Full Judgment Text
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 542 OF 2023
National Institute of Rural Development …Appellant
v.
Shyam Sunder Prasad Sharma & Ors. ... Respondents
J U D G M E N T
ABHAY S. OKA, J.
FACTUAL ASPECTS
1. The issue involved in this Civil Appeal is of entitlement of
respondent no.1 to pensionary benefits. The appellant is an
autonomous organisation working under the Ministry of Rural
Development, Government of India. The appellant has more than
Signature Not Verified
100 faculty members drawn from about 20 disciplines. It trains
Digitally signed by
Indu Marwah
Date: 2023.03.01
17:34:47 IST
Reason:
about 4,000 officials as well as non-officials engaged in the field of
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rural development. It is also conducting international programmes
for the benefit of third world countries.
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2. With effect from 14 August 2002, the appellant appointed
respondent no. 1 as an Associate Professor. Though the post was
admittedly a regular post, he was appointed on a contract basis
for a period of three years which was extendable to five years. Offer
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of contract appointment was issued on 22 July 2002 and the
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agreement was executed by the appellant on 14 August 2002.
Respondent no.1, after his appointment, opted for the
Contributory Provident Fund Scheme of the appellant and
submitted the necessary documents.
3. On the basis of an application made by respondent no.1, he
was offered a contract appointment to the post of Professor by the
appellant for a period of three years which was extendable to five
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years. The offer dated 1 May 2007 records that respondent no.1
will be entitled to benefits of the Contributory Provident Fund
Scheme (CPF) as per the rules of the appellant.
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4. On 18 February 2009, the Executive Council of the
appellant decided to regularise services of such faculty members
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who were employed on a contract basis on regular posts as a one-
time measure. Accordingly, NIRD Rules, 2011 for Regular
Appointment of the Academic Staff (Appointed on Contract Basis)
(for short “the Regularisation Rules”) were framed. By order dated
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4 May 2012, the appointment of respondent no.1 was regularised
on the post of Professor. The order itself records that the
appointment of respondent no.1 was made to a sanctioned post.
The order records that respondent no.1 will be entitled to
pensionary benefits under the new pension scheme.
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5. On 10 September 2012, a representation was made by
respondent no.1 to the Director of the appellant for the grant of
benefits under the old pension scheme to him. It was recorded that
the new pension scheme was applicable to those who were
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appointed on or after 1 January 2004. Even subsequently,
representations were made by respondent no.1 in the years 2013
and 2014.
6. Original application was filed by respondent no.1 before the
Central Administrative Tribunal challenging the action of applying
the new pension scheme to him. The Tribunal held that
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respondent no.1 was initially appointed as an Associate Professor
through direct recruitment against a permanent post on a contract
basis. Even his appointment as a professor on a contract basis
was on a permanent post. The Tribunal noted that respondent
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no.1’s appointment was regularised from 14 August 2012.
However, his service under the contract employment was required
to be considered for the purposes of determining pensionary
benefits. Therefore, the Tribunal proceeded to hold that the action
of the appellant of applying the new pension scheme was illegal. A
direction was issued to the appellant to consider the case of
respondent no.1 under the old pension scheme. It is this order
which has been confirmed by a Division Bench of Telangana High
Court by the impugned judgment and order.
SUBMISSIONS
7. The learned counsel appearing for the appellant urged that
respondent no.1’s first appointment as an Associate Professor on
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14 August 2002 was on a contract basis which came to an end
after he was appointed as a Professor on a contract basis in the
year 2007. Her submission is that as the order of regularisation
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was passed in the year 2012, he is not entitled to claim a pension
under the old scheme with effect from the year 2002. The learned
counsel further submitted that the Regularisation Rules under
which the service of respondent no.1 was regularised clearly
provided that all the academic staff members who were regularised
under the Regularisation Rules will be entitled to benefit of
pension only under the new pension scheme. She submitted that
without challenging the Regularisation Rules, respondent no.1
cannot claim that the old pension scheme will apply to him. The
learned counsel urged that respondent no.1 accepted the
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Regularisation Order dated 4 May 2012 which clearly provides
that he can claim the benefit of only the new pension scheme. She
pointed out that respondent no.1 continued to contribute to CPF
throughout his employment. She submitted that it was not open
for respondent no.1 to opt for the old pension scheme as it was
not open for him to exercise the option of joining the old pension
scheme. The learned counsel urged that Rule 6 of the
Regularisation Rules has not been correctly interpreted both by
the Tribunal and by the High Court. She submitted that there are
similarly placed 20 academic staff members of the appellant and
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therefore, if the impugned judgment is upheld, the financial
burden on the appellant will be of more than Rs. 8 crores.
