Holding

Service rendered under private management cannot be counted towards qualifying service for pension, and lecturers absorbed after the takeover are treated as new entrants subject to government rules, including a retirement age of 58 and a ten‑year service requirement for pension.

Summary

The respondent, a lecturer, was employed by a private college that was taken over by the Punjab Government in 1983 under a gift deed. The deed stipulated that staff absorbed by the Government would be treated as "new entrants" and that the Government would not assume any liability for service rendered before the takeover. After absorption, the respondent retired at the government‑prescribed retirement age of 58, having served less than ten years in government service, and was denied a pension. He contended that his service under the private management should be counted towards the qualifying period for pension and that he should be allowed to serve until the private‑college retirement age of 60. The Supreme Court held that the gift deed expressly excluded pre‑takeover service from pension calculations and that the respondents were subject to the Government’s rules, including the ten‑year service requirement and the 58‑year retirement age. Consequently, the appeal was allowed, setting aside the Division Bench decision and restoring the Single Judge’s order denying pension and continuation of service. The judgment clarified that any future scheme granting pension benefits to such teachers would have to be enacted by law and does not alter the present ruling.

Issues considered

The applicability of the gift deed provisions to the computation of qualifying service for pension.
Whether lecturers absorbed after the takeover are entitled to continue service up to the private‑college retirement age of 60.
Whether pre‑takeover service under private management can be counted towards the ten‑year service requirement for pension.

Legislation cited

Punjab Privately Managed Recognised Schools Employees (Security of Service) Rules, 1981s. Rule 22-A

Subjects

pensionservice lawprivate college takeovergift deedqualifying serviceretirement agenew entrantcontributory provident fundgovernment service rules

Judgment

A STATE OF PUNJAB
v.
DEV DUTT KAUSHAL ETC.

AUGUST 28, 1995

B [B.P. JEEVAN REDDY AND G.N. RAY, JJ.)

Se1vice Law.

Pension--Computation of Qualifying period fm~Plivate Educational
C Institution-No pension only contlibutmy provident fund-Institute taken over
by State Govemment-By way of Gift deed-Application of Govemment
Rules, specifically stipulated in the deed-College Staff Absorbed on the con-
ditions specified in the deed-Neither the conditions of service in the College
provides for pension nor the gift deed specifies the se1vice rendered in p1ivate
college to be counted for the pwpose of pension-Under these circumstances,
D the respondent appointed in the p1ivate college-Continued in se1vice after
Govemment take ove1~Retired, subsequently-Held, not entitled to pen-
sion-As the se1vice rendered by him under the private management cannot
be computed as qualifying service for receiving pension from the Government.

E Retirement-Age of superannuation-Private Educational Institute
taken over by Govemment--Gift Deed executed by the Management-Existing
teachers on take over by Govemment to be treated as "New entrants''-Staff
of college absorbed by Govemment subject to conditions stipulated in the gift
deed-Age of retirement in plivate college is 60 years but, in Govemment
college it is 58 years-No protective clause in the gift deed regarding age of
F superannuation under Plivate Management-Held, not entitled to continue in
service after 58 years.

The respondent was a Lecturer in a Private Educational Institution
which was taken over by the Government under a Gift Deed.
G The Service Conditions in the private College did not entitle any
pension but only contributory provident fund to the Teachers on their
retirement from service. The Management had agreed to the stipulated
condition in the Gift Deed that the Government shall not accept any
-
responsibility for the period prior to taking over of the College and that
H the Teachers appointed under the Government shall be treated as "New
96
STATE v. D.D. KAUSHAL 97

Entrants" and shall be governed by the rules and regulations of the A
Government.

The Respondent continued in service after such take over, and
retired from service on attaining the age of 58 years, the prescribed age of
superannuation under the Government rules. The Respondent was not
granted any pension as his service under the Government was less than 10 B
years.

A Writ Petition which was dismissed by Single Judge in view of the
terms and conditions of the Gift Deed was allowed by a Division Bench
following the decision of this Court in N.N. Swamy's, case [1977) 2 SCR C
774 the correctness of which was questioned in these appeals.

