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State Bank Of India And Another v. Raj Kumar .
Factual and Procedural Background
The respondent’s father, employed as a Messenger in the State Bank of India, died on 1 October 2004. His widow submitted applications dated 6 June 2005 and 14 June 2005 seeking the respondent’s appointment on compassionate grounds under the Bank’s then-existing Compassionate Appointment Scheme. Before the Bank completed processing, that Scheme was abolished and replaced, with effect from 4 August 2005, by the “SBI Scheme for Payment of Ex Gratia Lump Sum Amount,” which expressly substituted monetary compensation for compassionate appointments and required all pending cases to be dealt with under the new policy. On 31 January 2006 the Bank advised the family to apply under the new Scheme.
Challenging that advice, the respondent filed a writ petition in the Allahabad High Court. A learned Single Judge (8 May 2008) held that the old Scheme applied and ordered reconsideration of the respondent’s case for appointment; a Division Bench affirmed on 1 September 2008. The Bank obtained special-leave and appealed to the Supreme Court.
Legal Issues Presented
- Whether the respondent’s pending application for compassionate appointment, filed before 4 August 2005, must be considered under the abolished Compassionate Appointment Scheme or under the new Ex Gratia Lump Sum Scheme.
- Whether any vested or accrued right to compassionate appointment existed once the original Scheme had been withdrawn.
Arguments of the Parties
Appellant Bank’s Arguments
- The application for compassionate appointment was filed in June 2005 but had not been processed before the old Scheme was abolished on 4 August 2005.
- Clauses 14 and 15(vi) of the new Scheme mandate that all pending applications be dealt with exclusively under the new Scheme, thereby extinguishing any claim to compassionate appointment.
Respondent’s Arguments
- On the dates of death (1 October 2004) and application (June 2005) the compassionate appointment scheme was in force; hence the respondent had a right to be considered under that Scheme.
- Reliance was placed on SBI v. Jaspal Kaur to contend that a subsequent policy cannot defeat an earlier application.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Union of India v. R. Padmanabhan (2003) 7 SCC 270 | Ex gratia benefits do not create vested rights; applications must be considered under the guidelines in force on the date of actual consideration. | Used to affirm that the respondent had no vested right and that the Bank could apply the new Scheme. |
| State of T.N. v. Hind Stone (1981) 2 SCC 205 | Applications must be dealt with according to rules in force at the time of disposal in the absence of vested rights. | Quoted (via Padmanabhan) to reinforce that pending applications are governed by the policy existing at the time of decision. |
| Kuldeep Singh v. Govt. of NCT of Delhi (2006) 5 SCC 702 | Where processing and verification are needed, the policy applicable is the one prevailing on the date of grant unless a right has already accrued. | Applied by analogy to show that the new Scheme controlled because the respondent’s application still required verification. |
| SBI v. Jaspal Kaur (2007) 9 SCC 571 | Relied on by respondent to argue for application of the earlier scheme. | Distinguished; Court held the passage was context-specific and did not alter the rule that the new Scheme governs pending applications. |
Court's Reasoning and Analysis
The Court reiterated that compassionate appointment is a concession, not a mode of recruitment, and derives solely from the governing scheme. It identified three common requirements in such schemes—application by a dependent, fulfilment of eligibility criteria, and availability of a post—and noted that none confer an automatic or vested right. Because the respondent’s application required eligibility verification and vacancy assessment, no right crystallised on the mere filing of the application.
Clauses 14 and 15(vi) of the new Scheme explicitly abolished the earlier Scheme and directed that all pending applications be processed only under the new policy. Consistent with the principles set out in Padmanabhan, Hind Stone and Kuldeep Singh, the Court held that the governing scheme is the one in force when the application is considered, unless the earlier policy saves pending claims, which was not the case here.
The Court dismissed the respondent’s reliance on Jaspal Kaur, explaining that the cited passage pertained to a claim for additional monetary benefits, not to the substitution of a compassionate-appointment scheme, and thereby had no bearing on the present issue.
Holding and Implications
Appeal Allowed in Part; High Court orders set aside.
Consequences: The respondent’s request for compassionate appointment is denied. The family may submit a fresh application under the 2005 Ex Gratia Scheme, which the Bank must process and, if eligible, pay within four months. The decision reaffirms that no vested right exists in compassionate-appointment cases once the scheme is withdrawn, and that employers may lawfully require pending applications to be considered under a replacement policy. No new legal precedent was set; the Court applied existing principles to the facts.
R.V Raveendran, J.— Leave granted. Heard the parties.
2. The respondent's father employed as a Messenger in the appellant Bank, died on 1-10-2004. The respondent's mother made applications dated 6-6-2005 and 14-6-2005 requesting for his appointment on compassionate grounds. When the applications were being processed and verified, the Compassionate Appointment Scheme was substituted by the “SBI Scheme for payment of ex gratia lump sum amount” with effect from 4-8-2005. The new Scheme abolished the old Scheme for compassionate appointments and instead provided for payment of an ex gratia lump sum amount as per its terms.
