In Union of India & Ors. vs. All India Retired Bharat Sanchar Nigam Limited Executive Welfare Association and Ors., the Delhi High Court set aside an order by the Central Administrative Tribunal (CAT) that had directed the government to revise the pensions of retired BSNL and MTNL employees in accordance with the 7th Central Pay Commission (CPC). The Court held that once these employees were permanently absorbed into Public Sector Undertakings (PSUs), they ceased to be government servants and became subject to the Industrial Dearness Allowance (IDA) pay structure and the recommendations of Pay Revision Committees (PRCs) rather than CPCs. The Court clarified that Rule 37A of the CCS (Pension) Rules only guarantees that the formula for calculating pension at the time of retirement will match that of government servants; it does not confer a right to subsequent revisions based on future Pay Commissions designed for Central Government employees .
- Factual Background
The case involved a batch of writ petitions filed by the Union of India challenging a CAT order that granted pension parity to “combined service pensioners”—erstwhile employees of the Department of Telecommunications (DoT) who were absorbed into BSNL and MTNL during the corporatization of telecom services in 1986 and 2000. These employees opted for permanent absorption into the PSUs on the understanding that their pension would be calculated on a “combined service” basis (Government + PSU service) using the government’s formula.
- The Core Dispute
The retired employees argued that they were entitled to have their pensions revised using the 2.57 multiplier recommended by the 7th CPC, just like regular Central Government pensioners. They contended that the government had provided an “unequivocal assurance” at the time of absorption that their pensionary protection would remain intact and at par with government servants. Conversely, the government argued that these retirees were now PSU employees fitted into the IDA pay scale, and their pension revision was contingent on the 3rd PRC, which had not been implemented for BSNL/MTNL due to their poor financial health.
- Arguments of the Parties
- The Government (Petitioners): Asserted that under Rule 37A, absorbed employees are deemed retired from government service. They argued that CPC recommendations only apply to the Central Dearness Allowance (CDA) scale, while the respondents are governed by the IDA scale, which is distinct and exclusive.
- The Retired Employees (Respondents): Relied on Rule 37A(8) and various Office Memoranda (OMs) to claim that they were promised identical treatment to government pensioners. They pointed out that they had received certain benefits from the 6th CPC, establishing a precedent for parity.
- Court’s Analysis and Reasoning
- Interpretation of Rule 37A: The Court found that Rule 37A created a “legal fiction” where absorbed employees are considered retired from the government from the date of their absorption. The protection offered by Rule 37A(8) is restricted to the initial calculation of pension at the time of retirement and does not extend to “subsequent revisions arising from future Pay Commissions”.
- CDA vs. IDA Distinction: The Court emphasized that Central Government servants and PSU employees stand on “different footing” regarding pay and pension systems . CPCs are expert bodies for government servants (CDA), while PRCs perform that role for PSUs (IDA) .
- Nexus Between Pay and Pension: The Court reaffirmed the principle that pension revision is intrinsically linked to pay revision. Since the respondents’ IDA pay scales had not been revised due to the non-implementation of the 3rd PRC, their pension could not be revised “in vacuum” using a CPC multiplier intended for an entirely different pay structure .
- Rejection of the “Assurance” Argument: The Court ruled that the OMs and circulars relied upon by the respondents did not guarantee perpetual assimilation with the Central Government; they merely ensured the preservation of the pensionary formula at retirement .
- Final Conclusion
The High Court concluded that the CAT had proceeded on an “erroneous understanding” of Rule 37A . It held that the respondents, as combined service pensioners under the IDA regime, cannot claim benefits from the 7th CPC . The Court allowed the writ petitions and set aside the CAT’s directions for pension revision.
2026 DHC 5241
Union of India Through Its Secretary Department of Telecommunication & Ors. V. All India Retired Bharat Sanchar Nigam Limited Executive Welfare Association And Ors. (D.O.J. 01.07.2026)




