The Karnataka High Court ruled that the employment rules issued by the Ministry of Heavy Industries and Public Enterprises do not apply to public sector banks. The court clarified that public sector banks are neither government departments nor public sector enterprises, so they follow different regulations set by the Ministry of Finance.
Background of the Case
A lower court (single judge) had earlier ordered Vijaya Bank to refund ₹3 lakh to an employee who had resigned before completing his minimum service period. Vijaya Bank appealed against this order in the Karnataka High Court, arguing that the decision was incorrect. The High Court, after reviewing the case, overturned the lower court’s ruling and ruled in favor of the bank.
Employee’s Appointment and Agreement
Abhimanyu Kumar, a chartered accountant, was selected as a Probationary Manager (Generalist) at Vijaya Bank and joined on November 2, 2011. As per the terms of his appointment, he was required to serve for at least three years. The agreement also included an indemnity bond stating that if he left before completing this period, he would have to pay ₹3 lakh to the bank.
Resignation and Legal Dispute
In 2012, Kumar secured a job at the Steel Authority of India Ltd (SAIL) and decided to resign from Vijaya Bank. Since the bank did not waive the indemnity bond, he paid ₹3 lakh as per the agreement. Later, he filed a petition in court, claiming that he had been forced to sign the bond and that the bank should refund his money. He cited guidelines from the Department of Public Enterprises, arguing that these rules should apply to his case. The single judge accepted his argument and directed the bank to refund the amount.
High Court’s Final Decision
The division bench of the High Court ruled that the single judge had made an error in allowing the refund. It clarified that public sector banks are governed by the Ministry of Finance, not the Ministry of Heavy Industries and Public Enterprises. The court stated that the guidelines cited by Kumar apply only to public sector enterprises, which have different employment policies. Since banks follow their own rules, the indemnity bond signed by the employee remained valid. As a result, the High Court reversed the lower court’s decision, confirming that Vijaya Bank was not required to refund the ₹3 lakh.
