2011 (5) TMI 1121 - SC - Indian Laws

Employees who missed 6-month pension scheme deadline and failed to refund CPF advances lose pensionary benefits despite delayed claims

SC held that employees who failed to opt for pension scheme within statutory 6-month period and did not refund advances from employer's CPF contribution ... Eligibility to 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 - failure to comply with the terms and conditions of the Regulations, which govern the Pension Scheme - conceptual difference between the concept of Contributory Provident Fund (C.P.F.) and pension - Meaning of 'pension' - HELD THAT:- 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 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. 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. 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 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. 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 claiming any benefit under the Pension Scheme. Therefore, we cannot sustain the judgment and order passed by the High Court. The appeals are accordingly allowed and the impugned judgment and orders passed by the High Court are set aside. Issues Involved:1. Eligibility to claim pensionary benefits under the Pension Scheme.2. Compliance with essential conditions stipulated in the Regulations governing the Pension Scheme.3. Requirement of individual notice for exercising the option for the Pension Scheme.4. Adjustment and recovery of dues related to the Contributory Provident Fund (C.P.F.).Detailed Analysis:1. Eligibility to Claim Pensionary Benefits:The core issue in the appeals is whether the respondents are eligible to claim pensionary benefits under the Pension Scheme despite non-compliance with the essential conditions stipulated in the Regulations. The respondents had either not exercised their option for the Pension Scheme within the specified time or, having opted, failed to comply with the terms and conditions, such as refunding the advance taken from the employer's contribution to the C.P.F.2. Compliance with Essential Conditions:The Supreme Court emphasized that the Regulations governing the Pension Scheme have the force of law. These Regulations require strict compliance, and any deviation renders actions illegal and invalid. The respondents, in all appeals, had availed of the retiral benefits under the C.P.F. and gratuity without any protest and made claims for pensionary benefits only after retirement with unreasonable delays. The Court reiterated that statutory Regulations are binding and effective as enactments of the competent legislature, and any breach of these Regulations would amount to a violation, rendering such actions or orders illegal and invalid.3. Requirement of Individual Notice:The respondents argued that they were not given the opportunity to exercise the option for the Pension Scheme due to the non-service of individual notices. The Court, however, held that there was no requirement in the Pension Scheme or Regulations for serving individual notices. The Court referenced the case of Union of India v. M.K. Sarkar, stating that when notice or knowledge of the Pension Scheme can be reasonably inferred from the conduct of the respondents and surrounding circumstances, it constitutes sufficient notice in the eyes of the law. The Court found that the respondents' argument for want of knowledge due to non-service of individual notices was not tenable.4. Adjustment and Recovery of Dues:The Court discussed the provisions related to the adjustment and recovery of dues under the C.P.F. Scheme. The Regulations stipulated that employees who opted for the Pension Scheme but failed to refund the advance taken from the employer's contribution to the C.P.F. within the specified period would be deemed to have opted to continue with the existing C.P.F. benefit. The respondents' failure to comply with these conditions disentitled them from claiming any benefits under the Pension Scheme.Conclusion:The Supreme Court allowed the appeals, setting aside the High Court's judgments and orders. The Court held that the respondents were not entitled to claim pensionary benefits under the Pension Scheme due to their non-compliance with the essential conditions stipulated in the Regulations. The Court emphasized the binding nature of statutory Regulations and the necessity for strict adherence to their terms.