Asst. General Manager, State Bank of India, CPPC, Vazhutthacadu, Thiruvananthapuram & Branch Manager, SBI Parippilly Branch, Kollam District v. P. Vasudevan Pillai & Others

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** **& THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **WEDNESDAY, THE 17TH DAY OF JANUARY 2018 / 27TH POUSHA, 1939** **OP (CAT).No. 10 of 2018** **(AGAINST THE ORDER/JUDGMENT IN OA 248/2016 of CENTRAL ADMINISTRATIVE TRIBUNAL, ERNAKULAM BENCH DATED 23-06-2017)** ## **PETITIONERS (RESPONDENTS 5 & 6):** - **1 ASST. GENERAL MANAGER, STATE BANK OF INDIA, CENTRALIZED PENSION PROCESSING CENTRE, VAZHUTHACADU, THIRUVANANTHAPURAM. 695 014 (FORMERLY CHIEF MANAGER, STATE BANK OF TRAVANCORE, CENTRALIZED PENSION PROCESSING CENTRE, VAZHUTHACADU, THIRUVANANTHAPURAM. 695 014).** ## **2 BRANCH MANAGER,** **STATE BANK OF INDIA, PARIPPILLY BRANCH, KOLLAM DISTRICT- 691 574, (FORMERLY BRANCH MANAGER, STATE BANK OF TRAVANCORE, PARIPPILLY BRANCH, KOLLAM DISTRICT-691 574)** **BY ADV.SRI.P.RAMAKRISHNAN, SC, STATE BANK OF TRAVANCORE** ## **RESPONDENTS/APPLICANT & RESPONDENTS TO 1 TO 4:** **1. P.VASUDEVAN PILLAI, S/O LATE. PURUSHOTHAMAN PILLAI, FITTER GRADE 1 (RETD), SOUTH EAST CENTRAL RAILWAYS, VM NIVAS, PALAYAMKUNNU PO, VARKALA VIA, THIRUVANANTHAPURAM DISTRICT.695 146, KERALA STATE.** **2. FINANCE ADVISOR & CHIEF ACCOUNTS OFFICER (PENSION), SOUTH EAST CENTRAL RAILWAYS, BILASPUR-495 004.** **3. SENIOR DIVISIONAL FINANCE MANAGER, SOUTH EAST CENTRAL RAILWAYS, BILASPUR-495 004.** **4. UNION OF INDIA, REPRESENTED BY CHAIRMAN, RAILWAY BOARD, RAIL BHAVAN, NEW DELHI - 110 001.** **5. SENIOR DIVISIONAL FINANCE MANAGER, SOUTHERN RAILWAYS, THIRUVANANTHAPURAM - 695 014.** - **R2-5 BY ADV. SRI.K.SHRI HARI RAO, SC, RAILWAYS.** ## **R1 BY SRI.C.S.DIAS.** **THIS OP (CAT) HAVING COME UP FOR ADMISSION ON 17-01-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **OP (CAT).No. 10 of 2018 (Z)** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:** **EXHIBIT P1 TRUE COPY OF O.A NO.180/002248/2016 FILED BEFORE THE CENTRAL ADMINISTRATIVE TRIBUNAL ERNAKULAM BENCH WITH ANNEXURES.** **EXHIBIT P2 TRUE COPY OF THE REPLY AFFIDAVIT FILED BY RESPONDENTS 1 TO 4 IN O.A NO.180/00248/2016.** **EXHIBIT P3 TRUE COPY OF REPLY STATEMENT FILED BY THE RESPONDENTS 5 AND 6 IN O.A NO.180/00248/2016.** **EXHIBIT P4 TRUE COPY OF REJOINDER DATED 4.3.2017 FILED BY THE 1ST RESPONDENT.`** **EXHIBIT P5 `TRUE COPY OF THE ORDER DATED 23.6.2017 IN O.A NO.180/248/2016.** **EXHIBIT P6 TRUE COPY OF THE CIRCULAR DATED 18.4.1991 ISSUED BY THE RESERVE BANK OF INDIA. EXHIBIT P7 TRUE COPY OF THE CIRCULAR DATED 1.7.2015 OF THE RESERVE BANK OF INDIA.** **EXHIBIT P8 TRUE COPY OF CIRCULAR DATED 17.3.2016 OF THE RESERVE BANK OF INDIA.** ## **RESPONDENTS EXHIBITS:** ## **NIL** _// TRUE COPY//_ ss _P.A. TO JUDGE_ **P.R.RAMACHANDRA MENON, J & R.NARAYANA PISHARADI, J --------------------------------** ----------------------------------- **O.P.(CAT).No.10 of 2018** ------------------------------------------------------------------Dated this the 17[th] day of January, 2018 ## **JUDGMENT** ## _**P.R. Ramachandra Menon, J**_ The respondents No.5 and 6 in the O.A.No.180/00248/2016 are the petitioners before this court. The challenge is against Ext.P5 order passed by the Tribunal, whereby the steps for recovery of excess amount paid by the Bank, being the disbursing authority, pursuant to the re-fixation of pension payable to the first respondent with effect from 01.01.2006 as per Annexure-A5, have been interdicted by the Tribunal, holding that no recovery is possible by virtue of the law declared by the Hon'ble Supreme Court in _**State of Punjab v. Rafiq Masih (White Washer and Others)**_ _(2015(4) SCC 334)_ and that the Bank is free to recover the excess amount paid from the employees of the Bank, who are responsible for the excess payment, if any. The case of the petitioner Bank is that, no mistake has been committed by the Bank and that the direction to cause the excess amount to be recovered from the employees of the Bank is not correct and sustainable. 2. Heard Sri.P.Ramakrishnan, learned counsel appearing for the petitioners and Sri.Sreehari Rao, learned standing counsel 2 ## **O.P.(CAT).No.10 of 2018** appearing for the Railways (respondents 2 to 5). 