# Sudhir Kumar Agarwal v. Union of India & Ors

- **Citation:** (2025) 4 ILRA 162
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-04-01
- **Case number:** Writ A No. 12596 of 2024
- **Bench:** J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/sudhir-kumar-agarwal-v-union-of-india-ors-53101
- **Pages:** 18

## Headnote

Law
-
Pension
-
Commutation - Recovery Period -
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
163
Central Civil Services (Commutation
of Pension) Rules, 1981 and Bank
Pension
Regulations
-
Regulation
41(5) - Rule 10A - Punjab National
Bank
(Employees')
Pension
Regulations, 1995 - Regulation 41(4)
& 41(5) - Whether recovery beyond
12 years violates Article 14 - Supreme
Court in Common Cause v. Union of
India, (1987) 1 SCC 142 upheld 15year recovery rule - Court held 15year restoration rule not arbitrary or
unconstitutional - unjust enrichment -
life expectancy - Fixation of 15-year
recovery
period
not
arbitrary
or
irrational,
being
a
policy
matter
requiring
no
judicial
interference.
(Para - 1, 14, 22 to 27)

Petitioners,
retired
bank
and
government
employees,
challenged
continued
monthly
deductions
from
their
pensions
toward
commuted pension recovery even after the
full lump sum amount had been effectively
recovered within 10 to 12 years - Claimed
this amounted to unjust enrichment by the
employer - Petitioners relied on increased
life expectancy - argued for restoration of
full pension earlier than the prescribed 15year period. (Para - 3,4,10)

HELD:
-
Fixation
of
the
15-year
commutation recovery period is a matter of
policy upheld by the Supreme Court in
Common Cause. Judicial interference is
unwarranted unless the policy is per se
arbitrary or irrational. No mandamus can
issue to reduce the period to 10 or 12
years, and petitioners' grievance is not
justiciable in writ jurisdiction under Article

## Text

_Characters 0–39,621 of 61,582. This is a partial read: ask again with offset=39621 for what follows._

162 INDIAN LAW REPORTS ALLAHABAD SERIES
civil post within the meaning of Article 311
of the Constitution of India. As appellant
had obtained the appointment by playing a
fraud he cannot be allowed to take
advantage of his own fraud in entering the
service and claim that he was holder of the
post entitled to be dealt with in terms of
Article 311 of the Constitution of India or
the Rules framed thereunder. Where an
appointment in a service has been acquired
by practising fraud or deceit such an
appointment is no appointment in law, in
service and in such a situation Article 311
of the Constitution is not attracted at all.

Para-16. In Ishwar Dayal Sah v.
State of Bihar, 1987 Lab.I.C. 390, the
Division Bench of the Patna High Court
examined the point as to whether a person
who obtained the appointment on the basis
of a false caste certificate was entitled to
the protection of Article 311 of the
Constitution. In the said case the employee
had obtained appointment by producing a
caste certificate that he belonged to a
Scheduled Caste community which later on
was found to be false. His appointment
was cancelled. It was contended by the
employee that the cancellation of his
appointment amounted to removal from
service within the meaning of Article
311 of the Constitution and therefore
void. It was contended that he could not
be terminated from service without
holding
departmental
inquiry
as
provided under the Rules. Dealing with
the above contention, the High Court
held that if the very appointment to the
civil post is vitiated by fraud, forgery or
crime or illegality, it would necessarily
follow that no constitutional rights under
Article 311 of the Constitution can
possibly flow. It was held:

"If the very appointment to
civil post is vitiated by fraud, forgery or
crime or illegality, it would necessarily
follow that no constitutional rights under
Article 311 can possible flow from such a
tainted force. In such a situation, the
question is whether the person concerned is
at all a civil servant of the Union or the
State and if he is not validly so, then the
issue remains outside the purview of Art.
311. If the very entry or the crossing of the
threshold into the arena of the civil service
of the State or the Union is put in issue and
door is barred against him, the cloak of
protection under Art. 311 is not attracted.""

33. In view of all that has been
said, no case for interference with the
impugned orders is made out.

34. In the result, this writ petition
fails and is dismissed.

35.
The
interim
order
dated
12.08.2024 is hereby vacated.
----------
(2025) 4 ILRA 162
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.04.2025
BEFORE

THE HON'BLE J.J. MUNIR, J.

