IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20.1.2011 CORAM: THE HONOURABLE MR.JUSTICE P.JYOTHIMANI W.P.No.31060 of 2004 L.Ramachandran .. Petitioner Vs. 1. The Chairman Indian Bank 31, Rajaji Salai Chennai – 600 001. 2. The Assistant General Manager Personnel Department Indian Bank, Central Office 31, Rajaji Salai Chennai – 600 001. .. Respondents PRAYER: Petition under Article 226 of the Constitution of India for issue of a writ of Certiorarified Mandamus to call for the records relating to the impugned letter dated 19.7.2004 issued by the General Manager, Personnel Department, Head Office, Indian Bank, Chennai – 600 001, to quash the same and to consequently direct the respondents to pay arrears of pension due to the petitioner from November, 1993 with penal interest at the rate of 18% per annum forthwith and to continue to pay the pension as per the Indian Bank Employees' Pension Scheme, 1993 and Rules 1995. (prayer amended as per order dated 25.10.2007 in WPMP No.2156/07 in W.P.No.31060 of 2004) For Petitioner : Mr.K.M.Ramesh for Mr.P.Raghunathan For Respondents: Mr.G.Venkataraman for M/s.Aiyar & Dolia ORDER The writ petition is directed against the impugned letter dated 19.7.2004 of the General Manager, Personnel Department, Head Office, Indian Bank, Chennai – 600 001 and for a direction against the respondents to pay the arrears of pension due to the petitioner from November, 1993 with penal interest at the rate of 18% per annum and to continue to pay the pension as per the Indian Bank Employees' Pension Scheme 1993 and Rules 1995. https://hcservices.ecourts.gov.in/hcservices/ 2.1. The petitioner had joined in the services of the Indian Bank on 1.2.1953 as an Officer and after many promotions, he was ultimately promoted and was working as Zonal Manager in the Madras Zone as on September, 1988 in the grade of Deputy General Manager. He has submitted a letter on 22.4.1987 requesting the Bank to permit him to retire prematurely due to ill health and the said request was accepted and he was allowed to retire as per the communication of the Bank dated 5.9.1988 and his pensionary benefits were settled. 2.2. It is stated that after his retirement, the Indian Bank (Employees') Pension Regulations, 1995 was introduced, by which the persons who were employed between 1.1.1986 and 1.11.1993 were also permitted to apply with certain options. It is stated that as per the format provided, the petitioner has exercised his option on 30.6.1994 and undertook to refund the bank's contribution with accrued interest of 6% and the option papers were handed over by the petitioner on 25.9.1994. It is stated that the petitioner has sent the application for commutation of pension, which was acknowledged by the Bank on 1.12.1995, and the petitioner was asked to undergo a medical checkup. It is stated that the second respondent in the communication dated 28.12.1995 directed the petitioner to retransmit the application in the prescribed format to the Chief Officer, Personnel Department, Pension Cell, which was done by the petitioner on 20.1.1996. 2.3. It is the complaint of the petitioner that in spite of the fact that the pension application has been sent in the prescribed format, he has not been sanctioned pension as per the Indian Bank (Employees') Pension Regulations, 1995 and ultimately, he has sent a registered letter on 30.3.2003 and he approached this Court by filing W.P.No.13348 of 2003 and this Court, by an order dated 28.4.2003, has directed the Bank to consider the representation dated 30.3.2003 for payment of pension. 2.4. Even though there was stated to be certain personal hearing, pursuant to the same there was no order passed and ultimately, under the impugned communication dated 19.7.2004, the petitioner was informed that in the personal hearing held on 10.7.2003, he was intimated that he was not eligible for pension in terms of the Indian Bank (Employees') Pension Regulations, 1995. It was also stated that there was no provision to seek premature retirement and the bank has treated the request of petitioner for premature retirement as resignation and relieved him from service on 5.9.1988 and the said impugned letter is challenged on the ground that the same is untrue, unjustified and unconscionable and the petitioner has never submitted his resignation and he only wanted premature retirement and that cannot be treated as a letter of resignation. It is stated that the respondents having accepted the application of the petitioner for premature retirement cannot go back https://hcservices.ecourts.gov.in/hcservices/ to say that the petitioner has resigned. 3.1. In the counter affidavit filed by the respondents/Bank, it is stated that the writ petition is not maintainable due to the reason that the case of the petitioner does not come under the category of "premature retirement" under Regulation 32 of the Pension Regulations, so as to enable him to be eligible for payment of pension. 