Pepsu Road Transport
Corporation, Patiala Vs. Mangal Singh & Ors.
PEPSU Road TransportCorporation
and another Vs. Sharanjit Kaur (Dead) Through L.RS.
PEPSU Road Transport Corporation
and another Vs. Baldev Singh & Ors.
PEPSU Road Transport
Corporation and Another Vs. Jagroop Singh
J U D G M E N T
H.L. Dattu, J.
granted in SLP (C) No. 3349 of 2008 and SLP (C) 330 of 2008.
Civil Appeal No. 4111 of 2008 - PEPSU Road Transport Corporation and Another v.
Mangal Singh & Ors. (hereinafter referred to as "Mangal's appeal"),
respondent joined the services of the Pepsu Road Transport Corporation
(hereinafter referred to as "Corporation") as driver on 07.11.1974 and
his services were governed by service rules of the Corporation which included
the eligibility to receive Contributory Provident Fund (for short, "C.P.F.")
and gratuity. Subsequently, on 30.06.1982, the services of the respondent were
terminated for 2his unauthorized absence from the duty.
The respondent raised
an industrial dispute against his termination order, which was dismissed by the
Labour Court vide its order dated 11.02.1994. Aggrieved by the aforesaid order of
the Labour Court, respondent filed a writ petition before the High Court of
Punjab and Haryana, which was allowed vide order dated 10.04.1996, setting aside
the order of termination. The High Court further directed the reinstatement of the
respondent with effect from 18.06.1996. In the meantime, on 15.06.1992, the Corporation
had introduced the Pension Scheme for its employees and also framed Regulations
known as Pepsu Road Transport Corporation Employees Pension/Gratuity and General
Provident Fund Regulations 1992 (`Regulations' for short) in order to regulate
the said scheme.
The Pension Scheme in
terms of Regulation of the Regulations envisages the condition of exercise of
the option within a period of six months from the date of issue of the Regulations
by an employee in order to avail the pensionary benefits under the scheme. This
time was further extended till 15.12.1992. The Regulation 4 of the said
Regulations entitles the employee re-joining after leave or suspension to
exercise his option for Pension Scheme within the period of 6 months from the date
of his re-joining. The respondent had also submitted nomination form of the
C.P.F. scheme. However, the respondent did not receive any retiral benefits on his
retirement after attaining the age of superannuation due to pendency of
litigation in the High Court regarding the payment of his back wages for the
period of his absence from the service.
It is not in dispute
that respondent did not opt for the Pension Scheme till the date of his
retirement. On 09.03.2005, the respondent filed a writ petition before the High
Court for a direction to the Corporation to sanction pensionary benefits to the
respondent under the pension scheme. The High Court has allowed the writ
petition vide its order dated 19.01.2007 on the ground that the provisions of
Regulation 4 do not cover the case of the persons reinstated into service
pursuant to the orders of the Court. The High Court further directed the Corporation
to allow the respondent to exercise his option for pension scheme within six
months from the date of the order and the formalities for payment of pension be
finalized within a particular time frame. Being aggrieved, the Corporation has
filed this appeal.
SLP (Civil) No. 3349 of 2008- PEPSU Road Transport Corporation and Another v.
Sharanjit Kaur, widow of Bachittar Singh and Ors. (here in after referred to as
Bachittar's appeal): The respondent had joined the services of the Corporation
as a Conductor on 07.07.1962. He was subscriber for C.P.F. and gratuity. In the
year 1989, respondent took the loan from his C.P.F. account to the tune of `26,000/-.
Subsequently, on 15.06.1992, the Corporation had introduced the Pension Scheme for
its employees along with the Regulations to regulate the said scheme. The Pension
Scheme in terms of Regulation 3 (h) of the Regulations envisaged the condition
of refund of the loan taken from the C.P.F. account by an employee on or before
14.12.1992 in order to avail the pensionary benefits under the said
The respondent had
applied for the pension scheme but failed to return the said loan amount. The respondent
retired as Inspector on 28.02.1997. He had received all the monetary benefits
including a sum of Rs. 99,005/- under C.P.F. Scheme. However, the respondent
filed a writ petition before the High Court praying for pensionary benefits due
to him under the pension scheme.
The High Court (Civil
Writ Petition No. 10285 of 1998) vide its order dated 09.08.2007 has allowed the
appeal following its earlier decision in RSA No. 2173 of 1994, dated 25.05.2004
titled as `PEPSU Road Transport Corporation v. Sant Ram Fitter', wherein, the
High Court has observed that the rejection of the claim of respondent by the
Corporation was illegal and arbitrary as the amount of advance can be adjusted against
Death-cum-Retirement Gratuity payable to employee on his retirement as per
Regulation 24 (3) of the Regulations and it can even be deducted from the
C.P.F. of the respondent. In the light of this, the High Court has further
directed the Corporation to release pensionary benefits to the respondent with interest
@6% per annum from the date of accrual of pension till the date of payment
thereof within two months from the date of the order.
SLP (Civil) No. 330 of 2008- PEPSU Road Transport Corporation and Another v. Baldev
Singh & Ors. (hereinafter referred to as "Baldev's appeal): The respondent
joined the services of the Corporation as a driver on 13.10.1966 and had subscribed
to C.P.F. and gratuity. In the year 1986, respondent took loan from his C.P.F. account
to the tune of `12,000. Subsequently, on 15.06.1992, the Corporation had introduced
6the Pension Scheme for its employees along with the Regulations in order to
regulate the said scheme.
