GIC CASE HISTORY
HIERARCHY OF
ORGANISATION
MINISTRY OF
FINANCE--Ã DEPARTMENT OF FINANCIAL SERVICES(INSURANCE DIVISION)-Ã GENERAL INSURANCE PUBLIC SECTOR
ASSOCIATION (GIPSA)-Ã Chief Exective officer GIPSA
New India assurance Co Ltd
(Wholly owned by Govt Of India)
RESPONDANTS
1)
The Chairman Cum Managing Director
New India Assurance Co Ltd.
Head office, New India Assurance Co
Ltd,
New India Assurance Building,
87 MG Road, Fort,
Mumbai-400001
2) The Deputy General Manager,
Regional
office in Charge,
The
New India Assurance Co Ltd,
Kandomkulathy
Towers,
Near
college ground, MG Road,
Ernakulam.Kochi-682011
3) Union of India, ministry of finance ,Department Economic affairs.Insurance Division
4) The Chairman/ Chief Executive officer,
General
Insurance Public Sector Association,
Ground Floor Jeevan Tara Building
New Delhi - 110001
PERSONAL DETAILS
1)Name- M B. Chandran, aged 65 years
S/O Late Shri MNB Menon,
31/1309 Vinod Vihar,
159/SRA, Sahakarana Road,
Ponnurunni, Kochi-682019
2) Ex-servicemen Discharged from Indian
Air Force
3) Date of Joining as in New India Assurance
co. Ltd— 28/03/1991.
4)
Joined as assistant under Ernakulam Regional office.
5) Retired as assistant on
Superannuation after 21 years of service on completion of 60 years on
31/10/2011.
6) Average of Last ten months pay taken
for calculation of pension 27160
7) 50% of Average pay 13580 (eligible
as per Para 54B)
8) Again reduced to 8642 on pro rata
Basis (13580*21/33)
9) Resulted in a Loss of Rs 4938 per
Month w.e.f. 30/11/2011
FACT & CIRCUMSTANCES OF THE CASE
The proviso
to clause k of Para 2 of the GIC Pension scheme 1995 has has been incorporated
to enlarge the scope the the Term ‘employee’ used in the scheme by the inclusion
of Chairman of the Company if he is also an employee of the company prior to
his appointment.
The chairman
can also be appointed from outside the company on contract basis.
This proviso has been added to the clause k of the
GIC Pension scheme vide SO 475(E) Dated 03/07/1996 & effective only from
03/07/1996.
Para 54B has been added to GIC Pension scheme vide
SO 775(E) Dated 13/08/2001 with retrospective effect from 01/01/1996.
Since the
above subject is the matter of contentions, the following points may be noted.
The
incorporation of Proviso to clause k of Para 2 of GIC pension Scheme has
enlarged the scope of the definition of the term employee used in the scheme to
create new homogeneous group & the Chairman of the company now stands
included in the term “employee’ & it does not confer any special
consideration to him as regards pension rules of GIC Pension Scheme 1995.
The
Subsequent amendment to GIC Pension scheme by the incorporation of Para 54B
vide SO 775(E) Dated 13/08/2001 with retrospective effect from 01/01/1996
clearly proves that it is applicable to the term “employee” as envisaged in the
scheme as on 01/01/1996.
The Scheme
was notified on 28/06/1995 & deemed to have been commenced w.e.f.
01/11/1993 as per Chapter 1 Para 1 clause 2.
The proviso
to clause k was not in force in 01/01/1996 to 02/07/1996.This clearly proves
that Para 54B is applicable to the term employee as on date of 01/01/1996 Since
Proviso to clause k which was added only
on 03/07/1996 without any retrospective
effect was not in force during this period.
Even if it
is admitted for academic interest that 54B is only applicable for proviso to clause
k of Para 2, it is discriminatory as per article 14 of the constitution that
after creating a homogeneous group by the inclusion of the Top authority of the
institution (Chairman) in the term of employee for the benefit of pension,
& Subsequently segregating him for the purpose benefit under Para 54B,
seems to be a conflict of interest.
I have
joined the company on 28/03/1991 & is governed by the Scheme as on
01/11/1993, I am entitled for benefits under Para 54B of the GIC Pension Scheme
1995whish has been added to GIC Pension scheme vide SO 775(E) Dated 13/08/2001
with retrospective effect from 01/01/1996 & the proviso to clause k of Para
2 which restrict the benefit of Para 54B was not in force up to 02/07/1996.
I was
covered under the Para 54B of the GIC Pension rules w.e.f 01/01/2016 where as
the Chairman under Proviso to clause k of Para 2 was covered under Para 54B
only w.e.f.03/07/1996.
If so what
was Proviso in force from 01/01/1996 to 02/07/1996.