3. The crux of the factual sequence is that, the first respondent joined the service in South East Central Railways as Fitter Grade-I, and on attaining the age of superannuation, he retired from the service on 30.09.2004. The pension of the first respondent was initially fixed by the Railways as Rs.3,361/- and the amount due was being disbursed by the Bank, being the disbursement authority. While so, pursuant to implementation of the recommendation of the sixth Pay Commission, there was an upward revision of pension with effect from 01.01.2006. Pursuant to the relevant proceedings in this regard, the pension payable was noted as Rs.7,598/- and the petitioner Bank was effecting the disbursement through the second petitioner Branch Manager without any complaint. 4. Nearly 'ten years' after the above proceedings, the Railways issued Annexure-A6 dated 05.01.2016, pointing out that there was some mistake in the re-fixation of pension payable to the first respondent, that he was actually eligible to obtain only a sum of Rs.5,064/- per month with effect from 01.01.2006 and hence that there was an excess payment of Rs.4,60,512/-, which in turn was required to be recovered by the Bank and credited to the 3 ## **O.P.(CAT).No.10 of 2018** accounts of the Railways. It was pursuant to Annexure-A6, that the Bank issued Annexure-A5 recovery notice to the first respondent on 11.01.2016, enabling the first respondent to repay the said amount by way of 150 monthly instalments, at the rate of Rs.3,070/-. It was in the said circumstances, that Annexures-A5 and A6 were subjected to challenge by the first respondent by filing O.A.No.180/00248/2016 with the following prayers: _i. To call for the records leading up to the issue of Annexure A5 and A6 and quash the same,_ _ii. To declare that no amount is to be recovered from the applicant towards the alleged excess payment,_ _iii. To direct the 5[th] and 6[th] respondents to refund the amount of Rs.6,146/- within stipulated period,_ _iv. To direct the 1[st] respondent to revise the pension of the applicant to Rs.5585/- w.e.f. 1.1.2006 by issuing a revised PPO and grant the arrears of pension within a time frame,_ _v. Grant such other relief or reliefs that may be prayed for or that are found to be just and proper in the nature and circumstances of the case._ _vi. Grant cost of this O.A._ 5. The petitioner Bank took up a contention by filing Ext.P3 reply statement, primarily contending that O.A.No.180/00248/2016 itself was not maintainable as the Bank was not a notified institution in terms of the provisions of the Administrative Tribunals Act. The steps sought to be pursued against the first respondent were also 4 ## **O.P.(CAT).No.10 of 2018** sought to be justified as contended in Ext.P3. 6. The Railways filed Ext.P2 reply statement, virtually substantiating the excess payment resulted, however adding a sentence in paragraph 4, that excess payment was resulted because of the wrong calculation made by the Bank. How it had occurred at the hands of the Bank, was not explained. After hearing both the sides, the Tribunal accepted the challenge raised by the applicant and the position was answered in favour of him. The recovery was interdicted placing reliance on the verdict of the Hon’ble Supreme Court in _**State of Punjab v. Rafiq Masih (White Washer and Others)** (2015(4) SCC 334)_ . It was however made clear that the Bank was free to proceed against its employees, to have the excess payment recovered, which made the Bank to feel aggrieved, who is now before this Court. 7. The observations of the Tribunal in paragraph 9 and the operative portion of the order as contained in paragraph 11 are in the following terms. “ _**9** . It is worth noting that the respondents do admit that the excess payment was made not on account of the mistake occurred to the pension granting authority which had indeed correctly fixed the revised pension after the VIth CPC. It is the respondents Nos.5 & 6 bank which omitted to note the instruction of the pension sanctioning authority that the right_ 5 ## **O.P.(CAT).No.10 of 2018** _multiplication factor to be applied for revising pension of the applicant who retired after 1.4.2004 is 1.5067 instead of 2.56 as 50% of the DA was already merged with his basic pay. The error occurred was obviously due to the carelessness and lack of vigilance on the part of the employees/officials of respondents Nos.5 & 6. Annexure R5(a) and R5(b) instructions issued by the Reserve Bank of India to the pension disbursing banks appear to be highly unjust because even for the mistakes committed by the employees/officials of the bank the unwary account holder - a pensioner- is made to bear the burnt. The inequitable nature of such Reserve Bank of India directions becomes all the more grave in the case of a pension who ekes his livelihood using the pension amount received by him during the fag end of his life after retirement. Such persons may not be in a position to keep a vigil on the quantum of pension or to keep track of the revisions due to their sheer senile debilities.”