Pension commutation deductions may exceed the lump sum paid when prescribed by applicable pension rules.

The petitioner, a former Deputy Manager of the State Bank of India (SBI), retired under the Voluntary Retirement Scheme on 28 February 2007. He commuted one-third of his pension and received ₹4,27,442, with ₹3,631 deducted monthly from his pension for 15 years, from March 2007 to March 2022.

After restoration of his full pension, he contended that SBI had recovered ₹6,53,580—more than the lump sum paid—and sought a refund. SBI rejected the claim, explaining that the monthly deduction and 15-year recovery period had been notified to him when commutation was approved. He challenged SBI’s communication dated 9 February 2024 by writ petition.

1. Whether SBI was entitled to deduct ₹3,631 per month for 15 years, even though the aggregate deductions exceeded the commuted lump sum of ₹4,27,442.

2. Whether SBI’s communication dated 9 February 2024, rejecting the petitioner’s claim for a refund, was legally erroneous.

The Court applied the SBI Pension Fund Rules and the bank’s commutation framework, under which a portion of monthly pension may be exchanged for an upfront lump-sum payment, with the commuted portion deducted from pension for the prescribed restoration period.

It described the commuted value formula as monthly pension × commutation percentage × commutation factor × 12.

The Court also relied on the bank’s stated rule that the commuted portion is deducted for 15 years and that the applicable commutation factor depends on the pensioner’s age.

The Court found that SBI had disclosed the commuted amount, the monthly deduction of ₹3,631, and the 15-year deduction period when the petitioner’s commutation request was processed; he accepted the arrangement and received ₹4,27,442 in 2007.

The Court rejected the argument that aggregate deductions over 15 years had to be limited to the original lump sum. It reasoned that the commuted value was paid upfront and that the scheduled deductions over the restoration period could exceed that payment; the amount and duration of recovery followed the applicable pension rules and commutation factor.

The writ petition was dismissed.