Service spent in work charged establishment is not liable to be countenanced for the purposes of computing

This reference has been placed before the Full Bench consequent to
a learned Single Judge forming the opinion that a “serious conflict”
existed between three Division Bench decisions of the Court. The issue arises
with reference to the provisions of Regulation 370 of the Civil Services
Regulations as applicable in the State of U.P.
The issue is whether the period of service
rendered as a work charged or a daily wage employee is liable to be counted for
the purposes of computing “qualifying service” as required by
Regulation 370 for the grant of pension.
The judgments rendered by the Division Benches
of the Court, which were noticed by the learned Single Judge, were: (a) State
of U.P. And Others Vs. Panchu1; (b) State of U.P. And Others Vs. Ram Nagina Lal
Srivastava2; and (c) Navrang Lal Srivastava Vs. State of U.P. And Others3. We
note that the judgment rendered by the Division Bench in Panchu was duly
noticed and explained in Jai Prakash Vs. State of U.P.4, Ram Nagina Lal
Srivastava and in Navrang Lal Srivastava and after noticing the entire body of
precedent on the subject including the subsequent judgments rendered by the
Supreme Court on the subject, the Division Benches held that the services
rendered by an employee in a work charged establishment cannot be added for the
purposes of computing qualifying service under Regulation 370. There was thus
no conflict, let alone a “serious conflict”, which may have justified
the reference being made to this Full Bench. We would have hoped that the
subsequent judgments would have rendered a quietus to the entire controversy.
However since the issue has been referred to the Full Bench we consider it
appropriate to reiterate and reaffirm the principles enunciated in the
subsequent judgments of the Court. A brief history and the background in which
the issue itself arises. 
A. STATUS OF A WORK CHARGED EMPLOYEE 
The
concept of a work charged employee, of service rendered in a work charged
establishment and the distinction between regular service and service rendered
in a work charge establishment has never really been in doubt in service
jurisprudence. A Bench of three learned Judges of the Supreme Court in Jaswant
Singh And Others Vs. Union of India And Others5. The Supreme Court explained
the service rendered in a work charged establishment and its status in the
following terms: 
“A
work-charged establishment broadly means an establishment of which the
expenses, including the wages and allowances of the staff, are chargeable to
“works”. The pay and allowances of employees who are borne on a
work-charged establishment are generally shown as a separate sub-head of the
estimated cost of the work. 
The entire
strength of labour employed for the purposes of the Beas Project was
work-charged. The work-charged employees are engaged on a temporary basis and
their appointments are made for the execution of a specified work. From the
very nature of their employment, their services automatically come to an end on
the completion of the works for the sole purpose of which they are employed.
They do not get any relief under the Payment of Gratuity Act nor do they
receive any retrenchment benefits or any benefits under the Employees State
Insurance Schemes.” 
Jaswant
Singh and the principles laid down therein came to be reiterated by the Supreme
Court in State of Rajasthan Vs. Kunji Raman6. Their Lordships held: 
“6. A
work-charged establishment as pointed out by this Court in Jaswant Singh v.
Union of India broadly means an establishment of which the expenses, including
the wages and allowances of the staff, fare chargeable to “works”.
The pay and allowances of employees who are borne on a work-charged
establishment are generally shown as a separate sub-head of the estimated cost
of the works. The work-charged employees are engaged on a temporary basis and
their appointments are made for the execution of a specified work. From the
very nature of their employment, their services automatically come to an end on
the completion of the works for the sole purpose of which they are employed.
Thus a work-charged establishment is materially and qualitatively different
from a regular establishment. 
8. A work-charged establishment thus differs from a
regular establishment which is permanent in nature. Setting up and continuance
of a work-charged establishment is dependent upon the Government undertaking a
project or a scheme or a ‘work’ and availability of fund for executing it. So
far as employees engaged on work-charged establishments are concerned, not only
their recruitment and service conditions but the nature of work and duties to
be performed by them are not the same as those of the employees of the regular
establishment. A regular establishment and a work-charged establishment are two
separate types of establishments and the persons employed on those
establishments thus form two separate and distinct classes. For that reason, if
a separate set of rules are framed for the persons engaged on the work-charged
establishment and the general rules applicable to persons working on the
regular establishment are not made applicable to them, it cannot be said that
they are treated in an arbitrary and discriminatory manner by the Government.