Writ A No. 12596 of 2024
With other connected cases

Sudhir Kumar Agarwal
 ...Petitioner
Versus
Union of India & Ors.
 ...Respondents

Counsel for the Petitioner:
Manish Gupta, Sarita Singh, Sr. Advocate

Counsel for the Respondents:
A.S.G.I., Ishan Shishu, Maneesh Mehrotra

(A)
Service
Law
-
Pension
-
Commutation - Recovery Period -
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
163
Central Civil Services (Commutation
of Pension) Rules, 1981 and Bank
Pension
Regulations
-
Regulation
41(5) - Rule 10A - Punjab National
Bank
(Employees')
Pension
Regulations, 1995 - Regulation 41(4)
& 41(5) - Whether recovery beyond
12 years violates Article 14 - Supreme
Court in Common Cause v. Union of
India, (1987) 1 SCC 142 upheld 15year recovery rule - Court held 15year restoration rule not arbitrary or
unconstitutional - unjust enrichment -
life expectancy - Fixation of 15-year
recovery
period
not
arbitrary
or
irrational,
being
a
policy
matter
requiring
no
judicial
interference.
(Para - 1, 14, 22 to 27)

Petitioners,
retired
bank
and
government
employees,
challenged
continued
monthly
deductions
from
their
pensions
toward
commuted pension recovery even after the
full lump sum amount had been effectively
recovered within 10 to 12 years - Claimed
this amounted to unjust enrichment by the
employer - Petitioners relied on increased
life expectancy - argued for restoration of
full pension earlier than the prescribed 15year period. (Para - 3,4,10)

HELD:
-
Fixation
of
the
15-year
commutation recovery period is a matter of
policy upheld by the Supreme Court in
Common Cause. Judicial interference is
unwarranted unless the policy is per se
arbitrary or irrational. No mandamus can
issue to reduce the period to 10 or 12
years, and petitioners' grievance is not
justiciable in writ jurisdiction under Article
226. (Para - 23 to 27)

Petitions dismissed. (E-7)

LIST OF CASES CITED: -

1. "Common Cause", a registered Society &
ors. Vs U.O.I., (1987) 1 SCC 142

2. R. Gandhi Vs U.O.I. & anr., (1999) 8 SCC
106
3. Forum of Retired IPS Officers (FORIPSO) Vs
U.O.I. & anr., 2019 SCC OnLine Del 6610

4. SLP (Civil) No.8852 of 2019, Forum of Retired
IPS Officers (FORIPSO) Vs U.O.I. & anr.

5. Shila Devi & ors. Vs St. of Punj. & ors.,
2024:PHHC:157352-DB

6. Central Government Pensioners Association
Vs U.O.I., 2008 SCC OnLine Ker 291

7. Ram Narayan Gupta Vs St. of U.P. & ors.,
1994 (24) ALR 151

8. Ashok Kumar Agarwal & ors. Vs U.O.I. &
ors., 2025:AHC:6439-DB

(Delivered by Hon'ble Ashwani Kumar
Mishra, J.)

1. The question of law involved in
this batch of writ petitions is, if the
commutation value of pension for an
employee, who retires upon attaining the
age of superannuation, invariably 60
years, deducted in monthly installments
from his retirement pension, made good
in the time period of 10 years and 8
months or 11 years, or at the most 12
years, can be recovered for the agreed or
the stipulated period of 15 years provided
under the relevant service regulations,
leading the respondents to realize from
the employee more than the commutation
value paid?

2. Writ-A No.12596 of 2024 has
been heard as the leading writ petition.
The learned Counsel for the petitioners,
apart from highlighting facts and figures
individual to their cases, have mostly
confined
their
submissions
to
the
aforesaid question of law. As such, facts
164 INDIAN LAW REPORTS ALLAHABAD SERIES
would be noticed from the leading
petition.

3. The petitioner, Sudhir Kumar
Agarwal, was a Senior Manager with the
Indian Overseas Bank, Station Road
Branch, Moradabad and retired from
service
upon
attaining
the
age
of
superannuation on 31.01.2012. The Indian
Overseas Bank (for short, 'the Bank') is a
nationalized Bank..

4. Eschewing unnecessary detail,
all that need be noticed is that the
petitioner's
pension
fell
due
w.e.f.
01.02.2012. The basic average pay at the
time of his retirement was Rs.36,400/-.
Accordingly, 50% of the said sum of
money, to wit, Rs.18,200/- was fixed as the
basic pension + dearness allowance. The
petitioner requested commutation of his
pension to the extent of 1/3rd, which
worked out to a figure Rs.6,066/- per
month. The aforesaid commutation was
sanctioned and he was paid in lieu thereof a
lump sum of Rs.7,14,090/-. It is the
petitioner's case that the time period for
recovery of the commutation value of
pension paid to him was fixed at 15 years,
when the petitioner retired. Recovery of the
commutation value of Rs.7,14,090/- is
made by a monthly deduction from the
petitioner's
pension
in
the
sum
of
Rs.6,066/- + dearness allowance applicable.
The petitioner is receiving a monthly
pension
of
Rs.12,134/-
+
dearness
allowance, that works to a figure of
Rs.52,183/-, the dearness allowance being
Rs.40,049/- per month. The case of the
petitioner, like all others in this batch of
petitions, is that upon deduction of the
specified sum from his monthly pension,
the commutation value would have been
made good in the time period of 10 years
and 8 months. Instead of settling the
commutation account and releasing the
petitioner's full pension at the end of 10
years and 8 months, the respondents insist
that they would recover for the period of 15
years, agreed and settled at the time of
commutation. The petitioner has appended
a chart to the writ petition, marked
Annexure No. 2-A, which shows that from
01.02.2012 to 31.07.2024, the Bank would
have recovered from the petitioner at the
rate of Rs.6,066/-, a sum of Rs.90,09,900/-.
They would have recovered beyond the
commutation value as on 31.07.2024, a
sum of Rs.1,95,810/-. The submission,
therefore, is that the sum of Rs.7,14,060/-
paid to the petitioner as commutation value
of his 1/3rd pension, was to be recovered at
the specified rate in 118 installments; 150
have already been recovered, falling back
on the clause that says that recovery would
go on for realization of the commutation
value for a period of 15 years. The
petitioner,
therefore,
prays
that
a
mandamus be issued to the respondents not
to recover or deduct any sum of money
after completion of 10 years of his
retirement and restore the petitioner's full
pension.

