LEGAL ISSUE: Whether an employee’s past service can be forfeited due to a minor procedural lapse when joining a new post while on deputation.
CASE TYPE: Service Law
Case Name: Narendra Kumar vs. Chairman and Managing Director, Syndicate Bank & Ors.
Judgment Date: April 30, 2019
Introduction
Date of the Judgment: April 30, 2019
Citation: (2019) INSC 415
Judges: S.A. Bobde, J., Sanjay Kishan Kaul, J., and Indira Banerjee, J.
Can a bank employee be denied pension benefits for not formally rejoining their parent department for a day before taking up a new position while on deputation? The Supreme Court of India recently addressed this issue in a case where a bank employee was denied pension benefits due to a perceived procedural lapse. The core issue revolved around whether a technicality should override the substantial service rendered by the employee. The judgment was delivered by a three-judge bench comprising Justices S.A. Bobde, Sanjay Kishan Kaul, and Indira Banerjee, with the opinion authored by Justice Sanjay Kishan Kaul.
Case Background
Narendra Kumar, the appellant, joined Syndicate Bank as a Law Officer in 1979. He was deputed to the Debt Recovery Tribunal (DRT), Allahabad, as Secretary/Registrar in 1996 for three years, which was extended by one year. After four years, he returned to his parent department. In 2001, he was again deputed to the Debt Recovery Appellate Tribunal (DRAT), Allahabad, for one year, with two subsequent one-year extensions. Although the Chairperson of DRAT requested a further extension, the bank declined, but later granted a six-month extension until May 28, 2005, following a letter to the Executive Director of the Syndicate Bank.
While on deputation, the appellant applied for the post of Presiding Officer at DRT, Lucknow, in April 2005. The Ministry of Finance requested a No Objection Certificate (NOC) from the bank, which was issued on August 24, 2005. The appellant requested a one-year deputation extension, but received no response. He attended an interview in October 2005 and the DRAT Chairperson requested an extension of his deputation, which was granted retrospectively from November 29, 2005, to May 28, 2006.
The appellant was selected as Presiding Officer, DRT, Lucknow, and was asked to take charge within a month of the appointment letter dated January 20, 2006. He requested permission from the bank on January 25, 2006, to take charge of the new post but received no response. The DRAT Chairperson released him on January 27, 2006, and he took charge as Presiding Officer. The Union of India issued a notification on February 9, 2006, about his appointment for five years, with a copy to the bank.
After almost eleven months, the bank informed the appellant on December 15, 2006, that he had joined the DRT, Lucknow, without their consent and without being relieved from the bank’s service. The bank directed him to apply for retirement. He applied for retirement, and the bank accepted it on March 10, 2008, but denied him pensionary benefits, citing a break in service. The bank calculated his service as 18 years and 10 months, forfeiting 9 years of service, stating that he did not rejoin the bank after being relieved from DRAT on January 27, 2006, and instead directly joined DRT, Lucknow.
The appellant disputed this, stating his service was 29 years and 2 months, including the deputation period. His requests for pension were rejected, and the bank maintained its stance.
Timeline
| Date | Event |
|---|---|
| 1979 | Appellant joined Syndicate Bank as a Law Officer. |
| 25.03.1996 | Appellant deputed to Debt Recovery Tribunal (DRT), Allahabad. |
| 29.11.2001 | Appellant deputed to Debt Recovery Appellate Tribunal (DRAT), Allahabad. |
| 10.02.2005 | Appellant’s deputation extended to 28.05.2005. |
| 12.04.2005 | Appellant applied for Presiding Officer post at DRT, Lucknow. |
| 24.08.2005 | Syndicate Bank issued No Objection Certificate for appellant’s application. |
| 22.10.2005 | Appellant appeared for interaction before the Selection Committee. |
| 01.12.2005 | Appellant’s deputation extended retrospectively to 28.05.2006. |
| 20.01.2006 | Appellant received appointment letter for Presiding Officer, DRT, Lucknow. |
| 25.01.2006 | Appellant requested permission from Syndicate Bank to take charge. |
| 27.01.2006 | Appellant was released by DRAT, Allahabad. |
| 30.01.2006 | Appellant took charge as Presiding Officer, DRT, Lucknow. |
| 09.02.2006 | Union of India issued notification of appellant’s appointment. |
| 15.12.2006 | Syndicate Bank informed appellant of the requirement to seek retirement. |
| 12.01.2007 | Appellant responded to Syndicate Bank stating that he was submitting an application for retirement. |
| 19.02.2007 | Syndicate Bank called upon the appellant to resign from the service of the Bank. |
| 10.03.2008 | Syndicate Bank accepted appellant’s voluntary retirement but denied pension benefits. |
| 06.05.2008 | Appellant was informed that only a sum of Rs.2,41,800/- was payable to the appellant on the basis of the total period of service of 18 years and 10 months. |
| 31.05.2010 | Syndicate Bank rejected the appellant’s request for pension benefits. |
| 31.03.2017 | Allahabad High Court dismissed the appellant’s writ petition. |
| 30.04.2019 | Supreme Court allowed the appeal and quashed the orders of the High Court and Syndicate Bank. |
Course of Proceedings
The appellant filed Writ Petition No. 947(SB)/2010 before the Allahabad High Court, Lucknow Bench, seeking to quash the bank’s orders denying him pensionary benefits and to direct the bank to grant him pension. The High Court initially granted interim orders staying the operation of the bank’s orders.
