Full Judgment Text
2025 INSC 769
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 13962 OF 2024
THE RESERVE BANK OF INDIA … APPELLANT
VERSUS
M.T. MANI AND ANOTHER … RESPONDENTS
J U D G M E N T
AUGUSTINE GEORGE MASIH, J .
1. In this Appeal, challenge has been raised by the
Reserve Bank of India (“RBI”) to the Division Bench
Judgment of the Kerala High Court dated 18.12.2023
whereby the appeal preferred by Respondent No.1
against the Judgment of a Single Judge dismissing his
Writ Petition for grant of pension with effect from the
date of his retirement i.e. 01.12.2014, stood dismissed
after he exercised his option as per the RBI
Regulations/Circular dated 14.09.2020.
2. The facts are not in dispute and therefore are being
referred at the very outset.
3. The employees of the RBI prior to 1990 were governed
Signature Not Verified
Digitally signed by
ASHISH KONDLE
Date: 2025.05.23
15:52:34 IST
Reason:
by the Contributory Provident Fund (“CPF”) and the
payment of the Gratuity Act, 1972 (“Gratuity Act”). For
CIVIL APPEAL NO. 13962 of 2024 Page 1 of 25
the first time, on 29.10.1990, the RBI with approval
from its Central Board of Directors introduced the RBI
Pension Regulations, 1990. Employees were informed
vide Administration Circular No. 6 to the effect that the
said regulations would come into effect from
01.11.1990 giving an option to the existing employees
to join the said Pension Scheme or to continue with the
RBI’s CPF. All new employees who joined on or after
01.11.1990 were to be governed by the 1990
Regulations. It also provided that the employees in
service as on 01.01.1986 who retired before 01.11.1990
were also eligible for pension upon refunding the
amount of CPF share of the RBI with accrued interest
as received by them on their retirement, along with
simple interest thereon at the rate of 6%.
According to Regulation 31 thereof, employees retiring
between 01.01.1986 and 31.10.1990, although eligible
to join the Pension Scheme, would receive the pension
only from 01.11.1990 onwards, with no arrears for the
period before the said date. On 07.02.1992 RBI issued
another Administration Circular No. 5 amending the
Pension Regulations, 1990 effective from 06.02.1992.
Existing employees (excluding those on leave
preparatory to retirement) were given a fresh option to
switch to the Pension Regulations. Here again, no
retrospective pensionary benefits were granted.
CIVIL APPEAL NO. 13962 of 2024 Page 2 of 25
4. On 14.10.1995, Administration Circular No. 4
providing for another opportunity for existing
employees as on 01.11.1992 excluding those on Leave
Preparatory retirement to opt for the Pension
Regulations. On this occasion, the refund of the CPF
contribution made by the RBI and accrued interest was
to be effected with 12% simple interest. It was clarified
that it was not applicable to employees who had retired
before 01.11.1992 making it prospective.
5. Three attempts made by the RBI to give another option
to its employees to switch over from CPF to the Pension
Scheme did not find favour with the Government of
India on 04.02.2002, 26.02.2018 and 05.03.2019. On
14.09.2020, another Administration Circular No. 1 was
issued, which allowed existing CPF optees and former
employees who were in service on or after 01.11.1997
and retired with CPF to opt for Pension Regulations.
This was obviously, subject to the refund of the CPF
plus accrued interest amount pertaining to the RBI’s
share with 12% simple interest. It is apparent that this
Circular was not applicable to employees who had
retired before 01.11.1997. A detailed memorandum of
procedure for option to be exercised was issued by the
RBI on 20.09.2000.
CIVIL APPEAL NO. 13962 of 2024 Page 3 of 25
6. Respondent No. 1 joined service of the RBI on
14.09.1981 and became a member of the CPF Scheme
in operation then for the staff. During his entire service
tenure, until he retired as Manager on 30.11.2014,
Respondent No.1 got four options to switch over to the
Pension Scheme, starting from 01.11.1990 till
14.09.2000. He chose not to join the Pension Scheme
rather continued with the CPF. As a matter of fact, on
retirement, he was paid the entire dues of CPF and
Gratuity.
7. It appears that Respondent No. 1 filed a Writ Petition
before the High Court of Kerala at Ernakulam on
14.02.2020, after the Government of India rejected the
proposal of RBI for another option for CPF optees to
switch to the Pension Scheme on 05.03.2019. He
sought a direction to the RBI to allow him to exercise
the pension option as per the 1990 Regulations, and to
grant him pension benefits with effect from 30.11.2014,
his date of retirement, along with 12% interest on
arrears.
8. During the pendency of the Writ Petition, the RBI
proposed to the Government of India to grant a final
chance for remaining CPF optee employees, both
serving and retired, to opt for the Pension Scheme. No
objection was conveyed by the Government to the RBI’s
CIVIL APPEAL NO. 13962 of 2024 Page 4 of 25
proposal on 26.06.2020, for the CPF optees who were
in service from 01.11.1990 till 15.11.2000.
9. This permission for the change of option was allowed to
the employees subject to refund of the CPF amount
with accrued interest as received from RBI on
retirement and simple interest as may be decided by
the RBI. RBI issued Administration Circular No. 1 on
14.09.2020 opening a last option for the serving and
retiring employees who were in Bank service as on
01.11.1990 (the date of introduction of the Pension
Scheme) and continued as on 15.11.2000 (the closing
date of the last chance given to the employees to
exercise pension option). This fresh option for switching
over from CPF to Pension Scheme would be subject to
certain terms and conditions which were to be specified
as per the detailed instructions to be issued in this
regard separately by the RBI. However, in this
Administration Circular No. 1 itself it was clarified that
the eligible employees and the family members would
be entitled to draw monthly pension/family pension
with effect from 01.07.2020 and no arrears of pension
will be paid for the period prior thereto. The payment of
pension was made prospective w.e.f. 01.07.2020. It was
further clarified that this option was not applicable to
the employees who joined bank service on or after
01.01.2012 and were governed by the National Pension
CIVIL APPEAL NO. 13962 of 2024 Page 5 of 25
Scheme (NPS). Detailed instructions were issued by the
RBI on 18.09.2020. The relevant portion thereof reads
as follows:
“Please refer to Administration Circular No. 1
dated September 14, 2020 regarding opening of
option for pension.
2. The employees who were in the Bank’s
service as on November 1, 1990 and continued as
such on November 15, 2000 are being offered a
last opportunity for exercising their option for
switching over form Contributory Provident Fund
(CPF) to pension scheme under RBI Pension
Regulations, 1990 (Pension Regulations), covering
the categories, viz. serving employees, retired
employees and eligible family members of
deceased employees; as under:
(i) Serving employees of the Bank who had
earlier chosen not to be governed by Pension
Regulations and continued to retain CPF option,
subject to transfer of amount of Bank's
contribution to Provident Fund with accrued
interest to be credited to the RBI Gratuity and
Superannuation Fund (Pension Fund).
(ii) Retired employees of the Bank who had
earlier retained CPF option, subject to refund of
amount of Bank's contribution to Provident Fund
with accrued interest paid to them at the time of
their retirement, along with simple interest @3%
per annum calculated from the date of receipt of
the amount by the employee till the date of refund
to the Bank.
(iv) Option for switch-over from CPF to
Pension under the Pension Regulations, once
exercised, shall be irrevocable.
(v) The option shall not be applicable to employees
who joined service on or after 01.01.2012 and are
governed by National Pension System.
4. Retired employees:
(i) Eligible Retired employees, as mentioned
at Para 2(ii) above, shall exercise their option for
joining the Pension Scheme in FORM -1 (R) (copy
enclosed) within 90 days from the date of this
CIVIL APPEAL NO. 13962 of 2024 Page 6 of 25
circular i.e. on or before close of business hours on
December 17, 2020. On exercising the option, they
shall refund to the Bank in lump sum, within 90
days from the date of this circular i.e. on or before
close of business hours on December 17, 2020, the
Bank's contribution to Provident Fund and accrued
interest thereon paid to them at the time of their
retirement along with simple interest @3% per
annum calculated from the date of receipt of the
amount by the employee till the date of refund to
the Bank.
