/2022 INSC 0039/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
     CIVIL APPEAL NO(S).   297­298    OF 2022
(Arising out of SLP(Civil) No(s). 1940­1941 of 2020)
THE PUNJAB STATE COOPERATIVE
AGRICULTURAL DEVELOPMENT BANK LTD. ….APPELLANT(S)
VERSUS
THE REGISTRAR, COOPERATIVE
SOCIETIES AND OTHERS ….RESPONDENT(S)
WITH
CIVIL APPEAL NO(S).   303      OF 2022
     (Arising out of SLP(Civil) No(s). 1934 of 2020)
CIVIL APPEAL NO(S).     311      OF 2022
      (Arising out of SLP(Civil) No(s). 12822 of 2020)
CIVIL APPEAL NO(S).    312        OF 2022
       (Arising out of SLP(Civil) No(s). 1935 of 2020)
CIVIL APPEAL NO(S).    310         OF 2022
(Arising out of SLP(Civil) No(s). 1936 of 2020)
CIVIL APPEAL NO(S).      300        OF 2022
(Arising out of SLP(Civil) No(s). 1949 of 2020)
CIVIL APPEAL NO(S).     306         OF 2022
(Arising out of SLP(Civil) No(s). 1943 of 2020)
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CIVIL APPEAL NO(S).    299        OF 2022
(Arising out of SLP(Civil) No(s). 1944 of 2020)
CIVIL APPEAL NO(S).     308        OF 2022
(Arising out of SLP(Civil) No(s). 1859 of 2020)
CIVIL APPEAL NO(S).      309       OF 2022
(Arising out of SLP(Civil) No(s). 1942 of 2020)
CIVIL APPEAL NO(S).     301        OF 2022
(Arising out of SLP(Civil) No(s). 1932 of 2020)
CIVIL APPEAL NO(S).     302        OF 2022
(Arising out of SLP(Civil) No(s). 1931 of 2020)
CIVIL APPEAL NO(S).     304        OF 2022
(Arising out of SLP(Civil) No(s). 1939 of 2020)
CIVIL APPEAL NO(S).      305       OF 2022
(Arising out of SLP(Civil) No(s). 1937 of 2020)
CIVIL APPEAL NO(S).    307          OF 2022
(Arising out of SLP(Civil) No(s). 1945 of 2020)
            CIVIL APPEAL NO(S).     313         OF 2022
               (Arising out of SLP(Civil) No(s).12864 of 2020)
J U D G M E N T
Rastogi, J.
1. Leave granted.
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2. Civil   Appeals   @   SLP(Civil)   Nos.   1940­1941   of   2020   and   the
cognate   appeals   arise   from   the   self­same   common   judgment   dated
29 th
 July, 2019 and 4 th
 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. 1940­1941 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  self­same   impugned   judgment   in
the proceedings.  At the same time, the respondents are the original
writ   petitioners   who   are   the   retired   employees   and   the   service
conditions   of   the   employees   are   governed   by   the   Punjab   State
Cooperative   Agricultural   Land   Mortgage   Banks   Service   (Common
Cadre)   Rules,   1978(hereinafter   being   referred   to   as   the   “Rules
1978”)   and   became   members   of   the   Bank   Pension   Scheme,   which
was introduced w.e.f. 1 st
 April, 1989.  
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5. The   appellant   Bank   is   a   registered   cooperative   society   which
was   earlier   known   as   “Punjab   State   Cooperative   Land   Mortgage
Bank Ltd.”  The principal object of the Bank is to provide long term
loans   to   the   farming   community   and   to   protect   them   from   the
clutches of money lenders.  The main funding of the appellant Bank
is   by   way   of   loans   from   National   Bank   for   Agriculture   and   Rural
Development(NABARD) as per the norms laid down.   The appellant
Bank   has   two   tier   structure   comprising   of   “Punjab   State
Cooperative   Agricultural   Development   Bank   Ltd.”   at   Apex
level(SADB)   and   the   “Primary   Agricultural   Development
Banks”(PADB)   at   the   grass   root   level.     These   two   banks   ensure
timely   delivery   of   credit   to   the   farmers,   who   are   its   members   and
directly   benefitted   with   various   schemes   which   provide   long   term
and short­term loans to them.
6. Prior   to   1989,   the   employees   of   the   appellant   Bank   were
covered   under   the   Employees   Provident   Fund   and   Miscellaneous
Provisions   Act,   1952(hereinafter   being   referred   to   as   the   “Act
1952”).     The   scheme   was   being   duly   adhered   to   and   necessary
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contributions   were   regularly   paid   by   employees   and   the   employer
Bank.
7. The   Department   of   Finance,   Government   of   Punjab,   vide   its
letter dated 22 nd
  September 1988, pursuant to recommendations of
the   Punjab   Pay   Commission   to   bring   the   employees   serving   in
various   Public   Sector   Undertakings   and   State   aided   institutions
under   purview   of   the   State   Pension   Rules,   solicited   the
views/comments   of   the   concerned   organisations   to   inter­alia
communicate the additional financial burden involved in each case
and   whether   the   organisation/organisations   could   bear   the
additional   liability   out   of   their   own   resources.     These
recommendations were placed before the Administrator of the Bank
who vide Resolution dated 22 nd
 June 1989 decided to implement the
recommendations   of   the   State   Government   and   as   a   consequence
thereof,   the   pension   scheme   of   the   employees   and   Officers   in   the
common cadre was introduced w.e.f. 1 st
 April, 1989.
8. Resolution No.24 passed by the Administrator of the appellant
Bank dated 22 nd
 June, 1989 is reproduced as under:­
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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/office
rs   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
payment   of   contributory   provident   fund
scheme   and   refund   the   entire   existing
contribution   with   them   along   with   family
pension   contribution   and   deposit   linked
insurance   fund   along   with   up   to   date   interest
on these amounts.
9. In furtherance thereof, the appellant Bank sent a letter dated
27 th
  June,   1989   to   the   Registrar,   Cooperative   Societies,   Punjab,
seeking   approval   for   introduction   of   the   pension   scheme   for   its
