Disposed

K.P.Ramakrishnan and Others v. Kerala State Co-Operative Employees Pens

Kerala HC27 Sept 2016WP(C)/19510/2010

Case brief

AI extract

What is this about?

Retired co-operative bank employees challenged postponement of pension until full remittance of employer contributions. The court rejected claims for full pension from retirement and exemption from the amendment, but directed proportionate pension for the period preceding payment of full pension, based on contributions already remitted.

What did the court decide?

Pension Board directed to pay proportionate pension against 2009 remittances from the respective pension-docket allotment dates, whichever was earlier, up to March 2011.

K.P.Ramakrishnan and Others Vs Kerala State… — Cooperative Societies | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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TUESDAY, THE 27TH DAY OF SEPTEMBER 2016/5TH ASWINA, 1938

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WP(C).No. 19510 of 2010 (K) ----------------------------

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PETITIONER(S):

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1. K.P.RAMAKRISHNAN, 'SARATHI', PULLANCHERI P.O., MANJERI, MALAPPURAM DISTRICT.

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2. E.SIVASANKARAN, 'SIVAM', MELEPARMABA NARUKARA P.O., MANJERI, MALAPPURAM DISTRICT.

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3. V.ALAVI, VALLANCHIRA HOUSE, VALLAKUZHI, CHERANI, P.O.THRIKKALANGODE, MANJERI.

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BY ADVS.SRI.N.MANOJ KUMAR SMT.JAYASREE MANOJ

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RESPONDENT(S):

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1. KERALA STATE CO-OPERATIVE EMPLOYEES PENSION BOARD, P.B.NO.85, KALA NIVAS, T.C.27/156,157, CHINMAYA LANE, KUNNUMPURAM, NEAR AYURVEDA COLLEGE, THIRUVANANTHAPURAM-695001., REPRESENTED BY ITS SECRETARY.

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2. THE ERNAD CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD.NO.4363, KARUVAMBRAM, P.O., MALAPPURAM DISTRICT, PIN-676123, REPRESENTED BY ITS SECRETARY.

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3. THE REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEES' PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM-695004.

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4. ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES' PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, ERANHIPALAM P.O., CALICUT-673006.

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WP(C).No. 19510 of 2010 (K)

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5. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT CO-OPERATION DEPARTMENT, THIRUVANANTHAPURAM.

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R1 BY SRI.P.V.MOHANAN,SC, SRI.K.R.SUNIL,SC, R2 BY ADVS. SMT.PREETHY KARUNAKARAN SRI.K.RAVI (PARIYARATH) SRI.G.SREEKUMAR (CHELUR) R3 & R4 BY SRI.N.N.SUGUNAPALAN SENIOR ADVOCATE BY ADV. SMT.T.N.GIRIJA, SC,EPF

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R5 BY GOVERNMENT PLEADER

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SRI. ARUNKUMAR M.R.KARANAVAR

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05/08/2016, THE COURT ON 27-09-2016 DELIVERED THE FOLLOWING:

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WP(C).No. 19510 of 2010 (K)

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APPENDIX

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PETITIONER'S EXHIBITS :

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P1:	COPY OF THE NOTIFICATION NO.G.O.(MS) N. 44/2006/LBR DT 19/6/2006.
P2:	COPY OF THE CIRCULAR NO. KR/P/CELL II/CO-OPERATIVE EXAM/2008 DT 7/11/2008.
P3:	COPY OF THE LETTER NO. CRP(1) 6823/08 DT 4/12/2008 BY THE JOINT REGISTRAR.
P4:	COPY OF THE PROFORMA SUBMITTED BY THE BANK TO THE PENSION BOARD.
P5:	COPY OF THE PROFORMA SUBMITTED BY THE BANK TO THE PENSION BOARD.
P6:	COPY OF THE PROFORMA SUBMITTED BY THE BANK TO THE PENSION BOARD.
P7:	COPY OF THE LETTER DT 31/7/2009 ISSUED BY THE ASSISTANT PROVIDENT FUND COMMISSIONER, CALICUT.
P8:	COPY OF THE CHALLAN DT 8/8/2009.
P9:	COPY OF THE DEMAND NOTICE DT 9/3/2010 ISSUED BY THE BOARD TO THE BANK.
P10:	COPY OF THE DEMAND NOTICE DT 5/3/2010 ISSUED BY THE BOARD TO THE BANK.
P11:	COPY OF THE DEMAND NOTICE DT 9/3/2010 ISSUED BY THE BOARD TO THE BANK.
P12:	COPY OF THE CIRCULAR 2/2009 DT 12/2/2009 ISSUED BY THE PENSION BOARD.
P13:	COPY OF THE REPRESENTATION DT 15/3/2010 SUBMITTED JOINTLY BY THE PETITIONERS TO THE BANK.
P14:	COPY OF THE REPRESENTATION DT 12/4/2010 SUBMITTED BY THE PETITIONERS BEFORE HE HON'BLE MINISTER.
P15:	COPY OF THE REPLY DT 20/5/2010 RECEIVED BY THE 1ST PETITIONER FROM THE BOARD.
P16:	COPY OF THE REPRESENTATION DT 15/3/2010 SUBMITTED BY THE 2ND PETITIONER.