The Pension Scheme in
terms of Regulation 3 (h) of the Regulations envisaged the condition of refund of
the loan taken from the C.P.F. account by an employee on or before 14.12.1992 in
order to avail the pensionary benefits under the said scheme. The respondent
had applied for the pension scheme but failed to return the said loan amount.
Eventually, the respondent retired as a driver on 30.09.1994 and has received an
amount of `80,575/- under C.P.F. Scheme as retiral benefits. However, the
respondent filed a writ petition before the High Court of Punjab and Haryana inter-alia
praying for pensionary benefits due to him under the pension scheme.
The High Court vide its
ex-parte order dated 11.8.1997, directed the Corporation to pay all retrial
benefits to the respondent within 2 months with interest. Aggrieved by this, the
Corporation filed a review petition, which was allowed by the High Court vide its
order dated 22.05.1998, directing the Corporation to determine whether any
amount is due to the respondent by passing a speaking order. In compliance with
the above order of the High Court, the Managing Director of the Corporation, after
giving the 7 opportunity of hearing, passed a detailed order rejecting the claim
of the respondent. Being aggrieved by the said order dated 18.08.1998, the
respondent filed a writ petition before the High Court. The High Court has
allowed the writ petition vide its order dated 09.08.2007 following its earlier
Judgment in Civil Writ Petition No. 10285 of 1998 (Bachhitar Singh v. PEPSU
Road Transport Corporation).
Civil Appeal No. 3846 of 2010- PEPSU Road Transport Corporation and Another v.
Jagroop Singh (hereinafter referred to as "Jagroop's appeal"), the respondent
had served the Corporation as a driver and was subscriber of C.P.F. and gratuity.
Subsequently, on 15.06.1992, the Corporation introduced the Pension Scheme for
its employees and also made the Regulations in order to regulate the said scheme.
The Pension Scheme in terms of Regulation 4 of the Regulations envisages the
condition for exercise of the option on or before 15.12.1992, by an employee in
order to avail the pensionary benefits under the scheme. Subsequently, the
Corporation had also extended this period by three months.
It is not in dispute that
the respondent had not exercised any option for availing the benefits under the
pension scheme. On 30.11.2000, the 8respondent took pre-mature voluntary retirement.
On 08.06.2001, the respondent received all the retrial benefits under the C.P.F
Scheme and gratuity without any objection or protest. However, 01.06.2002, after
nearly 10years from his retirement, the respondent filed a suit for declaration
for the entitlement to pension and other benefits in the Court of Civil Judge
Senior Division, Bathinda. The learned Civil Judge had passed the judgment and decree
dated 01.03.2006 in favor of the respondent on the ground that the respondent was
never informed about the option available under the Regulations and he came to know
about this Scheme only at the time of his retirement.
The learned Civil Judge
further directed the Corporation to release pensionary benefit to the respondent
along with interest @9% per annum till the date of realization. Being aggrieved
by the judgment and decree dated 01.03.2006, the Corporation filed a Regular
Second Appeal in the Court of District Judge, Bathinda, the same was allowed
vide Judgment and order dated 27.04.2006 on the ground that respondent is
estopped from claiming any pensionary benefit by his act of receiving all the
retrial benefits under the C.P.F. Scheme at the time of his retirement and
failing to exercise the option in terms 9 of Regulation 4 of the Regulations in
order to avail the benefits under the pension scheme.
Aggrieved by this order
of the Additional District Judge dated 27.04.2006, the respondent filed a
Regular Second Appeal in the High Court, the same was allowed vide order and
judgment dated 23.12.2008. The High Court has followed its earlier Judgment in
Civil Writ Petition No. 14562 of 2004 titled as `Jagjit Singh v. Managing
Director, Pepsu Road Transport Corporation and another' dated 03.12.2008,
wherein, the appeal was allowed on the ground that the pension scheme was never
circulated nor was informed to the employees of the Corporation and mere
non-refund of the loan taken from the C.P.F. account would not disentitle the employee
from claiming pension under the scheme.
issue involved in the present appeal for our consideration is: Whether the respondents
are eligible to claim pensionary benefits under the Pension Scheme in view of the
non- compliance of the essential conditions stipulated in the Regulations which
govern the said Pension Scheme?
K. K. Mohan, learned counsel has appeared for the Corporation and the
respondents are represented by a battery of 10 learned counsel. We will refer to
their submissions while dealing with the issue canvassed before us.
counsel for the Corporation submits that the respondents having not exercised their
option for the pension scheme within the time specified in the Regulations and
those having opted but not having complied with the terms and conditions stipulated
in the Regulations which govern the pensionary benefits, the High Court erred
in law granting relief in question. In other words, he submits that the
respondents are ineligible to claim any pensionary benefits under the Pension Scheme
since they have failed to comply with quintessential conditions, namely
Regulation 3 and 4 of the said Regulations. He further submits, relying on the decision
of this Court in Union of India v. M.K. Sarkar, (2010) 2 SCC 59, that the respondents
cannot take the plea that they were not given the opportunity to opt for the
Pension Scheme in the absence of the service of notice by the Corporation to its
counsel for respondents submits relying on Dakshin Hayana Bijli Vitran Nigam v.
