Gujarat High Court
Patel Govindbhai Manilal Through ... vs Dena Bank (Now Bank Of Baroda) on 30 June, 2022
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11611 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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PATEL GOVINDBHAI MANILAL THROUGH DURGESHKUMAR
GOVINDBHAI PATEL
Versus
DENA BANK (NOW BANK OF BARODA)
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Appearance:
MR HARDIK C RAWAL(719) for the Petitioner(s) No. 1
MRS MH RAWAL(2851) for the Petitioner(s) No. 1
MR DARSHAN M PARIKH(572) for the Respondent(s) No. 2
NOTICE SERVED for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
Date : 30/06/2022
CAV JUDGMENT
1 The present petition has been filed by the petitioner with the following prayers:
"8 (B) be pleased to issue a writ of certiorari or any other appropriate writ, order or direction by quashing and Page 1 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 setting aside the impugned action / decision of sanctioning only Rs.5,851/- (@66.33 % i.e. 2/3rd ) as basic pension instead of Rs.8,777/- (100%) by virtue of pension payment order dated 04.04.2019 (to commence from retrospective effect from 27.11.2009) without passing any reasoned order or without issuing any show cause notice and further be pleased to direct the respondents to sanction full pension to the petitioner with effect from 27.11.2009 and pay the difference amount payable with 18% interest."
2 Facts in brief would indicate that the petitioner was appointed with the Dena Bank on 01.07.1977. He was thereafter promoted from time to time and pursuant to disciplinary proceedings, by an order dated 06.02.2001 an order of reversion was passed. The order was confirmed and on a challenge made before this Court, the petition was allowed. It appears that the Bank thereafter, by an order dated 13.12.2003, pursuant to a separate inquiry and a charge sheet, passed an order of compulsory retirement of service from the Bank with immediate effect and without notice. The order was passed in accordance with powers under Regulation 7 (3) of the Dena Bank Officers' Employees (Discipline & Appeal) Regulations, 1976. The petitioner at the relevant point of time, having compulsorily retired did not opt for the Pension Scheme under the Pension Regulations of 1995. He was, therefore, paid retirement benefits including leave encashment, gratuity and provident fund. According to the petitioner, he was paid an amount of Rs.3,17,770/-.
2.1 A Scheme was floated by the Dena Bank on 01.10.2018 giving an option of pension to those who were compulsorily retired between 29.09.1995 to 27.04.2010. The petitioner applied for the Page 2 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 option on 29.10.2018, the option was accepted and a Pension Payment Order was issued on 04.04.2019. The petitioner was sanctioned 2/3rd of total pension being Rs.5,851/- This decision was taken by the Bank under Regulation 33 of Dena Bank (Employees' Regulations) 1995. This is the subject matter of challenge by the petitioner.
3 Mr.Hardik Rawal, learned advocate for the petitioner would submit that on compulsory retirement, an employee can be granted pension at the rate not less than 2/3rd and not more than full pension. For taking a decision in context of the regulations whether to grant 2/3rd or 100%, Mr.Rawal, learned advocate, would submit that the Bank has to follow the principles of natural justice, inasmuch as, by only granting 2/3rd pension, in effect the respondent Bank has effected a pension cut of 33.33% in case of a compulsorily retired employee and therefore, the decision is bad.
3.1 In support of his submission, Mr.Rawal, learned advocate, would rely on a decision passed by this Court in Special Civil Application No. 9275 of 1997 and allied matters in the case of A.N.Puniwala vs. Bank of India, dated 25.04.2007 where according to Mr.Rawal, learned advocate, interpreting the regulations of a Bank of the same nature, this Court held that in exercising powers under the Rules in question and when discretion is given, an opportunity of hearing ought to be given to the concerned employee to satisfy the authority that in a given case withholding of the 33.33% of pension was not warranted. Mr.Hardik Rawal, learned Page 3 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 advocate, would also rely on a decision of the Patna High Court in the case of Kaushal Kishore Thakur vs. Indian Bank., in Civil Writ Jurisdiction Case No. 15264 of 2014 which was confirmed by the Division Bench of the Patna High Court in Letters Patent Appeal No. 580 of 2016. The Division Bench relied on the decision in the case of Puniwala (supra). Mr.Rawal, learned advocate, would therefore submit that it is no longer a matter of dispute that while exercising discretion of reduction in pension, an opportunity of hearing must be given to the petitioner.
