Sudhir Kumar Consul vs Allahabad Bank

Sudhir Kumar Consul .............. Appellant

versus

Allahabad Bank ............... Respondent

J U D G M E N T

H.L. Dattu, J.

1) Leave granted.

2) These appeals, by special leave, are directed against the

Judgment and Order dated 25.02.2009 of the High Court of

Uttarakhand in Writ Petition No. 69 of 2007. By the impugned

order, the Court has rejected the Writ Petition filed by the

appellant for granting certain reliefs which would include claim

for pensionary benefits under the New Pension Scheme, known

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as Allahabad Bank Employees (Pension) Regulations, 1995

[hereinafter referred to as, "the 1995 Regulations"].

3) The issue involved in the present appeals for our consideration

is: Whether the appellant is eligible and entitled for the

pensionary benefits under the Allahabad Bank Employees

Pension Scheme, 1890 [hereinafter referred to as "Old Pension

Scheme"] in terms of the Allahabad Bank Officers Service

Regulations, 1979 [hereinafter referred to as "the 1979

Regulations"].

4) The factual matrix in brief is as under :

The appellant was appointed as a Clerk in the Nainital

Branch of the Allahabad Bank, the respondent herein, on

21.02.1976. Subsequently, the appellant was promoted to the

post of JMG-Scale-I Officer Grade on 02.05.1983. The

services of the appellant, after promotion, were governed by the

1979 Regulations. The Regulation 46 of 1979 Regulations

provides retirees an option of gratuity or pension in lieu thereof,

and further, the pension benefits for the retirees opting for

pension are available under the Old Pension Scheme. Pursuant

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to the Tripartite Memorandum of Settlement [hereinafter

referred to as "the Tripartite Settlement"], among the

management, workers and officers of the various banks dated

29.10.1993, the respondent formulated a draft/proposed

Allahabad Bank Employees (Pension) Regulation 1993

[hereinafter referred to as "the draft/proposed 1993

Regulations"] vide Instruction Circular no. 3904 dated

06.09.1994. The draft/proposed 1993 Regulations provided the

option to the employees, who were on the rolls of the Bank as

on 31.10.1993, to opt for pension as per the Old Pension

Scheme plus Contributory Provident Fund [hereinafter referred

to as "the CPF"]. Accordingly, the appellant claimed pension

under the Old Pension Scheme in terms of the draft/proposed

1993 Regulations on 30.11.1994. Subsequently, on 29.09.1995,

the respondent formally adopted the 1995 Regulations pursuant

to the Tripartite Settlement. The 1995 Regulations superseded

the draft/proposed 1993 Regulations vide Circular No. 4318

dated 16.11.1995 by further extending the benefit under the

draft/proposed 1993 Regulations to the employees who were on

the rolls of Bank as on 29.09.1995 to opt for pension as per the

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Old Pension Scheme plus CPF. Further, the 1995 Regulations,

in express terms, have validated the earlier options exercised by

the employees in accordance with the draft/proposed 1993

Regulations. The appellant applied for the voluntary retirement

pursuant to the Allahabad Bank Employees Voluntary

Retirement Scheme, 2000 [hereinafter referred to as "the VRS-

2000"], which was accepted on 12.04.2001 and the appellant

stood relieved from the services of the Bank on 30.04.2001.

After retirement, the appellant was offered gratuity under the

Payment of Gratuity Act, 1972 by the respondent vide letter

dated 01.09.2001, which the appellant declined to accept.

Subsequently, on 09.10.2001, the appellant made a request to

the competent authority for sanction of pension in lieu of

gratuity, but his request was rejected by the General Manager

(Personnel Administration), vide letter dated 13.11.2001 as not

maintainable on the ground that an officer employed or

appointed after 01.07.1079 is ineligible for pension under the

Old Pension Scheme in view of Regulation 46 of the 1979

Regulations. In this backdrop, the appellant alternatively

requested the General Manager (Personnel Administration) vide

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letter dated 05.03.2002 to accept his option for Pension under

