Govt mulls PSU fund for retired workers’ medical scheme
Praveen Kumar Singh
Posted: Wednesday, Jul 15, 2009 at 2308 hrs IST
Tags: Retired Employees | Medical Scheme
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New Delhi: Retired employees of all profitable central public sector enterprises (CPSEs) may soon start receiving medical benefits from their ex-employers, if the government’s suggestion to this effect is implemented. The department of public enterprises (DPE) has asked the CPSEs to create a fund out of their profit before tax to meet the medical and other emergency needs of their retired workmen.
The CPSEs are required to contribute upto 1.5% of their profit before tax (PBT) to the corpus every year. However, they can identify the medical and other emergency needs for which the facility can be utilised. The CPSEs will not get any budgetary support from the government for providing the benefits. “The scheme may be set up where there is a need felt for such a scheme for retired employees of a CPSE. A Committee of Directors may be constituted by each CPSE for disbursement of fund to the retired employees. The committee may also identify the areas of medical and any other emergency needs,” the department said in the memorandum dated July 8, 2009, copies of which were also marked to the administrative ministries.
The memorandum stated, “In the introductory year of operation of the scheme, not more than 1.5% of previous year’s PBT will be permissible for funding of the scheme. In subsequent years, contribution to the corpus will be made depending upon the need. However, in no case the contribution to the corpus will exceed 1.5% of the PBT of the previous year”.
Reacting on the suggestion, the Standing Conference of Public Enterprises (SCOPE) said the move is positive in principle and will benefit the retired employees. “This is a positive move, as retired employees, who age at least 60 years, do need money to take care of their medical needs. However, given that it is still voluntary in nature, the extent of its implementation is a matter of concern,” SCOPE chairman Arup Roy Choudhury told FE.
Last year, the DPE had requested all the government ministries to communicate whether such a scheme is feasible and suggest the suitable methodology for its implementation. The call was given at the behest of the Second Pay Revision Committee, which had also recommended upto 300% hike in the pay package of CPSEs’ officers.
However, the ministries remained indifferent. Peeved over this, the department on its own issued the memorandum to all the CPSEs. “It is found that it would not be feasible to have a common/unified scheme for all the CPSEs. However, at the same time, a need is felt to have a scheme for the retired employees of a CPSE so that they can avail medical ad other emergency benefits. In such a situation, it would be better if the decision to create or otherwise a corpus to implement the recommendation is left to individual CPSEs,” the DPE said.
Multi Page Format
Saturday, October 29, 2011
CPSEs Corpus out of 1.5% PBT - letter dated 24.811 of National Confederatonation of Officers' Associaton (NCOA)
LETTER TO DPE
Posted on 17-Sep-2011
Queen City To
Sh. Ashok Kumar Pavadia
Jt. Secretary, DPE
24/08.2011
Respected Sir,
We met our Secretary DPE on 17/11/2009 and had a discussion on certain pending issues regarding pay revision. Further to this we would like to bring to your kind notice the following points with respect to the Pay revision of executives in Central Public Sector Enterprises effective from January 2007. These issues need your kind attention, as they are pending for a long time and are demoralizing the executives.
1. Periodicity:
The Office Memorandums issued by DPE regarding the Pay revision of executives in CPSEs have not mentioned about the periodicity. With the result the CPSEs at the time of pay revision effective from January 2007 have not mentioned about periodicity. Historically the Pay in CPSEs is revised once in 5 years except in 1997. In the case of workmen, for the pay revision due from 2007, the guidelines issued by DPE have given the option for the periodicity of 5 to 10 years. In the present context of free market economy, the salaries of executives in CPSEs have to be aligned to the market conditions as regularly as feasible to ensure that proper competent manpower is attracted and retained in the CPSEs, so that they can effectively compete with the Private Sector and Multi-National Enterprises. It may kindly be noted that the Pay revision for executives in Private Sector is carried out on a yearly basis. Also the pay revision for executives and workmen in an Enterprise has to be simultaneous to ensure that there are no serious anomalies (In the case of HMT, all the workmen draw Pay which is higher than the pay of even the General Manager). Keeping this in mind the pay revision for executives shall be carried out after 5 years in January 2012. In the long run the periodicity of Pay revision for employees in CPSEs shall be three years to align them with the market realities.
2. Revision of Pay scales for sick and marginally profit making companies: The 2nd Pay revision committee had recommended that Sick Enterprises that are making cash profits may be allowed to implement the pay revision without Risk Pay or Variable Pay. This recommendation of the committee has not been implemented so far. We request that the government should implement this recommendation and the revised pay scales should be implemented with effect from 1st January 2007 for the marginally profit making and sick CPSEs with 30% fitment benefit. The variable pay and revision of Perks & Allowances can be differed.
The 2nd Pay revision committee had also recommended that CPSEs that are not making cash profits should be examined by BRPSE in a period of 6 months for revival or enclosure. Enterprises that are recommended for revival should include the proposal for revised pay scales. If Enterprises are recommended for closure, the executives should be compulsorily retired by paying compensation based on the revised basic pay. We request that this recommendation of the committee should be implemented immediately. If the government delays a decision further, it may result in key executives leaving the Enterprise and it will become difficult for the government to revive these Enterprises subsequently.
3. Additional increments granted prior to 1st January 2007:
A few CPSEs especially under the Ministry of Defence Production have granted extraordinary additional increments to their executives prior to January 2007 as they are not able attract the best talent. These Enterprises are working in high tech-areas and were finding it very difficult to run the Enterprises as they are not able to attract the technically competent engineers in view of meager salaries when compared to the Private Sector and other CPSE Units like NTPC, NHPC, PGCIL, REC, ONGC, IOC, HPCL, BPCL, GAIL, NMDC, NALCO, BHEL, SAIL, CIL, etc.
The Boards of these CPSEs have granted additional increments prior to 1st January 2007 in these Enterprises to ensure that the Executives / Supervisors will be on par with other leading CPSEs in terms of pay. The Board of the CPSE has the power to grant additional increments and a number of cases they have even take the approval of the administrative Ministry. The DPE vide Clause 2 (ii) of the Office Memorandum dated 26th November 2008 has nullified this.
It is unethical and against natural justice to withdraw these additional increments granted by a competent authority after more than two years. The executives have drawn these increments and received the pay based on these increments during the last two years. You may kindly note, that in a number of cases after the Pay revision (which has taken place after 10 long years), the executive will be fixed at a pay which is less than the pay they are already drawing and there will be recoveries in the salary. We request you sir, to please examine the issue objectively and withdraw this Clause 2 (ii) of DPE OM dated 26th November 2008.
4. Personal pay / Special pay for purposes of Pay fixation on pay revision: It is a well defined policy that Personal Pay, Special Pay etc. of the individual is always considered for purposes of pay fixation at the time of pay revision. Keeping in line with the established policy, the Personal Pay, Special Pay etc. should be considered as basic pay for purposes of Pay fixation at the time of pay revision. In line with the past practice, the family planning increment should be given in the new scale.
5. Enhancing income tax exemption up to Rs. 10.00 Lakhs for gratuity with effect from Jan. 2007: The ceiling limit for payment of gratuity has been enhanced to Rs. 10.00 Lakhs for CPSEs from Jan. 2007. However the limit for income tax exemption has not been raised. The present limit of Rs. 3.50 lakhs was fixed in 1996. DPE should take up with the Ministry of Finance for enhancement of limit for income tax exemption for gratuity to Rs. 10.00 Lakhs for CPSEs employees with effect from 1st January 2007. It may be noted that all government employees are exempted from payment of income tax up to Rs. 10.00 lakhs on Gratuity with effect from 1st January 2006.
The recommendation of the 2nd pay revision committee for the removal of ceiling for payment of gratuity should be implemented. There will be no additional burden on the CPSEs as the Superannuation benefits including Gratuity are limited to 30% of the Pay. The Enterprises will contribute 30% of Pay only for all the Superannuation befits which include PF, Gratuity, medical benefit for retired employees and Pension.
6. Taxation of Perks for Company owned / leased accommodation: The executives residing in Company quarters and leased accommodation are being charged Perks taxation, if they are not paying 10% of the basic pay as rent recovery. It has nothing to do with the type of accommodation and the market rent of the quarter. In a number of cases executives are provided lower grade of accommodation due to non availability of quarters. Even in such cases the executives have to pay Perks tax. In most of the cases the rent recovery at 10% will be higher than the market rent of the houses. With the result the employee prefer to stay outside the Township and draw HRA. This will make the quarters vacant. The employees of CPSEs shall be treated on par with the government employees for purposes of Perks taxation for the housing accommodation. The rent recovery shall be based on licensee fee and the perks tax should not be applicable if the licensee fee is paid as rent recovery.
7. Retire Employees Medical Benefit: The 2nd Pay revision committee had recommended that CPSEs may create a corpus by contributing 1 to 1.5% of PBT to create a fund in order to take care of medical and any other emergency needs of retired employees who are not adequately covered by the Pension Scheme. Even though the government has accepted the recommendations, none of the Central Public Sector Enterprises have implemented this DPE order in letter and spirit. The DPE and the administrative ministries should review implementation of this circular and ensure that this order is implemented by all the CPSEs within the next three months.
8. Disparity in pay with respect to non-officers: There are disparities existing in the pay, even in the pre-revised scale in companies like Hindustan Machine Tools Ltd. The non-executives draw higher salaries because of the agreement made during 1992 pay revision, allowing percentage increment and open ended pay scales for workmen. This needs to be corrected urgently as it has demoralized the executives as they are drawing much less Pay than their sub-ordinates.
9. The issue of executive promoted from non-executives to executive and also the fitment of Executives recruited after 01.01.2007. The Executive recruited after 01.01.2007 had not benefited with 30 % Fitment, This issue shall be considered for a favorable decision.
10. Issue of non practicing allowance (NPA): Earlier to this revision NPA has always be considered as pay purpose of calculation of DA, CPF and gratuity. In the recent orders clarity is missing in the subject matter. Number of PSE’s are considering NPA as a part of pay and others are not willing to do so as the DPE circular is not clear in this issue. Necessary the guidelines may be issued in this subject.
11. Maternity Leave: Women employees of CPSEs should be treated on par with the government employees in terms of Maternity leave and Child care leave.
12. Upgrading large CPSEs as A+ Enterprise: Over a period of time some of the CPSEs have grown in size. The volume of business they carry out is large and comparable to Multi-national Enterprises, their activities are spread over the globe and they operate in highly technical intensive areas. They are competing with the global players and have proved their capabilities. To name a few under this category NTPC, BHEL, ONGC, Indian oil, SAIL, Coal India, NALCO, NMDC, HAL, BEL. These Enterprises have to be identified based on defined parameters and categorized as A+ Enterprises and the posts of CMD and functional Directors have to be upgraded.
We will be grateful to you if you could give us a meeting at your convenience for us to present these issues and discuss further.
Thanking you, yours faithfully,
Baby Thomas
Secretary General, NCOA
Note: Attn: Mr. Rajesh Singh: Sir, you may kindly inform us the date/ time by FAX to 0484 2720893. Or through phone: 09446081060 (self, Cochin)/ Mr. K. Ashok Rao, Delhi-9868101640. Thanks & regards.
Baby Thomas.
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Posted on 17-Sep-2011
Queen City To
Sh. Ashok Kumar Pavadia
Jt. Secretary, DPE
24/08.2011
Respected Sir,
We met our Secretary DPE on 17/11/2009 and had a discussion on certain pending issues regarding pay revision. Further to this we would like to bring to your kind notice the following points with respect to the Pay revision of executives in Central Public Sector Enterprises effective from January 2007. These issues need your kind attention, as they are pending for a long time and are demoralizing the executives.
1. Periodicity:
The Office Memorandums issued by DPE regarding the Pay revision of executives in CPSEs have not mentioned about the periodicity. With the result the CPSEs at the time of pay revision effective from January 2007 have not mentioned about periodicity. Historically the Pay in CPSEs is revised once in 5 years except in 1997. In the case of workmen, for the pay revision due from 2007, the guidelines issued by DPE have given the option for the periodicity of 5 to 10 years. In the present context of free market economy, the salaries of executives in CPSEs have to be aligned to the market conditions as regularly as feasible to ensure that proper competent manpower is attracted and retained in the CPSEs, so that they can effectively compete with the Private Sector and Multi-National Enterprises. It may kindly be noted that the Pay revision for executives in Private Sector is carried out on a yearly basis. Also the pay revision for executives and workmen in an Enterprise has to be simultaneous to ensure that there are no serious anomalies (In the case of HMT, all the workmen draw Pay which is higher than the pay of even the General Manager). Keeping this in mind the pay revision for executives shall be carried out after 5 years in January 2012. In the long run the periodicity of Pay revision for employees in CPSEs shall be three years to align them with the market realities.
2. Revision of Pay scales for sick and marginally profit making companies: The 2nd Pay revision committee had recommended that Sick Enterprises that are making cash profits may be allowed to implement the pay revision without Risk Pay or Variable Pay. This recommendation of the committee has not been implemented so far. We request that the government should implement this recommendation and the revised pay scales should be implemented with effect from 1st January 2007 for the marginally profit making and sick CPSEs with 30% fitment benefit. The variable pay and revision of Perks & Allowances can be differed.
The 2nd Pay revision committee had also recommended that CPSEs that are not making cash profits should be examined by BRPSE in a period of 6 months for revival or enclosure. Enterprises that are recommended for revival should include the proposal for revised pay scales. If Enterprises are recommended for closure, the executives should be compulsorily retired by paying compensation based on the revised basic pay. We request that this recommendation of the committee should be implemented immediately. If the government delays a decision further, it may result in key executives leaving the Enterprise and it will become difficult for the government to revive these Enterprises subsequently.
3. Additional increments granted prior to 1st January 2007:
A few CPSEs especially under the Ministry of Defence Production have granted extraordinary additional increments to their executives prior to January 2007 as they are not able attract the best talent. These Enterprises are working in high tech-areas and were finding it very difficult to run the Enterprises as they are not able to attract the technically competent engineers in view of meager salaries when compared to the Private Sector and other CPSE Units like NTPC, NHPC, PGCIL, REC, ONGC, IOC, HPCL, BPCL, GAIL, NMDC, NALCO, BHEL, SAIL, CIL, etc.
The Boards of these CPSEs have granted additional increments prior to 1st January 2007 in these Enterprises to ensure that the Executives / Supervisors will be on par with other leading CPSEs in terms of pay. The Board of the CPSE has the power to grant additional increments and a number of cases they have even take the approval of the administrative Ministry. The DPE vide Clause 2 (ii) of the Office Memorandum dated 26th November 2008 has nullified this.
It is unethical and against natural justice to withdraw these additional increments granted by a competent authority after more than two years. The executives have drawn these increments and received the pay based on these increments during the last two years. You may kindly note, that in a number of cases after the Pay revision (which has taken place after 10 long years), the executive will be fixed at a pay which is less than the pay they are already drawing and there will be recoveries in the salary. We request you sir, to please examine the issue objectively and withdraw this Clause 2 (ii) of DPE OM dated 26th November 2008.
4. Personal pay / Special pay for purposes of Pay fixation on pay revision: It is a well defined policy that Personal Pay, Special Pay etc. of the individual is always considered for purposes of pay fixation at the time of pay revision. Keeping in line with the established policy, the Personal Pay, Special Pay etc. should be considered as basic pay for purposes of Pay fixation at the time of pay revision. In line with the past practice, the family planning increment should be given in the new scale.
5. Enhancing income tax exemption up to Rs. 10.00 Lakhs for gratuity with effect from Jan. 2007: The ceiling limit for payment of gratuity has been enhanced to Rs. 10.00 Lakhs for CPSEs from Jan. 2007. However the limit for income tax exemption has not been raised. The present limit of Rs. 3.50 lakhs was fixed in 1996. DPE should take up with the Ministry of Finance for enhancement of limit for income tax exemption for gratuity to Rs. 10.00 Lakhs for CPSEs employees with effect from 1st January 2007. It may be noted that all government employees are exempted from payment of income tax up to Rs. 10.00 lakhs on Gratuity with effect from 1st January 2006.
The recommendation of the 2nd pay revision committee for the removal of ceiling for payment of gratuity should be implemented. There will be no additional burden on the CPSEs as the Superannuation benefits including Gratuity are limited to 30% of the Pay. The Enterprises will contribute 30% of Pay only for all the Superannuation befits which include PF, Gratuity, medical benefit for retired employees and Pension.
6. Taxation of Perks for Company owned / leased accommodation: The executives residing in Company quarters and leased accommodation are being charged Perks taxation, if they are not paying 10% of the basic pay as rent recovery. It has nothing to do with the type of accommodation and the market rent of the quarter. In a number of cases executives are provided lower grade of accommodation due to non availability of quarters. Even in such cases the executives have to pay Perks tax. In most of the cases the rent recovery at 10% will be higher than the market rent of the houses. With the result the employee prefer to stay outside the Township and draw HRA. This will make the quarters vacant. The employees of CPSEs shall be treated on par with the government employees for purposes of Perks taxation for the housing accommodation. The rent recovery shall be based on licensee fee and the perks tax should not be applicable if the licensee fee is paid as rent recovery.
