P. BANDOPADHYA & ORS. versus UNION OF INDIA & ORS. on 15 March 2019

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SUPREME COURT REPORTS

[2019] 4 S.C.R.

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P. BANDOPADHYA & ORS.

v.

UNION OF INDIA & ORS.

(Civil Appeal No. 3149 of 2019)

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MARCH 15, 2019

[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]

Service Law:

Pension – Entitlement to – Conversion of a GovernmentCDepartment into Central Public Sector Undertaking/Autonomousbody – En-masse transfer of the employees of the GovernmentDepartment to the Public Sector Undertaking – Department ofPension and Pension Welfare of the Government issued OfficeMemorandum specifying terms and condition governing pensionarybenefits of the transferred employees giving the employees optionDeither to retain pensionary benefits under Government Rules or begoverned by the rules of the Public Sector Undertaking – Appellants(transferred employees) opted to be absorbed in the Public SectorUndertaking – Further they opted to retain pensionary benefitsunder the rules of Central Government – They were informed byEthe Public Sector Undertaking (employer) that they were not eligiblefor Government pension but were eligible to only an amount equalto Provident Fund Contribution (as per clause (c) in the OfficeMemorandum) – Writ petition seeking direction to consider theircases for grant of Government pension – High Court dismissingthe petition held that the appellants were not eligible to availFpensionary benefits – On appeal, held: In view of r. 37 r/w. r. 49 ofCCS (Pension) Rules, appellants were not entitled to pensionarybenefits as they did not have minimum qualifying service of 10 yearsto make their service pensionable with Central Government – Asper Office Memorandum also the option of retaining the pensionaryGbenefits was available to only those who were in the first placeentitled to receive pension at the time of their retirement under theCentral Government Rules – Central Civil Services (Pension) Rules,1972 – rr. 37, 3(q) and 49.

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Dismissing the appeal, the Court

HELD: 1. Rule 37 of the CCS (Pension) Rules, 1972provides that a Government servant who is absorbed in aCorporation or Government Company is deemed to have retiredfrom government service on the date of his/her absorption. TheAppellants having voluntarily exercised the option to getabsorbed in the regular service of VSNL, were deemed to haveretired from the service of the Central Government on the dateof their absorption i.e. January 2, 1990 as per Rule 37(1) of theCCS (Pension) Rules, 1972. [Para 8.1][265-B; 266-A, B]

2. It is the admitted position that the Appellants had notcompleted 10 years of service on the date of their absorptioninto VSNL, i.e. when they were deemed to have retired from theservice of the Central Government. To receive pensionarybenefits from the Government, a Government servant is requiredto put in a minimum ‘qualifying service’ as defined by Rule 3(q)of the CCS (Pension) Rules, 1972. According to Rule 3(q),‘qualifying service’ means the service rendered while on duty orotherwise which shall be taken into account for the purpose ofPensions and Gratuities admissible under the CCS (Pension)Rules, 1972. [Para 8.2][266-B, C]

3. Rule 49(2) of the CCS (Pension) Rules, 1972 providesthat a Government servant is entitled to receive pension onretirement only after the completion of the qualifying service of10 years. On the other hand, a Government servant who retiresbefore completing the qualifying service of 10 years is entitled toservice gratuity under Rule 49(1) of the CCS (Pension) Rules,1972. [Para 8.3][266-D, E]

4. A conjoint reading of the statutory rules, i.e. Rule 37 withRule 49 of the CCS (Pension) Rules, 1972, would make itabundantly clear that the appellants were not entitled topensionary benefits since admittedly they did not have theminimum qualifying service of 10 years, to make their servicepensionable with the Central Government. On absorption in VSNLon January 2, 1990 there was a severance of their service withthe Central Government. The appellants would be entitled tothe retiral benefits under VSNL. [Para 8.3][267-C, D]

