Orissa High Court Stops UCO Bank From Recovering Rs 10 Lakh Bond From Former Officer, Denies Pension
The Orissa High Court has ruled that a former UCO Bank officer, who left her job while posted in Singapore without following the required service conditions, was not entitled to pension or the bank’s contribution to the provident fund.
However, the court directed UCO Bank not to recover the Rs 10 lakh bond amount from the former officer.
“The bank has the right to demand the bond money, which is an explicit condition in the employment contract, but it cannot be a measure of punishment,” Justice R K Pattanaik said.
Court Stops Recovery of Rs 10 Lakh Bond Amount
The High Court said that UCO Bank had the right to demand the bond amount under the employment agreement. However, the bank could not impose recovery of the bond amount as a disciplinary punishment.
The court found it unusual that the disciplinary authority had ordered the recovery of the bond amount as a penalty.
It said the bond was part of the employment contract. Therefore, any recovery had to be made according to the contract and could not be used as a punishment in disciplinary proceedings.
The court eventually set aside the bank’s demand to recover the Rs 10 lakh bond amount.
Case Filed by Former UCO Bank Officer in 2016
The case was filed by the former bank officer in 2016. During the pendency of the case, she died. Her legal heirs then continued the legal proceedings.
UCO Bank had sought to recover the Rs 10 lakh bond amount from the officer. The bank had also withheld several retirement benefits.
The former officer was accused of violating the conditions of her overseas posting and service agreement by leaving the bank before completing the required service period.
Officer Left Job Before Resignation Was Accepted
In its June 30 order, the High Court noted that the officer had asked UCO Bank to treat a particular date as her date of exit.
However, she left the bank before her resignation was formally accepted by the competent authority.
The court said her action had to be treated as abandonment of service. The bank later initiated departmental proceedings and took disciplinary action against her.
The High Court said that the resignation of a bank employee becomes effective only after it is accepted by the competent authority and the employee is formally relieved from service.
An employee cannot end an employment contract simply by leaving the job, the court said.
If an employee leaves without an authorised relieving order or before the resignation is accepted, it amounts to a breach of the employment contract and unauthorised absence from duty.
Officer Had Requested Repatriation from Singapore
The court noted that the officer had requested repatriation from Singapore on personal grounds. She had agreed to bear the expenses of her return.
She also deposited three months’ salary instead of serving the required notice period.
However, the court said the bank should have promptly refunded the salary deposited by the officer.
According to the court, UCO Bank retained the amount for a long period despite knowing that such a deposit was not required under the applicable regulations.
Officer Joined UCO Bank as Clerk in 1977
The woman joined UCO Bank as a clerk on September 26, 1977.
She was later promoted to Scale-I, Scale-II and then Senior Management Grade-III. She was posted at the Suryanagar Branch in Bhubaneswar.
The officer later applied for an overseas posting. She successfully cleared the required test and interview and was selected for a foreign assignment.
She was posted to UCO Bank’s Singapore branch from November 1, 2004. During her posting in Singapore, she was further promoted to Executive Cadre Scale-IV.
Rs 10 Lakh Bond Signed Before Overseas Posting
Under UCO Bank’s overseas posting policy, an officer was required to serve the bank for at least five years after repatriation before becoming eligible for another foreign posting.
Before being relieved for the overseas assignment, the officer was required to sign an agreement with the bank.
The agreement stated that she would have to pay Rs 10 lakh to UCO Bank as “liquidated damages” if she violated the terms of the agreement.
Officer Resigned Citing Family and Husband’s Health Problems
The court was informed that the officer submitted her resignation to UCO Bank’s Singapore branch on September 6, 2007.
She cited family problems and her husband’s heart condition as reasons for leaving the bank.
The officer also deposited three months’ salary instead of serving the required notice period.
However, she claimed that the bank rejected her resignation on technical grounds.
UCO Bank later initiated disciplinary proceedings against her. The bank denied her pension and sought recovery of the Rs 10 lakh overseas service bond.
Several other terminal benefits were also withheld.
Legal Heirs Challenged Bank’s Decision
After the officer’s death, her legal heirs continued the case before the Orissa High Court.
They sought the release of her pension or UCO Bank’s contribution to the provident fund.
They also sought reimbursement of income tax allegedly paid in Singapore and a refund of 9,372.30 Singapore dollars deposited instead of serving the notice period, along with interest.
The legal heirs also challenged UCO Bank’s demand to recover the Rs 10 lakh bond amount.
Lawyer Calls Bond Agreement One-Sided and Exploitative
Advocate Surendranath Panda, appearing for the legal heirs, argued that the agreement was not valid under the Indian Contract Act.
He said it was a standard agreement prepared by the bank and the employee had no real choice but to sign it.
The lawyer argued that such one-sided conditions were arbitrary and exploitative and could not be legally enforced.
Employee Cannot Leave Bank Without Formal Relieving Order: Court
The High Court said a resignation becomes effective only after it is accepted by the competent authority and the employee is formally relieved from service.
An employee cannot unilaterally end the employment contract by simply leaving the job.
The court said that leaving the job without an authorised relieving order or before the acceptance of resignation amounts to a breach of contract and unauthorised absence.
If disciplinary proceedings are initiated, the bank may recover damages from unpaid salary, gratuity, leave encashment and other dues, subject to the applicable service rules and regulations.
Leave Cannot Be Claimed as an Absolute Right
The High Court also made important observations regarding leave and leave encashment.
The court said that service at an overseas branch is treated as duty. However, the encashment of accumulated privilege leave is subject to the decision of the competent authority.
The authority may refuse or defer leave or leave-related benefits depending on service requirements and applicable rules.
The court said that under service law, leave cannot be claimed as an absolute right. The competent authority has the power to approve or reject a leave request.
High Court Partly Allows Petition
The Orissa High Court partly allowed the petition filed by the former officer’s legal heirs.
The court held that the former UCO Bank officer was not entitled to pension, the bank’s contribution to the provident fund or reimbursement of income tax paid in Singapore.
However, the court directed UCO Bank to refund the three-month salary deposit along with interest.
The bank was also directed to reconsider the officer’s claim for encashment of leave earned during her overseas posting.
Most importantly, the High Court set aside the demand for recovery of the Rs 10 lakh bond amount.
