The court established that re-fixation of pay for re-employed ex-servicemen must be prospective and prohibits recovery of previously overpaid amounts based on erroneous interpretations.

J U D G M E N T

A.K. Jayasankaran Nambiar, J.

The Life Insurance Corporation of India [LIC] and its Senior Divisional Manager are the appellants before us aggrieved by the common judgment dated 25.8.2022 of a learned Single Judge in W.P. (C).No.32144 of 2017 and connected cases. The brief facts necessary for disposal of these writ appeals are as follows:

The writ petitioners were ex-servicemen who got appointment in the LIC in the cadre of Assistants. Their appointments were through direct recruitment against a quota earmarked for ex-servicemen. After their discharge from the Defence service, they were appointed as Assistants in the LIC on various dates between 2009 and 2010, and at the time of their joining service of LIC, their pay was fixed by reckoning their last drawn defence salary in the manner stipulated under the O.M's issued by the Central Government in the Department of Personnel and Training, and thereafter other allowances such as Dearness Allowance, House Rent Allowance, City Compensatory Allowance etc. were added thereto to arrive at the gross salary payable to them. The writ petitioners were drawing the said salary till

2017.

2. In 2017, a re-fixation of the pay of the writ petitioners was effected based on instructions issued by the Central Government in regard to fixation of pay of ex-servicemen re-employed in public sector banks and like organisations. While re-fixing the pay of the writ petitioners, the appellants found that, as per the instructions issued by the Central Government, the component of Military Service Pay [MSP] that was paid to the writ petitioners when they were in Defence service was not to be reckoned in the computation of pay at the time of their re-employment with LIC. Assuming that the MSP component had been erroneously reckoned while fixing the pay and gross salary of the writ petitioners at the time of their initial appointment as Assistants, the appellants issued communications to the writ petitioners pointing out that the re-fixation of pay was done as per the Central Government instructions in force, and that certain amounts were liable to be recovered from them towards alleged excess pay drawn by them consequent to the MSP component of their military pay having been reckoned at the time of fixing their pay in the LIC at the time of their initial appointment in 2009/2010. It was the said communication that was impugned by the writ petitioners in the writ petitions referred above.

3. The learned Single Judge, who considered the issue, found that the re-fixation effected by the appellants in 2017 could not be said to be illegal since it was pursuant to Government instructions issued in this regard. The learned Judge however found that the re-fixation could only have prospective effect from 6.1.2017, the date of the decision taken by the appellants on the directions of the Central Government. The learned Judge however set aside the recovery steps attempted by the appellants from the arrears of pay due to the writ petitioners on account of retrospective operation of the re-fixation, and directed a release of the withheld amounts. The directions of the learned Single Judge read as follows:

“5. Having considered the contentions advanced, I am of the opinion that though the judgment in W.A.No.2094 of 2019 was in respect of re- employed Ex-servicemen in the Punjab National Bank, the principles as well as the circulars which were considered are identical in this case as well. On a writ petition being filed by re-employed ex-servicemen, the learned single Judge had set aside the orders which directed re-fixation of pay. However, after considering the contentions of the parties and other factual aspects of the matter, the Division Bench came to the conclusion that the revision of pay, as carried out by the impugned orders in question was perfectly legal and valid. However, it was held that the orders and circulars could have only prospective effect and that recovery from anterior dates would not b