Andhra HC (Pre-Telangana)
A.V.S. Ram Mohan Sastry And Ors. vs State Bank Of Hyderabad, Hyderabad And ... on 21 September, 2001
Equivalent citations: 2002(1)ALD572, 2002(4)ALT808
Author: I. Venkatanarayana
Bench: I. Venkatanarayana
ORDER
1. In all these writ petitions the point at issue is what are the methods and manner that have to be followed in implementing 'State Bank of Hyderabad (Employees) Voluntary Retirement Scheme 2001' (for short 'the Scheme').
2. All the writ petitioners are questioning the proceedings of the respondent-State Bank of Hyderabad (for short 'the respondent-Bank') declining to accept the offer of Voluntary Retirement under the Scheme on the ground that the petitioners' age is below the cut-off age as decided by the respondent-Bank.
3. Before examining the point at issue, it would be necessary and convenient to examine the scope and objects of the Scheme. The Union of India, Ministry of Finance (Banking Division) had an occasion to review the entire human resources and man power planning in Public Sector Banks and suggest remedial measures. For achieving the aforementioned objects, the Union of India constituted a Committee, headed by Mr. M. Narasimham, former Governor of Reserve Bank of India. This Committee, known as 'Narasimham Committee-II, was appointed to review the progress of reforms in the Banking Sector and to chart a programme for banking sector reforms necessary to strengthen India's banking system, to make it internationally competitive and to make a detailed recommendation in regard to banking policy, institutional supervisory, legislative and technological dimensions. In the course of the deliberations the Committee noted that the economic reforms set in motion in 1990 have unleased market forces and competition which affected all sections of the economy including banking sector. The high establishment cost and low productivity in public sector which affects their profitability makes it necessary for the Banks to convert their human resources into assets compatible with business strategies through a variety of measures including constant upgradation of skills, achieving a proper age and skill profile, creating opportunities for lateral and vertical career progress and inducting fresh and skilled personnel, who can man the Banks with efficiency and perfection. The Committee found that it is over manned at varying levels and the Banks should adjust their manning level to the right side. Even after this exercise, some of the excess staff may not be suitable for deployment on grounds of aptitude and mobility. Hence the Committee recommended to introduce an appropriate voluntary scheme with incentives.
4. In pursuance of the recommendations of the Committee, the respondent-Bank has introduced 'State Bank of Hyderabad (Employees) Voluntary Retirement Scheme, 2001 (SBHVRS), hereinafter known as "Scheme". The Scheme was open to all permanent employees of the Bank, who have put in 15 years of service or who have completed 40 years of age as on 31-1-2001 except those specifically mentioned as ineligible. All the petitioners applied for the Voluntary Retirement Scheme (SBHVRS) under State Bank of Hyderabad (Employees) Voluntary Retirement Scheme 2001. The respondent-Bank has rejected their applications stating "age being below the cut-off age as decided by the Bank in the category". Aggrieved by this proceedings dated 23-8-2001, the writ petitions have been filed.
5. Mr. E. Manohar, the learned senior Counsel appearing on behalf of the petitioners assailed the impugned proceedings of the respondent-Bank and contended that fixing the cut-off age at 53 is arbitrary and it has no nexus with the objective sought to be achieved. It is further submitted that the respondent-Bank has violated Clause 10.01 of the Scheme in issuing the impugned order.
6. Mr. R. Subhash Reddy, Mr. A. Sudarshan Reddy, appearing for the other petitioners submitted that the respondent-Bank has acted arbitrarily by increasing the age limit from 40 years to a higher limit and totally disregarded the objects envisaged in introducing the Voluntary Retirement Scheme. All the Public Sector Banks provided options to the employees for retirement on attaining 50 years of age and substitution of any upper age limit for eligibility under the Voluntary Retirement Scheme in Circular No./PER/2000-2001/87 dated 25-1-2001 beyond the age limit of 50 years is arbitrary. By virtue of the impugned proceedings the respondent-Bank has ignored the right to seek voluntary retirement.
