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

                         [2022] 5 S.C.R. 291                               291


    THE PUNJAB STATE COOPERATIVE AGRICULTURAL                              A
             DEVELOPMENT BANK LTD.
                                   v.
 THE REGISTRAR,COOPERATIVE SOCIETIES AND OTHERS
                  (Civil Appeal No. 297-298 of 2022)                       B
                         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) –
                                                                           C
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            D
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
                                                                           E
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         F
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
                                                                           G
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.
                                                                           H
                                  291
292            SUPREME COURT REPORTS                         [2022] 5 S.C.R.


A            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
B
      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
C     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
D     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
E     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
F     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
G     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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 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                     293
           v. THE REGISTRAR,CO-OP. SOCIETIES

existing rule certainly is not only violative of Article 14 but also      A
of Article 21 of the Constitution. [Paras 47, 48][314-H; 315-A-D]
       1.2 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 undoubtedly operates on those who entered             B
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. For the sake of
illustration, if a person while entering into service, has a legitimate
expectation that as per the then existing scheme of rules, he
may be considered for promotion after certain years of qualifying         C
service or with the age of retirement which is being prescribed
under the scheme of rules but at a later stage, if there is any
amendment made either in the scheme of promotion or the age
of superannuation, it may alter other conditions of service such
scheme of rules operates in futuro. But at the same time, if the          D
employee who had already been promoted or fixed in a particular
pay scale, if that is being taken away by the impugned scheme of
rules retrospectively, that certainly will take away the vested/
accrued right of the incumbent which may not be permissible and
may be violative of Article 14 and 16 of the Constitution.
[Paras 49, 50][315-D-H]                                                   E

       1.3 With regard to the submission about the financial distress
of the appellant Bank to justify the impugned amendment to say
that it may not be possible to continue the grant of pension any
more is concerned, suffice to say, that the rule making authority
was presumed to know repercussions of the particular piece of             F
subordinate legislation and once the Bank took a conscious
decision after taking permission from the Government of Punjab
and Registrar, Cooperative, introduced the pension scheme with
effect from 1st April 1989, it can be presumed that the competent
authority was aware of the resources from where the funds are to          G
be created for making payments to its retirees and merely
because at a later point of time, it was unable to hold financial
resources at its command to its retirees, would not be justified
to withdraw the scheme retrospectively detrimental to the

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294           SUPREME COURT REPORTS                      [2022] 5 S.C.R.


A     interests of the employees who not only became member of the
      scheme but received their pension regularly at least upto the
      year 2010 until the dispute arose between the parties and entered
      into litigation. Non-availability of financial resources would not
      be a defence available to the appellant Bank in taking away the
      vested rights accrued to the employees that too when it is for
B
      their socio-economic security. It is an assurance that in their old
      age, their periodical payment towards pension shall remain
      assured. The pension which is being paid to them is not a bounty
      and it is for the appellant to divert the resources from where the
      funds can be made available to fulfil the rights of the employees
C     in protecting the vested rights accrued in their favour. [Paras 54,
      55][317-A-E]
            Marathwada Gramin Bank Karamchari Sanghatana
            and Another v. Management of Marathwada Gramin
            Bank and Others 2011 (9) SCC 620 : [2011] 11
D           SCR 269; State of Rajasthan Vs. A.N. Mathur and
            Others 2014 (13) SCC 531 : [2013] [11] SCR 240; State
            of Himachal Pradesh and Others Vs. Rajesh Chander
            Sood and Others 2016 (10) SCC 77 : [2016] 6 SCR 851
            – held inapplicable.
E           1.4 So far as the submission made by the serving employees
      is concerned, they have no locus to question. At the same time,
      their apprehension as being projected to this Court is completely
      misplaced for the reason that employer/employees contribution
      is being provided under the employees pension scheme(EPS) of
      the Act 1952 which is made applicable to the serving employees
F     and they are entitled to get pension in terms of the provisions of
      the Act 1952. So far as their complaint regarding payment of
      contribution is concerned, it is in no manner going to be adjusted
      for payment of pension to retirees/respondents, who are entitled
      to get their pension in terms of the pension scheme of which
G     they are members and it is for the appellant Bank to reserve the
      resources and make payment to the retired employees seeking
      pension to the scheme in vogue when they became members
      and took benefits pursuant thereto. [Para 56][317-F-H]


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 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                   295
           v. THE REGISTRAR,CO-OP. SOCIETIES

       1.5 The complaint of the employees that they are not being       A
paid their pension since 2013, at the given time few employees
have been given benefit of one time settlement as introduced by
the Bank as an interim measure which was subject to their rights
being preserved, in the pending litigation, taking grievance of
the either party into consideration, the financial constraints of
                                                                        B
the Bank and the rights of the employees who are entitled to get
pension under the bank pension scheme, so far as the arrears
towards element of pension to which the retired employees are
entitled for, the appellant Bank is at liberty to pay arrears towards
pension upto 31st December, 2021 in 12 monthly installments in
the next one year by the end of December, 2022 and those                C
employees who have accepted payment under one time settlement
at a given point of time, what is being paid to them is always open
for adjustment against arrears of their due pension. Still if arrears
remain outstanding, the same shall be paid in 12 monthly
installments. At the same time, each of the employee who is
                                                                        D
member of the Bank Pension scheme must get pension to which
he/she is entitled from the month of January 2022 as admissible
under the law. [Para 57][318-A-D]
      Chairman, Railway Board and Others Vs. C.R.
      Rangadhamaiah and Others 1997 (6) SCC 623 : [1997]
      3 Suppl. SCR 63 – followed.                                       E

      UP. Raghavendra Acharya and Others Vs. State of
      Karnataka and Others 2006 (9) SCC 630 : [2006] 2
      Suppl. SCR 582; Bank of Baroda and Another vs. G.
      Palani and Others 2018 SCC Online SC 3691 – relied
      on.                                                               F

                       Case Law Reference
[2011] 11SCR 269                held inapplicable       Para 25
[2013] 11 SCR 240               held inapplicable       Para 25
                                                                        G
[2016] 6 SCR 851                held inapplicable       Para 25
[1997] 3 Suppl. SCR 63          followed                Para 30
[2006] 2 Suppl. SCR 582         relied on               Para 30

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296            SUPREME COURT REPORTS                          [2022] 5 S.C.R.