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WP(C).NO. 19510 OF 2010 (K)

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P17: COPY OF THE REPLY DT 11/5/2010 FROM THE BOARD. P18: COPY OF THE REPRESENTATION DT 22/3/2010 SUBMITTED BY THE BANK ALONG WITH THE RESOLUTION NO. 223 DT 22/3/2010.

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P19: COPY OF NEWS ITEM IN MATHRUBHOOMI DAILY DT 01/5/2010.

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P20: COPY OF THE KERALA CO-OPERATIVE SOCIETIES EMPLOYEES' SELF FINANCING AMENDMENT SCHEME INTRODUCED BY THE GOVERNMENT OF KERALA VIDE NOTIFICATION G.O.(P) NO. 1852010/CO-OP. DT 8/11/2010.

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RESPONDENT'S EXHIBITS : NIL.

//TRUE COPY//

P.S. TO JUDGE

P.V.ASHA, J.

W.P(C) No.19510 of 2010-K

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Dated this the 27^th day of September, 2016

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JUDGMENT

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The petitioners who are retired employees of Ernad Co-

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operative Agricultural and Rural Development Bank are challenging the 1^st proviso to clause b of sub para (i) of paragrah 39 of the Kerala State Co-operative Societies Employees' Self Financing Pension Scheme, 1994 (hereinafter referred to as `Pension Scheme 1994' for short).

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The petitioners retired from service on 31.10.2007, 31.8.2008 and 31.3.2009 respectively, while working as Assistant Secretary, Junior Supervisor and Secretary respectively in the 2^nd respondent Bank. Employees under the 2^nd respondent bank were covered by Employees' Provident Fund Pension Scheme, 1995(EPF Pension Scheme) framed under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The bank had been remitting the employers' and employees' shares of contribution to the provident fund. Consequent to the implementation of the Pension Scheme,1994,

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Government issued Ext.P1 order dated 19.06.2006, exempting the primary Co-operative Societies in the State from the provisions of Employees Pension Scheme, 1995. On the basis of Ext.P1 order, the Employees Provident Fund Organization issued Ext.P2 circular dated 7.11.2008, informing its decision to transfer the pension fund in respect of the employees of cooperative societies in terms of paragraph 39B of Employees Pension Scheme to the pension board; to stop payment of pension to those who left service after 01.07.2006 and to request such employees to refund the pension/commutation paid to them along with interest so as to transfer the same to the pension board. Thereafter, the Joint Registrar of Co-operative Societies, Malappuram had issued Ext.P3 circular dated 04.12.2008, requesting the Assistant Registrars to furnish the details of all the Primary co-operative societies and the employees under it who had joined the EPF, in the proforma attached. The petitioners submit that the details of their contribution in EPF were thereafter furnished and forwarded in Exts.P4 to P6 proforma. The 1^st petitioner was receiving pension under the employees’ pension scheme. On the basis of Ext.P7 letter of the Assistant Provident Find Commissioner directing the 1^st

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petitioner to refund the pension he had drawn from 1.11.2007 under the Employees Pension Scheme along with interest thereon, he remitted a sum of Rs.14,772/-, on 8.8.2009, for enabling transfer of the same to the pension board. Thereafter on 09.03.2010, the pension board issued a demand notice Ext.P9 directing the 1^st petitioner to remit a sum of Rs.8,97,899/- along with 24% interest from 1.4.2010. It was stated that the total amount required to be remitted to the pension fund in his case was a sum of Rs.10,17,833/- as on 31.3.2010, against which a sum of Rs.1,19,934/- alone was transferred from the employees provident fund organization. Exts.P10 and P11 are similar letters issued to petitioners 2 and 3.

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The petitioners submit that, they are not liable to pay interest at the rate of 24% per annum as demanded in Exts.P9 to P11 letters. According to them, demand of interest @ 24% per annum and calculation of contribution therein are contrary to the guidelines issued by the pension board in its Ext.P12 circular No.2/2009 dated 12.2.2009, where rate of contribution provided was only 8.33% of the pay. Aggrieved by the demand, petitioners submitted representations before the bank as well as the higher authorities to enable them to draw pension without

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any difficulty. While so, the Government issued a notification Ext.P20, by way of amendment to clause b of sub para (1) of paragraph 39 of the Scheme, inserting a proviso therein, making pension under the scheme payable only from the succeeding month after the remittance of the entire portion of the employer's contribution to the pension fund and denying eligibility for any arrears of pension. The Writ Petition is filed challenging this proviso contending that, they are unlawfully deprived of their right to get pension from the month succeeding the date of their retirement.