_ _“_ _**11** . In the above circumstances respondents are directed to ensure that the amount recovered from the applicant's pension is refunded to him and his pension as per Annexure R8 revised pension payment order is disbursed without any deduction and also to ensure that he is given pension in accordance with further revisions whenever occur and that his family pension also is revised from time to time. The respondents bank is free to recover the excess payment given to the applicant and the loss so suffered by the bank from the erring officials/employees of the Bank.”_ 8. The primary question to be considered is whether there is any excess payment. The next question is whether it could be 6 ## **O.P.(CAT).No.10 of 2018** recovered and the further question would be, if the excess payment was because the act pursued from the part of the Railways or from the part of the Bank. 9. The pleadings raised by the Bank, as set forth in paragraph 5 of Ext.P3, are worth while to be noted, which is extracted below: _**5** . It is submitted that by virtue of Annexure-A1 PPO, the monthly pension of the applicant was fixed as Rs.3,361/-. In pursuance to the 6[th] Pay Commission, which was implemented w.e.f. 1.1.2006, the pension of the applicant was also revised and the same was revised and re-fixed as Rs.7,598/- and the same was being disbursed from 1.1.2006 on wards. In pursuance to an inspection conducted by the Senior Divisional Finance Manager, Thiruvananthapuram, it was informed by Annexure-A6 that the applicant was eligible for only a sum of Rs.5,064/- + D.R. But the same was wrongly fixed and disbursed as Rs.7,598/- + D.R. Therefore by virtue of wrong fixation of pension w.e.f. 1.1.2006, the applicant had been paid excess a sum of Rs.4,60,512/- from 1.1.2006 to 31.12.2015. Vide Annexure-A6 it was further directed by the Senior Divisional Finance Manager, Thiruvananthapuram, 4[th] respondent herein to verify the records and to credit the excess amount paid to the Railways by means of Demand Draft._ 10. The version of the Railways is discernible from paragraph 3 and 4 and also from paragraph 12 of Ext.P2, which are 7 ## **O.P.(CAT).No.10 of 2018** ## also reproduced below: “ _**3** . It is humbly submitted that the Applicant retired from railway service on 30.09.2004 in the Pay Scale 45007000 and the pension was correctly fixed as Rs.3361/-. At the time of fixation of his pension and other retirement benefits, his basic pension was fixed duly taking into account 50% of Dearness Pay on the existing pay. As per 6[th] CPC Recommendations, the pension was to be revised with effect from 01.01.2006. As per Ministry of Finance. Department of Expenditure's OM No.1/1/2008-1C dated 30.08.2008 and Railway Board letter No.F(E)111/2008/PNI/12 dated 18.11.2008, pension calculation is to be done as 'Existing pension according to 5[th] CPC Recommendations” x 2.26 for the employees who retired on or before 31.03.2004 (whose 50% DA was not merged with basic pay). For employees who retired since 01.04.2004, the pension amount was to be fixed as existing pension x 1.5067 since their 50% DA was already merged with basic pay. The Applicant fails under the latter category. As such he is eligible for Rs.3361 x 1.5067 = Rs.5066 which was revised as Rs.5585/- with effect from 01.01.2006. The applicant has also admitted that he is eligible for Rs.5585/- and the respondents are not disputing the same.”_ _“_ _**4** . It is relevant to submit that though the applicant is actually entitled to a pension of Rs.5585/- only, the Pension Disbursing Authorities, the SBT, has incorrectly used the multiplication factor of 2.26 and has fixed the pension at Rs.7598/- due to which, consequent to revision of pension, an over payment of Rs.2013 (Rs.7598-Rs.5585) per month occurred since 01.01.2006. This was done wrongly, ignoring_ **O.P.(CAT).No.10 of 2018** 8 _the merger of Dearness Pension in the pre revised scale. The incorrect calculation by SBT authorities resulted in excess debit being raised on Railways and hence the bank authorities were advised to remit the over payment.”