Anwari Begum vs Employees Provident Fund Commissioner and Another

T.S. Doabia, J.

Wolsey''s prayer "had I served my God as reverently as I did my king, I would not have fallen on these days of penury'''' was quoted by D.A. Desai, J in D.S. Nakara and Others Vs. Union of India (UOI), for coming to the conclusion that the classification in revised pension formula between pensioners on the date of retirement specified in the memorandum in question is arbitrary violative of Article 14 of the Constitution of India. The above case dealt with those category of employees who had rendered service with the Union of India. The present appeal deals with a situation where the widow of a person who had once served the Madhya Pradesh State Electricity Board and who has grown feeble both mentally and physically seeks to sustain herself through the medium of family pension scheme. As to how and why she has been denied this benefit appears to be beyond her comprehension. She yearn for equality of treatment with those who are getting or are going to get this benefit.

Before dealing with the legal aspects which were found to be against her by a learned Single Judge of this Court, and which further led to the dismissal of her claim made through a writ petition, it would be apt to notice the facts in brief.

The appellant''s husband Lal Khan joined the services of Madhya Pradesh Electricity Board (hereinafter referred to as the Board) on 24th of December 1960. While in service, he met with an accident on 2nd of March, 1984. This accident has been defined as non-fatal, non-electric and after he recovered from the injuries sustained in the accident, he resumed his duties on 5fh of July 1984. A fitness certificate was issued by the Chief Medical Officer. This Lal Khan, the husband of the appellant, died on 19th of July 1986. This is said to be a natural death. The petitioner filed a letter petition in this Court. This was registered as Miscellaneous petition No. 117 of 1990. She sought appointment of her son on compassionate grounds. She also made a request for the payment of family pension. As this letter petition was found waiting in material particulars, the claim of the petitioner for family pension was not considered. She accordingly filed a separate petition. This petition was considered by a learned Single Judge of this Court and was dismissed. The dismissal of the aforementioned writ petition led to filing of the present letters patent appeal.

The claim of the appellant is that she is entitled to the family pension in terms of the family pension scheme This family pension scheme is statutory in nature. This has been framed under the Employee''s provident funds and mis-calcareous Provisions Act, 1952 (hereinafter referred to as the Central Act of 1952). The Central Act of 1952 was amended by Act No. 16 of the 1971. Section 6-A was added. The concept of introducing a scheme for giving pensions to the families of the employees was given a statutory recognition. For facility of reference, this section be noticed. This reads as under :-"6 A. Employees'' Family Pension Scheme. -

(1) the Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees'' Family Pension Scheme for the purpose of providing family pension and life assurance benefits to the employees of any establishment or class of establishments to which this Act applies.

(2) There shall be established, as soon as may be after the framing of the Family Pension Scheme, a Family Pension Fund into which shall be paid from time to time in respect of every such employee -

(a) such portion, not exceeding one - fourth, of the amount payable u/s ft as contribution by the employer as well as the employee, as may be specified in the Family Pension Scheme.

(b) such sums as are payable by the employer of an exempted establishment under sub-section (ft) Of Section 17, and

(c) such sums, being not less than the amount payable in pursuance of clause (a) out of the employer''s contribution u/s ft, as the Central Government may, after due appropriation made by Parliament by law in this behalf, specify.

(3) The family pension fund shall vest in and be administered by the Central Board.

(4) The Family Pension Scheme may provide for all or any of the matters specified in Schedule III.

(5) The Family Pension Scheme may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in that Scheme.

It was in pursuance of the above statutory provision, the Board took a decision on 8th of December, 1977. It decided to incorporate Family Pension Scheme in the Madhya Pradesh Electricity Board Contributory Provident Fund Scheme. This was to be implemented with effect from the date on which section ft A referred to above was enforced. In this regard, it would be apt to note the Circular issued by the Board. This has been placed on the record as Annexure R/2F. It reads as under ;-

No. LWO/2137 Jabalpur, dt 8.1.77

The M. P. Electricity Board has decided to incorporate Family Scheme as envisaged under the E. P. F. Act 1952 in its M. P. Electricity Board Contributory Provident Fund Scheme and to implement the same with effect from the date on which the Act No. 16 of 1971 amending the E. P. F. Act, 1952 came into force.