Allowing the Appeal, this Court

HELD: 1. The age of retirement of the College Lecturers under the
Government is 58 years. There is no clause or condition in the Gift Deed D
preserving or saving the age of retirement prescribed in the Private
College. The Lecturers had no right as such to be appointed under the
Government. The Gift Deed repeatedly states that on such appointment
they shall be treated as "new entrants" and shall be placed at the bottom
of the seniority list, as on the date of absorption in the relevant grade or
E
category and further in matters specifically provided, the Government
rules and regulations and orders will apply and thus the claim for con·
tinuance till the attainment of 60 years is not acceptable. [101-E-G]

2. According to Government rules, no Lecturer is entitled to pension
unless he puts in ten years of service. Under the Private Management the F
Respondent was not entitled to pension but only to C.P.F. The Gift Deed
does not specify that service rendered in the college while it was under the
past private management shall also be counted, but instead states that the
Government will not take any responsibility prior to take- over and the
management will clear all liabilities. The Gift Deed expressly specifies the G
only exemption to the rule of "new entrants" it recognised ·for the purpose
of fitment in the appropriate scale of pay, their service in the said grade
under the private management shall be taken into account. The gift deed
~ t provides expressly that in matters not expressly provided in the gift deed,
the rules, regulations, instructions and orders issued by the Government
shall apply. [101-H; 102-C; F-G; 103-A-B] H
98 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A State of 01issa v. N.N. Swamy, (1977) 2 SCR 774 and Chander Sain
v. State of Ha1ya11a & brs., (1994] 1 SCC 750, distint,'llisbed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1102 of
1995 Etc. Etc.

B From the Judgment and Order dated 21.10.93 of the Punjab &
Haryana High Court in L.P.A. No. 1346 of 1991.

b.V, Sehgal, Ujagar Singh, G.K. Bansal, Sanjay Bansal, Anis Ahmed
Khan, Sanjiv Anand, R.K. Kapoor, M.K. Dua, Miss. Monika and Shrish
Kumar Misra for the appearing parties.
c
The Judgment of the Court was delivered by

8.P. JEEVAN REDDY, J. Leave granted in Special Leave Petitions.

A common question arises in this batch of appeals. For the sake of
D convenience, we may state the facts in Civil Appeal No. 1102 of 1995 State
of Punjab and Ors. v. Prof Dev Dutta Kaushal, Lecturer, the facts of which
case alom'! Were placed before us as representative of the facts in other
a.ppeais.
The respondent joined a private educational institution, M.R. Col-
E lege, Fazilka, as a Lecturer on November 26, 1956. After one year, his
services were confirmed. His date of birth is October 29, 1931. According
to the conditions of service obtaining in the said private educational
institution, the age of retirement was fixed at sixty years which could be
extended upto sixty five years in certain situations. The said college was
F taken over· hy the State Government on June 30, 1983 and since then is
being run as a Government college. The respondent was continued in
service after such take over. On October 31, 1989, he was retired from
service on attaining the age of fifty eight years which is the age of super-
annuation prescribed under the government rules. Since his service under
the government was less than ten years, he was not granted any pension.
G He made a representation not only for pension but also for allowing him
to continue in service till he attains the age of sixty years. Since no action
was taken on his representation, he approached the Punjab and Haryana
High Court by way of a writ petition seeking appropriate directions to the
government to allow him to continue in service till he attains the age of
H si:\ty years and also to grant him the pension taking into consideration the
STAll~ v. D.D. KAUSHAL[B.P.JEEVAN REDDY,J.) 99

total length of service rendered including the service under the private A
educational institution. The writ petition was dismissed by a learned Single
Judge in view of the terms and conditions of the gift deed which was
executed al the time of take over of the said college by the government.
The respondent preferred a Letters Patent Appeal which has been allowed
by a Division Bench purporting to follow the decision of this Court in State
B
of 01issa and Anr. v. N.N. Swamy and Ors. Etc., (1977] 2 S.C.R. 774. The
correctness of the said view is questioned in this batch of appeals.

