Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6013 OF 2011          (Arising out S.L.P. (C) NO. 3777 OF 2007)

  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

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  

2

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  

3

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  

4

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  

5

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.  

6

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  

7

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  

8

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  

9

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  

1

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:

1

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,  

1

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  

1

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  

1

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  

2

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.    

2