It is well-settled that the Government has the power to frame different rules
for different classes of employees. We, therefore, reject the contention raised
on behalf of the appellant in Civil Appeal No. 653 of 1993 that Clauses (g),
(h) and (i) of Rule of RSR are violative of Articles 14 and 16 of the
Constitution and uphold the view taken by the High Court.” (emphasis
supplied) 
In Punjab State Electricity Board And Others v.
Jagjiwan Ram And Others7, the Supreme Court considered the entitlement of
employees rendering service in a work-charged establishment to promotional
scales. Following what was held in Jaswant Singh and Kunji Raman their
Lordships observed: 
“10. The work-charged employees can claim
protection under the Industrial Disputes Act or the rights flowing from any
particular statute but they cannot be treated on a par with the employees of
regular establishment. They can neither claim regularisation of service as of
right nor they can claim pay scales and other financial benefits on a par with
regular employees. If the service of a work-charged employee is regularised
under any statute or a scheme framed by the employer, then he becomes member of
regular establishment from the date of regularisation. His service in the
work-charged establishment cannot be clubbed with service in a regular
establishment unless a specific provision to that effect is made either in the
relevant statute or the scheme of regularisation. In other words, if the
statute or scheme under which service of work-charged employee is regularised
does not provide for counting of past service, the work-charged employee cannot
claim benefit of such service for the purpose of fixation of seniority in the
regular cadre, promotion to the higher posts, fixation of pay in the higher
scales, grant of increments etc. 
14. The ratio of the abovementioned judgments is that
work-charged employees constitute a distinct class and they cannot be equated
with any other category or class of employees much less regular employees and
further that the work-charged employees are not entitled to the service
benefits which are admissible to regular employees under the relevant rules or
policy framed by the employer.”(emphasis supplied) 
Subsequently a Full Bench of this Court in Pawan Kumar
Yadav Vs. State of U.P.8 ruled on the issue by holding that a work-charged
employee does not work against any temporary or permanent post or even on a
tenure post. Ruling upon the status of work-charged employees, the Full Bench
held that these employees do not hold any post and are merely employed by the
State for implementation of various projects and schemes and that their
services are co-terminus to the work or the scheme in which they are engaged.
The Full Bench, it may be noted, was dealing with the right of a dependant of a
daily-wage or work-charged employee to obtain compassionate appointment under
the U.P. Recruitment of Dependants of Government Servant (Dying in Harness)
Rules, 1974. The issue itself was answered in the following terms: 
“26. On the aforesaid discussion, and in view of
the law laid down in General Manager, Uttaranchal Jal Sansthan Vs. Laxmi Devi
(Supra), we answer the questions posed as follows: – 
1. A daily wager and workcharge employee employed in
connection with the affairs of the Uttar Pradesh, who is not holding any post,
whether substantive or temporary, and is not appointed in any regular vacancy,
even if he was working for more than 3 years, is not a ‘Government servant’
within the meaning of Rule 2 (a) of U.P. Recruitment of Dependants of
Government Servant (Dying in Harness) Rules, 1974, and thus his dependants on
his death in harness are not entitled to compassionate appointment under these
Rules.” 
B. ARTICLE 370 AND THE ENTITLMENT TO PENSION 
Article 370 of the Civil Service Regulations provides
that continuous, temporary or officiating service under the Government of Uttar
Pradesh followed without interruption with confirmation in the same or any
other post shall qualify for pension with the following exceptions: – 
(i) Period of temporary or officiating service in
non-pensionable establishment 
(ii) Periods of service rendered in a work charged
establishment; and 
(iii) Periods of service in a post paid out of
contingencies. 
