ISSAC T M versus THE IDUKKI DISTRICT CO-OPERATIVE BANK LTD & ORS. on 12 July 2019

[2019] 10 S.C.R. 551

ISSAC T M

v.

THE IDUKKI DISTRICT CO-OPERATIVE BANK LTD & ORS.

(Civil Appeal No.5430 of 2019)

JULY 12, 2019

[DR DHANANJAYA Y CHANDRACHUD ANDINDIRA BANERJEE, JJ.]

Service Law – State Co-operative Bank and District Co-operative Bank Employees Self Financing Pension Scheme 2005 –First respondent-co-operative bank decided to implement the 2005Pension Scheme, formulated by the Government of Kerala, for theemployees retiring on or after 1[st] May, 2005 – Disciplinaryproceedings initiated against the appellant, employee of the Bank– Appellant retired on 31 Jan.2007 – His pension was held up –Bank called upon the appellant to indicate his willingness to jointhe Pension Scheme – Appellant indicated his willingness and wasenrolled in the Pension Scheme – Grievance of the appellant that,despite him having conveyed his willingness to join the PensionScheme, the pension records were not forwarded by the Bank to thesecond respondent-Board which administers the Pension Scheme –Committee constituted by the Bank to look into the allegationslevelled against the appellant, opined that there was no merit in theallegations and he was entitled to his terminal dues includingpension – However, disbursement of the retiral dues was being heldup – High Court dismissed appellant’s writ petition inter alia seekingsanction of his pensionary dues w.e.f 1[st] February, 2007– Onappeal, held: Eligibility of the appellant to pension under the PensionScheme is not in dispute – Pension Scheme stipulates thatsuperannuation pension shall commence from the beginning of themonth succeeding the month in which the employee retires fromservice after attaining the age of superannuation – Appellant isentitled to pension w.e.f 1[st] February, 2007 – Bank did not forwardthe pension papers to the Board purportedly because of thedisciplinary proceedings – It was only after the appellant wasexonerated that he was finally intimated of the remittance whichwas required to be made, which the appellant did on the same day –

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ANo reason for the Bank to hold up the disbursal of the pensionarydues at the material time by not forwarding all the connected papersand information to the Board – Entitlement of the appellant cannotbe denied – Ordered accordingly – Impugned judgment set aside.The first respondent-co-operative bank decided toBimplement the State Co-operative Bank and District Co-operativeBank Employees Self Financing Pension Scheme 2005,formulated by the Government of Kerala for the employees ofthe State Co-operative Bank and District Co-operative banks,for its employees retiring on or after 1[st] May 2005. The appellantwas an employee of the bank in the State of Kerala, who enteredCservice in 1978 and rendered nearly 29 years of service beforeattaining the age of superannuation on 31[st] January, 2007.Disciplinary proceedings were initiated against the appellant andpayment of his pension was held up. The bank in March 2007called upon the appellant to indicate his willingness to join theDPension Scheme. The appellant indicated his willingness. As perthe appellant, the pension records of the appellant were notforwarded by the Bank to the Board which administers thePension Scheme. The Bank constituted a Sub-Committee to lookinto the allegations levelled against the appellant. The Committee opined that there was no merit in the allegations against theEappellant and he was entitled to his terminal dues includingpension. However, the disbursement of the retiral dues was beingheld up. The appellant instituted writ petition before the HighCourt seeking sanction of his pensionary dues w.e.f 1[st] February,2007 and the payment of arrears together with interest untilF1[st] November, 2013, when eventually the pensionary dues werepaid. The High Court dismissed the writ petition.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD: 1.1 The eligibility of the appellant to pension underthe State Co-operative Bank and District Co-operative BankGEmployees Self Financing Pension Scheme 2005 is not in dispute.The appellant is an employee who retired from service after 31March 2005 and is eligible under para 5(1)(i) of the PensionScheme. Para 19 of the Pension Scheme stipulates thatsuperannuation pension shall commence from the beginning ofH

the month succeeding the month in which the employee retiresfrom service after attaining the age of superannuation. In termsof the provisions contained in paragraph 19 of the PensionScheme, the appellant is entitled to pension with effect from 1February 2007. The entitlement of the appellant to receivepension with effect from 1 February 2007 was denied on the basisof para 5(2) of the Pension Scheme by the Single Judge and inappeal. The provisions contained in paragraph 5.2 have been heldto be ultra vires in a judgment of a Single Judge of the KeralaHigh Court in T K Jayan vs State of Kerala & Ors .The SingleJudge held that Banks which are governed by the PensionScheme are under an obligation in terms of para 29 of the PensionScheme to transfer the employer’s contribution together withinterest accrued thereon. Any delay on the part of a Bank cannotresult in detrimental consequences for the retirees.[Paras 15, 16] [588-B-E]

