, Rajat Joseph, Ankur Chhibber, Hrishikesh S. Chitaley, Vijay Kari Singh, Kaustubh D. Kadasne, Chandra Prakash, Ms. Anuradha Mishra, Arvind Kumar, Abhay Kumar Mishra, Ankit Kumar Vats, Advs. for the appearing parties. Judgment / Order of the Supreme Court Judgment Civil Appeals @ SLP(C) Nos. 8015 of 2022, 10457-10458 of 2022, 11342-11343 of 2022, 10475-10476 of 2022, 10642-10643 of 2022, 12354-12355 of 2022, 15188-15189 of 2022, 10693-10694 of 2022, 10272-10273 of 2022, 11119-11120 of 2022, 11207-11208 of 2022, 2995 of 2023 and 2557 of 2023 [2024] 12 S.C.R. 1521 Union of India & Ors. v. N.M. Raut & Ors. 1. Leave granted.

2. This judgment decides the aforestated appeals, which are concerned with the interpretation and implementation of the Modified Assured Career Progression Scheme, 2008,1 applicable with effect from 01.09.2008. 3. The MACPS was considered by a Bench of three Judges of this Court in “Union of India and Others v. M.V. Mohanan Nair”2 and other connected matters. This judgment elaborately compared the MACPS with the Assured Career Progression Scheme,3 which was introduced with effect from 09.08.1999 and continued to remain in force till 31.08.2008. In a nutshell, this Court held that the MACPS differed from the ACPS on several aspects, including two significant ones. First, the ACPS envisaged financial upgradations on completion of 12 years and 24 years of regular service without one or two promotions, as the case may be, whereas the MACPS envisaged three financial upgradations after completion of regular service of 10, 20, and 30 years without promotions and continuing on the same Grade Pay for a decade. Second, the financial upgradation under the ACPS was to the pay scale of the next higher promotional post in the service whereas, under the MACPS, financial upgradation was not with reference to the next higher promotional post but to the next higher grade pay in the scale of pay, as notified upon implementation of the Central Civil Services (Revised Pay) Rules, 2008.4

4. The decision in M.V. Mohanan Nair (supra) was subsequently followed and elaborated upon by this Court in (i) “Union of India v. R.K. Sharma and Others;5 (ii) “Director, Directorate of Enforcement and Another v. K. Sudheesh Kumar and Others”;6 and (iii) “Union of India and Others v. Ex.HC/GD Virender Singh.”7 5. In K. Sudheesh Kumar (supra), this Court had specifically dealt with Clause 8.1 of the MACPS and observed that the next financial 1 For short, “MACPS.” 2 (2020) 5 SCC 421. 3 For short, “ACP.” 4 CCS RP Rules. 5 (2021) 5 SCC 579. 6 (2022) 3 SCC 649. 7 (2022) SCC OnLine SC 1058. 1522 [2024] 12 S.C.R. Supreme Court Reports upgradation in terms of Section 1, Part-A of the First Schedule to the CCS RP Rules, was from Pay Band8-2 with Grade pay of ₹5400 to PB-3 with Grade Pay of ₹5400. The argument that the pay-scale and the Grade Pay of ₹5400 was common was rejected in view of the clear stipulation in Clause 8.1 of the MACPS. The effect thereof would be that a person given financial upgradation under the MACPS from PB-2 with Grade Pay of ₹5400 to PB-3 with Grade Pay of ₹5400 will be entitled to an increment at the rate of 3%. 7. In the case of Ex.HC/GD Virender Singh (supra), the issue which had arisen was as to whether the MACPS was applicable and was to be implemented with effect from 01.01.2006, the date on which the CCS RP Rules, were enforced or was to be applied, in terms of O.M. dated 19.05.2009.

8. Ex.HC/GD Virender Singh (supra), observes that the MACPS would be applicable with effect from 01.09.2008. Upon considering the reasoning in M.V. Mohanan Nair (supra), it was held that the earlier decision of this Court in “Union of India and others v. Balbir Singh Turn and another”,9 was effectively overruled. It is relevant to refer to this settled position, as the arguments in the present cases primarily arise from the fact that the CCS RP Rules were enforced with effect from 01.01.2006 and granted certain benefits to the respondents in the form of revision or higher pay scales after completion of two or four years of service, as the case may be. 9. Ex.HC/GD Virender Singh (supra), following M.V. Mohanan Nair (supra) reiterated that under the MACPS, the eligible Government employees are entitled to financial upgradation equivalent to the immediate next Grade Pay in the hierarchy of the Pay Bands, as stated in Section 1, Part-A of the First Schedule to the CCS RP Rules. 10. In the present case, upon implementation of the CCS RP Rules, some of the respondents who were working as Pharmacists in the Ordnance Factory, and the others, who were working as Superintendents in the Central Board of Excise, became entitled to non-functional upgradation, on completion of two or four years of service respectively, in PB-2 with Grade Pay of ₹4200 and PB-2 8 For short, “PB”. 9 (2018) 11 SCC 99. [2024] 12 S.C.R. 1523 Union of India & Ors. v. N.M. Raut & Ors.

with Grade Pay of ₹5400 respectively. The earlier pay scale, before the grant of non-functional financial upgradation, was with the Grade Pay of ₹2800 and ₹4800 respectively. 11. In order to appreciate the controversy, we would refer to the factual position in the case of Devendra Saxena, one of the respondents before us: o He was appointed as an Inspector in the service on 16.09.1982. At the time of induction, his pay scale was ₹425-800, which was revised over time to ₹5500-9000. o In 1999, he was granted the first financial upgradation under the ACPS and he was given the promotional post scale of ₹6500-10500 with Grade Pay of ₹4200. o Pursuant to the Ministry’s letter dated 21.04.2004, he was then moved to the higher Grade Pay of ₹₹4800. Subsequently, on 18.07.2000, he was promoted to Superintendent, but his pay was not changed as he was already given the promotional scale of pay due to the upgradation under the ACPS, a year earlier. o Upon implementation of the CCS RP Rules, the post of Superintendent carried two pay scales. The first pay scale was in PB-2 with Grade Pay of ₹4800 and the second was PB-2 with Grade Pay of ₹5400. The Grade Pay of ₹5400 was applicable after four years of service in that post. As Devendra Saxena had already completed four years of service in the post of Superintendent, he was given PB-2 with Grade Pay of ₹5400 w.e.f. 01.01.2006.

o Thereafter, on 16.09.2006, as he completed 24 years of service, he was granted his second financial upgradation under the ACPS by giving him the promotional post scale of ₹8000-13500 in PB-3 with Grade Pay of ₹5400. o In effect, he was given three financial upgradations in terms of Grade Pay in less than 30 years of service but was again granted a further upgradation on 16.09.2012, upon completing 30 years in service, by giving him the Grade Pay of ₹6600. This was clearly erroneous. 12. It would be relevant to reproduce the relevant clauses of the MACPS, which read as under: 1524 [2024] 12 S.C.R. Supreme Court Reports “1. There shall be three financial upgradations under the MACPS, counted from the direct entry grade on completion of 10, 20 and 30 years service respectively. Financial upgradation under the Scheme will be admissible whenever a person has spent 10 years continuously in the same grade-pay.