(ii) The duly filled in FORM-1 (R) (copy
enclosed) along with details of family duly filled in
Form 4 (copy enclosed) shall be submitted by the
retired employee at the Regional Office/Central
Office Department from where he/she retired.
x x x x x x
(vi) Pre - November 1, 2012 retirees will be
eligible for revision of pension, prospectively i.e.
from July 1, 2020, without payment of any
arrears, as per the method indicated in circular CO
HRMD No. G. 84/ 18491/21.01.00/2018-19
dated March 7, 2019 read with letter CO HRMD
No. 27412/21.01.000/2018-19 dated June 26,
2019.
(vii) Eligible retired employees who have
exercised their option for pension and refunded
Bank's contribution to Provident Fund and accrued
interest thereon, along with simple interest @3%
per annum as per para 4(i) above will be eligible
for full pension from July 1. 2020 upto the date
they opt for commutation of pension.
x x x x x x
ix) On commutation of pension, retired
employees will draw the basic pension reduced to
the extent of commuted portion of pension. In such
cases, full pension will be restored fifteen years
after the date of commutation of pension.
(x) Failing to deposit amount of Bank's
contribution to Provident Fund and accrued
interest thereon, along with simple interest @3%
per annum as at para 4(i) above within the
stipulated time by the retired employee, will render
the option for pension exercised by him/her as
CIVIL APPEAL NO. 13962 of 2024 Page 7 of 25
invalid. Any request for extension of time limit for
refund of Provident Fund amount shall be rejected
forthwith by respective RO/COD, without reference
to Central Office.
(xi) After completion of all formalities, eligible
retired employees will start drawing pension with
effect from July 1, 2020. No arrears of pension will
be paid for the period prior to July 1,2020.”
10. A perusal of the above instructions for implementation
dated 18.09.2020 makes it amply clear that all the
employees who were eligible to switch over from the
CPF Scheme to the Pension Scheme and who now
opted for the Pension Scheme were required to refund
the amount of Bank’s contribution to the Provident
Fund with accrued interest, along with simple interest
at the rate of 3% per annum, calculated from the date
of receipt of the amount by the employee from the
Bank till the date of refund thereof. The option had to
be exercised, and the refund was also to be made to
the Bank on or before 17.12.2020. Commutation of
pension was also permitted at the option of the
employees. It was specifically so noted and mentioned
that the retired employee would start drawing pension
with effect from 01.07.2020, and no arrears of pension
would be paid for the period prior thereto.
11. Respondent No. 1 on the issuance of the said
Administration Circular No. 1 dated 14.09.2020,
followed by the detailed instructions for
CIVIL APPEAL NO. 13962 of 2024 Page 8 of 25
implementation dated 18.09.2020, opted for the
Pension Scheme, and the said Pension Scheme had
been made applicable to him under which he is
admittedly receiving monthly pension. The said
Respondent, in the pending Writ Petition moved for an
amendment to challenge the denial of entitlement to
the grant of arrears of pension from the date of
retirement. The said clauses of the Administrative
Circular, as well as detailed instruction circular, were
challenged to that limited extent, with a prayer for
issuance of a writ of mandamus to the RBI to award
12% interest on arrears due to the petitioner by
allowing him arrears with effect from the date of his
retirement i.e. 30.11.2014.
12. The said amendment was allowed by the High Court on
18.03.2022, and an amended Writ Petition was filed.
Upon the RBI filing a Counter to the amended Writ
Petition, the Single Judge of the High Court proceeded
to decide the Writ Petition, dismissing it vide Order
dated 04.04.2023, holding therein that the Respondent
had well-informed details regarding the non-grant of
arrears of pension and eligibility for pension from a
particular date i.e. 01.07.2020. Having accepted the
same and taken benefit thereof, it was not open to the
Respondent to challenge a part of the said Scheme.
CIVIL APPEAL NO. 13962 of 2024 Page 9 of 25
13. Upon dismissal of the writ petition, the Respondent
preferred a writ appeal which was allowed by the
Division Bench on 18.12.2023 entitling the Respondent
to pension benefits from the date of his retirement i.e.
30.11.2014, on the grounds that in the earlier
administrative circulars, whenever an option had been
granted to the serving or retired employees, they were
entitled to arrears of pension as well. Denial of such
arrears of pension from the date of retirement was held
to be discriminatory and arbitrary at the hands of the
RBI. A direction was further issued to the RBI to pay
the pension benefits within one month from the date of
the Order, failing which, it would attract interest at the
rate of 6% per annum until realization.
14. The rationale and the reasoning put forth by the
Division Bench was that the Respondent, to be eligible
to opt for to the Pension Scheme, had to refund the
contribution of the bank along with accrued interest
with 3% simple interest from the date of the receipt of
the said amount till its deposit. The amount having
been refunded along with interest, entitled the
employees to the benefit of pension from the date of
retirement.
15. Another ground which was taken by the Division Bench
was that the cut-off date i.e. 01.07.2000 as the effective
date of pension was not based upon the RBI Pension
CIVIL APPEAL NO. 13962 of 2024 Page 10 of 25
Regulations, 1990. Instead, it was an administrative
decision to reduce the financial burden, which would
unjustly deprive eligible retirees of the rightful pension
claim for the earlier period.
16. The stand of the Appellant RBI was that the Pension
Scheme, as made applicable, provided for the cut-off
date of 01.07.2020 for the grant of benefit of pension,
based on the financial liability that would accrue as a
result of the change of option. The employees, having
received the lump sum amount had been utilizing the
same from the date of the retirement till the date of
refund, and the 3% interest required to be deposited
from the date of receipt of the amount till the date of
refund was to take care of the inflation and on the
lower side considering that the interest payable on a
fixed deposit is much higher. The said amount of 3%
was intended to cover merely the administrative and
other expenses.
17. Another ground taken in the writ by the RBI with
regard to the Respondent having voluntarily accepted a
contract which was offered by the RBI, cannot be
permitted to selectively accept the beneficial terms and
reject the unfavourable ones. The principle sought to
be invoked was that the Respondent cannot be
permitted to approbate and reprobate at the same time,
i.e., accept the Pension Scheme as it is and then
CIVIL APPEAL NO. 13962 of 2024 Page 11 of 25
demand retrospective benefit of arrears of pension
contrary to the agreed terms.
18. In the light of the above, with the judgment of the
Division Bench going contrary to the Administration
Circular No. 1, dated 14.09.2020, and the instructions
for implementation dated 18.09.2020, RBI approached
this Court by filing the Special Leave Petition wherein,
on notice having been issued, operation of the
Impugned Order entitling Respondent No. 1 to pension
from the date of his retirement was stayed. However,
his entitlement for monthly pension with effect from
01.07.2020 onwards was ordered to be continued.
19. Learned Counsel for the Appellant has referred in detail
to the Administration Circular No. 1 dated 14.09.2020
and 18.09.2020, to contend that the eligibility criteria
had been clearly laid down therein and it was also
made clear that the pension would be payable with
effect from 01.07.2020 and not from the date of
retirement. This is apparent from the clarification that
no arrears prior to the said date would be paid to an
optee for Pension Scheme from the CPF Scheme.
20. The Respondent, having unconditionally accepted all
terms of these circulars and filled in the requisite forms
etc. and fulfilled the conditions as laid down therein,
cannot now be permitted to challenge unfavourable
CIVIL APPEAL NO. 13962 of 2024 Page 12 of 25
conditions. The Scheme as a whole had to be given
effect to as a package deal.
