The Supreme Court has emphasized a crucial principle for government employees: resignation and retirement are not the same, and this distinction can have serious financial consequences.
In a recent case involving a former Delhi Transport Corporation (DTC) employee, the court upheld the government’s decision to deny pension benefits after the employee voluntarily resigned from service.
Resignation vs. Retirement
The ruling relied on the Central Civil Services (Pension) Rules, 1972, which state that resigning from a post results in 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Under Rule 26, pension entitlement is lost unless the resignation is formally withdrawn in the public interest.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, the court ruled there was no legal basis to grant pension benefits to the employee or their heirs.
However, the court clarified that resignation does not affect all post-service benefits.
Gratuity and Leave Benefits Still Payable
The court allowed the employee’s family to receive:
Gratuity: Under the Payment of Gratuity Act, 1972, employees with at least five years of continuous service are entitled to gratuity.
The DTC is not exempt from this law, so the benefit cannot be denied.
Leave Encashment: Legal heirs are also entitled to encashed leave, ensuring some financial support even when pension rights are lost.
Key Takeaways for Government Employees
This judgment serves as a warning: long service alone does not guarantee pension.
Pension eligibility arises only through superannuation or voluntary retirement following prescribed rules and notice requirements.
Voluntary resignation, no matter the reason, is treated as a complete severance of service for pension purposes.
How you exit public service can matter as much as how long you serve.
