Supreme Court Rules Work-Charged Service Counts Towards Pension in Uttar Pradesh

Date of the Judgment: 2nd September 2019

Citation: (2019) INSC 851

Judges: Arun Mishra, J., S. Abdul Nazeer, J., and M.R. Shah, J.

Can a period of service in a work-charged establishment be counted towards pension benefits? The Supreme Court of India recently addressed this crucial question, impacting numerous employees in Uttar Pradesh. This judgment clarifies that work-charged service, often rendered on lower pay scales, should be considered when calculating pensionable service, thus ensuring fair retirement benefits for employees. The three-judge bench, consisting of Justices Arun Mishra, S. Abdul Nazeer, and M.R. Shah, delivered the judgment.

Case Background

The appellant, Prem Singh, was initially appointed as a Welder in a work-charged establishment in 1965. He worked in various locations and was eventually recommended for regularization. His services were regularized on March 13, 2002, and he was posted as a Pump Operator. Prem Singh retired on January 31, 2007. He filed a writ petition in the High Court on July 31, 2008, seeking to have his work-charged service counted as qualifying service for pension. His representations were rejected on December 12, 2008, and March 23, 2009. The High Court dismissed his writ petition and special appeal.

Timeline

Course of Proceedings

The High Court dismissed Prem Singh’s writ petition and special appeal, upholding the rejection of his claim to count work-charged service for pension. The matter then reached the Supreme Court, where a Division Bench referred the matter to a larger bench due to conflicting precedents.

Legal Framework

The case revolves around the interpretation of the following legal provisions:

• Rule 3(8) of the U.P. Retirement Benefit Rules, 1961: Defines “qualifying service” for pension, excluding periods of service in a work-charged establishment unless it falls between two periods of temporary service or between temporary and permanent service. The rule states:
  
  “Qualifying service” means service which qualifies for pension in accordance with the provisions of Article 368 of the Civil Service Regulations. Provided that continuous temporary or officiating service under the Government of Uttar Pradesh followed without interruption by confirmation in the same or any other post except – (i) periods of temporary or officiating service in a non -pensionable establishment. (ii) periods of service in a work -charged establishment and (iii) periods of service in a post paid from contingencies shall also count as qualifying service.
• Regulation 361 of the Uttar Pradesh Civil Services Regulations: Specifies that service qualifies for pension only if it is under the Government, substantive, and permanent.
• Regulation 368 of the Uttar Pradesh Civil Services Regulations: States that service does not qualify unless the officer holds a substantive office on a permanent establishment.
• Regulation 370 of the Uttar Pradesh Civil Services Regulations: Excludes periods of service in work-charged establishments from qualifying service, similar to Rule 3(8). It states:
  
  Continuous temporary or officiating service under the Government of Uttar Pradesh followed without interruption by confirmation in the same or any other post shall qualify, except – (i) periods of temporary or officiating service in non -pensionable establishment; (ii) periods of service in work charged establishment; and (iii) periods of service in a post paid from contingencies.

These provisions collectively determine which periods of service are counted towards pension benefits for government employees in Uttar Pradesh.

Arguments

Appellant’s Arguments:

• The appellant relied on the Supreme Court’s decision in Habib Khan vs. State of Uttarakhand, which held that Regulation 370 of the Civil Service Regulations (similar to the provision in Uttar Pradesh) is akin to a provision struck down in Punjab. The Court in Habib Khan relied on Punjab State Electricity Board & Anr. v. Narata Singh and Anr, which stated that the High Court of Punjab and Haryana was justified in striking down a rule that distinguished between temporary and work-charged service.

• The appellant argued that the period of work-charged service should be included when calculating qualifying service for pension, as the distinction between temporary and work-charged service had been obliterated by earlier judgments.

State of Uttar Pradesh’s Arguments:

• The State argued that there is a difference between the rules in Uttar Pradesh and Punjab. In Punjab, there was deemed regularization, whereas in Uttar Pradesh, services are regularized on a specific date, which should be the start date for calculating qualifying service under Rule 3(8) of the Rules of 1961.

• The State contended that work-charged employees are different from regular employees, as they are not appointed through the same procedures and have different work pressure and accountability. They cannot be treated at par with regular employees, and their services cannot be clubbed with regular service unless specifically provided.

• The State further argued that the decision in Kesar Chand was per incuriam and relied on Secretary, State of Karnataka v. Uma Devi & Ors. The State also submitted that granting pension by including work-charged service would lead to financial collapse and be difficult to implement.

• The State argued that work-charged employees form a separate class and cannot be treated similarly to regular, temporary, or ad-hoc employees. Treating them similarly would violate Article 14 of the Constitution.

• The State argued that the pension can be paid only under the rules and the decision in Narata Singh did not examine the validity of the Punjab Regulations.

