Holding

Retirement on superannuation does not require Board sanction; Rule 11 is inapplicable, disciplinary proceedings cannot continue post‑superannuation, and PF must be paid unless a liability is established, leading to the dismissal of the Bank's appeals and setting aside of damages.

Summary

The Supreme Court examined two appeals by the State Bank of India against Delhi High Court orders directing payment of pension and provident fund to former assistants A.N. Gupta and Gulati, who had retired on superannuation. The Bank argued that under Rule 11 of the Imperial Bank of India Pension Rules, pension could be withheld unless the Executive Committee sanctioned the retirement, and that disciplinary proceedings could continue after superannuation. The Court held that retirement on superannuation is automatic under Service Rule 26 and requires no Board sanction; consequently Rule 11 does not apply to such retirements and disciplinary proceedings cannot be pursued after the employee ceases service. The Court also ruled that Rule 20 of the Provident Fund Rules allows withholding of PF only if a liability is prima facie established, which was not the case. Accordingly, the High Court’s award of damages for wrongful withholding was set aside, and the Bank’s appeals were dismissed.

Issues considered

Whether sanction of the Executive Committee under Rule 11 is required for pension entitlement on retirement by superannuation.
Whether disciplinary proceedings can continue after an employee has retired on superannuation.
Whether the Bank may withhold pension or provident fund under Rules 11 and 20 without establishing liability.
Whether damages for alleged wrongful withholding of pension and PF should be awarded.

Legislation cited

State Bank of India Act, 1955

Subjects

pensionsuperannuationservice rulesRule 11disciplinary proceedingsprovident funddamagesState Bank of Indiaretirementforfeitureliability

Judgment

THE ST A TE BANK OF INDIA A
A.N. GUPTA AND ORS.

SEPTEMBER 30, I 997

[SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] B

Service Law :

Rules and Regulations of the Imperial Bank of India Pension and
Guarantee Fund-Rules IO and /I-Rules governing the service of the C
Assistants in the Imperial Bank of India-Rule 26 .

Sanction of the Executive Committee of the Bank for obtaining retirement
on attaining Superannuation'-Whether necessary?-Held : No, Sanction of
the Bank is required only if the retirement is by any other method except D
superannuation viz. Premature retirement, etc.

Rules IO & /I-Forfeiture of Pension-Permissibility of-Jn case of
dismissal from service for wilful neglect or fraud.

Rule I I-Scope of-Claim to pension on superannuation-Rule 11 E
held to be applicable where an employee leaves the service of the Bank
before reaching the age of Superannuation or the Bank requires him to retire
before that date-Rule 26 of the service rules governing the Assistants in the
Imperial Bank of India. No sanction is required from the Bank under Rule
11 in case of retirement on superannuation.
F
Service Law-Disciplinary proceedings-Continuation thereof after the
date of superannuation-Held, cannot be permitted as Service Rules do not
provide for continuation of disciplinary proceedings after the date of
superannuation.

Retirement-Types of-Retirement on superannuation and premature G
Retirement-Premature Retirement may either be compulsory or voluntary.

Imperial Bank of India Employees' Provident Fund Rules-Rule 20.
Proviso-Payment to the Bank from the P.F. in case where the employee
resigning or retiring from the service of the bank is under a liability incurred
383
H
'"
384 SUPREME COURT REPORTS (1997] SUPP. 4 S.C.R.

A by him to the Bank-Applicability-Bank should prima facie establish any
liability incurred by the employee-Bank cannot be allowed to withhold the
P.F. due till the amount due from the employee is determined-Held,
Respondents entitled to the P.F. due to them in the absence of any liability
incurred.

B Damages-Whether entitled due to wrong withholding of the pension
and P.F. amount? No-Not as a case where the amounts were wrongly witheld
by the Bank-Moreover amounts with interest have been paid.

The respondent in CA 2141180 and the respondent in CA 9943/83 were
C working as Assistants in the Imperial Bank of India when the undertaking
of the Imperial Bank was transferred to the State Bank of India the appellant
herein under the State Bank of India Act, 1955. All the service regulations
which were applicable to the employees of the Imperial Bank remained
operative when these employees became the employees of the State Bank of
India.
D
Both the respondents having retired from service as Assistants on
superannuation were denied pension and provident fund on the ground that
disciplinary proceedings were going on against them and that these amounts
could be withheld by the Bank under the provisions of the relevant rules
E applicable.

