Prior Board Consultation Is Mandatory Before Reducing Pension of Compulsorily Retired Bank Officer

A bench of Justices Pamidighantam Sri Narasimha and Joymalya Bagchi heard an appeal against a Patna High Court judgment that upheld reduction of one third of pension payable to a bank officer under the Central Bank of India (Employees’) Pension Regulations, 1995. The appeal challenged the Field General Manager’s order reducing pension to two‑thirds following disciplinary proceedings that culminated in compulsory retirement.

The Supreme Court allowed the appeal, set aside the Field General Manager’s order dated 07.08.2015 and the High Court’s decision insofar as it sustained the reduction, and directed that any reduction in pension must follow prior consultation with the Board of Directors and after affording the officer an opportunity of hearing. The Court observed that pension is protected as a property right under Article 300A and procedural safeguards could not be bypassed. The Court, in its reasoning, observed: “In fine, we hold clause (1) and clause (2) of regulation 33 must be read conjointly and in all cases when the full pension admissible to a compulsorily retired employee under the regulations is reduced, a prior consultation with the Board is necessary.” The judgment further recorded that “pension is not a discretion of the employer but a valuable right to property,” and held that post facto approval by the Board could not generally substitute for mandatory prior consultation.

Background The appellant, a Chief Manager (Scale IV) of the Central Bank of India, faced disciplinary proceedings arising out of alleged irregularities in sanctioning loans during his tenure as Branch Manager, Dhanbad. An Inquiry Authority continued proceedings after the officer’s superannuation under Regulation 20(3)(iii) and found misconduct; the disciplinary authority imposed the major penalty of compulsory retirement with effect from the date of superannuation. On appeal, the Field General Manager (a higher authority) reduced the pension to two‑thirds and the Regional Manager had earlier recommended minimum pension payable on compulsory retirement.

The appellant challenged the reduction in the Patna High Court, which directed release of gratuity but upheld reduction of pension. The appellant then moved the Supreme Court contending that regulation 33(1) and (2) of the Pension Regulations must be harmoniously construed and that any deduction from pension required clear statutory prescription and prior Board consultation. The bank argued that clause (1) permitted a superior authority to grant pension at not less than two‑thirds and that where the reduction was made by an authority higher than the disciplinary authority, prior consultation with the Board was not necessary.

The Supreme Court analysed regulation 33, explaining clause (1) permitted grant of pension by an authority higher than the one competent to impose compulsory retirement, while clause (2) required consultation with the Board whenever a competent authority in original, appellate or review exercise awarded less than full pension. The Court rejected an interpretation that rendered clause (2) otiose and held that when the superior authority exercising power under clause (1) also functions as an appellate or reviewing authority, the requirement of prior consultation could not be circumvented. Reliance was placed on precedents elucidating when consultation is mandatory: where fundamental rights or property interests were affected, consultation must be prior and meaningful. The Court noted absence of material on computation of alleged bank loss and observed that no hearing was given before pension reduction; it declined to invoke Article 142 to endorse the reduction. The Supreme Court allowed the appeal, set aside the impugned orders, and directed that the Bank may revisit the question of reduction only after giving the appellant an opportunity of hearing and after prior consultation with the Board within two months; failing that, the appellant would be entitled to full pension from the date of superannuation.

Case Details: Case No.: 2025 INSC 848 Case Title: Vijay Kumar v. Central Bank of India & Ors. Appearances: For the Petitioner(s): Mr. Neeraj Shekhar, Advocate For the Respondent(s): Mr. Dhruv Mehta, Senior Counsel