Calcutta High Court Upholds Pension Rights for Resigned Employees in Trust-Based Schemes
In a landmark judgment, the Calcutta High Court has firmly established that resignation cannot defeat eligibility for pensions under trust-based schemes, delivering a significant blow to employers who attempt to deny benefits based on technicalities. The court dismissed the argument of a private company that sought to withhold pensions from employees solely because they "resigned" rather than "retired," emphasizing the binding nature of such schemes once established.
Court Rejects Company's Defense on Pension Denial
The division bench, comprising Justices Lanusungkum Jamir and Rai Chattopadhyay, ruled on Monday against Heinen & Hopman Engineering (I) Private Limited, which had appealed a single judge's order from April 11, 2025. That order had directed the company to release pension funds to employees who resigned before reaching superannuation. The bench upheld the earlier decision, reinforcing that pension schemes, especially those set up as trusts, impose a legal obligation on employers that cannot be circumvented by arbitrary interpretations of employment status.
Trust-Based Pension Funds as Corporate Social Responsibility
The court highlighted that the non-contributory pension fund in question is maintained by the company as part of its corporate social responsibility (CSR), rooted in ethical, philanthropic, and economic concerns. It stressed that such initiatives should transcend mere profit maximization, focusing instead on sustainability and ethical practices that benefit society at large. Once a pension scheme is created, even if fully funded by the employer, it cannot be administered whimsically or treated as the employer's personal property.
Key Legal Principles Upheld by the Court- Resignation does not invalidate pension eligibility under trust-based schemes.
- Employers cannot arbitrarily deny pensions, as this constitutes unjust enrichment.
- Pension funds established as trusts are binding obligations voluntarily assumed by employers.
- The single judge's classification of pension as "wage" under the Payment of Wages Act 1936 was affirmed.
Implications for Employment and Administrative Law
This ruling reinforces well-established doctrines in employment and administrative law, ensuring that pension schemes are administered fairly and consistently. By dismissing the company's appeal, the Calcutta High Court has set a precedent that protects employees' rights, particularly in cases where employers might exploit loopholes to avoid financial responsibilities. The decision underscores the importance of ethical corporate behavior and the legal enforceability of CSR initiatives tied to employee welfare.
The judgment serves as a reminder to companies across India that trust-based pension schemes are not discretionary benefits but legal commitments. It encourages a shift towards more transparent and equitable practices in employee compensation, aligning with broader societal goals of justice and sustainability.