It he seen that the above circular is without any its and buts. As to whether any employee is to be excluded from the operation of the Scheme is expressly mentioned in the circular and it should be presumed that this was applicable to all the employees who were in service either on the date on which the Act was enforced or at least on the date on-which the circular in question was issued. Section 6A was enforced with effect from 23rd of April, 1971 and the resolution of the Board is dated 8th of December 1977. To repeat, the appellant'' s husband joined the service with the Board on 24th of December 1960.

On 6th of June, 1980, another circular was issued by the Board. Para 2 of this circular. provides that as per the Family Pension Scheme of 1971, the employees are not required to contribute anything extra. The whole of accounting is supposed to be done with the Board and the Regional Provident Fund Commissioner, Indore was responsible for operation of this fund. Individually ledger cards were supposed to be maintained by the officials dealing with this subject. Para 5 of this letter further stipulates that the employees were not required to contribute anything extra. The office of the Board was supposed to pay the employees'' share out of their contributory provident fund subscription direct to the Regional Provident Fund Commissioner. A formula in this regard is indicated in para 5 of the circular. As such, it would be useful to notice para 5 of the Scheme. Pra 5 of the circular dated 6th of June, 1980, reads as under :-

As per provisions of the Scheme the employees will not be required to contribute anything extra. This office will pay employees share, not of his CPF subscription direct R. P. F. Commissioner. For this it is necessary to know the pay + D. A. of the individual subscriber from 1.3.1971 till today. The same be got filled up from the service book and with the help of DA. Chart sent with this Circular in Form 3A (enclosed) right from March, 1971 to 31.3.80 for each individual CPF employees and sent to this office with calculation of his contribution to the fund at the rate of 1-1/ 6% (one and one upon six per cent) of pay + D. A. had been calculated at the time of payment of Bonus as such total pay and D. A. from the bonus bill can be produced by the filed staff for each CPF employee and Contribution calculated accordingly. The arrears of wages will on account revised pay fixation bill be further helpful from 1.4.74 to ascertain pay + D. A. for the period. This office has to release contribution on behalf of employees together with equal contribution on Board''s behalf for all employees upto this date or RPF Commissioner, Indore. Unless this action is taken by this office, the benefit of the Scheme to the employee''s dependents will not be released by R. P. F. Commissioner, Indore. This office action is entirely depended on your co-operation in furnishing contribution cards duly filed in for the last eight years.

In para 6 of the aforementioned scheme, it was mentioned that the contributory provident fund employees family pension was to be released by the Regional Provident Fund Commissioner directly after meeting their audit requirements. A request was made to all officers of the Board to get form No. 3 A to be filled-up at the earliest. So far as the employees were concerned, their cooperation was sought filling the requisite cards.

All that has been noted above does go in favour of the employees. It would not be apt to notice that portion of the circular which is said to be against the appellant. This is contained in the opening paragraph of circular dated 6th of June, 1980. As this para is the sheet anchor of the case of the respondent Board, it would be apt to notice this para also.

You are already aware that the Board vide its order No. LWO/2137 dt 8.12.77 had adopted Family Pension Scheme as applicable to E. P. F. Employees under Employees Provident Fund Act, 1952 to the benefit of the contributory provident fund employees of the Board w. e. f. 1st March 1971. Every employee who has been admitted to the membership of contributory provident fund from 1.3.1971 is entitled to this pension scheme. In short the employees with C.P.F. account No. 109503 and onwards is ordinarily eligible for benefit of the scheme. However, those who have retired, left the service and no more in service after 1.3.1971 will be considered after each individual case is examined.

(emphasis supplied).

Thus, the case of the Board is that all those employees who had their contributory fund account No. 109503 and onwards were eligible for the benefit of the scheme. The number of the husband of the appellant was earlier to this, it being 102886. The Board concluded that the present widow is not entitled to the family pension. It would also be apt to notice that the clause which debars is not mandatory in its terms. All that has been said is that employees with C.P.K. account No. 109503 and onwards is ordinarily eligible for the benefit. The use of the words "ordinarily eligible" would show that there was room for variation and the debarment under para 1 was not something mandatory.

