BSES YAMUNA POWER LTD. versus SH. GHANSHYAM CHAND SHARMA & ANR. on 5 December 2019

1. By its order dated 26 May 2017 a Division Bench of the HighCourt of Delhi upheld the judgement of a Single Judge dated 21 MarchC2017 granting pensionary benefits to the first respondent. The judgementof the Single Judge directed the appellant to pay pensionary benefits tothe first respondent on the ground that he had completed twenty yearsof service and had ‘voluntarily retired’ and not ‘resigned’ from service.The appellant challenges these findings in the present appeal.

D2. The first respondent was appointed as a daily rated mazdooron 9 July 1968. His services were regularised on the post of a Peon on22 December 1971. The first respondent tendered his resignation on7 July 1990, which was accepted by the appellant with effect from10 July 1990. The first respondent was subsequently denied pensionarybenefits by the appellant on two grounds. First, that he had not completedEtwenty years of service, making him ineligible for the grant of pension.Second, in any case, by resigning, the first respondent had forfeited hispast services and therefore could not claim pensionary benefits.

3. The second question of whether by resigning, the firstrespondent forfeited his past service must be addressed at the outset. IfFthe first respondent’s resignation resulted in a forfeiture of past service,the question of whether he has completed twenty years of service isrendered irrelevant for such service would stand forfeited. In holdingthat the legal effect of the first respondent’s letter of resignation wouldamount to ‘voluntary retirement’, the Single Judge of the High Court ofDelhi relied on the judgement of this Court in Asger Ibrahim Amin vGLIC[1].

4. In Asger Ibrahim Amin, the appellant had resigned in 1991after completing twenty-three years of service with the Life InsuranceCorporation of India. When the appellant resigned, there existed noH1 (2016) 13 SCC 797

provision allowing for voluntary retirement. The Central Governmentsubsequently promulgated the Life Insurance Corporation of India(Employees) Pension Rules 1995[2] setting out the conditions to be fulfilledfor the grant of pension upon retirement and permitting, for the firsttime, employees to voluntarily retire after twenty years of service. Underthe LIC Pension Rules, pension on retirement was made retrospectivelyapplicable to employees retiring prior to 1995, however, the provisionsregarding voluntary retirement were not. The LIC Pension Rules alsostipulated that resignation amounted to a forfeiture of past service. Indeciding whether the appellant was entitled to pension under the LICPension Rules, Justice Vikramajit Sen speaking for a two judge Benchof this Court held:

“16. … [quoting Sheelkumar Jain v New India Assurance Co.Ltd. (2011) 12 SCC 197] The aforesaid authorities would showthat the court will have to construe the statutory provisionsin each case to find out whether the termination of serviceof an employee was a termination by way of resignation or atermination by way of voluntary retirement and whileconstruing the statutory provisions, the court will have to keep inmind the purpose of the statutory provisions…

17. The appellant ought not to have been deprived ofpension benefits merely because he styled his terminationof service as “resignation” or because there was noprovision to retire voluntarily at that time. The commendableobjective of the Pension Rules is to extend benefits to a class ofpeople to tide over the crisis and vicissitudes of old age, and ifthere are some inconsistencies between the statutoryprovisions and the avowed objective of the statute so as todiscriminate between the beneficiaries within the class, theend of justice obligates us to palliate the differences betweenthe two and reconcile them as far as possible. We would befailing in our duty, if we go by the letter and not by the laudatoryspirit of statutory provisions and the fundamental rights guaranteedunder Article 14 of the Constitution of India.”

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A5. The court in Asger Ibrahim Amin held that despite the use ofthe term ‘resignation’ in the appellant’s letter, the court had toindependently determine whether the termination of service amountedto a ‘resignation’ or a ‘voluntary retirement’. As the appellant in AsgerIbrahim Amin had fulfilled the prescribed years of service and, at thetime of his resignation there was no provision for voluntary retirement,Bthe Court held that the appellant had in fact ‘voluntarily retired’ and not‘resigned’. The LIC Pension Rules only made the provisions on retirementapplicable retrospectively and did not make the provisions with respectto voluntary retirement applicable retrospectively. However, in holdingthat the court must determine whether there existed a case for ‘voluntaryCretirement’ or ‘resignation’, the effect of the decision was to apply theprovisions on voluntary retirement retrospectively. The Court VikramajitSen expressly noted this:

“11. … The respondent Corporation has controverted the plea ofthe appellant that as the relevant date and time viz. 29-1-1991Dthere was no alternative for him except to tender hisresignation, pointing out that he could not have sought voluntaryretirement under Regulation 19(2-A) of the LIC of India (Staff)Regulations, 1960. If that be so, the respondent being a modelemployer could and should have extended the advantageof these Regulations to the appellant thereby safeguardingEhis pension entitlement. However, we find no substance in theargument of the respondent since Regulation 19(2-A) was, in fact,notified in the Gazette of India on 16-2-1996, that is, after thepension scheme case into existence with effect from 1-11-1993.