Bachan Singh, (2009) 14 SCC 793, that in Mangal's and Jagroop's appeals, the
respondents were not given the opportunity in order to exercise the option for
the Pension Scheme as no individual notice was served to them. Therefore, they were
unable to exercise the option for availing the benefits under the Pension
Scheme in terms of the Regulation 4 of the Regulations.
learned counsel for respondent in Mangal's appeal further submits that the respondent's
services were terminated when the Pension Scheme was introduced. Therefore, the
re-joining of duty by the respondent after the termination of his services is not
covered by Regulation 4 of the Regulations. In other words, the learned counsel
submits that Regulation 4 contemplates the exercise of option only by an
employee, under suspension and leave, within further period of 6 months from the
date of joining of duty after suspension.
counsel submits that, in Baldev's and Bachittar's appeals, the respondents
opted for the Pension Scheme and did not refund the amount of advance taken from
the C.P.F. including employer's contribution as the nature of the advance was
non-refundable, which is not covered by Regulation 3 (h) 12 of the said Regulations.
Learned counsel alternatively argues that even if there is failure of the respondents
to refund the employer's contribution in terms of Regulation 3(h) of the Regulations,
it does not disentitle the respondents from receiving pensionary benefits as
the advance due to employer's contribution of C.P.F. could be duly adjusted against
the respondents contribution by virtue of Regulation 20(3) and 24 (3) of the
Pepsu Road Transport Corporation was constituted in terms of the provisions of
the Road Transport Corporations Act, 1950 (hereinafter referred to as "the
1950 Act"). By reason of the provisions of Section 4 thereof, each
Corporation is a body corporate having perpetual succession and a common seal
and can, in its own name, sue and be sued.
45 of the 1950 Act authorises the Corporation to frame Regulations for the administration
of the affairs of the Corporation. The Section reads :- "45. Power to make
Regulations.--(1) A Corporation may, with the previous sanction of the State Government,
make Regulations, not inconsistent with this Act and the rules made thereunder,
for the administration of the affairs of the Corporation. (2) In particular, and
without prejudice to the generality of the foregoing power, such Regulations may
provide for all or any of the following matters, namely—
the manner in which, and the purposes for which, persons may be associated with
the Board under Section 10;
the time and place of meetings of the Board and the procedure to be followed in
regard to transaction of business at such meetings;
the conditions of appointment and service and the scales of pay of officers and
other employees of the Corporation other than the Managing Director, the Chief
Accounts Officer and the Financial Adviser or, as the case may be, the Chief
Accounts Officer-cum- Financial Adviser;
the issue of passes to the employees of the Corporation and other persons under
the grant of refund in respect of unused tickets and concessional passes under
Regulations provide for the grant of retirement benefits to the employees of
the PEPSU Road Transport Corporation with effect from 15.06.1992.
appreciate the point in issue, it would be necessary to refer to the relevant
Regulations : "Regulation 3. Application: (1) These Regulations shall apply
to the employees of the PEPSU Road Transport Corporation who: 14(i) Were/are
appointed on or after the date of issue of Regulations on whole-time and
regular basis; and (ii) Were working immediately before the date of issue of
Regulations and opt for these Regulations. (2) These Regulations shall not apply
to the employees, who: a) Opt out of these Regulations. b) Are on deputation
with the Corporation. c) Are paid out of contingencies. d) Are work charged
employees. e) Are employed on contract basis, except when the contract provided
otherwise. f) Are re-employed after superannuation. g) Are specifically
excluded wholly or partly from the operation of these Regulations; and h) Opt
for the PRTC Employees Pension/Gratuity and Regulations General Provident Fund,
1992, but failed to refund the amount of advance taken out of the Employer's
share of the Contributory Provident Fund along with interest thereon within the
"Regulation 4. Exercise
of Option: The option under clause (ii) of the sub-rule (1) of Regulation 3
shall be exercised in duplicate in writing in Form I so as to reach the managing
director as forwarded by the general manager in case of depots and
administrative officer in the case of headquarters with his counter signatures
within a period of six months from the date of issue of these
Regulations.Provided that: 15(i) In the case of an employee, who on the date of
the issue of these Regulations was abroad or on leave, the option shall be exercised
within a period of six months from the date of taking the charge of his post.
(ii) Where an employee is under suspension, on the date of issue of these Regulations,
the option shall be exercised within a period of six months from the date of
his joining the duty.(iii) An option once exercised shall be final, provided the
concerned employee deposits the Corporation's share of C.P. Fund received by him
- taken in advance, if any, within a period of six months from the date of issue
of Regulations and if a person fails to exercise his option under the said Regulations
within the specified period referred to above, it shall be deemed he has opted to
continue for the existing Contributory Provident Fund benefit.
