Punjab State Co-operative Agr. Development Bank vs The Registrar……

Facts/Background of the case:

The Punjab State Cooperative Agricultural Development Bank Ltd. (hereinafter referred to as 'the Bank'), a registered cooperative society, is the appellant in the current batch of appeals, and a related Civil Appeal @ Special Leave Petition (Civil) No.12864 of 2020 has been filed by serving bank employees who also claim to be aggrieved. The respondents are the original writ petitioners, who are retired employees, whose service conditions are governed by the Punjab State Cooperative Agricultural Land Mortgage Banks Service (Common Cadre) Rules, 1978 (hereinafter referred to as the "Rules 1978"), and who became members of the Bank Pension Scheme, which was implemented on April 1, 1989.

The Bank's main goal is to give long-term loans to farmers while also protecting them from the clutches of money lenders. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 protected the appellant Bank's employees prior to 1989. The system was being followed to the letter, with employees and the employer bank making timely payments.

Following the recommendations of the Punjab Pay Commission, the Department of Finance, Government of Punjab, issued a letter on September 22, 1988, bringing personnel working in different public sector undertakings and state-aided institutions under the State Pension Rules.

These proposals were presented to the Bank's Administrator, who chose to execute the State Government's recommendations by Resolution dated June 22, 1989, and as a result, the pension scheme for employees and officers in the common cadre was implemented on April 1, 1989. The amendment was made in the Rules of 1978, and Rule 15(ii) was added, permitting the Board of Directors to create pension schemes with the consent of the Punjab Registrar of Cooperative Societies.

According to the record, workers of the appellant Bank who chose for pension became members of the pension plan and continued to receive pension benefits when they opted for it until 2010. Later, when the appellant Bank determined that the plan was unviable due to financial restrictions, the appellant Bank's Board of Directors, in a meeting held on May 29, 2010, decided to reconsider the scheme.

Despite the fact that the proposal was rejected by the Registrar, Cooperative Societies, Punjab, Chandigarh, the appellant Bank's Board of Directors decided to end the pension scheme and return to the Contributory Provident Fund scheme with a One-Time Settlement proposal in a Resolution dated August 17, 2012. The Board of Directors later amended Rule 15 of the Rules, 1978 by order dated March 11, 2014, in exercise of its powers under Section 84A(2) of the Punjab Cooperative Societies Act, 1961, with the previous consent of the Registrar, Cooperative Societies. Rule 15(ii) was repealed as a result of this.

It seems from the record that the workers sought the High Court under Article 226 of the Constitution by filing writ petitions after the appellant Bank ceased paying pensions in accordance with Rule 15(ii) of the Rules 1978 long before the modification. Only a few employees have had their claims compensated under the One-Time Settlement Agreement. Finally, it was decided that all employees who joined the pension programme under the Rules 1978 are entitled to a regular pension, including amended amounts of dearness allowance.

The ruling of the Division Bench of the High Court dated 29th July, 2019 was challenged by the appellant Bank and serving workers who claimed that their right to pension might be jeopardised in the future, and have petitioned this Court to air their complaints in the current proceedings.

Issues:

i. What is the meaning of an employee's vested or accrued rights?

ii. Whether the rule-making authority can divest such vested or accrued rights with retroactive effect?

iii. Whether divesting such rights is violation of Article 14?

Judgement: [Five Judge Bench]

Ø It has been determined that a retrospective change that has the effect of depriving an employee of a benefit that was previously accessible to them under the current regulation is arbitrary, discriminatory, and in violation of the rights provided by Articles 14 and 16 of the Constitution. As a result, the appeals are rejected and dismissed.

Ø The Court noted that this was not a matter of a right that had accrued to the employee, and in that context, the repealing notification was upheld.

Ø The appellant Bank would not be allowed to use the lack of financial resources as a defence in denying the employees' vested rights, especially when it comes to their socioeconomic security.

Ø In terms of the complaint of serving employees regarding contribution payment, it will not be adjusted in any way for payment of pension to retirees/respondents who are entitled to receive their pension under the pension scheme to which they are members, and it will be up to the appellant Bank to set aside the resources and make payment to the retired employees seeking pension.

Ø The court believes it is appropriate to point out that, in terms of arrears towards the pension element to which retired employees are entitled, the appellant Bank is free to pay arrears towards pension up to December 31, 2021 in 12 monthly instalments in the following year by the end of December, 2022, and that those employees who have accepted payment under a one-time settlement at a given point in time, what is being paid to them is always open to adjustment against arrears. If the arrears are not paid in full, they will be paid in 12 monthly instalments.

Ø Each employee who is a member of the Bank Pension Scheme is entitled to the pension to which he or she is entitled from the month of January 2022, as permitted by law.



This article is written by Tanishq Chandel of Amity Law School.

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