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2022 Supreme(Online)(KER) 5041
HIGH COURT OF KERALA
ANU SIVARAMAN, J
G. YAMUNA, – Appellant
Versus
KERALA FINANCIAL CORPORATION, – Respondent
WP(C)/561/2019
P.GOPALAKRISHNA PILLAI(Party-In-Person), SRI.M.R.VENUGOPAL, SRI.C.AJITH KUMAR, SRI.N.N.SUGUNAPALAN (SR.), SRI.S.SUJIN, SC, EPFO, Mr.VISHNU J., CGC, SMT.DHANYA P.ASHOKAN, SENIOR GOVERNMENT PLEADER, SMT.M.R.SREELATHA, D.SAJEEV, SMT.LIGEY ANTONY, SMT.NITA.N.S.
Employees cannot claim rights to a pension scheme that was never formalized as regulations under the governing act, validating decisions on pension implementations based on financial viability.
Headnote:
Pension - Employees Rights - State Financial Corporations Act, 1951 - Sections 23, 39, 48 - The court ruled that the employees had no vested rights to the pension scheme since the requisite regulations were never finalized and implemented, thus affirming the legality of the decision to implement a new pension scheme.
Fact of the Case:
Petitioners, retired employees of a financial corporation, sought directions to implement a sanctioned pension scheme. The corporation initially proposed a scheme but later deemed it financially unviable, opting for the National Pension Scheme instead, prompting legal challenges from former employees seeking the original scheme's implementation.
Finding of the Court:
The court found that no formal pension regulations were established under the applicable financial corporation act, meaning the petitioners lacked a legal entitlement to the previously proposed pension scheme. Financial viability issues justified the board's decision without further governmental sanction.
Issues: Whether the pension scheme was effectively implemented, if employees had vested rights to it, and if the shift to a new pension scheme violated legal provisions or principles of fair treatment.
Ratio Decidendi: The court held that pension regulations under the State Financial Corporations Act must be properly formulated and published to be binding; since the previous scheme was never formalized, no rights to it existed.
Final Decision: The writ petitions are dismissed.
JUDGMENT
1.Heard the learned counsel for the petitioners, the learned Senior Government Pleader and the learned standing counsel appearing for the Kerala Financial Corporation.
2. These writ petitions are filed seeking directions to the respondents to release the pension to the petitioners in terms of the Pension Scheme, which had been prepared and sanctioned by the Kerala Financial Corporation (hereinfter referred to as “KFC” for short). The documents are being referred to in this judgment as in W.P.(C).No.561/2019 for convenience, unless otherwise specifically mentioned.
3. It is contended that the petitioners are retired employees of the 1st respondent which is a non-banking financial institution incorporated under Section 3 of the State Financial Corporations Act, 1951 (hereinafter referred to as the Act). It is submitted that the employees of the 1st respondent were governed by the Employees Provident Fund and Miscellaneous Provisions Act, 1952. While so, an amendment was brought to the Employees Provident Fund and Miscellaneous Provisions Act in the year 1995 providing that organizations exempted under Section 17 were enjoined to start a Pension Scheme. The 1st respondent had conducted due studies and had submitted a draft Pension Scheme before the 2nd respondent for approval. GO(MS) 669/2001/Fin dated 5.4.2001 was issued by the Government approving the Pension Scheme.
4. By Exhibit P2, the Pension Regulations framed were also approved by the State Government and the 1st respondent was directed to adopt the Regulations. However, this was not done. Later, by Exhibit P3 order dated 3.6.2002, the 1st respondent went back own its decision to implement the proposed Pension Scheme. The petitioner in W.P.(C).No.561 of
2019 along with another employee of the 1st respondent file a complaint as Complaint No.2277/2011 before the Lok Ayukta. An order was passed on 18.12.2013 recommending implementation of the Scheme. The 1st respondent filed W.P. (C).No.5046 of 2014 against the order of the Lok Ayukta and a Division Bench of this Court set aside the directions of the Lok Ayukta as being without jurisdiction. The Board of Directors of the 1st respondent thereafter took a decision to implement the National Pension Scheme (NPS for short) with retrospective effect from 1.4.2013. The 2nd respondent thereupon issued Exhibit P8 Government Order cancelling Exhibits P1 and P2 and implementing the NPS.
5. The party, who appears in person in W.P.(C).No.944 of 2019, contends that he retired from service of the respondent in 2007 as Manager. It is submitted that though the self financing Pension Scheme had been approved by the Government by Exhibits P1 and P2 Government Orders, the Pension Regulations were kept pending till the year 2019 and were arbitrarily cancelled in 2019. It is submitted that the order of cancellation was issued by the very same officer who was functioning as Chairman and Managing Director of the Corporation and that the decision to cancel the sanction accorded was not placed before the cabinet. Relying on the provisions of Regulation 28 and 29 of Exhibit P2 draft regulation, it is contended that the actuarial valuation is to be conducted before each periodical review after the Pension Scheme is implemented and that there was no sanctity in the conduct of a review by the Board even before the implementation of the Scheme. It is submitted that since the regulations had been appropriately framed to come into effect from 31.3.1998, the respondents are duty bound to implement the scheme with retrospective effect from 1998. It is contended that since Exhibit P2 regulations had been framed pursuant to the sanction accorded by the Government, there is absolutely no justification for not implementing the regulations from 1998 onwards.
6. The petitioners 1 and 2 in W.P.(C).No.10407 of 2019 are recognised service organisations. While the 3rd petitioner is a Junior Executive in the KFC. The prayer in the writ petition is against Exhibit
