New Delhi: In a major relief for a section of retired employees of the State Bank of India, the Supreme Court has made it clear that those who opted for the 2000 voluntary retirement scheme after 15 or more years of service are entitled to proportionate pension.
The order was issued by a three-judge bench comprising Justices Arun Mishra, M R Shah and B R Gavai. The bench directed the bank to implement the verdict within three months. The bank has to pay the arrears within this time frame. In case, they failed to pay the arrears, they have to pay an interest of six percent per annum for the amount.
Nearly two-decade-old dispute
As per the VRS scheme proposed by the Indian Banks Association (IBA), any employee with 15 years of service was eligible for pension. On December 27, 2000, the Central Board of the SBI approved the scheme. However, as per SBI Pension Fund Rules, an employee is eligible for pension only on completion of 20 years of service. SBI issued a clarification on January 15, 2001 stating that its Pension fund Rules were applicable while deciding on pension benefits. Several retired employees soon approached the High Courts, which ruled in their favour. Challenging the HC verdicts, the SBI approached the Supreme Court.
The SC bench observed that SBI is an instrumentality of State under Article 12. Hence they are bound by the principle of fairness. The Central Board of Directors of the SBI accepted the VRS proposal of the IBA without any reservation. As the memorandum containing the IBAs proposal of providing pension was approved in absolute terms by the Central Board of Directors of the bank, the 2001 clarification could not be of any value to dilute the otherwise clear and unambiguous resolution of the Board of Directors.
The Court also held that the VRS scheme, once approved by the Board of Directors of SBI, became a contract enforceable by law. The rights under contract cannot be taken away.
