Case: Bank of India &amp; Another Vs. K. Mohandas &amp; Others

3. In the month of May, 2000, Government of India, Ministry of Finance (Banking Division), advised the nationalized banks to carry out detailed manpower planning as these banks were found to have 25% of its manpower as surplus. A Human Resource Management Committee was constituted to examine the said issue and to suggest suitable remedial measures. The committee so constituted observed that high established cost and low productivity in public sector banks affect their profitability and it was necessary for these banks to convert their human resources into assets compatible with business strategies. Inter alia, the committee placed the draft Voluntary Retirement Scheme with the Central Government that would assist the banks in their efforts to optimize their human resources and achieve a balanced age and skills profile in keeping with their business strategies. With the approval of the central government, Indian Bank Association (IBA) circulated salient features of the draft scheme to the nationalized banks for consideration and adoption by their respective boards vide its letter dated August 31, 2000. The Board of Directors of each of the nationalized banks, keeping in view the objectives, considered the draft scheme and adopted it separately.4. In the present batch of appeals, the Voluntary Retirement Scheme brought out by the Punjab National Bank, Punjab & Sind Bank, Bank of India, Union Bank of India and United Bank of India is in issue.5. The scheme adopted by these banks, although separately, is identical and bears similar salient features with some variation in certain respects. It is not necessary to consider them individually. For the sake of brevity, we shall refer the scheme as VRS 2000.6. The objective of VRS 2000 has been:-to transform the organizational as more efficient as well as for controlling operational costs;-to improve the prospects and career growth and skills up gradation for employees by rationalizing the manpower;-to help the bank to right size the growth.7. We may, at this stage, summarise the salient features of VRS 2000. These are :(i) All permanent employees of the bank who have put in minimum 15 years of service or completed 40 years of age on the date of coming into force of the scheme are eligible for voluntary retirement.(ii) In addition to the normal retirement benefits available to an employee , according to the terms and conditions of his employment in the bank, an employee whose application for voluntary retirement is accepted will be paid a lump sum amount equivalent to 60 days salary for each completed year of service.(III) The competent authority may accept or reject the application of an employee for voluntary retirement and the decision of the competent authority shall be final.(IV) No voluntary retirement shall come into effect unless competent authority has passed orders accepting the applications of the employees to retire voluntarily under the scheme.(V) The scheme can be withdrawn at the discretion of the bank at any time without assigning any reason.(VI) It shall be open to the bank to alter/amend the conditions of the scheme. (In the scheme framed by Punjab National Bank such provision is not there).(VII) The applications made under the scheme will be irrevocable and the employee will not have the right to withdraw the application once submitted.(VIII) An employee whose application for voluntary retirement is accepted and relieved from the bank shall be eligible for :(i) gratuity as per Gratuity Act/service gratuity as the case may be;(ii) own contribution of provident fund and bank contribution towards provident fund, in case of those who have opted for Contributory Provident Fund or own contribution of provident fund and pension in terms of 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 (emphasis supplied) and(iii) leave encashment as per rules.8. The period during which VRS 2000 was to remain in operation in respect of the banks with which we are concerned is as follows:Punjab and Sind Bank 01.12.2000 to 31.12.2000Punjab National Bank 01.11.2000 to 30.11.2000Bank of India 15.11.2000 to 14.12.2000Union Bank of India 01.12.2000 to 31.12.2000United Bank of India 01.01.2001 to 31.01.20019. Section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (for short ` Act 1970) empowers the Board of Directors to make regulations consistent with the provisions of the Act or any Scheme made thereunder after consultation with the Reserve Bank and with the previous sanction of the Central Government in respect of matters provided therein.Section 19 (2)(f) readsIn particular, and without prejudice to the generality of the foregoing power, the regulations may provide for all or any of the following matters, namely:--(f) the establishment and maintenance of superannuation, pension, provident or other funds for the benefit of officers or other employees of the corresponding new bank or of the dependants of such officers or other employees and the granting of superannuation allowances, annuities and pensions payable out of such funds.These banks have made their regulations in respect of pension separately. Since they bear identical provisions; we shall refer them as Pension Regulations, 1995 generally. On the date of the commencement of the VRS 2000, Regulations 28 and 29 read asSuperannuation Pension:-Superannuation pension shall be granted to an employee who has retired on his attaining the age of superannuation specified in the Service Regulations or Settlements.