7. A detailed counter -affidavit was filed by the respondent-Bank. Mr. V. Jogayya Sarma, the learned Standing Counsel appearing for the respondent-Bank sought to sustain the impugned order and contended that the Scheme is for the benefit of the Organisation for reducing surplus staff including higher aged staff to meet the new challenges and to withstand the stiff competition. He further contended that the Scheme gives absolute discretion to the Banks and placed reliance on the declaration made by the employees in the applications wherein the petitioners have conceded that the acceptance or rejection of Voluntary Retirement Scheme is in the absolute discretion of the Bank. He further submitted that the applications were accepted as per the requirements of the Bank in descending order of the age and the applications of the employees coming under Higher Age Group above cut-off age were accepted. It is made clear in Article 10.-01 of the Scheme that 'cut-off age in each category will depend upon the acceptable number of employees who can be permitted to retire'. It is submitted that for the purpose of allowing 658 Officers and 730 award staff who are found surplus, the cut-off age worked out to 53 years for officers and 50 years for award staff as on 31-1-2001. In other words, if there are more number of applications, the cut-off age will be on the higher side and lesser the applications the cut-off age will be on the lower side. The Bank can neither predict nor fix the cut-off age at its discretion. Hence there was no arbitrariness in fixing the cut-off age.
8. Taking into consideration the rival submissions the only question that falls for consideration is whether the impugned proceedings of the respondent-Bank rejecting the applications for Voluntary Retirement Scheme under State Bank of Hyderabad (Employees) Voluntary Retirement Scheme 2001 is arbitrary and liable to be set aside.
9. The respondent-Bank in pursuance of the Scheme has invited applications from its employees between 5-1-2001 and 14-2-2001 with an option to close earlier. The Scheme is meant for all permanent employees of the Bank who have put in 15 years of service or who have completed 40 years of age as on 31-1-2001 except those who are specially notified as ineligible. The 'Scheme' was introduced only after conducting man power study and having been ratified by the Board of Directors. The respondent-Bank invited applications and there was an overwhelming response from the employees. It would appear that the respondent-Bank was not prepared for this overwhelming response and started accepting the applications in a descending order of their age. Since there was more applications than expected, the cut-off age was on the higher side. In short, it is the contention of the respondent-Bank that while implementing the Scheme they accepted the applications of the employees who are older in age and the respondent-Bank has to make 53 years as the cut-off age. It is further submitted that if all the applications for the 'Scheme' were to be accepted, there will not be any staff left to man 878 branches.
10. The respondent Bank is an agent and instrumentality of the State within the meaning of Article 12 of the Constitution. As such it is obligated by constitutional and public law injunctions to conduct its affairs, particularly in the matter of dealing with its employees, in a manner consistent with the injunctions of Articles 14 and 16 of the Constitution of India. In relation to dealings with its employees the respondent-Bank is constrained by both the doctrines, the doctrinal limitations of the classification principle as well as the limitation that they should not act arbitrarily.
11. The SBHVRS (Scheme) is open to all permanent employees of the respondent-Bank who have put in 15 years of service or have completed 40 years of age as on 31-1-2001 excepting "ineligible" categories. While accepting the applications and according permissions for grant of voluntary retirement, the respondent-Bank has permitted that benefits of voluntary retirement under the Scheme only to such of those employees in the officers category who are 53 years or above of age. The question is whether this act of the bank in limiting the benefits, as above, is invalid for any reason including those urged by the writ petitioners?
12. The SBH (Employees) Voluntary Retirement Scheme 2001 (SBHVRS) evolved pursuant to the meeting of the Board of Directors of the bank held on 22-1-2001 is a specific package of benefits born out of the policy choice of the respondent-Bank. This policy choice is the management's response to the felt necessities arising out of the post-90s liberalisation process. A study of the human resources of the public sector banks showed that 43% of the employees are above the 46 years age group and only 12% are in the 25-35 age group. This study has indicated that the employment structure of the public sector bank has a geriatric slant which has serious implications in respect of mobility, training, development of skills and succession plans for higher level positions and that coupled with the excess man power available would hamper the development of new skills and proper career progression in the banks. The scheme has been evolved in the back ground of the above realisation and to optimise its human resources with a view to achieve a balanced age and skills profile.
13. To analyse the challenge whether the prescription of the cut-off date for accepting voluntary retirements only of employees (officers) who are 53 years and above of age, constitutes an irrational classification having no reasonable nexus with the objects sought to be achieved by the scheme, it is necessary to consider the scheme as a whole including the operating instructions viz., as contained in Annexures A,B and C to the Circular dated 25-1-2001.
14. The object of the scheme and the discretion vouchsafed in the Management vis-a-vis the expectations of the employees who are applicants to the scheme, has been encapsulated in Para 10 of annexure-A to the scheme as under:
"10 Other features:
10.01 The Bank intends to control the outflow according to its requirements. Towards this end, the Bank retains the discretion to limit the number of employees allowed to retire in each category of staff viz., officers/clerical/ subordinate, to be covered under the scheme. As such, the Bank will have the sole discretion as to the acceptance or rejection of the request for retirement under the scheme depending upon the requirements of the Bank. For the purpose of exercising discretion in this regard, category-wise list of eligible applicants would be prepared in descending order of their age and applications of employees coming in higher ) age group above cut-off age would be accepted; the cut-off age in each category will of course depend upon the acceptable number of employees who can be permitted to retire.
