IN THE HIGH COURT OF JUDICATURE AT MADRAS Date: 14.11.2006 CORAM: THE HON'BLE MR. JUSTICE P.JYOTHIMANI W.P.Nos.25091 to 25094, 24210, 25186-25187, 25188-25189, 25098-25099, 25100-25101, 25102-25103 & 25104-25105 of 2006 & W.P.M.P.Nos.1, 2 & 3 of 2006 P.Sivasankaran ... Petitioner in W.P.No.24210/06 D.Krishnan ... Petitioner in W.P.No.25100/06 K.Mohan ... Petitioner in W.P.No.25091/06 V.Appukuttan ... Petitioner in W.P.No.25093/06 G.Haribabu ... Petitioner in W.P.No.25098/06 C.Rajendran ... Petitioner in W.P.No.25102/06 K.M.Sankarankutty ... Petitioner in W.P.No.25104/06 T.M.Sureshbabu ... Petitioner in W.P.No.25186/06 Sheilla Sathiavathy ... Petitioner in W.P.No.25188/06 K.Mohan ... Petitioner in W.P.No.25092/06 V.Appukuttan ... Petitioner in W.P.No.25094/06 G.Haribabu ... Petitioner in W.P.No.25099/06 D.Krishnan ... Petitioner in W.P.No.25101/06 C.Rajendran ... Petitioner in W.P.No.25103/06 K.M.Sankarankutty ... Petitioner in W.P.No.25105/06 T.M.Sureshbabu ... Petitioner in W.P.No.25187/06 Sheila Sathiavathy ... Petitioner in W.P.No.25189/06 Vs. 1. The Secretary, The Railway Employees' Cooperative Credit Society Ltd., Ashok Vihar Complex, Old Zoo Road, Chennai 3. 2. The Trustees Staff Retirement Benefit Fund, The Railway Employees Cooperative Credit Society Ltd., Southern Railway Office, Chennai 600 003. https://hcservices.ecourts.gov.in/hcservices/ 3. The Joint Registrar of Cooperative Societies, 91, St. Mary's Road, Abiramapuram, Chennai 600 018. 4. The Central Registrar, Ministry of Agriculture and Cooperation, Krishi Bhavan, New Delhi 110 001. ... Respondents in all the W.Ps. PRAYER in W.P.Nos.24210, 25100, 25091, 25093, 25098, 25102, 25104, 25186, 25188: Petition filed under Article 226 of the Constitution of India for the issuance of a writ of Declaration, declaring the Board of Management Resolution dated 15.12.2004 of the I and II respondents as illegal and unjust to in so far as the resolution ratifies the decision to wind up the Staff Retirement Benefit Fund Scheme and to direct the respondents to continue to pay pension financial assistance to the petitioners. PRAYER in W.P.Nos.25092, 25094, 25099, 25101, 25103, 25105, 25187, 25189: Petition filed under Article 226 of the Constitution of India for the issuance of a writ of Declaration, declaring the amendment dated 15.12.2004 to section 5(b) and 5(c) of the subsidiary regulations of the Revised Voluntary Retirement Benefit Scheme 2004 in so far as it seeks to deny the benefits under the Staff Retirement Benefit Fund Scheme as illegal and to direct the respondents to continue to pay pension/financial assistance to the petitioner without reference to the enhanced compensation paid under the Revised Voluntary Retirement Benefit Scheme 2004. Petitioners : Ms.R.Vaigai, S.C. for M/s.D.Nagasaila Respondents : Mr.R.Muthukumarasamy,S.C. 1 and 2 for Mr.A.Jinasenan In all these writ petitions, the resolution of the board of Management dated 15.12.2004 of the Railways Employees Cooperative Credit Society Ltd, in ratifying the approval accorded by the Chairman of the Society, in accordance with the recommendations of the subcommittee going into the demands of staff union, winding up of Staff Retirement Benefit Fund Scheme and enhancement of compensation payable to V.R.S. optees is in question by way of declaration, as it is illegal and for a direction to continue to pay pension financial assistance to the petitioners. 2. The petitioners are working as adhoc Clerks in the Railway Employees Cooperative Credit Society Ltd., and put in substantial years of service and having more years of service. The Railway Employees Cooperative Credit Society by a circular dated 29.01.1991 has introduced a pension scheme to the staffs of the society. According to the said scheme, the employees having service upto 10 years and below are to contribute monthly contribution at the rate of 3% of their basic pay. In respect of employees, having service of more than 10 years for retirement, the https://hcservices.ecourts.gov.in/hcservices/ contribution fixed at 2% of basic pay and the contribution to be effected commencing February 1991 salary of all the staffs and the pension scheme was to be operative from 01.07.1987. The petitioners who are having more than 10 years of service have contributed at the rate of 2%, as per the scheme, from the year 1991. In the year 1998, the contribution was increased by 1% and the increased contribution has also been paid. 3. By a circular dated 08.03.2001, the employees were informed that the board of management has decided to club the staff recruitment board fund with Life Insurance Corporation of India as a permanent measure. As per the circular, those staffs having more than 10 years of service remaining as on 01.03.2001 were directed to contribute a subscription of 5% of basic pay and those staffs less than 10 years of service to contribute 10% of basic pay towards Staff Recruitment Board Fund. The management was to contribute