Life Insurance Corporation of India Ltd. & Ors. v. Shree Lal Meena

14. To appreciate the controversy in hand, we are required to understand the principles stated in J.K. Cotton Spinning and Weaving Mills Company Ltd. (supra). In the said case, the question posed by the Court was when the service of an employee is terminated consequent upon the employer accepting the resignation voluntarily tendered by the employee, does the termination so brought about amount to “retrenchment” within the meaning of Section 2(s) read with Section 6-N of the Uttar Pradesh Industrial Disputes Act, 1947 (for short, “the State Act”). The High Court dealing with the issue came to the conclusion that the termination of service of the employee fell within the definition of “retrenchment” as enshrined in Section 2(s) of the State Act. The Court adverted to the definition under Section 2(s) of the State Act which defines “retrenchment” to mean the termination by the employer of the service of a workman for any reason whatsoever, otherwise than punishment inflicted by way of disciplinary action but did Page 13 not include voluntary retirement of the workman or retirement of the workman on reaching the age of superannuation, if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf. The Court referred to Section 6-N of the State Act which provided conditions precedent for retrenchment of a workman. The two-Judge Bench observed that provisions are pari materia with the 1947 Act. Be it noted, the Court further posed a question whether an employee whose resignation has been accepted by the employer falls within the first exclusion clause of the definition of the term “retrenchment”. The Court took note of the fact that the employee had tendered his resignation voluntarily and the termination of service was brought about by the acceptance of resignation. The Court referred to dictionary meaning of the term “resign” and the meaning of “retire”. We think it appropriate to reproduce the discussion from the said judgment:- “6. … The meaning of the terms ‘resign’ and ‘retire’ in different dictionaries is as under: Name of the Dictionary Meaning of ‘Resign’ Meaning of ‘Retire’ Page 14 Black’s Law (5th edn.) Formal renouncement or relinquishment of an office To terminate employment or service upon reaching retirement age Shorter Oxford English (Revised edn. of 1973) To relinquish, surrender, give up or hand over (something); esp., an office, position, right, claim, etc. To give up an office or position; to retire. The act of retiring or withdrawing to or from a place or position The Random House (College edn.) To give up an office, position etc.; to relinquish (right, claim, agreement etc.) To withdraw from office, business or active life.

7. From the aforesaid dictionary meanings it becomes clear that when an employee resigns his office, he formally relinquishes or withdraws from his office. It implies that he has taken a mental decision to sever his relationship with his employer and thereby put an end to the contract of service. As pointed out earlier just as an employer can terminate the services of his employee under the contract, so also an employee can inform his employer that he does not desire to serve him any more. Albeit, the employee would have to give notice of his intention to snap the existing relationship to enable the employer to make alternative arrangements so that his work Page 15 does not suffer. The period of notice will depend on the period prescribed by the terms of employment and if no such period is prescribed, a reasonable time must be given before the relationship is determined. If an employee is not permitted by the terms of his contract to determine the relationship of master and servant, such an employment may be branded as bonded labour. That is why in Central Inland Water Transport Corporation v. Brojo Nath Ganguly[4] this Court observed as under: (SCC p. 228, para 111) “By entering into a contract of employment a person does not sign a bond of slavery and a permanent employee cannot be deprived of his right to resign. A resignation by an employee would, however, normally require to be accepted by the employer in order to be effective”.

8. In the present case the employee’s request contained in the letter of resignation was accepted by the employer and that brought an end to the contract of service. The meaning of term ‘resign’ as found in the Shorter Oxford Dictionary includes ‘retirement’. Therefore, when an employee voluntarily tenders his resignation it is an act by which he voluntarily gives up his job. We are, therefore, of the opinion that such a situation would be covered by the expression ‘voluntary retirement’ within the meaning of clause (i) of Section 2(s) of the State Act. In Santosh Gupta V. State Bank of Patiala[5] case Chinnappa Reddy, J. observed as under: (SCC p. 342, para 5) “Voluntary retrenchment of a workman or the retrenchment of the workman on reaching the age of superannuation can hardly be

Page 16 described as termination, by the employer, of the service of a workman.” (Here the word ‘retrenchment’ has reference to ‘retirement’.) The above observation clearly supports the view which commends itself to us. We are, therefore, of the opinion that the High Court was not right in concluding that because the employer accepted the resignation offer voluntarily made by the employee, he terminated the service of the employee and such termination, therefore, fell within the expression ‘retrenchment’ rendering him liable to compensate the employee under Section 6-N. We are also of the view that this was a case of ‘voluntary retirement’ within the meaning of the first exception to Section 2(s) and therefore the question of grant of compensation under Section 6-N does not arise. We, therefore, cannot allow the view of the High Court to stand.” We have referred to the said decision in detail as the High Court has placed heavy reliance on the same.