2. The MACPS envisages merely placement in the immediate next higher grade pay in the hierarchy of the recommended revised pay bands and grade pay as given in Section 1, Part-A of the first schedule of the CCS (Revised Pay) Rules, 2008. Thus, the grade pay at the time of financial upgradation under the MACPS can, in certain cases where regular promotion is not between two successive grades, be different than what is available at the time of regular promotion. ln such cases, the higher grade pay attached to the next promotion post in the hierarchy of the concerned cadre/organisation will be given only at the time of regular promotion. xxx xxx xxx 5. Promotions earned/upgradation granted under the ACP Scheme in the past to those grades which now carry the same grade pay due to merger of pay scales/upgradations of posts recommended by the Sixth Pay Commission shall be ignored for the purpose of granting upgradations under Modified ACPS. Illustration-1 The pre-revised hierarchy (in ascending order) in a particular organization was as under:-₹5000-8000, ₹5500-9000 & ₹6500-10500. (a) A Government servant who was recruited in the hierarchy in the pre-revised pay scale Rs. 5000-8000 and who did not get a promotion even after 25 years of service prior to 1.1.2006,in his case as on 1.1.2006 he would have got two financial upgradations under ACP to the next grades in the hierarchy of his organization, Le., to [2024] 12 S.C.R. 1525 Union of India & Ors. v. N.M. Raut & Ors.

the pre-revised scales of Rs. 5500-9000 and Rs. 6500-10500. (b) Another Government servant recruited in the same hierarchy in the pre-revised scale of Rs. 5000-8000 has also completed about 25 years of service, but he got two promotions to the next higher grades of Rs. 5500-9000 & Rs. 6500-10500 during this period. In the case of both (a) and (b) above, the promotions/ financial upgradations granted under ACP to the pre-revised scales of Rs. 5500-9000 and Rs. 6500-10500 prior to 1.1.2006 will be ignored on account of merger of the pre-revised scales of Rs. 5000- 8000, Rs. 5500-9000 and Rs. 6500-10500 recommended by the Sixth CPC. As per CCS (RP) Rules, both of them will be granted grade pay of Rs.4200 in the pay band PB-2. After the implementation of MACPS, two financial upgradations will be granted both in the case of (a) and (b) above to the next higher grade pays of Rs. 4600 and Rs. 4800 in the pay band PB-2. 6. In the case of all the employees granted financial upgradations under ACPS till 01.01.2006, their revised pay will be fixed with reference to the pay scale granted to them under the ACPS. 6.1 xxx xxx xxx

6.2 In cases where financial upgradation had been granted to Government servants in the next higher scale in the hierarchy of their cadre as per the provisions of the ACP Scheme of August, 1999, but whereas as a result of the implementation of Sixth CPC’s recommendations, the next higher post in the hierarchy of the cadre has been upgraded by granting a higher grade pay, the pay of such employees in the revised pay structure will be fixed with reference to the higher grade pay granted to the post. To illustrate, in the case of Jr. Engineer in CPWD, who was granted 1st ACP in his hierarchy to the grade of Asstt. Engineer in the pre-revised scale of Rs.6500-10500 corresponding to the revised grade pay 1526 [2024] 12 S.C.R. Supreme Court Reports of Rs.4200 in the pay band PB-2, he win now be granted grade pay of Rs4600 in the pay band PB-2 consequent upon upgradation of the post of Asstt. Enggs. In CPWD by granting them the grade pay of Rs.4600 in PB-2 as a result of Sixth CPC’s recommendation. However, from the date of implementation of the MACPS, all the financial upgradations under the Scheme should be done strictly in accordance with the hierarchy of grade pays in pay bands as notified vide CCS (Revised Pay) Rules, 2008. xxx xxx xxx

9. ‘Regular service’ for the purposes of the MACPS shall commence from the date of joining of a post in direct entry grade on a regular basis either on direct recruitment basis or on absorption/re-employment basis. Service rendered on adhoc/contract basis before regular appointment on pre-appointment training shall not be taken into reckoning. However, past continuous regular service in another Government Department in a post carrying same grade pay prior to regular appointment in a new Department, without a break, shall also be counted towards qualifying regular service for the purposes of MACPS only (and not for the regular promotions). However, benefits under the MACPS in such cases shall not be considered till the satisfactory completion of the probation period in the new post. xxx xxx xxx 13. Existing time-bound promotion scheme, including in-situ promotion scheme, Staff’ Car Driver Scheme or any other kind of promotion scheme existing for a particular category of employees in a Ministry/Department or its offices, may continue to be operational for the concerned category of employees if it is decided by the concerned administrative authorities to retain such Schemes, after necessary consultations or they may switch-over to the MACPS. However, these Schemes shall not run concurrently with the MACPS. xxx xxx xxx [2024] 12 S.C.R. 1527 Union of India & Ors. v. N.M. Raut & Ors.

19. The MACPS contemplates merely placement on personal basis in the immediate higher Grade pay / grant of financial benefits only and shall not amount to actual/functional promotion of the employees concerned. Therefore, no reservation orders/roster shall apply to the MACPS, which shall extend its benefits uniformly to all eligible SC/ST employees also. However, the rules of reservation in promotion shall be ensured at the time of regular promotion. For this reason, it shall not be mandatory to associate members of SC/ST in the Screening Committee meant to consider cases for grant of financial upgradation under the Scheme. 20. Financial upgradation under the MACPS shall be purely personal to the employee and shall have no relevance to his seniority position. As such, there shall be no additional financial upgradation for the senior employees on the ground that the junior employee in the grade has got higher pay/grade pay under the MACPS. 21. Pay drawn in the pay band and the grade pay allowed under the MACPS shall be taken as the basis for determining the terminal benefits in respect of the retiring employee. xxx xxx xxx 28 Illustrations:

A. (i) If a Government servant (LDC) in PB-I in the Grade Pay of Rs.1900 gets his first regular promotion (UDC) in the PB-I in the Grade Pay of Rs.2400 on completion of 8 years of service and then continues in the same Grade Pay for further 10 years without any promotion then he would be eligible for 2nd financial upgradation under the MACPS in the PB-I in the Grade Pay of Rs.2800 after completion of 18 years (8+10 years). (ii) In case he does not get any promotion thereafter, then he would get 3rd financial upgradation in the PB-II in Grade Pay of Rs.4200 on completion of further 10 years of service i.e. after 28 years (8+10+10). 1528 [2024] 12 S.C.R. Supreme Court Reports (iii) However, if he gets 2nd promotion after 5 years of further service in the pay PB-II in the Grade Pay of Rs.4200 (Asstt. Grade/Grade “C”) i.e. on completion of 23 years (8+1O+5years) then he would get 3rd financial upgradation after completion of 30 years i.e. 10 years after the 2nd ACP in the PB-ll in the Grade Pay of Rs.4600.

