decision of high court on pension option to voluntary retired

[mahesh agrawal]

Dear Sir,
when there is clear verdict of high court that VRS people can not be
denied option of vrs,how IBA and banks can refuse.....I am sending a
copy of the decision sent by one of our colleagues Mr. B.V.Pai with the
request to all concerned unions,ubfu,AIBEA,AIBOC and all other unions
to please take up the matter with IBA immediately and not to indulge
the case in litigation please.......

Madhav K. Kirtikar vs Bank Of India on 7 January, 1997
Cites 11 docs - [View All]
Article 14 in The Constitution Of India 1949
Article 12 in The Constitution Of India 1949
Article 226 in The Constitution Of India 1949
Deokisan B. Sarda vs Controller Of Estate Duty on 16 April, 1987
A.P. Srivastava vs Union Of India And Others on 20 September, 1995
Citedby 1 docs
M.R. Kulkarni And Ors. vs Bank Of Maharashtra, ... on 13 February, 2004

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Mumbai High Court

Equivalent citations: 1997 (2) BomCR 524, (1997) ILLJ 1094 Bom, 1997
(2) MhLj 559
Bench: A Shah
Madhav K. Kirtikar vs Bank Of India on 7/1/1997

ORDER

1. This petition under Article 226 of the Constitution is filed by a
retired Bank employee for the following reliefs :

(i) to declare that the petitioner is entitled to the benefit of
pension in accordance with the pension scheme framed by the Bank of
India;

(ii) to issue a writ of mandamus to strike down that part of the scheme
which denies pensionary benefits to the employees who had retired
voluntarily from service during the period August 1, 1986 to October
31, 1993, and

(iii) to issue a writ of mandamus directing the respondent to forthwith
extend the pensionary benefits to the petitioner.

2. The facts of the case are simple and may be shortly stated. In or
about 1946 the petitioner joined the respondent-Bank of India which was
then a limited company. He retired from the service on August 1, 1987.
Many developments had taken place in the intervening period. What was
till then a private Bank, became a nationalized Bank under the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 ("Act"
for short). The petitioner had put in 41 years of service with the
respondent when he opted for voluntary retirement from the services of
the respondent in the year 1987. The petitioner had opted for voluntary
retirement in accordance with the rules contained in the Bank of India
(Officers' Service) Regulations, 1979 ("Regulations" for short). The
rules regarding voluntary retirement for officer employees, inter alia,
provide that an officer employee retiring voluntarily shall be entitled
to all the benefits under the normal retirement, as per the service
regulations.

3. Originally employees of the respondent-Bank were not entitled to
pension. But there was a scheme for payment of provident fund and
gratuity under the rules. When there was a demand from the Bank
employees for grant of pension to them, after discussions with the
Union, the Bank proposed to introduce the pension scheme for all the
employees and certain proposals were putforth while introducing the
pension scheme for the officers. It seems that the draft scheme was
circulated amongst the employees - both in service as well as retired.
The Bank also called for options to be exercised from the officer
employees who had retired between August 1, 1986 and October 31, 1993.
It seems that the Bank wrote to the petitioner expecting his option for
pension scheme and also directed him to undergo medical examination at
his costs from the Bank's approved doctors for the purposes of
commutation of pension. The petitioner vide his letter dated July 22,
1994 exercised his option to join the pension scheme. He also exercised
his option to commute one-third of the pension. He also got himself
medically examined by the respondent's doctor.

4. On September 29, 1995 the Bank of India (Employees') Pension
Regulations, 1995 ("Regulations of 1995" for short) were brought into
force. The Regulations were framed by the Board of the respondent-Bank
in exercise of the powers conferred by Clause (f) of Sub-section is (2)
of Section 19 of the Act after consultation with the Reserve Bank of
India and the previous sanction of the Central Government. By the
Regulations of 1995 the pension scheme is made applicable to all the
employees who have retired during the period January 1, 1986 to October
31, 1993. Under the old Regulations the employee had a right to retire
voluntarily after completing 30 years of service. However, by the
Regulations of 1995 the employee is given right to retire after 20
years' service under Regulation 29 and it is provided that such a
retired employee shall be eligible for pension.

5. By letter dated February 3, 1996 the respondent Bank wrote to the
petitioner that the Indian Bank's Association had clarified to the
respondent that employees who had voluntarily retired during the period
January 1, 1986 to October 31, 1993 would not be eligible for pension
and voluntary retirement. The petitioner was informed that as he had
sought and obtained voluntary retirement prior to November 1, 1993,
pensionary benefits could not be extended to him. It appears that the
Bank took a view that only those employees who have retired after
November 1, 1993 would be eligible for pension as provided under
Regulation 29. It is this decision of the Bank which is impugned in the
present petition under Article 226 of the Constitution.

