Dismissed

Kottangal Service Co-Operative Bank Ltd. No. 3680 v. State of Kerala

Kerala HC16 Nov 2021WP(C)/12630/2021

Case brief

AI extract

What is this about?

The High Court of Kerala considered a writ petition by a cooperative bank challenging orders directing its enrollment in the Kerala Co-operative Employees' Pension Scheme for a retired former employee. The bank argued financial hardship, but the court held financial difficulties are not a valid ground to deny vested retirement benefits. The petition was dismissed.

What did the court decide?

The writ petition challenging the orders directing enrollment in the Pension Scheme and payment of benefits is dismissed.

Kottangal Service Co-Operative Bank Ltd. No… — Pension and Retirement Benefits | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN TUESDAY, THE 16^TH DAY OF NOVEMBER 2021 / 25TH KARTHIKA, 1943 WP(C) NO. 12630 OF 2021

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WRIT PETITIONER:

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KOTTANGAL SERVICE CO-OPERATIVE BANK LTD. NO. 3680 CHUNGAPPARA P. O., MALLAPPALLY - 686 547, REPRESENTED BY ITS SECRETARY JOHNSON K. GEORGE, S/O. GEORGE VARGHESE, AGED 56 YEARS, RESIDING AT KALAYATNMMURIYL, CHUNGAPPARA P. O., PATHANAMTHITTA DISTRICT.

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BY ADVS. SRI. ARUN.B.VARGHESE SRI. AISWARYA V.S.

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RESPONDENTS:

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1 STATE OF KERALA REPRESENTED BY ITS SECRETARY, COOPERATIVE DEPARTMENT, GOVERNMENT OF KERALA, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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2 THE JOINT REGISTRAR (GENERAL) OF CO-OPERATIVE SOCIETIES (DISTRICT), 4TH FLOOR, MINI CIVIL STATION, PATHANAMTHITTA - 689 645.

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3 THE REGISTRAR COOPERATIVE SOCIETIES, OFFICE OF THE REGISTRAR OF COOPERATIVE SOCIETIES, THIRUVANANTHAPURAM - 695 001.

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4 MATHEW BEN O.G.JACOB S/O. P.M. CHACKO, AGED 57 YEARS, PANAMTHOTTATHIL HOUSE, KOTTANGAL P. O., PATHANAMTHITTA - 686 547.

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SRI. FAISAL - GP R4 – SRI. SHAJI THOMAS SRI. JEN JAISON

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No.12630 OF 2021

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JUDGMENT

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The petitioner is a Service Co-operative Bank which is classified in Class VII category. The Bank is having only three employees viz ., Secretary, Clerk and Peon.

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The 4^th respondent was an employee of the petitioner Bank. He entered service on 06.07.1987 as Sales man/Attender. On 16.05.1992, he was dismissed from service pursuant to disciplinary proceedings. Later, as per the directions of the Labour Court, the 4^th respondent was reinstated in service on 04.07.2005. On completion of ten years of service, he was given higher grade with effect from 01.05.1998. Though the second higher grade was due, the same was not given to the 4^th respondent due to the financial difficulties faced by the Bank. The 4^th respondent requested the petitioner to get him enrolled in the Kerala Co-operative Employees' Self Financing Pension Scheme, 1994 (for short 'the pension Scheme') framed by the Government under Section 80 A of the Kerala Co-operative Societies Act, 1969

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WP(C).No.12630 OF 2021

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(for short 'the Act') and to receive pension under the scheme. Due to financial stringency the Bank was not in a position to accede to the request of the 4 th respondent. The 4 th respondent approached various Authorities under the Act for direction to the Bank to enroll him in the Pension Scheme and to transfer the amount accumulated in his Contributory Provident Fund (for short 'CPF') account maintained under Section 61 of the Act to the Pension Fund and to provide other service benefits including the second higher grade. Since those requests were not considered by such Authorities, the 4^th respondent approached this Court by filing a writ petition and this Court by Ext. P4 judgment directed the Joint Registrar (General) of Co-operative Societies, the 2^nd respondent to consider the request of the 4^th respondent after hearing him and the petitioner Bank.

