Delhi District Court
Shri Radhey Shyam Garg vs National Housing Bank on 15 September, 2021
IN THE COURT OF MS NEENA BANSAL KRISHNA
PRINCIPAL DISTRICT & SESSIONS JUDGE
SOUTH EAST: SAKET COURTS, NEW DELHI
CS DJ No. 209332/2016
Shri Radhey Shyam Garg
S/o Late Shri Om Prakash Garg
R/o E-1, Sector 7, Rohini
New Delhi-110085
.... Plaintiff
Versus
National Housing Bank
3rd - 5th Floor, Core 5A
India Habitat Centre
Lodhi Road, New Delhi-110003
(Service to be effected through its
Managing Director)
....Defendant
First date before this Court : 17.11.2015
Date of Order : 15.09.2021
CS DJ No. 1647/2018
Shri Radhey Shyam Garg
S/o Late Shri Om Prakash Garg
R/o E-1/25, Sector 7, Rohini
New Delhi-110085
.... Plaintiff
Versus
CS DJ Nos. 209332/2016 & 1647/2018 Page 1 of 36 Pages
National Housing Bank
3rd - 5th Floor, Core 5A
India Habitat Centre
Lodhi Road, New Delhi-110003
(Service to be effected through its
Managing Director)
....Defendant
First date before this Court : 03.11.2018
Date of Order : 15.09.2021
JUDGMENT:
1. The plaintiff has filed the above mentioned suits for Declaration and Mandatory Injunction for grant of increments and Performance Linked Incentives under the National Housing Bank Act, 1987 read with National Housing Bank (Officers') Service Regulations, 1997 and consequent recovery of money in the sum of Rs.22,99,621/- inclusive of interest @ 18% per annum up to 30.10.2015 vide Civil Suit No. 209332/2016 and Rs.27,38,920/- along with interest @ 18% per annum up to 31.10.2018 vide Civil Suit No. 1647/2018.
2. Facts in brief are that plaintiff was initially appointed as Manager in the defendant Bank on 22.02.1989 and has been promoted from time to time in different posts in defendant Bank. He was lastly promoted as Executive Director w.e.f. 02.11.2011 and since then was holding this post till his retirement on 30.04.2017. The plaintiff has always been recognized by the Management and his performance has been treated "exceptional". It is submitted CS DJ Nos. 209332/2016 & 1647/2018 Page 2 of 36 Pages that Section 43 of the National housing Bank Act, 1987 (hereinafter referred to as "the Act") empowers the defendant bank to appoint officers and other employees and to determine their terms of Appointment by means of regulations which may be framed under Section 55 of the Act. The Board of Directors had framed National Housing Bank (Officers') Service Regulations, 1997 after obtaining approval of RBI and in consultation with Central Government which have been notified on 11.04.1997 in the Gazette of India. These Regulations provided for the salaries, allowances and other terms and conditions of service of the Executive Director. It is submitted that five grades have been specified which are as under :
Regulation 4:
Grade Scale Scale of Pay
(a) Special Grade As applicable to
the Executive
Directors of the
nationalized
banks.
(b) Top Executive Scale VII Rs.12650-300/2-13250-
Grade 350/1-13600-400/1-
14000
Scale VI Rs.11450-300/4-12650
(c) Senior Scale V Rs.10450-250/4-11450
Management
Grade
Scale IV Rs.8970-230/1-9200-
250/5-10450
(d) Middle Scale III Rs.8050-230/5-9200-
Management 250/2-9700
Grade
Scale II Rs.6210-230/11-8740
(e) Junior Scale I Rs.4250-230/3-4940-
Management 350/1-5290-230/12-8050
CS DJ Nos. 209332/2016 & 1647/2018 Page 3 of 36 Pages
Grade
Explanation: Special grade means pay, allowances and other perquisites as applicable to Executive Directors of the nationalized Banks.
3. The Increments have been specified in Regulation 5 as under:
(1) The increments shall be granted subject to the following sub-clauses:
(a) the increments specified in the scale of pay set out in sub-regulation (1) of regulation 4 shall, subject to the sanction of the Competent Authority, accrue on an annual basis and shall be granted on the first day of the month in which these fall due.
(b)..........
(c) .........
(2) An additional increment shall be granted in the scale of pay for passing each part of the CAIIB examination.
Explanation: ...
(a) .......
(b) If an Officer who is in receipt of Professional Qualification Allowance is promoted to next higher scale; he shall, subject to Government guidelines, if any, be granted, on fitment into such higher scale, additional increment (s) for passing CAIIB to the extent increment are available in the scale and if no increments are available in the scale or only one increment is available in the scale, the Officer shall be eligible for Professional Qualification Allowance in lieu of increment(s).
4. The plaintiff submits that as per the Service Regulations, the scale of pay prescribed in case of Special Grade Officers i.e. the Executive Directors is by reference to the scale of pay applicable to the Executive Directors of the nationalized banks. The scale for the post of Executive Directors of the Nationalized banks w.e.f. 01.01.2006 is CS DJ Nos. 209332/2016 & 1647/2018 Page 4 of 36 Pages Rs.65,000/- - Rs.78,000/- with annual increment @ 3% uniformly payable in the month of July of each year.
5. The plaintiff on being promoted to the post of Executive Director w.e.f. 02.11.2011, was placed in the same scale of Rs.65,000/- - Rs.78,000/- as applicable to the Executive Directors of the nationalized banks. Plaintiff had also cleared both the parts of CAIIB examination and therefore entitled to the additional increment in the scale of pay applicable to him in terms of Sub-Regulation (2) of Regulation 5.
