Supreme Court’s Views on Using the Words “Resignation” in Letter Given at the Time of Quitting the Bank
R K Pathak
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Comments by ABS :
We are reproducing below an article by Mr R K Pathak which discusses the various case laws which can be considered as favourable to the bankers who have used the words like “resignation” at the time they quit the bank. This can be useful to the bankers who have resigned from bank.
Article by R K Pathak :
Indian Banking Industry specifically Public Sector Banks have around 10 lacs employees and these comprises of Award staff ( Workman – Sub staff & Clerical Cadre) and Supervisory Staff ( Officers from scale I to VII). The Service conditions of Award staff are governed by Shastry Award & Bipartite settlement whereas of officers the same are governed by OSR and Officer Employees [Conduct] Rules 1976.
Interestingly, the word “Resignation” is not defined in Officer Service Regulation; Employees Pension Regulation; Sastry Award or bipartite Settlement. However, banks are still forfeiting the pensionary benefit on Resignation by an employee.
Moreover, IBA has admitted that concept of voluntary retirement is absent for award staff & also for officers in some Public Sector Banks. Banks have also admitted in reply under RTI, that “the act of Resignation is neither Misconduct under SERVICE RULES / bipartite settlement nor in Officer Employees [Conduct] Rules 1976.
On 29/10/1993 settlement for introduction of Pension scheme was signed between IBA & Officers Association & Workman Union and the complete Scheme after protracted negotiations was finalized & was circulated the Banks by IBA on 17/03/1994 & was adopted by Board of directors of the Banks & options were called from the Employees. The Regulation 10 of BEPR 1993 states ““Forfeiture of service”: Dismissal, termination of or resignation by an employee from the service except where the Service Regulations/Service Rules/Settlements do not disentitle such employee from receiving superannuation benefits shall forfeit his entire past service and consequently shall not qualify for pension payment.”
But IBA while seeking approval of the GOI, made changes in Forfeiture clause UNILATERALLY as “Forfeiture of Service”: Resignation or dismissal or removal or termination of employee from the service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits;…” by deleting “except where the Service Regulations/Service Rules/Settlements do not disentitle such employee from receiving superannuation benefits “.
As a result of this unilateral act, banks are losing the battle in High Court and Supreme Court which is evident from the case of Vijaya Bank Resignee employees, Bank of Baroda V S K Kool, Andhra Bank CRS employees case, D Malleshwar Rao case and so on.
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(A)Case : Sashikala Devi vs Central Bank of India (Decision in December 2014):
Gist of the Case : In Civil Appeal No(s)11488 of 2014,SLP(C) No. 36909 of 2012 decided on 17/12/2014. [You can download the judgment by clicking on the link here]. Supreme Court directed Central Bank of India to release the pension to resignee & gist of the case is as under:-
Mr. Mauziram, clerk , an employee of Central Bank of India after serving for 34 years sought resignation on medical ground by giving one month notice to the Bank. Bank accepted the resignation & relieved him on 28/11/2007. After reliving Mr. Mauziram on 18th December 2007 requested Bank to treat the notice of resignation dated 8/10/2007 as notice of Voluntary Retirement and release terminal benefits. Bank did not concede to his request which lead to Writ Petition in Patna High court [13458 of 2008] which was dismissed on 11/11/2011 (You can download the judgment by clicking on the link here)
Against the order of Patna High Court, SLP was filed in Supreme Court in 2012 which was decided on 17/12/2014 and allowed pension to Shashikala devi[ spouse of Mr. Mauziram].
The observations / findings of Supreme Court in the matter are as under:-
The short question that falls for our consideration in this appeal by special leave is whether letter dated 8th October, 2007 sent by late Shri Mauzi Ram, husband of the appellant, was in essence a letter seeking pre-mature retirement on medical grounds or a letter of resignation from the service of the respondent-bank. The High Court has while dismissing the writ petition and the appeal filed by the deceased-employee declared that the letter in question was a letter of resignation that resulted in forfeiture of the entire service rendered by the employee disentitling him to claim any pensionary benefits. The correctness of that view is under challenge in this appeal filed by the widow of the deceased employee who passed away during the pendency of the proceedings before the High Court.
The bank treating the letter of the employee as a letter of resignation from service relieved him apparently because the expression used in the letter was resignation which obviously meant that no financial burden would fall upon the bank in terms of retrial benefits otherwise payable to an employee who has served for the requisite number of years entitling him to retirement.
From the reading of Regulation 14, 22 & 29 of Pension Regulation 1995,it is evident that an employee who has completed 20 years of qualifying service is entitled to seek voluntary retirement from the service of the Bank provided he gives a notice of not less than three months in writing to the appointing authority in that regard. What is important is that in terms of proviso to Regulation 29(2), if the appointing authority does not refuse to grant permission for retirement before the expiry of the period specified in the said notice, the retirement becomes effective from the date of the expiry of the said period. It is also noteworthy that in terms of Regulation 29(3) (a) the appointing authority is competent to curtail the period of notice of three months in appropriate cases subject to the condition that the employee shall not apply for commutation of his pension before the expiry of the notice period.