B. If a Government servant (LDC) in PB-I in the Grade Pay of Rs.1900 is granted 1 st financial upgradation under the MACPS on completion of 10 years of service in the PB-l in the Grade Pay of Rs.2000 and 5 years later he gets 1 st regular promotion (UDC) in PB-I in the Grade Pay of Rs.2400, the 2nd financial upgradation under MACPS (in the next Grade Pay w.r.t. Grade Pay held by Government servant) will be granted on completion of 20 years of service in PB-I in the Grade Pay of Rs.2800. On completion of 30 years of service, he will get 3rd ACP in the Grade Pay of Rs. 4200. However, if two promotions are earned before completion of 20 years, only 3 rd financial upgradation would be admissible on completion of 10 years of service in Grade Pay from the date 2nd promotion or at 30th year of service, whichever is earlier. C. If a Government servant has been granted either two regular promotions or 2nd financial upgradation under the ACP Scheme of August, 1999 after completion of 24 years of regular service then only 3rd financial upgradation would be admissible to him under the MACPS on completion of 30 years of service provided that he has not earned third promotion in the hierarchy.”

13. A careful reading of the aforesaid clauses/provisions reflects the objective purpose of the MACPS, that is, that an employee should not remain stagnant in the same pay scale/Grade Pay for periods of 10, 20 or 30 years. In such cases, the employee would be entitled to financial upgradation to the immediate next higher Grade Pay, as mentioned in Section 1, Part-A of the first Schedule to the CCS [2024] 12 S.C.R. 1529 Union of India & Ors. v. N.M. Raut & Ors. RP Rules. Emphasis in clause 1 is on the expression “Grade Pay”. Clause 2, similarly, states that the benefit under the MACPS is available where the eligible employee has not got regular promotion. In such cases, he/she will be given financial upgradation. However, such financial upgradation is not the same as a pay-scale/Grade Pay, which is applicable to the next promotional post in the hierarchy of the concerned cadre/ organization.

14. Clause 5 states that the promotions earned/financial upgradations granted under the ACPS in the past shall be taken into account, but where there has been a merger of pay-scales/upgradation of posts recommended by the Sixth CPC, they shall be ignored for the purpose of granting upgradation under the MACPS. This has been explained by given examples A and B, which we have quoted above. At this stage, we would like to clarify that clause 5 will not be applicable to the cases in question. This is not a case of merger of pay-scales or upgradation of posts. On the other hand, this is a case wherein non-functional higher Grade Pay has been awarded to employees on completion of a certain length of service in the lower pay-scale/Grade Pay. We would, therefore, reject the contention of the respondents that, on implementation of the CCS RP Rules, upgrading the pay of Pharmacists and Superintendents, post the period of two or four years, would only amount to re-fixation of pay or revision of pay, as incorrect and, in essence, a wrong understanding of the CCS RP Rules.

15. Clause 6.2 specifically states that, where financial upgradation has been granted to the next higher pay-scale/Grade Pay in the hierarchy in the cadre as per the provisions of the ACPS, but as a result of the implementation of the Sixth CPC by grant of higher pay-scale/Grade Pay, the pay of such employees has been revised, such benefit will be given to the said employees. However, from the date of implementation of the MACPS, all financial upgradations would be done under the MACPS strictly in accordance with the hierarchy of the Grade Pay in the Pay Band, as notified vide CCS RP Rules. “Regular service” for the purpose of MACPS, commences from the date of joining the post in the direct entry grade on a regular service basis either on a direct recruitment basis or on an absorption/re-employment basis. 16. Clause 13 of the MACPS states that any time-bound promotion scheme, including in-situ promotion scheme, which is in force, may 1530 [2024] 12 S.C.R. Supreme Court Reports

continue to be in operation for the concerned category of employees if it is decided by the concerned administrative authorities to retain such schemes. However, such schemes cannot run concurrently with the MACPS. The objective is clear. An incumbent eligible Government employee should not take the benefit of both - the time-bound promotion scheme or in-situ promotion scheme as well as the benefit of financial upgradation under the MACPS. We have specifically referred to clause 13 for, in our opinion, the financial upgradation which is granted, after two or four years of service, to Pharmacists or Superintendents, would indicate that they availed financial upgradation. In their cases, because of service conditions, the Government had thought it proper to grant them such financial upgradation after they completed two or four years of service in the lower pay-scale/Grade Pay. It is not the intention of the Government to ignore the said upgradation under the CCS RP Rules. If we do so, we would be granting them additional benefits beyond what was envisaged and stated in the MACPS. The Revised Pay Rules, including a grant of financial benefits, and the MACPS are not two watertight or separate compartments, each conferring independent benefits without reference to the other. Grant of financial upgradations as well as promotions are to be duly accounted for and taken into consideration in the MACPS.

17. Clauses 19 and 20 specify that the financial upgradation is purely personal and has no relevance to the seniority position. Grade Pay/ grant of financial benefits shall not amount to actual or functional promotion of the employees concerned. Roster point etc. will not be applicable. 18. Clause 21 states that the pay drawn in the Pay Band and Grade Pay allowed under the MACPS shall be taken as the basis for determining the terminal benefits in respect of the retiring employees. 19. The illustrations in Clause 28 clearly affirm the view we have taken and are in accord with what we have stated above. 20. In view of the aforesaid position of the MACPS, we fail to understand how we can ignore the financial upgradation, which was granted upon completion of two or four years of service in the posts of Pharmacist or Superintendent, as the case may be, for the purpose of deciding as to whether or not the Government employee would [2024] 12 S.C.R. 1531 Union of India & Ors. v. N.M. Raut & Ors.

be entitled to the next financial benefit under the MACPS. To ignore the financial upgradation granted on completion of two or four years of service as Pharmacists or Superintendents, would be contrary to the intent and purpose of the scheme, the language employed as well as the examples/illustrations which have been given. No doubt, certain anomalies may arise because of the fact that the ACPS and MACPS did operate during different periods; the nature of financial upgradations was different; and the time periods specified for financial upgradation were different, but this cannot be a ground and reason to re-write or ignore the expressed language of the MACPS and the intent and purpose behind the scheme. Read in this light, we have no difficulty in accepting the present appeal and setting aside the impugned judgments. Hence, we allow the present appeals. 21. In other words, the respondents would be entitled to the benefits of the MACPS only after taking into consideration all the financial upgradations earned by them, in terms of the CCS RP Rules. Financial upgradations under the said Rules have to be accounted for and will be treated as financial upgradations earned for the purpose of reckoning the 10-year intervals and the three assured financial upgradations, in terms of Grade Pay, under the MACPS.

