whether the Appellant is entitled to claim pension even though he resigned from service of his own volition and, if so, whether his claim on this count had become barred by limitation or laches.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10251 OF 2014
ASGER IBRAHIM AMIN .. APPELLANT
VERSUS
LIFE INSURANCE CORPORATION OF INDIA .. RESPONDENT
J U D G M E N T
VIKRAMAJIT SEN, J.
1 The question which falls for consideration is whether the
Appellant is entitled to claim pension even though he resigned from service
of his own volition and, if so, whether his claim on this count had become
barred by limitation or laches.
2 The Appellant joined the services of the Respondent Corporation on
30.6.1967 on the post of Assistant Administrative Officer (Chartered
Accountant) at the age of twenty seven. He worked for 23 years and 7
months in the Corporation before tendering his resignation on 28.1.1991,
owing to “family circumstances and indifferent health”, presumably having
crossed fifty years in age. The request of the Appellant for waiver of the
stipulated three months notice was favourably considered by the Corporation
vide letter dated 28.2.1991, and the Appellant was allowed to resign from
the post of Deputy General Manager (Accounts), which he was holding at that
time. We shall again presume that the reasons that he had ascribed for his
retirement, viz. family problems and failing health, were found to be
legitimate by the Respondent, otherwise the waiver ought not to have been
given. Thereafter, the Central Government in exercise of power conferred
under Section 48 of the Life Insurance Corporation Act, 1956 had notified
the LIC of India (Staff) Regulations, 1960 and thereafter the Life
Insurance Corporation of India (Employees) Pension Rules, 1995 (hereinafter
referred to as “Pension Rules”) which, though notified on 28.6.1995, were
given retrospective effect from 1.11.1993. The Pension Rules provide,
inter alia, that resignation from service would lead to forfeiture of the
benefits of the entire service including eligibility for pension.
3 On 8.8.1995, that is post the promulgation by the Respondent of the
Pension Rules, the Appellant enquired from the Respondent whether he was
entitled to pension under the Pension Rules, which has been understood by
the Respondent as a representation for pension; the Respondent replied that
the request of the Appellant cannot be acceded to. The Appellant took the
matter no further but has averred that in 2000, prompted by news in a Daily
and Judgments of a High Court and a Tribunal, he requested the Respondent
to reconsider his case for pension. This request has remained unanswered.
It was in 2011 that he sent a legal notice to the Respondent, in response
to which the Respondent reiterated its stand that the Appellant, having
resigned from service, was not eligible to claim pension under the Pension
Rules. Eventually, the Appellant filed a Special Civil Application on
29.3.2012 before the High Court, which was dismissed by the Single Judge
vide Judgment dated 5.10.2012. The LPA of the Appellant also got
dismissed on the grounds of the delay of almost 14 years, as also on merits
vide Judgment dated 1.3.2013, against which the Appellant has approached
this Court.
4 As regards the issue of delay in matters pertaining to claims of
pension, it has already been opined by this Court in Union of India v.
Tarsem Singh, (2008) 8 SCC 648 that in cases of continuing or successive
wrongs, delay and laches or limitation will not thwart the claim so long as
the claim, if allowed, does not have any adverse repercussions on the
settled third-party rights. This Court held:
7. To summarise, normally, a belated service related claim will be rejected
on the ground of delay and laches (where remedy is sought by filing a writ
petition) or limitation (where remedy is sought by an application to the
Administrative Tribunal). One of the exceptions to the said rule is cases
relating to a continuing wrong. Where a service related claim is based on a
continuing wrong, relief can be granted even if there is a long delay in
seeking remedy, with reference to the date on which the continuing wrong
commenced, if such continuing wrong creates a continuing source of injury.
But there is an exception to the exception. If the grievance is in respect
of any order or administrative decision which related to or affected
several others also, and if the reopening of the issue would affect the
settled rights of third parties, then the claim will not be entertained.
For example, if the issue relates to payment or refixation of pay or
pension, relief may be granted in spite of delay as it does not affect the
rights of third parties. But if the claim involved issues relating to
seniority or promotion, etc., affecting others, delay would render the
claim stale and doctrine of laches/limitation will be applied. Insofar as
the consequential relief of recovery of arrears for a past period is
concerned, the principles relating to recurring/successive wrongs will
apply. As a consequence, the High Courts will restrict the consequential
relief relating to arrears normally to a period of three years prior to the
date of filing of the writ petition.
(emphasis is ours)
We respectfully concur with these observations which if extrapolated or
applied to the factual matrix of the present case would have the effect of
restricting the claim for pension, if otherwise sustainable in law, to
three years previous to when it was raised in a judicial forum. Such
claims recur month to month and would not stand extinguished on the
application of the laws of prescription, merely because the legal remedy
pertaining to the time barred part of it has become unavailable. This is
too well entrenched in our jurisprudence, foreclosing any fresh
consideration.
5 The second issue which confronts us is whether the termination of
service of the Appellant remains unalterably in the nature of resignation,
with the consequence of disentitling him from availing of or
migrating/mutating the pension scheme or whether it instead be viewed as a
voluntary retirement or whether it requires to be regarded so in order to
bestow this benefit on the Appellant; who had ‘resigned’ after reaching the
age of fifty and after serving the LIC for over twenty three years. The
Appellant resigned from service under Regulation 18 of LIC of India (Staff)
Regulations, 1960, which along with the other provisions of relevance is
reproduced for facility of reference -
SECTION 3 – TERMINATION
Determination of Service:
18. (1) An employee, other than an employee on probation or an employee
appointed on a temporary basis, shall not leave or discontinue his service
in the Corporation without first giving notice in writing to the competent
authority of his intention to leave or discontinue the service. The period
of notice required shall be-
(a) three months in the case of an employee belonging to Class I;
(b) one month in the case of other employees.
Provided that such notice may be waived in part or in full by the competent
authority at its discretion. In case of breach by an employee of the
provisions of the sub-regulation, he shall be liable to pay the Corporation
as compensation a sum equal to his salary for the period of notice required
of him, which sum may be deducted from any moneys due to him.
Superannuation and Retirement:
19(1) xx
(2) An employee belonging to Class I or Class II appointed to the
service of the Corporation on or after 1st September,1956, shall retire on
completion of 60 years of age, but the competent authority may, if it is of
the opinion that it is in the interest of the Corporation to do so, direct
such employee to retire on completion of 50 years of age or at any time
thereafter on giving him three months’ notice or salary in lieu thereof.
The following Regulations, on which learned Senior Counsel for the LIC has
placed reliance, came to be introduced on 16.2.1996, that is after the
Appellant had ‘resigned’ from service. We have called for and perused this
Notification, and as we expected, these provisions apply retrospectively
with effect from 1.11.1993. These Regulations ordain, inter alia, that an
employee may be permitted to retire (a) on completion of the age of 55 and
(b) after completing 25 years in service. In other words, the Corporation
has the power to compulsory retire an employee who has attained the age of
50 years if in its opinion such decision is in the interests of the
Corporation; and the employee may seek permission to retire upon completion
of 55 years of age and after rendering 25 years of service. This very
position finds reiteration in Rule 31 of the Pension Rules under the
epithet ‘voluntary retirement’, which pandect appears to have been
available from the inception i.e. 1.11.1993.
(2A) (a) Notwithstanding what is stated in sub-rules (1) and (2) above,
an employee may be permitted to retire at any time on completion of the age
55 after giving three months notice in writing to the appointing authority
of his intention to retire.
(b) (i) Notwithstanding the provisions of Clause (a), an employee governed
by the Life Insurance Corporation of India (Employees) Pension Rules 1995
may be permitted to retire at any time after he has completed twenty years
of qualifying service, by giving notice of not less than ninety days in
writing to the appointing authority.
Provided that this sub-clause shall not apply to an employee who is on
deputation unless after having been transferred or having returned to
India, he has resumed charge on the post in India and has served for a
period of not less than one year.
Provided further that this sub-clause shall not apply to an employee
who seeks retirement from service for being absorbed permanently in an
autonomous body or a public sector undertaking to which he is on deputation
at the time of seeking voluntary retirement.
(ii) The notice of voluntary retirement given under sub-clause (i) of
clause (b) shall require acceptance by the appointing authority.
Provided that where the appointing authority does not refuse to
grant the permission for retirement before the expiry of the period
specified in the said notice, the retirement shall become effective from
the date of expiry of the said period.”
6 As we have already recounted, the Appellant received a waiver of the
requirement of giving three months prior notice of his resolve to
“discontinue his service in the Corporation”, bestowing legitimacy to the
reasons that compelled him to do so. It also brings to the fore that the
1960 Staff Regulations did not provide for voluntary retirement or VRS as
has become commonplace today. This Court has clarified and highlighted
that ‘resignation’ and ‘retirement’ have disparate connotations; that an
employee can ‘resign’ at any time but, in contradistinction, can ‘retire’
only on completion of the prescribed period of qualifying service and in
consonance with extant Rules and Regulations.
7 We shall now consider the Pension Rules of 1995. Rule 3 of Chapter
II thereof, provides that the Rules are applicable to employees (1) who
were in the service of the Corporation on or after 1.1.1986 and had retired
before 1.11. 1993 i.e. the notified date, or (2) who retired after
1.11.1993; or (3)who were in the service before the notified date and
continued to be in service on or after the notified date; or (4) who were
in the service on or after 1.1.1986 but had retired on or after 1.11.1993
and before the notified date. What is discernible from these dates is that
the Pension Rules of 1995 have included two classes of beneficiaries into
one homogenous class, to wit, the employees who had retired before the
notified date and those who were to retire after the notified date. In our
opinion, the advantage of these beneficent Rules should be extended even to
the Appellant who was similarly placed as the retirees mentioned in Rule 3
but for the fact that he had ‘resigned’ rather than retired. The two
provisions caught in the crossfire are Rule 2(s), which defines
“retirement” and Rule 23, which deals with the “forfeiture of service”:
2(s) “retirement” means,- (i) retirement in accordance with the provisions
contained in sub-regulation (1) or sub-regulation (2) or sub-regulation (3)
of regulation 19 of the Life Insurance Corporation of India (Staff)
Regulations, 1960 and rule 14 of the Life Insurance Corporation of India
Class III and Class IV Employees (Revision of Terms and Conditions of
Service) Rules, 1985 made under the Act;
(ii) voluntary retirement in accordance with the provisions contained in
rule 31 of these rules. (emphasis added)
23. Forfeiture of service - Resignation or dismissal or removal or
termination or compulsory retirement of an employee from the service of the
Corporation shall entail forfeiture of his entire past service and
consequently shall not qualify for pensionary benefits.
Voluntary retirement, noted in the sub-Rule (ii) of Rule 2(s), has been
defined in Rule 31, and it reads as follows:
31. Pension on voluntary retirement - (1) At any time after an employee has
completed twenty years of qualifying service he may, by giving notice of
not less than ninety days, in writing, to the appointing authority, retire
from service:
Provided that this sub-rule shall not apply to an employee who is on
deputation unless after having been transferred or having returned to India
he has resumed charge of the post in India and has served for a period of
not less than one year:
Provided further that this sub-rule shall not apply to an employee who
seeks retirement from service for being absorbed permanently in an
autonomous body or a public sector undertaking to which he is on deputation
at the time of seeking voluntary retirement.
(2) The notice of voluntary retirement given under sub-rule (1) shall
require acceptance by the appointing authority:
Provided that where the appointing authority does not refuse to grant the
permission for retirement before the expiry of the period specified in the
said notice, the retirement shall become effective from the date of expiry
of the said period.
(3) (a) An employee referred to in sub-rule (1) may make a request in
writing to the appointing authority to accept notice of voluntary
retirement of less than ninety days giving reasons therefor;
(b) on receipt of a request under clause(a), the appointing authority may,
subject to the provisions of sub-rule (2), consider such request for the
curtailment of the period of notice of ninety days on merits and if it is
satisfied that the curtailment of the period of notice will not cause any
administrative inconvenience, the appointing authority may relax the
requirement of notice of ninety days on the condition that the employee
shall not apply for commutation of a part of his pension before the expiry
of the notice of ninety days.
(4) An employee, who has elected to retire under this rule and has given
necessary notice to that effect to the appointing authority, shall be
precluded from withdrawing his notice except with the specific approval of
such authority:
Provided that the request for such withdrawal shall be made before the
intended date of his retirement.
(5) The qualifying service of an employee retiring voluntarily under this
rule shall be increased by a period not exceeding five years, subject to
the condition that the total qualifying service rendered by such employee
shall not in any case exceed thirty-three years and it does not take him
beyond the date of retirement.
(6) The pension of an employee retiring under this rule shall be based on
the average emoluments as defined under clause(d) of rule 2 of these rules
and the increase, not exceeding five years in his qualifying service, shall
not entitle him to any notional fixation of pay for the purpose of
calculating his pension.