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A5. After exercising the option to be absorbed in VSNL, theappellants are now estopped from seeking pensionary benefitsfrom the Central Government. The Office Memorandum datedJuly 5, 1989 was issued by the Department of Pension and PensionWelfare, Government of India to settle the pensionary terms andconditions applicable in cases of en masse transfer of employeesBon the conversion of a Government Department into a CentralPublic Sector Undertaking/Autonomous Body. Clause (a) of theOffice Memorandum provided an option to Government servants(permanent, quasi-permanent and temporary) to either retain thepensionary benefits available to them under the Government rulesCor be governed by the rules of the Public Sector Undertaking/Autonomous Body. Under Clause (b), Government servants whoopted to retain pensionary benefits were entitled to receivepension at the time of their retirement “in accordance with CentralGovernment rules in force at that time”. A conjoint reading of Clauses (a) and (b) of the Memorandum would indicate that theDoption of retaining pensionary benefits was available only to thoseGovernment servants who were, in the first place, entitled toreceive pension at the time of their retirement the option to“retain” pensionary benefits available under the relevantGovernment rules. Clauses (a) and (b) pre-suppose that theEGovernment servants who opt to retain pensionary benefits,should be entitled to receive pensionary benefits under theCentral Government rules, in the first place. [Paras 8.3 and 8.4(a) (b)][267-D-H; 268-A, B]

6. Further, Paragraph I (1) (ii) of the document titledF“Clarificatory Information to Facilitate Exercise of Option” clearlystated that the eligibility to retain pensionary benefits under theCentral Government was subject to the condition of putting in aminimum of 10 years as qualifying service. The appellants werespecifically informed of this clarification at the time of exercising their option that their eligibility for pensionary benefits underGthe CCS (Pension) Rules, 1972 was dependant on their fulfillingthe minimum eligibility requirement of 10 years qualifying serviceon the day of their retirement. [Para 8.4][268-E-G]

7. The Appellants were not entitled to receive pensionarybenefits either under the CCS (Pension) Rules, 1972 or underH

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Clauses (a) and (b) of the Office Memorandum. The case of theappellants being Government servants prior to their absorptionin VSNL, with less than 10 years of qualifying service, would besquarely covered by Clause (c) of the Office Memorandum. UnderClause (c), they would be entitled to receive an amount equal tothe Provident Fund contribution for the period of their serviceunder the Government, upto the date of their permanentabsorption along with Simple Interest at 6% per annum as theopening balance in their CPF account with the Public SectorUndertaking/Autonomous Body. [Para 8][271-E-G]

Direct Recruit Class II Engineering Officers’ Associationv. State of Maharashtra & Ors. (1990) 2 SCC 715 :AIR 1990 SC 1607 : [1990] 2 SCR 900 – followed.

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Union of India & Anr. v. Bashirabhai R. Khiliji (2007)6 SCC 16 : AIR 2007 SC 1935 : [2007] 6 SCR 1060 –relied on.

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S.V. Vasaikar & Ors. v. Union of India & Ors. 2003 (2)–Mh.L.J. 691 : 2003 (4) Bom CR 79 approved.

Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3149of 2019.

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From the Judgment and Order dated 13.01.2016 of the High Courtof Judicature at Bombay in Writ Petition No.2704 of 2005.

Sanjay Kr. Mishra, S.K. Verma, Sravan Kumar, Advs. for theAppellants.

Vikramjit Banerjee, ASG, Maninder Singh, Manoj Kumar, Sr. Advs.,K.J. Presswalla, Mohan C., Hasan Murtaza, V.P. Bharathi, Ms. DivyaAnand, Kartik Anand, Parijat Kishore, Nachiketa Joshi, Vijay Prakash,Ayush Anand, Vaibhav Chadha, Gurmeet Singh Makker, Siddhartha Sinha,Ashutosh Kumar, Ms.Nikita Jain, Ms. Nimita Choudhary, Advs. for theRespondents.

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AThe Judgment of the Court was delivered by INDU MALHOTRA, J.

Leave granted.

1. The present Civil Appeal arises out of S.L.P. (C) No. 4652 ofB2018 wherein the impugned Judgment and Order dated January 13, 2016passed by the Bombay High Court in Writ Petition No. 2704 of 2005 hasbeen challenged.

2. The facts relevant for the present Civil Appeal, are briefly setout below:

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C2.1. The Appellants were erstwhile employees in the OverseasCommunications Service [“OCS”], a Department of the Governmentof India. On April 1, 1986 the OCS was converted into a GovernmentCompany known as the Videsh Sanchar Nigam Limited [“VSNL”].Initially, all employees of the erstwhile OCS were transferred en masseDto Respondent No. 4 – VSNL (now known as Tata CommunicationsLimited), where they worked on deputation from April 1, 1986 to January1, 1990.

