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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2463 OF 2015 [Arising out of S.L.P. (Civil) No. 3686 OF 2007]

Assistant General Manager, State Bank of India & Others ... Appellants

Versus

Radhey Shyam Pandey      ... Respondent

WITH

CIVIL APPEAL NOS. 2287-2288 OF 2010 CIVIL APPEAL NOS. 5035-5037 OF 2012

CIVIL APPEAL NO. 10813 OF 2013

J U D G M E N T

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,

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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, 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  

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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.  15.1.2001 to  31.1.2001.  The 1st respondent  

submitted his application seeking voluntary retirement and it  

was accepted on 17.3.2001 with effect from 31.3.2001. On  

27.3.2001, the respondent No. 1 submitted an application to  

withdraw  his  request  for  voluntary  retirement.   The  said  

application was declined by the Bank on 18.4.2001 stating  

that  the  date  for  withdrawal  of  application  had  already  

expired  on  15.2.2001.   It  is  apt  to  note  that  here  the  

respondent  wrote  a  letter  on  12.4.2001  claiming  pension  

under the Pension Fund Rules, 1995 in terms of State Bank of  

India Employees Pension Rules (for short ‘the Rules’).   The  

claim of the 1st respondent for withdrawal of his application  

for  voluntary  retirement  and  grant  of  pension  and  leave  

encashment was refused by the Bank on 4.7.2001.   Being  

grieved by the aforesaid refusal and declination of the prayer,  

the  1st respondent  preferred  writ  petition  being  CWP  No.  

14325 of 2001.

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5. The Writ Court took note of the fact there was acceptance  

of the voluntary retirement on 17.3.2001 with a stipulation  

that the employee would be relieved from his duties at the  

close of  business hours on 31.3.2001.  The Division Bench  

referred to the decision in  Mohinder Pal Singh v. Punjab  

and Sind Bank and others1 and the decision of this Court in  

Bank of India and others v. O.P. Swarankar etc.2 and  

after reproducing the directions of from  Swarankar’s case  

came to hold as follows:-

“In view of the aforesaid finding, the moment a  decision  is  taken  by  the  Bank,  the  jural  relationship of employer and employee stood  terminated.   The  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.  

1 2002 (2) SLR 716 2 (2003) 2 SCC 721

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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 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  

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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  

01.11.1993  and  had  completed  10  years  of  pensionable  

service  and  further  had  attained  the  age  of  58  years.  

Therefore, in terms of Rule 22 of the Pension Rules, he was  

entitled  to  pension.   Dealing  with  the  claim  for  leave  

encashment  which  is  based upon  the  circular  of  the  Bank  

dated 23.09.1986, it opined that the leave encashment was  

payable  to  an  employee  of  the  Bank,  who  had  been  

discharged if he was eligible for pension and as it had been  

found that the petitioner was entitled to pension in terms of  

the Pension Rules he would be entitled to leave encashment  

as well.    

8. In this batch of appeals, the question that emanates for  

consideration whether the respondent-employees are entitled  

to get pension.  There can be no cavil over the fact that their  

right  to  seek  withdrawal  from  the  scheme  of  voluntary  

retirement has been negatived by the impugned judgments  

passed  by  various  High  Courts  and,  therefore,  I  am  not  

required  to address the said issue.   It is essential to advert  

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to  the  issue  whether  the  employee  would  be  entitled  to  

pension under the four corners of the Rules. Rule 22 which  

squarely falls for consideration is as follows:-

“22.  (i)   A  member  shall  be  entitled  to  a  pension under these rules on retiring from the  Bank’s service –

(a) After  having  completed  twenty  years’  pensionable service provided that he has  attained the age of fifty years or if he is in  the service of the Bank on or after 1.11.93,  after  having  completed  ten  years  pensionable service provided that he has  attained the age of fifty eight years or if he  is  in  the service of  the Bank on or  after  22.5.1998,  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  

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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 Court took note of the  

fact that the counter-affidavit was silent regarding the claim  

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of  the  1st respondent  under  second  part  of  Clause  (a).  

Analysing  further  in  this  regard,  the  High  Court  opined as  

follows:-

“The  petitioner  has  submitted  his  offer  for  voluntary retirement in terms of the Pension Rules  existing in  the month of  January,  2001.   On the  said  date  a  member  of  the  Pension  Funds  was  entitled to pension on completion of 20 years of  pensionable service provided he has attained the  age of 50 years.  Alternatively, if a member is in  service of the Bank on or after 01.11.1993 and has  completed 10 years of pensionable service and has  attained the age of 58 years, he shall be entitled to  the pension.  The petitioner fulfils the second part  of Clause (a) of Rule 22 which was in existence on  the day when the petitioner submitted his request  for  voluntary  retirement.   Even  after  the  amendment  on  09.03.2001,  another  clause  has  been added i.e. 3rd part of Clause (a) as mentioned  above,  which  does  not  affect  the  claim  of  the  petitioner for pension as he is entitled to pension  in the second part of Rule 22(1)(a).”

10. The  High  Court  referred  to  the  voluntary  Retirement  

Scheme floated on 29.12.2000, and reproduced the relevant  

part of the said Scheme which is as follows:-

“5.  Amount of Ex-Gratia:

The  staff  member  whose  request  for  retirement  under  SBIVRS  has  been  accepted  by  Competent  Authority will be paid an amount of ex-gratia of 60  days’ salary (pay plus stagnation increments plus  special  pay  plus  dearness  allowance)  for  each  completed year of service (for this purpose fraction  of service of six months and above will be taken as  one year and accordingly service of less than six  

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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  Rs.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 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  

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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 opined that the said paragraphs, when  

properly appreciated, convey that the amount of ex-gratia is  

to be paid and what are the other benefits to be paid have  

also been enumerated.  Referring to Clause 6 it ruled that it  

deals with  gratuity, provident fund contribution, pension in  

terms of the Rules on the relevant date (including commuted  

value of pension), encashment of balance of privilege leave  

and certain other benefits.  The Court also took note of the  

clarificatory circular issued by the Bank on 10.1.2001.  While  

answering  the  question,  whether  or  not,  the  employee  

completing 15 years of  pensionable service as on relevant  

date the Court held he would be entitled for pension benefit.  

12. Presently  I  shall  refer  to  the  relevant  part  of  

Clarificatory circular:-  

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“In this connection, we invite a reference to para  6(c) of the Scheme forwarded under the cover of  Circular  No.  CIR.DO/PER  &  HRD/99  dated  29.12.2000.   The  payment  of  pension  to  the  employee  retiring  under  SBIVRS  would  be  governed  by  State  Bank  of  India  Employees  Pension Fund Rules on the relevant date (including  commuted  value  of  pension).   However,  as  per  existing rules, employees who have not completed  20 years of Pensionable Service are not eligible for  pension.”   

13. Having noted the rule relating to pension on which the  

case is founded and the scheme on which reliance has been  

placed  by  the  High  Court,  it  is  necessary  to  notice  how  

various High Courts have approached this problem.  I  have  

already stated that the High Court of Punjab and Haryana has  

opined  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  

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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.  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.  

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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 entitled to get pension.  The employee ad no means of knowledge of such  change of pension rules at the time of agreement.  In  such  a  situation,  the  relation  between  the  parties being that  of  employer and employee,  it  was  the  duty  of  the  employer  to  inform  the  employee  about  the  future  amendment  of  the  pension rules which would deprive the employee  of  his  right  to  get  pension  by  entering  into  the  voluntary  retirement  scheme.   If  he  had  known  this  fact,  he  would  not  definitely  enter  into  the  scheme because if  he had retired in due course  without opting for voluntary retirement, he would  be  entitled  to  get  pension  even  under  the  amended rules.  Therefore, the silence maintained  by the employer in such a situation amounted to  fraud on its part.  As pointed out in illustration (b)  to S. 17 of the Contract Act, if it becomes a duty of  a  father  to  disclose  the  defect  of  the  horse  proposed to be sold to his just grown up daughter,  in  the  same manner,  it  is  also  the  duty  of  the  employer to inform his employee about the future  amendment of the pension rules causing prejudice  to his employee at the last stage of his service life  before  accepting  the  terms  of  the  voluntary  retirement  scheme  declared  by  it  when  such  source of prejudice is know to the employer and  the  employee  had  no  manner  of  knowledge  of  such perilous condition.”