10.02 No request by an employee for Voluntary Retirement shall be deemed to have been accepted and come into effect unless the decision of the Competent Authority has been communicated in writing.
10.03 Submission of the application under the Scheme and receiving the same by the Bank does not confer any right to the employees against the Bank in any manner."
15. Annexure-C to the scheme sets out the form of application including the particulars to be provided therein as well as a declaration that has to be made by the employees who apply for the scheme. Two of the declarations that have been made by all the applicants including the petitioners, as are relevant to the analysis herein, are set out below:
"iii. In the event of the Bank acceding to my request for voluntary retirement under the Scheme, I undertake to vacate the residential accommodation; surrender the vehicle/furniture, the telephone and other facilities provided to me, immediately.
iv. 1 am aware that the acceptance or rejection of my request for Voluntary Retirement under the Scheme is at the absolute discretion of the Bank."
16. From the purposes underlying the scheme, the discretion vouchsafed to the respondent-Bank therein and the declarations that have been made by the employees-applicants including the petitioners herein in their applications, there is no manner of doubt that the petitioners could not have legitimately harboured any expectation that every qualified employee who applied would be entitled to the benefits of SBHVRS (Scheme). The scheme has been engendered to synergise and reform the manpower and human resources component of the respondent-bank. The scheme is the product of an expert evaluation and a concomitant policy choice made by the respondent Bank to meet the requirements of contemporary India's economic dynamics insofar as it affects the working of public sector banks including the respondent-Bank.
17. It is settled law that policy choices of even a State and its instrumentality are not susceptible to judicial review at any rate as an appellate scrutiny except in the rarest of rare cases and where perversity, gross irrationality or other unconstitutional factors are clearly manifest in such policy choice, vide - R.K. Garg v. Union of India, AIR 1981 SC 2138, Krishnan Kakkanth v. Government of Kerala, , State of Punjab v. Ram Lubhaya Bagga, (1998) 4 SCC 441, Bhavesh D. Parisha v. Union of India, AIR 2000 SCW 1965.
18. The large percentage of higher age employees in its present organisational structure has been perceived by the management of the respondent-Bank as one of the factors which diminutes its operative efficiency in the national environment where the public sector banks are obligated to compete with private banks with their leaner staff structure and higher operational and professional skills. This substantive structural problem has found utterance in the SBHVRS (Scheme) which has been evolved as a response to the bank's human resources problem. One of the principal objects of the scheme is thus the reduction of the overly large percentage of its employees belonging to higher age brackets. A specified percentage of the respondent's resources has been earmarked to cater to the requirement of the scheme. The respondent-Bank has thus been obligated to harmonise the twin requirements of reduction of staff consistent with the objects of the scheme with its financial resources earmarked for the said Scheme.
19. The bank has in the above circumstances decided to arrange all the received applications of its officer-employees in the descending order of the age of the applicants and adjusting the financial resources and its reduction requirements to the applicants received, has arrived at the cut-off date of 53 years for acceptance of the voluntary retirement applications. This power to restrict its approval to only some of the applications, the bank clearly and demonstrably has, having regard to the express prescriptions in Para 10 of Annexure-A as well as the declaration of the employees extracted above as contained in their applications for voluntary retirement.
20. The respondent-Bank clearly seems to have the power to restrict. Has the power been arbitrarily exercised? Does the classification adopted by it amount to hostile discrimination and is it bereft of a rational nexus to the objectives sought to be achieved by the scheme? The answer must of necessity be in the negative. The bank has restricted the benefits of voluntary retirement scheme to only to higher age officers among the applications and the cutoff date has been arrived at on the basis of a balancing act between the large number of applications received on the one hand and the respondent-bank's financial resources earmarked for the Scheme and its organisational requirements on the other. The restriction of the scheme to the higher age officers is consistent with the objects for which the Scheme has been engendered. It is thus neither arbitrary nor is the classification violative of Articles 14 and 16 of the Constitution of India. The petitioners are fully conscious, as apparent from Para 10 of Annexure-B to the Scheme and the declarations made by them, that every applicant is not entitled to the benefits of the Scheme. There is thus no pejorative affectation of any legitimate expectations of the petitioners in this regard.
21. Taking into consideration the totality of circumstances, I find no merits in the writ petitions and no infirmity in the decision of the respondent-Bank. The writ petitions are, therefore, dismissed. No order as to costs.