15. In Reserve Bank of India and another v. Cecil Dennis Solomon and another[6], the Court while analysing the Reserve Bank of India Pension Regulations, 1990, observed thus:-

16. In UCO Bank and others v. Sanwar Mal10, a two-Judge Bench referred to the decision in Cecil Dennis Solomon (supra) and opined thus:-

17. In Sheelkumar Jain v. New India Assurance Company Limited and others11, the Court made a distinction between effect of resignation and voluntary retirement while interpreting the General Insurance (Employees) Pension Scheme, 1995 and distinguished the decisions in Cecil Dennis Solomon (supra) and Sanwar Mal (supra) while observing thus:- “In these two decisions, Sanwar Mal (supra) and Cecil Dennis Solomon (supra), 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.” Be it noted, in the said case it has also been stated that:- “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

18. In this regard, learned counsel for the respondent has placed heavy reliance on the decision in National Insurance Company Limited and another v. Kirpal Singh12 wherein the Court observed that the question that fell for determination was whether the respondents who opted for voluntary retirement from service of the appellant companies were entitled to claim pension under the General Insurance (Employees) Pension Scheme, 1995. The Court took note of the definition of the terms “retirement”, “superannuation pension” and “pension on voluntary retirement” and in that context, observed:-

17. In the case at hand Para 2 of the Pension Scheme, 1995 (extracted earlier) defines the expressions appearing in the Scheme. But what is important is that such definitions are good only if the context also supports the meaning assigned to the expressions defined by the definition clause. The context in which the question whether pension is admissible to an employee who has opted for voluntary retirement under the 2004 Scheme assumes importance as Para 2 of the Scheme starts with the words “In this Scheme, unless the context otherwise requires”. There is nothing in the context of the 1995 Scheme which would exclude its beneficial provisions from application to employees who have opted for voluntary retirement under the Special Scheme, 2004 or vice versa. The term retirement must in the context of the two schemes, and the Page 24 admissibility of pension to those retiring under the SVRS of 2004, include retirement not only under Para 30 of the Pension Scheme, 1995 but also those retiring under the Special Scheme of

2004. That apart, any provision for payment of pension is beneficial in nature which ought to receive a liberal interpretation so as to serve the object underlying not only of the Pension Scheme, 1995 but also any special scheme under which employees have been given the option to seek voluntary retirement upon completion of the prescribed number of years of service and age.”

19. In Shashikala Devi v. Central Bank of India and others13, the issue was whether the bank was justified in treating a letter of the employee as a letter of resignation from service. The Court referred to Regulation 29 of the Central Bank of India (Employees) Pension Regulations, 1995 and took note of the fact that the employee was entitled to take voluntary retirement and, in that context observed whether or not a given communication is a letter of resignation simpliciter or can as well be treated to be a request for voluntary retirement will always depend upon the facts and circumstances of each case and the provisions of the rules applicable. Elaborating the said facet, the Court adverted to the concept of pension and examined the true

Page 25 purport of the letter and came to hold that the letter was to seek voluntary retirement and not resignation from employment. The Court placed reliance on the pronouncements of Sudhir Chandra Sarkar v. TISCO Ltd.14 and Union of India v. Pradeep Kumari15.

20. Learned counsel for the respondent also placed reliance on Asger Ibrahim Amin v. Life Insurance Corporation of India16 wherein the Court was interpreting the 1995 Rules with which we are concerned in this case. In the said case, a contention was raised that the employee having resigned from service was not eligible to claim pension under the 1995 Rules. The Court referred to Rule 31 of the 1995 Rules which deals with voluntary retirement. The Court referred to the authority in Sheelkumar (supra) and thereafter referred to paragraph 10 of Cecil Dennis Solomon case (supra) which we have reproduced hereinbefore and opined thus:- “The legal position deducible from the above observations further amplifies that the so-called resignation tendered by the Appellant was after satisfactorily serving the period of 20 years ordinarily qualifying or enabling voluntary

(2015) 9 JT 329: (2015) 10 SCALE 639 Page 26 retirement. Furthermore, while there was no compulsion to do so, a waiver of the three months notice period was granted by the Respondent Corporation. The State being a model employer should construe the provisions of a beneficial legislation in a way that extends the benefit to its employees, instead of curtailing it.”