8. The learned counsel appearing for respondent no.1 in reply
submitted that after respondent no.1’s employment was
regularised, in view of clause 4 of Bye-law 52 of the National
Institute of Rural Development (Service) Bye-laws (for short “the
said Bye-laws”), respondent no.1 on regularisation of his service
was entitled to opt for old pension scheme though earlier he had
joined CPF scheme. He submitted that as interpreted by the
Tribunal and the High Court, Rule 6 of the Regularisation Rules
carves out an exception in the case of an employee who was
initially appointed on a regular post and was holding a high
academic post on a contract basis who had subscribed either to
CPF or GPF-cum-Pension Scheme of the appellant. The learned
counsel appearing for respondent no.1 submitted that only 6 staff
members were beneficiaries of the Regularisation Scheme and not
20 as contended by the appellant. He pointed out that two
Associate Professors employed on a contract basis who are at
serial nos.1 and 2 in Annexure-I to the Regularisation Rules have
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been given the benefit of the old pension scheme. He pointed out
that as soon as the order of regularisation was served to
respondent no.1, he immediately made a representation disputing
the correctness of the clause which provided that he will get the
benefit only of the new pension scheme. He submitted that he
continued to submit the representations till the year 2014. He
submitted that therefore, it cannot be said that respondent no.1
had voluntarily accepted conditions imposed in the order of
regularisation. The learned counsel would submit that the
Tribunal and High Court have made a reasonable interpretation of
the rules and in particular, the Regularisation Rules which calls
for no interference. Even the learned senior counsel appearing for
the third respondent - Union of India has made submissions in
support of the appeal.
OUR VIEW
9. It is an admitted position that on 14th August 2002,
respondent no.1 was appointed as an Associate Professor by the
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appellant on a contractual basis as per the order dated 22 July
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2002 and in terms of the agreement dated 14 August 2002. The
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said contractual appointment was extended till 13 August 2007.
After joining the employment, respondent no.1 opted for CPF.
10. Contract appointment to the post of Professor was offered to
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respondent no.1 on 1 May 2007 on the terms and conditions set
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out in the written offer. Respondent no.1 joined on 3 May 2007.
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Clause 5 of the Offer of Contract Appointment dated 1 May 2007
clearly recorded that respondent no.1 will be entitled to benefit of
CPF. It is not the case of respondent no.1 that any grievance was
made by him before accepting the appointment about Clause no.5
which limits his entitlement only to the CPF. The appointment of
respondent no.1 was regularised on the basis of the Regularisation
Rules. Rule 4 of the Regularisation Rules provides for the
regularisation of the appointment of the academic staff appointed
on a contract basis. It provided that academic staff appointed on
a contract basis in terms of Bye-law 2(2)(a) of the said Bye-laws
shall be deemed to have been appointed on regular basis against
their respective sanctioned posts subject to being found fit by the
selection Committee after evaluating their performance. Rule 6 of
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the Regularisation Rules has been interpreted by the High Court
and the Tribunal. Rule 6 reads thus:
“In the event of deemed appointment of the
services of the academic staff appointed on
contract basis, no pensionary benefits
would be given other than as available under
the New Pension Scheme of the Government
of India is made applicable with effect from
01.01.2004. This will not affect employee
who was initially appointed on a regular
post and presently holding his/her high
academic post on contract basis and already
subscribing to either “CPF or GPF cum
Pension scheme” of the institute from the
date of their initial regular appointment.
Their existing status will remain
unchanged. No arrears of pensionary and
related allowances for the past service will
be paid in case of deemed appointment.
