Vijay Kumar vs Central Bank Of India

2025 INSC 848 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2025 (Arising out of SLP (C) No.________of 2025 (@ D No.39502/2024)

Vijay Kumar …..Appellant(s)

VERSUS

Central Bank of India & Ors. …..Respondent(s)

JUDGMENT

Joymalya Bagchi, J.

1. Delay condoned. Leave granted.

2. Appeal is directed against judgment dated 22.04.2024 passed

by the Patna High Court to the extent the Court upheld

reduction of one­third of the pension payable to the appellant

under the Central Bank of India (Employees’) Pension

Regulations, 19951.

3. Appellant while working as Chief Manager, a scale IV officer in Signature Not Verified Digitally signed by SATISH KUMAR YADAV Date: 2025.07.15 17:19:23 IST Reason:

the respondent No.1­bank was served with a Memorandum of 1 Hereinafter, Pension Regulations.

Page 1 of 14 Charge alleging that, during his tenure as Branch Manager,

Dhanbad Branch he sanctioned loans in respect of 12

accounts, inter alia, without proper appraisal of income, non­

verification of KYC compliance, without post­sanction

inspection etc. exposing the bank to potential financial loss of

huge amount.

4. A.K. Roy, Assistant General Manager (a scale V officer) was

appointed as the Inquiry Authority (IA). During the inquiry,

appellant attained superannuation on 30.11.2014 but the

enquiry was continued under Regulation 20(3)(iii) of Central

Bank of India (Officers’) Service Regulations, 1979 2. He

submitted inquiry report holding the appellant failed to

discharge his duties with utmost integrity and honesty which

was unbecoming of a Bank officer and exposed the Bank to

huge financial loss for his pecuniary gain. Inquiry report was

served on the appellant, and he replied to it. After considering

his reply disciplinary authority i.e., Deputy General Manager (a

scale VI officer) upheld the findings of the inquiry officer and

imposed major penalty of compulsory retirement under Rule 4

(h) of Central Bank of India Officer Employees’ (Discipline and

2 Hereinafter, Service Regulations.

Page 2 of 14 Appeal) Regulations, 19763 with effect from date of

superannuation. Appellant submitted an appeal before

appellate authority i.e., Field General Manager (a scale VII

officer).

5. During pendency of the appeal, Regional Manager, Purnea, a

scale IV officer, i.e., equivalent to scale of the appellant, on

05.08.2015 recommended minimum payable pension under

compulsory retirement i.e., two­third pension to the appellant.

Field General Manager by order dated 07.08.2015 concurred

with the Regional Manager and recommended award of two­

third compulsory retirement pension. Thereafter, on

30.12.2015 the said Field General Manager as the appellate

authority dismissed the appellant’s appeal and upheld the

penalty imposed on the latter.

6. The appellant initially approached the High Court challenging

validity of Regulation 20(3)(iii) of Service Regulations which

enabled the Bank to continue disciplinary proceedings even

after superannuation and for setting aside the order of

compulsory retirement including disbursal of full retiral

3 Hereinafter, Discipline and Appeal Regulations.

Page 3 of 14 benefits but subsequently he restricted his challenge only to

disbursal of full retiral benefits.

7. During hearing High Court was informed while the Bank had

not passed any order forfeiting gratuity, it had taken decision

to award two­third of the pension payable to the appellant. In

these circumstances, High Court while directing release of

gratuity upheld the decision of the Bank to reduce one­third of

the pension payable to the appellant.

8. Being aggrieved by the reduction of one­third pension,

appellant has approached this Court. Bank has contested the

appellant’s plea and produced additional documents, namely,

recommendation letter of Regional Manager, Purnea for grant

of minimum pension and the sanction letter of such pension

by Field General Manager awarding two­third pension to the

appellant.

9. Mr. Neeraj Shekhar contended pension is not a bounty and

appellant’s right to pension is constitutionally protected under

Article 300A. Such right could not be taken away save and

except by a clear prescription of law. High Court erred in

holding that a compulsorily retired employee is not entitled to

pension at all unless an order under regulation 33(1) of the Page 4 of 14 Pension Regulations is passed. Regulation 33 (1) and (2) must

be harmoniously construed to mean in cases where penalty of

compulsory retirement is imposed, such employee has a right

to receive pension not less than two­third of the full pension

and such deduction can be made only after prior consultation

with the Board of Directors.

10. Per contra, Mr. Dhruv Mehta, learned Senior Counsel

submitted a plain reading of regulation 33 (1) and (2) would

show the clauses are mutually exclusive and operate in

different circumstances which do not overlap each other. As

per clause (1), an authority higher than the authority

competent to impose compulsory retirement penalty may grant

pension at a rate not less than two­third whereas clause (2)

permits the competent authority awarding compulsory

retirement to award less than full pension in exercise of its

original, appellate or reviewing powers. Only in the latter case

consultation with Board of Directors is necessary. As the

pension was reduced by the Field General Manager, a scale VII

officer who is an authority higher in rank than the disciplinary

authority, a scale VI officer no prior consultation was

Page 5 of 14 necessary, and the impugned decision did not call for

interference.