7. Retire Employees Medical Benefit: The 2nd Pay revision committee had recommended that CPSEs may create a corpus by contributing 1 to 1.5% of PBT to create a fund in order to take care of medical and any other emergency needs of retired employees who are not adequately covered by the Pension Scheme. Even though the government has accepted the recommendations, none of the Central Public Sector Enterprises have implemented this DPE order in letter and spirit. The DPE and the administrative ministries should review implementation of this circular and ensure that this order is implemented by all the CPSEs within the next three months.
8. Disparity in pay with respect to non-officers: There are disparities existing in the pay, even in the pre-revised scale in companies like Hindustan Machine Tools Ltd. The non-executives draw higher salaries because of the agreement made during 1992 pay revision, allowing percentage increment and open ended pay scales for workmen. This needs to be corrected urgently as it has demoralized the executives as they are drawing much less Pay than their sub-ordinates.
9. The issue of executive promoted from non-executives to executive and also the fitment of Executives recruited after 01.01.2007. The Executive recruited after 01.01.2007 had not benefited with 30 % Fitment, This issue shall be considered for a favorable decision.
10. Issue of non practicing allowance (NPA): Earlier to this revision NPA has always be considered as pay purpose of calculation of DA, CPF and gratuity. In the recent orders clarity is missing in the subject matter. Number of PSE’s are considering NPA as a part of pay and others are not willing to do so as the DPE circular is not clear in this issue. Necessary the guidelines may be issued in this subject.
11. Maternity Leave: Women employees of CPSEs should be treated on par with the government employees in terms of Maternity leave and Child care leave.
12. Upgrading large CPSEs as A+ Enterprise: Over a period of time some of the CPSEs have grown in size. The volume of business they carry out is large and comparable to Multi-national Enterprises, their activities are spread over the globe and they operate in highly technical intensive areas. They are competing with the global players and have proved their capabilities. To name a few under this category NTPC, BHEL, ONGC, Indian oil, SAIL, Coal India, NALCO, NMDC, HAL, BEL. These Enterprises have to be identified based on defined parameters and categorized as A+ Enterprises and the posts of CMD and functional Directors have to be upgraded.
We will be grateful to you if you could give us a meeting at your convenience for us to present these issues and discuss further.
Thanking you, yours faithfully,
Baby Thomas
Secretary General, NCOA
Note: Attn: Mr. Rajesh Singh: Sir, you may kindly inform us the date/ time by FAX to 0484 2720893. Or through phone: 09446081060 (self, Cochin)/ Mr. K. Ashok Rao, Delhi-9868101640. Thanks & regards.
Baby Thomas.
Administrator :
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Non-pensioners corpus in a limbo
Non-pensioners corpus in a limbo
Central Goverment Guidelines To PSUs Ambiguous,Claim Retirees
B Pradeep Nair | TNN
Bangalore: A central government plan for creation of a corpus to take care of the medical emergencies of its non-pensioners is wobbling at the implementation level,thanks to the conditions-heavy fine print which retirees say is ambiguous.
The second Pay Revision Committee (PRC) recommended earlier this year that a corpus be created to take care of medical and any other emergency needs of retired executives and also those employees who are not adequately covered by the pension scheme.The PRC says that the CPSEs (central public sector enterprises) may create the corpus by contributing 1% to 1.5% of their profit before tax.
THE GRIEVANCES
Following PRC recommendations,the ministry of heavy industries and public enterprises asked CPSE managements to frame a scheme based on a set of guidelines,opposed by retirees.One of the guidelines says: A committee of directors may be constituted by the board of directors of each CPSE to identify the areas of medical and any other emergency needs of the senior citizens.
Ernest Abraham,general secretary of the All-India Non-pensioned-cum-Senior Citizens Retirees Association,told TOI: Why cant the ministry straightaway act on PRCs recommendations to set up a corpus,instead of relying on CPSEs The Bangalorebased association is one of the many pressure groups in this cause.
Another sticky guideline: Each CPSE will contribute 1.5% of previous years profit before tax to the corpus in the first year of the scheme;in the subsequent years,depending upon the need,contribution to the corpus,if required,would be made.
Abraham feels this clause is vague ( because the nature of the need is not known ) and any form of such conditional contribution to a social cause is insensitive.Why this condition from second year Let all profit-making CPSEs contribute 1.5% into the corpus every year.
Abraham wonders whether only employees of profit-making PSUs will be beneficiaries of the corpus.Since companies not making profit will not contribute to the corpus,does it mean employees of sick or closed units are left to fend for themselves This way,employees of ITI,for example,will be left out.If this happens,it amounts to victimizing them for no fault of theirs because the PRC clearly says that inefficient administration of CPSEs is what led to them becoming sick, he says.
THE SOLUTION
The association has made a strong pitch for removing ambiguities and setting up the corpus immediately.It has also suggested setting up of a single nodal agency for managing the corpus.Abraham says,Let the fixed contributions of CPSEs come into the corpus every year.
Stressing that non-pensioners of all central PSUs must be covered under the scheme,the association,in a letter to the ministry,says,The government does not make any discrimination in the pension to government retirees based on the departments performance;the same logic should hold good for non-pensioned retirees irrespective of the fact that they are from profit-making or sick PSUs.
WHY PSUs BECAME SICK
Monopolistic operations and a costplus-pricing system led to large operational inefficiencies and recruitment of manpower far in excess of requirement.Management started getting politicized and many times decisions were taken on considerations other than sound commercial logic.Several CPSEs failed to foresee and adopt new technologies and,management practices and became sick.
2nd Pay Revision Committee
WHAT RETIREES WANT
Set up corpus based on Pay Revision Committee recommendation and a single nodal agency to manage the corpus
Revise ministry of heavy industries and public enterprises guidelines
Central PSUs should contribute 1.5% of their profit before tax every year and not just in the first year of the scheme
All central PSU retirees should be eligible for the benefits of the corpus and not just retirees of profit-making companies
(In a tragic turn,Ernest Abraham,who has been fighting relentlessly for the welfare of non-pensioners,passed away in Bangalore early Sunday,just a few days after this correspondent
interacted with him)
Central Goverment Guidelines To PSUs Ambiguous,Claim Retirees
B Pradeep Nair | TNN
Bangalore: A central government plan for creation of a corpus to take care of the medical emergencies of its non-pensioners is wobbling at the implementation level,thanks to the conditions-heavy fine print which retirees say is ambiguous.
The second Pay Revision Committee (PRC) recommended earlier this year that a corpus be created to take care of medical and any other emergency needs of retired executives and also those employees who are not adequately covered by the pension scheme.The PRC says that the CPSEs (central public sector enterprises) may create the corpus by contributing 1% to 1.5% of their profit before tax.
THE GRIEVANCES
Following PRC recommendations,the ministry of heavy industries and public enterprises asked CPSE managements to frame a scheme based on a set of guidelines,opposed by retirees.One of the guidelines says: A committee of directors may be constituted by the board of directors of each CPSE to identify the areas of medical and any other emergency needs of the senior citizens.
Ernest Abraham,general secretary of the All-India Non-pensioned-cum-Senior Citizens Retirees Association,told TOI: Why cant the ministry straightaway act on PRCs recommendations to set up a corpus,instead of relying on CPSEs The Bangalorebased association is one of the many pressure groups in this cause.
Another sticky guideline: Each CPSE will contribute 1.5% of previous years profit before tax to the corpus in the first year of the scheme;in the subsequent years,depending upon the need,contribution to the corpus,if required,would be made.
Abraham feels this clause is vague ( because the nature of the need is not known ) and any form of such conditional contribution to a social cause is insensitive.Why this condition from second year Let all profit-making CPSEs contribute 1.5% into the corpus every year.
Abraham wonders whether only employees of profit-making PSUs will be beneficiaries of the corpus.Since companies not making profit will not contribute to the corpus,does it mean employees of sick or closed units are left to fend for themselves This way,employees of ITI,for example,will be left out.If this happens,it amounts to victimizing them for no fault of theirs because the PRC clearly says that inefficient administration of CPSEs is what led to them becoming sick, he says.
THE SOLUTION
The association has made a strong pitch for removing ambiguities and setting up the corpus immediately.It has also suggested setting up of a single nodal agency for managing the corpus.Abraham says,Let the fixed contributions of CPSEs come into the corpus every year.
Stressing that non-pensioners of all central PSUs must be covered under the scheme,the association,in a letter to the ministry,says,The government does not make any discrimination in the pension to government retirees based on the departments performance;the same logic should hold good for non-pensioned retirees irrespective of the fact that they are from profit-making or sick PSUs.
WHY PSUs BECAME SICK
Monopolistic operations and a costplus-pricing system led to large operational inefficiencies and recruitment of manpower far in excess of requirement.Management started getting politicized and many times decisions were taken on considerations other than sound commercial logic.Several CPSEs failed to foresee and adopt new technologies and,management practices and became sick.
2nd Pay Revision Committee
WHAT RETIREES WANT
Set up corpus based on Pay Revision Committee recommendation and a single nodal agency to manage the corpus
Revise ministry of heavy industries and public enterprises guidelines
Central PSUs should contribute 1.5% of their profit before tax every year and not just in the first year of the scheme
All central PSU retirees should be eligible for the benefits of the corpus and not just retirees of profit-making companies
(In a tragic turn,Ernest Abraham,who has been fighting relentlessly for the welfare of non-pensioners,passed away in Bangalore early Sunday,just a few days after this correspondent
interacted with him)
DPEs letter on creation of a corpus by contributing 1% to 1.5%
F. No. 2(81)/08-DPE-(WC)
Government of India
Ministry of Heavy Industries & Public Enterprises
Department of Public Enterprises
Public Enterprises Bhawan
Block No.14, CGO Complex, Lodi Road
New Delhi, the 13 January, 2009.
OFFICE MEMORANDUM
Subject: - Recommendation of 2nd PRC (Pay Revision Committee) on
creation of a corpus by contributing 1% to 1.5% of PBT (Profit
Before Tax) by CPSEs to take care of medical and any other
emergency needs of retired executives and those who are not
adequately covered by the pension scheme; examination
thereof.
Government, while considering the recommendations of the
2nd PRC, which was constituted for recommending revision of pay and
allowances for executives and non-unionised supervisors of CPSEs w.e.f.
01.01.2007 decided, inter alia to examine the recommendation of the 2nd
PRC on the subject mentioned above separately. The relevant extracts as
given in para 6.2.5 (c) of the report of 2nd PRC are as under:-
“The committee recommends that CPSEs may create a corpus
by contributing 1% to 1.5% of PBT to create a fund in order
to take care of medical and any other emergency needs of
retired executives and also those who are not adequately
covered by the pension scheme.”
2. The Ministries/Departments concerned with the CPSEs are
requested to furnish their considered views about the feasibility and the
methodology of operationalising the recommendation by 12.02.2009.
(Rajendra Kumar)
Deputy Secretary to the Government of India
Tel. 24360624
Administrative Ministries/Departments of the Government of India
(Secretary by name as per List)
Government of India
Ministry of Heavy Industries & Public Enterprises
Department of Public Enterprises
Public Enterprises Bhawan
Block No.14, CGO Complex, Lodi Road
New Delhi, the 13 January, 2009.
OFFICE MEMORANDUM
Subject: - Recommendation of 2nd PRC (Pay Revision Committee) on
creation of a corpus by contributing 1% to 1.5% of PBT (Profit
Before Tax) by CPSEs to take care of medical and any other
emergency needs of retired executives and those who are not
adequately covered by the pension scheme; examination
thereof.
Government, while considering the recommendations of the
2nd PRC, which was constituted for recommending revision of pay and
allowances for executives and non-unionised supervisors of CPSEs w.e.f.
01.01.2007 decided, inter alia to examine the recommendation of the 2nd
PRC on the subject mentioned above separately. The relevant extracts as
given in para 6.2.5 (c) of the report of 2nd PRC are as under:-
“The committee recommends that CPSEs may create a corpus
by contributing 1% to 1.5% of PBT to create a fund in order
to take care of medical and any other emergency needs of
retired executives and also those who are not adequately
covered by the pension scheme.”
2. The Ministries/Departments concerned with the CPSEs are
requested to furnish their considered views about the feasibility and the
methodology of operationalising the recommendation by 12.02.2009.
(Rajendra Kumar)
Deputy Secretary to the Government of India
Tel. 24360624
Administrative Ministries/Departments of the Government of India
(Secretary by name as per List)
Letter to Dr. Manmohan Singh for formaton of Corpus out of 1.5% of PBT for CPSEs retirees.
To,
Dr. Manmohan Singhji,
Honourable Prime Minister,
Govt. of India,
South Block,
New Delhi – 110 011.
Respected Sir,
Sub: Formation of a Central CORPUS FUND for CPSE’s Non – Pensioned Retirees / Senior
Citizens - Request for.
Ref: 1. Recommendations of 2nd Pay Revision Committee for CPSE’s Executives {Page – 130,
Para. No. 6.2.5 (C)}
2. Office – Memorandum No. 2(81) /08 – DPE (WC) – GL – XVI / 2009 dated 08.07.2009
3. National Workshop held at New Delhi on 16.11.2010, on “Medical & Emergency Needs of Retired Employees of CPSEs – Creation of CORPUS FUND”.
******
We are the National level Association of Non – Pensioned Retires of Central / State Government Public / Private Sector Enterprises / Undertakings, founded in 2001.
2. Unfortunately, unlike the employees of Central / State Government Departments, we the employees retired from Public Sector Enterprises do not have any facilities of either Medical or Pension benefits, after retirement (even after working for 30 – 35 years in an Organisation and having served the nation for such long periods).
3. It is needles to mention that the employees of Govt. of India / Govts. of All States, Members of Legislative Assembly / Councils (MLAs and MLCs), Members of Parliment (MPs), Officials of Financial Banks etc., including the workers of Anganawadi Schools are getting the Pensions and Medical Benefits, after their retirements.
4. We believe, It is needless to emphasize the present day need of providing the SOCIAL SECURITY to the aged and retired employees of Public Sector Enterprises.
5. Vide the Office – Memorandum No. 2(81)/08-DPE(WC) – GL – XVI / 2009 dated 08.07.2009 (a copy enclosed), issued by the Director, Dept. of Public Enterprises, Govt. of India, New Delhi, the Para – 4 reads as follows:
“After careful consideration of the recommendation of 2nd PRC, it has now been decided that individual CPSEs may create a corpus by contributing not more than 1.5% of PBT, in order to take care of medical and any other emergency needs of those retired employees, who are not covered by the pension scheme and / or post superannuation medical benefit scheme”.
6. The Administratative Ministries / Departments had been advised to issue suitable instructions to the Managements of their CPSEs, to consider framing of SCHEME, with a view to take care of Medical and other emergency needs of those, retired from the respective PSEs. But, to our dismay. No PSE has so far come forward to form any Schemes of the CORPUS FUND.
7. But, we have been requesting the Govt. of India to kindly formulate a SINGLE CORPUS and NODAL AGENCY, on the lines of PFRDA, CAG, etc., but all our efforts have been in vain.
8. Of – late, we may bring to your kind attention that M/s National Institute of Personal Management (NIPM) and Management Leadership Development Centre had organized a National Workshop on “Medical and Emergency needs of Retired Employees of CPSEs Creation of CORPUS”, on 16.11.2010 at SCOPE Complex, New Delhi. All the Top officials of the Industry, had participated. A copy of the Proceedings is enclosed for your immediate reference. The Conclusions and Recommendations made by the workshop and forwarded to the Department of Public Enterprises / Other Ministries are reproduced below:
Conclusions and Recommendations
In the light of discussion, interaction and deliberations the following conclusion arid recommendations were drawn.
It was understood that these recommendations could, for the time being, be only within the confines of the DPE guidelines promulgated so far and the review of the guidelines within a larger frame of greater fairness and equity would have to be taken up separately.
1. The CPSUs could be divided into 3 categories for the above purpose :-
a) Maharatna, Navaratna and Miniratna companies which have annual
PBT from which 1-1.5% could be earmarked towards the corpus.
b) Other profit making PSUs
c) Loss making PSUs
THE RATNA GROUP
Provide medical assistance on par with serving employees of equivalent designations
Make an ex-gratia payment as near the 30% of the minimum of the current pay attached to the designation at which the employee had retired or its present equivalent to meet the other emergency needs of the employee. This payment calculated monthly may be paid every quarter. The surviving spouse to be eligible for half of this amount. Additionally DA to be paid at prevailing rates.
3) This payment will be made from the corpus created out of the 1-1.5% of the PBT. This may be decided based on the fund available in the corpus. The Scheme so formulated by the Company will be reviewed periodically to ensure its viability.