Both the respondents i.e. the respondent in CA 2141/80 and the
respondent in C.A. 9943/83 filed separate writ petitions before the Delhi High
Court for a direction to the Bank to pay their respective retirement benefits.

F The respondent in C.A. 2141/80 filed a writ petition in the High Court
of Delhi for a direction to the Bank to pay his retirement benefits which was
allowed by a Single Judge. Against this, the Bank went in Letters Patent
Appeal to the Division Bench of the High Court. Similarly, the respondent in
CA 9943/83 filed a writ petition for a direction to the bank to pay him his
G retirement benefits. Both the L.P.A filed by the bank against the judgment of
the Single Judge in the case of respondent in CA 2141/80 and the writ petition
filed by the respondent in CA 9943/83 were heard together by a Division
Bench of the Delhi High Court. By the impugned judgement the appeal filed
by the Bank was dismissed; the writ petition filed by respondent in CA 9943/
83 was allowed. The Bank Preferred two appeals against this common
H judgement of the High Court of Delhi.
S.B.I. v. A.N. GUPTA 385
On behalf of the Appellant Bank, it was contended that the respondents A
were not entitled to the benefit of the pension as a matter of right. Under Rule
I I Pension could be held to be payable only when the entire service of the
retiring employee was certified by the sanction of the Executive Committee of
the Central Board of the Bank. This meant that the employee would be entitled
to the pension only if he conducted himself properly in the course of his B
employment

On behalf of the Respondents it was submitted that the respondents
would be entitled to full pension as well as Provident Fund standing to their
credit on their superannuation from the Bank.

Dismissing the appeals, the Court c
HELD : I. I. No sanction is required form the Bank to leave the service
on reaching the age of superannuation as provided in Rule 26 of the Service
Rules applicable to Assistants. Rule 25 of the Service Rules clearly mandates
the retirement of an employee on his attaining the age of superannuation and
there cannot be two opinions on that. Therefore, Rule I I has no application D
in the case of the respondents who retired on attaining the age of
superannuation. [396-D]

1.2. Rule II, Particularly the latter portion of this Rule would be
applicable where an employee leaves the service of the Bank before reaching
the age of superannuation or the Bank requires him to retire before that date E
on his becoming incapacitated or otherwise. [395-F)

2. Rule IO of the Pension Rules provides for forfeiture of all claims
for pension ifan employee is dismissed from service of the Bank for wilful
neglect or fraud. This rule specifically provides for forfeiture of the pension.
It ~ould not therefore be said that under Rule 11 again the pension of an F
employee could be withheld on these or similar grounds. The last sentence of
Rule 11 which says that an employee who shall leave the service without
sanction of the Executive Committee of the Central Board of the Bank shall
forfeit all claims for pension would not include the holding of the employee
guilty of wilful neglect or fraud which is envisaged in Rule IO. [395-E] G
3.1. Retirement on superannuation is automatic as per Rule 26 of the
Service Rules. No further action on the part of the Executive Committee of
the Central Board of the Bank would be required in such a case and Rule II
will not be applicable. [395-H]

3.2. Right to receive pension is a right to property under Rule 7 of the H
386 SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A Pension Rules when it says that no employee shall have any right of property
in the pension fund beyond the amount of his contribution to the pension section
of the fund with interest accrued there on. That being so Rule 11 cannot be
interpreted to mean that claim to pension of an employee on superannuation
can be defeated by the Bank by merely withholding sanction of retirement.
[396-B]
B
3.3. Retirement on superannuation is not the only mode of retirement
known to service jurisprudence. There can be other types of retirements like
premature retirement, either compulsory or voluntary. It would be in the case
of a premature retirement or any other contingency when an employee leaves
C the service of the Bank before he superannuates that Rule 11 would become
applicable. (395-G]

4. Proceeding in the garb of disciplinary proceedings cannot be
permitted after an employee has ceased to be in the service of the Bank as
Service Rules do not provide for continuation of disciplinary proceedings after
D the date of superannuation. Sanction of the Bank is required only if the
retirement of an employee is by any other method except superannuation.
(396-F]

T. Narsiah v. State Bank of India and Ors., (1978) 11 LLJ 173 A.P. and
M/sJK. Kulkarniv. State Bank ofIndia, Misc. Petition No 964of1977 decided
E by Bombay High Court on November 29, 1977, overruled.