the equal amount for every staffs towards premium payment for L.I.C. for grant of pension to the retired employees through L.I.C. and that was commenced from 01.04.2001. The enhanced contribution as per the scheme was also deducted from the salary of the petitioners with effect from March 2001 but the deduction at 6% per month instead of 5% as per the circular dated 08.03.2001. It was informed that L.I.C. pension scheme is more beneficial. The petitioners believed the same and the said revised scheme was agreed. A voluntary retirement scheme was announced by the circular dated 29.01.1999 under which, an employee who was put in 20 years of continuous service in the society were eligible to opt for the said V.R.S. scheme. Since originally, there was a ceiling of 2.5 lakhs for the persons who opted V.R.S. and there was no much response, the said ceiling was removed. It was in those circumstances, many of the employees have opted for the said scheme and it was also informed that if not, the scheme opted, the management may be forced to either wind up the society itself or to proceed with the other methods. 4. When the object of the scheme was to reduce the work force, contrary to that, the management has started recruitment of new employees in large numbers. The persons like petitioners who have not originally opted for the said V.R.S. scheme were compelled to accept the scheme by threat of being sent out of job and accordingly, the petitioners have signed the same. 5. It is the case of the petitioners that after signing the V.R.S. letter, the petitioners were permitted to copy the letter hurriedly even though they had no English knowledge. The petitioners were made to retire on 30.09.2005. Now, the petitioners’ understand that the L.I.C. pension scheme has not been finalized between the first respondent and L.I.C.. Deharse the said scheme, the petitioners will be entitled for pension as per Staff Retirement Benefit Funds Scheme. However, the petitioners were informed that they were not entitled for the pension as under the V.R.S scheme, the petitioners have given up their claim of pension. 6. The petitioners’ understand that since 1999 over 150 employees have been forced to opt the V.R.S. scheme. After V.R.S., the management is https://hcservices.ecourts.gov.in/hcservices/ making fresh appointment in large scale, contrary to the stand that the V.R.S. itself was to reduce the staff strength. The petitioners also state that at least 4 persons R.Nagaraj Rao, V.Sathyanarayana, T.M.Ramakrishnan and G.Krishnasamy who have retired even before the pension scheme was introduced and who have not contributed anything towards the scheme, are paid pension, which is denied to the petitioners, who have contributed to the scheme. The petitioners who have retired after the introduction of the L.I.C. scheme namely after 01.04.2001 are entitled for pension at Rs.3,500/- per month and the same has been denied. When the petitioners filed the Writ Petitions in January 2006 praying for payment of pension under L.I.C. scheme and after receipt of notice from this Court, by a letter dated 01.02.2006 issued by the first respondent, the first respondents has directed petitioners’ to express willingness to join duty within 7 days and in the event of giving such willingness to arrange to remit the amount received to the society within 15 days. Since anticipating that as it has happened in respect of some other employees case who were dismissed from service, the same will be followed in the petitioners’ case also, the petitioners have replied, stating that they are not willing to join. 7. It is stated in the counter affidavit filed by the first respondent in the said writ petitions, as if the petitioners have accepted that as serving employees who opted for retirement they are not entitled for pension under Staff Recruitment Benefit Fund Scheme. It was also stated by the first respondent society that the society was offering refund of contribution made from February 2005 to September 2005 and send the same and the same has not been encased by the petitioners. 8. According to the petitioners, as per the bye law of the Railway Employees Cooperative Credit Society Ltd., for the Staff Recruitment Benefit Fund, equal contribution is made by the society and the board of management and the fund is managed by a separate committee. Even though, in the committee the representatives of the employees are also to participate, the management of the funds of the scheme has been kept in total darkness and the petitioners learnt that there has been a total darkness. The petitioners also learn that the management passed resolution on 15.12.2004 to wind up Staff Recruitment Benefit Fund about which nothing was disclosed to the petitioners till date. The impugned resolution of the management of the first respondent is challenged on various legal grounds including that the same is in violation of Article 14, 15, 16, 21 and 29 of the