In the case at hand, Mauzi Ram-the deceased employee had rendered nearly 34 years of service in the respondent-bank. He was, therefore, qualified to receive pension in terms of the Regulations applicable to him. It is also evident from a reading of Regulation 29 that the deceased-employee was entitled to seek voluntary retirement in terms of Regulation 29 for he had completed more than twenty years of service by the 8th October 2007. As on 8th October, 2007 the deceased-employee was entitled either to resign from service or to seek premature retirement in terms of Regulation 29 (supra).
The question in that backdrop is whether letter dated 8th October, 2007 was a letter of resignation simplictor or could as well be treated to be a letter seeking voluntary retirement. The High Court, as seen earlier, has taken the view that the letter was one of resignation that resulted in the forfeiture of past service under Regulation 22 of the Regulations. The High Court appears to have been impressed by the use of the word “resignation” in the employee’s letter dated 8th October,2007. The use of the expression “resignation”, however, is not, in our opinion, conclusive.
That is, in our opinion, so even when this Court has always maintained a clear distinction between “resignation” and “voluntary retirement”. Whether or not a given communication is a letter of resignation simplictor or can as well be treated to be a request for voluntary retirement will always depend upon the facts and circumstances of each case and the provisions of the Rules applicable. The distinction between the expressions “resignation” and“voluntary retirement” was elaborately discussed by this Court in UCO Bank and Ors. v. sanwar Mal(2004) where this Court was examining the provisions of UCO Bank (Employees’) Pension Regulations 1995 applicable to a bank employee who had resigned from service after giving an advance notice to the appointing authority. So also in Reserve Bank of India and Anr V. CECIL Dennis Solomon and Anr.this Court was considering the provisions of the Reserve Bank of India Pension Regulations, 1990 while it made a distinction between what is resignation on the one hand and voluntary retirement on the other. At the same time a long line of decisions have recognised that pension is neither a bounty nor a matter of grace but is a payment for pastservices rendered by the employee. Decisions of this Court in D.S. Nakara and Ors V. Union of India (1983)1 SCC 305, and Chairman Railway Board and Ors. V C.R Hangadhamaiah and Ors.(1997), are clear pronouncements on the subject. Reference may also be made to Sudhir Chandra Sarkar v. Tata Iron and Steel and Or
It is also well settled by several decisions of this Court that while interpreting a statute the Court ought to keep the legislative intent in mind and eschew an interpretation which tends to restrict, narrow down or defeat its beneficial provisions.
Let us now examine the true purport of the letter submitted by the deceased-employee in the light of the above principles. Two distinct aspects stand out from the record. The first is that the deceased-employee had served for more than 34 years in the bank and was, therefore, entitled to seek voluntary retirement if he chose to leave prematurely. The second aspect which is equally important is that the employee had chosen to leave the employment not because of any disciplinary or other action proposed against him or any order of transfer or posting with which he was unhappy or because any proceedings had been started that could have visited him with any civil consequence if he had continued in service, but because of his physical inability to continue in service on account of diseases with which he was stricken. This is evident from the fact that not only in the letter, but also in documents enclosed therewith the employee has laid great stress on the reasons for leaving the service prematurely. No such reasons were necessary if the employee actually intended to resign in the true sense of that term. Reasons why he was quitting were obviously meant to support his case that he was doing so under the compulsion of the circumstances.
The refusal of the management of the bank to treat letter dated 8th October, 2007 as a request for premature retirement was conveyed to the employee on 24th June, 2008 in which the respondent-bank made reference to the decision of this Court in UCO Bank’s case (supra) whereby Regulation 22 of the Pension Regulations was upheld by this Court.
When viewed in the backdrop of the above facts, it is difficult to reject the contention urged on behalf of the appellant that what the deceased-employee intended to do by his letter dated 8th October, 2007 was to seek voluntary retirement and not resignation from his employment. We say so in the light of several attendant circumstances. In the first place, the employee at the time of his writing the letter dated 8th October, 2007 was left with just about one and a half years of service. It will be too imprudent for anyone to suggest that a bank employee who has worked with such commitment as earned him the appreciation of the management would have so thoughtlessly given up the retiral benefits in the form of pension etc, which he had earned on account of his continued dedication to his job. If pension is not a bounty, but a right which the employee acquires on account of long years of sincere and good work done by him, the Court will be slow in presuming that the employee intended to waive or abandon such a valuable right without any cogent reason. At any rate there ought to be some compelling circumstance to suggest that the employee had consciously given up the right and benefit, which he had acquired so assiduously.
