Abn Amro Bank Mumbai Pensioners ... vs M/S. Natwest Markets Plc on 23 April, 2024

[Cites 22, Cited by 0]

Bombay High Court

Abn Amro Bank Mumbai Pensioners ... vs M/S. Natwest Markets Plc on 23 April, 2024

Bench: Sandeep V. Marne

2024:BHC-OS:6626

precipe_s_1537_2012.docx

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO.1537 OF 2012
WITH
NOTICE OF MOTION NO.1545 OF 2017
WITH
NOTICE OF MOTION NO.21 OF 2017

ABN AMRO Bank Mumbai
Pensioners Association and Anr. ...Plaintiffs
Versus
M/s. NatWest Markets Plc. ...Defendant
...
Mr. Samarth Jaidev with Mr. Netaji Gawde for the Plaintiffs.
Mr. Mikhail Behl with Ms Aishwaryajeeta Tawde i/b. M/s. Kanga
and Co. for the Defendant.

CORAM : SANDEEP V. MARNE, J.
DATED : 23 APRIL 2024.

PC:
1. Not on board. Upon being mentioned on the ground of
urgency, taken on board.

2. Motion is made for speaking to minutes of Judgment and
Decree dated 29 February 2024. It is pointed out that the name of
the Defendant has been erroneously reflected in the cause title of the
said Judgment as "The Royal Bank of Scotland Plc." instead of "M/
s. NatWest Markets Plc.". That by amending the title of the Suit

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vide order dated 12 December 2019, the name of the Defendant is
replaced as "M/s. NatWest Markets Plc.".

3. Accordingly, in the cause title of the Judgment and
Decree dated 29 February 2024 the name of the Defendant be
corrected as "M/s. NatWest Markets Plc.". Similar change to be
effected in paragraph 2 of the Judgment.

4. Necessary corrections be carried out in the Judgment
and Decree dated 29 February 2024.

SANDEEP V. MARNE, J.

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(THIS IS THE CORRECTED COPY OF THE JUDGMENT)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 1537 OF 2012
WITH
NOTICE OF MOTION NO. 1545 OF 2017
WITH
NOTICE OF MOTION NO. 21 OF 2017

1. ABN AMRO BANK MUMBAI
PENSIONERS ASSOCIATION
Having its address at B/10-179,
Rajawadi, Vidyavihar (East),
Mumbai 400 077.
Represented by Kukkundoor
Achutha Nayak, Secretary and
the Authorised Signatory of the
Plaintif.

2. ABN AMRO BANK PENSIONERS
ASSOCIATION KOLKATA
Through its Constituted Attorney
Mr. Nirendra Mohan Bhar, Secretary
Having its address at 9A/7, South
Sinthee Road, Kolkata - 700 050.
AND
Flat E/2, Sudeshna Apartment, FA56,
Narayan Tala Road [West],
Kolkata - 700 059. ...Plaintiff

V/f.

M/S. NAT WEST MARKETS Plc ...Defendant

___________

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Mr. Rohaan Cama with Mr. Samarth Jaidev and Mr. Netaji
Gawade i/b Sanjay Udeshi & Co., for Plaintifs.
Mr. D. D. Madon, Senior Advocate and Mr. Snehal
Shah, Senior Advocate with Mr. Mikhail Behl, Mr. Ashir
Amin & Ms. Aishwaryajeeta Tawde i/b Kanga & Co., for
Defendant.
__________

CORAM : SANDEEP V. MARNE, J.
Judgment Resd. On : 08 February 2024.
Judgment Pron. On : 29 February 2024.

JUDGMENT :

1. Plaintifs, who are associations of pensioners of Defendant-Bank, have instituted this Suit for declaration that their members are entitled to guaranteed pension increment of 10% every year and that the reduction in pension increment efected from 10% to 5% by the Bank efective from January 2011 is illegal. Plaintifs have also sought a money decree in the sum of Rs. 131,85,00,000/- against the Defendant-Bank.

A. FACTS

2. Plaintifs are two associations of pensioners of the erstwhile ABN AMRO Bank- now the 'M/s. Nat West Markets Plc''. Plaintif No. 1 is the association of pensioners of Mumbai, whereas Plaintif No. 2 is the association representing pensioners of Kolkata. Both associations have Megha ___Page No. 4 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx filed the present petition challenging the Defendant's action in reducing the increment of pension payable to their members from 10% p.a. to 5% p.a. by impugned letters dated 27 October 2009, 19 April 2010 and 8 February 2011. Plaintifs have accordingly sought a mandatory injunction to restrain the Defendant-Bank from reducing the increment of pension payable to their members below 10%. Plaintifs have also prayed for monetary decree in the sum of Rs.131,85,00,000/- towards the diference in the amount of pension paid to its members on account of reduction of increment to 5% from 10%.

3. Initially the suit was filed only by ABN AMRO Bank Mumbai Pensioners Association representing the pensioners of the erstwhile the ABN AMRO Bank posted in Mumbai. Another association named ABN AMRO Bank Pensioners Association Kolkata is formed by pensioners representing the those based in Kolkata, which has been impleaded as Plaintif No.2 by amending the plaint. Names of members of both the Plaintif-Associations are listed in the list annexed at Exhibit-A and A-1 to the plaint respectively. As per that list, there were 116 members of Mumbai Association and 66 members of Kolkata Association, on whose behalf the present suit has been filed. Plaintifs state from 1 March 2008, ABN AMRO Pensioners Association's Coordination Committee has been formed consisting of members of Mumbai and Kolkata Associations for taking up common causes of the pensioners with the Defendant-Bank.

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4. Defendant is a Bank carrying on business of banking under the Banking Regulation Act, 1949 and used to operate under the name of 'ABN AMRO Bank M.V.' until October 2007 when its global operations, including India operations, were taken over by the Royal Bank of Scotland Plc. It appears that on 26 December 1976, the Defendant established a pension scheme for its employees for the purpose of providing pension to them in accordance with the entitlements as per the terms of service. The pension scheme is documented in the form of Trust Deed and has varied from time to time. It appears that until the year 1997, the pension payable under the Pension Scheme was fixed without any yearly increment. On 11 February 1997, Defendant sent a letter to Coordination Committee announcing guaranteed increase of 5% in the pension on 1 st day of January every year to ofset the increase in the cost of living. Accordingly, a Memorandum of Settlement was executed between the Defendant and the Coordination Committee, under which it was agreed inter-alia, that there would be 5% increase in pre-commuted pension on first day of January every year. By letter dated 8 August 2000, the Defendant agreed to grant guaranteed increase of 7% in pension on first day of January every year on an interim basis to pensioners who had retired on/or before 30 June 1994.

5. The Plaintif-Associations demanded a further increase in the annual increment of pension to 12% by letter Megha ___Page No. 6 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx dated 15 May 2001. The Defendant by its Letter dated 31 May 2001, agreed to grant guaranteed increase of 10% in pension on first day of every year to all pensioners. This is how the members of the Plaintif Associations started receiving 10% annual increment in the amount of pre- commuted pension since 1 July 2001. The system of grant of 10% increment on first day of each year apparently is continued upto the year 2011. Plaintifs aver that the agreement for guaranteed 10% increase in pension on 1 st day of January of every year was documented in HR policies declared from time to time. It appears that in the meantime, some correspondence took place between the Plaintifs and Defendant about providing adequate funding for ensuring guaranteed 10% increase in pension every year. By letter dated 8 June 2004, the Kolkata Association wrote to the Defendant to periodically review the funding of pension at interval of three years with a view to provide security to the pensioners. The Association also suggested funding of pension from Life Insurance Corporation of India (LIC). The Bank responded by letter dated 16 June 2004 giving an assurance to the Kolkata Association that the pension payments were being governed through a well templated process. The Kolkata Association once again wrote to the Defendant on 8 October 2004 requesting for funding of pension through LIC. Again the Defendant assured by letter dated 23 November 2004 that the pension payments were managed through well established process and that no changes were being contemplated in the then prevailing process. On 3 May 2005, another request was made by the Megha ___Page No. 7 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Kolkata Association for funding of pension through LIC and again Defendant wrote to the Association on 14 May 2005 that the pension payments were being managed through well established process. Again on 23 December 2005, the request for funding of pension through LIC was repeated by the Kolkata Association.

6. Plaintifs aver that after taking over of the global operations, including India operations, by the Royal Bank of Scotland, the pension scheme appearing on the intranet of Defendant refected guaranteed increase of 10% every year. After formation of the Coordination Committee, it wrote to the Defendant by letter dated 20 August 2008 for ad-hoc increase of minimum 20% on gross monthly pension with minimum increase of 5000 p.m. w.e.f. 1 October 2008. The Defendant-Bank wrote back to the Committee not agreeing to the demand but stated that the status-quo then prevailing was not proposed to be changed. Plaintifs accordingly contend that by Letter dated 1 December 2008, the Defendant gave an assurance not to alter the guaranteed 10% increase in pension every year.

7. In the aforesaid background, the Defendant wrote to the Committee on 27 October 2009 referring to the then prevailing conditions of finance industry and proposed decrease in the rate of annual increment in pension to 2% w.e.f. 1 January 2010. The Committee objected to the proposal by letter dated 20 November 2009. After considering Plaintifs' opposition to the proposal, Defendant Megha ___Page No. 8 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx showed willingness to discuss the proposal for revising the increment percentage from 10% to cap it at 5% or Consumer Price Index (CPI), whichever was lower w.e.f. 1 January 2011. The Defendant also ofered a proposal for lumpsum payout of the value of revised 5% annual increment while retaining the core pension benefit. The Plaintif opposed the proposal by letter dated 6 May 2010.

The Bank apparently implemented the decision of reducing the increase in pension to 5% from 1 January 2011. Plaintifs addressed advocate's notice dated 16 July 2010 to the Defendant calling it upon to reduce the incremental pension from the then existing 10% p.a. to 5% p.a. Some correspondence took place between the advocates of Plaintifs and Defendants.