Constitution of India. That apart, the first respondent having received the contribution of the petitioners towards the pension scheme cannot go back from the proposal of pension and the same amounts breach of trust. The first respondent has a legal duty to pay pension to the retired employees especially when the contribution has been deducted from the salary of the petitioners under the pension scheme. The third respondent has a legal duty to see that the first respondent performs the legal function in a proper manner. When all the employees who contributed under the scheme are getting pension, the same is denied to the petitioners. The impugned resolution has been challenged as violative of https://hcservices.ecourts.gov.in/hcservices/ Article 21 of the Constitution of India. It is also the case of the petitioners that as per the bye law of the society, the Staff Retirement Benefit Fund can not be unilaterally wound up. The amendments to the bye law can be done only in the manner known to law under the Multi State Cooperative Societies Act, 2002. Alteration in respect of payment of pension without proper notice is violative of Section 9(A) of the Industrial Disputes Act, apart from many other legal contentions. 9. The first respondent has filed counter affidavit. While admitting that the first respondent is a Multi State Cooperative Society, deemed to have been registered under the Multi State Cooperative Societies Act, 2002, the first respondent states that the petitioners have voluntarily retired from service with effect from 13.09.2005. It is true that in the year 1991, the staff retirement benefit fund scheme was evolved by the society and the contribution were deducted from the employees salary and also contribution made by the management. It is the case of the first respondent that the payment of monthly financial assistants under the scheme is not akin to monthly pension. It was only a welfare measure and not a statutory obligation. 10. According to the first respondent, the payment of monthly financial assistants under the staff retirement benefit fund scheme does not mean a statutory right. The employees are governed by the Employees Provident and Miscellaneous Provisions Act 1952, especially, Section 6 of the said Act, which contemplates the contribution by the employer to a percentage and the same is remitted by the society to the Employees Pension Fund and the Staff Retirement Benefit Fund Scheme. It is not a statutory scheme and is only a welfare measure and the continuance of the scheme depends upon the quantum of amount received. It was on the basis of the representation of the employees serving the society through their union that the Staff Retirement Benefit Fund Scheme is not beneficial to them and therefore, requesting for stoppage of the recovery from their salary and also requested for enhancement of compensation payable to the future V.R.S. optees and it was based on the said demand, which was made by the majority staff union, it was specifically agreed by the union and the management that if the contribution of employees towards Staff Retirement Benefit Fund Scheme is stopped it will not be possible for payment of monthly financial assistance and it was agreed that such of those persons who retired either superannuation or V.R.S. are not eligible for the said financial assistance. The recommendation of the committee to that effect was considered by the board of management of the first respondent and the same was accepted and accordingly the scheme was scrapped and the compensation payable to the future V.R.S. optees were enhanced and it was decided to stop deduction towards Staff Retirement Benefit Fund scheme from January 2006. Therefore, persons who have retired before the said date of scrapping of the scheme alone were made eligible for the monthly financial assistance and not others. 11. It is also the case of the first respondent that even in respect of persons who have already retired earlier and who were in receipt of the https://hcservices.ecourts.gov.in/hcservices/ monthly financial assistance under the Staff Retirement Benefit Fund scheme, out of 174, 119 of them have accepted the offer of the first respondent to receive one lumpsum grant in lieu of monthly financial assistance and the remaining 54 persons out of whom one died have not accepted. The petitioners are among the said 53 employees, who sought for voluntary retirement under the scheme which was scrapped. 12. It is also the case of the first respondent that the petitioners are one of the signatories to the memorandum dated 18.11.2004 submitted to the management for scrapping the Staff Retirement Benefit Fund scheme and under the memorandum, it was specifically expressed that in the applications it was specifically agreed by the petitioners that they are not entitled for financial assistance. By accepting the enhanced benefit under the revised voluntary retirement scheme, the petitioners having given such undertaking cannot now go back. It was only taking into account of all the situations, the management has accepted the claim of the petitioners and granted enhanced V.R.S. besides other terminal benefits and relieving them from service in September 2005. It was only after accepting the same they have filed the earlier writ petitions seeking for financial assistance and there has been no interim order and thereafter, the very same petitioners have filed the present writ petitions. 