The Madras High Court has clarified a critical issue in service law, holding that daily wage employees of the Tamil Nadu State Transport Corporation are entitled to family pension under the TNSTCE Pension Scheme 1998, counting their service from the date of appointment. This judgment reinforces the principle that pension benefits cannot be denied based on the nature of initial employment, providing relief to dependents of deceased employees who were previously excluded from pensionary benefits despite years of service.
Background & Facts
The Dispute
The present writ petitions, T.Deepavathy v. Metropolitan Transport Corporation Ltd. (W.P.No.1068 of 2019) and M.Kumari v. Metropolitan Transport Corporation Ltd. (W.P.No.1871 of 2019), involve claims for family pension and pensionary benefits under the Tamil Nadu State Transport Corporations Employees’ Pension Scheme 1998 (hereinafter, Pension Scheme 1998). The petitioners, widows of deceased employees of the Metropolitan Transport Corporation Ltd. (first respondent), sought pension benefits after their husbands, who were initially employed on daily wages, passed away while in service.
Key Facts
W.P.No.1068 of 2019 (T.Deepavathy):
The petitioner’s husband, late Thirumalivasu, was employed as a Conductor in the first respondent Corporation from 21.02.1999.
He was enrolled as a member of the Provident Fund from the date of appointment.
His services were regularized pursuant to a settlement under Section 12(3) of the Industrial Disputes Act, 1947, with effect from 01.09.2005.
He passed away on 30.01.2017 while in service.
The respondents settled terminal benefits but denied family pension, contending that his services were regularized only after 01.04.2003, making him ineligible under the Pension Scheme 1998.
The respondents paid Rs. 5,34,835 towards Provident Fund contributions but refused family pension from 01.02.2017.
W.P.No.1871 of 2019 (M.Kumari):
The petitioner sought pension, gratuity, and Provident Fund benefits for her service from 03.12.1997 to 31.08.2016.
The respondents denied her claims on similar grounds, arguing that her service was regularized only after 01.04.2003, making her ineligible under the Pension Scheme 1998.
Procedural History
W.P.No.1068 of 2019 and W.P.No.1871 of 2019 were filed under Article 226 of the Constitution of India seeking declarations that the respondents’ actions were illegal and unconstitutional.
The petitioners relied on a decision of the Madurai Bench of the Madras High Court in W.P.(MD).No.16684 of 2019, dated 07.08.2023, which granted similar relief.
The respondents filed counter-affidavits contending that:
The petitioners’ husbands were initially employed on consolidated pay and regularized only after 01.04.2003.
They were covered under the Contributory Pension Scheme, which came into effect from 01.04.2003, and not the Pension Scheme 1998.
The Government of Tamil Nadu, vide G.O.Ms.No.157, dated 27.09.2007, excluded the State Transport Undertaking from the purview of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 with effect from 01.09.1998.
The petitioners’ husbands did not qualify as members under the Pension Scheme 1998 as defined under Rule 2(i) of the Transport Corporation Employees’ Pension Fund Rules.
The respondents also contended that the issue was pending before a Division Bench in W.P.No.335 of 2020 and other connected matters.
The Parties' Positions
For the Petitioners:
Argued that the respondents’ denial of family pension was arbitrary and contrary to the Pension Scheme 1998.
Relied on the decision in W.P.(MD).No.16684 of 2019, which granted family pension to a similarly situated petitioner.
Contended that Provident Fund contributions were deducted from the date of appointment, making their husbands members under the Pension Scheme 1998.
For the Respondents:
Contended that the petitioners’ husbands were not regular employees as defined under Rule 2(i) of the Transport Corporation Employees’ Pension Fund Rules.
Argued that the Pension Scheme 1998 applied only to employees who were on the rolls as of 31.08.1998 and had exercised an option to join the scheme.
Claimed that the petitioners’ husbands were covered under the Contributory Pension Scheme, which came into effect from 01.04.2003, and not the Pension Scheme 1998.
Highlighted that the issue was sub judice before a Division Bench in W.P.No.335 of 2020.
Relief Sought
W.P.No.1068 of 2019 (T.Deepavathy):
Declaration that the respondents’ action in denying family pension was illegal and unconstitutional.
Direction to pay family pension under the Pension Scheme 1998 from 01.02.2017, with arrears and 12% interest per annum.
W.P.No.1871 of 2019 (M.Kumari):
Declaration that the respondents’ actions were illegal and unconstitutional.
Direction to pay:
Pension under the Pension Scheme 1998 by counting her entire service from 03.12.1997 to 31.08.2016.
Commuted value of pension under the Pension Scheme 1998.
Provident Fund amount.
Monthly pension under the Post Retirement Benefit Scheme from 01.09.2016, with arrears and 12% interest per annum.
