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CASE NO.: Appeal (civil)  410-429 of 2002

PETITIONER: Commnr.&Secretary to Govt.  

RESPONDENT: N. Govindan Achary and Ors.

DATE OF JUDGMENT: 31/01/2006

BENCH: ARIJIT PASAYAT & C.K. THAKKER

JUDGMENT: J U D G M E N T [With Civil Appeal Nos. 381-382 of 2002] The Commissioner and Secretary                  ....Appellant to Government, Transport Department, Fort. St. George, Madras

ARIJIT PASAYAT, J.  

       These appeals are directed against the judgment of the  Tamil Nadu Administrative Tribunal, Madras (in short the  ’Tribunal’) disposing of several applications filed by the  respondents. By the impugned judgment, the Tribunal held  that respondents were entitled to pension in terms of G.O.Ms.  No.378 issued by the Finance Department of the appellant- State dated 18.4.1975 read with G.O.Ms. No.378, Transport  Department, dated 23.9.1985.

       Background facts as highlighted by the appellants are  essentially as follows:

       The respondents were employees of the erstwhile  Transport Department in the State of Tamil Nadu. Till 1972  the public transportation was managed and run as a  Government Department conferring the status of Government  servants to all employees of the State Transport Department.  Pursuant to the policy decision of the State, Corporations were  formed. Initially, the employees were sent to the said  Corporations on deputation. As there was reluctance on their  part to be absorbed with the Transport Corporations giving up  their status and benefits available to government servants, the  Government by G.O.Ms. No.378 dated 18.4.1975 issued orders  offering pension for the services rendered in the Transport  Department while they served in the transport corporations.  But the pension offered in the said G.O.Ms. No.378 dated  18.4.1975 was denied to the respondents. Hence, they filed  applications before the Tribunal with a prayer that direction be  given to the present appellants to pay the eligible pension to  the applicants before the Tribunal for services rendered by  them in the transport department in terms of G.O.Ms. No.378  of the Finance Department dated 23.9.1985. Two categories of  cases were filed; one related to cases where pension was  denied on the ground that the applicants had not put in the  qualifying service of 10 years. Their services were counted  from the date of permanent absorption in the Transport  Department instead of their date of entry into service on  15.9.1975 i.e. the date of absorption in Transport  Corporations and in the second type of cases the employees  were not given benefit of pension while in service in the

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Transport Corporation as per G.O.Ms. 378.  The Government  referred to G.O. No.212 to deny the benefit. It was pointed out  by the present appellants that the respondents had opted to  continue under Operational Subordinate Service Rules (in  short the ’Operational Rules’) when pension was offered to  operation staff in G.O. No.212 dated 28.3.1974. Acting on the  basis of demand raised by certain employees the aforesaid  G.O. No.212 dated 28.3.1974 was issued extending  pensionary benefits and called for exercising options either to  remain in the existing scheme or to come under pension  scheme.  

       The State of Tamil Nadu was at the relevant point of time  following two types of schemes. One was the pensionary  scheme under Madras Liberalised Pension Rules, 1960 (in  short ’Liberalised Rules’) and other was known as Non- Pensionary Contributory Provident Fund Scheme (in short the  ’Provident Fund Scheme’) under the Tamil Nadu State  Transport Department Operation Subordinate Retiring Invalid  and Compassionate Gratuity (Non-Pensionable Establishment)  Rules.  

       As noted above, the G.O.No.212 was issued on  23.9.1974. When the G.O. was issued certain doubts were  entertained as to under which scheme the concerned  employees were covered. According to the appellants the  respondents opted to continue in the Non-pensionary  Contributory Provident Fund scheme by exercising option in  writing under Rule 34 of the Tamil Nadu Pension Rules (in  short ’Pension Rules’). Certain benefits were granted on  18.7.1975 to the employees engaged by the Public Sector  Undertakings and the State Government.        

       There were some connected issues which had been dealt  with by this Court in detail in Government of Tamil Nadu and  Ors. v. M. Ananchu Asari and Ors. (2003 (10) SCC 503) and  Government of Tamil Nadu and Ors. v. M. Ananchu Asari and  Ors.(2005 (2) SCC 332). These cases related to fixation of cut  off dates for granting/calculating pensionary benefits.  In M.  Ananchu Asari’s case (supra) it was held as follows:

"Hence, the fixation of the cut-off date as  1.4.1982 would, in our view, be appropriate.  Taking into account the aforementioned date  for the purpose of assessing the requisite  length of service, we direct the appellants to  take steps to extend the pensionary benefits to  the eligible employees. Having regard to the  conduct of the respondents in seeking the  remedy long after the options were exercised,  we consider it just and proper to direct that  the respondent employees whoever have  retired should get the arrears of pension only  from 1.1.1988, which date is fixed with  reference to the year of filing the first writ  petition, namely WP NO.7012 of 1988. The  fixation of pension and payment of arrears  should be done accordingly within a period of  four months from today. The appellants are  entitled to adjust the monetary benefits which  the employees would not have received if they  were to receive the pension."