13. According to the first respondent, as per the minutes of meeting of the management and staff union it will be seen that the majority of the employees of the society wanted the scrapping of the Staff Retirement Benefit Fund scheme. It is also denied by the first respondent that the petitioners were not aware of the contents of the letters written by them. As far as the allegation in the Writ Petition that the petitioners were not even allowed to read and understand and the same was in English which language the petitioners were not aware, the first respondent would submit that the petitioners have submitted more than 6 different letters in English in their own hand writing seeking for various payments due to them and therefore, it is false to say as if, they were unable to understand the English language. 14. It is also the case of the first respondent that there was no possibility of formation of L.I.C. trust, since the scheme did not materialize and the L.I.C. did not agree to the offer of pension to voluntary retired employees. In fact, the first respondent management has filed writ petitions for refund of initial deposits made to L.I.C. It is also denied that several persons were paid financial assistance under different scheme. 15. It is also the case of the first respondent that in respect of the petitioners in the previous Writ Petition in W.P.No.13006 to 13018 of 2002, who sought for pension from the L.I.C. scheme, which has not materialized and therefore, the respondents have agreed to pay them under the Staff Retirement Benefit Fund scheme. It is the case of the first respondent that the management has not given any complement for the purpose of granting such memorandum. https://hcservices.ecourts.gov.in/hcservices/ 16. On the other hand, it is the staff union which has given a written request to stop deduction from the salary towards Staff Retirement Benefit Fund and for scrapping this scheme and enhanced payment to the compensation under the V.R.S. optees. It is denied that the first respondent is in the habit getting signature in the blank papers. In respect of the knowledge about the contents of the memorandum, when the same was raised in the earlier writ petition, the first respondent management wanted to know from the General Secretary of the staff union, whether the petitioners were aware, to which the General Secretary of the staff union produced letters, singed by few employees along with the petitioners and therefore, it is not correct to state that the petitioners were not aware of the memorandum. 17. It is also the case of the first respondent that in fact the petitioners have in their own handwriting, accepted that they are not eligible for payment of monthly financial assistance under Staff Retirement Benefit Fund scheme. The first respondent also would submit that while contribution made by the petitioners from 1991 to January 2005 where much less than enhanced compensation paid to the petitioners under the revised voluntary retirement scheme on account of scrapping of Staff Retirement Benefit Fund scheme which would evidently show that the petitioners have received much more than what they have actual contributed towards fund. By circular dated 17.12.2004 the scrapping of the scheme as well as the payment of enhanced compensation under the V.R.S. optees has been informed. It was also specifically agreed in the meeting of the staff union held on 29.11.2004 that when once the Staff Retirement Benefit Fund scheme scrapped and the existing employees either go on retirement normally or under the V.R.S. scheme will not be paid financial assistance. The committee constituted to study the demand of the staff union has in fact recommended to increase the compensation payable from 15 days wages for every month to that of the 20 days wages for every month by way of amending the Subsidiary Rule 5(b) and 5(c) of the Revised Voluntary Retirement Benefit Fund Scheme 2004. The board resolution dated 15.12.2004 which is impugned was only after accepting the recommendation of sub committee formed to consider the demands of the staff union and consequently, the circular dated 17.12.2004 was issued amending 5(b) and 5(c) of the Revised Voluntary Benefit Scheme Rules by increasing the quantum of compensation from 15 days wages per month to 20 days wages per month, on account of scrapping of Staff Retirement Benefit Fund scheme and the said enhancement was given to the employees who opted for Voluntary Retirement with effect from February 2005. The enhancement of V.R.S. compensation and scrapping of benefit under Staff Retirement Benefit Fund scheme were interconnected as evidenced from the impugned resolution of the first respondent dated 15.12.2004 and therefore, it is not correct to state that the winding up of the Staff Retirement Benefit Fund scheme is distinct from V.R.S. compensation. The first respondent has denied the legal ground raised by the petitioners. 