4) The Corpus to be managed by a Trust consisting of Director (Finance) as Chairman, Director (HR), another serving Director, two senior retired employees not lower than the level of General Manager. The Trust will ensure that sufficient contingent reserves are held at any given time.
THE NON RATNA GROUP
The Board to determine the percentage of PBT to be transferred to the Corpus
Provide, on priority, medical assistance on par with serving employees
Make ex-gratia payment to meet the minimum needs of the employee to live a life of dignity which will also bring a fair name to the PSU for its care and concern for the pioneers and foundation makers
The Corpus to be administered in the same manner as above.
THE LOSS MAKING GROUP
Same action as for the Non Ratna Group as above.
Sources for fund may be as follows:
DPE CORPUS
It is suggested that from out of the total dividends received by the Govt. from the PSUs, 1% should be set aside as a Special Reserve to fund the needs of the retired employees of the Loss Making Group and also the needs of the other groups in the unlikely event of extraordinary circumstances.
Similarly 1% of the amount realized by the Govt. by way of disinvestment of PSUs may be transferred to this Trust.
This Special Reserve should be administered jointly by the DPE and SCOPE.
9. In view of the above, we would once again urge and request your good offices to kindly direct the concerned officials of the Ministry of Heavy Industries and Public Enterprises, so as to implement the recommendations of 2nd PRC for CPSEs and the above mentioned Recommendations made by the Workshop held on 16.11.2010, for formulating / establishing a Central CORPUS / NODAL AGENCY and to provide the SOCIAL SECURITY to the Retirees of CPSEs, who are Senior Citizens of this Country.
Thanking you,
Your’s faithfully
(N. Ramprasad) (B.T.Srinivasa Gowda)
President General Secretary
Dr. Manmohan Singhji,
Honourable Prime Minister,
Govt. of India,
South Block,
New Delhi – 110 011.
Respected Sir,
Sub: Formation of a Central CORPUS FUND for CPSE’s Non – Pensioned Retirees / Senior
Citizens - Request for.
Ref: 1. Recommendations of 2nd Pay Revision Committee for CPSE’s Executives {Page – 130,
Para. No. 6.2.5 (C)}
2. Office – Memorandum No. 2(81) /08 – DPE (WC) – GL – XVI / 2009 dated 08.07.2009
3. National Workshop held at New Delhi on 16.11.2010, on “Medical & Emergency Needs of Retired Employees of CPSEs – Creation of CORPUS FUND”.
******
We are the National level Association of Non – Pensioned Retires of Central / State Government Public / Private Sector Enterprises / Undertakings, founded in 2001.
2. Unfortunately, unlike the employees of Central / State Government Departments, we the employees retired from Public Sector Enterprises do not have any facilities of either Medical or Pension benefits, after retirement (even after working for 30 – 35 years in an Organisation and having served the nation for such long periods).
3. It is needles to mention that the employees of Govt. of India / Govts. of All States, Members of Legislative Assembly / Councils (MLAs and MLCs), Members of Parliment (MPs), Officials of Financial Banks etc., including the workers of Anganawadi Schools are getting the Pensions and Medical Benefits, after their retirements.
4. We believe, It is needless to emphasize the present day need of providing the SOCIAL SECURITY to the aged and retired employees of Public Sector Enterprises.
5. Vide the Office – Memorandum No. 2(81)/08-DPE(WC) – GL – XVI / 2009 dated 08.07.2009 (a copy enclosed), issued by the Director, Dept. of Public Enterprises, Govt. of India, New Delhi, the Para – 4 reads as follows:
“After careful consideration of the recommendation of 2nd PRC, it has now been decided that individual CPSEs may create a corpus by contributing not more than 1.5% of PBT, in order to take care of medical and any other emergency needs of those retired employees, who are not covered by the pension scheme and / or post superannuation medical benefit scheme”.
6. The Administratative Ministries / Departments had been advised to issue suitable instructions to the Managements of their CPSEs, to consider framing of SCHEME, with a view to take care of Medical and other emergency needs of those, retired from the respective PSEs. But, to our dismay. No PSE has so far come forward to form any Schemes of the CORPUS FUND.
7. But, we have been requesting the Govt. of India to kindly formulate a SINGLE CORPUS and NODAL AGENCY, on the lines of PFRDA, CAG, etc., but all our efforts have been in vain.
8. Of – late, we may bring to your kind attention that M/s National Institute of Personal Management (NIPM) and Management Leadership Development Centre had organized a National Workshop on “Medical and Emergency needs of Retired Employees of CPSEs Creation of CORPUS”, on 16.11.2010 at SCOPE Complex, New Delhi. All the Top officials of the Industry, had participated. A copy of the Proceedings is enclosed for your immediate reference. The Conclusions and Recommendations made by the workshop and forwarded to the Department of Public Enterprises / Other Ministries are reproduced below:
Conclusions and Recommendations
In the light of discussion, interaction and deliberations the following conclusion arid recommendations were drawn.
It was understood that these recommendations could, for the time being, be only within the confines of the DPE guidelines promulgated so far and the review of the guidelines within a larger frame of greater fairness and equity would have to be taken up separately.
1. The CPSUs could be divided into 3 categories for the above purpose :-
a) Maharatna, Navaratna and Miniratna companies which have annual
PBT from which 1-1.5% could be earmarked towards the corpus.
b) Other profit making PSUs
c) Loss making PSUs
THE RATNA GROUP
Provide medical assistance on par with serving employees of equivalent designations
Make an ex-gratia payment as near the 30% of the minimum of the current pay attached to the designation at which the employee had retired or its present equivalent to meet the other emergency needs of the employee. This payment calculated monthly may be paid every quarter. The surviving spouse to be eligible for half of this amount. Additionally DA to be paid at prevailing rates.
3) This payment will be made from the corpus created out of the 1-1.5% of the PBT. This may be decided based on the fund available in the corpus. The Scheme so formulated by the Company will be reviewed periodically to ensure its viability.
4) The Corpus to be managed by a Trust consisting of Director (Finance) as Chairman, Director (HR), another serving Director, two senior retired employees not lower than the level of General Manager. The Trust will ensure that sufficient contingent reserves are held at any given time.
THE NON RATNA GROUP
The Board to determine the percentage of PBT to be transferred to the Corpus
Provide, on priority, medical assistance on par with serving employees
Make ex-gratia payment to meet the minimum needs of the employee to live a life of dignity which will also bring a fair name to the PSU for its care and concern for the pioneers and foundation makers
The Corpus to be administered in the same manner as above.
THE LOSS MAKING GROUP
Same action as for the Non Ratna Group as above.
Sources for fund may be as follows:
DPE CORPUS
It is suggested that from out of the total dividends received by the Govt. from the PSUs, 1% should be set aside as a Special Reserve to fund the needs of the retired employees of the Loss Making Group and also the needs of the other groups in the unlikely event of extraordinary circumstances.
Similarly 1% of the amount realized by the Govt. by way of disinvestment of PSUs may be transferred to this Trust.
This Special Reserve should be administered jointly by the DPE and SCOPE.
9. In view of the above, we would once again urge and request your good offices to kindly direct the concerned officials of the Ministry of Heavy Industries and Public Enterprises, so as to implement the recommendations of 2nd PRC for CPSEs and the above mentioned Recommendations made by the Workshop held on 16.11.2010, for formulating / establishing a Central CORPUS / NODAL AGENCY and to provide the SOCIAL SECURITY to the Retirees of CPSEs, who are Senior Citizens of this Country.
Thanking you,
Your’s faithfully
(N. Ramprasad) (B.T.Srinivasa Gowda)
President General Secretary
Creation of Corpus out of 1.5% of PBT for retiree of CPSEs
Workshop
on
“Medical and Emergency Needs of Retired Employees of CPSEs – Creation of Corpus”
on 16th November, 2010 at SCOPE Complex, New Delhi
Proceedings of the Workshop
National Institute of Personnel Management and Management & Leadership Development Centre organized a one day workshop on “Medical and Emergency Needs of Retired Employees of CPSEs – Creation of Corpus”. The following distinguished speakers addressed the workshop:-
• Dr. Nitish Sen Gupta, Chairman, BRPSE, Government of India.
• Dr. U.D. Choubey, Director General, SCOPE & Former CMD, GAIL.
• Shri Rajendra Kumar, Director, DPE, Government of India.
• Shri K.Ramachandran Pillai, CMD, National Textile Corporation Ltd.
• Dr. A.K. Balyan, MD, Petronet LNG and Former Director (HR), ONGC.
• Shri R.S.Butola, MD, ONGC Videsh Ltd.
• Shri G.L.Tandon, Former CMD, Coal India Ltd & Neyveli Lignite Corporation Ltd.
• Shri B.K.Bakshi, Former CMD, Indian Oil Corporation Ltd.
• Shri R.Srinivasana, Former Member (Per), ONGC.
• Shri R.P. Singh, Director (Per), IFFCO.
• Shri Neeraj Jain, IFFCO Tokyo Gen. Insurance Company.
• Dr. Jauhari Lal, President, MLDC & Former Director (HR), ONGC & OIL.
• Ms. Jatinder Peters, Vice Chairperson, NIPM (Delhi Chapter) & GM, ONGC.
The following presentations were made:-
• Shri M.B.Aparajit, Chief Manager, CIL.
• Shri S.K.Singh, EA to Director (HR), OIL.
• Ms. S. Swaminathan, Sr. Manager (HR), BHEL.
• Shri A.K.Shah, GM (HR), ONGC.
• Shri S.C.Mahato, Sr. Manager, GAIL.
60 executives from 18 organizations attended the workshop which included 10 retired executives from CPSEs. S/Sh. A.S.Soni, Former Director (Offshore), ONGC and Shri Ashok Anand, Former Director (Per), Oil India Ltd also attended it. The workshop was divided into 4 sessions i.e. 2 sessions before lunch and 2 sessions in the afternoon.
2. Dr. Jauhari lal, President MLDC and Former Director(HR), ONGC & Oil India Ltd. brought out briefly the objectives of the workshop as follows:-
• Understand the provisions and implications of the DPE guidelines issued vide their Office Memorandum No.2 (81)/08-DPE (WC)-GL-XVI/ 2009 dated 8 July 2009.
• Sharing of information by PSUs on the status of implementing the above guidelines.
• Options available to PSUs for medical facilities to retired employees.
• Understanding “emergency needs” of retired employees as stipulated in the guidelines.
• Formation of a model Scheme for creation of corpus.
• Strategy for honoring the DPE guidelines.
3. Shri Rajendra Kumar, Director, DPE made a presentation on “Welfare Steps for Retired Employees of CPSEs”. In his presentation he brought out the following points:-
• 2nd pay revision committee met retired CPSEs executives including the All India Non-Pensioned Cum Senior Citizens Retirees’ Association, Bangalore.
The committee observed that while a few CPSEs provided post retirement medical benefit, most of the retired executives had no access to medical benefits.
Committee recommended up to 30% of basic pay towards superannuation benefit after providing for PF and gratuity a buffer available for pension and/or post retirement medical benefits. This was available only for those who superannuated after 15 years of service in a CPSE.
Corpus from 1 to 1.5% of PBT be created by CPSEs for medical and any other emergency needs for retired executives and also those who were not adequately covered by a pension scheme.
4. He further pointed out that the recommendations of the committee were circulated and suggestions were sought regarding feasibility and methodology of operationalising them. However DPE could receive only two responses without any specific comments. Subsequently these guidelines were issued. Creation of corpus was provided for benefit of those who had no support system like pension or medical benefit scheme. However for those retiring after 01.01.07, superannuation benefits up to 30% of basic pay + DA was provided which included CPF, Gratuity, Pension and Post Superannuation medical benefits. He further stated that CPSEs should make their own schemes to manage the fund or to operate through insurance companies.
5. With regard to OM dated 8th July, 2009, Shri Rajendra Kumar clarified that the schemes were to be formulated only where need was felt to take care of medical and any other emergency needs for those not covered by the pension scheme and / or post superannuation medical benefit scheme. Guidelines provided that not more than 1.5% of the PBT of previous year and even may be less depending on requirement to be earmarked for creating the corpus. Guidelines further provided for constituting a committee of Directors for deciding on distribution of funds and identifying areas of medical and emergency needs. However, there would be no budgetary support from the Government. The CPSEs would submit their proposals of the scheme to their respective Ministry/Department for approval. Sh.Rajendra Kumar mentioned that as per his knowledge, no CPSE had framed any scheme. However, some CPSEs had started framing the scheme to replace / supplement the existing scheme and they were considering paying a monthly amount to meet medical and emergency needs. He further clarified that the intention should not be to exhaust the funds but to provide for a reasonable support for medical or emergency requirements and the contribution might be flexible depending upon the CPSEs PBT.
6. Dr.Nitish Sen Gupta Chairman, BRPSE, Secretary to Govt. of India (retired) and Former M.P. and Director, IMI who was the Member of the 2nd PRC mentioned about his experiences of meeting the representatives including the retired employees of the CPSE’s. He admitted that the plight of a large number of retired employees was really pitiable. The committee was moved after listening to their woes and made these recommendations. He further mentioned that the recommendations of this PRC were quite different from the past PRC’s. It brought the culture of compensation linked with profitability of an organization and de-linked from the Govt. pay scale structure. The recommendations of medical benefits to the retired employees were also unique. He felt sorry that no CPSE had formulated the scheme as per DPE guidelines. He said these were very important guidelines and emphasized that the money was not a constraint is a will, there is a way” and these guidelines were to be read between the lines and with the right spirit. He suggested that companies should get together and evolve suitable systems. He emphasized that there was urgent need that DPE should ensure that these guidelines were implemented. He suggested that this issue needed to be taken to the level of Secretary, DPE and even with the Honorable Minister.
7. Dr.U.D. Choubey DG, SCOPE and former CMD, GAIL in his special address traced the history of formation of Public Sector undertakings and its concept. These were created basically to modernize the process of industrialization of Indian economy in its various facets and also to reach the remotest and the most backward areas of the country for development. These were called as “Commanding heights and Modern temples of India”. The PSUs had made major contribution in the socio-economic development of the Country. PSUs at one time had 24 lakh employees which reduced to 15 lakh at present. It is because of their contribution, PSUs were now christened as Mini-Ratna, Nav-Ratna and Maha-Ratna companies. At present companies were contributing about Rs.100,000 crores as net profit every year and also contribute to Government every year as dividend. Because of profitability, about Rs.90,000 crores had been realized by the Government by way of disinvestment of PSUs.
8. Dr Choubey added that in view of the commitment and contribution made by the employees of CPSEs in the formative years, these companies were now the pride of the Nation. Therefore, social security of retired employees was not only an obligation but responsibility of the concerned PSU and also the Government. He suggested that the corpus at the national level could be created by contributing 0.1% every year of the net profit of PSUs. This could take care of the medical needs of the retired employees of CPSUs which were unable to meet their medical expenses because of their financial constraints. He recalled that a number of PSUs including GAIL had formulated medical schemes which were at par with the serving employees. DPE should come out with such a mandatory provision. He assured that the SCOPE would carry forward this issue with the higher Government level for equality and justice.
9. During the course of subsequent discussions / interactions with the panel speakers and the participants, the following points were highlighted:
• Retired employees are not to be viewed as wasted asset but as reserve and reservoir of valuable talent and experience on call at any time by the Govt or the CPSUs
• It was unfair to employ differential concepts between the status of retired Govt employees and the CPSU retired employees.
• The Supreme Court of India has held in number of decisions that CPSUs fall within the inclusive definition of ‘State’.
• The Supreme Court has also held that the power of the Govt. in the grant of any benefit should be structured by rational, relevant and non-discriminatory norms
• Retirement benefits in whatever form are deferred wage in consideration of past service rendered sacrificing the prime of youth for the sake of the Govt. (CPSU) and the benefit should be such that the retired employee is able to lead a dignified life maintaining, as far as possible, the standard of living he was used to during his service life.
• The Apex Court has held that classification of retired employees for the purpose of retirement benefits should comply with article 14 of the Constitution.
• Insistence on a minimum of 15 years of service in a CPSU is further discriminatory in as much as employees move from Govt. to CPSU or from one CPSU to another only to serve the larger interests of the Govt. and by the selection process of the Govt.
• The DPE guidelines provide for the retired employees of only profit making companies. There are no guidelines for those employees of PSUs which do not have PBT.
• The employees, per se, cannot be held responsible for the losses. There were many external reasons beyond their control.
• Nevertheless Financial position of many of such companies is fast improving by way of “Turn around” strategies and measures.
• The DPE guidelines are vague on the term “any emergency needs”.
• Emergency needs may differ from person to person and place to place. Companies like SAIL, Coal India Ltd., BHEL having a large number of retired employees settled all over India will find it impossible to access the emergency needs of an individual. No company can create an establishment for this purpose. Moreover, this will lead to subjectivity.
• The guidelines are not mandatory in nature and implementation is left to the discretion of the PSU management. The provision that the scheme may be set up where a need is felt is subjective in nature and is vulnerable to grossly discriminatory interpretations.