6. The petitioner has alleged that the stand taken by the Bank denying
pension to the petitioner solely on the ground that he has retired
voluntarily prior to November 1, 1993 though after January 1, 1986 is
manifestly illegal and unconstitutional. It is also alleged that under
the pension regulations, officers who have retired from the Bank after
reaching the age of superannuation on or after January 1, 1986 having
been made eligible for pension, the petitioner who has retired on
voluntary basis on or after January 1, 1986 cannot be discriminated. It
is pointed out that the provisions which classified the retired
employees into two classes artificially is arbitrary and not based on
any rational and has no nexus to the object sought to be achieved by
introducing the pension scheme but runs counter to the objective of
providing pension scheme. It is, therefore, contended that the impugned
action of the respondent-Bank is contrary to and violative of Article
14 of the Constitution.

7. Mr. Kapadia, learned Counsel for the petitioner contended that since
the petitioner has retired voluntarily between January 1, 1986 and
October 31, 1993, he cannot be denied pension on the ground that he has
retired prior to 1993. The learned Counsel brought to my notice the
provisions contained in the 1995 Regulations, especially Regulation
2(k) "date of retirement", 2(y) "retirement", and Regulation 3 which
speaks of the applicability of the scheme to the employees. The learned
counsel also referred me to Regulations 29(3), 32 and 34 contending
that a combined reading of these regulations clearly shows that the
petitioner is entitled to pension under the regulations. According to
the learned counsel, regulation 3 of the regulations is made applicable
to the employees who were in the service of the Bank after January 1,
1986 but have retired before November 1, 1993. The learned counsel
pointed out that Regulation 29 speaks of pension of voluntary
retirement. In that regulation, the cut-off date is November 1, 1993
for pension on voluntary retirement. But at the same time Regulation
34, according to the learned counsel, speaks of payment of pension or
family pension in respect of employees who retired or died between
January 1, 1986 to October 31, 1993 and as such the learned counsel
pointed out that even under the regulations of the Bank as framed, the
petitioner came under the scope of the regulation and is entitled to
pension. The learned counsel brought to my notice the decision of the
Supreme Court in D. S. Nakara & Ors. v. Union of India (1983-I-LLJ-
104). He also relied upon the subsequent decisions of the Supreme Court
in Smt. Poonamal & Ors. v. Union of India & Ors. AIR 1985 SC 116 and A.
P. Srivastava v. Union of India & Ors. (1996-I-LLJ-241) (SC), referring
to these judgments, Mr. Kapadia pointed out that it is not permissible
for the respondent to make distinction between the same class of
employees who are retired. If it is done, it offends Article 14 of the
Constitution. Mr. Kapadia argued that even assuming that it is
permissible for the Bank to introduce a cut-off date by providing
classification amongst the employees i.e., those retired before the
cut-off date and those retired after the cut-off date, it is certainly
not open to make a further classification amongst the employees who
retired after the cut-off date. Such a construction, according to the
learned counsel, if given to the regulations would be violative of
Article 14. The learned counsel argued that a plain reading of the
Regulations itself clearly indicates that the petitioner is entitled to
pension under the new pension scheme and if the Bank wants to make
artificial differentiation amongst retired employees into classes, then
the case attracts Article 14.

8. Mr. Singh, learned counsel for the Bank submitted that the
provisions contained in the pension regulations clearly exclude the
employees who have taken voluntary retirement during the period January
1, 1986 to October 31, 1993. Mr. Singh submitted that the
interpretation suggested by Mr. Kapadia cannot be accepted in the face
of clear and unambiguous provisions of the regulations. Mr. Singh took
me through the various provisions of the regulations in order to show
that there is no scope for applying the scheme to the employees who
have retired voluntarily prior to October 31, 1993. On being questioned
by the Court, Mr. Singh was unable to give any explanation as to why
the employees retired voluntarily during the period January 1, 1986 to
October 31, 1993 are excluded. Mr. Singh merely stated that when there
was no pension scheme and when it was introduced for the first time, it
is open to the Bank to make distinction amongst the retired employees
as employees retired and employees who retired voluntarily and went
away from the Bank after so obtaining benefits to which they were
entitled. He contended that certain other categories of employees
retired before October 31, 1993 are excluded. The learned counsel
submitted that the pension scheme is applicable only to persons who
sought voluntary retirement under regulation 29 of the Regulations and
the scheme is not applicable to persons who voluntarily retired prior
to October 31, 1993.

