Court Order On Special Allowance as ‘Pay’ for GRATUITY & PENSION.

Sub: Reckoning Special Allowance as ‘Pay’ for  GRATUITY & PENSION.
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The need for this representation arose in view of averments made by Hon’ble Supreme Court of India, bench consisting of Hon’ble Justices Sri. Arun Mishra and Sri. Amitava Roy in the Civil Appeal No.5525 of 2012 between Bank of Baroda & another (appellants) and Sri. Palani & others (respondents). This case pertains to Joint Note dated 14.12.1999 between IBA and Officers’ Associations regarding fixation of ‘pay’ for the purpose of pension in respect of officers who retired on or after 1.4.1998. The Hon’ble Supreme Court in their Judgment dated 13.2.2018 dismissed the appeal filed by the Banks and allowed the appeal of the respondents. The Court also ordered that amount that is due and payable be paid with 9% interest within four months.

The averments made by Hon’ble Supreme Court in the above judgment have overwhelming bearing and similarities on my present representation.

1. I wish to draw your kind attention to the following averments made by Hon’ble Supreme Court in their Judgment while dismissing the appeal of the Banks:

i) Rigour of Regulations - Para 15 (page 10):
The regulations (Bank (Employees) Pension Regulation of 1995*) have statutory force, having been framed in exercise of the powers under Section 19(2)(f) of the Act of 1970 and are binding. They could not have been supplanted by any executive fiat or order or Joint Note, which has no statutory basis.  The Joint Note of the officers also had no statutory force behind and could not have obliterated any of the provisions of Act of 1970 or the existing Regulations. Thus, Joint Notes could, not have taken away the rights that were available under the Pension Regulations of 1995 to the Officer. (*emphasis added)

ii) Pension as a right - Para 23 (page 15):
Pension is a right and is not a bounty, and cannot be dealt with arbitrarily. In the instant cases the existing provisions could not have been amended with retrospective effect, taking away accrued rights on the basis of joint note which had no statutory backing.

iii) Joint Note not to supplant / override Statutory Regulations - Para 28 (page 19):
a) Joint Note/agreement could not have been in derogation of the existing statutory Regulations and regulation 2 (s) (c) could not have been given retrospective effect.

b) It is also apparent from the decisions of this court in P. Sadagopan Vs Food Corporation of India, (1997) 4 SCC 301, that executive instructions cannot be issued in derogation of the statutory Regulation. The settled position of law is that no Government Order, Notification or Circular can be a substitute of the statutory rules framed with the authority of law.

c) In Dr. Rajinder Singh Vs State of Punjab & Ors (2001) 5 SCC 482, this Court had reiterated that the settled position of law is that no government order, notification or circular can be a substitute of the statutory rules framed with the authority of law.

d) In K.Kuppsamy and Anr. Vs State of Tamil Nadu, (1998) 8 SCC 469, this court has observed that statutory rules cannot be overridden by executive orders or executive practice. Merely because the Government had taken a decision to amend the rules, does not mean that rule stood obliterated. Till the rule is amended, the rule applies.

iv) By Joint Note no estoppel created - Para 29 (page 20):
And
a) Thus in our opinion ………….. arbitrary exercise of power. Besides, there was no binding statutory force of the so called Joint Note of Officers’ Association, as admittedly to Officers’ Association even the provision of Industrial Disputes Act was not applicable and joint note had no statutory support., and it is not open to forgo the benefits available under the Regulations to those Officers who have retired …….. and thereafter and to deprive them of the benefits of the Regulations. Thus, by the Joint Note that has been relied upon, no estoppel said to have been created. There is no estoppels as against enforcement of statutory provisions.

b) The Joint Note had no force of law and could not have been against the spirit of the statutory Regulations and the basic service conditions, as envisaged under the Regulations framed under the Act of 1970. They could not have been tinkered with in an arbitrary manner, as has been laid down by this court in Central Inland Water Transport Corporation Limited and Anr. Vs. Brojo Nath Ganguly and Anr., (1986) 3 SCC 156 & Delhi Transport Corporation vs.D.T.C Mazdoor Congress, (1991) Supp.1 SCC 600.
v) Pension as a social security plan - Para 21(page 14):

In All India Reserve Bank Retired Officers Association and Ors Vs Union of India and Ors., (1992) Supp1.1 664, this Court observed:

“5. The concept of pension is now well known and has been clarified by this Court time and again. It is not a charity or bounty nor is it gratuitous payment solely dependent on the whim or sweet will of the employer. It is earned for rendering long service and is often described as deferred portion of compensation for past service. It is in fact in the nature of a social security plan to provide for December of life of a superannuated employee. Such social security plans are consistent with the socio economic requirements of the Constitution when the employer is a State within the meaning of Article 12 of the Constitution.”

