Holding

Retirees of Assam Oil Company who were members of the 1973 pension fund became transferred employees and members of the 1983 scheme, and are therefore entitled to the benefits of the 1995 revised pension formula.

Summary

The petitioners were retirees of Assam Oil Company Ltd., which was nationalised in 1981 and its assets, including a 1973 pension fund, were transferred to the successor Indian Oil Corporation (Assam Oil Division) under the Burmah Oil Company (Acquisition) Act. The corporation later introduced a revised pension scheme in 1983 and a formula for pension revision in 1995, initially limited to employees who retired after December 1994. The petitioners argued that, as members of the original pension fund, they became "transferred employees" and members of the 1983 scheme, and thus were entitled to the revised benefits. The respondents contended that the retirees who left service before the appointed date were not covered by the successor’s pension scheme and should not receive the revised benefits. The Court examined Sections 6(1) and 12 of the Acquisition Act, held that pension liabilities were transferred to the successor and that the retirees were indeed members of the 1983 scheme. Consequently, the Court directed that the petitioners be granted pension benefits according to the 1995 revision formula. The writ petition was allowed and the respondents were ordered to pay the arrears within four months.

Issues considered

Whether the pension liabilities of Assam Oil Company Ltd. were transferred to the successor Indian Oil Corporation under the Burmah Oil Company (Acquisition) Act.
Whether retirees who retired before the appointed date are deemed "transferred employees" and members of the 1983 pension scheme.
Whether the revised pension formula of 1995 applies to those retirees despite the original cut‑off date.

Legislation cited

Income Tax Act, 1961s. 2(6)

Subjects

NationalisationPension liabilitySuccessor corporationTransferred employeePension schemeRevised pension formulaSection 12Section 6Indian Oil CorporationAssam Oil CompanyArticle 32Writ petition

Judgment

PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS AND ORS. A
v.
UNION OF INDIA AND ORS.

... FEBRUARY 17, 2004

J [BRIJESH KUMAR AND ARUN KUMAR, JJ.] B

Service Law:

Burmah Oil Company (Acquisition of Shares of Oil India Ltd. and of the
undertakings in India of Assam Oil Company Ltd. and the Burmah Oil Co. c
(India Trading Ltd.) Act, 1981; Ss. 6(1), 11(1), 12: Acquisition of an Oil
Company by the Government of India and later merging with the "Indian Oil
Corporation Ltd. -Denial of benefits of revised pension scheme to the retirees
of the. Oil Company-Challenge to-Held: Liabilities of the successor
Corporation would include payment of pension/other pensionary benefits to D
the employees of the company-Pension Scheme (1973) framed by the Oil
Company to provide for creation of fund for pensionary benefits to its
employees-Transferring of fund to the successor Corporation-Revised
Pension Scheme (1983) framed by the Corporation thereafter-Objects of
both the Schemes are same-Retirees ofthe predecessor Oil Company became
the members of the Corporation on the appointed day and could be treated E
......._. as transferred employees-Absence ofany express provision for the applicability
,., of revised Scheme to the retired employees on or after its execution-Hence
retirees from the 0 ii Company eligible to get pensionary benefits ofthe Revised
Pension Scheme from funds transferred by the company-Interpretation of
Statutes.
F

-----·
I

Petitioners were retired employees of an Oil Company (Assam Oil
Company Ltd.) which was nationalized and taken over by the Government
of India by virtue of the Burmah Oil Company (Acquisition of Shares of
Oil India and of the Undertakings in India of Assam Oil Company Ltd.)
and the Burmah Oil Company (India Trading Ltd.) Act, 1981. The said G
Oil Company was later transferred and merged with the Indian Oil
--1
---"<
Corporation Ltd. (Assam Oil Division). All the employees of the Company
..__ after the appointed date became the employees of the successor Indian Oil
Corporation. The right, title and interest of the company including
liabilities for the payment of pension/pensionary benefits to its employees
479 H
480 SUPREME COURT REPORTS (2004] 2 S.C.R.

A were transferred and vested in the Indian Oil Corporation. Fund created
by the company for payment of pension to its retired employees stood
transferred to the Indian Oil Corporation and these retirees had been
receiving pension therefrom. In pursuance of the revised Pension Scheme,
1983, Indian Oil Corporation in 1995 promulgated a formula for revision
B of pension in respect of the employees of Indian Oil Corporation (Assam
Oil Division). However, the said scheme was made applicable to the
employees who had retired after 1st December, 1994. The cut-off date was
-
challenged by the retired employees in the matter ofSubrata Sen and Ors.,
v. Union of India and Ors., (2001] 8 SCC 71 and this Court set aside the
cut-off date, thereby employees retired before the cut-off date became
C eligible to get benefits of the revised pension scheme. However, the Indian
Oil Corporation denied benefits of the revised scheme to the retirees of
the Oil Company. Hence the present writ petition.

