Holding

Under section 39(19) of the Rajendra Agricultural University Act, 1971 the State is liable to pay a proportionate pension to former government servants who resign while on deputation and are absorbed by the university, and the pension must be calculated in accordance with Rule 161(b) of the Bihar Pension Rules, 1950, not exceeding the substantive pay last drawn before resignation.

Summary

The respondents were government servants who were deputed to the Rajendra Agricultural University, resigned from government service and were subsequently absorbed as university employees. Upon their retirement, the State of Bihar denied liability for any pension, relying on section 39(20) of the Rajendra Agricultural University Act, 1971 and Rule 161(b) of the Bihar Pension Rules, 1950, arguing that the respondents were re‑employed and thus entitled only to a pension based on their last drawn government pay. The Patna High Court held that section 39(19) of the Act imposed a liability on the State to pay a proportionate pension to such former government servants. On appeal, this Court affirmed that liability, interpreting section 39(19) as mandating a proportionate pension and directing the calculation to be governed by Rule 161(b), which limits the sum of pay and pension to the substantive pay last drawn before resignation. The Court clarified that the proportionate pension is to be computed with reference to the last drawn government pay at the time of resignation, while any additional benefits earned after absorption by the university are not payable by the State. Consequently, the appeals were allowed and the State was ordered to calculate and pay the pension within three months.

Issues considered

Whether the State of Bihar is liable to pay proportionate pension to former government servants who resigned while on deputation and were absorbed into the Rajendra Agricultural University under section 39(19) of the Rajendra Agricultural University Act, 1971.
Whether section 39(20) of the Act and Rule 161(b) of the Bihar Pension Rules, 1950, exclude or limit such liability.
How the proportionate pension, if payable, should be calculated under the applicable rules.

Legislation cited

Bihar Pension Rules, 1950s. Rule 161(b)
Rajendra Agricultural University Act, 1971s. 39(19), s. 39(20)

Subjects

pensionproportionate pensiondeputationresignationabsorptiongovernment employeestate liabilityRajendra Agricultural University ActBihar Pension Rules

Judgment

A STATE OF BIHAR AND ORS. ETC. ETC.
v. •- i I
\..
B.S. MATHUR AND ORS. ETC. ETC.

AUGUST 24, 1995

B [K. RAMASWAMY AND B.L. HANSARIA, JJ.J

Rajendra Aglicultural Unive1:~ity Act, 1971: Sections 39( 19)-Scope of

Bihar Pension Rules, 1950: Rule 16l(b)-Scope of

C Se1vice Law.

Pension-State Government Employees-Deputation to Univer-
sity-Absorption-Resignation from Govemment se1vice-State liability to pay
prop01tionate pension under section 39( 19 )-Held, confined to last drawn pay
D and sum total as envisaged in proviso to sub-rule (b) of Rule 161.

Respondents, while working as Government servant in the appellant-
State, went on deputation to the Rajendra Agricultural University. After
their absorption in the University they resigned from Government service.
On their retirement from the University, the Government disowned the
E liability to pay pension on the ground that (i) under section 39(20) of the
Rajendra Agricultural University Act. 1971 the State was not liable to pay
any pension since the respondents had resigned and were re- employed in
the University; (ii) in view of Rule 161(b) of the Bihar Pension Rules, 1950
the respondents were not entitled to any pension in excess of the pension
calculable on the last substantive pay drawn by them. The High Court,
F relying on section 39(19) of the 1971 Act held that Government was liable
~o pay proportionate pension to the respondents. The State preferred
appeals before this Court.

Allowing the appeals, this Court
G HELD : 1. Section 39(19) of the Rajendra Agricultural University ·
Act, 1971 clearly indicates that if a Government servant, while on deputa-
tion to the University, had chosen to resign from Government service and
-
was absorbed in the University service the State shall bear proportionate
pension/compensation payable to such a former Government servant. At
H what rate, the University and the Government would proportionately bear
48
STATE v. RS.MATHUR 49

\ ~ the compensation/proportionate pension has not been dealt with under the A
Act. Therefore, necessarily the Government has to fall back upon Rule
16l(b) of the Bihar Pension Rules, 1:950. (51-C-D]

2. f\ reading of Rule 161(b) clearly indicates that by a fiction it would
apply to the University employees of the erstwhile Government servant
deeming them to be re-employed in the University. The Proviso makes it B
clear that the sum total of pay plus pension would not exceed the substan-
tive pay last drawn by him before discharge. In other words, if a Govern-
ment servant opts for absorption in University service after resignation
from Government service he is entitled to the sum total of pay plus pension
which would not exceed the substantive pay last drawn by him before he C
had tendered his resignation and was discharged by the Government. The
proportionate pension of such Government employee should be calculated
with reference to the last drawn pay of the Government employee at the
time of acceptance of his resignation by the Government. The rest of the
benefits, which such an employee would get with reference to the last drawn O
pay on his retirement from the University service on llttaining superan-
nuation would not be borne by the Government. [52-A-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7874 of
1995 Etc.
E
From the Judgment and Order dated 18.12.91 of the Patna High
Court in C.W.J.C. 911 of 1991 (R).

B.B. Singh for the Appellants.

D.P. Mukherjee, Sanjoy Kr. Ghosh and B.K. Gupta for the Respon- F
dents.

The following Order of the Court was delivered :

Leave granted.
G
We have heard the counsel for the parties. These appeals by special
leave arise from the order dated December 18, 1991 of the Division Bench
of Patna High Court at Ranchi in C.W.J.C. No. 911/91.

