Supreme Court Allows Pension Benefits by Condoning Break in Service: Valsan P. vs. State of Kerala (2021)

Date of the Judgment: October 21, 2021
Citation: 2021 INSC 717
Judges: M.R. Shah, J. and A.S. Bopanna, J.
Can a break in service between two pensionable employments be condoned to allow for continuous pension benefits? The Supreme Court of India addressed this issue in a case where an employee had worked under both the Central and State governments, with a break due to employment in a Public Sector Undertaking (PSU). The court examined whether the intervening period of non-pensionable service could be condoned to allow the employee to receive pension benefits for his total service period. The judgment was delivered by a bench comprising Justice M.R. Shah and Justice A.S. Bopanna, with Justice A.S. Bopanna authoring the opinion.

Case Background

The appellant, Valsan P., initially worked as a Technician in the Telecom Department under the Central Government from February 5, 1974, to May 31, 1984. Subsequently, he joined Steel Industries Limited, Kerala (SILK), a Public Sector Undertaking (PSU) owned by the Kerala State Government, as an Engineer on June 4, 1984, and served there until May 31, 1987. Later, through the Public Service Commission, he joined the Technical Education Department on May 31, 1987, and retired on June 30, 2006, after 19 years of service.

The primary issue arose when the appellant claimed pension benefits, seeking to include his 10 years of service in the Telecom Department. The Accountant General informed him that the break between his Central and State service was nearly three years, and this break needed to be condoned by the State Government for his Central service to be considered for pension. The appellant’s request to condone this break was initially rejected by the State Government, stating that there were no rules for condoning such breaks, and that the break between two appointments should not exceed the joining time admissible under service rules, as per Rule 29(b) of Part III of the Kerala Service Rules (KSR).

Timeline

Course of Proceedings

The Kerala Administrative Tribunal (KAT) allowed the appellant’s application, noting that the period of service in SILK needed to be condoned to provide continuity of service between the two employments. The KAT relied on a Government Order dated September 24, 2014, which allowed for such condonation. However, the High Court of Kerala set aside the KAT’s order, stating that the appellant was seeking to include his service in SILK as pensionable service and that he should approach the Central Government for his service in the Telecom Department. The High Court did not address the core issue of condoning the break in service.

Legal Framework

The case primarily revolves around the interpretation of the following rules:

• Rule 29(b) of Part III of the Kerala Service Rules (KSR): This rule states that “Resignation of an appointment to take up another appointment the service in which counts is not resignation from public service. Note: The break between the two appointments should not exceed the joining time admissible under the service rules plus the public holidays.” This rule was cited by the State Government to deny condonation of the break in service.
• Rule 39 of Part II of the Kerala State and Subordinate Service Rules (KS & SSR): This rule provides that “Notwithstanding, anything contained in these rules or in the Special Rules or in any other Rules or Government Orders the Government shall have power to deal with the case of any person or persons serving in a civil capacity under the Government of Kerala or any candidate for appointment to a service in such manner as may appear to the Government to be just and equitable: Provided that where such rules or orders are applicable to the case of any person or persons, the case shall not be dealt with in any manner less favourable to him or them than that provided by those rules or orders.” This rule grants the State Government the power to make just and equitable decisions regarding service matters.

The interplay between these rules and various Government Orders forms the crux of the legal framework.

Arguments

Appellant’s Arguments:

• The appellant argued that he was not seeking to include his service in SILK as pensionable service.
• His primary claim was to condone the break in service between his employment in the Telecom Department (Central Government) and the Technical Education Department (State Government).
• He sought to exclude the period of service in SILK (June 4, 1984, to May 31, 1987) from being treated as a break in service between the two pensionable services.
• The appellant relied on Rule 39 of Part II of KS & SSR, which empowers the State Government to make just and equitable decisions regarding service matters.
• He also referred to Government Orders dated November 12, 2002, and December 6, 2003, which allowed for the reckoning of prior service between Central and State governments for pension benefits, with the State Government bearing the full pension liability.
• Finally, the appellant heavily relied on the Government Order dated September 24, 2014, which specifically allowed for condonation of non-qualifying sandwiched service as a break between two services, to reckon prior public service as qualifying service for pension.

Respondent’s Arguments:

• The respondents contended that Rule 29, Part III KSR, clearly states that the benefit of past service is forfeited if the break between two appointments exceeds the joining time admissible under the service rules.
• They argued that the break in service was due to non-pensionable employment in SILK, and therefore, the appellant was not entitled to condonation.
• The respondents also argued that the Government Order dated September 24, 2014, was not applicable retrospectively, as the appellant had retired on June 30, 2006.

Innovativeness of the argument: The appellant innovatively used the Government Order dated 24.09.2014 to his advantage, arguing that although it came after his retirement, it was still applicable to his case as his review petition was pending when the order was issued.

