The Supreme Court has held that railway employees do not cease to be Central Government servants merely because their service conditions are governed by separate railway-specific rules. 

The bench of Justice Dipankar Datta and  Justice Satish Chandra Sharma restored benefits granted to an employee whose prior railway service had been excluded for calculating weightage in pay fixation by the Kerala State Electricity Board (KSEB). 

The dispute arose after the appellant had joined Indian Railways as a Junior Draftsman in 1990 and, after rendering more than ten years of regular pensionable service, moved to the Kerala State Electricity Board in 2001 as a Sub-Engineer. Upon his joining KSEB, the Railways transferred pro-rata pension liability, and the Board had acknowledged that the railway service was liable to be reckoned for pension purposes. The Board’s own order and long-term settlements also provided that regular pensionable Central Government service followed by Board service would count for computing qualifying service for weightage. 

The appellant was accordingly granted weightage and related benefits. However, years later, the Chief Internal Auditor of the Board objected to the pay fixation and directed cancellation of the benefit with recovery of the alleged excess amount paid, taking the view that railway service could not be treated as Central Government service for weightage purposes. 

The Single Judge of the Kerala High Court had ruled in favour of the employee, holding that railway service was required to be reckoned as Central Government service. However, a Division Bench later reversed that decision, observing that railway servants were governed by separate service rules and therefore could not be treated at par with Central Government employees for the purpose of such benefits. 

Examining the issue, the Supreme Court undertook an extensive analysis of the constitutional and statutory position of the Railways. The Court observed that Railways is not a separate legal entity or merely a public sector undertaking, but a department of the Government of India functioning under the Ministry of Railways. The Court also highlighted the enormous scale and strategic significance of Indian Railways, describing it as the country’s largest civilian employer and a critical component of national infrastructure. 

The Bench noted that while separate rules such as the Railway Services (Conduct) Rules and Railway Services (Pension) Rules exist, these are framed under Article 309 of the Constitution in the same manner as Central Civil Service Rules. The existence of distinct service rules, according to the Court, does not alter the status of railway employees as members of the civil service of the Union. 

The Court further observed that even the Central Civil Services Rules themselves specifically exclude railway servants from their operation, implying that railway servants are nevertheless Government servants and are merely governed by a different set of rules. 

Rejecting the reasoning adopted by the High Court, the Supreme Court held: “A railway servant does not cease to be a member of the civil service of the Central Government merely because his conditions of service are regulated by rules specific to the Railways.” 

The Court also expressed surprise over the Board’s decision to withdraw benefits after granting them for several years and after accepting pension contributions transferred by the Railways. It held that the Board could not arbitrarily reverse its own position and deny benefits already conferred under its own orders and settlements. 

The Supreme Court restored the earlier Single Judge ruling and directed that all benefits earlier granted to the employee should continue and should not be withdrawn. The Court further directed implementation of the relief within three months. 

Case Details

Case Title: Bency John Versus Kerala State Electricity Board Ltd & Ors. 

Citation: JURISHOUR-1415-SC-2026

Case No.:  SLP (C) NOS.1377-1380 OF 2021

Date: 26/05/2026

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