1. Compulsory retirement as penalty — Reduction of pension — Dispute over mandatory prior consultation with the Board of Directors under Pension Regulations. (Para 2 , 3 , 4 , 5 , 7 )
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2025 Supreme(SC) 1066
SUPREME COURT OF INDIA
Pamidighantam Sri Narasimha, Joymalya Bagchi, JJ.
Vijay Kumar - Appellant
Versus
Central Bank of India & Ors. - Respondents
Civil appeal no. 9496 of 2025 (Arising out of SLP (C) No. of 2025 (@ D No.39502/2024)
Decided On : 15-07-2025
Advocates appeared:
For the Petitioner(s): Mr. Neeraj Shekhar, AOR Mrs. Kshama Sharma, Adv. Mr. Ramendra Vikram Singh, Adv. Mr. Ujjwal Ashutosh, Adv. Mr. Rajesh Kumar Maurya, Adv. Mr. Amrendra Singh, Adv. Mr. Ram Bachan Choudhary, Adv.
For the Respondent(s): Mr. Dhruv Mehta, Sr. Adv. Mr. Ashish Wad, Adv. Mr. Manoj Wad, Adv. Ms. Swati Arya, Adv. Ms. Akriti Arya, Adv. For M/S. J S Wad and Co., AOR
For the Petitioner(s): Mr. Neeraj Shekhar, AOR Mrs. Kshama Sharma, Adv. Mr. Ramendra Vikram Singh, Adv. Mr. Ujjwal Ashutosh, Adv. Mr. Rajesh Kumar Maurya, Adv. Mr. Amrendra Singh, Adv. Mr. Ram Bachan Choudhary, Adv.
For the Respondent(s): Mr. Dhruv Mehta, Sr. Adv. Mr. Ashish Wad, Adv. Mr. Manoj Wad, Adv. Ms. Swati Arya, Adv. Ms. Akriti Arya, Adv. For M/S. J S Wad and Co., AOR
Pension is a constitutional right that cannot be reduced without prior consultation with the Board, as mandated by the relevant regulations.
Headnote:(A) Central Bank of India (Employees’) Pension Regulations, 1995 - Regulation 33 - Interpretation of pension regulations concerning compulsory retirement - Court held that prior consultation with the Board is mandatory before reducing pension. (Paras 11-19)
(B) Pension is a constitutional right protected under Article 300A and cannot be arbitrarily reduced without following due process. (Paras 9, 17)
(C) High Court misinterpreted regulations by stating that a compulsorily retired employee is not entitled to pension unless an order under Regulation 33(1) is passed. (Paras 18, 24)
Facts of the case:
The appellant challenged the reduction of pension following compulsory retirement due to disciplinary action. The High Court upheld the bank’s decision to reduce pension by one-third.
Findings of Court:
The court found that the bank failed to consult the Board before reducing the pension and ordered the reinstatement of full pension.
Issues: The main issue was whether the reduction of pension was valid without prior consultation with the Board.
Ratio Decidendi: The court ruled that the regulations require prior consultation with the Board before reducing pension, affirming that pension is a right and not a bounty.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether reduction of pension by a superior authority requires prior consultation with the Board of Directors or if such authority can act independently under specific regulations. (Para 9 , 10 )
3. Pension is a property right; regulations must be read conjointly to avoid anomalies; prior consultation with the Board is a mandatory procedural safeguard. (Para 14 , 15 , 16 , 17 , 18 , 20 , 21 )
4. Prior consultation with the Board of Directors is mandatory whenever the full pension admissible to a compulsorily retired employee is reduced. (Para 19 )
5. Appeal allowed — Order reducing pension set aside — Bank directed to reconsider reduction after hearing the employee and consulting the Board. (Para 24 )
6. Is pension a discretionary bounty or a legal right?
Pension is not a discretion of the employer but a valuable right to property protected under Article 300A of the Constitution and can be denied only through the authority of law. (Para 17 )