According to the service conditions obtaining in the aforesaid private
college, the teachers were not entitled to any pension on their retirement
from service. They were only entitled to the contributory provident fund. C

rt would be appropriate to notice the terms and conditions of the gift
deed executed by the management of the aforesaid college in favour of the
G9vernment since it records the terms and conditions subject to which the
government had agreed to take over the college. The gift deed specifically
records that the management had applied to the government to take over D
the college and that the government had agreed to do so on the terms and
conditions recorded therein. The conditions relevant to our purpose are
Clauses 4, 5, 6, 8, 10 and 13. They are :

"4. It is agreed that Govt. shall not accept any liability or respon- E
sibility for the period prior to the taking over of the college by it
i.e. prior to 30-6-83. All such liabilities shall be cleared by the
Managing Committee of the college.

5. It is agreed that the college on being taken over by the Govern-
ment should not be over staffed and only such staff \viii be kept F
as is justified on the basis of actual work load in accordance with
~he prescribed norms for different categories of staff. Confirmed
and regularly appointed staff through prescribed channels and
approved by the University/Department will be taken over on
adhoc basis subject to the approval of the Punjab Public Service G
Commission where applicable.

• > 6. It is agreed that such members of the staff of the college as fulfil
necessary qualifications and are considered suitable for absorption
in Government Service by the Punjab Public Service Commis-
sion/Sub-ordinate Service Selection Board/Departmental Commit- H
100 SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R.

A tee shall only be taken over in Government Service and then
treated as new entrants. But the Principal will be taken over only
as Senior most lecturer of the concerned college. The Government
scales in respect of respective categories shall be permissible to
them and there shall be no personal grade for any one. Their pay
in the Government scale will be fixed on the basis of their length
B
of Service in equivalent/identical or higher time-scale. There shall
be no guarantee in regard to protecting their existing pay and
allowances or any other pre-requisites:

8. It is agreed that the members of the staff will be treated as fresh
c entrants and they will be placed at the bottom of the Old Govern-
ment employees in their respective cadre including the Principle
who will be absorbed as Senior most lecturer interse of the con-
cerned college.

10. It is further agreed that for other administrative and financial
D matters not specifically mentioned in the foregoing paragraphs the
college shall be governed by such rules, regulations/instructions
and orders as are issued by the Govt. from time to time and as
may be applicable to other Government college in the State.

E 13. The college will be considered to have been taken over w.e.f.
30 June, 1983.

A reading of the above clauses discloses the following features: the
Government had stipulated and the management had agreed that the
government shall not to accept any liability or responsibility for the period
F prior to taking over of the college, i.e., June 30, 1983. All such liabilities,
it was stated, shall be cleared by the managing committee of the college.
It was further stipulated that on such take over, the government will absorb
only such staff as is justified on the basis of the actual work load in
accordance with the norms prescribed under the government. It was fur-
G ther stipulated that only confirmed and regularly appointed staff through
prescribed channel and approved by the University/Department alone will·
be taken over and that too on adhoc basis. This appointment under the
government was to be subject to the approval of Punjab Public Service
Commission where ever applicable. It was further stated in express words
that on such appointment under the government, the teachers shall be
H treated as "new entrants". The principal was to be appointed only as the
STATE v. D.D.KAUSHAL[B.P.JEEVANREDDY,J.] 101

.... senior-most lecturer of the C<?ncerned college and not as the principal. It A
was also specified that on such appointment the teachers so absorbed and
treated as fresh entrants will be placed at the bottom of the existing
government employees in the relevant cadre. It was specified that there
shall be no guarantee in regard to protecting their existing pay or any other
perquisites and that they. will be fitted in the government pay scales
admissible to the respective categories. At the same time, an exception was B
made in the case of fitment in the scale, viz., their pay in the government
scale will be fixed on the basis of their length of service in equivalent/iden-
tical or higher time scale. The gift deed made it clear that for other
administrative and financial matters not specifically mentioned in the said
deed, the college shall be governed by such rules, regulations, instructions
and orders as are issued by the government from time to time and as may
c
be applicable to other government colleges in the State. The date of take
over was specified as June 30, 1983. It is in the light of these terms and
conditions that the respondent's claims in the writ petition have to be
examined because it is on these terms and conditions that the staff of the
said private college was taken over by the government and they became D
government employees.

