MACP should be given effect from 01.01.2006 – Important Supreme court Judgement

Important Supreme court Judgement – MACP should be given effect from

Union of India and Ors.
—– Appellant(s)
Balbir Singh Turn & Anr.
—– Respondent(s)
DIARY NO.4546 OF 2017
DIARY NO.11491 OF 2017
DIARY NO.11871 OF 2017
DIARY NO.13664 OF 2017
DIARY NO.13665 OF 2017
DIARY NO.13666 OF 2017
DIARY NO.18186 OF 2017
DIARY NO.18048 OF 2017
DIARY NO.18045 OF 2017
DIARY NO.18185 OF 2017
DIARY NO.22593 OF 2017
DIARY NO.30116 OF 2017
DIARY NO.23164 OF 2017
DIARY NO.11493 OF 2017
DIARY NO.28798 OF 2017


Deepak Gupta, J.
1. Applications for condonation of delay in filing and refiling the appeals
are allowed.
2. This bunch of appeals is being disposed of by a common judgment since
similar questions of law are involved.
3. The 6th Central Pay Commission was set up by the Government of India to
make recommendations in matters relating to emoluments, allowances and
conditions of service amongst other things. The Pay Commission also made
recommendation with regard to armed forces personnel. On 30th August,2008,
the Central Government resolved by a resolution of that date to accept the
recommendation of the 6th Central Pay Commission (CPC for short) with
regard to the personnel Below officer Rank (PBOR) subject to certain
modifications clause (i) of the Resolution reads as follows:-

“(i) Implementation of the revised pay structure of pay bands and grade
pay, as well as pension, with effect from 01.01.2006 and revised rates
of allowances (except Dearness Allowance/Relief) with effect from
clause 9 of the Resolution reads as follows:-

“(ix) Grant of 3 ACP up-gradation after 8,16 and 24 years of service of
4. Under the recommendations made by the 5th CPC there was a provision for
Assured Career Progression (ACP). Vide this scheme, if an employee was not
promoted he was entitled to get the next higher scale of pay after
completion of 12/24 years of service. The 6th CPC recommended the grant of
benefit of ACP after 10 and 20 years of service. The Union of India,
however decided to grant 3 ACP upgradations, after 8, 16 and 24 years of
service to PBORs, as per Clause (ix) extracted above. However, it would be
pertinent to mention that the 6th CPC did away with the concept of pay
scales and reduced the large number of pay scales into 4 pay bands and
within the pay bands there was a separate grade pay attached to a post.
5. For the purpose of this judgment we are dealing with the facts of civil
appeal diary No.3744 of 2016. It would be pertinent to mention that all the
petitioners before the Armed Forces Tribunal (AFT for short) who are
respondents before us are persons below officer rank. The respondents in
this case retired after 01.01.2006 but prior to 31.08.2008. They claim that
the benefit of the Modified Assured Career progression (MACP for short) was
denied to them on the ground that the MACP was made applicable only with
effect from 01.09.2008. The respondents approached the AFT praying that
they are entitled to the benefit of MACP w.e.f 01.01.2006, i.e., the date
from which the recommendation of the 6th CPC with regard to pay and
benefits were made applicable. The stand of the Union of India was that the
MACP was applicable only w.e.f. 01.09.2008 and, therefore, the respondents
who had retired prior to the said date were not entitled to the benefit of
the MACP. The AFT vide the impugned order dated 21.05.2014 held that the
benefit of ACP granted to an employee is part of the pay structure which
not only affects his pay but also his pension and, therefore, held that the
ACP is not an allowance but a part of pay and, therefore, in terms of
Clause (i) of the Government Resolution the MACP was payable w.e.f.
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6. The question that arises for decision is whether the benefit of MACP is
applicable from 01.01.2006 or from 01.09.2008.
7. The answer to this question will lie in the interpretation given to the
Government Resolution, relevant portion of which has been quoted
hereinabove. A bare perusal of Clause(i) of the Resolution clearly
indicates that the Central Government decided to implement the revised pay
structure of pay bands and grade pay, as well as pension with effect from
01.01.2006. The second part of the Clause lays down that all allowances
except the Dearness Allowance/relief will be effective from 01.09.2008. The
AFT held, and in our opinion rightly so, that the benefit of MACP is part
of the pay structure and will affect the grade pay of the employees and,
therefore, it cannot be said that it is a part of allowances. The benefit
of MACP if given to the respondents would affect their pension also.
8. We may also point out that along with this Resolution there is
Annexure-I. Part-A of Annexure-I deals with the pay structure, grade pay,
pay bands etc., and Item 10 reads as follows :-
10 Assured Career Progression Scheme for PBORs.

