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Kerala High Court · body

2004 DIGILAW 657 (KER)

Soman v. K. S. R. T. C.

2004-12-24

K.K.DENESAN

body2004
Judgment :- Retired employees of the Kerala State Road Transport Corporation (K.S.R.T.C.) have approached this Court seeking directions to the respondents to sanction and disburse the provident fund and the staff welfare fund amount to them with interest. Petitioners retired from service on superannuation on dates falling within the years 2002, 2003 and 2004. Retired employees having similar grievances have been approaching this Court for identical reliefs since the respondent-Corporation did not disburse the provident fund amount and the staff welfare amount due to them on closure of the fund. According to the petitioners, the Corporation has done great injustice and is perpetuating injustice by with holding the provident fund amount and not disbursing the same in spite of the lapse of several months since their retirement. 2. It is pointed out that on the ground of inadequacy of funds the Corporation has been delaying payment of retirement benefits which include the Death-cum-Retirement Gratuity and commutation value of pension. In the above circumstances, this Court was constrained to intervene and formulate a scheme thereby making arrangements to see that payment of retirement benefits to the employees is ensured at least in a phased manner. A Division Bench of this Court in W.A.No.289 of 2001 passed order dated 18-10-2001 directing the Corporation to see that retirement benefits are disbursed to the pensioners strictly complying with the following directions: “1. The Corporation would earmark 10% of the daily collection for disbursement of retirement benefits to its employees and the said amount would be kept in a separate Treasury account or otherwise bearing maximum interest and retirement benefit due be disbursed from that fund. 2. Corporation shall not divert hereafter any contribution made by the existing employees towards provident fund for any other purpose without getting orders from this Court. 3. Corporation would file a periodical statement before this court every month stating the amount lying in the account on the basis of the above direction and the amount disbursed. 4. Corporation would keep a register of district and also State wise and the amount be disbursed to the pensioners strictly on the basis of the State wise register kept by them. After disbursing the amount every month a statement would be filed before this court. 5. The retirement benefits would be disbursed strictly on the basis of the date of retirement, unless otherwise ordered by the order of this order. 6. After disbursing the amount every month a statement would be filed before this court. 5. The retirement benefits would be disbursed strictly on the basis of the date of retirement, unless otherwise ordered by the order of this order. 6. A copy of this order shall be served on the Director of Treasuries. He shall ensure that no amount is drawn from the Account mentioned in direction (1) above, except for the purpose of disbursing pensionary claims. This Account shall not be subject to any attachment or treasury ban. The amounts in P.F. Account shall be utilized only for satisfy P.F. claims of existing/retired employees.” Therefore, it is clear that unlike employees retired from Government Departments or Public Sector undertakings, pensioners of the K.S.R.T.C. are destined to stand in the queue waiting for their turn to get D.C.R.G and Commutation value of pension. They have to get themselves satisfied with the monthly pension for months and years since retirement, suffering severe financial stringency and hardship. Supreme Court had occasions to consider in detail the problems of pensioners in D.S. Nakara v. Union of India (A.I.R. 1983 S.C. 130). Pensioners belong to that category of citizens who on retirement cease to earn the monthly salary and are expected to live during the rest of their life depending on the terminal benefits and the monthly pension. The sudden stoppage of the income would put them into difficulties and hardships. Hence the only solace of the retired employee is the amount paid as DCRG, Commutation value of pension, Provident Fund etc., apart from the monthly pension, which they are entitled to get on account of the long service rendered in the respective establishments. Though the K.S.R.T.C. employees are also entitled to all kinds of retirement benefits as that of other employees belonging to Boards or Corporations or Government Departments, in view of the financial crunch highlighted by the KSRTC as defence, this Court, though took note of the fact that pension and gratuity are not bounties but are valuable rights, had to formulate a scheme to ensure payment, at least in future. In spite of that the retired employees are getting DCRG and commuted value of pension only after the lapse of considerable time amounting to several months and not less than two years. 3. In spite of that the retired employees are getting DCRG and commuted value of pension only after the lapse of considerable time amounting to several months and not less than two years. 