PETITIONER:
THE STATE BANK OF INDIA
Vs.
RESPONDENT:
SHRI C.B. DHALL
DATE OF JUDGMENT: 11/12/1997
BENCH:
SUJATA V. MANOHAR, D.P. WADHWA
ACT
HEADNOTE
JUDGMENT
JUDGMENTD.P. Wadhwa, J.
This appeal by the State Bank of India (for short, the ’Bank’ or ’State Bank’) arises out of the judgment dated August 22, 1983 of learned single Judge of the High Court of Delhi. The reasons for the judgment were given by order dated September 2, 1983. The impugned judgment was delivered on a writ petition filed by the respondent, C.B. Dhall. Dhall had challenged the Order of the Central Board of the State Bank dated June 4, 1980 by which it was resolved that "the sanction to retire you be withheld and the Bank’s contribution to your provident fund Account amounting to Rs. 24006-49 be forfeited" which decision was communicated to Dhall by letter dated July 16, 1980 of the Chief General Manager of the Bank. The High Court allowed the writ petition and quashed the Resolution of the Central Board as well as the Communication by which it was conveyed to Dhall. The High Court further ordered that the Bank shall pay within six weeks to Dhall the following amounts:
"1. The entire arrears of pension
in regard to the pension and
gratuity fund rules with interest @
6% per annum.
2. Pension will be paid in future
in accordance with the rules.
Pension will be computed on the
basis of full pay during the period
of suspension.
3. The provident Fund (Bank’s
contribution which has been
withheld) with interest according
to the Rules after deducting the
admitted sum of Rs. 10,000/- P.F.
and the interest up-to-date on
payment according to the Rules will
be calculated first. Thereafter the
admitted amount of Rs. 10,000/-
will be deducted therefrom. The
balance shall be paid to the
petitioner.
4. The petitioner shall also be
entitled to such other retirement
benefits as are admissible to him
according to the service rules,
have already not been given to him.
5. Petitioner will also be entitled
to full pay for the period of
suspension and the bank shall pay
the sum after deducting such amount
as has been paid to him during the
period of suspension by way of
subsistence allowance or otherwise.
6. The petitioner shall be entitled
to his costs.
Counsel’s fee for Rs. 50/-.
Dhall was appointed as Cashier in the Imperial Bank of India in July 1939 and was confirmed to this post after completion of his period of probation of one year. The Imperial Bank of India was constituted under the Imperial Bank of India Act, 1920 which was repealed by the State Bank of India Act, 1955 by which the State Bank was constituted. Services of Dhall were taken over by the State Bank and the existing Services Rules, Pension Fund Rules and provident Fund Rules of the Imperial Bank of India were adopted by the State Bank in respect of these employees. This was under Section 7 of the State Bank of India Act which, in relevant part, is as under:
"7. Transfer of service of existing
officers and employees of the
Imperial Bank to the State Bank-
(1) "Every officer or other
employee of the Imperial Bank
(excepting the managing director
the deputy managing director and
other directors) in the employment
of the Imperial bank immediately
before the appointed day shall on
and from the appointed day, become
an officer or other employee, as
the case may be, of the state Bank,
and shall hold his tenure, at the
same remuneration and upon the same
terms and conditions and with the
same rights and privileges as to
pension, gratuity and other matters
as he would have held the same on
the appointed day if the
undertaking of the Imperial Bank
had not vested in the State Bank,
and shall continue to do so unless
and until his employment in the
State Bank is terminated or until
his remuneration, terms or
conditions are duly altered by the
State Bank.
(2)................................
.....
(3)................................
..............
(4)................................
...............
(5)................................
................
(6)................................
................"
In July 1956, Dhall was promoted as Head Cashier by the State Bank of India. The State Bank of India (Sub-Accountant & Head Cashiers) Service Rules came into force on January 1, 1959. Under these Rules, the age of super annuation for head Cashier was 55 years but w.e.f. April 1, 1967, this was increased to 58 years. Dhall was due to retire on May 28, 1970 after completing 30 years of pensionable service. However, the competent authority granted extension to him of his service by seven years up to & including 30th June 1977 on which date Dhall was to completed 58 years of his age. While in he extended period of service, Dhall was suspended on account of certain allegations against him of fraud and defalcation of funds while posted at Agra.
