The Supreme Court has set aside the orders of the Patna High Court and the Field General Manager reducing the pension of an employee under the Central Bank of India (Employees’) Pension Regulations, 1995. The Court noted that there was no prior consultation with the Board of Directors.

The Appeal before the Apex Court was directed against the judgment of the Patna High Court upholding the reduction of one­-third of the pension payable to the appellant under the Central Bank of India (Employees’) Pension Regulations, 1995.

The Division Bench of Justice Pamidighantam Sri Narasimha and Justice Joymalya Bagchi observed, “In fine, we hold clause (1) and clause (2) of regulation 33 must be read conjointly and in all cases when the full pension admissible to a compulsorily retired employee under the regulations is reduced, a prior consultation with the Board is necessary.”

AOR Neeraj Shekhar represented the Appellant while Senior Advocate Dhruv Mehta represented the Respondent.

Factual Background

The Appellant while working as Chief Manager, a scale IV officer in the respondent bank was served with a Memorandum of Charge alleging that, during his tenure as Branch Manager he sanctioned loans in respect of 12 accounts without proper appraisal of income, non-verification of KYC compliance, without post­sanction inspection, thereby exposing the bank to potential financial loss of huge amount. The disciplinary authority i.e., Deputy General Manager (a scale VI officer), upheld the findings of the inquiry officer and imposed a major penalty of compulsory retirement under Rule 4 (h) of Central Bank of India Officer Employees’ (Discipline and Appeal) Regulations, 1976, with effect from the date of superannuation.

The Appellant submitted an appeal. During the pendency of the appeal, the Regional Manager, a scale IV officer, i.e., equivalent to the scale of the appellant, recommended a minimum payable pension under compulsory retirement i.e., two­-third pension to the appellant. However, the Field General Manager, as the appellate authority, dismissed the appellant’s appeal and upheld the penalty imposed on the latter. The High Court, while directing the release of gratuity, upheld the decision of the Bank to reduce one-­third of the pension payable to the appellant. Being aggrieved by the reduction of one­-third pension, the appellant approached the Apex Court.

Reasoning

The Bench explained, “There is no cavil that pension is not a discretion of the employer but a valuable right to property and can be denied only through authority of law. When an authority is vested with the discretion to grant a pension less than full pension admissible under the Pension Regulations, all procedural safeguards in favour of the employee including prior consultation must be strictly followed.”

As per the Bench, the High Court failed to read the regulation in its proper perspective and went a step ahead to hold that a compulsorily retired employee would not be entitled to any pension unless an order is passed under regulation 33 (1). On a perusal of the clauses in regulation 33, the Bench stated that the pension payable to an employee who has been compulsorily retired as a penalty shall not be less than two­ third of his full pension or Rs. 375 per mensem, whichever is higher. The word ‘may’ occurring in clause (1) does not give discretion to superior authority to award a pension less than two-third of the full pension, it said.

It was noticed that as per regulation 33, the award of pension less than full pension is to be done with prior consultation of the Board of Directors. Such prior consultation with the highest authority of the Bank, i.e., the Board of Directors must be understood as a valuable mandatory safeguard before an employee’s constitutional right to pension is curtailed. In these circumstances, a post facto approval cannot be a substitute for prior consultation with the Board before the decision is made.

“Though it is claimed that the delinquent acts of the appellant had caused an approximate loss to the tune of Rs. 3.26 crores to the bank, no evidence relating to the computation of such loss was either considered by the disciplinary authority or by the appellate authority. Further, no opportunity of hearing was given by the authorities prior to reducing his pension. No exceptional case to exercise our extraordinary powers under Article 142 is made out”, it held.

Thus, allowing the appeal, the Bench held that the Bank can take an appropriate decision regarding the reduction of pension after giving an opportunity of hearing to the appellant and with prior consultation of the Board within two months failing which the appellant shall be entitled to full pension from the date of superannuation.

Cause Title: Vijay Kumar v. Central Bank of India & Ors. (Neutral Citation: 2025 INSC 848)

Appearance

Appellant: AOR Neeraj Shekhar, Advocates Kshama Sharma, Ramendra Vikram Singh, Ujjwal Ashutosh, Rajesh Kumar Maurya, Amrendra Singh, Ram Bachan Choudhary

Respondent: Senior Advocate Dhruv Mehta, Advocates Ashish Wad, Manoj Wad, Swati Arya, Akriti Arya, M/S. J S Wad and Co.

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Justice Pamidighantam Sri NarasimhaJustice Joymalya Bagchi

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.