Employees of Govt Board Paid Via Grants-in-Aid Are Not Government Servants For Pension Under Rule 31 of Assam Services (Pension) Rules: Gauhati High Court - 2025-09-04

Gauhati High Court Denies Pension to Board Employees, Cites 'Grants-in-Aid' Salary Source

Guwahati, Assam – The Gauhati High Court has upheld a single-judge bench decision, ruling that employees of the Assam Minorities Development Board are not entitled to pension benefits under the Assam Services (Pension) Rules, 1969. A division bench comprising Chief Justice Ashutosh Kumar and Justice Manish Choudhury dismissed the appeal, affirming the crucial distinction between being an employee of the State Government and an employee of a government-funded Board.

Background of the Case

The case, Sri Ismail Ali vs The State of Assam , was brought forward by Grade-III and Grade-IV employees of the Assam Minorities Development Board. They challenged an earlier judgment from a single-judge bench which had rejected their claim for pension upon retirement. The employees contended that they had served for a significant period in posts that were sanctioned and permanently retained by the State Government, thereby qualifying them for pension under state rules.

Arguments Presented

The appellants, represented by Mr. A. Deka, argued that their long service in permanently retained, state-sanctioned posts met the criteria for pension eligibility under Rule 31 of the Assam Services (Pension) Rules, 1969.

The State of Assam, however, presented a counter-argument that proved decisive. The government's counsel contended that: 1. Source of Salary: The appellants' salaries were paid from 'grants-in-aid' provided to the Board, not from the regular Government Salary Budget under the ordinary Head. 2. Nature of Employment: Despite the Board being considered 'State' under Article 12 of the Constitution for certain purposes, its employees are not holders of civil posts under the State Government. 3. Conditional Sanction: While the posts were permanently retained, the sanction for them was for a limited period.

The appellants also pointed to a 2024 notification that granted pension benefits under a new scheme to another employee of the same Board, suggesting differential treatment.

Court's Legal Reasoning and Precedent

The High Court meticulously analyzed the conditions laid out in Rule 31 of the Assam Services (Pension) Rules, 1969 , which stipulates that for a service to qualify for pension, it must satisfy three conditions: 1. The service must be under the Government . 2. The employment must be substantive and permanent . 3. The employee must be paid by the Government .

The bench noted that the appellants failed to meet these criteria, particularly the first and third conditions. Their service was to the Board, not directly under the government, and their payment was from grants-in-aid, not the government's consolidated fund for salaries.

The Court drew upon the Supreme Court's precedent in State of Assam vs. Barak Upatyaka D.U. Karmachari Sanstha (2009) . This landmark judgment established that even if a Board is treated as 'State' under Article 12 of the Constitution, its employees are not automatically considered government servants.

In its judgment, the Division Bench stated:

"Thus, even though the Board in question may come within the definition of “State” for other purposes, but the employees of the Board, who are/ were being paid their salary from grants-in-aid, would not be called government servants."

Regarding the 2024 notification cited by the appellants, the Court dismissed its relevance, deeming it a "specific declaration with respect to the employee in question" that did not create a general right or entitlement for the appellants.

Final Verdict and Implications

Finding no reason to interfere with the reasoned order of the single-judge bench, the Gauhati High Court dismissed the appeal. The decision reinforces a critical principle in service law: the source of salary and the direct employer-employee relationship with the government are paramount for determining pension eligibility. Employees of autonomous boards, corporations, and societies funded by government grants cannot automatically claim pension benefits on par with State Government employees.