Ironing out the conundrum between correction and modification of an arbitral award in India - Business Guardian
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Ironing out the conundrum between correction and modification of an arbitral award in India

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Introduction
To begin with the article, I want to first highlight that arbitration in India has grown manyfold due to legislative intent and much needed amendments coupled with various judicial pronouncements of the Supreme Court (SC) and High Courts (HC) for the betterment of making India an international hub for arbitration which gives confidence to the international business community to resolve the disputes via arbitration in India only with the exemplification of least judicial intervention in matters related to arbitration but the effort goes in vain when Karnataka High court upheld the judgment of the city civil court, Bangalore where the court permitted modification of an arbitral award under section 33 of the Arbitration & conciliation act, 1996 (Arbitration act) and surprisingly the Hon’ble Karnataka HC upheld the judgment when the matter reached the apex court with utter dissatisfaction the SC held that the modification of an arbitral award is not permitted under section 33 of the Arbitration Act and the arbitrator doesn’t have any power specifically related to this matter in Gyan Arya v. Titan industries Ltd. So I’ll mention the conundrum still prevalent among arbitrators and subordinate courts and how the supreme court of India ironed out this conundrum and cleared the mist concerning correction and modification of an arbitral award under sections 33 & 34 of the Arbitration act of 1996 on different occasions to avoid conflicting rulings and bring forth the clarified position for a win-win situation in Indian arbitration jurisprudence so far regarding this.
According to section 33 of the arbitration act, a party with notice to other parties to a dispute may request arbitral tribunal for any clerical and an arithmetical error within 30 days after receipt of the award, and also if mutually agreed they may seek an interpretation on a specific point of an award like I said about the procedural aspect about correction, modification, and interpretation about arbitral award it begins after the tribunal passed the award within 30 days or pre-decided by the respective parties on several days also the party, with notice to the other party, may request the arbitral tribunal to correct any additional errors, any ecclesiastical or typographical errors or any other errors of a similar nature occurring in the award as there are certain limitations regarding the interplay of modification and a corrected added award as section 34 appeal provisions also emanates into the show with the application of section 33 and clarification of SC in this regard recently.

Modification of an Arbitral Award
So modification of an Arbitration award sounds very similar to the correction, interpretation of an arbitral award but the reality is the legislative and legal means are way different in terms of implications as well as implementation especially when subjected to judicial scrutiny as the technicalities such as claim volume change or adding up of an additional claim or removing or similar changes of same nature and there is a Lakshman Rekha for arbitrators conduct between section 33 & 34 and time after again judicial pronouncements cleared the fog around this like just a couple of days ago the apex court reiterated that modification of arbitral award permitted only up to mathematical and calculations errors or mistakes of similar nature not beyond that if subjected to section 33 in an appeal came from Karnataka high court related to gold quantity.
Pertinent to mention the power of the court is in real dilemma dealing with an application to set aside the arbitral award under section 34 of the arbitration act of 1996 especially when it got mixed with modification of awards from district courts particularly in claimed quantity, volume, and other important stuff which are not supposed to be modified either under section 34 or section 33 of the arbitration act i.e., Correction & modification, so on similar footing we can expect section 33 must have absolute restrictions attached to the same.
The plain reading of Section 34 of the Act (“Section 34”) stipulates that the power of the Courts is limited to setting aside the arbitral awards, strictly in terms of the specific grounds enshrined therein. However, there are several judgments wherein the Courts have not only set aside but also modified arbitral awards while dealing with petitions filed under Section 34 which makes it understandable that section 33 corrections are different than modification, noticeable modification of an arbitral award vest with judiciary under certain circumstances after passing of the award the power of modification and adding up will shrink to a greater extent so whether Courts can modify arbitral awards while dealing with petitions under Section 34 and highlights certain relevant judgments given by various Courts regarding this issue for better understanding of modification of an arbitral award under sec 34 & interplay with sec 33, consequently, a dilemma occurs because of these windy clouds on concerning issues related to Indian arbitration jurisprudence although apex court regularly ironing out such conundrums to make our country an arbitration-friendly jurisdiction globally also satisfying the legislative intent of the legislation.