11. The controversy centres around interpretation of regulation

33 of the Pension Regulations which provides for compulsory

retirement pension as follows: ­

“33. Compulsory Retirement Pension ­ 1. An employee compulsorily retired from service as a penalty on or after 1st day of November, 1993 in terms of Central Bank of India Officer Employees' (Discipline and Appeal) Regulations, 1976 or awards/settlements may be granted by the authority higher than the authority competent to impose such penalty, pension at a rate not less than two­thirds and not more than full pension admissible to him on the date of his compulsory retirement if otherwise he was entitled to such pension on superannuation on that date.

2. Whenever in the case of a bank employee the Competent Authority passes an order (whether original, appellate or in exercise of power of review) awarding a pension less than the full compensation pension admissible under these regulations, the Board of Directors shall be consulted before such order is passed.

3. A pension granted or awarded under clause (1) or, as the case may be, under clause (2), shall not be less than the amount of rupees three hundred and seventy­five per mensem.”

12. Clause (1) provides for granting pension at a rate not less

than two­third and not more than full pension by an authority

higher than the authority competent to impose penalty of

compulsory retirement. Clause (2) enjoins whenever a

competent authority passes an order awarding pension less

than full compensation pension in exercise of original,

Page 6 of 14 appellate or review powers, Board of Directors must be

consulted before such order is passed. In no case the pension

awarded shall be less than Rs.375/­ per mensem.

13. ‘Competent Authority’ is defined in both Discipline and

Appeal Regulations and Pension Regulations as an authority

appointed by the Board for the purpose of such regulations. In

the Discipline and Appeal Regulations, it is further clarified

Competent Authority must be superior to the delinquent and

not an officer holding rank lower than scale IV officer. Clause

3(b) of Discipline and Appeal Regulations read with Schedule 4

shows that an officer not below rank of Assistant General

Manager and holding a rank higher than the disciplinary

authority is the appellate authority under such regulation. A

combined reading of the provisions in both the regulations

would indicate a Field General Manager (holding a rank

superior to disciplinary authority and higher than Assistant

General Manager) is not only an authority superior to the

disciplinary authority empowered to reduce pension under

clause (1) but also the appellate authority under Discipline

4 Schedule to Discipline and Appeal Regulations “2. Any Officer employee of the Bank higher in rank and status than the Disciplinary Authority but no lower in rank and status than an Assistant General Manager shall be competent to act as the Appellate Authority within the meaning of Regulation 17.”

Page 7 of 14 and Appeal Regulations who could exercise appellate powers

to reduce pension under clause (2) of Pension Regulations.

14. The bank would argue as pension was reduced under

regulation 33(1) by Field General Manager as an authority

superior to disciplinary authority competent to impose

penalty, no prior consultation with Board was necessary,

unlike cases where Competent Authority i.e., disciplinary

authority while awarding compulsory retirement directs

pension less than full compensation pension.

15. Such argument is fallacious for following reasons. Clause

(2) permits the Competent Authority to award pension in

exercise of not only original but also appellate or reviewing

powers. If the expression ‘Competent Authority’ in clause (2) is

restricted to disciplinary authority alone, reduction of pension

in exercise of appellate or review power would become

nugatory. Any interpretation which renders words or

expressions in a statute otiose ought to be eschewed. 5

16. Given this situation to accept the bank’s interpretation

that the two clauses ought to be read independent of one

another would give rise to a piquant situation where the self­

5 Rao Shiv Bahadur Singh v. State of Uttar Pradesh, (1953) 2 SCC 111.

Page 8 of 14 same authority, i.e., Field General Manager reducing pension

under clause (1) would not require prior consultation with the

Board which is mandatory while exercising similar power

under clause (2). To avoid this anomaly whenever a superior

authority reducing pension under regulation 33(1) is also

appellate authority or reviewing authority who is empowered

to exercise power under clause (2), the requirement of prior

consultation with the Board must be held to be mandatory,

failing which requirement of such prior consultation may be

circumvented by the bank to the prejudice of the employee.

17. There is no cavil that pension is not a discretion of the

employer but a valuable right to property and can be denied

only through authority of law. When an authority is vested

with the discretion to grant pension less than full pension

admissible under the Pension Regulations, all procedural

safeguards in favour of the employee including prior

consultation must be strictly followed.

