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TMI Blog2022 (1) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973 to March 31, 1979 and reduce it to 55% in respect of the period from April 1, 1979, are unreasonable and arbitrary and are violative of the rights guaranteed under Articles 14 and 16 of the Constitution. Later, in U.P. RAGHAVENDRA ACHARYA AND ORS. VERSUS STATE OF KARNATAKA AND ORS. [ 2006 (5) TMI 514 - SUPREME COURT] , 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 Ors., this Court observed The Appellants had retired from service. The State therefore could not have amended the statutory Rules adversely affecting their pension with retrospective effect. 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 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 (Arising out of SLP (Civil) No. 12864 of 2020) Hon'ble Judges Ajay Rastogi And Abhay Shreeniwas Oka JJ. For the Appellant : Niharika Ahluwalia For the Respondent : Tushar Bakshi, Sanjay Kapur, Siddharth And Ranjeeta Rohatgi JUDGMENT AJAY RASTOGI, J. 1. Leave granted. 2. Civil Appeals @ SLP(Civil) Nos. 1940-1941 of 2020 and the cognate appeals arise from the self-same 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. 1940-1941 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 self-same impugned judgment in the proceedings. At the same time, the Respondents are the original writ Petitioners who are the retired employees and the service cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Item No. Agenda Decision 1. (i) To consider to amend Common Cadre Rules for introducing Pension Scheme. 1. (i) Resolved that the existing Common Cadre Rule No. 15 be numbered as 15(i) and a new rule 15(ii) be incorporated as under:15(ii) The Board of Directors may formulate Pension Rule with the approval of RCS Punjab. (ii) To consider to introduce Pension Scheme for the employees/officers in the Common Cadre of the Punjab State Cooperative Agricultural Development Bank (ii) (a) Resolved that the Pension Scheme for the employees/officers in the Common Cadre of the Punjab State Cooperative Agricultural Development Bank be introduced for the adoption w.e.f. 1.4.89. (b) It is further resolved that the pension rules enclosed are approved. Any matter which is not specifically mentioned in these Rules shall be governed by Chapter XIII of the Punjab Civil Service Rules Vol. II. (c) It is further resolved that the Regional Provident Fund Commissioner, Chandigarh be requested to exempt the bank from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to exercise this option in Form-A 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 Volume-I Part-I. Note: Unless the contrary appears from the context or subject to term 'pay' defined in Rule 2.44 of the Punjab Civil Services, Volume-I, Part-I, 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 24th March, 1993 for management and effective implementation of the scheme. 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 deleted. The order dated 11th March, 2014 is reproduced hereunder: O/o Registrar, Cooperative Societies, Punjab, Chandigarh (Credit Branch-1) To The Managing Director, The Punjab State Cooperative Agri. Dev. Bank Ltd., Chandigarh. Memo. Credit/CA-3/2841 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant/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 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 1st April, 1989 and finally held that the employees are entitled to regular pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 Ors. v. C.R. Rangadhamaiah and Ors. 1997(6) SCC 623 followed with U.P. Raghavendra Acharya and Ors. v. State of Karnataka and Ors. 2006(9) SCC 630 and Bank of Baroda and Anr. v. G. Palani and Ors . 31. Learned Counsel further submits that more than half of the Respondents are in the age group of 73 to 80 years and one-third 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 vest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption 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 1st 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 substitutionary for the reason that the Bank Pension Scheme did not provide for dependent's pension, ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme 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 22nd 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 three-Judge 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. 44. This Court, after taking note of the earlier view on the subject further held in Chairman, Railway Board and Ors. (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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard and Ors. (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 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. 1-1-1996, 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 amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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 and Anr. v. Brojo Nath Ganguly and Anr. , (1986) 3 SCC 156 Delhi Transport Corporation v. 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovident 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. 52. So far as the judgment in State of Himachal Pradesh and Ors. (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 2nd 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r socio-economic 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 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 seeki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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