1. Absorption of co-operative society employees into a state electricity board — Dispute over entitlement to pension and counting of prior service for qualifying period. (Para 5 , 6 )
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2025 Supreme(SC) 812
SUPREME COURT OF INDIA
VIKRAM NATH, PRASANNA B. VARALE, JJ.
Vijay Kumar Joshi – Appellant
Versus
Akash Tripathi & Ors. – Respondents
Civil Appeal Nos. 6652 of 2025 (@ SLP(Civil) No. 23286 of 2019) With Civil Appeal Nos. 6653-6674 of 2025 (@ SLP(C) No. 5632-5653 of 2020), Civil Appeal Nos. 6675-6710 of 2025 (@ SLP(C) No. 6915-6950 of 2020), Civil Appeal Nos. 6711-6741 of 2025 (@ SLP(C) No. 14200-14230 of 2021), Civil Appeal Nos. 6742-6765 of 2025 (@ SLP(C) No. 4410-4433 of 2020), Civil Appeal Nos. 6766-6775 of 2025 (@ SLP(C) No. 14272-14281 of 2021), Civil Appeal Nos. 6776-6781 of 2025 (@ SLP(C) No. 14282-14287 of 2021), Civil Appeal Nos. 6782-6783 of 2025 (@ SLP(C) No. 8341-8342 of 2021), Civil Appeal Nos. 6784-6785 of 2025 (@ SLP(C) No. 8343-8344 of 2021), Civil Appeal Nos. 6786 of 2025 (@ SLP(C) No. 16808 of 2021), Civil Appeal Nos. 6787-6788 of 2025 (@ SLP(C) No. 16809-16810 of 2021), Civil Appeal Nos. 6789 of 2025 (@ SLP(C) No. 3805 of 2021)
Decided On : 13-05-2025
Important Points
All absorbed employees are entitled to pension from the date of absorption, while service rendered prior to that is not counted towards qualifying service.
Subject
Service Law - Pension Entitlement
Act Referred
Headnote
(A) M.P. Civil Services (Pension) Rules - Entitlement to pension for absorbed employees - The Full Bench of the High Court determined that the judgment regarding pension for absorbed employees from co-operative societies was incorrect as employees would be subject to terms of absorption, which dictated pension benefits per society rules. (Paras 2, 3, 13, 24)
(B) Appellate authority jurisdiction - Functional integration of services - The Supreme Court emphasized that once absorbed, employees' identities fade, and they must enjoy similar benefits as other employees in the organization. Pension must be provided uniformly to avoid discrimination. (Paras 19, 23)
Facts of the case:
The present appeals challenge the Full Bench ruling that denied pension benefits to employees absorbed from various societies into the M.P. State Electricity Board, based on interpretations of prior judgments and service rules.
Findings of Court:
All absorbed employees are entitled to a pension effective from the date of absorption, but service prior to absorption is not counted towards qualifying service.
Issues: The primary issue was whether the service prior to absorption qualifies for pension calculations, and how to uniformly provide benefits to all absorbed employees.
Ratio Decidendi: The Court held that upon merging services, distinctions must vanish, and all employees must enjoy equal pension rights without unjust discrimination.
Result: Appeals allowed; pension benefits to be granted from the absorption date.
(B) Appellate authority jurisdiction - Functional integration of services - The Supreme Court emphasized that once absorbed, employees' identities fade, and they must enjoy similar benefits as other employees in the organization. Pension must be provided uniformly to avoid discrimination. (Paras 19, 23)
Facts of the case:
The present appeals challenge the Full Bench ruling that denied pension benefits to employees absorbed from various societies into the M.P. State Electricity Board, based on interpretations of prior judgments and service rules.
Findings of Court:
All absorbed employees are entitled to a pension effective from the date of absorption, but service prior to absorption is not counted towards qualifying service.
Issues: The primary issue was whether the service prior to absorption qualifies for pension calculations, and how to uniformly provide benefits to all absorbed employees.
Ratio Decidendi: The Court held that upon merging services, distinctions must vanish, and all employees must enjoy equal pension rights without unjust discrimination.
