All India Allahabad Bank Retired ... vs Allahabad Bank Through Its ...
2013 Latest Caselaw 645 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

Court No.24
 

 
Writ Petition No. 961 (S/B) of 2011
 

 
All India Allahabad Bank Retired Employees
 
Association						........	Petitioner
 
Versus
 
Allahabad Bank and others 			........	Opposite parties
 

 
********
 
Hon'ble Rajiv Sharma, J.,
 
Hon'ble Devendra Kumar Arora, J.

Heard Sri L.P. Shukla, learned Counsel for the petitioner and Dr. Ashok Nigam, Senior Advocate, assisted by Sri Gopal Kumar Srivastava, learned Counsel for the respondents-Bank.

Through the instant writ petition under Article 226 of the Constitution of India, the petitioner's association challenges the circular dated 30.10.2010 issued by General Manager, Human Resources, Allahabad Bank, Personnel Administrative Department, Head Office, Kolkatta, contained in Annexure No.1 to the writ petition.

Shorn off unnecessary details the facts of the case are as under :

The petitioner is an Association of old employees who retired from Allahabad Bank prior to Ist January, 1986. According to the petitioner, at the relevant time under the scheme, options were invited from the members of the petitioner's association either for payment of pension or gratuity. Members of the petitioner's association opted for payment of pension and they were provided pension. In the mean time, dispute arose with regard to payment of pension and gratuity. Later on, petitioner's association had approached this Court by filing writ petition No. 1002 of 1989, claiming gratuity under the Payment of Gratuity Act, 1972. A Division Bench of this Court, by judgment and order dated 13.11.2008, allowed the above writ petition and held that retired employees of the bank were entitled to the benefit of gratuity under the Payment of Gratuity Act, 1972.

Being aggrieved by the judgment and order dated 13.11.2008, Allahabad Bank had approached the Hon'ble Supreme Court by filing Civil Appeal No. 1478 of 2004. The Hon'ble Supreme Court while deciding the controversy finally by judgment dated 15th December, 2009 observed that pension and gratuity are two different subjects and not synonym to each other. Employees claimed gratuity in terms of Payment of Gratuity Act. However, Hon'ble Supreme Court held that the said judgment is applicable only to such employees who retired from service between Ist January, 1986 & 31st October, 1992.

Later on, the judgment was modified by their Lordships vide judgment and order dated 29th January, 2008, whereby the Apex Court clarified that such of those officers of the bank, working prior to Ist July, 1979 and have retired after coming into force of the said Act on 31st Oct., 1993 i.e. Payment of Gratuity Act, shall alone be entitled for benefits.

According to the petitioner, in defiance of the aforesaid specific order of the Hon'ble Supreme Court that the payment of gratuity under the Act will not amount to the exclusion of payment of pension under the Old Pension Scheme, the Allahabad Bank, vide its impugned circular dated 30.10.2010, directed that members of the petitioner's association shall not be entitled for regular pension but shall be entitled for gratuity. The Bank took a decision that all those employees who were getting pension under Rules shall be entitled for gratuity and those who have not been paid gratuity and payment of pension was stopped, they shall be paid gratuity. The decision taken at the time of the retirement of the members of petitioner's association is nullified so far as the payment of pension is concerned.

Hence the instant writ petition.

While assailing the impugned circular dated 30.10.2010, Sri L.P. Shukla, learned counsel for the petitioner' association has submitted that Hon'ble Supreme Court, vide its judgment and order dated 15.12.2009, hold that payment of gratuity or Provident Fund should not occasion any deduction from the pension as a set off. He further submits that despite the fact that Allahabad Bank, in Civil Appeal No. 1478 of 2004 : Allahabad Bank Versus All India Allahabad Bank retired Employees Association, has admitted that employees opted for the pensionary benefit are better in terms and pensionary scheme is more advantageous to the employees than that of the gratuity but vide Circular dated 30.10.2010, Allahabad Bank has illegally stopped the payment of pension in lieu of payment of gratuity under the Payment of Gratuity Act, 1972.

Sri Shukla submits that impugned circular is not only deprive the members of the petitioner's association of the monthly pension they have been receiving under the Old Pension Scheme since last 25 years from the respective dates of their retirement but also seeks to recover the same as the aggregate amount under the impugned circular, already paid under the scheme, has, thus, become liable to be refunded/adjusted. According to him, the impugned circular has been passed in utter disregard of principal of natural justice. The employees of petitioner's association have been divested from their vested right in violation of principle of natural justice.

Elaborating his submission, Sri Shukla submits that Payment of Gratuity Act, 1972 provides that only appropriate government can waive off payment of gratuity only if employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under the Act. He further submits that one of the members of petitioner's association, namely, B.R. Singh getting minimum approximate pension of Rs.4,000/-, whereas one time gratuity, he received under the impugned circular, after stopping of pension, is Rs.20,000/-. This is more or less the position of other similarly placed members of petitioner's association. According to him, not more than 50 person are still alive, who retired before 1.1.986 and opted for pension under Old Pension Scheme.