22. We are informed that, in the present case, the Government of India had implemented and executed the MACPS by granting benefits to the respondents and, later on, recoveries were initiated. As many of the employees may have retired, in terms of the decision of this Court in “State of Punjab and Others vs. Rafiq Masih (White Washer) and Others,10 we deem it appropriate to direct that the Union of India will not effect any recovery of arrears from the retirees or those who are retiring within one year from the date of pronouncement of this judgment. 23. In other cases, the recoveries may be made after issuing notice to the employee concerned, whose request for proportionate recovery over a period of time not exceeding two years, may be considered depending upon the quantum of recovery which is to be made. We also deem it appropriate to direct that the appellant, Union of India, will not charge interest on the amount to be recovered as they 10 (2015) 4 SCC 334 1532 [2024] 12 S.C.R. Supreme Court Reports themselves had made the payment and, the issue being debatable, to ask the employees to pay interest at this distant point of time may lead to difficulty both in calculation as well as in payment. 24. However, it is clarified that the pension and the pay scale, which are payable shall be re-determined on the basis of this judgment and will apply prospectively with effect from 01.01.2025.

25. Where recoveries have been made from the retirees, the same shall be refunded. However, in the case of serving employees, where recoveries have been made, the same need not be refunded. 26. We also clarify that we have not made any comments or observations on any petition/appeal which is filed challenging the validity and legality of Clause 8.1 of the MACPS. 27. Pending application(s), including applications for impleadment/ intervention, if any, shall stand disposed of. Civil Appeals @SLP(C) Nos. 3197 of 2024, 3198 of 2024, 9604 of 2024, 12060 of 2024 and 12261 of 2024) Leave granted. The present appeals are disposed of in terms of the judgment passed in Civil Appeal @ SLP (C) 8015/2022. Pending application(s), including applications for impleadment/ intervention, if any, shall stand disposed of. Result of the case: Appeals disposed of. †Headnotes prepared by: Nidhi Jain

[2024] 12 S.C.R. 1517 : 2024 INSC 1042 Union of India & Ors. v. N.M. Raut & Ors. (Civil Appeal No. 14380 of 2024) 12 December 2024 [Sanjiv Khanna, CJI and Sanjay Kumar, JJ.] Issue for Consideration Issue arose as regards interpretation and implementation of the Modified Assured Career Progression Scheme, 2008, and the financial upgradations granted under the MACPS. Headnotes† Service Law – Central Civil Services (Revised Pay) Rules, 2008 – Modified Assured Career Progression Scheme, 2008 – Financial upgradation – Non-functional financial upgradation – Counting of, to determine eligibility for financial upgradation under the MACPS – On implementation of the Revised Rules, some of the respondents working as Pharmacists in the Ordnance Factory, and Superintendents in the Central Board of Excise, became entitled to non-functional upgradation, on completion of two or four years of service respectively – One of them given three financial upgradations in terms of Grade Pay in less than 30 years of service but was again granted a further upgradation on 16.09.2012, upon completing 30 years in service – Correctness:

Held: Is clearly erroneous – Incumbent eligible Government employee should not take the benefit of both the timebound promotion scheme or in-situ promotion scheme as well as the benefit of financial upgradation under the MACPS – Respondents entitled to the benefits of the MACPS only after taking into consideration all the financial upgradations earned by them in terms of the CCS RP Rules – Financial upgradations under the Rules have to be accounted for and will be treated as financial upgradations earned for reckoning the 10-year intervals and the three assured financial upgradations, in terms of Grade Pay, under the MACPS – Non-functional higher Grade Pay has been awarded to employees on completion of a certain length of service in the lower pay-scale/ Grade Pay – Financial upgradation granted, after two or four years 1518 [2024] 12 S.C.R. Supreme Court Reports

of service, to Pharmacists or Superintendents, would indicate that they availed financial upgradation, which cannot be ignored for deciding the entitlement to the next financial benefit under the MACPS – To ignore the same would be contrary to the intent and purpose of the scheme, the language employed – In their cases, because of service conditions, the Government thought it proper to grant them such financial upgradation after they completed two or four years of service in the lower pay-scale/Grade Pay – Not the intention of the Government to ignore the said upgradation under the CCS RP Rules – Doing so, would be granting them additional benefits beyond what was envisaged and stated in the MACPS – Revised Pay Rules, including a grant of financial benefits, and the MACPS are not two watertight or separate compartments, each conferring independent benefits without reference to the other – Grant of financial upgradations as well as promotions are to be duly accounted for and taken into consideration in the MACPS – Anomalies arising because of the ACPS and MACPS operated during different periods cannot be a ground and reason to re-write or ignore the language and the intent and purpose behind the scheme – MACPS implemented and executed by granting benefits to the respondents and, later on, recoveries initiated – Recovery not to be effected from the retirees or those who retiring within one year from the date of the judgment – Recoveries may be made after issuing notice to the employee concerned – No interest to be charged on the amount to be recovered – Pension and the pay scale to be re-determined on the basis of the said judgment and to apply prospectively wef 01.01.2025 – Impugned judgments set aside. [Paras 11, 13-25]

Service Law – Modified Assured Career Progression Scheme, 2008-MACPS – Interpretation and implementation – Financial upgradation under – Criteria of eligibility – Explanation: Held: Objective purpose of the MACPS is that an employee should not remain stagnant in the same pay scale/Grade Pay for periods of 10, 20 or 30 years – Employee would be entitled to financial upgradation to the immediate next higher Grade Pay, as mentioned in Section 1, Part-A of the first Schedule to the CCS RP Rules – Benefit under the MACPS is available where the eligible employee has not got regular promotion, in such cases, he/she will be given financial upgradation – However, such financial upgradation is not the same as a pay-scale/Grade Pay, which is applicable to the next promotional post in the hierarchy of the concerned cadre/ organization. [Paras 12, 13] [2024] 12 S.C.R. 1519 Union of India & Ors. v. N.M. Raut & Ors. Service law – Modified Assured Career Progression Scheme, 2008 – Assured Career Progression Scheme – Difference – Explanation:

Held: Assured Career Progression Scheme-ACPS was introduced with effective from 09.08.1999 and continued to remain till 31.08.2008 – ACPS envisaged financial upgradations on completion of 12 years and 24 years of regular service without one or two promotions – Modified Assured Career Progression Scheme-MACPS envisaged three financial upgradations after completion of regular service of 10, 20, and 30 years without promotions and continuing on the same Grade Pay for a decade – Financial upgradation under the ACPS was to the pay scale of the next higher promotional post in the service – Under the MACPS, financial upgradation was not with reference to the next higher promotional post but to the next higher grade pay in the scale of pay, as notified upon the implementation of CCS RP Rules, 2008. [Para 3] Case Law Cited Union of India and Others v. M.V. Mohanan Nair [2020] 7 SCR 851 : (2020) 5 SCC 421; State of Punjab and Others v. Rafiq Masih (White Washer) and Others [2014] 13 SCR 1343 : (2015) 4 SCC 334 – relied on. Union of India v. R.K. Sharma and Others (2021) 5 SCC 579; Director, Directorate of Enforcement and Another v. K. Sudheesh Kumar and Others [2022] 2 SCR 720 : (2022) 3 SCC 649; Union of India and Others v. Ex.HC/GD Virender Singh [2022] 10 SCR 215 : (2022) SCC OnLine SC 1058; Union of India and others v. Balbir Singh Turn and another [2017] 12 SCR 421 : (2018) 11 SCC 99 – referred to. List of Acts Central Civil Services (Revised Pay) Rules, 2008.

List of Keywords Modified Assured Career Progression Scheme, 2008; Assured Career Progression Scheme, 1999; Non-functional financial upgradation; Time-bound promotion scheme; In-situ promotion scheme; Financial upgradation to next higher promotional post; Financial upgradation to next higher grade pay; Merger of pay scales; Financial upgradation; Schemes not run concurrently with MACPS. 1520 [2024] 12 S.C.R. Supreme Court Reports Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14380 of 2024 From the Judgment and Order dated 30.04.2020 of the High Court of Madhya Pradesh Principal Seat at Jabalpur in MP No.6012 of 2018 With Civil Appeal Nos.14378-14379, 14376-14377, 14374-14375, 14372-14373, 14370-14371, 14368-14369, 14366-14367, 14364-14365, 14362-14363, 14360-14361, 14359, 14358, 14353, 14354, 14355, 14356 and 14357 of 2024 Appearances for Parties

Ms. Aishwarya Bhati, Satya Darshi Sanjay, A.S.Gs., P. S. Patwalia, R Balasubramanian, V. Giri, Sr. Advs., Arjun Garg, Vikas Mehta, D.J. Bhanage, Nishant Anshul, Ms. Deveshi Chand, A Velan, Ms. Navpreet Kaur, Nilay Rai, Prince Singh, Ms. Shreya Jain, Ms. BLN Shivani, Mukesh Kumar Maroria, Shyam Gopal, Chinmayee Chandra, Siddhant Kohli, Pratyush Shrivastava, Siddhartha Dharmadhikari, R. Balasubranian, Gurmeet Singh Makker, Ms. Nidhi Khanna, Ms. Vimla Sinha, Ms. Aakanksha Kaul, Santosh Kumar, Annirudh Sharma-ii, Ms. Ruchi Kohli, Amit Sharma- B, Harshad Sundar, Mayank Kshirsagar, Ms. Kriti Gupta, Ms. Sagun Srivastava, Brahma Prakash Soni, Ponnam Mahesh Babu, Pratik R. Bombarde, Jitendra Kumar, Subhash Kumar, Ms. Kirti Anand, Rohit Verma, Samir Malik, Ankit Vashisht, Rajat Joseph, Ankur Chhibber, Hrishikesh S. Chitaley, Vijay Kari Singh, Kaustubh D. Kadasne, Chandra Prakash, Ms. Anuradha Mishra, Arvind Kumar, Abhay Kumar Mishra, Ankit Kumar Vats, Advs. for the appearing parties. Judgment / Order of the Supreme Court Judgment Civil Appeals @ SLP(C) Nos. 8015 of 2022, 10457-10458 of 2022, 11342-11343 of 2022, 10475-10476 of 2022, 10642-10643 of 2022, 12354-12355 of 2022, 15188-15189 of 2022, 10693-10694 of 2022, 10272-10273 of 2022, 11119-11120 of 2022, 11207-11208 of 2022, 2995 of 2023 and 2557 of 2023 [2024] 12 S.C.R. 1521 Union of India & Ors. v. N.M. Raut & Ors. 1. Leave granted.

2. This judgment decides the aforestated appeals, which are concerned with the interpretation and implementation of the Modified Assured Career Progression Scheme, 2008,1 applicable with effect from 01.09.2008. 3. The MACPS was considered by a Bench of three Judges of this Court in “Union of India and Others v. M.V. Mohanan Nair”2 and other connected matters. This judgment elaborately compared the MACPS with the Assured Career Progression Scheme,3 which was introduced with effect from 09.08.1999 and continued to remain in force till 31.08.2008. In a nutshell, this Court held that the MACPS differed from the ACPS on several aspects, including two significant ones. First, the ACPS envisaged financial upgradations on completion of 12 years and 24 years of regular service without one or two promotions, as the case may be, whereas the MACPS envisaged three financial upgradations after completion of regular service of 10, 20, and 30 years without promotions and continuing on the same Grade Pay for a decade. Second, the financial upgradation under the ACPS was to the pay scale of the next higher promotional post in the service whereas, under the MACPS, financial upgradation was not with reference to the next higher promotional post but to the next higher grade pay in the scale of pay, as notified upon implementation of the Central Civil Services (Revised Pay) Rules, 2008.4

4. The decision in M.V. Mohanan Nair (supra) was subsequently followed and elaborated upon by this Court in (i) “Union of India v. R.K. Sharma and Others;5 (ii) “Director, Directorate of Enforcement and Another v. K. Sudheesh Kumar and Others”;6 and (iii) “Union of India and Others v. Ex.HC/GD Virender Singh.”7 5. In K. Sudheesh Kumar (supra), this Court had specifically dealt with Clause 8.1 of the MACPS and observed that the next financial 1 For short, “MACPS.” 2 (2020) 5 SCC 421. 3 For short, “ACP.” 4 CCS RP Rules. 5 (2021) 5 SCC 579. 6 (2022) 3 SCC 649. 7 (2022) SCC OnLine SC 1058. 1522 [2024] 12 S.C.R. Supreme Court Reports upgradation in terms of Section 1, Part-A of the First Schedule to the CCS RP Rules, was from Pay Band8-2 with Grade pay of ₹5400 to PB-3 with Grade Pay of ₹5400. The argument that the pay-scale and the Grade Pay of ₹5400 was common was rejected in view of the clear stipulation in Clause 8.1 of the MACPS. The effect thereof would be that a person given financial upgradation under the MACPS from PB-2 with Grade Pay of ₹5400 to PB-3 with Grade Pay of ₹5400 will be entitled to an increment at the rate of 3%. 7. In the case of Ex.HC/GD Virender Singh (supra), the issue which had arisen was as to whether the MACPS was applicable and was to be implemented with effect from 01.01.2006, the date on which the CCS RP Rules, were enforced or was to be applied, in terms of O.M. dated 19.05.2009.