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According to the petitioners, even assuming that the proviso is valid that cannot have any impact on them, since the proviso came into force only on 08.11.2010, much after their retirement and it can be applied only in the case of those who retired subsequent to 08.11.2010 and the respondents cannot take advantage of the delay in effecting payment of pension in implementation of the provisions of the scheme. Their further contention is that after depriving them of their right to get pension under the Employees Pension Scheme 1995, which was available for them from the suceeding month of their retirement, the denial of pension for the period upto the date of transfer of

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the entire share of employer's contribution to Provident Fund, for which they do not have any role, is unreasonable and arbitrary. In case the respondents had implemented the provisions in the scheme in time, they would have got pension much earlier. It is stated that the proviso creates 2 sets of pensioners. There is no justification for such a classification so as to deprive a section of pensioners of their right to get pension from the succeeding months of their retirement. The petitioners rely on the judgment of the apex court in D.S.Nakara and others v. Union of India [AIR 1983 S.C 130] and submits that the proviso is liable to be declared unconstitutional. The judgment of the apex court in State of Andhra Pradesh & others V Ch. Gandhi [(2013) 5 SCC 111] is also relied on in support of the contention that the amendment shall not apply to them and can be made applicable only in the case of those retired after the date of Ext.P20, i.e 10.11.2010.

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The 1^st respondent Board has filed a counter affidavit, before the writ petition was amended incorporating the prayers as against the proviso to paragraph 39(1)(b) of the pension scheme, explaining the framing of the pension scheme 1994, the steps taken for working out the scheme by issuing Exts.P1 to P3

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orders/circulars during 2006 to 2008, the rate of contribution before and after 2006, rate of interest, etc.

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Subsequent to the amendment of the writ petition, a statement was filed on behalf of the 1^st respondent. It is stated that the pension Board is working on the basis of the Government Orders; entire employer’s contribution remitted in EPF Scheme, along with interest accrued thereon, has to be transferred to the pension Board towards the pension fund.; while 12% of the salary was contributed towards EPF Scheme, only 8.33% was being contributed to the pension fund; as per paragraph 39(1)(b) of the pension scheme, 1994, the employer's contribution remitted in the P.F scheme has to be transferred to the Co-operative pension fund; on receipt of the application for pension from the respective banks, the Board calculates the pension fund after verification of the service records of the retired hands; there will not be any disparity in the calculation in case the bank remits the contribution along with interest at the rates in force in the EPF scheme; in the case of the petitioners, the 2^nd respondent submitted application for pension only on 16.09.2009 and the transfer value of pension contribution was remitted along with letter dated 28.7.2009; since the amount

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remitted was not sufficient, demand notices were sent to the bank in respect of the petitioners on 5.2.2011 demanding remittance of the balance amount and the bank submitted Chelan remitting the demand amount as per letter dated 8.2.2011; petitioners were allotted individual code numbers and pension dockets, immediately on receipt of their applications for pension from the bank; pension Board is not levying any interest on pension fund of the employees after the date of their retirement; as per proviso to paragraph 39(ii)(b) pension shall be payable only from the succeeding month after remittance of the entire portion of the employer's contribution to the pension fund and no arrears of pension is payable; the only working capital of the scheme is the remittance in the name of the individual employees towards pension fund since it is a self financing scheme; the pension can be paid only after receipt of the entire fund contribution in the name of the petitioners; accordingly, on receipt of the entire amount the Board has sanctioned full pension to the petitioners from the month succeeding the remittance of the entire fund contribution, w.e.f 3/2011. The Board has further stated that the amendment is only legal and proper and there are several persons who are enjoying the

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benefit of the same. The sole corpus of pension fund is the interest accrued on the contribution lying with the bank and the scheme is applicable to all the persons who joined the pension scheme subsequent to its implementation.

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Government has not filed any counter affidavit.

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I heard Smt. Jayasree Manoj the learned Counsel for the petitioner, Sri. Hashim, the learned Special Govt.Pleader and Sri. K.R. Sunil, the learned Standing Counsel for the Pension Board, Smt T.N. Girija, the learned Counsel appearing for respondents 3 and 4 and Sri. G. Sreekumar, the learned Counsel for the 2^nd respondent.

