The Punjab State Cooperative Agricultural Development Bank Ltd. vs The Registrar, Cooperative Societies And Others

CIVIL APPEAL NO(S). 297­298 OF 2022 (Arising out of SLP(Civil) No(s). 1940­1941 of 2020)

THE PUNJAB STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LTD. ….APPELLANT(S)

VERSUS

THE REGISTRAR, COOPERATIVE SOCIETIES AND OTHERS ….RESPONDENT(S)

WITH

CIVIL APPEAL NO(S). 303 OF 2022 (Arising out of SLP(Civil) No(s). 1934 of 2020)

CIVIL APPEAL NO(S). 311 OF 2022 (Arising out of SLP(Civil) No(s). 12822 of 2020)

CIVIL APPEAL NO(S). 312 OF 2022 (Arising out of SLP(Civil) No(s). 1935 of 2020)

CIVIL APPEAL NO(S). 310 OF 2022 (Arising out of SLP(Civil) No(s). 1936 of 2020)

CIVIL APPEAL NO(S). 300 OF 2022 (Arising out of SLP(Civil) No(s). 1949 of 2020) Signature Not Verified

CIVIL APPEAL NO(S). 306 OF 2022 Digitally signed by NEETU KHAJURIA Date: 2022.01.11 17:32:25 IST

(Arising out of SLP(Civil) No(s). 1943 of 2020) Reason:

1 CIVIL APPEAL NO(S). 299 OF 2022 (Arising out of SLP(Civil) No(s). 1944 of 2020)

CIVIL APPEAL NO(S). 308 OF 2022 (Arising out of SLP(Civil) No(s). 1859 of 2020)

CIVIL APPEAL NO(S). 309 OF 2022 (Arising out of SLP(Civil) No(s). 1942 of 2020)

CIVIL APPEAL NO(S). 301 OF 2022 (Arising out of SLP(Civil) No(s). 1932 of 2020)

CIVIL APPEAL NO(S). 302 OF 2022 (Arising out of SLP(Civil) No(s). 1931 of 2020)

CIVIL APPEAL NO(S). 304 OF 2022 (Arising out of SLP(Civil) No(s). 1939 of 2020)

CIVIL APPEAL NO(S). 305 OF 2022 (Arising out of SLP(Civil) No(s). 1937 of 2020)

CIVIL APPEAL NO(S). 307 OF 2022 (Arising out of SLP(Civil) No(s). 1945 of 2020)

CIVIL APPEAL NO(S). 313 OF 2022 (Arising out of SLP(Civil) No(s).12864 of 2020)

JUDGMENT

Rastogi, J.

1. Leave granted.

2

2. Civil Appeals @ SLP(Civil) Nos. 1940­1941 of 2020 and the

cognate appeals arise from the self­same common judgment dated

29th July, 2019 and 4th October, 2019 passed by the Division Bench

of the High Court of Punjab and Haryana at Chandigarh.

3. The facts have been noticed by this Court from Civil Appeals @

SLP(Civil) Nos. 1940­1941 of 2020.

4. The appellant in the present batch of appeals, is the Punjab

State Cooperative Agricultural Development Bank Ltd. (hereinafter

referred to as ‘the Bank’), a registered cooperative society and

connected Civil Appeal @ Special Leave Petition (Civil) No.12864 of

2020 has been preferred by the serving employees of the bank who

also claim to be aggrieved by the self­same impugned judgment in

the proceedings. At the same time, the respondents are the original

writ petitioners who are the retired employees and the service

conditions of the employees are governed by the Punjab State

Cooperative Agricultural Land Mortgage Banks Service (Common

Cadre) Rules, 1978(hereinafter being referred to as the “Rules

1978”) and became members of the Bank Pension Scheme, which

was introduced w.e.f. 1st April, 1989.

3

5. The appellant Bank is a registered cooperative society which

was earlier known as “Punjab State Cooperative Land Mortgage

Bank Ltd.” The principal object of the Bank is to provide long term

loans to the farming community and to protect them from the

clutches of money lenders. The main funding of the appellant Bank

is by way of loans from National Bank for Agriculture and Rural

Development(NABARD) as per the norms laid down. The appellant

Bank has two tier structure comprising of “Punjab State

Cooperative Agricultural Development Bank Ltd.” at Apex

level(SADB) and the “Primary Agricultural Development

Banks”(PADB) at the grass root level. These two banks ensure

timely delivery of credit to the farmers, who are its members and

directly benefitted with various schemes which provide long term

and short­term loans to them.

6. Prior to 1989, the employees of the appellant Bank were

covered under the Employees Provident Fund and Miscellaneous

Provisions Act, 1952(hereinafter being referred to as the “Act

1952”). The scheme was being duly adhered to and necessary

4 contributions were regularly paid by employees and the employer

Bank.

7. The Department of Finance, Government of Punjab, vide its

letter dated 22nd September 1988, pursuant to recommendations of

the Punjab Pay Commission to bring the employees serving in

various Public Sector Undertakings and State aided institutions

under purview of the State Pension Rules, solicited the

views/comments of the concerned organisations to inter­alia

communicate the additional financial burden involved in each case

and whether the organisation/organisations could bear the

additional liability out of their own resources. These

recommendations were placed before the Administrator of the Bank

who vide Resolution dated 22nd June 1989 decided to implement the

recommendations of the State Government and as a consequence

thereof, the pension scheme of the employees and Officers in the

common cadre was introduced w.e.f. 1st April, 1989.

8. Resolution No.24 passed by the Administrator of the appellant

Bank dated 22nd June, 1989 is reproduced as under:­

5 Item Agenda Decision No. 1 (i) To consider to 1 (i) Resolved that the existing Common Cadre amend Common Rule No. 15 be numbered as 15(i) and a new Cadre Rules for rule 15(ii) be incorporated as under:

introducing 15(ii) The Board of Directors may formulate Pension Scheme. Pension Rule with the approval of RCS Punjab.

