Case BriefsSupreme Court

Supreme Court: In a case where the 3-judge bench of Arun Mishra, BR Gavai and MR Shah, JJ was hearing a reference in a plea of SBI employees seeking pension on completion of 15 years of service as per the State Bank of India Voluntary Retirement Scheme, it was held that the employees who completed 15 years of service or more as on cut­off date are entitled to proportionate pension under SBI VRS to be computed as per SBI Pension Fund Rules.

Refraining from burdening the bank with interest, the bench directed,

“Let the benefits be extended to all such similar employees retired under VRS on completion of 15 years of service without requiring them to rush to the court.”

Factual Background

  • After obtaining approval of the Government of India, the Indian Bank Association (IBA) evolved a Voluntary Retirement Scheme. The Central Board of Directors of SBI adopted and approved the scheme in its meeting held on 27.12.2000 for implementing the VRS for the employees of the bank by retiring them on completion of 15 years of service with the benefit provided in the scheme. The heart and soul of the scheme were that benefits to be given on completion of 15 years of service. The eligibility for benefits was provided to those who had completed 15 years of service as on 31.12.2000.
  • The SBI submitted that it reserved a right under the scheme to modify, amend or cancel it or any of the clauses and to give effect to it from any date deemed fit. The Deputy Managing Director­cum­CDO was the competent authority for the purpose.
  • As specific queries were raised, a clarification was issued by the Deputy Managing Director on 15.1.2001, stating that as per the existing rules, employees who had not completed 20 years of pensionable service, were not eligible for pension.
  • The respondent before the Supreme Court questioned the refusal of the bank to pay pension. He retired on 31.3.2001 under the SBI VRS. On 18.3.2001, the bank accepted the offer of the employee to retire him voluntarily. He was aged 59 years three months and had nine months service still to go before attaining the age of superannuation. On 31.3.2001, when the VRS became effective, he had put in 19 years, nine months, and 18 days of pensionable service. He had to retire on completion of 60 years and would have put in a little more than 20 years of pensionable service.

Taking note of the facts, the Court noticed that once the Central Board of Directors accepted the memorandum for making payment of pension, in case it was not accepting the proposal in the memorandum, it ought to have said clearly that it was not ready to accept the proposals of the Government and the IBA and rejects the same. Once it approved the proposals referred to in the memorandum, which were on the basis of IBA’s letter and Government of India’s decision it was bound to implement it in true letter and spirit cannot invalidate its own decision by relying on fact it failed to amend the rule, whereas other Banks did it later on with retrospective effect.

“They cannot invalidate otherwise valid decision by virtue of exclusive superior power to amend or not to amend the rule and act unfairly and make the entire contract unreasonable based on misrepresentation.”

It further said that while construing a contract, the language and surrounding circumstances of the overall scheme, memorandum and letters are to be read conjointly to find out whether any departure made by the Board of Directors in its Resolution dated 27.12.2000 is of pivotal significance. In this case, the decision was taken by it of approval of the IBA scheme as proposed. Its binding effect cannot be changed on the basis what parties choose to say afterward, nor they can   be permitted to wriggle out. The contract is required to be read as a whole. It is apparent on a bare reading that optees will be eligible for proportionate pension under the Pension Regulations of the bank and therefore, the bank bears the risk of lack of clarity, if any.

 “It was not the provision in the VRS scheme that incumbents having completed 20 years of service would be entitled for pensionary benefits. The scheme was carved out specially for attracting the employees by providing pension and other benefits to eligible persons like ex gratia, gratuity, pension and leave encashment. Deprivation of pension would make them ineligible for the benefits and would run repugnant to the eligibility clause.”

The Court concluded by saying that the basic framework of socialism is to provide security in the fall of life to the working people and especially provides security from the cradle to the grave when employees have rendered service in heydays of life, they cannot be destituted in old age, by taking action in an arbitrary manner and for omission to complete obligation assured one. Though there cannot be estoppel against the law but when a bank had the power to amend it, it cannot take shelter of its own inaction and SBI ought to have followed the pursuit of other banks and was required to act in a similar fair manner having accepted the scheme.

[Assistant General Manager, State Bank of India v. Radhey Shyam Pandey, 2020 SCC OnLine SC 253, decided on 02.03.2020]

Hot Off The PressNews

Supreme Court: The Bench comprising of Arun Mishra and S Abdul Nazeer, JJ., while addressing a matter, stated that “voluntary retirement” cannot be sought as a right and the government can frame rules to deny pleas for quitting on a premature basis in public interest.

The Supreme Court Bench while upholding the Uttar Pradesh government’s decision of rejecting the request for voluntary retirement of some senior doctors stated that due to the shortage in the number of specialised doctors in government hospitals and looking at the public interest the decision of the State on the stated grounds is justified.

Further, the Supreme Court Bench while concluding its decision stated that the concept of public interest can also be invoked by the government when voluntary retirement sought by an employee would be against public interest. Poorest of the poor obtain treatment at government hospitals. They cannot be put at peril. The bench had come to the above conclusion, when the doctors had claimed the right to retire under Part III of the Constitution, for which the Court stated that such right cannot be supreme than Right to Life.

[Source: The Times of India]

Case BriefsSupreme Court

Supreme Court: Interpreting the provisions of Sections 33C(2) of the Industrial Disputes Act, 1947 vis-à-vis a Voluntary Retirement Scheme framed by the State of Andhra Pradesh, the Court said that though there is cessation of relationship between the employee and the employer in VRS but if it does not cover the past dues like lay-off compensation, subsistence allowance, etc., the workman would be entitled to approach the Labour Court under Section 33C(2) of the Act.

Explaining the position of law, the Court said that if the VRS had mentioned about the lay-off compensation, needless to say, the claim would have been covered and the amount received by the workmen would have been deemed to have been covered the quantum of lay-off compensation. If it is specifically covered, or the language of VRS would show that it covers the claim under the scheme, no forum will have any jurisdiction. However, on a perusal of the VRS framed by the State of Andhra Pradesh, the Court noticed that it did not deal with the lay-off compensation and hence, said that the workmen is entitled to approach the Labour Court.

The 3-Judge Bench of Dipak Misra, V. Gopala Gowda and Kurian Joseph, JJ was deciding the reference made by the 2-Judge Bench in an appeal from the decision of the Andhra Pradesh High Court where it was held that once the workmen had availed the Voluntary Retirement Scheme and received the special compensation package, they could not have put forth a claim for lay-off compensation under Section 33C(2) of the Act. [A. Satyanarayana Reddy v. Presiding Officer, Labour Court, 2016 SCC OnLine SC 1059, decided on 30.09.2016]