THE PUNJAB STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LTD vs. THE REGISTRAR COOPERATIVE SOCIETIES

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION     CIVIL APPEAL NO(S).   297­298    OF 2022 (Arising out of SLP(Civil) No(s). 1940­1941 of 2020) THE PUNJAB STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LTD. ….APPELLANT(S) VERSUS THE REGISTRAR, COOPERATIVE SOCIETIES AND OTHERS ….RESPONDENT(S) WITH CIVIL APPEAL NO(S).   303      OF 2022      (Arising out of SLP(Civil) No(s). 1934 of 2020) CIVIL APPEAL NO(S).     311      OF 2022       (Arising out of SLP(Civil) No(s). 12822 of 2020) CIVIL APPEAL NO(S).    312        OF 2022        (Arising out of SLP(Civil) No(s). 1935 of 2020) CIVIL APPEAL NO(S).    310         OF 2022 (Arising out of SLP(Civil) No(s). 1936 of 2020) CIVIL APPEAL NO(S).      300        OF 2022 (Arising out of SLP(Civil) No(s). 1949 of 2020) Signature Not Verified Digitally signed by NEETU KHAJURIA Date: 2022.01.11 17:32:25 IST Reason: CIVIL APPEAL NO(S).     306         OF 2022 (Arising out of SLP(Civil) No(s). 1943 of 2020) 1 CIVIL APPEAL NO(S).    299        OF 2022 (Arising out of SLP(Civil) No(s). 1944 of 2020) CIVIL APPEAL NO(S).     308        OF 2022 (Arising out of SLP(Civil) No(s). 1859 of 2020) CIVIL APPEAL NO(S).      309       OF 2022 (Arising out of SLP(Civil) No(s). 1942 of 2020) CIVIL APPEAL NO(S).     301        OF 2022 (Arising out of SLP(Civil) No(s). 1932 of 2020) CIVIL APPEAL NO(S).     302        OF 2022 (Arising out of SLP(Civil) No(s). 1931 of 2020) CIVIL APPEAL NO(S).     304        OF 2022 (Arising out of SLP(Civil) No(s). 1939 of 2020) CIVIL APPEAL NO(S).      305       OF 2022 (Arising out of SLP(Civil) No(s). 1937 of 2020) CIVIL APPEAL NO(S).    307          OF 2022 (Arising out of SLP(Civil) No(s). 1945 of 2020)            CIVIL APPEAL NO(S).     313         OF 2022                (Arising out of SLP(Civil) No(s).12864 of 2020) J U D G M E N T Rastogi, J. 1. Leave granted. 2 2. Civil Appeals @ SLP(Civil) Nos. 1940­1941 of 2020 and the cognate appeals arise from the self­same common judgment dated th th 29  July, 2019 and 4  October, 2019 passed by the Division Bench of the High Court of Punjab and Haryana at Chandigarh. 3. The facts have been noticed by this Court from Civil Appeals @ SLP(Civil) Nos. 1940­1941 of 2020. 4. The appellant in the present batch of appeals, is the Punjab State Cooperative Agricultural Development Bank Ltd. (hereinafter referred   to   as   ‘the   Bank’),   a   registered   cooperative   society   and connected Civil Appeal @ Special Leave Petition (Civil) No.12864 of 2020 has been preferred by the serving employees of the bank who also claim to be aggrieved by the self­same impugned judgment in the proceedings.  At the same time, the respondents are the original writ   petitioners   who   are   the   retired   employees   and   the   service conditions   of   the   employees   are   governed   by   the   Punjab   State Cooperative Agricultural Land Mortgage Banks Service (Common Cadre)   Rules,   1978(hereinafter   being   referred   to   as   the   “Rules 1978”) and became members of the Bank Pension Scheme, which st was introduced w.e.f. 1  April, 1989.   3 5. The appellant Bank is a registered cooperative society which was  earlier   known  as   “Punjab   State   Cooperative   Land   Mortgage Bank Ltd.”  The principal object of the Bank is to provide long term loans   to   the   farming   community   and   to   protect   them   from   the clutches of money lenders.  The main funding of the appellant Bank is by way of loans from National Bank for Agriculture and Rural Development(NABARD) as per the norms laid down.  The appellant Bank   has   two   tier   structure   comprising   of   “Punjab   State Cooperative   Agricultural   Development   Bank   Ltd.”   at   Apex level(SADB)   and   the   “Primary   Agricultural   Development Banks”(PADB) at the grass root level.   These two banks ensure timely delivery of credit to the farmers, who are its members and directly benefitted with various schemes which provide long term and short­term loans to them. 6. Prior   to   1989,   the   employees   of   the   appellant   Bank   were covered under the Employees Provident Fund and Miscellaneous Provisions   Act,   1952(hereinafter   being   referred   to   as   the   “Act 1952”).    The   scheme   was   being   duly   adhered  to  and   necessary 4 contributions were regularly paid by employees and the employer Bank. 7. The Department of Finance, Government of Punjab, vide its nd letter dated 22  September 1988, pursuant to recommendations of the   Punjab   Pay   Commission   to   bring   the   employees   serving   in various   Public   Sector   Undertakings   and   State   aided   institutions under   purview   of   the   State   Pension   Rules,   solicited   the views/comments   of   the   concerned   organisations   to   inter­alia communicate the additional financial burden involved in each case and   whether   the   organisation/organisations   could   bear   the additional   liability   out   of   their   own   resources.     These recommendations were placed before the Administrator of the Bank nd who vide Resolution dated 22  June 1989 decided to implement the recommendations of the State Government and as a consequence thereof, the pension scheme of the employees and Officers in the st common cadre was introduced w.e.f. 1  April, 1989. 8. Resolution No.24 passed by the Administrator of the appellant nd Bank dated 22  June, 1989 is reproduced as under:­ 5

9. In furtherance thereof, the appellant Bank sent a letter dated th 27   June,  1989  to  the   Registrar,  Cooperative  Societies,   Punjab, seeking   approval   for   introduction   of   the   pension   scheme   for   its employees   covered   under   the   Rules,   1978.     The   Registrar, th Cooperative   Societies,   Punjab,   by   its   communication   dated   7 February,   1990   conveyed   its   approval   for   introduction   of   the pension scheme proposed by the appellant Bank to its employees 6 covered   under   the   Rules   1978.     In   pursuance   thereof,   the amendment was carried out in the Rules, 1978 and Rule 15(ii) was introduced authorizing the Board of Directors to formulate pension scheme with the approval of the Registrar Cooperative Societies, Punjab.     For   the   purpose   of   reference,   Rule   15(ii)   is   extracted hereunder:­ “15  (i)  PROVIDENT FUND:­ The employees shall be entitled to the benefit of the General Provident Fund as provided in the employees Provident Fund Act, 1952 and scheme framed thereunder. (ii)  THE PENSION SCHEME FOR THE EMPLOYEES/OFFICES IN THE   COMMON   CADRE   RULES   OF   THE   PUNJAB   STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK W.E.F. 1.4.89. 