Arikarevula Sanyasi Raju vs The Branch Manager, State Bank of India and Others

G. Bikshapahty, J.—The writ petition is filed seeking Writ of Mandamus or any other appropriate direction declaring the action of the Respondents in not paying monthly pension to the Petitioner, pursuant to the proceedings dated February 1, 1991 from 3rd respondent and the recovery of the amounts already paid towards the Leave Encashment and pension as illegal and arbitrary.

The facts in nut-shell are that the Petitioner was appointed in State Bank of India service on May 16, 1966 as Cashier, subsequently he was promoted as Sub Accountant in 1977. In the year 1988, the petitioner was charge-sheeted for misconduct and thereafter an enquiry was conducted into the charges framed against him. Finally the disciplinary authority imposed the punishment of removal from service by orders dated May 25, 1990 with effect from June 2, 1990. The petitioner did not challenge the order of removal in appeal or before any other authority or court. Thus, the punishment became final. The petitioner made application for settlement of terminal benefits, consequent on his removal from service namely Gratuity, Provident Fund, Pension, Leave Encashments etc. The petitioner submits that on February 1, 1991, the Branch Manager, State Bank of India, Seethammadhara branch sanctioned interim pension of Rs. 1,500/- per month pending the final sanction. Accordingly, the petitioner was being paid Rs. 1,500/- per month from the date of his retirement. He was also paid Leave Encashment to the tune of Rs. 8,714.57ps. The Respondent bank settled the Provident Fund on August 1, 1991 and the cheque for Rs. 97,395/- was issued to him which was deposited by him in S.B.I. Seethammadhara Branch. However, the petitioner states that a sum of Rs. 23,614.57 ps. consisting of Leave Encashment amount of Rs. 8,714.57ps. and pension paid from June 2, 1991 to April 1, 1992 amounting to Rs. 14,900/- were deducted. The case of the petitioner is that even the cheque was issued for the full amount, the petitioner deposited the said cheque in Seethammadhara Branch. The said sum of Rs. 23,614.57 ps. was withheld and he was informed that the said amounts were recovered from the P.F. amount as the petitioner was not entitled for pension and also the leave Encashment. That is the reason why, the petitioner was also not paid the pension from May, 1991 onwards.

In the counter affidavit filed on behalf of the Bank, it is submitted that the petitioner was removed from service with effect from June 2, 1990. The petitioner is not entitled for pension under the provisions of the State Bank of India Pension Fund Rules. The pension is only payable to the employees who retires from service of the Bank. Since the petitioner is removed from service, he is not entitled for the pension. It is submitted by the Respondents that under Rule 22 of the Pension Fund Rules, the pension is payable. The said rule is extracted below:

"(i) A member shall be entitled to a pension under these rules:

On retiring from the bank''s service

(a) After having completed twenty years pensionable service provided that he has attained the age of fifty years.

(b) after having completed twenty years pensionable service irrespective of the age he shall have attained, if he shall satisfy the authority competent to sanction his retirement by approved medical certificate or otherwise that he is incapacitated for further active service,

(c) after having completed twenty years pensionable service, irrespective of the age he shall have attained at his request in writing;

(d) after twenty five years pensionable service."

It is further submitted that the pension is not a fundamental right and the same is subject to sanction by the competent authority.

The petitioner filed additional affidavit stating that the matter relating to grant of pension, Gratuity and P.F.etc. in respect of the employees removed from the service was considered by the bank and after negotiations a circular was issued on February 11, 1985 wherein it was decided to grant pension to the persons who resigned from service or who are discharged or removed from the service. Therefore, by virtue of the said notification, the petitioner is entitled for the pension. He refers to the Circular dated February 11, 1985 and the grant of pension is contained in Clause (iv) which is extracted below:

"(iv) The instructions have already been is-sued through various circulars in our letter No. ADM:17049 dated April 23, 1980 clarifying that whenever employees of the bank (Award as well as the Officers) who have completed 25 years of pensionable service desires to leave the bank''s service by way of resignation or discharge or removal from the service or compulsory retirement except in a case of dismissal, they will be entitled for pensionary benefits."

The eligibility is determined on the basis of pension rules.

With regard to the payment of P.F. it is Submitted that the person who is removed from service is entitled for the P.F. provided he completes five years of service. Leave encashment is also eligible to the employees, if the employees are eligible for pension.

Under the circular relating to the P.F. settlement it is stated that "employee''s own liability, example, outstanding loan etc. can be set off from employee''s own contribution." Loss sustained by bank for his acts of omission or commission can be recovered by the Bank from the bank''s contribution. Bank''s contribution is payable only when one has served five years or more. Compensation payable in cases of retrenchment under paragraph 524 of the Award or 25(f) of Industrial Disputes Act has not been dealt with here. Thus, he submits that the petitioner is entitled for the pension under the pension fund Rules as the same is made applicable between the employees and the management.