4 Mr.Darshan Parikh, learned counsel appearing for the Bank would extensively argue on the basis of the affidavit in reply and the Regulations of the Bank. He would submit that Regulation 33 provides for fixing the pension which provides an absolute discretion to the competent authority to fix the pension of an employee. Emphasizing on language of the regulation which provides for the terminology ("may be granted by the authority higher than the authority competent to impose such penalty") Mr.Parikh, learned advocate, would submit that the discretion vests in the authority to grant either 2/3rd or full pension and within the band of 2/3rd to 100 % it is an absolute discretion of the Bank. In support of his submission Mr.Parikh, learned advocate, would rely on a decision of a Co-ordinate Bench of this Court in Special Civil Application No. 7671 of 2005, in the case of Kanaiyalal Kantilal Brahmbhatt vs. Bank of Baroda & Ors., and submit that reading para 11 of the decision would indicate that complete discretion is vested with the authority of deciding the quantum of pension. He would submit that Page 4 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 in light of the decision in the case of Kanaiyalal (supra), the decisions of this Court in the case of Puniwala and that of the Division Bench of the Patna High Court is not a good law and therefore should not be of any persuasive value.
5 Mr.Darshan Parikh, learned advocate, would take the court extensively to the varieties of pensions that the Pension Regulations provide for. He would submit that the variety of pensions include superannuation pension, pension on voluntary retirement, pension on compulsory retirement. He would submit that dismissal or resignation would entail complete forfeiture of pension. A retirement pension different from pension under superannuation, on compulsory retirement therefore vests discretion with the Bank either to grant 2/3rd or 100% pension. No notice is required to be given as the discretion is vested in the authority which is to be exercised and such discretion when exercised would not amount to reducing the pension or cut in pension entailing the authority to give an opportunity of hearing to the petitioner.
6 Having considered the submissions made by the learned counsels for the respective parties, the distinction that the learned counsel for the Bank would draw in context of decision in the cases of Puniwala (supra) and that of the Patna High Court is that both those cases involved withholding of pension or forfeiture of pension and therefore were distinguishable on facts. In the case on hand, on an option being given, the petitioner opted for the pension scheme, therefore the discretion was exercised by the Bank to give only 2/3rd Page 5 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 of pension which was not withholding or forfeiting the remaining pension requiring the Bank to give a hearing. Mr.Parikh's submission is clearly misconceived. The Bank under the Pension Regulations especially Regulation (33) has a discretion to grant pension either at the rate of 2/3rd or at the rate of 100%. Regulation 33 of the Bank reads as under:
"33. Compulsory Retirement Pension.
(I) An employee retired from service as a penalty on or after 1st day of November, 1993 in terms of bank of Baroda officers' Employees (Discipline and Appeal) Regulations, 1976 or awards / settlements may be granted by the authority higher than the authority competent to impose such penalty, pension at a rate not less than two thirds and not more than full pension admissible to him on the date of his compulsory retirement if otherwise he was entitled to such pension on superannuation on that date.
(2) Whenever in the case of a bank employee the Competent Authority passes an order (whether original, appellate or in exercise of power of review) awarding a pension less than the full compensation pension admissible under these regulations, the board of Directors shall be consulted before such order is passed.
(3) A pension granted or awarded under sub-regulation (1) or, as the case may be, under sub-regulation (2), shall not be less than the amount of rupees three hundred and seventy five per mensem."
