Orissa High Court Denies Pension to Ex-UCO Bank Officer but Restrains Bond Recovery

The Orissa High Court has ruled 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. However, the court directed the bank not to demand recovery of the Rs 10 lakh bond she had signed, which required her to work overseas for five years.

Justice R K Pattanaik observed: “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.” The court also noted that the bank should have refunded the salary deposit promptly, instead of retaining it for a long period, knowing that such a deposit is not required under regulations.

The case was filed in 2016 by the woman, who died during the pendency of the proceedings. Her legal heirs pursued the matter, challenging the bank’s actions. The retired employee had been accused of breaching the terms of her overseas posting and service contract by resigning before completing the minimum service period.

The court stated that the woman’s resignation before acceptance by the competent authority was treated as abandonment of service, leading to departmental action and punitive measures. The woman had sought repatriation on personal grounds, deposited three months’ salary instead of serving notice, and later filed the case after the bank denied her benefits and sought recovery of the bond amount.

Under the bank’s overseas posting policy, the officer was required to serve the bank for at least five years after repatriation. Before being relieved for the Singapore posting, she had signed an agreement stating that breach would require payment of Rs 10 lakh as liquidated damages.

Advocate Surendranath Panda, appearing for her legal heirs, argued under the Indian Contract Act that such an agreement was unacceptable as it was a standard-form contract drafted by the bank, leaving the employee no choice but to sign. He claimed these one-sided terms were arbitrary, exploitative, and void from the outset.

The woman joined the bank as a clerk in 1977 and rose through the ranks. She was posted to the Singapore branch in 2004 and promoted to Executive Cadre Scale-IV while there. In September 2007, she resigned due to family problems and her husband’s heart condition, depositing three months’ salary. The bank rejected her resignation on technicalities, initiated disciplinary proceedings, denied pension, sought recovery of the bond, and withheld terminal benefits.

Her legal heirs sought the release of pension or provident fund contribution, reimbursement of income tax paid in Singapore, refund of the salary deposit, and quashing of the bond recovery demand.

Justice Pattanaik pronounced the order on June 30, balancing the bank’s contractual rights with the principle that liquidated damages should not be punitive.