The Legal Issue
The central question before the Court was whether daily wage employees, whose services were regularized after 01.04.2003, are entitled to family pension and pensionary benefits under the TNSTCE Pension Scheme 1998, counting their service from the date of initial appointment.
Arguments Presented
For the Petitioners
Relied on the decision in W.P.(MD).No.16684 of 2019, which held that family pension cannot be denied to dependents of employees who were initially employed on daily wages but later regularized.
Argued that the respondents’ interpretation of Rule 2(i) of the Transport Corporation Employees’ Pension Fund Rules was arbitrary and contrary to the Pension Scheme 1998.
Contended that Provident Fund contributions were deducted from the date of appointment, making the deceased employees members under the scheme.
For the Respondents
Contended that the Pension Scheme 1998 applied only to employees who were on the rolls as of 31.08.1998 and had exercised an option to join the scheme.
Argued that the petitioners’ husbands were not regular employees as defined under Rule 2(i) and were covered under the Contributory Pension Scheme from 01.04.2003.
Highlighted that the issue was pending before a Division Bench in W.P.No.335 of 2020 and other connected matters.
The Court's Analysis
The Court observed that the issue in the present writ petitions was distinct from the matters pending before the Division Bench in W.P.No.335 of 2020, which dealt with claims for pension by employees themselves, not family pension claims. The Court noted that the decision in W.P.(MD).No.16684 of 2019 was directly on point, as it dealt with a claim for family pension under similar circumstances.
The Court emphasized the principle of judicial discipline, holding that a Co-ordinate Bench is bound to follow the decision of another Co-ordinate Bench unless a different view has been taken by another Bench or the matter has been referred to a higher Bench. Since no such referral or conflicting decision was brought to the Court’s notice, it deemed it appropriate to follow the decision in W.P.(MD).No.16684 of 2019.
The Court rejected the respondents’ contention that the petitioners’ husbands were not members under the Pension Scheme 1998, noting that Provident Fund contributions were deducted from the date of appointment. The Court held that the respondents’ interpretation of Rule 2(i) was arbitrary and contrary to the scheme’s intent, which was to provide pensionary benefits to employees and their dependents.
"Since, the issue involved in the present Writ Petition is similar to the issue considered by a Co-ordinate Bench of this Court (Madurai Bench) in W.P.(MD).No.16684 of 2019 and the Co-ordinate Bench, in the aforesaid decision, having referred to orders passed in earlier Writ Petitions viz., W.P.(MD).No.3675 of 2009, W.A.(MD).No.387 of 2010, W.P.No.21085 of 2010 and W.P.(MD).No.4887 of 2020, this Court is of the view that the judicial discipline requires this Court to follow the aforesaid decisions which are on the same subject issue as involved in the present Writ Petitions, more particularly, when it has not been shown to this Court of a different view having been taken by any other Co-ordinate Bench or the matter being referred either to a Division Bench or a Full Bench for a comprehensive adjudication."
The Verdict
The Court allowed both writ petitions with the following directions:
The respondents are directed to pay family pension to the petitioner in W.P.No.1068 of 2019 by calculating the services of her husband from 21.02.1999 till 30.01.2017.
The respondents are directed to grant pension to the petitioner in W.P.No.1871 of 2019 by counting her service from 03.12.1997 till 31.08.2016.
Any amounts already paid as terminal benefits are to be adjusted towards the family pension/pensionary benefits.
The entire exercise shall be completed within eight weeks from the date of receipt of a copy of this order.
No order as to costs.
What This Means For Similar Cases
Daily Wage Employees Are Entitled to Pensionary Benefits
This judgment reinforces the principle that daily wage employees who are later regularized are entitled to pensionary benefits under the TNSTCE Pension Scheme 1998, counting their service from the date of initial appointment. Practitioners should note:
The Pension Scheme 1998 applies retrospectively to employees who were initially employed on daily wages or consolidated pay.
Provident Fund contributions from the date of appointment create a presumption of membership under the scheme.
Judicial Discipline Mandates Following Co-ordinate Bench Decisions
Courts are bound to follow the decisions of Co-ordinate Benches on the same issue unless a different view has been taken or the matter has been referred to a higher Bench.
Practitioners should rely on binding precedents of Co-ordinate Benches to strengthen their arguments, especially in cases involving pensionary benefits.
Arbitrary Denial of Pension Benefits Is Unconstitutional
The Court held that denying pension benefits based on the nature of initial employment (daily wage vs. regular) is arbitrary and unconstitutional.
Employers and pension trusts cannot exclude employees from pension schemes merely because their services were regularized after a cut-off date (e.g., 01.04.2003).
Practitioners should challenge such exclusions by relying on this judgment and the precedent in W.P.(MD).No.16684 of 2019.
