SC Directed the Rajasthan State Road Transport Corporation to Pay the Pension to Absorbed Employees

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The payment of pension to the surplus employees who are absorbed into another public enterprise is generally governed by the regulations and the circulars issued by the State Government concerned. This case examines one such situation of pension payable to surplus employees absorbed into the appellant’s corporation.

Brief Facts of the Case

The Rajasthan State Agro Industries Corporation Limited (“RSAICL”) was closed by the State Government and all its employees were declared surplus. In order to accommodate the surplus employees, the State Government issued a notification for the absorption of the surplus employees in different corporations. Guidelines were issued for the same. The guidelines contained provisions regarding the benefits of a pension. The employees were allowed a choice between Contribution Pension Scheme or Corporation Pension Scheme. The respondent no. 1 was absorbed in the appellant’s corporation. Thereafter, as per the guidelines, the respondent no. 1 chose pension under Rajasthan State Road Transport Corporation Regulations, 1989 (“Regulations”). However, under his previous employment, the respondent no. 1 received a pension under the CPF Scheme. The respondent no. 1 made a request for the transfer of the fund to the General Provident Fund.

A circular was issued by the appellant. It was noted that only when the appellant receives a capital amount from the Rajasthan State Argo Industries Corporation, that the employees of the appellant would be entitled to the benefit chosen. The amount was transferred, and respondent No. 1 made several representations regarding the approval of the pension. The respondent no. 1 superannuated. Thereafter, a Writ Petition was filed seeking recognition of the choice and extending benefits. The Writ Petition was allowed and hence the present appeal.

Appellant’s Arguments

It was contended that the capital amount from both the CPF account and pension fund in the proportion of employees and the organization’s contribution. The respondent took the benefits of retirement from the RSAICL and is getting a pension from the Employees Provident Fund Organization. Hence, the respondent cannot avail additional benefits from the appellant. Additionally, the condition of transfer under para 11(b) was not fulfilled. Therefore, the respondent was not entitled to the benefit.

Respondent’s Arguments

Per contra, the respondent submitted that the entire contributions of the respondent were transferred by the Regional Provident Fund Commissioner, thereby fulfilling the condition. Furthermore, the respondent exercised his option of Pension benefit as prescribed. Hence, the decisions of the Rajasthan High Court in Jaipur Vidhyut Vitran Nigam Ltd. v. Mahaveer Prasad Jain be applied.

Court’s View

The Court referenced the statutory provisions of the Road Transportation Act, 1950 under which the Regulations are formulated. Therein the Court referred to definitions of ‘option’, ‘existing employee’. The Court referred the Regulation 43 of the Regulations which stipulates about the transfer to the pension fund by the Corporation. The Circular issued by the Bureau of Public Enterprises for absorption was brought on record and Clause 11(b) was referred. The Clause required the transfer of the CPF Account of the surplus employees to the absorbing enterprise.

The Court observed that clause 11(b) categorically applied to the present case. The respondent in his earlier employment was governed by the CPF Scheme, whereby contributions of both the employer and the employee were made. The amounts contributed by both were transferred to the appellant’s corporation post the absorption.

The Court observed that there was no obligation for transfer of the capital amount, but only transfer of the contributed sum, in the Regulations or the Circular. The only requirement was the transfer of the Employee’s contribution to the GPF Account. Therefore, nothing else was to be done by the employer for fulfilling the conditions with regard to the respondent’s claim of pension.

The Court referred the decision of the Rajasthan High Court in Jaipur Vidhyut Vitran Nigam Ltd. and Anr. v. Mahaveer Prasad Jain, 2008 (2) WLN 337. Therein the facts of the case are similar to the present case and the court observed that clause 11(b) was referred. It was held that the rejection of the claims of the petitioner therein was not legally sound.

Court’s Decision

The Court partly allowed the Appeal. The Court recognized the order made by the Hon’ble High Court to refund the entire amount under the CPF Scheme. In order to balance equities, the Court directed the Corporation to pay the pension to the respondents from the date of deposit made by them.


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