3. Now the issue here is not whether the petitioners should be paid gratuity and commutation value by modifying the scheme already formulated but whether the same treatment can be meted out to them in the matter of Provident Fund dues also. It can be seen from the order passed by the Division Bench that payments due to the retired employees on closure of Provident Fund is not covered by the said order. Therefore, whenever retired employees approach this Court with the grievance that they are not paid the Provident Fund or staff welfare fund amount, orders are passed by this Court directing the K.S.R.T.C. to disburse the amount with statutory Interest within a spirited time-limit. It is submitted that some of the retired employees had approached the Lok Ayukta and got similar orders directing the K.S.R.T.C. to make payment of Provident Fund. This state of affairs has been going on for quite some time and therefore it became a common practice for the Officers of K.S.R.T.C. to delay disbursement of Provident Fund thereby forcing every retired employee to resort to legal proceedings seeking relief from this Court or from Lok Ayukta. It is interesting to note that the respondent-Corporation has complied with the directions of this Court, so much so, those who approached this Court got the Provident Fund amount within two months or three months or four months as the case may be, according to the directions issued in the respective cases. Now in this batch of cases more than five dozen pensioners have sought for a direction to the Corporation either to sanction and disburse the Provident Fund amount due to them or to pay the statutory interest applicable to Provident Fund amount or to pay both. It is a fact that these writ petitions have been filed with the hope that if this Court issues appropriate directions to the Corporation, the payment will be effected at least within that time-limit. The issue is whether the respondent-Corporation is justified in dragging every retired employee to approach the writ Court or the Lokayuktha seeking orders directing payment of the Provident Fund or the staff welfare fund or the statutory interest payable by the Corporation. 4. The issue is whether the respondent-Corporation is justified in dragging every retired employee to approach the writ Court or the Lokayuktha seeking orders directing payment of the Provident Fund or the staff welfare fund or the statutory interest payable by the Corporation. 4. Learned counsel appearing for the petitioners submit that the delay on the part of the respondents to disburse the Provident Fund amount is totally unjustifiable, illegal and unbecoming of even an average employer, leave alone the State owned Corporation which is expected to act as a model employer. Retired employees who are not paid their gratuity and commutation value of pension are driven to this court from different parts of this State for getting reliefs even in respect of Provident Fund claims. The petitioners are constrained to meet legal expenses from their own pocket. Simultaneously, the K.S.R.T.C. is incurring expenses to defend all those cases, by spending money from its so called empty purse. Petitioners contend that paucity of funds is the Corporation's own creation and the only other partner which should share the blame is the State Government and therefore the employees who have no role in the management need not bear the brunt of the wrong decisions of the Corporation. According to the petitioners the Corporation should be directed by this Court to see that Provident Fund amount is paid to the retired employees according to the scheme of the fund and in terms of the Rules. 5. It is admitted position that the provisions of the Provident Fund Act, 1925 (Act 19/1925) and the General Provident Fund (Kerala) Rules are applicable in the matter of payment of Provident Fund to the K.S.R.T.C. employees. It is stated in the counter-affidavit filed by the respondent-Corporation that as per G.O.(P) No. 344/77/Fin., dated 8-9-1977, the Government of Kerala added the K.S.R.T.C also to the schedule of Act 19/1925. As per S.R.O.No.903/77, the provisions of the Act were made applicable to K.S.R.T.C. employees. Therefore, by virtue of the provisions contained in the aforesaid Acts and the Rules, the respondent-Corporation is liable to pay the provident fund dues to its employees. This fact is candidly admitted by the respondent-Corporation. Rule 15 specifies that in case delay in payment occur, the Corporation shall pay interest at the rate applicable for the relevant period. This also is a fact admitted by the Corporation. This fact is candidly admitted by the respondent-Corporation. Rule 15 specifies that in case delay in payment occur, the Corporation shall pay interest at the rate applicable for the relevant period. This also is a fact admitted by the Corporation. However, the Corporation takes up the defence that it is unable to pay provident fund dues because the Corporation is in financial doldrums for the last few years. 