Bangalore District Court
Britannia Industries Limited ... vs ) Mr.A.K.Hirjee on 21 September, 2015
Govt. Of Karnataka
C.R.P.67] TITLE SHEET FOR JUDGMENTS IN SUITS
Form No.9(Civil) AT MAYOHALL UNIT, BANGALORE.
Title sheet for
Judgment in suits
(R.P.91)
Present: Smt. B.S.REKHA, B.A (LAW) LL.B,
(Name of the presiding judge)
Original suit No.25868/2008
(CCCH-58)
Plaintiffs: - Britannia Industries Limited Pensioners'
Welfare Association, A society registered under the
provisions of the Societies Registration Act, and having its
office at 512A, Jodhpur Park, Flat No.2, Kolkata 700068
and herein represented by its Authorised representative
and Executive Committee Member Mr.Ashit K.Sarkar. 2)
Ms. Dolores M.Periera, d/o.late Michael Lawrence Periera,
aged about 61 years, residing at Flat No.1-D, 115, Wood
Creek Apartment, III Main, Defence Colony, Indiranagar,
Bangalore 560 038.
(By Pleader Sri.)
V/s.
Defendants: - 1) Mr.A.K.Hirjee, Trustee of covenanted Staff
Pension Fund and Officers Pension Fund and having his
residence at Flat No.9, Battery House, 74-A, Bhulabhai
Desai Road, Mumbai 400 026. 2) Mr.S.S.Kelkar, Trustee of
Covenanted Staff Pension Fund and Officers Pension fund
and residing at 1, Sidhula, N.Gamadia Road, Mumbai 400
026. 3) Ms.Vinita Bali, Trustee of Covenanted Staff
Pension Fund and Officers Pension fund and having her
residence and office at Britannia Industries Limited,
Britannia Gardens, Airport Road, Bangalore 560 017. 4)
Mr.Durgesh Mehta, Trustee of Covenanted Staff Pension
Fund and Officers Pension fund and having her residence
and office at Britannia Industries Limited, Britannia
Gardens, Airport Road, Bangalore 560 017. 5) Mr.Alagu
Balaraman, Trustee of Covenanted Staff Pension Fund and
Officers Pension fund and having her residence and office
at Britannia Industries Limited, Britannia Gardens, Airport
Road, Bangalore 560 017. 6) Mr.N.Sridhar, Ex- Trustee of
Covenanted Staff Pension Fund and Officers Pension fund,
Future Capital Holding, 2nd floor, Penninsula Corporate
Park, Gaupat Rao Kadam Marg, Lower Parel, Mumbai 400
013. 7) Mr.Nikhil Sen, Ex- Trustee of Covenanted Staff
Pension Fund and Officers Pension fund, residing at 4013,
1st Main, 1st Cross, HAL 2nd stage Domlur, Bangalore 560
071. 8) Mr.P.K.Malik, Ex- Trustee of Covenanted Staff
Pension Fund and Officers Pension fund, residing at #403,
Defense Colony, New Delhi 110 024. 9) Britannia
Industries Limited, A Company incorporated under the
provisions of the Companies Act, 1956 and having its
corporate office at Britannia Gardens, Airport road,
Bangalore 560 017, and herein represented by its Non-
Executive Chairman Mr.Nusli N.Wadia and Managing
Director Ms.Vinita Bali. 10) Britannia Industries Limited
Covenanted Staff Pension fund, A trust having its office at
Britannia Industries Limited, Britannia Gardens, Airport
Road, Bangalore 560 017, represented by its Trustee
Mr.A.K.Hirjee. 11) Britannia Industries Limited Officers
Pension fund, a Trust having its office at Britannia
Industries Limited, Britannia Gardens, Airport Road,
Bangalore 560 017, represented by its Trustee
Mr.A.K.Hirjee.
(By pleader Sri.GS)
Date of Institution of the suit 16.6.2008
Nature of the (Suit or pro-note, suit for Declaration &
declaration and possession, suit for Injunction.
injunction, etc.)
Date of the commencement of recording 9.12.2010
of the Evidence
Date on which the Judgment was 21.9.2015
pronounced
Year/s Month/s Days
Total duration 7 3 5
LVII ADDL.CITY CIVIL JUDGE
BANGALORE
JUDGMENT
The plaintiffs have filed this suit against defendants for declaration and injunction and other consequential reliefs.
The brief facts of the case of the plaintiffs are that the 9th defendant is a Company registered under the Companies Act, 1956 which began its business as a biscuit company and engaged in manufacture and sales of a wide range of bakery and food products. There are several thousands of employees working in that company. The 9th defendant had established the 'Covenanted Staff pension fund' (hereinafter referred to as CSPF) in 1971 for the Managers working with the 9th defendant. In 1984 it has established 'Officers Pension fund' (hereinafter referred to as OPF) for the officers of the 9th defendant in 1984. Both the funds have been constituted as private Trusts under the Indian Trust Act. Three directors of the Company were appointed as Trustees with other responsible company executives. The management and administration was vested with them. They have to exercise their role and responsibility for the Management and administration of the funds for the benefit of the pensioners. The Trustees are common. Defendants 1 to 5 are the present Trustees, defendant No.6 to 8 had been Trustees of the funds at the relevant point of time.
First plaintiff is a Welfare society registered under the provisions of Societies Registration Act in No.S/IL/24932 of 2004-05 was incorporated with the object of exposing the cause of the pensioners who were deprived of their just entitlements as a result of the illegal activities and misappropriation complained in the suit. The members of the plaintiffs are beneficiaries. The second plaintiff retired in her capacity as Manager in September 2004.
Pension is an entitlement that is intended to provide means of livelihood to the elderly. The monthly pension offered by the Company to its officers and Managers as a part of service conditions is a promise made by the Company to such employees on their retirement from service. It promised the employees about the manner in which the Company would ensure the security of such employees in their old age. The retirement benefits such as pension funds are intended to prevent the vagrancy of its employees or members of their families during their old age.
The 9th defendant has settled a Trust by a deed of Trust dt.4.3.1971 for the purpose of creating a superannuation fund to provide pensions to covenanted management staff. On similar terms the 9th defendant settled another Trust by a Trust deed dt.13.12.84 to provide pensions for Officers. The monthly pension is fixed calculated on the basis of last drawn salary and length of service from the time of their retirement. The defined benefit so computed for each pensioner is purchased out of the money that stood vested in the said funds from LIC for a monthly annuity for the lifetime of the retired officer or Manager and for the spouse or children in the event of pensioner's death. The amount for administration of the funds was contributed voluntarily by the 9th defendant on the periodic valuation made by the Actuary. Such a valuation is managed by the Accounting standard 15 issued by the Institute of Chartered Accountants of India. The creation of superannuation fund/pension fund of the nature contemplated in the CSPF and OPF is required to be approved under the provisions of Income Tax Act, 1963. The Trust deed and Rules of the deed has been approved by the Commissioner of Income tax - III, Kolkata.
In 1992 the 9th defendant celebrated its Platinum Jubilee. At the meeting of Board of Directors held on 30.3.1992 under the Chairmanship of late Mr.Rajan Pillai, the 9th defendant resolved to enhance the pension benefits amongst the others provided that the pension payable would be increased by 15%, on a triennial basis. An identical resolution was passed by the Board of Directors with respect to OPF. Accordingly, the terms of employment of all Officers and Managers of 9th defendant were revised effective from 1.4.92. They were informed about enhancements. This enhancement was continued from 1.4.98 and 1.4.2001.
The Trustees can use and deploy the funds vested with them only in terms of the mandate contained in the Trust deed and rules. However, the amount due as per triennial benefit was not paid to the eligible officers from 1.4.2004 without any intimation. At that time it was unofficially intimated that the Trust deed is going to be amended. On 19.1.2004, the then Trustees defendant No.1, 2,7 and 8 have in gross abuse of the Trust reposed in them, in complete violation of the mandate have paid a sum of Rs.7,90,00,000/- to the 9th defendant from the corpus of the funds and another sum of Rs.3,77,42,929/- on 6.2.2004 and Rs.24,56,071/- on 25.2.2004, in all Rs.12,11,99,000/- was transferred back to the Company.
The pensions that fell due under CSPF and OPF have not been paid to any of the eligible employees who retired from service after 31.3.2003. One retiree Mr.D.S.Jebadoss Draviam retired on 31.7.2003 from Chennai branch expired without getting pension. His widow was also denied with the payment of the pension. One pensioner Mr.P.Khanna of Delhi branch died without getting any enhancement of the triennial benefit. The Trustees have defaulted in payment of the pension due to the retired pensioners. Since 31.3.2003 the Trustees have completely failed to take steps. It was the practice that CSPF and OPF would buy annuities from the LIC of India for the retiring employees to ensure regular direct payment of monthly pensions in terms of the entitlement of the retired pensioners concerned. It was purchased prior to 31.3.2003. However, those who retired after 31.3.2003 have been completely deprived of their pensions on similar basis and earlier retirees denied their 15% enhancement due from 1.4.2004 and next installment from 1.4.2007. Over 300 officers and managers retired from 9th defendant were denied their pension due to breach of trust. The failure on the part of defendant No.1 to 8 is a gross abuse of powers. The defendant No.1 to 8 held high managerial office, it was expected that they would exercise a high degree of integrity vested with the complete control of the finances of the funds. However, they acted in collusion with defendant No.9 satisfying the greed of certain shareholders and members of the Board. They failed to discharge their duties as Trustees. The funds available with the Trust were illegally transferred. The amendment to the Rules of the funds has not taken effect as the Commissioner has not approved any such amendment. Further such an amendment that seeks to convert the present funds to a much less available Defined contribution system is contrary to the provisions of the terms of the Trust deed and rules of the funds. The Company had made huge and significant profits progressively. The dividends have been paid to the shareholders. The defendants acting as Trustees are bound to ensure that any amendment cannot be made in the manner that is detrimental to the employees which is provided under clause 4 of the Trust deed. The Trustees have sought to surreptitiously amend the CSPF and OPF rules with retrospective effect that takes away a vast and substantial portion of the accrued benefits as per current Rules of funds.
All pension funds related activities were stopped completely in the beginning of second quarter of 2003. The copies of the proposed amendment were denied. Certain retired employees of the Company at Chennai instituted proceedings in WP.Nos.10653 and 10654/2005 demanding that they should be heard before any approval is granted by the commissioner of Income tax regarding fund rule changes. The Hon'ble High Court of Chennai directed the Commissioner of Income tax to consider and dispose off the representation given by the plaintiffs on 5.3.2005. However, on 17.5.2005 the Commissioner has sought to grant a purported interim approval for the proposed amendment to the fund rules without hearing the affected parties. Thereafter a contempt petition was filed by the petitioners at Madras. The commissioner informed the Hon'ble High Court that the order was withdrawn. The amendments now proposed by the Trustees seek to convert the very nature of the pension scheme entirely to the detrimental to the officers and managers of the 9th defendant. The rules of funds as it stands today are unamended rules as they stood on 1.1.2003. The Trustees have power to make amendment which will be effective only when approved by the commissioner of Income tax.
The existing rules of the fund are designed as 'Defined benefit scheme'. The employee concerned would be paid on the basis of a fixed formula that is provided in the rules, based on the last drawn salary, seniority and years of service of the employee. The scheme to be introduced is 'Defined contribution scheme' which contemplates the notional fixed contribution at 15% each year by the company on the basis of his then earned basic salary which is highly disadvantageous to the employees. Every pensioner will be put to suffer losses if the rules are amended. There is an offer by the Company about reduced pension to the employees who have retired after 31.3.2003. Some of the officers and managers who were in dire need of pensions were compelled to accept the reduced pension. The CSPF rules require the Trustees to carry out actuarial valuation of the fund periodically. The last actuarial valuation was given effect to in the year 2001 which was carried out in 2003. The Trustees have failed to carry out any actuarial valuation of both CSPF and OPF to make contribution sufficient to meet the obligations of the funds.
The Trustees have completely ignored the rights and interests of the beneficiaries under the Trust. They have acted solely under the directions and for the benefit of the Board of Directors of the company. The Trustees have failed to uphold the trust reposed in them. They choose better service conditions for themselves and to favour the controlling interests in the Board of Directors. The Trustees have acted selfishly to protect their personal interest and advance their private interests. They are the puppets of the 9th defendant. The Trustees are clearly unworthy of trust.
The defendants 1 to 8 have used their position as Trustees, for finding favour with the Board of Directors of the 9th defendant. They have used the Trust and its property for their own benefits. The Trustees have failed to do their work towards ensuring the objects of the Trust. The Trustees who ought to have initiated appropriate action against the 9th defendant for its failure to meet its obligation to the pension funds in order to adhere to its commitment to pay pension to the retired officers and managers, have not even made a demand upon the 9th defendant. Any new body of the Trustees appointed by the 9th defendant are also going to be persons who will enable the 9th defendant to continue to defraud the retired officers and managers. The plaintiff requested the court to appoint receiver.
The 9th defendant is under an obligation to pay pensions independent of the obligations of the fund. It is a liability of the 9th defendant as per the Rules. It cannot be denied due to non availability of the required money. Many of the persons have accepted a lower basic salary and even gave up their rights to increased PF and gratuity eligibility, overtime, ever increasing variable Dearness allowance, huge periodic benefits, etc. The plaintiffs have no option except to approach this court. Hence prayed for decreeing the suit.
In the written statement of defendant No.3 to 5 and 9 to 11, it is contended that the suit is not maintainable. The pension rules are governed by the Income tax Rules. The Commissioner of Income tax has not approved the amendments to the Deeds of variation. The pension funds were free to move another deed of variation. Sec.293 of the Income tax Act is a bar for filing any suit which affects the proceedings under the Income tax Act and Rules. There is a writ petition pending in No.12951/2007 before Hon'ble High Court of Calcutta in which the Hon'ble Court directed the 9th defendant to deposit the amount in any Nationalised or scheduled bank by its order dt.15.10.2007. The 10th defendant had preferred appeal and that order was confirmed. The 10th defendant had preferred Spl.leave petition No.1837/2008 wherein that order was set aside and an amount of Rs.12 crores was seized by the Kolkata High court.
The first plaintiff had filed WP.11824/2007 against these defendants and authorities of Income tax department which is suppressed. The registered office of the first plaintiff association is situated at Kolkata. It is wrongly contended that the 10th and 11th defendants are operated from Bangalore to bring the suit within the jurisdiction of this suit. The suit is bad for non-joinder of necessary parties. The commissioner of Income tax Kolkata-III was seized of the matter. There is a statutory appeal against the decision of the competent authority. That authority is a necessary party to the suit. The plaintiffs have unjustifiably involved the stakeholders. The conduct of the first plaintiff itself is disputed.
It is contended that the Memorandum of Association and its aims and objects is not produced. Under the Societies Registration Act, a pensioner's society cannot be registered. The rules of CSPF and OPF do not contemplate defined benefit as contended by the plaintiffs. The Trustees can demand only ordinary annual contribution not exceeding 15% of the basic salary. The trustees are not entitled to seek any contribution over and above the ordinary annual contribution as contemplated in Rule 9(b) of the Fund Rules and Rule 87 of the Income tax Rules. The question of additional contribution does not arise. Accounting standards 15 specifies only the accounting statement to be given and AS 15 cannot mandate the amount of contributions that, the trustees can demand more from the 9th defendant. The contribution is governed by the Trust rules and the Income tax rules.
There is a qualitative implication regarding the resolutions referred. The grant of triennial increase was a voluntary gesture by the Board of the 9th defendant company on the occasion of the platinum jubilee year of the company. However, the fund rules were not amended. Inview of the solvency of the fund, the Board withdrew that gesture by resolution dt.12.4.2004. Hence that triennial benefit was not payable with effect from 1.4.2004. The Rules of the fund were not amended to provide for triennial increases in the pension. As such no vested right is created in favour of the plaintiffs so as to enable the plaintiffs to enforce the same. A sum of Rs.12,11,99,000/- was transferred to the 9th defendant as a matter of record. This excess amount could not be treated as money belonging to the fund in view of Clause 6 of the Trust deed.
The Commissioner of Income tax, Kolkata through letter dt.11.4.2007 issued show cause notice to CSPF as to why the recognition granted to the fund should not be withdrawn for violating Rule 91(2) of IT Rules which was challenged by the Hon'ble High Court of Calcutta wherein on 15.10.2007 there is an order to deposit amount in a nationalized bank. The CSPF had preferred an appeal before the Division bench of Kolkata High Court, the amount was deposited in FD. Aggrieved by that order, SLP was preferred. A sample correspondence of the pension funds with the pensioners is produced to show that pension was offered as and when they became eligible to receive pensions. However, majority have not chosen to receive the same. The Provision for providing triennial increases was not incorporated in the Fund rules. The Trustees had acted in the manner provided in the Trust. The said amount never belonged to the fund at any point of time. Hence the excess contribution was refunded to the Company.
The CSPF and OPF funds are not intended to provide a defined benefit, but it has always been a defined contribution scheme. A sum of Rs.12,11,99,000/- was paid by 9th defendant based on the actuarial valuation reports made by the then Managing Director and his subordinates in violation of the specific mandate which required to be made only with the prior approval of Board of Directors. At the time said excess contributions were made by the 9th defendant, Trustees who accepted such monies in violation of the rules, Mr.S.K.Alagh the then Managing Director with S.N.Majumdar, N.Moulin, J.Rajagopalan, G.Sarkar and Ravi Mannath, all executives of the 9th defendant who were working with and reporting to said S.K.Alagh. Such excess contributions would have significantly benefited these individuals in their personal capacity.
One Mr.S.K.Alagh who was a Director from 1.4.84 became the Managing Director from 9.2.89 and continued in that position till 3.6.2003. He was also a trustee of the petitioner fund from around August 1993. He continued as a trustee till 3.6.2003. All the other trustees of this fund during the period from 1.11.93 until 3.6.2003 ie. Mr.Aloke Banarjee, S.N.Majumdar, Nicolas Moulin, J.Rajagopalan, Gautam Sarkar and Ravi Mannath were also the employees of the 9th defendant Company and reported to S.K.Alagh. Even though there was no provision in the Fund rules or in the Trust deed, the Board of the respondent No.4 Company sanctioned a triennial increase in pensions by 15% by a resolution dt.30.3.92 as a voluntary gesture to mark the platinum jubilee year of the Company.
During the financial years 1994-95, 1998-1999, 1999-2000 and 2000-2001, the 9th defendant company and the then trustees of the Fund ascertained the pension liability of the fund on the actuarial valuation reports and found that there was a deficit between liability ascertained on such valuation and the available corpus of the Fund. The said company in addition to and apart from the annual contributions, paid additional sums to the CSPF to the tune of Rs.1211.99 lakhs. However in the Board resolution of 6.2.96 of the 9th defendant company it was recorded that "to give effect to the above pension factor from 1.4.96 based on actuarial valuation, the company may need to contribute Rs.5 lakhs during the year 1996-
97. In future years, any further adhoc contribution to be made over and above the statutory limit and additional amount being paid in 1996-97, will be placed before the Board..." Inspite of it amounts were received by the Fund to cover the deficit in the corpus of the fund without placing the matter before the Board of 9th defendant.
When the said fact came to the knowledge of the 9th defendant, a Board meeting was called on 10.4.2003 and Mr.S.K.Alagh and his team who were present were asked to withdraw from the meeting. In the minutes of the meeting it was noted that "The Chairman then outlined to the Board certain developments of serious concern with regard to the Company's CSPF had come to light which needed to be checked and verified for conformity with relevant regulations. The MD had confirmed that though he was the Chairman of the fund, had never participated in any meeting of the Trustees nor seen any Minutes of the meeting and he was not informed of any actions by the Trustees..." It was also informed that Gautam Sarkar, GM-Accounts & Planning would proceed on leave and would resign from 14.4.2003. The internal auditor was also due to retire on 31.12.2002. The Board accordingly authorized the Chairman to appoint M/s.C.C.Chokshi & Co. to conduct a detail external review of CSPF who submitted their report wherein it concluded that because of an erroneous interpretation of the Fund rules, larger annuities have infact been purchased. The erroneous conduct on the part of the trustees in giving higher pensions could be rectified at any time. The additional contribution based on the actuarial valuation reports over and above the 25%/27% of salary, including PF contribution, permissible as per the Income tax rules had resulted into an excess contribution by the company. The MD had not attended any of the trustees meetings and in his letter to the Chairman he had stated that the additional contribution made by the company to the Fund had been without his knowledge and consent. They also reported that they checked the related payment vouchers of the company and also the minutes of the meetings at which decisions were taken to fund the deficits of Rs.4,46,45,000/- and Rs.7,44,94,000/-. They had noticed that the person who had authorized the payment vouchers of the company and the Chairman of the trustee meetings was the same. They stated that in the Board meeting held on 6.2.96 it was noted that in future any further adhoc contribution to be made over and above the statutory limit will be placed before the Board, but payments were effected without specific board approval. Finally they recommended that no contributions, which are in addition to the statutory limits, should be permitted to be made. It would be more appropriate to redesign delegation of authority and responsibility to ensure effective control over such transactions. Additionally Chairman/MD should be made one of the compulsory signatories to any such payment.
The representative of M/s.C.C.Chokshi & Co. reported a gist of the above findings in the Board meeting held on 3.6.2003. It was further reported that the MD of 9th defendant Mr.S.K.Alagh was also guilty of other misdemeanors, that he had acted in a manner incompatible and inconsistent with the duties and responsibilities he owned as MD of a public company to the Board and to the shareholders, he had abused and breached the faith, trust and confidence that had been reposed in him and thus he had forfeited the trust and confidence of the Board. The directors were of the opinion that Mr.Alagh's employment as MD be terminated with immediate effect and six months salary be given in lieu of notice. Accordingly Mr.Alagh resigned on 10.6.2003.
In the board meeting held on 8.8.2003 it was noted that final review of the Funds by M/s.C.C.Chokshi & Co. was awaited as also the recommendations for corrective actions to be taken. The Board also agreed to implement the same as early as possible. Then the Board authorized A.K.Hirjee and S.S.Kelkar to implement the said recommendations. Accordingly the CSPF also resolved to return the excess contributions of Rs.1211.99 lakhs paid by the 9th defendant company.
In the Board meeting of the trust of the petitioner fund, it was resolved that having regard to the decision of the Board of Directors of the company withdrawing their earlier resolution relating to the proposal and keeping in view solvency and viability of the fund in terms of Rule 19A(b) of the Fund rules, the resolution No.265 passed on 1.4.92 relating to the proposal for introduction of a scheme for triennial increase in pensions by 15% would stand withdrawn with effect from 1.4.2004.
Again in the Board of Trustees meeting held on 7.9.2004 it was recorded that the earlier Trustees S.K.Alagh, J.Rajagopalan, Ravi Mannath, Gautam Sarkar misconstrued the Fund rules and paid out pension benefits in excess of the company's contribution payable as per the fund rules and provisions of the Income tax rules contrary to the defined contribution rules applicable, adversely affecting the solvency of the fund. The present trustees namely A.K.Hirjee, S.S.Kelkar, Nikhil Sen and N.Shridhar had been advised by the auditors and by legal opinion that the fund had been erroneously implemented in the past resulting in aberration of the existing fund rules. Keeping in view the need to ensure the solvency of the fund and having due regard to the correct interpretation of the Fund Rules generally and Rule 11(a), Rule 9(b) in particular, the Trustees proposed inter alia certain contemporary user friendly changes in the rules including but not limited to relaxing the eligibility criteria for entitlement to benefits under the Fund rules. With a view to setting all doubts at rest regarding interpretation of the Fund Rules as stated above, the Trustees decided to amend the fund rules to remove the limit on benefits under the Fund on the basis of pension factors and to directly link the benefits with the contribution made by the company. The Trustees being so entitled with power and authority under Rule 4 of the Fund rules to finally decide on the interpretation of the Fund rules were of the view that the correct interpretation of the Fund rules would be that the amounts computed under Rule 11(a) would be subject to the cap prescribed in Rule 9(b). Hence the amount of pension which could be paid to each member would be circumscribed by the maximum contribution which could be made by the Company on behalf of each member for a given year in accordance with Rule 87 of the IT rules. This understanding of the Trustees of the subservience of Rule 11(a) to Rule 9(b) was based on the legal opinions of the retired Chief Justice of High Courts at Bombay and Madras, Mr.M.N.Chandurkar and the Solicitors M/s.Crawford Bayley & Co. dt.6.9.2004 in that regard.
Thus the Managing Director who was also a Trustee of the CSPF and other trustees who were also the employees of the 9th defendant company acted contrary to the law were removed from their positions.
The auditors of the petitioner-fund in their audit report for the financial year 2002-2003 drew attention to Note 5 of schedule D of the Accounts which states that in terms of rule 9(b) of the fund rules, read together with rule 87 of the Income tax rules, 1962, the fund is entitled to receive from the company, an ordinary annual contribution in respect of each member an amount which shall not exceed 25% of the salary of the employees for the year reduced by Company's contribution to provident fund. The annual contribution by the Company to the Fund during the year as well as in some earlier years made on the basis of actuarial valuation reports is not in accordance with the limits prescribed under the above fund rules and the Income tax rules and has resulted into excess contribution of an aggregate amount of Rs.12,96,98,297/-. Pending final decision by the Trustees, the amount has been transferred from the Benefit account to a separate liability account.
Further it is recorded that during the year ended March 31 2003 the fund had transferred a sum of Rs.12,96,98,297/- representing amounts in excess of ordinary annual contribution in terms of Rule 9(b) of the fund rules read together with Rule 87 of the Income tax rules, 1962 made by the Company in earlier years to a separate liability account pending final decision by the trustees. The trustees have since decided and returned a sum of Rs.12,11,99,000/- to the Company during the year and balance of Rs.84,99,297/- has been transferred back to benefit account. The Secretary of the first plaintiff had initiated proceedings against M/s.C.C.Chokshi & Co. and its partner in their capacity as Auditors of the CSPF before the Disciplinary Committee of the Institute of Chartered Accountants of India alleging professional misconduct. The matter is still pending before the said committee. The act of the plaintiffs in seeking reliefs before multiple forums goes to prove that they are only harassing the defendants in various forums.