Crossing the Lakshman Rekha of Modification in Garb of Correction of an Arbitral Award

Due to the lack of a settled position of law and jurisprudence in this regard quite often inconsistent variations occur among different fora’s and court of law between correction under section 33 of the act which shall be used only for arithmetical and clerical errors in the award with notice to other party and section 34 which deals with appeal provisions to set aside arbitral award undergrounds enumerated in this section especially public policy like in garb of correction of a clerical error in an award the arbitrator went on to change claimed quantity & assets under section 33 of the act and similarly under section 34 of the act courts decides the merit of the award then made few modifications under 34 which itself is not permissible and finally the supreme court of India in 2021 pronounced two path-breaking judgments NHAI V. M.HAKEEM and GYAN ARYA V. TITAN INDUSTRIES LTD. related to ironing out the conundrum of correction and modification of award which surely clear some mist onwards on the concerned issue and do justice to the legislative intent of the act for least judicial intervention.
Tracing some background history in this regard the arbitration act of 1940 under section 15 & 16 provided powers for modification of award despite setting aside to Indian courts later got amended as this was against the basic spirit of arbitration and least judicial intervention and this amendment based on UNCITRAL model law for International Commercial Arbitration isolates the judicial appellate process from the practice of arbitration and neither does empower courts to modify award unless the law of land provided for the same, setting aside an award under section 34 of the act is restricted with few specific conditions as per the needs of international commercial disputes resolution scenario but modification part left undealt under this head, therefore it shows that parliament doesn’t want to provide any modification power of an arbitral award to safeguard autonomy and precious time of courts in a burdened judicial system but time and again the judicial precedents exhibited conflicting and non-uniform views which led to the crossing of correction and modification Lakshman Rekha in the Indian landscape.

Conflicting Judicial Precedents
In the past different courts endorsed inconsistent and differing approaches to modify and correction of awards to a greater extent until the NHAI v. M. HAKEEM judgment came on July 20, 2021, where SC held that the court cannot modify an award under section 34 as there are limited grounds to set aside an award and an doesn’t act as an appellate method also SC declined to modify the payment of compensation awarded under NHAI act despite it is extremely low for the land acquisition this provides much-needed clarity on this aspect before this the precedents created an unwanted conundrum in this regard.
In McDermott International v. Burn Standard Co. Ltd. Hon’ble SC held that courts cannot modify an arbitral award as it only has supervisory power to ensure fairness in arbitration, jurisdiction issue must be raised before the arbitral tribunal rather than the court so the court said we cannot modify the award we can only set aside it under section 34 although SC put up an interesting perspective to re arbitrate if the parties wanted so to cater the mistakes did by parties and tribunal in the past, slightly thinking it opened up a small room for a possible dilemma regarding modification issue as lastly, Apex court went on to modify the award under Article 142 in the garb of doing complete justice also it is better not to forget it cleared the mist to some extent in 2006.
In another landmark judgment Hindustan Zinc Ltd. V. Friends Coal Carbonisation delivered by the supreme court of India in 2006 after reiterating its stance in McDermott they unexpectedly upheld the modification of an award in a plea of section 34 to set aside the award by the trial court which is a dent in itself to the principle of least judicial intervention and an add on to the non-uniform position in this regard.
In a regressive step for the Indian arbitration landscape and a dent to bit improved image of the judiciary after they delivered a few pro arbitrations centric judgments during that period, it was a step back as in ONGC Ltd. V. Western Geco International Ltd. Court proceeded with modification of subject matter of an arbitral award under section 34 they had the option to set aside the award but to baffle public policy doctrine they modified the subject matter of award which violated section 5 arbitration act, 1996 doctrine of least judicial intervention in arbitration space, Hon’ble SC mentioned that if the tribunal inferred “wrong facts during proceedings then the award can be modified or cast away” which was fair to a certain extent but modification is certainly not the best choice regarding this.
In Vedanta Ltd. v. Shenzhen Shandong nuclear power construction Co. Ltd. supreme court of India in 2018 enumerated the parameters to award interest in international commercial arbitrations due to lack of consensus in awarding interest as well as the inconsistent approach of tribunals in doing so consequently the court made few modifications on account of interest part in the concerned international commercial arbitration respecting parameters and guidelines provided by Justice Indu Malhotra back then but modification and correction stigma continued which must not be the ideal practice, to be honest.
In Kinnari Mullick v. Ghanshyam Das Damani supreme court pronounced a very important judgment which said that after setting aside an arbitration award under section 34(4) courts are not empowered to transfer the parties before the arbitration tribunal especially Suo moto also added that restricted discretion is vested with courts if only written application made for the same by the parties, majorly it denied the power of modifications exercised by courts in various instances.
Similarly, in Radha Chemicals v. Union of India 2018, Hon’ble SC reiterated the same instance as mentioned in kinnari Mullick by the hon’ble court held that courts are not vested with the power to remand back the matter to the arbitration tribunal once the award is dispatched by the tribunal on the face of a petition under section 34 of the arbitration act such judgments cleared the instance of least judicial intervention and helped towards ironing out the conundrum in a limited manner.
In Gayatri Balaswamy v. ISG Nova soft technologies Ltd., Madras HC again took an ambiguous non-linear position when it comes to modification of award, the court said that under section 34 of the arbitration act modification power is inherent when the concerned matter reached SC, it found the observation of madras HC flawed and mistaken still in the garb of heaviest sword article 142 court allowed the modification to a greater extent.

