ASSISTANT G.M. STATE BANK OF INDIA & ORS Vs. RADHEY SHYAM PANDEY
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 2463 of 2015, Judgment Date: Feb 26, 2015
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2463 OF 2015
[Arising out of S.L.P. (Civil) No. 3686 OF 2007]
Assistant General Manager, State Bank of
India & Others ... Appellants
Versus
Radhey Shyam Pandey ... Respondent
WITH
CIVIL APPEAL NOS. 2287-2288 OF 2010
CIVIL APPEAL NOS. 5035-5037 OF 2012
CIVIL APPEAL NO. 10813 OF 2013
J U D G M E N T
Dipak Misra, J.
Leave granted in S.L.P. (Civil) No. 3686 of 2007.
Having regard to the commonality of controversy in this batch of appeals it
was heard together and is disposed of by a singular judgment. For the sake
of clarity and convenience, I shall adumbrate the facts from Civil Appeal
Nos. 2287-2288 of 2010 and at the appropriate stage refer to the views
expressed in other appeals. The 1st respondent, M.P. Hallan, an ex-
serviceman joined as a clerk on 18.5.1981 in the appellant-Bank which has
been constituted under the State Bank of India Act, 1955 (for brevity 'the
Act'). The Indian Banks Association (I.B.A.), after obtaining approval
from the Government of India evolved a Voluntary Retirement Scheme (V.R.S.)
and the appellant-Bank adopted the Scheme with certain modifications,
despite it having its own Voluntary Retirement Scheme in the existing
service conditions meant for its employees to seek voluntary
retirement/premature retirement/resignation. The Scheme, namely, S.B.I.
Voluntary Retirement Scheme (for short 'the Scheme') was adopted by the
State Bank of India on 29.12.2000. The Scheme was to remain open during
the period 15.1.2001 to 31.1.2001 with the option either to close it early
or extend the period, without assigning any reason.
After adoption of the Scheme, the Deputy Managing Director, the competent
authority, issued a Circular No. HRD/CDO/ VRS/1 on 29.12.2000 clarifying
certain aspects of the Scheme. Another Circular being No. HRD/CDO/VRS/5
was issued on 10.1.2001. On 11.01.2001, the said Circular was brought to
the notice of all the Branches/offices of all the Circles, including
Chandigarh Circle.
As per the Scheme, the applications for voluntary retirement under the
Scheme were to be submitted during the period i.e. 15.1.2001 to 31.1.2001.
The 1st respondent submitted his application seeking voluntary retirement
and it was accepted on 17.3.2001 with effect from 31.3.2001. On 27.3.2001,
the respondent No. 1 submitted an application to withdraw his request for
voluntary retirement. The said application was declined by the Bank on
18.4.2001 stating that the date for withdrawal of application had already
expired on 15.2.2001. It is apt to note that here the respondent wrote a
letter on 12.4.2001 claiming pension under the Pension Fund Rules, 1995 in
terms of State Bank of India Employees Pension Rules (for short 'the
Rules'). The claim of the 1st respondent for withdrawal of his application
for voluntary retirement and grant of pension and leave encashment was
refused by the Bank on 4.7.2001. Being grieved by the aforesaid refusal
and declination of the prayer, the 1st respondent preferred writ petition
being CWP No. 14325 of 2001.
The Writ Court took note of the fact there was acceptance of the voluntary
retirement on 17.3.2001 with a stipulation that the employee would be
relieved from his duties at the close of business hours on 31.3.2001. The
Division Bench referred to the decision in Mohinder Pal Singh v. Punjab and
Sind Bank and others[1] and the decision of this Court in Bank of India and
others v. O.P. Swarankar etc.[2] and after reproducing the directions of
from Swarankar's case came to hold as follows:-
"In view of the aforesaid finding, the moment a decision is taken by the
Bank, the jural relationship of employer and employee stood terminated.
The petitioner has admittedly sought to withdraw his offer to seek
voluntary retirement after the acceptance was conveyed to the petitioner.
Mere fact that the date of voluntary retirement was fixed as 31.03.2001, is
wholly inconsequential as employer and employee relationship has already
come to an end with the communication of acceptance. It was only the
procedural part under which the petitioner continued to work till
31.03.2001."
In the ultimate analysis, the High Court did not find any merit with regard
to refusal by the Bank in not accepting the application for withdrawal
submitted by the employee. Determination on the said score is not under
assail in any of the appeals before this court.
The next question that emerged for consideration before the High Court was
whether the employee was entitled to pension in terms of the rules,
including computed value of pension. It was contended by the 1st
respondent in the writ court that the pension rules were amended on
9.3.2001 and the said rules were in vogue when the petitioner had submitted
his application for voluntary retirement, and hence, he was entitled to get
the pensionary benefits. It was also urged that in terms of the amended
Rule 22 of the pension rules, he was entitled to pension. The said
submission was resisted by the Bank that Rule 22 did not cover the cases
like that of the petitioner. In justification of the said submission,
reliance was placed on the Division Bench judgment of the High Court of
Delhi in Vipin Kalia and Ors. v. State Bank of India and Ors. decided on
28.2.2007 in L.P.A. No. 410 of 2002 and also on a decision rendered by the
High Court of Andhra Pradesh in C.W.P. No. 2098 of 2006.
The Division Bench referred to the anatomy of Rule 22 and after analyzing
the scope of the rule distinguished the decision of the High Court of Delhi
as well as that of Andhra Pradesh and came to hold that it was apparent
from the record that the writ petitioner was in service of the Bank on
01.11.1993 and had completed 10 years of pensionable service and further
had attained the age of 58 years. Therefore, in terms of Rule 22 of the
Pension Rules, he was entitled to pension. Dealing with the claim for
leave encashment which is based upon the circular of the Bank dated
23.09.1986, it opined that the leave encashment was payable to an employee
of the Bank, who had been discharged if he was eligible for pension and as
it had been found that the petitioner was entitled to pension in terms of
the Pension Rules he would be entitled to leave encashment as well.
In this batch of appeals, the question that emanates for consideration
whether the respondent-employees are entitled to get pension. There can be
no cavil over the fact that their right to seek withdrawal from the scheme
of voluntary retirement has been negatived by the impugned judgments passed
by various High Courts and, therefore, I am not required to address the
said issue. It is essential to advert to the issue whether the employee
would be entitled to pension under the four corners of the Rules. Rule 22
which squarely falls for consideration is as follows:-
"22. (i) A member shall be entitled to a pension under these rules on
retiring from the Bank's service -
After having completed twenty years' pensionable service provided that he
has attained the age of fifty years or if he is in the service of the Bank
on or after 1.11.93, after having completed ten years pensionable service
provided that he has attained the age of fifty eight years or if he is in
the service of the Bank on or after 22.5.1998, after having completed ten
years pensionable service provided that he has attained the age of sixty
years;
After having completed twenty years' pensionable service, irrespective of
the age he shall have attained, if he shall satisfy the authority competent
to sanction his retirement by approved medical certificate or otherwise
that he is incapacitated for further active service;
After having completed twenty years pensionable service, irrespective of
the age he shall have attained at his request in writing.
After twenty five years' pensionable service.
A member who has attained the age of fifty-five years or who shall be
proved to the satisfaction of the authority empowered to sanction his
retirement to be permanently incapacitated by bodily or mental infirmity
from further active service (such infirmity not being the result of
irregular or intemperate habits) may, at the discretion of the trustees, be
granted a proportionate pension.
A member who has been permitted to retire under Clause 1(c) above shall be
entitled to proportionate pension."
Keeping the aforesaid Rule in view, it is obligatory to scrutinize the
analysis made by the High Court in the backdrop of the facts. The High
Court has taken note of the fact that the 1st respondent had completed more
than 19 years and 10 months of service as on 31.3.2001 and, therefore, the
first part of Clause (a) is not applicable to him. The High Court has also
opined that the third part of Clause (a) is not applicable to him as he had
completed more than 19 years of service but not attained the age of 60
years. The case of the 1st respondent was that his case was covered under
second part of Clause (a) which enables an employee to get pension if he
was in service of the Bank as on 1.11.1993 and had completed ten years' of
service and attained the age of 58 years. The High Court took note of the
fact that the counter-affidavit was silent regarding the claim of the 1st
respondent under second part of Clause (a). Analysing further in this
regard, the High Court opined as follows:-
"The petitioner has submitted his offer for voluntary retirement in terms
of the Pension Rules existing in the month of January, 2001. On the said
date a member of the Pension Funds was entitled to pension on completion of
20 years of pensionable service provided he has attained the age of 50
years. Alternatively, if a member is in service of the Bank on or after
01.11.1993 and has completed 10 years of pensionable service and has
attained the age of 58 years, he shall be entitled to the pension. The
petitioner fulfils the second part of Clause (a) of Rule 22 which was in
existence on the day when the petitioner submitted his request for
voluntary retirement. Even after the amendment on 09.03.2001, another
clause has been added i.e. 3rd part of Clause (a) as mentioned above, which
does not affect the claim of the petitioner for pension as he is entitled
to pension in the second part of Rule 22(1)(a)."
The High Court referred to the voluntary Retirement Scheme floated on
29.12.2000, and reproduced the relevant part of the said Scheme which is as
follows:-
"5. Amount of Ex-Gratia:
The staff member whose request for retirement under SBIVRS has been
accepted by Competent Authority will be paid an amount of ex-gratia of 60
days' salary (pay plus stagnation increments plus special pay plus dearness
allowance) for each completed year of service (for this purpose fraction of
service of six months and above will be taken as one year and accordingly
service of less than six months will be counted) or salary for the number
of months service is left, whichever is less, fraction of a month, if any,
will be ignored. 'Relevant Date' means the date on which the employee
ceases to be in service of the Bank as a consequence of the acceptance of
the request for voluntary retirement under the scheme.
For the purpose of calculation of ex-gratia, 60 days salary mentioned in
the Scheme is to be taken as equivalent to 2 months salary (with reference
to salary for the month in which employee is relieved from service on
(Voluntary Retirement).
Income Tax shall be deducted at source in respect of ex-gratia exceeding
Rs.5.00 lakhs or such other ceiling as may be prescribed under the Income
Tax Act as on the relevant date.
Other benefits:
Gratuity as payable under the extent instructions on the relevant date.
Provident Fund Contribution as per State Bank of India Employees Provident
Fund Rules as on relevant date.
Pension in terms of State Bank of India Employees' Pension Fund Rules on
the relevant date (including commuted value of pension).
Encashment of balance of privilege Leave, as applicable on the relevant
date.
Respective facilities extended to officers/others such as retention of
accommodation, telephone, car, continuation of housing loan etc., will be
extended to officers/others retiring under SBIVRS as per present
dispensations, at the discretion of Competent Authority. However, in such
cases of retention of physical facilities, 50% of the amount of ex-gratia
payable will be released only after the employee surrenders the facilities.
No interest, however, will be paid for the amount so withheld. All other
outstanding loans/advances will have to be repaid before date of retirement
under SBIVRS, failing which the amount of ex-gratia and other terminal
benefits payable to the employee will be appropriate towards the
outstanding loans/advances and the balance amount only will be payable to
the employee."
The High Court opined that the said paragraphs, when properly appreciated,
convey that the amount of ex-gratia is to be paid and what are the other
benefits to be paid have also been enumerated. Referring to Clause 6 it
ruled that it deals with gratuity, provident fund contribution, pension in
terms of the Rules on the relevant date (including commuted value of
pension), encashment of balance of privilege leave and certain other
benefits. The Court also took note of the clarificatory circular issued by
the Bank on 10.1.2001. While answering the question, whether or not, the
employee completing 15 years of pensionable service as on relevant date the
Court held he would be entitled for pension benefit.