It was submitted by the petitioners-retirees of the Company that the
pension fund as existed prior to appointed date stood transferred to the
D successor Indian Oil Corporation; that they have been receiving pension/
pensionary benefits from the Indian Oil Corporation; that the pension fund
was reconstituted by virtue of Section 12(3) of the Nationalization Act;
and that they were entitled to get benefits of the revised Pension Scheme
by virtue of provisions of law under Section 12(1)(4) of the Act.
E On behalf of the respondents, it was submitted that the retirees prior
to the appointed date were not the employees transferred to the successor
Indian Oil Corporation and the revised Pension Scheme, 1983 did not
apply to them; that no pension fund was transferred to the Indian Oil
Corporation for making payments of pensionary benefits to retirees of the
p Company; that the retirees of the Company had been deriving benefits as
per Pension Scheme, 1973 promulgated by the Company viz. from
annuities purchased by the .retirees from the Life Insurance Corporation
before their retirement; that the retirees of the Company had no link with
the Indian Oil Company; .and that the retirees. of the Company were not
entitled to claim benefits of the revised Pension Scheme.
G
Allowing the Writ Petition, the Court

HELD: 1.1. The Central Government or the successor company
· cannot claim to have totally snapped all its connections with the retired
employees of the Oil Companies on the Company being taken over, as it
H would be clear from the later part of Section 6(1) of the Nationalisation
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS 1·. U.O.L 48 J

Act that the liabilities of the Central Government or the successor A
company would include all borrowings, liability of payment of taxes if an:v,
and for the payment of any pension and other pensionary benefits to the
persons employed in relation to its undertakings in India. Thus, the liability
of pension or pensionary benefits of the employees of the specified
company (Assam Oil Company Limited) cannot be shed off in the manner
tried to be done and canvassed by the respondents. The liabilities in B
relation to pension and pensionary benefits of the employees of the
specified company is also very much taken over by the Central
Government, or the successor company. [488-B-D]

1.2. The Scheme of 1973 was framed by the Assam Oil Company C
Ltd. creating a trust and a deed thereof for the pensionary benefits to its
employees. By no means it can be said that it was a matter exclusively
betw_een the employee and the Life Insurance Corporation and nothing
beyond it. Such existing rights as on the appointed day could not be
prejudiced or diminished in view of sub-section (3) of Section 12 of the
Act. (488-F, G] D
1.3. The Pension Scheme, 1983 has been framed and promulgated
for the employees of Assurance Company by the successor company in
pursuance of sub-section (3) of Section 12 of the Act and it is in respect of
employees who were working and taken over as employees of the successor
company with effect from the appointed day as well as those who were in E
receipt of pension or other pensionary benefits. The fund as existed on
the appointed day stood transferred and vested in the Central
Government/successor company. The fund which was existing on that date,
as constituted under the Scheme of 1973 was for the pensionary benefits
of employees in service or retired before the appointed date, viz. F
. 14.10.1981. As per requirement of law under Section 12(3) of the Act, the
objects of the 1983 Scheme are similar to the objects of the Scheme of
1973. The pension fund 1983 has been made effective from the appointed
date. The fund then existing as constituted by the Assam Oil Company
Limited stood transferred and vested in the successor company on the own
showing of the respondents. It cannot be said that there existed no fund G
for pensionary benefits of the petitioners viz. retirees of the Oil Company

- or that it did not vest in the successor company. (491-A-DJ

1.4. The petitioners were undoubtedly the members of the existing
fund, namely, the fund created under the Scheme of 1973 for pensionary H
482 SUPREME COURT REPORTS [2004] 2 S.C.R.