2.2. On July 5, 1989 the Department of Pension and PensionWelfare of the Government of India issued Office Memorandum No. 4/18/87-P & P.W. (D) [“Office Memorandum”] specifying the termsEand conditions governing the pensionary benefits of employees who weretransferred en masse on the conversion of a Government Departmentinto a Central Public Sector Undertaking or Autonomous Body.

The relevant extract of the Office Memorandum is set outhereinbelow for ready reference:F

“…The following terms and conditions will be applicable inthe case of en masse transfer of employees:

(a) The permanent Government servants shall have an optionto retain the pensionary benefit available to them underGthe Government rules or be governed by the rules of thePublic Sector Undertaking/Autonomous Body. This optionshall also be available to the quasi permanent andtemporary employees after they have been confirmed inthe Public Sector Undertaking/Autonomous Body.

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(b) The Government servants who opt to be governed by thepensionary benefits available under the Government, shallat the time of their retirement, be entitled to pension, etc.,in accordance with the Central Government rules in forceat that time.

(c) The permanent Government servants with less than 10years’ service, quasi permanent employees and temporaryemployees who opt for the rules of the Public SectorUndertaking/Autonomous Body shall be entitled to anamount equal to Provident Fund contribution for the periodof their service under the Government up to the date ofpermanent absorption in the PSU/Autonomous Bodywithsimple interest at 6% per annum as opening balance intheir CPF account with the Public Sector Undertaking/Autonomous Body…”

2.3. In pursuance of the Office Memorandum, Notice datedDecember 11, 1989 was issued by Respondent No. 4 – VSNL giving theerstwhile employees of OCS the option to either be absorbed in theregular service of VSNL; or, be transferred to the Surplus Staff Cell ofthe Central Government for employment against possible vacanciesavailable in other Government offices.

The Appellants voluntarily exercised the option to be absorbedinto the regular service of VSNL with effect from January 2, 1990.

2.4. Thereafter, a Staff Notice dated February 21, 1990 was issuedby Respondent No. 4 – VSNL to its employees, who were earlier workingin OCS. The employees were called upon to exercise their option interms of Clause (a) of the Office Memorandum, i.e. either to retain thepensionary benefits available under the Government of India at the timeof retirement as per the applicable Central Government rules in force, oropt to be governed by the rules of Respondent No. 4 – VSNL.

The format in which the option was to be indicated was enclosedwith the Staff Notice, along with a document titled “ClarificatoryInformation to Facilitate Exercise of Option”. As per paragraph I (1)(ii) of the clarificatory document, the eligibility of employees who choseto retain pensionary benefits under the Central Government wasconditional on putting in a minimum of ten years of qualifying service.

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AThe relevant portion of Paragraph I (1) is reproduced hereinbelow forready reference:

“I. Exercise of option in favour of retention of pensionarybenefit under Central Government rules.

(1) This option is open to every employee whose services haveBbeen transferred from Overseas Communications Serviceto Videsh Sanchar Nigam Limited and who has beenpermanently absorbed in the Videsh Sanchar Nigam Ltd.,irrespective of service rendered in the OverseasCommunications Service. Your eligibility for benefits underCthe Pension Rules will however be conditional to:-…

… (ii) Putting in a minimum of ten years of qualifying service.

(9 years 9 months and above will be reckoned as 10 years)…”

D2.5. The Appellants opted to retain pensionary benefits under therules of the Central Government by exercising their option in pursuanceof the Staff Notice dated February 21, 2009.

2.6. Respondent No. 4 – VSNL vide Letters dated May 22, 2003and June 29, 2004, sought a clarification from Respondent No. 3 – Ministryof Communications and Information Technology, Department ofETelecommunications [“DOT”] as to whether the Appellants – P.Bandhopadhya, I.P. Singh and G. Palaniappan could retain the pensionarybenefits in spite of having less than 10 years of service as on January 2,1990.

2.7. In response, the DOT vide Letter dated October 13, 2004Frequested VSNL to settle the cases of the Appellants in accordancewith Clause (b) of the Office Memorandum.

2.8. Accordingly, by Letter dated November 30, 2004, RespondentNo. 4 – VSNL informed Respondent No. 2 – Department of Pensionand Pension Welfare, Government of India to settle the cases of theGAppellants in accordance with Clause (b) of the Office Memorandum.

2.9. In supersession of the Letter dated October 13, 2004, theDepartment of Pension and Pension Welfare, Government of India, videLetter dated March 24, 2005 informed Respondent No. 4 – VSNL thatthe payment of Pension to the Appellants would be settled in terms ofH

the Office Memorandum. This was re-confirmed by Respondent No. 3– DOT vide Letter dated May 30, 2005.

2.10. Accordingly, Respondent No. 2 – Department of Pensionand Pension Welfare, Government of India informed the Appellants thattheir pension would be settled in terms of the Office Memorandum.

2.11. On June 27, 2005 the Appellants were informed byRespondent No. 4 – VSNL that they would not be eligible to receiveGovernment Pension. They would, however, be eligible to receive benefitsunder Clause (c) of the Office Memorandum i.e. an amount equal to theProvident Fund contribution for the period of their service under theGovernment up to the date of permanent absorption in the Public SectorUndertaking/Autonomous Body with 6% Simple Interest as openingbalance in their CPF account with the Public Sector Undertaking/Autonomous Body.

2.12. Aggrieved by this decision, the Appellants made arepresentation before the Respondents seeking for a declaration thattheir cases be governed by Clause (b), and not Clause (c) of the OfficeMemorandum.

2.13. The Appellants thereafter filed Writ Petition No. 2704 of2005 before the Bombay High Court seeking the following prayers:

• setting aside of Communication/Orders passed by theRespondents on March 24, 2005, May 30, 2005 and June 27,2005;

• directions to treat the cases of the Appellants as being governedby Clause (b), and not Clause (c) of the Office Memorandum.

In effect, the Appellants were seeking directions that their casesbe considered eligible for grant of pension by the Government of India.

2.14. A Division Bench of the Bombay High Court dismissed WritPetition No. 2704 of 2005 on April 26, 2006 after holding that the case ofthe Appellants was covered by an earlier decision of a Division Bench inS.V. Vasaikar & Ors. v. Union of India & Ors. [2003 (2) Mh.L.J. 691: 2003 (4) Bom CR 79]. The Judgment dated April 26, 2006 passed bythe Division Bench was challenged by the Appellants before this Courtby way of S.L.P. (C) No. 15862 of 2006, which was later renumberedas Civil Appeal No. 3059 of 2007. This Court vide Order dated July 14,2011 set aside the Judgment dated April 26, 2006 passed by the Division A

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ABench of the Bombay High Court in view of the submission by theAppellants that the decision in S.V. Vasaikar & Ors. v. Union of India& Ors. [2003 (2) Mh.L.J. 691 : 2003 (4) Bom CR 79] was not applicableto the facts of their case. The matter was remanded to the High Courtfor fresh consideration on merits.

2.15. After remand, the Bombay High Court re-heard the matter,and passed a detailed judgment dismissing Writ Petition No. 2704 of2005, and held that the Appellants were not eligible to avail pensionarybenefits under the Government of India, since they had served for lessthan 10 years on the date of their absorption into VSNL.

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The High Court held that on a cumulative reading of Clauses (a),(b), and (c) of the Office Memorandum makes it clear that onlypermanent Government servants who have served for more than 10years would have the option of getting pensionary benefits after theirabsorption in Public Sector Undertakings.

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The case of the Appellants would be governed by Clause (c) ofthe Office Memorandum which clearly carved out the category ofemployees who had not completed 10 years of service. It was held thata new category which is either contrary to Clause (c), or renders theimport of Clauses (a) and (b) nugatory, cannot be created by way ofjudicial interpretation.

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The High Court held that the matter was squarely covered by theearlier decision of a Division Bench of the Bombay High Court in S.V.Vasaikar & Ors. v. Union of India & Ors. [2003 (2) Mh. L.J. 691 :2003 (4) Bom CR 79].

3. Aggrieved by the Judgment and Order dated January 13, 2016passed by the Division Bench, the Appellants filed the present SpecialLeave Petition. Applications for Impleadment have been filed by 48persons who claim to be similarly situated as the Appellants.

