Pension Benefits Restored: Supreme Court Rules on Kerala Government Employee's Service Break

The Supreme Court of India recently ruled on a significant pension-related dispute in the case of Valsan P. v. The State of Kerala & Ors., which was registered as Civil Appeal No. 6292 of 2021. This appeal arose out of the decision by the High Court of Kerala at Ernakulam, which had overturned an order passed by the Kerala Administrative Tribunal (KAT). The judgment, delivered on October 21, 2021, by M.R. Shah and A.S. Bopanna, reinstated the tribunal’s decision in favor of the appellant, restoring his pension benefits.

The dispute revolved around whether the period of service that the appellant had spent in a State-owned Public Sector Undertaking (PSU) should be treated as a break in service, thus affecting his eligibility for pensionary benefits. The Supreme Court’s ruling clarified an essential aspect of pension law concerning the continuity of service and the condonation of breaks in government employment.

Background of the Case

The appellant, Valsan P., had a career spanning several government and PSU roles:

He worked in the Telecom Department (under the Central Government) from February 5, 1974, to May 31, 1984.
He later joined Steel Industries Limited, Kerala (SILK), a fully State-owned PSU, from June 4, 1984, to May 31, 1987.
Subsequently, he secured employment in the Technical Education Department of the Kerala State Government through the Public Service Commission, where he worked from May 31, 1987, until retirement on June 30, 2006.

Following his retirement, the appellant applied for pensionary benefits, requesting that his past service in the Telecom Department (Central Government) be counted along with his tenure in the Kerala State Government. However, the Accountant General rejected his request on the grounds that there was a break in service between his Central Government and State Government employment due to his tenure in SILK, a non-pensionable PSU.

Petitioner’s Arguments

The petitioner, represented by P.V. Surendranath, contended that:

The period spent at SILK was not a voluntary break but rather a continuation of service under a State-owned PSU.
The Kerala Service Rules (KSR) allowed for the condonation of such breaks, and the government had previously condoned similar cases.
The Kerala Administrative Tribunal (KAT) had already ruled in his favor, acknowledging his right to pension benefits.
The High Court misinterpreted the case by assuming he was requesting the inclusion of his PSU service for pension eligibility, when in fact, he was only seeking condonation of the break.

Respondents’ Arguments

The State of Kerala, represented by C.K. Sasi, argued that:

As per Rule 29(b), Part III of the Kerala Service Rules (KSR), breaks in service exceeding the permissible joining period resulted in the forfeiture of past service.
The PSU service in SILK was not pensionable, and allowing condonation would set an unfavorable precedent.
The appellant was free to approach the Central Government for pension, as he had served there prior to joining the Kerala State Government.

Supreme Court’s Judgment

The Supreme Court, after reviewing the case, overruled the High Court’s decision and restored the KAT’s ruling. The key findings included:

The appellant’s claim was legitimate as he was only requesting a break condonation, not the inclusion of PSU service.
Rule 39 of Part II, Kerala State and Subordinate Service Rules (KS & SSR) provided the government with the discretionary power to condone service breaks in the interest of justice.
A Government Order dated September 24, 2014, allowed for the condonation of non-qualifying service periods to maintain pension continuity.
The High Court had misinterpreted the appellant’s request, assuming he sought recognition of SILK service, when he was merely asking to bridge the gap between his Central and State Government employment.

Key Extract from the Judgment:

“Government have examined the matter in detail and are pleased to order that the prior public service shall be reckoned as qualifying service for pension after condoning the sandwiched non-qualifying service as break between the two services.”

Final Verdict

The Supreme Court set aside the High Court’s order dated May 21, 2019.
The decision of the Kerala Administrative Tribunal (KAT), dated November 14, 2016, was restored.
The appellant’s pension eligibility was recognized, and the break in service was condoned.
The State of Kerala was directed to implement the tribunal’s decision and grant the appellant the appropriate pension benefits.

This case highlights the importance of equitable treatment in pension matters and underscores the government’s obligation to fairly assess service continuity for retired employees. The ruling serves as a precedent for similar cases where service gaps arise due to employment in non-pensionable State-owned entities.

Petitioner Name: Valsan P..
Respondent Name: The State of Kerala and Ors..
Judgment By: Justice M.R. Shah, Justice A.S. Bopanna.
Place Of Incident: Kerala.
Judgment Date: 21-10-2021.

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