Employee Pension & Indian Bank

SYNOPSIS AND BRIEF NOTES:

BRIEF FACTS:

Mr. Tom retired in 1989, after completion of tenure of 21 years of service. The retirement is by way of resignation. The resignation was accepted by bank. At the time of resignation he was given terminal benefits such as gratuity, P.F. On demand of the pension benefits, Mr. Tom was denied the same by the bank – IOB in year 1995 and thereafter in year 2000.

SHORT QUESTION:

Is Mr. Tom eligible for obtaining benefits under the Pension Scheme?

BRIEF ANSWER:

Yes, Mr. Tom should be eligible for the Pension Scheme since he satisfies the requirements of Regulation 29 vis-à-vis Regulation 50. There is no legitimate rationale of distinguishing between two set of employees; first, who resigned between November 1993 to September 1995 second, who resigned between January 1986 to October 1993.

RELEVANT DOCUMENTS AND LAW:

PAD Letter no. 1645, dtd. 04/06/1994.
Letter Ref. 7(F) 124 dtd. 06/03/95.

Regulation 10 of Draft Pension Regulation, 1993
Regulation 22 of IOB (Employees’) Pension Regulation, 1995 (Impugned)
Pension Regulation no. 52(1) of Pension Regulation, 1995
Pension Regulation no. 3(c)
IOB Employees Discipline & Appeal Regulation 1976
IOB (Officers) Service Regulation 1979
Section 2(s) of UP Industrial Disputes Act, 1947
Regulation 31- Pension Regulation 1955
Section 10(10AA) – Income Tax.





Citations referred in petition:

U.Com Bank V/s. S. Sanwarlal (RSA No. 1389/1997)
Income Tax V/s. RT Shahney (dtd. 10/12/1984)
JK Cotton Spinning & Weaving Mills V/s. State of UP (AIR 1990 SC 1808)
Commissioner of Income Tax V/s. DP Malhotra (28/07/1997)
CIT V/s. RJ Shahney (1986) 159 ITR 160
Cecil Dennis Solomon V/s. RBI (WP No. 615/1996)
Dattatreya Shriniwas Buche V/s. RBI (WP No. 2586/1997)


DISCUSSION:


The Constitution of India and the law of the land does not permit irrational discrimination not based on “intelligible differentiation” & “rational consideration”. If the management of the bank is found to have exercised discriminatory practices de hors the provisions of the Constitution of India, there are fair chances for the court to turn in down.

In this case the employer bank resorted to discriminatory practice by allowing pension benefits to those who retired between 1993-1995 and disallowing benefits to those retiring between 1986-1993. The Indian Bank Association (IBA) took permission from the government to pay pension benefits to those who retired between 1993-1995. Such a cut of date has been struck down by the Bombay and Karnataka High Court in case of voluntary retired employees.

Our arguments in brief:

1. Regulation no. 22 seeks to put “resignation” at par with dismissal, removal or termination. This is an unnatural classification and hence should be done away with. Employees who are dismissed or removed can avail benefits of Compassionate Allowance under Regulation no. 31. Manifestly this shows that two classes of employees are distinct and cannot be put on a single platform.

2. Resignation entails avail of terminal benefits such as gratuity & PF. Extrapolating this “Pension” should not be left out.

3. “Voluntary Retirement” and “Resignation” are one and the same. Both should satisfy a “condition precedent” of employer acceptance and a three month notice criteria (Cited: JK Cotton and Spinning Mills’ Judgment).

4. Pension Regulation No. 32 and 33 allow pension benefits in cases of “Premature retirement in Public Interest by Bank’s Order” and “Compulsory retirement”. Punishable cases are given benefits however “clear records” suffer.
This shows discrimination.

5. Punjab and Haryana High Court held “Regulation no.22” argument as ingenious (U Com V/s. S Sanwarlal)

6. Pension was a second re-tiral benefit scheme in lieu of Contributory Provident Fund and hence must be provided.

7. According to Madras High Court in CIT V/s. RT Shahney, retirement may be of various types either on superannuation or resignation. In both cases Section 10(10AA) of IT Act would apply. This view was repeated by Bombay High Court in Re. CIT V/s. DP Malhora.

8. Nagpur Bench of Bombay High Court in Re. Cecil Dennis Solomon V/s. RBI and Dattatreya Shriniwas Buche V/s. RBI took a view that the “Regulations” were not retrospective in nature, if there was nothing in them to show as such. Consequently the pension benefits could not be denied based on Regulation 22 that did not have retrospective effect.

