REPAKULA VIDYA SAGAR Vs. STATE BANK OF HYDERABAD

JUDGEMENT

(1.) Writ Appeal No.1778 of 2001 and 121 connected writ appeals are directed against the common judgment and order of the learned single Judge dated 21-9-2001 made in W.P. No.6235 of 2001 and batch. The appellants are the writ petitioners. The writ petitioners questioned the validity of the refusal of State Bank of Hyderabad, the 1st respondent herein, to accept the applications filed by the petitioners for voluntary retirement under the 'State Bank of Hyderabad (Employees) Voluntary Retirement Scheme, 2001 ' (for short, the Special Scheme), on the ground that the petitioners' age is below the cut-off age as decided by the 1st respondent-Bank.

(2.) The Special Scheme framed by the 1st respondent herein has had a historical background. The Union of India, Ministry of Defence (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 objective, 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 detailed recommendations in regard to banking policy, institutional supervisory, legislative and technological dnnensions. In the course of deliberations, t"Committee noted that the economic reorms set in motion in 1990 have unleashed market forces and competition, whichr affected all . sections of the economy including the banking sector. The high establishmnet cost and low productivity in public sector which affect their profitability, makes it esary for the banks to convert antire human resources into asscus come to 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 also found that banking administration is overmanned at varying levels and the banks should adjust their manning level to the right side. It also opined that some of the staff may not be suitable for deployment on grounds of aptitude and mobility. Under those circumstances, the Committee recommended to introduce an appropriate Voluntary Special Scheme with incentives. On examination of the recommendation of the Narasimham Committee II, it is stated, the Indian Banks Association (for short, IBA), addressed letters to all the Chief Executives of the public sector banks. The letter dated 31-8-2000 addressed to the Chairman and Managing Director of Andhra Bank reads as follows: INDIAN BANK'S ASSOCIATION No.PD/CIR/76/G.4/933 Strictly Confidential August, 31 2000. Chairman and Managing Director, Andhra bank Head Office Dr. Pattabhi Bahvan 5-9-11, Saifabad Hyderabad - 500 004. Dear Sir, Human Resource Management and man-power planning in Public Sector Banks. "Attention is invited to letter DO No.11/1/99-IR dated 22-5-2000 addressed to the Chief Executives of public sector banks by the Government of India, Ministry of Finance (Banking Division), wherein banks have been advised to carry out detailed manpower planning in order to adopt measures to have optimum human resource at various levels in keeping with the business strategies and requirements of each bank. At the meeting the Finance Minister had with Chief Executives of Public Sector Banks on 13th June 2000, the human resource and man-power planning in public sector banks where reviewed and a Committee was constituted to examine the issues confronting public sector banks in that regard and suggest suitable remedial measures. In the course of deliberations, the Committee noted that the economic reforms set in motion in 1990 have unleashed market forces and competition, which affect all sections of the economy including the banking sector. The high establishr/^nt cost and low productivity in pub!i~ sector banks which affect th"ir profitability, makes it necessary for the banks to convert their human resource 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 as well as vertical career progression and inducting fresh, skilled personnel with technical and professional skills for new business opportunities. The data available with us indicates that 43% of employees in public sector banks are in the 46 + age group and only 12% are in the 25-35 age group. This pattern has serious implications for the banks with reference to mobility, training, development of skills and succession plans for higher level positions. This, coupled with excess manpower wherever it exists, would come in the way of induction of new skills and proper career progression. In order to remedy this situation with the urgency that circumstances demand the Committee has placed before the Government two Special Schemes, viz.. Sabbatical Leave and a Voluntary Retirement Special Scheme that would assist the banks in their effort to optimize their human resource and achieve a balanced age and skills profile in keeping with their business strategies. Salient features of the two Special Schemes are given in the Annexure. IBA vide its letter dated 13th July 2000 has sought to objection from the Government for circulating the Special Schemes to the Banks for consideration and adoption by their Boards. The Government have conveyed to us that they have no objection to the banks' placing the two Special Schemes before their respective Board of Directors for adopting and implementing the above Special Schemes, It has been advised that the Banks may adopt these Special Schemes for sabbatical and voluntary retirement based on the essential features of the Special Schemes given in the Annexure, after obtaining their Board's approval and implement them in right earnest. Banks are also requested to take special note of the following: (1) Section 10 (10C) of the Income Tax Act read with Rule 2BA. (2) As per the amendments brought in by the Finance Act, 2000, so long as the bank complies with the rules framed under Section 10 (10C) prior approval from the Chief Commissioner or Director General of Income Tax, as the case may be, is not required for VRS. (3) Income Tax shall be deducted at source in respect of ex-gratia exceeding Rs.5.00 lakhs or such other ceiling as may be prescribed under the Income Tax Act. (4) Only completed years of service will be reckoned or arriving at the minimum eligible service. Subject to this, fraction of service of six months and above will be reckoned as one year for the purpose of calculating the ex-gratia. (5) While exercising discretion to decline applications for VRS or to make exceptions in the case of employees categorized as eligible for VRS, the decision should not be discriminatory among employees who are similarly placed and the reasons therefore should be recorded. (6) The competent authority for accepting VRS for the various categories/class of employees should be clearly laid down by the Board of Directors. (7) Banks should ensure compliance with requirements under labour legislations before giving effect to the Special Scheme." Yours faithfully, Sd/- xx K.C. Chowdhary Chief Executive & Secretary" It is stated that similar letters were addressed to the Chief Executives of the other public sector banks including the 1st respondent-Bank. In pursuance of the recommendations of the Narasimham Committee-II and followed by the letter of the IBA dated 31-8-2000, the 1st respondent- bank has introduced the Special Scheme. Under the Special Scheme, 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, are eligible to offer voluntary retirement. All the petitioners applied for voluntary retirement under the Special Scheme. The respondent- Bank rejected their applications by proceedings dated 23-8-2001 stating, "the age being below the cut-off age as decided by the bank in the category". Aggrieved by the above proceedings of the respondent- Bank dated 23-8-2001, W.P. Nos.5664 and 6235 of 2001 and batch were filed.

(3.) Before the learned single Judge, on behalf of the writ petitioners, it was contended that the impugned proceeding of the respondent-bank fixing the cut-off age as 53 years is arbitrary, unreasonable and violative of Art.14 of the Constitution and it has no nexus with the object sought to be achieved. On the other hand, on behalf of the 1st respondent-Bank, it was contended that the Special Scheme is for the benefit of the Organisation for reducing the surplus staff including the higher aged staff to meet the new challenges and to withstand the stiff competition in the banking sector. The learned Judge, after taking into consideration the rival contentions and appreciation of the materials placed before him, came to the conclusion that the restriction of the Special Scheme to the higher aged officers is consistent with the objects for which the Special Scheme has been framed, and such a course adopted by the 1st respondent is neither arbitrary nor unreasonable and it does not offend Art.14 postulates. In that view of the matter, the learned single Judge, by the order under appeal, dismissed all the writ petitions. Hence these writ appeals by the aggrieved writ petitioners.