Presently I shall refer to the relevant part of Clarificatory circular:-
"In this connection, we invite a reference to para 6(c) of the Scheme
forwarded under the cover of Circular No. CIR.DO/PER & HRD/99 dated
29.12.2000. The payment of pension to the employee retiring under SBIVRS
would be governed by State Bank of India Employees Pension Fund Rules on
the relevant date (including commuted value of pension). However, as per
existing rules, employees who have not completed 20 years of Pensionable
Service are not eligible for pension."
Having noted the rule relating to pension on which the case is founded and
the scheme on which reliance has been placed by the High Court, it is
necessary to notice how various High Courts have approached this problem.
I have already stated that the High Court of Punjab and Haryana has opined
that the employee who had opted for voluntary retirement is entitled to
pension in the second part of Rule 22 (1) (a). Now, I shall advert to the
analysis made by the High Court of Calcutta which is the subject matter of
C.A. No. 5035-37 of 2002. The learned Single Judge of the High Court of
Calcutta took note of the contention that when an offer of acceptance had
become a concluded contract any subsequent change of the pension fund rules
could not have adversely affected his rights, for the explanatory
memorandum issued by the bank on 9th March 2001 stipulated to the effect
that no employee/pensioner of the State Bank of India is likely to be
effected adversely by the notification being given retrospective effect.
He repelled the contention of the bank that the voluntary retirement scheme
itself provided that payment of pension was dependent upon the rules
prevalent on the date on which the employee would cease to be in service of
the bank and admittedly the writ petitioner therein had ceased to be an
employee on 31st March 2001 and, thereafter, the amendment of the pension
rules effecting from that day was binding upon him and as such he was not
liable to get any pension. The learned Single Judge formulated two issues
namely, (i) whether the right of the petitioner to receive pension as per
the existing rules could have been taken away by the amended rules which
became effective on 31st March, 2001? and (ii) was the writ petitioner
estopped from espousing his cause of action due to delay, laches and
acquiescence and answered both the issues in the negative against the bank
and in favour of the writ petitioner.
On an appeal being preferred the division bench referred to Section 17 and
19 of the Contract Act and came to hold as follows:-
"In the case before us, on the date of acceptance of the contract, it was
known to the bank that it had already decided to amend its pension rules by
which the appellant would be deprived of his right to get pension although
on the date of acceptance if he retired he would be entitled to get
pension. The employee ad no means of knowledge of such change of pension
rules at the time of agreement. In such a situation, the relation between
the parties being that of employer and employee, it was the duty of the
employer to inform the employee about the future amendment of the pension
rules which would deprive the employee of his right to get pension by
entering into the voluntary retirement scheme. If he had known this fact,
he would not definitely enter into the scheme because if he had retired in
due course without opting for voluntary retirement, he would be entitled to
get pension even under the amended rules. Therefore, the silence
maintained by the employer in such a situation amounted to fraud on its
part. As pointed out in illustration (b) to S. 17 of the Contract Act, if
it becomes a duty of a father to disclose the defect of the horse proposed
to be sold to his just grown up daughter, in the same manner, it is also
the duty of the employer to inform his employee about the future amendment
of the pension rules causing prejudice to his employee at the last stage of
his service life before accepting the terms of the voluntary retirement
scheme declared by it when such source of prejudice is know to the employer
and the employee had no manner of knowledge of such perilous condition."
Thereafter, the Bench referred to Food Corporation of India v.
Kamdhenu Cattle Feed Industries[3] and opined thus:-
"Therefore, on that ground also the writ petitioner is entitled to get the
pensionary benefit which was available to him on the date of declaration of
the scheme and also on the date of acceptance of the offer of the employee
under voluntary retirement scheme. If the proposed amendment was disclosed
to the writ petitioner in advance, he would not have accepted such
prejudicial terms of voluntary retirement scheme and offered for the
scheme. We do no for a moment dispute the submission of Mr. Gupta, the Ld.
Sr. Advocated appearing on behalf of the appellant that the contract was
competed by acceptance of the offer of the employee under the scheme as
laid down in the case of Bank of India v. O.P. Swarnanakar but the
appellant having committed fraud upon the writ petitioner by adopting
silence in the matter of proposed amendment of the pension rules on the
last date of the service of the employee, the writ petitioner is entitled
to the relief claimed by taking aid of Article 14 of the Constitution of
India."
Be it stated, as the Single Judge had not granted interest, the division
bench thought it appropriate to grant interest at the rate 12% per annum on
arrears amount of pension.
As far as the High Court of Allahabad is concerned, the learned Single
Judge had remitted the matter to the bank to consider the case of the writ
petitioner for his entitlement for grant of pension. In the intra-court
appeal, the Division Bench addressed to the lis on merits, referred to
clause 6 (c) of the scheme which provides that pension shall be granted in
terms of State Bank of India Employees' Pension Fund Rules on the relevant
date (including commuted value pension) and opined that the said clause
was a binding contract between the writ petitioner and on 18.3.2001 the
bank accepted the offer of retirement made by the writ petitioner, though
the employee did in fact retire on 31.3.2001. The High Court took note of
the fact although the amendments were sufficiently formulated before
31.03.2001 yet the trustees of the pension fund accepted the amended rules
only on the 30.10.2001. The High Court referred to the existing rules and
the amended rules which I shall refer to at a later stage. It was
contended by the writ petitioner before the Division Bench that he was
covered under second part of the Rule 22 (i) (a) inasmuch as he was in the
service of the Bank on and after 1.11.1993 and he had completed 10 years of
pensionable service, and attained the age of 58 years before the date he
retired. The bank resisting the said stand contended that the
clarificatory circular issued by the bank and contended that the employee
was not entitled to get pensionary benefits. The High Court observed that
the clarification had no greater status in law than the reading and
understanding the terms of the contract according to one party. It opined
that the pension rules should apply to the writ petitioner not by any force
of special statutory law but only by force of agreement. Eventually the
Court ruled thus:-
"The second important point raised by the Bank was that under 22(1)(c) of
the Pension Fund Rules, when an employee retires upon a request in writing
being made by him, he has to complete 20 years of service. Thus the
voluntary retirement being a retirement pursuant to the employees' request,
it is this clause which will be applicable to him and it will not be proper
to give him pension because he comes under another clause i.e. Clause (a),
which was merely introduced to accommodate late entrants into service when
the retirement age was raise to 58 on 1.11.1993 and then to 60 on
22.5.1998. Clause (a) was inserted so as to give employees benefit of
pension after 10 years of pensionable service even if they had joined late.
According to the Bank the writ petitioner is seeking to take advantage of
this clause although this clause was never intended to cover it.
It is also said that if in cases of retirement on request in
writing clause (a) is made applicable then clause (c) will have no field of
operation at all. Everybody will be entitled to pension after 10 years
and, therefore, the 20 years' requirement of Clause (c) will lose all
meaning."
Thereafter the division bench referred to Clause 15 of the Bank Fund Rules
which permits retirement on request by the bank employee provided a
sanction is made by the competent authority. After referring to the said
clause the court held thus:-
"In our opinion, the voluntary retirement under the scheme should not be
equated to a retirement to clause 15 of the Pension Fund Rules. It might
be that Clause 22(c) made to cover pension aspects for Clause 15
retirements and Clause 22(i)(a) was made to cover normal superannuation
retirements, but voluntary retirement was a special contract made available
for special purpose, and that too for a very small period of time which was
practically one moment or just one short fleeting period during an
employee's service career. For this scheme and this contract the pension
rules did not apply as rules. The rules apply only as words in the
contract. Therefore, if a contracting party is entitled to take benefit of
a permissive clause, then that cannot be denied to him on the basis of
purpose if construction of a statutory rule. This type of purposive
construction is far less, if at all, applied to contracts. Contacts are,
generally speaking, strictly interpreted on the basis of the language
agreed upon by the parties. The Court does not make out the parties'
contract, they make their own contact.
On this basis of strict interpretation, the writ petitioner clearly
comes within Rule 22(i)(a) although this is better put as Clause 22(i)(a)
of the Pension Fund Rules in reference to the contract.
Regarding the other aspect of Clause 22(i)(c) having no field of operation
at all, one bare look will show that the said clause will operate in all
cases where the retiring employee has not even attained the age of 58
years. If the pensionable period of 20 years has been completed before
that, and the competent authority grants sanction to retire under Rule 15,
then and in that event one would get pension although one would not under
the second or third parts of Clause 22(i)(a). Thus each part of the
contractual document is left with a meaning even if the interpretation in
favour of the writ petitioner is wholly accepted."
At this juncture, it is apt to appreciate the decision rendered in case of
Vipin Kalia (supra) by the division bench of Delhi High Court. In the
said case the division bench dealing with the State Bank of India Voluntary
Retirement Scheme whereunder the option exercised by the employees was
accepted by the respondent bank on 31.3.2001. All the appellants therein
had either completed 15 years of service or were of 40 years of age as on
31.12.2000 and accordingly, as per the provision of the State Bank of India
Employees Pension and Provident Fund Rules they had claimed pension as per
the rules. The court referred to Indian Bank's Association letter dated
11.12.2000 which was the fulcrum of the scheme to get the pension. The
division bench reproduced the said letter which I think it appropriate to
reproduce.
"Indian Bank's Association Stadium House 6th Floor, Block 2 Veer Nariman
Road Mumbai-400020
PD/CIR/76/G2/G4/
December 11,2000
Designated officers of all Public Sector Banks.
Dear Sirs,
Voluntary Retirement Scheme in Public Sector Banks-Amendments To Bank,
(Employees') Pension Regulations, 1995.
Please refer to our circular letter No. PD/CIR/76/G4/933 dated 31st August
2000 convening the 'No Objection' of the Government in banks adopting and
implementing a voluntary retirement scheme for employees on the lines of
what was contained in the Annexure to the circular.
As per the scheme, an employee who is eligible and applies for voluntary
retirement is entitled for the benefit of CPF, Pension, Gratuity and
encashment of accumulated privilege leave, as per rules.
Bank (Employees') Pension Regulations, 1955 do not have provisions enabling
payment of pension to an employee who retires before attaining the age of
super annuation except under circumstances as in Regulations 29, 30, 32 and
33. We had, therefore, taken up with the Government the need to incorporate
necessary provisions in the Pension Regulations by way of amendments to
Regulation 28 so that employees who retire as above under special/ad hoc
schemes formulated by the banks, after serving for a prescribed minimum
period would be eligible for pro rata pension.
Government of India has after examining the proposal conveyed its approval
and desired that IBA advise banks to make necessary amendments to their
Pension Regulations as in the Annexure. We request banks to take note
accordingly.
Please note that with the above amendments, employees who apply for
voluntary retirement after having rendered a minimum of 15 years of service
under a special/ad hoc scheme formulated with the specific approval of the
Government and the Board of Directors will be eligible for pro rata pension
for the period of service rendered as they are to retire on attaining the
age of superannuation on that date.
Yours faithfully,
sd/-
(Allen C A Pereira)
PERSONNEL ADVISER"
It was contended before the High Court that under the said recommendation
the bank was obliged to pay pension to them but the said contention was not
accepted by the Single Judge on the ground the said letter is not a binding
circular under Section 18 of the State Bank of India Act, 1955. The
learned Single Judge had also opined that voluntary retirement scheme was a
package by itself and it was not open to the employees to ask for
modification of the scheme and if the employees wanted to avail of the
benefit of pension, they should not have opted under the scheme and after
completing requisite years of service, would have been entitled to pension.
The Court examined the SBIVRS dated 30.12.2000 and opined that it was an
invitation to the employees to make an offer and opt for voluntary
retirement. The scheme, as analysed by the Division Bench, specifically
stipulated that the employees who were eligible and the period during which
an offer for voluntary retirement could be made. Reference was made to
Clause 5 and 6 of the scheme that provides for ex-gratia payment to the
officers who had opted for voluntary retirement. The court referring to
the letter dated 11.1.2001 opined that the payment of pension to an
employee retiring under the voluntary retirement scheme are to be governed
by the relevant pension rules, and as per the existing rules, an employee
who had not completed 20 years of pensionable service would not be eligible
for pension. Thereafter the Division Bench observed that the employee who
has opted under voluntary retirement scheme was fully conscious and aware
of the fact that he would not be entitled to pension under the scheme as he
had not completed 20 years of pensionable service and pension was payable
only to those employees who were eligible for pension under the rules as
applicable o the relevant date. Reference was made to Bank of India O.P.