It seems obvious to us that the Appellant’s case does not fall within the
postulation of Rule 23 as the last four categories or genres or types of
cessation of services are in character punitive; and the first envisages
those resignations where the right to pension has not been earned by that
time or where it is without the permission of the Corporation.
8 The Respondent Corporation has vehemently argued that the
termination of services is under Regulation 18 (supra) of the LIC (Staff)
Regulations, 1960 and is not covered by the Pension Rules of 1995.
Respondent Corporation has controverted the plea of the Appellant that at
the relevant date and time, viz. 28.1.1991 there was no alternative for him
except to tender his resignation, pointing out that he could not have
sought voluntary retirement under Regulation 19(2A) of LIC of India
(Staff) Regulations, 1960. If that be so, the Respondent being a model
employer could and should have extended the advantage of these Regulations
to the Appellant thereby safeguarding his pension entitlement. However,
we find no substance in the argument of the Respondent since Regulation
19(2A) was, in fact, notified in the Gazette of India on 16.2.1996, that is
after the pension scheme came into existence with effect from 1.11.1993.
Otherwise there would have been no conceivable reason for the Appellant
not to have taken advantage of this provision which would have protected
his pensionary rights.
9 We also record that the provisions covered by the definition of
“retirement”, which do not entail forfeiture of service, are sub-regulation
(1), sub-regulation (2), and sub-regulation (3) of Regulation 19 of the
Life Insurance Corporation of India (Staff) Regulations, 1960 and Rule 14
of the Life Insurance Corporation of India Class III and Class IV Employees
(Revision of Terms and Conditions of Service) Rules, 1985. None of these
provisions provides for voluntary retirement like Rule 31 of the Pension
Rules nor does the definition of “retirement” make any mention of
aforementioned Regulation 19(2A).
10 The facts of the case disclose that the Appellant has worked for
over twenty years and had tendered his resignation in accordance with the
provision of Regulation 18 of LIC of India (Staff) Regulations, 1960,
which, as is apparent from its reading, does not dissimulate between the
termination of service by way of resignation on the one hand and voluntary
retirement on the other, or distinguish one from the other.
Significantly, there was no provision for voluntary retirement at the
relevant time, and it was for this reason that the Pension Rules of 1995
specifically provided for it under Rule 31. In this backdrop of facts, we
need not dwell much on the issue because the case of Sheelkumar Jain v. New
India Assurance Co. Ltd., (2011) 12 SCC 197 is on all fours of this case.
11 In Sheelkumar, the Appellant resigned from the services of the
Respondent Company after serving for over 20 years on 16.12.1991. His
resignation was offered and granted under Clause 5 of General Insurance
(Termination, Superannuation and Retirement of Officers and Development
Staff) Scheme, 1976. Thereafter, the Central Government formulated General
Insurance (Employees') Pension Scheme, 1995 with retrospective effect from
1.11.1993. Sheelkumar applied for pension under this Scheme, which was
declined on the ground that resignation from service would entail
forfeiture of service under Clause 22 of the General Insurance (Employees')
Pension Scheme, 1995. The Appellant moved the High Court challenging the
rejection of his claim. His writ petition as well as the writ appeal was
dismissed by the High Court. The Appellant then moved this Court, whereby
we noted that Clause 5 of the Scheme of 1976 did not mention resignation
nor was the Appellant made aware of the distinction between resignation and
voluntary retirement; that this distinction was a product of the General
Insurance (Employees’) Pension Scheme of 1995. This Court observed:
20. Sub-para (1) of Para 5 does not state that the termination of service
pursuant to the notice given by an officer or a person of the Development
Staff to leave or discontinue his service amounts to “resignation” nor does
it state that such termination of service of an officer or a person of the
Development Staff on his serving notice in writing to leave or discontinue
in service amounts to “voluntary retirement”. Sub-para (1) of Para 5 does
not also make a distinction between “resignation” and “voluntary
retirement” and it only provides that an employee who wants to leave or
discontinue his service has to serve a notice of three months to the
appointing authority.
21. We also notice that sub-para (1) of Para 5 does not require that the
appointing authority must accept the request of an officer or a person of
the Development Staff to leave or discontinue his service but in the facts
of the present case, the request of the appellant to relieve him from his
service after three months’ notice was accepted by the competent authority
and such acceptance was conveyed by the letter dated 28-10-1991 of the
Assistant Administrative Officer, Indore.
xxxxx
23. The 1995 Pension Scheme was framed and notified only in 1995 and yet
the 1995 Pension Scheme was made applicable also to employees who had left
the services of Respondent 1 Company before 1995. Paras 22 and 30 of the
1995 Pension Scheme quoted above were not in existence when the appellant
submitted his letter dated 16-9-1991 to the General Manager of Respondent 1
Company. Hence, when the appellant served his letter dated 16-9-1991 to the
General Manager of Respondent 1 Company, he had no knowledge of the
difference between “resignation” under Para 22 and “voluntary retirement”
under Para 30 of the 1995 Pension Scheme. Similarly, Respondent 1 Company
employer had no knowledge of the difference between “resignation” and
“voluntary retirement” under Paras 22 and 30 of the 1995 Pension Scheme,
respectively.
24. Both the appellant and Respondent 1 have acted in accordance with the
provisions of sub-para (1) of Para 5 of the 1976 Scheme at the time of
termination of service of the appellant in the year 1991. It is in this
background that we have now to decide whether the termination of service of
the appellant under sub-para (1) of Para 5 of the 1976 Scheme amounts to
resignation in terms of Para 22 of the 1995 Pension Scheme or amounts to
voluntary retirement in terms of Para 30 of the 1995 Pension Scheme.
25. Para 22 of the 1995 Pension Scheme states that the resignation of an
employee from the service of the corporation or a company shall entail
forfeiture of his entire past service and consequently he shall not qualify
for pensionary benefits, but does not define the term “resignation”. Under
sub-para (1) of Para 30 of the 1995 Pension Scheme, an employee, who has
completed 20 years of qualifying service, may by giving notice of not less
than 90 days in writing to the appointing authority retire from service and
under sub-para (2) of Para 30 of the 1995 Pension Scheme, the notice of
voluntary retirement shall require acceptance by the appointing authority.
Since “voluntary retirement” unlike “resignation” does not entail
forfeiture of past services and instead qualifies for pension, an employee
to whom Para 30 of the 1995 Pension Scheme applies cannot be said to have
“resigned” from service.
26. In the facts of the present case, we find that the appellant had
completed 20 years of qualifying service and had given notice of not less
than 90 days in writing to the appointing authority of his intention to
leave the service and the appointing authority had accepted notice of the
appellant and relieved him from service. Hence, Para 30 of the 1995 Pension
Scheme applied to the appellant even though in his letter dated 16-9-1991
to the General Manager of Respondent 1 Company he had used the word
“resign”.
12 What is unmistakably evident in the case at hand is that the
Appellant had worked continuously for over 20 years, that he sought to
discontinue his services and requested waiver of three months notice in
writing, and that the said notice was accepted by the Respondent
Corporation and the Appellant was thereby allowed to discontinue his
services. If one would examine Rule 31 of the Pension Rules juxtaposed with
the aforementioned facts, it would at once be obvious and perceptible that
the essential components of that Rule stand substantially fulfilled in the
present case. In Sheelkumar, this Court was alive to the factum that each
case calls for scrutiny on its own merits, but that such scrutiny should
not be detached from the purpose and objective of the concerned statute.
It thus observed:
30. The aforesaid authorities would show that the court will have to
construe the statutory provisions in each case to find out whether the
termination of service of an employee was a termination by way of
resignation or a termination by way of voluntary retirement and while
construing the statutory provisions, the court will have to keep in mind
the purposes of the statutory provisions.
31. The general purpose of the 1995 Pension Scheme, read as a whole, is to
grant pensionary benefits to employees, who had rendered service in the
insurance companies and had retired after putting in the qualifying service
in the insurance companies. Paras 22 and 30 of the 1995 Pension Scheme
cannot be so construed so as to deprive of an employee of an insurance
company, such as the appellant, who had put in the qualifying service for
pension and who had voluntarily given up his service after serving 90 days’
notice in accordance with sub-para (1) of Para 5 of the 1976 Scheme and
after his notice was accepted by the appointing authority.
13 The Appellant ought not to be deprived of pension benefits merely
because he styled his termination of services as “resignation” or because
there was no provision to retire voluntarily at that time. The commendable
objective of the Pension Rule is to extend benefits to a class of people to
tide over the crisis and vicissitudes of old age, and if there are some
inconsistencies between the statutory provisions and the avowed objective
of the statute so as to discriminate between the beneficiaries within the
class, the end of justice obligates us to palliate the differences between
the two and reconcile them as far as possible. We would be failing in our
duty, if we go by the letter and not by the laudatory spirit of statutory
provisions and the fundamental rights guaranteed under Article 14 of the
Constitution of India.
14 Reserve Bank of India v. Cecil Dennis Solomon, (2004) 9 SCC 461
relied upon by the Respondent, although distinguishable on facts, has
ventured to distinguish “voluntary retirement” from “resignation” in the
following terms:
10. In service jurisprudence, the expressions “superannuation”, “voluntary
retirement”, “compulsory retirement” and “resignation” convey different
connotations. Voluntary retirement and resignation involve voluntary acts
on the part of the employee to leave service. Though both involve voluntary
acts, they operate differently. One of the basic distinctions is that in
case of resignation it can be tendered at any time, but in the case of
voluntary retirement, it can only be sought for after rendering prescribed
period of qualifying service. Other fundamental distinction is that in case
of the former, normally retiral benefits are denied but in case of the
latter, the same is not denied. In case of the former, permission or notice
is not mandated, while in case of the latter, permission of the employer
concerned is a requisite condition. Though resignation is a bilateral
concept, and becomes effective on acceptance by the competent authority,
yet the general rule can be displaced by express provisions to the
contrary. In Punjab National Bank v. P.K. Mittal (1989 Supp (2) SCC 175) on
interpretation of Regulation 20(2) of the Punjab National Bank Regulations,
it was held that resignation would automatically take effect from the date
specified in the notice as there was no provision for any acceptance or
rejection of the resignation by the employer. In Union of India v. Gopal
Chandra Misra ((1978) 2 SCC 301) it was held in the case of a judge of the
High Court having regard to Article 217 of the Constitution that he has a
unilateral right or privilege to resign his office and his resignation
becomes effective from the date which he, of his own volition, chooses. But
where there is a provision empowering the employer not to accept the
resignation, on certain circumstances e.g. pendency of disciplinary
proceedings, the employer can exercise the power.
(emphasis is ours)
The legal position deducible from the above observations further amplifies
that the so-called resignation tendered by the Appellant was after
satisfactorily serving the period of 20 years ordinarily qualifying or
enabling voluntary retirement. Furthermore, while there was no compulsion
to do so, a waiver of the three months notice period was granted by the
Respondent Corporation. The State being a model employer should construe
the provisions of a beneficial legislation in a way that extends the
benefit to its employees, instead of curtailing it.
15 The cases of Shyam Babu Verma v. Union of India, (1994) 2 SCC 521;
State of M.P. v. Yogendra Shrivastava, (2010) 12 SCC 538; M.R. Prabhakar v.
Canara Bank, (2012) 9 SCC 671; National Insurance Co. Ltd. v. Kirpal Singh,
(2014) 5 SCC 189; UCO Bank v. Sanwar Mal, (2004) 4 SCC 412 relied upon by
the parties are distinguishable on facts from the present case.
16 We thus hold that the termination of services of the Appellant, in
essence, was voluntary retirement within the ambit of Rule 31 of the
Pension Rules of 1995. The Appellant is entitled for pension, provided he
fulfils the condition of refunding of the entire amount of the
Corporation’s contribution to the Provident Fund along with interest
accrued thereon as provided in the Pension Rules of 1995. Considering the
huge delay, not explained by proper reasons, on part of the Appellant in
approaching the Court, we limit the benefits of arrears of pension payable
to the Appellant to three years preceding the date of the petition filed
before the High Court. These arrears of pension should be paid to the
Appellant in one instalment within four weeks from the date of refund of
the entire amount payable by the Appellant in accordance of the Pension
Rules of 1995. In the alternative, the Appellant may opt to get the amount
of refund adjusted against the arrears of pension. In the latter case, if
the amount of arrear is more than the amount of refund required, then the
remaining amount shall be paid within two weeks from the date of such
request made by the Appellant. However, if the amount of arrears is less
than the amount of refund required, then the pension shall be payable on
monthly basis after the date on which the amount of refund is entirely
adjusted.
17 The impugned Judgments of the High Court are set aside and the Appeal
stands allowed in the terms above. However, parties shall bear their
respective costs.
......................................................J
(VIKRAMAJIT SEN)


