Pepsu Road Transport Corp., Patiala vs Mangal Singh & Ors

Pepsu Road Transport Corporation, Patiala ........... Appellant

versus

Mangal Singh & Ors. ...........Respondents

WITH

CIVIL APPEAL NO.4405 OF 2011

(Arising out of SLP (Civil) No. 3349 of 2008)

PEPSU Road Transport Corporation and Another .......Appellants

versus

Sharanjit Kaur (Dead) Through L.Rs. .........Respondents

WITH

CIVIL APPEAL NO.4404 OF 2011

(Arising out of SLP (Civil) No. 330 of 2008)

PEPSU Road Transport Corporation and Another ....Appellants

versus

Baldev Singh & Ors. ...Respondents

1

WITH

CIVIL APPEAL NO. 3846 OF 2010

PEPSU Road Transport Corporation and Another ....Appellants

versus

Jagroop Singh ......Respondent

J U D G M E N T

H.L. Dattu, J.

1) Leave granted in SLP (C) No. 3349 of 2008 and SLP (C) 330 of

2008.

2) In Civil Appeal No. 4111 of 2008 - PEPSU Road Transport

Corporation and Another v. Mangal Singh & Ors. (hereinafter

referred to as "Mangal's appeal"), respondent joined the

services of the Pepsu Road Transport Corporation (hereinafter

referred to as "Corporation") as driver on 07.11.1974 and his

services were governed by service rules of the Corporation

which included the eligibility to receive Contributory Provident

Fund (for short, "C.P.F.") and gratuity. Subsequently, on

30.06.1982, the services of the respondent were terminated for

2

his unauthorized absence from the duty. The respondent raised

an industrial dispute against his termination order, which was

dismissed by the Labour Court vide its order dated 11.02.1994.

Aggrieved by the aforesaid order of the Labour Court,

respondent filed a writ petition before the High Court of Punjab

and Haryana, which was allowed vide order dated 10.04.1996,

setting aside the order of termination. The High Court further

directed the reinstatement of the respondent with effect from

18.06.1996. In the meantime, on 15.06.1992, the Corporation

had introduced the Pension Scheme for its employees and also

framed Regulations known as Pepsu Road Transport

Corporation Employees Pension/Gratuity and General

Provident Fund Regulations 1992 (`Regulations' for short) in

order to regulate the said scheme. The Pension Scheme in terms

of Regulation 4 of the Regulations envisages the condition of

exercise of the option within a period of six months from the

date of issue of the Regulations by an employee in order to

avail the pensionary benefits under the scheme. This time was

further extended till 15.12.1992. The Regulation 4 of the said

Regulations entitles the employee re-joining after leave or

suspension to exercise his option for Pension Scheme within the

3

period of 6 months from the date of his re-joining. The

respondent had also submitted nomination form of the C.P.F.

scheme. However, the respondent did not receive any retiral

benefits on his retirement after attaining the age of

superannuation due to pendency of litigation in the High Court

regarding the payment of his back wages for the period of his

absence from the service. It is not in dispute that respondent

did not opt for the Pension Scheme till the date of his

retirement. On 09.03.2005, the respondent filed a writ petition

before the High Court for a direction to the Corporation to

sanction pensionary benefits to the respondent under the

pension scheme. The High Court has allowed the writ petition

vide its order dated 19.01.2007 on the ground that the

provisions of Regulation 4 do not cover the case of the persons

reinstated into service pursuant to the orders of the Court. The

High Court further directed the Corporation to allow the

respondent to exercise his option for pension scheme within six

months from the date of the order and the formalities for

payment of pension be finalized within a particular time frame.

Being aggrieved, the Corporation has filed this appeal.

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3) In SLP (Civil) No. 3349 of 2008- PEPSU Road Transport

Corporation and Another v. Sharanjit Kaur, widow of Bachittar

Singh and Ors. (hereinafter referred to as Bachittar's appeal):

The respondent had joined the services of the Corporation as a

Conductor on 07.07.1962. He was subscriber for C.P.F. and

gratuity. In the year 1989, respondent took the loan from his

C.P.F. account to the tune of `26,000/-. Subsequently, on

15.06.1992, the Corporation had introduced the Pension

Scheme for its employees along with the Regulations to

regulate the said scheme. The Pension Scheme in terms of

Regulation 3 (h) of the Regulations envisaged the condition of

refund of the loan taken from the C.P.F. account by an

employee on or before 14.12.1992 in order to avail the

pensionary benefits under the said Regulations. The respondent

had applied for the pension scheme but failed to return the said

loan amount. The respondent retired as Inspector on

28.02.1997. He had received all the monetary benefits including

a sum of Rs. 99,005/- under C.P.F. Scheme. However, the

respondent filed a writ petition before the High Court praying

for pensionary benefits due to him under the pension scheme.

The High Court (Civil Writ Petition No. 10285 of 1998) vide its

5

order dated 09.08.2007 has allowed the appeal following its

earlier decision in RSA No. 2173 of 1994, dated 25.05.2004

titled as `PEPSU Road Transport Corporation v. Sant Ram

Fitter', wherein, the High Court has observed that the rejection

of the claim of respondent by the Corporation was illegal and

arbitrary as the amount of advance can be adjusted against

Death-cum-Retirement Gratuity payable to employee on his

retirement as per Regulation 24 (3) of the Regulations and it

can even be deducted from the C.P.F. of the respondent. In the

light of this, the High Court has further directed the Corporation

to release pensionary benefits to the respondent with interest

@6% per annum from the date of accrual of pension till the

date of payment thereof within two months from the date of the

order.

