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Petitioner: STATE BANK OF PAKISTAN through Governor and anothers VS Respondent: IMTIAZ ALI JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Iftikhar Muhammad Chaudhry, Ghulam Rabbani, Tariq Pervez Title:STATE BANK OF PAKISTAN through Governor and anothers vs IMTIAZ ALI
JUDGMENT
Reported As: 2012 SCMR 280 Result: Appeal accepted Judgment JUDGMENT TARIQ PARVEZ, J.---This appeal, by leave of the Court, is directed against the judgment dated 7- 12-2010 passed by High Court of Sindh, Karachi, whereby Writ Petition No.D-1684 of 2006 filed by the respondents has been allowed. 2. The State Bank of Pakistan (hereinafter referred to as the Bank') is a body corporate, established under the State Bank of Pakistan Act, 1956 (hereinafter referred to as 'the Act, 1956'), with a preamble that the Bank shall regulate the monetary and credit system of Pakistan and to foster its growth in the best national interest for securing monetary stability and fuller utilization of the country's productive resources. It has played a vital role in the development of the economy of Pakistan and is financial backbone. 3. In order to regulate its affairs, mandate has been given to the Bank under the Act, 1956 and to discharge its functions and perform its duties effectively, it has Central Board and other employees at all levels to run its day-to-day business. ' In exercise of powers, the Central Board of the Bank on or about 29th day of December, 1979 approved the State Bank of Pakistan Officers (Pension-cum-Gratuity) Regulations 1980 (hereinafter referred to as 'the Regulations, 1980'), which in substance has incorporated the pension scheme of the Central Government of Pakistan. It is to be noted that between the years 1993-1994, number of amendments were made in the banking laws of the country including the Act, 1956 so as to confer autonomy on the Bank. Section 54(1) of the Act, 1956 was amended by means of State Bank of Pakistan (Amendment) Act (Act-Il), 1994 (hereinafter referred to as 'the Act-II of 1994') whereby the
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words 'subject to the approval of the Federal Government' were omitted; thus the exercise of powers by the Central Board of the Bank under that section was made fully autonomous, which does not require previous sanction/approval of the Federal Government viz, its Rules/Regulations making power. 4. Because of such amendment, the Bank acquired absolute discretion in the recruitment process of officers and servants including their terms and conditions of service; constitution of superannuation, beneficial and other funds, with or without Bank's contribution both for officers and servants of the Bank for their welfare and for extending them other amenities including the medical facilities, grant of loans and advances, etc. By omission of the words 'prior approval' for the purpose of section 54 of the Act, 1956, the Bank has become fully autonomous and is not bound by the policies of the Central Government. 5. . The State Bank of Pakistan, in exercise of its discretionary powers and in order to modernize its banking as was being done in the private sector Banking, decided its restructuring with a view to improve its efficiency and performance. Considering the best interest of the national economy but simultaneously looking generously to the needs and requirements of its employees, the State Bank of Pakistan introduced several initiatives one of which was to offer a totally voluntary exit to its employees vide Voluntary Golden Handshake Scheme, 1997 (hereinafter referred to as 'the Scheme'), which was introduced by way of Circular No.9 of 1997 dated 23-10-1997. 6. Circular No.9 of 1997 incorporates the reasons and objects followed by entitlement of its employees in case they opt for it i.e. The Scheme. The object to introduce the Scheme has been highlighted in its opening paragraph by stating that the working conditions requires that the Bank shall also restructure itself in view of modernize procedures and during the process of restructuring, it was felt that certain offices will become redundant and employees working therein were to be put into surplus pool of the staff and officers at all levels; such staff and officer would be entitled to reduce compensation as compared to other present emoluments; however, before a need of establishing surplus pool, it was decided to offer an attractive Voluntary Golden Handshake Scheme to all employees, therefore, the Scheme' was introduced wherein the staff and officers were asked that they will be entitled to retirement benefits available under the existing Rules and Regulations and in addition to other normal benefits, the Bank will provide financial benefit package to all its employees. Detail of the Scheme regarding entitlement of the officers/staff members was as under:-- (a) Three (3) months' Basic Pay for each completed years of service One and a half months Basic Pay for each remaining months of service, whichever is less, however, subject to a maximum of 90 months basic pay. PLUS (b) Benevolent Fund Grant equivalent to 10 years to be paid in lump sum in advance at the time of settlement of dues, as a final payment as per entitlement. (a) Employees who have completed 25 years of Service or More (i) Under Old Retirement Benefits. Provident Fund own and Bank's contribution and Gratuity @ one month's Basic Pay for each completed year of service. (ii) Under New Retirement Benefits. General Provident Fund contribution and 50% commutation of Gross Pension and payment of pension on monthly basis. (b) Employees whose services are less than 25 years. (i) Under Old Retirement Benefits, Provident Fund own and Bank's contribution and Gratuity @ one month's Basic Pay for each completed year of service. (ii) Under New. Retirement Benefits.