......................................................J
(ABHAY MANOHAR SAPRE)
New Delhi,
October 12, 2015.

whether or not the manufacturer/exporter is entitled to rebate of the excise duty paid both on the inputs and on the manufactured product, when excise duty is paid on a manufactured product and also on the inputs which have gone into manufacturing the product and such manufactured product is exported? = The aforesaid discussion leads us to inevitable conclusion, namely, that the exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate. The impugned judgments are, accordingly, set aside allowing these appeals.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 1978 OF 2007


|M/S. SPENTEX INDUSTRIES LTD.               |...APPELLANT                 |
|VERSUS                                     |                             |
|COMMISSIONER OF CENTRAL EXCISE & ORS.      |...RESPONDENTS               |

                                   W I T H
                     CIVIL APPEAL NOS. 2025-2026 OF 2013
                        CIVIL APPEAL NO. 2027 OF 2013
                                     AND
                       CIVIL APPEAL NO. 10534 OF 2013


                               J U D G M E N T


A.K. SIKRI, J.

            In all these appeals, the basic question  of  law  which  arises
for consideration is as to  whether  or  not  the  manufacturer/exporter  is
entitled to rebate of the excise duty paid both on the  inputs  and  on  the
manufactured product, when excise duty is paid  on  a  manufactured  product
and also on the inputs which have gone into manufacturing  the  product  and
such manufactured product is exported?

We may point out at the outset that, as  per  the  scheme  provided  by  the
relevant Rules framed  under  the  Central  Excise  Act,  1944  (hereinafter
referred to  as  the  'Act')  two  options  are  admissible  in  respect  of
exemption from excise duty which is to be given when the goods  manufactured
are meant for export and are actually exported. A manufacturer/exporter  can
either export the said goods without payment of duty by executing a bond  to
the effect that goods are meant for export and would  be  actually  exported
and also undertakes to satisfy other  stipulated  conditions,  to  earn  the
exemption from payment on excise duty.  Other option is to pay the  duty  on
intermediate products and/or final products and thereafter  claiming  rebate
from  the  Government  once  the  goods  are  actually  exported.  When  the
manufacturer/exporter exercises first option, admittedly no duty  is  to  be
paid either on intermediate products or on  final  products.   However,  the
dispute has arisen when second option is  executed.  In  such  a  case,  the
Department has taken the stand that as per the relevant  rules,  the  rebate
is admissible in respect of one duty alone, i.e., either on  the  duty  paid
excisable goods or duty  paid  on  materials  used  in  the  manufacture  or
processing of such goods but not on both the final as well  as  intermediate
products. The authorities below, as would be noticed,  in  all  these  cases
have accepted  the  version  of  the  Revenue.   Therefore,  in  these  four
appeals, assessees are the appellants.