Swarankar (supra) and accordingly it was held as follows:-
"The appellants, therefore, cannot be allowed to wriggle out of the terms
and conditions accepted and agreed upon by the two parties viz. the
appellants and the respondent-bank. The appellants had entered into the
said contract with open eyes and fully conscious and aware of what benefits
they would be entitled to by opting under the Voluntary Retirement Scheme.
They were conscious and aware and in fact specifically informed by way of
clarification by the respondent that the employees who had not completed 20
years of service, would not be eligible for pension under the relevant
rules. The appellants by way of appeal are seeking modification of the
terms of the concluded contract which in equity is not just and fair."
Eventually concurring with the Single Judge the Division Bench ruled:-
"13. The State Bank of India, as already stated, has its own pension
regulations. The employees of the State Bank of India are bound by the
same. Letter/circular dated 11th December, 2000 refers to amendment to Bank
(Employees') Pension Regulations, 1995. The said regulations are not
applicable to the employees of State Bank of India. The Pension regulations
applicable to the State Bank of India employees are different. As far as
employees of State Bank of India are concerned, the Bank Employees' Pension
Regulations, 1995 are not applicable. The amendment suggested by
letter/circular dated 11th December, 2000 by Indian Bank's Association was
not applicable to the appellants and the employees of the State Bank of
India. We may also point out here that State Bank of India in the counter
affidavit has explained that its Voluntary Retirement Scheme was a special
and a distinct scheme offering a handsome package for the employees who
were ready and willing to opt for retirement. It is also pointed out that
the State Bank of India's employees unlike employees belonging to other
public sector banks were entitled to both contributory provident fund and
membership of a pension fund. It is stated that employees of other public
sector bank are eligible either for contributory provident fund or
membership of pension fund.
14. Learned Counsel for the appellants, however, also relied on the
judgment of a single Judge of this Court in the case of Punjab and Sind
Bank Officers Association and Ors. v. Union of India and Anr. on 11th May,
2006. In the said case, learned single Judge was examining regulations 28
and 29 of the Bank (Employees') Pension Regulations, 1995. The issue was
which of the two regulations would apply. It was held that Regulation 29
would apply to employees who had taken voluntary retirement whether under
normal circumstances or under a special scheme. It was further held that
the scheme or package cannot be altered unilaterally. The said decision
does not support the contention of the appellants. The terms and conditions
of the Voluntary Retirement Scheme were clear and specific. The terms were
not ambiguous. The employees including the appellants were fully conscious
of the decision taken by them and the benefits they would be entitled to.
The appellants voluntarily, with open eyes entered into an agreement and
after having retired and enjoyed the benefits, they cannot go behind the
concluded contract and claim further benefits. It must be remembered that a
Voluntary Retirement Scheme is formulated and conceived in public interest.
Interest of the respondent bank is also to be taken into consideration."
Having stated the various views taken by the High Courts I may now refer to
certain authorities dealing with these kind of schemes.
In Arikaravula Sanyasi Raju v. Branch Manager, State Bank of India,
Visakhapatnam (A.P.) and others[4] the question arose whether an officer
who is removed from service on finding of misconduct would be entitled to
get the relief of pension under Rule 22 of the State Bank of India Service
Rules. In the said case the High Court had directed the payment of
provident fund in terms of rules but denied the relief of pension. The
Court referred to Rule 22 of the rules and opined had the officer sought
retirement on that basis and allowed the retirement from service he would
have been entitled to pension on completion of 20 years of pensionable
service but removal would not entitle him to get pension. Interpreting
Clause 22(i)(c) the two-Judge observed thus:-
"Clause 22(i)(c) envisage only that after completing 20 years of
pensionable service, if an incumbent retired at his request in writing and
was permitted to retire, he would be entitled to pension. In other words,
for voluntary retirement, on completion of 20 years of pensionable service,
clause (c) of Rule 22(1) gets attracted"
In V. Kasturi v. Managing Director, State Bank of India, Bombay and
another[5] though the Court was dealing with eligibility to be entitled for
pension under Rule 22(i)(c) yet it reproduced the rule, referred to the
contentions and came to hold as follows:-
"12. On a close look at the relevant provisions of the Rules, it is not
possible to agree with this contention. The appellant, in order to earn
pension under Rule 22(1) clause (c) as amended in 1986 has to satisfy the
following twin conditions:
(i) at the time when the amended clause (c) applied, i.e., from 22-9-1986,
he should be a member of the pension fund;
(ii) he should have by then completed 20 years of pensionable service, and
should have put forward his requisition in writing for availing the benefit
of the said provision.
Unless both these conditions are satisfied the amended clause (c) of Rule
22(1) cannot apply in his case."
The afore-referred two decisions show how the Court had perceived the rule
position.
In Vice-Chairman and Managing Director, A.P. SIDC Ltd. and another v R.
Varaprasad and others[6] while dealing with the concept of voluntary
retirement schemes the Court has ruled that:-
"All employees who accepted VRS could be relieved at a time or batch by
batch depending on availability of funds. Further funds may be made
available early or late. If the argument of the respondents that relieving
date should be taken as effective date for calculating terminal benefits
and financial package under VRS, the dates may be fluctuating depending on
availability of funds. Hence it is not possible to accept this argument.
When the employees have opted for VRS on their own without any compulsion
knowing fully well about the Scheme, guidelines and circulars governing the
same, it is not open to them to make any claim contrary to the terms
accepted. It is a matter of contract between the Corporation and the
employees. It is not for the courts to rewrite the terms of the contract,
which were clear to the contracting parties, as indicated in the guidelines
and circulars governing them under which Voluntary Retirement Schemes
floated."
In O.P. Swarnakar (supra) the question arose whether an employee who opts
for voluntary retirement pursuant or in furtherance of scheme floated by
the Nationalised Banks and the State Bank of India would be precluded from
withdrawing the said offer. The court dealing with the concept of
voluntary retirement held as follows:-
"59. The request of employees seeking voluntary retirement was not to take
effect until and unless it was accepted in writing by the competent
authority. The competent authority had the absolute discretion whether to
accept or reject the request of the employee seeking voluntary retirement
under the Scheme. A procedure has been laid down for considering the
provisions of the said Scheme to the effect that an employee who intends to
seek voluntary retirement would submit duly completed application in
duplicate in the prescribed form marked "offer to seek voluntary
retirement" and the application so received would be considered by the
competent authority on first-come-first-serve basis. The procedure laid
down therefor suggests that the applications of the employee would be an
offer which could be considered by the bank in terms of the procedure laid
down therefor. There is no assurance that such an application would be
accepted without any consideration.
60. Acceptance or otherwise of the request of an employee seeking voluntary
retirement is required to be communicated to him in writing. This clause is
crucial in view of the fact that therein the acceptance or rejection of
such request has been provided. The decision of the authority rejecting the
request is appealable to the Appellate Authority. The application made by
an employee as an offer as well as the decision of the bank thereupon would
be communicated to the respective General Managers. The decision-making
process shall take place at various levels of the banks."
Eventually analyzing the stand of various banks the court expressed
thus:-
"90. The basic concept of the Scheme, therefore, underwent a change which
also goes to show that the banks had sought to invoke their power of
amending the Scheme. Once the Scheme is amended and/or an apprehension is
created in the mind of the employees that they would not even receive the
entire benefits as envisaged under the Scheme, they were entitled to revoke
their offers. Their action in our considered opinion is reasonable. It may
be that some of the employees only opted for the provident fund benefit
which did not undergo any amendment but the same would not change the
attitude on the part of the banks."
In HEC Voluntary Retd. Employees Welfare Society and Another v. Heavy
Engineering Corpn. Ltd. and others[7] the Court referring to concept of
voluntary retirement opined that an offer for voluntary retirement in terms
of a scheme, when accepted, leads to a concluded contract between the
employer and the employee. In terms of such a scheme, an employee has an
option either to accept or not to opt therefor. The scheme is purely
voluntary, in terms whereof the tenure of service is curtailed, which is
permissible in law. Such a scheme is ordinarily floated with a purpose of
downsizing the employees. It is beneficial both to the employees as well as
to the employer. Such a scheme is issued for effective functioning of the
industrial undertakings. The court further observed that although the
Company is a "State" within the meaning of Article 12 of the Constitution,
the terms and conditions of service would be governed by the contract of
employment. Thus, unless the terms and conditions of such a contract are
governed by a statute or statutory rules, the provisions of the Contract
Act would be applicable both at the formulation of the contract as also the
determination thereof. By reason of such a scheme, it only is an invitation
of offer floated. When pursuant to or in furtherance of such a Voluntary
Retirement Scheme an employee opts therefor, he makes an offer which upon
acceptance by the employer gives rise to a contract. Thus, as the matter
relating to voluntary retirement is not governed by any statute, the
provisions of the Contract Act, 1872, therefore, would be applicable too.
In this context reliance was placed on O.P. Swarankar's case (supra).
After so stating, the Court ruled:
"We have noticed that admittedly thousands of employees had opted for
voluntary retirement during the period in question. They indisputably form
a distinct and different class. Having given our anxious consideration
thereto, we are of the opinion that neither are they discharged employees
nor are they superannuated employees. The expression "superannuation"
connotes a distinct meaning. It ordinarily means, unless otherwise provided
for in the statute, that not only he reaches the age of superannuation
prescribed therefor, but also becomes entitled to the retiral benefits
thereof including pension. "Voluntary retirement" could have fallen within
the aforementioned expression, provided it was so stated expressly in the
Scheme.
Financial considerations are, thus, a relevant factor both for floating a
scheme of voluntary retirement as well as for revision of pay. Those
employees who opted for voluntary retirement, make a planning for the
future. At the time of giving option, they know where they stand. At that
point of time they did not anticipate that they would get the benefit of
revision in the scales of pay. They prepared themselves to contract out of
the jural relationship by resorting to "golden handshake". They are bound
by their own act. The parties are bound by the terms of contract of
voluntary retirement. We have noticed hereinbefore that unless a statute or
statutory provision interdicts, the relationship between the parties to act
pursuant to or in furtherance of the Voluntary Retirement Scheme is
governed by contract. By such contract, they can opt out of such other
terms and conditions as may be agreed upon. In this case the terms and
conditions of the contract are not governed by a statute or statutory
rules."
In the said case the court referred to V. Kasturi Case (supra) and
understood it in the following manner:-
"It has not been suggested that voluntary retirement, in the absence of any
express statutory rule governing the field, would bring about a case of
superannuation. In V. Kasturi, a new rule was introduced providing for
pension of an employee after retirement on completion of 20 years of
service, provided he requested in writing therefor. The questions which
fell for consideration therein were that if a person was eligible for
pension at the time of his retirement and if he survives till the time of
subsequent amendment of the relevant Pension Scheme, whether he would
become entitled to enhanced pension or would become eligible to get more
pension as per the new formula of computation of pension. In the fact
situation obtaining therein, it was held that employees could be divided in
two [pic]categories i.e. those who were eligible for pension at the time of
their retirement and those who were not. Whereas in the case of first
category the benefit of the amended provisions would be applicable, but in
the second it would not. V. Kasturi also, thus, in our opinion, is not
applicable to the fact of the present case."