A benefits of the employees of the company and the fund was existing on
--
the appointed day. Therefore, under the definition of transferred employee
the pensioners receiving pensionary benefit from the existing fund as on
the appointed day shall also be treated as transferred employees for the
purposes of the Scheme of 1983 and further in the definition of the term
'member' an employee of the Corporation includes a transferred
B employee. Since almost all the conditions of 1983 Scheme are similar to
that of the earlier Scheme, and there was no denial of the fact that the
petitioners/retirees of the company were still being paid their pensionary
benefits. The petitioners who have been the pensioner-members of the 1973
Scheme on the appointed day cannot be deprived of the pensionary benefits
C of the Corporation being very much the members of the Scheme of 1983.
That being the position, the benefit of revised pension Scheme could not
be denied to them. In the absence of any provision providing for
application of the revised formula, 1995, the formula would be applicable
to all members of the Scheme of 1983 irrespective of date of their
D retirement. The entitlement of the petitioners for pensionary benefits
according to the revised formula is in consonance with the facts and the
provisions of Section 6(1) and Section 12(3) and (4) of the Act and the
Pension Scheme of 1983. Any other interpretation would be against the
facts and meaning and the spirit of these provisions. Certainly those
employees who were not entitled for pension at all, could not be included
E in the fold of the pensioners to whom enhancement of pensionary benefit
would be applicable. (491-F-H; 492-A, E-G; 493-C)

Subrata Sen and Ors. v. Union of India and Ors., (2001J 8 SCC 71; V
Kasturi v. M.D. State Bank of India and Anr., [1998) 8 SCC P. 30 and
Hariram Gupta v. State of UP., (1998) 6 SCC 328, distinguished.
F
2. The respondents are directed to make available the pensionary
benefits to the petitioners in accordance with the formula of 1995 for
revised pension. (494-B)

CIVIL ORIGINAL JURISDICT.ION : Writ Petition (C) No. 42 of
G 2003.
(Under Article 32 of the Constitution of India.)

G.L. Sanghi, Pramod B. Agarwala, Ms. Praveena Gautam and Ms.
Reena Kheir for the Petitioners.
H .
;

I
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS v. U.0.1. [BRJJESH KUMAR, J.] 483

-- Raju Ramachandran, Additional Solicitor General, Raj Birbal, Tufail
A. Khan, C.V. Subba Rao, B.V. Balaram Das, Rakesh K. Khanna, Mrs.
A

Rashmi Khanna, Shashank Shekhar and Surya Kant for the Respondents.

The Judgment of the Court was delivered by

BRIJESH KUMAR, J. This Petition has been filed under Article 32 B
of the Constitution of India by the pensioners all of whom are said to be over
75 years of age and had been serving the Assam Oil Company Limited,
having retired on or before October 13, 1981. These petitioners claim benefit
of the revised pension scheme as made admissible to the retirees of Indian
Oil Corporation without any distinction or cut-off date of retirement.
c
The Assam Oil Company Ltd. as well as the Burmah Oil Company
Limited were nationalized and taken over by the Government of India by
virtue of the Burmah Oil Company (Acquisition of Shares of Oil India Ltd.
and of the undertakings in India of Assam Oil Company Limited and the
Burmah Oil Co. (India Trading Ltd.) Act, 1981 (hereinafter to be referred to D
as 'the Act'). As per provisions of Section 5 of the Act, with effect from the
appointed date, namely 14.10.1981 the right, title and interest of the said
companies in relation to their undertakings in India were to be transferred
and vested in the Central Government. Under sub-section (I) of Section 6 of
the Act, the undertakings of the companies would be deemed to include all
assets, rights, powers, books of accounts, records etc. including the borrowings, E

- li;ibilities including the liability for the payment of taxes, if any, and for the
payment of any pension and other pensionary benefits to the persons employed
in relation to its undertakings in India etc. By virtue of Section 9 of the Act
the undertakings vested in the Central Government, instead of continuing to
be so, could later be vested in one or more government companies. There F
is no dispute about the fact that the Assam Oil Company Limited after having
been taken over and vesting in the Central Government, later vested in the
Indian Oil Corporation Limited (Assam Oil Division) vide Notification dated
13. l 0.198 l. All the employees of the specified company employed
immediately before the appointed date became officers and the employees of
the Central Government/successor government company. Sub-section (1) of G
Section 11 relevant for the purposes reads as under :

"11.(1) Every whole-time officer or other employee of a specified
company who was, immediately before the appointed day, employed
by that company in connection with its undertakings in India, and
every whole-time officer or other employee of a specified company H
484 SUPREME COURT REPORTS [2004] 2 S.C.R.
-~

A who was, immediately before the appointed day, temporarily holding
any assignment outside India shall, on the appointed day, become an
officer or other employee, as the case may be, of the Central
Government or the concerned Government company (hereinafter
referred to as the successor Government company) in which the right,
title and interest of the specified company in relation to its undertakings
B in India have vested under this Act and shall hold office or service
under the Central Government, or the successor Government company,
as the rights to pension, gratuity and other matters as woul!i have
been admissible to him if there had been no such vesting and shall
continue to do so unless and until his employment under the Central
c Government or the successor Government company is duly terminated
or until his remuneration and conditions of service are duly altered by
the Central Government or the successor Government company.

