IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY WEDNESDAY, THE 1ST DECEMBER 2010 / 10TH AGRAHAYANA 1932 WP(C).No. 1299 of 2009(D) ------------------------- PETITIONER: --------------- KUTHANUR SERVICE CO-OPERATIVE BANK LTD.NO.F-1563, KUTHANUR P.O., PALAKKAD DISTRICT, REPRESENTED BY THE SECRETARY. BY ADV. SRI.GEORGE POONTHOTTAM SRI.SUJITH MATHEW JOSE RESPONDENT: --------------- THE STATE CO-OPERATIVE EMPLOYEES PENSION BOARD, THIRUVANANTHAPURAM. REPRESENTED BY THE SECRETARY. BY ADV. SRI.P.V.MOHANAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01/12/2010, ALONG WITH WPC NO. 17091 OF 2010 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX(WPC 1299/09) PETITIONER'S EXHIBITS: P1: TRUE COPY OF AFFIDAVIT FILED BEFORE THE SUPREME COURT IN SLP NO.2999/04 DT.22.10.2004. P2: TRUE COPY OF ORDER IN SLP NO.2999/04 DT.6.12.2004. P3: TRUE COPY OF COMMUNICATION DT.3.5.2005. P4: TRUE COPY OF REMINDER DT.16.11.2005. P5: TRUE COPY OF LETTER DT.25.7.08. P6: TRUE COPY OF COMMUNICATION DT.30.9.2008. P7: .DO. DT.1.11.2008. P8: .DO. DT.1.12.2008. P9: TRUE COPY OF CHALLAN EVIDENCING REMITTING OF RS.72,007/-. P10: TRUE COPY OF COVERING LETTER DT.16.7.2009. P11: TRUE COPY OF COMMUNICATION DT.25.7.2009 ALONG WITH THE CALCULATION STATEMENT. P12: TRUE COPY OF DEMAND NOTICE DT.2.7.2010 ISSUED BY RESPONDENT. RESPONDENT'S EXHIBITS: R1(A): TRUE COPY OF G.O.(CO-OP)NO.71/2009 CO DT.5.2.2009. R1(B): TRUE COPY OF CIRCULAR NO.37/71 DT.4.8L.1971. R1(C): TRUE COPY OF THE INSTRUCTION. TRUE COPY PS TO JUDGE C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. .................................................................... W.P.(C) Nos.1299/2009 & 17091/2010 .................................................................... Dated this the 1st day of December, 2010. JUDGMENT Ramachandran Nair, J. The connected writ petitions pertain to the claim of Family Pension by the petitioner in W.P.(C) No.17091/2010 whose husband was an employee in the Kuthanur Service Co-operative Bank Ltd. (hereinafter called "the Bank"). The employee joined service in 1980 and was dismissed from service in 1987 while working as a Junior Clerk. He contested the disciplinary proceedings and dismissal which ultimately got settled vide Ext.P1(in W.P.(C) 1299/2009) joint petition filed before the Supreme Court, the conditions of which are found in Ext.P2 (in W.P.(C) 1299/2009) judgment of the Supreme Court. The operative portion of the judgment of the Supreme Court settling the matter is extracted hereunder: "(a) The 2nd respondent Hifsur Rahiman will be taken into service of the Bank w.e.f. 1.12.2004 in the same post of Junior Clark in which he was working at the time of discharge from service on 6.2.1987, in the present scale of Rs.3215-80-3375-90-3825-100-4425-125-5175-150-5925 with 6 increments starting with a basic pay of Rs.3735/-. W.P.(C) 1299/09&17091/10 2 (b) The petitioner Bank will deposit the pension contribution in respect of the 2nd respondent-Hifsur Rahiman for the period from the date of inception of the pension scheme necessary to facilitate drawing of pension. (c) The petitioner bank will also deposit with the appropriate authority the amount of Welfare Fund contribution due in respect of the 2nd respondent - Hifsur Rahiman for the period upto date. (d) The petitioner bank will pay the 2nd respondent - Hifsur Rahiman a sum of Rs.50,000/- (Rupees Fifty Thousand only) in full satisfaction of all his claims/rights viz- a-viz the Bank in respect of the dispute giving rise to this S.L.P. This amount shall be paid by the petitioner in the SLP within 2 weeks of the disposal of this case by this Hon'ble Court. (e) The orders of the High Court and the award of the Labour Court, Kozhikode, will be set aside and the above settlement will be substituted in their place." The bank does not dispute it's liability to make contribution to the Employees Pension Fund from the date of commencement of the Fund in terms of clause (b) of the judgment of the Supreme Court abovereferred. Counsel for the Bank submitted that full contribution is paid and along with it interest at 12% under the one time settlement is also paid. The Bank's challenge is the demand of differential interest W.P.(C) 1299/09&17091/10 3 by the Pension Board, which is 12% over the rate of interest paid by it. According to the Bank, default interest at 24% is not payable by them as there was no default committed by them and according to judgment of the Supreme Court, the Bank has no liability to pay interest at all. The contention of the counsel for the Pension Board is that interest at statutory rate is payable on the contribution payable by the Bank. In the petition filed by the widow of the employee, who died on 17.1.2008, her claim is that she is entitled to Family Pension on death of the employee. Direction sought by the widow in the petition filed by her is to the Bank to make contribution to the Pension Board and for further direction to the Pension Board to start paying the pension. We have heard counsel appearing for all the three parties. 