Case Title: Managing Director, KSRTC & Anr. v. S.A. Suneesh Kumar & Ors.
Summary
The Kerala State Road Transport Corporation (KSRTC) filed an appeal with the Kerala High Court challenging the Single Judge’s decision to deposit employees’ and employer’s contributions to the National Pension Scheme (NPS) and the State Life Insurance Policy and Group Insurance Accounts within six months. The appeal was dismissed, and the Division Bench upheld the decision, finding no infirmity. The Single Judge argued that the Corporation is statutorily obligated to remit the funds to the Contributory Pension Scheme once deductions are effected, and the non-remittance of funds after deductions would suggest diversion for the Corporation’s own purposes. KSRTC argued that the National Pension Scheme provides for a delayed payment of contributions, which are deducted from salaries and accompanied by interest at the specified rate. The Bench rejected all arguments and found that the KSRTC’s failure to remit deductions from employees’ salaries was unjustifiable. The appeal was denied, and KSRTC was granted an additional six months to complete the payments.
About the case
The Kerala State Road Transport Corporation (KSRTC) filed an appeal with the Kerala High Court, which challenged the Single Judge’s decision compelling KSRTC to deposit both the employees’ and employer’s contributions to the National Pension Scheme (NPS) and the contributions to the State Life Insurance Policy and Group Insurance Accounts within six months. The appeal was recently dismissed.
The decision of the Single Judge was upheld by the Division Bench, which, consisting of Justice Alexander Thomas and Justice C. Jayachandran, found no infirmity.
“The primary factor that concerns us is the appellant-Corporation’s deduction from the employees’ salaries to contribute to the National Pension Scheme. The non-remittance of this deduction could not be justified under any legal principle.” The Corporation is statutorily obligated to remit the same to the Contributory Pension Scheme once such deductions are effected, as the learned Single Judge correctly maintained. The non-remittance of the aforementioned funds after the deduction has been made would clearly suggest that they have been diverted for the Corporation’s own purposes. This action is exceedingly unlikely to be justified. The Bench observed that the Corporation does not possess the right to satisfy its financial obligations by utilizing the employees’ contributions to the National Pension Scheme.
Justice Sathish Ninan dismissed a petition submitted by 106 KSRTC employees on February 23, 2023, after concluding that there was no justification for failing to remit the funds to the National Pension Scheme after the employees’ contributions had been deducted from their salaries. KSRTC preferred an appeal against this decision, emphasizing the Corporation’s dire financial circumstances.
The appellants contended that the National Pension Scheme provides for a delayed payment of contributions, which are deducted from the salary and accompanied by interest at the specified rate. Consequently, the Single Judge’s intervention was unnecessary. The appellant’s counsel further stated that the petitioners could have waited, particularly given their awareness of the Corporation’s financial situation, as they had not yet reached the age of retirement. Furthermore, it was argued that the Single Judge’s directives would encourage other employees in similar circumstances to seek legal assistance from the Court, thereby causing a complete breakdown in KSRTC’s financial management.
The Bench rejected all of the arguments put forth and was of the firm conviction that the KSRTC’s failure to remit the deductions from the employees’ salaries was unjustifiable. It was noted that the financial hardship posited by the KSRTC would not serve as a valid justification for the employee’s failure to remit their contribution to the National Pension Scheme. The Court was also unable to understand how the provision that mulcts the liability to pay interest on the belated payment of the employees’ contribution could be espoused as a right to delay the payment of the employee’s contribution to the respective head.
“The provision must strictly be in the form of a penalty to the Corporation, as it requires the payment of interest for the delayed amount.” Additionally, it is logical that the Corporation, which is currently in financial distress, will pay the interest in conjunction with the payment, resulting in a greater financial burden for the Corporation. Therefore, we do not find any validity in the argument that the petitioners could have afforded to wait, as they are not due for retirement. The Court observed that such a ground cannot be invoked to circumvent a statutory obligation, particularly when the employees’ contribution is acknowledged to have been deducted. It did not find any validity in the argument that the Court would be approached by similarly situated employees on these grounds.
Consequently, the appeal was denied, and KSRTC was granted an additional six months to complete the payments from the date of receipt of a copy of the judgment. Advocate Deepu Thankan, the Standing Counsel for KSRTC, and Advocates Ummul Fida, Lakshmi Sreedhar, Lekshmi P. Nair, and Namitha K.M. appeared on behalf of the Appellants. Advocate T.R.S. Kumar represented the respondents.
