The Supreme Court has ruled that a bank employee can claim pension and encashment of leave even when removed from service.

The case pertained to the denial of the claims of late S.K. Kool who was removed from service ‘as a measure of punishment’ by Bank of Baroda.

In response to a special leave petition by the bank, Justice Chandramouli Kumar Prasad ruled on December 11 that employee’s heirs are entitled to superannuation benefits.

He ordered Bank of Baroda to disburse the entire amount that the respondent is found entitled to along with interest at 6 per cent within six weeks.

He did not find any merit in the bank’s appeal and dismissed it with costs of Rs 50,000 to be paid out along with other dues.

The bank had argued that where cessation of service takes place on account of employee’s resignation or his dismissal/termination, all leaves to his credit lapse.


The matter was initially referred to the Industrial Tribunal which had ruled that the denial of superannuation benefits was not legal or justified.

It said that the employee is entitled to all termination benefits, such as pension, leave encashment, gratuity and commutation of pension.

The bank contested this and approached the High Court of Allahabad. It did not get relief there either, and moved the special leave petition.


Shilpa Singh, counsel for the employee’s heirs, argued that the order of the disciplinary authority inflicting the punishment itself entitled the employee to superannuation benefits.

The court noted that the bipartite settlement containing terms and conditions of service of employees provides for removal from service with pension benefits ‘as would be due otherwise under rules and regulations prevailing at the relevant time.’

“We have no doubt that employees…removed from service in terms of clause 6(b) of the bipartite settlement shall be entitled to superannuation benefits…,” it added.

(This article was published on January 12, 2014)
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