A           The Judgment of the Court was delivered by
            AJAY RASTOGI, J.
            1. Leave granted.
             2. Civil Appeals @ SLP(Civil) Nos. 1940-1941 of 2020 and the
B     cognate appeals arise from the self-same common judgment dated 29th
      July, 2019 and 4th October, 2019 passed by the Division Bench of the
      High Court of Punjab and Haryana at Chandigarh.
           3. The facts have been noticed by this Court from Civil Appeals
      @ SLP (Civil) Nos. 1940-1941 of 2020.
C            4. The appellant in the present batch of appeals, is the Punjab
      State Cooperative Agricultural Development Bank Ltd. (hereinafter
      referred to as ‘the Bank’), a registered cooperative society and connected
      Civil Appeal @ Special Leave Petition (Civil) No.12864 of 2020 has
      been preferred by the serving employees of the bank who also claim to
D     be aggrieved by the self-same impugned judgment in the proceedings.
      At the same time, the respondents are the original writ petitioners who
      are the retired employees and the service conditions of the employees
      are governed by the Punjab State Cooperative Agricultural Land
      Mortgage Banks Service (Common Cadre) Rules, 1978 (hereinafter
      being referred to as the “Rules 1978”) and became members of the
E     Bank Pension Scheme, which was introduced w.e.f. 1st April, 1989.
             5. The appellant Bank is a registered cooperative society which
      was earlier known as “Punjab State Cooperative Land Mortgage Bank
      Ltd.” The principal object of the Bank is to provide long term loans to
      the farming community and to protect them from the clutches of money
F     lenders. The main funding of the appellant Bank is by way of loans from
      National Bank for Agriculture and Rural Development(NABARD) as
      per the norms laid down. The appellant Bank has two tier structure
      comprising of “Punjab State Cooperative Agricultural Development Bank
      Ltd.” at Apex level(SADB) and the “Primary Agricultural Development
      Banks”(PADB) at the grass root level. These two banks ensure timely
G
      delivery of credit to the farmers, who are its members and directly
      benefitted with various schemes which provide long term and short-
      term loans to them.
            6. Prior to 1989, the employees of the appellant Bank were covered
      under the Employees Provident Fund and Miscellaneous Provisions Act,
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 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                     297
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

1952 (hereinafter being referred to as the “Act 1952”). The scheme        A
was being duly adhered to and necessary contributions were regularly
paid by employees and the employer Bank.
       7. The Department of Finance, Government of Punjab, vide its
letter dated 22nd September 1988, pursuant to recommendations of the
Punjab Pay Commission to bring the employees serving in various Public    B
Sector Undertakings and State aided institutions under purview of the
State Pension Rules, solicited the views/comments of the concerned
organisations to inter-alia communicate the additional financial burden
involved in each case and whether the organisation/organisations could
bear the additional liability out of their own resources. These           C
recommendations were placed before the Administrator of the Bank
who vide Resolution dated 22nd June 1989 decided to implement the
recommendations of the State Government and as a consequence thereof,
the pension scheme of the employees and Officers in the common cadre
was introduced w.e.f. 1st April, 1989.
                                                                          D
     8. Resolution No.24 passed by the Administrator of the appellant
Bank dated 22nd June, 1989 is reproduced as under:-



                                                                          E




                                                                          F




                                                                          G




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298            SUPREME COURT REPORTS                            [2022] 5 S.C.R.


A            9. In furtherance thereof, the appellant Bank sent a letter dated
      27th June, 1989 to the Registrar, Cooperative Societies, Punjab, seeking
      approval for introduction of the pension scheme for its employees covered
      under the Rules, 1978. The Registrar, Cooperative Societies, Punjab, by
      its communication dated 7th February, 1990 conveyed its approval for
      introduction of the pension scheme proposed by the appellant Bank to its
B
      employees covered under the Rules 1978. In pursuance thereof, the
      amendment was carried out in the Rules, 1978 and Rule 15(ii) was
      introduced authorizing the Board of Directors to formulate pension
      scheme with the approval of the Registrar Cooperative Societies, Punjab.
      For the purpose of reference, Rule 15(ii) is extracted hereunder:-
C
            “15 (i) PROVIDENT FUND:-
                  The employees shall be entitled to the benefit of the General
            Provident Fund as provided in the employees Provident Fund Act,
            1952 and scheme framed thereunder.
D           (ii) THE PENSION SCHEME FOR THE EMPLOYEES/
            OFFICES IN THE COMMON CADRE RULES OF THE
            PUNJAB STATE COOPERATIVE AGRICULTURAL
            DEVELOPMENT BANK W.E.F. 1.4.89.
            1. Short title and commencement:-
E
            (i) The rules shall be called, the Punjab State Cooperative
            Agricultural Development Banks Employees Pension, Family
            Pension and General Provident Fund Rules.
            (ii) These Rules shall come into force with effect from 1.4.89.
F           2. Application
            (i) These rules shall apply to all the posts in the services specified
            in the Appendix ‘I’ of the Common Cadre Rules, provided that in
            case of the employees appointed by transfer from Government
            Departments, these rules shall only apply to the extent specified
G           in their terms and conditions of deputation agreed upon with the
            Government Department concerned.
                  Provided further that nothing in these rules shall affect the
            application of any other law, statutory rules, bye-laws and
            regulations for time being in force.
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 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                        299
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

             Provided further that an employee who joins service on or       A
      after coming into force of these rules and such existing employees,
      who opt for these rules, shall be covered by these rules. All
      category of employees shall have to exercise this option in Form-
      A to these rules within three months from the date of notification
      of these rules.
                                                                             B
      (ii) The employees who do not opt for these rules shall be governed
      by the Employees Provident Fund Act and Rules.
      3. Definition:-
      XXX XXX XXX XXX                                                        C
      (o) Pay:- Pay means the pay as defined in Rule 2.44 of the Punjab
      Civil Services Rules Volume-I Part-I.
            Note:- Unless the contrary appears from the context or
      subject to term ‘pay’ defined in Rule 2.44 of the Punjab Civil
      Services, Volume-I, Part-I, does not include “Special Pay.”            D

      10. In furtherance thereto, the amended Rule 15(ii) came into
force with effect from 1st April, 1989. In sequel to the introduction of
implementation of the scheme, the contributions made by the employees
and the appellant Bank were transferred to create the pension corpus
fund to make it functionally viable and a trust was created by a trust       E
deed dated 24 th March, 1993 for management and effective
implementation of the scheme.
        11. It reveals from the record that the employees of the appellant
Bank who had opted for pension became members of the pension scheme
and continued to derive the benefit of pension after they had opted for it   F
till the year 2010. Later, when the appellant Bank found the scheme to
be unviable on account of financial constraints, the Board of Directors
of the appellant Bank in its meeting dated 29th May, 2010 in reference to
Agenda No. 15 reconsidered the matter about giving pension to the bank
employees and resolved as under:-                                            G
      1.     Pension to the retired employees and those going to retire
             in future be communicated.
      2.     Pension Scheme will not be applicable in case of employees
             employed on or after 1.1.2004.
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300              SUPREME COURT REPORTS                         [2022] 5 S.C.R.


