Introduction

Compassionate appointment in public services, including the banking sector in India, represents a significant departure from the conventional merit-based recruitment process mandated by Articles 14 and 16 of the Constitution of India.^[1] It is a socio-economic measure designed to provide immediate succour to the family of a deceased or medically incapacitated employee, thereby preventing destitution.^[2] This article undertakes a comprehensive analysis of the legal framework governing compassionate appointments in Indian banks, drawing extensively upon judicial pronouncements and policy evolution. It examines the core objectives, the paramountcy of employer-framed schemes, the critical assessment of financial indigence, procedural nuances, and the evolving landscape of such appointments, particularly the interplay with ex-gratia lump sum payments.

The Concept and Object of Compassionate Appointment

The Supreme Court of India, in Umesh Kumar Nagpal v. State Of Haryana And Others (1994), elucidated that the sole object of compassionate appointment is to enable the family to tide over the sudden crisis resulting from the death of the bread-earner who has left the family in penury and without any means of livelihood.^[3] It is not intended to be an alternative mode of recruitment or a source of employment as a matter of right.^[4] The Allahabad High Court in Dhiraj Kumar Dixit v. General Manager (Personnel), Uco Bank And Others (2002) described it as a measure of socio-economic justice, inhering economic security to the family of the deceased employee, adopted by various bodies including banks purely on humanitarian considerations.^[2]

This form of appointment is an exception to the general rule of public employment through open invitation and merit.^[1] As reiterated in Smt. Usha Gautam v. Aligarh Gramin Bank And Others (2019) and Ajay Kumar Pathak v. S.B.I. Through Its C.G.M. And Others (2019), compassionate employment is given solely on humanitarian grounds and cannot be claimed as a matter of right; it must be strictly construed and confined to the purpose it seeks to achieve.^[5][6] The scheme or policy is binding on both the employer and the employee.^[5]

The Primacy of the Scheme

The entitlement to compassionate appointment is traceable only to the specific scheme framed by the employer.^[4] As held in Sumer Kanwar (Smt.) v. State Of Rajasthan & Ors. (2011), there is no right whatsoever outside such a scheme, and an appointment can be made only if the scheme is in force and not after it is abolished or withdrawn.^[4]

Applicability of Scheme: Time of Demise, Consideration, or Policy Change

A critical issue often arising is determining which scheme applies when multiple schemes exist over time. The Supreme Court in Indian Bank And Others v. Promila And Another (2020) clarified that the compassionate employment scheme applicable at the time of the employee's demise governs the entitlement of benefits.^[7] If that scheme offered a choice (e.g., gratuity or compassionate employment) and the dependents opted for one, they forfeit the other.^[7] Similarly, in Canara Bank And Another v. M. Mahesh Kumar (2015), the Court held that the cause of action to be considered for compassionate appointment arose when the "Dying in Harness Scheme" of 1993 was in force, and subsequent schemes cannot be retroactively applied to negate rights accrued under an older, applicable scheme.^[8][9]

However, this principle is nuanced. In State Bank Of India And Another v. Raj Kumar (2010), where SBI abolished its compassionate appointment scheme and introduced an ex-gratia lump sum payment scheme, the Supreme Court held that the new scheme superseded the old one. Pending applications under the old scheme were to be processed under the new scheme, as compassionate appointment is a concessional benefit, not a vested right.^[10] This was reiterated in STATE BANK OF INDIA v. SHEO SHANKAR TEWARI (2019).^[11] The Court in Raj Kumar distinguished cases like SBI v. Jaspal Kaur, noting that observations in earlier cases were context-specific.^[10] The principle that norms prevailing on the date of consideration of the application should be the basis was also noted in Rauhl Kumar And Another v. Union Of India And 3 Others (2025).^[12]

In State Bank Of India And Another v. Vikas Dubey And Others (2007), where an application under an old scheme was rejected (and not challenged) and reconsideration was sought under a new scheme, the Supreme Court held it was an error for the High Court to direct reconsideration under the old scheme.^[13] The Court emphasized that the scheme as propounded by the bank should be followed without deviation.^[13]