4) In SLP (Civil) No. 330 of 2008- PEPSU Road Transport

Corporation and Another v. Baldev Singh & Ors. (hereinafter

referred to as "Baldev's appeal): The respondent joined the

services of the Corporation as a driver on 13.10.1966 and had

subscribed to C.P.F. and gratuity. In the year 1986, respondent

took loan from his C.P.F. account to the tune of `12,000.

Subsequently, on 15.06.1992, the Corporation had introduced

6

the Pension Scheme for its employees along with the

Regulations in order to regulate the said scheme. The Pension

Scheme in terms of Regulation 3 (h) of the Regulations

envisaged the condition of refund of the loan taken from the

C.P.F. account by an employee on or before 14.12.1992 in

order to avail the pensionary benefits under the said scheme.

The respondent had applied for the pension scheme but failed to

return the said loan amount. Eventually, the respondent retired

as a driver on 30.09.1994 and has received an amount of

`80,575/- under C.P.F. Scheme as retiral benefits. However, the

respondent filed a writ petition before the High Court of Punjab

and Haryana inter-alia praying for pensionary benefits due to

him under the pension scheme. The High Court vide its ex-

parte order dated 11.8.1997, directed the Corporation to pay all

retrial benefits to the respondent within 2 months with interest.

Aggrieved by this, the Corporation filed a review petition,

which was allowed by the High Court vide its order dated

22.05.1998, directing the Corporation to determine whether any

amount is due to the respondent by passing a speaking order. In

compliance with the above order of the High Court, the

Managing Director of the Corporation, after giving the

7

opportunity of hearing, passed a detailed order rejecting the

claim of the respondent. Being aggrieved by the said order

dated 18.08.1998, the respondent filed a writ petition before the

High Court. The High Court has allowed the writ petition vide

its order dated 09.08.2007 following its earlier Judgment in

Civil Writ Petition No. 10285 of 1998 (Bachhitar Singh v.

PEPSU Road Transport Corporation).

5) In Civil Appeal No. 3846 of 2010- PEPSU Road Transport

Corporation and Another v. Jagroop Singh (hereinafter referred

to as "Jagroop's appeal"), the respondent had served the

Corporation as a driver and was subscriber of C.P.F. and

gratuity. Subsequently, on 15.06.1992, the Corporation

introduced the Pension Scheme for its employees and also made

the Regulations in order to regulate the said scheme. The

Pension Scheme in terms of Regulation 4 of the Regulations

envisages the condition for exercise of the option on or before

15.12.1992, by an employee in order to avail the pensionary

benefits under the scheme. Subsequently, the Corporation had

also extended this period by three months. It is not in dispute

that the respondent had not exercised any option for availing

the benefits under the pension scheme. On 30.11.2000, the

8

respondent took pre-mature voluntary retirement. On

08.06.2001, the respondent received all the retrial benefits

under the C.P.F Scheme and gratuity without any objection or

protest. However, 01.06.2002, after nearly 10years from his

retirement, the respondent filed a suit for declaration for the

entitlement to pension and other benefits in the Court of Civil

Judge Senior Division, Bathinda. The learned Civil Judge had

passed the judgment and decree dated 01.03.2006 in favor of

the respondent on the ground that the respondent was never

informed about the option available under the Regulations and

he came to know about this Scheme only at the time of his

retirement. The learned Civil Judge further directed the

Corporation to release pensionary benefit to the respondent

along with interest @9% per annum till the date of realization.

Being aggrieved by the judgment and decree dated 01.03.2006,

the Corporation filed a Regular Second Appeal in the Court of

District Judge, Bathinda, the same was allowed vide Judgment

and order dated 27.04.2006 on the ground that respondent is

estopped from claiming any pensionary benefit by his act of

receiving all the retrial benefits under the C.P.F. Scheme at the

time of his retirement and failing to exercise the option in terms

9

of Regulation 4 of the Regulations in order to avail the benefits

under the pension scheme. Aggrieved by this order of the

Additional District Judge dated 27.04.2006, the respondent

filed a Regular Second Appeal in the High Court, the same was

allowed vide order and judgment dated 23.12.2008. The High

Court has followed its earlier Judgment in Civil Writ Petition

No. 14562 of 2004 titled as `Jagjit Singh v. Managing Director,

Pepsu Road Transport Corporation and another' dated

03.12.2008, wherein, the appeal was allowed on the ground that

the pension scheme was never circulated nor was informed to

the employees of the Corporation and mere non-refund of the

loan taken from the C.P.F. account would not disentitle the

employee from claiming pension under the scheme.

6) The issue involved in the present appeal for our consideration

is: Whether the respondents are eligible to claim pensionary

benefits under the Pension Scheme in view of the non-

compliance of the essential conditions stipulated in the

Regulations which govern the said Pension Scheme?

7) Shri K. K. Mohan, learned counsel has appeared for the

Corporation and the respondents are represented by a battery of

10

learned counsel. We will refer to their submissions while

dealing with the issue canvassed before us.

8) Learned counsel for the Corporation submits that the

respondents having not exercised their option for the pension

scheme within the time specified in the Regulations and those

having opted but not having complied with the terms and

conditions stipulated in the Regulations which govern the

pensionary benefits, the High Court erred in law granting relief

in question. In other words, he submits that the respondents are

ineligible to claim any pensionary benefits under the Pension

Scheme since they have failed to comply with quintessential

conditions, namely Regulation 3 and 4 of the said Regulations.

