The centre has blamed discrepancies in the "One Rank One Pension" policy on former Finance Minister P Chidambaram, who it said made a statement in parliament in 2014 on OROP without any recommendation by the then Union cabinet.
The centre's reply in the Supreme Court comes days after the court questioned discrepancies between parliamentary discussion on OROP in 2014 versus the actual policy in 2015.
OROP is short for "One Rank One Pension", which aims pension uniformity for armed forces personnel retiring at the same rank with the same length of service.
"The statement on in-principle approval of OROP for defence services was made by then Finance Minister P Chidambaram on February 17, 2014, without any recommendation by the then Union cabinet," the centre said in its affidavit filed in the Supreme Court today.
"On the other hand, the cabinet secretariat conveyed the approval of the Prime Minister in terms of Rules 12 of the Government of India (Transaction of Business Rules) 1961 on November 7, 2015," it said.
In the last hearing last week, a bench of Justices DY Chandrachud, Surya Kant and Vikram Nath had noted a contention on discrepancy between parliamentary discussion and the OROP policy, which was raised by the petitioner Indian Ex-servicemen Movement.
The government has said that while framing the OROP regime, it has not brought out any discrimination between defence personnel who are in the same rank with the same length of service, while the petitioners are seeking OROP on merely the same rank, overlooking the same length of service.
The centre also sought to counter the contention of petitioners for "automatic" revision of OROP, saying such dynamic calculations is "unheard of" in practice.
The petitioner wants OROP to be automatically revised every year, instead of the current policy of a periodic review once in five years. The petitioners said veterans who retired in 2014 are drawing more pension than those who retired between 1965 and 2013, which defeats the purpose of OROP.
The centre has attributed the difference in pension to a process called Modified Assured Career Progression, or MACP, which provides salary hike for those who have not been promoted for decades.
By connecting OROP with MACP, the government has reduced benefits substantially and the principle of OROP has been defeated, the petitioner said.