vi) Rights accrued cannot be taken away with retrospective effect-Para 24 (page 16):
The rights that have accrued cannot be taken away with retrospective effect, as laid down by the Court in Chairmen, Railway Board & Ors vs C.R. Rangadhamaiah & Ors(1997) 6 SCC 623. This Court has dealt with the vested rights and whether they can be taken away by retrospective amendments. This Court observed:
“24. In many of these decisions the expressions “vested rights”or “accrued rights” have been used while striking down the impugned provisions which had been given retrospective operation so as to have an adverse effect in the matter of promotion, seniority, substantive appointment, etc. of the employees. The said expressions have been used in the context of a right flowing under the relevant rule which sought to be altered with effect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an amendment having retrospective operation which has the effect of taking away a benefit already available to the employee under the existing rule is arbitrary, discriminatory and violative of the rights guaranteed under Articles 14 and 16 of the Constitution”. 

(A copy of Supreme Court judgment dated 13.2.2018 is enclosed for ready reference). 
2. I wish to draw your attention to the following clauses of Bank of Baroda (Employees’) Pension Regulations, 1995 in particular.

a) Chapter I, Para (2) (d): “average emoluments”:

“average emoluments” means the average of the pay drawn by an employee during the last ten months of his service in the Bank:

b) Chapter I, Para (2) (s) (c) : “Pay” (Ref: Notified in Gazette of India dt.30.11.2002 /HO Circular 265/2002 dt.24.12.2002):
“pay” includes, in relation to employee who retired or dies while in service on or after the 1st day of April 1998-

(i) the basic pay including stagnation increments, if any; and

(ii) all other components of pay counted for the purpose of making contribution to the Provident Fund and for payment of dearness allowance; and

(iii)  increment component of Fixed Personal Allowance; and

(iv)  dearness allowance calculated upto index number 1616 points in the All India Average Consumer Price Index for industrial workers in the series 1960=100:

3. Introduction of Special Allowance in the Joint Note dated 25.5.2015.

In the Joint Note dated 25.5.2015 entered into by Indian Banks’ Association (IBA) and Officers’ Associations, concept of Special Allowance was introduced w.e.f 1.11.2012. I am reproducing herein below Annexure I, Para 6 of Joint Note on special allowance for Officers:

With effect from 1.11.2012, officers shall be paid Special Allowance as under:
Scale I-III -       7.75% of Basic Pay + applicable Dearness Allowance thereon
Scale IV-V -      10% of Basic Pay + applicable Dearness Allowance thereon
Scale VI-VII-    11% of Basic Pay + applicable Dearness Allowance thereon
Note: The special allowance with applicable DA there on shall not be reckoned for superannuation benefits, viz pension including NPS, PF and Gratuity.

4. Case for setting right the injustice of non-reckoning of Special Allowance as “pay” for pension to undersigned who retired on 31.7.2014:

In the light of various averments made by Hon’ble Supreme Court, I wish to submit the following for your kind consideration:
a) Board of Directors of the Bank in exercise of their powers conferred under Clause (f) of sub-section (2) of Section 19 of Banking Companies (Acquisition and Transfer of Undertakings Act, 1970 in consultation with Reserve Bank of India and with the previous sanction of Central Government, notified in the Gazette of India – Extraordinary dated 29.9.1995, the Bank Of Baroda  (Employees’) Pension Regulations, 1995. Further, amendments to the pension regulations made from time to time are effective from date on which these amendments are published in Official Gazette in terms of Pension Regulation Chapter I, (2) (r). Therefore, Pension Regulations are statutory in nature.

b) As observed by the Hon’ble Supreme Court, Pension Regulations have statutory force and are binding. Pension Regulations being statutory, cannot be supplanted by any executive fiat or order or Joint Note as the same have no statutory basis. The Hon’ble Court has cited its various earlier judgments as detailed under Para (1) (iii) of this representation and has time and again reiterated its stated position.
Under Para 2 of Joint Note dated 25.5.2015, it is stated –

“IBA agreed that it shall recommend to the Public Sector Banks, as in Annexure II, to initiate the process of amending the Officers’ Service Regulations and Bank Employees’ Pension Regulations, 1995 dated 29th September 1995/26th March 1996, in order to implement what is stated in Annexure I. The IBA shall also recommend to the Government of India to approve the amendments and to issue appropriate guidelines necessary for this purpose”.