the 1995 Regulations and further intimated his provisional

acceptance of the said gratuity of `2,36,449/- under protest,

which was not replied to by the respondent. Eventually, the

respondent vide Instruction Circular no. 7331 dated 04.06.2002,

lowered down the eligibility criteria from 25 years to 15 years

for sanction of proportionate pension under Old Pension

Scheme to retirees under the VRS-2000. In view of this, the

appellant again requested vide letter dated 06.08.2002 to the

competent authority for the grant of pension under the Old

Pension Scheme and the same was rejected in terms of

Regulation 46 of the 1979 Regulations. The appellant further

made representations before the Chairman and Managing

Director of the respondent vide letters dated 16.08.2006 and

19.03.2007, which were rejected by the Assistant General

Manager vide letter dated 05.04.2007 on the ground that the

appellant was not eligible to claim pension under the Old

Pension Scheme in terms of the 1979 Regulations. Being

aggrieved, the appellant approached the High Court of

Uttarakhand by filing a writ petition under Article 226 of the

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Constitution of India and the same was partly allowed by the

judgment and order dated 25.02.2009, wherein the High Court

directed the respondent to pay gratuity to the appellant as per

Regulation 46(2) of the 1979 Regulations after adjusting the

amount of gratuity already paid to the appellant in terms of

Payment of Gratuity Act, 1972. The appellant, aggrieved by the

Judgment and Order of the High Court in Writ Petition, filed a

Review Application, which was rejected vide Order dated

31.03.2009. Aggrieved by these Orders, the appellant is before

us in these appeals.

5) We have heard Shri Sudhir Kumar Consul, the appellant, who

has appeared in person, and Shri Yashraj Singh Deora, learned

counsel for the respondent - Bank.

6) The appellant contends that he is entitled to claim the benefit of

pension under the existing Old Pension Scheme in addition to

CPF in view of exercise of his option in terms of the

draft/proposed 1993 Regulations. The appellant submits that he

is an officer governed by the 1979 Regulations and duly

eligible for pension under the existing Old Pension Scheme in

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terms of the Regulation 46(1) of the 1979 Regulations. In other

words, the appellant argued that he was the employee of the

respondent on the appointed date as per the said Regulation

46 (1). He further submits that the respondent has wrongly

deprived him of his pensionary benefits under the Old Pension

Scheme by misinterpreting Regulation 46 (1). In arguendo, the

appellant challenged the vires of Regulation 46 of 1979

Regulations, as being beyond the Scope of Section 12 (2) of the

Banking Companies (Acquisition and Transfer of Undertaking)

Act, 1970 [hereinafter referred to as "the Banking Act"] and in

violation of the guarantee of equality before law and equal

protection of laws enshrined in Article 14 of the Constitution of

India. The appellant submits that Section 12 (2) of the Banking

Act duly protects the existing pensionary and other rights of the

employee and the introduction of Regulation 46 (1) of 1979

Regulations unjustifiably deprives the appellant of his existing

pensionary right under the Old Pension Scheme. The appellant

further submits that the said Regulation 46 (1) creates an

arbitrary and unreasonable distinction between the same class

of officers of the respondent, merely on account of their date of

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appointment as employee with the respondent. In other words,

the appellant argued that the said Regulation 46 discriminates

the officers appointed on and before 01.07.1979 from those

officers who are appointed, recruited or promoted after the said

date.

7) Shri Yashraj Singh Deora, learned counsel for respondent,

submits that the appellant is not eligible to claim any pension

under the Old Pension Scheme in terms of Regulation 46 (1) of

the 1979 Regulations as the appellant had admittedly become

officer after 01.07.1979 on his promotion on 02.05.1983. It is

also submitted that the appellant, prior to his promotion, was a

Clerk with the respondent on the appointed date in terms of the

said Regulation 46 (1). Hence, the appellant cannot claim any

pensionary benefit under the Old Pension Scheme. In response

to appellant's alternative submissions, the learned counsel for

the respondent submits that Section 12 (2) of the Banking Act

was introduced in 1970 after nationalization of the Banks.

Section 12 (2) of the Banking Act cannot be invoked by

appellant as Regulation 46 of the 1979 Regulations was

introduced on 01.07.1979 only for officers whereas the

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appellant became officer only in 1983 by way of promotion. In

other words, the appellant, being a Clerk at the relevant time

when the said Regulation 46 was introduced as applicable to

officers, cannot challenge its vires on the touchstone of Section

12 (2) of the Banking Act. The learned counsel further submits

that the Regulation 46 (1) of 1979 Regulations is in harmony

with Article 14 of the Constitution of India.