(ii) To consider to (ii) (a) Resolved that the Pension Scheme for introduce the employees/officers in the Common Cadre Pension Scheme of the Punjab State Cooperative Agricultural for the Development Bank be introduced for the employees/office adoption w.e.f. 1.4.89.

rs in the (b) It is further resolved that the pension rules Common Cadre enclosed are approved. Any matter which is of the Punjab not specifically mentioned in these Rules shall State be governed by Chapter XIII of the Punjab Civil Cooperative Service Rules Vol. II.

Agricultural (c) It is further resolved that the Regional Development Provident Fund Commissioner, Chandigarh be Bank requested to exempt the bank from the payment of contributory provident fund scheme and refund the entire existing contribution with them along with family pension contribution and deposit linked insurance fund along with up to date interest on these amounts.

9. In furtherance thereof, the appellant Bank sent a letter dated

27th June, 1989 to the Registrar, Cooperative Societies, Punjab,

seeking approval for introduction of the pension scheme for its

employees covered under the Rules, 1978. The Registrar,

Cooperative Societies, Punjab, by its communication dated 7 th

February, 1990 conveyed its approval for introduction of the

pension scheme proposed by the appellant Bank to its employees

6 covered under the Rules 1978. In pursuance thereof, the

amendment was carried out in the Rules, 1978 and Rule 15(ii) was

introduced authorizing the Board of Directors to formulate pension

scheme with the approval of the Registrar Cooperative Societies,

Punjab. For the purpose of reference, Rule 15(ii) is extracted

hereunder:­

“15 (i) PROVIDENT FUND:­

The employees shall be entitled to the benefit of the General Provident Fund as provided in the employees Provident Fund Act, 1952 and scheme framed thereunder.

(ii) THE PENSION SCHEME FOR THE EMPLOYEES/OFFICES IN THE COMMON CADRE RULES OF THE PUNJAB STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK W.E.F. 1.4.89.

1. Short title and commencement:­

(i) The rules shall be called, the Punjab State Cooperative Agricultural Development Banks Employees Pension, Family Pension and General Provident Fund Rules.

(ii) These Rules shall come into force with effect from 1.4.89.

2. Application

(i) These rules shall apply to all the posts in the services specified in the Appendix ‘I’ of the Common Cadre Rules, provided that in case of the employees appointed by transfer from Government Departments, these rules shall only apply to the extent specified in their terms and conditions of deputation agreed upon with the Government Department concerned.

7 Provided further that nothing in these rules shall affect the application of any other law, statutory rules, bye­laws and regulations for time being in force.

Provided further that an employee who joins service on or after coming into force of these rules and such existing employees, who opt for these rules, shall be covered by these rules. All category of employees shall have to exercise this option in Form­A to these rules within three months from the date of notification of these rules.

(ii) The employees who do not opt for these rules shall be governed by the Employees Provident Fund Act and Rules.

3. Definition:­

XXX XXX XXX XXX

(o) Pay:­ Pay means the pay as defined in Rule 2.44 of the Punjab Civil Services Rules Volume­I Part­I. Note:­ Unless the contrary appears from the context or subject to term ‘pay’ defined in Rule 2.44 of the Punjab Civil Services, Volume­I, Part­I, does not include “Special Pay.”

10. In furtherance thereto, the amended Rule 15(ii) came into

force with effect from 1st April, 1989. In sequel to the introduction

of implementation of the scheme, the contributions made by the

employees and the appellant Bank were transferred to create the

pension corpus fund to make it functionally viable and a trust was

created by a trust deed dated 24 th March, 1993 for management

and effective implementation of the scheme.

8

11. It reveals from the record that the employees of the appellant

Bank who had opted for pension became members of the pension

scheme and continued to derive the benefit of pension after they

had opted for it till the year 2010. Later, when the appellant Bank

found the scheme to be unviable on account of financial

constraints, the Board of Directors of the appellant Bank in its

meeting dated 29th May, 2010 in reference to Agenda No. 15

reconsidered the matter about giving pension to the bank

employees and resolved as under:­

1. Pension to the retired employees and those going to retire in future be communicated.

2. Pension Scheme will not be applicable in case of employees employed on or after 1.1.2004.

3. Pensioners be not given the benefit of commutation of pension, medical reimbursement and LTC.

4. As per existing rules, the contribution equal to the 12% GPF deduction of employees to be continued by bank.

5. As per letter No.CA3/64/13717 dated 29.8.2008 of Registrar, Cooperative Societies, 12% of the profits of SADB & PADBs be allocated to employees benefit fund and its 90% share be contributed to the pension fund.

6. Bank to continue pension from its funds/expenses by stopping the commutation of pension, medical reimbursement and LTC facilities to its employees and retired employees, imposing 25% deduction on eligible amount of pension and after adjusting the pension amount against SADB/PADBs profits according to rules be made up on the basis of outstanding loans of SADB and PADBs.

7. As and when there is improvement in financial condition of bank, the payment of full pension may be considered.

9

12. The appellant Bank sent a letter dated 9 th June, 2010 to the

Registrar, Cooperative Societies, Punjab, seeking approval of the

aforesaid Resolution. The Registrar, Cooperative Societies, Punjab,

vide its letter dated 3rd September, 2010 issued directions to the

appellant Bank to review its proposal. Pursuant thereto, the

appellant Bank submitted its revised proposal to the Registrar,

Cooperative Societies, Punjab, on 30th March, 2011 to proceed with

the pension scheme in accordance with Resolution No. 15 dated

29th May, 2010. Although the proposal was turned down by the

Registrar, Cooperative Societies, Punjab, Chandigarh still the Board

of Directors of the appellant Bank vide its Resolution dated 17 th

August, 2012 decided to discontinue the pension scheme and revert

to the scheme of Contributory Provident Fund with a proposal of

One Time Settlement. The Board of Directors, later in exercise of its

powers vested in Section 84A(2) of the Punjab Cooperative Societies

Act, 1961 with the prior approval of the Registrar, Cooperative

Societies made amendment in Rule 15 of the Rules, 1978 by order

dated 11th March, 2014. Pursuant thereto, Rule 15(ii) stood

10 deleted. The order dated 11th March, 2014 is reproduced

hereunder:­

O/o Registrar, Cooperative Societies, Punjab, Chandigarh (Credit Branch­1)

To The Managing Director, The Punjab State Cooperative Agri. Dev. Bank Ltd., Chandigarh.

