Provident Fund Pensioners Association v. Employees' Provident Fund Organisation and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 9TH DAY OF DECEMBER 2013/18TH AGRAHAYANA, 1935 WP(C).No. 1362 of 2013 (U) --------------------------- ## PETITIONER(S)/PETITIONER: ------------------------------------------------ PROVIDENT FUND PENSIONERS ASSOCIATION, (REG NO 97/99), MAVOOR, KOZHIKODE-673661 REP.BY ITS GENERAL SECRETARY BY ADV. SRI.P.V.KUNHIKRISHNAN RESPONDENT(S): ---------------------------- 1. EMPLOYEES PROVIDENT FUND ORGANISATION REP.BY PROVIDENT FUND COMMISSIONER(PENSION),BHAVISHYA NIDHI BHAWAN, 14-BHIKAJI CAMA PLACE, NEW DELHI-110066 2. ASSISTANT PROVIDENT FUND COMMISSIONER (PENSION) BHAVISHYA NIDHI BHAVAN, 14-BHIKAJI CAMA PLACE NEW DELHI-110066 3. REGIONAL PROVIDEND FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION REGIONAL OFFICE, PATTOM, THIRUVANANTHAPURAM-695001 4. UNION OF INDIA, REP.BY ITS SECRETARY, MINSTRY OF LABOUR GOVERNMENT OF INDIA, NEW DELHI-110006 BY SRI.P.PARAMESWARAN NAIR,ASG OF INDIA BY SRI.N.N.SUGUNAPALAN (SR.) BY SMT.T.N.GIRIJA, SC,EPF ORGANISATION THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09-12-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 1362 of 2013 APPENDIX PETITIONER(S) EXHIBITS EXT.P1:A COPY OF THE LETTER NO PENSION 2/2/99 DTD 29/5/2002 OF THE 2ND RESPONDENT EXT.P2:A COPY OF THE LETTER NO .PEN 2/3/99/PT/24606 DTD 27/7/2004 OF THE 2ND RESPONDENT EXT.P3:A COPY OF THE LETTER NO PEN 2/3/99PT.DTD 10/4/2006 OF THE 3RD RESPONDENT EXT.P4:A COPY OF THE LETTER NO KR/KKD/PEN/CELL/06 DTD 17/4/2006 OF THE 2ND RESPONDENT. EXT.P5:A COPY OF THE LETTER NO 2027/2006 DTD NIL OF THE MINISTER OF STATE FOR LABOUR AND EMPLOYMENT, GOVERNMENT OF INDIA. //true copy// P.A.To Judge ## **K.VINOD CHANDRAN, J** - - - - - - - - - - - - - - - - - - - - W.P.(C).No. 1362 of 2013 - - - - - - - - - - - - - - - - Dated 9[th] December, 2013 - - - - - - - - - - - - - - - - - - - - - - - - ## **JUDGMENT** The petitioner is an Association ventilating the cause of the pensioners who are entitled to draw pension under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the EPF Act') and the Employees Pension Scheme, 1995 (Scheme of 1995), framed under the Act. The petitioner specifically projects the grievance of the pensioners who had exercised an option for commutation of pension under paragraph 12A of the Scheme which was in the Scheme from 16.3.1996 to 26.9.2008. Paragraph 12A of the Scheme is extracted herein. **Option for commutation** - A member eligible to pension may, in lieu of pension normally admissible under paragraph 12, opt on completion of three years from the commencement of the Scheme, to commute upto a maximum of one-third of his pension so as to receive hundred times the monthly pension so commuted as commuted value of pension. Balance pension will be paid on monthly basis as per option exercised under paragraph 13. Explanation - If for example, the normal pension under paragraph 12 is Rs.600/- and the pensioner opts to commute one third of this monthly pension, the commuted value will be equal to 1/3 x 600 x **WP(C).1362/13** 2 100 = Rs.20,000/- and the same shall be paid at the time of exercise of option for commutation. The balance of pension payable on monthly basis is Rs.400/-. 2. Certain members of the petitioners/Association exercised an option for commutation as per the above provision in the Scheme. Later on, they realised that they would have to continue to draw two-third pension throughout their life and their dependants would be entitled to only commutation of 100 times that of the remaining pension. The petitioner Association contends that such members amongst them are deprived of their rightful due since the respondent Organisation, which is conferred with the power and authority to implement the Scheme, is not entitled to retain or withhold one-third of their pension after recovery of what has been commuted and paid to them. Essentially what they would contend is that there should be some formula by which the entire pension is restored after a reasonable period of time. The continuation of payment of two-third pension to those who commuted the same as per paragraph 12A, throughout their life, would deprive them of the rightfully due pension which has been declared by the Honourable Supreme Court to be 'property' which **WP(C).1362/13** 3 no pensioner can be deprived of, unless by due process of law. The petitioners rely on **“Common Cause” A Registered Society v. Union of India (1987 (1) SCC 142)** , **Bharat Petroleum (Erstwhile Burmah Shell) Management Staff Pensioners v. Bharat Petroleum Corporation Ltd, and Others (1988 (3) SCC, 32)** , and **State of Jharkhand v. Jitendra Kumar Srivastava (2013 (3) KLT 782 [SC] )** of the Honourable Supreme Court and **Central Government Pensioners Association v. Union of India (2008 (3) KLT 226)** of this Court. 3. The respondent Organisation however would contend that it is as per the specific provisions of the Scheme that the pensioners were granted the commutation and they were well aware of the fact that such commutation would not be restored by passage of time. There is no question of deprivation of property by way of withholding of pension since it was an option of the pensioner to commute or not and such commutation could be permitted only under the provisions of the Scheme. Since there is no specific provision by which the pension can be restored, the **WP(C).1362/13** 4 pensioner having enjoyed the benefit of commutation and having without demur drawn two-third of the pension entitled to them, cannot turn round and contend that the pension has to be restored to them. It is also argued that, the fact that the provision of commutation was later omitted shows that the Government had, after evaluating the financial impact of such commutation decided that continuing the same would not be viable. Hence there could be no question of restoration of full pension, is their contention. 