21. It is noticeable that the two-Judge Bench distinguished the authorities in Shyam Babu Verma v. Union of India17, State of M.P. v. Yogendra Shrivastava18, M.R. Prabhakar v. Canara Bank19, Kirpal Singh (supra) and Sanwar Mal (supra) and eventually ruled thus:- “We thus hold that the termination of services of the Appellant, in essence, was voluntary retirement within the ambit of Rule 31 of the Pension Rules of 1995. The Appellant is entitled for pension, provided he fulfils the condition of refunding of the entire amount of the along with interest accrued thereon as provided in the Pension Rules of 1995. Considering the huge delay, not explained by proper reasons, on part of the Appellant in approaching the Court, we limit the benefits of arrears of pension payable to the Appellant to three years preceding the date of the petition filed before the High Court. These arrears of pension should be paid to the Appellant in one instalment within four weeks from the date of refund of the entire amount payable by the Appellant in accordance of the

Page 27 Pension Rules of 1995. In the alternative, the Appellant may opt to get the amount of refund adjusted against the arrears of pension. In the latter case, if the amount of arrear is more than the amount of refund required, then the remaining amount shall be paid within two weeks from the date of such request made by the Appellant. However, if the amount of arrears is less than the amount of refund required, then the pension shall be payable on monthly basis after the date on which the amount of refund is entirely adjusted.”

22. It is submitted by the learned counsel for the appellants that though the authority in Asger Ibrahim Amin (supra) deals with the 1995 Rules, it has really been guided by the concept of “beneficial legislation” and distinguished the authorities in similar situations and, therefore, the matter requires to be considered by a larger Bench. Emphasis is laid on the spinal issue that the resignation cannot be equated with voluntary retirement, unless there is a deeming provision to that effect.

23. The Court had referred to Section 3 of the 1960 Regulations which deals with “Termination” and contains Regulation 18 and Regulation 19. The relevant part of Regulation 18 reads as under:- “Regulation 18. Determination of Service: Page 28 (1) An employee, other than an employee on probation or an employee appointed on a temporary basis, shall not leave or discontinue his service in the Corporation without first giving notice in writing to the competent authority of his intention to leave or discontinue the service. The period of notice required shall be- (a) three months in the case of an employee belonging to Class I (b) one month in the case of other employees. Provided that such notice may be waived in part or in full by the competent authority at its discretion. In case of breach by an employee of the provisions of the sub-regulation, he shall be liable to pay the Corporation as compensation a sum equal to his salary for the period of notice required of him, which sum may be deducted from any moneys due to him. (2) The Chairman, the Executive Committee or the Corporation may determine the service of any permanent employee at any time on giving him- (a) three month’s notice or salary in lieu thereof if he is an employee in Class 1, and (b) one month’s notice or salary in lieu thereof if he is an employee in any other class Provided however, that the period of notice will be doubled in the case of employees who have served for 10 years or more. Provided further that no order under this regulation shall be made by an authority subordinate to the appointing authority Page 29 (3) Nothing contained in this regulation shall affect the right of the appointing authority to retire, discharge, remove or dismiss an employee without notice or salary in lieu thereof in accordance with the provisions of Regulation 39 or to terminate the services of any employee belonging to Class II in accordance with the provisions contained in Schedule III. Explanations 1. The expression “month” used in this regulation shall be reckoned according to the English calendar and shall commence from the day following that on which notice is received by the Corporation or the employee as the case may be. x x x x x” Relevant part of Regulation 19 is to the following effect:- “Regulation 19. Superannuation and Retirement: (1) An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II shall retire on completion of age 60; but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 55 years of age or at any time thereafter, on giving him three months notice or salary in lieu thereof. Provided that an employee who is a member of any approved superannuation fund as defined in clause (a) of Section 58-N of the Indian Income tax Act, 1922 and which has been recognised and allowed to be continued by the Corporation, shall be permitted upon request to retire before the date of retirement specified in this sub-regulation either (a) on completion of 25 years of service or Page 30 (b) on completion of 20 years of service, provided he has reached age 50 or (c) on completion of 20 years of service if he is incapacitated for further active service. (2) An employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 60 years of age, but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age or at any time thereafter on giving him three months’ notice or salary in lieu thereof.

24. The relevant part of Regulation 19(2A) which was notified on 16.02.1996 reads as follows:- “Regulation 19(2A). (a) Notwithstanding what is stated in sub-rules (1) and (2) above, an employee may be permitted to retire at any time on completion of the age 55 after giving three months notice in writing to the appointing authority of his intention to retire. (b) (i) Notwithstanding the provisions of Clause (a), an employee governed by the Life Insurance Corporation of India (Employees) Pension Rules, 1995 may be permitted to retire at any time after he has completed twenty years of qualifying service, by giving notice of not less than ninety days, in writing to the appointing authority. Provided that this sub-clause shall not apply to an employee who is on deputation unless after having been transferred or having returned to India, he has resumed charge on the post in Page 31 India and has served for a period of not less than one year. Provided further that this sub-clause 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.

