Supreme Court settles MACP implementation date for Central Government Employees: Union of India vs. R.K. Sharma (28 April 2021)

Date of the Judgment: 28 April 2021
Citation: (2021) INSC 216
Judges: L. Nageswara Rao, J. and Vineet Saran, J.
Can the Modified Assured Career Progression Scheme (MACPS) for central government employees be implemented from 01.01.2006, or should it be from 01.09.2008? The Supreme Court of India addressed this question in a batch of appeals concerning the implementation date of MACPS for civilian employees. The court clarified that MACPS benefits, being incentives, are applicable from 01.09.2008, not 01.01.2006, as claimed by the employees. This judgment settles the dispute regarding the effective date of MACPS implementation.

Case Background

The case involves a dispute over the implementation date of the Modified Assured Career Progression Scheme (MACPS) for civilian employees of the Central Government. The respondent, initially appointed as Deputy Director, was later promoted to Director. The 5th Central Pay Commission introduced the Assured Career Progression Scheme (ACPS) effective from 01.01.1996. This scheme provided financial upgrades after 12 and 24 years of service. The 6th Central Pay Commission recommended MACPS, offering three financial upgrades after 10, 20, and 30 years of service. The Central Government accepted these recommendations, implementing revised pay scales and dearness allowances from 01.01.2006, but other allowances from 01.09.2008. The respondent claimed MACPS benefits should be applicable from 01.01.2006, similar to the revised pay scales, while the government contended it should be from 01.09.2008.

Timeline:

Course of Proceedings

The respondent filed an Original Application (O.A. No.38 of 2014) before the Central Administrative Tribunal, Principal Bench, New Delhi, seeking implementation of MACPS from 01.01.2006. The Tribunal dismissed the O.A., ruling against the respondent’s claim. Subsequently, the respondent challenged the Tribunal’s decision before the High Court of Delhi via Writ Petition No.4760 of 2018. The High Court allowed the writ petition, directing the appellants to grant the second financial upgradation to the respondent under MACPS from 01.01.2006, relying on the Supreme Court’s judgment in Union of India & Ors. v. Balbir Singh Turn & Anr [(2018) 11 SCC 99]. The Union of India then appealed to the Supreme Court.

Legal Framework

The case revolves around the interpretation of the Assured Career Progression Scheme (ACPS) and the Modified Assured Career Progression Scheme (MACPS). The ACPS, introduced by the 5th Central Pay Commission, provided financial upgradations to employees after 12 and 24 years of service. The MACPS, recommended by the 6th Central Pay Commission, offered three financial upgradations after 10, 20, and 30 years of service. The key point of contention is the effective date of implementation of MACPS. The government resolution dated 29th August, 2008, accepted the 6th Pay Commission’s recommendations, implementing revised pay scales and dearness allowances from 01.01.2006, but revised allowances other than dearness allowance from 01.09.2008. The relevant conditions for grant of benefits under the ACPS are as under:

• The ACP Scheme envisages merely placement in the higher pay-scale/grant of financial benefits (through financial upgradation) only to the Government servant concerned on personal basis and shall therefore, neither amount to functional/regular promotion nor would require creation of new posts for the purpose.
• The highest pay-scale upto which the financial upgradation under the Scheme was available was be Rs.14,300-18,300. Beyond this level, there shall be no financial upgradation and higher posts were filled strictly on vacancy based promotions.
• The first financial upgradation under the ACP Scheme shall be allowed after 12 years of regular service and the second financial upgradation after 12 years of regular service from the date of the first financial upgradation subject to fulfillment of prescribed conditions. In other words, if the first upgradation gets postponed on account of the employee not found fit or due to departmental proceedings, etc. this would have consequential effect on the second upgradation which would also get deferred accordingly.
• Two financial upgradation under the ACP Scheme in the entire Government service career of an employee shall be counted against regular promotions (including in-situ promotion and fast-track promotions availed through limited Departmental Competitive Examination) availed from the grade in which an employee was appointed as a direct recruit. This shall mean that two financial upgradation under the ACP Scheme shall be available only if no regular promotions during the prescribed periods (12 and 24 years) have been availed by the employee if an employee has already got one regular promotion he shall qualify for second financial upgradation only on completion of 24 years of regular service under the In case two prior promotions on regular basis have already been received by an employee, no benefit under the ACP Scheme shall accrue to him.

In respect of Organized Group ‘A’ services, the Government has provided non-functional financial upgradation for the officers in PB-3 and PB-4 who are senior by two years or more to IAS officers (in particular grade) but have not so far been promoted to that particular grade because of lack of promotional avenues in Tariff Commission.

In respect of General Civil Service Group ‘A’ officers, whether holding isolated post or not {and also for Group ‘B’ & ‘C’ employees), the Government has provided financial upgradation by way of extending MACP to the officers who have not been promoted because of lack of upgradation whenever a person has spent 10 years continuously in the same grade. Further three upgradations after 10, 20 and 30 years of service are allowed.

The scheme for financial upgradation to Organized Group ‘A’ services is being implemented for the first time. Similarly, the MACPs scheme will be applicable to him for the first time (he is GCS Group ‘A’ officer holding a post which is not treated an isolated post, the earlier ACP scheme covered only those GCS Group ‘A’ officer who were on isolated posts).

Arguments

Appellant (Union of India) Arguments:

• The Union of India argued that the MACPS is an incentive scheme, not a part of the pay structure.
• They contended that the government policy decision was to implement revised pay scales and dearness allowances from 01.01.2006, while other allowances, including MACPS benefits, were to be effective from 01.09.2008.
• The appellant relied on the judgment in Union of India and Ors. v. M.V. Mohanan Nair [(2020) 5 SCC 421], which held that MACPS is an incentive scheme, and the financial upgradation is limited to the next grade pay in the same pay band, not the next promotional post.
• The Appellant argued that implementing MACPS from 01.01.2006 would result in large-scale recoveries of excess payments made to employees, particularly those who have retired.