On 19th of September 1983, another clarification was issued. It was provided that the scheme is not applicable to those employees who had become members of the contributory provident fund prior to 1st of March, 1971. Para 1 of this circular be noticed. It reads as under :-

To whom the family pension scheme 1971 is applicable :- The family pension scheme is applicable to those members of contributory provident fund who have been admitted to membership from 1.3.71 onward only, i.e. from C.P.F. No. 109503 and above. The scheme is not applicable to those who have become members of C.P.F. prior to 1.3.71 i.e., CPF No. 109502 and below. Therefore, no case for family pension benefits under this scheme in respect of such employees bearing No. 109502 and below be submitted to this office. Any cases relating to such employees received in this office will be returned or no action will be taken in such cases and will be filed.

With a view to complete the factual aspects, it would be apt to notice some of the clauses of the family pension scheme. Paragraphs 3, 4 and 9 are relevant. These be noticed.

Membership of the family pension fund. -

Subject to sub-paragraph (3) of paragraph 1, this scheme shall apply to every employee -

(a) who becomes a member of the employees'' provident fund or of provident funds of factories and other establishments exempted u/s 17 of the Act on or after the 1st day of March, 1971.

(b) who has been a member of the employees'' provident fund or of provident funds of factories and other establishments exempted u/s 17 of the Act immediately before the commencement of this scheme and opts to exercise his option under paragraph 4.

Option for joining this Scheme.

(1) Every employee who is a member of the employees'' provident fund or of provident funds of factories and other establishments exempted u/s 17 of the Act, immediately before the commencement of this scheme, shall have the option to join this Scheme.

(2) The option preferred to in sub-paragraph (1) shall be exercised in form-I within a period of three months from the 1st day of March, 1971.

(3) It shall be the duty of every employer to get the option referred to in sub-paragraph (1) exercised by every member to whom the option is given " the time specified in sub-paragraph (2).

(2). Xxxx

Family Pension Fund. - (1) from and out of the contributions payable by the employer and the employees in each month u/s 6 of the Act a part of the contribution, representing 1 -1/6 per cent of the employee''s pay along with an equivalent amount of 1 -1/6 per cent from and out of the employer''s contribution shall be remitted by the employer to the Family Pension Fund by a separate bank draft or cheque on the account of Family Pension Fund contribution in such manner as may be specified in this behalf by the Commissioner. The cost of the remittance, if any, shall be borne by the employer.

xxxx

The statutory provisions contained in the Act and the Scheme have been noticed above. As to what led the Board to deny the claim of the appellant may also be taken note of.

As per the Board, family pension scheme of Board employees was introduced on 9th of November 1966. M. P. Electricity Board Pension Rules were adopted by the Board. The categories of persons who were entitled to this were indicated. A perusal of para 6 of the return would broadly give the reason for denial of benefit to the widow of the deceased employee. It has again been stated that the scheme would be applicable to Those employees who have joined the serve of the Board on 1st of March, 1971. In para 8, it is mentioned that the employees of the trade and establishment appointed in Board between 1 st June 1957 and 28th February, 1971 were not entitled to family pension under the scheme in question. Paras 6,7 and 8 of the return in this regard be noticed. These read as under.:

That Family Pension Scheme of the Board employees was included under his order No. - PD - III/OSD/857 dated 9.11.66 in connection with rules known as Madhya Pradesh Electricity Board, Pension Rules as adopted by the Board and also to the employees of the intergraded Madhya Bharat, Vindhya Pradesh and other absorbed in the Board service but these rules were not made applicable to :-(i) persons who retired prior to the date of adoption of the scheme but re-employed on that date or thereafter; (ii) persons paid from contingency; (iii) work charged employees; (iv) casual labour, (v) contract officers. (vi) employees belonging to the trade establishment other than employees of integrated units, of Ex. M.B. & V.P. State who have been absorbed against a post falling under the trade establishment but were allowed to retain the pensionary'' benefits, (vii) employees of Bhopal State who were governed by C. P. F. benefits at the time of absorption with the board and who have not specifically opted for the Board Pension Rules under the circular No. / C-III/4215 dated 10.9.1963. As such, the employees who belong to trade establishment and appointed under the Board w. e. f. 1st June 1957 to 28fh February 1971 and were the members of the CPF Scheme were not entitled for the pension benefits as they were governed by the trade and establishment rules. The copy of order dt 9. 11. 1966 is placed and marked as Annexure R/2-E.