(ii) The notice of voluntary retirement given under sub-clause (i) of clause (b) shall require acceptance by the appointing authority. 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. (iii) (A) An employee referred to in sub-clause (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 such a request, the appointing authority may, subject to the provisions of sub-clause (ii) of clause (b), 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 such notice. Page 32

25. It is apposite to note here that in Asger Ibrahim Amin (supra), the two-Judge Bench has referred to the scheme of the 1995 Rules and taken note of the voluntary retirement as mentioned in the sub-rule (ii) of Rule 2(s). It has also referred to the relevant part of Rule 31 which we have already reproduced hereinabove and considered the question regarding interpretation of retrospective applicability of the notification in the following manner:- “The Respondent Corporation has vehemently argued that the termination of services is under Regulation 18 (supra) of the LIC (Staff) Regulations, 1960 and is not covered by the Pension Rules of 1995. Respondent Corporation has controverted the plea of the Appellant that at the relevant date and time, viz. 28.1.1991 there was no alternative for him except to tender his resignation, pointing out that he could not have sought voluntary retirement under Regulation 19(2A) of 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(2A) was, in fact, notified in the Gazette of India on 16.2.1996, that is after the pension scheme came into existence with effect from 1.11.1993. Otherwise there would have been no conceivable reason for the Appellant not to have taken advantage of this provision which would have protected his pensionary rights.” [Emphasis added] Page 33

26. As we find the aforesaid analysis has been made on the basis of the principles stated in Sheelkumar’s case (supra). Submission of Mr. Goburdhan, learned counsel for the appellants is that the analysis made in Asger Ibrahim Amin (supra) in respect of the 1995 Rules is not correct. It is apt to note here that 1995 Rules has been given retrospective effect on two scores, namely, the provisions will apply retrospectively with effect from the 1st day of November, 1993; and even employees who retired after the 1st day of January, 1986 and before the 1st day of November, 1993 could be entitled to exercise option to be covered under the pension scheme, subject to stipulated pre-conditions. We have already referred to Rule 3 of the 1995 Rules. As is demonstrable, the retiring employees who had been paid provident fund had to exercise their option and refund the amount paid with interest within the requisite time frame. Appreciated in this manner, it is obvious that the 1995 Rules do not postulate and do not give liberty/right to the retiring employees covered by Rule 3 to exercise option at any time. The window period and Page 34 pre-conditions were specific and mandatory. It has been noted in Asger Ibrahim Amin (supra) that there was no provision for voluntary retirement before the enforcement of the 1995 Rules. Voluntary retirement provision was introduced by the 1995 Rules under Rule 31 of the said Rules. Prior to enforcement of the aforesaid Rules, there was no concept in the Corporation which pertained to voluntary retirement. Section 2(s) of the 1995 Rules refers to voluntary retirement in accordance with the provisions contained in Rule 31 of the 1995 Rules. Rule 31 has not been given retrospective operation and effect. The retrospective operation of the 1995 Rules in entirety is limited to the employees, who had retired in normal course of superannuation. Needless to say, resignation has the effect of termination of an employee. Voluntary retirement though has the effect of termination of employee yet it has different 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 Page 35 1995 Rules specifically provides that on resignation, dismissal, removal, termination or compulsory retirement, the employee shall forfeit the entire 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.

27. We may further note here that whether an employee can take voluntary retirement would depend upon the conditions of employment and the rules applicable to the scheme of voluntary retirement. When Rule 31 was not in operation, the question would arise whether the benefit can be given to an employee who had retired from service. Be it noted that the 1995 Rules are not entirely retrospective. They have limited retrospectivity. Rule 31 expressly has not been made retrospective. Retrospectivity creates a given fiction and, therefore, unless there is express provision or it can be impliedly inferred from the plain and unambiguous language used, a provision should not be given retrospectivity. To arrive at the real meaning, it is always necessary to understand the scope and object of the whole enactment or the rules. In the said context, the relevant Page 36 factors are general scope and purview of the statute; remedy sought to be achieved; former state of law and what was contemplated. Unless these conditions are satisfied, it is difficult to treat Rule 31 of the 1995 Rules as retrospective, in the absence of any deemed clause that the employees who had earlier resigned shall be treated as employees as if they had voluntarily retired. In fact, if such an interpretation is placed on the said Rule, it will be travelling beyond the language employed therein. In Asger Ibrahim Amin (supra), retrospectivity has been given to Rule 31, and for said purpose the amendment to the 1960 Regulations, specifically Regulation 19(2A) 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 (supra).

28. In view of the aforesaid analysis, let the matter be placed before Hon’ble Chief Justice of India for constitution Page 37 of a larger Bench. Till the matter is decided, the Life Insurance Corporation, the appellant herein, shall go on paying fifty per cent of the pensionary amount to the respondent, commencing from 1st December, 2015 ....................... J. (Dipak Misra) ........................ J. (Prafulla C. Pant) New Delhi; November 26, 2015.