1. Employees who availed of a voluntary retirement scheme claim enhanced pension based on subsequent retrospective pay-scale revisions. (Para 2 , 3 , 12 , 13 , 14 , 17 , 18 )
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2019 Supreme(SC) 1033
SUPREME COURT OF INDIA
Sanjay Kishan Kaul, K.M. Joseph, JJ.
IFCI LTD. – Appellant
Versus
Sanjay Behari & Ors. – Respondents
Civil Appeal No.6995 of 2019
Decided On : 17-09-2019
Important Points
IMPORTANT POINTS
(1) Any scheme for voluntary retirement is a package by itself.
(2) Voluntary Retirement – Private respondents cannot claim parity with such people who had retired after full length of service and did not terminate their relationship.
(1) Any scheme for voluntary retirement is a package by itself.
(2) Voluntary Retirement – Private respondents cannot claim parity with such people who had retired after full length of service and did not terminate their relationship.
Subject
Voluntary Retirement Scheme - Benefits and Entitlements
Act Referred
INDUSTRIAL FINANCE CORPORATION OF INDIA LIMITED PENSION REGULATIONS: Reg.2, Reg..33, Reg..33(2), Reg..25(2)
Headnote
(A) Service Law – Pension – Voluntary Retirement Scheme – Any scheme for voluntary retirement is a package by itself – It is not appropriate to add or subtract from Scheme, nor can any concessions be given contrary to Scheme, or if they are not provided for under the Scheme – What is to be seen are clauses of scheme under which voluntary retirement has been taken and terms of scheme must be strictly followed – VRS-2008 has received consideration right till Supreme Court and attained finality on the issue of benefits and incentives sought to be claimed beyond Scheme – On having availed of benefits under scheme, if there are future changes, which may give any of monetary benefits, same cannot be read into scheme – This would defeat very purpose of having a VRS – Benefits under VRS-2008 are many, in terms of financial package – Pension is only one of the items of that package – Private respondents cannot claim parity with such people who had retired after full length of service and did not terminate their relationship – To grant private respondents benefit of pay revision, retrospectively, and that to be taken into account for grant of future pension would be a bounty which cannot be given to these private respondents. [Industrial Finance Corporation of India Limited Pension Regulations, 1993 – Regulation 2; IFCI Staff Regulations, 1974 – Regulation 33] (Paras 7, 21, 22, 23, 24, 25,31 and 32)
(B) Service Law – Pension – Voluntary Retirement Scheme – If RBI pay-scales had been adopted by IFCI with retrospective effect, private respondents could never have had a claim as their chapter was closed – Merely because for existing employees, RBI pay scales had been applied retrospectively without past benefits, that cannot be a ground to start getting pension on the basis of a calculation based on those revised pay-scales, on the reasoning that pension is a continuing right for past services rendered – Present endeavour by private respondents is a misadventure and has to be rejected – Impugned order of Division Bench of High Court set aside. (Paras 36 and 37)
Facts of Case:
Present dispute pertains to Voluntary Retirement Scheme (VRS) of 2008. Contesting respondents in the present case are thirty-one (31) employees of IFCI who availed of the VRS-2008 on 1.2.2008, and were accordingly relieved from duty on 25.2.2008. All benefits under the VRS-2008 were made available to these employees. issue before us is limited in its character as it arises from a claim by these employees that they would be entitled to an enhanced pension on the basis of subsequent revision of pay-scales, which was given retrospective effect, with effect from the time period when the respondents were still employees of the IFCI.
Findings of Court:
Continuing representation on the same issue is really not of much use. There is a gap of one and a half years between the last representation and sending of a legal notice. This, by itself, could have been fatal, but private respondents must fail on multifarious grounds.
Result : Appeal allowed.
Legal Category Hierarchy
Advocates Appeared:
For the Appellant(s) : Mr. P.B.A. Srinivasan, Adv. Mr. Parth Tandon, Adv. Mr. Avinash Mohapatra, Adv. Ms. Ichccha Kalash, Adv. Ms. Neelam Phukan, Adv. Ms. Ridhima Sehgal, Adv. Mr. Amit K. Nain, AOR
For the Respondent(s): Mr. Awanish Sinha, AOR
For the Appellant(s) : Mr. P.B.A. Srinivasan, Adv. Mr. Parth Tandon, Adv. Mr. Avinash Mohapatra, Adv. Ms. Ichccha Kalash, Adv. Ms. Neelam Phukan, Adv. Ms. Ridhima Sehgal, Adv. Mr. Amit K. Nain, AOR
For the Respondent(s): Mr. Awanish Sinha, AOR
Table of Contents
2. Employees seek parity with previous schemes and serving employees for revised pension; employer contends the scheme is a final package barring further claims. (Para 3 , 18 , 19 )
3. Voluntary retirement schemes are comprehensive packages to be strictly adhered to, where benefits are accepted as a final settlement barring future claims based on pay revisions. (Para 21 , 22 , 24 , 25 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 36 )
4. A voluntary retirement scheme is a complete package; its terms must be strictly followed, and benefits cannot be extended based on other schemes or subsequent revisions. (Para 22 , 24 )
