The Employees Provident Fund Organsation & Ors. Vs. A. Chandrakumaran Nair & Ors. - It is trite that the employer cannot contribute retrospectively to the pension fund more than statutory limits just to derive benefits which were not available to the members when the contribution was limited to statutory wages.

 HC Kerala (2025.07.21) in The Employees Provident Fund Organsation & Ors.  Vs. A. Chandrakumaran Nair & Ors.  [2025:KER:53846, WA NO.852/2022,] held that; 

• An employer cannot retrospectively contribute to the pension fund more than the statutory limits after the employees have retired from service and thus seek higher payments to the retired employees from the pension fund.

• It is exactly for the said reason that the EPF Act does not provide or contemplate any retrospective contribution to the provident fund or the pension fund. The provision for contributing to the provident fund above the statutory limit under Para 26.6 of the EPF scheme 1952 is available to the employees only, and that too with prospective effect when the wages of the employee exceed the stipulated sum.

• It is trite that the employer cannot contribute retrospectively to the pension fund more than statutory limits just to derive benefits which were not available to the members when the contribution was limited to statutory wages.

Excerpts of the Order;

This appeal is filed by the Employees Provident Fund Organisation (EPFO) challenging the judgment dated 28.03.2022 in W.P.(C) No.7801 of 2020 of the learned Single Judge. Appellants were respondents 1 to 3 in the W.P.(C). Respondents were petitioners 1 to 67 and the 4 th respondent, respectively in the W.P.(C).

# 2. Respondents 1 to 67 were employees of the 68 th respondent, Cochin International Airport Authority (CIAL), which is a Public Limited Company. Employees of CIAL are covered by the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) and the Employees Pension Scheme, 1995. The employer's contribution to the provident fund for the period from 1995 to 2003 was paid by CIAL on statutory limits and not on the actual salary of the respondents. Later, CIAL had submitted a series of representations (Ext.P1 series) dated 15.11.2018 to 07.01.2020, inter alia, pointing out its willingness to remit retrospective contribution to the provident fund based on actual salary. CIAL had also vide the said representations requested the Regional Provident Fund Commissioner (appellant No.2) to process the higher pension claims of their retired employees and to grant them a higher pension. Alleging that the appellants are not acting on the specific requests made by their employer, viz., the CIAL, respondents 1 to 67 had filed the Writ Petition inter alia seeking the following reliefs:

• "i) To issue a writ of mandamus and command respondents 1 to 3 to direct the respondents 1 to 3 to compute and communicate the deficiency on the part of 4th respondent in making provident fund contribution for the period from February, 1995 to June 2003, or such other period, including damages and interest, if any, with respect to petitioners and permit the 4th respondent to remit the deficient amount to the respective provident fund account of the petitioners, within a time frame to be fixed by this Honourable Court.

• (ii) To issue a writ of mandamus and command respondents 2 and 3 or such other appropriate authorities under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and the Employees' Pension Scheme, 1995 to consider and pass orders on Exhibit P1, P1(a), P1(b), P1(c), P1(d), P1(e), P1(f), P1(g) requests preferred by the 4th respondent, within a time frame to be stipulated by this Honourable Court ;

• (iii) To issue a writ of mandamus and command respondents 2 and 3 to process the joint option forms forwarded by the 4 th respondent as contemplated under Exhibit P2 judgment within a time frame to be fixed by this Honourable Court ;

• (iv) To pass any other and such other orders as this Honourable Court deem fit to pass in the nature and circumstances of the case.

• (v) To award the cost of this proceedings to the petitioners."

# 3. The EPFO filed a detailed counter affidavit in the W.P.(C) inter alia, pointing out that there is no provision for accepting retrospective contribution to the Provident Fund and that the attempt of respondents 1 to 67 to get pension on their actual salary at a very belated point in time is not legally sustainable. Respondents 1 to 67 filed a reply affidavit to the counter affidavit of the EPFO. In the W.P.(C), the learned Single Judge had vide an interim order directed CIAL to produce a demand draft (DD) for the requisite sum, which was duly complied with. Thereafter, the learned Single Judge had vide impugned judgment, disposed of the W.P.(C) inter alia directing the appellants to encash the DD deposited by CIAL towards alleged deficiency and arrears and thereafter to issue a letter for details of the alleged arrears by providing record of the employees and other registers maintained in the office, including the EPF numbers assigned to the employees. It was also directed that after scrutiny of the said documents, if any further deficiency is found, the EPFO shall send the demand after undertaking the exercise of computation and shall also take action as provided under Sections 7Q and 14B of the EPF Act.