3. Clauses 14 and 15 of the new Scheme relevant for our purpose are extracted below:
“14. Date of effect of the Scheme and disposal of pending applications.—… Applications pending under the Compassionate Appointment Scheme as on the date on which this new Scheme is approved by the Executive Committee of the Central Board will be dealt with in accordance with the new Scheme for payment of ex gratia lump sum amount provided they fulfil all the terms and conditions of this Scheme.
15. Miscellaneous provisions of the Scheme
(vi) With effect from the date the ‘SBI Scheme for payment of ex gratia lump sum amount’ comes into force the Bank's Scheme of compassionate appointments shall be deemed abolished/withdrawn and no request for compassionate appointment shall be entertained or considered by the Bank under any circumstance.”
4. As the old Scheme came to be abolished and compassionate appointment was no longer permissible after the new Scheme came into force, the Bank on 31-1-2006 advised the family of the deceased to make an application under the new Scheme for ex gratia payment. Feeling aggrieved, the respondent filed a writ petition before the Allahabad High Court.
5. A learned Single Judge of the High Court by order dated 8-5-2008 directed the appellant to reconsider the case of the respondent for appointment on compassionate grounds, holding that the old Scheme applied and the new Scheme was only prospective in operation. The said order was affirmed by the Division Bench by order dated 1-9-2008, which is under challenge in this appeal by special leave.
6. The learned counsel for the Bank submitted that even though the respondent's father died on 1-10-2004, the application for compassionate appointment was made only in June 2005; that before the application could be processed, the Compassionate Appointment Scheme was abolished and was replaced by a new Scheme on 4-8-2005; and that therefore, the Bank was justified in calling upon the respondent to apply under the new ex gratia scheme.
7. On the other hand, the learned counsel for the respondent submitted that on the date of death of his father and on the date of making the application, the compassionate appointment scheme was in force and therefore, he was entitled to be considered for compassionate appointment under the said scheme.
8. It is now well settled that appointment on compassionate grounds is not a source of recruitment. On the other hand it is an exception to the general rule that recruitment to public services should be on the basis of merit, by an open invitation providing equal opportunity to all eligible persons to participate in the selection process. The dependants of employees, who die in harness, do not have any special claim or right to employment, except by way of the concession that may be extended by the employer under the rules or by a separate scheme, to enable the family of the deceased to get over the sudden financial crisis. The claim for compassionate appointment is therefore traceable only to the scheme framed by the employer for such employment and there is no right whatsoever outside such scheme. An appointment under the scheme can be made only if the scheme is in force and not after it is abolished/withdrawn. It follows therefore that when a scheme is abolished, any pending application seeking appointment under the scheme will also cease to exist, unless saved. The mere fact that an application was made when the scheme was in force, will not by itself create a right in favour of the applicant.
9. Normally, the three basic requirements to claim appointment under any scheme for compassionate appointment are: (i) an application by a dependent family member of the deceased employee; (ii) fulfilment of the eligibility criteria prescribed under the scheme, for compassionate appointment; and (iii) availability of posts, for making such appointment. If a scheme provides for automatic appointment to a specified family member, on the death of any employee, without any of the aforesaid requirements, it can be said that the scheme creates a right in favour of the family member for appointment on the date of death of the employee. In such an event the Scheme in force at the time of death would apply.
10. On the other hand, if a scheme provides that on the death of an employee, a dependent family member is entitled to appointment merely on making of an application, whether any vacancy exists or not, and without the need to fulfil any eligibility criteria, then the scheme creates a right in favour of the applicant, on making the application and the Scheme that was in force at the time when the application for compassionate appointment was filed, will apply. But such schemes are rare and in fact, virtually nil.
11. Normal schemes contemplate compassionate appointment on an application by a dependent family member, subject to the applicant fulfilling the prescribed eligibility requirements, and subject to availability of a vacancy for making the appointment. Under many schemes, the applicant has only a right to be considered for appointment against a specified quota, even if he fulfils all the eligibility criteria; and the selection is made of the most deserving among the several competing applicants, to the limited quota of posts available. In all these schemes there is a need to verify the eligibility and antecedents of the applicant or the financial capacity of the family. There is also a need for the applicant to wait in a queue for a vacancy to arise, or for a Selection Committee to assess the comparative need of a large number of applicants so as to fill a limited number of earmarked vacancies.
12. Obviously, therefore, there can be no immediate or automatic appointment merely on an application. Several circumstances having a bearing on eligibility, and financial condition, up to the date of consideration may have to be taken into account. As none of the applicants under the scheme has a vested right, the scheme that is in force when the application is actually considered, and not the scheme that was in force earlier when the application was made, will be applicable.
13. Further, where the earlier scheme is abolished and the new scheme which replaces it specifically provides that all pending applications will be considered only in terms of the new scheme, then the new scheme alone will apply. As compassionate appointment is a concession and not a right, the employer may wind up the scheme or modify the scheme at any time depending upon its policies, financial capacity and availability of posts.
