Pension increments of 10% are not legally enforceable due to lack of valid consideration, and no binding contract for such increases exists.

JUDGMENT :

1. Plaintiffs, who are associations of pensioners of Defendant-Bank, have instituted this Suit for declaration that their members are entitled to guaranteed pension increment of 10% every year and that the reduction in pension increment effected from 10% to 5% by the Bank effective from January 2011 is illegal. Plaintiffs have also sought a money decree in the sum of Rs. 131,85,00,000/-against the Defendant-Bank.

A. FACTS

2. Plaintiffs are two associations of pensioners of the erstwhile ABN AMRO Bank- now the ‘Royal Bank of Scotland’. Plaintiff No. 1 is the association of pensioners of Mumbai, whereas Plaintiff No. 2 is the association representing pensioners of Kolkata. Both associations have filed the present petition challenging the Defendant’s action in reducing the increment of pension payable to their members from 10% p.a. to 5% p.a. by impugned letters dated 27 October 2009, 19 April 2010 and 8 February 2011. Plaintiffs have accordingly sought a mandatory injunction to restrain the Defendant-Bank from reducing the increment of pension payable to their members below 10%. Plaintiffs have also prayed for monetary decree in the sum of Rs.131,85,00,000/- towards the difference in the amount of pension paid to its members on account of reduction of increment to 5% from 10%.

3. Initially the suit was filed only by ABN AMRO Bank Mumbai Pensioners Association representing the pensioners of the erstwhile the ABN AMRO Bank posted in Mumbai. Another association named ABN AMRO Bank Pensioners Association Kolkata is formed by pensioners representing the those based in Kolkata, which has been impleaded as Plaintiff No.2 by amending the plaint. Names of members of both the Plaintiff-Associations are listed in the list annexed at Exhibit-A and A-1 to the plaint respectively. As per that list, there were 116 members of Mumbai Association and 66 members of Kolkata Association, on whose behalf the present suit has been filed. Plaintiffs state from 1 March 2008, ABN AMRO Pensioners Association’s Coordination Committee has been formed consisting of members of Mumbai and Kolkata Associations for taking up common causes of the pensioners with the Defendant-Bank.

4. Defendant is a Bank carrying on business of banking under the Banking Regulation Act, 1949 and used to operate under the name of ‘ABN AMRO Bank M.V.’ until October 2007 when its global operations, including India operations, were taken over by the Royal Bank of Scotland Plc. It appears that on 26 December 1976, the Defendant established a pension scheme for its employees for the purpose of providing pension to them in accordance with the entitlements as per the terms of service. The pension scheme is documented in the form of Trust Deed and has varied from time to time. It appears that until the year 1997, the pension payable under the Pension Scheme was fixed without any yearly increment. On 11 February 1997, Defendant sent a letter to Coordination Committee announcing gua