However, past service rendered by these
academic staff appointed on contract basis
may be taken into consideration for their
future promotions, if any, as per norms/
eligibility prescribed by the Institute for other
academic staff appointed on regular basis, for
this purpose, as made applicable from time to
time, with the approval of competent authority.
The deemed appointment will have no impact
on existing basic pay and allowance presently
being drawn by these academic staff appointed
on contract basis and they will continue to
draw their existing pay and allowances as per
norms."
(emphasis added)
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11. We may note here that the employment of respondent no.1
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was regularised by the office order dated 4 May 2012 which
specifically records that the order will take effect from the date of
issue of the order. The said condition has not been challenged by
respondent no.1. Therefore, he cannot claim that his employment
has been regularised with retrospective effect from the year 2002
when he was appointed on a contract basis as an Associate
Professor. The exception carved out in Rule 6 provides that the
main part of Rule 6 will not affect an employee initially appointed
on a regular post who was presently holding a high academic post
on a contract basis and who was subscribing to either CPF or GPF-
cum-pension scheme of the appellant from the date of his initial
regular appointment. This exception is applicable to a member of
the academic staff who was regularly employed (not on a contract
basis) earlier but was holding a high academic post on a contract
basis when the Regularisation Rules came into force. The
exception will not apply to an employee like respondent no.1,
whose first appointment was also on a contract basis and the
appointment to a higher academic post was also on a contract
basis. Even assuming that the exception carved out is applicable
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to the case of respondent no.1, the exception does not permit a
change of option from CPF to GPF-cum-Pension Scheme (old
pension scheme). The exception protects the option earlier
exercised by the employee so that the employee continues to be
governed by the scheme for which he has already opted.
Respondent no.1 had admittedly exercised the option of the CPF
scheme.
12. Reliance was placed on clause (a) of Bye-law 52 of the Bye-
laws which reads thus:
“52. Application and eligibility of the schemes:
a) Persons appointed after the date of
commencement of the schemes under bye-
laws 48 and 49.
1) A person appointed on contract under Service
bye-law 2(2) shall be eligible to be governed only
by the Contributory Provident Fund Scheme
under Bye-law 50.
2) A person initially appointed on contract under
Bye-law 12 to a post referred to in Bye-law 3(a)
shall be eligible to be governed by the
Contributory Provident Fund Scheme under bye-
law 50, for the period he holds the appointment
on contract (vide sub-clause 4).
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3) A person appointed to a post otherwise than on
contract shall be eligible to be governed only by
the Pension-cum-Gratuity-cum-Family Pension
Scheme referred to in bye-law 48 and the General
Provident Fund Scheme referred to in bye-law 49.
4) An employee of the category referred to in sub-
clause (2) shall, on his appointment on a regular
basis in the post held by him or any other post
under bye-law 12, have the option to elect either.
i) the Pension-cum-Gratuity-cum-Family
Pension Scheme referred to in bye-law 48
and the General Provident Fund Scheme
referred to in bye-law 49 or
ii) to continue to be governed by the
Contributory Provident Fund Scheme
referred to in bye-law 50.
Provided that he shall exercise and communicate
his option in writing to the Registrar and
Accounts Officer within three months of the date
of the order appointing him on a regular basis,
and if he is on leave on that date within three
months from the date of his return from leave,
and the option so exercised shall be final.
Provided further that if a person does not
communicate his option in the manner aforesaid,
he shall be deemed to have elected the Pension-
cum-Gratuity-cum-Family Pension Scheme and
the General Provident Fund Scheme.
Where a person elects or is deemed to have
elected the Pension-cum-Gratuity-cum-Family
Pension Scheme and the General provident Fund
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Scheme, he shall forego the Institute’s
contribution to his contributory Provident Fund
account together with interest thereon, which
shall be paid back to the Institute, and shall
thereupon be entitled to count towards pension
the service rendered by him prior to his
appointment on a regular basis to the extent
permissible under the Pension-cum-Gratuity-
cum-Family Pension Rules of the Institute, and
the accumulated balance of his subscriptions in
the Fund together with interest thereon standing
to his credit shall be transferred to his General
Provident Fund Account.”