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9 . In order to examine the validity of Ext P20, i.e the 1^st proviso to clause b of sub para (1) of Paragraph 39 of the pension scheme, 1994, with reference to the contentions raised, it is necessary to have a look at the pension scheme, 1994. The pension scheme was framed in exercise of powers conferred by Section 80A of the Kerala Co-operative Societies Act, 1969. Section 80A was inserted in the Act on 20.08.1993, providing for framing a self financing pension scheme for the establishment of a pension fund for payment of pension to the employees of societies in the manner provided therein. Section 80A reads as

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follows:

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“80A.Pension Scheme:-(1) The Government may, by notification in the Gazette, frame a Self Financing Pension Scheme for the establishment of a Pension Fund for payment of pension to the employees of the societies in the manner provided therein and may appoint different dates for the application of the scheme to different classes of societies.

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1A. The Self Financing Pension Scheme framed under subs. (1) may also provide for payment of pension from the pension fund, at such rates and subject to such conditions and restrictions as may be specified therein, to persons retired from service of any society during the period between 1st January, 1974 and 3rd June,1993 and are alive.

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(2) The pension fund established under the Self Financing Pension Scheme framed under sub-section (1) shall vest in, and be administered by, such body or authority as may be specified in the said scheme.”

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The pension scheme 1994 was framed thereafter, as per SRO 323/95, by notification as per G.O.(P). No. 44/95/Co-op dated 14.03.1995. As per sub section 1 of Section 80A of the Act, a pension fund was to be established for the purpose of payment of pension and the manner in which payment has to be made from the pension fund are to be provided for in the self finacing pension scheme. Under Sub section 2 an authority was to be constituted under the scheme for administering the pension fund. The Board was free to fix different dates for application of the scheme to different classes of societies. Chapter 2 of the scheme deals with pension fund. Paragraph 3 thereof originally

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provided for establishment of pension fund, and that the societies shall credit to it monthly contribution @ 8.33% of the pay of each of its employees, within the first 3 consecutive working days. Delay in payment beyond the 3 days attracted interest. On non-payment beyond first 10 days, interest was payable at 24% per annum. The rate of contribution was enhanced to 10% with effect from 07.08.2006. Sub para 3 provided that the pension fund shall vest and be administered by the Board. Paragraph 4 provided for constitution of the pension Board for the purpose of administering the pension fund, with Secretary to Department of Co-operation or an officer nominated by him (ex-officio), the Registrar of Co-operative Societies or an Additional Registrar of Co-operative Societies Ex officio and 12 members nominated by the Government out of which 5 shall be representatives of employees and 7 shall be representatives of Co-operative Instiutions as provided therein. The Chairman shall be appointed by the Government from among the members of the Board. Sub para 4 provides that the Board shall be a body corporate. Sub para 5 provided that the Board has to administer pension fund in the manner specified in the scheme. As per paragraph 17, the Board shall be responsible for collection of

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contribution to the pension fund and all matters connected with its administration, proper maintenance of accounts etc. Chapter III of the scheme commencing from paragraph 18 deals with pension. Paragraph 18 provides that, every employee of a society is eligible for pension under the scheme subject to other provisions in the scheme. As per the first proviso, an employee, who has received the Contributory Provident Fund, shall be eligible for pension only on refund of that portion of the employer's contribution in the Contributory Provident Fund along with interest thereon to the pension fund, before he submits an application for pension. Relevant portion of Paragraph 18 reads as follows:

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“18.Eligibility for Pension:(1) Every employee of a society to which this scheme applies shall, subject to the other provisions of the Scheme, be eligible pension under this Scheme:

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Provided that an employee, who has received the contributory Provident Fund shall be eligible for pension only on the refund of that portion of the employers' contribution in the Contributory Provident Fund together with interest thereon to Pension Fund before applying for pension.

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xxxxxxxxxxxxxxxxxxxxxxxxx”

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Therefore, as per para 18 as it originally stood itself, the remittance/refund of the entire portion of employers' contribution to the Provident Fund in the Pension Fund was a

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pre-requisite for even submitting an application for pension. Originally, the minimum pension on superannuation was fixed as a sum of Rs.100/- as per sub para 3 of paragraph 20, which was subsequently enhanced to Rs.300/- and thereafter to Rs.500/w.e.f 21.7.2010. Paragraph 27 provides that, an employee shall submit his formal application for superannuation pension in the form appended as Annexure I to the scheme at least one year in advance of the date of his anticipated retirement or retiring pension soon after the appointing authority grants permission to retire and that such an application shall be submitted to the Chief Executive of the society, who has to forward it to the Board along with relevant records for verification and it is for the officers of the Board to verify the remittance in the pension fund, service book, matters with respect to pay fixation on various stages of service career, for which the society shall furnish all the relevant records to the officers of the board on request. The pension sanctioning authority is the Board itself. Paragraph 31A provides for depositing the entire money belonging to pension fund in the accounts opened in the name of the Secretary of the Board in the branches of Kerala State Cooperative bank or district co-operative bank of the district