1.2 The Bank did not forward the pension papers to thesecond respondent-Board purportedly because of the disciplinaryproceedings. Evidently, it was only after the appellant wasexonerated on 28 September 2013 that on 12 October 2013 thathe was finally intimated of the remittance which was required tobe made, which the appellant did on the same day. No reason orjustification is found for the Bank to hold up the disbursal of thepensionary dues at the material time by not forwarding all theconnected papers and information to the second respondent. Sincethe entitlement of the appellant cannot be denied, the followingorder will meet the ends of justice: (i) The second respondentshall within a period of four weeks from today, pay over to theappellant, the arrears of pension between 1 February 2007 and 1November 2013; (ii) In the event that any interest is required tobe paid on account of the delayed receipt of the contribution bythe Bank, this shall be computed within a period of four weeksfrom the date of the receipt of a certified copy of this order andintimated to the first respondent; (iii) Within one week of thereceipt of the communication referred to in clause (ii) above, thefirst respondent shall remit the amount to the second respondent;and (iv) The arrears that are due and payable to the appellantshall be paid over within a period of two months of the receipt of A

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Aa certified copy of this order. The impugned judgment of the HighCourt is set aside. [Paras 17-19] [558-G; 559-A-G]

T K Jayan v. State of Kerala & OrsDecision of KerelaHigh Court dated 11[th] April, 2017 in Writ Petition(Civil) No. 29901/2012 – referred to.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No.5430 of

From the Judgment and Order dated 06.08.2018 of the High Courtof Kerala at Ernakulam in W.A. No. 2681 of 2015

Abir Phukan, M/s. KMNP LAW AOR, Advs. for the Appellant.

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P. V. Surendranath, Sr. Adv., Ms. Resmitha R. Chandran, LekhaSudhakran, P.V. Dinesh, Mukund P., T. P. Sindhu, Advs. for theRespondents.

The Judgment of the Court was delivered byDDR DHANANJAYA Y CHANDRACHUD, J.

1. Leave granted.

2. This appeal arises from a judgment dated 6 August 2018 of aDivision Bench of the High Court of Kerala[1] by which the order of theElearned Single Judge dismissing the Writ Petition filed under Article 226of the Constitution of India has been affirmed.

3. The appellant was an employee of the first respondent, a co-operative bank in the State of Kerala. He entered service in 1978 andrendered nearly 29 years of service before attaining the age ofFsuperannuation on 31 January 2007. The Government of Keralaformulated a self-financing pension scheme called the State Co-operativeBank and District Co-operative Bank Employees Self Financing PensionScheme 2005[2] for the employees of the State Co-operative Bank andDistrict Co-operative banks.

G4. Para 3 of the Pension Scheme constituted a pension fund.Para 5 provided for eligibility to receive pension in the following terms:- 1Writ Appeal No. 2681 of 2015

2“Pension Scheme”

“5. Eligibility for Pension. (1) Subject to the provisions of theScheme, the following persons shall be eligible for pension,namely :-

(i) Every employee of a bank;

(ii) Employees who have retired from the service of a Bank inbetween 1[st] January, 1974 and 31[st] March, 2005:

Provided that in respect of the employees who have retired inbetween 1[st] January, 1974 and 31[st] March, 1993, only those whoare alive on the date of publication of the scheme in the officialGazette shall be eligible for pension:

Provided also that an employee who has received the ContributoryProvident Fund and is in receipt of pension from any other pensionscheme shall be eligible for pension only on the remittance ofentire portion for the employers contribution to him, to the corpusof the fund.