8. Ex.HC/GD Virender Singh (supra), observes that the MACPS would be applicable with effect from 01.09.2008. Upon considering the reasoning in M.V. Mohanan Nair (supra), it was held that the earlier decision of this Court in “Union of India and others v. Balbir Singh Turn and another”,9 was effectively overruled. It is relevant to refer to this settled position, as the arguments in the present cases primarily arise from the fact that the CCS RP Rules were enforced with effect from 01.01.2006 and granted certain benefits to the respondents in the form of revision or higher pay scales after completion of two or four years of service, as the case may be. 9. Ex.HC/GD Virender Singh (supra), following M.V. Mohanan Nair (supra) reiterated that under the MACPS, the eligible Government employees are entitled to financial upgradation equivalent to the immediate next Grade Pay in the hierarchy of the Pay Bands, as stated in Section 1, Part-A of the First Schedule to the CCS RP Rules. 10. In the present case, upon implementation of the CCS RP Rules, some of the respondents who were working as Pharmacists in the Ordnance Factory, and the others, who were working as Superintendents in the Central Board of Excise, became entitled to non-functional upgradation, on completion of two or four years of service respectively, in PB-2 with Grade Pay of ₹4200 and PB-2 8 For short, “PB”. 9 (2018) 11 SCC 99. [2024] 12 S.C.R. 1523 Union of India & Ors. v. N.M. Raut & Ors.

with Grade Pay of ₹5400 respectively. The earlier pay scale, before the grant of non-functional financial upgradation, was with the Grade Pay of ₹2800 and ₹4800 respectively. 11. In order to appreciate the controversy, we would refer to the factual position in the case of Devendra Saxena, one of the respondents before us: o He was appointed as an Inspector in the service on 16.09.1982. At the time of induction, his pay scale was ₹425-800, which was revised over time to ₹5500-9000. o In 1999, he was granted the first financial upgradation under the ACPS and he was given the promotional post scale of ₹6500-10500 with Grade Pay of ₹4200. o Pursuant to the Ministry’s letter dated 21.04.2004, he was then moved to the higher Grade Pay of ₹₹4800. Subsequently, on 18.07.2000, he was promoted to Superintendent, but his pay was not changed as he was already given the promotional scale of pay due to the upgradation under the ACPS, a year earlier. o Upon implementation of the CCS RP Rules, the post of Superintendent carried two pay scales. The first pay scale was in PB-2 with Grade Pay of ₹4800 and the second was PB-2 with Grade Pay of ₹5400. The Grade Pay of ₹5400 was applicable after four years of service in that post. As Devendra Saxena had already completed four years of service in the post of Superintendent, he was given PB-2 with Grade Pay of ₹5400 w.e.f. 01.01.2006.

o Thereafter, on 16.09.2006, as he completed 24 years of service, he was granted his second financial upgradation under the ACPS by giving him the promotional post scale of ₹8000-13500 in PB-3 with Grade Pay of ₹5400. o In effect, he was given three financial upgradations in terms of Grade Pay in less than 30 years of service but was again granted a further upgradation on 16.09.2012, upon completing 30 years in service, by giving him the Grade Pay of ₹6600. This was clearly erroneous. 12. It would be relevant to reproduce the relevant clauses of the MACPS, which read as under: 1524 [2024] 12 S.C.R. Supreme Court Reports “1. There shall be three financial upgradations under the MACPS, counted from the direct entry grade on completion of 10, 20 and 30 years service respectively. Financial upgradation under the Scheme will be admissible whenever a person has spent 10 years continuously in the same grade-pay.

2. The MACPS envisages merely placement in the immediate next higher grade pay in the hierarchy of the recommended revised pay bands and grade pay as given in Section 1, Part-A of the first schedule of the CCS (Revised Pay) Rules, 2008. Thus, the grade pay at the time of financial upgradation under the MACPS can, in certain cases where regular promotion is not between two successive grades, be different than what is available at the time of regular promotion. ln such cases, the higher grade pay attached to the next promotion post in the hierarchy of the concerned cadre/organisation will be given only at the time of regular promotion. xxx xxx xxx 5. Promotions earned/upgradation granted under the ACP Scheme in the past to those grades which now carry the same grade pay due to merger of pay scales/upgradations of posts recommended by the Sixth Pay Commission shall be ignored for the purpose of granting upgradations under Modified ACPS. Illustration-1 The pre-revised hierarchy (in ascending order) in a particular organization was as under:-₹5000-8000, ₹5500-9000 & ₹6500-10500. (a) A Government servant who was recruited in the hierarchy in the pre-revised pay scale Rs. 5000-8000 and who did not get a promotion even after 25 years of service prior to 1.1.2006,in his case as on 1.1.2006 he would have got two financial upgradations under ACP to the next grades in the hierarchy of his organization, Le., to [2024] 12 S.C.R. 1525 Union of India & Ors. v. N.M. Raut & Ors.

the pre-revised scales of Rs. 5500-9000 and Rs. 6500-10500. (b) Another Government servant recruited in the same hierarchy in the pre-revised scale of Rs. 5000-8000 has also completed about 25 years of service, but he got two promotions to the next higher grades of Rs. 5500-9000 & Rs. 6500-10500 during this period. In the case of both (a) and (b) above, the promotions/ financial upgradations granted under ACP to the pre-revised scales of Rs. 5500-9000 and Rs. 6500-10500 prior to 1.1.2006 will be ignored on account of merger of the pre-revised scales of Rs. 5000- 8000, Rs. 5500-9000 and Rs. 6500-10500 recommended by the Sixth CPC. As per CCS (RP) Rules, both of them will be granted grade pay of Rs.4200 in the pay band PB-2. After the implementation of MACPS, two financial upgradations will be granted both in the case of (a) and (b) above to the next higher grade pays of Rs. 4600 and Rs. 4800 in the pay band PB-2. 6. In the case of all the employees granted financial upgradations under ACPS till 01.01.2006, their revised pay will be fixed with reference to the pay scale granted to them under the ACPS. 6.1 xxx xxx xxx