# 4. Aggrieved by the said order of the learned Single Judge, the Employees Provident Fund Organisation has preferred this Writ Appeal.

# 5. Heard Sri.Sajeev Kumar K.Gopal, Advocate, for the appellants, Sri.R.Sanjith, Advocate, for respondents 1 to 67 and Sri.Benny P.Thomas, Senior Advocate, instructed by Abel Tom Benny, Advocate for the 68th respondent CIAL.

# 6. The learned counsel for the appellants submitted that as regards his clients are concerned, no amount whatsoever is due from CIAL towards the EPF account of respondents 1 to 67 as had been purportedly put forth. Hence, there was no cause or reason to direct the production of a DD, its encashment or further steps under Sections 7Q and 14B of the EPF Act. The question of making payment towards deficiency would arise only if the EPFO makes a demand for the same after due determination as envisaged under Section 7 A of the EPF Act. There is no enabling provision under the EPF Act to remit retrospective contribution and the learned Single Judge erred in law in directing the appellants to encash the DD which was submitted by CIAL towards the alleged deficiency of contribution for the period, namely 1995 to 2003 of its retired employees. Since no arrears had been ascertained or demanded to be paid by the EPFO, there was no cause or reason to pay any amount through the DD. The fact that the retrospective contribution on actual wages was insisted on by respondents 1 to 67 only for claiming a higher pension was not taken proper note of by the learned Single Judge. As regards a claim by retired employees for a higher pension based on actual salary by accepting retrospective contribution to the provident fund belatedly offered by the employer, the EPFO cannot be compelled to accept contributions on actual salary from the employees simply because there is no provision in law to follow such a course and also because it is not desirable in the best interests of the fund. The employer had contributed to the provident fund on the statutory wage limit, which the employer is entitled/bound to do, and there is no legal compulsion on the employer to remit the contribution on actual salary. Thus, according to the EPFO, there is no deficiency or shortfall in the remittance of the contribution towards the provident fund by the employer. The learned Single Judge erred in approaching the issue as if there was an actual deficiency on the part of the employer in remitting contributions to the provident fund. The learned counsel further submitted that if the retrospective contribution for the period 1995 to 2003 as offered by the CIAL is accepted by the EPFO in the year 2025, a corresponding claim may arise to pay the pension following the actual salary drawn by respondents 1 to 67. This would lead to the creation of a huge financial liability and burden on the EPFO. Reliance is placed on the dictum laid down by the Hon'ble Supreme Court in Pawan Hans Limited and others v. Aviation Karmachari Sanghatana and others [2020 (13) SCC 506] and it is submitted that the funds of the EPFO are managed on an actuarial basis, and the contributions received from the employer and the employee are duly invested, and the income by way of interest forms a substantial fund through which any payout is made. An employer cannot retrospectively contribute to the pension fund more than the statutory limits after the employees have retired from service and thus seek higher payments to the retired employees from the pension fund. Over and above the same for topping up any deficiency, if any, firstly, there has to be a determination of deficiency under Section 7A of the EPF Act. The learned Single Judge could have at most directed the EPFO to consider the request of CIAL and the employees, and ought not to have directed the production of DD for the purported deficiency and directed encashment of the same. The direction in the judgment to the EPFO to take steps as per Sections 7Q and 14B of the Act is also unsustainable since any such steps could only be sequel to the determination of moneys, if any, due from the employer as envisaged under Section 7A of the EPF Act.