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6. In the present case, the Single Judge of the High Court of Delhirelied on the decision in Asger Ibrahim Amin to hold that the firstrespondent was entitled to pensionary benefits. The Single Judge notedthat the first respondent had completed more than twenty years of serviceand would have been eligible for pension upon voluntary retirement.GTherefore, despite the first respondent using the term ‘resignation’, onan independent determination of the facts of the case, the Single Judgeheld that he had in fact ‘voluntarily resigned’ from service’.

7. Mr C U Singh, learned Senior Counsel for the appellant, broughtto our attention that the correctness of the court’s approach in Asger H

Ibrahim Amin had been called into question by a co-ordinate bench ofthis Court in Senior Divisional Manager, LIC v Shree Lal Meena[3](“Shree Lal Meena I”), which referred the matter to a larger Benchof this Court. Thereafter, a three judge Bench of this Court wasconstituted and delivered a judgement in Senior Divisional Manager,LIC v Shree Lal Meena[4] (“Shree Lal Meena II”) overruling theview taken in Asger Ibrahim Amin. Both these judgements have beenplaced on the record.

8. The facts in Shree Lal Meena I and Shree Lal Meena IIwere analogous to those in Asger Ibrahim Amin. The respondentemployee had resigned after completing twenty years of service. Thecourt was called upon to determine whether the respondent’s ‘resignation’amounted to a forfeiture of his past service disentitling him from pensionor was in fact ‘voluntary retirement’. Justice Dipak Mishra (as the learnedChief Justice then was) speaking for a two judge Bench of this Court inShree Lal Meena I observed:

“28. … Needless to say, resignation has the effect of terminationof an employee. Voluntary retirement though has the effect oftermination of an employee yet it has different consequences. Inthe former case, the ex-employee could not be entitled to pension,whereas in case of voluntary retirement, the latter one, theemployee would be entitled to pension depending upon the termspostulated in the regulations or rules or the scheme. Rule 23 ofthe 1995 Rules specifically provides that on resignation, dismissal,removal, termination or compulsory retirement, the employee shallforfeit past service and he shall not qualify for pensionary benefit.Thus, resignation given under the 1995 Rules would not entitle anemployee to get pension.

29. … In Asger Ibrahim Amin, retrospectivity has been given toRule 31 [Pension on voluntary retirement], and for the said purposethe amendment to the 1960 Regulations, specifically Regulation19(2-A) has been taken recourse to. In our view, when Rule31 covers the field of voluntary retirement and does notmake it retrospective, there being a real difference betweenresignation and retirement, it is not seemly to read the 3 (2015) 17 SCC 43

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Aamended Regulations to the Rules to make the sameretrospective. Therefore, we are unable to concur with the viewexpressed in Asger Ibrahim Amin.”

(Emphasis supplied)

9. The court in Shree Lal Meena I took the view that theBprovision with respect to pension on voluntary retirement (Rule 31) wasnot applicable retrospectively because the relevant provision had notbeen enacted with retrospective effect. Crucially, the Court noted thatby making the provision on voluntary retirement applicable retrospectively,and making a determination in the facts of each case whether anCemployee had ‘resigned’ or ‘voluntarily retired’, the decision in AsgerIbrahim Amin obliterated the distinction between resignation andretirement. The court noted that there is a “real difference betweenresignation and retirement”. They cannot be used interchangeably, andthe court cannot substitute one for the other merely because the employee Dhas completed the requisite number of years to qualify for voluntaryretirement.

10. In Shree Lal Meena II, upholding the interpretation in ShreeLal Meena I, Justice Sanjay Kishan Kaul speaking for the three judgeBench, noted that the retrospective application of the provision onEvoluntary retirement in the LIC Pension Rules would lead to an absurdresult:

“19. What is most material is that the employee in this casehad resigned. When the Pension Rules are applicable, and anemployee resigns, the consequences are forfeiture of service,Funder Rule 23 of the Pension Rules. In our view, attempting toapply the Pension Rules to the respondent would be a self-defeating argument. As, suppose, the Pension Rules, wereapplicable and the employee like the respondent was inservice and sought to resign, the entire past service wouldbe forfeited, and consequently, he would not qualify forGpensionary benefits. To hold otherwise would imply thanan employee resigning during the currency of the Ruleswould be deprived of pensionary benefits, while anemployee who resigns when the Rules were not even inexistence, would be given the benefit of these Rules.”

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The Court noted that, if the approach followed in Asger Ibrahim Aminwas adopted in interpreting the LIC Pension Rules, an employee whoresigned after the enactment of the rules would not be entitled topensionary benefits but an employee who had resigned when the ruleswere not in force, but had completed the prescribed period of servicefor voluntary retirement, would be entitled to pensionary benefits. Suchan outcome could not be countenanced and would render nugatory theprovision which stipulated that upon resignation, past service stoodforfeited.