8. Plaintif No.1-Mumbai Association filed Suit No. 125 of 2011 on 24 November 2010 in this Court seeking permanent injunction against the Defendant from reducing the pension increment below 10%. On 8 February 2011, the Defendant addressed letters to some of the pensioners claiming that the reduction in pension increment was agreed to by the representatives of the pensioners. The Kolkata Association disputed the contents of letters dated 8 February 2011 by its reply dated 21 February 2011 and requested for reconsideration of Bank's decision to reduce the pension increment from 10% to 5%. The Defendant- Bank expressed inability to do so on account of pendency of Suit before this Court by its letter dated 16 March 2011. Suit No.125 of 2011 was withdrawn by Plaintif No.1 on 11 Megha ___Page No. 9 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx May 2012, with liberty to file a fresh suit for same cause of action. Accordingly, Plaintif No.1 has filed the present suit in which Plaintif No.2 (Kolkata Association) has been subsequently added. The prayers sought in the suit are as under :

(a) For a declaration that the Defendant's reduction of the increment of pension payable to the Plaintif's members from 10% per annum to 5% per annum vide the letters dated October 27, 2009, being Exhibit "V" hereto, April 19, 2010, being Exhibit "X" hereto, and February 8, 2011, being Exhibit "EE" hereto, is arbitrary, bad in law and in breach of contract.

(b) For a declaration that the Defendant is estopped from reducing the increment of pension payable to the Plaintif's members from 10%.

(c) For an appropriate order and direction of this Hon'ble court directing the Defendant to pay to the Plaintif a sum of Rs. 131,85,00,000/- towards the amount due and payable to the Plaintif's members in respect of the reduction of 5% pension Increment, from January 1, 2011 till the filing of the suit, and thereafter on a monthly basis till payment or realisation as per the Particulars of Claim set out in Exhibit NN hereto.

(d) For a permanent order and injunction restraining the Defendant, its servants, agents, assigns or any other person claiming by, through or under it from reducing the increment of pension payable to the Plaintif's members from 10%, and/or from acting in furtherance of its letters dated October 27, 2009, being Exhibit "V" hereto, April 19, 2010, being Exhibit "X" hereto, and February 8, 2011, being Exhibit "EE" hereto.

(e) or an appropriate order and direction directing the Defendant to forthwith comply with the provisions of Rule 15 of the Pension. Rules, 1975, being Exhibit No: "S" hereto.

(e-1) That this Hon'ble Court be pleased to direct the Defendant Bank to deposit the sum of Rs. 53,95,00,000/- with Pension Trust for purchase of annuities from Life Insurance Megha ___Page No. 10 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Corporation of India, or in any other manner or with any other such appropriate institution as this Hon'ble Court may direct, in accordance with Rule 15 of Pension Rules, 1975. (e-2) That this Hon'ble Court be pleased to direct the Defendant Bank to deposit a sum of Rs. 77,90,00,000/-, towards the balance 5% increment, in accordance with agreed HR Policy and letter dated 31st May, 2001, in this Hon'ble Court.

(f) Pending the hearing and final disposal of the present suit, for a temporary order and injunction restraining the Defendant, its servants, agents, assigns or any other person claiming by, through or under it from paying continuing to pay the increment of pension payable to the Plaintif's members at the rate of less than 10%, and/or from acting in furtherance of its letters dated October 27,2009, being Exhibit No: "V" hereto, April 19, 2010, being Exhibit No:

"X" hereto, and February 8, 2011, being Exhibit No: "EE"

hereto.

(g) Strictly in the alternative to the above, pending the hearing and final disposal of the present suit, for an appropriate order and direction of this Hon'ble court directing the Defendant to deposit the diferential amount which would have been paid to the Plaintif's members were it not for the reduction of the increment of pension from 10% per annum to 5% per annum, in this Hon'ble Court, from the date of filing of the present suit.

(h) Pending hearing and final disposal of the present suit, for an appropriate order and direction of this Hon'ble Court directing the Defendant to pay to the Plaintif a sum of Rs. 131,65,00,000/, towards the amount due and payable to the Plaintif's members in respect of the reduction of 5% of the pension increment, from January 2011 till the filing of the suit, as per the Particulars of Claim set out in Exhibit:OO1 and PP1 hereto, or alternately to deposit the same in this Hon'ble Court.

(h-1) Pending the hearing and final disposal of present suit this Hon'ble Court pleased to direct the Defendant Bank to deposit the sum of Rs. 53,95,00,00/- with Pension Trust for purchase of annuities from Life Insurance Corporation of India, or in any other manner or with any other such Megha ___Page No. 11 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx appropriate institution as Hon'ble Court may direct, in accordance with Rule 15 of Pension Rules, 1975. (h-2) Pending the hearing and final disposal of present suit this Hon'ble Court pleased to direct the Defendant Bank to deposit a sum of Rs. 77,90,00,000/- towards the balance 5% increment, in accordance with agreed HR Policy letter dated 31st May, 2001, in this Hon'ble Court.

(i) For ad interim and interim reliefs in terms of prayer clauses (f) to (h) above.

(j) For costs of the present suit.

(k) For such further and other reliefs as this Hon'ble Court may deem fit in the nature and circumstances of the present case.

9. The Defendant appeared in the suit and filed Written Statement contesting the claims raised in the plaint. Various preliminary objections are raised in the Written Statement about maintainability of the Suit on account of absence of authority to file suit, lack of cause of action, failure to comply with the provisions of Order 1 Rule 8 of the Code of Civil Procedure, 1908, status of pensioners as 'workman', etc. The suit is also defended on merits by contending that Plaintif-Associations do not have any right to demand increase in pension every year. Existence of any contract in providing annual increment in the pension is also disputed in the Written Statement.

10. At the instance of the Defendant, this Court framed two preliminary issues of jurisdiction and limitation by Order dated 21 March 2014. This Court, thereafter proceeded to decide the preliminary issues by its Judgment and Order dated 11 April 2014. This Court tried the issue of Megha ___Page No. 12 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx limitation under Section 9(A) of the Code and answered the same as under :

33. The plaintif's suit with regard to the declarations, the direction for payment, recovery and/or deposit and the injunction with regard to the increment in the bonus amount is within time. The plaintif's claim with regard to the directions, in respect of rule 15 and the deposit of amounts or the recovery of amounts as per rule 15 of the pension rules is barred by the law of limitation.

34. The suit as framed upon amendments to the plaint show recovery of more than Rs. 1 Crore. Hence it does not require to be transferred to the Bombay City Civil Court.

35. The suit shall proceed with regard to the claim under prayers (a), (b), (c), (d), (e-2), (j) & (k).

11. The Defendant challenged the Judgment and Order dated 11 April 2014 before the Division Bench in Appeal No. 208 of 2014, which came to be dismissed by the Appellate Court by Order dated 24 June 2014. Thus only prayer clauses (a), (b), (c), (d), (e-2), (j) and (k) in the Plaint survive as per the Order dated 11 April 2014.

B. ISSUES

12. By Order dated 7 November 2014, this Court has framed following issues :

(1) Whether the Plaintifs prove that they are an association of pensioners of the erstwhile ABN AMRO Bank? (2) Whether the Plaintifs prove that they are a registered society?

(3) Whether the Plaintifs prove that the members of the Plaintif No.1 were represented by Plaintif No.2 prior to the alleged registration of the Plaintif No.1? (4) Whether the Plaintifs prove that they represent the pensioners as alleged by them in paragraph 2, 2a, 2b and 10c of the plaint?

Megha ___Page No. 13 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx (5) Whether the Defendants prove that separate court fees are required to be paid by each of the member of the Plaintif Associations?

(6) Whether the Defendants prove that the suit is not maintainable in so far as such alleged pensioners are concerned who fall in the "workmen" category as defined under the provisions of the Industrial Disputes Act, 1947? (7) Whether the Defendants prove that the Plaintifs have no cause of action as against the Defendants? (8) Whether the Defendants prove that the suit is bad for want of leave under Order I Rule 8 of the Code of Civil Procedure, 1908?

(9) Whether the Defendants prove that the suit is liable to be dismissed for non-joinder of the Trustees of the ABN AMRO Bank Pension Fund?

(10) Whether the Defendants prove that the suit as filed is not maintainable as no declaration was first sought as to the validity and existence of the contract with regard to the incremental pension?

(11) Whether the Plaintifs prove that there was any binding contract between the Plaintifs and the Defendants? (12) Whether the H.R. Policy of the Defendants provided for a guaranteed 10% annual pension increment? (13) Whether the Defendants prove that the act of the Defendants of increase in 10% of Pension income was unilateral and benevolent/gratuitous Act? (14) Whether the Defendants' action of reduction in guaranteed 10% annual increase in the pension is just and proper?

(15) Whether the Plaintifs prove that there is a breach of contract?

(16) Whether the Plaintifs are entitled to a 10% annual increase in the pension?

(17) Whether the Plaintifs prove that it is entitled to a declaration that the Defendants are estopped from reducing the rate of increment of pension?

(18) Whether the Plaintifs prove that they are entitled to an order and direction as against the Defendants to pay an amount of Rs.131,85,00,000/-?

(19) Whether the Plaintifs are entitled to a permanent order and injunction restraining the Defendants from reducing the increment of pension payable to the Plaintifs' members? (20) What decree? What order?

C.      SUBMISSIONS



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13. Mr. Cama, the learned counsel appearing for the Plaintifs would submit that the pension increment is also a 'pension' and that therefore right to receive guaranteed increment of pension is akin to the right to receive pension.

That the contractual commitment was made to all pensioners for providing guaranteed 10% increase in pension every year. That the contract between the parties is borne out from correspondence placed on record as well as from actions of Defendant in acting upon the said contract. That most of the pensioners have retired prior to 2011 and 10% increment every year was guaranteed to them at the time of their retirement. That in Chairman, Railway Board and Others V/s. C. R. Rangadhamaiah and Others1 and U.P. Raghavendra Acharya and Others V/s. State of Karnataka and others 2, the Apex Court has held that the pension received by a person on the date of his retirement cannot be altered retrospectively. That the Courts have held that the retirement benefits are frozen on the date of retirement and it is unlawful for an employer to reduce the same at its ipse dixit. That the Apex Court in those judgments have held that the consideration for paying pension is the past service. That consideration for payment of pension is always bound to be past service rendered by an employee.