The 9th defendant company as well as the CSPF took immediate remedial and corrective measures as they came to know about the provisions of the Trust deed and the Income tax rules were not being followed. The Managing Director and existing trustees of the Fund were removed and replaced by new set of trustees. The auditors have certified in terms of Rule 9(b) of the Fund rules and that amount was refunded to the Company. The proposed amendment are contemplated to streamline the disparity and make the funds viable, so as to cater not only to the retired managers and officers, but also to see that the very same facility is extended to the managers and officers who retire in future. The proposed amendments are clarificatory in nature. The several employee friendly features are proposed with a view to broaden the base, by relaxing the eligibility clauses so that more number of retirees would be benefited. Out of the employees who left the company between 1.4.2003 and 30.6.2003, only 87 persons were eligible to receive pension under the existing scheme. Whereas as per the proposals in the Deeds of variation, 191 persons would be eligible to receive pensions. The first defendant has set up second plaintiff to file the present suit without justification. It is not permissible for the trustees to demand any contribution beyond the prescribed amount nor is it permissible for the 9th defendant to make any contribution in excess of any contribution which is permissible under Rule 87 of the Income Tax Rules even if there is a shortfall in the corpus of the pension fund having regard to its liability to grant pension amount in accordance with rule 11 of the Fund rules. The natural corollary of the limits set by both the pension Fund rules and the Income tax rules would therefore be that, the amount of pension which can be paid and to which individual employees will be entitled will be only such pension as is permissible to be paid out of the fund built within the framework of Rule 9(b) of the Pension fund rules and Rule 87 of the Income tax rules. Since the concerned employees will be entitled to pension strictly in accordance with the rules, if the pension computed on the basis of scale prescribed in Rule 11 of the Pension fund rules is not possible to give to the employee, the pension amount will have to be restricted to what the trustees can get with the funds available within them as regulated by rule 9(b) of the Fund rules and Rule 87 of the Income Tax rules.
The defendants submit that the Trustees under the Rules of the fund cannot demand from the 9th defendant for annual contribution less than 5% or more than 15% of the salary of the members. If there is a shortfall, the Rules contemplate that, the benefits will correspondingly abate. There is no question of 9th defendant to make good any shortfall and infact, for the first few decades of the Fund's existence there was never any shortfall and when a shortfall of about 5 lakhs occurred in 1996, the Board passed the resolution saying that, no contribution other than the permitted percentage could be made without its approval. The violation of this Board's instruction resulted in the irregularities by the previous trustees. Therefore, present Trustees have taken steps to remedy the wrong. The new Trustees acted upon the report of M/s.C.C.Chokshi & Co. and the legal opinion referred to earlier and adopted the corrective measures. The Trustees have taken appropriate action to seek amendments.
The appointment letter issued to the employees specifically states that his entitlement as a member of the relevant fund would be in accordance with the rules of the respective funds. Therefore it is implicit that the entitlement of the employee concerned shall be regulated only by the rules of the fund and the relevant rules under which the fund has been approved under the Income tax rules. The obligation of the 9th defendant is only to make the ordinary annual contributions to the respective funds and thereafter the employees shall be governed by the rules of the respective funds. Hence for these reasons prayed for dismissal of the suit.
The defendant No.1, 2 and 6 have adopted the above stated written statement.
The defendant No.7 and 8 have filed similar written statement by contending that the suit is not maintainable. This defendant contended that this defendant and defendant No.8 were advised by the auditor M/s.C.C.Chokshi & Co. that the earlier additional contribution made by Britannia would be refunded to the company as per legal advice obtained by them on Board instructions. Accordingly the funds were transferred to 9th defendant. The Chairman had specially invited Bombay Dyeing auditor M/s.C.C.Chokshi & Co. to the Board of Directors meeting in June 2003 to help and advice on rectifying or modifying the pension funds. M/s.Chokshis made a detailed presentation and brought a new concept stating that the funds were to, "although the pension fund rules talked of this being defined benefit scheme in reality the scheme was a scheme which endeavoured to deliver defined benefit within the means available through a defined contribution from the company". Even though the scheme had been able to deliver the defined benefit from inception in about 1970 till now in their findings. This required changing various fund rules to convert the existing Defined benefit schemes to Defined Contribution pension - which would reduce the Company's future liability substantially. Several earlier Additional contributions made by the company on the recommendation of the Actuary in past years from 1994 to 2001 to the Funds were claimed to be ultra-vires by the consultants. In fact this defendant had submitted a recommendation to Mr.Hirjee on 4th December 2003 for discussion with the Chairman providing for (i) payment of pensions based on contributions and interest thereon by the Pension Fund and (ii) the shortfall in pension as per Fund rules being made up by the company by charging against profit & loss account. This would have ensured that the accumulated benefit of all pensioners for past service would be protected till September 30th 2002 as per the existing Defined Benefit scheme, and thereafter the benefits would be as per changed rules on Defined contribution basis. This was completely in line with the alternatives suggested in M/s.C.C.Chokshi & Co's report to Britannia. The above mentioned proposal along with a more detailed note prepared by the GM - HR dtd.24.1.2004 sent to the Trustees under his memo of 28.1.2004 enlarging the suggestion was discussed during a meeting with the Chairman N.Wadia & Hirjee by defendant No.7 and 8 on 30.1.2004 at Mumbai who were strongly over ruled and the suggestions were totally rejected by the Chairman, supported by Mr.Hirjee, ending the effort to protect the accumulated benefits. The Trustees were instructed by the Chairman and Mr.Hirjee in Jan 2004 to refund to Britannia the earlier additional contributions made from1994 to 2001 to CSPF by Britannia and were shown that M/s.C.C.Chokshi & Co. had obtained legal advice on instructions of the Board that these earlier payments to the funds could be returned to the Company. Inspite of the fact there were several pending letters from various pensioners about non- receipt of pensions during 2003 & 2004 or the Platinum Jubilee pension increase of 15% from April 2004, which had remained unanswered, the funds were transferred to the 9th defendant on the legal advise. Finally replies drafted by Company's lawyers M/s.Crawford and Bayley were prepared which were signed by defendant No.7 as trustee and sent as per the instructions. The trustees were instructed in March 2004 by Mr.Hirjee not to proceed with the purchase of annuities from LIC for the release of Platinum Jubilee pension increases to all pensioners due from 1st April 2004 since the Board was intending to stop the same. This was consequent to an e-mail of 13.2.2003 by accounting staff dealing with LIC for annuity purchases seeking instructions. M/s.C.C Chokshi & Co. drafted the proposed Fund rule changes as directed by the Board in Oct.2003. After getting the Chairman Nuslie Wadia's approval, these were submitted in October 2004 by the Trustees to the Commissioner, and the Final deeds of Variation applications were made in May 2005, even though a copy of the Madras High Court order of 31.3.2005 setting aside the Interim approval granted by the Commissioner had been received by the Company & Trustees. In para 44 of WS of defendants 1 to 5 and 9 to 11 have also admitted clearly that the Board thereafter authorized Mr.Hirjee and S.S.Kelkar to implement the recommendations of the report of M/s.C.C.Chokshi & Co. and thus absolving defendant No.7 from this involvement. It is submitted that defendant No.7 and 8 were not involved in the day to day administration of the pension funds, and followed the instructions and decisions made by Mr.Hirjee, Chairman of Trustees and Company Director, on all major matters as directed during their short periods as Trustees. Hence for these reasons they prayed for dismissal of the suit.
In the light of the rival contentions of both the parties, the following issues have been framed for consideration:-
1) Whether the plaintiff proves that D1 to 8 committed breach of trust as Trustees of CSPF and OPF, who are jointly and severally liable to make good the losses caused to the trust funds with compound interest at 6%?
2) Whether the plaintiffs are entitled for appointment of trustees for then administration and management of CSPF and OPF?
3) Whether the defendants are liable to pay outstanding unpaid pensions and pension enhancements to all beneficiaries?
4) Whether the plaintiffs are entitled for permanent injunction?
5) Whether suit is not maintainable under Sec.293 of Income tax Act?
6) Whether suit in the present form not maintainable?
7) Whether defendants are entitled to execute the trust deed and fund rules against to the beneficial interest of plaintiffs?
8) Whether suit is time barred?
9) What order or decree?
The plaintiffs have got examined 11 witnesses as P.W.1 to P.W.11 and the documents at Ex.P.1 to P.116 have been marked on plaintiffs side. The defendants have got examined two witnesses as D.W.1 and D.W.2 and the documents Ex.D.1 to D.73 have been marked.
I have heard the advocate for plaintiffs and learned senior counsel appearing for the defendants. Perused the written arguments and the records.
My findings on the above issues are as follows :-
Issue No.1 : In the affirmative.
Issue No.2 : In the affirmative.
Issue No.3 : In the affirmative.
Issue No.4 : In the affirmative.
Issue No.5 : In the negative.
Issue No.6 : In the negative.
Issue No.7 : In the negative.
Issue No.8 : In the negative.
Issue No.9 : As per final order for
the following :-
REASONS
Issue No.1 & 6 :- In this case in order to prove the case of the plaintiffs, the Vice President and authorized representative of the first plaintiff association deposed as P.W.1 and stated about setting up of the Trust by the retired employees of 9th defendant who were denied of their pension. This first plaintiff is registered under the provisions of Societies Registration Act in the State of West Bengal. The second plaintiff has retired in her capacity as Manager. This company began with business as a manufacturer of biscuits is engaged in the manufacture of sales of wide range of bakery and food products. His examination-in-chief is on par with plaint averments. He also relied upon Ex.P.1 to P.83.
During his cross-examination which is in the form of question and answer recorded he has categorically stated that as per the Memorandum of Association there are 216 members by paying subscription fees and all are retired employees of Britannia. He is the Vice President of the Association, but as on the date of filing of the suit he was not the Vice President. He was elected unanimously in the presence of about 30 or 40 members. There are about 8 persons in the Governing Council which is also called as Executive Committee. He was not appointed by sub-committee, but by the Governing council to file the suit and legal proceedings. It is suggested to him that as per the resolution he was specifically authorized to file suit at Chennai High Court and not before this court which is denied by him. Ex.P.2 relates to participation of the Association even in the suit. He clarified that Ex.P.2 referred to any future suit in any location and para 1 and 2 specifically authorizes him to file this suit. This witness joined the association subsequently. Some of the additional members are added to that Association. One Mr.Arup Guha was the Vice President who expired in 2010 and thereafter he became the Vice President. The term of Governing Council is 2 years and the members should be elected in the Annual General Meeting which is held every year. He denied that there is no such Annual General Meeting was held and election was conducted.
He denied that the affairs of the Association are run by a small coterie and members have no say in the administration of the association and he is one among them. He denied that Ex.P.2 does not authorize either Mr.Datta or himself to file suit in Bangalore. He admits that in November 2006 when Ex.P.3 resolution was passed, the filing of any suit in Bangalore was not in contemplation of the Governing Council of the Association. He answered that he did not meet all the 216 members, but he discussed with some of the members about this case. There were about 150 members approximately in June 2008, but there were some members who are not alive. According to him he did not join the other co-plaintiffs before filing the suit because they were not available at Bangalore, but second plaintiff was available in Bangalore. He tried only a few over telephone. The need to file the suit was that the triennial benefits was stopped from April 2004 arbitrarily.
He joined the Company at the age of 48 years and earlier he was in ITC limited from 1953 to 1982 and he left that Company on retirement. He was invited as Personnel/HR in the Company. Britannia Company was aware of his talents and capabilities when he was employed in ITC Ltd. Mr.K.N.Randeria was previously working in ITC Ltd. and he called him for the selection committee of Britannia for an interview. He was appointed on 14.7.82 as GM, Industrial Relations as per Ex.D.4. He was aware of Mr.Sunil Alagh who was an employee of ITC Ltd. In the year 1989 and 1992 Mr.Sunil Alagh was the Managing Director of Britannia and he was also a Trustee of the pension funds, he was appointed as Trustee by the Board of Directors. He retired in the year 1992. However he was retained as a consultant for Britannia at the instance of Mr.Alagh and Mr.Majumder. Mr.Alagh selected him. He was having a strong professional relationship with Mr.Alagh. He does not remember the exact remuneration as a consultant. The funds to the Association were contribution from the members and he is not aware of the person who has signed the accounts of the Association. He is one of the Governing Council member. He did not attend the meetings held at Kolkata. The Governing Council is responsible for the accounts and assets of the Association. He was the Vice President for 10 months. The Annual General Meeting was held in February 2010 and he was elected as Vice President in that AGM. He was elected as member of Governing Council prior to 2010 also. The bank accounts are maintained in Axis Bank in Kolkata. He need not verify the accounts. He might have attended one meeting. According to him if the audited accounts are legally required he was ready to produce.
His date of birth is 18.5.1934 and he joined Britannia after crossing the age of 48. The service agreement Ex.D.3 is an extension of letter of appointment and is as per para 10 of the letter of appointment Ex.D.4. According to him since para 7 of Ex.D.4 specifically is included and mentioned in para 8 of the terms of employment attached to Ex.D.3 and hence it is not superseded. He denied that he crossed the age of 48 years and hence he was not eligible as per the Rules of the fund to become member. He had stated that his appointment was specifically agreed to the waiver of age restriction in order to make him eligible to membership recorded in the letter of appointment and reconfirmed in Annexure of Ex.D.3 which was part of his service condition offered by the Company which cannot be withdrawn. He was paid pension as per fund rules from 1992. He denied that he was wrongly paid pension by Britannia from 1992 to 2003 on account of Mr.Sunil Alagh's favouritism. He admits that he was a Trustee of CSPF from 13.12.89 to 31.8.92 and he had attended 3 to 4 times in the meeting as member of Board of Trustees. He admits that S.K.Alagh was also President. The duty to pay pensions to members on retirement was vested in the Trustees of the fund.
According to him during 1984 proposal for creating Officers pension fund, it was explained by Finance and Company Secretary the eligibility of contributions for tax exemptions for approved Pension funds. Therefore the decision to ensure that similar to the 1971 Covenanted pension fund, in 1984 similar approval from Commissioner of Income tax be obtained. He admits that the Trustees of the fund are required to exercise their role and responsibility in the Management and Administration of the funds according to the Terms of the Trust deed creating the Trust and the Rules applying to the respective Trusts. According to him Clause 7 of Ex.D.4 offers him the pension on retirement. He admits that it is the duty of the Trustees to pay pension to the members on retirement. He was paid the entire dues as per Clause 11(a) of the fund rules. He based his claim on triennial pension on the letter dt.1.4.92 ie.Ex.P.45 which was signed by Managing Director S.K.Alagh. He is aware of the resolution dt.30.3.1992. He denied that he deliberately did not tender the resolution as an exhibit. He was a Trustee of CSPF at the time of commencement of triennial benefits. Till 1995 no steps were taken by the Trustees about triennial benefits. Ex.P.45 was issued on 1.4.92, but he received by hand at the Executive office from Mr.Alagh few days thereafter. He has shown ignorance that Mr.Alagh has made fraudulent misstatement in Ex.P.45. He denied that the letter Ex.P.45 is concocted.
According to him the resolution dt.12.4.92 relates only to the covenanted managers due to retire. Ex.D.46 is the letter written by Mr.Zarir Batliwala dt.7.4.92 with respect to the application by the Trustee for amendment of the Trust Rules as per the Deed of Variation. According to him he was aware that some changes were being considered to the fund rules in order to rectify or modify the benefits. According to him there was a meeting of Board of Trustees covering many issues soon after the Britannia Board of Directors approval of the triennial pension increase and this item may have also been included. He admitted about Ex.D.7. According to the plaintiff the Trustees have granted the pensions on triennial basis, whereas the resolution No.264 relates to once-off correction from April 1992 to those who retired prior to April 1989. He denied that the resolution is once off only for the year 1995. According to him the word beneficiary definition is changed but it was amended subsequently. On 7.4.92 he approved the draft Deed of variation to amend the word beneficiary. He admits that the Deed of variation is approved by commissioner of Income tax. According to him he was having the fund rules updated till filing of the suit. According to him when many pensioners approached the advocate's office, one of the pensioner might have handed over the copy of the letter containing amendment proposal. He had not received that order from any Trustees. According to him the Trustee Mr.Batliwala had recommended for the change of the definition beneficiary. According to him the Trustees have to honour the Board of Directors. He admits that as per Trust deed the Trustees can pay as per trust rules. He admits that the triennial benefits paid is contrary to the trust rules, but it is the decision of the Board of Directors to introduce the scheme. According to him they made decision on 30.3.92 and thereafter that was intimated to the pensioners.
The word 'beneficiary' is defined in Ex.D.12. He denied the suggestion that it is the fraudulent act of one Mr.Alagh in writing the letters to some of the employees. According to him there was a discussion about the proposal of triennial benefit scheme by the Chairman Mr.Rajan Pillai and Mr.Zarir Batliwala. He was present for that meeting. According to him the Managing Directors did not require anybody's permission to send the letters like Ex.P.45. According to him it is not the only decision of Mr.Alagh, he being the authority has written the letters. According to him generally actuarial valuation will be done and during his tenure as Trustee it was done. That valuation was prior to 1992. The actuarial valuation is made during 1994, 1998, 2000, 2001. He admits that the actuarial valuation will be made to decide about the surplus. He was informed by the Company Secretary about the Actuarial valuation carried about by M/s.Chakraborti and Associates. According to him the Trustees have to obey the fund rules. The company will decide to pay the funds, the contribution of the Company will be decided by the fund rules. According to him prior Actuarial valuation is not necessary and it could be carried out later also. His function as HR was involved with the total Company's manpower and personnel for selection, recruitment, terms and conditions of service, training and development, motivating and managing industrial relations, etc. The terms and conditions include pensions also. According to him his retention was for expansion of marketing team to meet the changed policies and pension was secondary issue. He was consulted for pension related issues. He admits about increase in retainer ship fee by Mr.Alagh. He admits that in 1997 Trustees were preparing a Deed of variation towards increase of pension factor. He admits that his retainer ship fee was increased upto 31.5.1999. He stated that the pension fund provides for a pension based on final salary and years of service which is termed as "Defined benefit scheme", as compared to a pension fund where benefits are available from the accumulated contributions which are called "Defined Contribution scheme". This has been clearly explained in the definitions given in the Accounting standard AS 15 issued by the ICAI. Rule 11 of the Pension funds clearly state that the computation of pension will be the pensionable salary multiplied by the years of service and divided by a stated factor for the Grade. This is therefore a Defined benefit scheme, and not a Defined contribution scheme where pensions would be based on accumulated contributions during the service period.
According to him there was a resolution dt.1.4.92. Resolution No.264 refers to 1½ payment and Resolution No.266 refers to triennial pension based on the recommendation of 30.3.92. He admits that if the pension factor is reduced, it will be beneficial to the Managing Director Alagh, Vice President Mannath, Gautam Sarkar and other managers. He denied that he was one of the person in conspiracy between Alagh, Mannath, Gautam Sarkar and Rajagopalan to increase the pension factor. He denied that between 1997 to 1999 he chose to assist Mr.Alagh. He denied that Alagh had taken him to duty only to help him. He admits that ordinary contributions shall not exceed 27% of the employees salary. According to him Rule 29 states in full 'the Trustees shall arrange for actuarial valuation periodically and reserve should be allowed in such valuations for all contingent benefits if any.' As such the emphasis is given to the actuarial valuation of the Funds liabilities and the need for meeting them. According to him the Trustees of the fund in 1998 to 2001 paid an amount of Rs.12 crores in three installments from the Company into the fund. He admits that he is aware that the said amount was returned back to the Company. He has shown ignorance that Gautam Sarkar was asked to proceed on leave as he made illegal payments of Rs.12 crores and thereafter he left the Company. He has also shown ignorance that Mr.Sunil Alagh on account of his misdemeanor in the matter of pension funds and other matters, was removed from the Company and he also resigned. He has shown ignorance about removal of Rajagopalan and Ravi Mannath. He denied that the Trustees who refunded Rs.12 crores plus from the Trust fund to Company merely performed their duties as Trustees of restoring to the Company funds wrongfully transferred. He denied that Mr.Alagh, Mannath, Sarkar and Rajagopalan have fraudulently transferred the amount of Rs.12 crores and committed breach of trust of the Company. He denied that the pension scheme of the 9th defendant company is defined contribution and not defined benefit.
To strengthen the contention of the plaintiffs, Dolores Mildred Pereira who is the member of the Association from May 2005 is examined as P.W.2. In her examination-in-chief she has stated that she was working as Asst.H.R.Manager at the time of retirement. She worked from 10.1.72 to 30.9.2004 in the 9th defendant company and retired on 30.9.2004 on attaining super annuation. Her last drawn basic salary on the day of retirement was Rs.26,000/- and she would be entitled to a monthly pension of Rs.16495/-. She deposed that 9th defendant has constituted the CSPF of which defendants 1 to 8 were Trustees with the object of ensuring payment of pensions to the staff, they have also prepared Rules to govern their activities. But they have failed to pay the pensions that are due to her. Ex.P.93 to P.99 are marked in her examination-in-chief.
In the cross-examination she has admitted that she became the member of the Association after she learnt from other retired pensioners about this Association and one Mr.Datta advised her to become member by paying Rs.100/- as membership fee. However, she has not produced any such receipt and she also paid Rs.3000/- towards expenses of the Association. She had received notice of the meeting and resolutions, but she had not kept the copy. She is not aware of the members of the Association and she never voted and she has not read the resolutions. Ex.P.93 and 94 were handed over to her, but she is not aware of the exact date and one Personnel Manager had handed over those documents. She had not kept the envelope. She was handed over the letters similar to Ex.P.93 and 94 in a sealed envelope. She had received Ex.D.35 to 38 issued by Mr.Sarkar. She denied that she had not received Ex.P.93 in April 1996 which is anti dated forged by Mr.Alagh. She also denied that Ex.P.93 and 94 were not the attachments to that letter. She denied that the attachment titled as 'Pension benefits - revision' is a concocted document. She denied that as per Ex.D.36 and 38 signed by Mr.Ashit Sarkar shows that she is not entitled for pension factor of 1/50, but at the rate of 15% of her basic salary. Ex.D.39 and 40 letters are marked. She received the letter in 1992 about triennial benefits. She denied that the 10th defendant had paid pension as per the entitlement. She also denied that she has not paid any subscription or expenses to the plaintiff association.
She admits that she is having a brother by name Jude Pereira who is a free lancer. She admits that her brother was awarded a contract for land scaping of 'Britannia Gardens' in Mahalakshmi Race Course in Mumbai, but it was by one Mr.Nikhil Sen. The contract was for Rs.12 lakhs and maintenance fee was Rs.18,500/-. She denied that contract was awarded to her brother by Mr.Alagh and she is having personal rapport with him. She denied that Mr.Alagh had given ante-dated letter of 1.4.96 at Ex.P.93. She denied that the said contract was terminated by the company after Alagh was removed from the Company. She agreed that the said monthly maintenance contract was terminated.
Madhusudan Srinivas Ballal is examined as P.W.3. In his examination-in-chief by way of affidavit has deposed that he is a member of the first plaintiff association since April 2006. He was employed in the services of 9th defendant Company as Asst. Commercial Manager from 21.10.82 to 31.10.2005. His last drawn salary was Rs.22,600/- and he would be entitled to a monthly pension of Rs.10,396/-. He deposed that he is entitled to triennial enhancement of his pension by 15% by every 3 years. He deposed that 9th defendant has constituted the CSPF of which defendants 1 to 8 were Trustees with the object of ensuring payment of pensions to the staff, they have also prepared Rules to govern their activities. But they have failed to pay the pensions that are due to him. He was completely dependent upon the receipt of his pension, since he has not received the same he has taken up LIC agency to support his family. Ex.P.101 to P.103 are marked in his evidence. The counsel appearing for the defendant had not denied about the receipt of the letter ie. Ex.P.102, but he denied that by examining others, that is to be proved.
In the cross-examination he has stated as to how he joined the Association and he is not aware of the office bearers of the Association. He paid an amount of Rs.600/- by post, but he is not aware who told to pay that amount. He is not aware of the office bearers of the Association, but he knows the names of President, Vice President and the Secretary ie. Manish, Sarkar and Datta. Ex.D.41 is got marked through him. He received that letter by post. He had not examined the accounts of the Association from 2006 and he had not attended any meetings of the Association. The accounts were audited, he never voted in the election. He paid Rs.600/- towards joining fees, Rs.5000/- and Rs.2500/- in 2008 and 2010. He is unable to say the reason why he became the member of the Association in April 2006 though he retired in October 2005.
According to him usually the Company will settle everything and hence he did not ask for the pension. He joined the Association because the Company has not paid the amount as promised. He denied that he has not corresponded with the Company about receiving any pension amount. He read the Rules of CSPF, and said that the age of retirement is normal ie. 58 years. He retired from the service at the age of 53 years. He is not aware of the Clause 11(b) that it is the discretion of the Trustees to pay the pension to those who retire after 50 years. He denied that he is not entitled for the pension. He received Ex.P.102 in the year 1996. He denied that he received the letter subsequently from Mr.Alagh. The pension factor can only be changed by the Trustees of the fund. He has shown ignorance that the Managing Director cannot change the pension factor. He does not remember who had handed over Ex.P.102 and P.103. According to him the words "Improvements .... advised separately"
refers to annexure and not annexures. He admits that the said Annexure is the first document attached to Ex.P.103. To a question that you could not have received this document titled 'Pension benefit Revision' in 1996, since in 1996 the pension factor was not 1/50 and this document states that you are entitled to pension factor of 1/50, he had answered that he received it along with Ex.P.102 and P.103. He admits about Ex.D.42 and 43 which are letters dt.15.5.98 and 1.4.92. The triennial benefits were announced in 1992. Ex.D.43 was written by Mr.Sarkar to him, but there is no reference about the triennial benefits. However, the witness says that there might be one more letter. He denied that he was not even entitled to pension excluding pension factor and triennial benefit. He also denies that he is not a member of first plaintiff association. He denied that as a common cause he received pension under interim orders which he has to return to the Company. He was a member of the pension fund from 1999.
One R.Ramachandra is examined as P.W.4. He in his examination-in-chief has deposed that he is a member of the plaintiff association since August 2007. He was employed with 9th defendant Company as Accounts officer from 20.5.1972 to 31.1.2007. His last drawn basic salary at the time of retirement was Rs.11,685/-. He deposed that he would have been entitled to a monthly pension of Rs.5,787/-. He deposed that he is entitled to triennial enhancement of his pension by 15% by every 3 years. The 9th defendant has constituted the CSPF of which defendants 1 to 8 were Trustees with the object of ensuring payment of pensions to the staff, they have also prepared Rules to govern their activities. But they have failed to pay the pensions that are due to him. Ex.P.100 is marked during his evidence.