In Union of India and Ors. v. Lt. Col. P.S. Bhargava 1997) 2 SCC 28, this Court was dealing with a case where the respondent was denied pension on the ground that he had voluntarily retired from service.
Dismissing the appeal filed by the Union of India, this Court held that Regulation 16 of the Pension Regulations applicable to the respondent did not deal with voluntary resignations and could not, therefore be pressed into service to deny pension to respondent. This Court said:
”19. Regulation 16 does not cover a case of voluntary resignation. Regulation 16(b] does refer to a case where an officer who has to his credit the minimum period of qualifying service being called upon to resign whose pension can be reduced. Had the Regulations intended to take away the right of a person to the terminal benefits on his voluntary resigning, then a specific provision similar to regulation 16[b]would have been incorporated in the Regulations but this has not been done.Once an officer has to his credit the minimum period of qualifying service, he earns a right to get pension and as the Regulations stand, that right can be taken away only if an order is passed under Regulation3 or 16. The cases of voluntary resignations of officers, who have to their credit the minimum period of qualifying service are not covered by these two Regulations and, therefore, such officers, who voluntarily resign, cannot be automatically deprived of the terminal benefits.”
In Sheel Kumar Jain V. New India Insurance Company limited and Ors. (2011)12 SCC 197, the facts were Some what similar to the case at hand. The appellant in that case was an employee of an Insurance Company governed by a Pension Scheme which provided, as in the case at hand, forfeiture of the entire service of an employee should he resign from his employment. The appellant submitted a letter of resignation which resulted in denial of his service benefits under the scheme aforementioned. This Court, however, held that since the employee had completed the qualifying service and was entitled to seek voluntary retirement under the scheme he could not be said to have resigned so as to lose his pension.
In the result this appeal succeeds and is hereby allowed. The impugned order passed by the high Court is, hereby, set aside and the writ petition filed by the deceased-employee allowed with a direction to the respondent-bank to treat letter dated 8th October, 2007 as a notice for voluntary retirement of the employee and for curtailment for three months notice period. Depending upon the view the competent authority may take on the question of curtailment of the notice period and/or deduction of three months salary from out of the retiral benefits of the deceased-employee, the deceased-employee’s claim for payment of retiral benefits due under the relevant rules including pension shall be processed and released in favour of the appellant-widow as expeditiously as possible but not later than six months from the date a copy of this order is served upon the bank.
In the event of the bank’s failure to comply with the directions within six months as indicated above, the amount payable to the employee and after his death his widow, shall start earning interest @ 10% p.a. from the date the period of six months expires. The parties are left to bear their own costs.
(B) Case : Manohar Singh vs Union of India & Others :
It is interesting to note that on Resignation by an employees, the word which is neither defined in the service conditions / rules / settlement nor classified as misconduct, banks are forfeiting their past services and pensionary benefits without providing any opportunity of hearing as pointed by Jodhpur High Court SBCWP No.5988/2006 – Manohar Singh vs. Union of India & ors. [Judgment dt;30/4/2014] You can download the judgement by clicking on the link given here.
The breach of principles of natural justice by not providing any opportunity of hearing to the petitioner is also writ large in the present case. The forfeiture of past period of service entails adverse civil and financial consequences for the petitioner. Nothing prevented the respondent Insurance Company from giving an opportunity of hearing to the petitioner and putting him to notice that the word “resignation” would entail forfeiture of past service and he would be deprived of his right to get pension. The respondent Company could advise the petitioner to either continue to serve the Company for one month more or 3 months more for notice period or could agree to the deduction of 3 months' salary in lieu of notice period.
The public authority is expected to act fairly and not surreptitiously to the disadvantage of its employees particularly those who have served the Company for long periods of qualifying service & more. The resignation or retirement sought by the employee due to unavoidable family circumstances should not have been further aggravated by causing him the financial loss by depriving him of the pension to which otherwise he was admittedly entitled had he actually used the word “retirement” in place of “resignation” in the letter. Clause 22 of the Scheme is not meant to cause harm to the innocent employees and the Company should not be trigger happy to deprive the employee of his right to get the pension by forfeiting the past services without even giving an opportunity of hearing to the petitioner. Mere use of word “resign” with immediate effect, which immediacy was not even accepted by the respondent, cannot be construed as a fatal step for the petitioner to take away his right to get the pension under 1995 Pension Scheme.
When even a dismissed or compulsorily retired employee can be given up to 2/3rd of pension, why an employee who “resigns” should be deprived of the same altogether without even been told before hand about such a consequences of his giving a letter of resignation or retirement.
AT LEAST NOW BANK MANAGEMENT / IBA AND UNIONS SHOULD WAKE UP AND TAKE CORRECTIVE ACTIONS TO RECTIFY UNILATERAL ACT DONE IN 1995 AND RELEASE THE RIGHTS OF THE EMPLOYEES WITHOUT LITIGATION.