Abrogation of Schemes and Introduction of Ex-Gratia Payments

The shift from compassionate appointments to ex-gratia lump sum payments by several public sector banks, notably State Bank of India, has been a significant development. As established in State Bank Of India v. Raj Kumar (2010) and STATE BANK OF INDIA v. SHEO SHANKAR TEWARI (2019), once a compassionate appointment scheme is abolished and replaced, claims must be considered under the new ex-gratia scheme.^[10][11] The Andhra Pradesh High Court in Petitioner v. Respondent (2021) dealt with a scenario where SBI had discontinued compassionate appointments (effective 2005) but later, following Ministry of Finance directives in 2014, allowed both options: compassionate appointment in "exceptional cases" or ex-gratia payment. The applicability depended on the date of death and whether the case fell under "exceptional circumstances" as defined by the new policy.^[14] The case of Neelam Singh And Another v. Union Of India Thru. Ministry Of Finance And Others (2020) also highlighted the 2014 Ministry of Finance communication allowing Public Sector Banks (PSBs) to offer both options.^[15] The argument that the scheme in force at the date of death/application should apply was central.^[15] It is important to note, as in Nirdesh Kumar v. State Of U.P. And Others (2013), that a policy of the Indian Banks' Association (IBA) regarding ex-gratia may not automatically apply to other entities with different service rules.^[16]

Assessment of Financial Indigence: The Core Criterion

The fundamental prerequisite for compassionate appointment is the penurious condition of the deceased employee's family. Banks are required to conduct a thorough assessment of the family's financial status. As held in Union Bank Of India And Others v. M.T Latheesh (2006), the object is to enable the family to tide over a sudden crisis, and appointment is offered only if the bank is satisfied that without employment, the family cannot meet the crisis.^[17]

Role of Terminal Benefits and Other Income

In Punjab National Bank And Others v. Ashwini Kumar Taneja (2004), the Supreme Court emphasized that retiral benefits (gratuity, provident fund, pension, etc.) are integral to assessing the family's financial condition and must be factored into decisions.^[18] This principle was strongly reiterated in General Manager (D&Pb) And Others v. Kunti Tiwary And Another (2004), where the Court, referencing an IBA recommendation adopted by the bank, listed factors like family pension, gratuity, PF, LIC proceeds, other income, employment of other family members, family size, and liabilities.^[19] The Court stressed that the criterion is "penury" and "without any means of livelihood," not merely "not very well-to-do."^[19] Similarly, in Mumtaz Yunus Mulani (Smt) v. State Of Maharashtra And Others (2008), receipt of family pension and income from immovable properties were considered relevant in determining financial hardship.^[20]

Procedural Aspects and Limitations

Timeliness of Application

Applications for compassionate appointment must be made without undue delay. As observed in Canara Bank And Another v. M. Mahesh Kumar (2015), an application has to be considered within a reasonable period.^[9] Some schemes explicitly prescribe time limits. For instance, the policy discussed in S.C Rupchandani v. Chairman And Ors. (Gujarat High Court, 2007) stipulated that applications should ordinarily be received immediately on retirement (on medical grounds) and not after sixty days of cessation of service.^[21] However, some schemes, like the one in Authorized Officer, Prathama U P Bank v. Smt. Manjeet Kaur (Allahabad High Court, 2023), grant discretion to the bank to consider belated requests (even five years old), albeit with great circumspection, recognizing that the family managing somehow for years might indicate some means of subsistence.^[22]

Scope of Posts for Appointment

Compassionate appointments are generally restricted to lower category posts. Umesh Kumar Nagpal (1994) specified that such employment should not be granted above Classes III and IV posts.^[3] This is echoed in Canara Bank v. M. Mahesh Kumar (2015)^[9], Union Bank Of India v. M.T Latheesh (2006)^[17], and Sumer Kanwar (2011)^[4], typically limiting appointments to clerical and subordinate cadres.