Memo. Credit/CA­3/2841 Dated: 11.03.2014 Sub:­ Amendment in Clause 15 of Punjab State Cooperative Agricultural Development Bank Service Common Cadre Rules, 1978. Ref: Your office letter No. Admn/S07/11984 dated 27.01.2014

This office has received a proposal on the subject cited above. After examining the proposal and the legal opinion sent by the Bank, in exercise of powers vested vide Section 84A(2) of the Punjab Cooperative Societies Act 1961, Registrar Cooperative Societies, is pleased to allow the following amendments in the Punjab State Cooperative Agricultural Development Bank Service Common Cadre Rules 1978 as under:

Rule Existing Amended 15 (i) PROVIDENT FUND (i) The employees shall be The employees shall be entitled to entitled to the benefits of the

the benefit of the General Provident Contributory Provident Fund Fund as provided in the employees as provided in the Provident Fund Act, 1952 and Employees Provident Fund & scheme framed thereunder. Miscellaneous Act, 1952 and schemes framed thereunder.

(ii) The Pension Scheme for the (ii) Deleted.

employees/officers in the common

11 cadre rules of the Punjab State Cooperative Agricultural Development Bank w.e.f. 01.04.1989.

13. It reveals from the record that since the appellant Bank much

before the amendment had stopped making payments of pension in

terms of Rule 15(ii) of the Rules 1978, the employees approached

the High Court under Article 226 of the Constitution by filing writ

petitions and various interim orders were passed from time to time

and even at one stage, it was decided to introduce a proposal of one

time settlement which was furnished by the appellant Bank on

16th October, 2012 in the pending proceedings before the High

Court and, as informed, few of the employees have settled their

claims under the One Time Settlement but it will be appropriate to

notice at this stage that while the proceedings were pending before

the Division Bench of the High Court, by Order dated 24 th January

2014, it was made clear that one time settlement which has been

implemented after seeking approval of the competent authority

shall be without prejudice to the legal rights of the

applicant/respondent employees. The Order dated 24 th January,

2014 is reproduced hereunder:­

12 “CM­109­LPA­2014 Allowed as prayed for.

Document Annexure A1 is taken on record subject to such exceptions.

CM stands disposed of.

CM­71­LPA­2014 in LPA­2001­2013 Notice to the non­applicant/appellants. Ms. Jaishree Thakur, Advocate accepts notice.

After hearing learned counsel for the parties and keeping in view the fact that since One Time Settlement scheme has already been implemented after seeking approval of the competent authority, this application is disposed of with a clarification that the implementation of the said scheme shall be without prejudice to the legal rights of the applicant/respondents.”

14. This fact can be further noticed that the learned Single Judge

of the High Court decided the writ petitions by a Judgment dated

31st August 2013 and Rule 15(ii) was deleted by the appellant Bank

by Order dated 11th March, 2014 while the proceedings were

pending in LPA before the High Court.

15. The learned Single Judge of the High Court held that the

employees of the appellant Bank, having served the Bank were

covered under the scheme which was applicable at the given time

under the Act 1952 (prior to 1989). It is the appellant Bank which

accepted the recommendations of the State Government and

13 solicited options from the employees as to whether they wanted to

opt for a pension scheme which became applicable after the

amendment was made under the Rules 1978 and after a conscious

decision, Rule 15(ii) was introduced, it could not be justified to

circumvent the impact of the amended rule and thus create a

situation which would have the effect of defeating the rights which

are conferred upon the employees to seek pension under the rules

which became applicable with effect from 1 st April, 1989 and finally

held that the employees are entitled to regular pension including

revised rates of dearness allowance, to all the employees who

became member of the pension scheme under the Rules 1978.

16. When the matter travelled to the Division Bench of the High

Court, by that time, the amendment was made by an Order dated

11th March, 2014 and Rule 15(ii) was deleted. The Division Bench,

after taking note of the submissions made by the parties observed

that the decision to frame the pension scheme was a conscious

decision of the appellant Bank taken in its own wisdom and

corresponding rules were introduced and made applicable from 1 st

April, 1989 and Rule 15(ii) was deleted on 11th March, 2014. In

14 the interregnum, the employees became members of the pension

scheme and were paid their regular pension for sufficient time

which cannot be defeated and taken away retrospectively

detrimental to their interest. The amendment which has taken

away the vested and accrued right of the employees to get pension

and that too with retrospective effect would be violative of Article 14

of the Constitution and disposed of the LPA with a declaration that

amendment dated 11th March, 2014 under Rules 1978 shall apply

prospectively.

17. The judgment of the Division Bench of the High Court dated

29th July, 2019 became subject matter of challenge at the instance

of the appellant Bank and by the serving employees who have

claimed that their right to get pension may be affected in futuro,

and have approached this Court ventilating their grievances in the

instant proceedings.

18. It may be relevant to note that before the High Court, at

different stages, different counter affidavits were filed by the

Regional Provident Fund Commissioner(RPFC) with reference to the

15 grant of exemption after the Employees Pension Scheme 1995

became the part of the Act 1952.

19. It has been stated in the counter affidavit filed by the RPFC

under the Act 1952 that earlier it was erroneously mentioned

“granted exemption from pension scheme”, but that was a factually

incorrect statement recorded and the RPFC has made an

unconditional apology for making such a statement of fact. It is the

admitted case of RPFC that neither any application was filed by the

appellant Bank seeking exemption from the employees pension

scheme nor it was granted or refused.