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Thereafter,  the  Bench  referred  to  Food  Corporation  of  India  v.  Kamdhenu  Cattle  Feed  Industries3 and opined thus:-  

“Therefore, on that ground also the writ petitioner  is entitled 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, 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  3 AIR 1993 SC 1601  

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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  

existing rules and the amended rules which I shall refer to at  

a later stage.  It was contended by the writ petitioner before  

the Division Bench that he was covered under second part of  

the Rule 22 (i) (a)  inasmuch as he was in the service of the  

Bank on and after 1.11.1993 and he had completed 10 years  

of  pensionable  service,  and  attained  the  age  of  58  years  

before the date he retired.  The bank resisting the said stand  

contended that the clarificatory circular issued by the bank  

and contended that  the  employee  was  not  entitled  to  get  

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pensionary  benefits.    The  High  Court  observed  that  the  

clarification had no greater status in law than the reading and  

understanding  the  terms  of  the  contract  according  to  one  

party.  It opined that the pension rules should apply to the  

writ petitioner not by any force of special statutory law but  

only by force of agreement.  Eventually the Court ruled thus:-  

“The second important  point  raised by the Bank  was that under 22(1)(c) of the Pension Fund Rules,  when  an  employee  retires  upon  a  request  in  writing being made by him, he has to complete 20  years  of  service.   Thus the voluntary  retirement  being  a  retirement  pursuant  to  the  employees’  request, it is this clause which will be applicable to  him and it will not be proper to give him pension  because  he  comes  under  another  clause  i.e.  Clause  (a),  which  was  merely  introduced  to  accommodate late entrants into service when the  retirement age was raise to 58 on 1.11.1993 and  then to 60 on 22.5.1998.  Clause (a) was inserted  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  

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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  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  reference  to  the  contract.  

Regarding the other aspect of Clause 22(i)(c)  having no field of operation at all, one bare look  will  show that the said clause will  operate in all  cases where the retiring employee has not even  attained the age of 58 years.  If the pensionable  

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period  of  20  years  has  been  completed  before  that, and the competent authority grants sanction  to retire under Rule 15,  then and in that  event  one would  get  pension  although one would  not  under the second or third parts of Clause 22(i)(a).  Thus each part of the contractual document is left  with a meaning even if the interpretation in favour  of the writ petitioner is wholly accepted.”

18. At  this  juncture,  it  is  apt  to  appreciate  the  decision  

rendered  in  case  of  Vipin  Kalia  (supra)  by  the  division  

bench of Delhi High Court.  In the said case the division bench  

dealing  with  the  State  Bank of  India  Voluntary  Retirement  

Scheme whereunder the option exercised by the employees  

was accepted by the respondent bank on 31.3.2001.  All the  

appellants therein had either completed 15 years of service  

or were of 40 years of age as on 31.12.2000 and accordingly,  

as per  the provision of  the State Bank of  India Employees  

Pension and Provident Fund Rules they had claimed pension  

as  per  the  rules.  The  court  referred  to  Indian  Bank’s  

Association letter dated 11.12.2000 which was the fulcrum of  

the  scheme  to  get  the  pension.   The  division  bench  

reproduced  the  said  letter  which  I  think  it  appropriate  to  

reproduce.  

“Indian  Bank's  Association  Stadium  House  6th  Floor, Block 2 Veer Nariman Road Mumbai-400020  

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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  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  

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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 that under the  

said recommendation the bank was obliged to pay pension to  

them but the said contention was not accepted by the Single  

Judge on the ground the said letter is not a binding circular  

under Section 18 of the State Bank of India Act, 1955.  The  

learned  Single  Judge  had  also  opined  that  voluntary  

retirement scheme was a package by itself  and it  was not  

open to the employees to ask for modification of the scheme  

and  if  the  employees  wanted  to  avail  of  the  benefit  of  

pension, they should not have opted under the scheme and  

after completing requisite years of service, would have been  

entitled to pension.   The Court examined the SBIVRS dated  

30.12.2000  and  opined  that  it  was  an  invitation  to  the  

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employees to make an offer and opt for voluntary retirement.  

The scheme, as analysed by the Division Bench, specifically  

stipulated  that  the  employees  who  were  eligible  and  the  

period during which an offer for voluntary retirement could be  

made.  Reference was made to Clause 5 and 6 of the scheme  

that provides for ex-gratia payment to the officers who had  

opted for  voluntary  retirement.   The court  referring to  the  

letter dated 11.1.2001 opined that the payment of pension to  

an employee retiring under the voluntary retirement scheme  

are to be governed by the relevant pension rules, and as per  

the existing rules, an employee who had not completed 20  

years  of  pensionable  service  would  not  be  eligible  for  

pension.   Thereafter  the  Division  Bench observed that  the  

employee who has opted 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:-  

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“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 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  special  and  a  distinct  scheme  offering  a  handsome  package for the employees who were ready and  willing to opt for retirement. It is also pointed out  

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that  the  State  Bank  of  India's  employees  unlike  employees belonging to other public sector banks  were entitled to both contributory provident fund  and membership  of  a  pension  fund.  It  is  stated  that  employees  of  other  public  sector  bank  are  eligible  either  for  contributory  provident  fund or  membership of pension fund.

14. Learned Counsel for the appellants, however,  also relied on the judgment of a single Judge of  this  Court  in  the  case  of Punjab  and  Sind  Bank  Officers Association and Ors. v. Union of India and  Anr. on 11th May, 2006. In the said case, learned  single Judge was examining regulations 28 and 29  of  the  Bank  (Employees')  Pension  Regulations,  1995. The issue was which of the two regulations  would apply. It was held that Regulation 29 would  apply  to  employees  who  had  taken  voluntary  retirement  whether  under  normal  circumstances  or under a special scheme. It was further held that  the  scheme  or  package  cannot  be  altered  unilaterally. The said decision does not support the  contention  of  the  appellants.  The  terms  and  conditions  of  the  Voluntary  Retirement  Scheme  were  clear  and  specific.  The  terms  were  not  ambiguous.  The  employees  including  the  appellants  were  fully  conscious  of  the  decision  taken  by  them and  the  benefits  they  would  be  entitled to.  The appellants voluntarily,  with open  eyes entered into 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.

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21. In  Arikaravula  Sanyasi  Raju v.  Branch Manager,   

State Bank of India, Visakhapatnam (A.P.) and others4  

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 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 another5 though the Court was dealing  

4 (1997) 1 SCC 256 5 (1998) 8 SCC 30  

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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  time  when  the  amended  clause  (c)  applied,  i.e.,  from  22-9-1986,  he  should  be  a  member of the pension fund;

(ii) he should have by then completed 20 years  of  pensionable  service,  and  should  have  put  forward his  requisition in  writing for  availing the  benefit of the said provision.

Unless  both  these  conditions  are  satisfied  the  amended clause (c) of Rule 22(1) cannot apply in  his case.”  

23. The afore-referred two decisions  show how the Court  

had perceived the rule position.

24. In  Vice-Chairman  and  Managing  Director,  A.P.   

SIDC  Ltd.  and  another  v  R.  Varaprasad  and  others6  

while  dealing  with  the  concept  of  voluntary  retirement  

schemes the Court has ruled that:-  

“All  employees  who  accepted  VRS  could  be  relieved at a time or batch by batch depending on  availability of funds. Further funds may be made  

6 (2003) 11 SCC 572

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available  early  or  late.  If  the  argument  of  the  respondents that relieving date should be taken as  effective date for calculating terminal benefits and  financial  package  under  VRS,  the  dates  may  be  fluctuating  depending  on  availability  of  funds.  Hence it is not possible to accept this argument.  When the employees have opted for VRS on their  own  without  any  compulsion  knowing  fully  well  about  the  Scheme,  guidelines  and  circulars  governing  the  same,  it  is  not  open  to  them  to  make any claim contrary to the terms accepted. It  is  a  matter  of  contract  between the Corporation  and  the  employees.  It  is  not  for  the  courts  to  rewrite 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  

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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 expressed thus:-  

“90. The basic concept of the Scheme, therefore,  underwent a change which also goes to show that  the  banks  had  sought  to  invoke  their  power  of  amending  the  Scheme.  Once  the  Scheme  is  amended and/or an apprehension is created in the  mind of the employees that they would not even  receive the entire benefits as envisaged under the  Scheme, they were entitled to revoke their offers.  Their  action  in  our  considered  opinion  is  reasonable. It may be that some of the employees  only opted for the provident fund benefit which did  not undergo any amendment but the same would  not change the attitude on the part of the banks.”

