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PETITIONER: BHARAT PETROLEUM (ERSTWHILE BURMAH SHELL) MANAGEMENT STAFFPE

       Vs.

RESPONDENT: BHARAT PETROLEUM CORPORATION LTD. & ORS.

DATE OF JUDGMENT11/05/1988

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH DUTT, M.M. (J)

CITATION:  1988 AIR 1407            1988 SCR  Supl. (1) 312  1988 SCC  (3)  52        JT 1988 (2)   439  1988 SCALE  (1)1109  CITATOR INFO :  RF         1990 SC1228  (1,2)

ACT:      Burmah Shell  (Acquisition of  Undertakings  in  India) Act, 1976: ss. 3, 4, 9 & 10(1)-Burmah Shell Management Staff Pensioners-Claim for escalation of pension-Admissibility of.      Civil Services:  Pension-No longer considered a bounty- Held to  be property-Entitlement  to escalation  of pension- Judicial notice  can be taken of the fact that the rupee has lost its value.

HEADNOTE:      Burmah Shell  oil Storage  and Distributing  Company of India  Limited   had  a   non-contributory   pension   fund. Consequent upon  nationalisation of  the petroleum industry, this  fund   was  taken  over  by  the  Government  company, respondent No.  1,  under  s.  10(1)  of  the  Burmah  Shell Acquisition of Undertakings in India) Act 2 of 1976.      In this writ petition under Art. 32 of the Constitution the  erstwhile  Burmah  Shell  Management  Staff  Pensioners claimed adequate escalation in their pension keeping in view the loss  of purchasing  power of  the rupee and the general rise in  the cost  of living. In support of their claim they relied upon  the steep  escalation in the pension granted by the Hindustan  Petroleum Corporation,  a sister  concern, to its employees. The latter has no such fund. It was contended for the  respondent Company  that if the escalation admitted by the  Hindustan Petroleum  Corporation is  accepted as the basis for  escalation in  the respondent company there would be injustice  or a  burden would  arise  which  they  cannot discharge.      Allowing the writ petition, ^      HELD: 1.  The petitioners being the management staff of the Burmah  Shell are  entitled to  a hike  in the  pension. [316E-F]      2. Judicial  notice can  be taken  of the fact that the rupee has lost its value  to a  considerable extent. Pension is no  longer considered as a bounty and it has been held to be property. In a welfare state, as ours, 313

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rise in  the pension  of  the  retired  personnel,  who  are otherwise entitled  to it,  is accepted by the State and the State has  taken the  liability. In the instant case, if the similarly situated  sister concern  like Hindustan Petroleum Corporation can admit appropriate rise in the pension, there is no  justification as to why the respondent company should not do so. [316D-E]      3. The respondent-company has an obligation to pay from its earnings  into the  fund and merely because the existing fund is  not adequate  to bear  the additional liability the claim which  is otherwise  justified cannot be rejected. The company’s current  funds are  available  to  supplement  the pension fund. [316C]      4. Respondent  No. 1 to give to the petitioners hike in the pension effective from 1st May, 1988 at the same rate as is being  given by  Hindustan Petroleum  Corporation. If the amount available  from the  pension fund is not adequate the Government-company would  allocate appropriate funds to meet the demand. The additional pension to be disbursed latest by 31st of July, 1988. [316F-G]

JUDGMENT:      ORIGINAL JURISDICTION: Writ Petition (Civil) No. 590 of      (Under Article 32 of the Constitution of India)      B.B. Sawhney for the Petitioners.      G.B. Pai,  O.C. Mathur,  Ms. Meera  Mathur,  Ms.  Deepa Chhabra and N. Misra for the Respondents.      The Judgment of the Court was delivered by      RANGANATH MISRA, J. Under the Burmah Shell (Acquisition of Undertakings  in  India)  Act  2  of  1976,  (hereinafter referred to  as the  ’Act’), the Union of India acquired the right, title  and interest  of Burmah  Shell oil Storage and Distributing Company  of India Limited (hereinafter referred to as  Burmah Shell)  in relation  to  its  undertakings  in India. Sections  3, 4,  and 9 of the Act are relevant. Under section 3  the right,  title and interest of Burmah Shell in relation to  its undertakings in India stood transferred and became vested in the Central Government. In terms of section 4, the  assets  and  liabilities  were  taken  over  by  the Government of  India. Under section 9 persons employed under Burmah Shell came under the employment of the 314 Government company  known as  Bharat Petrolium Corporation A Limited (respondent  No. I  herein) Section  1()(1) provides thus:                "Where a  provident, superannuation,  welfare           or other fund has been established by Burmah Shell           for the  benefit of  the persons employed by it in           connection with  its undertakings  in  India,  the           monies relatable to the employees-                (i) whose  services  are  transferred  by  or                under this  Act to  the Central Government or                the Government company; or                (ii) who  are in  receipt of pension or other                pensionary benefits  immediately  before  the                appointed day,           shall, out  of the  monies standing on that day to           the  credit  of  such  provident,  superranuation,           welfare or  other fund  stand transferred  to  and           vested  in,   the  Central   Government   or   the           Government company,  as the case may be, free from           any trust that may have been constituted by Burmah           Shell in respect thereof."