5. When this petition came up,
considering the submission on its face
value that the respondents cannot recover
from the petitioner more than what has
been paid in commutation value, interim
stay of recovery from the petitioner's
pension towards the commutation value
was granted. A similar order was passed in
many of the writ petitions in this batch. It
was on 11.12.2024 when Writ-A No.16945
of 2024 came up after the grant of an
interim order earlier in the aforesaid writ
petition that Mr. Ashok Bhatnagar, learned
Counsel for the respondents in that case
pointed out that this issue is no longer res
intergra and stands answered against the
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
165
employees by the Supreme Court in
"Common Cause", a registered Society
and others v. Union of India, (1987) 1
SCC 142 and R. Gandhi v. Union of
India and another, (1999) 8 SCC 106. He
further drew the Court's attention to the
authority of the Delhi High Court in
Forum
of
Retired
IPS
Officers
(FORIPSO) v. Union of India and
another, 2019 SCC OnLine Del 6610. He
also apprised the Court of the fact that SLP
(Civil) No.8852 of 2019, Forum of
Retired IPS Officers (FORIPSO) v.
Union of India and another, carried
from the judgment of the Delhi High
Court in Forum of Retired IPS
Officers
(supra)
was
summarily
dismissed by the Supreme Court on
15.04.2019. He also drew the Court's
attention to a Bench decision of the
Punjab and Haryana High Court in
Shila Devi and others v. State of
Punjab
and
others,
2024:PHHC:157352-DB,
deciding
a
batch of matters, involving the same
controversy, answering it against the
employees. We would presently allude
to those decisions. What is not in
dispute is that the question here has
received judicial attention in the past, in
the not-so long-past, in recent years and
almost the other day as well.

