The Supreme Court has upheld the validity of a Uttarakhand regulation permitting pension earned from previous government service to be adjusted against the salary payable to a retired government servant appointed as Chairperson or Member of the State Public Service Commission.
A Bench of Justices S.V.N. Bhatti and N.V. Anjaria held that the “pay minus pension” arrangement under Regulation 7(2) of the Uttarakhand Public Service Commission (Conditions of Service) Regulations, 2004 did not violate the constitutional principle of equal pay for equal work.
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Allowing the State of Uttarakhand’s appeals, the Court set aside two Uttarakhand High Court judgments dated April 15, 2010, which had declared the regulation unconstitutional and directed reimbursement of deductions. Justice Anjaria authored the judgment delivered on November 4, 2026.
The dispute arose from separate petitions filed by Lieutenant General (Retired) M.C. Bhandari, who was appointed Chairman of the Uttarakhand Public Service Commission, and Sohan Lal, who was appointed a Member.
Following his retirement from the Indian Army in August 2006, Bhandari was appointed Chairman by an order dated November 3, 2006. He assumed office on November 24, 2006.
His basic monthly salary was fixed at ₹26,000, together with admissible allowances. However, the pay-fixation order stipulated that pension earned from his previous military service would be deducted from the salary payable as Chairman. The Finance Controller accordingly deducted his pension amount of ₹17,627 while fixing his salary.
Bhandari sought redetermination of his remuneration, arguing that military pension was a vested right earned through previous service and had no connection with his duties as Chairman. The State rejected his representation.
In the connected matter, Sohan Lal took voluntary retirement as Additional Secretary in the Uttarakhand Government on July 20, 2006. He was appointed a Member of the Commission and assumed office on July 22, 2006.
His basic monthly salary was fixed at ₹22,500, from which his pension of ₹11,025 was deducted. He challenged the adjustment on similar grounds.
The regulations were notified on December 16, 2004 under Article 318 of the Constitution, which empowers the Governor to determine the service conditions of members of a State Public Service Commission.
Regulation 7(1), as applicable to the dispute, prescribed monthly salaries of ₹26,000 for the Chairman and ₹22,500 for other Members.
Regulation 7(2) specifically dealt with appointments of retired government servants. It authorised the Governor to determine whether their service pension should be held wholly or partly in abeyance. Alternatively, where pension continued to be drawn in full, the prescribed pay could be reduced by an amount not exceeding the service pension, including its commuted portion.
An Office Memorandum dated September 16, 2008 recorded the Governor’s determination that pension payable immediately before assumption of office should be deducted from the basic pay of retired Central or State government officers appointed to these posts. Injury and disability pensions were excluded from the adjustment.
The High Court considered pension earned through previous service unrelated to the duties and responsibilities attached to the office of Chairman or Member of the Commission.
Since the appointees performed all the duties of their respective offices, it held that reducing their remuneration because they received pension violated the principle of equal pay for equal work.
It consequently declared Regulation 7(2) ultra vires Article 14 read with Article 39(d) of the Constitution and directed reimbursement of deductions made under the September 2008 communication.
However, the High Court rejected the separate argument that the arrangement amounted to a disadvantageous alteration of service conditions prohibited by the proviso to Article 318.
Reversing the High Court’s principal finding, the Supreme Court held that the doctrine of equal pay for equal work was not attracted to the pension adjustment.
The Bench distinguished withdrawal of pension entitlement from withholding it during the period in which the pensioner occupied the Commission’s office. It explained that the restriction operated during the tenure as Chairman or Member and that the pension entitlement revived after the tenure ended.
On this reasoning, the Court found no unconstitutional variation of service conditions under the proviso to Article 318. It also rejected the conclusion that Regulation 7(2) violated Articles 14 and 39(d).
The Court further reasoned that permitting receipt of the full prescribed salary in addition to the earlier pension would result in total receipts exceeding the salary attached to the office.
The Bench relied on Gurmesh Prakash Bishnoi v. State of Haryana and Others, (1998) 5 SCC 260. That case concerned pension entitlement arising from service first as a Member and subsequently as Chairman of the Haryana Public Service Commission. The applicable regulation imposed an embargo on receiving a Member’s pension while serving as Chairman.
The Supreme Court referred to the earlier ruling’s explanation that the embargo ceased when the person left the Chairman’s office. It treated the distinction between a temporary restriction and loss of pension entitlement as relevant to the present dispute.
The judgment also noted comparable pension-adjustment provisions in the Union Public Service Commission framework and provisions of the Civil Service Regulations concerning military pensioners taking up civil employment.
The former officeholders argued that the Governor’s determination came after their appointments and that the September 16, 2008 memorandum could not be applied retrospectively.
The Supreme Court rejected this contention, noting that the 2004 regulations were already in force when both appointments were made in 2006. Their salaries had been fixed by applying Regulation 7(1) together with Regulation 7(2).
The Bench found nothing in Regulation 7(2) requiring the Governor’s determination to precede, or coincide with, the appointment. It also found no prohibition against fixing pay after pension adjustment pending that determination.
To examine the allegation of procedural irregularity, the Court called for the official file notings. These showed that the Personnel and Finance Departments had considered the issue and that the proposal had been routed for the Governor’s approval.
The Court therefore concluded that the determination had been duly made and legally applied. It rejected the argument of impermissible retrospectivity, describing the memorandum’s operation, at most, as retroactive.
The Supreme Court additionally emphasised that both appointees accepted their posts while the regulations and attached service conditions were already operative.
Having assumed office with knowledge of those conditions, they were estopped from disputing the regulations’ applicability and the salary fixation made under them, the Court held.
It also invoked acquiescence, noting that the appointees had enjoyed the benefits of office before bringing their challenges. This provided an additional ground for allowing the State’s appeals, alongside the substantive rejection of the constitutional objections.
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