The Sentence
which reads as” who opted and is governed by the scheme” shall be the
Proviso for the period from 01/01/1996 to 02/07/1996( the dictionary meaning of
proviso is condition attached).
It is
storage to note the interpretation of the company that the Para 54B was
incorporated to Give a larger portion of Pension benefit only to one Employee (Chairman)
where as the intention of the proviso was only to include the Chairman also in
the term of employee if he is an employee prior to his appointment as Chairman
for a fixed tern on contract (Chairman can also be appointed from outside the
company on Contract basis)
Hence I am
entitled for fixation of pension as per the provisions of Para 54B which takes
in to account changes in the CCS Pension rules 1972 from time to time as I have
opted for the scheme w.e.f.01/11/1993.
Accordingly
my Pension may be fixed as per OM, F. NO
38/37/08-P&PW(A) Dated 02/09/2008 which provides for calculation pension @
50% on Last Drawn
Pay instead of pro-rata calculation of my pension for 21 years. The
Linkage of pension with 33 years’ service has been abolished by the above
circular.
EXPLANATION OF PARA54B & PROVISO TO CLAUSE (k)
OF PARA2.
PARA 54B.
**
“54B. Pensionary benefits to employee
mentioned in proviso to clause (k) of paragraph 2 who was in service on or
after 1.1.1996 –
Notwithstanding anything contained in this
Scheme, in respect of employee covered by the proviso to clause (k) of
paragraph 2, who was in service on or after 1stJanuary, 1996, the
pensionary benefits shall be calculated in accordance with the provisions
contained in the Central Civil Services (Pension) Rules, 1972 and the Central
Civil Services (Commutation of Pension Rules, 1981), as applicable to Central
Government servants and in accordance with the instructions issued by the
Central Government there under from time to time Provided that where such an
employee, who has retired on or after 1.1.1996 and before the date of
publication of this Scheme in the Gazette or the family of such employee in the
event of death of such employee gives a notice in writing within 90 days of the
publication of this Scheme, expressing an option not be governed by the
provisions of this paragraph, then, the provisions of the above paragraph shall
not apply in respect of such employee or the family of such employee, as the
case may be. Option once exercised under this proviso shall be final.
The above Said Para 2 Gives
the definition of the terms used in GIC pension scheme as shown under
2.
Definitions - In this
scheme, unless the context otherwise requires -
(a)
"Act" means the General Insurance Business (Nationalisation) Act,
1972 (57 of 1972);
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(k) "Employee" means
any person employed in the service of the Corporation or a Company on full time
work on permanent basis and who opts and is governed by this scheme;
*”Provided
that where the ****Chairman-cum-Managing Director
Corporation
or Chairman-cum-Managing Director of the Company, was an employee of the
Corporation or the Company, immediately preceding his appointment to the post
of ****Chairman-cum-Managing Director of the Corporation or the Company, as the
case may be, then such ****Chairman cum- Managing Director of the Corporation
or the Company, shall also be shall also be deemed to be an employee of the Corporation or the
Company, as the case may be, for the purposes of this scheme, subject to the
terms of any contract, agreement or letter of appointment or directions issued
by the Central Government.”
T he Proviso to clause (k)
of Para 2 was added only on 03/07/1996.vide SO 475(E) Dated 03/07/1996 without
retrospective effect.
Whereas Para 54B was added
to the scheme on 13th Aug 2001 with retrospective effective effect
from 01/01/1996 vide SO 775(E) Dated 13/08/2001.
Hence Para 54B was in
existence w.e.f 01/01/1996 much before the addition of said proviso to clause
(k) of Para 2.
In the absence of proviso to clause (k) of
Para 2 from 01/01/1996 to 02/07/1996, Para 54B was applicable to all employees
joined the scheme since inception from 01/11/1993 & Proviso contained in
clause (k) of Para 2 was “who opts and is governed by this scheme’(The
dictionary meaning of Proviso is condition attached)
The Chairman who is an
employee prior to his appointment as Chairman is also deemed to be an employee
for the purpose of this scheme. It is to be noted that the Chairman is
appointed on contract basis for a specific period by the finance ministry &can
be appointed from outside the company in such case he will not come under the
definition of an employee.
The literary meaning of
proviso as alleged by the company to be applicable only to the chairman is far
truth & contrary to fact & correct interpretation.
The correct interpretation
& intention of this proviso is to include the chairman also in the
definition of Employee if he was an employee prior to his appointment since
Chairman can also be appointed from outside the company & in that case he
will not come under term employee.
The Chairman is appointed on contract basis
for a fixed term. When a General Manager who is an employee of the company is
appointed as Chairman on contract basis for a fixed term, he ceases to be an employee
of the Company & to include him
again the pension scheme, a second Proviso to clause (k) of Para 2 was
incorporated.