6.1 The case of Puniwala (supra) squarely applies to the facts of the present case. It will be in the fitness of things to reproduce the observations of the Co-ordinate Bench of this Court in the case of Puniwala (supra). Paras 9 to 17 of the decision read as under:
"9. At the outset it is required to be noted that disciplinary proceedings were initiated against the respective petitioners under the provisions of the Bank of India Officers Employees' (Discipline & Appeal) Regulation; 1976. The order of penalty of compulsory Page 6 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 retirement from the bank's services was imposed upon the respective petitioners as provided under Regulation - 4 (f) of the Discipline & Appeal Rules. The order of compulsory retirement has not been challenged by any of the petitioners. Considering Regulation - 33 of the Bank of India (Employees') Pension Regulation; 1995, the respondents have passed an order and/or have taken the action of withholding of 25% of the pension. It is required to be noted at this stage that penalty of compulsory retirement is imposed under the Discipline & Appeal Rules while action of withholding of 25% of the pension is taken under the provisions of the Pension Regulation; 1995. Thus, both the actions i.e. imposing the penalty of compulsory retirement and withholding of 25% of the pension are under different Rules and Regulations. One is under Discipline & Appeal Rules and another is under Pension Regulations: 1995. Under the circumstances, the contention of the learned advocate appearing for the respondent bank that the action of the respondent bank in withholding of 25% of the pension is part of discipline proceedings and is not severable and while imposing the penalty of compulsory retirement at every stage, opportunity has been afforded and therefore no further opportunity is required to be given while withholding 25% of the pension cannot be accepted. At this stage, some of the averments in the affidavit in reply filed on behalf of the respondent bank are also required to be considered. In paragraph - 14 of the affidavit in reply, it is submitted that "respondents state that disciplinary proceedings were initiated under the provisions of Bank of India Officer Employees' (Discipline & Appeal) Regulations and disciplinary action proceeding under the provisions of the said regulations has no reason / point whatsoever to refer in any manner whatsoever in respect of payment of pension as competent authority to sanction pension and payment of pension is different under the Bank of India (Employees') Pension Regulations; 1985." Even dealing with the contention on behalf of the petitioners that the appellate authority before whom the order of compulsory retirement was challenged has also opined and/or observed that the petitioners be paid full pension, it is submitted by the respondents in affidavit in reply that it is not incumbent upon the competent authority under the Pension Rules to accept anyone or all recommendations made by the appellate authority. Thus, even according to the respondents in affidavit in reply, the competent authority under the Pension Rules is different than the disciplinary authority and the appellate authority.Page 7 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022
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10.Now so far as the contention on behalf of the respondents that as under Regulation - 33 of the Pension Regulations, notice and/or hearing is not provided and therefore, opportunity of hearing is not required to be given is concerned, it is required to be noted that Regulation - 33 of the Pension Rules provides that an employee compulsorily retired from service as a penalty may be granted pension at a rate not less than two thirds and not more than full pension admissible to him on the date of his compulsory retirement, even otherwise, they were entitled to such pension on superannuation on that date. The Regulation - 33 reads as under:-
"33. Compulsory Retirement Pension.- (1) An employee compulsorily retired from service as a penalty on or after 1st day of November, 1993 in terms of Discipline and Appeal Regulations or settlement by the authority higher than the authority competent to impose such penalty may be granted pension at a rate not less than two - thirds and not more than full pension admissible to him on the date of his compulsory retirement if otherwise he was entitled to such pension or superannuation on that date. (2) Whenever in the case of a bank employee the Competent Authority passes an order (whether original, appellate or in exercise of power of review) awarding a pension less than the full compensation pension admissible under these regulations, the Board of Directors shall be consulted before such order is passed. (3) A pension granted or awarded under sub-regulation (I) or, as the case may be, under sub-regulation (2), shall not be less than the amount of rupees three hundred and seventy five per mensem."
11.Now, considering Regulation - 33, it gives authority to the competent authority to withheld pension upto 25% and thus, discretion is vested with the authority to pay pension at a rate not less than two thirds and not more than full pension meaning thereby, the authority can withheld the pension upto 25%. Thus, in an appropriate case, the authority can withheld pension upto 5%, in an appropriate case upto 10%, in an appropriate case upto 20% and maximum upto 25%. When the discretion is given to the authority, in that case, if the opportunity of being heard is given to the concerned employee, in that case, the concerned employee can satisfy the authority that in a given case order of withholding of the pension of 25% is not warranted and that only 5% of the pension may be withheld and/or less than 25% of the pension may Page 8 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 be withheld. There is another reason also why in such a situation hearing is required to be given. When the discretion is given see that such discretion is not exercised arbitrarily and is exercised judiciously, the fair play requires that an opportunity of hearing is required to be given.