1. Short title and commencement:­ (i) The   rules   shall   be   called,   the   Punjab   State   Cooperative Agricultural   Development   Banks   Employees   Pension,   Family Pension and General Provident Fund Rules. (ii) These Rules shall come into force with effect from 1.4.89. 2. Application (i) These   rules   shall   apply   to   all   the   posts   in   the   services specified in the Appendix ‘I’ of the Common Cadre Rules, provided that   in   case   of   the   employees   appointed   by   transfer   from Government   Departments,   these   rules   shall   only   apply   to   the extent specified in their terms and conditions of deputation agreed upon with the Government Department concerned. 7 Provided further that nothing in these rules shall affect the application   of   any   other   law,   statutory   rules,   bye­laws   and regulations for time being in force.     Provided further that an employee who joins service on or after coming into force of these rules and such existing employees, who opt for these rules, shall be covered by these rules. All category of employees shall have to exercise this option in Form­A to these rules within three months from the date of notification of these rules. (ii) The   employees   who   do   not   opt   for   these   rules   shall   be governed by the Employees Provident Fund Act and Rules. 3. Definition:­ XXX XXX XXX XXX (o) Pay:­ Pay means the pay as defined in Rule 2.44 of the Punjab Civil Services Rules Volume­I Part­I. Note:­ Unless the contrary appears from the context or subject to term ‘pay’ defined in Rule 2.44 of the Punjab Civil Services, Volume­I, Part­I, does not include “Special Pay.” 10. In   furtherance   thereto,   the   amended   Rule   15(ii)   came   into st force with effect from 1  April, 1989.  In sequel to the introduction of implementation of the scheme, the contributions made by the employees and the appellant Bank were transferred to create the pension corpus fund to make it functionally viable and a trust was th created by a trust deed dated 24   March, 1993 for management and effective implementation of the scheme. 8 11. It reveals from the record that the employees of the appellant Bank who had opted for pension became members of the pension scheme and continued to derive the benefit of pension after they had opted for it till the year 2010.  Later, when the appellant Bank found   the   scheme   to   be   unviable   on   account   of   financial constraints, the Board of Directors of the appellant Bank in its th meeting   dated   29   May,   2010   in   reference   to   Agenda   No.   15 reconsidered   the   matter   about   giving   pension   to   the   bank employees and resolved as under:­ 1. Pension to the retired employees and those going to retire in future be communicated. 2. Pension   Scheme   will   not   be   applicable   in   case   of   employees employed on or after 1.1.2004. 3. Pensioners be not given the benefit of commutation of pension, medical reimbursement and LTC. 4. As   per   existing   rules,   the   contribution   equal   to   the   12%   GPF deduction of employees to be continued by bank. 5. As   per   letter   No.CA3/64/13717   dated   29.8.2008   of   Registrar, Cooperative Societies, 12% of the profits of SADB & PADBs be allocated   to   employees   benefit   fund   and   its   90%   share   be contributed to the pension fund. 6. Bank to continue pension from its funds/expenses by stopping the commutation of pension, medical reimbursement and LTC facilities to its employees and retired employees, imposing 25% deduction on   eligible   amount   of   pension   and   after   adjusting   the   pension amount against SADB/PADBs profits according to rules be made up on the basis of outstanding loans of SADB and PADBs. 7. As and when there is improvement in financial condition of bank, the payment of full pension may be considered. 9 th 12. The appellant Bank sent a letter dated 9  June, 2010 to the Registrar, Cooperative Societies, Punjab, seeking approval of the aforesaid Resolution.  The Registrar, Cooperative Societies, Punjab, rd vide its letter dated 3   September, 2010 issued directions to the appellant   Bank   to   review   its   proposal.     Pursuant   thereto,   the appellant   Bank   submitted   its   revised   proposal   to   the   Registrar, th Cooperative Societies, Punjab, on 30  March, 2011 to proceed with the pension scheme in accordance with Resolution No. 15 dated th 29   May, 2010.   Although the proposal was turned down by the Registrar, Cooperative Societies, Punjab, Chandigarh still the Board th of Directors of the appellant Bank vide its Resolution dated 17 August, 2012 decided to discontinue the pension scheme and revert to the scheme of Contributory Provident Fund with a proposal of One Time Settlement.  The Board of Directors, later in exercise of its powers vested in Section 84A(2) of the Punjab Cooperative Societies Act,   1961   with   the   prior   approval   of   the   Registrar,   Cooperative Societies made amendment in Rule 15 of the Rules, 1978 by order th dated   11   March,   2014.     Pursuant   thereto,   Rule   15(ii)   stood 10 th deleted.     The   order   dated   11   March,   2014   is   reproduced hereunder:­ O/o Registrar, Cooperative Societies, Punjab, Chandigarh (Credit Branch­1) To The Managing Director, The Punjab State Cooperative Agri. Dev. Bank Ltd., Chandigarh. Memo. Credit/CA­3/2841  Dated: 11.03.2014 Sub:­   Amendment   in   Clause   15   of   Punjab   State   Cooperative   Agricultural Development Bank Service Common Cadre Rules, 1978. Ref: Your office letter No. Admn/S07/11984 dated 27.01.2014 This office has received a proposal on the subject cited above. After examining the proposal and the legal opinion sent by the Bank, in exercise   of   powers   vested   vide   Section   84A(2)   of   the   Punjab   Cooperative Societies Act 1961, Registrar Cooperative Societies, is pleased to allow the following   amendments   in   the   Punjab   State   Cooperative   Agricultural Development Bank Service Common Cadre Rules 1978 as under:

11