A           3.     Pensioners be not given the benefit of commutation of
                   pension, medical reimbursement and LTC.
            4.     As per existing rules, the contribution equal to the 12% GPF
                   deduction of employees to be continued by bank.

B           5.     As per letter No.CA3/64/13717 dated 29.8.2008 of Registrar,
                   Cooperative Societies, 12% of the profits of SADB &
                   PADBs be allocated to employees benefit fund and its 90%
                   share be contributed to the pension fund.
            6.     Bank to continue pension from its funds/expenses by stopping
C                  the commutation of pension, medical reimbursement and LTC
                   facilities to its employees and retired employees, imposing
                   25% deduction on eligible amount of pension and after
                   adjusting the pension amount against SADB/PADBs profits
                   according to rules be made up on the basis of outstanding
                   loans of SADB and PADBs.
D
            7.     As and when there is improvement in financial condition of
                   bank, the payment of full pension may be considered.
              12. The appellant Bank sent a letter dated 9th June, 2010 to the
      Registrar, Cooperative Societies, Punjab, seeking approval of the aforesaid
E     Resolution. The Registrar, Cooperative Societies, Punjab, vide its letter
      dated 3rd September, 2010 issued directions to the appellant Bank to
      review its proposal. Pursuant thereto, the appellant Bank submitted its
      revised proposal to the Registrar, Cooperative Societies, Punjab, on 30 th
      March, 2011 to proceed with the pension scheme in accordance with
F     Resolution No. 15 dated 29th May, 2010. Although the proposal was
      turned down by the Registrar, Cooperative Societies, Punjab, Chandigarh
      still the Board of Directors of the appellant Bank vide its Resolution
      dated 17th August, 2012 decided to discontinue the pension scheme and
      revert to the scheme of Contributory Provident Fund with a proposal of
      One Time Settlement. The Board of Directors, later in exercise of its
G     powers vested in Section 84A(2) of the Punjab Cooperative Societies
      Act, 1961 with the prior approval of the Registrar, Cooperative Societies
      made amendment in Rule 15 of the Rules, 1978 by order dated 11th
      March, 2014. Pursuant thereto, Rule 15(ii) stood deleted. The order dated
      11th March, 2014 is reproduced hereunder:-
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 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                     301
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

          O/o Registrar, Cooperative Societies, Punjab, Chandigarh        A
                             (Credit Branch-1)
      To
      The Managing Director,
      The Punjab State Cooperative Agri. Dev. Bank Ltd.,
                                                                          B
      Chandigarh.
      Memo. Credit/CA-3/2841                        Dated: 11.03.2014
      Sub:- Amendment in Clause 15 of Punjab State Cooperative
            Agricultural Development Bank Service Common Cadre
            Rules, 1978.                                                  C
      Ref: Your office letter No. Admn/S07/11984 dated 27.01.2014
            This office has received a proposal on the subject cited
      above.
            After examining the proposal and the legal opinion sent by    D
      the Bank, in exercise of powers vested vide Section 84A(2) of
      the Punjab Cooperative Societies Act 1961, Registrar Cooperative
      Societies, is pleased to allow the following amendments in the
      Punjab State Cooperative Agricultural Development Bank Service
      Common Cadre Rules 1978 as under:
                                                                          E




                                                                          F




                                                                          G




      13. It reveals from the record that since the appellant Bank much
before the amendment had stopped making payments of pension in terms      H
302            SUPREME COURT REPORTS                          [2022] 5 S.C.R.


A     of Rule 15(ii) of the Rules 1978, the employees approached the High
      Court under Article 226 of the Constitution by filing writ petitions and
      various interim orders were passed from time to time and even at one
      stage, it was decided to introduce a proposal of one time settlement
      which was furnished by the appellant Bank on 16th October, 2012 in the
      pending proceedings before the High Court and, as informed, few of the
B
      employees have settled their claims under the One Time Settlement but
      it will be appropriate to notice at this stage that while the proceedings
      were pending before the Division Bench of the High Court, by Order
      dated 24th January 2014, it was made clear that one time settlement
      which has been implemented after seeking approval of the competent
C     authority shall be without prejudice to the legal rights of the applicant/
      respondent employees. The Order dated 24th January, 2014 is reproduced
      hereunder:-
            “CM-109-LPA-2014
                   Allowed as prayed for.
D
                  Document Annexure A1 is taken on record subject to such
            exceptions.
                   CM stands disposed of.
                   CM-71-LPA-2014 in LPA-2001-2013
E
                 Notice to the non-applicant/appellants. Ms. Jaishree Thakur,
            Advocate accepts notice.
                    After hearing learned counsel for the parties and keeping
            in view the fact that since One Time Settlement scheme has
F           already been implemented after seeking approval of the competent
            authority, this application is disposed of with a clarification that
            the implementation of the said scheme shall be without prejudice
            to the legal rights of the applicant/respondents.”
             14. This fact can be further noticed that the learned Single Judge
G     of the High Court decided the writ petitions by a Judgment dated 31 st
      August 2013 and Rule 15(ii) was deleted by the appellant Bank by Order
      dated 11th March, 2014 while the proceedings were pending in LPA
      before the High Court.
           15. The learned Single Judge of the High Court held that the
      employees of the appellant Bank, having served the Bank were covered
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 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                       303
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

