Delhi High Court
Delhi Transport Corporation vs K.K. Berry And Ors. on 5 September, 2006
Author: S. Muralidhar
Bench: Mukul Mudgal, S. Muralidhar
JUDGMENT S. Muralidhar, J.
1. LPA No. 550/2004 is directed against the judgment dated 3.10.2002 of a learned Single Judge allowing Writ Petition (Civil) No. 4009 of 1998 filed by the respondents. By the impugned judgments, the learned Single Judge directed the appellant to prepare a `due and drawn' statement on the basis that the respondents herein, who are retired pensioners of the appellant, would be entitled to interest at 12% per annum on the commuted value of the pension due to each of the respondents for the period from 1.7.1989 to 30.9.1995.
2. This appeal was filed on 30.8.2003 with a delay of over 270 days. It was apparently returned by the registry with certain objections. Thereafter it was re-filed only on 30.4.2004 with an obvious delay in re-filing the appeal. In the meanwhile, the impugned judgment was complied with by the appellant as is evident from the following two paragraphs of its memorandum of appeal:
At the outset it is submitted that the appellant Corporation has in pursuance to judgment dated 3rd October, 2002 complied with the directions in respect of all the respondents in as much as the payment of the commuted value of the pension together with 12% interest has been paid and has also furnished a due and drawn statement to all the Respondents.
The present appeal is being filed by the appellant, so that the judgment under appeal dated 3rd Oct., 2002 is not made a precedent in future cases as some retired employees has formed a self styled unrecognized D.T.C. Pensions Welfare Forum and has filed a Contempt Petition in order to force the appellant to apply the impugned judgment in all cases. Hence the present appeal.
3. LPA No. 552 of 2002 is directed against the impugned order dated 12.3.2004 of the learned Single Judge allowing Writ Petition (Civil) No. 2463-66 of 2004 filed by the respondent, DTC Pensioners' Welfare Forum, following the judgment dated 3.10.2002 passed in Writ Petition (Civil) No. 4009 of 1998. This appeal was filed in time and with an application for stay of the impugned order.
4. Both the LPAs, i.e., LPA No. 550/2004 and LPA No. 552/2004, came up for hearing in this Court on 18.5.2004. While directing notice to issue in the two appeals, as well as the application for condensation of delay, this Court stayed the operation of the second impugned order dated 12.3.2004 passed by the learned Single Judge in Writ Petition (Civil) Nos. 2463-66/2004, which was challenged in LPA No. 552/2004. Thereafter several hearings were taken up in the substitution of the legal representatives of some of the respondents, who expired during the pendency of these appeals. Even as late as 22.5.2006, this Hon'ble Court was not satisfied with the explanation for the delay in filing LPA No. 550/2004 and required the appellant to file a further affidavit explaining the delay.
5. We have heard the submissions of Mr. B. Datta, the learned Additional Solicitor General of India appearing for the appellant and Mr. Anil Mittal, learned Advocate for the respondents. As regards the reasons for delay in filing the LPA No. 550/04, Mr. Datta relies on the additional affidavit filed by the appellant in July 2006. The explanation is that the appellant has constituted a committee known as the Legal and Financial Committee which looks into the merits of all legal cases and makes recommendations to the competent authority of the appellant. The present case was placed before the said Committee on 11.12.2002, more than 2 months after the impugned judgment dated 3.10.2002 of the learned Single Judge, and the said Committee directed the file to be placed before the competent authority. It is stated that on 21.1.2003 the competent authority "being ignorant of the fact that an appeal from the order of learned Single Judge of the Hon'ble Court lay to a Division Bench" directed the filing of the appeal in the Hon'ble Supreme Court of India. Thereafter the file was sent to the Office of an Additional Solicitor General of India. It was returned from the said Office a few days later. It is stated that thereafter the present counsel was "orally consulted" and he opined that a letters patent appeal was indeed maintainable. It is then stated that "Corporation finally decided on 01-08-2003 to file the present appeal and entrust the matter to the present counsel".
6. We find the above explanation for the delay to be wholly unacceptable. If true, it indeed reflects a sorry state of affairs. We find it difficult to believe that the appellant, which is day in and day out filing numerous appeals before the Division Benches of this Court against the orders of learned Single Judges in writ petitions, was unaware of the legal position and decided to proceed on the advice of a committee that an appeal could directly be filed in the Hon'ble Supreme Court. There is also no explanation whatsoever for the considerable delay in the re-filing of the appeal. We are not at all satisfied with the explanation for the delay. The appeal deserves to be dismissed on this ground alone. However, Mr. Datta urged that although the impugned judgment dated 3.10.2002 of the learned Single Judge had already been complied with in respect of the 29 respondents in LPA No. 550/2004, the appeal should nevertheless be heard on merits since it constituted a precedent, as is evident from the order dated 12.3.2004 in WP(C) 2463-66 of 2004 against which LPA No. 552/2004 has been filed.
