Bank’s Technical Excuses Can’t Override Employee’s Right to Ex Gratia Under Old Circulars: Bombay High Court Slams Canara Bank’s Rejection of Claim

"Clause 24 of 2015 Scheme Clearly Protects Pending Applications Under Earlier Circulars", In a crucial judgment restoring the rightful claim of a retired bank employee, the Bombay High Court on 6th January 2026 came down heavily on Canara Bank for denying ex gratia compensation or compassionate appointment to a physically disabled son of a medically retired officer. The Court held that applications filed prior to the 2015 scheme are protected under earlier policies and cannot be rejected on new procedural grounds.

The case titled Shri Pramod Govind Sagalgile v. General Manager, Canara Bank, was decided by a division bench of Justice Sandipkumar C. More and Justice Mehroz K. Pathan. The Court directed the Bank to process the ex gratia payment within 12 weeks and set aside the rejection letter issued to the petitioner in 2017.

The petitioner, who took voluntary retirement on medical grounds in 2013, had applied for compassionate appointment for his physically disabled son. His repeated requests were rejected on the grounds that the 2015 Scheme was not applicable to him and that he had failed to submit a medical incapacitation certificate at the time of retirement. The High Court rejected both grounds as unsustainable in law.

“Bank Had No Right to Demand a Medical Board Certificate Under 2007 Scheme”

The Court noted that the Bank had accepted the petitioner’s retirement on health grounds without insisting on a medical certificate. “The Bank never referred the petitioner to any Medical Board. Yet, later they turned around and demanded a medical certificate under a scheme that wasn’t even applicable to his case,” observed the Court.

Referring to Clause B(iii) of Canara Bank’s Circular dated 24.09.2007, the bench held that the circular did not require any certification from a Medical Board for an employee who took premature retirement due to incapacitation before the age of 55. “The Bank’s insistence on a medical certificate is not only misplaced but legally untenable,” the Court declared.

"When an Application is Filed Before 05.08.2014, It Must Be Considered Under the Old Circulars"

One of the most significant findings in the judgment related to Clause 24 of the 2015 Scheme, which the Court described as “clear and mandatory.” The Bench held, “Clause 24 provides that all applications pending as on 04.08.2014 or filed before that date must be considered under the governing Circulars of 2005 and 2007. The Bank failed to honour this clause and instead applied the 2015 norms to a 2014 application.”

The Court observed that the petitioner had submitted a valid application for compassionate appointment of his son on 09.04.2014, well before the 2015 scheme came into force. “The rejection of this application citing the new scheme is clearly arbitrary and in violation of Clause 24,” the bench held.

"Retirement on Medical Grounds Was Accepted Without Objection – Now Bank Can’t Turn Around and Demand a Certificate"

The petitioner had retired 14 years before his superannuation due to chronic illness, a fact the Bank never contested at the time. The Court held that the Bank’s subsequent insistence on medical board certification was an afterthought. “By accepting his voluntary retirement on medical grounds, the Bank impliedly acknowledged his incapacitation. It cannot now defeat his claim by asking for a certification that was never sought earlier,” the judgment reads.

Compassionate Appointment is Not Just About Financial Need – It’s About Dignity

Rejecting the Bank’s argument that the petitioner was receiving pension and therefore not indigent, the Court cited the Supreme Court’s decision in Canara Bank v. M. Mahesh Kumar, holding that “financial hardship is not the sole test.” The Court reiterated, “Compassionate appointment is a measure of social justice, and not a benefit that depends merely on the family’s income status.”

The Court also relied on the Supreme Court’s observation in Malaya Nanda Sethy v. State of Orissa that applications for compassionate appointment must be decided quickly and in accordance with the policy applicable at the time of the event. “Delay or mechanical rejections defeat the whole purpose of compassionate appointments,” the Court emphasized.

Bank’s Rejection is a Deliberate Attempt to Deny Lawful Entitlement

The judgment minced no words in calling out the Bank’s conduct. “The grounds taken by the Bank appear to be a deliberate attempt to deprive the petitioner of his rightful entitlement under the 2007 Circular,” the Court noted.

In allowing the petition, the High Court quashed the rejection letter dated 16.01.2017 and directed Canara Bank to process the petitioner’s application under Clause B(iii) of the Circular dated 24.09.2007. The Court ordered that the lump-sum ex gratia payment be sanctioned and disbursed within 12 weeks.

“This Court finds that the petitioner’s retirement was clearly on medical grounds and before the age of 55, satisfying the eligibility under the 2007 Circular. Since no certification by a panel of doctors was required at that time, the Bank’s demand for such a certificate is without legal basis.”

Thus, in setting a precedent on the interpretation of Clause 24 of the 2015 Scheme, the Bombay High Court has reinforced the principle that employees’ rights under older schemes cannot be invalidated by retroactive application of newer procedures.

Date of Decision: 06 January 2026