The Bombay High Court has clarified a critical distinction in service law concerning pay protection for ex-servicemen, holding that the basic pay granted under pay protection regulations forms the basis for subsequent pay fixation under revised pay scales. The judgment underscores that employers cannot artificially distinguish between 'pay protection' and 'pay fixation' to deny ex-servicemen their rightful benefits under administrative circulars, setting a precedent for similar disputes in public sector employment.
Background & Facts
The Dispute
The petitioner, Maharashtra State Power Generation Company Limited (MSPGCL), challenged an order dated 24 December 2025 passed by the Industrial Court, Pune, in Complaint (ULP) No. 19 of 2025. The Industrial Court had partly allowed the complaint filed by Respondent No. 2, an ex-serviceman employed as a Technician-3, and directed MSPGCL to re-fix his pay as per Annexure-3-Technician-III/LDC and Equivalent at Sr. No. 45 to the Administrative Circular No. 449 dated 5 October 2019. The Industrial Court also directed refund of any recovered amounts.
Key Facts
- Respondent No. 2, an ex-serviceman, was appointed as Technician-3 on 25 November 2016 under the pay scale of Rs. 11,275-28,240.
- His last drawn military pay was Rs. 37,300 (Rs. 37,000 + Rs. 300 class pay), certified by the Senior Record Officer on 6 November 2018.
- To protect his military pay, his basic pay was fixed at Rs. 28,240 (the last stage in the pay scale) with an additional personal pay of Rs. 9,060, totaling Rs. 37,300.
- Administrative Circular No. 449 dated 5 October 2019 revised the pay scale for Technician-3 to Rs. 29,035-72,875, with Rs. 72,875 corresponding to the earlier basic pay of Rs. 28,240.
- Respondent No. 2 was initially granted revised basic pay of Rs. 74,310 (including one-step higher pay due to tribal posting) vide order dated 22 September 2021, but this was later reduced to Rs. 72,875 upon transfer.
- By order dated 17 August 2022, his pay was arbitrarily reduced to Rs. 37,360 without notice. After a committee hearing on 26 October 2023, his pay was further reduced to Rs. 41,070 vide order dated 24 October 2024, directing recovery of excess payments.
Procedural History
- 12 September 2022: Respondent No. 2 sought details of pay re-fixation.
- 20 February 2025: Industrial Court stayed recoveries pursuant to the order dated 24 October 2024.
- 22 April 2025: Writ Petition (Stamp) No. 13338 of 2025 challenging the stay order was disposed of without interference.
- 24 December 2025: Industrial Court partly allowed the complaint, setting aside the order dated 24 October 2024 and directing re-fixation of pay at Rs. 72,875 with consequential benefits.
- 7 July 2026: Present writ petition dismissed by the Bombay High Court.
Relief Sought
Respondent No. 2 sought:
- Declaration that MSPGCL engaged in unfair labour practices under Item 9 of Schedule IV of the Industrial Disputes Act, 1947.
- Pay fixation as per Administrative Circular No. 449 dated 5 October 2019 and Government Resolution dated 30 August 2019.
- Refund of recovered amounts with 12% interest.
- Interim relief to cease recoveries.
The Legal Issue
The central question was whether the basic pay of Rs. 28,240 granted to Respondent No. 2 under pay protection regulations could form the basis for revised pay fixation at Rs. 72,875 under Administrative Circular No. 449 dated 5 October 2019, or whether MSPGCL could ignore this pay protection and re-fix his pay based on his last drawn military pay of Rs. 37,300.
Arguments Presented
For the Petitioner (MSPGCL)
- The Industrial Court erred in allowing the complaint, as Respondent No. 2 did not challenge the order dated 24 October 2024 or the High Power Committee’s decision.
- Respondent No. 2 acquiesced to the pay fixation by submitting a compromise proposal vide letter dated 1 January 2025, giving up his claim for Rs. 72,875.
- The basic pay of Rs. 28,240 was granted only for pay protection, not as pay fixation, and thus cannot form the basis for revised pay fixation.
- Granting Rs. 72,875 would result in a windfall gain, as Respondent No. 2 was entitled to only Rs. 11,275 as a new entrant.
- The pay protection benefit was extended only to ensure that Respondent No. 2 did not receive less than his military pay, and this benefit cannot extend to revised pay scales.
For the Respondent (Employee)
- The Industrial Court correctly analyzed the material on record and held that Respondent No. 2 was entitled to Rs. 72,875 as per the fitment table in Administrative Circular No. 449.
- Administrative Circular No. 449 does not exclude ex-servicemen from its purview; it applies uniformly to all employees.
- The letter dated 1 January 2025 was a suggestion to avoid litigation, and Respondent No. 2 withdrew it upon being forced into litigation.
- The arbitrary reduction of pay without notice violated principles of natural justice and unfair labour practices under the MRTU & PULP Act, 1971.
The Court's Analysis
The Court examined the legal framework governing pay protection and pay fixation for ex-servicemen, relying on:
- Clause 28(b)(ii) of MSPGCL Employees’ Service Regulations, which mandates pay fixation at a stage equal to the last pay drawn in military service, ignoring pensionary benefits.
- Government Resolution dated 30 August 2019, which provides for pay fixation of ex-servicemen retiring after 1 January 2016 as per their pay under the 7th Pay Commission, ensuring no financial disadvantage.
The Court observed:
"The fact remains that his fixation was done in the pay scale of Rs. 11,275-28,240 at the last stage of Rs. 28,240/-. He drew that basic pay for almost two years. Therefore, he is entitled to draw corresponding basic pay of Rs. 72,875/- upon introduction of new pay structure w.e.f. 1 April 2018."
The Court rejected MSPGCL’s argument that pay protection and pay fixation are distinct concepts