21. An employer is entitled to consider several aspects
while fixing a particular date for implementation of a
scheme such as financial constraints, administrative
exigencies, economic conditions, and other relevant
circumstances. With these aspects in mind, the
employer is fully justified in fixing some cut-off date,
which cannot be said to be arbitrary. The various
decisions as conveyed by the Government of India
including its earlier refusal to allow a change of option,
reflect such a position with regard to the financial
burden and liability which the RBI and the Government
would have to bear. The final proposal which had been
finally accepted, and the financial liability as projected
therein, specifically took note of the fact that the
arrears of pension would not be paid to the optees as
per the 2020 Circular. The nominal interest of 3%
charged on the refunded amount was merely for the
purposes of covering the administrative expenses,
inflation etc.
22. In support of the aspect regarding the policy decision
and fixation of the cut-off date, dependent upon the
financial liability apart from the administrative
exigencies, reference has been made to the judgments
of this Court in Mohammad Ali Imam and Others Vs.
CIVIL APPEAL NO. 13962 of 2024 Page 13 of 25
1
State of Bihar and Others , State of Tripura and
2
Others Vs. Anjana Bhattacharjee and Others ,
Hirandra Kumar Vs. High Court of Judicature at
3
Allahabad and Another , State of Punjab and
4
Others v. Amar Nath Goyal and Others and
Himachal Road Transport Corporation and
Another v. Himachal Road Transport Corporation
5
Retired Employees Union .
23. Another plea which has been taken is that the
Respondent had been in service since the year 1981.
On all occasions i.e. 1990, 1992, 1995 and 2000 when
the options were given for switching over to the Pension
Scheme from the CPF Scheme, he decided not to opt for
the same and continued with the old scheme. On his
retirement, he received all the benefits under the said
CPF Scheme. Having failed to opt during these earlier
occasions, it would not lie in the mouth of the
Respondent to now state that he would be entitled to
the same benefit as was available under those
administrative circulars. Each circular had its own
terms and conditions which the employees opted for
and complied, thus entitling them to the benefit as per
the said Circular. Similarly, when the latest
1
(2020) 5 SCC 685
2
(2022) 19 SCC 705
3
(2020) 17 SCC 401
4
(2005) 6 SCC 754
5
(2021) 4 SCC 502
CIVIL APPEAL NO. 13962 of 2024 Page 14 of 25
administrative circular of the year 2020 was issued, it
was a complete package detailing therein the pros and
cons. Once accepted, the benefits which were earlier
conferred under the options made available to the then-
retired and in-service employees at the relevant time
cannot be claimed by the Respondent. It has also been
pointed out that as per the circular of 2020, simple
interest of 3% per annum is being charged upon the
amount of RBI contributions to provident fund,
whereas in the earlier occasions, interest was levied at
6% per annum on the first option followed by 12% per
annum on the subsequent occasions. This 3% interest,
as was being charged from the employees, was based
on the financial calculations and economic
considerations keeping in view the fact, that the
pension would be payable with effect from 01.07.2020
to the fresh optees to the Pension Scheme. This aspect
was clearly mentioned in the administrative circular as
well as the detailed instructions which pointed out
therein that arrears would not be payable prior to the
said date. It has been pointed out that each circular
was a scheme in itself, laying down different
parameters and requirements to be fulfilled, including
the aspect of eligibility with consequential benefits.
24. Some Circulars fixed the cut-off date for the employees
to be eligible, others laid down the different interest-
CIVIL APPEAL NO. 13962 of 2024 Page 15 of 25
rates for refund of the amount etc. Therefore, the 2020
Circular was a complete scheme in itself both liability
and benefits which were balanced and worked out
based on which approval was granted by the
Government of India. The conditions therefore laid
down therein were sacrosanct and, once accepted, had
to be adhered to. The reasons as assigned by the
Division Bench of the High Court are unsustainable as
there is no discrimination meted out to the
Respondent, and as a consequence of the Judgment of
the High Court, huge financial liability would fall upon
the Appellant, which was neither envisaged, perceived
nor intended. Policy decisions, especially relating to the
financial aspects, need not be interfered with. This has
been emphasised and based on the judgments referred
to above.
25. On the other hand, Counsel for the Respondent has
supported the judgment of the Division Bench of High
Court. He submits that all through, whenever the
Circulars have been issued, the employees have been
granted the benefit of arrears of pension from the date
of their retirement. Depriving the Respondent of the
benefit of the arrears, when the CPF contribution along
with the interest, as required stands deposited, would
amount to denying the Respondent the benefit of 67
months of pension, which would not be justified and
CIVIL APPEAL NO. 13962 of 2024 Page 16 of 25
would be discriminatory and arbitrary. Assertion has
been made that under the 1990 Pension Regulations,
there is nothing mentioned with regard to non-grant of
arrears. No issue of financial loss to the Government
Exchequer would arise as the Scheme has been duly
approved by the Ministry of Finance, and therefore, the
said aspect with regard to the financial liability is
unsustainable. Learned Counsel has further stated
that the RBI itself had been pushing for giving another
option to the employees for switching over to the
Pension Scheme. Therefore, it cannot now assert that
they would not grant the benefit which was earlier
granted under the prior Administrative Circulars issued
by the RBI. On this basis it is asserted that the
Respondent is being discriminated against viz-a-viz the
similarly placed employees/retirees.
26. Prayer has thus been made for dismissal of the Appeal.
27. We have considered the submissions made by the
Counsel for the parties and, with their assistance have
gone through the records of the case. The first and
foremost issue which requires to be considered and
decided, and upon which all the ancillary submissions
depend is; whether the fixing of the cut off date i.e.
01.07.2020 for grant of pensionary benefits and that
CIVIL APPEAL NO. 13962 of 2024 Page 17 of 25
too prospectively is in consonance with law or is
discriminatory and arbitrary.
28. The details and factum with regard to the various four
options which were available to the Respondent during
the period he was in employment with the RBI and that
he did not opt for switching over to the Pension Scheme
in the year 1990, 1992, 1995 and 2000 is not
questioned rather admitted. Respondent joined the
service on 14.09.1981 and retired as Manager on
30.11.2014. The details with regard to and the
requirements under each administrative circular issued
on these four occasions have not been disputed.
29. What is apparent, therefore is, that each administrative
circular was independent in itself where the competent
authority had taken a well-informed, considered, and
gauged decision with regard to the applicability,
liability and financial implications, apart from the other
aspects. Each time, as is apparent, different aspects
were taken note of. In some cases, it was provided for
retrospective effect, while in others it was restricted to
employees up to a particular date, and yet another only
to those employees who were in service while on yet
another occasion to both ex-employees and in-service
employees.
CIVIL APPEAL NO. 13962 of 2024 Page 18 of 25
30. Similarly, the rate of interest applicable on the amount
to be refunded also varied depending upon the targeted
beneficiaries of the Scheme. What is apparent,
therefore, is that on each occasion, there was a specific
timeframe fixed for giving an option, and the benefit
was similarly limiting it to the beneficiaries.
31. Fortunately for the Respondent he was eligible on four
occasions to avail the benefits of the Pension Scheme,
but he opted out each time and continued with the CPF
Scheme. Having taken a considered and calculated
decision with regard to non-joining of the Pension
Scheme and continuing with the CPF Scheme, the
claim of the Respondent has to be considered in the
said light.
32. Another aspect which is apparent is that there has
been a gap of 20 years, as the option which was given
prior to the last one was in the year 2000, and the one
which is in question before us is of the year 2020.
