Supreme Court Orders Pension Benefits for Widow Under Coal Mines Pension Scheme (2021)

LEGAL ISSUE: Entitlement to pension benefits under the Coal Mines Pension Scheme, 1998, specifically the lump sum payment upon the death of a pensioner who had opted for reduced pension during his lifetime. CASE TYPE: Pension Law. Case Name: Veena Pandey vs. Union of India & Ors. [Judgment Date]: November 18, 2021

Date of the Judgment: November 18, 2021
Citation: 2021 INSC 749
Judges: R. Subhash Reddy, J. and Hrishikesh Roy, J.
Can a widow be denied pension benefits that her husband had opted for under a pension scheme, simply because the scheme was later amended? The Supreme Court of India recently addressed this question in a case concerning the Coal Mines Pension Scheme, 1998. The court considered whether a widow was entitled to a lump sum payment, which was part of her husband’s pension plan, despite the abolishment of the relevant provision after his death. The bench comprised Justices R. Subhash Reddy and Hrishikesh Roy, with the judgment authored by Justice Hrishikesh Roy.

Case Background

Ramashankar Pandey, the husband of the appellant, worked at South Eastern Coal Fields Ltd., Bilaspur, after transferring from Bharat Coking Coal Ltd in 1999. He retired as Chief Personnel Manager on May 31, 2004, and settled in Bhojpur, Bihar. He had opted to receive 90% of his pension during his lifetime, a provision under para 15 1(b) of the Coal Mines Pension Scheme, 1998, effective from March 31, 1998. This meant that upon his death, his widow would be entitled to a lump sum payment equal to 100 times his full monthly pension, in addition to her family pension. Ramashankar Pandey’s basic pension was Rs. 7091 per month, and 10% of this (Rs. 788) was deposited with the department.

Timeline

Course of Proceedings

Following her husband’s death on January 12, 2011, Veena Pandey, the appellant, claimed a lump sum payment equivalent to 100 times her husband’s full monthly pension, as per para 15(1)(b) read with para 15(2) of the Pension Scheme, 1998. However, her claim was rejected on January 22, 2013, by the Regional Commissioner of the Coal Mines Provident Fund Organization (CMPFO). The CMPFO stated that while the pensioner had opted for 90% pension under para 15 (1)(b), this provision was abolished effective February 21, 2011. The 10% surrendered amount was refunded with interest, as per an order dated January 30, 2012, of the Coal Mines Provident Fund Commissioner. The appellant was refunded Rs. 36,938 as the surrendered amount with interest and Rs. 12,351 as widow pension arrears, totaling Rs. 49,289. Aggrieved, Veena Pandey approached the High Court of Patna, seeking pensionary benefits and challenging the CMPFO’s letter dated January 22, 2013. The High Court dismissed her petition, stating that no cause of action arose within its territorial jurisdiction. This decision was upheld by the Division Bench, which also noted that the pensioner’s services were outside the Patna High Court’s jurisdiction.

Legal Framework

The Coal Mines Pension Scheme, 1998, was framed under the powers conferred by Section 3-E of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948. This scheme aimed to provide social security and socio-economic justice to employees in the coal sector. The relevant provisions of the scheme are:

• Para 15(1)(b): This provision allowed employees to opt for receiving 90% of their total admissible pension during their lifetime. In return, upon their death, their widow would receive a lump sum amount equal to 100 times the full monthly pension, in addition to family pension.
• Para 15(2): This provision specifies the lump sum payment to the widow upon the death of the pensioner, who had opted for reduced pension during his lifetime.

The Supreme Court also noted that pension is a deferred portion of compensation for long service and is considered a form of property, as held in State of Jharkhand and Others Vs. Jitendra Kumar Srivastava and Another [2013] 12 SCC 210.

Arguments

Appellant’s Arguments:

• The appellant argued that her husband had opted for the lump sum payment under the Pension Scheme, and this right should be honored.
• The appellant contended that the lump sum payment (100 times the full monthly pension) became payable to her upon her husband’s death.
• The appellant’s counsel submitted that the widow is suffering due to the denial of her rightful pension benefits, further compounded by the High Court’s dismissal of her case on territorial jurisdiction grounds.