6. It must be recorded here that
in some of the petitions, pleadings have
not been exchanged whereas in others,
they have been elaborately put in. But,
as already remarked, the question being
a pure question of law, the individual
facts and even regulations, governing
the time period, during which full
pension would stand redeemed, would
not matter much. It would, therefore, be
of no profit to examine facts of individual
cases and the pleadings there.
7. Heard Mr. Arun Kumar Gupta,
learned Senior Advocate assisted by Mr.
Manish Gupta, learned Counsel for the
petitioner in Writ-A No.12596 of 2024; Mr.
Manoj Kumar Tewari, learned Counsel for
the petitioners in Writ-A Nos.13420 of
2024, 16537 of 2024, 16846 of 2024,
18065 of 2024, 19138 of 2024; Mr. Harsh
Vardhan Gupta with Mr. Sachin Singh,
learned Counsel for the petitioners in WritA Nos.14979 of 2024, 14984 of 2024,
16273 of 2024, 18469 of 2024, 16374 of
2024, 17614 of 2024, 17707 of 2024,
17741 of 2024, 18817 of 2024; Mr.
Pradeep Verma, learned Counsel for the
petitioners in Writ-A Nos.16467 of 2024,
17294 of 2024, 18819 of 2024, 19675 of
2024; Mr. Namit Kumar Sharma, learned
Counsel for the petitioners in Writ-A
Nos.14346 of 2024, 15833 of 2024;
Pramod Kumar Agrawal in person in WritA No.14826 of 2024; Mr. Vinod Kumar
Srivastava,
learned
Counsel
for
the
petitioners in Writ-A No.14864 of 2024;
Mr. Rahul Mishra, learned Counsel for the
petitioners in Writ-A Nos.14974 of 2024,
15822 of 2024, 18714 of 2024; Mr. Anshul
Kumar Singhal, learned Counsel for the
petitioners in Writ-A Nos.15805 of 2024,
17132 of 2024; Mr. Rama Kant Misra,
learned Counsel for the petitioners in WritA No.16750 of 2024; Mr. Rishi Kant Rai,
learned Counsel for the petitioner in WritA
No.16945
of
2024;
Mr.
Satish
Chaturvedi,
learned
Counsel
for
the
petitioner in Writ-A No.18634 of 2024; Mr.
S.N. Sinha with Mr. Mohd. Mohiuddin
Siddiqui,
learned
Counsel
for
the
petitioners in Writ-A Nos.19104 of 2024,
19172 of 2024; Mr. J.P. Singh, learned
Counsel for the petitioner in Writ-A
No.15317 of 2024; Mr. Surya Prakash
Dubey, learned Counsel for the petitioners
in Writ-A No.17776 of 2024; Mr. Navin
Kumar Srivastava, learned Counsel for the
166 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioners in Writ-A No.18497 of 2024
and Mr. Ajay Tripathi, learned Counsel for
the petitioner in Writ-A No.14145 of 2024;
Mr. Ashok Shankar Bhatnagar, learned
Counsel
for
the
respondent-Punjab
National Bank, Mr. Piyush Bhargav,
Advocate holding brief of Mr. Vivek Ratan
Agrawal,
learned
Counsel
for
the
respondent-Union Bank of India, Mr. Ajay
Shankar,
learned
Counsel
for
the
respondent-UCO Bank, Mr. Ashok Kumar
Lal with Mr. Anadi Krishna Narayana,
learned Counsel for the respondent-Bank of
Baroda, Mr. Abhishek Ahuja, learned
Counsel for the respondent-Indian Bank,
Mr. Ashok Kumar Singh, learned Counsel
for the respondent-Central Bank of India,
Mr. Pashupati Nath Tripathil, learned
Counsel for the respondent-Indian Bank,
Mr. Mehul Khare, learned Counsel for the
respondent-Canara Bank, Ms. Monika
Arya, learned Counsel for the Staterespondents, Mr. Abhishek Srivastava with
Mr. Ujwal Srivastava, learned Counsel for
the respondent-U.P. Power Corporation
Limited, Mr. Shrawan Kumar Tripathi,
learned
Counsel
for
the
respondentPurvanchal Vidyut Vitran Nigam Ltd., Mr.
Ishan Mishra, Advocate holding brief of
Mr. Manu Ghildyal, learned Counsel for
the
respondent-Dakshinanchal
Vidyut
Vitran Nigam Limited, Mr. Bipin Bihari
Pandey,
learned
Counsel
for
the
respondent-Nagar Nigam, Varanasi.

8. Mr. Pradeep Verma, learned
Counsel, who appears for the petitioners in
a number of writ petitions in this batch,
submits that there is no interest chargeable
on
the
commutation
value
or
the
commutation amount paid in lump sum
under the Regulations applicable to each of
the respondents concerned in the various
writ petitions. It is argued that the
petitioners have
paid up
the
entire
commuted portion or value of their
pensions within the span of 9-10 years of
their retirement, going by the regular
deductions made from their monthly
retirement pension. It is argued that the
recovery period of 15 years leads to an
irrationality, because double the amount of
money, that is paid towards commutation,
would be recovered in 15 years. He submits
that we are a welfare State and the scheme
for provision of commuted value, for this
reason, does not envisage levy of interest.
The commutation amount paid is not
taxable under the Income Tax Act. It is
emphasized
that
under
the
Pension
Regulations applicable, there is no mention
of recovery of more than the commuted
value. The respondents have recovered
more than the commutation value up to
31.08.2024.
Since
the
mortality
rate
between 70-75 years has reduced and life
span increased, it would call for restoration
of
pension
immediately
after
the
commutation value paid is recovered.

9. It is emphasized also that the
commutation value/ commutation factor in
the commutation table appended to the
Regulations involved in Writ-A No.16467
of 2024, is based on four parameters i.e.
interest rate, life expectancy, mortality rate
and the period of recovery. The mortality
rate, as published by the Institute of
Actualities of India, has been utilized in the
LIC (94-96 ultimate tables). An ultimate
mortality table lists the percentage of life
insurance purchasers expected to be still
alive at each given age, beginning with age
'0' (zero), which corresponds to or
represents 100% of the population of the
assured being alive up to the age of 120
years. Typically, the data is based on a
population of life insurance policy bearers,
either from a particular Insurance Company
or a group of them, rather than the country's
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
167
population. When the amount of monthly
deduction made from an employee's
pension in lieu of the lump sum paid to him
on account of commutation is multiplied
with the restoration period i.e. 180 months
(15 years), the sum of money approximates
to twice
of
what is
paid
towards
commutation in lump sum. It is argued that
the 15 years for restoration of commuted
pension has been fixed by the State when
life expectancy in India was comparatively
much lower. The life expectancy was 57
years only, whereas the retirement age was
higher than that. The learned Counsel
submits that as per official data released by
the Union Ministry of Health and Family
Welfare for the year 2011-15, the average
life expectancy in India has increased to
68.5 years. At present, he submits that the
average life expectancy in the country is
about 70.42 years, which is much more
than
the
age
of
retirement
upon
superannuation.