3.2. It is stated that there is no provision under the Officers Service Regulations to relieve an employee prematurely. At the time when the petitioner has submitted a letter on 22.4.1987, there were only two modes of leaving the service, viz., (i) retirement on attaining the age of superannuation; and (ii) resignation. Since on the said date the petitioner has not attained the age of superannuation, the only other mode available was to resign and this was known to the petitioner and therefore, there is no question of allowing the petitioner to retire prematurely on 5.9.1988. 3.3. It is stated that the petitioner's case does not fall under Regulation 32 of the Pension Regulations nor under Regulation 19 of the Officers' Service Regulation, since Regulation 19 only relates to allowing premature retirement of an officer in public interest. It is stated that even though the petitioner has made an application on 22.4.1987 requesting the bank to prematurely retire him, he has resigned from service with effect from 5.9.1988 and pursuant to that his terminal benefits were paid. 3.4. It is stated that the petitioner is not eligible for pension as he has not retired from service. The respondent/Bank has introduced a Pension Scheme during 1995 and as per the said Scheme, those employees who were in service on or after 1.1.1986 but have retired before 1.11.1993 were eligible for payment under the Scheme. Thereafter, necessary applications were sent to the employees who were in the rolls of the Bank after 1.1.1986, including to the petitioner and the employee, as per Regulation 3(1)(b) of the Scheme has to exercise his option within 120 days and on exercising the option, the employee concerned shall refund the bank's contribution towards provident fund with accrued interest at the rate of 6% within 60 days after expiry of the period of 120 days. It is stated that even the petitioner has exercised his option, but he did not refund the bank's contribution with accrued interest of 6% as contemplated under Regulation 3(1)(c) of the Pension Scheme. 3.5. It is stated that by a letter dated 28.12.1995 the petitioner was called upon to comply with the provisions of Regulation 3(1)(c) and in spite of it, the petitioner has not chosen to refund the amount and in view of the non compliance of the provisions of the said Regulations, he became disentitled to be a member of the pension scheme. It is also denied that the petitioner https://hcservices.ecourts.gov.in/hcservices/ has ever undertook to refund the bank's contribution with accrued interest of 6%. The petitioner ought to have refunded the bank's contribution with accrued interest up to November, 1995, which has not been followed. The mere submission of an application does not automatically entitle the petitioner for payment of pension, unless the petitioner complies with the said condition. 3.6. It is stated that in the year 1995-1996, the pension receivable was found to be meagre and the petitioner was required to refund an amount of ` 2.50 Lakhs and since the said amount was fetching 13% interest on the fixed deposit, the petitioner kept quiet till 30.3.2003. In the year 2003, when there was a revision of pension, the amount became attractive and increased substantially and the monthly income receivable by way of interest on fixed deposit has come down from 13% to 6.5% and the petitioner has claimed pension after 7 years by way of a representation. According to the respondents, the petitioner has taken a conscious and deliberate decision not to refund the bank's contribution with accrued interest and therefore, he cannot be said to have exercised his option under the Pension Regulations. 3.7. It is stated that there are six different classes of pension, viz., (i) superannuation pension; (ii) pension on voluntary retirement; (iii) invalid pension; (iv) premature retirement pension; (v) compassionate allowance; and (vi) compulsory retirement pension and the petitioner's case does not come under any one of the classes. There is no question of premature retirement as per Regulation 32 of the Pension Regulation and it has to be considered only as a resignation. 3.8. It is also stated in the additional counter affidavit filed by the respondents that the petitioner has left the service of the bank on his own volition and he has not retired under first proviso to Regulation 19(1) of the Indian Bank Officers' Service Regulations and no review as contemplated under the said provision has also been made by any Special Committee and the petitioner's request for retirement was factually not a retirement, but it is only a resignation, since at that time there was no regulation contemplating such premature retirement. 