(2) xxx xxx

(3) xxx xxx
D
(4) xxxx xxx"

We find that in regard to those employees who were in receipt of pension or
other pensionary benefits immediately before the appointed date, a provision
has been made under Section 12 of the Act, which reads as under :
E
"12. (1) Where a provident, superannuation, welfare or other fund
has been established by a specified company for the benefit of the
persons employed by it in connection with its undertakings in India,
or for the benefit of such persons and persons employed by Oil India,
the money relatable to the employees -
F
(a) whose services are transferred by or under this Act to the Central
Government or the successor Government Company, or as the
case may be, continued with Oil India, or
(b) who are in receipt of pension or other pensionary benefits
G immediately before the appointed day.

Shall, out of the moneys standing, on that day, to the credit of such
provident, superannuation, welfare or other fund, stand transferred to,
and vested in, the Central Government or the successor Government
Company, or Oil India, as the case may be, free from any trust that ·-
I

H may have been constituted by the specified company in respect thereof.
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS v. U.0.1. [BRIJESH KUMAR, J] 485

(2) The moneys which stand transferred, under sub-section (1) to the A
Central Government or the successor government company or
Oil India shall be dealt with by the Central Government or that
company, or Oil India, as tl1e case may be, in such manner as
may be prescribed.

(3) The successor Government company or Oil India, as the case B
may be, shall, as soon as may be after the appointed day,
constitute, in respect of the moneys and other assets which are
transferred to, and vested in, it under this section, one or more

-
trusts having objects as similar to the objects of the existing
trust, as in the circumstances may be practicable; so, however, .
that the rights and interest of the beneficiaries of the trust referred C
to in sub-section (1) are not, in any way, prejudiced or diminished.

(4) Where all the moneys and other assets belonging to an existing
trust are transferred to, and vested in the Central Government, or
the successor Government company or Oil India under this
section, the trustees of such trust shall, as from the date of such D
vesting, stand discharged from the trust except as respects things
done or omitted to be done before the date of such vesting."

The case of the petitioners is that by virtue of provisions contained in Section
12 quoted above, the existing fund for the purposes of pension of the retired E
employees as it stood on 13.10.1981 out of which petitioners were paid
pensionary benefits also stood transferred to the successor company, namely,
the Indian Oil Corporation (Assam Oil Division) (Central Government). It
is further the case of the petitioners that by virtue of the above said provision,
they have been receiving their p"ensionary benefits from the Indian Oil
Corporation (AOD). It was in 1995 that the Indian Oil Corporation F
promulgated a formula for revision of pension in respect of Indian Oil
Corporation (AOD). The said notification relating to staff pension fund is
dated 10.3.1995. However, the said scheme was made applicable to those
employees who had retired after l.12.1994. The said cut-off date was,
however, challenged by some of the retired employees of the Indian Oil
Corporation (AOD) objecting to the cut-off date. This Court in the said G
petition filed under Article 32 of the Constitution set aside the cut-off date
deleting the words ''retiring from December, 1994 onwards" from the

- Notification. The said decision is reported in [2001] 8 SCC p.71, Subrata
Sen and Ors. v. Union of India and Ors., but the benefit of the revised
pension scheme was not made admissible to the petitioners namely, the retirees H

'
486 SUPREME COURT REPORTS (2004) 2 S.C.R.

A prior to 14.10.1981 i.e. before the date of nationalization of the Assam Oil
Company Ltd .. The case of the petitioners is that the petitioners were covered
under the Assam Oil Staff Pension Fund which was reconstituted by virtue
of Section 12(3) of the Nationalisation Act and after nationalization they
have been getting pension under the said scheme, therefore, they cannot be
denied the benefit of revision of pension which took place in 1995. As
B pensiQners of the erstwhile Assam Oil Company Ltd. their relationship
continues as such with the successor company by virtue of clause (4) sub-
section ( 1) of Section 12 of the Act like that of the existing staff of the Assam
Oil Company Ltd. with the successor company after nationalization.

c is thatThe respondents have disputed the claim of the petitioners. Their case
the retirees prior to 14. l 0.1981 were not the employees transferred to
the successor company by virtue of Section 11 of the Nationalisation Act. It
does not cover the employees who had already retired before the taking over
of the Assam Oil Company Ltd.. That being the position the Notification
dated 10.3.1995 modifying the scheme of 1983 revising the pensionary benefits
D does not apply to the petitioners. It is further averred in the counter affidavit
that liability of pension and pensionary benefits of the retired employees, is
taken care of, as provided under Section 6(1) of the Nationalisation Act. It
is also denied that any fund was established by the Assam Oil Company Ltd.
or was transferred under Section 12(1) of the Nationalisation Act to the
E Central Government/Indian Oil Corporation for pensionary benefits of the
employees retired prior to 14.10.198 l. The Scheme of 1973 out of which
petitioners had been deriving. the pensionary benefits, was for purchase of
annuities from the life insurance corporation for such employees before their
retirement. Paragraph 19 of the counter affidavit is quoted below : .