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.Provided that this Sub-regulation shall not apply to an employee who is on deputation or on study leave abroad unless after having been transferred or having returned to India he has resumed charge of the post in India and has served for a period of not less than one year:Provided further that this Sub-regulation shall not apply to an employee who seeks retirement from service for being absorbed permanently in an autonomous body or a public sector undertaking or company or institution or body, whether incorporated or not to which he is on deputation at the time of seeking voluntary retirement;Provided that this Sub-regulation shall not apply to an employee who is deemed to have retired in accordance with Clause (1) of regulation -2.(2) The notice of voluntary retirement given under sub-regulation (1) shall require acceptance by the appointing authority:Provided that where that appointing authority does not refuse to grant the permission for retirement before the expiry of the period specified in the said notice, the retirement shall become effective from the date of expiry of the said period.(3)(a). An employee referred to in sub-regulation (1) may make a request in writing to the appointing authority to accept notice of voluntary retirement of less than three months giving reasons therefore.(b) On receipt of a request under Clause (a), the appointing authority may, subject to the provisions of Sub-regulation (2) , consider such request for the curtailment of the period of notice of three months on merits and if it is satisfied that the curtailment of the period of notice will not cause any administrative inconvenience, the appointing authority may relax the requirement of notice of three months on the condition that the employee shall not apply for commutation of a part of his pension before the expiry of the notice of three months.(4) An employee, who has elected to retire under this regulation and has given necessary notice to that effect to the appointing authority, shall be precluded from withdrawing his notice except with the specific approval of such authority;Provided that the request for such withdrawal shall be made before the intended date of his retirement.(5) 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.(6) The pension of an employee retiring under this regulation shall be based on the average emoluments as defined under clause (d) of regulation 2 of these regulations and the increase, not exceeding five years in his qualifying service, shall not entitle him to any notional fixation of pay for the purpose of calculating his pension.It appears that the benefits provided under Regulation 29 were not found to be attractive by the employees and did not help these banks in rightsizing their manpower; thus, arose a necessity of special scheme. VRS 2000 is, in a way, special scheme launched for a very limited period.12. VRS 2000 came up for consideration before this Court in the case of Bank of India & Ors. vs O.P. Swarnakar & Ors., (2003) 2 SCC 721. The question under consideration in that case was whether an employee who opts for voluntary retirement pursuant to or in furtherance of a scheme floated by the nationalized banks would be precluded from withdrawing the said offer. This Court culled out the followingThe banks treated the application from the employees as an offer which could be accepted or rejected.(ii) Acceptance of such an offer is required to be communicated in writing.(iii) The decision-making process involved application of mind on the part of several authorities.(iv) Decision-making process was to be formed at various levels.(v) The process of acceptance of an offer made by an employee was in the discretion of the competent authority.(vi) The request for voluntary retirement would not take effect in present but in future.(vii) The bank reserved its right to alter/rescind the conditions of scheme.In O.P. Swarnakar, it has been held that scheme is contractual in nature. It amounted to an invitation to offer and not an offer or proposal itself; the application made by the employees was an offer.14. The statement of law with regard to nature of voluntary retirement scheme expounded in O.P. Swarnakar has been reiterated in HEC Voluntary Retd. Employees Welfare Society v. Heavy Engineering Corporation Ltd. (2006) 3 SCC 708 ; albeit a different voluntary retirement scheme.15. The admitted factual position in this batch of appeals is that each of the employees had completed 20 years of service.16. It may be noticed that at the fag end of the operation of VRS 2000, at the instance of IBA and with the approval of the Central Government, Regulation 28 was proposed to be amended. The amendment in fact was carried out in the year 2002 with retrospective effect from September 1, 2000. By way of