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  •  All Public Sector Bank had been paying leave encashment on compulsory retirement upto November, 2000. Indian Banks Association vide circular No.PD/CIR/76/H7/E9/1452 dated 27 November, 2000 stopped this facility to CR (reasons not in public domain).
  • Subsequently some of the retired Employees filed WP in various High Courts  which permitted the payment of Leave Encashment in compulsory retired cases treating it one of the classes of retirement.
  • All these High Court judgments were challenged in Supreme Court by the representatives of Banks.  In all SIX SLPs have been filed by Banks in Supreme Court – Canara Bank (three) 28315/2011, 26623/2011 & 30252/2011, OBC (one) 30425/2011, PNB (one) 35937/2013 and Syndicate Bank (one) 9722/2014.
  • In the meanwhile, IBA also took cognizance of High Courts’ decisions and came up with revised guidelines to pay leave encashment in compulsory retirement cases vide Circular No. HR&IR/76/H7/E9/755 dated 11th May, 2015, amending the earlier instructions given in the year 2000, giving complete background and permitting payment of leave encashment wef 30th April, 2015.  Based on IBA Circular, all Banks issued their respective Circulars for payment of leave encashment wef 30th April, 2015.
  • IBA thus discriminated between compulsorily retired employees of PSBs during the period November, 2000 to 29th April, 2015 by not allowing the facility of payment of leave encashment to these categories of employees and allowing this facility to the employees who compulsorily retired wef 30th April, 2015.
  • In all fairness, IBA should have withdrawn their illegal Circular dated 27th November, 2000, barring the payment of leave encashment to compulsorily retired employees and allowed the payment to all compulsorily retired employees from November, 2000 onwards.
  • Incidentally all six SLPs filed by Banks were dismissed by Supreme Court on 25-8-2015 relate to the compulsorily retired employees falling under the period November, 2000 to 29-04-2015.  Once their SLPs have been dismissed these Banks must have paid the Leave encashment to these petitions discriminating them from other similarly placed compulsorily retired employees of the same period to whom this has been denied.
  • This issue has, therefore, reached its finality and as such needs to be implemented by all banks as per Article 141 of the Constitution of India which states “The law declared by the SC shall be binding on all Courts with the territory of India”.  Non-implementation of SC judgment gives rise to avoidable litigation which is against the National Litigation Policy and also against the right to equality.
  • Instead of withdrawing the aforesaid illegal Circular, IBA on reference by different Banks like, PNB and UCO Bank advised that the decision to extend the benefit to the employees who were compulsorily retired before 30-04-2015 may be taken at their individual Bank level.
  • This decision of IBA created further discrimination between the similarly placed employees of various PSBs as under:-

1)    PNB allowed payment of leave encashment to all compulsorily retired employees prior to 30-04-2015 with interest @ 10% (Circular dated 11-12-2015);

2)    UCO Bank issued a Circular on 04-06-2016 (No payment of interest)

3)    Bank of Baroda issued a Circular dated 30-07-2016 (No payment of interest)

4)    Bank of India issued a Circular dated 1-12-2016 (No payment of interest)

5)    Syndicate Bank issued a Circular dated 15-4-2017 (No payment of interest)


Money has a time value if the PSBs do not understand the difference of ‘x’ amount of money payable from 2000 till 2015 being paid in 2015 or 2016 or 2017 without paying interest thereof.  Many Banks including, Canara Bank have not so far even issued the Circular.

Is this not encouraging discrimination by leaving the individual Banks to decide about this issue ?

1)     Some Banks like Canara Bank, UnionBank,not issuing Circular even after their SLP is dismissed.

2)    A few Banks issuing Circulars but not paying interest.

3)    Payment of principal amount and interest for the delayed period.


·         Instead of following the rule of law, IBA deliberately denied the leave encashment to those compulsorily retired during 2000-2015. Instead of rectifying their mistake and issuing common guidelines to all PSBs, they advised few selected PSBs vide letter No HR & IR/KSC/UCO/M/2026 dated 27.01.2016 to take a decision on extending the benefit of leave encashment at individual bank Level. IBA shows their utter disregard to rule of law/DOPT guidelines, Constitutional provisions..

·         When IBA has issued common circular  to all PSBs in year 2000, disallowing  leave encashment to CRS employees,  it would have been fair on their part issue common guidelines to pay leave encashment together with interest for delayed period.


It appears that IBA is behaving as super constitutional authority, not subjected to rule of law applicable in India. We also feels that the IBA is a compulsive litigant in this nation fighting more 5lacs employees/retirees in various courts in India.


In view of the above submissions we request you to direct IBA to issue, directions to all Public Sector Banks to pay leave encashment together with interest for delayed period to all CRS retired employees, compulsorily retired during 2000-2015.

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