6. The plaintiff however on being promoted to the post of Executive Director was not granted the benefit of additional increments on account of higher qualifications. He noticed it when he went through the salary slip for the month of September 2014. He immediately made a representation to the Bank vide email dated 27.10.2014 with a request to rectify the error. Since then, he has been following the matter through email and also orally but the grievance of the plaintiff has remained unaddressed.
7. It is further submitted that plaintiff has been denied the benefit of Performance Linked Incentives to which he is entitled in terms of the Regulations of the bank. He has made several representations and requests despite which he has not been given the benefit of either the additional increments or performance linked incentives.
8. A prayer has therefore been made for:
(i) grant of two additional increments in the scale of pay CS DJ Nos. 209332/2016 & 1647/2018 Page 5 of 36 Pages for clearing higher examination;
(ii) to declare that plaintiff is entitled to Performance Linked Incentives under Regulation 4 of the NHB (Officers') Service Regulations, 1997;
(iii) to grant a mandatory injunction against the defendant bank directing to follow and observe the NHB (Officers') Service Regulations, 1997;
(iv) pass a decree in the sum of Rs.22,99,621/- due and recoverable as on 30.10.2015 along with interest on account of arrears of increment and Performance Linked Incentive along with 18% interest and grant further interest @ 18% per annum till the recovery of the amount in CS No. 209332/16 and
(v) pass a decree in CS No. 1647/2018 in the sum of Rs.27,38,920/- due and recoverable as on 31.10.2018 along with interest @ 18% per annum pendente-lite and future also till its realization.
9. The defendant in its written statement took the preliminary objection that there is no provision in the Regulations which entitles the plaintiff to additional Increments or Performance Linked Incentives. The plaintiff has failed to even plead or aver the legal basis or the provisions contained in any contract or NHB Regulations in support of the alleged claim. It is asserted that in the absence of any contract or regulations, the same cannot be granted without prior approval of the RBI and requisite sanction of the Central Government. It is the CS DJ Nos. 209332/2016 & 1647/2018 Page 6 of 36 Pages discretion and decision to frame regulations or to make amendments thereto and it falls within the exclusive domain of policy and ought to be left to the decision of the policy makers. The claim does not disclose any prayer in relation to the aforesaid and is therefore without any basis. Moreover, the plaintiff himself has stated in paragraph 13 of his plaint that the request of the plaintiff under which he has sought approval of his claim is pending before the concerned Authority. Till the approvals are received, he cannot claim increments or Performance Linked Incentives. Therefore, the plaint does not disclose any cause of action.
10.It is further alleged that the suits have been filed by the plaintiff on the basis of documents which was confidential, proprietary and sensitive information which have been procured improperly, wrongfully and unlawfully by the plaintiff in patent breach and derogation of the confidentiality obligations which the plaintiff owes to the defendant. He had been accorded a position involving great sensitivity and responsibility within defendant Bank as he was heading the legal department of the defendant. The plaintiff has abused his position of trust and wrongfully misappropriated document/ information without the knowledge and consent of the defendant. These documents on which reliance has been placed by the plaintiff are inadmissible and ought not to be read as they have been obtained in breach of the Data Privacy Policy CS DJ Nos. 209332/2016 & 1647/2018 Page 7 of 36 Pages and in violation of IT Rules of the defendant.
11. It is further submitted that the case of the plaintiff is based on mischievous obfuscation of facts coupled with misreading of the Regulations, Government Notifications and Guidelines. Both the claims of the plaintiff for increments and Performance Linked Incentives are not founded on any specific regulation, contract or enactment. It is submitted that Section 6 of the NHB Act stipulates the composition of Board Directors to be constituted as under:
i. A Chairman and a Manging Director, ii. Two Directors from amongst experts in certain stipulated fields, iii. Two Directors, being such persons who possess the prescribed experience, iv. Two Directors elected as prescribed by shareholders, v. Two Directors from out of the Directors of the RBI vi. Three Directors from amongst the officials of the Central Government vii. Two Directors from amongst the officials of the State Government.
12.All the officers of the Board with the exception of the Directors at the serial numbers (iv) and (v) are appointed by Central Government in consultation with the Reserve Bank. None of the Directors of Boards of Directors are promoted from within the cadre of officers of NHB.
13.Section 7 of the Act also makes it clear that the CS DJ Nos. 209332/2016 & 1647/2018 Page 8 of 36 Pages appointment of the aforementioned Directors is tenure based and while Chairman, Managing Director and Chief Executive Officers are entitled to receive such salary and allowances as specified by the Central Government in consultation with the RBI, the other Directors with the exception of the Government officials or RBI Directors are entitled to such fees and allowances as may be prescribed. The Chairman and Directors on the Board of Directors are not "Officers" within the meaning of term defined in Regulation 2 (j) of the NHB Regulation, 1997. Infact, the distinction between the officers and members of the Board is clearly borne out from provision of Clause 22 of the Terms and Condition of appointment of Whole time Director of Public Sector Banks issued by Department of Financial Services, Ministry of Finance which expressly prescribe that on the appointment of an officer of bank as a whole Director on the Board of Nationalized Bank, such appointee is to be deemed to have retired from the service of the Bank and as such the appointment is deemed to constitute a fresh appointment.
14. It is further submitted that as per Regulation 7 of NHB Regulations, the post of Executive Director is placed in Special Grade. Regulation 8 read with 2(e) of NHB Regulations stipulates that Chairman of the defendant is competent to prescribe the number of posts of Executive Director in the Special Grade as also to make appointment in or promotion to Special Grade.