In his cross-examination he has categorically stated that he became the member through his friends by paying subscription. But he does not remember the quantum. However, he paid the amount to Mr.Datta in Kolkata. He is having the receipt, but he has not brought the same. Towards running the expenses of this case he paid further amount to Mr.Datta. He has not examined any accounts and not received any amount of the association and he did not attend any meeting and not voted. He only knows Mr.Datta the Treasurer and Mr.Sarkar the Secretary of the Association. He came to know this fact through his friends. He is not aware when they became the Treasurer and Secretary and how long they were holding the office. He read the pension fund rules pertaining to officers through his boss in 1998. He was not aware of the dispute between Mr.Alagh and the Company. He is not aware that after he stepped down as the Managing Director, the Company changed the pension rules. At the time of inspection his boss told that there was rule for payment of pension. He got promotion to Officer Grade III on 1.4.98 and one Mr.K.S.Narasimhan was the Finance Manager. He signed the promotion letter Ex.P.100. After reading it he denied that he was aware of the pension factor as 1/70. He denied that he is not entitled for triennial benefits. He is receiving only interim pension. He denied that he is not a member of the Association.
P.W.5 one Ramaswamy who filed his examination-in-chief by way of affidavit was not subjected to cross-examination.
One Mrs.Mecy Jebadoss who is examined as P.W.6 had stated in her affidavit evidence that her husband was a member of the first plaintiff association since November 2004. After his demise she has become the member. Her husband was employed as Stores Officer in the 9th defendant Company and worked from 15.2.71 to 31.7.2003 and retired on attaining superannuation. He worked for 32 years in the 9th defendant company. His last drawn salary was Rs.10,850/- and was entitled to a monthly pension of Rs.5,038/-. She deposed that her husband was entitled to triennial enhancement of his pension by 15% and she should have received monthly pension with triennial enhancement in April 2007 and 2010. But her husband was neither paid his pension nor the triennial enhancement during his lifetime. Ex.P.104 and P.105 are marked in her evidence.
In her cross-examination she had stated that her husband told that he was a member of the Association by contributing Rs.5000/- + Rs.1100/- and she is having receipts. Her husband became the member in 2004 and died in February 2005, till then he was a member. The receipts were issued in the year 2008- 2009. She became the member in 2005 after the death of her husband. She is not having membership card, but she paid Rs.100/- on one occasion towards subscription fee. She received the documents produced by her through post. Ex.D.44 and D.45 does not bear the signature of the receiver. The subscription was Rs.100/- and donation was Rs.1000/-. As per Ex.D.44 she became member by paying amount on 22.9.2008. She admits that as per Ex.D.44 she became the member of the Association after filing of the suit. None of the Trustees of the Company have given any letter to her late husband that there is an entitlement for triennial benefit. She denied that they are not entitled for any monthly pension and triennial benefits. She is not having any document to show that her husband had written letter to 9th defendant or Trustees of 11th defendant seeking for pension.
P.W.7 one P.R.Sridharan had filed his affidavit evidence and in his examination-in-chief he had stated that he was employed in the services of 9th defendant company from 8.12.1971. At the time of his retirement from the Company his designation was 'FCC Officer - CPs'. He retired on 30.6.2008 on attaining superannuation. His last drawn basic salary was Rs.17,495/- and he is entitled to monthly pension of Rs.9,137/-. He was informed that he would be paid pension equivalent to a factor of 1/70th of his last drawn salary multiplied by his number of service. He deposed that he is entitled to triennial enhancement of his pension by 15% by every 3 years. But they have failed to ensure the payment of his pension due to him. The documents Ex.P.85 and P.86 are marked during his evidence.
In the cross-examination he has stated that he came to know from his colleagues that there is a Welfare Association for officers and he became the member i.e., one Shankaran, Venkataraman, V.Ramachandran and other colleagues informed about the Association. He after paying Rs.100/- became the member, then he paid the remaining amount towards donation ie. about Rs.2000/- to one Mr.Datta. He does not remember the mode of payment, but the amount was sent to Calcutta address. He does not remember that it was through cheque or cash, but he is having receipt, but not produced the same. According to him if any communications are available he is ready to produce. He had not attended any AGM because of the distance between Bengaluru to Kolkatta. However he was receiving communication through e-mail. He was sending the donation to Calcutta address about twice. One Mr.Datta being the Secretary requested for donation to take care of the Welfare association activities. He had not bothered to examine the accounts of the Association. One Mr.S.K.Datta was the Secretary. He admits that Ex.P.85 shows the pension factor as 1/70. He received Ex.D.28 and D.29 which are letters dt.1.4.2000 and 12.8.2005 respectively and Ex.D.30 dt.26.7.2008. The terms and conditions shown in the 1st officer promotion letter are not altered. According to him the pension benefits includes the triennial benefits. He received officer promotion in 1997, so he is entitled to triennial benefits also. He denied that the trustees have paid pension as per his entitlement.
P.W.8 one V.Srinivasan though filed his affidavit evidence in lieu of examination-in-chief was not subjected for cross-examination.
P.W.9 one V.Ramachandran filed his affidavit evidence and in his examination-in-chief he had stated that he was a member of the first plaintiff association since July 2008. He was employed as Production Planning Manager at the time of retirement in the 9th defendant Company. He worked from 7.12.1970 to 31.5.2008 and retired on attaining super annuation on 31.5.2008. His last drawn basic salary was Rs.26,450/- and was entitled to a monthly pension of Rs.19,837/-. He deposed that he is entitled to triennial enhancement of his pension by 15% after every 3 years. The 9th defendant has constituted the CSPF of which defendants 1 to 8 were Trustees with the object of ensuring payment of pensions to the staff, they have also prepared Rules to govern their activities. But they have failed to pay the pensions that are due to him. Ex.P.87 to P.92 were marked during his evidence.
In his cross-examination he deposed about his membership by paying annual subscription of Rs.100/- and sent the membership form to Kolkata. He had communicated to Mr.S.K.Datta. He paid Rs.1000/- on the request of Mr.Datta. He never examined the accounts and never attended any meeting. He knew only Mr.Datta. According to him Ex.P.88 and P.89 are the documents to show about the pension factor of 1/50. Ex.P.88 and P.89 are handed over to him personally. Mr.Ravi Krishna issued a letter written by Mr.Alagh and Mr.Sinha. Ravi Krishna told that these are sets. Ex.P.88 and P.89 does not refer to annexures. According to him the document is signed on 1.4.96, but he received not on the same date. He has shown ignorance about the date of letter and they are ante-dated. One Mr.Ravi Krishna personally handed over the letter to him. Mr.Alagh prepared the letter in Bangalore. According to him the letter of change of pension factor was given on 1.4.96. The letter of 1.4.96 is the letter set containing pension benefits. There is reference in the letter about pension factor as 1/50. He did not examine the pension rules. According to him Mr.Ravi Krishna handed over the letter to him in Chennai. He denied that the letter of Mr.Sunil Alagh was ante- dated. Ex.D.31 dt.15.5.98 was received by him. He also admits about receipt of letter dt.28.6.2003 signed by Mr.Nikhil Sen. Ex.D.33 and D.34 are also admitted. The retirement benefits shown the contribution of the Company is 32%. However he has shown ignorance that it includes 15% pension, 12% provident fund and 5% for gratuity. He denied that he has suppressed about all these letters. He denied that he is not entitled to the pension factor of 1/50 and monthly pension of Rs.19,837/-. There is no document to show that he is entitled for triennial enhancement of pension at 15% once in 3 years. However, he was informed about this triennial benefits by one P.V.Ramakrishnan and Venkataraman. None of the Trustees have informed about his entitlement to triennial benefits. He denied that the Trustees have paid the pension as per his entitlement.
One P.C.Balakrishnan is examined as P.W.10. He has filed his affidavit evidence wherein he has stated that he was employed with 9th defendant Company and his designation was 'Shift Manager'. He worked from 5.6.1967 to 31.12.2003 and retired on 31.12.2003 on attaining superannuation. His last drawn basic salary was Rs.18,200/- and he is entitled to a monthly pension of Rs.13,316/-. He deposed that he is entitled to triennial enhancement of his pension by 15% after every 3 years. The 9th defendant has constituted the CSPF of which defendants 1 to 8 were Trustees with the object of ensuring payment of pensions to the staff, they have also prepared Rules to govern their activities. But they have failed to pay the pensions that are due to him. Ex.P.106 to P.114 are documents marked in his evidence.
In the cross-examination he had categorically stated that he became the member of the Association in 2004 and he learnt about the pensioners association and contacted them and got the application form and duly filled and paid the subscription fee and became the member. In the middle of 2004 that association was started and he has paid yearly subscription of Rs.100/-. He is having the receipts, but not produced the same. He identifies Ex.D.48 which is dt.10.11.2004. He contacted Mr.Datta who was one of his colleagues. Mr.Datta was the Association secretary and he met him in the year 2004. He told Mr.Datta that he want to become member of the Association. He knows Mr.Datta and other office bearers. He had no idea about the Memorandum and Articles of Association. One Manish Mukherjee was the President of the Association. He had not attended any meeting and he had not voted in the election and he did not receive the accounts of the Association. He is not aware that the amount he sent to the Association were reflected in the receipts. He did not question the office bearers about the spending of the money by the Association. He denied that he has not paid any subscription or fighting fund. He denied that he has produced the receipts which are completely bogus. He identified the signature of Mr.S.K.Datta on Ex.D.49. In his promotion letter it was communicated by the Vice President Ravi Krishna of Chennai branch about entitlement of pension factor of 1/50 ie. Ex.P.110, but however that letter was sent by Mr.Sunil Alagh. There is a recital in the letter that 'improvements and other components are being advised separately' and also mentioned 'improved the pension factor'. He was not specific about number of letters sent by Mr.Alagh. He received Ex.P.110 through one Ravi Krishna the Vice President in person. He admits that Ex.P.110 was first received by Ravi Krishna from Mr.Alagh. He does not know the exact date of delivery of that letter, but may be in Arpil 1996. He denied that the said letter would never have been written in April 1996. He denied that the letter of Mr.Sinha dt.1.4.96 at Ex.P.110 does not refer to any annexure. He denied that the annexure 'pension benefits-revision' produced is a forged document. He admitted the signature of Ravi Krishna on Ex.D.46 and 47. He denied that Ex.P.109 does not bear the signature of Ravi Krishna. According to him the triennial benefits are not equal to all cadre, the same was not shown in the letter written to him by Jebadoss Draviam. He admits about Ex.D.50 which is the letter dt.17.5.97 written by Mr.Ashit Sarkar.
One Mr.Subir Kumar Datta is examined as P.W.11. He has filed his affidavit evidence wherein he has stated that he was a member of first plaintiff association since 19.9.2004. He was also the Secretary of said Association. He deposed that Ex.P.84 is a true list of members of the Association as on 4.1.2011. The association had authorized Mr.Ashit K.Sarkar, resident of Bangalore to file the suit who has complete authority to represent the Association. He was employed as Secretarial Assistant in 9th defendant company and his designation was Secretarial Officer. He worked from 21.3.1974 to 31.1.2003 and retired on attaining super annuation. His last drawn basic salary was Rs.14,030/- per month. He was entitled to pension which was equivalent to a factor of 1/70 of his last drawn salary multiplied by his service in 9th defendant. He is entitled to monthly pension of Rs.5,786/-. He stated that on his retirement the 9th defendant had purchased annuities and at present he is getting monthly pension of Rs.3,310/-. He deposed that he is entitled to triennial enhancement of his pension by 15% after every 3 years. The 9th defendant has constituted the CSPF of which defendants 1 to 8 were Trustees with the object of ensuring payment of pensions to the staff, they have also prepared Rules to govern their activities. But they have failed to pay the pensions that are due to him. The defendants have breached their trust and have acted illegally and fraudulently in depriving the pension to its entire staff. The documents Ex.P.115 to P.119 and P.119A are marked in his evidence.
In the cross-examination he had categorically stated that he is the Secretary of the Association from 2004 and one of the founder member of the Association. Now there are 5 founder members. On 19.9.2004, 32 pensions have attended the meeting and selected him as the Secretary in the AGM. They wanted to form Association and hence they held a meeting which was prior to registration of the Association. His appointment as Secretary was ratified subsequently. They have applied for the registration in September and got the certificate in November 2004. The Governing body consisted of 9 members. The Governing body members period is minimum 3 years and subsequently through election. He was elected in the AGM from 2005 till 2011. He is having Minutes book which reflects the election of Governing Council members every year. According to him as there are internal confidential matters reflected in the Minutes book, he cannot produce the same. He was elected as Secretary on 12.6.2011. 42 members have attended the meeting. The other office bearers are Manish Mukherjee, President, Ashit Kumar Sarkar, Vice President, Asiskanti Ghosh - Assistant Secretary. Nobody have contested to the election and there is no meeting. One Mr.A.K.Guha who was the founder was part of Governing Council. At the time of filing for registration there were 7 founder members. The Registrar of Societies, West Bengal has no record to show the list of members of Association. He had maintained the Minutes book of all the proceedings of the general body. He also kept all the separate files which are serially numbered and kept according to the date of receipt in order. There is a standard form now to be filled up. As a Secretary he used to convene the meetings. He admits that he had not produced the audited accounts. According to him he has not got audited accounts because it is not relevant. They have filed audited accounts to the Registrar of Societies. Final receipts are with him, but he has not produced it. He received his pension in the next month of his retirement itself. He is purchased by the Company, but it was not given to the individual employees. He has received the pension entitled as on that date. The company was paying the pension upto March 2004 and thereafter it was sent by LIC directly to his account. He signed pension option form in December 2002 and he has paid the monthly pension as per rules. He has not filed any case questioning that the pension received was less. He had written 3 to 4 letters to the Company claiming his pension. He had received his pension as per pension rules, but he has not received his triennial increase due to him in April 2004. His revision letter dt.1.4.92 states about the triennial benefit. He has not produced that letter in this proceedings. He is in possession of the said letter. He is not aware that his counsel has produced this letter to the court. Except that letter he is not having any document to show that he is entitled to triennial benefits. He denied that his claim of triennial benefits is bogus and fraud. He denied that he made false allegation against the Trustees. The members retired on or after 31.3.2003 have not received their pension like him. The Company does not purchase annuities for those who retired after 31.3.2003. Only 69 members are getting interim relief as per the orders passed in this case. The Association had produced the letters of members who are entitled to interim payments.
The documents relied upon by the plaintiff are Ex.P.1 is the certificate of registration of Societies, West Bengal. Ex.P.2 is the Minutes of Annual general meeting held on 11.1.2006. Ex.P.3 is the resolution passed in the Governing Body meeting dt.20.11.2006. Ex.P.4 is the Trust deed which is an important document. Ex.P.5 is the Britannia Industries Ltd. Covenanted Staff Pension Fund rules. Ex.P.6 is the Trust deed dt.13.12.1984. Ex.P.7 is the Officers pension Fund rules, Ex.P.8 is the letter written by Mr.Zarir Batliwala to all the members of covenanted staff. Ex.P.9 is the letter written to R.Dayal by M.V.K.Rao, GM, about retirement benefits, Ex.P.10 is the letter written by M.V.K.Rao, General Manager to one R.Dayal about improved benefits under the Britannia Industries Ltd. Officers pension fund. Ex.P.11 is the letter written by K.P.Kuriakose to one R.Dayal regarding payment of pension arrears. Ex.P.12 is the letter dt.10.3.92 to Mr.Dayal. Ex.P.13 is the letter written by N.Balasubramanian to O.P.Raswant about retirement. Ex.P.14 is the office note of retirement. Ex.P.15 is the letter written by J.Rajagopalan to O.P.Raswant which shows that he was eligible for 15% increase in pension with effect from April 2001. Ex.P.16 is the letter written to one A.Kishore by Mr.S.K.Alagh stating that his basic salary has been revised to Rs.1530/- p.m inclusive of a once off adjustment, with effect from 1.4.88. Ex.P.17 is the letter written by Mr.S.k.Alagh to A.Kishore about the retirement benefits. Ex.P.18 is the letter written by Ashok Ramaswami to one G.Ranganathan regarding pension benefits. Ex.P.19 is the letter dt.1.4.92 written by S.K.Alagh to Mr.Basu. Ex.P.20 is the letter dt.1.4.92 written by S.N.Majumder to A.K.Chakraborty. Ex.P.21 is the letter written by S.N. Majumder to S.K.Datta about the pension scheme, Ex.P.22 is the letter sent by Mr.Alagh to A.Kishore. In this document which is dt.1.4.92 S.K.Alagh has stated about the triennial benefits. Ex.P.23 is the letter written by Ashit Sarkar as Vice President-HR. Annexures to this letter are produced dt.1.4.92. Further Ex.P.24 is the letter written by Alagh to Mr.Dayal regarding platinum jubilee benefit. Ex.P.25 is the letter written to Dayal sent by courier post dt.25.6.92. Ex.P.26 is the letter written to R.Dayal dt.13.3.95 by one Sugata Sircar about triennial benefit. There is a letter attached to it with respect to approval by the Board of Trustees for increase in pension. Ex.P.27 is the letter written by J.Rajagopalan dt.25.3.98 to one Rameshwar Dayal. Ex.P.28 is the letter dt.1.2.2001 which shows about payment of triennial benefits, Ex.P.29 is the letter written to Mr.Wahi by S.K.Alagh. Ex.P.30 is the letter dt.25.6.92 and Ex.P.31 is the letter dt.13.3.95 about triennial benefits. Ex.P.32 is also another letter dt.25.3.98. Ex.P.33 is the letter written by P.K.Malik dt.1.4.92 to Mr.Vijay Khanna, Ex.P.34 is the letter dt.1.4.96 with annexures. Ex.P.35 is the letter written by P.K.Malik to one Ravi Chand dt.1.4.92. Ex.P.36 is the letter written to one S.Majumder by Alagh. Ex.P.37 is the letter written to S.Viswanathan by Alagh dt.1.4.92. Ex.P.38 is the letter dt.13.3.95. Ex.P.39 is the letter written by Alagh to G.Ranganathan dt.1.4.92. Ex.P.40 is the letter dt.1.4.96 written by Alagh with respect to triennial increase benefit. There is pension benefit revision which is attached letter shows about improving the benefit of pension by raising the pension factor from existing 54 to 50 which will be effective from 1.4.96. Ex.P.41 is also the letter dt.1.3.98 written by J.Rajagopalan to Ranganathan regarding change of pension factor which is addressed by the Income tax department from 1.4.96. Ex.P.42 is the letter dt.1.2.2001 written by J.Rajagopalan to Ranganathan with respect to triennial increase. Ex.P.43 is the letter written to Natarajan about his revised salary inclusive of a once-off adjustment. Ex.P.44 is the letter dt.1.4.92 written by Ravi Krishna to one Venkataraman which is the permission letter and it contains the calculation of retirement benefits. Ex.P.45 is the letter written to A.K.Sarkar by Alagh which is the copy of the letter marked subject to objection which shows that Alagh had approved revision in his salary and there is a recital about triennial increase. Ex.P.46 is the letter written by Ashit Sarkar to Kuriakose. Ex.P.47 is the letter written by Alagh to one Ashit Sarkar about retirement benefits which is having pension benefits and also the calculation sheet. Ex.P.48 is the letter written by Kuriakose to A.K.Sarkar dt.31.8.92. Ex.P.49 is the letter dt.1.4.96 written to P.K.Basu by Alagh for the improvement of pension factor which is with respect to attracting and retaining the best talent in the Company. Ex.P.50 is the letter dt.1.4.96 to Basu from Mr.Sinha. In this letter the annexure shows about improvement of the pension factor from 54 to 50. Ex.P.51 is the letter dt.1.4.96 written to one Chakraborthy. Ex.P.52 is the letter dt.1.4.96 with attachment which shows about improvement of pension factor and also triennial benefit. Ex.P.53 is a similar letterdt.1.4.96 written by N.Sen to Tapas Kumar Ray. Ex.P.54 is the letter addressed to all the Officers dt.1.4.96 about improvement of pension factor. Ex.P.55 is the letter dt.1.4.96 written by Alagh to one Ravi Krishna which is with respect to improvement of pension factor. Ex.P.56 is the letter written by Mr.Alagh to Majumder dt.1.4.96 about the improvement of pension factor. Ex.P.57 is the letter written to one P.C.Natarajan by Ravi Krishna regarding revision of the salary and calculations and the pension benefits about improvement of the pension factor. Ex.P.58 is the letter written to Venkataraman by Ravi Krishna dt.1.4.96 about the same benefits. Ex.P.59 is the letter written by Ashit Sarkar to one Nikhil Sen who is a Trustee requesting for 15% increase in the triennial benefit requesting to grant next option due effective from April 2004 which is not included in the cheques sent. Ex.P.60 is the letter written dt.11.11.2004 requesting for payment of triennial benefits. Ex.P.61 is the letter to trustees by Ravi and Ex.P.62 is the postal receipt. Ex.P.63 is the letter written to Bhatnagar from a Trustee to choose the pension benefits. Ex.P.64 is the letter written to Trustees by Bhatnagar. Ex.P.65 is the letter dt.17.4.2006 written to Bhatnagar regarding pension payment wherein there is a recital that the triennial benefits is withdrawn by the Company through Board resolution dt.12.4.2004. Ex.P.66 is the letter written by one Mr.Dayal dt.8.4.2004 requesting for triennial benefit. Ex.P.67 is the letter dt.19.6.2004 by him. Ex.P.68 is the COP receipt. Ex.P.69 is the letter written by S.K.Mathur to one Ravi Krishna dt.1.6.2009 with respect to transaction about the retirement communication. Ex.P.70 is the letter written by Trustee to one Ravi Krishna about pension benefits dt.23.12.2009. Ex.P.71 is the letter written to Trustees by Ravi Krishna and Ex.P.72 is the postal receipt. Ex.P.73 is the letter written by Trustee to Pramod C.Jain about pension fund. Ex.P.74 is the letter written by Pramod Jain, Ex.P.75 is the postal receipt. Ex.P.76 is the letter dt.9.4.2007 written to Pramod Jain. Ex.P.77 is the letter dt.10.5.2008 by Pramod Jain. Ex.P.78 is the letter written to Pramod Jain. Ex.P.79 is the letter written by Jain dt.21.8.2008 to the Trustee. Ex.P.80 is the letter written to one Jain by the trustee by saying about the withdrawal of the triennial benefit by the Board dt.12.4.2004. Ex.P.81 is the letter of pension. Ex.P.82 is the Deed of variation dt.21.5.2005 between the Company and the Trustees. Ex.P.83 is the Deed of variation by proposing amendment to the fund rules. Another deed of variation through CSPF with proposal to amendment. Ex.P.84 is the list of pensioners on 4.11.2011. Ex.P.85 is the letter written to Mr.Sridharan by one Paul about eligibility to take membership of Pension Fund. Ex.P.86 is the letter of retirement of Sridharan. Ex.P.87 is the letter written by K.Ramachandran to V.Ramachandran with continuation. Ex.P.88 is the letter written to Ramachandran by S.K.Alagh about improvement of perks and pension factor. Ex.P.89 is the letter written by Sinha to Ramachandran dt.1.4.96. Ex.P.90 is the letter dt.24.2.2008 written to Ramachandran by Balaraman. Ex.P.91 is the letter written to Ramachandran by earlier MD. Ex.P.92 is the letter written by the Trustees to Ramachandran. Ex.P.93 is the letter written by Alagh to Periera dt.1.4.96. Ex.P.94 is the letter dt.1.4.96 to Periera about the representations made in the grade and salary. Ex.P.95 is the letter written by Periera to Britannia Industries Ltd. about non receipt of the pension. Ex.P.96 is the letter written to see about long overdue pension. Ex.P.97 is the letter dt.3.10.2005. Ex.P.98 is the letter written to the Trustees by one Periera about non payment of the triennial benefit. Ex.P.99 is the letter by Peiera dt.30.1.2006 to the Trustees by disclosing the provisions of the pension rules. Ex.P.100 is the letter written through one Ramachandran by the V.Kaul,GM. Ex.P.101 is the letter written to Ballal by Balasubramani wherein there is a recital that the non contributory officers fund pension is introduced. Ex.P.102 is the letter dt.1.4.96. Ex.P.103 is also the letter sent by Sinha to Ballal with annexures which says about the improvement of pension factor. Ex.P.104 is the appointment letter of Jebudoss Draviam. Ex.P.105 is Salary statement of Jebudoss Draviam, Ex.P.106 is the long service award of one Balakrishna. Ex.P.107 is the letter written to Balakrishna dt.17.8.84 which says about non contributory officers pension fund is introduced. Ex.P.108 is the letter written to Balakrishna dt.15.4.88 about review of the salary. Ex.P.109 dt.1.492 which shows about recommendation for implement of pension factor, Ex.P.110 is the letter dt.1.4.96 written by Balakrishna about implement of pension factor with annexure and annexures. Ex.P.111 is the letter dt.31.10.2003 to Balakrishna by Harikrishna informing about the date of retirement. Ex.P.112 to 114 are the transcription of Balakrishna. Ex.P.115 is the order copy of WP.No.10653/2005 and other cases of Hon'ble High Court of Judicature at Madras. Ex.P.116 is the order copy of Writ petition.
Against this in the evidence of D.W.1 he has categorically stated that he was the CFO of the company between 16.11.2006 to 15.11.2008 and continued to be associated with the company till 31.3.2005. He was also Trustee of defendant No.10 and 11 from 29.1.2007 and till date. As the registered office of the plaintiffs and 9th defendant is situated at Kolkata, this court has no territorial jurisdiction. He had stated about the establishment of CSPF and OPF and the eligibility criteria and approval of the said fund under the Income Tax Act and rules. He had stated about Rule 87 of the Income Tax Rules and stated that the contribution of the company should not exceed 27% of the employees salary in a year. He also stated about Clause 6 of Trust deed and Rule 9(b) and 11(a) of the fund rules and also change of pension factor. The ordinary annual contribution of any member should be 27% with effect from 22.9.1997 as reduced by the companies contribution if any to the provident fund. Right from the inception the contribution by the company together with income used to form the corpus. On retirement of an employee fund purchases annuity from LIC which pays the monthly pension. The maximum contribution permits 15% of the eligible employee's salary. The fund was able to pay pension till 1995. Subsequent to 1990 the salary levels increased with a decrease in interest rates which resulted in the imbalance between the liabilities of the fund which substantially increased and the assets of the fund which could not keep pace resulting in a deficit of the funds. In addition the triennial increase in the pension effecting from April 1992 aggravated the deficit in the corpus. The consequence of this made imbalance and to secure the solvency for the funds to execute deed of variation subject to approval of the commissioner of Income tax to protect the interest of all the beneficiaries and employees.
