JUDGMENT [ENTITY], J.
1. This bunch of writ petitions (C.W.P. Nos. 1499/83, 2864/83, 4125, 4908, 1530, 2319 and 42[SECTION] of 1984. 1039, 5141, 41, 3678, 4072, 4712, 4720, 4721, 5584 of 1985 and 1171/87) will be disposed of by a common judgment.
2. We have referred to the facts as given in [CASE NUMBER].
3. The factual matrix has little relevance to the issues raised and canvassed at the hearing. However, a brief resume of the facts is necessary to appreciate the points urged.
4. The petitioner joined as a Beldar on August 1, 1951, as a work-charged employee in the office of the Sub-Divisional Officer, Pathankot. He had a regular service, without any break, from the date of joining the service till the date of his superannuation-October 3, 1977.
5. After his superannuation, the petitioner represented to the respondents for grant of pensionary benefits for the reasons that he had served the department regularly and the post against which he was appointed was a regular post. Even in the Industrial Award dated June 1, 1972(between the Workman and the Chief Engineer, PWD (B and R), Establishment Branch, [ACT], Patiala) which was published in the Government Gazette dated July 14, 1972, it was held by the Tribunal that the work-charged employees were entitled to be confirmed after five years of service. Therefore, the petitioner contends that he would be deemed to have been confirmed in the year 1956. Respondent No. 1, vide its letter No. 1177 B & R (4)-73 dated 6-2-1973, accorded sanction to the regularisation of all those employees of PWD (Irrigation Branch) working work-charged establishment with effect from 15th August, 1972, who had put in ten years, or more service on that date. The petitioner averred that respondent No. 1 has deprived him of the pensionary benefits on the strength of [SECTION] and [SECTION] or [SECTION] of the [ACT]. The petitioner was a Government servant and was paid. from the-Government revenue and Government funds, and could not be excluded from the purview of [ACT] in relation to pension. It is pleaded that the action is totally arbitrary and violative of [SECTION] of the [ACT]. as the said rule is discriminatory.
6. The respondents, in their return, substantially admitted all the factual pleas of the petitioner. It was, inter alia, pleaded that the petitioner's qualifying service for pension and gratuity starts from August 15, 1972. i. e. the date from which he is brought on the regular cadre. He did not have a regular service for ten years on the date of his superannuation, i.e. October 31, 1977, thus was not entitled to pensionary benefits. The service in the work-charged establishments does not count for pension under [SECTION] of the [ACT]. Volume 2.
7. The writ petition came up for hearing before [ENTITY], J. The learned judge opined that the question whether the benefit of pension and gratuity can be allowed to the work-charged employees only from the date they stand regularised in service or after taking notice of the whole of the service, i.e., from the date of joining as a work-charged employee is a matter of importance and has to be judged on the test of 'equality' provisions under [SECTION] of the [ACT]. A prayer was made to my Lord, the Chief Justice, for constitution of a larger Bench.
8. The matter was subsequently placed for hearing before [ENTITY] and [ENTITY], JJ. The Division Bench was of the prima facie opinion that the rules regarding the work-charged employees had remained in force for more than half a century and there was no direct decision of any court on the point. and the decision on the point may have far-reaching implications. It observed that the matter be decided by a Full Bench as the decision would bind the States of [ACT], Haryana and the Union Territory of Chandigarh It is in this manner that the matter has been placed before us.
9. What is pension? Is it a right to property or a bounty? The question came up for consideration before this Court in [PRECEDENT]. It was held that such a right constitutes 'property' and any interference will be a breach of [SECTION] of the [ACT]. The decision given by the learned single Judge was approved by the Letters Patent Bench in [PRECEDENT]. The Letters Patent Bench held that the pension granted to a public servant on his retirement is 'property' within the meaning of [SECTION] of [ACT] and he could not be deprived of the same. save by authority of law.
10. This matter again came up for hearing before a Full Bench of this Court in [ENTITY] v. State of [ACT] reported as ILR (1967) I Punj 278 : ([PRECEDENT]). The majority quoted with approval the principle laid down in the earlier two decisions of the Court referred to above and held that the pension is not to be treated as a bounty payable on the sweet-will and pleasure of the Government and that the right of superannuation pension. including its amount, is a valuable right vesting in a Government servant. The Full Bench decision was approved by their Lordships of the Supreme Court in [PRECEDENT], with the following observations :
"We are of the opinion that the right of the petitioner to receive pension is property under [SECTION] and by a mere executive order the State had no power to withhold the same. Similarly, the said claim is also property under [SECTION] and it is not saved by [SECTION]. Therefore, it follows that the order dated June 12, 1968, denying the petitioner right to receive pension affects the fundamental right of the petitioner under [SECTION] and [SECTION] of the [ACT] and as such the writ petition under [SECTION] is maintainable."