On November 24, 1975 Dhall was served with the Charge Sheet. The charges laid under this Charge sheet were many and some of these were (1) shortage of admitted by Dhall, thus, admitting his negligence and responsibility therefor collaterally; (2) shortage in cash to the tune of Rs. 1, 000/- on September 25, 1972; (3) exchanging mutilated noted for he denomination of Rs. 5, Rs. 20 and Rs. 100 without approval of the joint custodian. The Reserve Bank of India had intimated the Bank that mutilated notes to the extent of Rs. 55,000/- were irregularly exchanged and that this was borne out by the inspection of the currency at the branch at Agra held on August 11, 1976 which pertained to the period when Dhall was the head Cashier. Enquiry proceedings were initiated against Dhall. Dhall completed 58 years of his age on June 30, 1977. However, due to the pendency of enquiry, he was given two years extension.
Report of the enquiry officer was submitted on June 15, 1979 which was placed before the disciplinary Authority who found Dhall guilty of most of the charges levelled against him. Extended period of Service of Dhall expired on June 17, 1979 on his attaining the age of 60 years. On November 22, 1979, he was intimated and given show cause notice as to why Bank’s contribution to the provident fund should not be forfeited as he was liable to the Bank to the extent of Rs. 37458/83 and further why sanction to his retirement be not withheld under Rule 11 of the Imperial Bank of India Pension and Guarantee Fund Rules and Regulations. Reply of Dhall was considered and the Central Board of the Bank directed forfeiting of Bank’s contribution amounting to Rs.24006/49 from the provident fund. Dhall was also told that sanction to retire him was withheld under Rule 11 of the Rules and Regulations of the pension and Guarantee Fund by the competent authority. The result was that Dhall was deprived of pension and Bank’s contribution to his provident fund. The show cause notice and the decision of the Bank are reproduced hereunder as:
"State Bank of India,
Local Head Office,
P.O. Box No. 398,
11, Sansad Marg
New Delhi.
Disciplinary Action Cell
No. DAC/79/RL/1336
Dated 22nd Nov. 1979.
Dear Sir,
With reference to the
correspondence resting with your
letter dated 29th June 1976, in
reply to the statement of the
charges served on you, in terms of
out letter No. R. IV/8990 dated
24th November 1975 and subsequent
departmental enquiry held against
you, we have perused the findings
of the enquiry authority vis-a-vis
the proceedings of the enquiry and
"held you guilty of charges Nos. 1,
2, 4, 5, 6, 7, 7a, 9, 10 and
partially charge No.3.
2. With reference to your letter
dated 1st August, 1979 as charges
proved against are grave and you
attained the age of 60 years on the
30th June, 1979 and ceased to be in
the service of the Bank from that
date, you are hereby required to
show cause - why recommendation
should not be made to Local Board
to withhold the sanction of your
withhold the sanction of your
retirement and pension in the term
of Rule 11 of the Imperial Bank of
India Pension and Guarantee Fund
rules. Please also show cause as to
why the bank’s contribution towards
the provident Fund may not be
forfeited as you are liable to the
bank to the extend to Rs.
37,458/83.
3. Your reply in this regard should
reach the undersigned within 7 days
of the receipt of this letter by
you. Otherwise it will be presumed
that you have nothing to submit in
this regard as we shall proceed
accordingly.
Yours faithfully."
Sd/-
"State Bank of India,
Local Head Office,
P.O. Box No. 398,
11, Sansad Marg,
New Delhi.
No. DAC
Disciplinary action Cell
Agra Branch
Shri C.B. DHALL OFFICER GDE II
H/Cashier - Under suspension.
With ref. to your written
statement dated 11.2.80, be advised
considered by the Executive
committee of the Central Board at
its meeting held on 4.6.80 and it
is resolved that the sanction to
retire you be withheld and the
bank’s contribution to your P.Fund
a/c amount to Rs. 24,006/49 be
forfeited.
2. Therefore our tentative decision
conveyed to you vide letter No.
DAC/79/R-V/1336 dated 23rd Nov. ’79
is confirmed.
Sd/- Chief General Manager"
When the decision was communicated to Dhall, he as noted above, filed the writ petition challenging the decision of the Bank. The High Court allowed the writ petition in terms mentioned above. Special leave petition filed by the Bank against the impugned judgment was admitted. On October 28, 1983, the Court passed the following order:
"Special leave granted. The
appellant however undertakes that
even in the event of success
nothing will be recovered from the
respondent. The judgment in appeal
will not be treated as a precedent
for any other case. Four weeks’
time is granted for payment.