F "19. That the contents of para 5(xiv) are wrong and denied. Under
the Assam Oil Company Pension Fund Rules and Scheme 1973, the
member of the scheme was being purchased annuities on or before
his retirement and it was from the said annuity purchased in his name
that he continues to derive pension for his life. There is nothing to
the credit of the person under the fund after annuities were purchased
G in his name. That being so no money is transferred under Section
12(1) of the Act in so far as the person who stood retired on or
before the appointed date like the petitioners. The petitioners are
getting pension from LIC by virtue of their being beneficiaries of the
annuities purchased in their name and not from the funds which stood
transferred from Assam Oil Company to IOC. It is wrong to suggest
H
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS v U.0.1. [BRIJESH KUMAR, J.] 487

- that the petitioners are entitled to any additional benefits as have been
granted to the retired employees who had retired on or after 14.10.1981
as per the judgment of this Hon'ble Court."
A

The respondents submit that the Indian Oil Corporation (AOD) Staff Pension
Fund Scheme, 1983 was not meant for the retirees who had retired earlier as
employees of the Assam Oil Company Ltd., viz. those who had never become B
the employees of the Indian Oil Corporation. Therefore, they were not the
beneficiaries of the Scheme of 1983. The Annuity based benefit as in vogue
prior to the taking over of the company, under the scheme of 1973, it continues
and the petitioners are ·entitled to pensionary benefits based on annuity
purchased on their' behalf. It is further sought to be impressed that it was a C
kind of an arrangement between those employees in whose names annuities
were purchased and the LIC. There was no pensionary fund or any other
monies for the benefit of the retired employees covered under the Scheme of
1973. Thus the employees who had already retired before the appointed day
could have no link with the successor company which had taken over after
the retirement of the petitioners. In so far the employees who were in service D
of the Assam Oil Company Ltd. on the appointed day of taking over, a new
Scheme was promulgated for them in the year 1983 creating a trust for the
pensionary benefit of such employees. The retirees of pre-appointed day are
neither covered nor have any concern with the Scheme of 1983 and that
being the position there is no occasion for them to take any benefit of the E
revision of pension in 1995.

We feel that the above argument as advanced on behalf of the
respondents needs to be closely examined and in connection therewith we
may refer to sub-section (1) of Section 6 of the Act which reads as under :

"6(1) Subject to the provisions of sub-section (2), the undertakings of F
each specified company shall be deemed to include all assets, rights,
powers, authorities and privileges and all property, movable and
immovable, including any designs, trade marks, trade names, style of
labeling, station decor or any distinctive colour schemes, cash balances,
reserve funds, book debts, investments and all other rights and interests G
in, or arising out of, such property as were, immediately before the

.. appointed company, in relation to its undertakings in India, and all
books of account, registers, records and all other documents of
whatever nature relating thereto and shall also be deemed to include
all borrowings, liabilities (including the liability for the payment of
H
488 SUPREME COURT REPORTS [2004) 2 S.C.R.

A taxes, if any, and for the payment of any pension and other pensionary
benefits to the persons employed in relation to its undertakings in
India) and obligations of whatever kind of the specified company in
relation to its undertakings in India;"

