Resignation will not entail cancellation of pension, ruled the Supreme Court in a recent landmark decision that marked a paradigm shift in pension laws. Till now, pension rules applied only to retired employees.
Finding no reason to deny the fruits of such a beneficial legislation to an employee who has put in years of service but had to forgo his pension just because he prematurely resigned from service either due to ill-health or family obligations, the Bench of Justices Vikramajit Sen and AM Sapre extended a helping hand to such class of employees through its judgement.
The judges noted, “The commendable objective of the Pension Rule 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 ends 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.”
The significant ruling by the apex court came in a case filed by a septuagenarian Asger Ibrahim Amin, who resigned as Deputy General Manager (Accounts) from life Insurance Corporation on February 28, 1991. He was just 50 when he quit and his three-month notice period was also waived by Corporation on grounds of his failing health and family problem.
But when Amin had resigned, there was no provision for voluntary retirement. The lIC (Employees) Pension Rules notified by the Central Government on June 28, 1995, much later after Amin resigned, however, provided for pension under voluntary retirement scheme. Also under the Pension Rules was another clause that upon resignation, the employee will lose his/her eligibility for pension. This was to apply retrospectively. The Corporation cited this rule to deny Amin pension. He took the matter to High Court, but lost as 14 years elapsed after he terminated service.
The apex court ruled out delay as a ground to defeat Amin’s appeal. The only question to be decided was whether resignation amounts to retirement. The Bench concluded that resignation can be “styled” as voluntary retirement. It held that lIC Pension Rules entitled allowed voluntary retirement for an employee who completes 20 years of service. Since Amin had put in 23 years of service, he would ordinarily be entitled for pension under this category.
The Bench said, “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.” The pension was ordered to be paid from 2009 onwards, three years prior to the date on which he approached HC. The court also directed Amin to reimburse the contribution made by lIC into his Provident Fund by either paying it upfront or getting it adjusted against his pension arrears.