October 6, 2025
Staff Report
LAHORE
In a significant ruling that strengthens the rights of retired employees, the Supreme Court of Pakistan has declared pension a ‘constitutional right’ protected under Articles 9 and 14 of the Constitution, setting aside attempts by the Oil and Gas Development Company Limited (OGDCL) to deny additional pension benefits to a former employee.
A two-member bench comprising Justice Syed Mansoor Ali Shah and Justice Aqeel Ahmed Abbasi delivered the judgment on September 17, 2025, in favor of Shakeel Ahmed Kayani, who had challenged the denial of additional pension benefits after retiring from OGDCL following more than 40 years of service.
Pension is a constitutional right, not bounty
In strongly worded observations that establish important legal precedent, Justice Syed Mansoor Ali Shah emphasised the constitutional dimension of pension rights, stating, “We also wish to reiterate that pension is not a matter of bounty, charity, or benevolence – it is a right protected under Articles 9 and 14 of the Constitution of the Islamic Republic of Pakistan, 1973 and inseparably linked with the right to life, dignity and livelihood.”
The judgment went further to characterise pension as deferred compensation earned through years of service. “It should be taken more seriously for those public servants for whom it is a crystallized return on years of faithful service, a form of deferred wages earned through the sweat, labour, and loyalty of an employee,” Justice Shah wrote.
The Court emphasised the human dimension of pension entitlements. “To deny or withhold pension is to strip a person of the security they have justly earned, leaving them exposed to indignity, vulnerability, and want. Therefore this right must be protected in the shape of the grant of pension that is not only adequate but also predictable.”
Background of the case
Shakeel Ahmed Kayani began his career with the Pakistan Military Accounts Department Office in Wah Cantt on August 17, 1980. He later joined the Oil and Gas Development Corporation (OGDC) as an Accounts Assistant (BPS-14) on February 2, 1995. During his tenure, the Corporation underwent a fundamental transformation when it was converted into the Oil and Gas Development Company Limited (OGDCL) through the Oil and Gas Development Corporation (Reorganization) Ordinance, 2001.
Kayani retired on June 17, 2021, as a Senior Accountant (E-04) after rendering a total of 40 years and 10 months of service, including his previous government service. Upon retirement, he claimed additional pension benefits under Regulation 15(1A) of the Oil and Gas Development Corporation Pension and Gratuity Regulations, 1985, which entitled employees to 2% of gross pension for each extra year of service beyond 30 years, subject to a maximum of 10%.
However, OGDCL denied his claim through an office memorandum dated August 20, 2021. The Islamabad High Court dismissed his constitutional petition on February 2, 2022, prompting Kayani to approach the Supreme Court.
Govt directives can’t override statutory protection
Muhammad Bashir Khan, ASC, representing the petitioner, argued that his client was entitled to additional pension under Regulation 15(1A) of the Pension Regulations. He contended that as a former employee of the Corporation, Kayani’s terms and conditions of service were statutorily protected under Section 5 of the Ordinance, 2001.
The petitioner’s counsel contended that Regulation 265 of the Oil and Gas Development Corporation Employees (Service) Regulations, 1994—which provides that directives or instructions issued by the Federal Government shall be complied with by the Company—could not override the statutory protection extended under the 2001 Ordinance. Therefore, he argued, the Finance Division’s Office Memorandum dated September 4, 2001, which discontinued additional pension for civil servants, had no bearing on former Corporation employees.
Khan also referred to letters dated February 1, 2005, and May 23, 2010, issued by OGDCL itself, declaring that the company’s employees were not civil servants but employees of an autonomous body governed by its own regulations. This distinction, he argued, was crucial in establishing that federal government circulars for civil servants did not apply to OGDCL employees.
Govt’s memorandum discontinued additional pension benefits
Sultan Mazhar Sher Khan, ASC, representing OGDCL, defended the company’s decision by arguing that under Regulation 265 of the Service Regulations, the Board of Directors was bound by directives and instructions issued by the Federal Government. He pointed to the Finance Division’s Office Memorandum dated September 4, 2001, as a binding directive that discontinued additional pension benefits.
The company’s counsel specifically highlighted Clause C of Part-III (Pension and Commutation) of the memorandum to argue that since additional pension had been discontinued for federal government employees, it was equally binding on OGDCL.
As an alternative argument, the respondent’s counsel submitted that the Board of Directors, in their 145th meeting held on January 17, 2013, had resolved that the maximum scale of gross pension would remain equal to 70% of pensionable salary upon completion of 30 years or more of service at retirement. This resolution, he contended, precluded the grant of additional pension for extra years of service.
Govt memorandum not a direct directive to OGDCL: SC
The Supreme Court systematically dismantled both arguments presented by OGDCL. Examining the 2001 Office Memorandum, the Court found it was titled “Revision of Basic Pay Scales and Fringe Benefits of Civil Employees (BPS-1-22) of the Federal Government (2001)” and was clearly addressed to civil employees of the federal government, not to OGDCL.
“Nowhere from the reading of the Office Memorandum can it be shown that it is a directive/instruction issued to the Board of Directors of the Company,” Justice Shah wrote. The Court noted that there was no evidence that the memorandum was separately dispatched to OGDCL’s Board as a directive, nor had the company produced any receipt of such communication.
Regarding the 2013 Board resolution, the Court held it was “inconsequential as the same is in violation of Section 5 of Ordinance, 2001 read with Regulation 15(1A) of the Pension Regulations”. The judgment stated that the Pension Regulations, framed in 1985 and amended in 1987 with prior approval of the Federal Government, enjoyed higher statutory force than a Board Resolution and could not be overridden without federal approval.
The judgment also addressed broader questions of corporate governance and autonomy of state-owned enterprises. The Court said that OGDCL’s conversion into a public limited company in 2001 “strengthened, rather than diluted” its autonomy, shifting its governance model closer to the private sector.
“Public corporations are designed not as extensions of government departments but as independent bodies entrusted with bringing efficiency, autonomy, and commercial discipline to vital sectors of economic activity,” wrote Justice Shah.
The Supreme Court set aside the Islamabad High Court’s judgment and declared that Kayani was entitled to additional pension under Section 5 of the Ordinance, 2001, read with Regulation 15(1A) of the Pension Regulations. OGDCL was directed to pay the additional pension within 30 days and submit a compliance report to the Registrar. The judgment concluded with a reminder of pension’s constitutional significance: “To trifle with pension is, therefore, to trifle with constitutional justice itself.”