Issues Framed by the Supreme Court

The primary issue framed by the Supreme Court was:

1. Whether the break in service interrupting the service rendered in the Telecom Department and the Technical Education Department is condonable.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• Rule 29(b) Part III of Kerala Service Rules (KSR): The Court acknowledged this rule but did not consider it as the final word, emphasizing the need to consider other provisions and government orders.
• Rule 39 of Part II of Kerala State and Subordinate Service Rules (KS & SSR): The Court heavily relied on this rule, highlighting the State Government’s power to make just and equitable decisions.
• Government Order dated 12.11.2002: The Court used this to show that the government had already provided the benefit of reckoning prior service between the Central and State governments.
• Government Order dated 06.12.2003: The Court used this to show that the government had already decided to bear the full pension liability.
• Government Order dated 24.09.2014: The Court considered this order as the most crucial, as it specifically allowed for condonation of non-qualifying sandwiched service.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by a combination of factors, primarily focusing on the need for equitable treatment of the appellant and the existing government policies that allowed for condonation of service breaks. The Court emphasized that the appellant was not seeking any undue benefit but was merely asking for his past service to be considered for pension, which was permissible under the existing rules and government orders. The court also highlighted that the appellant’s review petition was pending when the Government Order dated 24.09.2014 was issued, thus making it applicable to his case.

The ratio of “Fact:Law” is 40:60, indicating that while the factual aspects of the case were considered, the legal interpretation and application of rules and government orders played a more significant role in the court’s decision.

Logical Reasoning:

The court’s reasoning was that while Rule 29(b) of Part III KSR initially posed an obstacle, Rule 39 of Part II KS & SSR and the Government Order dated 24.09.2014 provided a way to condone the break. The court also considered the fact that the appellant’s review petition was pending when the government order was issued, making it applicable to his case. The court rejected the argument that the order could not be applied retrospectively, emphasizing that the issue was not settled and had not reached finality in the case of the appellant.

The Supreme Court, in its decision, stated:

“In that view, we are of the considered opinion that the KAT was justified in its conclusion and High Court has erred in setting aside the same.”

“The order dated 21.05.2019 passed by the High Court of Kerala in O.P. (KAT) No.468 of 2017 is therefore set aside.”

“The order dated 14.11.2016 passed by the KAT in O.A. No. 975 of 2015 is restored for its implementation.”

The court did not have any minority opinion.

Key Takeaways

• Breaks in service between Central and State government jobs can be condoned for pension benefits.
• Government orders allowing condonation of breaks in service can be applied even if they are issued after an employee’s retirement, provided the issue was not settled and had not reached finality.
• Rule 39 of Part II of KS & SSR provides the State Government with the power to make just and equitable decisions regarding service matters.
• The court emphasized that the appellant was not seeking any undue benefit but was merely asking for his past service to be considered for pension.

Directions

The Supreme Court set aside the order of the High Court and restored the order of the Kerala Administrative Tribunal (KAT). The timeline for implementation of the order was to apply from the date of the Supreme Court judgment.

Development of Law

The ratio decidendi of this case is that a break in service between two pensionable employments can be condoned to allow for continuous pension benefits, especially when the intervening period is non-pensionable. This judgment clarifies that Rule 29 of Part III KSR should not be interpreted in isolation and that the State Government has the power to make just and equitable decisions under Rule 39 of Part II of KS & SSR and government orders, to ensure that employees receive their due pensionary benefits.

Conclusion

The Supreme Court’s judgment in Valsan P. vs. State of Kerala clarifies the conditions under which a break in service can be condoned to allow continuous pension benefits. The court emphasized the need for equitable treatment and the importance of considering all relevant rules and government orders. This decision ensures that employees who have served under both Central and State governments are not deprived of their pension benefits due to technicalities related to breaks in service.

Category

• Pension Law
  • Condonation of Break in Service
  • Kerala Service Rules
  • Kerala State and Subordinate Service Rules
  • Pension Benefits
  • Government Orders
• Kerala Service Rules
  • Rule 29, Part III, Kerala Service Rules
• Kerala State and Subordinate Service Rules
  • Rule 39, Part II, Kerala State and Subordinate Service Rules

FAQ

Q: What is condonation of break in service?

A: Condonation of break in service means that a period of interruption in an employee’s service is officially overlooked, allowing the employee to maintain continuity of service for benefits like pension.

Q: Can a break in service between Central and State government jobs be condoned for pension benefits?

A: Yes, the Supreme Court has clarified that such breaks can be condoned, especially when the intervening period is non-pensionable, provided that the employee is not seeking to include the non-pensionable service for pension benefits and the government has the power to condone the break.

Q: What is the significance of Rule 39 of Part II of the Kerala State and Subordinate Service Rules?

A: Rule 39 empowers the State Government to make just and equitable decisions regarding service matters, allowing for flexibility in interpreting rules to ensure fairness.

Q: What if a government order allowing condonation is issued after an employee’s retirement?

A: The Supreme Court has clarified that such government orders can be applied even after retirement, provided the issue was not settled and had not reached finality in the case of the employee.

Q: What was the key issue in the Valsan P. vs. State of Kerala case?

A: The key issue was whether the break in service between the appellant’s employment in the Telecom Department (Central Government) and the Technical Education Department (State Government) could be condoned to allow him to receive pension benefits for his total service period.