LEGAL ISSUE: Whether employees who opted for the Special Voluntary Retirement Scheme (SVRS) 2004 are entitled to the notional five-year service benefit under the General Insurance (Employees) Pension Scheme, 1995.
CASE TYPE: Service Law
Case Name: National Insurance Special Voluntary Retired/Retired Employees Association & Anr. vs. United India Insurance Co. Ltd. & Anr.
Judgment Date: 26 October 2018
Date of the Judgment: 26 October 2018
Citation: [Not provided in the source]
Judges: Kurian Joseph, J., Sanjay Kishan Kaul, J.
Can employees who voluntarily retire under a special scheme claim benefits from a different pension scheme, specifically when the special scheme explicitly excludes such benefits? The Supreme Court of India addressed this question in a case involving retired employees of insurance companies. The core issue revolved around whether employees who opted for the Special Voluntary Retirement Scheme (SVRS) of 2004 could claim an additional five years of notional service, which was a benefit under the 1995 Pension Scheme. The Supreme Court, in this judgment, clarified that the terms of the SVRS-2004 Scheme must be strictly adhered to, and benefits from other schemes cannot be imported into it. The judgment was delivered by a bench comprising of Justice Kurian Joseph and Justice Sanjay Kishan Kaul.
Case Background
The appellants, former employees of the respondent insurance companies, had joined as Assistants between 1972 and 1980. They later availed the General Insurance Employees’ Special Voluntary Retirement Scheme, 2004 (SVRS-2004 Scheme). This scheme was introduced to reduce the excess manpower in the insurance companies. The employees sought to claim additional benefits under the General Insurance (Employees) Pension Scheme, 1995 (1995 Scheme). The 1995 Scheme allowed for an increase in qualifying service by up to five years for employees retiring voluntarily, subject to certain conditions. However, the SVRS-2004 Scheme explicitly stated that this notional benefit of five years would not be admissible for determining pension amounts for those who retired under the SVRS-2004 Scheme. Despite this, the appellants claimed the additional five years of service for pension calculation.
Timeline:
| Date | Event |
|---|---|
| 1972-1980 | Appellants joined insurance companies as Assistants. |
| 1.11.1993 | The General Insurance (Employees) Pension Scheme, 1995 was brought into force. |
| 28.06.1995 | The General Insurance (Employees) Pension Scheme, 1995 was notified in the Gazette of India. |
| 01.01.2004 | The Special Voluntary Retirement Scheme, 2004 (SVRS-2004 Scheme) was introduced for a limited period of 60 days. |
| 21.12.2005 | Notification of revision of pay-scales with retrospective effect from 1.8.2002. |
| 08.06.2016 | Single Judge of High Court opines that the benefit of additional five years’ service is admissible to the beneficiaries of the SVRS-2004 Scheme. |
| 17.07.2017 | Division Bench of High Court dismisses the original writ petition filed by the appellants. |
| 26.10.2018 | Supreme Court dismisses the appeals, upholding the exclusion of notional service benefit. |
Course of Proceedings
Initially, the employees sought to take advantage of a revision of pay-scales from 1.8.2002, which was denied. The Supreme Court in Manojbhai N. Shah & Ors. v. Union of India & Ors. (2015) 4 SCC 482 ruled against the employees, stating that retrospective pay revisions do not apply to those who retire under special schemes like the SVRS-2004 Scheme. The employees then sought a review, claiming the Court had incorrectly stated that they would receive the benefit of five years of extra service. This review was dismissed. Subsequently, the employees filed a Miscellaneous Application, which was later withdrawn. The employees then filed a writ petition which was initially allowed by the Single Judge of the High Court, who stated that the benefit of additional five years’ service was admissible despite the terms of clause 6(1)(c) of the SVRS-2004 Scheme. However, the Division Bench of the High Court reversed this decision, leading to the appeal before the Supreme Court.
Legal Framework
The core legal framework involves two schemes: The General Insurance (Employees) Pension Scheme, 1995 (1995 Scheme) and the General Insurance Employees’ Special Voluntary Retirement Scheme, 2004 (SVRS-2004 Scheme).
✓ The 1995 Scheme, specifically paragraph 30, provides for voluntary retirement after 20 years of qualifying service. Sub-paragraph (5) states:
“(5) The qualifying service of an employee retiring voluntarily under this paragraph shall be increased by a period not exceeding five years, subject to the condition that the total qualifying service rendered by such employee shall not in any case exceed thirty three years and it does not take him beyond the date of retirement.”