13. It reveals from the record that since the appellant Bank much before the amendment had stopped making payments of pension in terms of Rule 15(ii) of the Rules 1978, the employees approached the High Court under Article 226 of the Constitution by filing writ petitions and various interim orders were passed from time to time and even at one stage, it was decided to introduce a proposal of one time settlement which  was  furnished  by  the   appellant  Bank on th 16   October,   2012   in   the   pending   proceedings   before   the   High Court and, as informed, few of the employees have settled their claims under the One Time Settlement but it will be appropriate to notice at this stage that while the proceedings were pending before th the Division Bench of the High Court, by Order dated 24  January 2014, it was made clear that one time settlement which has been implemented   after   seeking   approval   of   the   competent   authority shall   be   without   prejudice   to   the   legal   rights   of   the th applicant/respondent   employees.   The   Order   dated   24   January, 2014 is reproduced hereunder:­ 12 “CM­109­LPA­2014 Allowed as prayed for. Document Annexure A1 is taken on record subject to such exceptions. CM stands disposed of. CM­71­LPA­2014 in LPA­2001­2013 Notice   to   the   non­applicant/appellants.     Ms.   Jaishree Thakur, Advocate accepts notice. After hearing learned counsel for the parties and keeping in view the fact that since One Time Settlement scheme has already been   implemented   after   seeking   approval   of   the   competent authority, this application is disposed of with a clarification that the implementation of the said scheme shall be without prejudice to the legal rights of the applicant/respondents.” 14. This fact can be further noticed that the learned Single Judge of the High Court decided the writ petitions by a Judgment dated st 31  August 2013 and Rule 15(ii) was deleted by the appellant Bank th by   Order   dated   11   March,   2014   while   the   proceedings   were pending in LPA before the High Court. 15. The   learned   Single   Judge   of   the   High   Court   held   that   the employees   of   the   appellant   Bank,   having   served   the   Bank   were covered under the scheme which was applicable at the given time under the Act 1952 (prior to 1989). It is the appellant Bank which accepted   the   recommendations   of   the   State   Government   and 13 solicited options from the employees as to whether they wanted to opt   for   a   pension   scheme   which   became   applicable   after   the amendment was made under the Rules 1978 and after a conscious decision, Rule 15(ii) was introduced, it could not be justified to circumvent   the   impact   of   the   amended   rule   and   thus   create   a situation which would have the effect of defeating the rights which are conferred upon the employees to seek pension under the rules st which became applicable with effect from 1  April, 1989 and finally held that the employees are entitled to regular pension including revised   rates   of   dearness   allowance,   to   all   the   employees   who became member of the pension scheme under the Rules 1978. 16. When the matter travelled to the Division Bench of the High Court, by that time, the amendment was made by an Order dated th 11  March, 2014 and Rule 15(ii) was deleted.  The Division Bench, after taking note of the submissions made by the parties observed that the decision to frame the pension scheme was a conscious decision   of   the   appellant   Bank   taken   in   its   own   wisdom   and st corresponding rules were introduced and made applicable from 1 April, 1989 and Rule 15(ii) was deleted on 11th March, 2014.  In 14 the interregnum, the employees became members of the pension scheme   and   were   paid   their   regular   pension   for   sufficient   time which   cannot   be   defeated   and   taken   away   retrospectively detrimental to their interest.   The amendment which has taken away the vested and accrued right of the employees to get pension and that too with retrospective effect would be violative of Article 14 of the Constitution and disposed of the LPA with a declaration that th amendment dated 11  March, 2014 under Rules 1978 shall apply prospectively. 17. The judgment of the Division Bench of the High Court dated th 29  July, 2019 became subject matter of challenge at the instance of   the   appellant   Bank   and   by   the   serving   employees   who   have claimed that their right to get pension may be affected in futuro, and have approached this Court ventilating their grievances in the instant proceedings. 18. It   may   be   relevant   to   note   that   before   the   High   Court,   at different   stages,   different   counter   affidavits   were   filed   by   the Regional Provident Fund Commissioner(RPFC) with reference to the 15 grant   of   exemption   after   the   Employees   Pension   Scheme   1995 became the part of the Act 1952. 19. It has been stated in the counter affidavit filed by the RPFC under   the   Act   1952   that   earlier   it   was   erroneously   mentioned “granted exemption from pension scheme”, but that was a factually incorrect   statement   recorded   and   the   RPFC   has   made   an unconditional apology for making such a statement of fact.  It is the admitted case of RPFC that neither any application was filed by the appellant   Bank   seeking   exemption   from   the   employees   pension scheme nor it was granted or refused. 20. The stand of the EPFC is that Employees’ Provident Funds Scheme,   1952   and   Employees’   Pension   Scheme,   1995   both   are designed   to   secure   a   minimum   core   of   old   age/terminal   social security.  Neither of these schemes exhaust an employee’s right to social   security.     According   to   the   EPFC,   the   bank’s   promise   to supplementary pension outside of EPF must be evaluated in that light. 21. It is  further stated  that the  benefits  under bank’s pension scheme   can   only   be   understood   as   supplementary   and   not 16 substitutionary because the bank’s pension scheme did not provide for dependents’ pension, nominees’ pension, childrens’ pension or withdrawal benefits.  This only provides a far narrower pensionary cover to its employees.  Its pension scheme could not be considered for exemption under Section 17(1C) of the Act. 22. Learned counsel for the appellant Bank submits that it has not been considered by the High Court that the appellant Bank had framed  a   pension   scheme   subject   to   approval   of   the   competent authority.   Even though, the appellant Bank had not applied for seeking   approval/exemption   from   the   authority,   still   the   fact remains that in the absence of the approval being granted by the competent authority, the retirees were entitled to receive pension st until the scheme remain in operation, i.e., upto 31  October, 2013. 23. Learned   counsel  further   submits   that   if   the   employees  are being permitted to get pension under the scheme of the Bank after st 31   October   2013   and   also   statutory   pension   from   Regional Provident Fund Commissioner under the Act 1952, indeed there shall be payment of double pension which is in either way not permissible in law. 17 24. Learned counsel further submits that the employee is entitled for pension but how the pension is to be computed, no one can claim   any   vested/accrued   right.     It   is   not   the   case   of   the respondents that they are not being paid pension.   It was paid earlier under the pension scheme introduced by the Bank from the st year  1989 until it remained  in force  till  31   October  2013  and thereafter, the employees are entitled to get a statutory pension as per the Employees Pension Scheme 1995 under the provisions of the Act 1952.  