Will be listed for final hearing
along with SLP No. 431/81 (CA
9943/83)."
It may be noted that SLP (C) No. 431/81 (CA No. 2141/80) entitled State Bank of India vs. A.N. Gupta etc. has since been decided and judgment is reported in 1997 (6) SCALE 303.
In A.N. Gupta’s case, this court considered the scope of Rule 11 of the Rules and Regulations of the Imperial Bank of India Pension and Guarantee Fund and Rule 20 of the Imperial Bank of India Employees provident Fund Rules. These Rules and Rule 18 of the Imperial Bank of India Employees Provident Fund Rules are as under:
(1) The Imperial Bank of India
Employees Pension and Guarantee
Fund (Rules and Regulations)
"The retirement of all officers of
the Bank shall be subject to the
sanction of the Executive Committee
of the Central Board. The
retirement of all other employees
of the Bank shall be subject to the
sanction of the Executive Committee
or the Local Board concerned with
their employment. Any officer or
other employee who shall leave the
service without sanction, as
required by this rule shall forfeit
all claim upon the fund for
pension."
(2) The Imperial Bank of India
Employees Provident Fund Rules
"18. If any member shall be
dismissed from the service of the
Bank for any fault or other cause
justifying dismissal, he shall not
be entitled to receive, unless
permitted to do so by the trustees,
the sums 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
interest thereon) shall be paid by
the trustees to the Bank out of the
sum standing to the credit of the
member’s account.
20. When a member resigns or
retires from the service of the
Bank he shall, if he has served the
bank for a period of five years or
more (including service in the
Presidency Banks), be entitled to
receive the balance at his credit
in the fund. Provided that when any
member resigning or retiring from
the service of the Bank is under a
liability incurred by him to the
Bank, the trustees shall,
irrespective of the duration of his
service, pay to the Bank out of the
balance at his credit in the fund
any amount due by him to the Bank
(not exceeding in any case the sums
contributed by the Bank to his
account in the fund and any
interest credited to his account on
the sums so contributed)."
This Court held that Rule 11 had no application in the case of the employees governed by the Imperial Bank of India Pension and Guarantee Fund Rules who had retired on attaining the age of superannuation. The Court did not agree with the submission of the Bank that sanctioning of retirement must be understood as sanctioning of service which in term must be understood as approval of service. It was observed that proceedings in the garb of disciplinary proceedings could not be permitted after an employee had ceased to be in the service of the Bank as Service Rules then in force applicable to such employees did not provide for continuation of disciplinary proceedings after the date of superannuation and that sanction of the Bank was required only if the retirement of an employee was by any other method except superannuation. As regards Rule 20 of the Imperial bank of India Employees Provident Fund Rules, this Court took this view that this Rule would become applicable only if an employee retiring from the service of the Bank was under a liability incurred by him to the Bank and in that case, trustees administering the provident Fund could pay to the bank from balance to the credit of the employee in the Fund any amount due by him to the bank. The Court observed that there was nothing on record to show if any liability was incurred by any of the respondents and if so what were the amounts and then said as under:
" In this view of the matter we do
not think it is necessary for us to
go into the question as to whether
the term "liability incurred "
means only such liability as is
either not disputed or established
by due process. Can it be said that
this term would also include any
liability that may be alleged by
the bank? In any case the bank
should at least prima facie
establish that any liability has
been incurred by the employee for
which it can lay claim to the
provident Fund of the employee. We
cannot accept the proposition on
behalf of the Bank that the
trustees should be allowed to
withhold the provident Fund due
till they have had an opportunity
to have established and determined
the amount, if any, due from the
respondents to the Bank. We are of
the view that the respondents are
entitled to the Provident Fund due
to them in accordance with the
provident Fund Rules as it cannot
be said that they incurred any
liability."
This Court did not approve the view expressed by the Andhra Pradesh high Court in T. Narsiah vs. State Bank of India & Ors. [1978 (2) LLJ 173] wherein the High Court was of the view that enquiry could also be made against an employee after his retirement on attaining the age of superannuation. This Court said that by giving such an interpretation to Rule 11, the High Court had, in fact, lent validity to disciplinary proceeding against an employee even after his superannuation for which no provision existed either in the relevant Pension Rules or in the relevant Service Rules and when the High Court had itself observed that an enquiry even if initiated during the service period of the employee could not be continued after his retirement on superannuation. In coming to the conclusion that Rule 11 would not be applicable when an employee superannuates on his attaining the age of retirement, this Court considered various relevant pension Rules and Service Rules of the Imperial Bank.
