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Monday, January 12, 2015

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



                      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
                 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

(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

(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
                 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
"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

      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
                 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.
                                                 (JAGDISH   SINGH    KHEHAR)

                               (ARUN MISHRA)
NOVEMBER 18, 2014.

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