The MP High Court has ruled that the pension of a bank employee can’t be reduced without consulting the Board of Directors. The case is related to a manager working in Central Bank of India. His pension was reduced by one-third without consulting the Board of Directors.
The employee, Anil Madhav Chincholkar, was compulsorily retired in May 2011, about two years before his scheduled retirement. He was retired following disciplinary proceedings over alleged irregularities during his tenure. The bank reduced his pension by one-third as a penalty. Chincholkar challenged this decision of the bank in the Court, citing Regulation 33 of the Central Bank of India (Employees’) Pension Regulations, 1995.
He argued that where less than the full pension is awarded to an employee compulsorily retired as a penalty, consultation with the Board of Directors is mandatory. The bank said that the consultation was done with the Board of Directors and Board had delegated powers to General Manager.
After he was compulsorily retired, the general manager of the bank sanctioned pension at two-thirds of the rate admissible to the petitioner. Regulation 33 of the Central Bank of India Employees’ Pension Regulations, 1995, requires mandatory consultation with the board of directors when awarding less than full pension. The bank said that powers had been delegated by the Board of Directors to the general manager.
Justice Deepak Khot said the bank had failed to produce sufficient material showing that the mandatory consultation had taken place. The judge held that an alleged delegation of powers by the Board to the general manager who ordered the pension reduction could not replace the statutory requirement of consultation under Regulation 33(2).
The order noted that the petitioner had completed more than 36 years of service before being compulsorily retired. He claimed that he was entitled to a pension based on his qualifying years of service. The petitioner’s argument was not that compulsory retirement automatically gave him the right to receive a full pension. Instead, he argued that if his pension was reduced, the reduction must be made strictly according to Regulation 33.
The court stated that an internal delegation or resolution in favour of the general manager cannot override or substitute the legal requirement of prior board consultation framed under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The court noted that the order sanctioning two-thirds pension failed to assign any administrative reasons for the reduction, rendering it legally unsustainable.
