Delhi High Court
Sunita Devi vs Life Insurance Corporation Of India & ... on 28 April, 2010
Author: S.Muralidhar
Bench: S. Muralidhar
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
18.
+ W.P. (C) No. 3774 of 2008
SUNITA DEVI ..... Petitioner
Through: Mr. V.N. Jha, Advocate.
versus
LIFE INSURANCE CORPORATION OF INDIA
& ANR. ..... Respondents
Through: Mr. S. Kamal Mehta, Advocate for LIC.
Ms. Ratna Dhingra and Ms. Shreya Sharma,
Advocates for R-2.
CORAM: JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in Yes
Digest?
ORDER
28.04.2010 W.P. (C) No. 3774 of 2008 & CM No. 7265 of 2008
1. The husband of the Petitioner was an employee of the Indian Airlines and was working there as an Assistant Manager (S&P) till the date of his retirement on 31st July 1995. In the year 1994, Indian Airlines proposed the creation of a pension scheme for its employees known as Indian Airlines Employees Self Contributory Superannuation Pension Scheme („Scheme‟). Under the Scheme it was proposed that all full-time employees who become members of the scheme would contribute a percentage of their salary to be deducted every month and credited to the fund under the Scheme. Each member had to contribute for a certain period and for those who did not have WP (C) No. 3774 of 2008 Page 1 of 8 sufficient number of years of service left for the superannuation, an amount was calculated based on the total number of years in deficit. The member was required to make payment of the entire sum so calculated either in lump sum or pay the said amount in monthly instalments along with interest on the total sum due.
2. A deed of Trust was entered into between the Indian Airlines and the Trustees of the Scheme (Respondent No.2 herein). The deed of Trust contained Rules which stipulated that the retiring employee would get pension equivalent to 40% of the last month‟s salary consisting of basic pay, dearness allowance, additional pay, interim relief and personal pay, if any.
3. In order to give effect to the Scheme, an agreement was entered into with the Life Insurance Corporation of India („LIC‟), Respondent No.1, which issued a master policy stipulating certain terms and conditions. In terms of the said agreement with the LIC, the amount was to be calculated on superannuation of the employee. An annuity was to be purchased from the LIC so as to ensure payment by the LIC of a fixed monthly sum to the retired employee. On his demise the payment of annuity amount was to be made to his nominee/legal representative.
4. The Petitioner‟s husband applied for enrolment as a member of the Scheme and was accepted as its member. He complied with the requirements of the Scheme. He deposited a pay order dated 3rd July 2000 in the sum of Rs. 1,21,687/- and later a further sum of Rs. 20,000/- as the contribution on his part. His last drawn salary was Rs. 8,543/-. Accordingly, he was to WP (C) No. 3774 of 2008 Page 2 of 8 receive Rs. 3,417/- per month as pension. The total corpus benefit (pension amount) was Rs. 3,41,700/- and the commutation amount was Rs. 1,13,900/- being 1/3rd of the corpus.
5. The Petitioner‟s husband exercised Option No.1 according to which he was to receive a pension amount of Rs. 2,278/- per month for life and upon his death, the corpus was to be returned to his nominee together with the commutation amount. The husband of the Petitioner appointed her as his beneficiary/nominee under Rule 20 of the Scheme. It is stated that the Petitioner‟s husband started drawing a pension of Rs. 2,278/- per month under the Annuity No. 24582 and Policy No. 311242.
6. Unfortunately, the Petitioner‟s husband expired on 21st October 2004. The Petitioner wrote to the LIC on 24th November 2004 informing it of her husband‟s death. She also returned to the LIC the cheques issued in the name of her husband. She requested that the amount be paid to her as the nominee. However, LIC did not respond to the Petitioner‟s letter dated 24 th November 2004. A reminder was sent on 15th June 2005. On 8th August 2005, LIC wrote to the Respondent No. 2 Trust requesting that Form N and the discharge receipt enclosed with the letter should be got signed by the Petitioner as a beneficiary. On receiving the said letter dated 8 th August 2005, the Petitioner wrote to Respondent No. 2 on 16th August 2005 asking it to send the requisite papers to Respondent No. 1.
7. Respondent No. 2 sent a letter on 14th January 2008 to the Petitioner in which it was stated that the Trust suffered a shortfall of Rs.19.46 crores due WP (C) No. 3774 of 2008 Page 3 of 8 to the benefit extended to the early retirees as compared to their contribution. Consequently, the Trustees in exercise of the powers conferred under Clause V of the Trust Deed amended the scheme from "Benefit Defined" to "Contribution Defined". The amended Trust Deed provided that the employees who have retired and for whom annuity had already been purchased from LIC and were drawing pension thereon "shall contribute a lump sum amount equal to the difference between the cost of annuity purchased for them and the total contributions made by each such employee to the Pension Trust." Alternatively, the Trustees were to notify LIC for retrieval of the shortfall in the contribution from the purchase price of the annuity paid to LIC in respect of such members. The contention of the Petitioner is that the amendment to the Scheme cannot have retrospective effect and cannot enable LIC to repudiate the Petitioner‟s claims.