Table of Submissions:

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether Rule 3(8) of the U.P. Retirement Benefit Rules, 1961 and Regulation 370 of the Civil Services Regulation of Uttar Pradesh should be struck down considering that the Court has upheld the decision regarding pari materia provision enacted in the State of Punjab which excluded computation of the period of work-charged services from qualifying service for pension.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Kesar Chand v. the State of Punjab [AIR 1988 Punjab and Haryana 265]: The Court upheld the ratio of this case, which struck down a similar rule that excluded work-charged service.
• Punjab State Electricity Board v. Narata Singh [(2010) 4 SCC 317]: The Court relied on this case, which affirmed that work-charged service should be counted for pension.
• Habib Khan v. the State of Uttarakhand [Civil Appeal No.10805-10807 of 2017]: The Court followed this decision, which applied the principles of Kesar Chand and Narata Singh to a similar situation in Uttarakhand.
• Jaswant Singh & Ors. v. Union of India & Ors. [(1979) 4 SCC 440]: The Court acknowledged the observations made in this case but distinguished it from the present matter, noting that the issue of counting service was different.
• State of Rajasthan v. Kunji Raman [(1997) 2 SCC 517]: The Court acknowledged that work-charged employees are a separate class for the purpose of equal pay, but that does not mean that their service can not be counted for pension.
• Punjab State Electricity Board v. Jagjiwan Ram [(2009) 3 SCC 661]: The Court acknowledged that work-charged employees are a separate class for the purpose of time bound promotion scales, but that does not mean that their service can not be counted for pension.
• Secretary, State of Karnataka & Ors. v. Uma Devi [(2006) 4 SCC 1]: The Court used this case to direct the regularization of employees who had worked for ten years or more.
• Rule 3(8) of the U.P. Retirement Benefit Rules, 1961: The Court read down this rule to include work-charged service for pension.
• Regulation 370 of the Uttar Pradesh Civil Services Regulations: The Court struck down this regulation as it was found to be discriminatory and irrational.
• Paras 667, 668 and 669 of Financial Handbook Vol. VI: The Court struck down the instructions contained in Para 669 as they were found to be discriminatory and irrational.

What weighed in the mind of the Court?

The Supreme Court’s decision was significantly influenced by the principles of fairness, equality, and the need to prevent exploitation. The Court emphasized that:

• The work-charged employees were performing regular and perennial work, not project-based work, and were often transferred like regular employees.
• The State had been exploiting work-charged employees by paying them less for the same kind of work.
• The note appended to Rule 3(8) already allowed for the counting of work-charged service in certain circumstances, making the exclusion in other cases discriminatory.
• The court found that there was no qualitative difference between the work of regular employees and work-charged employees.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio

The court’s reasoning was primarily based on legal principles and precedents, but also acknowledged the factual context of exploitation and misuse of work-charged employment.

Logical Reasoning:

The court considered alternative interpretations but rejected them because they were inconsistent with the principles of fairness and equality. The final decision was reached by reading down Rule 3(8) and striking down Regulation 370, ensuring that work-charged service is counted towards pension.

The Supreme Court stated:

• “In our opinion, an impermissible classification has been made under Rule 3(8). It would be highly unjust, impermissible and irrational to deprive such employees benefit of the qualifying service.”
• “The work-charged employees had been subjected to transfer from one place to another like regular employees as apparent from documents placed on record.”
• “The State has been benefitted by the services rendered by them in the heydays of their life on less salary in work-charged establishment.”

There was no minority opinion in this case. All three judges concurred in the judgment.

Key Takeaways

• Work-charged service will now be counted as qualifying service for pension benefits in Uttar Pradesh.
• Rule 3(8) of the U.P. Retirement Benefit Rules, 1961, has been read down to include work-charged service.
• Regulation 370 of the Civil Services Regulations has been struck down.
• Employees who have worked for ten years or more in work-charged establishments are now entitled to regularization.
• Arrears of pension are limited to three years before the date of the order.
• The judgment ensures that employees who have served for long periods in work-charged establishments receive fair pension benefits.

Directions

The Supreme Court directed that:

• The arrears of pension shall be confined to three years only before the date of the order.
• The admissible benefits be paid within three months.
• The services of those employees who have worked for ten years or more in work-charged establishment and have not been regularized, be treated as regular one. However, they shall not be entitled to claiming any dues of difference in wages had they been continued in service regularly before attaining the age of superannuation.

Development of Law

Ratio Decidendi: The ratio of this case is that work-charged service must be counted as qualifying service for pension, and any rule that excludes it is discriminatory and irrational.

Change in Law: This judgment changes the previous position in Uttar Pradesh, where work-charged service was not generally counted for pension. It brings the state in line with other states where similar rules have been struck down, ensuring fairness and equal treatment for work-charged employees.

Conclusion

The Supreme Court’s judgment in Prem Singh vs. State of Uttar Pradesh & Ors. is a significant victory for work-charged employees in Uttar Pradesh. By reading down Rule 3(8) and striking down Regulation 370, the Court has ensured that work-charged service is counted towards pension benefits. This decision promotes fairness, equality, and prevents the exploitation of employees who have dedicated years of service to the state. The judgment also directs the regularization of long-serving work-charged employees, further solidifying their rights and benefits.