Sanchayita Lahkar

The Bombay High Court Division Bench comprising Justice Ravindra V. Ghuge and Justice Ashwin D. Bhobe has stated that deputation allowance drawn by employees at the time of their superannuation cannot be reckoned for the purpose of calculating pension and retirement benefits. The decision was rendered while disposing of a batch of writ petitions concerning retired bankers, who served on deputation as Chief Vigilance Officers (CVOs) in various banks. The Bench made it clear that pension calculation must be based on the substantive pay that the employees would have drawn in their parent banks, excluding deputation allowances, in accordance with the applicable pension regulations and clarifications issued by the Government of India.

The petitioners, all retired bankers including Usha Ravi, B. Uma Sankar, Shiv Narain Kaushik, and Laxminarayan Rath, had approached the High Court seeking the inclusion of deputation allowance in the computation of their pensionary benefits. Each petitioner had volunteered and proceeded on deputation pursuant to an advertisement issued by the Ministry of Finance, Government of India, inviting applications for CVO positions in Public Sector Banks, Financial Institutions, and Insurance Companies.

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The core issue revolved around whether the 15% deputation allowance, granted to the petitioners during their deputation period, should form part of the 'average emoluments' used to compute their pension.

The petitioners contended that since provident fund contributions were deducted on the deputation allowance, it should logically be included for pension fixation. It was argued that their deputation constituted a promotion or elevation, entitling them to higher pensionary benefits. They relied on Regulation 25 and Regulation 35(2) of the Bank Pension Regulations, 1995, particularly stating that the deputation period should be treated as qualifying service.

The respondents, including the respective parent banks (Bank of Baroda, Union Bank of India, Canara Bank, and Bank of India), the borrowing banks (Loanee Banks), and the Union of India, strongly opposed the petitions. They asserted that deputation allowance was merely a temporary incentive for serving in a borrowing organization and could not be considered a component of substantive pay for pension purposes. It was submitted that the terms of deputation expressly provided that employees would retain their parent bank pay structure, with an additional deputation allowance.

The respondents further placed reliance on a clarificatory communication dated 27th November 1998, issued by the Deputy Secretary, Government of India, which specified that for pension purposes, the substantive pay that the officer would have drawn in the parent bank, but for his deputation, should be considered.

Relevant documents produced during the proceedings included orders issued by the Under Secretary (Vigilance), Ministry of Finance, Department of Financial Services, Government of India, which stipulated terms of deputation such as duration, pay scale, and contribution responsibilities for provident fund and leave salary.

The Court recorded that the "common factor in all these cases is that each of these Petitioners was on deputation with a particular bank until their dates of superannuation." It further observed that "the petitioners themselves applied and volunteered to proceed on deputation in response to the advertisement of the Government of India."

Examining the statutory framework, the Court noted that Regulation 2(d) of the Bank Pension Regulations defines "average emoluments" as "the average of the pay drawn by an employee during the last ten months of his service on the bank," while Regulation 2(e) defines "bank" to mean the parent bank.

Referring to the clarificatory communication dated 27th November 1998, the Court stated: "in the light of the provisions contained in rules 33 (note 7) of the CCS Pension Rules, it has been decided that the substantive pay that an officer would have drawn in the parent bank, but for his deputation, be taken as the pay for calculating average emoluments for the purpose of Pensionary benefits and not the pay actually drawn by the officer in the higher scale in the loanee organization."

The Court rejected the argument that provident fund deductions on deputation allowance created a right to claim higher pension, observing: "merely because the provident fund deductions were carried out even on the 15% deputation allowance, could change the law for enabling the Petitioners to claim pension on the basis of the last drawn salary inclusive of the deputation allowance."

It was recorded that a mistake in provident fund contributions would not confer a vested right to claim higher pension.

The Court also noted that deputation assignments were temporary in nature, and "merely because a deputationist attains the age of superannuation while on deputation, would not entitle him to treat such a higher pay scale as a foundation for calculating the pension fixation."

Discussing precedent, the Court referred to the decision in U.K. Walia v. Punjab National Bank and others, where it was held that "benefit of higher grade on deputation will not bring with it a right to enhanced pension on the last pay drawn."

The Court summarized: "none of these Petitioners were promoted. It was pursuant to the advertisement published by the Government of India calling for Applications from Employees who would volunteer to discharge functions as CVO with a different bank, that the Petitioners were sent on deputation."

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The High Court held that it did not find any error committed by the Respondent/Parent Banks in calculating the monthly pension and, accordingly, directed that the writ petitions were disposed of. The Court expressly stated that the Rule is discharged. It was clarified that no relief could be granted to the Petitioners for the inclusion of the 15% deputation allowance in the calculation of pensionary benefits, as the deputation allowance could not be treated as part of the substantive pay drawn in the Parent Bank for the purposes of computing average emoluments.

Further, the Court recorded the submissions made by the learned Advocates for the Parent Banks that all the provident fund accumulations, inclusive of the subscription on the 15% deputation allowance, if not already paid, would be returned to the Petitioners. The Court directed that the portions of contributions made on the 15% deputation allowance which were deposited in the pension accounts must also be refunded to the Petitioners. It ordered that all such amounts must be returned with statutory interest, payable from the respective dates of retirement of each Petitioner, and that the payments must be made within a period of 60 days from the date of the judgment.

Advocates Representing the Parties:

For the Petitioners: Mr. Suresh Pakale, Senior Advocate; Mr. Nilesh Desai, Advocate; Ms. Padmaja Malgaonkar, Advocate

For the Respondents: Mr. Ashok D. Shetty, Advocate; Ms. Rita K. Joshi, Advocate; Mr. Rahul P. Shetty, Advocate; Mr. Shashikant Patil, Advocate; Mr. Lancy D’souza, Advocate; Ms. Deepika Agarwal, Advocate; Mr. Chetan Akerkar, Advocate; Ms. Priyanka Chavan, Advocate; Mr. Shrihari Saranathan, Advocate

Case Title: Usha Ravi v. Bank of Baroda and Others; B. Uma Sankar v. Union Bank of India and Others; Shiv Narain Kaushik v. Union Bank of India and Others; Laxminarayan Rath v. Union Bank of India and Others.

Neutral Citation: 2025: BHC-AS:18745-DB

Case Numbers: Writ Petition No. 7034 of 2024, Writ Petition No. 8680 of 2024, Writ Petition No. 13400 of 2023, Writ Petition No. 13399 of 2023.

Bench: Justice Ravindra V. Ghuge and Justice Ashwin D. Bhobe.

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