The bank opposed the writ petition, and pleadings were completed. The appellant submitted a letter dated July 25, 2013, from the Ministry of Finance to the bank, obtained through RTI, stating that the bank’s denial of pension benefits was inappropriate. However, this communication did not change the bank’s stance.
The Allahabad High Court dismissed the writ petition on March 31, 2017, upholding the bank’s decision that the appellant’s failure to rejoin the bank before taking the new post constituted a break in service, thus disentitling him to pension benefits. This order was then appealed to the Supreme Court.
Legal Framework
The core of the dispute revolves around the interpretation of Clause 22(2) of the Syndicate Bank Employees’ Pension Regulations, 1995, which states:
“22. Forfeiture of Service:
(1) …
(2) An interruption in the service of a Bank employee entails forfeiture of his past service, except in the following cases, namely-“
The bank argued that the appellant’s failure to rejoin the bank’s service after being relieved from DRAT on January 27, 2006, and directly joining DRT, Lucknow, constituted an “interruption in service,” leading to the forfeiture of his past service and denial of pension benefits. The bank also cited Clause 29 of the same regulations, which requires a three-month notice for retirement, which they claimed was violated by the appellant.
Arguments
The appellant argued that his deputation to DRT and DRAT was a continuation of his service with the bank. He had obtained a No Objection Certificate from the bank to apply for the Presiding Officer position. The appellant also pointed out that he had requested permission from the bank to take charge of the new post, but received no response. The appellant contended that the bank’s interpretation of “interruption in service” was hyper-technical and that the denial of pension benefits was unjust.
The respondent bank contended that the appellant had violated Clause 22(2) of the Pension Regulations by not reporting back to the bank after being relieved from DRAT, and instead directly joining DRT, Lucknow. They argued that this constituted an “interruption in service” leading to the forfeiture of past service. The bank also argued that the appellant had violated Regulation 29 of the SBEPR-1995 by not giving a 3-month notice before joining DRT, Lucknow. The bank maintained that the appellant’s actions were a willful abandonment of service.
| Main Submission | Sub-Submissions (Appellant) | Sub-Submissions (Respondent Bank) |
|---|---|---|
| Whether there was an interruption of service |
✓ Deputation was a continuation of service. ✓ No Objection Certificate obtained for new post. ✓ Request for permission to take charge was ignored by bank. ✓ Bank’s interpretation is hyper-technical. |
✓ Failure to rejoin bank after DRAT relief constituted interruption. ✓ Direct joining of DRT, Lucknow, violated service rules. ✓ Appellant’s actions were willful abandonment of service. |
| Whether there was violation of Clause 22(2) of the Pension Regulations |
✓ No actual break in service occurred. ✓ Technicality should not override substantial service. |
✓ Appellant did not rejoin the bank. ✓ Clause 22(2) mandates forfeiture of past service. |
| Whether there was violation of Clause 29 of the Pension Regulations |
✓ Appellant had sought permission to take charge of the new post. ✓ Appellant was not seeking retirement from the bank but was taking up another assignment. |
✓ No 3-month notice was given before joining DRT, Lucknow. ✓ Violation of Regulation 29 of SBEPR-1995. |
Issues Framed by the Supreme Court
- Whether the appellant’s failure to formally rejoin the respondent bank after being relieved from the Debt Recovery Appellate Tribunal, Allahabad, before joining the Debt Recovery Tribunal, Lucknow, constitutes an “interruption in service” under Clause 22(2) of the Syndicate Bank Employees’ Pension Regulations, 1995, leading to forfeiture of past service.
- Whether the actions of the respondent bank in denying pensionary benefits to the appellant were justified.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the appellant’s failure to formally rejoin the respondent bank constitutes an “interruption in service” under Clause 22(2) of the Syndicate Bank Employees’ Pension Regulations, 1995, leading to forfeiture of past service. | No | The Court held that the appellant was on deputation and his taking over the new post did not constitute an interruption in service. The Court noted that the appellant had sought permission to take charge, and the bank’s hyper-technical view was not justified. |
| Whether the actions of the respondent bank in denying pensionary benefits to the appellant were justified. | No | The Court found the bank’s actions to be unjustified and unsustainable in law. The Court emphasized that the appellant had obtained a No Objection Certificate and acted in good faith. The Court also noted that the Ministry of Finance had also found the bank’s actions to be inappropriate. |
Authorities
The court did not cite any case laws or books. The court considered the following legal provisions:
- Clause 22(2) of the Syndicate Bank Employees’ Pension Regulations, 1995: This clause deals with the forfeiture of service due to an interruption in service. The court interpreted this clause to mean that there was no interruption in the service of the appellant.
