Promotion Does Not Cease To Be Promotion Just Because Employee's Grade Pay Doesn't Change : Supreme Court

The Supreme Court on Thursday held that promotions earned by Railway Guards within the Guard cadre must be counted while determining entitlement under the Modified Assured Career Progression Scheme (MACPS), ruling that employees who have reached the post of Mail/Express Guard are not entitled to further financial upgradations to higher Grade Pays under the scheme.

A Bench of Justice Sanjay Karol and Justice Augustine George Masih allowed appeals filed by the Union of India and set aside Rajasthan High Court and Central Administrative Tribunal (CAT) orders which had directed grant of second and third MACP financial upgradations to retired Mail/Express Guard Harbans Lal Verma.

The Court restored the Railway administration's decision rejecting the employee's claim for Grade Pay of Rs. 4,600 and Rs. 4,800 under the MACPS.

The dispute arose after the Sixth Central Pay Commission merged several posts in the Guard cadre into the same Grade Pay of Rs. 4,200. The respondent contended that since he remained in the same Grade Pay throughout his career despite promotions, he was entitled to financial upgradations under the MACPS.

Rejecting this contention, the Court held that promotions within the Guard cadre remained genuine promotions even if they carried the same Grade Pay.

"A promotion does not cease to be a promotion merely because the promotee's Grade Pay does not change," the Bench observed.

The Court noted that each promotion involved a formal selection process, enhanced responsibilities, promotional increments and higher running-duty allowances, resulting in substantially higher overall emoluments.

“An employee who has traversed the Guard cadre up to Mail/Express Guard has earned three promotions counted under Paragraph 8 (with the Passenger Guard to Senior Passenger Guard movement ignored under Paragraph 5) and has thereby exhausted all three financial upgradation slots under the MACPS. He is not entitled to any further financial upgradation.”, observed the bench.

Briefly put, the respondent joined the Railways as a Goods Guard in 1976 and was promoted first as Passenger Guard and later as Mail/Express Guard before retiring in 2009 after more than 32 years of service.

Following the introduction of MACPS, he was initially granted second and third financial upgradations carrying Grade Pay of ₹4,600 and ₹4,800. However, after the Railway Board clarified that promotions within the Guard cadre had to be counted under Paragraph 8 of the MACPS, the benefits were withdrawn.

The Central Administrative Tribunal and Rajasthan High Court ruled in the employee's favour, prompting the Union of India to approach the Supreme Court.

Setting aside the concurrent findings of the High Court and CAT, the judgment authored by Justice Masih observed that since the Respondent received the financial benefits from the promotion in the Railways Guard Cadre, and was not financially stagnated, therefore, his promotion would be counted as a financial upgradation without actual grant of financial upgradation carrying grade pays.

“Each promotion within the Guard cadre entailed a promotional increment and the consequential enhancement of running-duty allowances and post-specific emoluments, the details of which have been noted in the preceding analysis. An employee who received these financial benefits through successive promotions has not experienced financial stagnation within the meaning of the MACPS and is not entitled to further financial upgradation under the Scheme on that ground.”, the Court held.

The Court explained that a promotion does not stop being a promotion simply because the Grade Pay remains the same. If an employee moves to a higher post through a formal promotion, gets greater responsibilities, and receives other financial benefits such as promotional increments and higher allowances, it is still a promotion, not qualifying for further financial upgradations under the MACP scheme.

“all similarly situated Railway Guards across Indian Railways who have traversed the Guard cadre up to Mail/Express Guard and whose MACP claims at Grade Pay Rs. 4600 and Rs. 4800 were denied or withdrawn pursuant to RBE No. 76/2011, RBE No. 142/2012, or any administrative order consistent with this judgment, and who have not already received those benefits pursuant to individual orders that have attained finality and been implemented inter partes, shall have their MACP positions regulated in accordance with the law as declared in this judgment. Employees who have received MACP benefits pursuant to orders of a Tribunal or High Court that have attained finality between the parties concerned and have been implemented shall not be subjected to any recovery or revision on the basis of this judgment.”, the Court held.

Importantly, the Court clarified that “no recovery of any MACP benefits already paid to the Respondent shall be made.” The Court ordered so, after recording the Union's statement.

In terms of the aforesaid, the appeals were allowed.