under the scheme which was applicable at the given time under the Act       A
1952 (prior to 1989). It is the appellant Bank which accepted the
recommendations of the State Government and solicited options from
the employees as to whether they wanted to opt for a pension scheme
which became applicable after the amendment was made under the
Rules 1978 and after a conscious decision, Rule 15(ii) was introduced, it
                                                                            B
could not be justified to circumvent the impact of the amended rule and
thus create a situation which would have the effect of defeating the
rights which are conferred upon the employees to seek pension under
the rules which became applicable with effect from 1st April, 1989 and
finally held that the employees are entitled to regular pension including
revised rates of dearness allowance, to all the employees who became        C
member of the pension scheme under the Rules 1978.
       16. When the matter travelled to the Division Bench of the High
Court, by that time, the amendment was made by an Order dated 11th
March, 2014 and Rule 15(ii) was deleted. The Division Bench, after
taking note of the submissions made by the parties observed that the        D
decision to frame the pension scheme was a conscious decision of the
appellant Bank taken in its own wisdom and corresponding rules were
introduced and made applicable from 1st April, 1989 and Rule 15(ii) was
deleted on 11th March, 2014. In the interregnum, the employees became
members of the pension scheme and were paid their regular pension for
sufficient time which cannot be defeated and taken away retrospectively     E
detrimental to their interest. The amendment which has taken away the
vested and accrued right of the employees to get pension and that too
with retrospective effect would be violative of Article 14 of the
Constitution and disposed of the LPA with a declaration that amendment
dated 11th March, 2014 under Rules 1978 shall apply prospectively.          F
        17. The judgment of the Division Bench of the High Court dated
29th July, 2019 became subject matter of challenge at the instance of the
appellant Bank and by the serving employees who have claimed that
their right to get pension may be affected in futuro, and have approached
this Court ventilating their grievances in the instant proceedings.         G
       18. It may be relevant to note that before the High Court, at
different stages, different counter affidavits were filed by the Regional
Provident Fund Commissioner(RPFC) with reference to the grant of
exemption after the Employees Pension Scheme 1995 became the part
of the Act 1952.                                                            H
304             SUPREME COURT REPORTS                            [2022] 5 S.C.R.


A           19. It has been stated in the counter affidavit filed by the RPFC
      under the Act 1952 that earlier it was erroneously mentioned “granted
      exemption from pension scheme”, but that was a factually incorrect
      statement recorded and the RPFC has made an unconditional apology
      for making such a statement of fact. It is the admitted case of RPFC
      that neither any application was filed by the appellant Bank seeking
B
      exemption from the employees pension scheme nor it was granted or
      refused.
             20. The stand of the EPFC is that Employees’ Provident Funds
      Scheme, 1952 and Employees’ Pension Scheme, 1995 both are designed
      to secure a minimum core of old age/terminal social security. Neither of
C     these schemes exhaust an employee’s right to social security. According
      to the EPFC, the bank’s promise to supplementary pension outside of
      EPF must be evaluated in that light.
            21. It is further stated that the benefits under bank’s pension scheme
      can only be understood as supplementary and not substitutionary because
D     the bank’s pension scheme did not provide for dependents’ pension,
      nominees’ pension, childrens’ pension or withdrawal benefits. This only
      provides a far narrower pensionary cover to its employees. Its pension
      scheme could not be considered for exemption under Section 17(1C) of
      the Act.
E           22. Learned counsel for the appellant Bank submits that it has not
      been considered by the High Court that the appellant Bank had framed
      a pension scheme subject to approval of the competent authority. Even
      though, the appellant Bank had not applied for seeking approval/exemption
      from the authority, still the fact remains that in the absence of the approval
F     being granted by the competent authority, the retirees were entitled to
      receive pension until the scheme remain in operation, i.e., upto 31st
      October, 2013.
            23. Learned counsel further submits that if the employees are
      being permitted to get pension under the scheme of the Bank after 31 st
G     October 2013 and also statutory pension from Regional Provident Fund
      Commissioner under the Act 1952, indeed there shall be payment of
      double pension which is in either way not permissible in law.
             24. Learned counsel further submits that the employee is entitled
      for pension but how the pension is to be computed, no one can claim any
      vested/accrued right. It is not the case of the respondents that they are
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    THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                         305
      v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

not being paid pension. It was paid earlier under the pension scheme             A
introduced by the Bank from the year 1989 until it remained in force till
31st October 2013 and thereafter, the employees are entitled to get a
statutory pension as per the Employees Pension Scheme 1995 under the
provisions of the Act 1952. Thus, plea of vested right which has been
considered by the High Court is completely misplaced and as long as the
                                                                                 B
appellant Bank fulfils its statutory liability under the provisions of the Act
1952, which they are under an obligation to comply with, the employees
are not entitled to claim pension under the scheme introduced by the
Bank after it stands withdrawn with effect from 31st October, 2013 and
thus no vested/accrued right of the employee is in any manner has been
defeated and a finding recorded by the High Court to continue the bank           C
pension scheme after it stood deleted is not sustainable in law and
deserves to be interfered by this Court.
      25. In support of his submissions, learned counsel placed reliance
on the judgments of this Court in Marathwada Gramin Bank
Karamchari Sanghatana and Another Vs. Management of                              D
Marathwada Gramin Bank and Others1, State of Rajasthan Vs. A.N.
Mathur and Others2 and State of Himachal Pradesh and Others Vs.
Rajesh Chander Sood and Others3.
       26. Learned counsel further submits that the pension scheme
introduced by the Bank later became financially unviable and the                 E
number of retirees in comparison to the existing employees recruited
after 1st January, 2004 is almost three times and if the appellant Bank
is mandated to continue to make payment of pension under Bank
Pension Scheme, the Bank will become defunct and the contribution
towards pension made by the serving employees will be futile and they
will get nothing at the time of their retirement. The Bank has earned a          F
meagre profit in the later years and still, in the given circumstances, the
appellant Bank, if allowed to made over pension in terms of the judgment
impugned, there will be no option left except to close down the Institution
in such an eventuality and that apart it has created a wide gap of inequality
between the serving employees and the retirees without resorting to              G
exemption from the RPFC.


1
  2011(9) SCC 620
2
  2014(13) SCC 531
3
  2016(10) SCC 77                                                                H
306             SUPREME COURT REPORTS                           [2022] 5 S.C.R.