Judgment Summary and applicability

Cases similar came up before various courts of the land. Their ratio and applicability to Mr. Tom’s Case is elucidated briefly hereunder:

1. Canara Bank & others V. ----- (Karnataka High Court)

Canara Bank introduced a Voluntary retirement scheme. IBA asked employees retiring between 1986-1993 to apply for membership of the pension scheme. In terms of Pension Regulation 1995 “retirement” included “premature retirement...before attaining age of superannuation” & included service tenure of 10 years. The court noticed that commutation figures and monthly outlay in case the pension was given was not huge. The definition of “Voluntary Retirement” did not specifically exclude “retirees”. The agreement reached on 29/10/93 between IBA and All Indian Bank Employee Association included retirees between 1986-1993. No circumstances arose that changed the circumstances or conditions in the statutory settlement arrived between parties.

The court noted that: taking into consideration “Principles of Interpretation” and “Rule of Constructions”, if an impugned action is capable of two interpretations, one that infringes fundamental rights and another that does not infringe fundamental rights, it would be necessary to interpret the action the later way.

Taking this principle into consideration, the court held Canara Bank’s action of not including the retirees between 1986-1993 to pension scheme as violating Fundamental Rights.

Pension according to court was granted in lieu of long service rendered by an employee and considered as deferred portion of compensation for past service. It wasn’t a charity that could be deferred at sweet-will.

The court also observed that there was nothing to show that the fund set up under Regulation 5 was meant only for employees retiring after 1993 and that regulation 3 specifically stated that they were applicable to employees who retired between 1986-1993.

Referring to Supreme Court in Re. Nakara and in Re. Krishna, the court pointed that a practice of drawing artificial lines of classification based on cut off dates should be desisted. “Classification amongst employees retired and those who sought voluntary retirement was not permissible”, observed the court.

Since our employer bank – IOB is a part of IBA and we a part of employees union, what transpired above applies to us. Moreover IOB appears to be party to this matter since the appellants have provided the data concerning IOB.


2. Srinath V. Syndicate Bank.

In terms of Clause 17(a) of the V Bipartite Settlement the appellate was “deemed to have voluntary retired” on account of her long and unexplained absence. The pension benefits were denied. A writ petition was filed. Court held that she was eligible for pension benefits under regulation. The bank however rejected the request once again. Matter was taken up to the single judge who ruled in favor of bank while the division bench allowed the LP quashing the order of Single judge.

In doing so, the court opined that the labor and welfare legislations have to be construed broadly and liberally. The concern should be more on content and the context rather than literal import. Directive policies enshrined in Part IV of the Constitution should be borne in mind. Benefits of welfare legislations should not be defeated on subtle devices.

The court opined that there was nothing “Voluntary” in the retirement since the explanation of appellant was rejected and time asked was refused. The management Order cannot be treated as “resignation”. “Resignation” is out of free will and emanates from employee and not from the employer.

While recognizing the distinction and reflecting the lack of “voluntary” element in the instance case, the court proceeded to stress on the importance of the minimum qualifying service criteria. The court said that if the employee resigned however he has put in the minimum qualifying service in such a case he would be eligible for the pension benefits although he “resigned”.

Referring to National Textile Workers Union V/s. PR Ramakrishnan, a judgment of Supreme Court, the Karnataka High Court observed that if the statute does not expressly confer a right to the workmen but does not indicate any negative intendment either, the statute must be construed in favor of workmen. The Pension Regulation entitles “retired employees” to receive pension. In such a case the construction should be liberal and “retired employees” should include those who retired by way of resigning particularly looking to Clause 2(y) of the regulation wherein “Retirement” includes “premature retirement” before attaining the age of superannuation. It is pertinent to note that “Voluntary Retirement” and “Premature retirement” – both these categories have been included in the definition.

The court further stated – “in deciding the entitlement of an employee for pension and other pensionary benefits, the court should necessarily bear in mind the well settled position in law that where an employee put in more than minimum qualifying service for pension under the erlevant regulations or the rules, enven in case of resignation after putting in the qualifying service, the employee would be entitled to pension..”.

Factually the above matter appears to be little different from ours as in this case the employee had “deemed to have retired” on account of management order. Our case is different because we retired by “resignation” and not by management order. However, since the court has used a language of wide amplitude by using the word “resign”, we are benefited by the judgment since the tenure of service is something important according to the court and should not be overlooked. That is same as what we are saying.


3. Syndicate Bank V. Srinath

This judgment emanates from the appeal filed by the Syndicate Bank against the aforesaid decision of the division bench of the Karnataka High Court. The Supreme Court too ruled in favor of the respondent (petitioner before the Karnataka High Court).

However, in taking the view, the Supreme Court has judged the issue by drawing distinction between “forced retirement” and “voluntary retirement”. This distinction is not relevant for our purpose.

