Sheelkumar Jain vs New India Assurance Co. Ltd. & Ors

Sheelkumar Jain ...... Appellant

Versus

The New India Assurance Co. Ltd. & Ors. ...... Respondents

J U D G M E N T

A. K. PATNAIK, J.

Leave granted.

2. This is an appeal by way of special leave against the

order dated 10.11.2006 of the Division Bench of the Madhya

Pradesh High Court, Indore Bench, in W.A. No.224 of 2006.

3. The brief facts of this case are that on 01.07.1969 the

appellant was appointed as an Inspector in Liberty Insurance

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Company Limited. Under the General Insurance Business

(Nationalised) Act, 1972 (for short `the Act'), Liberty Insurance

Company was nationalized and merged in the respondent

no.1-Company. The services of the appellant were absorbed

in respondent No.1-Company and in September, 1984, he was

promoted as Assistant Administrative Officer and posted at the

Guna Branch as Assistant Branch Manager. In the year

1989, he was transferred to Indore and posted as Assistant

Administrative Officer and thereafter as Divisional Accountant

and in 1991 he was promoted to the post of Administrative

Officer. The appellant then served a letter dated 16.09.1991 to

the General Manager of respondent No.1- Company at the

Head Office of the company at Bombay saying that he would

like to resign from his post and requesting him to treat the

letter as three months' notice and to relieve him from his

services. The Assistant Administrative Officer, Indore, by his

letter dated 28.10.1991 informed the appellant that his

resignation has been accepted by the competent authority with

effect from 16.12.1991, i.e. after completion of three months

notice. Accordingly, the appellant was relieved from his

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services on 16.12.1991. Thereafter, the General Insurance

(Employees') Pension Scheme, 1995 (for short `the Pension

Scheme, 1995') was made by the Central Government in

exercise of its powers under Section 17-A of the Act. The

Pension Scheme, 1995 applied also to employees who were in

the service of respondent No.1-Company on or after first

January, 1986 but had retired before the first day of

November, 1993 and exercised an option in writing within 120

days from the notified date provided he refunded within the

specified period the entire amount of the company's

contribution to the provident fund including interest thereon

as well as the entire amount of non-refundable withdrawal, if

any, made from the company's contribution to the provident

fund amount and interest thereon. On 20.10.1995, the

appellant submitted an application to the respondent No.1-

Company opting for the Pension Scheme, 1995 and gave an

undertaking to refund to respondent No.1-Company the entire

amount of company's contribution to his provident fund

account together with interest as well as the entire amount of

non-refundable withdrawal, if any, made by him from

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company's contribution to his provident fund account and

interest thereon. The respondent No.1-Company, however,

intimated the appellant by letter dated 25.10.1995 that the

Pension Scheme, 1995 was not applicable to those who have

resigned from the respondent No.1-Company and since the

appellant has resigned, he will not be entitled for the Pensions

Scheme, 1995.

4. The appellant then filed Writ Petition No.692 of 1996

before the Madhya Pradesh High Court, Indore Bench, which

was dismissed by the learned Single Judge by order dated

15.02.2000. Aggrieved, the appellant initially filed Special

Leave Petition before this Court, but thereafter withdrew the

same and challenged the order of the learned Single Judge

before the Division Bench of the Madhya Pradesh High Court

in Writ Appeal No.224 of 2006. The Division Bench of the

Madhya Pradesh High Court held in the impugned order that

under Clause 22 of the Pension Scheme, 1995, resignation

entails forfeiture of the past services and as the appellant has

resigned from service, even if he had worked for 20 years in

respondent No.1-Company, he cannot be equated with an

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employee who had taken voluntary retirement from service

under Clause 30 of the Pension Scheme, 1995 and the

Pension Scheme, 1995 did not apply to the appellant and

dismissed the Writ Appeal.

