Bank cannot withhold retirement benefits expressly granted by removal order despite ongoing service dispute: MP High Court

Madhya Pradesh High Court: A division bench comprising Justice Sunita Yadav and Justice Milind Ramesh Phadke partially allowed an appeal challenging the order of the Single Judge directing the appellant to institute an industrial dispute in respect of his retirement benefits. The Court held that where a removal order expressly grants retirement benefits, they cannot be withheld by directing the employee to apply to the Industrial Tribunal, as the referral to the tribunal was only intended to challenge the removal itself.

Background

The plaintiff was dismissed from the State Bank of Indore (subsequently merged with the State Bank of India) where he had been working since February 1985; initially as a clerk/cashier and later as a computer operator. Following allegations of illegal loan advances, he was suspended and subsequently removed from service on April 1, 2008. The removal order expressly granted him retirement benefits, including pension, provident fund and gratuity, without disqualification from employment in future. The appellant’s initial objection to his removal through written application no. 1096 of 2009(S) resulted in the High Court setting aside the order of removal. However, the Division Bench set aside this order and directed them to file an industrial dispute. When the appellant approached the bank for his retirement benefits, he was asked to sign blank forms, which he refused, leading to the present litigation.

argument

The appellant, through senior counsel KN Gupta, argued that since the removal order itself provided for the payment of retirement allowances and the matter had become final, the Single Judge erred in directing him to raise an industrial dispute in respect of these benefits . He stressed that only the termination dispute is to be referred to the Industrial Court, not the issue of pension benefits. The respondent bank, represented by senior counsel VK Bhardwaj, submitted a compliance report showing that while Rs. 18,13,560.48 was due as pension arrears till January 2023, the appellant owed Rs. 34,02,654.93 to the bank. The bench argued that the single judge had correctly interpreted the division’s earlier order requiring all disputes to be raised before the Industrial Tribunal.

The reasoning of the Court

First, the Court pointed out that the original April 1, 2008 removal order expressly provided for retirement benefits. This very provision in the removal order established appellant’s right to these benefits, making them independent of any removal litigation. Secondly, perusal of the earlier order of the Division Bench, the Court clarified that the Industrial Tribunal’s direction of approach was specifically limited to challenging removal from service, not pension benefits. The Court did not find any dispute regarding the appellant’s right to pension, noting that even the respondent bank did not dispute this aspect.

Thirdly, as regards the recovery of outstanding credits from the appellant’s benefits, the Court maintained the single judge’s observation regarding compliance with the principles established in High Court of Punjab and Haryana v. Jagdev Singh (2016) and State of Punjab v. Rafiq Masih (2015). This effectively meant that while the bank could pursue recovery, it had to do so within the statutory framework for the recovery of contributions from pension benefits. Finally, the Court ordered the bank to release the terminal charges if it had not already been done, subject to the principles laid down in the judgments mentioned above. Accordingly, the appeal was partially upheld.

Date: 25-10-2024

Citation: WA No. 1889 OF 2019

Appellant’s attorney: Shri KN Gupta, Senior Advocate for Shri RBS Tomar

Defendant’s lawyer: Shri VK Bhardwaj, Senior Advocate with Shri Raju Sharma

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