# 7. Per contra, the learned counsel for respondents 1 to 67 vehemently objected to the contentions in the appeal. He submitted that the judgment rendered by the learned Single Judge does not suffer from any illegality and calls for no interference. Elaborate submissions are made by the learned counsel in line with the counter affidavit filed and he adds that since the employer, viz., CIAL, had committed to pay as the employer's contribution an amount equal to the employee's contribution with interest, and had paid such equal contribution in the initial period of employment, there is no cause or reason to decline the same. It is contended that it is due to CIAL's commitment to employee welfare and also acknowledging that there was a mistake in properly understanding the EPF Act, CIAL had undertaken to pay the shortfall in contribution. It is based on the said undertaking and as directed by the Single Judge, that an amount of Rs.78.14 lakhs was deposited by CIAL. Out of the said Rs.78.14 lakhs, the employer's contribution payable is only Rs.13.24 lakhs and the balance of Rs.65 lakhs is the interest on the EPF shortfall for the period from 1995 to 2022. It is thus contended that the claim of the EPFO that they stand to lose since they have to pay interest to the employees is incorrect, since the interest portion payable to the employees has also been factored in and remitted by CIAL. CIAL has acknowledged that there was a shortfall in EPF contribution made initially and has come forward and remitted the shortfall of Rs.13,00,000/- together with interest at the rate of Rs.65,00,000/-. In such a scenario, the EPFO cannot be heard to contend that they would not accept and account the same as they would stand to suffer a loss if the same is accepted. That they may have to pay higher pensions in furtherance of the claims put forth and hence cannot accept the funds, is also per se unsustainable. Reliance is also placed on the Division Bench judgment of this Court in Jose V. Thomas and others v. The Employees Provident Fund Organisation (2024 SCC OnLine Ker 7648) to substantiate the contentions put forth.

# 8. The learned Senior Counsel for the CIAL submitted that CIAL had been pursuing the matter with the EPFO, as is evident from Ext.P1 series of representations and that it had revealed its bona fides by producing the DD for the requisite amount towards the deficiency and arrears. Further submissions were also made by the learned Senior Counsel more or less in line with the submissions on behalf of respondents 1 to 67.

# 9. We have heard the counsel for both sides in detail and have considered the contentions put forth. The primary question to be considered is whether, sans the determination of money due from the employer as envisaged under Section 7A of the Act, the learned Single Judge could have directed CIAL to produce a DD towards the purported deficiency and arrears and then proceed to direct the EFPO to encash the same and undertake a computation as envisaged under Sections 7Q and 14B of the Act. It is not in dispute that CIAL had limited the contribution to both the provident fund and the pension fund to the statutory limit till 06.06.2003. Even as per the EPFO, there was no deficiency or shortfall in the remittance of the contribution towards the provident fund by CIAL.Further, respondents 1 to 67 have already superannuated and have received the emoluments that follow without demur. It is the specific contention of the EPFO that the EPF scheme stipulates that, if so desired, the employer and the employee could jointly opt for making contributions on the actual salary, which is higher than the ceiling limit of the salary in terms of para 26.6 of the EPF Scheme, 1952. It would be relevant to reproduce paragraph 26.6 of the EPF Scheme, 1952, as it stands now. It reads as follows:

• "Notwithstanding anything contained in this paragraph, an officer not below the rank of an Assistant Provident Fund Commissioner may, on the joint request and writing of any employee of a factory or other establishment to which the scheme applies and his employer, enroll such employee as a member or allow him to contribute on more than Rs.15,000/- of his pay per month if he is already a member of the fund and thereupon such employee shall be entitled to the benefits and shall be subject to the conditions of the fund provided that the employer gives an undertaking in writing that he shall pay the administrative charges payable and shall comply with all statutory provisions in respect of such employees."

Thus, the provision envisages a joint request for contributing more than the stipulated amount, as well as an undertaking in writing from the employer for opting to make contributions on the actual salary, which is higher than the ceiling limit of the salary. As regards respondents 1 to 67, there had been no joint request with CIAL for payment of contributions on higher wages by complying with the procedure as stipulated under para 26.6 of the EPF Scheme, 1952. The respondents never exercised the option to pay, nor actually paid the higher contribution on their actual salary exceeding the wage ceiling. They, who are no longer members of the pension fund, and have already superannuated and as of now are termed by EPFO as not to be 'employees' as envisaged in the Pension Scheme, had all along been aware of the fact that the employer's share of contribution, is restricted to the statutory ceiling and had accepted the EPF and the pension fund benefits as per their entitlement without protest. Neither respondents 1 to 67 nor the CIAL has produced any evidence to prove the contrary.

