Madras High Court
R.Lakshmanan vs M/S. Indian Airlines Ltd on 29 October, 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29.10.2021
CORAM:
THE HON'BLE MR.JUSTICE P.VELMURUGAN
W.P. No. 24317 of 2004
and WPMP.Nos.450 of 2010
1. R.Lakshmanan
2. S.Ramanathan
3. Joseph Jeevaraj
4. R.Rajagopal
5. P.V.Reddy
6. P.V.Mani
7. T.S.Mohan
8. A.K.Kothapurkar
9. S.Murali
10. S.Rajendran
11. N.Aravindakshan
12. K.Murugesan
13. Dennis Ranjan
14. T.J.Sabestian Thambu
15. M.N.Gopalakrishnan
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16. R.Dharmalingam
17. N.Chinnasamy
18. V.Balasubramanian
19. P.Balaram
20. A.Krishnamaraju
21. B.S.Chandirasekara
22. P.Vasudevan
23. G.Shanmugam
24. A.Natarajan
25. A.Rajagopalan
26. R.Sadasivam
27. G.Panerselvam ...Petitioners
Vs
1. M/s. Indian Airlines Ltd.
Rep. by its Managing Director
Airlines House
No.113, Gurudwara Rakabgunj Road
New Delhi 110 001
2. M/s. Indian Airlines Ltd.
Rep. by its Regional Director
Southern Region
Airlines House
Chennai
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3. The Central Provident Fund
Commissioner
Employees Provident Fund Organisation
Bharishya Mudhi Bavan
14, Bhikaji Gama Place
New Delhi 110 066
4. Indian Airlines Employees' Self-Contributory
Super annuation Scheme
Airlines House
No.113, Gurudwara Rakabgunj road
New Delhi-110 001
5.Ministry of Civil Aviation
Rep. By its Secretary to Government
Rajiv Gandhi Bhavan
Room No.273-B B-Block
Safdarjung Airport
New Delhi-110 003 ...Respondents
[cause title amended as per order dated 12/10/2009
vide WPMP.No.1684 of 2007 in W.P.24317/2004]
Prayer: Writ petition is filed under Art. 226 of Constitution of India
praying to issue a WRIT OF CERTIORARIFIED MANDAMUS calling
for the records pertaining to the Indian Airlines Self Contributory
Superannuation pension Scheme evolved by the 1st respondent as
amended on 04.03.2003 and quash the provisions of the Scheme of
pension in so far it relates to the petitioners, who have become the
members of the scheme before 31.03.2003 and pay 40% of pensionable
pay as monthly pension to the petitioners as per the original Indian
Airlines Employees Self-Contributory Superannuation Pension Scheme
introduced in the year 1998 with all consequential benefits such as
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arrears of pension and interest at the rate of 15% per annum for delayed
payment of pension.
For petitioners : Mr.L.Sriram for K.Mani
For Respondents : Mr.Srinivasamurthy for N.G.R.Prasad
for R4
Mr.J.Madanagopal Rao, S.C.G.C
for R5
ORDER
This Writ petition is filed challenging the Indian Airlines Self
Contributory Superannuation pension Scheme evolved by the 1st
respondent as amended on 04.03.2003 and seeks for payment of 40% of
pensionable pay as monthly pension to the petitioners as per the original
Indian Airlines Employees Self-Contributory Superannuation Pension
Scheme introduced in the year 1998 with all consequential benefits such
as arrears of pension and interest at the rate of 15% per annum for
delayed payment of pension.
2. It is averred in the writ petition that the petitioners are members
of the Indian Airlines Employees Self-contributory Superannuation
Pension Scheme (hereinafter called I.A.E.S.C.S Pension Scheme) which
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was approved by the Commissioner of Income Tax Act, 1961. In Indian
Airlines Limited, the I.A.E.S.C.S Pension Scheme was approved by the
Government of India through its letter dated 29.05.1997 as effective from
01.04.1994. The scheme is purely based on the contribution of the
employees and hence it is an annuity scheme run by the Indian Airlines
Ltd. Through a Trust. The salient features of the I.A.E.S.C.S Pension
Scheme are as follows:
a) All employees of the Indian Airlines will contribute certain
percentage of salary ranging from 1 to 5% every month plus additional
contribution at the rate of Rs.27-/- per month (escalating @ 10% per
annum).
b). The minimum pension payable to the employees will be 40% of
the last drawn salary and a maximum of 50%.
c) The members have to make a lumpsum payment of contribution
as per agreed formula in case the subscription is for less than 15 years.