7. Accordingly we heard submissions of Mr. Datta on merits as well. He submits that the learned Single Judge erred in holding that the appellants were required to pay interest to the respondents pensioners on the commuted value of pension only because the appellant was charging interest from the pensioners on the refund of the EPF contribution. He submits that while there is a legal basis for charging interest on the refund of the EPF contribution by the pensioners, there was no legal basis for requiring the appellant to pay interest on the commuted value of pension. He further submitted that the pension scheme itself was under litigation and could be operationalized only on 1.11.1995 and, therefore, the appellant should not be required to pay interest on the commuted value of pension for any period prior to this date. At the conclusion of the submissions, Mr. Datta filed an additional affidavit dated 30.8.2006 enclosing an order dated 25.11.1994 issued by the DTC, which in turn followed an Office Memorandum dated 25.8.1994 issued by the Government of India, Department of Pension and Pensioners Welfare, New Delhi. The order dated 25.11.1994 directed that "wherever the employees are required to refund the payments towards Death-cum-Retirement Gratuity already drawn/received from the Corporation, the same will be refunded along with interest. The rate of interest will be the rate applicable on P.F. accumulations from time to time (at present 12% per annum compound annually) for the period from the date of receipt of the payments to the date of their refund to the Corporation." Failure to refund the payment already received would entail a penal interest of 1% per annum. Accordingly, he submits that the DTC was justified in requiring the pensioners to refund the PF amount already received together with interest at 12% per annum compounded annually.
8. Mr. Anil Mittal, counsel for the respondent submits that as far as LPA No. 550 of 2004 is concerned, the issue is academic since the impugned order dated 3.10.2002 in respect of each of the respondents has already been implemented by the appellant. He submits that there is no express provision in the Pension Scheme notified by Office Order No. 16 dated 27.11.1992 that permits the appellant to charge 12% interest on the refund of the EPF amount. However, if indeed the interest had to be charged at 12%, then a similar rate of interest was required to be paid by the appellant to the pensioners on the commuted value of the pension. In these circumstances, the learned Single Judge was justified in giving the directions as contained in the impugned order dated 3.10.2002.
9. We may first notice a few facts that are relevant for the disposal of the present appeals. The appellant introduced a pension scheme by Office Order No. 16 dated 27.11.1992 where an option was given to all existing employees as of 27.11.1992 and those who had retired with effect from 3.8.1981 onwards to opt for the pension scheme within 30 days. This period was later extended up to February 1993 and the admitted position is that the respondents pensioners before us have all exercised their options to be governed by the Scheme. For employees who joined the appellant with effect from 28.11.1992 the pension scheme was compulsory. The relevant clauses of the said Scheme are:
(6) The employees who have retired on or after 3rd August, 1981 and the existing employees, who have drawn employer's share, under the EPF Act, partly or wholly shall have to refund the same with interest in the event of their opting for the Pension Scheme. The total amount to be refunded by the retired employees/existing employees would be the amount that would have accrued had they not withdrawn the employer's share.
(7) Excess amount of gratuity, if already paid to ex-employees and which is not admissible under the pension Scheme, will have to be refunded by them before any benefit under the Scheme, is granted to them.
(8) A due and drawn statement would be prepared in respect of retired employees opting for pension Scheme and the amount to be paid/refunded, would be worked out by the concerned unit, wherefrom the employee had retired from service.
It was further stipulated that the unit officers "will also ensure the recovery of PF and gratuity from the ex-employees before forwarding their applications as mentioned above".
10. Thereafter the `due and drawn' statement came to be prepared by the appellant in respect of each of the pensioners showing the amount constituting the employees' share of the provident fund which had already been received by the pensioners which was now required to be refunded together with the amount constituting the compound interest at 12% p.a. on the said amount for the period from 31.7.1989 to 30.9.1995. Likewise, the gratuity amount together with 10% simple interest that was required to be refunded was also shown. Thirdly, the total arrears of pension from 1.7.1989 to 30.9.1995 was calculated and this was added to the commuted value of the pension. Finally the difference between the total amount of pension and commuted pension payable to the employee and the amount recoverable from him was shown in the statement.