On 19.8.2004 a resolution was passed by the company authorizing the Trustees to carry out certain variations with effect from 31.3.2003 and a resolution was passed on 7.9.2004 to carry out user friendly changes in the rules which authorized inter-alia provided for reduction of requirement of completion of continuous services from 10 years to 5 years and removal of the requirement of attainment of age of 50 years, the removal of limits on the benefits under the fund, based on pension factor so as to directly link the benefits with the contributions made by the company and to carry out certain procedural changes. Accordingly on 27.10.2004 letter was addressed to Commissioner of Income tax, Kolkata placing the draft of Deed of variation for approval effecting from 31.3.2003 which was approved on 17.5.2005 effective from 1.1.2004. After execution of deeds it was submitted for approval on 25.5.2005 which was challenged by some of the retired employees before Madras High Court which directed CIT to grant herein to these petitioners and pass orders on merits. An appeal is filed before Central Board of Direct taxes which has given opportunity of hearing. In the meanwhile the Madras High Court directed CBDT to grant hearing. The CBDT disposed off the appeal on 31.3.2011 and directed the company to file fresh Deed of variation within 30 days which would not adversely affect the right of employees. Against that writ petition was filed. Thus there is a bar under Sec.293 of Income tax Act to file the suit. During platinum jubilee year in 1992 the Board of Directors recommended to the Trustees for introducing the scheme for triennial benefits with effect from 1.4.95. But there is no actuarial valuation certifying this triennial increase. By Deed of Variation dt.3.9.92 the Trust rules was amended and the word beneficiary is redefined. Those who retire prior to 1.4.95 were not eligible. The trustees acted outside the definition illegally and liable to the trust for wrongful claim. The trustees have committed criminal breach of trust. It was the sole discretion of the then Trustees to amend the fund rules. Ex.P.45 is created and concocted by Mr.S.K.Alagh and P.W.1 so as to wrongfully and fraudulently create basis for payment of pension though P.w.1 was not eligible for the same. This was done to benefit Mr.Raghav and others. The trustees cannot demand over and above what is specified in Rule 9(b). Pension factor was also amended by deed of variation by the then trustee. The contribution made by the 9th defendant is in excess of the limits permissible is illegal. Any adhoc contribution to be made over and above the statutory limits would be placed before the Board for approval. There is a mis- management and breach of trust came to be realized by the company and the Board of meeting was called on 10.4.2003. It was noted that Mr.Alagh should never participate in the meeting and he was informed about the same. When it was detected based on the legal opinion the amount was refunded. The Board of Directors appointed C.C.Chokshi and Co. who discovered these facts. Thereafter Mr.S.K.Alagh had resigned. Neither the plaintiffs nor any members of the association can claim any lesser right as Clause 26 of fund rules envisages 10th and 11th defendant acted solely in the interest of fund and beneficiaries and prays to dismiss the suit.
In the cross-examination he had categorically stated that he being the Trustee has to administer the affairs of the Trust along with the other trustees as per Trust Deed and Trust rules which is for the benefit of the members and beneficiaries. The Trust deed refers only to the members. The trustees have nothing to do with drafting of the Trust deed. The Trust deed is drafted by the Board of Directors. The Trustees are having power to amend the Trust deed only with the consent of Board. The head office of the Trust is located at Calcutta. The Trust is utilizing the services of employees of the company. The Trust records are maintained by the employees of 9th defendant Company. The details of the Trustees were suggested and their employment in the 9th defendant Company is admitted. All the Trustees are collectively responsible for overall administration. The minutes book of the trust are kept in Bangalore. The MD of the 9th defendant sits at Bangalore, the Corporate office is situated at Bangalore. He joined 9th defendant Company at the age of 54 years and earlier he was working at Sifi Limited and prior to that he was working in M/s.Hindustan Lever Ltd. for 29 years. He is receiving pension from Hindustan Lever Ltd. The promoters of Bombay Dyeing and 9th defendant are one and the same. About 100 years back the 9th defendant Company was incorporated. He ceased to be the employee of 9th defendant company. Now he is working in Bombay Dyeing as JMD. Mr.Hirjee and Sukanth Kelkar are the independent Directors of 9th defendant. He filed affidavit based on Trust deed, trust rules, etc. The original of Ex.D.53 is in the custody of Company Secretary. He saw the original Minutes of meeting when he was CFO. He is not aware of the actuarial valuation prior to 1994. He has stated that on 9.9.87 and on 17.8.91 they had actuarial valuation for both the Trust, but he is not aware of the same prior to 9.9.87. According to him, the voluntary contribution is not statutory requirement. Non contributory contribution means the employee is not required to make any contribution, but the company has to do it. The company makes contribution on behalf of officers only.
He is a Chartered Accountant. He had not inspected the accounts prior to 2006 and 2007 because he was not a Trustee earlier. He was unable to answer the questions regarding the contribution of the company and also regarding books of accounts. He is working in financial field for 20 years. According to him Mr.Lakshminarayana of M/s.C.C. Chokshi & Co. was found guilty of misconduct. According to him Rule 11-A of Trust rules specifies pension in conjunction with Rule 9-B. The Rule provides defined benefit scheme subject to IT rules, Trust deed and trust rules. He admits about payment of pension upto 31.3.2003. It was discontinued because it was found that it was unauthorized and illegal contribution which was brought to the notice of the Board and thereafter it was stopped. Allocation of cost according to him is apportionment of cost. He was the CFO and Trustee at the same time. At that time the company made contribution to the Trust. The question put to this witness about the pension factor and actuarial valuation when he was an employee in Hindustan Lever Ltd. which was seriously objected. Every year the Board of Directors have to approve the balance sheet and profit and loss account of 9th defendant company. The main concentration of the cross- examination is about the management of the Company and responsibility of the Trustees and the method of knowing the independent Directors and promoter shareholders. He admits that the Trustees of 10th and 11th defendant funds are the employees of the 9th defendant or Bombay Dyeing. It is also suggested about the method of maintenance of balance sheet and profit and loss account of the Company and approval by the internal and statutory auditors. The annual account statement approved by the Board will be submitted to the statutory auditors who will examine the accounts. After approval of the accounts by the Board of Directors it will be placed before the shareholders in AGM. According to him there was some fraud committed by some of the members of the management during 1994 to 2003 which is shown in the statement presented to shareholders. Ex.D.7 to 10 are the resolutions of the Board. The report of M/s.C.C.Chokshi & Co. was submitted in one of the Board meeting of 2003. He has shown ignorance about the instructions given by the 9th defendant company to suspend the payment of pension with effect from 31.3.2003. The meeting dt.7.9.2004 was held about discussion of deeds of variation. The draft was placed before the Board. The amendment proposed is only to make various user friendly changes. One Sanjay Alagh had handed over Ex.D.7 to 10. The Trustees acted on the recommendation of the Board in its meeting held on 30.3.1991. There is much cross-examination with respect to Ex.D.7 to 10. He is still continued as Trustee. He admits that prior to 1992 and thereafter the actuarial valuation was done. He had stated about the method of calculation of pension.
According to him the funds with annuity comprising of accumulated value of opening balance on 1.11.2004, accumulation of all contributions made by the employer, accumulated value of amount transferred from another super annuation fund. The method of calculation of pension is suggested. He is unable to say the approximate value of money required to pay the pension as on 2003-2004. The contribution of Rs.7.44 crores was made over and above the ordinary annual contribution in 2000-2001. He is aware of the refund of Rs.12 crore amount and odd to the company. Though there was no need to repay that amount it was returned. The recommendation of M/s.C.C.Chokshi & Co. includes regarding refund of excess contribution. He admits that M/s.C.C.Chokshi & Co. did not recommend that the Trustees should stop paying the pension to the retired employees from 31.3.2003. He has shown ignorance that the old Trustees have not taken any decision to pay pension as per Rule 11-A of the fund rules. His evidence is based on his own study of several documents. The management of the 9th defendant company had proposed this scheme, that scheme was proposed in 2004. The amendment benefited the Trustees who are members of the management of the company and the MD. He does not remember when P.W.1 was retired. He is unable to say that P.W.1 had completed 10 years of service before retirement. No civil proceedings are initiated against the persons who committed breach of trust by paying triennial benefits to the members. The orders were agreed to be set aside in the petition before the Hon'ble Madras High Court. He admits that Mr.Alagh had the authority to issue the increment letter as MD of the company. But he had no right to recommend Board of Directors. He was also Trustee. He agreed that the letter Ex.P.19 was issued by Mr.Alagh within his authority. Likewise Ex.P.23, 37, 39, 40 and 45 were also issued by Mr.Alagh. He denied that the Board of Directors of 9th defendant company are guilty of breach of trust. According to him the adhoc exgratia scheme was introduced by the Company, not by CSPF or OPF. No company can reduce or negate without the consent of the employee any benefit. The 9th defendant company has not initiated any proceedings against Mr.Alagh.
D.W.2 who is the first defendant in this case had categorically stated that he was appointed as Trustee of defendant No.10 and 11 on 3.6.2003 and continued till date. He is the Director of defendant No.9 from 5.9.93 and continued till date. He had stated about the establishment of CSPF and OPF and also the rules of the fund. He had stated that the Trust deed was registered, according to him Rule 11(a) of the Pension fund rules says about payment of pension, Rule 9(b) says about the entitlement of ordinary annual contribution which is not less than 5% and not more than 27% of their salary. He also stated about Clause 6 of the Trust deed and stated about Rule 87 of Income tax rules. According to him prior to 1985, the pension funds were able to disburse pension by meeting the requirement of Rule 11(a) by purchasing annuity of LIC which was changed in 1990. A resolution was passed on 6.2.96 by the Board. Inspite of the directions the excess amount was paid through resolution dtd.6.2.96. They escaped any detection since the payment were not separately reflected in the audit report, but it was shown in the head of salary, wages, bonus, etc. A sum of Rs.12,11,99,000/- was paid by the 9th defendant to CSPF which is in clear violation of specific mandate. The matter was not brought to the notice of the Board. The 9th defendant had discovered the adhoc contribution over and above the ordinary annual contribution which is in violation of the mandate. The Minutes of the meeting held on 10.4.2003 and the 9th defendant authorized M/s.C.C.Chokshi & Co. to conduct external review of the working of pension fund. This witness has addressed letter to that company on 20.3.2003 and 16.4.2003. The remaining evidence of this witness is similar with that of D.W.1.
D.W.2 one Mr.Hirjee is the holder of LL.B and BA Honors degree and Bar at law degree. He in his cross- examination has stated that he started as Company Secretary and became MD from 1982 to 1988. Now he is working as non executive Director and Chairman of several companies. He had not attended the Board meeting of 9th defendant from 1993. According to him in some of the Board meetings the pension scheme was discussed. There were about 50 meetings held between 5.9.93 to 31.3.2003 and he attended about 40 meetings. He is unable to say the data of the required amount to pay pension to the employees who were going to retire between 31.3.2003 and 31.3.2004. As the majority of the board directors are based at Mumbai, the Board meeting will be held at Mumbai. He has shown ignorance that the Company had made additional lumpsum contribution based on actuarial report Ex.P.56. The pension factor is revised once or twice. This witness had answered to the questions regarding amendment and pension factor, agenda of the meeting in evasive manner. There was no request from the Trustees of the fund to consider the amendment of 9th defendant. He has answered to the question regarding placement of any subject to the meeting and the method of taking decision by the Board on the agenda and also the concerned officials who will be present for those meetings. He admits about proposal for amending pension factor was placed before the meeting on one or two occasions. He was not shown as independent Director as per Ex.D.57 because he was only non Executive Director and part of the promoter. He is the Director control 50% of the share of the holding company of the Director.
He admits that 9th defendant company is a group company of Nowrosjee Wadia and sons. He was aware about non payment of pension since 1.3.2003 as there were some problems when he assumed the office. He is the senior most Director of the company. The pension factor was amended on 10.12.97. He had stated about the details of the meeting which he attended. The actuarial valuation was done during 2009, 2010. According to him after hearing the professional advice they have followed the due process. According to him during the internal discussions he came to know about the fraud. There will be strategic meeting and formal meeting in the company. According to him the discovery was made near to 10.4.2003. However, he was not involved in day-to- day management of the Company. The Chairman after consulting some board colleagues had taken decision to appoint reputable external agency. That board meeting was taken in 2002. From 1.4.2003 M/s.C.C.Chokshi and Co. became the auditors of the CSPF and OPF. He used to meet them from time to time to conduct the review. The partners of M/s.C.C.Chokshi & Co. are mainly based at Bombay. Between 20.3.2003 to 16.4.2003 he met Lakshminarayana once or twice. The entire board was present in the meeting of 10.4.2003 and senior staff members were the invitees. He did not propose the appointment of M/s.C.C.Chokshi & Co. The board has delegated authorities to the Managing Director, Chairman and one or two executive committee of the Board to act in furtherance of interest of the 9th defendant company. Himself and Mr.Roger were authorized to take appropriate remedial action with respect to mismanagement of pension funds. Mr.Gautam Sarkar was asked to go on leave effecting from 17.3.2003 and resigned from service on 14.4.2003. The resignation of Ravi Mannath was accepted on 17.10.2003, the resignation of Rajagopal was accepted on 31.8.2004. M/s.C.C.Chokshi & Co. were not represented in the meeting dt.10.4.2004. He was one of the member of various audit committees. However he has shown ignorance that he was member of audit committees between 5.9.93 and 31.3.2003. The Trustees used to formulate the rules of the fund and the company and then it will be finally approved by the Government authorities to take effect. He was party to the drafting of the deeds of variation. The Trustees and the company used to finalise the draft. His co-trustees and professional advisors have assisted to draft the deeds of variation at Ex.P.82 and P.83. He had not verified the books of accounts prior to 1995 pertains to CSPF and OPF. According to him no contribution was made by the employees to the said funds. There was a request by the Trustees in 1996 to top up by the company. He is unable to say the names of persons who were present to the meeting dt. 6.2.96. There were specific questions asked regarding communication of the resolutions dt.3.6.2003 and 30.1.2004 to the employees/members of the fund. Some of the letters were written to employees who have not received pension from 2003. He had not made any attempt to locate correspondence with the employees/members which resulted in offering reduced pension and stopping platinum jubilee from 31.3.2003. As per the records no actuarial valuation reports were placed before the Board between 1996 to 2003. According to him on 6.2.96 meeting the board had prepared a paper asking for special adhoc contribution of Rs.5 lakhs. According to him the contribution made in 1996 was authorized by the board and hence there is no question to refund that contribution. The senior people who were asked to resign from the services. He is not aware of the authorized person to remove the trustees. This witness vaguely answers to the questions regarding the profit and investment of the company, about the figures suggested. According to him there was inter corporate deposits of fixed tenure to the other companies of Nowrosjee Wadia & Sons Group. According to him naturally the persons holding management will also be benefited in case of change of pension factor. The membership of audit committee will be changing from time to time. According to him Ex.D.55 was the letter which contained the endorsement placed before board by Mr.Nusli Wadia, but the date 11/6 was not in his hand writing. Ex.D.55 does not refer to Board meeting dt.3.6.2003 and he was present to that meeting.
He admits that Mr.Sunil Alagh was paid a settlement when his employment with 9th defendant company came to an end in 2003. According to him 1/3rd of the board retires by rotation & there will be reappointment and he was appointed as trustee by rotation. According to him defined contribution delivers to the beneficiary the pension value of his account based on the amount contributed and interest earned thereon. The defined benefit scheme delivers to the beneficiary the defined benefit in the prescribed form from within the resources of the said fund. He admits that Ex.D.61 was marked as a draft for discussion. M/s.C.C.Chokshi & Co. is a reputed firm of auditors in the Country. He denied that he intentionally with-held the report of auditor. According to him he had no comment with respect to the questions regarding the course open to the Trust to approach Civil Court in a matter relating to trustees. He is aware of payment of triennial benefit from 5.9.93 to the employees. He denied that he breached the Trust reposed in him by illegally transferring a sum of Rs.12.11 crores to the 9th defendant company. He denied that he was personally benefited from transferring the funds. He denied that he was favouring the company.
The documents relied upon by the defendant are Ex.D.1 is the Memorandum of association, Ex.D.2 is the regulation of the association, Ex.D.3 is an agreement between the company with Ashit Kumar Sarkar. Ex.D.4 is the offering of appointment as General Manager. In this letter there is a recital that though he is above the age of 48 years, he will be admitted as member of the CSPF and he will be granted extension of his employment. Ex.D.5 is the extract of minutes of meeting of Board of Directors dt.30.3.92. As per this resolution, the amount of additional contribution will be provided for the increase in pension as above be computed actuarially and will be paid to the trustees. However this document shows that it is a proposal. Ex.D.6 is the letter written by the trustee to Income tax officer dt.7.4.92 along with a draft of deed of variation to incorporate certain amendments. In this deed of variation the word 'beneficiary' means the spouse, child or children of members. Ex.D.7 is the copy of the resolution dt.7.4.92 which proposes the placement of the deed of variation to the office of commissioner of Income tax. Ex.D.8 is with respect to resolution No.264, Ex.D.9 with respect of resolution No.265, Ex.D.10 is with respect to resolution No.266. Ex.D.11 is the Deed of variation which was approved by the commissioner of Income tax with effect from 1.4.93. Ex.D.12 is the pension fund rules of CSPF Ex.D.13 is the actuarial valuation report as on 31.3.96. Ex.D.14 is the actuarial valuation report dt.31.3.97. Ex.D.15 is the actuarial valuation report as on 31.3.98. Ex.D.16 is the actuarial valuation report as on 31.3.99. Ex.D.17 is the extract of minutes of meeting dated 6.2.96 regarding pension factor. Ex.D.18 is the letter sent by S.K.Alagh to Ashit Sarkar dated 30.8.96. Ex.D.19 is the letter dated 28.5.97 to Sarkar about enhancement of retainer ship fee. Ex.D.20 is the Deed of variation dated 10.12.97. Ex.D.21 is the letter by Alagh to Ashit Sarkar for increase of retainer ship fee. Ex.D.22 is the letter written by S.K.Alag to Ashith Sarkar towards extension retainer-ship fees upto 31.03.99 Ex.D.23 is the letter written by Alagh to Sarkar dated 21.4.99 for extension of retainer ship fee rate period upto 31.5.99. Ex.D.24 is the letter dt.21.5.98 about revision of retainer ship fee. Ex.D.25 is the resolution No.256 towards investment of the amount. Ex.D.26 is the resolution No.253, Ex.D.27 is the resolution No.248. Ex.D.28 is the letter written by General Manager to P.R.Sridharan by promoting him to Officer grade with the salary details. Ex.D.29 is dated 12.8.2005 which is the promotion letter to Sridharan. Ex.D.30 is the summary statement showing the details of amount due to him. Ex.D.31 is the letter written by Ashit Sarkar to V.Ramachandran about revised salary. There is an annexure to this letter which shows 32% of retired benefits contribution by the company. Ex.D.32 is the letter written to Ramachandran about the revision of salary. Ex.D.33 is the intimation of remuneration with annexure. Ex.D.34 is the letter of revision of salary to Ramachandran with annexure. Ex.D.35 is the letter written by S.K.Alagh to D.M.Periera about revision of salary. Ex.D.36 is the intimation with annexure showing 32% of contribution. Ex.D.37 is also the revised salary letter. Ex.D.38 is the details of the allowance with annexures. Ex.D.39 is the letter showing the benefits from the pension fund. Ex.D.40 is the letter showing the pension payment. There is a reference of triennial increase in this letter and also withdrawal of the benefits. Ex.D.41 is the membership subscription receipt of Mr.Ballal. Ex.D.42 is the revision of salary of Mr.Ballal with annexure. Ex.D.43 is the details of the allowances with annexure. Ex.D.44 and 45 are the receipts of Mercy Jebadoss. Ex.D.46 is the letter written to her about promotion to officer grade-III. Ex.D.47 is the letter dt.1.4.96 about review of compensation structure. Ex.D.48 and 49 are the receipts of one Balakrishna towards payment of amount to association. Ex.D.50 is the details of revised salary to Balakrishna with annexure. Ex.D.51A to H are the membership forms, Ex.D.52 is the list of members register, Ex.D.53 is the extract of minutes of meeting dt.10.4.2003. Ex.D.54 is the extract of minutes of meeting dt.3.6.2003. Ex.D.55 is the resignation of Mr.S.K.Alagh. Ex.D.56 is the actuarial valuation report dt.17.9.91. Ex.D.57 is the Annual report. Ex.D.58 is the Minutes of meeting dt.23.3.99. Ex.D.59 is the Minutes of meeting dt.15.3.2001, Ex.D.60 is the actuarial valuation report as on 31.3.2001. Ex.D.61 is the document which is a draft for discussion dt.29.5.2003. Ex.D.62 is the letter written to commissioner of Income tax by the trustees with draft deed of variation. Ex.D.63 is another letter dated 27.10.2004 written by N.Sridharan to commissioner of Income tax. Ex.D.64 is the letter written by Asst.Commissioner of Income tax to the trustees. Ex.D.65 is also another letter. Ex.D.66 is the letter written by Vice Chairman to the auditor dt.20.3.2003. Ex.D.67 is the letter dt.16.4.2002 to the auditor requesting to conduct the review of pension funds. Ex.D.68 is the extract of minutes of meeting dt.30.1.2004. Ex.D.69 is another extract. Ex.D.70 is also minutes of meeting dt.19.8.2004. Ex.D.71 is the letter written to N.V.Iyer by 1st defendant. Ex.D.72 is the extract of resolution dt.7.9.2004. Ex.D.73 is the letter written by 2nd Defendant to M/s.CC.Chokshi and Co., In this case it is undisputed that the plaintiff association is formed for the welfare of the retired employees. The association formed is Britannia Industries Ltd., Pensioners Welfare Association. The 9th defendant had established Covenanted Staff Pension Fund i.e., CSPF for the Managers in 1971 and Officers' Pension Fund i.e., OPF in the year 1984. These two funds have been constituted as private Trusts under the Indian Trust Act. The management and administration of both the funds is vested with the Trustees. Defendants 1 to 5 are the present Trustees and defendant No.6 to 8 were the Trustees for the relevant period. It is contended that the Society was registered under the Societies Registration Act. However, the learned Senior counsel appearing for the defendants had contended that in Kolkata the Act relevant is the West Bengal Societies Registration Act, 1961 and the Society has to be registered under that particular Act. However, this Society is registered under the Societies Registration Act. However, Sec.19 of that particular Act says that every Society may sue or may be sued in the name of the President, Secretary or Office bearer.
In this case this objection is raised is not at the relevant point of time because the Company had transacted with this association and it has not raised any objection about its formation. Now this objection has to be over-ruled.
With respect to the other objections taken by the defendant counsel is about the locus-standi of the plaintiff to file the suit. The learned senior counsel also contended that there is no personal interest by the association. Further the association has not submitted the list of members and also no documents are placed to show that this association consists of such number of members. He also raised objections with respect to the authorization given to the plaintiff because there is no specific resolution to file the current suit. In this regard with respect to O.1 R.8 of cpc the counsel had relied upon citation reported in AIR (34) 1947 Madras 447 between The Corporation of Madras Vs. S.A.Kant & others wherein it is held that :
"An association of persons who are all interested in the same matter may not itself be similarly interest. An association, the members of which are stall holders in a market, having as its object the furtherance of the interest of the stall holders has in no way the same interest in the stalls as its members and cannot be said to represent all the stall holders in a suit against increase of rent of the stalls. Further it is observed when a representative suit is sought to be prosecuted, firstly, the circumstances must fall under the requirements of O.1 R.8 of CPC and secondly, under O.3 R.2 of the original side rules of this court an application must be made by a Master's summons to obtain an order in that respect...".
He also relied upon another citation reported in AIR 1938 Madras 755 between the Ratnaswamy Nada and others Vs. The Prince of Arcot Endowments, Trichinoply under the control of His Highness the Prince of Arcot, wherein it is held that :
"The plaintiffs who are entitled to have recourse to O.1 R.8, but even if they succeeded in their pleas, they would be entitled only to declaration, possession and injunction and not to the relief of mesne profits. The procedure pertaining to representatives suits is inapplicable to money claims and a decree for mesne profits cannot be passed even as against the named defendants...."
The learned senior counsel also relied upon another citation reported in AIR 1947 Madras 100 between V.H.Subramanya Wadiyar Vs. Srinivasa Wadiyar wherein it is held that :
"Permission given to a person to represent a body of persons under O.1 R.8 cpc is not final and the order granting the permission can be questioned at any other stage of the suit or in the appeal with a view to have suit dismissed on the ground that the person to whom the permission has been granted is not a member of that body..." In another citation reported in AIR (29) 1942 Calcutta 360 between Surendra Kumar Basu Vs. District Board Nadia & another wherein it is observed that :
"I agree with him that the Court below was not right in holding that the plaintiff could avoid the necessity of proving special damage, if he had brought this suit in a representative capacity. O.1 R.8 cpc has is well established is a purely enabling section. It entitles under certain circumstances only some of the interested persons to bring a suit on behalf of all. But it does not force one to represent many if his action is maintainable without the joinder of these persons. It is further held that it is only an enabling rule formulated for the purpose of convenience. It does not vest a right of suit in any person or group of persons but merely enables a person who has a right of suit in common with several others..."
In another citation reported in AIR 1955 Madras 281 between Kodia Gounder & another Vs. Vellandi Gounder and others wherein it is held that :
"All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree shall be determined by the court executing the decree and not by a separate suit. But the question is whether the respondent would be said to be parties to the suit. However, much the defendants in action represented the respondents the parties to the suit could only be the defendants who were included and not others as the respondents names did not appear as parties...."