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concerned. Paragraph 33 provides that, the pension fund shall not be used for any purpose other than those specified in the scheme. Paragraph 34 provides that all expenses for administration of pension fund shall be from that fund alone. Paragraph 38 provides for the recovery of amount due from a society which reads as follows:

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“38. Recovery of amount due from a Society:-If any amount due from a society to the Pension Fund under this Scheme is in arrears, the secretary or any other officer authorised by him in this behalf shall, after due enquiry, ascertain the amount of arrears. and if the society fails to clear the arrears within the time as may be specified in the notice issued thereon, issue a certificate for that amount with interest at the rate of 24% p.a. till date or Rs.500 whichever is higher, from the date of such notice to the Collector of the District in which the demand raised and the Collector on receipt of such certificate shall proceed to recover the amount with interest in the same manner as arrears of Public revenue due on land.”

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Therefore, the arrears due from a society towards pension fund in respect of its employees are to be realized along with interest @ 24% p.a and it has to be recovered even by resorting to revenue recovery proceedings. As per paragraph 39, on application of the scheme to a society, the entire amount of employer's contribution standing in the credit of the employees in the Contributory Provident Fund, along with interest accrued thereon, has to be transferred and credited by the concerned societies to the pension fund. Proviso to sub para (1) provides that in case the society fails to transfer the pension

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fund arrears in full, pension proportionate to the fund remitted by the society shall be paid to the employees. The proviso providing for grant of proportionate pension was inserted by way of amendment effected with effect 10.11.2010. Clause b of sub para 1 of paragraph 39 provides that the portion of employer's contribution of the employee along with interest standing in the credit of the employees in the contributory provident fund shall be transferred in accordance with the provisions contained in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and credited to the Pension Fund under the scheme. As per the 1^st proviso inserted with effect from 10.11.2010, the societies concerned shall remit the pension fund along with interest, in respect of persons retired from the societies enrolled under EPF scheme and who are not drawing pension from the EPF scheme, at the rates existing in the EPF scheme during the period of their service upto the date of their retirement. It further provides that pension shall be payable only with effect from the date of transfer of the succeeding month after the remittance of entire portion of the employer's contribution to the pension fund and that no arrears would be payable. The 2^nd proviso, deals with the transfer of employers' share of contribution in the case of

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employees who are in service, within a period of one year or else with interest @ 24% per annum. Sub para 1A provides for payment of interest @ 24% in case the society fails to transfer the employers' share of contribution along with interest accrued thereon within a period of one year from 14.03.1995, the date of implementation of pension scheme or has transferred only a part thereof. The relevant portion of paragraph 39 of the scheme reads as follows:

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“39.Special provision for transfer of accumulations from the Contributory Provident Funds:-

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(1) With effect on and from the date of application of this Scheme to a society

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(a) the portion of the employees contribution with interest accrued thereon standing to the credit of the employees in the contributory provident fund established by that society shall be transferred and credited by the society to the pension fund under this scheme; and

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Provided that if the society/bank fails to transfer the pension fund arrears in full, pension proportionate to the fund remitted by the society/bank shall be paid to

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the employees.

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(1A) If any society fails to transfer the employees contribution with interest accrued thereon after the commencement of Sec.80A of the Kerala Co-operative Societies Act, 1969. and the Kerala Co-operative Societies Employees Self Financing Pension Scheme, 1994, within a period of one year from 14-3-1995, that is the date of implementation of the pension scheme or has transferred only a part thereof, shall be liable to transfer such amount or part thereof as the case may be with interest at the rate of 24% per annum.

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(b) the portion of the employers' contribution with interest accrued thereon standing to the credit of the employees in the contributory provident fund established under the employees Provident Funds and Miscellaneous

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Provisions Act, 1952 (Central Act 19 of 1952) , shall be transferred in accordance with the provisions of that Act and credited to the pension fund under this scheme.

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Provided that in respect of persons retired from societies enrolled under EPF Scheme, and who are not drawing pension from the Employees Provident Fund hitherto the societies concerned shall remit the pension fund with interest at the rates existing in the Employees Provident Fund Scheme during the period of their service i.e., up to the date of retirement.

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Pension shall be payable only from the succeeding month after the remittance of the entire portion of employer's contribution to the pension fund and no arrears of pension shall be payable:

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Provided further that in respect of the employees who are in service, the societies shall transfer the entire portion of employer's contribution with interest as per rules of the Scheme within a period of one year from the date of publication of this notification and afterwards with interest @ 24% per annum

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(2) The liability of an employee to contribute to the contributory provident funds referred to in subparagraph (1) shall cease from the date on which the amount standing to his credit in the said provident fund is transferred and credited to the Pension Fund under this scheme.

