The Supreme Court has once again reinforced the protective intent of pension laws by holding that service rendered on a contractual basis prior to regularisation cannot be excluded for pensionary benefits. In this significant ruling, the Court clarified the scope of Rule 17 of the CCS (Pension) Rules, 1972, and directed the Union of India to put in place a clear mechanism enabling eligible employees to exercise their option for pension, including the manner of remittance of required contributions. The decision is a major relief for employees whose long years of contractual service were previously disregarded for retirement benefits.
Citation: [2025] 181 taxmann.com 182 (SC)
Court: Supreme Court of India
Date of Judgment: 29 April 2025
Reported on: 15 December 2025
Law Area: Labour Laws / Service Jurisprudence
Facts of the Case
- The appellants were initially engaged by the Union of India on a contractual basis.
- They were subsequently regularised in service in the year 2015.
- Upon retirement, the authorities did not count the period of contractual service for the purpose of granting pensionary benefits.
- The appellants claimed that their pre-regularisation service should be counted under Rule 17 of the CCS (Pension) Rules, 1972, subject to compliance with the prescribed mechanism.
Issue Before the Court
Whether the period of contractual service rendered prior to regularisation is liable to be counted for the purpose of pensionary benefits under the CCS (Pension) Rules, 1972.
Decision / Held
- The Supreme Court held that the contractual service period rendered prior to regularisation must be counted towards pensionary benefits.
- Such counting is to be done in accordance with the mechanism prescribed under Rule 17 of the CCS (Pension) Rules, 1972.
- The Court directed the Union of India to:
- Take immediate steps to implement the judgment.
- Clearly indicate the mode and manner in which the appellants may exercise the option under Rule 17.
- Notify the amount payable by the appellants, if any, in case they opt for grant of pension under the said rule.
Key Takeaway / Significance
- The judgment reinforces the principle that substantive service rendered on a contractual basis cannot be ignored merely because regularisation occurred later.
- It provides relief to similarly placed government employees by ensuring social security benefits like pension are not denied on technical grounds.
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The ruling strengthens employee rights in matters involving transition from contractual to regular service.