Summary
A retired RBI employee who had declined four earlier options to switch from the Contributory Provident Fund to the RBI Pension Regulations, 1990, opted for pension under the last option offered by Administration Circular No. 1 of 14.09.2020, which paid pension prospectively from 01.07.2020 without arrears, and then claimed arrears from his retirement in 2014. The Kerala High Court's Division Bench allowed the claim as discriminatory. The Supreme Court restored the Single Judge's dismissal: the cut-off date was a valid policy decision founded on financial considerations, each option circular was a self-contained scheme, and the respondent could not accept the scheme's benefits while rejecting its no-arrears condition.
Issues
- Whether fixing a prospective cut-off date for payment of pension to CPF optees who switched to the Pension Scheme under the 2020 circular, with no arrears for the earlier period, was arbitrary, discriminatory or contrary to law.
- Whether an employee who accepted the 2020 option on its stated terms and began drawing pension could challenge the denial of arrears of pension from the date of his retirement.
Provisions considered
- Regulation 31 and the pension option circulars of 1990, 1992, 1995 and 2000, Reserve Bank of India Pension Regulations, 1990The Court traced the four earlier options to switch from CPF to pension, noting that each circular had its own eligibility, refund terms, interest rate and effective date, and that Regulation 31 itself paid pension to pre-1990 retirees only from 01.11.1990 without arrears; each circular was an independent scheme whose benefits could not be claimed by one who did not opt under it. (¶¶ 3, 4, 5, 28, 29, 30, 37)
- Administration Circular No. 1 dated 14.09.2020 and implementation instructions dated 18.09.2020 (last pension option), Reserve Bank of India Pension Regulations, 1990The circular and instructions required refund of the Bank's CPF contribution with accrued interest plus 3% simple interest, permitted commutation, and stated that pension would be drawn from 01.07.2020 with no arrears for the prior period. The Court read the scheme as a complete, balanced package approved by the Government on projected financial liability that excluded arrears, and held its conditions binding on those who opted. (¶¶ 9, 10, 11, 32, 33, 38, 39, 40)
- Article 14, Constitution of IndiaRelying on Mohammad Ali Imam, Amar Nath Goyal, State of Tripura v. Anjana Bhattacharjee and Hirandra Kumar, the Court held that financial constraints are a valid and non-arbitrary basis for fixing a cut-off date for pensionary benefits, that courts should not interfere unless the date is capricious or whimsical, and that the cut-off date here did not offend Article 14. (¶¶ 35, 36, 41)
Held
- Each administrative circular offering an option to switch from the CPF to the Pension Scheme was independent and self-contained, framed by the competent authority after considering applicability, liability and financial implications; the circulars differed in retrospective effect, eligible categories, timeframes and the interest payable on refund, and the benefits were limited to the beneficiaries and terms of each scheme. (¶¶ 29, 30, 37)
- The respondent was eligible on four occasions (1990, 1992, 1995 and 2000) to join the Pension Scheme but took a considered decision each time to continue with the CPF and received its full benefits on retirement; his claim to the benefits that earlier circulars gave to their optees had to be judged in that light. (¶¶ 28, 31)
- The 2020 option was proposed after a gap of twenty years during which the Government had thrice declined a further option; the proposal placed financial details before the Government with no liability for arrears, and a retrospective grant would have imposed an unjustified liability of over Rs 900 crore. The decision to pay pension prospectively from the cut-off date fell within the realm of policy, and financial constraints are a valid, non-arbitrary basis for a cut-off date with which courts should not interfere unless it is capricious or whimsical. (¶¶ 32, 33, 34, 35, 36)
- Having opted for the 2020 scheme after being informed of its terms and having drawn pension under it, the respondent could not approbate and reprobate by accepting the scheme as a whole while rejecting the clause denying arrears; the scheme had to operate as a whole, and the claim for arrears amounted to seeking a violation of its contractual terms. (¶¶ 12, 37, 39, 40)
- There being no violation of constitutional, statutory or common-law principles, the Division Bench's interference with the Single Judge's dismissal of the writ petition could not be sustained. (¶¶ 41, 42)
Result
Appeal allowed; the Division Bench judgment dated 18.12.2023 set aside and the Single Judge's judgment dated 04.04.2023 dismissing the writ petition restored; no order as to costs; pending applications disposed of.