An employee who dies
on or after the issue of these Regulations and who could not exercise his
option the legal heir of such employee, who is entitled to receive retirement benefits
under the said Regulations, shall exercise option, subject to the condition
that the legal heir shall have to deposit the amount of the Corporation's share
of the C.P. Fund received by the deceased employee.(v) The employee recruited after
the introduction of the said pension Regulations will be covered under these
Regulations. Regulation Subscription and Maintenance of General Provident Fund
Account: (1) The employees, who were appointed on or after the commencement of these
Regulations and also to the existing employees, who opt for those Regulations shall
contribute towards the General Provident Fund at the rate prescribed by the Punjab
Government for their 16employees.
An employee may, however,
subscribe voluntarily at higher rate than that prescribed by the Punjab Government.
The Fund shall be regulated in accordance with the rules and procedure to be prescribed
by the Punjab Government from time to time. (2) The date of switchover for the
existing employees to General Provident Fund shall be date of issue of these
The Corporation shall
maintain the General Provident Fund Account at head office level. (3) An
employee may be sancationed an advance out of his own share (General Provident Fund)
for transfer to Pension and Gratuity to meet with his liability of advance
taken by him out of the employer's share of the Contributory Provident
Fund.Regulation 24. Adjustment and Recovery of dues: (1) The competent
authority shall take steps to assess the dues outstanding against the employee two
years before the date on which he is due to retire on superannuation. (2)The
assessment of the outstanding dues against the employees shall be completed by the
competent authority eight months prior to the date of his retirement. (3) The dues
as assessed including those dues which come to the notice subsequently and which
remain outstanding till the date of retirement of the employee, shall be adjusted
against the amount of death-cum-retirement gratuity becoming payable to the
employee on his retirement. (4) When an employee retries from service, an
office shall be issued to that effect by competent authority.
is well settled law that the Regulations made under the statute laying down the
terms and conditions of service of employees, including the grant of retirement
benefits, has the force of law. The Regulations validly made under statutory powers
are binding and effective as the enactment of the competent legislature. The statutory
bodies as well as general public are bound to comply with the terms and
conditions laid down in the Regulations as a legal compulsion. Any action or order
in breach of the terms and conditions of the Regulations shall amount to violation
of Regulations which are in the nature of statutory provisions and shall render
such action or order illegal and invalid.
Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, (1975) 1 SCC 421, this
Court, while elaborately discussing the nature and effect of the Regulations
made under the Statute, has observed: "23. The noticeable feature is that these
statutory bodies have no free hand in framing the conditions and terms of service
of their employees. These statutory bodies are bound to apply the terms and conditions
as laid down in the Regulations. The statutory bodies are not free to make such
terms as they think fit and proper. Regulations prescribe the terms of appointment,
conditions of service and 18procedure for dismissing employees. These Regulations
in the statutes are described as "status fetters on freedom of
The Oil and Natural Gas
Commission Act in Section 12 specifically enacts that the terms and conditions
of the employees may be such as may be provided by Regulations. There is a legal
compulsion on the Commission to comply with the Regulations. Any breach of such
compliance would be a breach of the Regulations which are statutory provisions.
In other statutes under consideration viz. the Life Insurance Corporation Act
and the Industrial Finance Corporation Act though there is no specific provision
comparable to Section 12 of the 1959 Act the terms and conditions of employment
and conditions of service are provided for by Regulations. These Regulations are
not only binding on the authorities but also on the public. ...30. In this view
a Regulation is not an agreement or contract but a law binding the corporation,
its officers, servants and the members of the public who come within the sphere
of its operations.
The doctrine of ultra
vires as applied to statutes, rules and orders should equally apply to the
Regulations and any other subordinate legislation. The Regulations made under power
conferred by the statute are subordinate legislation and have the force and effect,
if validly made, as the Act passed by the competent legislature.... 33. There is
no substantial difference between a rule and a Regulation inasmuch as both are subordinate
legislation under powers conferred by the statute. A Regulation framed under a statute
applies uniform treatment to every one or to all members of some group or class.
The Oil and Natural Gas Commission, the Life Insurance Corporation and Industrial
Finance Corporation are all required by the statute to frame Regulations inter
alia for the purpose of the duties and conduct and conditions of service of 19 officers
and other employees. These Regulations impose obligation on the statutory authorities.
The statutory authorities cannot deviate from the conditions of service.
Any deviation will be
enforced by legal sanction of declaration by courts to invalidate actions in violation
of rules and Regulations. The existence of rules and Regulations under statute
is to ensure regular conduct with a distinctive attitude to that conduct as a
standard. The statutory Regulations in the cases under consideration give the
employees a statutory status and impose restriction on the employer and the
employee with no option to vary the conditions. An ordinary individual in a
case of master and servant contractual relationship enforces breach of
The remedy in such
contractual relationship of master and servant is damages because personal service
is not capable of enforcement. In cases of statutory bodies, there is no
personal element whatsoever because of the impersonal character of statutory
bodies. In the case of statutory bodies it has been said that the element of public
employment or service and the support of statute require observance of rules
Vidya Dhar Pande v. Vidyut Grih Siksha Samiti, (1988) 4 SCC 734, the services of
the appellant-employee were terminated, in contravention of the service
Regulations, by the respondent school. This Court, while reinstating the
employee in service, has agreed with the observations made in Sukhdev Singh's
case (Supra). While doing so, this Court has stated : 9. The question whether a
Regulation framed under power conferred by the provisions of a statute has got statutory
power and whether an order made in breach 20of the said Regulation will be rendered
illegal and invalid, came up for consideration before the Constitution Bench in
the case of Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi.