CS DJ Nos. 209332/2016 & 1647/2018 Page 9 of 36 Pages
15.It is thus claimed that the position of Executive Director in defendant Bank is not a Board level position and is not a Director of the Board at all. While all Directors constituting Board of Directors of defendant are appointed in the manner prescribed by Section 6 of the Act, the post of Executive Director is a cadre based position. The appointment or promotion to the said post is made by the Chairman of the defendant in terms of Regulation 4 read with Regulation 7 of the NHB Regulations. The office of Executive Director of the defendant is not and cannot be equated with the position of whole time Executive Director in Nationalized Bank who hold a Board level position. Moreover, Regulation 4 of the NHB Regulation does not have the effect of establishing such parity. Regulation 4 merely grants scale of pay in the special grade "as applicable to Executive Directors of Nationalized Banks". The plaintiff is therefore not entitled to additional Increments and Performance Linked Incentives as claimed by him.
16.The defendant has admitted that the scale of pay of Executive Directors of Nationalized Banks is Rs.65,000/- - 3%- Rs.78,000/-. The Executive Director (Special Grade) of the defendant has also been granted the same pay scale. Annual increment of 3% is also payable to the Executive Director of the defendant. It is submitted that in view of the letter dated 02.09.2009 issued by Department of Financial Services, Ministry of Finance, the increment is in CS DJ Nos. 209332/2016 & 1647/2018 Page 10 of 36 Pages lieu of basic pay. The plaintiff does not dispute or allege that his pay, allowance or other perquisites have not been granted in line with the Executive Directors of the Nationalized Banks. Increment is a form of, and is otherwise comprised in, pay. Additional increments / allowances for clearing CAIIB Examination are not applicable or available to the Executive Directors of the Nationalized Banks. Consequently, following the plaintiff's promotion to the Special Grade, he is not entitled to avail any increment on account of additional qualifications.
17.In respect of Performance Linked Incentives, it is submitted that it cannot be treated as part of pay, allowance and other perquisites. There is no basis in fact or law nor is it based on any statutory provision or a written contract between the parties. The plaintiff's claim of Performance Linked Incentives is not only misconceived and untenable but also is in derogation of the NHB Regulations. The reliefs claimed by the plaintiff are liable to be rejected. On merits, the position as explained in the preliminary objections has been reiterated.
18.Plaintiff in his replication has reaffirmed his claim as contained in the plaint and denied the averments made in the written statement.
19.The issues on the pleadings in Suit No. 209332/16 were framed on 30.07.2019 as under :
(i) Whether the plaintiff as Executive Director of the defendant bank was entitled to grant of additional CS DJ Nos. 209332/2016 & 1647/2018 Page 11 of 36 Pages increments for passing each part of CAIIB Examination under Regulation 5 of NHB (Officers) Service Regulations, 1997 as prayed for? OPP
(ii) Whether the plaintiff is entitled to Performance Linked Incentive under Regulation 4 of NHB (Officers) Service Regulations, 1997 and NHB Act, 1987? OPP
(iii) Whether the plaintiff is entitled to a decree of mandatory injunction thereby directing the defendant to follow and implement the provisions of NHB (Officers) Service Regulations, 1997 and NHB Act, 1987? OPP
(iv) Whether the plaintiff is entitled to a sum of Rs.22,99,621/- as recoverable as on 30.10.2015 for the various orders towards arrears of increments and performance linked incentives? OPP
(v) Whether the plaintiff is entitled to interest @ 18% as prayed for? OPP
(vi) Whether the written statement of the defendant is liable to be struck off for want of proper verification?
OPD
(vii) Relief.
20.The issues on the pleadings in Suit No. 1647/2018 were also framed on 30.07.2019 as under :
(i) Whether the plaintiff as Executive Director of the defendant bank was entitled to grant of additional increments for passing each part of CAIIB Examination CS DJ Nos. 209332/2016 & 1647/2018 Page 12 of 36 Pages under Regulation 5 of NHB (Officers) Service Regulations, 1997 as prayed for? OPP
(ii) Whether the plaintiff is entitled to Performance Linked Incentive under Regulation 4 of NHB (Officers) Service Regulations, 1997 and NHB Act, 1987? OPP
(iii) Whether the plaintiff is entitled to a decree of mandatory injunction thereby directing the defendant to follow and implement the provisions of NHB (Officers) Service Regulations, 1997 and NHB Act, 1987? OPP
(iv) Whether the plaintiff is entitled to a sum of Rs.27,38,920/- as recoverable as on 31.10.2018 for the various orders towards arrears of increments and performance linked incentives? OPP
(v) Whether the plaintiff is entitled to interest @ 18% as prayed for? OPP
(vi) Whether the written statement of the defendant is liable to be struck off for want of proper verification?
OPD
(vii) Relief.
21.The plaintiff Shri Radhey Shyam Garg appeared as PW1 and tendered his evidence by way of affidavit as Ex.PW1/A1. He has relied on the documents Ex.P1 to Ex.P40.
22.The defendant examined DW1 Shri Sourav Seal who has proved his evidence by way of affidavit as Ex.DW1/A and CS DJ Nos. 209332/2016 & 1647/2018 Page 13 of 36 Pages has relied upon the documents which are Ex.D1 to Ex.D3.
23.The detailed testimony of the witnesses shall be considered subsequently.
