GIC CASE  HISTORY                

HIERARCHY OF ORGANISATION

MINISTRY OF FINANCE--àDEPARTMENT OF FINANCIAL SERVICES(INSURANCE DIVISION)-à GENERAL INSURANCE PUBLIC SECTOR ASSOCIATION (GIPSA)-à 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 1^stJanuary, 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 13^th 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.