Employees Cannot Pick Favourable Terms and Reject the Rest: Bombay High Court Upholds SIDBI’s Cut-Off Date for Pension to CPF Optees

“Option Once Exercised, the Entire Scheme Must Be Accepted — No Room for Picking and Choosing”, Division Bench of the Bombay High Court, comprising Justice R.I. Chagla and Justice Advait M. Sethna, delivered a significant judgment in Sandeep Lahiri Choudhury & Anr. v. Small Industries Development Bank of India & Ors., dismissing a challenge by retired SIDBI employees to clauses of an internal circular that limited their pension benefits under the SIDBI Pension Regulations, 2002.

The Court upheld Clauses 3(VIII) and 4(IX) of SIDBI’s HRD Circular dated 29 June 2022, which restricted the payment of pension to CPF optees prospectively from 1 July 2022, and denied any arrears of pension from their respective dates of superannuation. The Bench, relying extensively on the Supreme Court's binding precedent in RBI v. M.T. Mani, held that fixation of a cut-off date for extending pension benefits was neither arbitrary nor violative of Articles 14 or 16 of the Constitution.

“The Petitioners cannot approbate and reprobate. Having exercised their option under the scheme as a package, they cannot now seek to accept the beneficial portions and discard the disadvantageous clauses,” the Court emphasized.

“Pension Is a Policy Decision With Financial Implications; Courts Must Show Judicial Restraint in Interfering”

The Petitioners — retired officers of SIDBI — had challenged the HRD Circular which offered one final opportunity to CPF (Contributory Provident Fund) optees to switch to the pension scheme but limited the effective date of pension to 1 July 2022, denying any retrospective pension or arrears from their date of retirement.

They argued that they were never given a valid and lawful opportunity to opt for pension under the earlier 1993 or 2002 SIDBI Pension Regulations, and that the denial of retrospective pension was discriminatory and violated their constitutional rights.

The Bench, however, rejected these arguments. It held that financial viability, administrative sustainability, and broader policy considerations are legitimate bases for fixing such cut-off dates. Relying on para 36 of the Supreme Court’s ruling in M.T. Mani, the High Court noted:

“It cannot be said that the cut-off date, as fixed for grant of Pension while refusing its retrospectivity, would be arbitrary or illegal or discriminatory in nature.”

The Court also noted that SIDBI had extended a “last and final opportunity” to all eligible CPF optees, including retired employees and legal heirs of deceased employees, to switch to the pension scheme and that this was in compliance with earlier High Court orders in Writ Petition No. 104 of 2020.

Retrospective Pension Would Create “Financially Unsustainable Scenario”

Noting the financial implications of the pension scheme, the Court recorded that the switch-over scheme had already imposed a burden of ₹96 crores on SIDBI, and that granting retrospective benefits just to the 28 petitioners would further add ₹19.67 crores. With over 150 such CPF optees, the Court concluded that allowing arrears for all such retirees could destabilize the financial equilibrium of the institution.

“Retrospective pension would lead to financially unsustainable consequences. Courts must refrain from interfering with economic and policy decisions,” the Bench observed.

Petitioners Had Enjoyed CPF Benefits for Years – No Prejudice in Denial of Retrospective Pension

Relying on Union of India v. M.K. Sarkar, the Court rejected the petitioners’ demand for retrospective pension benefits, observing that the petitioners had already enjoyed the income and benefits under the CPF scheme for years, and refunding SIDBI’s contribution now does not negate the unjust enrichment that would result if they were also granted full pension arrears.

The doctrine against “double benefit” was squarely applied. The Court stated:

“Even if the CPF amount is refunded now, the petitioners have enjoyed interest and income from it for several years. Allowing retrospective pension would amount to double benefit and is impermissible.”

No Distinction Between SIDBI Case and RBI Case – SC Ruling in M.T. Mani Is Binding

The Petitioners attempted to distinguish their case from M.T. Mani, arguing that unlike RBI employees, SIDBI employees were never properly given earlier opportunities to opt for pension. However, the High Court found this argument “misconceived,” pointing to the 2022 Circular and past judicial orders which clearly extended a final opportunity to all CPF optees, including petitioners.

“The serving/retired employees and eligible family members of SIDBI were given ample opportunity to opt for pension. Their challenge is only to the cut-off clause, not the scheme itself,” the Court noted.

The Bench concluded that the very clauses challenged in this case had been upheld by the Supreme Court in RBI v. M.T. Mani, and therefore the High Court was bound by the ratio.

No Picking and Choosing Allowed in Pension Policy

In dismissing the Writ Petition, the Court reaffirmed the principle that employees cannot selectively accept only favourable aspects of a policy while rejecting others, especially where the policy is a financially burdensome welfare measure granted as a matter of discretion.

There was no violation of fundamental rights, and no arbitrary action by SIDBI in fixing the cut-off date of 1 July 2022. The petitioners, having opted into the scheme with full knowledge of its terms, must accept the scheme in its entirety, including the restriction on retrospective pension and denial of arrears.

“There is no merit in the present petition which is dismissed with no orders as to costs,” the Court concluded.

Date of Decision: 09 February 2026