11. The pensioners were aggrieved by the said `due and drawn' statement. It is their contention that an employee becomes entitled to the commuted value of pension on the very next day after having retired from service and the amount of pension is reduced proportionately, i.e., by 1/3rd. It is submitted that the correct way of calculating the amount of EPF to be refunded by the pensioners was that from the entire amount of the EPF, the commuted value of the pension should be deducted first and thereafter on the balance, if any, the interest may be calculated month-wise by adjusting the monthly pension that becomes due and payable to the pensioners. It was also pointed out that the Government in any event takes care of the interest payable on the commuted pension inasmuch as that the amount of commutation is calculated on the pension likely to be earned by the retiring persons during the next 10 years depending on the age factor. This commuted amount is then paid to the retiring employee immediately on his retirement. Thereafter the employee starts receiving the proportionally reduced pension, i.e., 1/3rd of the basic pension. The full pension is, however, restored to the retired employee after 15 years and not after 10 years for which the calculations are made. In other words, the commuted portion of the pension paid in advance is recovered back fully with interest by the Government.
12. The appellant DTC declined to accept this request principally on the ground that there was no provision in the Central Civil Services (Pension) Rules, 1972(`1972 Rules') for payment of interest on the commuted pension. Aggrieved by the erroneous calculation of the amounts payable to and by the pensioners, the respondents 1 to 29 in LPA 550/2004 filed Writ Petition (Civil) No. 4009 of 1998 in this Court praying, inter alia, for a direction to the appellant herein to prepare the correct `due and drawn' statements in the manner suggested by them.
13. In the meanwhile certain other developments took place. In respect of the very scheme with which we are concerned, its validity was challenged by the DTC Retired Employees' Association and upheld by the Division Bench of this Court on 16.3.2000 in LPAs Nos. 294 and 297 of 1997. Thereafter the matter was carried in appeal to the Hon'ble Supreme Court. In DTC Retired Employees' Association v. Delhi Transport Corporation , the Hon'ble Supreme Court dismissed the appeals and upheld the validity of the pension scheme. The arguments before the Hon'ble Supreme Court on the validity of Clause 6 of the Scheme requiring the employees to refund the provident fund together with interest were negatived and the Hon'ble Supreme Court observed as under (SCC @ p. 67):
The next contention urged by the appellant's counsel is that DTC was not entitled to charge interest on the employer's share of provident fund received by the employees on retirement. Prior to the Pension Scheme, the employees were entitled to get benefit of the Contributory Provident Fund. These employees on retirement accepted the employer's share of provident fund. The Scheme specifically provided that those who wanted to opt for pension should return the employer's share of provident fund with interest. However, the retired employees had utilised the money received to their advantage. Therefore, they are bound to return the same along with interest; otherwise, a section of the employees would be unduly benefited vis-a-vis other employees. Therefore, we do not think that such a clause in the Scheme is irrational or illegal. We do not find any infirmity in the findings recorded by the High Court.
However, it appears that before the Hon'ble Supreme Court, the question that arises in these appeals about the liability of the appellant to pay 12% compound interest on the commuted value of pension payable to the pensioners, did not arise for consideration. Therefore, even while the respondents herein no longer question the right of the appellant to charge interest on the EPF amount required to be refunded, the question of non-payment of a corresponding interest on the commuted pension was not before the Hon'ble Supreme Court and, therefore, not considered by it at all.
14. This is reflected in the submission of the counsel for the pensioners before the learned Single Judge which has been noted in the impugned order as under:
Learned Counsel for the Respondents says that in view of certain decisions having been rendered by a Division Bench of this Court, the Respondents are entitled to charge interest on the EPF amount. Learned counsel for the Petitioners is not questioning this at all. He admits that the Respondents are entitled to charge interest on the EPF amount. What is actually submitted by learned Counsel for the Petitioners is that having charged interest on the EPF amount, the Respondents should be asked to pay interest on the commuted value of pension which they have withheld, even though theoretically, from 1st July, 1989 onwards. There does not seem to be any reason to deny to the Petitioners the interest on the commuted value of pension, particularly since the Respondents have demanded and received interest on the EPF amount.
15. The learned Single Judge noted that upon retirement, the respondents pensioners were entitled to receive the commuted value of pension in terms of Rule 6(1)(i-a) of the Central Civil Services (Commutation of Pension) Rules, 1981 (`1981 Rules') on the date following the date of retirement. The learned Single Judge thereafter observed as under:
It seems unreasonable that on the amount which the Respondents are asking Petitioner No. 1 to refund, they are claiming interest but on the amount which they are giving to him, they are not paying any interest. The Respondents cannot have their cake and eat it too. Either they should not demand interest from Petitioner No. 1 on the EPF or if they do so, they should pay interest to Petitioner No. 1 on the commuted value of pension which was not paid to him on the due date. Alternatively, the Respondents may adjust both the amounts and on the balance, interest may be calculated.
The learned Single Judge held that since the appellant had in any event taken a lenient view of the applicability of the 1972 Rules they could not avoid paying interest on the commuted value of the pension merely because the 1972 Rules did not contain a provision in that behalf. Consequently the learned Single Judge disposed of the writ petitions in the manner stated at the beginning of this judgment.