During this period, on three separate occasions, as
mentioned earlier, the Government did not agree with
the proposal of the RBI to grant another option for
switching over to the Pension Scheme. It is apparent
from the documents placed on the record that the
financial details regarding the liability and the
calculations based thereon, as part of the proposal for
a one-time last option to move to the Pension Scheme
CIVIL APPEAL NO. 13962 of 2024 Page 19 of 25
were put forth before the Government. As is evident
from the said proposal, no liability with regard to
arrears of pension was highlighted therein. This is
logical as well as it was specifically provided that the
pension would be payable with effect from 01.07.2000,
and there would be no entitlement of arrears from the
date of retirement or otherwise.
33. The financial burden and the liability were therefore,
prominent aspects taken into consideration by the
Government while granting its no objection to the
proposed Scheme for switching to the Pension Scheme
to the erstwhile CPF Scheme optee employees.
34. As per the pleadings, the retrospective financial burden
would have resulted in an unjustified liability of over
900 crores for the RBI, which would have led to a
financially unsustainable scenario. This aspect has
also been pressed into service by the Counsel. The
decision of the Government falls within the realm of
policy decision, keeping in view of the considerations
taken note of before ultimately approving the Scheme of
switch-over as a last option to the persons who were
eligible under it as laid down therein.
35. When this aspect is examined in the light of the law, as
settled by this Court in the case of Mohammad Ali
CIVIL APPEAL NO. 13962 of 2024 Page 20 of 25
Imam and Others (supra), in Paragraph 11, this Court
held thus:
“11. Apart from this, there may be other
considerations in the mind of the executive authority
while fixing a particular date i.e. economic conditions,
financial constraints, administrative and other
circumstances, and if no reason is forthcoming from
the executive for fixation of a particular date, it
should not be interfered with by the Court unless the
cut-off date leads to some blatantly capricious or
outrageous result. In such cases, it has been opined
that there must be exercise of judicial restraint and
such matters ought to be left to the executive
authorities, to fix the cut-off date, and the
Government thus, must be left with some leeway and
free play at the joints in this connection. Even if no
particular reasons are given for the cut-off date by
the Government, the choice of cut-off date cannot be
held to be arbitrary (unless it is shown to be totally
capricious or whimsical) — State of A.P. v. N.
Subbarayudu [ State of A.P. v. N. Subbarayudu ,
(2008) 14 SCC 702 : (2009) 2 SCC (L&S) 172].”
In State of Punjab and Others (supra), in paragraphs
32, 32, 34 and 37, this Cout held thus:
32. The importance of considering financial
implications, while providing benefits for employees,
has been noted by this Court in numerous judgments
including the following two cases. In State of
Rajasthan v. Amrit Lal Gandhi [(1997) 2 SCC 342 :
1997 SCC (L&S) 512 : AIR 1997 SC 782] this Court
went so as far as to note that:
“Financial impact of making the Regulations
retrospective can be the sole consideration while
fixing a cut-off date. In our opinion, it cannot be said
that this cut-off date was fixed arbitrarily or without
any reason. The High Court was clearly in error in
allowing the writ petitions and substituting the date
of 1-1-1986 for 1-1-1990.” [Ibid., at AIR p. 784, para
17 : SCC p. 348, para 17 (emphasis supplied).]
33. More recently, in Veerasamy [(1999) 3 SCC 414 :
1999 SCC (L&S) 717] this Court observed that,
financial constraints could be a valid ground for
introducing a cut-off date while implementing a
CIVIL APPEAL NO. 13962 of 2024 Page 21 of 25
pension scheme on a revised basis [ Supra fn 2 SCC
at p. 421 (para 15).] . In that case, the pension
scheme applied differently to persons who had
retired from service before 1-7-1986, and those who
were in employment on the said date. It was held
that they could not be treated alike as they did not
belong to one class and they formed separate
classes.
34. In State of Punjab v. Boota Singh [(2000) 3 SCC
733 : 2000 SCC (L&S) 435] (“Boota Singh”) after
considering several judgments of this Court in D.S.
Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145]
to K.L. Rathee v. Union of India [(1997) 6 SCC 7 :
1997 SCC (L&S) 1253] it was held that D.S.
Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145]
should not be interpreted to mean that the
emoluments of persons who retired after a notified
date holding the same status, must be treated to be
the same [ Supra fn 13 SCC at p. 735 (para 8).].
37. In the instant case before us, the cut-off date has
been fixed as 1-4-1995 on a very valid ground,
namely, that of financial constraints. Consequently,
we reject the contention that fixing of the cut-off date
was arbitrary, irrational or had no rational basis or
that it offends Article 14.”
In State of Tripura (supra) the Supreme Court, in
reaffirming its earlier rulings such as in Amar Nath
Goyal (supra) and T.N Electricity Board vs. R.
6
Veerasamy and Others , held that financial
constraints can constitute a valid and non-arbitrary
basis for fixing a cut-off date for extending pensionary
benefits or pay revisions. It emphasized that economic
considerations are germane to governmental policy
decisions, and distinguishing between retirees based
on such a date does not violate Article 14 of the
6
(1999) 3 SCC 414
CIVIL APPEAL NO. 13962 of 2024 Page 22 of 25
Constitution. Accordingly, in the present case, the cut-
off date fixed under the Pension Rules was
constitutionally valid, and the High Court’s judgment
striking it down was found to be erroneous. In
Hirandra Kumar (supra) the Court clarified that
individual hardships cannot justify altering a rule of
general application and underscored that the
determination of cut-off dates is a matter of policy-
making. This function squarely lies within the domain
of the rule-making authority, not the judiciary, as
courts cannot assume the role of framing or modifying
policy decisions in the guise of judicial review.
36. Therefore, it cannot be said that the cut off date, as
fixed for grant of pension while refusing its
retrospectivity, thereof would be arbitrary or illegal or
discriminatory in nature.
37. Moreover, based on the facts of the case, the
Respondent cannot be permitted to blow hot and cold
in the same breath, as stated above. Each Circular had
its own specific terms and conditions, entitling the
retirees or in-service employees to the benefits as were
laid down therein and that too subject to certain
conditions.
CIVIL APPEAL NO. 13962 of 2024 Page 23 of 25
38. The said scheme itself was a well-considered and
thoroughly worked-out detailed financial liability
aspect. The said Scheme therefore to be operational
and effective and above all, a viable one was to operate
as a whole. The present Scheme of the year 2020, was
a conglomerate of various factors, with each factor
working in tandem with the others making it an
effective and workable Scheme which when tested on
the principles laid down by this Court as referred to
above would not fall foul of it.
39. The financial aspect, in itself, is a valid consideration,
as stated above, and would be applicable in the present
case. The Respondent, therefore, cannot be permitted
to choose a particular aspect of the Scheme that makes
it unworkable, and that too for his own financial
benefit. Approbation and reprobation would not be
permissible in such schemes. Respondent having once
opted for the Scheme cannot be permitted to not accept
a part thereof while intending to take the benefit of the
Scheme as a whole.
40. The plea, therefore, as has been sought to be projected
amounts to violation of the contractual terms because
the Scheme in itself had to be given effect to as a
whole.
CIVIL APPEAL NO. 13962 of 2024 Page 24 of 25
41. There being no violation of the Constitutional,
Statutory or Common Law principles, interference by
the Division Bench vide the impugned judgment while
setting aside the judgement of the Single Judge cannot
sustain.
42. In view of the above, the impugned judgment dated
18.12.2023 passed by the Division Bench of High Court
of Kerala, therefore, cannot sustain and is hereby set
aside and the Judgment of the Learned Single Judge
dated 04.04.2023 dismissing the writ petition preferred
by the Respondent is restored. The appeal is allowed.
43. There shall be no orders as to cost.
44. Pending application(s), if any, shall also stand disposed
of.
……...……….……………………..J.
[ ABHAY S. OKA ]
……..………..……………………..J.
[ AUGUSTINE GEORGE MASIH ]
NEW DELHI;
MAY 23, 2025.