14. Mr. Cama would rely upon judgment of this Court in Mrs. Hemlatha Varadan and others V/s. Municipal 1 (1997) 6 SCC 623 2 (2006) 9 SCC 630 Megha ___Page No. 15 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Corporation of Greater Mumbai3 and would submit that any attempt to alter pensionary benefits cannot be countenanced on the basis of well settled legal position that depriving an employee to the rightful entitlement of pension, afects right to live and right in property. He would also place reliance on the judgment of the Apex Court in State of Kerala and Others Vs. M. Padmanabhan Nair 4.

15. Mr. Cama would submit that the contract in the present case is borne out from correspondence between the parties. Relying upon the judgment of the Apex Court in Govind Rubber Limited V/s. Louis Dreyfus Commodities Asia Private Limited5 and English Case in Butler Machine Tool Co. Ltd. V/s. Ex-Cello Corporation (England) Ltd.6, he would submit that the contract can be assumed even from correspondence between the parties. That the intention of the parties as appearing from the correspondence can be inferred if there is a meeting of minds between the parties and if it is observed that the parties were ad-idem as to the terms of contract, existence of contract must be inferred. He would submit that the correspondence between the parties leaves no manner of doubt that there is contractual obligation accepted by the Defendant-Bank for providing guaranteed 10% increment in pension.

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16. Mr. Cama, would further submit that the members of Plaintifs-associations have spent decades of their lives employed with the Defendant and assurance of 10% guaranteed pension increment was arrived at after negotiations between the parties. The terminology used in the letter dated 31 May 2001 makes it clear that there was an "agreement" and the agreement provided for "guaranteed" annual pension increment of 10% to "all" pensioners. That the terminology clearly evidences a binding contractual obligation between the parties.

17. Mr. Cama, would further submit that Plaintif's witness (P.W.2) has adduced evidence about the arrangement of providing guaranteed 10% pension increment as existence of contract by the defendant. That the said witness was herself involved in the decision-making process and the evidence given by her clearly suggests that the bank always treated provision of 10% pension increment as a valid and binding contract. That no evidence is adduced by the Defendant-Bank to prove that grant of 10% pension increment was a benevolent act or that any right was retained to wriggle out of contractual obligation at their ipse dixit. In absence of any evidence by the Defendant, its defence cannot be accepted. That the contract was also documented in the form of HR Policies published from time to time, which did not use or suggest the word "benevolent". On the contrary, the letter dated 31 May 2001 uses the word 'guaranteed' for grant of 10% pension increment every year.

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18.              On      the         issue   of    non-payment            of    court-fees

individually by each member of Plaintifs, Mr. Cama would submit that the suit is filed by Plaintif-Associations seeking declaration and recovery of money payable to the Associations. That the cause of action is singular and not separate for each member of the Association. That therefore one set of maximum court-fees is rightly paid on a single plaint. The cause of action relates to breach of contractual commitments made to the Defendant and for violation of right of the Associations to recover the diference of pension from the defendant. Upon receipt of the decretal amount, the Plaintifs-Associations will make necessary disbursements to its members. He would rely upon judgment of this Court in Syndicate Bank and others V.s. M/s. S.S. Printers and others 7 holding that so long as maximum court-fees are paid on a plaint, no further court- fees can be demanded even if plaint involves number of causes of action. That the suit is not representative suit and the same is filed by two registered associations who are statutorily authorised to maintain the suit on behalf of their members. This is not a case where one pensioner has filed suit to espouse the cause of his cohorts and that therefore the provisions of Order 1 Rule 8 of the Civil Procedure Code are not attracted.

19. Mr. Cama would further submit that pensioners have legitimate expectation of receiving 10% guaranteed pension increment every year and that they have planned 7 1995 (3) Bom.C.R. 429 Megha ___Page No. 18 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx their finances accordingly. That the Defendant-Bank's sudden decision to reduce the pension increment from 10% to 5% upsets the entire financial planning of the pensioners who are at the fag end of their lives. He would therefore submit that the Defendant-Bank must honour its contractual commitments and restore the 10% pension increment in terms of agreement arrived at between the parties vide letter dated 31 May 2001.

20. Mr. Madon and Mr. Shah, the learned senior advocates have opposed the Suit appearing for the Defendant-Bank. They would submit that Plaintifs do not have right to sue and that on that count, the suit deserves to be dismissed. That the constitutional documents of Plaintif No.1-Assocation do not permit it to initiate legal proceedings on behalf of its alleged members as Clause-4 of the Memorandum of Association has expressly been deleted. That the conscious decision was taken by Plaintif No.1 that it would not initiate or prosecute any litigation to protect or fight for rights of pensioners. That so far as Plaintif No.2 is concerned, no constitutional documents of Plaintif No.2- Association have been placed or proved. Despite being requisitioned by Defendant by way of Advocate's letter dated 28 January 2015, the Plaintifs have failed to produce bye-laws of Plaintif No.2-Association warranting drawl of adverse inference. He would rely upon cross-examination of P.W.No.1-Mr. Nayak who was the then Secretary of Plaintif No.1-Association and who denied existence of any constitutional documents. That the Resolutions allegedly Megha ___Page No. 19 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx adopted by the Plaintif Nos.1 and 2 have not been proved during the course of trial. Therefore, the authority to file and maintain the suit itself is under cloud. That the Plaintifs have thus failed to demonstrate the right to sue and consequently their suit must fail.

21. Mr. Madon would further submit that though the suit is filed in the name of Plaintifs-Associations, the decretal amount is not sought for the benefit of the Associations and the Associations would finally remit the payments to its members. Thus, the Decree would finally enure to the benefit of the members. The suit is thus filed on behalf of the members and in that sense is a representative suit. That therefore each individual claim of pensioner ought to have been valued separately and a separate court- fee ought to have been paid in respect thereof. He would rely upon the judgment of the Apex Court in the case of Mota Singh & Ors. V/s. State of Haryana8 and judgment of this Court in Heena Narendra Patel Vs. Heena Narendra Patel9. He would also place reliance on Judgment dated 5 October 2023 passed by this Court in Nandkumar Khairam Kalati and Others. V/s. M/s. Atlantic Apparels10. Mr. Madon would submit that the judgment of the Apex Court in Syndicate Bank (supra) has no application to the present case and that the said decision is considered by this Court in its decision in Heena Narendra Patel. He would also refer to the Order dated 16 February 2021 passed by the Taxing Master of this Court in 8 AIR 1981 SC 484 9 (2015) 2 Bom.C.R. 614 10 Summary Suit (L) No. 12781 of 2023 decided on 5 October 2023.

Megha ___Page No. 20 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Abhijit Singh and 47 others V/s. Nat West Markets PLC11 wherein direction was issued for payment of separate court-fees in respect of individual claims.

22. Mr. Madon would further submit that no enforceable contract exists between the parties for payment of 10% pension increment each year. That existence of such contract has been specifically denied by the Defendant. That there is no specific prayer in the plaint seeking a declaration about existence of any such contract and in absence of such prayer, the suit must fail. That the letters addressed by the Kolkata Association dated 15 March 2001 and by Defendant-Bank on 31 May 2001 did not create any contractual obligations between the parties. That the pleadings in the plaint do not support the plea of existence of any such contract.

23. Referring to definition of the term 'consideration' in Section 2(d) of the Indian Contract Act, 1872, Mr. Madon would submit that there is no consideration in respect of the contract that is sought to be established in the present case. That Kolkata Association's letter dated 15 May 2001 merely contains a sympathetic request for an increment and that the same does not constitute a promise in any manner. That this is expressly borne out from the deposition of Ms. Smita Mhapuskar (P.W.2) who had herself denied existence of any agreement and had treated grant of pension increment as a mere benevolent gesture on the part of the Defendant. To constitute an enforceable contract, the two letters dated 15 11 Suit (L.) No.1021 of 2019 decided on 16 February 2021.

Megha ___Page No. 21 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx May 2001 and 31 May 2001 must contain reciprocating promises forming consideration for one another. That there is neither any pleading nor proof about existence of consideration fowing to the Defendant-Bank by pensioners for it to agree to pension increment.

24. Mr. Madon would submit that past services rendered by pensioners cannot be treated as a consideration to constitute an agreement on the part of the Defendant-Bank to pay pension increment. That there is no pleading about past services constituting consideration for any agreement. Relying on a passage in 'Chitty on Contracts' (32nd Edition), Sections 4-026, Page 419, Mr. Madon would submit that a promise to make payment in respect of past services is not contractually binding. That no additional services are rendered by pensioners so as to constitute a contract for payment of pension increment. That mere gratuitous act on the part of the Defendant in extending annual increment of 10% vide letter dated 31 May 2001 does not constitute a binding enforceable contract in absence of reciprocating consideration/ promises. He would also rely the judgment of the Apex Court in Dwarampudi Nagaratnamba V/s. Kunuku Ramayya and another12 holding that past services which once operated as consideration for earlier promise cannot be treated under Section 2(d) of the Indian Contract Act as a subsisting consideration. He would also rely upon judgment of Madras High Court in Doraswamy Iyer Vs. 12 AIR 1968 SC 253 Megha ___Page No. 22 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Arunachala Ayyar and others 13 as well as English case in Murray (Inspector of Taxes) V/s. Goodhews 14 where gratuitous payments received were not treated as income for the purpose of taxation. That therefore the Defendants gratuitous/benevolent act of ofering pension increment cannot be treated as a binding enforceable contract.

25. Mr. Madon would submit that pension increment cannot be treated as a facet of pension. That the Trust Deed of the Defendant contains provision for only payment of guaranteed pension and not increase in pension. That the Trust Deed has never been amended so as to make any provision for pension increment.

26. Mr. Madon would take me through the evidence of Mr. Nayak (P.W.1) and Ms. Smita Mhapuskar (P.W.2) to demonstrate that the evidence does not bear out existence of any contract between the parties. He would further submit that the promises made out by Mr. Romesh Sobti, Company Representative, India of Defendant-Bank or Mr. Raj Katra, Head, Human Resource, India were beyond their authorities. That there was confict of interest as Mr. Sobti, Mr. Katra and Ms. Mhapuskar are beneficiaries for drawl of pension increments. Relying upon judgment of this Court in Firestone Tyre and Rubber Co. V/s. Synthetics and Chemicals Ltd. And others15, Mr. Madon would submit that the Defendant-Bank is otherwise not bound by decisions taken by Mr. Sobti, Mr. Katra or Ms. Mhapuskar 13 AIR 1936 Madras 135 14 1977 1 WLR 499 15 (1971) 41 CC 377 Megha ___Page No. 23 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx without any authority. He would submit that the pension increment was paid through 'ofice expenses debit' and not as 'pension' in the books of accounts, thereby suggesting that the decision making authorities of the Defendant-Bank were not even aware about liability fastened on the Defendant towards pension increment.

