Employees Allowed to Switch Back to DCRB Pension Scheme Subject to Refund Conditions: Calcutta High Court

Beneficial Legislations Must Be Interpreted Liberally in Favor of Employees - Calcutta High Court, in a landmark judgment, set aside a Single Bench order that had dismissed the claim of retired employees of the Calcutta State Transport Corporation (CSTC) to re-opt for the Death-cum-Retirement Benefit (DCRB) Scheme, 1990. The Division Bench allowed the appeal, holding that employees who had initially opted for the DCRB Scheme but later switched to the Contributory Provident Fund (CPF) Scheme can return to the DCRB Scheme, provided they refund the employer’s share of the provident fund and any gratuity exceeding ₹70,000 as per Clause 63(2) of the DCRB Regulations, 1990.

The Court emphasized that the DCRB Scheme is a beneficial piece of legislation and must be liberally interpreted to favor employees, as long as stipulated conditions are met. It also ruled that technical grounds such as delay in making claims or waiver of rights cannot defeat the employees' entitlement under the scheme.

The case involved members of the CSTC Retirees’ and Pensioners’ Association, all retired employees of CSTC between 1999 and 2008. Initially, these employees had opted for the DCRB Scheme, 1990, but later voluntarily switched to the CPF Scheme, citing irregular pension payments. Upon realizing that payments under the DCRB Scheme were regular, they sought to rejoin the DCRB Scheme and requested that the amounts to be refunded (as required by Clause 63(2)) be adjusted against arrears of pension. CSTC rejected their requests.

After the rejection, the appellants approached the Court, seeking enforcement of their rights under Clause 63(2) of the DCRB Regulations, which permits employees to switch to the DCRB Scheme if they refund the employer’s share of provident fund and gratuity above ₹70,000.

Whether the employees who voluntarily opted out of the DCRB Scheme can exercise their right to return to it under Clause 63(2) of the DCRB Regulations.
Whether the delay in asserting rights or the doctrine of acquiescence bars the employees from claiming pension benefits under the DCRB Scheme.
How Clause 63(2), as a part of beneficial legislation, should be interpreted.

The Court held that Clause 63(2) of the CSTC Employees’ (Death-cum-Retirement Benefits) Regulations, 1990 provides employees the right to switch to the DCRB Scheme, subject to refunding the employer’s share of provident fund and gratuity exceeding ₹70,000. While the clause was framed for employees who had already received CPF benefits before the DCRB Scheme’s implementation in 1990, the Court interpreted it broadly to apply even to employees who switched to the CPF Scheme after initially opting for the DCRB Scheme.

“Clause 63(2) is a part of a beneficial legislation and must be interpreted in favor of the employees. The right to opt for the DCRB Scheme should not be denied on technical grounds if the employees meet the refund conditions.” [Para 24]

The Court rejected the respondents’ argument that the appellants' claim was barred by delay and laches. It relied on the Supreme Court’s rulings in Union of India v. Tarsem Singh [(2008) 8 SCC 648] and Asger Ibrahim Amin v. LIC [(2016) 13 SCC 797], which held that claims involving pension are continuing wrongs and cannot be barred by delay unless third-party rights are affected.

“Pension claims constitute a continuing wrong, and delay does not render them stale unless they prejudice the settled rights of third parties. The appellants' claim does not affect third-party rights.” [Para 33]

The respondents argued that by voluntarily switching to the CPF Scheme, the appellants waived their right to rejoin the DCRB Scheme. The Court dismissed this argument, citing the Supreme Court's ruling in Ashit Chakraborty v. CSTC [2023 SCC OnLine SC 594], which held that waiver of pension rights requires clear evidence of conscious abandonment.

“Mere delay or past conduct does not amount to waiver or acquiescence. The appellants’ initial decision to switch to the CPF Scheme does not preclude them from rejoining the DCRB Scheme, especially when such a right is recognized under Clause 63(2).” [Para 32]

The Court emphasized the need to interpret the DCRB Regulations, 1990, in a manner that benefits employees. It noted that the General Manager’s 2007 communication, which allowed one appellant to switch back to the DCRB Scheme on refund conditions, confirmed that the option was still available to other members.

“Beneficial legislations like the DCRB Scheme aim to safeguard employees' post-retirement financial security. They must be construed liberally, and minor procedural delays cannot defeat the substantive rights of employees.” [Para 24]

The Court allowed the appeal and set aside the Single Bench’s judgment, holding as follows:

The appellants are entitled to opt for the DCRB Scheme under Clause 63(2) of the DCRB Regulations, subject to fulfilling the refund conditions (employer’s share of CPF and gratuity exceeding ₹70,000).

The appellants are directed to apply for the DCRB Scheme benefits within eight weeks from the date of the judgment. The respondents must process the claims within four weeks thereafter and communicate their decision.

The appellants' request for adjusting refundable amounts against arrears of pension or future pension should be considered in line with Clause 63(2).

This judgment reinforces the principle that beneficial legislations like the DCRB Scheme must be interpreted in favor of employees to ensure their financial security post-retirement. The decision underscores that procedural delays or past decisions do not bar employees from exercising their substantive rights under such schemes. Further, it recognizes the need for CSTC to process claims in a fair and time-bound manner, ensuring justice to retired employees.

Key Takeaways
Employees who initially opted out of the DCRB Scheme can return to it under Clause 63(2) by refunding the employer’s CPF share and gratuity exceeding ₹70,000.
Pension claims are not barred by delay, as they constitute a continuing wrong unless third-party rights are affected.
Waiver of pension rights requires evidence of conscious abandonment, which was absent in this case.
Beneficial legislations must be liberally interpreted to protect employees' rights, even if technical lapses occur.

Date of Decision: December 13, 2024