Supreme Court clarifies “Late Entrant” status for pension benefits in Armed Forces: Union of India vs. Abhiram Verma (2021)

Introduction

Date of the Judgment: 30 September 2021
Citation: (2021) INSC 673
Judges: M.R. Shah, J. and A.S. Bopanna, J.
Can an officer who resigns from the Armed Forces be considered a “late entrant” for the purpose of pension benefits? The Supreme Court of India addressed this question in a recent case involving a former Army Medical Corps officer. The core issue revolved around whether an officer who resigned due to a lack of promotional prospects could claim pension benefits as a “late entrant,” a category typically reserved for those who retire upon reaching the age of superannuation after completing a minimum service period. This judgment clarifies the distinction between resignation and retirement in the context of armed forces pension regulations. The judgment was delivered by a two-judge bench comprising Justice M.R. Shah and Justice A.S. Bopanna.

Case Background

The respondent, Abhiram Verma, joined the Indian Army’s Armed Medical Corps as a Short Service Commission Officer on 27 March 1992, at the age of 33 years and 10 months. He was granted a Permanent Commission on 28 January 1998, at the age of 39 years and 2 months. On 15 April 2000, citing a lack of promotional opportunities, he applied for resignation. This resignation was initially rejected on 4 September 2000. The respondent then filed a statutory complaint on 24 March 2001, which was also rejected on 14 March 2002. He then filed a writ petition before the High Court of Jammu & Kashmir, which was allowed on 11 October 2006, directing the Army to reconsider his resignation. Finally, his resignation was accepted on 31 January 2007, but he was denied terminal benefits, except for encashment of leave. The respondent’s name was officially removed from the Army Medical Corps on 23 April 2007. Subsequently, the respondent filed a writ petition before the High Court of Jammu & Kashmir, which was later transferred to the Armed Forces Tribunal. The Tribunal ruled in favor of the respondent, directing the appellants to process the respondent’s claim for terminal/pensionary benefits considering his qualifying service as 15 years as a “late entrant”. The Union of India then appealed this decision to the Supreme Court.

Timeline

Course of Proceedings

The respondent initially filed a writ petition before the High Court of Jammu & Kashmir, challenging the rejection of his resignation. The High Court allowed the petition, directing the Army to reconsider the resignation. Subsequently, after his resignation was accepted, the respondent filed another writ petition seeking gratuity and pension benefits. This petition was later transferred to the Armed Forces Tribunal. The Tribunal ruled in favor of the respondent, directing the appellants to process his claim for terminal/pensionary benefits, considering his qualifying service as 15 years as a “late entrant” under Regulation 15 of the Pension Regulations. The Union of India then appealed to the Supreme Court against this decision.

Legal Framework

The case primarily revolves around the interpretation of Regulation 15 of the Pension Regulations, 1961, concerning “late entrants.” According to this regulation:

“Regulation 15 – Late Entrants
15. For purposes of the regulations in this Chapter, a “late entrant” is an officer who is retired on reaching the prescribed age limit for compulsory retirement with at least 15 years commissioned service (actual) qualifying for pension but whose total qualifying service is less than twenty years (actual).”

This regulation defines a “late entrant” as an officer who retires upon reaching the mandatory retirement age with at least 15 years of commissioned service, but less than 20 years of total qualifying service. Additionally, Regulation 25(a) of the Pension Regulations, 1961, specifies that the minimum qualifying service for earning a retiring pension is 20 years. The court also considered the rules for premature retirement/resignation of AMC Officers dated 26.03.1998, which stated that officers who resign due to lack of career prospects are not entitled to terminal benefits. The court also considered the distinction between “resignation” and “voluntary retirement” as per service jurisprudence.