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General Provident Fund contribution. Although, such employees are not entitled to pensioner benefits, it has been decided, as a special case and without creating any precedent to allow them compensation towards pensioner benefits equivalent to 50% Commutation of Gross Pension as a full and final settlement. (c) Leave Encashment subject to a maximum of 180 days. (d) Post retirement medical facilities as admissible under the Bank's rules, or an amount equivalent to two months pay for every year for a total period of 10 years, at the option of the employee. ' Post retirement benefits (other than medical facilities) as admissible under the rules. ' The above entitlements were, however, subject to exercise of option by the employees and the cutoff date for exercise of option was fixed up to 22-11-1997. It was also explained that no option will be entertained after the expiry of the cutoff date and option once exercised shall not be revocable. It was also left to the discretion of the management to accept or reject an option exercised by an employee or it may defer the acceptance of the option or may accept option with such modifications as deemed appropriate, keeping in view the interest of the Bank. . 7. During the course of arguments, we have been informed that about 2000 employees of different ranks opted to exercise the option, out of which about 1400 plus options were accepted by the Bank and the employees whose options were accepted by the Bank were paid their emoluments according to their entitlement as provided in the Scheme, by calculating the length of service of each employee and that without any objection and reservations, the amount so calculated as entitlement was paid by the Bank and accepted by the employees, who opted in favor of the Scheme. 8. It appears from the record that somewhere in June, 2004, after about more than six years, the respondent-employees filed appeals before the Federal Service. Tribunal against the Circular No.9 (the Scheme), claiming that they had been deprived of their pensionary benefits/rights; however, in view of decision rendered by this Court in Muhammad Mubeen-us-Salam v. Federation of Pakistan (PLD 2006 SC 602), the Service Tribunal put-off its hand from the case of the respondent- employees as their appeals became abated in view of the judgment supra; but they were, however, directed to take recourse to the competent forum, if so advised, which they followed by filing of Writ Petition No.1684 of 2006 in the High Court of Sindh, Karachi. The Division Bench of the High Court vide its judgment dated 7-12-2010 allowed the Writ Petition of the respondents with direction to the Bank to pay to the respondents commutation of their gross-pension, irrespective of the Scheme. 9. Feeling aggrieved of the impugned judgment dated 7-12-2010, the, Bank (appellant) filed Civil Petition No. 295 of 2011, which came up for hearing before Bench of this Court, headed by the Hon'ble Chief Justice of Pakistan, when leave to appeal was granted on 12-7-2011. Operative para of the order is reproduced herein below for convenience:-- "2. . Leave to appeal is granted, inter alia, to examine that under the "Voluntary Golden Handshake Scheme" the respondents, who have served the petitioner Bank for a period of less than 25 years and more than 10 years on having opted the said Scheme were paid compensation towards pensioner benefits equivalent to 50% commutation of Gross Pension, as full and final settlement, as a "Special Case" without creating any precedent, can still claim that they are entitled for the payment of pension on monthly basis." . 10. The summery of arguments that has emerged out of the submissions made by the learned counsel for the appellant-Bank is given as under:-- (a) That the impugned judgment of the learned High Court is contrary to the principles as laid down by this Court in the case of State Bank of Pakistan v. Khyber Zaman and others [2004 PLC (CS) 1213].