He further submits, relying on the decision of this Court in

Union of India v. M.K. Sarkar, (2010) 2 SCC 59, that the

respondents cannot take the plea that they were not given the

opportunity to opt for the Pension Scheme in the absence of the

service of notice by the Corporation to its individual

employees.

9) Learned counsel for respondents submits relying on Dakshin

Hayana Bijli Vitran Nigam v. Bachan Singh, (2009) 14 SCC

11

793, that in Mangal's and Jagroop's appeals, the respondents

were not given the opportunity in order to exercise the option

for the Pension Scheme as no individual notice was served to

them. Therefore, they were unable to exercise the option for

availing the benefits under the Pension Scheme in terms of the

Regulation 4 of the Regulations.

10) The learned counsel for respondent in Mangal's appeal further

submits that the respondent's services were terminated when

the Pension Scheme was introduced. Therefore, the re-joining

of duty by the respondent after the termination of his services is

not covered by Regulation 4 of the Regulations. In other

words, the learned counsel submits that Regulation 4

contemplates the exercise of option only by an employee, under

suspension and leave, within further period of 6 months from

the date of joining of duty after suspension.

11) Learned counsel submits that, in Baldev's and Bachittar's

appeals, the respondents opted for the Pension Scheme and did

not refund the amount of advance taken from the C.P.F.

including employer's contribution as the nature of the advance

was non-refundable, which is not covered by Regulation 3 (h)

12

of the said Regulations. Learned counsel alternatively argues

that even if there is failure of the respondents to refund the

employer's contribution in terms of Regulation 3(h) of the

Regulations, it does not disentitle the respondents from

receiving pensionary benefits as the advance due to employer's

contribution of C.P.F. could be duly adjusted against the

respondents contribution by virtue of Regulation 20(3) and 24

(3) of the Regulations.

12) The Pepsu Road Transport Corporation was constituted in

terms of the provisions of the Road Transport Corporations Act,

1950 (hereinafter referred to as "the 1950 Act"). By reason of

the provisions of Section 4 thereof, each Corporation is a body

corporate having perpetual succession and a common seal and

can, in its own name, sue and be sued.

13) Section 45 of the 1950 Act authorises the Corporation to frame

Regulations for the administration of the affairs of the

Corporation. The Section reads :-

"45. Power to make Regulations.--(1) A Corporation

may, with the previous sanction of the State

Government, make Regulations, not inconsistent with

this Act and the rules made thereunder, for the

administration of the affairs of the Corporation.

13

(2) In particular, and without prejudice to the

generality of the foregoing power, such Regulations

may provide for all or any of the following matters,

namely--

(a) the manner in which, and the purposes for which,

persons may be associated with the Board under

Section 10;

(b) the time and place of meetings of the Board and

the procedure to be followed in regard to transaction

of business at such meetings;

(c) the conditions of appointment and service and the

scales of pay of officers and other employees of the

Corporation other than the Managing Director, the

Chief Accounts Officer and the Financial Adviser or,

as the case may be, the Chief Accounts Officer-cum-

Financial Adviser;

(d) the issue of passes to the employees of the

Corporation and other persons under Section 19;

(e) the grant of refund in respect of unused tickets and

concessional passes under Section 19."

14) The Regulations provide for the grant of retirement benefits to

the employees of the PEPSU Road Transport Corporation with

effect from 15.06.1992.

15) To appreciate the point in issue, it would be necessary to refer

to the relevant Regulations :

"Regulation 3. Application: (1) These Regulations

shall apply to the employees of the PEPSU Road

Transport Corporation who:

14

(i) Were/are appointed on or after the date of issue of

Regulations on whole-time and

regular basis; and

(ii) Were working immediately before the date of issue

of Regulations and opt for these Regulations.

(2) These Regulations shall not apply to the

employees, who:

a) Opt out of these Regulations.

b) Are on deputation with the Corporation.

c) Are paid out of contingencies.

d) Are work charged employees.

e) Are employed on contract basis, except when the

contract provided otherwise.

f) Are re-employed after superannuation.

g) Are specifically excluded wholly or partly from the

operation of these Regulations; and

h) Opt for the PRTC Employees Pension/Gratuity and

Regulations General Provident Fund, 1992, but failed

to refund the amount of advance taken out of the

Employer's share of the Contributory Provident Fund

alongwith interest thereon within the stipulated

period."

Regulation 4. Exercise of Option: The option under

clause (ii) of the sub-rule (1) of Regulation 3 shall be

exercised in duplicate in writing in Form I so as to

reach the managing director as forwarded by the

general manager in case of depots and administrative

officer in the case of headquarters with his counter

signatures within a period of six months from the date

of issue of these Regulations.

Provided that:

15

(i) In the case of an employee, who on the date of

the issue of these Regulations was abroad or on

leave, the option shall be exercised within a

period of six months from the date of taking the

charge of his post.

(ii) Where an employee is under suspension, on the

date of issue of these Regulations, the option

shall be exercised within a period of six months

from the date of his joining the duty.

(iii) An option once exercised shall be final,

provided the concerned employee deposits the

Corporation's share of C.P. Fund received by

him - taken in advance, if any, within a period

of six months from the date of issue of

Regulations and if a person fails to exercise his

option under the said Regulations within the

specified period referred to above, it shall be

deemed he has opted to continue for the

existing Contributory Provident Fund benefit.