Thus, plea of vested right which has been considered by   the   High   Court   is   completely   misplaced   and   as   long   as   the appellant Bank fulfils its statutory liability under the provisions of the Act 1952, which they are under an obligation to comply with, the employees are not entitled to claim pension under the scheme introduced by the Bank after it stands withdrawn with effect from st 31   October,   2013   and   thus   no   vested/accrued   right   of   the employee   is   in   any   manner   has   been   defeated   and   a   finding recorded by the High Court to continue the bank pension scheme after it stood deleted is not sustainable in law and deserves to be interfered by this Court. 18 25. In support of his submissions, learned counsel placed reliance on the judgments of this Court in   Marathwada Gramin Bank   Vs. Karamchari   Sanghatana   and   Another   Management   of 1 Marathwada Gramin Bank and Others ,  State of Rajasthan  Vs. 2  and  A.N. Mathur and Others State of Himachal Pradesh and 3 Others  Vs.  Rajesh Chander Sood and Others . 26. Learned   counsel   further   submits   that   the   pension   scheme introduced by the Bank later became financially unviable and the number   of   retirees   in   comparison   to   the   existing   employees st recruited after 1   January, 2004 is almost three times and if the appellant   Bank   is   mandated   to   continue   to   make   payment   of pension   under   Bank   Pension   Scheme,   the   Bank   will   become defunct and the contribution towards pension made by the serving employees will be futile and they will get nothing at the time of their retirement.  The Bank has earned a meagre profit in the later years and still, in the given circumstances, the appellant Bank, if allowed to made over pension in terms of the judgment impugned, there will 1 2011(9) SCC 620 2 2014(13) SCC 531 3 2016(10) SCC 77 19 be no option left except to close down the Institution in such an eventuality and that apart it has created a wide gap of inequality between the serving employees and the retirees without resorting to exemption from the RPFC. 27. Learned counsel submits that the RPFC has initiated separate proceedings under Section 7A of the Act 1952 for the year April 1989 to March 2015 and for the year April 2015 to June 2017, th imposing liability on the Bank by an Order dated 14  September, st 2015   and   31   August,   2017   respectively.     At   the   same   time, separate proceeding under Section 14B for damages and Section 7Q for interest were also instituted and in terms of orders passed by the Authority, demand raised pursuant thereto has been deposited by   the   appellant.     In   the   given   circumstances,   the   Regional Provident Fund Commissioner has recovered towards pension fund contribution   along   with   damages   and   interest   for   the   period commencing from April 1989 to August 2017.   At the same time, the appellant has been asked to pay pension to the retirees under the Bank Pension Scheme in terms of the impugned judgment to the employees who are covered at one stage under the scheme. It 20 will almost be a double payment to the employees which is over and above the payment which was admissible to the employees in terms of statutory pension scheme 1995 under the Act 1952 and that apart,   there   are   categories   of   employees   who   have   settled   their accounts under one time settlement which was approved by the Government and if the Judgment is to be implemented in rem, it will not only be a double payment of pension but a great financial distress to the Bank which is otherwise not permissible in law. 28. Per contra, Mr. P.S. Patwalia, learned senior counsel for the respondents   submits   that   indisputedly   the   present   respondents who were writ  petitioners before  the High  Court are the  retired employees and after amendment was made under the scheme of Rules 1978, they became its member and started getting pension in st terms of the scheme under the Rules with effect from 1  April, 1989 and   without   any   justification,   the   appellant   Bank   unilaterally stopped full pension to the respondent pensioners in the year 2010 and   that   was   the   stage   when   the   retired   employees   were constrained to approach the High Court wherein it was held that these pensioners are entitled to pension in terms of the scheme.  To 21 st overcome   the   judgment   dated   31   August,   2013   of   the   learned Single Judge of the High Court of Punjab and Haryana, by Order th dated 11  March 2014, Rule 15(ii) was deleted and by deleting the said   rule,   it   has   taken   away   the   vested   right   of   the   retired employees   and   their   service   conditions   have   been   altered retrospectively to the detriment of the retired employees which is violative of Articles 14 and 21 of the Constitution. 29. Learned counsel further submits that so far as the scheme under the Act 1952 is concerned, the employees pension scheme was introduced under the Act 1952 for the first time in 1995 and it is   nowhere   related   to   the   pension   scheme   introduced   by   the nd appellant under its Resolution No. 24 dated 22  June, 1989 with st effect from 1   April, 1989 and the appellant Bank neither sought any exemption under Section 17(1C) of the Act 1952 nor it was required   for   the   reason   that   the   Bank   introduced   the   pension scheme in the year 1989.  At that time, there was no such pension scheme   under   the   Act   1952   and   once   it   is   made   clear   that exemption was never sought by the appellant Bank, under the Act 1952,   at   least   the   vested   right   which   has   been   accrued   to   the 22 respondents   cannot   be   taken   away   retrospectively   which   is   not sustainable   and   this   what   the   Division   Bench   has   held   in   the impugned judgment. 30. The   reliance   has   been   placed   on   the   Constitution   Bench Judgment of this Court in  Chairman, Railway Board and Others 4 Vs.   C.R.   Rangadhamaiah   and   Others   followed   with   U.P. Vs. Raghavendra Acharya and Others   State of Karnataka and 5 Others   and   Bank of Baroda and Another   Vs.   G. Palani and 6 . Others 31. Learned counsel further submits that more than half of the respondents are in the age group of 73 to 80 years and one­third of the retirees have already expired during pendency of litigation and it is the appellant Bank who had in its own volition introduced the scheme and the respondent employees have exercised their option to be governed by the said scheme and the employees have also foregone   their   Contributory   Provident   Fund.     In   the   given circumstances, the rights which are conferred and vested in favour 4 1997(6) SCC 623 5 2006(9) SCC 630 6 2018 SCC Online SC 3691 23 of the respondent employees could not be divested by the appellant in an arbitrary manner which is in violation of Article 14 of the Constitution. 