That, as per the Board Circular No. L-WO/2137 dated 8th December 1977, a copy whereof is filed herewith and marked as Annexure R/2-F, Board adopted the Family Pension Scheme of 1971 and made applicable to the employees of the Board who comes under trade establishment and became the members of the CPF Scheme of the Board on or after 1st March, 1971 as specifically mentioned in the circular No. IV/250 dated 6th June, 1980, and no, 02-07/1V/8255 dt. 19.9.1983, a copy whereof is filed herewith and marked Annexures R/2-G and R-2-H by which the Board has specifically adopted the Family Pension scheme as applicable to those employees who have joined the service of the Board on 1.3.1971 and all these employees were given the CPF Account No. 109503 and onwards and before that the employees were not entitled for the pensionary benefits. 8. That, the employees of the Trade and Establishment appointed in the Board between 1st June, 1957 and 28th February 1971 upto the account No. 109502 were not entitled for the family pension under these rules. Petitioner''s husband was appointed under the Board service on 24th December, 19b0 and became a member of the CPF scheme and was allotted the account No. 102886. In the circumstances, he was not entitled for the benefit of the Family . Pension Scheme of 1971.

From the above paragraphs, the reasons which led to the denial of the claim of the appellant can be discerned. These reasons are :

(i) that the appellant''s husband belonged to trade and establishment as he was appointed before 28th February 1971 and he was member of the CPF scheme and therefore, he was not entitled to the pension benefit which the widow of the deceased employee is claiming;

(ii) that only those employees of the Board who were members of the Trade and Establishment and who joined the service of the Board after 1st of March, 1971 were entitled to this. Another reason which has been given is that the appellant widow had taken advantage of the contributory provident fund and, therefore, she is not entitled to double benefit. So far as this later submission is concerned, the appellant has stated in categoric terms that the appellant never refused to deposit the share of her husband. This share is to 1-1/6 per cent or the employee''s contribution. The total contribution in this regard is 19893. 1-1/6 per cent of the employee''s contribution would not be thus more than Rs. 200/-. According to the appellant, for this petty amount, she cannot be deprived of the benefit which is to endure through out her life.

The writ petition came to be dismissed on the ground that a cut off date has been indicated in the scheme and the appellant''s husband had joined the service before the cutoff date, therefore, she was not entitled to the family pension for contrary to provisions of Section 6-A and also to the earlier scheme. In this regard, it would be apt to notice section 1 ft (b) of the Central Act of 1952. This provision reads as under :

Act not to apply In establishments belonging to Government or local authority and also to infant factories. -

xxxx

(b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits;

xxxx

This provision was amended by Act No. 33 of 1988. It was for the first time it was prescribed that certain categories of employees would not be entitled to the benefits conferred by the Act. By the time the amendment came into force the appellant''s husband had died and therefore, his case would not be governed by these provisions. Thus, on the reading of section ft A, the scheme which was in force on 6th of December 1977 and the circular dated 6th of June, 1980, it become apparent that the scheme was made applicable to all employees. The use of the word '' ''ordinarily'''' in circular issued on 6th of June 1980 supports the claim of the appellant. Later introduction of the cut off date in the circular dated 19th of September 1983 is contrary to the provisions noted above.

