Date of the Judgment: 15 March 2019
Citation: (2019) INSC 217
Judges: Ranjan Gogoi, CJI, Sanjay Kishan Kaul, J, K.M. Joseph, J.
Can an employee who resigned before a pension scheme was implemented, but after the date from which the scheme was made retrospectively applicable, claim benefits under that scheme? This was the core question before the Supreme Court of India. The court examined whether employees who resigned before the notification of pension schemes, but after the date from which the schemes were made applicable, could be entitled to the benefits. The three-judge bench, consisting of Chief Justice Ranjan Gogoi, Justice Sanjay Kishan Kaul, and Justice K.M. Joseph, delivered the judgment, with the opinion authored by Justice Sanjay Kishan Kaul.
Case Background
Shree Lal Meena, an employee of the Life Insurance Corporation of India (LIC), expressed his desire for voluntary retirement due to health concerns in letters dated 15.6.1990 and 18.6.1990. However, there was no provision for voluntary retirement at the time. Consequently, he submitted his resignation on 14.7.1990, which was accepted by LIC on 11.1.1991, effective from 14.7.1990. At the time of his resignation, the applicable scheme was the Contributory Provident Fund Scheme.
Later, the Life Insurance Corporation of India (Employees) Pension Rules, 1995, were introduced on 28.6.1995, with retrospective effect from 1.11.1993. These rules applied to employees in service on or after 1.1.1986, who had retired before 1.11.1993, subject to certain conditions. Shree Lal Meena, having served after 1.1.1986, believed he was eligible for pension benefits. However, LIC rejected his claim on 6.4.1996, citing his resignation.
Shree Lal Meena filed a writ petition before the Rajasthan High Court in 1997, which was decided in his favor by a Single Judge on 8.9.2006. The High Court held that his resignation should be considered as voluntary retirement due to the lack of a voluntary retirement provision at the time. The LIC’s appeal to the Division Bench of the High Court was dismissed on 16.8.2011.
Timeline
| Date | Event |
|---|---|
| 15.6.1990 | Shree Lal Meena expresses concerns about his and his wife’s health and the possibility of seeking voluntary retirement. |
| 18.6.1990 | Shree Lal Meena reiterates his concerns about his and his wife’s health and the possibility of seeking voluntary retirement. |
| 14.7.1990 | Shree Lal Meena tenders his resignation, waiving the mandatory notice period. |
| 11.1.1991 | LIC accepts Shree Lal Meena’s resignation, effective from 14.7.1990. |
| 28.6.1995 | Life Insurance Corporation of India (Employees) Pension Rules, 1995, are promulgated, with retrospective effect from 1.11.1993. |
| 6.4.1996 | LIC declines Shree Lal Meena’s request for pension benefits. |
| 28.8.1997 | Shree Lal Meena issues a notice of demand. |
| 1997 | Shree Lal Meena files a writ petition before the Rajasthan High Court. |
| 8.9.2006 | Single Judge of the Rajasthan High Court rules in favor of Shree Lal Meena. |
| 16.8.2011 | Division Bench of the Rajasthan High Court dismisses LIC’s appeal. |
| 15.03.2019 | Supreme Court allows the appeal of LIC. |
Course of Proceedings
The Rajasthan High Court’s Single Judge ruled in favor of Shree Lal Meena, stating that his resignation should be treated as voluntary retirement due to the absence of a voluntary retirement scheme at the time. The Division Bench upheld this decision, rejecting LIC’s arguments based on previous Supreme Court judgments. The LIC then appealed to the Supreme Court, leading to the present judgment.
Legal Framework
The Supreme Court examined the following provisions:
- Rule 2(j) of the Life Insurance Corporation of India (Employees) Pension Rules, 1995: Defines “employee” but excludes those who retired before the commencement of the rules and were drawing a pension under the Staff Regulations.
- Rule 2(s) of the Life Insurance Corporation of India (Employees) Pension Rules, 1995: Defines “retirement” as retirement under the Staff Regulations or voluntary retirement under the Pension Rules.
- Rule 23 of the Life Insurance Corporation of India (Employees) Pension Rules, 1995: States that resignation entails forfeiture of past service and disqualification for pensionary benefits.
- Rule 31 of the Life Insurance Corporation of India (Employees) Pension Rules, 1995: Deals with pension on voluntary retirement, requiring 20 years of qualifying service and a 90-day notice.
- Regulation 18 of the Life Insurance Corporation of India (Staff) Regulations, 1960: States the conditions for leaving or discontinuing service.