(2) In respect of Persons mentioned in clause (i) and (ii) of sub-paragraph (1) pension shall be payable only from the succeedingmonth of the month on which the remittance of entire portion ofthe employers’ contribution to pension fund is made and no arrearsof pension shall be payable to the month of such remittance.

(3) Persons retired from the service of a Bank in between 1[st]January, 1974 and 31[st] March, 1993, and who are alive on thedate of publication of the scheme in the official Gazette shall beeligible for monthly pension only and no family pension shall bepayable on the death of such person.”

Para 7 provided for qualifying service. Para 19 which providedfor the payment of pension is extracted below:- “19. Payment of Pension – Pension under the Scheme shall bepayable per mensum which shall commence,

(i) In the case of superannuation pension, from the beginning ofthe month succeeding the month in which the employeeretires from the service of the Bank after attaining the age of58 years.

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A(ii) In the case of retiring pension, from the date succeeding thedate on which the employee retires voluntarily from theservice of Bank; and

(iii) In the case of family pension, from the date succeeding thedate of death of the employee or the pensioner, as the casemay be.”

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6. By a communication dated 30 May 2006, the first respondentinformed its employees of the decision which was taken by the Bank toimplement the Pension Scheme for its employees retiring on or after 1May 2005. A week before the appellant was to retire from service, theCbank issued a show cause notice to him on 24 January 2007 in pursuanceof which disciplinary proceedings were initiated. As a result of thedisciplinary proceedings, a liability of Rs 6.76 lakhs was fastened uponthe appellant on 5 October 2007 and he was intimated that his retiraldues will be released after deducting the amount.

D7. As a result of the disciplinary proceedings, the payment ofpension was held up in spite the appellant’s letter dated 19 October 2007addressed to the Board, raising objections[3]. On 15 March 2007, the firstrespondent called upon the appellant to indicate his willingness to jointhe Pension Scheme and to remit an amount of Rs 8,30,651 inclusive ofinterest at the rate of 12 per cent per annum between February 2007Eand March 2010.

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8. While indicating his willingness, the appellant by a letter dated30 March 2010 objected to the payment of interest computed at the rateof 12 per cent on the employer’s share, stating that he would be willingto pay interest at the standard rate on which interest is computed on theFprovident fund.

9. On 16 April 2010, the appellant was enrolled in the PensionScheme and was allotted a docket number. The grievance of the appellantis that, despite him having conveyed his willingness to join the PensionScheme, the pension records were not forwarded by the Bank to theGBoard which administers the Pension Scheme, consequent upon which,he addressed a letter on 15 January 2011 to the Bank and the Board. On31 January 2011, the first respondent informed the appellant that hisapplication for pension would be decided only after the disposal of thecases pending before the High Court of Kerala.

3The Kerala State Employees Pension Board is the second respondent.

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10. Despite repeated representations, the appellant’s efforts failedto bear fruit. The appellant filed a writ petition before the High Courtwhich was disposed of with a direction to the Bank to consider hisrepresentation. Following the order of the Kerala High Court dated 27August 2013, the first respondent constituted a Sub Committee to lookinto the allegations which were levelled against the appellant. TheCommittee opined that there was no merit in the allegations against theappellant and that he was entitled to his terminal dues including pension.Upon the decision of the Committee which was rendered on 28 September2013, the first respondent informed the appellant of the decision to disbursehis retiral dues and to recommend the payment of pension. The appellantwas called upon to deposit an amount of Rs 6,48,565 which he did on thesame day.

11. Since the disbursement of the retiral dues was being held up,the appellant moved the Registrar of Co-operative Societies. By hisorder dated 17 May 2014, the Secretary, Kerala State Co-operativeEmployee Pension Board directed the payment of interest with effectfrom 1 November 2013. Subsequently, by an order dated 18 March 2015,the Joint Registrar of Co-operative Societies directed the payment ofinterest on the retiral dues.

12. The appellant instituted a writ petition before the Kerala HighCourt seeking sanction of his pensionary dues with effect from 1 February2007 and the payment of arrears together with interest until 1 November2013, when eventually the pensionary dues were paid. The Writ Petitionwas dismissed by the learned Single Judge of the High Court on theground that para 5(2) of the Pension Scheme stipulated that pensionshall be paid only from the month succeeding the month in which remittanceof the employer’s contribution is made. The learned Single Judge heldthat in view of the pendency of the disciplinary proceedings, the disbursalof the employer’s contribution has been held up and in consequence,para 5 disabled the appellant from the benefit of pension with effectfrom the date of his retirement. This view of the learned Single Judgehas been upheld by the judgment of the Division Bench in the Writ Appeal.

