LEGAL ISSUE: Whether an employee’s application for voluntary retirement, if not explicitly accepted, can be deemed accepted, especially when followed by a resignation.
CASE TYPE: Service Law
Case Name: Rajasthan State Road Transport Corporation Ltd. & Ors. vs. Smt. Mohani Devi & Anr.
Judgment Date: 15 April 2020
Introduction
Date of the Judgment: 15 April 2020
Citation: (2020) INSC 298
Judges: R. Banumathi, J. and A.S. Bopanna, J.
Can an employee who initially applied for voluntary retirement, but later submitted a resignation, be considered to have voluntarily retired if the initial application was not explicitly accepted? The Supreme Court of India addressed this question in a recent case involving the Rajasthan State Road Transport Corporation. The core issue revolved around whether the employee’s resignation could be treated as a continuation of his earlier request for voluntary retirement, thereby entitling his widow to retiral benefits. This judgment was authored by Justice A.S. Bopanna.
Case Background
The husband of the respondent, Smt. Mohani Devi, was employed as a conductor at the Alwar Depot of the Rajasthan State Road Transport Corporation (RSRTC). He was appointed on 15 March 1979. On 28 July 2005, he applied for voluntary retirement citing health reasons. However, no action was taken on this application. Subsequently, on 3 May 2006, he submitted his resignation, stating he was under depression and his health had further deteriorated. The resignation was accepted on 31 May 2006, and he was relieved of his duties, with benefits paid as per resignation. Immediately thereafter, he submitted another application stating that he had mistakenly mentioned ‘resignation’ and that he intended to retire voluntarily, referring to his earlier application. He passed away on 14 April 2011. Following his death, Smt. Mohani Devi approached the High Court seeking retiral benefits, claiming her husband should be deemed to have voluntarily retired.
Timeline
| Date | Event |
|---|---|
| 15 March 1979 | Husband of the respondent appointed as conductor at Alwar Depot of RSRTC. |
| 28 July 2005 | Husband applies for voluntary retirement citing health reasons. |
| 3 May 2006 | Husband submits resignation due to depression and deteriorating health. |
| 31 May 2006 | Resignation accepted by RSRTC, and husband relieved of duties. |
| Immediately after 31 May 2006 | Husband submits an application stating his intention was voluntary retirement, not resignation. |
| 14 April 2011 | Husband of the respondent passes away. |
| 2012 | Smt. Mohani Devi files a writ petition before the High Court of Rajasthan. |
Course of Proceedings
The learned Single Judge of the Rajasthan High Court ruled in favor of the respondent, stating that forcing an employee with deteriorating health to work would be oppressive. The court also noted that the voluntary retirement application was not decided within the prescribed period under Clause 19-D(2) of the Pension Scheme. Relying on Clause 18-D(2) of RSRTC Standing Orders, which allows employees with pensionable service to seek voluntary retirement, the court held that the husband should be deemed to have voluntarily retired. The Rajasthan High Court directed the appellants to treat the respondent’s husband as having voluntarily retired and release the retiral benefits. Aggrieved by this order, the appellants filed an appeal before the Division Bench, which was dismissed, upholding the decision of the single judge.
Legal Framework
The key legal provisions relevant to this case include:
- Rule 50 of the Rajasthan Civil Services Pension Rules, 1996: This rule stipulates the conditions for voluntary retirement. It states that an employee with 20 years of qualifying service is eligible to apply for voluntary retirement. Sub-Rule (2) specifies that the notice of voluntary retirement given by the employee requires acceptance by the appointing authority.
- Section 4(1)(b) of the Payment of Gratuity Act, 1972: This section states that gratuity is payable if the termination of employment is after 5 years of continuous service, including cases of resignation.
Arguments
Appellant’s Arguments:
- The appellant argued that the High Court erred in deeming the voluntary retirement application as accepted, as there was no explicit acceptance by the employer.
- They contended that the employee had submitted his resignation, which was accepted, and he was relieved of his duties with all benefits payable to a resigning employee.
- The appellant further argued that the employee had charge sheets pending against him at the time of applying for voluntary retirement, which would have given the employer the right to not accept the voluntary retirement application.
- They submitted that the employee did not raise any issue regarding his resignation during his lifetime, and the writ petition was filed belatedly after his death.