In this case it was
held that: [SCC p. 438 : SCC (L&S) P. 118, para 33] "There is no substantial
difference between a rule and a Regulation inasmuch as both are subordinate legislation
under powers conferred by the statute. A Regulation framed under a statute
applies uniform treatment to every one or to all members of some group or class.
The Oil and Natural Gas Commission, the Life Insurance Corporation and Oil and Industrial
Finance Corporation are all required by the statute to frame Regulations inter alia
for the purpose of the duties and conduct and conditions of service of officers
and other employees. These Regulations impose obligation on the statutory authorities.
The statutory authorities
cannot deviate from the conditions of service. Any deviation will be enforced by
legal sanction of declaration by courts to invalidate actions in violations of
rules and Regulations. The existence of rules and Regulations under statute is to
ensure regular conduct with a distinctive attitude to that conduct as a standard.
The statutory Regulations in the cases under consideration give the employee a statutory
status and impose restriction on the employer and the employee with no option
to vary the conditions."10. There is, therefore, no escape from the
conclusion that Regulations have force of law. The order of the High Court
must, therefore, be reversed on this point unhesitatingly.
in the case of non-statutory Regulations, specifically providing for the grant
of pensionary benefits to the employee qua his employer shall be governed by
the terms and conditions encapsulated in such non-statutory Regulations. In Union
of India v. Brig. P. K. Dutta (Retd.), 1995 Supp (2) SCC 29, this Court : 7. It
is true that the Pension Regulations are non- statutory in character. But as held
by this Court in Major (Retd.) Hari Chand Pahwa v. Union of India 1995 Supp (1)
SCC 221 , the pensionary benefits are provided for and are payable only under those
Regulations and can, therefore, be withheld or forfeited under and as provided by
those very Regulations. The following observations from the said judgment makes
the position clear:
"We do not agree
even with the second contention advanced by the learned counsel. The provisions
of Regulation 16(a) are clear. Even if it is assumed that the Pension Regulations
have no statutory force, we fail to understand how the provisions of the said
Regulations are contrary to the statutory provisions under the Act or the Rules.
The pension has been provided under these Regulations. It is not disputed by the
learned counsel that the pension was granted to the Corporation under the said
Regulations. The Regulations which provided for the grant of pension can also provide
for taking it away on justifiable grounds."
Rajasthan SRTC v. Bal Mukund Bairwa, (2009) 4 SCC 299, the services of the
employee of the appellant were terminated by virtue of service Regulations
(Statutory) made under Section 45 of the Road Transport Corporation Act, 1950. This
Court, while upholding the jurisdiction of the Civil Court to entertain the suit
filed by the employee challenging the order of termination of his services, has
held: "38. Where the relationship between the parties as employer and employee
is contractual, the right to enforce the contract of service depending on
personal volition of an employer is prohibited in terms of Section 14(1)(b) of the
Specific Relief Act, 1963.
It has, however, four
exceptions, namely, (1) when an employee enjoys a status i.e. his conditions of
service are governed by the rules framed under the proviso appended to Article
309 of the Constitution of India or a statute and would otherwise be governed
by Article 311(2) of the Constitution of India; (2) where the conditions of service
are governed by statute or statutory Regulation and in the event mandatory provisions
thereof have been breached; (3) when the service of the employee is otherwise protected
by a statute; and (4) where a right is claimed under the Industrial Disputes
Act or sister laws, termination of service having been effected in breach of the
provisions thereof. 39. The appellant Corporation is bound to comply with the mandatory
provisions of the statute or the Regulations framed under it. A subordinate
legislation when validly framed becomes a part of the Act..."
is a retirement benefit partaking of the character of regular payment to a person
in consideration of the past services rendered by him. We hasten to add that although
pension is not a bounty but is claimable as a matter of right, yet the right is
not absolute or unconditional. The person claiming pension must establish his
entitlement to such pension in law. The entitlement might be dependent upon various
considerations or conditions. In a given case, the retired employee is entitled
to pension or not depend on the provisions and interpretation of Rules and Regulations.
The Contributory Provident Fund appears to be simple mechanism where an employee
is paid the total amount which he has contributed along with the equal contribution
made by the employer ordinarily at the time of retirement of an employee. In
short, we quote what was repeatedly said by this Court that "pension is
payable periodically as long as the pensioner is alive whereas C.P.F. is paid only
once on retirement". Therefore, conceptually, pension and C.P.F. are
separate and distinct.
we will try to explain the essential distinction between these two retirement benefits
that an employee may derive at the time of his retirement from service. The C.P.F.
was 4 introduced with the object of providing social security to the employees
working in factories and other establishments, after their retirement. The C.P.F.
was instituted as a Compulsorily Contributory Provident Fund by the enactment of
the Employees' Provident Funds and Miscellaneous Provisions Act, 1952
(hereinafter referred to as "the Provident Fund Act"). The employee
registered under the Provident Fund Act shall be entitled to claim all benefits
available under the C.P.F. Scheme framed under the Act. This CPF Scheme requires
opening of the account for the employee by the employer. The Government/employer
is under the continuous obligation to deposit equal or matching contribution
made by the employee in his account till he retires. Once the employee is
retired, then his rights qua Government/employer's contribution into his C.P.F.
account finally crystallizes. After retirement, this entire C.P.F. amount is
paid to the employee as a retrial benefit. On the receipt of C.P.F. amount, the
relationship between employee and employer ceases to exist without leaving any further
legal right or obligation qua each other.
