Pension A Constitutional Right, Can't Be Reduced Without Proper Procedure : Supreme Court

The Supreme Court provided relief to the ex-Central Bank Of India employee whose pension was reduced by one-third without consulting board of directors, as mandated under Central Bank of India (Employees') Pension Regulations, 1995 (“Regulation”).

The Court reiterated that pension is an employee's right to property, which is a constitutional right, that cannot be denied without the authority of law, even if an employee was compulsorily retired on account of misconduct.

When Regulation 33 of the Bank specifically mentioned that no reduction in the pension would be made without prior consultation with the Board of Directors, then the act of the bank to reduce the Appellant's pension by one third was arbitrary and unjustified, the court said.

“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.”, the court observed.

“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.”, the court added.

The bench comprising Justices PS Narasimha and Joymalya Bagchi heard the case involving an appellant, who was found guilty of sanctioning 12 housing and mortgage loans in breach of procedural norms, exposing the bank to a potential loss of ₹3.26 crore.

A departmental inquiry initiated under Regulation 20(3)(iii) of the Central Bank of India Officer Employees' Service Regulations continued even after his retirement. He was compulsorily retired with effect from his superannuation date (30.11.2014).

Subsequently, the bank, through the appellate authority ordered a reduction of his pension by one-third, without consulting the Board of Directors. The Patna High Court upheld this action, prompting the appellant to approach the Supreme Court.

Setting aside the High Court's decision, the judgment authored by Justice Bagchi interpreting clauses (1) and (2) of Regulation 33 observed that although a higher authority is vested with the power to grant pension “not less than two-thirds” of full pension under Clause 1, but if any competent authority (disciplinary, appellate, or reviewing) intends to award less than full pension, it must first consult the Board of Directors as stated under Clause 2.

Accordingly, the appeal was allowed, and the High Court's order and the Bank's pension reduction order were set aside.

The Court directed the Bank to reconsider the matter within two months after, giving the appellant an opportunity of hearing, and obtaining prior approval from the Board of Directors.

Cause Title: Vijay Kumar VERSUS Central Bank of India & Ors.

Citation : 2025 LiveLaw (SC) 713

Click here to read/download the judgment

Appearance:

For Petitioner(s) :Mr. Neeraj Shekhar, AOR (Arguing Counsel) Mrs. Kshama Sharma, Adv. Mr. Rajesh Kumar Maurya, Adv. Mr. Ujjwal Ashutosh, Adv. Mr. Ramendra Vikram Singh, Adv. Mr. Ram Bachan Choudhary, Adv. Mr. Amrendra Singh, Adv.

For Respondent(s) :Mr. Dhruv Mehta, Sr. Adv. (Arguing Counsel) Mr. Ashish Wad, Adv. Mr. Manoj Wad, Adv. Ms. Swati Arya, Adv. Ms. Akriti Arya, Adv. Ms. Nishi Sangtani, Adv. Mr. Mohd. Hadi, Adv. M/S. J S Wad And Co, AOR