employees   covered   under   the   Rules,   1978.     The   Registrar,
Cooperative   Societies,   Punjab,   by   its   communication   dated   7 th
February,   1990   conveyed   its   approval   for   introduction   of   the
pension   scheme   proposed   by   the   appellant   Bank   to   its   employees
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covered   under   the   Rules   1978.     In   pursuance   thereof,   the
amendment was carried out in the Rules, 1978 and Rule 15(ii) was
introduced authorizing the Board of Directors to formulate pension
scheme   with   the   approval   of   the   Registrar   Cooperative   Societies,
Punjab.     For   the   purpose   of   reference,   Rule   15(ii)   is   extracted
hereunder:­
“15  (i)  PROVIDENT FUND:­
The employees shall be entitled to the benefit of the General
Provident  Fund  as provided in  the  employees  Provident   Fund  Act,
1952 and scheme framed thereunder.
(ii)   THE PENSION SCHEME FOR THE EMPLOYEES/OFFICES IN
THE   COMMON   CADRE   RULES   OF   THE   PUNJAB   STATE
COOPERATIVE   AGRICULTURAL   DEVELOPMENT   BANK   W.E.F.
1.4.89.
1. Short title and commencement:­
(i) The   rules   shall   be   called,   the   Punjab   State   Cooperative
Agricultural   Development   Banks   Employees   Pension,   Family
Pension and General Provident Fund Rules.
(ii) These Rules shall come into force with effect from 1.4.89.
2. Application
(i) These   rules   shall   apply   to   all   the   posts   in   the   services
specified in the Appendix ‘I’ of the Common Cadre Rules, provided
that   in   case   of   the   employees   appointed   by   transfer   from
Government   Departments,   these   rules   shall   only   apply   to   the
extent specified in their terms and conditions of deputation agreed
upon with the Government Department concerned.
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Provided   further   that   nothing   in   these   rules   shall   affect   the
application   of   any   other   law,   statutory   rules,   bye­laws   and
regulations for time being in force.
    Provided further that an employee who joins service on or after
coming into force of these rules and such existing employees, who
opt for these rules, shall be covered by these rules. All category of
employees   shall   have   to   exercise   this   option   in   Form­A   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 Volume­I Part­I.
Note:­ Unless the contrary appears from the context or subject
to   term   ‘pay’   defined   in   Rule   2.44   of   the   Punjab   Civil   Services,
Volume­I, Part­I, does not include “Special Pay.”
10. In   furtherance   thereto,   the   amended   Rule   15(ii)   came   into
force with effect from 1 st
  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   24 th
  March,   1993   for   management
and effective implementation of the scheme.
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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
had opted for it till the year 2010.   Later, when the appellant Bank
found   the   scheme   to   be   unviable   on   account   of   financial
constraints,   the   Board   of   Directors   of   the   appellant   Bank   in   its
meeting   dated   29 th
  May,   2010   in   reference   to   Agenda   No.   15
reconsidered   the   matter   about   giving   pension   to   the   bank
employees and resolved as under:­
1. Pension to the retired employees and those going to retire in future
be communicated.
2. Pension   Scheme   will   not   be   applicable   in   case   of   employees
employed on or after 1.1.2004.
3. Pensioners   be   not   given   the   benefit   of   commutation   of   pension,
medical reimbursement and LTC.
4. As   per   existing   rules,   the   contribution   equal   to   the   12%   GPF
deduction of employees to be continued by bank.
5. As   per   letter   No.CA3/64/13717   dated   29.8.2008   of   Registrar,
Cooperative   Societies,   12%   of   the   profits   of   SADB   &   PADBs   be
allocated   to   employees   benefit   fund   and   its   90%   share   be
contributed to the pension fund.
6. Bank to continue pension from its funds/expenses by stopping the
commutation of pension, medical reimbursement and LTC facilities
to   its   employees   and   retired   employees,   imposing   25%   deduction
on   eligible   amount   of   pension   and   after   adjusting   the   pension
amount   against   SADB/PADBs   profits   according   to   rules   be   made
up on the basis of outstanding loans of SADB and PADBs.
7. As and when  there  is improvement  in financial  condition  of bank,
the payment of full pension may be considered.
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12. The   appellant   Bank   sent   a   letter   dated   9 th
  June,   2010   to   the
Registrar,   Cooperative   Societies,   Punjab,   seeking   approval   of   the
aforesaid Resolution.   The Registrar, Cooperative Societies, Punjab,
vide   its   letter   dated   3 rd
  September,   2010   issued   directions   to   the
appellant   Bank   to   review   its   proposal.     Pursuant   thereto,   the
appellant   Bank   submitted   its   revised   proposal   to   the   Registrar,
Cooperative Societies, Punjab, on 30 th
  March, 2011 to proceed with
the   pension   scheme   in   accordance   with   Resolution   No.   15   dated
29 th
  May,   2010.     Although   the   proposal   was   turned   down   by   the
Registrar, Cooperative Societies, Punjab, Chandigarh still the Board
of   Directors   of   the   appellant   Bank   vide   its   Resolution   dated   17 th
August, 2012 decided to discontinue the pension scheme and revert
to   the   scheme   of   Contributory   Provident   Fund   with   a   proposal   of
One Time Settlement.  The Board of Directors, later in exercise of its
powers vested in Section 84A(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   11 th
  March,   2014.     Pursuant   thereto,   Rule   15(ii)   stood
10

