The Delhi High Court has clarified that an employee acquitted in a criminal case on the benefit of doubt is not automatically entitled to have the period of suspension or dismissal counted as continuous service for pensionary benefits. The judgment reinforces that such entitlement depends on whether the competent authority finds the employee fully exonerated, not merely acquitted.
Background & Facts
The Dispute
The respondent, V.C. Jain, was a Branch Manager at State Bank of India (SBI) when he was arrested in 2002 following a bribery complaint filed by a private individual. He was suspended with effect from 21.09.2002 and later dismissed from service in 2005 after being convicted under Sections 7, 13(2), and 13(1)(d) of the Prevention of Corruption Act, 1988. His conviction triggered mandatory disqualification under Section 10(1)(b)(i) of the Banking Regulation Act, 1949, which prohibits employment of persons convicted of criminal offences involving moral turpitude.
Procedural History
- 2002: Arrested and suspended pending criminal proceedings
- 2005: Convicted by Trial Court; dismissed from service under SBI Service Rules
- 2010: Acquitted by Delhi High Court on appeal, but explicitly on "benefit of doubt" due to prosecution’s case being "full of doubts"
- 2011: Reinstated by SBI with explicit conditions: no back wages, and period of suspension not counted for terminal benefits
- 2011: Disciplinary proceedings revived; respondent penalized with reduction in rank
- 2012: Filed writ petition seeking to count 21.09.2002 to 24.03.2011 as continuous service for pension calculation
- 2023: Single Judge directed pension benefits to include the suspended period
- 2026: Appeal filed by SBI; Delhi High Court sets aside the order
Relief Sought
The respondent sought to have the period of suspension and dismissal (21.09.2002 to 24.03.2011) counted as continuous service for computation of pension and retiral benefits, despite having accepted the reinstatement order that explicitly excluded this benefit.
The Legal Issue
The central question was whether an employee acquitted in a criminal case on the benefit of doubt is entitled to have the period of suspension and dismissal counted as service for pensionary benefits, absent a finding of full exoneration by the competent authority.
Arguments Presented
For the Appellant (SBI)
SBI relied on Rule 68A(8)(i) of the SBI Officers Service Rules, 1992, which entitles an employee to full pay and service credit only if "fully exonerated." It argued that acquittal on benefit of doubt does not equate to exoneration. SBI cited Greater Hyderabad Municipal Corp. v. M. Prabhakar Rao, Union of India v. K.V. Jankiraman, and Reserve Bank of India v. Bhopal Singh Panchal to assert that the employer retains exclusive discretion to determine whether the period should be counted, especially where the employee’s own conduct led to suspension. It further emphasized Section 10(1)(b)(i) of the Banking Regulation Act, 1949, which legally compelled dismissal upon conviction, making the employer blameless.
For the Respondent (V.C. Jain)
The respondent contended that since his conviction was set aside, the period of suspension should be treated as service for pension purposes, citing Vinod Kumar v. State (NCT of Delhi) and Jagannath Naik v. State. He argued that the acquittal nullified the basis for dismissal and that the conditions in the reinstatement order were unconscionable and procedurally unfair. He claimed the employer’s discretion must yield to equity when the underlying conviction is overturned.
The Court's Analysis
The Court undertook a meticulous statutory and precedential analysis. It held that Rule 68A(8)(i) is the critical provision: it grants service credit only if the officer is "fully exonerated." The acquittal in this case was explicitly qualified as being on "benefit of doubt," meaning the prosecution’s case was weak, not that the respondent was innocent. The Court emphasized that "benefit of doubt" acquittals do not equate to exoneration under the law.
"The acquittal of the respondent in the criminal case cannot be termed to be a clear and clean acquittal; rather, it is acquittal from the criminal charge based on benefit of doubt."
The Court distinguished Vinod Kumar and Jagannath Naik, noting those cases involved wrongful dismissal by the employer, whereas here, dismissal was statutorily mandated under Section 10(1)(b)(i) of the Banking Regulation Act, 1949. The employer had no discretion to retain the respondent post-conviction.
The Court further held that the respondent’s acceptance of the reinstatement order - without objection, followed by continued service and retirement - constituted acquiescence to the terms, including the exclusion of the suspended period from service credit. The discretionary power vested in the employer under Rule 68A(8)(ii) was found to be lawful, reasonable, and not arbitrary.
The Court reaffirmed the principle from Union of India v. K.V. Jankiraman and Sukhdarshan Singh v. State of Punjab: to mandate automatic service credit upon acquittal would undermine administrative discipline and public interest. The decision must be case-specific and made by the competent authority.
The Verdict
The appellant, State Bank of India, prevailed. The Delhi High Court held that acquittal on benefit of doubt does not entitle an employee to count the period of suspension or dismissal as continuous service for pensionary benefits unless the competent authority finds full exoneration. The direction to re-fix pension benefits was set aside.
What This Means For Similar Cases
Dismissal Based on Statutory Mandate Cannot Be Attributed to Employer
- Practitioners must distinguish between dismissals triggered by employer discretion versus statutory compulsion (e.g., Section 10(1)(b)(i) of the Banking Regulation Act, 1949)
- Where dismissal is legally mandated, the employer cannot be held liable for service credit even if conviction is later overturned
- This applies to public sector banks, PSUs, and other entities bound by similar statutory disqualifications
Benefit of Doubt Acquittal ≠ Full Exoneration for Service Benefits
- Acquittals based on insufficient evidence or benefit of doubt do not trigger automatic entitlement to back wages or service credit
- Employers retain discretion under service rules (e.g., Rule 68A(8)(ii)) to determine whether to grant benefits
- Employees must challenge reinstatement conditions at the time of acceptance; silence constitutes waiver
Reinstatement Conditions Are Binding Unless Unconscionable
- Conditions attached to reinstatement, including exclusion of service period for pension, are enforceable if accepted without protest
- Courts will not interfere with such discretionary decisions absent arbitrariness or mala fide
- Practitioners should advise clients to raise objections to reinstatement terms immediately, not post-retirement