This is known as 'balance of contribution'.
d) The annuities will be purchased through LIC from the fund
generated with the contribution made by the employees.
e) This scheme is a 'Benefit Linked Scheme' in which the benefit is
calculated on the basis of 40% of Provident Fund wages of the
employees at the time of his retirement.
3. Due to financial mismanagement the petitioners including those
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who retired since 1998 were not paid pension even though they are
entitled to monthly pension at 40% of their respective Provident Fund
Pay.
4. It is submitted by the learned counsel for the petitioners that the
trust came nearer to insolvency position and tried to recover the 'shortfall
in contributions' due from the retirees even though there is no provision
to recover the shortfall in the trust deed. This attempt of the trust was
thwarted by the orders of the Hon'ble High Court of Bombay, restraining
the trust from taking action to recover the shortfall from the retirees.
Then the Indian Airlines Pension Trust started recovering from the
existing members their proportionate share of cost towards the Trust's
mismanagement.
5. The learned counsel for the petitioners would submit that with a a
malafide intention to shirk off legal obligations to pay pension to retirees
retiring after 01.04.2003, amendments have been announced in changing
Clause 7 and introducing a proviso to Clause 5(c) of the Rules framed
under the Indian Airlines Employees Self Contributory Superannuation
pension Funds Scheme as effective from 04.03.2003. After the advent of
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these amendments the obligation to pay pension at 40% of the last drawn
pay was shirked off. The members of I.A.E.S.C.S Pension Scheme are
not share holders but they are compelled to share the losses caused by the
management of the trust.
6. As regards Chennai Region, the employees retired between 1994-
1998 were discriminated in a much as in all other regions, employees
retired between 1994-1998 were given monthly pension of 40% of last
drawn PF pay and on the other hand some of the employees who retired
in Chennai Region between 1994-1998 were not given the monthly
pension even though they paid the lumpsum amount towards annuity.
7. The petitioners stated that the action of the respondents is highly
inhuman and contrary to the scheme and the present amendment is
prejudicial to the main object of the scheme and hence the amendment
made to the Trust Deed is illegal and unsustainable and violative of
Article 14 and 16 of Constitution of India.
8. The respondents 1 and 2 filed Counter affidavit and submitted
that consequent to the approval of scheme of amalgamation by Ministry
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of Corporate Affairs vide its order dated 22.08.2007, as a result of which
the two companies, namely Air India Ltd., and Indian Airlines Limited
now stands resolved without being wound up resulting in consolidation
of business of the two companies a new entity i.e National Aviation
Company of India Limited has been formed. It is further submitted that
the scheme of amalgamation being effective from 27.08.2007, all legal or
other proceedings which were to be initiated by or against Indian Airlines
Ltd., shall now be initiated by or against NACIL.
9. It is further submitted that though the Airlines has been made a
party to this Writ Petition, ultimately the scheme being self-contributory
and the relief can be only against the Trust which is a private trust
established under the Indian Trusts Act, the Writ Petition itself is not
maintainable and the same is liable to be dismissed.
10. The respondents 1 and 2 would point out that the memorandum
would explain the circumstances in which the Pension Scheme was
brought about. It was not a Management Scheme. The stake holders in
the scheme are the employees. This is the underlying fact. The
Government of India and the Indian Airlines helped the Employees
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Unions/Associations in formulating a pension scheme as stated above, in
which the maximum contribution from the Management was only Rs.
100/- per annum and the rest of the contributions were to come from the
employees. That is why it is called Self Contributory Scheme. Therefore
the petitioners if at all have any claim, have to look up to the 4 th
Respondent Trust and not the 1st and 2nd Respondent Airlines. The 1st and
2nd Respondent has been unnecessarily made a party to the above Writ
Petition, and so the Writ Petition against the 1st and 2nd Respondent is
liable to be dismissed. The respondents 1 and 2 submitted that no claim
can be staked against the Respondent Airlines.
11. The 4th respondent filed counter affidavit filed and submitted
that as per clause 9 of the Trust Deed it has been agreed upon that all
suits or other legal proceedings with regard to the Trust and its Rules
shall be instituted only in the Courts within the Territory of New Delhi,
therefore the present Writ Petition before this Hon'ble Court is contrary
to clause 9 of the Trust Deed and the same is liable to be dismissed.
12. It is further submitted by the 4th respondent that the scheme was
applicable to the employees who have retired from the services on and
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after 01.04.1994. Further the payments of pension was to start after the
purchase of Life Insurance Corporation for the respective employees.
The first contribution towards pension fund was started from May 1998
by way of deductions from the salary. In the case of employees who had
already retired, the employees were asked to deposit a lumpsum amount
equivalent to 15 years contribution. Between 01.04.1994 to May 1998 as
many as 1579 employees retired. The Trust started purchasing annuities
as and when the employees started making lumpsum payment. Between
01.02.1999 and July 2000, annuities for 990 retired employees was
purchased.