(iv) An employee who dies on or after the issue of

these Regulations and who could not exercise

his option the legal heir of such employee, who

is entitled to receive retirement benefits under

the said Regulations, shall exercise option,

subject to the condition that the legal heir shall

have to deposit the amount of the

Corporation's share of the C.P. Fund received

by the deceased employee.

(v) The employee recruited after the introduction

of the said pension Regulations will be covered

under these Regulations.

Regulation 20. Subscription and Maintenance of

General Provident Fund Account: (1) The employees,

who were appointed on or after the commencement of

these Regulations and also to the existing employees,

who opt for those Regulations shall contribute

towards the General Provident Fund at the rate

prescribed by the Punjab Government for their

16

employees. An employee may, however, subscribe

voluntarily at higher rate than that prescribed by the

Punjab Government. The Fund shall be regulated in

accordance with the rules and procedure to be

prescribed by the Punjab Government from time to

time.

(2) The date of switchover for the existing employees

to General Provident Fund shall be date of issue of

these Regulations. The Corporation shall maintain the

General Provident Fund Account at head office level.

(3) An employee may be sancationed an advance out

of his own share (General Provident Fund) for

transfer to Pension and Gratuity to meet with his

liability of advance taken by him out of the employer's

share of the Contributory Provident Fund.

Regulation 24. Adjustment and Recovery of dues: (1)

The competent authority shall take steps to assess the

dues outstanding against the employee two years

before the date on which he is due to retire on

superannuation.

(2)The assessment of the outstanding dues against the

employees shall be completed by the competent

authority eight months prior to the date of his

retirement.

(3) The dues as assessed including those dues which

come to the notice subsequently and which remain

outstanding till the date of retirement of the employee,

shall be adjusted against the amount of death-cum-

retirement gratuity becoming payable to the employee

on his retirement.

(4) When an employee retries from service, an office

shall be issued to that effect by competent authority.

17

16) It is well settled law that the Regulations made under the statute

laying down the terms and conditions of service of employees,

including the grant of retirement benefits, has the force of law.

The Regulations validly made under statutory powers are

binding and effective as the enactment of the competent

legislature. The statutory bodies as well as general public are

bound to comply with the terms and conditions laid down in the

Regulations as a legal compulsion. Any action or order in

breach of the terms and conditions of the Regulations shall

amount to violation of Regulations which are in the nature of

statutory provisions and shall render such action or order illegal

and invalid.

17) In Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi,

(1975) 1 SCC 421, this Court, while elaborately discussing the

nature and effect of the Regulations made under the Statute, has

observed:

"23. The noticeable feature is that these statutory

bodies have no free hand in framing the conditions

and terms of service of their employees. These

statutory bodies are bound to apply the terms and

conditions as laid down in the Regulations. The

statutory bodies are not free to make such terms as

they think fit and proper. Regulations prescribe the

terms of appointment, conditions of service and

18

procedure for dismissing employees. These

Regulations in the statutes are described as "status

fetters on freedom of contract". The Oil and Natural

Gas Commission Act in Section 12 specifically enacts

that the terms and conditions of the employees may be

such as may be provided by Regulations. There is a

legal compulsion on the Commission to comply with

the Regulations. Any breach of such compliance would

be a breach of the Regulations which are statutory

provisions. In other statutes under consideration viz.

the Life Insurance Corporation Act and the Industrial

Finance Corporation Act though there is no specific

provision comparable to Section 12 of the 1959 Act

the terms and conditions of employment and

conditions of service are provided for by Regulations.

These Regulations are not only binding on the

authorities but also on the public.

...

30. In this view a Regulation is not an agreement or

contract but a law binding the corporation, its

officers, servants and the members of the public who

come within the sphere of its operations. The doctrine

of ultra vires as applied to statutes, rules and orders

should equally apply to the Regulations and any other

subordinate legislation. The Regulations made under

power conferred by the statute are subordinate

legislation and have the force and effect, if validly

made, as the Act passed by the competent legislature.

...

33. There is no substantial difference between a

rule and a Regulation inasmuch as both are

subordinate legislation under powers conferred by the

statute. A Regulation framed under a statute applies

uniform treatment to every one or to all members of

some group or class. The Oil and Natural Gas

Commission, the Life Insurance Corporation and

Industrial Finance Corporation are all required by the

statute to frame Regulations inter alia for the purpose

of the duties and conduct and conditions of service of

19

officers and other employees. These Regulations

impose obligation on the statutory authorities. The

statutory authorities cannot deviate from the

conditions of service. Any deviation will be enforced

by legal sanction of declaration by courts to invalidate

actions in violation of rules and Regulations. The

existence of rules and Regulations under statute is to

ensure regular conduct with a distinctive attitude to

that conduct as a standard. The statutory Regulations

in the cases under consideration give the employees a

statutory status and impose restriction on the

employer and the employee with no option to vary the

conditions. An ordinary individual in a case of master

and servant contractual relationship enforces breach

of contractual terms. The remedy in such contractual

relationship of master and servant is damages because

personal service is not capable of enforcement. In

cases of statutory bodies, there is no personal element

whatsoever because of the impersonal character of

statutory bodies. In the case of statutory bodies it has

been said that the element of public employment or

service and the support of statute require observance

of rules and Regulations."

