Pension | Past Service As Contractual Employee To Be Taken Into Account For Pension: Supreme Court

The Supreme Court recently held that for the purposes of pension, past service as a contractual employee is to be taken into account. The court directed the state of Himachal Pradesh to finish the entire process within 3 months and issue orders fixing pensions for these employees engaged in education and ayurvedic department.

The Supreme Court bench comprising Justices S. Ravindra Bhat and Justice Aravind Kumar was hearing an appeal filed by the State of Himachal Pradesh against a High Court decision which directed the state to grant the employees pension which should take into account the previous period of contractual employment.

The State's contention rested on Rule 2(g) of the CCS Pension Rules, 1972, which seemingly excluded contractual employees from the purview of pension rules. They argued that Rule 17, which allows the inclusion of service period as a contractual worker for pension calculations, would not be applicable due to the exclusion clause in Rule 2(g).

However, the Supreme Court disagreed with the state's interpretation, asserting that such a reading would render Rule 17 redundant. The court emphasized that Rule 17 was specifically introduced to address scenarios where contractual employees are later regularized by the state, ensuring continuity in pension calculations.

The court observed “Rule 17 was engrafted essentially to cater to the eventuality, where the employees working on a contract basis were regularized at a later stage. It is only for the purposes of pension that the past service as a contractual employee is to be taken into account.”

The court further highlighted that Rule 2(g) commences with the phrase "save as otherwise provided in the rules," indicating that other rules may still be applied in certain circumstances.

The court observed “However, what is significant is that the rule itself in its opening terms saves the application of other provisions of the pension rules: “Save as otherwise provided in these rules”.”

BACKGROUND OF THE CASE

The respondents were employed on a contract basis by the State in its Education and in the Ayurvedic Department. Their services as contractual employees were regularized at different points in time. Many of them were engaged before the rules for pension in 2004 were framed.

It abolished the entitlement of pension per se. Thereafter, employees were regularized.

They claimed that after being regularised, the period of contractual employment should be considered to calculate pension. The state rejected this claim and employees approached the HC. The HC agreed with the employees and directed the state to grant them a pension which should take into account the previous period of contractual employment. Aggrieved by the same, the state filed an appeal before Supreme Court.

Case title: State of Himachal Pradesh v. Sheela Devi

Citation: 2023 LiveLaw (SC) 663

Click Here To Read/Download Order