After giving the aforesaid preliminary background thereby putting the  issue
in perspective, that has arisen for consideration we may take  note  of  the
factual background. For the purpose of convenience, it would  be  sufficient
if we traverse through the facts that emerge from Civil Appeal No.  1978  of
2007.

       The  appellant/assessee,  in  this  appeal,   is   engaged   in   the
manufacturing    of polyester cotton  blended  yarn  and  polyester  viscose
blended yarn and       both these products fall  under  Chapter  55  of  the
Schedule to the Central     Excise Tariff Act,  1985.   For  manufacture  of
the aforesaid product, the  assessee had used the raw material which was  an
intermediate product   and paid excise duty thereupon.  The  final  products
were also cleared on   payment of excise duty on  those  finished  products.
The assessee had       exported these goods on  payment  of  central  excise
duty in the CENVAT     account and, thereafter, filed as many as  forty-five
rebate claims    amounting to  ?1,46,90,995/-  (?75,42,487/-+  ?71,48,508/-)
in the months    of November and December, 2004 respectively.  These  rebate
claims      were filed under the  provisions  of  Rule  18  of  the  Central
Excise Rules,    2002 (hereinafter referred to as the 'Rules').

On receipt of the aforesaid rebate claims, the Department issued show  cause
notice dated January 11, 2005 whereby the assessee was called upon  to  show
cause as to why the rebate claimed by the assessee be  not  rejected  as  it
was contrary to the provisions of Rule 18 of the  Rules  read  with  Section
11B of the Act and the Notification issued  thereunder,  i.e.,  Notification
No. 19/2004-CE(NT) dated September 06, 2004.  After  considering  the  reply
that was given by the assessee, the Deputy Commissioner of  Central  Excise,
Division-II, Nagpur rejected the rebate of duty paid on  the  final  product
exported as well as the claim of rebate of duty  paid  on  inputs  contained
therein by passing Order-in-original dated January 28, 2005.   Aggrieved  by
this order, the  assessee  filed  the  appeal  before  the  Commissioner  of
Central Excise (Appeals), Nagpur. This appeal was decided  by  orders  dated
March 15, 2005 holding that in terms of Rule 18 of the Rules,  the  assessee
is entitled to one of the two claims for  rebate,  i.e.,  either  rebate  of
duty paid on exported goods or the duty paid on inputs used in the  exported
goods, and not on both of them. He, thus, remitted  the  case  back  to  the
Deputy Commissioner to decide the  claim  of  the  assessee  after  granting
personal hearing to the assessee and taking its option as to  which  of  the
two claims assessee wanted to prefer.

Still not satisfied with this  partial  relief  given  by  the  Commissioner
(Appeals), as the assessee wanted rebate on  both  types  of  excise  duties
paid, the assessee challenged the order of  the  Commissioner  (Appeals)  by
filing Revision Application before the Joint Secretary to the Government  of
India under Section 35EE of the  Act.   This  Revision  Application  of  the
assessee was decided in its favour as the  Joint  Secretary  held  that  the
assessee was entitled to rebate both  on  the  exported  goods  as  well  as
inputs used in the exported goods. It was now the turn of the Department  to
feel dissatisfied with the aforesaid outcome and, therefore,  it  challenged
the aforesaid revisional order by filing  the  writ  petition  in  the  High
Court of Bombay, Nagpur Bench.  This  writ  petition  has  been  decided  in
favour of the Revenue whereby the view taken by the Joint Secretary  to  the
Government of India is reversed  and  that  of   Commissioner  (Appeals)  is
upheld holding that out of the two excise  duties,  Rule  18  of  the  Rules
permits rebate only qua one of them and not on the both duties.
Special Leave Petition against this judgment of the Bombay  High  Court  was
preferred by the assessee in which leave was granted. That  is  how  present
appeal comes up for hearing to decide the question of law  that  has  arisen
for consideration.

Before embarking  on  the  case  that  is  pleaded  by  both  sides  on  the
interpretation of the relevant provisions of  the  Act  and  Rules,  and  in
particular Rule 18 of the Rules, it is  imperative  to  scan  through  those
provisions.  First of all, we take note of the relevant statutory  provision
in the Act which  is  Section  11B  thereof.   That  portion  of  this  long
provision, which is relevant for us, is extracted below:
“S. 11B.  Claim for refund of duty  and  interest,  if  any,  paid  on  such
duty.— (1) Any person claiming refund of any duty of  excise  and  interest,
if any, paid on such duty may make an application for refund  of  such  duty
and interest if any, paid on such duty  to  the  Assistant  Commissioner  of
Central Excise or Deputy Commissioner of Central Excise  before  the  expiry
of one year from the relevant date  in  such  form  and  manner  as  may  be
prescribed and the application shall be accompanied by such  documentary  or
other evidence including the documents referred to in  section  12A  as  the
applicant may furnish to establish that the amount of  duty  of  excise  and
interest, if any, paid on such duty in relation  to  which  such  refund  is
claimed was collected from or paid by him and the  incidence  of  such  duty
and interest if, any, paid on such duty had not been passed  on  by  him  to
any other person:”


Thereafter,  Central  Excise  Rules,  2002  were  framed  by   the   Central
Government in exercise of powers contained in Section  37  of  the  Act.  As
mentioned above, the scheme of the relevant Rules or the subject  matter  of
the issue at hand provides for two options  insofar  as  payment  of  excise
duty on the products meant for exports are concerned.   Under  Rule  18,  an
exporter has the option to pay the duty and then claim  rebate  thereof  and
under Rule 19, export can be made without payment of duty on execution of  a
bond.  Both these rules are given below.
“Rule 18.  Rebate of duty.—  Where  any  goods  are  exported,  the  Central
Government  may,  by  notification,  grant  rebate  of  duty  paid  on  such
excisable goods or duty  paid  on  materials  used  in  the  manufacture  or
processing of such goods and the rebate shall be subject to such  conditions
or limitations, if any,  and  fulfillment  of  such  procedure,  as  may  be
specified in the notification.

Rule 19.  Export without payment of duty.— (1)  Any excisable goods  may  be
exported without payment of duty from a  factory  of  the  producer  or  the
manufacturer or the warehouse or any other premises, as may be  approved  by
the Commissioner.

(2)  Any material may be removed without payment of duty from a  factory  of
the producer or the manufacturer or the warehouse  or  any  other  premises,
for use in the manufacture or processing of goods  which  are  exported,  as
may be approved by the Commissioner.

                              xxx   xxx   xxx”


Obviously, the controversy that arises is qua interpretation that is  to  be
accorded to Rule 18.  The Rule stipulates that the Central  Government  may,
by notification, grant rebate of duty paid on such excisable goods  OR  duty
paid on material used in the manufacturing  or  processing  of  such  goods.
The word 'OR' which is used in between the two kinds of  duties  in  respect
of which rebate can be granted is the bone of contention and  it  is  to  be
interpreted whether it postulates grant of one of the  two  duties  or  both
the duties can be claimed.  It is also to be  noted  at  this  stage  itself
that Rule 18 is only  an  enabling  provision  which  empowers  the  Central
Government  to  issue  a  notification  for  grant  of  these  rebates   and
prescribes the procedure for claiming such rebate(s).

As is clear from the bare reading of Rule 18,  the  manner  of  getting  the
rebate under the said Rule has to be  as  per  the  procedure  that  may  be
specified in the notification.

The Central Government has  issued  Notification  No.  19/2004-CE(NT)  dated
September 06, 2004 which deals with grant of rebate  of  whole  of  duty  on
excisable goods exported. The opening portion of  this  Notification,  which
needs to be taken note of, is as under:
“In exercise of the powers conferred  by  rule  18  of  the  Central  Excise
Rules, 2002 and in supersession of the Ministry of  Finance,  Department  of
Revenue, notification No. 40/2001-Central  Excise  (N.T.),  dated  the  26th
June 2001, [G.S.R. 469(E), dated the 26th June, 2001] insofar as it  relates
to export to  the  countries  other  than  Nepal  and  Bhutan,  the  Central
Government hereby directs that there shall be granted rebate  of  the  whole
of the duty paid on all excisable goods falling under the First Schedule  to
the Central Excise Tariff Act, 1985 (5 of  1986)  exported  to  any  country
other than Nepal and Bhutan, subject  to  the  conditions,  limitations  and
procedures specified hereinafter-

                              xxx   xxx   xxx”


It also lays down conditions and limitations for  claiming  such  rebate  as
well as procedure which needs to be fulfilled.  The provision,  inter  alia,
prescribes the time limit within which claim for rebate  to  Central  Excise
is to be presented.  What is relevant for the purposes of  present  case  is
the Form, as per which  application  for  removal  of  excisable  goods  for
export is to be made and the same is prescribed in Annexure 2 to the  Rules.
Column 3 thereof reads as under:
                               “xxx  xxx   xxx

3.   I/We  hereby  certify  that  the  above-mentioned   goods   have   been
manufactured.

(a)   availing facility/without availing facility  of  Cenvat  credit  under
Cenvat Credit Rules, 2002.

