Bombay High Court: In a writ petition filed by a former employee of Manganese Ore (India) Limited (‘MOIL’) challenging the validity of Rule 7 (b) of the MOIL Group Superannuation Cash Accumulation Scheme (Defined Contribution) Rules (‘the Scheme’) whereby he was denied his pension because he had resigned and not superannuated, the Division Bench of Avinash G. Gharote* and Abhay J. Mantri, JJ., held that rule 7(b) was discriminatory and allowed the petition by further holding that he was entitled to the benefits of the said Scheme.
Background
The petitioner, in the present matter, was appointed as a manager on 09-06-1998 and was promoted to the post of Executive Director by an office order dated 29-06-2019. He was about to be superannuated on 31-05-2023 but tendered his resignation due to health condition which came to be accepted w.e.f. 08-04-2023.
Subsequently, when the petitioner received his retirement benefits, namely gratuity and leave encashment, he did not receive the pension amount under the Scheme. Due to this, he made a representation to MOIL, but it went unaddressed.
Aggrieved, he filed the present petition challenging the validity of Rule 7(b) of the Scheme, which provided that no amount/benefit would be given to the employee in case of resignation and the amount accumulated under his name would be transferred and credited to the company’s account or adjusted against annual contribution payable by the company to the Trust/LIC.
Analysis
The Court stated that since there was a difference between ‘superannuation’ or ‘retirement’ and ‘resignation’, the benefit available to an employee who superannuates/ retires may not be made available to an employee who resigns, depending upon the Rules/Policy and Scheme governing such employee.
The Court noted that as per the office memorandum dated 26-11-2008 issued by the Government of India (‘the OM’) which dealt with superannuation benefits to employees of MOIL, Central Public Sector Enterprises (‘CPSE’) were allowed to give 30 percent of the basic pay as superannuation benefits, which could include Contributory Provident Fund (‘CPF’), gratuity, pension, and post-superannuation medical benefits. The CPSEs were authorized to make their Scheme to manage these funds or operate through Insurance Companies on a fixed contribution basis. The above-mentioned Scheme was framed by MOIL in terms of the OM, and it delineated the age of superannuation to be 60 years.
The Court noted that according to Rules 3 and 8 of the Scheme, the eligibility criteria to receive a pension or annuity were as follows:
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all employees who were on the roll of the company on 01-01-2007 and recruited thereafter, and
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superannuation, and
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who have put in a minimum of 15 years of service before superannuation,
Thus, the Court said that the purpose and object of the Rules were to ensure that an employee who was in service on 01-01-2007 rendered 15 years of service to be eligible for grant of benefits of the Scheme.
The Court noted that vide another office memorandum issued by the Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, the minimum service of 15 years condition was dispensed with for an employee being granted annuity/pension. In consonance with this office memorandum, MOIL removed criteria b and c from the Scheme.
The Court noted that the effect of such modification was that the benefit of annuity/pension became available to employees who did not superannuate or put in a minimum of 15 years of service after 01-01-2007. Thus, the Scheme would apply to any employee of MOIL, even those who ended their service due to death or via resignation.
After analysing the challenged Rule 7(b), the Court noted that it created discrimination by dividing the resignation into two categories. The first was a resignation simplicitor, whereas the second one was a technical resignation. It further divided technical resignation into two categories:
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If technical resignation was tendered for joining another CPSE where a similar scheme was operational, the accumulated balance of the benefit would be transferred to that CPSE.
If technical resignation was tendered after 15 years of service for joining another CPSE where a similar scheme was not operational, the benefits would be given to the employee.This, the Court said, meant that even if an employee resigned to join another CPSE after completing 15 years of service, such an employee was entitled to the benefit of the Scheme.
The Court opined that the distinction sought to be made between a simplicitor resignation and a resignation for joining another CPSE for granting benefit under the Scheme to the employee did not have any nexus with the object and purpose of the Scheme. Thus, the Court held that Clause 7 (b) was discriminatory, even inter se.
The Court further observed that though the petitioner was an employee on 01-01-2007 and had served more than 15 years, he was denied the benefit of the annuity/pension merely because he had resigned.
Upon perusal of the Service Regulations that governed the petitioner, the Court noted that there was no clause that entailed forfeiture of the past services of an employee upon his resignation. Noting this, the Court held that there was no reason for the denial of the benefit of the Scheme to the petitioner when he satisfied the eligibility criteria.
Thus, the Court allowed the petition, stating that the petitioner was entitled to the benefits under the Scheme.
[Chandrabhan v. MOIL Limited, 2024 SCC OnLine Bom 3879, decided on 20-12-2024]
*Order Authored by Justice Avinash G. Gharote
Advocates who appeared in this case:
For the petitioner: Akshay Sudame
For the respondent: S. S. Ghate
