SUDHAKAR SITARAM CHITALE and ORS.versusTHE BANK OF MAHARASHTRA and ORS.

                                                                         8-wp-4080-2002.doc

          jsn, spk, ksj
                            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                    CIVIL APPELLATE JURISDICTION

                                    WRIT PETITION NO. 4080 OF 2002

                   Sudhakar Sitaram Chitale & Ors.                  …Petitioners

                          Versus

                   The Bank of Maharashtra & Ors.                   …Respondents
                                                ----------
                   Mr. Piyush P. Hushing, i/b. P.K. Hushing for the Petitioners.
                   Ms. S.V. Bharucha (Thru V.C.) for the Respondent No.3 - Union of
                   India.
                                                   ----------

                               CORAM                 :      R.I. CHAGLA AND
                                                            FIRDOSH P. POONIWALLA, JJ.

                               RESERVED ON           :      29th AUGUST, 2026.

                               PRONOUNCED ON :              11th SEPTEMBER, 2026.


                   J U D G M E N T:-

                   1.          By this Writ Petition, the Petitioners have sought a

                   declaration that they are entitled to all the benefits of the revision of

                   the pay scale under the Agreement dated 14th December 1999.

                   Further direction is sought against Respondent Nos. 1 and 2 to give

KAVITA             effect to the revision of pay scales, with effect from 1st November
SUSHIL
JADHAV
Digitally signed
by KAVITA
SUSHIL JADHAV
                   1997, in the case of the Petitioners, inspite of the fact that they have
Date: 2026.09.11
17:40:21 +0530




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retired after 1st November 1997 and before 1st April 1998. A further

direction is sought against the Respondents to pay forthwith the

amounts as claimed by the Petitioners from 1st November 1997

onwards on the basis of the said revised pay scales, along with

interest on the said amounts, at the rate of 18% per annum, from 1st

November 1997 till actual payment to the Petitioners.



2.            Respondent Nos. 1 and 2, who are the contesting

parties, have, inspite of several opportunities being given to them, as

has been observed in the order dated 29th August 2026, failed to

make an appearance. Accordingly, the present Petition has been

heard in their absence.



3.          The Petitioners were working as officers in various

branches and offices of Respondent No. 1 - Bank of Maharashtra.

Petitioner Nos. 1 to 12 retired by accepting voluntary retirement and

Petitioner Nos. 13 to 21 retired from service on superannuation. All

the Petitioners have retired on various dates from 1st November 1997

to 31st March 1998. The respective dates when the Petitioners retired

from service have been mentioned in Annexure-A to the Petition.




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4.          Respondent No. 1 - Bank of Maharashtra, is a banking

Company constituted under the Banking Companies (Acquisition and

Transfer of Undertakings) Act, 1970, and is wholly owned and

controlled by Respondent No. 3 - Union of India. Respondent No. 2 is

the Indian Banking Association, which is an association of most of the

banks, including Respondent No. 1, and conducts negotiations with

organizations of officers and workmen in all banks and takes

decisions on service conditions and wage revision agreements at the

national banking industry level, which are followed by all the

member banks.



5.          The present Petition has challenged the arbitrary fixation

of pension with effect from 1st April 1998 under a joint note dated

14th December 1999 entered into between Respondent No. 2 and the

representatives of the officer - employees of the nationalized banks. It

is the case of the Petitioners that the revision should have been with

effect from 1st November 1997, being the date immediately

following the expiry of the preceding bipartite settlement.



6.          The Petitioners have stated that there were bipartite

settlement agreements for wage revision entered into, and which are

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set out in tabular form as under:


     Settlement of    Date of Signing Effective From      Preceded by
     Wages/Pension                                         expiry on


      5th Bipartite
                       10/04/1989          01/11/1987         ------
       Agreement

      6th Bipartite
                       14/02/1995          01/11/1992     31/10/1992
       Agreement

      7th Bipartite
                       27/03/2000          01/11/1997     31/10/1997
       Agreement

 Impugned Joint
                       14/12/1999          01/04/1998     31/10/1997
 Note/Agreement




7.             The Petitioners have stated that from the above, it is a

consistent, unbroken practice in the banking industry for every wage-

revision settlement to be given retrospective effect from the day

immediately following the expiry of the preceding settlement.



8.             It is the contention of the Petitioners that the 6th

bipartite settlement was arrived at and signed on 14th February

1995, but was brought into force retrospectively with effect from 1st

November 1992, i.e., on the expiry of the previous 5th bipartite


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agreement. The bipartite agreements were thus brought into force

retrospectively for a period of 5 years from 1st November and in the

case of the 6th bipartite agreement, it was brought into effect from,

as aforesaid, 1st November 1992. The 6th bipartite agreement

expired on 31st October 1997. There were negotiations for the 7th

Bipartite Agreement, which is stated to have continued for a long

time, and it was arrived at and signed on 27th March 2000. This was

also for a period of 5 years only, and the scales of pay, therefore, were

given retrospective effect from 1st November 1997, i.e., immediately

from the expiry of the previous bipartite agreement.



