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THE BOARD OF DIRECTORS OF CANARA BANK, REPRESENTED BY ITS CHAIRMAN & OTHERS V/S C.A. AVIRAH, SRAMPICKAL HOUSE, KOTTAYAM DISTRICT (DIED) & OTHERS, decided on Thursday, September 28, 2017.
[ In the High Court of Kerala, WA. No. 89 of 2017 in WP(C) 9252 of 2013. ] 28/09/2017
Judge(s) : CHIEF NAVANITI PRASAD SINGH & V. RAJA VIJAYARAGHAVAN
Advocate(s) : Petitoner V.M. Kurian, Mathew B. Kurian, K.T. Thomas. N.G.R. Prasad, V.G. Arun, T.R. Harikumar.
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    Navaniti Prasad Singh C.J.1. The Canara Bank has preferred this intra court appeal against the judgment and order dated 21.10.2016 passed by the learned single Judge of this Court in W.P.(C) No. 9252 of 2013 whereby the writ petition filed by the 1st respondent herein since dead and substituted by respondents 2 to 12 herein being widow and children of late 1st respondent claiming pensionary benefits in spite of being compulsorily retired by way of punishment was allowed and it was held that he was entitled to pensionary benefits as per Canara Bank (Employees') Pension Regulations 1995 to the extent as it was made applicable to other similarly situated employees who were compulsorily retired by way of punishment.2. With consent of parties and having heard both the sides the writ appeal is being disposed of at this stage itself in as much as the widow of the late employee herself is now virtually on deathbed who may be about 88 years old.3. The facts are not in dispute. The sole writ petitioner joined the services of Canara Bank as a Clerk at their Thrissur Branch in this State on 31.07.1961. In the course of employment he was promoted to officers grade and then was made Manager. On certain charges of dereliction on 17.11.1983 he was suspended from service and a disciplinary proceeding was initiated. In the disciplinary proceedings on 21.10.1986 his employment was terminated with punishment of compulsory retirement which order has attained finality. It may be noted that on being compulsorily retired he was not entitled to any pension but was entitled to other retiral benefits. It may be noted here that at that time the Canara Bank had no provision for payment of recurring pension to any of its employees.4. It appears that with effect from 01.01.1986 the Central Government implemented the recommendations of the Fourth Pay Commission which inter alia provided for pension to different category of its employees who were earlier under the Contributory Provident Fund Scheme and not entitled to pension. Immediately the All India Bank Employees Association started demanding similar benefits for employees of the nationalised banks. It is to be noted that Canara Bank is also a nationalised bank. Ultimately on 29.10.1993 in terms of the Industrial Disputes Act 1947 a settlement was arrived at between the management of the 58 banks including the Canara Bank represented by the Indian Banks' Association and their workmen as represented by the All India Bank Employees' Association [Ext.R1(a)].5. At this stage suffice it is to note that this Settlement dated 29.10.1993 and Joint Note on Agreed Conclusions reached between the parties on the same date 29.10.1993 [Ext.R1(b)] provided for grant of pensionary benefits to employees who had retired on or after 01.10.1986 the day the Fourth Pay Commission was implemented and to the employees retiring after the date of Settlement. The demand of the employees to get the pensionary benefits as a third retiral benefit was not acceded to as per the Settlement and what was accepted was that they (the retired employees and others) would refund the employer's contribution to the Contributory Provident Fund along with stipulated interest and in lieu thereof they the employees who retired after 01.01.1986 would be entitled to pensionary benefit and actual payment of which would be made with effect from 01.11.1993.6. It appears on 29.09.1995 the Canara Bank after consultation with the Reserve Bank of India and with the previous sanction of the Central Government came out with and implemented the Canara Bank (Employees') Pension Regulations 1995. These regulations virtually gave effect to the settlement referred to earlier and was made effective from 29.09.1995 when it was published in the Official Gazette. But while doing so some provisions were also introduced for the first time not covered by the Settlement granting limited pensionary benefits to the employees who had been compulsorily retired by way of punishment and who were to be compulsorily retired by way of punishment but restricted the benefits to persons who had retired as such on or after 01.11.1993 and did not extend this benefit to persons who retired after 01.01.1986 as in other cases the date when the Fourth Pay Commission was implemented. Thus a restriction is put on similar employees who were compulsorily retired by way of punishment between 01.01.1986 and 01.11.1993 the validity of which is the main contention. The original sole respondent having been compulsorily retired by way of punishment on 21.10.1986 after more than 25 years of service claims the limited pensionary benefits on parity with those who were compulsorily retired on or after 01.11.1993 