Even if it be presumed that by circular dated 19th of September 1983, a cut off date has been mentioned, the question would arise as to whether this cut off date satisfy the test of a reasonable classification as envisaged by Articles 14 and 16 of the Constitution. A cut off date should have some nexus with the purpose sought to be achieved. The purpose of the family pension scheme was to provide some relief to the families of the employees who survive the employee in question. Why this benefit has to be given to only those employees who have joined after 1st of March, 1971 and not before 1st of March, 1971 has not been indicated. The only contribution which the husband of the appellant was supposed to make is not more than Rs. 200/-. The object of the scheme is to provide relief to the families and by putting a cut off date an artificial categorisaction has been made. This would clearly be hit by Article 14 of the Constitution of India.

Even though we have concluded that the concept of cut off date is not found mentioned in the notification by which family pension was sought to be given and this is missing even in the later notification but as this was the basis of denial of relief to the appellant, it would we apt to advert to this aspect of the matter also.

By now, it is well settled that grant of pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer. It is also not an engrail payment but is a payment for the past service rendered by an employee. It is social welfare measure rendering socioeconomic justice to those who in their hey days of their life toiled for the employer and as an assurance that in their old age they would not be left in lurch or in the case of the faintly pension, their familiars would not be left high and dry. The myth that the grant of pension is a bounty and a gratuitous payment was broken way back in 1971 when the Supreme Court of India in the case repotted as Deokinandan Prasad Vs. The State of Bihar and Others, authoritatively ruled that pension is aright and the payment of it does not depend upon the discretion of the employer. This view was re-affirmed in a later decision reported as State of Punjab and Another Vs. Iqbal Singh, . The Supreme Court in the case of D.S. Nakara and Others Vs. Union of India (UOI), , look note of the change in the social systems and was of the view that the employer is under an obligation to provide security in old age. Para 22 is relevant and be noticed. It reads as under :-

In the course of transformation of society from feudal to welfare and as socialistic thinking acquired respectability. State obligation to provide security in old age, an escape from underserved want was recognised and as a first step pension was treated not only as reward for past service but with a view to helping the employee to avoid destitution in old age. The quid pro quo was that when the employee was physically and menially alert, he rendered unto the master the best, expecting him to look after him in ihe fall of life. A retirement system therefore, exists solely for the purpose of providing benefits. In most of the plans of retirement benefits, everyone who qualified for normal retirement receives the same amount. (See Retirement Systems of Public Employees by Bleekney, page 33).

In the light of the above situation, we are of the view that a claim for pension is not a claim to some charity. We are also of the view that there is no cut off date and even if there is some cut off date, there is no rational behind this cut of date and the same is violative of Article 14 of the Constitution of India. All employees working on 1st of March, 1971 have a right to get their families treated in the same manner. Some judicial precedents on (his aspect of the matter be noticed.

In Smt. J.S. Rukmani and Others Vs. Government of Tamil Nadu and Others, where distinction was made between widows of one class of government servants and the widows of another class merely on the basis of the place where the government servant last served at the time of superannuation, it was held that litis classification has no nexus with the object sought to be achieved.

In Ratiial Hiralal v. Government of Gujarat, 1983 L.I.C. 1563, a distinction was sought to be made between employees retiring prior to the cut off dates .They were not made eligible to get benefits of the Scheme. This was held to be discriminatory. Similar opinion was expressed in B.B. Das v. State of Assam and others 1989 Lab. I. C. NOC 11.

Kamlaben v. State of Gujarat, 1991 Lab. I. C. 613, is again an authority for similar proposition. The criteria that a government servant should be in service on a specified date and should have retired thereafter to earn pension was held to be violative of Articles 14 and 16 of (he Constitution of India, Similar view would be found in the decision reported as N. L. Abhyankar v. Union of India, AIR 1984 1247. See also the view expressed by the Punjab and Haryana High Court in Raghbir Singh v. State of Haryana and Others, 1987 (4) SLR 767. S.S. Kang, J, (later, Chief Justice of Jammu and Kashmir) expressed the view that II pensioners form one homogenous class and they cannot be put into two different categories, simply on the basis of the dates of retirement.

