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Voluntary Retirement Scheme – Regulation 3(9)(b) explicitly clarifies, that the exercise of option should be in writing within the stipulated time expressed in Regulation 35 of the 1995 Regulations.= CIVIL APPEAL Nos.10364-10371 OF 2014 (Arising out of SLP(C)Nos.12059-12066 of 2010) V. KANNAPPAN & ORS. ……APPELLANTS VERSUS ADDITIONAL SECY & ORS.(MIN.FIN&COM.AFRS) ……RESPONDENTS

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.10364-10371 OF 2014
(Arising out of SLP(C)Nos.12059-12066 of 2010)
V. KANNAPPAN & ORS. ……APPELLANTS

VERSUS
ADDITIONAL SECY & ORS.(MIN.FIN&COM.AFRS) ……RESPONDENTS
WITH
CIVIL APPEAL No.10372 OF 2014
(Arising out of SLP(C)No.20331 of 2011)
J U D G M E N T

J.S.Khehar, J.

Leave granted.
The appellants in these appeals were originally inducted into
the service of Bank of Madura. By virtue of a scheme of amalgamation
sanctioned by the Reserve Bank of India, the Bank of Madura was merged with
the Industrial Credit and Investment Corporation of India Bank (hereinafter
referred to as the `ICICI Bank’) with effect from 10.03.2001. Consequent
upon the aforesaid merger, the appellants became the employees of the ICICI
Bank.
All the appellants are retirees, having sought voluntary
retirement from the ICICI Bank. Their retirement was operative with effect
from 31.07.2003. The appellants’ claim is for pension. The instant claim
emerges from the Bank of Madura Employees’ Pension Regulation, 1995
(hereinafter referred to as the `1995 Regulations’). The 1995 Regulations
define the voluntary retirement scheme in Regulation 2(ze). The same is
being extracted hereunder:
“`V.R.S.’ means Bank of Madura Employees’ Voluntary Retirement Scheme
enclosed to the circular CO.STF:39/94-95 dated July 21, 1994, or any other
specific scheme, that may be implemented in future bringing such scheme
under the definition of this regulation. The employees who have completed
20 years of service in the bank and who have retired subsequent to the
expiry of the scheme mentioned in the Circular CO:GM:CIR:2/93-94 dated May
20, 1993, and who were extended the additional benefits in addition to the
normal retirement benefits shall be deemed and considered to have retired
under V.R.S.”

(emphasis is ours)

During the course of hearing, learned senior counsel for
the appellants contended, that the voluntary retirement scheme contemplated
under Regulation 2(ze), would include any other specific scheme, that may
be implemented in future, bringing such scheme under the 1995 Regulations.
It is the submission of the learned senior counsel for the appellants, that
the Early Retirement Option 2003 (hereinafter referred to as the `ERO 2003)
issued by the ICICI Bank on 17.06.2003, was such a scheme, which was
implemented after the promulgation of the 1995 Regulations, and was
brought within the definition of Regulation 2 (ze). In order to
substantiate the instant contention, learned senior counsel for the
appellants invited our attention to Regulation 2(zea). The same is being
extracted hereunder:
“Voluntary Retirement Scheme means and to be understood as ICICI Bank Early
Retirement Option 2003 scheme and this amendment in benefits will cover
only those employees who avail of such early retirement option under ICICI
Bank Early Retirement option 2003 scheme. (effective from 01.7.2003)”
(emphasis is ours)
In view of Regulation 2(zea) there can be no doubt whatsoever, that
the ERO 2003 must be deemed to be a voluntary retirement scheme within the
meaning of Regulation 2(ze) of the 1995 Regulations.
Having satisfied this Court, that the appellants would be
entitled to the benefits of the 1995 Regulations, on the basis of ERO 2003,
learned senior counsel for the appellants invited our attention to
Regulation 35. The Regulation, as it was originally framed, comprised of
(iv) clauses. The same is being extracted hereunder:
“35. Pension to Employees retiring under VRS (i) An employee who has
opted for pension and who retired under VRS enumerated in Regulation 2(ze)
of these regulations and who has completed twenty years of service in the
bank shall be eligible for pension from the date of his attaining the age
of superannuation i.e., the date on which he would have retired had he
continued in the employment if he is otherwise eligible under these
regulations.

(ii) The eligible employees who have already retired under VRS may
exercise their irrevocable option in writing in the format prescribed by
the Bank within sixty days from the date of notice to be sent to them.
Such employees have to refund the bank’s entire contribution to the
Provident Fund including interest received with further simple interest at
the rate of six percent per annum from the date of withdrawal of the
Provident Fund amount till the date of refund. The refund of the amount
shall be made to the bank within thirty days from the date of
superannuation to enable the employee to get the benefits under pension
scheme. Otherwise it will be deemed that the member has opted out of the
pension scheme.

(iii) If an employee who has opted for pension dies before the date of
superannuation but after the date of his relief under VRS, his family shall
be paid family pension subject to regulation under chapter VII of this
scheme provided the condition stipulated in regulation 35(ii) is complied
with.