deleted.     The   order   dated   11 th
  March,   2014   is   reproduced
hereunder:­
O/o Registrar, Cooperative Societies, Punjab, Chandigarh
(Credit Branch­1)
To
The Managing Director,
The Punjab State Cooperative Agri. Dev. Bank Ltd.,
Chandigarh.
Memo. Credit/CA­3/2841  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:
Rule Existing Amended
15 (i) PROVIDENT FUND
The   employees   shall   be   entitled   to
the benefit of the General Provident
Fund as provided in the employees
Provident   Fund   Act,   1952   and
scheme framed thereunder. (i)   The   employees   shall   be
entitled to the benefits of the
Contributory Provident Fund
as   provided   in   the
Employees Provident Fund &
Miscellaneous Act, 1952 and
schemes framed thereunder.
(ii)   The   Pension   Scheme   for   the
employees/officers   in   the   common (ii) Deleted.
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cadre   rules   of   the   Punjab   State
Cooperative   Agricultural
Development   Bank   w.e.f.
01.04.1989.
13. It reveals from the record that since the appellant Bank much
before the amendment had stopped making payments of pension in
terms   of   Rule   15(ii)   of   the   Rules   1978,   the   employees   approached
the   High  Court   under   Article   226   of   the   Constitution  by   filing  writ
petitions and various interim orders were passed from time to time
and even at one stage, it was decided to introduce a proposal of one
time   settlement   which   was   furnished   by   the   appellant   Bank   on
16 th
  October,   2012   in   the   pending   proceedings   before   the   High
Court   and,   as   informed,   few   of   the   employees   have   settled   their
claims under the One Time Settlement but it will be appropriate to
notice at this stage that while the proceedings were pending before
the Division Bench of the High Court, by Order dated 24 th
  January
2014,   it   was   made   clear   that   one   time   settlement   which   has   been
implemented   after   seeking   approval   of   the   competent   authority
shall   be   without   prejudice   to   the   legal   rights   of   the
applicant/respondent   employees.   The   Order   dated   24 th
  January,
2014 is reproduced hereunder:­
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“CM­109­LPA­2014
Allowed as prayed for.
Document   Annexure   A1   is   taken   on   record   subject   to   such
exceptions.
CM stands disposed of.
CM­71­LPA­2014 in LPA­2001­2013
Notice   to   the   non­applicant/appellants.     Ms.   Jaishree
Thakur, Advocate accepts notice.
After  hearing learned counsel for  the parties and keeping  in
view   the   fact   that   since   One   Time   Settlement   scheme   has   already
been   implemented   after   seeking   approval   of   the   competent
authority,   this   application   is   disposed   of   with   a   clarification   that
the   implementation  of  the   said   scheme   shall   be   without   prejudice
to the legal rights of the applicant/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
31 st
 August 2013 and Rule 15(ii) was deleted by the appellant Bank
by   Order   dated   11 th
  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
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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 1 st
 April, 1989 and finally
held   that   the   employees   are   entitled   to   regular   pension   including
revised   rates   of   dearness   allowance,   to   all   the   employees   who
became member of the pension scheme under the Rules 1978.
16. When   the   matter   travelled   to   the   Division   Bench   of   the   High
Court,   by   that   time,   the   amendment   was   made   by   an   Order   dated
11 th
  March, 2014 and Rule 15(ii) was deleted.   The Division Bench,
after   taking   note  of  the   submissions   made   by   the   parties   observed
that   the   decision   to   frame   the   pension   scheme   was   a   conscious
decision   of   the   appellant   Bank   taken   in   its   own   wisdom   and
corresponding   rules   were   introduced   and   made   applicable   from   1 st
April,   1989   and   Rule   15(ii)   was   deleted   on   11th   March,   2014.     In
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the   interregnum,   the   employees   became   members   of   the   pension
scheme   and   were   paid   their   regular   pension   for   sufficient   time
which   cannot   be   defeated   and   taken   away   retrospectively
detrimental   to   their   interest.     The   amendment   which   has   taken
away  the vested and accrued right of the employees to get pension
and that too with retrospective effect would be violative of Article 14
of the Constitution and disposed of the LPA with a declaration that
amendment   dated   11 th
  March,   2014   under   Rules   1978   shall   apply
prospectively.
17. The   judgment   of   the   Division   Bench   of   the   High   Court   dated
29 th
  July, 2019 became subject matter of challenge at the instance
of   the   appellant   Bank   and   by   the   serving   employees   who   have
claimed   that   their   right   to   get   pension   may   be   affected   in   futuro,
and  have  approached  this  Court  ventilating   their  grievances in  the
instant proceedings.
18. It   may   be   relevant   to   note   that   before   the   High   Court,   at
different   stages,   different   counter   affidavits   were   filed   by   the
Regional Provident Fund Commissioner(RPFC) with reference to the
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grant   of   exemption   after   the   Employees   Pension   Scheme   1995
became the part of the Act 1952.
19. It   has   been   stated   in   the   counter   affidavit   filed   by   the   RPFC
under   the   Act   1952   that   earlier   it   was   erroneously   mentioned
“granted exemption from pension scheme”, but that was a factually
incorrect   statement   recorded   and   the   RPFC   has   made   an
unconditional apology for making such a statement of fact.  It is the
admitted case of RPFC that neither any application was filed by the
appellant   Bank   seeking   exemption   from   the   employees   pension
scheme nor it was granted or refused.
20. The   stand   of   the   EPFC   is   that   Employees’   Provident   Funds
Scheme,   1952   and   Employees’   Pension   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
16

