MOIL Ltd.'s Pension Scheme Struck Down By Bombay HC As Discriminatory; Distinction Between Resignation And Superannuation Declared Arbitrary

Background

Chandrabhan Atulkar was employed by Manganese Ore (India) Limited ('MOIL Ltd') since 1988 and was promoted to Executive Director (Technical) in 2019. While he was set to superannuate in May 2023, he resigned citing health concerns in March 2023. His resignation was accepted as effective from April 8, 2023.

While he received other retirement benefits like gratuity and leave encashment, he was denied pensionary benefits under MOIL's Superannuation Cash Accumulation Scheme (“MOIL Scheme”). This denial was based on Clause 7(b) of the scheme, which excluded employees who resign from receiving their pension. It only allowed pension to those who superannuated. Aggrieved, Atulkar filed a writ petition and challenged this clause as arbitrary, discriminatory, and violative of Article 14 of the Constitution.

Arguments

Atulkar argued that Clause 7(b) arbitrarily differentiates between employees who resign and those who superannuate. He relied on the principles of equality established in Shayara Bano v. Union of India [(2017) 9 SCC 1], and asserted that the clause discriminates against those who resign, even if they fulfil all other conditions. He pointed out that this differentiation is not even found in the Service Regulations governing MOIL employees. Since his resignation was due to health reasons and he had met all other eligibility criteria under the amended scheme, he argued that denying his pension was arbitrary.

MOIL defended Clause 7(b) by arguing that resignation and superannuation represent fundamentally different scenarios. They relied on Senior Divisional Manager, LIC v. Shree Lal Meena [(2019) 4 SCC 479], where an employee's resignation resulted in the forfeiture of his pension benefits. They maintained that the scheme's distinction between resignation and superannuation was justified and had a nexus with the policy objectives.

Court's Findings

Firstly, the court noted that the MOIL Scheme was amended in 2018 to remove superannuation and service length as criteria for pension benefits. The court found this amendment to imply that the manner of termination (either resignation or superannuation) was immaterial for pension purposes.

Secondly, the court analyzed Clause 7(b) and observed that it creates a distinction between “simple resignation” and “technical resignation” (for joining another Central Public Sector Enterprise with a similar scheme). It held that this differentiation lacked any rational nexus to the scheme's objectives of providing annuity/pension to employees with sufficient service.

Further, the court emphasized that Atulkar had already completed over 15 years of service and met all other eligibility requirements. It noted that his resignation occurred very close to his scheduled superannuation anyway and that the manner of termination alone should not disentitle him from receiving pension.

Thirdly, the court noted that MOIL's reliance on Shree Lal Meena was misplaced since the facts and governing regulations in that case were materially different. It explained that the specific pension rules applicable in Shree Lal Meena explicitly mandated the forfeiture of certain benefits upon resignation. Noting that MOIL's Service Regulations do not have any such comparable provisions, the court refused to place any reliance on Shree Lal Meena.

Finally, the court considered the object and purpose of the MOIL Scheme 2018 amendment - to make pension available for those who worked for over 15 years. The court noted that the distinction between simple resignation and technical resignation has no nexus to the purpose of the Scheme. Thus, it declared Clause 7(b) to be discriminatory and allowed the petition. Consequently, it directed MOIL to release Atulkar's pension benefits.

Case Title: Chandrabhan Atulkar v. MOIL Ltd.

Citation: 2024 LiveLaw (Bom) 654

Counsel for the Petitioner: Mr. Akshay Sudame

Counsel for the Respondents: Mr. S.S. Ghate

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