Kiran Raj

The Supreme Court of India, Division Bench comprising Justice Pamidighantam Sri Narasimha and Justice Joymalya Bagchi, has partly allowed an appeal directing the Union of India to grant pensionary benefits to a group of employees who were initially appointed on a contractual basis and subsequently regularised. The court, invoking Rule 17 of the Central Civil Services (Pension) Rules, 1972, confined its findings solely to the grant of pension, setting aside the Karnataka High Court's prior denial on this issue. The appeal arose from a dispute over whether the contractual service period of the appellants should be counted for pension benefits post-regularisation.

The High Court had earlier denied this claim, stating that since the initial appointment was not pursuant to a selection through the Staff Selection Commission, the service period under the contract could not be counted. The Supreme Court, relying on its precedent in State of Himachal Pradesh v. Sheela Devi, clarified that once contractual employees are regularised, Rule 17 mandates that their past service be accounted for pension subject to opting procedures under the Rule.

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The appellants were appointed as Data Entry Operators under the Plan Scheme titled ‘Rationalisation of Data Processing Facilities’ between 1996 and 1999 on a temporary and contractual basis. Subsequent to the judgment of the Central Administrative Tribunal (CAT), Bangalore Bench, in O.A. No. 339/2011 dated 01.04.2013 — upheld by the High Court on 22.04.2014 in W.P. No. 57381/2013 (S-CAT) and connected matters — the Union of India issued an Office Memorandum dated 05.01.2015 for regularising the appellants’ services prospectively from that date. Accordingly, their services were regularised by an order dated 01.04.2015 with effect from 05.01.2015.

The appellants approached the CAT again through a fresh Original Application, seeking a direction to regularise their services from the date of initial appointment or from the date of completing 10 years of service. They also sought protection of pay and counting of their contractual period towards seniority, service benefits, and pension. The CAT, by its order dated 19.01.2016, granted reliefs in full, stating:

"The pay and other allowances drawn by the applicants prior to their appointment on regular basis on 1.4.2015 shall be protected... Their annual increment shall be determined accordingly."

It further directed: "The applicants... shall be entitled to come under the old pension scheme and the entire period of service right from the date of initial appointment on contract basis shall be counted towards pensionary benefits."

Additionally, the CAT ordered that the period from completion of 10 years of contractual service should be reckoned for seniority and other service benefits.

The respondents challenged the CAT’s order in a writ petition before the High Court. The Karnataka High Court, by order dated 23.03.2021 in W.P. Nos. 4712 and 4714 of 2016 (S-CAT), upheld the CAT's direction only to the extent of pay protection. It rejected the claim regarding pension and seniority, holding that the initial appointment was not based on Staff Selection Commission recommendations and hence could not form part of pensionable service.

Before the Supreme Court, the appellants restricted their submission to the grant of pensionary benefits by including the contractual period. They relied on the decision of the Court in Sheela Devi and Rule 17 of the CCS (Pension) Rules, 1972. Rule 17 reads:

"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... to count in lieu thereof the service for which the aforesaid monetary benefits may have been payable."

The respondents attempted to distinguish Sheela Devi, arguing that in the present case, the initial appointments were not against sanctioned posts.

The Supreme Court declined to entertain arguments on retrospective regularisation, seniority, or service benefits, and confined itself solely to the issue of pension. It noted: "Rule 17 of the Pension Rules deals with counting of service on contract for the purpose of granting pension, which squarely covers the issue in the present case."

Referring to Sheela Devi, the Court recorded: "Although Rule 2(g) of the Pension Rules excludes contractual employees... Rule 17 applies once such contractual employee is regularised... the Pension Rules become applicable and Rule 17 requires that past service as a contractual employee is to be taken into account for calculating pension."

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Stating the directions issued in Sheela Devi, the Court observed: "The state shall take immediate steps to indicate the mode and manner of exercising option by all the employees concerned... regardless of the dates on which they were engaged..."

Accordingly, the Court found that the appellants are entitled to have their prior contractual service counted towards pensionary benefits in accordance with Rule 17.

The Division Bench, setting aside the High Court's denial of pension benefits, issued the following directives:

The appeals are partly allowed. The impugned order of the High Court dated 23.03.2021 is set aside to the extent indicated. The Union of India is directed to take immediate steps to indicate the mode and manner for the appellants to exercise the option under Rule 17 of the Pension Rules. The Union of India shall also notify the amounts that the appellants would be required to remit in case they opt for grant of pension under the said Rules. No order as to costs. IA Diary No. 44115/2025 for bringing on record legal representatives of appellant no. 21 is allowed. Pending applications, if any, stand disposed of.

Advocates Representing the Parties:

For the Petitioners: Mr. Gaurav Dhingra, Advocate-on-Record.

For the Respondents: Mr. K. M. Nataraj, Additional Solicitor General; Mr. Vatsal Joshi, Advocate; Mr. Sharath Nambiar, Advocate; Ms. Indira Bhakar, Advocate; Mr. Vinayak Sharma, Advocate; Mr. Anuj Srinivas Udupa, Advocate; Mr. Chitransh Sharma, Advocate; Ms. Satvika Thakur, Advocate; Mr. Yogya Rajpurohit, Advocate; Mr. Aayush Saklani, Advocate; Ms. Nikita Capoor, Advocate; Mr. Mohd. Akhil, Advocate; Mr. Raghav Sharma, Advocate; Mr. Prashant Rawat, Advocate; Mr. Kritagya Kait, Advocate; Dr. N. Visakamurthy, Advocate-on-Record; Mr. Gurmeet Singh Makker, Advocate-on-Record

Case Title: S.D. Jayaprakash and Ors. etc. v. The Union of India & Ors.

Neutral Citation: 2025 INSC 594

Case Number: Civil Appeal Nos.of 2025 arising out of SLP (C) Nos. 19539-19540 of 2021

Bench: Justice Pamidighantam Sri Narasimha, Justice Joymalya Bagchi

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