3.9. The additional counter affidavit also chooses to mention about various persons who are alleged to have been paid pension and states that they have only been paid ex-gratia amount and that was pursuant to the instruction given by the Government of India dated 26.11.1998 to all nationalised banks with a view to provide ex-gratia relief to all employees who retired before 1.1.1986, if they have rendered 20 years of continuous service before their date of superannuation. The petitioner having given his letter for retirement on 22.4.1987 is not entitled for such ex-gratia payment. It is therefore stated that as per the Regulations in existence at https://hcservices.ecourts.gov.in/hcservices/ that time, there was no premature retirement or voluntary retirement. 4.1. It is the contention of the learned counsel for the petitioner by referring to the Pension Regulation that when the application of the petitioner was for premature retirement on health grounds and that has been accepted and he has been relieved from service, there is no scope to construe the same as resignation. According to him, if it is resignation, as per the service regulations, it requires three months notice. 4.2. As far as the allegation regarding the non payment of the bank's contribution of provident fund with 6% interest, it is the submission of the learned counsel for the petitioner that in fact on calculation the bank has to pay to the petitioner an amount of ` 51,583.93, after adjustment and therefore, there was no obligation on the part of the petitioner to pay the amount and it is the case of the petitioner that the bank has at no point of time demanded refund of bank's contribution. 5.1. Per contra, it is the contention of the learned counsel for the respondents that at the time when the petitioner was allowed to be relieved the Pension Regulation as in existence at that time was applied and the amounts were settled on 29.10.1993. Under the new scheme which has come into existence in 1995, the petitioner has certain obligation to refund the bank's contribution towards provident fund with interest and unless that amount is refunded, there is no possibility to presume that the petitioner has exercised his option. At the time when the petitioner has given letter on 22.4.1987, there was no provision for voluntary retirement and such premature retirement was possible at that time only in public interest. By applying Regulation 19, the age of retirement was 58 years, which is now 60 years, and there was only a provision of compulsory retirement and there is no premature retirement. He would rely upon the judgment in J.K.Cotton Spinning and Weaving Mills Co. Ltd., Kanpur v. State of U.P. and others, 1991 I LLJ 39. 5.2. As far as the three months notice is concerned, it is contended that the three months pay has been adjusted based on the leave eligibility of the petitioner. 5.3. The employee's application is not as per the statutory regulations which imposes certain conditions and therefore, the petitioner is not entitled to pension as per the new scheme. In this regard, he would rely upon the the decision in UCO Bank and Others v. Sanwar Mal, 2004 II LLJ 490. 6. Heard the learned counsel for the petitioner and the respondents, perused the records and given my anxious thought to the issue involved in this case. https://hcservices.ecourts.gov.in/hcservices/ 7. In view of the non production of the copy of the letter stated to have been given by the petitioner on 22.4.1987 either by the petitioner or the respondents, it is useful to refer to the letter of the bank dated 5.9.1988, which is as follows: "With reference to your letter dated 22.4.1987, addressed to the Chairman & Managing Director and your subsequent oral representations on various occasions requesting to allow you to retire from the services of the Bank, we inform you that your request has been accepted and you are relived from the services of the Bank from today, the 5th September, 1988. We also inform you that the accumulated leave at your credit will be adjusted towards notice period of three months." As per the contents of the said letter, the accumulated leave to the credit of the petitioner has been adjusted towards the notice period of three months. 8. Regulation 19 of the Indian Bank (Officers') Service Regulations, 1979, which was admittedly in vogue at the time when the petitioner has submitted his letter dated 22.4.1987 and on the date when the petitioner was relieved, viz., 5.9.1988, is as follows: "19. Age of retirement (1) The age of retirement of an officer employee shall be as determined by the Board in accordance with the guidelines issued by the Government from time to time. Provided that the Bank may, at its discretion on review by the Special Committee/Special Committees as provided hereinafter in sub-regulations (2) retire, if it is of the opinion that it is in the public interest, an officer employee on or at any time after the completion of 55 years of age or on or at any time after the completion