CHANDIGARH, Sept. 2 — The Punjab and Haryana High Court has upheld the withdrawal of the 2005 Cooperative Bank Employees Pension Scheme, ruling that cooperative banks cannot be treated as “State” under the Constitution and their largely small-scale shareholders cannot be burdened with liabilities that threaten financial stability.
Justice Harpreet Singh Brar, while dismissing multiple petitions from retired employees of Punjab State Cooperative Bank (PSCB) and District Central Cooperative Banks, said the pension plan was “neither statutory nor financially viable.” The court noted that retired staff remain entitled to statutory benefits under central laws and a replacement pension model.
The petitioners had challenged a November 20, 2015 order of the Registrar, Department of Cooperative Societies, which upheld the repeal of the scheme. They argued that the decision to discontinue the plan was arbitrary and unlawful.
Rejecting the claims, Justice Brar clarified that cooperative banks are run by member-based societies and accountable to shareholders, “predominantly small agriculturists with limited resources.” These institutions, the bench said, could not be considered instrumentalities of the State under Article 12 of the Constitution, nor could they be forced to absorb unsustainable financial burdens.
The court pointed out that the 2005 scheme was replaced by the New Pension Scheme in 2012 through a board resolution later ratified by the Registrar. Since the plan was not mandated under service rules, it could not be deemed statutory, the judge said.
Justice Brar further underscored that employees were not left without recourse. “The employees of PSCB and the other cooperative banks are also receiving their statutory entitlements of pension under the Employees’ Pension Scheme, 1995, Contributory Provident Fund under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, Gratuity under the Payment of Gratuity Act, 1972, and Leave Encashment in terms of Government instructions,” he observed. “As such, the petitioners are not rendered helpless by withdrawal of the pension scheme.”
He also cited financial impracticalities that doomed the scheme’s survival. “Clearly, the continuation of the pension scheme was directly dependent on the availability of requisite funds, the inflow of which did not match the outflow while the number of new beneficiaries kept increasing over the years,” he said. “Regrettably, the financial viability of this scheme was not assessed by experts at the time of its implementation, or else this model would perhaps have been discouraged for being non-viable in the long term.”