Respondent’s Arguments:

• The respondent pointed out that the provision under which the appellant was claiming benefits (para 15(1)(b) of the Pension Scheme, 1998) was abolished with effect from February 21, 2011.
• The respondent stated that the 10% surrendered amount had been refunded to all pensioners with interest, as per an administrative order dated March 4, 2011, of the Commissioner, CMPFO, and the appellant’s case was settled on April 18, 2011.
• The respondent contended that the appellant was already refunded the surrendered amount of 10% with interest.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in the judgment. However, the core issue was whether the appellant was entitled to the lump sum payment under the Coal Mines Pension Scheme, 1998, despite the abolishment of the relevant provision after her husband’s death. The sub-issue was whether the High Court was right in dismissing the petition for lack of territorial jurisdiction.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

• All India Reserve Bank Retired Officers’ Association & ors Vs. Union of India & ors [1992] Supp 1 SCC 664 – The court cited this case to support the view that pension is a form of compensation for long service.
• State of Jharkhand and Others Vs. Jitendra Kumar Srivastava and Another [2013] 12 SCC 210 – The court relied on this case to affirm that pension is a hard-earned benefit and a form of property.

The Supreme Court also considered the following legal provisions:

• Section 3-E of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948: This section empowers the framing of the Coal Mines Pension Scheme, 1998.
• Para 15(1)(b) of the Coal Mines Pension Scheme, 1998: This provision allowed employees to opt for receiving 90% of their total admissible pension during their lifetime, with a lump sum payment to the widow upon their death.
• Para 15(2) of the Coal Mines Pension Scheme, 1998: This provision specifies the lump sum payment to the widow upon the death of the pensioner.

Judgment

How each authority was viewed by the Court?

• All India Reserve Bank Retired Officers’ Association & ors Vs. Union of India & ors [1992] Supp 1 SCC 664: The Court used this case to highlight that pension is a form of compensation for long service.
• State of Jharkhand and Others Vs. Jitendra Kumar Srivastava and Another [2013] 12 SCC 210: The Court relied on this case to establish that pension is a hard-earned benefit and a form of property.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that the pensioner had opted for the lump sum benefit under the pension scheme while the provision was still in effect. The court noted that the widow was being forced to litigate for over a decade to secure her rightful pension benefits. The court emphasized that pension is a form of property and a deferred compensation for long service. The court also highlighted the social security aspect of the pension scheme, aimed at ensuring socio-economic justice for employees in the coal sector. The court did not delve into the legality of discontinuing the provision but focused on the entitlement of the appellant based on the scheme’s provisions at the time of her husband’s retirement.

The court’s reasoning was primarily based on the specific facts of the case, such as the pensioner’s option for a lump sum benefit and the subsequent hardship faced by his widow. There was also a consideration of the legal principle that pension is a form of property and a deferred compensation for long service.

The Supreme Court did not consider any alternative interpretations of the pension scheme provisions. The court focused on the specific facts of the case and the entitlement of the appellant. The court emphasized that the pensioner had opted for the benefit when the provision was in force and that the widow should not be denied her rightful dues due to a subsequent amendment.

The court’s decision was that the appellant was entitled to the lump sum payment as per the provisions of the Pension Scheme, 1998, that were in force at the time of her husband’s retirement. The court ordered the respondent to disburse the due amount, adjusting for the amount already refunded.

The court’s reasoning can be summarized as follows:

• The pensioner had opted for the lump sum benefit when the provision was in force.
• Pension is a form of property and a deferred compensation for long service.
• The widow should not be denied her rightful dues due to a subsequent amendment in the pension scheme.
• The social security aspect of the pension scheme should be upheld.

