The Supreme Court of India has held that a notice for voluntary retirement becomes effective automatically by operation of law if the appointing authority fails to pass a positive order of refusal within the specified notice period. The Court further ruled that any disciplinary proceedings initiated or dismissal orders passed after such retirement are legally unsustainable.
The Bench, comprising Justice J.K. Maheshwari and Justice Vijay Bishnoi, delivered this judgment while dismissing two appeals filed by UCO Bank against the Chhattisgarh High Court’s orders which had granted terminal benefits to a former Manager and quashed his subsequent dismissal from service.
Background of the Case
The respondent, SK Shrivastava, joined UCO Bank as a Clerk-cum-Godown Keeper in 1983 and was promoted to Manager in 2007. In July 2010, while he was serving as a Branch Manager at Raipur, the Bank noticed suspicious transactions in certain accounts. On October 4, 2010, the respondent submitted a notice for voluntary retirement.
While the Bank’s Zonal Office issued a show-cause notice on November 11, 2010, seeking an explanation for the transactions, the three-month notice period for retirement expired on January 4, 2011. The respondent continued to serve until May 16, 2011, after which he ceased attending work. It was only on June 29, 2011, that the Bank informed him that his request for voluntary retirement was not accepted. Subsequently, on March 5, 2012—eight months after he left the service—the Bank issued a chargesheet and eventually dismissed him.
The High Court of Chhattisgarh had previously ruled in favor of the employee, holding that since the Bank did not refuse the retirement notice during the notice period, he was deemed retired.
Arguments of the Parties
Appellant (UCO Bank): The Bank’s counsel relied on Regulation 20(3)(ii) of the UCO Bank (Officers’) Service Regulations, 1979. They argued that the issuance of a show-cause notice amounted to the “pendency” of disciplinary proceedings. During such pendency, they contended, a request for voluntary retirement cannot be accepted. The Bank also argued that the “deeming fiction” of retirement under the Pension Regulations would not apply if disciplinary proceedings were pending.
Respondent (Employee): The respondent, appearing in person, argued that the show-cause notice did not constitute the initiation of disciplinary proceedings. He maintained that since no refusal was communicated within the three-month notice period ending January 4, 2011, his retirement became effective by efflux of time.
Amicus Curiae: Senior Advocate Gaurav Agrawal, appointed as Amicus Curiae, pointed out that Regulation 29(2) of the Pension Regulations requires a positive act of refusal within the notice period. He argued that the show-cause notice in this case did not indicate an intention to institute disciplinary action as required by Regulation 20(3)(ii).
The Court’s Analysis
The Court examined the interplay between Regulation 29 of the UCO Bank (Employees’) Pension Regulations, 1995, and Regulation 20 of the Service Regulations.
- Deemed Acceptance: The Court noted that under the proviso to Regulation 29(2), if the authority does not refuse permission before the expiry of the notice period, the retirement “shall become effective from the date of expiry of the said period.”
- Harmonious Construction: The Court held that while Regulation 20(3) allows a Bank to retain an employee facing disciplinary action, this must be read harmoniously with the Pension Regulations. The Court observed:
“While Regulation 20(3)(i) & (ii) of Service Regulation permits the authority to not grant ‘approval’ where disciplinary proceedings are pending; Regulation 29 of Pension Regulation also achieves the same effectively, through its proviso, by permitting the authority to ‘refuse’ voluntary retirement, but within the notice period.” - Nature of Show-Cause Notice: Critically, the Court found that the show-cause notice dated November 11, 2010, merely sought an explanation and did not state that disciplinary proceedings were being instituted. The Court remarked:
“Mere mention of ‘further course of action’ cannot be construed as intention to institute disciplinary proceedings.” - Jurisdictional Limitation: Referring to Tek Chand v. Dile Ram, the Court reiterated that if rules provide for automatic retirement in the absence of refusal, the jural relationship of master and servant snaps upon the expiry of the notice period.
The Decision
The Supreme Court concluded that the respondent’s voluntary retirement became effective on January 4, 2011. Consequently, the Bank lacked the jurisdiction to issue a chargesheet in 2012 or pass a dismissal order.
“In our view, it is correct to hold that when an employee decides to severe master servant relationship and serves a notice indicating such intention specifying the period, by operation of law it will become effective in absence of any order of refusal. The subsequent act of issuing chargesheet and consequential order of dismissal is also not justified in law.”
The Court dismissed the Bank’s appeals and directed it to settle all dues and post-retiral benefits within three months, along with the applicable interest rate.
Case Details:
- Case Title: UCO Bank & Ors. v. SK Shrivastava
- Case Number: Civil Appeal No. 375 of 2020 (with C.A. No. 376/2020)
- Bench: Justice J.K. Maheshwari and Justice Vijay Bishnoi
- Date: April 07, 2026
