MUKUND K. PAI & ORS. versus PUNJAB NATIONAL BANK & ORS

Citation: [2025] 7 S.C.R. 2148 · Decided: 30-07-2025 · Supreme Court of India · Bench: J.K. MAHESHWARI · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2025] 7 S.C.R. 2148 : 2025 INSC 1033
Mukund K. Pai & Ors. 
v. 
Punjab National Bank & Ors.
(Civil Appeal No. 9918 of 2025)
30 July 2025
[J.K. Maheshwari and Vijay Bishnoi, JJ.]
Issue for Consideration
Issue arose as regards to whether Indian Banks Association 
Clarification and HRMD Circular can override the 2014 guidelines for 
the purpose of pay fixation of ex-servicemen during re-employment; 
whether re-fixation as done by the respondent-Bank pursuant to 
the IBA Clarification is in consonance with the guidelines dated 
17.02.2014 and whether the High Court was justified in confirming 
such re-fixation; and if not, in what manner can the fixation of pay 
of ex-servicemen may be made on their re-employment and what 
reliefs can be granted to the appellants-ex-servicemen.
Headnotes†
Service Law – Pay fixation – Pay fixation of ex-serviceman  
re-employed in public sector bank – Post-retirement from 
Indian Navy, the appellants took re-employment with the 
respondent-bank – Subsequent to issuance of IBA Clarification, 
the respondent-bank vide HRMD circular re-fixed the pay 
of the appellants at an amount lower than what they were  
re-employed at – Appellants filed writ petition – Single Judge 
of the High Court quashed the order of re-fixation – Division 
Bench set aside the order passed by the Single Judge – 
Challenge to:
Held: IBA Clarification and the subsequent HRMD Circular do 
not override the 2014 guidelines – Refixation done by the bank 
ignoring 2014 guidelines in applying IBA clarification and the 
HRMD circular to be quashed – Bank while re-fixing the pay had 
violated the principles of natural justice and reduced the pay of 
appellants without hearing them – IBA clarification and HRMD 
circular are not in consonance with the 2014 guidelines for pay 
fixation of ex-servicemen and for purpose of fixation of pay, the 
2014 guidelines shall prevail over the IBA clarification and HRMD 
[2025] 7 S.C.R. 
2149
Mukund K. Pai & Ors. v. Punjab National Bank & Ors.
circular – Re-fixation applying IBA clarification and HRMD circular 
by ignoring the 2014 guidelines not justified – By virtue of passing 
order of re-fixation, the appellants have suffered civil consequences, 
thus, without affording an opportunity, re-fixation so done, was in 
violation of principle of natural justice hence, is set-aside – Bank 
to apply the 2014 guidelines and re-fix the pay of the appellants 
on the principles culled out – Recovery and refund, if any, shall 
stand quashed – Refixation be made afresh – While fixing the pay, 
in case, the pay of the appellants is reduced from initial fixation, 
the bank shall observe the principle of natural justice – Guidelines 
dated 17.02.2014 issued by Department of Financial Services 
(Welfare) – Indian Banks Association, letter dated 17.05.2018 – 
HRMD Circular No.413/2018 dated 22.06.2018. [Paras 24-26]
Service Law – Pay fixation of ex-serviceman re-employed 
in public sector bank – Guidelines dated 17.02.2014 issued 
by Department of Financial Services (Welfare) – cl.2.1, 
2.1(ii), 2.1(iii)  – Essentials for re-fixation of the pay of an 
ex-serviceman on re-employment in the public sector bank – 
Stated. [Para 19]
Case Law Cited
State Bank of India and Others v. K.P. Subbaiah [2003] Supp. 
1 SCR 545 : (2003) 11 SCC 646; Bhagwan Shukla v. Union of 
India and Others [1994] Supp. 2 SCR 419 : (1994) 6 SCC 154 – 
referred to.
List of Keywords
Re-fixation of pay of ex-servicemen on re-employment; ‘Pay-fixation 
of ex-servicemen’; Guidelines dated 17.02.2014; Department of 
Financial Services (Welfare); Indian Banks Association Clarification 
(IBA Clarification); HRMD Circular; Principles of natural justice; 
Pay reduction; 2014 guidelines prevail over the IBA clarification 
and HRMD circular; Recovery and refund.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No.  
9918 of 2025
From the Judgment and Order dated 07.02.2020 of the High Court 
of Kerala at Ernakulam in WA No. 2094 of 2019.
2150
[2025] 7 S.C.R.
Supreme Court Reports
Appearances for Parties
Advs. for the Appellants:
Gautam Narayan, Sr. Adv., Liju V Stephen, James P. Thomas, 
Mrs. Indu Susan Jacob, Ravi Sagar, Ms. Asmita Singh, Ms. Asmita 
Singh.
Advs. for the Respondents:
Dhruv Mehta, Sr. Adv., Rajesh Kumar Gautam, Anant Gautam, 
Deepanjal Choudhary, Ms. Likivi Jakhalu.
Judgment / Order of the Supreme Court
Order
1)	
Leave granted. 
2)	
The instant appeal has been preferred by the ex-servicemen, 
challenging the impugned

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