TaxTMI 
TaxTMI 
2015 (2) TMI 1197
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....k 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. 3. 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. 4. As per the Scheme, the applications for voluntary retirement under the Scheme ....
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....or 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. 7. 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 t....
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....y 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. (iii) A member who has been permitted to retire under Clause 1(c) above shall be entitled to proportionate pension." 9. 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 Co....
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....h other ceiling as may be prescribed under the Income Tax Act as on the relevant date. 6. 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....
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....y 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. 14. 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 th....
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....nt 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." 15. 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. 16. 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 to....
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....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 ....
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....pplies 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 Governm....
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....nt-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. Th....
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.... 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" 22. In V. Kasturi v. Managing Director, State Bank of India, Bombay and another (1998) 8 SCC 30 though the Court was dealing with eligibility to be entitled for pension under Rule 22(i)(c) yet it repr....
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....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 d....
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....ts 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 ....
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....id 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. 28. At this juncture, ....
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....e 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. 30. 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. 31. In Bangalore Development Authority & Ors. Vs. R. Hanumaiah & Ors. (2005) 12 SCC 508 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 wou....
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....BI, 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. 34. In this context, reference may be made to a decision in Bank of Baroda & Others V. Ganpat Singh Deora (2009) 3 SCC 217, 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 benefit....
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....ave 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 where under 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 pe....
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....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 eligible for pensionary benefits on taking voluntary retirement under the Scheme. 40. The use of the words "such employees" in the communica....
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....gulations. 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 ....
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.... 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 ha....
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....ting. 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 wi....
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....on 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". 41. 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 ....
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....re 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 t....