Self-financing pension schemes may validly exclude resigned employees where the retirement distinction supports actuarial viability.

A self-financing pension scheme may lawfully distinguish between resignation and retirement, and limit pension entitlement to employees who retire under the scheme. Regulation 22 of the UCO Bank (Employees) Pension Regulations, 1995 treated resignation, dismissal, removal, or termination as resulting in forfeiture of past service and loss of pensionary benefits; this was upheld as an eligibility condition, not a penalty. The classification between resigned and retired employees was held to have an intelligible differentia and a direct nexus with the scheme's actuarial and financial structure, so the exclusion of resigned employees was not arbitrary or violative of Article 14.

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Issues: (i) Whether employees who had resigned from bank service were entitled to pension under the UCO Bank (Employees) Pension Regulations, 1995. (ii) Whether the provision disentitling resigned employees from pensionary benefits was arbitrary or violative of Article 14 of the Constitution of India.

Issue (i): Whether employees who had resigned from bank service were entitled to pension under the UCO Bank (Employees) Pension Regulations, 1995.

Analysis: The pension scheme was framed as a self-financing and actuarially structured scheme constituting a complete code by itself. The regulations distinguished between resignation and retirement, and applied only to retirees covered by the scheme. Regulation 22 expressly provided that resignation, dismissal, removal, or termination entailed forfeiture of past service and disqualification from pensionary benefits. The scheme also contemplated pension as a second retiral benefit linked to qualifying service and the accumulated provident fund contribution, which was not available in the case of resignation in the same manner as retirement.

Conclusion: Employees who had resigned from service were not entitled to pension under the regulations.

Issue (ii): Whether the provision disentitling resigned employees from pensionary benefits was arbitrary or violative of Article 14 of the Constitution of India.

Analysis: The classification between resigned employees and retired employees was held to be based on intelligible differentia having a direct nexus with the object of the scheme. Resignation and retirement operate differently in service jurisprudence, and the scheme was designed to preserve the financial viability of a funded pension arrangement. Regulation 22 was treated as an eligibility condition within the framework of the scheme and not as a penal provision. The exclusion of resigned employees was therefore not found to be unreasonable or discriminatory.

Conclusion: Regulation 22 was not violative of Article 14 and was valid.

Final Conclusion: The banks were entitled to succeed, and the respondents could not claim pensionary benefits under the pension regulations on the basis of resignation.

Ratio Decidendi: In a self-financing pension scheme, a regulation may validly limit membership and pensionary entitlement to retired employees and exclude resigned employees where the distinction is rationally connected to the scheme's actuarial and financial structure.

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