SC Upholds Classification of Pre- and Post-Nov 2002 Bank Retirees For Dearness Relief, Says Adopting Flat Rate Would Be Hazardous [Read Judgment]

The Supreme Court on Wednesday upheld the consideration between pre-November 2002 financial institution retirees and post-November 2002 retirees in cost of dearness aid because it mentioned each the kinds of retirees stand on other footing and the parameters which govern the computation of dearness aid also are on a distinct degree, whilst additionally noting that any stepping up of get advantages for a piece of staff is sure to inflate the determine of Rs.1288 crores consistent with annum which used to be set aside for the convenience of the workers vide a 2005 bipartite agreement.

A bench of Justice Adarsh Kumar Goel and Justice Uday Umesh Lalit mentioned so whilst deciding the enchantment filed by means of the United Bank of India and others in opposition to the Calcutta High Court judgment of September, 2016, wherein it used to be held that there used to be no justification for creating a difference between pre- and post-2002 retirees and the appellant (financial institution) will have to pay dearness aid to all pensioners on the identical price.

The apex court docket used to be in settlement with the verdict of the Madras High Court in case titled AB Kasturirangan v. Canara Bank and so forth., which were showed by means of the apex court docket by the point the moment enchantment used to be filed, because it mentioned, “In our considered view, the assessment made by the Division Bench of the Madras High Court was absolutely correct. The settlement has to be taken as a package deal and it would be impossible to hold certain parts good and acceptable while finding other parts to be bad. Moreover, the recitals D, E and F in the Bipartite settlement dated 02.06.2005…show that a package deal was entered into and Rs.1288 crores per annum towards all the benefits was set apart for the benefit of the employees. Any stepping up of benefit for a section of employees is bound to inflate the figure of Rs.1288 crores per annum though that by itself is not a ground that weighs with us. In our view both the categories of retirees, namely, pre November 2002 and post November, 2002 stand on different footing, the parameters which govern the computation of dearness relief are also on a different level”.

“…this is not a matter where a section of employees merely on account of date of retirement are being differentiated. If we adopt a flat rate of 0.24% as is being prayed for, the class of retirees who retired before 01.11.2002 will stand conferred better rate than those employees who retired after 01.11.2002. Nor can we apply a flat rate of 0.18% for them. Each class is governed by distinct and different parameters. These are all matters of policy making. The conferral of advantages of benefits on two different classes of retirees has a completely distinct formula and rates and it would not be possible to have a synthesis on any count or to put both the sets of retirees on any common parameters. Both classes are distinct and do not form a homogenous group. It would be extremely difficult and hazardous to adopt a flat rate as is sought to be projected,” the apex court docket held.

It is to be famous Memorandum of Settlement dated October 29, 1993 used to be entered into between the managements of 58 banks as represented by means of the Indian Banks’ Association on one hand and their workmen as represented by means of the All India Bank Employees’ Association at the different. This memorandum recited that the events had agreed to introduce pension scheme in banks for the workmen/staff in lieu of employers’ contribution to the provident fund and that the pension scheme so agreed used to be to be extensively on Central Government/Reserve Bank of India development.

Paragraph 6 of the memorandum handled Dearness Allowance aid to the pensioners and it stipulated that, “Dearness relief to pensioners will be granted at such rates as may be determined from time to time in line with the Dearness Allowance formula in operation in Reserve Bank of India”.

On June 2, 2005, a bipartite agreement used to be arrived at between the managements of 50 banks, represented by means of the Indian Banks’ Association on one hand and their workmen, represented by means of the All India Bank Employees’ Association, National Federation of Bank Employees, Bank Employees’ Federation of India, Indian National Bank Employees’ Federation and National Association of Bank Workers alternatively.

In case of staff who had retired all over the length 01.04.1998 to 31.10.2002, dearness aid on the price of zero.24% used to be awardable upto Rs.3550 of elementary pension per 30 days and thereafter the proportion for quantities in extra of Rs.3550 used to be successively at decreased charges. On the opposite hand, in case of staff who retired all over the length 01.11.2002 to 30.04.2005, the proportion of zero.18% used to be with out this kind of tapering formulation.

The thought of tapering formulation underneath the bipartite agreement dated 27.04.2010 used to be retained with recognize to pre-November 2002 retirees, whilst the dearness aid to post-November 2002 retirees used to be to be on the flat price of zero.18%.

 Around this time, the Reserve Bank of India, which to begin with used to be no longer giving complete reimbursement in opposition to worth upward push on dearness aid to staff who retired previous to 01.11.2002, this is to mention used to be additionally giving dearness aid on a tapering formulation, began giving complete reimbursement. 

Since the convenience of grant of complete reimbursement in opposition to worth upward push on dearness aid as used to be prolonged by means of Reserve Bank of India, used to be no longer prolonged to the retirees of United Bank of India who had retired previous to 01.11.2002, the United Bank of India Retirees’ Welfare Association and others most well-liked a petition earlier than the prime court docket contending that even though the Reserve Bank of India had began giving complete reimbursement in opposition to worth upward push on dearness aid to retirees previous to 01.11.2002, the United Bank of India persevered to make difference in phrases of dearness aid at the foundation of dates of retirement of the pensioners and that such motion on section of appellant used to be obviously adversarial to para 6 of the agreement dated 29.10.1993. 

Holding the consideration between pre-November 2002 retirees and post-November 2002 retirees to be unreasonable, arbitrary and discriminatory, the department bench directed the appellant to pay the dearness aid to all pensioners on the identical price.

The financial institution got here to the Supreme Court in enchantment.

The financial institution contended that the view taken by means of department bench of Madras High Court used to be already affirmed by means of the apex  court docket by means of pushing aside the enchantment therefrom on 01.02.2017, that the retirees previous to 01.11.2002 may just no longer declare identical get advantages/parity at par with those that retired after 01.11.2002; that the dearness allowance payable to the pensioners used to be connected to the pay and pre- retirees had been being paid pension or dearness aid thereon as consistent with provider stipulations acceptable to them on the time of retirement.

The apex court docket whilst deciding the enchantment famous that, “The reliance on the resolutions/circulars issued by Reserve Bank of India was also misplaced. It is true that the tapering formula was done away with by Reserve Bank of India but that by itself cannot entitle the retirees prior to 01.11.2002 either to be conferred the advantage at the same rate made applicable by Reserve Bank of India or at the flat rate of 0.24% as was sought to be projected”. 

“The tapering formula undoubtedly begins with 0.24% for the first segment of Rs.3550 of basic pension and then progressively steps down and finally reaches the level of 0.06% where the basic pension is in excess of Rs.6010. What is devised by way of such tapering formula is higher rate at the lower levels of segments so that larger number of peoples would get maximum advantage and the rate thereafter keeps stepping down. Neither can we apply the rate of 0.18% which will then cause great harm and damage to the retirees nor can we adopt a flat rate of 0.24% for the entire amount of basic pension. The benefit which is sought to be conferred by the tapering formula lies in the averaging which comes to near about the same quantum as is given to the post 01.11.2002 retirees,” it mentioned.

The court docket additionally famous that no representation were put on file to publish that even with zero.18% dearness allowance, those that retire after November 2002 stroll away with considerably better benefit as in opposition to pre-November 2002 retirees.

Read the Judgment Here

Updated: May 16, 2018 — 3:43 pm
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