Committee for Protection of Rights of ONGC Employees v. O.N.G.C., (1990) 2 SCC
472, this Court has stated : 25"12. Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 (hereinafter referred to as `the Provident
Fund Act') has been enacted with the object of providing social security to the
employees in factories and other establishments covered by the said Act, after
their retirement. In the Statement of Objects and Reasons for the said
enactment it was mentioned as under: "The question of making some provision
for the future of the industrial worker after he retires, or for his dependants
in case of his early death, has been under consideration for some years. The ideal
way would have been provisions through old age and survivors' pensions as has been
done in the industrially advanced countries. But in the prevailing conditions
in India, the institution of a pension scheme cannot be visualised in the near future.
Another alternative may be for provision of gratuities after a prescribed
period of service.
The main defect of a
gratuity scheme, however, is that the amount paid to a worker or his dependants
would be small, as the worker would not himself be making any contribution to the
fund. Taking into account the various difficulties, financial and administrative,
the most appropriate course appears to be the institution compulsorily of contributory
provident fund in which both the worker and the employer would contribute.
Apart from other advantages, there is the obvious one of cultivating among the workers
a spirit of saving something regularly."13. This indicates that the scheme
of Contributory Provident Fund, by way of retiral benefit, envisaged by the Provident
Fund Act, is in the nature of a substitute for old age pension because it was
felt that in the prevailing conditions in India, the institution of a pension
scheme could not be visualised in the near future. It was not the intention of Parliament
that Provident Fund benefit envisaged by the said Act would be in addition to
Krishena Kumar v. Union of India, (1990) 4 SCC 207, this Court has held : "32.
The Railway Contributory Provident Fund is by definition a fund. Besides, the
government's obligation towards an employee under CPF Scheme to give the matching
contribution begins as soon as his account is opened and ends with his retirement
when his rights qua the government in respect of the Provident Fund is finally crystallized
and thereafter no statutory obligation continues. Whether there still remained a
moral obligation is a different matter."
All India Reserve Bank Retired Officers' Assn. v. Union of India, 1992 Supp (1)
SCC 664, this Court, while considering the case of the Pension Scheme and Contributory
Provident Fund Scheme, has held: "10. ... in the case of an employee governed
by the Contributory Provident Fund Scheme his relations with the employer come to
an end on his retirement and receipt of the contributory provident fund amount but
in the case of an employee governed under the Pension Scheme his relations with
the employer merely undergo a change but do not snap altogether."
is a periodic payment of an amount to the employee, after his retirement from
service by his employer till his death. In some cases, it is also payable to the
dependents of the 27 deceased employee as a family pension. The pension is in a
nature of right which employee has earned by rendering long service to the employer.
It is a deferred payment of compensation for past service. It is dependable on
the condition of rendering of service by the employee for a certain fixed period
of time with decent behavior. Like C.P.F., the object of providing pensionery benefit
under the Pension Scheme is to provide social security to the employee and his
family after his retirement from service. The Government's/Employer's obligation
under the Pension Scheme begins only when the employee retires and it continues
till the death of the employee.
Deokinandan Prasad v. State of Bihar, (1971) 2 SCC 330, this Court has held: "31.
... pension is not a bounty payable on the sweet will and pleasure of the
Government and that, on the other hand, the right to pension is a valuable right
vesting in a government servant.
D.S. Nakara v. Union of India, (1983) 1 SCC 305, this court has observed: "27.
Viewed in the light of the present day notions pension is a term applied to
periodic money payments to a person who retires at a certain age considered age
of disability; payments usually continue for the rest of the natural life of the
recipient. The reasons underlying the grant of pension vary from country to country
and from scheme to scheme. But broadly stated they are (i) as compensation to
former members of the Armed Forces or their dependents for old age, disability,
or death (usually from service causes), (ii) as old age retirement or
disability benefits for civilian employees, and (iii) as social security payments
for the aged, disabled, or deceased citizens made in accordance with the rules governing
social service programmes of the country.
Pensions under the first
head are of great antiquity. Under the second head they have been in force in
one form or another in some countries for over a century but those coming under
the third head are relatively of recent origin, though they are of the greatest
magnitude. There are other views about pensions such as charity, paternalism, deferred
pay, rewards for service rendered, or as a means of promoting general welfare (see
Encyclopaedia Britannica, Vol. 17, p. 575). But these views have become
otiose.28. Pensions to civil employees of the Government and the defence
personnel as administered in India appear to be a compensation for service
rendered in the past. However, as held in Douge v. Board of Education, 302 US 74,
a pension is closely akin to wages in that it consists of payment provided by
an employer, is paid in consideration of past service and serves the purpose of
helping the recipient meet the expenses of living. This appears to be the nearest
to our approach to pension with the added qualification that it should ordinarily
ensure freedom from undeserved want. Summing up it can be said with confidence that
pension is not only compensation for loyal service rendered in the past, but pension
also has a broader significance, in that it is a measure of socio-economic justice
which inheres economic security in the fall of life when physical and mental prowess
is ebbing corresponding to aging process and, therefore, one is 29 required to
fall back on savings.
