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New Pension Scheme: Kerala HC allows SBI’s appeal against Union

Vinson Kurian Thiruvananthapuram | Updated on August 19, 2020

 

The High Court of Kerala has held that the introduction of a contributory pension scheme in respect of all employees who entered service of State Bank of India (SBI) on or after August 1, 2010, is legal and valid. The same does not suffer from any legal infirmity, nor is any hostile discrimination inherent in it.

An Appeal Bench comprising Justices AM Shaffique and Gopinath P pronounced the judgment on Monday, setting aside earlier rulings by single-bench judges in respect of the New Pension Scheme (NPS) cases filed by State Bank’s Staff Union (SBSU, Kerala Circle) and a group of officers. In the process, it allowed the appeals by SBI against the single-bench rulings.

‘Reliefs not granted’

In the writ appeal, the High Court examined the validity of application of SBI’s Defined Contribution Pension Scheme (New Pension Scheme) introduced to all categories of officers and employees joining service on or after August 1, 2010. The SBSU had also challenged the very same judgement to the extent that it does not grant all the reliefs sought.

The learned judges in their single-bench verdict had observed that those joining on or after August 1, 2010, are not eligible for the old pension scheme and that introduction of NPS is not legally valid for want of requirements under Section 50 of the SBI Act. The SBSU had contended this is contrary to binding industrial settlements and therefore in violation of Industrial Disputes Act.

Reacting to the verdict by the Appeal Bench, A Raghavan, General Secretary, SBSU (Kerala Circle), said that the union has the impression that justice has not been served. “We will be consulting our legal counsels with respect to future course of action,” he told BusinessLine here.

Not binding anymore

The Division Bench has come to a conclusion that it is not binding anymore to examine whether industry-level awards/settlements provide for or recognise a right to receive pension under non-contributory scheme. “When there is a conflict between one statute and the other, it needs to be determined as to which has precedence over the other,” he said.

Sec. 50(4) of SBI Act clearly provides that any modification or annulment shall be without prejudice to the validity of anything previously done under the said regulation. This appears to have escaped the attention of the Division Bench. This section clearly protects the earlier scheme and so the new scheme cannot have retrospective effect if it is not beneficial, especially since the old scheme is non-contributory.

Allowing the writ appeals by the bank, the court observed that Section 17 of the SBI Act vests the general superintendence of SBI with the Central Board and that Section 18 of the Act provides that the Central Board will be guided by the directions of Central Government.

Not illegal or inoperative

It further held that officers and employees who joined on or after August 1, 2020, were well aware at the time of their joining that they will not be governed by the old non-contributory pension scheme. Now they cannot be allowed to turn around and challenge their terms/conditions of appointment or be allowed to approbate and reprobate.

The SBIOSR (SBI Officers’ Service Rules) was amended to include the persons joining on or after August 1, 2010, and even without such amendment, the persons who joined thereafter are not eligible for non-contributory pension. Citing various Supreme Court judgments, the Kerala High court held that failure to lay an amendment before Parliament as per section 50 of SBI Act does not render the amendment illegal or inoperative.

Regarding the bipartite settlements, the court observed that it does not deem it necessary to examine as to whether the industrial settlements referred to by SBSU provide for or recognise a right to receive the pension under non-contributory scheme as it is a settled law that the terms of an industrial settlement will always be subject to statutory prescription.

Published on August 19, 2020

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