5. Mr. Sushil Kumar Jain, learned counsel for the

appellant, submitted that the High Court was not right in

coming to the conclusion that the appellant had resigned from

service. He submitted that though in the letter dated

16.09.1991 to the General Manager of the respondent no.1-

Company the appellant used the word `resigned', the letter was

actually a three months' notice for voluntary retirement. He

submitted that the appellant had rendered 20 years service

and 20 years service was the qualifying service for voluntary

retirement under Clause 30 of the Pension Scheme, 1995. He

submitted that since the appellant had rendered more than 20

years of service under the respondent no.1-Company, he was

entitled to the pension and such pension should not be denied

to him by saying that he had resigned from service and had

not taken voluntary retirement. He further submitted that

Clause 22 of the Pension Scheme, 1995 providing that

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resignation from the service of the respondent no.1-Company

shall entail forfeiture of his entire past service and

consequently shall not qualify for pensionary benefits, was not

in existence when the appellant submitted his letter dated

16.09.1991 and the only provision that was in force was

Clause 5 of the General Insurance (Termination,

Superannuation and Retirement of Officers and Development

Staff) Scheme, 1976, (for short `the Scheme 1976') which

provided that an officer or a person of the Development Staff

shall not leave or discontinue his service without first giving a

three months notice in writing to the appointing authority of

his intention to leave or discontinue the service. He submitted

that had there been a provision similar to Clause 22 of the

Pension Scheme, 1995 in the Scheme, 1976, he would not

have used the word `resigned' in his letter dated 19.06.1991.

He cited the decisions of this Court in Sudhir Chandra Sarkar

v. Tata Iron and Steel Co. Ltd. & Ors. [AIR 1984 SC 1064], J.K.

Cotton Spinning and Weaving Mills Company Ltd. v. State of

U. P. & Ors. [(1990) 4 SCC 27], Union of India & Ors. v. Lt. Col.

P.S. Bhargava [(1997) 2 SCC 28] and Sansar Chand Atri v.

7 State of Punjab & Anr. [(2002) 4 SCC 154] to contend that the

resignation of the appellant actually amounted to voluntary

retirement in the facts and circumstances of the case. He

vehemently argued that it has been held in D.S. Nakara & Ors.

v. Union of India [(1983) 1 SCC 305] and Chairman, Railway

Board & Ors. v. C. R. Rangadhamaiah & Ors. [AIR 1997 SC

3828] that pension is neither a bounty nor a matter of grace

but is a payment for the past services rendered by an

employee. He relied on the decisions of this Court in S.

Appukuttan v. Thundiyil Janaki Amma & Anr. [(1988) 2 SCC

372], Vatan Mal v. Kailash Nath [(1989) 3 SCC 79], Employees'

State Insurance Corporation v. R.K. Swamy & Ors. [(1994) 1

SCC 445] and Union of India & Anr. v. Pradeep Kumari & Ors.

[(1995) 2 SCC 736] for the proposition that while interpreting a

statute the Court must have regard to the legislative intent

and should not take a narrow or restricted view which will

defeat the beneficial purpose of the statute.

6. Mr. Balaji Subramanian, learned counsel for the

respondents, on the other hand, submitted that the letter

dated 16.09.1991 of the appellant to the General Manager of

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the respondent no.1-Company used the word `resigned' and,

therefore, the appellant actually resigned from service and did

not take voluntary retirement. He cited a decision of this

Court in UCO Bank & Ors., etc. v. Sanwar Mal, etc. [(2004) 4

SCC 412] in which this Court, while construing the UCO Bank

(Employees') Pension Regulations, 1995 which had similar

provisions, held that the words `resignation' and `voluntary

retirement' carry different meanings and an employee, who

has resigned from the service, was not entitled to pension. He

also relied on the decision of this Court in Reserve Bank of

India & Anr. v. Cecil Dennis Solomon & Anr. [(2004) 9 SCC 461]

in which this Court, while construing the provisions of the

Reserve Bank of India Pension Regulations, 1990, has held

that in service jurisprudence, the expressions "resignation"

and "voluntary retirement'' convey different connotations and

a person who has resigned is not entitled to pension.

7. We have perused the decisions of this Court cited by

learned counsel for the respondents. In Reserve Bank of India

& Anr. v. Cecil Dennis Solomon & Anr. (supra) employees of the

Reserve Bank of India had tendered their resignations in 1988

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and were getting superannuation benefits under the provident

fund contributory provisions and gratuity schemes.

