PNB Pensioner: 2023

Saturday, 2 December 2023

Pension updation - AIBRF Line of Action

Following is the Text of AIBRF circular no. 2023/125 dated 30.11.2023.

“Re: Updation of Pension in Banks.

Re: Proposed Action Programs by AIBRF.

We wish to invite your attention on RBI Circular dated 13.03.2023 approving Updation of pension for pensioners retired prior to 01.11.2017. According to formula sanctioned, basic pension will be increased to 1.63 times. In other words, basic pension of Rs. 100 will be revised to Rs. 163 for all those who retired prior to 1.11.2017.

2. As all of you know, in RBI in 2019, basic pension was revised, according to which revision was as under:

RBI Pension revision Formula
Retired between	Pension Revision Factor (2019)	Pension Revision Factor (2023)
01.11.1986 to 30.10.2002	100 became 363	363 became 591
01.11.2002 to 31.10.2007	100 became 244	244 became 397
01.11.2007 to 31.10.2012	100 became 176	176 became 286
01.11.2012 to 31.10.2017	NA	100 became 163

3. After revision in basic pension up to 2017, DA will be payable on CPI above 6352. It is very good achievement for RBI pensioners. We convey our compliments and congratulation to our retiree brothermen in RBI.

4. In SBI also, as informed earlier, as report of the committee constituted by DFS, basic pension of all pensioners will be fixed at 50 per cent of pay instead of present dual system of 40/ 50 per cent. This improvement has given big boost to the pensioners of SBI and has brought their pension at par with pension scheme of public sector banks.

5. In public sector banks also, Government has recently sanctioned some improvements like 100 percent DA to Pre-November, 2002 retirees, pension option to resignees etc.

6. However, the major demand of bank pensioner remains pending and despite under negotiation at IBA level, it is yet to take concrete shape.

7. At AIBRF level, we have been continuously taking organizational steps to achieve this important demand. In continuation to pursue the demand at the organizational level in coming days which we all know is going to be crucial period, we propose to launch the following action programs:

(a) Dharna and demonstration by state Committees at important centers in states
(b) Dharna Programs in batches at Delhi.

8. We propose to convene Core Committee Meeting next week to give final shape to the action program on Updation. All our state committees/ affiliates are requested to be in readiness to implement action programs to make them grant success.”

Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.

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Tuesday, 28 November 2023

VRS Optees - An Unwanted Lot, Journey so far…….

Journey of VRS Optees had been quite turbulent, full of pitfalls.

In the year 2000 PSB’s offered the VRS scheme. The main features/attractions of the scheme were as under;

Pensionary & other terminal benefits will be provided from the date of voluntary retirement.
In addition to the above two months of salary for each completed year of service, with a maximum of remaining period of service or five years, will be provided to the VRS Optees.

1. 7th Bipartite Settlement: (Agreement dated 27.03.2000)

# 16. PENSION In relation to an employee who retires or dies while in service on or after the 1st day of April, 1998 ‘Pay’ for the purpose of Pension shall be the aggregate of the pay drawn by the member of award staff in terms of the sixth Bipartite Settlement dated 14th, February, 1995 and the dearness allowance thereon calculated upto index number 1616 points in All India Average Consumer Price Index for Industrial Workers in the series 1960=100. This shall be subject to the necessary amendments to be made to the relevant provisions of Bank (Employees) Pension Regulations, 1995".

2. Now three anomalies were created for VRS optees’

Pension on pre-revised basic pay. ( Basic pay as per 6th Bipartite + DA calculated on tapering formula). This anomaly was corrected through 8th Bipartite Settlement w.e.f. 01.05.2005, but no arrears of pension (from the date of retirement upto 30.04.2005) & that of commutation of increased pension, were paid. Fresh PPO’s were issued, revising the pension from 01.05.2005. Hon’ble Supreme Court vide orders dated 13.02.2018 permitted the arrears with interest & 9%. However while making payment banks had denied the benefit of Regulation 41, of Pension Regulations (See detailed note below).
Denial of 5 years notional service benefit on voluntary retirement in terms of amendment in VRS scheme after the close of VRS scheme. This anomaly was corrected on the basis of Hon’ble Supreme Court judgement dated 27.03.2009. Arrears were paid & fresh PPO’s were issued.
Denial of 100% DA neutralisation for pre- Nov-2002 retirees.This anomaly has been corrected w.e.f. 01.10.2023 & arrears has been denied.