From a plain reading of the provision it is apparent
that service rendered in a work charged establishment is not liable to be
counted while computing qualifying service for the purposes of pension. 
As far as this Court is concerned, the issue of a
muster roll employee and his entitlement to pension with reference to the
provisions of Regulation 370 fell for consideration before a Division Bench of
the Court in Bansh Gopal Versus State of U.P. & Ors.9. Answering the said
issue the Division Bench held: 
“17. The Regulation 370 as quoted above expressly
excluded the services rendered in work-charged establishment for purposes of
pension. Fundamental Rule 56(e) on which reliance has been placed by counsel
for the appellant does not help the appellant in the present case. Rule 56(6)
requires retiring pension to be paid in accordance with and subject to the
provisions of the relevant rules. Fundamental Rule 56(e) is quoted as
below: 
“56(e) A retiring pension shall be payable and
other retirement benefits, if any, shall be available in accordance with and
subject to the provisions of the relevant rules to every Government servant who
retires or is required or allowed to retire under this rule. 
18. The
relevant rules for payment of pension are contained in Civil Services
Regulation. There is nothing inconsistent between Fundamental Rule 56 and
Regulation 370 so as to not follow Regulation 370. According to Regulation 370,
the services rendered by appellant in work charge establishment does not
qualify for purposes of pension.” 
C. THE
JUDGMENT IN NARATA SINGH 
A Full Bench of the Punjab and Haryana High Court in
Keshar Chand Vs. State of Punjab And Others10 had struck down Rule 3.17(ii) of
the Punjab Civil Services Rules, which excluded the period of service rendered
in a work charged establishment for the purposes of determining qualifying
service. A special leave petition taken against the said judgment also came to
be dismissed. Bearing in mind the aforesaid declaration of the law by the Full
Bench of the Punjab and Haryana High Court, the Supreme Court in Punjab State
Electricity Board And Others Vs. Narata Singh11 dealt with a claim for pension
of a work charge employee. Since Rule 3.17(ii) of the Punjab Civil Service
Rules had been struck down,

the Supreme Court in Narata Singh held that the service rendered by an employee
in a work charged establishment was liable to be added for the purposes of
computing qualifying service. This would be evident from the following
observations carried in Narata Singh:
 
“5……A bare reading of the above-quoted rule
makes it clear that periods of service in work charged-establishments were not
counted as qualifying service. Therefore, the work charged employees had
challenged validity of the said Rule. The matter was considered by the Full
Bench of Punjab and Haryana High Court. In Kesar Chand v. State of Punjab &
Ors. [1988 (5) SLR 27]: (AIR 1988 Punj & Har 265), the Full Bench held that
Rule 3.17(ii) of the Punjab Civil Services Rules was violative of Article 14 of
the Constitution of India. The Full Bench decision was challenged before this
Court by filing a special leave petition which was dismissed. Thus, the ratio
laid down by the Full Bench judgment that any rule which excludes the counting
of work charged service of an employee whose services have been regularized
subsequently, must be held to be bad in law was not disturbed by this Court.
The distinction made between an employee who was in temporary or officiating
service and who was in work charged service as mentioned in Rule 3.17(ii) of
the Punjab Civil Services Rules disappeared when the said rule was struck down
by the Full Bench. The effect was that an employee holding substantively a
permanent post on the date of his retirement was entitled to count in full as
qualifying service the periods of service in work charged establishments. In
view of this settled position, there is no manner of doubt that the work
charged service rendered by the respondent No.1 under the Government of Punjab was
qualified for grant of pension under the rules of Government of Punjab and,
therefore, the Board was not correct in rejecting the claim of the respondent
for inclusion of period of work charged service rendered by him with the State
Government for grant of pension, on the ground that service rendered by him in
the work charged capacity outside PSEB and in the departments of the State
Government was a non-pensionable service.” 
