Punjab’s power corporation entitled to fix its own cut-off date for pension benefits: HC

The Punjab and Haryana High Court has ruled that the Punjab State Power Corporation Limited (PSPCL), being a statutory corporation, is entitled to prescribe a cut-off date for implementing the recommendations of the Fifth Pay Commission in view of its financial health. The Court held that the inability of the Corporation to extend enhanced pensionary benefits to employees retiring before December 1, 2011, stood justified as it was backed by cogent financial material and “is not arbitrary in nature.”

Justice Harpreet Singh Brar observed that the Punjab State Electricity Board was a statutory body formed on February 1, 1959, under the Electricity Supply Act, 1948. It was subsequently unbundled into two companies — Punjab State Power Corporation Limited and Punjab State Transmission Corporation Limited — vide Notification dated April 16, 2010.

“Thus, admittedly, the Corporation is a statutory body,” the Bench observed, before examining whether it could deviate from the recommendations of the Fifth Pay Commission and set its own cut-off date based on its financial health.

Justice Brar relied on an affidavit filed by the Corporation to assess its fiscal position. The affidavit stated that 9,729 employees retired between January 1, 2006, and November 30, 2011, with 25 to 33 years of service, creating a liability of about Rs.277.80 crore up to December 31, 2019. Out of them, 1,541 retirees had passed away, reducing the net liability to Rs.233.79 crore for 8,188 retirees, besides an additional Rs 44 crore towards family pension for the deceased retirees.

The affidavit added the Corporation would have to bear an *extra burden of Rs 94 crore if the Fifth Pay Commission’s benefits were extended from January 1, 2006, at a time when it had already suffered a loss of Rs 6,938.99 crore in 2017-18.

The Bench concluded that “sufficient material has been placed on record to show that the financial health of the Corporation is not sound enough to extend the enhanced pensionary benefits to those who retired prior to December 1, 2011. Further, it is no longer res integra that fiscal health is a relevant consideration for a Corporation to decide the commencement date of enhanced pensionary benefits.”

Rejecting the plea that the cut-off date was arbitrary, Justice Brar asserted: “In the absence of any specific arguments on part of the counsel for the petitioner indicating that the said cut-off date has led to a blatantly capricious or outrageous result, this Court is of the considered opinion that respondents were justified in deciding to implement the recommendations of the Fifth Pay Commission with effect from December 1, 2011, and this exercise is not tainted by arbitrariness.”

Before parting, the Bench dismissed all the connected petitions challenging the Corporation’s decision.