CHAIRMAN & M.D., K.S.R.T.C. versus K.O. VARGHESE AND ORS.

Citation: [2007] 8 S.C.R. 164 · Decided: 09-07-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
CHAIRMAN & M.D., K.S.R.T.C. 
v. 
K.O. VARGHESE AND ORS. 
JULY 9, 2007 
B 
[H.K. SEMA AND P.K. BALASUBRAMANY AN, JJ.] 
Service Law: 
C 
Pension-Kera/a Service Rules-Part /II-Recommendations by 5th 
Kera/a Pay Commission relating to grant of enhanced pensionary benefits-
Dispute with regard to implementation of the recommendations in KSRTC, 
an autonomous Corporation-Court intervened and directed the State 
Government to take a policy decision-In view of the precarious financial 
position of KSR~C. direction by State Government to KSRTC that grant of 
D benefits of 5th ~ay Commission to pensioners of KSRTC be deferred until · 
better times-Held: The directiOn meant that the very question of adopting 
the recommendations of 5th Pay Commission stood postponed for better 
times-Financial position of KSRTC being not sound, decision taken by the 
State Government not to implemet:it. here and now, the recommendations of 
. E 5th Pay Commissidn for KSRTC and the decision based on it by KSRTC are 
fully justiji~d-The decision cannot be said to be vitiated by any ~traneous 
consideration or perverse appreciation of the circumstances obtaining-
Road Transport Corporation Act, 1950--s.34. 
The Government of Kerala authorized KSRTC, an autonomaus 
F Corporation established under the Road Transport Corporation Act, 1950, to 
pay pension to its employees as per the Kerala Service Rules (KSR). The 5th 
Kerala Pay Commission made recommendations relating to grant of enhanced 
pensionary benefits and other allowances to retired employees. Dispute arose 
with regard to implementation of the recommendations of the Pay Commission 
in KSRTC. Pursuant to intervention of the Court, the Government of Kerala 
G took a policy decision to direct KSRTC notto give the benetit' of the Sth Pay 
Commission to the pensioners of KSRTC until better times in view of the 
., . 
precarious financial condition of KSRTC. 
~ 
H 
High Court, vide the impugned judgment, held that the adoption of Part 
164 
CHAIRMAN & M.D., K.S.R.T.C. v. K.O. VARGHESE 
165 
III of KSR by KSRTC, was an exercise of legislation by reference and if and A 
when the Government adopted the recommendation of the Fifth Pay 
Commission in respect of its employees governed by Part.Ill of the KSR, 
KSRTC was also obliged to implement the recommendation in respect ofits 
employees with effect from the same date. The Court held that in the absencie 
of any specific regulation being framed by KSRTC and in the absence of a 
direction under Section 34 of the Act by the State Government to KSRTC tp B 
fix a different cut-off date, KSRTC was bound to implement the 
.J 
recommendation of the Fifth Pay Commission and to grant revised pensionary 
benefits and dearness relief to all its employees on par with the government 
employees. Hence the present appeals. 
Allowing the appeals, the Court 
HELD: 1.1. KSRTC is an autonomous Corporation established under 
c 
the Road Transport Corporation Act, l 950. It can regulate the service of its 
employees by making appropriate regulations in that behalf. Until such 
regulations are framed, it is entitled to take note of its financial health in D 
considering whether a particular recommendation for enhanced pay or pension 
in respect of Government employees should be adopted by it and if it is to be 
adopted by it, from what point of time. This, of course, would be subject to any 
direction that may be issued by the State Government in terms of Section 3'4 
of the Act. (Para 151 (175-8-DI 
E 
1.2. When the Court intervened and directed the Government to take a 
policy decision and not leave the matter pending in view of the fact that the 
pensioners were generally senror citizens, t.he Government reconsidered the 
question and after examining the position in detail in the context of the 
financial position of KSRTC, took a decision that the grant of benefits of the F 
Fifth Pay Commission to the pensioners of KSRTC may be deferred for better 
times. This was a direction to KSRTC in terms of Section 34 of the Ac~. 
KSRTCwas therefore bound to implement this direction in the absence of1a 
regulation in that behalf. (Para 151 (175-E-FJ 
Kera/a State Road Transport Corporation v. K.O. Varghese & Ors., G 
(2003112 SCC 293; Mysore State Road Transport Corporation v. Babajan 
Conductor & Anr., (197712 S.C.R. 925; General Manager, Mysore State Road 
TransportCorpqration-v.. Dew:aj Urs. & A11r., 1197612 S.C.C. 862 and Union 
. of India v. P.N. Menon & Ors., AIR (19
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