Service Law – Voluntary Retirement Scheme – Whether the respondent employees are entitled to pension on completion of 15 years of service as per the State Bank of India Voluntary Retirement Scheme (VRS framed in 2000) – Held: The Central Board of Directors of the SBI 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 Indian Bank Association (IBA) and rejects the same – However, 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 – By accepting the same, binding obligation was created upon the SBI to make payment of pension on completion of 15 years of service – It cannot invalidate its own decision by relying on fact it failed to amend the rule, whereas other Banks did it later on with the 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 – The scheme of contractual nature has to be read in the context and in the backdrop of facts and what has been resolved by the Board of Directors – There is no ambiguity with respect to the admissibility of pension when the memorandum and the scheme are read together – In case of ambiguity and even if two interpretations are possible in the backdrop of facts of the case, one in favour of the employee has to be adopted and any clarification, if it denies the benefit of pension, has to be held to be unenforceable, illegal and contrary to law – In the instant case, the eligibility clause, when read with clauses providing the benefit, i.e., clauses 5 and 6 of the scheme, leaves no room for any doubt and makes it clear the employee with 15 years of service were treated as eligible to claim the benefit of the scheme floated by SBI – Therefore, the employees who completed 15 years of service or more as on cut-off date were entitled to proportionate pension under SBI-VRS to be computed as per SBI Pension Fund Rules.
Disposing of the appeals, the Court
HELD: 1. It is apparent 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. By accepting the same, binding obligation was created upon the SBI to make payment of pension on completion of 15 years of service. It 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 was open to the Board of Directors to reject the proposal. Once it accepted the proposal to make payment of pension on completion of 15 years of service as proposed in the memorandum, though the scheme is tried to be interpreted by the SBI that pension was to be admissible as provided in the rule that refers to proportionate pension as noted by this Court in O.P. Swarnakar & Ors., and what was decided by Government of India/IBA, was not taken away rather adopted by the Central Board of Directors. The scheme of contractual nature has to be read in the context and in the backdrop of facts and what has been resolved by the Board of Directors. There is no ambiguity with respect to the admissibility of pension when the memorandum and the scheme are read together. In case of ambiguity and even if two interpretations are possible in the backdrop of facts of the case, one in favour of the employees has to be adopted and so-called clarification dated 11.1.2000 even if considered in the manner so as to deny the benefit of pension, has to be held to be unenforceable, illegal and contrary to law. [Para 53][877-G-H; 878-A-E]
2. It is apparent from the eligibility clause of the VRS scheme that eligibility is provided for the employees having 15 years of pensionable service and they will be entitled for benefits as provided in the scheme. The eligibility clause, when read with clauses providing the benefit, i.e., clauses 5 and 6 of the scheme, leaves no room for any doubt and makes it clear that employees with 15 years of service were treated as eligible to claim the benefit of the scheme floated by SBI. 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. [Para 54][878-E-H]
3. The submission raised on behalf of the SBI that the draft scheme nowhere stipulated that 15 years’ service would be the eligibility or that on completion of 15 years’ service, the incumbent would be eligible for pension, is factually incorrect. It is apparent from the material circumstances, documents, and correspondence that the decision was taken at all levels including the one by the Central Board of Directors of SBI, that the benefit of pension was to be given to the employees on completion of 15 years of service. In that perspective, vagueness of scheme of SBI, if any, can be of no advantage as it is clear beyond the pale of doubt that pension was heart and soul of the scheme with ex gratia on completion of 15 years of service. It is due to the reason that the benefit was to be accorded to the incumbents having completed
15 years of service, Regulation 28 as applicable to other nationalised banks was proposed to be modified as reflected in the letter of IBA dated 11.12.2000 and Government of India letter dated 5.9.2000. Later on, the regulation was amended in 2002 after the scheme had already been implemented in right earnest. There was not even an iota of doubt that VRS was to give benefits to all eligible employees having completed 15 years of service. It was apparent from the letter dated 29.12.2000 of SBI that the guidelines of IBA were approved by the Central Board of Directors in its meeting dated 27.12.2000. [Para 55][879-A-E]
4. This Court observed that the principal aim of the socialist State as envisaged in the Preamble is to eliminate inequality. 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. [Para 63][885-F-H]
Bank of India & Ors. v. O.P. Swarnakar & Ors. (2003)
2 SCC 721 : [2002] 5 Suppl. SCR 438 ; Delhi Transport Corporation v. D.T.C. Mazdoor Congress & Ors. (1991) Supp 1 SCC 600 : [1990] 1 Suppl. SCR 142 ; Central Inland Water Transport Corporation Ltd. & Anr. v. Brojo Nath Ganguly & Anr. (1983) 3 SCC 156 : [1986] 2 SCR 278 ; Bank of India & Anr. v. K. Mohandas & Ors. (2009) 5 SCC 313 : [2009] 5 SCR 118 ; D.S. Nakara & Ors v. Union of India (1983) 1 SCC 305 : [1983] 2 SCR 165 – relied on.
HEC Voluntary Retd. Employees Welfare Society v. Heavy Engineering Corporation Ltd. (2006) 3 SCC 708 : [2006] 2 SCR 678 ; Jan Mohd. Noor Mohd. Bagban v. State of Gujarat, AIR 1966 SC 385 : [1966] 1 SCR
505 ; Atlas Cycle Industries Ltd. v. State of Haryana (1979) 2 SCC 196 : [1979] 1 SCR 1070; S.G.
Jaisinghani v. Union of India, AIR 1967 SC 1427 : [1967] 2 SCR 703 – referred to.
A. Schoroeder Music Publishing Co. Ltd. v. Macaulay (formerly Instone) (1974) 1 WLR 1308 ; Levison v. Patent Steam Carpet Co. Ltd; (1949) 2 All ER 584 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.