12.In case of Mangilal (supra), the Hon'ble Supreme Court in paragraph - 10 has observed as under :-
"10. Even if a statute is silent and there are no positive words in the Act or the Rules made thereunder, there could be nothing wrong in spelling out the need to hear the parties whose rights and interest are likely to be affected by the orders that may be passed, and making it a requirement to follow a fair procedure before taking a decision, unless the statute provides otherwise. The principles of natural justice must be read into unoccupied interstices of the statute, unless there is a clear mandate to the contrary. No form or procedure should ever be permitted to exclude the presentation of a litigant's defence or stand. Even in the absence of a provision in procedural laws, power inheres in every tribunal/court of a judicial or quasi-judicial character, to adopt modalities necessary to achieve requirements of natural justice and fair play to ensure better and proper discharge of their duties. Procedure is mainly grounded on the principles of natural justice irrespective of the extend of its application by express provision in that regard in a given situation. It has always been a cherished principle. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice where substantial rights of parties are considerably affected. The application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment. (See Swadeshi Cotton Mills v. Union of India.) Its aim is to secure justice or to prevent miscarriage of justice. Principles of natural justice do not supplant the law, but supplement it. These rules operate only in areas not covered by any law validly made. They are a means to an end and not an end in themselves. The principles of natural justice have many facets. Two of them are; notice of the case to be met, and opportunity to explain"Page 9 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022
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13.In case of Dr. Rash Lal Yadav V/s. State of Bihar & Others reported in (1994) 5 SCC 267, the Hon'ble Supreme Court has observed that where a statute confers wide powers on an administrative authority coupled with wide discretion, the possibility of its arbitrary use can be controlled or checked by insisting on their being exercised in a manner which can be said to be procedurally fair. It is observed that Rules of natural justice are, therefore, devised for ensuring fairness and promoting satisfactory decision making.
14.In case of Suresh Chandra Nanhorya V/s. Rajendra Rajak & Others reported in (2006) 7 SCC 800, the Hon'ble Supreme Court has observed that natural justice is inseparable ingredient of fairness and reasonableness. It is observed that it is even said that the principles of natural justice must be read into unoccupied interstices of statute, unless there is a clear mandate to the contrary. It is also further observed by the Hon'ble Supreme Court that natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice.
15.Now, considering the facts of the case on hand and the relevant Regulation - 33 of the Pension Rules under which 25% of the pension of the petitioners have been withheld and considering the fact that it confers discretion upon the authority to withhold pension upto 25% and withholding of the pension can be said to be a civil consequence, the principles of natural justice must be read into the said regulation. If the opportunity would have been given to the respective petitioners before withholding of 25% of the pension, in that case, considering the discretion of the authority to withhold the pension upto 25%, the concerned employee could have represented to the authority and satisfied the authority that it is not a case where maximum 25% of the pension is required to be withheld. Thus, in view of the fact that discretion is vested with the authority to withhold pension upto 25% fair play required and that the authority exercises the jurisdiction judiciously the principle of natural justice must be read into the said regulation. Under the circumstances, as the action of the respondents in withholding 25% of the pension is without giving an opportunity to the petitioners, the same is in breach of principles of natural justice and requires to be quashed and set aside.
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16.The contention on behalf of the respondent bank is that at the time of imposing penalty of compulsory retirement at every stage, opportunity was given and withholding of 25% of the pension is consequential action of compulsory retirement no further opportunity is required to be given is concerned, it is required to be noted that as such both theactions are independent and under different Rules / Regulations. One is under the Discipline & Appeal Rules and another is under the Pension Rules; 1995. Even it is the case on behalf of the respondent bank in the affidavit in reply, as stated above that it is not incumbent upon the competent authority under the Pension Rules to consider the observation and/ or the order of the appellate authority, as both are under different regulations. It is also required to be noted at this stage that it is an admitted position that no notice has been served upon the respective petitioners calling upon them to show cause as to why pension upto 25% should not be withheld. Under the circumstance, the contention on behalf of the respondent bank that as while imposing the penalty of compulsory retirement opportunity was given and withholding of the pension upto 25% is consequential action and therefore, hearing is not required, cannot be accepted. Even the contention on behalf of the respondent bank that withholding of 25% of the pension is a part of the disciplinary proceedings also cannot be accepted as the order of compulsory retirement is passed under the provisions of the Discipline & Appeal Rules and the order of withholding of 25% of the pension is passed under the Pension Rules. Under the circumstances, the impugned action of the respondents in withholding of 25% of the pension is required to be quashed and set aside as it is in breach of principles of natural justice.
17.For the reasons stated above, all the petitions succeed and the impugned action of the respondents in withholding of 25% of the pension on passing the order of compulsory retirement are hereby quashed and set aside. It goes without saying that as the impugned actions are set aside only on the ground that they are in breach of principles of natural justice, it is always open for the respondent bank to pass an appropriate order in accordance with law and on merits after giving an opportunity to the respective petitioners. Rule is made absolute to the aforesaid extent in each of the petition, however, there shall be no order as to costs."
