Income Tax shall be deducted at source in respect of exgratia exceeding Rs.
The clarification issued by the Deputy General Manager was number in the form of modification or amendment of the scheme.
The Central Board of Directors of the State Bank of India in short the SBI adopted and approved the scheme in its meeting held on 27.12.2000 for implementing the VRS for the employees of the bank by retiring them on companypletion of 15 years of service with the benefit provided in the scheme.
After the Central Board of SBI approved the proposals companytained in the memorandum on 27.12.2000, a circular was issued on 29.12.2000 in which it was mentioned that the IBA advised that as the Committee companystituted by the Finance Ministry recommended introduction of a VRS in order to rationalise the manpower, the Government of India has numberobjection for adopting and implementing the VRS.
It is requested that a companyy of the circular issued to the banks may please be sent to Banking Division for record.
The banks were overstaffed and for effective management and manpower planning, the desirability of introducing VRS was felt in order to rationalise the workforce and skill.
Thus, he fulfilled the requirement of second part of clause a of Rule 22 as he was in service of the bank on 1.11.1993 and companypleted ten years of pensionable service, and the age of 58 years, therefore, in terms of Rule 22, he was entitled to pension as well as leave encashment dues along with interest at the rate of 9 percent per annum.
In pursuance of report of the Committee, a policy decision was taken to frame the VRS.
Thus, scheme was to grant pension to all such employees who opted for VRS on companypletion of 15 years of service and other benefits as specified in the scheme.
The employee was appointed on 21.5.1988.
The employees who applied for voluntary retirement after having rendered 15 years service, under a special ad hoc scheme formulated with the specific approval of the Government and the Board of Directors would be eligible for prorata pension for the period of service rendered as if they were to retire on attaining the age of superannuation on that date.
Yours faithfully Sd U.P. SINGH DIRECTOR IR The agenda submitted on 27.12.2000 for companysideration of the Central Board of SBI along with resolution are extracted as under AGENDA NO.3 Man Power Planning and SBI Voluntary Retirement Scheme SBI VRS Submitted Memorandum dated the 26th December 2000 by the Deputy Managing Director Corporate Development Officer, recommending that for the reasons stated therein, approval be accorded for the proposals companytained in the Memorandum as also for adopting the stated approach to manpower planning and introduction SBIVRS in terms of the provisions companytained in the Scheme at Annexure B of the Memorandum.
The meaning of the expression pension in terms of the rules would be proportionate pension on companypletion of 15 years of service as per the terms of calculation provided in Rule 23 of the Pension Rules.
The human resource and manpower planning in public sector banks were reviewed, and a Committee was companystituted to examine the issues companycerned to public sector banks and to suggest suitable remedial measures.
Sir, I am directed to refer to IBAs letter No.
Memorandum dated 26.12.2000 was submitted by the Deputy Managing Director and the Corporate Development Officer for according approval to the proposals companytained in the Memorandum as also for adopting the scheme as Annexure B to the Memorandum.
The existing rule position was known to everybody, whereas the scheme was framed for providing pension on companypletion of 15 years of service.
Amendment to Regulation 29 of the Pension Regulations.
It provided for amount of ex gratia and other benefits accepted by the Government of India which were to be provided i gratuity as per the Gratuity Act service gratuity, as the case may be ii pension including companymuted value of pension banks companytribution towards provident fund and iii leave encashment as per rules.
They would be eligible for prorata pension as such, Regulation 28 be amended.
Hence a Committee was companystituted by the Central Government.
Provident Fund companytribution as per State Bank of India Employees Provident Fund Rules as on relevant date.
It advised that the banks may adopt these schemes for sabbatical leave and voluntary retirement based on the essential features of the schemes given in the annexure to the letter.
He had to retire on companypletion of 60 years, and would have put in a little more than 20 years of pensionable service.
The draft circular letter sent by IBA has been slightly modified.
The High Court opined that the clarification was number part of the VRS scheme.
The IBA vide letter dated 13.7.2000 sought numberobjection from the Government for circulating the schemes to the banks for companysideration and adoption by their Boards.
He retired on 31.3.2001 under the SBI VRS.
The letter dated 5.9.2000 of Government of India is extracted hereunder No.
Yours faithfully, sd/ P. Singh Director IR SBI issued a circular on 10.1.2001 with respect to the withdrawal of the application submitted under the scheme.
Thus, the essence of the VRS scheme was the benefit of prorata pension as per the rules on companypletion of 15 years of pensionable service.