CIVIL APPEAL NO. 13962 of 2024 Page 25 of 25
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 13962 OF 2024
THE RESERVE BANK OF INDIA … APPELLANT
VERSUS
M.T. MANI AND ANOTHER … RESPONDENTS
J U D G M E N T
AUGUSTINE GEORGE MASIH, J .
1. In this Appeal, challenge has been raised by the
Reserve Bank of India (“RBI”) to the Division Bench
Judgment of the Kerala High Court dated 18.12.2023
whereby the appeal preferred by Respondent No.1
against the Judgment of a Single Judge dismissing his
Writ Petition for grant of pension with effect from the
date of his retirement i.e. 01.12.2014, stood dismissed
after he exercised his option as per the RBI
Regulations/Circular dated 14.09.2020.
2. The facts are not in dispute and therefore are being
referred at the very outset.
3. The employees of the RBI prior to 1990 were governed
Signature Not Verified
Digitally signed by
ASHISH KONDLE
Date: 2025.05.23
15:52:34 IST
Reason:
by the Contributory Provident Fund (“CPF”) and the
payment of the Gratuity Act, 1972 (“Gratuity Act”). For
CIVIL APPEAL NO. 13962 of 2024 Page 1 of 25
the first time, on 29.10.1990, the RBI with approval
from its Central Board of Directors introduced the RBI
Pension Regulations, 1990. Employees were informed
vide Administration Circular No. 6 to the effect that the
said regulations would come into effect from
01.11.1990 giving an option to the existing employees
to join the said Pension Scheme or to continue with the
RBI’s CPF. All new employees who joined on or after
01.11.1990 were to be governed by the 1990
Regulations. It also provided that the employees in
service as on 01.01.1986 who retired before 01.11.1990
were also eligible for pension upon refunding the
amount of CPF share of the RBI with accrued interest
as received by them on their retirement, along with
simple interest thereon at the rate of 6%.
According to Regulation 31 thereof, employees retiring
between 01.01.1986 and 31.10.1990, although eligible
to join the Pension Scheme, would receive the pension
only from 01.11.1990 onwards, with no arrears for the
period before the said date. On 07.02.1992 RBI issued
another Administration Circular No. 5 amending the
Pension Regulations, 1990 effective from 06.02.1992.
Existing employees (excluding those on leave
preparatory to retirement) were given a fresh option to
switch to the Pension Regulations. Here again, no
retrospective pensionary benefits were granted.
CIVIL APPEAL NO. 13962 of 2024 Page 2 of 25
4. On 14.10.1995, Administration Circular No. 4
providing for another opportunity for existing
employees as on 01.11.1992 excluding those on Leave
Preparatory retirement to opt for the Pension
Regulations. On this occasion, the refund of the CPF
contribution made by the RBI and accrued interest was
to be effected with 12% simple interest. It was clarified
that it was not applicable to employees who had retired
before 01.11.1992 making it prospective.
5. Three attempts made by the RBI to give another option
to its employees to switch over from CPF to the Pension
Scheme did not find favour with the Government of
India on 04.02.2002, 26.02.2018 and 05.03.2019. On
14.09.2020, another Administration Circular No. 1 was
issued, which allowed existing CPF optees and former
employees who were in service on or after 01.11.1997
and retired with CPF to opt for Pension Regulations.
This was obviously, subject to the refund of the CPF
plus accrued interest amount pertaining to the RBI’s
share with 12% simple interest. It is apparent that this
Circular was not applicable to employees who had
retired before 01.11.1997. A detailed memorandum of
procedure for option to be exercised was issued by the
RBI on 20.09.2000.
CIVIL APPEAL NO. 13962 of 2024 Page 3 of 25
6. Respondent No. 1 joined service of the RBI on
14.09.1981 and became a member of the CPF Scheme
in operation then for the staff. During his entire service
tenure, until he retired as Manager on 30.11.2014,
Respondent No.1 got four options to switch over to the
Pension Scheme, starting from 01.11.1990 till
14.09.2000. He chose not to join the Pension Scheme
rather continued with the CPF. As a matter of fact, on
retirement, he was paid the entire dues of CPF and
Gratuity.
7. It appears that Respondent No. 1 filed a Writ Petition
before the High Court of Kerala at Ernakulam on
14.02.2020, after the Government of India rejected the
proposal of RBI for another option for CPF optees to
switch to the Pension Scheme on 05.03.2019. He
sought a direction to the RBI to allow him to exercise
the pension option as per the 1990 Regulations, and to
grant him pension benefits with effect from 30.11.2014,
his date of retirement, along with 12% interest on
arrears.
8. During the pendency of the Writ Petition, the RBI
proposed to the Government of India to grant a final
chance for remaining CPF optee employees, both
serving and retired, to opt for the Pension Scheme. No
objection was conveyed by the Government to the RBI’s
CIVIL APPEAL NO. 13962 of 2024 Page 4 of 25
proposal on 26.06.2020, for the CPF optees who were
in service from 01.11.1990 till 15.11.2000.
9. This permission for the change of option was allowed to
the employees subject to refund of the CPF amount
with accrued interest as received from RBI on
retirement and simple interest as may be decided by
the RBI. RBI issued Administration Circular No. 1 on
14.09.2020 opening a last option for the serving and
retiring employees who were in Bank service as on
01.11.1990 (the date of introduction of the Pension
Scheme) and continued as on 15.11.2000 (the closing
date of the last chance given to the employees to
exercise pension option). This fresh option for switching
over from CPF to Pension Scheme would be subject to
certain terms and conditions which were to be specified
as per the detailed instructions to be issued in this
regard separately by the RBI. However, in this
Administration Circular No. 1 itself it was clarified that
the eligible employees and the family members would
be entitled to draw monthly pension/family pension
with effect from 01.07.2020 and no arrears of pension
will be paid for the period prior thereto. The payment of
pension was made prospective w.e.f. 01.07.2020. It was
further clarified that this option was not applicable to
the employees who joined bank service on or after
01.01.2012 and were governed by the National Pension
CIVIL APPEAL NO. 13962 of 2024 Page 5 of 25
Scheme (NPS). Detailed instructions were issued by the
RBI on 18.09.2020. The relevant portion thereof reads
as follows:
“Please refer to Administration Circular No. 1
dated September 14, 2020 regarding opening of
option for pension.
2. The employees who were in the Bank’s
service as on November 1, 1990 and continued as
such on November 15, 2000 are being offered a
last opportunity for exercising their option for
switching over form Contributory Provident Fund
(CPF) to pension scheme under RBI Pension
Regulations, 1990 (Pension Regulations), covering
the categories, viz. serving employees, retired
employees and eligible family members of
deceased employees; as under:
(i) Serving employees of the Bank who had
earlier chosen not to be governed by Pension
Regulations and continued to retain CPF option,
subject to transfer of amount of Bank's
contribution to Provident Fund with accrued
interest to be credited to the RBI Gratuity and
Superannuation Fund (Pension Fund).
(ii) Retired employees of the Bank who had
earlier retained CPF option, subject to refund of
amount of Bank's contribution to Provident Fund
with accrued interest paid to them at the time of
their retirement, along with simple interest @3%
per annum calculated from the date of receipt of
the amount by the employee till the date of refund
to the Bank.
(iv) Option for switch-over from CPF to
Pension under the Pension Regulations, once
exercised, shall be irrevocable.
(v) The option shall not be applicable to employees
who joined service on or after 01.01.2012 and are
governed by National Pension System.
4. Retired employees:
(i) Eligible Retired employees, as mentioned
at Para 2(ii) above, shall exercise their option for
joining the Pension Scheme in FORM -1 (R) (copy
enclosed) within 90 days from the date of this
CIVIL APPEAL NO. 13962 of 2024 Page 6 of 25
circular i.e. on or before close of business hours on
December 17, 2020. On exercising the option, they
shall refund to the Bank in lump sum, within 90
days from the date of this circular i.e. on or before
close of business hours on December 17, 2020, the
Bank's contribution to Provident Fund and accrued
interest thereon paid to them at the time of their
retirement along with simple interest @3% per
annum calculated from the date of receipt of the
amount by the employee till the date of refund to
the Bank.