Page 11 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 6.2 Relying on the decisions in the case of Mangilal Vs. State of Madhya Pradesh reported in 2004 (2) SCC 447, the Court held that considering the Scheme of the Rules, it was incumbent for the Bank to provide and adhere to the principles of natural justice as a pension cut or deciding to give only 2/3rd and not 100% of pension would result in civil consequences.
6.3 As far as the decision cited by the learned advocate in case of Kanaiyalal Brahmbhatt (Supra) is concerned, the judgement nowhere has discussed the concept of principles of natural justice and it has only decided the issue on the question of the discretion of the authorities to withhold pension to the extent of 2/3rd or granting 100% pension. It is in this context that the Court held that on compulsory retirement, the discretion lies with the Bank whether to grant full pension or an amount upto 2/3rd. Reading rule 33, the Court held as under:
"12.To my mind the scheme of the said Regulations is amply clear. An employee who has to be retired on compulsory retirement basis by way of penalty is entitled to receive pension at-least to the extent of two third of his other-wise payable superannuation pension. The authority has discretion to fix such a pension anywhere between the minimum of two-third and maximum of of his full other-wise payable superannuation pension. The discretion does not travel beyond the said limits. The word "may" used in sub regulation(1) of Regulation 33 of the said Regulations only conveys the intention of the authorities to invest the competent authority with a discretion to grant pension between the two terminies. The word "may" used in Regulation 33 does not give discretion to the authority to refuse or to grant pension to the employee.
13.As noted earlier Chapter V of the said Regulations makes provisions for different kinds of pensions. These include Superannuation Pension, Pension on Voluntary Retirement, Page 12 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 Invalid Pension, Compassionate Allowance, Premature Retirement Pension and Compulsory Retirement Pension. Each classes of pension has different connotation, different provisions and is granted for different purpose. Compulsory retirement is granted to an employee who is facing penalty of compulsory retirement. In his case, sub-regulation(1) of Regulation 33 of the said Regulations is to be applied and the authority specified therein has to take decision as to the quantum of pension to be paid to such employee which may vary between a minimum of two-third and maximum full of his other-wise payable superannuation pension.
14.To the view I have adopted, there is enough indication in the Regulations itself. Regulation 22 of the said Regulations noted here-in-above provides inter-alia that resignation or dismissal or removal or termination of an employee from the service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits. Significantly, the term compulsory retirement has not been included in the said regulation for forfeiture of past service. Despite such forfeiture of service when the Bank wanted to leave scope for consideration of grant of compassionate pension, in case of employees who are dismissed, removed or terminated, provisions in this regard has been made in Regulation 31 of the said Regulations. The case of an employee facing penalty of compulsory retirement however, stands on different footing. There is no reference to the term compulsory retirement in sub- regulation (1) of Regulation 22 of the said Regulations, which inter-alia provides for forfeiture of entire past service or of disqualification for pensionary benefits. In that view of the matter, the past service can be forfeited or pension withheld only to the extent the Regulations so permitted. Subregulation(1) of Regulation 33 of the said Regulations permits the authority to grant pension not less than two third or upto a maximum possible pension on the superannuation date. In other words not more than 1/3rd of the pension can be forfeited.
15.The Disciplinary Authority has also provided in the order of compulsory retirement that same is passed with superannuation benefits as would be due at that stage. The term used is superannuation benefits. Superannuation benefits in turn includes pension under Regulation 33. The petitioner wold therefore, be entitled to receive superannuation pension as granted in the Regulation 33 of the said Regulations.Page 13 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022
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16.In the result, I am unable to uphold the stand of the Bank regarding the entitlement of the petitioner to receive pension. The impugned order dated 15-3-2005 is quashed. Simultaneously, order dated 24-1-2006 passed by the respondents pursuant to a representation made by the petitioner is also quashed. The petitioner is held entitled to receive pension as provided for in sub- regulation(1) of Regulation 33 of the said Regulations. The competent authority shall undertake exercise only for the purpose of considering the quantum of pension as provided therein. The stand of the respondent that it is solely the discretion of the Bank whether to grant pension or not to the petitioner, since he is facing the penalty of compulsory retirement, is not accepted. The respondents shall fix the pension at its discretion within the limits provided under subregulation(1) of Regulation 33 of the said Regulations as explained here-in-above."
