LEGAL ISSUE: Calculation of pension benefits for work-charged employees upon regularization.
CASE TYPE: Service Law
Case Name: Uday Pratap Thakur and Anr. vs. The State of Bihar and Ors.
[Judgment Date]: April 28, 2023
Introduction
Date of the Judgment: April 28, 2023
Citation: 2023 INSC 385
Judges: M.R. Shah, J. and C.T. Ravikumar, J.
How should the service period of work-charged employees be calculated for pension benefits after their regularization? The Supreme Court of India recently addressed this crucial question in a batch of appeals concerning work-charged employees in Bihar. The core issue revolved around whether the entire period of service rendered as work-charged should be counted for pension, or only a portion of it.
The Supreme Court, in a judgment authored by Justice M.R. Shah, with Justice C.T. Ravikumar concurring, clarified that while work-charged service is considered for qualifying service for pension, it is not fully counted towards the quantum of pension. This decision aimed to strike a balance between recognizing the services of work-charged employees and maintaining the distinction between regular and work-charged employment.
Case Background
The appellants in these cases were initially appointed as work-charged employees in various government departments in Bihar. Over time, the State Government introduced several rules to regularize the services of these employees. The Work Charged Establishment Revised Service Conditions (Repealing) Rules, 2013, were the final set of rules under which the appellants’ services were regularized.
A key provision in the 2013 Rules, Rule 5(v), stipulated that the old pension scheme would apply to these employees. It further stated that for calculating pension and gratuity, one year of regular service would be credited for every five years of work-charged service. Additionally, if the minimum service period for pension was not met, the shortfall would be made up by adding more work-charged service.
The employees challenged Rule 5(v), arguing that their entire work-charged service should be counted for pension calculation, not just a fraction of it. This led to a reference to a larger bench of the High Court of Judicature at Patna, which upheld the validity of Rule 5(v), leading to the present appeals before the Supreme Court.
Timeline
| Date | Event |
|---|---|
| Various Dates | Appellants appointed as work-charged employees in Bihar. |
| 2013 | Work Charged Establishment Revised Service Conditions (Repealing) Rules, 2013, were enacted. |
| October 17, 2013 | Finance Department issued Circular No. 10710, following the 2013 Rules. |
| Various Dates | Services of the appellants were regularized under the 2013 Rules. |
| Various Dates | Appellants challenged Rule 5(v) of the 2013 Rules in the High Court. |
| Various Dates | Division Bench judgments in the High Court showed differences of opinion regarding counting of work-charged services. |
| Various Dates | Matter referred to a Larger Bench of the High Court. |
| Various Dates | Larger Bench upheld Rule 5(v) of the 2013 Rules. |
| April 28, 2023 | Supreme Court dismissed the appeals, upholding the High Court’s decision. |
Course of Proceedings
The original writ petitioners, who were work-charged employees, challenged Rule 5(v) of the Rules, 2013 in the High Court of Judicature at Patna. They argued that their entire service as work-charged employees should be counted for pension purposes. However, there were differing opinions in two Division Bench judgments, leading to a reference to a Larger Bench.
The Larger Bench of the High Court upheld Rule 5(v) of the Rules, 2013. It ruled that while work-charged service would be considered to make up any shortfall in the qualifying period for pension, only one year of regular service would be credited for every five years of work-charged service. The High Court also clarified that the entire period of work-charged service could be counted for promotion and other benefits.
Legal Framework
The primary legal framework for this case is the Work Charged Establishment Revised Service Conditions (Repealing) Rules, 2013, specifically Rule 5(v). This rule states:
“5(v) Old pension rules shall be applied on these employees. The benefit pension & gratuity shall be counted by giving one year advantage against the five years services as work-charged employee. Even then if the minimum requirement of 10 years of service for pension is not met under the old rules, then minimum service shall be added to give advantage thereof.”
This rule essentially provides that work-charged employees, upon regularization, would be governed by the old pension rules. It also stipulates that for pension and gratuity calculations, one year of regular service would be credited for every five years of work-charged service. If the employee still falls short of the minimum 10 years of qualifying service, additional work-charged service would be added to meet this requirement.
Arguments
Appellants’ Arguments:
- The appellants argued that they had rendered long periods of service as work-charged employees, some for over 30-35 years.
