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Pension Is Deferred Salary, Right To Pension A Constitutional Right: Kerala High Court

Hannah M Varghese
17 Aug 2022 9:34 AM GMT
Pension Is Deferred Salary, Right To Pension A Constitutional Right: Kerala High Court
Pension is not a bounty to be paid at the employer's whims; employer cannot wriggle out of responsibility by pleading paucity of funds.

The Kerala High Court recently held that the right to pension is a constitutional right and that pensions cannot be paid to retired employees merely at the whims and fancies of the employers.

Justice V.G Arun observed that pension is deferred salary and the right to the same is akin to the right to property under Article 300A of the Constitution of India.

"Pension is no longer a bounty to be paid at the whims and fancies of the employer. On the other hand, pension is deferred salary, akin to property under Article 300A. The right to pension, if not a fundamental right, is definitely a constitutional right. A retired employee cannot be deprived of this right, save by authority of law."

The Court was adjudicating upon a batch of petitions moved by current and retired employees of the Kerala Books and Publications Society (KBPS), a registered Society wholly owned by the State Government. The Employees Provident Fund (EPF), Miscellaneous Provisions Act and Employees Pension Scheme were made applicable to the KBPS employees.

Soon, the labour unions highlighted the significant difference in salary and pension between government employees and KBPS employees, despite it being fully owned by the government. As per the Labour Court's direction, an expert committee was constituted to submit a report regarding the possibility of forming a separate pension fund for KBPS employees.

The report suggested payment of pension as provided under Part III of Kerala Service Rules with budgetary support from the Government and the State eventually accorded sanction for publishing the KBPS Employees Contributory Pension and General Provident Fund Regulations, 2014

The retired employees appeared through Advocates Kaleeswaram Raj and T.M Raman Kartha and argued that they were entitled to get full pension from the date of their retirement in accordance with the Pension Regulations.

On the other hand, the current employees appeared through Advocates P. Ramakrishnan and Sherry J. Thomas and contended that the Government Order notifying the Pension Regulations should be quashed citing that the EPF scheme was more beneficial.

Advocate Latha Anand appeared for the KBPS and submitted that the society was not running on huge profits and that in any event, under the prevailing circumstances, the revenue generated by the society could not be utilised for payment of pensions to retired employees.

It was further submitted that full pension can be paid only if the contribution already made is refunded by the EPF Organisation or the huge amounts due from the government are paid.

The Court found that as per the Pension Regulations, an employee becomes entitled to pension from the next day of his retirement. The Regulations did not contain any provision enabling the employer to pay any amount lesser than what is legitimately due to the pensioner.

"It may be true that a significant portion of the corpus of the pension fund consists of the amount to be refunded by the EPF Organisation. The fact that no amount has so far been repaid is also not disputed. Even then, the question is whether the retired employees can be denied pension on that ground."

Upon perusing the Supreme Court precedents, Justice Arun held that the KBPS is bound to pay the pension dues in full at the earliest.

"Having formulated the pension regulations and having stopped payment of contribution to the EPF pension fund, the society cannot wriggle out of its responsibility by pleading paucity of funds."

Therefore, it was held that KBPS should stimulate the required funds, either from its profit or revenue. It was also clarified that the dispute with the EPF Organisation and the delay in receiving back the EPF contribution were not acceptable excuses for the non-payment of eligible pensions to the retired employees.

As such, the petitions filed by both retired and current employees were allowed.

Case Title: Abhilash Kumar R. & Ors. v. Kerala Books and Publication Society & Ors.

Citation: 2022 LiveLaw (Ker) 436

Click Here To Read/Download The Order

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