5. Rule 20 of the Employees Provident Fund Rule will become applicable
only if an employee retiring from the service of the Bank is under a liability
incurred by him to the Bank. In that case trustees administering the Provident
Fund can pay to the Bank out of the balance to the credit of the employee in
p the Fund any amount due by him to the Bank. (396-H]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2141 of 1980.

From the Judgment and Order dated 25.2.80 of the Delhi High Court in
L.P.A. No. 30of1975.

G WITH

Civil Appeal No. 9943of1983.

Sunil Dogra and Ms. Monica Sharma for Mis. Suresh A. Shroff and Co.
for the Appellant.

H P.K. Chatterjee, Abhijeet Chatterjee, Sukumar Ghose and K.S. Bhati for
S.B.I. v. A.N. GUPTA [D.P. WADHWA, J.] 387
the Respondents. A
The Judgment of the Court was delivered by

D.P. WADHWA, J. These are two appeals and are directed against the
common judgment dated February 25, 1980 of the Delhi High Court by which
the High Court not only directed that pension and provident fund be paid to B
the respondents, who were working as Assistants, but also awarded damages
to them and against the appellant-Bank for wrongfully withholding these
payments. The operative part of the impugned judgment reads thus :

"In the result, we direct that the Bank shall pay within four weeks to
Sarvshri Gupta (respondent in CA No. 2141/80) and Gulati (respondent C
in CA No. 9943/83) :

1. the entire pension fund due as calculated under the Pension and
Guarantee Fund Rules;

2. a sum equivalent to 9% per annum by way of damages for D
wrongfully with-holding the aforesaid amount from the date of
retirement to the date of actual payment; and

3. the provident fund due along with interest plus an amount
equivalent 9% per annum by way of damages from the date of E
retirement to the date of payment.

Amounts already paid under our order of 19th December,
1979, shall be deducted from the above payments."

Both Gupta and Gulati had retired from the service of the Bank after F
putting varying years of service and claimed pension and provident fund.
These were denied to them by the Bank on the ground that there were certain
lapses on their part while in service and that under the provisions of the
relevant rules, as applicable, these amounts could be with-held. There claims
were resisted by the Bank relying on Rule 11 of Rules and Regulations of the
Imperial Bank of India Pension and Guarantee Fund (for short 'Pension Rules') G
and Rule 20 of the Imperial Bank of India Employee's Provident Fund Rules.
These Rules read as under:

"Rule 11. The retirement of all officers of the Bank shall be subjects
to the sanction of the Executive Committee of the Central Board. The
retirement of all other employees of the Bank shall be subjects to H
388 SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A sanction of the Executive Committee or the Local Board concerned
with their employment. Any officer or other employee who shall leave
the service without sanction as required by this rule shall forfeit all
',
claim upon the fund for pension.

Rule 20. When a.member resigns or retires from the service of the bank
B he shall, if he has served the Bank for a period of the five years or
more (including service in the Presidency Banks), be entitled to receive
the balance at his credit in the fund. Provided that when any member
resigning or retiring from the service of the Bank is under a liability
incurred by him to the Bank, the trustees shall, irrespective of the
duration of his service, pay to the Bank out of the balance at his credit
c in the fund any amount due by him to the Bank (not exceeding in any
case the sums contributed by the Bank to his account in the fund and
any interest credited to his account on the sums so contributed)."

There are separate rules governing the service of Assistants in the
D Imperial Bank of India (Service Rules, for short). Of these Rules, 25 and 26
would be relevant and are set down as under:

"25. An Assistant may at the discretion of the Executive Committee
be called upon to retire from the Bank's service upon completion of
twenty-five years service.
E 26. All Assistants shall retire at fifty-five years of age or upon the
completion of thirty years' service whichever occurs first:

Provided that the Executive Committee may extend the period of
service of an Assistant who has attained the age of fifty-five years
(fifty-eight years w._e.f. 1.4.1967) or has completed thirty years' service
F should such extension be deemed desirable in the interests of the
Bank.