Against this, the counsel appearing for the plaintiffs had relied upon the citation reported in (1990) 1 SCC 608 between Chairman, Tamilnadu Housing Board, Madras Vs. T.M.Ganapathy wherein it is observed that :
"On the question of maintainability of the suit in a representative capacity under O.1 R.8 cpc it has been contended that since the injury complained of is in regard to demand of money and that too by a separate man against each of the allottees, giving raise to different cause of action, Rule 1 has no application. Each one of them is not interested in what happens to the others. The provisions of O.1 R.8 have been included in the code in the public interest so as to avoid multiplicity of litigation. The condition necessary for application of the provisions is that the persons on whose behalf the suit be brought must have the same interest. In this citation AIR 1955 Madras 281 is also observed. The provision must therefore receive an interpretation which will sub-serve the object for its enactment. There are no words in the rule to limit its scope to any particular category of suits or to exclude a suit in regard to a claim for money or injunction as the present one...."
In another judgment reported in (1972) 1 MLJ 431 between State of Mysore Vs. Charodi Abyudaya Sangha wherein it is held that :
"There is no substance in the contention of the learned High Court Government pleader contending plaintiff has no locus- standi to maintain the suit. It is necessary to note that the suit has been brought under O.1 R.8 cpc on behalf of members of the Charodi community. It is an association as borne out by the Memorandum of association. The President who signed the plaint it cannot be contended with any justification that the Sangha in question whose members are all persons belonging to same community is not entitled to file the suit...."
In another citation reported in AIR 1965 SC 11 between State of Andhra Pradesh Vs. Gundubola Venkata Suryanarayanagaru wherein it is held that :
"Counsel for the State of Andhra Pradesh said that a person who seeks to institute a suit in representative capacity must establish that he had obtained sanction of the persons interested on whose behalf the suit is proposed to be instituted. It is held that the provision which requires that the court shall in such a case give at the plaintiff expense notice of the institution of the suit to all persons having the same interest and the power is reserved to the court to entertain an application from any person on whose benefit the suit is instituted. A suit filed with permission to sue for and on behalf of numerous persons having the same interest under O.1 R.8 is still a suit filed by the person who is permitted to sue as the plaintiff..."
.
The counsel appearing for the plaintiff had produced the extract of amendment to O.1 R.8 cpc with effect from 1.2.1977. The amended part of O.1 R.8 cpc reads as follows :-
One person may sue or defend on defend on behalf of all in same interest (1) Where there are numerous persons having the same interest in one suit, -
(a) One or more of such persons may, with the permission of the Court, sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons so interested;
(b) The Court may direct that one or more of such persons may sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons so interested. (2) The Court shall, in every case where a permission or direction is given under sub-
rule (1), at the plaintiff's expense, give notice of the institution of the suit to all persons so interested, either by personal service, or where, by reason of the number of persons or any other cause, such service is not reasonably practicable, by public advertisement, as the Court in each case may direct.
(3) Any person on whose behalf, or for whose benefit, a suit is instituted, or defended, under sub-rule (1) may apply to the Court to be made a party to such suit.
(4) No part of the claim in any such suit shall be abandoned under sub-rule (1), and no such suit shall be withdrawn under sub- rule (3), of Rule 1 of Order XXIII, and no agreement, compromise of satisfaction shall be recorded in any such suit under Rule 3 of that Order, unless the Court has given, at the plaintiff's expense, notice to all persons so interested in the manner specified in sub-rule (2).
(5) Where any person suing or defending in any such suit does not proceed with due diligence in the suit of defence, the Court may substitute in his place any other person having the same interest in the suit. (6) A decree passed in a suit under this rule shall be binding on all persons on whose behalf, or for whose benefit, the suit is instituted, or defended, as the case may be.
Explanation - For the purpose of determining whether the persons who sue or are sued, or defend, have the same interest in one suit, it is not necessary to establish that such persons have the same cause of action as the persons on whose behalf, or for whose benefit, they sue or are sued, or defend the suit, as the case may be.
In the present case on hand, the suit was filed by the association and one Ms.Dolores M.Pereira. Along with the plaint an application under O.1 R.8 cpc was also filed seeking permission to sue in representative capacity.
In this case there is one peculiar event taken place is that a memo was filed on 1.1.2009 wherein the defendants contended that they are ready to pay pension as per their calculation and that memo was filed on 25.10.2008 showing each pensioner entitlement amount. On consideration of that memo, this court directed the defendant to pay the amount till decision of the application or final order in this case. Further on 21.1.2009 an application was filed, the defendants were permitted to pay the pension directly to the pensioners. Further as per the order sheet dt.21.7.2010 the application under O.1 R.8 cpc was allowed and an order was passed to issue the paper publication in Indian Express. Further there is an order passed on 2.8.2010 which restrained the defendants from amending the Trust deed and Pension fund rules which adversely affect the beneficiaries. Subsequently the list of the persons entitled for pension was furnished by the plaintiff and the amount was paid. With respect to this application, the defendant had filed application with a request to direct to stop payment of the pension as the Company was paying the pension without properly referring to the rules and the entitlement of the parties. Against that order the Review petition is also filed. However that matter has to be decided by this court along with the suit.
In this case when an application under O.1 R.8 cpc was allowed by this court and proper compliance is made as per the direction of this court, the defendant now cannot question about the maintainability of the suit now. In this case it is undisputed that the Company itself had formed CSPF and OPF and the plaintiff association consists of the members of both CSPF and OPF. In this case the entitlement of the pension may be different depends on their qualifying service and other aspects. But, their main intention is to get the pension and triennial benefits and also the pension in relation to changed pension factor. Thus, in my opinion, with respect to this objection regarding capacity of the plaintiff association to sue in representative capacity has to be over-ruled.
The learned counsel for the defendant also vehemently argued about the non furnishing of particulars in the plaint as per O.6 R.4 of cpc. O.6 R.4 cpc reads as follows :-
"In all cases in which the party pleading relies on misrepresentation, fraud, breach of trust, willful default or undue influence and in all other cases in which particulars may be necessary beyond such as or exemplified in the forms aforesaid, particulars (with date and items if necessary) shall be stated in the pleading..".
The counsel appearing for the defendant had relied upon citation reported in AIR (38) 1951 SC 280 between Bishon Duo Narayan & another Vs. Seo Geni Rai & others wherein it is held that :
"In cases of fraud undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid. There can be no departure from them in evidence. General allegations are insufficient even to amount to an availment of fraud of which any court ought to take notice however strong the language in which they are couched may be and the same applies to undue influence and coercion.
The counsel for the plaintiff while addressing arguments had vehemently contended that prayer B, F and G which does not specifically defines the date on which the losses were caused to the fund and the quantum of amount to be given to the pensioners and to ensure the payment of the pension. According to him when there is no proper pleading, how the court can decree the suit and who is going to calculate all these aspects and how the office can pass decree.
The counsel appearing for the plaintiff had relied upon citation reported in (2006) 1 SCC 75 between Udayshankar Trair Vs. Ram Kaleshwar Prasad Singh and another wherein it is held that :
"Non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use...."
In this case, these plaintiffs have approached the court for their grievance and they are the retired employees of the company which is undisputed. Further with respect to the pleadings the main objection raised is that the court cannot pass such a decree and it is highly impossible to execute the decree. However, it is the liberty of the court to consider these aspects while passing the judgment. Hence, this objection is not acceptable.
The counsel appearing for the plaintiff also vehemently contended that the plaintiff is not entitled to file the suit as there is no proper authorization. Even he relied upon Ex.P.2 & 3 to prove this aspect. Ex.P.2 is the resolution which shows that in the Minutes of meeting held on 11.1.2006 at Kolkata authorizing to file a suit in Chennai High Court with respect to non payment of pension. Further it is resolved that Mr.S.K.Dutta and/or Mr.A.K.Sarkar are authorized to represent the association to various legal statutory local authorities. Further they were also authorized to engage the counsels. Ex.P.3 is the resolution dated 20.11.2006 which shows that they were authorized to represent the association or to institute the legal proceedings. However there is no specific place shown in Ex.P.3.
The defendant also relied upon the citation reported in ILR 1991 Karnataka 1654 between B.H.Inamdar Vs.B.F.Swamy wherein it is held that :
"Unless the board by a resolution authorizes the filing of a suit, the Secretary on his own cannot institute suit against any person.."
However, the counsel appearing for the plaintiff had relied upon citation reported in (1996) 6 SCC 660 between Union Bank of India Vs. Naresh Kumar and others wherein it is held that :
"Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the courts and the CPC to ensure that injustice is not done to any party who has the just case. As far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable. It is further held even in the absence of any formal authority or power of attorney having been executed, a person can by virtue of the office which he holds sign and verify the pleadings on behalf of the Corporation. In addition thereto as a company is a juristic entity it can duly authorize any person to sign the plaint. It is further held that the court had to be satisfied that Sri.L.K.Rohatgi could sign the plaint on behalf of the appellant. The suit had been filed in the name of the appellant company; full amount of court fee had been paid by the appellant-Bank; documentary as well as oral evidence had been led on behalf of the appellant and the trial of the suit before the Sub-Judge, Ambala, had continued for about two years. It is difficult, in these circumstances, even to presume that the suit had been filed and tried without the appellant having authorized the institution of the same. The only reasonable conclusion which we can come to is that Sri.L.K.Rohatgi must have been authorized to sign the plaint and, in any case, it must be held that the appellant had ratified the action of Sri.L.K.Rohatgi in signing the plaint and thereafter it continued with the suit..."
As per this citation on the ground of technicality the court cannot deny the just cause. In this case, these plaintiffs have approached the court for their grievance and they are the retired employees of the company which is undisputed. Merely on technical ground that the plaintiff was authorized only to file a suit before Chennai court cannot be a ground to reject the plaint.
In this case the main contention raised by the plaintiffs is that the defendant No.9 company had announced triennial benefits to the employees in view of the platinum jubilee of the company in the year 1992. There was a meeting held by the Board of Directors on 30.3.92 under the Chairmanship of Mr.Rajan Pillai. The company agreed to enhance the pension benefits that were being paid by the company to all the retired pensioners. As per that enhancement the future pensions payable would be increased by 15% once in 3 years. It is undisputed that the said Triennial benefit was paid to the retired employees who are going to retire on 1.4.95, 1.4.98 and on 1.4.2001. However, that benefit was stopped from 1.4.2003. That is the main contention of the plaintiffs.
The defendant had contended that the said triennial benefit is the decision of the company and the employees cannot demand as a matter of right. It is only a benefit given and the company can withdraw that benefit at any time. It is also contended by the defendant that one Mr.Alagh who was the then Managing Director of the Company along with some interested persons had paid this amount to the retirees. It is also alleged that Mr.Sarkar is also one of his man and this opportunity is used by Mr.Alagh for his benefit. That Mr.Alagh was one of the Trustees of the CSPF and OPF. The allegation of the company is that Mr.Alagh had misused his powers and deviated the funds without the knowledge of the company by showing to the account of salary of the staff. It is also contended that he is the person who is instrumental for misuse of the funds. Further it is undisputed that an amount of Rs.12 crores was transferred to the Trust during his tenure. However that amount of Rs.12 crores is ordered to be returned to the company after the new management had taken charge of the company. The D.W.2 who is the first defendant in this case has deposed on behalf of the 9th defendant also. He was appointed as Trustee of the defendant No.10 and 11 on 3.6.2003. He had stated about the eligibility criteria of the company and the contribution of the company to the pension fund, etc. However according to him Rs.12,11,99,000/- was made by the MD S.K.Alagh and the subordinates to the CSPF was clear violation of specific mandate of the Board of Directors dt.6.2.96. According to him if any such adhoc contribution were to be made over and above the statutory limit it should be placed before the board. However there is no such prior approval or intimation to the Board. The Trustees who accepted that amount was acted in violation of Rule 9(d) of Fund rules and Rule 87 of Income Tax rules and Clause 6 of the proceeding and liable for criminal breach of trust. There was a change in the pension factor also and this excess contribution significantly benefited majority of the then Trustees in their personal capacity.
According to him when the 9th defendant company discovered this contribution convened a meeting of Board of Directors on 10.4.2003 as per Ex.D.53 and on serious discussion the board approved and ratified the actions taken. Thereafter the company authorized to appoint M/s.C.C.Chokshi & company to conduct external review and this defendant No.1 had addressed letter on 20.3.2003 and 16.4.2003 in this regard. That auditor have submitted report as per Ex.D.61 wherein there is an observation that there is administrative lapses in not obtaining the approval of the Income tax authorities and that observation was unanimously accepted by the Board of Directors and as per the directions Mr.Alagh had resigned on 10.6.2003.
However in the evidence of this witness he had categorically stated that till now no action is taken against Mr.Alagh and his retirement benefits were settled without any deduction. There is no proper explanation offered by him to show as to why no action was taken against him. During the course of cross- examination this witness has stated that himself and F.X.Roger were authorized by the Board to take action about this mismanagement of the fund.
In this case even according to him when they found serious allegation against Mr.Alagh why they have not taken serious action against him is a matter to be seriously viewed. When the allegation of fraud and breach of trust is made against him, why he is left off without any action is also an important issue. The counsel appearing for the defendant had vehemently contended that there is proposition of indoor management. According to the counsel for the plaintiffs the doctrine of indoor management cannot be applied to this case.
He also relied upon the citation reported in (1843-60)All ER 435 between Royal British Bank Vs. Tuarquand wherein it is observed that :
"The deed allows the Directors to borrow on bond such sum or sums of money as shall from time to time by a resolution passed at a general meeting of the company be authorized to be borrowed finding that the authority might be made complete by a resolution he would have a right to infer the fact of the resolution authorizing that which on the face of the document appeared to be legitimately done. According to him as a matter of business convenience, however, it has long been recognized that where officers of a company occupying position such as those of a managing director, or other director or manager or other officer to whom under the company's articles or agreements, or resolutions specified in section 192, of which third persons can have notice, any power or authority could be delegated or sub- delegated, and such person purports to exercise such power or authority, and person in his position usually exercises such power or authority, outsiders dealing with the company may reasonably assume that the person apparently or ostensibly exercising any such power or authority has been duly authorized to exercise it, whether in fact he is so authorized or not. This rule is based not only on the ground of estoppel but also business convenience. For otherwise, ordinary business dealing with companies will be intolerable if everybody in day-today business is required to examine the company's machinery in order to satisfy himself that the person he is dealing with has actual authority to enter into transactions on behalf of the Company.." .
Against this the counsel appearing for the defendant had relied upon the citation reported in (1903) 2 Ch.439 between British Asbestos Co. Ltd.Vs. Boyd wherein it is held that :
"Those transfers were in the company's books, and appeared on the fact of the company's books. It is not, therefore, necessary that the facts should not be known, in the sense of not appearing on the fact of the company's books. But the knowledge of the defect must not be present to the mind of any person to whom it is material to know it. As stated in BUCKLEY ON THE COMPANIES ACTS 98th edition) P.230, the object of a clause like this and of s.67 of the general Act is to make the honest acts of de facto directors as good as the honest acts of de jure directors, and, although down to the decision in Dawson V. African Consolidated Land and Trading Co.
(1) it was generally supposed that such article or section only applied as between members of the company and outsiders, and did not apply as between members of the company inter se or as between members of the company and the company, that decision has stated such a view of the law to be incorrect, and has held the article or section to be of general operation..."
However the counsel appearing for the plaintiff had relied upon the citations with respect to indoor management reported in (1843-60) ALL E.R.435 between Royal British Bank Vs.Turbuand wherein it is held that :
"Persons dealing with the company were bound to make themselves acquainted with the statute and the Deed of settlement of the company, but they were not bound to do more; a person, on reading the Deed of settlement, would find, not a prohibition against borrowing, but a permission to borrow on certain conditions, and, learning that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the fact of the document appearing to be legitimately done; and therefore, the company was liable whether or not a resolution had been passed..."
In another citation reported in (2015) 1 SCC 103 between Gunmala Sales Pvt. Ltd. Vs. others wherein it is held that :
"The doctrine of "indoor management"
would be a relevant factor to be considered while assessing the averments to be made to satisfy the requirements of Section 141 of the NI Act. A complainant to whom a cheque is issued by a company may not be aware of the functions performed by a particular Director in the company. The responsibility of each of the Directors is exclusively the internal management of the company itself. It is further held that the question notes that the Managing Director of Joint Managing Director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section
141. It is also further held that in the commercial world, a person having a transaction with a company is entitled to presume that the Directors of the company are in charge of the affairs of the company and it is for the Directors to prove to the contrary at the trial. This Court also observed that a person having business dealings with the company may not be aware of the arrangement within the company in regard to its management. It is also held that if the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix 'Managing' to the word 'Director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company..."
It is the contention of the parties that whatever may be the indoor management, it will not affect the interest of the beneficiaries. It is the duty of the company to settle all the amounts to which the employees are eligible. If at all any act is done by the Managing Director it is the look out of the company to set it right and for that purpose the ex-employees of the company cannot be penalized. It is the contention of the defendant that one Mr.Alagh in connivance with Mr.Sarkar and other interested persons had mis- managed the funds and he had transacted with the employees without authority or without taking the prior approval of the Board of Directors. The contention of the plaintiffs is that all these aspects cannot be taken into consideration because when Mr.Alagh is MD of the company whatever communication made by him is nothing but the communication of the company.
The main contention of the plaintiff is that Mr.Alagh had written letter to many persons on 1.4.92 by saying that promotion was given to some of the employees on recognition of their service and that letter is in the letterhead of the company. He also stated about the announcement of triennial benefit and also about the change of pension factor from 1/54 to 1/50 in view of good achievement by the persons after every 3 years and he had stated the next adjustment will be in April 1995. This is evidenced by Ex.P.19 letter written to Mr.P.K.Basu, Ex.P.20 is the letter written to Mr.A.K. Chakraborthy, Ex.P.21 is the letter to Mr.S.K.Datta, Ex.P.22 is the letter written to Kishore are some of the instances. Even in Ex.P.24 the letter written to Mr.Dayal dt.1.4.92 also he has categorically stated that platinum jubilee year will be celebrated in 1992-94 and on appreciation of past contribution of the retired employees, the Board of Directors made arrangement for increase in the pension factor who retired prior to April 1989 with effect from April 1992 and thereafter. Ex.P.29 is another letter written to Mr.Wali on 1.4.1992 by Mr.Alagh. Ex.P.33 is the letter written to Mr.Vijay Khanna with the same recitals. Ex.P.35 letter written to Mr.Ravichand, Ex.P.36 written to Mr.Majumder, Ex.P.37 is letter written to Mr.S.Vishwanathan, Ex.P.39 letter written to Mr.Ranganathan, Ex.P.43 letter written to Mr.Natarajan, Ex.P.44 written to Mr.Venkataraman, Ex.P.45 letter written to Mr.A.K.Sarkar are some of the instances which shows that Mr.Alagh had written letters intimating about the triennial benefit and change of pension factor. However, Ex.P.21, 32, 33, 35 and 44 are the letters signed by other Trustees. However the counsel appearing for the defendant had vehemently contended that the signature of one Ravikrishna is forged. In this case it is also undisputed that some other Directors also have written letters to the employees. If at all Mr.Alagh alone had done mismanagement, but there is no explanation offered by the defendant as to why other Directors also have written letter intimating about this triennial increase and change of pension factor.
Further it is pertinent to note that it is the duty of the company to look into this aspect as to what is done by the employees. The payment of the triennial benefit for 3 occasions is undisputed. Whether it is done by the Managing Director without bringing to the notice of the Board of Directors is a matter to which the company has to take action against the Management. However, what the company was doing till payment of benefit on 3 occasions is a matter which is not explained. Though the learned senior counsel for the defendant had argued that as the amount was shown in the salary details, it was not noticed by the other Directors of the company. However this explanation cannot be accepted because this is not a small company and this company is having financially technical hands which is evidenced by the evidence of D.W.2 and there will be a separate committee to look into the financial matters. If at all any act in violation of the company is done by Mr.Alagh, why he is left without any punishment is also unexplained. Though there is an answer in the cross-examination of D.W.2 that the action would be taken against him, but as there is already delay and no efforts are made for commencement of the said act shows the intention of the company to take action is doubtful.
In this case before announcement of any such benefit schemes the company has to take assistance of actuarial valuation. It is undisputed that the actuarial valuation was made on 5 occasions ie. on 17.9.91, 11.11.94, 18.12.98, 18.12.98 and 15.12.98. Further these valuation reports shows that the company was taking actuarial valuation periodically. Further these documents are marked as Ex.D.56, D.13, D.14, D.15 and D.16. Further there is one more actuarial valuation dt.14.1.92 which is given by Mr.M.C.Chakraborthy and Associates have stated in their report in para 3 which reads as follows :- You also desire to ascertain the cost of your scheme for increasing of pension. Your proposal that the pensions prospectively payable from the dates of future retirement will have an increase of 15% correction at the end of 3 years from the date of retirement.
Based on this report the cost of Rs.24.4 lakhs is assessed in the actuarial report and also it is stated about increase of pension at 20% at the end of 3 years and 25% at the end of 3 years is also calculated by the actuarial report. They have shown the total cost may be compared with the total surplus of Rs.31.27 lakhs. This document was not marked in the evidence, but filed in the booklet. This letter is given to the company and it is addressed to Mr.Zarir Batliwala. This shows that before announcing the triennial benefit the company has taken all precautions by obtaining actuarial valuation at the request of Mr.Zarir Batliwala which shows that Mr.Alagh cannot be held as a person who was interested in that benefit and he alone is instrumental for this allegation of fraud. The contention of the defendant is that this M/s.Chakraborthy & Associates valuator has not properly conducted the valuation report and they have sided Mr.Alagh. It is also alleged that the company after discovering some mismanagement had entrusted the actuarial valuation to one M/s.C.C.Chokshi & Co. After entrusting that work to M/s.C.C.Chokshi & Co., D.W.2 had communicated with that company and requested to conduct proper enquiry in this regard. Only after receipt of the information from M/s.C.C.Chokshi & Co., this benefit of triennial increase was withdrawn by the company. However, the document marked as Ex.D.71 was written by D.W.2 to M/s.C.C.Chokshi & Co. shows that they require in depth review of the funds and the Chairman intends to propose this company as valuator. Thereafter in Ex.D.73, D.W.2 had confirmed their appointment as valuator. Ex.D.66 and 67 are the letters. Thereafter through Ex.D.60 actuarial valuation was given by V.V.Gopal Rao dt.23.1.2001 which says that the company has to pay contribution of Rs.744.94 lakhs. There is resolution passed by the board as per Ex.D.53 dt.10.4.2003 which shows that Mr.Gautam Sarkar was directed to proceed on leave and authorized to appoint M/s.C.C.Chokshi & Co. and also S.K.Alagh, Ravi Mannat, Nikhil Sen, P.K.Mallik and Rajagopalan were withdrawn from the meeting.
In this case the contention of the plaintiffs is that whatever may be the differences between the Board of the company and the Managing Director, but it will not affect their right of entitlement to the triennial benefit and the pension factor. In this case Mr.Alagh being a responsible person communicated with some of the employees by stating about the decision taken for improvement of the conditions of the retired employees by changing the pension factor and also by giving triennial benefit. The contention of the defendant is that it is only voluntary gesture of the company in announcing the triennial benefit, but it cannot be claimed as a right. However whatever benefit given to the employees unilaterally cannot be withdrawn. Even the citation says that the beneficial aspect of the employees has to be taken into consideration. Further the benefits already given cannot be withdrawn and that it should not be reduced. Even in the Deed of variation also the important object is to amend the Trust fund rules which should be favourable to the beneficiaries.
If at all any such act of misappropriation or mismanagement or fraud is committed by the Managing Director Mr.Alagh, but some other letters are given by other Directors also. Then how can Mr.Alagh alone is responsible is unexplained. Further the signature of one of the Directors is disputed, but that will be cast on the defendant to prove the said aspect. What was the necessity for Mr.Alagh to communicate with employees about this scheme is unexplained though the defendant contended that Mr.Alagh along with some of the employees had communicated this letter with annexures. However the counsel appearing for the defendant had contended that the pension factor was not decided and the triennial benefit was not declared as on 1.4.93. However these letters shows that in order to appreciate and recognize the effort of the employees the Trustees of officers Pension Fund and CSPF on the recommendation of Board of Directors improved the pension devisor and to improve the amount eligible to past pensioners from April 1982, this was announced. These letters include the annexures which according to the defendant are the concocted documents. One of the example which I have taken into consideration is about Ex.P.22 which is the annexure I and II shows about summary of loan schemes and also the special allowances which according to the defendant are not attached to the letter. However in the main letter itself shows about the Annexure I and II then how can these documents be said as concocted documents. Even Ex.P.26 is also one of the letter shown about scheme approved by the Board of Trustees for increase in pension factor with effect from 1.4.95 and this letter is dt.13.3.95.
In this case though the defendant company had denied about the announcement of triennial benefit, but the plaintiff had placed documents on record to show that the company had formulated rules and intended to increase the triennial benefit which was only communicated by the Managing Director being the responsible person of the company. In this case when once any communication is made by authorized person holding the responsible post in the letterhead of the company, then the company cannot claim that it was a fraud played by that particular person. If at all any such thing happens then the company has to take steps against him. The company has just requested to go on leave and thereafter he himself voluntarily resigned from the job. In this case if at all the company wanted to establish that those communications were made fraudulently, then it is the duty of the company to examine that witness because the entire dues were cleared to him. Further he is the person who was very well available to the hands of the company. Further if at all he did not turn up, then the company could have taken steps to summon him. Even if he supports the case of the company or otherwise then the company would have treated him as hostile and then the burden of establishing this aspect on behalf of the company would have waived. However in this case the counsel appearing for the defendant vehemently contended that it is the duty of the plaintiffs to examine that particular witness, but in what way the plaintiffs could get him and how he can come and depose on behalf of the plaintiffs.
When once the plaintiffs have produced the documents which are undisputedly signed by Mr.Alagh in the letterhead of the company which contains the claim of the plaintiffs, then to contradict this aspect the burden shifts on the defendant to discredit the value of those documents. However the defendant has not done so. Further the defendant counsel had relied upon the citation reported in 2007(6) SCC 737 between Ramachandra Sakaram Mahajan Vs. Damodar Thrimbak Tansale and others wherein it is held that :
"The suit for recovery of possession on the strength of the title obviously the burden was on the plaintiff to establish that title. No doubt in appreciating the case of title set up by the plaintiff. The court was also entitled to consider the rival title set up by the defendant. But the weakness of the defence or the failure of the defendant to establish the title set up by them would not enable the plaintiff to a decree. However in the present case on hand that is not the question because the plaintiffs have established by examining the witnesses and producing the documents..."
