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TMI Blog2007 (7) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003] 3 SCR 779 . 2. KSRTC is a Corporation established under the Road Transport Corporation Act, 1950, hereinafter called, the Act . The Corporation was formed on 15.3.1965. On 22.3.1965, the employees of the Transport Department of the Government of Kerala were absorbed in KSRTC. KSRTC became functional with effect from 1.4.1965. In the general instructions issued on 22.3.1965 in exercise of power under Section 34(1) of the Act, the Government while transferring the existing transport undertakings and their assets and liabilities to KSRTC, also made applicable to it, all orders and notifications thereunto issued by the Government, which were not inconsistent with the provisions of the Act, until their alteration or repeal. Part II thereof dealt with the staff. It would be profitable to set down paragraphs 10 to 12 of that Order at this stage: 10. All persons employed by Government in the State Transport Department and appointed substantively to a permanent post in that Department who would have continued in the service of Government but for the transfer of the management of the State Undertaking to the Corporation, shall be treated as permanently transferred to the Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the IV Pay Commission and its acceptance by the State Government. But due to its precarious financial position, the Board of Directors of KSRTC took a decision on 19.3.1986 to implement only some of the recommendations with effect from 1.11.1986 and an order in that regard was also issued. On 2.2.1990, a Memorandum of Settlement was drawn up, based on the understanding arrived at between the management and the recognized Labour Unions. As per that memorandum, the benefits of the settlement were postponed till September 1991. The benefits were thereafter made available. 5. This was followed by the report of the Fifth Pay Commission and the acceptance by the Government of its recommendations. The benefits relating to pension and allied matters were made applicable to persons who retired from service prior to 1988 and the wage revision was given effect to from 2.2.1990. The financial condition of KSRTC was precarious. On 17.5.1991, KSRTC wrote to the Government seeking its approval for implementation of the recommendations of the Fifth Pay Commission in the Corporation. This was followed by letters detailing the financial crisis faced by the Corporation. Ultimately, by lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This Court therefore directed the High Court to reconsider those aspects and also consider the question whether KSRTC as a statutory Corporation, did not have the power to fix a date different from the date fixed for the government employees for implementation of the recommendations of the Fifth Pay Commission regarding pensionary benefits and wage revision. 8. Back in the High Court, the Division Bench held that the adoption of Part III of KSR by KSRTC, was an exercise of legislation by reference and if and when the government adopted the recommendation of the Fifth Pay Commission in respect of its employees governed by Part III of KSR, KSRTC was also obliged to implement the recommendation in respect of its employees with effect from the same date. The Division Bench further held that the letter of the Government dated 24.9.1992, was not a direction in terms of Section 34 of the Act. The High Court also held that KSRTC did not have the competence to fix a different cut-off date in respect of its employees. It ultimately held that in the absence of any specific regulation being framed by KSRTC and in the absence of a direction under Section 34 of the Act by the State Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier direction of the State Government, Part III of KSR had been made applicable to employees of KSRTC and once Part III of KSR was made applicable, the employees were entitled to pensionary benefits as provided therein and that would include the right to enhanced pension as and when they are enhanced. Right to pension included the right to it from a given date. Here, the date was the one adopted by the State Government. He submitted that the direction issued by the Government dated 27.3.1984 authorizing KSRTC to pay pension clearly justified this position. He also submitted that the High Court was correct in holding that the communication dated 24.9.1992, was not a direction under Section 34 of the Act. He pointed out that no formalities were complied with and the direction was not even notified. It was merely a reply to a letter sent by KSRTC. The communication dated 27.3.1984 would be a direction in terms of Section 34 of the Act and KSRTC was bound to pay any enhancement as and when it is given by the State Government to its employees. Counsel representing those employees who were originally employees of the Government added that those employees could not be prejudiced by n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court by judgment dated 6.3.1995 noticed the stand of KSRTC in its counter affidavit that it was not in a position financially to meet the requirements, on accepting the recommendations of the Fifth Pay Commission and KSRTC was facing great financial difficulty. The Court also noticed the submission of learned Counsel for KSRTC that since the matter related to a policy decision, the advice of the State Government had to be given due weightage and in the face of the earlier letter, the matter had been referred to the Government and KSRTC will take a decision as and when the Government approved the policy of giving the benefits of Fifth Pay Commission to the pensioners of KSRTC. The court noticed that the pensioners were senior citizens and therefore an expeditious decision by the State Government was warranted. The court directed: It is for the State Government to take a decision in the matter having due regard to all the relevant circumstances including the financial stability of the Corporation. Therefore, I direct the Government to take a decision in the matter within a reasonable time and the Corporation shall take further action pursuant to the decision to be taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 16.5.1995. 15. The High Court has rested its decision on the direction of the Government dated 27.3.1984 authorizing KSRTC to pay pension to its employees as per KSR and the acceptance of the same by KSRTC by issue of the order dated 5.9.1984, obeying the direction and providing for payment of pension in terms of KSR as an incorporation of KSR by reference. Proceeding from this, the High Court has held that pension is payable to all the employees of KSRTC in terms of Part III of KSR and this led to the position even as regards the date of payment as fixed by the Government for its employees. The High Court, though it noticed the decision in Union of India v. P.N. Menon and Ors. (1995)IILLJ307SC regarding the entitlement of KSRTC to look into various aspects like its financial ability to pay, has proceeded to reason that in view of the adoption of Part III of KSR, the Corporation had lost its right to fix a cut-off date in the absence of any direction under Section 34 of the Act. The court has also held that communication of the Government dated 24.9.1992 had only directed deferring of payment of pension as recommended by Fifth Pay Commission and this meant that the Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f KSRTC to take a decision in the absence of any regulation already framed, that the enhanced pensionary benefits as recommended by the Fifth Pay Commission need not be paid commencing on the same date as the State Government employees but the question of enhancing pension could be considered at a later point of time. There is nothing in Part III of KSR to control the power of KSRTC to decide that the recommendations of the Fifth Pay Commission may be implemented with effect from a particular date or that it need not be implemented at all in view of the precarious financial condition of KSRTC. The reasoning therefore that the direction to adopt Part III of KSR and the order adopting it by KSRTC would denude KSRTC of its power to fix a cut-off date for adopting and implementing the recommendations of the Fifth Pay Commission is found to be not sustainable. 17. Learned Counsel for the respondents argued that what the Government has directed is only to defer the payment of pension and that meant that pension as recommended by the Fifth Pay Commission had become payable but only the actual payment stood deferred to a future point of time. In the context of what has happened here, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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