Resignation Not Equivalent To Retirement For Leave Encashment Unless Enabled By Statute: Kerala High Court
The Kerala High Court held that an employee, who leaves the service either on retirement, voluntary or otherwise, or on resignation, has no vested/inherent right to stake a claim for leave encashment, unless otherwise enabled by the statute or by norms or rules regulating conditions of service.
A Division Bench of Justice Alexander Thomas and Justice C. Jayachandran while hearing an appeal against the Judgment of the Single Judge directing the Company to disburse leave encashment to the employee who resigned held that, “The incident of retirement, either voluntary or on superannuation, is a sine qua non for claiming the benefit of earned leave as per the above norms. The petitioner has not secured either voluntary retirement or superannuation retirement. His resignation cannot be equated to voluntary retirement, since he resigned before he had attained the cut off age of 55 years. There is no question of even remotely treating his resignation as voluntary retirement, in any view of the matter.”
This appeal filed by the National Insurance Company challenged a judgment by a Single Judge. The judgment had ordered the appellants to pay the respondent's accrued leave encashment along with 6% interest per annum within two months from the date of receiving the judgment.
The respondent, who had served the National Insurance Company Ltd. for 21 years, resigned from their position. Despite being informed about entitlement to earned leave encashment, the amount was not disbursed. The respondents's attempts to seek encashment through representations went unanswered. In response, the present appellant had rejected his representation by an order stating that earned leave benefits are available only to retirees, not to those who resign.
Advocate Thampan Thomas appeared for the Appellants/Respondents and Senior Advocate E.K. Nandakumar appeared for the Respondent/Petitioner.
The Court noted that the case involved employees of the appellant/company governed by the General Insurance (Termination, Superannuation and Retirement of Officers and Development Staff) Scheme, 1976. The respondent opted for this scheme over the 1995 Pension Scheme. Clause 4(5)(a) of the 1976 Scheme allows earned leave encashment for retirees or those voluntarily retiring, excluding those in Clauses 4(4) and 5. The Court noted that the respondent's resignation falls under Clause 5, which mandates a three-month notice before discontinuing service. The respondent gave two months' notice and argued that Clause 5 doesn't apply.
“It is therefore clear and beyond the cavil of any doubt that Clause 4(5) dealing with earned leave encashment is not applicable to officers covered by Clause 5 by virtue of the proviso to Clause 4(5). Resultantly, the petitioner's claim for earned leave encashment is not supported by the statutory regime in Annexure-R2(A) Scheme.”
However, the Court held that Clause 4(5)(a) exclusion applies, and the respondent didn't meet retirement criteria, so leave encashment was denied. The Single Judge's judgment was set aside, and the writ petition by the respondent was dismissed.
Consequently, this writ appeal was allowed.
Cause Title: National Insurance Company Ltd. & Ors. v. S. Sudeep Kumar, 2023:KER:49445
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