The additional counter affidavit was filed on behalf of the bank stating that even under the Rules, the petitioner is not entitled as he did not complete 25 years of service as on the date of the removal from service. Therefore, he does not get any right for pension. The interim pension granted to the petitioner was paid only under mistaken impression and that would not confer any right. With regard to the leave encashment, the Respondent submits that the employee is entitled for leave for leave encashment, if he is entitled for pension. Since, the petitioner, is not entitled for pension, he is also not entitled for leave encashment. Hence, both the sums i.e. interim pension paid and also leave encashment were recovered from the provident Fund accumulation of the bank. It is also submitted that the bank has got power to set off the amounts which are due to it and the petitioner cannot be allowed unjust enrichment.

On the basis of the above said averments, it is to be considered whether the petitioner is entitled for pension and the leave encashment and whether the action of the respondents recovering the said amount is in accordance with the law?

It is not in dispute that the petitioner was removed from service for certain misconducts and as on the date of the removal , he did not complete 25 years of service. Therefore, it is to be seen whether the petitioner is entitled for the pension in accordance with the circular issued by the bank dated February 11, 1985. It is conceded that the pension is not payable in respect of the employees who have been dismissed from service. However, in respect of the employees who are imposed with the punishment of removal from service, the pension is payable in accordance with the Pension Fund Rules.

The learned counsel for the petitioner submits that the pension is no more a bounty and the petitioner is entitled to claim the same as of right. The Respondents having granted the interim pension @Rs. 1,500/- per month, pending disposal of final settlement, it is not open for them to stop the payment of pension without notice. Equally it is not open for the Respondents to deduct the pension paid and also the leave encashment without putting petitioner to notice. He further submits that even the petitioner was not informed before deducting the amount and no notice or opportunity was given to him. Thus the learned counsel for the petitioner submits that the entire action of the Respondents is illegal and in gross violation of principles of natural justice.

The learned counsel submits that the Supreme Court and the various High Courts have categorically held that the pension is a right which accrues to employee after putting in long years of service. Therefore, it cannot be treated as a bounty or exgratia - payment. He relies on the decisions reported in Deokinandan Prasad Vs. The State of Bihar and Others, ; State of Punjab and Another Vs. Iqbal Singh, , Dayal Singh Dewana v. State of Punjab and Ors. 1991 (2) SLR 723, V. Vedham v. The Director of School Education, Madras and Ors. 1991 (4) SLR 402, H.S. Nanjundiah Vs. State of M.P. and Others, . It is not necessary to refer to each case cited by the learned counsel for the petitioner. It is now well settled by the Supreme Court that right to a pension is a condition of service and therefore he is entitled for the pension subject to fulfilment of conditions of grant of pension. Therefore, what is required to be considered is whether the petitioner is entitled for the pension under the Rules.

10A. The learned counsel for the petitioner strongly relies on Sub-clauses (b) and (c) of Rule 22(1)(i). He submits that an employee who completes 20 years of pensionable service and if he satisfies the competent authority on the basis of medical certificate or otherwise that he is incapacitated for further active service is entitled for pension. Even otherwise, he submits under Clause (c) that after having completed 20 years of pensionable service, irrespective of the age, he may go on retirement at request.

I have considered the contention of the learned counsel for the petitioner, I am afraid, I cannot accept the submissions made by him. The contention is that the petitioner is incapacitated for further active service not on account of medical disability, but on account of order, of removal passed by the management. Therefore, when once he is incapacitated from service on account of removal, he shall be considered for grant of pension as admittedly he has completed more than 20 years of pensionable service and less than 25 years of service. The said proposition cannot be accepted for more than one reason. The facility of pension is granted to the employees who had completed 20 years of service and on medical grounds or in case if the is incapacitated for further active service. Therefore, his incapacity is co-related to medical and physical disability. If the interpretation as made by the learned counsel for the petitioner is to be accepted, then every employee either dismissed orremoved or otherwise terminated irrespective of the medical fitness is entitled for pension. That is not the intention of the clause. It covers only employees under medical disability. Therefore, the words incapacitated for further active service must be construed with reference to the principle of ejusdem generis and the same has to be co-related to the medical fitness of the employee. The Clause (c) is also inapplicable as it is the voluntary retirement to be accepted by the authority when the application is made by the employee in writing. Therefore, I am of the considered opinion that the petitioner is not entitled for the pension under Rule 22(1). The employee will be covered only by Clause (d) when he completes 25 years of pensionable service. For these reasons I have to hold that the petitioner is not entitled for the pension.

It is also contended by the learned counsel for the petitioner that the petitioner was not imposed with the punishment of forfeiture of pension and therefore the pension cannot be withheld. He relies on the decision reported in B.L. Tank and Ors. v. B.S. Ojha, IAS, Chief Secretary to Govt. Haryana and Ors. 1992 (5) SLR 508.

The said decision is not relevant inasmuch as one of the modes of punishment to be inflicted by the Court Marshal is also forfeiture of pension. Inasmuch as such a punishment is not imposed, the authorities are not entitled to stop the payment of pension. But in the instant case, there is no such punishment contemplated under the service regulations. Further, the very eligibility of the petitioner for the pension is not established. Hence, the reference to the said decision is inappropriate.

