Supreme Court Denies Pro-Rata Pension to Employee Under Voluntary Retirement Scheme: Central Bank of India vs. Tara Chand (2019)

Introduction

Date of the Judgment: July 31, 2019

Citation: (2019) INSC 750

Judges: Ashok Bhushan, J. and Navin Sinha, J.

Can an employee who opts for voluntary retirement under a specific scheme automatically receive pension benefits if they meet the eligibility criteria for the scheme, or must they also separately qualify under the pension regulations? The Supreme Court of India addressed this question in a recent case involving the Central Bank of India and one of its employees, Tara Chand. The core issue revolved around whether an employee who opted for voluntary retirement under the Central Bank of India Employees Voluntary Retirement Scheme, 2001, was entitled to pro-rata pension, even if they did not meet the minimum service requirements under the Central Bank of India (Employees’) Pension Regulations, 1995. The Supreme Court, in this case, held that eligibility to apply for voluntary retirement does not automatically guarantee pension benefits; the employee must also meet the pension eligibility requirements as per the pension regulations.

Case Background

The case involves a dispute between the Central Bank of India and one of its employees, Tara Chand, regarding his entitlement to pro-rata pension upon opting for voluntary retirement. The Central Bank of India (Employees’) Pension Regulations, 1995, came into force on October 26, 1995, and Tara Chand opted for this pension scheme. Subsequently, the Central Bank of India introduced the Employees Voluntary Retirement Scheme, 2001, effective from February 22, 2001, to March 8, 2001. Prior to the scheme’s implementation, the bank issued a circular on January 31, 2001, to clarify its provisions.

Tara Chand applied for voluntary retirement on February 23, 2001, which was accepted by the bank on March 26, 2001. However, on September 12, 2001, the bank denied him pro-rata pension, stating he did not meet the necessary service requirements under the pension regulations. Aggrieved, Tara Chand filed a writ petition challenging the bank’s decision. The Single Judge of the Rajasthan High Court allowed the writ petition, directing the bank to grant pro-rata pension, a decision upheld by the Division Bench of the Rajasthan High Court. The Central Bank of India then appealed to the Supreme Court.

Timeline

Course of Proceedings

The respondent, Tara Chand, filed a writ petition before the Rajasthan High Court challenging the Central Bank of India’s order dated September 12, 2001, which denied him pro-rata pension. The Single Judge of the High Court allowed the writ petition, setting aside the bank’s order and directing the bank to extend pro-rata pension benefits to Tara Chand. The bank then filed a Special Appeal before the Division Bench of the High Court, which was also dismissed. The Division Bench upheld the Single Judge’s decision, relying on the judgment of the Supreme Court in Bank of India and another Vs. K. Mohandas and others, (2009) 5 SCC 313, and concluded that Tara Chand was entitled to pension under the scheme since he was above 40 years of age and had completed 11 years of service. The Central Bank of India then appealed to the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Central Bank of India Employees Voluntary Retirement Scheme, 2001, and the Central Bank of India (Employees’) Pension Regulations, 1995.

The relevant provisions are:

• Clause 4 of the Scheme, 2001: This clause specifies the eligibility criteria for voluntary retirement. It states that all permanent employees of the bank are eligible to seek voluntary retirement if they have completed 15 years of service or have attained 40 years of age.
  
  “4. ELIGIBILITY:- 4.1All permanent employees of the Bank will be eligible to seek voluntary retirement under the scheme provided they meet the following eligibility criteria as on the date of application: – a)they have completed 15 years of service in the Bank OR b)40 years of age.”
• Clause 6(ii) of the Scheme, 2001: This clause deals with other benefits and states that an employee seeking voluntary retirement will be eligible for pension as per the Central Bank of India (Employees’) Pension Regulations, 1995.
  
  “6. OTHER BENEFITS:- An employee seeking voluntary retirement under the Scheme will be eligible for the following benefits in addition to the ex-gratia amount mentioned in Clause 5 above of this Scheme:- i)Gratuity as per Payment of Gratuity Act, 1972 or Gratuity payable under the Service Rules as the case may be, as per existing rules; ii)a)Pension (including commuted value of pension) as per Central Bank of India (Employees’) Pension Regulations 1995 (in case of those who have opted for Pension and otherwise eligible for the same) OR b) Bank’s contribution towards PF as per existing rules (in respect of employees opted to PF) iii)Leave encashment as per existing rules.”
• Regulation 14 of the Pension Regulations, 1995: This regulation defines the qualifying service for pension. It states that an employee who has rendered a minimum of ten years of service in the bank on the date of retirement or the date on which he is deemed to have retired shall qualify for pension.
  
  “Regulation 14.Qualifying Service – Subject to the other conditions contained in these regulations, an employee who has rendered a minimum of ten years of service in the Bank on the date of his retirement or the date on which he is deemed to have retired shall qualify for pension.”
• Regulation 28 of the Pension Regulations, 1995: This regulation, as amended with effect from September 1, 2000, states that pension shall also be granted to an employee who opts to retire before attaining the age of superannuation, but after rendering service for a minimum period of 15 years.