In this backdrop, I am required to scan the anatomy of Rule 22 and the
appropriate interpretation is required to be placed on the same. Rule
22(i) (a) postulates that members shall be entitled to pension under the
said rule on retiring from the bank's service. Thus, the key word is
retiring from bank's service. The said rule when understood in proper
perspective, covers cases of normal retirement/superannuation. There are
various compartments and each compartment has different criterion. An
employee, who has completed 20 years of pensionable service and has
attained the age of 50 years, would be entitled to get the pension under
the rules. This is one compartment. Second one, as is envisaged, carves
out an exception to the first part, which stipulates that when an employee
who is working in the bank on or after 01.11.1993 and has completed 10
years of pensionable service, shall be entitled for pension provided he has
attained the age of 58 years. The third part of the rule stipulates that
all employees who are in service of the bank or after 22.05.1998 and have
put in 10 years of pensionable service, to be eligible for pension provided
they have attained the age of 60 years i.e. age of superannuation. As the
facts would demonstrate, in the instant case, the employees/respondents,
before attaining the age of superannuation, sought voluntary retirement
under the Scheme.
At this juncture, it is relevant to state Rule 22(i)(b) which provides that
an employee who has completed 20 years of pensionable service, irrespective
of age, if he satisfies the authority competent to sanction retirement by
appropriate medical certificate or otherwise that he is incapacitated for
further active service, he would be entitled to pension. This clause does
not cover the present respondents. Clause 22(i)(c) deals with entitlement
of pension by an employee if he has completed 20 years of pensionable
service irrespective of age, if he seeks retirement at his own request in
writing. It is the stand of the Bank that Rule 22(i)(c) was added on
20.09.1986 for the specific purpose of granting pension to those who have
voluntary retired. As is evident from the factual score under the SBI VRS,
the employees were required to submit written applications seeking
voluntary retirement under the Scheme. When the scheme was in operation,
the competent authority i.e. Deputy Managing Director had issued a circular
dated 10/15.1.2001 clarifying the position that the employees could
withdraw their applications made under SBI VRS by 15.2.2001 and those
employees who have not completed 20 years of pensionable service, are not
eligible for pension. There can be no doubt, by abundant caution, the bank
issued a clarificatory circular. The said circular cannot be given any
type of nomenclature other than a clarificatory circular, despite treated
as such. It is graphically clear from the same that an employee who has
completed 20 years of pensionable service would be entitled to pension,
even if they seek voluntary retirement under SBI VRS. It was open to the
employees to withdraw their applications under SBI VRS by 15.2.2001. The
respondent-employees, as is manifest, chose not to withdraw. In these
circumstances, the question arises whether any part of Rule 22 would apply
to the respondent for extension of benefit of pension. As has been
elaborated earlier, Clause 22(i)(a) and 22(i)(b) are not applicable to
them.
Mr. Rohtagi, learned Attorney General, has submitted that on 30.1.2001, the
SBI Employees Pension Fund Rules was amended by the Central Board of SBI.
The SBI VRS was in operation from 15.1.2001 to 31.1.2001. The employees
were at liberty, as has been stated earlier, to withdraw by 15.2.2001.
Admittedly, the Rule was in force on 30.1.2001. The employees were very
well aware about the amended Rule. There can be no scintilla of doubt
that the Rule existed as on 31.1.2001. If an employee wanted to withdraw,
he could have withdrawn prior to 15.2.2001 but as is the admitted position,
none of the employees withdrew. There is no cavil over the fact that the
employees had accepted all the benefits of the VRS. The crux of the matter
is whether the respondents can get the benefit, despite the amendment
brought to the Rules.
In Arikaavula Sanyasi Raju (supra), it has been clearly held, for voluntary
retirement on completion of 20 years of pensionable service, clause (c) of
Rule 22(i) gets attracted. Another aspect needs to be noted. The SBI
Pension Rules have been framed under Section 50 of the SBI Act, 1955. The
Rules have statutory force. The concept of any kind of promissory
estoppel, if any, could not be applicable to promote or condone the breach
of law.
In Bangalore Development Authority & Ors. Vs. R. Hanumaiah & Ors.[8] it has
been held that rule of promissory estoppel cannot be availed to permit or
condone a breach of law. It cannot be invoked to compel the Government to
do an act prohibited by law, for such a direction would be against the
statute. To arrive at the said conclusion, the two-Judge Bench placed
reliance on TISCO Ltd. V. State of Jharkhand[9], Hira Tikkoo V. Union
Territory, Chandigarh[10] and Savitaben Somabai Bhatiya V. State of
Gujarat[11].
The High Court, to sustain its conclusion, has referred to Clause 6(c) of
the Scheme which postulates that the benefits shall be granted to the
employee which include the pension and the said pension shall be granted in
terms of the State Bank of India Employees Pension Fund Rules on the
relevant date. The High Court referred to Rule 22(i) prior to the
amendment i.e. 09.03.2001. The unamended portion of the Rule reads as
follows:
"After having completed 20 years' pensionable service provided that he has
attained the age of 50 years or if he is in service of the Bank on or after
01.11.1993, after having completed 10 years pensionable service provided
that he has attained the age of 58 years."
After the amendment that was incorporated on 9.3.2001, the Rule reads as
under:
"After having completed 20 years' pensionable service provided that he has
attained the age of 50 years or if he is in service of the Bank on or after
01.11.1993, after having completed 10 years pensionable service provided
that he has attained the age of 58 years or if he is in the service of the
Bank on or after 22.05.1998, after having completed 10 years pensionable
service provided that he has attained the age of 60 years".
Analysing the said Rule, the High Court opined that the employees would be
covered under second part of clause (a) of Rule 22(i) which was in
existence on the date when the petitioner submitted his request for
voluntary retirement. That apart, the High Court has also held even after
amendment on 09.03.2001, by which another clause has been added, that is,
third part of clause (a), would not affect the claim of the employees for
pension as he is entitled to pension in the second part of Rule 22(i) (a).
Here, as I find, the High Court has opined as the respondent was in service
of Bank on 1.11.1993 and had completed 10 years of pensionable service and
attained the age of 58 years, he would be entitled to pension. There is no
doubt that the Government of India, on 22.5.98, advised all the banks that
the age of retirement would be 60 years. Accordingly, the Board of SBI, on
22.5.1998 itself, passed a resolution whereby it fixed the age of
retirement 60 years w.e.f. that date. As a consequence of re-fixation of
age of retirement, the rules were amended and third part of Rule 22(i)(a)
was added for all employees who were in service of the bank on or before
22.5.98 and had put in 10 years of pensionable service to be eligible for
pension benefit provided that they have attained the age of 60 years. As
has been stated earlier, the respondents had not retired on attaining the
age of superannuation but sought voluntary retirement under the SBI VRS.
The Bank has placed reliance on the clarificatory circular issued by the
Deputy Managing Director on 10/15.1.2001, which lays a postulate that
employees who have not completed 20 years of pensionable service are not
eligible for pension.
In this context, reference may be made to a decision in Bank of Baroda &
Others V. Ganpat Singh Deora[12], wherein the Court was interpreting Bank
of Baroda (Employees) Pension Regulations 1995. In the said case, the Bank
of Baroda had introduced "Bank of Baroda Employees Voluntary Retirement
Scheme 2001" and under the Scheme along with terminal benefits pension in
terms of 1995 Regulations was to be provided to the employees who opted for
the VRS Scheme. The respondent-employee therein, after accepting voluntary
retirement, filed an application for claiming pension which was opposed by
the Bank in terms of Regulations 14, 28 and 29 of the Pension Regulations
1995. Eventually, the matter travelled to the Tribunal, who, by its
award, allowed the respondent's claim and directed the Bank to pay to the
respondent pension according to the Pension Regulations. Against the
award passed by the Industrial Disputes Tribunal, the Bank preferred a writ
petition before the High Court but the said challenge did not meet with any
success. This Court referred to the language of the Scheme and opined as
follows:
"27. The conditions relating to completing 15 years of service for being
eligible to apply for BOBEVRS, 2001 are special to the Scheme as also to
the case of those employees who wished to apply for voluntary retirement
under the aforesaid Scheme, if they had completed or would be completing 40
years of age. The latter condition appears to have been incorporated in
view of the provisions of Regulations 14 and 32 of the Pension Regulations,
1995, [pic]to enable employees who had completed 10 years of service to
also become eligible to apply for premature retirement under the Pension
Regulations, 1995.
28. However, we are inclined to agree with Ms Bhati that Regulation 29 does
not contemplate voluntary retirement under the Voluntary Retirement Scheme
and applies only to such employees who themselves wish to retire dehors any
scheme of voluntary retirement, after having completed 15 years of
qualifying service for the said purpose. There is a distinct difference
between the two situations and Regulation 29 would not cover the case of an
employee opting to retire on the basis of a voluntary retirement scheme.
29. Furthermore, Regulation 2 of the Voluntary Retirement Scheme, 2001 of
the appellant Bank merely prescribes a period of qualifying service for an
employee to be eligible to apply for voluntary retirement.
30. On the other hand, Regulations 14 and 29 of the Pension Regulations,
1995, relate to the period of qualifying service for pension under the said
Regulations, in two different situations. While Regulation 14 provides that
in order to be eligible for pension an employee would have to render a
minimum of 10 years' service, Regulation 29 is applicable to the employees
choosing to retire from service prematurely, and in their case the period
of qualifying service would be 15 years".
After so stating, the Court further opined thus:
"31. The facts of the present case, however, do not attract the provisions
of Regulation 29 since the respondent accepted the offer of voluntary
retirement under the Scheme framed by the Bank and not on his own volition
dehors any scheme of voluntary retirement. In such a case, Regulation 14
read with Regulation 32 providing for premature retirement would not also
apply to the case of the respondent. While Regulation 2 of the BOBEVRS,
2001 speaks of eligibility for applying under the Scheme, Regulation 14 of
the Pension Regulations, 1995, contemplates a situation whereunder an
employee would be eligible for premature pension. The two provisions are
for two different purposes and for two different situations. However,
Regulation 28 of the Pension Regulations, 1995, after amendment made
provision for situations similar to the one in the instant case.
32. In the absence of any particular provision for payment of pension to
those who opted for BOBEVRS, 2001 other than Regulation 11(ii) of the
Scheme, we are once again left to fall back on the Pension Regulations,
1995, and the amended provisions of Regulation 28 which bring within the
scope of superannuation pension employees who opted for the Voluntary
Retirement Scheme, which will be clear from the explanatory memorandum.
However, the period of qualifying service has been retained as 15 years for
those opting for BOBEVRS, 2001 and is treated differently from premature
retirement where the minimum period of qualifying service has been fixed at
10 years in keeping with Regulation 14 of the Pension Regulations, 1995.
33. We are, therefore, of the view that not having completed the required
length of qualifying service as provided under Regulation 28 of the 1995
Regulations, the respondent was not eligible for pension under the Pension
Regulations, 1995 of the appellant Bank."
Being of this view, the Court allowed the appeal preferred by the
Bank.
In Bank of India and Another V. K. Mohandas and Others[13], the Court
referred to Regulation 28 of the Employees' Pension Regulations 1995, which
had provided superannuation pension and Regulation 29 provided pension on
voluntary retirement. After referring to series of decisions, the Court
held thus:
"31. It is also a well-recognised principle of construction of a contract
that it must be read as a whole in order to ascertain the true meaning of
its several clauses and the words of each clause should be interpreted so
as to bring them into harmony with the other provisions if that
interpretation does no violence to the meaning of which they are naturally
susceptible. (North Eastern Railway Co. v. Lord Hastings[14])
32. The fundamental position is that it is the banks who were responsible
for formulation of the terms in the contractual Scheme that the optees of
voluntary retirement under that Scheme will be eligible to pension under
the Pension Regulations, 1995, and, therefore, they bear the risk of lack
of clarity, if any. It is a well-known principle of construction of a
contract that if [pic]the terms applied by one party are unclear, an
interpretation against that party is preferred (verba chartarum fortius
accipiuntur contra proferentem)".
Thereafter, the Court adverted to intention of the Banks at the time of
bringing out VRS 2000. The Court observed that if the intention was not to
give pension as provided under Regulation 29 and particularly sub-
Regulation (5) thereof, they could have said so in the Scheme itself. The
Court also reproduced the communication dated 5.9.2000 sent by the
Government of India, Ministry of Finance, Department of Economic Affairs,
Banking Division to the Personnel Advisor, Indian Banks Association and
came to hold as follows:
"39. Two things immediately become noticeable from the said communication.
