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Judgment
D. Hariparanthaman, J.—The common question that arises for consideration in these appeals is whether the learned single Judge is correct in
directing the Tamil Nadu State Apex Co-operative Bank to pay 20% of last drawn salary as pension to its retired employees.
The facts leading to the filing of these appeals are as follows:
(a) The Tamil Nadu State Apex Co-operative Bank Limited (shortly ""the Bank"") is a Co-operative Society registered under the Tamil Nadu Co-
operative Societies Act. The District Central Co-operative Banks are its Members. The Government of Tamil Nadu also owns substantial shares.
There are no private individual members in the Co-operative Society. The Bank has been running profitably.
(b) While so, a settlement u/s 12(3) of the Industrial Disputes Act (in short ""the Act"") was entered into between the Bank and the Tamil Nadu
State Apex Co-operative Bank Employees Union (shortly ""the Union"") on 29.05.1991. Contributory Superannuation Pension Scheme (in short
the Scheme"") was introduced with effect from 01.01.1991 under Clause F.2 (c) of the settlement. Clause F.2 (c) of the memorandum of
settlement reads as follows:
F.2 (c) Pension Scheme:
It is mutually agreed that additional contribution at 2.5% of Basic Pay and D.A will be made to the Employees'' Provident Fund by both the
employees and employer with effect from 1.1.1991 for the purpose of Pension Scheme.
Further, it is mutually agreed that a suitable Pension Scheme will be evolved after detailed discussions.
It is also agreed that no loan facility against this additional 2.5% P.F. contributions will be sanctioned.
(c) Though contributions were recovered from the employees pursuant to the settlement at the rate of 2.5% of Basic pay and D.A from
01.01.1991 and the Bank also paid matching contributions, the settlement was not implemented and pension was not paid.
(d) Subsequently, another settlement u/s 12(3) of the Act on pension was entered into between the Bank and the Union on 24.10.1996.
(e) The Bank also entered into a settlement with the Tamil Nadu State Apex Coop. Bank Officers'' Association on 08.12.1996, in respect of
pension on similar terms, as contained in the settlement dated 24.10.1996.
(f) Clause G-3 of the settlement dated 24.10.1996 provides for pension, which reads as follows:
G-3 STAFF CONTRIBUTORY PENSION SCHEME 1996:
It is mutually agreed that the existing Contributory Superannuation Scheme will get modified to the extent necessary so as to extend pensionary
benefits to the staff, effective from 1.1.1991, as provided for in the ""Contributory Pension Scheme"" and detailed in the Annexure enclosed to this
Settlement.
(g) The annexure to the settlement contains the details of the Tamil Nadu State Apex Co-operative Bank Employees Contributory Pension
Scheme (shortly ""the Pension Scheme"").
(h)The Pension Scheme provides for contribution at the rate of 2.5% of Basic Pay and Dearness Allowance from each month from the date of
entry into the Bank up to 31.12.1990 and thereafter, from the employees and the matching contributions from the Bank.
(i)As per the Scheme, Pension Corpus would be linked to LIC of India.
(j) As per Clause 5 of the Scheme, the Bank agreed to contribute each year commencing from 01.01.1996 such sums that are required in keeping
the Pension Corpus with sufficient resources to pay pension for all the eligible employees under the Scheme.
(k) The Bank also framed Regulations, namely, the Tamil Nadu State Apex Coop. Bank Employees'' Pension Scheme Regulations, 1996.
Regulation 20(i) in Chapter - IV is relevant for this case and the same is extracted hereunder:
i) Basic Pension will be fifty percent of the average emoluments i.e. average of pay drawn by an employee during the last 10 months of his
service as per Rugulation 20 (ii).
(l) The General Body of the Bank on 29.01.1997 approved the allocation of Rs. 10 Crores to the Pension Corpus out of the profits earned during
1995-1996, in compliance with the settlement referred to above. The same was sent to the Registrar of Co-operative Societies for administrative
approval. The allocation of Rs. 10 Crores from and out of the profit of the Bank, without the approval of the Government, was objected by the
auditors and hence, pending approval of the Government, the same was kept as un-disbursed profit. Thus, the amount did not reach the Pension
Corpus.
(m) In those circumstances, the Bank was not able to pay pension as agreed to in the settlement. On the other hand, the Bank paid adhoc pension
at the rate of 25% of last drawn wages, while the Scheme provides for 50% of the last drawn wages. That is, 50% of the pension was paid. That
too, the adhoc pension was paid from 01.01.1997 only to those who retired after 01.01.1991, instead of from 01.01.1991, as per the settlement.
(n)The LIC of India administered warning to the Bank for resorting to adhocism. The LIC of India advised that whenever employees retire from
the service of the Bank, their contribution with accumulation of interest would be drawn from the fund and annuities would be purchased based on
eligible pension and that any shortfall could be made good from the Corpus fund. Instead of doing the same, the Bank resorted to withdrawing
amounts from the Corpus fund for payment of adhoc pension.
(o)The Bank was forced to give adhoc pension only, since the Bank was not able to transfer the sum of Rs. 10 Crores allocated to Pension
Corpus fund as the Government was yet to approve the same.