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The Bank contended before the 2^nd respondent that, if the Bank enroll the 3 employees in the Pension Scheme, the Bank would entail huge financial loss. The funds received as investments cannot be utilized for disbursing the service benefits of the employees. Pursuant to Ext.P4

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judgment, the 2^nd respondent passed Ext.P5 order directing the Bank to enroll the 4^th respondent in the Pension Scheme and to pay the contribution before the date of his retirement from service and also to provide him the grade promotion and other service benefits to which he is entitled to.

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Against Ext.P5 order, the petitioner Bank preferred Ext.P6 Revision Petition before the Government. Since, the Bank did not comply with the directions in Ext.P5, the petitioner approached this Court by filing a writ petition and this Court finding that the Bank has preferred Ext.P6 Revision Petition before the Government against Ext.P5, directed the Government by Ext.P7 judgment to consider and pass orders on Ext.P6 Revision Petition after hearing both sides.

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In compliance of the directions in Ext.P7 judgment, the Government passed Ext.P8 order dismissing the Revision Petition and confirming the order of the 2^nd respondent in Ext.P5. It is challenging Exts.P5 and P8 orders that the Bank has filed this Writ Petition.

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The case of the petitioner is that the Bank is facing serious financial difficulties and Exts.P5 and P8 orders are

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passed without taking note of the financial condition of the Bank. The petitioner has relied on Ext.P3 circular issued by the Registrar of Co-operative Societies which interdicts the Bank from utilizing the funds received through loans and interest for paying salary to the employees of Co-operative Banks. The petitioner has also relied on Ext.P9 letter of the Assistant Registrar (General) addre ssed t o the 2^nd respondent Joint Registrar (General) informing that if the request of the 4^th respondent is implemented, the Bank which is already running at loss will not be in a position to repay the deposits received from the creditors and the Bank will be put to further financial crisis. The learned counsel for the petitioner points out that Ext.P9 letter of the Assistant Registrar (General) is dated 12.02.2021 after the hearing held in Ext.P6 Revision Petition by the Deputy Secretary on 01.02.2021 and Ext.P8 order was passed without taking note of Ext.P9 letter. According to the petitioner, the Bank cannot be compelled to enroll the members in the Pension Scheme.

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7.The 4^th respondent has filed a counter affidavit wherein he has stated that the petitioner Bank started CPF in

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July 1991 and the Bank is remitting the employers' contribution to CPF every month and also deducting the employees' contribution from their salary and transferring the same to the CPF account. It is further stated that an amount of Rs.3,88,301/- + interest from 01.04.2021 is credited in the CPF account of the 4^th respondent by way of employees contribution and since the amount is already credited in the CPF by the Bank, there is no likelihood of causing financial burden to the Bank as contended. It is further contended by the 4^th respondent that since what remains is only the transfer of the amount already accrued in the CPF account with its interest and arrears to the pension fund maintained as per Rule 39 of the Scheme, the Bank will not be having any financial burden.

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Heard Sri.Arun B.Varghese, the learned counsel for the petitioner, Sri.K.M.Faisal, learned Government Pleader and Sri.Shaji Thomas, the learned counsel for the 4^th respondent.

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Sri. Arun B. Varghese, the learned counsel for the petitioner points out that Exts.P5 and P8 orders are passed

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WP(C).No.12630 OF 2021

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without taking note of the present financial condition of the Bank and that the decision not to join the Pension Scheme is not a permanent one, but taken in view of the present financial situation of the Bank. Sri. Arun also states that, the Assistant Registrar has in Ext.P9, taking note of the financial situation of the Bank, informed the Joint Registrar, the 2^nd respondent that, if Ext.P5 order is to be implemented, the Bank will be put to further financial crisis and will not be in a position to repay the deposits received from the creditors. According to Sri. Arun, if the Government had considered Ext.P9 before passing Ext.P8 order, they would have taken a different view. The learned counsel submits that, in view of the present financial condition of the Bank, the Bank cannot be compelled to join the Scheme and as and when the financial condition improves, the Bank may consider joining the Scheme. He therefore prays to quash Exts.P5 and P8 orders.