D. JUDGMENTS OF THIS COURT FOLLOWING NARATA
SINGH 
Following Narata Singh and failing to notice the
distinguishing features of the statutory panorama in the backdrop of which it
came to be rendered, various judgments were delivered by different Benches of
this Court holding that the period of service spent in a work charged
establishment is liable to be included for computing qualifying service. These
were: Thakur Prasad Vs. State of U.P. Through Principal Secretary Food &
Others12, Jawahar Prasad Tripathi Vs. State of U.P. and others13, Board of Revenue,
Lucknow & Ors. Vs. Prasidh Narain Upadhyay14, Chedi Ram Maurya Vs. Uttar
Pradesh Basic Education Board15, State of U.P. and Ors. Vs. Panchu16 and Raj
Dularey Dubey Vs. Public Service Tribunal Lucknow & Ors17. 
These judgments as we have noted above, failed to bear
in mind that a specific rule which mandated exclusion of the period of service
rendered in a work charged establishment had been struck down by the Punjab and
Haryana High Court and consequently the basis for exclusion had disappeared and
ceased to exist. As the extract from the judgment of the Supreme Court in
Narata Singh would evidence, it was in the above backdrop that the matter came
to be decided. Regulation 370 on the other hand continued to exist on the
statute book insofar as the State of U.P. was concerned and consequently there
was thus an evident distinction which was liable to be borne in mind while
ruling on the issue of entitlement of pension of a work charged employee. This
aspect as we find escaped the attention of the Benches when they rendered
judgment on the causes aforementioned. 
We may in this connection also note that the judgment
rendered by the Division Bench in Panchu was taken in appeal to the Supreme
Court where the special leave petition18 of the State came to be dismissed in
the following terms: 
“The special leave petition is dismissed. 
The question of law relating to counting the
period of work charge establishment is left open for determination in an
appropriate case. The impugned judgment passed by the High Court cannot be
cited as a precedent in any other case.”
 
From a
plain reading of the order of the Supreme Court made while dismissing the
special leave petition, it is evident that the question of law relating to
inclusion of period of service rendered in a work charged establishment was
left open for determination in an appropriate case. There was, thus, no
affirmation of the law. The two other judgments of this Court which struck a
discordant note and therefore merit consideration are those rendered in State
of U.P. Through Principal Secretary Public Works Department Lucknow &
Others Vs. Prem Chandra And Others19 and Bhuneshwar Rai Vs. State of U.P. And
Others20. The Division Bench in Prem Chandra again rested on Narata Singh.
Noticing the fact that the provisions of Rule 3.17(ii) of the Punjab Civil Service
Rules, had been struck down in Kesar Chand, the Division Bench held that the
provisions of Regulation 370 would have to be read down in line with the
judgment of the Supreme Court in Narata Singh upon coming to a conclusion that
the judgment of the Full Bench of the Punjab and Haryana High Court had merged
into the judgment of the Supreme Court in Narata Singh. We may, additionally
note that the judgment of the Division Bench in Prem Chandra was also taken in
appeal to the Supreme Court but the special leave petition21 came to be
dismissed summarily as would be evident from the order passed thereon which
reads as follows: 
“Delay
condoned. 
The
special leave petition is dismissed.” 
Bhuneshwar Rai referred to Narata Singh and although it referred
to Bansh Gopal the Court held in the facts of that case that the services
rendered in a work charged establishment were liable to be taken into
consideration while deciding the issue of entitlement to pension. We must, with
respect, state that both the aforesaid Division Benches do not lay down the
correct law. We are of the firm opinion that there was no merger of the
judgment rendered by the Full Bench of the Punjab & Haryana High Court in
the judgment of the Supreme Court in Narata Singh. Firstly, the principle of
merger had no application. Secondly, Narata Singh, as we have noted above,
itself came to be decided in light of the peculiar statutory regime which
prevailed in the State of Punjab and Haryana consequent to the provision of the
Punjab Civil Service Rules having been struck down and the special leave
petition preferred against the judgment of the Full Bench having been
dismissed. Similarly, although the Division Bench in Bhuneshwar Rai held that
the period of service rendered against a work charged establishment was liable
to be included, the same came to be rendered even after noticing Bansh Gopal,
which as we have found, in fact held to the contrary.