20. The stand of the EPFC is that Employees’ Provident Funds

Scheme, 1952 and Employees’ Pension Scheme, 1995 both are

designed to secure a minimum core of old age/terminal social

security. Neither of these schemes exhaust an employee’s right to

social security. According to the EPFC, the bank’s promise to

supplementary pension outside of EPF must be evaluated in that

light.

21. It is further stated that the benefits under bank’s pension

scheme can only be understood as supplementary and not 16 substitutionary because the bank’s pension scheme did not provide

for dependents’ pension, nominees’ pension, childrens’ pension or

withdrawal benefits. This only provides a far narrower pensionary

cover to its employees. Its pension scheme could not be considered

for exemption under Section 17(1C) of the Act.

22. Learned counsel for the appellant Bank submits that it has

not been considered by the High Court that the appellant Bank had

framed a pension scheme subject to approval of the competent

authority. Even though, the appellant Bank had not applied for

seeking approval/exemption from the authority, still the fact

remains that in the absence of the approval being granted by the

competent authority, the retirees were entitled to receive pension

until the scheme remain in operation, i.e., upto 31 st October, 2013.

23. Learned counsel further submits that if the employees are

being permitted to get pension under the scheme of the Bank after

31st October 2013 and also statutory pension from Regional

Provident Fund Commissioner under the Act 1952, indeed there

shall be payment of double pension which is in either way not

permissible in law.

17

24. Learned counsel further submits that the employee is entitled

for pension but how the pension is to be computed, no one can

claim any vested/accrued right. It is not the case of the

respondents that they are not being paid pension. It was paid

earlier under the pension scheme introduced by the Bank from the

year 1989 until it remained in force till 31 st October 2013 and

thereafter, the employees are entitled to get a statutory pension as

per the Employees Pension Scheme 1995 under the provisions of

the Act 1952. Thus, plea of vested right which has been considered

by the High Court is completely misplaced and as long as the

appellant Bank fulfils its statutory liability under the provisions of

the Act 1952, which they are under an obligation to comply with,

the employees are not entitled to claim pension under the scheme

introduced by the Bank after it stands withdrawn with effect from

31st October, 2013 and thus no vested/accrued right of the

employee is in any manner has been defeated and a finding

recorded by the High Court to continue the bank pension scheme

after it stood deleted is not sustainable in law and deserves to be

interfered by this Court.

18

25. In support of his submissions, learned counsel placed reliance

on the judgments of this Court in Marathwada Gramin Bank

Karamchari Sanghatana and Another Vs. Management of

Marathwada Gramin Bank and Others1, State of Rajasthan Vs.

A.N. Mathur and Others2 and State of Himachal Pradesh and

Others Vs. Rajesh Chander Sood and Others3.

26. Learned counsel further submits that the pension scheme

introduced by the Bank later became financially unviable and the

number of retirees in comparison to the existing employees

recruited after 1st January, 2004 is almost three times and if the

appellant Bank is mandated to continue to make payment of

pension under Bank Pension Scheme, the Bank will become

defunct and the contribution towards pension made by the serving

employees will be futile and they will get nothing at the time of their

retirement. The Bank has earned a meagre profit in the later years

and still, in the given circumstances, the appellant Bank, if allowed

to made over pension in terms of the judgment impugned, there will

1 2011(9) SCC 620 2 2014(13) SCC 531 3 2016(10) SCC 77

19 be no option left except to close down the Institution in such an

eventuality and that apart it has created a wide gap of inequality

between the serving employees and the retirees without resorting to

exemption from the RPFC.

27. Learned counsel submits that the RPFC has initiated separate

proceedings under Section 7A of the Act 1952 for the year April

1989 to March 2015 and for the year April 2015 to June 2017,

imposing liability on the Bank by an Order dated 14th September,

2015 and 31st August, 2017 respectively. At the same time,

separate proceeding under Section 14B for damages and Section 7Q

for interest were also instituted and in terms of orders passed by

the Authority, demand raised pursuant thereto has been deposited

by the appellant. In the given circumstances, the Regional

Provident Fund Commissioner has recovered towards pension fund

contribution along with damages and interest for the period

commencing from April 1989 to August 2017. At the same time,

the appellant has been asked to pay pension to the retirees under

the Bank Pension Scheme in terms of the impugned judgment to

the employees who are covered at one stage under the scheme. It

20 will almost be a double payment to the employees which is over and

above the payment which was admissible to the employees in terms

of statutory pension scheme 1995 under the Act 1952 and that

apart, there are categories of employees who have settled their

accounts under one time settlement which was approved by the

Government and if the Judgment is to be implemented in rem, it

will not only be a double payment of pension but a great financial

distress to the Bank which is otherwise not permissible in law.

28. Per contra, Mr. P.S. Patwalia, learned senior counsel for the

respondents submits that indisputedly the present respondents

who were writ petitioners before the High Court are the retired

employees and after amendment was made under the scheme of

Rules 1978, they became its member and started getting pension in

terms of the scheme under the Rules with effect from 1 st April, 1989

and without any justification, the appellant Bank unilaterally

stopped full pension to the respondent pensioners in the year 2010

and that was the stage when the retired employees were

constrained to approach the High Court wherein it was held that

these pensioners are entitled to pension in terms of the scheme. To

21 overcome the judgment dated 31st August, 2013 of the learned

Single Judge of the High Court of Punjab and Haryana, by Order

dated 11th March 2014, Rule 15(ii) was deleted and by deleting the

said rule, it has taken away the vested right of the retired

employees and their service conditions have been altered

retrospectively to the detriment of the retired employees which is

violative of Articles 14 and 21 of the Constitution.

