Telangana High Court
Nadella Nageswara Rao And 4 Others vs The Singreni Collieries Company ... on 21 July, 2023
THE HON'BLE SRI JUSTICE K.SARATH
WRIT PETITION Nos.11408 & 13463 of 2021
COMMON ORDER:
1. Heard Sri Goda Siva, learned Senior Counsel appearing for Sri Goda Ramakrishna, learned Counsel for the petitioners in both the petitions and Sri P.Sriharsha Reddy, Learned Standing Counsel appearing for the respondents.
2. Since the lis involved in both the petitions is one and the same, they were heard together and being disposed of by way of this common order.
3. The Learned Senior Counsel appearing for the petitioners submits that the petitioners 1 to 4 in W.P.No.11408 of 2021 and petitioners 1 to 47 in W.P.No.13463 of 2021 have retired from service in the respondent company on attaining the age of superannuation. The respondents consequent upon 2 SK,J W.P.Nos.11408 & 13463 of 2021 Wage Revision introduced the SCCL Executives Defined Contribution Pension Scheme, 2007 (EDCPS-2007) and the benefit under the said scheme is applicable to the Executives retired after 01.01.2007. The said scheme envisages creation of Pension Fund entirely funded by the respondents as the existing Coal Mines Pension Scheme provided a fixed pension of 25% of Basic Pay plus DA at the time of retirement and there is no provision for increase of this fixed pension.
4. The learned Senior Counsel for the petitioners further submits that in the SCCL EDCPS-2007, the Rule 3.1 (I) contemplates contribution by the Employer and the Rule 3.1(II) makes contribution by the Member optional, the Rule.3.1 (VII) deals with Members Account, which would make it clear that the employer contribution and Member contribution 3 SK,J W.P.Nos.11408 & 13463 of 2021 shall be shown separately and the interest accrued shall also be credited to the respective Member's pension account. The Rule 4.1 specifies the benefits payable to the Member on normal retirement age i.e. superannuation pension, as per which the pension would be payable in the form of annuity and the same would be equal to the accumulated contribution in the Member Pension account and interest thereon. The Rule-5.1 also stipulates no money belong to the fund in the hands of the trust shall be recoverable by the company under any pretext whatsoever nor shall the company have any lien or change of any description on the same. The Rule 8.2. (b) states that no money belonging to the fund shall be receivable by the employer have any lien or change on the fund and the Rule-8.3 ensures that the benefit under the scheme are strictly 4 SK,J W.P.Nos.11408 & 13463 of 2021 personal and cannot be assigned, charged or alienated in any manner whatsoever.
5. The learned Senior Counsel appearing for the petitioners further submits that leave Rules for the executives were governed by the Singareni Collieries Company Ltd. Executive Leaves Rules, 2012 at the time of retirement of the petitioners. These Rules contain scheme for the purpose of leave encashment by executives while in service and encash them at the time of superannuation. Accordingly, the petitioners enchased leaves in accordance with the existing rules as on the date of their retirement and the respondents have recovered the Income Tax.
6. The learned Senior Counsel for the petitioners further submits that an amendment was carried to the Leave Rules in the year, 2019 with effect from 01.01.2019 and by virtue of said amendment, the 5 SK,J W.P.Nos.11408 & 13463 of 2021 total encashment of Leave to the credit of retired executives was slashed down to 300 days (inclusive of both earned Leave and Half Pay leave). The respondents without issuing any notices to the petitioners recovered amounts from their Corpus Fund of Pension under EDCPS, 2007 by implementing the new Rules retrospectively. The amended rules could never be made applicable to such of those Executives who retired prior to 01.01.2019.
7. The learned Senior Counsel for the petitioners further submits that the pension is not a gratuitous payment and not dependent upon sweet discretion of Government, but it is governed by the Rules and recoveries from the pension is not permissible from retired employees or who are due to be retired within one year and further when there was no fault on the 6 SK,J W.P.Nos.11408 & 13463 of 2021 part of employee, the question of recovery by excess amount paid does not arise and requested to allow both the writ petitions.
