DPE guidelines don't apply to nationalised banks: Karnataka High Court

Bengaluru: The Karnataka High Court has said that the Department of Public Enterprise Guidelines (DPE Guidelines) is not applicable to the nationalised banks.

A division bench comprising Chief Justice N V Anjaria and Justice K V Aravind said this while upholding the decision of a bank recovering the indemnity bond amount from one of its former employees who left the job before the stipulated period as mentioned in the indemnity bond.

Abhimanyu Kumar, a chartered accountant, was selected for the post of Probationary Manager (Generalist) in Vijaya Bank in November 2011. While joining the services, he had executed the indemnity bond for Rs three lakh for a minimum period of service of three years. In April 2012, he was offered a job in the Steel Authority of India Limited (SAIL). His request for waiver of the indemnity bond was rejected by the bank and Abhimanyu paid Rs three lakh and secured the relieving letter.

After joining the SAIL, Abhimanyu moved the high court claiming that the DPE guidelines permitted the transfer of the amount as well as the period of the bond when an employee of the public sector entity joins the services of the Central Government, State Government and autonomous body. On April 19, 2023, a single bench ruled in his favour on the strength of the DPE guidelines.

The bank moved an appeal contending that DPE guidelines are not applicable to the banks and that the nationalised banks are guided by the instructions issued by the parent ministry, Ministry of Finance.

The division bench noted that while tendering his resignation, Abhimanyu had confirmed that he was willing to serve for three months' notice period and that will pay the bond amount. The bench said that the single judge committed an error in relying on the DPE guidelines.

“The petitioner was intimated by letter dated 6th June 2012 that the DPE Guidelines were not applicable since the banks were not covered thereunder. The public sector banks which are the nationalized Banks are guided by the instructions issued by the parent Ministry which is the Department of Finances and Services and Department of Economic Affairs (Banking Division), Ministry of Finance. The guidelines by the Department of Public Enterprises/Bureau of Public Enterprises, Ministry of Heavy Industries and Public Enterprises are not applicable to public sector Banks. They are applicable only to the public sector enterprises which have different service conditions, packages and lateral movement of public officials,” the bench said.