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Mukund K. Pai v. Punjab National Bank

Civil Appeal · 2025 INSC 1033Decided 30 Jul 2025
Civil Appeal No. of 2025 (Arising out of SLP (C) No. 8223 of 2020)
Justice J.K. Maheshwari · Justice Vijay Bishnoi

Background

The appellants, retired Indian Navy officers, were re-employed by Punjab National Bank between 2015 and 2017 as clerical-cadre staff, and their pay was initially fixed at a certain level. Later, following a clarification from the Indian Banks' Association and an internal bank circular, the Bank retroactively reduced their basic pay, treating their original fixation as a mistake. The Kerala High Court's Single Judge sided with the ex-servicemen, holding a 2014 Government of India guideline on ex-servicemen's pay fixation could not be overridden by the IBA's internal clarification, but the Division Bench reversed this on appeal, prompting the present appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that the binding 2014 Government guidelines on pay fixation for re-employed ex-servicemen take precedence over the IBA's clarification and the Bank's internal circular, which could not lawfully override them: a point the Bank itself effectively conceded during the hearing. Separately, and independently, the Court held that reducing an employee's pay years after it was fixed, causing them real financial loss, cannot be done without first giving them notice and a chance to be heard: a basic requirement of natural justice that the Bank had ignored. The appeal was allowed: the pay reduction was quashed, all recoveries/refunds arising from it were undone, and the Bank was directed to re-fix pay strictly per the 2014 guidelines, with due process if any future reduction is contemplated.

Lesson Learnt

An employer cannot rely on an internal circular or an industry association's clarification to override binding government guidelines, and no employee's pay can be cut, even to "correct" an earlier mistake, without first giving them notice and a genuine opportunity to be heard.

Official source (sci.gov.in)View Judgment (PDF)

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