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The Rajasthan State Road Transport Corporation v. Goverdhan Lal Soni

Civil Appeal · 2020 INSC 539Decided 9 Sept 2020
Civil Appeal No. 1789 of 2020
Justice Ashok Bhushan · Justice K.M. Joseph

Background

The respondents were employees of the Rajasthan State Agro Industries Corporation (which only had a Provident Fund scheme) who became "surplus" when that corporation closed, and were absorbed into the Rajasthan State Road Transport Corporation (RSRTC), which offered both a Pension Scheme and a CPF Scheme. Both respondents validly opted for the Pension Scheme within the prescribed window, and their old Provident Fund contributions (employee's and employer's share) were duly transferred to RSRTC, but RSRTC refused to grant them pensions on retirement, citing a later circular that conditioned pension on transfer of a separate "capital amount" from the old employer: an amount neither the Pension Regulations nor the original 1991 absorption circular actually required.

Decision Breakdown

The Supreme Court held that the applicable 1991 circular and RSRTC's own Pension Regulations only required transfer of the employee's and employer's provident fund contributions (to the GPF and Pension Fund respectively), not any separate "capital value", and this transfer had already been completed via the Regional Provident Fund Commissioner. The corporation's reliance on a later circular demanding an undefined "capital amount" was therefore without legal basis, and the respondents had validly exercised their pension option in time. The Court upheld the High Court's direction to grant pension, but modified the terms slightly in equity, allowing the respondents to keep whatever CPF benefits they had already received (rather than refunding them) and making pension payable prospectively from the date of their refund of any overlapping CPF deposit, thereby dismissing both of the Corporation's appeals with minor modifications.

Lesson Learnt

When an employee is lawfully absorbed into a new organisation and completes all the actual conditions a transfer scheme requires (such as transferring provident fund contributions), the new employer cannot deny a promised benefit like pension by inventing additional conditions not found in the governing regulations or circular.

Official source (sci.gov.in)View Judgment (PDF)

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