Summary
A Delhi Transport Corporation conductor who resigned after more than 20 years of service forfeited his past service under Rule 26 of the CCS (Pension) Rules, 1972 and was not entitled to pension, since a resignation cannot be recast as voluntary retirement. His legal heirs were, however, entitled to gratuity under Section 4 of the Payment of Gratuity Act, 1972, which covers resignation, and to leave encashment, with interest.
Issues
- Whether an employee who resigned after more than 20 years of service is entitled to pension when Rule 26 of the CCS (Pension) Rules, 1972 provides that resignation entails forfeiture of past service.
- Whether the resignation could be treated as voluntary retirement so as to attract pension.
- Whether gratuity is payable under the Payment of Gratuity Act, 1972 to an employee who resigned.
- Whether the legal heirs are entitled to leave encashment.
Provisions considered
- Rule 26(1), Central Civil Services (Pension) Rules, 1972Resignation, unless allowed to be withdrawn in the public interest by the appointing authority, entails forfeiture of past service. The employee's resignation had been accepted and his request to withdraw it refused, so his past service stood forfeited. (¶¶ 9, 9.1, 9.6)
- Rules 36, 48 and 48-A, Central Civil Services (Pension) Rules, 1972These rules grant retiring pension on retirement after 30 or 20 years of qualifying service. Although the employee had over 20 years of service, the Court held they could not be invoked because his resignation attracted forfeiture under Rule 26. (¶¶ 9, 9.2, 9.3, 9.6)
- Section 4(1), Payment of Gratuity Act, 1972Gratuity is payable on termination of employment after at least five years of continuous service, including on resignation. The Court held the heirs entitled to gratuity notwithstanding the resignation. (¶¶ 10, 10.1, 10.2)
- Section 5, Payment of Gratuity Act, 1972It was undisputed that no notification exempting the Corporation from the Act had been issued by the appropriate government; the Act therefore applied and gratuity could not be denied. (¶ 10.2)
Held
- Under Rule 26 of the CCS (Pension) Rules, 1972, resignation entails forfeiture of past service; once the resignation was accepted and its withdrawal declined, the employee was not entitled to pension. (¶¶ 9.1, 9.6)
- Following BSES Yamuna Power Limited v. Ghanshyam Chand Sharma, a resignation cannot be reclassified as voluntary retirement, as that would erase the distinction between the two and render Rule 26 nugatory; completion of 20 years of service is immaterial once service stands forfeited on resignation. (¶¶ 9.5, 9.6)
- Section 4 of the Payment of Gratuity Act, 1972 makes gratuity payable to an employee with at least five years of continuous service whether the employment ends by retirement or resignation. (¶ 10.1)
- As the Corporation had not been exempted under Section 5 and could not show that the Act did not apply to it, the claim for gratuity could not be denied on the ground of resignation. (¶ 10.2)
- On the Corporation's concession, the amount due towards leave encashment was payable to the family of the deceased employee. (¶¶ 6.3, 11)
Result
Appeal partly allowed; legal heirs held entitled to gratuity under the Payment of Gratuity Act, 1972 and to leave encashment, payable within six weeks with interest at 6% per annum from the date of resignation till payment; claim to pension rejected.