amendment, a proviso has been inserted to Regulation 28, which reads asthat 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 15 years in terms of any scheme that may be framed for the purpose by the Banks Board with the concurrence of the Government.The optees have been given retiral benefits by the respective banks under VRS 2000 save and except the benefit of pension under Regulation 29(5). Their representation in this regard did not yield any result and that necessitated them to approach various High Courts for redressal of their grievance.18. The views of High Courts differ. Punjab and Haryana High Court has held that employees are entitled to add a period of qualifying service not exceeding five years in terms of the Regulation 29(5); the total qualifying service rendered by an employee seeking voluntary retirement in any case shall not exceed 33 years. With regard to the amendment in Regulation 28, Punjab and Haryana High Court has held that by the said amendment, the provision contained in Regulation 29(5) of the Regulations does not get affected so as to disentitle the employees the benefit provided therein.19. There are two views in so far as Kerala High Court is concerned. In the case of K. Mohandas (Civil Appeal arising out of SLP (c) 22704/2005), the Division Bench in the Writ Appeal held that the employees seeking voluntary retirement under VRS 2000 were entitled to benefit under Regulation 29(5) of Pension Regulations, 1995. However, in the case of N.U. Kurup, the single Judge held otherwise. The single Judge took the view that the employees seeking voluntary retirement under VRS 2000 were entitled to pension under Regulation 28 and that they are not entitled to benefit of addition of five years service as provided in Regulation 29(5). The view of the Division Bench of Calcutta High Court is on the lines of the view of the single Judge of Kerala High Court that the optees of voluntary retirement under VRS 2000 are not entitled to benefit of addition of five years service under Regulation 29(5).

Reasoning:
49. It is true that the controversy in the case of Bank of Baroda arose out of the same voluntary retirement scheme with which we are concerned in this group of appeals. However, there is vital factual difference in that case and this group of appeals. Pertinently that was a case where the employee had completed only 13 years of service( not even 15 years of service much less 20 years service) although he completed 40 years of age at the time he offered for voluntary retirement. The employees application therein for voluntary retirement was accepted by the Bank of Baroda and he was paid all retiral benefits. However, his request for grant of pension in addition to the other retiral benefits was not acceded to by the bank. It was so because he had not completed even 15 years of service. The employee pursued industrial adjudicatory process for redressal of his grievance in respect ofof pension by the bank. The employees claim was opposed by the Bank of Baroda contending that in terms of Regulations 14, 28 and 29 of the Pension Regulations, 1995, the employee was not entitled to pension. The observations made by this Court in Bank of Baroda which have been quoted above and relied upon by the banks in support of their contention have to be understood in the factual backdrop namely, that the employee had completed only 13 years of service and, was not eligible for the pension under the Pension Regulations,1995 and for the benefit of addition of five years to qualifying service under Regulation 29(5), an employee must have completed 20 years of service.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.Insofaras the present group of appeals is concerned, the employees are not seeking to resile from the Scheme. They are actually seeking enforcement of the clause in the Scheme that provides that the optees will be eligible for pension under the Pension Regulations, 1995. According to them, they are entitled to the benefits of Regulation 29(5). In our considered view, plea of estoppel is devoid of any substance; as a matter of fact it does not arise at all in the facts and circumstances of the case.53. 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 view expressed by some of the High Courts do not lay down the correct legal position.Although it has been held by us that the subject employees are entitled to the weightage in terms of Regulation 29(5) of Pension Regulations, 1995, but we are satisfied that any award of interest on unpaid pension would not be in the interest of justice. It is so because different High Courts did not have unanimous judicial opinion on the issue. Punjab and Haryana High Court and the Division Bench of the Kerala High Court upheld the contention of the employees with regard to applicability of Regulation 29(5) to the optees who had completed 20 years of service while the Division Bench of the Calcutta High Court and a single Judge of the Kerala High Court took exactly an opposite view. The stance of the banks, although found not meritorious, cannot be said to be totally frivolous. We, accordingly, hold that the subject employees are not entitled to interest on unpaid pension.