2009 (3) TMI 1004 - SC - Indian Laws

Nationalized banks Voluntary Retirement Scheme 2000 - Whether the employees (having completed 20 years of service) of these banks (Bank of India, Punjab National Bank, Punjab 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 Pension Regulations, 1995? - each of the employees had completed 20 years of service - 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. 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. HELD THAT - Any interpretation of the terms of VRS 2000, although contractual in nature, must meet the test of fairness. It has to be construed in a manner that avoids arbitrariness and unreasonableness on the part of the public sector banks who brought out VRS 2000 with an objective of rightsizing its manpower. The banks decided to shed surplus manpower. By formulation of the Special Scheme (VRS 2000), the banks intended to achieve its objective of rationalizing its 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 Pension Regulations, therefore, has to be given. The amendment to Regulation 28 can, at best, be said to have been intended to cover the employees with 15 years of service or more but less than 20 years of service. This intention is reflected from the communication dated September 5, 2000 sent by the Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) to the Personnel Advisor, Indian Banks' Association. 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 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. It was vehemently contended on behalf of the banks that VRS 2000 was a self-contained Scheme and it provided for special benefits in the form of ex-gratia. It was submitted that ex-gratia was not available to the employees claiming voluntary retirement under Pension Regulations and it was because of that, that Scheme did not envisage granting of pension benefits under Regulation 29(5) of the Pension Regulations, 1995, along with the payment of ex-gratia which was a substantial amount. On behalf of banks it was submitted that the employees, having taken benefits under the scheme (VRS 2000), are estopped from raising any issue that their entitlement to pension would not be covered by amended Regulation 28. It was suggested that the employees having taken benefit of the scheme cannot insist for pension under Regulation 29(5). O.P. Swarnakar 2002 (12) TMI 605 - SUPREME COURT was relied upon in this regard wherein it has been held that an employee, having taken the ex-gratia payment, or any other benefit under the scheme cannot be allowed to resile from the scheme. In so far as 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. 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. Whether the concerned employees are entitled to interest on unpaid pension? - HELD THAT - 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. Therefore, the appeals preferred by the banks must fail and are dismissed while the appeals of the employees deserve to be allowed and are allowed accordingly. The respective banks shall now recalculate, within one month from today, the pension payable to the concerned employees by giving them the benefit of Regulation 29(5). However, the employees shall not be entitled to interest on unpaid pension. The pending applications in these appeals stand disposed of. The parties shall bear their own costs.

Summary

Issues Involved:
1. Validity and interpretation of the Voluntary Retirement Scheme (VRS) 2000.
2. Applicability of Pension Regulations, 1995, particularly Regulation 29(5), to employees opting for VRS 2000.
3. Entitlement of employees to the addition of five years of notional service under Regulation 29(5).
4. Impact of the amendment to Regulation 28 on the benefits under VRS 2000.
5. Estoppel and the right of employees to claim pension benefits.
6. Award of interest on unpaid pension.

Issue-Wise Detailed Analysis:

1. Validity and Interpretation of the Voluntary Retirement Scheme (VRS) 2000:
The Supreme Court examined the VRS 2000, noting its objectives to optimize human resources and control operational costs in nationalized banks. The scheme was contractual in nature, constituting an invitation to offer, and the applications by employees were considered offers that could be accepted or rejected by the banks. The scheme included provisions for pension benefits as per the Pension Regulations, 1995.

2. Applicability of Pension Regulations, 1995, particularly Regulation 29(5), to Employees Opting for VRS 2000:
The Court analyzed whether employees opting for VRS 2000 were entitled to the benefits under Regulation 29(5) of the Pension Regulations, 1995, which provides for the addition of five years of notional service. It was found that the intention of the banks at the time of introducing VRS 2000 was to include pension benefits under Regulation 29, as evidenced by the terms of the scheme and the surrounding circumstances.

3. Entitlement of Employees to the Addition of Five Years of Notional Service under Regulation 29(5):
The Court held that employees who had completed 20 years of service and opted for VRS 2000 were entitled to the addition of five years of notional service under Regulation 29(5). This interpretation was based on the language of the scheme and the Pension Regulations, 1995, which were part of the contractual terms of VRS 2000.

4. Impact of the Amendment to Regulation 28 on the Benefits under VRS 2000:
The amendment to Regulation 28, which was made with retrospective effect from September 1, 2000, was intended to cover employees with 15 years of service but less than 20 years. The Court found that this amendment did not affect the entitlement of employees who had completed 20 years of service to the benefits under Regulation 29(5). The amendment was harmonized with Regulation 29 to ensure fairness.

5. Estoppel and the Right of Employees to Claim Pension Benefits:
The banks argued that employees who accepted benefits under VRS 2000 were estopped from claiming additional benefits under Regulation 29(5). The Court rejected this argument, stating that employees were seeking enforcement of the scheme's terms, which included pension benefits under the Pension Regulations, 1995. The plea of estoppel was found to be without substance.

6. Award of Interest on Unpaid Pension:
The Court considered whether employees were entitled to interest on unpaid pension. Given the differing judicial opinions from various High Courts and the non-frivolous stance of the banks, the Court concluded that awarding interest would not be in the interest of justice. Therefore, employees were not entitled to interest on unpaid pension.

Conclusion:
The appeals by the banks were dismissed, and the appeals by the employees were allowed. The banks were directed to recalculate the pension payable to the concerned employees by giving them the benefit of Regulation 29(5) within one month, without awarding interest on unpaid pension.