3. 8th Bipartite Settlement: (Agreement dated 02.06.2005)

# 16. Pension (in Banks other than State Bank of India) In respect of an employee other than the employee in State Bank of India, who is a member of the Pension Fund, who retires or dies while in service or otherwise ceases to be in employment on or after the 1st May 2005, ‘Pay’ for the purpose of pension shall be the pay as in clause 6 of this settlement. This shall be subject to the necessary amendments to be made to the relevant provisions of Bank (Employees’) Pension Regulations, 1995. Note: The Bank (Employees’) Pension Regulations, 1995 does not apply to the employees of State Bank of India.

4. 9th Bipartite Settlement: :(Agreement dated 27.04.2010 )

# 3. Further to Clause 7(2) of the Bipartite Settlement dated 2nd June 2005, it is agreed between the parties as under:
(i) On and from 1.5.2005, in the case of employees who retired during the period 1.4.1998 to 31.10.2002, dearness relief shall be payable for every rise or be recoverable for every fall, as the case may be, of every 4 points over 1684 points in the quarterly average of the All India Average Consumer Price Index for Industrial Workers in the series 1960=100. Such increase or decrease in dearness relief for every said four points shall be calculated in the manner given below:

5. Note on Regulation 41, of Pension Regulations

i). 1616-1684 Arrears - Commutation

The matter concerns, refixation of pension and consequential arrears with respect to the bank employees who retired or died while in service on or after 1.4.1998 and before 31.10.2002.

Let’s look at the operative part of the various judgements.

ii). Operative part of Karnataka High Court Judgement dated 21.04.2011.

# 13…..bank shall pay the differential amount of pension and commutation value of pension to the petitioners on that basis,within a period of eight weeks, if not earlier and in the event of failure to make the payment as above, the banks shall be liable to pay interest at the rate of 10% on the said amounts till the date of payment.

iii). Operative part of SC Judgement dated 13.02.2018.

“# 34. Thus, we set aside the judgement rendered by the High Court of Delhi and affirm that of High Courts of Karnataka at Bangalore and the High Court of Madras. The appeals filed by the Banks are dismissed and the appeal filed by the Association is allowed. Resultantly, let the amount which was due and payable be paid with 9% interest, be calculated and paid within four months from today.

iv). From the above judgments it is clear that commutation is the important part of the arrears to be paid to the concerned employees.

Thus the arrears to be paid will have the following three components.

Arrears =

Difference of (Basic Pension + DA) with interest @9% plus
(+) Commutation Value with interest @9% minus
(-) monthly recovery of commutation amount (⅓ of difference of Basic Pension) for 15 years from the date of retirement.

v). Now the moot point in payment of arrears of commutation is the recovery of commutation amount (⅓ of difference of Basic Pension) for 15 years from the date of retirement.

Here I wish to draw attention towards relevant portions of Regulation 41, of Pension Regulations which reads as under:-

# 41(2) An employee shall indicate the fraction of pension, which he desires to commute, and may either indicate the maximum limit of one-third pension or such lower limit, as he may desire to commute.

# 41(4) The lump sum payable to an applicant shall be calculated in accordance with the Table given below.

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Notes (2) An employee who had commuted the admissible portion of pension is entitled to have the commuted portion of the pension restored after the expiry of a period of fifteen years from the date of commutation.

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Notes (6) The commutation of pension shall become absolute in the case of an employee, (a) retiring on superannuation or voluntary retirement who submits an application for commutation of pension before the date of retirement, on the date following the date of retirement:

# 41(6) An applicant who is authorized a superannuation pension, voluntary retirement pension, premature retirement pension, compulsory retirement pension, invalid pension or compassionate allowance shall be eligible to commute a fraction of his pension under these regulations.

Provided that on and from 1.7.2003, in case of an applicant in whose case the commuted value of pension becomes payable on the day following the date of his retirement or from the

date from which the commutation becomes absolute, the reduction in the amount of pension on account of commutation shall become operative from its inception. Where, however, payment of commuted value of pension could not be made within the first month after the date of retirement or within the first month after the date when the commutation becomes absolute as the case may be, the difference between the normal monthly pension and the commuted pension shall be paid for the period between the date on which commutation becomes absolute and the date preceding the date on which commuted value of pension is deemed to have been paid.