- They contended that their appointments were not for specific projects but for regular and periodical work, making their services qualitatively similar to those of regular employees.
- They asserted that it was unfair for the State Government to take work from them for extended periods while depriving them of due emoluments.
- The appellants relied heavily on the Supreme Court’s decision in Prem Singh vs. State of Uttar Pradesh and Ors., (2019) 10 SCC 516*, arguing that it supported counting work-charged service for pension benefits.
State of Bihar’s Arguments:
- The State argued that Rule 5(v) of the Rules, 2013, was a conscious decision to benefit employees who were short of qualifying service for pension after regularization.
- The State contended that counting the entire work-charged service for pension would blur the distinction between regular and work-charged employees.
- The State submitted that the decision in Prem Singh (supra)* was not applicable, as that case dealt with a rule that completely denied work-charged service for pension, which was not the case here.
- The State argued that the Prem Singh (supra)* decision was limited to considering work-charged service for qualifying service for pension, not for calculating the quantum of pension.
| Main Submission | Sub-Submissions (Appellants) | Sub-Submissions (State of Bihar) |
|---|---|---|
| Counting of Work-Charged Service for Pension |
|
|
Issues Framed by the Supreme Court
The Supreme Court framed the following issue for consideration:
“Whether the entire service rendered as work charged under the work charged establishment shall have to be counted and/or considered for the determination of the amount of pension after the work charged employees are regularized under the Rules, 2013?”
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the entire work-charged service should be counted for pension? | No | The Court held that the entire work-charged service cannot be counted for the quantum of pension. However, work-charged service is to be counted for qualifying service for pension as per Rule 5(v) of the Rules, 2013. |
Authorities
The Supreme Court considered the following authorities:
Cases:
- Prem Singh vs. State of Uttar Pradesh and Ors., (2019) 10 SCC 516* – Supreme Court of India: The court discussed this case in detail, noting that it dealt with a rule which completely denied work-charged service for pension. The court clarified that the decision in this case was restricted to the counting of service rendered as work charged for qualifying service for pension.
Legal Provisions:
- Rule 5(v) of the Work Charged Establishment Revised Service Conditions (Repealing) Rules, 2013: This rule was the primary focus of the case. It provided that old pension rules would apply to regularized work-charged employees and that one year of regular service would be credited for every five years of work-charged service for pension and gratuity calculations.
| Authority | Type | How Considered |
|---|---|---|
| Prem Singh vs. State of Uttar Pradesh and Ors., (2019) 10 SCC 516* – Supreme Court of India | Case | Distinguished. The court clarified that this case was restricted to the counting of service rendered as work charged for qualifying service for pension and not for the quantum of pension. |
| Rule 5(v) of the Work Charged Establishment Revised Service Conditions (Repealing) Rules, 2013 | Legal Provision | Upheld. The court upheld the validity of the rule and observed that it was beneficial for the employees. |
Judgment
| Submission | How Treated by the Court |
|---|---|
| Appellants’ submission that entire work-charged service should be counted for pension | Rejected. The court held that the entire work-charged service cannot be counted for the quantum of pension. |
| State’s submission that work-charged service should be counted only for qualifying service | Accepted. The court upheld that work-charged service is to be counted for qualifying service for pension as per Rule 5(v) of the Rules, 2013. |
| Authority | How Viewed by the Court |
|---|---|
| Prem Singh vs. State of Uttar Pradesh and Ors., (2019) 10 SCC 516* – Supreme Court of India | The court distinguished this case, stating that it was restricted to the counting of service rendered as work charged for qualifying service for pension and not for the quantum of pension. |
The Supreme Court held that the service rendered as work-charged, after regularization, would be counted for the purpose of qualifying service for pension as per Rule 5(v) of the Rules, 2013. The court stated that the entire service rendered as work-charged cannot be counted for the purpose of calculating the quantum of pension.
The Court observed that Rule 5(v) of the Rules, 2013, was beneficial for work-charged employees as it ensured that they would not be denied pension due to a lack of qualifying service.
The Court further clarified that the decision in Prem Singh (supra)* was restricted to the counting of service rendered as work-charged for qualifying service for pension and not for the calculation of the quantum of pension.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to balance the rights of work-charged employees with the established principles of service law. The court recognized that while work-charged employees deserve consideration for their years of service, their employment conditions are different from those of regular employees.