(b)   availing facility/without availing  facility  under  Notification  No.
21/2004-Central Excise (N.T.), dated the 6th September,  2004  issued  under
rule 18 of Central Excise Rules, 2002.

(c)   availing facility/without availing  facility  under  Notification  No.
43/2001-Central Excise (N.T.), dated the 26th June, 2001 issued  under  rule
19 of Central Excise (No. 2) Rules, 2001.

                              xxx   xxx   xxx”


The aforesaid Notification, as is evident from the  reading  thereof,  deals
with grant  of  rebate  of  duty  paid  on  the  finished  goods,  that  are
ultimately  exported.  There  is  yet  another  Notification  No.   21/2004-
CE(N.T.); dated September 06, 2004 issued by  the  Government  for  claiming
rebate of whole of the duty paid on excisable goods used in the  manufacture
or processing of exported goods,  as  is  clear  from  the  reading  of  the
opening para thereof:
“In exercise of the powers conferred  by  rule  18  of  the  Central  Excise
Rules, 2002 and in supersession of the Ministry of  Finance,  Department  of
Revenue, notification No. 41/2001-Central  Excise  (N.T.),  dated  the  26th
June, 2001 [G.S.R. 470(E) dated the 26th June 2001], the Central  Government
hereby, directs that rebate of whole of the duty  paid  on  excisable  goods
(hereinafter  referred  to  as  'materials')  used  in  the  manufacture  or
processing of export goods shall, on their exportation out of India, to  any
country except Nepal and Bhutan, be paid subject to the conditions  and  the
procedure specified hereinafter.”


This Notification also prescribes, inter alia, the procedure for  export  in
the specified format which is Form ARE2 appended as Annexure 2B's Rules  and
envisages filing of combined application for removal  of  goods  for  export
under the claim for rebate of duty paid on excisable material  used  in  the
manufacture and packing [i.e., intermediate product used  as  raw  material]
as well as duty paid on the final product  for  export.   This  form,  thus,
enables the manufacturer of the final product exported to  claim  rebate  of
both kinds of duties paid.  That becomes evident from the following  portion
of the said form:
“Form A.R.E. 2
Combined application for removal of goods for export under claim for  rebate
of duty paid on excisable materials used in the manufacture and  packing  of
such goods and removal of dutiable excisable goods for  export  under  claim
for rebate of finished stage Central  Excise  Duty  or  under  bond  without
payment of finished stage Central Excise Duty leviable on export goods.

To
The Superintendent of Central Excise,
(Address)
…...............(full postal address)
1.    Particulars of the Assistant Commissioner of  Central  Excise  or  the
Deputy  Commissioner  of  Central  Excise  from   whom   rebate   shall   be
claimed/with   whom   bond   is   executed   and   his    complete    postal
address__________
2.    I/We_________of _____ propose to  export  the  under  mentioned  goods
(details of  which  are  given  in  Table  1  below)  to  ____  (country  of
destination) by air/sea/land/post parcel under  claim  for  rebate  of  duty
paid on excisable materials used in the  manufacture  and  packing  of  such
goods.

3.    *The finished goods being exported are not dutiable.
                                         Or
We intended to claim the rebate of Central Excise Duty  paid  on  clearances
of goods for export under notification No.  19/2004-Central  Excise  (N.T.),
dated the 6th September, 2004 issued under Rule 18 of Central Excise  Rules,
2002.”

The argument of learned counsel for the appellant  is  that  it  has  always
been the policy of the Central Government to exempt the goods  from  payment
of excise duty both on the final excisable products as well as  on  material
used in the manufacturing of goods for payment of  duty  if  the  goods  are
meant for export outside India.  Moreover,  Rule  18  is  only  an  enabling
provision and in exercise of powers contained  in  this  Rule,  the  Central
Government has also issued notification for grant of rebate or duty paid  on
excisable goods as well as duty paid on material used in the manufacture  of
goods.  Even the notifications which prescribe the procedure  contemplate  a
situation where duty may have been paid not only on the excisable goods  but
on the material used in the manufacture of goods and  provide  for  claiming
the rebate in respect of duty paid on both these goods.  It was also  argued
that the order of the  Joint Secretary, Government of  India  further  shows
the mind of the Government itself,  disclosing  that  both  the  duties  are
eligible for grant of rebate.  On that basis, it is argued that Rule 18  has
to be interpreted keeping in view the overall scheme of the statute and  the
Rules and the manner in which the Government itself operated the said  Rule.
 Learned counsel for the respondent,  on  the  other  hand,  predicated  his
arguments on the plain and grammatical meaning that needs to be accorded  to
Rule 18 of the Rules by arguing that the  word  'OR'  used  therein  clearly
signifies that it is one of the two  duties  to  which  the  rebate  can  be
granted and not both.  For this purpose, reasoning given by the  High  Court
was adopted with the submission that it was  in  accord  with  the  cardinal
principle of literal interpretation and, therefore, the  view  of  the  High
Court was correct in law.

After giving due consideration to the respective submissions, in  the  light
of statutory scheme envisaged for grant of rebate in the Act and  Rules,  we
are constrained to hold that the High Court  has  not  taken  correct  view,
which we feel is a myopic view and ignores the overall scheme pertaining  to
grant of rebate in respect  of  goods  exported  out  of  India.  There  are
multiple reasons  for  arriving  at  this  conclusion  which  are  discussed
hereinafter.

(i)   Historical perspective of the statutory scheme:  Central Excise  Rules
under the Act were first framed in the year 1944. Rule 12  thereof  provided
for rebate of duty and Rule 13 enabled exporter to export the goods  without
payment of duty.  Relevant portion of these Rules was as under:
“Rule 12.  Rebate of duty.— The Central Government may, from time  to  time,
by notification in the Official Gazette, grant rebate of -

(a)   duty paid on the excisable goods;
(b)   duty paid on materials used in  the  manufacture  of  goods;  if  such
goods are exported outside India or shipped as provision or stores  for  use
on board a ship proceeding to a foreign  port,  or  supplied  to  a  foreign
going aircraft to such extent and subject  to  such  safeguards,  conditions
and limitations as regards the class  or  description  of  goods,  class  or
description of materials used for manufacture thereof, destination, mode  of
transport and other allied matters as may be specified in the notification.
                               xxx   xxx   xxx

Rule 13.  Export in bond of goods on which duty has not been  paid.—(1)  The
Central Government may, from time to time, by notification in  the  Official
Gazette -

(a)   permit export of specified excisable goods in bond without payment  of
duty, in the like manner,  as  the  goods  regarding  which  the  rebate  is
granted under sub-rule (i) of rule 12  from  a  factory  of  manufacture  or
warehouse or any other premises as may be approved by  the  Commissioner  of
Central Excise;

(b)   specify materials, removal of which without payment of duty  from  the
place of manufacture or storage for  use  in  the  manufacture  in  bond  of
export goods may be permitted by Commissioner of  Central Excise;

(c)  Allow removal of excisable material without payment  of  duty  for  the
manufacture of export  goods,  as  may  be  specified,  to  be  exported  in
execution of one or more export orders; or for replenishment  of  duty  paid
materials used in the manufacture of such export goods already exported  for
the execution of such orders, or both;

subject to such safeguards, conditions and limitations as regards the  class
or description  of  goods,  class  or  description  of  materials  used  for
manufacture  thereof,  destination,  mode  of  transport  and  other  allied
matters  as  may  be  specified  in  the  notification  which  the  exporter
undertakes to abide by entering into a bond in the  proper  form  with  such
surety  or  sufficient  security,  and  under   such   conditions   as   the
Commissioner approves.
                              xxx   xxx   xxx ”


It is manifest from the reading of the aforesaid Rules that  from  the  very
beginning, two alternative methods were provided  enabling  an  exporter  of
goods to get rid of the burden of paying the excise duty; both on  excisable
goods as well as on  materials  used  in  the  manufacture  of  goods.   The
exporter could either claim rebate when the duty was paid.  Or else, he  was
free not to pay excise duty at all on both types of  goods  by  executing  a
bond in the prescribed form and  fulfilling  the  conditions  prescribed  in
this behalf.  The grant of rebate, in either  of  the  options,  has  always
been in respect of both kinds of excise duties, i.e. on  the  final  product
that is exported as well as on the  intermediate  product  on  which  excise
duty  is  paid/payable  and  the  same  is  used  as  raw  material  in  the
manufacture of goods.  Under  these  Rules  also,  Notification  No.  41/94-
CE(NT), dated September 12, 1994 and Notification  No.  42/94-CE(NT),  dated
September 21, 1994 were issued for grant of rebate of duty on export of  all
excisable goods,  except  minerals  oils  and  ship  stores  and  rebate  on
materials used in manufacture of goods exported out of India, respectively.