24.Learned counsel on behalf of the plaintiff has argued that he had joined the defendant Bank as Manager in 22.02.1989 and has been promoted from time to time till his date of his retirement on 30.04.2017. At every level, he was paid two increments till he became the Executive Director in 02.11.2011. He came to know that he has been denied the two increments when he looked at his salary slip in 2014. He accordingly made a representation to the defendant. His representations were referred to the Government which was sent back to the defendant to be decided by the Board despite which no decision has been taken by the Board of Directors. It is submitted that as per Regulation 3 (j) of National Housing Bank (Officers') Service Regulations, 1997 (Ex.P38), the Officer is an employee of the bank. In terms of Regulation 5, each Officer is entitled to additional increments on acquiring higher qualification of CAIIB. Regulation 44 provides for power to implement regulations while Regulation 47 states that where any question of interpretation of regulations arises, the same has to be referred to the Board of Directors. The plaintiff is an employee / officer of the bank is therefore entitled to two additional increments on the pay scale granted to him on becoming an Executive Director.
CS DJ Nos. 209332/2016 & 1647/2018 Page 14 of 36 Pages
25.Learned counsel on behalf of the plaintiff has further argued that the Government of India vide its letter dated 22.01.2014 Ex.P14 had suggested that the defendant may get an external legal opinion in regard to grant of Performance Linked Incentives and be decided after approval of Board of Directors. Letter Ex.P15 was written by the Defendant Bank to Government of India clearly stating that Executive Director is not a Board level position. The Draft Administrative Policy Ex.P21 also clarifies that the Executive Director of the defendant is an officer and not a member of the Board. Regulation 39 specifies that the Directors and the Executive Directors are the same. It is further submitted that this position has been stated and reaffirmed by the defendant in the affidavits filed on their behalf before the High Court of Delhi and other High Courts. The Executive Director is not a part of Board of Directors but is a senior most bank officer entitled to same perks as nationalized Bank. It is submitted that the various correspondence proved on behalf of the plaintiffs clearly show that the defendant had concurred that the plaintiff is entitled to Performance Linked Incentives but for the reasons best known has failed to implement its own decisions. It is therefore argued that the plaintiff has been wrongly denied the benefit of increments and Performance Linked Incentives for which necessary directions may be issued.
26.Learned counsel on behalf of the defendant has argued CS DJ Nos. 209332/2016 & 1647/2018 Page 15 of 36 Pages that in terms of the Regulations, the additional increments are available only till the level of General Manager (GM). The Executive Director (ED) has a different salary structure and the additional increments are not available to them in terms of the Rules of the Government of India which are applicable. It has been pointed out that DA is different at the ED level as compared to GM level. Moreover, the HRA @ 30% is granted to ED while it is only 10% for the GM. The NHB (Officers') Service Regulations, 1997 are applicable to the officers till the level of GM and beyond that it is the Government of India Regulations which become applicable. The plaintiff has relied on an email of Exim Bank but it is not a Nationalized Bank and the salary to which the employees of defendant Bank are entitled is in accordance to the Bank Regulations. The Act and its Regulations of Exim bank are not applicable to the officers of the defendant.
27.It is further argued that the Performance Linked Incentives are available only to the Full Time Board Members who have a fixed tenure. On the other hand, plaintiff is full-time bank employee and cannot claim parity with the Board Members. It is further explained that Performance Linked Incentive was introduced only in 2009 vide memo dated 24.06.2009 and was applicable only to the full-time Directors. The parameters for calculating incentive have been notified. It is further submitted that though a Note dated 27.01.2015 Ex.PW1/4 was moved by the Managing CS DJ Nos. 209332/2016 & 1647/2018 Page 16 of 36 Pages Director recommending payment of Performance Linked Incentive but it never received any approval from Government of India. The Members of the Board do not have any power to change the Regulations without the intervention of the Parliament. Therefore, the recommendation of the Board in itself is not sufficient to change the NHB (Officers') Service Regulations, 1997 which are statutory and no Incentive can be granted without the consent of the Government of India / Chairman. It is also submitted that this Office Note was a confidential note which has been procured inappropriately by the plaintiff for which a detailed enquiry was held in the bank. During the enquiry, the original Note was sought to be traced but the same was not found available on the record. It is concluded that both the suits of the plaintiff are without merit and liable to be dismissed.
28.I have heard the arguments and perused the record. My issuewise findings are as under :
Issue No. (i) in CS DJ No. 9332/2016 and CS DJ No. 1647/2018:
(i) Whether the plaintiff as Executive Director of the defendant bank was entitled to grant of additional increments for passing each part of CAIIB Examination under Regulation 5 of NHB (Officers) Service Regulations, 1997 as prayed for? OPP
29.It is an admitted case of the parties that plaintiff, a regular CS DJ Nos. 209332/2016 & 1647/2018 Page 17 of 36 Pages employee of defendant, was promoted as Executive Director w.e.f. 02.11.2011. It is also not in dispute that the Defendant Bank is governed by National Housing Bank Act, 1987. Section 43 of the Act empowers the defendant bank to appoint officers and other employees and determine their terms of appointment by means of regulations. Section 43 of the Act reads as under: :
"(a) 43. Staff of National Housing Bank.-(1) The National Housing Bank may appoint such number of officers and other employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service.
(2) The duties and conduct, terms and conditions of service and the establishment and maintenance of provident fund or any other fund for the benefit of the officers and other members of staff of the National Housing Bank shall be such as may be prescribed...
(b) Section 2(h) of the NHB Act defines the expression "prescribed" means prescribed by regulations made under the NHB Act."
30.Section 55 of the Act confers power on the Board of Directors of NHB/ Defendant to make Regulations with the previous approval of RBI and in consultation with the Central Government on various matters including matters of duties, conduct, salaries and allowances and conditions of service of the officers and other members of the staff.
