Voluntary Retirement Case of Bank Challenged in High Court

VRS refers to a scheme of an option given by the organization to its employees to retire before superannuation (i.e., before the actual date of retirement) in exchange for additional severance payment and benefits.It is a method used by companies to reduce surplus staff. This mode has come about in India as labour laws do not permit direct retrenchment of unionized employees.

Voluntary retirement scheme applies to an employee who has completed 10 years of service or is above 40 years of age. It applies to all employees , including workers and executives of a company or of an authority or of a co-operative society, excepting directors of a company or a co-operative society.

In the case of Parveen Kumar Verma vs Chairman State Bank Of India & Ors a bank employee challenges his voluntary retirement.

Date of decision:16 March 2020

CWP No. 22013 of 2014

Name of parties: Parveen Kumar Verma(petitioner),

Chairman State Bank Of India (respondent)

The facts of the case are that the petitioner challengedthe order dated 04.09.2013 which was passed by the Regional Manager of the State Bank of India at its Regional Business Office, Sirsa. It was stated that the petitioner had voluntarily retired/resigned from service. He also challenged the later order dated 04.06.2014 passed by the Branch Manager of the Bank at its Chautala Branch in District Sirsa, informing him that his absence could not be condoned and that he would not be allowed to join duty.

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The petitioner entered the service of the Bank as a Messenger in the year 1997. It is his claim that his health deteriorated as he was diagnosed with tuberculosis in the cervical spine. While so, he was transferred on 09.07.2012 to the Chautala 1 of 8 Branch of the Bank. He claims to have submitted an application to the Branch Manager at Chautala seeking grant of leave on 10.07.2012. Admittedly, he remained absent from duty since the said date. It is also not in dispute that the Bank did not grant him any leave at that time.

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The Bank issued Memo dated 05.02.2013 to the petitioner through its Branch Manager observing that he had unauthorizedly absented himself from duty since 10.07.2012 and calling upon him to report to duty within three days and explain the reasons for his absence. The petitioner did not respond to this memo. He was then issued letter dated 11.05.2013 , which was dispatched to him by registered post with acknowledgement due on 11.05.2013, by the Branch Manager of the Chautala Branch of the Bank. Therein, while referring to the earlier memo dated 05.02.2013, the Branch Manager observed that the petitioner was still continuing to be absent from duty and advised him to report for duty within 30 days. He further cautioned him that if he failed to do so, he would be deemed to have voluntarily retired from service on the expiry of the notice period. The Branch Manager further stated that in such an event, the petitioner would be liable to pay the Bank 14 days/one month’s pay and allowances in lieu of notice.

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The petitioner replied to this notice on 08.06.2013 stating that he was not feeling well and asking for extension of leave for 15 days. Thereupon, the Branch Manager of the Chautala Branch of the Bank issued letter dated 10.06.2013, sent to the petitioner by registered post with acknowledgement due on 12.06.2013. Therein, while referring to the petitioner’s reply dated 08.06.2013, the Branch Manager stated that the petitioner was on leave without taking prior sanction and advised him to submit his leave application in the proper format along with the Medical Certificate from the Chief Medical Officer of his district.

The Branch Manager further stated that the petitioner’s conduct was highly irregular and in contravention of the Rules and advised him to report to the Branch along with documents.

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Thereafter, the Disciplinary Authority of the Bank issued the ‘3rd and final notice’ dated 04.09.2013 to the petitioner. Therein, the Disciplinary Authority took note of the unauthorized absence of the petitioner from duty since 10.07.2012 and, while referring to the letter dated 11.05.2013 sent to him earlier, he noted that the petitioner had failed to report for duty by 11.06.2013 and was therefore deemed to have voluntarily retired from the service of the Bank on 12.06.2013. He called upon the petitioner to pay to the Bank, within 15 days of the date of the notice, one month’s pay and allowances in lieu of notice failing which the Bank would file a suit for recovery of the same without prejudice to its right to set off the same against the terminal dues and other amounts payable to the petitioner.

