Supreme Court: Whenever new Scheme is introduced for Existing Employees, Retired Employees Cannot Seek its Benefit

Supreme Court: Whenever new Scheme is introduced for Existing Employees, Retired Employees Cannot Seek its Benefit

The Supreme Court of India (SC) bench comprising of Justices Ashok Bhushan, Subhash Reddy, and MR Shah, while setting aside the order of the HC in the case of Himachal Road Transport Corporation & Anr. (Appellants) v. Himachal Road Transport Corporation Retired Employees Union (Respondents), stated that the HC did not notice the difference of factual background, in the cases relied on by the respondent-writ petitioner and it did not consider the issue independently in question.

The bench stated, "It is clear that all the members of the respondent-Union, while in service, were governed by Contributory Provident Fund Scheme. All those employees who retired before 05.06.1995 were paid all retiral benefits, applicable to them."

It added that "As the Pension Scheme was not in existence during the relevant time, it was not the case of violation of any service conditions either. The Pension Scheme is introduced by way of notification dated 06.10.1995, by giving effect from 05.06.1995, on which date the Cabinet has approved the Scheme. The employees who were governed by the Contributory Provident Fund Scheme and retired prior to 05.06.1995 and the employees who were in service and continued after 05.06.1995, of the appellant-Corporation, cannot be treated as a homogeneous class."

The factual matrix of the case is that the appellant corporation is established under the Road Transport Corporations Act, 1950. The employees of the Corporation were governed by the Contributory Provident Fund Scheme (CPF).

In 1995, it introduced a Pension Scheme by issuing a Notification dated 6 October 1995 and adopted Central Civil Service (Pension) Rules, 1972. The said scheme was approved formulated by the Corporation.

The Pension Scheme was given effect from 5 June 1995 from the date on which Scheme was approved by the Cabinet/ Government. For the employees who retired from 5 June 1995 till 6 October 1995 and for the employees in service, an option was given either to opt for Pension Scheme or to continue under the CPF. Clause 5 of the Scheme, stipulates eligibility criteria to opt for Pension Scheme.

The respondent-Union, consisting of the employees who retired prior to 5 June 1995, approached the Himachal Pradesh Administrative Tribunal (Administrative Tribunal).

It was contested by the appellants and they contended that all the employees of the Corporation, who retired prior to 5 June 1995, were already paid all the retiral benefits including the benefit of CPF, as such the cut-off date fixed, implementing the Pension Scheme, was not discriminatory.

The Administrative Tribunal dismissed the Application filed by the respondent-Union and held that the appellants are entitled to fix the cut-off date for introducing the Pension Scheme for its employees and such fixation is not discriminatory.

An appeal was filed before the HC by the respondent-Union that has allowed the Writ Petition, by quashing the cut-off date, on the ground that no reasons were forthcoming from the appellant-corporation, for picking up the cut-off date 5 June 1995 for implementation of Pension Scheme.

The HC has declared that the Scheme which was notified on 6 October 1995, shall apply to the members of the respondent-Union and other similarly situated persons, with a condition that they will have to deposit the amount received by them under the CPF within a reasonable time.

An appeal was filed before the SC wherein the Top Court observed that it is always open for the employer to introduce new Schemes and benefits, having regard to the financial health of the employer.

It stated, "Whenever such new benefit is extended for the existing employees, retired employees cannot seek such benefit, merely on the ground that they too were the former employees of the Corporation."

It added that "When the members of the respondent-Union retired, there was no Pension Scheme at all. They were merely governed by the Contributory Provident Fund Scheme and, on retirement, they were already granted the benefit of such Scheme."

The Top Court referred to the judgment in the case titled State of Rajasthan and Another v. Amrit Lal Gandhi and others, (1997) 2 SCC 342. In this case fixation of cut-off date from 1 January 1990 was found fault with, by the HC and it issued directions to give effect from 1 January 1986, while reversing the judgment of the HC. The SC has held that fixation of cut-off date from 1 January 1990 cannot be said to be arbitrary or discriminatory.

The SC bench put reliance on another case, Suchet Singh Yadav and others v. Union of India and others, (2019)11 SCC 520, wherein it was held by this Court that the pensioners, for purposes of pension, constitute one class and schemes which classify pensioners on basis of cut-off date are impermissible unless such classification is founded on some rational principle. It held that the Order which was issued by the Central Government on 21 November 1997, applies to existing officers and not retirees.

The SC referred to another case titled All Manipur Pensioners Association by its Secretary v. The State of Manipur and others, (2019)9 Scale, 282, wherein the Court held, "Pensioners form only one homogeneous class and held that such a fixation of date for extending the benefits of revised benefits to the pensioners, is arbitrary and violates Article 14 of the Constitution."

The SC set aside the judgment of the HC and allowed the civil appeal.