13. It is submitted that the lumpsum contributed by the 990 retired
employees till July 2000 for whom annuities were purchased came to Rs.
13.98 Crores, whereas the Trust had to spend Rs. 33.36 Crores for the
purchase of those annuities. Therefore, there was a gap between the
amounts contributed by the retirees and the purchase of annuities which
had to naturally come from the contributions made by the employees.
Then the Trust realised that there was a sharp shortfall in the funds and it
is impossible for purchase of annuities for the rest of the employees. This
was because of various unexpected factors such as the interest rates in
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the financial market came down as a result Life Insurance Corporation
naturally increased the cost of purchasing the annuities, secondly because
of the sudden roll back in the retirement age of employees of Indian
Airlines Limited from 60 to 58 years. As a result of roll back, a number
of retirees swelled up. Therefore contributions came down and the
annuities were to be purchased for more retirees immediately earlier than
the anticipated age of retirement. This led to the impossible state of
affairs. Being a self contributory scheme the amounts had to necessarily
come from the employees and if pension was to be paid based on the
original scheme it would have necessarily led to bankruptcy of the Trust.
For example in the case of 1st petitioner who had retired on 30.09.1997,
was drawing a salary of Rs. 10,180 and according to the original scheme
he as to be paid a monthly pension of Rs. 4,072/-. he had totally
contributed a sum of Rs. 1,36,420 towards the pension fund, but to pay
him the pension of Rs. 4,072/-, the Trust had to necessarily purchase
annuity from Life Insurance Corporation to the tune of atleast Rs.
4,07,200/-. This amount had to necessarily come from the fund and in
every case if the difference had to be made good by the Trust, the Trust
would have been left without any funds and the remaining employees for
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whom annuities are to be purchased in the lurch. Therefore the Trust had
to necessarily find out ways and means by which the scheme can be
brought down to practical levels, so that the retired employees could be
paid pension some were commensurate to their contribution. The
amended scheme also made provision to recover the difference between
the value of annuity and the actual amount contributed by the employee.
14. The 4th respondent would also submit that in 1998 itself, the
amounts were hardly sufficient to purchase the annuities for the
employees retired after that date. When this situation was noticed by the
Trustees, in order to avoid total bankruptcy M/s. K.A.Pandit, Consulting
Actuaries was appointed and various steps to handle the situation was
taken and as a result of the same only the amendment was brought in.
15. It is submitted by the 4th respondent that out of 3067 employees
retired between April 1998 to March 2003, 2026 employees opted for
withdrawal of the amount standing to their credit and withdrawn the
same. Few opted for purchase of annuity as per the amended scheme and
400 and odd have not exercised of their option either for withdrawal or
for purchase of the annuities as a result the amounts are lying with LIC
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awaiting for their option. A perusal of the above would show that a
majority of the employees accepted the amended scheme. They have
either given option for purchase of the annuities for the amounts standing
to their credit or opted for withdrawal of the amounts. Even in the case of
Petitioners, Petitioner Nos. 9,10 have opted for purchase of annuities for
the amounts standing to their credit and getting pension for that amount,
with regard to Petitioners No. 3,11,17,18,19,20,21,23,24 they have opted
for withdrawal from the fund and got the money standing to their credit.
If the amended scheme is upset at the instance of few, grave prejudice
and irreparable loss would be caused to the other employees. The clock
cannot be put back. The Trust had done their best within the given
situation by amending the scheme. Otherwise the Trust itself would have
become bankrupt leaving most of the retirees/employees in the lurch.
16. The learned counsel for the 4th respondent submits that the
Petitioners having accepted the fact that it is purely a self-contributory
scheme, cannot object to the amendment which the trust was forced to
do. It was also done after taking the employees representatives into
confidence. The situation was unforeseen and the amendment was due to
the compelling reasons as explained above. He further submit that there
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are no merits in the Writ Petition. T
17. In the additional affidavit filed by the 4th respondent, it is stated
that Pension scheme was implemented and the Pension Trust has sent
communications to the retirees advising them to make their contributions
and as and when the amount was collected, the purchase of annuities
were made. Thereafter, Pension deed was amended due to the fund
position. Majority of the employees retired prior to the amendment deed
dated 04.03.2003 and have submitted their option and upon receipt of the
authorization, either the amount lying to their credit was received from
the Life Insurance Corporation and refunded or annuities were purchased
as per the amended scheme based upon the option exercised by them.