The facts are not. in dispute. Respondent No. 1 was appointed as a
Government servant on April 13, 1955 and at the relevant time when he H
50 SUPREME COURT REPORTS (1995) SUPP. 3 S.C.R.

A went on deputation he was Senior Research Assistant working in the
Agriculture Department. He was transferred i.e. sent on deputation to the
~- '
Rajendra Agricultural Uni:rersity. He tendered his resignation in 1977 and
was absorbed as an employee of the University. Similarly, respondents 2-9,
while working as Government servants, went on deputation to the ·Rajendra
University and they resigned in 1981 and were absorbed as University
B employees. On their retirement, a question arose whether the Government
is liable to pay pension and if so, to what extent. Since the Government
- was disowning the liability to pay pension, they approached the High Court
under Article 226 of the Constitution. The stand taken by the Government
was that under s.39(20) of the Rajendra Agricultural University Act,
c 1971(for short, 'the Act'), they must be deemed to be re-employed and,
therefore, the State was not liable to pay any pension since they resigned
and were re-employed in the University. The Government also relied upon
letter bearing No. 1/A. P.G.O. 30/85 Agri. Patna dated 11.5.1990 and
contended that rule 161(b) of Bihar Pension Rules, 1950 (for short, 'the
D Rules') would stand attracted to the respondents and, therefore, the
respondents are not entitled to any pension in excess of the pension
calculable on the last substantive pay drawn by them.

The High Court, relying upon s.39(19) of the Act, which is pari
mate1i{l with the provisions of the Bihar Agricultural University Act, held
E that the Government's liability to pay pension still subsists. Therefore, the
Government is liable to pay the compensation/proportionate pension to the
respondents. Accordingly allowed the writ petition.

Mr. B.B. Singh, learned counsel for the State, contended that since
the respondents had resigned and were re-employed by the University, by
-F operation of the instructions issued in letter dated 11.5.1990, they must be
deemed to have been re-employed. Therefore, they are not entitled to
pension higher than what they would have got, had they remained as
Government servants by operation of Rule 161(b) of the Rules. Though he
contended that the Government does not bear the proportionate pension,
G we do not think that the stand taken by the Government is at all tenable.

Section 39(19) of the Act reads thus :

''Such Government servants who choose to resign government
service and enter the service of the University shall be considered
H for compensation, proportionate pension, provided that no such
STATE v. B.S. MATHUR 51

• ' J> compensation, proportionate pension shall be allowed to any A
employee, who resigns in spite of being required by Government
to serve on some other post, under the Government carrying
emoluments not less than his pay at the time of such resignation."

The first part of section clearly indicates that such Government
servants while on deputation with the University service who choose to B
resign from Government service and enter the service of the University,
shall be considered for compensation/proportionate pension. The other
part is not material for the purpose of this case. Hence, it is not necessary
to consider the same. Therefore, it is clear that if a Government servant,
while on deputation in the University, had chosen to resign from Govern- c
ment service and was absorbed in the University service, by operation of
s.39(19) the State bears proportionate pension/compensation payable to
such a former Government servant.

At what rate, the University and the Government would propor-
tionately bear the compensation/proportionate pension has not been dealt D
with under the Act. Therefore, necessarily the Government has to fall back
upon the Rule 161(b), which envisages thus :

"161. (b) A Government servant on re-employment should draw
the initial pay of the post unless Government sanction advance E
increments under Rule 83 of the Bihar Service Code, provided
always that the sum total of pay plus pension does not exceed the
substantive pay last drawn by him before discharge. Where the sum
total exceeds the last substantive pay only so much of the pension
may be allowed to be drawn as not to make the total of pension
plus the initial pay of the post exceed the substantive pay last F
drawn.

Note 1 - In cases of re-employment of pensioners part of whose
pension is recoverable from other Government - provincial or
central - If the sum total of pay plus pension exceeds the substan- G
th;e pay drawn at the time of discharge, the pay on re- employment
should not be fixed by keeping the pension in abeyance either in
full or in part i.e., the reduction in such cases should be made in
the pay itself instead of keeping the pension in abeyance.

Note 2 c These restrictions do not apply to ex- policemen whose H
52 SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A pension does not exceed Rs. 10 a month."

A re'ading of the Rule clearly indicates that by a fiction it would apply
to the University employees of the erstwhile Government servant deeming
them to be re-employed in the University. Such Government servant should
draw his initial pay of the post unless the Government sanctions advance
B increments under rule 83 of the Bihar Service Code. The proviso makes it
clear that the sum total of pay plus pension would not exceed the substan-
tive pay last drawn by him before discharge. In other words, if a Govern-
ment servant opts for absorption in University service after resignation
from Government service, he is entitled to the sum total of pay plus pension
C which would not exceed the substantive pay last drawn by him before he
had tendered his resignation and was discharged by the Government. In
other words, the proportionate pension of such Government employee
should be calculated with reference to the last drawn pay of the Govern-
ment employee at the time of acceptance of his resignation by the Govern-
ment. The rest of the benefits, which such an employee would get with
D reference to the last drawn pay on his retirement from the University
service on attaining superannuation, would not be borne by the Govern-
ment. The proportionate liability which the Government is required to
bear, by operation of section 39(19) would be with reference to the last
drawn pay and the sum total as envisaged in proviso to sub-rule (b) of Rule
E 161.

The appeals are accordingly allowed. The matter is clarified and the
Government and the University shall accordingly calculate the pension and
make payment within three months from the date of the receipt of the
order. No.costs.

T.N.A. Appeals allowed.