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The petitioner then addressed letter dated 17.05.2014 to the Branch Manager of the Bank at Chautala stating that he had come to join duty on 14.05.2014 but had not been allowed to do so. He sought permission to resume duty at the Branch. In response to this communication, the Branch Manager of the Bank at Chautala addressed letter dated 04.06.2014 to the petitioner, informing him that he had continuously absented himself from duty for a period of one year and ten months since 3 of 8 10.07.2012 and such unauthorized absence could not be condoned without sufficient/valid evidence/reasons in terms of Clause 12.2.5 of the relevant instructions. He referred to the first notice dated 05.02.2013; the second notice which was served upon the petitioner on 01.05.2013 and the third and final notice which was served upon him by the RBO, Sirsa. He then extracted a portion of the third and final notice and concluded that as his absence could not be condoned at this stage, he could not be allowed to join duty.

The Bank filed its written statement.

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The court was of the view that to stand the legal scrutiny, it is essential that the employee concerned is given opportunity at each stage to report back for duties/explain his absence to the satisfaction of the bank.’ In terms of the aforestated prescribed procedure( Voluntary Cessation of Employment’ as per its HR Handbook Volume-II (para 2.7), the petitioner necessarily had to be issued three consecutive notices of 30 days each, before enforcing voluntary cessation of employment. The first notice is to be issued upon absence for a period of 90 or more consecutive days, calling upon the employee to report for work within 30 days of the date of notice. If within such stipulated time, the employee reports for work or gives an explanation for his absence to the satisfaction of the Management, inter- alia, that he has not taken up another employment or avocation, the matter would end there. If, however, he fails to do so, he is to be given a second notice calling upon him to report for work within 30 days, mentioning that he would be deemed to have voluntarily vacated his employment on expiry of the notice period. Again, if the employee submits a satisfactory reply, he is to be permitted to join duty within 30 days from the date of expiry of the notice period under this second notice, without prejudice to the Bank’s right to take action. However, if the employee fails to report for work within such 30 days period, he has to be given a final notice calling upon him to report for work within 30 days, failing which he is deemed to have voluntarily vacated his employment.

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the facts in the case on hand, as mentioned above, do not reflect proper compliance with the requirements of the aforestated Rule. The first notice dated 05.02.2013 cannot be taken to be a notice in terms of this Rule, as it gave a mere three days to the petitioner to report for duty. If any typographical mistake was made in this notice, it was for the Bank to take corrective measures but, admittedly, none were taken. Therefore, this notice fails to qualify as a notice relatable to the aforestated Rule. The first notice would therefore be the notice dated 11.05.2013, which called upon the petitioner to report for duty within 30 days. In response thereto, the petitioner submitted letter dated 08.06.2013 claiming that he was not well and seeking leave. There is no indication of the Bank applying its mind and recording a finding as to whether it found this to be a satisfactory explanation in terms of the Rule. In any event, the Bank then issued the ‘3rd and final notice’ dated 04.09.2013. Though this is titled as a ‘3rd and final notice’, it could not be taken to be a notice under the Rule at all, inasmuch as it did not offer the petitioner 30 days time to report for duty, as required by the Rule. On the other hand, this notice recorded that as the petitioner had failed to report for duty within 30 days from the earlier notice dated 11.05.2013, he was deemed to have voluntarily retired from the service of the Bank on 12.06.2013.

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In effect, the Bank issued only one notice which can be taken to be relatable to the aforestated Rule relating to Voluntary Cessation of Employment. Without adhering to the prescribed procedure, it was not open to the Bank to adopt its own methodology and visit voluntary retirement 7 of 8 upon the petitioner. The entire exercise therefore stands vitiated on this ground. Well settled is the legal proposition that where a rule provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner .

in UPTRON INDIA LTD. v SHAMMI BHAN[1998(6) SCC 538], it was said that the discretion vesting in an authority cannot be exercised capriciously.

On the above analysis, the action of the Bank in imposing voluntary retirement upon the petitioner, vide the order dated 04.09.2013, and its consequential refusal to allow him to join duty, vide the order dated 04.06.2014, was held to be sustained and hence the petition was allowed.

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For case specific advice related to VRS (Voluntary Retirement Scheme) in Punjab Haryana High Court Chandigarh, one can contact best Service Lawyer Advocate in Chandigarh Panchkula Mohali Zirakpur Kharar Derabassi Baltana etc.

This post is written by Rachita Yedhula.