Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Del) 1061

2026 DHC 4198
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJEEV NARULA, J.
COL Jamshaid Akhtar (Retd.) – Petitioner
Versus
General Manager (Hr) Engineering Projects (India) ATD. And Ors. – Respondents
W.P.(C) 7625 of 2019, CM APPL. 31753 of 2019, CONT.CAS(C) 883 of 2022, W.P.(C) 7598 of 2019, CM APPL. 31601 of 2019
Decided On : 08-05-2026
Advocates Appeared :
For the Petitioner : Mr. Indra Sen Singh, Mr. Nasir Mohammad and Ms. Kaberi Sharma, Advocates.
For the Respondents : Ms. Manisha Agrawal Narain, CGSC with Mr. Nipun Jain, Advocate. Mr. Debarshi Bhadra, Advocate.

Advocates:
For the Appellants/Petitioners: Indra Sen Singh, Nasir Mohammad, Kaberi Sharma
For the Respondents: Manisha Agrawal Narain, Nipun Jain, Debarshi Bhadra, Devvrat Yadav, Kartik Sharma

A public employer cannot retrospectively deduct pension from the salary of a re-employed pensioner who was appointed through open recruitment at a minimum pay scale without prior pay protection, particularly in the absence of fraud, as such action constitutes arbitrary administrative conduct.

Headnote:(A) Service Law - Pay Fixation - Re-employed pensioners in Public Sector Enterprise - Interpretation of policy - Deduction of pension from salary - Where an employee is recruited through an open process and fixed at the minimum of the applicable pay scale without any pay protection of previous service emoluments, the mechanical deduction of pension from such base salary is arbitrary and contrary to the governing framework. (Paras 44-48)

(B) Service Law - Recovery of excess payment - Retrospective recovery - Unwarranted where no fraud, concealment, or misrepresentation by the employee is established - Employer cannot reopen long-settled service conditions or recover payments arising from its own interpretation of rules after several years of service, particularly when such recovery causes hardship to the employee. (Paras 35-38, 60)

Facts of the case:
Retired defence officers were recruited by a state-owned enterprise through open selection and appointed at the minimum of the prescribed pay scale without any pay protection. Afterseveral years of service, the employer sought to retrospectively deduct their pension from their consolidated monthly salary based on a specific departmental office memorandum and withheld their terminal dues. The employees challenged the legality of this deduction and the subsequent withholding of dues.

Findings of Court:
The court found that the employer could not retrospectively alter the terms of appointment years after the individuals had been confirmed in their posts. The directive to deduct pension from base pay, where no benefit of prior service was granted, was held to be an unreasonable and erroneous interpretation of the administrative policy. Furthermore, the absence of fraud or misrepresentation barred the employer from initiating retrospective recovery of payments made over several years.

Issues: The main issues were whether a public employer is justified in deducting pension from salaries of retired officers who were appointed via open recruitment without pay protection, and whether such an employer can retrospectively recover dues after years of consistent service without proof of misrepresentation by the employees.

Ratio Decidendi: The court concluded that the 'pay minus pension' policy is applicable in the context of a holistic pay fixation exercise and cannot be used to reduce the entry-level salary of a fresh recruit to a nominal amount. Since the employer failed to demonstrate any fraudulent inducement by the employees and the initial pay fixation was a conscious administrative decision, retrospective recovery of payments is impermissible under the established principles of equity and service law.

Result: Petitions allowed; the employer directed to release all withheld terminal dues and arrears within twelve weeks with interest at 8% per annum for any delay.

Table of Content
1. court rules against preliminary objections of non-joinder and availability of alternative remedies. (Para 31 , 32)
2. principles of fair recovery and prohibition of recovering excess payments without employee fault. (Para 34 , 35 , 36 , 37)
3. interpretation of dpe om 2012 regarding the 'pay minus pension' formula in specific appointment scenarios. (Para 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51)
4. court rules deduction illegal where no pay protection was initially granted. (Para 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62)
5. mandate to release withheld terminal dues and arrears as they are independent of illegal refixation. (Para 63 , 64 , 65 , 66 , 67 , 68)
6. final orders in petitions and closure of contempt proceedings. (Para 69 , 70 , 71 , 72 , 73 , 74)

JUDGMENT :

SANJEEV NARULA, J.

1. These matters concern retired defence officers who, after leaving military service, were selected by Engineering Projects (India) Ltd., [“EPIL”] a Central Public Sector Enterprise, [“CPSE”] through a recruitment advertisement. Their pay was fixed at the minimum of the applicable pay scales and no pay protection with reference to their last drawn military pay was granted. Years later, EPIL sought to deduct the defence pension drawn by the Petitioners from the salary paid by EPIL and, for that purpose, directed them to furnish pension particulars for refixation of pay. The Petitioners challenge that course of action as arbitrary, unreasonable, contrary to the governing policy framework, and irreconcilable with the pay fixation consciously made and acted upon by EPIL itself.

2. Both writ petitions assail individual communications dated 27th May, 2019 issued to each of the Petitioners, as well as the common order dated 12th June, 2019. The communications dated 27th May, 2019 required the Petitioners to furnish pension details so that their pay could be refixed after subtracting pension. Thereafter, by the communication dated 12th June, 2019, the Respondents directed withholding of the Petitioners’ salaries on account of non-furnishing of documents. The legal foundation pleaded by the Respondents is principally the Office Memorandum dated 14th December, 2012 issued by the Department of Public Enterprises, [“DPE”] read with DPE clarification dated 28th March, 2019.

3. The two writ petitions arise from substantially similar facts. Col. Jamshaid Akhtar (Retd.) retired from the Indian Army in the rank of Colonel and later joined EPIL as General Manager (Civil). Wg. Cdr. Sandeep Malhotra (Retd.) retired from the Indian Air Force in the rank of Wing Commander and later joined EPIL as Deputy General Manager (Finance). While their ranks, dates of appointment, posts and pay scales differ, the impugned action, the policy framework invoked by the Respondents, the interim protection granted by this Court, and the central legal issue are common. The matters have, therefore, been heard together and are being decided by this common judgment. Separate factual features shall be noticed where they have a bearing on the relief to be granted.

4. CONT.CAS(C) 883/2022 arises from the interim order passed in W.P.(C) 7625/2019. Since the writ petitions themselves are being finally decided, that contempt petition is also taken up and disposed of by the present judgment.

Factual background in W.P.(C) 7625/2019

5. Col. Jamshaid Akhtar (Retd.), was commissioned in the Indian Army and retired voluntarily on 2nd June, 2012 in the rank of Colonel. According to him, at the time of retirement, he was drawing pay in Pay Band-4 with grade pay and military service pay. Upon retirement, he became entitled to defence pension.

6. In response to an advertisement issued by EPIL, the Petitioner applied for the post of General Manager (Civil) on 2nd August, 2013. His case is that, at the stage of application and interview, he disclosed his previous military service, last pay drawn, and defence pension. He also states that he had expected pay prot

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2026 Supreme(Del) 1061

A public employer cannot retrospectively deduct pension from the salary of a re-employed pensioner who was appointed through open recruitment at a minimum pay scale without prior pay protection, particularly in the absence of fraud, as such action constitutes arbitrary administrative conduct.

Cases Referred (6)