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26. In  HEC  Voluntary  Retd.  Employees  Welfare  

Society and Another v. Heavy Engineering Corpn. Ltd.   

and  others7 the  Court  referring  to  concept  of  voluntary  

retirement opined that an offer for voluntary retirement in  

terms of  a  scheme,  when accepted,  leads to a concluded  

contract between the employer and the employee. In terms  

of  such  a  scheme,  an  employee  has  an  option  either  to  

accept  or  not  to  opt  therefor.  The  scheme  is  purely  

voluntary, in terms whereof the tenure of service is curtailed,  

which  is  permissible  in  law.  Such  a  scheme  is  ordinarily  

floated with  a  purpose of  downsizing the employees.  It  is  

beneficial both to the employees as well as to the employer.  

Such  a  scheme  is  issued  for  effective  functioning  of  the  

industrial  undertakings.  The  court  further  observed  that  

although the 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  

7 (2006) 3 SCC 708

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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  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  

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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”.  They are bound by their own act. The parties are  bound  by  the  terms  of  contract  of  voluntary  retirement.  We  have  noticed  hereinbefore  that  unless a statute or statutory provision interdicts,  the  relationship  between  the  parties  to  act  pursuant  to  or  in  furtherance  of  the  Voluntary  Retirement  Scheme is  governed  by  contract.  By  such  contract,  they  can  opt  out  of  such  other  terms and conditions as may be agreed upon. In  this case the terms and conditions of the contract  are not governed by a statute or statutory rules.”

In the said case the court referred to V. Kasturi Case  

(supra) and understood it in the following manner:-

“It  has  not  been  suggested  that  voluntary  retirement,  in  the  absence  of  any  express  statutory  rule  governing  the  field,  would  bring  about a case of  superannuation.  In  V.  Kasturi,  a  new rule was introduced providing for pension of  an employee after retirement on completion of 20  years of service, provided he requested in writing  therefor. The questions which fell for consideration  therein  were  that  if  a  person  was  eligible  for  pension  at  the  time  of  his  retirement  and  if  he  survives till the time of subsequent amendment of  the relevant  Pension Scheme,  whether  he would  become  entitled  to  enhanced  pension  or  would  become eligible  to  get  more  pension as  per  the  new formula of computation of pension. In the fact  situation  obtaining  therein,  it  was  held  that  employees could be divided in two categories 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  

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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 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  

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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  entitlement  of  

pension  by  an  employee  if  he  has  completed  20  years  of  

pensionable  service  irrespective  of  age,  if  he  seeks  

retirement at his own request in writing.  It is the stand of the  

Bank  that  Rule  22(i)(c)  was  added  on  20.09.1986  for  the  

specific  purpose  of  granting  pension  to  those  who  have  

voluntary retired.  As is evident from the factual score under  

the SBI VRS, the employees were required to submit written  

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applications seeking voluntary retirement under the Scheme.  

When the scheme was in operation, the competent authority  

i.e.  Deputy  Managing  Director  had  issued  a  circular  dated  

10/15.1.2001 clarifying the position that the employees could  

withdraw their applications made under SBI VRS by 15.2.2001  

and those employees who have not completed 20 years of  

pensionable service, are not eligible for pension.  There can  

be  no  doubt,  by  abundant  caution,  the  bank  issued  a  

clarificatory circular.  The said circular cannot be given any  

type  of  nomenclature  other  than  a  clarificatory  circular,  

despite treated as such.  It is graphically clear from the same  

that an employee who has completed 20 years of pensionable  

service  would  be  entitled  to  pension,  even  if  they  seek  

voluntary  retirement  under  SBI  VRS.   It  was  open  to  the  

employees to withdraw their applications under SBI VRS by  

15.2.2001.  The respondent-employees, as is manifest, chose  

not to withdraw.  In these circumstances, the question arises  

whether any part of Rule 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.  

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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  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  

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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.8 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  

Jharkhand9,  Hira  Tikkoo  V.  Union  Territory,  

Chandigarh10 and  Savitaben Somabai Bhatiya V. State  

of Gujarat11.   

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 the employee which include the pension  

and the said pension shall be granted in terms of the State  

Bank of India Employees Pension Fund Rules on the relevant  

date.   The  High  Court  referred  to  Rule  22(i)  prior  to  the  

amendment i.e. 09.03.2001.  The unamended portion of the  

Rule reads as follows: 8 (2005) 12 SCC 508 9 (2005) 4 SCC 272 10 (2004) 6 SCC 765 11 (2005) 3 SCC 636

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“After  having  completed  20  years’  pensionable  service provided that he has attained the age of 50  years or if he is in service of the Bank on or after  01.11.1993,  after  having  completed  10  years  pensionable service provided that he has attained  the age of 58 years.”

After  the  amendment  that  was  incorporated  on  

9.3.2001, the Rule reads as under:

“After  having  completed  20  years’  pensionable  service provided that he has attained the age of 50  years or if he is in service of the Bank on or after  01.11.1993,  after  having  completed  10  years  pensionable service provided that he has attained  the age of 58 years or if he is in the service of the  Bank  on  or  after  22.05.1998,  after  having  completed 10 years pensionable service provided  that he has attained the age of 60 years”.

33. Analysing the said Rule, the High Court opined that the  

employees would be covered under second part of clause (a)  

of Rule 22(i) which was in existence on the date when the  

petitioner  submitted  his  request  for  voluntary  retirement.  

That  apart,  the  High  Court  has  also  held  even  after  

amendment  on  09.03.2001,  by  which  another  clause  has  

been 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  

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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  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.  

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34. In this context, reference may be made to a decision in  

Bank  of  Baroda  &  Others  V.  Ganpat  Singh  Deora12,  

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 pay to the respondent pension according to the Pension  

Regulations.    Against  the  award  passed  by  the  Industrial  

Disputes Tribunal, the Bank preferred a writ petition before  

the High Court but the said challenge did not meet with any  

success.  This Court referred to the language of the Scheme  

and opined as follows:

12  (2009) 3 SCC 217

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“27. The  conditions  relating  to  completing  15  years  of  service  for  being  eligible  to  apply  for  BOBEVRS, 2001 are special to the Scheme as also  to  the  case  of  those  employees  who  wished  to  apply for voluntary retirement under the aforesaid  Scheme,  if  they  had  completed  or  would  be  completing 40 years of age.  The latter  condition  appears to have been incorporated in view of the  provisions of Regulations 14 and 32 of the Pension  Regulations, 1995,  to enable employees who had  completed  10  years  of  service  to  also  become  eligible  to  apply  for  premature  retirement  under  the Pension Regulations, 1995.

28. However,  we  are  inclined  to  agree  with  Ms  Bhati  that  Regulation  29  does  not  contemplate  voluntary  retirement  under  the  Voluntary  Retirement  Scheme  and  applies  only  to  such  employees who themselves wish to retire dehors  any scheme of voluntary retirement, after having  completed 15 years  of  qualifying service  for  the  said  purpose.  There  is  a  distinct  difference  between  the  two  situations  and  Regulation  29  would not cover the case of an employee opting to  retire  on  the  basis  of  a  voluntary  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  

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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  whereunder  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  treated  differently  from  premature  retirement where the minimum period of qualifying  service has been fixed at 10 years in keeping with  Regulation 14 of the Pension Regulations, 1995.

33. We are, therefore, of the view that not having  completed the required length of qualifying service  

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as  provided  under  Regulation  28  of  the  1995  Regulations,  the  respondent  was  not  eligible  for  pension  under  the  Pension  Regulations,  1995  of  the appellant Bank.”

Being  of  this  view,  the  Court  allowed  the  appeal  

preferred by the Bank.

