Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 9076 of 2019

@SLP (C) No. 6553 of 2018

BSES Yamuna Power Ltd. …Appellant

Versus

Sh. Ghanshyam Chand Sharma & Anr. …Respondents

JUDGMENT

Dr Dhananjaya Y Chandrachud, J

1. By its order dated 26 May 2017 a Division Bench of the High Court of Delhi

upheld the judgement of a Single Judge dated 21 March 2017 granting

pensionary benefits to the first respondent. The judgement of the Single Judge

directed the appellant to pay pensionary benefits to the first respondent on the

ground that he had completed twenty years of service and had „voluntarily retired‟

and not „resigned‟ from service. The appellant challenges these findings in the

present appeal.

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2. The first respondent was appointed as a daily rated mazdoor on 9 July

1968. His services were regularised on the post of a Peon on 22 December 1971.

The first respondent tendered his resignation on 7 July 1990, which was

accepted by the appellant with effect from 10 July 1990. The first respondent was

subsequently denied pensionary benefits by the appellant on two grounds. First,

that he had not completed twenty years of service, making him ineligible for the

grant of pension. Second, in any case, by resigning, the first respondent had

forfeited his past services and therefore could not claim pensionary benefits.

3. The second question of whether by resigning, the first respondent forfeited

his past service must be addressed at the outset. If the first respondent‟s

resignation resulted in a forfeiture of past service, the question of whether he has

completed twenty years of service is rendered irrelevant for such service would

stand forfeited. In holding the that the legal effect of the first respondent‟s letter of

resignation would amount to „voluntary resignation‟, the Single Judge of the High

Court of Delhi relied on the judgement of this Court in Asger Ibrahim Amin v

LIC1.

4. In Asger Ibrahim Amin, the appellant had resigned in 1991 after

completing twenty-three years of service with the Life Insurance Corporation of

India. When the appellant resigned, there existed no provision allowing for

voluntary retirement. The Central Government subsequently promulgated the Life

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(2016) 13 SCC 797

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Insurance Corporation of India (Employees) Pension Rules 1995 2 setting out the

conditions to be fulfilled for the grant of pension upon retirement and permitting,

for the first time, employees to voluntarily retire after twenty years of service.

Under the LIC Pension Rules, pension on retirement was made retrospectively

applicable to employees retiring prior to 1995, however, the provisions regarding

voluntary retirement were not. The LIC Pension Rules also stipulated that

resignation amounted to a forfeiture of past service. In deciding whether the

appellant was entitled to pension under the LIC Pension Rules, Justice Vikramajit

Sen speaking for a two judge Bench of this Court held:

“16. … [quoting Sheelkumar Jain v New India Assurance Co.

Ltd. (2011) 12 SCC 197] The aforesaid authorities would
show that the court will have to construe the statutory
provisions in each case to find out whether the
termination of service of an employee was a termination
by way of resignation or a termination by way of
voluntary retirement and while construing the statutory
provisions, the court will have to keep in mind the purpose of
the statutory provisions…

17. The appellant ought not to have been deprived of

pension benefits merely because he styled his
termination of service as “resignation” or because there
was no provision to retire voluntarily at that time. The
commendable objective of the Pension Rules is to extend
benefits to a class of people to tide over the crisis and
vicissitudes of old age, and if there are some
inconsistencies between the statutory provisions and the
avowed objective of the statute so as to discriminate
between the beneficiaries within the class, the end of
justice obligates us to palliate the differences between
the two and reconcile them as far as possible. We would
be failing in our duty, if we go by the letter and not by the
laudatory spirit of statutory provisions and the fundamental
rights guaranteed under Article 14 of the Constitution of
India.”

(Emphasis supplied)

2
LIC Pension Rules

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5. The court in Asger Ibrahim Amin held that despite the use of the term

„resignation‟ in the appellant‟s letter, the court had to independently determine

whether the termination of service amounted to a „resignation‟ or a „voluntary

retirement‟. As the appellant in Asger Ibrahim Amin had fulfilled the prescribed

years of service and, at the time of his resignation there was no provision for

voluntary retirement, the Court held that the appellant had in fact „voluntarily

retired‟ and not „resigned‟. The LIC Pension Rules only made the provisions on

retirement applicable retrospectively and did not make the provisions with respect

to voluntary retirement applicable retrospectively. However, in holding that the

court must determine whether there existed a case for „voluntary retirement‟ or

„resignation‟, the effect of the decision was to apply the provisions on voluntary

retirement retrospectively. The Court Vikramajit Sen expressly noted this:

“11. … The respondent Corporation has controverted the plea

of the appellant that as the relevant date and time viz. 29-1-
1991 there was no alternative for him except to tender his
resignation, pointing out that he could not have sought
voluntary retirement under Regulation 19(2-A) of the LIC of
India (Staff) Regulations, 1960. If that be so, the
respondent being a model employer could and should
have extended the advantage of these Regulations to the
appellant thereby safeguarding his pension entitlement.
However, we find no substance in the argument of the
respondent since Regulation 19(2-A) was, in fact, notified in
the Gazette of India on 16-2-1996, that is, after the pension
scheme case into existence with effect from 1-11-1993.