18. High Court failed to read the regulation in its proper

perspective and went a step ahead to hold that a compulsorily

retired employee would not be entitled to any pension unless an

order is passed under regulation 33 (1). A combined reading of Page 9 of 14 the clauses in regulation 33 clearly indicates that the pension

payable to an employee who has been compulsorily retired as a

penalty shall not be less than two­third of his full pension or Rs.

375 per mensem, whichever is higher. The word ‘may’ occurring

in clause (1) does not give discretion to superior authority to

award pension less than two­third of the full pension. High

Court misinterpreted the word ‘may’ in the clause to hold that

grant of pension is discretionary. The word ‘may’ must be read

in its proper context, that is to say, it was used in the regulation

not to vest discretion in the superior authority to grant pension

less than two­third of full pension payable but to clarify that the

aforesaid clause will not entitle a compulsorily retired employee

to pension if he is not otherwise entitled to such pension on

superannuation on that day. For example, if an employee is

compulsorily retired without completing ‘qualifying service’

making him eligible to pension under the regulations.

19. In fine, we hold clause (1) and clause (2) of regulation 33

must be read conjointly and in all cases when the full pension

admissible to a compulsorily retired employee under the

regulations is reduced, a prior consultation with the Board is

necessary.

Page 10 of 14

20. It would be argued the Field General Manager’s order to

reduce pension may be placed before the Board for ex­post

facto approval. Whether ‘prior consultation’ is mandatory or a

post facto approval would suffice would depend on various

factors including nature of consultation, status of the

authority consulted, and the rights affected by the decision.

21. A plain reading of regulation 33 would show award of

pension less than full pension is to be done with prior

consultation of the Board of Directors. Such prior consultation

with the highest authority of the Bank i.e., Board of Directors

must be understood as a valuable mandatory safeguard before

an employee’s constitutional right to pension is curtailed. In

these circumstances, a post facto approval cannot be a

substitute of prior consultation with the Board before the

decision is made. Reference may be made to Indian

Administrative Service (S.C.S.) Association, U.P. & Ors. vs.

Union of India & Ors.6 wherein the parameters to decide

whether prior consultation is mandatory or directory have

been succinctly elucidated:­

6 (1993) Supp (1) SCC 730.

Page 11 of 14 “26. The result of the above discussion leads to the following conclusions:

(1) Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution. There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation. There must be definite facts which constitute the foundation and source for final decision. The object of the consultation is to render consultation meaningful to serve the intended purpose. Prior consultation in that behalf is mandatory.

(2) When the offending action affects fundamental rights or to effectuate built­in insulation, as fair procedure, consultation is mandatory and non­consultation renders the action ultra vires or invalid or void.

(3) When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.

(4) When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.

(5) When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory. The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken be put to notice of the authority or the persons to be consulted; have the views or objections, take them into consideration, and thereafter, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon. In such circumstances it amounts to an action “after consultation”. (6) No hard and fast rule could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate to lay down the manner in which consultation must take place. It is for the Court to determine in each case in the light of its facts and circumstances whether the action is “after consultation”; “was in fact consulted” or was it a “sufficient consultation”.

(7) Where any action is legislative in character, the consultation envisages like one under Section 3(1) of the Act, that the Central Government is to intimate to the State Governments concerned of the proposed action in general outlines and on receiving the objections or suggestions, the Central Government or Legislature is free to evolve its policy decision, make

Page 12 of 14 appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules. The revised draft bill or rules, amendments or additions in the altered or modified form need not again be communicated to all the concerned State Governments nor have prior fresh consultation. Rules or Regulations being legislative in character, would tacitly receive the approval of the State Governments through the people's representatives when laid on the floor of each House of Parliament. The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non­consultation.”

22. Mr. Mehta finally in a last bid endeavour requested us to invoke

powers under Article 142 to do complete justice and endorse the

decision of the reduction of pension in the present case.

23. Though it is claimed that the delinquent acts of the appellant

had caused an approximate loss to the tune of Rs. 3.26 crores to

the bank, no evidence relating to the computation of such loss was

either considered by the disciplinary authority or by the appellate

authority. Further, no opportunity of hearing was given by the

authorities prior to reducing his pension. No exceptional case to

exercise our extraordinary powers under Article 142 is made out.

24. Accordingly, we allow the appeal and set aside the order of the

High Court and order of the Field General Manager dated

07.08.2015 reducing pension without prior consultation of the

Board of Directors. It shall be open to the Bank to take appropriate

decision regarding reduction of pension after giving an opportunity Page 13 of 14 of hearing to the appellant and with prior consultation of the Board

within two months from the date of this judgment failing which the

appellant shall be entitled to full pension from the date of

superannuation.

….……..…..……...……………………….J. (PAMIDIGHANTAM SRI NARASIMHA)

….……..…..……...……………………….J (JOYMALYA BAGCHI)

New Delhi;

July 15, 2025.

Page 14 of 14