State Bank Of India vs L. Kannaiah And Ors

(hereinafter referred to as the 'Bank') as Security Guards. The 2nd

respondent (Abbas), who is no more and whose L.Rs. are on record,

was appointed by the Bank on 22.8.1962. The 4th respondent

(Marimuthu) was appointed on 8.9.1957 and the 5th respondent

(Raju) was appointed on 1.9.1955. By that time, they were aged 37,

35 and 38 years respectively. The 2nd respondent rendered 22 years

of service, the 4th respondent 24 years of service and the 5th

respondent 22 years of service in the Bank, by the time they retired at

the age of 60. There is no need to refer to the other two respondents

(Respondent Nos. 1 & 3) as the first respondent has already got the

relief during the pendency of the writ petition and the third respondent

was denied relief by the High Court. They are unnecessarily shown

as respondents. Though the S.L.P. was filed against 14 respondents

who were writ petitioners, all excepting five, were deleted from the

array of respondents subsequently. Hence this appeal is effective

against three respondents only.

A writ petition under Article 226 of the Constitution was filed in

the Madras High Court in the year 1986 seeking a direction to the

Bank to admit them to the benefit of pension fund and to pay pension.

The pension was denied to them on the ground that they exceeded

the age limit of 35 years as on 1.1.1965. It may be stated here that

the age limit was increased to 38 years later on and that is how some

of the original writ petitioners got the relief. The prescription of the

age limit of 35 years as well as the cutoff date of 1.1.1965 was

questioned before the High Court. The learned single Judge of the

High Court dismissed the writ petition. This led to the filing of writ

appeal by the aggrieved employees. The Division Bench, by the

impugned judgment dated 4.2.1998, set aside the order of the

learned Single Judge and allowed the appeal in part. The Division

Bench of the High Court directed the Bank to admit appellant Nos. 3,

10, 11 & 13 to the pension fund with effect from April, 1983. That

means, the respondents 2, 4 & 5 in this appeal, apart from one more

person (whose name has been deleted from S.L.P. in view of non-

compliance with Office Report) have got the relief from the High

Court. Hence, this appeal by the Bank.

Civil Appeal No. 3432 of 2000 is in the nature of a cross-appeal

filed by four persons who were appellant Nos.4, 6, 12 & 14 in the writ

appeal, to whom relief was denied by the High Court.

The State Bank of India Employees' Pension Fund came into

existence on the 1st July, 1955. In exercise of the powers conferred

by Section 50 of the State Bank of India Act (Act 23 of 1955) certain

rules were framed governing the establishment and maintenance of

the pension fund under the caption 'State Bank of India Employees'

Pension Fund Rules'. Rules 7 & 8 are relevant for this case. They

read as follows:

"7. Save as provided in rule 8, every whole time

permanent employee in the service of the Bank who is

entitled to pension benefits under the terms and

conditions of his service shall become a member of the

fund from—

(a) the date from which he is confirmed in the service of

the Bank or

(b) the date from which he may be required to become a

member of the fund under the terms and conditions of

his service.

8. Save as provided in rule 25, no employee shall be

eligible to become a member of the fund—

(a) if he is a member of the Imperial Bank of India

Employees' Pension and Guarantee Fund or if he is

engaged in any country outside India and appointed

for service in such country;

(b) if he is below 21 years of age;

(c) if he is over 35 years of age or

(d) whose service is specially declared by the Bank to be

non pensionable."

It should be noted that the age limit under Clause (b) of Rule 8

was reduced to 18 years and the age limit under Clause (c) was

increased to 38 years by means of amendments made during the

pendency of the writ petition. The Bank issued circular No.68, dated

28th March, 1959 and another staff circular No. 69 (date not known)

extending the pension fund benefits to certain excluded categories of

employees. The ex-servicemen, except those drawing a nominal

pension of Rs.25 and below belonged to the excluded category.

However, by means of staff circular No.18 dated 8.4.1974, the Bank

Management decided to admit all whole-time permanent employees

to the benefits of the provident and pension funds subject to their

respective service rules and the rules of the funds. Para 3 of the

circular reads as follows:

"Consequently, all ex-servicemen hitherto classified under

'excluded category' may now be admitted to the benefits

of the State Bank of India Employees' Provident and

Pension Fund with effect from 1.1.1965 or from the date

of their confirmation, whichever is later, irrespective of the

nature and the quantum of military pension drawn by

them."…

Para 5 of the circular stipulated that the age limit (viz. not being

over 35 years) for admission to pension fund shall continue. Thus the

pensioned ex-service personnel were admitted to pensionary benefits

with effect from 1.1.1965 subject to the restriction of the age limit of

35 years (which was later on enhanced to 38 years) on that date. As

the date of confirmation of the respondents was much earlier to

1.1.1965, the crucial date for admission to the pension fund would be

1.1.1965. On that date, the confirmed employee of the Bank should

not have exceeded 35 years of age. That is the combined effect of

the staff circular No. 18 dated 8.4.1974 read with the Pension Fund

Rules referred to supra. The reason for prescribing the maximum age

limit of 35 or 38, as the case may be, for the purpose of induction into

pension fund appears to be that the employee would be able to

render minimum service of 20 years as contemplated by Rule 22 of

the Pension Fund Rules. However, there does not appear to be any

rationale or discernible basis for fixing the cutoff date as 1.1.1965,

notwithstanding their earlier confirmation in Bank service. True, a new

benefit has been conferred on the ex-servicemen and therefore a

cutoff date could be fixed for extending this new benefit, without

offending the ratio of the decision in D.S. Nakara and others Vs.

Union of India [AIR 1983 SC 130]; but, there could be no arbitrariness

or irrationality in fixing such date. Minimum qualifying service being

the essential consideration, even according to the Bank, there is no

reason why the ex-servicemen like the respondents, who from the

date of their confirmation had put in more than twenty years of

service, even taking the retirement age as 58, should be excluded.

No reason is forthcoming in the counter-affidavit filed by the Bank for

choosing the said date. When it is decided to extend the pensionary

benefits to ex-servicemen drawing pension, the denial of the benefit

to some of the serving employees should be based on rational and

intelligible criterion. In substance, that is the view taken by the High

Court and we see no reason to differ with that view.

Civil Appeal No. 3431/2000 is therefore dismissed. No costs.

Coming to the appeal filed by four writ petitioners who were

unsuccessful in the High Court, as far as appellants 1 & 2

(petitioners/appellants 4 & 6 in the High Court) are concerned, relief

was denied to them on the ground of their total service in the State

Bank of India being less than 20 years when they retired at the age of

60. A contention has been raised for the first time in the S.L.P. that

the service rendered by them in the Army should be clubbed with

their service in the Bank for the purpose of pension. The circular

issued by the Government of India, Ministry of Finance (Banking

Division) on 28.1.1983 has been relied upon. However, there is

nothing in the circular which obligates the Managements of the Banks

to add the military service to the service rendered in the Bank for the

purpose of pension. Such benefit was directed to be given only in

regard to sanction of loans and for the purpose of promotion in a

limited way. Therefore, the contention of the said two appellants has

no merit.

As regards the appellants 3 & 4 (who are no more and whose

L.Rs. are brought on record), they joined the service of Imperial Bank

of India on 8.3.1950 and 1.1.1955 respectively. On formation of the

State Bank of India, they were absorbed in the service of State Bank

of India along with the other staff of the erstwhile Imperial Bank of

India with effect from 1.7.1955. Reckoning from that date, they

rendered service of 24 years by the time they retired in the year 1980

at the age of 60. The 4th appellant would have been confirmed as

Security Guard only after he joined the State Bank of India on transfer

because he had hardly put in six months of service in Imperial Bank.

In the counter-affidavit filed in the High Court, the deponent

(Personnel Manager of the Bank) specifically stated that pensioned

Sepoys were excluded from the Imperial Bank of India Pension and

Guarantee Fund Rules. Therefore, the bar under Rule 8(a) of the

Rules quoted above does not apply to these two appellants. If so,

when the ex-servicemen were taken out of excluded category by

virtue of the Circular dated 8.4.1974 and they became eligible to be

admitted to the benefits of the SBI Employees' Provident and Pension

Fund, it would be travesty of justice if the pension is denied to

appellants 3 & 4 merely because they were originally employed by

Imperial Bank of India. They should not be driven to a situation in

which they would be disabled from availing of the benefits either

under the Imperial Bank Pension Fund or the SBI Pension Fund. In

fact, nothing is stated in the counter-affidavit filed by the Bank in the

High Court as to why they should be denied the benefit of pension in

the State Bank of India. The observation of the High Court that they

are not entitled for pension "as they were not the employees of the

State Bank of India originally as they had joined the service of the

Imperial Bank of India prior to 1.7.1955" cannot therefore be

sustained. The High Court ought not to have rejected their plea

without reference to the relevant facts. We therefore direct that the

pension and the other pensionary benefits shall be paid over to the

legal representatives of appellants 3 & 4 expeditiously by treating

them as members of Pension Fund from the date on which other

employees of Bank are normally admitted.

Civil Appeal No. 3432 of 2000 is thus allowed in part. No costs.