Note - For the purposes of rules 25 and 26 service shall count:-

(i) in the case of an Assistant first engaged by the Bank as a
G Probationary Assistant, from the commencement of his probationary
service or from the date he attained the age of twenty-one years if his
probationary service commenced before such date; and

(ii) in the case of any other Assistant, from the date of his
confirmation in his first post in the Bank in whatever capacity it may
H have been or from the date he attained the age of twenty-one years
S.B.I. v. A.N. GUPTA [D.P. WADHWA, J.] 389
if he was confirmed in the Bank's service before attaining that age." A
When special leave was granted by this Court, it was directed that cost
in any event shall be paid by the Bank to the respondents. There was also
ex-parte stay relating to damages awarded under paras (2) and (3) of the
operative part of the impugned judgment quoted above. It was stated before
us that all the amounts due to respondents towards their pension and provident B
fund have since been paid except the damages as awarded by the impugned
judgment which had been stayed by this Court.

Imperial Bank of India was constituted under the Imperial Bank of India
Act, I 920. Both Gupta and Gulati were working as Assistants in the Imperial
Bank when the undertaking of the Imperial Bank was transferred to the State C
Bank of India, the appellant herein, under the State Bank of India Act, 1955.
All the service regulations which were applicable to the employees of the
Imperial Bank remained operative when these employees became the employees
of the State Bank of India. Central Board of Directors of the State Bank were
empowered to make regulations after consulting with the Reserve Bank of D
India and with the previous sanction of the Central Government. As far as
the present two appeals are concerned, there has not been any change in the
Rules and Regulations relating to the Pension and Guarantee Fund and the
Employees Provident Fund Rules.

To understand the rival contentions, we may note some of the relevant E
facts in each of the two appeals.

Respondent Gupta (in CA No. 2141/80) attained the age of 58 years on
August 14, 1972 and retired from the service of the Bank under Rule 26 of the
Service Rules. The Bank issued him a memorandum to the effect that as he
had attained the age of 58 years, "It was no longer necessary for him to F
attend the office from August 14, 1972". There were certain allegations against
Gupta in respect of his work between February 1968 to July 1970 while he was
posted as Superintendent in the Stationary Department of the Bank. He was
placed under suspension on July 19, 1972. Since there was no rule to continue
with an enquiry after the employee reached the age of superannuation, Gupta G
was directed not to attend the office and, as noted above, he had retired
within a period of less than one month from the date of his suspension.

The appellant Gulati (in CA 9943/83) attained the age of 58 years on
April 3, 1970. However, the Bank had extended his service by letter dated
September 15, 1969 for two years, i.e., up to April 3, 1972. This the Bank did H
390 SUPREME COURT REPORTS (1997] SUPP. 4 S.C.R.

A relying on its power under proviso to Rule 26 of the Rules governing the
service of Assistants, Gulati was, however, suspended w.e.f. July 27, 1971 and
on October 26, 1971 he was served with a charge-sheet in contemplation of
disciplinary proceedings against him. Gulati gave his reply to the charge-
sheet. Though there were no further proceedings in the matter, Gulati was
asked by letter dated March 22, 1972 that it had been decided by the Bank
B to require him to resign and that if he failed to do so, he would be dismissed
from service. Gulati did not resign. He reiterated the denial of the charges
levelled against him and sought an enquiry. The Bank did not pass any order
of dismissal and rather by letter dated March 13, 1972 gave opportunity to
Gulati to ask for documents, if any, that may be required by him by April 6,
C 1972. By April 3, 1972, Gulati retired from the service of the Bank on completing
the period of two years after the age of 58 years by which the Bank had
chosen to extend his services.