Lastly, Sri Shukla submits that in an identical case, challenging the action of the Allahabad Bank stopping payment of pension, one retired employee of the Allahabad Bank, namely, Shapoor M. Mehta approached the Bombay High Court under ordinary original civil jurisdiction by filing writ petition No. 604 of 2011 :Shapoor M.Mehta Vs. Allahabad Bank. A Division Bench of the Bombay High Court, vide judgment and order dated 19.1.2012, while placing reliance of Hon'ble Supreme Court in Allahabad Bank vs. All India Allahabad Bank Retired Employees Association (supra), allowed the petition by quashing and setting aside the action of the Bank in stopping the payment of pension. Similarly, in another case, a Division Bench of the Nagpur Bench of the Bombay High Court, vide its judgment and order dated 7.2.2012 passed in writ petition No. 2627 of 2011 :Shridhar M. Indurkar Vs. Allahabad Bank and another, also allowed the writ petition of the retired employees. It has also been submitted that against the aforesaid judgment and orders dated 19.1.2012 and 7.2.2012, special leave petitions were preferred in the Hon'ble Supreme Court by Allahabad Bank. In the said appeals, Hon'ble Supreme Court, vide order dated 17.9.2012, directed the Allahabad Bank to pay arrears, as on date, to the respondent and that monthly pension shall be paid to the respondent on time as per his entitlement. Therefore, the writ petition is liable to be allowed.

Refuting the submissions advanced by the Counsel for the petitioner and supporting the impugned circular dated 30.10.2010, Dr. Ashok Nigam, Senior Advocate, appearing on behalf of respondent-Bank has submitted that the impugned circular is perfectly in order and in accordance with law which has been issued after a policy decision taken by the Board of Directors in accordance with Rule 9 of the Old Pension Scheme. Further, Government of India had approved the decision taken by the respondent bank. He further submits that the judgment of the Supreme Court does not provide that members of petitioner's Association are entitled for pension. It is submitted by the learned counsel for the bank that the scheme of respondent-Bank is continuing since 1890 and respondent had got right to issue the impugned circular altering the condition with regard to payment of gratuity and pension.

Elaborating his submission, Sri Nigam has submitted that no prejudice whatsoever has been caused to the petitioner for the reason being that the Gratuity has been paid pursuant to the judgment of the Hon'ble Apex Court and therefore, no violation of natural justice has occurred on account of not providing opportunity of being heard to the petitioner by the respondent-Bank.

It has been submitted that in the whole banking industry including respondent Bank, the employees including officers are not entitled to three retrial benefits i.e. Employer's Contribution to Provident Fund (CPF), Gratuity and Pension. Therefore, employees of the Allahabad Bank are entitled to only two retiral benefits and the combination can be of (a) Gratuity & Employer's CPF or (b) Gratuity & Pension or (c) Pension & Employer's CPF. He submits that the respondent Bank till discontinuance of the said Pension Scheme (Old) w.e.f. October, 2010, has paid substantial amount of pension to such ex-employees, whereas had they been paid Gratuity at the time of their respective retirement, the amount payable to them would have been only a very little fraction of the total pension received by them till September, 2010. He submits that admittedly, the members of the petitioner's association have since received two retiral benefits i.e. Employer's Contribution to PF and Gratuity, therefore, their claim/demand for payment of pension (old), in fact, is a demand for payment of third retirement benefit which is contrary to Rules and service conditions applicable to the employees of the respondent Bank, as also to the employees working in other Nationalized Banks, where also the service conditions with regard to payment of only two retirement benefits is in force.

Sri Nigam further submits that the employees, who have retired after 1.1.986 and have opted for pension under Pension Regulation, 1995, are being paid pension in lieu of Employees' Contribution to Provident Fund. Thus, the employees who have retired after 1.1.986 are also being paid only two retiral benefits i.e. Gratuity and pension, which is in lieu of employer contribution to provident fund. He submits that so far the members of the petitioner's association, who retired prior to 1.1.1986, are concerned, they have also been paid two retiral benefits i.e. Employees Contribution to Provident Fund and Pension (Old) in lieu of gratuity till 30.9.2010 and Employers Contribution to Provident Fund and Gratuity after 1.10.2010. Now, payment of monthly amount of pension to the employees who have retired prior to 1.1.1986, under the Allahabad Bank Employees Pension Scheme (Old) would amount to payment of three retiral benefits. Therefore, old pension was paid in lieu of gratuity and respondent bank has right to change the same and the bank at a time is not liable to give multiple post retiral benefits.

We have heard learned Counsel for the parties and perused the records.