A reading of the above provision makes it clear that the Central Government
B or the successor company cannot claim to have totally snapped all its
connections with the retired employees of the oil companies on the company
being taken over, as it would be clear from the later part of Section 6(1) that
the liabilities of the Central Government or the successor company would
include all borrowings, liability of payment of taxes if any, and for the
C payment of any pension and other pensionary benefits to the persons employed
in relation to its undertakings in India namely, the specified company i.e. the
Assam Oil Company Limited. Thus, the liability of pension or pensionary
benefits of the employees of the specified companies (Assam Oil Company
Limited) cannot be shed off in the manner tried to be done and canvassed
by the respondents before us. The liabilities in relation to pension and
D pensionary benefits of the employees of the specified companies (Assam Oil
Company Limited) are also very much taken over by the Central Government,
or the successor company. We have already quoted Section 12 of the Act.
To lay emphasis on sub-section (3) of Section 12 we would like to highlight
that the Central Government or successor company after the appointed day
E shall constitute one or more trusts in respect of the monies and other assets
which are transferred or vested in government of the successor company
having objects similar to the existing trust without prejudice to the existing
rights of the beneficiaries of the trust.
-
The Scheme of 1973 was framed by the Assam Oil Company Ltd.
F creating a trust and a deed thereof for the pensionary benefits of its employees.
Such existing rights as on the appointed day could not be prejudiced or
,J
diminished in view of sub-section (3) of Section 12 of the Act. The Central
Government or the successor company was supposed to frame a scheme
having objects similar to those which were already e~isting under a similar
scheme. This makes us to examine the provisions of the two schemes namely,
G the one which was framed in the year 1973 for the employees of Assam Oil
Company Ltd. and the other which has been framed by the successor company
in the year 1983 which can well be referable to sub-sections (3) and (4) of ...
Section 12 of the Act. A copy of the Scheme of 1973 has been placed on
record as Annexure P-2. It is titled as the Assam Oil Staff Pension Fund.
H The rules of the fund are known as the Rules of the Assam Oil Staff Pension
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS v. U.0.1. [BRIJESH KUMAR, J.] 489

Fund of Assam Oil Company and associated companies (approved by the A
Commissioner of Income Tax (Central), Calcutta, with effect from August I,
1973. It prescribes as to who would be the members of the scheme and that
pension would be payable on completion of certain given period of service.
The calculation of the amount of pension as was payable had also been
prescribed under the rules. There is a provision for pre-mature pension as B
well. A part of the pension is also commutable in discretion of the trustees
subject to provisions of Rule 90 of the Income Tax Rules, 1962. At the time
of retirement, if the employee has some dependents, the trustees, may, at
their discretion, reduce his pension to pay the same to the dependents. There
are detailed rules meeting different kind of eventualities, eg. in case of the
death of the retiree or his widow and dependents so on and so forth. The C
trustees on the request of the employer have power to withhold or discontinue
the pension or annuity or a part thereof or deprive him of the benefits if the
member is dismissed for fraud or dishonesty or misconduct. It is further
provided that no person shall be entitled to transfer or assign by way of
security or otherwise his interest in the fund and such a transfer or assignment
made will not be valid. As provided under Rule 9 in certain eventl,lalities D
money payable to the member may be forfeited to the fund. The trustees are
to deduct at source any tax payable or any pension granted pursuant to the
rules. Rule 13 further provided that no member shall have any right against
trustees or any assets of the fund except the right to the payment of the
pension in accordance with the rules. The "fund" has been defined as- E
"means Assam Oil Staff Pension Fund hereinbefore referred to and includes
the moneys, policies of insurance or other property which may be received
by the Trustees pursuant to these presents and the assets for the time being
representing the same and. the income thereof."

It is, therefore, clear from the Scheme of 1973 that it has been framed F
by the then employers for the pensionary benefits of its employees. All
details about entitlement, dis-entitlement, mode and manner of payment and
different claims in different circumstances are all provided for in the rules
framed under the Scheme. Pension could be reduced or stopped in terms of
the scheme. In certain eventualities the amount could even be forfeited to the G
fund. The manner in which the pension is to be calculated is also detailed
in the rules. Therefore, to say that the pensionary benefit was an arrangement
between the employee and the LIC, may not be correct. The erstwhile
employer, namely the Assam Oil Company Ltd. did not act merely as a
mediator in facilitating purchase of annuity for the employees. The scheme
provided the manner in which the pensionary fund was to be raised and the H
490 SUPREME COURT REPORTS (2004] 2 S.C.R.

A manner in which it was to be disburse_d and paid as pension. It provided all
other detaiis by which the objective to provide pensionary benefits to its
employees was sought to be achieved. By no means it can be said that it was
a matter exclusively between the employee and the LIC and nothing beyond
it.

B We may now examine the Scheme of 1983 which has been prepared
and promulgated by the successor company for the employees who were
working in the Assam Oil Company Ltd. and were taken over as employees
of the successor company on the appointed day. It is titled as the Indian Oil
Corporation Limited (Assam Oil Division) Staff Pension Fund Trust Deed.
C The deed in its preface avers as follows :

"Whereas under section 12(1) of the Burmah Oil Company
(Acquisition of shares of Oil India and of the undertakings in India
of Assam Oil Company Limited and the Burmah Oil Company (India
Trading) Limited Act, 1981 (41 of 1981) (hereinafter referred to as
D the "Acquisition Act"), the monies standing to the credit of the Assam
Oil Staff Pension Fund (hereinafter referred to as the "Existing Fund"),
a fund established for the benefit of the employees of the Assam Oil
Company Limited in respect of such employees whose services were
transferred to the Corporation (hereinafter referred to as the
"Transferred Employees") and who were in receipt of pension or
E other pensionary benefits, stand transferred to and vested i11 the
Corporation with effect from 14th October, 198 l (hereinafter referred
to as 'the Appointed Day"), free from any trust constituted by the
Assam Oil Company Limited in respc:ct thereof.

