SC rules in favour of retired employees

Declares 1977 Act regarding 70% pension statutory in nature as against NBP circular’s 33%

ISLAMABAD: The Supreme Court on Saturday ruled in favour of retired employees of the National Bank of Pakistan (NBP) entitling them to 70% pension from the revised 33%.

The three-judge bench of the top court, headed by Justice Ejaz Afzal Khan, while issuing a 22-page judgment dismissed NBP’s petition against the Lahore High Court (LHC) order, which was authored by Justice Jawwad Hassan. The SC bench also set aside the Peshawar High Court (PHC) verdict in favour of NBP.

The federal government had issued a notification on November 30, 1977 in terms of Section 20 of the Bank Nationalisation Act, under which all matters regarding pensions are decided.

However, the NBP board of directors introduced Circular No 3799 dated 16-06-1999 reducing the pension from 70% to 33%, despite the fact that they had not been given the power to do so.



Hashmat Habib, the counsel for retired employees, told The Express Tribune that in view of the SC judgment, NBP will have to pay Rs6 billion to its retired employees in arrears. He claimed that since Rs56 billion was already available in the employees’ pension fund, there would be no financial burden on NBP.

But on the other hand, NBP is reportedly claiming that the bank would suffer a loss of Rs48 billion.

Habib alleged that the bank had spent almost Rs500 million in lawyers’ fees in the entire litigation process, adding that an inquiry should be conducted as to how such a huge amount of public money was spent on legal fees.

“We have no hesitation to hold that the notification dated November 30, 1977, having been issued by the federal government in terms of Section 20 of the Act, is salutatory in nature, and violation of any of its provisions is amenable to the constitutional jurisdiction of the high court,” said the judgment.

The judgment noted that the NBP board of directors, after the dissolution of the Pakistan Banking Council, became more autonomous and independent in managing the bank operations and determining the terms and conditions of services of the officers and executives of the bank.



The board in exercise of such powers introduced under circular No 3799 dated 16-06-1999 revised the pay structure making substantial increase in the salaries of the officers and the executives of the bank. It, however, had not been given power under Section 11 of the act to rescind, replace or repeal a statutory dispensation already in force.

The counsel for retired employees had argued that the reduction in pension from 70% to 33% could not be justified under any principle of law and jurisprudence when the recommendation of the pay commission, orders of the banking council, notification issued by the Finance Division, government of Pakistan and the circular issued by the bank nowhere limited their efficacy in terms of time.

The counsel stated that if the terms and conditions regulating pension have their origin in a contract, the board of directors could not unilaterally amend them without the consent of the stakeholders.

He also said where pension is not only a vested interest but a recurring right, laches or any other inaction for a short span of time cannot extinguish it. Failure to publish the notification in the official gazette cannot shear it of its efficacy or make it non-statutory, he added.