4. All the authorities cited by the petitioner/Association definitely points to the unequivocal declaration of law that pension is property and that it is not a bounty or a gratuitous payment to be made at the sweet will or grace of the employer; but is a right which accrues to the pensioner by virtue of the long unblemished service with the employer. The Act and the Scheme is a welfare legislation intended at providing succour to the employees who work in establishments which do not have a pension Scheme; to ensure the subsistence of an employee even after he is superannuated. The working of the fund constituted under the Act and the provisions of the Scheme formulated are all within the **WP(C).1362/13** 5 wisdom of the legislature, which formulates it after getting necessary inputs from various informed sources. 5. Common cause (supra) was a case in which the commutation of pension and the deprivation of the 1/3 portion, throughout the life time of a pensioner, came up for consideration. When the matter was pending before Court, the Government came out with a proposal to its retired Civilian employees but declined the same to the retired defence personnel. The defence personnel, according to the Union of India, were a separate class and they received higher pension and retired at an early age. Despite the additional burden to the exchequer the grounds were negated, since ultimately the restoration of commuted pension would serve the end of bringing relief to those who served the Nation, with great sacrifice. The grounds stated for treating defence personnel differently was also negatived. 6. **Bharat Petroleum** (supra) also raised the question of restoration of commuted pension and adequate escalation in tune with the price index but the Court confined its decision to the 2[nd] **WP(C).1362/13** 6 question. The Court considered the question from the aspect of the additional burden on the employer Company. A similar Company that too a Petroleum Company (HPCL) was shown to have granted escalation of pension to its retirees. While 'Burmah Shell' had a fund from which pension was paid HPCL, or rather the company it took over, had no such fund. On the finding that if the sister concern could grant escalation then' the respondent Company could also do the same even expending money from its current funds; necessary directions to hike the pension in terms with that of HPCL was issued. **Jitendra Kumar Srivastava** (supra) dealt with withholding of pension and held that such deprivation cannot be by administrative instructions; which in effect supplanted the rule. The right to receive pension being property under Article 31 (1) of the Constitution of India, needs no reiteration. 7. What is to be immediately noticed is that all the above decisions were rendered in the context of pension Schemes implemented and operated by the employer. Herein the Scheme has been brought in, as a welfare measure, compelling contributions by statute from the employer and deduction from the **WP(C).1362/13** 7 employee's salary during the period of employment. The employer has no role in the working of the Scheme and does not at all bear the liability except to the extent of the contributions, which stop with the retirement of the employee. The Organisation constituted under the Act has the responsibility of administering the fund. ## 8. **Central Government Pensioners Association v.** **Union of India (2008 (3) KLT 226)** raised the Government's disinclination to consider the reduction of the period for restoration of commuted amounts from 15 years to 12 years, despite recommendations of the Vth Pay Commission. While conceding the Government's right to evaluate the financial implications and decide upon the recommendations, it was pointed out that such decision should nevertheless be supported by reasons. For the sole reason of the counter affidavit, having not disclosed any reasons; the Union Government was directed to take a decision on the representations. ## 9. Here also, the financial implications ought to be **WP(C).1362/13** 8 considered by the Central Government, which, however, is not the employer and is not bound by the obligations of an employer since the pension fund is an independent fund constituted under a Welfare Legislation. To draw a distinction between the obligations of an employer and the obligations of a Welfare State would be begging the question. But, the pensioners have with open eyes exercised an option for commutation. Many would not have been fortunate to draw pension for long and on their death their dependants would have been paid a lump sum amount as provided under the Scheme. With the increasing cost of living and the all pervading commercialisation what the petitioners contend is that their increased mortality works to their disadvantage. They contend that they are only a few and there would not be any huge liability on the Fund, if their commuted portion is restored. However, that alone cannot sway this Court to issue any positive direction since, then even the dependants of pensioners who expired would raise a claim for enhanced lump sum compensation. There are matters which are best left to the Government and the Organisation to decide after looking at the balancing considerations of financial viability and the welfare of the **WP(C).1362/13** 9 pensioners. The State which came forward with a welfare legislation to provide succour also has the responsibility to ensure dignity of life, at least bordering on reasonable sustenance. It will not be proper for this Court to issue positive directions but the Government can very well consider the grievances projected in the Writ petition and examine the financial viability, if a proper representation is made. The writ petition is closed however with the above observations and leaving the parties to suffer their costs. ## **Sd/-** **K.VINOD CHANDRAN, Judge** Mrcs