9.          Petitioners state that the period of agreement executed in

February 1995 which as aforementioned was for a period of 5 years

with effect from 1st November 1992, expired on 31st October 1997.

The talks for settlement on the terms and conditions of the next

agreement were going on for a considerable period of time and

during which Petitioner Nos. 1 to 12 decided to voluntarily retire

after 1st November 1997 and before 31st March 1998, as they bona

fide believed and reasonably expected that the first and second

Respondents would agree to give periodical increase in salary with

retrospective effect from 1st November 1997 in consonance with the

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established procedure.



10.         Petitioner Nos. 13 to 21 have been stated to have retired

on superannuation between 1st November 1997 to 31st March 1998.

They had planned their investments and lifestyle after retirement,

and had also planned their privilege leave on the assumption of

getting the difference in salary, leave encashment, pension, gratuity,

and commutation amount on the basis of revision of pay scales with

effect from 1st November 1997 itself.



11.         The Petitioners state that inspite of the consistent

unbroken practice for every wage-revision settlement in the banking

industry to be given retrospective effect from the day immediately

following the expiry of the preceding settlement, Respondent No. 1,

by its letter dated 15th February 2000, instructed the bank

managers/officers of the bank that Respondent No. 2 had signed a

joint note on behalf of the member banks on salary revision to

employees and the representatives of officers' organizations who

have also signed the said joint note. In the said letter, the prescribed

format for calculation of arrears payable was enclosed.




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12.         The Petitioners state that it is clear from paragraph 2 of

the said letter that initially the amounts are to be calculated and

disbursed on an ad-hoc basis only till formalities for amending the

Officer Service Regulations are completed. Paragraph 5 directed that

arrears payable for each individual officer under the various

provisions shall be calculated effectively from the dates specified in

that paragraph. The Petitioners state that, for the purpose of

calculations of the arrears of pay and dearness allowance and

pension, it is to be calculated from 1st April 1998 (and not from 1st

November 1997, as was expected on the basis of the long-standing

practice). Similarly, the fixed personal allowance, house rent

allowance, city compensatory allowance, provident fund, gratuity,

medical aid, recovery of house/furniture rent, and all other

allowances are to be calculated from 1st November 1999 and not

from 1st November 1997.



13.         The Petitioners, who have, as aforesaid, retired during

the period from 1st November 1997 to 31st March 1998, are

aggrieved by the implementation of the Joint Note dated 14 th

December, 1999 as interpreted in the said letter dated 15 th February

2000. The Petitioners have issued Demand Notice dated 16 th

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November, 2000 which Respondent Nos. 1 & 2 responded vide letters

dated 28th November, 2000 and 19th April, 2001 rejecting the

Petitioners’ demand. Being aggrieved, the Petitioners have filed the

present Writ Petition.



14.         Mr. Piyush Hushing, the learned Advocate appearing for

the Petitioners, has submitted that the 6th Bipartite Agreement

governing pay scales expired on 31st October 1997. This was

followed by the Joint Note/Agreement dated 14th December 1999

for officers/employees, which was signed after the Petitioners had

retired. Clause 13 thereof gives revision in Pay/DA/Pension with

effect from 1st April 1998 and the revision in the Provident Fund,

Gratuity, and other allowances with effect from 1st November 1999.

He submitted that for an identical revision cycle, the 7th Bipartite

Settlement dated 27th March 2000 for award staff was given

retrospective effect from 1st November 1997.



15.         Mr. Hushing has submitted that there is arbitrariness in

the decision taken by Respondent Nos. 1 and 2 in the revision of

Pay/DA/Pension and giving effect to the same from 1st April 1998, as

well as in the Provident Fund, Gratuity, and other allowances by

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giving it effect from 1st November 1999. He submitted that in doing

so there is a clear departure from the consistent, unbroken practice in

the banking industry for every wage-revision settlement viz. giving it

retrospective effect from the day immediately following the expiry of

the preceding settlement. He submitted that this practice "has come

to stay and has acquired the force of law". He submitted that the

Respondents are estopped from deviating from it. The rationale of

the practice, that no officer superannuating or voluntarily retiring in

the interregnum between the expiry of an old settlement and the

signing of a new one should suffer loss, is precisely the mischief the

Petitioners have suffered.



