In public service, the difference between closing a door gently and walking away can determine what follows you into retirement.
Supreme Court on Pension Rights – Resign and Lose It All
The Supreme Court has reaffirmed a critical principle governing government service: resignation and retirement are not the same, and the distinction has serious financial consequences. In a recent ruling involving a former employee of the Delhi Transport Corporation (DTC), the apex court upheld the government’s decision to deny pension benefits after the employee voluntarily resigned from service.
The court relied on the Central Civil Services (Pension) Rules, 1972, which clearly state that resignation from a service or post results in the forfeiture of past service. Under Rule 26, pension entitlement is lost unless the resignation is formally withdrawn in the public interest. Since no such withdrawal occurred in this case, the court found no legal basis to extend pension benefits to the employee or his legal heirs.
Resignation Doesn’t Erase Gratuity and Leave Benefits, But Pension is Lost
However, the ruling also clarified that resignation does not erase all post-service entitlements. The Supreme Court allowed the release of gratuity and leave encashment to the deceased employee’s family. Citing Section 4 of the Payment of Gratuity Act, 1972, the court observed that an employee who has completed at least five years of continuous service is entitled to gratuity as a statutory reward for long service and loyalty. As the Delhi Transport Corporation is not exempt from the Act, gratuity could not be denied.
Additionally, the court directed that leave encashment be paid to the legal heirs, reinforcing the principle that certain service-related benefits survive resignation and death, even when pension rights do not.
The judgment serves as a clear warning to government employees who assume that long service—often spanning two or three decades—automatically guarantees pension benefits. Pension eligibility arises only through superannuation or voluntary retirement undertaken in accordance with prescribed rules and notice requirements. A voluntary resignation, regardless of personal hardship or intent, is treated as a complete severance of service for pension purposes.
In the ledger of public service, how one exits matter as much as how long one serves.
Summary
The Supreme Court has ruled that government employees who voluntarily resign forfeit their pension under CCS Pension Rules, 1972. In a DTC case, the court denied pension to heirs but allowed gratuity and leave encashment under statutory law. The judgment clarifies that long service alone does not guarantee pension eligibility.
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