(p) Since the adhoc pension was paid to the retired employees from the contributions alone, the serving employees were apprehensive that the
contributions made by them got eroded and there would be no amount to pay pension to them at the time of their retirement. In order to safeguard
the interest of the serving members, the Bank kept aside a sum of Rs. 13.88 Crores from and out of the total Pension Corpus fund of Rs. 22.02
Crores available with LIC of India.
(q)While 121 employees, who retired after 01.01.1991, were paid adhoc pension at the rate of 25% of last drawn wages from 01.01.1997, the
employees retired after June 2003, were not paid even this adhoc pension.
The aforesaid facts led to the filing of writ petition in W.P. No. 27318 of 2004 by the Tamil Nadu State Apex Co-operative Bank Pensioners''
Association for a direction to the Bank for payment of pension to 20 employees, who retired after June 2003, with interest at 18%.
While pension was sought for 20 persons who retired after June 2003, even the adhoc pension paid to 121 employees was stopped from April
2005.
This led to the filing of another writ petition in W.P. No. 36632 of 2006 by the Tamil Nadu State Apex Co-operative Bank Pensioners''
Association along with one of its Members, seeking direction to the Bank to pay pension to all the retired employees, as per the Scheme.
Some of the retirees also individually filed writ petitions and those writ petitions are W.P. No. 4343 of 2005 and 46318 of 2006. 7.In those
circumstances, an interim order was passed on 21.04.2006 in W.P.M.P. No. 33227 of 2004 in W.P. No. 27318 of 2004 directing the Bank to
pay 15% of the due pension from April 2006 and the same was continued till the writ petition was disposed.
While the earlier writ petition in W.P. No. 27318 of 2004 confined to 20 persons, the writ petition in W.P. No. 36632 of 2006 relates to 159
retirees, as the pension was stopped to all the retirees after April 2005. An interim order was passed on 28.09.2006 in M.P. No. 2 of 2006 in
W.P. No. 36632 of 2006 directing the Bank to pay 15% of the pension due pending disposal of the writ petition.
It is an admitted fact that the appellant repeatedly wrote letters to the Registrar of Co-operative Societies requesting him to seek approval of the
Government for the transfer of Rs. 10 Crores that was allocated in January 1997 itself to the Pension Corpus. But the same was not successful.
When all those writ petitions came up for final hearing during December 2006, after hearing the submissions made by all the parties, this Court
appointed 15 Members Committee, inclusive of representative of the writ petitioner Association, the Bank, and other respondents and the
Committee was directed to find out workable solution.
The Additional Secretary to Government, Co-operation, Food and Consumer Protection Department was the convenor of the Committee,
who held several meetings and submitted a report. While the employees/retirees demanded pension ranging from 25 to 35% of the last drawn
salary in lieu of 50% as originally provided in the 12(3) settlement, the Bank agreed to pay only 17.5%. Since there was no consensus, the
convenor of the Committee was constrained to file no consensus report.
Hence, the learned single Judge framed the following issue for consideration for disposal of those writ petitions.
The point falling for consideration is that ""What could be the quantum of the pension payable to the employees by the 1st Respondent Bank? and
Whether it is 25% as demanded by the employees or at 17.5% as agreed by the 1st Respondent Bank Management.
The Bank also questioned the very maintainability of those writ petitions and the same was also considered.
The learned Judge disposed all the writ petitions viz., W.P. Nos. 27318 of 2004, 36632 of 2006, 4043 of 2005 and 46318 of 2006 by a
common order dated 13.10.2008 with the following directions:
41.In the result, W.P. Nos. 27318/2004 and 36632/2006 are partly allowed with the following directions:
First Respondent Bank shall pay 20% of last drawn salary as pension to the retired employees.
Pension shall be paid to all the retired employees at the rate of 20% commencing from October 2008 (payable on 1st November 2008).
Arrears shall be payable to all the retired employees in five monthly instalments. It is made clear that no interest is payable on the arrears of pension
payable to the retired employees.
First instalment of arrears of pension shall be payable from 01.12.2008.
As stated in its letter dated 12.07.2007, first Respondent Bank shall transfer Rs. 23.73 Crores to Pension Corpus Fund of the bank maintained
with LIC in eight annual instalments. First instalment shall commence from the financial year 2008-2009.
42.W.P. Nos. 4043/2005 & 46318/2006: In the line of the above directions, both the Writ Petitions are disposed of.
After orders was passed, submissions were made regarding 25% of pension already paid. Mr. N.G.R. Prasad, learned Counsel for the petitioner
has submitted that pension at the rate of 25% already paid may not be recovered nor be adjusted. In support of his contention, learned Counsel
for the Petitioner placed reliance upon The State of Karnataka and Another Vs. Mangalore University Non-Teaching Employees Association and
Others, .
Learned Counsel for the 1st respondent would submit that since Court has passed the order directing payment of pension at the rate of 20%,
necessarily excess of pension paid has to be recovered.
In view of the decision The State of Karnataka and Another Vs. Mangalore University Non-Teaching Employees Association and Others, , 1st
Respondent Bank may not recover nor adjust excess 5% which was already paid to the group of employees/retirees.
The crux of the directions is that the Bank was directed to pay 20% of last drawn salary as pension to the retired employees from October
2008 payable from 01.11.2008. The learned Judge negatived the contention as to the maintainability of the writ petitions, raised by the Bank.
