Justice Pamidighantam Sri Narasimha, Justice Joymalya Bagchi, Supreme Court
Supreme Court: Contractual Service Rendered Prior To Regularisation To Be Counted For Payment Of Pensionary Benefits
|The Supreme Court partly allowed an Appeal against the High Court's decision, which denied pension to employees for the period of their contractual service even after they were regularised.
The Supreme Court reiterated that the contractual service period rendered by an employee prior to their regularisation must be counted towards the payment of pensionary benefits.
The Court partly allowed an Appeal against the Judgment of the Karnataka High Court, which held that the Appellants, who were initially appointed on a contractual basis and subsequently regularised, would not be entitled to seniority, service benefits, and pension for the period of their contractual service. The Court directed the grant of pensionary benefits in accordance with law to the Appellants.
A Bench of Justice Pamidighantam Sri Narasimha and Justice Joymalya Bagchi held, “In light of the clear language of Rule 17 of the Pension Rules as well as its interpretation in Sheela Devi (supra), the contractual service period rendered prior to the appellants’ regularisation in 2015 must be counted towards the payment of their pensionary benefits in accordance with the mechanism set out in Rule 17. In line with the directions issued in Sheela Devi (supra) extracted hereinabove, we direct the respondent Union of India to take immediate steps and indicate the mode and manner for the appellants to exercise the option provided under Rule 17 of the Pension Rules as well as to notify the amounts that the appellants would have to remit in case they opt for grant of pension under the Rules.”
AOR Gaurav Dhingra appeared for the Appellants, while Additional Solicitor General KM Nataraj represented the Respondents.
Brief Facts
The Appellants were appointed as Data Entry Operators on a temporary and contractual basis under the 'Rationalisation of Data Processing Facilities' scheme. Pursuant to an Order of the Central Administrative Tribunal (CAT), the Respondents issued an Office Memorandum to regularise the Appellants' service from a prospective date.
The Appellants preferred an Application before the CAT, seeking regularisation from their initial appointment date or after completing 10 years of service, protection of pay, and grant of seniority, service benefits and pension by counting their contractual service period. The CAT allowed this application.
The Respondents challenged the CAT's Order, and the High Court partly allowed the Writ Petition. The High Court set aside the CAT's directions regarding seniority, service benefits, and pension, holding that the Appellants were entitled to the benefits only after their regularisation.
Court’s Reasoning
The Supreme Court referred to Rule 17 of the Central Civil Services (Pension) Rules, 1972, which deals with counting service on contract for pension purposes.
The Bench noted, “Before commencing our analysis, it is necessary to note the scope of prayers made before the CAT and High Court, and before this Court. The prayer before the CAT is for regularisation with retrospective effect, protection of pay, and grant of seniority and service and pension benefits by counting the period of contractual service. Pursuant to the High Court’s impugned order dated 23.03.2021, only the appellants’ pay has been protected while their prayers for seniority, service and pension benefits by including the contractual period have been rejected.”
The Court referred to its decision in State of H.P. v. Sheela Devi (2023), wherein it was held that “although Rule 2(g) of the Pension Rules excludes contractual employees from their application, Rule 17 applies once such contractual employee is regularised on a later date.”
The Court, therefore, held that Rule 17 applied once a contractual employee was regularised. Upon regularisation, the Pension Rules apply, and Rule 17 provides that past service as a contractual employee be considered for calculating pension.
Consequently, the Court ordered, “With the above reasoning and directions, we partly allow the present appeals and set aside the impugned order of the High Court.”
Accordingly, the Supreme Court partly allowed the Appeal.
Cause Title: S.D. Jayaprakash & Ors. v. Union of India & Ors. (Neutral Citation: 2025 INSC 594)
Appearance:
Appellants: AOR Gaurav Dhingra
Respondents: ASG K. M. Nataraj; AOR N. Visakamurthy and Gurmeet Singh Makker; Advocates Vatsal Joshi, Sharath Nambiar, Indira Bhakar, Vinayak Sharma, Anuj Srinivas Udupa, Chitransh Sharma, Satvika Thakur, Yogya Rajpurohit, Aayush Saklani, Nikita Capoor, Mohd. Akhil, Raghav Sharma, Prashant Rawat and Kritagya Kait