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August 25, 2020

HC Imposes Cost on Bank for Deducting Pension Retrospectively for Excess Erroneously paid

by shivam jaiswal in Legal Court Judgement

HC Imposes Cost on Bank for Deducting Pension Retrospectively for Excess Erroneously paid in last 13 Years

Pension constitutes a fundamental right and deprivation of even a part of it cannot be accepted, except in accordance with the authority of law, the Nagpur bench of the Bombay high court (HC) held in the case of Shri Naini Gopal S/o Dhirendra Mohan Roy.

Facts of the Case:-

  • The petitioner Naini Gopal aged 85 retired as an Assistant Foreman from a Factory with effect from 1-10-1994.
  • Consequent upon increase in the pension and the dearness allowance as per the recommendations of the 5th, 6th and 7th Pay Commissions, the basic pension of Rs.25,634 was fixed, for which the petitioner was entitled to and accordingly he was paid.
  • In August 2019, the basic pension amount of the petitioner was reduced from Rs.25,634 to Rs.25,250 with effect from 1-1-2016 and accordingly, the Centralized Pension Processing Centre of the State Bank of India (respondent 3), directed recovery of an amount of Rs.3,69,035 from the pension payable to the petitioner in the installments of Rs.11,400, i.e. 1/3rd of the monthly pension with effect from 1-8-2019.
  • The deduction of pension was without the consent or knowledge of the petitioner.
  • The petitioner, therefore, approached the Court challenging such action and seeking further direction to the respondents to restore the position in respect of payment of pension, prevailing prior to the deduction which commenced from 1-8-2019.

Was the amount of pension reduced by the employer?

  • HC found in the present case that the stand taken by the employer, the competent authority, was very clear in stating that the fixation of pension of the petitioner was correct and proper.
  • The employer had supported the claim of the petitioner and had no role to play in the matter of reduction of pension or its recovery.
  • The letter addressed to the petitioner by the employer stated that the pension at the rate of Rs.26000 has been correctly notified vide 7th CPC PPO No.401199400151 (0101).
  • HC was, therefore, satisfied that the entitlement of the petitioner to the pension was correctly fixed by the competent authority.

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Observations of the HC on the stand taken by the Bank

  • It was the stand taken by the Bank that the revised pension of Rs.9,102 was payable to the petitioner as a civil pensioner, but the Bank calculated it as Rs.9,974 as a personnel below officer rank (PBOR) and thus paid an amount of Rs.872 per month in excess from October, 2007.
  • The Bank knew the stand of the employer supporting the claim of the petitioner for pension.
  • HC was of the view that it was not the authority of the Bank to fix the entitlement of the pension amount of the employees other than the employees of the respondent- Bank.
  • HC, therefore, held that the action of the Bank to reduce the pension of the petitioner was unauthorized and illegal. Furthermore, the Bank has failed to demonstrate any technical error in the calculations

Observations of the HC on the reliance’s placed by the Bank

  • The Bank had placed reliance upon the Reserve Bank of India Circular No.RBI/2015-16/340-DGBA.GAD.No.2960/45.01.001/2015-16 dated 17-3-2016 to urge the authority to recover the excess payment conferred upon it by the Reserve Bank of India.
  • Reliance was also placed upon the undertaking given by the petitioner to the Bank, permitting the deduction of all such excess amounts, if so credited in his account due to oversight.
  • HC held that in fact there was no excess payment made to the petitioner, the question of applicability of the instructions issued by the Reserve Bank of India or the undertaking given by the petitioner does not arise.

Observations of the HC on the course of action the Bank should have taken

  • If the Bank had any doubt about the correctness of fixation of pension, it should have carried the correspondence with the employer and got the clarification.
  • At least, an explanation in respect of the proposed deduction with retrospective effect should have been called from the petitioner.
  • This is the bare minimum requirement of the principles of natural justice.
  • No enquiry or investigation was made before taking the action by the Bank.
  • It is for the first time after issuance of notice by this Court, that the Bank started making enquiries seeking clarifications from the employer of the petitioner in respect of pension and an assurance was given in the reply that the restoration of pension shall be done, as may be advised by the employers.
  • According to the HC, this should have been carried out prior to effecting the deductions from the pension payable to the petitioner.
  • The entire action of the Bank, in the view of the HC was arbitrary, unreasonable, unauthorized and in violation of the principles of natural justice and was thus not sustained.

Observations of the HC on the role of the Bank w.r.t pension

  • The Bank is a trustee of the account of the pensioners and had no authority in the eyes of law to dispute the entitlement of the pension payable to the employees, other than those in the employment of the Bank.
  • To tamper with such account and effect the recovery of pension without any authority, is nothing but a breach of trust of the petitioner by the Bank.
  • It should not be understood that even where there is technical error in calculation, other than of entitlement, resulting in excess payment, the Bank cannot recover it. However, no such case was made here.
  • The petitioner is of 85 years of age and it was claimed that he bears a great liability of mentally disabled daughter, aged about 45 years, who has to be looked after mentally and physically, and the costly medical treatment is required to be administered.
  • Instead of showing sensitivity to the problems of senior citizens, the Bank had shown the arrogance and the petitioner was made to move from one place to another to know the reason for deduction of amount from the pension payable to him.
  • HC reminded the Bank that the pension payable to the employees upon superannuation is a ‘property’ under Article 300-A of the Constitution of India and it constitutes a fundamental right to livelihood under Article 21 of the Constitution of India.
  • The deprivation, even a part of this amount, cannot be accepted, except in accordance with and authority of law.
  • Article 41 of the Constitution of India has created an obligation upon the State to recognize a right of public assistance in the case of old age, sickness and disablement.
  • Article 46 therein requires the State to promote with special care the economic interests of the weaker sections of the people.
  • In short, the aforesaid provisions of the directive principles of State policy create an obligation upon the State to enact suitable laws, making the provisions to recognize a right of public assistance, to promote economic interests, to protect the life and property of senior citizens, to treat them with respect and dignity and to give wide publicity to it.

Order of the HC

  • The Bank had reduced the pension payable to the petitioner from Rs.9,974 to Rs.9,102 per month and the amount of Rs.872 per month was said to have been paid in excess to the petitioner, which was being recovered.
  • In fact, an amount of Rs.3,26,045 had already been recovered and the recovery of the balance amount of Rs.42,042 was proposed to be made.
  • HC directed the Bank to refund the amount of Rs.3,26,045 to the petitioner by crediting it in his pension account with interest at the rate of 18% pa from the date of deduction till the date of crediting such amount in the account of the petitioner.
  • HC restrained the Bank from recovering the balance amount of Rs.42,042 from the pension account of the petitioner.
  • The Bank was directed to pay the costs of Rs.50,000 to the petitioner towards the expenses of this petition, mental agony and harassment, within 8 days failing which, the further costs of Rs.1,000 for each day’s delay shall have to be imposed.

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