Now, the appellant Gupta after August 14, 1972 and appellant Gulati
after April 3, 1972 requested the Bank to pay them their pension and provident
...
D fund as may be due to them under the relevant service regulations. Gupta was
told that he had retired from the service of the Bank and the matter of payment
of his retirement benefits was engaging the attention of the Bank. Though the
Bank never turned down the demand of Gupta to get the benefits as due to
him after his retirement, yet these were not paid to him. He, therefore, filed
a writ petition in the High Court which was allowed by a learned single Judge
E and the Bank went in Letters Patent Appeal to the Division Bench of the High
Court. Similarly, in the case of Gulati, variohs reminders were sent by him
demanding payment of his pensionary benefits and since there was no response
from the Bank , Gulati also filed a writ petition for a direction to the Bank to
pay him his retirement benefits.
F Both the LPA filed by the Bank against the judgments of the learned
single judge in the case of Gupta and the writ petition filed by Gulati were
heard together by a Division Bench of the High Court. By the impugned
judgment while the appeal filed by the Bank was dismissed, the writ petition
filed by Gulati was allowed. The Division Bench issued directions both in the
G case of Gupta and Gulati which have been set out above.

It was contended before us by Mr. Sunil Dogra, learned counsel for the
Bank, that the respondents did not have an automatic right to get full pension
on retirement from the Bank service and as per Rule 11, unless and until the
Bank sanctioned the same, the respondent would not be entitled to the
H benefit of pension as a matter of right. It was also submitted that "sanction
S.B.I. v. A.N. GUPTA [D.P. WADHWA, J.) 391
to retirement" must be read and understood as sanction to the service A
preceding retirement and under Rule 11, pension could be held to be payable
only when the entire service of the retiring employee was certified by the
sanction of the Executive Committee of the Central Board of the Bank. The
argument was that sanction of service must be understood in the context of
approval of service and unless, therefore, the employee had conducted himself B
properly in the course of his employment in the Bank and if so held by the
Bank, the employee would only then be entitled to the pension. Similar was
the argument by the Bank regarding payment of provident fund to the retiring
employee. We may note that though the trustees who manage pension and
guarantee fund are common, the pension fund and guarantee fund are
administered separately in two sections. Under Rule 5-A of the Pension Rules, C
every employee has to contribute monthly to the pension section of the fund
certain amount of percentage of his salary. The contribution so made carry

- interest at the prescribed rate. Under Rule 6, the Bank is also to subscribe
monthly to the pension section of the fund an amount equal to that contributed
by the employee. Under Rule 7, no employee shall have any right of property
in the fund beyond the amount of his contributions to the pension section D
of the fund with the interest accrued there on. Under Rule 15 of the Employees
Provident Fund Rules, similar contributions are to be made to the fund by the
employee and the Bank which again is to carry interest.

Mr. Chatterjee, learned counsel appearing for the respondents, submitted E
that the respondents would be entitled to full pension as well as pro~ident
fund standing to their credit on their superannuation from the Bank. He
submitted, with reference to various Rules, that it could not be said that when
. an employee superannuated, his retirement benefits could be paid only to him
when these were sanctioned by the Bank after looking into his past record
of service. Reference was made particularly to Rules 10, 14 and 19 of the F
Pension Rules. Stress was more laid on Rule 19. We may set out these Rules
as under:

''I 0. An employee dismissed from the Bank's services for wilful neglect
or fraud shall forfeit all claims upon the fund for pension.
G
11. The retirement of all officers of the Bank shall be subject to the
sanction of Executive Committee or the Central board. The retirement
of all other employees of the Bank shall be subject to the sanction of
the Executive Committee or the Local Board concerned with their
employment. Any Officer or other employee who shall leave the service
without sanction as required by this rule shall forfeit all claim upon H
392 SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A the fund for pension.

14. If an officer or assistant of the Bank who is entitled to pension
under these rules wishes to accept employment in any other bank at
any time or any other commercial employment within two years from
the date of retirement, he should obtain the previous sanction of the
B Executive Committee of the Central Board. Should he undertake such
employment without the sanction required under this rule it shall be
competent for the trustees to withdraw the pension payable to him
either in whole or in part at their discretion.

19. (i) An employee retiring from the Bank's service after having
c completed twenty years' service with the Bank shall be entitled to
pension provided the employee has attained the age of fifty years if
employed on the staff in India or the female staff in London or sixty
years if employed on the male staff in London.