2. The first question to be considered is the Bank's liability to pay interest for the delayed payment of contribution on behalf of the employee to the Pension Board. Admittedly the Contributory Pension Scheme came into force in 1993 when the employee was not in service. W.P.(C) 1299/09&17091/10 4 Therefore, the Bank cannot be held to be a defaulter in making contribution. The Bank's liability arises from the judgment of the Supreme Court wherein the Supreme Court has only ordered payment of contribution by the Bank for the employee to get the pension. At the maximum the Bank can be called upon to pay compensatory interest and not default interest because Bank is not a defaulter. Since the Bank claims that interest at 12% is paid under the one time settlement scheme, we feel the claim by the Pension Board for the Higher rate of interest at 24% i.e. 12% over and above what is paid by the Bank is not sustainable. We, therefore, declare the Bank's liability for payment of interest at 12% for the period of default in payment. This will apply for the delayed payment of contribution from the commencement of the Contributory Pension Scheme till the date on which the Supreme Court pronounced the judgment. Since the Bank committed default in payment even after judgment of the Supreme Court for period after judgment till date of payment, the Bank will be liable to pay interest at W.P.(C) 1299/09&17091/10 5 24% because there is default in complying with the judgment of the Supreme Court. 3. Another point raised before us is with regard to liability for payment of interest for the contribution made by the Bank to the Contributory Provident Fund Account of the employee maintained by the District Co-operative Bank which was transferred on commencement of the Pension Scheme. In this case for 7 years i.e. from 1980 to 1987, the contributions made by the Bank would have been lying in the Provident Fund Account of the employee that was maintained with the District Co-operative Bank. However, since he was dismissed from service, the amount was not transferred on commencement of the Pension Scheme. This amount also happened to be paid to the Pension Fund after judgment of the Supreme Court. According to counsel for the Bank, the Bank has remitted the contribution after taking it from the District Co-operative Bank with interest. The contribution would have accrued interest in the Account W.P.(C) 1299/09&17091/10 6 with the District Co-operative Bank until 1987 and if it was still lying there, then the Bank would have been crediting interest in the Account. Therefore, whatever is the accretion of interest during the period the District Co-operative Bank was retaining the amount, that should go to the account of the employee. However, if the Bank has withdrawn the amount after dismissal of the employee, then from the date of withdrawal till date of remittance of the amount to the Pension Fund, the Bank has to pay interest at 12% which is the interest that the District Co-operative Bank was crediting in the Provident Fund Account. The Pension Board is, therefore, directed to rework liability in the above lines and give a statement after making adjustments of remittances made by the Bank. The payment should be first credited towards the principal amount and the balance only should be adjusted towards interest. The Pension Board will give the statement within two weeks from date of receipt of copy of this judgment and if there is any balance outstanding, the Bank will remit it within two weeks from date W.P.(C) 1299/09&17091/10 7 of receipt of the statement from the Bank. If there is any dispute on the working out of liability as above, then we direct the Joint Registrar of Co-operative Societies, Palakkad, to settle the dispute between the Pension Board and the Bank so that unnecessary further litigation is avoided in this court. 4. So far as W.P.(C) No.17091/2010 is concerned, the petitioner therein being the widow is entitled to Family Pension. There will be direction to the Pension Board to start paying pension from January, 2011 onwards including the entire arrears payable upto that period. W.P.(C)s are allowed as above. C.N.RAMACHANDRAN NAIR Judge BHABANI PRASAD RAY Judge pms