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4. Mr. Sanjay Kumar Mishra, Advocate appeared on behalf ofthe Appellants, and sought the setting aside of the impugned JudgmentGand Order dated January 13, 2016 passed by the Division Bench.

Mr. Vikramjit Banerjee, learned Additional Solicitor General,appeared on behalf of Respondent Nos. 1 – 3, and Mr. Maninder Singh,learned Senior Advocate, appeared on behalf of Respondent No. 4 –VSNL.

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5. We have perused the record with the able assistance of thecounsel for the parties. The issue which arises for our consideration inthe present Civil Appeal is whether the Bombay High Court was justifiedin holding that the case of the Appellants was covered by the earlierdecision in S.V. Vasaikar & Ors. v. Union of India & Ors. [2003 (2)Mh. L.J. 691 : 2003 (4) Bom CR 79], and whether they are entitled toreceive pensionary benefits under the Central Government.

6. SUBMISSIONSOF PETITIONERS

6.1. Mr. Sanjay Kumar Mishra, Advocate, submitted that theDivision Bench of the Bombay High Court had committed an error bydenying pensionary benefits to the Appellants.

6.2. It was submitted that Clause (b) of the Office Memorandumwould govern the case of the Appellants, since they had opted to availthe pensionary benefits available under the Central Government at thetime of their retirement under Clause (a) of the Office Memorandum.

6.3. It was further submitted that the Office Memorandum shouldbe interpreted in isolation on the basis of its plain text, and the Formattached with the Staff Notice dated February 21, 1990 should notcondition the said interpretation.

6.4. The Division Bench had erroneously interpreted the OfficeMemorandum, since Clause (a) is the controlling provision, and Clause(c) in no way dilutes what is provided by Clause (a).

The Appellants challenged the interpretation of the OfficeMemorandum given by a co-ordinate bench in S.V. Vasaikar & Ors. v.Union of India & Ors. [2003 (2) Mh. L.J. 691 : 2003 (4) Bom CR 79].

According to Mr. Mishra, Clauses (c) and (d) of the OfficeMemorandum provides only the mode of payment of retiral benefitswith respect to two different categories of employees – viz. employeeswith less than 10 years of qualifying service, and employees with morethan 10 years of qualifying service.

7. SUBMISSIONSOF RESPONDENTS

7.1. The counsel for the Respondents inter alia submitted thatthe issue in the present case was squarely covered by the earlier judgmentof the Bombay High Court in S.V. Vasaikar & Ors. v. Union of India& Ors. [2003 (2) Mh. L.J. 691 : 2003 (4) Bom CR 79]. The Appellants A

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Athrough their Federation had appeared in this case, and had not challengedthis judgment before this Court. As a consequence, this judgment attainedfinality. It was therefore not open to the Appellants to re-litigate thesame issue in the present Writ Petition. The Division Bench rightlyfollowed the said decision while dismissing Writ Petition No. 2704 of2005 by way of the impugned Judgment and Order dated January 13,B2016.

7.2. It was submitted on behalf of VSNL that the OfficeMemorandum categorises employees into two classes – first, those whohave completed 10 years of qualifying service; and second, those whodo not have 10 years of qualifying service. Under the OfficeCMemorandum, while the first class of employees is entitled to pensionunder the Government of India, the second class is entitled to a certainsum of Provident Fund contribution.

7.3. The Appellants admittedly had less than 10 years of qualifyingservice. They had voluntarily exercised their option of getting absorbedDin the regular service of VSNL. As a consequence, this resulted in theseverance of their previous service with the Central Government, andthey were deemed to have retired from Government service on January2, 1990 i.e. the date of their absorption with VSNL in accordance withRule 37(1) of the Central Civil Services (Pension) Rules, 1972 [“CCSE(Pension) Rules, 1972].

The Appellants having taken a conscious decision to opt forabsorption in VSNL, knowing fully well that they had not completed 10years of qualifying service with the Central Government, were not entitledto receive pensionary benefits as per Rule 49 of the CCS (Pension)FRules, 1972.

7.4. It was submitted that the Office Memorandum was virtuallyin conformity with Rule 49 r.w. Rule 37 of the CCS (Pension) Rules,1972. In any case, the Office Memorandum cannot be interpreted inisolation, and has to be construed in consonance with the CCS (Pension)GRules, 1972.