(ii) An employee retiring from the Bank's services after having
D completed twenty years' service on the staff in India and/or on the
staff in London shall be entitled to pension irrespective of the age he
shall have attained if he shall satisfy the authority competent to
sanction his retirement by approved medical certificate or otherwise
that he is incapacitated for further active service. (Notwithstanding
anything to the contrary in these rules and regulations the total of
E such employee's service whether in India or London shall count for
pension under this rule.)

(iii) An employee who has attained the age of fifty-five or who
shall be proved to the satisfaction of the authority competent to
sanction his ;-etirement to be permanently incapacitated by bodily or
F
mental infirmity from further active service (such infirmity not being
the result of irregular or intemperate habits) may, at the discretion of
the trustees, be granted a proportionate pension.

Mr. Dogra referred to a decision of the Andhra Pradesh High Court in
G T. Narsiah v. State Bank of India & Ors., ( 1978) II LLJ 173 which according
to him has taken the view what was being advanced by the Bank. In this
judgment of the Andhra Pradesh High Court as well as of the impugned
judgment of the Delhi High Court there is also reference to an unreported
decision of the Bombay High in Mis. J.K. Kulkarni v. State Bank of India,
(Misc. Petition No. 964 of 1977 decided on November 29, 1977) where the
H learned Single Judge held that Rule 11 applied to all retirements but the Bank
S.B.I. v. A.N. GUPTA [D.P. WADHWA, J.] 393
would be entitled to with-hold sanction only in circumstances similar to Rule A
I 0 and for this Bank would be required to hold a fair and honest enquiry
which could be held even after the employee had retired. It was stated by the
learned Judge that Rule I I contemplated two different types of termination
of service. He expressed his opinion thus: "One would be retirement in terms
of any of the Rules either the Service Rules or Pension Rules and the other B
would be leaving the service without bothering to obtain anybody's permission
or sanction. It stands to reason that a person who leaves service without
caring to obtain any sanction under Rule 11, can safely be denied any claim
to pension in terms of the last clause of Rule 11. However , that clause also
covers all cases of retirement where the retirement is accompanied by the
sanction of the Executive Committee. Here the Executive Committee may have C
discretion in issuing certificate by looking to the service career of an employee".
Then after discussing Pension Rules and the Service Rules, the learned Judge
concluded as under:

''From that point of view, I am satisfied that the Bank's proposal to
hold a formal inquiry even after retirement of the Petitioner is proper. D
They would of course give him all reasonable opportunity that is
required in the inquiry of any domestic tribunal and observe the rules
of natural justice. They have a right to satisfy themselves regarding
the conduct of the Petitioner while he was in service. If they are able
to reach a firm decision within the findings which might fall under E
Rule 10, the Committee does seem, in my view, to have a right to
withhold the sanction. This is all that the Committee is seeking to do."

While the Delhi High Court expressed its dissent to the view expressed
by Bombay High Court, it was accepted by the Andhra Pradesh High Court.
Andhra Pradesh High Court decision was rendered by a learned Single Judge F
and we have been shown an unreported decision of the appellate Bench
against that order wherein view of the learned Single Judge has been upheld.