35. In Bank of India and Another V. K. Mohandas and  

Others13,  the  Court  referred  to  Regulation  28  of  the  

Employees’  Pension  Regulations  1995,  which  had  provided  

superannuation pension and Regulation 29 provided pension  

on voluntary retirement.  After referring to series of decisions,  

the Court held thus:

“31. It  is  also  a  well-recognised  principle  of  construction of a contract that it must be read as a  whole in order to ascertain the true meaning of its  several  clauses  and  the  words  of  each  clause  should  be  interpreted  so  as  to  bring  them  into  harmony  with  the  other  provisions  if  that  interpretation does no violence to the meaning of  which  they  are  naturally  susceptible.  (North  Eastern Railway Co. v. Lord Hastings14)

32. The fundamental position is that it is the banks  who were responsible for formulation of the terms  in  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  

13  (2009) 5 SCC 313 14  (1900) AC 260

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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 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  

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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  already  completed  20  years’  service  as  the  provisions  contained in Regulation 29 met that contingency.

xxx xxx xxx

43. It was submitted that by such construction a  class within the class would be created which is  impermissible. We do not agree. If a special benefit  under  Regulation  29(5)  is  available  to  the  employees who had completed 20 years of service  or more,  by no stretch of imagination,  can it  be  said that it  is  discriminatory to those employees  who had completed  15 years  of  service  but  not  completed  20  years.  In  view  of  the  provision  contained in Regulation 29(5),  if  the optees who  have not completed 20 years get  excluded from  the weightage of five years which has been given  to  the  optees  who  have  completed  20  years  of  service  or  more,  it  is  no  discrimination.  Such  provision can neither be said to be arbitrary nor  can be held to be violative of any constitutional or  statutory provisions. The weightage of five years  under Regulation 29(5) is applicable to the optees  having service of 20 years or more. There is, thus,  basis for  additional benefit.  Merely because the   employees  who  have  completed  15  years  of  service but not completed 20 years of service are  not  entitled  to  weightage  of  five  years  for  qualifying  service  under  Regulation  29(5),  the  employees  who  have  completed  20  years  of  service or more cannot be denied such benefit.

xxx xxx xxx

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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 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.

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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 for the employees to go  in for as they were getting special benefits in the  form of ex gratia and in addition thereto, inter alia,  pension under the Pension Regulations which also  provided for weightage of five years of qualifying  service  for  the  purposes  of  pension  to  the  employees who had completed 20 years’ service”.

37. In  the  said  case,  the  decision  rendered  in  Bank  of  

Baroda (supra) was distinguished by stating thus:

“63. The decision of this Court in Bank of Baroda  is,  thus, clearly distinguishable as the employee  therein  had  not  completed  qualifying  service  much less 20 years of service for being eligible to  the weightage under Regulation 29(5) and cannot  be applied to  the present  controversy nor  does  that  matter  decide  the  question  here  to  be  decided in the present group of matters”.

Eventually, the Court concluded thus:

“66. We hold, as it must be, that the employees  who had completed 20 years of service and were  pension optees and offered voluntary retirement  under VRS 2000 and whose offers were accepted  by the banks are entitled to addition of five years  of  notional  service  in  calculating  the  length  of  service for  the purposes of that  Scheme as per  Regulation  29(5)  of  the  Pension  Regulations,  1995. The contrary views expressed by some of  the High Courts do not lay down the correct legal  position.”

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38. Recently, in  State Bank of Patiala V. Pritam Singh  

Bedi & Others15,  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  

15  2014 (8) SCALE 397

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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  having  completed  more  than  19  years  and  6  months  of  service  in  the  Bank,  they  are  to  be  treated to have completed 20 years of service. The  aforesaid question was neither raised nor decided  in the case of 'Bank of Baroda' or 'Bank of India'.

25.  In  view of  the aforesaid  fact,  the Appellant- Bank cannot derive the benefit of the decision of  this Court in Bank of Baroda as the employees who  were parties before the Court in the said case had  not  completed  20  years  of  service.  As  per  the  

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decision  of  this  Court  in Bank  of  India,  the  Respondents-writ Petitioners having completed 20  years  of  service  are  entitled  to  the  benefit  of  Regulation 29.”

39. Keeping in view the aforesaid pronouncements, I shall  

advert to the Regulations and the Scheme in question.  From  

the aforesaid two decisions,  it  is  graphically  clear  that  the  

Court has read into the scheme, Regulations governing the  

pension.  In the case at hand, as I find, the Regulation 22(i)(a)  

refers  to  three  categories;  twenty  years  of  pensionable  

service and attaining age of fifty years, or as on 1.11.1993 an  

employee in service has completed ten years of pensionable  

service provided he has attained the age of fifty-eight years,  

or  an  employee  to  be  in  service  of  the  Bank  on  or  after  

22.05.1998   and  has  completed  ten  years  of  pensionable  

service 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.  

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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  with  ineligibility  which  need  not  be  

referred to.  Clause 5 deals with amount of ex-gratia.  Clause  

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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 1995 of the Banks which  

were  in  appeal  before  this  Court  and  the  special  salient  

features of  the scheme which stipulated that  an employee  

whose application for  voluntary retirement is accepted and  

relieved  from  the  Bank  shall  be  eligible  for  contributory  

provident  fund  or  own  contribution  of  provident  fund  and  

pension in terms of the employees Pension Regulations 1995,  

in case of those who have opted for pension and have put in  

20 completed years of service in the Bank.  The Court also  

referred  to  Regulations  28  and  29,  which  deals  with  

superannuation  pension  and  the  pension  on  voluntary  

retirement respectively.  The Court also took note of the fact  

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that all employees who have completed 20 years of service  

and the amendment in Regulation 28, which was carried out  

in  2002  with  retrospective  effect  from  1.9.2000  and  the  

amendment inserted a proviso which provided that pension  

shall  also  be  granted  to  an  employee  who  opts  to  retire  

before attaining the age of superannuation but after having  

served for  a  minimum period of  13 years  in  terms of  any  

scheme that may be framed for the purpose by the Bank’s  

Board with the concurrence of the Government.   The Court  

took  note  of  the  fact  that  the  benefits  provided  under  

Regulation  29  were  not  found  to  be  attractive  by  the  

employees and, therefore, the necessity arose for 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”.

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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 of three months in  

Regulation  29(3)  can  be  waived  at  the  discretion  of  the  

banks.   The Court posed the questions as follows:

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“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 examine the question posed,  the Court  thought  it  

appropriate to examine the contract and the circumstances in  

which it was made in order to see whether or not from the  

nature of it, the parties must have made their bargain on the  

footing  that  a  particular  thing  or  state  of  things  would  

continue to exist.  

43. I  have  already  referred  to  Clause  6  of  the  Scheme,  

which deals with ‘other benefits’.  Sub-clause (3) of Clause 6  

stipulates that an employee would be entitled to get pension  

in terms of the State Bank of India Employees Pension Fund  

Rules on the relevant date.   The High Courts have placed  

reliance  on  the  second  part  of  Rule  22(i)(a).   Similar  

contention  has  been advanced before  us.   Per  contra,  Mr.  

Rohtagi would submit that it is Rule 22(i)(c) which would be  

applicable.  I find force in the said submission, for Rule 22(i)

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(a)  deals  with the concept of retirement and 22(i)(c)  deals  

with the concept of retirement on request.  In K. Mohandas  

(supra), the Rule was read into the Scheme in the absence of  

any other postulate.  Same is the case here and, therefore, I  

read  the  Rule  to  the  Scheme.   Interpreting  the  1995  

Regulations, this Court had said that it will apply in entirety  

and,  therefore,  benefit  was extended in  Rule  29(5).   Be it  

noted,  in the said Regulation, it  was categorically provided  

that  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  

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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 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  

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withdraw.  In the absence of withdrawal, there cannot be any  

trace of doubt that the employees would be governed by the  

rules existing at the time of floating of the Scheme which has  

to be read into the Scheme, for the Scheme clearly stipulates  

that the employees availing the benefit of the Scheme would  

be  entitled  to  pension  as  per  the  Pension  Rules.   I  have  

already scanned the anatomy of the Rules and I notice that  

there  is  a  categorical  distinction  between  ‘retirement’  and  

‘voluntary retirement’.  In all the impugned judgments, as I  

find, the High Courts have not appreciated the said distinction  

and applied the Rule pertaining to normal retirement.  If the  

decisions  in  K.  Mohandas (supra)  and  Ganpat  Singh  

Deora (supra) are read carefully, it will go a long way to show  

that  a  voluntary  retirement  and  retirement  are  

distinguishable, if the Rule/Regulations/Scheme distinguishes.  