The requirement of having completed a minimum qualifying serviceof 10 years for entitlement to pensionary benefits under Rule 49 of theCCS (Service) Rules, 1972 would apply to Clause (a) of the OfficeMemorandum.

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The Appellants had admittedly less than the minimum qualifyingservice of 10 years, and were deemed to have retired from Governmentservice, and were not entitled to pensionary benefits under the CentralGovernment. On absorption with VSNL, they would not be entitled topension.

8. DISCUSSIONANDANALYSIS

8.1. Rule 37 of the CCS (Pension) Rules, 1972 provides that aGovernment servant who is absorbed in a Corporation or GovernmentCompany is deemed to have retired from government service on thedate of his/her absorption.

The relevant extract of Rule 37 of the CCS (Pension) Rules, 1972is reproduced hereinbelow:

“37. Pension on absorption in or under a corporation, companyor body

(1) A Government servant who has been permitted to beabsorbed in a service or post in or under a Corporationor Company wholly or substantially owned or controlledby the Central Governmentor a State Government or in orunder a Body controlled or financed by the CentralGovernment or a State Government, shall be deemed tohave retired from service from the date of such absorptionand subject to sub-rule (3) he shall be eligible to receiveretirement benefits if any, from such date as may bedetermined, in accordance with the orders of the CentralGovernment applicable to him.

(2) …

(3) Where there is pension scheme in a body controlled orfinanced by the Central Government in which a Governmentservant is absorbed, he shall be entitled to exercise optioneither to count the service rendered under the CentralGovernment in that body for pension or to receive pro rataretirement benefits for the service rendered under theCentral Government in accordance with the orders issuedby the Central Government.

EXPLANATION.– Body means Autonomous Body or StatutoryBody.”

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AThe Appellants having voluntarily exercised the option to getabsorbed in the regular service of VSNL, were deemed to have retiredfrom the service of the Central Government on the date of their absorptioni.e. January 2, 1990 as per Rule 37(1) of the CCS (Pension) Rules,1972.B8.2. It is the admitted position that the Appellants had not completed10 years of service on the date of their absorption into VSNL, i.e. whenthey were deemed to have retired from the service of the CentralGovernment.

To receive pensionary benefits from the Government, aGovernment servant is required to put in a minimum ‘qualifying service’Cas defined by Rule 3(q) of the CCS (Pension) Rules, 1972. According toRule 3(q), ‘qualifying service’ means the service rendered while on dutyor otherwise which shall be taken into account for the purpose of Pensionsand Gratuities admissible under the CCS (Pension) Rules, 1972.

8.3. Rule 49(2) of the CCS (Pension) Rules, 1972 provides that aDGovernment servant is entitled to receive pension on retirement onlyafter the completion of the qualifying service of 10 years.[1] On the otherhand, a Government servant who retires before completing the qualifyingservice of 10 years is entitled to service gratuity under Rule 49(1) of theCCS (Pension) Rules, 1972.EThe relevant extract of Rule 49 of the CCS (Pension) Rules, 1972is reproduced hereunder for ready reference:

“49. Amount of Pension

“49. Amount of Pension

(1) In the case of a Government servant retiringin accordancewith the provisions of these rules before completingFqualifying service of ten years, the amount of servicegratuityshall be calculated at the rate of half month’semoluments for every completed six monthly period ofqualifying service.

(2) (a) In the case of a Government servant retiring inGaccordance with the provisions of these rules aftercompleting qualifying service of not less than thirty-threeyears, the amount of pension shall be calculated at fiftyper cent of average emoluments, subject to a maximum offour thousand and five hundred rupees per mensem.; 1 Union of India & Anr. v. Bashirbhai R. Khiliji, (2007) 6 SCC 16 : AIR 2007 SC 1935.

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(b) In the case of a Government servant retiringinaccordance with the provisions of these rules before-completing qualifying service of thirtythree years, butafter completing qualifying service of ten years, the amountof pension admissible under Clause (a)and in no case theamount of pension shall be less than Rupees three hundredand seventy-five per mensem;…”

A conjoint reading of the statutory rules, i.e. Rule 37 with Rule 49of the CCS (Pension) Rules, 1972, would make it abundantly clear thatthe Appellants were not entitled to pensionary benefits since admittedlythey did not have the minimum qualifying service of 10 years, to maketheir service pensionable with the Central Government. On absorptionin VSNL on January 2, 1990 there was a severance of their service withthe Central Government. The Appellants would be entitled to the retiralbenefits under VSNL.