31.In exercise of the powers vested in the defendant bank, the Board of defendant bank with the previous approval of RBI with consultation with Central Government made the National Housing Bank (Officers') Service Regulations, 1997 duly notified in the Gazette w.e.f. 11.04.1997, which CS DJ Nos. 209332/2016 & 1647/2018 Page 18 of 36 Pages govern the salaries and service conditions of the employees of the defendant.
32. It is further not in dispute that as per the structure of the bank, it comprises of Board of Directors as under :
i. A Chairman and a Manging Director, ii. Two Directors from amongst experts in certain stipulated fields, iii. Two Directors, being such persons who possess the prescribed experience, iv. Two Directors elected as prescribed by shareholders, v. Two Directors from out of the Directors of the RBI vi. Three Directors from amongst the officials of the Central Government vii. Two Directors from amongst the officials of the State Government.
33.It is also not in dispute that the members of the Board of Directors are not the regular employees of the defendant.
34.It is further admitted by the defendant that the employee of the Bank can be promoted upto the level of Executive Director and is a permanent employee unlike the Directors on the Board who are appointed on tenure basis.
35.Regulation 4 provides a Special Grade for Executive Directors of the Nationalized Bank. The Explanation provides a Special Grade means pay, allowances and other perquisites as applicable to Executive Directors of Nationalized Banks.
36.The plaintiff is admittedly a regular employee who was CS DJ Nos. 209332/2016 & 1647/2018 Page 19 of 36 Pages promoted to the post of Executive Director w.e.f. 02.11.2011. As per Regulation 4, his salary was to be fixed in the pay scale of Special Grade which has been defined as that of Executive Directors of the Nationalized Banks. This implies that the plaintiff was merely given a pay scale equivalent to the Executive Directors of the Nationalized Bank and it is not as if his position was in parity with that of the Executive Directors of Nationalized Banks who are appointed for a fixed tenure as whole time Directors. It is evident from Regulation 4 that a reference has been made to the Executive Directors of Nationalized Banks solely for the purpose of fixing the salary, allowances and perquisites i.e. solely for the purpose of pay parity.
37.The plaintiff has claimed that he is entitled to increments in terms of Regulation 5 on account of his higher qualifications on account of passing each part of CAIIB examination. The only objection that has been taken by the defendant is that no such increments are granted to the Directors of the Nationalized Banks and since the plaintiff has parity with the Board of Directors, he is not entitled to the increments.
38.This argument is completely fallacious since the status of the plaintiff is that of a regular employee which is also in contemplation of NHB Act and the NHB Regulations. It is only the Pay Scale which has been defined as "Special Grade" equivalent to that of Executive Directors of Nationalized Banks. Once it was already contemplated in CS DJ Nos. 209332/2016 & 1647/2018 Page 20 of 36 Pages the Act and the Regulations that the post of Executive Directors shall be given to the regular employee who shall not be a whole time Director for which a Board of Directors is constituted separately, it cannot artificially raise the distinction of plaintiff being a regular employee and the Directors of Nationalized Banks being tenure postings, when the question arises for fixing his salary according to the pay scale of a Director of Nationalized Bank only to defeat the legitimate claim of the plaintiff. The confusion seems to have crept as Defendant lost the distinction between defining a Pay Scale and appointment of an officer to the post of Whole Time Director. Once a regular pay scale has been granted to the plaintiff it is erroneous to deny him the benefit of additional increments.
39. Regulation 5 (2) itself clearly provides as under:
(b) If an Officer who is in receipt of Professional Qualification Allowance is promoted to next higher scale; he shall, subject to Government guidelines, if any, be granted, on fitment into such higher scale, additional increment (s) for passing CAIIB to the extent increment are available in the scale and if no increments are available in the scale or only one increment is available in the scale, the Officer shall be eligible for Professional Qualification Allowance in lieu of increment(s).
40.Regulation 5 clearly talks of additional increments being granted on promotion to a higher Scale. Moreover, Regulation 4 does not mention that the Regulation 5 shall be applicable to all the Pay Scales except the Special Grade Pay Scale defined therein. While increments as provided in Regulation 5 would be available to all other CS DJ Nos. 209332/2016 & 1647/2018 Page 21 of 36 Pages pay scales, it is not comprehendible as to how it can be denied to the highest pay scale of Special Grade especially when the two Regulations do not contain any such qualification or reservation.
41.It would be pertinent to refer to the e-mail dated 29.10.2014 Ex.P27 received from Exim Bank of India by the defendant stating that the ED of the bank who has been put in Special Grade / Scale 8, which is a pay scale that is part of service Regulations, is entitled to increment for passing CAIIB/JAIIB. The claim of the plaintiff for increments on account of CAIIB qualifications was referred by defendant to Government of India, Ministry of Finance and the plaintiff was informed about the same vide letter dated 01.05.2015 Ex.P28. A response was received from Government of India vide letter dated 30.06.2015 Ex.P29 stating that the increments for acquiring professional qualifications like CAIIB is part of bipartite settlements between the employee and the Bank. This clarifies that the incentives on acquiring higher qualification was to be governed by the service Regulations of the defendant bank. As already discussed above, the plaintiff being in the highest pay scale was entitled to the additional Increments in terms of Regulation 5 which governs the terms of appointment and salary of the plaintiff.
42.It is thus held that the plaintiff being a regular employee of the defendant Bank in a defined pay scale, is entitled to the CS DJ Nos. 209332/2016 & 1647/2018 Page 22 of 36 Pages two increments on account of higher qualifications as provided in Regulation 5 while fixing his pay scale in terms of Regulation 4 of the NHB Regulations.