At the cost of repetition, it is relevant to mention here that earlier, the Retired Employees' Association of the bank had moved this Court at Allahabad asserting that there is statutory right of the retired employees to receive gratuity under the Payment of Gratuity Act, 1972. This Court held that the retired employees of the bank were entitled to the benefit of gratuity under the Act. The said judgment was carried in appeal to the Hon'ble Supreme Court. In Allahabad Bank Vs. All India Allahabad Bank Retired Employees Association, the Hon'ble Supreme Court dismissed the appeal filed by the bank on 15.12.2009. The Hon'ble Supreme Court held that the payment of gratuity under the Act was a statutory right unless an exemption was granted by the appropriate government under the Act. Further, the Hon'ble Supreme Court noted that pensionary benefits or retirement benefits, whether governed by a scheme or rules, constitute a package and pensionary benefits may include the payment of pension as well as gratuity. Upon the dismissal of the appeal filed by the bank, a circular was issued on 30th October 2010, stating that it had been decided to discontinue the Scheme for payment of pension in lieu of gratuity pending amendment to the Officers Service Regulations. Being aggrieved, the petitioner's is before this Court in proceedings under Article 226 of the Constitution of India.

The issue which was raised initially before the Allahabad High Court and thereafter in appeal before the Supreme Court in All India Allahabad Bank Retired Employees Association (supra) was whether the retired employees were entitled to gratuity which is a statutory entitlement under the Payment of Gratuity Act 1972. The Hon'ble Supreme Court upheld the judgment of this Court and came to the conclusion that a statutory right to the payment of gratuity could not be divested unless an exemption was granted by the appropriate government under the provisions of the Act. The Supreme Court held that pension and gratuity are separate retiral benefits and hence the statutory right to the payment of gratuity could not be withheld on the ground that the employees were in receipt of pension under a pension scheme or rules. In paragraphs 22 and 23 of the judgment, the Supreme Court observed as follows :

"In our considered opinion, pensionary benefits or the retirement benefits as the case may be whether governed by a scheme or rules may be a package consisting of payment of pension and as well as gratuity. Pensionary benefits may include payment of pension as well as gratuity. One does not exclude the other. Only in cases where the gratuity component in such pension schemes is in better terms in comparison to that of what an employee may get under the Payment of Gratuity Act the Government may grant an exemption and relieve the employer from the statutory obligation of payment of gratuity.

In the result, we find merit in the submissions made by the learned Senior Counsel, Shri P. Rao appearing for the Association that pension and gratuity are separate retiral benefits and right to gratuity is a statutory right."

On placing reliance upon the judgment of the Hon'ble Supreme Court in All India Allahabad Bank Retired Employees Association (supra), the Hon'ble Bombay High Court in Shapoor M. Mehta Versus Allahabad Bank (writ petition No. 604 of 2011) decided on 19.1.2012, has held as under :

"The judgment of the Supreme Court upholding the right of retired employees to the payment of gratuity under the payment of Gratuity Act 1972 has been met with a reprisal by depriving the employees of the right to the payment of pension. Nothing more arbitrary can be conceived of. The manner in which the payment of pension has been unilaterally stopped by an executive act is arbitrary. The judgment of the Supreme Court held that the employees were entitled to gratuity in addition to pension since the payment of gratuity was a statutory right. The bank had no basis whatsoever to deprive the Petitioner of his pension to which he was entitled under the Pension Rules.

Section 12(2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1969 provides that every officer or other employee of an existing bank shall become on the commencement of the Act an officer or employee of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights inter alia to pension, gratuity and other matters as would have been admissible if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and would continue to do so unless the terms of employment are duly altered. The power to frame regulations is contained in Section 19. Under clause (f) of sub section (2) of Section 19 the power to frame regulations includes the subject of establishing and maintaining superannuation, pension, provident or other funds. Sub-section (3) stipulates that until any regulation is made under sub-section (1) every regulation, rule, bye-law or an order made by an existing bank shall be deemed to be a regulation made under sub-section (1). Though the old Pension Rules, when they were framed in 1890, contained a power in clause (9) to amend, vary, rescind or modify those rules, the power cannot be exercised arbitrarily. The status of the First Respondent in any event went through a metamorphosis once the First Respondent became a nationalised bank. All powers by an authority of the State have to be exercised reasonably and fairly. Even if the conditions of service could be altered, they have to be altered in accordance with law. Pensionary payments constitute an important source of wherewithal for senior citizens to live the years of twilight in dignity. Depriving employees who have put in long years of service of a right which has accrued and vested in them to receive pension cannot be regarded as fair conduct. The deprivation in the present case has taken place patently in violation of law and is violative of the guarantee of equal protection under Article 14 of the Constitution."

Against the order dated 19.1.2012, Allahabad Bank has approached the Apex Court by filing Special Leave to Appeal (Civil) No. 7429 of 2012 : Allahabad Bank Versus Shapoor M. Mehta. The Apex Court, vide interim order dated 17.9.2012, has passed the following order :

"Issue notice returnable in twelve weeks.

Mr. Shiv Kumar Suri, advocate waives service for the respondent.

