FACTS
The petitioner, a former employee of Burmah Shell Oil Storage Ltd., retired under a voluntary retirement scheme in 1973. Upon the acquisition of Burmah Shell by the Central government in 1976, it became a subsidiary of Bharat Petroleum Ltd. Post-retirement, the petitioner received a reduced pension, with deductions for employee provident fund (EPF) and gratuity, leading to dissatisfaction. Aggrieved, the petitioner approached the Supreme Court under Article 32 of the Indian Constitution.
ISSUES
- Whether a company acquired by the Central government falls within the definition of “State” under Article 12?
- Whether the deductions made from the petitioner’s pension in the name of gratuity and EPF were justified?
CONTENTIONS
- The petitioner contended that deductions from his pension were unjust and sought their invalidation.
- Respondents argued against the maintainability of the writ petition and defended the deductions, stating they were
legitimate for social security purposes.
RATIO DECIDENDI
The Supreme Court bench, comprising Justice V.R. Krishna Iyer, Justice O. Chinarajappa, and Justice R.S. Pathak, clarified that entities like Bharat Petroleum Corporation Ltd. fall under the definition of “State” as per Article 12. It deemed the deductions unjust, emphasizing that reductions in pension negate the intended benefit to employees.
DECISION
Despite a dissenting opinion from Justice Pathak, the bench unanimously allowed the petitioner’s appeal. Bharat Petroleum Corporation Ltd. was held to be a “State” under Article 12. The deductions from the petitioner’s pension were deemed unjust, emphasizing the need for independent consideration of gratuity and provident fund payments in employee social security benefits.
CONCLUSION
The case sets significant precedents in both constitutional law and social justice for employees. It underscores the importance of interpreting social security measures liberally to ensure maximum benefit for employees and highlights the integral role of public sector undertakings in advancing the welfare state. The ruling emphasizes the necessity to prevent bifurcation and confusion in financial benefits to retired employees.
