J&K Bank Cannot Exclude Maternity Leave from Contractual Service Period, Rules Division Bench

The High Court of J&K and Ladakh dismissed J&K Bank’s appeals, holding that excluding maternity leave from a two-year probationary period to deny regularisation benefits is unconstitutional gender discrimination.

A Division Bench of the High Court of Jammu & Kashmir and Ladakh at Jammu, comprising Chief Justice Arun Palli and Justice Rajnesh Oswal, on 20 May 2026 dismissed two intra-court appeals filed by Jammu and Kashmir Bank Ltd. against a judgment of the Writ Court dated 25 August 2025. The Writ Court had directed the Bank to treat the maternity leave periods of four female Banking Associates as continuous service, without deducting those periods from the two-year contractual tenure required for regularisation. The Division Bench found that excluding sanctioned maternity leave from the service period, with the effect of pushing the employees’ regularisation dates past a critical pay-benefit cut-off, amounted to discrimination on the ground of sex, contrary to Article 15 of the Constitution of India. The Bank’s plea that the employees had acquiesced in the extension of their contracts was rejected outright.

Four Banking Associates, One Cut-Off Date

Tanu Gupta, Basu Magotra, Isha Sudan, and Bintul Hudda were appointed as Banking Associates by J&K Bank, all joining in November 2018. Under their terms of engagement, regularisation was contingent on the successful completion of a two-year contractual period.

Each of the four employees availed maternity leave during that period. Their respective leave durations were 118 days (Tanu Gupta), 83 days (Basu Magotra), 181 days (Isha Sudan), and 176 days (Bintul Hudda). The Bank sanctioned this leave, despite the contracts containing no express provision for it, on the condition that the contractual period would stand extended by the corresponding leave duration.

As a result, their regularisation dates fell after 31 December 2020: Tanu Gupta was regularised on 10 March 2021, Basu Magotra on 4 February 2021, Isha Sudan on 13 May 2021, and Bintul Hudda on 5 February 2021. Colleagues appointed alongside them, who had not availed maternity leave, were regularised before that date.

The significance of 31 December 2020 lay in a Board Resolution dated 26 April 2021 and Circular No. 752 dated 12 March 2021. The Bank had resolved to freeze variable pay and platinum jubilee pay (re-designated as “Adjustment Pay”) for regular employees on its rolls as on 31 December 2020. Employees regularised after that date were not entitled to this component. Because the four women were regularised only after the cut-off, they were denied the Adjustment Pay and associated benefits that their peers received.

The employees challenged their regularisation orders before the Writ Court in WP(C) No. 1065/2022 (Basu Magotra & Ors. v. J&K Bank Ltd. & Ors.) and WP(C) No. 2314/2023 (Tanu Gupta v. J&K Bank Ltd. & Ors.). The Writ Court allowed both petitions on 25 August 2025, quashing the impugned regularisation orders and directing the Bank to treat the maternity leave periods as continuous service, and to extend all benefits under Circular No. 752 with retrospective effect.

The Bank’s Case on Appeal

J&K Bank filed LPA No. 34/2026 (arising from Tanu Gupta’s case) and LPA No. 27/2026 (arising from Basu Magotra’s case), both represented by Mr Raman Sharma, Senior Advocate, with Mr Kartikay Sharma, Advocate.

The Bank advanced four principal grounds. First, it argued that maternity leave had never been denied; it was fully granted. The contractual period was merely extended proportionately so that the employees could complete the requisite active service for a suitability assessment. The Writ Court had failed to appreciate this distinction.

Second, the Bank contended that the employees, having accepted the leave sanction conditions without protest and availed the benefit, were estopped from later challenging the regularisation orders. The Bank relied on the Supreme Court’s judgment in P.S. Gopinathan v. State of Kerala and Others, AIR 2008 SC 2768, in support of the doctrine of acquiescence.

Third, the Bank submitted that since the employees had not rendered continuous service for two years, their regularisation was rightly deferred until the extended contractual period was completed, in strict accordance with the terms of engagement.

Fourth, the Bank argued that Circular No. 752 and the Board Resolution of 26 April 2021 applied only to employees on the rolls as on 31 December 2020. Since the respondents were regularised after that date, a consequence of their own extended contracts, they had no entitlement to Adjustment Pay.

The respondents were represented by Mr Amit Gupta, Senior Advocate, with Mr Sumit Moza, Advocate. Their position was that the two-year tenure existed solely to assess suitability. Once suitability was acknowledged and regularisation followed, the employees could not be placed at a disadvantage merely because they had exercised their right to maternity leave. Excluding that period, they argued, was systemic gender discrimination that penalised motherhood.