6.2 In cases where financial upgradation had been granted to Government servants in the next higher scale in the hierarchy of their cadre as per the provisions of the ACP Scheme of August, 1999, but whereas as a result of the implementation of Sixth CPC’s recommendations, the next higher post in the hierarchy of the cadre has been upgraded by granting a higher grade pay, the pay of such employees in the revised pay structure will be fixed with reference to the higher grade pay granted to the post. To illustrate, in the case of Jr. Engineer in CPWD, who was granted 1st ACP in his hierarchy to the grade of Asstt. Engineer in the pre-revised scale of Rs.6500-10500 corresponding to the revised grade pay 1526 [2024] 12 S.C.R. Supreme Court Reports of Rs.4200 in the pay band PB-2, he win now be granted grade pay of Rs4600 in the pay band PB-2 consequent upon upgradation of the post of Asstt. Enggs. In CPWD by granting them the grade pay of Rs.4600 in PB-2 as a result of Sixth CPC’s recommendation. However, from the date of implementation of the MACPS, all the financial upgradations under the Scheme should be done strictly in accordance with the hierarchy of grade pays in pay bands as notified vide CCS (Revised Pay) Rules, 2008. xxx xxx xxx

9. ‘Regular service’ for the purposes of the MACPS shall commence from the date of joining of a post in direct entry grade on a regular basis either on direct recruitment basis or on absorption/re-employment basis. Service rendered on adhoc/contract basis before regular appointment on pre-appointment training shall not be taken into reckoning. However, past continuous regular service in another Government Department in a post carrying same grade pay prior to regular appointment in a new Department, without a break, shall also be counted towards qualifying regular service for the purposes of MACPS only (and not for the regular promotions). However, benefits under the MACPS in such cases shall not be considered till the satisfactory completion of the probation period in the new post. xxx xxx xxx 13. Existing time-bound promotion scheme, including in-situ promotion scheme, Staff’ Car Driver Scheme or any other kind of promotion scheme existing for a particular category of employees in a Ministry/Department or its offices, may continue to be operational for the concerned category of employees if it is decided by the concerned administrative authorities to retain such Schemes, after necessary consultations or they may switch-over to the MACPS. However, these Schemes shall not run concurrently with the MACPS. xxx xxx xxx [2024] 12 S.C.R. 1527 Union of India & Ors. v. N.M. Raut & Ors.

19. The MACPS contemplates merely placement on personal basis in the immediate higher Grade pay / grant of financial benefits only and shall not amount to actual/functional promotion of the employees concerned. Therefore, no reservation orders/roster shall apply to the MACPS, which shall extend its benefits uniformly to all eligible SC/ST employees also. However, the rules of reservation in promotion shall be ensured at the time of regular promotion. For this reason, it shall not be mandatory to associate members of SC/ST in the Screening Committee meant to consider cases for grant of financial upgradation under the Scheme. 20. Financial upgradation under the MACPS shall be purely personal to the employee and shall have no relevance to his seniority position. As such, there shall be no additional financial upgradation for the senior employees on the ground that the junior employee in the grade has got higher pay/grade pay under the MACPS. 21. Pay drawn in the pay band and the grade pay allowed under the MACPS shall be taken as the basis for determining the terminal benefits in respect of the retiring employee. xxx xxx xxx 28 Illustrations:

A. (i) If a Government servant (LDC) in PB-I in the Grade Pay of Rs.1900 gets his first regular promotion (UDC) in the PB-I in the Grade Pay of Rs.2400 on completion of 8 years of service and then continues in the same Grade Pay for further 10 years without any promotion then he would be eligible for 2nd financial upgradation under the MACPS in the PB-I in the Grade Pay of Rs.2800 after completion of 18 years (8+10 years). (ii) In case he does not get any promotion thereafter, then he would get 3rd financial upgradation in the PB-II in Grade Pay of Rs.4200 on completion of further 10 years of service i.e. after 28 years (8+10+10). 1528 [2024] 12 S.C.R. Supreme Court Reports (iii) However, if he gets 2nd promotion after 5 years of further service in the pay PB-II in the Grade Pay of Rs.4200 (Asstt. Grade/Grade “C”) i.e. on completion of 23 years (8+1O+5years) then he would get 3rd financial upgradation after completion of 30 years i.e. 10 years after the 2nd ACP in the PB-ll in the Grade Pay of Rs.4600.

B. If a Government servant (LDC) in PB-I in the Grade Pay of Rs.1900 is granted 1 st financial upgradation under the MACPS on completion of 10 years of service in the PB-l in the Grade Pay of Rs.2000 and 5 years later he gets 1 st regular promotion (UDC) in PB-I in the Grade Pay of Rs.2400, the 2nd financial upgradation under MACPS (in the next Grade Pay w.r.t. Grade Pay held by Government servant) will be granted on completion of 20 years of service in PB-I in the Grade Pay of Rs.2800. On completion of 30 years of service, he will get 3rd ACP in the Grade Pay of Rs. 4200. However, if two promotions are earned before completion of 20 years, only 3 rd financial upgradation would be admissible on completion of 10 years of service in Grade Pay from the date 2nd promotion or at 30th year of service, whichever is earlier. C. If a Government servant has been granted either two regular promotions or 2nd financial upgradation under the ACP Scheme of August, 1999 after completion of 24 years of regular service then only 3rd financial upgradation would be admissible to him under the MACPS on completion of 30 years of service provided that he has not earned third promotion in the hierarchy.”

13. A careful reading of the aforesaid clauses/provisions reflects the objective purpose of the MACPS, that is, that an employee should not remain stagnant in the same pay scale/Grade Pay for periods of 10, 20 or 30 years. In such cases, the employee would be entitled to financial upgradation to the immediate next higher Grade Pay, as mentioned in Section 1, Part-A of the first Schedule to the CCS [2024] 12 S.C.R. 1529 Union of India & Ors. v. N.M. Raut & Ors. RP Rules. Emphasis in clause 1 is on the expression “Grade Pay”. Clause 2, similarly, states that the benefit under the MACPS is available where the eligible employee has not got regular promotion. In such cases, he/she will be given financial upgradation. However, such financial upgradation is not the same as a pay-scale/Grade Pay, which is applicable to the next promotional post in the hierarchy of the concerned cadre/ organization.