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(emphasis supplied)

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The grievance of the petitioners is as against the 1^st proviso to clause b of sub para 1 of paragraph 39, saying that it deprives them of their right to get pension from the succeeding month of their retirement and denies them any arrears of pension, postponing their eligibility for pension till the remittance of the entire share of employer's contribution in the pension fund. Petitioners were drawing/eligible to draw pension

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under the Employees pension Scheme, but for the introduction of scheme they would have got pension under the EPF scheme. Admittedly the pension payable under that scheme was meagre.

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It is seen that the employer’s contribution in respect of the petitioners were paid by the Bank only in the year 2011. The petitioners had retired from service in the year 2007, 2008 etc. and they received the entire P.F contribution from the provident fund and in the case of the 1^st petitioner, he was getting pension from the EPF organization. The pension under the scheme 1994 was sanctioned immediately after the remittance of the entire contribution from March 2011. As contended by the learned counsel for the Board, the petitioners could enjoy the benefit of the entire Provident Fund, from the respective dates of their retirement in 2007-2008 till the remittance of the same in the pension fund in 2011. It is also a fact that the 1^st petitioner had made the refund of pension he had received under the Employees Pension Scheme as per Ext.P8 in 08/2009 for the period from 11/2007, pursuant to Ext.P7 letter asking him to refund the sum of Rs.14772/- along with interest of Rs.1596/-.

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On a perusal of the provisions contained in the

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scheme, it can be seen that pension becomes payable as per the scheme, subject to fulfillment of all the conditions contained in various provisions of the scheme. As pointed out by the learned Counsel for the Board, pension is paid from the pension fund generated for each of the employees out of the share of employers' contribution remitted in contributory provident fund, on its transfer by the concerned societies. As can be seen from the provisions contained in paragraph 18, persons like petitioners became eligible for pension only on refund of the employer's contribution in the CPF along with interest. Only on such refund and remittance, the fund could be generated for pension. Para 29 of the scheme which provides for payment of pension from the succeeding month of retirement has to be read along with para 18 of the scheme, which provides that eligibility is subject to other provisions of the scheme including para 38 which provides for recovery of amount due from the society along with interest and para 39 which provides for transfer of employers' share of contribution in the pension fund and the remittance of pension fund in the case of those retired from service and who were enrolled in the EPF scheme but not drawing pension, along with interest. Contention of the

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petitioners is that under the proviso to clause (b) to para 39(1), persons like petitioners who were enrolled under the EPF scheme but not drawing pension are made ineligible for pension till the society transfers the amount under the pension fund and makes the remittance of the entire amount of employers contribution and that too without entitlement for arrears of pension. But under the proviso under para 20 also, those who retired from service and not enrolled in the pension scheme are eligible for arrears of pension only from the month on which the society remits the entire pension contribution. Therefore classification is based on the remittance of pension contribution/employers' contribution made to CPF to the pension fund. When pension fund is necessary for payment of pension, such a classification cannot be said to be arbitray or discriminatory.

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Section 80A of the Kerala Co-operative Societies Act, 1969 provides for framing of self financing pension scheme, for establishment of pension fund for payment of pension to the employees of the co-operative societies. Therefore, the establishment of pension fund is to be in accordance with the provisions of the scheme. Pension becomes payable only after

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establishment of pension fund and pension fund is established in accordance with the provisions in chapter II of the scheme. Para.3 provides for its establishment by crediting a monthly contribution of 10% of the pay as specified in clause g of sub para 1 of paragraph 2 of the scheme. Sub para 3 of paragraph 2 provides that, pension fund shall be administered by the Pension Board in which it shall vest. Under para.17, pension board is responsible for collection of contribution to the Pension Fund, recovery of amounts due to it and speedy settlement of claims and sanction of pension. Under the Proviso to Paragraph 18, a person who has received the contributory provident fund becomes eligible to apply for pension only after refund of the the portion of employer's contribution along with interest accrued to it to the pension fund. The petitioners have not challenged the proviso to para.18. It is relevant to note that as per paragraph 27, the application for pension has to be submitted by the employee one year before the anticipated date of his retirement. Eventhough sub para 1 of paragraph 20 makes every employee eligible for pension on superannuation, proviso below sub para 3, postpones the eligibility of an employee who retires before getting enrolled in pension scheme, to get the pension and

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arrears with effect from the month in which the society makes the total pension contribution along with interest. This postponement is brought about by the amendment effected from 21.07.2010. Paragraph 39 provides for transfer of the accumulations from Contributory Provident Fund within a period of one year from 14.03.1995 and interest @ 24% was made payable for the delay by way of amendment effected in 2006. Despite all these, transfer of funds was completed in the case of petitioners only in the year 2011, even though partial transfer was effected in 2009.

