The Madhya Pradesh High Court has affirmed that judicial classification of a daily wage employee as permanent by a Labour Court creates an irrevocable statutory right to pension under the old pension regime, irrespective of administrative non-compliance or deductions under the National Pension Scheme. This ruling reinforces the primacy of judicial findings over procedural irregularities in service matters.
Background & Facts
The Dispute
The respondent, Hussain Khan, was engaged as a Chokidar on a daily wage/contingency paid basis by the State of Madhya Pradesh on 01.01.1978. He was never formally appointed under statutory recruitment rules, nor was he granted a sanctioned post. Despite this, he performed duties continuously for over four decades. The State treated him as an unskilled labourer governed by the National Pension Scheme (NPS), deducting contributions from his salary throughout his service.
Key Facts
- Engaged as Chokidar on 01.01.1978 on daily wage basis
- No formal appointment or sanctioned post ever granted
- Deductions towards National Pension Scheme made regularly from salary
- Filed industrial dispute seeking regularization and benefits
- Labour Court award dated 25.10.2013 classified his services as permanent and placed him in the permanent gang
- Further classified under permanent gang effective 30.05.2002
- State challenged Labour Court award in W.P. No. 2869/2014; High Court directed payment of minimum pay scale from classification date but did not confer regular status
- Continued to be treated as unskilled labourer under NPS until retirement
- Retired on superannuation on 31.10.2019
- Submitted representation for pension on 07.04.2021; no response received
- Filed Writ Petition No. 9534/2024 before Single Judge of Madhya Pradesh High Court
- Single Judge passed order dated 25.09.2025 directing settlement of pension and family pension with arrears and 6% interest
Procedural History
- 01.01.1978: Engagement as daily wage Chokidar
- 25.10.2013: Labour Court awards classification as permanent employee
- 30.05.2002: Classification under permanent gang confirmed
- 2014: State files W.P. No. 2869/2014 challenging Labour Court award
- 31.10.2019: Respondent retires
- 07.04.2021: Representation for pension submitted
- 2024: Writ Petition No. 9534/2024 filed before Single Judge
- 25.09.2025: Single Judge allows writ petition, directs pension and family pension
- 2026: State files Writ Appeal No. 549/2026 under Section 2(1) of MP Uchcha Nyayalaya Adhiniyam, 2005
- 12.05.2026: Judgment reserved
- 13.05.2026: Judgment pronounced
Relief Sought
The respondent sought: (1) grant of full pension under the old pension regime; (2) family pension; (3) arrears of pension from date of retirement; (4) interest at 6% per annum; and (5) payment within 60 days. The State opposed all claims, asserting that NPS deductions and absence of sanctioned post barred eligibility.
The Legal Issue
The central question was whether an employee judicially classified as permanent by a Labour Court can be denied pensionary benefits under the old pension regime solely because the employer deducted contributions under the National Pension Scheme and failed to regularize him through formal appointment or sanctioned post.
Arguments Presented
For the Appellant/State
The State contended that the respondent was never granted regular or permanent status under service rules, and therefore could not claim benefits under the old pension regime. It emphasized that deductions under the National Pension Scheme were made consistently, indicating the employee’s classification under NPS. It further argued that pension is a statutory right, not an equitable benefit, and that no provision entitles unskilled labourers to family pension. The State relied on administrative compliance with NPS rules and absence of sanctioned posts to deny claims.
For the Respondent
The respondent argued that the Labour Court’s award dated 25.10.2013, upheld by higher forums, legally classified him as a permanent employee. He submitted that the State’s failure to regularize him through formal appointment or provide a sanctioned post was its own administrative failure, and it could not use that failure to deprive him of statutory pension rights. He relied on the Supreme Court’s decision in Civil Appeal No. 14753/2024, which held that employers cannot take advantage of their own wrongs to deny benefits.
The Court's Analysis
The Division Bench emphasized that the scope of review in an intra-court appeal is narrow and interference is warranted only if the Single Judge’s order is perverse, arbitrary, or suffers from a patent error of law. The Court found no such infirmity.
The Court rejected the State’s reliance on NPS deductions as determinative of pension eligibility. It held that the right to pension flows from the legal status conferred upon the employee, not from administrative labeling or payroll practices. Once the Labour Court classified the respondent as a permanent employee, a statutory right to pension under the M.P. Work-charged and Contingency Paid Employees Pension Rules was triggered.
"The mechanical and perhaps erroneous deduction of NPS contributions by the Department cannot extinguish or override this substantive statutory right. Administrative actions regarding salary slip labeling cannot defeat judicial classification."
The Court then applied the binding precedent from Civil Appeal No. 14753/2024, wherein the Supreme Court held that an employer cannot deny pensionary benefits by citing procedural lapses or absence of sanctioned posts. The Court quoted the Supreme Court’s reasoning:
"The neglect/failure/omission of the respondents in not conferring permanent status to Madanlal can not afford any justification or good reason for them to take advantage of their own wrong in depriving Madanlal of his pensionary benefits."
The Court concluded that if no sanctioned post was available, the State was legally obligated to place the respondent on a supernumerary post. The State’s failure to do so could not be used to deprive him of benefits. The Single Judge’s order was therefore legally sound and consistent with binding precedent.
The Verdict
The writ appeal was dismissed. The order of the Single Judge dated 25.09.2025 was affirmed in its entirety. The State was directed to settle the respondent’s pension and family pension claims, including arrears from 31.10.2019, with interest at 6% per annum, within 60 days of the judgment. No costs were awarded.
What This Means For Similar Cases
Judicial Classification Overrides Administrative Non-Compliance
- Practitioners must argue that Labour Court or Industrial Tribunal orders conferring permanent status create enforceable pension rights, irrespective of whether formal appointments or sanctioned posts were issued
- Employers cannot rely on NPS deductions or payroll classifications to negate judicial findings of permanent employment
- The burden shifts to the State to prove that the judicial classification was legally invalid, not to prove procedural compliance
Employer’s Failure Cannot Be Used to Deny Statutory Benefits
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Where an employer fails to regularize an employee despite a judicial direction, it cannot invoke its own omission to deny pension or family pension
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The doctrine of ex turpi causa non oritur actio applies: no party can benefit from its own wrongdoing
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In cases involving work-charged or contingency employees, courts will look to the substance of employment status, not administrative labels
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Always cite Civil Appeal No. 14753/2024 as binding precedent when challenging denial of pension based on lack of sanctioned posts
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File writ petitions seeking pension even if NPS deductions were made, provided judicial classification exists
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Demand family pension for permanent employees classified by Labour Courts, even if initially categorized as unskilled labour
