Insurer Cannot Use Its Own Delay to Deny Compassionate Appointment, Supreme Court Holds
A bench of Justices Sanjay Karol and N. Kotiswar Singh directs New India Assurance to appoint an employee's son after the company's own inaction allowed the age threshold to lapse.
The Supreme Court has directed The New India Assurance Company Limited to grant compassionate appointment to the son of a retired employee, holding that the company could not rely on the employee's post-55 retirement date when that date itself resulted from the company's own failure to act on a voluntary retirement application submitted well before the age threshold. The judgment, delivered on 16 July 2026 by a division bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh, sets aside a Bombay High Court order that had upheld the rejection. At the centre of the dispute is a single question: whether an employer that receives a time-sensitive application before an eligibility threshold, sits on it past that threshold, and only then raises a documentary deficiency can turn around and deny the dependent's claim on the strength of the very consequence its delay produced.
How the Dispute Reached the Supreme Court
Ramnarayan Mahadeo Madankar joined New India Assurance Company as sub-staff on 18 October 1984 and was later working as Assistant Clerk-cum-Cashier at its Gondia Branch. His date of birth is 10 December 1960.
In July 2015, Madankar suffered serious neurological problems while still in service. The Civil Surgeon, General Hospital, Gondia issued a certificate on 21 July 2015 recording that he was about 54 years old and completely and permanently incapacitated for further service. The very next day, 22 July 2015, he applied to the company for voluntary retirement on medical grounds, enclosing the Civil Surgeon's certificate. On that date he had not completed 55 years of age.
The company introduced its Scheme for Compassionate Appointment in Public Sector General Insurance Companies by circular dated 12 November 2014, with effect from 1 November 2014. Clause 1.1 of the Scheme extended the benefit to a dependent family member where the employee “is retired on medical grounds due to incapacitation before reaching the age of 55 years,” with the incapacitation to be certified by a duly appointed Medical Board in a Government Medical College, Government District Headquarters Hospital, or a panel of doctors nominated by the company.
The application remained pending without any acknowledgment. Madankar sent reminders on 6 November 2015 and 1 December 2015, both before he turned 55 on 10 December 2015. By then, the company had the VRS application, the Civil Surgeon's certificate, and two written reminders before it. It neither accepted the application nor rejected the medical certificate nor called for a Medical Board certificate before the age threshold passed.
Only on 3 February 2016 — after Madankar had already crossed 55 years — did the company write to him asking for a Medical Board certificate. He obtained one from K.T.S. District General Hospital, Gondia on 10 February 2016, within seven days of receiving that communication. The company accepted the voluntary retirement application on 31 May 2016 and relieved him on 3 June 2016.
His son, Rahul Madankar (Appellant No. 1), then applied for compassionate appointment. The claim remained pending through representations sent in 2017, 2018 and 2019. The company finally rejected it on 15 July 2019, on the ground that Madankar had retired after completing 55 years. The Bombay High Court, Nagpur Bench, dismissed the writ petition on 19 August 2023, holding that the Civil Surgeon's certificate did not satisfy Clause 1.1 and that the Medical Board certificate was obtained only after the age threshold had crossed. The Supreme Court granted leave and converted the special leave petition into a civil appeal.
The Core Issue: Whose Delay, Whose Consequence
The Court framed the central question precisely: whether the company, after receiving a retirement application on medical grounds before the employee crossed the age threshold, could keep the application pending, communicate the deficiency only after the threshold passed, and then rely on that very consequence to deny the dependent's claim.
The company's principal argument was that Clause 1.1 uses the expression “is retired on medical grounds” and not “applies for retirement on medical grounds.” The Court acknowledged that such a submission might ordinarily carry force. Where an employee applies belatedly, fails to submit any medical material, or does not comply with a timely direction to produce the prescribed certificate, the dependent cannot insist that the date of application must replace the date of retirement. But the Court found the present case fell in a different category entirely.
The Court accepted that the company was right to insist that compassionate appointment cannot be granted contrary to the governing scheme and cannot rest on sympathy alone. It drew on Umesh Kumar Nagpal v. State of Haryana, (1994) 4 SCC 138, for the settled position that appointments in public service must ordinarily proceed through open competition and that compassionate appointment is a carefully limited exception. It also applied Bhawani Prasad Sonkar v. Union of India, (2011) 4 SCC 209, for the principle that the scheme is binding on employer and employee alike and must be strictly construed.
