Service Law; Pepsu Roadways Transport Corp. Vs. S.K. Sharma [Supreme Court of India, 08-08-2016]

PRTC Employees Pension/Gratuity and General Provident Fund Regulations, 1992 – Retirement – the respondents had accepted to continue as employees of Corporation pursuant to order of merger/transfer of PEPSU Roadways with effect from 16.10.1956 and on completing their service under the Corporation and reaching the age of retirement they were entitled to receive only the benefits of CPF and gratuity as admissible to them under then prevailing regulations of the Corporation. Since they accepted those retiral benefits there is no relationship left between the Corporation and the respondents and in such a situation further claim against the Corporation that it should treat the respondents to be Government servants and adjust their retiral benefits accordingly was totally untenable and wrongly allowed by the High Court. The impugned judgment of the High Court granting relief to the respondents is therefore set aside. The second appeal and the writ petition of the respondents shall stand dismissed. This appeal is accordingly allowed but the parties are left to bear their own costs.




August 8, 2016

CIVIL APPEAL NO. 4703 of 2009

PEPSU Road Transport Corporation, Patiala …..Appellants Through its Managing Director & Anr.


S. K. Sharma & Ors. …..Respondents



1. This appeal by special leave assails the judgment and order dated 24.04.2006 passed by a Division Bench of High Court of Punjab and Haryana dismissing LPA No. 700 of 2002 preferred by the appellants and affirming the judgment of learned Single Judge dated 11.01.2002 whereby Writ Petition bearing CWP No. 11908 of 1992 preferred by some of the respondents was allowed. Some had preferred to file suits and Civil Appeals which were dismissed. Their Regular Second Appeal No. 430 of 1995 was tagged with the above writ petition and was allowed by the same common judgment enabling all the 21 respondents to refund a part of CPF (Govt. Contribution) or agree for adjustment, to obtain pensionary benefits.

2. The respondents filed the writ petition in 1992 claiming that they were appointed originally in a department of PEPSU described as PEPSU Roadways, between January 1955 and September 1956. It is not in dispute that in the PEPSU Roadways the respondents’ appointment was only on temporary basis. PEPSU Roadways lost its utility due to creation of PEPSU Road Transport Corporation (hereinafter referred to as the ‘Corporation’). Copy of notification dated 07.01.1956 available on record shows that Corporation was created by this notification under the provisions of the Road Transport Corporation Act, 1950 enforced with effect from 10.08.1954. The State Government through the Chief Secretary issued a letter dated 16.10.1956 informing the General Manager, PEPSU Roadways, Patiala (with reference to PEPSU Roadways’ communication dated 14.10.1956) that His Highness the Rajpramukh had ordered the transfer of PEPSU Roadways to the PEPSU Road Transport Corporation (with effect from 15.10.1956 forenoon) on various terms and conditions in respect to evaluation of the assets of the PEPSU Roadways as well as sharing the burden for payment of the employees of the Corporation. The letter indicates that the Corporation was requested to draw up the agreement required by clause (h) of sub-section (2) of Section 19 of the Road Transport Corporation Act, 1950 and forward the same to the Government for approval and signatures. On account of the States Reorganization Act the merger of State of PEPSU with the State of Punjab became effective from 01.11.1956. Through an Order no. 61 dated 30.11.1956 the Corporation admitted that PEPSU Roadways stood taken over by the Corporation from 16.10.1956 (before noon), so the services of all the temporary employees stood transferred to the Corporation with effect from 16.10.1956 on the prevailing terms and conditions till the approval of new terms and conditions by the Corporation. The respondents never challenged this declaration, got promotions etc. and continued to serve the Corporation till they all retired between 1989 and 1991. It is not in dispute that PEPSU Road Transport Corporation Regulations which was framed in 1957 provided for Contributory Provident Fund (CPF). There was no provision for grant of pension. Much after the retirement of the respondents, only with effect from 15.06.1992 the Corporation framed

PRTC Employees Pension/Gratuity and General Provident Fund Regulations, 1992

(hereinafter described as ‘Regulations of 1992’). Under these Regulations, for the first time pension was introduced in the Corporation.

3. Soon after the enforcement of Regulations of 1992 the respondents who had already received their retiral benefits under the 1957 Regulations filed the writ petition at hand. Originally the grievance of the respondents in the writ petition was as to why the Regulations of 1992 have not been made retrospective but through an amendment in 1998, the writ petition was substantially amended so as to claim that they continued to be employees of the State in the department of PEPSU Roadways till PEPSU State was reorganized and from 01.11.1956, the date of reorganization they became employees of State of Punjab with right to pension as available to Government servants. The Single Judge allowed the writ petition on the premise that the respondents had simply been transferred from the parent department to serve in the Corporation and therefore they continued to be Government servants because there was no order passed for their absorption in the Corporation. The Letters Patent Appeal preferred by the appellants was dismissed by the judgment and order dated 24.04.2006 which is under challenge in this appeal.

