Counting Contractual Service Towards Pension After Regularisation:
An In-Depth Commentary on S.D. Jayaprakash & Ors. v. Union of India (2025 INSC 594)

1. Introduction

This commentary examines the Supreme Court of India’s judgment in S.D. Jayaprakash & Ors. v. Union of India, delivered on 29 April 2025 by Justice Pamidighantam Sri Narasimha with Justice Joymalya Bagchi concurring. The case concerns a cohort of Data Entry Operators (DEOs) who entered Government service on a contractual basis in the late 1990s, were regularised prospectively in 2015, and sought recognition of their earlier contractual tenure for (a) seniority, (b) service benefits, and (c) pension. While the Karnataka High Court denied all three, the Supreme Court confined itself to pension and held that, under Rule 17 of the Central Civil Services (Pension) Rules, 1972 (CCS Pension Rules), the period of contractual service must be counted for pensionary benefits once the employee is regularised.

Key issues distilled by the Court:

1. Does Rule 17 mandate inclusion of pre-regularisation contractual service for pension?
2. Is it material that initial engagement was not against a sanctioned post or through Staff Selection Commission (SSC)?
3. What mechanism should be followed for exercising the option under Rule 17?

2. Summary of the Judgment

• The Supreme Court partly allowed the appeal.
• It reversed the Karnataka High Court only on the pension issue, leaving rejection of seniority and other service benefits undisturbed (matters not argued).
• Applying Rule 17 CCS Pension Rules and the precedent in State of Himachal Pradesh v. Sheela Devi (2023), the Court directed the Union of India to:
  • Notify the appellants of the mode and manner to exercise the Rule 17 option.
  • Intimate the amount to be refunded/forgone towards Government contributions to the Contributory Provident Fund (CPF) if they choose to count contractual service.
  • Complete the entire exercise—including fixation of pension—within the structured timelines previously fixed in Sheela Devi (eight weeks + eight weeks + four months).
• Outcome: Contractual service between 1996–2015 will now be reckoned for pension computation once employees undertake the Rule 17 option.

3. Analysis

3.1 Precedents Cited and Their Influence

1. State of H.P. v. Sheela Devi, 2023 SCC OnLine SC 1272
   • Primary authority interpreting Rule 17.
   • Held that Rule 17 overrides the general exclusion of contractual employees under Rule 2(g) once they are regularised.
   • Laid down a process roadmap (options, timelines) which the present Court simply transplanted.
2. Direct Recruit Class II Engineering Officers’ Assn. v. State of Maharashtra, (1990)
   • Though not expressly cited, the principle that past continuous service cannot be ignored once regularisation occurs provides intellectual backdrop.
3. CAT & High Court Decisions
   • CAT (2016) allowed complete retrospective benefits; High Court (2021) trimmed it down. The Supreme Court’s selective interference shows deference to limited grounds urged.

3.2 Legal Reasoning

The Court’s reasoning follows a tight syllogism:

1. Statutory Text: Rule 17 expressly speaks of a person “initially engaged … on contract … and subsequently appointed … in a substantive capacity” and allows them to elect to count such service for pension.
2. Interpretive Precedent: Sheela Devi has already harmonised Rule 17 with Rule 2(g)’s exclusion. Hence, once regularisation occurs, the exclusion ceases to operate.
3. No Material Distinction: The Respondent’s attempted distinction (initial post not sanctioned/SSC) is immaterial because Rule 17’s trigger is continuity without interruption, not method of first engagement. The Court treats the phrase “without interruption of duty” as pivotal.
4. Regulatory Mechanism: The option clause is mandatory; employees must decide to keep CPF benefits or refund them and obtain pension credit. The Court replicates the operational directions from Sheela Devi.

3.3 Potential Impact

• Uniform Pension Entitlement: Central government contractual employees later regularised can rely on this judgment to secure pension credit for earlier service, even where initial appointment was ad-hoc, non-SSC, or against non-sanctioned posts.
• Flood-Gate Possibility: Ministries and departments may face waves of representations from ‘scheme-based’ contractual staff regularised in the last two decades.
• Administrative Readjustments: Enhanced pension liabilities for Government; need for updated actuarial projections in Budget estimates.
• Clarificatory Value: Ends the debate on whether Rule 17 is restricted to sanctioned posts or competitive selection: the answer is “no” once substantive appointment occurs.
• Narrow Scope on Seniority: By not disturbing the High Court on seniority/ACP, the Court implicitly signals that Rule 17 covers only pension; other service benefits stand on different footing.

4. Complex Concepts Simplified

Regularisation

Conversion of a temporary/contractual appointment into a permanent or substantive post, usually after satisfying eligibility benchmarks.

Rule 17 CCS Pension Rules

A provision allowing an employee who started as a contractual worker and later became permanent to either (a) keep CPF benefits and not count that period for pension, or (b) refund/forgo CPF benefits and count that period toward pension.

Contributory Provident Fund (CPF)

Savings mechanism where both employee and Government contribute; distinct from Pension which is a defined benefit paid from Consolidated Fund.

Option Exercise

The formal choice an employee must make under Rule 17; failure to exercise within the prescribed time defaults to retaining CPF and losing pension weightage.

Prospective vs. Retrospective Regularisation

Prospective regularisation means benefits accrue only from the date of order; retrospective would make them effective from earlier date(s). The Court confined its relief to pension but prospectively adjusted, via Rule 17.

5. Conclusion

S.D. Jayaprakash v. Union of India cements the interpretive position that once a contractual employee is regularised without a break in service, Rule 17 of the CCS Pension Rules statutorily compels the Government to permit counting of prior contractual service for pension, subject to the employee’s option to refund or forgo CPF benefits. The judgment harmonises the textual mandate of Rule 17 with equitable considerations of continuous service, rejects objections based on mode of initial recruitment, and faithfully applies the roadmap laid down in Sheela Devi.

For practitioners, the decision offers a ready template for relief in analogous matters; for administrators, it provides clear procedural steps to implement Rule 17. Above all, it underscores the Supreme Court’s commitment to ensuring that workers who have devoted long years under contractual uncertainty are not short-changed at the twilight of their careers.