It is nextly contended by the learned counsel for the petitioner that the entire P.F. was released to the petitioner by the respondent and the cheque was released in his favour. The said cheque was deposited by the petitioner in his personal account maintained at Seetammadhara branch, which also happened to be State Bank of India. Therefore, the action of the respondents in straightaway deducting the amount without giving any notice or intimation is absolutely illegal and arbitrary. Further, the authorities are not empowered to deduct the amount from the Provident Fund accumulations, as no deduction is permissible under the scheme.

The learned counsel for the Respondents bank submits that the petitioner is not entitled for any notice inasmuch as the petitioner has paid the amount for which he is not entitled. Therefore, the petitioner cannot complain violation of principles of natural justice. He further submits that by keeping the amount which the petitioner is not entitled under the rule, it is an unjust, enrichment and also illgotten wealth and hence the same can be recovered from the P.P. which is permissible. He further submits that the Respondent being a Banker, he can exercise the Banker''s lien and recover the same. In this regard, it may be noted that the question of exercising the bankers'' Hen was never pleaded by the bank either in the counter or in any correspondence exchanged between the petitioner and the bank. Therefore, the same cannot be allowed to be raised.

Only issue that could be decided is whether the petitioner is entitled for a notice. The petitioner submits that a sum of Rs. 23, 614.57 ps. have been withheld by the bank from out of the provident Fund accumulations, for which the cheque was deposited by the petitioner in Seethammadhara branch. The petitioner was paid a sum of Rs. 14,900/- towards the interim pension from Junel, 1990 to March 31, 1991 and a sum of Rs. 8,714.57 ps. towards the leave encashment totalling to Rs. 23,614.57 ps. When the said amount is sought to be set-off or adjusted, the petitioner is required to be put on notice. Simply because the bank is having funds with it, it cannot appropriate without putting the petitioner on notice or without giving any opportunity to the petitioner. Once the amount has been released by the bank, towards the P.P. accumulation, the same becomes his property and it cannot be denied without giving any opportunity. It makes no difference whether the cheque is deposited in the State Bank of India or in any other bank. Therefore deducting the same is wholly illegal and void and in violation of principles of natural justice. Accordingly, I hold that the action of the Respondents in deducting the sum of Rs. 23, 614.57 ps. is illegal and without jurisdiction.

Nextly, it is submitted that the Respondent has no manner of right to deduct the amounts paid to the petitioner towards the pension and leave encashment. There is no provision under he Provident Fund scheme to make such kind of deductions.

The State Bank of India Provident Fund Rules have been framed by the State Bank of India in exercise of powers conferred by Section 50 of the State Bank of India Act, 1955. Under Rule 26, the member when he resigns or retires from service, he is entitled for the P.P. Rule 24 stipulates that a member dismissed from the service of the bank shall not be entitled to receive the P.F. unless permitted by the trustees. The said rules is extracted below:

"If any member shall be dismissed from the service of the Bank for any fault or other cause justifying idsmissal, he shall not be entitled to receive unless permitted to do so by the trustees, the sums contributed by the bank to his provident Fund account, or any interest credited to that account on the sums so contributed. provided that when any member is so dismissed any amount due under a liability incurred by the member to the Bank (not exceeding in any case the sums so contributed by the Bank and interst thereon) shall be paid by the trustees to the bank and out of the sum standing to the credit of the member''s account".

Even in the circular issued by the bank, only the employees, own liability e.g., employees'' loan etc. can be deducted from the provident fund.

Admittedly the amount does not represent the loan or any other liability. It is the amount paid by the Bank of its own volition and such an amount cannot be deducted from the P.F. accumulation. There is also no provision under the Rules permitting the bank to make such a deduction. The Provident Fund Gratuity and pensionary benefits stand on a separate footing inasmuch as they are not liable for attachment even by the Courts. Therefore, in the absence of any specific provision in the Rules or in the Act, the Respondent bank has no power to deduct the same from the P.F. accumulation. Under these circumstances, I hold that the deduction of sum from the P.F. is illegal and incompetent, and the same is without jurisdiction. Accordingly, the petitioner is entitled for the said sum of Rs. 23,614.57 ps. with interest @ 18% per annum from Nov., 1991.

For the foregoing reasons, the Writ Petition is allowed and the action of the Respondent bank in recovering a sum of Rs. 23,614.57 ps. towards the pension and the leave encashment is held illegal, incompetent, and consequently, a direction shall be issued to the respondents to refund a sum of Rs. 23,614.57 ps with interest @ 18% per annum from Novermber, 1991 to the petitioner within six weeks from the date of receipt of this order. Since it has been held that the petitioner is not entitled for leave encashment. However, this order does not preclude the bank from recovering the said amount from the petitioner by initiating Civil Proceedings, if so advised.

In the circumstances, there shall be no order as to costs.