Case: THE PUNJAB STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LTD Vs. THE REGISTRAR, COOPERATIVE SOCIETIES AND OTHERS


Decision reasoning: 1[ds]39. The facts are not in dispute that the respondents are the retired employees and members of the Punjab State Cooperative 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 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 1989.41. 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 1st 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.43. The concept of vested/accrued right in the service jurisprudence and particularly in respect of pension has been 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 28-3-1995 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 three-Judge 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 two-Judge 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 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 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.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.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 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 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.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.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 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 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 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, Co-operative, introduced the pension scheme with effect from 1st April 1989, it can be presumed that the competent authority was aware of the 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, non--availability 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 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 seeking pension to the scheme in vogue when they became members and took benefits pursuant thereto.