29. Learned counsel further submits that so far as the scheme

under the Act 1952 is concerned, the employees pension scheme

was introduced under the Act 1952 for the first time in 1995 and it

is nowhere related to the pension scheme introduced by the

appellant under its Resolution No. 24 dated 22 nd June, 1989 with

effect from 1st April, 1989 and the appellant Bank neither sought

any exemption under Section 17(1C) of the Act 1952 nor it was

required for the reason that the Bank introduced the pension

scheme in the year 1989. At that time, there was no such pension

scheme under the Act 1952 and once it is made clear that

exemption was never sought by the appellant Bank, under the Act

1952, at least the vested right which has been accrued to the

22 respondents cannot be taken away retrospectively which is not

sustainable and this what the Division Bench has held in the

impugned judgment.

30. The reliance has been placed on the Constitution Bench

Judgment of this Court in Chairman, Railway Board and Others

Vs. C.R. Rangadhamaiah and Others4 followed with U.P.

Raghavendra Acharya and Others Vs. State of Karnataka and

Others5 and Bank of Baroda and Another Vs. G. Palani and

Others6.

31. Learned counsel further submits that more than half of the

respondents are in the age group of 73 to 80 years and one­third of

the retirees have already expired during pendency of litigation and

it is the appellant Bank who had in its own volition introduced the

scheme and the respondent employees have exercised their option

to be governed by the said scheme and the employees have also

foregone their Contributory Provident Fund. In the given

circumstances, the rights which are conferred and vested in favour

4 1997(6) SCC 623 5 2006(9) SCC 630 6 2018 SCC Online SC 3691 23 of the respondent employees could not be divested by the appellant

in an arbitrary manner which is in violation of Article 14 of the

Constitution.

32. Learned counsel submits that so far as the One Time

Settlement scheme is concerned, it was introduced to mitigate the

problem due to withdrawal of pension scheme as an interim

measure under the orders passed by the High Court. Since there

was no option left to the employees who became hand to mouth,

some of them have accepted under the One Time Settlement

scheme but the Division Bench by its interim order made it clear

that acceptance of one time settlement shall be without prejudice to

their legal rights, in the given circumstances, what has been paid

under One Time Settlement scheme to few of the employees is

always adjustable under the scheme to which they are entitled for

under the law. The scheme was in vogue for more than two

decades and it is not open for the appellant Bank to take away their

vested rights in an arbitrary manner and deprive them the benefit of

pension which is in vogue since 1989 so far as the retirees are

concerned.

24

33. Mr. Siddharth, learned counsel for the Regional Provident

Fund Commissioner submits that the appellant bank is covered

under the provisions of the Act 1952 and under the Act, three

schemes have been framed, firstly, Employees Provident Fund

Scheme 1952(EPFS) which establishes a contributory provident

fund under Sections 5 and 6 of the Act. Employers and employees

contribute to the provident fund in equal measure at the prescribed

rates notified by the authority competent under the law from time

to time. However, presently there is 12% employees’ monthly

wages. Secondly, there is Employees’ Pension Scheme 1995(EPS)

scheme framed under Section 6A of the Act, 1952 which replaces

the earlier Employees’ Family Pension Scheme, 1971(FPS). Family

Pension Scheme provided for pension to the dependents of such

employees who died in harness. EPS, on the other hand, is a

comprehensive pension scheme that provides superannuation

pension, early pension and dependents’ pension. It is funded by

diverting a part of the employers’ share of contribution made to

EPFS into the pension fund(presently 8.33% of monthly wages).

Employees do not contribute under EPS. The third scheme is

25 Employees’ Deposit Linked Insurance Scheme, 1976. The Bank

sought exemption from EPFS under Section 17(1)(b) and from

EDLIS under Section 17(2A). The fate of exemption and its

consequence may not be relevant so far as the present dispute

raised in the instant proceedings is concerned, at the same time, it

is being specifically stated that the appellant Bank did not seek any

exemption from the operation of Employees’ Pension Scheme after

16th November, 1995.

34. Learned counsel further states that, in the interregnum, since

the appellant Bank failed to deposit its due contributions, first

under the Family Pension Scheme and later under the Employees

Pension Scheme for the period commencing from 1 st April 1989 to

31st March 2015 and from April 2015 to June 2017, separate

proceedings were initiated under Section 7A followed with damages

under Section 14B and interest under Section 7Q and final

assessments have been made after affording opportunity to the

appellant Bank. Pursuant thereto, money has been deposited but

that has nothing to do with the pension scheme introduced by the

Bank which can only be understood as supplementary and not

26 substitutionary for the reason that the Bank Pension Scheme did

not provide for dependent’s pension, children’s pension or

withdrawal benefits and such benefits are designed only under the

Employees Pension Scheme 1995 introduced under the provisions

of the Act 1952.

35. Mr. Gurminder Singh, learned senior counsel for the serving

employees submits that that as per the pension scheme introduced

by the appellant Bank, the employees have to make their own

contribution and looking to the depleting strength of the serving

employees, their contribution is being utilized for payment of

pension to the retired employees and bank is throughout harping

upon the plea that because of financial distress, it is not possible

for the Bank to continue with the pension scheme any more and

that is the reason for which the pension scheme was withdrawn by

the Bank at a later stage and that affects the interest of the serving

employees whose entire employees’ contribution is being utilized

against the payment of pension to the retirees and consistently,

there is a shortfall of employer’s share of in­service employees and

this practice if being continued any more, by the time the serving

27 employee will retire, they will not be able to get pension despite they

have undertaken their contribution while in service.

36. The indisputed fact according to the learned counsel is that

the retirees are being paid their pension under the Bank pension

scheme at the cost of the serving employees and it affects the

interest of the serving employees which is being jeopardized.

37. Learned counsel in alternate further submits that the class of

the employees either retired/serving should be dealt with the same

standards/yardsticks and one retiral scheme should be followed for

all the employees regardless of the fact that whether they are

serving or retired and it will be unjust if the Bank pension scheme

is allowed to continue at the cost of serving employees which would

deprive them of their right to pension introduced by the Bank to

which they are otherwise entitled for under the law.