8) We have carefully considered the rival submissions of the

appellant in person and the learned counsel for the respondent-

Bank. In our opinion, the appellant is not entitled to claim

pensionary benefit in view of Regulation 46 (1) of the 1979

Regulations. The said Regulation 46 (1) provides pensionary

benefit under existing supplementary pension Scheme in lieu of

gratuity only to those officers who were officers on the

appointed date i.e. the officers who were appointed on or before

01.07.1979. Moreover, Provision 3 of the Old Pension Scheme

stipulates that the officers who are recruited or promoted after

01.07.1979, i.e. the date of implementation of the 1979

Regulations, are not entitled for pension as per the said

Regulations. It is an admitted fact that the appellant was

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working with the respondent as a Clerk on 01.07.1979 and was

promoted as an officer only in 1983. Therefore, the appellant is

not eligible to claim any benefit under the Old Pension Scheme.

9) It is well settled law that the vires of any subordinate

legislation can be challenged on the ground that it is arbitrary,

unreasonable and offends Article 14 of the Constitution of

India. The 1979 Regulations were introduced with a view to

standardize and provide comprehensive and compact set of

rules in respect of wages and perquisites of the officers of the

Bank. In furtherance of this object, Regulation 46 (1) of the

1979 Regulations provides pension in lieu of gratuity only to

the officers appointed prior to or on 01.07.1979 and not to

officers appointed, recruited or promoted thereafter. In this

view, we are of the opinion that the said Regulation 46 (1) lays

down a reasonable criteria for differentiation between the

officers appointed prior to or on 01.07.1979 and after the said

date. Hence the said Regulation 46 (1) is in consonance with

the Article 14 of the Constitution of India. Moreover, the fixing

of the cut-off date for granting retirement benefits such as

gratuity or pension under the different schemes incorporated in

1

the subordinate legislation, thereby, creating two distinct and

separate classes of employees is well within the ambit of

Article 14 of the Constitution. The differential treatment of two

sets of officers appointed prior to the notified date would not

offend Article 14 of the Constitution. The cut off date may be

justified on the ground that additional outlay as involved or the

fact that under the terms of appointment, the employee was not

entitled to the benefit of pension or retirement.

10) This Court, in Union of India v. P.N. Menon, (1994) 4

SCC 68, has held:

"8. Whenever the Government or an authority, which

can be held to be a State within the meaning of Article

12 of the Constitution, frames a scheme for persons

who have superannuated from service, due to many

constraints, it is not always possible to extend the

same benefits to one and all, irrespective of the dates

of superannuation. As such any revised scheme in

respect of post-retirement benefits, if implemented

with a cut-off date, which can be held to be reasonable

and rational in the light of Article 14 of the

Constitution, need not be held to be invalid. It shall

not amount to "picking out a date from the hat", as

was said by this Court in the case of D.R. Nim v.

Union of India, (1967) 2 SCR 325, in connection with

fixation of seniority. Whenever a revision takes place,

a cut-off date becomes imperative because the benefit

has to be allowed within the financial resources

available with the Government."

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The Court further observed:

"14...No scheme can be held to be foolproof, so as to

cover and keep in view all persons who were at one

time in active service. As such the concern of the court

should only be, while examining any such grievance,

to see, as to whether a particular date for extending a

particular benefit or scheme, has been fixed, on

objective and rational considerations."

11) In State Government Pensioners' Association v. State of A.P.,

(1986) 3 SCC 501, the Order in question provided that

retirement gratuity may be one-third of the pay drawn at the

time of retirement for every six-monthly service, subject to

maximum of 20 months' pay limited to `30,000. This Order

was made effective from 01.04.1978. The petitioners, who were

government employees and had retired before 01.4.1978,

contended that the gratuity, being a part and parcel of the

pensionary benefits, they were also entitled to the same

retrospectively. On behalf of the State, it was pointed out that

the gratuity which had accrued to the petitioners prior to

01.4.1978, was calculated on the then existing rules and pay,

and such petitioners formed a distinct class, for the purpose of

payment of gratuity, from others who retired after 01.04.1978,

the date from which the revised pension rules were made

1

applicable by the Government. This Court held that the upward

revision of gratuity which took effect from a specified date i.e.