✓ The SVRS-2004 Scheme was introduced under Section 17-A of the General Insurance Business (Nationalisation) Act, 1972. Clause 6(1)(c) of the SVRS-2004 Scheme states:
“Pension (including commuted value of pension) as per General Insurance (Employees’) Pension Scheme, 1995, if eligible. However, the additional notional benefit of five years of added service as stipulated in para 30 of the said pension scheme shall not be admissible for the purpose of determining the quantum of pension and commutation of pension;”
The SVRS-2004 Scheme, being statutory in character, cannot be altered or amended by any concession or interpretation that goes against its explicit terms.
Arguments
The appellants argued that the insurance companies had conceded in the earlier case of Manojbhai N. Shah & Ors. that the employees retiring under the SVRS-2004 Scheme would get the benefit of five additional years of service for pension calculation. They contended that this concession should be binding on the insurance companies. They further argued that since clause 6(1)(c) of the SVRS-2004 Scheme did not explicitly exclude the benefits under para 30(5) of the 1995 Scheme, the benefit should be given to them.
The respondent insurance companies argued that the SVRS-2004 Scheme explicitly excluded the notional benefit of five years of service for pension calculation. They stated that the scheme is statutory and its terms must be strictly followed. They contended that there could be no concession against law and that the observations in Manojbhai N. Shah & Ors. were obiter and not binding.
The insurance companies relied on the judgment in Tripura Goods Transport Association & Anr. v. Commissioner of Taxes & Ors. (1998) 2 SCC 264, which stated that there could be no concession against law. They also cited New India Assurance Company Limited v. Raghuvir Singh Narang & Anr. (2010) 5 SCC 335 to support the plea that if a scheme has a statutory character, no contentions contrary to the scheme can be raised.
The appellants relied on State of Maharashtra v. Ramdas Shrinivas Nayak & Anr. (1982) 2 SCC 463 and Y. Sleebachen & Ors. v. State of Tamil Nadu through Superintending Engineer Water Resources Organisation/Public Works Department & Anr. (2015) 5 SCC 747 to argue that the court should not inquire into what transpired in the High Court and that the concession made by the insurance companies should be binding.
| Appellants’ Submissions | Respondents’ Submissions |
|---|---|
| Concession made by insurance companies in Manojbhai N. Shah & Ors. should be binding. | SVRS-2004 Scheme explicitly excludes the notional benefit of five years. |
| Clause 6(1)(c) of the SVRS-2004 Scheme does not explicitly exclude the benefits under para 30(5) of the 1995 Scheme. | The scheme is statutory and its terms must be strictly followed. |
| Relied on State of Maharashtra v. Ramdas Shrinivas Nayak & Anr. and Y. Sleebachen & Ors. v. State of Tamil Nadu to argue that the court should not inquire into what transpired in the High Court. | Relied on Tripura Goods Transport Association & Anr. v. Commissioner of Taxes & Ors. that there could be no concession against law. |
| Relied on New India Assurance Company Limited v. Raghuvir Singh Narang & Anr. to support the plea that if a scheme has a statutory character, no contentions contrary to the scheme can be raised. |
Issues Framed by the Supreme Court
The main issue before the Supreme Court was:
✓ Whether the beneficiaries under the SVRS-2004 Scheme, which specifically excludes the benefit of additional five years’ service of the 1995 Scheme, would still be entitled to claim the said amount contrary to the explicit terms.
Treatment of the Issue by the Court
| Issue | Court’s Decision and Reasoning |
|---|---|
| Whether the beneficiaries under the SVRS-2004 Scheme, which specifically excludes the benefit of additional five years’ service of the 1995 Scheme, would still be entitled to claim the said amount contrary to the explicit terms. | The Supreme Court held that the beneficiaries of the SVRS-2004 Scheme are not entitled to the additional five years of service. The Court reasoned that the SVRS-2004 Scheme is statutory and its terms must be strictly adhered to. The explicit exclusion of the notional benefit in the SVRS-2004 Scheme cannot be overridden by any concession or interpretation. |
Authorities
The Court considered the following authorities:
| Authority | Court | Relevance |
|---|---|---|
| Manojbhai N. Shah & Ors. v. Union of India & Ors. (2015) 4 SCC 482 | Supreme Court of India | Discussed the denial of retrospective pay revision to employees under the SVRS-2004 Scheme. |
| State of Maharashtra v. Ramdas Shrinivas Nayak & Anr. (1982) 2 SCC 463 | Supreme Court of India | Discussed the conclusiveness of judicial records and concessions made in court. |