Arguments

The arguments presented by both sides are as follows:

Appellant’s Arguments (Central Bank of India)

• The appellant contended that Clause 6(ii) of the Scheme, 2001, clearly states that an employee seeking voluntary retirement will be eligible for pension only as per the Pension Regulations, 1995.
• They argued that eligibility to apply under the Scheme, 2001, does not automatically entitle an employee to receive pension. An employee is entitled to pension only if they meet the criteria under the Pension Regulations, 1995.
• The appellant submitted that as per Regulation 28 of the Pension Regulations, 1995, which was amended with effect from September 1, 2000, an employee is entitled to pension if they retire before superannuation but after rendering a minimum of 15 years of service. Since the respondent had not completed 15 years of service, he was not entitled to pension.
• The appellant relied on the judgments in Bank of Baroda and others vs. Ganpat Singh Deora, (2009) 3 SCC 217, Punjab National Bank and others vs. Ram Kishan, (2014) 13 SCC 485, and Regional Manager, Punjab National Bank and another vs. Dharam Pal Singh, (2014) 13 SCC 484, to support their argument that the respondent was not eligible for pension.

Respondent’s Arguments (Tara Chand)

• The respondent argued that Clause 4 of the Scheme, 2001, states that an employee who has completed 15 years of service or 40 years of age is eligible to seek voluntary retirement and is also eligible for pension. The respondent, having completed 40 years of age, was eligible.
• The respondent submitted that Regulation 14 of the Pension Regulations, 1995, states that an employee who has rendered a minimum of 10 years of service in the bank on the date of retirement qualifies for pension. Since the respondent had rendered 11 years of service, he was eligible for pension.
• The respondent relied on the judgments in Bank of India and another Vs. K. Mohandas and others, (2009) 5 SCC 313 and National Insurance Company Limited and another vs. Kirpal Singh, (2014) 5 SCC 189, to support his claim for pension.
• The respondent further argued that since he applied for pension in 2001 and had been waiting for 18 years, the Court should not interfere with the High Court’s judgment.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the respondent, who opted for voluntary retirement under the Central Bank of India Employees Voluntary Retirement Scheme, 2001, was entitled to pro-rata pension, even though he did not meet the minimum service requirements under the Central Bank of India (Employees’) Pension Regulations, 1995.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following cases and provisions:

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of the relevant statutory provisions and the need to adhere to the established legal framework. The Court emphasized that eligibility for voluntary retirement under a scheme does not automatically translate to pension eligibility. The Court’s reasoning was based on the following points:

• The Court stressed that Clause 6(ii) of the Scheme, 2001, clearly states that pension eligibility is governed by the Central Bank of India (Employees’) Pension Regulations, 1995. This clause explicitly links pension benefits to the pension regulations, not just the eligibility criteria for the voluntary retirement scheme.
• The Court highlighted that Regulation 28 of the Pension Regulations, 1995, as amended, specifies that employees retiring before superannuation are eligible for pension only if they have completed a minimum of 15 years of service. The respondent, having completed only 11 years of service, did not meet this requirement.
• The Court distinguished the case of Bank of India and another Vs. K. Mohandas and others, stating that it dealt with a different issue of notional service and was not relevant to the present case. The present case was about eligibility for pension based on the length of service.
• The Court also distinguished National Insurance Company Limited and another vs. Kirpal Singh, noting that it involved different regulations and a different scheme.
• The Court followed the judgment in Bank of Baroda and others vs. Ganpat Singh Deora, which was directly on point and held that an employee who opts for voluntary retirement under a scheme is not automatically entitled to pension unless they meet the minimum service requirements under the pension regulations.
• The Court rejected the argument that the respondent should be granted pension due to the long delay, stating that statutory requirements must be adhered to, regardless of the time elapsed.

Key Takeaways

• Eligibility to apply for voluntary retirement under a scheme does not automatically guarantee pension benefits. Employees must also meet the specific pension eligibility criteria as per the relevant pension regulations.
• For voluntary retirement before superannuation, a minimum of 15 years of service is required to qualify for pension under the Central Bank of India (Employees’) Pension Regulations, 1995.
• Courts will adhere to the statutory requirements and legal framework, even in cases where there has been a significant delay in the resolution of the matter.

Directions

The Supreme Court set aside the judgments of the High Court and dismissed the writ petition filed by the respondent. The parties were directed to bear their own costs.

Development of Law

The ratio decidendi of this case is that eligibility for voluntary retirement under a specific scheme does not automatically guarantee pension benefits. The employee must also meet the specific requirements for pension eligibility under the relevant pension regulations. This judgment reinforces the principle that pension benefits are governed by the pension regulations and not merely by the eligibility criteria of a voluntary retirement scheme. This clarifies that the eligibility for a voluntary retirement scheme does not automatically confer pension benefits.

Conclusion

In the case of Central Bank of India vs. Tara Chand, the Supreme Court held that an employee who opts for voluntary retirement under a specific scheme is not automatically entitled to pro-rata pension if they do not meet the minimum service requirements under the relevant pension regulations. This decision clarifies that eligibility for a voluntary retirement scheme does not automatically confer pension benefits, and that pension eligibility is governed by the specific terms of the relevant pension regulations. The Court emphasized the importance of adhering to the statutory requirements and legal framework, even in cases where there has been a significant delay in the resolution of the matter.