Respondent’s Arguments:
- The respondent argued that her husband had initially applied for voluntary retirement due to deteriorating health, and forcing him to work would be oppressive.
- She contended that the voluntary retirement application was not decided within the prescribed period as per Clause 19-D(2) of the Pension Scheme.
- The respondent submitted that her husband’s subsequent resignation should be considered as a continuation of his earlier request for voluntary retirement.
- The respondent also argued that even if it is a case of resignation the deceased husband was entitled to the payment of gratuity as he had put in the qualifying service.
| Appellant’s Submissions | Respondent’s Submissions |
|---|---|
|
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Innovativeness of the argument: The respondent’s argument that the resignation should be seen as a continuation of the voluntary retirement application is innovative, seeking to prioritize the employee’s initial intent due to his health condition.
Issues Framed by the Supreme Court
The Supreme Court framed the following issue for consideration:
- Whether the husband of the respondent had acquired an indefeasible right to seek voluntary retirement from service, and whether the High Court was justified in concluding that his subsequent resignation should be considered as an application for voluntary retirement.
Treatment of the Issue by the Court
| Issue | Court’s Treatment |
|---|---|
| Whether the husband of the respondent had acquired an indefeasible right to seek voluntary retirement from service, and whether the High Court was justified in concluding that his subsequent resignation should be considered as an application for voluntary retirement. | The Supreme Court held that the employee did not acquire an indefeasible right to voluntary retirement as the application required acceptance by the appointing authority, which was not given. The court also held that the High Court was not justified in treating the resignation as a continuation of the voluntary retirement application. |
Authorities
The Supreme Court considered the following authorities:
- Rule 50 of the Rajasthan Civil Services Pension Rules, 1996: This rule was considered to determine the conditions for voluntary retirement. The court noted that sub-rule (2) requires acceptance of the voluntary retirement notice by the appointing authority.
- Section 4(1)(b) of the Payment of Gratuity Act, 1972: This provision was considered to determine the eligibility for gratuity payments, which includes termination of employment after 5 years of continuous service, even in cases of resignation.
Authorities Considered by the Court
| Authority | How it was used |
|---|---|
| Rule 50 of the Rajasthan Civil Services Pension Rules, 1996 | The court used this rule to highlight that voluntary retirement requires acceptance by the appointing authority, which was not given in this case. |
| Section 4(1)(b) of the Payment of Gratuity Act, 1972 | The court used this provision to determine that the employee was eligible for gratuity even after resignation, provided he had completed 5 years of continuous service. |
Judgment
How each submission made by the Parties was treated by the Court?
| Party | Submission | Court’s Treatment |
|---|---|---|
| Appellant | The High Court erred in deeming the voluntary retirement application as accepted. | Accepted. The Supreme Court agreed that the High Court erred in deeming the voluntary retirement application as accepted because there was no explicit acceptance. |
| Appellant | The employee submitted his resignation, which was accepted. | Accepted. The Supreme Court acknowledged that the employee had submitted his resignation, which was accepted by the employer. |
| Appellant | The employee had charge sheets pending against him. | Accepted. The court noted that the employee had charge sheets pending against him and that the employer was within its right to not consider his voluntary retirement application. |
| Appellant | The writ petition was filed belatedly after the employee’s death. | Accepted. The Supreme Court noted that the writ petition was filed belatedly and after the death of the employee. |
| Respondent | Husband applied for voluntary retirement due to deteriorating health. | Acknowledged. The court acknowledged the husband’s health issues but noted it did not negate the need for acceptance of the voluntary retirement application. |
| Respondent | Voluntary retirement application was not decided within the prescribed period. | Rejected. The court held that the lack of decision within the prescribed time did not mean deemed acceptance, especially when charge sheets were pending. |
| Respondent | Resignation should be considered a continuation of the voluntary retirement application. | Rejected. The court rejected this argument, stating that the employee had submitted a resignation which was accepted. |
| Respondent | Entitlement to gratuity after qualifying service. | Accepted. The court held that the employee was entitled to gratuity as per the Payment of Gratuity Act, 1972. |
How each authority was viewed by the Court?
✓ Rule 50 of the Rajasthan Civil Services Pension Rules, 1996: The Court emphasized that this rule requires acceptance of the voluntary retirement notice by the appointing authority, which was absent in this case.
