(1) The Chief of the Naval Staff may sanction the award of Meritorious Service Medal, with annuity to men of the Indian Navy. The number of awards authorized in the service shall be determined at the scale of one for every 800 men of the sanctioned strength as 31 December of the year for which the Meritorious Service Medals are to be awarded.
(2) A vacancy shall be considered to have occurred on the death, dismissal, discharge or disrating of the awardee or his transfer to pension establishment or promotion to commissioned rank or on forfeiture of the medal involving immediate stoppage of the annuity to the individual, and awards may be made against the vacancies thus caused in the permanent quota.