(ii) The duly filled in FORM-1 (R) (copy
enclosed) along with details of family duly filled in
Form 4 (copy enclosed) shall be submitted by the
retired employee at the Regional Office/Central
Office Department from where he/she retired.
x x x x x x
(vi) Pre - November 1, 2012 retirees will be
eligible for revision of pension, prospectively i.e.
from July 1, 2020, without payment of any
arrears, as per the method indicated in circular CO
HRMD No. G. 84/ 18491/21.01.00/2018-19
dated March 7, 2019 read with letter CO HRMD
No. 27412/21.01.000/2018-19 dated June 26,
2019.
(vii) Eligible retired employees who have
exercised their option for pension and refunded
Bank's contribution to Provident Fund and accrued
interest thereon, along with simple interest @3%
per annum as per para 4(i) above will be eligible
for full pension from July 1. 2020 upto the date
they opt for commutation of pension.
x x x x x x
ix) On commutation of pension, retired
employees will draw the basic pension reduced to
the extent of commuted portion of pension. In such
cases, full pension will be restored fifteen years
after the date of commutation of pension.
(x) Failing to deposit amount of Bank's
contribution to Provident Fund and accrued
interest thereon, along with simple interest @3%
per annum as at para 4(i) above within the
stipulated time by the retired employee, will render
the option for pension exercised by him/her as
CIVIL APPEAL NO. 13962 of 2024 Page 7 of 25
invalid. Any request for extension of time limit for
refund of Provident Fund amount shall be rejected
forthwith by respective RO/COD, without reference
to Central Office.
(xi) After completion of all formalities, eligible
retired employees will start drawing pension with
effect from July 1, 2020. No arrears of pension will
be paid for the period prior to July 1,2020.”
10. A perusal of the above instructions for implementation
dated 18.09.2020 makes it amply clear that all the
employees who were eligible to switch over from the
CPF Scheme to the Pension Scheme and who now
opted for the Pension Scheme were required to refund
the amount of Bank’s contribution to the Provident
Fund with accrued interest, along with simple interest
at the rate of 3% per annum, calculated from the date
of receipt of the amount by the employee from the
Bank till the date of refund thereof. The option had to
be exercised, and the refund was also to be made to
the Bank on or before 17.12.2020. Commutation of
pension was also permitted at the option of the
employees. It was specifically so noted and mentioned
that the retired employee would start drawing pension
with effect from 01.07.2020, and no arrears of pension
would be paid for the period prior thereto.
11. Respondent No. 1 on the issuance of the said
Administration Circular No. 1 dated 14.09.2020,
followed by the detailed instructions for
CIVIL APPEAL NO. 13962 of 2024 Page 8 of 25
implementation dated 18.09.2020, opted for the
Pension Scheme, and the said Pension Scheme had
been made applicable to him under which he is
admittedly receiving monthly pension. The said
Respondent, in the pending Writ Petition moved for an
amendment to challenge the denial of entitlement to
the grant of arrears of pension from the date of
retirement. The said clauses of the Administrative
Circular, as well as detailed instruction circular, were
challenged to that limited extent, with a prayer for
issuance of a writ of mandamus to the RBI to award
12% interest on arrears due to the petitioner by
allowing him arrears with effect from the date of his
retirement i.e. 30.11.2014.
12. The said amendment was allowed by the High Court on
18.03.2022, and an amended Writ Petition was filed.
Upon the RBI filing a Counter to the amended Writ
Petition, the Single Judge of the High Court proceeded
to decide the Writ Petition, dismissing it vide Order
dated 04.04.2023, holding therein that the Respondent
had well-informed details regarding the non-grant of
arrears of pension and eligibility for pension from a
particular date i.e. 01.07.2020. Having accepted the
same and taken benefit thereof, it was not open to the
Respondent to challenge a part of the said Scheme.
CIVIL APPEAL NO. 13962 of 2024 Page 9 of 25
13. Upon dismissal of the writ petition, the Respondent
preferred a writ appeal which was allowed by the
Division Bench on 18.12.2023 entitling the Respondent
to pension benefits from the date of his retirement i.e.
30.11.2014, on the grounds that in the earlier
administrative circulars, whenever an option had been
granted to the serving or retired employees, they were
entitled to arrears of pension as well. Denial of such
arrears of pension from the date of retirement was held
to be discriminatory and arbitrary at the hands of the
RBI. A direction was further issued to the RBI to pay
the pension benefits within one month from the date of
the Order, failing which, it would attract interest at the
rate of 6% per annum until realization.
14. The rationale and the reasoning put forth by the
Division Bench was that the Respondent, to be eligible
to opt for to the Pension Scheme, had to refund the
contribution of the bank along with accrued interest
with 3% simple interest from the date of the receipt of
the said amount till its deposit. The amount having
been refunded along with interest, entitled the
employees to the benefit of pension from the date of
retirement.
15. Another ground which was taken by the Division Bench
was that the cut-off date i.e. 01.07.2000 as the effective
date of pension was not based upon the RBI Pension
CIVIL APPEAL NO. 13962 of 2024 Page 10 of 25
Regulations, 1990. Instead, it was an administrative
decision to reduce the financial burden, which would
unjustly deprive eligible retirees of the rightful pension
claim for the earlier period.
16. The stand of the Appellant RBI was that the Pension
Scheme, as made applicable, provided for the cut-off
date of 01.07.2020 for the grant of benefit of pension,
based on the financial liability that would accrue as a
result of the change of option. The employees, having
received the lump sum amount had been utilizing the
same from the date of the retirement till the date of
refund, and the 3% interest required to be deposited
from the date of receipt of the amount till the date of
refund was to take care of the inflation and on the
lower side considering that the interest payable on a
fixed deposit is much higher. The said amount of 3%
was intended to cover merely the administrative and
other expenses.
17. Another ground taken in the writ by the RBI with
regard to the Respondent having voluntarily accepted a
contract which was offered by the RBI, cannot be
permitted to selectively accept the beneficial terms and
reject the unfavourable ones. The principle sought to
be invoked was that the Respondent cannot be
permitted to approbate and reprobate at the same time,
i.e., accept the Pension Scheme as it is and then
CIVIL APPEAL NO. 13962 of 2024 Page 11 of 25
demand retrospective benefit of arrears of pension
contrary to the agreed terms.
18. In the light of the above, with the judgment of the
Division Bench going contrary to the Administration
Circular No. 1, dated 14.09.2020, and the instructions
for implementation dated 18.09.2020, RBI approached
this Court by filing the Special Leave Petition wherein,
on notice having been issued, operation of the
Impugned Order entitling Respondent No. 1 to pension
from the date of his retirement was stayed. However,
his entitlement for monthly pension with effect from
01.07.2020 onwards was ordered to be continued.
19. Learned Counsel for the Appellant has referred in detail
to the Administration Circular No. 1 dated 14.09.2020
and 18.09.2020, to contend that the eligibility criteria
had been clearly laid down therein and it was also
made clear that the pension would be payable with
effect from 01.07.2020 and not from the date of
retirement. This is apparent from the clarification that
no arrears prior to the said date would be paid to an
optee for Pension Scheme from the CPF Scheme.
20. The Respondent, having unconditionally accepted all
terms of these circulars and filled in the requisite forms
etc. and fulfilled the conditions as laid down therein,
cannot now be permitted to challenge unfavourable
CIVIL APPEAL NO. 13962 of 2024 Page 12 of 25
conditions. The Scheme as a whole had to be given
effect to as a package deal.
