2020 (3) TMI 1318 - SC - Indian Laws

Entitlement to pension on completion of 15 years of service as per the State Bank of India Voluntary Retirement Scheme - whether, under the scheme as approved and adopted by the Central Board of SBI, the pension is admissible to the employees on completion of 15 years of permanent service? HELD THAT - It is apparent that once the Central Board of Directors accepted the memorandum for making payment of pension, in case it was not accepting the proposal in the memorandum, it ought to have said clearly that it was not ready to accept the proposals of the Government and the IBA and rejects the same. Once it approved the proposals referred to in the memorandum, which were on the basis of IBA's letter and Government of India's decision it was bound to implement it in true letter and spirit. By accepting the same, binding obligation was created upon the SBI to make payment of pension on completion of 15 years of service. It cannot invalidate its own decision by relying on fact it failed to amend the rule, whereas other Banks did it later on with retrospective effect. They cannot invalidate otherwise valid decision by virtue of exclusive superior power to amend or not to amend the Rule and act unfairly and make the entire contract unreasonable based on misrepresentation. It is apparent from the eligibility Clause of the VRS scheme that eligibility is provided for the employees having 15 years of pensionable service and they will be entitled for benefits as provided in the scheme. The eligibility clause, when read with clauses providing the benefit, i.e., clauses 5 and 6 of the scheme, leaves no room for any doubt and makes it clear that employees with 15 years of service were treated as eligible to claim the benefit of the scheme floated by SBI. It was not the provision in the VRS scheme that incumbents having completed 20 years of service would be entitled for pensionary benefits. The scheme was carved out specially for attracting the employees by providing pension and other benefits to eligible persons like ex gratia, gratuity, pension and leave encashment. Deprivation of pension would make them ineligible for the benefits and would run repugnant to the eligibility clause. The basic framework of socialism is to provide security in the fall of life to the working people and especially provides security from the cradle to the grave when employees have rendered service in heydays of life, they cannot be destituted in old age, by taking action in an arbitrary manner and for omission to complete obligation assured one. Though there cannot be estoppel against the law but when a bank had the power to amend it, it cannot take shelter of its own inaction and SBI ought to have followed the pursuit of other banks and was required to act in a similar fair manner having accepted the scheme. The employees who completed 15 years of service or more as on cut-off date were entitled to proportionate pension under SBI VRS to be computed as per SBI Pension Fund Rules. Let the benefits be extended to all such similar employees retired under VRS on completion of 15 years of service without requiring them to rush to the court - Appeal disposed off.

Summary

Issues Involved:
1. Entitlement to pension under the State Bank of India Voluntary Retirement Scheme (VRS) 2000 on completion of 15 years of service.
2. Conflict of opinion among judges regarding pension admissibility under the VRS.
3. Clarification and amendments to the SBI Pension Fund Rules.
4. Judicial interpretation and enforcement of the VRS scheme.
5. Application of principles of fairness, equality, and non-arbitrariness in contractual obligations.

Detailed Analysis:

Entitlement to Pension Under VRS 2000:
The primary issue was whether employees who opted for voluntary retirement under the SBI VRS 2000 and completed 15 years of service were entitled to pension. The scheme, approved by the Central Board of SBI on 27.12.2000, indicated that employees with 15 years of service were eligible for benefits, including pension.

Conflict of Opinion Among Judges:
The case was referred to a larger bench due to differing opinions among judges on the admissibility of pension under the VRS. The core of the dispute was whether the scheme's terms allowed for pension benefits on completion of 15 years of service or required 20 years as per existing rules.

Clarification and Amendments to the SBI Pension Fund Rules:
The SBI VRS scheme was based on guidelines from the Indian Bank Association (IBA) and approved by the Government of India. A crucial aspect was whether the existing Pension Fund Rules, which required 20 years of service for pension eligibility, were amended to align with the VRS scheme's provision of 15 years. The Deputy General Manager’s clarification on 15.1.2001 reiterated the 20-year requirement but did not amend the scheme.

Judicial Interpretation and Enforcement of the VRS Scheme:
The judgment emphasized the contractual nature of the VRS scheme. It was held that the scheme's terms, as approved by the Central Board of Directors, constituted a binding contract. The court noted that the scheme was intended to provide pension benefits on completion of 15 years of service, and any subsequent clarification could not alter this fundamental term.

Application of Principles of Fairness, Equality, and Non-Arbitrariness:
The court underscored the principles of fairness, equality, and non-arbitrariness, which are integral to Article 14 of the Constitution of India. It was held that the SBI, as an instrumentality of the state, could not act arbitrarily or unfairly by denying pension benefits promised under the VRS. The court referenced several precedents, including D.S. Nakara v. Union of India, to highlight that pension is a right and not a bounty.

Conclusion:
The court concluded that employees who completed 15 years of service under the SBI VRS 2000 were entitled to proportionate pension. The SBI was directed to extend pension benefits to all eligible employees without requiring individual litigation. The judgment emphasized that the SBI's failure to amend the pension rules could not be used to deny benefits, as this would be arbitrary and violative of constitutional principles. The appeals were disposed of with instructions for compliance within three months, failing which interest would be applicable.