Judgement of Ernakulam CAT on 100% commutation absorbees in PSUs BPS had raised this issue before 7th CPC vide their Memorandum 25.5.2014

                         ERNAKULAM BENCH

                     Original Application No. 180/00704/2015

                     Tuesday, this the 19th day of July, 2016



    P.J. Abraham, S/o. P.I. Joseph, aged 86 years,
    Chief Mechanical Engineer (Retd.), Integral Coach Factory,
    38, Vrindavanam, SCB Road, Cochin-682 019.                 . . . . Applicant

    (By Advocate -    Mr. C.S.G. Nair)

    1.    Financial Advisor & Chief Accounts Officer,
          Integral Coach Factory, Perambur,
          Chennai - 600 038.

    2.    Union of India, represented by the Secretary,
          Ministry of Personnel, Public Grievances & Pension,
          Department of Pension & Pensioner's Welfare,
          Lok Nayak Bhawan, Khan Market, New Delhi - 110 003.

    3.    Branch Manager, Union Bank of India,
          Panampilly Nagar, Cochin - 682 034.              ....    Respondents

    [By Advocates : Ms. P.K. Radhika (R1),
                    Mr. K.C. Muraleedharan, ACGSC (R2) &
                    Mr. K.S. Ajayagosh (R3)]

          This application having been heard on 29.06.2016, the Tribunal on

    19.07.2016 delivered the following:

    Hon'ble Mr. U. Sarathchandran, Judicial Member -

          The applicant is a retired Chief Mechanical Engineer, retired from the

    Integral Coach Factory, Chennai under the Railways on 31.8.1983. He had

    put in 31 years of service under the Railways. He was deputed to Balmer &

    Lawrie Company Limited, a Central Public Undertaking (CPU) in 'public

    interest'. As an incentive to attract all competent personnel from Government
    Departments for deputation, he was offered the additional facility of

    commuting 100% of his pension in the parent Department. Normally for a

    pensioner 1/3rd pension is allowed to be commuted. But for those who opted

    to deputation to Central Public Sector Undertakings the balance 2/3 rd of the

    pension also was allowed to be commuted. On the basis of the decision of the

    Apex Court in Common Cause, A Registered Society & Ors. v. Union of

    India - (1987) 1 SCC 142, the 1/3rd pension was restored after a lapse of 15

    years since 1999. The applicant states that on implementation of the VIth

    Central Pay Commission (CPC) the Government ordered that revision of

    Pension in no case shall be lower than 50% of the minimum of the pay in the

    pay band plus Grade Pay corresponding to the pre-revised scale from which

    the pensioner had retired. According to the applicant he is a similarly situated

    and he seeks the relief as under:

          '(i)    To declare that the applicant is entitled for revision of pension as per
          para 4.2 of OM dt. 1.9.2008 i.e. 50% of the minimum of the pay in the pay band
          plus grade pay of Chief Mechanical Engineer i.e. 27,350/- w.e.f. 1.1.2006.

          (ii)    To direct the respondents to issue revised PPO to the applicant fixing the
          monthly pension @ Rs. 27,350/- w.e.f. 1.1.2006 and also the corresponding
          family pension and grant all consequential benefits including arrears of pension
          with interest @ 12% p.a. within a stipulated period.

          (iii)  To direct the 1st respondent to pay the arrears of balance amount of
          pension w.e.f. 1.5.1999 to 31.12.2005 @ rs. 5,762/- p.m. along with the
          Dearness Relief applicable to it with interest @ 12% p.a. within a time frame.

          (iv)     To refund the recovered amount from the pension of the applicant with

          (v)     To Grant such other relief or reliefs that may be prayed for or that are
          found to be just and proper in the nature and circumstances of the case.

          (vi)    To grant cost of this OA.'