One such saving in kind
is when you give your best in the hey-day of life to your employer, in days of invalidity,
economic security by way of periodical payment is assured. The term has been
judicially defined as a stated allowance or stipend made in consideration of
past service or a surrender of rights or emoluments to one retired from service.
Thus the pension payable to a government employee is earned by rendering long and
efficient service and therefore can be said to be a deferred portion of the compensation
or for service rendered. In one sentence one can say that the most practical raison
d'etre for pension is the inability to provide for oneself due to old age. One may
live and avoid unemployment but not senility and penury if there is nothing to
fall back upon."
Poonamal v. Union of India, (1985) 3 SCC 345, this Court has observed: "7.
... pension is a right not a bounty or gratuitous payment. The payment of pension
does not depend upon the discretion of the Government but is governed by the relevant
rules and anyone entitled to the pension under the rules can claim it as a matter
of right. (Deoki Nandan Prasad v. State of Bihar 1971 (2) SCC 330, State of
Punjab v. Iqbal Singh 1976 (2) SCC 1 and D.S. Nakara v. Union of India 1983 (1)
SCC 305.) Where the Government servant rendered service, to compensate which a
family pension scheme is devised, the widow and the dependent minors would equally
be entitled to family pension as a matter of right. In fact we look upon pension
not merely as a statutory right but as the fulfilment of a constitutional promise
inasmuch as it partakes the character of public assistance in cases of
unemployment, old-age, disablement or similar other cases of undeserved want. Relevant
rules merely make effective the constitutional mandate."
Krishena Kumar v. Union of India (supra) this Court has held: "32. ...On
the other hand under the Pension Scheme the government's obligation does not begin
until the employee retires when only it begins and it continues till the death
of the employee. Thus, on the retirement of an employee government's legal obligation
under the Provident Fund account ends while under the Pension Scheme it
Prabhu Narain v. State of U.P.,(2004) 13 SCC 662, this Court has observed: "5.
No doubt pension is not a bounty, it is a valuable right given to an employee, but,
in the first place it must be shown that the employee is entitled to pension under
a particular rule or the scheme, as the case may be."
U.P. Raghavendra Acharya v. State of Karnataka, (2006) 9 SCC 630, this Court
has held: "25. Pension, as is well known, is not a bounty. It is treated to
be a deferred salary. It is akin to right of property. It is correlated and has
a nexus with the salary payable to the employees as on the date of retirement."
term pension has been defined in American Jurisprudence 2d, Vol. 60, at pg. 879
as thus: "However, by modern usage, the "pension" is not restricted
to pure gratuities. Thus, it has been held that a pension paid a governmental
employee for long and efficient service is not an emolument the payment of
which is barred by a state constitutional provision, but is a deferred portion
of the compensation earned for services rendered. ... A pension is closely akin
to wages in that it consists of payments provided by an employer, is paid in consideration
of past services, and serves the purpose of helping the recipient meet the
expense of living."
concept of pension has been discussed in Halsbury's Laws of England, Fourth Edition
(Reissue), Vol. 16, para. 400 as thus: "Meaning of `pension'. `Pension'
means a periodical payment or lump sum by way of pension, gratuity or superannuation
allowance as respects which the Secretary of State is satisfied that it is to be
paid in accordance with any scheme or arrangement having its object or one of its
objects to make provision in respect of persons serving in particular
employments for providing them with retirement benefits ... `Pension' does not
include: (i) a payment to an employee which consists solely of a return of his own
contributions, with or without interest; (ii) that part of a payment to an employee
which is attributable solely to additional voluntary contributions by that employee
made in accordance with the scheme or arrangement; (iii) a periodical payment
or lump sum, in so far as that payment or lump sum represents compensation under
the statutory compensation schemes and is payable under a statutory provision, whether
made or passed before, on or after 31st July 1978"
concept of pension has also been considered in Corpus Juris Secundum, Vol. 70,
at pg. 423 as thus: "A pension is a periodical allowance of money granted by
the government in consideration or recognition of meritorious past services, or
of loss or injury sustained in the public service. A pension is mainly designed
to assist the pensioner in providing for his daily wants, and it presupposes
the continued life of the recipient."
sum up, we state that the concept of pension has been considered by this court
time and again and in catena of cases, it has been observed that the Pension is
not a charity or bounty nor is it a conditional payment solely dependent on the
sweet will of the employer. It is earned for rendering a long and satisfactory
service. It is in the nature of deferred payment for past services. It is a social
security plan consistent with the socio-economic requirements of the Constitution
when the employer is a State within the meaning of Article 12 of the Constitution
rendering social justice to a superannuated government servant. It is a right attached
to the office and cannot be arbitrarily denied. [see A.P. Srivastava v. Union of
India, (1995) 6 SCC 227, Vasant Gangaramsa Chandan v. State of Maharashtra, (1996)
10 SCC 148, Subrata Sen v. Union of India, (2001) 8 SCC 71, Union of India v.
P.D. Yadav, (2002) 1 SCC 405, Grid Corpn. of Orissa v. Rasananda Das, (2003) 10
SCC 297, All India Reserve Bank Retired Officers Assn. v. Union of India
noticed the conceptual difference between the concept of C.P.F. and pension, we
will now notice the submissions made by the learned counsel for the parties to
common thread which runs through all these appeals canvassed before us is that the
respondents have failed to comply with the terms and conditions of the
Regulations, which govern the Pension Scheme. We have already considered the 34
nature and effect of the Regulations, which are made under a statute. These statutory
Regulations require to be interpreted in the same manner which is adopted while
interpreting any other statutory provisions.
