Supreme Court refers conflict on compassionate appointment to larger bench: State Bank of India vs. Sheo Shankar Tewari (2019)

Date of the Judgment: February 8, 2019

Judges: Uday Umesh Lalit, J. and Indu Malhotra, J.

Can a bank deny compassionate appointment to a dependent of a deceased employee if a new scheme providing ex-gratia payment comes into effect after the employee’s death but before the application is considered? The Supreme Court of India grappled with this question, noting conflicting precedents on whether the old scheme or the new scheme should apply. This case highlights the tension between an employer’s policy changes and the rights of dependents of deceased employees. The bench comprising of Justice Uday Umesh Lalit and Justice Indu Malhotra, found the existing decisions inconsistent and referred the matter to a larger bench.

Case Background

The respondent’s father, an employee of the State Bank of India (SBI), passed away on November 11, 2004. Following his death, the respondent applied for compassionate appointment on March 3, 2005. At the time of the application, the bank’s policy allowed for compassionate appointments for dependents of employees who died while in service. However, the Government of India had issued instructions on July 14, 2004, to create a scheme for monetary assistance instead of compassionate appointments. The Indian Banks’ Association (IBA) advised banks to frame their own schemes based on this model on July 31, 2004.

Before the respondent’s application could be processed, SBI introduced a new scheme on August 4, 2005, that provided for a lump-sum ex-gratia payment instead of compassionate appointments. Clause 15(vi) of this new scheme stated that the previous scheme for compassionate appointments was abolished and no requests for such appointments would be entertained. Consequently, SBI rejected the respondent’s application, leading to the present legal battle.

Timeline

Course of Proceedings

The respondent challenged the bank’s decision through a Writ Petition. The Single Judge and the Division Bench of the High Court ruled in favor of the respondent, accepting the writ petition. The bank then appealed to the Supreme Court.

Legal Framework

The core legal issue revolves around the interpretation and application of schemes for compassionate appointment. The initial scheme allowed for appointments on compassionate grounds, while the subsequent scheme provided for ex-gratia payments. The key question is which scheme should apply when a new scheme is introduced after an application for compassionate appointment has been made but before it has been considered.

Arguments

Arguments by the Petitioner (State Bank of India):

• The petitioner-bank argued that the new scheme, which came into effect on August 4, 2005, abolished the old scheme for compassionate appointments. Therefore, no applications under the old scheme could be considered.
• The bank relied on the Supreme Court’s decision in State Bank of India and another vs. Raj Kumar [(2010) 11 SCC 661], which stated that compassionate appointment is not a right but a concession. The relevant scheme is the one in force when the application is considered, not when it was made.
• The bank further cited MGB Gramin Bank vs. Chakrawarti Singh [(2014) 13 SCC 583], which supported the view that pending applications should be considered under the new scheme if the old scheme is abolished.

Arguments by the Respondent (Sheo Shankar Tewari):

• The respondent argued that the scheme in force when the cause of action arose (i.e., the death of his father on November 11, 2004, and his subsequent application on March 3, 2005) should be applicable.
• The respondent relied on the Supreme Court’s decision in Canara Bank and another vs. M. Mahesh Kumar [(2015) 7 SCC 412], which held that the scheme in force when the cause of action arose should be considered. The new scheme cannot have retrospective effect to take away the right accrued to the respondent under the old scheme.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in this order. Instead, it noted the conflicting positions taken in previous judgments and referred the matter to a larger bench. The core issue is whether the scheme for compassionate appointment in force at the time of the employee’s death or the scheme in force at the time of consideration of the application should apply.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

• State Bank of India and another vs. Raj Kumar [(2010) 11 SCC 661]: The Court held that compassionate appointment is not a right and that the scheme in force at the time of consideration should apply.
• MGB Gramin Bank vs. Chakrawarti Singh [(2014) 13 SCC 583]: This case supported the view that pending applications should be considered under the new scheme if the old scheme is abolished.
• Canara Bank and another vs. M. Mahesh Kumar [(2015) 7 SCC 412]: The Court held that the scheme in force when the cause of action arose (i.e., the death of the employee) should be considered, and the new scheme cannot have retrospective effect.
• SBI vs. Jaspal Kaur [(2007) 9 SCC 571]: This case was referred to in Canara Bank, supporting the view that the scheme in force when the cause of action arose should be considered.