even though the Regulations granting the benefits came into effect from 29.09.1995 only.7. The petitioner's claim was simple. As per the Settlement all retired employees who had retired after 01.01.1986 and who were to retire after 29.10.1993 the date of settlement were treated as one homogeneous group by the 1995 Regulation. Then restricting the benefit in respect of compulsorily retired employees by way of punishment to 01.11.1993 was arbitrary and had no rationale. The sub-classification to deny pensionary benefit was thus arbitrary and grossly discriminatory. The learned single Judge accepted the plea. Hence the appeal.8. It may be noted that on behalf of the Bank it was apparently submitted that the selection of date for the cut off was 01.11.1993 which was the date of Settlement and the date thus had a significance for the purposes of sub-classification. This plea was not accepted by the learned single Judge. Accordingly the correctness of the judgment of the learned single Judge is in question in this intra court appeal.9. On behalf of the writ petitioner the respondents in this appeal reliance was placed on the case of D.S. Nakara v. Union of India [(1983) 1 SCC 305] and on a Division Bench judgment of the Madras High Court reported in W.A. No.2768 of 2002 decided on 10.12.2009 [C.P. Krishnaswami v. Union of India and Punjab National Bank and others : MANU/TN/3354/2009] wherein virtually an identical issue came up for consideration and the Division Bench of the Madras High Court decided it in favour of the employee granting the pensionary benefits in spite of the fact that he was compulsorily retired by way of punishment prior to 01.11.1993 but after 01.01.1986.10. On behalf of the Canara Bank primary reliance was placed on the Division Bench judgment of the Delhi High Court in the case of Kailash Nath Singhal v. Union of India and Punjab National Bank and others in LPA No.448 of 1999 decided on 22.02.2002 [reported in (2002) II ILJ 1048 Delhi] where the Division Bench of the Delhi High Court negatived the claim of the employee under similar circumstances. It may be noted here that so far as the Madras Division Bench judgment is concerned that was appealed against and after grant of leave to appeal the civil appeal was dismissed by the Apex Court in United Bank of India v. Prasanta Kumar Ray [(2012) 12 SCC 519]. So far as the Division Bench judgment of the Delhi High Court is concerned there the employees' appeal was summarily dismissed at the stage of SLP itself by the Apex Court.11. Before us on behalf of the appellant Bank a stand has been taken. It has been submitted that the term “retired employee” as used in the 1993 Settlement referred to a limited group of employees only. In view of the meaning ascribed to the said expression under the Canara Bank Officers/Employees (Discipline and Appeal) Regulations 1976 whereby compulsory retirement by way of punishment was a major penalty in view of Clause 4 of the said 1976 Regulations and if this is read with the Canara Bank (Officers') Service Regulations 1979 and in particular Clause 19 thereof “retirement” is contemplated as persons who have completed their tenure of service on superannuation; people who have been made to compulsorily retire as dead wood; and people who opted for voluntary retirement. The submission would be that keeping in view of the aforesaid Settlement of 1993 it clearly did not envisage any pensionary benefit so far as the employees who were compulsorily retired by way of punishment. It dealt only with the other retired employees and thus the pensionary benefits extended as per the Settlement to such retired employees alone with effect from 01.01.1986 while granting the same to persons retiring after 01.11.1993 also. This was also recommended in the Regulation of 1995 as such. This was one independent homogeneous group. But the 1995 Regulation notwithstanding the Settlement of 1993 extended limited pensionary benefits even to the compulsorily retired employees by way of punishment prospectively from 29.09.1995 and with limited retrospectivity from 01.11.1993 the date of implementation of Settlement and not beyond that. The contention of the Bank that this compulsorily retired employees by way of punishment as a whole did not form a homogeneous group and therefore the cutoff date specified as 01.11.1993 could not be termed as arbitrary nor did it amount to sub-classification having no rational nexus. This is the view accepted by the Division Bench of the Delhi High Court and not accepted by the Division Bench of the Madras High Court.12. Per contra on behalf of the writ petitioner/respondent herein it is submitted that if we were to accept the contention of the Bank that the Settlement of the year 1993 did not deal with case of punishment by way of compulsory retirement at all then effective date of Settlement i.e. 01.11.1993 loses all its relevance because the said Settlement did not deal with it at all. If that be so as the 1995 Regulation of the Bank had separately dealt with additional limited pensionary benefit in respect of employees who suffered punishment by way of compulsory retirement which then forms a homogeneous group and not extending the pensionary benefits which was made applicable with