In the meanwhile, we direct the petitioner to pay arrears, as on date, to the respondent within two weeks from today.

Needless to say that monthly pension shall be paid to the respondent on time as per his entitlement."

Recently, in Civil Appeal No. 9024 of 2012 :Allahabad Bank Vs. A.C. Aggarwal decided on 13.3.2013, the Hon'ble Supreme Court, while, dealing with the question as to whether the respondent, who had sought voluntary retirement from service and was paid gratuity by the appellant under the Payment of Gratuity Act, 1972 along with Contributory Provident Fund is entitled to pension, relying upon its earlier decision rendered in Allahabad Bank and another Vs. All India Allahabad Bank Retired Employees Association (2010) 2 SCC 44, dismissed the appeal of the Bank. The relevant paragraphs of the judgment dated 13.3.2013 are reproduced as under :

"12. The High Court allowed the writ petition and directed the appellant to pay gratuity to the employees who had opted for pension. On appeal by the bank, the two Judge Bench of this Court noted the background in which the 1972 Act was enacted by Parliament, referred to Section 5 thereof which empowers the appropriate Government to exempt any establishment, factory, mine, oil field, plantation, etc. and observed:

"A plain reading of the provisions referred to hereinabove makes it abundantly clear that there is no escape from payment of gratuity under the provisions of the Act unless the establishment is granted exemption from the operation of the provisions of the Act by the appropriate Government."

The Bench then referred to the judgments in Som Prakash Rekhi v. Union of India (1981) 1 SCC 449, Sudhir Chandra Sarkar v. TISCO Ltd. (1984) 3 SCC 369 and observed:

"Gratuity payable to an employee on the termination of his employment after rendering continuous service for not less than 5 years and on superannuation or retirement or resignation, etc. being a statutory right cannot be taken away except in accordance with the provisions of the Act whereunder an exemption from such payment may be granted only by the appropriate Government under Section 5 of the Act which itself is a conditional power. No exemption could be granted by any Government unless it is established that the employees are in receipt of gratuity or pension benefits which are more favourable than the benefits conferred under the Act.

In our considered opinion, pensionary benefits or the retirement benefits as the case may be whether governed by a scheme or rules may be a package consisting of payment of pension and as well as gratuity. Pensionary benefits may include payment of pension as well as gratuity. One does not exclude the other. Only in cases where the gratuity component in such pension schemes is in better terms in comparison to that of what an employee may get under the Payment of Gratuity Act the Government may grant an exemption and relieve the employer from the statutory obligation of payment of gratuity."

The appellant's plea that under the Old Pension Scheme, an employee is entitled to only two terminal benefits, viz., Contributory Provident Fund and either gratuity or pension was negatived by the Court in the following words:

"It is not the case of the Bank that at the time of superannuation of the employees there was a scheme for payment of gratuity under which the employees were entitled to payment of gratuity and the said scheme in comparison to that of the provisions of the Act was more beneficial to the workmen. On the other hand, the scheme that was prevalent at the relevant time in clear and categorical terms provided that:

"the gratuity will not be payable in case where a pension is granted by the Bank. But if a pensioned officer should die before receiving any pension payments an aggregate sum at least equal to the gratuity which he would otherwise have received then the Bank will pay the difference between such aggregate sum and gratuity to the officer's widow; if any, otherwise to his legal representative."

Be it noted that in the counter-affidavit filed in the High Court the Bank placed reliance on Shastry and Desai Awards which have taken the view that Allahabad Bank which had pension scheme of its own was more advantageous than the provisions of the gratuity to its employees. It is asserted that under the said Awards and the subsequent settlements an employee is entitled to receive either the benefit of pension or gratuity at his own option but not both. The contention was that such of those employees who had voluntarily opted for pension scheme were not entitled to receive gratuity as well. The respective comparative figures under pension and/or gratuity, in terms of Shastry/Desai Awards and/or Bipartite Settlement on one hand and the gratuity payable under the Act on the other were made available for the perusal of the Court to buttress the Bank's submission that what has been paid to the employees was better in terms and more favourable than the benefits conferred under the Act.

The submission is totally devoid of any merit for more than one reason, namely, that it is for the appropriate Government to form the requisite opinion that the employees were in receipt of gratuity or pensionary benefits which were more favourable than the benefits conferred under the Act and therefore, the establishment must be exempted from the operation of the provisions of the Act. The Bank having failed to obtain exemption from the operation of the provisions of the Act cannot be permitted to raise this plea.

No establishment can decide for itself that employees in such establishments were in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under the Act. Sub-section (5) of Section 4 protects the rights of an employee to receive better terms of gratuity from its employer under any award or agreement or contract as the case may be. Admittedly, the Scheme under which the employees of the Bank received the pension was in lieu of gratuity. There is no question of comparing the said Scheme and arrive at any conclusion that what they have received was much better in terms than the benefits conferred under the Act. Reliance upon sub-section (5) of Section 4 is therefore unsustainable.