Judgment

How each authority was viewed by the Court?

• The Court noted that State Bank of India and another vs. Raj Kumar [(2010) 11 SCC 661]* and MGB Gramin Bank vs. Chakrawarti Singh [(2014) 13 SCC 583]* supported the view that the scheme in force at the time of consideration should apply.
• The Court also noted that Canara Bank and another vs. M. Mahesh Kumar [(2015) 7 SCC 412]* and SBI vs. Jaspal Kaur [(2007) 9 SCC 571]* supported the view that the scheme in force when the cause of action arose should apply.

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with the conflicting precedents on the issue of which scheme should apply in cases of compassionate appointment when a new scheme is introduced. The Court noted that some decisions favored the scheme in force at the time of consideration, while others favored the scheme in force at the time the cause of action arose. This inconsistency led the Court to believe that the matter required consideration by a larger bench to ensure uniformity and clarity in the law.

Logical Reasoning:

The Supreme Court did not make a final decision on the merits of the case. Instead, it recognized the conflicting positions taken by different benches of the Court and decided to refer the matter to a larger bench. The Court noted that:

• The decisions in State Bank of India vs. Raj Kumar and MGB Gramin Bank vs. Chakrawarti Singh suggested that the scheme in force at the time of consideration should apply.
• However, the decision in Canara Bank vs. M. Mahesh Kumar suggested that the scheme in force at the time the cause of action arose should apply.

The Court found these positions to be inconsistent and irreconcilable. Therefore, it referred the matter to a larger bench of at least three judges to resolve the conflict.

The Court stated:

“The principles emanating from these two lines of decisions, in our considered view are not consistent and do not reconcile. The matter therefore requires consideration by a larger Bench of at least three Hon’ble Judges of this Court.”

Key Takeaways

• The Supreme Court acknowledged a conflict in its previous decisions regarding the applicability of compassionate appointment schemes.
• The Court referred the matter to a larger bench to resolve the conflict and provide clarity on whether the old scheme or the new scheme should apply.
• This case highlights the importance of consistent application of the law and the need for clarity in policies regarding compassionate appointments.

Directions

The Supreme Court directed the Registry to place the papers of the case before the Hon’ble the Chief Justice of India for constituting a Bench of appropriate strength to dispose of the petition.

Development of Law

The ratio decidendi of this case is that there is a conflict in the decisions of the Supreme Court regarding the applicability of compassionate appointment schemes when a new scheme is introduced after the death of the employee but before the consideration of the application. This case does not change the existing law but highlights the need for a larger bench to settle the conflict.

Conclusion

The Supreme Court, in this order, did not decide the case on its merits. Instead, it recognized the conflicting precedents on the issue of compassionate appointments and referred the matter to a larger bench. This referral underscores the need for a consistent and clear legal position on which scheme should apply when a new scheme is introduced after an employee’s death but before the application for compassionate appointment is considered. The outcome of the larger bench will have significant implications for future cases involving compassionate appointments.

Category

• Service Law
  • Compassionate Appointment
  • Ex-Gratia Payment
• State Bank of India
  • Compassionate Appointment Scheme
  • Ex-Gratia Payment Scheme
• Compassionate Appointment
  • Scheme Applicability

FAQ

Q: What is compassionate appointment?

A: Compassionate appointment is a provision that allows for the employment of a dependent family member of a deceased government or public sector employee, to provide financial support to the family.

Q: What is ex-gratia payment in this context?

A: Ex-gratia payment is a lump-sum monetary payment made to the family of a deceased employee in lieu of a compassionate appointment.

Q: What was the conflict in this case?

A: The conflict was whether the old scheme for compassionate appointment or the new scheme for ex-gratia payment should apply when the new scheme was introduced after the employee’s death but before the application was considered.

Q: Why did the Supreme Court refer the matter to a larger bench?

A: The Supreme Court referred the matter because there were conflicting precedents on the issue, and a larger bench was needed to resolve the conflict and provide clarity.

Q: What is the potential impact of this case?

A: The decision of the larger bench will clarify the legal position on which scheme should apply in cases of compassionate appointments, ensuring consistency and fairness in future cases.