8. A counter affidavit has been filed by the Trust i.e. Respondent No. 2 in which a reference has been made to proceedings in Writ Petition No. 1858 of 2003 (N. Samkunny v. LIC) in which an order dated 10th October 2003 was passed by the Bombay High Court directing LIC to maintain status quo relating to the annuities where payments had already begun. In a letter dated 13th March 2008 by way of reply to the Petitioner‟s legal notice dated 20 th December 2007, the LIC took the stand that it was not settling her claim since Respondent No. 2 had not provided to it the claim form duly attested by Respondent No. 2. However, in the counter affidavit in these proceedings, LIC has taken the stand that it is bound by the order dated 10 th October 2003 of the Bombay High Court which ordered status quo to be maintained. Further, it is pointed out that the Petitioner‟s husband already WP (C) No. 3774 of 2008 Page 4 of 8 received a sum of Rs. 1,13,900/- being the commutation amount. Further, LIC claims that some "understanding" has been arrived at "with the respective Union/Association" in terms of which under the amended Scheme, the retirees were "claiming payment of the full corpus" whereas the Petitioner was claiming pension under the unamended Scheme.
9. Learned counsel for the Petitioner, on the other hand refers to the judgment of the Supreme Court in Air India Employees Self-Contributory Superannuation Pension Scheme v. Kuriakose V. Cherian (2005) 8 SCC 404 where it has been categorically held that the benefit of retired employees as a result of purchase of annuities could not be curtailed because of the shortfall of the pension fund amount. It is submitted that at the time when the Bombay High Court passed the interim order on 10 th October 2003, the aforementioned decision of the Supreme Court was not available and, therefore, it is the Supreme Court judgment which should prevail.
10. This Court has heard submissions of learned counsel for the parties.
11. There is no real justification shown for denying the payment of the balance corpus amount of Rs. 2,28,700/- (i.e. Rs. 3,41,700 - Rs. 1,13,900) to the Petitioner. It is plain that any amendment made to the Scheme can only have prospective effect and cannot deprive the vested rights of the retired employees and their benefits in terms of the Scheme. In Air India Employees Self-Contributory Superannuation Pension Scheme v. Kuriakose V. Cherian the Supreme Court examined the issue at some length. It was held in para 48 (SCC) that the rights of the employees to WP (C) No. 3774 of 2008 Page 5 of 8 receive the annuities and quantum of the annuity gets crystallized at the time of purchase of the annuity. After referring to the judgment in Sasadhar Chakravarty v. Union of India (1996) 11 SCC 1 it was held that:
"the right of the employee to receive an annuity and the quantum thereof gets crystallised at the time of purchase of the annuity under the then existing scheme of LIC and any subsequent improvements in a given pension fund scheme would not be available to those persons whose rights are already crystallised under the scheme by which they are governed because the amounts contributed by the employer in respect of such persons are already withdrawn from pension fund to purchase the annuity."
12. It was explained in para 50 (SCC) that "the corpus to the extent required for purchase of annuity leaves the trust fund and all connections between trust fund and retirees are severed." In para 52 (SCC) it was held that the LIC having accepted the annuity and having effected monthly payments "can neither reduce the annuity amount nor refund to the Trust to the detriment of the retirees since the annuity has already crystallized and no change can be made in such annuity as stipulated by the impugned amendments."
13. The Petitioner is right in contending that after the above judgment of the Supreme Court, the interim order dated 10th October 2003 of the Bombay High Court is to no avail.
14. In the considered view of this Court, LIC cannot deny to the nominees of members of the Scheme who joined it prior to the amendment the benefit of the payment of annuities and the corpus fund as already agreed to. In other WP (C) No. 3774 of 2008 Page 6 of 8 words, LIC should pay the Petitioner the balance corpus that it has unfairly withheld even after the position was made clear by the Supreme Court in the above decision. As pointed out by the Petitioner, the payment of the commutation amount of Rs. 1,13,900/- to her late husband was because he exercised Option I under the Scheme. Further, in terms of the same Option I, the Petitioner is entitled to receive the balance of the total corpus benefit of Rs. 2,27,800/-. The above corpus fund was arrived at on the basis of the annuities purchased. That amount therefore, got crystallized. The LIC could thereafter not back track on the basis of the subsequent amendment to the Scheme.
15. As far as Respondent No. 2 is concerned, it has no objection to any orders being passed by the Court allowing the prayer of the Petitioner. Its role is limited to forwarding the claim of the Petitioner to the LIC which it is prepared to do in terms of the directions of this Court.
16. The writ petition is, accordingly, allowed. Respondent No. 2 will, within a period of two weeks from today, send the duly attested claim form of the Petitioner to Respondent No. 1. Within a further period of two weeks thereafter, Respondent No. 1 LIC will release to the Petitioner the amount of Rs. 2,27,800/- (the balance of the corpus) in her capacity as the nominee/beneficiary of her husband late Shri D.B. Singh. The said amount will be paid together with simple interest @ 6% from 24th November 2004 when the Petitioner first approached Respondent No. 1 for the release of the amount till the date of payment. If the payment is not made within the time as directed by this Court, LIC will pay penal simple interest @ 12% per WP (C) No. 3774 of 2008 Page 7 of 8 annum for the period of delay.
17. The writ petition is allowed in the above terms with costs of Rs. 5,000/- which will be paid by the LIC to the Petitioner within four weeks. The application is disposed of.
S.MURALIDHAR, J APRIL 28, 2010 dn WP (C) No. 3774 of 2008 Page 8 of 8