The Calcutta High Court has affirmed that public sector banks like the State Bank of India fall within the ambit of 'autonomous bodies' under a Supreme Court directive mandating reinstatement of untainted candidates whose appointments were nullified due to systemic corruption in recruitment. This ruling ensures that employees who left their prior jobs in good faith are entitled to resume service with full seniority and benefits, reinforcing the principle that livelihood rights cannot be forfeited due to administrative malfeasance beyond their control.
Background & Facts
The Dispute
The petitioners, Samrat Goswami and another, were permanent employees of the State Bank of India when they successfully secured appointments as teachers through the 1st SLST, 2016 conducted by the West Bengal Central School Service Commission. Upon appointment, they resigned from their positions at the Bank. Subsequently, the entire 1st SLST, 2016 recruitment process was declared void by the Calcutta High Court on 22nd April 2024, a decision upheld by the Supreme Court on 3rd April 2025 in State of West Bengal v. Baishakhi Bhattacharyya (Chatterjee), Civil Appeal No. 9586 of 2024, due to widespread irregularities and corruption.
Key Facts
- The petitioners were regular employees of the State Bank of India prior to joining as teachers in 2016
- They resigned from the Bank upon receiving their teaching appointments
- The Supreme Court, in its judgment dated 03.04.2025, nullified the entire 1st SLST, 2016 selection process
- The Court identified two categories of candidates: (i) tainted candidates, who were ineligible for any relief; and (ii) untainted candidates, who had no involvement in the corruption and had left prior employment in reliance on the recruitment
- The Supreme Court, in paragraph 47 of its judgment, permitted untainted candidates to apply to their previous employers for reinstatement
- The Supreme Court directed that such applications be processed within three weeks, with reinstatement to be granted without break in service, with preservation of seniority, increments, and other entitlements
- The Supreme Court also permitted the creation of supernumerary posts to accommodate such candidates
- The petitioners applied to the State Bank of India for reinstatement
- The Bank rejected their application on 15.02.2026, contending that it is neither a State Government entity nor an autonomous body as contemplated by the Supreme Court
- The Punjab National Bank, another public sector bank, had already reinstated similar candidates under the same Supreme Court directive
Procedural History
- 03.04.2025: Supreme Court delivers judgment in State of West Bengal v. Baishakhi Bhattacharyya (Chatterjee), Civil Appeal No. 9586 of 2024
- 15.02.2026: State Bank of India issues rejection letter to petitioners
- 12.03.2026: Writ Petition No. 21604 of 2025 filed before the Calcutta High Court
- 17.03.2026: Hearing concluded
- 17.03.2026: Judgment delivered by Justice Amrita Sinha
The Parties' Positions
For the Petitioners
- The Supreme Court’s direction in paragraph 47 was intended to protect the livelihood rights of untainted candidates
- The term 'autonomous bodies' must be interpreted purposively to include public sector banks, which operate independently under the Banking Regulation Act, 1949, and are owned by the Government of India
- The Bank’s refusal to comply undermines the Supreme Court’s intent to restore justice to innocent employees
- The Punjab National Bank’s compliance sets a precedent that the State Bank of India cannot ignore without arbitrariness
For the Respondent (State Bank of India)
- The Bank is a corporate entity incorporated under the State Bank of India Act, 1955, and is not an 'autonomous body' as understood in the context of the Supreme Court’s order
- The phrase 'State Government or Autonomous Bodies, etc.' in paragraph 47 refers to educational or public administrative bodies under state control, not commercial entities
- The Bank is not bound by the precedent of other banks
- The principle of ejusdem generis limits 'etc.' to entities of the same class as State Government and autonomous bodies, excluding commercial banks
Relief Sought
The petitioners sought:
- Immediate reinstatement to their previous positions at the State Bank of India
- Restoration of seniority and all service benefits including increments
- No break in service from the date of resignation
- Creation of supernumerary posts if original posts are unavailable
- Compliance with the Supreme Court’s directive within a stipulated timeframe
The Legal Issue
The central question was whether the term 'autonomous bodies' in paragraph 47 of the Supreme Court’s judgment in State of West Bengal v. Baishakhi Bhattacharyya includes public sector banks like the State Bank of India, and whether such banks are legally bound to reinstate untainted candidates who left their employment in reliance on a now-nullified appointment.
