In a batch of Letters Patent Appeals filed before the Delhi High Court by the Food Corporation of India (FCI) against a common judgment dated 25-02-2026, passed in a batch of writ petitions instituted by the employees/retired employees of FCI, a Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia upheld the impugned judgment and dismissed all appeals.
The writ petitions were regarding the implementation of pay regimes in Central Public Sector Enterprises (CPSEs) – the Central Dearness Allowance (CDA) and the Industrial Dearness Allowance (IDA).
In 1980, the Union of India launched a policy to phase out the Central Dearness Allowance (CDA) pay pattern and migrate employees of Central Public Sector Enterprises (CPSEs) to the Industrial Dearness Allowance (IDA) pattern. The Supreme Court validated this transition in Jute Corporation of India Officers Association v. Jute Corporation of India Ltd (1990) 3 SCC 436, ruling that employees appointed on or after 01-01-1989 would be governed by the IDA pattern, while earlier appointees retained a voluntary option to switch over.
Subsequently, the Department of Public Enterprises (DPE) issued an office memorandum dated 12-06-1990 laying down detailed implementation instructions, including the classification of categories and the manner in which the switch-over to the IDA pattern was to be operationalized. This was followed by other memorandums in 2009 and 2010 stating that the expression “appointment” included “promotion”. Thereafter, FCI issued a circular dated 30-09-2011, mandating a retrospective conversion from the CDA pattern to the IDA pattern for all officers promoted on or after 01-01-1989. FCI then issued internal circulars to proceed with monetary recoveries from employees whose refixation created a negative balance, while simultaneously withholding higher differential benefits and arrears from employees who stood to gain from the conversion.
Aggrieved, two distinct sets of employees filed the said writ petitions. The retired senior officers challenged the retrospective refixation and subsequent coercive recoveries from their salaries, pensions, and retiral dues, whereas the former employees accepted the IDA migration, but challenged FCI’s arbitrary administrative freeze on releasing their positive financial entitlements. By the impugned judgment, the first set was partially allowed, and the second set was fully allowed. Aggrieved, FCI filed the present appeals.
FCI contended that the reliefs granted against recovery in favour of the respondents were contrary to the Supreme Court’s decision that excess payment of public money, even if occasioned by mistake or negligence and in absence of any misrepresentation on part of the employee, was ordinary recoverable since money paid without legal authority could not be retained as a matter of right.
The Court agreed with the findings in the impugned judgment that FCI was not justified in seeking recovery from retired employees after their retirement and stated that the office memorandums as well as the circulars sought to circumvent the Supreme Court’s judgment in Jute Corporation (supra) and to deprive employees appointed prior to 1989 of their right to voluntarily exercise an option between the CDA pattern and the IDA pattern. It was stated that such action against retired employees would occasion manifest hardship.
Further, the Court stated that coercive monetary recovery from retired employees—where the excess payment arose purely from internal administrative errors and not from employee fraud, misrepresentation, or concealment—was arbitrary, inequitable, and legally impermissible under the law laid down in State of Punjab & Ors. v. Rafiq Masih (White Washer) & Ors. (2015) 4 SCC 334. The Court noted the Single Judge’s conclusion that a public-sector enterprise such as the FCI could not implement a policy change arbitrarily. It was found from the record that wherever FCI considered amounts paid under the CDA pattern to be in excess, it sought recovery from its employees; but in cases where the same policy entitled employees to amounts in excess of what had been paid, FCI withheld or denied such benefits. The Court held that a selective and inconsistent application of policy was wholly impermissible.
Further, the Court said that “the implementation of a welfare scheme could not be conditioned upon the unilateral advantage of the employer, particularly where such an approach results in unequal treatment and prejudice to its employees”. The Court ruled that administrative convenience or the mere possibility of future recovery difficulties did not confer authority upon a State instrumentality to deny or indefinitely defer benefits accruing under a pay scale sanctioned by the Central Government. Thus, the Court dismissed all appeals filed by FCI and upheld the Single Judge’s directives, as well as the impugned judgment.
