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Service & Administrative LawSupreme Court of India

IFCI Ltd. v. Sanjay Behari & Ors.

Civil Appeal · 2019 INSC 1048Decided 17 Sept 2019
Civil Appeal No. 6995 of 2019
Justice Sanjay Kishan Kaul · Justice K.M. Joseph

Background

Thirty-one employees of IFCI Ltd. (a Government of India undertaking/NBFC, formerly the Industrial Finance Corporation of India) had availed of IFCI's Voluntary Retirement Scheme of 2008 and received all benefits due under that scheme at the time. Years later, after IFCI revised pay-scales for its continuing employees with retrospective effect, these retired employees claimed they too were entitled to an enhanced pension calculated on the basis of the new pay-scales. The Division Bench of the High Court had ruled in favour of the retired employees, prompting IFCI's appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that employees who voluntarily retire under a VRS settle their relationship with the employer on the terms of that scheme as they stood at the time, and cannot later claim the benefit of pay revisions made for employees who continued in service. The Court noted that the retired employees knew the terms of VRS-2008 when they opted for it, had already received all scheme benefits, and that pension for them had to be calculated based on their last salary before the date their service ended, not on a subsequent retrospective pay revision never meant to extend to them. It also noted the long delay before the claim was raised and found the claim to be, in the Court's words, a "misadventure." The High Court's order was set aside and IFCI's appeal was allowed, though the Court declined to impose costs given the respondents were largely pensioners.

Lesson Learnt

Opting for a voluntary retirement scheme is treated as a full and final settlement on the scheme's own terms: an employee who takes VRS benefits generally cannot later claim the advantage of pay or pension revisions granted afterward to employees who remained in service.

IFCI Ltd. v. Sanjay Behari & Ors. – Legal Case Shots | LegalAware