The Corporation as
well as respondents are obliged and bound to comply with its mandatory
conditions and requirements. Any action or conduct deviating from these conditions
shall render such action illegal and invalid. Moreover, the respondents have availed
the retiral benefits arising out of the C.P.F and gratuity without any protest.
The respondents in all these appeals, before us, have made a claim for
pensionary benefits under the Pension Scheme for the first time only after
their retirement with an unreasonable delay of more than 8 years. It is not in
dispute, in some appeals, that the respondents never opted for the Pension Scheme
for their alleged want of knowledge for non-service of individual notices. In
other appeals, although respondents applied for the option of the Pension Scheme
but indisputably never fulfilled the quintessential conditions envisaged by the
Regulations which are statutory in nature.
learned counsel for the respondents in support of their contention for want of
knowledge of the Pension Scheme due to 35 non-service of individual notices
relied on the decision of this Court in Dakshin Haryana Bijli Vitran Nigam v.
Bachan Singh, (2009) 14 SCC 793. The said decision is clearly distinguishable on
facts. In that case, the appellant, Haryana State Electricity Board, had issued
instructions dated 23.06.1993 and circular dated 09.08.1994 in order to provide
an option to the employees for pensionary benefits in lieu of their work charged
service with an express condition of noting of instructions from all the employees
and acknowledging the receipt of the letter. In these appeals, before us, there
is no such condition of noting from the employees or serving individual notices
in the Pension Scheme or Regulations. Therefore, in our opinion, Bachan Singh's
decision will not assist the respondents.
our view, in the facts and circumstances of the present case and in view of
absence of such condition in the scheme, it is not necessary for the Corporation
to give an individual notice to respondents for exercising of option for pension
Scheme and also for asking respondent to refund the employers contribution of
C.P.F. at each stage. Furthermore, when notice or knowledge 36of the Pension
Scheme can be reasonably inferred or gathered from the conduct of the
respondents in their ordinary course of business and from surrounding circumstances,
then, it will constitute a sufficient notice in the eyes of law. In Union of India
v. M.K. Sarkar, (2010) 2 SCC 59, this Court has : 21. The Tribunal in this case
has assumed that being "aware" of the scheme was not sufficient
notice to a retiree to exercise the option and individual written communication
was mandatory. The Tribunal was of the view that as the Railways remained unrepresented
and failed to prove by positive evidence, that the respondent was informed of the
availability of the option, it should be assumed that there was non-compliance with
the requirements relating to notice. The High Court has impliedly accepted and
affirmed this view.
The assumption is not
sound. 22. The Tribunal was examining the issue with reference to a case where there
was a delay of 22 years. A person, who is aware of the availability of option, cannot
contend that he was not served a written notice of the availability of the
option after 22 years. In such a case, even if Railway Administration was represented,
it was not reasonable to expect the department to maintain the records of such intimation(s)
of individual notice to each employee after 22 years. In fact by the time the matter
was considered more than nearly 27 years had elapsed. Further when notice or
knowledge of the availability of the option was clearly inferable, the employee
cannot after a long time (in this case 22 years) be heard to contend that in the
absence of written intimation of the option, he is still entitled to exercise the
option. 23. This Court considered the meaning of "notice" in Nilkantha
Sidramappa Ningashetti v. Kashinath Somanna Ningashetti, AIR 1962 SC 666.
This Court held: (AIR
p. 669, para 10) "10. We see no ground to construe the expression `date of
service of notice' in Column 3 of Article 158 of the Limitation Act to mean only
a notice in writing served in a formal manner. When the legislature used the word
`notice' it must be presumed to have borne in mind that it means not only a
formal intimation but also an informal one. Similarly, it must be deemed to
have in mind the fact that service of a notice would include constructive or informal
notice. If its intention were to exclude the latter sense of the words `notice'
and `service' it would have said so explicitly."
Regulation 4 (iii) of the Regulations is a deeming provision to the effect:
firstly, if an employee fails to exercise his option within a period of 6 months
from the date of issue of these Regulations and; secondly, even on exercise of option,
if an employee fails to refund the amount of advance taken from employers
contribution of the C.P.F. within 6 months from the date of issue of these
Regulations, then it shall be deemed that employee has opted to continue for
the existing C.P.F. benefit. Therefore, the failure on the part of the
respondents to opt for the Pension Scheme and refund the advance taken from the
employer's contribution of C.P.F. will disentitle them from 38 claiming any
benefit under the Pension Scheme. Therefore, we cannot sustain the Judgment and
order passed by the High Court.
appeals are accordingly allowed and the impugned Judgment and orders passed by the
High Court are set aside. There will be no order as to costs.
[ D. K. JAIN ]
[ H. L. DATTU ]