27. Without prejudice and in the alternative, Mr. Madon would submit that even if the letters dated 13 May 2001 and 15 May 2001 or 31 May 2001 are treated as enforceable agreements, the same would apply only in respect of the pensioners as on 30 June 1994 and that the same would not apply to employees retiring post that date. Mr. Madon would also dispute the computation of suit claim. He would pray for dismissal of the suit.

D. REASONING, ANALYSIS AND FINDINGS

28. Based on various contentions raised by the learned counsel appearing for the parties, the issues framed by this Court can be grouped in four broad questions that need to be answered while deciding the present suit. They relate to (i) preliminary objections about maintainability of the suit, (ii) failure to pay adequate court-fees, (iii) existence of contract between the parties and (iv) right of plaintifs or their members to claim guaranteed pension increment of 10% each year. I accordingly proceed to answer the issues formulated by this Court by Order dated 7 November 2014 in these four broad groups as follows :

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Iffue Nof. 1 to 4:

(1) Whether the Plaintifs prove that they are an association of pensioners of the erstwhile ABN AMRO Bank? (2) Whether the Plaintifs prove that they are a registered society?

(3) Whether the Plaintifs prove that the members of the Plaintif No.1 were represented by Plaintif No.2 prior to the alleged registration of the Plaintif No.1? (4) Whether the Plaintifs prove that they represent the pensioners as alleged by them in paragraph 2, 2a, 2b and 10c of the plaint?

29. These issues essentially pertain to the right of the Plaintifs to sue and maintain the present suit. The Defendant has questioned maintainability of the present suit at the behest of the Plaintifs on the ground that no constitutional documents are produced and/or proved, in addition to absence of authority by the pensioners given to Plaintif Association to fight on their behalf with regard to their grievances of pension. Plaintifs are Association of pensioners of Mumbai and Kolkata and have long since been representing the pensioners with the Bank. There is no denial to the fact that the Coordination Committee of Mumbai and Kolkata Associations was formed. There are numerous documents on record evidencing the discussions by Bank with the said Coordination Committee of the said two Associations. Infact the letter dated 31 May 2001 which is the sheet-anchor of Plaintifs to demand guaranteed 10% pension increment every year, was written by the Defendant-Bank in response to the letter of Kolkata Association dated 15 May 2001. After grant of 10% pension increment in pursuance of letter dated 31 May 2001, the Coordination Committee of the Associations continued the Megha ___Page No. 25 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx correspondence with the Defendant-Bank demanding purchase of annuity from LIC so as to ensure smooth payment of pension and pension increment. The Defendant- Bank engaged itself in correspondence with the Coordination Committee by discussing the demands raised by it. The Coordination Committee demanded 20% pension increment by letter dated 29 August 2008, which was responded by the defendant by letter dated 1 December 2008. The proposal for reduction of pension increment to 2% w.e.f. 1 January 2010 was given by Defendant-Bank to the Coordination Committee by letter dated 27 October 2009. The same was resisted by the Coordination Committee and the final decision in the matter was taken and conveyed to the Coordination Committee by the Defendant-bank by capping the pension increment at 5% or CPI (whichever is lower) by letter dated 19 April 2010.

30. The Defendant however now raises a technical plea that the Plaintif-Associations do not have right to sue or to maintain the present suit. The objection is essentially premised on deletion of Item No.4 of the Memorandum of Association of Mumbai Association under which one of the objectives behind forming the Association was to fight for rights of pensioners of the Defendant-Bank. In my view, Plaintif No.1 is a legal entity as it is registered as a Society under the provisions of the Societies Registration Act, 1860 and is therefore entitled to sue and maintain the present suit. It appears that the Certificate of Registration in respect of Plaintif No.2 has not been marked as Exhibit. If Megha ___Page No. 26 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Defendant's objection is accepted Suit by only Plaintif No. 1 will have to be treated as maintainable and in the event of this Court decreeing the Suit, only pensioners of Mumbai Association would be benefitted by the decree. The causes of action for the two Plaintif associations are not diferent. Reduction of pension increment is a policy decision taken by the Bank to be applied uniformly to all pensioners, regardless of their postings in Mumbai or Kolkata. I am therefore not inclined to accept the technical objection of failure to prove the registration certificate of Plaintif No. 2 for holding that the Suit qua Plaintif No. 2 is not maintainable. Plaintifs are legal entities capable of suing. The objection to maintainability on this count therefore fails.

31. So far as Issue No.4 about right to represent pensioners of Defendant-Bank are concerned, I again find the objection to be too technical deserving outright rejection. Having entered in series of correspondence with Plaintif-Associations on the issue of pension increments, it is too late in a day for the Defendant-Bank to turn around and raise a technical objection of deletion of Item No. 4 of byelaws of Plaintif No.2. If Plaintifs did not have right to fight for pension of its members, the question as to why Defendant made correspondence with them and why decision of reduction of pension increment to 5% was conveyed to the Coordination Committee of both associations begs an answer. The first four issues are Megha ___Page No. 27 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx therefore answered in favour of Plaintifs and against the Defendants.

Iffue No. 5 :

(5) Whether the Defendants prove that separate court fees are required to be paid by each of the member of the Plaintif Associations?

32. The payment of appropriate court-fees has been the hotbed of controversy between the parties. The Defendant contends that the suit is filed in respect of claims of individual pensioners and that therefore separate court- fees must be paid in respect of each such individual claim. The suit is filed by two Associations of pensioners, essentially seeking a declaratory relief against the Defendant in respect of its decision to reduce pension increment below 10%. A consequential monetary decree is sought in the sum of Rs.131,85,00,000/- towards diference of pension on account of reduction of increment from 10% to 5% w.e.f. 1 January 2011 onwards. This claim again is not static and varies with passage of time as well as upon death/opting of cash-out by pensioners.

33. The Defendant has relied on judgment of this Court in Heena Narendra Patel (supra). In that case, the suit was instituted by 8 individual members of a cooperative society seeking damages of Rs. 1 crore for each Plaintif from Defendants. The suit was jointly valued at Rs.8 crores and court-fees of Rs. 3 lakhs was paid. Defendants raised an objection about improper valuation of the suit and failure to Megha ___Page No. 28 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx pay court-fees in respect of each individual claims. This Court held in paras-8, 10, 12, 13, 14 and 19 as under :

8. The short issue that arises in this suit is, therefore, whether plaintifs are liable to pay court fees separately on their respective cause of action subject to maximum limit of Rs. 3,00,000/- prescribed under the said Act or the maximum limit of Rs. 3,00,000/- prescribed in Article 1 of Schedule I of the Act is not applicable and each plaintif has to pay maximum court fees under their respective claim aggregating to Rs. 10,65,840/-.

10. Under Order 1 Rule 1 r/w Order 2 Rule 3, the plaintifs were justified in uniting in the same suit, their independent causes of action against the same defendant. Therefore there is no harm with the plaintifs filing the suit together. Each of the plaintif is alleging defamation against the Defendant Nos. 1 and 2 arising out of the notice dated 22nd October 2005 addressed by the Defendant No. 2 on instructions from Defendant No.1. Each plaintifs, therefore, even if act of the defendants is common against each of the plaintif, has to prove that by lodging the complaint dated 22nd October 2005, the defendant nos. 1 and 2 have defamed each of the plaintif and each of the plaintif also has to justify the amount of Rs. 1 Crore claimed. In other words, each plaintif has to not only establish liability of defendant Nos. 1 and 2 to each one of them, but also should establish the quantum with respect to each one of them. It is therefore clear from the plaint that the 7 surviving plaintifs could have filed 7 separate suit against the defendants without necessity to file one comprehensive suit. Moreover, even if the evidence could be common for the defendants as against of the plaintifs, the evidence for each of the plaintif will have to be separate, because this is a suit for defamation. In a suit for breach of contract, perhaps the situation might be diferent. As it is a suit for defamation even if each of the plaintif had filed separate suits, they were likely to be not consolidated because in a defamation action, each plaintif will have to prove that the act of the defendant defamed them and the quantum of damages claimed.

12. At the same time, I am inclined to accept the view that the term "distinct subjects" used in Section 18 should be read and understood as subject matters as are distinct but which can be clubbed together in a single suit. The intention of Section 18 seems to be provided for suits which involved multifariousness and which do not go against the provisions of Code of Civil Procedure such as misjoinder of causes of action.

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13. Whether the items involved in the suit are distinct subjects or one and the same subject may also be decided by the facts as to whether, if one of the plaintif alone had filed the suit and decree passed therein in favour of such plaintif, would it enure to the benefit of the rest of the parties who have not been parties to the suit.

14. It may be convenient for all the plaintifs claiming for similar relief on a similar cause of action to combine and file a suit. In such a case it is possible to avoid multiplicity of suits by combining causes of action and parties without ofending the provisions of Code of Civil Procedure. At the same time I find it dificult to see how distinct causes of action which each plaintif has can be one subject even within the meaning of Section 18. In reality, the plaintifs are seeking 8 independent decrees of Rs. 1 Crore each against the Defendant Nos. 1 and

2. In my view each of the plaintifs will have to pay separate amounts of maximum court fees as if each of the plaintif has filed an independent action. I find it dificult to see how distinct causes of action that each plaintif independently has can ever be distinct subjects within the meaning of Section

18. Section 18 in my view takes into account a situation where there is one plaintif who filed a suit embracing two or more subjects not many plaintifs who have come together and field a suit for defamation claiming separate damages.

