CCS Pension Rules | Contractual Service Must Count Towards Pension Once Employee Is Regularised : Supreme Court

The Supreme Court observed that a contract job period should be counted for pensionary benefits, once the government employee is regularized.

A bench of Justices PS Narasimha and Joymalya Bagchi ruled in favour of government employees who were initially appointed on a contractual basis and later regularized, holding that they are entitled to pensionary benefits for their entire service period.

The Court rejected the denial of benefits based on Rule 2(g) of the Central Civil Services (Pension) Rules, 1972 (“Pension Rules”), which excludes contractual employees, stating that once regularized, the entire service period must be counted for pension purposes.

The Court took note of Rule 17 of the Pension Rules, which states that once service is regularized, the entire service, i.e., contractual and regular, counts for pension, thereby overriding Rule 2(g).

Reference was made from the case of State of Himachal Pradesh & Ors. v. Sheela Devi, 2023 SCC OnLine SC 1272, where it was held that 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 said.

“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.”, the court said.

“In light of the clear language of Rule 17 of the Pension Rules as well as its interpretation in Sheela Devi (supra), the contractual service period rendered prior to the appellants' regularisation in 2015 must be counted towards the payment of their pensionary benefits in accordance with the mechanism set out in Rule 17.”, the court held.

Accordingly, the appeal was allowed, and the Respondent-Union of India was directed to take immediate steps and indicate the mode and manner for the appellants to exercise the option provided under Rule 17 of the Pension Rules as well as to notify the amounts that the appellants would have to remit in case they opt for grant of pension under the Rules.

Case Title: S.D. JAYAPRAKASH AND ORS. ETC. VERSUS THE UNION OF INDIA & ORS.

Citation : 2025 LiveLaw (SC) 506

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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.