Supreme Court : “Respondents Governed by Statutory Rules, Entitled to Pension” Despite CPF Withdrawals; Finds “No Option Was Given” for Pension Switchover and Rejects Estoppel Argument
Isabella Mariam
The Supreme Court has directed that employees appointed under the Antar Gramin Sadak Nirman Yojana are governed by the rules applicable to equivalent posts in the Cane Development Department, affirming their entitlement to pensionary benefits subject to limited arrears. The Division Bench comprising Justice Abhay S. Oka and Justice Augustine George Masih stated that the respondents, though engaged on a temporary basis under the scheme, were covered under the statutory rules following government decisions from 1997. The Court noted that the respondents were eligible for pensionary benefits under the applicable framework, notwithstanding the fact that they had availed of the Contributory Provident Fund scheme upon their retirement.
Referring to the earlier judgment in Vinod Kumar Goel’s case, the Bench found that the respondents' service conditions and benefits were to be aligned with those applicable to government employees. The Court also recorded that the initial objection regarding delay and estoppel could not deprive the respondents of their continuing entitlement to pension. It recorded that “the respondents had at the very outset put forth their claim for pension which was declined by the appellants”. The Court addressed the appellant’s submissions concerning delay, waiver, and CPF withdrawals but recorded that the respondents were always ready and willing to deposit the withdrawn CPF amounts to enable eligibility under the pension framework.
The respondents were appointed to various posts under the Antar Gramin Sadak Nirman Yojana between 1969 and 1982. Their service conditions were governed by the Uttar Pradesh Cane (Gazetted) Service Rules, 1979, as applicable to gazetted officers of the Cane Development Department. No separate rules were framed specifically for the respondents. They were engaged on a temporary basis and were initially governed by the Contributory Provident Fund Scheme.
The respondents sought pensionary benefits on par with permanent government employees and approached the High Court. Their claim was based on a series of government decisions and departmental communications. On 29 September 1997, the government conveyed that it had no objection to granting benefits such as pension, gratuity, leave travel concession, and group insurance to employees under the scheme, subject to the condition that all financial expenses would be met from the scheme’s internal resources, without government aid.
A subsequent decision dated 12 November 1997 provided that all employees under the scheme would be governed by the service rules, government orders, regulations, and bye-laws applicable to equivalent posts in the Cane Development Department. However, the Sugar Cane Commissioner issued clarifications excluding employees under the scheme from the benefits of regularization, permanency, and pension. The age of superannuation was initially maintained at 58 years but was later raised to 60 years for these employees.
The respondents relied on the judgment delivered by the Supreme Court in Vinod Kumar Goel v. State of Uttaranchal, where the Court held that an employee under the same scheme was entitled to the benefit of continuance till 60 years of age. In a subsequent development, this Court also granted him pensionary benefits despite his service not meeting the qualifying criteria under the pension rules.
The respondents’ claims were also supported by the fact that the Uttar Pradesh Government, through a notification dated 28 November 2001, amended Rule 56 of the Uttar Pradesh Fundamental Rules, raising the superannuation age to 60 years. The respondents had, at the relevant time, challenged notices directing their retirement at 58 years by filing writ petitions. Interim orders were granted, allowing them to continue in service until the age of 60 years.
The appellants contested the respondents’ claim for parity with permanent government employees. They submitted that the respondents had withdrawn amounts under the CPF Scheme after retirement, and thus were estopped from seeking pensionary benefits. They also contended that the respondents’ appointments were temporary in nature and not on par with permanent government employees.
The respondents contended that since the service rules applicable to the Cane Development Department were expressly made applicable to them, they were entitled to the same benefits, including pension. They also submitted that they were willing to deposit back the amounts withdrawn under the CPF Scheme to comply with pension eligibility requirements.
The Court examined the documents and submissions presented by both sides. It recorded that “the respondents, although appointed under the Scheme, were governed by the fundamental statutory rules as per the order dated 12.11.1997 of the Competent Authority”. The Court further recorded that “this aspect is further fortified in light of the decision dated 29.11.1997, which extends the benefit of retiral benefits etc. to the scheme employees, restricting it only to the management of finances under the Scheme itself”.
The Bench referred to its earlier decision in the Vinod Kumar Goel case, where it was held that “the employees appointed under the scheme would be governed by the Rules as applicable to the government employees as per the conscious decision of the government”. The Court recorded that the employees were entitled to continue until 60 years of age, and that the judgment in Goel’s case applied to the present respondents, as no material change in rules or regulations between Uttar Pradesh and Uttarakhand was pointed out after the bifurcation of the two States.
The Court addressed the appellants’ argument regarding estoppel and waiver, stating that “the respondents had at the very outset put forth their claim for pension which was declined by the appellants and that too either prior to retirement or prior to withdrawal of the fund under Contributory Provident Fund Scheme”. It further noted, “they were always and are still ready and willing to deposit the amount withdrawn as is required to be so contributed”.
The submission that switching from the CPF Scheme to the Pension Scheme was not permissible without express options under the rules was also discussed. The Court recorded that “there was no option given for switchover to the respondents rather it was asserted that they were not entitled to pension which, as held above, has been found to be unsustainable”. The Court distinguished the present case from precedents cited by the appellants, including Rajasthan Rajya Vidyut Nigam Ltd. v. Dwarka Prasad Koolwal and Union of India v. M.K. Sarkar, on the basis that those cases involved employees who failed to exercise a formal option when invited to do so.
The Court further observed that while service-related claims may be rejected on grounds of delay, “where the claim relates to a continuing wrong, which does not affect the rights of third parties, equities can be balanced by restricting the arrears”. It stated, “normally, the period of three years prior to the date of filing of the Writ Petition in the High Court for restricting the consequential relief has been resorted to regarding disbursal of arrears, which is justified”.
The Supreme Court dismissed the appeal with a direction that “the respondents [are] entitled to arrears of pension for a period of three years prior to the date of the filing of their Writ Petition or the date of attaining the age 60 years whichever is earlier”. The Court added that “as regards the benefits which have been disbursed to the respondents under the Contributory Pension Scheme, the appellants would be entitled to deduct the said amount from the arrears of pension payable to the respondents”.
The Court specified that this exercise shall be completed within one month. If any balance amount is due from the respondents, they will be informed within two weeks thereafter and must deposit the required amount within a further two-week period. On compliance, arrears and ongoing pension entitlements are to be paid within thirty days.
Case Title: State of Uttar Pradesh & Anr. v. Dinesh Kumar Sharma & Ors.
Neutral Citation: 2025 INSC 370
Case Number: Civil Appeal No(s). 1080 of 2017
Bench: Justice Abhay S. Oka and Justice Augustine George Masih
[Read/Download order]