Supreme Court of India Ironed Out the Conundrum
So, as I mentioned the dilemma and inconsistent approach of high courts and the supreme court on different occasions related to this conundrum of modification, correction, and the intricacies involved in section 34 of the act, to settle the dust and mist around the issue in 2021 SC pronounced 2 important judgments which according to me will iron out these confusing stances and shall provide a constant and uniform approach in India to make India an arbitration-friendly jurisdiction in a real sense although the courts can modify the award under article 142 of Indian constitution in the garb of doing complete jurisdiction these two precedents will benefit the arbitration jurisprudence of India.
1st is Project director, NHAI v. M. Hakeem where the supreme court held that courts do not have any power to modify the arbitral award under section 34 of the Arbitration act, 19996 and as section 34 of the act is based on UNCITRAL model law on international commercial arbitration, 1985 under which no modification power was provided under section 34 courts can set aside the award completely or in part but modification is not the ideal way to proceed , court also discussed power to adjourn the proceedings under section 34(4) so the arbitration tribunal can treat the defects in a fair and just manner as tribunal can eliminate grounds for setting aside the award this judgment welcomed largely by the practitioners of arbitrations and the commentators in the same subject or practice area as this cleared the space which was earlier complicated by different high courts hopefully the relevant course, judicial orders, and relevant amendments to the post-award mechanism become more synthesized and effective onwards.
2nd one is in Gyan Prakash Arya V. titan industries Ltd. This is one of the most important and recent cases decided on the issue of the conundrum of modifications and corrections under section 33 of the act as the learned arbitrator modified the award in name of correction and interpretation under section 33 so the aggrieved appellant after facing a setback under section 34 for setting aside this award on account of modification which is not permitted under section 33 consequently, went to the Karnataka high court against this under section 37 of the act but surprisingly the high court upheld the judgment of Bangalore city civil court rendering the modification of award under section 33 as Valid and sustaining with no option left the appellant knocked on the door of the apex court where the bench decided with utter dissatisfaction from both subordinate courts that no modification of an award is permitted under section 33 of the act until and unless there is an arithmetical or clerical error in the award and constitutional courts shouldn’t interfere with the basic spirit of arbitration legislation of least judicial intervention and to contribute for improving India’s image as a preferred seat for International Arbitration around the world and eradicating such sorry affairs of the state in Indian Arbitration Landscape.

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Disproportionate assets case: Delhi High Court stays Lokpal proceedings initiated against Jharkhand Mukti Morcha chief Shibu Soren

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Disproportionate assets case: Delhi High Court stays Lokpal proceedings initiated against Jharkhand Mukti Morcha chief Shibu Soren

On Monday, the Delhi High Court has stayed the proceedings initiated by Lokpal of India under the provisions of the Lokpal & Lokayuktas Act, 2013 against Jharkhand Mukti Morcha (JMM) Chief and Rajya Sabha MP Shibu Soren in connection with a disproportionate case of assets.

The bench comprising of Justice Yashwant Varma observed and has passed an order on Soren’s plea challenging the validity of the said proceedings, claiming that the same was ex facie bad in law and without jurisdiction.