# 10. It is in the above context that the contention put forth by the EFPO that the quantum of benefits and the rate of contributions under the pension fund scheme are regulated based on the actuarial valuation becomes relevant. As regards the retrospective contributions that are now being offered, we find merit in the contention of EPFO that it never had any advantage of receiving this contribution, which, if at all chosen to pay, could have been paid years back, complying with the due procedure as explained above. EPFO, would now, under the impugned judgment, be required to bear the burden, in case any payouts are to be made, without having had the benefit of the relevant amounts for actuarial investments earlier. It is exactly for the said reason that the EPF Act does not provide or contemplate any retrospective contribution to the provident fund or the pension fund. The provision for contributing to the provident fund above the statutory limit under Para 26.6 of the EPF scheme 1952 is available to the employees only, and that too with prospective effect when the wages of the employee exceed the stipulated sum. We note that this aspect had not engaged the attention of the learned Single Judge. Ext.P1 series would indeed reveal that the CIAL had been writing to the 2 nd respondent Regional Provident Fund Commissioner, from 2018 onwards and had been persistent up till 2020 with their request to accept retrospective contribution concerning their retired employees. However, the same by itself is not a substitute for the procedure envisaged in para 26.6 of the EPF Scheme, 1952 or its present equivalent. It would also be relevant to note that Ext.P1 series issued by the CIAL refers to W.P. (C) No.1320 of 2015 and the connected cases, regarding which the EPFO had profusely mentioned in its counter affidavit that the matters touching the issue at hand are under active consideration of the Hon'ble Supreme Court. The contentions put forth based on Ext.P5 series produced as part of Annexure R1 (b), which is the "Specimen consent of Majority of employees for voluntary coverage under the EPF Act, 1952", also does not constitute a compliance with the mandates of para 26.6 of the EPF Scheme, 1952 or its current equivalent. The learned counsel for the respondents had placed reliance on a footnote in Ext.P5 series produced as part of Annexure R1 (b), which mentions that the relevant detail needs to be incorporated in the document only if 'retrospective coverage is desired' and attempts to contradict the contention of the EPFO that retrospective coverage is never envisaged in the EPF Act. The said contention, however, is bound to fail as the footnote in the form cannot be a substitute, nor can it override the Act or the Scheme. The dictum laid down by the Hon'ble Supreme Court in Pavan Hans Limited (supra), in a comparable though not similar context, is relevant. It reads as follows:

• "Provident Fund is normally managed on actuarial basis; the contributions received from employer and the employee are invested and the income by way of interest forms the substantial fund through which any pay out is made. For all these years the Fund in question was subsisting on contributions made by the other employees and, if at this stage, the benefit in terms of the judgment of the High Court is extended with retrospective effect, it may create imbalance. Those who had never contributed at any stage would now be members of the fund. The fund never had any advantage of their contributions and yet the fund would be required to bear the burden in case any payout is to be made. Even if concerned employees are directed to make good contributions with respect to previous years with equivalent matching contribution from the employer, the fund would still be deprived of the interest income for past several years in respect of such contributions. ( Emphasis supplied) 

It is trite that the employer cannot contribute retrospectively to the pension fund more than statutory limits just to derive benefits which were not available to the members when the contribution was limited to statutory wages. As regards the reliance placed on the dictum in Jose v. Thomas (supra), we note that in the said case, the prayer was to quash the order of rejection issued by the EPFO, which had been produced as Ext.P3 therein. Thus, in Jose v. Thomas (supra), the employer had moved the EPFO requesting to permit them to deposit the arrears towards the employer's contribution to the EPF account with retrospective effect on the actual salary and the said prayer had been rejected by the EPFO. In the case at hand, however, there is no rejection or even consideration of the request preferred by CIAL. Hence, the dictum in Jose v. Thomas (supra) does not assist the case of respondents 1 to 67.

# 11. We see merit in the submission of the learned counsel for the appellants that the learned Single Judge could at the most have directed consideration of the representation of CIAL rather than directing production and encashment of the DD. A direction to process the matter further as per Sections 7Q and 14B of the Act without a determination first under Section 7A could not have been made. Unless a determination of the money due from the employer as envisaged in Section 7A of the EPF Act is carried out by the EPFO, the question of accepting the amounts unilaterally arrived at by the employer and produced vide a DD before the court does not arise.

