Holding

The employee did not waive his right to continue service, and the bank is ordered to reinstate him with all consequential benefits.

Summary

Amarjit Singh Sahni, a cashier‑clerk of Punjab and Sind Bank, applied for voluntary retirement under the bank's scheme (effective 1‑31 Dec 2000) but withdrew his application on 22 Dec 2000 before the bank had accepted it. The bank later treated him as relieved from service on 28 Jan 2001 and denied his reinstatement, depositing only Rs 1,422.21 as leave encashment without informing him that it was part of scheme benefits. Sahni filed a writ petition seeking reinstatement and the full benefits, including an ex‑gratia payment of Rs 10,50,000. The Supreme Court examined whether his withdrawal and the subsequent closure of his account amounted to a waiver of his right to continue service. It held that waiver requires knowledge of the right, which Sahni did not possess, and that the bank’s unilateral deposit did not constitute acceptance or estoppel. Consequently, the Court ordered his reinstatement with all consequential benefits, except for the period he was on leave, and declined to award interest or costs.

Issues considered

Whether the employee waived his right to continue in service by withdrawing his voluntary retirement application before acceptance by the bank.
Whether the small deposit of leave encashment in the employee's account, without his knowledge, amounts to acceptance of the scheme and thus a waiver of his right.
Whether the principles of estoppel or waiver apply to the employee's conduct of closing his bank account.
Whether the bank, as a State entity, is obligated to reinstate the employee and pay the full scheme benefits.

Legislation cited

Constitution of Indias. Article 12
Payment of Gratuity Act, 1972

Subjects

Voluntary Retirement SchemeWaiver of rightReinstatementLeave encashmentEx gratia paymentState employerArticle 12EstoppelService lawEmployee benefits

Judgment

A
PUNJAB AND SINO BANK AND ORS.
V.

MOHINDER PAL SINGH AND ORS.

OCTOBER 28, 2005 B
[H.K. SEMA, S.B. SINHA AND A.K. MATHUR, JJ.]

Service Law:

Voluntary Retirement Scheme-Punjab and Sind Bank-Employee
c
withdrawing his option to avail benefit of the Scheme before its acceptance by
the Bank-Bank depositing in employee's account small amount towards leave
encashment-Held, waiver of a right implies the knowledge of the existing
right-At no point time the employee was informed that the amount was
deposited in his account as part of benefit under the Scheme-Employee cannot D
.
be said to have waived his right to continue in se'rvice-Besides leave
encashment benefit is one of the additional benefits-The main benefit of the
Scheme indisputably was the ex-gratia payment which was not paid to
employee-An employee even if contained in service would have been entitled
to the additional benefits which are in the nature of terminal benefits-The E
Bank is a 'State' within the meaning of Article 12 of the Constitution-Fair
and better dealings from a 'State' vis-a-vis its own employees is expected-
Jt is not for an employee, who did not accept that his offer had validly been
accepted in terms of the Scheme to approach the Bank for payment of his
dues-It was for the Bank to make such an offer-Employee is entitled to be
reinstated in services with all consequential benefits and continuity in service- F
Waiver-Constitution of India-Article I 2.

Bank of India and Ors. v. O.P. Swarnakar and Ors., (2003] 2 SCC 721,
relied on.

Punjab and Sind Bank and Anr. v. S. Ranveer Singh Bawa and Anr., G
(2004] 4 sec 484, held inapplicable.

CIVIL APPEL LA TE JURISDICTION : I.A. No. 7 In Civil Appeal No.
8476 of 2002.
989 H
,
990 SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R..

A From the Judgment and Order dated 3.4.2002 of the Punjab and Haryana.
High Court in W.P. No. 1458 of 2001.

Jagat Arora, Rajiv Nanda, Rajat Arora and Ms. Ritu Arora for the
Appellants.

B Ms. Meenakshi Arora and Shailendra Bhardwaj for the Respondents.

The following Order of the Court was delivered :
~.
ORDER

C Application of a decision of this Court in Bank of India and Ors. v.
0. P. Swarnakar and Ors., [2003] 2 SCC 721 falls for consideration in this
application.

