Voluntary Retirement Not A Mere Act Of Leaving, It Is A Distinct Right Of Employee: Supreme Court

The Supreme Court said on Tuesday that voluntary retirement is not a mere act of leaving or discontinuing but is rather a distinct right of an employee that is available on completion of the requisite number of years of service.

A bench of Justices JK Maheshwari and Vijay Bishnoi delivered its verdict on appeals filed by a bank challenging two separate 2019 orders of the Chhattisgarh High Court.

The high court had issued a direction for the grant of terminal benefits to a bank employee, saying that after the completion of the three-month notice period as specified in the notice for voluntary retirement or from the date of stopping to attend the service, he be treated voluntarily retired.

The apex court noted that the employee was appointed in September 1983 and was promoted as manager in April 2007.

It said that in July 2010, while working as branch manager at Raipur, some suspicious transactions in two accounts came to the knowledge of the bank. In the meantime, the employee sent a notice of voluntary retirement on October 4, 2010 to the general manager and in response, the zonal office asked for a fresh application under pension regulations.

Later, since the period specified in the notice for voluntary retirement had elapsed, the employee stopped working with the bank with effect from May 16, 2011.

The top court noted that after about eight months from the date when he severed his employment with the bank, he was chargesheeted on March 5, 2012 over the allegedly suspicious transactions.

He later moved the high court challenging the non-acceptance of voluntary retirement and consequent initiation of inquiry and dismissal.

While dealing with the appeals, the bench referred to the relevant provisions of pension and service regulations.

"Upon reading, it is quite clear, if an employee on or after 1st day of November 1993 completes 20 years of qualifying service, and furnishes a notice of not less than three months to the appointing authority, he may retire voluntarily," the bench noted.

It said the notice of three months indicating intention to retire voluntarily was given on October 4, 2010 and the period was supposed to expire on January 4, 2011, to which refusal was not ordered within the notice period.

The bench said the non-approval communicated on June 29, 2011, after expiry of the notice period and cessation of work, was of no avail. It noted that a show-cause notice was issued by the bank on November 11, 2010 but it would not indicate the intention to institute disciplinary proceedings in terms of the service regulation.

"Nonetheless, voluntary retirement is not a mere act of leaving or discontinuing, rather, a distinct right of an employee that is available on completion of the requisite number of years of service, etc," it said.

The bench said existence of such a show cause notice itself was not sufficient without refusal by the competent authority to stop automatic operation of the notice of voluntary retirement.

"In absence, the notice of voluntary retirement would take its course. In the present case, no such order of refusal or order of withholding was passed by the competent authority within the stipulated period," it said.

"In our view, it is correct to hold that when an employee decides to sever the master-servant relationship and serves a notice indicating such intention specifying the period, by operation of law it will become effective in the absence of any order of refusal," the bench said.

It said the subsequent act of issuing a charge sheet and consequential order of dismissal was also not justified in law. The bench said as directed by the high court, the employee would be entitled to all consequential post-retiral benefits.

It directed the bank to settle all the dues within three months along with the interest applicable.