The first claim of the respondent is that he is entitled to continue in
service till he attains the age of sixty years. It is not possible to agree. It is
admitted on all hands that the age of retirement of the college lecturers
under the government is fifty eight years. In view of the terms and condi- E
tions of the gift deed mentioned above, it is plain that the respondent's plea
cannot be accepted. There is no clause or condition in the gift deed
preserving or saving the age of retirement prescribed in the said private
college. Actually on the take over of the college, the teachers/lecturers had
no right as such to be absorbed or to be appointed under the government. F
Their appointment in government service was subject to fulfillment of
certain conditions specified above. The gift deed repeatedly states that on
such appointment, they shall be treated as "new entrants" and shall be
placed at the bottom of the seniority list, as on the date of the absorption,
in the relevant grade/category. The gift deed further stated that in matters
not specifically provided for therein, the government's rules, regulations G
and orders will apply. In such a situation, it is obvious that the claim for
continuance till the attainment of sixty years is simply not acceptable.
J

Now coming to the claim for pension, it may be noted that according
to the government rules,· no lecturer is entitled to pension unless he puts H
102 SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A in ten years service. There is no dispute about this position. There is egually . '

no dispute that respondent had not served for ten years under the govern-
ment The contention of the respondent, however, is that the service
rendered by him in the college while it was under the private management
should also be counted and his pension fixed on that basis. We are :-igain
unable to appreciate this contention. As stated above, the respondent was
B not entitled to any pension according to the service conditions obtaining in
the private college. Had the college not been taken over by the government
and had he retired in the normal course, he would not have been entitled
to any pension. He was entitled only to contributory provident fund. It is
only under government service that pension is provided for. But such
c pension is available only if an employee puts in ten years of service under
the government. Now the gift deed does not say that for the purpose of
pension, the service rendered in the college while it was under the private
management shall also be counted. On the contrary, it says that the
government shall not be responsible and shall not accept any liability for
the period prior to the taking over of the college and that all such liabilities-
D
shall be cleared by the managing committee of the college - which means
that on the date of taking over of the colleg~, the respondent was entitled
to be paid the contributory provident fund by the then management of the
college. Indeed, it is stated by the learned counsel for the State that it was
so paid to and received by the respondent. The correctness of the said
E statement has, however, not been put in issue and, therefore, we do not
express any opinion on the correctness of the said statement of fact. All
that we need say is that the respondent was entitled to receive the con-
tributory provident fund according to the relevant rules on the date of take
over of the said college from the private management. If he has not been
so paid, his remedy lies against the managing committee of the college in
F
office prior to the date of taking over. It may also be noticed that the gift
deed expressly specifies the only exception to the rule of "new entrants" it
recognised, viz., for the purpose of fitment in the appropriate scale of pay,
their service in the said appropriate scale of pay, their service in the said
grade under the private management shall be taken into account. No other
G exception is provided for or recognised by the gift deed. Accepting the
respondent's plea in this behalf would amount to reading yet another
exception into the said gift deed, viz., for the purpose of pension also the
service under the Private management shall be counted. This we cannot do
for more than one reason wherever it wanted to so provide the gift deed
H
STATE i·. D.D. KAUSHAL(B.P.JEEVAN REDDY,J.] 103

itself specified the exception to the rule of ''new entrants'; hence, no other A
exception can be read into it. Secondly, the gift deed provided for in the
gift deed, the rules, regulations, instructions and orders issned by the
government from time to time shall apply. In this view of the matter, the
second claim of the respondent is also liable to be rejected and this is what
the learned Single Judge of the High Court had opined. The Division
B
Bench, however, reversed him purporting to follow the decision of this
Court in N.N. Swamy. It is, therefore, necessary to carefully examine the
facts and the principle of the said decision to ascertain whether the
principle or ratio of the said decision has any relevance herein.