6.4 What the Court in effect held is that once having retired, the discretion is of the Bank to grant fixed pension and it is in accordance with that discretion that the Court quashed the order of complete denial of pension and directed the Bank to take a decision within the discretionary limits as provided under the Rule. Nowhere was the question of principles of natural justice an issue which was decided. The Single Bench of the Patna High Court, considering various decisions, especially in the case of Puniwala (supra) held as under:
" Having considered the rival contentions and the facts and circumstances of the case, the Court is in agreement with the submissions of learned counsel for the petitioner. Though, as per the Pension Regulation the power of the Bank to withhold 1/3rd pension of a delinquent cannot be doubted or curtailed, however, the mode and manner to be adopted by the authority before taking such drastic action which is penal in nature visiting the person with civil consequences, has to be in accordance with law either explicit or implied. In the present case in view of the decisions relied upon by learned counsel Page 14 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 for the petitioner where the Courts have rightly held that the requirement of arriving at a conclusion that the conduct of the delinquent has resulted the Bank with loss, the natural corollary is that the loss has to e quantified and details / materials regarding the same have to be provided to the delinquent along with the memo of charges so as to give him an effective and meaningful opportunity of hearing. The same being not done in the present case, the order to withhold 1/3rd pension cannot be sustained and is according struck down. As far as leave encashment is concerned, there being no controversy that the Courts have held that a compulsory retiree is also entitled to the same and even lateron the I.B.A having fallen in line, the entitlement in law being an admitted position, just because the I.B.A has taken a decision to allow the same from a prospective date will not change the position in law. The petitioner thus on this count also is held entitled to payment of leave encashment and the decision to deny him the same is also struck down.
Accordingly, in view of the discussions made herein above, the writ petition stands disposed off holding that the petitioner is entitled to full pension as well as payment of leave encashment which shall be computed in accordance with law within four weeks from the date of production of a copy of this order before respondents no.2 and 3. The payment required to be made pursuant to such computation shall also be so done within the next four weeks.
The amount of G.P.F which the Bank has admitted in the present proceeding shall also be paid to the petitioner within four weeks from the date of production of a copy of this order before the respondents no.2 and 3. The Court would also like to observe that the amount of G.P.F which has been admitted in the present proceeding by the respondent Bank shall also be paid to the petitioner and if any formalities are required to be done on the part of the petitioner, he shall comply with the same within two weeks and whatever formality is to be completed on behalf of the Bank, the same shall also be so done within the next two weeks and the amount payable shall be so done within four weeks thereafter.
It is further made clear that all payment under any head which carries statutory interest, the same shall be paid to the Page 15 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 petitioner from the date of entitlement till the date of payment. Whatever dues the petitioner may be owing to the respondent Bank, if the same has not been paid, the same shall not carry interest after the date of compulsory retirement for the reason that the Bank also had a greater amount payable to the petitioner compared to what the petitioner owes to the Bank and the account was required to be settled forthwith pursuant to such order of punishment."
6.5 The Division Bench of the Patna High Court also in the Letters Patent Appeal held as under:
"In view of the rival contentions following issues fall for consideration in this appeal :
(I) Whether reduction of 1/3rd of the pension can be allowed in the facts and circumstances of the case?
(II) Whether it can be held that leave of the writ petitioner would lapse leading to forfeiture of the Patna High Court LPA No.580 of 2016 leave encashment amount?
We would proceed to consider the issues one by one. Issue No. (I):
Mr. Chitranjan Sinha, learned Senior Counsel appearing for the appellants, has drawn attention of this Court to Regulation 33 of the Pension Regulation. For better appreciation, Regulation 33 is extracted as under:
"33. Compulsory Retirement Pension (1) An employee compulsorily retired from service as a penalty on or after 1st day of November, 1993, in terms of Indian Bank Officer Employees' (Discipline and Appeal) Regulations, 1976 or awards / settlements may be granted by the authority higher than the authority competent to impose such penalty, pension at a rate not less than two-thirds and not more than full pension admissible to him on the date of his compulsory retirement, if otherwise he was entitled to such pension on superannuation on that date.
(2) Whenever, in the case of a Bank employee, the Competent Authority passes an order (whether original, appellate or in exercise of power of review) awarding a pension less than the full Page 16 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 compensation pension admissible under these regulations, the Board of Directors shall be consulted before such order is passed.