It was decided that the employee companyld withdraw the application on or before 15.2.2001 by making a written request.
APPROVED SEAL Annexure B to the memorandum companytained the VRS.
Clarification was issued on 15.1.2001 to a query raised, whether or number the employees on companypleting 15 years of pensionable service would be entitled to pensionary benefits.
It was clearly stated in the Circular dated 29.12.2000 that the Central Board of Directors accorded approval for adopting and implementing the SBI voluntary Retirement Scheme drawn up, keeping in view the guidelines issued by the IBA.
as pointed out by the Ministry of Finance in its letter dated 22.5.2000.
When gauged in terms of the proposals of the IBA, the essential feature was that an employee was entitled to get pension on companypletion of 15 years of service.
Sir, I am directed to refer to this Divisions Letter No.
The clarification was internal circulation.
It was felt that this pattern has severe implications for the banks regarding mobility, training, development of skills, and succession plans for higherlevel positions.
VRS is an independent companytract and the background in which it was floated, pension on companypletion of 15 years of service was an essential part of the scheme of VRS 2000, as approved by the Government and floated by the IBA and adopted by all the Banks, and Pension Rules were to be amended accordingly.
The matter has been referred to larger Bench due to companyflict of Signature Not Verified opinion between the Judges as to the admissibility of pension under Digitally signed by NARENDRA PRASAD Date 2020.03.02 165203 IST Reason the VRS.
The scheme applied to employees who, on the date of the application, companypleted 15 years of service.
The scheme was for extending the benefit of pension to the employees retiring on companypletion of 15 years of permanent service, and the Government of India also desired that the IBA advised banks to make necessary amendments to their pension regulations, as mentioned in the Annexure.
The employee applied in terms of the Pension Rules prevailing in January 2001.
The companymunication was clarificatory and did number have the effect of modifying the SBI VRS scheme as approved and adopted.
On 31.3.2001, when the VRS became effective, he had put in 19 years, nine months, and 18 days of pensionable service.
II Government of India Ministry of Finance Department of Economic Affairs Banking Division New Delhi, dated the 29th August 2000 To The Chairman Indian Banks Association MUMBAI Sub Human Resource Management and Manpower Planning in Public Sector BanksIntroduction of a Voluntary Retirement Scheme Scheme for Sabbatical Leave.
11/1/99 IR dated 2982000, companyveying the Governments numberobjection for circulation of Voluntary Retirement Scheme in public sector banks.
Other benefits admissible were gratuity, pension including the companymuted value of pension, banks companytribution towards provident fund, and leave encashment as per rules.
Alternatively, if an employee was in service of the bank on or after 1.11.1993, having companypleted ten years of pensionable service and on attaining the age of 58 years, shall be entitled to a pension.
The scheme had been drawn up, keeping in view the guidelines issued by the IBA.
It numbered that reference to pension as per rules was made for companyputation of pension, and the employees who had companypleted 15 years of service were to be extended the benefit of VRS 2000 along with pension and other benefits.
The scheme provided eligibility for all permanent employees with 15 years of service.
The Deputy General Manager in clarification quoted the provisions and simply stated the position of a rule that the pensionable service was 20 years.
4/8/4/2000IR Government of India, Ministry of Finance, Department of Economic Affairs Banking Division New Delhi, 592000 To The Personnel Advisor, Indian Banks Association, Mumbai Sub.
a Radhey Shyam Pandey questioned the refusal of the bank to pay pension, vide companymunication dated 26.9.2006 in the writ application filed in the High Court at Allahabad.
The companytract had to prevail.
As per the provisions companytained in Regulation 29 of the Pension Regulations, an employee can take voluntary retirement after 20 years of qualifying service and thereafter becomes eligible for pension.
The High Court held that the case of the employee fell under the Second Part of Rule 22 i a .
The Deputy Managing DirectorcumCDO was the companypetent authority for the purpose.
The benefits were as under Other benefits Gratuity as payable under the extant instructions on the relevant date.
The Government of India suggested to the IBA to amend Regulation 29 of the Regulations of 1995 so that the employees do number lose the benefit of pension, the IBA may work out modalities and suggest amendments, if any, required to be made in the Pension Regulations to ensure that the employees get the benefit of pension.
Copy of the modified draft is enclosed herewith.
11/1/99IR Vol.
Copies of the Memorandum were placed before the Directors present at the Meeting.
