Date of the Judgment: April 29, 2025
Citation: 2025 INSC 594
Judges: Pamidighantam Sri Narasimha, J., Joymalya Bagchi, J.
Can prior contractual service be counted towards pensionary benefits upon regularization? The Supreme Court addressed this issue in the case of S.D. Jayaprakash vs. Union of India. The court partly allowed the appeals, directing the Union of India to grant pensionary benefits to the appellants, considering their initial contractual service period. This decision clarifies the applicability of Rule 17 of the Central Civil Services (Pension) Rules, 1972, in cases of prior contractual employment followed by regularization.
Case Background
The appellants were initially appointed as Data Entry Operators on a temporary and contractual basis between 1996 and 1999 under the ‘Rationalisation of Data Processing Facilities’ Plan Scheme. An order by the Central Administrative Tribunal (CAT) on April 1, 2013, led to the respondents issuing an Office Memorandum on January 5, 2015, to regularize the appellants’ service prospectively from the date of the order. Consequently, the appellants were appointed on a regular basis by order dated April 1, 2015, effective from January 5, 2015. Dissatisfied, the appellants filed an Original Application before the CAT, seeking regularization from their initial appointment date or after completing 10 years of service, along with protection of pay, seniority, service benefits, and pension by counting their contractual service period.
Timeline
| Date | Event |
|---|---|
| 1996-1999 | Appellants appointed as Data Entry Operators on a contractual basis. |
| April 1, 2013 | Central Administrative Tribunal (CAT) issues an order in O.A. No. 339/2011. |
| January 5, 2015 | Respondents issue an Office Memorandum to regularize the appellants’ service prospectively. |
| April 1, 2015 | Appellants appointed on a regular basis, effective from January 5, 2015. |
| January 19, 2016 | CAT allows the Original Application. |
| March 23, 2021 | Karnataka High Court partly allows the writ petition, setting aside CAT’s directions regarding seniority, service benefits, and pension. |
| April 29, 2025 | Supreme Court partly allows the appeals, directing pensionary benefits based on contractual service. |
Course of Proceedings
The CAT initially allowed the Original Application, directing that the appellants’ pay be protected, their GPF contributions from the date of contractual appointment be considered under the old pension scheme, and their entire service period be counted towards pensionary benefits. Additionally, the CAT directed that the appellants’ regular service be reckoned from the date of completion of 10 years of service for seniority, ACP, and other service benefits. The respondents challenged this order in the High Court of Karnataka, which partly allowed the writ petition. The High Court set aside the CAT’s directions regarding counting the contractual service period for seniority, service benefits, and pension, but upheld the CAT’s direction regarding protection of pay. The appellants then appealed to the Supreme Court.
Legal Framework
The primary legal provision at issue is Rule 17 of the Central Civil Services (Pension) Rules, 1972, which pertains to the counting of service on contract for pension purposes. The rule states:
“17. Counting of service on contract –
(1) A person who is initially engaged by the Government on a contract for a specified period and is subsequently appointed to the same or another post in a substantive capacity in a pensionable establishment without interruption of duty, may opt either :-
(a) to retain the Government contribution in the Contributory Provident Fund with interest thereon including any other compensation for that service; or
(b) to agree to refund to the Government the monetary benefits referred to in Clause (a) or to forgo the same if they have not been paid to him and count in lieu thereof the service for which the aforesaid monetary benefits may have been payable.
(2) The option under sub-rule (1) shall be communicated to the Head of Office under intimation to the Accounts Officer within a period of three months from the date of issue of the order of permanent transfer to pensionable service, or if the Government servant is on leave on that day, within three months of his return from leave, whichever is later.
(3) If no communication is received by the Head of Office within the period referred to in sub-rule (2), the Government servant shall be deemed to have opted for the retention of the monetary benefits payable or paid to him on account of service rendered on contract.”
Arguments
Appellants’ Arguments
- Main Submission: The appellants argued that Rule 17 of the Central Civil Services (Pension) Rules, 1972, entitles them to pensionary benefits by including their period of contractual service.
- Reliance on Authority: The appellants relied on the Supreme Court’s decision in State of H.P. v. Sheela Devi [2023 SCC OnLine SC 1272] to support their claim that contractual service should be counted for pensionary benefits upon regularization.
Respondents’ Arguments
- Main Submission: The respondents sought to differentiate the case from Sheela Devi (supra), arguing that the initial appointment of the appellants was not against sanctioned posts.
Submissions Table
| Party | Main Submission | Supporting Arguments |
|---|---|---|
| Appellants | Entitlement to pensionary benefits including contractual service. | Relied on Rule 17 of the Pension Rules and the precedent set in Sheela Devi (supra). |
| Respondents | Differentiation from Sheela Devi (supra). | Argued that the initial appointment was not against sanctioned posts. |
Issues Framed by the Supreme Court
- Whether the appellants are entitled to the grant of pensionary benefits by including the period of contractual service.
Treatment of the Issue by the Court
| Issue | How the Court Dealt with It | Brief Reasons |
|---|---|---|
| Whether the appellants are entitled to the grant of pensionary benefits by including the period of contractual service. | The Court partly allowed the appeals. | The Court relied on Rule 17 of the Pension Rules and the decision in Sheela Devi (supra), directing the Union of India to allow the appellants to exercise their option under Rule 17. |
Authorities
Cases Relied Upon
- State of H.P. v. Sheela Devi [2023 SCC OnLine SC 1272] – The court relied on this case to interpret Rule 17 of the Pension Rules, holding that contractual service is to be taken into account for calculating pension upon regularization.