11. This view was re-affirmed in State of. [ACT] v. Iqbal Singh reported as AIR 1976 SC 667 where their Lordships of the Supreme Court wee pleased to observe as under :
"It has been urged by the appellant that the Full Bench decision of the High Court of [ACT] & Haryana in [ENTITY]'s case [PRECEDENT] is not in accordance with law as superannuation pension is a bounty and is given only as an act of grace. That ground is no longer available to the appellants in view of the decision of this Court in [PRECEDENT] where it was held that pension is not a bounty payable on the sweet will and pleasure of the Government and the right of a Government servant to receive it is property under [SECTION] of the [ACT] and the State cannot withhold the same by a mere executive order. It was further held in that case that the claim to pension was also property under [SECTION] of the [ACT] and was not saved by clause (v) thereof."
In view of this, the pension is a right to property and a Government servant cannot be deprived of this right. save by legislation which, too, has to satisfy the test of [SECTION] of the [ACT].
12. The principal submission raised by the learned counsel relates to the constitutional validity of [SECTION] of [ACT] called the Rules) which is in the following terms:
"If an employee was holding substantively a permanent post on the date of his retirement, his temporary or officiating service under the State Government, followed without interruption by confirmation in the same or another post, shall count in Full as qualifying service except in respect of :
(i) periods of temporary or officiating service in non-pensionable establishment;
(ii) periods of service in work-charged establishment; and
(iii) "
[SECTION] of the [ACT]. Vol. I may be noticed.
"1.4 These rules shall not apply to-
(i) any Government employee between whom and the Government. a specific contract or agreement subsists in respect of any matter dealt with herein to the extent up to which specific provision is made in the contract or agreement (see [SECTION] above).
(ii) any person for whose appointment and conditions of service special provision is made by or under any law for the time being in force; and
(iii) any Government employee or class of Government employees to whom the competent authority may. by general or special order. direct that they shall not apply in whole or in part. One of such classes of Government employees is that employed only occasionally or which is subject to discharge at one month's notice or less. A list of such Government employees is given in [SECTION].
Note : Different types of Model forms of agreement for use in the case of Government employees engaged on contract are given in Form Pb. CSR No. 1."
13. The principle underlying the guarantee of [SECTION] of the [ACT] is that all persons similarly circumstanced shall be treated alike. both in privileges conferred. and liabilities imposed. Equal laws would have to be applied to all in the same situation. and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same.
14. In the earliest stages of evolution of the [ACT], [SECTION] came to be identified with the doctrine of classification because the view taken was that [SECTION] forbid discrimination and there. will be no discrimination where classification making the differentia fulfils two conditions. viz. (i) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group, and (ii) that differentia has a rational relation to the objects sought to the achieved by the statute in question. See [PRECEDENT], their Lordships of the Supreme Court observed as under:
"The classification may be founded on differential basis according to objects sought to be achieved but what is implicit in it is that there ought to be nexus i.e. causal connection between the basis of classification and object of the statute under consideration. It is equally well settled by the decisions of this Court that [SECTION] condemns discrimination not only. by a substantive law but also by a law of procedure."
15. However, a new dimension was given to [SECTION] of the Supreme Court in [PRECEDENT]. In that case. the petitioner, as I.A.S. Officer, challenged the order of his transfer on several grounds including the violation of [SECTION]. It was pointed out for the first time that [SECTION] embodies guarantee against arbitrariness. Their Lordships were pleased to observe as under:
"From a positive point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of [SECTION], and if it affects any matter relating to public employment, it is also violative of [SECTION]. [SECTION] and [SECTION] strike at arbitrariness in State action and ensure fairness and equality of treatment."
[SECTION]. The legislation has not only to pass the above rest but it must also pass the test that it is not arbitrary. In [PRECEDENT], their Lordships of the Supreme Court were pleased to observe as under:
" what is the content and reach of the great equalising principle enunciated in this article? There can be no doubt that it is a founding faith of the [ACT]. It is indeed the pillar on which rests squarely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all-embracing scope and meaning for, to do so would he to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits [SECTION] strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades [SECTION] like a brooding omnipresence."
17. In re : [PRECEDENT], their Lordships of the Supreme Court re-stated the following four principles in these terms:
"The constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion or persons or things. The Courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is riot palpably arbitrary.
The principle underlying the guarantee of [SECTION] is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same.
The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience, it can recognise even a degree of evil, but the classification should never be arbitrary v. artificial or evasive.