However the counsel appearing for the defendant had vehemently contended that all the persons who received the communication have not been examined by the plaintiffs. However when the similar letters are received by the employees and some of them have been examined and stated about the contents, that itself is sufficient. Hence that contention cannot be accepted at all.
Further the counsel appearing for the plaintiffs has relied upon the citation reported in (2003) 8 SCC 745 between Narbada Devigupta Vs. Beerendra Kumar Jaiswal and another wherein it is held that :
"No consequential amendment was made in the plaint taking a plea of fraud and forgery of rent receipts. There is also no evidence to that effect. Further it is held that its execution has to be proved by admissible evidence, that is, by the 'evidence of those persons' who can vouchsafe for the truth of the facts in issue. The situation is, however, different where the documents are produced, they are admitted by the opposite party, signatures on them are also admitted and they are marked thereafter as exhibits by the court. It is also held that the documents were admitted and then exhibited. The plaintiff did not dispute his signatures on the back of them. There was, therefore, no further burden of proof on the defendant to lead additional evidence in proof of the writing on the rent receipts and its due execution by the deceased landlady. Further it is held that the plaintiff failed to lead any evidence to show what were those pending litigations and what was the occasion and necessity to sign printed blank receipts at their back by the plaintiff..." In the present case on hand the plaintiffs have come with a report along with the letters written by the MD by intimating about the benefits. In the evidence of defendants they are not disputing that the letterhead belongs to the company and the signature is of Mr.Alagh who was the Managing Director at that relevant point of time. Their contention is only that he committed fraud against the company. However when the signature is admitted as per this citation, there is no need to examine the author of the letter.
The learned senior counsel on behalf of the defendant had vehemently contended the documents are not proved by examining the author and hence they cannot be relied upon. Even he objected during the course of marking of the documents that the documents are copies and the documents are not produced from proper custody by saying that the letters written to some other persons were produced by the plaintiffs and those documents are marked subject to objection. This court has ordered permitting the plaintiffs to mark the documents subject to objection.
In this case admittedly all the persons who received the communication are not deposed before the court to mark the documents. However as the cause of all the persons is one and the same, the documents can be considered though they are marked subject to objection. Their presence to mark the documents is not necessary because the receiving of those documents is undisputed. During the course of cross-examination the witnesses have stated that they received the letters by hand. Further during their evidence they have shown ignorance about the officers of the association. They have also stated that it is Mr.S.K.Dutta who was known as Secretary of the association and he was known by the persons and on his request they became the members by paying the necessary fees and also the contribution towards litigation expenses. In this case when the documents are produced which are undisputed, then there is no burden on the plaintiffs to establish by examining the authors of the documents. Hence this objection is not accepted.
Further when the actuarial valuation was made on the request of the company then it shows the intention of the company to consider the pension factor and also the triennial benefit. If at all the company was not intended to consider these aspects, there was no necessity for the company to get the actuarial valuation report. The contention of the defendant is that the valuator who conducted the actuarial valuation was not properly looked into the aspects, but the court has to see when and why this D.W.2 who is the first defendant had got doubt about the valuator is not explained. Further it is stated in the evidence of D.W.2 that after he took charge as Trustee on 3.6.2003 he himself had communicated with M/s.C.C.Chokshi & Co., but it was not with the approval of the Board. However he has stated in his letter that their services will be considered and they will be appointed as valuator and he requested them to give report. Thereafter he placed the matter before the Board and then the Board has taken decision. However why this D.W.2 had done all these things is not explained. Further how he noticed about these lapses is also not explained. He has categorically stated that he discovered the adhoc contribution which is confirmed by M/s.C.C.Chokshi & Co. who became the valuators of this company subsequently. However the plaintiffs have produced the order passed by the Council of Institute of Chartered Accountants of India, Report of the Disciplinary Committee under Sec.21 of Chartered Accountants Act between the Secretary, Britannia Industries Ltd, Pensioners Welfare Association Vs. R.Lakshminarayana of M/s.C.C. Chokshi & Co. in No.25-CA(99)/2005. In this case there is an observation that : I "In view of above, the Committee is of the opinion that since there was a change in accounting policy in the year under question, it is duty of the auditor to give a clear description of all the substantive reasons in his report. By merely drawn attention to the Notes to the Accounts in one's audit report does not disclose the auditor of his duty since the responsibility of the auditor is to express an opinion on the financial statements bases on the audit which the Respondent in this case has failed to do because he has first drawn the attention to Note 5 in Schedule 'D' without bringing/highlighting the fact that there has been a change in accounting policy with respect to annual contribution to the CSPF which had an effect on the Balance-sheet of the Fund of the relevant year.
The Committee noted the following Facts:
"That after the Respondent firm did the consultancy job for BIL on the pension fund scheme they were appointed as the auditor of CSPF.
Respondent firm was acting as consultant to the BIL as well.
The Respondent firm was appointed as Consultants of BIL for review of CSPF on 16th April 2003 and the Respondent firm has also audited the accounts of CSPF for the year 2003-04 and they didn't disclose the said fact in their audit report that they also did the review of CSPF during the year for which they also got huge amount of remuneration (approx Rs.13 lakhs for review work) apart from the audit fees (Rs.54000/- for conducting the audit of CSPF)for conducting the audit of CSPF separately.
As per the Guidance note on Independence of Auditors:
"Independence implies that the judgment of a person is not subordinate to the wishes or direction of another person who might have engaged him, or to his own self-interest. Thus a member performing professional work must recognize the problems created by personal relationship or financial involvement, which by reason of their nature or degree might threaten his independence. The Chartered Accountant should make it certain that his independence is not jeopardized.."
The Committee is of the view that the Respondent had carried out two jobs simultaneously and one job affected his other job and as a safeguard to his independency he should have disclosed the fact of his assignment with BIL as consultant in his audit report of the CSPF which the respondent failed to do. Moreover since the respondent was getting nearly 30 times more fees as compared to the audit fees for CSPF, the Committees is of the view that his independence was in doubt and as a safeguard to his independence he should have disclosed this fact in his report so that the reader of the report can read the final accounts in the right perspective. Thus, the respondent didn't follow the standards as required of a prudent Chartered Accountant prescribed by this guidance note and violated this guidance note.
With this observation the conclusion arrived at is as follows :-
"Inview of the above and in considered opinion of the committee the respondent is guilty of professional misconduct falling within the meaning of Clause 6, 7, 8 and 9 of Part I of second schedule and other misconduct under Sec.22 r/w.Sec.21 of Chartered Accountants Act, 1949..."
On perusal of this order it could be seen that the valuator who had given opinion to withdraw the triennial benefit himself is guilty of misconduct. In that order there is a specific observation made by the Committee that this valuator is taking excess of audit fee in violation of the rules. It is further observed that the respondent ie. the Chartered Accountant got appointed as auditor of the CSPF for the year 2002- 2003. The respondent has signed the balance sheet of CSPF for the year 2002-2003 on 11.10.2003 whereby the liability of Rs.12.12 crores was created in favour of the BIL without there being any demand or any issue being raised by the BIL as per the documents submitted before the Committee. The BIL in its balance sheet for the year ending 31.3.2003 did not make any claim and asked for refund of this money. It is further observed that the sequence of events clearly makes out a case against the respondent that first they had carried out a review of the CSPF and thereafter as an auditor of the CSPF helped the management in executing their plans.
Further with respect to the allegation of fraud by Mr.Alagh is concerned, he on behalf of the company had sent letter by appreciating the work of the employees and also the proposal to give benefits to the retired employees by considering their previous contribution to the company for its well being. However during his tenure he got the actuarial valuation report from Mr.Chakravarthy & Associates and they have given their actuarial valuation which was not denied or challenged till 2003. However this first defendant immediately became the Trustee had transacted with M/s.C.C.Chokshi & Co. and thereafter appointed the company who submitted improper report and made improper guidance as per the order of the disciplinary committee had attempted to refund the money back to the company.
Now if all these aspects are considered, then it will be doubtful as to who is committing breach of trust. If crucial observation is made it is the first defendant who had committed breach of trust because he by showing offer to M/s.C.C.Chokshi & Co. that they will be appointed as valuators had got the report and thereafter he placed the matter before Board and obtained approval. His act is not in favour of the benefit of the employees. Based on his offer the M/s.C.C.Chokshi & Co. had submitted report to which they faced misconduct proceedings. There is no such allegation against M/s.Chakravarthy & Associates who were the previous valuators who have shown about the requirement of the amount in future about the benefits which the company is going to announce. This shows that who is at misconduct is a crucial aspect which the company has to consider. In this case in my opinion, the contention of the defendant cannot be accepted at all.
In this case it is undisputed that all the retired employees subject to some conditions are eligible for pension. As per Ex.P.5/6 a member shall be a member of the covenanted staff /category of officers who admitted as member of the fund in accordance with the rules. With respect to the definition of pensionable salary it means the last drawn basic monthly salary before retirement which was amended vide Deed of Variation dt.7.4.2004.
Further the important aspect is that about definition of retirement. Retirement shall mean the termination of a member's service with the company (otherwise than by dismissal for misconduct) after attaining the age of 50 years or with the consent of the Board of Directors of the company on account of incapacity. The normal age of retirement will be 58 years.
The main objection of the defendants counsel is that these plaintiffs does not come under the definition of 'beneficiary' because as per Ex.P.5 and 6 beneficiary means 'the spouse, child or children of a member'. It is undisputed that plaintiffs are members as per this definition. The main arguments of the defendant counsel is that as there is a distinction under Sec.19A(b) in Ex.P.7 which is the Officers pension fund rules make distinction between member or the beneficiary which reads as follows :-
"The Trustees may on a recommendation from the Company, increase from time to time the pension that is being paid to a Member or Beneficiary in such manner as they think fit provided that the Actuary of the Fund, having regard to the assets of the Fund and the surplus revealed in the actuarial valuation, if any, certified that such increase can be granted without affecting the viability of the Fund..." Further Ex.P.82 is the Deed of variation which is dt.21.5.2005 wherein some amendments are proposed to the funds. In that proposal sub-rule (2)(f) shall be substituted as follows :- 'beneficiary' shall mean the 'spouse, child or children of the member or any other person named as a nominee by the member in the records of the company'. Ex.P.83 is the Deed of Variation with respect to CSPF which also proposes the same amendment.
It is interesting to note that the Trustees to that Deed of Variation are first defendant and other Trustees. The defendant had relied upon Ex.D.11 which shows that this Deed of Variation came to be given effect through approval of Commissioner of Income tax. As per this the amendment is with effect from 1.4.92. It is also pertinent to note that P.W.1 was also one of the Trustees at that time. The main contention of the defendant is that these retired employees do not come under the definition of beneficiary.
However the counsel appearing for the plaintiffs had relied upon citation reported in (2009) 5 SCC 313 between Bank of India and another Vs. K.Mohandas and others wherein it is held that:-
"The fundamental position is that it is the banks who were responsible for formulation of the terms in the contractual Scheme that the optees of voluntary retirement under that Scheme will be eligible to pension under the Pension Regulations, 1995, and, therefore, they bear the risk of lack of clarity, if any. It is a well-known principle of construction of a contract that if the terms applied by one party are unclear, an interpretation against that party is preferred (verba chartarum fortius accipiuntur contra proferentem). What was, in respect of pension, the intention of the banks at the time of bringing out VRS 2000? Was it not made expressly clear therein that the employees seeking voluntary retirement will be eligible for pension as per the Pension Regulations? If the intention was not to give pension as provided in Regulation 29 and particularly sub-regulation (5) thereof, they could have said so in the Scheme itself. After all much thought had gone into the formulation of VRS 2000 and it came to be framed after great deliberations. The only provision that could have been in mind while providing for pension as per the Pension Regulations was Regulation 29. Obviously, the employees, too, had the benefit of Regulation 29(5) in mind when they offered for voluntary retirement as admittedly Regulation 28, as was existing at that time, was not applicable at all. None of Regulations 30 to 34 was attracted..."
The counsel appearing for the plaintiffs also in his written arguments had relied upon the definition of beneficiary under Sec.3 of the Indian Trust, 1883 which means person for whose benefit the confidence is accepted. Further as per Ex.D.5 the proposal was to improve the benefits available to members/ pensioners. The learned counsel also in his written arguments had narrated that the reason for changing the meaning of beneficiary can only be explained by production of the entire board resolution. However inspite of asking for the same through notice, that is not produced, but only extract of the meeting is produced.
In this case the citation relied upon by the defendant counsel reported in AIR 1968 SC 1413 is rather applicable to the plaintiffs because it says a party in possession of the best evidence with-holding the same or non examining an important witness then the court to draw an adverse inference. However this citation applies to two points, one is with respect to non examination of Mr.Alagh and other Directors who have sent the letter and also with respect to non examination of the pensioners who received the letter and also with respect to non production of the entire Minutes of the meeting. In this case with respect to non examination of Mr.Alagh on behalf of the defendant the court can draw adverse inference and also with respect to non production of the entire Minutes of meeting held with respect to the amendment to Trust fund rules also the adverse inference has to be drawn.
In furtherance of this meeting there is proposal to improve the benefit available to the members/pensioners. The resolution was passed on 30.3.1992 marked as Ex.D.5 which reads as under:-
The proposals to improve the benefits available to Members/Pensioners under the Pension Fund as contained in Annexure III to the Agenda were noted. A) RESOLVED that the Deed of Variation of the Britannia Industries Limited Covenanted Staff pension Fund (in accordance with the draft tabled at the Meeting and initiated by the Chairman for the purpose of identification) be and is hereby approved subject to such amendments as may be suggested by the Commissioner of Income Tax, Calcutta.
Further Resolved that on receiving the approval of the Commissioner of Income Tax, Calcutta, the Deed of Variation be executed under the common seal of the Company.
B) RESOLVED that pursuant to Rule 20 of the Rules of the Britannia Industries Limited Covenanted Staff Pension Fund, a recommendation be made to the Trustees of the said Fund for introduction of minimum pension for Covenanted Managers of the Company in Grades IIIA, IV and GV in the manner following, effective April 1, 1992, and subject to Rules 11(b) and 16 of the Rules of the Fund.
Category Minimum pension
Per month
# Grade III A Rs.1750
# Grade IV Rs.1500
# Grade V Rs.1250
FURTHER RESOLVED that the amount of
additional contribution to the Fund, if any, to provide for the payment of minimum pension as above be computed actuarially and paid to the Trustees of the said Fund.
C) RESOLVED that pursuant to Rule 19A(b) of the Rules of the Britannia Industries Covenanted Staff Pension Fund, a recommendation be made to the Trustees of the said Fund for a once off increase in pension payable to the beneficiaries of the Fund who have retired from the services of the Company prior to March 31, 1989 in the manner following :
Date of Retirement % increase in
Pensionbeing paid
April 1975- March 1985 25
April 1985 - March 1987 15
April 1987 - March 1989 10
FURTHER RESOLVED that the amount of
additional contribution to the Fund, if any, to provide for the increase in pension as above be computed actuarially and paid to the Trustees of the said Fund.
D) RESOLVED that pursuant to Rule 19A(b) of the Rules of the Britannia Industries Limited Covenanted Staff Pension Fund, a recommendation be made to the Trustees of the said Fund for instituting a Scheme for a triennial increase in pensions payable to beneficiaries, the first such review to be effected from April 1, 1995 on the basis of the following formula:
Date of Retirement Minimum increase in Pension being paid More than 3 years before Review date 15% 2-3 years before review Date 10% 1-2 years before review Date 5% Less than 1 year before Review date Nil FURTHER RESOLVED that the amount of additional contribution to the Fund, if any, to provide for the increase in pension as above be computed actuarially and paid to the Trustees of the said Fund in one or more installments. In this case with respect to the eligibility of the persons who are entitled for these benefits, there is a serious objection raised by the defendant. According to the defendant the plaintiff had furnished the list of the eligible persons without considering this particular aspect of their eligibility as per Ex.D.5. The resolution Deed of that Ex.D.5 defines that the persons who are going to retire 3 years before review date are eligible for 15%, 2 to 3 years before review date are eligible for 10% and 1 to 2 years before review date are eligible for 5% and the persons retired one year before review date are not entitled for any benefit. That review date is
31.3.1989. However the contention of the defendant counsel is that this is only a recommendation, but it is not approved. However the entire extract of this Minutes of meeting is not produced. Thus this court can draw adverse inference against the defendant as they with-held the valuable document.
The next aspect to be considered by this court is regarding the maintainability of the suit. The contention of the plaintiff is that this is a society which is registered and on behalf of the Society he has examined P.Ws 1 to 11. In this case P.Ws.1 to 11 have categorically stated that they have taken the membership of the Society on paying subscription. P.W.1 is the Vice President of the Association had categorically stated about his grievances on behalf of the association. According to him, the association is having several grievances against the action taken by the company. They are as follows :-
(i) The company is intended to increase the pension factor.
(ii) The company is intended to carry the amendment to the Trust fund rules which is going to reduce the benefit to the retired employees.
(iii) The Trustees are not acting for the benefit of their retired employees which is their main object.
(iv) The Trustees being the employees of 9th defendant company are favouring the company rather supporting the members of the Trust.
(v) The company is attempting to invoke its intention through these Trustees who are the employees.
(vi) The company without proper notice and without hearing the persons had unilaterally withdrawn the triennial benefit.
(vii) The Trust without proper application of mind had transferred the amount of Rs.12 and odd crores.
In this case in order to establish these grievances P.W.1 had categorically stated when and how the association is formed. He also stated about his appointment as Vice President in 2008 and at that time there were about 30 to 40 members, but it raised to 216. He also stated about the Memorandum of association and its powers. However he had not personally examined the credentials of the members of the association. He also stated that he joined the company at the age of 48 years as H.R. The defendant wanted to say that at the instance of Sunil Alagh who was working along with this plaintiff in ITC, he joined the company. This P.W.1 was also one of the Trustee of the defendant No.10 and 11. The defendant wanted to show that this P.W.1 was given hike in remuneration once in 3 to 4 months when he joined subsequently. The intention of the defendant is that this plaintiff with Mr.Alagh wanted to have the retirement benefit in higher side have done fraud. This witness has categorically stated that they are claiming their entitlement based on the Trust fund rules. In order to substantiate the claim of the association P.W.2 who is the second plaintiff in this case had supported the case of the association, but she was served with the intimation through peon. The learned senior counsel for the defendant wanted to prove from her evidence that Ex.P.93 was ante-dated forged letter from Mr.Alagh, but she denied it.
The learned counsel for the defendant wanted to introduce her acquaintance with Mr.Alagh had suggested that her brother one Mr.Jude Periera was owning land scapping company which was awarded the contract of Britannia Gardens in Mumbai, but she denied. P.W.3 is one Mr.Ballal had stated about his grievances and the defendant wanted to prove that he was not eligible for pension because he retired at the rate of 53 years and the normal age of retirement shall be 58 years. He denied that his pension benefits is at the discretion of the Trust. P.W.4 is one Mr.Ramachandran to whom it is suggested that there was a dispute between the Company and Mr.Alagh. He is receiving interim pension. P.W.5 is not subjected for cross-examination. P.W.6 is the wife of deceased employee and she is not aware of any rules of the company, but she had stated that her husband died in 2005 and she became member of the association after his death. P.W.7 is aware of Mr.S.K.Dutta, however no letter was sent to him by any of the Directors of the company about change of pension factor and triennial benefits. P.W.8 is not subjected for cross-examination. P.W.9 is the employee who received letters from one Mr.Ravi Krishna in 1996. He has shown ignorance that the letter dtd.1.4.96 is ante-dated. He had categorically stated that Mr.Ravi Krishna had personally handed over those letters. P.W.10 has not at all participated in any of the meetings of the association, but he received letter from Mr.Sunil Alagh. It is suggested to him that there was no proposal to change the pension factor in April 1996 and the letter Ex.P.110 could not have been given in April 1996. P.W.11 is an important witness because all other witnesses have stated that they were aware of him and through him only they became the members of the association. This witness became the member of the association on 19.9.2004 in a meeting and he was elected as Secretary. According to this witness there is a Minutes book and there will be AGM regularly. He became the Secretary in the meeting dtd.12.6.2011 held at Kolkata. He admits that the Registrar of Societies, West Bengal has no record of the complete list of members of the association. Even they have kept all the applications received. According to him there is a standard format to be filled by the members. He has been paid monthly pension as per the option exercised by him. According to him the persons who have retired on or after 31.3.2003 are not receiving pension like him. The company has not purchased annuities for those who retired after 31.3.2003.
In this case according to the defendant the plaintiffs are not entitled for any of the reliefs sought in this case. Further it is contended that among the plaintiffs examined before the court, the evidence of P.W.5 and 8 cannot be considered because they are not subjected for cross-examination. With respect to evidence of P.W.1 the defendant contended that he is not eligible for pension because as per the Trust fund his pension cannot be considered. He joined the company at the age of 48 years and his date of birth is 18.5.1934. He admits that he joined the defendant company after he crossed the age of 48 years. According to him as per the rule, if any member attained 48 years at the date of commencement of the employment he is ineligible for pension, but according to him his appointment letter dt.14.7.1982 Ex.D.4 shows that he was admitted as Member of the company's Pension fund notwithstanding that he is above the age of 48 years. He has also stated that as per para 7 of terms of appointment which reads as follows :-
"It has been decided to admit you as a member of the Company's Covenanted Staff Pension Fund, notwithstanding that you will be above the age of 48 years at the time of commencement of service, in terms of Rule 8(a) of the Rules of the Fund and that in the event of your service falling short of the minimum period of service as stipulated in Rule 11(a) of the Fund, you will be granted extension of your employment on your continuing to be in the employment of the Company until the normal age of retirement..."
If this document is considered then his entitlement to member of Pension fund is proper. Then he is eligible for all the benefits as a member of the fund. In this case as it is the decision of the company, then his entitlement to the benefit cannot be questioned on this ground.
With respect to the other witness P.W.2 she is an employee and second plaintiff in this case. She completed service and hence her entitlement cannot be questioned. With respect to P.W.3 he received communication from the company, but however he retired from the service at the age of 53 years which is below the normal age of retirement. The main objection of the defendant is that he is not entitled for any pension because 11(b) of the Fund rules stipulates the entitlement of a person for the benefit. Further immediately after the retirement he has not opted for membership. With respect to P.W.4 he is receiving interim pension. With respect to P.W.5 she is the widow of employee and she is eligible for pension as per the definition of beneficiary even if it is accepted. P.W.7 is the employee and there is no serious dispute about his entitlement. With respect to P.W.9 the suggestion is that he is already been paid the benefit. During the course of arguments the learned senior counsel had vehemently contended that the evidence of P.W.1 to 3 and 9 if considered then the letters referred to by them does not refer to triennial benefit and regarding pension factor. P.W.9 admits that the notice is only a notice of what is proposed at future AGM. With respect to evidence of P.W.4, 6, 7 and 11, the learned senior counsel argued that they have given evidence without any documents and they have not received any letter from Mr.Alagh. He also argued that P.W.1 is not aware of anything about the Trust rules. His main contention is that the authors of those letters have to be examined to prove the contents. Further it is argued that P.W.1 to 11 have retired after 2004. While addressing arguments the learned senior counsel had argued that the court can consider the request of only 5 persons, but not with respect to triennial benefit.
In this case the learned senior counsel had vehemently contended that the association itself is not entitled for the relief claimed. The witnesses examined on behalf of the association are not eligible to be the members of the association. Even their membership is also not properly established. However the counsel appearing for the plaintiffs submitted that as it is a registered association recognized by the Societies Registration Act and all members of the association cannot be examined, but some of the members who received communication from the company through Managing Director have been examined. Further the letters discloses about the change of pension factor and also about the announcement of triennial benefit. In this case if at all no such steps is taken by the company, then what was the necessity for paying the triennial benefits for a period of 3 occasions is a matter to be considered by this court. The reply of the learned senior counsel in this regard is that it is at the connivance of Mr.Alagh with some of his close employees, he misused the funds of the company and paid. However this argument of the responsible company which is running from several years with all experienced Trustees, Board of Directors run with the assistance of auditors cannot be accepted. This is not an easy thing to be accepted because the company is having internal audit system, audit committee and also the external auditors who will thoroughly look into the financial aspect of the company. The defendant cannot take the shelter under fraud, misrepresentation of the Managing Directors. That Managing Directors are not lay man, but they are well trained and senior employees of the company and without any materials the company cannot say that he committed fraud. If at all he has done any unusual act, then why he was not removed from service is unexplained. But his resignation was taken by giving all the benefits. Further during the course of cross-examination the learned senior counsel had stated that he is not objecting to the fact that such letters have been received by the witness. However he objected on the ground that the truth and contents of the documents have to be proved by the author being summoned.
In this case when the company is disputing about his trust worthiness, the company would have with- held his retirement benefit and could have examined on behalf of the company, or otherwise, the company could have summoned him because the company is disputing the contents of the letter. Thus though there is no much burden on the defendant, but when the plaintiff established by adducing the evidence and producing the document and the document is undisputed, then the burden shifts on the defendant to establish its defence. In this case that particular defence is not established by the defendant.
The counsel appearing for the defendant had contended that even by mistake if any wrong is committed as a matter of course it cannot be continued. According to him the company has made a mistake in furnishing list of the beneficiaries which was ought not to have been done by the company. But by mistake it was done. The same wrong cannot be continued. According to him the list of beneficiaries furnished by them include some of the persons who are not entitled to that benefit. Their names are also included in the list. Further he argued that even if that amount need not be recovered, but further payments should be stopped. However before submitting that particular list, the company ought to have looked into this aspect. He also relied upon citation reported in 112(2004) DLT 797 between Dr.Shakuntala Gupta Vs. Municipal corporation of Delhi wherein it is held that :
"Right to pension is a continuing right and in that sense claim for pension would never become stale. It is akin to continued wrong...."
However in the present case on hand when once after scrutinizing the list and the entitlement only, the company had certified and paid the amount, now it cannot be said that it is a wrong committed by the company. An application for rejection of payment of the further pension is filed, it is pending. However now in my opinion as already after proper scrutiny the amount was paid, now it cannot be taken back. Hence the application is rejected.
