In a significant ruling, the Supreme Court of India clarified that once a contractual employee is regularised, their entire service period—including the time served under contract—must be counted for pensionary benefits.
A Bench of Justices P.S. Narasimha and Justice Joymalya Bagchi delivered this judgment in the case titled S.D. Jayaprakash and Others vs. Union of India and Others, which arose from appeals challenging a Karnataka High Court decision.
"The effect is that upon regularisation, 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." — Supreme Court
The case involved several Data Entry Operators appointed on a contractual basis between 1996 and 1999 under a Central Government scheme. They were later regularised in 2015 following a Central Administrative Tribunal (CAT) order.
Earlier, the High Court had ruled that the contractual period could not be counted for pension, seniority, or service benefits, as the initial appointment was not through the Staff Selection Commission. However, the Supreme Court overturned this reasoning by applying Rule 17 of the Central Civil Services (Pension) Rules, 1972.
“In light of the clear language of Rule 17 of the Pension Rules as well as its interpretation in Sheela Devi (2023), the contractual service period rendered prior to the appellants' regularisation in 2015 must be counted.” — Supreme Court
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Rule 17 specifically deals with employees first appointed on a contractual basis and later regularised. It gives such employees the option to either retain the government’s contribution to the Contributory Provident Fund or refund it to opt for pension by counting the entire service period.
The Court also relied heavily on its earlier ruling in the Sheela Devi case, which had interpreted Rule 17 in favor of employees in similar circumstances. The Court held that once regularised, Rule 17 overrides Rule 2(g), which excludes contractual employees from the Pension Rules.
“Rule 17 was designed to address situations where employees initially served on a contract and were later brought into regular service. It ensures such employees are not denied pension rights unjustly,” the Court clarified.
As a result, the Supreme Court directed the Union of India to implement the necessary steps for affected employees to exercise their pension options under Rule 17. The government must now notify the affected employees about the option process and amounts, if any, they must remit for pension eligibility.
The appeals were partly allowed, and the impugned High Court order was set aside to the extent that it denied pension rights for contractual service.
Case Title: S.D. JAYAPRAKASH AND ORS. ETC. VERSUS THE UNION OF INDIA & ORS.
Appearances:
For Petitioner(s) :Mr. C.B.Gururaj, Adv. Mr. Prakash Ranjan Nayak, AOR Mr. Animesh Dubey, Adv. Mr. M.C. Dhingra, Sr. Adv. (Arguing Counsel) Mr. Gaurav Dhingra, AOR Mr. Shashank Singh, Adv. Mr. Surendra Gautam, Adv. Mr. Lalit Nagar, Adv.
For Respondent(s) :Mr. K. M. Nataraj, A.S.G. (NP) Mr. Vatsal Joshi, Adv. (Arguing Counsel) Mr. Sharath Nambiar, Adv. Mr. Mohd. Akhil, Adv. Mr. Raghav Sharma, Adv. Mr. Prashant Rawat, Adv. Mr. Kritagya Kait, Adv. Ms. Kritagya Kait, Adv.
