Classification of retirees based on the date of retirement is not founded on any rational principle and is, therefore, void as violative of Article 14 of the Constitution.

Headnote:
PENSIONARY BENEFITS - VOLUNTARY RETIREMENT - CUT-OFF DATE - DISCRIMINATION - CLASSIFICATION - EMPLOYEES' PENSION REGULATIONS, 1995 - INTERPRETATION - APPLICABILITY - EMPLOYEES' RIGHT TO PENSION - CONDITIONS - EMPLOYEES' OPTION - REFUND OF PROVIDENT FUND CONTRIBUTIONS - RELATIONSHIP OF EMPLOYER AND EMPLOYEE - HOMOGENEOUS CLASS - RATIONAL PRINCIPLE - ARTICLE 14 - ARTICLE 16.
Fact of the Case:

Employees of appellant-Banks who had voluntarily retired from service between 1-1-1986 and 31-10-1993 under a statutory scheme of voluntary retirement, were denied pensionary benefits under the Regulations framed by the Banks in the year 1995. They challenged the cut-off date prescribed under the Regulations as arbitrary, discriminatory, ultra vires and violative of Articles 14, 16 (1), 21, 39 (d) and 41 of the Constitution of India. They sought quashing of regulation 29 which allegedly deprived them the benefit of the Pension Scheme.
Finding of the Court:

The Court held that: 1. Regulation 29 of the Pension Regulations of 1995, which made a distinction between the retirees who had retired before 1-11-1993 and retirees who had retired thereafter, was ultra vires to the extent of making the distinction. 2. The classification of retirees based on the date of retirement was not founded on any rational principle and was, therefore, void as violative of Article 14 of the Constitution. 3. The object of providing a pension or liberalisation thereof was to provide a decent standard of life to the working people after their superannuation. Hence, where the retirees belonged to the same class, no unequal treatment could be made on the ground that some retired earlier and some retired later. 4. The employees who had retired voluntarily between 1-1-1986 and 31-10-1993 were entitled to the grant of pensionary benefits under the Regulations upon fulfilment of the conditions specified therein.
Issues: 1. Whether the cut-off date prescribed under the Pension Regulations of 1995 was arbitrary, discriminatory, ultra vires and violative of Articles 14, 16 (1), 21, 39 (d) and 41 of the Constitution of India? 2. Whether Regulation 29 of the Pension Regulations of 1995, which made a distinction between the retirees who had retired before 1-11-1993 and retirees who had retired thereafter, was ultra vires? 3. Whether the classification of retirees based on the date of retirement was founded on any rational principle? 4. Whether the object of providing a pension or liberalisation thereof was to provide a decent standard of life to the working people after their superannuation? 5. Whether the employees who had retired voluntarily between 1-1-1986 and 31-10-1993 were entitled to the grant of pensionary benefits under the Regulations upon fulfilment of the conditions specified therein?
Ratio Decidendi: The Court held that the classification of retirees based on the date of retirement was not founded on any rational principle and was, therefore, void as violative of Article 14 of the Constitution. The object of providing a pension or liberalisation thereof was to provide a decent standard of life to the working people after their superannuation. Hence, where the retirees belonged to the same class, no unequal treatment could be made on the ground that some retired earlier and some retired later. The employees who had retired voluntarily between 1-1-1986 and 31-10-1993 were entitled to the grant of pensionary benefits under the Regulations upon fulfilment of the conditions specified therein.
Final Decision: The Court allowed the writ petitions and quashed Regulation 29 of the Pension Regulations of 1995 to the extent of making the distinction between the retirees who had retired before 1-11-1993 and retirees who had retired thereafter. The Court directed the appellant-Banks to extend the benefit of Pension Scheme to the employee-petitioners after accepting their options given.

R. P. SETHI, C. J.

( 1 ) DENIAL of pensionary benefits under the Regulations framed by the appellant-Banks in the year 1995 to the respondent-employees who had voluntarily retired from service between 1-1-1986 and 31-10-1993, under the then prevalent Voluntary Retirement Scheme, brought them to the court for the grant of appropriate relief. The respondent-employees prayed for quashing of regulation 29 which allegedly deprived them the benefit of the Pension Scheme. It was submitted that the cut-off date prescribed under the aforesaid Regulations was arbitrary, discriminatory, ultra vires and violative of Articles 14, 16 (1), 21, 39 (d) and 41 of the constitution of India. They prayed that a declaration be issued holding them entitled to the grant of pension on voluntary retirement under the Regulations of 1995. It was submitted that a command be issued to the appellant-Banks to grant commutation amount of pension and to pay the same w. e. f. 1st November, 1993 with all consequential benefits including interest at the market rate for the period of delay in payment of pension and commutation amount to the petitioners. The pleas found favour with the learned Single Judge who vide his order impugned in this appeal directed the appellant-Banks to extend the benefit of Pension Scheme to the employee-petitioners after accepting their options given. Aggrieved by the order of the learned single Judge the present appeals have been filed by Canara Bank, Union Bank of India, Indian banks' Association, Syndicate Bank, Bank of India and the Union of India. It is alleged by the appellants that the order of the learned Single Judge was contrary to law laid down by the supreme Court and the result of the mis-appreciation of the various provisions of the Pension regulations relied upon by the respondent-employees.

( 2 ) IN order to appreciate the rival contentions it is necessary to take note of the facts and relevant provisions of the law in the case. It is not disputed that the respondent-employees were the officers of the appellant-Banks who had voluntarily retired from the services of the Banks between 1-1-1986 and 31-10-1993 under a statutory scheme of voluntary retirement framed by the Bank. None of the petitioners were entitled to grant of pension at the time they voluntarily retired. In exercise of the powers conferred by clause (f) of sub-section (2) of Section 19 of the companies (Acquisition and Transfer of Undertaking) Act, 1970 (5 of 1970), the Board of directors of appellants-Banks, after consultation with the Reserve Bank of India and with the previous sanction of the Central Government made and framed the Pension Regulations in the year 1995. Earlier the employees of the Bank were governed by the Regulations framed in the year 1979, under which the normal age of superannuation was fixed at 60 years in respect of officers recruited or promoted as officers prior to 19-7-1969 and 58 years in respect of officers recruited or promoted on or after 19-7-1969. The Regulations permitted the Board of Directors of the Banks to frame a rule or scheme permitting voluntary retirement prematurely. Acting under the aforesaid provisions the Board of Directors of one of the Banks viz. , Canara bank, in its meeting held on 30-3-1986 resolved that the officers who had completed 50 years of age or 25 years of total service as officer-employee or otherwise whichever was earlier may be permitted to voluntarily retire from the service of the Bank by extending the benefits which were available to officers retiring in the normal course on superannuation. It was also provided that the officer-employees retiring voluntarily were to obtain previous sanction of the Bank to accept any job in Private Sector as required and stipulated for officers retiring on superannuation. The aforesaid Bank issued Circular No. 160 of 1986 dated 24-4-1986 which stipulated the eligibility for voluntary retirement as 50 years of age or 25 years of total service. Three months

Click Here to Read the rest of this document

1997 Supreme(Kar) 266

Classification of retirees based on the date of retirement is not founded on any rational principle and is, therefore, void as violative of Article 14 of the Constitution.

Login now and unlock premium legal research