145(a). He also relied upon the citation reported in 1971(2) SCC 330 between Deokinandan Prasad Vs., The State of Bihar and others wherein it is held that :
"In our opinion, the right to get pension is 'property' and by with holding the same, the petitioner's fundamental rights guaranteed under Articles 19(1)(f) and 31(1) are affected. As the matter is being discussed more fully in the latter part of the judgment, it is enough to state at this stage that the writ petition is maintainable...."
145(b). He also relied upon another citation reported in 1984 (Supp) SCC 399 between Salabuddin Mohamed Yunus Vs.State of Andhra Pradesh wherein it is held that "Pension being thus a fundamental right, it could only be taken away or curtailed in the manner provided in the Constitution. So far as Article 31(1) is concerned, it may be said that the appellant was deprived of his property by authority of law but this could not be said to have been done for a public purpose nor was any compensation being given to the appellant for deprivation of his property, namely, a sum of Rs.142.85 being the difference between Rs.1000 and Rs.857
15. So far as Article 19(1)(f) is concerned, the fundamental right under that sub-clause could be restricted only as provided by clause (5) of Article 19. That clause has no application to a right to receive pension which is property under sub-clause (f) of Article 19(1) of the Constitution as held in Deokindandan Prasad case. The said amendment could not by any stretch of imagination be classified as a law of the nature mentioned in clause (5) of Article 19.
In Deokinandan Prasad case it was expressly held that clause (5) of Article 19 has no application to the right to receive pension. The fundamental right to receive pension according to the rules in force on the date of his retirement accrued to the appellant when he retired from service. By making a retrospective amendment to the said Rule 299(1)(b) more than fifteen years after that right had accrued to him, what was done was to take away the appellant's right to receive pension according to the rules in force at the date of his retirement or in any event to curtail and abridge that right. To that extent, the said amendment was void..." He also relied upon another citation reported in (2001) 8 SCC 71 between Subroto Sen & others Vs. Union of India wherein it is held that :
"In our view the aforesaid para does not in any way support the contention of the respondents. On the contrary, on parity of reasoning, we would also reiterate that let us be clear about this misconception. Firstly, the Pension Scheme including the liberalized scheme available to the employees is non- contributory in character. Payment of pension does not depend upon Pension fund. It is the liability undertaken by the Company under the Rules and whenever becomes due and payable, is to be paid. As observed in Nakara case pension is neither a bounty, nor a matter of grace depending upon the sweet will of the employer, nor an ex gratia payment. It is a payment for the past services rendered. It is a social welfare measure rendering socio-economic justice to those who in the heyday of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in the lurch. Maybe that in the present case, the trust for Pension fund is created for income tax purposes or for smooth payment of pension, but that would not affect the liability of the employer to pay monthly pension calculated as per the Rules on retirement from service and this retirement benefit is not based on availability of Pension fund. There is no question of pensioners dividing the pension fund or affecting the pro rata share on addition of new members to the Scheme..."
In another citation reported in (1988) 3 SCC 32 between Bharat Petroleum (erstwhile Burmah Shell) Management staff pensioners Vs. BPC Ltd. & others wherein it is held that :
"The respondent-Company has an obligation to pay from its earnings into the fund and merely because the existing fund is not adequate to bear the additional liability the claim which is otherwise justified cannot be rejected. As we have already pointed out, the Company's current funds are available to supplement the pension fund. It is further held that Judicial notice can be taken of the fact that the rupee has lost its value to a considerable extent. Pension is no longer considered as a bounty and it has been held to be property. In a welfare State as ours, rise in the pension of the retired personnel who are otherwise entitled to it is accepted by the State and the State has taken the liability. If the similarly situated sister concern like Hindustan Petroleum Corporation can admit appropriate rise in the pension, we see no justification as to why the respondent-Company should not do so...." In another citation reported in 1989 Supp (1) SCC 236 between Imperial Bank of India Pensioners' Association Vs. State Bank of India wherein it is held that :
"Once it is realized that pension is a right and not a bounty, it would not be proper to leave the quantum of pension at the discretion of the Trustees in each case. To do so would be to leave the employees at the mercy of the Trustees who would naturally exercise the discretion in any manner they like in the absence of guidelines. Even in the case of Central Government employees only the outer ceiling is prescribed..."
In another citation reported in (2006) 9 SCC 630 between U.P.Raghavendra Acharya and others Vs. State of Karnataka and others wherein it is held that:
"These appeals involve the question of revision of pay and consequent revision in pension and not the grant of pension for the first time. Only the modality of computing the quantum of pension was required to be determined in terms of the notification issued by the State of Karnataka. For the said purpose, Rule 296 of the Rules was made applicable. Once this rule became applicable, indisputably the computation of pensionary benefits was required to be carried out in terms thereof. The Pension Rules envisage that pension should be calculated only on the basis of the emoluments last drawn. No order, therefore, could be issued which would be contrary to or inconsistent therewith. Such emoluments were to be reckoned only in terms of the statutory rules. If the State had taken a conscious decision to extend the benefit of the UGC pay scales w.e.f 1.1.96 to the appellants, allowing them to draw their pay and allowances in terms thereof, we fail to see any reason as to why the pensionary benefits would not be extended to them from the said date..."
In another citation reported in (1983) I SCC 305 between D.S.Nakara and others Vs. Union of India wherein it is held that "Pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer, nor an ex gratia payment. It is a payment for the past service rendered. It is a social welfare measure rendering socio-economic justice to those who in the hey-day of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch.
Pension as a retirement benefit is in consonance with an furtherance of the golas of the Constitution. The most practical raison d'etre for pension is the inability to provide for oneself due to old age. It creates a vested right and is governed by the statutory rules such as the Central Civil Services (Pension) Rules which are enacted in exercise of power conferred by Articles 309 and 148(5) of the Constitution. It is also held that the expression 'pensioner' is generally understood in contradistinction to the one in service. Those who render service and retire on superannuation or any other mode of retirement and are in receipt of pension are comprehended in the expression 'pensioners'. They for the purpose of pension benefits form a homogeneous class, which cannot be divided by arbitrarily fixing an eligibility criterion unrelated to the purpose of revision of pension. It is further held that in the present case Article 14 is wholly violated in as much as the pension rules being statutory in character, the amended rules, since the specific date, accord differential and discriminatory treatment to equals in the matter of commutation of pension. It would have a traumatic effect on those who retired just before that date. This division which classified pensioners into two classes is artificial and arbitrary, is not based on any rational principle and whatever principle, if there be any, has not only no nexus to the objects sought to be achieved by liberalizing the pension rules, but is counter-productive and runs counter to the whole gamut of the pension scheme. Further there is not a single acceptable or persuasive reason for this division....."
In another citation reported in (1984) 3 SCC 369 between Sudhir Chandra Sarkar Vs. Tata Iron and Steel Co.Ltd and others wherein it is held that :
"Pension and gratuity in the matter of retiral benefits and for recovering the same must be put on par. The gratuity, like pension, is a retirement benefit for long and continuous service as a provision for old age. It is earned as a matter of right on fulfilling the conditions subject to which it is earned. It is not a gratuitous payment depending upon the discretion or sweet will or fancy of the employer. Like pension, it can also be recovered through civil suit...."
In another citation reported in (1985) 1 SCC 429 between State of Kerala and others Vs. M.Padmanabha Nair wherein it is held that :
"That a duty was cast on the Treasury Officer to grant to every retiring Government servant the last pay certificate which in this case had been delayed by the concerned officer for which neither any justification nor explanation had been given. The claim for interest was, therefore, rightly decreed in respondent's favour...."
The citations which I have discussed in para 143 to 151 of this Judgment clearly discloses that pension is a fundamental right. Further these citations says that the retired employees automatically entitled for retirement benefit immediately after the retirement. It is the duty of the company ie. employer to settle the pension immediately after the retirement of the employee. Pension is accrued right and it cannot be a bounty payment. Further pension is a property and a fundamental right guaranteed by Article 19(1)(f) and Article 31(1) of the Constitution.
However, the learned senior counsel appearing for the defendant had contended that pension of a Government concern is different from the pension of private institution. However the counsel appearing for the plaintiff had relied upon citation which relates to private industry also. Pension is a rule and every employer has to pay the pension which may vary in the quantum.
In this case there is no dispute that the employees are entitled for pension, but with respect to P.W.1 who joined the company after completion of 48 years and P.W.3 who retired at the age of 53 years though are strictly not eligible for the pension, but in case of Nakara Vs. Union of India it is held that the scheme of introducing the pension must infer interpretative process and it should receive a liberal construction. As per this citation the pension scheme being a non contributory, extension of the same to those who retire before the said date will not affect the share available to others since there is no Pension fund involved. It is a statutory liability.
The PENSION MEANS IT 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 RECEIPIENT. THE QUANTUM OF PENSION IS A CERTAIN PERCENTAGE CORRELATED TO THE AVERAGE EMOLUMENTS DRAWN DURING LAST CERTAIN YEARS OF SERVICE. ITS PAYMENT IS DEPENDENT UPON AN ADDITIONAL CONDITION OF IMPECCABLE BEHAVIOUR EVEN SUBSEQUENT TO RETIREMENT, THAT IS, SINCE THE CESSATION OF THE CONTRACT OF SERVICE. IT CAN BE REDUCED OR WITHDRAWN AS A DISCIPLINARY MEASURE.
BROADLY, THE REASON UNDERLYING THE GRANT OF PENSION 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.
The learned senior counsel appearing for the defendant had relied upon citation reported in (1996) 11 SCC 1 between Sasadar Chakravarthy Vs. Union of India wherein it is held that :
"Rule 85 and 89 of Income Tax Rules are meant to safeguard monies deposited in the superannuation fund. Rule 89 requires the Trustees to purchase annuity from the LIC to the exclusion of anyone else.
The entire scheme of approved superannuation fund is so framed as to ensure safety of the fund so that the beneficiaries are assured of an annuity for the requisite period. In this judgment, the ratio of G.S.Nakara Vs. Union of India is held cannot be applied to extend the benefit of improvement in the pension scheme of such fund to the existing pensioners. But that is available only to members in service. The contribution is in the form of fixed percentage of salary of each employee. It is also observed that there is no reserve of funds available to the Trustees of an approved superannuation fund. As soon as an employee retires and annuity purchased for his benefit, there remains no scope for any fresh contribution so as to entitle him to an increased pension. The approved superannuation fund is set up only from the contributions made by the employer who is given certain tax benefit in order to encourage the setting of superannuation fund..."
He also relied upon another citation reported in (2005) 8 SCC 414 between Air India Employees Self Contributory superannuation pension scheme Vs. Kuriakose, V.Cherian and others which says about the defined contribution plan.
Even in the present case also the contention of plaintiffs is that Rule 87 of the Income tax Act says that it applies only to ordinary annual contribution with respect to permissible deduction which is reported in judgment of ITA NO.644/MUM/2007 between Asst.Commissioner of Income tax, Mumbai Vs. Glaxo Smith Klin Pharmaceuticals and others wherein it is observed that :
"What follows is that, in terms of the above provisions, a contribution to approved superannuation fund is deductible in principle as long as the quantum of the said contribution does not exceed the prescribed limits. The limits are, however, prescribed only for the initial contributions and ordinary annual contribution to the fund. As a corollary to these limits having been prescribed, amounts paid in excess of such limits, towards initial contribution and for ordinary annual contribution, are not allowed as deduction. That is the only limitation for quantum of deduction under section 36(1)(iv). However, it is not in dispute that the amounts paid in excess of the 27% of salaries of the employees, are neither towards the ordinary annual contribution or towards the initial contribution. This payment has been necessitated due to shortfall discovered in the course of actuarial valuation of the fund..."
Further Ex.P.118 also is the reply given by the Income tax officer to P.W.1 under Right to Information Act which says that plain reading of 36(i)(iv) and Rule 87 of Income Tax Act indicate that any excess contribution made to a superannuation fund over the limit stated in Income tax Rules 87/88 would not be admissible as deduction. As per this letter excess contribution also can be made by the company beyond the 27% of the salary, but tax exemption will not be given to that excess contribution.
With respect to Clause 6 of the Trust deed which reads as follows :
"The funds of the Fund, being the trust property, shall consist of the accumulation of the contributions being the total of contributions received by the Trustees in accordance with the Rules, securities, insurance or annuity policies or other investments or property of the Fund made or acquired in accordance with the Rules, interest and other accretions arising from the assets of the Fund together with any other accretions credited to the Fund as reduced by payments and disbursements, such credits and debits being made in accordance with the Rules and of no other sums..."
The learned senior counsel for the defendant vehemently contended that this provision says it is only defined benefit scheme, but not defined contribution scheme. However the counsel appearing for the plaintiffs had vehemently contended that it is purely defined contribution scheme. However on careful perusal of this Trust deed it could be seen that it is purely defined contribution scheme.
In this case on perusal of these citations and the facts and the materials placed on record, it could be seen that there is no dispute that the list given by the company by showing the entitlement of the pension in pursuance of the order passed towards payment of interim pension shows that all these 227 employees are retired employees and this document is furnished by the company itself which proves that these persons are the ex-employees of the company who retired by attaining superannuation. Now the company is questioning their entitlement to pension benefit. However what was the necessity for the company to furnish the name of the employees who are eligible for their retirement if at all they were not eligible for retirement benefits. Though at the initial stage some names are disclosed, but subsequently the particulars are furnished by the company. However when some more employees have applied for this benefit, then the company had filed application for withdrawal of that benefit which came to be rejected. Now that matter has to be decided by this court.
In this case the main aspect to be decided is whether the defendants have committed breach of trust. It is undisputed that 9th defendant is the company and defendant No.10 and 11 are the pension fund, the defendant No.1 to 8 are the Trustees. It is undisputed that the amount of Rs.12 crores was transferred to the Fund as contribution. As per the required contribution the company ought to have contributed Rs.82.40 lakhs from 1994 to 2001, but the company has contributed Rs.827.30 lakhs and the excess contribution is Rs.744.90 lakhs which according to the defendant No.9 is deducted by M/s.C.C.Chokshi & Co. This amount according to the defendant No.9 is the excess contribution. However now that aspect is subject matter of Hon'ble High Court of Kolkata and that amount is in deposit. In this case the learned senior counsel appearing for the defendant had vehemently contended that even as per the letter sent to some of the employees ie. Ex.P.101 is the letter written to M.Ballal, Ex.P.107 letter written to Mr.Balakrishna, Ex.P.87 letter written to Mr.Ramachandran are some of the letters show that there is condition No.7 which reads that "A non contributory companies officers pension fund is being introduced and you will be eligible" which shows that the company had started non contributory pension fund. However it is the contention of the plaintiffs that it is scheme of contribution, but not defined benefit scheme.
In this case there is an important Clause in Ex.P.7 that no money belonging to the fund in the hands of the Trustees shall be recoverable by the company nor the company shall have any lien or charge of any description on the same. If this version is taken into consideration by proper or improper method when the amount is transferred to the fund, then it cannot be taken back by the company. In this case with respect to Rs.12 crores it is undisputed that the amount was transferred to the fund, but immediately after discovery according to the defendant it was re-returned to the company which is not allowed even as per the fund rule. In this case if that aspect is considered that it is nothing but violation of the Trust fund rules.
Further the definition of Trust as defined under the Indian Trust Act 1982 means a Trust is an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declare and accepted by him for the benefit of another or of another and the owner. The person who reposes or declares the confidence is called the 'author of the trust' : the person who accepts the confidence is called the 'trustee' : the person for whose benefit the confidence is accepted is called the 'beneficiary' : the subject-matter of the trust is called 'trust-property' or 'trust-money' : the 'beneficial interest' or 'interest' of the beneficiary is his right against the trustee as owner of the trust- property; and the instrument, if any, by which the trust is declared is called the "instrument of trust".
In this case it is undisputed that the Trust is formed based on the Trust deed ie. Ex.P.4 with an intention to pay pensions as per the Rules. As per Clause 9(a) of the Trust deed the company can at any time cease to contribute to the fund, but it shall give 3 months notice.
This Trust deed is instrumental for formation of the pension fund to the employees. The intention of the fund is to provide retirement benefit to the employees who retired after serving in the company. In this case it is undisputed that this plaintiffs association consists of the retired employees. The main argument of the plaintiffs counsel is that the trustees have committed breach of trust. If at all any mismanagement is done then without filing a suit any Trustee may apply a petition to Principal court of original Jurisdiction for the opinion. The Court has to see whether any breach of trust is committed by the present Trustees. The main allegation of the plaintiffs is that the Trustees must protect the trust property. In this case their contention is that the Trustees have transferred illegally the amount of the Trust fund to the company. These Trustees are the employees of the 9th defendant company. They are under the mercy of the company. When once they have transferred the amount due to change of Trustees, it is nothing but breach of trust. The learned counsel for plaintiff contended that the failure to ensure payment of pension due to the retired employees since 1.4.2003 in accordance with Rule 11 to 20 of Fund rules is nothing but breach of trust. Further the pensions are arbitrarily stopped despite no decision being taken by neither the old Trustees nor the new Trustees until the receipt of Chokshi's report which is in violation of Rule
20. Further it is admitted that Rules of CSPF and OPF have not been amended because it was rejected by the Commissioner of Income tax. Despite all this the beneficiaries offered a reduced pension which is illegal. The Trustees have acted in derogation of Clause A and 3 of the Trust deed Rule 11 and 20 of CSPF and OPF rules and Sec.11 of the Trust.
The next aspect is about failure to pay the triennial increments which was announced as per Ex.D.5 and 9 to all beneficiaries. Further it is also contended that P.W.1 has stated in his evidence that the letters were sent to all the beneficiaries which is not challenged in the cross-examination. The improvements were implemented from April 1995, 1998 and 2001 and they are due from 2004 onwards which was discontinued arbitrarily.
The next contention is regarding misappropriation of Rs.12,11,99,000/- to which the plaintiffs counsel contended that the return of that amount is in violation of Rule 28 and 91(2) of CSPF And Income tax rules. Further as a result of this the Commissioner of Income tax had derecognized the fund. There is violation of Sec.13, 14 and 15 of the Trust Act.
The next contention is regarding Trustees attempted to amend the rule from 'Defined Benefit' to 'Defined Contribution Scheme' and withdraw the benefits available to a deceased pensioner's spouse or children and reducing the service period of the pensioner for computing pension from service with the company to only membership of the company.
The next contention is AS 15 which is accounting for retirement benefit in the financial statement of employers is issued by ICIA and are notified by Ministry of Corporate office clearly state that 'Defined Benefit scheme' is one where benefit payable to the employee is determined with reference to factors such as, a percentage of final salary, number of years of service and the grade of employee. It is also stated that there is a confusion surrounding 32% shown in the table, but Clause 8 of AS 15 states that in certain cases a retirement benefit scheme may stipulate the basis of contribution on which the benefits are determined and because of this may appear to be a defined contribution scheme. If it is a case of 'Defined Contribution scheme', then there is no necessity to have actuarial valuation. Further the Trustees cannot reduce the benefit payable to beneficiaries.
These are the lapses which according to the plaintiffs are the breach of trust. In this case it is undisputed that CSPF and OPF are formed for the benefit of retired employees. Further the Trustees are the employees of the 9th defendant company who are under the control of the 9th defendant. Further as they occupy good position in the company, they have to obey the directions of the 9th defendant. Further it is undisputed in the evidence of P.W.1 and 2 that they have to look after the affairs of the company also. In this case inview of appointment of new Trustee ie. D.W.2 he had discovered some misappropriation of the funds and he got it confirmed through M/s.C.C.Chokshi & Co., even prior to appointment of that company as valuator by giving a proposal of appointment as valuator. Further this D.W.2 was in the company even prior to he becoming the Trustee. When he was in the company then why he had not done all these aspects prior to appointing as Trustee. In this case whether Mr.Alagh had committed breach of trust or whether this D.W.2 has committed breach of trust is an important aspect which has to be considered now. In this case while discussing above I have already held that Mr.Alagh had acted in the capacity of Managing Director and informed the decision of the company to the employees through letters which is undisputed. Even as Managing Director he was not restrained from making such communication with the employees. In those letters there is appreciation of the work of the employees which is needed by Managing Director and thereafter there is a recital about the proposal of change of pension factor and also announcement of triennial benefit is stated in the letter. However, his capacity to communicate with the employees cannot be questioned. Though the company had sought for his resignation and he had given resignation which cannot be a ground to deny the benefits which are already announced.
The learned senior counsel appearing for the defendant vehemently contended that if at all any such announcement of triennial benefit is there it is only once off payment. However if at all the intention was to give once off payment why the proposal was made that it is a benefit which would be accrued once in 3 years. Further when already 3 payments were made from 1995, 1998 and 2001 the company cannot unilaterally stop that benefit to the employees. Further there is no such prior notice is issued regarding taking back of that decision. As per the citation relied upon by the plaintiffs counsel it is necessary to issue atleast 3 months notice before taking any such decision which is not done. In this case when once an announcement is made about enhancement of the pension that too due to platinum jubilee celebration of the company, the company cannot withdraw such a benefit. Further the citations relied upon by the plaintiffs counsel says that pension is a fundamental right and the right to have additional benefit which is the voluntary gesture even according to the defendants counsel cannot be taken back. Further even if the company has no proper financial resources, then also the company is duty bound to pay the entitlements to the employees.
In this case admittedly the company is getting good progress and the company is also having capacity to pay the same. Further if at all any such mismanagement is made by the Managing Director for which the poor pensioners cannot be held as responsible. If at all any such mismanagement is made, then the company can take proper recourse under law against its Managing Director which is not at all done. Though there may be more investment on the fund by the company, but the company cannot deny their rights. Further if at all the company wants to withdraw this financial benefit, it has to take recourse to law by taking the suggestion or objection by the association so that the company can take decision. Now, the act of the company in unilaterally withdrawing the triennial benefit is not proper and it amounts to breach of trust because the Trustees have breached the trust which was reposed in them. Thus there is clear breach of trust as alleged by the plaintiffs. Then the remedy open to the plaintiffs is to approach this court. Further if at all any confusion with respect to the act of Trustees, the Trustees ought to have approached the Civil Court which is having jurisdiction in this regard.
Further with respect to the jurisdiction of the Civil Court, the counsel appearing for the plaintiffs had relied upon the citation reported in (2000) 3 SCC 689 between State of Andhra Pradesh Vs. Manjeti Laxmi Kantha Rao wherein it is held " The normal rule of law is that Civil Courts have jurisdiction to try all suits of civil nature except those of which cognizance by them is either expressly or impliedly excluded as provided under Section 9 of the Code of Civil Procedure but such exclusion is not readily inferred and the presumption to be drawn must be in favour of the existence rather than exclusion of jurisdiction of the civil courts to try a civil suit. The test adopted in examining such a question is (i) whether the legislative intent to exclude arises explicitly or by necessary implication, and (ii) whether the statute in question provides for adequate and satisfactory alternative remedy to a party aggrieved by an order made under it. In Dhulabhai Vs. State of M.P it was noticed that where a statute gives finality to the orders of the Special Tribunals, jurisdiction of the civil courts must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit and such provision, however, does not exclude those case where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure...."
In the citation reported in (2010) 8 SCC 726 between Ramesh Govindram (dead) through LRs Vs. Sugra Humayun Mirza Wakf wherein it is held that :
"The crucial question that shall have to be answered in every case where a plea regarding exclusion of the jurisdiction of the civil court is raised is whether the Tribunal is under the Act or the Rules required to deal with the matter sought to be brought before a civil court. If it is not, the jurisdiction of the civil court is not excluded. But if the Tribunal is required to decide the matter the jurisdiction of the civil court would stand excluded...."
In this case, in view of these citations the Civil court is having jurisdiction because the prayer of the plaintiffs is of different fold ie. declaration, mandatory injunction which cannot be given by any Tribunal. Hence this objection cannot be considered.
Further in this case the persons who are to be beneficiaries will be the retired employees. Only after the death of employees the wife and children come. Though there may be amendment to the word 'beneficiary' which is much highlighted by the defendants, but what was the proceedings taken place before such amendment is not placed before this court. Under such circumstances, when an amendment which is not to the benefit of the members is of no consequence. In this case the intention of any association or fund is to benefit its employees and thereafter to the family members. There are separate articles found in the CSPF and OPF about the payment of amount in consequence of death of any pensioner. If at all the intention of the fund was to benefit the wife and children, then what was the necessity to add so many articles in the fund rules is an important aspect which cannot be brushed aside. In this case CSPF and OPF rules, though P.W.1 was a Trustee and a signatory to the amendment Deed of Variation, but it cannot be said that the said amendment has to be considered. Hence in my opinion, though the word 'beneficiary' is amended, but the intention of the fund rules to benefit the retired employees has to be considered because in the presence of the retired employee then how the wife and children come to picture. Even in the Succession Act also in the presence of the person, his successors cannot claim a right. Likewise in this case the first person who can receive the pension or any additional benefit is the retired employee which cannot be brushed aside. Hence the contention of the defendant's counsel that due to this amendment of the definition the plaintiffs are not entitled to the benefit cannot be accepted at all.
Further with respect to the present Board of Trustees, the act of the Trustees which is not favourable to the persons who are beneficiaries of the Trustees, then it is nothing but breach of trust. When there is breach of trust, the Trustees cannot hold office. Hence when they are not protecting the property of the Trust ie. to say the amount which was transferred to the Trust, then it is lapses on the part of the Trustees as per Sec.13 of the Trust Act. Further Sec.13 of the Trust Act says that the Trustee is bound to fulfill the purpose of the Trust. In this case the purpose of the Trust is to benefit the retired employees which itself is not done by the Trustees. When the Trustees have not acted as per the Trust rules, then they are liable for breach of trust as envisaged under Sec.23 of the Trust Act.
In this case though an attempt is made by the defendant that the beneficiary has by fraud induced the Trustee to commit breach, but it is not established. In this case the Trustees cannot take the shelter of protection. In this case as envisaged under Sec.49 of the Trust Act where a discretionary power conferred on the Trustee is not exercised reasonably and in good faith such power may be controlled by Principal Civil Court of original jurisdiction. Further Sec.60 of the Trust Act envisages that the beneficiary has a right that the Trust property shall be protected and administered by proper person. Sec.71 of the Trust Act envisages that the Trustee may be discharged from his office only by this court to which a petition for his discharge is presented under the Act. Sec.74 envisages that whenever any such vacancy or disqualification occurs and it is found impracticable to appoint a new trustee under Section 73, the beneficiary may, without instituting a suit, apply by petition to a Principal Civil Court of original jurisdiction for the appointment of a Trustee or a new trustee, and the Court may appoint a trustee or a new trustee accordingly. In appointing new trustees, the Court shall have regard (a) to the wishes of the author of the Trust as expressed in or to be inferred from the instrument of trust; (b) to the wishes of the person, if any, empowered to appoint new trustees; (c) to the question whether the appointment will promote or impede the execution of the Trust; and (d) where there are more beneficiaries than one, to then interests of all such beneficiaries.