Later on it would appear Rule 228 was inserted in the Imperial Bank of India Pension and Guarantee fund Rules which postulates continuance of disciplinary proceedings even after an employee ceases to be in Bank’s service. This Rule 22B (to be read as Rule 22A as per the additional affidavit filed by the bank) came into force with effect from June 25, 1987 and would, therefore, be not relevant in the present case.
The question then arises what are the Rules of service applicable in the case of Dhall. Mr. Dogra, learned counsel for the Bank, submitted that Rules 20A and 20B which were inserted in the State Bank of India (Supervising Staff) Service Rules, 1975 (for short "Service Rules") would be answer to that. Rules 20A and 20B were introduced with effect from April 1,1977 and are as under:
"20A. Notwithstanding anything to
the contrary in these rules, no
employee who has ceased to be in
the Bank’s service by the operation
of , or by virtue of, any rule,
shall be deemed to have retired
form the Bank’s service for the
purpose for the Imperial Bank of
India Employees’ Pension and
Guarantee Fund Rules or the State
Bank of India Employees’ Pension
Fund Rules unless such cessation of
service has been sanctioned as
retirement for the purpose of
either of the said pension fund
rules as may be applicable to him.
20B. In Case disciplinary
proceedings under these rules have
been initiated against an employee
before he ceases to be in the
Bank’s service by the operation of,
or by virtue of, any of these
rules, the disciplinary proceedings
may, at the discretion of the
Managing Director, be continued and
concluded by the authority by which
the proceedings were initiated in
the manner provided for the in
these rules as if the employee
continues to be in service, so
however, that he shall be deemed to
be in service only for the purpose
of the continuance and conclusion
of such proceedings."
We asked Mr. Dogra if the services of Dhall, the Head Cashier, were governed by the State Bank of India (Sub- Accountants and Head Cashiers) Service Rules as Rule 2 therein provided that the Rules shall apply to all Sub- Accountants and head Cashiers who are in the service of the Bank as such on January 1, 1959 and to all Sub-Accountants and Head Cashiers appointed thereafter. Mr. Dogra with reference to the additional affidavit filed by the Bank submitted that State Bank of India (sub-Accountants and head Cashiers) Service Rules, 1959 were no longer in force as they were repealed in terms of Rule 2(1) of the State Bank of India Supervising Staff (Service Rules), of the State Bank of India Supervising Staff (Service Rules), 1975. Said Rule 2(1) states that the Service Rules which came into force with effect from July 1,1975 shall apply to all officers/staff officers and senior staff officers in the Bank other than persons who were in the service of the Bank on June 30,1955 either as officers or as assistants. It was submitted by Mr. Dogra that Dhall was a Cashier on June 30, 1955 and was not an officer. he was also not an Assistant to be governed by the Rules governing the services of Assistants in the Bank. Dhall was promoted as head Cashier in July 1956 under Rule 3(p) of the Service Rules. head Cashier is a person appointed on the terms and conditions applicable to officers Grade ii and as per the definition of officer under Rule 3(j), officer means an officer Grade II. Dhall would, therefore, be an officer under the Service Rules, State bank of India (Sub-Accountants and Head Cashiers) Service Rules, 1959 would, therefore, be no longer in force as these would deem to have been repealed by Rule 2(1) of the Service Rules which states that these Service Rules shall apply to all officers, staff officers and Senior Staff Officers in the bank other than persons who were in the service of the Bank on the 30th June, 1955 either as officers or as Assistants. Consequently, Dhall would be governed by Rules 20A and 20B of the Service Rules which came into effect from April 1,1977.
There is no dispute that the employees who are in the service of the Bank as on 30th June, 1955 would continue to be governed by the Imperial Bank of India Rules relating to pension and provident Fund and those joining the Bank after this data by the Rules of the State bank of India framed under Section 50 of the State bank of India Act. In this connection we may also refer to Rule 21 of the Service Rules of 1975 which is as under:
" 21. Unless Otherwise directed by
the Appointing Authority, every
employee shall as from the
commencement of his service as an
officer become a member of-
(a) the State bank of India
Employees Provident Fund, if he is
not already a member of that Fund
or the Imperial bank of India
Employee’s Provident Fund:
(b) the State Bank Of India
Employees’ pension Fund, if he is
not already a member of that Fund
or the imperial bank of India
Employees’ Pension and Guarantee
Fund or the bank of Bombay
Officers’ pensions and Guarantee
Fund or the bank of Madras pension
and Gratuity Fund:
and shall subscribed and agree to
be bound by the rules of those
Funds.