18) In Vidya Dhar Pande v. Vidyut Grih Siksha Samiti, (1988) 4

SCC 734, the services of the appellant-employee were

terminated, in contravention of the service Regulations, by the

respondent school. This Court, while reinstating the employee

in service, has agreed with the observations made in Sukhdev

Singh's case (Supra). While doing so, this Court has stated :

9. The question whether a Regulation framed under

power conferred by the provisions of a statute has got

statutory power and whether an order made in breach

20

of the said Regulation will be rendered illegal and

invalid, came up for consideration before the

Constitution Bench in the case of Sukhdev Singh v.

Bhagatram Sardar Singh Raghuvanshi. In this case it

was held that: [SCC p. 438 : SCC (L&S) P. 118, para

33]

"There is no substantial difference between a

rule and a Regulation inasmuch as both are

subordinate legislation under powers conferred

by the statute. A Regulation framed under a

statute applies uniform treatment to every one or

to all members of some group or class. The Oil

and Natural Gas Commission, the Life Insurance

Corporation and Oil and Industrial Finance

Corporation are all required by the statute to

frame Regulations inter alia for the purpose of

the duties and conduct and conditions of service

of officers and other employees. These

Regulations impose obligation on the statutory

authorities. The statutory authorities cannot

deviate from the conditions of service. Any

deviation will be enforced by legal sanction of

declaration by courts to invalidate actions in

violations of rules and Regulations. The existence

of rules and Regulations under statute is to

ensure regular conduct with a distinctive attitude

to that conduct as a standard. The statutory

Regulations in the cases under consideration give

the employee a statutory status and impose

restriction on the employer and the employee

with no option to vary the conditions."

10. There is, therefore, no escape from the conclusion

that Regulations have force of law. The order of the

High Court must, therefore, be reversed on this point

unhesitatingly.

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19) Even in the case of non-statutory Regulations, specifically

providing for the grant of pensionary benefits to the employee

qua his employer shall be governed by the terms and conditions

encapsulated in such non-statutory Regulations. In Union of

India v. Brig. P. K. Dutta (Retd.), 1995 Supp (2) SCC 29, this

Court :

7. It is true that the Pension Regulations are non-

statutory in character. But as held by this Court in

Major (Retd.) Hari Chand Pahwa v. Union of India

1995 Supp (1) SCC 221 , the pensionary benefits are

provided for and are payable only under those

Regulations and can, therefore, be withheld or

forfeited under and as provided by those very

Regulations. The following observations from the said

judgment makes the position clear:

"We do not agree even with the second

contention advanced by the learned counsel. The

provisions of Regulation 16(a) are clear. Even if

it is assumed that the Pension Regulations have

no statutory force, we fail to understand how the

provisions of the said Regulations are contrary to

the statutory provisions under the Act or the

Rules. The pension has been provided under

these Regulations. It is not disputed by the

learned counsel that the pension was granted to

the Corporation under the said Regulations. The

Regulations which provided for the grant of

pension can also provide for taking it away on

justifiable grounds."

22

20) In Rajasthan SRTC v. Bal Mukund Bairwa, (2009) 4 SCC 299,

the services of the employee of the appellant were terminated

by virtue of service Regulations (Statutory) made under Section

45 of the Road Transport Corporation Act, 1950. This Court,

while upholding the jurisdiction of the Civil Court to entertain

the suit filed by the employee challenging the order of

termination of his services, has held:

"38. Where the relationship between the parties as

employer and employee is contractual, the right to

enforce the contract of service depending on personal

volition of an employer is prohibited in terms of

Section 14(1)(b) of the Specific Relief Act, 1963. It

has, however, four exceptions, namely, (1) when an

employee enjoys a status i.e. his conditions of service

are governed by the rules framed under the proviso

appended to Article 309 of the Constitution of India or

a statute and would otherwise be governed by Article

311(2) of the Constitution of India; (2) where the

conditions of service are governed by statute or

statutory Regulation and in the event mandatory

provisions thereof have been breached; (3) when the

service of the employee is otherwise protected by a

statute; and (4) where a right is claimed under the

Industrial Disputes Act or sister laws, termination of

service having been effected in breach of the

provisions thereof.

39. The appellant Corporation is bound to comply

with the mandatory provisions of the statute or the

Regulations framed under it. A subordinate legislation

when validly framed becomes a part of the Act..."

23

21) Pension is a retirement benefit partaking of the character of

regular payment to a person in consideration of the past

services rendered by him. We hasten to add that although

pension is not a bounty but is claimable as a matter of right, yet

the right is not absolute or unconditional. The person claiming

pension must establish his entitlement to such pension in law.

The entitlement might be dependent upon various

considerations or conditions. In a given case, the retired

employee is entitled to pension or not depend on the provisions

and interpretation of Rules and Regulations. The Contributory

Provident Fund appears to be simple mechanism where an

employee is paid the total amount which he has contributed

along with the equal contribution made by the employer

ordinarily at the time of retirement of an employee. In short,

we quote what was repeatedly said by this Court that "pension

is payable periodically as long as the pensioner is alive whereas

C.P.F. is paid only once on retirement". Therefore,

conceptually, pension and C.P.F. are separate and distinct.

22) Now we will try to explain the essential distinction between

these two retirement benefits that an employee may derive at

the time of his retirement from service. The C.P.F. was

24

introduced with the object of providing social security to the

employees working in factories and other establishments, after

their retirement. The C.P.F. was instituted as a Compulsorily

Contributory Provident Fund by the enactment of the

Employees' Provident Funds and Miscellaneous Provisions

Act, 1952 (hereinafter referred to as "the Provident Fund Act").