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(b) That the learned High Court has erred in law and failed to appreciate that the Scheme constituted full and final acceptance of pensionary benefits/entitlement of the respondents. (c) That the impugned judgment suffers from misinterpretation of Regulations, 1980 and State Bank of Pakistan Staff Regulations, 1993 (hereinafter referred to as Staff Regulations, 1993). (d) That the High Court has embarked upon the matter, which was either a past and closed transaction or was barred by limitation being hit by the doctrine of lathes. (e) That the assumption of Constitutional jurisdiction in the subject matter by the learned High Court was uncalled for and was illegal because the services of the respondents-employees are not governed by the statutory rules. 11. Learned counsel after formulating the synopsis of his arguments has argued that the impugned judgment is based on complete misreading and misapplication of the Regulations, 1980 and Staff Regulations, 1993. ' According to him the service and pension Rules and the polices of the Central Government in no way are applicable to the respondent-employees of the Bank as 'their service and pension Rules are governed by the Regulations, 1980 and Staff Regulations, 1993 where the latter Regulations have overriding effect to the former. ' He has argued that the circular issued by the appellant-Bank or the policy introduced and implemented subsequent to acceptance of 'the Scheme by the respondent-employees have n6 application to the case of the respondent-employees, therefore, in absence of any fresh legal entitlement, they could not claim any financial benefit, which are not applicable retrospectively but prospectively 'to the cases of those employees who are or would be in service at the time when any subsequent scheme or incentive or policy is introduced by the appellant-Bank. ' He has submitted that service rules and staff regulations of the appellant-Bank are not statutory in nature, therefore, on the strength of decision rendered by this Court in Muhammad Idrees v. Agriculture Development Bank of Pakistan and others (PLD 2007 SC 681) and in State Bank of Pakistan v. Muhammad Aslam Khan (Civil Appeals Nov976-1000 of 2009), the jurisdiction assumed by the learned High Court was in contravention of the law laid down by this Court in the above cited judgments. ' Learned counsel has further argued that in view of above cited judgment, when it is a matter between employer and employee whose services are not governed by the statutory Rules, their relationship would be that of master' and servant, therefore, it would be beyond the Constitutional jurisdiction of the High Court. ' The learned counsel has placed more emphasis on his submission that the learned High Court has completely misinterpreted and erroneously applied the Regulations, 1980 which are to be read in conjunction and in consonance with the Staff Regulations, 1993. He has referred to para-4 of the Regulations, 1980 wherein 'pension' has been defined as:-- "an officer who retires after completing not less than ten years of total qualifying service shall be entitled to a gross pension". ' According to him this entitlement to gross pension is in respect of such employee who retires after completing service of ten years or above and it would not be applicable to an employee who separates himself from the appellant-Bank on acceptance of the Scheme, which Scheme was voluntary one and was subject to exercise of option. ' According to the learned counsel, it was not the employer who has removed the employees i.e. The respondents but the respondent employees have opted for exit from the appellant- Bank on the basis of terms and conditions as spelt out in the Scheme, therefore, such employees could not be brought within the purview of para-4 of the Regulations, 1980, which refers to retirement of an employee and not to an employee who opts to leave the appellant-Bank on acceptance of the Scheme.