The facts of N.N. Swamy are the following: a private college known c
as "Khallikote College" was taken over by the government on and with
effect from March 9, 1971. A formal agreement was executed between the
managing committee of the college and the Governor of the State record-
ing the terms and conditions of transfer. They provided that the transfer
of the college to the government was of all the assets of the college. but D
without any liability. The managing committee continued to be liable for
the outstanding liabilities, if any, of the college for which the government
was not liable. The six writ petitioners, (who were respondents before this
Court) were all Readers in different faculties in the said college on the
date of taking over. They were in the pay scale of Rs. 510-860 and were
actually drawing pay less than Rs.600 per month on the date of take over. E
Two other, who are juniors (indeed one of them was only a lecturer and
not even a Reader) were in the pay scale of Rs. 600- 1000 and were drawing
the pay of Rs. 600 or above on the date of take over. On March 23, 1971,
the government issued a circular containing conditions governing the taking
over of the services of the teaching staff of the said college. Para 5 of the F
said circular provided that ''adhoc appointments shall be issued to all
Professors and such of the Readers in position, who on the date of
takeover were in receipt of pay of Rs. 600 per month or more, in the scale
of pay Rs. 600-1000 against posts of Readers. Readers who on the date of
takeover were in receipt of pay of less than Rs. 600 per month and all
lecturers in position on that date shall be given ad hoc appointment against G
t the post of lecturers in the scale of Rs. 260-780 with effect from the date
of take over." Pursuant to the said Para 5, appointment as Readers was
denied to the said six petitioners on the ground that they were drawing pay
of less than Rs. 600 per month on the date of take over. Since the adhoc
appointment was not given to them as Readers on the said ground, their H
104 SUPREME COlJ_RT REPORTS f1995] SUPP. 3 S.C.R.

A cases were also not referred to the Public Service Commission for regular
appointment as Readers. The said six lecturers complained against the
same by way of a writ petition in the Orissa High Court. Their claim was
examined by the High Court, as also by this Court, only with reference to
the circular dated March 23, 1971. This Court opined that the aforesaid
Para 5 of the circular was arbitrary and void being violative of Article 14
B of the Constitution. It was pointed out that the stipulation that Reader must
be drawing pay of not less than Rs. 600 per month on the date of take over ·
has no nexus with the object underlying the prescription of qualifications.
It was pointed out that the pay scales in private institutions are generally
lower than similar government institutions and that disqualifying a Reader
c from appointment to the said category under the government only on the
aforesaid ground was discriminatory. It was pointed out that another
Reader who was junior to all the said six writ petitioners was appointed as
Reader only because he was drawing a salary of Rs. 660 per month on the
date of take over.
D
Another aspect dealt with in N.N. Swamy related to the computation
of the period of qualifying service, which contention appears to have been
raised for the first time before this Court. The submission was this: on July
30, 1970, i.e., prior to the taking over of the said college by the government,
the government had prescribed qualifications for appointment as a Reader.
E One of the qualifications prescribed was "atleast eight years of teaching
experience as a lecturer"; the service of the said writ petitioners in the
category of lecturers rendered under the private management cannot be
-
taken into account and, therefore, they cannot be promoted as Readers
since they have not put in eight years service as lecturers under the
government. With respect tn'this submission, the Court question, this Court
F
(Bench comprising Goswami and Shinghal, .JJ.) made the following obser-
vation:

"When a fairly well-recognised institution, as in this case, run for
more than a century, is completely taken over by the Government
G for management, it is not merely taking over the land and buildings,
tables and chairs. It has to tackle, at the same time, a human
problem, that is to say, the fate of the teachers and the staff serving
that institution. The institution, with which we are concerned, was
taken over, by consent, as a going educational concerne and it goes
H without saying that it must be administered on sound lines having
STATE v. D.D.KAUSHAL[B.P.JEEVANREDDY,J.) 105

regard to quality, efficiency and progress in all respects. It is A
understandable that the employees had to join the new service
under the Government, for the first time, and so could be, in that
sense, fresh entrants. But to say that the teaching experience of
the Readers in the private institution is completely effaced to the
extent that they will not be even eligible, on the plea of absence
B
of teaching experience in Government service, for consideration
for appointment as Readers is a seliously glim issue. We feel assured
that such an argument had not been canvassed by the State in the
High Cowt on the basis of the Rules of July 19, 1971, since these
Rules came into force after the take over for which a separate circular
had already been issued to take care of the special exigency. Action c
under the Government circular of March 23, 1971, alone, was in
controversy in the High Court. The said circular took in recogni-
tion of the service in the private college in the case of two Readers
(Nos.9 and 10 in Annexlire I). The only differentia was, therefore,
the salary drawn by the Readers on the date of take over. That D
action based on the salary aspect under the said circular had to
stand the test of Article 16 in the High court, as well as before us.
The argument in favour of complete erasion of the past teaching
experience in the private college, first time presented before us,
fails to take note of the distinction between eligibility and
suitability". E

