Ashok Kumar Dabas (Dead Through Legal Heirs) v. Delhi Transport Corporation (Supreme Court) 2025 INSC 1404

Supreme Court of India | Civil Appellate Jurisdiction | Judgment dated 9 December 2025

Head Note

Service Law — Resignation — Pension — Gratuity — Distinction between resignation and voluntary retirement — Forfeiture of past service — Payment of Gratuity Act, 1972.

Resignation from service, once accepted and not withdrawn in accordance with rules, results in forfeiture of past service under Rule 26 of the Central Civil Services (Pension) Rules, 1972, thereby disentitling an employee to pension or family pension, irrespective of the length of service rendered. Courts cannot re‑characterise resignation as voluntary retirement to confer pensionary benefits. However, gratuity is a statutory right under Section 4 of the Payment of Gratuity Act, 1972, payable even upon resignation, unless the employer is specifically exempted. Leave encashment, in the absence of any statutory bar, must also be paid.

Citation

2025 INSC 1404

Facts

The deceased employee, Ashok Kumar Dabas, was appointed as a conductor with the Delhi Transport Corporation (DTC) in 1985. In 1992, DTC introduced a pension scheme, which he opted for. After nearly 29 years of service, he submitted a letter of resignation in August 2014 citing family circumstances. The resignation was accepted in September 2014. His subsequent request to withdraw the resignation was rejected.

The employee thereafter sought release of retiral benefits including pension, gratuity and leave encashment. DTC released only the provident fund, denying pension and gratuity on the ground that resignation entailed forfeiture of past service. His challenge failed before the Central Administrative Tribunal and the Delhi High Court. After his death, his legal heirs pursued the appeal before the Supreme Court.

Issues

1. Whether an employee who resigns after completing more than 20 years of service is entitled to pension under the Central Civil Services (Pension) Rules, 1972.
2. Whether gratuity can be denied to an employee who resigns from service.
3. Whether the employee’s legal heirs are entitled to leave encashment.

Relevant Statutory Provisions

• Rule 26, Central Civil Services (Pension) Rules, 1972
• Rules 48 and 48‑A, Central Civil Services (Pension) Rules, 1972
• Section 4, Payment of Gratuity Act, 1972

Decision

The appeal was partly allowed.

• The claim for pension and family pension was rejected.
• The legal heirs were held entitled to gratuity under the Payment of Gratuity Act, 1972.
• Leave encashment was directed to be paid.
• The amounts were directed to be released within six weeks along with interest at 6% per annum from the date of resignation.

Reasoning

Pension

The Court held that Rule 26 of the Central Civil Services (Pension) Rules, 1972, explicitly provides that resignation results in forfeiture of past service. Pension under Rules 48 and 48‑A is admissible only in cases of retirement or voluntary retirement and not in cases of resignation.

The Court rejected the argument that the resignation should be construed as voluntary retirement on equitable considerations. It reiterated that resignation and voluntary retirement are distinct legal concepts and courts cannot blur this distinction to extend pensionary benefits. Completion of 20 or more years of service does not override the statutory consequence of resignation.

Gratuity

The Court distinguished pension from gratuity. Gratuity is governed by the Payment of Gratuity Act, 1972, a welfare legislation. Section 4 of the Act mandates payment of gratuity even upon resignation, provided the employee has completed five years of continuous service.

Since DTC failed to establish that it was exempted from the operation of the Gratuity Act, the statutory right to gratuity could not be denied merely because the employee resigned.

Leave Encashment

As there was no statutory prohibition and the employer conceded liability, the Court directed payment of leave encashment to the legal heirs.

Ratio Decidendi

Resignation from service entails forfeiture of past service under Rule 26 of the Central Civil Services (Pension) Rules, 1972, thereby disentitling an employee to pension irrespective of the length of service rendered; however, gratuity being a statutory right under the Payment of Gratuity Act, 1972, remains payable even upon resignation unless the employer is specifically exempted.

Significance of the Judgment

The judgment reinforces the strict statutory distinction between resignation and voluntary retirement in pension jurisprudence, while simultaneously protecting employee rights under labour welfare legislation. It cautions employees against resigning when voluntary retirement is available and clarifies the continued applicability of the Gratuity Act to public sector undertakings in the absence of exemption.

End Notes: Case Laws Referred

1. BSES Yamuna Power Ltd. v. Ghanshyam Chand Sharma, (2020) 3 SCC 346
2. Shashikala Devi v. Central Bank of India, (2014) 16 SCC 260
3. Reserve Bank of India v. Cecil Dennis Solomon, (2004) 9 SCC 461
4. Shanti Devi v. Delhi Transport Corporation, W.P.(C) No. 4871/2010 (Delhi High Court)
5. Delhi Transport Corporation v. Ram Kishan, W.P.(C) No. 2627/2015 (Delhi High Court)