Again the Punjab and Haryana High Court in Shamsher Singh v. State of Punjab, 1988 (2) SLR 408 concluded that the denial of the benefit of pension to the petitioners who retired from service before 31 St. of March, 1985 would be unconstitutional. This decision was affirmed by the Letters Patent Bench of the Punjab and Haryana High Court and also later on by the Supreme Court of India. Later on, the State of Punjab wanted to get out of tins judgment and filed a review petition also. This was dismissed. The relevant facts would be found mentioned in the case reported as State of Punjab v. Dr. Asa Singh. 1993 LR (13) , and Statutes (Punjab)

In paras 6 and 7, the Division Bench consisting of S. D. Agarwala C. J. and H. Bedi J. made following observations:-

In the light of the above observations, we are of the view that the SLP as also the Review Application tiled in the Supreme Court having been dismissed, it would be most improper for us to judge the correctness of the Shamsher Singh''s case in these proceedings.

We have also examined the arguments of Mr. Saron that the gratuity and terminal benefits which the respondents had already received on their retirement was only a one time benefit and no enhancement could be claimed on their revision. This argument too was considered by the Supreme Court while disposing of the SLP and the Review Application.'''' The denial of pension was again held to be bad.

It is not necessary to burden this judgment with judicial precedents. However, reference be made to a decision given by the Bombay High Court in K.B. Sharma v. R.M. Gandhi, 1993 Lab. I.C. 578 wherein the provisions curtailing the rights of an employee to receive full contribution under a scheme prepared under Central Act of 1952 were held to be ultra vires. In the present case also, the Board had implemented the Scheme without a cut off date. The later curtailment and taking away the benefits would be ultra-vires the Act. The Central idea behind all judicial precedents is that the alleged classification should have some nexus With the object sought to he achieved. The object in this case is to give some solace to the families of a deceased employee. It cannot he said that this is required only in the case of those employees who were in service on a particular date and not before that. The cut off date, if any, said to have been fixed would be contrary to the equality clause contained in Articles 14 and 16 of the Constitution of India. We are, accordingly, of the view :

(i) that the Family Pension Scheme is a statutory scheme enforced in pursuance of section 6A of the Act, 1952;

(ii) the Board had taken a decision to implement the scheme with effect from the same date on which the Central Act was enforced;

(iii) there was no stipulation in the Scheme that it would be applicable to only those employees who started making contribution to the provident fund alter 1st of March, 1971. As the words used in circular Annexure R/2-F arc "ordinarily eligible'''' and therefore, it can safely be said that there is no mandatory prohibition contained in the above annexure. The later decision to incorporate some cut off date would not affect the rights which had come to - vest on the enforcement of the Scheme;

(iv) that the reading of the scheme and the method and manner in which it was to be implemented indicates that the employee was not supposed to take any step. All deductions which were to be made, were to he made by the Accounts Department of the Board and the concerned employee was only to obtain a card in this regard. The Central Act of 1952 made an amendment in section 16 taking away certain rights. This became effective only in the year 1988. By that time, the husband of the appellant had died and the rights which came to vest in the appellant could not be taken away,

(v) that even if it he presumed that there was some prescription of cut off date the same would not be in consonance with the equality clause contained in Article 14 and 16 of the Constitution of India.

In the result, the judgment under appeal is reversed. This letters patent appeal is allowed. A writ of Mandamus is issued to the respondent-Board to take steps with a view to make the requisite contribution so that the Regional Provident Fund Commissioner, Indore is in a position to release the family pension of the appellant. The appellant would deposit the amount which she was not supposed to have on account of the benefits she was to get under the family pension scheme. This amount is said to be merge amount of Rs. 200/- The Board may show its magnanimity and consider the possibility of waiving this amount. If it finds any difficulty in the matter of waiving this amount, then file appellant would deposit the same. Let the arrears of family pension be released within a period of two months. The period of two months would begin from the date the copy of this judgment is made available to the respondent-Board by the appellant. In case the payment of arrears is not made within the period of two months, the appellant would be entitled to interest. This interest would be at the rate of 12%. This interest would be payable by the person on whose account the delay occurs. The appellant would also be entitled to costs of this litigation. These are assessed at Rs. 1, 650/-.