SCA/16361/2004 1/35 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 16361 of 2004 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= BANK OF INDIA RETIRED OFFICERSASSOCIATION & 1 - Petitioner(s) Versus BANK OF INDIA THRO'CHAIRMAN & MANAGING & 3 - Respondent(s) ========================================================= Appearance : MR MS TRIVEDI for Petitioner(s) : 1 - 2.MR RAJENDRA M DESAI for Petitioner(s) : 1, MR NANDISH CHUDGER FOR M/S.NANAVATI ASSOCIATES for Respondent(s) : 1, 3, None for Respondent(s) : 2, 4, ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 18/08/2006 ORAL JUDGMENT 1. In this petition, the petitioners have SCA/16361/2004 2/35 JUDGMENT challenged regulation 34 of the Pension Regulations 1995 formulated by respondent No.1, Bank of India. 2. Brief facts leading to the present petition are that the petitioner No.1 is an Association of Retired Officers of Bank of India. Petitioner No.2 is a member of petitioner No.1 Association. 2.1 Respondent No.1 formulated a pension scheme through regulations called Bank of India (Employees') Pension Regulations, 1995 (hereinafter to be referred to as "the said Regulations"). Through the said Regulations, pensionary benefits were made available to the employees of respondent No.1 Bank. The pension scheme provided, inter alia, that pension would be made available to those employees who joined the service of the Bank on or after the notified date. For those who are already in service of the Bank as on the notified date or who had retired before the notified date, different provisions were made. 2.2 Broadly stated, in regulation 3 of the said SCA/16361/2004 3/35 JUDGMENT Regulations, it was provided that those employees who were in service of the bank on or after the 1st day of January 1986, but had retired before the 1st day of November, 1993, would be covered by the pension scheme provided they exercise the option in writing within 120 days from the notified date to become member of the pension fund. For those who retired on or after 1st day of November 1993 but before the notified date also, an option was made available to be exercised in writing within 120 days form the notified date to become the member of the fund. Both these classes of employees had to refund with simple interest at the rate of 6 per cent per annum the entire amount of Bank's contribution to the provident fund. Those employees who were in service before the notified date and continued to be in service thereafter also, option was to be exercised within 120 days from the notified date. 2.3 Petitioner No.1 Association espouses the cause of officers of respondent No.1 Bank who retired after 1.1.86 but before 1.11.93. With respect to such employees, provisions were made under regulation 34 SCA/16361/2004 4/35 JUDGMENT of the said Regulations which provided, inter alia, that they shall be eligible for pension with effect from 1st day of November 1993. Similarly, families of such employees who died between the said dates also had an option to seek pension but with a rider that the family shall receive pension only with effect from 1.11.93. These provisions made in regulation 34 of the said Regulations aggrieved the petitioners. 3. The petitioners contend that the cut-off date of employees who have retired before 1.11.1993 and after 1.11.93 is an artificial demarcation between the other wise similarly situated employees. It is, therefore, their case that all employees irrespective of the date of their retirement who had opted for pension should receive their pensionary benefits from the date of retirement and not from 1.11.93 as provided under regulation 34 of the said Regulations. 4. The petitioners had made a representation to the respondents on 18th December 2001 in this regard. The representation, however, came to be turned down SCA/16361/2004 5/35 JUDGMENT by the respondents by communication dated 15.2.2002. The petitioners have, therefore, filed this petition challenging validity of regulation 34 of the said Regulations. 5. Respondents Nos.1 & 2 have filed affidavit in reply dated 27th March 2006. In the affidavit in reply, apart from opposing the petition on legal grounds it is stated that petitioner No.1 Association had filed Special Civil Application No.10532 of 1996 before this Court. In the said petition, the grievance of petitioner No.1 Association was with respect to the payment of commuted value of pension and for payment of interest on such commuted value of pension. It is pointed out that the said petition came to be disposed of by the learned single Judge of this Court by the judgment dated 16.9.99. The learned single Judge while partly allowing the petition directed that respondent No.1 bank shall pay to the officers of the Bank who retired between 1.1.86 and 31.10.93 interest at the rate of 6 per cent per annum on the commuted value of pension for the period from 1.11.93 till 31.3.95. SCA/16361/2004 6/35 JUDGMENT Rest of the prayers made by the Association were turned down. It is also pointed out in the said affidavit in reply that against the directions issued by the learned single Judge in the order dated 16.9.99, respondent No.1 Bank had preferred Letters Patent Appeal No.732 of 2000 and by an order dated 10.1.2001, the directions issued by the learned single Judge has been stayed. It is stated that the said LPA is pending. It is further stated that the petitioners have not disclosed these facts in the petition. 