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The question to be examined is whether the petitioners were entitled to get pension from the succeeding month of their retirement even before they submitted applications and before the refund of Provident Fund received by them and remittance of their pension fund under the EPF scheme and the remittance of the employers share of contribution. Right to pension under the scheme is subject to the fulfillment of the conditions in various provisions contained in the scheme. But for the scheme and pension fund established under that, they would not have been eligible for pension. Of course, there was delay in implementation of the scheme framed

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in 1995, as evident from Exts.P1 to P3 issued during 2006 to 2008. At the same time, the petitioners were also benefitted on receipt of the entire Provident Fund amount, on their retirement.

¶125

It is only on remittance of that portion of contribution, i.e, only on transfer of the entire share of employer's share contribution to the contributory pension fund and the amount remitted in the pension fund under the EPF scheme to the pension fund under the scheme by the society, that the pension fund could be generated for payment of pension to the petitioners. Proviso to clause (a) to sub para 1 of paragraph 39, which was introduced w.e.f 10.11.2010 provides that, in the event of failure on the part of a society/bank to transfer the pension fund arrears in full to the Board, the employee shall be paid pension proportionate to the fund remitted. The impugned proviso to clause b to sub para 1 of paragraph 39 provides that, till the societies transfer the entire amount of the pension fund in the case of persons who retired from it and who were enrolled under EPF scheme along with interest to the pension fund, pension is not payable and such persons are not entitled to arrears of pension. But proviso to sub paragraph 1 of paragraph 39 provides for payment of pension proportionate to the

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remittance made by the society. In the case of persons like the petitioners who were enrolled under the EPF scheme, the pension fund also had to be transferred for payment of pension and the payment of pension is postponed till the succeeding month of the remittance of entire amount of contribution under the employer's share of contribution denying even the proportionate pension. When proviso to clause a provides for proportionate pension in the case of all others except those who were enrolled under EPF scheme for pension, there is no rationale behind denying proportionate pension in the case of persons like petitioners who retired from service and were enrolled under the EPF scheme. The additional requirement in their case is remittance of the pension fund under the EPF scheme. It will be arbitrary and discriminatory to treat them separately for the non-remittance of pension fund alone, when there is partial remittance and to deny the benefit of proviso under clause (a) with reference to the available corpus for payment. Paragraph 39 deals with transfer of accumulations from CPF. While clause (a) provides for transfer of employer's contribution of all employees who were covered by CPF scheme to the Pension Fund, clause (b) provides for transfer of the

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pension fund also in the case of those retired from service and were enrolled under the Employees Pension Scheme.

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It is pertinent to note that the pension scheme 1994 is

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a self financing Pension Scheme, which was introduced for the first time for the employees of the co-operative societies in the year 1995 in terms of Section 80A of the Act. The pension is to be paid from out of the pension fund to which the society has to remit/transfer credit the share of employer's contribution in the CPF along with interest and the pension fund under the EPF scheme. It is not a scheme as in the case of employees under the Government of India or the State of Kerala as it prevailed at the time of introduction of pension scheme. The pension in respect of the Central/State Government employees are the deferred wages, for the payment of which no separate fund was to be constituted, where classification of employees for the purpose of pension would amount to discrimination/arbitrariness. But in the case of the employees under the Co-operative Societies the pension fund itself is generated by transferring the portion of employer’s share of contribution and the pension fund under the EPF scheme, which was with persons like petitioners for a certain period after their retirement till its refund and with the

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provident fund organization till its transfer to the societies, and thereafter with the societies till the remittance in the pension fund. Therefore, the self financing pension scheme for employees of co-operative societies and the scheme applicable to the employees of Central/State Government employees are uncomparable. Under the Employees Pension Scheme which was applicable to the employees of co-operative societies, the quantum of pension was meagre whereas the pension payable under the pension scheme 1994 is substantial. Unless and until the fund for payment of pension is made available it cannot be said that the petitioners were unlawfully deprived of their right to pension. Eligibility of pension is subject to the other provision in the scheme. Proviso to Clause 18 makes it clear that an application for pension has to be submitted only after refund of the employer's contribution in the CPF is made along with interest, to the pension fund. In normal case the employee has to submit application for pension one year before his retirement. Eligibility for pension is dependent on all these conditions. In the case of petitioners, they got the entire amount in the PF account including the employers' contribution immediately after their retirement. They were able to enjoy it till the refund of

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employers' contribution was made in the year 2011 towards their pension fund. It is also pertinent to note that, in the judgment relied on by the learned counsel for the petitioners D.S.Nakara (supra), paragraph 45 specifically takes into account the fact that the pension scheme available for Government employees was not contributory in character and there is no pension fund and as far as the Government of Central and State are concerned, payment of pension is a statutory liability. Relevant portion of the judgment in D.S.Nakara 's case (supra) read as follows:

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“45. Let us clear one misconception. The pension scheme including the liberalised scheme available to the government employees is non-contributory in character. It was not pointed out that there is something like a pension fund. It is recognised as an item of expenditure and it is budgeted and voted every year. At any given point of time there is no fixed or predetermined pension fund which is divided amongst eligible pensioners. There is no artificially created fund or reservoir from which pensioners draw pension within the limits of the fund, the share of each being co-extensive with the available fund. The payment of pension is a statutory liability undertaken by the Government and whatever becomes due and payable is budgeted for.

