The Supreme Court has held that service rendered by employees on contract, ad hoc, or daily-wage basis before their regularisation must be counted for computing pension benefits. The Court rejected the argument that only regularised service qualifies for pensionary purposes. Grounding the ruling in Articles 14 and 21, the bench emphasised that denying pension credit for earlier continuous service violates the right to livelihood and equality, as the employee rendered genuine work irrespective of the mode of appointment.

This ruling sits at the intersection of service law and constitutional rights, and tests three doctrines that CLAT PG examines repeatedly.

**The Right:** Pension is not a bounty but a property right and a facet of Article 21 (right to life including livelihood). The Supreme Court in D.S. Nakara v. Union of India (1983) first established that pension is a right, not a privilege, and any classification among pensioners must satisfy Article 14. This ruling extends that logic: denying credit for pre-regularisation service creates an arbitrary classification between employees who did identical work, violating the equality guarantee.

**The Limitation the Court Recognised:** The State may regulate service conditions, including pension eligibility, under its executive or legislative power. It is entitled to prescribe qualifying service periods. However, regulation cannot be used to extinguish rights that already crystallised through actual continuous service.

**The Test Applied:** The Court applied the twin-test under Article 14 — intelligible differentia and rational nexus with the object sought. It found no rational nexus between denying pension credit and any legitimate state objective, because the employee had already contributed labour and the employer had accepted and benefited from that service. The court also invoked the principle against unjust enrichment — the state cannot accept years of work and then deny its pensionary consequence.

**Doctrinal chain:** D.S. Nakara (1983) → State of Punjab v. Arun Gupta → Daya Ram v. State of Haryana → present ruling. Each step progressively expands what counts as 'qualifying service.' CLAT PG examines whether aspirants can apply the correct tier of this chain to a new fact pattern.