Those authorities, however, only took the company so far. The Court held they do not support the proposition that an employer may receive an application before the age threshold, allow it to remain pending beyond a reasonable time, communicate the essential deficiency only after the threshold has crossed, and thereafter rely on that very delay to defeat the claim. The requirement that a claim must remain within the scheme does not release the employer from its duty to administer the scheme fairly and within a reasonable time.
Reasoning: Delay, Fair Administration, and No Benefit from Own Wrong
The Court found two independent streams of principle supporting its conclusion.
First, it applied Malaya Nanda Sethy v. State of Orissa, 2022 SCC OnLine SC 684, where this Court held that where no fault or delay was attributable to the applicant and the delay throughout lay with the department, the applicant should not be made to suffer. Allowing the authority to profit from its own inaction would give a premium to delay. The Court in Malaya Nanda Sethy had also directed that applications for compassionate appointment on completed applications must be considered at the earliest, and not beyond six months from the date of submission.
Second, the Court drew on the broader principle articulated in Kusheshwar Prasad Singh v. State of Bihar, (2007) 11 SCC 447: “a wrong doer ought not to be permitted to make a profit out of his own wrong.” The Court noted that though those observations arose in a different statutory context, the principle provided safe guidance here. The company was dealing with a time-sensitive application. Clause 1.1 made 55 years a material threshold. Once Madankar applied before attaining 55 years and supported the application with a Government medical certificate, the company was required to scrutinise the application with reasonable promptitude. If the Civil Surgeon's certificate was insufficient, the company had to say so before the age threshold expired.
The Court examined the chronology with care. The company's own case was that it first called for the Medical Board certificate by letter dated 3 February 2016. That was after the threshold had already passed on 10 December 2015. Madankar obtained the Medical Board certificate within seven days of that communication. The delay in obtaining it before the age threshold was therefore a direct consequence of the company communicating the requirement only after the threshold had crossed.
The Court also addressed the purpose of the certification requirement in Clause 1.1. The requirement of a Medical Board certificate is intended to ensure that claims of medical incapacitation are properly verified and that frivolous applications are not entertained. Where the scheme itself contemplates certification by a panel of doctors nominated by the company, the company was expected either to refer Madankar to such a panel or promptly inform him to obtain certification from the other authorities mentioned. Having remained silent after receiving the application and the Civil Surgeon's certificate, the company could not belatedly turn around and deprive the appellants of the scheme's benefit. A technical construction that allowed this would place the benefit of the scheme at the mercy of administrative delay and would defeat the fairness inherent in administering a beneficial scheme.
The High Court's approach was specifically criticised. It had treated the date of the Medical Board certificate and the date of acceptance of voluntary retirement as the relevant date, without examining the company's own delay in communicating the requirement of such certificate. The Court found this led to an erroneous affirmation of the rejection order.
Relief: Direct Grant, Not Remand
The Court rejected the option of sending the matter back to the company or the High Court. The claim had remained pending since 2016. The appellants had pursued it diligently and continuously. Returning the matter to the stage at which the company ought to have acted years ago would defeat the object of compassionate appointment. The Court drew on Bhawani Prasad Sonkar, where a similar course was taken: after finding the rejection unsustainable, this Court had directed grant of employment rather than remanding indefinitely.
Order
The Court set aside the judgment dated 19 August 2023 of the Bombay High Court, Nagpur Bench, in Writ Petition No. 5560 of 2021, and also set aside the rejection communication dated 15 July 2019 issued by the company.
The following specific directions were issued:
The company shall grant compassionate appointment to Rahul Madankar under the Scheme in accordance with the post and cadre contemplated under the Scheme. If Rahul Madankar has crossed the applicable upper age limit during the pendency of these proceedings, the company shall grant the necessary age relaxation, since the delay in finalising the claim cannot operate to his prejudice. The appointment order shall be issued within eight weeks from the date of receipt of a copy of the judgment. Rahul Madankar shall be entitled to monetary benefits only from the date of actual appointment.
The High Court's direction regarding verification and payment of any unpaid dues of Ramnarayan Madankar was not interfered with. If any admissible dues remain unpaid, the company shall release them to him within eight weeks. No order as to costs was made.