38. We have heard the learned counsel for the parties and with

their assistance perused the material available on record.

39. The facts are not in dispute that the respondents are the

retired employees and members of the Punjab State Cooperative

28 Agricultural Development Bank Limited, Chandigarh and they were

earlier the members of the Employees Provident Fund Scheme

under the Act 1952. The scheme was being duly adhered to and

necessary contributions were made over by the employees and

employer Bank. Later on, with the recommendation of the Punjab

Pay Commission, regarding introducing the pension scheme, the

Administrator of the appellant Bank vide its Resolution dated 22 nd

June, 1989 decided to implement the recommendations of the State

Government and as a consequence thereof, the pension scheme for

the employees and Officers in the Rules 1978 was introduced with

effect from 1st April 1989.

40. Accordingly, the Rules 1978 were amended and Rule 15(ii) was

introduced authorizing the Board of Directors to formulate pension

scheme with the prior approval of the Registrar Cooperative

Societies, Punjab. Pursuant thereto, the amendment was made

with an option that such of the employees who opt for the

rules(pension scheme) shall be covered by these rules. At the given

time, such employees who do not opt for these rules shall be

governed by Act, 1952.

29

41. Indisputedly, all the respondent employees were given the

option to become member of the pension scheme on being retired

from service and they continued to derive the benefit of pension

after they had opted continuously until the year 2010 and only

thereafter, the litigation started when the appellant Bank stopped

making payment of pension in terms of the Bank pension scheme.

Although the Bank pension scheme will not apply in cases to

employees employed on or after 1 st January 2004. Later on, the

Bank took a decision by deleting Rule 15(ii) of pension scheme by

an amendment dated 11th March, 2014 and that became the cause

of grievance of the employees in questioning the action of the Bank

by approaching the Courts for ventilating their grievance.

42. The question that emerges for consideration is as to what is

the concept of vested or accrued rights of an employee and at the

given time whether such vested or accrued rights can be divested

with retrospective effect by the rule making authority.

43. The concept of vested/accrued right in the service

jurisprudence and particularly in respect of pension has been

30 examined by the Constitution Bench of this Court in Chairman,

Railway Board and Others(supra) as follows:­

“11. On the basis of the said decision of the Full Bench of the Tribunal, other Benches of the Tribunal at Bangalore, Hyderabad, Allahabad, Jabalpur, Jaipur, Madras and Ernakulam have passed orders giving relief on the same grounds. These appeals and special leave petitions have been filed against the decision of the Full Bench and those other Benches of the Tribunal. Some of these matters were placed before a Bench of three learned Judges of this Court on 28­3­1995 on which date the following order was passed:

“Two questions arise in the present case, viz., (i) what is the concept of vested or accrued rights so far as the government servant is concerned, and (ii) whether vested or accrued rights can be taken away with retrospective effect by rules made under the proviso to Article 309 or by an Act made under that article, and which of them and to what extent.

We find that the Constitution Bench decisions in Roshan Lal Tandon v. Union of India (1968) 1 SCR 185; B.S. Vadera v. Union of India (1968) 3 SCR 575 and State of Gujarat v. Raman Lal Keshav Lal Soni (1983) 2 SCC 33 have been sought to be explained by two three­Judge Bench decisions in K.C. Arora v. State of Haryana (1984) 3 SCC 281 and K. Nagaraj v. State of A.P. (1985) 1 SCC 523 in addition to the two­Judge Bench decisions in P.D. Aggarwal v. State of U.P. (1987) 3 SCC 622 and K. Narayanan v. State of Karnataka 1994 Supp (1) SCC 44. Prima facie, these explanations go counter to the ratio of the said Constitution Bench decisions. It is not possible for us sitting as a three­Judge Bench to resolve the said conflict. It has, therefore, become necessary to refer the matter to a larger Bench. We accordingly refer these appeals to a Bench of five learned Judges.” 31

44. This Court, after taking note of the earlier view on the subject

further held in Chairman, Railway Board and Others(supra)as

under:­

“20. It can, therefore, be said that a rule which operates in futuro so as to govern future rights of those already in service cannot be assailed on the ground of retroactivity as being violative of Articles 14 and 16 of the Constitution, but a rule which seeks to reverse from an anterior date a benefit which has been granted or availed of, e.g., promotion or pay scale, can be assailed as being violative of Articles 14 and 16 of the Constitution to the extent it operates retrospectively.

24. In many of these decisions the expressions “vested rights” or “accrued rights” have been used while striking down the impugned provisions which had been given retrospective operation so as to have an adverse effect in the matter of promotion, seniority, substantive appointment, etc., of the employees. The said expressions have been used in the context of a right flowing under the relevant rule which was sought to be altered with effect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an amendment having retrospective operation which has the effect of taking away a benefit already available to the employee under the existing rule is arbitrary, discriminatory and violative of the rights guaranteed under Articles 14 and 16 of the Constitution. We are unable to hold that these decisions are not in consonance with the decisions in Roshan Lal Tandon (1968) 1 SCR 185, B.S. Vedera (1968) 3 SCR 575 and Raman Lal Keshav Lal Soni (1983) 2 SCC

33.

25. In these cases we are concerned with the pension payable to the employees after their retirement. The respondents were no longer in service on the date of issuance of the impugned notifications. The amendments in the rules are not restricted in their application in futuro. The amendments apply to employees who had already retired and were no longer in service on the date the impugned notifications were issued.