18. It is also the case of the first respondent that the Industrial Dispute Act has no application since the first resopndent governed by the Multi State Cooperative Societies Act. It is also the case of the first https://hcservices.ecourts.gov.in/hcservices/ respondent that the amendment to the provision of Rule 5(b) and 5(c) of the Revised Voluntary Benefit scheme enhancing the compensation was made at the request of the employees which includes the petitioners. It is also the case of the first respondent that the board of management was entitled as per law to modify, amend or alter or revoke any of the existing rules or scheme and the modification made by the first respondent is in accordance with the subsidiary regulation number 8(a) of the Staff Retirement Benefit Fund rules and bye law number 70 of the society bye law itself. 19. It is also the case of the first respondent that the petitioners have already approached this Court for a direction to pay the financial assistance as per the Staff Retirement Benefit Fund scheme and suppressing the same, the present writ petitions are filed. It is also the first respondent’s case that a reference to the typed set of papers would reveal that the amounts paid to the petitioners under various heads which includes the additional amounts paid and enhanced compensation on account of V.R.S. are much more than the compensation payable under normal V.R.S. scheme which was existing prior to the winding up of Staff Retirement Benefit Fund scheme. It is also the case of the first respondent that the accounts regarding erstwhile Staff Retirement Benefit Fund scheme was maintained properly with proper auditing and participation of the workers in the management of the respondent and in view of the same the first respondent pleads for dismissal of the writ petition. 20. Ms.R.Vaigai learned counsel appearing for the petitioner would submit that inasmuch as the first respondent society is governed by the provisions of the Multi State Cooperative Societies Act, 2002, any bye law framed as per the said Act can be only amended or modified in accordance with that Act. In the present case, the impugned resolution of the board of management dated 15.12.2004, by which, there was a ratification of approval accorded to the decision the Chairman of the Society in accepting the recommendations of the sub committee to go into the demands of the staff union regarding the deduction to Staff Retirement Benefit Fund scheme, winding up of the Staff Retirement Benefit Fund scheme and enhancement of compensation payable to V.R.S. optees is against the bye law of the society, especially, bye law no. 70, under which, the Staff Retirement Benefit Fund was created and the same cannot be unilaterally wound up on the basis of the resolution of the Board of Directors. 21. It is also her contention that the bye laws which are prepared as per the provisions of the Multi State Cooperative Societies Act 2002, can be amended as per Section 11 only on resolution passed in the general meeting of the society in which 2/3 majority of the members are present and voting and such amendment has to be registered and the effect of the amendment will be operative only for a registration under Section 12 of the said Act. According to her, in the present case, there was no amendment to the bye law and such amendment has not been brought in the general body and the same was not registered and therefore, the impugned resolution dated 15.12.2004 is not valid. She would also submit that the amendments sought to be made governing the scheme of Revised Voluntary Retirement Benefit https://hcservices.ecourts.gov.in/hcservices/ scheme 2004, by granting 20 days wages for every month of residual service instead of for 15 days for fixing quantum of compensation is also not in accordance with law. It is also her contention that when once the Staff Retirement Benefit Fund scheme which came into force by way of rule from 1991, namely, the Railway Employees Cooperative Credit Society Staff Retirement Benefit Fund Rule 1991, under which the contribution has been made from the employees salaries, it is not open to the first respondent to close the scheme in the guise of providing better benefit by Voluntary Retirement Scheme. Inasmuch as it is a contributory fund from the employees, there was no question of scrapping the said scheme, since according to the learned counsel the term amendment or modification does not mean that the first respondent is