18. It is also pointed out by the 4th respondent that Writ Petitioners
2, 5, 7, 9, 10, 15, 26 and 27 have retired after the introduction of the
amended scheme and therefore, they are not governed by the original
scheme. Petitioners 3, 8, 11, 17, 18, 19 21, 23 and 24 have voluntarily
decided to opt out of the scheme and submitted their request to refund
the contribution made by them. On the basis of their option, amounts
were collected from the Life Insurance Corporation and the same was
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refunded.
19. It is also submitted by the 4th respondent that even according to
the pension scheme, the contribution of the 1st respondent is restricted to
Rs.100/- per annum and therefore, there is no necessity for the 1st
respondent Air India to request the petitioners or other employees to
submit the option one way or the other. The Trust has not discriminated
any employee. Annuities were purchased as and when contributions were
received from the retirees in the normal course and there is no partiality
shown to anyone.
20. The 4th respondent also made it clear that the present attempt
made by the petitioners to rebut the option exercised by them is purely an
afterthought. The petitioners have submitted their option viz., opted for
pension under the amended scheme or withdrawn from the scheme, any
change would have a bearing on the Life Insurance Corporation, which is
not a party to the Writ Petition. Therefore, it is not open to the petitioners
to change their stand.
21. The 4th respondent in the additional affidavit drawn the attention
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of this court to the Memorandum dated 01.08.2019 filed by the
Petitioners, which would show that the retirement date of the petitioners,
their option exercise and the scheme to which they were covered and
amount of refund they collected from the corpus amount.
22. The 4th respondent also submit that similar prayer of another
retiree was also rejected by this Court in W.P.No.25407 of 2001 vide
order dated 19.09.2014 (P.K.Jayakumar Vs. Indian Airlines Limited).
23. Heard both sides and perused the records carefully.
24. It is the case of the petitioners that all public sector enterprises
introduced a scheme of Annuity Scheme through the LIC, based on
purely voluntary contributions made by the employees through a Fund
without any liability on the Public Sector Enterprises. Since the annuity
schemes would be based on the contribution of the employees, the
schemes should be made on prospective basis only. The employees who
have already retired from the service of the PSEs would not be eligible
for the benefits of the said schemes. The respondent Director of Finance
sought permission to the Finance Rules dated 25.01.1996 with
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retrospective effect from 01.04.1994. It is contended that the Department
of Public Enterprises vide letter dated 19.12.1996 granted permission to
run the scheme w.e.f., a date not earlier than 01.04.1995 as Board of
Director have approved the scheme on 30.03.1995 only. Exemption as
per Section 39 of the Employees Pension Scheme 1995 was to be
obtained from Ministry of Labour. Memorandum of Undertaking with the
Unions was sighed by Indian Airlines on 19.12.1998 by which the
effective date of the scheme is 1.4.1994. It is stated that the trust was
formed in September 1997 for managing the scheme with certain
benefits.
25. It is contended by the petitioners that the respondent admitted
that till July 2000, annuities had been purchased for 990, out of 1579
employees, indicating there was no parity of treatment of retirees which
violated Article 14 and 19 of Constitution of India. It is the main
contention of the respondents that the petitioners including those retired
since 1997 were not paid pension even though they are entitled to
monthly pension at 40% of their respective Provident Fund Pay. But the
annuities were not purchased in respect of all employees totaling to 1579
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employees retired between 1.4.1994 and its implementation in May 1998
and preferred to purchase annuities in respect of only 1990 employees
and that is admitted by the respondents.
26. According to the learned counsel for the petitioners, the pension
scheme amended and as a result pension at minimum of 40% of the last
drawn pay was shirked off, reducing it nearly to 5% to 10% of last drawn
pay and that too retrospectively is not correct. Further the Trust Deed
amendment came into effect from 01.04.2003 and in such case, it is
applicable only to members who enter the scheme on or after 01.04.2003.
But the respondents had made it applicable to existing members also,
which according to learned counsel for the petitioners is not correct.
27. It is pointed out by the learned counsel for the petitioner that the
trust tried to recover the “Shortfall in contribution” due from the retirees
even though there is no provision to recover the shortfall in the trust
deed. It is stated that High Court of Bombay restrained the trust from
taking action to recover the shortfall from the retirees. It is relevant to
point out herein that the Supreme Court of India also held that no
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pension scheme can be introduced which is not giving more benefits than
the PF pension scheme under the PF Act. According to the respondents
no favouritism is shown to anyone and the annuities were purchased in
phases depending on receipt of employees own contribution. In the case
of the first petitioner, the contribution was called for on 03.08.2000 and
the first petitioner had remitted the amount on 17.08.2000 but he was
denied pension. Respondents admitted that the retired employees only
contributed a fraction of corpus required to purchase annuity as per the
last pay drawn and the rest of the funding was from contribution from
serving employees. So, it is a clear discrimination that while for some
annuity purchased using the contribution of serving employees.
