The 1987 Pension O.M. does not apply to PSU employees absent adoption or governmental direction.

The appellants were retired direct recruits of the Food Corporation of India (“FCI”), a statutory corporation established under Section 3 of the Food Corporations Act, 1964.

They had served under the FCI’s CPF Scheme and claimed parity with employees transferred and absorbed into the FCI from the Government of India’s Department of Food, who were permitted to receive pensionary benefits under the Central Government Pension Scheme.

The appellants contended that the Office Memorandum dated 1 May 1987 (“1987 O.M.”) required an opportunity to opt from the CPF Scheme to the Pension Scheme and that its non-extension to them violated Articles 14 and 16 of the Constitution.

The Single Judge dismissed their writ petition, W.P.(C) 7270/2019, on 16 April 2026. The present intra-court appeal challenged that dismissal.

1. Whether the 1987 O.M., providing for changeover from the CPF Scheme to the Pension Scheme for Central Government employees, applied directly or by necessary implication to direct recruits of the FCI.

2. Whether the appellants were entitled to pensionary benefits at par with FCI employees transferred from Government service under Section 12A of the Food Corporations Act, 1964.

3. Whether denial of the Pension Scheme to the appellants violated Articles 14 and 16 of the Constitution on account of alleged discrimination against transferred employees and employees of other public-sector or statutory bodies, particularly BIS.

4. Whether Section 6(2) of the Food Corporations Act, 1964 made the 1987 O.M. binding on the FCI as a Government policy instruction.

The Court applied Sections 6(2), 12(3) and 12A of the Food Corporations Act, 1964. Section 6(2) requires the FCI to be guided by Central Government instructions on questions of policy, while Section 12(3) authorises the FCI to determine the appointment, conditions of service and scales of pay of its employees through regulations; Section 12A governs the absorption of Government employees into the FCI.

The 1987 O.M. was construed as applying to civilian Central Government employees governed by the relevant Central Government CPF Rules, and not automatically to employees of public-sector undertakings or statutory corporations.

The Court considered Union of India v. S.L. Verma, 2006 (12) SCC 53, holding that its benefit depended on BIS Regulation 16, which expressly subjected BIS employees to the CCS (Pension) Rules, 1972.

It also considered Union of India v. Amit Mukherji, 2013 SCC OnLine Del 2049, on the 1987 O.M.’s automatic-switch-over legal fiction, and Food Corporation of India v. Bhanu Lodh, 2005 (3) SCC 618, on the scope of policy instructions under Section 6(2), but held that neither precedent established the O.M.’s applicability to FCI direct recruits.

The Court held that the 1987 O.M.’s subject and language confined it to Central Government employees subscribing to the Central Government CPF Scheme.

Clauses 6.1 and 7.2 did not mandate that public-sector undertakings, including the FCI, extend an identical option to their employees; they contemplated orders by the relevant administrative authorities where other Government contributory-fund schemes were involved.

The appellants were directly recruited by the FCI and were governed by FCI Staff Regulations, while the transferred employees had first entered Government service and were absorbed under the statutory scheme in Section 12A. Their different modes of entry constituted an intelligible differentia with a rational connection to the differing pensionary treatment, defeating the Article 14 challenge.

The Court further distinguished S.L. Verma, because BIS Regulation 16 expressly incorporated the CCS (Pension) Rules, whereas no comparable FCI rule, regulation, circular or O.M. existed.

Although Amit Mukherji recognised an automatic switch-over under the 1987 O.M., that principle could operate only where the O.M. applied; it did not independently extend the O.M. to FCI employees.

The Government’s order dated 30 June 2015, issued pursuant to the Kerala High Court’s order, also concluded that the O.M. applied to Central Government employees and not to FCI direct recruits whose CPF was administered by the FCI CPF Trust under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

The transferred employees formed a separate and reasonably classified category, and no unconstitutional discrimination was established vis-à-vis them or BIS employees.

The Division Bench found no ground to interfere with the Single Judge’s judgment dated 16 April 2026, dismissed LPA 551/2026, disposed of the pending application(s), and made no order as to costs.