We are, therefore, of
the considered view that the Division Bench erred in holding that the service
rendered in a work charged establishment was liable to be included.
 
D. THE
SUBSEQUENT JUDGMENTS 
The
distinguishing feature of Narata Singh which had inadvertently escaped the
attention of the earlier Division Benches was however noticed by the Division
Bench of the Court in Jai Prakash Vs. State of U.P. and 4 others22. Noticing
the law as enunciated by the Full Bench of the Court in Pawan Kumar Yadav and
the judgments rendered by the Supreme Court in Jaswant Singh, Kunji Raman and
Jagjeevan Ram, the Division Bench revisited the issue and held: 
“It,
therefore, follows from the aforesaid judgments of the Supreme Court that the
work charged employees constitute a distinct class and they cannot be equated
with regular employees and that the work charged employees are not entitled to
the service benefits which are admissible to regular employees under the
relevant rules. 
We are
conscious that in Special Appeal Defective No.842 of 2013 (State of U.P. &
Ors. Vs. Panchu) that was decided on 2 December 2013, a Division Bench, after
taking notice of the judgment of the Supreme Court in Narata Singh (supra),
observed that the rationale which weighed with the Supreme Court should also
govern the provisions of the Civil Service Regulations, but what we find from a
perusal of the aforesaid judgment of the Division Bench is that the decisions
of the Supreme Court in Jagjiwan Ram (supra), Jaswant Singh (supra) and Kunji
Raman (supra) as also the Full Bench judgment of this Court in Pavan Kumar
Yadav (supra) had not been placed before the Court. These decisions of the
Supreme Court and the Full Bench of this Court leave no manner of doubt that in
view of the material difference between an employee working in a work charged
establishment and an employee working in a regular establishment, the service
rendered in a work charged establishment cannot be clubbed with service in a regular
establishment unless there is a specific provision to that effect in the
relevant Statutes. Article 370(ii) of the Civil Service Regulations
specifically, on the contrary, excludes the period of service rendered in a
work charged establishment for the purposes of payment of pension and we have
in the earlier part of this judgment held that the decision of the Supreme
Court in Narata Singh (supra), which relates to Rule 3.17(i) of the Punjab
Electricity Rules, does not advance the case of the appellant. In this view of
the matter, the appellant is not justified in contending that the period of
service rendered from 1 October 1982 to 5 January 1996 as a work charged
employee should be added for the purpose of computing the qualifying service
for payment of pension.” 
The
Division Bench in Jai Prakash held that the precedents left no manner of doubt
that the service rendered in a work charged establishment could not be clubbed
with service in a regular establishment. Noticing that Regulation 370 clearly
excluded the period of service rendered in a work charged establishment it held
that the period of service rendered by a person as a work charged employee is
not liable to be taken into consideration while computing qualifying service
for payment of pension. Significantly the judgment in Panchu was duly noticed
and it came to be explained on the ground that the subsequent judgments of the
Supreme Court as also of the Full Bench had not been placed before the Bench
which decided the same. A Special Leave Petition23 against Jai Prakash was
dismissed on 5 September 2014 in the following terms: 
“There
is nothing on the record to suggest that any Rule or Scheme framed by the State
to count the work-charge period for the purpose of pension in the regular
establishment. In absence, of any such Rule or Scheme, we find no merit to
interfere with the impugned judgment. 
The
special leave petition is dismissed.” 
The order
of the Supreme Court dismissing the Special leave petition was on merits and
affirmed the judgment rendered in Jai Prakash. This judgment in Jai Prakash
rendered by the Division Bench correctly laid down the law. 
After the
judgment in Jai Prakash was affirmed by the Supreme Court, the issue of
entitlement of a work charged employee to pension again fell for consideration
before a Division Bench in Navrang Lal Srivastava which again reiterated the
law on the subject in the following terms: 
“Thus,
there is no manner of doubt that the service rendered by an employee in a work
charged establishment cannot be counted for the purpose of computing the
qualifying service of ten years for payment of pension. The submission of
learned counsel for the petitioner that Article 370(ii) of the Regulations
should be read down to include the service rendered in a work charged
establishment for payment of pension, therefore, cannot be
accepted.” 