Result: Appeals allowed; pension benefits to be granted from the absorption date.
Legal Category Hierarchy
Advocates appeared:
For the Petitioner(s): Mr. N.K. Mody, Sr. Adv. Ms. Ishita M. Puranik, Adv. Mr. Suresh Kumar Bhan, Adv. Ms. Jigisha Agarwal, Adv. Mr. Diwakar Shukla, Adv. Mr. Prabuddha Singh Gour, Adv. Mr. Karan Gupta, Adv. Mr. Nityanand Mahato, Adv. Mr. Praveen Swarup, AOR Mr. Prashant Bhushan, AOR Ms. Alice Raj, Adv. Mr. S K Gangele, Sr. Adv. Ms. Priya Sharma, Adv. Mr. Prathvi Raj Chauhan, Adv. Mrs. Barnali Basak, Adv. Ms. Monica Goel, Adv. Ms. Saket Gautam, Adv. Mr. Satish Kumar, AOR Mr. Arup Banerjee, AOR Mr. Devesh Kumar Agnihotri, Adv. Mr. Ajeet Kumar Singh, Adv. Ms. Priya Mishra, Adv. Mr. Devvrat, AOR Mr. Aditya Kumar Dubey, Adv.
For the Respondent(s): Mr. G. Umapathy, Sr. Adv. Mr. Rohit K. Singh, AOR Mr. Pritam Bishwas, Adv. Mr. Amalpushp Shroti, AOR Mr. V.V.V. Pattabhiram, D.A.G. Ms. Mrinal Gopal Elker, AOR Mr. Aditya Vaibhav Singh- G.A, Adv. Ms. Chhavi Khandelwal, Adv. Mr. Siddharth, AOR Mr. Harshit Manwani, Adv.
For the Petitioner(s): Mr. N.K. Mody, Sr. Adv. Ms. Ishita M. Puranik, Adv. Mr. Suresh Kumar Bhan, Adv. Ms. Jigisha Agarwal, Adv. Mr. Diwakar Shukla, Adv. Mr. Prabuddha Singh Gour, Adv. Mr. Karan Gupta, Adv. Mr. Nityanand Mahato, Adv. Mr. Praveen Swarup, AOR Mr. Prashant Bhushan, AOR Ms. Alice Raj, Adv. Mr. S K Gangele, Sr. Adv. Ms. Priya Sharma, Adv. Mr. Prathvi Raj Chauhan, Adv. Mrs. Barnali Basak, Adv. Ms. Monica Goel, Adv. Ms. Saket Gautam, Adv. Mr. Satish Kumar, AOR Mr. Arup Banerjee, AOR Mr. Devesh Kumar Agnihotri, Adv. Mr. Ajeet Kumar Singh, Adv. Ms. Priya Mishra, Adv. Mr. Devvrat, AOR Mr. Aditya Kumar Dubey, Adv.
For the Respondent(s): Mr. G. Umapathy, Sr. Adv. Mr. Rohit K. Singh, AOR Mr. Pritam Bishwas, Adv. Mr. Amalpushp Shroti, AOR Mr. V.V.V. Pattabhiram, D.A.G. Ms. Mrinal Gopal Elker, AOR Mr. Aditya Vaibhav Singh- G.A, Adv. Ms. Chhavi Khandelwal, Adv. Mr. Siddharth, AOR Mr. Harshit Manwani, Adv.
Table of Contents
2. Whether absorbed employees are entitled to state board pension benefits or governed by society rules, and whether prior society service counts as qualifying service. (Para 4 , 12 )
3. Functional integration upon merger necessitates equal treatment; denying pension to absorbed employees while granting it to others in the same organization constitutes unjust discrimination. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 )
4. Pension qualifying service commences only from the date of appointment under the State Government; prior service in non-governmental societies cannot be counted toward state pension rules. (Para 24 , 25 )
5. Appeals allowed to the extent that absorbed employees are entitled to pension effective from their respective dates of absorption into the state electricity board. (Para 26 )
6. What is the legal effect of the merger or absorption of employees into a homogenous service?
Upon merger or absorption, the original identity of the service ceases to exist, and complete functional integration must follow. The merged service loses its original status, and the principle of equivalence should be followed to ensure employees are treated on par with the integrated service. (Para 20 )
7. Can absorbed employees be denied pension benefits if other employees in the same organization performing identical duties receive them?
