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Punjab & Sind Bank And Others v. Mohinder Pal Singh And Others
Factual and Procedural Background
Shri Amarjit Singh Sahni (“the applicant”) was employed as a Cashier-cum-Clerk at Punjab & Sind Bank’s Zonal Office in Haryana. The Bank introduced “The Punjab and Sind Bank Employees’ Voluntary Retirement Scheme, 2000” (“the Scheme”), open from 1 December 2000 to 31 December 2000. Under the Scheme an employee could opt for voluntary retirement in exchange for an ex-gratia payment (calculated either as 60 days’ salary per completed year of service or salary for the remaining months of service, whichever was less) together with statutory/terminal benefits such as gratuity, pension or provident-fund contribution, and leave encashment.
The applicant submitted an option under the Scheme on 15 December 2000 but withdrew it on 22 December 2000, before any acceptance by the Bank. On learning that the Bank was nonetheless treating withdrawn options as accepted, he filed CWP No. 1458 of 2001 before the Punjab & Haryana High Court. An interim order dated 31 January 2001 directed that, if not already relieved, he be allowed to continue. The Bank asserted he had been relieved on 28 January 2001 and refused to reinstate him.
On 9 March 2001 the Bank deposited ₹1,422.21 (purportedly net leave encashment after heavy tax deduction) into the applicant’s savings account; fearing further unilateral credits, he closed the account on 24 April 2001. Meanwhile, multiple writ petitions challenging or invoking the Scheme were pending. On 17 December 2002, the Supreme Court decided Bank of India v. O.P. Swarnakar, (2003) 2 SCC 721, clarifying employees’ rights to withdraw offers before acceptance.
Relying on O.P. Swarnakar, the applicant issued notices in early 2003 seeking reinstatement and payment of dues amounting to approximately ₹10.5 lakh under the Scheme; the Bank did not respond. The present application before the Supreme Court concerns the applicability of O.P. Swarnakar to these facts.
Legal Issues Presented
- Whether, under the principles laid down in Bank of India v. O.P. Swarnakar, the applicant’s withdrawal of his VRS option before acceptance entitled him to continue in service.
- Whether the credited amount of ₹1,422.21 and the applicant’s subsequent closure of his account constituted a waiver or estoppel preventing him from asserting his right to reinstatement.
- Whether the Bank’s reliance on Punjab & Sind Bank v. S. Ranveer Singh Bawa, (2004) 4 SCC 484, was applicable to the present facts.
Arguments of the Parties
Applicant’s Arguments
- His offer under the Scheme was unequivocally withdrawn before acceptance; therefore, under O.P. Swarnakar the Bank could not terminate his services.
- No communication of acceptance or of any payment under the Scheme was ever made; hence there was neither estoppel nor waiver.
- The solitary deposit of ₹1,422.21 (without explanation) could not be treated as acceptance of benefits, especially when accompanied by an unexplained deduction of over ₹13,000 allegedly as income tax.
- The Bank acted unfairly and discriminated among employees by selectively crediting accounts.
Bank’s Arguments
- The applicant’s closure of his savings account prevented the Bank from crediting the ex-gratia amount, evidencing waiver of his rights.
- The principle of estoppel, as recognised in S. Ranveer Singh Bawa, should bar the applicant from resiling.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bank of India v. O.P. Swarnakar, (2003) 2 SCC 721 |
|
The Court applied these principles to hold that the applicant’s timely withdrawal remained effective because no acceptance was communicated and no benefits were knowingly received. |
| Punjab & Sind Bank v. S. Ranveer Singh Bawa, (2004) 4 SCC 484 | Estoppel against employees who, with knowledge, appropriate payments made under VRS after withdrawing their option. | The Court distinguished the case, finding no evidence that the applicant had knowledge of or appropriated any benefit; therefore estoppel did not arise. |
Court's Reasoning and Analysis
The Court first reiterated the governing propositions from O.P. Swarnakar: an employee’s offer under a VRS is revocable prior to acceptance, and acceptance cannot be presumed in the absence of express communication. It found as an admitted fact that the Bank had not accepted the applicant’s option before it was withdrawn on 22 December 2000, nor had it ever notified him of any such acceptance.
Addressing the Bank’s contention that the applicant had waived his rights, the Court stressed that waiver requires conscious knowledge of an existing right and intentional relinquishment. The meagre credit of ₹1,422.21—made without any accompanying intimation that it was a Scheme benefit—could not constitute knowledge. Moreover, the primary benefit under the Scheme was the ex-gratia payment (about ₹10.5 lakh), which was never offered or paid. The applicant’s closure of his account to forestall unilateral credits could not be construed as waiver; rather, it highlighted the Bank’s failure to act transparently.
The Court took adverse note of the Bank’s conduct: despite being a “State” within Article 12, it neither communicated acceptance nor paid statutory dues, and claimed an implausible tax deduction of over ₹13,000 from leave encashment. In these circumstances, estoppel principles discussed in S. Ranveer Singh Bawa were inapplicable because there was no evidence that the applicant had knowingly benefitted from or acquiesced in the Scheme.