9. The principal controversy raised in this petition is whether the
employees who have retired voluntarily during the period January 1,
1986 to October 31, 1993 are covered by the pension scheme of 1995. The
employees of the Bank are governed by the Bank of India (Officers'
Service) Regulations, 1979. The said Regulations contained rules
regarding voluntary retirement for officer employees. The rules
specifically provide that an Officer may be permitted by the competent
authority to voluntarily retire from the Bank's Service any time after
completion of 55 years of age or 30 years of total service as an
officer employee or otherwise, whichever is earlier, after giving the
Bank 3 months' notice in writing unless the requirement is wholly or
partly waived. It is also provided that an officer employee retiring
voluntarily shall be entitled to all benefits under the normal
retirement as per the Regulations. The petitioner opted for retirement
under these rules and accordingly was allowed to retire with effect
from January 1, 1987.

10. Now turning to the Regulations of 1995, Clause 2(k) of the
Regulations of 1995 define "date of retirement" as follows :

"2(k) : 'date of retirement' means the last date of the month in which
an employee attains the age of superannuation or the date on which he
is retired by the Bank or the date on which the employee voluntarily
retires; or the date on which the officer is deemed to have retired".

Sub-clause (x) of Clause 2 defines "retired" to include deemed to have
retired under Clause (1). Under Sub-clause (y) "retirement" is defined
as follows :

"2(y) : 'retirement' means cessation from Bank's service -

(a) on attaining the age of superannuation specified in Service
Regulations or Settlements;

(b) on voluntary retirement in accordance with provisions contained in
regulation 29 of these regulations;

(c) on premature retirement by the Bank before attaining the age of
superannuation specified in Service Regulations or Settlement".

11. Chapter II of the Regulations deals with application and
eligibility. Clause 3 reads as follows :

"These regulations shall apply to employees who, -

(1)(a) were in the service of the Bank on or after the 1st day of
January, 1986 but had retired before November 1, 1993; and

(b) ..........

(c) .........."

Clause 14, Chapter IV deals with qualifying service and it reads as
follows : "Subject to the other conditions contained in these
regulations, an employee who has rendered a minimum of ten years of
service in the Bank on the date of his retirement or the date on which
he is deemed to have retired shall qualify for pension".

12. Then Clause 29, Chapter V provides for pension on voluntary
retirement. It says that on or after November 1, 1993 any employee who
has completed twenty years may, by giving three months' notice in
writing, retire from service. Clause 34 of Chapter V reads as follows :

"Payment of pension or family pension in respect of employees who
retired or died between January 1, 1986 to October 31, 1993 :

(1) Employees who have retired from the service of the Bank between
January 1, 1986 and October 31, 1993 shall be eligible for pension with
respect from November 1, 1993.

(2) The family of a deceased employee governed by the provisions
contained in Sub-regulation (7) of Regulation 3 shall be eligible for
family pension with effect from November 1, 1993".

13. The concept of pension is now well known and has been clarified by
the Supreme Court time and again. It is not a charity or bounty nor is
it gratuitous payment solely dependent on the whim or sweet will of the
employer. It is earned for rendering long service and is often
described as deferred portion of compensation for past service. It is
in fact in the nature of a social security plan to provide for the
December of life of a superannuated employee. Such social security
plans are consistent with the socio-economic requirements of the
Constitution when the employer is a State within the meaning of a
Article 12 of the Constitution. In D. S. Nakara's case (supra) the
Supreme Court held that classification in revised pension formula
between the pensioners on the basis of date of retirement specified in
the memoranda is arbitrary and violative of Article 14. In D. S.
Nakara's case (supra) the scheme under consideration of the Supreme
Court was not a new scheme but was only revision of the existing
scheme. This distinction was noticed by the Constitutional Bench of the
Supreme Court in Krishena Kumar v. Union of India, (1991-I-LLJ-191).
The Bench held that a pension scheme and a provident fund scheme being
structurally different, those belonging to the latter scheme cannot
claim to come over the former scheme as of right on the plea that the
cut-off date fixed under the scheme violated Article 14 of the
Constitution. This legal position was reiterated in A. I Reserve Bank
Retired Officers Association v. Union of India, 1992 II CLR SC 89,
Ahmadi, J., as His Lordship then was, speaking for the Bench observed :
"Whenever any rule or regulation having statutory flavour is made by an
authority which is a State within the meaning of Art. 12, the choice of
the cut-off date which has necessarily to be introduced to effectuate
such benefits is open to scrutiny by the Court and must be supported on
the touch-stone of Art. 14. If the choice of the date results in
classification or division of members of a homogeneous group it would
be open to the Court to insist that it be shown that the classification
is based on an intelligible differentia and on rational consideration
which bears a nexus to the purpose and object thereof. The differential
treatment accorded to those who retired prior to the specified date and
those who retired subsequent thereto must be justified on the touch-
stone of Art. 14, for otherwise it would be offensive to the philosophy
of equality enshrined in the Constitution".

