TMI Blog2015 (2) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellants. Mrs. K. Sarada Devi, AOR, Ms. Kamini Jaiswal, AOR, Mr. Ankur S. Kulkarni, AOR, Mr. Jagjit Singh Chhabra, AOR and M/s. Mitter Mitter Co. for the Respondents. JUDGMENT Dipak Misra, J. Leave granted in S.L.P. (Civil) No. 3686 of 2007. 2. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 6. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5.1998, after having completed ten years pensionable service provided that he has attained the age of sixty years; (b) 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; (c) After having completed twenty years pensionable service, irrespective of the age he shall have attained at his request in writing. (d) After twenty five years pensionable service. (ii) 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. (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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 5.00 lakhs or such 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pined 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted 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. 17. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 20. Having stated the various views taken by the High Courts I may now refer to certain authorities dealing with these kind of schemes. 21. In Arikaravula Sanyasi Raju v. Branch Manager, State Bank of India, Visakhapatnam (A.P.) and others (1997) 1 SCC 256 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 Clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 25. 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-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 27. 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 pensiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 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. 29. 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 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 De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary 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 Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the terms applied by one party are unclear, an interpretation against that party is preferred (verba chartarum fortius accipiuntur contra proferentem) . 36. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recently, in State Bank of Patiala V. Pritam Singh Bedi Others 2014 (8) SCALE 397 , 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 ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 45. I have been apprised with regard to the relevant details of the respondents herein. It is as follows: NAME OF THE RESPONDENT LENGTH OF SERVICE AGE AS OF 31.03.2001 EX-GRATIA AMOUNT PAID (Apart from other benefits like PF Gratuity) Radhey Shyam Pandey SLP No. 3686/07 19 yrs. 8 months 18 days 59 yrs. 3 months Ex-Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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