“Resignation” of an employee results in forfeiture of past service and would not entitle such employee for claiming pension

The Court further held that “resignation” has the effect of termination of an employee and entails consequences different from that of “voluntary retirement” and pension cannot be claimed in the former case.

The above ratio was passed in the matter of BSES Yamuna Power Ltd. Vs. Sh. Ghanshyam Chand Sharma in Civil Appeal No. 9076 of 2019 decided on December 5, 2019.

Challenge

The first respondent was an employee of the appellant and tendered his resignation. Subsequently he was denied pensionary benefits by the appellant primarily on the ground that he had forfeited his past services by resigning and was not eligible for pension.  The issue came before a Single Judge of the Delhi High Court who 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 decision of the Single Judge as upheld by the Division Bench of the Delhi High Court.

The question before the Supreme Court was whether by resigning, the first respondent forfeited his past service. In effect, the Supreme Court was called upon to determine the legal effect of the first respondent’s letter of resignation and whether it would amount to “voluntary resignation”.

Held

The Supreme Court relied on the judgement of Senior Divisional Manager, LIC Vs. Shree Lal Meena and held that where an employee has resigned from service, there arises no question of whether he has in fact “voluntarily retired” or “resigned”. The 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.

The Court held that 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 CCS Pension Rules, 1972 states that upon resignation, an employee forfeits past service. 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. The Court further held that if this court were to re-classify his resignation as a case of voluntary retirement, it would obfuscate the distinction between the concepts of resignation and voluntary retirement and render the operation of Rule 26 nugatory. Therefore the finding of the Single Judge that the first respondent “voluntarily retired” was set aside.