DPE guidelines on terms of employment will not apply to public sector banks: HC  

The guidelines issued by the Department of Public Enterprises (DPE) on personal policies, related terms and conditions of employment and indemnity bonds secured from employees, will not apply to the public sector banks, said the High Court of Karnataka.

“The public sector banks are guided by the instructions issued by the Department of Economic Affairs (Banking Division) of the Ministry of Finance. The guidelines by the DPE of Ministry of Heavy Industries and Public Enterprises are not applicable to public sector banks as these guidelines are applicable only to the public sector enterprises, which have different service conditions packages and lateral movement of public officials,” the Court said.

A division bench comprising Chief Justice N.V. Anjaria and Justice K.V. Aravind passed the order while allowing an appeal filed by erstwhile Vijaya Bank, which is now known as Bank of Baroda. The bank had questioned an order passed by single judge, who had directed the bank to refund ₹3 lakh secured from an employee for failing to serve minimum of three years as was agreed through the indemnity bond.

Pointing out that DPE’s guidelines allows continuation of period of minimum service as specified in the indemnity bond in the new public sector enterprises to which the employee joins, the single judge had said that the bank, being a public sector undertaking, is bound by these guidelines.

The single judge had said that petitioner, Abhimanyu Kumar, who left the bank before expiry of three years bond period to join Steel Authority of India Limited (SAIL), a public sector enterprises, is entitled for refund of ₹3 lakh as he is entitled for continuation of minimum period of service as per the indemnity bond with SAIL.

Disagreeing with the single judge’s finding, the bench said that “the single judge could not but have misdirected himself in relying on the guidelines to hold that the bank was in error in demanding and collecting ₹3 lakh… The bank is not the department of Government nor is a public sector enterprise in that sense to which the DPE’s guidelines may apply.”