Pension paid on superannuation is ‘Property’ under Article-300A

Isha Sawant | Government Law College | 7th September 2020

Naini Gopal v. Union of India

Facts:

The petitioner- Naini Gopal retired as an Assistant Foreman from the Ordinance Factory at Bhandara with effect from 01-10-1994, the last drawn basic salary of the petitioner was Rs. 2647/- and basic pension was fixed at Rs. 1334/- on the date of retirement. Consequently, as per the 5^th, 6^th and 7^th Pay Commissions the basic pension of Rs. 25634/- was fixed which the petitioner was entitled to receive and was accordingly paid. In August 2019, the petitioner’s pension amount was reduced to Rs. 25,250 with effect from 01-01-2016, and according the respondent no.3- The Centralized Pension Processing Centre of the State Bank of India, directed a recovery of Rs. 3,69,035/- from the pension payable to the petitioner in instalments of Rs. 11,400/- i.e. 1/3^rd of his monthly pension with effect from 01-08-2019. Since, the deduction of the pension was made without the petitioner’s consent or knowledge he filed an application under Right to Information (RTI) Act, 2005 on 01-09-2019 to know the details and reason for deduction of his pension amount during the period 2015-16 and 2016-17.

The petitioner received a reply to this application on 20-09-2019 from respondent no.3 that there was an excess of payment of pension of Rs. 3,69,035/- to the petitioner which was discovered after making a revised calculation. The petitioner, therefore, approached the Bombay High Court seeking relief. The petitioner relied on a communication dated 04-12-2020 issued by the Accounts Officer of the employer stating that pension at the rate of Rs. 26,000/- was correctly notified.

Issues:

• Whether the Bank is empowered to deduct the pension amount to recover the excessive amount paid.
• Whether the petitioner is entitled to restoration of his pension amount.

Legal Issues:

• Constitution of India, Article-21 Right to Life and Liberty.
• Constitution of India, Article-300A Right to Property.

Observations of the Court:

The case was heard by the Bombay High Court Bench of R.K. Deshpande and N.B. Suryawanshi, JJ. The court initially heard the matter on 30-07-2020 and passed an order wherein it asked if SBI acted on its own or on the basis of any instructions issued by the other respondent(petitioner’s employer), and if the Bank has acted without any authority the court would have to impose heavy costs upon them. It further expressed as to how the Bank was not permitting the petitioner from withdrawing the amount from his account; and if any recovery was to be made it would be open for the employer to do the same in accordance with law. The court further stated that it was under the impression that SBI, Nagpur branch had acted on the instructions issued by the petitioner’s employer which is why it made the above-mentioned order. The employer- General Manager, Ordanance Factory, Bhandara who is respondent no.4 filed an affidavit in response to this petition in which it has confirmed the employment and retirement details of the petitioner; it submitted that respondent no.2 had issued a revised PPO under which the pension was revised to Rs. 25,250/- w.e.f. 01-01-2016. They also submitted that PPO’s were being sent directly through email by respondent no,2 to respondent no.3, and respondent no.4 had not issued any order for recovery of any amount from the petitioner’s pension. 

The respondent no.3- State Bank of India filed a reply in which it stated that the petitioner’s pension was revised as per the 6^th C.PC, however the respondent bank calculated the same as payable to a personnel below Officer Rank (PBOR) instead of as a Civil Pensioner, thus an excess of Rs. 872/- per month was paid to the petitioner since October 2007 due to a technical error in the system. They also stated that they received no memo from respondent nos.2 and 4 for enhancing the pension to Rs. 26,000/- and that they had taken this matter up with respondent no.2 on 07-08-2020. They stated that the petitioner had submitted that due to an oversight an amount of Rs. 3,69,035/- was paid in excess by the bank, which was being recovered over a huge period of time and till date the bank had only partly recovered the amount, Rs. 42,042/- and a nominal interest thereon was yet to be recovered. The respondent relied upon the RBI circular  dated 17-03-1026 in which it was stated that in case of pensioner’s inability to pay the amount, the overpayment can be recovered from his future pension payments in instalment of 1/3^rd of net (pension + relief) payable each month unless the pensioner gives written consent to pay higher instalment amount. On the basis of this clause the bank claimed to have authority to recover the excess payment made to the pensioner, they relied on the judgement in the case High Court of Punjab and Haryana and Ors v. Jagdev Singh (2016). 

The court observed that the stand taken by the employer- the competent authority is clear in stating that the fixation of pension of petitioner was correct, employer supported the petitioner’s claim and had no role in reduction of the pension or its recovery. The court was of the view that the Bank had no authority to fix entitlement of the pension amount of the employees and therefore, held the action of the Bank to reduce the pension to be unauthorized and illegal, the bank had even failed to demonstrate any technical error in the calculations. The court held that in fact there was no excess payment made to the petitioner and the question of applicability of the RBI guidelines or undertaking given by the petitioner does not arise and so the decision of the apex court in the Jagdev Singh case would not apply to the facts of the present case. The court also criticized the action of the bank as arbitrary and in violation of the principles of natural justice and so cannot be sustained. The court observed that the Bank committed a breach of trust of the petitioner; it also clarified that if there was a technical error in calculation other than of entitlement, committed in excess payment, the Bank cannot recover it and the court held that no such was made out here.

The court also held that pension payable on superannuation is ‘Property’ under Article-300A of the Constitution and also constitutes a ‘right to livelihood’ under Article-21 of the Constitution. The deprivation of even a part of this pension amount cannot be accepted except under authority of law. The court also observed that Article 41 and Directive Principles of the State Policy create an obligation on the state to protect and preserve the interests of senior citizens and other weaker sections of the society. The court took note of the plight of senior citizens especially when it comes to their security and the difficulty they face in accessing banking facilities, it has called for Banks to create appropriate facilities and set-up mechanisms to make the process easier and safer for senior citizens.

Judgement:

The court allowed the petition. The court restrained the Bank from recovering any more amount from the pension payable to the petitioner; and directed them to immediately credit Rs. 3,27,045 recovered from the petitioner’s pension account with an interest rate of 18% p.a. from the date of recovery of each instalment till the date to credit of this amount in the petitioner’s account. It further directed respondent no.3- the Bank to pay compensation of Rs. 50,000/- to the petitioner attracting costs of Rs. 1000/- for each day’s delay.