effect from 01.01.1986 to others restricting the same in the case of employees who were compulsorily retired by way of punishment to 01.11.1993 was an unauthorised and arbitrary sub-classification of a homogeneous group rendering the cutoff date as 01.11.1993 is a wholly arbitrary and irrational concept. In other words it treated unequally the equal homogeneous group thus violating Article 14.13. In our view the submission of the Bank as noted above is a self defeating submission in as much as if the Settlement of the year 1993 did not refer to or deal with the case of employees punished by way of compulsory retirement then the effective date of Settlement is irrelevant for the consideration of employees who were punished with compulsory retirement and therefore while granting retrospectivity to the Regulation of 1995 but limiting it to 01.11.1993 would thus be arbitrary as all such employees who were made to compulsory retire after 01.01.1986 but before 29.09.1995 (the date of Regulation) form one homogeneous group sub-dividing the same would be irrational and impermissible. The cutoff date must have both reason and rational which is lacking in the present case.14. In our view we may look at the problem in a slightly different way. The Regulations of the year 1995 were brought in to effectuate the Settlement of the year 1993 which Settlement was to provide for pensionary benefits to all the employees who retired after 01.01.1986 and who were to retire henceforth. Therefore the Regulation was applicable to a homogeneous group starting from 01.01.1986 to 1995 and onwards who were earlier not entitled to pensionary benefits upon retirement. As per Bank's own saying the settlement of 1993 did not contemplate employees who had been compulsorily retired by way of punishment but while framing the Regulations the Bank in its wisdom decided to confer limited pensionary benefits to such punished employees as well. While granting this benefit of limited pensionary benefit to the punished employees who then formed a homogeneous group and by giving limited retrospectivity as per the 1995 Regulations from 01.11.1993 would amount to the subdivision of otherwise a homogeneous group the cutoff date being 01.11.1993. The enquiry would be what is the relevance of this retrospective date of 01.11.1993 and what is the rationale? As per the Bank itself this benefit was not a part of the Settlement which was to be effective from 01.11.1993 and therefore this date of 01.11.1993 has no relevance to this limited benefit therefore it lacks any rationale. If the benefit under 1995 Regulation was being given retrospective effect then the retrospectivity had to cover the period of the homogeneous group instead of cutting it short. In other words like the other pensionary benefits it had to go back to 01.01.1986 and there is absolutely no reason or rationale for depriving similar persons of the benefits merely because they fall within the period 01.01.1986 to 01.11.1993. This would be our short answer.15. It would have been totally different if the 1995 Regulations did not confer the limited pensionary benefit to any person retrospectively. In other words if the Regulations specified that the benefit would be only to persons being made to compulsorily retire by way of punishment henceforth i.e. prospectively it would have been beyond challenge but it is this limited retrospectivity which is found to be irrational and without reason and it is for this reason we hold that the cutoff date 01.11.1993 is arbitrary and the benefit would accrue from 01.01.1986 onwards.16. The principle of homogeneous class to be treated as one not permitting sub-classification thereof without reason or rationale is now well settled by the Constitution Bench judgment in the case of D.S. Nakara (supra). We may also refer to the relevant part from the reports of the said judgment found in paragraph 42 which reads as follows :“42. If it appears to be undisputable as it does to us that the pensioners for the purpose of pension benefits form a class would its upward revision permit a homogeneous class to be divided by arbitrarily fixing an eligibility criteria unrelated to purpose of revision and would such classification be founded on some rational principle ? The classification has to be based as is well settled on some rational principle and the rational principle must have nexus to the objects sought to be achieved. We have set out the objects underlying the payment of pension. If the State considered it necessary to liberalise the pension scheme we find no rational principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to government servants then those who retired earlier cannot be worse off than those who retire later. Therefore this division which classified pensioners into two classes is not based on any rational principle and if the rational principle is the one of dividing pensioners with a view to giving something more to persons otherwise equally placed it would be discriminatory.xx  xx  xx  xx  xx   xxThe artificial division stares into face and is unrelated to any principle and whatever principle if there be any has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. In fact this arbitrary division has not only no nexus