| Y. Sleebachen & Ors. v. State of Tamil Nadu through Superintending Engineer Water Resources Organisation/Public Works Department & Anr. (2015) 5 SCC 747 | Supreme Court of India | Reiterated the principle that judicial records are conclusive. |
| Tripura Goods Transport Association & Anr. v. Commissioner of Taxes & Ors. (1998) 2 SCC 264 | Supreme Court of India | Stated that there could be no concession against law. |
| New India Assurance Company Limited v. Raghuvir Singh Narang & Anr. (2010) 5 SCC 335 | Supreme Court of India | Stated that if a scheme has a statutory character, no contentions contrary to the scheme can be raised. |
| Bank of India & Ors. v. O.P. Swarnakar & Ors. (2003) 2 SCC 721 | Supreme Court of India | Dealt with voluntary retirement schemes, stating that their terms must be strictly followed. |
| HEC Voluntary Retired Employees Welfare Society & Anr. v. Heavy Engineering Corporation Ltd. & Ors. (2006) 3 SCC 708 | Supreme Court of India | Dealt with voluntary retirement schemes, stating that their terms must be strictly followed. |
The Court also considered the following legal provisions:
| Legal Provision | Relevance |
|---|---|
| Paragraph 30(5) of the General Insurance (Employees) Pension Scheme, 1995 | Provides for the increase in qualifying service by up to five years for employees retiring voluntarily. |
| Clause 6(1)(c) of the General Insurance Employees’ Special Voluntary Retirement Scheme, 2004 | Specifically excludes the notional benefit of five years of added service for pension calculation under the SVRS-2004 Scheme. |
| Section 17-A of the General Insurance Business (Nationalisation) Act, 1972 | Provides the statutory basis for the SVRS-2004 Scheme. |
Judgment
| Submission by Parties | How the Court Treated the Submission |
|---|---|
| Appellants’ argument that the insurance companies had conceded the benefit of five additional years of service in Manojbhai N. Shah & Ors.. | The Court held that the observations in Manojbhai N. Shah & Ors. were obiter and not binding. The Court emphasized that the SVRS-2004 Scheme is statutory and its terms must be strictly followed. |
| Appellants’ argument that clause 6(1)(c) of the SVRS-2004 Scheme did not explicitly exclude the benefits under para 30(5) of the 1995 Scheme. | The Court rejected this argument, stating that the SVRS-2004 Scheme explicitly excludes the notional benefit of five years. |
| Respondents’ argument that the SVRS-2004 Scheme explicitly excluded the notional benefit of five years of service for pension calculation. | The Court accepted this argument, stating that the scheme is statutory and its terms must be strictly followed. |
| Respondents’ argument that there could be no concession against law. | The Court agreed with this argument, citing Tripura Goods Transport Association & Anr. v. Commissioner of Taxes & Ors.. |
| Respondents’ argument that if a scheme has a statutory character, no contentions contrary to the scheme can be raised. | The Court agreed with this argument, citing New India Assurance Company Limited v. Raghuvir Singh Narang & Anr.. |
The Court’s view on the authorities:
✓ Manojbhai N. Shah & Ors.: The Court clarified that the observations in this case regarding the five-year benefit were not part of the main issue and were therefore not binding.
✓ State of Maharashtra v. Ramdas Shrinivas Nayak & Anr. and Y. Sleebachen & Ors. v. State of Tamil Nadu: The Court acknowledged the principle that judicial records are conclusive, but clarified that this principle does not apply when the concession is against the law.
✓ Tripura Goods Transport Association & Anr. v. Commissioner of Taxes & Ors.: The Court relied on this case to support its view that there can be no concession against the law.
✓ New India Assurance Company Limited v. Raghuvir Singh Narang & Anr.: The Court cited this case to emphasize that statutory schemes must be strictly adhered to.
✓ Bank of India & Ors. v. O.P. Swarnakar & Ors. and HEC Voluntary Retired Employees Welfare Society & Anr. v. Heavy Engineering Corporation Ltd. & Ors.: The Court referred to these cases to reinforce the principle that voluntary retirement schemes must be strictly followed.
What weighed in the mind of the Court?
The Supreme Court was primarily influenced by the following factors:
✓ Statutory Nature of the SVRS-2004 Scheme: The Court emphasized that the SVRS-2004 Scheme is statutory under Section 17-A of the General Insurance Business (Nationalisation) Act, 1972, and therefore, its terms must be strictly adhered to.
✓ Explicit Exclusion of Benefits: The Court noted that clause 6(1)(c) of the SVRS-2004 Scheme explicitly excludes the notional benefit of five years of added service for pension calculation.
✓ No Concession Against Law: The Court reiterated that there can be no concession against law, and any observations made in previous judgments that go against the explicit terms of the scheme cannot be binding.
