CCS Pension Rules Apply To Central Government Employees, Payment Of Gratuity Act Not Applicable : Supreme Court
Kiran Raj
The Supreme Court of India Division Bench of Justice Pankaj Mithal and Justice S.V.N. Bhatti on February 11 dismissed a batch of appeals by retired employees of the Heavy Water Plant, Tuticorin, and held that they are not entitled to gratuity under the Payment of Gratuity Act, 1972. The Court found that the plant functions under the Department of Atomic Energy and that its personnel hold civil posts under the Central Government, with retirement benefits determined under the Central Civil Service (Pension) Rules, 1972. The dispute arose after the retirees sought a higher gratuity by applying the Gratuity Act and claimed the differential amount over what had been computed for them.
The appeals arose from a common judgment of the High Court of Madras declaring that employees of the Heavy Water Plant, Department of Atomic Energy, Government of India, Tuticorin, were not covered by Section 2(e) of the Payment of Gratuity Act, 1972. The dispute originated after a retired employee was issued a pension payment order under the CCS (Pension) Rules, 1972, under which gratuity payable was less than that under the Payment of Gratuity Act. An application was filed before the Controlling Authority under the Act seeking payment of the differential amount. The Controlling Authority held that the Act applied, treating the establishment as an industry under the Industrial Disputes Act, 1947, and directed payment of the difference. The appellate authority dismissed the management’s appeal.
The High Court allowed the writ appeals filed by the management, holding that the employees held civil posts under the Central Government and were governed by CCS Rules. Before the Supreme Court, the retired employees contended that the Heavy Water Plant functioned as an autonomous industrial establishment and, in the absence of exemption under Section 5, the Act applied. The management contended that the establishment was an adjunct of the Department of Atomic Energy, and employees were excluded under Section 2(e).
The Court observed that “The point for consideration in the subject Civil Appeals is whether the employees of Heavy Water Plant, Department of Atomic Energy, Government of India, Tuticorin (“HWP”) are covered by the provisions of the Payment of Gratuity Act, 1972 (“PG Act”).”
On jurisdictional fact, the Court stated that “a jurisdictional fact is a fact which must exist before a court, tribunal, or authority assumes jurisdiction over a particular matter.” It further recorded that “If the jurisdictional fact does not exist, the court, authority or officer cannot act.”
Regarding precedent, the Court observed, “It is axiomatic that a decision is an authority for what it decides and not what can be logically deduced therefrom.” It added that “the decision in MCD (supra) cannot be an authority for deciding the applicability of the PG Act to the employees of HWP.”
While construing Section 2(e), the Court recorded that the exclusionary clause “excludes employees of the Central and State Governments from the meaning of ‘employee’ under the PG Act.” It further stated that “a person who is governed by any other Act, or governed by any Rules providing for payment of gratuity, does not come within the ambit of the definition of ‘employee’ under the PG Act.”
On the character of the establishment, the Court observed that “In substance, without any ambiguity, the HWP is created to manage the projects of the DAE for the production of heavy water.” It stated that “HWP at Tuticorin is a project under the management of the Heavy Water Projects Board of the DAE, and cannot, by sieving, separate itself from being an ancillary or adjunct of the DAE.”
The Court concluded that “the employees fall within the exclusionary clause of Section 2(e) of the PG Act.” It further recorded that “The result of such exclusion is that Sections 5 and 14 are not attracted in deciding on the applicability of the PG Act to the employees of HWP.”
The Court directed that “For the above reasons, we are in agreement with the order impugned, and the Civil Appeals fail and are dismissed. Pending applications, if any, stand disposed of.”
Case Title: N. Manoharan Etc. v. The Administrative Officer and Another
Neutral Citation: 2026 INSC 143
Case Number: Civil Appeal Nos. of 2026 @ Special Leave Petition (Civil) Nos. 22628–22637 of 2024 and connected matters
Bench: Justice Pankaj Mithal, Justice S.V.N. Bhatti