• That no PSU has set up any scheme, demonstrates that either there is too much “vagueness” in the guidelines or there is sheer apathy in the PSU management or both.
• This issue has to be seen in a larger perspective. This is an important issue of “social security” for which both the government and the concerned CPSUs have congruent responsibility.
• Social security scheme particularly the medical scheme and the financial assistance after retirement are motivational for retention of talents in the core disciplines and core sectors in this era of competitive environment. There are enough examples of European, Canadian and American companies for ensuring “social security” of its retired employees.
• Banking industry is very considerate to its retired employees and has given the second option to its retired employees to join the pension scheme.
• A large majority of employees who retired 5,10 or 15 years back received meager superannuation benefits by way of CPF, gratuity etc. and their financial position is miserable in the absence of any financial help from their own organization or Government.
• Guidelines talk about meeting ‘emergency needs’ which presumably are to meet the basic physical need of at least two square meals a day, clothing and toiletries for two persons and reasonable living accommodation and social needs for a decent living.
Conclusions and Recommendations
In the light of discussion, interaction and deliberations the following conclusions and recommendations were drawn.
It was understood that these recommendations could, for the time being, be only within the confines of the DPE guidelines promulgated so far and the review of the guidelines within a larger frame of greater fairness and equity would have to be taken up separately.
1. The CPSUs could be divided into 3 categories for the above purpose :-
a) Maharatna, Navaratna and Miniratna companies which have annual PBT from which 1-1.5% could be earmarked towards the corpus.
b) Other profit making PSUs
c) Loss making PSUs
THE RATNA GROUP
1) Provide medical assistance on par with serving employees of equivalent designations
2) Make an ex-gratia payment as near the 30% of the minimum of the current pay attached to the designation at which the employee had retired or its present equivalent to meet the other emergency needs of the employee. This payment calculated monthly may be paid every quarter. The surviving spouse to be eligible for half of this amount. Additionally DA to be paid at prevailing rates.
3) This payment will be made from the corpus created out of the 1-1.5% of the PBT. This may be decided based on the fund available in the corpus. The Scheme so formulated by the Company will be reviewed periodically to ensure its viability.
4) The Corpus to be managed by a Trust consisting of Director (Finance) as Chairman, Director (HR), another serving Director, two senior retired employees not lower than the level of General Manager. The Trust will ensure that sufficient contingent reserves are held at any given time.
THE NON RATNA GROUP
1) The Board to determine the percentage of PBT to be transferred to the Corpus
2) Provide, on priority, medical assistance on par with serving employees
3) Make ex-gratia payment to meet the minimum needs of the employee to live a life of dignity which will also bring a fair name to the PSU for its care and concern for the pioneers and foundation makers
4) The Corpus to be administered in the same manner as above.
THE LOSS MAKING GROUP
Same action as for the Non Ratna Group as above.
Sources for fund may be as follows:
DPE CORPUS
It is suggested that from out of the total dividends received by the Govt from the PSUs, 1% should be set aside as a Special Reserve to fund the needs of the retired employees of the Loss Making Group and also the needs of the other groups in the unlikely event of extraordinary circumstances.
Similarly 1% of the amount realized by the Govt by way of disinvestment of PSUs may be transferred to this Trust.
This Special Reserve should be administered jointly by the DPE and SCOPE.
(R.P. Singh)
on
“Medical and Emergency Needs of Retired Employees of CPSEs – Creation of Corpus”
on 16th November, 2010 at SCOPE Complex, New Delhi
Proceedings of the Workshop
National Institute of Personnel Management and Management & Leadership Development Centre organized a one day workshop on “Medical and Emergency Needs of Retired Employees of CPSEs – Creation of Corpus”. The following distinguished speakers addressed the workshop:-
• Dr. Nitish Sen Gupta, Chairman, BRPSE, Government of India.
• Dr. U.D. Choubey, Director General, SCOPE & Former CMD, GAIL.
• Shri Rajendra Kumar, Director, DPE, Government of India.
• Shri K.Ramachandran Pillai, CMD, National Textile Corporation Ltd.
• Dr. A.K. Balyan, MD, Petronet LNG and Former Director (HR), ONGC.
• Shri R.S.Butola, MD, ONGC Videsh Ltd.
• Shri G.L.Tandon, Former CMD, Coal India Ltd & Neyveli Lignite Corporation Ltd.
• Shri B.K.Bakshi, Former CMD, Indian Oil Corporation Ltd.
• Shri R.Srinivasana, Former Member (Per), ONGC.
• Shri R.P. Singh, Director (Per), IFFCO.
• Shri Neeraj Jain, IFFCO Tokyo Gen. Insurance Company.
• Dr. Jauhari Lal, President, MLDC & Former Director (HR), ONGC & OIL.
• Ms. Jatinder Peters, Vice Chairperson, NIPM (Delhi Chapter) & GM, ONGC.
The following presentations were made:-
• Shri M.B.Aparajit, Chief Manager, CIL.
• Shri S.K.Singh, EA to Director (HR), OIL.
• Ms. S. Swaminathan, Sr. Manager (HR), BHEL.
• Shri A.K.Shah, GM (HR), ONGC.
• Shri S.C.Mahato, Sr. Manager, GAIL.
60 executives from 18 organizations attended the workshop which included 10 retired executives from CPSEs. S/Sh. A.S.Soni, Former Director (Offshore), ONGC and Shri Ashok Anand, Former Director (Per), Oil India Ltd also attended it. The workshop was divided into 4 sessions i.e. 2 sessions before lunch and 2 sessions in the afternoon.
2. Dr. Jauhari lal, President MLDC and Former Director(HR), ONGC & Oil India Ltd. brought out briefly the objectives of the workshop as follows:-
• Understand the provisions and implications of the DPE guidelines issued vide their Office Memorandum No.2 (81)/08-DPE (WC)-GL-XVI/ 2009 dated 8 July 2009.
• Sharing of information by PSUs on the status of implementing the above guidelines.
• Options available to PSUs for medical facilities to retired employees.
• Understanding “emergency needs” of retired employees as stipulated in the guidelines.
• Formation of a model Scheme for creation of corpus.
• Strategy for honoring the DPE guidelines.
3. Shri Rajendra Kumar, Director, DPE made a presentation on “Welfare Steps for Retired Employees of CPSEs”. In his presentation he brought out the following points:-
• 2nd pay revision committee met retired CPSEs executives including the All India Non-Pensioned Cum Senior Citizens Retirees’ Association, Bangalore.
The committee observed that while a few CPSEs provided post retirement medical benefit, most of the retired executives had no access to medical benefits.
Committee recommended up to 30% of basic pay towards superannuation benefit after providing for PF and gratuity a buffer available for pension and/or post retirement medical benefits. This was available only for those who superannuated after 15 years of service in a CPSE.
Corpus from 1 to 1.5% of PBT be created by CPSEs for medical and any other emergency needs for retired executives and also those who were not adequately covered by a pension scheme.
4. He further pointed out that the recommendations of the committee were circulated and suggestions were sought regarding feasibility and methodology of operationalising them. However DPE could receive only two responses without any specific comments. Subsequently these guidelines were issued. Creation of corpus was provided for benefit of those who had no support system like pension or medical benefit scheme. However for those retiring after 01.01.07, superannuation benefits up to 30% of basic pay + DA was provided which included CPF, Gratuity, Pension and Post Superannuation medical benefits. He further stated that CPSEs should make their own schemes to manage the fund or to operate through insurance companies.
5. With regard to OM dated 8th July, 2009, Shri Rajendra Kumar clarified that the schemes were to be formulated only where need was felt to take care of medical and any other emergency needs for those not covered by the pension scheme and / or post superannuation medical benefit scheme. Guidelines provided that not more than 1.5% of the PBT of previous year and even may be less depending on requirement to be earmarked for creating the corpus. Guidelines further provided for constituting a committee of Directors for deciding on distribution of funds and identifying areas of medical and emergency needs. However, there would be no budgetary support from the Government. The CPSEs would submit their proposals of the scheme to their respective Ministry/Department for approval. Sh.Rajendra Kumar mentioned that as per his knowledge, no CPSE had framed any scheme. However, some CPSEs had started framing the scheme to replace / supplement the existing scheme and they were considering paying a monthly amount to meet medical and emergency needs. He further clarified that the intention should not be to exhaust the funds but to provide for a reasonable support for medical or emergency requirements and the contribution might be flexible depending upon the CPSEs PBT.
6. Dr.Nitish Sen Gupta Chairman, BRPSE, Secretary to Govt. of India (retired) and Former M.P. and Director, IMI who was the Member of the 2nd PRC mentioned about his experiences of meeting the representatives including the retired employees of the CPSE’s. He admitted that the plight of a large number of retired employees was really pitiable. The committee was moved after listening to their woes and made these recommendations. He further mentioned that the recommendations of this PRC were quite different from the past PRC’s. It brought the culture of compensation linked with profitability of an organization and de-linked from the Govt. pay scale structure. The recommendations of medical benefits to the retired employees were also unique. He felt sorry that no CPSE had formulated the scheme as per DPE guidelines. He said these were very important guidelines and emphasized that the money was not a constraint is a will, there is a way” and these guidelines were to be read between the lines and with the right spirit. He suggested that companies should get together and evolve suitable systems. He emphasized that there was urgent need that DPE should ensure that these guidelines were implemented. He suggested that this issue needed to be taken to the level of Secretary, DPE and even with the Honorable Minister.
7. Dr.U.D. Choubey DG, SCOPE and former CMD, GAIL in his special address traced the history of formation of Public Sector undertakings and its concept. These were created basically to modernize the process of industrialization of Indian economy in its various facets and also to reach the remotest and the most backward areas of the country for development. These were called as “Commanding heights and Modern temples of India”. The PSUs had made major contribution in the socio-economic development of the Country. PSUs at one time had 24 lakh employees which reduced to 15 lakh at present. It is because of their contribution, PSUs were now christened as Mini-Ratna, Nav-Ratna and Maha-Ratna companies. At present companies were contributing about Rs.100,000 crores as net profit every year and also contribute to Government every year as dividend. Because of profitability, about Rs.90,000 crores had been realized by the Government by way of disinvestment of PSUs.
8. Dr Choubey added that in view of the commitment and contribution made by the employees of CPSEs in the formative years, these companies were now the pride of the Nation. Therefore, social security of retired employees was not only an obligation but responsibility of the concerned PSU and also the Government. He suggested that the corpus at the national level could be created by contributing 0.1% every year of the net profit of PSUs. This could take care of the medical needs of the retired employees of CPSUs which were unable to meet their medical expenses because of their financial constraints. He recalled that a number of PSUs including GAIL had formulated medical schemes which were at par with the serving employees. DPE should come out with such a mandatory provision. He assured that the SCOPE would carry forward this issue with the higher Government level for equality and justice.
9. During the course of subsequent discussions / interactions with the panel speakers and the participants, the following points were highlighted:
• Retired employees are not to be viewed as wasted asset but as reserve and reservoir of valuable talent and experience on call at any time by the Govt or the CPSUs
• It was unfair to employ differential concepts between the status of retired Govt employees and the CPSU retired employees.
• The Supreme Court of India has held in number of decisions that CPSUs fall within the inclusive definition of ‘State’.
• The Supreme Court has also held that the power of the Govt. in the grant of any benefit should be structured by rational, relevant and non-discriminatory norms
• Retirement benefits in whatever form are deferred wage in consideration of past service rendered sacrificing the prime of youth for the sake of the Govt. (CPSU) and the benefit should be such that the retired employee is able to lead a dignified life maintaining, as far as possible, the standard of living he was used to during his service life.
• The Apex Court has held that classification of retired employees for the purpose of retirement benefits should comply with article 14 of the Constitution.
• Insistence on a minimum of 15 years of service in a CPSU is further discriminatory in as much as employees move from Govt. to CPSU or from one CPSU to another only to serve the larger interests of the Govt. and by the selection process of the Govt.
• The DPE guidelines provide for the retired employees of only profit making companies. There are no guidelines for those employees of PSUs which do not have PBT.
• The employees, per se, cannot be held responsible for the losses. There were many external reasons beyond their control.
• Nevertheless Financial position of many of such companies is fast improving by way of “Turn around” strategies and measures.
• The DPE guidelines are vague on the term “any emergency needs”.
• Emergency needs may differ from person to person and place to place. Companies like SAIL, Coal India Ltd., BHEL having a large number of retired employees settled all over India will find it impossible to access the emergency needs of an individual. No company can create an establishment for this purpose. Moreover, this will lead to subjectivity.
• The guidelines are not mandatory in nature and implementation is left to the discretion of the PSU management. The provision that the scheme may be set up where a need is felt is subjective in nature and is vulnerable to grossly discriminatory interpretations.
• That no PSU has set up any scheme, demonstrates that either there is too much “vagueness” in the guidelines or there is sheer apathy in the PSU management or both.
• This issue has to be seen in a larger perspective. This is an important issue of “social security” for which both the government and the concerned CPSUs have congruent responsibility.
• Social security scheme particularly the medical scheme and the financial assistance after retirement are motivational for retention of talents in the core disciplines and core sectors in this era of competitive environment. There are enough examples of European, Canadian and American companies for ensuring “social security” of its retired employees.
• Banking industry is very considerate to its retired employees and has given the second option to its retired employees to join the pension scheme.
• A large majority of employees who retired 5,10 or 15 years back received meager superannuation benefits by way of CPF, gratuity etc. and their financial position is miserable in the absence of any financial help from their own organization or Government.
• Guidelines talk about meeting ‘emergency needs’ which presumably are to meet the basic physical need of at least two square meals a day, clothing and toiletries for two persons and reasonable living accommodation and social needs for a decent living.
Conclusions and Recommendations
In the light of discussion, interaction and deliberations the following conclusions and recommendations were drawn.
It was understood that these recommendations could, for the time being, be only within the confines of the DPE guidelines promulgated so far and the review of the guidelines within a larger frame of greater fairness and equity would have to be taken up separately.
1. The CPSUs could be divided into 3 categories for the above purpose :-
a) Maharatna, Navaratna and Miniratna companies which have annual PBT from which 1-1.5% could be earmarked towards the corpus.
b) Other profit making PSUs
c) Loss making PSUs
THE RATNA GROUP
1) Provide medical assistance on par with serving employees of equivalent designations
2) Make an ex-gratia payment as near the 30% of the minimum of the current pay attached to the designation at which the employee had retired or its present equivalent to meet the other emergency needs of the employee. This payment calculated monthly may be paid every quarter. The surviving spouse to be eligible for half of this amount. Additionally DA to be paid at prevailing rates.
3) This payment will be made from the corpus created out of the 1-1.5% of the PBT. This may be decided based on the fund available in the corpus. The Scheme so formulated by the Company will be reviewed periodically to ensure its viability.
4) The Corpus to be managed by a Trust consisting of Director (Finance) as Chairman, Director (HR), another serving Director, two senior retired employees not lower than the level of General Manager. The Trust will ensure that sufficient contingent reserves are held at any given time.
THE NON RATNA GROUP
1) The Board to determine the percentage of PBT to be transferred to the Corpus
2) Provide, on priority, medical assistance on par with serving employees
3) Make ex-gratia payment to meet the minimum needs of the employee to live a life of dignity which will also bring a fair name to the PSU for its care and concern for the pioneers and foundation makers
4) The Corpus to be administered in the same manner as above.
THE LOSS MAKING GROUP
Same action as for the Non Ratna Group as above.
Sources for fund may be as follows:
DPE CORPUS
It is suggested that from out of the total dividends received by the Govt from the PSUs, 1% should be set aside as a Special Reserve to fund the needs of the retired employees of the Loss Making Group and also the needs of the other groups in the unlikely event of extraordinary circumstances.
Similarly 1% of the amount realized by the Govt by way of disinvestment of PSUs may be transferred to this Trust.
This Special Reserve should be administered jointly by the DPE and SCOPE.
(R.P. Singh)
Wednesday, October 26, 2011
ONGC, OIL suppress figures, Assam loses Rs 865.99 crore: CAG
ONGC, OIL suppress figures, Assam loses Rs 865.99 crore: CAG
Assam has lost at least Rs 865.99 crore as royalty from ONGC and Oil India Ltd (OIL) in a span of five years, as a result of suppression of production figures by the oil companies, according to a Comptroller and Auditor General (CAG) report.
The report on the Assam government’s revenue receipts for the year ending March 2010, which was placed in the state assembly on Wednesday, has also blamed the failure of the government to enforce payments. Out of the total loss, CAG said that OIL alone accounted for revenue losses to the tune of Rs 634.94 crore, while ONGC accounted for Rs 215.12 crore. The state government was also deprived of Rs 10.48 crore as it failed to claim the sum as “differential royalty” from the Oil Industry Development Board (OIDB).
In the five-year period from April 2004 to March 2009, OIL suppressed its production figures of crude oil and condensate to the tune of 2.27 kilolitres , and the revenue lost amounted to Rs 72.40 crore. OIL also suppressed gas production figures leading to a loss of Rs 49.40 crore.