How the Division Bench Reasoned

The Division Bench began by accepting the factual premise that the Bank had indeed granted maternity leave rather than denying it. The real question, the Bench held, was whether the consequential extension of the contractual period, and the resulting loss of Circular No. 752 benefits, was constitutionally permissible.

The Bench found it “solely due to the exclusion of the maternity leave period” that the employees’ regularisation fell after 31 December 2020, depriving them of benefits that would otherwise have accrued. This, the Bench held, was a direct and discriminatory consequence of their invocation of maternity leave.

On the constitutional framework, the Bench drew on Article 15 (prohibition of sex-based discrimination), Article 15(3) (enabling special measures for women), Article 42 (just and humane working conditions and maternity relief), Article 38 (welfare state obligations), and Article 39 (equal right to livelihood and equal pay). It held that any ambiguity or silence in rules governing maternity benefits must be resolved through beneficial construction in favour of the female employee, and that any contrary interpretation would defeat the spirit of gender justice embedded in Article 15.

The Bench referred to the Supreme Court’s judgment in Municipal Corporation of Delhi v. Female Workers (Muster Roll), (2000) 3 SCC 224, which held that employers must be considerate towards working women during pregnancy and after childbirth, and that the Maternity Benefit Act, 1961 aims to ensure women can overcome motherhood “honourably, peaceably, undeterred by the fear of being victimised.”

It also relied on Deepika Singh v. PGIMER, Chandigarh, (2023) 13 SCC 681, where the Supreme Court held that a purposive interpretation of maternity leave provisions is essential, and that “no employer can perceive childbirth as detracting from the purpose of employment.” That judgment was approved in Kavita Yadav v. State (NCT of Delhi), (2024) 1 SCC 421.

The Bank’s acquiescence argument was rejected with particular firmness. The Bench held that while acquiescence operates as an equitable shield, it cannot be used to defeat fundamental rights. Where a constitutional infraction is manifest, equity must yield to the rule of law. The Bench also found that the employees had no real bargaining power: any contemporaneous protest against the regularisation terms would have resulted in termination. Accepting the conditions was not a free choice but a compelled submission.

In this context, the Bench drew extensively on the Supreme Court’s recent judgment in Bhola Nath v. State of Jharkhand, 2026 INSC 99, reported as 2026 SCC Online SC 129. That judgment had disapproved of mechanical application of acquiescence principles without engaging with core constitutional issues, and had reiterated that the State, as a model employer, cannot exploit the vulnerability or unequal bargaining position of its employees. The Supreme Court in that case had also invoked Central Inland Water Transport Corporation v. Brojo Nath Ganguly, which held that courts will not enforce, and will strike down, unfair contractual clauses entered into between parties with unequal bargaining power.

The Division Bench applied the “lion and lamb” analogy drawn in Bhola Nath: a contract between the State (or a State instrumentality) and an individual employee is structurally unequal, and constitutional courts are duty-bound to protect the weaker party from exploitation by the dominant contracting party.

The Bench also noted a prior judgment of the learned Single Judge in Shafakat and Others v. J&K Bank Limited and Others, which had held that deducting leave availed during a probationary period when computing years of service for promotion purposes was arbitrary and violative of Articles 14 and 16. The Bank had initially challenged that judgment in LPA No. 33/2024 but subsequently withdrew the appeal, which was dismissed as withdrawn on 26 March 2025.

Clause 30 of the Bipartite Settlement dated 11 November 2020 was also noted: it mandated that regular female employees be granted maternity leave for up to six months per occasion, subject to a maximum of twelve months during their entire service. The Bench observed that the Bank had itself incorporated maternity protections into its service regulations, making its conduct in the present case all the more difficult to sustain.

Outcome

The Division Bench found the Writ Court’s judgment to be “well-reasoned, pellucid, and entirely in accordance with law.” Both LPA No. 34/2026 and LPA No. 27/2026 were dismissed.

The directions of the Writ Court accordingly stand: J&K Bank is directed to treat the maternity leave periods of Tanu Gupta, Basu Magotra, Isha Sudan, and Bintul Hudda as continuous service, without discounting those periods from the two-year assessment period computed from their joining dates. The Bank must extend to them all benefits under Circular No. 752 dated 12 March 2021 — including revised pay scale and Adjustment Pay — as were given to Banking Associates appointed alongside them, along with consequential benefits, with retrospective effect. The judgment was pronounced on 20 May 2026 and approved for reporting.