IMPORTANT POINTS
VRS is an independent contract, not statutory provision, making employee eligible for pension on completion of 15 years and a particular age. Expression "pension as per rules” is used only for the purpose of working out proportionate pension.
It is not open to SBI to modify/amend the VRS floated as proposed by IBA and sanctioned by Central Government without prior approval of Central Government.
Benefits of VRS cannot be denied to the employees for not amending the Rules in accordance of the Scheme.
Inequality of bargaining power merit intervention of court.
Section 23 of Indian Contract Act does not apply to SBI VRS.
Pension cannot be denied in an unfair manner.

JUDGMENT :

ARUN MISHRA, J.

1. The question involved is whether the respondent-employees are entitled to pension on completion of 15 years of service as per the State Bank of India Voluntary Retirement Scheme (for short, "the VRS framed in 2000").

2. The matter has been referred to larger Bench due to conflict of opinion between the Judges as to the admissibility of pension under the VRS.

3. After obtaining approval of the Government of India, the Indian Bank Association (IBA) evolved a Voluntary Retirement Scheme. The Central Board of Directors of the State Bank of India (in short 'the SBI') adopted and approved the scheme in its meeting held on 27.12.2000 for implementing the VRS for the employees of the bank by retiring them on completion of 15 years of service with the benefit provided in the scheme. The scheme had been drawn up, keeping in view the guidelines issued by the IBA. "Memorandum" dated 26.12.2000 was submitted by the Deputy Managing Director and the Corporate Development Officer for according approval to the proposals contained in the Memorandum as also for adopting the scheme as Annexure 'B' to the Memorandum.

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 25-35 age group. It was felt that this pattern has severe implications for the banks regarding mobility, training, development of skills, and succession plans for higher-level 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.

5. After the Central Board of SBI approved the proposals contained in the memorandum on 27.12.2000, a circular was issued on 29.12.2000 in which it was mentioned that the IBA advised that as the Committee constituted by the Finance Ministry recommended introduction of a VRS in order to rationalise the manpower, the Government of India has no objection for adopting and implementing the VRS. It was clearly stated in the Circular dated 29.12.2000 that the Central Board of Directors accorded approval for adopting and implementing the