Managing Director Cannot Amend Service Rules Behind Executive Committee's Back: Delhi High Court Grants Post-Retirement Medical Benefits To Resigning Employee

"Any relationship between an employee and employer is primarily a contract, terms of which are governed by rules regulating the conditions of service, and if there exists any rule which permits grant of post-retirement medical benefits to an employee who severs his/her relationship from the employer by resignation, in that eventuality denial of such benefits would be absolutely arbitrary and hence will not be sustainable." Delhi High Court, in a significant ruling, held that an employee who resigns from service cannot be denied post-retirement medical benefits if the governing rules explicitly provide for the same at the time of separation.

A division bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia observed that executive amendments carried out solely by a Managing Director without the requisite approval of the Governing Council or Executive Committee are legally non-est and cannot override statutory service rules.

The appellant, Centre for Railway Information Systems (CRIS), assailed a single judge's order dated May 8, 2026, which had quashed an order denying post-retirement medical facilities to Priya Srivastava, an employee who rendered nearly 28 years of service before seeking voluntary retirement. The appellant organization had treated her departure as a "resignation" and argued that a 2010 amendment deleting the word "resignation" from Rule 8.4 of the CRIS Medical Attendance Rules disentitled her from claiming medical benefits post-separation.

The primary questions before the court were whether an employee resigning from service is entitled to post-retirement medical benefits under Rule 8 of the CRIS Medical Attendance Rules, 2009, and whether the deletion of the word "resignation" from Rule 8.4 via an Office Memorandum approved solely by the Managing Director was legally valid.

Statutory Authority Lacking For Rule Amendment

Analyzing the structural framework of the CRIS society, the bench observed that the Governing Council is the sole executive body empowered to frame and modify rules, regulations, and bye-laws governing conditions of service. The court noted that while Rule 8.4 of the Medical Rules, 2009 originally included "resignation" alongside superannuation, an Office Memorandum dated November 26, 2010, sought to delete the word "resignation" based solely on the approval of the Managing Director.

"Amendment Done Without Governing Council Approval"

The bench underscored that this purported amendment bypassed the mandatory approval of the Executive Committee and the Governing Council. Referencing internal documents and responses to legal notices, the court pointed out that CRIS itself recognized this jurisdictional flaw when it subsequently placed an agenda item before its 31st Governing Council meeting in January 2025 to officially address the eligibility of resigning employees.

Rules As They Stood At Separation Prevail

The court held that since the respondent's resignation was accepted on March 28, 2024—a date prior to the prospective strict rules adopted by the Governing Council in January 2025—she remained governed by the unamended text of Rule 8.4. "Any relationship between an employee and employer is primarily a contract... and if there exists any rule which permits grant of post-retirement medical benefits to an employee who severs his/her relationship from the employer by resignation, in that eventuality denial of such benefits would be absolutely arbitrary."

Finding no legal infirmity in the single judge's reasoning, the division bench dismissed the intra-court appeal alongside the challenge to the dismissal of the review petition. The court upheld the directions mandating CRIS to calculate and intimate the requisite contribution amount payable by the respondent, activate her post-retirement medical facility upon deposit, and process admissible reimbursement claims for indoor treatment incurred after her entitlement accrued.

Date of Decision: 12 August 2026