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:
J U D G M E N T
D.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.
