TaxTMI 
TaxTMI 
2015 (2) TMI 1197
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..... 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 were to be submitted during the period i.e. 15.1....
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....yee 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 that the writ petitioner was in service of the Bank on 01.11.19....
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....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 Court took note of the fact that the counter-affidavit was silent regarding the claim of the 1st respondent under sec....
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....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." 11. The High Court op....
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....n 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 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 entitl....
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....ed 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 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....
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....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 re....
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....ires 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" 19. It was contended before the High Court t....
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....ployees 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 spec....
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....ferred 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 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 ti....
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....e 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 expresse....
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....y 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".....
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....er 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, 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 en....
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....ndment 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 would be against the statute. To arrive at the said conclusion, the two-Judge Bench placed reliance on TISCO Ltd. V. State of Jharkhand (2005) 4 SCC 272, Hira Tikkoo V. Union Territory, Chandigarh (2004) 6 SCC 765 and Savitaben Somabai Bhatiya V. State of Gujarat (2005) 3 SCC 636. 32. 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 th....
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....s 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 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 ....
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.... 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 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 t....
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....m 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 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 alread....
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....ion. 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 f....
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....nt 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....
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....ire 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 19....
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....od 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?" 42. To exa....
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....ctive. 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." 44. 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 wit....