Assam has lost at least Rs 865.99 crore as royalty from ONGC and Oil India Ltd (OIL) in a span of five years, as a result of suppression of production figures by the oil companies, according to a Comptroller and Auditor General (CAG) report.
The report on the Assam government’s revenue receipts for the year ending March 2010, which was placed in the state assembly on Wednesday, has also blamed the failure of the government to enforce payments. Out of the total loss, CAG said that OIL alone accounted for revenue losses to the tune of Rs 634.94 crore, while ONGC accounted for Rs 215.12 crore. The state government was also deprived of Rs 10.48 crore as it failed to claim the sum as “differential royalty” from the Oil Industry Development Board (OIDB).
In the five-year period from April 2004 to March 2009, OIL suppressed its production figures of crude oil and condensate to the tune of 2.27 kilolitres , and the revenue lost amounted to Rs 72.40 crore. OIL also suppressed gas production figures leading to a loss of Rs 49.40 crore.
After CAG, oil sector under CBI scanner
India | Updated Jun 14, 2011 at 08:39pm IST
After CAG, oil sector under CBI scanner
Meetu Jain, CNN-IBN
New Delhi: The CBI on Tuesday stepped in to investigate the alleged flouting of policy by Mukesh Ambani led Reliance Industries Limited(RIL). Irregularities in the policy were highlighted in the draft in the Comptroller Auditor General (CAG) Report leaked to the media on Monday.
CNN-IBN gained access to the CBI documents which asked the Oil Ministry to send across files related to the KG D6 oil fields.
The CBI has, now, asked for files relating to approvals to RIL for increasing its capital expenditure from $ 2.4 billion to $ 8.8 billion.
The CBI is also looking at files relating to the vigilance inquiry against former DG Hydrocarbons, V K Sibal.
The investigative agency is probing why the exploration period was extended beyond original schedule for both RIL and ONGC.
The CAG in its report said that the government had favoured Mukesh Ambani's RIL and two other oil exploring companies.
The CAG report also mentioned that the oil ministry and its regulatory arm - the Directorate General of Hydrocarbons (DGH) - allegedly favoured at least three explorers.
The report alleged that the government allowed Ambani's RIL to violate terms of its contract with the government for exploration in the Krishna-Godavari basin.
This was the first ever audit of private sector participation in the oil sector.
The CAG report also stated that the Directorate General of Hydrocarbons had allowed RIL to violate norms.
The violation of terms, in turn, helped RIL increase its capital expenditure plan to start production from the Krisha-Godavari basin. Sources say that 70 per cent of the draft CAG report is devoted to RIL alone.
The premier auditor, whose report will be tabled in Parliament after incorporating comments from the Oil Ministry, said Reliance never had intention of developing the KG-D6 gas fields as per the initial cost estimates as it did not initiate tendering for equipment as per the original plan.
"Most procurement activities were undertaken late, in line with the schedules of the IDP of May, 2004, clearly evidencing that the operator had no intention of complying with these timelines," the draft report said.
"By contrast, activities in respect of items in the AIDP were initiated even before the submission/approval of the AIDP," it said.
The CAG said the submission of an addendum to the initial development plan (IDP) instead of a revised comprehensive development plan, as well as lack of adequate details with regard to the Phase-II development cost of $ 3.3 billion, made it virtually certain that the operator will submit more addendums.
"The DGH also approved the AIDP, without questioning why the operator did not take action in-line with the already approved IDP," it said.
The report also said that the ministry and DGH allowed Reliance to enter successive exploration phases without the stipulated relinquishment of area and then allowed it to declare the entire contract area as "discovery area".
This was both "irregular and incorrect", since drilling of wells and consequential discoveries had not taken place in the major portion of the contract area, the CAG said.
"We recommend that government should re-examine delineation of the entire contract area as 'discovery area' and take immediate steps for relinquishment of excess area in line with the provisions of the PSC, as also fix accountability for those responsible for this decision," it
said.
The CAG said the benefit granted to Reliance is huge, but cannot be quantified. It also found a "similar irregular determination of the entire contract area" as 'discovery area' in the case of another block operated by Reliance, dubbed KG-OSN-2001/2.
The CAG's scope of audit covers the Production Sharing Contract (PSC) in respect of the KG-DWN-98/3 (KG-D6) block awarded to Reliance for two financial years - 2006-07 and 2007-08 - with access to the records of previous years linked to the transactions of these years.
With additional information from PTI
(
After CAG, oil sector under CBI scanner
Meetu Jain, CNN-IBN
New Delhi: The CBI on Tuesday stepped in to investigate the alleged flouting of policy by Mukesh Ambani led Reliance Industries Limited(RIL). Irregularities in the policy were highlighted in the draft in the Comptroller Auditor General (CAG) Report leaked to the media on Monday.
CNN-IBN gained access to the CBI documents which asked the Oil Ministry to send across files related to the KG D6 oil fields.
The CBI has, now, asked for files relating to approvals to RIL for increasing its capital expenditure from $ 2.4 billion to $ 8.8 billion.
The CBI is also looking at files relating to the vigilance inquiry against former DG Hydrocarbons, V K Sibal.
The investigative agency is probing why the exploration period was extended beyond original schedule for both RIL and ONGC.
The CAG in its report said that the government had favoured Mukesh Ambani's RIL and two other oil exploring companies.
The CAG report also mentioned that the oil ministry and its regulatory arm - the Directorate General of Hydrocarbons (DGH) - allegedly favoured at least three explorers.
The report alleged that the government allowed Ambani's RIL to violate terms of its contract with the government for exploration in the Krishna-Godavari basin.
This was the first ever audit of private sector participation in the oil sector.
The CAG report also stated that the Directorate General of Hydrocarbons had allowed RIL to violate norms.
The violation of terms, in turn, helped RIL increase its capital expenditure plan to start production from the Krisha-Godavari basin. Sources say that 70 per cent of the draft CAG report is devoted to RIL alone.
The premier auditor, whose report will be tabled in Parliament after incorporating comments from the Oil Ministry, said Reliance never had intention of developing the KG-D6 gas fields as per the initial cost estimates as it did not initiate tendering for equipment as per the original plan.
"Most procurement activities were undertaken late, in line with the schedules of the IDP of May, 2004, clearly evidencing that the operator had no intention of complying with these timelines," the draft report said.
"By contrast, activities in respect of items in the AIDP were initiated even before the submission/approval of the AIDP," it said.
The CAG said the submission of an addendum to the initial development plan (IDP) instead of a revised comprehensive development plan, as well as lack of adequate details with regard to the Phase-II development cost of $ 3.3 billion, made it virtually certain that the operator will submit more addendums.
"The DGH also approved the AIDP, without questioning why the operator did not take action in-line with the already approved IDP," it said.
The report also said that the ministry and DGH allowed Reliance to enter successive exploration phases without the stipulated relinquishment of area and then allowed it to declare the entire contract area as "discovery area".
This was both "irregular and incorrect", since drilling of wells and consequential discoveries had not taken place in the major portion of the contract area, the CAG said.
"We recommend that government should re-examine delineation of the entire contract area as 'discovery area' and take immediate steps for relinquishment of excess area in line with the provisions of the PSC, as also fix accountability for those responsible for this decision," it
said.
The CAG said the benefit granted to Reliance is huge, but cannot be quantified. It also found a "similar irregular determination of the entire contract area" as 'discovery area' in the case of another block operated by Reliance, dubbed KG-OSN-2001/2.
The CAG's scope of audit covers the Production Sharing Contract (PSC) in respect of the KG-DWN-98/3 (KG-D6) block awarded to Reliance for two financial years - 2006-07 and 2007-08 - with access to the records of previous years linked to the transactions of these years.
With additional information from PTI
(
KG-D6 Cost Lower Than GSPC, ONGC Projects: RIL
15 Jul 2011
KG-D6 Cost Lower Than GSPC, ONGC Projects: RIL
Reliance said the allegations that government revenue interests have been affected by the 'gold-plating' are completely false
Reliance Industries has said its eastern offshore KG-D6 gas field development cost is much less than what Gujarat government company GSPC and state-owned ONGC are spending on projects in the vicinity of its KG basin find.
Reliance had in 2004 proposed a $2.4 billion investment for producing 40 million cubic metres per day of gas from 5.32 trillion cubic feet of reserves in the D1/D3 fields of the KG-D6 block. Later, in 2006, it revised the capital expenditure requirement to $5.2 billion in Phase-I for producing a higher 80 mmscmd of gas from 11.3 tcf of reserves.
Replying to a draft audit report of the CAG, which said that the increase in field cost would mean a lower profit take for the government, Reliance said, "It has set a benchmark for the lowest project costs across the world."
Its cost estimates for producing gas from the deepsea KG-D6 block are the lowest even in comparison to shallow water projects.
"Oil and Natural Gas Corp's block KG-D5 in vicinity, with a discovery made in 2001, has 1.9 tcf of gas reserves with an estimated development cost of $7.7 billion, for which a development plan is under preparation.
"Gujarat State Petroleum Corp's (GSPC) shallow water block in the same basin, which had a discovery in 2003, is estimated to cost $2 billion to develop 1.4 tcf," it said.
ONGC's KG-D5 block sits next to Reliance's KG-D6 area, where the first discovery was made in 2002. While Reliance took six years to bring KG-D6 gas on to production, even after 10 years of the first discovery, ONGC has not yet been able to put together a development plan.
Reliance said the allegations that government revenue interests have been affected by the 'gold-plating' are completely false. The New Exploration Licencing Policy, under which Reliance had won the KG-D6 block in 2000, brought an end to the 'cost plus regime', where firms got a fixed return on all the capital they invested.
Under NELP, a contractor like Reliance "never benefits by an increase in costs," it said, adding it was imperative to view the revenue interest of the government from the point of view of the contribution of the project to the nation.
"Needless to say, inspite of all the noise, the draft CAG report has found nothing to suggest that Reliance indulged in 'gold-plating' viz that Reliance placed orders on its own affiliates at inflated costs or that payments made to vendors came back to Reliance," the voluminous 250-page response said.
After an extensive and detailed audit process, in which eight CAG officials spent six months on Reliance premises, "CAG does not state that any evidence exists to support any case that the contract cost has been dishonestly inflated."
KG-D6 Cost Lower Than GSPC, ONGC Projects: RIL
Reliance said the allegations that government revenue interests have been affected by the 'gold-plating' are completely false
Reliance Industries has said its eastern offshore KG-D6 gas field development cost is much less than what Gujarat government company GSPC and state-owned ONGC are spending on projects in the vicinity of its KG basin find.
Reliance had in 2004 proposed a $2.4 billion investment for producing 40 million cubic metres per day of gas from 5.32 trillion cubic feet of reserves in the D1/D3 fields of the KG-D6 block. Later, in 2006, it revised the capital expenditure requirement to $5.2 billion in Phase-I for producing a higher 80 mmscmd of gas from 11.3 tcf of reserves.
Replying to a draft audit report of the CAG, which said that the increase in field cost would mean a lower profit take for the government, Reliance said, "It has set a benchmark for the lowest project costs across the world."
Its cost estimates for producing gas from the deepsea KG-D6 block are the lowest even in comparison to shallow water projects.
"Oil and Natural Gas Corp's block KG-D5 in vicinity, with a discovery made in 2001, has 1.9 tcf of gas reserves with an estimated development cost of $7.7 billion, for which a development plan is under preparation.
"Gujarat State Petroleum Corp's (GSPC) shallow water block in the same basin, which had a discovery in 2003, is estimated to cost $2 billion to develop 1.4 tcf," it said.
ONGC's KG-D5 block sits next to Reliance's KG-D6 area, where the first discovery was made in 2002. While Reliance took six years to bring KG-D6 gas on to production, even after 10 years of the first discovery, ONGC has not yet been able to put together a development plan.
Reliance said the allegations that government revenue interests have been affected by the 'gold-plating' are completely false. The New Exploration Licencing Policy, under which Reliance had won the KG-D6 block in 2000, brought an end to the 'cost plus regime', where firms got a fixed return on all the capital they invested.
Under NELP, a contractor like Reliance "never benefits by an increase in costs," it said, adding it was imperative to view the revenue interest of the government from the point of view of the contribution of the project to the nation.
"Needless to say, inspite of all the noise, the draft CAG report has found nothing to suggest that Reliance indulged in 'gold-plating' viz that Reliance placed orders on its own affiliates at inflated costs or that payments made to vendors came back to Reliance," the voluminous 250-page response said.
After an extensive and detailed audit process, in which eight CAG officials spent six months on Reliance premises, "CAG does not state that any evidence exists to support any case that the contract cost has been dishonestly inflated."
Government policies man hurdle in implementation of corporate governance by PSUs
Government policies man hurdle in implementation of corporate governance by PSUs
Even as the Union Cabinet on Thursday made it mandatory for public sector undertakings (PSUs) to follow corporate governance norms, senior executives of blue chip PSUs point out that it is the government itself that has been posing hurdles in the implementation of these rules.
Senior executives of public sector energy major GAIL disclosed that the company management had run into trouble with market watchdog Securities and Exchange Board of India (Sebi) for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
GAIL had to furnish its communication with the ministry of petroleum and natural gas to prove that it was the government and not the company management that was responsible for the delay in appointment of independent directors.
Sebi eventually concluded that it was a case of a “sad travesty of the law by the government of India… and as it’s not the company but the major shareholder (government), which is the culprit”. Similarly Oil and Natural Gas Corp (ONGC) officials point out that although the oil giant is a listed company, the government has an ad hoc mechanism for forcing it to compensate the downstream oil companies – Indian Oil Corp Ltd (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) – for revenue loss on the sale of petroleum products sold below market price due to the government’s political compulsions.
Senior ONGC officials are of the view that this is not fair to the shareholders and if the government wants to pay such compensation in the national interest, it should to be done on the basis of a concrete formula.
Besides, the price that ONGC gets for its natural gas is less than half of what the private companies rake in and the government has been dragging its feet on the proposal for raising the price to a more reasonable level. ONGC has been losing Rs 3,000 crore every year as a result of this low price.
While the petroleum ministry has been in favour of increasing the price, the power and fertiliser ministries have been opposed to the proposal as it would lead to an increase in the cost of production for power plants that sell electricity at regulated prices and the fertiliser subsidy would also go up.
Natural gas is used as a fuel by power plants and as a feedstock for manufacturing fertilisers.
Executives of the downstream oil companies, such as IOC, BPCL and HPCL also hold the grouse that the government has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons and this has eroded their profits.
Even the partial compensation that they receive from the government does not come in time, which makes it difficult to manage their books since they have to prepare their financial results every quarter like the other listed companies.
Senior public sector executives are also of the view that independent directors must be appointed by the government on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say the public sector companies are already subject to stringent audit by the Comptroller and Auditor General of India (CAG), whose report is tabled in Parliament.
Besides, public sector companies fall under the watchful eye of the Central Vigilance Commissioner (CVC) and the Central Bureau of Investigation ( CBI). “The fear of these three Cs (CAG, CVC and CBI), in fact, often cramps the decision making of public sector enterprises,” a senior executive remarked.
Governance a distant dream for PSU:
GAIL management had run into trouble with Sebi for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
Although ONGC is a listed co, the govt has an ad hoc policy for forcing it to compensate the downstream oil cos for revenue loss on the sale of petro products sold below the market price due to the govt’s political compulsions.
Executives of IOC, BPCL and HPCL also hold the grouse that the govt has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons.
Senior PSU staff also feel the independent directors must be appointed by the govt on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say public sector companies are already under the stringent scanners of the three ‘ C’s – CAG, CVC & CBI. CORP
Even as the Union Cabinet on Thursday made it mandatory for public sector undertakings (PSUs) to follow corporate governance norms, senior executives of blue chip PSUs point out that it is the government itself that has been posing hurdles in the implementation of these rules.
Senior executives of public sector energy major GAIL disclosed that the company management had run into trouble with market watchdog Securities and Exchange Board of India (Sebi) for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
GAIL had to furnish its communication with the ministry of petroleum and natural gas to prove that it was the government and not the company management that was responsible for the delay in appointment of independent directors.
Sebi eventually concluded that it was a case of a “sad travesty of the law by the government of India… and as it’s not the company but the major shareholder (government), which is the culprit”. Similarly Oil and Natural Gas Corp (ONGC) officials point out that although the oil giant is a listed company, the government has an ad hoc mechanism for forcing it to compensate the downstream oil companies – Indian Oil Corp Ltd (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) – for revenue loss on the sale of petroleum products sold below market price due to the government’s political compulsions.
Senior ONGC officials are of the view that this is not fair to the shareholders and if the government wants to pay such compensation in the national interest, it should to be done on the basis of a concrete formula.
Besides, the price that ONGC gets for its natural gas is less than half of what the private companies rake in and the government has been dragging its feet on the proposal for raising the price to a more reasonable level. ONGC has been losing Rs 3,000 crore every year as a result of this low price.