11. The Court in Shree Lal Meena II elucidated the distinctionbetween resignation and voluntary retirement in the following terms:

“22. … [quoting RBI v Cecil Dennis Solomon (2004) 9 SCC 461]In service jurisprudence, the expressions “superannuation”,“voluntary retirement”, “compulsory retirement” and “resignation”convey different connotations. Voluntary retirement and resignationinvolve voluntary acts on the part of the employee to leave service.Though both involve voluntary acts, they operate differently. Oneof the basic distinctions is that in case of resignation it can betendered at any time, but in the case of voluntary retirement, itcan only be sought for after rendering the prescribed period ofqualifying service. Another fundamental distinction is that in caseof the former, normally retiral benefits are denied but in case ofthe latter, the same is not denied. In case of the former, permissionor notice is not mandated, while in the case of the latter, permissionof the employer concerned is a requisite condition. Thoughresignation is a bilateral concept, and becomes effective onacceptance by the competent authority, yet the general rule canbe displaced by express provisions to the contrary.”

The above observations highlighted the material distinction betweenthe concept of resignation and voluntary retirement. The Court alsoobserved that while pension schemes do form beneficial legislation in adelegated form, a beneficial construction cannot run contrary to theexpress terms of the provisions:

“26. There are some observations on the principles of public sectorsbeing model employers and provisions of pension being beneficiallegislations (see Asger Ibrahim Amin v LIC). We may, however,note that as per what we have opined aforesaid, the issue cannot

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Abe dealt with on a charity principle. When the legislature, in itswisdom, brings forth certain beneficial provisions in the form ofPension Regulations from a particular date and on particular termsand conditions, aspects which are excluded cannot be included init by implication.”

BThe view in Asger Ibrahim Amin was disapproved and the courtheld that the provisions providing for voluntary retirement would notapply retrospectively by implication. In this view, where an employeehas resigned from service, there arises no question of whether he has infact ‘voluntarily retired’ or ‘resigned’. The decision to resign is materiallyCdistinct from a decision to seek voluntary retirement. The decision toresign results in the legal consequences that flow from a resignationunder the applicable provisions. These consequences are distinct fromthe consequences flowing from voluntary retirement and the two maynot be substituted for each other based on the length of an employee’stenure.D

12. In the present case, the first respondent resigned on 7 July1990 with effect from 10 July 1990. By resigning, the first respondentsubmitted himself to the legal consequences that flow from a resignationunder the provisions applicable to his service. Rule 26 of the CentralCivil Service Pension Rules 1972[5] states that:E

“26. Forfeiture of service on resignation

(1) Resignation from a service or a post, unless it is allowed to bewithdrawn in the public interest by the Appointing Authority, entailsa forfeiture of past service…”

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Rule 26 states that upon resignation, an employee forfeits pastservice. We have noted above that the approach adopted by the court inAsger Ibrahim Amin has been held to be erroneous since it removesthe important distinction between resignation and voluntary retirement.Irrespective of whether the first respondent had completed the requisiteGyears of service to apply for voluntary retirement, his was a decision toresign and not a decision to seek voluntary retirement. If this court wereto re-classify his resignation as a case of voluntary retirement, this wouldobfuscate the distinction between the concepts of resignation andvoluntary retirement and render the operation of Rule 26 nugatory. Such H5 CCS Pension Rules an approach cannot be adopted. Accordingly, the finding of the SingleJudge that the first respondent ‘voluntarily retired’ is set aside.

13. We now turn to the question of whether the first respondenthad completed twenty years in service. During the present proceedings,our attention was drawn to the fact that the first respondent had appliedfor voluntary retirement on 14 February 1990. By a letter dated 25 May1990 the appellant denied the first respondent’s application for voluntaryretirement on the ground that the first respondent had not completedtwenty years of service. It was thus urged that the appellant’s decisionto deny the first respondent voluntary retirement was illegal as the firstrespondent had completed twenty years of service.

14. This argument cannot be accepted. Even if he was deniedvoluntary retirement on 25 May 1990, the first respondent did notchallenge this decision but resigned, on 7 July 1990. The denial ofvoluntary retirement does not mitigate the legal consequences that flowfrom resignation. No evidence has been placed on the record to showthat the first respondent took issue with the denial of voluntary retirementbetween 25 May 1990 and 7 July 1990. To the contrary, in the legalnotice dated 1 December 1992 sent by the first respondent to the appellant,the first respondent admitted to having resigned. The first respondent’swrit petition was instituted thirteen years after the denial of voluntaryretirement and eventual resignation. In the light of these circumstances,the denial of voluntary retirement cannot be invoked before this Court toclaim pensionary benefits when the first respondent has admittedlyresigned.

15. On the issue of whether the first respondent has served twentyyears, we are of the opinion that the question is of no legal consequenceto the present dispute. Even if the first respondent had served twentyyears, under Rule 26 of the CCS Pension Rules his past service standsforfeited upon resignation. The first respondent is therefore not entitledto pensionary benefits.

16. For the above reasons, we accordingly allow the appeal andset aside the impugned order of the High Court of Delhi dated 26 May2017. There shall be no order as to costs.

Appeal allowed.

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