19. None of the other two Judgments cited by the Plaintifs i.e. C.P. Syndicate Ltd. v. Sardar Naurang Singh AIR (37) 1950 Nagpur 189 and Raghubir Singh v. Dharam Kaur 3 ALL 108 (F.B.) are applicable to the facts of the present case. They do not involve in the case of joinder of multiple party seeking a decree against a common defendant. In that context, the ratio of the Bombay High Court in the matter of Indian Oil (supra) as regards applicability of proviso to Article 1 of Schedule 1 of the said Act to Section 18 will not apply to a case involving joinder of plaintifs/parties and joinder of causes of action. In all the judgments cited by the Plaintifs, the facts involved only joinder of causes of action by a single plaintif.

34. In my view, the judgment of this Court in Heena Narendra Patel (supra) would have no application to the present case. In that case, each of the 8 Plaintifs had distinct causes of action within the meaning of Section 18 of the Bombay Court Fees Act, 1959 and 8 independent Megha ___Page No. 30 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx decrees were sought of Rs.1 crore each. It is in the light of these facts that Single Judge of this Court held that each Plaintif must pay separate court-fees in respect of individual decrees sought by them. In para-10 of the Judgment, this Court clarified that "in a suit for breach of contract, perhaps the situation might be diferent." Thus if a common suit was to be filed by the said 8 Plaintifs in Heena Narendra Patel alleging breach of contract, the payment of singular court-fees would have been acceptable. In the present case, the pensioners have not filed the Suit seeking individual decrees. The suit is filed by the two Associations seeking one decree in their favour. If the suit is decreed in terms of monetary claim, the money would be payable to the Plaintif-Associations and not to the individual pensioners. In that view of the matter, the judgment of this Court in Heena Narendra Patel would have no application to the facts of the present case.

35. In Nandkumar Khairam Kalati (supra), a Single Judge of this Court has dealt with a summary suit filed by number of Plaintifs consisting of individuals and a private limited company claiming diferent amounts that were purportedly lent to the same Defendant. It is in the facts of that case that this Court held that Plaintifs could not have filed a common suit for avoiding payment of court- fees, which they would have been liable to pay in the event of filing of separate suits. In that case, the court-fees was also not caped at Rs.3,00,000/-. Thus facts, in Nandkumar Khairam Kalati are entirely distinguishable.

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36. In Mota Singh relied upon by Mr. Madon, diferent truck owners had filed a common Petition questioning the tax liability, with having no connection with each other. In the light of that position, the Apex Court held that individual petitions were required to be filed by paying separate court fees.

37. Here the Suit is filed by two associations, seeking a declaration and money decree against the Defendant. The Suit essentially seeks a declaration with regard to the rate of pension increment. Any declaration given by this Court would otherwise bind the Bank. I must also be mindful of the fact that this Court is dealing with case of pensioners, who are at advanced stage of their lives. The amount to which they would ultimately entitled to, in the event of their success in the suit, is also not static. It is changing with passage of each day. I am therefore not inclined to issue a direction for payment of individual court-fees by all members of the associations. I therefore find that the objection of non-payment of individual court-fees by each of the pensioners raised by the Defendant is baseless and deserves to be rejected. Issue No.5 is answered accordingly.

Iffue No. 6 :

(6) Whether the Defendants prove that the suit is not maintainable in so far as such alleged pensioners are concerned who fall in the "workmen" category as defined under the provisions of the Industrial Disputes Act, 1947?

38. In my view, the objection with regard to the status of pensioners as "Workman" under Section 2(s) of the Megha ___Page No. 32 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Industrial Disputes Act, 1947 is not seriously pressed before me. In any case, no evidence is led to prove that the pensioners performed manual, unskilled, skilled, technical, operational, clerical or supervisory work or that Defendant is an 'Industry' and therefore the pleadings in the Written Statement about status of pensioners as 'workmen' is not proved. The suit is therefore maintainable and the objection raised by the Defendant in this regard is repelled. The Issue No.6 is answered accordingly.

Iffue N0. 7:

(7) Whether the Defendants prove that the Plaintifs have no cause of action as against the Defendants?

39. The Defendants have sought to contend that there was no cause of action for the Plaintifs to file suit against the Defendants. I find the objection to the totally baseless as there existed a clear cause of action for Plaintifs to file the suit in view of the policy decision taken by the Defendant to reduce pension increment from 10% to 5% w.e.f. 1 January 2011. The objection of lack of cause of action is thus totally baseless and deserves outright rejection. Issue No.7 is answered accordingly.

Iffue No. 8:

(8) Whether the Defendants prove that the suit is bad for want of leave under Order I Rule 8 of the Code of Civil Procedure, 1908?

40. Leave under Order 1 Rule 8 of the Code would have been necessary if some of the pensioners were to file a Megha ___Page No. 33 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx suit representing all other pensioners of the Bank. In the present case, the suit is not filed by one or more pensioners. It is filed by the two Pensioners Associations, who are legal entities, capable of suing. A monetary decree is sought by the two Pensioners Associations and if the suit is decreed, the monies would be paid to Plaintif-Associations. In that view of the matter, the suit cannot be treated as a representative suit for which leave under Order 1 Rule 8 would be necessary. In my view, therefore leave under Order 1 Rule 8 is not necessary for maintaining the present suit. Issue No.8 is answered accordingly.

Iffue No. 9:

(9) Whether the Defendants prove that the suit is liable to be dismissed for non-joinder of the Trustees of the ABN AMRO Bank Pension Fund?

41. The objection of non-joinder of trustees of Defendant-Bank is again not seriously pressed before me. Even otherwise, I fail to comprehend as to why presence of trustees of the pension fund would be necessary parties to the present suit. The pension, including pension increment, is paid to the pensioners by the Defendant-Bank. The objection of non-joinder has some connection with disowning of responsibility about decisions taken by Mr. Sobti, Mr. Katra and Ms. Mhapuskar, who, according to the Defendant-Bank are beneficiaries. This could be the reason why, trustees of the Pension Scheme are claimed to be necessary parties to the suit. I find the attempt to disown decisions of Mr. Sobti, Mr. Katra and Ms. Mhapuskar to be totally baseless and afterthought and unsupported by Megha ___Page No. 34 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx pleadings. This aspect is being dealt with separately while deciding the Issue No. 11. Therefore, presence of trustees of the pension fund of the Defendant is not necessary for deciding the Suit. They are not necessary parties, in whose absence, suit cannot be decided. The objection of non- joinder is therefore rejected. Issue No.9 is answered accordingly.

Iffuef Nof. 10, 11, 12, 13 and 15:

(10) Whether the Defendants prove that the suit as filed is not maintainable as no declaration was first sought as to the validity and existence of the contract with regard to the incremental pension?

(11) Whether the Plaintifs prove that there was any binding contract between the Plaintifs and the Defendants? (12) Whether the H.R. Policy of the Defendants provided for a guaranteed 10% annual pension increment? (13) Whether the Defendants prove that the act of the Defendants of increase in 10% of Pension income was unilateral and benevolent/gratuitous Act? (15) Whether the Plaintifs prove that there is a breach of contract?

42. These issues relate to existence of contract between the parties for grant of pension increment of 10% every year and its enforceability. This, in my view, is the most crucial issue on which success of the Plaintif in the suit squarely hinges. To succeed in the present suit, the Plaintifs must prove that there is binding and enforceable contract with the Defendant-Bank for grant of 10% pension increment every year.

43. In the present case, there is no direct agreement or contract signed by the Plaintifs and Defendant for payment of pension increment. Existence of contract is Megha ___Page No. 35 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx sought to be inferred by the Plaintifs on the basis of correspondence between the parties and conduct of the Defendant. It is well settled that in order to prove or infer existence of contract, six essential elements are required to be proved viz. ofer, acceptance, awareness, consideration, capacity and legality. In the present case, letter dated 15 May 2001 by Kolkata Association demanding 12% pension increment w.e.f. 1 July 2001 is sought to be projected as an ofer and Bank's letter dated 31 May 2001 agreeing to a guaranteed increase of 10% pension increment every year is sought to be projected as acceptance of that ofer. The Defendant, on the other hand denies existence of any such ofer and acceptance. Additionally, the Defendant denies existence of any consideration for making reciprocal promises. Section 2 of the Indian Contract Act, 1872 provides thus :

2. Interpretation-claufe.--In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:--

(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;

(b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;

(c) The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee";

(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;

(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;

(f) Promises which form the consideration or part of the consideration for each other are called reciprocal promises;

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(g) An agreement not enforceable by law is said to be void;

(h) An agreement enforceable by law is a contract;

(i) An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract;

(j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

44. Thus under Section 2 (a) of the Indian Contract Act, the action of a person who signifies willingness to do or to abstain from doing anything with a view to obtain assent of the other person constitutes a proposal. From reading of letter dated 15 May 2001, it is dificult to hold that Kolkata Association or its members signified their willingness to do or to abstain from doing anything with a view to obtain assent of the Defendant-Bank. This is the reason why the Defendant contends that there is absence of any consideration in the present case to infer existence of contract between the parties. Substantial debate has taken place between the parties as to whether past service of pensioners would constitute consideration to infer contract. Mr. Madon has relied upon relevant passages from Chitty on Contracts, 32nd Edition, Vol.I "General Principles" in support of his contention that past consideration is no consideration. The relevant passages in Chitty on Contracts reads thus :

4-026: Past consideration is no consideration. The consideration for a promise must be given in return for the promise. If the act or forbearance alleged to constitute the consideration has already been done before, and independently of, the giving of the promise, it is said to amount to "past consideration"; and such past acts or forbearances do not in law amount to consideration for the promise. If, for example, a thing is guaranteed by a seller after it has been sold the guarantee is not contractually binding on the seller as the consideration for his promise is Megha ___Page No. 37 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx past. Similarly a promise to make a payment in respect of past services is not contractually binding unless the conditions specified in para.4-030 below are satisfied or some other consideration is provided. For example, a promise to pay money may be made to an employee after his retirement or to an agent after the termination of the agency. If the sole consideration for the promise is the service previously rendered by the former employee or agent, it will be past consideration, so that the promise will not be contractually binding. It will be so binding only if some consideration other than the past service has been provided by the promisee. Such other consideration may consist in his giving up rights which are outstanding (or are in good faith believed to be outstanding) under the original contract, or in his promising to perform or actually performing some other act or forbearance not due from him under the original contract for example, in his validly promising not to compete with the promisor.