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 the scheme remain in operation, i.e., upto 31 st
 October, 2013.
23. Learned   counsel   further   submits   that   if   the   employees   are
being permitted to get pension under the scheme of the Bank after
31 st
  October   2013   and   also   statutory   pension   from   Regional
Provident   Fund   Commissioner   under   the   Act   1952,   indeed   there
shall   be   payment   of   double   pension   which   is   in   either   way   not
permissible in law.
17

24. Learned counsel further submits that the employee is entitled
for   pension   but   how   the   pension   is   to   be   computed,   no   one   can
claim   any   vested/accrued   right.     It   is   not   the   case   of   the
respondents   that   they   are   not   being   paid   pension.     It   was   paid
earlier under the pension scheme introduced by the Bank from the
year   1989   until   it   remained   in   force   till   31 st
  October   2013   and
thereafter, the employees are entitled to get a statutory pension as
per   the   Employees   Pension   Scheme   1995   under   the   provisions   of
the Act 1952.  Thus, plea of vested right which has been considered
by   the   High   Court   is   completely   misplaced   and   as   long   as   the
appellant   Bank  fulfils  its   statutory   liability  under   the  provisions   of
the   Act   1952,   which   they   are   under   an   obligation   to   comply   with,
the   employees   are   not   entitled   to   claim   pension   under   the   scheme
introduced   by   the   Bank   after   it   stands   withdrawn   with   effect   from
31 st
  October,   2013   and   thus   no   vested/accrued   right   of   the
employee   is   in   any   manner   has   been   defeated   and   a   finding
recorded   by   the   High   Court   to   continue   the   bank   pension   scheme
after   it   stood   deleted   is   not   sustainable   in   law   and   deserves   to   be
interfered by this Court.
18