The aforesaid Rules of 1944 were replaced by  Central  Excise  Rules,  2001.
In these rules, relevant  provisions  were  Rules  18  and  19.  It  is  not
necessary to reproduce these Rules which are same as Rules 18 and 19 of  the
existing Rules.  Under these Rules also similar Notifications  were  issued,
i.e., Notification No. 40/2001-CE(NT) dated June 26, 2001  and  Notification
No. 41/2001-CE(NT) dated June 26, 2001 providing  for  rebate  of  whole  of
duty on excisable goods when exported as well as rebate of  inputs  used  in
manufacture/processing of export goods.  Likewise, Notifications 40  and  41
dated June 26, 2001 were issued under Rule 19 of these Rules.

Central Excise Rules, 2001  were  superseded  by  the  present  Rules,  viz.
Central Excise Rules, 2002 and the exact  provisions  thereof  have  already
been quoted.  The aforesaid historical narration of the relevant  provisions
from time to time depict one common theme,  namely,  to  provide  rebate  of
duty paid on the excisable goods as well as the duty paid on  material  used
in the manufacture of goods.
(ii)  Scheme of the Rules :  A cumulative reading of  the  scheme  enshrined
in Rules 18 and 19 of the Rules, 2002 has already been  pointed  out  above.
These Rules provide two alternatives to the exporter  enabling  him  to  get
the benefit of exemption  from  paying  the  excise  duty.  Under  Rule  19,
exporter is not required to pay any excise duty at  all.   At  the  time  of
removal of these goods  from  the  factory  gate  of  the  producer  or  the
manufacturer or the warehouse or any  other  premises,  he  is  supposed  to
comply with the conditions, safeguards and procedure, as may be notified  by
the Board. Such a procedure provides for execution of a  bond  which,  inter
alia, lays down the condition that the goods which are cleared are  actually
meant for export and he is  to  furnish  the  proof  that  those  goods  are
actually exported.  What is important is that when  the  exporter  opts  for
this method, with the approval of the Commissioner, he is  not  required  to
pay duty either on the final product, i.e., on excisable  goods  or  on  the
material used in the manufacture of those goods.  The intention is loud  and
clear, namely, the goods which are meant  for  exports  are  free  from  any
excise duty.  It extends not only to the  material  which  is  used  in  the
manufacture of goods but also on the goods that are produced and  ultimately
exported.  Once we keep in mind this scheme, it cannot be the  intention  of
the Legislature to provide rebate only on one  item  in  case  a  particular
exporter/manufacturer opts for other  alternative  under  Rule  18,  namely,
paying the duty in the first instance and then claiming the rebate.   Giving
such restrictive meaning to Rule 18 would not only be  anomalous  but  would
lead to absurdity as well.  In fact, it would defeat  the  very  purpose  of
grant of remission from payment of excise  duty  in  respect  of  the  goods
which  are  exported  out  of  India.    It  may  also  lead  to   invidious
discrimination and arbitrary results.

      Let us visualize another situation.  A  particular  exporter  may  opt
for scheme under Rule 18, i.e., for claim of rebate insofar as, say,  excise
duty on material used in manufacture of goods is concerned.   He  would  pay
that duty and claim rebate.  When it comes to payment of duty of  export  of
excisable goods, he exercises the option under Rule 19 and executes  a  bond
which enables him  not  to  pay  any  duty  on  excisable  goods.   In  this
scenario, the exporter will still be able to get the benefit of  not  paying
any excise duty on both final product as well as intermediate product.

(iii) Government's own perception:  As mentioned above, Rule 18 is  enabling
provision which authorises the Central Government to  issue  a  notification
for grant of these rebates. Exercising powers under this Rule,  the  Central
Government has issued necessary notifications for rebate in respect of  both
the duties, i.e., on intermediate product as well as on the  final  product.
Further, and  which  is  more  significant,  these  notifications  providing
detailed procedure for claiming such rebates contemplate a  situation  where
excise duty may have been paid both on the excisable goods and  on  material
used in the manufacture of those goods and enables  the  exporter  to  claim
rebate on both the duties.  This kind of procedure and format of  prescribed
Forms, already described above, becomes a clincher insofar as  understanding
of the Government of Rule 18 of the Rules is concerned.

It is to be borne in mind that  it  is  the  Central  Government  which  has
framed the Rules as  well  as  issued  the  notifications.  If  the  Central
Government itself is of the opinion that the rebate  is  to  be  allowed  on
both the forms of excise duties the government  is  bound  thereby  and  the
rule in-question has to interpreted in accord  with  this  understanding  of
the rule maker itself.  Law in this respect is well settled and,  therefore,
it is not  necessary  to  burden  this  judgment  by  quoting  from  various
decisions.  Our purpose would be served by referring to  one  such  decision
in the case of R & B Falcon (A) Pty Ltd. v. Commissioner  of  Income  Tax[1]
wherein interpretation given by the Central Board of Direct Taxes (CBDT)  to
a particular provision was held binding on the tax authorities.   The  Court
explained this principle in the following manner:
“33. CBDT has the requisite jurisdiction to interpret the provisions of  the
Income Tax Act. The interpretation  of  the  CBDT  being  in  the  realm  of
executive construction, should ordinarily be held to be  binding,  save  and
except where it violates any  provisions  of  law  or  is  contrary  to  any
judgment rendered by the courts.  The  reason  for  giving  effect  to  such
executive construction is not only same as contemporaneous which would  come
within the purview of the maxim temporania  caste  pesto,  even  in  certain
situation a representation made by an  authority  like  Minister  presenting
the Bill before Parliament may also be found bound thereby.

34.  Rules of executive construction in a situation of this nature may  also
be applied. Where a representation is made by the maker  of  legislation  at
the time of introduction of the Bill or construction  thereupon  is  put  by
the executive upon its coming into force, the same carries a great weight.

35.  In this regard, we may refer to the decision of the House of  Lords  in
R. (Westminster City Council) v. National Asylum Support  Service  (2002)  1
WLR 2956 : (2002) 4 All ER 654 (HL) and its interpretation of  the  decision
in Pepper v. Hart 1993 AC 593 : (1992) 3 WLR 1032 : (1993) 1 All ER 42  (HL)
on the question of “executive estoppel”. In the former decision, Lord  Steyn
stated: (WLR p. 2959, para 6)
“6. If exceptionally there  is  found  in  the  Explanatory  Notes  a  clear
assurance by the executive to Parliament about the meaning of a  clause,  or
the circumstances in which a power will or will not be used, that  assurance
may in principle be admitted against the executive in proceedings  in  which
the executive places a contrary contention before a court.”

36.  A similar interpretation was rendered by  Lord  Hope  of  Craighead  in
Wilson v. First County Trust Ltd. (No. 2) (2004) 1 AC 816  :  (2003)  3  WLR
568 : (2003) 4 All ER 97 (HL), wherein it was  stated:  (WLR  p.  600,  para
113)
“113. ...As I understand it [Pepper v. Hart 1993 AC 593 : (1992) 3 WLR  1032
: (1993) 1 All ER 42 (HL), it recognised a limited exception to the  general
rule that resort to Hansard was inadmissible. Its purpose is to prevent  the
executive seeking to place a meaning on words used in legislation  which  is
different  from  that  which  ministers  attributed  to  those  words   when
promoting the legislation in Parliament.”

37. For a detailed  analysis  of  the  rule  of  executive  estoppel  useful
reference may be  to  the  article  authored  by  Francis  Bennion  entitled
“Executive Estoppel: Pepper v. Hart Revisited”,  published  in  Public  Law,
Spring 2007, p. 1 which throws a new light on the subject-matter.”


We are also of the opinion  that  another  principle  of  interpretation  of
statutes,  namely,  principle  of  contemporanea  expositio   also   becomes
applicable which is manifest from the act of the Government in  issuing  two
notifications giving effect to Rule 18.  This  principle  was  explained  by
the Court in Desh Bandhu Gupta and Co. and others v.  Delhi  Stock  Exchange
Association Ltd.[2] in the following manner:
“9.  It may be stated that it was not disputed  before  us  that  these  two
documents which came into existence almost simultaneously with the  issuance
of the notification could be looked at for finding out  the  true  intention
of the Government in issuing the notification in question,  particularly  in
regard to the manner in which outstanding transactions were to be closed  or
liquidated.   The  principle  of  contemporanea  expositio  (interpreting  a
statute or any  other  document  by  reference  to  the  exposition  it  has
received from contemporary authority) can be invoked though  the  same  will
not always be decisive of the question of construction.  (Maxwell 12th  Edn.
p. 268).  In Crawford on Statutory Construction (1940 Edn.) in para 219  (at
pp. 393-395) it has been stated that administrative  or  executive  officers
charged with executing a statute) generally should be clearly  wrong  before
it is overturned; such a construction  commonly  referred  to  as  practical
construction  although  not  controlling,  is   nevertheless   entitled   to
considerable weight it  is  highly  persuasive.   In  Baleshwar  Bagarti  v.
Bhagirathi Dass (1908) ILR 35  Cal  701  at  713  the  principle  which  was
reiterated in Mathura Mohan Saha v. Ram Kumar Saha, ILR 43  Cal.  790:  (AIR
1916 Cal. 136) has been stated by Mukerjea J. thus:

“It is a well-settled principle of construction that courts in construing  a
statute will give much weight to the interpretation  put  upon  it,  at  the
time of its enactment and  since,  by  those  whose  duty  it  has  been  to
construe, execute and apply it. I do not suggest  for  a  moment  that  such
interpretation has by any means a controlling effect upon the  Courts;  such
interpretation may, if occasion arises have to  be  disregarded  for  cogent
and persuasive reasons, and in a clear case of error, a Court would  without
hesitation refuse to follow such construction.”