43.Issue no. (i) is decided in favour of the plaintiff and against the defendant.
Issue No. (ii) in CS DJ No. 9332/2016 and CS DJ No. 1647/2018:
(ii) Whether the plaintiff is entitled to Performance Linked Incentive under Regulation 4 of NHB (Officers) Service Regulations, 1997 and NHB Act, 1987? OPP
44.The plaintiff has claimed that Performance Linked Incentives are provided to the Directors of the Nationalized Banks and since he is entitled to the same Pay Scale as them, it has been wrongly denied to him. The only defence put forth by the defendant is that since plaintiff is a regular employee, he cannot claim Performance Linked Incentives which is given only to the Full Time Directors of the Board, which plaintiff admittedly is not.
45.As already discussed above it is only the Pay Scales for Executive Directors in the defendant Bank which has been defined as that of the Executive Directors of the Nationalized Banks. Admittedly Full Time Directors of the Board are being granted Performance Linked Incentives. It is not under challenge that the salary of the plaintiff as Executive Director has to be the same as that of the CS DJ Nos. 209332/2016 & 1647/2018 Page 23 of 36 Pages Director of a Nationalized Bank. The basic question which arises is whether the Performance Linked Incentive is a part of salary.
46.In Assistant Commissioner of Income Tax vs M. Srinivasulu (1997) 59 TTJ Hyd 393 Income Tax Appellate Tribunal, Hyderabad held that the incentive bonus is a part of salary.
47.Likewise, In K.A. Choudary vs Commissioner Of Income-Tax 1987 (1990) 183 ITR 29 AP decided by Andhra High Court, a similar contention about incentive bonus not being a part of salary was considered. It was observed that the Incentive bonus received is nothing else but what an employee receives from the employer. It is included in the definition of salary. While make a reference to the judgment of Supreme Court of India in CIT Vs. Hind Lamps Ltd. decided on 31.07.2008, it was observed that the Bonus Incentive is part of the salary and it is "profit in lieu of salary" as provided under Section 17 of the Income Tax Act.
48.Andhra High Court in M. Krishna Murthy & ors. vs Commissioner of Income-Tax (1985) 152 ITR 163 AP, had made a reference to Section 2 (24) (iii) of the Income Tax Act wherein "income" is defined to include the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of the Section 17. Section 17 defines "salary" to include any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages.
CS DJ Nos. 209332/2016 & 1647/2018 Page 24 of 36 Pages
49.Supreme Court of India in Gestetner Duplicators (Pvt.) Ltd vs Commissioner of Income-Tax (1979) AIR SC 607 had noted that conceptually there is no difference between salary and wages, remuneration or payment for work done or services rendered. The former expression is generally used in connection with services of higher or non-manual type while the latter is used in connection with manual services.
50.Full Bench of Andhra Pradesh in ESIC Vs. Andhra Pradesh Paper Mills Ltd. AIR 1978 AP 18, it was held that the term wage includes all the allowances as well as the incentive allowances and this position of law is clear and unambiguous. Similar were the observations of the Bombay High Court in Commissioner of Income Tax v Gopal Krishan Suri (2001) 248 ITR 819 (Bombay).
51.In The Daily Pratap Vs. The Regional Provident Fund Commissioner, Punjab, Haryana, Himachal Pradesh and Union Territory, Chandigarh. (1998) 8 SCC 90 it was observed by Apex Court that in order to become an incentive allowance, it has to be shown that the eligible workmen who had put in extra output would be entitled by way of incentive to do more work to get additional allowance directly linked up with extra output given to them. It was observed that such bonus would be part of the wages.
52.It is thus evident from the aforementioned judgments that Performance Linked Incentive is a part of salary. Once it is CS DJ Nos. 209332/2016 & 1647/2018 Page 25 of 36 Pages so held any confusion in regard to grant of Performance Linked Incentive gets immediately sorted out. Admittedly, the salary of the Executive Director of Defendant Bank has to be the same as that of Director of the Nationalized Banks who are entitled to Performance Linked Incentive. On the principle of pay parity, since the Performance Linked Incentive is part of salary, the plaintiff is also entitled to the same.
53.This view is also fortified from the various documents of the Defendant itself. We may first refer to the Performance Linked Incentive(PLI) Scheme dated 04.08.2009 issued by Government of India, Ministry of Finance applicable to CMDs and whole time directors of Development Financial Institutions including NHB Mark Z wherein it was notified that the government has decided to extend the benefit of PLI to all the whole time directors of various banks including the defendant bank to those who are appointed on deputation basis.
54.A letter dated 30.11.2011 Ex.P13 was sent by Ministry of Finance, Government of India to the Chairman & Managing Director of the defendant bank in respect of performance evaluation matrix for the CMD / ED which was finalized and forwarded with the request to indicate the commitments under the Statement of Intent for the period 2011-12 in respect of performance parameters as per the evaluation matrix. The Ministry of Finance vide its letter had also contemplated grant of Performance Linked CS DJ Nos. 209332/2016 & 1647/2018 Page 26 of 36 Pages Incentives and had suggested the performance evaluation matrix.
55.Deputy General Manager of the defendant bank vide letter dated 29.05.2013 Ex.P11 on receiving the representation from the plaintiff wrote a letter to Ministry of Finance wherein a reference was made to Regulation 4 of NHB (Officers') Service Regulations, 1997 which provided that the pay, allowance and perquisites of the Executive Director of the Nationalized Banks shall be applicable to Executive Director (Special Grade), NHB. It was further stated that till then the Performance Linked Incentives were being given only to the CMD being the whole time Director. An advice was sought whether Executive Directors are also entitled to performance linked incentives. Assistant General Manager again vide letter dated 26.11.2013 Ex.P12 sent a reminder in regard to the pending issues seeking advice in regard to Performance Linked Incentive to the Executive Director of defendant bank.