10. It is interestingly argued that
the
life
expectancy
of
government
employees is higher than the average life
expectancy of the population in general. As
such, this has reduced the risk of nonrecovery of the commutation amount due to
premature mortality of pensioners to almost
a zero. It is, therefore, urged that the period
of
recovery/
restoration
has
to
be
rationalized on these changed data about
the life span and other matters. The laws
and rules have to accord with these
changed things. It is next submitted by Mr.
Pradeep Verma that the State has failed to
consider
these
relevant
facts
and
circumstances.
The
rule,
restoring
commuted pension after 15 years, has
turned arbitrary and unreasonable. It
constitutes
excess
recovery
by
the
respondents at the expense of the senior
citizens in violation of Article 14 of the
Constitution. The period of recovery for the
commutation value is emphasized again to
be ultimately dependent upon three factors,
to wit, the interest rate, the life expectancy
of the pensioners and the mortality rates.
When the commutation tables currently in
force in different establishments were
drawn up, the interest rate was high, life
expectancy low and mortality high. It is
emphasized by the learned Counsel for the
petitioners at this juncture that this is a case
of unjust enrichment of the exchequer at
the cost of senior citizens. The excess
amount recovered by the respondents
constitutes unjust enrichment, which is
illegal and unconstitutional too. Restoration
of full pension after 15 years, instead of 10,
lacks an arithmetical basis and the same is
per se and ex facie arbitrary and irrational.
The State is a model employer and cannot
enrich itself by its whim at the cost of
citizens in the twilight years of life.

11.
Mr.
Mohd.
Mohiuddin
Siddiqui, learned Counsel for the petitioner
in Writ-A Nos. 19104 of 2024 and 19172
of 2024 has submitted along similar lines to
assail the long period of deduction as
Pramod Kumar Agarwal, appearing in
person in Writ-A No.14826 of 2024.

12. Mr. Manoj Kumar Tiwari,
learned Counsel for the petitioners has
submitted that the decision of the Supreme
Court in Common Cause (supra) was not
based upon any records, factors, formulae
or
data
forwarded
by
the
Central
Government in support of fixing the period
of 15 years, as time during which
commuted pension would be released. The
Supreme Court proceeded on a principle
that it was necessary for the Central
Government to fix the period of 15 years in
order to recover losses on account of early
deaths of pensioners. Common Cause was
168 INDIAN LAW REPORTS ALLAHABAD SERIES
decided in the year 1986. He submits that
there is no basis to insist on the period of
15 years as necessary to recoup losses for
the employer or the Government on
account of early deaths of many pensioners,
who have commuted their pension, 38
years after the Supreme Court decided
Common Cause. There is no such data or
formula or factors forwarded by the
Government, including the respondents to
show that the period of 15 years is
calculated on some scientific or reasonable
basis to determine the period of recovery of
the commuted pension. Mr. Tiwari has
particularly pointed out that with the
increase in life expectancy, the Kerala High
Court in Central Government Pensioners
Association v. Union of India, 2008 SCC
OnLine
Ker
291
recommended
consideration to the Central Government
that the period of recovery of commutation
value may now cause unjust enrichment to
the employer at the cost of senior citizens,
and that the period of time for the
commutation value to be squared off may
be reduced to 12 years. The Government
were directed to decide the petitioners'
representation in that case, taking note of
the remarks in the judgment. Mr. Tiwari
submits
that
Central
Government
Pensioners
Association
(supra)
was
decided about 16 years ago, and till date
neither the Central Government nor the
Corporations of the Government, like the
respondent establishments, have thought of
bringing down the period of commutation
value to be settled, given the average
longevity.

13. Mr. Harsh Vardhan Gupta,
learned Counsel for the petitioners in nine
of the writ petitions, urges that the decision
of the Supreme Court in Common Cause
clearly supports the period of recovery to
be 12 years. So far as the case of R.
Gandhi (supra) is concerned, Mr. Gupta
says that the issue decided in the said case
is whether the period of restoration is to be
counted from the date of retirement or the
date of commutation. The issue there is
different and the respondents cannot make
any capital out of it.

