IFCI vs. Ex-Employees: VRS-2008 Pension Dispute

In a significant verdict, the Supreme Court of India resolved the dispute between IFCI and its ex-employees regarding the VRS-2008 pension scheme. The ruling clarifies the terms and limitations of the voluntary retirement package, ensuring finality in the settlement of claims. This judgement sets a precedent for similar cases and upholds the integrity of the VRS-2008 Scheme. Stay informed about the details of the case and its legal implications.


  • Industrial Finance Corporation of India Ltd. (IFCI) was established in 1948 to address the industrial and infrastructural needs of India.
  • IFCI transformed from a statutory corporation to a company under the Indian Companies Act in 1993.
  • To manage excess employees, voluntary retirement schemes were introduced over time.
  • The current dispute is related to the Voluntary Retirement Scheme (VRS) of 2008.

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  • Plea of private respondents that certain aspects of the Scheme were nebulous and benefits must be available to them is without basis.
  • Referring to the constitution Bench judgment in D.S. Nakara v. Union of India, learned counsel explained the method of revised pay scales for existing employees.
  • Revised pay scales are introduced from a certain date, and all existing employees are brought onto the revised scales through fitments and increments for past service.
  • Benefits of revised scale are extended to all employees in service prior to the date fixed for introducing revised scales, not just those entering service after that date.

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  • The Scheme for Voluntary Retirement is a standalone package with specified terms.
  • The VRS-2008 provided a full and final settlement of all claims, disallowing any further benefits from earlier schemes.
  • The eligibility and benefits under the VRS-2008 were clearly stated in the Scheme clauses.
  • Pension, being a form of retirement benefit, is for past services and is not subject to retroactive changes.
  • Employees opting for VRS-2008 were aware of the implications and terms of the scheme, limiting their future claims.
  • The VRS-2008 did not allow for an open-ended interpretation or additional financial benefits beyond the Scheme terms.
  • The IFCI Pension Regulations were inclusively applied within the framework of the VRS-2008 for employees opting for voluntary retirement.
  • The principle of no additional benefits post-VRS cessation was upheld in legal disputes, maintaining the integrity of the VRS-2008.
  • Delay in raising subsequent claims or seeking to derive extra benefits beyond the Scheme terms was not entertained.
  • The VRS-2008 was meant to be a one-time economic package for voluntary retirees, with no room for further claims or benefits.
  • Clause 7 of the Scheme outlines the benefits available to employees who opt for voluntary retirement, including the balance in their Provident Fund account and pension as per IFCI Pension Regulations.
  • Employees opting for VRS can receive voluntary retirement amount equivalent to two months’ salary for each completed year of service or Rs.15 lakhs, whichever is less.
  • Clause 8.7 of the Scheme states that the benefits provided under the scheme will be a full and final settlement of all claims to the employee or their nominee.
  • The definition of ‘date of retirement’ includes the date when an employee voluntarily retires, as per the IFCI Staff Regulations.
  • Regulation 33 of the IFCI Staff Regulations allows employees under the IFCI Pension Regulations to voluntarily retire after completing 20 years of qualifying service.
  • Administrative Circular No.16 of 1992 introduced Regulation 33(2) w.e.f. 20.6.1992, specifying that service rendered prior to joining IFCI will not be considered for calculating voluntary retirement benefits.
  • Employees aged 50 or above have the option to retire by giving three months’ notice in writing.
  • The benefits provided under the Scheme are a final settlement of all claims to the employee or their nominee.
  • Ex gratia amounts are paid to employees who are leaving services of the company voluntarily.
  • These payments are made in lieu of the employees foregoing any further claims or rights.
  • The purpose of introducing a scheme for voluntary retirement is to reduce surplus staff and to bring in financial efficiency.
  • Previous application of RBI pay-scales to existing employees does not entitle them to pension based on those revised pay-scales
  • Pension is calculated based on the last ten months’ salary prior to termination date
  • Private respondents’ claim for pension based on retrospectively applied RBI pay-scales is unfounded as their chapter with IFCI was closed

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  • Costs were not imposed due to the fact that the private respondents are mostly pensioners now.
  • The appeal was allowed.
  • The impugned order of the Division Bench of the High Court was set aside.


Case Number: C.A. No.-006995-006995 / 2019

Click here to read/download original judgement

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