56.Pursuant thereto the plaintiff vide letter dated 19.04.2013 Ex P34 had sought information from Remuneration Committee if the Performance Linked Incentive has been determined for the year 2011.
57.The Ministry of Finance vide letter dated 22.01.2014 Ex.P14 advised the Bank to seek external legal opinion on the issue of grant of Performance Linked Incentives. Executive Director Shri Arnab Roy of defendant Bank CS DJ Nos. 209332/2016 & 1647/2018 Page 27 of 36 Pages vide letter dated 25.03.2014 Ex.P15 addressed to Ministry of Finance in reference to their letter dated 22.01.2014 informed that the external legal opinion had been obtained from Shri H. S. Parihar, Advocate, Supreme Court of India who has given an opinion that in view of the specific provisions of the NHB (Officers') Service Regulations, 1997, the Executive Directors of NHB / defendant were entitled to Performance Linked Incentives on the lines as available to Executive Directors of the Nationalized Banks. An Office Note dated 27.01.2015 Ex.Pw1/4 was prepared wherein the entire sequence of events of having obtained external opinion and on its basis recommending the grant of PLIs to the EDs (Special Grade) was put up before the General Manager (APS). The matter was placed through a separate Board Memorandum Ex.P17 before the Board of Directors in a meeting held on 10.03.2014 which approved the proposal but advised that it may be brought to the notice of Department of Financial Services and their No Objection may be obtained for payment of such incentives. The extracts of the Minutes of the Board meeting held on 10.03.2014 is Ex.P16.
58.The proposal was again sent to Department of Financial Services which were returned vide letter dated 21.04.2014 Ex. P18 to seek specific comments of the Chairman. Shri R. V. Verma, Chairman and Managing Director of the defendant bank responded to Department of Financial Services vide letter dated 28.04.2014 Ex.P19 that the CS DJ Nos. 209332/2016 & 1647/2018 Page 28 of 36 Pages proposal for grant of Performance Linked Incentives to Executive Director was placed before the Board for its approval and the same was supported and recommended by him in course of deliberations of the Board meeting.
59.Ministry of Finance vide dated 11.08.2014 as referred in notice Ex.PW1/A in response to the information sought by the defendant in regard to grant of Performance Linked Incentives to Executive Directors, stated that the specific comments of the Chairman on this issue may be provided to the Department for determination of the matter. NHB.
60.The General Manager of the defendant vide letter dated 25.11.2014 Ex.P31 (in response to the letter dated 14.11.2014 of the plaintiff seeking Performance Linked Incentives for the year 2011-12; 2012-13 & 2013-14), informed the plaintiff that Department of Financial Services has advised the Bank to provide them with the specific comments of the Chairman, NHB on the issue and an Office Note dated 25.08.2014 was placed by the Department before the CMD and that the plaintiff would be informed after receiving the comments from the CMD.
61.From these letters, it is quite evident that Department of Finance itself proposed the Evaluation Matrix for grant of Performance Linked Incentives to the Executive Director of the defendant bank. It is also established that the matter was duly considered by the defendant Bank vide its proposal Ex.P17 in the Board meeting and was approved vide Extracts of Minutes Ex.P16. The only rider that was CS DJ Nos. 209332/2016 & 1647/2018 Page 29 of 36 Pages attached to the grant of Performance Linked Incentives was that the prior financial approval may be taken from Department of Financial Services, Ministry of Finance. However, the same was not required in view of Regulation 4 which clearly provided that the salary of Executive Director of defendant bank shall be the same as that of the nationalized banks. Once the Regulations, 1997 which was duly approved by Department of Financial Services and published in the Gazette, itself defined the salary and perquisites payable to the officers of Defendant Bank, there was no need or requirement for seeking further approval from the Ministry of Finance. It is ironical that despite there being a clear mandate, the defendant bank hesitated in implementing the decisions taken by it and again sought approval of Ministry of Finance which was neither required nor warranted in the circumstances.
62.It is vehemently argued that the Office Note Ex. PW1/4 cannot be relied upon since it was a confidential document of the Defendant which has been surreptitiously obtained and cannot be held admissible in evidence.
63.One of the earliest leading decisions on the question of admissibility of evidence which is obtained secretly is Regina vs. Maqsud Ali (1966) 1 QB 688 wherein it was held that such evidence was admissible provided that its accuracy could be proved and the voices properly identified subject to the conditions that the evidence was relevant and otherwise admissible. The court held that the CS DJ Nos. 209332/2016 & 1647/2018 Page 30 of 36 Pages method of obtaining the evidence could not affect its admissibility, which still remained a matter for the discretion of the court.
64.The Constitution Bench of the Supreme Court in Pooran Mal Vs. The Director of Inspection (Investigation), New Delhi & Ors. (1974) SCC 345 referred to Kuruma Vs. Queen (1955) AC 197 wherein while considering English Law of Evidence in its application to Eastern Africa Privy Council observed that the test to be applied, both in civil and in criminal cases, in considering whether evidence is admissible is whether it is relevant to the matters in issue. If it is, it is admissible and the Court is not concerned with how it was obtained. The Apex Court thus, held that it would be wrong to exclude such evidence. Neither the Constitution nor Criminal Procedure Code provides for exclusion of evidence obtained illegally. It was held that in India, the courts have consistently refused to exclude relevant evidence merely on the ground of it being obtained by illegal means.
