A) ABSTRACT / HEADNOTE

The decision in UCO Bank & Anr. v. Vijay Kumar Handa settles an important question in Indian service jurisprudence concerning the entitlement of a bank employee to terminal and pensionary benefits after being removed from service for gross misconduct. The controversy arose from disciplinary proceedings initiated against a clerical employee of UCO Bank for riotous, disorderly, and indecent behaviour within bank premises. While the disciplinary authority imposed dismissal from service, the appellate authority modified the punishment to removal from service with terminal benefits. This appellate order attained finality when it remained unchallenged by the employer.

Subsequently, an industrial dispute led to judicial scrutiny of the proportionality of punishment under Section 11A of the Industrial Disputes Act, 1947, culminating in the High Court restoring the appellate authority’s punishment. The dispute resurfaced when the employee claimed pensionary benefits under the UCO Bank (Employees’) Pension Regulations, 1995, which the Bank resisted by invoking Regulation 22 relating to forfeiture of service.

The Supreme Court harmonised the apparent conflict between Clause 6(b) of the Bipartite Settlement dated 19.10.1966 and Regulation 22, relying on its earlier ruling in Bank of Baroda v. S.K. Kool. The Court affirmed that where an employee is removed from service with terminal benefits and satisfies eligibility requirements, pension cannot be denied. The judgment reinforces the binding nature of bipartite settlements and clarifies the legal consequences of unchallenged appellate disciplinary orders in service law.

Keywords:
Service Law; Gross Misconduct; Removal from Service; Terminal Benefits; Pension Entitlement; Bipartite Settlement; Regulation 22; Industrial Disputes Act

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The judgment emerges from prolonged disciplinary and industrial litigation spanning more than two decades, reflecting the complexity of employer–employee relations in public sector banks. The dispute is rooted in the statutory framework governing bank employees, particularly bipartite settlements concluded under Sections 2(p) and 18(1) of the Industrial Disputes Act, 1947. Such settlements possess statutory force and bind both management and workmen.

The respondent, a clerical employee, faced disciplinary action for alleged acts amounting to gross misconduct under Clause 19.5(c) of the Bipartite Settlement. While the misconduct findings were consistently upheld, the nature of punishment underwent multiple judicial transformations. The pivotal moment occurred when the appellate authority modified the punishment from dismissal to removal with terminal benefits, thereby altering the legal consequences attached to cessation of service.

Subsequent invocation of Section 11A by the Labour Court brought into focus the limits of judicial interference with disciplinary penalties. The High Court’s intervention restored the appellate authority’s order, which became final due to absence of challenge by the Bank.

The controversy later shifted from the legality of punishment to entitlement of pension, raising a doctrinal conflict between Regulation 22 of the Pension Regulations, 1995 and Clause 6(b) of the Bipartite Settlement. The case thus required judicial harmonisation of subordinate legislation with binding settlements, implicating principles of statutory interpretation, service rights, and legitimate expectation.

D) FACTS OF THE CASE

The respondent was serving as a Clerk at the Gurmandi Branch of UCO Bank. On 21.09.1998, he was alleged to have assaulted a bank officer within the bank premises, along with another employee. A charge memorandum dated 12.10.1998 accused him of riotous, disorderly, and indecent behaviour, constituting gross misconduct under Clause 19.5(c) of the Bipartite Settlement.

A departmental enquiry was instituted, culminating in an enquiry report dated 09.10.1999 holding the charges proved. The disciplinary authority, after granting personal hearing, imposed the penalty of dismissal from service on 14.12.1999.

On appeal, the appellate authority concurred with the findings of misconduct but modified the punishment by order dated 16.02.2000, substituting dismissal with removal from service with entitlement to terminal benefits and clarifying that such removal would not disqualify future employment.

The respondent raised an industrial dispute, leading the Central Government Industrial Tribunal-cum-Labour Court to invoke Section 11A and direct reinstatement with partial back wages. This award was quashed by the High Court, which held that interference with punishment was unjustified. The Division Bench affirmed this view.