25. In support of his submissions, learned counsel placed reliance
on   the   judgments   of   this   Court   in   Marathwada   Gramin   Bank
Karamchari   Sanghatana   and   Another   Vs.   Management   of
Marathwada Gramin Bank and Others 1
,  State of Rajasthan  Vs.
A.N.   Mathur   and   Others 2
  and   State   of   Himachal   Pradesh   and
Others  Vs.  Rajesh Chander Sood and Others 3
.
26. Learned   counsel   further   submits   that   the   pension   scheme
introduced   by   the   Bank   later   became   financially   unviable   and   the
number   of   retirees   in   comparison   to   the   existing   employees
recruited   after   1 st
  January,   2004   is   almost   three   times   and   if   the
appellant   Bank   is   mandated   to   continue   to   make   payment   of
pension   under   Bank   Pension   Scheme,   the   Bank   will   become
defunct and the contribution towards pension made by the serving
employees will be 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
1   2011(9) SCC 620
2   2014(13) SCC 531
3   2016(10) SCC 77
19

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   14 th
  September,
2015   and   31 st
  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   April   1989   to   August   2017.     At   the   same   time,
the   appellant   has   been   asked   to   pay   pension   to   the   retirees   under
the   Bank   Pension   Scheme   in   terms   of   the   impugned   judgment   to
the   employees   who   are   covered   at   one   stage   under   the   scheme.   It
20

will almost be a double payment to the employees which is over and
above the payment which was admissible to the employees in terms
of   statutory   pension   scheme   1995   under   the   Act   1952   and   that
apart,   there   are   categories   of   employees   who   have   settled   their
accounts   under   one   time   settlement   which   was   approved   by   the
Government   and   if   the   Judgment   is   to   be   implemented   in   rem,   it
will   not   only   be  a  double   payment   of  pension  but   a  great   financial
distress to the Bank which is otherwise not permissible in law.
28. Per   contra,   Mr.   P.S.   Patwalia,   learned   senior   counsel   for   the
respondents   submits   that   indisputedly   the   present   respondents
who   were   writ   petitioners   before   the   High   Court   are   the   retired
employees   and   after   amendment   was   made   under   the   scheme   of
Rules 1978, they became its member and started getting pension in
terms of the scheme under the Rules with effect from 1 st
 April, 1989
and   without   any   justification,   the   appellant   Bank   unilaterally
stopped full pension to the respondent pensioners in the year 2010
and   that   was   the   stage   when   the   retired   employees   were
constrained   to   approach   the   High   Court   wherein   it   was   held   that
these pensioners are entitled to pension in terms of the scheme.  To
21

