KSRTC Can't Use Employees' Pension Contributions To Meet Its Financial Obligations: Kerala High Court Upholds Single Bench Decision

The Division Bench comprising Justice Alexander Thomas and Justice C. Jayachandran found no infirmity in the decision of the Single Judge and upheld the same.

“The primary aspect which weigh with us, is the fact that the appellant-Corporation had effected deduction from the salary of the employees' towards their contribution to the National Pension Scheme, the non-remittance of which could not be justified on any legal premise. As rightly held by the learned Single Judge, once such deductions are effected, the Corporation is statutorily bound to remit the same to the Contributory Pension Scheme. Non-remittance of the said funds, after effecting the deduction, could obviously indicate diversion of the same for some other purposes of the Corporation, which action can hardly be justified. The Corporation inheres no right to meet its financial obligation by utilizing the employees' contribution to the National Pension Scheme,” the Bench observed.

On February 23, 2023, Justice Sathish Ninan had disposed of a plea filed by 106 KSRTC employees on finding that there was no justification in not remitting the amounts to the National Pension Scheme once the employees' contribution to the same had been deducted from their salary. It is this decision against which KSRTC preferred an appeal, highlighting the poor financial conditions of the Corporation.

It was argued by the appellants that the National Pension Scheme contemplates an arrangement for delayed payment of contribution, after deduction from the salary, together with interest at the stipulated rate and the intervention of the Single Judge was thus not necessary.

The appellant's counsel added that since the petitioners themselves had not reached the age of retirement, they could have waited, especially when they are aware of the financial situation of the Corporation. Additionally, it was submitted that the directions of the Single Judge would persuade other similarly situated employees to approach the Court, which would completely devastate the financial management of KSRTC.

The Bench did not find merit in any of the contentions raised and was of the firm opinion that once the KSRTC had effected deductions from the employees’ salaries, the non-remittance of the same could not be justified. It observed that even if the financial plight propounded by the KSRTC was considered, it would not provide any justifiable ground for non-remittance of the employee's contribution to the National Pension Scheme.

The Court also could not comprehend how the provision mulcting the liability to pay interest on the belated payment of the employees' contribution could be espoused as a right to delay the payment of the employee's contribution to the respective head.

“The provision can only be in the nature of a penalty to the Corporation by stipulating payment of interest for the delayed amount. Moreover, it does stand to reason that the Corporation, which is stated to be in financial doldrums, will effect payment together with interest, in which situation the Corporation will have to shoulder a larger financial responsibility. So also, we do not find any merit, in the ground that the petitioners could have afforded to wait, since they are not due for retirement. Such a ground cannot be pressed into service to wriggle out of a statutory obligation, especially when the employees' contribution is admitted to have been deducted,” the Court observed in this regard.

It did not find any merit in the contention of the likelihood of similarly situated employees' approaching the Court on these grounds.

It thus rejected the appeal, while granting a further period of six months from the date of receipt of a copy of the judgment for KSRTC to effect the payments.

The Standing Counsel for KSRTC Advocate Deepu Thankan, and Advocates Ummul Fida, Lakshmi Sreedhar, Lekshmi P. Nair, and Namitha K.M. appeared on behalf of the Appellants. The respondents were represented by Advocate T.R.S. Kumar.

Case Title: Managing Director, KSRTC & Anr. v. S.A. Suneesh Kumar & Ors.

Citation: 2023 LiveLaw (Ker) 401

Case Number: WA NO. 820 OF 2023

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