Employee Removed for Gross Misconduct Entitled to Pension if Otherwise Eligible, Supreme Court Holds

A bench of Justices Abhay S. Oka and Ujjal Bhuyan heard an appeal by UCO Bank challenging a Punjab and Haryana High Court order which directed the bank to process pensionary benefits for a former clerk who had been removed from service for gross misconduct. The central question before the Court was whether an employee punished by removal from service could claim pension where the Bipartite Settlement provided for “removal from service with superannuation benefits” but the Bank’s Pension Regulations appeared to disentitle removed employees from pension.

The Supreme Court dismissed the appeal and upheld the concurrent High Court orders. The Court held that where the appellate disciplinary authority had substituted dismissal with removal from service “with terminal benefits” and that order had attained finality, the employee who otherwise satisfied the eligibility criteria for pension under the statutory regulations was entitled to superannuation benefits. The Court reiterated that the Bipartite Settlement clause providing for removal “with superannuation benefits” must be harmonised with pension regulations so as to give effect to both instruments. The Court, in its reasoning, observed: “From a plain reading of the aforesaid Regulation, it is evident that removal of an employee shall entail forfeiture of his entire past service and consequently such an employee shall not qualify for pensionary benefits. If we accept this submission, no employee removed from service in any event would be entitled for pensionary benefits. But the fact of the matter is that the Bipartite Settlement provides for removal from service with pensionary benefits ‘as would be due otherwise under the rules or regulations prevailing at the relevant time’... From the conspectus of what we have observed we have no doubt that such of the employees who are otherwise entitled to superannuation benefits are removed from service in terms of Clause 6(b) of the Bipartite Settlement shall be entitled to superannuation benefits.”

Background

The dispute arose from an incident on 21.09.1998 when the respondent, then a clerk at UCO Bank’s Gurmandi branch, was charged with assault and gross misconduct. An internal enquiry found the charge proved; the disciplinary authority dismissed the respondent on 14.12.1999. On appeal the penalty was modified on 16.02.2000 to removal from service while providing that the respondent “will be entitled to receive the terminal benefits for the period of service he has rendered” and that “removal from service will not be a disqualification for his future employment.”

An industrial reference by the central government resulted in a Labour Court award (13.02.2004) which substituted a lesser penalty and ordered reinstatement with 75% back wages; the High Court set aside that award and the Division Bench affirmed, thereby restoring the appellate disciplinary order. The respondent later filed a writ petition under Article 226 seeking release of retiral benefits; a Single Judge directed the Bank to process the respondent’s pension option (submitted on 05.10.2010) and release pensionary dues, a view affirmed by the Division Bench on 11.01.2017.

UCO Bank challenged the High Court order before the Supreme Court. The Bank relied on Regulation 22 of the UCO Bank (Employees’) Pension Regulations, 1995, which stated that “resignation or dismissal or removal or termination of an employee from the service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits.” The Bank argued that the respondent never opted for pension prior to removal and that the Regulation disentitled removed employees from pension. The respondent relied on the appellate order granting terminal benefits and on this Court’s decision in Bank of Baroda v. S.K. Kool, contending that an employee removed under Clause 6(b) of the Bipartite Settlement remained entitled to superannuation benefits if otherwise eligible.

Applying the ratio in S.K. Kool and noting that the appellate order had attained finality, the Supreme Court dismissed the appeal and directed no costs.

Case No.: Civil Appeal No. 5922 of 2024 (2025 INSC 442) Case Title: UCO Bank & Anr. v. Vijay Kumar Handa Appearances: For the Petitioner(s): [Not indicated in the judgment] For the Respondent(s): [Not indicated in the judgment]