6. Before adverting to the averments made in the counter-affidavit of the respondent-Corporation, it would be relevant to advert to the statutory provisions which govern the situation. The General Provident Fund (Kerala) Rules (hereinafter referred to as the Rules) speaks about the constitution of the fund called the 'General Provident Fund'. Petitioners are members of the said fund. They have subscribed to the fund from the salary received by them every month. In other words, the Corporation has deducted the amount towards subscription every month from the salary. Rule 5 says that as on the date of commencement of the said Rules employees who were members of the State Provident Fund (Travancore), the General Provident Fund (Cochin) and the General Provident Fund (Madras) will be allowed to exercise option either to continue to subscribe to the respective funds or to become members of the new fund. Rule 6 says that subject to the aforesaid provisions contained in Rule 5 and sub-rule (2) of Rule 6, all employees shall join the Fund. Therefore, all employees are bound to become members. It is not optional. Rules do not require the employer to make any contribution towards the Fund. General Provident Fund as envisaged in the Rules, therefore, consists of, exclusively, the money paid by the employees. Rule 10 mandates that a subscriber shall subscribe monthly to the Fund except during period of suspension and the last dime months of his service. Rule 11 says that the amount of subscription shall not be less than 6% of the emoluments and not more than his emoluments. Rule 10 mandates that a subscriber shall subscribe monthly to the Fund except during period of suspension and the last dime months of his service. Rule 11 says that the amount of subscription shall not be less than 6% of the emoluments and not more than his emoluments. Rule 13 says that subscription shall ordinarily be recovered by deductions from pay bills Rule 14 mandates that if an officer fails to subscribe with effect from the date on which he is requited to subscribe to the Fund, the total amount due to the Fund on account of arrears of subscription shall forthwith be paid by the subscriber to the Fund or in default be ordered by the Account Officer to be recovered by deduction from the emoluments of the subscriber in installments; or otherwise. Rule 15 says that the amount deposited in the Fund shall carry interest at such rates as may be fixed by the employer. Of course, there are provisions for payment of advance, temporary or permanent from the Fund to the subscriber. It is pertinent to note that Rule 29 provides that in a case where the Sanctioning Authority is satisfied that money drawn as an advance from the Fund has been utilized for any other purpose than that for which sanction given, appropriate action shall be taken against the subscriber and the amount can be ordered to be recovered in lump as well. This shows that even the subscriber of the Fund cannot utilize the amount for any purpose other than for genuine purposes as permitted by the Rules Rule 30 says that when a subscriber quits the service, the amount standing to this credit in the Fund shall become payable to him. There are provisions in the Rules which mandates that the employer or the competent officer shall effect payment of the amount on closure of the fund to the subscriber who has ceased to be the employee of the Corporation. 7. It is not disputed, rather fairly admitted by the respondent-Corporation, that there cannot be any valid justification for delaying payment of provident fund to a retired employee. However, the counter-affidavit portrays a sad picture. 7. It is not disputed, rather fairly admitted by the respondent-Corporation, that there cannot be any valid justification for delaying payment of provident fund to a retired employee. However, the counter-affidavit portrays a sad picture. The Corporation laments that the State Government and the Central Government, exhibit an unhelpful attitude towards the problems faced by K.S.R.T.C. According to the Corporation, unlike other private entrepreneurs, the K.S.R.T.C. is doing a public service in tune with the objects of a welfare State. Figures have been furnished in the counter-affidavit to show that the expenditure of the Corporation exceeds the income from the various services operated by the Corporation. Reliance is placed on the provisions of the Motor Vehicles Act, particularly Section 67 of the Act and also Section 23 of the Road Transport Corporation Act to show that the State Government has got certain duties towards the State Transport Corporation. It is specifically stated that the unhelpful attitude betrayed by the State Government has forced the Corporation into a debt trap. On the basis of the aforesaid statements, the respondent-Corporation wants the retired employees to wait till the Corporation improves its finical position, even for receiving Provident Fund amount which is nothing but the accumulated amount paid by the employees from their monthly salary. 8. It is true that this Court had to formulate a scheme in the matter of payment of gratuity and commutation value of pension. But the same approach cannot be made in the case of provident fund and staff welfare fund, for obvious reasons. Reference to the provisions contained in the relevant statutes clearly shows that as far as G.P.F. is concerned it is a separate fund constituted by the statute and every employee is compelled to pay subscription at the specified rate every month. The amount thus collected from the employees cannot be used for any purpose other than for paying amounts to the employees as advances, temporary or non-refundable; and ultimately as final payment on closure of the provident fund account. The closure of the amount should be done as soon as the employee ceases to be an employees of the Corporation. Immediately on closure, payment has top be effected. Delay in making payment amounts to per se breach of the Rules. 