Chairman & M.D., K.S.R.T.C vs K.O. Varghese & Ors

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:

3. On 27.3.1984, the Government of Kerala authorized KSRTC to pay pension to its employees as per Kerala Service Rules, hereinafter referred to as "KSR". The said communication is on the following terms.

On 5.5.1984, an order was issued by the Managing Director of KSRTC that all Corporation employees who retire after 1.4.1984 would be paid pension subject to the employees fulfilling the stipulations therein.

4. Then came the recommendations 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 letter dated 24.9.1992, the State Government advised KSRTC that it may defer for better times, the implementation. We quote the letter hereunder:

6. Some of the employees of KSRTC filed a writ petition in the High Court challenging this non-implementation. The High Court allowed the writ petition, O.P. 7176 of 1993 and directed KSRTC to pay the arrears of the enhanced Dearness Allowance from 1.7.1991 till 31.10.1991. KSRTC appealed to the Division Bench in W.A. 890 of 1993. An interim order of stay of the directions issued by the single judge was also obtained. Meanwhile, in another writ petition, O.P. No. 13233 of 1992, another single judge directed the Government to take a policy decision on whether, the benefits of the Fifth Pay Commission should be extended to the pensioners of KSRTC.

19. The result of this discussion is to hold that the High Court was in error in its decision and in directing that pension had to be paid in terms of the recommendations of the Fifth Pay Commission. We therefore allow these appeals and setting aside the decisions of the High Court dismiss the writ petitions filed by the writ petitioners. We make no order as to costs.