Balancing the equities, the Court held that the applicant remained an employee and had not forfeited his right to reinstatement.
Holding and Implications
Application Allowed; Applicant to be Reinstated.
The Court directed Punjab & Sind Bank to permit the applicant to rejoin duty and to grant all consequential benefits with continuity of service, excluding the period he was on leave. The Bank may adjust any amount already paid, but no interest or costs were awarded.
Implications: The decision reinforces that, post-O.P. Swarnakar, a VRS offer remains revocable until duly accepted and communicated. It also clarifies that minimal or unexplained payments do not amount to waiver or estoppel absent demonstrable knowledge and appropriation by the employee. While the ruling turns on its facts, it underscores the heightened obligation of public sector banks to act transparently and fairly toward their employees.
Order
1. Application of a decision of this Court in Bank of India v. O.P Swarnakar (2003) 2 SCC 721 falls for consideration in this application.
2. Before, however, we advert to the said question, we may notice the admitted facts:
Shri Amarjit Singh Sahni, the applicant herein at all material times was working in Punjab and Sind Bank (for short “the Bank”) as a Cashier-cum-Clerk at the Zonal Office, Haryana. The Bank adopted a scheme known as “the Punjab and Sind Bank Employee's Voluntary Retirement Scheme, 2000” (for short “the Scheme”) which was to remain in operation from 1-12-2000 to 31-12-2000. In terms of the Scheme, those who sought for voluntary retirement were entitled to accept ex gratia payments as specified therein as also the other benefits which are as under:
“Amount of ex gratia.—An employee seeking voluntary retirement under the Scheme will be entitled to the ex gratia amount mentioned below in para (a) or (b), whichever is less:
(a) 60 days' salary (pay plus stagnation increments plus special pay plus dearness relief) for each completed year of service;
(b) salary for the number of months of service left;
Other benefits.—An employee seeking voluntary retirement under the Scheme will be eligible for the following benefits in addition to the ex gratia amount mentioned in para 6 above of this Scheme:
(i) Gratuity as per the Payment of Gratuity Act, 1972 or gratuity payable under the Service Rules, as the case may be, as per existing rules.
(ii)(a) Pension (including commuted value of pension) as per PNB (Employees) Pension Regulations, 1995.
(b) Bank's contribution towards PF as per existing rules.
(iii) Leave encashment as per existing rules.”
3. The applicant opted to avail the benefit of the said Scheme wherefor he filed an application on 15-12-2000. He, however, withdrew the said offer on or about 22-12-2000. It is not the case of the Bank that prior thereto the application filed by the applicant was accepted.
4. It is furthermore not in dispute that on 29-1-2001, the applicant filed a writ petition in the Punjab and Haryana High Court being CWP No. 1458 of 2001. The matter came up before the High Court on 31-1-2001 whereupon notices were issued and an interim order was passed directing that if the applicant had not been relieved from service, he would be allowed to continue therein. However, he was not permitted to join his service by the Bank on the plea that he had been relieved from duties on 28-1-2001. Employees who had, however, not been relieved were permitted to continue.
5. It is furthermore not in dispute that the applicant had a savings bank account with the Bank wherein a sum of Rs 1422.21 was deposited on 9-3-2001. According to the applicant, as he apprehended that the appellant might deposit some other amount in terms of the aforementioned Scheme in his account, he closed the same on or about 24-4-2001.
6. The employees of the Bank as also of other nationalised banks filed writ applications questioning the legality and validity of the Scheme. Some writ applications were also filed seeking for issuance of writ of or in the nature of mandamus directing the respective banks to pay unto them their lawful dues strictly in terms of the Scheme. The said writ applications were allowed by the Punjab and Haryana High Court holding the Scheme to be invalid in law. The Bank as also the other banks filed applications for grant of special leave before this Court questioning the correctness of the said judgment.
7. These appeals upon grant of special leave were disposed of on 17-12-2002 in O.P Swarnakar (2003) 2 SCC 721 wherein this Court opined:
(i) If the Scheme had been amended as a result whereof the employees entertained an apprehension that they would not even receive the entire benefits, they were entitled to revoke the offer.
(ii) An offer made by an employee ipso facto would not amount to a resignation in praesenti as it was to apply on a future date and withdrawal thereof before acceptance thereof by the employer would be valid in law.
(iii) The offers could not be accepted before expiry of the Scheme.
(iv) The Scheme as such was not invalid in law.
(v) However, if those employees had accepted the ex gratia payment or any other benefit under the Scheme, they could not have resiled therefrom.
8. It is not in dispute that the Bank had not accepted the offer of the applicant before he withdrew therefrom. It is also not in dispute that no such communication was ever made to the applicant. It is furthermore not in dispute that the applicant was entitled to a sum of Rs 10,50,000 by way of benefits in terms of the Scheme. The said amount has not been offered to the applicant till date.