32. Learned   counsel   submits   that   so   far   as   the   One   Time Settlement scheme is concerned, it was introduced to mitigate the problem   due   to   withdrawal   of   pension   scheme   as   an   interim measure under the orders passed by the High Court.  Since there was no option left to the employees who became hand to mouth, some   of   them   have   accepted   under   the   One   Time   Settlement scheme but the Division Bench by its interim order made it clear that acceptance of one time settlement shall be without prejudice to their legal rights, in the given circumstances, what has been paid under   One   Time   Settlement   scheme   to   few   of   the   employees   is always adjustable under the scheme to which they are entitled for under   the   law.     The   scheme   was   in   vogue   for   more   than   two decades and it is not open for the appellant Bank to take away their vested rights in an arbitrary manner and deprive them the benefit of pension which is in vogue since 1989 so far as the retirees are concerned. 24 33. Mr.   Siddharth,   learned   counsel   for   the   Regional   Provident Fund Commissioner submits that the appellant bank is covered under the provisions of the  Act 1952 and under the Act, three schemes   have   been   framed,   firstly,   Employees   Provident   Fund Scheme   1952(EPFS)   which   establishes   a   contributory   provident fund under Sections 5 and 6 of the Act.  Employers and employees contribute to the provident fund in equal measure at the prescribed rates notified by the authority competent under the law from time to   time.     However,   presently   there   is   12%   employees’   monthly wages. Secondly, there is Employees’ Pension Scheme 1995(EPS) scheme framed under Section 6A of the Act, 1952 which replaces the earlier Employees’ Family Pension Scheme, 1971(FPS).  Family Pension Scheme provided for pension to the dependents of such employees who died in harness.   EPS, on the other hand, is a comprehensive   pension   scheme   that   provides   superannuation pension, early pension and dependents’ pension.   It is funded by diverting a part of the employers’ share of contribution made to EPFS into the pension fund(presently 8.33% of monthly wages). Employees   do   not   contribute   under   EPS.     The   third   scheme   is 25 Employees’ Deposit Linked Insurance Scheme, 1976.     The Bank sought   exemption   from   EPFS   under   Section   17(1)(b)   and   from EDLIS   under   Section   17(2A).     The   fate   of   exemption   and   its consequence may not be relevant so far as the  present dispute raised in the instant proceedings is concerned, at the same time, it is being specifically stated that the appellant Bank did not seek any exemption from the operation of Employees’ Pension Scheme after th 16  November, 1995. 34. Learned counsel further states that, in the interregnum, since the   appellant   Bank   failed   to   deposit   its   due   contributions,   first under the Family Pension Scheme and later under the Employees st Pension Scheme for the period commencing from 1  April 1989 to st 31   March   2015   and   from   April   2015   to   June   2017,   separate proceedings were initiated under Section 7A followed with damages under   Section   14B   and   interest   under   Section   7Q   and   final assessments   have   been   made   after   affording   opportunity   to   the appellant Bank.  Pursuant thereto, money has been deposited but that has nothing to do with the pension scheme introduced by the Bank which  can  only be understood  as supplementary  and not 26 substitutionary for the reason that the Bank Pension Scheme did not   provide   for   dependent’s   pension,   children’s   pension   or withdrawal benefits and such benefits are designed only under the Employees Pension Scheme 1995 introduced under the provisions of the Act 1952.   35. Mr. Gurminder Singh, learned senior counsel for the serving employees submits that that as per the pension scheme introduced by   the   appellant   Bank,   the   employees   have   to   make   their   own contribution and looking to the depleting strength of the serving employees,   their   contribution   is   being   utilized   for   payment   of pension to the retired employees and bank is throughout harping upon the plea that because of financial distress, it is not possible for the Bank to continue with the pension scheme any more and that is the reason for which the pension scheme was withdrawn by the Bank at a later stage and that affects the interest of the serving employees whose entire employees’ contribution is being utilized against the payment of pension to the retirees and consistently, there is a shortfall of employer’s share of in­service employees and this practice if being continued any more, by the time the serving 27 employee will retire, they will not be able to get pension despite they have undertaken their contribution while in service. 36. The indisputed fact according to the learned counsel is that the retirees are being paid their pension under the Bank pension scheme   at   the   cost   of   the   serving   employees   and   it   affects  the interest of the serving employees which is being jeopardized. 37. Learned counsel in alternate further submits that the class of the employees either retired/serving should be dealt with the same standards/yardsticks and one retiral scheme should be followed for all   the   employees   regardless   of   the   fact   that   whether   they   are serving or retired and it will be unjust if the Bank pension scheme is allowed to continue at the cost of serving employees which would deprive them of their right to pension introduced by the Bank to which they are otherwise entitled for under the law. 38. We have heard the learned counsel for the parties and with their assistance perused the material available on record. 39. The   facts   are   not   in   dispute   that   the   respondents   are   the retired employees and members of the Punjab State Cooperative 28 Agricultural Development Bank Limited, Chandigarh and they were earlier   the   members   of   the   Employees   Provident   Fund   Scheme under the Act 1952.   The scheme was being duly adhered to and necessary   contributions   were   made   over   by   the   employees   and employer Bank.  Later on, with the recommendation of the Punjab Pay Commission, regarding introducing the pension scheme, the nd Administrator of the appellant Bank vide its Resolution dated 22 June, 1989 decided to implement the recommendations of the State Government and as a consequence thereof, the pension scheme for the employees and Officers in the Rules 1978 was introduced with st effect from 1  April 1989. 