Service classification by source of recruitment fails Article 14 where similarly situated employees face different retirement ages.

The Supreme Court considered whether Jal Nigam employees could be subjected to different superannuation ages of 58 and 60 solely on the basis of source of recruitment. It held that such classification was impermissible under Article 14 because no intelligible differentia with a rational nexus to the rule's object was shown, and the earlier special service regulation continued to operate absent express repeal. The Court also distinguished relief: employees who had litigated received salary up to 60 years, while others were treated as notionally continued to 60 years for re-fixation of pay and retirement benefits, with arrears limited to retirement benefits.

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Issues: (i) Whether the Regulations, 2005 could validly prescribe different superannuation ages of 58 and 60 years for similarly situated employees of the Jal Nigam on the basis of source of entry into service; (ii) Whether employees who were made to retire at 58 years were entitled to consequential monetary and retirement benefits.

Issue (i): Whether the Regulations, 2005 could validly prescribe different superannuation ages of 58 and 60 years for similarly situated employees of the Jal Nigam on the basis of source of entry into service.

Analysis: The employees of the Nigam had historically been treated alike for purposes of superannuation under Regulation 31 of the 1978 Regulations, which applied the service conditions generally applicable to State Government servants. The Court held that once such common treatment had existed, a later classification based only on source of recruitment could not stand unless supported by an intelligible differentia having a rational nexus with the object sought to be achieved. No adequate justification for separating transferred employees from directly recruited employees was shown. Regulation 31, being a special regulation, was not displaced by the later Regulations, 2005 in the absence of express repeal, and even otherwise the advantageous provision would govern members of the same service.

Conclusion: The Regulations, 2005 were unconstitutional and ultra vires Article 14 in so far as they created two different retirement ages for similarly situated employees.

Issue (ii): Whether employees who were made to retire at 58 years were entitled to consequential monetary and retirement benefits.

Analysis: The Court held that employees who had approached a court were entitled to full salary up to 60 years, while employees who had not approached any court were not entitled to arrears of salary but had to be treated as having continued in service up to 60 years for the purpose of re-fixation of pay and retirement benefits. The earlier decisions governing the Nigam's service conditions supported grant of consequential relief, but the High Court's restriction of back wages to 20% was not sustained. The Court accordingly calibrated relief by distinguishing between arrears of salary and arrears of retirement benefits.

Conclusion: Full salary up to 60 years was allowed to litigating employees, and non-litigating employees were granted notional continuation up to 60 years with revised retirement benefits and arrears of retirement benefits only.

Final Conclusion: The common judgment of the High Court was substantially affirmed on the invalidity of the discriminatory retirement regime, but the relief was modified and structured differently for employees who had and had not approached the court.

Ratio Decidendi: A service classification based solely on source of recruitment is impermissible under Article 14 unless supported by an intelligible differentia with a rational nexus to the object of the rule, and a special service regulation continues to govern unless expressly repealed.

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