# 12. We note that the Employees Provident Fund was envisioned with the avowed object of making some provision for the future of the employee after he retires or in case of his early death to provide for his dependents. It is necessary to ensure that the EPF scheme remains financially sustainable. Providing the guaranteed benefits is crucial for both employee security and the long-term viability of the fund. Vested social security rights of the employee vis-à-vis the provident fund has to be harmonised with the health of the fund. Affecting retrospective contributions and seeking payment of pension on the said basis has the propensity to burden the funds and to unsettle its actuarial basis. Determination of the moneys due from the employer under Section 7A and issuance of an order calling upon the employer after quantification is a sine qua non for receiving deficiency or arrears from the employer. In the total absence of any legal norms that permit retrospective coverage, the learned Single Judge had erred in directing the CIAL to produce a DD for the alleged deficiency of contribution for the period 1995 to 2003 and in directing the appellants EPFO to encash the said DD and undertake the computation as envisaged under Section 7Q and 14B of the Act.

# 13. In the light of the above, the judgment dated 28.03.2022 in W.P.(C) No.7801 of 2020 of the learned Single Judge is set aside. The appellants are hereby directed to treat Ext.P1 series or any other representation, if any, that the CIAL may submit and consider the same in accordance with law and as per the mandates of the EPF Act.

This appeal is allowed as above. No costs.

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Vijay Kumar Vs. Central Bank of India & Ors - 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 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.

 Supreme Court (2025.07.15) in Vijay Kumar Vs. Central Bank of India & Ors [2025 INSC 848, Civil Appeal No. Of 2025 (Arising out of SLP (C) No.________of 2025 (@ D No. 39502/2024)] held that;

• # 17. 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 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.

Excerpts of the order;:.

# 1. Delay condoned. Leave granted.

# 2. Appeal is directed against judgment dated 22.04.2024 passed by the Patna High Court to the extent the Court upheld reduction of onethird of the pension payable to the appellant

under the Central Bank of India (Employees’) Pension Regulations, 1995 [Hereinafter, Pension Regulations.].

# 3. Appellant while working as Chief Manager, a scale IV officer in the respondent No.1bank was served with a Memorandum of   Charge alleging that, during his tenure as Branch Manager, Dhanbad Branch he sanctioned loans in respect of 12 accounts, inter alia, without proper appraisal of income, nonverification of KYC compliance, without postsanction inspection etc. exposing the bank to potential financial loss of huge amount.

# 4. A.K. Roy, Assistant General Manager (a scale V officer) was appointed as the Inquiry Authority (IA). During the inquiry, appellant attained superannuation on 30.11.2014 but the enquiry was continued under Regulation 20(3)(iii) of Central Bank of India (Officers’) Service Regulations, 1979. He submitted inquiry report holding the appellant failed to discharge his duties with utmost integrity and honesty which was unbecoming of a Bank officer and exposed the Bank to huge financial loss for his pecuniary gain. Inquiry report was served on the appellant, and he replied to it. After considering his reply disciplinary authority i.e., Deputy General Manager (a scale VI officer) upheld the findings of the inquiry officer and imposed major penalty of compulsory retirement under Rule 4 (h) of Central Bank of India Officer Employees’ (Discipline and  Appeal) Regulations, 1976 with effect from date of superannuation. Appellant submitted an appeal before appellate authority i.e., Field General Manager (a scale VII officer).

# 5. During pendency of the appeal, Regional Manager, Purnea, a scale IV officer, i.e., equivalent to scale of the appellant, on 05.08.2015 recommended minimum payable pension under compulsory retirement i.e., twothird pension to the appellant. Field General Manager by order dated 07.08.2015 concurred with the Regional Manager and recommended award of twothird compulsory retirement pension. Thereafter, on 30.12.2015 the said Field General Manager as the appellate authority dismissed the appellant’s appeal and upheld the penalty imposed on the latter.

# 6. The appellant initially approached the High Court challenging validity of Regulation 20(3)(iii) of Service Regulations which enabled the Bank to continue disciplinary proceedings even after superannuation and for setting aside the order of compulsory retirement including disbursal of full retiral  benefits but subsequently he restricted his challenge only to disbursal of full retiral benefits.

# 7. During hearing High Court was informed while the Bank had not passed any order forfeiting gratuity, it had taken decision to award twothirds of the pension payable to the appellant. In these circumstances, High Court while directing release of gratuity upheld the decision of the Bank to reduce one-third of the pension payable to the appellant.