28. The learned counsel for the petitioner in support of their
submissions placed reliance on the decision of the Honourable Supreme
Court reported in (2005) 8 SCC 404 [Air India Employees Self-
Contributory Superannuation Pension Scheme Vs. Kuriakose
V.Cherian and others]. In the above said decision it is held by the
Honourable Supreme Court that amendment cannot be said to be
prospective in operation merely on ground that right of the retiree only
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after amendment of the scheme were being affected as the amount
already paid to them under the unamended scheme was not being asked
to be returned. The Supreme Court in the above decision, held that the
impugned judgment is unassailable and thus dismissed the appeals filed
Air India Employees Self Contributory Superannuation Pension Scheme.
It is held in paragraph 9 of the decision that the High Court by the
impugned judgment held that the amendment to the trust deed to the
extent it applies in future is legal and valid but the amendment cannot
apply to the employees who have retired before the date of amendment
and such employees shall continue to receive pensionary benefits as
before, namely, the benefits which existed at the time of amendment.
29. It is relevant to note down that the first petitioner has paid
subscription as lumpsum and the balance of the contributions for fifteen
years. The first petitioner who retied on 30.09.1997 did not receive any
pension. On retirement while all employees of Delhi, Mumbai and
Calcutta regions who retired by 1997 were paid pension at agreed rate of
40% of the last drawn salary, only in Madras region, the petitioners were
denied pension. The Trust commenced payment of annuity to the retirees
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from February 1999 and had made payment to 993 who retired during the
period April 1994 to April 1998. The first respondent also accepted that
more than 1500 employees retired between April 1994 and April 1998,
the trust had made payment to 993 who retired during the period April
1994 to April 1998, indicating that all the retirees were not treated on par
and no equality in treatment among the petitioners.
30. Since it is held by the other High Courts and the Supreme Court
that amendment cannot be made retrospectively and that there should be
no discrimination among the regions and when the other region
employees retired between 1994-1998 were given monthly pension of
40% of last drawn PF pay, the petitioners herein cannot be discriminated
and their pension should be on par with the employees in other regions.
Based on the annuity amount collected from the petitioners, the
respondents is required to pay the pension to the petitioners. As it is
pointed out by the 4th respondent that Writ Petitioners 2, 5, 7, 9, 10, 15,
26 and 27 have retired after the introduction of the amended scheme and
therefore, they are not governed by the original scheme and that
petitioners 3, 8, 11, 17, 18, 19, 21, 23 and 24 have voluntarily decided to
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opt out of the scheme and submitted their request to refund the
contribution made by them and that on the basis of their option, amounts
were collected from the Life Insurance Corporation and the same was
refunded. As far as petitioners 1, 4, 6, 13 16, 20, 22 and 25 are
concerned, they are entitled for pension under old scheme.
31. In the result, the Writ Petition is disposed of with a direction to
the respondents to grant the pensionary benefits as per the original
scheme to the petitioners 1, 4, 6, 13 16, 20, 22 and 25, if they are
otherwise eligible as per the scheme. Since the writ petition is pending
from the year 2004, the above said direction shall be carried out within a
period of two months from the date of receipt of a copy of this order. It
is open to the petitioners who already opted for revised pension or
claimed refund, to redress their grievance before the appropriate forum.
No costs. Consequently, connected miscellaneous petition is closed.
29.10.2021
Index:Yes/No
nvsri
Note:Issue order copy on 01.11.2021
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1. Managing Director, M/s. Indian Airlines Ltd.
Airlines House
No.113, Gurudwara Rakabgunj Road
New Delhi 110 001
2. Regional Director, M/s. Indian Airlines Ltd.
Rep. by its
Southern Region
Airlines House
Chennai
3. The Central Provident Fund
Commissioner
Employees Provident Fund Organisation
Bharishya Mudhi Bavan
14, Bhikaji Gama Place
New Delhi 110 066
4. Indian Airlines Employees' Self-Contributory
Super annuation Scheme
Airlines House
No.113, Gurudwara Rakabgunj road
New Delhi-110 001
5.Secretary to Government, Ministry of Civil Aviation
Rep. By its
Rajiv Gandhi Bhavan
Room No.273-B B-Block
Safdarjung Airport
New Delhi-110 003
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P.VELMURUGAN.J,
nvsri
W.P. No. 24317 of 2004
29.10.2021
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