    2.    The respondent No. 1 filed reply statement stating that at the time when

    he was relieved from Integral Coach Factory on 1.8.1983 and was absorbed in

    Balmer & Lawrie Company Limited, the settlement benefits were processed
    as per the extant rules and gratuity and lumpsum amount in lieu of pension

    were worked out with reference to commutation table. His date of

    commutation was 1.5.1984 and the date of restoration was 1.5.1999. Due to

    the implementation of the VIth CPC, the applicant's notional full pension was

    revised from Rs. 8,643/- to Rs. 25,693/-. According to the respondents the

    revision of pension at 50% of minimum of the pay band and Grade Pay as per

    VIth CPC scales has not been extended to public sector undertakings

    absorbees who are entitled to restoration of 1/3 rd pension. It is also contended

    that the applicant is entitled to only pro-rata pension as he had less than the

    maximum required service for full pension. Respondent No. 1 pray for

    rejecting the OA.

    3.    The respondent No. 3 pension disbursing bank submitted that recovery

    for overpayment of excess amount of Rs. 18,35,166/- was started from the

    applicant's pension from the month of July, 2015 as per the letter received

    from the Integral Coach Factory stating that there was such overpayment. As

    per the interim order passed by this Tribunal and on the instructions of the

    Integral Coach Factory, the Bank has stopped recovery from the pension of

    the applicant.

    4.    Heard the learned counsel appearing for the applicant, respondent No.

    1, respondent No. 2 and respondent No. 3.

    5.    Learned counsel for the applicant Shri C.S.G. Nair, besides the

    Common Cause's case (supra), relied on the judgment dated 2.8.2007 in Writ

    Petition No. 22207 of 2002 of the Madras High Court in K. Ganesan v.
    Registrar & Ors. In the above case, the petitioner was originally employed as

    Deputy Controller General of Accounts in the Department of Expenditure. He

    opted to join a public sector undertaking i.e. Bharat Heavy Electricals

    Limited. He opted for commutation of pension of 1/3 rd and 2/3rd part apart

    from the pro-rata gratuity. His entire pension was thus commuted and the

    same was paid to him in July, 1986. The Madras High Court relying on Rule

    37-A of Pension Rules and Sections 10 & 12 of the Pension Act, 1871

    directed the respondents (his original employer) to restore the pension

    payable after the expiry of commutation of 2/3 rd pension and pay all the

    arrears payable to him and to continue to pay the same for the future period.

    6.    Shri C.S.G. Nair learned counsel for the applicant submitted that the

    facts and law laid down in the decision of the Madras High Court is squarely

    applicable to the applicant in the present OA and that he is entitled to get his

    full pension restored although he had commuted 100% of his pension at the

    time when he left the job with the Integral Coach Factory and got absorbed in

    a public sector undertaking Balmer & Lawrie Company Limited.

    7.    While discussing the legal aspects of the case in K. Ganesan's case

    (supra) His Lordship Justice F.M. Ibrahim Kalifulla (as his Lordship then

    was) held:

          '11.    .......................................Though we made our anxious consideration to
          the decisions reported in 1991 (2) SCC 265 (Welfare Assn. Of Absorbed Central
          Government Employees v. Union of India), 1996 (2) SCC 187 (Welfare
          Association of Absorbed Central Government employees in Public Enterprises v.
          Union of India), AIR 1998 SC 2862 (Welfare Associn. Of A.C.G.E. in P.E. v.
          Arvind Verma) and AIR 2000 SC 3387 (P.V. Sundara Rajan v. Union of India),
          is none of the decisions, the question as to the prohibition imposed under Section
          12 of the Pensions Act to surrender once own right of a pensioner was never
          considered. In paragraph-13 of the decision of the Honourable Supreme Court
          reported in AIR 2000 SCC 3387, the Honourable Supreme Court while holding
          that the absorbees who had commuted 100% pension, continue to remain non-
          pensioners made clear, such position would be prevalent only till their pension is
         restored. Therefore, when in the case on hand, when the petitioner who also
          sought for 100% commutation of pension at the time of his absorption in BHEL
          in the year 1986, in the light of the decision of the Honourable Supreme Court
          reported in 1996 (2) SCC-187 (Welfare Association of Absorbed Central
          Government Employees in Public Enterprises v. Union of India), he was fully
          entitled for the benefits granted to the Government servants in the common cause
          case in so far as it related to 1/3 rd pension commuted by him. By virtue of such a
          declaration of law made by the Honourable Supreme Court which made it clear
          that the petitioner was nevertheless a pensioner, it will have to be held that as a
          pensioner, he would be entitled for the protection under Section 12 of the
          Pension Act, 1871 in so far as it related to surrendering of his rights as provided
          under Rule 37-A of the CCS Pension Rules................ '

    Referring to the provisions of Sections 10 & 12 of Pension Act, 1871 it was

    further held:

          '12.      Section 12 of the Pensions Act, 1871 reads as under:

                    '12.   Assignments etc., in anticipation of pension to be void.