On perusal of the materials available on record this court can safely come to the conclusion that the Trustees of CSPF and OPF have committed breach of trust. When once it is established that they have committed breach of trust, they are unfit and incapable of acting in the Trust.
In this case it is undisputed that the Trustees have refunded the amount to the company. However that amount is in FD as ordered by the Hon'ble High Court of Kolkata. When the matter is lispendens, this court cannot order for return of the amount, but the court can come to the conclusion that the pensioners have to be made good of the losses with interest at 6% p.a. However with respect to the calculation of the losses, this court directs the plaintiffs to suggest the name of receiver who could be a person to whom the 9th defendant also should not have any objection. Hence I answer Issue No.1 in the affirmative and 6 in the negative.
Issue No.2:- Sec.71 of the Trust Act envisages that the Trustee may be discharged from his office only by this court to which a petition for his discharge is presented under the Act. Sec.74 envisages that whenever any such vacancy or disqualification occurs and it is found impracticable to appoint a new trustee under Section 73, the beneficiary may, without instituting a suit, apply by petition to a Principal Civil Court of original jurisdiction for the appointment of a Trustee or a new trustee, and the Court may appoint a trustee or a new trustee accordingly. In appointing new trustees, the Court shall have regard (a) to the wishes of the author of the Trust as expressed in or to be inferred from the instrument of trust; (b) to the wishes of the person, if any, empowered to appoint new trustees; (c) to the question whether the appointment will promote or impede the execution of the Trust; and (d) where there are more beneficiaries than one, to then interests of all such beneficiaries.
With respect to the appointment of the Board of Trustees as envisaged under Sec.74 as the interest of many beneficiaries is involved, the association can furnish the list of Trustees which should be scrutinized by the 9th defendant company and thereafter it will be get approved from the concerned authorities. Those Trustees have to safeguard the interest of the retired pensioners and to pay the pension including outstanding unpaid pension and also the enhancements. Further the court has to say that the defendants are restrained from making any amendment to the Trust rules which is less beneficial to the pension of the beneficiaries of CSPF and OPF. In this case when the plaintiffs have established that the Trustees have committed breach of trust, the Trust Act provides for appointment of Trustees. Hence in my opinion, the plaintiffs are entitled for appointment of Trustees for the administration and management of CSPF and OPF. Hence I answer this issue in the affirmative.
Issue No.3:- The contention of the plaintiffs is that the defendant No.9 has to pay the outstanding unpaid pension and enhancement to all the beneficiaries. The contention of the defendant is that except the entitled pension they are not eligible for any other benefit. Further with respect to the triennial benefit it was stopped from the year 2004. I have already discussed about these aspects while discussing Issue No.1. Hence the court can come to the conclusion that the defendants are liable to pay the outstanding unpaid pension and pension enhancement to all the beneficiaries who are eligible. Hence I answer this issue in the affirmative.
Issue No.4 & 7 :- These issues are co-related and hence they are taken up together for discussion and consideration. One of the relief sought in the suit is that the defendants be restrained from effecting or attempting to effect any amendment to the CSPF and OPF which are in any manner less beneficial to the pension that they are entitled to. In this case it is undisputed that the proposed amendment shown in the Deed of variation was nothing but less beneficial to the beneficiaries. That is not permitted under law. Even Rule 28 of Ex.P.7 envisages that the Trustees may at any time get the consent of the company by a supplemental deed amend or add to the rules, provided however that such alteration does not adversely affect the benefits to be paid or currently being paid from the fund or the object of the fund provided that no alteration in the rules be made without prior approval of the commissioner. Even this Trust fund rules provides that no amendment can be made which affect the benefits of the beneficiaries. Hence when the defendant company wanted to amend the rules which are less beneficial to the beneficiaries, the plaintiffs are entitled for the relief of permanent injunction. Hence issue No.4 is answered in the affirmative and Issue No.7 is answered in the negative.
Issue No.5:- The contention of the defendant is that the suit is not maintainable under Sec.293 of Income Tax Act. Sec.293 of the Income Tax Act reads as follows :- "No suit shall be brought in any civil court to set aside or modify (proceeding taken or) any order made under this Act; and no prosecution, suit or other proceeding shall lie against (The Government or) any officer of the Government for anything in good faith done or intended to be done under this Act..." On this issue the counsel appearing for the defendant No.9 had pointed out some of the points which shows that the suit is not maintainable ie. 2.1 The suit involves adjudication of questions such as:
2.1.1 Whether the company could contribute monies in excess of the limits prescribed under Rule 87 of I T Rules?
2.1.2 Could the Trust Funds have legitimately received amounts over and above Ordinary Annual Contribution prescribed under Rule 9(a)(b)?
2.1.3 Was any actuarial valuation done before this excess contributions was received?
2.1.4 Having receiving excess contribution of Rs.12.11 crores could such amount be said to "belong" to the company?
2.1.5 Who committed breach of contract - Whether the then Trustees in receiving the excess contributions or the subsequent Trustees in remedying the wrong and refunding the monies back to the Company? 2.2 Under Section 293 of Income Tax Act there is a Bar to filing of any suit which would affect proceedings under the Income Tax Act.
2.3 Several of the above mentioned questions are pending adjudication in one form or the other, before the Kolkata and Madras High Courts. Hence the question is Resintegra.
2.4 Certain important clauses in the Trust Deeds referred are .
Cl.4 - Differences or disputes arising under the Rules as to interpretation, rights or obligations of the Company, Members and Beneficiaries shall be decided by the Trustees and their decision shall be final and binding. However where such difference or disputes relates to IT matters, (such as in the present case regarding excess contribution over and above the limit prescribed in Rule 87 etc.)such differences or disputes shall be referred to the Commissioner of Income Tax and his decision in the matter shall be final. This procedure under Clk.4 of the Rules has not been followed by the plaintiffs. Cl.6 - The Trustees shall not be liable for any more money than shall have actually come into their hands. However Trustees shall be at liberty to utilize any part of the total interest, total forfeiture and total net appreciation (if any) credited to the Fund. This may be utilized towards making any deficiency of accumulation of contribution. In other words the only funds of the Fund would be from the contributions, forfeitures or interest. Cl.6 further states that the Trustees shall be entitled to be indemnified against proceedings, costs and expenses unless occasioned by negligence or fraud. Neither negligence nor fraud by the Trustees has been properly pleaded with full particulars in terms of Order VI Rule 4. AIR 1951 SC 280 para 24 & 25 - General allegations are insufficient - full particulars of Fraud has to be pleaded. They are only a vague allegation or breach of Trust.
2.5 The suit reliefs are vague; No decree can be granted on such prayers 2.5.1 Relief (a) alleges breach of trust without specifying with full particulars the nature of the breach etc., as required under Order VI Rule 4 CPC. Reliefs (c) and (d) flow from the same proof of (a).
2.5.2 Relief (b) raises a claim to "make good the losses"
without mentioning the quantum; similarly it claims compound interest at 6% p.a. from an unknown future date etc. 2.5.3 Relief (e) seeks for the return of "all monies paid out of the funds" without mentioning the quantum.
2.5.4 Reliefs (f) & (h) seek for payment of pension to "beneficiaries" on terms which are not "any less beneficial" which is again a vague, unclear and unmeaning relief.
2.5.5 Relief (g) is the subject matter of proceedings before the Madras High Court and hence this Hon'ble court cannot go into those questions in this suit.
However the plaintiffs are not challenging any of the proceedings taken place under this Act. However towards contribution of money the plaintiff is not challenging, but he is challenging the act of the Trustees in returning the amount to the company. However that particular act is not considered by this court because that matter is pending before the Hon'ble High Court of Kolkata. Hence that is not a matter which is not questioned. With respect to actuarial valuation also it is not questioned, but it is only pleaded that prior to announcement of triennial benefit and change of pension factor, the actuarial valuation was done. Further the company has to follow this actuarial valuation every year. The contention of the defendant is that these matters of payment of the amount and return of the amount are all pending before different courts. That is not questioned before this court. In this case this court is not deciding about disputes relating to the company. But it is deciding the matter which is between the employees and the breach of trust. It is also not questioned about the act of the Trustees, but the act in violation of the Trust fund rules is questioned and that should be decided by the Civil court as per the Trust Act. Further there is an allegation of fraud and negligence by the Company but not by the plaintiffs. Hence the contentions taken by the defendant that the suit is barred under Sec.293 of IT Act is not proved. Further the plaintiff has not made any prayer questioning the acts contemplated in that particular Section. Hence that Section is not a bar for this suit.
The counsel appearing for the plaintiffs also relied upon the citation reported in (2010) 8 SCC 726 between Ramesh Govind Ram (dead by LRs) Vs. Sugra Humayun Mirza Wakf which says about the maintainability of the suit.
In this case on perusal of the materials and prayer sought it could be seen that there is no bar in filing this suit. Hence I answer this issue in the negative.
Issue No.8 :- With respect to the main aspect of limitation is concerned, in the written arguments the counsel appearing for the defendant had argued that the relief sought in the suit prayer (a) is for declaration; (b) (e) (f) (h) are for mandatory injunction;
(c) and (d) are for appointment of Trustees and settlement of scheme and (g) is for permanent injunction. The cause of action pleaded by the plaintiffs which is latest is to have arisen in January/February 2004 when the Trustees of the pension fund paid back Rs.12.11 crores to the company in violation of the terms of the Trust and in 2005 when the rules of the Fund were sought to be amended and on another dates of continuing breach when pension payments were made to the members when they fell due. With respect to the limitation it is contended that under Article 58 of Limitation Act, 3 years from the date on which the right to sue accrues ie., the suit is filed in 2008 which is barred by limitation. With respect to the contention of the plaintiffs that Section 22 of the Limitation Act with respect to continuing breach it is contended that it leads to fresh period of limitation, it is observed that Sec.22 will not attract in so far as the allegation of breach of trust in repayment of Rs.12.11 crores. It is also further observed that Sec.23 of the Limitation Act which is in paramateria with Sec.22 refers not to a continuing breach, but to a continuing wrong. If the wrongful act causes an injury which is complete, there is no continuing.
Against to this contention, the counsel appearing for the plaintiffs had relied upon Article 103 of the Limitation Act which states that to make good the loss occasioned by breach of trust the period of limitation shall be 3 years from the date of Trustee's death or if the loss has not done resulted the date of the loss. Further there is no period of limitation for recovery of money due to the Trust. On this point he relied on the citation reported in (1998) 2 SCC 242 between Hindustan Times Ltd. Vs. Union of India and others wherein it is held that:-
"Trust money with employer for deposit in the statutory fund the delay in the deposit on his part of contribution amounted to breach of trust. It is further held that now the Act does not contain any provision prescribing a period of limitation for assessment or recovery of damages. The monies payable into the Fund are for the ultimate benefit of the employees but there is no provision by which the employees can directly recover these amounts. The power of computation and recovery are both vested in the Regional Provident Fund Commissioner or other officer as provided in Section 14-B, Recovery is not by way of suit. Initially, it was provided that the arrears could be recovered in the same manner as arrears of land revenue. But by Act 37 of 1953 Section 14-B was amended providing for a special procedure under Sections 8-B to 8-G. By Act 40 of 1973 Section 11 was amended by making the amount a first charge on the assets of the establishment if the arrears of employee's contribution were for a period of more than 6 months. By Act 33 of 1988, the charge was extended to the employee's share of contribution as well. It is further held that inspite of all these amendments, over a period of more than thirty years, the legislature did not think fit to make any provision prescribing a period of limitation. This in our opinion is significant and it is clear that it is not the legislative intention to prescribe any period of limitation for computing and recovering the arrears. As the amounts are due to the Trust Fund and the recovery is not by suit, the provisions of the Indian Limitation Act, 1963 are not attracted. In Nityananda M.Joshi Vs. LIC of India, it has been held that the Limitation Act, 1963 has no application to Labour Courts and, in our view, that principle is equally applicable to recovery by the authority concerned under Section 14-B. Further in Bombay Gas Co.Ltd. V. Gopal Bhiva it has been held that in respect of an application under Section 33(c)(2) of the Industrial Disputes Act, 1947, there is no period of limitation. In that context, it was stated that the courts could not imply a period of limitation. It was observed :- "It seems to us that where the legislature has made no provision for limitation, it would not be open to the courts to introduce any such limitation on the grounds of fairness or justice..."
He also relied upon citation reported in (2003) 1 SCC 184 between S.K.Mastan Bee Vs. General Manager, South Central Railways wherein it is held that "Where the petitioner was an illiterate widow with meager resources who had been deprived by the Railways of her Gangman husband's arrears of family pension, held, the petition and claim was maintainable despite delay..."
Inview of the above said discussion, this court can come to the conclusion that as it is a fundamental right and it is continuing there is no question of limitation arises. Hence I answer this issue in the Negative.
Issue No.9 :- In the result, I proceed to pass the following :-
ORDER The suit of the plaintiff is partly decreed with costs.
It is declared that defendants 1 to 8 have committed breach of trust and they are unfit to act as Trustees.
The defendant No.1 to 9 are jointly and severally liable to make good the losses caused to the Trust fund with interest at 6% p.a. from the date of suit.
The plaintiffs are directed to suggest the name of the receiver who is acceptable by the 9th defendant to take into the account of the losses caused to the plaintiff. The plaintiff are directed to suggest name of the Trustees who are acceptable by the 9th defendant and the Trustees to be appointed shall take appropriate action for the welfare of the retired employees.
The 9th defendant is directed to pay the unpaid pension and enhancement to all the beneficiaries which is not any less beneficial to the employees. The defendants are restrained from making any amendment to CSPF and OPF which is less beneficial to the pensioners.
The plaintiffs are directed to pay the court fee on the ascertained amount to be ascertained by the Receiver.
Draw the decree accordingly.
[Dictated to the Judgment-Writer, computerized transcript thereof corrected, signed and then pronounced by me in the open court on this the 21st day of September, 2015].
[ B.S.REKHA ], LVII Addl. City Civil & Sessions Judge, Mayohall, Bangalore.
ANNEXURE List of witnesses examined for the plaintiffs :-
P.W.1 : Ashith Kumar Sarkar.
P.W.2 : Mrs.Dolores Mildred Pereira.
P.W.3 : Madhusudan Srinivas Ballal.
P.W.4 : R.Ramachandra.
P.W.5 : Ramaswamy.
P.W.6 : Mrs.Mecy Jebadoss.
P.W.7 : P.R.Sridharan.
P.W.8 : V.Srinivasan.
P.W.9 : V.Ramachandran.
P.W.10 : P.C.Balakrishnan.
P.W.11 : Subir Kumar Datta.
List of documents marked :-
Ex.P 1 : Certificate of registration of societies.
Ex.P 2 Minutes of Annual general meeting.
Ex.P 3 Resolution passed in Governing body
meeting.
Ex.P 4 Trust deed.
Ex.P 5 C.S.P.F rules.
Ex.P 6 Trust deed dt.13.12.1984.
Ex.P 7 Officers pension fund rules.
Ex.P 8 Letter written by Zarir Batliwala.
Ex.P 9 Letter written to R.Dayal to MVK Rao.
Ex.P 10 Letter written by MVK Rao to R.Dayal.
Ex.P 11 Letter written by Kuriakose to Dayal.
Ex.P 12 Letter dt.10.3.92 to Dayal.
Ex.P 13 Letter written by N.Balasubramanian to
OP.Raswant.
Ex.P 14 Office note or retirement.
Ex.P 15 Letter written by Rajagopalan to
OP.Raswant.
Ex.P 16 Letter written to Kishore by S.K.Alagh.
Ex.P 17 Letter written by Alagh to Kishore.
Ex.P 18 Letter written by Ashok Ramaswamy to
G.Ranganathan.
Ex.P 19 Letter written by Alagh to Basu.
Ex.P 20 Letter by Majumder to AK.Chakraborthy.
Ex.P 21 Letter by Majumder to S.K.Datta.
Ex.P 22 Letter sent by Alagh to Kishore.
Ex.P 23 Letter written by Ashit Sarkar as VP.
Ex.P 24 Letter written by Alagh to Dayal.
Ex.P 25 Letter written to Dayal dt.25.6.92.
Ex.P 26 Letter written to Dayal by Sugata Sircar.
Ex.P 27 Letter dt.25.3.98 by Rajagopalan to
Dayal.
Ex.P 28 Letter dt.1.2.2001 about payment of
triennial benefits.
Ex.P 29 Letter written to Wahi by Alagh.
Ex.P 30,31 Letters about triennial benefits.
Ex.P 32 Another letter dt.25.3.98.
Ex.P 33 Letter written by Malik to Vijay Khanna.
Ex.P 34 Letter dt.1.4.96 with annexures.
Ex.P 35 Letter written by Malik to Ravi Chand.
Ex.P 36 Letter written to Majumder by Alagh.
Ex.P 37 Letter to S.Viswanathan by Alagh.
Ex.P 38 Letter dt.13.3.95.
Ex.P 39 Letter written by Alagh to Ranganathan.
Ex.P 40 Letter dt.1.4.96 by Alagh regarding
triennial increase benefit.
Ex.P 41 Letter dt.1.3.98 by Rajagopalan to
Ranganathan.
Ex.P 42 Letter by Rajagopalan to Ranganathan.
Ex.P 43 Letter written to Natarajan.
Ex.P 44 Letter by Ravi Krishna to Venkataraman.
Ex.P 45 Letter written to A.K.Sarkar by Alagh.
Ex.P 46 Letter written by Sarkar to Kuriakose.
Ex.P 47 Letter written by Alagth to Ashit Sarkar.
Ex.P 48 Letter written by Kuriakose to Sarkar.
Ex.P 49 Letter written to Basu by Alagh.
Ex.P 50 Letter dt.1.4.96 to Basu from Sinha.
Ex.P 51 Letter dt.1.496 written to Chakraborthy.
Ex.P 52 Letter dt.1.4.96 about improvement of
pension factor and triennial benefit. Ex.P 53 Letter written by N.Sen to Tapas Kumar Ray.
Ex.P 54 Letter addressed to all the officers. Ex.P 55 Letter written by Alagh to Ravi Krishna. Ex.P 56 Letter written by Alagh to Majumder. Ex.P 57 Letter to Natarajan by Ravikrishna. Ex.P 58 Letter to Venkataraman by Ravikrishna. Ex.P 59 Letter by Ashit sarkar to Nikhil Sen. Ex.P 60 Letter dt.11.11.2004 for payment of triennial benefit.
Ex.P 61 Letter to Trustees by Ravi.
Ex.P 62 Postal receipt.
Ex.P 63 Letter to Bhatnagar from a Trustee.
Ex.P 64 Letter written to Trustees by Bhatnagar.
Ex.P 65 Letter written to Bhatnagar.
Ex.P 66 Letter written by Dayal dt.8.4.2004
requesting for triennial benefit.
Ex.P 67 Letter dt.19.6.2004.
Ex.P 68 COP receipt.
Ex.P 69 Letter written by Mathur to Ravikrishna.
Ex.P 70 Letter written by Trustee to Ravikrishna.
Ex.P 71 Letter written to Trustees by Ravikrishna
Ex.P 72 Postal receipt.
Ex.P 73 Letter about pension fund.
Ex.P 74 Letter written by Praqmod Jain.
Ex.P 75 Postal receipt.
Ex.P 76 Letter dt.9.4.2007 to Pramod Jain.
Ex.P 77 Letter dt.10.5.2008 by Pramod Jain.
Ex.P 78 Letter written to Pramod Jain.
Ex.P 79 Letter by Jain to the Trustee.
Ex.P 80 Letter to Jain by the Trustee.
Ex.P 81 Letter of pension.
Ex.P 82 Deed of variation dt.21.5.2005.
Ex.P 83 Deed of variation.
Ex.P 84 List of pensioners on 4.11.2011.
Ex.P 85 Letter to Sridharan by Paul.
Ex.P 86 Letter of retirement of Sridharan.
Ex.P 87 Letter by K.Ramachandran to
V.Ramachandran.
Ex.P 88 Letter to Ramachandran by Alagh.
Ex.P 89 Letter by Sinha to Ramachandran.
Ex.P 90 Letter to Ramachandran by Balaraman.
Ex.P 91 Letter to Ramachandran by earlier MD.
Ex.P 92 Letter by Trustees to Ramachandran.
Ex.P 93 Letter by Alagh to Periera dt.1.4.96.
Ex.P 94 Letter to Periera.
Ex.p 95 Letter by Periera to Britannia Industries.`
Ex.P 96 Letter about long overdue pension.
Ex.P 97 Letter dt.3.10.2005.
Ex.P 98 Letter to Trustees by Periera about
triennial benefit payment.
Ex.P 99 Letter by Periera to Trustees.
Ex.P 100 Letter through Ramachandran by V.Kaul. Ex.P 101 Letter to Ballal by Balasubramani. Ex.P 102 Letter dt.1.4.96.
Ex.P 103 Letter by Sinha to Ballal.q Ex.P 104 Appointment letter of Jebudoss. Ex.P 105 Salary statement of Jebudoss Draviam. Ex.P 106 Long service award of Balakrishna. Ex.P 107 Letter written to Balakrishna dt.17.8.84. Ex.P 108 Letter to Balakrishna about review of salary.
Ex.P 109 Letter dt.1.4.92 about recommendation for implement of pension factor.
Ex.P 110 Letter by Balakrishna dt.1.4.96. Ex.P 111 Letter to Balakrishna by Harikrishna. Ex.P 112 to Transcription of Balakrishna.
114 Ex.P 115 Order copy of W.P.10653/2005.
Ex.P 116 Order copy of writ petition.
List of witnesses examined for the defendants :-
D.W.1 : Durgesh N.Mehta.
D.W.2 : Anil Kumar Hirjee.
List of documents marked :-
Ex.D 1 : Memorandum of association.
Ex.D 2 Regulation of the association.
Ex.D 3 Agreement between the
company with A.K.Sarkar.
Ex.D 4 Offering of appointment as GM.
Ex.D 5 Extract of minutes of meeting of Board
of Directors dt.30.3.92.
Ex.D 6 Letter by Trustee to Income tax officer.
Ex.D 7 Copy of resolution dt.7.4.92.
Ex.D 8 With respect to resolution No.264.
Ex.D 9 With respect to resolution No.265.
Ex.D 10 With respect to resolution No.266.
EX.D 11 Deed of variation.
Ex.D 12 Pension fund rules of CSPF.
Ex.D 13 Actuarial valuation report dt.31.3.96.
Ex.D 14 Actuarial valuation report dt.31.3.97.
Ex.D 15 Actuarial valuation report dt.31.3.98.
Ex.D 16 Actuarial valuation report dt.31.3.99.
Ex.D 17 Extract of minutes of meeting.
Ex.D 18 Letter sent by Alagh to Sarkar.
Ex.D 19 Letter to Sarkar about enhancement of
retainership fee.
Ex.D 20 Deed of variation dt.10.12.97.
Ex.D 21 Letter to Alagh by Sarkar.
Ex.D 22 Letter by Alagh to Sarkar dt.31.3.99.
Ex.D 23 Letter by Alagh to Sarkar dt.21.4.99.
Ex,D. 24 Letter about revision of retainership fee.
Ex.D 25 Resolution no.256.
Ex.D 26 Resolution no.253.
Ex.D 27 Resolution No.248.
Ex.D 28 Letter written by GM to Sridhar.
Ex.D 29 Promotion letter to Sridharan.
Ex.D 30 Summary statement.
Ex.D 31 Letter by Sarkar to Ramachandran.
Ex.D 32 Letter written to Ramachandsran about
revision of salary.
Ex.D 33 Initimation.
Ex.D 34 Letter of revision of salary to
Ramachandran.
Ex.D 35 Letter by Alagh to Periera.
Ex.D 36 Initmation with annexure.
Ex.D 37 Revised salary letter.
Ex.D 38 Details of allowances.
Ex.D 39 Letter showing the benefits.
Ex.D. 40 Letter showing the pension payment.
`
Ex.D. 41 Membership receipt of Mr.Ballal.
Ex.D 42 Revision of salary of Ballal.
Ex.D 43 Details of allowances.
Ex.D 44,45 Receipts of Mercy Jebudoss.
Ex.D 46 Promotion letter.
Ex.D 47 Review of compensation structure letter.
Ex.D 48,49 Receipts of Balakrishna.
Ex.D 50 Details of revised salary.
Ex.D 51(a) Membership forms.
to (h)
Ex.D 52 Members register.
Ex.D 53 Extract of Minutes of meeting
dt.10.4.2003.
Ex.D 54 Extract of minutes of meeting
dt.3.6.2003.
Ex.D 55 Resignation letter of S.K.Alagh.
Ex.D 56 Actuarial valuation report dt.17.9.91.
Ex.D 57 Annual report.
Ex.D 58 Minutes of meeting dt.23.3.99.
Ex.D 59 Minutes of meeting dt.15.3.2001.
Ex.D 60 Actuarial valuation report dt.31.3.2001.
Ex.D. 61 Draft for discussion dt.29.5.2003.
Ex.D 62 Letter written to Commissioner of Income
tax.
Ex.D 63 Letter to Sridharan.
Ex.D 64 Letter written by Asst.
Commisioner of Income tax to the
trustees.
Ex.D 65 Another letter.
Ex.D 66 Letter written to Vice Chairman to
Auditor dt.20.3.2003.
Ex.D 67 Letter dt.16.4.2002.
Ex.D. 68 Extract of minutes of meeting
dt.30.1.2004.
Ex.D 69 Another extract.
Ex.D 70 Minutes of meeting dt.19.8.2004. Ex.D 71 Letter written to N.V.Iyer by1st defendant.
Ex.D 72 Extract of resolution dt.7.9.2004. Ex.D 73 Letter written by second defendant to M/s.C.C.Chokshi & Co.
[B.S.REKHA], LVII ACC & SJ.