Supreme Court Upholds Pension Scheme Cut-Off Date but Grants Relief in Exceptional Case: Oriental Bank of Commerce vs. Janak Raj Sharma (2019)

Date of the Judgment: 01 October 2019
Citation: 2019 INSC 1189
Judges: R. Banumathi, J., A.S. Bopanna, J., Hrishikesh Roy, J.

Can a bank employee who missed the deadline to opt for a pension scheme due to being abroad be granted an exception? The Supreme Court of India addressed this question in a case involving the Oriental Bank of Commerce and one of its former employees. The court upheld the bank’s cut-off date for the pension scheme but granted relief to the employee due to exceptional circumstances. The judgment was delivered by a three-judge bench comprising Justices R. Banumathi, A.S. Bopanna, and Hrishikesh Roy.

Case Background

The respondent, Janak Raj Sharma, was a Senior Manager at Oriental Bank of Commerce. He voluntarily retired on 15 January 2001. On 23 August 2010, the bank issued a circular offering a pension scheme to employees who had served before 29 September 1995 and retired before 27 April 2010. The deadline to apply for this scheme was 25 October 2010. Mr. Sharma, who was abroad, learned about the circular only on 18 November 2010 and subsequently applied. The bank rejected his application because it was submitted after the deadline.

Timeline

Course of Proceedings

Mr. Sharma filed a writ petition before the High Court after his application was rejected. The Single Judge of the High Court allowed his petition on 4 September 2015, relying on a judgment by the Bombay High Court in the case of Kayoji Sorabji Mirza v. UBI & Ors. The Single Judge noted that Mr. Sharma was abroad and unaware of the circular. The bank appealed this decision before the Division Bench, which dismissed the appeal on 30 September 2015, upholding the Single Judge’s order. The Division Bench also considered the fact that Mr. Sharma exercised his option only after returning from abroad. The bank then appealed to the Supreme Court.

Legal Framework

The case revolves around the interpretation and application of the pension scheme introduced by the Oriental Bank of Commerce. The scheme had a specific cut-off date for employees to opt for it. The legal framework also involves the general principles of fairness and equity in administrative actions, especially when dealing with the rights of employees.

Arguments

The bank argued that the cut-off date for the pension scheme was clearly defined and that Mr. Sharma’s application was submitted after the deadline. They contended that the cut-off date was in line with the scheme floated by all public sector banks, which provided a specific date for opting for the pension scheme.

Mr. Sharma argued that he was abroad during the period when the circular was issued and was unaware of the scheme until after the cut-off date. He contended that the rejection of his application was unfair given the circumstances.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues but considered whether the High Court was correct in directing the bank to accept Mr. Sharma’s application despite the cut-off date.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the judgment of the Bombay High Court in the case of Kayoji Sorabji Mirza v. UBI & Ors. The High Court had relied on this judgment to allow Mr. Sharma’s petition.

Judgment

What weighed in the mind of the Court?

The Supreme Court acknowledged the validity of the cut-off date for the pension scheme. However, the Court was swayed by the fact that Mr. Sharma had a long service record with the bank and was genuinely unaware of the scheme due to his being abroad. The Court emphasized the exceptional nature of the circumstances and made it clear that this decision should not be treated as a precedent.

The Court stated, “In the normal circumstance when a publication of the cut-off date was made while introducing the scheme, it would be appropriate to hold that the option should have been exercised within the last date as prescribed as otherwise there would not be finality.” However, it also noted, “considering the fact that the respondent had rendered long period of service to the appellants-Bank and keeping in view that in exceptional circumstance the learned Single Judge as well as the Division Bench of the High Court had directed the appellants-Bank to accept the option exercised by the respondent herein, we are not inclined to interfere with the impugned order.” The Court further clarified, “such direction issued is in the exceptional circumstance keeping in view the facts involved in the instant case and the same shall not be treated as a precedent in any other case.”

The Supreme Court directed Mr. Sharma to return the provident fund contribution he received in 2001, along with 6% interest from 16 January 2001 to 25 October 2010. The bank was ordered to process his pension request within 60 days, with pension payments effective from 4 September 2015 (the date of the Single Judge’s order). Mr. Sharma would not be entitled to any interest on the pension amount from 4 September 2015 until the date of receipt.

Key Takeaways

• ✓ Banks can set cut-off dates for pension schemes, and these dates are generally binding.
• ✓ Courts may make exceptions in extraordinary circumstances, such as when an employee was genuinely unaware of the scheme due to circumstances beyond their control.
• ✓ Such exceptions are case-specific and should not be treated as precedents.

Directions

The Supreme Court directed Mr. Sharma to return the provident fund contribution he received in 2001, along with 6% interest from 16 January 2001 to 25 October 2010. The bank was ordered to process his pension request within 60 days, with pension payments effective from 4 September 2015.

Development of Law

The ratio decidendi of this case is that while cut-off dates for pension schemes are generally upheld, exceptions can be made in extraordinary circumstances, particularly when an employee was genuinely unaware of the scheme due to circumstances beyond their control. This case does not change the previous position of the law but clarifies that exceptions can be made in exceptional circumstances.

Conclusion

The Supreme Court upheld the High Court’s decision to grant pension benefits to Mr. Sharma, despite his late application, considering his long service and the exceptional circumstance of his being abroad. The Court clarified that this decision is specific to the facts of this case and should not be treated as a precedent.