16. The approach to the issue on hand has to be based on certain settled legal principles explaining the nature and purpose of pension to a retired employee of the State or undertaking of the State. It has been long recognised in judicial decisions that pension is akin to property and is not a bounty or charity. In D.S. Nakara v. Union of India , the concept of pension as a measure of socio-economic justice was explained thus:
29. Summing up it can be said with confidence that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to aging process and, therefore, one is required to fall back on savings. One such saving in kind is when you give your best in the hey-day of life to your employer, in days of invalidity, economic security by way of periodical payment is assured. The term has been judicially defined as a stated allowance or stipend made in consideration of past service or a surrender of rights or emoluments to one retired from service. Thus the pension payable to a government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation or for service rendered. In one sentence one can say that the most practical raison d'etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon.
The Court went on to explain the rationale behind the grant of pension (SCC @ page 322-323, paras 27, 29, 30):
27. Viewed in the light of the present day notions pension is a term applied to periodic money payments to a person who retires at a certain age considered age of disability; payments usually continue for the rest of the natural life of the recipient. The reasons underlying the grant of pension vary from country to country and from scheme to scheme. But broadly stated they are (i) as compensation to former members of the Armed Forces or their dependents for old age, disability, or death (usually from service causes), (ii) as old age retirement or disability benefits for civilian employees, and (iii) as social security payments for the aged, disabled, or deceased citizens made in accordance with the rules governing social service programmes of the country. Pensions under the first head are of great antiquity. Under the second head they have been in force in one form or another in some countries for over a century but those coming under the third head are relatively of recent origin, though they are of the greatest magnitude. There are other views about pensions such as charity, paternalism, deferred pay, rewards for service rendered, or as a means of promoting general welfare (see Encyclopedia Britannica, Vol. 17, p. 575). But these views have become otiose.
29. Summing up it can be said with confidence that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to aging process and, therefore, one is required to fall back on savings. One such saving in kind is when you give your best in the hey-day of life to your employer, in days of invalidity, economic security by way of periodical payment is assured. The term has been judicially defined as a stated allowance or stipend made in consideration of past service or a surrender of rights or emoluments to one retired from service. Thus the pension payable to a government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation or for service rendered. In one sentence one can say that the most practical raison d'etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon.
30. The discernible purpose thus underlying pension scheme or a statute introducing the pension scheme must inform interpretative process and accordingly it should receive a liberal construction and the courts may not so interpret such statute as to render them inane (see American Jurisprudence, 2d, 881).
Although the judgment in D.S. Nakara to the extent that it invalidated a cut off date for grant of revised pensionary benefits has been subsequently watered down in a series of judgments including Krishena Kumar v. Union of India , Action Committee South Eastern Railway Pensioners v. Union of India 1991 Supp (2) SCC 544 and Tamil Nadu Electricity Board v. R. Veerasamy , the nature of what pension is as explained in D.S. Nakara still remains good law.
17. Viewed in light of the above legal principles, we agree with the reasoning of the learned Single Judge that, in the above circumstances it would be unfair and unreasonable to deny the pensioners interest on the commuted value of the pension paid to them. Mr. Datta is perhaps right in his submission that charging 12% per annum compound interest on the EPF amount required to be refunded has the backing of the Circular dated 25.8.1994 issued by the Government of India. However, that still does not explain how it is fair and just to deny the respondent pensioners the corresponding rate of interest on a compounded basis on the commuted value of pension which is payable to them. We are of the view that the denial to the respondents the benefit of the interest on the commuted value of pension on the same basis as what is being charged from them in terms of para 6 of the pension scheme and the Circular dated 25.8.1994 of the Government of India would be plainly arbitrary, unreasonable and violative of Article 14 of the Constitution.
18. There is also no answer by the appellants to the point made by the respondent pensioners that while the award of pension is calculated on the basis of the pension likely to be earned by the retiring person during the next ten years depending on his age factor, the full pension is received only after 15 years and not after 10 years. Therefore, obviously, the portion of the commuted value of pension paid in advance is recovered back together with the interest that such amounts could have earned. There appears to be no specific denial by the appellant to this averment made in para 12(iii) of the writ petition. The only stand by way of reply is that there is no specific provision in the 1972 Rules for payment of such interest. We are of the view that the absence of a provision to pay interest on the commuted value of the pension cannot be offered as an explanation for answering the charge of arbitrariness and unreasonableness resulting from the denial of the payment of such interest, particularly in view of the fact that the Government, and now the appellant, have chosen to arm themselves with specific powers to charge such interest from the pensioners on the amounts that they seek to recover from them by way of refund of the EPF dues.
19. We accordingly find no ground to interfere with the impugned judgments of the learned Single Judge. The appeals are dismissed with no order as to costs.