of 30 years of total service as an officer employee or otherwise, whichever is earlier. Provided further that before retiring an officer employee at least three months' notice in writing or an amount equivalent to three months' substantive salary/pay and allowances, shall be given to such officer employee; Provided further that an officer aggrieved by the order of the Competent Authority, as provided in sub- regulation (2), may within one month of the passing of https://hcservices.ecourts.gov.in/hcservices/ the order, give in writing a representation to the Board of Directors against the decision of the Competent Authority, and on receipt of such representation from the concerned officer, the Board of Directors shall consider his representation and take a decision within a period of three months. Where the Board of Directors decides that the order passed by the Competent Authority is not justified, the concerned officer shall be reinstated as though the Competent Authority has not passed the order. Provided also that nothing in this regulation shall be deemed to preclude an officer employee from retiring earlier pursuant to the option exercised by him in accordance with the rules in the Bank. Explanation: An officer employee will retire from the last day of the month in which he completes his age of retirement. Provided that an officer employee whose date of birth is on the 1st day of a month shall retire from service on the afternoon of the last day of the preceding month on attaining the age of retirement. (2) The Bank shall constitute a Special Committee/Special Committees, consisting of not less than three members, to review, whether an officer employee should be retired in accordance with the first proviso to this regulation. Such Committee/Committees shall, from time to time, review the case of each officer employee and no order of retirement shall be made unless the Special Committee/ Special Committees recommend/s in writing to the Competent Authority the retirement of the Officer Employee." The fourth proviso to Regulation 19(1) of the Indian Bank (Officers') Service Regulations, 1979 contemplates that pursuant to the option exercised by an officer, in accordance with the rules of the Bank, the Bank is entitled to allow an employee from retiring earlier. Sub-Regulation (2) to Regulation 19 of the Indian Bank (Officers') Service Regulations, 1979 contemplates a Special Committee constituted by the bank for the purpose of granting such retirement. 9. The petitioner, on completion of 55 years age, as per the condition contemplated under Regulation 19(1) of the Indian Bank (Officers') Service Regulations, 1979, has got himself relieved and as per the said clause, the three months salary has been adjusted towards the leave benefits to which the petitioner was entitled to. https://hcservices.ecourts.gov.in/hcservices/ Therefore, as submitted by the learned counsel for the respondents/Bank, at the time when the petitioner has submitted his application, viz., on 22.4.1987, there was no rule enabling the bank to allow him to retire prematurely. It is not the case of the petitioner that his case was considered by the Special Committee as a special case. Therefore, there is nothing to construe that at that time when the order was passed on 5.9.1988, the petitioner was allowed to retire prematurely. It is also not in dispute that as per the fourth proviso to Regulation 19(1) of the Indian Bank (Officers') Service Regulations, 1979, the Bank has not framed any rules. 10. The Indian Bank (Employees') Pension Regulations, 1995 was introduced and was also made applicable in respect of employees who were in service on or after 1.1.1986, but retired before 1.11.1993. Under the scheme, the term "retirement" is defined in Regulation 2(y) of the Indian Bank (Employees') Pension Regulations, 1995 as follows: "2(y) "Retirement" means cessation from Bank's service.- (a) on attaining the age of superannuation specified in Service Regulations or Settlements; (b) on voluntary retirement in accordance with provisions contained in regulation 29 of these regulations; (c) on premature retirement by the Bank before attaining the age of superannuation specified in the Service Regulations or Settlement" Under the said Regulation 2(y)(c) of the Indian Bank (Employees') Pension Regulations, 1995, which introduced premature retirement, premature retirement is made applicable in respect of premature retirement by way of settlement or as per the service regulations as contemplated under Regulation 19 of the Indian Bank (Officers') Service Regulations, 1979, enumerated above, which of course contemplates the Special Committee to decide about the premature retirement. 