After exercising the option to be absorbed in VSNL, the Appellantsare now estopped from seeking pensionary benefits from the CentralGovernment.

8.4. The Office Memorandum dated July 5, 1989 was issued bythe Department of Pension and Pension Welfare, Government of Indiato settle the pensionary terms and conditions applicable in cases of enmasse transfer of employees on the conversion of a GovernmentDepartment into a Central Public Sector Undertaking/Autonomous Body.

(a) Clause (a) of the Office Memorandum provided an option toGovernment servants (permanent, quasi-permanent andtemporary) to either retain the pensionary benefits available tothem under the Government rules or be governed by the rulesof the Public Sector Undertaking/Autonomous Body. UnderClause (b), Government servants who opt to retain pensionarybenefits were entitled to receive pension at the time of theirretirement “in accordance with Central Government rulesin force at that time”.

(b) A conjoint reading of Clauses (a) and (b) would indicate thatthe option of retaining pensionary benefits was available only A

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Ato those Government servants who were, in the first place,entitled to receive pension at the time of their retirement. Thisis evident from Clause (a) which provides the option to “retain”pensionary benefits available under the relevant Governmentrules. Clauses (a) and (b) pre-suppose that the Governmentservants who opt to retain pensionary benefits, should beBentitled to receive pensionary benefits under the CentralGovernment rules, in the first place.

(c) Rule 37 read with Rule 49 of the CCS (Pension) Rules, 1972indicates that the Appellants were not entitled to receive Pensionunder the CCS (Pension) Rules, 1972, since they had notCcompleted 10 years of qualifying service. There was, therefore,no question of the Appellants availing of the option of ‘retaining’the benefits under Clause (a).

(d) The Division Bench has rightly held that Clause (b) of theOffice Memorandum cannot be read in isolation, and is requiredDto be read in conjunction with Clause (a). The entitlement toPension under Clause (b) is qualified by the phrase “inaccordance with the Central Government rules in force atthat time”.

E(e) Further, Paragraph I (1) (ii) of the document titled“Clarificatory Information to Facilitate Exercise of Option”clearly stated that the eligibility to retain pensionary benefitsunder the Central Government was subject to the condition ofputting in a minimum of 10 years as qualifying service.

FThe Appellants were specifically informed of this clarification atthe time of exercising their option that their eligibility for pensionarybenefits under the CCS (Pension) Rules, 1972 was dependant on theirfulfilling the minimum eligibility requirement of 10 years qualifying serviceon the day their retirement.

G8.5. We find great force in the submissions made by Mr. ManinderSingh, Senior Advocate appearing for VSNL, and the learned AdditionalSolicitor General, that the case is squarely covered by the earlier decisionof a Division Bench of the Bombay High Court in S.V. Vasaikar & Ors.v. Union of India & Ors. [2003 (2) Mh. L.J. 691 : 2003 (4) Bom CR79].H

8.6. It has been rightly contended that the earlier Writ PetitionNo. 5374 of 2002 was filed in a representative capacity. Petitioner No.3 in the said Writ Petition was the Federation of the VSNL EmployeesUnion, a collective body of VSNL employees. The Federation wasespousing the collective interest of the Appellants, and other similarlysituated persons before the Division Bench. The prayers in Writ PetitionNo. 5374 of 2002, was recorded by the High Court in the followingwords:

“3. In the second petition, i.e., Writ Petition No. 5374 of 2002,a prayer is made for declaring that the action of therespondents in not giving the petitioners and similarly situatedemployees, who had not completed ten years of service withthe Government of India, the right to exercise option forretaining Government pensionary benefits on their absorptionwith VSNL is arbitrary, discriminatory and violative of Articles14 and 16 of the Constitution. It was, therefore, prayed thatappropriate direction be issued to the Government of Indiathat the Petitioners and similarly situated employees, who hadnot completed ten years of service on their date of absorptionin VSNL, are entitled to exercise option for retainingGovernment pensionary benefits by counting their service inGovernment of India along with their service with VSNL for”such benefits.