14. In this context we may usefully refer to the decision of this Court in Union of India v. R. Padmanabhan (2003) 7 SCC 270 wherein this Court observed:
“8. … That apart, being ex gratia, no right accrues to any sum as such till it is determined and awarded and, in such cases, normally it should not only be in terms of the guidelines and policy in force, as on the date of consideration and actual grant but has to be necessarily with reference to any indications contained in this regard in the scheme itself. The line of decisions in relation to vested rights accrued being protected from any subsequent amendments may not be relevant for such a situation and it would be apposite to advert to State of T.N v. Hind Stone (1981) 2 SCC 205. That was a case wherein this Court had to consider the claims of lessees for renewal of their leases or for grant of fresh leases under the Tamil Nadu Minor Mineral Concession Rules, 1959. The High Court was of the view that it was not open to the State Government to keep the applications filed for lease or renewal for a long time and then dispose them of on the basis of a rule which had come into force later. This Court, while reversing such a view taken by the High Court, held that in the absence of any vested rights in anyone, an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application, despite the delay, if any, involved although it is desirable to dispose of the applications, expeditiously.”
15. We may also refer to the decision of this Court in Kuldeep Singh v. Govt. of NCT of Delhi (2006) 5 SCC 702 which considered the question of grant of liquor vend licences. This Court held that where the applications required processing and verification the policy which should be applicable is the one which is prevalent on the date of grant and not the one which was prevalent when the application was filed. This Court clarified that the exception to the said rule is where a right had already accrued or vested in the applicant, before the change of policy.
16. In this case the employee died in October 2004, the application was made only in June 2005. The application was not even by the respondent, but by his mother. Therefore, it was necessary to ascertain whether the respondent really wanted the appointment, whether he possessed the eligibility, and whether any post was available. Within two months of the application, the new Scheme came into force and the old Scheme was abolished. The new Scheme specifically provided that all pending applications will be considered under the new Scheme. Therefore it has to be held that the new Scheme which came into force on 4-8-2005 alone will apply even in respect of pending applications.
17. The respondent relied upon the following observations in SBI v. Jaspal Kaur (2007) 9 SCC 571, (2007) 1 CLR 947 to contend that he was entitled to be considered under the old Scheme which was in force at the time of the application by his mother:
“26. Finally in the fact situation of this case, Shri Sukhbir Inder Singh (late), Record Assistant (Cash & Accounts) on 1-8-1999, in the Dhab Wasti Ram, Amritsar Branch, passed away. The respondent, widow of Shri Sukhbir Inder Singh applied for compassionate appointment in the appellant Bank on 5-2-2000 under the scheme which was formulated in 2005. The High Court also erred in deciding the matter in favour of the respondent applying the scheme formulated on 4-8-2005, when her application was made in 2000. A dispute arising in 2000 cannot be decided on the basis of a scheme that came into place much after the dispute arose, in the present matter in 2005. Therefore, the claim of the respondent that the income of the family of the deceased is Rs 5855 only, which is less than 40% of the salary last drawn by late Shri Sukhbir Inder Singh, in contradiction to the 2005 Scheme does not hold water.”
18. The said observations are read out of the context by the respondent. In that case the Bank employee died on 1-8-1999. Application was filed by the widow on 5-2-2000. The case of the widow was considered twice and the request for appointment on compassionate grounds was declined by taking into consideration the financial position/capacity of the family. The High Court allowed the writ petition filed by the widow in 2004 on the ground that the terminal benefits of Rs 4,57,607 received by the family were not sufficient for the sustenance of the family. In an appeal by the Bank, it was contended before this Court that in addition to Rs 4,57,607 paid as terminal benefits, the widow was getting Rs 2055 per month as family pension and that was not considered by the High Court. During the hearing before this Court, the widow relied upon the new Scheme dated 4-8-2005 and sought additional payment in terms of the scheme.
19. The above observations were made in the context of rejecting the widow's request for additional payment under the 2005 Scheme. In fact, this Court allowed the Bank's appeal and dismissed the writ petition filed by the widow for additional benefits. The said observations, cannot therefore be of any assistance to consider the applicability of the old Scheme for compassionate appointment vis-à-vis the new Scheme for ex gratia payment.
20. The respondent was not entitled to be considered for compassionate appointment. The High Court was not justified in quashing the communication dated 31-1-2006 or in directing reconsideration of the case of the respondent for compassionate appointment.
21. We therefore allow this appeal in part as follows:
(i) The orders of the learned Single Judge and the Division Bench are set aside.
(ii) The respondent and/or his family may file a fresh application under the new Scheme, as directed by the Bank in its letter dated 31-1-2006.
(iii) The appellant Bank is directed to process such application under the new Scheme, if and when made, and pay the lump sum ex gratia amount due in terms of that Scheme, to the beneficiaries, within four months of the receipt of the application.
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