BANK OF INDIA & ANR. versus K. MOHANDAS & ORS.

Citation: [2009] 5 S.C.R. 118 · Decided: 27-03-2009 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Dismissed
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Judgment (excerpt)

[2009] 5 S.C.R. 118 
1 
A 
BANK OF INDIA & ANR. 
v. 
K. MOHANDAS & ORS. 
(Civil Appe~al No. 1942 of 2009) 
8 
MARCH 27, 2009 
[D.K. JAIN AND R.M. LODHA, JJ.] 
Pension Regulations, 1995: Regulation 28, 29(5) - VRS 
2000 - Bank employees - Optees of voluntary retirement 
c under VRS 2000 having completed .20 years of services of 
appellants-Banks are entitled to addition of five years of 
notional service in calculating the length of service for the 
purpose of said scheme as per Regulation 29(5) - Special 
benefit under Regulation 29(5) available to employees who 
D completed 20 years of service or more, cannot be said to be 
discriminatory to those employees who completed 15 years 
~ 
of service but not completed 20 years - Service law -
Voluntary retirement. 
E 
The question which arose for consideration in these 
appeals filed by Banks was whether employees (having 
completed 20 years of services) of appellants-Banks who 
had opted for voluntary retirement under VRS 2000 are 
entitled to addition of five years of notional service in 
F 
calculating the length of service for the purpose of said 
scheme as per Regulation 29(5) of Pension Regulations, 
\ 
1995. 
Dismissing the appeals, the Court 
G 
HELD: 1. The employees who had completed 20 
years of service and weire pension optees and offered 
voluntary retirement under VRS 2000 and whose offers 
... 
were accepted by the banks are entitled to addition of five 
years of notional service in calculating the length of 
H 
118 
BANK OF INDIA & ANR. v. K. MOHANDAS & ORS. 
119 
;z 
service for the purposes of that Scheme as per A 
Regulation 29(5) of the Pension Regulations, 1995. [Para 
53] [152-F, G] 
2.1. It is admitted position that VRS 2000 was a 
.., 
contractual scheme. It was an invitation to offer 
containing a term that optee would also be eligible for B 
pension as per Pension Regulations. An application by 
an employee for voluntary retirement was a proposal or 
offer and upon acceptance of the application for 
voluntary retirement made by the employee and a c 
communication of acceptance to him, the concluded 
contract came into existence and the offeree was relieved 
from the employment. [Para 27] [138-G-H; 139-A] 
HEC Voluntary Retd. Employees Welfare Society v. 
~· 
Heavy Engineering Corporation Ltd. (2006) 3 SCC 708, 
D 
referred to. 
2.2. The true construction of a contract must depend 
upon the import of the words used and not upon what 
the parties choose to say afterwards. Nor does 
E 
subsequent conduct of the parties in the performance of 
the contract affect the true effect of the clear and 
unambiguous words used in the contract. The intention 
of the parties must be ascertained from the language 
-
they have used, considered in the light of the 
F 
surrounding circumstances and the object of the 
contract. The nature and purpose of the contract is an 
important guide in ascertaining the intention of the 
parties. It is also a well-recognized principle of 
construction of a contract that it must be read as a whole 
in order to ascertain the true meaning of its several G 
clauses and the words of each clause should be 
--! 
interpreted so as to bring them into harmony with the 
other provisions if that interpretation does no violence to 
the meaning of which they are naturally susceptible. 
H 
120 
SUPREME COURT REPORTS 
[2009] 5 S.C.R. 
:i; 
A [Paras 28 and 31] (139-B-D; 139-G-H; 140-A] 
Ottoman Bank of Nicosia v. Ohanes Chakarian AIR 1938 
PC 26 and Ganga Saran v. Firm Ram Charan Ram Gopal, 
AIR 1952 SC 9, relied on. 
B 
The North Eastern Railway Company vs. L. Hastings 
(1900) AC 60, referred to. 
2.3. The fundamental position is that it is.the banks 
who were responsible fol' formulation of the terms in the 
c contractual Scheme that the optees of voluntary 
retirement under that Scheme would be eligible to 
pension under Pension Regulations, 1995, and, therefore, 
they bear the risk of lack 01f clarity, if any. It is a well-known 
principle of construction of contract that if the terms 
D applied by one party are unclear, an interpretation against 
+ 
that party is preferred. [Para 32] [140-8, C] 
3.1. The appellant-banks are public sector banks and' 
are 'State' within the meaning of Article 12 of the 
Constitution and their action even in contractual matters 
E has to be reasonable, lest, as observed in *O.P. Swamakar, ·! 
it must attract the wrath c1f Article 14 of the Constitution. 
[Para 33] (141-B] 
*Bank of India & Ors. v. 0.P. Swarna
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