Family Pension & Terminal Benefits Can't Be Substitute Or Bar To Compassionate Employment: Delhi High Court

Background Facts

The Appellant's deceased husband was in the service of the Respondent (Punjab and Sind Bank). He was working as a Peon in the subordinate cadre. He remained in continuous employment until his demise. The deceased was survived by his widow (Appellant), who is the sole surviving member of his family. The Appellant started to receive a pension of ₹3,000/- per month from the All India Punjab and Sind Bank Employees Welfare Society. She also received a family pension of ₹22,583/- per month.

Later, the appellant submitted an application to the respondent seeking appointment on compassionate grounds. However, the respondent rejected the application. Again, the appellant submitted a revised application for appointment on compassionate grounds to her home branch. No decision was taken on the appointment application.

Aggrieved, the appellant filed a writ petition seeking a direction to the respondent to consider her for appointment to a suitable post on compassionate grounds. A Single Judge directed the respondent to consider the appointment application in accordance with the applicable guidelines, scheme or policy governing compassionate appointment.

Therefore, the respondent considered the appellant's case and rejected the appointment application. It was held that the Appellant's case was governed by Clause 5.1 of the Scheme titled 'PSB Jeevan Sahara: Comprehensive Scheme For Appointment On Compassionate Grounds And Payment Of Ex-Gratia Amount In Lieu Of Appointment On Compassionate Grounds'. It provides that the family shall be regarded as indigent where its income, including notional income, is less than 60% of the deceased employee's last drawn salary, or, where such family income exceeds 60%, but is less than ₹20,000/- per month.

It was further recorded that the monthly income was ₹33,422.37 per month. The deceased employee's last drawn salary was ₹53,953.10, 60% of which amounted to ₹32,371.86. Therefore, the rejection order concluded that the appellant was ineligible for compassionate appointment under the Scheme.

The appellant challenged the rejection order by filing the writ petition, which was dismissed by the Single Judge. Aggrieved by the dismissal, the appellant preferred the Appeal before the High Court of Delhi.

It was argued by the appellant that the respondent erred in computing the Appellant's family income at ₹33,422.37 per month. If the computation was made correctly without taking into consideration family pension, interest on the corpus and the investments, the appellant's family income would fall below 60% of the deceased employee's last drawn salary. Therefore, appellant would have been eligible as per the Scheme.

It was further argued that no investment was made in LIC policies as recorded in the Rejection Order as the Appellant had already withdrawn the proceeds thereof upon the demise of her husband. It was also argued that the monthly pension of ₹3,000/- received from the Welfare Society had been surrendered prior to the submission of the Appointment Application.

On the other hand, it was argued by the respondent that guidelines and criteria prescribed under the Scheme include the income-eligibility requirement contained in Clause 5.1. The appellant was found ineligible under the Scheme on the computation. The computation did not include any income derived from LIC policies.

It was further argued that the Scheme required that the retiral benefits received by the family should be taken into account while assessing its financial condition.

Findings and Observations of the Court

It was observed by the Division Bench that the Scheme provides the benefit of compassionate appointment to families that are indigent and require immediate assistance to alleviate financial destitution. It was further observed that in the case of a deceased employee belonging to the subordinate cadre, Clause 5.1(c) of the Scheme is applicable.

It was noted by the Bench that the appellant's appointment application was rejected based on the computation of her family income. It was further noted that the computation presumed that the entire corpus and the investments would remain unutilised throughout the appellant's lifetime. It was held that such an assumption is without basis, as the appellant cannot be expected to not utilize the terminal benefits for her needs merely to preserve them as income-generating investments throughout her lifetime.

It was further held that no provision of the Scheme requires that the family of a deceased employee should invest the terminal benefits received by it. Terminal benefits are service-related entitlements accruing to the legal representatives upon the employee's death. Therefore, capitalising the entirety of such terminal benefits and treating the notional interest thereon as family income would defeat the object of the Scheme.

It was further observed by the Division Bench that Clause 5.1 of the Scheme requires 'notional income' to be considered. The expression 'notional income' may include income actually received by the family or income capable of being generated from assets actually held by it. However, it cannot extend to income notionally attributed to a corpus of terminal benefits which the family is under no obligation to retain an income-bearing form.

Therefore, it was held by the Bench that the inclusion of ₹8,337.26 per month in the computation of the appellant's family income cannot be sustained. Upon exclusion of the said amount, the Appellant's family income was reduced to ₹25,780.11 per month, which is below ₹32,371.86 i.e. 60% of the deceased employee's last drawn salary.

It was further held that the inclusion of the family pension of ₹21,888/- per month and the sum of ₹3,000/- per month received from the Welfare Society as components of the appellant's monthly family income cannot be sustained. These amounts were benefits accruing to the appellant consequent upon the death of the employee. Therefore, they cannot operate as a substitute for, or a bar to compassionate employment.

Reliance was placed on the decision in Govind Prakash Verma v. Life Insurance Corporation of India wherein it was held that compassionate employment cannot be denied merely because a member of the deceased employee's family has received benefits admissible under the applicable rules. It was held that the compassionate appointment is available in addition to the service benefits accruing to the legal representatives upon the death of the employee.

Further, the decision in Canara Bank v. M. Mahesh Kumar was also relied upon wherein it was held that the grant of family pension or the payment of terminal benefits cannot be regarded as a substitute for compassionate employment. It was further held that the object of compassionate appointment is to enable the family of a deceased employee to overcome the sudden financial crisis due to the employee's death.

Consequently, the rejection order was set aside by the Division Bench. The respondents were directed to grant the compassionate appointment to the appellant within two months.

With the aforesaid observations, the order of the Single Judge was set aside by the Division Bench. Consequently, the appeal filed by the appellant was allowed by the Division Bench.

Case Name : Anita v. Punjab and Sind Bank

Case No. : LPA 208/2025

Counsel for the Appellant : Abhishek Kumar, Advocate along with Appellant-in-person

Counsel for the Respondent : Rajat Arora, Niraj Kumar & Sourabh,