21. An employer is entitled to consider several aspects
while fixing a particular date for implementation of a
scheme such as financial constraints, administrative
exigencies, economic conditions, and other relevant
circumstances. With these aspects in mind, the
employer is fully justified in fixing some cut-off date,
which cannot be said to be arbitrary. The various
decisions as conveyed by the Government of India
including its earlier refusal to allow a change of option,
reflect such a position with regard to the financial
burden and liability which the RBI and the Government
would have to bear. The final proposal which had been
finally accepted, and the financial liability as projected
therein, specifically took note of the fact that the
arrears of pension would not be paid to the optees as
per the 2020 Circular. The nominal interest of 3%
charged on the refunded amount was merely for the
purposes of covering the administrative expenses,
inflation etc.
22. In support of the aspect regarding the policy decision
and fixation of the cut-off date, dependent upon the
financial liability apart from the administrative
exigencies, reference has been made to the judgments
of this Court in Mohammad Ali Imam and Others Vs.
CIVIL APPEAL NO. 13962 of 2024 Page 13 of 25
1
State of Bihar and Others , State of Tripura and
2
Others Vs. Anjana Bhattacharjee and Others ,
Hirandra Kumar Vs. High Court of Judicature at
3
Allahabad and Another , State of Punjab and
4
Others v. Amar Nath Goyal and Others and
Himachal Road Transport Corporation and
Another v. Himachal Road Transport Corporation
5
Retired Employees Union .
23. Another plea which has been taken is that the
Respondent had been in service since the year 1981.
On all occasions i.e. 1990, 1992, 1995 and 2000 when
the options were given for switching over to the Pension
Scheme from the CPF Scheme, he decided not to opt for
the same and continued with the old scheme. On his
retirement, he received all the benefits under the said
CPF Scheme. Having failed to opt during these earlier
occasions, it would not lie in the mouth of the
Respondent to now state that he would be entitled to
the same benefit as was available under those
administrative circulars. Each circular had its own
terms and conditions which the employees opted for
and complied, thus entitling them to the benefit as per
the said Circular. Similarly, when the latest
1
(2020) 5 SCC 685
2
(2022) 19 SCC 705
3
(2020) 17 SCC 401
4
(2005) 6 SCC 754
5
(2021) 4 SCC 502
CIVIL APPEAL NO. 13962 of 2024 Page 14 of 25
administrative circular of the year 2020 was issued, it
was a complete package detailing therein the pros and
cons. Once accepted, the benefits which were earlier
conferred under the options made available to the then-
retired and in-service employees at the relevant time
cannot be claimed by the Respondent. It has also been
pointed out that as per the circular of 2020, simple
interest of 3% per annum is being charged upon the
amount of RBI contributions to provident fund,
whereas in the earlier occasions, interest was levied at
6% per annum on the first option followed by 12% per
annum on the subsequent occasions. This 3% interest,
as was being charged from the employees, was based
on the financial calculations and economic
considerations keeping in view the fact, that the
pension would be payable with effect from 01.07.2020
to the fresh optees to the Pension Scheme. This aspect
was clearly mentioned in the administrative circular as
well as the detailed instructions which pointed out
therein that arrears would not be payable prior to the
said date. It has been pointed out that each circular
was a scheme in itself, laying down different
parameters and requirements to be fulfilled, including
the aspect of eligibility with consequential benefits.
24. Some Circulars fixed the cut-off date for the employees
to be eligible, others laid down the different interest-
CIVIL APPEAL NO. 13962 of 2024 Page 15 of 25
rates for refund of the amount etc. Therefore, the 2020
Circular was a complete scheme in itself both liability
and benefits which were balanced and worked out
based on which approval was granted by the
Government of India. The conditions therefore laid
down therein were sacrosanct and, once accepted, had
to be adhered to. The reasons as assigned by the
Division Bench of the High Court are unsustainable as
there is no discrimination meted out to the
Respondent, and as a consequence of the Judgment of
the High Court, huge financial liability would fall upon
the Appellant, which was neither envisaged, perceived
nor intended. Policy decisions, especially relating to the
financial aspects, need not be interfered with. This has
been emphasised and based on the judgments referred
to above.
25. On the other hand, Counsel for the Respondent has
supported the judgment of the Division Bench of High
Court. He submits that all through, whenever the
Circulars have been issued, the employees have been
granted the benefit of arrears of pension from the date
of their retirement. Depriving the Respondent of the
benefit of the arrears, when the CPF contribution along
with the interest, as required stands deposited, would
amount to denying the Respondent the benefit of 67
months of pension, which would not be justified and
CIVIL APPEAL NO. 13962 of 2024 Page 16 of 25
would be discriminatory and arbitrary. Assertion has
been made that under the 1990 Pension Regulations,
there is nothing mentioned with regard to non-grant of
arrears. No issue of financial loss to the Government
Exchequer would arise as the Scheme has been duly
approved by the Ministry of Finance, and therefore, the
said aspect with regard to the financial liability is
unsustainable. Learned Counsel has further stated
that the RBI itself had been pushing for giving another
option to the employees for switching over to the
Pension Scheme. Therefore, it cannot now assert that
they would not grant the benefit which was earlier
granted under the prior Administrative Circulars issued
by the RBI. On this basis it is asserted that the
Respondent is being discriminated against viz-a-viz the
similarly placed employees/retirees.
26. Prayer has thus been made for dismissal of the Appeal.
27. We have considered the submissions made by the
Counsel for the parties and, with their assistance have
gone through the records of the case. The first and
foremost issue which requires to be considered and
decided, and upon which all the ancillary submissions
depend is; whether the fixing of the cut off date i.e.
01.07.2020 for grant of pensionary benefits and that
CIVIL APPEAL NO. 13962 of 2024 Page 17 of 25
too prospectively is in consonance with law or is
discriminatory and arbitrary.
28. The details and factum with regard to the various four
options which were available to the Respondent during
the period he was in employment with the RBI and that
he did not opt for switching over to the Pension Scheme
in the year 1990, 1992, 1995 and 2000 is not
questioned rather admitted. Respondent joined the
service on 14.09.1981 and retired as Manager on
30.11.2014. The details with regard to and the
requirements under each administrative circular issued
on these four occasions have not been disputed.
29. What is apparent, therefore is, that each administrative
circular was independent in itself where the competent
authority had taken a well-informed, considered, and
gauged decision with regard to the applicability,
liability and financial implications, apart from the other
aspects. Each time, as is apparent, different aspects
were taken note of. In some cases, it was provided for
retrospective effect, while in others it was restricted to
employees up to a particular date, and yet another only
to those employees who were in service while on yet
another occasion to both ex-employees and in-service
employees.
CIVIL APPEAL NO. 13962 of 2024 Page 18 of 25
30. Similarly, the rate of interest applicable on the amount
to be refunded also varied depending upon the targeted
beneficiaries of the Scheme. What is apparent,
therefore, is that on each occasion, there was a specific
timeframe fixed for giving an option, and the benefit
was similarly limiting it to the beneficiaries.
31. Fortunately for the Respondent he was eligible on four
occasions to avail the benefits of the Pension Scheme,
but he opted out each time and continued with the CPF
Scheme. Having taken a considered and calculated
decision with regard to non-joining of the Pension
Scheme and continuing with the CPF Scheme, the
claim of the Respondent has to be considered in the
said light.
32. Another aspect which is apparent is that there has
been a gap of 20 years, as the option which was given
prior to the last one was in the year 2000, and the one
which is in question before us is of the year 2020.