It is pertinent here to draw your attention to the fact that in K.Kuppsamy and Anr. Vs State of Tamil Nadu, (1998) 8 SCC 469, Hon’ble Supreme Court has observed that merely because the Government had taken a decision to amend the rules, does not mean that rule stood obliterated. Till the rule is amended, the rule applies.

Therefore, in the light of the above observation, I wish to submit that any amendment to Bank Employees’ Pension Regulations will come into force once the amended regulation is published in Gazette of India and not from effective date of implementation of Joint Note ie., 1.11.2012.  Hence, the Joint Note dated 25.5.2015 has no force of law and the same is against the spirit of the statutory regulations as regards to Pension benefits of the undersigned.

c) As notified in Gazette of India dt.30.11.2002 /HO Circular 265/2002 dt.24.12.2002) Chapter I, Para (2) (s) (c) (ii) of  Bank of Baroda (Employees’) Pension Regulations, 1995 has been explicit in stating that all other components of pay counted for the purpose of payment of dearness allowance be considered as “pay”. This was the position as per statute on the day of Joint Note that was entered into ie., on 25.5.2015.

The Hon’ble Supreme Court has held that Joint Note has no force of law and cannot supplant Pension Regulations, which are binding. Since Para (2) (s) (c) (ii) of pension regulations is a statutory provision, it is binding on the Bank to consider the Special allowance which attracts DA as “pay” for pension benefit of undersigned, who retired from services on 31.7.2014.

d) Under Para 8 of Annexure I of Joint Note dated 25.5.2015 between IBA and Officers’ Associations, it is stated –

Pension (including State Bank of India)
“With effect from 1st November 2012, the pay drawn under this Joint Note by the Officers who are members of Pension Fund shall be taken into consideration for the purpose of calculation of pension as per the Pension Fund Rules/ Regulations in force”.
The above has been specifically added in the Joint Note as Special Allowance attracting DA was to be excluded from pay for the purpose of deciding Superannuation benefits.

I wish to state that the undersigned retired from the service well before Joint Note was entered into. As already elaborated, Joint Note cannot supplant / replace the Statutory Regulations that are in force. In fact, Pension Regulations were amended as late as January 2018. Therefore, in terms of Para (2) (s) (c) (ii) of Pension Regulations as was in force on the date of Joint Note / Retirement of the undersigned, it is obligatory on the Bank to consider the Special allowance which attracts DA as “pay” for pension benefit of undersigned.
e) In Annexure I, foot note to Para 6 of Joint Note dated 25.5.2015 on Special Allowance, it is stated –
“The Special Allowance with applicable DA thereon shall not be reckoned for superannuation benefits, viz, pension including NPS, PF and Gratuity.”

The above foot note was inserted as the pension regulation that was in force on the day of Joint Note dt. 25.5.2015, provided for considering Special Allowance as “pay” for pension benefit as the same attracted applicable DA. In fact, Special Allowance stands on the same footing as “Basic Pay”, since it attracts applicable DA and is linked to basic pay. Nomenclature of Special Allowance was introduced with the ulterior motive of circumventing / by-passing of pension regulations in order to deny the pension benefits.

It is pertinent to state here that Hon’ble Supreme Court has observed that the Joint Note cannot be in derogation of the existing statutory regulations. The Court has made reference to its earlier judgment that reckonable emoluments which are the basis for computation of pension are to be taken on the basis of emoluments payable at the time of retirement.(Indian Ex-services League & Ors Etc V. Union of India & Ors Etc., [1991] 2 SCC 104( Page 17 of judgment).
Joint Note dated 25.5.2015 has resulted in derogation of existing Statutory Regulations. As Special Allowance attracted applicable DA and hence is eligible to be considered as ‘pay” for pension as per regulation Chapter I, (2) (s) (c) (ii). Therefore, Special Allowance has to be reckoned for pension benefit of the undersigned.

f) The undersigned retired from the service of the Bank w.e.f Dt:--------- .. Special Allowance with applicable DA was paid to me with effect from 1.11.2012 and was to be eligible for treating as ‘pay’ for pension in terms of Pension Regulation 2 (s) (c) (ii). This status was attempted to be altered by the foot note to the Special Allowance clause of Joint Note dated 25.5.2015. Also, attempt has been made to give retrospective effect to the Special Allowance clause of Joint Note by introducing Clause (d) after Clause 2 (s) (c) of Pension Regulations by way of amendment notified vide Gazette Notification No.HRS IRS 228A SJ 2914 2017 dated 13.1.2018 (HO Circular 107/2018 dt.27.2.2018).   

