Facts of the Case

The petitioners were retired employees of various nationalised banks who challenged the increase in health insurance premium payable under the optional medical insurance scheme introduced pursuant to the 10th Bipartite Settlement. They contended that the premium charged to retired employees was substantially higher than that charged to serving employees and challenged the circulars issued by Canara Bank, UCO Bank and Punjab National Bank revising the premium for the insurance period from 01.11.2019 to 31.10.2020.

The petitioners also sought directions requiring banks to bear the insurance premium from staff welfare funds and requested waiver of GST on health insurance premiums.

Issues Involved

  1. Whether retired bank employees are entitled to health insurance premiums at the same rate as serving employees.
  2. Whether banks are legally bound to bear the insurance premium of retired employees from staff welfare funds.
  3. Whether the Ministry of Finance letter and IBA Circulars create an enforceable right in favour of retired employees.
  4. Whether charging higher insurance premiums from retired employees violates Article 14 of the Constitution.
  5. Whether retired employees are entitled to waiver of GST on health insurance premiums.

Petitioners' Arguments

  • The Ministry of Finance letter contemplated that banks should bear the insurance premium through staff welfare funds instead of recovering the amount from retired employees.
  • At the inception of the insurance scheme, retired employees were offered premiums comparable to serving employees and later arbitrary increases defeated the legitimate expectation created by the scheme.
  • Separate charges for domiciliary treatment were imposed only upon retirees, resulting in discrimination.
  • The IBA Circular stated that the Mediclaim Policy for retirees would operate on similar terms and conditions as applicable to serving employees; therefore, charging substantially higher premiums violated this assurance.
  • Serving employees enjoyed wider insurance coverage for dependents while retired employees received comparatively limited benefits despite paying higher premiums.
  • Charging higher premiums from retirees amounted to discrimination and violated Article 14 of the Constitution.

Respondents' Arguments

  • The impugned premium related only to the insurance year 2019–2020 and had already expired, rendering the challenge infructuous.
  • The 10th Bipartite Settlement and the 2015 Joint Note clearly provided that retired employees would be covered only upon payment of the stipulated premium.
  • The settlement expressly authorised individual banks to determine the contribution payable by retired employees.
  • The medical insurance scheme for retirees was optional and not compulsory.
  • The Ministry of Finance communication merely advised banks to consider group insurance and did not mandate payment from staff welfare funds.
  • Neither the 10th Bipartite Settlement nor the 2015 Joint Note guaranteed parity of premium between serving employees and retired employees.
  • Insurance companies revise premiums annually depending upon risk and actuarial considerations.

Court Order / Findings

The Delhi High Court dismissed all the writ petitions.

The Court held that the challenge to the premium applicable for the insurance period 2019–2020 had become infructuous since that policy period had already expired.

The Court further held that the 10th Bipartite Settlement and the 2015 Joint Note expressly required retired employees to pay the stipulated premium and empowered individual banks to determine the contribution payable by retirees.

The Ministry of Finance letter merely advised banks that they may consider group insurance policies instead of direct payment from staff welfare funds. The use of the word "may" made the communication advisory rather than mandatory and created no enforceable legal right.

Similarly, the IBA Circular regarding similar terms and conditions was also advisory in nature and did not prohibit subsequent revision of insurance premiums.

The Court observed that insurance policies are renewed annually and insurers are free to revise premium rates in accordance with law. Since retired employees ordinarily present a higher medical risk than serving employees, charging higher premiums cannot be regarded as arbitrary or discriminatory.

The Court also noted that the insurance scheme was optional, and retired employees were free to opt for any other suitable medical insurance policy if they considered the offered premium excessive.

The prayer seeking waiver of GST was rejected as no statutory provision permitted such relief.

Accordingly, all writ petitions and pending applications were dismissed.

Important Clarification

  • Retired bank employees do not possess a legal right to claim insurance premiums equal to those charged to serving employees.
  • The 10th Bipartite Settlement authorises banks to determine the contribution payable by retired employees.
  • The Ministry of Finance letter is advisory and not mandatory.
  • The IBA Circular regarding similar terms and conditions does not prevent future enhancement of insurance premiums.
  • Higher insurance premiums for retired employees do not violate Article 14 merely because retirees generally represent a higher medical risk.
  • Optional insurance schemes do not compel retirees to continue with the bank-sponsored policy, and they remain free to obtain insurance from alternative insurers.
  • Waiver of GST cannot be granted in the absence of statutory authority.

 Sections Involved

  • Article 14 of the Constitution of India
  • Industrial Disputes Act, 1947
  • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
  • Officers' Service Regulations, 1979
  • 10th Bipartite Settlement dated 25.05.2015
  • Schedule IV of the 10th Bipartite Settlement
  • 2015 Joint Note
  • Ministry of Finance Letter dated 24.02.2012
  • IBA Circular dated 01.10.2015
  • Health Insurance / Medical Insurance Scheme for Bank Employees & Retirees

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785391648_2316compressed.pdf

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