The employee registered under the Provident Fund Act shall be

entitled to claim all benefits available under the C.P.F. Scheme

framed under the Act. This CPF Scheme requires opening of

the account for the employee by the employer. The

Government/employer is under the continuous obligation to

deposit equal or matching contribution made by the employee

in his account till he retires. Once the employee is retired, then

his rights qua Government/employer's contribution into his

C.P.F. account finally crystallizes. After retirement, this entire

C.P.F. amount is paid to the employee as a retrial benefit. On

the receipt of C.P.F. amount, the relationship between

employee and employer ceases to exist without leaving any

further legal right or obligation qua each other.

23) In Committee for Protection of Rights of ONGC Employees v.

O.N.G.C., (1990) 2 SCC 472, this Court has stated :

25

"12. Employees' Provident Funds and Miscellaneous

Provisions Act, 1952 (hereinafter referred to as `the

Provident Fund Act') has been enacted with the object

of providing social security to the employees in

factories and other establishments covered by the said

Act, after their retirement. In the Statement of Objects

and Reasons for the said enactment it was mentioned

as under:

"The question of making some provision for the

future of the industrial worker after he retires, or

for his dependants in case of his early death, has

been under consideration for some years. The

ideal way would have been provisions through old

age and survivors' pensions as has been done in

the industrially advanced countries. But in the

prevailing conditions in India, the institution of a

pension scheme cannot be visualised in the near

future. Another alternative may be for provision of

gratuities after a prescribed period of service. The

main defect of a gratuity scheme, however, is that

the amount paid to a worker or his dependants

would be small, as the worker would not himself

be making any contribution to the fund. Taking

into account the various difficulties, financial and

administrative, the most appropriate course

appears to be the institution compulsorily of

contributory provident fund in which both the

worker and the employer would contribute. Apart

from other advantages, there is the obvious one of

cultivating among the workers a spirit of saving

something regularly."

13. This indicates that the scheme of Contributory

Provident Fund, by way of retiral benefit, envisaged

by the Provident Fund Act, is in the nature of a

substitute for old age pension because it was felt that

in the prevailing conditions in India, the institution of

a pension scheme could not be visualised in the near

future. It was not the intention of Parliament that

Provident Fund benefit envisaged by the said Act

would be in addition to pensionary benefits."

26

24) In Krishena Kumar v. Union of India, (1990) 4 SCC 207, this

Court has held :

"32. The Railway Contributory Provident Fund is by

definition a fund. Besides, the government's obligation

towards an employee under CPF Scheme to give the

matching contribution begins as soon as his account is

opened and ends with his retirement when his rights

qua the government in respect of the Provident Fund

is finally crystallized and thereafter no statutory

obligation continues. Whether there still remained a

moral obligation is a different matter."

25) In All India Reserve Bank Retired Officers' Assn. v. Union of

India, 1992 Supp (1) SCC 664, this Court, while considering

the case of the Pension Scheme and Contributory Provident

Fund Scheme, has held:

"10. ... in the case of an employee governed by the

Contributory Provident Fund Scheme his relations

with the employer come to an end on his retirement

and receipt of the contributory provident fund amount

but in the case of an employee governed under the

Pension Scheme his relations with the employer

merely undergo a change but do not snap altogether."

26) Pension is a periodic payment of an amount to the employee,

after his retirement from service by his employer till his death.

In some cases, it is also payable to the dependents of the

27

deceased employee as a family pension. The pension is in a

nature of right which employee has earned by rendering long

service to the employer. It is a deferred payment of

compensation for past service. It is dependable on the condition

of rendering of service by the employee for a certain fixed

period of time with decent behavior. Like C.P.F., the object of

providing pensionery benefit under the Pension Scheme is to

provide social security to the employee and his family after his

retirement from service. The Government's/Employer's

obligation under the Pension Scheme begins only when the

employee retires and it continues till the death of the employee.

27) In Deokinandan Prasad v. State of Bihar, (1971) 2 SCC 330,

this Court has held:

"31. ... pension is not a bounty payable on the sweet

will and pleasure of the Government and that, on the

other hand, the right to pension is a valuable right

vesting in a government servant.

28) In D.S. Nakara v. Union of India, (1983) 1 SCC 305, this court

has observed:

"27. Viewed in the light of the present day notions

pension is a term applied to periodic money payments

to a person who retires at a certain age considered

28

age of disability; payments usually continue for the

rest of the natural life of the recipient. The reasons

underlying the grant of pension vary from country to

country and from scheme to scheme. But broadly

stated they are (i) as compensation to former members

of the Armed Forces or their dependents for old age,

disability, or death (usually from service causes), (ii)

as old age retirement or disability benefits for civilian

employees, and (iii) as social security payments for

the aged, disabled, or deceased citizens made in

accordance with the rules governing social service

programmes of the country. Pensions under the first

head are of great antiquity. Under the second head

they have been in force in one form or another in some

countries for over a century but those coming under

the third head are relatively of recent origin, though

they are of the greatest magnitude. There are other

views about pensions such as charity, paternalism,

deferred pay, rewards for service rendered, or as a

means of promoting general welfare (see

Encyclopaedia Britannica, Vol. 17, p. 575). But these

views have become otiose.

28. Pensions to civil employees of the Government and

the defence personnel as administered in India appear

to be a compensation for service rendered in the past.

However, as held in Douge v. Board of Education, 302

US 74, a pension is closely akin to wages in that it

consists of payment provided by an employer, is paid

in consideration of past service and serves the purpose

of helping the recipient meet the expenses of living.

