Woman quits foreign bank job: Court says no to benefits, but stops bank from recovering bond

The Orissa High Court has held that a former UCO Bank officer, who resigned during an overseas posting in Singapore in breach of her service conditions, is not entitled to pension or the bank’s provident fund contribution, but directed the bank not to demand the recovery of the Rs 10 lakh bond she had signed, mandating her to work overseas for five years.

“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.

It also came on record that the woman had died during the pendency of the case, which she filed in 2016 against the bank, which sought to recover the bond amount besides stopping her retirement benefits.

The retired employee was accused of breaching the terms of her overseas posting and service contract by resigning before completing the minimum service period. Dealing with a plea by her legal heirs, the court said the bank should have refunded the salary deposit promptly, instead of retaining it for a long period, fully knowing that such a deposit is not required under the regulations.

On June 30, the court said that though she had informed the bank to treat a particular date as the date of her exit, leaving the job before acceptance of her resignation “shall have to be treated as abandonment of service, and therefore, it was followed by departmental action and the punitive measure.”

The court also noted that the woman sought repatriation at her own expense on personal grounds and had deposited three months’ salary instead of serving the notice period.

The woman had joined the bank as a clerk on September 26, 1977, and was promoted from Scale-I to Scale-II and thereafter to Senior Management Grade-III at Suryanagar Branch, Bhubaneswar from November 2004. She later applied for an overseas posting, successfully cleared a test and interview, and was posted to its Singapore branch from November 1, 2004. She was further promoted to the Executive Cadre Scale-IV while working in Singapore.

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Justice R K Pattanaik pronounced the order on June 30.

Under the bank’s overseas posting policy, the officer was required to serve the bank for at least five years after repatriation and before becoming eligible for another foreign posting. Before being relieved from the Bhubaneswar branch, she was asked to sign an agreement stating that if she breached its terms, she would have to pay the bank Rs 10 lakh as “liquidated damages”.

Appearing for her legal heirs, advocate Surendranath Panda argued that under the Indian Contract Act, such an agreement was unacceptable as it is a standard-form contract drafted by the bank, leaving the employee with no choice but to sign it. Such one-sided terms, the counsel claimed, are arbitrary, exploitative and void from the outset, and cannot be legally enforced.

The court was informed that she submitted her resignation letter with the Singapore branch on September 6, 2007, owing to family problems and her husband’s heart problems and deposited her three months’ salary instead of serving the notice period. The woman, however, claimed that the bank rejected her resignation citing technicalities, initiated disciplinary proceedings, denied her pension, sought recovery of the Rs 10 lakh overseas service bond, besides withholding several terminal benefits.

After her death, her legal heirs approached the high court seeking the release of pension or the bank’s provident fund contribution, reimbursement of income tax allegedly paid in Singapore, refund of 9,372.30 Singapore Dollars deposited instead of notice, with interest, and quashing of the bank’s demand to recover the Rs 10 lakh bond amount.

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Bank may recover damages: Order

A resignation tendered by a bank employee becomes effective only when it is accepted by the competent authority, and he or she is relieved from service.

The employee cannot unilaterally sever the employment contract just by walking away.

If the employee leaves without an authorised relieving order or before the resignation is formally accepted, it is treated as a breach of contract and unauthorised action on duty.

If departmental proceedings were initiated and the petitioner left the job before its commencement, the bank has the right to recover the damages from her unpaid salary, gratuity, leave encashment, etc.

But it is quite unusual that the disciplinary authority imposed the penalty for the recovery of the bond money.

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.

Service at an overseas branch is treated as duty, but the encashment of accumulated privilege leave is subject to the competent authority’s discretion and may be refused or deferred as per service requirements.

In service law, leave of any kind cannot be claimed as an absolute right, and the authority can accept or reject it.

Ruling

The court partly allowed the petition, holding that the former UCO Bank officer was not entitled to a pension, the bank’s provident fund contribution or Singapore tax reimbursement. It, however, ordered a refund of her three-month salary deposit with interest, directed reconsideration of the overseas leave encashment, and set aside the demand recovery of the Rs 10 lakh bond amount.