Provided that if his age at the
time of commencement of his service
as Officer is below 21 years he
shall become a member of the State
bank of India Employees’ Pension
Fund on attaining the age of 21
years and on becoming a member
shall subscribe and agree to be
bound by the rules of that Fund."
Rules 20-A and 20-B of the Service Rules have been framed under Section 43 of the State Bank of India Act. This section is as under:
"43. State bank may appoint
officers any other employees- (1)
The State bank may appoint such
number of officers, advisers and
employees as it considers necessary
or desirable for the efficient
performance of its functions, and
determine the terms and conditions
of their appointment and service.
(2) The officers, advisers and
employees of the State Bank shall
exercise such powers and perform
such duties lies may, by general or
special order be entrusted or
delegated to them by the Central
Board."
Section 43 empowered the State bank to determine the terms and conditions of the appointment and service of its officers and employees. These officers and employees exercise such powers and perform such duties as may be entrusted or delegated to them by the Central board of the State Bank. Section 50 of the State Bank of India Act empowers the Central Board to make regulations but Section 43 is independent of Section 50, we hold that Service Rules had been framed by the State bank in exercise of its statutory powers under Section 43 of the State Bank of India Rules.
Rules 20-A and 20-B have now made a material difference to the applicability of Rule 11 of the pension Rules. However, the case of A.N. Gupta (Supra) is distinguishable as these Rules, 20-A and 20-B, came into existence only w.e.f. March 31, 1977. Under Rule 20-A retirement under the Pension Fund Rules has now to be sanctioned by the competent authority. Under this Rule, retirement would mean retirement on superannuation or any other type of retirement.
Under Rule 20-B disciplinary proceedings if initiated against an employee before he retires from service could be continued and concluded even after his retirement and for the purpose of conclusion of the disciplinary proceedings, the employees is deemed to have continued in service but for no other purpose. After the disciplinary proceedings, the employee is deemed to have continued in service but for no other purpose. After the disciplinary proceedings were concluded, the State Bank directed that (1) sanction of Dhall to retire be withheld and (2) Bank’s contribution to his provident fund accounts be forfeited. Under Rule 10 of the Pension Fund Rules, and employee dismissed from the Bank Service for willful neglect or fraud shall forfeit all claims upon the fund for pension. Dhall has not been dismissed from service through he was charged with willful neglect and fraud. The question that arises for consideration is what is the effect of the direction the State bank that sanction to retire of Dhall be withheld. Here cessation of service of Dhall on retirement has not been sanctioned accordingly as per the last portion of Rule 11 of the pension Fund he forfeits all claims upon the Fund for pension.
But then applicability of his Rule 11 has to be contrasted with Rule 10. It is only if an employee has been dismissed from service that he forfeits all claims upon the fund for pension and so would appear to be the effect of Rule 11. Under Rule 7, an employee has right of property in the pension fund to the extent of his contribution made thereof with interest thereon. It would, therefore, appear to us that when the Rules talk of forfeiture of all claims upon the fund for pension that would only mean the Bank’s contribution and the interest accruing thereon. These Rules cannot be extended to forfeit event eh employee’s contribution to the pension fund and the interest accruing thereon. However, after the introduction of Rule 5-A in the pension Fund Rules w.e.f. April 1, 1968, there is not to be any contribution by employee to the pension fund.
Coming to the provident Fund Rules, Rule 18 applies when an employee is dismissed from service which is not the case here. It is under Rule 20 that an amount of Rs. 24,006,49 has been forfeited which is the Bank’s contribution to the provident fund account of Dhall. This, the State Bank is entitled to forfeit under Rule 20. The amount has been arrived at after due enquiry and represents the liability incurred by Dhall to the Bank. Accordingly we hold that Dhall was rightly proceeded against in the disciplinary proceedings and the State bank was within its authority to impose the penalty as conveyed to Dhall by letter dated July 16, 1980 of the Chief General Manager of the State Bank.
We, therefore, uphold the impugned judgment of the High Court to the extent that Dhall would be entitled to his contribution, if any, to the pension Found along with the interest accrued thereon. The impugned judgment in all other respects is set aside. However, in view of the interim orders made on October 28, 1983, no further orders are required in this appeal.