While taking the above view, in last paragraph the Supreme Court, while referring to Sanwar Mal’s Case (2004-4-SCC-412) draws distinction between “resignation” and “retirement”. While doing so it points out that “resignation” and “voluntary retirement” are connotations of deliberate abandonment of service and on the other hand “retirement” occurs only on superannuation. After drawing this distinction the Supreme Court states – “..in any case, we are of the opinion that she could not be denied the benefit of her 20 years of service when she comes within the pension scheme that she was employed prior to 1986 and retired before 29.9.95.”

On going through the above discussion, to some extent we can say that the court indicated that both “voluntary retirement” and “resignation” are single specie. While considering the question of providing pension, a long tenure of 20 years of service is a cogent criterion in determining the eligibility of an employee for a pension scheme. The obiter to this extent in the judgment could prove useful.


4. Ramachandra & Ors. V. Canara Bank.

The petitioner voluntarily retired under the VRS. The pension regulations later came into force. Regulation 19(1) permitted an employee to exercise option of early retirement and that could not preclude him on account of such an early retirement. On account of this both “voluntary retirement” and “retirement on superannuation” shared same platform. The respondent bank denied pension benefits taking a plea that the petitioner had retired prior to 1993. This stand of the respondent bank was challenged.

The Court considered the provisions of Section 2(y) of the regulations and pointed out that there could be no distinction between “voluntary retirement” and those retired otherwise. The court said it was open to it to give construction to achieve the objects of regulation. The Karnataka High Court in this case appears to have taken a similar view adopted in succeeding case decided a year later and narrated hereinabove at Point 1.


5. Cecil V. RBI


On perusing this judgment, it appears that some arguments taken in our petition have been adopted from this judgment. The court’s opinion is very much akin to our arguments or rather our arguments have been crafted on the court’s opinion that favors our stand and arguments.

Without deciding the vires of Regulation 26 (3A) to the Staff Regulation, the Nagpur Bench of Bombay High Court has taken a view that:

a. Regulations were not retrospective and hence not applicable to those who resigned prior to 1990 (applicable date in that case)
b. The provision of “voluntary retirement” did not exist when the petitioner were in service [they had no option but to resign]
c. “Resignation is not equivalent to dismissal or termination both of which are the acts of management, but conversely resignation is more akin to voluntary retirement” observed the court.


6. RBI V. Cecil [Contra]

SLP was filed against the aforesaid judgment of Nagpur Bench of Karnataka High Court. The Supreme Court ruled in favor of RBI and held that “resignation” and “voluntary retirement” were different in service jurisprudence and followed different consequences. According to Supreme Court, VRS is created by regulation and “resignation” is an implied term in the employer-employee relationship.

It is pertinent to note that all the respondents who claimed pension did not attain the age of 50 during resignation. In our case they did. This judgment came in light of interpretation of Regulation 26 that did not contemplate resignation. Regulation 26 whilst Regulation 2(y) are materially different as such Regulation 2(y) takes into consideration “resignation” as an included category. This way we are different from the case into contemplation.

In this case the regulations denied retirement benefits to those resigned. In our case retirement benefits were given. In this case stipulated service tenure was not met. In our case it was met. In this case notice was not mandated. In our case notice is mandated and given. There is a material difference in the Regulation which governed the view of the court in this case and the Regulations in our case that passed through the litmus test of the Supreme Court in Karnataka High Court cases.

The view of Supreme Court no doubt favors the employer banks. However, this judgment can be distinguished on facts and law as hereinabove.


7. BOI V. Narendra Dave [Contra]

This judgment takes a view taken by Supreme Court in Re. Cecil (Supra). It adds that Regulation 22 is not ultra vires and the view taken in this decision is primarily by drawing distinctions between “retirement” and “resignation”. What the court contemplates is that anybody can resign anytime – even on the second day of service but retirement is on completion of “qualifying service”. The court acknowledges the difference that large number of years of service makes. It also points out that an argument about completion of minimum years of service is meritorious.

Looking to the fabric of the judgment it appears that various citations of the Supreme Court cited hereinabove were not negated by the court expressly, although mentioned in petition. No mention about these citations finds place in the judgment. The line of argument is single-channeled in that it only says that Regulation 22 is ultra-vires. Our line of argument is manifold and includes contrary view of the Supreme Court in various other prior cases. There are various similarities in the case of the respondent in this case and us. If the Supreme Court wanted the mater to turn water-tight, it could have dealt with each and every line of contention and ruled them out along with earlier views expressed by the Karnataka High Court. This is what the Court has not done. To this extent the doors of re-entry are open.
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