(Emphasis supplied)

6. In the present case, the Single Judge of the High Court of Delhi relied on

the decision in Asger Ibrahim Amin to hold that the first respondent was entitled

to pensionary benefits. The Single Judge noted that the first respondent had

completed more than twenty years of service and would have been eligible for

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pension upon voluntary retirement. Therefore, despite the first respondent using

the term „resignation‟, on an independent determination of the facts of the case,

the Single Judge held that he had in fact „voluntarily resigned‟ from service‟.

7. Mr C U Singh, learned Senior Counsel for the appellant, brought to our

attention that the correctness of the court‟s approach in Asger Ibrahim Amin

had been called into question by a co-ordinate bench of this Court in Senior

Divisional Manager, LIC v Shree Lal Meena3 (“Shree Lal Meena I”), which

referred the matter to a larger Bench of this Court. Thereafter, a three judge

Bench of this Court was constituted and delivered a judgement in Senior

Divisional Manager, LIC v Shree Lal Meena4 (“Shree Lal Meena II”) overruling

the view taken in Asger Ibrahim Amin. Both these judgements have been

placed on the record.

8. The facts in Shree Lal Meena I and Shree Lal Meena II were analogous

to those in Asger Ibrahim Amin. The respondent employee had resigned after

completing twenty years of service. The court was called upon to determine

whether the respondent‟s „resignation‟ amounted to a forfeiture of his past service

disentitling him from pension or was in fact „voluntary retirement‟. Justice Dipak

Mishra (as the learned Chief Justice then was) speaking for a two judge Bench of

this Court in Shree Lal Meena I observed:

“28. … Needless to say, resignation has the effect of

termination of an employee. Voluntary retirement though has
the effect of termination of an employee yet it has different

3
(2015) 17 SCC 43
4
(2019) 4 SCC 479

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 consequences. In the former case, the ex-employee could not
be entitled to pension, whereas in case of voluntary
retirement, the latter one, the employee would be entitled to
pension depending upon the terms postulated in the
regulations or rules or the scheme. Rule 23 of the 1995 Rules
specifically provides that on resignation, dismissal, removal,
termination or compulsory retirement, the employee shall
forfeit past service and he shall not qualify for pensionary
benefit. Thus, resignation given under the 1995 Rules would
not entitle an employee to get pension.

29. … In Asger Ibrahim Amin, retrospectivity has been given

to Rule 31 [Pension on voluntary retirement], and for the said
purpose the amendment to the 1960 Regulations, specifically
Regulation 19(2-A) has been taken recourse to. In our view,
when Rule 31 covers the field of voluntary retirement and
does not make it retrospective, there being a real
difference between resignation and retirement, it is not
seemly to read the amended Regulations to the Rules to
make the same retrospective. Therefore, we are unable to
concur with the view expressed in Asger Ibrahim Amin.”

(Emphasis supplied)

9. The court in Shree Lal Meena I took the view that the provision with

respect to pension on voluntary retirement (Rule 31) was not applicable

retrospectively because the relevant provision had not been enacted with

retrospective effect. Crucially, the Court noted that by making the provision on

voluntary retirement applicable retrospectively, and making a determination in the

facts of each case whether an employee had „resigned‟ or „voluntarily retired‟, the

decision in Asger Ibrahim Amin obliterated the distinction between resignation

and retirement. The court noted that there is a “real difference between

resignation and retirement”. They cannot be used interchangeably, and the court

cannot substitute one for the other merely because the employee has completed

the requisite number of years to qualify for voluntary retirement.

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10. In Shree Lal Meena II, upholding the interpretation in Shree Lal Meena I,

Justice Sanjay Kishan Kaul speaking for the three judge Bench, noted that the

retrospective application of the provision on voluntary retirement in the LIC

Pension Rules would lead to an absurd result:

“19. What is most material is 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. In our view,
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. To hold
otherwise would imply than an employee resigning
during the currency of the Rules would be deprived of
pensionary benefits, while an employee who resigns
when the Rules were not even in existence, would be
given the benefit of these Rules.”

(Emphasis supplied)

The Court noted that, if the approach followed in Asger Ibrahim Amin was

adopted in interpreting the LIC Pension Rules, an employee who resigned after

the enactment of the rules would not be entitled to pensionary benefits but an

employee who had resigned when the rules were not in force, but had completed

the prescribed period of service for voluntary retirement, would be entitled to

pensionary benefits. Such an outcome could not be countenanced and would

render nugatory the provision which stipulated that upon resignation, past service

stood forfeited.