4-030: Past act done at promisor's request. An act done before the promise was made can be consideration for the promise if three conditions are satisfied. First, the act must have been done at the request of the promisor; secondly, it must have been understood that payment would be made; and thirdly, the payment, if it had been promised in advance, must have been legally recoverable. In such a case the promisee is, quite apart from the subsequent promise, entitled to a quantum meruit for his services. The promise can be regarded either as fixing the amount of that quantum meruit or as being given in consideration of the promisee's releasing his quantum meruit claim. On the other hand, a past service for which payment was not expected, or one for which payment, though expected, is not legally recoverable, is no consideration for a subsequent promise to pay for it.

45. It is sought to be suggested on behalf of the Defendant that to constitute valid consideration, the promise must be given in return for the promise and that if any act is done in the past, the same constitutes 'past consideration' and would not be a valid consideration. It is submitted that services rendered in the past cannot form a valid consideration for promise to give pension increment. It is also contended by Mr. Madon that a gratuitous service also does not constitute a valid consideration. Reliance is Megha ___Page No. 38 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx placed on passage no.4-199 of Chitty on Contracts, 32nd Edition, Vol.I "General Principles" which reads thus :

4-199: Gratuitouf fervicef. Normally a promise to render services without reward is not supported by consideration and is therefore not binding contractually. For example, where A gratuitously promises to insure B's property but fails to do so, A is not liable to B for breach of contract if the property is destroyed or damaged. A firm of solicitors is likewise not bound by its promise not to charge its client for work done after a specified date, since, without more, such a promise is not supported by any consideration. Occasionally, it may be possible to find consideration in the indirect financial benefit which the promisor obtains from the arrangement, e.g. in the form of favourable publicity.

46. It is Defendant's case that the scheme for grant of 10% pension increment is merely a benevolent and gratuitous act which is not supported by any consideration and therefore is not binding contractually.

47. Mr. Madon has relied on judgment of the Apex Court in Dwarampudi Nagaratnamba (supra) in support of his contention of past service not forming a valid consideration. In paras-4 and 5 of the judgment, the Apex Court has held as under :

(4) Our findings are as follows:

Venkatacharyulu and the appellant were parties to an illicit intercourse. The two agreed to cohabit. Pursuant to the agreement each rendered services to the other. Her services were given in exchange for his promise under which she obtained similar services. In lieu of her services, he promised to give his services only and not his properties. Having once operated as the consideration for his earlier promise, her past services could not be treated under Section 2 (d) of the Indian Contract Act as a subsisting consideration for his subsequent promise to transfer the properties to her. The past cohabitation was the motive and not the consideration for the transfer under Exts. A-1 and A-2. The transfers were without consideration and were by way of gifts. The gifts were not hit by S.6 (h) of the Transfer of Property Act, by reason of the Megha ___Page No. 39 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx fact that they were motivated by a desire to compensate the concubine for her past services.

(5) In Balo v. Parbati, ILR (1940) All 371: (AIR 1940 All 385) the Court held that the assignment of mortgagee's right to a woman in consideration of past cohabitation was not hit by Section 6 (h) of the Transfer of Property Act and was valid.

Properly speaking, the past cohabitation was the motive and not the consideration for the assignment. The assignment was without consideration by way of gift and as such was not hit by S. 6 (h). In Istak Kamu v. Ranchhod Zipru, ILR (1947) Bom 206 at p. 217: (AIR 1947 Bom 198 at p. 202) the court rightly held that past cohabitation was the motive for the gift under Exhibit 186, and the gift was valid but in holding that the promises to make the gifts under other exhibits were made in consideration of past illicit cohabitation and consequently those gifts were invalid, the Court seems to have too readily assumed that past cohabitation was the consideration for the subsequent promises.

48. Reliance is also placed on the judgment of Madras High Court in Doraswamy Iyer (supra) in which it is held that a mere promise to subscribe a sum of money to a temple does not furnish a valid consideration and that there must be a request by the promissor to the promisee to do something. The Madras High Court has held as under :

And it was observed that that is a perfectly good contract. I think, it cannot now be accepted that the mere promise to subscribe a sum of money or the entry of such promised, sum in a subscription list furnishes consideration. There must have been some request by the promisor to the promises to do something in consideration of the promised subscription. This is the rule to be deduced from the only other case that I have been able to discover relating to the recovery of a promised subscription on the basis of a contract. That case is 54 L J Ch 811 (2). The promise there was to contribute a large sum of money to the Congregational Union for the payment of Chapel debts. The promisor paid a large instalment of his promised contribution and then died. The Congregational Union then sought to make the promisor's executors liable.

The contention was that on the strength of the promise the Committee of the Union had incurred liabilities and that this amounted to consideration. It was held that the claim was unsustainable in as much as the promisee had not undertaken any liability as part of the bargain with the promisor.

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49. Mr. Madon has relied upon the English judgment in Murray (Inspector of Taxes) (supra) in support of his contention that payments made as gifts and not as consideration for services do not constitute a binding contract. It is held by the Court of Appeal in judgment authored by Buckley, J. as under :

In Walker v. Carnaby Harrower, Barham & Pykett [1970] 1 W.L.R. 276 a firm of accountants who had acted as auditors for six companies and were not reappointed, received an unsolicited and voluntary solatium for their loss of ofice in the form of a cheque for a sum equivalent to a year's audit fees. Pennycuick J. said, at p. 287:

"It seems to me that a gift of that kind made by a former client cannot reasonably be treated as a receipt of a business which consists in rendering professional services. The subject matter of the assessments under Cases I and II is the full amount of the profits or gains of the trade or profession. Those profits have to be computed, it is well established, upon ordinary commercial principles. It does not seem to me that ordinary commercial principles require the bringing into account of this sort of voluntary payment, not made as the consideration for any services rendered by the firm, but by way of recognition of past services or by way of consolation for the termination of a contract. It is dificult to amplify the point any further. I fully appreciate that the taxpayer firm would not have received this payment if they had not previously rendered professional services to the companies. Again, I fully appreciate that the payment was made to them as a firm and not because the companies had a particular afection for any member of the firm personally."

The payments were therefore treated as having been gifts not made as a consideration for services rendered, and on that footing were held not to be chargeable to tax.

In my opinion a perusal of these authorities leads to the conclusion that every case of a voluntary payment-and we are only concerned with cases of that kind in the present appeal- must be considered on its own facts to ascertain the nature of the receipt in the recipient's hands.

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50. On the other hand, it is the contention of the Plaintifs that past services rendered by pensioners constitute consideration for agreement to pay pension. In D.S. Nakara V/s. Union of India (1983) 1 SCC 305, the Apex Court held in para-28 and 29 as under :

28. Pension to civil employees of the Government and the defence personnel as administered in India appears to be a compensation for service rendered in the past. However, as held in Dodge v. Board of Education 17 302 US 74: 82 L Ed 57 (1937) a pension is closely akin to wages in that it consists of payment provided by an employer, if paid in confideration for paft fervice and serves the purpose of helping the recipient meet the expenses of living.

29..... Thus the pension payable to a government employee is earned by rendering long and suficient service and therefore can be said to be a deferred portion of the compensation or for the service rendered.

(emphasis and underlining supplied)

51. Again in Subrata Sen Vs. Union of India (2001) 8 SCC 71, the Apex Court held in para-14 as under :

14. In our view the aforesaid para does not in any way support the contention of the respondents. On the contrary, on parity of reasoning, we would also reiterate that let us be clear about this misconception. Firstly, the Pension Scheme including the liberalised scheme available to the employees is non-contributory in character. Payment of pension does not depend upon Pension Fund. It is the liability undertaken by the Company under the Rules and whenever becomes due and payable, is to be paid. As observed in Nakara case pension is neither a bounty, nor a matter of grace depending upon the sweet will of the employer, nor an ex gratia payment. It if a payment for the paft fervicef rendered.

It is a social welfare measure rendering socio-economic justice to those who in the heyday of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in the lurch. Maybe that in the present case, the trust for Pension Fund is created for income tax purposes or for smooth payment of pension, but that would not afect the liability of the employer to pay monthly pension calculated as per the Rules on retirement from service and this retirement benefit is not based on availability of Pension Fund. There is no question of pensioners dividing the Pension Fund or afecting the pro rata share on addition of new Megha ___Page No. 42 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx members to the Scheme. As per Rule 1 quoted above, an employee would become a member of the Fund as soon as he enters into a specified category of service of the Company. Under Rule 8, trustees may withhold or discontinue a pension or annuity or any part thereof payable to a member or his dependants, and that pension amount is non-assignable. Further, the payment of pension was the liability of the employer as per the Rules and that liability is required to be discharged by the Union of India in lieu of its taking over of the Company. The rights of the employees (including retired) are protected under Section 11 of the Burmah Oil Company [Acquisition of Shares of Oil India Limited and of the Undertakings in India of Assam Oil Company Limited and the Burmah Oil Company (India Trading) Limited] Act, 1981."

(emphasis and underlining supplied)

52. Considering the judgments in D. S. Nakara and Subrata Sen, the submission of Mr. Madon about 'past consideration no consideration' and past services rendered not forming valid consideration cannot be accepted. By now, it is a well settled law that past services rendered is a valid consideration for enforcing a right to receive pension.

53. In M. Padmanabhan Nair (supra), the Apex Court has reiterated that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on their retirement. However, the issue before the Apex Court was about delay in settlement of pension and gratuity where the same was paid after delay of 2 years and 3 months, where the Apex Court has allowed interest at the rate of 12% p.a. The judgment therefore does not assist determination of issue in hand.

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54. The issue that arises for consideration in the present case is about existence of contract to receive 'pension increment' at a fixed rate/percentage. Defendant- Bank is not denying the right of the pensioners to receive pension. What it seeks to justify is its right to reduce the rate/percentage of pension increment, right to receive which, according to Defendant, does not fow from any contract.