65.Following the earlier decisions, the position regarding admissibility of evidence was very aptly captured by a 2- Judge Bench of the Supreme Court in State Vs. Navjot Sandhu (2005) 11 SCC 600 and it observed that the tape recorded conversation even if collected illegally is admissible so long as it is relevant to the issue under consideration.
66.In Yashwant Singh & Ors. Vs. CBI (2019) 6 SCC 1, the CS DJ Nos. 209332/2016 & 1647/2018 Page 31 of 36 Pages Supreme Court observed that an issue was raised in regard to the manner in which the three documents in question had been procured and placed before the court. It was held that the only criterion to be considered is the relevancy and so long as the same is established the manner of procurement even if illegally would not ordinarily be significant in itself in regard to the court's decision to act upon the same.
67.In the recent judgment, in Deepti Kapur Vs. Kunal Julka CM(M) 40/2019 decided on 30.06.2020, the Delhi High Court made reference to the aforementioned decisions and endorsed that the manner of procuring a piece of evidence is of no consequence if the evidence sought to be so produced is relevant subject to the rules of admission as contained in the Indian Evidence Act.
68.In the present case, even if the contention of the defendant is accepted that the Office Note Ex. PW1/4 was an internal document of the defendant which has been procured illegally by the plaintiff, it does not render the said document inadmissible. The said document being relevant is admissible in evidence especially when the authenticity of the document has neither been denied nor challenged by the defendant. Also, Office Note merely states the interpretation of Regulations which is borne out independently as well.
69.As already discussed above, Performance Linked Incentive is part of salary and the plaintiff was entitled to CS DJ Nos. 209332/2016 & 1647/2018 Page 32 of 36 Pages Performance Linked Incentives which have been wrongly withheld by the defendant bank till now.
70.Issue No. (ii) is decided in favour of the plaintiff.
Issue No. (iii) in CS DJ No. 9332/2016 and CS DJ No. 1647/2018:
(iii) Whether the plaintiff is entitled to a decree of mandatory injunction thereby directing the defendant to follow and implement the provisions of NHB (Officers) Service Regulations, 1997 and NHB Act, 1987? OPP
71.In view of the findings in issue no. (i) and (ii), the plaintiff is entitled to directions to be issued to the defendant bank to implement the provisions of NHB (Officers') Service Regulations, 1997 and NHB Act, 1987.
72.Issue No. (iii) is decided in favour of the plaintiff.
Issue (iv) in CS DJ No. 9332/16 & in CS DJ No. 1647/18 respectively:
(iv) Whether the plaintiff is entitled to a sum of Rs.22,99,621/- as recoverable as on 30.10.2015 for the various orders towards arrears of increments and performance linked incentives? OPP
(iv) Whether the plaintiff is entitled to a sum of Rs.27,38,920/- as recoverable as on 31.10.2018 for the various orders towards arrears of increments and performance linked incentives? OPP CS DJ Nos. 209332/2016 & 1647/2018 Page 33 of 36 Pages
73.Though the plaintiff has stated in both the suits that the amounts due on account of increments and performance linked incentives are claimed to be Rs.22,99,621/- in CS DJ No. 9332/16 and Rs.27,38,920/- in CS DJ No. 1647/18 inclusive of interest but has failed to give any detailed calculations. Moreover, he has not shown any basis for claiming interest @ 18 % per annum.
74.In view of findings in issue nos. (i), (ii) and (iii), plaintiff is held entitled to the Increments and the Performance Linked Incentives for which the calculations be done by the defendant within one month and the payments be made accordingly.
75.Issue No. (iv) is decided in favour of the plaintiff.
Issue No.(v) in CS DJ No. 9332/2016 and CS DJ No. 1647/2018:
(v) Whether the plaintiff is entitled to interest @ 18% as prayed for? OPP
76.The plaintiff has claimed interest @ 18% per annum but has not placed on record any Regulation providing for grant of such interest. The interest at the prevailing @ 5% per annum, is awarded to the plaintiff from the date of institution of the suit till the date of realization.
Issue No. (vi) in CS DJ No. 9332/2016 and CS DJ No. 1647/2018:
CS DJ Nos. 209332/2016 & 1647/2018 Page 34 of 36 Pages
(vi) Whether the written statement of the defendant is liable to be struck off for want of proper verification?
OPD
77.In Suit bearing CS DJ No. 1647/2018, the written statement is supported by verification as per law and also by an affidavit. The objection taken on behalf of the plaintiff is without merit.
78.In Suit bearing CS DJ No. 9332/2016, though the Written Statement does not have verification but it is supported by an affidavit wherein the verification in respect of the written statement has been specifically mentioned.
79.It may also be mentioned that the case of the parties is essentially based on the documents which are admitted by both the parties.
80.The objection in regard to the written statement not being support with a proper verification is without merit and is hereby decided against the plaintiff.
Relief
81.In view of the findings on the issues as discussed above, both the suits of the plaintiff are decreed. The amounts due on account of increments and performance linked incentives be calculated by the defendant within one month and the payments be made accordingly. Plaintiff shall be entitled on the said amounts so calculated to CS DJ Nos. 209332/2016 & 1647/2018 Page 35 of 36 Pages interest @ 5% per annum from the date of institution till the date of payment.
82.Parties to bear their own costs. Decree Sheet be prepared accordingly. File be consigned to Record Room.
Announced in the open court today i.e. 15th September, 2021 (Neena Bansal Krishna) Principal District & Sessions Judge South-East District, Saket Courts, New Delhi.
CS DJ Nos. 209332/2016 & 1647/2018 Page 36 of 36 Pages