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Showing contexts for: interest on commuted pension in Delhi Transport Corporation vs K.K. Berry And Ors. on 5 September, 2006Matching Fragments
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.
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.
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.