The Division Bench dismissed the Writ Petitions, and held asfollows:

“26. Regarding the contention that employees, who had notcompleted ten years, were not allowed to exercise the optionwith regard to pensionary benefits, it may be stated that evenwhen they were in the Government service, when VSNL was aGovernment Company, they were not entitled to such benefits.Reading the memorandum also, it becomes abundantly clearthat the persons, who had not completed ten years of servicewith the Government, were not entitled to pensionary benefits.The option, which was allowed by the Government, and to beexercised by the employees, was in respect of those employees A

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Awho had completed ten years or more of serviceand quasi-permanent employees and temporary employees, who wouldbe entitled to such benefits after they would be confirmed inthe Public Sector or Autonomous Bodies. Since the petitionersand similarly situated persons, who had not completed tenyears of service, were not entitled to such benefits even underBthe Government, they cannot make grievance for pensionarybenefits.”

The afore-said findings of the Division Bench squarely cover theCpresent case of the Appellants.

8.7. The decision in S.V. Vasaikar & Ors. v. Union of India &Ors. [2003 (2) Mh. L.J. 691 : 2003 (4) Bom CR 79] was not challengedbefore the Supreme Court, and has since attained finality. Therefore,the relief sought by the Appellants before the High Court was barred byDthe principle of res judicata.

Reference can be made to the decision of the Constitution Benchin Direct Recruit Class II Engineering Officers’ Association v. Stateof Maharashtra & Ors.[2]wherein Sharma, J., on behalf of the five-judge bench, held:

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“35…It is well established that the principles of res judicataare applicable to writ petitions. The relief prayed for on behalfof the petitioner in the present case is the same as he wouldhave, in the event of his success, obtained in the earlier writpetition before the High Court. The petitioner in replycontended that since the special leave petition before thisCourt was dismissed in limine without giving any reason, theorder cannot be relied upon for a plea of res judicata. Theanswer is that it is not the order of this Court dismissing thespecial leave petition which is being relied upon; the plea ofres judicata has been pressed on the basis of the High Court’sjudgment which became final after the dismissal of the specialleave petition. In similar situation a Constitution Bench ofthis Court in Daryao v. State of UP[3] held that where the High F

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2 (1990) 2 SCC 715 : AIR 1990 SC 1607.

3 (1962) 1 SCR 574 : AIR 1961 SC 1457.

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Court dismisses a writ petition under Article 226 of theConstitution after hearing the matter on the merits, asubsequent petition in the Supreme Court under Article 32 onthe same facts and for the same reliefs filed by the same partieswill be barred by the general principle of res judicata. Thebinding character of judgments of courts of competentjurisdiction is in essence a part of the rule of law on whichthe administration of justice, so much emphasised by theConstitution, is founded and a judgment of the High Courtunder Article 226 passed after a hearing on the merits mustbind the parties till set aside in appeal as provided by theConstitution and cannot be permitted to be circumvented bya petition under Article 32…”

Albeit the decision of the Constitution Bench was in the contextof a Writ Petition filed under Article 32, it would apply with greater forceto bar a Writ Petition filed under Article 226, like the one filed by thepresent Appellants, by the operation of the principle of res judicata.

8.8. The Appellants were not entitled to receive pensionary benefitseither under the CCS (Pension) Rules, 1972 or under Clauses (a) and(b) of the Office Memorandum.

The case of the Appellants being Government servants prior totheir absorption in VSNL, with less than 10 years of qualifying service,would be squarely covered by Clause (c) of the Office Memorandum.Under Clause (c), they would be entitled to receive an amount equal tothe Provident Fund contribution for the period of their service under theGovernment, upto the date of their permanent absorption along withSimple Interest at 6% per annum as the opening balance in their CPFaccount with the Public Sector Undertaking/Autonomous Body.

9. In view of the aforesaid findings, the present Civil Appeal isdismissed. The impugned Judgment and Order dated January 13, 2016passed by the Bombay High Court in Writ Petition No. 2704 of 2005 isaffirmed.

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272SUPREME COURT REPORTS[2019] 4 S.C.R.

A10. The Applications for Impleadment filed in the Appeal aredisposed of in terms of the present judgment. Any other pending I.A.sare disposed of.

Ordered accordingly.

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Kalpana K. Tripathy

Appeal dismissed.

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