11. Regulation 3(1) of the Indian Bank (Employees') Pension Regulations, 1995, which is as follows: "3. Application:-These regulations shall apply to employees who,- (1)(a) were in the service of the Bank on or after the 1st day of January, 1986 but had retired before the 1st day of November, 1993; and https://hcservices.ecourts.gov.in/hcservices/ (b) exercise an option in writing within one hundred and twenty days from the notified date to become member of the Fund; and (c) refund within sixty days after the expiry of the said period of one hundred and twenty days specified in clause (b) the entire amount of the Bank's contribution to the Provident Fund including interest accrued thereon together with a further simple interest at the rate of six per cent per annum on the said amount from the date of settlement of the Provident Fund account till the date of refund of the aforesaid amount to the Bank; or till the 1st day of April, 1995 whichever is earlier." contemplates an option to be exercised by an employee within 120 days, in which event the employee shall refund within 60 days of the expiry of 120 days, the entire amount of the bank's contribution to the provident fund with interest at the rate of 6%. 12. The case of the petitioner is that he has exercised his option as per the said regulation. It is also not in dispute that the petitioner has not repaid the amount of bank's contribution towards provident fund along with interest as contemplated under Regulation 3(1) of the Indian Bank (Employees') Pension Regulations, 1995. If the petitioner has not complied with the said provision of the Regulation, the petitioner is not entitled to make an application as per Regulation 3 of the Indian Bank (Employees') Pension Regulations, 1995. 13. Regulation 22(1)(a) of the Indian Bank (Employees') Pension Regulations, 1995, which is as follows: "22. Forfeiture of service:- (1) (a) Resignation or dismissal or removal or termination of an employee from the service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits" enables the bank to forfeit the service on the ground of resignation, dismissal, etc., in which event pensionary benefits are not liable to be paid. While explaining about the said Regulation, of course relating to UCO Bank (Employees') Pension Regulations, 1995, which is in pari materia the same as that of the Indian Bank (Employees') Pension Regulations, 1995, the Supreme Court in UCO Bank and Others v. Sanwar Mal, 2004 II LLJ 490, has explained the qualification for the pension rule in the following words: "6. To sum up, the pension scheme embodied in the regulation is a self-supporting scheme. It is a code by https://hcservices.ecourts.gov.in/hcservices/ itself. The bank is a contributor to the pension fund. The bank ensures availability of funds with the trustees to make due payments to the beneficiaries under the regulations. The beneficiaries are employees covered by the Regulation 3. It is in this light that one has to construe Regulation 22 quoted above. Regulation 22 deals with forfeiture of service. Regulation 22(1) states that resignation, dismissal, removal or termination of an employee from the service of the bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits. In other words, the pension scheme disqualifies such dismissed employees and employees who have resigned from membership of the fund. The reason is not far to seek. In a self-financing scheme, a separate fund is earmarked as the scheme is not based on budgetary support. It is essentially based on adequate contributions from the members of the fund. It is for this reason that under Regulation 11, every bank is required to cause an investigation to be made by an actuary into the financial condition of the fund from time to time and depending on the deficits, the bank is required to make annual contributions to the fund. Regulation 12 deals with investment of the fund whereas Regulation 13 deals with payment out of the fund. In the case of retirement, voluntary or on superannuation, there is a nexus between retirement and retiral benefits under the provident fund rules. Retirement is allowed only on completion of qualifying service which is not there in the case of resignation. When such a retiree opts for self-financing pension scheme, he brings in accumulated contribution earned by him after completing qualifying number of years of service under provident fund rules whereas a person who resigns may not have adequate credit balance to his provident fund account (i.e. banks contribution) and, therefore, the Regulation 3 does not cover employees who have resigned. Similarly, in the case of a dismissed employee, there may be forfeiture of his retiral benefits and consequently the framers of the scheme have kept out the retirees as well as dismissed employees vide Regulation 22. Further, the pension payable to the beneficiaries under the scheme would depend on income accruing on investments and unless there is adequate corpus, the scheme may not be workable and, therefore, Clause 22 prescribes a disqualification to dismissed employees