7. Does the word 'may' in Regulation 33(1) allow the authority to grant pension less than two-thirds?
No. The word 'may' does not vest discretion to award less than two-thirds of the full pension; it clarifies that the clause does not entitle an employee to pension if they are not otherwise eligible, such as lacking qualifying service. (Para 18 )
8. Is prior consultation with the Board of Directors mandatory for reducing pension?
Yes. When the full pension admissible to a compulsorily retired employee is reduced, prior consultation with the Board of Directors is a mandatory procedural safeguard that cannot be substituted by post facto approval. (Para 16 , 19 , 21 )
9. How should Regulation 33(1) and 33(2) of the Pension Regulations be interpreted?
The clauses must be read conjointly. To avoid anomalies where the same authority could reduce pension with or without consultation depending on the clause used, prior consultation is required in all reduction cases. (Para 15 , 16 , 19 )
JUDGMENT :
Joymalya Bagchi, J.
1. Delay condoned. Leave granted.
2. Appeal is directed against judgment dated 22.04.2024 passed by the Patna High Court to the extent the Court upheld reduction of onethird of the pension payable to the appellant under the Central Bank of India (Employees’) Pension Regulations, 19951[Hereinafter, Pension Regulations.].
3. Appellant while working as Chief Manager, a scale IV officer in the respondent No.1bank was served with a Memorandum of Charge alleging that, during his tenure as Branch Manager, Dhanbad Branch he sanctioned loans in respect of 12 accounts, inter alia, without proper appraisal of income, non verification of KYC compliance, without postsanction inspection etc. exposing the bank to potential financial loss of huge amount.
4. A.K. Roy, Assistant General Manager (a scale V officer) was appointed as the Inquiry Authority (IA). During the inquiry, appellant attained superannuation on 30.11.2014 but the enquiry was continued under Regulation 20(3)(iii) of Central Bank of India (Officers’) Service Regulations, 19792[Hereinafter, Service Regulations]. He submitted inquiry report holding the appellant failed to discharge his duties with utmost integrity and honesty which was unbecoming of a Bank officer and exposed the Bank to huge financial loss for his pecuniary gain. Inquiry report was served on the appellant, and he replied to it. After considering his reply disciplinary authority i.e., Deputy General Manager (a scale VI officer) upheld the findings of the inquiry officer and imposed major penalty of compulsory retirement under Rule 4(h) of Central Bank of India Officer Employees’ (Discipline and Appeal) Regulations, 19763[Hereinafter, Discipline and Appeal Regulations.] with effect from date of superannuation. Appellant submitted an appeal before appellate authority i.e., Field General Manager (a scale VII officer).
5. During pendency of the appeal, Regional Manager, Purnea, a scale IV officer, i.e., equivalent to scale of the appellant, on 05.08.2015 recommended minimum payable pension under compulsory retirement i.e., twothird pension to the appellant. Field General Manager by order dated 07.08.2015 concurred with the Regional Manager and recommended award of two third compulsory retirement pension. Thereafter, on 30.12.2015 the said Field General Manager as the appellate authority dismissed the appellant’s appeal and upheld the penalty imposed on the latter.
6. The appellant initially approached the High Court challenging validity of Regulation 20(3)(iii) of Service Regulations which enabled the Bank to continue disciplinary proceedings even after superannuation and for setting aside the order of compulsory retirement including disbursal of full retrial benefits but subsequently he restricted his challenge only to disbursal of full retiral benefits.
7. During hearing High Court was informed while the Bank had not passed any order forfeiting gratuity, it had taken decision to award twothird of the pension payable to the appellant. In these circumstances, High Court while directing release of gratuity upheld the decision of the Bank to reduce onethird of the pension payable to the appellant.
8. Being aggrieved by the reduction of onethird pension, appellant has approached this Court. Bank has contested the appellant’s plea and produced additional documents, namely, recommendation letter of Regional Manager, Purnea for grant of minimum pension and the sanction letter of such pension by Field General Manager awarding twothird pension to the appellant.
9. Mr. Neeraj Shekhar contended pension is not a bounty and appellant’s right to pension is constitutionally protected under Article 300A. Such right could not be taken away save and except by a clear prescription of law. High Court erred in holding that a compulsorily retired employee is not entitled to pension at all unless an order under regulation 33(1) of the Pension Regulations is passed. Regulation 33 (1) and (2) must be harmoniou
