KURIAKOSE V CHERIAN Vs. AIR INDIA EMPLOYEES SELF CONTRIBUTORY SUPERANNUATION PENSION SCHEME FINANCE DEPT

JUDGEMENT

(1.) THIS petition under Article 226 is for the issue of appropriate writ, direction or order directing the respondents to rescind and revoke the amendment effected to the Air India Employees Self Contributory Superannuation Pension Scheme as per the Deed of Variation dated 3-4-2002 and the letters dated 2-4-2002 and 3-4-2002 issued pursuant to the amended scheme requiring the pensioners to make payment of additional contribution towards annuities purchased from respondent No. 3 Life Insurance Corporation of India and, to continue such annuities without any alteration to its terms and quantum and without any payment of additional contribution from the pensioners. The petitioner Nos. 1 to 5 are the retired employees of the respondent No. 2 Air India Limited. The petitioner No. 6 is a registered association representing the retired pensioners of the respondent No. 2. The first respondent is the Air India Employees' Self Contributory Superannuation pension Scheme constituted by the respondent No. 2 Air India for the benefit of its full time employees for providing pension to superannuated members thereof and respondent No. 6 to 17 are its trustees. The second respondent air India, is a Government Company, incorporated under the Indian Companies Act, 1913. The third respondent is the Life Insurance Corporation of india constituted under the Life Insurance Corporation Act, 1956. Respondent Nos. 4 and 5 are the Unions representing employees of the respondent No. 2. The facts and circumstances leading upto this petition are stated hereinafter.

(2.) IN or about 1994 the respondent No. 2 proposed creation of a pension scheme for its employees. The pension scheme proposed by the respondent no. 2 was designated as a self contributory pension scheme, which was formulated based on actuarial reports. The proposed scheme was sent to the government of India, Ministry of Civil Aviation and Tourism (Department of civil Aviation) and approval was given in March 1995, subject to certain revisions proposed by the department being effected and on further condition that the Air India would not be permitted to contribute anything in excess of rs. 100 per annum for all employees put together. The respondent No. 2 entered into Memorandum of Understanding (Mou) with various unions for implementation of the pension scheme dated 18-5-1995. As per the Mou there was to be a single pension scheme for all employees of the respondent no. 2 and no union was to create separate pension scheme. Further it was mandatory for all full time employees of the respondent No. 2, represented by the respective unions to become members of the pension scheme. Further the contribution from the respondent No. 2 was restricted to Rs. 100 per annum totally for all employees taken together. The members contribution was two fold i. e. , a percentage of their salary to be deducted every month and credited to the account of the respondent No. 1 and a lump sum monthly payment as fixed by the actuaries. Each member had to a contribute for a minimum period of 15 years of service. For those who did not have sufficient number of years of service from the commencement of the scheme to superannuation, an amount was calculated based on the total number of years in deficit and the members were required to effect payment of either the entire sum so calculated as a lump sum payment or to pay the said amount in monthly instalments alongwith interest on the total sum due. The Deed of Trust for incorporating the scheme was entered into on 12-8-1996 and the Rules for the scheme were framed thereunder known as Air India Employees Self Contributory Pension Scheme Rules ('rules' for short ). A deed of variation of the trust was effected on 7-10-1997 to amend certain provisions of the Trust deed. As per the terms of the Trust Deed, the retiring employee shall get pension equivalent to 40% of the last drawn salary, which consists of basic pay, dearness allowance, and personal pay if any (Basic + D. A. + P P), and for that purpose, the respondent No. 1 had approached the Life Insurance Corporation of India, Pension and Group Schemes Department, Divisional Office, to have a Superannuation Pension Scheme. Accordingly an agreement was entered into between the Life Insurance Corporation of India ('l. I. C. ' for short)and respondent No. 1 whereby the L. I. C. had issued a Master Policy bearing no. GA/12717 stipulating various terms and conditions. After the commencement of the scheme all the employees were given option for making contribution and a certain fixed sum was mentioned as payable as pension under each option. This amount was consequent on the contribution made under each option. As per the first option 40% of the last drawn salary was payable as pension to the members on superannuation and the second option was payment of a sum of pension under the first option less the commuted amount which was one third of the annuity amount payable under the first option.

(3.) THE petitioner Nos. 1 to 5, since their respective dates of superannuation, have been receiving monthly pension as per the scheme. The genesis of the dispute is the said amendment effected to the trust deed by the trustees of respondent No. 1 in consultation with respondent No. 2. It is the case of the respondent Nos. 1 and 2 that the scheme as originally framed was defective as a result large amount of benefits were given irrespective of the contributions actually made by the retiring employees towards the scheme. As a result older employees who made smaller contribution would receive disproportionately large amount of benefits and consequently ho funds will be available with the respondent No. 1 and none of the employees who retire after 2005 will get any benefit whatsoever even though they have paid huge amounts of contribution. Therefore the trustees proposed amendment to convert the scheme from "benefit defined" to "contribution defined". This amendment was approved in the meeting of the trustees held on 2-4-2002 and the Deed of amendment was executed on 3-4-2002 whereby it is provided that pension shall be corresponding to the contribution by the respective retired employees and not on the basis of 40% of the last drawn salary of the employees. Corresponding amendments were also effected in the Rules. Under the amended rules it is provided that the employees who have retired upto 31-10-2001 shall contribute a lumpsum amount equal to the difference between the cost of annuity purchased for them by the pension fund from the L. I. C. , and the total of contribution made by each such employee to the pension fund till the date of his retirement within such time as may be proposed by the trustees. Rule 6 was made to provide that with regard to employees who have retired upto 31-10-2001 and who do not make the additional contribution as stipulated under sub-clause (c) of Rule 5, the trustees shall notify L. I. C. for retrieval of the shortfall in the contribution from the purchase price of the annuity paid to L. I. C. in respect of such members and for a proportionate reduction in the monthly pension amounts payable to such employees. The amount of shortfall in the contribution so retrieved shall be added to and form part of the corpus of the trust fund and shall be distributed equally amongst the continuing members who are in service. Pursuant to the said amendment letters were issued to the pensioners requiring them to pay differential sum between the contribution made by them and the amount of annuity taken on their behalf from the L. I. C. since the scheme has been amended from being benefit defined to contribution defined. The pensioners were called upon to pay differential amount before 30-4-2002 failing which it has been stated that annuity value in respect of each pensioner will be reduced, to the extent of the contribution by each pensioner and consequent reduction in the pension payable would also be effected. This amendment to the scheme has been purportedly effected on the basis of the provisions of Clause 5 of the Trust Deed and as a result of this amendment pension payable to the petitioners stood substantially reduced and this is demonstrated by the following chart: <FRM>JUDGEMENT_219_BCR6_2003Html1.htm</FRM>