Against the common order dated 13.10.2008 passed by the learned Judge in the batch of writ petitions, the Bank has preferred appeals in
W.A. Nos. 1390 to 1393 of 2008 against all the common orders passed in the batch of writ petitions and the Pensioners Association has
preferred appeals in W.A. Nos. 111 and 112 of 2009 against the order passed in W.P. Nos. 27318 of 2004 and 36632 of 2006 respectively and
W.A. No. 1228 of 2009 is preferred against the order passed in W.P. No. 46318 of 2006 and W.A. No. 253 of 2009 is preferred against the
order passed in W.P.4043 of 2005.
We have heard the submissions made on either side and perused the materials available on record.
The learned senior counsel for the appellant - Bank submitted as follows:
a) The learned Judge erred in holding that writ petitions are maintainable against the appellant - Bank, while the appellant - Bank is a Co-operative
Society, registered under the Tamil Nadu Co-operative Societies Act. It is not State under Article 12 of the Constitution. Hence, the writ petitions
under Article 226 of the Constitution are not maintainable against the appellant - Bank. In this regard, the senior counsel relies on the larger Bench
judgment of this Court in K. Marappan Vs. The Deputy Registrar of Co-operative Societies and The Special Officer, Vattur Co-operative
Agricultural Bank, .
b) The retirees seek to enforce the 12(3) settlement by filing writ petitions under Article 226 of the Constitution. This is not permissible as their
remedy lies elsewhere. In this regard, he relies on a Division Bench judgment of this Court in Madras Labour Union Vs. Binny Ltd. (Buckingham
and Carnatic Mills) and others, . The learned senior counsel further submitted that though the learned Judge has agreed with the proposition laid
down in the said judgment, the learned Judge erred in entertaining those writ petitions.
c) The learned Judge ought not to have entertained the writ petitions, when the retirees have effective alternative remedy under the Industrial
Disputes Act and when remedies are available under the Industrial Disputes Act, the retirees ought not to have approached this Court under
Article 226 of the Constitution. In this regard, reliance is placed on the judgment of the Honourable Apex Court in Rajasthan State Road
Transport Corporation and Another Vs. Krishna Kant and Others, and a Division Bench judgment of this Court in Indian Additives Ltd. Vs.
Indian Additives Employees Union and Another, .
d) The learned Judge should not have fixed the quantum of compensation, as it involves disputed questions of facts.
The learned Additional Advocate General representing the Government also submitted that the writ petitions ought to have been dismissed as
not maintainable, in view of the larger Bench judgment of this Court in K. Marappan''s case (cited supra).
On the other hand, the learned Counsel appearing for the Pensioners Association and the retirees, seek to sustain the order of the learned
Judge and their grievance is that the learned Judge ought to have fixed the quantum of compensation at 50% of the due pension payable under the
Act. The learned Judge ought to have fixed the quantum of compensation at the rate of 25% of last drawn wages, instead at 20%.
I have considered the submissions made on either side. From the submissions made on either side, the following two issues are arises for
consideration in these appeals:
(i) Whether the writ petitions relating to payment of pension are maintainable.
(ii) Whether the learned Judge was correct in fixing the quantum of compensation at the rate of 20% of the last drawn wages, when the fixation of
pension involves disputed questions of fact.
There is no dispute that the appellant bank is a Co-operative Society registered under the Tamil Nadu Co-operative Societies Act and not
State under Article 12 of the Constitution. The larger Bench of this Court has held in K. Marappan''s case (cited supra) that normally writ petition
is not maintainable against Co-operative Societies. The following are the proposition laid down by the larger Bench of this Court in K. Marappan''s
case (cited supra):
From the above discussion, the following propositions emerge:
(i) If a particular co-operative society can be characterised as a ""State"" within the meaning of Article 12 of the Constitution (applying the tests
evolved by the Supreme Court in that behalf), it would also be ""an authority"" within the meaning and for the purpose of Article 226 of the
Constitution. In such a situation, an order passed by a society in violation of the bye-laws can be corrected by way of Writ Petition;
(ii) Applying the tests in Ajay Hasia it is held that a co-operative society carrying on banking business cannot be termed as an instrumentality of the
State within the meaning of Article 12 of the Constitution;
(iii) Even if a society cannot be characterised as a ""State"" within the meaning of Article 12 of the Constitution, a Writ would lie against it to enforce
a statutory public duty cast upon the society. In such a case, it is unnecessary to go into the question whether the society is being treated as a
person"" or ""an authority"" within the meaning of Article 226 of the Constitution and what is material is the nature of the statutory duty placed upon it
and the Court will enforce such statutory public duty. Although it is not easy to define what a public function or public duty is, it can reasonably
said that such functions are similar to or closely related to those performable by the State in its sovereign capacity.
(iv) A society, which is not a ""State"" would not normally be amenable to the writ jurisdiction under Article 226 of the Constitution, but in certain
circumstances, a writ may issue to such private bodies or persons as there may be statutory provisions which need to be complied with by all
concerned including societies. If they violate such statutory provisions a writ would be issued for compliance of those provisions.
(v) Where a Special Officer is appointed in respect of a co-operative society which cannot be characterised as a ""State"" a writ would lie when the
case falls under Clauses (iii) and (iv) above.