In the case before the Andhra Pradesh High Court 1978 Vol. 2 LLJ f73
the petitioner was an officer in the State Bank. Disciplinary proceedings were G
initiated against him but before these could be completed the officer was
· informed by the Bank through its letter dated May 5, 1976 that it was not
possible for the Bank to complete the enquiry well in time before the officer
attaining the age of 60 years which was the date of his superannuation. He
was told he would therefore cease to be in the Bank's service on the date of
his superannuation and he would not be paid any subsistence allowance with H
394 SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A effect from that date. The officer was treated as having retired and ceasing
to be in the employment of the Bank with effect from May 10,1976. The officer
claimed his Provident Fund and Pension and on Bank's refusal to pay the
same, a writ petition was filed. During the course of the hearing of the writ
petition it was submitted by the Bank that it had since decided to pay the
Provident Fund in full to the officer and Bank had also no objection to pay
B his contribution to the pension and that as far as the payment of Bank's share
in the Pension Fund was concerned, the officer was not entitled there to
unless and until the Bank granted the same in accordance with Rule 11 of the
Pension Rules. It was contended before the Andhra Pradesh High Court by
the officer that Rule I I had no application in his case and on attaining the
C age of superannuation he automatically went out of the service of the Bank.
The Bank, however, relied on Rule 11 to withhold Bank's contribution to the
Pension Fund. The court was of the view that Rule I I had to be read in its
context and consistent with the object behind the said Rule. It held that Rule
applied not only in the case of the retirement contemplated by Rule 19 but
also to cases of retirement of employees on attaining the age of superannuation.
D The court observed that it might happen that the irregularities of misfeasance
of an employee could not be detected well before his retirement so as to
initiate and complete disciplinary enquiry in the matter and again there might
be a case where disciplinary enquiry was initiated but could not be completed
before the delinquent employee attained the age of superannuation. The court
E noted that there was no provision in the Service Rules of the Bank providing
for extension of service of an employee to enable the authorities to complete
the di~ciplinary enquiry against him which power was available under the
Government Service Rules. The court said even if an enquiry was pending
against an employee there was nothing to stop him from retiring on his
attaining the age of superannuation. The enquiry could not continue after his
F retirement. The court was, therefore, of the opinion that it was for that reason
that the Bank had reserved to itself the power to sanction the pensionary
benefits under Rule I I and if there was nothing wrong with the service of an
employee throughout, the Bank would naturally sanction the pension, but if
there was sufficient material disclosing grave irregularities on the part of the
G employee, the Bank might be well within its power in refusing to sanction the
pensionary benefits, or in sanctioning them only partly. The learned Single
Judge of the Andhra Pradesh High Court then went on to hold as under :

"Of course, such a decision has to be arrived at fairly, which necessarily
means after holding an enquiry, giving a fair opportunity to the
H concerned officer to defend himself against the accusation. Such an
S.B.l. v. A.N. GUPTA [D.P. WADHWA, J.) 395
enquiry would not be a 'disciplinary enquiry' within the ordinary A
meaning of the term, but an enquiry confined to the purposes of the
rules, viz., whether the employee should be granted any pensionary
benefits; and if so, to what extent? Such an enquiry can also be made
after the retirement (of an employee; and particularly in cases of
retirement) on attaining the age of superannuation, probably such B
enquiries will have to be conducted only after retirement."

The court, therefore, gave direction as to how the enquiry was to be
conducted against the officer so as to entitle him the pensionary benefits if
he was exonerated. We are afraid that this view of the Andhra High Court
does not commend to us. By giving such an interpretation to Rule 1 1 the C
Andhra Pradesh High Court has, in effect, lent validity to disciplinary
proceeding against an employee even after .bis superannuation for which no
provision existed either in Pension Rules or in the Service Rules and when
the High Court had itself observed that an enquiry even if initiated during the
service period of the employee could not be continued after his retirement on
superannuation. D

Rule I 0 of the Pension Rules provides for forfeiture of all claims for
pension ifan employee is dismissed from service of the Bank for wilful neglect
or fraud. This rule specifically provides for forfeiture of the pension. It could
not therefore be said that under Rule 1 I again the pension of an employee E
could be withheld on these or similar grounds. In our view last sentence of
Rule I I which says that an employee who shall leave the service without
sanction of the Executive Committee of the Central Board of the Bank shall
forfeit all claims for pension would not include the holding of the employee
guilty of wilful neglect or fraud which is envisaged in Rule I 0. Rule I I
particularly the latter portion of this Rule would be applicable where an F
employee leaves the service of the Bank before reaching the age of
superannuation or the Bank requires him to retire before that date on his
becoming incapacitated or otherwise. It cannot be said that an employee
retires only on superannuation and there is no other circumstance under
which an employee can retire. Retirement on superannuation is not the only G
mode of retirement known to service jurisprudence. There can be other types
of retirements like premature retirement, either compulsory or voluntary. It
would be in the case of a premature retirement or any other contingency when
an employee leaves the service of the Bank before he superannuates that Rule
11 would become applicable. Retirement on superannuation is automatic as per
Rule 26 of the Service Rules. No further action on the part of the Executive H
396 SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A Committee of the Central Board of the Bank would be required in such a case
and Rule l l will not be applicable.