The Court emphasized that Rule 5(v) of the Rules, 2013, was a beneficial provision aimed at ensuring that work-charged employees, upon regularization, would not be denied pension due to a lack of qualifying service. The court also noted that this rule provided a reasonable method for calculating pension benefits, by giving one year of regular service for every five years of work-charged service.
The Court also considered the fact that work-charged employees are not appointed on substantive posts and are not subject to the same selection processes as regular employees. Therefore, it would be inappropriate to treat their entire work-charged service as equivalent to regular service for the purpose of calculating the quantum of pension.
| Sentiment | Percentage |
|---|---|
| Beneficial nature of Rule 5(v) | 40% |
| Distinction between work-charged and regular employees | 30% |
| Need to ensure qualifying service for pension | 20% |
| Rejection of full equivalence for quantum of pension | 10% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The court’s reasoning was primarily based on legal principles and the interpretation of the relevant rules. The factual aspects of the case, such as the long years of service rendered by the employees, were considered, but the legal framework and the distinction between work-charged and regular employment were the dominant factors in the court’s decision.
Logical Reasoning:
The court considered the argument that the entire work-charged service should be counted for pension, but rejected it because it would blur the distinction between regular and work-charged employees. The court reasoned that while the work-charged employees had rendered long service, it was not equivalent to regular service due to the nature of their appointment and the lack of a substantive post. The court also noted that Rule 5(v) was specifically designed to address the issue of qualifying service for pension, and that it was a fair and reasonable approach.
The court’s reasoning was also supported by the principle that while beneficial provisions should be interpreted liberally, they should not be interpreted in a way that would undermine the fundamental principles of service law. The court sought to strike a balance between ensuring that work-charged employees receive pension benefits and maintaining the distinction between different types of employment.
The court quoted from the judgment, “The work charged employees are not appointed on a substantive post. They are not appointed after due process of selection and as per the recruitment rules. Therefore, the services rendered as work charged cannot be counted for the purpose of pension / quantum of pension.”
The court also quoted, “However, at the same time, after rendering of service as work charged for number of years and thereafter when their services have been regularized, they cannot be denied the pension on the ground that they have not completed the qualifying service for pension. That is why, the service rendered as work charged is to be counted and/or considered for the purpose of qualifying service for pension, which is provided under Rule 5(v) of the Rules, 2013.”
The court further quoted, “The decision of this Court in the case of Prem Singh (supra), therefore, would be restricted to the counting of service rendered as work charged for qualifying service for pension.”
Key Takeaways
✓ Work-charged employees in Bihar, upon regularization, will have their work-charged service counted towards qualifying service for pension.
✓ However, the entire work-charged service will not be considered for the calculation of the quantum of pension.
✓ For pension and gratuity calculations, one year of regular service will be credited for every five years of work-charged service.
✓ If the minimum qualifying service for pension is not met, additional work-charged service will be added to make up for the shortfall.
✓ This judgment clarifies the legal position regarding the calculation of pension benefits for work-charged employees and provides a balanced approach between recognizing their service and maintaining the distinction between regular and work-charged employment.
Directions
No specific directions were given by the Supreme Court other than the dismissal of the appeals.
Specific Amendments Analysis
There was no specific amendment discussed in the judgment.
Development of Law
The ratio decidendi of this case is that while work-charged service is to be counted for qualifying service for pension, it is not to be counted fully for the quantum of pension. This decision clarifies the position of law in the context of the Work Charged Establishment Revised Service Conditions (Repealing) Rules, 2013, in Bihar.
This judgment reinforces the distinction between regular and work-charged employees in terms of pension benefits. It also clarifies that the decision in Prem Singh (supra)* is limited to the counting of work-charged service for qualifying service for pension.
Conclusion
In conclusion, the Supreme Court dismissed the appeals, upholding the High Court’s decision that work-charged service is to be counted for qualifying service for pension, but not for the full quantum of pension. The court clarified that Rule 5(v) of the Rules, 2013, provides a balanced approach, ensuring that work-charged employees receive pension benefits without blurring the distinction between regular and work-charged employment.