13. Assailing the judgment of the Division Bench, a Special LeavePetition was filed under Article 136 of the Constitution of India.

14. We have heard Mr. Abir Phukan, learned counsel appearingon behalf of the appellant, Mr P V Surendranath, learned Senior Counsel A

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Aappearing on behalf of the first respondent and Mr P V Dinesh, learnedcounsel appearing on behalf of the second respondent.

15. The eligibility of the appellant to pension under the PensionScheme is not in dispute. The appellant is an employee who retired fromservice after 31 March 2005 and is eligible under para 5(1)(i) of theBPension Scheme. Para 19 of the Pension Scheme stipulates thatsuperannuation pension shall commence from the beginning of the monthsucceeding the month in which the employee retires from service afterattaining the age of superannuation. In terms of the provisions containedin paragraph 19 of the Pension Scheme, the appellant is entitled to pensionwith effect from 1 February 2007.C

16. The entitlement of the appellant to receive pension with effectfrom 1 February 2007 was denied on the basis of para 5(2) of the PensionScheme by the learned Single Judge and in appeal. The provisionscontained in paragraph 5.2 have been held to be ultra vires in a judgmentof a Single Judge of the Kerala High Court in T K Jayan vs State ofDKerala & Ors[4] .The learned Single Judge has held that Banks whichare governed by the Pension Scheme are under an obligation in terms ofpara 29 of the Pension Scheme to transfer the employer’s contributiontogether with interest accrued thereon. Any delay on the part of a Bankcannot result in detrimental consequences for the retirees. The substantiveErelief which has been granted in the judgment of the learned Single Judgeis in the following terms:- “I, therefore, strike down sub-paragraph (2) of paragraph 5 tosuch extent and declare that the employees of Banks, who werein service as on 01.04.2005 will be entitled to arrears of pension,Fprovided the respective Banks had remitted the employer’scontribution to the pension corpus with eligible interest andadditional interest of 25%, if attracted, under paragraph 29 of theScheme.”

17. During the course of the hearing, it has emerged before theGCourt that while the Bank, informed the appellant by its letter dated 15March 2010 of the amount which was required to be deposited by him(Rs 8,30,651), this was inclusive of interest at the rate of 12 per cent forthe period 2007-2008. Evidently, the appellant had objections to thedemand of interest at the rate of 12 per cent per annum. The Bank did H4 Writ Petition (Civil) No. 29901/2012 decided on 11 April 2017

not forward the pension papers to the second respondent-Boardpurportedly because of the disciplinary proceedings. On 31 May 2011,the Bank informed the appellant that his application for pension wouldbe considered only after the disposal of the cases which were initiatedby the appellant against the Bank. Evidently, it was only after the appellantwas exonerated on 28 September 2013 that on 12 October 2013 that hewas finally intimated of the remittance which was required to be made,which the appellant did on the same day. We find no reason or justificationfor the Bank to hold up the disbursal of the pensionary dues at the materialtime by not forwarding all the connected papers and information to thesecond respondent.

18. Since the entitlement of the appellant cannot be denied, weare of the view that the following order will meet the ends of justice:

(i) The second respondent shall within a period of four weeks fromtoday, pay over to the appellant, the arrears of pension between1 February 2007 and 1 November 2013;

(ii) In the event that any interest is required to be paid on account ofthe delayed receipt of the contribution by the Bank, this shall becomputed within a period of four weeks from the date of thereceipt of a certified copy of this order and intimated to the firstrespondent;

(iii Within one week of the receipt of the communication referred toin clause (ii) above, the first respondent shall remit the amountto the second respondent; and

(iv) The arrears that are due and payable to the appellant shall bepaid over within a period of two months of the receipt of acertified copy of this order.

19. The appeal is allowed in the above terms. The impugnedjudgment of the High Court is set aside. There shall be no order as tocosts.

20. Pending application(s), if any, shall stand disposed of.

Divya Pandey

Appeal allowed.

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