16.         Mr. Hushing submitted that the most striking illustration

of arbitrariness is that for the very same revision cycle following the

expiry of the preceding settlement on 31st October 1997; officers

were granted the revision/Pension only from 1st April 1998, without

any intelligible differentia. He submitted that the Respondents have

advanced no rational basis whatsoever for this 5-month differential, a

differential that has no nexus with any legitimate object, and which

operates solely to deprive officers who retired in the intervening

window (precisely the Petitioners' class) of their legitimate dues.

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17.           Mr. Hushing has submitted that the impugned Joint

Note/Agreement dated 14th December 1999, as interpreted in the

said in the said letter dated 15th February 2000, artificially divides

retired officers into pre-1st April 1998 and post-1st April 1998

retirees.



18.           Mr. Hushing has placed reliance upon the judgment of

the Supreme Court in D.S. Nakara v. Union of India 1, wherein it has

been held that Petitioners from one class cannot be subdivided on the

basis of an arbitrary eligibility cut-off, unrelated to the object sought

to be achieved. The impugned cut-off has no rational nexus with any

legitimate object of the revision. He submitted that the Respondents

in the present case have unjustly differentiated between different

categories of pensioners and sought to artificially divide the class of

retired officers by prescribing different dates of effect of the said

Agreement.



19.           Mr. Hushing submitted that Petitioner Nos. 1 to 12,

being conversant with the settled industry practice, voluntarily

retired between 1st November 1997 and 31st March 1998 in the

1   (1983) 1 SCC 305

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bona fide and reasonable expectation that the revision, whenever

concluded, would be given effect from 1st November 1997. The

Petitioner Nos. 13 to 21 were superannuated during that period.

They   calculated   their   retiral   entitlements,   gratuity,   pension,

commutation, and leave encashment on that footing. He submitted

that the doctrines of legitimate expectation and promissory estoppel

bind the Respondents to their consistent representation.



20.         Mr. Hushing submitted that Respondent No. 1, being an

instrumentality of the State under Article 12, is bound to treat all its

similarly situated employees equally and cannot discriminate

between officers who retired between 1st November 1997 and 31 st

March, 1998 and those retiring after 1st April 1998 by adopting a

private commercial understanding to that effect. The window of 5

months which is left unprotected for the officers/employees who

retired during those months, is arbitrary, illegal and discriminatory in

nature and violative of Articles 14, 19, and 21 of the Constitution of

India, and therefore needs to be set aside.



21.         Having considered the submissions, the issue which

arises in the present Petition is whether the Petitioners, having retired

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between 1st November 1997 and 31st March 1998, are entitled to

have their salary, pension, gratuity, commutation, leave encashment,

and other retiral benefits re-fixed on the basis of the revised pay

scales with effect from 1st November 1997. It is the Petitioners' case

that the cut-off date of 1st April 1998 fixed under the impugned Joint

Note-cum-Agreement dated 14th December 1999 is arbitrary,

discriminatory, and violative of Articles 14, 19, and 21 of the

Constitution.



22.         It is pertinent to note that it has been a consistent,

unbroken practice in the banking industry for every wage-revision

settlement to be given retrospective effect from the day immediately

following the expiry of the preceding settlement. This can be seen

from the aforesaid chart that gives the particulars of the 5th Bipartite

Agreement, 6th Bipartite Agreement, and 7th Bipartite Agreement,

which include the date of signing, effective from, and preceded by

the expiry dates. This can be contrasted with the impugned Joint

Note-cum-Agreement dated 14th December, 1999 which gives cut off

date of 1st April, 1998 though the expiry of the previous Bipartite

Agreement was on 31st October, 1997. The banking industry having

adopted this practice, there is no rationale for deviating from the

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same. In doing so, the Respondents have subdivided pensioners

forming one class on the basis of an arbitrary eligibility cut-off

unrelated to the object sought to be achieved.



23.             It has been held in D.S. Nakara (supra) at paragraph 11

that in order to pass the test of permissible classification, two

conditions must be fulfilled, viz. (i) that the classification must be

founded on an intelligible differentia which distinguishes persons or

things that are grouped together from those that are left out of the

group; and (ii) that the differentia must have a rational relation to

the objects sought to be achieved by the statute in question.



24.             Reliance has been placed on the judgment of the

Supreme Court in Ram Krishna Dalmia vs. Justice S.R. Tendolkar2, in

this context. It has been held that the classification may be founded

on differential basis according to the object sought to be achieved,

but what is implicit in it is that there ought to be a nexus, i.e., causal

connection between the basis of classification and the object of the

statute under consideration. It is equally well settled by the decisions

of the Supreme Court that Article 14 condemns discrimination not

2     AIR 1958 SC 538

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only by a substantive law but also by way of procedure.



25.            Further, it has been held in the said judgment that

pensioners form a class as a whole and cannot be micro-classified by

an arbitrary, unprincipled and unreasonable eligibility criterion for

the purpose of grant of revised pension criterion of date of

enforcement of the revised scheme entitling benefits of the revision

to those retiring after that date while depriving the benefits to those

retiring prior to that date. This would be violative of Article 14 of the

Constitution.