55. In my view, 'right to receive pension' and 'right to receive pension increment' are two entirely diferent concepts. Past services may constitute valid consideration for payment of pension, which in the present case is payable under the Trust Deed. To constitute a contract for payment of pension, past services can be considered as valid consideration. If a contract is documented, under which employer agrees to pay pension to the employee after superannuation, past services alone becomes consideration for such contract, which is legally enforceable. Another angle from which right to receive pension can be viewed is the scheme formulated by the employer in paying pension in the form of deferred salary. Payment of pension is usually made with a view to secure livelihood of a retiree. In a given case, an employer may not agree to pay any pension but pay full amount of salary for services rendered each month. Subject to the statutory deductions like Provident Fund, ESIC, Taxation etc. an employee can be paid the entire remuneration for rendering services with the employer each month. In another case, the employer can constitute a fund Megha ___Page No. 44 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx and deposit part of the amount receivable by an employee towards salary in that fund every month with a stipulation that the amount would be paid in lumpsum on the date of retirement. In the third case, a similar fund can be created from which monthly payments are to be paid to the employee in the form of pension during the lifetime of retiree. In all three cases, the right to receive amount either in the form of full salary each month or lumpsum amount at the time of retirement or deferred annuity in the form of pension is a reward gained by an employee for having rendered services with the pensioner. Therefore, the arguments sought to be canvassed on behalf of the Defendant that past services rendered by an employee are required to be treated on par with 'past consideration' is unacceptable. As held by Apex Court in D.S. Nakara, pension is nothing but deferred salary in consideration of services rendered by an employee. I am therefore not inclined to accept the defence of Defendants that there is no consideration for contract to pay pension to the members of Plaintif-Associations. Therefore, so far as payment of pension is concerned, there is a valid and enforceable contract between the parties. As a matter of fact, Mr. Madon does not dispute existence of contract for payment of pension. The issue of debate is about existence of contract for payment of pension increment. In my view, to infer a contract for payment of pension increment of 10% each year, there is no consideration. The consideration of past services has already constituted as contract to pay pension. On same consideration, another contract to pay Megha ___Page No. 45 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx guaranteed pension increment cannot be inferred. I am therefore not inclined to hold that an enforceable contract exist between the parties to pay any pension increment or to pay the same at any fixed rates/percentage.

56. Even otherwise, reading of letters of Kolkata Association dated 15 May 2001 or of Defendant-Bank dated 31 May 2001 do not suggest that any reciprocal promises are made by the parties for constitution of a valid or binding contract for payment of pension increment. I therefore hold that there is no enforceable contract between the parties under which 10% pension increment was payable by the Bank to the members of the Plaintif-Associations. Such contract cannot be inferred on the basis of HR Policies sought to be relied upon by Plaintifs, which are exhibited during evidence and need to be otherwise discarded. Since there is no contract, the question of breaching the same does not arise. Issue Nos. 10, 11, 12, 13 and 15 are answered accordingly.

Iffuef Nof. 14, 16 and 17:

(14) Whether the Defendants' action of reduction in guaranteed 10% annual increase in the pension is just and proper?

(16) Whether the Plaintifs are entitled to a 10% annual increase in the pension?

(17) Whether the Plaintifs prove that it is entitled to a declaration that the Defendants are estopped from reducing the rate of increment of pension?

57. These issues relate to right of pensioners to demand guaranteed pension increment of 10% each from Defendant-Bank. I have already held that there is no Megha ___Page No. 46 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx enforceable contract between the pensioners and Defendant for payment of guaranteed 10% pension increment. The issue that therefore arises is whether in absence of contract, can pension increment be demanded on the principles of legitimate expectation and estoppel. It is sought to be contended on behalf of the Plaintifs that the scheme of grant of 10% pension increment commenced from 1 July 2001 and continued upto 31 December 2010 i.e. for almost 10 long years which created legitimate expectation for members of Plaintif-Associations for continuation of the scheme. It is contended that the pensioners made their respective financial plannings on an assumption that the bank would always grant them 10% pension increment every year. Plea of estoppel is also raised against the Defendant contending that the conduct of the Defendant in continuing the scheme of 10% pension increment estopped the bank from withdrawing the same.

58. Before I proceed to decide the issue of Plaintifs' right to receive pension increment on principles of legitimate expectation and estoppel, it is necessary to first deal with Defendant's objection about 'election'. It is contended by Defendant that right based on existence of contract and right based on legitimate expectation are mutually destructive pleas and cannot be pressed simultaneously. That Plaintifs must choose either of them. Reliance is placed by Mr. Madon on the judgment of Madras High Court in Sivarama Thevar V/s. Narasus Spinning Mills Ofice (2015) 6 Mad LJ 586. The case before Madras Megha ___Page No. 47 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx High Court involved electing one out of the two mutually exclusive pleas of title and adverse possession. Obviously pleas of title and adverse possession cannot be raised in a suit as existence of one automatically destroys the other. In the present case however, existence of contract and legitimate expectation are two grounds on which the relief of guaranteed claim for pension increment is claimed. Since it is permissible for Plaintifs to raise alternate pleas to claim a relief, existence of contract and legitimate expectation/ estoppel can be argued simultaneously. In addition to existence of contract, Plaintifs can plead the case of legitimate expectation. The pleas are not mutually exclusive, but are supportive to each other. Therefore I am not inclined to accept the objection of failure to elect raised by the Defendant.

59. To deal with the issue of estoppel, Defendant- Bank has also made a lame attempt to disown the decisions taken by its India Executives to paint a picture as if the decision making authorities in Netherlands were oblivious about grant of 10% guaranteed pension increment each year. Mr. Madon has relied upon judgment of this Court in Firestone V/s. Synthetics and Chemicals Ltd. and Others 1969 SCC OnLine Bom 49 in support of his contention that a person having personal interest cannot take policy decisions on behalf of an establishment and such decision would not bind such establishment. The judgment is relied upon essentially to disown the decisions taken by Mr. Sobti and Mr. Katra branding them as beneficiaries of their own decisions. In my view, the Defendant has not Megha ___Page No. 48 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx pleaded a case that a decisions taken by Mr. Sobti and Mr. Katra do not bind the Defendant. Therefore, I need not delve deeper into that issue.

60. Turning back to the issue of legitimate expectation, Mr. Cama has relied on the Constitution Bench judgment of the Apex Court in Chairman, Railway Board and Others V/s. C. R. Rangadhamaiah (supra), in support of his contention that pension payable to an employee cannot be reduced. The Apex Court dealt with the case of running staf of railways such as Drivers, Guards, Shunters etc. who are paid running allowance and 75% of which was treated as part of 'emolument' for payment of pension. By letter dated 22 March 1976, the Railway Board reduced the percentage for computation of running allowance in average emoluments from 75% to 45%. The said letter was quashed by Central Administrative Tribunal. Railway Board issued statutory notification on 5 December 1998 for implementing the decision of reduction of percentage of running allowance for inclusion in average emoluments to 45% retrospectively from 1 January 1973 and to 55% retrospectively from 1 April 1979. The Apex Court has dealt with permissibility to reduce the percentage of addition of running allowance in 'emoluments', on which basis pension becomes payable. It has held in paras-24, 25, 26, 30 and 33 as under :

24. In many of these decisions the expressions "vested rights"

or "accrued rights" have been used while striking down the impugned provisions which had been given retrospective operation so as to have an adverse efect in the matter of promotion, seniority, substantive appointment, etc., of the employees. The said expressions have been used in the Megha ___Page No. 49 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx context of a right fowing under the relevant rule which was sought to be altered with efect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an amendment having retrospective operation which has the efect 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. We are unable to hold that these decisions are not in consonance with the decisions in Roshan Lal Tandon, B.S. Yadav and Raman Lal Keshav Lal Soni.

25. In these cases we are concerned with the pension payable to 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.

26. In Deokinandan Prasad v. State of Bihar (1971) 2 SCC 330: 1971 SuppSCR 634 decided by a Constitution Bench it has been laid down: (SCC p. 343, para 31) "31.... pension is not to be treated as a bounty payable on the sweet will and pleasure of the Government and that the right to superannuation pension including its amount is a valuable right vesting in a government servant" [p. 152] (emphasis supplied) In that case the right to receive pension was treated as property under Articles 31(1) and 19(1)(f) of the Constitution.

30. The respondents in these cases are employees who had retired after 1-1-1973 and before 5-12-1988. As per Rule 2301 of the Indian Railway Establishment Code they are entitled to have their pension computed in accordance with Rule 2544 as it stood at the time of their retirement. At that time the said rule prescribed that running allowance limited to a maximum of 75% of the other emoluments should be taken into account for the purpose of calculation of average emoluments for computation of pension and other retiral benefits. The said right of the respondent-employees to have their pension computed on the basis of their average emoluments being thus calculated is being taken away by the amendments introduced in Rule 2544 by the impugned notifications dated 5-12-1988 inasmuch as the maximum limit has been reduced from 75% to 45% for the period from 1-1-1973 to 31-3-1979 and to 55% from 1-4-1979 onwards. As a result the amount of Megha ___Page No. 50 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx pension payable to the in accordance with the rules which were in force at the time of their retirement has been reduced.

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 said amendments in Rule 2544 have the efect 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.

61. In my view the judgment of C. R. Rangadhamaiah would have no application to the present case. In that case, the Supreme Court dealt with a case where there was reduction in 'pension' for running staf of railways, for whom part of running allowance drawn by them is added in basic pay which then forms 'average emolument' for drawl of pension. Any reduction in the amount of average emolument results in automatic reduction in the amount of pension. Earlier 75% running allowance was included in the basic pay thereby increasing the basic pay which formed average emolument for pension. By the impugned Notification dated 5 December 1998, the same was reduced retrospectively to 45% and 55% from 1 January 1973 and 1 April 1979 respectively. The Constitution Bench has answered the twin issues of permissibility to give retrospective efect for reduction in pension and entitlement of the Railway administration to efect reduction in pension. In the present case, there is no reduction in pension as such. What is reduced is the Megha ___Page No. 51 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx percentage of increment to be awarded on the pension drawn in the previous year. The issue of retrospectivity is not even involved in the present case. The judgment of C. R. Rangadhamaiah therefore would have no application to the facts of the present case.

