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Assistant General Manager, State Bank of India & Ors. v. Radhey Shyam Pandey

Civil Appeal · 2020 INSC 238Decided 2 Mar 2020
Civil Appeal No. 2463 of 2015
Justice Arun Mishra · Justice M.R. Shah · Justice B.R. Gavai

Background

A group of State Bank of India employees took voluntary retirement under the bank's VRS-2000 scheme after completing 15 years of service, expecting proportionate pension under the SBI Pension Fund Rules. The bank resisted paying pension to those with fewer than 20 years of qualifying service. Because earlier Supreme Court benches had taken conflicting views on this question (compare SBI v. Raj Kumar and MCB Gramin Bank v. Chakrawarti Singh on one side with Canara Bank v. M. Mahesh Kumar on the other), the conflict was referred to this three-judge bench for resolution.

Decision Breakdown

The Court held that employees who had completed 15 years of service as on the scheme's cut-off date were entitled to proportionate pension, computed as per the SBI Pension Fund Rules. Invoking the constitutional goal of protecting retired employees from destitution, the Court reasoned that since the bank itself had the power to amend the scheme but chose to adopt the pension benefit, it could not later resile from honouring it, and ordered the benefit be extended to all similarly placed employees without forcing them to litigate individually. However, considering the facts, the Court declined to award interest, directing only that arrears be paid within three months (with 6% interest thereafter if delayed). The appeals were disposed of accordingly.

Lesson Learnt

Once an employer voluntarily creates and implements a retirement benefit scheme, it cannot later retreat from honouring the benefits promised under it on a technical reinterpretation: similarly placed employees are entitled to the same treatment without having to go to court individually.

Official source (sci.gov.in)View Judgment (PDF)

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