In the review petition’s decision in M. Ananchu Asari’s case

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(supra) it was observed as follows:

"Certain contentions are raised on the merits,  especially, in regard to the conclusion of this  Court that the process of absorption did not  take place in 1975. We are not inclined to  rehear the arguments on merits. If the  petitioners failed to furnish the necessary  material even during the pendency of appeal in  this Court, that is no ground to review the  judgment. There is also nothing to be clarified  insofar as the operative part of the judgment is  concerned. It is not necessary for us to express  any view on the question whether the  Transport Corporation employees who were  erstwhile government servants retiring after  1.1.1988 would be eligible to get the pension in  addition to the salary drawn by them in the  Corporation as per the Rules and GOs  applicable to them. It is the contention of the  learned counsel for the respondent employees  that the GOs issued by the government  themselves contemplated such payment and in  fact those who were parties to the earlier writ  petitions were given that benefit. This issue  cannot legitimately form the subject matter of  either review or clarification."

Stand of the appellants in these appeals is that the  aforesaid two decisions did not relate to the facts of the  present case. On the contrary, learned counsel for the  respondents submitted that the issue is no longer res integra  in view of the aforesaid two judgments.           As noted above, the two relevant GOs are Nos.212 and  378, so far as relevant, they read as follows:

"GOVERNMENT OF TAMIL (ABSTRACT) Pension: Benefits of Madras Liberalised  Pension Rules - Extension to employees of  Tamil Nadu State Transport Department \026  orders \026 issued.

TRANSPORT DEPARTMENT G.O.Ms. No.212         DATED 28th MARCH  1974

G.O. Ms. No.537, Transport Department,   dated 3.7.1972

ORDER In the G.O. read above the Government has  approved the Special Rules for the Tamil Nadu  State Transport Department Operation Sub- Ordinate Service.  According to Rule 12 of the  said Rules, all the members of the services are  eligible for the benefits of gratuity and they will  be governed by the Special Gratuity Rules and  will not be entitled to pension or provident  Fund benefits as applicable to the regular  government servants.  The Government have  since decided to extent the benefits of the

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Madras Liberalised Pension Rules, 1960 to the  workers of the Tamil Nadu State Transport  Department in lieu of Tamil Nadu State  Transport Department Operation Subordinate  Retiring.  In valid and compassionate Gratuity  (Non-Pensionable Establishment) Rules.

02. The Government accordingly direct that  the workers of the Tamil Nadu State Transport  Department be entitled to the Pension and  Provident Fund and the Family Pension  benefits as applicable to the regular  Government servants under the Madras  Liberalised Pension Rules, 1960 and the  Madras Government Servants Family Pension  Rules, 1964.

03. This order shall take effect from 11.1.1974.   The workers shall be given the option either to  remain in the existing system or to be  governed by the Madras Liberalised Pension  Scheme.  The implementation of the Madras  Liberalised Pension Rules, 1960 and the  Madras Government Servants Family Pension  Rules, 1964 shall be effected subjected to the  following conditions:-

(a) All existing employees borne on the Tamil  Nadu State Transport Department Subordinate  Service who opt for the Madras Liberalised  Pension benefits shall be governed by the  Madras Liberalised Pension Rules, 1960.  For  this purpose, their entire service in the Tamil  Nadu State Transport Department Operation  Subordinate Service will be reckoned towards  pension, gratuity and all other benefits for  which they would have been entitled to under  the rules.  They will not be eligible to get any  Government contribution to Employees  Provident Fund, 1952 now converted as Tamil  Nadu Government Industrial Employees  Provident Fund, 1969 and the amount of such  contribution already credit to the account of  the employees will be resumed and credited  back to the Government.  The contribution  made towards the Employees Provident Fund,  so far will be deemed as having been  contributed to General Provident Fund  (Madras).  They will have to continue to  contribute to the General Provident Fund  (Tamil Nadu).

xxx                     xxxx                            xxxx     

06. However, to ensure that all existing  employees are given the option to continue to  be governed by the existing terms and  conditions, if for some reasons, they choose to  do so, Government direct that all the  employees covered in paragraph 3 (a) (c) of this  order will have the option to request to be  governed by the existing terms and conditions  of service.  This option will be exercised on or  before 30.6.1974.  Those who do not exercise  any option shall automatically come under the

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Liberalised Pension Rules, 1960.  Option  cannot be exercised after 30.6.1974 and option  once exercised is final.

xxx                     xxxx                            xxxx

(BY ORDER OF THE GOVERNOR) M.S. RAM SPECIAL SECRETARY TO GOVERNMENT xxx                     xxxx                            xxxx

"GOVERNMENT OF TAMIL NADU  (ABSTRACT) FUNDAMENTAL RULES PERMANENT  ABSORPTION OF GOVERNMENT SERVANT  UNDER STATE OWNED  CORPORATIONS/BOARDS/UNDERTAKINGS  TERMINAL BENEFITS ORDERS ISSUED.  