5.1. In the said reply filed by respondents Nos.1 & 2, it is further contended that a settlement for pension was signed between the representatives of the employees and the representative of Bank on 29th October, 1993, to provide for pensionary benefits with effect from 1.11.93 to employees who were in service and who retired subsequently. However, by way of dispensation, all employees who had retired during the period from 1.1.86 to 31.10.93, were also made eligible for pension if they applied for the same and refund the CPF as provided in the SCA/16361/2004 7/35 JUDGMENT regulations. It is, therefore, stated that in terms of regulation 52 of the said Regulations, an employee who is member of the pension fund is entitled to receive pension in the normal course from the date following his retirement. However, in view of the fact that settlement of pension envisaged that the payment of pensionary benefits shall commence from 1.11.93; in case of employees who retired during the period from 1.1.86 to 31.10.93, pension payment could not have commenced from the date following their retirement as provided in regulation 52. In view of this position, regulation 34 is incorporated. 5.2 It is further stated in the affidavit in reply that those who retired prior to 1.11.93 would have continued to enjoy the fruits of Contributory Provident Fund. They were required to refund the CPF benefits only against the commutation of arrears of pension when actually released to them so that the pensioners would not have difficulty in raising resources for refunding the CPF amount. It is further stated that simple interest at the rate of 6 per cent per annum is collected only upto 1.4.95 SCA/16361/2004 8/35 JUDGMENT irrespective of the date of refund of CPF by the pensioner. 6. The petitioners have filed affdavit in rejoinder. However, no new factual aspects come forth in the said rejoinder statement. 7. It is on the basis of these pleadings that the parties have made submissions before the Court. 8. Learned advocate Shri Trivedi appearing for the petitioners submitted that regulation 34 of the said Regulations is illegal, unlawful and invalid. He submitted that all employees irrespective of date of their retirement should receive pension w.e.f, date immediately following the date of retirement. He submitted that regulation 34 of the said Regulations is in conflict with regulation 52. He further submitted that by introducing regulation 34, respondent No.1 has introduced an artificial cut-off date. The employees retiring prior to 1.11.93 are treated differently from those retiring after 1.11.93. Those who retired after 1.11.93 would SCA/16361/2004 9/35 JUDGMENT receive their pension immediately after retirement whereas employees retiring after 1.1.86, but before 1.11.93 are held eligible for pension only from 1.11.93. This, according to the learned advocate for the petitioner, is discriminatory. He submitted that retirees form a homogeneous class. They have been further sub-classified into two groups, those retiring before 1.11.93 and those retiring after 1.11.93 which according to the learned advocate is not legally permissible. 9. Learned advocate Shri Chudgar for the respondents opposed the petition. He submitted that respondent No.1 Bank had introduced pension scheme through the said Regulations. The said Regulations make different specific provisions for different classes of employees. He submitted that the members of the petitioner No.1 Association who retired before 1.11.93 with benefits of CPF scheme cannot claim pensionary benefits without any condition. He further submitted that the pension scheme was made applicable prospectively from 1.11.93 through a settlement between the employer on one side and the SCA/16361/2004 10/35 JUDGMENT the employees on the other. The settlement had taken place in October 1993 and it was agreed therein that the pension scheme was to be made applicable with effect from 1.11.93. It is, therefore, clear that all employees who joined the service of the bank after 1.11.93 are included in the pension scheme and by giving limited retrospective effect to the scheme, employees who retired after 1.11.86 have also been given option to switch over to the pension scheme. He submitted that the capacity of the bank to weigh the additional burden flowing from such a scheme would be a relevant consideration for this Court while examining the validity of the condition in question. He further submitted that regulation 52 of the said Regulations is a general regulation providing, inter alia, that pension would be payable to retiring employees on the following date after his retirement. On the other hand, regulation 34 is a specific regulation applying to special class of employees. He also submitted that petitioner No.1 Association had approached this Court earlier challenging certain portion of the said Regulations. This Court had substantially turned down the SCA/16361/2004 11/35 JUDGMENT challenge of the Association and provided only for a limited relief of granting interest on the delayed payment of commuted value of pension. Even this direction of the learned single Judge is under challenge before the Division Bench and the LPA is pending and stay has been granted. 10. Having heard the learned advocates appearing for the parties, this Court has to decide the legality of regulation 34 of the said Regulations. 11. As noted earlier, pension scheme was introduced for the first time by respondent No.1 Bank through the said Regulations. Regulation 2 of the said Regulations defines certain terms. Regulation 2(r) of the said Regulations defines "notified date" as follows:- "(r) "notified date" means the date on which these regulations are published in the official Gazette." It is not in dispute that the said Regulations were published in official Gazette on 29th September, 1995. The notified date, therefore, happens to be SCA/16361/2004 12/35 JUDGMENT 29th September, 1995. 