overcome   the   judgment   dated   31 st
  August,   2013   of   the   learned
Single   Judge   of   the   High   Court   of   Punjab   and   Haryana,   by   Order
dated 11 th
  March 2014, Rule 15(ii) was deleted and by deleting the
said   rule,   it   has   taken   away   the   vested   right   of   the   retired
employees   and   their   service   conditions   have   been   altered
retrospectively   to   the   detriment   of   the   retired   employees   which   is
violative of Articles 14 and 21 of the Constitution.
29. Learned   counsel   further   submits   that   so   far   as   the   scheme
under   the   Act   1952   is   concerned,   the   employees   pension   scheme
was introduced under the Act 1952 for the first time in 1995 and it
is   nowhere   related   to   the   pension   scheme   introduced   by   the
appellant   under   its   Resolution   No.   24   dated   22 nd
  June,   1989   with
effect   from   1 st
  April,   1989   and   the   appellant   Bank   neither   sought
any   exemption   under   Section   17(1C)   of   the   Act   1952   nor   it   was
required   for   the   reason   that   the   Bank   introduced   the   pension
scheme in the 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
22

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 Others
Vs.   C.R.   Rangadhamaiah   and   Others 4
  followed   with   U.P.
Raghavendra Acharya and Others  Vs.  State of Karnataka and
Others 5
  and   Bank   of   Baroda   and   Another   Vs.   G.   Palani   and
Others 6
.
31. Learned   counsel   further   submits   that   more   than   half   of   the
respondents are in the age group of 73 to 80 years and one­third 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 vested in favour
4   1997(6) SCC 623
5   2006(9) SCC 630
6   2018 SCC Online SC 3691
23

of the respondent employees could not be divested by the appellant
in   an   arbitrary   manner   which   is   in   violation   of   Article   14   of   the
Constitution.
32. Learned   counsel   submits   that   so   far   as   the   One   Time
Settlement   scheme   is   concerned,   it   was   introduced   to   mitigate   the
problem   due   to   withdrawal   of   pension   scheme   as   an   interim
measure   under   the   orders   passed   by   the   High   Court.     Since   there
was   no   option   left   to   the   employees   who   became   hand   to   mouth,
some   of   them   have   accepted   under   the   One   Time   Settlement
scheme   but   the   Division   Bench   by   its   interim   order   made   it   clear
that acceptance of one time settlement shall be without prejudice to
their   legal   rights,   in   the   given   circumstances,   what   has   been   paid
under   One   Time   Settlement   scheme   to   few   of   the   employees   is
always   adjustable   under   the   scheme   to  which   they   are   entitled  for
under   the   law.     The   scheme   was   in   vogue   for   more   than   two
decades and it is not open for the appellant Bank to take away their
vested rights in an arbitrary manner and deprive them the benefit of
pension   which   is   in   vogue   since   1989   so   far   as   the   retirees   are
concerned.
24

33. Mr.   Siddharth,   learned   counsel   for   the   Regional   Provident
Fund   Commissioner   submits   that   the   appellant   bank   is   covered
under   the   provisions   of   the   Act   1952   and   under   the   Act,   three
schemes   have   been   framed,   firstly,   Employees   Provident   Fund
Scheme   1952(EPFS)   which   establishes   a   contributory   provident
fund under Sections 5 and 6 of the Act.   Employers and employees
contribute to the provident fund in equal measure at the prescribed
rates   notified   by   the   authority   competent   under   the   law   from   time
to   time.     However,   presently   there   is   12%   employees’   monthly
wages.   Secondly,   there   is   Employees’   Pension   Scheme   1995(EPS)
scheme   framed   under   Section   6A   of   the   Act,   1952   which   replaces
the  earlier  Employees’ Family   Pension  Scheme,  1971(FPS).    Family
Pension   Scheme   provided   for   pension   to   the   dependents   of   such
employees   who   died   in   harness.     EPS,   on   the   other   hand,   is   a
comprehensive   pension   scheme   that   provides   superannuation
pension,   early   pension   and   dependents’   pension.     It   is   funded   by
diverting   a   part   of   the   employers’   share   of   contribution   made   to
EPFS   into   the   pension   fund(presently   8.33%   of   monthly   wages).
Employees   do   not   contribute   under   EPS.     The   third   scheme   is
25