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' Learned counsel has also referred to the definition of the word 'retirement' as provided in Regulations, 1980 which reads as under:-- "2(i). 'retirement' means retirement of an officer under the State Bank of Pakistan (Staff) Regulations and includes termination of service for any reason other than dismissal." ' His submission is that an officer who retires in accordance with Staff Regulations, 1993 may fulfils the criteria as given under the paragraph of 'pension' shall be eligible to receive gross pension. According to the learned counsel the definition of the word 'retirement' under Regulations, 1980 also states that 'termination of service other than dismissal'. In his view the acceptance of the Scheme, which was also voluntary to opt cannot be termed as termination of service but it was a voluntary withdrawal by the respondents. ' The learned counsel on the strength of his above submissions has also referred to para-19 of the Staff Regulations, 1993, which reads as under:-- "19.(i)An officer or an Executive shall retire from service: (a) on such date after he has completed twenty five years of service qualifying for pension or other retirement benefits as the Government may, in the interest of the Bank and for reasons to be recorded in writing in each case direct; or (b) in any other case, on the completion of the sixtieth year of his age. (ii) An employee in Clerical and Non-Clerical cadre shall retire on the completion of the sixtieth year of his age. (iii) The Governor may, on the request of an employee allow him to retire on any day after the completion of 25 years of service in the Bank. ' The learned counsel has also objected to the findings recorded by the learned High Court in the impugned judgment, where it has been held that "voluntary exit of an employee from the SBP through VGHS is a termination of service, and is therefore, a retirement from service According to the learned counsel such interpretation and conclusion drawn by the learned High Court is entirely erroneous and misconceived because the term 'termination' cannot be read in isolation nor is independent to Staff Regulations, 1993. He has added that if more than ten year service is taken as base for qualifying period for pension and the word 'termination', as used in the definition of 'retirement', is given wider meaning and scope, it would tantamount to frustrate the very object of introducing the Scheme. He has elaborated his submission by giving an example that such wider interpretation shall adversely affect the very purpose of introducing the Scheme. He has given an example that a DMG officer after having served for ten years period, on attaining the age of 35 years can say that he is entitled to be retired with pension for rest of his life. According to learned counsel if such interpretation is allowed to prevail, then a person who joins service at the age of 20/21 years, on reaching the age of 31/32 years can quit from service by taking advantage of the term 'retirement' making him entitled to receive gross-pension whereas he shall be still young person of 31/32 years age and he can switchover to another job, receiving salary of new assignment, leaving behind the financial burden on its previous employer, which in fact, in the opinion of the learned counsel, is a burden placed on the shoulders of present and future generation, left by the previous generation.' ' Learned counsel has further argued that because of irrational and illogical meanings, which have been assigned to the words 'termination of service' to amount 'retirement' by the learned High Court, the very object of the Scheme has been frustrated. According to him only two situations have been enumerated in the Staff Regulations, 1993 i.e. Either retirement on the basis of completion of 25 years of service or on reaching the age of 60 years. ' Learned counsel has also argued that the Scheme itself had made it crystal clear that the employees have been ivided into two categories i.e. Those who have completed 25 years of service and secondly those whose service is less than 25 years; in case of first category, the employees are
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held entitled to GP Fund contribution and 50% communication of gross-pension and payment of pension on monthly basis, which would mean that they would get 50% commutation of the gross pension as well as they would also be entitled to obtain payment of pension on monthly basis because they became entitled to monthly pension having served for 25 years in the appellant- Bank; whereas the employees Whose service is less than 25 years have been clearly placed in second category of the. Scheme where there is no reference whatsoever for payment of pension to them under the pre-existing system since they had not retired. The learned counsel has referred to the Scheme itself wherein clause (b)(ii) clearly provides that "General Provident Fund Contribution; although such employees are not entitled to pension benefits, it has been decided, as a special case and without creating any precedent to allow them compensation towards pensionary benefits equivalent to 50% commutation of gross-pension as a full and final settlement" (emphasis provided). ' The learned counsel has also raised objection to the placing reliance by the learned Division Bench of the High Court upon the case of State Bank of Pakistan v. Khyber Zaman [2004 PLC (CS) 1213] as according to him in this cited case, the dispute before the Court was over the grant of Benevolent Fund Grant at enhanced rate. In his view, by means of the impugned judgment, the learned High Court has made the respondent- employees entitled to double