In the case at hand, it is clear as day that the Rule carves out  

two  categories  of  retirement,  one,  normal  retirement  on  

superannuation  and  second,  retirement  on  request  i.e.  

voluntary retirement, ordinarily called the golden handshake  

and, therefore, the scheme was floated.  In the instant case,  

as  I  perceive,  the  Scheme  which  is  more  beneficial  was  

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provided.  It had the pension and the ex-gratia.  However, it  

had  a  condition  as  enumerated  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  

RESPONDEN T

LENGTH OF  SERVICE

AGE AS  OF  

31.03.200 1

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-Gratia– Rs.6,20,014/-

Mihir  Kumar 12  yrs.  3 58 yrs. Ex-Gratia-

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Nandi  C.A.No.  5035-5037/12

months 24 days 1 month Rs.2,46,576/-

M.P.  Hallan  C.A.  Nos.  2287-88/10

19  yrs.  4  months

58  yrs.  11  months  25  days

Ex-Gratia- Rs.5,55,108/-

R.P.  Nigam  C.A.  No.  10813/13

16 yrs 6 months 56  yrs.  11  months  29  days

Ex-Gratia- Rs.4,40,037/-

46. In  the  case  at  hand,  unlike  the  decision  of  Ganpat  

Singh Deora  (supra), there is no provision for computation  

of  broken  period  and,  therefore,  unless  an  employee  has  

completed 20 years of service, he would not be entitled to  

pension.  Therefore, I have no hesitation in holding that the  

impugned  judgments  and  orders  passed  by  various  High  

Courts, namely, High Court of Judicature at Allahabad, Punjab  

&  Haryana  High  Court  at  Chandigarh  and  High  Court  of  

Calcutta are unsustainable in law and accordingly I set aside  

the same.  

47. Consequently,  the  appeals  are  allowed  and  the  

impugned judgments and orders are set aside.  In the facts  

and circumstances of the case, there shall be no order as to  

costs.  

.............................J. [Dipak Misra]

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New Delhi; February 26, 2015  

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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.2463 OF 2015  

(ARISING OUT OF S.L.P. (C) NO. 3686 of 2007) ASSISTANT GENERAL MANAGER,  STATE BANK OF INDIA & ORS.            ………APPELLANTS

VERSUS RADHEY SHYAM PANDEY            ….RESPONDENT

WITH  C.A. NOS.2287-2288 of 2010

STATE BANK OF INDIA & ORS .          ……. APPELLANTS                      VERSUS M.P. HALLAN & ANR.      ……… RESPONDENTS

C.A. NOS.5035-5037 of 2012 CHAIRMAN, STATE BANK OF INDIA & ORS.  ……. APPELLANTS                      VERSUS MIHIR KUMAR NANDI & ANR.          ……… RESPONDENTS

AND C.A. NO. 10813 of 2013

STATE BANK OF INDIA & ORS.              ……APPELLANTS     VERSUS

RAMESH PRASAD NIGAM                     …….RESPONDENT

J U D G M E N T

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V. GOPALA GOWDA, J.

    I had the opportunity to read the opinion of my  

brother  Judge,  Justice  Dipak  Misra  and  I  am  in  

respectful disagreement with the opinion rendered by  

him in the present appeals.

 2.  Leave granted in SLP (C) No. 3686 of 2007. The  

appellant  Bank-the  State  Bank  of  India,  on  the  

recommendation  of  the  Indian  Banks  Association  (in  

short  “IBA”),  introduced  a  scheme  titled  ‘SBI  

Voluntary  Retirement  Scheme,  2000  (in  short  ‘SBI-

VRS’).  This  scheme  was  introduced  by  SBI  despite  

there being provisions in the State Bank of India  

Employees’  Provident  Fund  Rules,  for  its  employees  

to  avail  premature  retirement/resignation/voluntary  

retirement. SBI-VRS was in operation for a limited  

period and was introduced by the appellant Bank with  

package for the purpose specified in the scheme.  

3. It is the claim of the appellant Bank that clause  

6(c)  of  the  SBI-VRS  provided  for  “other  benefits”  

which is, “Pension in terms of the SBI Employees’  

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Pension Fund Rules on the relevant date (including  

the commuted value of pension).

 4. It is the further claim of the appellant Bank that  

the employees who applied for retirement under SBI-

VRS will be bound by the circular dated 11.01.01,  

issued by the competent authority viz., Dy. Managing  

Director of the Bank clarifying that:-  

“….  However,  as  per  existing  rules  employees who have not completed 20 years  of pensionable service are not eligible  for pension.”

The respondents, who were employees of the State Bank  

of India, applied for voluntary retirement under SBI-

VRS  on  different  dates  between  15.1.2001  and  

31.1.2001. Their applications got accepted and they  

stood retired from the bank service with effect from  

31.3.2001.  

5. In the meanwhile, a parallel development had taken  

place  in  the  appellant  Bank  with  respect  to  its  

employees’ Pension Fund Rules. On 31.1.2001, the age  

of normal retirement of the employees working in the  

appellant  Bank  was  extended  from  58  years  to  60  

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years. Accordingly, the Service Rule as well as Rule  

22(i)(a) of the SBI Pension Fund Rules was amended  

wherein it was added that a member would be entitled  

to pension :  

“….. if he is in the service of the  bank  on  or  after  22.5.1998,  after  having  completed  10  years  pensionable  service provided that he has attained  the age of 60 years.”

6.  The  respondents  made  representations  where  they  

sought pension under Rule 22(i)(a) and were advised  

by the bank that  they were not eligible for pension  

under  Rule  22(i)(a).  The  respondents  filed  Writ  

Petitions  before  respective  High  Courts  of  their  

jurisdictions namely, the High Court of Judicature at  

Allahabad, High Court of Judicature at Kolkata and  

the  High  Court  of  Punjab  and  Haryana,  which  were  

allowed by both the Single Bench and the Division  

Bench of the High Court. Hence, the appeals are filed  

by the appellant Bank before this Court.   

7. I am in respectful disagreement with the opinion  

rendered by my brother Judge in the present appeals.  

However, I intend to assign my reasons for the same,  

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based on certain relevant considerations. The issues  

arising for deliberation in this case are as under:

(i) Whether the respondents in the present  appeals are to be considered for pension  benefits under the provisions of Rule 22(i) (c) of the State Bank of India Employee’s  Pension Fund Rules alone, as claimed by the  appellant Bank?   (ii) Whether  the  State  Bank  of  India  is  entitled to retain its own employment Rules  which  is  not  in  consonance  with  the  subsequent  amendments  made  in  the  Employee’s Pension Regulations, 1995 in all  the public sector undertaking Banks in the  light  of  the  correspondence  between  the  Finance  Ministry  and  Indian  Banks  Association?

(iii) Under  what  legal  provisions  will  the  respondent  employees  be  entitled  to  make  their claims for pension?

Answer to Point no. 1

8.  Pension  benefits  accrue  upon  an  employee  on  

retirement from his employment. Therefore, we first  

need to assess the definition of ‘retirement’ before  

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answering the question on pension benefits for the  

respondents herein. Neither the State Bank of India  

Act,  1955  nor  the  State  Bank  of  India  Employees’  

Pension Fund Rules defines retirement. Therefore, I  

am inclined to read the definition of retirement as  

has  been  mentioned  in  the  State  Bank  of  Patiala  

Employee’s Pension Regulation 1995 which provides for  

the  definition  of  retirement  from  employment  since  

the same is  pari materia to the Employees’ Pension  

Regulation 1995. Section 2(y) of the Regulation reads  

thus:

“2(y)  “retirement”  means  cessation  from  the  Bank’s service-

(a) On attaining the age of superannuation  specified  in  Service  Regulations  or  Settlements;

(b) On  voluntary  retirement  in  accordance  with provisions contained in regulation 29  of these regulations;

(c) On  premature  retirement  by  the  Bank  before attaining the age of superannuation  specified  in  Service  Regulations  or  Settlements.”

In  the  present  case,  however,  clause  (b)  of  the  

definition  will  also  be  read  in  the  light  of  the  

amended Regulation 28 which was intended to provide  

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relief to the employees seeking voluntary retirement  

under  the  VRS  2000,  after  providing  15  years  of  

pensionable service. Thus, from the above definition,  

one  is  left  with  no  doubt  that  the  employees  who  

availed VRS 2000 have ‘retired’ from the Bank as per  

the definitions.

 It is pertinent now to highlight the object and  

purpose of the SBI-VRS. At a meeting conducted on  

13.6.2000 between the Finance Minister and the Chief  

Executives  of  the  Public  Sector  Banks,  the  human  

resource and manpower planning in Public Sector Banks  

was reviewed. A committee was constituted to examine  

the  issues  confronting  the  Public  Sector  Banks  in  

this  regard  and  to  suggest  suitable  remedial  

measures.  The  committee  had  observed  that  high  

establishment  costs  and  low  productivity  in  Public  

Sector  Banks  affect  their  profitability.  It  was  

hence,  necessary  to  convert  their  human  resources  

into  assets  compatible  with  business  strategies  

through  a  variety  of  measures  including  constant  

upgradation of skills, achieving proper age and skill  

profile, creating opportunities for lateral as well  

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as  vertical  career  progression  and  including  fresh  

skilled  personnel  with  technical  and  professional  

skills for new business opportunities.