(iv) The pension amount shall be calculated based on average emolument
i.e. average of pay drawn by an employee during the last ten months of his
service as per Regulation.”
After the introduction of the ERO 2003 Scheme with effect from
17.06.2003, Regulation 35 was amended so as to add thereto clause (v). The
same is being extracted hereunder:

“(V) An employee who has opted for pension under this Regulations and who
opts for retirement under ICICI Bank Early Retirement Option 2003 as
enumerated in regulation 2(zea) of this Regulation, and who has completed
20 years of services in the Bank shall be eligible for pension from the
date of retirement thereunder and the payment of pension to him shall
commence from the succeeding month.”
(emphasis is ours)
The solitary question that arises for our consideration
is, whether the appellants are entitled to pensionary benefits under
Regulation 35 of the 1995 Regulations. Insofar as the instant aspect of the
matter is concerned, it is necessary to mention, that all the appellants
were in the service of the Bank of Madura when the 1995 Regulations were
introduced. Whilst in the employment of the Bank of Madura options, were
invited under Regulation 35 thrice over. On the first occasion, the
existing employees of the Bank of Madura were required to exercise their
option under Regulation 35, and to indicate whether they would like to draw
pensionary benefits under the existing voluntary retirement scheme. Right
to furnish the option was to be exercised within a period of 6 months from
25.01.1995 i.e. upto 25.07.1995. The second opportunity was afforded to
the employees of the Bank of Madura on 22.07.1995. The right to furnish the
option was thereby extended for a further period of three months from
25.07.1995 i.e. upto 25.10.1995. Yet, again a third opportunity to furnish
options was given by the Bank of Madura to its existing employees on
01.02.1996. Through the aforesaid Circulars, employees were required to
furnish their option under Regulation 35 of the 1995 Regulations up to
30.05.1996. It is not a matter of dispute that eversince their induction
into the service of Bank of Madura, and thereafter, whenever options were
sought under the 1995 Regulations, none of the appellants opted for the
pension scheme under Regulation 35.
No further opportunity for tendering an option, for grant
of pension under a voluntary retirement scheme, was sought after the
amalgamation of Bank of Madura with the ICICI Bank (with effect from
10.03.2001). In sum and substance therefore, it is apparent that even
after the absorption of the appellants in the employment of the ICICI Bank,
the appellants never chose to be governed by Regulation 35, of the 1995
Regulations.
On 17.06.2003, ICICI Bank introduced the ERO 2003 Scheme.
It afforded an opportunity to its employees to avail of the voluntary
retirement scheme contemplated thereunder. Eligibility therefor was
expressed in paragraph 4 of the scheme. The same is being reproduced
hereunder:
“4. Eligibility
All permanent employees of the Bank who have completed at least 7 Years
of Service and are 40 years of age as on July 31, 2003 will be considered
eligible to opt for the benefits under the Scheme. For the purpose of this
clause, the services rendered by the permanent employees in the
organization merged with the Bank will be considered as eligible service in
terms of respective schemes of amalgamation.”

A perusal of the eligibility clause of the scheme reveals, that an
employee who had rendered at least 7 years of service and had attained the
age of 40 years on 31.07.2003, was eligible to apply for voluntary
retirement, under the ERO 2003 Scheme. It is not a matter of dispute, that
all the appellants were eligible for seeking voluntary retirement, under
the ERO 2003 Scheme. All the appellants actually applied for voluntary
retirement, under ERO 2003 Scheme. Their applications for voluntary
retirement were submitted well before the last date i.e.31.07.2003.
Consequent upon the acceptance of their voluntary retirement, all the
appellants availed of the monetary benefits due to them under the ERO 2003
Scheme. On 10.08.2003, all monetary post retiral benefits including
provident fund, were duly paid to the appellants. Having availed of the
aforesaid benefits, the appellants raised a claim for grant of pension
under Regulation 35 of the 1995 Regulations, on 14.08.2003.
At this juncture, it is necessary to delineate the
benefits, that would flow to those who sought voluntary retirement under
the ERO 2003 Scheme. These benefits were expressed in paragraph 8 of the
scheme. They include “One Time Cash Benefit” (as per paragraph 8A),
“Annuity Benefit” (as per paragraph 8B), “Other Benefits”, including group
medical insurance, encashment of balance privilege leave, amounts payable
on retirement date under the Bank’s Provident, Gratuity, Superannuation
Funds, and payments under Pension/Family Pension Scheme, if any, as per the
Rules of the respective Funds/Scheme of the Bank (as per paragraph 8C).
Insofar as the benefit of pension claimed by the appellants is concerned,
the same was provided for under the heading “Pension Benefit” in paragraph
8D of the ERO 2003 Scheme. Paragraph 8D is being extracted hereunder:
“8D Pension Benefit
The Eligible Employees who have opted for the pension benefit as
per the erstwhile Bank of Madura Employees’ Pension Regulations, 1995, will
be eligible for the same as per the terms and conditions of the said
Regulations.”