FINANCE (FR.II) DEPARTMENT

G.O.MS.No.378                   Dated 18.4.1975.

01.     G.O.Ms. No.1072, Finance, Dated  5.9.1964. 02.     G.O.Ms. No.731, Industries (Special)  Dated, 21.5.1974.

ORDER

       In the G.O. second read above certain  terminal benefits relating to Pension, Gratuity,  Provident Fund, Earned Leave, Family  Pension, etc., were granted to Government  servants permanently absorbed in the Tamil  Nadu Small Industries Corporation Limited.   The Government have decided to grant similar  benefits to Government servant permanently  absorbed under all other public undertakings  under the State Government and pass the  following orders in regard to the issues relating  to liabilities of Pension and Gratuity, Provident  Fund, Earned Leave, Family Pension  commutation of leave to those opted to the  service of the State owned  Corporations/Boards/Undertakings.

Pension and Gratuity:                  In addition to pay in the public  undertaking an optee will be entitled to  pension/gratuity earned by him in  Government service prior to the such  absorption.  If the qualifying service under  Government is less than ten years, Gratuity  and Death cum Retirement Gratuity alone will  be payable. They are permitted to draw their  pension/gratuity immediately on absorption in  the Corporation.

Provident Fund:

       The amount of subscription together with  interest thereon, standing in the Provident  Fund Account of a Government Servant opting  for service in the Public Sector Undertaking

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may, if he so desires, be transferred to his new  Provident Fund Account under the  undertaking provided the undertaking also  agrees to such a transfer.  If, however, the  Public Undertaking does not operate a  Provident Fund, the amount in question  should be refunded to the subscriber.  An  officer covered by a Government contributory  Provident Fund will also be allowed, if he so  desires, to carry forward the corpus of the  amount including Government contributions  to his new Provident Fund Account under the  Public Sector undertaking. Once such a  transfer of Provident Fund balance has taken  place, the officer will be governed by the  Provident Fund rules of the undertaking.  As  per General Provident Fund (Tamil Nadu)  Rules, the Provident Fund accumulation shall  continue to carry interest at the normal rate  till final payment or transfer of provident fund  accumulation.   

xxx                     xxx                             xxx       Family Pension:         Since the optee for permanent absorption  in the Public Sector undertaking will cease to  be a Government Servant, the Governments  liability for family pension will cease.

Commutation of Pension: i)      Every Government servant will exercise  an option within six months of his  absorption for either of the alternatives  indicated below:-

(a)     Receiving the monthly pension and  Death-cum-Retirement Gratuity  already worked out under the usual  Government arrangements.

                               OR    (b)     Receiving the gratuity and a lump  sum amount in lieu of pension  worked out with reference to  commutation tables obtaining on  the date from which pension will be  admissible and payable under the  option orders.

ii)     Any further liberalization of pension rules  decided upon by Government after the  permanent absorption of a Government  servant in a public enterprise would not  be extended to them.

iii)    In cases where an officer at the time of  absorption has less than 10 years service  and is not entitled to pension the  question of proportionate pension will not  arise, as he will be eligible only to the  proportionate service gratuity in lieu of  pension and Death-cum-Retirement  Gratuity based on length of service.

               (BY ORDER OF THE GOVERNOR)    

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                                       S. GUHAN                 SECRETARY TO GOVERNMENT."      

For resolving of the controversy, GO.1028 may also be  referred to. On a reading of the GOs the crucial expressions  appear to be pension/gratuity "earned by him" (underlined for  emphasis) and the period stipulated is 10 years. This is  indicative of the fact that the position is relatable to  government service and the qualifying service is 10 years in  terms of the Pension Rules. If the respondents’ stand is  accepted it would mean that even if no benefit under the  government scheme is available yet the pensionary benefits  have to be given. It is to be further noted that G.O. No.212  refers to G.O. 537.  From the factual details available it  appears that the respondents preferred to remain under the  Provident Fund Scheme. In the affidavits filed by the  respondents in respect of the stand taken as to exercise of  option, there is no specific denial. On the contrary, it is stated  that the defendant does not remember whether the option was  exercised.          Learned counsel for the respondents has highlighted  about the beneficial nature of the provisions. It is to be noted  that the Tribunal proceeded on the basis as if G.O.378  superseded G.O 212. G.O. 378 refers to exercise of the option  by the employees who wanted to be covered by the scheme. If  really G.O.378 was intended to supersede G.O.212, the least  that could have been done is to refer to G.O.212 which is  admittedly not the position. G.O.378 nowhere refers to any  exercise of option under G.O.212. It is highlighted by learned  counsel for the respondents and the employees who have  intervened in the proceedings that when the Transport  Corporations were formed option was asked for. It is too well  known that in the Corporation no pensionary benefits were  there. So the question of asking for any option did not arise  and in that background the employees had opted for provident  fund scheme. After the cut off date i.e. 1.4.1982 the basis of  option changed and the earlier basis was also changed.  

