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Central Bank of India v. M. Sethumadhavan

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 1975 of 2010)Decided 29 Mar 2017
Civil Appeal No. 1975 of 2010
Justice Kurian Joseph · Justice R. Banumathi

Background

Nationalised banks had fixed a cut-off date (31.10.1994) for extending a revised pay scale to the calculation of retirement gratuity, meaning employees who retired before that date got gratuity based on pre-revised pay. Retired employees challenged this cut-off as arbitrary and discriminatory, and different High Courts had taken divergent views, with Kerala, Gujarat, and Madras upholding the cut-off while Karnataka struck it down.

Decision Breakdown

The Supreme Court held that fixing a cut-off date is a well-established and legitimate practice and that the banks' cut-off date was not arbitrary, unjust, or unfair, settling the legal question in the banks' favour. However, noting that the affected retirees were few in number and had been litigating for nearly a quarter of a century, the Court invoked its special constitutional power under Article 142 to direct the banks to pay each of them Rs. 2,00,000 in full and final settlement of all claims, including litigation costs, within eight weeks, as a one-time equitable measure.

Lesson Learnt

Even when a court rules against claimants on the strict legal question, it can still use its special equitable powers to award a measure of relief where litigants have endured decades of litigation over a modest claim: legal correctness and equitable fairness are not always the same outcome.

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

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