A            27. Learned counsel submits that the RPFC has initiated separate
      proceedings under Section 7A of the Act 1952 for the year April 1989 to
      March 2015 and for the year April 2015 to June 2017, imposing liability
      on the Bank by an Order dated 14th September, 2015 and 31st August,
      2017 respectively. At the same time, separate proceeding under Section
      14B for damages and Section 7Q for interest were also instituted and in
B
      terms of orders passed by the Authority, demand raised pursuant thereto
      has been deposited by the appellant. In the given circumstances, the
      Regional Provident Fund Commissioner has recovered towards pension
      fund contribution along with damages and interest for the period
      commencing from April 1989 to August 2017. At the same time, the
C     appellant has been asked to pay pension to the retirees under the Bank
      Pension Scheme in terms of the impugned judgment to the employees
      who are covered at one stage under the scheme. It will almost be a
      double payment to the employees which is over and above the payment
      which was admissible to the employees in terms of statutory pension
D     scheme 1995 under the Act 1952 and that apart, there are categories of
      employees who have settled their accounts under one time settlement
      which was approved by the Government and if the Judgment is to be
      implemented in rem, it will not only be a double payment of pension but
      a great financial distress to the Bank which is otherwise not permissible
      in law.
E
             28. Per contra, Mr. P.S. Patwalia, learned senior counsel for the
      respondents submits that indisputedly the present respondents who were
      writ petitioners before the High Court are the retired employees and
      after amendment was made under the scheme of Rules 1978, they
      became its member and started getting pension in terms of the scheme
F     under the Rules with effect from 1 st April, 1989 and without any
      justification, the appellant Bank unilaterally stopped full pension to the
      respondent pensioners in the year 2010 and that was the stage when the
      retired employees were constrained to approach the High Court wherein
      it was held that these pensioners are entitled to pension in terms of the
G     scheme. To overcome the judgment dated 31st August, 2013 of the learned
      Single Judge of the High Court of Punjab and Haryana, by Order dated
      11th March 2014, Rule 15(ii) was deleted and by deleting the said rule, it
      has taken away the vested right of the retired employees and their service
      conditions have been altered retrospectively to the detriment of the retired
      employees which is violative of Articles 14 and 21 of the Constitution.
H
    THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                      307
      v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

       29. Learned counsel further submits that so far as the scheme          A
under the Act 1952 is concerned, the employees pension scheme was
introduced under the Act 1952 for the first time in 1995 and it is nowhere
related to the pension scheme introduced by the appellant under its
Resolution No. 24 dated 22nd June, 1989 with effect from 1st April, 1989
and the appellant Bank neither sought any exemption under Section
                                                                              B
17(1C) of the Act 1952 nor it was required for the reason that the Bank
introduced the pension scheme in the year 1989. At that time, there was
no such pension scheme under the Act 1952 and once it is made clear
that exemption was never sought by the appellant Bank, under the Act
1952, at least the vested right which has been accrued to the respondents
cannot be taken away retrospectively which is not sustainable and this        C
what the Division Bench has held in the impugned judgment.
      30. The reliance has been placed on the Constitution Bench
Judgment of this Court in Chairman, Railway Board and Others Vs.
C.R. Rangadhamaiah and Others4 followed with U.P. Raghavendra
Acharya and Others Vs. State of Karnataka and Others5 and Bank                D
of Baroda and Another Vs. G. Palani and Others6.
       31. Learned counsel further submits that more than half of the
respondents are in the age group of 73 to 80 years and one-third of the
retirees have already expired during pendency of litigation and it is the
appellant Bank who had in its own volition introduced the scheme and          E
the respondent employees have exercised their option to be governed by
the said scheme and the employees have also foregone their Contributory
Provident Fund. In the given circumstances, the rights which are conferred
and vested in favour of the respondent employees could not be divested
by the appellant in an arbitrary manner which is in violation of Article 14
of the Constitution.                                                          F

      32. Learned counsel submits that so far as the One Time
Settlement scheme is concerned, it was introduced to mitigate the problem
due to withdrawal of pension scheme as an interim measure under the
orders passed by the High Court. Since there was no option left to the
employees who became hand to mouth, some of them have accepted                G
under the One Time Settlement scheme but the Division Bench by its

4
  1997(6) SCC 623
5
  2006(9) SCC 630
6
  2018 SCC Online SC 3691                                                     H
308            SUPREME COURT REPORTS                           [2022] 5 S.C.R.


A     interim order made it clear that acceptance of one time settlement shall
      be without prejudice to their legal rights, in the given circumstances,
      what has been paid under One Time Settlement scheme to few of the
      employees is always adjustable under the scheme to which they are
      entitled for under the law. The scheme was in vogue for more than two
      decades and it is not open for the appellant Bank to take away their
B
      vested rights in an arbitrary manner and deprive them the benefit of
      pension which is in vogue since 1989 so far as the retirees are concerned.
             33. Mr. Siddharth, learned counsel for the Regional Provident Fund
      Commissioner submits that the appellant bank is covered under the
      provisions of the Act 1952 and under the Act, three schemes have been
C     framed, firstly, Employees Provident Fund Scheme 1952(EPFS) which
      establishes a contributory provident fund under Sections 5 and 6 of the
      Act. Employers and employees contribute to the provident fund in equal
      measure at the prescribed rates notified by the authority competent under
      the law from time to time. However, presently there is 12% employees’
D     monthly wages. Secondly, there is Employees’ Pension Scheme
      1995(EPS) scheme framed under Section 6A of the Act, 1952 which
      replaces the earlier Employees’ Family Pension Scheme, 1971(FPS).
      Family Pension Scheme provided for pension to the dependents of such
      employees who died in harness. EPS, on the other hand, is a
      comprehensive pension scheme that provides superannuation pension,
E     early pension and dependents’ pension. It is funded by diverting a part of
      the employers’ share of contribution made to EPFS into the pension
      fund(presently 8.33% of monthly wages). Employees do not contribute
      under EPS. The third scheme is Employees’ Deposit Linked Insurance
      Scheme, 1976. The Bank sought exemption from EPFS under Section
F     17(1)(b) and from EDLIS under Section 17(2A). The fate of exemption
      and its consequence may not be relevant so far as the present dispute
      raised in the instant proceedings is concerned, at the same time, it is
      being specifically stated that the appellant Bank did not seek any
      exemption from the operation of Employees’ Pension Scheme after 16 th
      November, 1995.
G
             34. Learned counsel further states that, in the interregnum, since
      the appellant Bank failed to deposit its due contributions, first under the
      Family Pension Scheme and later under the Employees Pension Scheme
      for the period commencing from 1st April 1989 to 31st March 2015 and
      from April 2015 to June 2017, separate proceedings were initiated under
H
 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                        309
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

