Case Note & Summary
The petitioner, Shapoor M. Mehta, an 87-year-old senior citizen, retired from Allahabad Bank on 30 May 1986 after 39 years of service as a Special Assistant, belonging to the category of award staff. The bank had a pension scheme governed by Pension Rules which entitled special assistants, clerks, and cash clerks to pension at 35% of full monthly basic pay drawn during the twelve months preceding retirement, with a minimum pension of Rs.50 per month. The petitioner continued to receive pension under these rules even after nationalisation. The Retired Employees Association of the bank moved the Allahabad High Court asserting the statutory right of retired employees to gratuity under the Payment of Gratuity Act, 1972. The High Court ruled in their favour, and the Supreme Court dismissed the bank's appeal on 15 December 2009 in Allahabad Bank v. All India Allahabad Bank Retired Employees Association, holding that gratuity under the Act is a statutory right unless exemption is granted, and that pensionary benefits constitute a package. Following the dismissal, the bank issued a circular on 30 October 2010 stating that it had decided to discontinue the scheme for payment of pension in lieu of gratuity pending amendment to the Officers Service Regulations. Consequently, the petitioner's pension of Rs.5,660 per month was stopped with effect from 1 October 2010. Aggrieved, the petitioner filed the present writ petition. The court considered whether the bank could unilaterally discontinue the pension without amending the service regulations. The court held that the bank could not stop the pension unilaterally; the pension was a vested right under the Pension Rules, and any change required amendment of the service regulations. The court allowed the petition, quashed the circular insofar as it discontinued the petitioner's pension, and directed the bank to restore the pension and pay arrears within four weeks.
Headnote
A) Service Law - Pension - Discontinuation of Pension - Payment of Gratuity Act, 1972 - The petitioner, a retired bank employee, was receiving pension under the bank's Pension Rules. After the Supreme Court upheld the right of retired employees to gratuity under the Payment of Gratuity Act, 1972, the bank discontinued the petitioner's pension with effect from 1 October 2010, stating that pension in lieu of gratuity would be stopped pending amendment to the Officers Service Regulations. The court held that the bank could not unilaterally stop the pension without amending the service regulations, as pensionary benefits constitute a package and the petitioner had a vested right to pension. (Paras 1-5)
Issue of Consideration
Whether the bank could unilaterally discontinue the pension of a retired employee who was in receipt of pension in lieu of gratuity, without amending the service regulations.
Final Decision
The court allowed the writ petition, quashed the circular insofar as it discontinued the petitioner's pension, and directed the bank to restore the pension and pay arrears within four weeks.
Law Points
- Pensionary benefits constitute a package
- pension cannot be unilaterally discontinued without amending service regulations
- Payment of Gratuity Act 1972 provides statutory right to gratuity unless exemption granted