Arguments Presented
For the Petitioner
The petitioners relied on the Supreme Court’s explicit intent to protect the right to livelihood of untainted candidates. They argued that the term 'autonomous bodies' must be interpreted broadly and purposively, not narrowly, to achieve the constitutional objective of protecting fundamental rights under Article 21. They cited State Bank of India v. S. Nagarajan to show that public sector banks are deemed autonomous in their functioning despite government ownership. The Punjab National Bank’s compliance was presented as a practical and legal precedent that the State Bank of India could not disregard without violating the principle of equal treatment.
For the Respondent
The Bank contended that 'autonomous bodies' in the Supreme Court’s order referred only to public educational or administrative institutions under state control, such as school commissions or public universities. It argued that the Bank, being a commercial entity governed by the Banking Regulation Act, 1949, and the State Bank of India Act, 1955, does not fall within the same class. It invoked ejusdem generis to restrict 'etc.' to entities similar to State Government and autonomous bodies, excluding corporate entities. It further claimed that the Supreme Court’s direction was not binding on private or commercial employers.
The Court's Analysis
The Court undertook a purposive interpretation of paragraph 47 of the Supreme Court’s judgment, emphasizing that the directive was not a technical or administrative instruction but a constitutional safeguard for innocent individuals whose livelihoods were jeopardized by systemic corruption they had no part in. The Court observed that the Supreme Court’s intent was to restore the status quo ante for untainted candidates, ensuring they were not punished for the malfeasance of others.
"The reasoning for such exception is that the candidates who left their earlier jobs and joined service being successful in the 1st SLST, 2016 could not have anticipated that the entire selection process including their appointment would be nullified by the Court in future. Such untainted candidates were no way responsible for losing their job. As cancellation of their appointment would have a direct bearing with their right to life and livelihood, the Hon’ble Supreme Court made the exception of permitting the untainted candidates to revert to their previous place of posting."
The Court rejected the Bank’s narrow construction of 'autonomous bodies'. It held that public sector banks, though commercial in nature, are statutory corporations established by Parliament, wholly owned by the Government of India, and function with significant public accountability. They are not private entities but instruments of public policy. The Court further noted that the Supreme Court’s use of the phrase 'etc.' was clearly expansive, intended to cover all previous employers, regardless of their legal structure, provided they were the candidate’s prior employer.
The Court emphasized that the direction was mandatory, not discretionary. The Bank had no authority to second-guess or reinterpret the Supreme Court’s order. The Bank’s reliance on the Punjab National Bank’s compliance was not merely persuasive but indicative of a uniform legal obligation across public sector banks.
The Court also clarified that the Bank must verify whether the petitioners were listed as tainted candidates on the official portal of the West Bengal Central School Service Commission. If not, reinstatement was not a matter of discretion but a legal duty.
The Verdict
The petitioners succeeded. The Calcutta High Court set aside the Bank’s rejection order dated 15.02.2026. The Bank is directed to reinstate the petitioners in their previous positions with full seniority, all service benefits, and entitlement to increments. There shall be no break in service. If the original posts are unavailable, supernumerary posts must be created as permitted by the Supreme Court. The Bank must complete reinstatement within four weeks from the date of communication of this order. Costs are awarded to the petitioners.
What This Means For Similar Cases
Autonomous Bodies Include Public Sector Banks
- Practitioners representing untainted candidates in similar cases must argue that public sector banks, LIC, NTPC, and other government-owned corporations qualify as 'autonomous bodies' under purposive interpretation
- The term is not limited to educational or administrative bodies but includes any prior employer that is a statutory or government-owned entity
- The Supreme Court’s directive is binding on all such employers, regardless of their commercial character
Reinstatement Is a Right, Not a Discretion
- Employers cannot refuse reinstatement on grounds of administrative inconvenience, policy, or precedent
- The obligation arises automatically upon verification that the candidate is untainted
- Failure to comply may attract contempt proceedings or writ enforcement
- Service continuity, seniority, and increments are non-negotiable entitlements under the directive
Precedent of Other Institutions Is Legally Significant
- Compliance by one public sector institution (e.g., PNB) establishes a normative standard for others
- Non-compliance by another (e.g., SBI) constitutes arbitrary and discriminatory treatment
- Courts will treat inconsistent application of Supreme Court directives as violative of Article 14