One is that as per Regulation 29 of the Pension Regulations, 1995, an
employee can take voluntary retirement after 20 years of qualifying service
and become eligible for pension. The other thing is that the Scheme
provides that the employees with 15 years of service or 40 years of age
shall be eligible to take voluntary retirement under the Scheme and under
Regulation 29, the employees having rendered 15 years of service or
completed 40 years of age but not completed 20 years of service shall not
be [pic]eligible for pensionary benefits on taking voluntary retirement
under the Scheme.
40. The use of the words "such employees" in the communication is referable
to employees having rendered 15 years of service but not completed 20 years
of service and, therefore, it was decided to bring an amendment in the
Regulations so that the employees having not completed 20 years' service do
not lose the benefit of pension. The amendment in Regulation 28, as is
reflected from the afore referred communication, was intended to cover the
employees who had rendered 15 years' service but not completed 20 years'
service. It was not intended to cover the optees who had already completed
20 years' service as the provisions contained in Regulation 29 met that
contingency.
xxx xxx xxx
43. It was submitted that by such construction a class within the class
would be created which is impermissible. We do not agree. If a special
benefit under Regulation 29(5) is available to the employees who had
completed 20 years of service or more, by no stretch of imagination, can it
be said that it is discriminatory to those employees who had completed 15
years of service but not completed 20 years. In view of the provision
contained in Regulation 29(5), if the optees who have not completed 20
years get excluded from the weightage of five years which has been given to
the optees who have completed 20 years of service or more, it is no
discrimination. Such provision can neither be said to be arbitrary nor can
be held to be violative of any constitutional or statutory provisions. The
weightage of five years under Regulation 29(5) is applicable to the optees
having service of 20 years or more. There is, thus, basis for additional
benefit. Merely because the [pic]employees who have completed 15 years of
service but not completed 20 years of service are not entitled to weightage
of five years for qualifying service under Regulation 29(5), the employees
who have completed 20 years of service or more cannot be denied such
benefit.
xxx xxx xxx
46. The precise effect of the Pension Regulations, for the purposes of
pension, having been made part of the Scheme, is that the Pension
Regulations, to the extent, these are applicable, must be read into the
Scheme. It is pertinent to bear in mind that interpretation clause of VRS
2000 states that the words and expressions used in the Scheme but not
defined and defined in the rules/regulations shall have the same meaning
respectively assigned to them under the rules/regulations. The Scheme does
not define the expression "retirement" or "voluntary retirement". We have,
therefore, to fall back on the definition of "retirement" given in
Regulation 2(y) whereunder voluntary retirement under Regulation 29 is
considered to be retirement. Regulation 29 uses the expression "voluntary
retirement under these Regulations". Obviously, for the purposes of the
Scheme, it has to be understood to mean with necessary changes in points of
details. Section 23 of the Contract Act has no application to the present
fact situation.
xxx xxx xxx
50. It is true that VRS 2000 is a complete package in itself and
contractual in nature. However, in that package, it has been provided that
the optees, in addition to ex gratia payment, will also be eligible to
other benefits inter alia pension under the Pension Regulations. The only
provision in the Pension Regulations at the relevant time during the
operation of VRS 2000 concerning voluntary retirement was Regulation 29 and
sub-regulation (5) thereof provides for weightage of addition of five years
to qualifying service for pension to those optees who had completed 20
years' service. It, therefore, cannot be accepted that VRS 2000 did not
envisage grant of pension benefits under Regulation 29(5) of the Pension
Regulations, 1995, to the optees of 20 years' service along with payment of
ex gratia.
51. The whole idea in bringing out VRS 2000 was to right size workforce
which the banks had not been able to achieve despite the fact that the
statutory Regulations provided for voluntary retirement to the employees
having completed 20 years' service. It was for this reason that VRS 2000
was made more attractive. VRS 2000, accordingly, was an attractive package
for the employees to go in for as they were getting special benefits in the
form of ex gratia and in addition thereto, inter alia, pension under the
Pension Regulations which also provided for weightage of five years of
qualifying service for the purposes of pension to the employees who had
completed 20 years' service".
In the said case, the decision rendered in Bank of Baroda (supra) was
distinguished by stating thus:
"63. The decision of this Court in Bank of Baroda is, thus, clearly
distinguishable as the employee therein had not completed qualifying
service much less 20 years of service for being eligible to the weightage
under Regulation 29(5) and cannot be applied to the present controversy nor
does that matter decide the question here to be decided in the present
group of matters".
Eventually, the Court concluded thus:
"66. We hold, as it must be, that the employees who had completed 20 years
of service and were pension optees and offered voluntary retirement under
VRS 2000 and whose offers were accepted by the banks are entitled to
addition of five years of notional service in calculating the length of
service for the purposes of that Scheme as per Regulation 29(5) of the
Pension Regulations, 1995. The contrary views expressed by some of the High
Courts do not lay down the correct legal position."
Recently, in State Bank of Patiala V. Pritam Singh Bedi & Others[15], the
Court was dealing with the State of Bank of Patiala Voluntary Retirement
Scheme, 2000, introduced by a circular dated 20.1.2001. The Court quoted
in extenso from K. Mohandas & Others (supra). Thereafter the Court
referred to Clause 3 and 7. Clause 7 thereof dealt with other benefits
including pension or Bank's contribution to provident fund as the case
maybe as per rules applicable on the relevant date on the basis of actual
years of service rendered. The Court also took note of Regulation 2(w) and
2(y) of State Bank of Patiala (Employees) Pension Regulations, 1995.
Regulation 2(w) defined "qualifying service" and 2(y) defined "retirement".
Regulation 2(y)(b) referred to voluntary retirement in accordance with
provisions contained in Regulation 29 of the Regulations. Reference was
also made to Regulation 14 that defined "qualifying service" which
stipulates that employee who has rendered a minimum of ten years in the
bank from the date of his retirement or on the date on which he is deemed
to have retired shall qualify for pension. Reference was also made to
Regulation 18 which prescribes how the broken period of service of less
than one year has to be computed. Regulation 28 thereof dealt with
superannuation pension and Regulation 29 related to pension on voluntary
retirement. Scanning the various provisions of the Regulations, the Court
held thus:
"22. The Respondents completed more than 10 years of service in the Bank on
the date of retirement; therefore, they fulfill the requirement of
qualifying service as per Regulation 14.
23. It has not been disputed by Appellant-Bank that the Respondents in all
the appeals have completed much more than 19 years 6 months of service in
the Bank. For example, Respondent No. 1-Prakash Chand in C.A. No. 173 of
2010 had joined the Bank on 4th May, 1981 and relieved on 31st March, 2001.
Thus, he had completed 19 years, 10 months and 28 days of qualifying
service on the date of relieving from service.
24. Regulation 18 of the Pension Regulations, 1995 provides that if broken
period is more than six months, it shall be treated as one year. Therefore,
all the Respondents-writ Petitioners having completed more than 19 years
and 6 months of service in the Bank, they are to be treated to have
completed 20 years of service. The aforesaid question was neither raised
nor decided in the case of 'Bank of Baroda' or 'Bank of India'.
25. In view of the aforesaid fact, the Appellant-Bank cannot derive the
benefit of the decision of this Court in Bank of Baroda as the employees
who were parties before the Court in the said case had not completed 20
years of service. As per the decision of this Court in Bank of India, the
Respondents-writ Petitioners having completed 20 years of service are
entitled to the benefit of Regulation 29."
Keeping in view the aforesaid pronouncements, I shall advert to the
Regulations and the Scheme in question. From the aforesaid two decisions,
it is graphically clear that the Court has read into the scheme,
Regulations governing the pension. In the case at hand, as I find, the
Regulation 22(i)(a) refers to three categories; twenty years of pensionable
service and attaining age of fifty years, or as on 1.11.1993 an employee in
service has completed ten years of pensionable service provided he has
attained the age of fifty-eight years, or an employee to be in service of
the Bank on or after 22.05.1998 and has completed ten years of pensionable
service provided that he has attained the age of sixty years. The High
Court has held that the employees would be covered under second part of
Clause (a). I have already dealt with clause (b). Mr. Rohtagi has heavily
relied on Clause 22(i)(c). It really requires close scrutiny. It
stipulates that a member shall be entitled to pension on completion of 20
years of pensionable service irrespective of the age he has attained if the
retirement is at his own request in writing. Thus, there is a distinction
between a normal retirement and a voluntary retirement. A voluntary
retirement stands in a distinction to retirement and also retirement which
comes under Clause 22(i)(b) which dwells on sanction of competent authority
and member being incapacitated. A scheme has come into existence because
of certain objectives. The objectives of the scheme were to have a
balanced age-profile providing for mobility, training, development of
skills and succession plans for higher-level positions, to provide for an
exit for employees who have an honest feeling that they should now retire
and take rest or that there are better opportunities elsewhere, to have
overall reduction in the existing strength of the employees and to increase
productivity and profitability. Clause 3 of the Scheme provides
eligibility criterion. It reads as follows:
"The Scheme will be open to all permanent employees of the Bank except
those specifically mentioned as 'ineligible', who have put in 15 years of
service or have completed 40 years of age as on 31st December 2000. Age
will be reckoned on the basis of the date of birth as entered in the
service record."
Clause 4 deals with ineligibility which need not be referred
to. Clause 5 deals with amount of ex-gratia. Clause 6 deals with other
benefits which I have already referred to. Clause 6(c) clearly stipulates
that an employee seeking voluntary retirement would have the benefit of
pension in terms of State Bank of India Employees' Pension Fund Rules on
the relevant date.
40. In this context, what I have noticed in the case of K. Mohandas
(supra) that the Court has referred to the Scheme to understand the true
meaning of several clauses; formulation of the contractual scheme where
reference has been made to Pension Regulations 1995 of the Banks which were
in appeal before this Court and the special salient features of the scheme
which stipulated that an employee whose application for voluntary
retirement is accepted and relieved from the Bank shall be eligible for
contributory provident fund or own contribution of provident fund and
pension in terms of the employees Pension Regulations 1995, in case of
those who have opted for pension and have put in 20 completed years of
service in the Bank. The Court also referred to Regulations 28 and 29,
which deals with superannuation pension and the pension on voluntary
retirement respectively. The Court also took note of the fact that all
employees who have completed 20 years of service and the amendment in
Regulation 28, which was carried out in 2002 with retrospective effect from
1.9.2000 and the amendment inserted a proviso which provided that pension
shall also be granted to an employee who opts to retire before attaining
the age of superannuation but after having served for a minimum period of
13 years in terms of any scheme that may be framed for the purpose by the
Bank's Board with the concurrence of the Government. The Court took note
of the fact that the benefits provided under Regulation 29 were not found
to be attractive by the employees and, therefore, the necessity arose for
floating a special scheme i.e. VRS-2000. The grievance of the optees in
the case was that they were given the retiral benefits by the respondent-
Bank under VRS-2000 save and except the benefit of pension under Regulation
29(5). Regulation 29(5) in the case of those banks is as follows:
"The qualifying service of an employee retiring voluntarily under this
Regulation shall be increased by a period not exceeding five years, subject
to the condition that the total qualifying service rendered by such
employee shall not in any case exceed thirty-three years and it does not
take him beyond the date of superannuation".