In the present case the real question that arises for our consideration is whether the employees having exercised their option to avail the benefits under the pension scheme are estopped from claiming the benefit under the provisions of the Act?

The appellant being an establishment is under the statutory obligation to pay gratuity as provided for under Section 4 of the Act which is required to be read along with Section 14 of the Act which says that the provisions of the Act shall have effect notwithstanding anything inconsistent therein contained in any enactment or in any instrument or contract having effect by virtue of any enactment other than this Act. The provisions of the Act prevail over all other enactments or instruments or contracts so far as the payment of gratuity is concerned. The right to receive gratuity under the provisions of the Act cannot be defeated by any instrument or contract."

The Court also referred to an interlocutory order passed on 22.3.2006 whereby the parties were directed to appear before the Controlling Authority and the latter was directed to decide whether the benefits admissible to the employees under the Old Pension Scheme were more beneficial than the gratuity payable under the 1972 Act, referred to the decision of the Controlling Authority and held:

"Section 7 deals with procedure for determination of the amount of gratuity. Every person who is eligible for payment of gratuity under the Act is required to send a written application to the employer in the prescribed form for payment of such gratuity. Sub-section (2) of Section 7 provides that once the gratuity becomes payable, the employer shall, whether an application has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the Controlling Authority specifying the amount of gratuity so determined and arrange to pay the amount of gratuity to the person to whom the gratuity is payable.

The scheme envisaged under Section 7 of the Act is that in case of any dispute as to the amount of gratuity payable to an employee under the Act or as to the admissibility of any claim of, or in relation to, an employee payable to gratuity, etc. the employer is required to deposit with the Controlling Authority the admitted amount payable as gratuity. In case of any dispute the parties may make an application to the Controlling Authority for deciding the dispute who after due inquiry and after giving the parties to the dispute, a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the Controlling Authority shall direct the employer to pay such amount to the employee.

Sub-section (7) of Section 7 provides for an appeal against the order of the Controlling Authority. The Act nowhere confers any jurisdiction upon the Controlling Authority to deal with any issue under sub- section (5) of Section 4 as to whether the terms of gratuity payable under any award or agreement or contract is more beneficial to employees than the one provided for payment of gratuity under the Act. This Court's order could not have conferred any such jurisdiction upon the Controlling Authority to decide any matter under sub-section (5) of Section 4, since Parliament in its wisdom had chosen to confer such jurisdiction only upon the appropriate Government and that too for the purposes of considering to grant exemption from the operation of the provisions of the Act.

Even on merits the conclusions drawn by the Controlling Authority that the Pension Scheme (Old) offered by the Bank is more beneficial since the amount of money the pensioners got under the pension scheme is more than the amount that could have been received in the form of gratuity under the provisions of the Act is unsustainable. The Controlling Authority failed to appreciate that sub-section (5) of Section 4 of the Act protects the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer than the benefits conferred under the Act. The comparison, if any, could be only between the terms of gratuity under any award or agreement or contract and payment of gratuity payable to an employee under Section 4 of the Act. There can be no comparison between a pension scheme which does not provide for payment of any gratuity and right of an employee to receive payment of gratuity under the provisions of the Act."

13. IA No.6 of 2009 filed by the Association for clarification was disposed of by this Court vide order dated 29.1.2010, the relevant portion of which is extracted below:

"We have heard learned counsel for the petitioner as well as learned counsel appearing for the Bank.

Paragraph 28 of the Judgment shall now read as under:

"Judgment is, however, applicable to all the members of the Petitioner's Association/Pensioners in the respondent-Bank governed by the Pension Regulations (old) 1890 of the Bank as well as those pensioners who retired during the period 1.1.1986 to 31.10.1993.

It is made clear that such of those officers of the Bank working prior to 1.7.1979 and have retired after coming into force of the said Act on 31st October, 1993, shall alone be entitled for the benefits."

I.A. is disposed of accordingly."

14. In the impugned order, the Division Bench of the High Court noticed the aforesaid judgment of this Court and observed:

"Though the Supreme Court limited the judgment aforesaid to the employees of the Bank working prior to 1st July, 1979 and who had retired after coming into force of the said Act on 31st October, 1993 and in which the petitioner as aforesaid is covered but even if we were to consider the case of the petitioner as not covered by the said dates, the counsel for the respondent Bank is unable to show as to how the ratio aforesaid of the judgment would not apply to the petitioner. The petitioner is admitted to be entitled to pension under the Old Pension Scheme of the year 1890 of the respondent Bank. The said pension is sought to be denied to the petitioner only for the reason of the gratuity under the Gratuity Act having been paid to the petitioner but which gratuity the Supreme Court has held to be a statutory right not affected by the pension. We have also put it to the counsel for the respondent Bank as to whether the petitioner would not have been in the same position as the retired employees before the Supreme Court had he not been paid gratuity and had started availing of the pension and would have thereafter claimed the gratuity. No reply to the said proposition has been forthcoming."