_ _“_ _**12** . It is further submitted that the Pension of the applicant has been revised by the competent authority i.e. Sr.DFM, Bilaspur vide revised PPA No.SECR/PEN/BSP/Rev.PPA/Pre 06/N-857/1822 dated 26.12.2016 duly enhancing his basic pension from Rs.5064/to Rs.5585/- w.e.f. 1.1.2006 onwards. Copy has been sent to the disbursing authority through STATE BANK OF TRAVANCORE/CPPC/TRIVANDRUM for immediate implementation. A true copy of the same is produced herewith and marked as Annexure-R8. The relief sought by the Applicant substantiated by Paras 4.2 to 4.7 of the Original OA has thus been accepted and fulfilled by the above PPA duly de-linking of qualifying service w.e.f. 1.1.2006 on wards. The delay in issue of the same is deeply regretted though the pensioner happened to get Rs.7598/- instead of the legitimate dues of Rs.5585/- from 01.01.2006 due to the incorrect fixation made by the bank authorities.”_ 11. The Bank has not specifically stated in Ext.P3 that the excess payment effected by them at the rate of Rs.7,598/- per month was pursuant to any instruction or direction given by the Railways and hence that they are not responsible. Coming to the version of the Railways, it is stated in the last sentence of paragraph 4, that excess payment was only due to the 9 ## **O.P.(CAT).No.10 of 2018** miscalculation effected by the Bank, which appears to have been accepted by the Tribunal while passing Ext.P5 verdict, interdicting the recovery, at the same time observing that the Bank was free to have the amount recovered from its employees - based on the observation of paragraph 9 as aforesaid. 12. The suit to be considered is whether the Bank is having any right to fix the pension or whether it is only a disbursing authority, effecting such disbursement based on the orders to be given by the sanctioning authority/Railways. Admittedly, the first respondent was an employee of the South East Central Railways and all the service records are available with the Railways and not with the Bank. From the contention raised by the Railways in paragraph 3, it is quite evident that, pursuant to the retirement from service on 30.09.2004, the pension of the first respondent was fixed by the Railways and it was only on intimation of this fixation, that the amount due was being disbursed by the Bank, at the rate of Rs.3,361/- per month. The pension came to be enhanced only pursuant to implementation of the sixth Pay Commissions' recommendations with effect from 01.01.2006. The Railways, while attributing the mistake on the part of the Bank in paragraph 4 of Ext.P2 reply statement, quite conveniently omitted to mention that 10 ## **O.P.(CAT).No.10 of 2018** the fixation at the correct rate was effected and communicated by the Railways or that the Bank was acting contrary to the instruction given by the Railways. On going through the contents of paragraph 12 of Ext.P2 reply statement, it is seen that the competent authority of the Railways had re-fixed the pension at Rs.5585/- per month with effect from 01.01.2006, only in December, 2016 and it was communicated to the Bank for immediate implementation, vide Annexure-R8. It was accordingly that instruction was issued to have the excess payment recovered from the beneficiary. 13. On going through the materials on record, it is quite clear that the disbursing authority/ Bank, not being the competent authority to fix the pension, can be found at fault, only if they had acted contrary to the instruction given by the Railways as to the fixation. No case is projected by the Railways anywhere in Ext.P2 reply statement, that the Railways had effected the fixation correctly and intimated the Bank on time. The learned standing counsel for the Railways submits that the course of action is discernible as stated in paragraph 5 of Ext.P2 reply statement, which is in the following terms. “ _**5** . With regard to the authority of the office of Sr.DFM/TVC on pension payment of the Applicant who retired from South East Central Railway, it is humbly submitted that_ 11 ## **O.P.(CAT).No.10 of 2018** _Railway employees after superannuation, irrespective of the zone they retire from, are entitled to draw their pension from the nearest pension disbursing branch where they settle after retirement. Shri.P.Vasudevan Pillai, who retired as Fitter Grade I from South East Central Railway, Bhilaspur was drawing his pension from State Bank of Travancore, Parippally Branch, Kollam District, Kerala. Since numerous retired employees are drawing their pension from various banks with disbursement running into crores of rupees and since banks calculate and commence revised pension consequent to implementation of Pay Commissions, chances of wrong payments causing excess drain on railway pension fund and underpayment