In the present case, the proceedings were initiated by Lokpal of India pursuant to a complaint dated August 5, 2020 filed by BJP’s Nishikant Dubey. Therefore, it has been directed by the CBI to make a preliminary enquiry into the Complaint under section 20(1)(a) of the Lokpal and Lokayuktas Act, 2013. It was claimed by Soren that the said order was not served on him.

While claiming the complaint was false, frivolous and vexatious, Soren in his plea submitted that according to section 53 of the Act and there is a statutory bar against the Lokpal of India assuming jurisdiction to investigate or inquire into any Complaint made after the expiry of seven years from the offence alleged.

The plea reads that the initiation of the proceedings under the Complaint, or at the very least, continuation thereof, once it has been demonstrated by the preliminary inquiry that it pertains to alleged acquisitions prior to the 7-year period and is clearly barred by statute, without jurisdiction and the same is liable to be quashed.

Further, the petition filled submits that the maximum period of 180 days for completion of preliminary enquiry from the date of Complaint expired on February 1, 2021. In this backdrop, it has been stated that by this time, only on July 1, 2021, the comments were sought from Soren which is beyond the prescribed statutory period.

The plea adds that the final preliminary enquiry report was submitted by the CBI on 29.06.2022, about a year and a half after expiry of the 180- day period. Such purported report is void and null and non-est in the eyes of law and cannot be received or considered by the Respondent No.1.

Thus, the court took note of the order passed by Lokpal of India dated August 4, 2022 directing that proceedings under section 20(3) of the Lokpal Act be initiated to determine whether a prima facie case existed to be proceeded against Soren. It is Soren’s case that the order was passed without considering the preliminary objection on jurisdiction being raised by him.

In the said order, the court noted that all the Lokpal of India recorded was that the comments received from the petitioner were forwarded to CBI so as to examine and submit an enquiry report.

It was ordered by the court that the challenge to assumption of jurisdiction by respondent no. 1 (the Lokpal of India) has neither been answered and nor dealt with. Matters require consideration. Subsequently, there will be a stay of proceedings pending before the Lokayukta.

Accordingly, the court will now hear the matter on 14 December.

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DELHI HC SETS ASIDE MURDER CONVICTION & LIFE SENTENCE OF MAN WHO WAS UNPRESENTED BY LAWYER; REMANDS CASTE BACK TO TRIAL COURT

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DELHI HC SETS ASIDE MURDER CONVICTION & LIFE SENTENCE OF MAN WHO WAS UNPRESENTED BY LAWYER; REMANDS CASTE BACK TO TRIAL COURT

The Delhi High Court in the case Narender @ Lala v. State Of NCT Of Delhi observed and has set aside the orders of conviction for murder and sentence of life imprisonment awarded to a man in 2018 who was unrepresented by a lawyer before the Trial Court. Thus, the Delhi High Court has remanded the case back to the Trial Court for cross examination of certain prosecution witnesses.

The division bench comprising of Justice Mukta Gupta and Justice Anish Dayal observed and was of the view that there had been a grave miscarriage of justice to the man as when number of witnesses were examined, he was not represented by a counsel and that the legal aid counsel, who was present before Trial Court and was appointed on the same day and asked to cross- examine the witnesses on the same day.

On March, 2018, Narender was convicted for offence of murder punishable under section 302 of Indian Penal Code, 1860. On 4th May, 2018, he was sentenced by the Trial Court for life imprisonment and also to pay a fine of Rs. 10,000.

In the present case, the case of the prosecution was that the man had committed murder of his wife by strangulating her to death.

In a appeal, it was argued by the man that during the substantial course of trial, he was not represented by a lawyer and hence the trial in the absence of a lawyer had seriously prejudiced him. He thus sought recalling of all the prosecution witnesses and thereby ensuring a fair trial.

The Court observed that the manner in which the trial is conducted, there was a serious denial of fair trial to the appellant and the appellant is required to be given an opportunity to cross-examine the witnesses i.e., the witnesses examined in the absence of the lawyer, or the lawyer having been appointed on the same day from the legal aid and is asked to cross-examine the witnesses.

Further, the court remanded the back to Trial Court for cross-examination of ten prosecution witnesses. Also, the court directed the Trial Court Judge to follow due process of law and also to record the statement of the man under Section 313 CrPC and permit leading the defence evidence if so required.

