Delhi High Court Upholds Bank Policy on Notional Interest for Ex-Gratia Payments
Court Rejects Compassionate Appointment Claim, Validates Inclusion of Notional Income in Family's Financial Assessment
In a significant judgment, the Delhi High Court has upheld the Bank of Maharashtra's policy of including notional interest on terminal benefits in the calculation of a family's income for determining eligibility for ex-gratia payment in lieu of compassionate appointment. The decision came as a setback for the petitioner, Omwati, who sought relief following the death of her husband, an employee of the bank.
The petitioner, represented by Advocate Mr. Ranjit Sharma, argued that the bank's calculation, which included notional interest on terminal benefits, unfairly inflated the family's income, thus disqualifying them from receiving ex-gratia payment. The bank, represented by Advocate Mr. V.K. Gupta, countered that the policy was in line with the objectives of providing immediate relief to families in financial distress.
Justice Prateek Jalan, presiding over the case, emphasized the need for an objective system that aligns with the purpose of the ex-gratia scheme. The court noted that such schemes are akin to compassionate appointment policies, which are designed to provide immediate relief from financial destitution following the sudden demise of an employee.
The court referenced several Supreme Court judgments, highlighting that the inclusion of notional interest ensures objectivity and uniformity in decision-making. It dismissed the petitioner's reliance on Punjab and Haryana High Court judgments, which had disapproved of the inclusion of notional interest, stating that those decisions did not align with the intended objectives of the scheme.
Justice Jalan further elaborated that the policy's requirement for a comprehensive financial assessment at the time of the application, rather than an analysis based on actual interest earned, is crucial to fulfilling the scheme's immediate relief objective. The court also pointed out that excluding notional calculations could lead to subjective and inconsistent decisions by employers.
The judgment underscores the importance of adhering strictly to the terms of such schemes, reinforcing that they are not entitlements but discretionary grants aimed at alleviating immediate financial hardships.
Bottom Line:
Compassionate Appointment - Ex-gratia payment in lieu of compassionate appointment - Notional interest on terminal benefits as part of family's income - Validity upheld.
Statutory provision(s): Article 226 of the Constitution of India, Indian Banks' Association Scheme for Ex-Gratia Payment, Supreme Court judgments on compassionate appointments including Umesh Kumar Nagpal v. State of Haryana, Canara Bank v. Ajithkumar G.K., Tinku v. State of Haryana.
Omwati v. Bank of Maharashtra, (Delhi) : Law Finder Doc Id # 2784914