1-4-1978 with prospective effect, was legal and not violative of

Article 14 of the Constitution.

12) In Action Committee South Eastern Railway Pensioners v.

Union of India, 1991 Supp (2) SCC 544, this Court has

examined the concept of `dearness pay', including the two

options for retirement benefits given to the employees which

had been framed fixing a cut-off date. This Court held:

"12. ... Learned counsel for the petitioners only

submitted that if the formula adopted in the case of

employees having retired after March 31, 1985 vide

circular dated May 17, 1985 is applied in the case of

the petitioners then it would make substantial

difference in the calculation of the amount of gratuity

and commuted value of pension. As already discussed

above no such claim can be allowed nor the same can

be permissible on any principle of equality enshrined

under Article 14 of the Constitution inasmuch as the

petitioners form a different class from those who were

continuing in service on or after March 31, 1985. The

petitioners of their own accord had opted for the

choice given to them and the principle enunciated in

D.S. Nakara case (1983) 1 SCC 305 cannot be applied

in the case of the petitioners."

13) In All India Reserve Bank Retired Officers' Association v.

Union of India, 1992 Supp (1) SCC 664, the Retired Officers'

1

Association of the Reserve Bank of India questioned the

validity of introduction of pension scheme in lieu of

Contributory Provident Fund Scheme. The bank employees,

who retired prior to 01.01.1986, had not been given benefit of

the said Pension Scheme. This Court held that the said cut-off

date was neither arbitrary nor artificial or whimsical. It was

further observed:

"10. ... The underlying principle is that when the State

decides to revise and liberalise an existing pension

scheme with a view to augmenting the social security

cover granted to pensioners, it cannot ordinarily grant

the benefit to a Section of the pensioners and deny the

same to others by drawing an artificial cut-off line

which cannot be justified on rational grounds and is

wholly unconnected with the object intended to be

achieved. But when an employer introduces an entirely

new scheme which has no connection with the existing

scheme, different considerations enter the decision

making process. One such consideration may be the

financial implications of the scheme and the extent of

capacity of the employer to bear the burden. Keeping

in view its capacity to absorb the financial burden that

the scheme would throw, the employer would have to

decide upon the extent of applicability of the scheme."

(Emphasis

added)

14) In University Grants Commission v. Sadhana Chaudhary,

(1996) 10 SCC 536, this Court has observed:

1 "21. ... It is settled law that the choice of a date as a

basis for classification cannot always be dubbed as

arbitrary even if no particular reason is forthcoming

for the choice unless it is shown to be capricious or

whimsical in the circumstances. When it is seen that a

line or a point there must be and there is no

mathematical or logical way of fixing it precisely, the

decision of the legislature or its delegate must be

accepted unless it can be said that it is very wide off

the reasonable mark."

15) In T.N. Electricity Board v. R. Veerasamy, (1999) 3 SCC 414,

the pension scheme was applied differently to persons who had

retired from service before 01.07.1986, and those who were in

employment on the said date. This Court held:

"15. ... We are of the view that the retired employees

(respondents), who had retired from service before 1-

7-1986 and those who were in employment on the said

date, cannot be treated alike as they do not belong to

one class. The workmen, who had retired after

receiving all the benefits available under the

Contributory Provident Fund Scheme, cease to be

employees of the appellant-Board w.e.f. the date of

their retirement. They form a separate class."

16) In State of Punjab v. Boota Singh case, (2000) 3 SCC 733, this

Court has held that the benefit conferred by the notification

dated 9-7-1985 can be claimed by those who retire after the

date stipulated in the notification and those who have retired

prior to the stipulated date in the notification are governed by

1

different rules. They are governed by the old rules, i.e., the

rules prevalent at the time when they retire. The two categories

of persons are governed by different sets of rules. They cannot

be equated. The grant of additional benefit has financial

implications and the specific date for the conferment of

additional benefits cannot be considered arbitrary. This Court

held:

"In the case of Indian Ex-Services League v. Union of

India (1991) 2 SCC 104 this Court distinguished the

decision in Nakara case (1983) 1 SCC 305 and held

that the ambit of that decision cannot be enlarged to

cover all claim by retirees or a demand for an

identical amount of pension to every retiree,

irrespective of the date of retirement even though the

emoluments for the purpose of computation of pension

be different. We need not cite other subsequent

decisions which have also distinguished Nakara case

(1983) 1 SCC 305. The latest decision is in the case of

K.L. Rathee v. Union of India (1997) 6 SCC 7 where

this Court, after referring to various judgments of this

Court, has held that Nakara case (1983) 1 SCC 305

cannot be interpreted to mean that emoluments of

persons who retired after a notified date holding the

same status, must be treated to be the same. The

respondents are not entitled to claim benefits which

became available at a much later date to retiring

employees by reason of changes in the rules relating

to pensionary benefits."