The court noted that the Pension Rules were brought into force with retrospective effect from 1.11.1993, and logically applied to employees in service on or after that date. The court also noted that Rule 3(1)(a) of the Pension Rules extended the applicability to employees who “retired” on or after 1.1.1986 and before 1.11.1993, provided they opted for the scheme and refunded the LIC’s contribution to the Provident Fund.
Arguments
The respondent, Shree Lal Meena, argued that his initial request for voluntary retirement should be considered, and his resignation was a result of the absence of a voluntary retirement scheme. He contended that his case was similar to voluntary retirement and that he had the requisite years of service to be entitled to pensionary benefits if the scheme had existed at the relevant time.
The LIC contended that Shree Lal Meena’s case was one of resignation, and the Pension Rules clearly state that resignation entails forfeiture of past service and disqualification for pensionary benefits. The LIC argued that the retrospective application of the Pension Rules should not extend to those who had resigned before the rules came into force, as the rules specifically used the term “retired” and not “resigned.”
The LIC also relied on the judgment of the Supreme Court in Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461] and of the Division Bench of the Punjab & Haryana High Court in J.M. Singh v. Life Insurance Corporation of India & Ors. [CWP No.10157/1996 decided on 8.1.2010] to support their arguments.
The High Court relied on the judgment of the Supreme Court in JK Cotton Spinning & Weaving Mills Co. Ltd., Kanpur v. State of U.P. [AIR 1990 SC 1808] to support its contention that a voluntary resignation is similar to a voluntary retirement.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Resignation vs. Retirement | Resignation should be considered voluntary retirement due to the lack of a scheme at the time. | Shree Lal Meena (Respondent) |
| Resignation entails forfeiture of service and disqualification for pensionary benefits under the Pension Rules. | LIC (Appellant) | |
| Applicability of Pension Rules | Pension Rules should apply to employees who served after 1.1.1986 and were in service on or after 1.11.1993. | Shree Lal Meena (Respondent) |
| Pension Rules apply to employees who ‘retired’ and not those who ‘resigned’ before 1.11.1993. | LIC (Appellant) | |
| Interpretation of Rules | The term “retired” should include those who resigned due to the absence of a voluntary retirement scheme. | Shree Lal Meena (Respondent) |
| The terms “resigned” and “retired” have different meanings in service jurisprudence and are used differently in the Pension Rules. | LIC (Appellant) |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was whether employees who resigned from service before the notification of the pension schemes, but after the date from which the schemes were made applicable, would be entitled to the benefit of the pension schemes.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether employees who resigned before the notification of the pension schemes, but after the date from which the schemes were made applicable, would be entitled to the benefit of the pension schemes. | No, they are not entitled to the pension scheme. | The court held that resignation entails forfeiture of past service and disqualification for pensionary benefits under the Pension Rules. The terms “resigned” and “retired” have different meanings in service jurisprudence and are used differently in the Pension Rules. |
Authorities
The Court considered the following authorities:
- JK Cotton Spinning & Weaving Mills Co. Ltd., Kanpur v. State of U.P. [AIR 1990 SC 1808] – The court clarified that this case was about retrenchment under the Uttar Pradesh Industrial Disputes Act, 1947, and not about pension eligibility. The court held that the High Court had read too much into this judgment.
- Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461] – The court relied on this judgment, which differentiated between resignation and voluntary retirement, stating that voluntary retirement is a concept created by a statutory provision, while resignation is a unilateral determination of an employer-employee relationship.
- UCO Bank & Ors. v. Sanwar Mal [(2004) 4 SCC 412] – The court noted that this case also distinguished between resignation and retirement, emphasizing that pension schemes are self-supporting and based on adequate contributions from members.
- M.R. Prabhakar & Ors. v. Canara Bank & Ors. [(2012) 9 SCC 671] – The court noted that this case also differentiated between the concept of ‘voluntary retirement’ and ‘resignation’.
- J.M. Singh v. Life Insurance Corporation of India & Ors. [CWP No.10157/1996 decided on 8.1.2010] – The court relied on this case which was in line with the judgment in Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr.
- Sheel Kumar Jain v. New India Assurance Company Limited [(2011) 12 SCC 197] – The court discussed this case, which dealt with the benefit of a pension scheme to certain employees, but found that it did not apply to the present case.
- Sudhir Chandra Sarkar v. Tata Iron and Steel Co. Ltd. & Ors. [(1984) 3 SCC 369] – The court clarified that this case was based on the definition of ‘retirement’ under the Retiring Gratuity Rules, 1937, which was expansive and all-inclusive, and not applicable to the present case.
- Grundy v. Pinniger [(1852) 21 LJ Ch 405] – The court cited this case for the principle that statutory provisions must be given their clear meaning unless there is ambiguity in the wordings.
