Issac T.M. vs Idukki Distt. Coop. Bank Ltd.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No(s). 5430 of 2019 (@ SLP(C) No. 30948/2018)

Issac T M Appellant(s)

Versus

The Idukki District Co-operative Bank Ltd & Ors. Respondent(s)

JUDGMENT

Dr Dhananjaya Y Chandrachud, J

Leave granted.

This appeal arises from a judgment dated 6 August 2018 of a Division

Bench of the High Court of Kerala 1 by which the order of the learned Single Judge

dismissing the Writ Petition filed under Article 226 of the Constitution of India has

been affirmed.

The appellant was an employee of the first respondent, a co-operative Signature Not Verified Digitally signed by MANISH SETHI bank in the State of Kerala. He entered service in 1978 and rendered nearly 29 Date: 2019.07.22 17:49:38 IST Reason:

years of service before attaining the age of superannuation on 31 January 2007.

1 Writ Appeal No. 2681 of 2015 2

The Government of Kerala formulated a self-financing pension scheme called the

State Co-operative Bank and District Co-operative Bank Employees Self Financing

Pension Scheme 20052 for the employees of the State Co-operative Bank and

District Co-operative banks.

Para 3 of the Pension Scheme constituted a pension fund. Para 5

provided for eligibility to receive pension in the following terms:-

“5. Eligibility for Pension. (1) Subject to the provisions of the Scheme, the following persons shall be eligible for pension, namely :-

(i) Every employee of a bank;

(ii) Employees who have retired from the service of a

Bank in between 1st January, 1974 and 31st March, 2005:

Provided that in respect of the employees who have retired in between 1st January, 1974 and 31st March, 1993, only those who are alive on the date of publication of the scheme in the official Gazette shall be eligible for pension:

Provided also that an employee who has received the Contributory Provident Fund and is in receipt of pension from any other pension scheme shall be eligible for pension only on the remittance of entire portion for the employers contribution to him, to the corpus of the fund.

(2) In respect of Persons mentioned in clause (i) and (ii) of sub-paragraph (1) pension shall be payable only from the succeeding month of the month on which the remittance of entire portion of the employers’ contribution to pension fund is made and no arrears of pension shall be payable to the month of such remittance.

(3) Persons retired from the service of a Bank in between 1st January, 1974 and 31st March, 1993, and who are alive on the date of publication of the scheme in the official Gazette shall be eligible for monthly pension only and no family pension shall be payable on the death of such person.”

2“Pension Scheme” 3

Para 7 provided for qualifying service. Para 19 which provided for the

payment of pension is extracted below:-

“19. Payment of Pension – Pension under the Scheme shall be payable per mensum which shall commence,

(i) In the case of superannuation pension, from the beginning of the month succeeding the month in which the employee retires from the service of the Bank after attaining the age of 58 years.

(ii) In the case of retiring pension, from the date succeeding the date on which the employee retires voluntarily from the service of Bank; and

(iii) In the case of family pension, from the date succeeding the date of death of the employee or the pensioner, as the case may be.”

By a communication dated 30 May 2006, the first respondent informed its

employees of the decision which was taken by the Bank to implement the Pension

Scheme for its employees retiring on or after 1 May 2005. A week before the

appellant was to retire from service, the bank issued a show cause notice to him

on 24 January 2007 in pursuance of which disciplinary proceedings were initiated.

As a result of the disciplinary proceedings, a liability of Rs 6.76 lakhs was fastened

upon the appellant on 5 October 2007 and he was intimated that his retiral dues

will be released after deducting the amount.

As a result of the disciplinary proceedings, the payment of pension was

held up in spite the appellant’s letter dated 19 October 2007 addressed to the

Board, raising objections3. On 15 March 2007, the first respondent called upon the

appellant to indicate his willingness to join the Pension Scheme and to remit an

amount of Rs 8,30,651 inclusive of interest at the rate of 12 per cent per annum

between February 2007 and March 2010.