15. In our view, the High Court's interpretation/understanding of the judgment of this Court is correct and there is no merit in the argument of Shri Nariman that the respondent, who had received gratuity under the 1972 Act, is not entitled to pension or that he must refund the amount of gratuity as a condition for payment of pension.

16. At this stage, we may mention that vide communication dated 14.7.1986 sent to the Central Government, the appellant had sought exemption from the operation of the 1972 Act but its prayer was not entertained. It is also worth noticing that in pursuance of industry level settlement signed on 24.4.2010, the appellant offered another option to those employees who could not exercise option for pension under the 1995 Scheme and the respondent exercised such option vide letter dated 22.9.2010.

17. Reference may also be made to Section 14 of the 1972 Act, which reads as under:

"Section 14. Act to override other enactments, etc. - The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act."

18. In view of the plain language of the above reproduced provision, which contains a non-obstante clause, every eligible employee is, notwithstanding anything inconsistent contained in any other enactment or instrument or contract is entitled to gratuity. Therefore, even if the respondent had opted for pension, he could have legitimately claimed gratuity without being required to refund the amount of pension already received by him.

19.In the result, the appeal is dismissed. The appellant is directed to implement the order of the High Court within a period of eight weeks from today."

From the above proposition of law, it is quite clear that the petitioner, if held entitled for payment of gratuity under the Payment of Gratuity Act, 1972, cannot be deprived of the pension being paid to him under the pension scheme of the bank as one does not exclude the other. Therefore, the plea of the Allahabad Bank that a retired employee is entitled to either pension or gratuity but not both, does not stand in view of the above judgments of the Apex Court.

Even otherwise, once all persons were given regular pension appointed in view of the same Act and rules and even the members of the petitioner's association was also paid regular pension prior to issuance of impugned circular, then there appears to be no embargo under the Act or Rule to stop the payment of pension to the members of petitioner's Association who retired prior to Ist January, 1986 and that too without providing any opportunity of hearing. The impugned circular seems to be an instance of non-application of mind to the statutory provisions as well as Rules. Once the Allahabad Bank exercised its discretion in pursuance of the power conferred for payment of pension to all the employees working in the Bank, the stoppage of pension of members of the petitioner's association at a later stage on the ground that a retired employee is entitled to either pension or gratuity but not both, seems to be unjust, improper and discriminatory.

Hon'ble Supreme Court in the case reported in AIR 1954 SC 224: M/s.Dwarka Prasad Laxmi Narain. Vs. State of Uttar Pradesh and others, held that limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. A Legislation or order which is arbitrary or excessively invades the right, cannot be said to contain the quality of reasonableness unless it strikes a proper balance.

In (1974) 4 SCC 3: E.P. Royappa. Vs. State of Tamil Nadu and another, the everlasting observation of Hon'ble Supreme Court shall regulate the society for all times to come. The Hon'ble Supreme Court observed that Article 14 is the genus while Article 16 is a species. Equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies; Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.

In (1974) 4 SCC 335: The General Manager South Central Railway Secunderabad and another. Vs. A.V.R. Siddhantti and others, Hon'ble Supreme Court reiterated the Royappa's case (supra) and held that fundamental right and equality means that persons in like situation under like circumstances, are entitled to be treated alike. So long as employees similarly circumstanced in the same class of service are treated alike, the question of hostile discrimination does not arise.

In (1981) 4 SCC 335: Air India. Vs. Nergesh Meerza and others, Hon'ble Supreme Court has summed up the equality clause as well as settled the law in para 39 thereof, as under:

"39. Thus, from a detailed analysis and close examination of the cases of this Court starting from 1952 till today, the following propositions emerge:

(1)In considering the fundamental right of equality of opportunity a technical, pedantic or doctrinaire approach should not be made and the doctrine should not be invoked even if different scales of pay, service terms, leave, etc., are introduced in different or dissimilar posts.

Thus, where the class or categories of service are essentially different in purport and spirit, Article 14 cannot be attracted.

(2)Article 14 forbids hostile discrimination but not reasonable classification. Thus, where persons belonging to a particular class in view of their special attributes, qualities, mode of recruitment and the like, are differently treated in public interest to advance and boost members belonging to backward classes, such a classification would not amount to discrimination having a close nexus with the objects sought to be achieved so that in such cases Article 14 will be completely out of the way.

(3) Article 14 certainly applies where equals are treated differently without any reasonable basis.

(4) Where equals and unequals are treated differently, Article 14 would have no application.

(5) Even if there be one class of service having several categories with different attributes and incidents, such a category becomes a separate class by itself and no difference or discrimination between such category and the general members of the other class would amount to any discrimination or to denial of equality of opportunity.