One of the contentions canvassed by the Bank was that the Regulation 29
does not cover the persons retired under VRS-2000 which is dehors the
statutory scheme for voluntary retirement. The counter submission on
behalf of the employees was that by making provisions in the scheme that
the optees would be eligible for the benefits in addition to the ex-gratia
amount, inter alia, pension as per the Pension Regulations, 1995, the
employees understood that what was contemplated was pension under
Regulation 29 and, therefore, any ambiguity in VRS 2000 ought to have been
construed and harmonized with the intention of the parties; Regulation 29
was the only regulation under the Pension Regulations, 1995, applicable to
the voluntary retirement and, therefore, Regulation 29, ipso facto, became
the terms of the contract; and that each and every paragraph of Regulation
29 can be made applicable to an optee of more than 20 years of service
without coming into conflict with any provision of the scheme; the notice
period of three months in Regulation 29(3) can be waived at the discretion
of the banks. The Court posed the questions as follows:
"The principal question that falls for our determination is: whether the
employees (having completed 20 years of service) of these banks (Bank of
India, Punjab National Bank, Punjab and Sind Bank, Union Bank of India and
United Bank of India) who had opted for voluntary retirement under VRS 2000
are entitled to addition of five years of notional service in calculating
the length of service for the purpose of the said Scheme as per Regulation
29(5) of the Pension Regulations, 1995?"
To examine the question posed, the Court thought it appropriate to examine
the contract and the circumstances in which it was made in order to see
whether or not from the nature of it, the parties must have made their
bargain on the footing that a particular thing or state of things would
continue to exist.
I have already referred to Clause 6 of the Scheme, which deals with 'other
benefits'. Sub-clause (3) of Clause 6 stipulates that an employee would be
entitled to get pension in terms of the State Bank of India Employees
Pension Fund Rules on the relevant date. The High Courts have placed
reliance on the second part of Rule 22(i)(a). Similar contention has been
advanced before us. Per contra, Mr. Rohtagi would submit that it is Rule
22(i)(c) which would be applicable. I find force in the said submission,
for Rule 22(i)(a) deals with the concept of retirement and 22(i)(c) deals
with the concept of retirement on request. In K. Mohandas (supra), the
Rule was read into the Scheme in the absence of any other postulate. Same
is the case here and, therefore, I read the Rule to the Scheme.
Interpreting the 1995 Regulations, this Court had said that it will apply
in entirety and, therefore, benefit was extended in Rule 29(5). Be it
noted, in the said Regulation, it was categorically provided that
pensionary benefits should be available to a person seeking voluntary
retirement if he has put in 20 years of service. Same is the provision
here, that is, 20 years of service irrespective of the age. As some
doubts had arose, a clarificatory circular was issued on 10.1.2001.
Relevant part has already been reproduced earlier. It has been clearly
clarified that as per existing Rules, employees who have not completed 20
years of Pensionable Service are not eligible for pension. This
clarification is in consonance with the Rules. The amendment facet which
has come into existence afterwards is absolutely inconsequential as it
deals with different facets of Rule 22(i)(a). In this context, reference
to circular dated 11.1.2001 is absolutely necessitous. The relevant part
reads as follows:
"In this connection, queries have been raised whether an employee who
submits his application for retirement under SBIVRS can withdraw such an
application subsequently. Corporate Centre have examined the issue and
have advised that the scheme is purely voluntary. The role of the employee
is active. It is his conscious decision and there will be no reason for
his withdrawal of application at a later date. However, there could be
few, yet genuine cases where the employees would like to withdraw the
application submitted under the scheme for various reasons. It has,
therefore, been decided that the employee who has submitted an application
for retirement under SBIVRS may be permitted to withdraw the application on
or before 15th February, 2001. For this purpose, the employee will have to
make a written request which must reach the Branch Manager/head of the
Department/ Head of the Unit i.e. authority to whom the application for
retirement under SBIVRS has been submitted, on or before 15.02.2001. The
authority receiving the applications for withdrawal must forward it to the
competent authority immediately but not later than the following day and
obtain a confirmation to that effect from the competent authority."
Both the circulars were almost simultaneous and both were within the
knowledge of the employees and if an employee desired to withdraw, he could
have done so as time was there till 15.2.2001. None of the respondents
chose to withdraw. In the absence of withdrawal, there cannot be any trace
of doubt that the employees would be governed by the rules existing at the
time of floating of the Scheme which has to be read into the Scheme, for
the Scheme clearly stipulates that the employees availing the benefit of
the Scheme would be entitled to pension as per the Pension Rules. I have
already scanned the anatomy of the Rules and I notice that there is a
categorical distinction between 'retirement' and 'voluntary retirement'.
In all the impugned judgments, as I find, the High Courts have not
appreciated the said distinction and applied the Rule pertaining to normal
retirement. If the decisions in K. Mohandas (supra) and Ganpat Singh Deora
(supra) are read carefully, it will go a long way to show that a voluntary
retirement and retirement are distinguishable, if the
Rule/Regulations/Scheme distinguishes. In the case at hand, it is clear as
day that the Rule carves out two categories of retirement, one, normal
retirement on superannuation and second, retirement on request i.e.
voluntary retirement, ordinarily called the golden handshake and,
therefore, the scheme was floated. In the instant case, as I perceive, the
Scheme which is more beneficial was provided. It had the pension and the
ex-gratia. However, it had a condition as enumerated in the Rule that if
an employee had not completed 20 years of service, as per Rule 22(i)(c), he
would not get pension. In K. Mohandas (supra), if an employee has
completed 20 years of service, apart from pensionary benefits, he would
also get the benefit under Regulation 29(5) as stipulated therein. To
elaborate, unless one is not entitled to pension, the other additional
benefits pertaining to pension do not arise. I may hasten to add that I am
only concerned with the concept of voluntary retirement under the Rules and
the Scheme and as I find, the Rule cannot be interpreted as employees would
be entitled to pension. That is neither the intention nor the spirit of
the Rule, which has to be read into the Scheme as a part of it.
I have been apprised with regard to the relevant details of the respondents
herein. It is as follows:
|NAME OF THE |LENGTH OF |AGE AS OF |EX-GRATIA AMOUNT PAID |
|RESPONDENT |SERVICE |31.03.2001 |(Apart from other |
| | | |benefits like PF & |
| | | |Gratuity) |
|Radhey Shyam |19 yrs. 8 months|59 yrs. 3 |Ex-Gratia-Rs.6,20,014/|
|Pandey |18 days |months |- |
|SLP No. | | | |
|3686/07 | | | |
|Mihir Kumar |12 yrs. 3 months|58 yrs. |Ex-Gratia-Rs.2,46,576/|
|Nandi C.A.No. |24 days |1 month |- |
|5035-5037/12 | | | |
|M.P. Hallan |19 yrs. 4 months|58 yrs. 11 |Ex-Gratia-Rs.5,55,108/|
|C.A. Nos. | |months 25 |- |
|2287-88/10 | |days | |
|R.P. Nigam |16 yrs 6 months |56 yrs. 11 |Ex-Gratia-Rs.4,40,037/|
|C.A. No. | |months 29 |- |
|10813/13 | |days | |
In the case at hand, unlike the decision of Ganpat Singh Deora (supra),
there is no provision for computation of broken period and, therefore,
unless an employee has completed 20 years of service, he would not be
entitled to pension. Therefore, I have no hesitation in holding that the
impugned judgments and orders passed by various High Courts, namely, High
Court of Judicature at Allahabad, Punjab & Haryana High Court at Chandigarh
and High Court of Calcutta are unsustainable in law and accordingly I set
aside the same.
Consequently, the appeals are allowed and the impugned judgments and orders
are set aside. In the facts and circumstances of the case, there shall be
no order as to costs.
.............................J.
[Dipak Misra]
New Delhi;
February 26, 2015
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2463 OF 2015
(ARISING OUT OF S.L.P. (C) NO. 3686 of 2007)
ASSISTANT GENERAL MANAGER,
STATE BANK OF INDIA & ORS. .........APPELLANTS
VERSUS
RADHEY SHYAM PANDEY ....RESPONDENT
WITH
C.A. NOS.2287-2288 of 2010
State Bank of India & Ors . ....... APPELLANTS
VERSUS
M.P. HALLAN & ANR. ......... RESPONDENTS
C.A. NOS.5035-5037 of 2012
CHAIRMAN, State Bank of India & Ors. ....... APPELLANTS
VERSUS
MIHIR KUMAR NANDI & ANR. ......... RESPONDENTS
AND
C.A. NO. 10813 of 2013
STATE BANK OF INDIA & ORS. ......APPELLANTS
VERSUS
RAMESH PRASAD NIGAM .......RESPONDENT
J U D G M E N T
V. GOPALA GOWDA, J.
I had the opportunity to read the opinion of my brother Judge, Justice
Dipak Misra and I am in respectful disagreement with the opinion rendered
by him in the present appeals.
2. Leave granted in SLP (C) No. 3686 of 2007. The appellant Bank-the State
Bank of India, on the recommendation of the Indian Banks Association (in
short "IBA"), introduced a scheme titled 'SBI Voluntary Retirement Scheme,
2000 (in short 'SBI-VRS'). This scheme was introduced by SBI despite there
being provisions in the State Bank of India Employees' Provident Fund
Rules, for its employees to avail premature
retirement/resignation/voluntary retirement. SBI-VRS was in operation for a
limited period and was introduced by the appellant Bank with package for
the purpose specified in the scheme.
3. It is the claim of the appellant Bank that clause 6(c) of the SBI-VRS
provided for "other benefits" which is, "Pension in terms of the SBI
Employees' Pension Fund Rules on the relevant date (including the commuted
value of pension).
4. It is the further claim of the appellant Bank that the employees who
applied for retirement under SBI-VRS will be bound by the circular dated
11.01.01, issued by the competent authority viz., Dy. Managing Director of
the Bank clarifying that:-
".... However, as per existing rules employees who have not completed 20
years of pensionable service are not eligible for pension."
The respondents, who were employees of the State Bank of India, applied for
voluntary retirement under SBI-VRS on different dates between 15.1.2001 and
31.1.2001. Their applications got accepted and they stood retired from the
bank service with effect from 31.3.2001.
5. In the meanwhile, a parallel development had taken place in the
appellant Bank with respect to its employees' Pension Fund Rules. On
31.1.2001, the age of normal retirement of the employees working in the
appellant Bank was extended from 58 years to 60 years. Accordingly, the
Service Rule as well as Rule 22(i)(a) of the SBI Pension Fund Rules was
amended wherein it was added that a member would be entitled to pension :
"..... if he is in the service of the bank on or after 22.5.1998, after
having completed 10 years pensionable service provided that he has attained
the age of 60 years."
6. The respondents made representations where they sought pension under
Rule 22(i)(a) and were advised by the bank that they were not eligible for
pension under Rule 22(i)(a). The respondents filed Writ Petitions before
respective High Courts of their jurisdictions namely, the High Court of
Judicature at Allahabad, High Court of Judicature at Kolkata and the High
Court of Punjab and Haryana, which were allowed by both the Single Bench
and the Division Bench of the High Court. Hence, the appeals are filed by
the appellant Bank before this Court.
7. I am in respectful disagreement with the opinion rendered by my brother
Judge in the present appeals. However, I intend to assign my reasons for
the same, based on certain relevant considerations. The issues arising for
deliberation in this case are as under:
Whether the respondents in the present appeals are to be considered for
pension benefits under the provisions of Rule 22(i)(c) of the State Bank of
India Employee's Pension Fund Rules alone, as claimed by the appellant
Bank?
Whether the State Bank of India is entitled to retain its own employment
Rules which is not in consonance with the subsequent amendments made in the
Employee's Pension Regulations, 1995 in all the public sector undertaking
Banks in the light of the correspondence between the Finance Ministry and
Indian Banks Association?
Under what legal provisions will the respondent employees be entitled to
make their claims for pension?
Answer to Point no. 1
8. Pension benefits accrue upon an employee on retirement from his
employment. Therefore, we first need to assess the definition of
'retirement' before answering the question on pension benefits for the
respondents herein. Neither the State Bank of India Act, 1955 nor the State
Bank of India Employees' Pension Fund Rules defines retirement. Therefore,
I am inclined to read the definition of retirement as has been mentioned in
the State Bank of Patiala Employee's Pension Regulation 1995 which provides
for the definition of retirement from employment since the same is pari
materia to the Employees' Pension Regulation 1995. Section 2(y) of the
Regulation reads thus:
"2(y) "retirement" means cessation from the Bank's service-
On attaining the age of superannuation specified in Service Regulations or
Settlements;
On voluntary retirement in accordance with provisions contained in
regulation 29 of these regulations;
On premature retirement by the Bank before attaining the age of
superannuation specified in Service Regulations or Settlements."
