Introduction Of New Pension Scheme In SBI Has No Legal Effect, Rules Kerala High Court

The High Court of Kerala has declared that the introduction of Defined Contributory Pension Scheme/New Pension Scheme (NPS) in State Bank of India ‘has no legal effect’.

State Banks’ Staff Union (SBSU), Kerala Circle, had argued in a petition that the introduction of the scheme for members joining service on or after August 1, 2010, took away the right to get pension based on the pension rule in vogue in SBI.

Giving a brief history, A Raghavan, General Secretary, SBSU (Kerala circle), said that the ninth bipartite settlement had made the NPS applicable across the industry, excluding SBI.

Despite provisions to exclude the bank as per the settlement, the management had unilaterally gone head to implement the NPS from August 1, 2010.

Appearing on behalf of the petitioners, counsel S Vaidyanathan and H Ganapathy contended that the SBI Act, 1955, does not empower its Central Board to amend the pension rules without due process of law.

Neither could this be done with retrospective effect, they said. An amendment can be brought in only in terms of the various provisions under Section 50 of the Act.

But Section 50(4) clearly states that every regulation shall, as soon as it is made by the Central Board, be forwarded to the Centre, and lay a copy before each House of Parliament in session for a period of 30 days.

Both Houses must agree on making any modification in the regulation before implementation. Thereafter, it should be notified in the gazette.

Delivering the judgement, Justice CT Ravikumar alluded to similar petitions filed earlier also contending that the introduction of NPS was ‘bad in law’, owing to non-compliance with the mandatory provisions under Section 50.

Even if the bank was only implementing the policy of the Centre, it could not overlook the statutory mandate under Section 50 in respect of service conditions related to pension.

Judgment in that case had observed that the NPS would have to be introduced as a regulation, as contemplated under Section 50, and will have to follow the procedure under Section 50(4) to have a legal effect.

Justice Ravikumar observed that “going by that judgment, the NPS (has) got no legal effect. In such circumstances, I am of the view that the NPS is not now available for consideration”.