Arguments

Arguments by the Appellants (Union of India)

• The respondent’s case was one of “voluntary resignation” and not “voluntary retirement.” The respondent resigned due to a lack of promotional prospects.
• The respondent did not complete the qualifying service for voluntary retirement when he submitted his resignation on 15 April 2000.
• The respondent was not eligible for premature retirement on 15 April 2000, as he had only completed 15 years and 27 days of service.
• The minimum qualifying service for retiring pension is 20 years under Regulation 25(a).
• The benefit of being a “late entrant” under Regulation 15 is only for those who retire upon reaching the age of superannuation, not those who resign voluntarily.
• The Armed Forces Tribunal erred in treating the case of “voluntary resignation” as “voluntary retirement.” There is a vast difference between the two.
• Reliance was placed on the decision of the Supreme Court in BSES Yamuna Power Limited v. Ghanshyam Chand Sharma, (2020) 3 SCC 346, to highlight the difference between resignation and voluntary retirement.
• Even if the respondent had applied for “voluntary retirement,” he did not complete the qualifying service for premature retirement as of 15 April 2000.
• The Pension Regulations of the Army, 2008, relied upon by the respondent, are not applicable, as the respondent resigned in 2000 and his name was struck off from the Army Medical Corps in 2007. The Pension Regulations, 1961, are applicable.
• As per the applicable rules dated 26 March 1998, officers who resign due to lack of career prospects are not entitled to terminal benefits.
• There was no delay on the part of the authority in deciding the application for resignation.

Arguments by the Respondent (Abhiram Verma)

• The respondent should be entitled to the benefit as a “late entrant” under Regulation 15 and the benefit of Regulation 19(h) of the Pension Regulations, 2008.
• Regulation 19 of the Pension Regulations, 2008, is pari materia to the Pension Regulations, 1961.
• The respondent’s pre-commission service, totaling 6 years 4 months and 6 days, should also be counted towards his total qualifying pensionable service.
• The respondent’s total qualifying pensionable service is 22 years 11 months and 2 days (including pre-commission service and ante-date seniority).
• The Tribunal rightly treated the respondent as a “late entrant” due to the peculiar facts of the case, including the respondent being granted Permanent Commission at a late age and the stagnation in promotions.
• The respondent was 42 years old when he applied for premature severance, which was initially rejected on a false ground.
• The appellants delayed accepting the respondent’s request, which happened only after the intervention of the J&K High Court.
• Pension Regulations, 2008, should be applicable, as the date of retirement is irrelevant for granting benefits under new pension rules, citing D.S. Nakara v. Union of India (1983) 1 SCC 305 and K.J.S Buttar v. Union of India, (2011) 11 SCC 429.
• There is no difference between “resignation” and “voluntary retirement” in the context of the Army, as both require prior permission, citing Union of India v. Lt. Col. P.S. Bhargava, (1997) 2 SCC 28.
• The respondent’s real intention was to seek premature retirement, but he was told that as per Army HQ Policy dated 26 March 1998, premature release before 10 years of service has to be termed as “resignation.”

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether, in the facts and circumstances of the case, the respondent is entitled to the benefit of Regulation 15 of the Pension Regulations, 1961 as a “late entrant” and therefore entitled to the pensionary benefits?
2. Whether the resignation tendered by the respondent on 15.04.2000 can be said to be a “resignation” or “voluntary retirement”?

Treatment of the Issue by the Court

Authorities

Distinction between Resignation and Voluntary Retirement

• Senior Divisional Manager, LIC v. Shree Lal Meena, (2019) 4 SCC 479 – Supreme Court of India: The Court reiterated the distinction between resignation and voluntary retirement, noting that resignation can be tendered at any time, while voluntary retirement requires fulfilling eligibility criteria.
• BSES Yamuna Power Ltd. v. Ghanshyam Chand Sharma, (2020) 3 SCC 346 – Supreme Court of India: This case further clarified the difference between resignation and voluntary retirement, emphasizing that a beneficial construction cannot run contrary to the express terms of the provisions.
• RBI v. Cecil Dennis Solomon, (2004) 9 SCC 461 – Supreme Court of India: This case was cited in Shree Lal Meena (supra), highlighting that resignation can be tendered at any time, while voluntary retirement requires a prescribed period of qualifying service and permission from the employer.