(vi) The bye-laws made by a co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983 do not have the force of
law. Hence, where a society cannot be characterised as a ""State"", the service conditions of its employees governed by its bye-laws cannot be
enforced through a Writ Petition.
(vii) In the absence of special circumstances, the Court will not ordinarily exercise power under Article 226 of the Constitution of India when the
Act provides for an alternative remedy.
(viii) The decision in M. Thanikachalam and others Vs. Maduranthakam Agricultural Producers co-operative Marketing Society and others, , is no
longer good law, in view of the decision of the Seven-Judge Bench of the Supreme Court in Pradeep Kumar Biswas case and the other decisions
referred to here before.
Therefore, it has to be tested whether the learned Judge was correct in entertaining the writ petitions in the light of the law laid down by the larger
Bench of this Court in the judgment cited supra.
In our considered view, the learned Judge entertained the writ petitions, taking into account the special circumstances of the case. The larger
Bench of this Court has categorically held as the 7th proposition that when special circumstances exists, this Court could exercise its power under
Article 226 of the Constitution, though statutes provide for alternative remedy. The learned Judge was conscious of the fact that normally writ
petition is not maintainable against the Co-operative Society. The special circumstances that made the learned Judge to entertain the writ petitions
are stated in paragraph Nos. 10 and 14 of the Judgment and the same are extracted hereunder:
Though, it is the implementation of terms of bipartite agreement, having regard to the interest of retired employees of 1st Respondent Bank,
High Court has seized up the matter. To examiine the viability of pension scheme, 15 member committee was constituted. Meeting convened by
the Additional Secretary to Government, Co-operative Food and Consumer Protection Department was held on several occasions ranging from
January 2002 to September 2008. The Convenor has submitted an elaborate report. The Court has already passed an interim order directing
payment of interim pension at the rate of 15% of last drawn salary.
...14. Though, function of 1st Respondent Bank cannot be termed as similar or close, thus performable by the State, Government do have it say in
issuing directions to the 1st Respondent Bank. When the High Court has dealt with the matter for quite some time, Writ Petitions cannot be
dismissed as not maintainable. At this distant point of time, it would not be appropriate to direct the parties to seek remedy before the Labour
Court. The objection raised as to the maintainability of the Writ Petitions cannot be countenanced.
In order to decide the issue, it is necessary to look into the circumstances that led to the filing of the writ petitions. The appellant - Bank
entered into settlement u/s 12(3) of the Industrial Disputes Act on 29.05.1991 providing pension as third benefit, apart from gratuity and PF
benefits. As per this settlement, the pension has to be paid for the employees, who retire after 01.01.1991. The settlement also provides for
contribution from the employees at the rate of 2.5% of Basic Pay and Dearness Allowance from 01.01.1991 and the matching contribution from
the Bank, in order to pay pension from and out of the aforesaid contributions. Accordingly, contributions were made. Soon thereafter, it was felt
that the said contributions could not be sufficient to pay pension.
In these circumstances, another settlement dated 24.10.1996 was entered into between the appellant - Bank and the Employees Union,
providing Pension Scheme. As per this Scheme, contributions have to be made to the pension fund at the rate of 2.5% of Basic Pay and Dearness
Allowance from the date of entering into service and the appellant - Bank also has to pay matching contribution, instead of from 01.01.1991, as
decided in the earlier settlement. The appellant - Bank was also conscious that even this contribution from the date of entry into service could not
meet the requirement of payment of pension as provided for under the pension scheme. Hence, in Clause 5 of the Pension Scheme, the appellant -
Bank agreed to contribute each year commencing from 01.01.1996 such sums that are required in keeping the Pension Corpus with sufficient
resources to pay pension. In this regard, Clause (5) of the Pension Scheme, is extracted hereunder, as it is relevant to decide the issue involved in
this case.
All employees of the Bank will henceforth contribute towards Pension Corpus 2.5% of the Pay and Dearness Allowance and the Management
will also pay an equal sum towards the corpus every month. The Pension Corpus will be duly linked to the LIC of India and appropriate authority
will be obtained for the appropriate administration of the scheme. The Bank further agrees to contribute each year commencing from 1.1.1996
such sums that are required in keeping the Pension Corpus with sufficient resources to pay pension for all the eligible employees under this scheme
and as is being required by LIC of India, in this behalf.
In terms of Clause 5 of the Pension Scheme, referred to above, the appellant - Bank allocated Rs. 10 Crores to the Pension Corpus, out of
the profits earned during 1995-1996. The allocation was duly approved by the General Body of the Bank on 29.01.1997. The same was sent to
the Registrar of Co-operative Societies for administrative approval. Since the auditors objected for allocating Rs. 10 Crores from the profit of the
appellant - Bank, without the approval of the Government, the same was kept as un-disbursed profit, pending approval of the Government.