11. The Court in Shree Lal Meena II elucidated the distinction between

resignation and voluntary retirement in the following terms:

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 “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 resignation involve voluntary acts on
the part of the employee to leave service. Though both
involve voluntary acts, they operate differently. One of the
basic distinctions is that in case of resignation it can be
tendered at any time, but in the case of voluntary retirement,
it can only be sought for after rendering the prescribed period
of qualifying service. Another fundamental distinction is that in
case of the former, normally retiral benefits are denied but in
case of the latter, the same is not denied. In case of the
former, permission or notice is not mandated, while in the
case of the latter, permission of the employer concerned is a
requisite condition. Though resignation is a bilateral concept,
and becomes effective on acceptance by the competent
authority, yet the general rule can be displaced by express
provisions to the contrary.”

The above observations highlighted the material distinction between the concept

of resignation and voluntary retirement. The Court also observed that while

pension schemes do form beneficial legislation in a delegated form, a beneficial

construction cannot run contrary to the express terms of the provisions:

“26. There are some observations on the principles of public

sectors being model employers and provisions of pension
being beneficial legislations (see Asger Ibrahim Amin v LIC).
We may, however, note that as per what we have opined
aforesaid, the issue cannot be dealt with on a charity
principle. When the legislature, in its wisdom, brings forth
certain beneficial provisions in the form of Pension
Regulations from a particular date and on particular terms
and conditions, aspects which are excluded cannot be
included in it by implication.”

The view in Asger Ibrahim Amin was disapproved and the court held that the

provisions providing for voluntary retirement would not apply retrospectively by

implication. In this view, where an employee has resigned from service, there

arises no question of whether he has in fact „voluntarily retired‟ or „resigned‟. The

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decision to resign is materially distinct from a decision to seek voluntary

retirement. The decision to resign results in the legal consequences that flow

from a resignation under the applicable provisions. These consequences are

distinct from the consequences flowing from voluntary retirement and the two

may not be substituted for each other based on the length of an employee‟s

tenure.

12. In the present case, the first respondent resigned on 7 July 1990 with

effect from 10 July 1990. By resigning, the first respondent submitted himself to

the legal consequences that flow from a resignation under the provisions

applicable to his service. Rule 26 of the Central Civil Service Pension Rules

19725 states that:

“26. Forfeiture of service on resignation

(1) Resignation from a service or a post, unless it is allowed

to be withdrawn in the public interest by the Appointing
Authority, entails a forfeiture of past service…”

Rule 26 states that upon resignation, an employee forfeits past service. We have

noted above that the approach adopted by the court in Asger Ibrahim Amin has

been held to be erroneous since it removes the important distinction between

resignation and voluntary retirement. Irrespective of whether the first respondent

had completed the requisite years of service to apply for voluntary retirement, his

was a decision to resign and not a decision to seek voluntary retirement. If this

court were to re-classify his resignation as a case of voluntary retirement, this

would obfuscate the distinction between the concepts of resignation and

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CCS Pension Rules

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voluntary retirement and render the operation of Rule 26 nugatory. Such an

approach cannot be adopted. Accordingly, the finding of the Single Judge that the

first respondent „voluntarily retired‟ is set aside.

13. We now turn to the question of whether the first respondent had completed

twenty years in service. During the present proceedings, our attention was drawn

to the fact that the first respondent had applied for voluntary retirement on 14

February 1990. By a letter dated 25 May 1990 the appellant denied the first

respondent‟s application for voluntary retirement on the ground that the first

respondent had not completed twenty years of service. It was thus urged that the

appellant‟s decision to deny the first respondent voluntary retirement was illegal

as the first respondent had completed twenty years of service.

14. This argument cannot be accepted. Even if he was denied voluntary

retirement on 25 May 1990, the first respondent did not challenge this decision

but resigned, on 7 July 1990. The denial of voluntary retirement does not mitigate

the legal consequences that flow from resignation. No evidence has been placed

on the record to show that the first respondent took issue with the denial of

voluntary retirement between 25 May 1990 and 7 July 1990. To the contrary, in

the legal notice dated 1 December 1992 sent by the first respondent to the

appellant, the first respondent admitted to having resigned. The first respondent‟s

writ petition was instituted thirteen years after the denial of voluntary retirement

and eventual resignation. In the light of these circumstances, the denial of

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voluntary retirement cannot be invoked before this Court to claim pensionary

benefits when the first respondent has admittedly resigned.

15. On the issue of whether the first respondent has served twenty years, we

are of the opinion that the question is of no legal consequence to the present

dispute. Even if the first respondent had served twenty years, under Rule 26 of

the CCS Pension Rules his past service stands forfeited upon resignation. The

first respondent is therefore not entitled to pensionary benefits.

16. For the above reasons, we accordingly allow the appeal and set aside the

impugned order of the High Court of Delhi dated 26 May 2017. There shall be no

order as to costs.

.……......................................................J
[Dr Dhananjaya Y Chandrachud]

..……......................................................J
[Hrishikesh Roy]

New Delhi;
December 5, 2019.

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