Subsequently, the Reserve Bank of India Pension Regulations,

1990 were framed. The employees who had tendered

resignations in 1988 claimed that they were entitled to

pension under these new Pension Regulations and moved the

Bombay High Court for relief and the High Court held that the

Reserve Bank of India was legally bound to grant pension to

such employees. The Reserve Bank of India challenged the

decision of the Bombay High Court before this Court and this

Court held that as the employees had tendered resignation

which was different from voluntary retirement, they were not

entitled to pension under the Pension Regulations. Similarly,

in UCO Bank & Ors., etc. v. Sanwar Mal, etc. (supra) Sanwar

Mal, who was initially appointed in the UCO Bank on

29.12.1959 and was thereafter promoted to Class III post in

1980, resigned from the service of the UCO Bank after giving

one month's notice on 25.02.1988. Thereafter, the UCO Bank

(Employees') Pension Regulations, 1995 were framed and

Sanwar Mal opted for the pension scheme under these

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regulations. The UCO Bank declined to accept his option to

admit him into the pension scheme. Sanwar Mal filed a suit

for a declaration that he was entitled to pension under the

Pension Regulations and for a mandatory injunction directing

the UCO Bank to make payment of arrears of pensions along

with interest. The suit was decreed and the decree was

affirmed in first appeal and thereafter by the High Court in

second appeal. The UCO Bank carried an appeal to this Court

and this Court differentiated "resignation" from "voluntary

retirement" and allowed the appeal and set aside the judgment

of the High Court. In these two decisions, the Courts were not

called upon to decide whether the termination of services of

the employee was by way of resignation or voluntary

retirement. In this case, on the other hand, we are called

upon to decide the issue whether the termination of the

services of the appellant in 1991 amounted to resignation or

voluntary retirement.

8. For deciding this issue, we have to look at the Clause 5

of the Scheme, 1976 made under Section 10 of the Act under

which the services of the appellant were terminated after he

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submitted his letter dated 16.09.1991 to the General Manager

of respondent No.1- Company saying that he would like to

resign from his post and requesting him to treat the letter as

three months' notice and to relieve him from his services.

Clause 5 of the Scheme, 1976 is quoted hereinbelow:

"5. Determination of Service:

(1) An officer or a person of the Development

Staff, other than one on probation shall not

leave or discontinue his service without first

giving in writing to the appointing authority

of his intention to leave or discontinue the

service and the period of notice required to

be given shall be three months;

Provided that such notice may be waived in

part or in full by appointing authority at its

discretion.

Explanation I - In this Scheme, month shall

be reckoned according to the English

Calendar and shall commence from the day

following that on which the notice is

received by the Corporation or the

Company, as the case may be.

Explanation II - A notice given by an officer

or a person of the Development Staff under

this paragraph shall be deemed to be proper

only if he remains on duty during the period

of notice and such officer or person shall

not be entitled to set off any leave earned

against the period of such notice.

1 (2) In case of breach by an officer or a

person of the Development Staff of the

provisions of sub-paragraph (1), he shall be

liable to pay to the Corporation or the

Company concerned, as the case may be, as

compensation a sum equal to his salary for

the period of notice required of him which

sum may be deducted from any monies due

to him."

It will be clear from the language of sub-clause (1) of Clause 5

of the Scheme, 1976 that an officer or a person of the

Development Staff could leave or discontinue his services after

giving in writing to the appointing authority of his intention to

leave or discontinue of the services and the period of such

notice required to be given was three months. It is in

accordance with this statutory provision that the appellant

submitted his letter dated 16.09.1991 to the General Manager

of respondent No.1-Company saying that he would like to

resign from his post and requesting him to treat the letter as

three months' notice and to relieve him from his services and

it is in accordance with this statutory provision that the

competent authority accepted his resignation with effect from

16.12.1991, i.e. after completion of three months' notice. Sub-

1 clause (1) of Clause 5 does not state that the termination of

service pursuant to the notice given by an officer or a person

of the Development Staff to leave or discontinue his service

amounts to "resignation" nor does it state that such

termination of service of an officer or a person of the

Development Staff on his serving notice in writing to leave or

discontinue in service amounts to "voluntary retirement".

Sub-clause (1) of Clause 5 does not also make a distinction

between "resignation" and "voluntary retirement" and it only

provides that an employee who wants to leave or discontinue

his service has to serve a notice of three months to the

appointing authority. We also notice that sub-clause (1) of

Clause 5 does not require that the appointing authority must

accept the request of an officer or a person of the Development

Staff to leave or discontinue his service but in the facts of the

present case, the request of the appellant to relieve him from

his service after three months' notice was accepted by the

competent authority and such acceptance was conveyed by

the letter dated 28.10.1991 of the Assistant Administrative

Officer, Indore.