Headnote

Service Law — Modified Assured Career Progression Scheme (MACPS) — Counts of Same Grade Pay Promotions — Railway Guard Cadre Structure - Modified Assured Career Progression Scheme (MACPS), Paragraphs 2, 5, and 8 — Railway Board Circulars (RBE No. 76/2011 and RBE No. 142/2012) — Entitlement to 2nd and 3rd financial upgradations to Grade Pay Rs. 4600 and Rs. 4800 — Counter-claim based on structural convergence of Grade Pay post-6th Central Pay Commission (CPC) - Key Rulings & Interpretations – i. Applicability of Paragraph 8 to the Guard Cadre - The Supreme Court held that Paragraph 8 of the MACPS strictly applies to the Railway Guard cadre - The movements across the distinct posts of Senior Goods Guard, Passenger Guard, Senior Passenger Guard, and Mail/Express Guard within the cadre constitute functional "promotions" under the relevant Recruitment Rules and Avenue Chart, despite carrying the identical compressed Grade Pay of Rs. 4200 in Pay Band PB-2 post the 6th CPC recommendations - A promotion does not cease to be a promotion merely because the employee's Grade Pay remains constant – ii. Exhaustion of MACPS Slots - An employee who has traversed the promotional hierarchy up to the terminal post of Mail/Express Guard is deemed to have earned three functional promotions (with the movement from Passenger Guard to Senior Passenger Guard ignored under Paragraph 5 due to direct merger of scales) - such an employee has exhausted all three financial upgradation slots available under the MACPS and cannot claim further financial upgradation to Grade Pay Rs. 4600 or Rs. 4800; iii. Financial Reality vs. Stagnation - The Supreme Court observed that promotions within the Guard cadre are not financially neutral - Each advancement involves a formal selection process, pay fixation, promotional increments, and an upward revision of basic pay that significantly enhances running-duty allowances and post-specific additional allowances - employees reaching the terminal post cannot be characterized as suffering from the "financial stagnation" the MACPS was designed to remedy; iv. Scope of Paragraph 5 (Transitional Adjustments) - The illustration appended to Paragraph 5 is a transitional provision regulating the treatment of pre-MACPS ACP-era promotions/upgradations up to 01.09.2008 - It does not override Paragraph 8 for the post-01.09.2008 MACPS operational period, nor does it mandate the total exclusion of structural promotional rungs when calculating future stagnation benefits; v. Binding Nature of Executive Clarifications - Departmental and executive clarifications issued by the Railway Board in consultation with the Department of Personnel and Training (DoPT), such as RBE No. 76/2011 and RBE No. 142/2012, are integral to the Scheme and binding on authorities. Financial upgradation under the MACPS cannot exceed the maximum Grade Pay ceiling attached to the highest promotional post in the respective hierarchy; vi. Precedential Value of Dismissals in Limine - A non-speaking dismissal of a Special Leave Petition (SLP), or an order keeping the question of law open, does not constitute a declaration of law under Article 141 of the Constitution of India and does not invoke the doctrine of merger. [Relied on Union of India and Others v. M.V. Mohanan Nair (2020) 5 SCC 421; Kunhayammed and Others v. State of Kerala and Another (2000) 6 SCC 359; Paras 36-65]

Cause Title: UNION OF INDIA AND OTHERS VERSUS HARBANS LAL VERMA (with connected matters)

Citation : 2026 LiveLaw (SC) 712

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Appearance:

For Petitioner(s) : Mr. Vikramjit Banerjee, A.S.G. Mr. Nachiketa Joshi, Sr. Adv. Mr. Shubhendu Anand, Adv. Mr. Amit Sharma-ii, Adv. Mr. Raman Yadav, Adv. Mr. Ayush Anand, Adv. Mr. Amrish Kumar, AOR

For Respondent(s) :Mr. Keshav Baheti, Adv. Mrs. Aanchal Maheshwari, Adv. Mr. Kanishak Saini, Adv. Mr. Ashutosh Thakur, AOR Dr. Sumant Bharadwaj, Adv. Dr. Vedant Bharadwaj, Adv. Ms. Mridula Ray Bharadwaj, AOR Mr. D.m.sharma, Adv. Mrs. Amrita Behera, Adv. Mrs. Pooja Gupta, Adv. Ms. Anshita Sharma, Adv.