In this regard, I wish to state as under:

i) As observed by Hon’ble Supreme Court, Pension is a right and is not a bounty, and cannot be dealt with arbitrarily or tinkered with in an arbitrary manner(Ref. case: Central Inland Water Transport Corporation Limited & Anr. Vs Brojo Nath Ganguly & Anr.,(1986) 3 SCC 156 & Delhi Transport Corporation vs. D.T.C Mazdoor Congress, (1991) Supp.1 SCC 600). Regulations having statutory force are binding and cannot be supplanted by any executive order or Joint Note which has no statutory basis (Para 15 & 23 of judgment).

I retired from services on 31.7.2014. Therefore, the Joint Note dated 25.5.2015 has no statutory force and denial of reckoning of Special Allowance for my pension benefit is arbitrary, has no legal sanction and bad in the eye’s of law.
ii) Sub-Clause (d) to Clause 2 (s) of pension regulation has been introduced (Ref: Gazette Notification No.HRS IRS 228A SJ 2914 2017 dated 13.1.2018 /HO Circular 107/2018 dt.27.2.2018) in order to give retrospective effect for denial of Special Allowance for pension benefit. While dismissing the appeal of Banks, the Hon’ble Supreme Court has struck down amendment of introducing sub-clause (c) to regulation 2 (s) in respect of employees retired after 1.4.1998  as it could not have been enacted retrospectively to take away accrued rights and the same is held arbitrary and irrational (Para 33 of judgment).

The Hon’ble Supreme Court has also held as pronounced in Chairman, Railway Board & Ors vs. C.R. Rangadhamaiah & Ors (1997) 6 SCC 623 that an amendment having retrospective operation which has the effect of taking away a benefit already available to the employee under the existing rule is arbitrary, discriminatory and violative of the rights guaranteed under Articles 14 and 16 of the Constitution.

Any amendment to the pension regulation is effective from date of notification in the Official Gazette in terms of Chapter I, Clause (2) (r) of pension regulations. I, having retired from service of the Bank on……… ., reckoning of Special Allowance as “pay” is my accrued / vested rights under Chapter I, Clause (2) (s) (c) (ii) of pension regulations. Introduction of sub-clause (d) to regulation 2 (s) vide Notification No. HRS IRS 228A SJ 2914 2017 dated 13.1.2018 (HO Circular 107/2018 dt.27.2.2018) with retrospective effect is arbitrary, irrational, amounts to taking away a benefit already available to the employee and thus is violative of rights guaranteed under Articles 14 and 16 of the Constitution. Therefore, I pray that Special Allowance be considered as “pay” for my pension benefit.

g) Attention is drawn to the explanatory memorandum stated in Head Office Circular: HO:BR:109/165 dated 19/09/2017 on Amendments to  Bank of Baroda (Employees’) Pension Regulations, 1995 which is reproduced here below:

“The Regulations which have been given retrospective effect are as per the agreed terms and conditions of the settlements and Joint Notes signed between the Indian Banks’ Association on behalf of member banks on the basis of specific mandate given by respective banks in this regard and apex level workmen unions and officer’s associations of the Banks. Therefore, interests of no person shall be adversely affected by such retrospective effect”.

I wish to state that the above explanatory memorandum is in total contravention of Supreme Court orders / judgments and my interest has been affected as far as exclusion of Special Allowance as “pay” for my pension benefit.

h) Chapter I, Para (2) (d) of Pension Regulations defines “average emoluments” being average of pay drawn by the employee during the last ten months of service. The undersigned has drawn Special Allowance during the last ten months of service and hence in terms of Pension Regulation 2 (s) (c) (ii), Special Allowance also has to be reckoned for pension.

i) The Hon’ble Supreme Court has held that by Joint Note, no estoppels has been created against enforcement of Statutory Regulations. Therefore, it is within my rights to seek reckoning of Special Allowance as “pay” for pension benefits.

5. Prayer:
The legality of my case for reckoning Special Allowance as “pay” for pension benefit are  detailed under Para 4, above. The same is conclusively backed by various averments of Hon’ble Supreme Court of India, which is the final interpreter of law.
In view of averments made by Hon’ble Supreme Court in their recent judgment, Bank of Baroda as a Public Sector / Government Enterprise is expected to strictly adhere to the constitutional / statutory norms, rather than attempting to circumvent / by-pass it. I sincerely hope that Bank to which I have served till my Superannuation will not fail me on this account.
Therefore, I pray:
i) That Special Allowance with applicable DA be considered for my pension benefit and pension be refixed.
ii) That I may be paid arrears including commutation after duly taking into account the Special Allowance Component with effect from date of my superannuation ie., 1.8.2014. 
iii) In the background of recent judgment of Supreme Court dated 13.2.2018, arrears may be paid with an interest of 9%. 

( Sri. SANKAR. R. G)