       The controversy as noted above lies within a narrow  compass i.e. whether G.O. No.378 in effect superseded G.O.  No.212. Bare reading of the two GOs do not certainly indicate  that to be the position. Additionally, if the stand of the  respondents is accepted the expression "earned by him"  becomes superfluous. That can never be the intention. It  would be also relevant to quote a portion of GO MS No.1028  dated 23.9.1985 which has also relevance.  

"GOVERNMENT OF TAMIL NADU ABSTRACT STATE PUBLIC SECTOR  UNDERTAKINGS PERMANENT ABSORPITON  OF GOVERNMENT SERVANT UNDER STATE  OWNED CORPORATIONS/BOARDS/  UNDERTAKINGS TERMINAL BENEFITS  ORDERS ISSUED.

TRANSPORT DEAPRTMENT G.O. MS. NO.1028                                                                                 DATED 23.9.1985                                 KURODHANA  PURATTAST-7                                                 THIRUVALLUVARANDU:2016

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READ

01.     G.O. Ms. No.378, Finance (FR.11)  Department, dated 18.04.1975

02.     G.O. Ms. No.284, Finance Department  dated 31.3.1980.

0.3     From the Finance (Pen.) Department Lr.  No.74399/ Pen./83-8 dated 5.6.1985  addressed to the Accountant General Tamil  Nadu.

PENSION AND GRATUTITY         In addition to pay in the Public  Undertakings, an optee will be entitled to  pension/gratuity earned by him in government  service prior to such absorption as per Madras  Liberalisd Pension Rules 1960. They are  permitted to draw their pension/gratuity from  the date of their permanent absorption in the  Transport Corporations.  The arrears of  monthly pension from the date of their  permanent absorption till date or the lumpsum  amount based on the commuted value of  pension according to their option shall be paid  immediately in respect of retired/legal heirs of  the deceased employees.  Some of the retired  employees were sanctioned and paid pension  only from the dates of the actual retirement  from the Transport Corporations on attaining  the age of superannuation as per the orders  issued in the G.O. second read above.  In  respect of such cases the arrears of monthly  pension from the date of absorption to the date  of retirement of lumpsum amount based on  the commuted value after adjusting the  monthly pension already received till date  according to their option shall be paid to them.  In respect of the employees who expired on or  after their permanent absorption the legal  heirs would have been paid only Death-cum- Retirement Gratuity.  In such cases the  lumpsum amount based on the commuted  value will be paid to the legal heirs, since the  payment of monthly pension/ family pension  does not arise.

EMPLOYEES WHO ARE IN SERVICE IN STATE  TRANSPORT UNDERTAKINGS

       If the employees opt for lump sum  amount based on the commuted value of  pension, the entire amount of pension and  gratuity will be paid to them in the form of  National Savings Certificate.  If they opt for  monthly pension, the arrears of monthly  pension from the date of absorption to till date  and gratuity will be paid to them in the form of  National Savings Certificate and the current  monthly pension will be paid every month:

04.     The expenditure towards the settlement  of Terminal Benefits referred to in para 3 above  will be initially met by the respective Transport

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Corporations and subsequently adjusted  against the outstanding Government loan to  the Corporations.

06.     FAMILY PENSION         1.      Since the optee for permanent  absorption in the State Transport  Undertakings will cease to be a Government  servant the Government liability for Family  Pension will cease.

       The erstwhile Tamil Nadu State Transport  Department employees absorbed permanently  in the State Transport Undertakings should be  allowed pension increase also in their pension  besides Dearness Allowance, Additional  Dearness Allowance as applicable from time to  time to Government pensioners who retired on  that date as per the orders issued in the letter  third read above.

(BY ORDER OF THE GOVERNOR)

                                   A.K. VENKAT SUBRAMANIAN COMMISSIONER & SECRETARY TO  GOVERNMENT"   Therefore, the stand of the State Government appears to  be correct. The view expressed by the Tribunal is indefensible  and is set aside. The appeals are allowed but with no orders as  to costs.