Calcutta HC Allows Review Petition Filed By IIM Calcutta Faculty; Confirms Automatic Inclusion Into New Pension Scheme As Per 1987 Memorandum

Calcutta High Court: In 2020, a Division Bench had denied pension benefits to an IIM Calcutta faculty member for failing to opt into the new GPF-cum-Pension-cum-Gratuity Scheme. However, a Division Bench of Justices Rajasekhar Mantha and Ajay Kumar Gupta allowed a review petition against this judgement. The bench held that the relevant pension rules automatically covered employees who did not opt out. It explained that the earlier division bench erred in holding that the employee had to explicitly opt-in; since, it contradicted both the memorandum's provisions and the case of Union of India v. S.L. Verma. Background Ambujaksha Mahanti, a former IIM Calcutta faculty member, was employed before 1985 under the Contributory Provident Fund (CPF) scheme. In 1987, IIM issued a notification based on the recommendations of the 4th Pay Commission ('1987 memorandum'), introducing a new pension scheme. Employees were required to opt out within six months if they wished to remain under the CPF scheme; otherwise, they would automatically migrate to the new GPF-cum-Pension-cum-Gratuity Scheme ('new scheme'). While Mahanti did not exercise any option, IIM continued to treat him as a CPF beneficiary. In 2020, a Division Bench dismissed Mahanti's claim for inclusion in the pension scheme, holding that he failed to opt in. Mahanti filed a review petition, arguing that the 1987 memorandum created a legal fiction that automatically shifted him to the pension scheme unless he opted out. Review was sought both on the ground that there was an error apparent on the face of the judgment dated 14th February 2020 and in light of new facts and documents submitted by Mahanti. Arguments Counsel for Mahanti argued that the 1987 memorandum and subsequent notifications explicitly stated that employees failing to opt out would be deemed members of the new pension scheme. Relying on the Supreme Court's judgment in Union of India v. S.L. Verma [(2006) 12 SCC 53], Mahanti argued that the notification created a legal fiction that automatically transferred employees who did not opt out. He contended that the previous Division Bench erred by not applying this. This, he argued, satisfied Order XXXXVII Rule 1A of the Code of Civil Procedure, which permits review for errors apparent on the face of the record. However, IIM's counsel argued that Mahanti continued to withdraw benefits under the CPF scheme and did not challenge his classification until much later. They maintained that his actions contradicted his claim, and argued that his silence amounted to acceptance of the CPF scheme. Court's Reasoning Firstly, the court noted that the 1987 memorandum clearly established that employees who did not opt out within six months would automatically transition to the new pension scheme. It found that Mahanti's failure to exercise an option in 1987 meant he was automatically governed by the GPF-cum-Pension-cum-Gratuity Scheme, per the legal fiction created by the memorandum. Further, the court relied on the Supreme Court judgement in S.L. Verma, which considered very similar facts, and held that employees who did not opt out must be deemed as members of the new pension scheme. The court ruled that the previous Division Bench overlooked this binding precedent, leading to a mistake 'apparent on the face of the record'. The court observed that the most glaring error in the 2020 order was the finding that Mahanti “has not chosen to come under the GPF and hence will not get pension.” The court noted that this finding contradicted the memorandum, and the division bench's own finding that Mahanti comes under the 4th Pay Commission which mandates pension. Lastly, the court acknowledged the new documents submitted during the review, including minutes of meetings and financial statements. It held that these documents further corroborated and supported Mahanti's case. Thus, the court allowed the review petition, and set aside the dismissal of Mahanti's appeal. It directed IIM Calcutta to treat him as a member of the new GPF-cum-Pension-cum-Gratuity Scheme from July 1987. Decided on: 10-12-2024 Case No.: RVW 173 of 2021 | Ambujaksha Mahanti v. Indian Institute of Management, Calcutta Counsel for the Petitioner: Mr. Anindya Kumar Mitra, Senior Advocate; Mr. Shamit Sanyal, and Mr. Dip Jyoti Chakraborty Counsel for the Respondents: Mr. L.K. Gupta, Senior Advocate; Mr. D.N. Ray, Mr. Bhaskar Mukherjee, and Ms. Debadrita Dutta Click Here To Read/Download The Order

Calcutta HC Allows Review Petition Filed By IIM Calcutta Faculty; Confirms Automatic Inclusion Into New Pension Scheme As Per 1987 Memorandum

Pranav Kumar

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