Thereafter, the respondent sought release of retiral and pensionary benefits. The Single Judge directed the Bank to process pension, relying on the appellate authority’s order. This was affirmed in Letters Patent Appeal. The Bank’s challenge before the Supreme Court gave rise to the present appeal.

E) LEGAL ISSUES RAISED

i. Whether an employee removed from service for gross misconduct is entitled to pensionary benefits when the appellate authority expressly grants terminal benefits?
ii. Whether Regulation 22 of the UCO Bank (Employees’) Pension Regulations, 1995 overrides Clause 6(b) of the Bipartite Settlement?
iii. Whether an unchallenged appellate disciplinary order attains finality binding the employer?
iv. Whether courts can deny pension despite explicit entitlement under a binding settlement?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the appellant Bank contended that the respondent was not punished under Clause 6(b) and hence could not rely on it. Reliance on Bank of Baroda v. S.K. Kool was argued to be misplaced due to factual distinctions. It was urged that the respondent had not initially opted for pension and failed to satisfy eligibility under the ninth Bipartite Settlement.

The Bank relied heavily on Regulation 22 of the Pension Regulations, 1995, asserting that removal from service entails forfeiture of past service, thereby disqualifying pension. The seriousness of misconduct and public discipline within banking institutions were emphasised to justify denial of retiral benefits.

G) RESPONDENT’S ARGUMENTS

The counsels for the respondent submitted that the appellate authority’s order explicitly conferred terminal benefits and had attained finality. The Bank’s failure to challenge that order barred subsequent denial of pension.

Reliance was placed on Bank of Baroda v. S.K. Kool, arguing that Clause 6(b) harmoniously operates with pension regulations and protects eligible employees. Completion of qualifying service and submission of pension option were highlighted as satisfying statutory requirements.

H) JUDGMENT

The Supreme Court dismissed the appeal, affirming concurrent findings of the High Court. The Court held that bipartite settlements have statutory backing and must be given full effect. The appellate authority’s modification of punishment to removal with terminal benefits was decisive and binding.

The Court rejected the Bank’s reliance on Regulation 22, reiterating that a construction rendering Clause 6(b) redundant must be avoided. Harmonious interpretation mandated that eligible employees removed with terminal benefits receive pension. The Court reaffirmed S.K. Kool as binding precedent and declined interference under Article 136.

a) RATIO DECIDENDI

The ratio rests on harmonisation between statutory regulations and binding settlements. The Court held that where removal from service is coupled with entitlement to terminal benefits under Clause 6(b), and eligibility conditions are fulfilled, pension cannot be denied. Finality of unchallenged appellate orders is legally conclusive.

b) OBITER DICTA

The Court observed that denying pension despite express settlement provisions would amount to rendering negotiated punishments illusory. Such interpretation would undermine collective bargaining in industrial relations.

c) GUIDELINES

i. Bipartite settlements must be harmonised with service regulations.
ii. Removal with terminal benefits carries pension entitlement if eligibility exists.
iii. Unchallenged appellate disciplinary orders attain finality.
iv. Regulatory provisions must not nullify negotiated service protections.

I) CONCLUSION & COMMENTS

The judgment reinforces certainty in service law by protecting negotiated employee rights while maintaining disciplinary discipline. It underscores judicial restraint in unsettling final disciplinary orders and affirms pension as a deferred social security benefit rather than a discretionary bounty. The decision strengthens collective bargaining outcomes in public sector employment and ensures predictable application of service jurisprudence.

J) REFERENCES

a) Important Cases Referred

i. Bank of Baroda v. S.K. Kool, (2014) 2 SCC 715
ii. Hardial Singh v. Bank of Baroda, 2012 SCC Online P&H 8059

b) Important Statutes Referred

i. Industrial Disputes Act, 1947
ii. Industrial Disputes (Central) Rules, 1957
iii. UCO Bank (Employees’) Pension Regulations, 1995