A perusal of paragraph 8D of the ERO 2003 Scheme reveals, that such
employees who “have opted for the pension benefits as per the erstwhile
Bank of Madura Employees’ Pension Regulations, 1995”, alone would be
eligible for pension.
The determination of the claim of the appellants would,
therefore, essentially emerge from an interpretation of Regulation 35 of
the 1995 Regulations. This is so because paragraph 8D of the ERO 2003
Scheme, mandates it as such. It is, therefore, that we shall advert to
Regulation 35 aforementioned to determine the claim of the appellants. To
draw a legitimate inference, Clauses (i) and (ii) of Regulation 35 need to
be read together. Clause (ii) of Regulation 35 relates to employees who had
already retired by accepting voluntary retirement i.e., the employees who
had retired before the promulgation of the 1995 Regulations. Such employees
were allowed to exercise their irrevocable option in writing in the format
prescribed by the Bank, within sixty days from the date of notice to be
sent to them. We are not concerned with this clause inasmuch as all the
appellants were in service of the Bank of Madura when the 1995 Regulations
were promulgated. Clause (i) read with Clause (ii) of Regulation 35 would
reveal, that a claim for pension, whether the employee was in service or
had retired at the time of promulgation of the 1995 Regulations, was
sustainable only on behalf of such employees “who have opted for pension”,
and who retire under a voluntary retirement scheme, governed by Regulation
2(ze)/2(zea) of the 1995 Regulations. Therefore, employees were only to be
entitled to pensionary benefits, if they had exercised their options for
pension. Concededly, none of the appellants had exercised such option for
pension under the 1995 Regulations. The submission on behalf of the
appellants was, that exercise of option prior to the promulgation of a
voluntary retirement scheme would be inconceivable. How could one opt for
what is not known? It was therefore the contention of the learned senior
counsel for the appellants, that the question of the appellants having
opted before the VRS scheme introduced by the ICICI Bank in 2003 could not
arise, as their right to opt would emerge only when they chose to retire
voluntarily under the ERO 2003 Scheme.
It is not possible for us to accept the aforesaid
submissions of the learned senior counsel for the appellants. Regulation
35 Clause (i) would make a lot of difference in terms of evaluating the
rights of the appellants. If the appellants had exercised their option for
drawing pension, then they would simultaneously opt out of the provident
fund scheme. Viewed in the manner expressed above, option for pension
assumes great significance under Regulation 35(i). Consequent upon an
employee not exercising an express option for pension, the employer (on
behalf of the employee, as also on its own behalf) shall regularly deduct
and deposit an appropriate amount in the provident fund account of the
concerned employee. This exercise would cease immediately on the exercise
of a positive option for pension. As already noticed hereinabove, none of
the appellants had opted for the pension under Regulation 35(i), and
therefore, they continued to be governed, for post retiral benefits, by the
other alternatives available to them.
In addition to Clauses(i) and (ii) of Regulation 35,
Clause (v) of Regulation 35, which has also been extracted hereinabove,
is also of great significance. The binding words of Clause (v) are clear
and express. The mandate is, that “an employee who has opted for pension
under the 1995 Regulations, and who opts for retirement under ICICI Bank
Early Retirement Option 2003”, shall be eligible for pension. Clause (v) of
Regulation 35 has to be read with paragraph 8D of the ERO 2003 Scheme which
provides, that eligible employees who had opted for the pension benefit as
per the erstwhile 1995 Regulations, will be eligible for the same as per
the terms and conditions of the said Regulations. We are satisfied that
since the appellants had not opted for pension under the 1995 Regulations,
they are clearly disentitled to claim pensionary benefits under Regulation
35 of the 1995 Regulations, even after the ERO 2003 Scheme was made a part
and parcel of Regulation 2 (ze)/2(zea), and even after the amendment of
Regulation 35 by adding clause (v) thereto.
It is essential for us while determining the controversy
in hand to refer to Regulation 3(9)(a) and (b) of the 1995 Regulations,
which were relied upon, on behalf of the appellants. The same are being
extracted hereunder:
“3. Application:- These regulations shall apply to employees who, 1(a) to
(8) xxxxxxxxxxxxxx

“(9)(a): Retired under VRS as defined in Regulation 2(ze);

(b) exercise an option in writing within the stipulated time as contained
in Regulation 35 to become member of the Fund.”
It was the vehement contention of the learned senior counsel for the
appellants, that exercise of option has to be with reference to the
acceptance of voluntary retirement under a voluntary retirement scheme, and
therefore, exercise of such option would be made when the employee chooses
to voluntarily retire under a voluntary retirement scheme. It is not
possible for us to accept the contention advanced at the hands of the
learned senior counsel for the appellants, because Regulation 3(9)(b)
explicitly clarifies, that the exercise of option should be in writing
within the stipulated time expressed in Regulation 35 of the 1995
Regulations.
For the reasons recorded hereinabove, we find no merit in
these appeals and the same are accordingly dismissed. As a sequel to
dismissal of the appeals, the applications for intervention do not survive
for consideration, and the same are accordingly dismissed.
………………………J.
(JAGDISH SINGH KHEHAR)

………………………J.
(ARUN MISHRA)
NEW DELHI;
NOVEMBER 18, 2014.

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