Service Law:
Pension – Entitlement to – Conversion of a Government Department into Central Public Sector Undertaking/Autonomous body – En-masse transfer of the employees of the Government Department to the Public Sector Undertaking – Department of Pension and Pension Welfare of the Government issued Office Memorandum specifying terms and condition governing pensionary benefits of the transferred employees giving the employees option either to retain pensionary benefits under Government Rules or be governed by the rules of the Public Sector Undertaking – Appellants (transferred employees) opted to be absorbed in the Public Sector Undertaking – Further they opted to retain pensionary benefits under the rules of Central Government – They were informed by the Public Sector Undertaking (employer) that they were not eligible for Government pension but were eligible to only an amount equal to Provident Fund Contribution (as per clause (c) in the Office Memorandum) – Writ petition seeking direction to consider their cases for grant of Government pension – High Court dismissing the petition held that the appellants were not eligible to avail pensionary benefits – On appeal, held: In view of r. 37 r/w. r. 49 of CCS (Pension) Rules, appellants were not entitled to pensionary benefits as they did not have minimum qualifying service of 10 years to make their service pensionable with Central Government – As per Office Memorandum also the option of retaining the pensionary benefits was available to only those who were in the first place entitled to receive pension at the time of their retirement under the Central Government Rules – Central Civil Services (Pension) Rules, 1972 – rr. 37, 3(q) and 49.
Dismissing the appeal, the Court
HELD: 1. Rule 37 of the CCS (Pension) Rules, 1972 provides that a Government servant who is absorbed in a Corporation or Government Company is deemed to have retired from government service on the date of his/her absorption. The Appellants having voluntarily exercised the option to get absorbed in the regular service of VSNL, were deemed to have retired from the service of the Central Government on the date of their absorption i.e. January 2, 1990 as per Rule 37(1) of the CCS (Pension) Rules, 1972. [Para 8.1][265-B; 266-A, B]
2. It is the admitted position that the Appellants had not completed 10 years of service on the date of their absorption into VSNL, i.e. when they were deemed to have retired from the service of the Central Government. To receive pensionary benefits from the Government, a Government servant is required to put in a minimum ‘qualifying service’ as defined by Rule 3(q) of the CCS (Pension) Rules, 1972. According to Rule 3(q), ‘qualifying service’ means the service rendered while on duty or otherwise which shall be taken into account for the purpose of Pensions and Gratuities admissible under the CCS (Pension) Rules, 1972. [Para 8.2][266-B, C]
3. Rule 49(2) of the CCS (Pension) Rules, 1972 provides that a Government servant is entitled to receive pension on retirement only after the completion of the qualifying service of
10 years. On the other hand, a Government servant who retires before completing the qualifying service of 10 years is entitled to service gratuity under Rule 49(1) of the CCS (Pension) Rules, 1972. [Para 8.3][266-D, E]
4.A conjoint reading of the statutory rules, i.e. Rule 37 with Rule 49 of the CCS (Pension) Rules, 1972, would make it abundantly clear that the appellants were not entitled to pensionary benefits since admittedly they did not have the minimum qualifying service of 10 years, to make their service pensionable with the Central Government. On absorption in VSNL on January 2, 1990 there was a severance of their service with the Central Government. The appellants would be entitled to the retiral benefits under VSNL. [Para 8.3][267-C, D]
5. After exercising the option to be absorbed in VSNL, the appellants are now estopped from seeking pensionary benefits from the Central Government. The Office Memorandum dated July 5, 1989 was issued by the Department of Pension and Pension Welfare, Government of India to settle the pensionary terms and conditions applicable in cases of en masse transfer of employees on the conversion of a Government Department into a Central Public Sector Undertaking/Autonomous Body. Clause (a) of the Office Memorandum provided an option to Government servants (permanent, quasi-permanent and temporary) to either retain the pensionary benefits available to them under the Government rules or be governed by the rules of the Public Sector Undertaking/Autonomous Body. Under Clause (b), Government servants who opted to retain pensionary benefits were entitled to receive pension at the time of their retirement “in accordance with Central Government rules in force at that time”. A conjoint reading of Clauses (a) and (b) of the Memorandum would indicate that the option of retaining pensionary benefits was available only to those Government servants who were, in the first place, entitled to receive pension at the time of their retirement the option to “retain” pensionary benefits available under the relevant Government rules. Clauses (a) and (b) pre-suppose that the Government servants who opt to retain pensionary benefits, should be entitled to receive pensionary benefits under the Central Government rules, in the first place. [Paras 8.3 and 8.4
(a) (b)][267-D-H; 268-A, B]
6. Further, Paragraph I (1) (ii) of the document titled “Clarificatory Information to Facilitate Exercise of Option” clearly stated that the eligibility to retain pensionary benefits under the Central Government was subject to the condition of putting in a minimum of 10 years as qualifying service. The appellants were specifically informed of this clarification at the time of exercising their option that their eligibility for pensionary benefits under the CCS (Pension) Rules, 1972 was dependant on their fulfilling the minimum eligibility requirement of 10 years qualifying service on the day of their retirement. [Para 8.4][268-E-G]
7. The Appellants were not entitled to receive pensionary benefits either under the CCS (Pension) Rules, 1972 or under Clauses (a) and (b) of the Office Memorandum. The case of the appellants being Government servants prior to their absorption in VSNL, with less than 10 years of qualifying service, would be squarely covered by Clause (c) of the Office Memorandum. Under Clause (c), they would be entitled to receive an amount equal to the Provident Fund contribution for the period of their service under the Government, upto the date of their permanent absorption along with Simple Interest at 6% per annum as the opening balance in their CPF account with the Public Sector Undertaking/Autonomous Body. [Para 8][271-E-G]
Direct Recruit Class II Engineering Officers’ Association v. State of Maharashtra & Ors. (1990) 2 SCC 715 : AIR 1990 SC 1607 : [1990] 2 SCR 900 – followed. Union of India & Anr. v. Bashirabhai R. Khiliji (2007)
6 SCC 16 : AIR 2007 SC 1935 : [2007] 6 SCR 1060 – relied on.
S.V. Vasaikar & Ors. v. Union of India & Ors. 2003 (2) Mh.L.J. 691 : 2003 (4) Bom CR 79 – approved.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.