In fact, even before the aforesaid settlement dated 24.10.1996, the appellant - Bank wrote a letter dated 12.09.1996 to the Registrar of Co-
operative Societies, about the justifiability of the claim of employees for payment of pension. Presumably, it could have been based on the earlier
settlement entered into in the year 1991. Paras 4 and 8 of the said letter are extracted hereunder:
It is rather unfortunate that the employees are not enjoying the benefits of service rendered by them, after their retirement from the services of
the Bank. The retirement benefits now enjoyed by them in the form of Employees'' Provident Fund accretions and Gratuity shall not provide
adequate compensation for the long period of service they have put in. It is only a ""Pension Scheme"" that could provide succour to the retired
employees, as a regular means of income to take both ends meet. Such a pension scheme is absent in our Bank so far. Reserve Bank of India,
State Bank of India and the State/Central Government employees are covered by suitable pension schemes and it is high time that a Pension
Scheme is introduced in TNSC Bank.
...8. We have made an all-time high record of profit of Rs. 35.56 Crores (subject to audit) for the year ended March 1996. We felt if a Corpus
Fund is created, with allocation of Reserve from the Bank to take care of pension payments, it will not pose a financial burden on the Bank at any
future point of time. The General Manager (Admn.) of our Bank has already held discussions with the Registrar of Co-operative Societies and also
with the Director of Co-operative Audit. The Directorate of Co-operative Audit is in favour of introduction of Pension Scheme and allocation of
Reserves to the Corpus Fund, in principle, subject however to the administrative approval of the Registrar of Co-operative Societies. The
Streamlining Committee which was set up to go into the pay scales and service conditions of Central Coop. Bank Employees in Tamil Nadu, has
recommended introduction of Pension Scheme to the Government.
The appellant - Bank took up the matter to the Registrar of Co-operative Societies, requesting him to recommend to the Government for
approval of the allocation of Rs. 10 Crores made by them to the Pension Corpus. But, no orders were passed by the Government in this regard,
either refusing, or permitting the transfer of Rs. 10 Crores to Pension Corpus.
While so, the retirees pressed for payment of pension as provided under the settlement. In these circumstances, the appellant - Bank resorted
to payment of adhoc pension at the rate of 50% of the pension payable under the settlement. The adhoc pension was paid to the retirees only from
01.01.1997. Without the approval of the Government for transfer of the allocated sum of Rs. 10 Crores to the Pension Corpus, the Scheme is not
viable and could not be operated. Even the adhoc pension was not paid to the persons, who retired after June 2003. The appellant - Bank wrote a
letter dated 14.05.2004 to the Registrar of Co-operative Societies. The relevant passages from the letter dated 14.05.2004 are extracted
hereunder:
Pursuant to the settlements entered into, the Bank has agreed to pay pension to the retirees of the Bank on and from 01.01.1991, by providing
sufficient funds to the Pension Corpus. We have appropriated Rs. 10 Crores to the Pension Corpus, out of the profits earned during 1995-96,
which was duly approved by the General Body of the Bank on 29.01.1997. The same has been sent to the Registrar of Coop. Societies for
administrative approval.
The action of the Bank in allocating Rs. 10.00 Crores from out of the profit of the Bank without the approval of the Government was objected to
by the auditors and hence, pending approval of the Government, the same has been kept as undisbursed profit.
Since the Trade Union Organisations had put pressure on the Bank to implement the Pension Scheme as per the Settlement entered into, we had
started paying Adhoc Pension at 50% of the eligible Pension to those who have retired from 1991 onwards. The Adhoc Pension was paid from
January 1997 by drawing funds from the TNSC Bank Employees'' Superannuation Trust Fund maintained by the LIC, for which purpose, the
Trustees of the Fund have passed a resolution to draw funds from LIC for payment of Adhoc Pension.
Subsequently we have applied for exemption from EPS 1995 to the PF Authorities on 19.02.1997.
As on date, we are paying Adhoc Pension to 121 retirees of the Bank to the extent of Rs. 4,85,000/- per month by drawing funds from LIC. The
minimum and maximum amount of Adhoc Pension paid to the retirees are Rs. 400/- and Rs. 5900/- respectively.
We are not paying Adhoc Pension to 18 retirees, who are retired from the services of the Bank from June 2003 since the Pension proposal of the
Bank has not been approved by the Government.
...As per the Scheme of LIC, we have set aside a sum of Rs. 13.28 Crores from out of Rs. 20/- Crores available under the corpus to the
Category III to VI.
...The balance amount of Rs. 6.72 Crores is not sufficient to purchase annuity for payment of Pension to the existing Pensioners. In order to make
the scheme viable, the Government may permit the Bank to transfer the sum of Rs. 10.00 Crores kept as undisbursed profit, to LIC. If this is
done, the balance amount available for purchase of annuity, will go up to Rs. 16.72 Crores. From this, we can purchase annuity, as suggested by
LIC, for payment of Pension to the existing Pensioners.
...If the Government gives its approval for the allocation of Rs. 10.00 Crores, which was kept as undisbursed profit, to the Pension Corpus, then
the Scheme would become viable and the Bank can implement the Pension Scheme.
The appellant - Bank was of the view that if the Government approved the allocation of Rs. 10 Crores, which was kept as un-disbursed profit
under the Pension Corpus, then the Scheme would become viable and the appellant - Bank could implement the Pension Scheme.
The appellant - Bank wrote another letter dated 21.12.2004 to the Registrar of Co-operative Societies, requesting him to recommend to the
Government to get administrative approval for transferring the sum of Rs. 10 Crores to the Pension Corpus. The relevant passage from the said
letter is extracted hereunder:
Out of total Pension Corpus Fund of Rs. 20.06 Crores, we have set aside Rs. 13.28 Crores to the above categories. The balance amount of Rs.