In the present case, however, clause (b) of the definition will also be
read in the light of the amended Regulation 28 which was intended to
provide relief to the employees seeking voluntary retirement under the VRS
2000, after providing 15 years of pensionable service. Thus, from the above
definition, one is left with no doubt that the employees who availed VRS
2000 have 'retired' from the Bank as per the definitions.
It is pertinent now to highlight the object and purpose of the SBI-VRS. At
a meeting conducted on 13.6.2000 between the Finance Minister and the Chief
Executives of the Public Sector Banks, the human resource and manpower
planning in Public Sector Banks was reviewed. A committee was constituted
to examine the issues confronting the Public Sector Banks in this regard
and to suggest suitable remedial measures. The committee had observed that
high establishment costs and low productivity in Public Sector Banks affect
their profitability. It was hence, necessary to convert their human
resources into assets compatible with business strategies through a variety
of measures including constant upgradation of skills, achieving proper age
and skill profile, creating opportunities for lateral as well as vertical
career progression and including fresh skilled personnel with technical and
professional skills for new business opportunities.
9. The data available with IBA indicated that 43% of employees in Public
Sector Banks are in the 46+ age group and only 12% are in the 25-35 years
age group. This pattern of jobs in the public sector Banks, according to
the committee, had serious implications for the Banks with reference to
mobility, training, development of skills and succession plans for high
level positions. This, coupled with excess manpower wherever it exists,
would come in the way of induction of new skills and proper career
progression.
The Committee had therefore recommended introduction of a Voluntary
Retirement Scheme that would assist the Bank in their effort to optimize
their human resources and achieve a balanced age skills profile in keeping
in mind with the business strategies. The Banks were further advised by the
IBA to implement the scheme in right earnest.
10. From the memorandum of the Voluntary Retirement Scheme presented by the
appellant Bank itself, it is clear that the SBI-VRS scheme was introduced
for the purpose of business enhancement and profitability of the Bank
itself and not for the benefits of the employees per se. The intention of
the Public Sector Banks including the appellant Bank, in introducing the
VRS 2000, is rightfully highlighted in the decision of this Court in Bank
of India v. K. Mohandas & Ors.[16] which read as under:
"36. ...........The banks decided to shed surplus manpower. By formulation
of the special scheme (VRS 2000), the banks intended to achieve their
objective of rationalizing their force as they were overstaffed. The
special Scheme was, thus, oriented to lure the employees to go in for
voluntary retirement. In this background, the consideration that was to
pass between the parties assumes significance and a harmonious construction
to the Scheme and the Pension Regulations, therefore, has to be given".
(emphasis supplied)
In ordinary situation, an employee who retires either on reaching the age
of superannuation, or by request in writing after completing the prescribed
number of years, become eligible to pension under the State Bank of India
Employee's Pension Rules. The pertinent provisions under the SBI Employees
Pension Rules relating to pension of employees, read as under:
"22. (i). A member shall be entitled to a pension under these rules on
retiring from the Banks service-
a). After having completed twenty years' pensionable service provided that
he has attained the age of fifty years or if he is in the service of the
Bank on or after 1.11.93, after having completed ten years pensionable
service provided that he has attained fifty eight years or if he is in the
service of the Bank on or after 22.05.1998, after having completed ten
years pensionable service provided that he has attained the age of sixty
years.
XXX XXX XXX
c). After having completed twenty years pensionable service, irrespective
of the age he shall have attained at his request in writing. "
11. This situation is altered temporarily by the introduction of the SBI-
VRS. Therefore, it is also important to understand the framework of SBI-
VRS. In the absence of the SBI-VRS, the respondents had the option of
seeking voluntary retirement under Rule 22(i)(c) which in fact, the
respondents did not avail. Instead they availed the SBI-VRS. It is
therefore pertinent to see how the SBI-VRS was functioning and what the
respondents seeking SBI-VRS might have reasonably foreseen while
availing the scheme. When the application of voluntary retirement of
respondent Radhey Shyam Pandey was accepted by the appellant Bank on
18.3.2001, he still had about 9 months services left and he was 59 years
and 3 months old.
As on 31st March, 2001, when his voluntary retirement from service became
effective, he had been on pensionable service for 19 years, 9 months and 18
days.
12. If the respondent had chosen to retire by superannuation after
attaining 60 years of age which was the normal age of retirement, he would
have put in a little more than 20 years of pensionable service. He
consequently, would have become eligible to pension. However, when he
retired on 31.3.2001, he still had 2 and months short to complete 20
years of service. It is pertinent to understand what prompted him to opt
for the SBI-VRS at this stage.
13. In clause 5 of the scheme, the incentive of the Voluntary Retirement
Scheme is mentioned. It is an ex-gratia payment of 60 days salary for every
year of completed service. Since, the respondent had finished 20 years of
service approximately, he would have been entitled to 40 months of salary
as ex-gratia.
Pension on the other hand, is calculated as half month's salary per month.
Therefore, by utilizing the SBI-VRS, although the respondent had given up 9
months service still left, he would have gained 40 months incentive. To add
to this, he becomes eligible for pension, then he in addition to ex-gratia,
will get half month's salary as his pension from the time he retires. This
can be considered as a good bargain from availing the SBI- VRS. On
reasonable presumption, it can be ascertained that it is this benefit
provided by the SBI-VRS through ex-gratia payment along with pension which
prompted the employees in availing the benefits of the scheme rather than
retiring on superannuation under the Rules.
14. On the other hand, if he is not entitled to pension, then availing SBI-
VRS is unwise since the respondent has given up his half month's salary
worth pension for his working period in return of 40 months' salary.
SBI-VRS is admittedly a contract between the Bank and its employees as has
been recognized in the case of Bank of India v. K. Mohandas case mentioned
supra. The application of the Voluntary Retirement Scheme meant that the
Bank employees agreed with the Bank that it would be bound by the scheme
thereby entering into a contract. However, clause 6(c) of SBI-VRS states:
"6. Other Benefits :
XXX XXX XXX
XXX XXX XXX
(c) Pension in terms of State Bank of India Employees' Pension Fund Rules
on the relevant date (including commuted value pension)."
15. Considering that the incentives of SBI-VRS are distinct from the
benefits provided under Rule 22(i)(c) of the State Bank Employees Pension
Fund Rules and also, that Clause 6(c) of SBI-VRS does not specifically
state that the pension benefits are to be provided under rule 22(i)(c) of
SBI Employees Pension Fund Rules, the claim for pension by the respondents
cannot be decided solely on the basis of the provision of Rule 22(1)(c) of
the State Bank of India Employees' Pension Rules.
Answer to Point no. 2
16. It has been claimed by the appellant Bank that State Bank of India has
its own Pension Rules that are different from the Employees' Pension
Regulations 1995 which operate in the other Public Sector Banks. The claim
made by the appellant Bank that it is not bound by the Pension Regulations
1995, is premised on the assumption that the employees of the State Bank of
India form a distinct class of employment from the employees of the other
Public Sector Banks on the ground of reasonable and intelligible
differentia.
This conclusion by the appellant Bank is not warranted since all the
employees of Public Sector Bank forms one homogenous class since all the
fourteen Public Sector Banks which were formed under the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970 and the six banks
under the Banking Companies (Acquisition and Transfer of Undertakings) Act,
1980, are subject to the control of the Central Government. It is pertinent
to note that Section 19 of both- The Banking Companies (Acquisition and
Transfer of Undertakings) Acts of 1970 and 1980 and Section 50 of the State
Bank of India Act, 1955, vest the power on the Central Government to make
consistent rules for all the Public Sector Banks.
Section 50(2)(o) of State Bank of India Act, 1955 reads thus:
"50. Power of Central Government to make regulations: (1) The Central Board
may, after consultation with the Reserve Bank and with the previous
sanction of the Central Government [by notification in the Official
Gazette] make regulations, not inconsistent with this Act and the rules
made thereunder, to provide for all matters for which provision is
expedient for the purpose of giving effect to the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing
power, such regulation may provide for-
XXX XXX XXX
(o) The establishment and maintenance of superannuation, pension, provident
or other funds for the benefit of the employees of the State Bank or of the
dependent of such employees or for the purposes of the State Bank, and the
granting of superannuation allowances, annuities and pensions payable out
of any such fund;]"
17. The Central Government through a letter dated 5.9.2000 directed the
Indian Banks Association to formulate a uniform norm for pensions for
employees voluntarily retiring under SBI-VRS 2000 and the same was
formulated by the Indian Banks Association on 11.12.2000. Therefore, the
State Bank of India is bound by the directions issued in this regard by the
Indian Banks Association under Section 50(2)(o) of the State Bank of India
Act, 1955.
18. The appellant Bank, State Bank of India is an instrumentality of the
State as has been held by this Court in the case of Bank of India & Ors. v.
O.P. Swarnakar & Ors.[17] which reads as under:
"48...But the State Bank of India as also the nationalized banks are
"States" within the meaning of Article 12 of the Constitution of India. The
services of the workman are also governed by several standing orders and
bipartite settlements which have the force of law. The banks, therefore,
cannot take recourse to "hire and fire" for the purpose of terminating the
services of the employees. The banks are required to act fairly and
strictly in terms of the norms laid down therefor. Their actions in this
behalf must satisfy the test of Articles 14 and 21 of the Constitution of
India.
Therefore, the appellant Bank cannot engage in acts which are antithetical
to equality. In the case of E.P. Royappa v. State of Tamil Nadu[18], the
constitution Bench of this Court held as under:
"Equality is a dynamic concept with many aspects and dimensions and it
cannot be "cribbed cabined and confined" within traditional and doctrinaire
limits. From a positivistic point of view, equality is antithetic to
arbitrariness. In fact equality and arbitrariness are sworn enemies; one
belongs to the rule of law in a republic while the other, to the whim and
caprice of an absolute monarch. Where an act is arbitrary it is implicit in
it that it is unequal both according to political logic and constitutional
law and is therefore violative of Art. 14, and if it affects any matter
relating to public employment, it is also violative of Art. 16. Arts. 14
and 16 strike at arbitrariness in State action an( ensure fairness and
equality of treatment. They require that State action must be based on
valent relevant principles applicable alike to all similarly situate and it
must not be guided by any extraneous or irrelevant considerations because
that would be denial of equality. Where the operative reason for State
action, as distinguished from motive inducing from the antechamber of the
mind, is not legitimate and relevant but is extraneous and outside the area
of permissible considerations, it would :amount to mala fide exercise of
power and that is hit by Arts. 14 and 16."
19. Even though the SBI-VRS is in the nature of contract, it has to be
interpreted under the scanner of Article 14 of the Constitution of India.
In the process of implementation of the Voluntary Retirement Scheme on its
own terms, the appellant Bank being an associate Bank of the Indian Banks
Organization, it cannot set rules and procedures which deviates from the
standard and safeguards set by the Central Government in consensus with the
Indian Banks Association.
20. It is the claim of the appellant Bank that the SBI-VRS provides the
optees with handsome ex-gratia amount on retirement. It does not however
mean that the appellant is entitled to deprive the respondent of his
pension on the ground that he has been given handsome ex-gratia amount
under the scheme. Pension received by an employee upon his retirement is
not a bounty as has been held in the case of Deokinandan Prasad v. State of
Bihar[19] as under:
"Pension is not a bounty payable on the sweet will and pleasure of the
Government and that, on the other hand, the right to pension is a valuable
right..."