✓ Section 4(1)(b) of the Payment of Gratuity Act, 1972: The Court relied on this provision to affirm the employee’s entitlement to gratuity, despite his resignation.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- The absence of explicit acceptance of the voluntary retirement application by the employer, as required by Rule 50 of the Rajasthan Civil Services Pension Rules, 1996.
- The fact that the employee had submitted a resignation, which was accepted by the employer, and the employee had received the benefits associated with resignation.
- The fact that charge sheets were pending against the employee when he applied for voluntary retirement, which would have given the employer the right to not consider his application.
- The fact that the employee did not raise any grievance regarding his resignation during his lifetime.
- The requirement under Section 4(1)(b) of the Payment of Gratuity Act, 1972, that gratuity is payable even in cases of resignation after 5 years of continuous service.
| Reason | Percentage |
|---|---|
| Absence of acceptance of voluntary retirement | 30% |
| Submission and acceptance of resignation | 25% |
| Pending charge sheets | 20% |
| No grievance raised during lifetime | 15% |
| Gratuity payable despite resignation | 10% |
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The court’s reasoning was primarily based on the factual sequence of events, especially the submission and acceptance of the resignation. The legal aspects of voluntary retirement and gratuity were also considered, but the factual matrix weighed more heavily in the court’s decision.
Logical Reasoning:
The Supreme Court considered the High Court’s view that the employee should be deemed to have voluntarily retired because his initial application was not rejected. However, the Supreme Court rejected this view because the employee submitted a resignation, which was accepted by the employer, and the employee received the benefits of resignation. The court also noted that the employee had charge sheets pending against him when he had applied for voluntary retirement. The court emphasized that the employee did not raise any issue regarding his resignation during his lifetime. The court also considered the legal position that gratuity is payable even in cases of resignation after 5 years of continuous service.
The Supreme Court’s decision was based on the factual sequence of events, the applicable rules, and the relevant legal provisions. The court held that the employee’s resignation was a separate act from his initial application for voluntary retirement and that the employee could not be deemed to have voluntarily retired. However, the court also held that the employee was entitled to gratuity as per the Payment of Gratuity Act, 1972.
The majority opinion was delivered by Justice A.S. Bopanna, and there were no dissenting opinions.
The court quoted the following from the judgment:
“In the instant case, the undisputed position is that there was no acceptance and in that circumstance the husband of the respondent had submitted his resignation on 03.05.2006.”
“Though the High Court has indicated deemed acceptance, the same would not be justified in the instant facts since the position which has not been taken note by the High Court is that as on the date when the husband of the respondent had made the application for voluntary retirement on 28.07.2005 the husband of the respondent had already been issued ChargeSheets bearing No.7352 dated 16.12.2004 and bearing No.4118 dated 11.07.2005 alleging misconduct.”
“As rightly pointed out by the learned counsel for the respondents, Section 4(1)(b) of the Payment of Gratuity Act, 1972 provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well.”
Key Takeaways
- An application for voluntary retirement does not automatically guarantee retirement; it requires explicit acceptance from the employer.
- If an employee submits a resignation after applying for voluntary retirement, and the resignation is accepted, the employee will be treated as having resigned, not voluntarily retired.
- Pending disciplinary proceedings can affect the acceptance of a voluntary retirement application.
- Employees are entitled to gratuity even if they resign, provided they have completed 5 years of continuous service.
- It is important for employees to raise any grievances regarding their employment status during their lifetime.
Directions
The Supreme Court directed the appellants to calculate and pay the gratuity amount to the respondent, if not already paid, within four weeks from the date of the judgment, in accordance with the provisions of the Payment of Gratuity Act, 1972.
Development of Law
The ratio decidendi of this case is that an application for voluntary retirement does not create an indefeasible right for the employee to retire voluntarily. The employer must explicitly accept the application for it to be effective. This judgment clarifies that a resignation, when submitted and accepted, is a distinct act from an earlier application for voluntary retirement. The court also reaffirmed that gratuity is payable even in cases of resignation after 5 years of continuous service, as per the Payment of Gratuity Act, 1972.
Conclusion
The Supreme Court allowed the appeal, setting aside the High Court’s order. The court clarified that an employee’s resignation, when accepted, cannot be treated as a continuation of a previous application for voluntary retirement, especially when the voluntary retirement application was not explicitly accepted by the employer. However, the court upheld the employee’s right to gratuity under the Payment of Gratuity Act, 1972.