6.78 Crores available is not sufficient enough to purchase annuity for payment of Pension to the retirees. If the Government permits to transfer the
sum of Rs. 10.00 Crores, which was kept as undisbursed profit, to the Pension Corpus Fund, the amount available for purchase of annuity will go
up to Rs. 16.78 Crores. From this we can purchase annuity, as suggested by LIC, for payment of Pension to the existing Pensioners.
....
Hence, we request the Registrar of Coop. Societies to kindly recommend to the Government favourably to get Administrative Approval for
transferring a sum of Rs. 10.00 Crores kept as undisbursed profit to the Pension Corpus Fund with LIC, so as to enable the Bank to run the
scheme smoothly.
On the above lines, another letter dated 18.03.2005 was also addressed to the Registrar of Co-operative Societies by the appellant - Bank.
The relevant passage from the letter dated 18.03.2005 is extracted hereunder:
In view of the above, if we receive the Administrative Approval of the Government on or after 01.04.2005, we will have to pay Fringe Benefit Tax
at the rate of 30% i.e., the Bank has to pay a sum of Rs. 3.00 Crores as Fringe Benefit Tax for the contribution of Rs. 10.00 Crores to the
Pension Corpus Fund.
In the above circumstances, we request the Registrar of Coop. Societies to kindly recommend to the Government to give us the administrative
approval on the same on or before 31.03.2005, so as to avoid tax liability.
As stated above, the persons retired after June 2003, were not paid pension and the same led to the filing of writ petition in W.P. No. 27318
of 2004. Therefore, there were 2 classes of retirees viz., the retirees who were paid pension and the retirees who were not paid pension. The
Trustees of the Pension Corpus Fund insisted for payment of adhoc pension to all the retirees, and that there shall not be any discrimination among
the retirees. In these circumstances, the appellant - Bank stopped payment of adhoc pension to all the retirees of the appellant - Bank from April
2005 onwards.
In view of the said crisis, the appellant - Bank again wrote a letter dated 15.06.2005 to the Registrar of Co-operative Societies, requesting him
to get approval from the Government for the transfer of Rs. 10 Crores to the Pension Corpus Fund. The relevant paras from the said letter dated
15.06.2005 are extracted hereunder:
Now, the Trustees of the Pension Corpus Fund insisted for payment of Adhoc Pension to all the retirees (121+38=159) of the Bank and there
shall not be any discrimination among the retirees.
In view of the above, the Bank has stopped payment of Adhoc Pension to all the retirees of the Bank from April 2005 onwards.
Now, the TNSC Bank Pensioners'' Association and the other Employees''/Officers'' Organisations are pressing for payment of Adhoc Pension to
all the retirees of the Bank.
Further, the Life Insurance Corporation of India, is time and again insist for finalization of Pension Scheme and purchase Annuities to the retirees of
the Bank for payment of Pension.
Since the available funds with LIC is not sufficient enough to purchase Annuities to meet the Pension demands of the retirees, we request you Sir to
please look into the matter and obtain the approval of the Government of Tamil Nadu, at the earliest, for transferring the sum of Rs. 10.00 Crores,
which is kept as undisbursed profit to the Pension Corpus Fund maintained with LIC, so as to enable us to overcome the present situation and run
the Pension Scheme smoothly.
While the appellant - Bank wrote series of letters, referred to above, requesting the Registrar of Co-operative of Societies to take up the
matter to the Government for approval of transfer of Rs. 10 Crores to the Pension Corpus Fund, the appellant - Bank directly wrote a letter dated
21.06.2005 to the Government, requesting to grant necessary approval. The following paras from the said letter dated 21.06.2005 are extracted
hereunder:
If the Government permits to transfer the sum of Rs. 10.00 Crores, which was kept as undisbursed profit, to the Pension Corpus Fund, the amount
available for purchase of annuity will go up to Rs. 18.14 Crores. From this we can purchase annuity, as suggested by LIC, for payment of Pension
to the retirees at Adhoc Pension level.
...Taking into consideration all the above factors, we request the Special Secretary to Government to please look into the matter and give the
administrative approval of the Government for the pension scheme to the retiring employees of the Bank and also for transferring the sum of Rs.
10.00 Crores, to the Pension Corpus Fund maintained with LIC so as to enable us to overcome the present situation and to run the Pension
Scheme.
While so, the Government wrote a letter dated 14.02.2006 to the Registrar of Cooperative Societies and the content of the said letter is
extracted hereunder:
I am directed to invite attention to the references cited and to request you to examine in consultation with the Special Officer, Tamil Nadu State
Apex Co-operative Bank in regard to the possibility of adding the interest to the corpus of Rs. 10.00 Crores or increase the corpus fund from Rs.
10.00 Crores to 12.00 or 13.00 Crores according to the requirement and with the contribution made by the employees and management to
formulate a revised proposal for sanction of 25% of pay and D.A as pension for those who have appointed before 1.4.2003 by entering into a
revised settlement with the employees Union u/s 18(1) of Industrial Disputes Act and send sustainable scheme for consideration of the
Government.