benefit i.e. Held them entitled to payment under the Scheme and now payment of pension under para-4 of the Regulations, 1980. The learned counsel also referred to paras 4, 5 and 10 of the cited judgment at pages 1220 and 1223, where it has been concluded by this Court that "it is not understandable how any deletion, amendment, addition or insertion can be made by us in GHSS especially when it is free from any ambiguity and does not call for scholarly interpretation; no where it has been mentioned in the computer print that an employee of the State Bank of Pakistan who opts for GHSS would be entitled to get double benefit available in the existing rules and that of the GHSS" (emphasis provided). It was finally concluded that "how the respondents can be allowed to approbate and reprobate after the acceptance of GHSS in toto without any objection". ' The learned counsel has also submitted that the findings recorded by the learned Division Bench of the High Court in the impugned judgment by placing reliance on the Scheme introduced by the State Bank of Pakistan Banking Services Corporation in the year 2003 with title "Special Early Retirement Package for Engineers on Engineering side and for Clerical & Non-Clerical Staff of all sides", which had allowed 100% commutation for those employees who opted for said Scheme and who had rendered ten years or more service. According to the learned counsel, such application of subsequent scheme to the case of the present respondents was illegal for the reason that this Scheme was introduced by the State Bank of Pakistan Banking Services Corporation (Bank), which is a separate legal entity a.e. a statutory body set up under a, different enactment and not by the appellant-Bank for its employees and also that the said Scheme was introduced several years after the retirement of the respondent-employees, therefore, this Scheme at all was not relevant. ' The next submission of the learned counsel is that the very language of the Scheme suggests that it was a voluntary Scheme and no employee was under any obligation to accept it. He has added that all employees were given sufficient and reasonable time of four weeks to consider the Scheme and if it was beneficial to them, they may opt for it; therefore, there could be element of coercion or duress. ' Learned counsel further submits that the respondent-employees had approached the learned High. Court (a forum, in his opinion, not available to them) for redressed of their grievance after about a period of six years or more because they for the first time filed an appeal before the Federal Service Tribunal in January, 2004 against the Circular No.9 i.e. The Scheme, therefore, their petition was badly hit by the doctrine of lathes.
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' The learned counsel has finally argued that it is established principle of law that a Writ Petition would not be maintainable if the petitioner had adequate alternate remedy available to him; in his view, since the services of the respondent-employees were not regulated under any statutory rules and their terms and conditions were controlled on the principle of master and servant; therefore, only a Civil Court could have jurisdiction for redressed of grievance of the respondents, if any. ' While concluding his submissions, the learned counsel has reiterated that in the Scheme itself, it is clearly noted that an employee accepting the Scheme shall not be entitled to pension and in the Scheme itself the word 'compensation' has been used instead of the word 'pension', apart from mentioning that it shall be 'full and final' settlement between the employees and employer. 12. At the converse, learned counsel appearing for the respondent-employees while relying upon the impugned judgment, whereby they were allowed relief as claimed for being petitioners before the High Court, fully supports the impugned judgment. His submission is that the respondents have been discriminated vis-a-vis similarly placed employees of the appellant-Bank, therefore, their right as protected under Article 25 of the Constitution of Islamic Republic of Pakistan (hereinafter referred to as 'the Constitution') stands violated. ' His submits that irrespective of what was held out at the time of introduction of the Scheme and as contained therein was not adhered to by the appellant-Bank's authorities but on the contrary the same was not acted upon rather violated. He has added that under the Scheme itself, it was provided that an employee, who accepts the Scheme and opts for it, shall be entitled to benefits under the Scheme which was in addition to other retirement benefits (emphasis provided). ' The learned counsel has argued that the retirement benefits were the entitlement of the respondent-employees, which could not have been denied and the respondent-employees in fact have favoured the appellant-Bank by exercising the option by acceptance of the. Scheme whereby the financial burdens for future was reduced. According to the learned counsel the exit of the respondent-employees from the appellant-bank thus has created room for new entrant. ' The learned counsel on the one hand has argued that there is violation of rights of the respondents under Article 25 of the Constitution but on the other hand he stresses that even.Later on the appellant-Bank has been introducing voluntary retirement schemes where under the employees who had completed ten years of service with the Bank were held entitled to full pensionary benefits, which have been denied to the respondents. ' The learned counsel has also referred to various other voluntary retirement schemes, both from public and…
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