14. Mr. Ashok Bhatnagar, learned
Counsel, appearing for the respondents in
Writ-A No.16945 of 2024, submits that the
period of 15 years is prescribed by
Regulations 41(4) and 41(5) of the Punjab
National
Bank
(Employees')
Pension
Regulations,
1995
(for
short,
'the
Regulations of 1995') and the petitioners
are seeking curtailment of the period of
commutation from 15 years to 11. This
cannot be done dehors the rules, involved
in all causes against the Punjab National
Bank. This writ petition, which does not
challenge the vires of the Regulations of
1995, is not maintainable. It is argued that
the benefit of pension, as a retiral benefit in
lieu of the Bank's contribution to the
provident fund, has been introduced by all
nationalized Banks, including the Punjab
National Bank, pursuant to the bipartite
settlement dated 29.10.1993, so far as it
relates to employees, who are workmen,
and on the basis of a joint note dated
29.10.1993, so far as officers of the Bank
are concerned. The note aforesaid has been
signed by the Management of various
Banks and Officers' Associations at the
Industry level. The benefit of pension is not
compulsory, but elective. Those employees,
who opt for the benefit of pension in lieu of
the
respondents'
contribution
to
the
provident fund, are governed by the
Pension Regulations.

15.
The
aforesaid
bipartite
settlement dated 29.10.1993 and the joint
note dated 29.10.1993 have culminated in
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
169
the Regulations of 1995, with these
Regulations being framed by the Board of
Directors of the Respondent in exercise of
powers conferred under Section 19 of the
Banking Companies (A&T Undertakings)
Act, 1970 after consultation with the
Reserve Bank of India and the previous
sanction of the Central Government. He
emphasizes that the commutation of 1/3rd
pension payable in future to the pensioners
is also not compulsory, but absolutely
elective. It is for the employee to decide to
seek commutation or not, but if he seeks
commutation, the entitlement to restoration
of the commuted portion comes about
under the Regulations after 15 years from
the date, it is made. In support of his
contention that the period of 15 years
cannot be reduced, Mr. Bhatnagar has
relied upon four authorities that have
already been noticed in the earlier part of
this judgment, and to which necessary
allusion would be made later on.

16. During the course of his
submissions, Mr. Bhatnagar said that in one
of the cases in the bunch, the submission
raised was that the 15 year period led to
unjust enrichment of the respondents at the
cost of senior citizens. The submission
proceeds on the foot of the reasoning that
in the pension fund, the total receipts of
deduction of installments from the monthly
pension to make good for the commutation
value, far exceed what is paid to the
petitioners in lump sum. This happens
because the recovery continues for a period
of 15 years. It was said for the petitioners,
according to Mr. Bhatnagar, that the
pension fund has swelled at their cost. Mr.
Bhatnagar points out that there is also a
submission on behalf of the petitioners that
the average age since the year 1987 has
gone up from 57 years to 69-70 years, and
on the other hand, the rate of interest on the
corpus has also gone up since the scheme
of
commutation
of
pension
was
implemented. He submits that no such issue
has been raised either in the writ petition or
the counter affidavit. He argues that the
prevalent rate of interest has gone up from
7-8% per annum in 1987 to 12-13% in the
year 1994-95. However, since then the rate
of interest has plummeted considerably to
hover around 6% per annum. As such, the
claim of the petitioners on this score is
factually misconceived. So far as the
increase in the average age is concerned,
though it has gone up to 69-70 years, but a
balance chart of the pension fund for the
Punjab National Bank provides a different
picture. It shows that the Bank had to
infuse funds to keep the balance of
payment in viable figures, causing loss to
the Bank. Mr. Bhatnagar has attempted to
introduce during arguments a chart to show
for the financial years 2020-21, 2021-22,
2022-23 and 2023-24, the shortfall in the
pension
fund
despite
receipts
of
contribution from the commuted pension
holders, which the Bank had to make good
from its own resources. The risk factor on
account of early deaths of pensioners is
there, and that is what is responsible for the
shortfalls, because lump sum payment once
made, cannot be recovered after the
pensioners' death.

17. Mr. Ajay Shankar, learned
Counsel
has
added
to
Mr.
Ashok
Bhatnagar's argument about the risk factor
on account of many early deaths of
pensioners. The fact is that payment of
lump sum, in order to provide the
commuted value of pension, leads to
depleted fund with the respondents and loss
of interest thereon. This can be made good
by paying a reduced pension to the
petitioners for extended period of time. In
addition, it is argued that the petitioners
170 INDIAN LAW REPORTS ALLAHABAD SERIES
have opted for commutation of their free
will, fully aware that they would get a
reduced pension, in case they elect
commutation for the time period of 15
years. Mr. Ajay Shankar says that an
estoppel clearly applies to the petitioners,
who
have
accepted
the
benefit
of
commutation, which comes as a complete
package, including reduced pension for a
period of 15 years. He points out that the
petitioners seek to reopen the point, which
this Court has already decided in Ram
Narayan Gupta v. State of U.P. and
others, 1994 (24) ALR 151. Mr. Ajay
Shankar speaks about Rule 10A of the
Central Civil Services (Commutation of
Pension) Rules, 1981 (for short, 'the Rules
of 1981') and says that these are pari
materia to Regulation 41(5) of the UCO
(Employees) Pension Regulations, 1995.
Mr.
Ajay
Shankar
represents
the
respondents in a case, where they are the
UCO Bank. He emphasizes that the pension
funds are used for payment of pensionery
benefits alone and not utilized for any other
purpose. It is maintained to pay monthly
pensions and also to plan for contingencies,
like the Covid-19 pandemic. These are not
a source of unjust enrichment to the
respondents, as they cannot be utilized
elsewhere.