The classification must not be arbitrary but must be rational, that is to say. it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others, and (2) that differentia must have a rational relation to the object sought to be achieved by the Act."
18. This proposition was affirmed and explained by the [ACT] Bench of the Supreme Court in [PRECEDENT], with the following observations :-
"That it must, therefore, now be taken to be well-settled that what [SECTION] strikes at is arbitrariness because any action that is arbitrary must necessarily involve negation of equality. The Court made it explicit that where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law, and is, therefore, violative of [SECTION]."
The same principle was reiterated in [PRECEDENT], with the following observations made by their Lordships of the Supreme Court :
"As a corollary to this well established proposition, the next question is, on whom the burden lies to affirmatively establish the rational principle on which the classification is founded correlated to the abject sought to be achieved? The thrust of [SECTION] is that the citizen is entitled to equality before law and equal protection of laws. In the very nature of things the society being composed of unequals in a welfare State will have to strive by bath executive and legislative action to help the less fortunate in society to ameliorate their condition so that the social and economic inequality in the society may be bridged. This would. necessitate a legislation applicable to a group of citizens otherwise unequal and amelioration of whose, lot is the object of State affirmative action. In the absence of the doctrine of classification such legislation is likely to flounder oh the bedrock of equality enshrined in [SECTION]. The Court realistically appraising the social stratification and economic inequality and. keeping in view the guidelines on which the State action must move as constitutionally laid down in [SECTION] of the [ACT], evolved the doctrine of classification. The doctrine was evolved to sustain a legislation or State action designed to help weaker sections of the society or some such segments of the society in need of succour. Legislative and executive. action may accordingly be sustained if it satisfies the twin tests of reasonable classification and the rational principle correlated to the object sought to be achieved The State, therefore. would have to affirmatively satisfy the Court that the twin tests have been satisfied. It can only be satisfied if the State establishes not only the rational principle on which classification is founded but correlates it to the objects sought to be achieved. This approach is noticed in Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC [SECTION]28 when the Court observed that a discriminatory action of the Government is liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary. but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."
19. In the light of the above, let us examine the validity of [SECTION] of the [ACT]. This rule says that the period of service in a work-charged establishment shall not be taken into account in calculating the qualifying service. After the services of a work-charged employee have been regularised he becomes a public servant. The service is under the Government and is paid by it. This is what was precisely stated in the Industrial Award dated June 1, 1972, between the workmen and the Chief Engineer, P.W.D. (B. & R), Establishment Branch, [ACT], Patiala, which was published in the Government Gazette dated July 14, 1972. Even otherwise. the matter was settled by the [ACT] Government Memo No. 14095-BRI(3)-72/5383 dated 6th February, 1973(Annexure P7) where it was stated that all those work charged employees who had put in ten years of service or more as on 15th August, 1972, their services would be deemed to have been regularised. Once the services of a work-charged employee have been regularised, there appears to be hardly any logic to deprive him of the pensionary benefits as are available to other public servants under [SECTION] of the Rules. Equal protection of laws must mean the protection of equal laws for all persons similarly situated. [SECTION] strikes at arbitrariness because a provision which is arbitrary involves the negation equality. Even the temporary or officiating service under the State Government has. to be reckoned for determining the qualifying service. It looks to be illogical that the period of service spent by an employee in a work-charged establishment before his regularisation has not been taken into consideration for determining his qualifying service. The classification which is sought to be made among Government servants who eligible for pension and those who started work-charged employees and their services regularised subsequently, and the others is based on any intelligible criteria and, before, is not sustainable at law. After the services of a work-charged employee have n regularised, he is a public servant like other servant. To deprive him of the pension is not only unjust and inequitable is hit by the vice of arbitrariness, and for se reasons the provisions of [SECTION] of the Rules have to be struck down being violative of [SECTION] of the [ACT].
20. In relaxation of [SECTION] of Rules by the respondent-authorities, the service of sixteen work-charged employees was counted for pensionary benefits and gratuity vide Government of [ACT], Department of Irrigation and Power (Irrigation Branch) Memo No. 2/5/81/- IB(6)/[SECTION]411 dated 7th November, 1982(Annexure P2) which reads as under :
"Sanction of the Government of [ACT] is accorded in relaxation of [SECTION] of [ACT] for counting of previous work-charged service towards gratuity in respect of [SECTION] work-charged employee of Nangal Workshop mentioned in the enclosed statement subject to the Conditions that no terminal benefit is/has been given to these work-charged employees at the time of regularisation of their service.
