Bank cannot withhold pension benefits expressly awarded in removal order despite ongoing service dispute: MP High Court

Madhya Pradesh High Court: A division bench consisting of Judge Sunita Yadav and Judge Milind Ramesh Phadke allowed a partial appeal against the order of the single judge directing the appellant to initiate an industrial dispute over his pension benefits. The Court held that where a relocation order expressly awards pension benefits, these cannot be withheld by directing the employee to apply to the Industrial Tribunal, as the reference to the tribunal was only to challenge the relocation itself.

Background

The appellant was relieved from his service in the State Bank of Indore (later merged with State Bank of India), where he had been employed since February 1985; Initially as a receptionist/cashier and later as a computer operator. Following accusations of illegally granted loans, he was suspended and subsequently dismissed from service on April 1, 2008. The removal order specifically granted him retirement benefits, including pension, provident fund and gratuity, without disqualifying him from future employment. The initial challenge to his removal by the appellant through Writ Petition No. 1096 of 2009(S) resulted in the High Court quashing the removal order. However, the Division Bench set aside this order and directed him to raise 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 suit.

Arguments

The appellant through Senior Counsel KN Gupta submitted that since the removal order itself provided for payment of pension benefits, and this aspect had become final, the Single Judge had erred in directing the initiation of an industrial dispute on these benefits . He emphasized that only the dismissal dispute should be referred to the Industrial Tribunal, and not the issue of pension benefits. The respondent bank, represented by Senior Counsel VK Bhardwaj, presented a compliance report which revealed that though Rs. 18,13,560.48 was due as pension arrears till January 2023, the appellant was Rs. 34,02,654.93 to the bank. The bench submitted that the single judge had correctly interpreted the earlier order of the Division Bench requiring all disputes to be brought before the Industrial Tribunal.

Reasoning of the Court

First, the Court emphasized that the original removal order of April 1, 2008 explicitly provided for pension benefits. This provision in the removal order itself confirmed the appellant’s clear right to these benefits, making them independent of any disputes over the removal. Secondly, the Court on examining the earlier order of the Division Bench clarified that the direction to approach the Industrial Tribunal was specifically limited to challenging the dismissal from service and not the pension benefits. The Court held that there was no dispute as to the appellant’s entitlement to pension benefits, noting that even the respondent bank had not challenged this aspect.

Thirdly, with regard to the recovery of outstanding loans from the appellant’s benefits, the Court confirmed the single judge’s observation regarding compliance with the principles laid down in High Court of Punjab and Haryana v. Jagdev Singh (2016) and State of Punjab v Rafiq Masih (2015). This effectively meant that although the bank could pursue recovery, it had to do so within the established legal framework for collecting contributions from pension benefits. Finally, the Court ordered the bank to release the terminal dues if this has not already been done, in accordance with the principles set out in the above-mentioned decisions. The appeal has therefore been partially allowed.

Date: 25-10-2024

Quote: WA No. 1889 OF 2019

Appellant’s lawyer: Shri KN Gupta, Senior Advocate at Shri RBS Tomar

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

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