Recently, the Supreme Court held that an employer cannot frustrate an employee’s voluntary retirement merely by issuing a show-cause notice without formally refusing the request within the prescribed period. The Court affirmed that once the notice period lapses without refusal, retirement takes effect automatically, remarking that a mere show-cause notice cannot stall the legal consequence of voluntary retirement.
Brief facts:
The case arose from a service dispute involving voluntary retirement under Regulation 29 of the UCO Bank (Employees’) Pension Regulations, 1995, read with Regulation 20(3) of the UCO Bank (Officers’) Service Regulations, 1979. The employee had submitted a notice seeking voluntary retirement, triggering a three-month notice period; however, during this period, the employer only issued a show-cause notice without initiating formal disciplinary proceedings or passing any order refusing retirement. Upon expiry of the notice period, the employee treated the retirement as effective and ceased service. The employer subsequently attempted to reject the retirement and initiated disciplinary proceedings, leading to dismissal, which was set aside by the High Court, prompting the present appeal before the Apex Court.
Contentions of the Petitioner:
The Bank contended that the issuance of a show-cause notice during the notice period amounted to initiation of disciplinary proceedings under Regulation 20(3)(ii) of the Service Regulations, thereby creating a bar on voluntary retirement. The Counsel argued that once such proceedings were deemed pending, the employee could not be permitted to retire without prior approval. The Bank further submitted that the deeming provision under Regulation 29 of the Pension Regulations would not apply in cases where disciplinary proceedings were either pending or contemplated. Reliance was placed on precedents interpreting the scope of disciplinary proceedings and deemed pendency to justify withholding retirement.
Contentions of the Respondent:
The Respondent argued that the show-cause notice did not amount to initiation of disciplinary proceedings and merely sought an explanation without indicating any concrete intent to proceed further. The Counsel contended that no formal order refusing voluntary retirement was passed or communicated within the notice period, as required under Regulation 29(2). Therefore, by operation of law, the retirement became effective automatically upon expiry of the notice period. The Respondent further submitted that any subsequent disciplinary action, including the issuance of a charge sheet and dismissal, was without jurisdiction as the employer-employee relationship had already ceased.
Observation of the Court:
The Division Bench of Justice J.K. Maheshwari and Justice Vijay Bishnoi observed that “the existence of such a show cause notice itself is not sufficient without refusal by competent authority to stop the automatic operation of the notice of voluntary retirement. In absence, the notice of voluntary retirement would take its course. In the present case, no such order of refusal or order of withholding was passed by the competent authority within the stipulated period. The notice of voluntary retirement, therefore, became effective automatically by efflux of time upon the expiry of the three-month period on 04.01.2011. This Court, accordingly, finds no infirmity in the view taken by the High Court, which is liable to be upheld.”
The Court held that Regulation 29 of the Pension Regulations clearly contemplates a situation where voluntary retirement becomes effective automatically if not refused within the stipulated notice period. It emphasised that the proviso to Regulation 29(2) creates a legal fiction of “deemed acceptance,” leaving no scope for ambiguity once the authority fails to act in time. The Bench observed that the scheme of the regulation requires a conscious and timely decision from the employer, failing which the employee’s intention to sever the relationship takes effect by operation of law. It further clarified that such deemed acceptance is not contingent upon any formal communication of approval.
The Bench observed that the employer must undertake a “positive act” of refusal within the notice period to prevent the automatic operation of voluntary retirement. It emphasised that mere inaction or delayed communication cannot defeat the statutory consequence envisaged under the regulations. The Bench clarified that refusal must not only be decided but also communicated within the prescribed time, failing which the right to deny retirement stands extinguished. It further held that any subsequent attempt to refuse retirement after the expiry of the notice period is legally ineffective and cannot revive the employer-employee relationship.
The Court held that issuance of a show-cause notice, without more, does not amount to initiation of disciplinary proceedings. It observed that for Regulation 20(3)(ii) to apply, the notice must clearly indicate an intention to institute formal disciplinary action. The Bench emphasised that vague expressions such as “further course of action” cannot be equated with the initiation of proceedings. It further clarified that unless disciplinary proceedings are properly initiated, the embargo under the Service Regulations cannot be invoked to deny voluntary retirement.
The Bench emphasised that Regulation 20(3) of the Service Regulations and Regulation 29 of the Pension Regulations must be read harmoniously to avoid conflicting outcomes. It observed that while the Service Regulations restrict employees from leaving during the pendency of disciplinary proceedings, the Pension Regulations provide a structured mechanism for voluntary retirement with a built-in safeguard of deemed acceptance. The Bench clarified that both provisions operate in distinct but overlapping spheres and must be interpreted in a manner that preserves their respective intent. It concluded that the authority retains the power to refuse retirement, but only within the framework and timeline prescribed under the Pension Regulations.
The Court held that once voluntary retirement takes effect, the employer-employee relationship comes to an end, and any disciplinary proceedings initiated thereafter are without jurisdiction. It observed that continuation of such proceedings would be legally unsustainable as there exists no subsisting service relationship. The Bench emphasised that the subsequent issuance of a charge sheet and dismissal order, after the effective date of retirement, cannot be validated retrospectively. It therefore concluded that such actions are null in the eyes of the law and liable to be set aside.
The decision of the Court:
In light of the foregoing discussion, the Apex Court dismissed the appeals and upheld the High Court’s findings, declaring that the Respondent had validly retired upon expiry of the notice period. It held that in the absence of a timely refusal, voluntary retirement takes effect automatically, and any subsequent disciplinary proceedings are void.
Case Title: UCO Bank & Ors Vs. Sk Shrivastava
Case No.: Civil Appeal No. 375 of 2020
Citation: 2026 Latest Caselaw 267 SC
Coram: Hon’ble Mr. Justice J.K. Maheshwari, Hon’ble Mr. Justice Vijay Bishnoi
Advocate for the Petitioner: Sr. Adv. Gaurav Agarwal, AOR Brijesh Kumar Tamber, Adv. Vinay Singh Bisht, Adv. Prateek Kushwaha, Adv. Arani Mukherjee, Adv. Yashu Rustagi, Adv. Sahas Bhasin, Adv. Vaibhav Dayma
Advocate for the Respondent: Respondent-in-person
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