(Amendment Notified in Gazette of Government of India Dated 24.07.2004)

vi). In the present case, as the commutation value is being paid after 01.07.2003 and a period of more than 15 years has already passed from the date commutation had become absolute, banks are not entitled to make any recovery on account of commutation (⅓ of difference of Basic Pension).

However, even if one takes a very narrow interpretation of the Regulation 41(6) which is operative w.e.f. 01.07.2003, banks at the maximum can recover commutation amount (⅓ of difference of Basic Pension), only from the date of retirement upto 30.06.2003.

vii). I recall from memory, the similar high handedness attitude of the bank managements, while making payment of arrears of pension for 5 years notional service to retirees under Voluntary Retirement Scheme (EVRS-2000) allowed by SC in 2009. At that time also banks recovered commutation amount (⅓ of difference of BP), from the date of voluntary retirement upto the date of payment of arrears in 2009, blatantly disregarding the Pension Regulation 41.6, as above.

viii). The said recovery of 180 instalments of commutation amount (1/3 of differential of pension) with interest, was illegal on the following grounds.

a. In non of the judgements of Hon’ble Supreme Court of India / HIgh Court of Karnataka (citation quoted in the trailing mail), banks were permitted to charge interest on the 180 instalments of recovery of commutation amount (1/3 of differential of pension), either explicitly or implicitly.

b. While making recovery of 180 instalments of commutation amount (1/3 of differential of pension) with interest, provisions of Regulation 41(6) of Punjab National Bank (Employees') Pension Regulation, 1995, have been ignored with impunity. Relevant provisions of the regulations reads as under;

# Regulation 41(6) An applicant who is authorised a superannuation pension, voluntary retirement pension, premature retirement pension, compulsory retirement pension, invalid pension or compassionate allowance shall be eligible to commute a fraction of his pension under these regulations.

Provided that on and from 1.7.2003, in case of an applicant in whose case the commuted value of pension becomes payable on the day following the date of his retirement or from the date from which the commutation becomes absolute, the reduction in the amount of pension on account of commutation shall become operative from its inception. Where, however, payment of commuted value of pension could not be made within the first month after the date of retirement or within the first month after the date when the commutation becomes absolute as the case may be, the difference between the normal monthly pension and the commuted pension shall be paid for the period between the date on which commutation becomes absolute and the date preceding the date on which commuted value of pension is deemed to have been paid.

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Link to my other blogs on the connected issues;

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Wednesday, 7 June 2023

D.S. Nakara & Ors. Vs Union of India, - It is equally well settled by the decisions of this Court that Art. 14 condemns discrimination not only by a substantive law but also by a law of procedure.

Supreme Court (17.12.1982) In D.S. Nakara & Ors. Vs Union of India, [W.P. No. 2627 of 2015] held that;

Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a brooding omnipresence.
It is equally well settled by the decisions of this Court that Art. 14 condemns discrimination not only by a substantive law but also by a law of procedure.
The equal treatment guaranteed in Art. 14 is wholly violated in as much as the pension rules being statutory in character, since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension.
Therefore the classification does not stand the test of Art.14. Further the classification is wholly arbitrary because we do not find a single acceptable or persuasive reason for this division. This arbitrary action violated the guarantee of Art. 14.
From the discussion three things emerge :
(i) that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right subject to 1972 rules which are statutory in character because they are enacted in exercise of powers conferred by the proviso to Art. 309 and clause (5) of Art. 148 of the Constitution ;
(ii) that the pension is not an ex-gratia payment but it is a payment for the past service rendered ; and
(iii) it is a social welfare measure rendering socio-economic justice to those who in the hey-day of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch.

Excerpts of the order;

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The scope, content and meaning of Article 14 of the Constitution has been the subject-matter of intensive examination by this Court in a catena of decisions. It would, therefore, be merely adding to the length of this judgment to recapitulate all those decisions and it is better to avoid that exercise save and except referring to the latest decision on the subject in Maneka Gandhi v. Union of India from which the following observation may be extracted:

"...... what is the content and reach of the great equalising principle enunciated in this article ? There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all-embracing scope and meaning for, to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits..... Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a brooding omnipresence."