14. Clause 5 states that the promotions earned/financial upgradations granted under the ACPS in the past shall be taken into account, but where there has been a merger of pay-scales/upgradation of posts recommended by the Sixth CPC, they shall be ignored for the purpose of granting upgradation under the MACPS. This has been explained by given examples A and B, which we have quoted above. At this stage, we would like to clarify that clause 5 will not be applicable to the cases in question. This is not a case of merger of pay-scales or upgradation of posts. On the other hand, this is a case wherein non-functional higher Grade Pay has been awarded to employees on completion of a certain length of service in the lower pay-scale/Grade Pay. We would, therefore, reject the contention of the respondents that, on implementation of the CCS RP Rules, upgrading the pay of Pharmacists and Superintendents, post the period of two or four years, would only amount to re-fixation of pay or revision of pay, as incorrect and, in essence, a wrong understanding of the CCS RP Rules.

15. Clause 6.2 specifically states that, where financial upgradation has been granted to the next higher pay-scale/Grade Pay in the hierarchy in the cadre as per the provisions of the ACPS, but as a result of the implementation of the Sixth CPC by grant of higher pay-scale/Grade Pay, the pay of such employees has been revised, such benefit will be given to the said employees. However, from the date of implementation of the MACPS, all financial upgradations would be done under the MACPS strictly in accordance with the hierarchy of the Grade Pay in the Pay Band, as notified vide CCS RP Rules. “Regular service” for the purpose of MACPS, commences from the date of joining the post in the direct entry grade on a regular service basis either on a direct recruitment basis or on an absorption/re-employment basis. 16. Clause 13 of the MACPS states that any time-bound promotion scheme, including in-situ promotion scheme, which is in force, may 1530 [2024] 12 S.C.R. Supreme Court Reports

continue to be in operation for the concerned category of employees if it is decided by the concerned administrative authorities to retain such schemes. However, such schemes cannot run concurrently with the MACPS. The objective is clear. An incumbent eligible Government employee should not take the benefit of both - the time-bound promotion scheme or in-situ promotion scheme as well as the benefit of financial upgradation under the MACPS. We have specifically referred to clause 13 for, in our opinion, the financial upgradation which is granted, after two or four years of service, to Pharmacists or Superintendents, would indicate that they availed financial upgradation. In their cases, because of service conditions, the Government had thought it proper to grant them such financial upgradation after they completed two or four years of service in the lower pay-scale/Grade Pay. It is not the intention of the Government to ignore the said upgradation under the CCS RP Rules. If we do so, we would be granting them additional benefits beyond what was envisaged and stated in the MACPS. The Revised Pay Rules, including a grant of financial benefits, and the MACPS are not two watertight or separate compartments, each conferring independent benefits without reference to the other. Grant of financial upgradations as well as promotions are to be duly accounted for and taken into consideration in the MACPS.

17. Clauses 19 and 20 specify that the financial upgradation is purely personal and has no relevance to the seniority position. Grade Pay/ grant of financial benefits shall not amount to actual or functional promotion of the employees concerned. Roster point etc. will not be applicable. 18. Clause 21 states that the pay drawn in the Pay Band and Grade Pay allowed under the MACPS shall be taken as the basis for determining the terminal benefits in respect of the retiring employees. 19. The illustrations in Clause 28 clearly affirm the view we have taken and are in accord with what we have stated above. 20. In view of the aforesaid position of the MACPS, we fail to understand how we can ignore the financial upgradation, which was granted upon completion of two or four years of service in the posts of Pharmacist or Superintendent, as the case may be, for the purpose of deciding as to whether or not the Government employee would [2024] 12 S.C.R. 1531 Union of India & Ors. v. N.M. Raut & Ors.

be entitled to the next financial benefit under the MACPS. To ignore the financial upgradation granted on completion of two or four years of service as Pharmacists or Superintendents, would be contrary to the intent and purpose of the scheme, the language employed as well as the examples/illustrations which have been given. No doubt, certain anomalies may arise because of the fact that the ACPS and MACPS did operate during different periods; the nature of financial upgradations was different; and the time periods specified for financial upgradation were different, but this cannot be a ground and reason to re-write or ignore the expressed language of the MACPS and the intent and purpose behind the scheme. Read in this light, we have no difficulty in accepting the present appeal and setting aside the impugned judgments. Hence, we allow the present appeals. 21. In other words, the respondents would be entitled to the benefits of the MACPS only after taking into consideration all the financial upgradations earned by them, in terms of the CCS RP Rules. Financial upgradations under the said Rules have to be accounted for and will be treated as financial upgradations earned for the purpose of reckoning the 10-year intervals and the three assured financial upgradations, in terms of Grade Pay, under the MACPS.

22. We are informed that, in the present case, the Government of India had implemented and executed the MACPS by granting benefits to the respondents and, later on, recoveries were initiated. As many of the employees may have retired, in terms of the decision of this Court in “State of Punjab and Others vs. Rafiq Masih (White Washer) and Others,10 we deem it appropriate to direct that the Union of India will not effect any recovery of arrears from the retirees or those who are retiring within one year from the date of pronouncement of this judgment. 23. In other cases, the recoveries may be made after issuing notice to the employee concerned, whose request for proportionate recovery over a period of time not exceeding two years, may be considered depending upon the quantum of recovery which is to be made. We also deem it appropriate to direct that the appellant, Union of India, will not charge interest on the amount to be recovered as they 10 (2015) 4 SCC 334 1532 [2024] 12 S.C.R. Supreme Court Reports themselves had made the payment and, the issue being debatable, to ask the employees to pay interest at this distant point of time may lead to difficulty both in calculation as well as in payment. 24. However, it is clarified that the pension and the pay scale, which are payable shall be re-determined on the basis of this judgment and will apply prospectively with effect from 01.01.2025.

25. Where recoveries have been made from the retirees, the same shall be refunded. However, in the case of serving employees, where recoveries have been made, the same need not be refunded. 26. We also clarify that we have not made any comments or observations on any petition/appeal which is filed challenging the validity and legality of Clause 8.1 of the MACPS. 27. Pending application(s), including applications for impleadment/ intervention, if any, shall stand disposed of. Civil Appeals @SLP(C) Nos. 3197 of 2024, 3198 of 2024, 9604 of 2024, 12060 of 2024 and 12261 of 2024) Leave granted. The present appeals are disposed of in terms of the judgment passed in Civil Appeal @ SLP (C) 8015/2022. Pending application(s), including applications for impleadment/ intervention, if any, shall stand disposed of. Result of the case: Appeals disposed of. †Headnotes prepared by: Nidhi Jain