Resignation Forfeits Pension Rights Under Regulation 22, Not Equatable To Voluntary Retirement: Supreme Court - 2025-07-23

Resignation Forfeits Pension Rights, Supreme Court Upholds Distinction from Voluntary Retirement; Grants Relief Under Article 142

New Delhi: In a significant ruling on service jurisprudence, the Supreme Court has held that an employee who resigns from service, thereby forfeiting their past service under the applicable pension regulations, cannot later claim pension benefits by equating resignation with voluntary retirement. A bench of Justices Dipankar Datta and Ujjal Bhuyan affirmed that "resignation" and "voluntary retirement" are distinct concepts with different legal consequences.

However, in a move exercising its extraordinary powers under Article 142 of the Constitution, the Court granted special relief to the employee, a septuagenarian who had served the bank for 36 years before resigning due to mental depression. The Court directed the bank to either allow him to opt into a recent pension settlement or pay him a sum of ₹5 lakh as a one-time relief.

The judgment came in a set of cross-appeals filed by the United Bank of India (now Punjab National Bank) and its former employee, Swapan Kumar Mullick.

Case Background: A 36-Year Career Ending in Resignation

Swapan Kumar Mullick joined the bank in 1970 and resigned in 2006 after 36 years of service, citing "mental depression." At the time, he received his provident fund dues. In 2010, following a bipartite settlement, the bank offered another option for pension to employees who had retired on or after September 29, 1995.

Mr. Mullick's application to opt for the pension was rejected by the bank on the grounds that employees who resigned were ineligible. The bank cited Regulation 22 of the United Bank of India (Employees’) Pension Regulations, 1995, which states that resignation entails forfeiture of an employee's entire past service, disqualifying them from pensionary benefits.

Mr. Mullick successfully challenged this in the Calcutta High Court, where a Single Judge ruled that using the word 'resignation' should not deprive an employee of pension benefits if they had completed the qualifying service. The bank appealed this to a Division Bench, which set aside the Single Judge's order but directed the bank to consider amending its regulations and re-examine Mr. Mullick's case. Both parties then approached the Supreme Court.

Key Arguments

• The Bank’s Position: The bank argued that resignation and retirement are fundamentally different. It contended that Mr. Mullick had voluntarily resigned in 2006, accepted his terminal benefits (provident fund), and was bound by Regulation 22, which explicitly provides for forfeiture of service upon resignation. It relied on key Supreme Court precedents like UCO Bank v. Sanwar Mal and LIC v. Shree Lal Meena , which upheld this distinction.
• The Employee’s Plea: Mr. Mullick argued that his resignation, tendered due to ill health after a long and unblemished service record, should be treated as a request for voluntary retirement. His counsel contended that Regulation 22 was unconstitutional under Article 14 for unfairly clubbing employees who resign with those who are dismissed or terminated. Reliance was placed on Shashikala Devi v. Central Bank of India , where the court had looked beyond the word "resignation" to the employee's intent.

Supreme Court's Analysis: Upholding the Legal Distinction

The Supreme Court undertook a detailed analysis of precedents, noting a consistent judicial trend differentiating resignation from voluntary retirement. The bench observed that while both lead to a severance of employment, they are not interchangeable.

The Court explicitly affirmed the law laid down by a larger bench in Shree Lal Meena (2019) , which held that when regulations provide for specific consequences for resignation, they must be given effect. The Court noted:

"The consistent trend of the decisions from Sanwar Mal (supra) to BSES Yamuna Power Ltd. (supra) ... has been to hold 'resignation' and 'voluntary retirement' as two distinct concepts with varying consequences... substitution of the two for each other based solely on the duration of an employee’s service would run counter to the intendment of statutory regulations and, therefore, is improper."

The Court rejected the argument that Regulation 22 was arbitrary or violated Article 14 of the Constitution, stating that clubbing resignation with dismissal for the purpose of service forfeiture is a matter of policy and not manifestly arbitrary.

Final Verdict and Humanitarian Relief

While upholding the bank's legal position and setting aside the High Court's directions to consider amending the regulations, the Supreme Court invoked its special powers under Article 142 to provide relief to Mr. Mullick.

Acknowledging his 36 years of unblemished service, his candor in resigning due to mental health issues, and his advanced age, the Court crafted a unique solution. It directed that: 1. Mr. Mullick be given a final opportunity to opt for pension under a recent 2024 bipartite settlement, provided he returns the provident fund amount with interest. 2. If he is ineligible under the settlement or unable to refund the amount, the bank, as a "model employer," must pay him a sum of ₹5,00,000 as a one-time financial relief.

The Court clarified that this grant of financial relief was a special case and should not be treated as a precedent. The employee's appeal was dismissed, while the bank's appeal was partly allowed, affirming the legal principle but providing tailored relief.