The judgment in Vijay Kumar vs. Central Bank of India & Ors simplified on July 15, 2025 by the Supreme Court throws much relevant light on fundamental right to pension and procedural safeguards which are necessary when reduction is made in pension of an employee. The case of Anderson highlights the need to work within the laws and be fair in ruling in the case of an individual welfare with respect to the financial security of this individual in his or her retirement.
Factual History of the Case
Vijay Kumar, the appellant is a Chief Manager (Scale IV officer) in Central Bank of India. He was charged with the Memorandum of Charge of misconduct in his tenure as Manager in the Branch in Dhanbad. These charges were sanctioning loans without appropriately appraising income, failure to verify KYC as well as failure to conduct post-sanction inspection hence making the bank face high chances of substantial financial loss. It was investigated by an Assistant General Manager (Scale level V officer). Vijay Kumar superannuated (on November 30, 2014), during the inquiry process though the proceedings went on as per the relevant regulations of the service. His inquiry report revealed that he lacked ethics and integrity in duty and scored him down as failing to be honest in his duties as a way to make him lose the bank a lot of money.
After the investigation, the disciplinary authority, who happened to be the Deputy General Manager (Scale VI officer) affirmed the findings and gave the verdict of the lesser penalty of mandatory retirement which was to take effect on the superannuation date. Vijay Kumar approached to the Field General Manager (Scale VII officer) who was the appellate authority against this decision. In the pendency of this appeal, the Regional Manager, Purnea (a Scale IV officer) on August 5, 2015, recommended to grant the appellant minimum payable pension, i.e. 2/3 rd of the pension on compulsory retirement. This was recommended by the Field General Manager on August 7, 2015, and later on, December 30, 2015, his appeal made by Vijay Kumar was dismissed confirming the severity of the risk.
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First Vijay Kumar had disputed the legitimacy of the regulation which made available a post-superannuation disciplinary proceeding and he had gone to the Patna High Court seeking entitlement to full retiral benefits. But later he restricted this challenge to the issuance of full retiral benefits. The High Court, in ordering the payment of gratuity affirmed the bank action to deduct a third of his pension. Vijay Kumar was not happy with this cut and he moved the Supreme Court.
The Bone of the Debate: Regulations of Pensions
The very nexus of the Contention was the understanding of Regulation 33 of the Central Bank of India (Employees’) Pension Regulations, 1995, which is a special Regulation on having compulsory retirement pension. There are three important clauses present in this rule. According to the clause (1), an employee who has been subjected to the compulsory retirement as a penalty must receive pension at the rate of at least 2/3 but not to the full amount which can be done by authority higher than the authority that has imposed the penalty. Clause (2) makes it obligatory that an order is issued by the Competent Authority (both the original or appellate or review) directing a pension to be paid at a rate lower than that of the full compensation pension, the Board of Directors must first be consulted. The minimum amount of pension provided in the clause (3) is Rs. 375 per month.
The bank claimed that since the superior authority to the disciplinary authority was the Field General Manager; the pension under Regulation 33(1) was reduced, and hence there was no need of consulting with the Board prior to acting. This was interpreted that Clause (1) and Clause (2) existed in distinct succession.
Interpretation and fundamental issues of the Supreme Court
The Supreme Court disapproved the interpretation by the bank, because it was fallacious. The Court further pointed out that Clause (2) of Regulation 33 grants the analogous (Competent Authority) to grant pension both under exercise of original power as well as under exercise of appellate power or reviewing power. Limiting the expression, which is, Competent Authority in the Clause (2) to the disciplinary authority alone would make the provisions with regards to the reduction of pension in the appellate or review powers ineffective. The Court explicitly held that all interpretations resulting into words or expressions within a statute being rendered unnecessary ought to be avoided.
More importantly, the Court pointed at the so-called piquant situation, in which, in case of the argument presented by the bank, the respective authority (Field General Manager) would not consult with the Board in order to cut the pension in a case covered by Clause (1) but would do in a situation covered by Clause (2). To prevent this anomaly and in order to guard the rights of the employee, the Court ruled that as far as a super authority of decreasing the pension under Regulation 33(1) is also the appellate, or reviewing authority which has power, under Clause (2) to act, there will be a requirement to consult the Board first. This is because an absence of this would enable the bank bypass the protection of prior consultation so as to prejudice the employee.
It further came up in the judgment that a pension is not a favorable bonus at the will of the employer but a good constitutional right to property not susceptible to arbitrariness by any other, guarded by Article 300A. Ambiguous legal prescription can never cut down this right. Where discretion exists with regard to an authority awarding less than the full pension, then the procedural protections such as consultation should be followed to the letter. That misunderstanding by the High Court which equated the use of the word as such with discretion to rule in favor of awarding pension less than two-thirds of the full pension was reversed. The Supreme Court elucidated that, the term, may, in the mentioned clause refers to the fact that the clause has no automatic entitlement to pension to an employee who might other-wise not be entitled (e.g. not having completed a so called, qualifying service).
Compulsory Prior Consultation
The Supreme Court clearly added that Regulation 33 Clause (1) and Clause (2) shall be read together. In all cases of decreasing the full pension to which a compulsorily retired employee is entitled, the Board of Directors must first of all consult. The Court has also clarified that this prior consultation is not a discretionary fancy and a mere formality or something that can be cured by an ex-post facto sanction. It is important that consultation with the supreme management unit of the Bank i.e., the Board of Directors is done before any employee is denied his/her constitutional right of pension. Source: Court has gone to Indian Administrative Service (S.C.S.) Association, U.P. & Ors. vs. Union of India & Ors. to point out the criteria according to which consulting, priorly is an imperative in the circumstances that fundamental rights are involved.
The Supreme Court finally gave leave to the appeal and quashed the order of the High Court as well as the order of the Field General Manager dated August 7, 2015 which had cut down pension without consulting the Board of Directors. The Court allowed the Bank to make a right decision on the drawing-down of pension, but only when there was given the opportunity of hearing to the appellant and a consultation with the Board. This should be done within a period of two months after the judgment. Not complying by the period will put the appellant in a position to be full pay pensions as soon as he was superannuated.
This case is an authoritative or very strong precedent that proves the fact that pension is a right that cannot be violated and that procedural protections, especially prior consultation with the supreme authority, must be followed vehemently when a such fundamental right is to be trimmed. It restates that the administrative discretion is nothing but to be exercised within the limits of the law and fairness so that employees are not deprived of the unfair and procedurally improper decisions.
