Supreme Court Dismisses HPCL's Plea Against Bombay HC Order Quashing Pension Cuts For 269 Retired Employees

The Supreme Court on Tuesday (November 19) dismissed an SLP filed by Hindustan Petroleum Corporation Limited (HPCL) against the Bombay High Court's decision to quash two notifications that reduced/discontinued pensionary benefits to 269 retired employees.

A bench of Justice Abhay S Oka and Justice Augustine George Masih said that the notifications were issued without following the principles of natural justice.

“As noted earlier, the decision was taken belatedly on 14^th March, 2016. As far as the second letter is concerned, we find that some of the employees had retired way back in the year 1994 and 1995. Many of them had taken VRS. Part of the pensionary benefits have been withdrawn admittedly without following principles of natural justice and without giving them an opportunity of being heard. Same is the case with 40 employees who are subject matter of first letter dated 14^th March 2016. Now it is too late in the day to direct the petitioners to give them opportunity of being heard. Moreover, the issue relates to only 269 retire employees. So, on the limited grounds indicated earlier, we are not inclined to exercise jurisdiction under Article 136 of the Constitution.”

The Court clarified that this decision is confined to the 269 retired employees and did not address any other legal questions raised by HPCL.

The dispute originated from HPCL's actions that retrospectively altered pension entitlements of its retired employees. The notifications affected 40 retirees who joined HPCL or its predecessor after July 15, 1974, and an additional 229 employees who retired after June 28, 1994.

During the hearing, Justice Abhay Oka criticized HPCL's actions, stating, “Just to do it after so many years, that also without following elementary principles of natural justice…A person's entire equation of life is upset by the reason of this action.”

The affected pensioners were part of a group whose entitlements had been granted under pension plans historically in effect for HPCL and its predecessor entities, Esso and Lube India Limited. The High Court had quashed the two notifications issued by HPCL on March 14, 2016.

The Bombay High Court, in its May 3, 2019, judgment, ruled that HPCL's notifications amounted to arbitrary reductions in pension entitlements. The court observed that the pensionary benefits are substantive right to property of the employee and not a bounty or ex-gratia payment made by employer's will.

The two notifications dated March 14, 2016, addressed:

1. Withdrawal of Pensionary Benefits for 40 Employees: These employees joined HPCL between July 15, 1974, and May 1, 1975. HPCL ceased their pension payments entirely, asserting that they were erroneously granted such benefits.

2. Reduction in Pensionary Benefits for 229 Employees: The second notification recalculated and reduced pension payments for employees who retired after June 28, 1994, by imposing retrospective cap of Rs. 12000 per annum and removing certain allowances, including dearness relief linked to the All-India Consumer Price Index.

Case no. – SLP(C) No. 5228-5229/2020

Case Title – Hindustan Petroleum Corporation Ltd. v. Pensioners Social and Welfare Association