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The detailed  provisions for  administration of the fund are contained in that section.      This petition  under Article  32 of the Constitution is by the  erstwhile Burmah  Shell Management  Staff Pensioners who claim two reliefs:      (1) Extension of the benefit of restoration of commuted      pension after  the period  of 15 years from the date of      commutation as  decided by  this Court  in the  case of      Common Cause  & Ors. v. Union of lndia & Ors., AIR 1987      SC 210 and      (2) Adequate  escalation in the pension keeping in view      the loss  of purchasing  power of  the  rupee  and  the      general rise in the cost of living.      In answer  to the  rule nisi,  the respondent  made its return by  contending that  the pension  scheme of the first respondent is a funded scheme. The decision of this Court in the case  of Common  Cause rendered in respect of Government servants, both  of civil  and defence  services,  cannot  be extended to a public sector undertaking. The pen- 315 sion scheme  of Burmah  Shell was set up by Non-Contributory Pension A  Fund by  a Trust  Deed  in  December,  1950,  but effective  from   1st  January,  1947,  of  which  both  the management staff  as also  the clerical  staff were members. This Court on 13th of November, 1987, referred two questions arising for  determination  for  the  opinion  of  Mr.  D.K. Lodaya, Chief  Actuary of  the Life Insurance Corporation of India at  Bombay, with  the consent  of parties  and the two questions referred to are:           ( 1)  Is the  pension fund  actuarially solvent to      bear the liability flowing from restoration of commuted      portions of  pensions after  13 or  15 years  from  the      respective dates of commutation ? If not, the extent of      additional funds  necessary  for  the  purpose  may  be      indicated, and  the tax  relief which will be available      for such  contribution of  additional funds may also be      indicated.           (2) Is  the pension  fund actuarially  solvent  to      bear  (a)  enhancement  of  pensions  and  (b)  linking      pensions with  the cost  of living  index? If  so,  the      extent  by  which  the  pensions  can  be  enhanced  by      utilising the  existing resources  of the  Fund may  be      indicated.      The report  has been  received and  kept on  record. It indicates  that  the  additional  liability  on  account  of restoration of  the commuted  value of  the pension  on  the basis of 13 years would be more that Rs. 3 Crores and on the basis of  15 years  would  be  more  than  Rs.2-1/2  Crores. Counsel for  the petitioners has, however, told us in course of the  hearing that  the question  of  restoration  of  the commuted value  of the  pension may  not be  adjudicated  at present. In  view of such submission, we do not examine this issue.      The writ  petition is,  therefore, confined to the only question as to the escalation of pension. Burmah Shell has a fund known as Burmah Shell India Pension Fund and it has its own  rules.   When  Government  nationalised  the  Petroleum industry, another  company known  as Caltex  India Ltd.  was also acquired  and came  to be  known as Hindustan Petroleum Corporation. It  is thus  a  sister  concern  owned  by  the Central Government.  Petitioners relied upon the increase in the pension  granted by  the Hindustan Petroleum Corporation to its  employees in support of their claim for the increase in the  pension. While Burmah Shell had a pension fund which has been  taken over  by the  Government company, Caltex did

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not have  such a fund The allegation made by the petitioners that the Hindustan Petroleum Corporation 316 Where there  is no  such fund has granted a steep escalation in the  pension has  not been disputed before us. Admittedly Burmah Shell  is a  bigger company  than Hindustan Petroleum Corporation. We  have been  told that the total Burmah Shell management  staff   presently  in   the  employment  of  the respondent  No.  1  would  be  around  a  thousand.  Nothing acceptable has  been placed before us from where support can be received for the argument of Mr. Pai, learned counsel for respondent No.  1, that if the escalation admitted by Messrs Hindustan Petroleum Corporation is accepted as the basis for escalation in  Burmah Shell  there would  be injustice  or a burden  would  arise  which  the  respondent-Company  cannot discharge. The  respondent-Company has  an obligation to pay from its  earnings into  the Fund  and  merely  because  the existing  fund  is  not  adequate  to  bear  the  additional liability the  claim which  is otherwise justified cannot be rejected. As  we have  already pointed  out,  the  Company’s current funds are available to supplement the pension fund.      Judicial notice can be taken of the fact that the rupee has lost  its value  to a considerable extent. Pension is no longer considered  as a  bounty and  is has  been held to be property. In a welfare State as ours, rise in the pension of the retired  personnel who  are otherwise  entitled to it is accepted by the State and the State has taken the liability. If the  similarly situated  sister  concern  like  Hindustan Petroleum Corporation  can admit  appropriate  rise  in  the pension, we  see no  justification as to why the respondent- Company should not do so.      We, therefore,  hold that  the  petitioners  being  the management staff  of the Burmah Shell would be entitled to a hike in  the pension admissible at the same rate as is being given by  Hindustan Petroleum  Corporation.  We  accordingly direct respondent  No. 1  to give  the necessary hike in the pension effective from 1st May, 1988 If the amount available from the  pension fund  is not  adequate, it would obviously mean that  the Government company would allocate appropriate funds to  meet the  demand. The additional pension should be disbursed latest by 31st of July, 1988. No costs. P.S.S.                                Petition allowed. 317