THE PUNJAB STATE COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LTD. versus THE REGISTRAR,COOPERATIVE SOCIETIES AND OTHERS

Citation: [2022] 5 S.C.R. 291 · Decided: 11-01-2022 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Dismissed

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Judgment (excerpt)

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291
THE PUNJAB STATE COOPERATIVE AGRICULTURAL
DEVELOPMENT BANK LTD.
v.
THE REGISTRAR,COOPERATIVE SOCIETIES AND OTHERS
(Civil Appeal No. 297-298 of 2022)
JANUARY 11, 2022
[AJAY RASTOGI AND ABHAY S. OKA, JJ.]
Service Law – Punjab State Cooperative Agricultural Land
Mortgage Banks Service (Common Cadre) Rules, 1978 – r.15(ii) –
Employees Provident Fund and Miscellaneous Provisions Act, 1952
– Constitution of India – Articles 14, 16, 21 – Pension Scheme –
Retrospective amendment taking away the benefit available to
employees under the existing rule – Correctness of – Held: An
amendment having retrospective operation which has the effect of
taking away the benefit already available to the employee under
the existing rule would divest the employee from his vested/accrued
rights and is thus violative of the rights guaranteed u/Articles 14 &
16 – In the present case, Bank pension scheme was introduced from
01.04.1989 – Options were called from the respondent-employees
and those who gave option became member of the pension scheme
and accordingly pension was continuously paid to them – Only in
the year 2010, when the Bank failed in discharging its obligations,
employees approached High Court – The Bank later on withdrew
the pension scheme by deleting clause 15(ii) by amendment in 2014
which was introduced w.e.f 01.04.1989 – Employees who availed
the benefit of pension under the scheme, their rights indeed stood
vested and accrued to them and any amendment to the contrary
made with retrospective operation to take away the right accrued
to the retired employee under the existing rule is violative of Articles
14 & 21– Further, non-availability of financial resources is not a
defence available to the appellant-Bank in taking away the vested
rights accrued to the employees that too when it is for their socio-
economic security – Pension is not a bounty – Appeals dismissed.
Service Law – Concept of vested/accrued rights of an
employee – Discussed.
[2022] 5 S.C.R. 291
291
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SUPREME COURT REPORTS
[2022] 5 S.C.R.
Doctrines/Principles – Legitimate expectation vis-à-vis a
vested/accrued right – Held: There is a distinction between the
legitimate expectation and a vested/accrued right in favour of the
employees – The rule which classifies such employee for
promotional, seniority, age of retirement purposes operates on those
who entered service before framing of the rules but it operates in
futuro – In a sense, it governs the future right of seniority, promotion
or age of retirement of those who are already in service.
Service Law – Pension Scheme – Plea of financial distress
taken by the appellant-Bank to justify the impugned amendment
taking away the right accrued to the retired employee under the
existing rule – Held: Not acceptable – Rule making authority was
presumed to know repercussions of the particular piece of
subordinate legislation and once the Bank took a conscious and
introduced the pension scheme, it can be presumed that the competent
authority was aware of the resources from where the funds are to be
created for making payments to its retirees.
Dismissing the appeals, the Court
HELD: 1.1 An amendment having retrospective operation
which has the effect of taking away the benefit already available
to the employee under the existing rule indeed would divest the
employee from his vested or accrued rights and that being so, it
would be held to be violative of the rights guaranteed under
Articles 14 and 16 of the Constitution. In the instant case, the
Bank pension scheme was introduced from 1.04.1989 and options
were called from the employees and those who had given their
option became member of the pension scheme and accordingly
pension was continuously paid to them without fail and only in
the year 2010, when the Bank failed in discharging its obligations,
respondent employees approached the High Court by filing the
writ petitions. The Bank later on withdrawn the scheme of pension
by deleting clause 15(ii) by an amendment dated 11.03.2014 which
was introduced with effect from 1.04.1989 and the employees
who availed the benefit of pension under the scheme, indeed their
rights stood vested and accrued to them and any amendment to
the contrary, which has been made with retrospective operation
to take away the right accrued to the retired employee under the
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existing rule certainly is not only violative of Article 14 but also
of Article 21 of the Constitution. [Paras 47, 48][314-

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