 9. The data available with IBA indicated that 43%  

of employees in Public Sector Banks are in the 46+  

age group and only 12% are in the 25-35 years age  

group.  This  pattern  of  jobs  in  the  public  sector  

Banks,  according  to  the  committee,  had  serious  

implications  for  the  Banks  with  reference  to  

mobility,  training,  development  of  skills  and  

succession  plans  for  high  level  positions.  This,  

coupled  with  excess  manpower  wherever  it  exists,  

would come in the way of induction of new skills and  

proper career progression.

 The  Committee  had  therefore  recommended  

introduction  of  a  Voluntary  Retirement  Scheme  that  

would assist the Bank  in their effort to optimize  

their  human  resources  and  achieve  a  balanced  age  

skills profile in keeping in mind with the business  

strategies. The Banks were further advised by the IBA  

to implement the scheme in right earnest.

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10. From the memorandum of the Voluntary Retirement  

Scheme presented by the appellant Bank itself, it is  

clear that the SBI-VRS scheme was introduced for the  

purpose of business enhancement and profitability of  

the  Bank  itself  and  not  for  the  benefits  of  the  

employees per se. The intention of the Public Sector  

Banks  including  the  appellant  Bank,  in  introducing  

the  VRS  2000,  is  rightfully  highlighted  in  the  

decision  of  this  Court  in  Bank  of  India  v. K.  

Mohandas & Ors.16 which read as under:

“36. ………..The banks decided to shed surplus  manpower.  By  formulation  of  the  special  scheme (VRS 2000), the banks intended to  achieve  their  objective  of  rationalizing  their force as they were overstaffed. The  special Scheme was, thus, oriented to lure  the  employees  to  go  in  for  voluntary  retirement. In  this  background,  the  consideration that was to pass between the  parties  assumes  significance  and  a  harmonious construction to the Scheme and  the Pension Regulations, therefore, has to  be given”.

         (emphasis supplied)

In ordinary situation, an employee who retires either  

on reaching the age of superannuation, or by request  

in writing after completing the prescribed number of  

16 (2009) 5 SCC 313

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years,  become  eligible  to  pension  under  the  State  

Bank of India Employee’s Pension Rules. The pertinent  

provisions  under  the  SBI  Employees  Pension  Rules  

relating to pension of employees, read as under:

“22. (i). A member shall be entitled to a  pension under these rules on retiring from  the Banks service-

a).  After  having  completed  twenty  years’ pensionable service provided  that  he  has  attained  the  age  of  fifty  years  or  if  he  is  in  the  service  of  the  Bank  on  or  after  1.11.93, after having completed ten  years  pensionable  service  provided  that  he  has  attained  fifty  eight  years or if he is in the service of  the  Bank  on  or  after  22.05.1998,  after  having  completed  ten  years  pensionable service provided that he  has attained the age of sixty years.  

     XXX       XXX      XXX

c).  After  having  completed  twenty  years  pensionable  service,  irrespective  of  the  age  he  shall  have  attained  at  his  request  in  writing. “

11.  This  situation  is  altered  temporarily  by  the  

introduction of the SBI-VRS. Therefore, it is also  

important to understand the framework of SBI-VRS. In  

the absence of the SBI-VRS, the respondents had the  

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option  of  seeking  voluntary  retirement  under  Rule  

22(i)(c)  which  in  fact,  the  respondents  did  not  

avail.  Instead  they  availed  the  SBI-VRS.  It  is  

therefore  pertinent  to  see  how  the  SBI-VRS  was  

functioning and what the respondents seeking     SBI-

VRS might have reasonably foreseen while availing the  

scheme. When the application of voluntary retirement  

of respondent Radhey Shyam Pandey was accepted by the  

appellant Bank on 18.3.2001, he still had about 9  

months services left and he was 59 years and 3 months  

old.

 As  on  31st March,  2001,  when  his  voluntary  

retirement from service became effective, he had been  

on pensionable service for 19 years, 9 months and 18  

days.  

12.  If  the  respondent  had  chosen  to  retire  by  

superannuation after attaining 60 years of age which  

was the normal age of retirement, he would have put  

in  a  little  more  than  20  years  of  pensionable  

service. He consequently, would have become eligible  

to pension. However, when he retired on 31.3.2001, he  

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still had 2 and ½ months short to complete 20 years  

of  service.  It  is  pertinent  to  understand  what  

prompted him to opt for the SBI-VRS at this stage.

13. In clause 5 of the scheme, the incentive of the  

Voluntary Retirement Scheme is mentioned. It is an  

ex-gratia payment of 60 days salary for every year of  

completed service. Since, the respondent had finished  

20 years of service approximately, he would have been  

entitled to 40 months of salary as ex-gratia.

 Pension on the other hand, is calculated as half  

month’s salary per month. Therefore, by utilizing the  

SBI-VRS,  although  the  respondent  had  given  up  9  

months service still left, he would have gained 40  

months incentive. To add to this, he becomes eligible  

for pension, then he in addition to ex-gratia, will  

get half month’s salary as his pension from the time  

he retires. This can be considered as a good bargain  

from  availing  the  SBI-  VRS.  On  reasonable  

presumption, it can be ascertained that it is this  

benefit  provided  by  the  SBI-VRS  through  ex-gratia  

payment  along  with  pension  which  prompted  the  

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employees  in  availing  the  benefits  of  the  scheme  

rather  than  retiring  on  superannuation  under  the  

Rules.

14.  On  the  other  hand,  if  he  is  not  entitled  to  

pension, then availing SBI-VRS is unwise since the  

respondent has given up his half month’s salary worth  

pension  for  his  working  period  in  return  of  40  

months’ salary.  

SBI-VRS is admittedly a contract between the Bank  

and its employees as has been recognized in the case  

of Bank of India v. K. Mohandas case mentioned supra.  

The  application  of  the  Voluntary  Retirement  Scheme  

meant that the Bank employees agreed with the Bank  

that it would be bound by the scheme thereby entering  

into  a  contract.  However,  clause  6(c)  of  SBI-VRS  

states:

“6. Other Benefits :

   XXX XXX    XXX

   XXX XXX    XXX

(c) Pension in terms of State Bank  of  India  Employees’  Pension  Fund  

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Rules  on  the  relevant  date  (including  commuted  value  pension).”

15. Considering that the incentives of SBI-VRS are  

distinct from the benefits provided under Rule 22(i)

(c) of the State Bank Employees Pension Fund Rules  

and  also,  that  Clause  6(c)  of  SBI-VRS  does  not  

specifically state that the pension benefits are to  

be  provided  under  rule  22(i)(c)  of  SBI  Employees  

Pension  Fund  Rules,  the  claim  for  pension  by  the  

respondents cannot be decided solely on the basis of  

the provision of Rule 22(1)(c) of the State Bank of  

India Employees’ Pension Rules.

Answer to Point no. 2

16. It has been claimed by the appellant Bank that  

State Bank of India has its own Pension Rules that  

are different from the Employees’ Pension Regulations  

1995 which operate in the other Public Sector Banks.  

The claim made by the appellant Bank that it is not  

bound by the Pension Regulations 1995, is premised on  

the assumption that the employees of the State Bank  

of India form a distinct class of employment from the  

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employees of the other Public Sector Banks on the  

ground of reasonable and intelligible differentia.

 This  conclusion  by  the  appellant  Bank  is  not  

warranted since all the employees of Public Sector  

Bank  forms  one  homogenous  class  since  all  the  

fourteen Public Sector Banks which were formed under  

the  Banking  Companies  (Acquisition  and  Transfer  of  

Undertakings) Act, 1970 and the six banks under the  

Banking  Companies  (Acquisition  and  Transfer  of  

Undertakings) Act, 1980, are subject to the control  

of the Central Government. It is pertinent to note  

that  Section  19  of  both-  The  Banking  Companies  

(Acquisition  and  Transfer  of  Undertakings)  Acts  of  

1970 and 1980 and Section 50 of the State Bank of  

India  Act,  1955,  vest  the  power  on  the  Central  

Government  to  make  consistent  rules  for  all  the  

Public Sector Banks.