9. The closure of the amount should be done as soon as the employee ceases to be an employees of the Corporation. Immediately on closure, payment has top be effected. Delay in making payment amounts to per se breach of the Rules. 9. Learned counsel for the petitioners submit that the Corporation is in the position of a trustee and that the beneficiaries shall not be told that the trustee has no money in its hands to pay off the amounts legally due to the beneficiaries of the Fund. According to the petitioners the Corporation has committed not only breach of the Rules but breach of trust as well. Reference is made to the provisions of the Indian Penal Code defining ‘criminal breach of trust’ and the provision for punishing the offender. I consider it, therefore, useful to extract Section 405 of the Indian Penal Code which reads: “405 Criminal breach of trust.—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to has own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the made in which such trust is to be discharged, or of any legal contract, express or implied which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits ‘criminal breach of trust.” Here, according to the petitioners, the offender is a public sector undertaking. It is pointed out that if the same lapse were committed by a private employer, the authorities would have taken appropriate action not only to see that the amount is paid in time but also to prosecute the employer for offence punishable under Section 406 of the Indian Penal Code. But in the case of the statutory corporation which is a public sector undertaking, no such action is taken, submitted the counsel. Even if the Corporation is incurring loss in its business, it cannot be an excuse for diverting the provident fund which the Corporation had compulsorily deducted from the emoluments of the employees on the specific understanding that the amount will be ultimately paid to them the very moment they retire from the service. But unfortunately, K.S.R.T.C., the public sector undertaking, admits the fact that the amount collected from the employees have been appropriated for other purposes. But unfortunately, K.S.R.T.C., the public sector undertaking, admits the fact that the amount collected from the employees have been appropriated for other purposes. In paragraph 15 of the counter-affidavit, it is stated that the Corporation had been forced to divert money from the provident fund account for the payment of salary and pension to the employees of the Corporation. It would appear that the salary for the existing employees of the Corporation. It would appear that the salary for the existing employees is paid from the fund collected from the former employees who have become pensioners. Amount was diverted for other purposes as well. In paragraph 10 of the counter-affidavit, it is stated inter alia as follows: “It is respectfully submitted that in order to meet its social obligations, the K.S.R.T.C. was coerced to divert Rs.149 crores from STPF Trust Fund.” As rightly submitted by the counsel for the petitioners, it is too harsh on the part of the employer to ask the retired employees to suffer for the mismanagement or lapses and/or other omissions or lack of farsightedness on the part of those in the high echelons of the Corporation. Petitioners are not demanding any money from the income derived by the Corporation or from any money borrowed by the Corporation for running its business. Petitioners request their employer to pay back the money which was compulsorily deducted from their salary while in service towards RE They only want the employer to fulfill the promise and to act according to law. Respondents have no case that the amount deposited in the Provident Fund was diverted with the knowledge or permission of the employees. It was a unilateral action on the part of the Corporation. It is strange on the part of a public sector undertaking to tell the retired employees that what little amount was collected from them every month, which collections got accumulated in due course of time, have been swallowed by the Corporation and the poor retired employees are asked to wait until the Corporation improves its financial situation. The contention of the petitioners that had the same lapses been committed by a private employer, the authorities would not have spared him and would have taken action to prosecute the trustee invoking Section 406 of the I.P.C. cannot be brused aside as irrelevant. The contention of the petitioners that had the same lapses been committed by a private employer, the authorities would not have spared him and would have taken action to prosecute the trustee invoking Section 406 of the I.P.C. cannot be brused aside as irrelevant. Anyway, I do not want to dwell more on that aspect, because the issue here is not whether the diversion of the fund constitutes an offence or not. I need only notice that the employees have shown supreme patience though they are denied payments due even under the Provident Fund account. They have been approaching this Court after raising funds to meet legal expenses. I have no hesitation to hold that diversion of the RE amount and non-payment of PF and Staff Welfare Fund to the retired employees of the KS.R.T.C. are per se arbitrary and illegal, if not unlawful. Therefore the relief prayed for by the petitioners for payment of PF and Staff Welfare Fund with statutory interest shall be granted. The claim of the petitioners is just, legitimate and long due. As far as Provident Fund and Staff Welfare Fund amounts are concerned the reasons put forward by the Corporation cannot be accepted at all. It would be useful to note here that a learned Judge of this Court (Kurian Joseph, J.) in W.P.