# 8. Being aggrieved by the reduction of onethird pension, appellant has approached this Court. Bank has contested the appellant’s plea and produced additional documents, namely, recommendation letter of Regional Manager, Purnea for grant of minimum pension and the sanction letter of such pension by Field General Manager awarding twothird pension to the appellant.

# 9. Mr. Neeraj Shekhar contended pension is not a bounty and appellant’s right to pension is constitutionally protected under Article 300A. Such right could not be taken away save and except by a clear prescription of law. High Court erred in holding that a compulsorily retired employee is not entitled to pension at all unless an order under regulation 33(1) of the Pension Regulations is passed. Regulation 33 (1) and (2) must be harmoniously construed to mean in cases where penalty of compulsory retirement is imposed, such employee has a right to receive pension not less than twothird of the full pension and such deduction can be made only after prior consultation with the Board of Directors.

# 10. Per contra, Mr. Dhruv Mehta, learned Senior Counsel submitted a plain reading of regulation 33 (1) and (2) would show the clauses are mutually exclusive and operate in different circumstances which do not overlap each other. As per clause (1), an authority higher than the authority competent to impose compulsory retirement penalty may grant pension at a rate not less than twothird whereas clause (2) permits the competent authority awarding compulsory retirement to award less than full pension in exercise of its original, appellate or reviewing powers. Only in the latter case consultation with Board of Directors is necessary. As the pension was reduced by the Field General Manager, a scale VII officer who is an authority higher in rank than the disciplinary authority, a scale VI officer no prior consultation was necessary, and the impugned decision did not call for interference.

# 11. The controversy centres around interpretation of regulation 33 of the Pension Regulations which provides for compulsory retirement pension as follows: “

• 33. Compulsory Retirement Pension 

• 1. An employee compulsorily retired from service as a penalty on or after 1st day of November, 1993 in terms of Central Bank of India Officer Employees' (Discipline and Appeal) Regulations, 1976 or awards/settlements may be granted by the authority higher than the authority competent to impose such penalty, pension at a rate not less than twothirds and not more than full pension admissible to him on the date of his compulsory retirement if otherwise he was entitled to such pension on superannuation on that date.

• 2. Whenever in the case of a bank employee the Competent Authority passes an order (whether original, appellate or in exercise of power of review) awarding a pension less than the full compensation pension admissible under these regulations, the Board of Directors shall be consulted before such order is passed.

• 3. A pension granted or awarded under clause (1) or, as the case may be, under clause (2), shall not be less than the amount of rupees three hundred and seventyfive per mensem.”

# 12. Clause (1) provides for granting pension at a rate not less than twothird and not more than full pension by an authority higher than the authority competent to impose penalty of compulsory retirement. Clause (2) enjoins whenever a competent authority passes an order awarding pension less than full compensation pension in exercise of original, appellate or review powers, Board of Directors must be consulted before such order is passed. In no case the pension awarded shall be less than Rs.375/per mensem.

# 13. ‘Competent Authority’ is defined in both Discipline and Appeal Regulations and Pension Regulations as an authority appointed by the Board for the purpose of such regulations. In the Discipline and Appeal Regulations, it is further clarified Competent Authority must be superior to the delinquent and not an officer holding rank lower than scale IV officer. Clause 3(b) of Discipline and Appeal Regulations read with Schedule shows that an officer not below rank of Assistant General Manager and holding a rank higher than the disciplinary authority is the appellate authority under such regulation. A combined reading of the provisions in both the regulations would indicate a Field General Manager (holding a rank superior to disciplinary authority and higher than Assistant General Manager) is not only an authority superior to the disciplinary authority empowered to reduce pension under clause (1) but also the appellate authority under Discipline and Appeal Regulations who could exercise appellate powers to reduce pension under clause (2) of Pension Regulations.

# 14. The bank would argue as pension was reduced under regulation 33(1) by Field General Manager as an authority superior to disciplinary authority competent to impose penalty, no prior consultation with Board was necessary, unlike cases where Competent Authority i.e., disciplinary authority while awarding compulsory retirement directs pension less than full compensation pension. 