The decisions clearly lay down that though Art. 14 forbids class legislation, it does not forbid reasonable classification for the purpose of legislation. In order, however, to pass the test of permissible classification, two conditions must be fulfilled, viz., (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group; and (ii) that differentia must have a rational relation to the objects sought to be achieved by the statute in question. (see Shri Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar & Others. The classification may be founded on differential basis according to objects sought to be achieved but what is implicit in it is that there ought to be a nexus i.e., causal connection between the basis of classification and object of the statute under consideration. It is equally well settled by the decisions of this Court that Art. 14 condemns discrimination not only by a substantive law but also by a law of procedure.

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After an exhaustive review of almost all decisions bearing on the question of Art. 14, this Court speaking through Chandrachud, C.J. in Re. Special Courts Bill restated the settled propositions which emerged from the judgments of this Court undoubtedly insofar as they were relevant to the decision on the points arising for consideration in that matter. Four of them are apt and relevant for the present purpose and may be extracted. They are:

"3. The constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The Courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary.
4. The principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is substantially the same.
6. The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive.
7. The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and (2) that differentia must have a rational relation to the object sought to be achieved by the Act."

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The other facet of Art. 14 which must be remembered is that it eschews arbitrariness in any form. Article 14 has, therefore, not to be held identical with the doctrine of classification. As was noticed in Maneka Gandhi's case in the earliest stages of evolution of the Constitutional law, Art. 14 came to be identified with the doctrine of classification because the view taken was that Art. 14 forbids discrimination and there will be no discrimination where the classification making the differentia fulfils the aforementioned two conditions. However, in EP. Royappa v. State of Tamil Nadu, it was held that the basic principle which informs both Arts. 14 and 16 is equality and inhibition against discrimination. This Court further observed as under:

"From a positivistic point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Art. 14, and if it affects any matter relating to public employment, it is also violative of Art. 16. Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.

Justice Iyer has in his inimitable style dissected Art. 14 as under:

"The article has a pervasive processual potency and versatile quality, equalitarian in its soul and allergic to discriminatory diktats. Equality is the antithesis of arbitrariness and ex cathedra ipse dixit is the ally of demagogic authoritarianism. Only knight- errants of 'executive excesses'-if we may use current cliche-can fall in love with the Dame of despotism, legislative or administrative. If this Court gives in here it gives up the ghost. And so it that I insist on the dynamics of limitations on fundamental freedoms as implying the rule of law; be you ever so high, the law is above you."

Affirming and explaining this view, the Constitution Bench in Ajay Hasia etc. v. Khalid Mujib Sehravardi & others etc. held that it must, therefore, now be taken to be well settled that what Art.14 strikes at is arbitrariness because any action that is arbitrary must necessarily involve negation of equality. The Court made it explicit that where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Art. 14. After a review of large number of decisions bearing on the subject, in Air India etc. etc. v. Nargesh Meerza & Ors. etc etc. the Court formulated propositions emerging from analysis and examination of earlier decisions. One such proposition held well established is that Art. 14 is certainly attracted where equals are treated differently without any reasonable basis.

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Thus the fundamental principle is that Art. 14 forbids class legislation but permits reasonable classification for the purpose of legislation which classification must satisfy the twin tests of classification being founded on an intelligible differntia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question.

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From the discussion three things emerge : (i) that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right subject to 1972 rules which are statutory in character because they are enacted in exercise of powers conferred by the proviso to Art. 309 and clause (5) of Art. 148 of the Constitution ; (ii) that the pension is not an ex-gratia payment but it is a payment for the past service rendered ; and (iii) it is a social welfare measure rendering socio-economic justice to those who in the hey-day of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch. It must also be noticed that the quantum of pension is a certain percentage correlated to the average emoluments drawn during last three years of service reduced to ten months under liberalised pension scheme. Its payment is dependent upon an additional condition of impeccable behaviour even subsequent to requirement, that is, since the cessation of the contract of service and that it can be reduced or withdrawn as a disciplinary measure.