1

17) In State of Punjab v. J.L. Gupta, (2000) 3 SCC 736, this Court

reiterating the views expressed in Boota Singh (supra), held:

"5. The controversy involved in the present appeal and

connected appeals is squarely covered by the

aforesaid decision. The respondents are thus not

entitled to claim benefits under the notification dated

9-7-1985 since the said benefits became available on a

much later date to the retiring employees by reason of

change in the rules relating to pensionary benefits. In

this view, the judgment of the High Court cannot be

sustained."

18) In Ramrao v. All India Backward Class Bank Employees

Welfare Assn., (2004) 2 SCC 76, this Court has held that, even

for the purpose of effecting promotion, fixing of a cut-off date

was neither arbitrary, unreasonable nor did it offend Article 14

of the Constitution. This Court further observed:

"32. If a cut-off date can be fixed, indisputably those

who fall within the purview thereof would form a

separate class. Such a classification has a reasonable

nexus with the object which the decision of the Bank to

promote its employees seeks to achieve. Such

classifications would neither fall within the category

of creating a class within a class or an artificial

classification so as to offend Article 14 of the

Constitution of India.

33. Whenever such a cut-off date is fixed, a question

may arise as to why a person would suffer only

because he comes within the wrong side of the cut-off

1

date, but, the fact that some persons or a Section of

society would face hardship, by itself cannot be a

ground for holding that the cut-off date so fixed is

ultra vires Article 14 of the Constitution."

19) In State of Punjab v. Amar Nath Goyal, (2005) 6 SCC 754, this

Court held:

"37. In the instant case before us, the cut-off date has

been fixed as 1-4-1995 on a very valid ground,

namely, that of financial constraints. Consequently,

we reject the contention that fixing of the cut-off date

was arbitrary, irrational or had no rational basis or

that it offends Article 14."

20) In State of Bihar v. Bihar Pensioners Samaj, (2006) 5 SCC 65,

this Court held:

"17. We think that the contention is well founded. The

only ground on which Article 14 has been put forward

by the learned counsel for the respondent is that the

fixation of the cut-off date for payment of the revised

benefits under the two notifications concerned was

arbitrary and it resulted in denying arrears of

payments to certain Sections of the employees. This

argument is no longer res integra. It has been held in

a catena of judgments that fixing of a cut-off date for

granting of benefits is well within the powers of the

Government as long as the reasons therefor are not

arbitrary and are based on some rational

consideration."

1

21) We have sympathies for the appellant but, in a society

governed by Rule of law, sympathies cannot override the Rules

and Regulations. We may recall the observations made by this

Court while considering the issue of compassionate

appointment in public service. In Life Insurance Corporation

of India v. Asha Ramachhandra Ambekar and Anr. (1994) 2

SCC 718, wherein the Court observed: "The High Courts and

the Administrative Tribunals cannot confer benediction

impelled by sympathetic consideration.... Yielding to instinct

will tend to ignore the cold logic of law. It should be

remembered that "law is the embodiment of all wisdom".

Justice according to law is a principle as old as the hills. The

Courts are to administer law as they find it, however,

inconvenient it may be."

22) In view of the above discussion, the appeals fail and are,

accordingly, dismissed. However, we grant liberty to the

appellant, if he so desires, to exercise his option to join the

1995 Regulations in terms of instruction Circular No.

11143/PA/2010-11/27 dated 15.09.2010 within 30 days from

today. If such an option is exercised by the appellant, the

1

respondents are directed to consider the same sympathetically

within 60 days from the date of the option. Parties are directed

to bear their own costs.

..............................J.

[ D.K. JAIN ]

..............................J.

[ H.L. DATTU ]

New Delhi,

February 21, 2011.

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