62. Reliance is placed by Mr. Cama on the judgment of the Apex Court in U.P. Raghvendra Acharya. In that case, the Apex Court has dealt with an issue as to whether the Appellants who were given the benefit of revised pay- scales w.e.f. 1 January 1996 could have been deprived of the retiral benefits calculated with efect therefrom. The case involved retired teachers of a University who superannuated during the period 1 January 1996 to 31 March 1998. They were granted revised pay-scales from 1 January 1996. However, pension was denied on the basis of such revised pay-scales from 1 January 1996. In the light of this factual position, the Apex Court held in paras-25, 29, 31 as under :

25. Pension, as is well known, is not a bounty. It is treated to be a deferred salary. It is akin to right of property. It is correlated and has a nexus with the salary payable to the employees as on the date of retirement.

29. As the amount calculated on the basis of the revised scales of pay on from 1-1-1996 to 31-3-1998 has not paid to the appellants by the State of Karnataka as ex gratia, and in fact was paid by way of emoluments to which the became entitled to in terms of their conditions of service, which in turn are governed by the statutory rules, they acquired a vested right therein. If the appellants became entitled to the benefits of the revised scales of pay, and consequently to the pension calculated on the said basis in terms of the impugned rules, there would be reduction of pension with retrospective efect which would be violative of Articles 14 and 16 of the Constitution of India.

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31. The appellants had retired from service. The State therefore could not have amended the statutory rules adversely afecting their pension with retrospective efect.

63. Again the issue in U.P. Raghavendra Acharya (supra) was entirely diferent. The issue was about non- payment of pension in accordance with the pay scales drawn by the Appellant therein. Right to draw pension on the basis of salary actually drawn by an employee is a statutory right which has been enforced by the Apex Court in U.P. Raghavendra Acharya. The judgment has no application to the facts of the present case.

64. Reliance of Mr. Cama on the judgment of this Court in Hemlatha Varadan (supra) is again completely misplaced as the issue in that case did not involve right to draw fixed increment on pension every year. The case involved the issue of refixation of salary of Petitioners therein after their retirement on the ground of they being untrained teachers. The judgment therefore would have no application.

65. Plaintifs have placed reliance on various decisions relating to right of pension of government employees. While doing so however, Plaintifs have conveniently ignored the fact that for Government employees, the basic pension remains static unless increased as per recommendations of pay commission at interval of 10 years. What may increase for them is only percentage of dearness allowance (DA), which is linked to Megha ___Page No. 53 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx CPI and there is no guarantee for increase in DA. Furthermore increase in percentage of DA efects increase by simple percentage over fixed amount of pension. As against this, what members of Plaintif-Associations receive is 5% 'compounded increase' in overall pension every year. This is demonstrated below :

Year Pensioner of Defendant Government Pensioner Bank after 5% increment after 5% rise in DA each each year year Compoun Percentage ded rise in DA pension increment each year Base 30000 30000 pension Year 1 5% 31500 5% 31500 Year 2 5% 33075 10% 33000 Year 3 5% 34728 15% 34500 Year 4 5% 36464 20% 36000 Year 5 5% 38287 25% 37500 Year 6 5% 40201 30% 39000 Year 7 5% 42211 35% 40500

66. In the present case, Defendant has not withdrawn pension increment altogether. It has merely reduced it from 10% to 5% w.e.f. 1 January 2011. This efectively means that every year, the pensioners would receive 5% increase in the amount of pension that they received in the previous year. I am informed that the rate of increment of 5% which is in vogue since January 2011 has not been reduced further by the Defendant-Bank. Though letter dated 19 April 2010 provides for caping of pension increment at "5% or CPI whichever is lower", Mr. Madon has informed that despite Consumer Price Index (CPI) being lower than 5%, the Megha ___Page No. 54 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx Defendant-Bank has benevolently continued to pay 5% pension increment to its pensioners.

67. One must bear in mind that the increment in pension is demanded by the Plaintifs and granted by the Defendant essentially to mitigate the cost of living on account of infation. Various letters brought on record by Plaintifs clearly suggest that demand of rise in pension increment was sought each time making reference to 'increase in cost of living'. It appears that until January 1997, Bank was paying fixed pension to the pensioners without any yearly rise. For the first time, the Bank agreed to give 5% pension increment every year to ofset the increase in the cost of living. The rate of pension increment was increased to 7% from August 2000. The same was increased to 10% from July 2001. After drawing pension increment of 10% each year, the Coordination Committee of Plaintif-Associations had demanded hike of pension increment at the rate of 20% by letter dated 29 August 2008. Thus, despite receiving 10% increment over pension drawn in previous year from 2001 onwards, the Coordination Committee was expecting exponential rise of 20% increment in pension every year from 1 October 2008. One fails to understand as to how this demand of 20% rise in pension increment could be attributable to rise in cost of living on account of infation. Be that as it may. The Bank referred to global financial crises and proposed reduction of pension increment to 2% by letter dated 27 October 2009. The Coordination Committee protested against such steep Megha ___Page No. 55 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx reduction by letter dated 20 November 2009. It appears that few meetings took place between the Bank and representatives of the Coordination Committee on 24 February 2010 and 8 March 2010. It is Bank's contention that the ofice bearers of Plaintif-Associations had agreed for caping the pension increment at 5% instead of 2% proposed in the letter dated 27 October 2009. The Plaintifs obviously deny any such agreement. Be that as it may. The Defendant decided to grant pension increment at only 5% from January 2011 vide letter dated 19 April 2010, which is the cause of action for filing of the present suit. Considering the average infation rates prevailing in the country during the past decade (which is on average 6% since 2012 till 2024), it is dificult to hold that compounded increment of 5% every year is so low so as to cause any substantial hardship to the pensioners of the Defendant-Bank.

68. Defendant-Bank is not a State Instrumentality and therefore its action need not be judged on the touchstone of reasonableness or arbitrariness. The relationship between the pensioners and the Defendant are contractual and not statutory. Nonetheless even if the test of arbitrariness or reasonableness was to be applied to the facts of the present case, it is dificult to hold that caping pension increment at 5% is so unreasonable that a Court would have interfered if the Defendant was to be a State Instrumentality.

69. In my view, no legitimate expectation was created for Plaintifs' members by the Defendant-Bank nor can it be Megha ___Page No. 56 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx estopped from revising the decision of granting 10% pension increment. Plaintifs' demands for grant of pension increment was premised on 'increased cost of living'. They believed that the cost of living had gone up so much in 2008 that 20% rise in pension increment was warranted. Thus Plaintifs' argument of legitimate expectation and estoppel is of convenience. They seek to apply it only against Defendant-Bank and not against them. According to Plaintifs, they had the license of demanding higher rate of pension increment by applying the test of increase in cost of living, however when Bank decided to decrease the pension increment, they press into service doctrines of legitimate expectation and estoppel.

70. Plaintifs have thus failed to prove existence of any right in their favour to claim guaranteed pension increment @10% each year. Defendant-Bank was entitled to reduce the rate/percentage of pension increment by taking into consideration various factors like infation, its financial conditions, etc.

71. I am therefore of the view that right to claim pension increment @ 10% each year, does not fow out of legitimate expectation or even by applying the principle of estoppel. Plaintifs have accordingly failed to establish right to receive pension increment at 10% every year. Issue Nos.14, 16 and 17 are answered accordingly.

Iffuef Nof. 18 and 19:

Megha ___Page No. 57 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx (18) Whether the Plaintifs prove that they are entitled to an order and direction as against the Defendants to pay an amount of Rs.131,85,00,000/-?

(19) Whether the Plaintifs are entitled to a permanent order and injunction restraining the Defendants from reducing the increment of pension payable to the Plaintifs' members?

72. Since Plaintifs have failed to prove existence of enforceable contract to claim increment in pension at 10% each year or any right independent of the contract to receive that benefit, they are not entitled to any monetary decree from the Defendant in their favour. Similarly, Plaintifs are not entitled to the relief of permanent injunction as prayed for. Issue Nos.18 and 19 are answered accordingly.

73. Before parting, the apprehension expressed by Mr. Cama about the Defendant-Bank further reducing the pension increment needs to be dealt with. As observed above, during pendency of the Suit, Defendant did not reduce the pension increment lower than 5%. By letter dated 19 April 2010, the Bank had fixed the pension increment at 5% or as per CPI. Mr. Madon has submitted that if increment was to be granted as per CPI, the same would have been less than 5%, but the Bank has still maintained the same at 5% during last 13 years. Simultaneously with reduction of pension increment to 5% vide letter dated 19 April 2010, the Bank introduced the scheme for lumpsum payout of the value of revised 5% annual increment while retaining the core pension benefit. This means that the pensioner can opt for lumpsum Megha ___Page No. 58 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx payment of entire value of future pension increment at 5% and continue to receive the basic (core) pension during lifetime. It appears that many pensioners have opted for cash-out and are no longer the afected parties in this dispute. Only a small percentage of living pensioners continue to draw yearly pension increment as they are yet to opt for cash-out benefit. Mr. Madon has fairly submitted that the Bank is willing to ofer the cash out option for balance pensioners as well. If they opt for cash-out benefit, their pension increment would be frozen at 5% and apprehension about future reduction in increment would get dispelled. It is for those pensioners to make an informed choice and opt for cash-out benefit so that they do not have to worry about reduction of pension increment below 5% in future. The Defendant-Bank has already made an exit from India operations and therefore there would not be any fresh pensioner in future. The issue now remains about only minuscule number of living pensioners. Mr. Madon's statement about keeping open the cash-out option at 5% pension increment is thus recorded. The Defendant-Bank shall keep that option open atleast till 31 st December 2024 so that the remaining pensioners shall have suficient time to make an informed choice for exercise of cash-out option accordingly.

E. ORDER

74. I accordingly proceed to pass the following order :

ORDER Megha ___Page No. 59 of 60____ ::: Uploaded on - 24/04/2024 ::: Downloaded on - 25/04/2024 09:08:47 ::: precipe_s_1537_2012.docx

(i) Except to the extent of observations made in Para 73 above, Plaintif's suit is dismissed.

(ii) Parties to bear their own costs.

(iii) Decree be drawn up accordingly.

75. With dismissal of the Suit, Notices of Motion Nos. 1545 of 2017 and 21 of 2017 do not survive. The same also stand disposed of.

[SANDEEP V. MARNE, J.] Note : Corrections are carried out in cause-title and para-2 only pursuant to speaking to minutes order dated 23 April 2024.

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