Supreme Court settles applicability of ACP vs MACP Scheme for Central Government Employees: Union of India & Ors. vs. S. Ranjit Samuel & Ors. (24 March 2022)

Introduction

Date of the Judgment: 24 March 2022

Citation: (2022) INSC 273

Judges: L. Nageswara Rao, J. and B.R. Gavai, J.

When government employees are due for a promotion, but none is available, which scheme should apply for their financial upgradation? The Supreme Court of India recently addressed this question in a case concerning the Assured Career Progression (ACP) Scheme of 1999 and the Modified Assured Career Progression (MACP) Scheme of 2009. The core issue was whether employees who completed 24 years of service between September 1, 2008, and May 19, 2009, should be considered under the old ACP Scheme or the new MACP Scheme. The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice B.R. Gavai, with Justice B.R. Gavai authoring the opinion.

Case Background

The respondents in this case were employees working as Junior Engineers/Lower Division Clerks. The Union of India introduced the ACP Scheme on August 9, 1999, to provide financial relief to employees who were stagnating on a particular post due to a lack of promotional opportunities. Under this scheme, employees were entitled to a financial upgrade after 12 years of service, and a second upgrade after another 12 years (total 24 years), if no regular promotion was available.

Subsequently, based on the recommendations of the 6th Central Pay Commission, the MACP Scheme was introduced on May 19, 2009, superseding the ACP Scheme. The MACP scheme was made retrospectively applicable from September 1, 2008. The MACP scheme provided for three financial upgradations on completion of 10, 20 and 30 years of service. A key difference between the two schemes was that the ACP Scheme assured the promotional grade, while the MACP Scheme only assured a higher grade pay.

The respondent employees had already received their first financial upgrade under the ACP Scheme. They completed 24 years of service between January and April 2009 and expected their cases to be reviewed by the Screening Committee in January 2009, as per the ACP Scheme. However, the MACP Scheme was implemented with retrospective effect from September 1, 2008. The employees argued that they were entitled to the second financial upgrade under the ACP Scheme as their right had accrued before the MACP Scheme came into effect. Their representations were rejected, leading them to approach the Central Administrative Tribunal.

Timeline

Course of Proceedings

The Central Administrative Tribunal (CAT), Madras Bench, allowed the Original Applications filed by the respondents. The Tribunal directed that the cases of the employees be placed before the Screening Committee for consideration of the second financial upgradation under the ACP Scheme, upon completion of 24 years of service.

Aggrieved by the decision of the Tribunal, the appellants filed writ petitions before the High Court of Judicature at Madras. The High Court dismissed the writ petitions, upholding the decision of the Tribunal.

Legal Framework

The core of this case revolves around two office memorandums issued by the Union of India:

• Assured Career Progression (ACP) Scheme, 1999: Introduced on August 9, 1999, to address stagnation among government employees. It provided for two financial upgradations: the first after 12 years of regular service and the second after another 12 years (total 24 years), if no regular promotion was available.
• Modified Assured Career Progression (MACP) Scheme, 2009: Introduced on May 19, 2009, and made retrospectively applicable from September 1, 2008. This scheme superseded the ACP scheme and provided for three financial upgradations after 10, 20 and 30 years of regular service. The MACP scheme only assured higher grade pay, not a promotional grade.

The key distinction between the two schemes is that the ACP Scheme assured the promotional grade, whereas the MACP Scheme only assured higher grade pay.

Arguments

Appellants’ Arguments (Union of India):

• The 6th Central Pay Commission’s recommendations were accepted by the Government of India on August 29, 2008. While the revised pay structure was implemented from January 1, 2006, the revised rates of allowance were implemented from September 1, 2008.
• The MACP Scheme, though notified on May 19, 2009, was made applicable retrospectively from September 1, 2008.
• The cases of employees due for consideration after September 1, 2008, were not put up before the Screening Committee as the MACP Scheme was being contemplated.
• Clauses 6 and 7 of the MACP Scheme provide for the consideration of employees who were entitled to benefits between September 1, 2008, and June 30, 2009.
• Employees who became due for benefits under the ACP Scheme before September 1, 2008, would receive benefits under that scheme, while those who became due on or after September 1, 2008, would be considered under the MACP Scheme.
• The appellants relied on the judgment of the Supreme Court in Vice Chairman Delhi Development Authority vs. Narender Kumar and others, which supported their position.

Respondents’ Arguments (Employees):

• The employees completed 24 years of service between January and April 2009, and their cases should have been considered by the Screening Committee in January 2009.
• If their cases had been considered in January 2009, they would have been entitled to the second financial upgradation under the ACP Scheme.
• The employees should not be penalized for the appellants’ failure to hold the Screening Committee meeting on time.
• The respondents relied on the order of the Supreme Court in Union of India & ors. vs. Vinay Kumar.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the respondent employees would be governed by the ACP Scheme or by the MACP Scheme.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court allowed the appeals of the Union of India, setting aside the orders of the High Court and the Tribunal. The Court held that the cases of the respondent employees would be governed by the MACP Scheme.