11.1 Regulation 3 of the said Regulations provides for application of the said Regulations. Regulation 3 reads 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 1st day of November 1993; and (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 eh 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 SCA/16361/2004 13/35 JUDGMENT earlier or; (2) (a) have retired on or after the 1st day of November 1993 but before the notified date; (b) an 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 Bank's contribution to the Provident Fund and 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 (3) (a) are in the service of the Bank before the notified date and continue to be in the service of the Bank on or after the notified date; and (b) exercise an option in writing within one hundred and twenty days from the notified date to become member of the Fund; and (c) authorise the trust of the Provident Fund of the Bank to transfer the entire SCA/16361/2004 14/35 JUDGMENT contribution of the Bank along with the interest accrued thereon to the credit of the Fund constituted for the purpose under regulation 5; or (4) join the service of the Bank on or after the notified date; or (5) were in the service of the Bank during any time on or after the 1st day of November 1993 and had died after retirement but before the notified date, their family shall be entitled for the amount of pension payable to them from the date on which they would have been entitled to pension under these regulations, had they been alive till the date on which they died, if the family of the deceased - (a) exercise an option in writing within one hundred and twenty days from the notified date to become member of the Fund; and (b) refund within sixty days after the expiry of the said period of one hundred and twenty days specified in clause (a) above the entire amount of Bank's contribution to the Provident Fund and interest accrued thereon together with a further simple interest at the rate of six per SCA/16361/2004 15/35 JUDGMENT 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 (6) joined the service of the bank on or after the 1st day of November 1993 but who have died while in the service of the Bank before the notified date, their family shall be entitled to the family pension under these regulations. Provided that the family of such a deceased employee refunds within one hundred and eighty days from the notified date the entire amount of Bank's contribution to the Provident Fund, if any, and interest accrued thereon together with further simple interest at the rate of six per cent per annum from the date of settlement of the Provident Fund account till the date of refund of the aforesaid amount to the Bank. Provided further that the family of such a deceased employee shall apply in writing for grant of family pension; or (7) were in the service of the Bank during any time on or after the 1st day of January, 1986 and had died while in service on or before the 31st day of October 1993 or had SCA/16361/2004 16/35 JUDGMENT retired on or before the 31st day of October 1993, but died before the notified date in which case their family shall be entitled to the pension or the family pension as the case may be under these regulations, if the family of the deceased. (a) exercise an option in writing within one hundred and twenty days from the notified date to become member of the Fund; and (b) refund within sixty days of the expiry of the said period of one hundred and twenty days specified in clause (a) above the entire amount of Bank's contribution to the Provident Fund and interest accrued thereon together with a further simple interest at the rate of six per cent per annum 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 first day of April 1995 whichever is earlier; or (8) joined the service of the Bank on or before the 31st day of October 1993 and who died while in service on or after the 1st day of November,1993, but before the notified date in which case their families shall be entitled to family pension under these regulations if the family of the deceased SCA/16361/2004 17/35 JUDGMENT employee- (a) exercise an option in writing within one hundred and twenty days from the notified date to become a member of the Fund; and (b) refund within sixty days of the expiry of the said period of one hundred and twenty days specified in clause (a) above 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 from the date of settlement of the Provident Fund account of the employee till the date of refund of the aforesaid amount to the bank; (9) Notwithstanding anything contained in sub- regulations(1), (2), (3) (5) and (8) an option exercised before the notified date by an employee or the family of a deceased employee in pursuance of the settlement shall be deeded to be an option for the purpose of this Chapter if such an employee or the family of deceased employee refund within sixty days from the notified date, the amount of the Bank's contribution to the Provident Fund including interest accrued thereon together with a further simple interest in accordance with the provisions of this Chapter and in case SCA/16361/2004 18/35 JUDGMENT employer's contribution of Provident Fund has not been received from Provident Fund Trust, has authorised or authorises within