denying legitimate dues to pensioners are equally likely to occur. So, to ensure correctness in pension disbursal by banks, Railway Board vide their letter No.2010/AC-II/21/10/Pt.IV dated 18.9.2014 a copy which is produced and marked as AnnexureR1, have directed all Zonal Railways to undertake check of pension duly deputing staff to the banks located in the vicinity of HQrs/Division/Workshops. Based on Railway Board's direction. FA&CAO/MAS had advised all divisions to undertake_ _this phase of work vide their letter No.P.500/HQrs/PEN/Verification of pension dated 23.10.2015 copy of the same is produced and marked as Annexure-R2. It is in compliance with the above orders that the 4[th] Respondent, Sr.Divisional Finance Manager, Trivandrum, had deputed staff to all the banks situated under its jurisdiction, which includes SBT, Parippally Branch, Kollam. During the course of this check at SBT, Parippally, overpayment made to Shri.P.Vasudevan Pillai was detected for the period from 1.1.2006 to 31.12.2015. This has also been advised to_ 12 ## **O.P.(CAT).No.10 of 2018** _FA&CAO/SECR/Bhilaspur who are the pension authority, as per this office letter No.P.500/TVC/pension/OA180/248 dated 10.10.16. Since it is not practical for respective zonal authorities to carry out inspection at far away banks from where retired employees settle and draw pension, Railway authorities who have geographical proximity to carry out such inspections are entrusted with the responsibility to do the same with a view to check and prevent excess payment from public money.”_ 14. We have gone through the pleadings and proceedings, it is not clearly stated by the Railways, whether the fixation of revised pension as Rs.7,598/- was done solely by the Bank, and if so, how? The Railways concede in paragraph 12 of Ext.P2 reply statement that the mistake came to light only in the course of inspection conducted in the year 2016, pursuant to Annexure-R1 Railway Board letter dated 18.09.2014 to conduct periodical checks in the Banks and that the delay was deeply regretted. All the while, i.e. for nearly ten years, the first respondent was enjoying the benefit of excess pension. We are of the view that both the Railways and the Bank have equally contributed to the mischief. 15. Coming to the question of recovery, the legal position has been made clear by the Hon’ble Supreme Court in _**State of Punjab v. Rafiq Masih (White Washer and Others)**_ cited (supra). The declaration made by the Supreme Court being the law 13 ## **O.P.(CAT).No.10 of 2018** of the land, by virtue of Article 141 of the Constitution of India there is no exemption to anybody, whether it be the Railways or the Bank. By virtue of the operation of such law, the recovery proceedings have been interdicted and as such, the demand put forward by the Railways vide Annexure-A6 (which was also challenged before the Tribunal and rightly interdicted by the Tribunal) warrants no interference. Similarly, there is no merit in the contention put forward by the bank that O.A.No.180/00248/2016 is not maintainable (the Bank not being a notified institution under the Administrative Tribunals Act), in so far as the challenge raised by the first respondent was not solely against Annexure-A4 issued by the Bank, but also against the basic order/instruction vide Annexure-A6 issued by the Railways, instructing the Bank to effect the recovery. Since the challenge was raised against Annexure-A6 as well, with Railways in the party array, the O.A. was very much maintainable before the Tribunal. 16. After hearing both the sides, this court finds that no specific direction has been given by the Tribunal in Ext.P5, casting a duty upon the Bank to recover the excess payment from the employees of the Bank. As the recovery itself has been interdicted, based on the law declared by the Supreme Court, it is equally 14 ## **O.P.(CAT).No.10 of 2018** applicable to the Railways as well as the Bank. The Tribunal has only made it clear that the Bank is 'free' to proceed against the employees, if at all there is any delinquence on the part of the employees. As it stands so, we do not find any reason to add anything more in this regard, as it is for the Bank to consider whether any mistake was there on the part of the employees and even if it be so, whether they should proceed against them at this distance of time. The O.P. stands dismissed, in the light of the above observations. _Sd/-_ **(** _**P.R. Ramachandra Menon,**_ **Judge)** _Sd/-_ **(R. Narayana Pisharadi, Judge)** //True Copy// _P.A. to Judge_ ss