'Law Does Not Permit A Person To Both Approbate & Reprobate': Kerala HC Upholds Validity Of SBI Contributory Pension Scheme [Read Judgment]

In doing so, the Division Bench comprising Justices AM Shaffique and Gopinath P. set aside the order of the Single Bench which held that the contributory pension scheme was not brought into operation in the manner prescribed by the provisions contained in Section 50 of the State Bank of India Act, 1955 and therefore declared the said Scheme to be non-operational.

Background

The State Bank of India had deviated from its erstwhile non-contributory pension scheme under the State Bank of India Employees Pension Fund Rules, 1965 and switched to a scheme providing for a contributory pension for its employees who joined service on or after 1.8.2010, by amending the 1992 Staff Rules / the 2014 Regulations.

The same was challenged before the High Court by the State Banks Staff Union (Kerala Circle), contending that classification of employees, who joined after 1.8.2010 into a separate class amounted to hostile discrimination.

Classification Of Pensioners By Providing Cut-Off Date For The Purpose Of Grant Of Revised Pension Unconstitutional: SC

The Single Bench however held that the respondents are not entitled to any order of entitlement to receive pension under the 1965 Rules as they had accepted the appointment offer which clearly specified that they would be governed by the provisions of the new Pension Scheme.

The Single Bench however declared the new Pension Scheme to be non-operational for having been enforced without following the procedure.

Accordingly, separate appeals were preferred by both SBI and the Staff Union.

Findings

In disposing of these appeals jointly, the Division Bench observed that the Central Board of SBI had decided that all employees who entered service after 01-08-2010 will not be permitted to become members of the existing pension scheme which was non-contributory, after "due deliberation".

It observed that the Appellant-employees had entered service "knowing fully" well that they are not eligible to become members of the non-contributory pension scheme

"Persons who accepted the appointment on specific terms cannot be allowed to turn around and challenge the terms/conditions of such appointment. They cannot be allowed to approbate and reprobate," the Court held.

It reiterated the rule enunciated by the UK Court of Appeals in Verschures Creameries Ltd. v. Hull & Netherlands Steamship Co. Ltd.,

"A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. That is to approbate and reprobate the transaction."

With respect to abrogation of procedure prescribed under Section 50 of the State Bank of India Act, 1955, which provides for laying down of each regulation before the Parliament, the Division bench held,

"failure to lay the amendment to the Service Rules and/ or the 2014 Regulations before Parliament as prescribed in Section 50 (4) does not render them illegal or inoperative."

The observation was made in the light of well settled principle that a requirement of merely laying subordinate legislation before the House of the legislature is "directory".

Reliance was placed on Quarry Owners' Association v. State of Bihar & Ors., (2000) 8 SCC 655, where the Top Court had observed,

"when a statue required the placement of a notification before the State Legislature it is the obligation of the state to place the same with the specific note before each House of State Legislature. Even if it had not been done, the State could place the same before the House at the earliest and the omission to comply with it would not affect the validity of the notifications and their coming into force."

Case Details:

Case Title: Chairman, SBI & Ors. v. Unnikrishnan PC & Ors. (and other similar appeals)

Case No.: WA No. 469/2018

Quorum: Justices AM Shaffique and Gopinath P.

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