sixty days from the notified date the trustees of the Provident Fund of the Bank to transfer the entire contributions of the Bank to the Provident Fund including interest accrued thereon in accordance with the provisions of tis Chapter to there credit of the Fund constituted for this purpose under regulation 5." Regulation 4 of the said Regulations provides, inter alia, that notwithstanding anything contained in sub- regulation (4) of regulation 3, an employee who joins the service of the bank on or after the notified date at the age of thirty-five years or more, may, within the period of ninety days from the date of his appointment, elect, to forego his right to pension, whereupon the said Regulations shall not apply to him. 11.2 Regulation 14 of the said Regulations provides for qualifying service for pension. Regulation 22 of the regulations provides for forfeiture of service under certain circumstances, such as, resignation, SCA/16361/2004 19/35 JUDGMENT dismissal or removal of an employee. Chapter V of the said Regulations pertains to classes of pension. These regulations provided, inter alia, for superannuation pension, pension on voluntary retirement, invalid pension, compassionate allowance, premature retirement pension and compulsory retirement pension. It is in Chapter V that regulation 34 has been included. Regulation 34 of the said Regulations reads as follows:- "34. Payment of pension or family pension in respect of employees who retired or died between 1.1.1986 to 31.10.1993. (1) Employees who have retired from the service of the Bank between the 1st day of January 1986 and the 31st day of October, 1993 shall be eligible for pension with effect from the 1st day of November, 1993. (2) The family of a deceased employee governed by the provisions contained in sub-section (7) of regulation 3 shall be eligible for family pension with effect from the 1st day of November, 1993." 11.3 Chapter VI of the said Regulations provides for rate of pension. Chapter VII thereof provides for family pension and Chapter VIII provides for SCA/16361/2004 20/35 JUDGMENT commutation of pension. Chapter IX of the said Regulations provides for general conditions. Regulation 52 contained in Chapter IX reads as follows:- "52. Date from which pension becomes payable. (1) Except in the case of an employee to whom the provisions of regulation 43 and regulation 46 apply a pension other than family pension shall become payable from the date following the date on which an employee retires. (2) Family pension shall become payable from the date following the date of death of the employee or the pensioner. (3) Pension including family pension shall be payable for the day on which its recipient dies." 12. On the basis of the above provisions contained in the said Regulations, the contentions raised on behalf of the petitioners need to be examined. 13. Before attempting to harmonize the interpretation of the different provisions and to judge the validity of regulation 34 of the said Regulations, a few salient factual features need to be noted. SCA/16361/2004 21/35 JUDGMENT 13.1 The said Regulations were formulated in the year 1993 and actually notified on 29th September, 1995. All the members of petitioner No.1 Association whose cause the petitioners seek to espouse have retired from service between 1.1.1986 and 1.11.1993 and have opted to become members of the pension fund. In other words, in response to the option made available by the said Regulations, all the concerned employees have opted to switch over to the pension scheme. They had exercised their options at the relevant time. It may be recalled that as per regulation 3 of the said Regulations, time of 120 days from the notified date was made available to such employees to exercise their option. Thus, all the employees on whose behalf petitioner No.1 association has filed the present petition, would have exercised their option for switching over to the pension scheme as per the regulations way back in the year 1995. For the first time, a protest was made about the pension being made available to them with effect from 1.1.93 by making a representation on 18.12.2001. This representation was also turned down by respondent No.1 Bank. It was conveyed to the SCA/16361/2004 22/35 JUDGMENT petitioners the decision thereof vide communication dated 15.2.2002. The present petition has thereafter been filed some time in December 2004. It may also be noted that petitioner No.1 Association had filed Special Civil Application No.10532 of 1996 before this Court raising certain issues about the terms of the said Regulations. The said petition, as noted earlier, received partial success. In the said petition, the petitioners never raised any grievance about regulation 34 of the said Regulations. It is in this background that the present petition is required to be examined. 14. From the said Regulations, contents whereof have been noted herein-above, it can be seen that respondent No.1 Bank introduced pension scheme for the first time through said Regulations. The regulations were notified on 29th September 1995. As is emerging from the affidavit in reply filed by respondents Nos.1 & 2, the said Regulations providing for pension scheme were on account of settlement signed between the management and the employees Union on 29th October, 1993. In the said settlement, SCA/16361/2004 23/35 JUDGMENT it was decided to provide for pensionary benefits with effect from 1.11.93 to those employees who were in service then and retiring subsequently. It was only by way of a special