8. The learned Standing Counsel for the respondents basing on the counter submits that the SCCL Executives Defined Contribution Pension Scheme, 2007 was adopted in toto from Coal India Ltd., (CIL), which got approved by the SCCL Board. As per the Chapter-V of the scheme, a Trust was registered or administration of SCCL EDCPS fund on 29.08.2019 and Income Tax Exemption for payment of contribution towards EDCPS fund was obtained by the Management on 19.01.2021. After appointment of LIC of India as Fund Manager and subsequently on obtaining approval for EDCPS fund by Income Tax Department, the processing of individual claims of the retired eligible executives have been started 7 SK,J W.P.Nos.11408 & 13463 of 2021 from the month of March, 2021 onwards. The contribution made by the employer to its employees is strictly regulated by the scheme subject to fulfillment of eligibility criteria stipulated in the scheme as it is a non-statutory benefit to the Executives who have retired on superannuation from 01.01.2007 onwards only. The SCCL is having power to deduct or regulate the payment of employer contributions to the Executives.
9. The learned Standing Counsel for the respondents further submits that the Rule No.8.14 of SCCL-EDCPS Scheme, 2007, provides that all the terms and conditions prescribed by the Department of Public Enterprises (DPE) are in line with CIL executives Defined Contribution Scheme in the matter of Superannuation Pension Scheme. The DPE vide its OMs dated 17.07.2012 and 07.02.2014 8 SK,J W.P.Nos.11408 & 13463 of 2021 clarified that the encashment of Half Pay Leave and Earned Leave put together limited to 300 days. Accordingly, the excess paid leave encashment was recovered from the petitioners by complying the DEP guidelines in accordance with the Rule No.8.14 of EDCPS scheme; therefore the contention of the petitioners that the employer is restrained to effect recoveries in EDCPS is not tenable.
10. The learned Standing Counsel for the respondents further submits that the Senior Auditor, Government of Telangana vide letter dated 18.09.2019 addressed to CMD of the respondent- Company stating that the Company has been paying encashment of Half Pay Leave (HPL) to the Executives on retirement both Earned Leave and HPL to a maximum of 600 days against ceiling of 300 days from the year 2014-15 to 2018-19. In view of 9 SK,J W.P.Nos.11408 & 13463 of 2021 the remarks of the audit, the competent authority has decided to implement the amended Leave Rules of the Executives as was in CIL, since the respondent-Company is following the payment of pay and perks and leave benefits in toto as in CIL.
11. The Standing Counsel for the respondents further submits that the petitioners being retired executives, if are ready to enjoy the benefits given by the respondent company even after retirement shall be obligated to compensate for the excess benefits enjoyed on par with other executives as principle of restitution applies.
12. The learned Standing Counsel for the respondent further submits that since the total Corpus is paid by the employer under EDCPS scheme, the employer is having right to adjust/recover dues from the executives/retired 10 SK,J W.P.Nos.11408 & 13463 of 2021 executives. According to SCCL Executives Leave Rules, 2012 earlier i.e from 01.01.2012 to 31.12.2018, Earned Leave and Half Pay Leaves can be accumulated and encashed up to maximum of 300 days each. Subsequently certain amendments were made vide circular dated 01.01.2019 limiting the leave encashment to a maximum of 300 days combining EL and HPL and the said memo came into effect from 01.01.2019 and the SCCL Executive Rules were also adopted from the CIL and subsequently, the SCCL leave rules were got amended as in CIL from time to time and there are no merits in the writ petitions and requested to dismiss both the writ petitions.
13. After hearing both sides, this Court is of the considered view that all the petitioners have retired as Executives from the Respondent-Company and all 11 SK,J W.P.Nos.11408 & 13463 of 2021 of them have retired prior to 01.01.2019. The Respondent-Company introduced a scheme called as SCCL-Executives Defined Contribution Pension Scheme, 2007 (SCCL-EDCPS-2007) and the said scheme is made applicable to the Executives who have retired after 01.01.2007. The said scheme envisages creation of Pension Fund entirely funded by the respondent company. The SCCL Leave Executive Rules, 2012 were applicable to the petitioners herein as on the date of their retirement. The said Rules contains the scheme for the purpose of encashment of leave by the Executives while in service and encash them at the time of superannuation. As per the said rules, the maximum of 300 days of Earned Leaves and 300 days of Half Pay Leave were to be enchased by the retired Executives. Accordingly, all the petitioners have encashed their Earned leaves and Half Pay Leaves 12 SK,J W.P.Nos.11408 & 13463 of 2021 in accordance with the existing Rules as on the date of their retirement. The respondents have also recovered the income tax from the petitioners as per the Rules.