Section 7A followed with damages under Section 14B and interest under        A
Section 7Q and final assessments have been made after affording
opportunity to the appellant Bank. Pursuant thereto, money has been
deposited but that has nothing to do with the pension scheme introduced
by the Bank which can only be understood as supplementary and not
substitutionary for the reason that the Bank Pension Scheme did not
                                                                             B
provide for dependent’s pension, children’s pension or withdrawal benefits
and such benefits are designed only under the Employees Pension Scheme
1995 introduced under the provisions of the Act 1952.
       35. Mr. Gurminder Singh, learned senior counsel for the serving
employees submits that that as per the pension scheme introduced by
the appellant Bank, the employees have to make their own contribution        C
and looking to the depleting strength of the serving employees, their
contribution is being utilized for payment of pension to the retired
employees and bank is throughout harping upon the plea that because of
financial distress, it is not possible for the Bank to continue with the
pension scheme any more and that is the reason for which the pension         D
scheme was withdrawn by the Bank at a later stage and that affects the
interest of the serving employees whose entire employees’ contribution
is being utilized against the payment of pension to the retirees and
consistently, there is a shortfall of employer’s share of in-service
employees and this practice if being continued any more, by the time the
serving employee will retire, they will not be able to get pension despite   E
they have undertaken their contribution while in service.
       36. The indisputed fact according to the learned counsel is that
the retirees are being paid their pension under the Bank pension scheme
at the cost of the serving employees and it affects the interest of the
serving employees which is being jeopardized.                                F

        37. Learned counsel in alternate further submits that the class of
the employees either retired/serving should be dealt with the same
standards/yardsticks and one retiral scheme should be followed for all
the employees regardless of the fact that whether they are serving or
retired and it will be unjust if the Bank pension scheme is allowed to       G
continue at the cost of serving employees which would deprive them of
their right to pension introduced by the Bank to which they are otherwise
entitled for under the law.
       38. We have heard the learned counsel for the parties and with
their assistance perused the material available on record.                   H
310             SUPREME COURT REPORTS                            [2022] 5 S.C.R.


A            39. The facts are not in dispute that the respondents are the retired
      employees and members of the Punjab State Cooperative Agricultural
      Development Bank Limited, Chandigarh and they were earlier the
      members of the Employees Provident Fund Scheme under the Act 1952.
      The scheme was being duly adhered to and necessary contributions
      were made over by the employees and employer Bank. Later on, with
B
      the recommendation of the Punjab Pay Commission, regarding introducing
      the pension scheme, the Administrator of the appellant Bank vide its
      Resolution dated 22 nd June, 1989 decided to implement the
      recommendations of the State Government and as a consequence thereof,
      the pension scheme for the employees and Officers in the Rules 1978
C     was introduced with effect from 1st April 1989.
             40. Accordingly, the Rules 1978 were amended and Rule 15(ii)
      was introduced authorizing the Board of Directors to formulate pension
      scheme with the prior approval of the Registrar Cooperative Societies,
      Punjab. Pursuant thereto, the amendment was made with an option that
D     such of the employees who opt for the rules(pension scheme) shall be
      covered by these rules. At the given time, such employees who do not
      opt for these rules shall be governed by Act, 1952.
             41. Indisputedly, all the respondent employees were given the
      option to become member of the pension scheme on being retired from
E     service and they continued to derive the benefit of pension after they
      had opted continuously until the year 2010 and only thereafter, the litigation
      started when the appellant Bank stopped making payment of pension in
      terms of the Bank pension scheme. Although the Bank pension scheme
      will not apply in cases to employees employed on or after 1st January
      2004. Later on, the Bank took a decision by deleting Rule 15(ii) of pension
F     scheme by an amendment dated 11th March, 2014 and that became the
      cause of grievance of the employees in questioning the action of the
      Bank by approaching the Courts for ventilating their grievance.
             42. The question that emerges for consideration is as to what is
      the concept of vested or accrued rights of an employee and at the given
G     time whether such vested or accrued rights can be divested with
      retrospective effect by the rule making authority.
            43. The concept of vested/accrued right in the service jurisprudence
      and particularly in respect of pension has been examined by the
      Constitution Bench of this Court in Chairman, Railway Board and
H     Others(supra) as follows:-
 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                          311
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

      “11. On the basis of the said decision of the Full Bench of the          A
      Tribunal, other Benches of the Tribunal at Bangalore, Hyderabad,
      Allahabad, Jabalpur, Jaipur, Madras and Ernakulam have passed
      orders giving relief on the same grounds. These appeals and special
      leave petitions have been filed against the decision of the Full
      Bench and those other Benches of the Tribunal. Some of these
                                                                               B
      matters were placed before a Bench of three learned Judges of
      this Court on 28-3-1995 on which date the following order was
      passed:
         “Two questions arise in the present case, viz., (i) what is the
      concept of vested or accrued rights so far as the government
                                                                               C
      servant is concerned, and (ii) whether vested or accrued rights
      can be taken away with retrospective effect by rules made under
      the proviso to Article 309 or by an Act made under that article,
      and which of them and to what extent.
         We find that the Constitution Bench decisions in Roshan Lal
                                                                               D
      Tandon v. Union of India (1968) 1 SCR 185; B.S. Vadera v.
      Union of India (1968) 3 SCR 575 and State of Gujarat v. Raman
      Lal Keshav Lal Soni (1983) 2 SCC 33 have been sought to be
      explained by two three-Judge Bench decisions in K.C. Arora v.
      State of Haryana (1984) 3 SCC 281 and K. Nagaraj v. State of
      A.P. (1985) 1 SCC 523 in addition to the two-Judge Bench                 E
      decisions in P.D. Aggarwal v. State of U.P. (1987) 3 SCC 622
      and K. Narayanan v. State of Karnataka 1994 Supp (1) SCC
      44. Prima facie, these explanations go counter to the ratio of the
      said Constitution Bench decisions. It is not possible for us sitting
      as a three-Judge Bench to resolve the said conflict. It has,
                                                                               F
      therefore, become necessary to refer the matter to a larger Bench.
      We accordingly refer these appeals to a Bench of five learned
      Judges.”
      44. This Court, after taking note of the earlier view on the subject
further held in Chairman, Railway Board and Others(supra) as under:-
                                                                               G
      “20. It can, therefore, be said that a rule which operates in futuro
      so as to govern future rights of those already in service cannot be
      assailed on the ground of retroactivity as being violative of Articles
      14 and 16 of the Constitution, but a rule which seeks to reverse
      from an anterior date a benefit which has been granted or availed
                                                                               H
312      SUPREME COURT REPORTS                           [2022] 5 S.C.R.


