'Temporary' Employees Working For Decades Like Regular Govt Employees Can't Be Denied Equal Benefits: Supreme Court

The Supreme Court on Thursday (Aug. 22) observed that the employees who were performing the duties indistinguishable from the regular government employees cannot be deprived of the benefits accorded to the government employees.

“The denial of pensionary benefits solely on the basis of their temporary status, without due consideration of these factors, appears to be an oversimplification of their employment relationship with the government. This approach runs the risk of creating a class of employees who, despite serving the government for decades in a manner indistinguishable from regular employees, are deprived of the benefits and protections typically accorded to government servants.”, the bench comprising Justices Hima Kohli and Sandeep Mehta said.

The Court said that once it is established that the employee, who was not primarily appointed on a regular basis, performs the role and responsibilities of a regular employee for a long time and receives the same benefit as that of a regular employee, then such an employee no longer remains a temporary employee and should be considered as a regular employee.

“While the duration of service alone may not be determinative, it is a significant factor when considered in conjunction with the other aspects of their employment. Such long-term service suggests a level of permanence and integration into the governmental structure that belies their classification as temporary employees. The appellants performed duties similar to those of regular employees in the Accounts Section of SFF HQ Estt. No.22. This similarity in job functions further blurs the line between the appellants' status and that of regular government employees, suggesting that the distinction may be more formal than substantive. The extension of significant elements from the 4th and 5th CPC to the appellants further cements their plea of being employed in governmental functions.”, the judgment authored by Justice Sandeep Mehta observed.

Background

The case relates to the denial of the 6th Pay Commission benefits accrued to the Appellants which were received by other regular government employees. The Appellants were appointed to manage the Compulsory Saving Scheme Deposits (hereinafter referred to as SSD) Fund of the Special Frontier Force (hereinafter referred to as SFF) in various positions such as Junior Accountant, Accountant, Upper Division Clerk (UDC), and Lower Division Clerk (LDC), on running pay scales.

The SSD Fund is a welfare initiative funded through the personal contributions of the SFF troops from their salaries. Upon having been engaged as above, the appellants also received Traveling Allowance (TA), Dearness Allowance (DA), House Rent Allowance (HRA), Special Security Allowance (SSA), Gratuity, Bonus, Winter Allowance, and High-Altitude Allowance, etc. along with salary as per the 4th and 5th Central Pay Commissions ('CPC').

On 1st January 2006, the Union of India implemented the 6th Central Pay Commission and made the same applicable to all government employees of the SFF. However, these benefits were not extended to the appellants i.e. SSD employees, and instead, an ad-hoc amount of Rs. 3,000/- per month was given to each of them.

Aggrieved by this, the Appellants made representation to the Union Government for extending the benefits to the appellants, however the same was rejected. Following this, an application was preferred before the Central Administrative Tribunal (“CAT”) for an extension of the said benefits granted under the 6th Pay Commission to the Appellants. However, the CAT also rejected their application.

While dismissing their application the CAT held that they were not employed in government service the services performed were not statutory because the SSD Fund is a voluntary contribution made by the SFF employees.

The decision of the CAT was affirmed by the High Court, and following this, the Appellants appealed to the Supreme Court.

Issue For Consideration

The core issue presented for adjudication by the Court was whether the appellants, despite being classified as temporary employees of a scheme managed by contributory pooling of funds, can claim entitlement to pensionary benefits in accordance with the 6th CPC.

Observation

The Court decided the issue on the touchstone of Article 12 of the Constitution i.e., whether the SSD managed by the Appellants could be regarded as the State under Article 12 of the Constitution to extend the benefits of the 6th CPC to the Appellants.

Reference was made to the case of Ajay Hasia v. Khalid Mujib Sehravardi and Others reported in (1981) 1 SCC 722, where the Court established several tests to determine whether an entity can be considered an instrumentality or agency of the Government, and thus an "authority" under Article 12 of the Constitution of India. These tests include but are not limited to ;

“1. Extent of financial support from the government;
2. Deep and pervasive control of the government;
3. Functions performed are of public importance and closely related to governmental functions;
4. Entity enjoys monopoly status conferred or protected by the State;
5. The government department has been transferred to the entity.”

After applying these principles to the case at hand, the Court held “we find compelling evidence on record which establishes that the appellants meet the characteristics of regular government servants. Admittedly, the appellants were appointed on a regular pay scale. This factor strongly indicates a formalised employee-employer relationship akin to permanent government employees.”

Reasons Given By The Court

Firstly, the Court found that there was a deep and pervasive governmental control over the Appellant's employment terms as the appellants received increments and promotions comparable to those of other government employees.

Secondly, the degree of state control was exercised by the Government in the Appellant's employment terms because the facts provide positive evidence to show that the appellants' career paths were managed like permanent employees indicating a level of governmental oversight and control consistent with regular government service

Thirdly, the Court said that the provision of leave and other benefits, including the grant of Assured Career Progression (ACP), further reinforces the similarity between the appellants' employment conditions and those of regular government employees.

Also, a reference was made to the recent case of Vinod Kumar and Others v. Union of India reported in 2024 LiveLaw (SC) 330 where the Court observed that the essence of employment and the rights thereof cannot be merely determined by the initial terms of appointment when the actual course of employment has evolved significantly over time.

“This Court fully associates with this principle (as laid down in Vinod Kumar's case) and finds it wholly applicable in the present case, especially in light of the administrative orders and Board proceedings referred to supra that have consistently treated the appellants as equivalent to regular government employees. The mere classification of employees as 'temporary' or 'permanent' is not merely a matter of nomenclature but carries significant legal implications, particularly in terms of service benefits and protections.”, the Court observed.

The Court concluded with the following observation:

“Thus, we are of the opinion that the denial of pensionary benefits to the appellants is not tenable or justifiable in the eyes of law as the same is arbitrary and violates the fundamental rights as guaranteed by Articles 14 and 16 of the Constitution of India. It is indeed relevant to note that the appellants' batch seems to be the last in their genre of SSD Fund temporary employees and thus, manifestly, the direction to extend the benefits of the 6th CPC and the RP Rules to the appellants shall not form a precedent so as to have a detrimental effect on the financial health of the SSD Fund.”

Accordingly, the Appeal was allowed, and the respondents were directed to extend the benefits of the 6th Central Pay Commission including the pensionary benefits under the Revised Pay Scale Rules, 2008 to the appellants herein in the same terms as are being afforded to their peers in the Accounts Section of SFF HQ Estt. No. 22.

Appearance:

For Petitioner(s) Ms. Neha Rathi, AOR Mr. Kamal Kishore, Adv. Ms. Kajal Giri, Adv. Mr. Sanyam Jain, Adv. Mr. Kislay Panday, Adv. Mr. Hariom Yaduvanshi, Adv. Ms. S. Harini, Adv. Mr. Avi Dhankar, Adv. Ms. Gyanvi Roy, Adv. Mr. Arjun Yaduvanshi, Adv. Dr. Monika Gusain, AOR

For Respondent(s) Mr. K M Nataraj, A.S.G. (NP) Mr. Vatsal Joshi, Adv. Mr. B K Satija, Adv. Mr. Sharath Nambiar, Adv. Mr. Divyanshu Kumar Srivastava, Adv. Mr. Siddharth Venkatesh Thakur, Adv. Mr. Arvind Kumar Sharma, AOR

Case Title: RAJKARAN SINGH & ORS. VERSUS UNION OF INDIA & ORS., C.A. No. 009721 / 2024

Citation : 2024 LiveLaw (SC) 599

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