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