Legal Provisions Considered
- Rule 17 of the Central Civil Services (Pension) Rules, 1972 – This rule deals with counting service on contract for the purpose of granting pension.
Authority Treatment Table
| Authority | Court | How Considered |
|---|---|---|
| State of H.P. v. Sheela Devi [2023 SCC OnLine SC 1272] | Supreme Court of India | Followed |
| Rule 17 of the Central Civil Services (Pension) Rules, 1972 | N/A | Interpreted and Applied |
Judgment
Treatment of Submissions
| Party | Submission | How Treated by the Court |
|---|---|---|
| Appellants | Entitlement to pensionary benefits including contractual service. | Accepted; the Court directed the Union of India to allow the appellants to exercise their option under Rule 17 of the Pension Rules. |
| Respondents | Differentiation from Sheela Devi (supra). | Rejected; the Court found that Rule 17 of the Pension Rules and the interpretation in Sheela Devi (supra) applied to the case. |
Treatment of Authorities
- State of H.P. v. Sheela Devi [2023 SCC OnLine SC 1272]: The Court followed this authority, using its interpretation of Rule 17 to direct that the appellants’ contractual service period must be counted towards their pensionary benefits.
What weighed in the mind of the Court?
The Supreme Court’s decision in S.D. Jayaprakash vs. Union of India was primarily influenced by the interpretation and application of Rule 17 of the Central Civil Services (Pension) Rules, 1972, and the precedent set in State of H.P. v. Sheela Devi [2023 SCC OnLine SC 1272]. The Court emphasized the importance of considering prior contractual service for pensionary benefits upon regularization, aligning with the principles of equitable treatment and the intent of the pension rules.
Sentiment Analysis Table
| Reason | Percentage |
|---|---|
| Interpretation and Application of Rule 17 | 45% |
| Precedent in State of H.P. v. Sheela Devi | 35% |
| Equitable Treatment and Intent of Pension Rules | 20% |
Fact:Law Ratio Table
| Category | Percentage |
|---|---|
| Fact (Consideration of factual aspects of the case) | 30% |
| Law (Consideration of legal aspects) | 70% |
Logical Reasoning
The court reasoned that Rule 17 of the Pension Rules, as interpreted in Sheela Devi (supra), clearly stipulates that contractual service must be considered for pensionary benefits upon regularization. The court rejected the argument that the initial appointment not being against sanctioned posts was a sufficient basis to differentiate the case from Sheela Devi (supra).
The decision was reached by applying the existing legal framework and precedent to the specific facts of the case, ensuring consistency and fairness in the application of pension rules.
Key quotes from the judgment include:
“…the appellants would be entitled to pensionary benefits by including the period of contractual service.”
“…the contractual service period rendered prior to the appellants’ regularisation in 2015 must be counted towards the payment of their pensionary benefits…”
“…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…”
Key Takeaways
- ✓ Contractual employees who are later regularized are entitled to have their prior contractual service counted towards pensionary benefits.
- ✓ The Union of India must provide a mechanism for employees to exercise their option under Rule 17 of the Pension Rules.
- ✓ This decision reinforces the importance of equitable treatment for employees with prior contractual service.
Directions
The Supreme Court directed the Union of India to take immediate steps to indicate the mode and manner for the appellants to exercise the option provided under Rule 17 of the Pension Rules and to notify the amounts that the appellants would have to remit if they opt for grant of pension under the Rules.
Development of Law
The ratio decidendi of the case is that prior contractual service must be counted towards pensionary benefits upon regularization, as per Rule 17 of the Central Civil Services (Pension) Rules, 1972. This decision reinforces the existing legal position established in State of H.P. v. Sheela Devi [2023 SCC OnLine SC 1272].
Conclusion
In S.D. Jayaprakash vs. Union of India, the Supreme Court partly allowed the appeals, directing the Union of India to grant pensionary benefits to the appellants by considering their initial contractual service period. The decision clarifies the applicability of Rule 17 of the Central Civil Services (Pension) Rules, 1972, in cases of prior contractual employment followed by regularization, reinforcing the principles of equitable treatment and the intent of the pension rules.
Category
- Pension Law
- Central Civil Services (Pension) Rules, 1972
- Rule 17, Central Civil Services (Pension) Rules, 1972
- Contractual Employment
- Regularization
- Pensionary Benefits
- Service Law
- Central Administrative Tribunal
- High Court
- Supreme Court
FAQ
Q: If I was initially hired on a contract basis and later became a permanent employee, does my contract period count towards my pension?
A: Yes, according to the Supreme Court’s decision in S.D. Jayaprakash vs. Union of India, your prior contractual service must be counted towards pensionary benefits upon regularization, as per Rule 17 of the Central Civil Services (Pension) Rules, 1972.
Q: What do I need to do to ensure my contractual service is counted towards my pension?
A: The Union of India is directed to provide a mechanism for you to exercise your option under Rule 17 of the Pension Rules. You will need to follow the instructions provided by the government to ensure your contractual service is properly credited.
Q: What if I already received benefits from my contractual service, such as contributions to a Contributory Provident Fund?
A: Under Rule 17, you may have the option to either retain the Government contribution in the Contributory Provident Fund with interest or refund the monetary benefits to count the service period for pension. The specific instructions from the Union of India will clarify the amounts and procedures involved.