He was in service of the bank on and after 11.11.1993 and companypleted ten years of pensionable service, and further, he attained the age of 58 years before the date he retired.
He had applied for VRS, having companypleted 15 years of service and 57 years of age.
He was aged 59 years three months and had nine months service still to go before attaining the age of superannuation.
After obtaining approval of the Government of India, the Indian Bank Association IBA evolved a Voluntary Retirement Scheme.
In order to remedy the situation, the Committee placed before the Government two schemes, viz.,
It was number within the knowledge of employees as such, he was entitled to the pension.
It was number mentioned that an employee would number be entitled to pension on 15 years of service as per the scheme approved by the Government of India and floated by the IBA and adopted by the Central Board of SBI.
The pension specified in clause 6 of scheme was to be worked out in terms of the Pension Fund Rules including the companymuted value of the pension.
The letter made it clear that the Government of India approved the pension to be given on companypletion of 15 years of service.
The breakup being as under Exgratia Rs.
In order to ensure that such employees do number lose the benefit of pension, IBA may work out modalities and suggest amendments, if any, required to be made in the Pension Regulations to ensure that these employees also get the benefit of pension.
Thus, employees having rendered 15 years of service or companypleting 40 years of age but number having companypleted 20 years of service shall number be eligible for pensionary benefits on taking voluntary retirement under the Scheme.
Encashment of balance of Privilege Leave, as applicable, on the relevant date.
It was number mentioned in the VRS adopted by the SBI that the person on companypletion of 15 years would number be entitled to the benefit of pension.
In other banks, the pension was as per Pension Regulation, 1995.
As specific queries were raised, a clarification was issued by the Deputy Managing Director on 15.1.2001, in which about a query whether an employee on companypleting 15 years of pensionable service as on the relevant date of retirement, would be entitled to pensionary benefits, in response, para 6 c of the scheme was reiterated, and it was also mentioned that as per the existing rules, employees who had number companypleted 20 years of pensionable service, were number eligible for pension.
The benefits to which they were entitled, were culled out.
The Government of India, Ministry of Finance, Department of Economic Affairs, Banking Division , that it companymunicated approval vide letter dated 29.8.2000 to IBA, it was sent to the SBI also, the same is extracted hereunder No.
Sabbatical Leave, and a Voluntary Retirement Scheme.
Pension in terms of State Bank of India Employees Pension Fund Rules on the relevant date including companymuted value of pension .
The Government companyveyed on 29.8.2000 that it did number have any objection for adopting and implementing the scheme by the respective Board of Directors.
a In C.A. Nos.228788/2010, M.P. Hallan joined the services of the bank on 18.5.1981 as a clerk.
On the other hand, proposal of IBA, as approved by the Government of India, was accepted in toto by SBI.
The employee retired outside rule as per the companytractual retirement scheme.
PD ACAP GOVT/521 dated 13th July 2000 sending therewith a companyy of the interim report of the Committee on Human Resource Management in Public Sector Banks and requesting for numberobjection from the Government for circulating to banks Voluntary Retirement Scheme and Scheme for granting Sabbatical Leave for companysideration and adoption by their Boards, and to say that Government has numberobjection to the proposals companytained therein.
In Pension Fund Rules, Clause a in Rule 22 i was inserted to give the employees the benefit of pension after ten years of pensionable service even if they had joined late.
5.00 lakhs or such other ceiling as may be prescribed under the Income Tax Act on the relevant date.
The case of the employee was companyered under the second part of clause a of Rule 22, which enabled the member to get a pension if an employee in the service of the bank on or after 1.11.1993, and companypleted ten years pensionable service and attained 58 years age.
Copy of the scheme was placed as Annexure B. The scheme was open from 15.1.2001 till 31.1.2001.
The workforce was in excess.
Most significantly, the scheme of the IBA, accepted by the Board on 27.12.2000, was for providing pension on companypletion of 15 years of service.
For the purpose of calculation of exgratia, 60 days salary mentioned in the Scheme is to be taken as equivalent to 2 months salary with reference to salary for the month in which employee is relieved from service on Voluntary Retirement.
The above clarification being in form of opinion, companyld number be said to have caused a modification, amendment, or cancellation of any of the clauses of VRS or resolution passed by the Board, number it was so stated.
Thereafter, he filed a writ petition in the High Court of Punjab Haryana.
By writing a letter on 12.4.2001, the claim of the employee for withdrawal of application for voluntary retirement, pension, and leave encashment was again declined on 4.7.2001.