40. Accordingly, the Rules 1978 were amended and Rule 15(ii) was introduced authorizing the Board of Directors to formulate pension scheme   with   the   prior   approval   of   the   Registrar   Cooperative Societies, Punjab.   Pursuant thereto, the amendment was made with   an   option   that   such   of   the   employees   who   opt   for   the rules(pension scheme) shall be covered by these rules.  At the given time,   such   employees   who   do   not   opt   for   these   rules   shall   be governed by Act, 1952. 29  41. Indisputedly,   all   the   respondent   employees   were   given   the option to become member of the pension scheme on being retired from service and they continued to derive the benefit of pension after they had opted continuously until the year 2010 and only thereafter, the litigation started when the appellant Bank stopped making payment of pension in terms of the Bank pension scheme. Although   the   Bank   pension   scheme   will   not   apply   in   cases   to st employees employed on or after 1   January 2004.   Later on, the Bank took a decision by deleting Rule 15(ii) of pension scheme by th an amendment dated 11  March, 2014 and that became the cause of grievance of the employees in questioning the action of the Bank by approaching the Courts for ventilating their grievance. 42. The question that emerges for consideration is as to what is the concept of vested or accrued rights of an employee and at the given time whether such vested or accrued rights can be divested with retrospective effect by the rule making authority.   43. The   concept   of   vested/accrued   right   in   the   service jurisprudence   and   particularly   in   respect   of   pension   has   been 30 examined by the Constitution Bench of this Court in   Chairman, (supra) as follows:­ Railway Board and Others “11.  On the basis of the said decision of the Full Bench of the Tribunal, other Benches of the Tribunal at Bangalore, Hyderabad, Allahabad, Jabalpur, Jaipur, Madras and Ernakulam have passed orders   giving   relief   on   the   same   grounds.   These   appeals   and special leave petitions have been filed against the decision of the Full Bench and those other Benches of the Tribunal. Some of these matters were placed before a Bench of three learned Judges of this Court on 28­3­1995 on which date the following order was passed: “Two questions arise in the present case, viz., ( i ) what is the concept   of   vested   or   accrued   rights   so   far   as   the   government servant is concerned, and ( ii ) whether vested or accrued rights can be taken away with retrospective effect by rules made under the proviso to Article 309 or by an Act made under that article, and which of them and to what extent. We find that the Constitution Bench decisions in  Roshan Lal Tandon  v.  Union of India  (1968) 1 SCR 185;  B.S. Vadera  v.  Union of India   (1968) 3 SCR 575 and  State of Gujarat  v.  Raman Lal Keshav Lal Soni  (1983) 2 SCC 33  have been sought to be explained by two three­Judge   Bench   decisions   in  K.C.   Arora  v.  State   of   Haryana (1984) 3 SCC 281 and   v.   (1985) 1 SCC 523 K. Nagaraj State of A.P. in   addition   to   the   two­Judge   Bench   decisions   in  P.D. Aggarwal  v.  State   of   U.P.  (1987)   3   SCC   622   and  K. Narayanan  v.  State  of   Karnataka  1994   Supp   (1)   SCC   44.   Prima facie,   these   explanations   go   counter   to   the   ratio   of   the   said Constitution Bench decisions. It is not possible for us sitting as a three­Judge Bench to resolve the said conflict. It has, therefore, become   necessary   to   refer   the   matter   to   a   larger   Bench.   We accordingly refer these appeals to a Bench of five learned Judges.” 31 44. This Court, after taking note of the earlier view on the subject further held in   Chairman, Railway Board and Others (supra)as under:­ “20.  It can, therefore, be said that a rule which operates in futuro so as to govern future rights of those already in service cannot be assailed on the ground of retroactivity as being violative of Articles 14 and 16 of the Constitution, but a rule which seeks to reverse from an anterior date a benefit which has been granted or availed of, e.g., promotion or pay scale, can be assailed as being violative of Articles 14 and 16 of the Constitution to the extent it operates retrospectively. 24.  In many of these decisions the expressions “vested rights” or “accrued rights” have been used while striking down the impugned provisions which had been given retrospective operation so as to have   an   adverse   effect   in   the   matter   of   promotion,   seniority, substantive   appointment,   etc.,   of   the   employees.   The   said expressions have been used in the context of a right flowing under the relevant rule which was sought to be altered with effect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an amendment having retrospective operation which has the effect of taking away a benefit already available to the employee under the existing rule is arbitrary, discriminatory and violative of the rights guaranteed under Articles 14 and 16 of the Constitution. We are unable to hold that these decisions are not in consonance with the decisions in  Roshan Lal Tandon    (1968) 1 SCR 185,  B.S. Vedera   (1968) 3 SCR 575 and  Raman Lal Keshav Lal Soni  (1983) 2 SCC 33. 25.  In these cases we are concerned with the pension payable to the   employees   after   their   retirement.   The   respondents   were   no longer   in   service   on   the   date   of   issuance   of   the   impugned notifications. The amendments in the rules are not restricted in their application in futuro.  The amendments apply to employees who had already retired and were no longer in service on the date the impugned notifications were issued. 32 33.  Apart from being violative of the rights then available under Articles 31(1) and 19(1)( f ), the impugned amendments, insofar as they have been given retrospective operation, are also violative of the rights guaranteed under Articles 14 and 16 of the Constitution on the ground that they are unreasonable and arbitrary since the said amendments in Rule 2544 have the effect of reducing the amount of pension that had become payable to employees who had already   retired   from   service   on   the   date   of   issuance   of   the impugned notifications, as per the provisions contained in Rule 2544 that were in force at the time of their retirement.” (emphasis supplied)        45. Later, in  U.P. Raghavendra Acharya and Others (supra), the question   which   arose   for   consideration   was   that   whether   the appellants who were given the benefit of revised pay scale with st effect from 1   January, 1996 could have been deprived of their retiral benefits calculated with effect therefrom for the purpose of calculation of pension.  In that context, while examining the scheme of the Rules and relying on the Constitution Bench Judgment in (supra),   this   Court Chairman,   Railway   Board   and   Others observed as follows:­ “22.  The State while implementing the new scheme for payment of grant of pensionary benefits to its employees, may deny the same to a class of retired employees who were governed by a different set of rules. The extension of the benefits can also be denied to a class of employees if the same is permissible in law. The case of the appellants, however, stands absolutely on a different footing. They had   been   enjoying   the   benefit   of   the   revised   scales   of   pay. Recommendations have been made by the Central Government as also the University Grant Commission to the State of Karnataka to 33

