Govt. Company Scheme Denying Pensionary Benefits To Employee Who Resigned Before Retirement Discriminatory: Bombay HC
|The Bombay High Court has granted relief to a employee of a central public sector enterprise who was denied pensionary benefits after he resigned soon before official retirement and consequent superannuation, declaring the scheme to be discriminatory.
The Court was hearing a Writ Petition challenging the validity of a scheme by MOIL Ltd., a state-owned manganese-ore mining company, which provided that that no amount or benefit would be given to the member in case of resignation and the amount accumulated under the name of such member of the scheme shall be transferred and credited to the company’s account or adjusted against annual contribution payable by the company to a trust or the Life Insurance Corporation of India.
A Division-Bench comprising Justice Avinash G. Gharote and Justice Abhay J. Mantri held, "Since it is not disputed that the petitioner qualifies the eligibility criteria for grant of pensionary benefits, as contained in...the Scheme and neither the Scheme nor the Service Regulations applicable provide for forfeiture of the entire past services rendered and consequently pensionary benefits, and since... the Scheme has been held to be discriminatory, we allow the petition by holding that the petitioner is entitled to the benefits of the MOIL GSCA (Defined Contribution) (Group Superannuation Cash Accumulation) Scheme."
Advocate Akshay Sudame appeared for the Petitioner and Advocate S.S. Ghate appeared for the Respondents.
In pursuance to the recommendations of the Second Pay Revision Commission, the Government of India by an office memorandum formulated the MOIL Group Superannuation Cash Accumulation Scheme (Defined Contribution) Rules that specified that the eligibility criteria for pension.
The scheme initially had the conditions that, to be eligible for pensionary benefits under the new scheme, an employee must have been in service since a set date (a condition which the Petitioner met), must be superannuated and spent a minimum of 15 years of service. The scheme was later amended and the second and their requirements were done away with.
The Petitioner, who was one of the Executive Directors of MOIL was to superannuate in May 2023, but tendered his resignation due to his health condition around two months prior, which was accepted subject to deduction and adjustments in lieu of the shortfall of notice period.
Soon after, the Petitioner received his retiral benefits consisting of gratuity and leave encashment, however, the amount under the pension scheme was not released to him. Challenging the decision, he argued that the pension scheme was arbitrary for discriminating against persons who resign from service, as opposed to being superannuated and that this violates the right to equality. He also argued that the decision would not withstand the constitutional guarantee that no person shall be deprived of his property save by authority of law contained Article 300A.
"Clause 7(b) contemplates denial of amount/benefit (annuity/pension) to an employee, who is also member of the Scheme, on resignation." the Court noted from the contents of the scheme.
Upon further perusal of the conditions of the scheme, noticed that the scheme creates a distinction between simplicitor resignation and resignation for the purpose of joining another Central Public Sector Enterprise (CPSE). If an employee resigned for joining CPSE after completing 15 years of service, they would get the benefit. The Petitioner in the case had completed 15 years of service, but had not resigned to join another CPSE.
"Such inter se discrimination between resignation simplicitor (on health grounds) and resignation for joining another CPSE, even though a similar Scheme is not available, in fact is clearly discriminatory, and has no nexus with the object sought to be achieved, as indicated above." the Court said.
The Court also said an examination of the Service Regulations indicated that there was no which entails forfeiture of the past services of an employee upon resignation. "This being so, when the Service Regulations governing an employee, do not take away the benefit of his past services, upon his resignation, there is no reason whatsoever, why the benefit of the Scheme, should be permitted to be taken away from, and particularly so when the petitioner satisfies the eligibility criteria for being administered the benefit of the Scheme." the Court said.
Cause Title: Chandrabhan Atulkar v. MOIL Limited And Anr. [2024:BHC-NAG:14112-DB]
Click here to read/download the Judgment