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  • In a case titled The Punjab State Cooperative Agricultural Development Bank Ltd. vs. The Registrar, Cooperative Societies and Ors. the Hon’ble SC has held that an amendment with retrospective effect cannot take away any right which has already vested in the employee as it would violate Articles 14 and 21 of the Constitution.
  • In the instant case, the appellant bank, on the recommendation of the Punjab Pay Commission, introduced a pension scheme for employees and officers in 1989. Rule 15(ii) was added to the Punjab State Cooperative Agricultural Mortgage Bank Service (Common Cadre) Rules, 1978 which authorised the Board of Directors to formulate the pension scheme.
  • All the employees were given an option to be covered in this scheme. They derived benefits under this scheme till 2010. In May of 2010, the Bank found the scheme unviable due to lack of resources.
  • The Board of Directors passed a resolution to discontinue the scheme and by the power vested in them by section 84A(2) of the Punjab Cooperative Societies Act, they deleted rule 15(ii).
  • The main question for consideration before the Apex Court was regarding the vested rights of the employee and could these vested rights be divested by an amendment by giving it a retrospective effect.
  • The Bench observed that when the appellant Bank withdrew the pension scheme by deleting rule 15(ii), it sought to take away the rights already vested in the employees. Any amendment taking away those vested rights would be violative not just of Article 14 but also article 21 of the Constitution.
  • The Court also held that an employee who had already been promoted or fixed on a particular pay scale, that being taken away by the impugned scheme of rules, would take away the vested rights of the incumbent employee which is not permissible and is violative of Articles 14 and 21 of the Constitution.
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