The Supreme Court quoted the following from the judgment:

• “Pension as is well known, is the deferred portion of the compensation for rendering long years of service.”
• “It is a hard-earned benefit accruing to an employee and has been held to be in the nature of property by this Court…”
• “…without commenting on the legality of the decision to discontinue the said provision in the pension scheme by the employer, as the pensioner was not alive on the date of discontinuance, we consider it appropriate to pass necessary orders in her favor in this proceeding itself.”

There was no majority or minority opinion in this case. The bench of two judges unanimously agreed on the decision.

The court’s reasoning focused on the specific facts of the case and the entitlement of the appellant. The court emphasized that the pensioner had opted for the benefit when the provision was in force and that the widow should not be denied her rightful dues due to a subsequent amendment. The court did not delve into the legality of discontinuing the provision but focused on the entitlement of the appellant based on the scheme’s provisions at the time of her husband’s retirement. This decision could have implications for other cases where pension benefits are denied due to subsequent amendments in pension schemes.

The court did not introduce any new doctrines or legal principles, but it reinforced the principle that pension is a form of property and a deferred compensation for long service, as established in previous cases. The court’s decision also highlights the importance of upholding the social security aspect of pension schemes.

Key Takeaways

• Pension benefits, once opted for by an employee, cannot be denied to their dependents solely based on subsequent amendments to the pension scheme.
• Pension is a form of property and a deferred compensation for long service.
• Courts will prioritize the social security aspect of pension schemes and ensure that beneficiaries receive their rightful dues.
• This judgment could set a precedent for similar cases where pension benefits are denied due to subsequent amendments in pension schemes.

Directions

The Supreme Court directed the respondent/employer to compute and disburse the sum due and payable under the Pension Scheme to the appellant within 8 weeks from the date of the order. The amount earlier refunded to the appellant was to be adjusted during the remittance process.

Development of Law

The ratio decidendi of the case is that a widow is entitled to the lump sum payment under the Coal Mines Pension Scheme, 1998, as per the provisions that were in force at the time of her husband’s retirement, even if those provisions were subsequently abolished. This decision reinforces the principle that pension is a form of property and a deferred compensation for long service, and that beneficiaries should not be denied their rightful dues due to subsequent amendments in pension schemes.

Conclusion

In the case of Veena Pandey vs. Union of India & Ors., the Supreme Court ruled in favor of the appellant, ordering the disbursement of pension benefits that her husband had opted for under the Coal Mines Pension Scheme, 1998. The court emphasized that pension is a form of property, and the widow was entitled to the lump sum payment as per the provisions of the scheme that were in force at the time of her husband’s retirement. The court’s decision underscores the importance of upholding the social security aspect of pension schemes and ensuring that beneficiaries receive their rightful dues.

Category

Parent Category: Pension Law
Child Categories: Coal Mines Pension Scheme, 1998; Section 3-E, Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948

FAQ

Q: What was the main issue in the Veena Pandey vs. Union of India case?
A: The main issue was whether a widow was entitled to a lump sum pension payment under the Coal Mines Pension Scheme, 1998, after her husband’s death, even though the provision for such payment was abolished after his retirement.

Q: What did the Supreme Court decide in this case?
A: The Supreme Court ruled in favor of the widow, holding that she was entitled to the lump sum payment as per the provisions of the scheme that were in force at the time of her husband’s retirement.

Q: Why did the court rule in favor of the widow?
A: The court emphasized that pension is a form of property and a deferred compensation for long service. It also noted that the pensioner had opted for the lump sum benefit when the provision was in force, and the widow should not be denied her rightful dues due to a subsequent amendment in the pension scheme.

Q: What is the significance of this judgment?
A: This judgment reinforces the principle that pension benefits, once opted for by an employee, cannot be denied to their dependents solely based on subsequent amendments to the pension scheme. It also highlights the importance of upholding the social security aspect of pension schemes.

Q: What should I do if my pension benefits are denied due to subsequent amendments in the pension scheme?
A: If your pension benefits are denied due to subsequent amendments in the pension scheme, you should seek legal advice and consider filing a case in the appropriate court, citing this judgment as a precedent.