9. Even out of the total amount of leave encashment of Rs 14,459.21 a sum of Rs 13,037 was deducted and only a sum of Rs 1422.21 was credited in the account of the applicant on 9-3-2001. The Bank accepts that it had never communicated to the applicant that the said amount was being deposited in terms of the Scheme. When questioned as to why the amount of Rs 10,50,000 or any other amount to which the applicant might have been entitled to by way of the Scheme had not been offered to the applicant, the learned counsel for the Bank faintly suggested that the same could not be done as the applicant closed his bank account. We cannot accept such contention. It is not a case where after the expiry of the Scheme, an employee requested the Bank to be permitted to withdraw from the option. The only question which, therefore, arises for consideration is as to whether the applicant herein waived his right.
10. Waiver of a right implies his knowledge of the existing right. A person cannot be said to have waived his right unless it is established that his conduct was such so as to enable the Court to arrive at a conclusion that he did so with knowledge that he had a right, but despite the same acted in such a manner which would imply that he has waived the same.
11. The applicant in the instant case not only withdrew his offer before the same was accepted, he even filed a writ petition when he came to know that the Bank had unilaterally accepted offers of certain employees despite the same having been withdrawn and terminated their services with immediate effect. As noticed hereinbefore, the judgment in O.P Swarnakar (2003) 2 SCC 721 was delivered on 17-12-2002. Immediately thereafter, he issued a notice that he be permitted to report for duty as he had not accepted the retiral benefits. His representation went unheeded. He thereafter sent legal notices on 22-2-2003 and 28-3-2003. The stand of the Bank at all material times was and still is that a sum of Rs 14,459.21 was paid to him by way of leave encashment of 31 days upon deduction of income tax therefor. But, it is accepted that at no point of time had he been told that the said amount had been deposited in his account as a part of benefit under the Scheme. Even, there had been no communication to the applicant by the Bank that he is being paid out of the total leave encashment of Rs 14,459.21 after deducting a huge sum of Rs 13,037, a sum of Rs 1422.21 We fail to understand as to how out of the said amount of Rs 14,459.21 a sum of more than Rs 13,000 could be deducted by way of income tax. Leave encashment benefit is one of the additional benefits. The main benefit of the Scheme indisputably was the ex gratia payment. An employee even if continued in service would have been entitled to the additional benefits which are in the nature of terminal benefits.
12. It is also beyond anybody's comprehension as to why despite expiry of about five years the main benefit of the Scheme or in any event the total benefit amounting to Rs 10,50,000 to which the applicant was otherwise entitled to in terms of the Scheme had not been paid to him.
13. The Bank is “State” within the meaning of Article 12 of the Constitution. We expect fair and better dealings from “State” vis-à-vis its own employees. An employee who did not accept that his offer had validly been accepted in terms of the Scheme could not have been expected to approach the Bank for payment of his dues. It was for the Bank to make such an offer. The Scheme says so. The law in this behalf is also clear. He had not even been offered his salary or notice pay.
14. In a case of this nature, the court is entitled to take into consideration the entire facts and circumstances of the matter and for that purpose the conduct of the Bank is also relevant.
15. We, therefore, in the peculiar facts of this case, are not in a position to accept that by reason of such a deposit of a meagre sum of Rs 1422.21 in respect whereof the applicant had no knowledge, and in relation whereto he had not been informed, and only because he closed the account so as to prevent the Bank from depositing any further amount in his account cannot be said to have waived his right to continue in service.
16. The learned counsel appearing on behalf of the Bank relied upon the decision of this Court in Punjab & Sind Bank v. S. Ranveer Singh Bawa (2004) 4 SCC 484. Therein, having regard to the facts and circumstances of the case, this Court clearly came to the conclusion:
“8. From the averments herein, it is clear that Respondent 1 had two savings bank accounts Nos. 4775 and 4777. He had withdrawn his option on 22-12-2000 and yet without any objection he receives three credits in his account on 27-12-2000, 25-1-2001 and 29-1-2001 on account of salary (including notice pay). Thereafter, he repays his car loan; invests Rs 30,000 in PPF and Rs 1,42,406.40 in fixed deposit for three years, which is a long-term investment. Therefore, the principle of estoppel extensively discussed by this Court in the case of Bank of India v. O.P Swarnakar (2003) 2 SCC 721 applies to the facts herein. The conduct of Respondent 1 indicates his knowledge about payments in his accounts; that he never objected to such payments and that he had appropriated the amounts for his benefit. Therefore, he cannot resile from the Scheme.”
(emphasis supplied)
The said decision has no application to the facts of the present case.
17. The conduct of the applicant herein does not indicate any knowledge about the payment in his account or his wilful appropriation thereof as to constitute a waiver. The applicant had contended that even the Bank had acted in a discriminatory manner as in the account of certain employees some deposits had been made but in respect of others, no such deposits had been made. The said allegation also has not been denied.
18. For the reasons aforementioned, this application is allowed. The Bank is hereby directed to permit the applicant to join his duties. He is entitled to be reinstated in service with all consequential benefits and continuity in service except for the period during which he was on leave. However, in the facts and circumstances of this case, we do not intend to award any interest on the said sum or any costs against the appellant. The appellant shall, however, be entitled to deduct the amount actually paid to the applicant or payable in his account, if any.
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