1 9. We may now look at Clauses 22 and 30 of the Pension

Scheme, 1995 which are quoted hereinbelow:

"22. Forfeiture of Service: Resignation or

dismissal or removal or termination or

compulsory retirement or an employee from the

service of the Corporation or a Company shall

entail forfeiture of his entire past service and

consequently shall not qualify for pensionary

benefits.

30. Pension on Voluntary Retirement: (1) At

any time after an employee has completed twenty

years of qualifying service, he may, by giving

notice of not less than ninety days, in writing to

the appointing authority, retire from service:

Provided that this sub-paragraph shall not apply

to an employee who is on deputation unless after

having been transferred or having returned to

India he has resumed charge of the post in India

and has served for a period of not less than one

year:

Provided further that this sub-paragraph shall

not apply to an employee who seeks retirement

from service for being absorbed permanently in

an autonomous body or a public sector

undertaking to which he is on deputation at the

time of seeking voluntary retirement.

(2) The notice of voluntary retirement given under

sub-paragraph (1) shall require acceptance by the

appointing authority:

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Provided that where the appointing authority

does not refuse to grant the permission for

retirement before the expiry of the period

specified in the said notice, the retirement shall

become effective from the date of expiry of the

said period.

(3)(a) An employee referred to in sub-paragraph

(1) may make a request in writing to the

appointing authority to accept notice of voluntary

retirement of less than ninety days giving reasons

therefor;

(b) on receipt of request under clause (a), the

appointing authority may, subject to the

provisions of sub-paragraph (2), consider such

request for the curtailment of the period of notice

of ninety days on merits and if it is satisfied that

the curtailment of the period of notice will not

cause any administrative inconvenience, the

appointing authority may relax the requirement

of notice of ninety days on the condition that the

employee shall not apply for commutation of a

part of his pension before the expiry of the notice

of ninety days.

(4) An employee who has elected to retire under

this paragraph and has given necessary notice to

that effect to the appointing authority shall be

precluded from withdrawing his notice except

with the specific approval of such authority:

Provided that the request for such withdrawal

shall be made before the intended date of his

retirement.

(5) The qualifying service of an employee retiring

voluntarily under this paragraph shall be

increased by a period not exceeding five years,

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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.

(6) The pension of an employee retiring under this

paragraph shall be based on the average

emoluments as defined under clause (d) of

paragraph 2 of this scheme and the increase, not

exceeding five years in his qualifying service,

shall not entitled him to any notional fixation of

pay for the purpose of calculating his pension;

Explanation: For the purpose of this paragraph,

the appointing authority shall be the appointing

authority specified in Appendix-I to this scheme."

10. The Pension Scheme, 1995 was framed and notified

only in 1995 and yet the Pension Scheme, 1995 was made

applicable also to employees who had left the services of the

respondent No.1-Company before 1995. Clauses 22 and 30 of

the Pension Scheme, 1995 quoted above were not in existence

when the appellant submitted his letter dated 16.09.1991 to

the General Manager of respondent No.1-Company. Hence,

when the appellant served his letter dated 16.09.1991 to the

General Manager of respondent No.1- Company, he had no

knowledge of the difference between `resignation' under Clause

22 and `voluntary retirement' under Clause 30 of the Pension

1

Scheme, 1995. Similarly, the respondent No.1-Company

employer had no knowledge of the difference between

`resignation' and `voluntary retirement' under Clauses 22 and

30 of the Pension Scheme, 1995 respectively. Both the

appellant and the respondent No.1 have acted in accordance

with the provisions of sub-clause (1) of Clause 5 of the

Scheme, 1976 at the time of determination of service of the

appellant in the year 1991. It is in this background that we

have now to decide whether the determination of service of the

appellant under sub-clause (1) of Clause 5 of the Scheme,

1976 amounts to resignation in terms of Clause 22 of the

Pension Scheme, 1995 or amounts to voluntary retirement in

terms of Clause 30 of the Pension Scheme, 1995. Clause 22 of

the Pension Scheme, 1995 states that resignation of an

employee from the service of the Corporation or a Company

shall entail forfeiture of his entire past service and

consequently shall not qualify for pensionary benefits, but

does not define the term "resignation". Under sub-clause (1) of

Clause 30 of the Pension Scheme, 1995, an employee, who has

completed 20 years of qualifying service, may by giving notice

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of not less than 90 days in writing to the appointing authority