The Commission recommends that the time bound promotion
scheme in case of PBORs shall allow two financial
upgradations on completion of 10 and 20 years of
service as at present. The financial upgradations under
the scheme shall allow benefit of pay fixation equal to
one increment along with the higher grade pay. As
regards the other suggestions relating to residency
period for promotion of PBORs Ministry of Defence may
set up an Inter-Services Committee to consider the
matter after the revised scheme of running bands is
implemented (Para 2.3.34)

Three ACP upgradation after 8, 16 and 24 years of
service has been approved. The upgradation will take
place only in the hierarchy of Grade Pays, which need
not necessarily be the hierarchy in that particular

Part-B of Annexure-I deals with allowances, concessions & benefits and
Conditions of Service of Defence Forces Personnel. It is apparent that the
Government itself by placing MACP in Part-A of Annexure-I was considering
it to be the part of the pay structure.
Read also :  Grant of non-functional Grade Pay of Rs. 5400/- in PB-2 to those who were granted Grade Pay of Rs. 4800/- due to ACP/MACP Scheme - OA No. 1707/2016 (Hon'ble CAT PB, New Delhi)
9.The MACP Scheme was initially notified vide Special Army Instructions
dated 11.10.2008. The Scheme was called the Modified Assured Career
Progression Scheme for Personnel Below Officer Rank in the Indian Army.
After the Resolution was passed by the Central Government on 30.08.2008
Special Army Instructions were issued on 11.10.2008 dealing with revision
of pay structure. As far as ACP is concerned Para 15 of the said letter
reads as follows:-

“15. Assured Career Progression. In pursuance with the Government
Resolution of Assured Career Progression (ACP), a directly recruited
PBOR as a Sepoy, Havildar or JCO will be entitled to minimum three
financial upgradations after 8, 16 and 24 years of service. At the time
of each financial upgradation under ACP, the PBOR would get an
additional increment and next higher grade pay in hierarchy.
xx xx xx”
Thereafter, another letter was issued by the Adjutant General Branch on
03.08.2009. Relevant portion of which reads as follows:-

“…….The new ACP (3 ACP at 8, 16 and 24 years of service) should be
applicable w.e.f. 1 Jan 2006, and the old provns (operative w.e.f. the
Vth Pay Commission) would be applicable till 31 Dec. 05. Regular
service for the purpose of ACP shall commence from the date of joining
of a post in direct entry grade.
xx xx xx”
Finally, on 30.05.2011 another letter was issued by the Ministry of
Defence, relevant portion of which reads as follows:-

“5. The Scheme would be operational w.e.f. 1st Sep. 2008. In other
words, financial up-gradations as per the provisions of the, earlier
ACP scheme (of August 2003) would be granted till 31.08.2008.”
Therefore, even as per the understanding of the Army and other authorities
up till the issuance of the letter dated 30.05.2011 the benefit of MACP was
available from 01.01.2006.
10. As already held by us above, there can be no dispute that grant of ACP
is part of the pay structure. It affects the pay of the employee and he
gets a higher grade pay even though it may be in the same pay band. It has
been strenuously urged by Col. R. Balasubramanian, learned counsel for the
UOI that the Government took the decision to make the Scheme applicable
from 01.09.2008 because many employees would have lost out in case the MACP
was made applicable from 01.01.2006 and they would have had to refund the
excess amount, if any, paid to them. His argument is that under the old
Scheme if somebody got the benefit of the ACP he was put in the higher
scale of pay. After merger of pay scales into pay bands an employee is only
entitled to higher grade pay which may be lower than the next pay band.
Therefore, there may be many employees who may suffer.
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11. We are only concerned with the interpretation of the Resolution of the
Government which clearly states that the recommendations of 6th CPC as
modified and accepted by the Central Government in so far as they relate to
pay structure, pay scales, grade pay etc. will apply from 01.01.2006. There
may be some gainers and some losers but the intention of the Government was
clear that this Scheme which is part of the pay structure would apply from
01.01.2006. We may also point out that the Resolution dated 30.08.2008
whereby the recommendation of the Pay Commission has been accepted with
modifications and recommendations with regard to pay structure, pay scales,
grade pay etc. have been made applicable from 01.01.2006. This is a
decision of the Cabinet.
This decision could not have been modified by issuing executive
instruction. The letter dated 30.05.2011 flies in the face of the Cabinet
decision reflected in the Resolution dated 30.08.2008. Thus, administrative
instruction dated 30.05.2011 is totally ultra vires the Resolution of the
12. Col. R. Balasubramanian, learned counsel for the UOI relied upon the
following three judgments viz. P.K. Gopinathan Nair & Ors. v. Union of
India and Ors. 1 , passed by the High Court of Kerala on 22.03.2017, Delhi
Urban Shelter Improvement Board v. Shashi Malik & Ors.2, passed by the
High Court of Delhi on 01.09.2016, K.K. Anandan & Ors. v. The Principal
Accountant General Kerala (Audit) & Ors3 passed by the Central
Administrative Tribunal, Ernakulam Bench, Kerala on 08.02.2013. In our
view, none of these judgments is applicable because the issue whether the
MACP is part of the pay structure or allowances were not considered in any
of these cases.
13. In this view of the matter we find no merit in the appeals, which are
accordingly disposed of. All pending applications are also disposed of.

(Madan B. Lokur)
(Deepak Gupta)

New Delhi

December 08, 2017