Respondent (R.K. Sharma & Ors.) Arguments:

• The respondent argued that the MACPS should be implemented from 01.01.2006, similar to the revised pay scales and dearness allowances.
• The respondent relied on the judgment in Union of India & Ors. v. Balbir Singh Turn & Anr [(2018) 11 SCC 99], which held that ACP is part of the pay structure and should be implemented from 01.01.2006.
• The respondent argued that denial of MACPS benefits from 01.01.2006 is discriminatory and unjust.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the Government of India is justified in implementing the Modified Assured Career Progression Scheme (MACPS) for civilian employees of the Central Government with effect from 01.09.2008 and not from 01.01.2006.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court:

• Union of India & Ors. v. Balbir Singh Turn & Anr [(2018) 11 SCC 99]*: The Supreme Court distinguished this case, stating that it pertained to ACP being part of the pay structure, while MACP is an incentive scheme.
• Union of India and Ors. v. M.V. Mohanan Nair [(2020) 5 SCC 421]*: The Supreme Court relied on this judgment to hold that both ACP and MACP are incentive schemes, and financial upgradation is limited to the next grade pay in the same pay band.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The court emphasized that the MACPS is an incentive scheme designed to relieve stagnation and is not part of the regular pay structure.
• The court relied on the government resolution dated 29.08.2008, which clearly stated that revised allowances other than dearness allowance, including MACPS benefits, were to be effective from 01.09.2008.
• The court considered the practical implications of implementing MACPS from 01.01.2006, noting that it would result in large-scale recoveries of excess payments made to employees.
• The court distinguished its earlier judgment in Balbir Singh Turn (supra), clarifying that it pertained to ACP being part of the pay structure, while MACP is an incentive scheme.
• The court relied on the judgment in M.V. Mohanan Nair (supra) which clarified that MACP is an incentive scheme.

The court’s reasoning was primarily based on the interpretation of the government’s policy and the nature of the MACPS as an incentive scheme, rather than a component of the basic pay structure. The court also considered the practical implications of its decision, particularly the potential financial burden on the government and employees if MACPS were to be implemented retroactively.

The Supreme Court stated, “In view of the judgment of this Court in M.V. Mohanan Nair (supra), the Respondents and other similarly situated employees are entitled for financial upgradation under MACPS only to the next grade pay and not to the grade pay of next promotional post.” The Court further added, “It is clear from the resolution dated 30.08.2008 that the recommendation of the 6th Pay Commission was accepted by the Government and was made effective from 01.01.2006 in respect of civilian employees with regard to revised scales of pay and dearness allowances. In so far as the revised allowances other than dearness allowance, recommendation of the 6th Pay Commission were given effect from 01.09.2008.” The Court also noted, “Moreover, the implementation of MACPS by granting financial upgradation only to the next grade pay in the pay band and not granting pay of the next promotional post w.e.f. 01.01.2006 would be detrimental to a large number of employees, particularly those who have retired.”

Key Takeaways

• The Modified Assured Career Progression Scheme (MACPS) for Central Government employees is effective from 01.09.2008, not 01.01.2006.
• MACPS is considered an incentive scheme, not part of the pay structure.
• Financial upgradation under MACPS is limited to the next grade pay in the same pay band, not the next promotional post.
• Implementing MACPS from 01.01.2006 would result in large-scale recoveries of excess payments.

Directions

The Supreme Court set aside the judgment of the High Court and allowed the appeals.

Development of Law

The Supreme Court clarified that the Modified Assured Career Progression Scheme (MACPS) is an incentive scheme and not part of the pay structure. The court also upheld that the MACPS is applicable from 01.09.2008, as per the government’s resolution. This judgment settles the dispute regarding the effective date of MACPS implementation and clarifies the nature of MACPS benefits.

Conclusion

The Supreme Court’s judgment in Union of India vs. R.K. Sharma clarifies that the Modified Assured Career Progression Scheme (MACPS) for Central Government employees is effective from 01.09.2008, not 01.01.2006. The court emphasized that MACPS is an incentive scheme, not part of the pay structure, and its implementation from 01.01.2006 would lead to large-scale recoveries. This decision provides clarity on the implementation date of MACPS and its nature as an incentive scheme.

Category

Parent Category: Service Law, Child Category: Modified Assured Career Progression Scheme (MACPS), Parent Category: Central Government Employees, Child Category: MACP Implementation Date, Parent Category: Allowances, Child Category: MACP, Parent Category: Government Policies, Child Category: Implementation of MACP, Parent Category: Service Law, Child Category: Assured Career Progression Scheme (ACPS), Parent Category: Service Law, Child Category: Union of India vs. R.K. Sharma

FAQ

Q: What is the Modified Assured Career Progression Scheme (MACPS)?
A: MACPS is a scheme that provides financial upgradations to central government employees after completing 10, 20, and 30 years of service. It is designed to relieve stagnation in their careers.

Q: From which date is MACPS effective for Central Government employees?
A: MACPS is effective from 01.09.2008 for central government employees, as clarified by the Supreme Court.

Q: Is MACPS considered part of the pay structure?
A: No, MACPS is considered an incentive scheme and not part of the regular pay structure.

Q: What does financial upgradation under MACPS mean?
A: Financial upgradation under MACPS means that the employee will be placed in the next higher grade pay within the same pay band, not the grade pay of the next promotional post.

Q: What would have happened if MACPS was implemented from 01.01.2006?
A: Implementing MACPS from 01.01.2006 would have resulted in large-scale recoveries of excess payments made to employees, particularly those who have retired.