46. Later, in  (supra), the question Bank of Baroda and Another arose with respect to the employees who retired or died while in st st service on or after 1  April 1998 and before 31  October, 2002 to whom benefits were vested and accrued could be deprived of their retiral benefits.  In this context, while taking note of the view relying 34 on   the   Constitution   bench   Judgment   in   Chairman,   Railway (supra), this Court observed as under:­ Board and Others “29. Thus, in our opinion, the Regulations which were in force till 2003, would apply with full force and as a matter of fact, the amendments   made   in   it   by   addition   of   Explanation   (c)   in Regulation 2(s) did not have the effect of amending the Regulations relating   to   pension,   as   contained   in   Regulation   38   read   with Regulations   2(d)   and   35   of   the   Regulations   of   1995.   Even otherwise,   if   it   had   the   effect   of   amending   the   pay   and   perks ‘average emoluments’, as specified in Regulation 2(d), it could not have   operated   retrospectively   and   taken   away   accrued   rights. Otherwise also, it would have been arbitrary exercise of power. Besides, there was no binding statutory force of the so called Joint Note   of   the   Officers’   Association,   as   admittedly,   to   Officers’ Association even the provisions of Industrial Disputes Act were not applicable and joint note had no statutory support, and it was not open to forgo the benefits available under the Regulations to those officers who have retired from 1.4.1998 till December 1999 and thereafter, and to deprive them of the benefits of the Regulations. Thus, by the Joint Note that has been relied upon, no estoppel said to   have   been   created.   There   is   no   estoppel   as   against   the enforcement of statutory provisions. The Joint Note had no force of law and could not have been against the spirit of the statutory Regulations and the basic service conditions, as envisaged under the Regulations framed under the Act of 1970. They could not have been tinkered with in an arbitrary manner, as has been laid down by   this   Court   in   Central   Inland   Water   Transport   Corporation Limited & Anr. vs. Brojo Nath Ganguly & Anr., (1986) 3 SCC 156 & Delhi Transport Corporation vs. D.T.C. Mazdoor Congress, (1991) Supp.1 SCC 600.” 47. The exposition of the legal principles culled out is that an amendment having retrospective operation which has the effect of taking away the benefit already available to the employee under the existing rule indeed would divest the employee from his vested or 35 accrued rights and that being so, it would be held to be violative of the rights guaranteed under Articles 14 and 16 of the Constitution. 48. In the instant case, the Bank pension scheme was introduced st from 1  April 1989 and options were called from the employees and those who had given their option became member of the pension scheme and accordingly pension was continuously paid to them without fail and only in the year 2010, when the Bank failed in discharging its obligations, respondent employees approached the High   Court   by   filing   the   writ   petitions.     The   Bank   later   on withdrawn the scheme of pension by deleting clause 15(ii) by an th amendment dated  11   March,  2014  which was  introduced  with st effect from 1  April, 1989 and the employees who availed the benefit of pension under the scheme, indeed their rights stood vested and accrued to them and any amendment to the contrary, which has been   made   with   retrospective   operation   to   take   away   the   right accrued to the retired employee under the existing rule certainly is not   only   violative   of   Article   14   but   also   of   Article   21   of   the Constitution. 36 49. It may also be noticed that there is a distinction between the legitimate expectation and a vested/accrued right in favour of the employees.     The   rule   which   classifies   such   employee   for promotional,   seniority,   age   of   retirement   purposes   undoubtedly operates on those who entered service before framing of the rules but it operates in futuro.  In a sense, it governs the future right of seniority, promotion or age of retirement of those who are already in service. 50. For the sake of illustration, if a person while entering into service, has a legitimate expectation that as per the then existing scheme of rules, he may be considered for promotion after certain years of qualifying service or with the age of retirement which is being prescribed under the scheme of rules but at a later stage, if there is any amendment made either in the scheme of promotion or the age of superannuation, it may alter other conditions of service such scheme of rules operates in futuro.  But at the same time, if the   employee   who   had   already   been   promoted   or   fixed   in   a particular pay scale, if that is being taken away by the impugned scheme of rules retrospectively, that certainly will take away the 37 vested/accrued   right   of   the   incumbent   which   may   not   be permissible   and   may   be   violative   of   Article   14   and   16   of   the Constitution.  51. The   judgment   on   which   learned   counsel   for   the   appellant Bank   has   placed   reliance   in   the   case   of   Marathwada   Gramin Bank Karamchari Sanghatana and Another (supra), the issue under   consideration   was   with   respect   to   provident   fund.     The Marathawada Gramin Bank had floated a provident fund scheme built   on   better   rates   of   contributions   than   the   rates   mandated under   the   employees   provident   fund   scheme.   Hence,   the   better scheme of provident fund was statutorily recognized by grant of exemption under Section 17(1).  