32

33. Apart from being violative of the rights then available under Articles 31(1) and 19(1)(f), the impugned amendments, insofar as they have been given retrospective operation, are also violative of the rights guaranteed under Articles 14 and 16 of the Constitution on the ground that they are unreasonable and arbitrary since the said amendments in Rule 2544 have the effect of reducing the amount of pension that had become payable to employees who had already retired from service on the date of issuance of the impugned notifications, as per the provisions contained in Rule 2544 that were in force at the time of their retirement.” (emphasis supplied)

45. Later, in U.P. Raghavendra Acharya and Others(supra), the

question which arose for consideration was that whether the

appellants who were given the benefit of revised pay scale with

effect from 1st January, 1996 could have been deprived of their

retiral benefits calculated with effect therefrom for the purpose of

calculation of pension. In that context, while examining the scheme

of the Rules and relying on the Constitution Bench Judgment in

Chairman, Railway Board and Others(supra), this Court

observed as follows:­

“22. The State while implementing the new scheme for payment of grant of pensionary benefits to its employees, may deny the same to a class of retired employees who were governed by a different set of rules. The extension of the benefits can also be denied to a class of employees if the same is permissible in law. The case of the appellants, however, stands absolutely on a different footing. They had been enjoying the benefit of the revised scales of pay. Recommendations have been made by the Central Government as also the University Grant Commission to the State of Karnataka to

33 extend the benefits of the Pay Revision Committee in their favour.

The pay in their case had been revised in 1986 whereas the pay of the employees of the State of Karnataka was revised in 1993. The benefits of the recommendations of the Pay Revision Committee w.e.f. 1­1­1996, thus, could not have been denied to the appellants.

30. In Chairman, Rly. Board v. C.R. Rangadhamaiah (1997) 6 SCC 623, a Constitution Bench of this Court opined :

“33. Apart from being violative of the rights then available under Articles 31(1) and 19(1)(f), the impugned amendments, insofar as they have been given retrospective operation, are also violative of the rights guaranteed under Articles 14 and 16 of the Constitution on the ground that they are unreasonable and arbitrary since the said amendments in Rule 2544 have the effect of reducing the amount of pension that had become payable to employees who had already retired from service on the date of issuance of the impugned notifications, as per the provisions contained in Rule 2544 that were in force at the time of their retirement.”

31. The appellants had retired from service. The State therefore could not have amended the statutory rules adversely affecting their pension with retrospective effect.”

46. Later, in Bank of Baroda and Another(supra), the question

arose with respect to the employees who retired or died while in

service on or after 1st April 1998 and before 31st October, 2002 to

whom benefits were vested and accrued could be deprived of their

retiral benefits. In this context, while taking note of the view relying

34 on the Constitution bench Judgment in Chairman, Railway

Board and Others(supra), this Court observed as under:­

“29. Thus, in our opinion, the Regulations which were in force till 2003, would apply with full force and as a matter of fact, the amendments made in it by addition of Explanation (c) in Regulation 2(s) did not have the effect of amending the Regulations relating to pension, as contained in Regulation 38 read with Regulations 2(d) and 35 of the Regulations of 1995. Even otherwise, if it had the effect of amending the pay and perks ‘average emoluments’, as specified in Regulation 2(d), it could not have operated retrospectively and taken away accrued rights. Otherwise also, it would have been arbitrary exercise of power. Besides, there was no binding statutory force of the so called Joint Note of the Officers’ Association, as admittedly, to Officers’ Association even the provisions of Industrial Disputes Act were not applicable and joint note had no statutory support, and it was not open to forgo the benefits available under the Regulations to those officers who have retired from 1.4.1998 till December 1999 and thereafter, and to deprive them of the benefits of the Regulations. Thus, by the Joint Note that has been relied upon, no estoppel said to have been created. There is no estoppel as against the enforcement of statutory provisions. The Joint Note had no force of law and could not have been against the spirit of the statutory Regulations and the basic service conditions, as envisaged under the Regulations framed under the Act of 1970. They could not have been tinkered with in an arbitrary manner, as has been laid down by this Court in Central Inland Water Transport Corporation Limited & Anr. vs. Brojo Nath Ganguly & Anr., (1986) 3 SCC 156 & Delhi Transport Corporation vs. D.T.C. Mazdoor Congress, (1991) Supp.1 SCC 600.”

47. The exposition of the legal principles culled out is that an

amendment having retrospective operation which has the effect of

taking away the benefit already available to the employee under the

existing rule indeed would divest the employee from his vested or

35 accrued rights and that being so, it would be held to be violative of

the rights guaranteed under Articles 14 and 16 of the Constitution.

48. In the instant case, the Bank pension scheme was introduced

from 1st April 1989 and options were called from the employees and

those who had given their option became member of the pension

scheme and accordingly pension was continuously paid to them

without fail and only in the year 2010, when the Bank failed in

discharging its obligations, respondent employees approached the

High Court by filing the writ petitions. The Bank later on

withdrawn the scheme of pension by deleting clause 15(ii) by an

amendment dated 11th March, 2014 which was introduced with

effect from 1st April, 1989 and the employees who availed the benefit

of pension under the scheme, indeed their rights stood vested and

accrued to them and any amendment to the contrary, which has

been made with retrospective operation to take away the right

accrued to the retired employee under the existing rule certainly is

not only violative of Article 14 but also of Article 21 of the

Constitution.

36

49. It may also be noticed that there is a distinction between the

legitimate expectation and a vested/accrued right in favour of the

employees. The rule which classifies such employee for

promotional, seniority, age of retirement purposes undoubtedly

operates on those who entered service before framing of the rules

but it operates in futuro. In a sense, it governs the future right of

seniority, promotion or age of retirement of those who are already in

service.

50. For the sake of illustration, if a person while entering into

service, has a legitimate expectation that as per the then existing

scheme of rules, he may be considered for promotion after certain

years of qualifying service or with the age of retirement which is

being prescribed under the scheme of rules but at a later stage, if

there is any amendment made either in the scheme of promotion or

the age of superannuation, it may alter other conditions of service

such scheme of rules operates in futuro. But at the same time, if

the employee who had already been promoted or fixed in a

particular pay scale, if that is being taken away by the impugned

scheme of rules retrospectively, that certainly will take away the

37 vested/accrued right of the incumbent which may not be

permissible and may be violative of Article 14 and 16 of the

Constitution.