14. Keeping in mind the law laid down by the Supreme Court, it cannot
be disputed that when a new scheme is introduced, a choice of cut-off
date may be permissible subject to the scrutiny by the Court in order
to ascertain whether the choice of the date can be supported on the
touch-stone by Article 14. In the case in hand the Bank has chosen to
apply scheme to the employees who have retired after January 1, 1986.
The benefit of the scheme therefore must be given to all the employees
who have retired after January 1, 1986. It will be totally
impermissible to make artificially a further classification amongst the
employees retired after January 1, 1986 as it will be totally
irrational, arbitrary and violative of Article 14. This is more so
because under the scheme the employees who have retired voluntarily
after November 1, 1993 are expressly covered by clause 29 of the
scheme. In this regard reference may be made to the decision of the
Supreme Court in A. P. Srivastava's case (supra). There the question
which arose for consideration of the Supreme Court was whether an
employee who was a temporary Government servant loses his right to
receive pension when the employer exercises his option and retires the
employee after he attains the age of 55 years in accordance with Rule
56 (j)(ii) of the Fundamental Rules, even though the employee might
have completed more than 20 years' service ? The Supreme Court held
that if a temporary Government servant who has rendered 20 years of
service, is entitled to pension, if he voluntarily retires, there is no
justification for denying the right to him when he is required to
retire by the employer in the public interest as an order of compulsory
retirement is not a punishment and pension is a right of the employee
for service rendered. Therefore, a temporary Government servant would
be entitled to pension after he has completed more than 20 years of
service even if he is required to retire by the employer in exercise of
power under Rule 56(j) of the Fundamental Rules.

15. With the assistance of the learned counsel for the parties, I have
carefully gone through the pension scheme of 1995. I do not see any
distinction in the scheme amongst retired employees. If a proper
construction is given to the regulations, in my view, the Bank cannot
make a distinction amongst employees who retire under the voluntary
retirement scheme and employees who retire otherwise because the term
"retirement" which occurs in the regulations enclose voluntary
retirement. There is no reason to confine voluntary retirement only to
regulation 29 of the regulations. If such a construction is given to
regulation 29 it clearly violates Article 14. In Shri Govindlalji v.
State of Rajasthan, it was observed that if the impugned provisions of
a statute are reasonably capable of a construction which does not
involve the infringement of any fundamental rights, that construction
must be preferred though it may reasonably be possible to adopt another
construction which leads to the infringement of the said fundamental
rights. This rule of interpretation was reiterated by the Supreme Court
in M. K. B. Menon v. A. C. Estate Duty, . The Supreme Court held the
Court ought not to

interpret statutory provisions, unless compelled by their language, in
such a manner as would involve its constitutionality because the
legislature is presumed to enact a law which does not contravene or
violate the constitutional provisions. We have already noted that by
Rule 3(1)(a) the scheme is made applicable to the employees retired
after January 1, 1986. Rule 34 then provides that employees who have
retired from service of the Bank between January 1, 1986 and October
31, 1993 shall be eligible for pension with effect from November 1,
1993. The combined reading of Rules 3 and 34 shows that the petitioner
is entitled to get pensionary benefits which are extended by the Bank,
even though it is for the first time. The regulations framed by the
Bank is for giving pensionary benefits to all the employees of the Bank
either retired on attaining the age of superannuation or retired under
the scheme of voluntary retirement. It is therefore not permissible for
the bank to fix artificially a further cut-off date as November 1, 1993
to give benefit of the pension scheme to the employees who have retired
voluntarily only after November 1, 1993. When the Bank decides to
extend the benefit of pension to its employees it cannot make any
distinction between the employees who have retired and employees who
sought voluntary retirement and retired. I am also supported by an
unreported judgment, single Judge of the Karnataka High Court dated
September 30, 1996 in Writ Petition Nos. 3919 to 3994 of 1996. The
Karnataka High Court has held that the employees of the respondent Bank
who had voluntarily retired between January 1, 1986 and October 31,
1993 are eligible for pension.

16. In the result, petition succeeds. Rule is made absolute in terms of
prayer clauses (a) and (c). The respondent Bank is directed to comply
with the order of this Court within six weeks from today.

17. Certified copy expedited.