Employees’   Deposit   Linked   Insurance   Scheme,   1976.         The   Bank
sought   exemption   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
16 th
 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   1 st
  April   1989   to
31 st
  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
26

substitutionary   for   the   reason   that   the   Bank   Pension   Scheme   did
not   provide   for   dependent’s   pension,   children’s   pension   or
withdrawal benefits and such benefits are designed only under the
Employees   Pension   Scheme   1995   introduced   under   the   provisions
of the Act 1952.  
35. Mr.   Gurminder   Singh,   learned   senior   counsel   for   the   serving
employees submits that that as per the pension scheme introduced
by   the   appellant   Bank,   the   employees   have   to   make   their   own
contribution   and   looking   to   the   depleting   strength   of   the   serving
employees,   their   contribution   is   being   utilized   for   payment   of
pension   to   the   retired   employees   and   bank   is   throughout   harping
upon   the   plea   that   because   of   financial   distress,   it   is   not   possible
for   the   Bank   to   continue   with   the   pension   scheme   any   more   and
that is the reason for which the pension scheme was withdrawn by
the Bank at a later stage and that affects the interest of the serving
employees   whose   entire   employees’   contribution   is   being   utilized
against   the   payment   of   pension   to   the   retirees   and   consistently,
there is a shortfall of employer’s share of in­service employees and
this   practice   if   being   continued   any   more,   by   the   time   the   serving
27

employee will retire, they will not be able to get pension despite they
have undertaken their contribution while in service.
36. The   indisputed   fact   according   to   the   learned   counsel   is   that
the   retirees   are   being   paid   their   pension   under   the   Bank   pension
scheme   at   the   cost   of   the   serving   employees   and   it   affects   the
interest of the serving employees which is being jeopardized.
37. Learned counsel in alternate further submits that the class of
the employees either retired/serving should be dealt with the same
standards/yardsticks and one retiral scheme should be followed for
all   the   employees   regardless   of   the   fact   that   whether   they   are
serving or retired and it will be unjust if the Bank pension scheme
is allowed to continue at the cost of serving employees which would
deprive   them   of   their   right   to   pension   introduced   by   the   Bank   to
which they are otherwise entitled for under the law.
38. We   have   heard   the   learned   counsel   for   the   parties   and   with
their assistance perused the material available on record.
39. The   facts   are   not   in   dispute   that   the   respondents   are   the
retired   employees   and   members   of   the   Punjab   State   Cooperative
28

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   22 nd
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 1 st
 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.
29

 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   1 st
  January   2004.     Later   on,   the
Bank   took   a   decision   by   deleting   Rule   15(ii)   of   pension   scheme   by
an amendment dated 11 th
  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.
42. The   question   that   emerges   for   consideration   is   as   to   what   is
the   concept   of   vested   or   accrued   rights   of   an   employee   and   at   the
given   time   whether   such   vested   or   accrued   rights   can   be   divested
with retrospective effect by the rule making authority.  
43. The   concept   of   vested/accrued   right   in   the   service
jurisprudence   and   particularly   in   respect   of   pension   has   been
30

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 28­3­1995 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
three­Judge   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   two­Judge   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
three­Judge   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.”
31

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 .
32

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.”
       (emphasis supplied)
45. Later, in  U.P. Raghavendra Acharya and Others (supra), the
question   which   arose   for   consideration   was   that   whether   the
appellants   who   were   given   the   benefit   of   revised   pay   scale   with
effect   from   1 st
  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   Others (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
33