18. Mr. Vivek Ratan Agarwal,
learned Counsel has argued on behalf of the
respondents, adopting the same line of
arguments as those advanced by Mr. Ashok
Bhatnagar.

19. Upon hearing learned Counsel
for the parties, what we find is that the
point involved here, indeed, engaged the
attention of the Supreme Court squarely in
Common Cause. The facts in Common
Cause can best be recapitulated in the
words of their Lordships, which read:
 "1. By these applications under
Article 32 of the Constitution Common
Cause, a registered society and three
retired government servants have asked for
striking down certain provisions of the
Commutation of Pension Rules applicable
to civilian and defence pensioners as they
permit the Union of India to recover more
than what is paid to the pensioners upon
commutation and for a direction that an
appropriate
scheme
rationalising
the
provisions relating to commutation be
brought into force. The respondent has filed
a
counter-affidavit
challenging
the
maintainability of the petition as also the
claim of the petitioners and the matter has
been heard at considerable length from
time to time. Parties have filed written
submissions
supplementing
their
oral
arguments.

2. The Central Civil Services
(Commutation of Pension) Rules, 1981 are
the appropriate rules in force so far as
civilian employees under the Government
of India are concerned. A set of regulations
is in force in regard to defence personnel.

3. It is not disputed that in the
case of civilians the total amount of
pension which can be commuted is up to
one-third while in the case of defence
personnel, commutation is admissible up to
43 per cent in the case of officers and up to
45 per cent in respect of other ranks. The
argument advanced on behalf of the
petitioners that there has been a substantial
improvement in the life expectancy of the
people in India has not been refuted on
behalf of the respondent. This Court
suggested to the respondent in course of the
hearing that in the changed situation now
prevailing in the country, a new look
should be given to the matter. In deference
to the suggestion made by this Court, the
respondent took time to consider the
various aspects raised in the writ petitions
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
171
and the oral submissions advanced at the
hearing as also the written notes submitted
in court. It also took into account the fact
that several State Governments have
changed
the
Rule
applicable
to
commutation and have restored full pension
to the pensioners who commuted a part of
their pension after lapse of fifteen years.
Union of India has now agreed to restore
the commuted portion of the pension in
regard to all civilian employees at the age
of seventy years or after fifteen years,
whichever is later, and has agreed to make
this effective from April 1, 1986.....

4. As the position now stands,
when a pensioner commutes any part of his
pension up to the authorised limit, his
pension is reduced for the remaining part of
his life by deducting the commuted portion
from the monthly pension."
(emphasis by Court)

20. In deciding the issue involved,
the Supreme Court held in Common
Cause:

"5.
The
petitioners
have
contended that the commuted portion out of
the pension is ordinarily recovered within
about 12 years and, therefore, there is no
justification for fixing the period at 15
years. Commutation brings about certain
advantages. The commuting pensioner gets
a lump-sum amount which ordinarily he
would have received in course of a spread
over period subject to his continuing to
live. Thus, two advantages are certainly
forthcoming out of commutation - (1)
availability of a lump sum amount, and (2)
the risk factor. Again many of the State
Governments have already formulated
schemes accepting the 15 year rule. In this
background, we do not think we would be
justified in disturbing the 15-year formula
so far as civilian pensioners are concerned.

6. The age of superannuation
used to be 55 until it was raised to 58. It is
not necessary to refer to the age of the
commuting pensioner when the benefit
would be restored. It is sufficient to
indicate that on the expiry of fifteen years
from the period of retirement such
restoration would take place.

9. In dealing with a matter of this
nature, it is not appropriate to be guided by
the example of life insurance; equally
unjust it would be to adopt the interest
basis. On the other hand, the conclusion
should be evolved by relating it to the
"years-of-purchase" basis. An addition of
two years to the period necessary for the
recovery on the basis of years of purchase
justifies the adoption of the 15-year rule.
That is more or less the basis which
appears to be equitable. It may be that this
would give rise to an additional burden on
the exchequer but it would not be heavy
and after all it would bring some relief to
those who have served the cause of the
nation at great sacrifice. We are, therefore,
of the view that no separate period need be
fixed for the armed forces personnel and
they should also be entitled to restoration of
the commuted portion of the pension on the
expiry of 15 years as is conceded in the
case of civil pensioners. And for them too,
the effective date should be from April 1,
1985."
(emphasis by Court)