(3) A pension granted or awarded under sub-regulation (1) or, as the case may be under sub-
Patna High Court LPA No.580 of 2016 regulation (2), shall not be less than the amount of rupees three hundred and seventy five per mensem." At the strength of the aforesaid provisions, learned Counsel has submitted that if an employee is compulsorily retired, then, in terms of aforesaid Regulation, the competent authority, which would be higher in rank than the authority competent to impose such penalty, can award pension at a rate not less than two thirds and not more than full pension admissible to him on the date of his compulsory retirement.
Thus, it is contended, on behalf of the appellant - bank, that a competent authority has taken a decision to grant only two third of pension. Since the aforesaid Regulation does not require any prior hearing to be given to the concerned employees, it was not required at all to grant him such opportunity. He has further submitted that it was incorrect to state, on behalf of the writ petitioner, that the loss caused because of misconduct of the petitioner could not be quantified as the same stands stated all along during the course of disciplinary proceeding. Per contra, learned Counsel, appearing for the writ petitioner - respondent, with the help of Annexure 2 of the writ petition, by which a learned Single Judge Bench of this Court, on an earlier occasion, had remanded the matter to appellate authority Patna High Court LPA No.580 of 2016 for fresh consideration, has submitted that one of the grounds for remitting back the matter was the fact that the learned Counsel, appearing for the Bank, was not able to counter the submission made on behalf of the writ petitioner that the loans, advanced by the petitioner, while in service, have substantially been recovered and most of the accounts were closed amounting to the fact that there was no loss or negligible pecuniary loss. It has been urged that, in such a situation, when the loss could not be quantified either during the course of departmental proceeding or during the course of fixation of his pension in terms of Regulation 33 of the Pension Regulation, the decision of withholding / forfeiture of one third of his pension would not be sustainable in the eyes of law.
Page 17 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 Upon deeper scrutiny of the matter, we do not find force in the submissions made on behalf of the appellants for the following reasons :
The departmental proceeding and imposition of penalty upon an employee of the Indian Bank are governed by the Indian Bank Officer Employees' (Discipline & Appeal) Regulations, 1976. Major penalty stands described under Regulation 4 and penalty, with respect to compulsory retirement, being one of the major penalties, is provided under Regulation 4(h); whereas the fixation of pension is done under entirely separate Regulation, v.i.z., Indian Bank Patna High Court LPA No.580 of 2016 (Employees) Pension Regulations, 1995. As stated above, such power of fixation of pension of compulsorily retired employee has been provided under Regulation 33 of the Pension Regulation. Thus, both the actions, i.e., imposing of penalty of compulsory retirement and withholding of one third of the pension, are under different Rules and Regulations, one is under the Indian Bank Officer Employees' (Discipline & Appeal) Regulations, 1976, and the other is under Indian Bank (Employees) Pension Regulations, 1995. Therefore, in one our considered view, the contention of the learned Counsel, appearing for the Bank before the Writ Court, that in view of opportunity having been granted at the time of departmental proceeding and some sort of quantum of loss having been reflected, during that proceeding, was enough for withholding one- third of the pension as both the actions are not severable; rather, the subsequent actions of reduction of pension, as a consequence thereof, has rightly not been accepted by the learned Single Judge. Careful reading of the Regulation 33 of the Pension Regulation would disclose that the competent authority, which is a rank higher than the disciplinary authority, has the option either to grant full pension or withhold the pension up to one-third of the admissible amount. However, the question would be as to what should be the deduction in a particular case? Can it be done without Patna High Court LPA No.580 of 2016 quantifying the loss to the Bank due to the alleged misconduct? Answer has to be in negative as without quantifying the loss, any decision to deduct part of pension would be unreasonable and arbitrary. The loss not having been quantified at the time of departmental proceeding, as has been discussed by the learned Single Judge of this Court, while remitting back the matter to the appellate authority for fresh consideration on one of the grounds that the assertions of the petitioner that the almost entire loan amount, granted by him, has Page 18 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 already been recovered and that could not be specifically denied by the Bank, such action of withholding specific part of pension can hardly be justified. A question would arise why not deduction would be of 5 % or 10 %, and why it would be of one-third of the total pension? No answer could be given to this query by the Bank. Now, the second reason for discarding such reduction would be the admitted fact that the petitioner was not noticed before taking such step. If a decision is going to be taken in a proceeding, which is severable and