21. The same proposition of law was reiterated by the Constitution Bench of
this Court in the case of D.S. Nakara v. Union of India[20] wherein this
Court held as under:
"20. The antiquated notion of pension being a bounty, a gratuitous payment
depending upon the sweet will or grace of the employer not claimable as a
right and, therefore, no right to pension can be enforced through court has
been swept under the carpet by the decision of the Constitutional Bench in
Deokinandan Prasad v. State of Bihar wherein this court authoritatively
ruled that pension is a right and the payment of it does not depend upon
the discretion of the Government but is governed by the rules and a
government servant coming within rules is entitled to claim pension. It was
further held that the grant of pension does not depend upon anyone's
discretion. It is only for the purpose of quantifying the amount having
regard to service and other allied matters that it may be necessary for the
authority to pass an order to that effect but the right to receive pension
flows to the officer not because of the order but by the virtue of rules.
This view was reaffirmed in State of Punjab v. Iqbal Singh."
(emphasis supplied)
Therefore, depriving the respondents seeking SBI-VRS of their right to
pension solely on the ground that they have availed voluntary retirement
under a scheme while providing less than 20 years of service and also on
the ground that they have been provided with handsome ex-gratia amount on
their retirement, is arbitrary and attracts the wrath of Article 14 of the
Constitution of India. This is particularly so, because SBI-VRS was
introduced for the benefit of the Public Sector Banks which included the
appellant Bank. It was not a welfare scheme which provided the respondents
with multiple offers to choose from. Therefore, the appellant Bank at this
stage, cannot absolve itself from the responsibility of granting the
respondents what is due to them by virtue of providing pensionable
services, on the pretext of having provided ex-gratia amount.
22. In another case of Roop Chand Adlakha v. Delhi Development
Authority[21], this Court held as under:
"To overdo classifications is to undo equality. The idea of similarity or
dissimilarity of situations of persons, to justify classifications, cannot
rest on merely differentia which may, by themselves be rational or logical,
but depends on whether the differences are relevant to the goals sought to
be reached by the law which seeks to classify. The justification of the
classification must needs, therefore, to be sought beyond the
classification. All marks of distinction do not necessarily justify
classification irrespective of the relevance or nexus of objects sought to
be achieved by the law imposing the classification."
(emphasis supplied)
23. In the case on hand, the classification between employees who have
voluntarily retired under the SBI-VRS and those who have retired under the
same scheme introduced by the other Public Sector Banks, is not rational
since they constitute the employees of the appellant Bank into a distinct
class on the basis of the VRS 2000 scheme introduced by the appellant Bank
and the same scheme introduced by other Public Sector Banks, with no
intelligible differentia. The payment of ex-gratia cannot be held against
the employees since it cannot be expected of a person to give up his
service before superannuation without reasonable incentives. What the
appellant Bank intends to show as the benefit of the employees seeking VRS
under the scheme, is actually meant for the benefit of the appellant Bank
itself.
24. In setting up schemes such as the SBI-VRS, the appellant Bank, which is
the instrumentality of the State under Article 12 of the Constituion,
cannot deviate from its constitutional duties as has been held in the case
of D.S. Nakara v. Union of India (supra) :
"36. Having set out clearly the society which we propose to set up, the
direction in which the State action must move, the welfare State which we
propose to build up, the constitutional goal of setting up a socialist
State and the assurance in the Directive Principles of State Policy
especially of security in old age at least to those who have rendered
useful service during their active years, it is indisputable, nor was it
questioned, that pension as a retirement benefit is in consonance with and
in furtherance of the goals of the Constitution. The goals for which
pension is paid themselves give a fillip and push [pic]to the policy of
setting up a welfare State because by pension the socialist goal of
security of cradle to grave is assured at least when it is mostly needed
and least available, namely, in the fall of life.
25. Moreover, this decision of the appellant Bank to distinguish between
two sets of employees, goes against Article 39 of the Constitution of India
which directs the State to make policies to ensure equal pay for equal
work. The appellant Bank being an instrumentality of the State, is not
permitted to make such discriminations. Hence, the appellant Bank is liable
to implement the amendments made by the Indian Banks Association to
accommodate the grant of pension to those employees who sought voluntary
retirement through SBI-VRS.
Answer to point no. 3
26. Under Rule 22 of the State Bank of India Employees' Pension Rules, an
employee's entitlement to pension accrues on retiring from the Bank service
on one of the following conditions:
Under Rule 22(1)(a):
After having completed 20 years pensionable services provided that he has
attained the age of 50 years OR
If he was in the service on or after 1.11.93, then after having completed
10 years of service provided that he has attained the age of 58 years, OR
If he was in the service on or after 22.5.98, then after having completed
10 years pensionable service provided, that he has attained the age of 60
years.
Under Rule 22(1)(c):
After 20 years of pensionable service, at his request in writing (where the
entitlement is to proportionate pension).
On the other hand, the un-amended Employee's Pension Regulations, 1995
provide for pension under the following condition:
Regulation 28 reads as under:
"28. Superannuation Pensions:-
Superannuation pension shall be granted to an employee who has retired on
his attaining the age of superannuation specified in the Service
Regulations and Settlements."
Regulation 29 reads as under:
"29. Pension on Voluntary Retirement:
On or after the 1st day of November, 1993 at any time, after an employee
has completed twenty years of qualifying service he may, by giving notice
of not less than three months in writing to the appointing authority
retire from service; ......"
27. It can be observed that the State Bank of India Employees' Pension
Rules and the un-amended Employee's Pension Regulation, 1995 are consistent
in so far as both Rules set the eligibility of pension on voluntary
retirement service only after 20 years of pensionable service. However, it
is imperative to understand the amendment which the correspondence between
the Finance Ministry and Indian Banks Association, following the
introduction of the SBI-VRS, brought about.
28. By a letter (F.no.4/8/4/2000-IR), dated 5.9.2000, written by the
Finance Ministry to the Indian Banks Association, the Ministry recommended
to the IBA to suggest amendments to Regulation 29 of the Pension
Regulations in the following terms:
"I am directed to refer to this Division's Letter no. 11/1/99 IR dated 29-8-
2000 conveying the Government's no objection for circulation of Voluntary
Retirement Scheme in public sector banks. The Scheme, inter alia, provides
that employees with 15 year of service or 40 years of age shall be eligible
to take voluntary retirement under the Scheme. As per the provisions
contained in Regulation 29 of the Pension Regulations, an employee can take
voluntary retirement after 20 years of qualifying service and thereafter
becomes eligible for pension. Thus employees having rendered 15 years of
service or completing 40 years of age, but not having completed 20 years of
service shall not be eligible for pensionary benefits on taking voluntary
retirement under the Scheme.
In order to ensure that such employees do not lose the benefits of pension,
IBA may work out modalities and suggest amendments, if any, required to be
made in the Pension Regulations to ensure that these employees also get the
benefits of pension".
Pursuant to this correspondence, the Indian Banks Association suggested an
amendment to the Regulations in the following terms:
"INDIAN BANKS ASSOCIATION
STADIUM HOUSE, 6th FLOOR
BLOCK 2 VEER NARIMAN ROAD
MUMBAI- 400020
PD/CIR/76/G2/G4/
December 11, 2000
VOLUNTARY RETIRMENT SCHEME IN PUBLIC SECTOR BANKS AMENDMENTS TO BANK
(EMPLOYEES') PENSION REGULATIONS, 1995
Designated officers of all Public Sector Banks.
Dear Sirs,
Please refer to our circular letter no. PD/CIR/76/G4/993 dated 31st August
2000 convening the 'No Objection' of the Government in banks adopting and
implementing a voluntary retirement scheme for employees on the lines of
what was contained in the Annexure to the circular.
As per the scheme, an employee who is eligible and applies for voluntary
retirement is entitled for the benefits of CPF, Pension, Gratuity and
encashment of accumulates privilege leaves, as per rules.
Bank (Employees') Pension Regulations, 1955 do not have provisions enabling
payment of pension to an employee who retires before attaining the age of
superannuation except under circumstances as in Regulations 29, 30, 32 and
33. We had, therefore, taken up with the Government the need to
incorporate necessary provisions in the Pension Regulations by way of
amendments to Regulation 28 so that employees who retire as above under
special/ ad hoc schemes formulated by the banks, after serving for a
prescribed minimum period would be eligible for pro rata pension.
Government of India has after examining the proposal conveyed its approval
and desired that IBA advise banks to make necessary amendments to their
Pension Regulations as in the Annexure. We request banks to take note
accordingly.
Please note that with the above amendments, employees who apply for
voluntary retirement after having rendered minimum 15 years of service
under a special/ ad hoc scheme formulated with the specific approval of the
Government and the Board of Directors will be eligible for pro rata pension
for the period of service rendered as they are to retire on attaining the
age of superannuation on that date.
Yours Faithfully,
Sd/-
(Allen C A Pareira)
PERSONNEL ADVISER"
Pursuant to this suggestion, Regulation 28 of Employees Pension
Regulations, 1995 was amended to include the proviso with retrospective
effect from 1.9.2000 as under:
"Provided that pension shall also be granted to an employee who opts to
retire before attaining the age of superannuation, but after having served
for a minimum period of 15 years in terms of any scheme that may be framed
for the purpose by the Bank's Board with the concurrence of the
Government."
This Court, in the case of Bank of India v. K. Mohandas (supra) further
clarified the intention behind amendment of Regulation 28 and its
retrospective application. The relevant paragraphs read as under:
"40.........The amendment in Regulation 28, as is reflected from the afore
referred communication, was intended to cover the employees who had
rendered 15 years' service but not completed 20 years' service. ....
41. Even if it be assumed that by insertion of the proviso in Regulation 28
(in the year 2002 with effect from 1-9-2000), all classes of employees
under VRS, 2002 were intended to be covered, such amendment in Regulation
28, needs to be harmonized with Regulation 29......"
29. While answering Point no, 2 in favour of the respondents, I held that
the State Bank of India should implement the amendment made to Rule 28 of
the Employees Pension Regulation in granting pension to the employees
seeking voluntary retirement under SBI-VRS.
I therefore, answer point no 3 in favour of the respondents and direct the
appellant Bank to grant pension to the employees seeking voluntary
retirement under the SBI-VRS after completing 15 years of pensionable
service. Therefore, the respondent Radhey Shyam Pandey, having completed 19
years 8 months and 18 days of service, respondent M.P. Hallan, having
completed 19 years and 4 months of service and the respondent R.P. Nigam,
having completed 16 years and 6 months of service, become eligible for
pension as per the amended Regulation 28 of Employees Pension Rules, 1995.
By virtue of power vested in this Court under Article 142 Constitution of
India, I hold that the pension relief is also extended to all the other
employees who have availed SBI-VRS 2000 after having completed 15 years of
pensionable service. Thus, C.A. No.@ SLP (C) No.3686 of 2007, C.A. Nos.2287-
2288 of 2010 and C.A. No. 10813 of 2013 are dismissed.
30. The C.A. Nos.5035-5037 of 2012 of the appellant Bank succeed in that
respondent Mihir Kumar Nandi, having completed 12 years 3 months and 4 days
of service, becomes ineligible for pension benefits.
31. All the appeals are disposed of accordingly. No costs.
......................................................... J.
[V. GOPALA GOWDA]
New Delhi,
February 26, 2015
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[1] 2002 (2) SLR 716
[2] (2003) 2 SCC 721
[3] AIR 1993 SC 1601
[4] (1997) 1 SCC 256
[5] (1998) 8 SCC 30
[6] (2003) 11 SCC 572
[7] (2006) 3 SCC 708
[8] (2005) 12 SCC 508
[9] (2005) 4 SCC 272
[10] (2004) 6 SCC 765
[11] (2005) 3 SCC 636
[12] (2009) 3 SCC 217
[13] (2009) 5 SCC 313
[14] (1900) AC 260
[15] 2014 (8) SCALE 397
[16] (2009) 5 SCC 313
[17] (2003) 2 SCC 721
[18] AIR 1974 SC 555
[19] 1971 SCR 634
[20] (1983) 1 SCC 305
[21] 1988 (Supp 3) SCR 253
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89