21. A perusal of the law laid down
by the Supreme Court in Common Cause
is of seminal importance. The Rule in
Common Cause brought about a drastic
change to the rights of pensioners, who had
elected to commute their pension. Prior to
Common Cause, as it appears, except in
the cases of some State Governments, who
had adopted the rule of restoring full
pensions after expiry of a period of 15
172 INDIAN LAW REPORTS ALLAHABAD SERIES
years from the date of commutation, the
Central Government, both in relation to the
civil services and defence services, was
adhering to the letter of the law carried in
the
Rules
of
1981,
which
made
commutation of pension by a retiring
government servant, whether a civil servant
or a service man, burdened with a
permanent monthly deduction from his
pension. This would have obviously far
exceeded the gains from the commutation
received in lump sum by the pensioners.
The petitioners, at that time too, had
contended
in
Common
Cause
that
recovery of the commuted value of pension
is complete in 12 years and there is no
justification to bring in a rule of restoring
the pension upon the expiry of 15 years.
This came about as a result of the Union
Government agreeing to alter the rule,
prescribing a permanent reduction of
pension for the pensioners, by a rule which
said that recovery of the commuted value
would stop on completion of 15 years from
the date of retirement on superannuation or
the pensioner attaining the age of 70 years,
whichever is later. Their Lordships did not
go with the 70 years ceiling, but also did
not accept the position that the entire
recovery of commutation value being over
in 12 years, there was no justification to fix
the period of time for restoration of pension
at 15 years. It was remarked that
commutation
brings
about
certain
advantages
for
the
employee.
The
pensioner gets a lump sum, which he would
have received spread over a period of time,
subject to his continued survival. It was,
therefore, remarked that two advantages,
that
came
to
the
pensioner
with
commutation, was firstly, the immediate
availability of a lump sum amount of
money, and, secondly, exclusion of the risk
factor, arising from the event of death. The
Court also took note that many State
Governments
had
already
formulated
schemes, accepting the 15 year rule. It was
in this background that for civilian
pensioners, the Court accepted the 15 year
rule. The Court specifically rejected the
criteria of the pensioners' age as one for
restoring the pension. The other remarks in
paragraph No.9 of the report may not be
very relevant to this case, as this cause
essentially relates to pension in civilian
service, albeit of a Bank or Corporation.

22. What really matters is that the
Court in Common Cause introduced a 15
year rule, consciously adding a 3 year
period beyond the 12 year recovery of the
commutation value, bearing in mind the
advantage to the employee of receiving a
lump sum, which he might or might not
have received, depending upon his fate in
the matter of life expectancy. The other
more important fact was that given the
uncertainties of human life, described as a
risk factor, the employer too would have to
be
compensated
in
the
matter
of
maintenance of the pension fund as the
employer would have to absorb in the
budgeting of the fund, cases of those
employees, who took the lump sum and did
not survive long enough, to ensure
replenishment.

23. For the present, the submission,
that has been advanced on behalf of the
petitioners, is that life expectancy has
increased generally, and, therefore, there
would be a larger number of pensioners,
contributing to the replenishment of the
pension fund, compared to the time when
Common Cause was decided. Therefore,
given the fact that the average life
expectancy has risen to 70 years or so,
which was 57 years at the time, when
Common Cause was decided, the Rule of
adding 3 years beyond the 12 year recovery
4 All. Sudhir Kumar Agarwal Vs. Unior of India & Ors.
173
period of the commutation value and fixing
a 15 year period of time, after which
pension would get restored, is now
absolutely arbitrary and unfair. It would
lead
to
unjust
enrichment
of
the
respondents or the exchequer at the cost of
the senior citizens. This is said to be
antithetical to the values of a welfare State.
The argument, though attractive, does not
hold much force; at least to be suited in a
writ petition, or for that matter, a Court of
law, as matters stand. There could be some
sense to the fact that increase in average
longevity may have made pension funds
with an employer more viable, but that is a
matter of working out economies on a
larger scale. There are neither sufficient
pleadings nor could there be in a few writ
petitions filed before the Court, that may
enable the Court to take an informed
decision, affecting the budgeting and
economy of the respondents' pension fund.
It is not something, that is so palpably
wrong or absurd that the Court may hold it
to be arbitrary. The factor of increase in
average longevity may require a policy
decision on the respondents' part to be
taken, but that would not entitle the
petitioners to a writ of ours, limiting the
recovery period of the commuted pension
value to 10 years or 11, as the petitioners
seek, or even 12. Working out of
economies and money matters, like this, are
reputed in law to be best left to the primary
decision maker, who has to bear the
burden, manage great funds and frame
budgets. It is not a matter, which can be
decided within the confines of a lis,
founded on pleading and some documents.

24. Mr.