This appears to be the nearest to our approach to

pension with the added qualification that it should

ordinarily ensure freedom from undeserved want.

29. Summing up it can be said with confidence that

pension is not only compensation for loyal service

rendered in the past, but pension also has a broader

significance, in that it is a measure of socio-economic

justice which inheres economic security in the fall of

life when physical and mental prowess is ebbing

corresponding to aging process and, therefore, one is

29

required to fall back on savings. One such saving in

kind is when you give your best in the hey-day of life

to your employer, in days of invalidity, economic

security by way of periodical payment is assured. The

term has been judicially defined as a stated allowance

or stipend made in consideration of past service or a

surrender of rights or emoluments to one retired from

service. Thus 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 or for service rendered.

In one sentence one can say that the most practical

raison d'etre for pension is the inability to provide for

oneself due to old age. One may live and avoid

unemployment but not senility and penury if there is

nothing to fall back upon."

29) In Poonamal v. Union of India, (1985) 3 SCC 345, this Court

has observed:

"7. ... pension is a right not a bounty or gratuitous

payment. The payment of pension does not depend

upon the discretion of the Government but is governed

by the relevant rules and anyone entitled to the

pension under the rules can claim it as a matter of

right. (Deoki Nandan Prasad v. State of Bihar 1971

(2) SCC 330, State of Punjab v. Iqbal Singh 1976 (2)

SCC 1 and D.S. Nakara v. Union of India 1983 (1)

SCC 305.) Where the Government servant rendered

service, to compensate which a family pension scheme

is devised, the widow and the dependent minors would

equally be entitled to family pension as a matter of

right. In fact we look upon pension not merely as a

statutory right but as the fulfilment of a constitutional

promise inasmuch as it partakes the character of

public assistance in cases of unemployment, old-age,

disablement or similar other cases of undeserved

want. Relevant rules merely make effective the

constitutional mandate."

30

30) In Krishena Kumar v. Union of India (supra) this Court has

held:

"32. ...On the other hand under the Pension Scheme

the government's obligation does not begin until the

employee retires when only it begins and it continues

till the death of the employee. Thus, on the retirement

of an employee government's legal obligation under

the Provident Fund account ends while under the

Pension Scheme it begins."

31) In Prabhu Narain v. State of U.P.,(2004) 13 SCC 662, this

Court has observed:

"5. No doubt pension is not a bounty, it is a valuable

right given to an employee, but, in the first place it

must be shown that the employee is entitled to pension

under a particular rule or the scheme, as the case may

be."

32) In U.P. Raghavendra Acharya v. State of Karnataka, (2006) 9

SCC 630, this Court has held:

"25. Pension, as is well known, is not a bounty. It is

treated to be a deferred salary. It is akin to right of

property. It is correlated and has a nexus with the

salary payable to the employees as on the date of

retirement."

31

33) The term pension has been defined in American Jurisprudence

2d, Vol. 60, at pg. 879 as thus:

"However, by modern usage, the "pension" is not

restricted to pure gratuities. Thus, it has been held

that a pension paid a governmental employee for long

and efficient service is not an emolument the payment

of which is barred by a state constitutional provision,

but is a deferred portion of the compensation earned

for services rendered. ... A pension is closely akin to

wages in that it consists of payments provided by an

employer, is paid in consideration of past services,

and serves the purpose of helping the recipient meet

the expense of living."

34) The concept of pension has been discussed in Halsbury's Laws

of England, Fourth Edition (Reissue), Vol. 16, para. 400 as

thus:

"Meaning of `pension'. `Pension' means a periodical

payment or lump sum by way of pension, gratuity or

superannuation allowance as respects which the

Secretary of State is satisfied that it is to be paid in

accordance with any scheme or arrangement having

its object or one of its objects to make provision in

respect of persons serving in particular employments

for providing them with retirement benefits ...

`Pension' does not include:

(i) a payment to an employee which consists

solely of a return of his own contributions,

with or without interest;

(ii) that part of a payment to an employee

which is attributable solely to additional

voluntary contributions by that employee

32

made in accordance with the scheme or

arrangement;

(iii) a periodical payment or lump sum, in so far

as that payment or lump sum represents

compensation under the statutory

compensation schemes and is payable under

a statutory provision, whether made or

passed before, on or after 31st July 1978"

35) The concept of pension has also been considered in Corpus

Juris Secundum, Vol. 70, at pg. 423 as thus:

"A pension is a periodical allowance of money

granted by the government in consideration or

recognition of meritorious past services, or of loss

or injury sustained in the public service. A pension

is mainly designed to assist the pensioner in

providing for his daily wants, and it presupposes the

continued life of the recipient."

36) To sum up, we state that the concept of pension has been

considered by this court time and again and in catena of cases,

it has been observed that the Pension is not a charity or bounty

nor is it a conditional payment solely dependent on the sweet

will of the employer. It is earned for rendering a long and

satisfactory service. It is in the nature of deferred payment for

past services. It is a social security plan consistent with the

socio-economic requirements of the Constitution when the

33

employer is a State within the meaning of Article 12 of the

Constitution rendering social justice to a superannuated

government servant. It is a right attached to the office and

cannot be arbitrarily denied. [see A.P. Srivastava v. Union of

India, (1995) 6 SCC 227, Vasant Gangaramsa Chandan v.

State of Maharashtra, (1996) 10 SCC 148, Subrata Sen v.

Union of India, (2001) 8 SCC 71, Union of India v. P.D. Yadav,

(2002) 1 SCC 405, Grid Corpn. of Orissa v. Rasananda Das,

(2003) 10 SCC 297, All India Reserve Bank Retired Officers

Assn. v. Union of India (Supra)].