Of course, even without the aid of  these  two  documents  which  contain  a
contemporaneous exposition of the Government's intention, we  have  come  to
the conclusion that on a plain construction of the notification the  proviso
permitted the closing out or liquidation of all outstanding transactions  by
entering into a forward contract in accordance with the rules, bye-laws  and
regulations of the respondent.”


In this hue, we  may  now  advert  to  the  reasoning  given  by  the  Joint
Secretary itself in the order passed in Revision  Petition  wherein  he  has
discussed the issue in the following perspective:

“.....Govt. notes that as a  principle  and  a  policy  measure,  Govt.  has
accepted that export of goods from India  should  be  relieved  of  domestic
levies (both customs and Central Excise)  in  order  to  promote  export  of
domestic products from India and to make then  internationally  competitive.
In order to achieve this objective,  two  schemes  operate,  namely,  export
under bond and export under payment of duty  and  both  are  comparable,  as
objectives of both the schemes are same i.e. to  neutralize  the  burden  of
internal levies on goods exported.  In case  of  former,  export  goods  are
exempted from payment of duty, subject to conditions/restrictions  etc.  and
in the case of latter export goods are cleared on payment of duty  which  is
rebated subject to production of proof of export.   For  export  under  bond
Rule 19 provides for excisable goods  to  be  exported  without  payment  of
duty, subject to conditions etc. which are detailed in Notfn. No. 42/2001  –
CE(NT) dt. 26.06.2001 and Notification No.  43/2001-CE(NT)  dtd.  26.06.2001
further relieves the burden of duty  on  inputs  used  to  manufacture  such
goods by obtaining them  duty  free  under  bond.  Thus,  export  goods  are
relieved of the burden of excise duty both  on  finally  exported  goods  as
well the inputs used vide these legislative and  machinery  provisions.   As
both schemes are comparable  as  objective  to  serve  the  common  goal  of
relieving the burden of domestic taxation, the  other  scheme  provides  for
similar dispensation in case goods are exported on payment of  duty  by  way
of rebating central excise duty suffered  on  such  export  goods.  Rule  18
provides for rebate of duty on such export goods or duty  paid  on  material
used in manufacture of such export goods. While Notification No.  40/2001  –
Central Excise (NT) dtd. 26.6.2001 as amended deals with details  provisions
for rebate on finishing goods, Notfn. No. 41/201 C.E. (NT) as amended  deals
and provides the detailed  procedural  provisions  for  input  stage  rebate
also. Similar provisions and export relief existed for export on payment  of
duty and under bond in the erstwhile  Rule  12  and  13  of  Central  Excise
Rules. The fundamental objective of existing rules and the earlier  ones  is
the same i.e. to neutralise the duty  element  on  the  goods  exported  and
hence no other interpretation denying the relief  sought  appears  possible.
Circular No. 129/40/95 dt. 29.09.95, para 1.5 of Chapter  8  of  Part  V  of
CBEC Manual further leaves no room for any other interpretation.”


(iv)  Interpretation of word 'OR'  occurring  in  Rule  18:   The  aforesaid
discussion leads us to the only inevitable consequence which is this  :  the
word 'OR' occurring in Rule 18 cannot be  given  literal  interpretation  as
that leads to various  disastrous  results  pointed  out  in  the  preceding
discussion and, therefore, this word has to be read  as  'and'  as  that  is
what was intended by the rule maker in the scheme of  things  and  to  carry
out the objectives of the Rule 18 and also to bring it at par with Rule 19.

We  are  conscious  of  the  principle  that  the  word  'or'  is   normally
disjunctive and 'and'  is  normally  conjunctive  (See  Union  of  India  v.
Kamlabhai  Harjiwandas  Parekh  and  others[3]).   However,  there  may   be
circumstances where these words are to be read as vice-versa to give  effect
to manifest intention of the Legislature as disclosed from the context.

Of course, these two words normally 'or' and 'and' are  to  be  given  their
literal meaning in unless some other part  of  same  Statute  or  the  clear
intention of it requires that to be done.  However, wherever use of  such  a
word, viz., 'and'/'or' produces unintelligible or absurd results, the  Court
has power to read the word 'or' as 'and' and vice-versa to  give  effect  to
the intention of the Legislature which is otherwise quite clear.   This  was
so done in the case of State  of  Bombay  v.  R.M.D.  Chamarbaugwala[4]  and
while doing so, the Court observed as under:
“...Considering the nature,  scope  and  effect  of  the  impugned  Act,  we
entertain no doubt whatever that the first category  of  prize  competitions
does not include any innocent prize competitions.  Such is what we  conceive
to be the clear intention of the Legislature as expressed  in  the  impugned
Act read as a whole and to give effect to this obvious intention as  we  are
bound to do, we have perforce  to  read  the  word  “or”  appearing  in  the
qualifying clause after the word “promoter” and  before  the  word  “or”  as
“and”. Well-known canons of construction of statutes permit  us  to  do  so.
(See Maxwell on the Interpretation of Statutes, 10th edition, page 238)”


In J. Jayalalitha v. Union of India[5],  provisions  of  Section  3  of  the
Prevention of Corruption Act, 1988 empowers the  Government  to  appoint  as
many special judges as may be necessary for such area or areas or  for  such
case or group of case, as may be specified in the notification.   Construing
the italicised 'or' it was held that it would mean that the  Government  has
the power to do either or both the things, i.e., the  Government  may,  even
for an area for which a special judge has been appointed, appoint a  special
judge for a case or group of cases.

Likewise, in Mazagaon Dock Ltd.  v.  The  Commissioner  of  Income  Tax  and
Excess Profits Tax[6], word  'or'  occurring  under  Section  42(2)  of  the
Income Tax Act, 1922 was construed as 'and' when the Court  found  that  the
Legislature 'could not have intended' use of the  expression  'or'  in  that
Section.  We have already explained the statutory scheme  contained  in  the
Act and Rules which express manifest  intention  of  the  Legislature  which
provide for granting of both kinds of rebates to the assessee.  In  Mazagaon
Dock Ltd. (supra), this aspect was explained in the following manner:
“10.  The word “or” in the clause  would appear to be  rather  inappropriate
as it is susceptible of the interpretation that when some profits  are  made
but they are less than the normal profits, tax could only be imposed  either
on the one or on the other,  and  that  accordingly  a  tax  on  the  actual
profits earned would bar the imposition of tax on profits which  might  have
been intended, and the word “or” would have to be read  in  the  context  as
meaning “and”. Vide Maxwell's Interpretation  of  Statutes,  Tenth  Edition,
pages 238-239.  But that, however, does  not  affect  the  present  question
which is whether the word “derived” indubitably points to  the  business  of
the non-resident as the one taxable under  S.  42(2)  and  for  the  reasons
already given the answer must be in the negative.”


The aforesaid discussion leads us to  inevitable  conclusion,  namely,  that
the exporters/appellants are entitled to both the rebates under Rule 18  and
not one kind of rebate.  The impugned judgments are, accordingly, set  aside
allowing these appeals.


                             .............................................J.
                                                                (A.K. SIKRI)



                             .............................................J.
                                                     (ROHINTON FALI NARIMAN)

NEW DELHI;
OCTOBER 09, 2015.

-----------------------
[1]
      (2008) 12 SCC 466
[2]   (1979) 3 SCR 373
[3]   (1968) 1 SCR 463
[4]   (1957) 1 SCR 874
[5]   (1999) 5 SCC 138
[6]   (1959) 1 SCR 848

direction to the respondents to allow her to continue in service as Headmistress in-charge of the Dhemaji Rastrabhasha Hindi Lower Primary School; for regularisation of her service and for payment of regular salary to her for the service being rendered. The High Court dismissed the said writ petition.The services of a teacher who has been working for the last 25 years shall not be assumed to have been terminated and deprived of from her legitimate claim. Where the services are terminated, the status of the delinquent as a government servant comes to an end and nothing further remains to be done in the matter. But if the order is passed and merely kept in the file, it would not be treated to be an order terminating services nor shall the said order be deemed to have been communicated.” 18. In the background of the facts of this case, particularly, the continued service of the appellant for the last 25 years, the impugned order passed by the High Court cannot be sustained in law. 19. For the aforesaid reason, this appeal is allowed and the impugned order is set aside. Consequently, the appellant shall be entitled to continue in service and further entitled to all arrears of salary in accordance with law.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.8249  OF 2015
                  (Arising out of SLP(C) No.19947 of 2010)


DULU DEVI                              .....APPELLANT
                                   VERSUS
STATE OF ASSAM AND OTHERS         ....RESPONDENTS


                               J U D G M E N T

M.Y. Eqbal J.
      Leave granted.
2.    The appellant has preferred this appeal by special leave  against  the
impugned order dated 06.04.2010 passed by the Gauhati  High  Court  in  Writ
Petition  (Civil)  No.2560  of  2007,  filed  by  the  appellant  seeking  a
direction to the  respondents  to  allow  her  to  continue  in  service  as
Headmistress in-charge of  the  Dhemaji  Rastrabhasha  Hindi  Lower  Primary
School; for regularisation of her service and for payment of regular  salary
to her for the service being rendered. The High  Court  dismissed  the  said
writ petition.

