Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4111 OF 2008
Pepsu Road Transport Corporation, Patiala ...…….. Appellant
versus
Mangal Singh & Ors. ………..Respondents
WITH
CIVIL APPEAL NO.4405 OF 2011
(Arising out of SLP (Civil) No. 3349 of 2008)
PEPSU Road Transport Corporation and Another …….Appellants
versus
Sharanjit Kaur (Dead) Through L.Rs. ………Respondents
WITH
CIVIL APPEAL NO.4404 OF 2011
(Arising out of SLP (Civil) No. 330 of 2008)
PEPSU Road Transport Corporation and Another ….Appellants
versus
Baldev Singh & Ors. …Respondents
1
WITH
CIVIL APPEAL NO. 3846 OF 2010
PEPSU Road Transport Corporation and Another ….Appellants
versus
Jagroop Singh ……Respondent
J U D G M E N T
H.L. Dattu, J.
1) Leave granted in SLP (C) No. 3349 of 2008 and SLP (C) 330 of
2008.
2) In 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
2
his 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 4 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
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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.
4
3) In SLP (Civil) No. 3349 of 2008- PEPSU Road Transport
Corporation and Another v. Sharanjit Kaur, widow of Bachittar
Singh and Ors. (hereinafter 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 Regulations. 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
5
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.
4) In 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
6
the 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 ).
5) In 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
8
respondent 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.
6) The 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?
7) Shri 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.
8) Learned 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 individual
employees.
9) Learned counsel for respondents submits relying on Dakshin
Hayana Bijli Vitran Nigam v. Bachan Singh , (2009) 14 SCC
11
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.
10) The 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.
11) Learned 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 Regulations.
12) 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.
13) Section 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.
13
(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—
(a) the manner in which, and the purposes for which,
persons may be associated with the Board under
Section 10;
(b) the time and place of meetings of the Board and
the procedure to be followed in regard to transaction
of business at such meetings;
(c) 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;
(d) the issue of passes to the employees of the
Corporation and other persons under Section 19;
(e) the grant of refund in respect of unused tickets and
concessional passes under Section 19.”
14) The Regulations provide for the grant of retirement benefits to
the employees of the PEPSU Road Transport Corporation with
effect from 15.06.1992.
15) To 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
alongwith interest thereon within the stipulated
period.”
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.
(iv) 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 20 . 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
16
employees. 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 Regulations. 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.
17
16) It 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.
17) In 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
18
procedure for dismissing employees. These
Regulations in the statutes are described as “status
fetters on freedom of contract”. 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 contractual terms. 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 and Regulations.”
18) In 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
20
of 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.
21
19) Even 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.”
22
20) In Rajasthan SRTC v. Bal Mukund Bairwa, (2009) 4 SCC 29 9 ,
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…”
23
21) Pension 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.
22) Now 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
24
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.
23) In 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 pensionary benefits.”
26
24) In 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.”
25) In 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. ”
26) Pension 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.
27) In 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.
28) In 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
28
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.
29. 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.”
29) In 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.”
30
30) In 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 begins.”
31) In 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.”
32) In 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.”
31
33) The 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. ”
34) The 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
32
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
st
passed before, on or after 31 July 1978”
35) The 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.”
36) To 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
33
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 ( Supra )].
37) Having 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 the lis.
38) The 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.
39) The 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.
40) In 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
36
of 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.
37
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.”
41) The 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.
42) The 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.
……………………………J.
[ D. K. JAIN ]
……………………………J.
[ H. L. DATTU ]
New Delhi.
May 12, 2011
39