37) Having noticed the conceptual difference between the concept

of C.P.F. and pension, we will now notice the submissions

made by the learned counsel for the parties to the lis.

38) The common thread which runs through all these appeals

canvassed before us is that the respondents have failed to

comply with the terms and conditions of the Regulations, which

govern the Pension Scheme. We have already considered the

34

nature and effect of the Regulations, which are made under a

statute. These statutory Regulations require to be interpreted in

the same manner which is adopted while interpreting any other

statutory provisions. The Corporation as well as respondents are

obliged and bound to comply with its mandatory conditions and

requirements. Any action or conduct deviating from these

conditions shall render such action illegal and invalid.

Moreover, the respondents have availed the retiral benefits

arising out of the C.P.F and gratuity without any protest. The

respondents in all these appeals, before us, have made a claim

for pensionary benefits under the Pension Scheme for the first

time only after their retirement with an unreasonable delay of

more than 8 years. It is not in dispute, in some appeals, that the

respondents never opted for the Pension Scheme for their

alleged want of knowledge for non-service of individual

notices. In other appeals, although respondents applied for the

option of the Pension Scheme but indisputably never fulfilled

the quintessential conditions envisaged by the Regulations

which are statutory in nature.

39) The learned counsel for the respondents in support of their

contention for want of knowledge of the Pension Scheme due to

35

non-service of individual notices relied on the decision of this

Court in Dakshin Haryana Bijli Vitran Nigam v. Bachan Singh,

(2009) 14 SCC 793. The said decision is clearly distinguishable

on facts. In that case, the appellant, Haryana State Electricity

Board, had issued instructions dated 23.06.1993 and circular

dated 09.08.1994 in order to provide an option to the employees

for pensionary benefits in lieu of their work charged service

with an express condition of noting of instructions from all the

employees and acknowledging the receipt of the letter. In these

appeals, before us, there is no such condition of noting from the

employees or serving individual notices in the Pension Scheme

or Regulations. Therefore, in our opinion, Bachan Singh's

decision will not assist the respondents.

40) In our view, in the facts and circumstances of the present case

and in view of absence of such condition in the scheme, it is not

necessary for the Corporation to give an individual notice to

respondents for exercising of option for pension Scheme and

also for asking respondent to refund the employers contribution

of C.P.F. at each stage. Furthermore, when notice or knowledge

36

of the Pension Scheme can be reasonably inferred or gathered

from the conduct of the respondents in their ordinary course of

business and from surrounding circumstances, then, it will

constitute a sufficient notice in the eyes of law. In Union of

India v. M.K. Sarkar, (2010) 2 SCC 59, this Court has :

21. The Tribunal in this case has assumed that

being "aware" of the scheme was not sufficient notice

to a retiree to exercise the option and individual

written communication was mandatory. The Tribunal

was of the view that as the Railways remained

unrepresented and failed to prove by positive

evidence, that the respondent was informed of the

availability of the option, it should be assumed that

there was non-compliance with the requirements

relating to notice. The High Court has impliedly

accepted and affirmed this view. The assumption is not

sound.

22. The Tribunal was examining the issue with

reference to a case where there was a delay of 22

years. A person, who is aware of the availability of

option, cannot contend that he was not served a

written notice of the availability of the option after 22

years. In such a case, even if Railway Administration

was represented, it was not reasonable to expect the

department to maintain the records of such

intimation(s) of individual notice to each employee

after 22 years. In fact by the time the matter was

considered more than nearly 27 years had elapsed.

Further when notice or knowledge of the availability

of the option was clearly inferable, the employee

cannot after a long time (in this case 22 years) be

heard to contend that in the absence of written

intimation of the option, he is still entitled to exercise

the option.

37

23. This Court considered the meaning of "notice"

in Nilkantha Sidramappa Ningashetti v. Kashinath

Somanna Ningashetti, AIR 1962 SC 666. This Court

held: (AIR p. 669, para 10)

"10. We see no ground to construe the

expression `date of service of notice' in Column

3 of Article 158 of the Limitation Act to mean

only a notice in writing served in a formal

manner. When the legislature used the word

`notice' it must be presumed to have borne in

mind that it means not only a formal intimation

but also an informal one. Similarly, it must be

deemed to have in mind the fact that service of a

notice would include constructive or informal

notice. If its intention were to exclude the latter

sense of the words `notice' and `service' it would

have said so explicitly."

41) The Regulation 4 (iii) of the Regulations is a deeming provision

to the effect: firstly, if an employee fails to exercise his option

within a period of 6 months from the date of issue of these

Regulations and; secondly, even on exercise of option, if an

employee fails to refund the amount of advance taken from

employers contribution of the C.P.F. within 6 months from the

date of issue of these Regulations, then it shall be deemed that

employee has opted to continue for the existing C.P.F. benefit.

Therefore, the failure on the part of the respondents to opt for

the Pension Scheme and refund the advance taken from the

employer's contribution of C.P.F. will disentitle them from

38

claiming any benefit under the Pension Scheme. Therefore, we

cannot sustain the Judgment and order passed by the High

Court.

42) The appeals are accordingly allowed and the impugned

Judgment and orders passed by the High Court are set aside.

There will be no order as to costs.

.................................J.

[ D. K. JAIN ]

.................................J.

[ H. L. DATTU ]

New Delhi.

May 12, 2011

39