5. Appeal allowed and the order of the Division Bench of the High Court set aside. (Para 37 , 38 )
6. What is the legal nature of a Voluntary Retirement Scheme (VRS)?
A VRS is a comprehensive package or Golden Handshake designed to reduce surplus staff and improve financial efficiency. Employees who opt for it do so voluntarily and are bound by the specific terms of the scheme, foregoing further claims or rights in exchange for the provided benefits. (Para 22 , 24 , 34 )
7. Can benefits from a previous or different voluntary retirement scheme be imported into a current one?
No. Voluntary retirement schemes must be strictly adhered to. It is inappropriate to add or subtract from a scheme or import concessions from other schemes, as the employer's offer is a specific package that alone is admissible. (Para 22 )
8. Does the principle that pension is a continuing right for past service apply to employees who take voluntary retirement?
No. While pension is generally a retirement wage for past service, in the context of a VRS, pension is merely one component of a total financial package. Employees who terminate their relationship early for a package cannot claim subsequent pay revisions as a continuing right. (Para 25 , 27 , 32 , 36 )
9. What is the effect of a clause in a VRS that bars future revisions of retirement amounts due to pay scales?
Such clauses are binding. If a scheme specifically provides that there will be no revision in the voluntary retirement amount on account of future pay revisions, the employees cannot claim enhanced benefits based on subsequent changes in pay structure. (Para 13 , 25 )
JUDGMENT :
SANJAY KISHAN KAUL, J.
1. The celebration of independence of our country also came with many challenges, including in the financial sector. The Industrial Finance Corporation of India Ltd. (for short ‘IFCI’) was the first financial corporation set up soon thereafter, in 1948, with the object of providing for the industrial and infrastructural needs of the new born India and to enable the growth of the economy through medium and long term finance. Passage of time and financial & infrastructural changes resulted in the transformation of IFCI from a statutory corporation to a company under the Indian Companies Act, 1956, in the year 1993. The status of this institution, at present, is of a Government of India Undertaking and a Non-Banking Financial Company, primarily engaged in corporate lending.
2. Changing needs found the IFCI with having, possibly, an excess number of employees at various levels. In order to shed the flab, there have been voluntary retirement schemes introduced, from time to time. The present dispute pertains to the Voluntary Retirement Scheme (for short ‘VRS’) of 2008. The contesting respondents in the present case are thirty-one (31) employees of IFCI who availed of the VRS-2008 on 1.2.2008, and were accordingly relieved from duty on 25.2.2008. There is no dispute that all the benefits under the VRS-2008 were made available to these employees.
3. The issue before us is limited in its character as it arises from a claim by these employees that they would be entitled to an enhanced pension on the basis of subsequent revision of pay-scales, which was given retrospective effect, with effect from the time period when the respondents were still employees of the IFCI.
4. In the context of the aforesaid nature of dispute, it would be relevant to note that the IFCI notified a pension scheme in the year 1993 for its employees, under the INDUSTRIAL FINANCE CORPORATION OF INDIA LIMITED PENSION REGULATIONS , 1993 (hereinafter referred to as the ‘said Regulations’). The said Regulations came into effect from 1.11.1993. It would be appropriate to refer to some of the clauses of the said Regulations, which are germane for the determination of the controversy before us.
5. Regulation 2 is the Definition clause. In terms of sub-clause (6) ‘date of retirement’ is defined while ‘retirement’ is defined under clause (11). These clauses read as under:
“2. Definitions
In these Regulations, unless the context otherwise requires:
…. …. …. …. ….
(6) ‘Date of retirement’ means the date on which an employee attains the age of superannuation or he is retired by the Corporation or the date on which the employee voluntarily retires;”
…. …. …. …. ….
“(11) ‘Retirement’ means retirement in terms of Regulation 33 of the Staff Regulations and other instructions issued by the Corporation under settlement/award;”
6. What is relevant to note is that voluntary retirement is included in the definition of the ‘date of retirement’ and ‘retirement’, which in turn is defined with reference to Regulation 33 of the IFCI Staff Regulations, 1974 (hereinafter referred to as the ‘Staff Regulations’) and other instructions issued by the IFCI. Thus, turning to the Staff Regulations, Regulation 33 deals with superannuation and retirement. Regulation 33(2) was inserted by Administrative Circular No.16 of 1992 dated 14.8.1992, w.e.f. 20.6.1992. The relevant portion of clause (2) of Regulation 33 of IFCI Staff Regulations is extracted as under:
“33. Superannuation and Retirement
…. …. …. …. ….
(2) (i) an employee who has attained the age of 50 years shall have an option to retire anytime thereafter by giving to the Corporation three months notice in writing.
xxxx xxxx xxxx xxxx xxxx”
“(ii) “Without prejudice to sub-Regulation (2)(i), an employee governed by the IFCI Pension Regulations, 1993, may voluntarily retire at any time after he has completed 20 years of qualifying service in the Corporation as defined in the IFCI Pension Regulations, 1993 (even though he has not