(6)In order to judge whether a separate category has been carved out of a class of service, the following circumstances have general to be examined:

(a) the nature, the mode and the manner of recruitment of a particular category from the very start,

(b) the classifications of the particular category,

(c) the terms and conditions of service of the members of the category,

(d) the nature and character of the posts and promotional avenues,

(e) the special attributes that the particular category possess which are not to be found in other classes, and the like."

In (1989) Supp-1 SCC 116=AIR 1989 SC 307: Roop Chand Adlakha and others. Vs. Delhi Development Authority and others, Hon'ble Supreme Court has observed that classification shall depend upon whether the differences are relevant to the goals sought to be reached by the law which seeks to classify. Overdo classification is to undo equality. Their lordships held that process of classification is in itself productive of inequality and in that sense antithetical of equality. However, the process of classification itself cannot be permitted to generate or aggravate inequality. Hon'ble Supreme Court cautioned that undisclosed or unknown reason for a classification rendering the precious guarantee of equality "a mere rope of sand".

In (1978) 1 SCC 248: Msr. Maneka Gandhi. Vs. Union of India and another, while reiterating the principle enunciated in Royappa's case (supra) and other cases, their lordships held that equality and arbitrariness both are sworn enemies. Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14 which strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a brooding omnipresence and the procedure contemplated by Article 21 must answer the test of reasonableness in order to be in conformity with Article 14.

In (2001) 1 SCC 442: K. R. Lakshman and others. Vs. Karnataka Electricity Board and others, their Lordships reiterated that classification must satisfy two conditions, namely, the classification to be founded on intelligible differentia which distinguishes persons or things that are grouped from others who are left out of the group and that the differentia must have a rational relation to the object sought to be achieved by the legislation. There must be a nexus between the basis of classification and the object of the legislation.

In the case reported in (1971) 2 SCC 330: Deokinandan Prasad. Vs. The State of Bihar and others, their lordship held that right to receive pension is property under Article 31 (1) and by a mere executive order the State had no powers to withhold the same. Hon'ble Supreme Court observed as under:

"27. The last question to be considered, is, whether right to receive pension by a Government servant is property, so as to attract Articles 19 (1 (f) and 31 (1) of the Constitution. This question falls to be decided in order to consider whether the writ petition is maintainable under Article 32. To this aspect, we have already adverted to earlier and we now proceed to consider the same.

28. According to the petitioner the right to receive pension is property and the respondents by an executive order, dated June 12, 1968, have wrongfully withheld his pension. That order affects his fundamental rights under Articles 19 (1) (f) and 31 (1) of the Constitution...."

Hon'ble Supreme Court further observed that pension is not to be treated as bounty payable on sweet will and pleasure of the Government and the right to superannuation pension including its amount is a valuable right vesting in a Government servant.

In the case reported in (1973) 1 SCC 120: State of Punjab. Vs. K.R. Erry and Sobhag Rai Mehta, Hon'ble Supreme Court ruled that right of Government servant to receive pension is property under Article 31 (1) and by mere executive order the State Government did not have power to waive the same.

In the case reported in (1983) 1 SCC 305: D.S. Nakara and others. Vs. Union of India, the leading judgment of Hon'ble Supreme Court with regard to twin grounds for test of reasonable classification and rational principle corelated to the object sought to be achieved. The burden of proof lies on the State to establish that these twin tests have been satisfied. It can only be satisfied if the State establishes not only the rational principle on which classification is founded but correlate it to the objects sought to be achieved.

In the case reported in (1987) 2 SCC 179: State of Uttar Pradesh. Vs. Brahm Datt Sharma and another, while reiterating the aforesaid well settled proposition of law with regard to pension, Hon'ble Supreme Court observed that pension is right of property earned by Government servant on his rendering satisfactory service to the State. These principles have been reiterated in the case reported in 1992 Supple SCC 664: (AIR 1992 SC 767) All India Reserve Bank Retired Officers Association and others. Vs. Union of India and another.

Coming to the present dispute, in a very high handedness and arbitrariness manner, the Allahabad Bank has stopped the facility of pension to the members of the petitioner's association without any reasonable cause. Therefore, the impugned circular seems to be an instance of non-application of mind suffering from vice of arbitrariness and without taking into account the fact that the pensionary benefits are the fundamental right protected by Article 31 (1) of the Constitution.

The burden was on Allahabad Bank to establish the nexus of the object sought to be achieved and rational behind the impugned circular. Except the argument on behalf of the Allahabad Bank that under the rules and statutory provisions, the members of the petitioner's association are not entitled for payment of pension, the Allahabad Bank has not brought on record any material which may justify the issuance of the impugned circular.

How and in what circumstances the Allahabad Bank has taken a different view while stopping the pension to the members of the petitioner's association, is not borne out either from the record or from the argument advanced by the learned Counsel for the respondent-Bank. The command of the Act is equally applicable to all category of employees working in the Allahabad Bank collectively discharging their obligations under the Act. They cannot be treated differently with regard to payment of pension and more so when as held by Hon'ble Supreme Court, the pension is not a bounty but it is a property protected by Article 31 (1) of Constitution.