to the liberalised pension scheme but it is counter-productive and runs counter to the whole gamut of pension scheme. The equal treatment guaranteed in Article 14 is wholly violated inasmuch as the pension rules being statutory in character since the specified date the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours' difference in matter of retirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore the classification does not stand the test of Article 14.”17. The said decision of the Constitution Bench has been explained in a subsequent Constitution Bench judgment in the case of Indian Ex-Services League v. Union of India [(1991)2 SCC 104] and relevant would be paragraphs 11 and 12 thereof which reads as follows :“11. The conclusion of the Constitution Bench in Nakara was that the benefits of liberalisation and the extent thereof given in accordance with the liberalised pension scheme have to be given equally to all retirees irrespective of their date of retirement and those benefits cannot be confined only to the persons who retired on or after the specified date because for the purpose of grant of the benefit of liberalisation in pension all retirees constitute one class irrespective of their date of retirement. In order to give effect to this conclusion the only relief granted was to strike down that portion of the Memoranda by which the benefit of the liberalised pension scheme was confined only to persons retiring on or after the specified date with the result that the benefit was extended to all retirees irrespective of their date of retirement. Once this position emerging from the decision in Nakara is borne in mind the fallacy in the petitioners' contention in these writ petitions becomes obvious and their claim based only on Nakara is untenable.12. The liberalised pension scheme in the context of which the decision was rendered in Nakara provided for computation of pension according to a more liberal formula under which average emoluments were determined with reference to the last ten months' salary instead of 36 months' salary provided earlier yielding a higher average coupled with a slab system and raising the ceiling limit for pension. This Court held that where the mode of computation of pension is liberalised from a specified date its benefit must be given not merely to retirees subsequent to that date but also to earlier existing retirees irrespective of their date of retirement even though the earlier retirees would not be entitled to any arrears prior to the specified date on the basis of the revised computation made according to the liberalised formula. For the purpose of such a scheme all existing retirees irrespective of the date of their retirement were held to constitute one class any further division within that class being impermissible. According to that decision the pension of all earlier retirees was to be recomputed as on the specified date in accordance with the liberalised formula of computation on the basis of the average emoluments of each retiree payable on his date of retirement. For this purpose there was no reversion of the emoluments of the earlier retirees under the scheme. It was clearly stated that 'if the pensioners from a class their computation cannot be by different formula affording unequal treatment solely on the ground that some retired earlier and some retired later'. This according to us is the decision in Nakara and no more.”18. Applying the rule as enunciated therein as we have already pointed out when the 1995 Regulations for the first time introduced limited pensionary benefits to the class of employees who had suffered compulsory retirement by way of punishment then giving a limited retrospectivity and not extending it to the entire homogeneous group would be without any rationale or reason. We may note here that there may be financial constraints but that by itself would not be a cause for subdivision in as much as the retrospectivity has been given but not full retrospectivity. The group of employees compulsorily retired by way of punishment prior to the date of enforcement of the 1995 Regulation form one homogeneous group but restricting the benefit only to some of them is bereft of reason or rationale. On financial considerations if no retrospectivity was given it is understandable and would have validity. But then cutting or dividing or sub-dividing a homogeneous group while granting limited retrospectivity cannot stand to reason. We may note that as noted by the Apex Court also in the case of Prasanta Kumar Ray's case (supra) which went from the judgment of the Division bench of Madras High Court the number of employees who would get such benefit would be far and few the writ petitioner being one of them that cannot give rise to grave financial constraints. The Regulations came into force in the year 1995. We would therefore accept the ultimate result which follows the decision of the Division Bench of the Madras High Court though slightly on a different ground.19. So far as the Division Bench of the Delhi High Court is concerned being Kailash Nath Singhal (supra) to our mind it proceeds on the basis of rationality of the date 01.11.1993 being the date when the Settlement was to be effective but as noted above