The Delhi High Court has held that retired Department of Telecommunications (DoT) employees who were permanently absorbed into Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) cannot claim revision of their pension under the recommendations of the 7th Central Pay Commission (CPC).
Allowing a batch of writ petitions filed by the Union of India, the Division Bench clarified that although these retirees continue to receive pension under Rule 37A of the Central Civil Services (Pension) Rules, 1972, the Rule only governs the method of pension calculation at the time of retirement and does not extend future Central Pay Commission-based pension revisions.
Background of the Case
The dispute arose from an order passed by the Central Administrative Tribunal (CAT), Principal Bench, on September 20, 2023. The Tribunal had directed the Union Government to revise the pension of BSNL and MTNL combined service pensioners in accordance with the recommendations of the 7th CPC.
The respondents were originally employees of the Department of Telecommunications. Following the corporatisation of telecom services, they opted for permanent absorption into BSNL or MTNL. After retirement, they became combined service pensioners governed by Rule 37A of the CCS (Pension) Rules, under which pension is computed by taking into account both their Government and PSU service.
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The pensioners argued that since several pension-related benefits and revised pensionary rules flowing from the 6th and 7th CPC had already been extended to them, they were also entitled to revision of their basic pension on the same lines as Central Government pensioners. They also pointed out that all 7th CPC benefits, except pension revision, had already been extended to them.
Government's Stand
The Union Government challenged the Tribunal's decision, contending that once the respondents accepted permanent absorption into BSNL or MTNL, they ceased to be Central Government employees.
It argued that the absorbed employees were governed by the Industrial Dearness Allowance (IDA) pay structure applicable to public sector undertakings and that their pay and pension revisions were linked to the recommendations of the Pay Revision Committee (PRC), not the Central Pay Commission.
The Government further submitted that the 7th CPC recommendations applied only to Central Government pensioners and Government employees drawing pro-rata pension, and not to combined service pensioners governed by Rule 37A.
Another key submission was that pension revision is a consequence of pay revision. Since the recommendations of the 3rd Pay Revision Committee were never implemented in BSNL and MTNL owing to the financial condition of the PSUs, there was no revised IDA pay structure that could justify a corresponding revision of pension.
Court's Observations
After examining Rule 37A, the Office Memoranda, the statutory framework and the history of BSNL and MTNL absorption, the High Court concluded that the Tribunal had incorrectly interpreted the scope of Rule 37A.
The Bench observed:
“The Rule only extends a limited promise, i.e., when absorbees retire from a PSU their pension will be calculated like that of Central Government servants at the time of their retirement by employing the same formula. The Rule does not go further.”
The Court held that Rule 37A ensures parity only in the method of pension calculation at the time of retirement. It does not entitle permanently absorbed PSU employees to every future benefit arising from subsequent Central Pay Commission recommendations.
The Bench further noted that the respondents had ceased to be Government servants upon permanent absorption into BSNL and MTNL. While they continued to receive pension under Rule 37A, their service conditions thereafter were governed by the rules applicable to the respective PSUs, including the IDA pay structure and the PRC framework.
The Court also rejected the respondents' contention that extension of certain revised pensionary rules under the 6th and 7th CPC automatically created a right to revision of basic pension. It held that those Office Memoranda merely extended limited pensionary benefits and revised methods of computation and did not amount to an order revising pension itself.
Importantly, the Bench observed that pension revision ordinarily follows pay revision. Since the 3rd PRC had not been implemented for BSNL and MTNL, there was no revised pay structure on which any corresponding revision of pension could be based.
The Court also found that the recommendations of the 7th CPC were specifically meant for Central Government employees and Government servants drawing pro-rata pension, and not for combined service pensioners drawing pension under the IDA framework.
Decision
Holding that there was no statutory provision, executive order or constitutional basis for extending the benefits of the 7th Central Pay Commission to BSNL and MTNL combined service pensioners, the Delhi High Court set aside the Central Administrative Tribunal's order.
The Court concluded that Rule 37A provides only a limited assurance regarding the calculation of pension at the time of retirement and does not create an entitlement to future pension revisions under successive Central Pay Commission recommendations. Accordingly, the writ petitions filed by the Union of India were allowed.
Case Details:
Case Title: Union of India Through Its Secretary Department of Telecommunication & Ors. v. All India Retired Bharat Sanchar Nigam Limited Executive Welfare Association & Ors.
Case Number: W.P.(C) 4946/2024 with connected matters
Judge: Justice C. Hari Shankar and Justice Om Prakash Shukla
Decision Date: 1 July 2026
