Money & Banking

Apex court reserves order on 100% DA neutralisation for pre-2002 bank retirees

Tunia Cherian | | Updated on: Aug 04, 2017

Seeks clarifications as a similar plea was dismissed in an earlier case

The Supreme Court on August 1 reserved judgment in a petition filed by various organisations seeking 100 per cent neutralisation of DA for pre-November 2002 bank retirees. Senior counsel who represented the bank management (Indian Banks’ Association) vehemently argued that there was no case of discrimination, as is being alleged, between pre- or post-2002 retirees.

The employer has a right to restrict the applicability of new benefits/improvements to future retirees and for that purpose the cut-off date of November 1, 2002, was in order.

The counsel also argued that making the 100 per cent DA neutralisation applicable to all past retirees would involve huge financial burden on banks.

VK Bali, arguing for the petitioners, said the distinctions made out in the Bipartite Settlement of May 2005, in respect of applicability of uniform rate of DA and the distortions in its implementation through IBA circular dated June 28, 2005, had gone against its spirit.

The clauses relating to payment of uniform DA from May 2005 did not stipulate any cut-off date with regard to exclusion of pre-November 2002 retirees from the applicability of 100 per cent DA. They had only mentioned the change in formula to 100 per cent DA neutralisation from 2005.

While issuing the circular, the IBA had ‘unilaterally created an artificial classification by wrongly dividing the retirees into different groups as pre-November 2002 and post-November 2002.’

AS Nambiar, another counsel, sought to invoke Article 14 of the Constitution here. The ‘artificial classification’ had no justification or rationale, he said.

Inflation hurts all pensioners equally, irrespective of the date of retirement. DA is payable towards part-compensation on account of price rise and, hence, there cannot be different rates payable to retirees merely on the basis of their date of retirement.

The argument of the management about pension fund being contributory was countered on the grounds that it is a revenue expenditure that has to be fully met by the bank in accordance with actuarial investigation.

‘Without substance’ V Mohana, another counsel for the petitioners, invited the court’s attention to the discrimination caused by the IBA circular of June 28, 2005. Judgment in the case should apply to all affected bank pensioners. The argument about the huge financial burden is without any substance or justification, he said. Meanwhile, the court sought some clarifications in the light of an earlier case of 100 per cent DA neutralisation having been dismissed.

It also sought views of the rival parties about another judgment relating to dismissal of appeals against an order of the Madras High Court in a related case and implications thereof.

Published on January 09, 2018

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