 Section 50(2)(o) of State Bank of India Act, 1955  

reads thus:

“50. Power of Central Government to make  regulations: (1) The Central Board may,  after consultation with the Reserve Bank  

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and  with  the  previous  sanction  of  the  Central  Government  [by  notification  in  the Official Gazette] make regulations,  not inconsistent with this Act and the  rules made thereunder, to provide for all  matters for which provision is expedient  for the purpose of giving effect to the  provisions of this Act.

(2) In particular and without prejudice  to the generality of the foregoing power,  such regulation may provide for-

 XXX XXX XXX

(o)  The  establishment  and  maintenance  of  superannuation,  pension,  provident  or  other  funds  for the benefit of the employees of  the State Bank or of the dependent  of  such  employees  or  for  the  purposes of the State Bank, and the  granting  of  superannuation  allowances,  annuities  and  pensions  payable out of any such fund;]”

17.  The  Central  Government  through  a  letter  dated  

5.9.2000  directed  the  Indian  Banks  Association  to  

formulate a uniform norm for pensions for employees  

voluntarily retiring under SBI-VRS 2000 and the same  

was  formulated  by  the  Indian  Banks  Association  on  

11.12.2000.  Therefore,  the  State  Bank  of  India  is  

bound by the directions issued in this regard by the  

Indian  Banks  Association  under  Section  50(2)(o)  of  

the State Bank of India Act, 1955.  

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18. The appellant Bank, State Bank of India is an  

instrumentality of the State as has been held by this  

Court in the case of  Bank of India & Ors. v.  O.P.  

Swarnakar & Ors.17  which reads as under:

“48…But the State Bank of India as  also  the  nationalized  banks  are  “States”  within  the  meaning  of  Article  12  of  the  Constitution  of  India.  The  services  of  the  workman  are also governed by several standing  orders  and  bipartite  settlements  which  have  the  force  of  law.  The  banks,  therefore,  cannot  take  recourse to “hire and fire” for the  purpose of terminating the services  of  the  employees.  The  banks  are  required to act fairly and strictly  in  terms  of  the  norms  laid  down  therefor.  Their  actions  in  this  behalf  must  satisfy  the  test  of  Articles  14  and  21  of  the  Constitution of India.

Therefore, the appellant Bank cannot engage in acts  

which are antithetical to equality. In the case of  

E.P.  Royappa v.  State  of  Tamil  Nadu18,  the  

constitution Bench of this Court held as under:

“Equality is a dynamic concept with many  aspects and dimensions and it cannot be  "cribbed  cabined  and  confined"  within  

17 (2003) 2 SCC 721 18 AIR 1974 SC 555

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traditional and doctrinaire limits. From  a positivistic point of view, equality is  antithetic  to  arbitrariness.  In  fact  equality  and  arbitrariness  are  sworn  enemies; one belongs to the rule of law  in  a  republic  while  the  other,  to  the  whim and caprice of an absolute monarch.  Where an act is arbitrary it is implicit  in it that it is unequal both according  to political logic and constitutional law  and is therefore violative of Art. 14,  and if it affects any matter relating to  public employment, it is also violative  of Art. 16. Arts. 14 and 16 strike at  arbitrariness in State action an( ensure  fairness and equality of treatment. They  require that State action must be based  on valent relevant principles applicable  alike  to  all  similarly  situate  and  it  must not be guided by any extraneous or  irrelevant  considerations  because  that  would be denial of equality. Where the  operative  reason  for  State  action,  as  distinguished from motive inducing from  the  antechamber  of  the  mind,  is  not  legitimate and relevant but is extraneous  and  outside  the  area  of  permissible  considerations, it would :amount to mala  fide exercise of power and that is hit by  Arts. 14 and 16.”

19. Even  though  the  SBI-VRS  is  in  the  nature  of  

contract, it has to be interpreted under the scanner  

of Article 14 of the Constitution of India. In the  

process of implementation of the Voluntary Retirement  

Scheme on its own terms, the appellant Bank being an  

associate Bank of the Indian Banks Organization, it  

cannot set rules and procedures which deviates from  

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the  standard  and  safeguards  set  by  the  Central  

Government  in  consensus  with  the  Indian  Banks  

Association.

20. It is the claim of the appellant Bank that the  

SBI-VRS provides the optees with handsome ex-gratia  

amount on retirement. It does not however mean that  

the appellant is entitled to deprive the respondent  

of his pension on the ground that he has been given  

handsome ex-gratia amount under the scheme. Pension  

received by an employee upon his retirement is not a  

bounty as has been held in the case of  Deokinandan  

Prasad v. State of Bihar19 as under: “Pension is not a bounty payable on the  sweet will and pleasure of the Government  and that, on the other hand, the right to  pension is a valuable right…”  

21. The same proposition of law was reiterated by the  

Constitution Bench of this Court in the case of D.S.  

Nakara v. Union of India20 wherein this Court held as  

under:

“20. The antiquated notion of pension being  a  bounty,  a  gratuitous  payment  depending  upon  the  sweet  will  or  grace  of  the  

19 1971 SCR 634 20 (1983) 1 SCC 305

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employer  not  claimable  as  a  right  and,  therefore,  no  right  to  pension  can  be  enforced  through  court  has  been  swept  under  the  carpet  by  the  decision  of  the  Constitutional Bench in  Deokinandan Prasad  v.  State  of  Bihar  wherein  this  court  authoritatively  ruled  that  pension  is  a  right and the payment of it does not depend  upon the discretion of the Government but  is governed by the rules and a government  servant coming within rules is entitled to  claim pension. It was  further held that  the grant of pension does not depend upon  anyone’s discretion.  It is only for the  purpose  of  quantifying  the  amount  having  regard to service and other allied matters  that it may be necessary for the authority  to pass an order to that effect but the  right  to  receive  pension  flows  to  the  officer not because of the order but by the  virtue of rules. This view was reaffirmed  in State of Punjab v. Iqbal Singh.”

(emphasis supplied)  

Therefore,  depriving  the  respondents  seeking  

SBI-VRS  of  their  right  to  pension  solely  on  the  

ground  that  they  have  availed  voluntary  retirement  

under a scheme while providing less than 20 years of  

service and also on the ground that they have been  

provided  with  handsome  ex-gratia  amount  on  their  

retirement, is arbitrary and attracts the wrath of  

Article  14  of  the  Constitution  of  India.  This  is  

particularly so, because SBI-VRS was introduced for  

the benefit of the Public Sector Banks which included  

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the appellant Bank. It was not a welfare scheme which  

provided  the  respondents  with  multiple  offers  to  

choose from. Therefore, the appellant Bank at this  

stage, cannot absolve itself from the responsibility  

of granting the respondents what is due to them by  

virtue  of  providing  pensionable  services,  on  the  

pretext of having provided ex-gratia amount.  

22. In another case of  Roop Chand Adlakha v.  Delhi  

Development Authority21, this Court held as under:

“To  overdo  classifications  is  to  undo  equality.  The  idea  of  similarity  or  dissimilarity of situations of persons,  to justify classifications, cannot rest  on  merely  differentia  which  may,  by  themselves be rational or logical, but  depends on whether the differences are  relevant  to  the  goals  sought  to  be  reached  by  the  law  which  seeks  to  classify.  The  justification  of  the  classification must needs, therefore, to  be sought beyond the classification. All  marks of distinction do not necessarily  justify  classification  irrespective  of  the relevance or nexus of objects sought  to be achieved by the law imposing the  classification.”                    (emphasis supplied)

23. In the case on hand, the classification between  

employees who have voluntarily retired under the SBI-

21 1988 (Supp 3) SCR 253  

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VRS and those who have retired under the same scheme  

introduced by the other Public Sector Banks, is not  

rational since they constitute the employees of the  

appellant Bank into a distinct class on the basis of  

the VRS 2000 scheme introduced by the appellant Bank  

and the same scheme introduced by other Public Sector  

Banks, with no intelligible differentia. The payment  

of  ex-gratia  cannot  be  held  against  the  employees  

since it cannot be expected of a person to give up  

his service before superannuation without reasonable  

incentives. What the appellant Bank intends to show  

as the benefit of the employees seeking VRS under the  

scheme,  is  actually  meant  for  the  benefit  of  the  

appellant Bank itself.  