26.            The judgment of the Supreme Court in D.S. Nakara

(supra) has been followed by this Court in Union of India vs. T.

Mukundan3. In the said decision, this Court considered Rule 48-B of

the Central Services (Pension) Rules, 1972, which provided that in

addition to qualifying service on voluntary retirement, there would

be grant of weightage of 5 years in qualifying service on voluntary

retirement to Government employees.



27.           This Court has, in construing the said Rule, held that the

3   (2005) 3 Mah LJ 412

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Rule does not suggest that it intended to create a different class of

voluntary retirees who retired after 10th September 1983 and those

who retired before that date. By the said Rule, the mode of

computation of pension to the voluntary retirees is liberalised from a

specified date, i.e. 10th September 1983.



28.         Accordingly, it was held that the ratio of D.S. Nakara

(Supra) is clearly applicable to the case in hand. The benefit of Rule

48-B must be given not only to the retirees who retire after 10th

September 1983, but also those who retired earlier to 10th

September 1983; though the retirees who retired earlier would not

be entitled to any arrears prior to 10th September 1983 on the basis

of revised computation based on Rule 48-B.



29.          It follows from these decisions that Respondent Nos. 1

and 2 have, in not giving retrospective effect to the wage revision

settlement from the day immediately following the expiry of the

preceding settlement, acted in an arbitrary manner. The most striking

illustration of arbitrariness is that for the very same revision cycle

following the expiry of the preceding settlement on 31st October

1997, officers were granted the revision/pension only from 1st April

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1998, without any intelligible differentia. There is no rational basis

whatsoever for this 5-month differential, which differential has no

nexus with any legitimate object of the Act and operates solely to

deprive officers, such as the Petitioners, who have retired in the

intervening period, of their legitimate dues. As held in the said

decisions, this discrimination requires to be struck down under

Article 14 of the Constitution of India.



30.            Further, we find much merit in the submissions on

behalf of the Petitioners that Respondent Nos. 1 and 2, being

conversant with the settled industry practice, were required to

consider the Petitioners who had voluntarily retired between 1st

November 1997 and 31st March 1998 to be entitled to their retiral

dues viz. Gratuity, pension, commutation, and leave encashment and

other such entitlements in the same manner as other retirees after 1st

April 1998.



31.           The Petitioners had voluntarily retired between the said

period of 1st November 1997 and 31st March 1998 in the bona fide

and reasonable expectation that there would be similar revision.

Accordingly, the doctrines of legitimate expectation and promissory

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estoppel   would    bind    the   Respondents    to   that      consistent

representation.



32.         We, accordingly, are of the view that the Respondent No.

1, as an instrumentality of the State under Article 12, was bound to

treat all its similarly situated employees equally and not to

discriminate between officers who retired after 1st April 1998 and

before that date, viz. between 1st November 1997 and 1st April

1998. We find much merit in the submission of the Petitioners that

the window of 5 months, being left unprotected for the employees

who retired during those months, is arbitrary, illegal, and

discriminative in nature and violative of Articles 14, 19, and 21 of the

Constitution of India and therefore requires to be set aside.



33.         Accordingly, we pass the following order:


       (1) It is declared that the Petitioners are entitled to all

            benefits of the revision of pay scale under the Joint

            Note/Agreement dated 14th December 1999.


       (2) The Respondent Nos. 1 and 2 are directed to give effect to

            the said revision of pay scales with effect from 1st

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    November 1997 in the case of the Petitioners, inspite of

    the fact that they retired after 1st November 1997 and

    before 1st April 1998.


(3) The Respondents are directed to pay to the Petitioners

    within a period of four weeks from receipt of upto date

    statement of the Petitioners’ dues from 1st November

    1997 onwards on the basis of the aforesaid revised pay

    scales as under:


    (i) The Difference in Salary and Dearness allowance.


    (ii) The Difference in Encashment of accumulated leave.


    (iii) Increased Pension on the basis of the Revised Pay

    Scale.


    (iv) Arrears of Difference in Pension.


    (v) The Difference in the amount of Commutation of

    Pension on the basis of the Revised Salary and/or

    Pension.


    (vi) The Difference in the amount of gratuity.



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         (vii) All other amounts payable to the Petitioners.


   (4) Further, the Respondents shall pay interest on the

         aforesaid amounts at the rate of 6% per annum from 1st

         November 1997 till actual payment to the Petitioners.


   (5)   The Writ Petition is disposed of in the above terms.

         There shall be no order as to costs.




[ FIRDOSH P. POONIWALLA, J. ]                   [ R.I. CHAGLA J. ]




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