(C).No.16129 of 2004 has made the following observations in the context of a similar situation: "As the very name denotes Provident Fund is a fund provided for the employee by himself to be utilised at the time of his retirement. It is a fund constituted only by the contribution of the employees. In other words, it is a deposit made by the employees. Being governed by the statute, it is a compulsory deposit payable only after termination from service. True, the rules provide for advances. Therefore, the Corporation is only the custodian. The custodian has to respect the trust and it shall not misappropriate. As and when the closure application is received, the custodian has to disburse the amount along with the accrued interest." It was also observed in the Judgment pronounced on 10-6-2004 that the poor pensioners must get at least their Provident Fund immediately on retirement. 10. Against some of the directions issued by the Single Bench, the Corporation preferred writ appeals. But the Division Bench did not accept the contentions of the respondent-Corporation. 10. Against some of the directions issued by the Single Bench, the Corporation preferred writ appeals. But the Division Bench did not accept the contentions of the respondent-Corporation. Ultimately, the Corporation did not press the appeals. Instead, sought for reasonable time to effect payment of Provident Fund to the employees. 11. Therefore, it is clear that the respondent-Corporation has got a legal duty to see that the amount outstanding to the credit of the pensioners in their Provident Fund is disbursed to them without any delay whatsoever. Financial difficulties of the employer or inadequacy of finds cannot be valid justification for delaying the payment from the Provident Fund. It is so, for the reason that the amount to be paid back to the employees is their own money. Not a single pie in that Fund belongs to the Corporation. Having forcefully deducted the money from their emoluments, it is sheer in justice to tell the employees when they retire from service that the employer cannot pay the Provident Fund immediately. It is equally unjust on the part of the Corporation to drag the retired employees to courts of law or other forums for reliefs. Hence there shall be a direction that the respondent-Corporation shall immediately pay the Provident Fund amount and the Staff Welfare Fund due to the petitioners. The amount thus to be paid shall carry interest at statutory rate from the date of retirement till actual payment is made. Since the petitioners have been compelled to approach this Court spending money from the frail purses, I allow these writ petitions in so far as they relate to payment of Provident Fund amount and Staff Welfare amount, with costs quantified at Rs.1500 for each petitioner. 12. In this hatch, some of the cases pertain to only a claim, for interest for the delayed payment of Provident Fund. It is not disputed that provident fund amount should carry interest till actual payment is made. Therefore, there shall be a direction to the Corporation to pay interest at statutory rate to all the petitioners who have not been paid interest from the date of retirement till actual payment of the Provident Fund. Amount shall be paid within one month from the date of receipt of a copy of this judgment. 13. Therefore, there shall be a direction to the Corporation to pay interest at statutory rate to all the petitioners who have not been paid interest from the date of retirement till actual payment of the Provident Fund. Amount shall be paid within one month from the date of receipt of a copy of this judgment. 13. In some cases, petitioners seek reliefs for payment of D.C.R.G., and commutation value of pension together with a direction for payment of Provident Fund and Staff Welfare Fund including interest As far as gratuity and commutation value of pension is concerned., the issue is covered by the order passed by the Division Bench in W.A. No. 289 of 2001. Therefore, no direction can be issued to the Corporation regarding disbursement of gratuity and commutation value of pension. Those claim will be dealt with as per the orders passed by the Division Bench in the writ appeal referred to in this judgment. 14. Now, I propose to consider the prayer made by the Standing Counsel for the Corporation that some time may be granted for payment of Provident Fund and Staff Welfare Fund. In the light of what I have stated in the preceding paragraphs, there is no justification to allow the request of the Corporation for further time. However, having regard to the practical difficulties, expressed by the Standing Counsel in processing the claims of all the petitioners in this batch of cases at once, I am inclined to allow a period of one month to the respondents to disburse the amount due under Provident Fund and Staff Welfare Fund. The writ petitions are disposed of as above.