A     of, e.g., promotion or pay scale, can be assailed as being violative
      of Articles 14 and 16 of the Constitution to the extent it operates
      retrospectively.
      24. In many of these decisions the expressions “vested rights” or
      “accrued rights” have been used while striking down the impugned
B     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 was sought to be altered with effect from
      an anterior date and thereby taking away the benefits available
C     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.
D     We are unable to hold that these decisions are not in consonance
      with the decisions in Roshan Lal Tandon (1968) 1 SCR 185, B.S.
      Vedera (1968) 3 SCR 575 and Raman Lal Keshav Lal Soni
      (1983) 2 SCC 33.
      25. In these cases we are concerned with the pension payable to
E     the employees after their retirement. The respondents were no
      longer in service on the date of issuance of the impugned
      notifications. The amendments in the rules are not restricted in
      their application in futuro. The amendments apply to employees
      who had already retired and were no longer in service on the date
      the impugned notifications were issued.
F
      33. Apart from being violative of the rights then available under
      Articles 31(1) and 19(1)(f), the impugned amendments, insofar
      as they have been given retrospective operation, are also violative
      of the rights guaranteed under Articles 14 and 16 of the Constitution
      on the ground that they are unreasonable and arbitrary since the
G     said amendments in Rule 2544 have the effect of reducing the
      amount of pension that had become payable to employees who
      had already retired from service on the date of issuance of the
      impugned notifications, as per the provisions contained in Rule
      2544 that were in force at the time of their retirement.”
H                                                     (emphasis supplied)
 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                         313
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

       45. Later, in U.P. Raghavendra Acharya and Others(supra),              A
the question which arose for consideration was that whether the appellants
who were given the benefit of revised pay scale with effect from 1st
January, 1996 could have been deprived of their retiral benefits calculated
with effect therefrom for the purpose of calculation of pension. In that
context, while examining the scheme of the Rules and relying on the
                                                                              B
Constitution Bench Judgment in Chairman, Railway Board and
Others(supra), this Court observed as follows:-
       “22. The State while implementing the new scheme for payment
       of grant of pensionary benefits to its employees, may deny the
       same to a class of retired employees who were governed by a
       different set of rules. The extension of the benefits can also be      C
       denied to a class of employees if the same is permissible in law.
       The case of the appellants, however, stands absolutely on a
       different footing. They had been enjoying the benefit of the revised
       scales of pay. Recommendations have been made by the Central
       Government as also the University Grant Commission to the State
                                                                              D
       of Karnataka to extend the benefits of the Pay Revision
       Committee in their favour. The pay in their case had been revised
       in 1986 whereas the pay of the employees of the State of Karnataka
       was revised in 1993. The benefits of the recommendations of the
       Pay Revision Committee w.e.f. 1-1-1996, thus, could not have
       been denied to the appellants.                                         E
       30. In Chairman, Rly. Board v. C.R. Rangadhamaiah (1997) 6
       SCC 623, a Constitution Bench of this Court opined :
           “33. Apart from being violative of the rights then available
           under Articles 31(1) and 19(1)(f), the impugned amendments,
           insofar as they have been given retrospective operation, are       F
           also violative of the rights guaranteed under Articles 14 and 16
           of the Constitution on the ground that they are unreasonable
           and arbitrary since the said amendments in Rule 2544 have
           the effect of reducing the amount of pension that had become
           payable to employees who had already retired from service on
           the date of issuance of the impugned notifications, as per the     G
           provisions contained in Rule 2544 that were in force at the
           time of their retirement.”
       31. The appellants had retired from service. The State therefore
       could not have amended the statutory rules adversely affecting
       their pension with retrospective effect.”                              H
314            SUPREME COURT REPORTS                          [2022] 5 S.C.R.


A            46. Later, in Bank of Baroda and Another(supra), the question
      arose with respect to the employees who retired or died while in service
      on or after 1st April 1998 and before 31st October, 2002 to whom benefits
      were vested and accrued could be deprived of their retiral benefits. In
      this context, while taking note of the view relying on the Constitution
      bench Judgment in Chairman, Railway Board and Others(supra), this
B
      Court observed as under:-
            “29. Thus, in our opinion, the Regulations which were in force till
            2003, would apply with full force and as a matter of fact, the
            amendments made in it by addition of Explanation (c) in Regulation
            2(s) did not have the effect of amending the Regulations relating
C
            to pension, as contained in Regulation 38 read with Regulations
            2(d) and 35 of the Regulations of 1995. Even otherwise, if it had
            the effect of amending the pay and perks ‘average emoluments’,
            as specified in Regulation 2(d), it could not have operated
            retrospectively and taken away accrued rights. Otherwise also, it
D           would have been arbitrary exercise of power. Besides, there was
            no binding statutory force of the so called Joint Note of the
            Officers’ Association, as admittedly, to Officers’ Association even
            the provisions of Industrial Disputes Act were not applicable and
            joint note had no statutory support, and it was not open to forgo
            the benefits available under the Regulations to those officers who
E
            have retired from 1.4.1998 till December 1999 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 estoppel as against the enforcement of
            statutory provisions. The Joint Note had no force of law and could
F           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 & Anr. vs.
G           Brojo Nath Ganguly & Anr., (1986) 3 SCC 156 & Delhi Transport
            Corporation vs. D.T.C. Mazdoor Congress, (1991) Supp.1 SCC
            600.”
            47. The exposition of the legal principles culled out is that an
      amendment having retrospective operation which has the effect of taking
      away the benefit already available to the employee under the existing
H
 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                             315
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

rule indeed would divest the employee from his vested or accrued rights           A
and that being so, it would be held to be violative of the rights guaranteed
under Articles 14 and 16 of the Constitution.
        48. In the instant case, the Bank pension scheme was introduced
from 1st April 1989 and options were called from the employees and
those who had given their option became member of the pension scheme              B
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 11th March, 2014 which was                    C
introduced with effect from 1st April, 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 existing rule certainly is not only violative
of Article 14 but also of Article 21 of the Constitution.                         D

       49. It may also be noticed that 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 undoubtedly operates on those who
entered service before framing of the rules but it operates in futuro. In a       E
sense, it governs the future right of seniority, promotion or age of
retirement of those who are already in service.
       50. For the sake of illustration, if a person while entering into
service, has a legitimate expectation that as per the then existing scheme
of rules, he may be considered for promotion after certain years of               F
qualifying service or with the age of retirement which is being prescribed
under the scheme of rules but at a later stage, if there is any amendment
made either in the scheme of promotion or the age of superannuation, it
may alter other conditions of service such scheme of rules operates in
futuro. But at the same time, if the employee who had already been                G
promoted or fixed in a particular pay scale, if that is being taken away
by the impugned scheme of rules retrospectively, that certainly will
take away the vested/accrued right of the incumbent which may not
be permissible and may be violative of Article 14 and 16 of the
Constitution.
                                                                                  H
316            SUPREME COURT REPORTS                           [2022] 5 S.C.R.