Right to receive pension is a right to property under Rule 7 of the
Pension Rules when it says that no employee shall have any right of property
in the pension fund beyond the amount of his contribution to the pension
B section of the fund with interest accrued there on. That being so Rule l I
cannot be interpreted to mean that claim to pension of an employee on
superannuation can be defeated by the Bank by merely withholding sanction
of retirement. For about 8 years when these two matters were pending in the
Delhi High Court the Bank did not take any decision in terms of Rule l l to
C sanction retirement of the respondents. The Bank never communicated to the
respondents that it had withheld sanction to their retirement or did not
approve their service. It is only during the course of proceedings in the High
Court that the Bank came up with the plea that it wanted to have the
allegations against the respondents enquired into. To us the language of the
Rule 11 appears quite explicit. No sanction is required from the Bank to leave
D the service on reaching the age of superannuation as provided in Rule 26 of
the Service Rules applicable to Assistants. Rule 25 of the Service Rules
clearly mandates the retirement of an employee on his attaining the age of
superannuation and there cannot be two opinions on that. We, therefore, hold
that Rule 11 has no application in the case of the respondents who retired
E on attaining the age of superannuation. We cannot agree with the plea of the
Bank that sanctioning of retirement must be understood as sanctioning of
service which in term must be understood as approval of service. Proceeding
in the garb of disciplinary proceedings cannot be permitted after an employee
has ceased to be in the service of the Bank as Service Rules do not provide
for continuation of disciplinary proceedings after the date of superannuation.
F Sanction of the Bank is required only if the retirement of an employee is by
any other method except superannuation. We do not think that the decision
of the Andhra Pradesh High Court in T. Narsiah v. State Bank of India &
Ors. and that of the Bombay High Court in Mis J.K. Kulkarni v. State Bank
of India, have laid down good law.

G Coming to Rule 20 of the Employees' Provident Fund Rule which we
have quoted above, this Rule will become applicable only if an employee
retiring from the service of the Bank is under a liability incurred by him to the
Bank. In that case trustees administering the Provident Fund can pay to the
Bank out of the balance to the credit of the employee in the Fund any amount
H due by him to the Bank. We have not been told if any liability was incurred
~
,.
I

S.B.I. v. A.N. GUPTA [D.P. WADHWA, J.] 397
by any of the two respondents and if so what were the amounts. In this view A
of the matter we do not think it is necessary for us to go into the question
as to whether the term "liability incurred" means only such liability as is either
not disputed or established by due process. Can it be said that this Jerm
would also include any liability that may be alleged by the Bank? In any case
the Bank should at least prima facie establish that any liability has been
incurred by the employee for which it can lay claim to the Provident Fund of B
the employee. We cannot accept the proposition on behalf of the Bank that
the trustees should be allowed to whithold the Provident Fund due till they
have had an opportunity to have established and determined the amount, if
any, due from the respondents to the Bank. We are of the view that the
respondents are entitled to the Provident Fund due to them in accordance C
with the Provident Fund Rules as it cannot be said that they incurred any
liability.

By way of interim orders passed by the High Court as well as by this
Court the amounts due towards pension and provident fund have since been
paid to the respondents. There is no dispute on that. It has, however, urged D
by Mr. Dogra, learned counsel for the Bank that the High Court went wrong
in directing payment of a sum equivalent to 9% per annum by way of damages
for wrongly withholding the pension amount and also the Provident Fund
amount. We think it was not a case where it could be said that the amounts
were wrongly withheld by the Bank and rather decisions of the Andhra E
Pradesh High Court and Bombay High Court supported the view which was
advanced by the Bank. Moreover the Pension Fund and the Provident Fund
carry interest and these amounts with interest have been paid to the
respondents. We would, therefore, delete the award damages to the respondents
as mentioned in paras 2 and 3 of the operative portion of the impugned
judgment which we have reproduced in the beginning of this judgment. F
To this extent only the appeals are partly allowed which are otherwise
dismissed. As pointed out earlier costs are nevertheless payable by the Bank
' to the respondents.

M.P. Appeals dismissed. G