The Court ordered that the case be listed before the learned Trial Court on 26th September, when Superintendent Tihar Jail will product the appellant before the learned Trial Court and the learned Trial Court is requested to expedite the trial and conclude the same preferably within four months.

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SUPREME COURT REFUSES TO ENTERTAIN PLEA CHALLENGING EXCLUSION OF SC/ST RESERVATION IN JHARKHAND DISTRICT JUDGES APPOINTMENT

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SUPREME COURT REFUSES TO ENTERTAIN PLEA CHALLENGING EXCLUSION OF SC/ST RESERVATION IN JHARKHAND DISTRICT JUDGES APPOINTMENT

The Supreme Court in the case Dr. B.R. Ambedkar Educational And Cultural Trust v. Hon’ble High Court Jharkhand And Ors. observed and has refused to entertain a plea challenging the non-inclusion of reservation for Scheduled Castes, Scheduled Tribes and Other Backward Classes communities in the process of appointment of District Judges in pursuant to an advertisement issued in March, 2022 by the High Court of Jharkhand. The present petition claimed that the exclusion of reservation violates Jharkhand State Reservation Policy and constitutional guarantee under Article 16(4). Apart from this, it is also in derogation of a resolution being passed by the High Court vouching to implement reservation in the Jharkhand Superior Judicial Service.

The bench comprising of Justice D.Y. Chandrachud and the Justice Hima Kohli observed and has granted liberty to the petitioner to file a petition under Article 226 of the Constitution before the Jharkhand High Court.

The court while considering that the process of appointment as per the concerned notification is underway, Justice Chandrachud asked the petitioner to approach the High Court with respect to future appointments.

It stated that “For the future you can file a petition before the High Court… We will give you liberty to approach the High Court under Article 226 of the Constitution.”

The bench of Justice Chandrachud observed that the Decisions of the Administrative side of the High Court can be challenged before the judicial side of the High Court. You can move the High Court.

In the present case, a writ petition challenging a similar notification was filed in 2017 before the High Court, which was eventually dismissed. It was observed by the High Court that there is no duty vested in the authorities to reserve seats for all posts, more particularly in higher judiciary. Moreover, it had already initiated the appointment process, the High Court opined that it cannot alter the rules midway. Thus, the appeal filed before the Apex Court was also dismissed.

However, in 2018 the Full Court of the Jharkhand High Court had agreed in principle to grant reservation in the recruitment for Jharkhand Superior Judicial Service. The advocates belonging to the SC/ST/OBC communities in 2021 had made representations to the Chief Justice of the High Court requesting for the implementation of the Reservation policy in appointment of District Judges (direct entry from Bar)/ superior judicial service. The impugned notification was issued without incorporating reservation for SC/ST/OBC communities in March 2022.

Mr. Arvind Gupta, Advocate on Record has filled the present petition.

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Right to contest election is not a fundamental right; it is only a right conferred by statute: Supreme Court

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Don’t compare Turban, Kirpan with Hijab: SC

The Supreme Court in the case Vishwanath Pratap Singh vs Election Commission of India observed that the right to contest an election is not a fundamental right but only a right conferred by a statute.

The bench comprising of Justice Hemant Gupta and the Justice Sudhanshu Dhulia observed while dismissing a Special Leave Petition filed by Vishwanath Pratap Singh that an individual cannot claim that he has a right to contest election and the said stipulation violates his fundamental right, so as is required under the Act, to file his nomination without any proposer.

Also, the court imposed a cost of Rupees one lakh on Singh.

In the present case, Singh had first approached the Delhi High Court challenging a notification issued by Election Commission of India for election to Rajya Sabha after he was not allowed to file his nomination without a proper proposer being proposing his name. His contentions were rejected by the High Court that his fundamental right of free speech and expression and right to personal liberty has been infringed.

While dismissing the SLP, the Apex Court observed that the writ petition before the High Court was entirely misconceived.

The bench observed while referring to earlier judgments viz Javed v. State of Haryana, (2003) 8 SCC 369 and Rajbala v. State of Haryana (2016) 2 SCC 445 wherein it was stated that the right to contest an election is neither a fundamental right nor a common law right. It is a right conferred by a statute.