Judicial Scrutiny and Interpretation

Courts play a crucial role in interpreting compassionate appointment schemes and ensuring their fair application. While acknowledging the discretionary nature of such appointments, judicial review aims to prevent arbitrariness and ensure adherence to the stated objectives of the policy.

Adherence to Policy and Limited Judicial Intervention

The judiciary generally refrains from altering the terms of an employer's scheme. In Indian Bank v. Promila (2020), the Supreme Court, citing State of H.P. v. Parkash Chand (2019), emphasized that courts cannot rewrite the scheme.^[7] The employer is bound by its own policy, especially if it has been consistently followed, as noted in Chakarwati Singh v. Marwar Ganganagar Bikaner Gramin Bank (Rajasthan High Court, 2009).^[23] If an ex-gratia appointment is declined on a factual basis, such as non-submission of an application, and the matter has attained finality, reliance on other judgments involving different schemes may be misconceived, as seen in Sanjay Kumar v. Union Of India And 4 Others (Allahabad High Court, 2025).^[24]

The Context of Syndicate Bank v. K. Umesh Nayak

While Syndicate Bank And Another v. K. Umesh Nayak (1994) primarily deals with the entitlement to wages during strikes (requiring the strike to be both legal and justified),^[25] certain underlying principles resonate with the administration of compassionate appointment schemes. The emphasis in Syndicate Bank on adherence to established rules (legality of strike) and factual determination of conditions (justifiability of strike) by appropriate authorities (industrial adjudicators) finds an echo in the compassionate appointment context. Compassionate appointment, too, is contingent upon strict adherence to the scheme's provisions and a factual assessment of "penury" by the employer. Just as an illegal strike cannot be justified, an application not meeting the scheme's criteria cannot sustain a claim for compassionate appointment. The case underscores the importance of entitlements being governed by pre-defined conditions and processes, a principle applicable across various facets of employment law, including the exceptional measure of compassionate aid.

Evolving Landscape: Recent Trends and Dual Options

The landscape of compassionate appointments in public sector banks has been dynamic. Following a period where many banks shifted predominantly to ex-gratia payments, there has been a move towards a more flexible approach. As discussed in Neelam Singh (2020) and Petitioner v. Respondent (AP HC, 2021), the Ministry of Finance, Government of India, through communications in 2014, allowed PSBs to adopt a dual system.^[15][14] This typically involves offering compassionate appointment in "exceptional circumstances" (e.g., death due to specific causes like terrorist attacks, or where the family is left in extreme distress with no other support) while retaining the option of ex-gratia lump sum payment in other cases. The specifics, including what constitutes "exceptional circumstances" and the effective date of such revised schemes, are determined by individual bank policies approved by their Boards.

Conclusion

Compassionate appointment in Indian banks remains a complex and often litigated area of service law. It embodies a humanitarian exception to the rule of merit-based recruitment, aimed at providing immediate relief to families facing sudden financial crises due to the loss of their primary earner. The jurisprudence, significantly shaped by the Supreme Court and various High Courts, underscores several key tenets: the paramountcy of the employer's scheme, the necessity of demonstrating actual financial penury, the general applicability of the scheme prevalent at the time of the employee's demise (subject to explicit supersession by new policies), and the limited scope of such appointments.

The evolution towards ex-gratia payments and subsequently towards dual-option models reflects attempts to balance financial prudence with welfare objectives. For dependents, it is crucial to understand the specific scheme of the concerned bank, make timely applications, and provide accurate information regarding their financial status. For banks, adherence to their own schemes, fair assessment of indigence, and transparent decision-making are imperative to ensure that this compassionate measure serves its intended purpose without diluting the principles of public employment. The judiciary continues to act as a vital check, ensuring that discretion is exercised reasonably and in consonance with the underlying objectives of social justice and constitutional mandates.