In the meantime, on 21.04.2006 and 28.09.2006 in W.P. No. 27318 of 2004 and W.P. No. 36632 of 2006 respectively, this Court passed
an interim order, directing the appellant - Bank to pay 15% of the due pension payable under the settlement, as an interim measure, to the retirees,
who approached this Court. The Government passed an order dated 08.03.2007 extending the interim relief to the retirees, including the retirees,
who have not approached this Court. Thus, interim pension at the rate of 15% was granted to all the retirees.
When the matter was listed before the Hon''ble Mr. Justice M. Jaichandren in December 2006, all the parties, including the appellant - Bank
agreed for finding a solution to the payment of Pension, by appointing a Committee. Under such circumstances, the learned Judge passed an order
dated 22.12.2006, constituting a Committee, consisting of 15 Members. The said order was a consensus order. The relevant passage from the
said order is extracted hereunder:
In such circumstances, suggestions have come from the learned Counsels appearing on behalf of the parties in the above mentioned Writ
Petitions, to arrive at a workable solution by constituting a committee comprising of representatives of the petitioners and the respondents.
Based on the said submissions and the suggestions made, this Court finds it is appropriate to constitute a committee consisting of the following
members:
M.Jayaraman representing the
V.Piramanayagam Writ petitioners
N.Parthasarathy, AGM representing the
J.Selvaganapathy, AGM first respondent
S.Viswanathan, AGM
V.R.Chozhan, Assistant Manager representing the second
T.Baskaran respondent
K.G.Jayakumar representing the
J.Venkateswaran third respondent
P.Rajarethinam representing the
K.Manohar fourth respondent
Under Secretary to the
Government of Co-operative representing the
Department fifth respondent
Additional Registrar (Credit)
R.Sathyanarayanan, Admn.,
Officer, L.I.C. representing the
A.Rajendiran, Branch sixth respondent
Manager, L.I.C
6.The Governor of the Committee would be the Under Secretary to the Government, Co-operative Department, who shall call for the meetings
and conduct the same and submit a report to this Court with regard to the viability of the scheme, within a period of six weeks from the date of
receipt of the copy of this order.
Before the Committee, both the Government representatives, the convenor and the appellant - Bank agreed for the payment of pension at the
rate of 17.5%, while the employees/retirees demanded pension ranging from 25 to 35%. Hence, there was no consensus.
In the meantime, the Government issued a letter dated 08.03.2007 to the appellant - Bank permitting them to pay pension at the rate of 15%
from the amount of Rs. 10 Crores, allocated for Pension Corpus fund, from and out of the profits earned by the appellant - Bank during the year
1995-1996. It is also stated that the viability of the Scheme and quantum of compensation payable to the retirees could be decided by the
Government, after examining the report from the pension experts. The contents of the said letter dated 08.03.2007 are extracted hereunder:
I am directed to invite attention to the references cited and to state that the Government have decided to honour the Court directions for payment
of 15% interim pension to those retirees of the Tamil Nadu State Apex Cooperative Bank who have gone to the Court and obtained orders to this
effect from the Court. I am to state that the interim pension of 15% be paid from the amount of Rs. 10.00 Crores allocated for the Pension Corpus
Fund from out of the profits earned by the Tamil Nadu State Apex Cooperative Bank during the year 1995-96 which was duly approved by the
Annual General Body meeting of the Bank. For this purpose, I am to state that the Government by exercising their powers conferred u/s 170(b) of
the Tamil Nadu Cooperative Societies Act, 1983 exempt the Tamil Nadu State Apex Cooperative Bank from the provision of Section 72 of the
said Act so as to enable the Tamil Nadu State Apex Cooperative Bank to draw and utilize the above amount for this purpose. I am to add that the
viability of this scheme and the quantum of pension payable to the retirees of the Tamil Nadu State Apex Cooperative Bank will be decided by the
Government after examining the report from the pension experts. The receipt of this letter may kindly be acknowledged.
The appellant - Bank also wrote another letter dated 12.07.2007 to the Government, that was heavily relied on by the learned Judge for
granting pension at the rate of 20%. The relevant passage as relied on by the learned Judge is extracted hereunder:
Though the Government of Tamil Nadu vide its letter has advised the Bank to consider the possibility of increasing the Corpus Fund from Rs.
10.00 Crores to Rs. 12.00 Crores or Rs. 13.00 Crores and pay Pension at 25%, it is possible for the Bank to pay Pension only at 20.00% within
the quantum of Rs. 13.00 Crores (already earmarked amount of Rs. 10.00 Crores + Rs. 3.00 Crores Interest).
In fact, the Government suggested for payment of pension at the rate of 25%. This could be seen from the aforesaid passage itself. Further, the
appellant - Bank made the following request to the Government in the said letter, for payment of pension at the rate of 25%.
In view of the above, we request the Government of Tamil Nadu to consider the following:
It is suggested that the Bank may be pay Pension at 25% of the Average 10 months Basic Pay and Dearness Allowance. By paying at 25% the
additional commitment on part of the Bank would be 23.73 Crores (58.60 - 34.87 = 23.73 Crores) which is well within the accumulated
earmarked sum of Rs. 10.00 Crores (26.51 Crores) allocated in the year 1995-96.
Since it is not possible for the Bank to contribute the entire sum of Rs. 23.73 Crores in one Lumpsum, it is suggested that the above sum may be
contributed in three annual instalments together with interest for the balance amount at the rate prescribed by the LIC.