# 15. Such argument is fallacious for following reasons. Clause (2) permits the Competent Authority to award pension in exercise of not only original but also appellate or reviewing powers. If the expression ‘Competent Authority’ in clause (2) is restricted to disciplinary authority alone, reduction of pension in exercise of appellate or review power would become nugatory. Any interpretation which renders words or expressions in a statute otiose ought to be eschewed. [Rao Shiv Bahadur Singh v. State of Uttar Pradesh, (1953) 2 SCC 111.]

# 16. Given this situation to accept the bank’s interpretation that the two clauses ought to be read independent of one another would give rise to a piquant situation where the self  same authority, i.e., Field General Manager reducing pension under clause (1) would not require prior consultation with the Board which is mandatory while exercising similar power

under clause (2). To avoid this anomaly whenever a superior authority reducing pension under regulation 33(1) is also appellate authority or reviewing authority who is empowered to exercise power under clause (2), the requirement of prior consultation with the Board must be held to be mandatory, failing which requirement of such prior consultation may be circumvented by the bank to the prejudice of the employee.

# 17. 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 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.

# 18. 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). A combined reading of the clauses in regulation 33 clearly indicates that the pension payable to an employee who has been compulsorily retired as a penalty shall not be less than twothird 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 pension less than twothird of the full pension. High

Court misinterpreted the word ‘may’ in the clause to hold that grant of pension is discretionary. The word ‘may’ must be read in its proper context, that is to say, it was used in the regulation not to vest discretion in the superior authority to grant pension less than twothird of full pension payable but to clarify that the aforesaid clause will not entitle a compulsorily retired employee to pension if he is not otherwise entitled to such pension on superannuation on that day. For example, if an employee is compulsorily retired without completing ‘qualifying service’ making him eligible to pension under the regulations. 19. 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.

# 20. It would be argued the Field General Manager’s order to reduce pension may be placed before the Board for expost facto approval. Whether ‘prior consultation’ is mandatory or a post facto approval would suffice would depend on various factors including nature of consultation, status of the authority consulted, and the rights affected by the decision.

# 21. A plain reading of regulation 33 would show 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., 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 of prior consultation with the Board before the decision is made. Reference may be made to Indian Administrative Service (S.C.S.) Association, U.P. & Ors. vs. Union of India & Ors. [ (1993) Supp (1) SCC 730.] wherein the parameters to decide whether prior consultation is mandatory or directory have been succinctly elucidated:

• “26. The result of the above discussion leads to the following conclusions:

• (1) Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution. There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation. There must be definite facts which constitute the foundation and source for final decision. The object of the consultation is to render consultation meaningful to serve the intended purpose. Prior consultation in that behalf is mandatory. 

• (2) When the offending action affects fundamental rights or to effectuate builtin insulation, as fair procedure, consultation is mandatory and nonconsultation renders the action ultra vires or invalid or void.

• (3) When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.

• (4) When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.

• (5) When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory. The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken be put to notice of the authority or the persons to be consulted; have the views or objections, take them into consideration, and thereafter, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon. In such circumstances it amounts to an action “after consultation”.

• (6) No hard and fast rule could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate to lay down the manner in which consultation must take place. It is for the Court to determine in each case in the light of its facts and circumstances whether the action is “after consultation”; “was in fact consulted” or was it a “sufficient consultation”.

• (7) Where any action is legislative in character, the consultation envisages like one under Section 3(1) of the Act, that the Central Government is to intimate to the State Governments concerned of the proposed action in general outlines and on receiving the objections or suggestions, the Central Government or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules. The revised draft bill or rules, amendments or additions in the altered or modified form need not again be communicated to all the concerned State Governments nor have prior fresh consultation. Rules or Regulations being legislative in character, would tacitly receive the approval of the State Governments through the people's representatives when laid on the floor of each House of Parliament. The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for nonconsultation.”

# 22. Mr. Mehta finally in a last bid endeavour requested us to invoke powers under Article 142 to do complete justice and endorse the decision of the reduction of pension in the present case. 

# 23. 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. 

# 24. Accordingly, we allow the appeal and set aside the order of the High Court and order of the Field General Manager dated 07.08.2015 reducing pension without prior consultation of the Board of Directors. It shall be open to the Bank to take appropriate decision regarding reduction of pension after giving an opportunity of hearing to the appellant and with prior consultation of the Board within two months from the date of this judgment failing which the appellant shall be entitled to full pension from the date of superannuation.

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