14. There is no dispute that basing on the remarks of the audit, the respondents have decided to amend the Leave Rules of Executives in consonance with the Rules of Coal India Ltd. (CIL) and the rules were amended w.e.f. 01.01.2019. As per new Rules, the encashment of Earned Leave and Half Pay leave put together were limited to 300 days. In the impugned action the respondents without issuing any notices to the petitioners recovered the amounts from their Corpus Fund of Pension under EDCPS, 2007 by implementing the new Rules retrospectively.
15. The contention of the respondents that the petitioners being the Executives, if are ready to 13 SK,J W.P.Nos.11408 & 13463 of 2021 enjoy the benefits given by the respondent-Company even after the retirement shall be obligated to compensate for the excess benefits enjoyed by them on par with the other Executives as the principle of restitution applies is not acceptable.
16. The respondents have applied amended Rules retrospectively and arrived at a conclusion that the petitioners were paid excess amounts towards Half Pay Leave and Full DA on full basic pay instead of half DA and decided to recover and accordingly recovered the same without issuing any notice or circulars to the petitioners and the said action of the respondents is contrary to the principles of natural justice and also law laid down by the Hon'ble Apex Court and also this Court.
17. The learned Counsel for the petitioners relied on the Judgment of the High Court of Bombay at 14 SK,J W.P.Nos.11408 & 13463 of 2021 Nagpur in Shri Srikrishna Madhao Khare Vs. National Thermal Power Projects in W.P.No.2610 of 2015 dated 10.01.2017. In that case, the petitioner therein was called upon to repay the leave encashment and half pay leave that were paid to him at the time of his retirement and the Bombay High Court, relying upon the Judgment of the Hon'ble Supreme Court in NTPC Pension Trust Vs. Mohd. Younus and others in Civil Appeal No.8054, 2011 dated 09.12.2015 and held as follows:
"7. A similar question came up before the Hon'ble Supreme Court in Civil Appeal No.8054 of 2011 where the respondent- NTPC was one of the parties. In that case also, the NTPC, by relying on the rules/guidelines, that were notified after the retirement of the employee concerned, were applied to the said employee and certain retiral benefits were not paid to him. The Hon'ble Supreme Court was satisfied that the retiral benefits of the employee in the said case stood crystallized on the date of his retirement and any rules or guidelines notified thereafter including the guidelines that came into force thereafter could not have been made applicable to the employee concerned. As rightly submitted on behalf of the petitioner, the said 1001WP2610.15-Judgment 7/7 order applies to the present case with full vigour. Merely because there was an audit objection, the respondent-NTPC could not have withdrawn the benefits, that 15 SK,J W.P.Nos.11408 & 13463 of 2021 were rightfully granted in favour of the petitioner on his retirement on 31/12/2012. The action on the part of the respondent-NTPC in asking the petitioner to repay the amount of Rs.6,13,295/- is clearly bad-in-law and is liable to be set aside".
18. The above said analogy apply to the instant case also, as all the petitioners were retired from services prior to 01.01.2019 and as on the date of their retirement SCCL-Executive Leave Rules, 2012 were in force and the same was accepted by the respondents in their counter also. In view of the same, the respondents cannot apply the amendment to SCCL-Executive Leave Rules, 2012 in the year, 2019 to the petitioners and cannot recover the amount from the Corpus Fund of pension of the petitioners.
19. The learned Counsel for the petitioners relied on the Judgment of the Hon'ble Supreme Court in State 16 SK,J W.P.Nos.11408 & 13463 of 2021 of Punjab Vs. Raifq Mashi (White Washer)1, wherein the Hon'ble Supreme Court formulated certain guidelines for recovery of the amounts from the employees, which are as follows:
"8. It is not possible to postulate all situations of hardship, which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to herein above, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:
i) Recovery from employees belonging to Class-III and Class-IV service (or Group 'C' and Group 'D' service).