(Emphasis added)

It is evident from the above excerpt that the contention relating to
eight years' service as a pre-requisite was urged for the first time before F
this Court and had not been urged before the High Court. This Court,
therefore, observed that the circular of March 23, 1971 provided for
appointment of only two Readers (Juniors to the said six writ petitioners)
only because they were in receipt of pay of Rs. 600 or above and dis-
qualified the said writ petitioners in the ground of drawing pay less than G
Rs. 600 and that once the said ground of distinction is struck down as
violative of Article 16, the plea of lack of teaching experience, argued for
the first time before this Court, should fail. It cannot, therefore, be said
that this Court has ruled that the service rendered under the private
management should be taken into consideration. All that it said is that
denial of such service is "a seriously grim issue". But since there was no H
106 SUPREME COURT REPORTS [1995} SUPP. 3 S.C.R.

A occasion for pronouncing upon the said contention, no final opinion was
expressed. The said decision, therefore, does not support the case of the
respondents herein.

Another case.relied upon by the learned counsel for the respondents
before us is the decision of this Court in Chander Sain v. State of Ha1yana
B & Ors., [1994] 1 S.C.C. 750. Having regard to Para 10 of the conditions
subject to which the private institution was taken over and particularly in
the light of Para 3 of another memo dated March 28, 1979, this Court held
that the government was bound to take into account the service rendered
by the teachers under the private management for the purpose of calculat-
c ing the gratuity payable. According to the orders in force prior to the taking
over of the said institution, the teachers in private colleges were entitled
to same gratuity as was payable to similar teachers in government service.
Actually, the government was contributing seventy five percent of the total
deficit of the private colleges relating to salary, gratuity, etc. for the posts
approved by the government. The stand of the State of Haryana in that
D case was that teachers who had retired before the take over alone were
entitled to gratuity calculated on the basis of the service rendered by them
under the private management and not those who are absorbed in govern-
ment service and retired thereafter. Such a plea was _held to be unaccep-
table. Since the said decision turned on the particular facts and the
E language of the circulars concerned in that case, it is not necessary to set
out the fact~ of the said decision.

For the above reason, these appeals are liable to be allowed and are
accordingly allowed herewith. The judgment of the Division Bench is set
F aside and the judgment of the learned Single Judge is restored. There shall
be no order as to costs.

Before parting with this case, we must refer to a circumstance
brought to our notice. It is stated that in the year 1992, the Government of
Punjab has framed a scheme under Rule 22-A of the Punjab Privately
•G Managed Recognised Schools Employees (Security of Service) Rules, 1981
under scheme, it is stated by the learned counsel for the respondents, the
teachers in the private schools taken over by the government are entitled
to count their service under the private management for the purpose of
pension. We do not express any opinion on the said contention. It is enough
1 to observe that if any of the respondents in these appeals in entitled to any
STATE v. D.D. KAUSHAL [B.P. JEEVAN REDDY, J.] 107

benefit under the said scheme, he is entitled to claim the same according A
to law. It may also be in these appeals only, Civil Appeal No. 1104 of 1995
pertains to a teacher in a school while in all other appeals pertain so
lecturers in colleges. The learned counsel asked us to clarify further that
if in future the Government of Punjab frames a scheme with respect to
lecturers similar to the aforementioned scheme, this judgment should not
stand in the way. In our opinion, the said apprehension is wholly un-
B
founded. This Judgment does not preclude the government from conferring
such benefits as they may think appropriate on the respondents and other
similarly placed persons nor does this decision stand in the way of such
persons claiming the appropriate relief under such scheme, as and when
framed.

A.G.N. Appeal allowed.

J