Pension Can't Be Denied To Employee Citing Wrongful Deductions Made Towards CPF Scheme : Supreme Court

In a judgment affirming the rights of pensioners, the Supreme Court held that retired employees cannot be made to suffer due to mistakes committed by their employers.

In this case, a pensioner, who retired as conductor of the Calcutta State Transport Corporation, was denied pension on the ground that he did not exercise the option for pension under the new pension regulations. The Corporation contended that the employee was governed by the old Contributory Provident Fund Scheme and deductions  continued to be made from his salary throughout his career.

However, the Court found that the Corporation had failed to act on the option exercised by the employee to receive pension under the pension regulations.  The fact that deductions continued from his salary is not a ground to deny his claims. These deductions were wrongful as they were made in disregard of the option given by the employee.

A Bench of Justices Abhay S Oka and Rajesh Bindal explained this further,

“It is not in dispute that the respondent no.1 had exercised his right to receive pension under the 1990 Regulations in the year 1991. Thereafter, it was the duty of the Corporation to have given effect to the same. Merely because there were some wrong deductions from his salary and he was treated as member of the CPF Scheme, cannot be permitted to be raised as a ground to defeat his rightful claim”.

In the present case, Respondent no.1 was appointed in the Calcutta State Transport Corporation as a conductor on from 1981. At that time there was no pension scheme in force, only Contributory Provident Fund Scheme was applicable. In 1991, the Calcutta State Transport Corporation Employees’ Service (Death cum Retirement Benefits) Regulations, 1990 were framed providing for pension scheme for the employees, which was effective from April 1, 1984. The existing employees were to give an option to avail benefit under the 1990 Regulations. Prior to this, Contributory Pension Fund Scheme was in force. The Respondent no.1 had submitted his option within time. He sought voluntary retirement in 2017. Though certain retiral benefits were paid to him, no pension was paid. He filed a representation shortly after. As no action was taken, he filed a writ petition before the High Court. Having a ruling to his favour, the appellants filed an appeal before the Division Bench which reaffirmed the Single Judge’s order.

Before the High Court, the Corporation argued that the Respondent, though submitted his option in 1991 for the pension scheme as per 1990 regulation, his subsequent conduct  showed that he wasn’t interested in it. There were regular deductions from his salary as contributions towards the CPF fund. The statements were being sent to him. However, he never objected to it. He raised the issue only after his retirement. So, he should not be allowed to avail the benefit of the pension scheme, it was contended.

The Court noted that the Corporation was at fault for not acting on the option given the employee. The pension was to start after retirement of the respondent. When the same was not released to him, he immediately filed a representation. The Court further opined that employees can't be made to suffer for the Corporation's fault.

“The argument that there are number of similarly situated employees who will also stake their claims, will not deter this Court in granting the relief to the respondent, which is legitimately due to him. Rather this argument shows that the Corporation was at fault in implementing the 1990 Regulations in the cases of number of employees though these were notified on 4.1.1991 and were given retrospective effect from 1.4.1984. Technical objections are sought to be raised, which are not tenable. For any fault on the part of the Corporation, the employees cannot be made to suffer”, said the Court.

Before dismissing the appeal, the Bench further opined that the argument against waiver of right won't hold good as far as the appellants are concerned.

"We do not find any merit in the same argument raised by the counsel for the appellant as was rejected by the High Court, namely, the waiver of the right to receive pension by the respondent no.1. There was no conscious abandonment of right to receive pension by the respondent no.1 to deprive him of his pension".

Case Title: Calcutta State Transport Corporation vs Ashit Chakraborty

Citation : 2023 LiveLaw (SC) 419

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