Another
Division Bench of the Court in Ram Nagina Lal Srivastava held that the services
rendered by an employee in a worked charged establishment cannot be added for
the purposes of computing qualifying service. 
Following
the line of decisions referred to above, the Court in State of U.P. Vs. Sri
Ram24 yet again held that the service rendered by a work charged employee was
not liable to be included for the purposes of computing qualifying
service. 
F. THE
PRESENT REFERENCE 
We had at
the beginning noted that Panchu had been duly considered in Jai Prakash as well
as Ram Nagina Lal Srivastava and Navrang Lal Srivastava. The Division Bench of
this Court in Ram Nagina Lal Srivastava dealt with Panchu in the following
terms: 
“The
last judgment of this Court which struck a discordant note and which must be
noticed is that rendered by the Division Bench in Panchu (supra). It is
apposite to note here that Panchu was also taken in appeal to the Supreme Court
where the Special Leave Petition18 came to be dismissed on 28 March 2014 in the
following terms: 
“The
special leave petition is dismissed. The question of law relating to counting
the period of work charge establishment is left open for determination in an
appropriate case. The impugned judgment passed by the High Court cannot be
cited as a precedent in any other case.” 
From the
above narration of facts and the various judgments rendered on the issue, it is
apparent that the judgments of this Court which held that the service rendered
by a person in a work charged establishment was eligible for inclusion in the
period of qualifying service proceeded on the basis that the judgment rendered
in Naratha Singh applied and failed to notice the distinguishing features upon
which it came to be rendered. The law subsequently has been authoritatively
pronounced and ruled upon in both Jai Prakash and Navrang Lal Srivastava, and
in judgments of the Hon’ble Supreme Court noticed earlier.” 
The
learned Single Judge however while referring the matter to the Full Bench has
inadvertently failed to notice that Panchu stood duly explained in light of the
subsequent pronouncements in Jai Prakash, Ram Nagina and Navrang Lal
Srivastava. Since Panchu had been taken note of in the aforementioned
judgments, the issue of a conflict did not arise at all. 
We
accordingly conclude that the judgments of this Court which proceeded to follow
Narata Singh failed to bear in mind the distinguishing features of the
statutory regime in the backdrop of which it came to be delivered. As noted
above, Rule 3.17(ii) of the Punjab Civil Service Rules had been struck down.
The absence of Rule 3.17(ii) from the statute book formed the bedrock upon
which Narata Singh was decided. Significantly, Regulation 370 continues to
govern the field and in clear and unambiguous terms provides that the period of
service rendered in a work charged establishment is liable to be excluded while
computing qualifying service. 
We therefore hold that the period of service
spent in a work charged establishment is not liable to be countenanced for the
purposes of computing qualifying service. The law in this regard stands
correctly declared and elucidated in Jai Prakash, Navrang Lal Srivastava and
Ram Nagina. The decision in Panchu and the other judgments of this Court which
have followed the line of reasoning adopted therein shall accordingly stand
overruled.
 
We accordingly answer the reference by holding that
the period of service spent by a person in a work charged establishment is not
liable to be counted for the purposes of computing qualifying service.
Regulation 370 of the Civil Service Regulations continues to govern and hold
the field. The factual backdrop in which Narata Singh came to be rendered
escaped the attention of the various Division Benches which followed it despite
the existence of the unambiguous command of Regulation 370. Jai Prakash and the
subsequent pronouncements following it and referred to above represent the
correct position in law. The matter shall now be placed before the learned
Single Judge for a decision on the writ petition in the light of what has been
held above. 
Order Date: February 18, 2016 
Arun K. Singh 
(Dr. D.Y. Chandrachud, C.J.) 
(M.K. Gupta, J.) 
(Yashwant Varma, J.) 

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