With this background let us now turn to the challenge posed in these petitions. The challenge is not to the validity of the pension liberalisation scheme. The scheme is wholly acceptable to the petitioners, nay they are ardent supporters of it, nay further they seek the benefit of it. The petitioners challenge only that part of the scheme by which its benefits are admissible to those who retired from service after a certain date. In other words, they challenge that the scheme must be uniformly enforced with regard to all pensioners for the purpose of computation of pension irrespective of the date when the Government servant retired subject to the only condition that he was governed by the 1972 Rules. No doubt, the benefit of the scheme will be available from the specified date, irrespective of the fact when the concerned Government servant actually retired from service.

What then is the purpose in prescribing the specified date vertically dividing the pensioners between those who retired prior to the specified date and those who retire subsequent to that date? That poses the further question, why was the pension scheme liberalised ? What necessitated liberalisation of the pension scheme ?

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If it appears to be undisputable, as it does to us that the pensioners for the purpose of pension benefits form a class, would its upward revision permit a homogeneous class to be divided by arbitrarily fixing an eligibility criteria unrelated to purpose of revision, and would such classification be founded on some rational principle ? The classification has to be based, as is well settled, on some rational principle and the rational principle must have nexus to the objects sought to be achieved. We have set out the objects underlying the payment of pension. If the State considered it necessary to liberalise the pension scheme, we find no rational principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to government servants then those who retired earlier cannot be worst off than those who retire later. Therefore, this division which classified pensioners into two classes is not based on any rational principle and if the rational principle is the one of dividing pensioners with a view to giving something more to persons otherwise equally placed, it would be discriminatory. To illustrate, take two persons, one retired just a day prior and another a day just succeeding the specified date. Both were in the same pay bracket, the average emolument was the same and both had put in equal number of years of service. How does a fortuitous circumstance of retiring a day earlier or a day later will permit totally unequal treatment in the matter of pension ? One retiring a day earlier will have to be subject to ceiling of Rs. 8,100 p a. and average emolument to be worked out on 36 months' salary while the other will have a ceiling of Rs. 12,000 p.a. and average emolument will be computed on the basis of last ten months average. The artificial division stares into face and is unrelated to any principle and whatever principle, if there be any, has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. In fact this arbitrary division has not only no nexus to the liberalised pension scheme but it is counter productive and runs counter to the whole gamut of pension scheme. The equal treatment guaranteed in Art. 14 is wholly violated in as much as the pension rules being statutory in character, since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours difference in matter of retirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore the classification does not stand the test of Art.14. Further the classification is wholly arbitrary because we do not find a single acceptable or persuasive reason for this division. This arbitrary action violated the guarantee of Art. 14.

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That is the end of the journey. With the expanding horizons of socio-economic justice, the socialist Republic and welfare State which we endeavour to set up and largely influenced by the fact that the old men who retired when emoluments were comparatively low and are exposed to vagaries of continuously rising prices, the falling value of the rupee consequent upon inflationary inputs, we are satisfied that by introducing an arbitrary eligibility criteria: 'being in service and retiring subsequent to the specified date' for being eligible for the liberalised pension scheme and thereby dividing a homogeneous class, the classification being not based on any discernible rational principle and having been found wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being thoroughly arbitrary, we are of the view that the eligibility for liberalised pension scheme of being in service on the specified date and retiring subsequent to that date' in impugned memoranda, Exhibits P-I and P-2, violates Art. 14 and is unconstitutional and is struck down. Both the memoranda shall be enforced and implemented as read down as under:

In other words, in Exhibit P-1, the words:

"that in respect of the Government servants who were in service on the 31st March, 1979 and retiring from service on or after that date"

and in Exhibit P-2, the words:

"the new rates of pension are effective from 1st April 1979 and will be applicable to all service officers who became/become non-effective on or after that date."

are unconstitutional and are struck down with this specification that the date mentioned therein will be relevant as being one from which the liberalised pension scheme becomes operative to all pensioners governed by 1972 Rules irrespective of the date of retirement. Omitting the unconstitutional part it is declared that all pensioners governed by the 1972 Rules and Army Pension Regulations shall be entitled to pension as computed under the liberalised pension scheme from the specified date, irrespective of the date of retirement. Arrears of pension prior to the specified date as per fresh computation is not admissible. Let a writ to that effect be issued. But in the circumstances of the case, there will be no order as to costs.

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