3 The Kerala State Employees Pension Board is the second respondent. 4

While indicating his willingness, the appellant by a letter dated 30 March

2010 objected to the payment of interest computed at the rate of 12 per cent on

the employer’s share, stating that he would be willing to pay interest at the

standard rate on which interest is computed on the provident fund.

On 16 April 2010, the appellant was enrolled in the Pension Scheme and

was allotted a docket number. The grievance of the appellant is that, despite him

having conveyed his willingness to join the Pension Scheme, the pension records

were not forwarded by the Bank to the Board which administers the Pension

Scheme, consequent upon which, he addressed a letter on 15 January 2011 to the

Bank and the Board. On 31 January 2011, the first respondent informed the

appellant that his application for pension would be decided only after the disposal

of the cases pending before the High Court of Kerala.

Despite repeated representations, the appellant’s efforts failed to bear fruit.

The appellant filed a writ petition before the High Court which was disposed of with

a direction to the Bank to consider his representation. Following the order of the

Kerala High Court dated 27 August 2013, the first respondent constituted a Sub

Committee to look into the allegations which were levelled against the appellant.

The Committee opined that there was no merit in the allegations against the

appellant and that he was entitled to his terminal dues including pension. Upon the

decision of the Committee which was rendered on 28 September 2013, the first

respondent informed the appellant of the decision to disburse his retiral dues and

to recommend the payment of pension. The appellant was called upon to deposit

an amount of Rs 6,48,565 which he did on the same day.

Since the disbursement of the retiral dues was being held up, the appellant

moved the Registrar of Co-operative Societies. By his order dated 17 May 2014, 5

the Secretary, Kerala State Co-operative Employee Pension Board directed the

payment of interest with effect from 1 November 2013. Subsequently, by an order

dated 18 March 2015, the Joint Registrar of Co-operative Societies directed the

payment of interest on the retiral dues.

The appellant instituted a writ petition before the Kerala High Court

seeking sanction of his pensionary dues with effect from 1 February 2007 and the

payment of arrears together with interest until 1 November 2013, when eventually

the pensionary dues were paid. The Writ Petition was dismissed by the learned

Single Judge of the High Court on the ground that para 5(2) of the Pension

Scheme stipulated that pension shall be paid only from the month succeeding the

month in which remittance of the employer’s contribution is made. The learned

Single Judge held that in view of the pendency of the disciplinary proceedings, the

disbursal of the employer’s contribution has been held up and in consequence,

para 5 disabled the appellant from the benefit of pension with effect from the date

of his retirement. This view of the learned Single Judge has been upheld by the

judgment of the Division Bench in the Writ Appeal.

Assailing the judgment of the Division Bench, a Special Leave Petition was

filed under Article 136 of the Constitution of India.

We have heard Mr. Abir Phukan, learned counsel appearing on behalf of

the appellant, Mr P V Surendranath, learned Senior Counsel appearing on behalf

of the first respondent and Mr P V Dinesh, learned counsel appearing on behalf of

the second respondent.

The eligibility of the appellant to pension under the Pension Scheme is not

in dispute. The appellant is an employee who retired from service after 31 March

2005 and is eligible under para 5(1)(i) of the Pension Scheme. Para 19 of the 6

Pension Scheme stipulates that superannuation pension shall commence from the

beginning of the month succeeding the month in which the employee retires from

service after attaining the age of superannuation. In terms of the provisions

contained in paragraph 19 of the Pension Scheme, the appellant is entitled to

pension with effect from 1 February 2007.