(ii) Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.
(iii) Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.
Xxx xxx xxx 1 (2015) 4 SCC 334 17 SK,J W.P.Nos.11408 & 13463 of 2021
20. The above directions of the Hon'ble Supreme Court apply to the instant case as all the petitioners were retired from service. The respondents without issuing any notice or circulars to the petitioners effected recovery from them and the same is liable to be set aside and the petitioners are entitled to get back the amounts recovered by the respondents from the pension fund under Executive Defined Contribution Pension Scheme (EDCPS, 2007).
21. Moreover, Rule-5.1, 8.2 and 8.3 of SCCL Executive Defined Contribution Pension Scheme - 2007 (EDCPS, 2007) reads as follows:
5.1 Fund Constituted under an irrevocable Trust:
The Fund shall be constituted under a Trust established in India. This shall be an irrevocable Trust save with the consent of all the beneficiaries and provisions of Income Tax Act, 1961. No money belonging to the Fund in the hands of the Trustees shall be recoverable by the Company under any pretext whatsoever nor shall the company have 18 SK,J W.P.Nos.11408 & 13463 of 2021 any lien or charge of any description on the same save as herein provided".
Rule-8.2 Members to have no interest in the Master Policy/Scheme of Insurance and Employer not have any interest in Fund's money:
(a) No Member/Beneficiary shall have any interest in the Master Policy taken out by the Trustees under the rules of fund or in any investment otherwise made by the Trustees in accordance with the Rules of the Trust but shall be entitled to receive Pension Benefits in accordance with the Rules.
(b) No money belonging to the fund shall be receivable by the Employer under any circumstances nor shall the employer have any lien or charge on the fund.
Provided always that the Trustees shall administer the Scheme for the benefit of the Members and their Beneficiates in accordance with the provisions of these Rules.
Rule-8.3; Restraint on Assignment or Encumbrances:
Subject to other conditions stipulated in the Scheme the Benefits under the Scheme are strictly personal and cannot be assigned, charged or alienated in any manner whatsoever".19
SK,J W.P.Nos.11408 & 13463 of 2021
22. As per the above Rules, the respondent- Company have no right to recover or withhold amounts from pension fund of the petitioners and the same is arbitrary and illegal and the recovery effected by the Respondents from the amount of the petitioners is liable to be set aside.
23. The contention of the respondent-Company is that as per the Rule 8.14 of EDCPS, 2007 the respondent has power to recover the amount from the petitioners.
Rule-8.14 of EDCPS, 2007 reads as follows:
Adherence of DEP guidelines:
"All the terms and conditions prescribed by Department of Public Enterprises (DEP) in line with the CIL Executive Defined Contribution Pension Scheme in the matter of Superannuation Pension are to be adhered"
In fact, the impugned orders were passed in view of amendment of SCCL-Executive Leave Rules, 2012 20 SK,J W.P.Nos.11408 & 13463 of 2021 dated 01.01.2019 and the Rule 8.14 of the EDCPS- 2007 is not apply to the instant case and the impugned proceedings were not issued in consonance with the EDCPS-2007. In view of the same the contention of the respondents is not acceptable.
25. As on the date of retirement of the petitioners, they were eligible to encash maximum of 300 days Earned Leaves and maximum of 300 days Half Pay Leaves as per their entitlement. The respondents have also admitted in their counter that the amended Rules were framed and came into force on 01.01.2019 basing on the Audit report. Implementing the said Rules retrospectively and the amount received by the petitioners as per the existing rules as on the date of their retirement was treating as 21 SK,J W.P.Nos.11408 & 13463 of 2021 excess payment and effecting recovery is arbitrary and illegal.
26. In view of the above findings, both the writ petitions are allowed and the respondents are directed to pay back the amount to the petitioners recovered from the Pension Fund under EDCPS,2007 of the petitioners with interest @ 6% per annum, within eight (8) weeks from the date of receipt of copy of this order.
27. Miscellaneous applications, if any, shall stand closed. There shall be no order as to costs.
_____________________ JUSTICE K.SARATH Date: 21.07.2023 trr