3.    The facts of the case which reveals from the list of  dates  furnished
by the appellant and have not been  disputed  by  the  respondents,  are  as
under.
4.    The appellant was first appointed as an Assistant Teacher in  Assamese
subject in the Dhemaji Hindi Lower Primary School in 1976.  By  order  dated
19.12.1989 of the  Deputy  Inspector  of  Schools,  Dhemaji,  appellant  was
finally appointed  as  an  Assistant  Teacher  as  against  the  substantive
vacancy in  the  said  school.  Even  though  the  appellant  was  rendering
continuous service as Assistant Teacher for more than 10 years, she was  not
paid her salary.  Aggrieved by the same, she filed  a  writ  petition  being
W.P.(C) No.833 of 1999. Thereafter, the respondents-Authority  directed  the
Deputy Inspector of Schools, Dhemaji to enquire into non-payment  of  salary
and  furnish  a  report.  On  submission  of  such  report,  the  Additional
Secretary, Education Department by  order  dated  03.05.2000,  directed  the
Deputy Inspector of School, Dhemaji, to release the salary of the  appellant
for the period  she  rendered  her  services.  Thereafter,  by  order  dated
12.09.2000, the High Court  disposed  of  the  said  writ  petition  with  a
direction to the  respondents to release the salary  of  the  appellant  not
only from the current month but also for the period  she  actually  rendered
her services as a Teacher and to make  an  enquiry  as  to  the  appellant's
entitlement for regularisation of her services and  pass  necessary  orders.
It is stated that the respondents have not  filed  any  appeal  against  the
said order and, therefore, the findings and directions  as  aforestated  has
since attained finality.
5.    In view of the directions given by  the  High  Court  vide  its  order
dated 12.09.2000 passed in W.P.(C) No.833 of 1999, the  appellant  was  paid
all arrears of her salary and other allowances till August, 2007.
6.    In the year 2005, the appellant had been  given  charge  of  the  Head
Mistress. On the date of crossing the “Efficiency Bar”, she was  also  given
the next increment by order dated 05.03.2005.
7.    It is pertinent to note that in connection with another writ  petition
being W.P.(C)  No.4468/2006,  the  Deputy  Inspector  of  Schools,  Dehmaji,
submitted a report on 03.11.2006 enclosing therewith a list of 193  teachers
who had been appointed in  1989  but  were  subsequently  terminated,  still
drawing their salaries. In the said list of 193 candidates, the name of  the
appellant was shown at Serial  No.168.  The  Deputy  Inspector  of  Schools,
Dhemaji,  vide  his  letter  dated  09.11.2006,   informed   the   Director,
Elementary Education, Assam, that  the  said  report  was  prepared  without
going through the official records and relevant files and the same  was  not
wholly correct.  Consequently,  the  respondents-authority  by  order  dated
09.02.2007, stopped the salary of  193  teachers  including  the  appellant.
Aggrieved by the same, the appellant filed  the  writ  petition  being  W.P.
No.2560 of 2007 which was dismissed by the High  Court.  In  the  said  writ
petition, it was categorically averred that the  appellant  had  never  been
terminated from her service and  no  order  of  termination  had  ever  been
served upon her.
8.    It is also evident from the report  dated  25.02.2008  of  the  Deputy
Inspector of School, Dhemaji that the appellant was  never  terminated  from
her services and her name was not included in the list of 752  teachers  who
were terminated in the year 1992 as  per  letter  dated  12.05.1992  of  the
Director, Elementary Education, Assam. Thereafter, the appellant also  filed
a  Miscellaneous  Case  No.2049  of  2008  inter  alia  praying   that   the
respondents be directed to release her  salary  till  the  disposal  of  the
pending writ  petition.  Learned  counsel  appearing  for  the  respondents-
authority on instruction,  informed the High Court that  the  appellant  was
still continuing in her service. Accordingly, the High Court vide its  order
dated  02.02.2009  directed  the  respondents  to  pay  the  salary  to  the
appellant. Thereafter, the Director of  Elementary  Education,  Assam,  vide
his letter dated  11.02.2010  directed  the  District  Elementary  Education
Officer, Dhemaji, to submit a clear report as to whether  the  name  of  the
appellant was enlisted in the lists  of  terminated  teachers.  In  response
thereof, the District Elementary Education  Officer,  Dhemaji,  submitted  a
report that the name of the appellant appeared in the list of  193  teachers
which was sent on 03.11.2006 to the Director,  Elementary  Education,  Assam
and the said report was prepared without going through the relevant  records
and files.

 9.   We have heard learned counsel appearing for the  parties  and  perused
the record.
10.    Learned  counsel  appearing  for  the  appellant  submits  that   the
appellant had never been terminated from her service and that  no  order  of
termination had ever been served upon her. He further submits  that  without
going through the relevant  records  and  files,  the  respondents-Authority
prepared a list of 193 teachers and included the name of the  appellant  for
terminating their  services.  Indisputably,  the  appellant  has  been  paid
salary by the respondents-Authority for at least 25  years  without  serving
any termination letter upon her.
11.    Learned  counsel  appearing  for  the   respondents   contends   that
appointment of the appellant is itself illegal on the ground  that  she  was
under age at the time of her appointment. He further contends  that  as  the
appellant was appointed in a non-existent post, she did not get  her  salary
till July, 2000.
12.   Learned  counsel  appearing  for  the  respondents  submits  that  the
respondents-Authority  terminated  the  services  of   illegally   appointed
teachers including the appellant but they were  continuing  in  service  and
drawing their salary till July, 2007.  However,  their  salary  was  stopped
with effect from  August,  2007.  Thus,  the  appellant's  salary  was  also
stopped as she was appointed illegally and her  service  was  terminated  in
1992. He further submits that the High Court has rightly held  that  if  the
service of the appellant stood terminated in the year 1992 then she  has  no
legal right to claim salary, regularisation and promotion of service as  the
relevant materials were not produced before it when the  earlier  order  was
passed by the High Court directing the respondents  to  release  salary  and
allowances to the appellant and also to make  enquiry  with  regard  to  the
claim of the appellant for regularisation.
13.   We bestow our anxious consideration to the rival submissions  made  by
learned counsel  appearing  for  the  parties  and  find  substance  in  the
submission made by learned counsel appearing for the appellant.
14.   Indisputably,  the  appellant  has  been  continuously  serving  as  a
teacher since 1989 and pursuant to the order  passed  in  the  earlier  writ
petition the appellant was paid  entire  salary  since  the  date  when  the
salary was not paid.  The High Court took notice  of  the  fact  that  while
considering the regularization of services of the appellant, she  being  the
senior most teacher of the school was allowed to cross  the  Efficiency  Bar
two times, initially in the year 2003 and subsequently  in  the  year  2005.
The High Court in the impugned  order  further  noted  that  the  letter  of
termination was neither issued  nor  the  services  of  the  appellant  were
terminated.  Admittedly, some of the terminated teachers  filed  their  writ
petition challenging the termination, which was interfered with by the  High
Court, but the Court observed that the said benefit  cannot  be  granted  to
the appellant as she was not a party in the said writ  petition.   The  High
Court, assuming that the services of the appellant were terminated,  refused
to grant relief and dismissed the writ petition.
15.   In our considered opinion, the approach of the High Court  is  not  in
accordance with law.  The services of a teacher who  has  been  working  for
the last 25 years shall not be assumed to have been terminated and  deprived
of from her legitimate claim.
16.   The Constitution Bench Judgment of this Court in the case of State  of
Punjab vs. Amar Singh Harika, AIR 1966 SC page 1313, considered this  aspect
of the matter.  Writing the judgment, His  Lordship  (Gajendragadkar,  C.J.)
held that mere passing of an order of dismissal or termination would not  be
effective unless it is published and communicated to the officer  concerned.
 If the appointing authority passes an order  of  dismissal,  but  does  not
communicate it to the officer concerned, theoretically it is  possible  that
unlike in the case on a judicial order pronounced in  Court,  the  authority
may change its mind and decide to modify its order.  The order of  dismissal
passed by the appropriate authority and kept with itself, cannot be said  to
take effect unless the officer concerned knows about the said order  and  it
is otherwise communicated to all the parties concerned. If it is  held  that
mere passing of order  of  dismissal  has  the  effect  of  terminating  the
services of the officer concerned, various complications may arise.
17.   Similar view has been taken by this Court in  the  case  of  Union  of
India vs. Dinanath Shantaram Karekar, (1998) 7 SCC  569,  where  this  Court
observed:

“9. Where the services are terminated, the status of  the  delinquent  as  a
government servant comes to an end and nothing further remains  to  be  done
in the matter. But if the order is passed and merely kept in  the  file,  it
would not be treated to be an order terminating services nor shall the  said
order be deemed to have been communicated.”

18.   In the background  of  the  facts  of  this  case,  particularly,  the
continued service of the appellant for  the  last  25  years,  the  impugned
order passed by the High Court cannot be sustained in law.
19.   For the aforesaid reason, this appeal  is  allowed  and  the  impugned
order is set aside.   Consequently,  the  appellant  shall  be  entitled  to
continue in service and  further  entitled  to  all  arrears  of  salary  in
accordance with law.


                                                       …...................J
                                                               [M. Y. EQBAL]


                                                       …...................J
                                                               [C. NAGAPPAN]

NEW DELHI;
OCTOBER 09, 2015.