the Bank's own contention here in this Court has been that the settlement has no relevance to the limited pensionary benefits being granted to employees who were compulsorily retired by way of punishment in as much as the settlement did not deal with such employees at all. Thus the rationale adopted and accepted by the Division Bench of the Delhi High Court does not commend acceptance to us. As we have already indicated that 01.11.1993 had no relevance to the benefits conferred in the present case and once a limited retrospectivity was given showing the intention to confer benefits retrospectively then retrospectivity ought to be for the entire homogeneous group. We are thus respectfully unable to subscribe the view of the Division Bench judgment of the Delhi High Court.20. Thus to sum up we see no valid reason or rationale in the act of the Bank while granting pension to employees who suffered punishment by way of compulsory retirement extending the benefit retrospectively from 29.09.1995 to 01.11.1993 only and not extending it to 01.01.1986 from which date grant of pension was otherwise considered to other employees. This limited retrospectivity is what lacks valid reason and rationale. The benefit of pension for such employees was for the first time introduced by the 1995 Regulations which came in effect from 29.09.1995. There were two homogeneous groups of such employees. One prospective from 29.09.1995 and onwards and the other prior to 29.09.1995 up to 01.01.1986 when the 4th Central Pay Commission was implemented. What has been done is that the benefit to the second homogeneous group has been restricted and/or curtailed to such employees only between 01.11.1993 to 29.09.1995 instead of 01.01.1986 to 29.09.1995 for which we have found that there is no valid rationale or reason. The benefit thus would accrue to all in the second group.21. Before closing in fairness to learned counsel for the Bank we may refer to some other judgments that were cited by him. The first is UCO Bank and others v. Sanwar Mal and others [(2004) 4 SCC 412]. The said judgment has no relevance to the present controversy though it dealt with pari materia Regulations of the UCO Bank. The question before the Court was whether there is a distinction between “resignation” and “retirement” and whether employees who had resigned could be treated as retired for the purposes of grant of pensionary benefits. The Apex Court clearly held that there is a vast distinction between the two and the employee who resigned and left would not be treated as retired and no benefit under the 1995 Regulations regarding pensionary benefit would accrue. We are not concerned with the said question.22. The next reliance is placed on the case of Bank of India v. Indu Rajagopalan and others [(2001) 9 SCC 318]. In that case the Bank had tried to make a distinction under similar Regulations of Bank of India of the year 1995 as between employees who had voluntarily retired in between 01.01.1986 and 31.10.1993 which was not accepted by the High Court. The Apex Court dismissed the appeal of the Bank. It has no relevance for our purpose.23. Then reference was made to the case of Bishwant Prasad Singh v. State of Bihar and others [(2001) 2 SCC 305]. That case again did not deal with the issue in question. That case was by a Judicial Officer whose services were not being extended and the Apex Court was dealing with the case where services were not extended beyond the age of superannuation i.e. 58 years to 60 years and whether such an action was same as compulsory retirement. Those issues were not at all similar to what we have to consider.24. Then there was reference to the case of Asger Ibrahim Amin v. Life Insurance Corporation of India [(2016) 13 SCC 797]. Here the issue was of an employee tendering resignation as there was no provision for voluntary retirement and he was sought to be denied pensionary benefits by virtue of having resigned. The Apex Court allowed the appeal of the employee holding that in the facts of the case resignation must be treated as retirement. In the facts and circumstances noted therein in our opinion it again had no relevance to the present case.25. Learned counsel for the appellant then referred to a judgment of learned single Judge of Guahathi High Court which has taken a view similar to the Division Bench judgment of Delhi High Court noticing the Delhi High Court judgment. As noted above we are unable to persuade ourselves to subscribe the judgment of the Delhi High Court. We may also note that the decision of the Madras High Court on the issue was not brought to the notice of the said Court. Let it be noted that no other issue was raised for our consideration by the Bank.For the reasons aforesaid we find no reason to interfere with the judgment of the learned single Judge and we accordingly dismiss this appeal. As noted in the very beginning the original writ petitioner who claimed the pensionary benefits died during the pendency of the writ petition and even his widow is now virtually on deathbed. Considering the aforesaid we direct the appellant/Bank to calculate and give necessary benefits of pension which was due to the original writ petitioner at the earliest but not later than one month from today.