However, the Supreme Court in Javed (supra) had made the following observations: Right to contest an election is neither a fundamental right nor a common law right and it is a right conferred by a statute. At the most, in view of Part IX having been added in the Constitution of India that a right to contest election for an office in Panchayat may be said to be a constitutional right and a right originating in the Constitution and given shape by a statute. But even if, it cannot be equated with a fundamental right. It is stated that there is nothing wrong in the same statute which confers the right to contest an election also to provide for the necessary qualifications without which a person cannot offer his candidature for an elective office and also to provide for disqualifications which would disable a person from contesting for, or from holding, an elective statutory office.

It was held in Rajbala (supra) that the right to contest for a seat in either of the two bodies is subject to certain constitutional restrictions and could be restricted further only by a law which the parliament made.

Further, the court added that Singh did not have any right to contest election to the Rajya Sabha in terms of the law made by the Parliament.

The Court stated while dismissing the SLP that the Representation of People Act, 1950 read with the Conduct of Elections Rules, 1961 has contemplated the name of a candidate to be proposed while filling the nomination form. However, it cannot be claimed by an individual that he has a right to contest election and the said stipulation violates his fundamental right, so as to file his nomination without any proposer as is required under the Act.

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Post-conviction compounding of offences is permissible: Himachal Pradesh High Court

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The Himachal Pradesh High Court in the case Shri Kantu Ram v Shri Beer Singh recently observed that a court, while exercising powers under Section 147 of the Negotiable Instruments Act and can proceed to compound the offences even after recording of conviction by the courts below.

The bench comprising of Justice Sandeep Sharma observed in a case where the revision Petitioner, who was convicted under Section 138 of the NI Act by the Magistrate Court and was aggrieved by subsequent dismissal of appeal by the Sessions Court and had agreed to pay the amount due and settle the matter.

Thus, the petitioner had sought compounding of offences.

In the present case, the respondent admitted the factum with regard to receipt of the amount due from the accused and expressed that the prayer made on behalf of accused for compounding of offence can be accepted.

However, the High Court allowed the prayer and the offence committed by the Petitioner under Section 138 NI Act was ordered to be compounded.

The Court observed that the Reliance was placed on Damodar S. Prabhu V. Sayed Babalal H. (2010) 5 SCC 663, wherein the Apex Court has categorically held that court, while exercising power under Section 147 of the NI Act and can proceed to compound the offence even after recording of the conviction by the courts below.

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‘Pensionary benefits to employee, who is removed from service for misconduct, is not at par with those who retire on superannuation’

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The Jammu and Kashmir and Ladakh High Court in the case Bashir Ahmad Wani v Jammu and Kashmir Grameen Bank and Another recently observed and stated that an employee who is removed from service for misconduct is not at par with those who is being retired on superannuation.

The bench comprising of Justice Sanjeev Kumar observed while dismissing the pension claim made by a former employee of the J&K Grameen Bank, who was removed from service in 2011.

In the present case, the petitioner had sought benefit of the J&K Grameen Bank (Employees) Pension Regulations, 2018 whereby provision was made for terminal benefits.

However, the court disallowed the claims on two grounds:

Firstly, that at the time of removal of the petitioner from service when there were no norms, rules or regulations providing for the benefit of pension to the employees of the respondent-Bank.

In the year 2011, the employees of the respondent-Bank were governed by the J&K Grameen Bank ( the Officers and Employees) Service Regulations, 2010… it is abundantly clear that it does not prescribe imposition of a penalty of removal along with the pensionary benefits.

Secondly, it was opined by the court that though the 2018 Regulations had been made applicable to those employees who were in service between 1st day of September, 1987 and 31st day of March, 2010 and the employees retired from the services of the Bank before 31st day of March, 2018, however, this leeway cannot come to aid of the Petitioner.

The Curt observed that the reason for finding that the Petitioner was not an employee who had “retired” on superannuation from the bank. Rather, he was “removed” for misconduct.

The Court stated that the regulations apply to those employees who retired from the service of the Bank before 31.03.2018 and not the employees who were terminated for misconduct. Viewed thus, the order of removal of the petitioner dated 02.09.2011 holding the petitioner entitled to terminable benefits and cannot, by any stretch of reasoning, be construed to be an order of removal with the benefit of the pension. Neither, the petitioner, at the time of his removal from service, nor with the promulgation of Pension Regulations of 2018, is entitled to the benefit of pension.

Accordingly, the court dismissed the petition.

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