While the petroleum ministry has been in favour of increasing the price, the power and fertiliser ministries have been opposed to the proposal as it would lead to an increase in the cost of production for power plants that sell electricity at regulated prices and the fertiliser subsidy would also go up.
Natural gas is used as a fuel by power plants and as a feedstock for manufacturing fertilisers.
Executives of the downstream oil companies, such as IOC, BPCL and HPCL also hold the grouse that the government has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons and this has eroded their profits.
Even the partial compensation that they receive from the government does not come in time, which makes it difficult to manage their books since they have to prepare their financial results every quarter like the other listed companies.
Senior public sector executives are also of the view that independent directors must be appointed by the government on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say the public sector companies are already subject to stringent audit by the Comptroller and Auditor General of India (CAG), whose report is tabled in Parliament.
Besides, public sector companies fall under the watchful eye of the Central Vigilance Commissioner (CVC) and the Central Bureau of Investigation ( CBI). “The fear of these three Cs (CAG, CVC and CBI), in fact, often cramps the decision making of public sector enterprises,” a senior executive remarked.
Governance a distant dream for PSU:
GAIL management had run into trouble with Sebi for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
Although ONGC is a listed co, the govt has an ad hoc policy for forcing it to compensate the downstream oil cos for revenue loss on the sale of petro products sold below the market price due to the govt’s political compulsions.
Executives of IOC, BPCL and HPCL also hold the grouse that the govt has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons.
Senior PSU staff also feel the independent directors must be appointed by the govt on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say public sector companies are already under the stringent scanners of the three ‘ C’s – CAG, CVC & CBI. CORP
Government policies man hurdle in implementation of corporate governance by PSUs
Government policies man hurdle in implementation of corporate governance by PSUs
Even as the Union Cabinet on Thursday made it mandatory for public sector undertakings (PSUs) to follow corporate governance norms, senior executives of blue chip PSUs point out that it is the government itself that has been posing hurdles in the implementation of these rules.
Senior executives of public sector energy major GAIL disclosed that the company management had run into trouble with market watchdog Securities and Exchange Board of India (Sebi) for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
GAIL had to furnish its communication with the ministry of petroleum and natural gas to prove that it was the government and not the company management that was responsible for the delay in appointment of independent directors.
Sebi eventually concluded that it was a case of a “sad travesty of the law by the government of India… and as it’s not the company but the major shareholder (government), which is the culprit”. Similarly Oil and Natural Gas Corp (ONGC) officials point out that although the oil giant is a listed company, the government has an ad hoc mechanism for forcing it to compensate the downstream oil companies – Indian Oil Corp Ltd (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) – for revenue loss on the sale of petroleum products sold below market price due to the government’s political compulsions.
Senior ONGC officials are of the view that this is not fair to the shareholders and if the government wants to pay such compensation in the national interest, it should to be done on the basis of a concrete formula.
Besides, the price that ONGC gets for its natural gas is less than half of what the private companies rake in and the government has been dragging its feet on the proposal for raising the price to a more reasonable level. ONGC has been losing Rs 3,000 crore every year as a result of this low price.
While the petroleum ministry has been in favour of increasing the price, the power and fertiliser ministries have been opposed to the proposal as it would lead to an increase in the cost of production for power plants that sell electricity at regulated prices and the fertiliser subsidy would also go up.
Natural gas is used as a fuel by power plants and as a feedstock for manufacturing fertilisers.
Executives of the downstream oil companies, such as IOC, BPCL and HPCL also hold the grouse that the government has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons and this has eroded their profits.
Even the partial compensation that they receive from the government does not come in time, which makes it difficult to manage their books since they have to prepare their financial results every quarter like the other listed companies.
Senior public sector executives are also of the view that independent directors must be appointed by the government on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say the public sector companies are already subject to stringent audit by the Comptroller and Auditor General of India (CAG), whose report is tabled in Parliament.
Besides, public sector companies fall under the watchful eye of the Central Vigilance Commissioner (CVC) and the Central Bureau of Investigation ( CBI). “The fear of these three Cs (CAG, CVC and CBI), in fact, often cramps the decision making of public sector enterprises,” a senior executive remarked.
Governance a distant dream for PSU:
GAIL management had run into trouble with Sebi for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
Although ONGC is a listed co, the govt has an ad hoc policy for forcing it to compensate the downstream oil cos for revenue loss on the sale of petro products sold below the market price due to the govt’s political compulsions.
Executives of IOC, BPCL and HPCL also hold the grouse that the govt has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons.
Senior PSU staff also feel the independent directors must be appointed by the govt on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say public sector companies are already under the stringent scanners of the three ‘ C’s – CAG, CVC & CBI. CORP
Even as the Union Cabinet on Thursday made it mandatory for public sector undertakings (PSUs) to follow corporate governance norms, senior executives of blue chip PSUs point out that it is the government itself that has been posing hurdles in the implementation of these rules.
Senior executives of public sector energy major GAIL disclosed that the company management had run into trouble with market watchdog Securities and Exchange Board of India (Sebi) for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
GAIL had to furnish its communication with the ministry of petroleum and natural gas to prove that it was the government and not the company management that was responsible for the delay in appointment of independent directors.
Sebi eventually concluded that it was a case of a “sad travesty of the law by the government of India… and as it’s not the company but the major shareholder (government), which is the culprit”. Similarly Oil and Natural Gas Corp (ONGC) officials point out that although the oil giant is a listed company, the government has an ad hoc mechanism for forcing it to compensate the downstream oil companies – Indian Oil Corp Ltd (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) – for revenue loss on the sale of petroleum products sold below market price due to the government’s political compulsions.
Senior ONGC officials are of the view that this is not fair to the shareholders and if the government wants to pay such compensation in the national interest, it should to be done on the basis of a concrete formula.
Besides, the price that ONGC gets for its natural gas is less than half of what the private companies rake in and the government has been dragging its feet on the proposal for raising the price to a more reasonable level. ONGC has been losing Rs 3,000 crore every year as a result of this low price.
While the petroleum ministry has been in favour of increasing the price, the power and fertiliser ministries have been opposed to the proposal as it would lead to an increase in the cost of production for power plants that sell electricity at regulated prices and the fertiliser subsidy would also go up.
Natural gas is used as a fuel by power plants and as a feedstock for manufacturing fertilisers.
Executives of the downstream oil companies, such as IOC, BPCL and HPCL also hold the grouse that the government has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons and this has eroded their profits.
Even the partial compensation that they receive from the government does not come in time, which makes it difficult to manage their books since they have to prepare their financial results every quarter like the other listed companies.
Senior public sector executives are also of the view that independent directors must be appointed by the government on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say the public sector companies are already subject to stringent audit by the Comptroller and Auditor General of India (CAG), whose report is tabled in Parliament.
Besides, public sector companies fall under the watchful eye of the Central Vigilance Commissioner (CVC) and the Central Bureau of Investigation ( CBI). “The fear of these three Cs (CAG, CVC and CBI), in fact, often cramps the decision making of public sector enterprises,” a senior executive remarked.
Governance a distant dream for PSU:
GAIL management had run into trouble with Sebi for not appointing the required number of independent directors on its board because the proposal had been held up by the ministry.
Although ONGC is a listed co, the govt has an ad hoc policy for forcing it to compensate the downstream oil cos for revenue loss on the sale of petro products sold below the market price due to the govt’s political compulsions.
Executives of IOC, BPCL and HPCL also hold the grouse that the govt has not been allowing them to raise the prices of petroleum products to bring them at par with market prices due to political reasons.
Senior PSU staff also feel the independent directors must be appointed by the govt on managerial merit rather than on the basis of political connections, which turns out to be counter- productive.
As far as the emphasis on audit in the new corporate governance norms is concerned, senior executives say public sector companies are already under the stringent scanners of the three ‘ C’s – CAG, CVC & CBI. CORP
CAG slams ONGC for tardy exploration
CAG slams ONGC for tardy exploration
Press Trust of India / New Delhi 05 Aug 10 | 06:39 PM
Premier auditor the Comptroller and Auditor General (CAG) has slammed Oil and Natural Gas Corporation (ONGC) for systemic deficiencies in oil and gas exploration effort that resulted in no discovery in 16 blocks despite spending over Rs 1,460 crore.
The CAG in its report tabled in Parliament today said the performance audit of ONGC in its 37 shallow water blocks "revealed systemic and compliance deficiencies."
The deficiencies relate to "absence of norms for key activities, delays/failures in carrying out acquisition, processing and interpretation (API) of seismic data, delayed tendering, mismatch in planning of exploration activities".
The sluggish effort resulted in "unfruitful expenditure (of Rs 2,136.45 crore) and avoidable expenditure (of Rs 94.67 crore) besides entailing liability for payment of liquidated damaged (Rs 252.20 crore)", it said.
The audit was spread over 21 blocks that had been given to ONGC on nomination basis and 16 it had won under the New Exploration Licensing Policy (NELP).
CAG said ONGC made no oil and gas discovery in any of the 16 NELP blocks as all the wells drilled were found to be dry.
"The company had surrendered/proposed to surrender 10 of the 16 NELP blocks after incurring substantial expenditure of Rs 1,461.36 crore over the period 2004-08, though the company had bid for the blocks after analysing them," the report said.
In 7 of these blocks, ONGC took 8-12 months to complete Environment Impact Assessment (EIA) studies which had adverse impact on timely API of seismic data. "In the absence of norms, the reasonableness of time taken in completion of EIA studies and API could not be ascertained in the audit," it said.
"The pace of completion of API was also very slow in a number of blocks with the result that exploration commitments in the nomination as well as the NELP blocks could not be completed in time," CAG said.
"The slow pace coupled with the mismatch between rig deployment plan and availability/ deployment of rigs affected in fulfilling the drilling commitments. This had a cascading adverse impact as exploration blocks had to be surrendered after incurring substantial expenditure."
CAG asked ONGC to complete exploration activities in a time-bound manner to avoid surrender of blocks, prescribe norms for EIA, initiate tendering process well in advance and ensure availability of suit
Press Trust of India / New Delhi 05 Aug 10 | 06:39 PM
Premier auditor the Comptroller and Auditor General (CAG) has slammed Oil and Natural Gas Corporation (ONGC) for systemic deficiencies in oil and gas exploration effort that resulted in no discovery in 16 blocks despite spending over Rs 1,460 crore.
The CAG in its report tabled in Parliament today said the performance audit of ONGC in its 37 shallow water blocks "revealed systemic and compliance deficiencies."
The deficiencies relate to "absence of norms for key activities, delays/failures in carrying out acquisition, processing and interpretation (API) of seismic data, delayed tendering, mismatch in planning of exploration activities".
The sluggish effort resulted in "unfruitful expenditure (of Rs 2,136.45 crore) and avoidable expenditure (of Rs 94.67 crore) besides entailing liability for payment of liquidated damaged (Rs 252.20 crore)", it said.
The audit was spread over 21 blocks that had been given to ONGC on nomination basis and 16 it had won under the New Exploration Licensing Policy (NELP).
CAG said ONGC made no oil and gas discovery in any of the 16 NELP blocks as all the wells drilled were found to be dry.
"The company had surrendered/proposed to surrender 10 of the 16 NELP blocks after incurring substantial expenditure of Rs 1,461.36 crore over the period 2004-08, though the company had bid for the blocks after analysing them," the report said.
In 7 of these blocks, ONGC took 8-12 months to complete Environment Impact Assessment (EIA) studies which had adverse impact on timely API of seismic data. "In the absence of norms, the reasonableness of time taken in completion of EIA studies and API could not be ascertained in the audit," it said.
"The pace of completion of API was also very slow in a number of blocks with the result that exploration commitments in the nomination as well as the NELP blocks could not be completed in time," CAG said.
"The slow pace coupled with the mismatch between rig deployment plan and availability/ deployment of rigs affected in fulfilling the drilling commitments. This had a cascading adverse impact as exploration blocks had to be surrendered after incurring substantial expenditure."
CAG asked ONGC to complete exploration activities in a time-bound manner to avoid surrender of blocks, prescribe norms for EIA, initiate tendering process well in advance and ensure availability of suit
CAG pulls up Sebi, Irda for retaining surplus funds
Government auditor CAG has rapped five regulators, including Sebi, Irda and PNGRB, for keeping their surplus funds worth over Rs 2,142 crore collected through fee and penalty outside the government accounts.
The Comptroller and Auditor General (CAG) in its report has pulled up Securities and Exchange Board of India (Sebi), Insurance regulatory and Development Authority (Irda), Pension Fund Regulatory Development Authority (PFRDA), Central Electricity Regulatory Commission (CERC) and Petroleum and Natural Gas Regulatory Board (PNGRB) for "contravention of constitutional provision".
"Scrutiny of the annual accounts of the five regulatory bodies revealed that these bodies were retaining their surplus funds generated through fee charges, unspent grants received from government, aggregating to Rs 2,142.47 crore at the end of March, 2010 outside the Government Accounts," CAG said.
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The practice by the regulators are in contravention of the instructions issued by the Finance Ministry that all ministries and departments of the government would ensure that funds of regulatory bodies are maintained in the Public Account, the CAG said.
"The Finance Accounts of the Union Government therefore do not present a current and complete picture of government finances to the extent of funds of Rs 2,142.47 crore lying outside the government accounts," it added.
Further, the CAG report noted that the Finance Ministry in December, 2009 and November, 2010 had said the broad guidelines relating to operationalising Sebi and Irda funds in the Public Accounts have been framed and conveyed to the Controller General of Accounts for drawing up the detail accounting procedure.
... contd.
Government auditor CAG has rapped five regulators, including Sebi, Irda and PNGRB, for keeping their surplus funds worth over Rs 2,142 crore collected through fee and penalty outside the government accounts.
The Comptroller and Auditor General (CAG) in its report has pulled up Securities and Exchange Board of India (Sebi), Insurance regulatory and Development Authority (Irda), Pension Fund Regulatory Development Authority (PFRDA), Central Electricity Regulatory Commission (CERC) and Petroleum and Natural Gas Regulatory Board (PNGRB) for "contravention of constitutional provision".
"Scrutiny of the annual accounts of the five regulatory bodies revealed that these bodies were retaining their surplus funds generated through fee charges, unspent grants received from government, aggregating to Rs 2,142.47 crore at the end of March, 2010 outside the Government Accounts," CAG said.
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The practice by the regulators are in contravention of the instructions issued by the Finance Ministry that all ministries and departments of the government would ensure that funds of regulatory bodies are maintained in the Public Account, the CAG said.
"The Finance Accounts of the Union Government therefore do not present a current and complete picture of government finances to the extent of funds of Rs 2,142.47 crore lying outside the government accounts," it added.
Further, the CAG report noted that the Finance Ministry in December, 2009 and November, 2010 had said the broad guidelines relating to operationalising Sebi and Irda funds in the Public Accounts have been framed and conveyed to the Controller General of Accounts for drawing up the detail accounting procedure.
... contd.
CAG says scam at ONGC, NTPC cost govt Rs 1800cr
CAG says scam at ONGC, NTPC cost govt Rs 1800cr
The Comptroller and Auditor General’s (CAG) audit of public-sector companies has revealed financial irregularities in bluechips like ONGC, IOC and NTPC. As a result of these irregularities, the government has lost a possible dividend inflow of more than Rs 1,800 crore. CNBC-TV18’s Abhijit Neogy reports.
Here is a verbatim transcript of Abhijit Neogy’s comments on CNBC-TV18. Also watch the accompanying video.
The annual CAG report for PSU companies is out and it says bluechips like NTPC, ONGC etc have indulged in financial irregularities. The irregularities range from overstatement of profits to overstatement of expenditure and that has resulted in a loss of about Rs 1,846 crore in dividend to the government. As far as ONGC is concerned, the understatement of profits through overstatement of expenditure is around Rs 257 crore. For IOC, it amounts to about Rs 207 crore and NTPC has inflated its balance sheet by about Rs 938 crore.
The frequent flyer programme of National Aviation Company Ltd. has also come in for some criticism from the IT audit of CAG. This particular mechanism doesn’t seem to be yielding much on the ground because the Action Taken Report, because last year, about 75% of recommendation of penal action has not taken off.
The Comptroller and Auditor General’s (CAG) audit of public-sector companies has revealed financial irregularities in bluechips like ONGC, IOC and NTPC. As a result of these irregularities, the government has lost a possible dividend inflow of more than Rs 1,800 crore. CNBC-TV18’s Abhijit Neogy reports.
Here is a verbatim transcript of Abhijit Neogy’s comments on CNBC-TV18. Also watch the accompanying video.
The annual CAG report for PSU companies is out and it says bluechips like NTPC, ONGC etc have indulged in financial irregularities. The irregularities range from overstatement of profits to overstatement of expenditure and that has resulted in a loss of about Rs 1,846 crore in dividend to the government. As far as ONGC is concerned, the understatement of profits through overstatement of expenditure is around Rs 257 crore. For IOC, it amounts to about Rs 207 crore and NTPC has inflated its balance sheet by about Rs 938 crore.