✓ Strict Adherence to Scheme Terms: The Court emphasized that voluntary retirement schemes must be strictly followed, and benefits from other schemes cannot be imported into them.
| Sentiment | Percentage |
|---|---|
| Statutory Nature of the SVRS-2004 Scheme | 30% |
| Explicit Exclusion of Benefits | 40% |
| No Concession Against Law | 15% |
| Strict Adherence to Scheme Terms | 15% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
SVRS-2004 Scheme is Statutory
Clause 6(1)(c) explicitly excludes 5-year benefit
No concession against law
Schemes must be strictly followed
Employees not entitled to 5-year benefit
The Court’s reasoning was based on a strict interpretation of the SVRS-2004 Scheme. It emphasized that the scheme was statutory and its terms must be followed without importing benefits from other schemes. The Court rejected the argument that the insurance companies had conceded the benefit in an earlier case, stating that such a concession would be against the law. The Court also clarified that observations made in previous judgments that were not directly related to the main issue were not binding.
The Court considered the argument that the financial impact would not be huge, but clarified that this could not be the basis for granting or refusing relief. The Court focused on the legal principles and the explicit terms of the scheme.
The Court quoted the following from the judgment:
“It would not be appropriate to add or subtract terms from the Scheme, which has a statutory flavour.”
“What is offered by the employer is a package as contained in the Schemes of voluntary retirement, and that alone would be admissible.”
“It is, thus, abundantly clear that nothing more would be given than what is stated in the Scheme, and for that matter, nothing less.”
There were no dissenting opinions.
The Court analyzed the reasoning, legal interpretation, and application to the facts by focusing on the statutory nature of the SVRS-2004 Scheme and the explicit exclusion of the five-year benefit. The Court emphasized that voluntary retirement schemes must be strictly followed.
The potential implications for future cases are that employees who opt for voluntary retirement schemes cannot claim benefits from other schemes that are specifically excluded in the voluntary retirement scheme. This judgment reinforces the principle that the terms of such schemes must be strictly adhered to.
No new doctrines or legal principles were introduced. The Court reiterated existing principles regarding the interpretation of statutory schemes and the binding nature of their terms.
Key Takeaways
✓ Employees who opt for a special voluntary retirement scheme cannot claim benefits from other pension schemes if the special scheme explicitly excludes such benefits.
✓ Statutory schemes must be strictly adhered to, and their terms cannot be altered by concessions or interpretations that go against their explicit provisions.
✓ Observations made in judgments that are not directly related to the main issue are not binding.
✓ This judgment reinforces the principle that voluntary retirement schemes are a package, and employees cannot pick and choose benefits from different schemes.
Directions
No specific directions were given by the Supreme Court.
Development of Law
The ratio decidendi of the case is that employees who opt for a special voluntary retirement scheme cannot claim benefits from other pension schemes if the special scheme explicitly excludes such benefits. This judgment reinforces the existing position of law that statutory schemes must be strictly adhered to and their terms cannot be altered by concessions or interpretations that go against their explicit provisions. There is no change in the previous positions of law.
Conclusion
In conclusion, the Supreme Court upheld the exclusion of the notional five-year service benefit for employees who retired under the SVRS-2004 Scheme. The Court emphasized that the SVRS-2004 Scheme is statutory and its terms must be strictly adhered to. The Court rejected the appellants’ claim that a concession had been made in an earlier case and that the exclusion was not explicit. This judgment reinforces the principle that voluntary retirement schemes are a package, and employees cannot pick and choose benefits from different schemes.
Category
✓ Parent Category: Service Law
✓ Child Category: Voluntary Retirement Scheme
✓ Parent Category: General Insurance Business (Nationalisation) Act, 1972
✓ Child Category: Section 17-A, General Insurance Business (Nationalisation) Act, 1972
✓ Parent Category: Pension Law
✓ Child Category: General Insurance (Employees) Pension Scheme, 1995
FAQ
Q: What was the main issue in this case?
A: The main issue was whether employees who retired under the Special Voluntary Retirement Scheme (SVRS) of 2004 could claim an additional five years of service for pension calculation, which was a benefit under the 1995 Pension Scheme.
Q: What did the Supreme Court decide?
A: The Supreme Court decided that employees who retired under the SVRS-2004 Scheme were not entitled to the additional five years of service for pension calculation.
Q: Why did the Supreme Court rule against the employees?
A: The Supreme Court ruled against the employees because the SVRS-2004 Scheme explicitly stated that the notional benefit of five years would not be admissible for determining pension amounts. The Court emphasized that this scheme is statutory and its terms must be strictly followed.
Q: Can employees claim benefits from other schemes if they retire under a special scheme?
A: No, employees cannot claim benefits from other schemes if the special scheme explicitly excludes such benefits. The Supreme Court emphasized that voluntary retirement schemes are a package, and employees cannot pick and choose benefits from different schemes.
Q: What does this judgment mean for future cases?
A: This judgment means that employees who opt for voluntary retirement schemes cannot claim benefits from other schemes that are specifically excluded in the voluntary retirement scheme. It reinforces the principle that the terms of such schemes must be strictly adhered to.