In a notable ruling, the Allahabad High Court has reaffirmed the binding nature of pension commutation agreements, dismissing a writ petition challenging the 15-year restoration period for pensions after commutation. The court observed that employees who voluntarily accept the terms of pension commutation cannot later seek modifications, stressing the importance of adhering to agreed contractual terms.
Background of the Case
The case, WRIT – A No. 17819 of 2024, was filed by 49 retired employees of Punjab National Bank, led by Ashok Kumar Agarwal. The petitioners, represented by Advocates Chandra Dutt and Pradeep Verma, contended that the 15-year restoration period outlined in the Punjab National Bank (Employee) Pension Regulation, 1995, was excessive and should be reduced to 10 years. Their argument was based on the claim that the lump-sum amount paid upon commutation was effectively recovered through deductions within 10-11 years.
The respondents, represented by Advocates Ashok Shankar Bhatnagar, Anupama Parashar, and others, argued that the commutation terms were clearly laid out in the regulations. They emphasized that employees were fully informed before opting for commutation and that the 15-year period was an integral part of the regulatory framework.
Key Legal Issues
The petition raised significant legal questions:
1. Whether the statutory provision mandating a 15-year restoration period under Regulation 41(4) and (5) of the Pension Regulations, 1995, was arbitrary or unreasonable.
2. Whether employees, after voluntarily accepting commutation terms, could challenge the restoration period retroactively.
Court’s Observations
The Division Bench, comprising Justice Ashwani Kumar Mishra and Justice Donadi Ramesh, dismissed the petition, delivering a judgment that strongly upheld the sanctity of contractual obligations.
The Court stated:
“The statutory scheme is abundantly clear that an option is extended to the retiring employee to avail of the benefit of commutation on specific terms. Having acquiesced to the commutation policy with open eyes, it is not open for the retiring employee to contend later that the period of restoration of full pension be reduced.”
The Court emphasized that the Pension Regulations, 1995, were transparent and offered employees the opportunity to fully understand the terms before opting for commutation. Regulation 41 clearly specifies that pensions commuted for a lump-sum amount would be restored only after 15 years.
The bench further noted:
“The argument that the table or the figures were not adequately disclosed is not acceptable. Once the petitioners have acquiesced to the policy and accepted the offer, their subsequent attempt to resile or seek change in its computation would clearly be impermissible.”
Legal Precedents Cited
The bench supported its decision with rulings from the Supreme Court and other high courts, including:
– Common Cause v. Union of India, (1987) 1 SCC 142
– R. Gandhi v. Union of India, (1999) 8 SCC 106
– Forum of Retired IPS Officers v. Union of India, 2019 SCC Online Del 6610
These precedents reinforced the principle that terms agreed upon under statutory frameworks are binding and cannot be challenged retrospectively.
Judgment
The Court concluded that the 15-year restoration period was neither arbitrary nor unreasonable. The petitioners, having voluntarily opted for commutation under clear terms, could not seek a retrospective reduction in the restoration period to 10 years.
The writ petition was dismissed in its entirety.