Before, however, we advert to the said question, we may notice the
admitted facts.
D
Shri Amarjit Singh Sahni, the Applicant herein at all material times was
working in the Punjab and Sind Bank (for short "th~ 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
E 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

F 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; or
G
(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:
H
PUNJAB AND SINO BANK v. MOHINDER PAL SINGH 991
(i) Gratuity as per the Payment of Gratuity Act, 1972 or gratuity A
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
or

'· (b) Bank's contribution towards PF as per existing rules.

(iii) Leave encashment as per existing rules."

The Applicant opted to avail the benefit of the said Scheme wherefor C
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 pior thereto the
application filed by the application was accepted.

It is furthermore not in dispute that on 29.01.2001, the Applicant filed
a writ petition in the Punjab and Haryana High Court being C.W.P. No. 1458 D
of 200 I. The matter came up before the High Court on 31.01.200 I 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 continu~
therein. However, he was not permitted to join his service by the Bank on the
plea that he had been relieved from duties on 28.01.200 I. Employees who E
had, however, not been relieved were permitted to continue.

It is furthermore not in dispute that the Applicant had a Saving Banks
Account with the Bank wherein a sum of Rs. 1422.21 was deposited on
9.03.2001. According to the Applicant, as he apprehended that the Respondent
might deposit some other amount in terms of the aforementioned Scheme in F
his account, he closed the same on or about 24.04.2001.

The employees of the Bank as also other nationalized banks filed writ
applications questioning the legality and validity of the Scheme. Some writ 0
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 G
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
f.
leave before this Court questioning the correctness of the said judgment.
H
992 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A These appeals upon grant of special leave were disposed of on I 7th
December, 2002 in O.P. Swarnakar (supra) 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.
B (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.
c
(iv) The Scheme as such was not invalid in law.
(iii) However, if those employees had accepted the ex gratia payment
or any other benefit under the Scheme, they could not have
resiled therefrom.
D 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. I0,50,000/- by way
of benefits in terms of the Scheme. The said amount had not been offered to
E the Applicant till date.

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. 1,422.21 was credited
in the account of the Applicant on 9.03.200 I. The Bank accepts that the
Applicant had never been communicated that the said amount was being
F deposited in terms of the Scheme. When questioned as to why the amount of
Rs. I 0,50,000/- or any other amo:mt 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
G contention. It is not a case where after the expiry of the Scheme, an ·employee
requested the Bank to be permitted to withdraw from option. The only question
which, therefore, arises for consideration is as to whether the Applicant herein
waived his right.

Waiver of a right implies his knowledge of the existing right. A person .,
H cannot be said to have waived his right unless it is established that his conduct
PUNJAB AND SINO BANK v. MOHINDER PAL SINGH 993
was such so as to enable the Court to arrive at a conclusion that he did so A
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.

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 B
same having been withdrawn and terminated their services with immediate
effect. As noticed herein before, the judgment in 0. P. Swarnakar (supra) was
delivered on 17th December, 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 C
on 22nd February, 2003 and 28th March, 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 he had 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 D
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. 1,422.21. 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 E
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.

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 p
benefit amounting to Rs. I 0,50,000 to which the Applicant was otherwise
entitled to in terms of the Scheme had not been paid to him.

The Bank is a 'State' within the meaning of Article 12 of the Constitution
of India. We expect fair and better dealings from a 'State' vis-a-vis its own
employees. It is not for an employee who did not accept that his offer had G
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.
H
994 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A 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.

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 meager sum of Rs. 1,422.21 in
B 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.

The learned counsel appearing on behalf of the Bank relied upon the
C decision of this Court in Punjab & Sind Bank and Anr. v. S. Ranveer Singh
Bawa and Anr., (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 I had two
savings bank accounts Nos. 4775 and 4777. He had withdrawn his
D
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
Joan; invests Rs 30,000 in PPF and Rs 1,42,406.40 in fixed dep011it
for three years, which is a Jong-term investment. Therefore, the
E principle of estoppel extensively discussed by this Court in the case
of Bank of India v. O.P. Swarnakar 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. "
F
(Emphasis supplied)

The said decision has no application to the fact of the present case.

G The conduct of the Applicant herein does not indicate any knowledge
about the payment in his account or his willful 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
H made. The said allegation also has not been denied.
PUNJAB AND SINO BANK v. MOHINDER PAL SINGH 995
For the reasons aforementioned, this application is allowed. The Bank A
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 Respondent. The Respondent shall,
however, be entitled to deduct the amount actually paid to the Applicant or B
payable in his account, if any.

R.P. Application allowed.