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4. The basis of Memorandum dated 26.12.2000, was the advice by IBA vide letter dated 31.8.2000 in which it was pointed out that they deliberated with the Government of India, Ministry of Finance (Banking Division), at its meeting with the Finance Minister, with Chief Executives of public sector banks on 13.6.2000. The human resource and manpower planning in public sector banks were reviewed, and a Committee was constituted to examine the issues concerned to public sector banks and to suggest suitable remedial measures. The Committee considered the economic reforms set in motion in the year 1990, the high establishment cost and low productivity in public sector banks. It was felt that the banks convert their human resource into assets compatible with the business strategies through a variety of measures. The data available indicated that 43% of the employees in public sector banks were in the 46 + age group, and only 12% were in the 25­35 age group. It was felt that this pattern has severe implications for the banks regarding mobility, training, development of skills, and succession plans for higher­level positions. The workforce was in excess. In order to remedy the situation, the Committee placed before the Government two schemes, viz., Sabbatical Leave, and a Voluntary Retirement Scheme. The IBA vide letter dated 13.7.2000 sought no objection from the Government for circulating the schemes to the banks for consideration and adoption by their Boards. The Government conveyed on 29.8.2000 that it did not have any objection for adopting and implementing the scheme by the respective Board of Directors. It advised that the banks may adopt these schemes for sabbatical leave and voluntary retirement based on the essential features of the schemes given in the annexure to the letter. The scheme provided eligibility for all permanent employees with 15 years of service. It provided for amount of ex gratia and other benefits accepted by the Government of India which were to be provided (i) gratuity as per the Gratuity Act/service gratuity, as the case may be; (ii) pension (including commuted value of pension)/bank’s contribution towards provident fund; and (iii) leave encashment as per rules.

12. On behalf of the bank, it was submitted that VRS 2000 stipulated that the pension in terms of SBI Pension Fund Rules on the relevant date, i.e., 31.3.2001, was to be provided. In other words, in case the employee was entitled to a pension in terms of Pension Rules and not otherwise. A provision was added in Rule 22(1) of the Pension Rules in the year 1986, accordingly, the pension was to be granted in all cases relating to voluntary retirement on completion of 20 years of service. The employees opting for the SBI­VRS would be governed only by Rule 22(i)(c) as it falls under the category of voluntary retirement. Under Rule 22(iii), a member who has been permitted to retire under clause 22(i)(c) shall be entitled to a proportionate pension, which is on completion of 20 years of pensionable service. Eligibility clause 3 has nothing to do with the admissibility of the pension. It was further submitted that the employees who completed ten years of pensionable service and were 60 years of age were entitled to pension; while employees under the VRS on completion of 15 years would not get pension and for that 20 years' service was necessary, the submission of employees that it would be discriminatory is based on incorrect premise. There is no challenge to the SBI Pension Rules or SBI­VRS. The bank provided the pensionable service period of 10 years on attaining the age of 60 years in terms of reservation policy. The bank appoints late entrants like ex­servicemen who, after serving in Armed Forces, join the bank and are left only with about ten years of service before they attain the age of superannuation. It is to grant benefit to such a particular category of employees that a period of 10 years on attaining the age of superannuation of 60 years was provided in Rule 22(i)(a).

13. The appellants further submitted that 20 years' period is provided in case of voluntary retirement to ensure that an employee on whom the bank has spent a considerable amount during training, works for a substantial period before he seeks retirement. It is a uniform policy followed by the bank. Regulation 28 was amended in 2002 providing for 15 years of service. It applies to the employees who are governed by the Bank Employees' Pension Regulations, 1995. These regulations do not apply to SBI employees as the SBI Pension Rules govern them. SBI employees are entitled to Provident Fund, gratuity and pension in terms of the Rules on completion of 20 years of service. Thus, there cannot be any comparison of SBI employees with the employees of other nationalised banks. The clarification dated 11.01.2000 has also been relied on by the bank. Now more than 19 years have passed and to grant a pension to all those who have retired, w.e.f. 1.4.2001 would cast a huge financial liability on the bank.

18. IBA’s letter dated 31.8.2000 makes clear the salient features of the VRS scheme that all permanent employees with 15 years of service were eligible to retire. Ineligible persons have also been specified. In unqualified terms, it was mentioned in the annexures that such employees would be entitled to the amount of ex gratia of 60 days’ salary for each completed year of service or salary for the number of months service is left, whichever is less. Other benefits admissible were gratuity, pension including the commuted value of pension, bank's contribution towards provident fund, and leave encashment as per rules. Thus, scheme was to grant pension to all such employees who opted for VRS on completion of 15 years of service and other benefits as specified in the scheme. The Government of India, Ministry of Finance, Department of Economic Affairs, (Banking Division), that it communicated approval vide letter dated 29.8.2000 to IBA, it was sent to the SBI also, the same is extracted hereunder: