In PETITION FOR SLA (CIVIL) NO. 7277 OF 2020-SC- Once dismissal order was set aside by HC, umbilical cord between employer & employee stood restored: Top Court directs Syndicate Bank to restitute employee due to its failure in implementing earlier settlement memo
Justices Hima Kohli & Ahsanuddin Amanullah [10-10-2023]

Read Order: SYNDICATE BANK v. N.R. BHAT

Tulip Kanth

New Delhi, December 19, 2023: While considering a matter involving a suspension order passed against an employee of Syndicate Bank, the Supreme Court has asked the Bank to restitute the employee by paying him interest which would be more than the ordinary rate of interest on an FDR that the petitioner-Bank offers to the public at large. The Top Court passed this Order after noting that the Bank failed to implement its joint settlement memo substituting the penalty of dismissal from service imposed on the respondent-employee with the penalty of reduction of time scale of pay.

The Petitioner-Bank approached the Top Court challenging the order passed by the Division Bench of the High Court in an Intra Court Appeal whereby the respondent-employee was permitted to exercise the option of availing retiral benefits and making a written request to the petitioner-Bank to pass appropriate orders.

The factual background of this case was that the respondent-employee joined the services of the petitioner-Bank as an Officer Trainee on March 31, 1969. On completion of probation, he was posted as a Probationary Junior Officer on October 3, 1969. On August 6, 1982, the respondent employee was suspended in contemplation of disciplinary proceedings. After the disciplinary proceedings were concluded, the Disciplinary Authority passed an order on March 3, 1997 dismissing the respondent-employee from service.

The said order had been upheld by the Appellate Authority. Aggrieved by the aforesaid orders, the respondent-employee preferred a writ petition before the High Court whereby the matter was remitted back to the Petitioner – Bank for reconsideration.

Aggrieved by the said order, the petitioner preferred an Intra Court Appeal before the Division Bench. During the pendency of the writ appeal, the parties arrived at an amicable settlement in terms of a Joint Memo where under the petitioner-Bank agreed to substitute the penalty of dismissal from service imposed on the respondent-employee with the penalty of reduction of time scale of pay by four stages but without adversely affecting his retiral benefits. It was in the course of taking on record the aforesaid Joint Memo that the impugned order came to be passed granting liberty to the respondent-employee to exercise the option of availing retiral benefits.

It was the case of petitioner-Bank that that the High Court ought not to have permitted the respondent-employee to apply for pensionary benefits considering the fact that the entire matter was settled between the parties by virtue of the Joint Compromise Memo. The respondent-employee had an opportunity to opt for a pension scheme in the year 1995 when the Syndicate Bank Employees (Pension Regulations) were first notified and at that time, he was an employee of the Bank but having failed to do so then, he couldn’t demand that pension be released in his favour.

The Division Bench of Justice Hima Kohli & Justice Ahsanuddin Amanullah  was inclined to accept the submission made by the petitioner–Bank. “…even if the relationship of the employer-employee had ceased on the dismissal of the respondent-employee on 3rd March, 1997, once the dismissal order passed by the Disciplinary Authority and upheld by the Appellate Authority vide order dated 6th April, 1997, was set aside by the High Court by virtue of the judgment dated 23rd June, 2005, the umbilical cord between the petitioner-Bank and the respondent-employee stood restored and there was ample opportunity for the respondent-employee to have exercised the option in terms of the Circular dated 16th April, 2010, which he failed to do”, the Bench clarified.

As per the Bench, having missed the bus, the respondent-employee could not have claimed any benefit of pension that too after entering into a Joint Memo of Settlement with the petitioner-Bank.

“We are, therefore, of the opinion that no such option could have been permitted to be exercised by the respondent-employee at such a belated stage, in the year 2019”, the Bench further added.

The Top Court also found substance in the submission made by the respondent-employee that he ought to be compensated for illegal withholding of the settlement dues payable to him in terms of the Joint Memo.

The Bench took note of the fact that it was made clear to the petitioner-Bank on the very first date that the Joint Memo ought to be implemented but the same had not been implemented.

The Bench directed the Bank to restitute the respondent-employee by paying him interest at the rate of 12% per annum to the respondent-employee w.e.f. July 1, 2019, till the date the said amount is released in favour of the respondent-employee. The interest component shall be paid within four weeks failing which, the same shall stand enhanced from 12% to 15% per annum, the Bench further ordered.