AND WHEREAS the Existing Fund is an approved superannuation
F fund within the meaning of section 2(6) of the Income-tax Act, 1961;

AND WHEREAS under section 12(3) of the Acquisition Act, the
-.
Company is required to establish a separate Pension Fund (hereinafter referred
to as "the Fund"), in respect of the monies transferred to and vested in the
G Corporation as above, having objects as similar to the objects of the Existing
Fund, so as to provide pension benefits to those Transferred Employees and
other employees of the Corporation who shall be admitted as members of the
Fund (hereinafter referred to as the "Members")."

(Emphasis supplied by us)
H
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS v. U.O.L [BRIJESH KUMAR, J] 49 J

It is thus clear from what has been quoted above that the Pension Scheme A
1983, has been framed and promulg?.ted in pursuance of sub-section (3) of
Section 12 of the Act and it is in respect of employees who were working and
taken over as employees of the successor company with effect from the
appointed day as well as those who were in receipt of pension or other
pensionary benefits. It further mentions that the existing fund stood transferred B
and vested in Corporation with effect from 14th October, 1981 free from any
trust constituted by the Assam Oil Company Limited in respect thereof. The
fund as existed on the appointed day stood transferred and vested in the
Central Government/successor company. We have already seen that the fund
which was existing on that date, as constituted under the Scheme of 1973 was
for the pensionary benefits of employees in service or retired before C
14.10.1981. As per requirement of law under Section 12(3) of the Act, the
objects of the 1983 Scheme are similar to the objects of the existing fund
namely, the fund of 1973. The Pension Fund 1983 has been made effective
from 14.10.198 l. The fund then existing as constituted by the Assam Oil
Company Limited stood transferred and vested in the successor company on
the own showing of the respondents. It is totally incorrect to say that there D
existed no fund for pensionary benefits of the petitioners viz. retired employees
of the Assam Oil Company Limited or that it did not vest in the successor
company. The Trust Deed of 1983 does not talk of any partial transfer and
vesting of the existing fund. A further examination of the scheme shows that
the working of the Staff Pension Fund Rules of Indian Oil Corporation Limited E
(AOD) is similar to the scheme of 1973 and the rules framed thereunder.
The term 'transferred employee' has been defined under rule 2(i) providing
that the word 'transferred employee' means an employee of the Assam Oil
Company Limited who was on or before the appointed day a member of the
existing fund and in respect of whom the money is lying to the credit in
existing fund stood transferred or vested in the Corporation under Section F
12(1) of the Act. The petitioners were undoubtedly the members of the existing
fund namely, the fund created under the Scheme of 1973 for pensionary
benefits of the employees of the company and which fund was existing on
the appointed day. Therefore, under the definition of transferred employee
the pensioners receiving pensionary benefit from the existing fund as on G
14. 10.1981 shall also be treated as transferred employees for the purposes of
the Scheme of 1983 and further in the definition of the term 'member' an
employee of the Corporation includes a transferred employee. A perusal of
the further details of the working of the Scheme of 1983 also shows that it
functions in the same manner as did the 1973 Scheme i.e. by purchasing
annuity from the LIC. Almost all the conditions are similar to that of the H
492 SUPREME COURT REPORTS [2004] 2 S.C.R.

A earlier scheme. The petitioners who have been the pensioner members of the
1973 Scheme on the appointed day cannot be deprived of the pensionary
benefits of the Corporation being very much the members of the Scheme of
1983. That being the position the benefit of revised pension scheme of 1995
could not be denied to them.