The frequent flyer programme of National Aviation Company Ltd. has also come in for some criticism from the IT audit of CAG. This particular mechanism doesn’t seem to be yielding much on the ground because the Action Taken Report, because last year, about 75% of recommendation of penal action has not taken off.
CAG raps ONGC for inflated Imperial buy
Expressindia » Story
CAG raps ONGC for inflated Imperial buy
Posted: Mar 24, 2011 at 1846 hrs IST
New Delhi The government auditor CAG has rapped ONGC Videsh Ltd for its buyout of Imperial Energy Corp saying reserves were inflated and unrealistic projections of output made to justify the Indian energy giant's most expensive acquisition ever.
OVL, the overseas arm of Oil and Natural Gas Corp (ONGC), in January 2009 acquired Russia-focused Imperial Energy for USD 2.12 billion (Rs 10,320 crore).
Imperial, whose main assets are in Tomskh region of east Russia, has produced lower than projected output and had inflated oil reserves.
"...the company has been able to achieve production of only 15,803 barrels of oil per day (bpd) as against the envisaged production levels of 35,000 bpd (at the time of acquisition)," the Comptroller and Auditor General said in its report tabled in Parliament today.
CAG calculated that lesser output meant Rs 1182.14 crore loss during 15 months from January 2009 to March 2010.
The Cabinet Committee on Economic Affairs (CCEA) had in August 2008 allowed OVL to acquire Imperial subject to stipulation that the rate of return on investment is more than 10 per cent. Also, OVL was to farm out a part of its stake to a Russian firm.
Before the acquisition, the technical consultant and OVL had estimated the 2P reserves (that have 50 per cent chance of being produced) of Imperial Energy at 790 million barrels of oil equivalent and 825 million barrels of oil equivalent respectively.
"With these estimates of reserves and long term crude price at USD 85 per barrel, the company (OVL) assessed the project as viable with the average daily rate of production of 35,000 bpd for 2009 and thereafter, to enhance the production up to 80,000 bpd by 2011," CAG said in the report.
Against this, the actual rate of production on October 20, 2008 was only about 5,634 bpd as against the projected output of 11,000 bpd. Average output in 2009 was 9067 bpd and for January-August 2010 14,724 bpd, much lower than what was projected at the time of acquisition.
"Consequent to low production, the company (OVL) could not achieve internal rate of return (IRR) of 10 per cent and incurred losses of USD 37.892 million (Rs 174.15 crore) and USD 212.464 million (Rs 1007.99 crore) for the years 2008-09 and 2009-10 respectively," CAG said.
Moreover, OVL had to reduce the proven reserve size of the asset during 2009-10 by 1.527 million tons "indicating the inflated size of reserves estimated by the company at the time of its acquisition."
"The company (OVL) did not address the reservations expressed in 2007 by Russian Resources Ministry regarding inflated reserve position declared by Imperial Energy Corp, at the time of evaluation of investment opportunity in 2008," CAG said.
CAG said OVL did not exercise the option of farming out a part of its stake in Imperial to "a local partner to leverage their combined financial strength and shared experience of the joint venture partner."
"This resulted in financial loss to OVL," it said.
CAG rejected OVL's reply that "due to discouraging and very different drilling results of 28 wells in three fields in 2008 and 2009, production could not be achieved as envisaged at the time of acquisition".
OVL "management's reply is not tenable as the subsequent drilling results and reduction of proved reserve size by 1.527 million tons during 2009-10 raises doubt about the reserve size of the Imperial Energy Corp and economic viability of the takeover," the CAG report said.
"The fact that the company even now is not in a position to generate a realistic production profile and bring out an economic analysis confirms that all the problems associated with these fields were not properly assessed at the time of evaluation of opportunity which led to poor production performance and consequent losses," CAG added.
CAG said investment risk could have been mitigated in the initial stage itself by farming out a part of its stake.
"The technical consultant while confirming the audit observation opined that it is a known fact that tight reservoir had poor productivity and also poorer recovery in comparison to a normal one. The prediction for production level was highly optimistic rather than realistic," it added.
CAG raps ONGC for inflated Imperial buy
Posted: Mar 24, 2011 at 1846 hrs IST
New Delhi The government auditor CAG has rapped ONGC Videsh Ltd for its buyout of Imperial Energy Corp saying reserves were inflated and unrealistic projections of output made to justify the Indian energy giant's most expensive acquisition ever.
OVL, the overseas arm of Oil and Natural Gas Corp (ONGC), in January 2009 acquired Russia-focused Imperial Energy for USD 2.12 billion (Rs 10,320 crore).
Imperial, whose main assets are in Tomskh region of east Russia, has produced lower than projected output and had inflated oil reserves.
"...the company has been able to achieve production of only 15,803 barrels of oil per day (bpd) as against the envisaged production levels of 35,000 bpd (at the time of acquisition)," the Comptroller and Auditor General said in its report tabled in Parliament today.
CAG calculated that lesser output meant Rs 1182.14 crore loss during 15 months from January 2009 to March 2010.
The Cabinet Committee on Economic Affairs (CCEA) had in August 2008 allowed OVL to acquire Imperial subject to stipulation that the rate of return on investment is more than 10 per cent. Also, OVL was to farm out a part of its stake to a Russian firm.
Before the acquisition, the technical consultant and OVL had estimated the 2P reserves (that have 50 per cent chance of being produced) of Imperial Energy at 790 million barrels of oil equivalent and 825 million barrels of oil equivalent respectively.
"With these estimates of reserves and long term crude price at USD 85 per barrel, the company (OVL) assessed the project as viable with the average daily rate of production of 35,000 bpd for 2009 and thereafter, to enhance the production up to 80,000 bpd by 2011," CAG said in the report.
Against this, the actual rate of production on October 20, 2008 was only about 5,634 bpd as against the projected output of 11,000 bpd. Average output in 2009 was 9067 bpd and for January-August 2010 14,724 bpd, much lower than what was projected at the time of acquisition.
"Consequent to low production, the company (OVL) could not achieve internal rate of return (IRR) of 10 per cent and incurred losses of USD 37.892 million (Rs 174.15 crore) and USD 212.464 million (Rs 1007.99 crore) for the years 2008-09 and 2009-10 respectively," CAG said.
Moreover, OVL had to reduce the proven reserve size of the asset during 2009-10 by 1.527 million tons "indicating the inflated size of reserves estimated by the company at the time of its acquisition."
"The company (OVL) did not address the reservations expressed in 2007 by Russian Resources Ministry regarding inflated reserve position declared by Imperial Energy Corp, at the time of evaluation of investment opportunity in 2008," CAG said.
CAG said OVL did not exercise the option of farming out a part of its stake in Imperial to "a local partner to leverage their combined financial strength and shared experience of the joint venture partner."
"This resulted in financial loss to OVL," it said.
CAG rejected OVL's reply that "due to discouraging and very different drilling results of 28 wells in three fields in 2008 and 2009, production could not be achieved as envisaged at the time of acquisition".
OVL "management's reply is not tenable as the subsequent drilling results and reduction of proved reserve size by 1.527 million tons during 2009-10 raises doubt about the reserve size of the Imperial Energy Corp and economic viability of the takeover," the CAG report said.
"The fact that the company even now is not in a position to generate a realistic production profile and bring out an economic analysis confirms that all the problems associated with these fields were not properly assessed at the time of evaluation of opportunity which led to poor production performance and consequent losses," CAG added.
CAG said investment risk could have been mitigated in the initial stage itself by farming out a part of its stake.
"The technical consultant while confirming the audit observation opined that it is a known fact that tight reservoir had poor productivity and also poorer recovery in comparison to a normal one. The prediction for production level was highly optimistic rather than realistic," it added.
Ongc Retired Officers Asso. vs Ongc on 7 March, 2000
Article 226 in The Constitution Of India 1949
All India Reserve Bank Retired ... vs Union Of India And Others on 10 December, 1991
Gujarat High Court
Ongc Retired Officers Asso. vs Ongc on 7 March, 2000
Equivalent citations: (2000) 4 GLR 2879
Bench: R Tripathi
JUDGMENT
1. The present petition is filed by two petitioners, one, ONGC Retired Officers' Association and Shri V.G. Srinivasan, President (as he then was) of petitioner no.1. The petition is directed against the respondent Oil & Natural Gas Commission ("the Commission" for brevity) for excluding the employees who have retired prior to 1.4.1990 from granting the benefits under superannuation benefit scheme. It is the grievance of the petitioners that the scheme, formulated by the Commission is made applicable only to those employees who retired on 1.4.1991, or thereafter. It is the case of the petitioners that in fact a draft scheme was circulated for eliciting opinion poll by the Directorate of Personnel of the Commission. In that it was mentioned in clause (1) that :
"The scheme would be compulsory for each and every employee of the Commission who came on roll of the Commission on 7th October 1987 or thereafter."
It is also the case of the petitioners that thereafter the scheme with some modifications was again circulated which is at Annexure 'B'. In the modified scheme it was mentioned in subclause (C) of clause 1, under the heading 'Membership' that :
"All regular employees of ONGC are entitled to become member of the scheme.
The scheme would be optional to the present serving officers of the Commission, but not to officers joining on 1st April 1990 or thereafter who will have to compulsorily become member of the scheme and no option in his case would be available to them. Option in case of existing employees once exercised will be final and irrevocable."
It is submitted on behalf of the petitioners that in view of these two schemes, the prayers at para 14 of the petition are required to be granted, whereby it is prayed that direction in the nature of mandamus be issued against the respondent Commission to apply the scheme now known as "ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme", to all its employees. It is also prayed by the petitioners that to the extent the scheme is made applicable compulsorily to the employees who are in service as on 1.4.1991, the same should be declared unconstitutional and that the Commission be directed to make the scheme applicable to all its employees on their exercising option. Mr.Majgaonkar, learned counsel vehemently urged that the action of the respondent Commission of applying the scheme in its present form whereby the scheme is made applicable only to the employees who were on the rolls of the Commission on or after 1.4.1991 is unjust, arbitrary and therefore, the prayers as prayed for are required to be granted.
2. Mr.R.H. Mehta, the learned advocate for the Commission has invited my attention to the affidavit filed on behalf of the Commission wherein para 9(ii) states that, "the scheme which was circulated in the year 1987 was only a draft scheme and it was, as the title shows, was circulated for eliciting opinion poll". It is also pointed out that it was thereafter with necessary modifications that it was recommended to the Central Govt. for making the scheme in question effective from 1.4.1990. Mr.Mehta has also invited my attention to letter dated 18.9.1991, whereby the Union Ministry of Petroleum and Natural Gas granted its approval to the scheme with a modification so far as applicability of the said scheme is concerned in clause (iii) of the said letter which reads as under :
"The scheme may be made effective from 1.4.1990 subject to the condition that all employees who retired between 1.4.1990 and 1.4.1991 will be excluded from the scheme."
Mr.Mehta, learned counsel has submitted that the said modification was made by the Union Government by its letter dated 18.9.1991 , which is already produced on record of this case with an affidavit dated 10.3.1998. Therefore, the petitioners very much knew about the decision being that of the Union Government and if at all that decision was required to be challenged it was open to the petitioners to join the Govt of India as a party respondent to defend its decision. Mr.Mehta has also submitted that the scheme implemented by the Commission is only after approval from the Union Government and the said scheme is implemented as approved by the Union Government and therefore, if at all the decision of modification of date was to be challenged, the same should have been challenged by the petitioners only after joining the Union of India as party respondent in the present petition.
3. Mr.Majgaonkar for the petitioners urged that as regards the action of the respondent Commission of forwarding the scheme to the Union Government vide letter dated 29.3.1991 with a changed date of 1.4.1990 instead of 7.10.1987, no justification is put forward by the Commission.
4. It appears from the aforesaid discussion that the cut off date which is now prescribed for implementation of the scheme is a decision of the Union Government and if at all that decision is to be challenged by the petitioners, the petitioners ought to have joined the Govt. of India as party respondent so as to enable the Union Government to put forward the justification, if any for prescribing the said date. In absence of the Union Government before this Court, no reliefs can be granted against the Commission as the Commission is only an implementing agency of the decision of the Union Government whereby the Central Government modified the proposal sent by the Commission by letter dated 29.3.1991 in the form of change of date, as stated hereinabove.
Mr.R.H. Mehta, the learned advocate for the Commission submitted that it is observed by the Honourable Supreme Court in the case of All India Reserve Bank Retired Officers Association & others v. Union of India & another, 1991 (6) JT 400, wherein the Honourable the Supreme Court was considering the question of prescribing the cut off date for implementation of pension scheme in substitution of CPF scheme. The Honourable Supreme Court held that :
"The underlying principle is that when the State decides to revise and liberalise an existing pension scheme with a view to augmenting the social security cover granted to pensioners, it cannot ordinarily grant the benefit to a section of the pensioners and deny the same to others by drawing an artificial cut off line which cannot be justified on rational grounds and is wholly unconnected with the object intended to be achieved. But when an employer introduces an entirely new scheme which has no connection with the existing scheme, different considerations enter the decision making process. One such consideration may be the financial implications of the scheme and the extent of capacity of the employer to bear the burden. Keeping in view its capacity to absorb the financial burden that the scheme would throw, the employer would have to decide upon the extent of applicability of the scheme."
5. Mr.Mehta has also pointed out that the present scheme was also the subject matter of a writ petition being W.P. No.1718 of 1996 under Article 226 of the Constitution before the High Court of Mumbai, wherein it was challenged by the petitioners therein that the scheme in question was not having financial viability and equitableness. Therefore, requested for the following reliefs :
- To quash and set aside the scheme.
- Directions be issued for not implementing the scheme.
- Operation of the scheme should be stayed.
- The respondent be directed to restrain from paying out the said funds in any manner for any purpose.
The High Court of Mumbai was pleased to pass an order on 5.11.1996, which reads as under :
"This petition under Article 226 is filed by some of the employees of Oil & natural Gas Commission (ONGC) challenging the validity of ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme ("Scheme" for short). The main grievance of the petitioners is that the scheme is not financially viable and the entire corpus of the scheme is likely to be wiped out soon leaving the Junior employees in service completely high and dry. The petitioners have therefore, prayed for quashing and setting aside the scheme. In the alternative, they have prayed for a direction against the ONGC not to implement the scheme.
It seems that the scheme was introduced sometime in May 1990 for the officers working in ONGC, although, some 3000 officers did not join the scheme, large majority comprising of nearly 18000 officers have opted for the scheme. so far around 2000 cases of those who have retired/ expired have been settled. Nearly 293 cases of death and/ or total permanent disability while in service the pending for settlement.
In their affidavit in reply ONGC has vehemently denied the petitioners' case that the scheme is not financially viable.
However, during hearing Mr.Dada, learned Additional Solicitor General, appearing for ONGC fairly stated that the Corporation has received actuarial report from M/s K.A. Pandit that the scheme is not viable. Mr.Dada also produced a copy of the report for the perusal of the Court. The report shows that the scheme is not viable on account of unexpected time in the salary and PAGE change in the formula of D.A. M/s K.A. Pandit have recommended that to make the scheme viable it is necessary to raise fund from the sources available. The fund position should be reviewed especially when there is a change on account of wage negotiation or the long terms recruitment policy. It is recommended that in order to take cases of the fund additional contribution should be raised from the year in which exorbitant salary rise has been given, i.e. 1992 and difference with 12% interest to be paid to the fund. It is also recommended that any difference of annuity cost because of above salary rise and interest payable to LIC for 1992 to date of payment of annuity should be raised in such a way that it does not pose undue problems to the existing members.
On a careful scrutiny of the report, it is clear, that the scheme is not viable unless additional funds are raised from difference sources. Otherwise, the scheme is liable to be scrapped altogether. The question relating to generation of additional funds will have to be considered by negotiations between the Officers' Association and the Corporation. The Bombay Association has appeared through the President, STO (MRBC), ONGC and has agreed for holding negotiations with the Corporation. However, the all India Association, i.e. ASTO (CWC), ONGC has not appeared although served. The central association is hereby directed to hold similar negotiations with the Corporation for the purpose of finding out solution for saving the scheme. In the meanwhile, it is necessary to issue ad interim relief in order to ensure that the fund is not further depleted.
The ONGC is hereby restrained from paying out from the funds of the scheme except in the cases of death or total/ permanent disability while in service, the Corporation is permitted to release the funds to the extent of 50% in such cases."
Thereafter, the said writ petition came to be withdrawn on the basis of Memorandum of Understanding (MoU) submitted before the Honourable High Court of Mumbai. It is clear from the order passed by the Honourable Mumbai High Court that it was on the basis of modification of the scheme as agreed in the said (MoU), the said writ petition came to be withdrawn giving up challenge to the scheme in question. This is to show that the scheme as was stood, was found to be not viable and therefore, the same was required to be changed under the MoU in question. In that view of the matter it is clear that if the said scheme found to be not viable even for implementing from 1.4.1990 it could not have been found viable for implementing it from any earlier date.