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At the same time, pension scheme 1994 was framed in the year 1995. The right to pension accrued only by virtue of the provisions of the scheme and the scheme itself provides for its operation. Eligiblity for pension is subject to fulfillment of all the

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conditions in the scheme. The amendment effected in 2010 is in respect of implementation. Even before the amendment to para. 39(b), therefore the provisions contained in Section 18 provided for refund of entire conribution as a condition for submitting application for pension. Separate scheme in respect of the employees of the co-operative societies comes by way of Section 80A itself in terms of the provisions contained in the scheme. When the very corpus for payment of pension, which is the pension fund in respect of each of the employee was not available with the pension board, there is no basis for the complaint of the petitioners. In order to effect payment, there should be at least a portion of the amount with the pension fund under the Board. Furthermore, it is only after the submission of application in terms of the scheme that an employee becomes eligible for pension. In the case of the petitioners, it is stated that their applications were received in the Board only on 16.11.2009, when the bank had informed the transfer value of the pension contribution and the entire pension contribution was subsequently remitted in respect of the petitioners only on 5.2.2011. Going by the provisions contained in the scheme, the petitioners cannot be denied proportionate amount of pension at

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a time when there was partial payment when the petitioners submitted appllication in 2009, though the entire amount of the contribution was not paid by the bank. Therefore, the denial of pension to the petitioners for the period from December, 2009 to February, 2011, awaiting the remittance of the entire contribution cannot be said to be legal since they could have been given the proportionate pension. The challenge to Ext.P20 can be sustained only to that extent.

¶143

The petitioners have also claimed that since the amendment is only in 2010, that cannot be made applicable in the case of the petitioners, since they retired much prior to the date of amendment. The fact remains that, pension becomes payable only when the fund is generated. The only fund for payment is the employer's contribution to CPF and the pension fund under EPF scheme, which comes to the Board only on the transfer from the respective societies. Pension becomes payable from the next month of retirement only in cases where all other conditions are satisfied. As long as there is no fund available, it cannot be said that the petitioners were entitled to pension even before the date of remittance of at least portion of contribution to the pension fund. These conditions were to be fulfilled even

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before the amendment to clause 39(b) was inserted in the year 2010 as per Ext.P20. Ext.P20 amendment was followed by another amendment as per SRO 489/2011 published in the gazette dated 12.8.2011 which came into effect from 21.7.2010, according to which, pension is payable only from the succeeding month of remittance of entire portion of employer’s contribution along with interest thereon to the pension fund. Therefore, the challenge as against Ext.P20 amendment effected to proviso to clause (b) of sub para (1) of paragraph 39 thereto will not stand .

¶146

The contention that pensioners are classified into two groups by way of the impugned proviso in Ext.P20 or that it discriminates one group of pensioners for the purpose of payment of pension, cannot be accepted, since the payment depends upon the availability of pension fund. Since the petitioners became eligible for pension only after the fund was established, there is no basis for the contention that Ext.P20 amendment cannot be applied in the case of the petitioners or for a declaration that the amendment could be operated only in the case of those retired subsequent to the date of Ext.P20. However, the petitioners would be eligible for proportionate pension with reference to the contributions remitted by the 2^nd

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respondent bank with the pension Board upto 5.2.2011 when the entire remittance was made. The claim of the petitioners for arrears of pension, ie. pension from the months succeeding their retirement as well as for full pension notwithstanding Ext.P20 amendment cannot be allowed. The decision relied on by the learned Counsel for the petitioners in respect of retroactivity will not apply in the facts and circumstances of the case. The provision for realisation of interest at the rate of 24%, by way of amendment to the scheme also is not liable to be interfered with.

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Therefore, the 1^st respondent shall see that the petitioners are paid pension proportionate to the amount remitted in their pension funds in the year 2009 for the period from the respective dates on which they were allotted the pension dockets, whichever is earlier, upto March, 2011, the month from which they were paid pension.

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The Writ Petition is disposed of with the above directions.

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Sd/- (P.V.ASHA, JUDGE)

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rtr/

K.P.Ramakrishnan and Others v. Kerala State Co-Operative Employees Pens

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K.P.Ramakrishnan and Others v. Kerala State Co-Operative Employees Pens

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