Resignation entails forfeiture of past service, precluding entitlement to gratuity under the Payment of Gratuity Act.

The Petitioner was appointed as a Post Graduate Teacher (History) with the Kendriya Vidyalaya Sangathan (KVS) on July 9, 1995.

On August 18, 2008, after approximately 13 years of service, she tendered her resignation citing chronic back pain and ill health.

KVS accepted the resignation on April 23, 2009.

Although the Petitioner had opted for the GPF-cum-pension scheme governed by the CCS (Pension) Rules, 1972, her claim for retiral benefits was rejected on the ground that resignation entails forfeiture of past service under Rule 26.

The Petitioner initially succeeded before the Controlling Authority under the Payment of Gratuity Act, 1972 (PG Act), but the Respondent challenged that order via a separate writ petition.

Subsequently, the Petitioner approached the Central Administrative Tribunal (CAT) challenging the validity of Bye-law 26/Rule 26 and seeking pensionary benefits.

The Tribunal dismissed her claim on May 30, 2023, and July 17, 2023, holding that resignation results in forfeiture of service.

Whether the Petitioner, having resigned from service, is entitled to gratuity under the Payment of Gratuity Act, 1972, or if the claim is defeated by Rule 26 of the CCS (Pension) Rules, 1972.

Whether an employee governed by the CCS (Pension) Rules falls within the definition of "employee" under Section 2(e) of the PG Act.

Whether Rule 26 of the CCS (Pension) Rules is inconsistent with Section 4 of the PG Act and thus inoperative.

The court primarily interpreted Section 2(e) of the Payment of Gratuity Act, 1972, which excludes persons holding posts under the Central or State Government who are governed by other Acts or rules providing for gratuity.

It applied Rule 26 of the Central Civil Services (Pension) Rules, 1972, which stipulates that resignation from a service or post entails forfeiture of past service.

The court relied on the Supreme Court precedents in *N. Manoharan v. Administrative Officer* [2026 INSC 143], which clarified the exclusion of governed employees from the PG Act.

The court relied on the Supreme Court precedent in *Union of India v. Braj Nandan Singh* [(2005) 8 SCC 325], which affirmed the mandatory nature of forfeiture upon resignation under Rule 26.

The Court focused on whether the Petitioner qualified as an "employee" under the PG Act to trigger its benefits.

It noted that the exclusion clause in Section 2(e) of the PG Act is substantive; if an employee’s gratuity is regulated by a distinct rule-based framework (like the CCS Pension Rules), the PG Act does not operate.

Since the Petitioner had opted for the GPF-cum-pension scheme and her service conditions were regulated by the CCS Rules as adopted by KVS, she fell squarely within the exclusion.

The Court rejected the Petitioner’s argument regarding Section 14 (the overriding effect of the PG Act), reasoning that the overriding clause only applies if the person is first established as an "employee" under the Act; since she was excluded under Section 2(e), the question of inconsistency with Section 4 did not arise.

Furthermore, the Court held that Rule 26 is unambiguous—resignation automatically forfeits past service, leaving no "qualifying service" to claim benefits.

The Court held that since the Petitioner is governed by statutory rules providing for gratuity, she is excluded from the ambit of the Payment of Gratuity Act, 1972.

Consequently, under Rule 26 of the CCS (Pension) Rules, her resignation resulted in the forfeiture of her 13 years of service, rendering her ineligible for pension or gratuity.

No relief was granted.