The entitlement of the appellant to receive pension with effect from 1

February 2007 was denied on the basis of para 5(2) of the Pension Scheme by the

learned Single Judge and in appeal. The provisions contained in paragraph 5.2

have been held to be ultra vires in a judgment of a Single Judge of the Kerala High

Court in T K Jayan vs State of Kerala & Ors 4 .The learned Single Judge has held

that Banks which are governed by the Pension Scheme are under an obligation in

terms of para 29 of the Pension Scheme to transfer the employer’s contribution

together with interest accrued thereon. Any delay on the part of a Bank cannot

result in detrimental consequences for the retirees. The substantive relief which

has been granted in the judgment of the learned Single Judge is in the following

terms:-

“I, therefore, strike down sub-paragraph (2) of paragraph 5 to such extent and declare that the employees of Banks, who were in service as on 01.04.2005 will be entitled to arrears of pension, provided the respective Banks had remitted the employer’s contribution to the pension corpus with eligible interest and additional interest of 25%, if attracted, under paragraph 29 of the Scheme.”

During the course of the hearing, it has emerged before the Court that

while the Bank, informed the appellant by its letter dated 15 March 2010 of the

amount which was required to be deposited by him (Rs 8,30,651), this was

inclusive of interest at the rate of 12 per cent for the period 2007-2008. Evidently,

4 Writ Petition (Civil) No. 29901/2012 decided on 11 April 2017 7

the appellant had objections to the demand of interest at the rate of 12 per cent

per annum. The Bank did not forward the pension papers to the second

respondent-Board purportedly because of the disciplinary proceedings. On 31

May 2011, the Bank informed the appellant that his application for pension would

be considered only after the disposal of the cases which were initiated by the

appellant against the Bank. Evidently, it was only after the appellant was

exonerated on 28 September 2013 that on 12 October 2013 that he was finally

intimated of the remittance which was required to be made, which the appellant

did on the same day. We find no reason or justification for the Bank to hold up the

disbursal of the pensionary dues at the material time by not forwarding all the

connected papers and information to the second respondent.

Since the entitlement of the appellant cannot be denied, we are of the

view that the following order will meet the ends of justice:

(i) The second respondent shall within a period of four weeks from today, pay

over to the appellant, the arrears of pension between 1 February 2007 and

1 November 2013;

(ii) In the event that any interest is required to be paid on account of the

delayed receipt of the contribution by the Bank, this shall be computed

within a period of four weeks from the date of the receipt of a certified copy

of this order and intimated to the first respondent;

(iii) Within one week of the receipt of the communication referred to in clause (ii)

above, the first respondent shall remit the amount to the second

respondent; and

(iv) The arrears that are due and payable to the appellant shall be paid over

within a period of two months of the receipt of a certified copy of this order. 8

The appeal is allowed in the above terms. The impugned judgment of the

High Court is set aside. There shall be no order as to costs.

Pending application(s), if any, shall stand disposed of.

…..…………................................J. (Dr Dhananjaya Y Chandrachud)

.…………………………...............J. (Indira Banerjee)

New Delhi July 12, 2019 9

ITEM NO.39 COURT NO.10 SECTION XI-A

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 30948/2018

(Arising out of impugned final judgment and order dated 06-08-2018 in WA No. 2681/2015 passed by the High Court of Kerala at Ernakulam)

ISSAC T.M. Petitioner(s)

VERSUS

THE IDUKKI DISTRICT COOPERATIVE BANK LTD. & ORS. Respondent(s)

Date : 12-07-2019 This petition was called on for hearing today.

CORAM :

HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MS. JUSTICE INDIRA BANERJEE

For Petitioner(s) Mr. Abir Phukan, Adv.

Kmnp Law Aor, AOR For Respondent(s) Mr. P.V. Surendranath, Sr. Adv.

Ms. Resmitha R. Chandran, AOR Lekha Sudhakran, Adv.

Mr. P. V. Dinesh, AOR Mr. Mukund P., Adv.

T.P. Sindhu, Adv.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

The appeal is allowed in terms of the signed reportable

judgment.

Pending application(s), if any, shall stand disposed of.

(MANISH SETHI) (SAROJ KUMARI GAUR) COURT MASTER (SH) BRANCH OFFICER

(Signed reportable judgment is placed on the file)