B In regard to the decision rendered by this Court in the case of Subrata
Sen (supra) it has been vehemently urged on behalf of the respondents that
the said decision will have no bearing on the merits of the present case since
in that case the controversy was raised by those who were working on the
appointed day as employees of the Assam Oil Company Limited and were
C taken over as the employees of the Indian Oil Corporation but had retired
thereafter before December, 1994. That is to say the benefit of the revised
fonnula of computation of the pension under the 1995 Scheme was available
to only those who had retired after December, 1994. It is submitted that no
question"relating to retirees prior to 14.10.1981 was involved in that decision.
Therefore, deletion of the part of the scheme providing for those who were
D "retired from December, 1994 onwards" will cover only those employees
who may have retired after the appointed day and before December, 1994.
In the first place it may be indicated that the argument as advanced makes
no difference on the merits as the embargo placed on availability ofpensionary
benefits according to the revised formula on the basis of the date ofretirement
E has been removed. That is to say broadly the benefit of the revised formula
would be available to those who had retired even prior to December, 1994.
In absence of any such provision providing for application of the revised
fonnula to those who "retired from December, 1994 onwards", the 1995
fonnula would be applicable to all members of the Scheme of 1983 irrespective
of date of their retirement. It is the case of the respondents also that the
F revised formula of 1995 would be applicable to those who are members of
the Scheme of 1983. We have already found that pensioners under the 1973
Scheme would also become members of the 1983 Scheme as per the provisions
of the Scheme of 1983 itself. We also notice that the submissions have been
advanced on behalf of the respondents against the facts averred and narration
G made in the Pension Scheme of 1983. The entitlement of the petitioners for
pensionary benefits according to the revised formula is in consonance ~ith
the facts and the provisions of Section 6 (1) and Section 12 (3) and (4) of
the Act and the Pension Scheme of 1983. Any other interpretation would be
against the facts and the meaning and the spirit of these provisions.

H Respondents have placed reliance upon a decision reported in [1998] 8
PENSIONERS' ASSOCIATION, EX-ASSAM OIL OFFICERS v. U.O I. [BRIJESH KUMAR, J.) 493
---- sec p.30, v Kasturi v. MD., State Bank of India and Anr., to contend that A.
an amendment enhancing the pension or providing for a new formula of
computation of pension would not be applicable to the earlier retirees unless
such provision is expressly made applicable to them. We, however, find that
the above noted decision would be of no help to the respondents' case since

- what has been held is that if a person is already getting pensionary benefits
and an amendment is effected for upward increase in pension, such a retiree B
would be entitled for the enhanced benefit and the same could not be denied
for the reason that he had already retired before the change came into effect.
Certainly those who were not entitled for pension at all, could not be included
in the fold of the pensioners to whom enhancement of pensionary benefit
would be applicable. That is to say such benefit would be available to C
existing pensioners and not to those who were not entitled to pension at all
nor they were getting the same. Besides the above, we have already found
that the petitioners have been members of the Scheme of pension of 1973
framed by their erstwhile employer Assam Oil Company Ltd. under which
they had been getting their pension according to the rules framed to administer D
the pension fund. That is to say they were the members of the existing
pension fund at the time of taking over of the undertaking by the Central
Government. Pension fund also stood transferred and vested in the Central
Government/successor company as would be evident from the avennents
made in the Scheme framed in the year 1983. We have already discussed in
detail how the pensioners of the specified company also became members of E
the Scheme of 1983 which was made effective from 14.10.1981. There is no
denial of the fact that the petitioners were still being paid their pensionary
benefits. In such facts and circumstances the petitioners would be entitled
for the benefit of the new fonnula introduced in 1995, rather that benefit
could not be denied to the petitioners in the light of the decision in the case

-· of Kasturi (supra). Even according to the respondents the benefit of the new F
fonnula was available to those who were members of the 1983 Scheme.
Reliance placed on another decision of this Court reported in [ 1998] 6 SCC
p.328, Hariram Gupta v. State of U.P. would also not be applicable to the
facts of the case in hand. It is not the case of the respondents that the
petitioners are to be deprived of the benefit of the new fonnula in view of G
any cut-off date excluding them or due to financial constraints or the like
reasons. On the other hand, the case of the respondents is that the petitioners
had no concern whatsoever with the successor company since they had retired
prior to the appointed date; there was no pension fund for them nor the
successor company had -to do anything with their pensionary benefits since
it was a case where annuities were purchased in their name from the LIC, H
494 SUPREME COURT REPORTS (2004] 2 S.C.R.

A therefore, it was a matter between the petitioners and the LIC. In view of the
provisions of law which have been discussed in the earlier part of the judgment
as well as factual position, the stand taicen by the respondents is not sustainable.
The petitioners were beneficiaries of the I 973 Pension Scheme and had also
become the members of the 1983 Scheme which made them entitled for the
B benefit of formula for revision of pension made effective from 1995.

In the result, we allow the writ petition and direct the respondents to
make available the pensionary benefits to the petitioners in accordance with
-
the formula of 1995 for revised pension. The arrears as may be found due
shall be cleared within a period of four months from today.

c Costs easy.

S.K.S. Petition allowed.
·,
~

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