(emphasis added)
13. Bye-laws 48 and 49 provide for Pension-cum-Gratuity-cum-
Family Pension Scheme (old scheme) and General Provident Fund
Scheme respectively. Sub-clause (a)(1) of clause 52 clearly
provides that a person appointed on a contract in accordance with
Bye-law 2(2)(a) shall be eligible only to CPF which is provided in
Bye-law 50. Clause (a)(2) of Bye-law 52 provides that a person
who was initially appointed on a contract basis as provided in the
Bye-laws to a post (of academic staff) referred to in Bye-law 3(a)
shall be eligible to be governed by CPF scheme for the period he
holds office. Clause (a)(4) of Bye-law 52 deals with a situation
where a person appointed on a contract basis is appointed on a
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regular basis. Only in such a case, an option is available to opt for
the either old pension scheme and GPF scheme or CPF scheme.
There is a difference between appointing a contract employee on a
regular basis and regularising the services of the contract
employees. Moreover, when the Bye-laws were framed, the
Regularisation Rules were not in existence. In this case, we are
dealing with the regularisation of the service of the contract
employee in terms of the Regularisation Rules and not an
appointment on a regular basis. Respondent no.1 has been
regularised under Regularisation Rules. Therefore, Clause (a)(4) of
Bye-law 52 will not apply to respondent no.1 whose employment
has been regularised under the Regularisation Rules.
14. As noted earlier, Rule 6 clearly lays down that those who are
regularised under the said Rules will not be entitled to benefit of
any scheme other than the new pension scheme. Even when the
exception carved out to Rule 6 is applicable, it enables the
regularised employee to continue with either CPF or the old
pension scheme as per the option already exercised by him. The
Regularisation Rules under which the employment of respondent
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no.1 was regularised do not permit the regularised employee to
change his or her option from CPF to the old pension scheme.
Clause 52 of the Bye-laws cannot override subsequent statutory
Rules in the form of the Recruitment Rules. The Recruitment
Rules are made for giving effect to the Resolution of the General
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Executive Council made on 18 February 2009 for the
regularisation of the academic staff appointed on a contract basis.
After having taken benefits of the Regularisation Rules, the
entitlement of respondent no.1 will be governed by Rule 6 and not
by Clause (a) (4) of Bye-law 52 of the Bye-laws.
15. The Tribunal, as well as the High Court, have proceeded on
an erroneous basis that after regularisation, respondent no.1 was
entitled to change his option from CPF to the old pension scheme
in terms of Bye-law 52. The High Court erroneously observed that
regularization would relate back to the date of initial appointment
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made in the year 2002 when the order of regularisation dated 4
May 2012 expressly states that the regularisation will operate from
the date of the said order. The High Court came to the conclusion
that in view of the second proviso to sub-clause (a) (4) of Bye-law
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52 of the Bye-laws, on the failure to communicate the option in
the prescribed manner it shall be deemed that the employee has
opted for the old pension scheme and GPF. Sub-clause (a)(4) of
Bye-law 52, as observed earlier, will not apply to an employee
whose service has been regularised under the Regularisation
Rules. In the present case, in view of the provisions of the
Regularisation Rules, there was no question of making available
such an option.
16. In the circumstances, we find it difficult to sustain the
impugned judgments. It appears that respondent no.1 has
returned the benefits received by him under the CPF scheme. As
a consequence of setting aside the impugned order, we direct the
appellant to pay the amount to which respondent no.1 was entitled
to under CPF. The amount shall be paid within a period of two
months from today failing which the same will carry interest at the
rate of 8% p.a. from the date on which the amount was returned
to the appellant by respondent no.1.
17. Subject to the above direction, the appeal is allowed. The
impugned orders of the Central Administrative Tribunal and the
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Division Bench of the High Court are hereby set aside and the
original application filed by the appellant before the Tribunal
stands dismissed.
……....…………………J.
(Sanjay Kishan Kaul)
…….……..……………J.
(Abhay S. Oka)
New Delhi;
February 28, 2023.
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