Further, if we pay Pension at 25%, the Bank can easily convince the Employees/Officers Organisations and Pensioners'' Association and
implement the Pension Scheme as per the directions of the Hon''ble High Court.
According to the appellant - Bank, Rs. 10 Crores allocated by the appellant - Bank for the Pension Corpus Fund was not kept idle and the
said amount earned interest. According to them, the said amount of Rs. 10 Crores along with the accumulated interest, comes to Rs. 26.51
Crores. The appellant - Bank also stated that if Rs. 23.73 Crores is permitted to be transferred to Pension Corpus Fund, it could be possible to
pay pension at the rate of 25%. The appellant - Bank has also obtained an expert opinion from M/s. Darashaw. The actuarial report dated
03.07.2007 gives the projection of the deficit for pension if paid at the rate of 50% or 20% or 25% respectively. The projection is as follows:
Table 6 Pension Cost Additional Pension Deficit Cost 15% 332995793 0 15294385 20% 443994391 110998598 126292983 25%
554992988 221997195 237291580
However, the Life Insurance Corporation of India gave a different projection. According to them, the deficit is much more than the projection
of M/s. Darashaw. As per M/s. Darashaw''s report, by transferring Rs. 26.3 Crores, representing the allocation of Rs. 10 Crores along with
interest, could meet the requirement for payment of pension at the rate of 25%. But it is no so in the case of Life Insurance Corporation of India.
In these circumstances, the learned Judge thought that the aforesaid facts constitute special circumstances warranting the entertainment of the
writ petitions. In our view, the special circumstances are as visualised in proposition No. (vii) of the larger Bench Judgment of this Court cited
supra. Hence, the learned Judge has correctly entertained the writ petitions.
The aforesaid facts make it very clear that the arguments that are advanced before this Court are contrary to the series of letters, written to the
Registrar of Co-operative Societies and the Government. In fact, both the Government as well as the appellant - Bank were of the view that it
could be possible that pension could be paid at the rate of 25%.
As per the settlement, the persons who retired on or after 01.01.1991 are entitled to pension. That is, the persons who were at the age of 58
years as of 1991 are entitled to pension. Those persons are now aged 78 years. Those senior citizens could not be driven now, to go to some
other forum, after all the exercises referred to above, took place. More importantly, the appellant - Bank agreed for a constitution of a Committee
by this Court to resolve the issue and a Committee was also constituted. The appellant - Bank was willing to pay pension at the rate of 17.5%,
while the employees/retirees pitched high demanding ranging from 25 to 35%. Hence, there was no consensus. At this juncture, the learned Judge,
taking into account the aforesaid facts, fixed pension at the rate of 20%, that too from October 2008. Existence of alternate remedy is not an
absolute bar for entertaining writ petitions under Article 226 of the Constitution. On the other hand, it is a self imposed restriction. In a proper
case, inspite of existence of an alternate remedy, this Court could entertain writ petitions. The judgments relied on by the learned senior counsel for
the appellants are not applicable to the facts of the case. Hence, we do not find any infirmity in the order of the learned Judge.
In view of the aforesaid facts, the appellant - Bank could not say that the matter involves disputed questions of fact, particularly, when the
learned Judge fixed pension at the rate of 20% only, even when the appellant - Bank was of the view that payment of pension at the rate of 25% is
possible, as stated in their letter dated 12.07.2007. Furthermore, the matter is relating to pension. It is a different matter, if the same is relating to
conditions of service, other than pension. Though the appellant - Bank is not State under Article 12 of the Constitution, the pension to their
employees, pursuant to the settlement, is the right to life and livelihood guaranteed under Article 21 of the Constitution. Even in a case of an
individual workman, for his claim to pension against a private Bank, a Division Bench of this Court in A.K. Ansari v. Bharat Overseas Bank Ltd.
reported in 1999 (3) L.L.N. 310 upheld the maintainability of the writ petition. The said judgment squarely applies to the facts of this case also,
particularly since the retirees from 01.01.1991 numbering about 271 are involved in this case. Paras 12(E) and 12(W) of the said judgment are
extracted hereunder:
12E. The Division Bench had not laid down that no writ is maintainable against the respondent - bank but it has accepted the principle that the writ
petition is maintainable against the respondent - bank where situations warrant as has been laid down by the Division Bench in Madras Labour
Union v. Binny Ltd. 1995 (1) L.L.N. 687, as well as in V. Sadasivan and Ors. v. Binny Ltd. 1998 (1) L.L.N. 235 (vide supra).
...12(W) In the foregoing circumstances, in the light of the aforesaid pronouncements of the Apex Court as well as the Division Bench of this
Court, we confirm the view taken by the learned Single Judge that the writ petition is maintainable and the contention to the contra raised by Sri
T.K. Seshadri has to be necessarily rejected. On the facts and to the limited extent indicated above, we hold that the writ petition is maintainable.
All the above facts were relied on by the retirees to sustain the order as well as for fixing the pension at higher rate. While we are inclined to
sustain the order of the learned Judge, we do not find any reason to enhance the rate of pension, as required by the retirees.
In fine, these writ appeals are dismissed. No costs. Consequently, connected miscellaneous petitions are closed.