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Sri. Shaji Thomas, the learned counsel for the 4^th respondent, on the other hand, contends that the Registrar of Co-operative Societies has issued Ext.R4 (a) circular in

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WP(C).No.12630 OF 2021

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exercise of the powers under Section 66 A of the Act in compliance with the direction in the Division Bench judgment

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of this Court in Sambasivan Nair v. Kerala State Cooperative Employees Pension Board and another [2012

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(3) KHC 518] directing the Chief executive Officer of all Cooperative Societies in the State to remit the contribution to the pension fund maintained by the Pension Board on or before the 10^th day of every month and if there is delay in making the contribution, the CEO will be personally liable towards such amount with interest. According to Sri. Shaji Thomas, the said circular is binding on all the Co-operative Societies and the petitioner Bank is bound to join the Pension Scheme and to transfer the amount that is already credited in the CPF to the Pension Scheme.

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Sri. Shaji Thomas points out that, the Pension Scheme was introduced by the Government in exercise of the powers under Section 80 A of the Act and as per the Scheme, the employees have a legal right to receive pension from the Kerala State Co-operative Employees' Pension Board and in terms of Rule 39 of the Pension Scheme it is the duty of the

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WP(C).No.12630 OF 2021

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Bank to transfer the portion of the employer's contribution with interest accrued thereon standing to the credit of the employees in the CPF to the pension fund. The learned counsel also relied on the provisions under Rule 39 (1A) of the Pension Scheme which provides that, in case of failure of the Society to transfer the employers contribution with interest accrued thereon, the same shall entail interest @ 10% per annum which the Society will be liable to pay. He invites my attention to the decision of this Court in

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Haridasan v. State Bank of Travancore [2017(2) KLT 952] , wherein this Court relying on the decision in D.S.Nakara v. Union of India [1983 (1) SCC 305] and

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other decisions held that pension is a vested right in the employee, subject to the Statute, if any, holding the field.

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Sri. Arun Varghese submits that the decision in Sambasivan Nair (supra) was in relation to an employee who had already joined the Scheme and would not apply to the facts of the present case. Sri.Arun Varghese also submits on instruction that, the employer's contribution has been credited to the CPF account of the 4^th respondent along with

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the employee's contribution. The sum and substance of the contention of the petitioner Bank is that, the Bank is in great financial crisis and at present it is not possible for the Bank to join the Scheme and to grant the second higher grade and other service benefits due to the 4^th respondent. It is also submitted that if the Bank is to implement Exts.P5 and P8 orders, the Bank will be put to further hardships and loss. The Bank is interdicted from taking the resources of the Bank accumulated by way of deposits by Ext.P3 and similar circulars issued by the Registrar of Co-operative Societies.

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Since it is admitted that the employer's and employee's contributions have been credited to the CPF account of the 4^th respondent, what remains is only the transfer of the amount already accrued in the CPF account of the 4^th respondent with its interest and arrears to the pension fund. As rightly contended by Sri.Shaji.Thomas, the same cannot put financial burden on the Bank as projected by the petitioner. The other service benefits due to the 4^th respondent is by way of higher grade. The s ervice benefits including second higher grade cannot be denied to the 4^th

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respondent for the reason that the Bank is facing financial difficulties. The financial difficulty of the employer is not a valid ground to deny payment of service benefits and retirement benefits due to an employee. As held by the Apex Court in D.S.Nakara (supra) the pension payable to a Government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation for service rendered. The 4^th respondent has retired from service on 30.05.2020 and the 4^th respondent has to live the rest of his life with the pensionary benefits. The financial difficulties of the Bank cannot merit any consideration for not enrolling the 4^th respondent in the Pension Scheme and to transfer the amount outstanding in the CPF account of the 4^th respondent with its interest and arrears.

