Arvind Prasad Pandey & Ors. vs The State Of Madhya Pradesh & Ors.

Petitioners have filed this petition under Article 226 of the Constitution of India making a prayer to issue direction to respondents/Municipal Corporation not to deduct contribution to Contributory Provident Fund (CPF) applying compound interest.

Learned counsel appearing for petitioners submitted that petitioners were employees of Town Improvement Trust/Special Area Development Authorities. Said organization got merged with Municipal Corporation with its assets and liabilities. Directions were issued to deposit the contribution in Contributory Provident Fund (CPF). Municipal Corporation deposited the contribution up to 01.08.1994 i.e. date of merger and amount was deducted from gratuity of retiring employees by applying compound interest. Employees are facing grave financial hardship at the time of retirement. Several representations were made but same were not considered and decided. In view of above, petitioners prayed for aforesaid relief.

Learned counsel appearing for respondent No.3 i.e. Municipal Corporation, Rewa submitted that petitioners were appointed in Town Improvement Trust and Special Area Development Authorities. State Government has taken a decision to merge Town Improvement Trust and Special Area Development Authorities in their respective Municipal Corporations or Municipalities with all assets and liabilities. Employees filed writ petition in which orders were passed to deposit CPF of employees up to 01.08.1994 i.e. date of merger. Municipal Corporation, Rewa deposited the CPF amount of petitioners along with interest. It is submitted that CPF has already been deposited by respondent No.3/Corporation along with interest. Respondent No.1 and 2 are deducting amount by imposing compound interest, therefore, respondent No.3 does not have any role in deduction of compound interest and relief is sought against respondent No.1 and 2.

Respondent No.1 and 2 has stated that Directorate of Urban Administration and Development had issued instructions through circular dated 19.01.1998 to consider the services of officers/employees of the Town Improvement Trust/Special Area Development Authorities for pension from the date of their dissolution and merger in Urban Local Bodies. Department had issued circular dated 17.11.2016 providing pension benefits to employees of dissolved institutions whose services were absorbed in Urban Local Bodies before 01.01.2005. Services were calculated from first date of appointment and amount of provident fund (employer's contribution) was deposited by their institution along with interest rate declared by State Government from time to time. Circular dated 17.11.2016 was amended by circular dated 03.07.2017 stating that words "said order will come into effect from the date of issue" are deleted. Contributory Provident Fund Scheme was applicable for Officers/employees working in urban local bodies of the State. Rules of 1980 were enacted which has been implemented from 01.04.1970. As per Rule 2(1)(c) of the Rules of 1980, persons who have received amount credited to their Contributory Provident Fund (CPF) account at the time of st their retirement or after I day of April, 1970, have subsequently expressed willingness in writing to join the pension scheme may be included in the scheme on condition that they pay into pension fund the full amount which they have received as Municipal share in Contributory Provident Fund at the time of retirement along with interest at the rate of 5% on said amount from the date on which amount would have otherwise been credited to pension fund. In view of said provisions, amount of Contributory Provident Fund received by Officers/employees of urban local bodies as municipal share before joining the pension scheme was deposited in the pension fund along with interest. Corporation has deposited Contributory Provident Fund (employers' contribution) from date of first appointment till 01.08.1994. Interest for last 23 years has not been deposited on said amount, therefore, the recovery is righty being made from the employees from their retiral dues who were absorbed from dissolved institutions. In view of same, no interference is called for and petition may be dismissed.

Heard the counsel for the parties.

Pension is to be granted to an employee of Municipal Council in accordance with the Madhya Pradesh Municipal Services (Pension) Rules, 1980. Aforesaid rules were made applicable from 01.04.1970 and same are applicable to those municipal employees who joined services after 01.04.1970. Such employees who were in service prior to 01.04.1970 and they have given option to be included in pension scheme then such employees may become part of scheme if they deposit share of Contributory Provident Fund of Municipal Council along with interest at the rate of 5%. After enactment of Pension Rules, 1980, another circular was issued by Directorate of Urban Administration Bhopal dated 19.01.1998. As per said circular, members who were in services of Dissolved Town Improvement Trust shall also be entitled to get benefit of pension scheme after their absorption in municipal services. Employees, who have less than 10 years of service from absorption till superannuation, will not be entitled to pension scheme and they will continue under Contributory Provident Fund Scheme. Thereafter another circular dated 17.11.2016 was issued by Urban Development and Housing Department Bhopal. In said circular, it was clarified that employees of Town Improvement Trust/ Special Area Development Authorities/ Slum Areas (Improvement and Clearance) Board were given benefit of Contributory Provident Fund Scheme. Employees of aforesaid organizations after their absorption in municipalities and Municipal Corporation were to be given the benefit of pension in accordance with the Madhya Pradesh Municipal Services (Pension) Rules, 1980. For benefit of pension, their services are to be counted from date of absorption. Aggrieved by not counting previous services rendered by employees of aforesaid organizations for purposes of pension, writ petitions were filed in High Court. In said cases, High Court passed orders that employees be given benefit of pension and services rendered by them in earlier organizations from date of appointment. It was also ordered that all amount received by the employees under Contributory Provident Fund Scheme is to be deposited. In view of circulars issued by Urban Administration and Housing Department and orders passed by High Court, decision was taken that share of amount in Contributory Provident Fund Scheme along with interest is to be deposited in pension account. Contributory Provident Fund received by employees after dissolution of Town Improvement Trust/Special Area Development Authorities/Slum Areas (Improvement and Clearance) Board are to be returned by employees along with interest so that they can get benefit of pension scheme and in cases, where employees at the time of absorption have not received Contributory Provident Fund, then municipalities have to deposit the said amount along with interest in pension account.

In view of above, writ petitions filed by petitioners is disposed of with following directions :

Certified copy as per rules.