Payment of pension to employees absorbed in BSNL and retired between 1st Oct 2000 and 31st July 2001 – reg. 

Payment of pension to employees absorbed in BSNL and retired between 1st Oct 2000 and 31st July 2001 – reg. 

Payment of pension to employees absorbed in BSNL and retired between 1st Oct 2000 and 31st July 2001 – reg.



Reserved on: 8th January, 2020
Decided on: 24th January, 2020

W.P.(C) 10019/2017 and CM APPL. 40921/2017 (stay)

UNION OF INDIA & ORS ….. ………………………………………………………….Petitioners

Through: Ms. Mrinalini Sen with Ms. Kritika
Gupta, Advocates.


ASSOCIATION AND ORS ………………………………………………………….. Respondents

Through: Mr. Ranvir Singh, Advocate for R1.
Mr. Naresh Kaushik with Ms. Vibhuti Tyagi and Mr.Tapasvi Raj, Advocates for R4, R9, R10 and R12.

Dr. S. Muralidhar, J.


1. The Department of Telecommunications (DOT), Government of India, (Petitioner No.1), the Bharat Sanchar Nigam Limited (BSNL) through its Chairman-cum-Managing Director (Petitioner No.2) and the Department of Pension & Pensioners Welfare („DPPW‟), Ministry of Personnel Public Grievances & Pensions (Petitioner No.3) have jointly filed this petition challenging an order dated 16th December, 2016 of the Central Administrative Tribunal, Principal Bench, New Delhi (“CAT‟) disposing of OA No. 2173/2014 filed by the Respondent No.1 and Respondents No. 4 to 14 thereby quashing an order dated 15th January, 2003 issued by the DOT in regard to payment of pension to employees who retired from the DOT between 1st October, 2000 and 31st July, 2001 and were subsequently absorbed in the BSNL. OA No. 2173/2014 was filed before the CAT by the All India BSNL Pensioners Welfare Association (hereafter Association) (Respondent No.1 herein) on behalf of 4230 affected pensioners in a representative capacity.

2. By the impugned order, the CAT has held that there was no justification for the DOT to deny the benefit to the Respondents 2 to 14 the benefit of formula adopted in Office Memorandum (OM) dated 18th October, 1999. The CAT has issued a direction to the Petitioners to re-fix the pension of the said Respondents; give them notional benefit of the IDA pay scale and thereafter grant all consequential benefits from the date of their respective dates of retirement in accordance with law.

3. It must be noted at the outset that on 23rd January, 2018 an interim order was passed that no coercive steps will be taken against the Petitioners for implementing the impugned order of the CAT.

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4. The facts in brief are that on creation of the BSNL with effect from 1st October, 2000 all serving Group „A‟ officers were transferred to it on deputation basis. An OM dated 27th October, 1997 was issued by the DPPW on the issue of implementation of the recommendations of the 5th Central Pay Commission („CPC‟) regarding revision of the provisions regulating pension/commutation of pension. This provided that pension shall continue to be calculated at 50% of average emoluments in all cases subject to a minimum of Rs.1275/- and maximum upto 50% of the highest pay in the Government.

5. The OM dated 27th October, 1997 further provided that those Government servants who opted for revised scales of pay and retired within ten months from coming into force of the revised scales of pay, basic pay for ten months preceding retirement shall be calculated as under:

“(i) For the period during which pay is drawn in the pre-revised scale-

Basic pay plus DA and Interim Relief I and II appropriate to the basic pay at the rates in force on 01.01.1996 drawn during the relevant period and

(ii) For the period during which pay is drawn in revised scale-Basic pay in the revised scale.”

6. The above OM was further revised by an OM dated 17th December, 1998 specifying that pension shall not be less than 50% of the minimum pay in the revised pay scale.

