Odisha Pension Rules | Job Contractors Not Entitled To Pension For Pre-Regularisation Period Unlike Work-Charged Employees : Supreme Court

The Supreme Court has held that 'work-charged employees' are distinct from 'job contractors' when it comes to pensionary entitlements under the Odisha Pension Rules 1992.

Explaining the distinction between the work-charged employee and employees working on a job contract, the Court observed:

Departing from the usual practice of rejecting time-barred pleas filed after excessive delay, the Supreme Court allowed the State of Odisha's batch of belated petitions concerning the distribution of pensionary benefits to employees.

Given the importance of the matter as the case affected many employees and had significant implications for the State Exchequer, the Court decided to condone the delay and examine the cases on their merits.

However, the Court also reprimanded the State of Odisha for its careless and lethargic approach in pursuing litigation related to pensionary benefits for employees. Resultantly, it imposed costs of ₹1.5 lakh per employee on the state for its inexcusable delays in filing appeals and special leave petitions, which led to unnecessary prolongation of the legal process.

"It is not a case concerning a few employees, rather it affects a large number, and in turn, the State Exchequer. It is for this reason that we were persuaded to look into these matter(s), although initially, we were not inclined to interfere, considering the lethargic approach of the State in pursuing these matters, and the inordinate delay caused, which was never explained in any satisfactory manner. The State though kept filing one Special Leave Petition after another before this Court, not in one go but one after another, most of them belatedly, to complete a mere formality. For this reason, many of these petitions have been dismissed on the ground of delay itself as stated earlier, as Courts do not come to rescue those who sleep over their rights. Be it the State. The liability of the State on this issue will be addressed towards the end. Now, since we are taking up these matters, what will be the fate of the already dismissed petitions after our determination, we will address at the end.", the court observed.

"Consequently, in all such cases the State shall pay an amount of Rupees One Lakh Fifty Thousand, to the employee concerned. This amount shall be deposited in the account of the employees, or as the case might be, within a period of four weeks from today. This order shall not be made effective till the above amount is deposited in the account of each of such employees.", the court ordered.

Background Of The Case 

The bench comprising Justices Sudhanshu Dhulia and Ahsanuddin Amanullah was hearing the State of Odisha's batch of petitions against the Odisha High Court's Division Bench decision to dismiss their Writ Appeals as time-barred. In this case, the Court decided the long-standing dispute over pensionary benefits for employees who were initially hired as Job Contractors and later regularized in the State of Odisha. 

The moot question before the Court was whether only a portion of the service rendered by employees as Job Contractors should be counted for pensionary benefits after their regularization or if the entire period of service as Job Contractors should be included in the calculation of their pension benefits.

The Odisha Administrative Tribunal ("OAT") held in employees' favor holding that the entire service rendered as Job Contractors would be counted for determining the pensionary benefits post regularization. The High Court's Single Bench upheld the OAT's decision, prompting the State to appeal to the Division Bench. 

Following the Division Bench's dismissal of the Writ Appeals as time-barred filed after inordinate delay, the State appealed to the Supreme Court.

Before the Supreme Court, the State of Odisha, citing Sub-Rule 6 of Rule 18 of the Odisha Pension Rules, 1992 ("Pension Rules"), argued that only a specific portion of an employee's service as a Job Contractor which enables them to pensionary benefits should be considered for pensionary benefits post-regularization. The State contended that Sub-Rule 6, introduced through a 2001 amendment, was intended to limit the service period counted for pension eligibility, rather than including the entire tenure of service.

Supreme Court's Observation

Initially, the Court considered dismissing the petitions due to the State's inaction and substantial delays. However, recognizing the significant financial implications for the State, the Court chose to address the petitions on their merits.

Finding force in the State's contentions, the judgment authored by Justice Dhulia upholding Rule 18(6) of Pension Rules stated that the Rule intended to not include the whole service period rendered by the employee as a Job Contract, but a specific portion of service enabling them to receive pensionary benefits post regularization. 

The Court further highlighted the distinction between Job Contractors and Work-Charged Employees under the Odisha Pension Rules, stating that only Work-Charged Employees are entitled to have their entire service counted for pensionary benefits post-regularization as also held in the case of Prem Singh vs. State of Uttar Pradesh and Others (2019) 10 SCC 516. In contrast, Job Contractors are governed by separate rules, where only a portion of their service is considered for pension eligibility.

The Court also considered the Orissa High Court's 1992 ruling in Settlement Class-IV Job Contract Employees Union v. State of Orissa, which denied Job Contractors' claim for their entire service period to be used in pension calculations, limiting it instead to the years necessary for pension eligibility.

The Court said that the aforesaid ruling of the Job Contract Employees Union's case was misinterpreted by the OAT and High Court for including the entire service rendered as Job Contractors for determining pensionary benefits.

Accordingly, the appeals were allowed, however with the imposition of Rs. 1.5 Lakhs cost per employee on the State.

Case Title: STATE OF ODISHA & ORS. Versus SUDHANSU SEKHAR JENA (and connected matters)

Citation : 2025 LiveLaw (SC) 239

Click here to read/download the judgment