Later, Marathawada Gramin Bank discontinued its  provident fund  scheme for financial  unviability, and reverted to rates mandated under paragraph 26 of the EPFS. The Bank later declined to exercise its voluntary contribution under Para 26 of the scheme after the exemption was declined and that came   to   be   upheld   by   this   Court   which   may   not   be   of   any assistance to learned counsel for the appellant in the instant case. 38 52. So far as the judgment in  State of Himachal Pradesh and (supra) is concerned, it was a case where apart from the Others scheme under the provisions of Act 1952, the State of Himachal Pradesh   framed   another   scheme   for   the   Himachal   Pradesh Corporate Sector Employees Pension(Family Pension, Commutation of Pension and Gratuity) Scheme, 1999.   It was made operational st with effect from 1  April 1999 but before the rights to the employees nd could be vested/accrued, it was repealed on 2   December, 2004. The question arose whether such contingent right vested with the employee on their having once opted under 1999 scheme was at all be   binding   or   irrevocable   despite   being   repealed   by   a   later nd notification dated 2  December, 2004.  In that context, this Court observed that it was not the case of the right which accrued to the employee and in that context, the repealing notification was upheld by this Court. 53. In   (supra),   it   was   a   case   where   the State   of   Rajasthan University   which   was   an   autonomous   body   created   under   the provisions   of   the   Act   by   its   Resolution   introduced   the   pension scheme, without taking recourse of the fact that the Resolution of 39 the Board of the Management of the University can be enforced only with prior approval from the Chancellor, i.e., the Governor of the State in terms of Section 39 of the Act and it was never approved by the Chancellor, in absence whereof, such resolution of the Board of Management   was   unauthorized   and   was   not   open   to   be implemented.   In the given circumstances, this Court was of the view that in absence of the mandate of Section 39 being complied with, the Board of Management of the University was not justified in introducing the scheme of pension. 54. So far as the submission made by learned counsel for the appellant   about   the   financial   distress   of   the   appellant   Bank   to justify the impugned amendment to say that it may not be possible to continue the grant of pension any more is concerned, suffice to say,   that   the   rule   making   authority   was   presumed   to   know repercussions of the particular piece of subordinate legislation and once the Bank took a conscious decision after taking permission from   the   Government   of   Punjab   and   Registrar,   Co­operative, st introduced the pension scheme with effect from 1   April 1989, it can be presumed that the competent authority was aware of the 40 resources   from   where   the   funds   are   to   be   created   for   making payments to its retirees and merely because at a later point of time, it was unable to hold financial resources at its command to its retirees,   would   not   be   justified   to   withdraw   the   scheme retrospectively detrimental to the interests of the employees who not only   became   member   of   the   scheme   but   received   their   pension regularly   at   least   upto   the   year   2010   until   the   dispute   arose between the parties and entered into litigation. 55. In our view, non­availability of financial resources would not be a defence available to the appellant Bank in taking away the vested rights accrued to the employees that too when it is for their socio­economic security.   It is an assurance that in their old age, their periodical payment towards pension shall remain assured. The pension which is being paid to them is not a bounty and it is for the appellant to divert the resources from where the funds can be made available to fulfil the rights of the employees in protecting the vested rights accrued in their favour. 56. So far as the submission made by the serving employees is concerned, they have no locus to question.  At the same time, their 41 apprehension   as   being   projected   to   this   Court   is   completely misplaced for the reason that employer/employees contribution is being provided under the employees pension scheme(EPS) of the Act 1952 which is made applicable to the serving employees and they are entitled to get pension in terms of the provisions of the Act 1952.  So far as their complaint regarding payment of contribution is concerned, it is in no manner going to be adjusted for payment of pension   to   retirees/respondents,   who   are   entitled   to   get   their pension in terms of the pension scheme of which they are members and it is for the appellant Bank to reserve the resources and make payment to the retired employees seeking pension to the scheme in vogue   when   they   became   members   and   took   benefits   pursuant thereto. 57. Before we part with the judgment, we cannot be oblivious of the situation that the complaint of the employees that they are not being   paid   their   pension   since   2013,   at   the   given   time   few employees   have   been   given   benefit   of   one   time   settlement   as introduced by the Bank as an interim measure which was subject to their  rights  being preserved,  in the   pending  litigation,  taking 42 grievance   of   the   either   party   into   consideration,   the   financial constraints of the Bank and the rights of the employees who are entitled to get pension under the bank pension scheme, we consider appropriate to observe that so far as the arrears towards element of pension   to   which   the   retired   employees   are   entitled   for,   the appellant Bank is at liberty to pay arrears towards pension upto st 31  December, 2021 in 12 monthly instalments in the next one year by   the   end   of   December,   2022   and   those   employees   who   have accepted payment under one time settlement at a given point of time, what is being paid to them is always open for adjustment against   arrears   of   their   due   pension.     Still   if   arrears   remain outstanding, the same shall be paid in 12 monthly instalments. At the same time, each of the employee who is member of the Bank Pension scheme must get pension to which he/she is entitled from the month of January 2022 as admissible under the law.   58. So far as the complaint of the appellant Bank regarding orders passed under Section 7A, Section 14B and Section 7Q of the Act 1952 for the period April 1989 to March 2015 and for April 2015 to June 2017, copies of which has been placed on record is concerned, 43 are not the subject matter of challenge in the instant proceedings, it will   be   open   for   the   appellant   to   take   legal   recourse,   if   being aggrieved in the appropriate proceedings available under the law. 59. Consequently, the appeals fail and are accordingly dismissed with observations indicated above. 60. Pending applications, if any, stand disposed of. ………………………….J. (AJAY RASTOGI) …………………………..J. (ABHAY S. OKA) NEW DELHI JANUARY 11, 2022 44