4. It is significant to note that the letter of Chief Secretary dated 16.10.1956 informing the General Manager, PEPSU Roadways of Government’s decision on the subject of transfer of PEPSU Roadways to the Corporation was not placed before the High Court by the writ petitioners although it finds a specific mention in Order no. 61 dated 30.11.1956 passed by the General Manager, PEPSU Road Transport Corporation. Hence this Court, apparently in the larger interest of justice, by order dated 20.08.2015 permitted the appellants to place on record the consent of the respondents and necessary documents to show that the respondents accepted transfer from PEPSU Roadways to the Corporation. The additional fresh documents were filed after service upon the respondents who were granted accommodation on that ground on 24.11.2015. The additional documents were filed with an affidavit on behalf of appellants and include a copy of letter dated 16.10.1956. The respondents have not objected to the correctness and authenticity of the additional documents and hence those documents have been taken on record and used by learned senior counsel for the appellants in support of his contentions.

5. On behalf of the appellants learned senior counsel Mr. Rakesh Dwivedi first took us through the letter dated 16.10.1956 and also the subsequent order dated 30.11.1956. He showed by way of illustration that one of the respondents Mr. O.P. Trehan through letter dated 01.03.1965 had opted to serve the Corporation. He also placed reliance on order dated 02.06.1986 of the Corporation by which Mr. S.K. Sharma, another respondent was promoted as Sr. Depot Manager which he accepted. That order clearly stipulated that he will be governed by the rules in force and those that may subsequently be framed for the officers of the Corporation. Before advancing submissions in respect of issues of law, Mr. Dwivedi emphasised that being temporary employees of PEPSU Roadways till 15.10.1956, the respondents under then prevailing service rules of the State Government were not entitled to pension as temporary employees even till their department i.e, PEPSU Roadways was merged with the Corporation by the decision of the State Government. Therefore, it is contended that they have not suffered any adverse consequences on account of merger; rather they became permanent employees of the Corporation, obtained promotions and on retirement availed all the lawfully admissible benefits of CPF and gratuity without any protest and demur.

6. On behalf of appellants Mr. Dwivedi has advanced the following submissions: (1) The relevant Department, PEPSU Roadways itself ceased to exist and be a Department and was merged with the Corporation totally and completely by 16.10.1956. The Department merged along with the posts, assets, liabilities and the respondent employees. There was no protest or challenge to such merger by way of transfer of the entire Department to the Corporation. (2) The word “transfer” is not used in the Government’s decision evidenced by letter dated 16.10.1956 in the narrow sense of “transfer and posting” to another post or place. Rather, it connotes transfer as merger of the entire Department with assets, liabilities, posts and employees including their service and hence there was no occasion or need for any order of absorption in respect of the respondents. (3) Since the transfer/merger of the Department was complete much before the date 01.11.1956 when PEPSU State merged with the State of Punjab under the States Reorganization Act, the respondents cannot claim to have become employees of State of Punjab by virtue of Section 115 of States Reorganization Act. This provision could have helped them only if the Department-PEPSU Roadways could have existed till 01.11.1956 or if they had been simply deputed to work in the Corporation under usual terms of deputation while retaining their lien on posts available under the State Government.

7. Learned senior counsel for the appellants elaborated his submissions by contending that the High Court erred in relying upon various sub-sections and provisos to Section 115 of the States Reorganization Act and such error was on account of failure to appreciate that the respondents ceased to have for them any post in the Government due to complete transfer/merger of the PEPSU Roadways with the Corporation much before 01.11.1956. It was also contended that the High Court failed to appreciate that as temporary employees with very little service to their credit, the respondents were not put to any disadvantage on account of transfer/merger because being temporary employees in 1955 and 1956, they were then not entitled to pension under the PEPSU Services Regulations governing pensions, particularly sub-rule (a) of Rule 1.2 in Chapter 1 which contains general rules relating to pensions for superior and inferior service. The rule reads thus:

“Cases in which claims to pension are inadmissible 1.2 In the following cases no claim to pension is admitted:- (a) When a Government servant is holding an appointment of a temporary nature or is paid for definite work done for the Government without being permanently employed.”

8. Lastly, it was contended on behalf of appellants that the High Court should not have entertained the writ petition in 1992 or allowed substantial amendments in 1998 to permit claims made belatedly after decades and after superannuation from the service of the Corporation. Such claims should have been rejected on the ground of delay. In support of this plea reliance was placed upon judgment in the case of