separate from the departmental proceeding, as held above, and which is going to affect a person adversely, the doctrine of fair play always require, that opportunity of hearing should be given in view of the well accepted noble principle of audi alteram partem. A reference, in this regard, may be made to a decision of the Apex Court Patna High Court LPA No.580 of 2016 rendered in Suresh Chandra Nanhorya v. Rajendra Rajak and Ors. [2007(1) BBCJ (SC) 3 = 2007(7) Supreme 222. The Apex Court has held that natural justice is an inseparable ingredient of fairness and reasonableness. It is even said that the principles of natural justice must be read into unoccupied interstices of the statute unless there is clear a mandate to the contrary. We are in agreement of the views expressed by the learned Single Judge of Gujarat High Court in A.N. Puniwala vs. Bank of India Ors. [2007(3) GLR 2143] in this regard. Learned Single Judge, placing reliance upon the aforesaid decision of the Apex Court, along with identical view taken in the cases of Dr. Rash Lal Yadav v. State of Bihar & Ors, and Mangilal vs State of Madhya Pradesh, has held that the departmental proceeding, initiated under a different statutes than the Regulation whereunder the payment of pension is to be sanctioned by the competent authority, cannot be held to be a consequential one and, thus, even if it is not provided under Regulation 33 of Pension Regulation in express term to grant reasonable opportunity to such employee against whom adverse order of deduction of pension is to be passed, since contrary has also not been provided in the statute, it has to be understood that grant of such opportunity stands embedded in the interstices in the statute. Learned Single Judge, in this regard, has also placed Patna High Court LPA No.580 of 2016 reliance upon the decision of the Supreme Court rendered in Swadeshi Cotton Mills v. Union of India.
Thus, it is held that the aim of the principle of audi alteram partem is to prevent miscarriage of justice. The principles of natural justice would not supplant the law but supplement it. The Page 19 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 principles of natural justice have many facets. Two of them are:
Notice of the case be met and opportunity to explain. Having held so, ordinarily, this Court would have remitted back the matter to the competent authority to take a fresh decision after issuing notice to the petitioner in the aforesaid background of the matter. However, in view of fact that actual loss, if any, could not be quantified either during the course of departmental proceeding or by the competent authority, while reducing the pension, and it could not be even substantiated before the Writ Court, this Court finds no reason to remitting back the matter, once again, to the concerned authorities. A reference, in this regard may be made to the observation of the learned Single Judge, while remanding the matter to the appellate authority vide Annexure 2 to the connected writ petition passed in C.W.J.C. No. 4148 of 2013, questioning any loss, which has actually incurred by the Bank, as the Bank could not answer the statement made by the Patna High Court LPA No.580 of 2016 petitioner that no loss has actually been incurred as all the loans, advanced by the petitioner, were recovered. Even after remand, the loss could not be quantified as it has not been stated before learned Single Judge that even the appellate authority has come to such conclusion. However, we would refrain ourselves from making any comment on the appellate order having been passed on merit upholding penalty of compulsory retirement for the reason that the same is under challenge in a different writ petition and, thus, was not a lis to be decided before the writ Court.
In above view of the matter, it is held that the judgment, under appeal, on the present issue, cannot be faulted with and the issue is decided against the appellants."
7 Accordingly, the action of the Bank in restricting the discretion by awarding 2/3rd pension to the petitioner and in effect depriving the petitioner of pension is withholding of pension or forfeiture of pension to that extent and for the same the principles of natural justice ought to be followed. Recently, a Division Bench of the Himachal Pradesh High Court in the case of Arun Kumar Sood vs. Chairman & Managing Director had the occasion to consider Page 20 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022 C/SCA/11611/2019 CAV JUDGMENT DATED: 30/06/2022 the issue of awarding pension on compulsory retirement.
8 Accordingly, the petition is allowed. The decision of the Bank in withholding 33.33% of pension by the Pension Payment Order of 04.04.2019 is quashed and set aside. A fresh order on the quantum of pension, that the petitioner is entitled to needs to be passed after giving an opportunity of hearing to the petitioner in light of the decision in the case of Puniwala (supra). The petition is therefore partly allowed. The exercise of hearing shall be granted to the petitioner within eight weeks from the date of receipt of the copy of this order and a fresh order in accordance with law shall be passed within two weeks thereafter. Petition is allowed to the aforesaid extent.
(BIREN VAISHNAV, J) Bimal FURTHER ORDER After pronouncement of the judgement, Mr.Darshan Parikh, learned advocate for the respondent - Bank, requests for stay of the judgement. Request of the learned advocate is rejected.
(BIREN VAISHNAV, J) Bimal Page 21 of 21 Downloaded on : Thu Jun 30 22:38:04 IST 2022