Submission of the petitioner's counsel that the impugned circular is an incident of hostile discrimination as well as the arbitrary exercise of power, seems to be correct and is in right perspective. The Allahabad Bank has failed to establish the rational behind passing the impugned circular and stopping the pension.

In the case reported in (2002) 8 Supreme Court Cases 400; Essen Deinki Vs. Rajiv Kumar, the Hon'ble Supreme Court held that when the question arises with regard to the interpretation of welfare legislation, it is the duty of the courts to give broad interpretation keeping in view the purpose of such legislation of preventing arbitrary action though the statutory requirements cannot be ignored.

In the case reported in (2003) 4 Supreme Court Cases 27; S.M. Nilajkar and others vs. Telecom District Manager, Karnataka, the Hon'ble Supreme Court has held that while interpreting the welfare legislation in case of doubt or two possible views, the interpretation should be done in favour of beneficiaries. In the case reported in (2004) 5 Supreme Court Cases 385; Deepal Girishbhai Soni and others Vs. United India Insurance Co. Ltd. Baroda, the Hon'ble Supreme Court again reiterated that beneficial legislation should be interpreted liberally keeping in view the purpose of enactment and reading entire statute in its totality. The purport and object of the Act must be given its full effect by applying the principles of purposive construction.

In the present case, Section 12(2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1969 provides that every officer or other employee of an existing bank shall become on the commencement of the Act an officer or employee of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights inter alia to pension, gratuity and other matters as would have been admissible if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and would continue to do so unless the terms of employment are duly altered. The power to frame regulations is contained in Section 19. Under clause (f) of sub section (2) of Section 19 the power to frame regulations includes the subject of establishing and maintaining superannuation, pension, provident or other funds. Sub-section (3) stipulates that until any regulation is made under sub-section (1) every regulation, rule, bye-law or an order made by an existing bank shall be deemed to be a regulation made under sub-section (1). Though the old Pension Rules, when they were framed in 1890, contained a power in clause (9) to amend, vary, rescind or modify those rules, the power cannot be exercised arbitrarily. The status of the Allahabad Bank in any event went through a metamorphosis once the Allahabad Bank became a nationalised bank. All powers by an authority of the State have to be exercised reasonably and fairly. Even if the conditions of service could be altered, they have to be altered in accordance with law. Pensionary payments constitute an important source of wherewithal for senior citizens to live the years of twilight in dignity. Depriving employees who have put in long years of service, right has accrued and vested in them to receive pension and it cannot be regarded as a fair conduct. The deprivation in the present case has taken place patently in violation of law and is violative of the guarantee of equal protection under Article 14 of the Constitution. Furthermore, the members of the petitioner's association is admitted to be entitled to pension under the Old Pension Scheme of the year 1890 of the respondent-Bank. The said pension sought to be denied to the members of the petitioner's association only for the reason of the gratuity under the Gratuity Act having been paid to them but in the matter of said gratuity, the Supreme Court has held to be a statutory right not affected by the pension.

It is relevant to mention here that a co-ordinate Bench of this Court, while granting ad interim order dated 26.5.2011, has observed that on 23rd May, 2011, a statement was recorded that impugned circular was issued in terms of a settlement entered between the employees and management but the said stand of the respondent-Bank was changed on later stage by saying that the decision with regard to impugned circular was taken at higher level with due approval of Government of India and as such, the Bench directed the respondent to continue to pay pension as given prior to impugned circular to the members of the petitioner. Therefore, it appears that the respondent-Bank has taken stand on a different stage of litigation in different way, which shows the oblique motive of the bank.

For the reasons aforesaid, we are of the view that respondent-bank could not have issued the impugned circular which amounts to stoppage of pension in contravention of principle of natural justice, more so when the members of petitioner had given option long back i.e. almost 30 years back opting pension. The right to receive pension by an employee is a right of property, so as to attract Article 19 (1) (f) and Article 31 (i) of the Constitution and the said right of employee cannot be withheld by mere executive instruction. Therefore, the impugned circular issued by the respondent-Bank is not sustainable in the eyes of law in view of the observations made by the Apex Court in A.C. Agarwal (supra) and All India Allahabad Bank Retired Employees Association (supra). The impugned circular is liable to be quashed.

Accordingly, the writ petition is allowed. The impugned circular dated 30.3.2010 insofar as it relates to discontinuation of pension under the Old Pension Scheme from October, 2010 onwards and to recover the aggregate amount already paid under the scheme, is hereby quashed. Respondent-Bank is directed to pay regular monthly pension to the members of the petitioner's association as is being paid to all other employees of the Allahabad Bank from October, 2010 onwards. It is also provided that respondent-Bank shall not recover/refund/adjust the aggregate amount already paid under the Old Pension Scheme.

Order Date : 10.4.2013

lakshman/Ajit/-