Bank-imposed service bonds are not penalties; resignation forfeits pensionary benefits but allows interest on non-stipulated deposits. Would you like a summary of the arguments regarding the forfeiture of past service upon resignation?

The deceased petitioner, an Executive Scale-IV officer of UCO Bank, was posted to the Singapore branch in 2004 under a contract requiring a 5-year post-repatriation service or payment of a Rs. 10 lakh bond as liquidated damages

Due to family health issues, she submitted her resignation on September 6, 2007, along with 9372.30 SGD (three months' salary) in lieu of notice

The Bank refused the resignation and initiated disciplinary proceedings for "abandonment of service" and prior loan irregularities

The petitioner returned to India and subsequently passed away; her legal representatives continued the suit

The Bank eventually accepted the resignation in 2014 but sought to recover the Rs. 10 lakh bond money and service charges from her terminal benefits, while denying pension and certain leave encashments

1. Whether the Bank's recovery of Rs. 10 lakh bond money as "liquidated damages" via a disciplinary penalty was legally sustainable

2. Whether an employee who resigns is entitled to pensionary benefits or the employer’s contribution to the Provident Fund under the UCO Bank (Employees’) Pension Regulations, 1995

3. Whether the petitioner was entitled to interest on the 9372.30 SGD deposited in 2007 and reimbursement of Singapore income tax

4. Whether the petitioner was entitled to encashment of Privilege Leave (PL) accumulated during the overseas tenure

Regulation 22(1) of the UCO Bank (Employees’) Pension Regulations, 1995, which stipulates that resignation entails forfeiture of past service, disqualifying the employee from pension

Supreme Court precedent UCO Bank v. Sanwar Mal (2004), which held that resignation and retirement are distinct, and a self-financing pension scheme can validly exclude those who resign

Section 74 of the Indian Contract Act, 1872, noting that liquidated damages must be a reasonable estimate of loss and not a penalty

UCO Bank Officer Employees’ (Conduct) Regulations, 1976, and the Provident Fund Rules

The Court reasoned that while the Bank has a general right to enforce service bonds to recoup costs, such recovery cannot be imposed as a "penalty" under disciplinary regulations as it is a civil liability

In this case, since the petitioner deposited three months' salary and sought repatriation due to hardship, the court found the Rs. 10 lakh demand "unconscionable" and unsupported by proof of actual loss

Regarding pension, the Court followed Sanwar Mal, concluding that the petitioner’s resignation triggered the forfeiture clause in Regulation 22(1), making her ineligible for both pension and the Bank’s contribution to the PF

On tax reimbursement, the claim was rejected as the Bank proved the Singapore authorities returned the cheque, meaning no tax was actually encashed

The Court found that the Bank's retention of the SGD deposit for seven years without a regulatory basis for such a deposit was unjustified, necessitating a refund with interest

The petitioner is not entitled to pension or the Bank's contribution to the PF due to her resignation

The Bank must refund the 9372.30 SGD deposit with 6% annual interest from 2007

The Bank must re-evaluate the claim for 100 days of overseas PL encashment based on foreign service rules. The Bank was directed to disburse the dues within six weeks