- Pinner v. Everett [[1969] 3 All ER 257] – The court cited this case for the principle that statutory provisions must be given their clear meaning unless there is ambiguity in the wordings.
- Member, Board of Revenue v. Arthur Paul Benthall [(1955) 2 SCR 842] – The court cited this case for the principle that when the same statute uses two different words, they must be construed to mean differently.
- Kanhaiyalal Vishindas Gidwani v. Arun Dattatray Mehta [(2001) 1 SCC 78] – The court cited this case for the principle that when the same statute uses two different words, they must be construed to mean differently.
- CIT v. Sun Engineering Works (P.) Ltd. [(1992) 4 SCC 363] – The court cited this case for the principle that a judgment has to be read for the law it lays down, by reference given to a factual matrix.
| Authority | Court | How it was used |
|---|---|---|
| JK Cotton Spinning & Weaving Mills Co. Ltd., Kanpur v. State of U.P. [AIR 1990 SC 1808] | Supreme Court of India | Clarified; the court held that the High Court had read too much into this judgment. |
| Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461] | Supreme Court of India | Followed; the court relied on this judgment to distinguish between resignation and voluntary retirement. |
| UCO Bank & Ors. v. Sanwar Mal [(2004) 4 SCC 412] | Supreme Court of India | Followed; the court noted that this case also distinguished between resignation and retirement, emphasizing that pension schemes are self-supporting and based on adequate contributions from members. |
| M.R. Prabhakar & Ors. v. Canara Bank & Ors. [(2012) 9 SCC 671] | Supreme Court of India | Followed; the court noted that this case also differentiated between the concept of ‘voluntary retirement’ and ‘resignation’. |
| J.M. Singh v. Life Insurance Corporation of India & Ors. [CWP No.10157/1996 decided on 8.1.2010] | Punjab & Haryana High Court | Followed; the court relied on this case which was in line with the judgment in Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. |
| Sheel Kumar Jain v. New India Assurance Company Limited [(2011) 12 SCC 197] | Supreme Court of India | Discussed; the court discussed this case, which dealt with the benefit of a pension scheme to certain employees, but found that it did not apply to the present case. |
| Sudhir Chandra Sarkar v. Tata Iron and Steel Co. Ltd. & Ors. [(1984) 3 SCC 369] | Supreme Court of India | Clarified; the court clarified that this case was based on the definition of ‘retirement’ under the Retiring Gratuity Rules, 1937, which was expansive and all-inclusive, and not applicable to the present case. |
| Grundy v. Pinniger [(1852) 21 LJ Ch 405] | English Court | Cited; the court cited this case for the principle that statutory provisions must be given their clear meaning unless there is ambiguity in the wordings. |
| Pinner v. Everett [[1969] 3 All ER 257] | English Court | Cited; the court cited this case for the principle that statutory provisions must be given their clear meaning unless there is ambiguity in the wordings. |
| Member, Board of Revenue v. Arthur Paul Benthall [(1955) 2 SCR 842] | Supreme Court of India | Cited; the court cited this case for the principle that when the same statute uses two different words, they must be construed to mean differently. |
| Kanhaiyalal Vishindas Gidwani v. Arun Dattatray Mehta [(2001) 1 SCC 78] | Supreme Court of India | Cited; the court cited this case for the principle that when the same statute uses two different words, they must be construed to mean differently. |
| CIT v. Sun Engineering Works (P.) Ltd. [(1992) 4 SCC 363] | Supreme Court of India | Cited; the court cited this case for the principle that a judgment has to be read for the law it lays down, by reference given to a factual matrix. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Shree Lal Meena’s resignation should be treated as voluntary retirement. | Rejected; the court held that resignation is different from retirement and entails forfeiture of service. |
| Pension Rules should apply to employees who served after 1.1.1986. | Partially accepted; the court held that the rules apply to employees who “retired,” not those who “resigned.” |
| The term “retired” should include those who resigned due to the absence of a voluntary retirement scheme. | Rejected; the court held that the terms “resigned” and “retired” have different meanings in service jurisprudence and are used differently in the Pension Rules. |
The court held that the judgment in JK Cotton Spinning & Weaving Mills Co. Ltd., Kanpur v. State of U.P. [AIR 1990 SC 1808] was not applicable to the present case. The court also relied on Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461], which differentiated between resignation and voluntary retirement, stating that voluntary retirement is a concept created by a statutory provision, while resignation is a unilateral determination of an employer-employee relationship.
The court also relied on UCO Bank & Ors. v. Sanwar Mal [(2004) 4 SCC 412], which emphasized that pension schemes are self-supporting and based on adequate contributions from members. The court also noted that M.R. Prabhakar & Ors. v. Canara Bank & Ors. [(2012) 9 SCC 671] differentiated between ‘voluntary retirement’ and ‘resignation’.
