Closure of an aided school cannot extinguish pensionary rights already accrued and sanctioned.

The petitioners were retired teachers and employees of R.M. Arya Girls Primary School, a recognised private school receiving 95% grant-in-aid from the New Delhi Municipal Council (NDMC).

Their pensionary entitlements had been sanctioned, and pension or family pension had been paid for substantial periods after retirement; Sarita Saini, for example, received pension until February 2021.

The school operated from rented premises and was required to vacate them pursuant to an eviction order, which attained finality after dismissal of the SLP by the Supreme Court on 18 January 2021.

The school ceased functioning on 30 June 2021, after which its students were accommodated in NDMC schools.

Pension and arrears were paid up to 30 June 2021 during the proceedings, leaving the dispute confined to non-payment from 1 July 2021 onwards.

Although there was a dispute regarding whether the closure had received prior approval under Rule 46 of the Delhi School Education Rules, 1973, the petitioners sought only continuation of pension and family pension, not absorption or salary as surplus staff.

Whether pension or family pension lawfully earned, sanctioned and paid to retired employees of a recognised aided school can be discontinued merely because the school subsequently ceases to function or closes down.

Whether the dispute concerning compliance with Rule 46 of the Delhi School Education Rules, 1973 affects the petitioners’ already accrued pensionary rights.

Whether NDMC must initially discharge the pensionary arrears, leaving any contribution or reimbursement dispute to be resolved separately between NDMC and the erstwhile management.

Section 10 of the Delhi School Education Act, 1973 requires employees of recognised private schools to receive pension and other service benefits not less favourable than those available to corresponding employees of schools run by the appropriate authority.

Rule 126 of the Delhi School Education Rules, together with the procedure framed under it, supplies the applicable pension regime, under which pension becomes payable upon cessation from the establishment on superannuation.

The Court relied on Smt. Shakuntala Mehrishi v. New Delhi Municipal Committee, (1990) 3 SCC 521, which held that pensionary entitlement accrues under the applicable scheme and cannot be deferred or denied because arrangements concerning pension contributions have not been finalised.

NDMC v. Manju Tomar, 2024 INSC 635, concerning the consequences of an unauthorised school closure for serving surplus employees, was distinguished as not deciding the extinguishment of accrued pension rights of retired employees.

The Court further applied the principle from D.S. Nakara v. Union of India, (1983) 1 SCC 305, Chairman, Railway Board v. C.R. Rangadhamaiah, (1997) 6 SCC 623, and U.P. Raghavendra Acharya v. State of Karnataka, (2006) 9 SCC 630, that pension is an earned statutory benefit and an accrued pensionary right cannot be withdrawn to the prejudice of the retiree without authority of law.

Rule 46’s requirement of prior approval for closure and Rule 47’s protection concerning surplus staff do not provide authority to terminate pension already earned and sanctioned.

The Court held that Section 2(h), which defines “employee” in relation to a recognised school, could not be read as requiring continued employment or continued existence of the school as a condition for receiving pension; otherwise, no retired employee could remain within a pension scheme.

The petitioners’ pension rights had arisen from qualifying service rendered while the school was recognised and aided, had been sanctioned, and had in fact been paid before closure.

The Court found no provision in the Act, Rules or applicable pension scheme providing that such rights cease upon the later closure of the institution.

The Rule 46 dispute was therefore relevant, if at all, to the rights of serving employees and the inter se financial liability of NDMC and the management, but not to the petitioners’ accrued pensionary entitlements.

The Court also noted that NDMC had issued an order shortly before closure extending the Seventh Central Pay Commission regime, including pension revisions, to the school, which was consistent with the continued administration of the pension scheme.

Since payment could not be withheld pending an accounting dispute between NDMC and the management, NDMC was directed to make payment in the first instance, subject to its right of recovery or reimbursement.

NDMC and its Director (Education) were directed to calculate and pay each petitioner’s pension or family-pension arrears from 1 July 2021 until actual payment, including applicable revisions, within eight weeks.

The arrears were directed to carry simple interest at 6% per annum from the respective due dates until payment.

Pension or family pension was ordered to continue to be regularly remitted thereafter.

NDMC was permitted to pursue contribution, reimbursement or recovery from the erstwhile management, but such proceedings could not delay or condition payment to the petitioners.

The writ petitions were accordingly allowed.