Retrenched Employees Rehired After Corporation Closure Can’t Count Earlier Service for Pension; Deputation Cases Stand on a Different Footing: Punjab & Haryana High Court
Case Name: Mahipal and Others v. State of Haryana and Others (and connected matters)
Date of Judgment: 26 May 2026
Citation: CWP-4949-2016 and connected cases
Bench: Justice Harpreet Singh Brar
Held: The Punjab & Haryana High Court held that employees of the Haryana State Minor Irrigation and Tubewells Corporation (HSMITC) who were retrenched upon closure of the corporation and subsequently re-employed in other organizations cannot claim counting of their past HSMITC service for pensionary benefits where the later appointment was a fresh appointment or re-employment. However, an employee who had already been working on deputation with the borrowing organization prior to closure of HSMITC and whose absorption reflected continuity of service would be entitled to count his earlier service for pension purposes.
Summary: A batch of writ petitions was filed by former employees of HSMITC seeking directions for counting their past service rendered in the corporation towards pension and other retiral benefits after their subsequent employment in various State organizations, including the Haryana State Agricultural Marketing Board (HSAMB), Haryana Vidyut Prasaran Nigam Limited, power utilities and other public bodies. The petitioners relied primarily on a Haryana Government Office Memorandum dated 7 January 2002 and earlier judgments granting similar benefits to certain employees.
The petitioners argued that HSMITC had been wound up in 2002, resulting in retrenchment of its employees. Thereafter, many of them secured appointments in different State organizations pursuant to policies framed for retrenched employees. They contended that the State’s policy permitted counting of service rendered in Boards, Corporations and Government undertakings for pensionary purposes and that similarly situated employees had already obtained relief through earlier decisions including Suresh Chand v. State of Haryana and Prem Parkash Gupta v. Haryana State Agricultural Marketing Board.
The respondents opposed the petitions by contending that the cases were governed not by Prem Parkash Gupta but by the Division Bench judgment in State of Haryana v. Nathu Singh. According to them, the petitioners had already been retrenched, their relationship with HSMITC had come to an end, and their later appointments were fresh appointments or re-employment rather than absorption with continuity of service. Therefore, the benefit of counting past service was unavailable.
While examining the controversy, the Court first analyzed the distinction between the precedents in Prem Parkash Gupta and Nathu Singh. Referring to a Full Bench decision rendered in 2026, the Court noted that there was no conflict between the two judgments because they operated in entirely different factual situations.
The Court observed that in Prem Parkash Gupta, the employee had already been serving on deputation in HSAMB before the closure of HSMITC and was absorbed into HSAMB before the corporation ceased operations. Consequently, there was continuity of employment and no severance of service. In contrast, Nathu Singh involved an employee who had been retrenched, received all service benefits, and was subsequently re-employed years later under a separate rehabilitation scheme as a fresh appointee. The Division Bench had therefore denied counting of prior service.
Applying these principles, the Court found that the petitioners in CWP-4949-2016 and most of the connected petitions had been retrenched after closure of HSMITC and were later appointed or re-employed in different organizations. They were unable to establish continuity of service or show that their appointments were anything other than fresh appointments. Consequently, their cases were held to be squarely governed by Nathu Singh, disentitling them from counting past HSMITC service for pensionary benefits.
The Court, however, carved out an exception for the petitioner in CWP-6693-2016, Kashmira Singh. The Court noted that he had been serving on deputation as a Junior Engineer in HSAMB before HSMITC closed down and had already given consent for permanent absorption as early as January 2000. Although administrative complications delayed his absorption, this Court had earlier directed HSAMB to absorb him, and he was ultimately absorbed with effect from 16 June 1998. The Court held that these facts clearly established continuity of service, bringing his case within the ratio of Prem Parkash Gupta rather than Nathu Singh.
The Court further noted that Kashmira Singh had retired without being granted pension and had instead been paid service gratuity. Since his earlier service was liable to be counted, the authorities were directed to reconsider his entitlement to pension and other consequential benefits. The Court also held that delayed release of gratuity and leave encashment entitled him to interest.
Decision: The Punjab & Haryana High Court dismissed CWP-4949-2016, CWP-6824-2016, CWP-7218-2016, CWP-18882-2016, CWP-19417-2016, CWP-27126-2016, CWP-2470-2017 and CWP-37165-2019, holding that the petitioners therein were not entitled to count their past HSMITC service for pensionary benefits because their later appointments constituted fresh appointments or re-employment after retrenchment. However, CWP-6693-2016 filed by Kashmira Singh was allowed. The Court directed that his past service in HSMITC be counted for pensionary purposes, ordered reconsideration of his pension claim, and awarded interest at 6% per annum on delayed payment of gratuity and leave encashment.