24. In setting up schemes such as the SBI-VRS, the  

appellant Bank, which is the instrumentality of the  

State  under  Article  12  of  the  Constituion,  cannot  

deviate from its constitutional duties as has been  

held in the case of  D.S. Nakara v.  Union of India  

(supra) :

“36. Having  set  out  clearly  the  society  which we propose to set up, the direction in  which  the  State  action  must  move,  the  

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welfare State which we propose to build up,  the  constitutional  goal  of  setting  up  a  socialist  State  and  the  assurance  in  the  Directive  Principles  of  State  Policy  especially of security in old age at least  to those who have rendered useful service  during  their  active  years,  it  is  indisputable,  nor was  it questioned,  that  pension  as  a  retirement  benefit  is  in  consonance with and in furtherance of the  goals  of  the  Constitution.  The  goals  for  which  pension  is  paid  themselves  give  a  fillip and push to the policy of setting up  a  welfare  State  because  by  pension  the  socialist  goal  of  security  of  cradle  to  grave is assured at least when it is mostly  needed and least available, namely, in the  fall of life.

25. Moreover, this decision of the appellant Bank to  

distinguish  between  two  sets  of  employees,  goes  

against Article 39 of the Constitution of India which  

directs the State to make policies to ensure equal  

pay  for  equal  work.  The  appellant  Bank  being  an  

instrumentality  of  the  State,  is  not  permitted  to  

make such discriminations. Hence, the appellant Bank  

is liable to implement the amendments made by the  

Indian Banks Association to accommodate the grant of  

pension  to  those  employees  who  sought  voluntary  

retirement through SBI-VRS.

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Answer to point no. 3

26.  Under  Rule  22  of  the  State  Bank  of  India  

Employees’ Pension Rules, an employee’s entitlement  

to pension accrues on retiring from the Bank service  

on one of the following conditions:

Under Rule 22(1)(a): (a) After  having  completed  20  years  pensionable  

services provided that he has attained the age of 50  

years OR

(b) If he was in the service on or after 1.11.93,  

then  after  having  completed  10  years  of  service  

provided that he has attained the age of 58 years, OR

(c) If he was in the service on or after 22.5.98,  

then  after  having  completed  10  years  pensionable  

service provided, that he has attained the age of 60  

years.

Under Rule 22(1)(c): (d) After  20  years  of  pensionable  service,  at  his  

request  in  writing  (where  the  entitlement  is  to  

proportionate pension).

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On  the  other  hand,  the  un-amended  Employee’s  

Pension Regulations, 1995 provide for pension under  

the following condition:

Regulation 28 reads as under: “28. Superannuation Pensions:-

Superannuation  pension  shall  be  granted to an employee who has retired  on  his  attaining  the  age  of  superannuation  specified  in  the  Service Regulations and Settlements.”

Regulation 29 reads as under:

“29. Pension on Voluntary Retirement: (1) On  or  after  the  1st day  of  November, 1993 at any time, after an  employee has completed twenty years of  qualifying service he may, by giving  notice of not less than three months  in  writing   to  the  appointing  authority retire from service; ……”

27. It can be observed that the State Bank of India  

Employees’  Pension  Rules  and  the  un-amended  

Employee’s Pension Regulation, 1995 are consistent in  

so far as both Rules set the eligibility of pension  

on voluntary retirement service only after 20 years  

of pensionable service. However, it is imperative to  

understand  the  amendment  which  the  correspondence  

between  the  Finance  Ministry  and  Indian  Banks  

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Association, following the introduction of the SBI-

VRS, brought about.  

28. By a letter (F.no.4/8/4/2000-IR), dated 5.9.2000,  

written by the Finance Ministry to the Indian Banks  

Association, the Ministry recommended to the IBA to  

suggest amendments to Regulation 29 of the Pension  

Regulations in the following terms:

“I am directed to refer to this Division’s  Letter  no.  11/1/99  IR  dated  29-8-2000  conveying the Government’s no objection for  circulation  of  Voluntary  Retirement  Scheme  in  public  sector  banks.  The  Scheme,  inter  alia, provides that employees with 15 year  of  service  or  40  years  of  age  shall  be  eligible to take voluntary retirement under  the Scheme. As per the provisions contained  in Regulation 29 of the Pension Regulations,  an  employee  can  take  voluntary  retirement  after  20  years  of  qualifying  service  and  thereafter  becomes  eligible  for  pension.  Thus employees having rendered 15 years of  service or completing 40 years of age, but  not  having  completed  20  years  of  service  shall  not  be  eligible  for  pensionary  benefits  on  taking  voluntary  retirement  under the Scheme.

In order to ensure that such employees do  not lose the benefits of pension, IBA may  work out modalities and suggest amendments,  if any, required to be made in the Pension  Regulations to ensure that these employees  also get the benefits of pension”.  

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Pursuant to this correspondence, the Indian Banks  

Association suggested an amendment to the Regulations  

in the following terms:

“INDIAN BANKS ASSOCIATION  STADIUM HOUSE, 6th FLOOR  BLOCK 2 VEER NARIMAN ROAD MUMBAI- 400020

PD/CIR/76/G2/G4/

December 11, 2000

VOLUNTARY RETIRMENT SCHEME IN PUBLIC SECTOR  

BANKS  AMENDMENTS  TO  BANK  (EMPLOYEES’)  

PENSION REGULATIONS, 1995

Designated  officers  of  all  Public  Sector  

Banks.

Dear Sirs, Please  refer  to  our  circular  letter  no.  PD/CIR/76/G4/993  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 benefits of  CPF,  Pension,  Gratuity  and  encashment  of  accumulates privilege leaves, 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 superannuation except  under  circumstances  as  in  Regulations  29,  30, 32 and 33.  We had, therefore, taken up  

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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 minimum 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 Pareira)

PERSONNEL ADVISER”

Pursuant  to  this  suggestion,  Regulation  28  of  

Employees  Pension  Regulations,  1995  was  amended  to  

include  the  proviso  with  retrospective  effect  from  

1.9.2000 as under:

“Provided that pension shall also be  granted to an employee who opts to  retire before attaining the age of  

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superannuation,  but  after  having  served for a minimum period of 15  years in terms of any scheme that  may be framed for the purpose by the  Bank’s Board with the concurrence of  the Government.”  

This  Court,  in  the  case  of  Bank  of  India v.  K.  

Mohandas (supra)  further  clarified  the  intention  behind  amendment  of  Regulation  28  and  its  

retrospective  application.  The  relevant  paragraphs  

read as under:

“40.……..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. ….

41. Even if it be assumed that by  insertion  of  the  proviso  in  Regulation  28  (in  the  year  2002  with  effect  from  1-9-2000),  all  classes  of  employees  under  VRS,  2002 were intended to be covered,  such  amendment  in  Regulation  28,  needs  to  be  harmonized  with  Regulation 29……”

29.  While  answering  Point  no,  2  in  favour  of  the  

respondents,  I  held  that  the  State  Bank  of  India  

should implement the amendment made to Rule 28 of the  

Employees Pension Regulation in granting pension to  

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the employees seeking voluntary retirement under SBI-

VRS.  

 I therefore, answer point no 3 in favour of the  

respondents and direct the appellant Bank to grant  

pension to the employees seeking voluntary retirement  

under  the  SBI-VRS  after  completing  15  years  of  

pensionable service. Therefore, the respondent Radhey  

Shyam Pandey, having completed 19 years 8 months and  

18 days of service, respondent  M.P. Hallan, having  

completed 19 years and 4 months of service and the  

respondent R.P. Nigam, having completed 16 years and  

6 months of service, become eligible for pension as  

per the amended Regulation 28 of Employees Pension  

Rules, 1995. By virtue of power vested in this Court  

under Article 142 Constitution of India, I hold that  

the pension relief is also extended to all the other  

employees who have availed SBI-VRS 2000 after having  

completed 15 years of pensionable service. Thus, C.A.  

No.@ SLP (C) No.3686 of 2007, C.A. Nos.2287-2288 of  

2010 and C.A. No. 10813 of 2013 are dismissed.

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30. The C.A. Nos.5035-5037 of 2012 of the appellant  

Bank succeed in that respondent Mihir Kumar Nandi,  

having  completed  12  years  3  months  and  4  days  of  

service, becomes ineligible for pension benefits.

 31. All the appeals are disposed of accordingly. No  

costs.

………………………………………………… J.                           [V. GOPALA GOWDA]

New Delhi, February 26, 2015  

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