Applicability of Pension Regulations

• D.S. Nakara v. Union of India (1983) 1 SCC 305 – Supreme Court of India: The court held that for the purpose of granting benefit under the new Pension Rules, the date of retirement is irrelevant, though the revised scheme would be operative from the date mentioned in the new Pension Rules.
• K.J.S Buttar v. Union of India, (2011) 11 SCC 429 – Supreme Court of India: The court reiterated the ruling in D.S. Nakara (supra) regarding the applicability of new pension rules.

Resignation and Voluntary Retirement in Armed Forces

• Union of India v. Lt. Col. P.S. Bhargava, (1997) 2 SCC 28 – Supreme Court of India: This case was cited by the respondent to argue that there is no difference between “resignation” and “voluntary retirement” in the Army. However, the Supreme Court distinguished this case, noting that in the present case, the respondent did not complete the minimum qualifying service.

Pension Regulations

• Regulation 15 of the Pension Regulations, 1961: Defines “late entrant” for pension benefits.
• Regulation 25(a) of the Pension Regulations, 1961: Specifies the minimum qualifying service for earning a retiring pension as 20 years.

Judgment

The Supreme Court held that the respondent’s application was a “resignation” and not a “voluntary retirement”. The Court observed that the respondent had applied for resignation due to lack of promotional aspects. The Court also noted that the respondent did not complete the minimum qualifying service for voluntary retirement. The Court further held that the respondent could not be considered a “late entrant” as he did not retire on reaching the prescribed age limit for compulsory retirement. The Court emphasized that the benefit of being a “late entrant” is only for those who retire upon reaching the age of superannuation, not those who resign voluntarily. The court also clarified that the Pension Regulations of the Army, 2008, were not applicable to the respondent’s case, as he resigned before the regulations came into force. The applicable regulations were the Pension Regulations, 1961. The court stated that the respondent, having tendered his resignation, must suffer the consequences and cannot now claim that he intended to seek premature retirement. The court also noted that the respondent did not fulfill the criteria for “voluntary retirement” as he had not completed 10 years of service. The court emphasized that a beneficial construction cannot run contrary to the express terms of the provisions.

The Court quoted the following from the judgment:

• “Therefore, from the aforesaid facts, the only conclusion would be that on 15.04.2000 the respondent tendered “resignation” for lack of promotional avenues/aspects and it was not a case of “voluntary retirement”.”
• “Therefore, having tendered the “resignation”, the respondent has to suffer the consequences and now cannot be permitted to take ‘U’ turn and say that what the respondent wanted was “premature retirement” and not “resignation”.”
• “As per Regulation 15, a “late entrant” is an officer who is retired on reaching the prescribed age limit for compulsory retirement with at least 15 years commissioned service (actual). As the respondent did not retire on reaching the prescribed age limit for compulsory retirement, the respondent cannot be said to be a “late entrant”.”

The court rejected the respondent’s argument that his pre-commission service should be counted, stating that the 2008 regulations were not applicable. The Court also rejected the argument that there is no difference between “resignation” and “voluntary retirement” in the Army, distinguishing the case cited by the respondent. The Court ruled that the respondent was not entitled to pensionary benefits as a “late entrant” under Regulation 15 of the Pension Regulations.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the clear distinction between “resignation” and “voluntary retirement” as defined in service jurisprudence and the specific conditions outlined in the Pension Regulations, 1961. The court emphasized that the respondent’s application was explicitly a “resignation” due to lack of promotional avenues and that he did not meet the criteria for “voluntary retirement” at the time of application. The court also highlighted that the benefit of being a “late entrant” under Regulation 15 is specifically for those who retire upon reaching the age of superannuation, not those who resign voluntarily. The court also emphasized that the respondent did not complete the minimum qualifying service for pension benefits and that the Pension Regulations of the Army, 2008, were not applicable to his case. The court’s reasoning was grounded in a strict interpretation of the applicable regulations and a rejection of the respondent’s attempt to recharacterize his resignation as a voluntary retirement. The court also emphasized the importance of adhering to the express terms of the provisions and not allowing for a beneficial construction that would run contrary to the regulations.