Rs 17,627 of Army pension held back for a PSC chairman: Supreme Court upholds pay-minus-pension rule
Justice S.V.N. Bhatti and Justice N.V. Anjaria reverse the Uttarakhand High Court, holding that withholding pension during tenure is not a pay cut and that those who accepted the posts cannot challenge the rule.
The Supreme Court on 4 November 2026 held that the Uttarakhand Government may fix the salary of a retired officer appointed to the State Public Service Commission by subtracting his pension from the pay of the post. It set aside two High Court judgments that had struck down the rule as discriminatory.
A bench of Justice S.V.N. Bhatti and Justice N.V. Anjaria decided the two connected appeals. The judgment, written by Justice Anjaria, is marked reportable.
The Court reasoned that the pension is withheld during the term of office and revives when it ends, so nothing is taken away. It also held that both appointees took up their posts with the rule in force and challenged it only near the end of their tenure.
A Lieutenant General and a civil servant
Lieutenant General (Retd.) M.C. Bhandari retired from the Army on 30 August 2006. The State appointed him Chairman of the Uttarakhand Public Service Commission by an order of 3 November 2006, and he took charge on 24 November 2006.
His basic pay was fixed at Rs 26,000 a month, with a note that the pension for his earlier service would be deducted. On 19 December 2006 the Commission’s Finance Controller fixed his salary after deducting Rs 17,627, the pension he drew.
Sohan Lal, the second respondent, was a Provincial Civil Service officer who took voluntary retirement as Additional Secretary on 20 July 2006. He was appointed a Member of the Commission the same day and took charge on 22 July 2006.
His basic pay was fixed at Rs 22,500. The pension fixed at his retirement, Rs 11,025, was deducted to arrive at his salary.
Bhandari represented on 13 June 2007 that his pension was a vested right earned in the armed forces, with no nexus to the Chairman’s office. The State turned him down on 30 June 2007.
Regulation 7(2) and the 2008 memorandum
Article 318 lets the Governor frame regulations on the conditions of service of Commission members. Under its proviso, those conditions cannot be varied to a member’s disadvantage after appointment. The Uttarakhand Public Service Commission (Conditions of Service) Regulations, 2004 were notified on 16 December 2004.
Regulation 7(1) fixes the Chairman’s salary at Rs 26,000 a month and each Member’s at Rs 22,500. Regulation 7(2) covers appointees who are retired Government servants. The Governor is to decide whether the service pension is held in abeyance, wholly or in part, or whether the pay is reduced by an amount not exceeding the pension.
The State said it had always applied pay minus pension to retired Government servants appointed to constitutional posts, including the Commission. After Bhandari’s representation, it obtained the Governor’s determination under Regulation 7(2).
The result was an Office Memorandum of 16 September 2008, issued with the Finance Department’s concurrence. It said the pension due just before the appointee took charge, other than injury or disability pension, would be reduced from the basic pay of the post. It was to apply from 16 December 2004, the date of the notification.
The High Court strikes the rule down
Both men challenged Regulation 7(2) in the High Court of Uttarakhand, which allowed their petitions by judgments of 15 April 2010. It held the regulation ultra vires Article 14 read with Article 39(d), set aside the 2008 order, and directed that any amounts deducted be reimbursed.
The High Court followed a 2004 Punjab and Haryana High Court judgment in Ram Phal Singh v. State of Haryana, which dealt with a similar Haryana regulation. It accepted that the pension was earned for Army service and had no link to the duties of a Commission Chairman.
It rejected the argument that the deduction varied service conditions in breach of the Article 318 proviso. But it found the deduction contrary to the principle of equal pay for equal work.
The State appealed. Mr. Abhishek Atrey appeared for the State, and Senior Counsel Mr. Harshvir Pratap Sharma and Mr. Rohan Thawani for the respective respondents.
Withheld, not withdrawn
Justice Anjaria framed the central question as whether the appointees could claim the pay of the post and the earlier pension together.
“whether they are entitled to receive the salary added by the amount of pension which was receivable by them in respect of the post held before their retirement” (para 3.4)
The bench said the High Court was right on one point: keeping pension in abeyance does not vary conditions of service under the Article 318 proviso. The deduction operates only while the person holds the post.
At the end of the term, the pension that was held back revives, and the appointee receives what was withheld.
“There was no withdrawing of the pension.” (para 7.2)
On that footing, the bench held, the equal pay for equal work principle has no bearing. The High Court, it said, wholly misdirected itself in finding Regulation 7(2) ultra vires Articles 14 and 39(d).
The bench relied on Gurmesh Prakash Bishnoi v. State of Haryana, (1998) 5 SCC 260. That case concerned a person who served first as a Member and then as Chairman of the Haryana Public Service Commission and sought a separate pension for each stint.
Under the Haryana regulations, the Court there had held, a former Member could not draw his Member’s pension while serving as Chairman. The bar lifted once he ceased to hold office, and the entitlement then arose. The present bench treated that as an answer to the issue.
The State had also pointed to paragraph 526 of the Civil Service Regulations, which lets the authority fixing pay for a re-employed military pensioner reduce it by up to the amount of the pension. The bench noted a similar proviso in the Union Public Service Commission (Members) Amendment Regulations, 2007.
The Governor’s decision and the file notings
The respondents made what the bench called a faint attempt on timing. They argued that Regulation 7(2) could not operate without the Governor’s determination, and that the Office Memorandum of 2008 could not be applied backwards to their 2006 appointments.
The bench rejected the argument. The 2004 Regulations were in force when both men were appointed, and their salaries were fixed under Regulation 7(1) read with Regulation 7(2). Nothing in the regulation requires the Governor to decide at the moment of appointment or earlier.
Nor does it bar pay minus pension from being applied until the Governor decides. The Memorandum reflected the Government’s decision, the bench said. It found no element of retrospectivity, and held that at best the Memorandum operated retroactively.
It added that accepting the respondents’ case would produce absurd results. If the pension were added to the pay of the post, the total would exceed that salary, and perhaps the salary of the highest post.
Because irregularity in the Governor’s determination was alleged, the Court called for the State’s file. The notings showed that the Joint Secretary, Personnel, forwarded a letter of 29 May 2007 to the competent authority seeking a decision on the Chairman’s salary and the deduction.
An opinion on file said the deduction accorded with the regulations. The Finance Department said it matched past practice and advised fixing the Chairman’s pay by deducting his basic pension. A proposal went up for the Governor’s approval under Regulation 7(2), and the Memorandum followed. The bench called the contention meritless.
Accepting the post, then fighting the rule
The bench held that the respondents were estopped from disputing the Regulations. They were appointed after the Regulations were notified and could not disclaim knowledge of the conditions attached to the posts.
Both accepted office with open eyes, it said, and then claimed a different position on the Regulations.
“One who participates in a game, cannot later challenge the rules of the game.” (para 12)
The bench said that principle, long applied to candidates in selection processes and students in examinations, applies equally to a Government servant who accepts a post and later resiles from its service conditions.
The appointments were made in 2006. The two men enjoyed the posts for more than two years and challenged Regulation 7(2) only at the fag end of their tenure, the bench noted. The principle of acquiescence, it held, barred the challenge.
Order
The Supreme Court held that the High Court committed a manifest error in declaring Regulation 7(2) of the Uttarakhand Public Service Commission Regulations ultra vires. It set aside the High Court judgments of 15 April 2010 in Writ Petitions No. 182 (SB) of 2008 and No. 181 (SB) of 2008.
Civil Appeal Nos. 1614 and 1615 of 2011 were allowed. Any pending interlocutory application ceases to survive.