51. The judgment on which learned counsel for the appellant

Bank has placed reliance in the case of Marathwada Gramin

Bank Karamchari Sanghatana and Another(supra), the issue

under consideration was with respect to provident fund. The

Marathawada Gramin Bank had floated a provident fund scheme

built on better rates of contributions than the rates mandated

under the employees provident fund scheme. Hence, the better

scheme of provident fund was statutorily recognized by grant of

exemption under Section 17(1). Later, Marathawada Gramin Bank

discontinued its provident fund scheme for financial unviability,

and reverted to rates mandated under paragraph 26 of the EPFS.

The Bank later declined to exercise its voluntary contribution under

Para 26 of the scheme after the exemption was declined and that

came to be upheld by this Court which may not be of any

assistance to learned counsel for the appellant in the instant case.

38

52. So far as the judgment in State of Himachal Pradesh and

Others(supra) is concerned, it was a case where apart from the

scheme under the provisions of Act 1952, the State of Himachal

Pradesh framed another scheme for the Himachal Pradesh

Corporate Sector Employees Pension(Family Pension, Commutation

of Pension and Gratuity) Scheme, 1999. It was made operational

with effect from 1st April 1999 but before the rights to the employees

could be vested/accrued, it was repealed on 2 nd December, 2004.

The question arose whether such contingent right vested with the

employee on their having once opted under 1999 scheme was at all

be binding or irrevocable despite being repealed by a later

notification dated 2nd December, 2004. In that context, this Court

observed that it was not the case of the right which accrued to the

employee and in that context, the repealing notification was upheld

by this Court.

53. In State of Rajasthan(supra), it was a case where the

University which was an autonomous body created under the

provisions of the Act by its Resolution introduced the pension

scheme, without taking recourse of the fact that the Resolution of

39 the Board of the Management of the University can be enforced only

with prior approval from the Chancellor, i.e., the Governor of the

State in terms of Section 39 of the Act and it was never approved by

the Chancellor, in absence whereof, such resolution of the Board of

Management was unauthorized and was not open to be

implemented. In the given circumstances, this Court was of the

view that in absence of the mandate of Section 39 being complied

with, the Board of Management of the University was not justified in

introducing the scheme of pension.

54. So far as the submission made by learned counsel for the

appellant about the financial distress of the appellant Bank to

justify the impugned amendment to say that it may not be possible

to continue the grant of pension any more is concerned, suffice to

say, that the rule making authority was presumed to know

repercussions of the particular piece of subordinate legislation and

once the Bank took a conscious decision after taking permission

from the Government of Punjab and Registrar, Co­operative,

introduced the pension scheme with effect from 1 st April 1989, it

can be presumed that the competent authority was aware of the

40 resources from where the funds are to be created for making

payments to its retirees and merely because at a later point of time,

it was unable to hold financial resources at its command to its

retirees, would not be justified to withdraw the scheme

retrospectively detrimental to the interests of the employees who not

only became member of the scheme but received their pension

regularly at least upto the year 2010 until the dispute arose

between the parties and entered into litigation.

55. In our view, non­availability of financial resources would not

be a defence available to the appellant Bank in taking away the

vested rights accrued to the employees that too when it is for their

socio­economic security. It is an assurance that in their old age,

their periodical payment towards pension shall remain assured. The

pension which is being paid to them is not a bounty and it is for the

appellant to divert the resources from where the funds can be made

available to fulfil the rights of the employees in protecting the vested

rights accrued in their favour.

56. So far as the submission made by the serving employees is

concerned, they have no locus to question. At the same time, their

41 apprehension as being projected to this Court is completely

misplaced for the reason that employer/employees contribution is

being provided under the employees pension scheme(EPS) of the Act

1952 which is made applicable to the serving employees and they

are entitled to get pension in terms of the provisions of the Act

1952. So far as their complaint regarding payment of contribution

is concerned, it is in no manner going to be adjusted for payment of

pension to retirees/respondents, who are entitled to get their

pension in terms of the pension scheme of which they are members

and it is for the appellant Bank to reserve the resources and make

payment to the retired employees seeking pension to the scheme in

vogue when they became members and took benefits pursuant

thereto.

57. Before we part with the judgment, we cannot be oblivious of

the situation that the complaint of the employees that they are not

being paid their pension since 2013, at the given time few

employees have been given benefit of one time settlement as

introduced by the Bank as an interim measure which was subject

to their rights being preserved, in the pending litigation, taking

42 grievance of the either party into consideration, the financial

constraints of the Bank and the rights of the employees who are

entitled to get pension under the bank pension scheme, we consider

appropriate to observe that so far as the arrears towards element of

pension to which the retired employees are entitled for, the

appellant Bank is at liberty to pay arrears towards pension upto

31st December, 2021 in 12 monthly instalments in the next one year

by the end of December, 2022 and those employees who have

accepted payment under one time settlement at a given point of

time, what is being paid to them is always open for adjustment

against arrears of their due pension. Still if arrears remain

outstanding, the same shall be paid in 12 monthly instalments. At

the same time, each of the employee who is member of the Bank

Pension scheme must get pension to which he/she is entitled from

the month of January 2022 as admissible under the law.

58. So far as the complaint of the appellant Bank regarding orders

passed under Section 7A, Section 14B and Section 7Q of the Act

1952 for the period April 1989 to March 2015 and for April 2015 to

June 2017, copies of which has been placed on record is concerned,

43 are not the subject matter of challenge in the instant proceedings, it

will be open for the appellant to take legal recourse, if being

aggrieved in the appropriate proceedings available under the law.

59. Consequently, the appeals fail and are accordingly dismissed

with observations indicated above.

60. Pending applications, if any, stand disposed of.

………………………….J. (AJAY RASTOGI)

…………………………..J. (ABHAY S. OKA) NEW DELHI JANUARY 11, 2022

44