Setting Cut-Off Date For Receiving Enhanced Pension Benefits Illegal & Arbitrary: Telangana High Court

The Telangana High Court has scrapped the cut-off date set by the Telangana State Apex Co-operative Bank Ltd., for receiving enhanced pension benefits finding it illegal and arbitrary, and thus directed the Bank to make the amendment retrospective.

Justice Surepalli Nanda reiterated that the arbitrary classification of employees based on their retirement date was unconstitutional and discriminatory and that benefits of enhanced pension scheme should be extended to all pensioners, regardless of their retirement date.

"the Apex Court has categorically held that the classification of employees who retire on or after a particular date will be eligible was held as arbitrary and illegal stating that the pensioners themselves form a homogenous group and if the date of retirement is a valid criterion for classification, those who retire at the end of every month shall form a class by themselves. This is too microscopic a classification to be upheld for any valid purpose." 

The Court observed that contradictory to the contention of the Bank, that the pension scheme introduced in 2020 was a new scheme, a plain reading of the 'new scheme' would reveal that it was in fact an amendment to the existing TSCOB Employees Performance Incentive cum Contributory Superannuation Benefits Scheme (EPICSBS).

"Therefore, once, if the purpose of the resolution and the intention of the bank is shown that it is to enhance the existing pension, none of the employees who retire and those who are drawing existing pension prior to 01.04.2020 are eliminated by stipulating the date in clause 2) of the resolution 49 (by way of which the new pension scheme was introduced)."

Facts:

The petition was filed by retired employees of the Co-operative Bank challenging the restrictive nature of the resolution passed in the 49th Board Meeting of the Bank, by which petitioners were restricted from claiming an enhanced pension.

The petitioners retired in various months of 2015 and were benefiting under the EPICSBS scheme introduced by the Bank in 2011. The Bank passed a resolution in 2020, to enhance the pension benefits, however, set a cut-off date stipulating that only employees working at the bank as of 01.04.2020 and retiring thereafter were eligible to benefit from the new scheme.

The Bank per contra contended that the scheme introduced by way of the 49th Board Resolution was a new scheme, with a separate trust fund, and could by no stretch be considered an extension/amendment to the existing scheme under (EPICSBS). Further, the resolution of the General Body clearly specifies that only the cadre of the employees of the bank who have been extended the scheme as of 04.11.2011 is taken as a reference for determining the quantum of the benefit to be provided to that employee in respect of the new scheme.

The court examined the evidence and found that the cutoff date, introduced to distinguish between employees covered by the previous scheme and those covered by the new pension scheme, lacked a rational basis. While the TSCAB argued that the cutoff was reasonable and necessary, the court deemed it arbitrary and unconstitutional.

Justice Nanda observed that a simple reading of the scheme itself would make it obvious, that the intent of the scheme was 'to provide additional pension/superannuation benefits to employees who are already covered under the EPICSBS scheme.'

Citing the Supreme Court's decision in D.S. Nakara v. Union of India, the court emphasized that the petitioners were part of a homogeneous group of pensioners who had served the bank and contributed to the previous pension scheme. The arbitrary introduction of a cutoff date discriminated against those who retired earlier, violating their right to equal treatment under Article 14.

"This Court opines that the respondents failed to justify the said date since the said date has no nexus for the very object and intention of introducing this enhanced pension scheme. Once the said date doesn't have any nexus to the object sought to be achieved, it is hit by Article 14 as held by the Apex Court in well settled law in D.S. Nakara Vs. Union & India."

It further noted that pension is a continuing right, and any revision of the scheme applies to all pensioners. In this case, the enhancement in the pension scheme was introduced for all pensioners and should not have been arbitrarily restricted based on a specific date.

It was opined that since the Bank failed to create a nexus between the cut-off date and the object sought through the 49th Board resolution, the cut-off date was held illegal and the Bank was directed to extend the benefit to all employees benefiting under the pension scheme.

Therefore, the court concluded that the cutoff date was without any rational basis and constituted an unreasonable classification. It held that the introduction of the date was a violation of Article 14 and ordered that the benefits of the enhanced pension scheme should be extended to all pensioners, irrespective of their retirement date. 

Counsel for petitioner: N Mohan Krishna

Counsel for Respondent no: Rohit Pogula

Case Title: T. Hemanth Kumar Vs. Telangana State Co-operative Bank

Case No: W.P. 24442 of 2020

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