Bank May Deny Counting Suspension Period As Service Even After Appellate Acquittal, Delhi High Court Holds

A bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia heard an intra-court appeal by the State Bank of India challenging a Single Judge's direction to treat a suspended officer’s period out of service as continuous service for pensionary and retiral benefits. The appeal arose from a writ matter in which the respondent, a former SBI officer, sought re-fixation of pension and terminal benefits by counting the period from 21.09.2002 to 24.03.2011 as service.

The Court allowed the bank’s appeal and set aside the Single Judge’s direction insofar as it required the appellant to count the suspension/dismissal period as service for pensionary benefits. The High Court upheld that whether an intervening period of suspension or dismissal should be treated as service was vested in the competent authority of the employer and depended on the facts, applicable service rules and statutory obligations. The Court, in its reasoning, observed: "On a careful reading of the judgments referred to herein above, the principle of law which can be deduced is that in case order of reinstatement of an employee is passed on his acquittal in the criminal case by the Appellate Court, such an employee will not ipso facto be entitled for salary or any other benefit for the period he was placed under suspension or for the period he was out of employment on account of his dismissal for the reason of his conviction by the Trial Court. Such legal principle, in our opinion, is clearly applicable in the facts of the instant case having regard to Rule 68A(8)(ii) read with Rule 68A(7)(i) of the Service Rules and Section 10(1)(b)(i) of the Act, 1949." The Court noted that the Single Judge’s denial of back wages was not challenged and remained final.

Background The dispute originated from a 2002 private complaint alleging bribery against the respondent while he served as Branch Manager at SBI’s Laxmi Nagar branch. The respondent was arrested on 02.09.2002 and suspended effective 21.09.2002. A charge-sheet dated 08.06.2004 preceded his conviction on 08.07.2005 under Sections 7, 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988; he was dismissed from service on 14.10.2005 in view of Rule 68(7) of the SBI Officers’ Service Rules and Section 10(1)(b)(i) of the Banking Regulation Act, 1949. The trial conviction prompted dismissal and forfeiture of gratuity; the dismissal appeal was dismissed and the officer challenged the orders before this Court.

On criminal appeal, this Court set aside the conviction on 24.12.2010 and acquitted the respondent “giving him benefit of doubt.” He sought reinstatement and the Bank reinstated him by order dated 25.03.2011 subject to conditions, including that: "You will not be paid any salary & allowances for the period you remained under suspension/out of service and this period will not be counted as service for all purpose including calculation of terminal benefits." The respondent accepted the conditions, rejoined without protest, withdrew the earlier writ and faced revived disciplinary proceedings that resulted in reduction in rank; he superannuated on 30.11.2011.

After retirement the respondent filed W.P.(C) 4762/2012 seeking re-fixation of pension by treating the 2002–2011 period as service. The Single Judge held he was not entitled to back wages but directed that the period be treated as continuous service for pension. SBI appealed that portion of the order. The High Court examined Rule 68A(8)(i)/(ii) and Rule 68(7) of the Service Rules, Section 10(1)(b)(i) of the Banking Regulation Act and several precedents including Raj Narain v. Union of India, M. Prabhakar Rao v. Greater Hyderabad Municipal Corporation, K.V. Jankiraman, Reserve Bank of India v. Bhopal Singh Panchal, Jaipal Singh and Sukhdarshan Singh. The Court concluded that where dismissal and reinstatement followed conviction and statutory rules mandated dismissal on conviction, the employer’s discretion to decide whether the intervening period counted as service was decisive. The High Court therefore set aside the Single Judge’s direction to count the period as service and allowed the appeal; the remaining prayer for back wages stood finally decided against the respondent and was not disturbed. The pending application was disposed of and there was no order as to costs.

Case Details: Case No.: LPA 141/2024 & CM APPL. 10308/2024 Case Title: State Bank of India v. V.C. Jain Appearances: For the Petitioner(s): Mr. Rajiv Kapur, Senior Counsel for SBI with Ms. Riya Sood, Advocate For the Respondent(s): Mr. Neeraj Jain, Advocate with Mr. M.T. Reddy, Advocate