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.   1­1­1996,   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   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.”
31.   The   appellants   had   retired   from   service.   The   State   therefore
could   not   have   amended   the   statutory   rules   adversely   affecting
their pension with retrospective effect.”
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   1 st
  April   1998   and   before   31 st
  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
34

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
35

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 1 st
 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   11 th
  March,   2014   which   was   introduced   with
effect from 1 st
 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.
36

49. It  may   also   be   noticed   that   there  is  a   distinction   between   the
legitimate   expectation   and   a   vested/accrued   right   in   favour   of   the
employees.     The   rule   which   classifies   such   employee   for
promotional,   seniority,   age   of   retirement   purposes   undoubtedly
operates   on   those   who   entered   service   before   framing   of   the   rules
but it operates in futuro.   In a sense, it governs the future right of
seniority, promotion or age of retirement of those who are already in
service.
50. For   the   sake   of   illustration,   if   a   person   while   entering   into
service,   has   a   legitimate   expectation   that   as   per   the   then   existing
scheme   of   rules,   he   may   be   considered   for   promotion   after   certain
years   of   qualifying   service   or   with   the   age   of   retirement   which   is
being   prescribed   under   the   scheme   of   rules   but   at   a   later   stage,   if
there is any amendment made either in the scheme of promotion or
the   age   of   superannuation,   it   may  alter   other   conditions  of   service
such  scheme  of  rules  operates in   futuro.   But  at  the   same  time,  if
the   employee   who   had   already   been   promoted   or   fixed   in   a
particular   pay   scale,   if   that   is   being   taken   away   by   the   impugned
scheme   of   rules   retrospectively,   that   certainly   will   take   away   the
37

vested/accrued   right   of   the   incumbent   which   may   not   be
permissible   and   may   be   violative   of   Article   14   and   16   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.
38

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 1 st
 April 1999 but before the rights to the employees
could   be   vested/accrued,   it   was   repealed   on   2 nd
  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  2 nd
  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
39

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,   Co­operative,
introduced   the   pension   scheme   with   effect   from   1 st
  April   1989,   it
can   be   presumed   that   the   competent   authority   was   aware   of   the
40

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,   non­availability   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
socio­economic   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
41

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.
57. Before   we   part   with   the   judgment,   we   cannot   be   oblivious   of
the situation that the complaint of the employees that they are not
being   paid   their   pension   since   2013,   at   the   given   time   few
employees   have   been   given   benefit   of   one   time   settlement   as
introduced   by   the   Bank   as   an   interim   measure   which   was   subject
to   their   rights   being   preserved,   in   the   pending   litigation,   taking
42

grievance   of   the   either   party   into   consideration,   the   financial
constraints   of   the   Bank   and   the   rights   of   the   employees   who   are
entitled to get pension under the bank pension scheme, we consider
appropriate to observe that so far as the arrears towards element of
pension   to   which   the   retired   employees   are   entitled   for,   the
appellant   Bank   is   at   liberty   to   pay   arrears   towards   pension   upto
31 st
 December, 2021 in 12 monthly instalments in the next one year
by   the   end   of   December,   2022   and   those   employees   who   have
accepted   payment   under   one   time   settlement   at   a   given   point   of
time,   what   is   being   paid   to   them   is   always   open   for   adjustment
against   arrears   of   their   due   pension.     Still   if   arrears   remain
outstanding, the same shall be paid in 12 monthly instalments. At
the   same   time,   each   of   the   employee   who   is   member   of   the   Bank
Pension scheme must get pension to which he/she is entitled from
the month of January 2022 as admissible under the law.  
58. So far as the complaint of the appellant Bank regarding orders
passed   under   Section   7A,   Section   14B   and   Section   7Q   of   the   Act
1952 for the period April 1989 to March 2015 and for April 2015 to
June 2017, copies of which has been placed on record is concerned,
43

are not the subject matter of challenge in the instant proceedings, it
will   be   open   for   the   appellant   to   take   legal   recourse,   if   being
aggrieved in the appropriate proceedings available under the law.
59. Consequently,   the   appeals   fail   and   are   accordingly   dismissed
with observations indicated above.
60. Pending applications, if any, stand disposed of.
………………………….J.
(AJAY RASTOGI)
…………………………..J.
(ABHAY S. OKA)
NEW DELHI
JANUARY 11, 2022
44