Sanction of the Government of [ACT] is also accorded to the counting of service of these [SECTION] work-charged employees towards pension as a special case provided no benefit has already been drawn by them in lieu of pensionary benefits."
If respondent No. 1 has granted exemption from rules in certain cases, we do not find any justifiable reason for excluding others from the grant of pension and gratuity benefits. For this reason too, we find [SECTION] is bad at law, as it enables the Government to discriminate between employees similarly situated.
21. In fairness to Mr. [ENTITY], the learned Addl. Advocate-General, the submission made by him may be adverted to. It was contended that (i) a work-charged employee completion of which his services come to an end, (ii) no order has been passed by the State Government confirming the petitioner against the post on which his services are regularised and resultantly he does not fulfil the conditions entitling a Government servant for pension, as envisaged by [SECTION] of the Rules. The counsel also tried to justify the Government action by placing reliance on [SECTION] of the [ACT] It was further contended that P.W.D. (B & R), Establishment Branch is not an industry and in support of this submission he relied on State of [ACT] v. [ENTITY], ILR (1982) 2 Punj and Har 544 : (AIR 1983 NOC 94)(FB) and [ENTITY] v. The Management of M/s. Executive Engineer, SYL Division, Kurukshetra, ILR (1984) 2 Punj & Har 215 : (1984 Lab IC 1[SECTION]5)(FB).
22. His first submission is divide of any merit. In para 3 of the petition, it is specifically averred that the petitioner had regular service, without any break of a single day, right from 1951 to the date of his superannuation in the year 1977. In the corresponding para of the written statement, this assertion has not been denied but the only plea taken is that his qualifying service for pension and gratuity starts from 15th August, 1972, i.e., the day from which he was brought on regular cadre; and that his service in the work-charged establishment does not count for pension under [SECTION] of the Rules. The plea that he has been in continuous service has not been denied. It appears that on the completion of one project, the petitioners were engaged in another project either with break in service or without any break. Every plea raised in a petition has to be specifically denied and in the absence of a specific denial, the assertions made in the petition will normally be deemed to have been admitted or at least the court can proceed on the basis that it is an uncontroverted fact. Since there is no denial by the respondents that the petitioner has been in continuous service since 1951, it would be presumed that he has been in continuous service till the date of superannuation. The second contention that no order has been passed by the State Government confirming. the petitioner against the post on which his services were regularised, and so on, is also without merit. The regularisation of services petitioner will be deemed to have been made permanent on the post against which his services have been regularised. This precisely appears to be the purport of the [ACT] Government Memo (Annexure P7), and the award of the Industrial Tribunal dated June 1, 1972, published in the Government Gazette dated July 14, 1972, referred to earlier. In the award, it was specifically held that the work-charged employees who had put in three years of continuous service are entitled to be made permanent and to be confirmed after having put in five yeas' service as demanded by the workmen. The award may bind the workmen and the management of the P.W.D.(B & R) Establishment Branch. Technically speaking it may not be binding on other branches of the P.W.D. Once the services of a work-charged employee are regularised he will be deemed to be entitled to the benefit under [SECTION] of the Rules.
23. The third submission that the Government action was justified in view of [SECTION] of the [ACT]. [ACT] deserves to be rejected simply on the ground that this rule has not remotest application to the facts of the present case. The learned counsel is not correct in saying that there is a specific contract or an agreement in the instant case, excluding the applicability of the [ACT], and more particularly, in the light of the fact that the services of the petitioner were regularised, and he would be deemed to have become a member of the service under the Government.
24. The last submission of the learned Addl. Advocate-General that the P.W.D. (B & R) Establishment Branch is not an industry is not sustainable in law. This question does not arise. However, the rulings relied upon by him, viz [ENTITY]'s case ([PRECEDENT]) and [ENTITY] case (supra) were expressly overruled in Des Raj v. State of [ACT] reported as (1988) 2 JT 145 : (AIR 1988 SC 1182). Their Lordships of the Supreme Court were pleased to hold as under :
"The main functions of the Irrigation Department when subjected to the Dominant Nature test clearly come within the ambit of industry. We have not been able to gather as to why even six years after the amendment has not been brought to the definition of industry in [SECTION] of the Act the same has not been brought into force. This court on more than one occasion has indicated that the position should be clarified by an appropriate amendment and when keeping in view the opinion of this Court, the law was sought to be amended. it is appropriate that the same should be brought into force as such or with such further alterations as may be considered necessary. and the legislative view of the matter is made known and the confusion in the field is cleared up."
25. Before we conclude we must observe that this judgment will be confined only to pension and gratuity.
26. In view of the foregoing discussion. the petitions are allowed. with no order as to costs.
27. Petitions allowed.