No. Denying pension benefits to absorbed employees solely based on their origin in societies, while other employees in the same organization receive them, would amount to unjust discrimination and create impermissible classes of employees within the same organization. (Para 23 )
8. Does service rendered in a co-operative society prior to absorption into a state entity count as qualifying service for a state pension?
No. Qualifying service for a state pension begins from the date the employee takes charge of a post under the State Government. Service in a society is not counted because it was not under the State Government and was not governed by state rules. (Para 24 , 25 )
JUDGMENT :
Vikram Nath, J.
1. Leave granted in all the Special Leave Petitions.
2. The present appeals, except the two mentioned in paragraph 3 hereafter, assail the correctness of the judgment and order dated 22.08.2019 passed by the Full Bench of the High Court of Madhya Pradesh at Jabalpur in a bunch of Writ Appeals whereby it answered the two questions referred to it and held that the judgment of the Division Bench in the Writ Appeal No.334 of 2015, holding that the employees of the Society were entitled to pension, did not lay down the correct law and further that the employees were not entitled to the benefit of pension as claimed by them but would be governed by the terms of absorption which provided that pension and gratuity would be admissible as per the rules and regulations of the Society. These appeals further assail the consequential orders passed by the Division Bench disposing off Writ Appeals in the light of the judgment of the Full Bench dated 22.08.2019.
3. The following two appeals that arise out of SLP(C) No.23286/2019 and SLP(C) No.3805/2021 arise from separate orders passed in contempt proceedings whereby the contempt proceedings were closed. In one of the contempt proceedings, it was held that the employees had been granted pension counting their service from the date of absorption in the Madhya Pradesh State Electricity Board,1[MPSEB], whereas in the other contempt proceedings, the proceedings were dropped in view of the judgment of the Full Bench dated 22.08.2019 referred to above.
4. The only issue which is relevant for adjudication in these appeals is with regard to admissibility of pension to the employees of the Societies who were absorbed with the MPSEB and if the answer to the same is yes, then what would be the length of service to be counted i.e. whether the service rendered in the Society would also be counted for determining the qualifying period for calculation of pension or only the service rendered after absorption in the MPSEB would be counted.
5. In the State of Madhya Pradesh, large number of Co-operative Societies were registered which were involved in the work of distribution of electricity in different areas. At some stage the financial health of the Societies became poor and they were unable to manage and control their affairs, as such a policy decision was taken in 1995 to merge them with the MPSEB subject to terms and conditions being set out in all respects. In particular, with respect to the employees of the Societies both regular and daily wagers.
6. The policy decision of 1995 ultimately fructified in the year 2002 when the Societies were dissolved and the merger took place with effect from 15.03.2002 notified subsequently vide order of MPSEB dated 18.05.2004 and 14.12.2004. Further, the terms and conditions for absorption were formulated and declared by the MPSEB in its order dated 05.06.2004, which are reproduced hereunder:
“1. The regular employees of the above societies shall be taken over on the same terms and conditions as existing in the Society except that no deputation allowance shall be paid.
2. Their pay scale will be the same which they were getting before the absorption.
3. The above employees may not be transferred out of the circle concerned, so that no anomaly arises.
4. Their age of superannuation will be the same as applicable in the societies.
5. Pension/gratuity will be payable to the employees absorbed in the Board as per the rules/regulations of the concerned society.
6. Their designation will be maintained as it was in the society.”
7. Soon after the absorption, the employees’ Union by the name Bijli Karamchari Sangh,2[BKS] filed a Writ Petition registered as W.P.(S) No.1151 of 2005 titled Bijli Karamchari Sangh vs. M.P.State Electricity Board and others . The relief claimed in these petitions was with respect to quashing of the order issued by the Regulatory Commission dated 20.02.2003 and 15.12.2004 which related to the merger and absorption. Further relief claime
