Punjab & Haryana High Court Holds ‘Removal’ Not Equivalent to ‘Dismissal’ for Denial of Pension; Directs State Bank of Patiala to Release Retiral Benefits with Interest

Case Name: Ujagar Singh Saini (Through LRs) v. State Bank of Patiala and Others

Date of Judgment: 9 January 2026

Citation: CWP-16738-1999

Bench: Hon’ble Mr. Justice Sandeep Moudgil

Held: The Punjab and Haryana High Court allowed the writ petition and held that an employee who is “removed from service” cannot be treated at par with a “dismissed” employee for the purpose of denying pension and other retiral benefits, unless the governing regulations expressly so provide. The Court held that denial of pension, gratuity and leave encashment to the petitioner was illegal and unsustainable, particularly when he had completed qualifying service and had exercised option under the pension scheme. The Court further held that retiral benefits constitute “property” under Article 300A of the Constitution and cannot be withheld without statutory authority.

Summary: The writ petition was filed by the legal representatives of the original petitioner, a former officer of the State Bank of Patiala, who had been removed from service in July 1994 after disciplinary proceedings on allegations of embezzlement. Despite having rendered over twenty-two years of service, the petitioner was denied pension, gratuity and other retiral benefits on the premise that no superannuation pension is admissible to “dismissed officers”.

The petitioner contended that the penalty imposed was “removal from service” under Regulation 67(g) of the State Bank of Patiala (Officers’) Service Regulations, 1979, which is statutorily distinct from “dismissal”, and that the Bank had wrongly equated the two for denying retiral benefits. It was further argued that the petitioner had exercised option under the pension scheme circulated in 1993 and had fulfilled the qualifying service requirement, and therefore could not be deprived of pensionary benefits. It was also contended that gratuity and leave encashment were withheld without any quantified finding of loss or a specific forfeiture order as required under the applicable regulations.

The Bank defended its action by asserting that the 1993 pension scheme was only a draft and that only the State Bank of Patiala (Employees’) Pension Regulations, 1995 had statutory force. It was contended that under the 1995 Regulations, pension was not admissible to employees who were dismissed or removed from service, and that recovery of the embezzled amount had been effected by adjusting the petitioner’s provident fund and deposits.

The High Court examined the statutory framework and held that although the 1993 scheme may not have been formally notified, the Bank had itself acted upon it by inviting options and acknowledging them under the 1995 Regulations. The Court held that the 1993 scheme and the 1995 Regulations must be read harmoniously, particularly when the latter expressly recognised employees who had exercised options under the earlier scheme.

Relying on authoritative Supreme Court decisions including Bank of Baroda v. S.K. Kool and UCO Bank v. Vijay Kumar Handa, the Court held that where an employee is otherwise eligible for superannuation benefits, the penalty of removal cannot be construed to automatically forfeit pension unless the regulations explicitly provide so. The Court further held that forfeiture provisions must be strictly construed and that “removal” cannot be judicially expanded to include consequences statutorily attached only to “dismissal”.

On the issue of gratuity and leave encashment, the Court held that there was no enabling provision permitting forfeiture in cases of removal, and that any alleged financial loss had already been substantially adjusted. Withholding of retiral dues without statutory backing was held to be impermissible.

Decision: The writ petition was allowed. The orders denying pension and retiral benefits were quashed. The respondent-Bank was directed to quantify any proved loss, adjust the same, and thereafter release all service and pensionary benefits including pension arrears, gratuity and other dues to the legal heirs of the petitioner, along with interest at the rate of nine percent per annum from the date the amounts became due. The entire exercise was directed to be completed within two months.