During this period, on three separate occasions, as
mentioned earlier, the Government did not agree with
the proposal of the RBI to grant another option for
switching over to the Pension Scheme. It is apparent
from the documents placed on the record that the
financial details regarding the liability and the
calculations based thereon, as part of the proposal for
a one-time last option to move to the Pension Scheme
CIVIL APPEAL NO. 13962 of 2024 Page 19 of 25
were put forth before the Government. As is evident
from the said proposal, no liability with regard to
arrears of pension was highlighted therein. This is
logical as well as it was specifically provided that the
pension would be payable with effect from 01.07.2000,
and there would be no entitlement of arrears from the
date of retirement or otherwise.
33. The financial burden and the liability were therefore,
prominent aspects taken into consideration by the
Government while granting its no objection to the
proposed Scheme for switching to the Pension Scheme
to the erstwhile CPF Scheme optee employees.
34. As per the pleadings, the retrospective financial burden
would have resulted in an unjustified liability of over
900 crores for the RBI, which would have led to a
financially unsustainable scenario. This aspect has
also been pressed into service by the Counsel. The
decision of the Government falls within the realm of
policy decision, keeping in view of the considerations
taken note of before ultimately approving the Scheme of
switch-over as a last option to the persons who were
eligible under it as laid down therein.
35. When this aspect is examined in the light of the law, as
settled by this Court in the case of Mohammad Ali
CIVIL APPEAL NO. 13962 of 2024 Page 20 of 25
Imam and Others (supra), in Paragraph 11, this Court
held thus:
“11. Apart from this, there may be other
considerations in the mind of the executive authority
while fixing a particular date i.e. economic conditions,
financial constraints, administrative and other
circumstances, and if no reason is forthcoming from
the executive for fixation of a particular date, it
should not be interfered with by the Court unless the
cut-off date leads to some blatantly capricious or
outrageous result. In such cases, it has been opined
that there must be exercise of judicial restraint and
such matters ought to be left to the executive
authorities, to fix the cut-off date, and the
Government thus, must be left with some leeway and
free play at the joints in this connection. Even if no
particular reasons are given for the cut-off date by
the Government, the choice of cut-off date cannot be
held to be arbitrary (unless it is shown to be totally
capricious or whimsical) — State of A.P. v. N.
Subbarayudu [ State of A.P. v. N. Subbarayudu ,
(2008) 14 SCC 702 : (2009) 2 SCC (L&S) 172].”
In State of Punjab and Others (supra), in paragraphs
32, 32, 34 and 37, this Cout held thus:
32. The importance of considering financial
implications, while providing benefits for employees,
has been noted by this Court in numerous judgments
including the following two cases. In State of
Rajasthan v. Amrit Lal Gandhi [(1997) 2 SCC 342 :
1997 SCC (L&S) 512 : AIR 1997 SC 782] this Court
went so as far as to note that:
“Financial impact of making the Regulations
retrospective can be the sole consideration while
fixing a cut-off date. In our opinion, it cannot be said
that this cut-off date was fixed arbitrarily or without
any reason. The High Court was clearly in error in
allowing the writ petitions and substituting the date
of 1-1-1986 for 1-1-1990.” [Ibid., at AIR p. 784, para
17 : SCC p. 348, para 17 (emphasis supplied).]
33. More recently, in Veerasamy [(1999) 3 SCC 414 :
1999 SCC (L&S) 717] this Court observed that,
financial constraints could be a valid ground for
introducing a cut-off date while implementing a
CIVIL APPEAL NO. 13962 of 2024 Page 21 of 25
pension scheme on a revised basis [ Supra fn 2 SCC
at p. 421 (para 15).] . In that case, the pension
scheme applied differently to persons who had
retired from service before 1-7-1986, and those who
were in employment on the said date. It was held
that they could not be treated alike as they did not
belong to one class and they formed separate
classes.
34. In State of Punjab v. Boota Singh [(2000) 3 SCC
733 : 2000 SCC (L&S) 435] (“Boota Singh”) after
considering several judgments of this Court in D.S.
Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145]
to K.L. Rathee v. Union of India [(1997) 6 SCC 7 :
1997 SCC (L&S) 1253] it was held that D.S.
Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145]
should not be interpreted to mean that the
emoluments of persons who retired after a notified
date holding the same status, must be treated to be
the same [ Supra fn 13 SCC at p. 735 (para 8).].
37. In the instant case before us, the cut-off date has
been fixed as 1-4-1995 on a very valid ground,
namely, that of financial constraints. Consequently,
we reject the contention that fixing of the cut-off date
was arbitrary, irrational or had no rational basis or
that it offends Article 14.”
In State of Tripura (supra) the Supreme Court, in
reaffirming its earlier rulings such as in Amar Nath
Goyal (supra) and T.N Electricity Board vs. R.
6
Veerasamy and Others , held that financial
constraints can constitute a valid and non-arbitrary
basis for fixing a cut-off date for extending pensionary
benefits or pay revisions. It emphasized that economic
considerations are germane to governmental policy
decisions, and distinguishing between retirees based
on such a date does not violate Article 14 of the
6
(1999) 3 SCC 414
CIVIL APPEAL NO. 13962 of 2024 Page 22 of 25
Constitution. Accordingly, in the present case, the cut-
off date fixed under the Pension Rules was
constitutionally valid, and the High Court’s judgment
striking it down was found to be erroneous. In
Hirandra Kumar (supra) the Court clarified that
individual hardships cannot justify altering a rule of
general application and underscored that the
determination of cut-off dates is a matter of policy-
making. This function squarely lies within the domain
of the rule-making authority, not the judiciary, as
courts cannot assume the role of framing or modifying
policy decisions in the guise of judicial review.
36. Therefore, it cannot be said that the cut off date, as
fixed for grant of pension while refusing its
retrospectivity, thereof would be arbitrary or illegal or
discriminatory in nature.
37. Moreover, based on the facts of the case, the
Respondent cannot be permitted to blow hot and cold
in the same breath, as stated above. Each Circular had
its own specific terms and conditions, entitling the
retirees or in-service employees to the benefits as were
laid down therein and that too subject to certain
conditions.
CIVIL APPEAL NO. 13962 of 2024 Page 23 of 25
38. The said scheme itself was a well-considered and
thoroughly worked-out detailed financial liability
aspect. The said Scheme therefore to be operational
and effective and above all, a viable one was to operate
as a whole. The present Scheme of the year 2020, was
a conglomerate of various factors, with each factor
working in tandem with the others making it an
effective and workable Scheme which when tested on
the principles laid down by this Court as referred to
above would not fall foul of it.
39. The financial aspect, in itself, is a valid consideration,
as stated above, and would be applicable in the present
case. The Respondent, therefore, cannot be permitted
to choose a particular aspect of the Scheme that makes
it unworkable, and that too for his own financial
benefit. Approbation and reprobation would not be
permissible in such schemes. Respondent having once
opted for the Scheme cannot be permitted to not accept
a part thereof while intending to take the benefit of the
Scheme as a whole.
40. The plea, therefore, as has been sought to be projected
amounts to violation of the contractual terms because
the Scheme in itself had to be given effect to as a
whole.
CIVIL APPEAL NO. 13962 of 2024 Page 24 of 25
41. There being no violation of the Constitutional,
Statutory or Common Law principles, interference by
the Division Bench vide the impugned judgment while
setting aside the judgement of the Single Judge cannot
sustain.
42. In view of the above, the impugned judgment dated
18.12.2023 passed by the Division Bench of High Court
of Kerala, therefore, cannot sustain and is hereby set
aside and the Judgment of the Learned Single Judge
dated 04.04.2023 dismissing the writ petition preferred
by the Respondent is restored. The appeal is allowed.
43. There shall be no orders as to cost.
44. Pending application(s), if any, shall also stand disposed
of.
……...……….……………………..J.
[ ABHAY S. OKA ]
……..………..……………………..J.
[ AUGUSTINE GEORGE MASIH ]
NEW DELHI;
MAY 23, 2025.
CIVIL APPEAL NO. 13962 of 2024 Page 25 of 25