A            51. The judgment on which learned counsel for the appellant Bank
      has placed reliance in the case of Marathwada Gramin Bank
      Karamchari Sanghatana and Another(supra), the issue under
      consideration was with respect to provident fund. The Marathawada
      Gramin Bank had floated a provident fund scheme built on better rates
      of contributions than the rates mandated under the employees provident
B
      fund scheme. Hence, the better scheme of provident fund was statutorily
      recognized by grant of exemption under Section 17(1). Later,
      Marathawada Gramin Bank discontinued its provident fund scheme for
      financial unviability, and reverted to rates mandated under paragraph 26
      of the EPFS. The Bank later declined to exercise its voluntary
C     contribution under Para 26 of the scheme after the exemption was declined
      and that came to be upheld by this Court which may not be of any
      assistance to learned counsel for the appellant in the instant case.
              52. So far as the judgment in State of Himachal Pradesh and
      Others(supra) is concerned, it was a case where apart from the scheme
D     under the provisions of Act 1952, the State of Himachal Pradesh framed
      another scheme for the Himachal Pradesh Corporate Sector Employees
      Pension(Family Pension, Commutation of Pension and Gratuity) Scheme,
      1999. It was made operational with effect from 1st April 1999 but before
      the rights to the employees could be vested/accrued, it was repealed on
      2nd December, 2004. The question arose whether such contingent right
E     vested with the employee on their having once opted under 1999 scheme
      was at all be binding or irrevocable despite being repealed by a later
      notification dated 2nd December, 2004. In that context, this Court observed
      that it was not the case of the right which accrued to the employee and
      in that context, the repealing notification was upheld by this Court.
F            53. In State of Rajasthan(supra), it was a case where the
      University which was an autonomous body created under the provisions
      of the Act by its Resolution introduced the pension scheme, without
      taking recourse of the fact that the Resolution of the Board of the
      Management of the University can be enforced only with prior approval
      from the Chancellor, i.e., the Governor of the State in terms of Section
G
      39 of the Act and it was never approved by the Chancellor, in absence
      whereof, such resolution of the Board of Management was unauthorized
      and was not open to be implemented. In the given circumstances, this
      Court was of the view that in absence of the mandate of Section 39
      being complied with, the Board of Management of the University was
H     not justified in introducing the scheme of pension.
 THE PUNJAB STATE CO-OP. AGRIC. DEVELOPMENT BANK LTD.                           317
   v. THE REGISTRAR,CO-OP. SOCIETIES [AJAY RASTOGI, J.]

       54. So far as the submission made by learned counsel for the             A
appellant about the financial distress of the appellant Bank to justify the
impugned amendment to say that it may not be possible to continue the
grant of pension any more is concerned, suffice to say, that the rule
making authority was presumed to know repercussions of the particular
piece of subordinate legislation and once the Bank took a conscious
                                                                                B
decision after taking permission from the Government of Punjab and
Registrar, Co-operative, introduced the pension scheme with effect from
1st April 1989, 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 and merely because at a later point of
time, it was unable to hold financial resources at its command to its           C
retirees, would not be justified to withdraw the scheme retrospectively
detrimental to the interests of the employees who not only became member
of the scheme but received their pension regularly at least upto the year
2010 until the dispute arose between the parties and entered into litigation.
       55. In our view, non-availability of financial resources would not       D
be 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. It is an assurance that in their old age, their periodical
payment towards pension shall remain assured. The pension which is
being paid to them is not a bounty and it is for the appellant to divert the
resources from where the funds can be made available to fulfil the rights       E
of the employees in protecting the vested rights accrued in their favour.
       56. So far as the submission made by the serving employees is
concerned, they have no locus to question. At the same time, their
apprehension as being projected to this Court is completely misplaced
for the reason that employer/employees contribution is being provided           F
under the employees pension scheme(EPS) of the Act 1952 which is
made applicable to the serving employees and they are entitled to get
pension in terms of the provisions of the Act 1952. So far as their
complaint regarding payment of contribution is concerned, it is in no
manner going to be adjusted for payment of pension to retirees/                 G
respondents, who are entitled to get their pension in terms of the pension
scheme of which they are members and it is for the appellant Bank to
reserve the resources and make payment to the retired employees seeking
pension to the scheme in vogue when they became members and took
benefits pursuant thereto.
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318              SUPREME COURT REPORTS                         [2022] 5 S.C.R.


A             57. Before we part with the judgment, we cannot be oblivious of
      the situation that the complaint of the employees that they are not being
      paid their pension since 2013, at the given time few employees have
      been given benefit of one time settlement as introduced by the Bank as
      an interim measure which was subject to their rights being preserved, in
      the pending litigation, taking grievance of the either party into
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      consideration, the financial constraints of the Bank and the rights of the
      employees who are entitled to get pension under the bank pension scheme,
      we consider appropriate to observe that so far as the arrears towards
      element of pension to which the retired employees are entitled for, the
      appellant Bank is at liberty to pay arrears towards pension upto 31 st
C     December, 2021 in 12 monthly instalments in the next one year by the
      end of December, 2022 and those employees who have accepted payment
      under one time settlement at a given point of time, what is being paid to
      them is always open for adjustment against arrears of their due pension.
      Still if arrears remain outstanding, the same shall be paid in 12 monthly
      instalments. At the same time, each of the employee who is member of
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      the Bank Pension scheme must get pension to which he/she is entitled
      from the month of January 2022 as admissible under the law.
             58. So far as the complaint of the appellant Bank regarding orders
      passed under Section 7A, Section 14B and Section 7Q of the Act 1952
      for the period April 1989 to March 2015 and for April 2015 to June 2017,
E     copies of which has been placed on record is concerned, are not the
      subject matter of challenge in the instant proceedings, it will be open for
      the appellant to take legal recourse, if being aggrieved in the appropriate
      proceedings available under the law.
            59. Consequently, the appeals fail and are accordingly dismissed
F     with observations indicated above.
             60. Pending applications, if any, stand disposed of.

      Divya Pandey                                               Appeals dismissed.
      (Assisted by : Roopanshi Virang, LCRA)
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