                    All assignments, agreements, sales and securities of very kind made by
                    the person entitled to any pension, pay or allowance mentioned in
                    Section 11 in respect of any money not payable at or before the making
                    thereof on account of such pension, pay or allowance or for giving or
                    assigning any future interest therein are null and void.'

          13.      Under Section 10 as stated by us earlier, while commutation of pension
          for the whole or any part of it can be opted by a pensioner based on such terms
          fixed under the Rules, it will have to be stated that such enabling provision
          providing for commutation for either part or whole of the pension can only for
          commutation purposes and that under the guise of commutation, it will not be
          open for the Government to once and for all wipe of the very right to restoration
          of such pension after the expiry of the period of commutation. In fact, Rule 37-A
          clause (b) though uses the expression the commutation of balance amount of
          pension namely the 2/3 rd of pension, the stipulations contained therein providing
          for such commutation of 2/3rd pension would be subject to surrendering of the
          right of Government servant, for drawing the 2/3 rd pension would run counter to
          the very concept of commutation which will not be in consonance with Section
          10 providing for commutation of pension alone and not the right to claim
          pension after the period of commutation. '

    Referring to the pensioners surrender of right for drawal of 2/3 rd of his

    pension by agreeing for the terms contained in Rule 37-A of Pension Rules

    which amounted to a wholesale surrender of his right to pension, the Court in

    that case ruled:

          '14.      ....................................When under Section 12 of the Act, there is a
          prohibition imposed on the pensioner himself to barter away his right under very
          many circumstances except as provided under Section 12-A of the Pensions Act,
          we are convinced that surrendering of the right for drawal of 2/3 rd of Pension
          after its commutation as provided under Rule 37-A (b) is repugnant to Section 12
          and is straight away hit by the prohibition imposed under Section 12.
          Consequently any action based on Rule 37-A(b) is wholly illegal and therefore,
          the surrendering of rights of the petitioner for drawing 2/3 rd pension at the time
          of its commutation to that extent can not operate against his interest. We
          therefore, declare that such surrendering rights by the petitioner at the time of his
          absorption in the year 1986 while commuting 2/3 rd of his pension, was invalid
         and consequently the petitioner was lawfully entitled for the restoration of his
          pension after the expiry of the period of commutation of 2/3 rd pension.'

    8.    In the light of the law laid down by the Madras High Court which is

    arising from a decision of the Co-ordinate Bench of this Tribunal, the same is

    binding on this Tribunal also. Therefore, in the light of the aforecited decision

    of the Madras High Court this Tribunal holds that the applicant is entitled to

    get his full pension restored after the expiry of 15 years of his commutation as

    laid down in Common Cause's case (supra). The pension to be so restored

    shall necessarily be in accordance with the VIth CPC scale of revised pension

    with effect from 1.1.2006 i.e. 50% of the minimum of pay in the pay band

    plus Grade Pay corresponding to the post in which the applicant retired from

    service i.e. Chief Mechanical Engineer.

    9.    Therefore, this Tribunal directs the respondents to issue revised

    pension payment order to the applicant fixing his pension as 50% of the

    minimum of the pay in the revised pay band plus Grade Pay of the post from

    which he left the post (of Chief Mechanical Engineer). The applicant will be

    entitled to get the pension at the rate mentioned above with effect from

    1.1.2006. It is also made clear that the applicant is entitled to the full pension

    at the rate prevailing in 1999 when his pension was restored and the same rate

    will have to be paid to him from 1.5.1999 till 31.12.2005 along with the

    dearness relief applicable to it and thereafter at the rate as stated above from

    1.1.2006. Ordered accordingly. The respondents shall implement the order

    within three months from the date of receipt of a copy of this order.
    10.    The Original Application is disposed of as above. No order as to costs.

                             (U. SARATHCHANDRAN)
                               JUDICIAL MEMBER


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