7. Another OM dated 18th October, 1999 was issued by the DPPW modifying the earlier OM dated 27th October, 1997. This stated that the average emoluments for those retiring within ten months of coming over to the revised pay scales would be calculated thus:

“The average emoluments based on the basic pay of the preceding ten months of those Government Servants who had opted to come over to the revised scales of pay and had retired within a period of 10 months reckoned from January 1, 1996 shall be calculated as follows for the purpose of determining their pension entitlement.

(A) For the period during which pay was drawn in the pre- revised pay scales.

The total emoluments for the number of months for which pay was drawn in the pre-revised pay scales shall be calculated after taking into account the following:

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i. Basic Pay (including increments if any drawn during the intervening period).

ii. Dearness allowance upto CPI 1510 i.e. @ 148%, III% and 96% of the basic pay as the case may be.

iii. The first and second installments of Interim Relief appropriate to the Basic pay drawn during the relevant period.

iv. Notional increase of the Basic Pay by applying the Fitment Benefit of 40 percent on the Basic pay in the pre-revised pay scale.

(B) For the period during which pay was drawn in the revised pay scales:

The aggregate of the Basic pay for the number of months for which pay was drawn in the revised pay scales.

The average emoluments of the preceding ten months will thereafter be calculated by adding (A) and (B) and dividing the result by 10. Pension admissible will consequently be 50% of the average emoluments so calculated.”

8. According to the Petitioners, the object behind this modification was to eliminate the anomaly in pension drawn by those retiring within ten months of coming over to the revised pay scale during the period from 1st January to 31st October, 1996 and those who retired after completion of ten months period with effect from 1st January,1996.

9. Prior to en masse transfer of DOT employees to the BSNL on deemed deputation basis with effect from 1st October 2000, several rounds of discussions were held with the unions. It was agreed to extend the retirement benefits in the BSNL in accordance with the CCS (Pension) Rules, 1972. This led to insertion of Rule 37A in the CCS (Pension) Rules which came to be published on 30th September, 2000. It provided for the conditions for payment of pension and absorption upon conversion of a Government Department into a Central Autonomous Body („CAB‟) or a Public Sector Undertaking (PSU).

10. The relevant portion of the newly inserted Rule 37A of the CCS (Pension) Rules read as under:

“(4) The permanent absorption of the Government servants as employees of the Public Sector Undertaking or Autonomous Body shall take effect from the date on which their options are accepted by the Government and on and from the date of such acceptance, such employees shall cease to be Government servants and they shall be deemed to have retired from Government service.

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(7) The employees including quasi-permanent and temporary employees but excluding causal labourers, who opt for permanent absorption in the Public Sector Undertaking or Autonomous Body, shall on and from date of Absorption, be governed by the rules and regulations or bye-laws of the Public Sector Undertaking or Autonomous Body, as the case may be.

(8) A permanent Government servant who has been absorbed as an employee of a Public Sector Undertaking or Autonomous Body shall be eligible for pensionary benefits on the basis of combined service rendered by him in the Government and in the Public Sector Undertaking or Autonomous Body in accordance with the formula for calculation of pension/family pension under these rules as may be in force at the time of his retirement from the Public Sector Undertaking or Autonomous Body, as the case may be.

(9) The pension of an employee under sub-rule (8) shall be calculated on the basis of his last ten months average pay.

(10) In addition to pension or family pension, as the case may be the employees shall also be eligible to Dearness relief as per Industrial Dearness Allowance pattern.

(21) Nothing contained in sub-rule (12) to (20) shall apply in the case of conversion of the Departments of Telecom Services and Telecom Operations into Bharat Sanchar Nigam Limited in which case the pensioner benefits including family pension shall be paid by the government.

(22) For the purpose of payment of pensionary benefits including family pension referred to in sub-rule (21), the Government shall specify the arrangements and manner including the rate of pensionary contributions to be made by Bharat Sanchar Nigam Limited to the government and the manner in which financial liabilities on this account shall be met.”………………………………… Read More

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