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The contention of Sri.Arun Varghese, the learned counsel for the Bank that, if Ext.P9 was considered by the 1^st respondent before passing Ext.P8 order, the Government would have taken a different stand also cannot be sustained as the contention of the Bank before the Government as well

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the 2^nd respondent was that due to the financial difficulties the Bank cannot enroll the 4^th respondent in the Pension Scheme and pay the service benefits. Therefore, even if Ext.P9 is pressed into service a different stand cannot be possible as Exts.P5 and P8 orders were issued taking note of the contentions of the petitioner regarding its financial constraints. Being a welfare legislation for the employees, the Bank cannot opt out of the pension Scheme unless specifically exempted. I do not find any reason to interfere with Exts.P5 and P8 orders.

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The writ petition is accordingly dismissed. There will be no order as to costs.

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Sd/-

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MURALI PURUSHOTHAMAN JUDGE

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SPR

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WP(C).No.12630 OF 2021

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APPENDIX

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PETITIONER'S EXHIBITS:-

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EXHIBIT P1	TRUE COPY OF THE RESOLUTION OF THE MEETING HELD ON 10/04/2013 OF THE WRIT PETITIONER BANK.
EXHIBIT P2	TRUE COPY OF THE ORDER NO.C.R.P.(1) 3502/14KDIS DATED 25/07/2014 ISSUED BY THE 2ND RESPONDENT.
EXHIBIT P3	TRUE COPY OF THE CIRCULAR NO.73/13 DATED 21/11/2013 ISSUED BY THE 3RD RESPONDENT.
EXHIBIT P4	TRUE COPY OF THE JUDGMENT DATED 14.11.2019 IN W.P(C) NO.22000/2019 OF THE HONOURABLE HIGH COURT OF KERALA.
EXHIBIT P5	TRUE COPY OF ORDER NO.CRP(2) 3327/2019/K.DIS DATED 25.01.2020 ISSUED BY THE 2ND RESPONDENT.
EXHIBIT P6	TRUE COPY OF THE REVISION PETITION DATED 11.06.2020 FILED BY THE WRIT PETITIONER BEFORE THE 1ST RESPONDENT.
EXHIBIT P7	TRUE COPY OF JUDGMENT DATED 05.11.2020 IN WP(C) NO.19871/2020 OF THE HONOURABLE HIGH COURT OF KERALA.
EXHIBIT P8	TRUE COPY OF ORDER NO.G.P.(RT) NO.243/2021/COOPERATIVE DATED 09.04.2021 ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P9	TRUE COPY OF PROCEEDINGS NO.E.64/2021 DATED 12.02.2021 ISSUE BY THE ASSISTANT REGISTRAR (GERERAL)
	MALAPPALY TO THE JOINT REGISTRAR (GENERAL).

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RESPONDENTS'S EXHIBITS:-

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EXHIBIT R4(a) TRUE PHOTOCOPY OF THE CIRCULAR NO.44/2012 DATED 19.11.2012 ISSUED BY THE REGISTRAR OF CO-OPERATIVE

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SOCIETIES, THIRUVANANTHAPURAM.

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EXHIBIT R4(b) TRUE PHOTOCOPY OF THE PROFORMA ISSUED BY THE KERALA STATE CO-OPERATIVE EMPLOYEES' PENSION BOARD. EXHIBIT R4(c) TRUE PHOTOCOPY OF THE REPRESENTATION DATED 01.10.2012 SUBMITTED BY THE 4TH RESPONDENT. EXHIBIT R4(d) TRUE PHOTOCOPY OF THE ORDER NO.C.R.P (2) 4744/2012 DATED 17.07.2013 ISSUED BY THE 2ND RESPONDENT. EXHIBIT R4(e) TRUE PHOTOCOPY OF THE ORDER DATED 31.01.2019 ISSUED BY THE 2ND RESPONDENT. EXHIBIT R4(f) TRUE PHOTOCOPY OF THE ORDER DATED 25.01.2020 ISSUED BY THE 2ND RESPONDENT. EXHIBIT R4(g) TRUE PHOTOCOPY OF THE RELEVANT PORTION OF THE AUDIT REPORT OF THE PETITIONER BANK FOR THE YEAR 2018-2019.

Kottangal Service Co-Operative Bank Ltd. No. 3680 v. State of Kerala

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Kottangal Service Co-Operative Bank Ltd. No. 3680 v. State of Kerala

Case brief

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