retire from service and under sub-clause (2) of Clause 30 of

the Pension Scheme, 1995, the notice of voluntary retirement

shall require acceptance by the appointing authority. Since

`voluntary retirement' unlike `resignation' does not entail

forfeiture of past services and instead qualifies for pension, an

employee to whom Clause 30 of the Pension Scheme, 1995

applies cannot be said to have `resigned' from service. In the

facts of the present case, we find that the appellant had

completed 20 years qualifying service and had given notice of

not less than 90 days in writing to the appointing authority of

his intention to leave service and the appointing authority had

accepted notice of the appellant and relieved him from service.

Hence, Clause 30 of the Pension Scheme, 1995 applied to the

appellant even though in his letter dated 16.09.1991 to the

General Manager of respondent no.1-Company he had used

the word `resign'.

11. We may now cite the authorities in support of our

aforesaid conclusion. In Sudhir Chandra Sarkar v. Tata Iron

and Steel Co. Ltd. & Ors. (supra), the plaintiff had rendered

1

continuous service under the respondent from 31.12.1929 till

31.08.1959, i.e. for 20 years and 8 months. He submitted a

letter of resignation dated 27.07.1959 and his resignation was

accepted by the respondent by letter dated 26.08.1959 and he

was released from his service with effect from 01.09.1959. On

these facts, a three-Judge Bench of this Court held:

"The termination of service was thus on account of

resignation of the plaintiff being accepted by the

respondent. The plaintiff has, within the meaning

of the expression, thus retired from service of the

respondent and he is qualified for payment of

gratuity in terms of Rule 6."

12. In Union of India & Ors. v. Lt. Col. P.S. Bhargava (supra),

respondent joined the Army Dental Corps in 1960 and

thereafter he served in various capacities as a specialist and

on 02.01.1984 he wrote a letter requesting for permission to

resign from service with effect from 30.04.1984 or from an

early date. His resignation was accepted by a communication

dated 24.07.1984 and he was released from service and he

was also informed that he shall not be entitled to gratuity,

pension, leave pending resignation and travel concession. On

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receipt of this letter, he wrote another letter dated 18.08.1984

stating that he was not interested in leaving the service. This

was followed by another letter dated 22.08.1984 praying to the

authority to cancel the permission to resign. These letters

were written by the respondent because he realized that he

would be deprived of his pension, gratuity, etc. as a

consequence of his resignation. These subsequent letters

dated 18.08.1984 and 22.08.1984 were not accepted and the

respondent was struck off from the rolls of the Army on

24.08.1984. On these facts, the Court held:

"Once an officer has to his credit the

minimum period of qualifying service, he

earns a right to get pension and as the

Regulations stand that right to get pension

can be taken only if an order is passed under

Regulations 3 or 16."

13. 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

2

provisions, the Court will have to keep in mind the purposes of

the statutory provisions. The general purpose of the Pension

Scheme, 1995, read as a whole, is to grant pensionary benefits

to employees, who had rendered service in the Insurance

Companies and had retired after putting in the qualifying

service in the Insurance Companies. Clauses 22 and 30 of the

Pension Scheme, 1995 cannot be so construed as to deprive of

an employee of an Insurance Company, such as the appellant,

who had put in the qualifying service for pension and who had

voluntarily given up his service after serving 90 days notice in

accordance with sub-clause (1) of Clause 5 of the Scheme,

1976 and after his notice was accepted by the appointing

authority.

14. In the result, we set aside the orders of the Division

Bench of the High Court in the Writ Appeal as well as the

learned Single Judge and allow this appeal as well as the Writ

Petition filed by the appellant and direct the respondents to

consider the claim of the appellant for pension in accordance

with the Pension Scheme, 1995 and intimate the decision to

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the appellant within three months from today. There shall be

no order as to costs.

..........................J.

(R. V. Raveendran)

..........................J.

(A. K. Patnaik)

New Delhi,

July 28, 2011.