State Cannot Exploit Employees By Keeping Them On Part-Time Basis For Decades To Deny Old Pension Scheme: Punjab & Haryana HC

"Mere acceptance of such terms cannot operate as a waiver of statutory or constitutional rights, particularly where the employee had no real bargaining power and the acceptance was a condition precedent for securing regular employment." Punjab and Haryana High Court, in a significant ruling, held that service rendered on a part-time, temporary, or contractual basis prior to regularization must be counted as qualifying service for the purpose of granting benefits under the Old Pension Scheme.

A bench of Justice Harpreet Singh Brar observed that the State, being a model employer, cannot take advantage of its own exploitative employment practices to deny pensionary benefits to employees who have rendered decades of uninterrupted service.

The Court was adjudicating a massive bunch of over 90 writ petitions which were broadly classified into two categories. The first category comprised employees appointed on a part-time or contractual basis prior to January 1, 2006, whose services were regularised under the New Pension Scheme (NPS) after that date. The second category involved employees appointed against posts advertised before the NPS notification cut-off date of October 28, 2005, but who joined service after January 1, 2006, due to administrative delays and sought a shift to the Old Pension Scheme under a 2023 State policy.

The primary question before the court was whether part-time or contractual service rendered prior to regularisation can be excluded from qualifying service for computing pensionary benefits. The court was also called upon to determine whether employees who signed undertakings accepting the New Pension Scheme at the time of their regularisation are legally estopped from claiming benefits under the Old Pension Scheme.

State Cannot Exploit Unemployed Citizens

The respondent State heavily relied upon Rule 3.17A(g)(iii) of the Punjab Civil Service Rules Vol-II (as applicable to Haryana), arguing that the provision expressly excludes the counting of service rendered by part-time employees for the purposes of pension. The State contended that part-time employees do not hold any civil post and are paid from contingent funds, making them ineligible for the Old Pension Scheme.

Rejecting this argument, the High Court relied on the Division Bench judgment in State of Haryana v. Jai Bhagwan, noting that it is highly improbable that a government school appoints a peon or water-carrier for merely 3-4 hours a day. The Court observed that the State has increasingly resorted to engaging employees on a part-time or contractual basis instead of making regular appointments, thereby exploiting the mass unemployment prevailing in the country.

Uninterrupted Service Cannot Be Ignored

Justice Brar emphasized that individuals are often compelled to accept such irregular engagements for meagre remuneration out of sheer necessity. The Court ruled that it would result in manifest injustice if the valuable service rendered by an employee for over a decade prior to regularization is excluded from consideration for pensionary benefits merely because the initial engagement was on a part-time basis.

Forced Undertakings Are Void Ab Initio

The State further argued that several petitioners had accepted the terms and conditions contained in their regularization orders, which explicitly stipulated that they would be governed by the New Pension Scheme. The State contended that having opened their PRAN accounts and accepted these terms without challenge, the employees were now legally estopped from demanding a switch to the Old Pension Scheme.

The Court firmly dismissed this contention, relying on the precedent set in Ranjit Singh v. State of Punjab. The bench held that undertakings obtained from employees compelling them to forgo statutory rights as a condition of employment are unconscionable and void ab initio. The Court noted that the actions of an employer must conform to the constitutional mandate of fairness and non-arbitrariness, and cannot override statutory rights simply by extracting forced consent.

Hyper-Technical Approach Defeats Beneficial Policies

Addressing the second category of petitioners, the Court examined the Office Memorandum dated May 8, 2023, which granted a one-time option to switch to the Old Pension Scheme for employees appointed against vacancies advertised prior to the October 28, 2005 cut-off. The State had denied this benefit to certain teachers, arguing that while the original advertisement was issued in July 2005, it was withdrawn and a fresh advertisement was issued in 2006.

The Court observed that the 2006 advertisement expressly preserved the eligibility of candidates who had applied under the 2005 advertisement, exempting them from fresh application fees. By doing so, the State itself created a legal fiction treating the recruitment process as having its genesis in the original 2005 advertisement. The Court chided the State for adopting a pedantic interpretation, holding that administrative delays cannot frustrate the beneficial object sought to be achieved by the policy.

Allowing the petitions, the Court quashed the impugned orders denying the Old Pension Scheme to the first category of employees and directed the State to count their past part-time service for fixing pensionary benefits. For the second category, the Court directed the respondents to allow the petitioners to exercise their option to switch to the Old Pension Scheme within six weeks and process their claims along with arrears.

Date of Decision: 09 July 2026