The court held that the principle laid down in Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461] was squarely applicable to the facts of the present case.
The court observed that the employee in this case had resigned. When the Pension Rules are applicable, and an employee resigns, the consequences are forfeiture of service, under Rule 23 of the Pension Rules.
The court also stated that attempting to apply the Pension Rules to the respondent would be a self-defeating argument. As, suppose, the Pension Rules were applicable and the employee like the respondent was in service and sought to resign, the entire past service would be forfeited, and consequently, he would not qualify for pensionary benefits.
The court also observed that the expressions “resignation”, “dismissal”, “removal” have been used in the same rules, and when different expressions are used in the same rules, in different contexts then all of them cannot be given the same meaning.
The court concluded that the impugned orders could not be sustained and were liable to be set aside. The court allowed the appeal of LIC and dismissed the writ petition filed by the respondent.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the clear distinction between resignation and retirement in service jurisprudence and the specific language of the Pension Rules. The court emphasized that statutory provisions must be given their clear meaning unless there is ambiguity in the wordings. The court also considered that the pension schemes are contributory in nature and their financial implications.
| Reason | Percentage |
|---|---|
| Clear distinction between resignation and retirement in service jurisprudence | 30% |
| Specific language of the Pension Rules | 30% |
| Statutory provisions must be given their clear meaning | 20% |
| Contributory nature of pension schemes and their financial implications | 20% |
| Category | Percentage |
|---|---|
| Fact | 20% |
| Law | 80% |
The court’s reasoning was heavily based on the legal interpretation of the terms “resignation” and “retirement” and the specific provisions of the Pension Rules, with less emphasis on the factual aspects of the case.
Logical Reasoning
Employee resigns before pension scheme notification but after retrospective date.
Pension Rules define “retirement” and “resignation” differently.
Resignation entails forfeiture of past service and disqualification for pension benefits.
Retrospective application of Pension Rules applies only to those who “retired,” not “resigned.”
Employee not entitled to pension benefits.
The court considered the argument that the employee had resigned due to the absence of a voluntary retirement scheme at the time. However, the court rejected this argument, stating that the employee had consciously chosen to resign under the existing rules. The court also rejected the argument that the term “retired” should include those who resigned due to the absence of a voluntary retirement scheme.
The court emphasized that the statutory provisions must be given their clear meaning unless there is some confusion or they are capable of another interpretation.
The court also considered the financial implications of the pension schemes and held that it would be inadvisable to expand such beneficial schemes beyond their contours to extend them to employees for whom they were not meant for by the Legislature.
The court held that the employee had resigned and that the consequences under the pension rules were forfeiture of service.
The court quoted from the judgment:
- “It is trite to say that statutory provisions must be given their clear meaning unless there is ambiguity in the wordings.”
- “When different expressions are used in the same Rules, in different contexts then all of them cannot be given the same meaning.”
- “In service jurisprudence, the expressions “superannuation”, “voluntary retirement”, “compulsory retirement” and “resignation” convey different connotations.”
There was no minority opinion in this case.
Key Takeaways
- Employees who resign from service before the notification of a pension scheme are generally not eligible for pension benefits under that scheme, even if the scheme is made retrospectively applicable.
- The terms “resignation” and “retirement” have distinct meanings in service jurisprudence, and the courts will generally adhere to these distinctions.
- Pension schemes are often contributory in nature, and their financial implications must be considered when interpreting their provisions.
- Statutory provisions must be given their clear meaning unless there is ambiguity in the wordings.
Directions
The Supreme Court directed that the amounts already paid to the respondent in C.A. No. 14739 of 2015, under the interim directions dated 26.11.2015, would not be claimed back.
Development of Law
The ratio decidendi of this case is that the terms “resignation” and “retirement” have distinct meanings in service jurisprudence, and the courts will generally adhere to these distinctions. The court also held that pension schemes are often contributory in nature, and their financial implications must be considered when interpreting their provisions. This judgment reaffirms the principles laid down in previous judgments such as Reserve Bank of India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461] and UCO Bank & Ors. v. Sanwar Mal [(2004) 4 SCC 412].
Conclusion
The Supreme Court clarified that employees who resign before a pension scheme is notified are generally not eligible for benefits under that scheme, even if it is made retrospectively applicable. The Court emphasized the distinct meanings of “resignation” and “retirement” in service law and underscored the importance of adhering to the specific language of pension rules. The court allowed the appeal of LIC and dismissed the writ petition filed by the respondent.