How each authority was viewed by the Court?

• Vice Chairman Delhi Development Authority vs. Narender Kumar and others [CITATION]: The court followed this judgment, as it was a three-judge bench decision, and directly addressed the issue of applicability of ACP vs MACP. The court reiterated that mere eligibility does not translate into an entitlement and that the MACP scheme applies retrospectively.
• Union of India & Ors. vs. M.V. Mohanan Nair [CITATION]: The court cited this case to emphasize that MACP benefits are incentives and not enforceable rights.
• Union of India vs. R.K. Sharma & Ors. [CITATION]: The court cited this case to emphasize that MACP benefits are incentives and not enforceable rights.
• Shankarsan Dash v. Union Of India [CITATION]: The court used this case to highlight that mere inclusion in a select list does not create a vested right to employment, drawing a parallel to the employees’ expectation of ACP benefits.
• Union of India & ors. vs. Vinay Kumar [CITATION]: The court distinguished this case, stating that it was a two-judge bench decision and dealt with a different scheme, making it not applicable to the present case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the retrospective applicability of the MACP Scheme and the principle that mere eligibility does not create a vested right. The court emphasized that the MACP scheme was introduced to benefit a larger section of employees and that the executive has the power to give retrospective effect to such beneficial schemes.

The court’s reasoning was based on the legal principle that the MACP scheme was made retrospectively applicable and that the employees’ eligibility for the second financial upgrade arose after the implementation of the MACP scheme. The court also emphasized that the benefits under these schemes are incentives and not enforceable rights, as established in previous judgments.

The court considered the argument that the employees had a right to be considered under the ACP scheme since they had completed 24 years of service before the MACP scheme came into effect. However, the court rejected this argument, stating that the MACP scheme was made retrospectively applicable and that the employees’ eligibility for the second financial upgrade arose after the implementation of the MACP scheme. The court also noted that the MACP scheme was more beneficial to a larger section of employees.

The court quoted the following from the judgment in Vice Chairman Delhi Development Authority vs. Narender Kumar and others:

“In the present context, none of the employees actually earned a second financial up­gradation. They undoubtedly became eligible for consideration. However, the eligibility ipso facto could not, having regard to the terms of the ACP scheme translate into an entitlement. The eligibility was, to put it differently, an expectation.”

“To be entitled to the benefits, the public employer (here DDA) had to necessarily review and consider the employees’ records, to examine whether they fulfilled the eligibility conditions and, based on such review individual orders had to be made by DDA. In other words, second ACP up­gradation was not automatic but dependant on external factors.”

“It is noteworthy that a larger section of employees would benefit from the MACP benefits, because they are to be given after 10­, 20­ and 30­years’ service (as compared with two benefits, falling due after 12 and 24 years of service) and further that such benefits under MACP scheme are subjected to less rigorous eligibility requirements, than under the ACP scheme.”

There were no dissenting opinions in this case.

Key Takeaways

• Government employees who became eligible for a second financial upgrade after September 1, 2008, will be governed by the MACP Scheme, even if they completed the required years of service under the ACP Scheme.
• Mere eligibility for a benefit does not create a vested right; the actual grant of the benefit depends on the applicable scheme and rules.
• The government has the power to implement beneficial schemes retrospectively, and such schemes will apply to all eligible employees from the effective date.
• The MACP scheme is considered more beneficial to a larger section of employees as it provides for three financial upgradations after 10, 20 and 30 years of service, compared to the two upgradations under the ACP scheme.

Directions

The Supreme Court directed that if the appellants have not finalized the cases of any of the respondent employees for their entitlement under the MACP Scheme, the same shall be considered in accordance with the MACP Scheme, and the benefits be given to them within a period of three months from the date of the order.

Development of Law

The ratio decidendi of the case is that the MACP Scheme, which was made retrospectively applicable from September 1, 2008, will govern the cases of employees who became eligible for financial upgradation after this date, even if they had completed the required years of service under the ACP Scheme. This judgment reaffirms the principle that mere eligibility does not create a vested right and clarifies the applicability of the MACP scheme in cases where the employees had an expectation of being considered under the ACP scheme. This decision also reinforces the executive’s power to implement beneficial schemes retrospectively.

Conclusion

In summary, the Supreme Court ruled that government employees who became eligible for a second financial upgrade after September 1, 2008, will be governed by the MACP Scheme, not the ACP Scheme. The Court emphasized the retrospective applicability of the MACP Scheme and the principle that mere eligibility does not create a vested right. This judgment clarifies the legal position on the applicability of these schemes and provides a clear direction for the government in handling such cases.