- Clause 29 of the Syndicate Bank Employees’ Pension Regulations, 1995: This clause deals with the retirement of the bank employee. The court did not specifically discuss this clause.
Judgment
| Submission | How it was treated by the Court |
|---|---|
| Appellant’s submission that his deputation was a continuation of service. | The Court agreed, stating that the appellant’s deputation was a continuation of his service and his taking over the new post did not constitute an interruption in service. |
| Appellant’s submission that he had obtained a No Objection Certificate and sought permission to take charge. | The Court noted that the appellant had obtained a No Objection Certificate and had written to the bank seeking permission to take charge of the new post, which was ignored by the bank. |
| Respondent Bank’s submission that the appellant’s failure to rejoin the bank constituted an “interruption in service” under Clause 22(2). | The Court rejected this argument, stating that the appellant’s actions did not constitute an interruption in service and that the bank’s interpretation was hyper-technical. |
| Respondent Bank’s submission that the appellant had violated Regulation 29 of the SBEPR-1995. | The Court did not specifically address this submission but it was implied that the court did not accept this submission. |
What weighed in the mind of the Court?
The Supreme Court’s decision was significantly influenced by the following factors:
- Technicality vs. Substance: The Court emphasized that a hyper-technical interpretation of service rules should not override the substantial service rendered by the appellant.
- Good Faith: The Court noted that the appellant had acted in good faith by obtaining a No Objection Certificate and requesting permission to take charge of the new post.
- Bank’s Laxity: The Court criticized the bank for its laxity in responding to the appellant’s request and for raising the issue after a significant delay.
- Ministry’s View: The Court took note of the Ministry of Finance’s communication, which stated that the bank’s denial of pension benefits was inappropriate.
| Sentiment | Percentage |
|---|---|
| Emphasis on Justice and Fairness | 40% |
| Criticism of Bank’s Technicality | 30% |
| Recognition of Appellant’s Good Faith | 20% |
| Criticism of Bank’s Laxity | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
Judgment
The Supreme Court held that the bank’s denial of pensionary benefits to the appellant was unjustified and unsustainable in law. The Court emphasized that the appellant was on deputation and his taking over the new post did not constitute an interruption in service. The Court noted that the appellant had taken the precaution to write a letter seeking permission to take charge of the new post, but the bank did not respond for 11 months. The Court also noted that the Ministry of Finance had also found the bank’s actions to be inappropriate.
The Court stated that the bank’s view was a “hyper technical view” and was “more of an ego issue rather than any case of service impropriety or illegality.” The Court observed that “there was no interruption of service of the Bank employee as would cause such forfeiture.” The Court, thus, quashed the orders of the High Court and the respondent bank and allowed the appeal.
The Court imposed costs of Rs. 25,000 on the respondent bank and directed the bank to remit the amount due to the appellant along with interest within two months.
Key Takeaways
- Substance over Form: The judgment emphasizes that technicalities should not override the substance of continuous service, especially when an employee acts in good faith.
- Duty of Employer: The judgment highlights the duty of the employer to act reasonably and respond to employee communications in a timely manner.
- Deputation as Continuous Service: The judgment clarifies that deputation is generally considered a continuation of service with the parent department, unless there is a clear break in service.
- Importance of NOC: Obtaining a No Objection Certificate from the parent department is a crucial step for employees seeking new opportunities while on deputation.
- Impact on Future Cases: This judgment sets a precedent that will likely influence future cases involving service rules and pension benefits for employees on deputation.
Directions
The Supreme Court directed the respondent bank to:
- Quash the impugned orders denying the appellant pensionary benefits.
- Remit the amount due to the appellant along with interest, as per norms.
- Pay costs of Rs. 25,000 to the appellant.
- Complete the above actions within a maximum period of 2 months from the date of the judgment.
Specific Amendments Analysis
Not applicable as no specific amendment was discussed in the judgment.
Development of Law
The ratio decidendi of this case is that a minor procedural lapse by an employee on deputation, who has acted in good faith and obtained a No Objection Certificate, should not lead to the forfeiture of past service and denial of pensionary benefits. This judgment clarifies that deputation is generally a continuation of service with the parent department and that a hyper-technical interpretation of service rules should not override the substance of continuous service. This decision reinforces the principle that technicalities should not be used to deny legitimate dues to employees.
Conclusion
The Supreme Court allowed the appeal, quashing the orders of the Allahabad High Court and the respondent bank. The Court held that the bank’s denial of pensionary benefits to the appellant was unjustified and that his actions did not constitute an interruption in service. The Court emphasized that the appellant had acted in good faith and that the bank’s interpretation of service rules was hyper-technical. The Supreme Court directed the bank to pay the appellant his pensionary benefits, along with interest, and imposed costs of Rs. 25,000 on the bank.