6. Mr.Mehta, learned advocate has also invited the attention of the Court to para 9 of the affidavit in reply at page 71, wherein it is stated in no uncertain terms that respondent no.1 only required to contribute a token amount of Rs.100/-. This is one of the conditions stipulated by the Govt. of India while according NOC to entertain superannuation benefit scheme. He has also invited my attention to the averments made in para 13 at page 73 that if the scheme is made applicable for officers, who retired from 1.4.1990, the scheme would become inequitable and unviable as the number of officers would receive disproportionate benefits compared to very less contribution made by them at the cost of young officers/ members.
7. In the light of the aforesaid discussion, the petition fails. No reliefs as prayed for by the petitioners can be granted. Rule is discharged with no order as to costs.
All India Reserve Bank Retired ... vs Union Of India And Others on 10 December, 1991
Gujarat High Court
Ongc Retired Officers Asso. vs Ongc on 7 March, 2000
Equivalent citations: (2000) 4 GLR 2879
Bench: R Tripathi
JUDGMENT
1. The present petition is filed by two petitioners, one, ONGC Retired Officers' Association and Shri V.G. Srinivasan, President (as he then was) of petitioner no.1. The petition is directed against the respondent Oil & Natural Gas Commission ("the Commission" for brevity) for excluding the employees who have retired prior to 1.4.1990 from granting the benefits under superannuation benefit scheme. It is the grievance of the petitioners that the scheme, formulated by the Commission is made applicable only to those employees who retired on 1.4.1991, or thereafter. It is the case of the petitioners that in fact a draft scheme was circulated for eliciting opinion poll by the Directorate of Personnel of the Commission. In that it was mentioned in clause (1) that :
"The scheme would be compulsory for each and every employee of the Commission who came on roll of the Commission on 7th October 1987 or thereafter."
It is also the case of the petitioners that thereafter the scheme with some modifications was again circulated which is at Annexure 'B'. In the modified scheme it was mentioned in subclause (C) of clause 1, under the heading 'Membership' that :
"All regular employees of ONGC are entitled to become member of the scheme.
The scheme would be optional to the present serving officers of the Commission, but not to officers joining on 1st April 1990 or thereafter who will have to compulsorily become member of the scheme and no option in his case would be available to them. Option in case of existing employees once exercised will be final and irrevocable."
It is submitted on behalf of the petitioners that in view of these two schemes, the prayers at para 14 of the petition are required to be granted, whereby it is prayed that direction in the nature of mandamus be issued against the respondent Commission to apply the scheme now known as "ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme", to all its employees. It is also prayed by the petitioners that to the extent the scheme is made applicable compulsorily to the employees who are in service as on 1.4.1991, the same should be declared unconstitutional and that the Commission be directed to make the scheme applicable to all its employees on their exercising option. Mr.Majgaonkar, learned counsel vehemently urged that the action of the respondent Commission of applying the scheme in its present form whereby the scheme is made applicable only to the employees who were on the rolls of the Commission on or after 1.4.1991 is unjust, arbitrary and therefore, the prayers as prayed for are required to be granted.
2. Mr.R.H. Mehta, the learned advocate for the Commission has invited my attention to the affidavit filed on behalf of the Commission wherein para 9(ii) states that, "the scheme which was circulated in the year 1987 was only a draft scheme and it was, as the title shows, was circulated for eliciting opinion poll". It is also pointed out that it was thereafter with necessary modifications that it was recommended to the Central Govt. for making the scheme in question effective from 1.4.1990. Mr.Mehta has also invited my attention to letter dated 18.9.1991, whereby the Union Ministry of Petroleum and Natural Gas granted its approval to the scheme with a modification so far as applicability of the said scheme is concerned in clause (iii) of the said letter which reads as under :
"The scheme may be made effective from 1.4.1990 subject to the condition that all employees who retired between 1.4.1990 and 1.4.1991 will be excluded from the scheme."
Mr.Mehta, learned counsel has submitted that the said modification was made by the Union Government by its letter dated 18.9.1991 , which is already produced on record of this case with an affidavit dated 10.3.1998. Therefore, the petitioners very much knew about the decision being that of the Union Government and if at all that decision was required to be challenged it was open to the petitioners to join the Govt of India as a party respondent to defend its decision. Mr.Mehta has also submitted that the scheme implemented by the Commission is only after approval from the Union Government and the said scheme is implemented as approved by the Union Government and therefore, if at all the decision of modification of date was to be challenged, the same should have been challenged by the petitioners only after joining the Union of India as party respondent in the present petition.
3. Mr.Majgaonkar for the petitioners urged that as regards the action of the respondent Commission of forwarding the scheme to the Union Government vide letter dated 29.3.1991 with a changed date of 1.4.1990 instead of 7.10.1987, no justification is put forward by the Commission.
4. It appears from the aforesaid discussion that the cut off date which is now prescribed for implementation of the scheme is a decision of the Union Government and if at all that decision is to be challenged by the petitioners, the petitioners ought to have joined the Govt. of India as party respondent so as to enable the Union Government to put forward the justification, if any for prescribing the said date. In absence of the Union Government before this Court, no reliefs can be granted against the Commission as the Commission is only an implementing agency of the decision of the Union Government whereby the Central Government modified the proposal sent by the Commission by letter dated 29.3.1991 in the form of change of date, as stated hereinabove.
Mr.R.H. Mehta, the learned advocate for the Commission submitted that it is observed by the Honourable Supreme Court in the case of All India Reserve Bank Retired Officers Association & others v. Union of India & another, 1991 (6) JT 400, wherein the Honourable the Supreme Court was considering the question of prescribing the cut off date for implementation of pension scheme in substitution of CPF scheme. The Honourable Supreme Court held that :
"The underlying principle is that when the State decides to revise and liberalise an existing pension scheme with a view to augmenting the social security cover granted to pensioners, it cannot ordinarily grant the benefit to a section of the pensioners and deny the same to others by drawing an artificial cut off line which cannot be justified on rational grounds and is wholly unconnected with the object intended to be achieved. But when an employer introduces an entirely new scheme which has no connection with the existing scheme, different considerations enter the decision making process. One such consideration may be the financial implications of the scheme and the extent of capacity of the employer to bear the burden. Keeping in view its capacity to absorb the financial burden that the scheme would throw, the employer would have to decide upon the extent of applicability of the scheme."
5. Mr.Mehta has also pointed out that the present scheme was also the subject matter of a writ petition being W.P. No.1718 of 1996 under Article 226 of the Constitution before the High Court of Mumbai, wherein it was challenged by the petitioners therein that the scheme in question was not having financial viability and equitableness. Therefore, requested for the following reliefs :
- To quash and set aside the scheme.
- Directions be issued for not implementing the scheme.
- Operation of the scheme should be stayed.
- The respondent be directed to restrain from paying out the said funds in any manner for any purpose.
The High Court of Mumbai was pleased to pass an order on 5.11.1996, which reads as under :
"This petition under Article 226 is filed by some of the employees of Oil & natural Gas Commission (ONGC) challenging the validity of ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme ("Scheme" for short). The main grievance of the petitioners is that the scheme is not financially viable and the entire corpus of the scheme is likely to be wiped out soon leaving the Junior employees in service completely high and dry. The petitioners have therefore, prayed for quashing and setting aside the scheme. In the alternative, they have prayed for a direction against the ONGC not to implement the scheme.
It seems that the scheme was introduced sometime in May 1990 for the officers working in ONGC, although, some 3000 officers did not join the scheme, large majority comprising of nearly 18000 officers have opted for the scheme. so far around 2000 cases of those who have retired/ expired have been settled. Nearly 293 cases of death and/ or total permanent disability while in service the pending for settlement.
In their affidavit in reply ONGC has vehemently denied the petitioners' case that the scheme is not financially viable.
However, during hearing Mr.Dada, learned Additional Solicitor General, appearing for ONGC fairly stated that the Corporation has received actuarial report from M/s K.A. Pandit that the scheme is not viable. Mr.Dada also produced a copy of the report for the perusal of the Court. The report shows that the scheme is not viable on account of unexpected time in the salary and PAGE change in the formula of D.A. M/s K.A. Pandit have recommended that to make the scheme viable it is necessary to raise fund from the sources available. The fund position should be reviewed especially when there is a change on account of wage negotiation or the long terms recruitment policy. It is recommended that in order to take cases of the fund additional contribution should be raised from the year in which exorbitant salary rise has been given, i.e. 1992 and difference with 12% interest to be paid to the fund. It is also recommended that any difference of annuity cost because of above salary rise and interest payable to LIC for 1992 to date of payment of annuity should be raised in such a way that it does not pose undue problems to the existing members.
On a careful scrutiny of the report, it is clear, that the scheme is not viable unless additional funds are raised from difference sources. Otherwise, the scheme is liable to be scrapped altogether. The question relating to generation of additional funds will have to be considered by negotiations between the Officers' Association and the Corporation. The Bombay Association has appeared through the President, STO (MRBC), ONGC and has agreed for holding negotiations with the Corporation. However, the all India Association, i.e. ASTO (CWC), ONGC has not appeared although served. The central association is hereby directed to hold similar negotiations with the Corporation for the purpose of finding out solution for saving the scheme. In the meanwhile, it is necessary to issue ad interim relief in order to ensure that the fund is not further depleted.
The ONGC is hereby restrained from paying out from the funds of the scheme except in the cases of death or total/ permanent disability while in service, the Corporation is permitted to release the funds to the extent of 50% in such cases."
Thereafter, the said writ petition came to be withdrawn on the basis of Memorandum of Understanding (MoU) submitted before the Honourable High Court of Mumbai. It is clear from the order passed by the Honourable Mumbai High Court that it was on the basis of modification of the scheme as agreed in the said (MoU), the said writ petition came to be withdrawn giving up challenge to the scheme in question. This is to show that the scheme as was stood, was found to be not viable and therefore, the same was required to be changed under the MoU in question. In that view of the matter it is clear that if the said scheme found to be not viable even for implementing from 1.4.1990 it could not have been found viable for implementing it from any earlier date.
6. Mr.Mehta, learned advocate has also invited the attention of the Court to para 9 of the affidavit in reply at page 71, wherein it is stated in no uncertain terms that respondent no.1 only required to contribute a token amount of Rs.100/-. This is one of the conditions stipulated by the Govt. of India while according NOC to entertain superannuation benefit scheme. He has also invited my attention to the averments made in para 13 at page 73 that if the scheme is made applicable for officers, who retired from 1.4.1990, the scheme would become inequitable and unviable as the number of officers would receive disproportionate benefits compared to very less contribution made by them at the cost of young officers/ members.
7. In the light of the aforesaid discussion, the petition fails. No reliefs as prayed for by the petitioners can be granted. Rule is discharged with no order as to costs.
Ongc Retired Officers Asso. vs Ongc on 7 March, 2000
Article 226 in The Constitution Of India 1949
All India Reserve Bank Retired ... vs Union Of India And Others on 10 December, 1991
Gujarat High Court
Ongc Retired Officers Asso. vs Ongc on 7 March, 2000
Equivalent citations: (2000) 4 GLR 2879
Bench: R Tripathi
JUDGMENT
1. The present petition is filed by two petitioners, one, ONGC Retired Officers' Association and Shri V.G. Srinivasan, President (as he then was) of petitioner no.1. The petition is directed against the respondent Oil & Natural Gas Commission ("the Commission" for brevity) for excluding the employees who have retired prior to 1.4.1990 from granting the benefits under superannuation benefit scheme. It is the grievance of the petitioners that the scheme, formulated by the Commission is made applicable only to those employees who retired on 1.4.1991, or thereafter. It is the case of the petitioners that in fact a draft scheme was circulated for eliciting opinion poll by the Directorate of Personnel of the Commission. In that it was mentioned in clause (1) that :
"The scheme would be compulsory for each and every employee of the Commission who came on roll of the Commission on 7th October 1987 or thereafter."
It is also the case of the petitioners that thereafter the scheme with some modifications was again circulated which is at Annexure 'B'. In the modified scheme it was mentioned in subclause (C) of clause 1, under the heading 'Membership' that :
"All regular employees of ONGC are entitled to become member of the scheme.
The scheme would be optional to the present serving officers of the Commission, but not to officers joining on 1st April 1990 or thereafter who will have to compulsorily become member of the scheme and no option in his case would be available to them. Option in case of existing employees once exercised will be final and irrevocable."
It is submitted on behalf of the petitioners that in view of these two schemes, the prayers at para 14 of the petition are required to be granted, whereby it is prayed that direction in the nature of mandamus be issued against the respondent Commission to apply the scheme now known as "ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme", to all its employees. It is also prayed by the petitioners that to the extent the scheme is made applicable compulsorily to the employees who are in service as on 1.4.1991, the same should be declared unconstitutional and that the Commission be directed to make the scheme applicable to all its employees on their exercising option. Mr.Majgaonkar, learned counsel vehemently urged that the action of the respondent Commission of applying the scheme in its present form whereby the scheme is made applicable only to the employees who were on the rolls of the Commission on or after 1.4.1991 is unjust, arbitrary and therefore, the prayers as prayed for are required to be granted.
2. Mr.R.H. Mehta, the learned advocate for the Commission has invited my attention to the affidavit filed on behalf of the Commission wherein para 9(ii) states that, "the scheme which was circulated in the year 1987 was only a draft scheme and it was, as the title shows, was circulated for eliciting opinion poll". It is also pointed out that it was thereafter with necessary modifications that it was recommended to the Central Govt. for making the scheme in question effective from 1.4.1990. Mr.Mehta has also invited my attention to letter dated 18.9.1991, whereby the Union Ministry of Petroleum and Natural Gas granted its approval to the scheme with a modification so far as applicability of the said scheme is concerned in clause (iii) of the said letter which reads as under :
"The scheme may be made effective from 1.4.1990 subject to the condition that all employees who retired between 1.4.1990 and 1.4.1991 will be excluded from the scheme."
Mr.Mehta, learned counsel has submitted that the said modification was made by the Union Government by its letter dated 18.9.1991 , which is already produced on record of this case with an affidavit dated 10.3.1998. Therefore, the petitioners very much knew about the decision being that of the Union Government and if at all that decision was required to be challenged it was open to the petitioners to join the Govt of India as a party respondent to defend its decision. Mr.Mehta has also submitted that the scheme implemented by the Commission is only after approval from the Union Government and the said scheme is implemented as approved by the Union Government and therefore, if at all the decision of modification of date was to be challenged, the same should have been challenged by the petitioners only after joining the Union of India as party respondent in the present petition.
3. Mr.Majgaonkar for the petitioners urged that as regards the action of the respondent Commission of forwarding the scheme to the Union Government vide letter dated 29.3.1991 with a changed date of 1.4.1990 instead of 7.10.1987, no justification is put forward by the Commission.
4. It appears from the aforesaid discussion that the cut off date which is now prescribed for implementation of the scheme is a decision of the Union Government and if at all that decision is to be challenged by the petitioners, the petitioners ought to have joined the Govt. of India as party respondent so as to enable the Union Government to put forward the justification, if any for prescribing the said date. In absence of the Union Government before this Court, no reliefs can be granted against the Commission as the Commission is only an implementing agency of the decision of the Union Government whereby the Central Government modified the proposal sent by the Commission by letter dated 29.3.1991 in the form of change of date, as stated hereinabove.
Mr.R.H. Mehta, the learned advocate for the Commission submitted that it is observed by the Honourable Supreme Court in the case of All India Reserve Bank Retired Officers Association & others v. Union of India & another, 1991 (6) JT 400, wherein the Honourable the Supreme Court was considering the question of prescribing the cut off date for implementation of pension scheme in substitution of CPF scheme. The Honourable Supreme Court held that :
"The underlying principle is that when the State decides to revise and liberalise an existing pension scheme with a view to augmenting the social security cover granted to pensioners, it cannot ordinarily grant the benefit to a section of the pensioners and deny the same to others by drawing an artificial cut off line which cannot be justified on rational grounds and is wholly unconnected with the object intended to be achieved. But when an employer introduces an entirely new scheme which has no connection with the existing scheme, different considerations enter the decision making process. One such consideration may be the financial implications of the scheme and the extent of capacity of the employer to bear the burden. Keeping in view its capacity to absorb the financial burden that the scheme would throw, the employer would have to decide upon the extent of applicability of the scheme."
5. Mr.Mehta has also pointed out that the present scheme was also the subject matter of a writ petition being W.P. No.1718 of 1996 under Article 226 of the Constitution before the High Court of Mumbai, wherein it was challenged by the petitioners therein that the scheme in question was not having financial viability and equitableness. Therefore, requested for the following reliefs :
- To quash and set aside the scheme.
- Directions be issued for not implementing the scheme.
- Operation of the scheme should be stayed.
- The respondent be directed to restrain from paying out the said funds in any manner for any purpose.
The High Court of Mumbai was pleased to pass an order on 5.11.1996, which reads as under :
"This petition under Article 226 is filed by some of the employees of Oil & natural Gas Commission (ONGC) challenging the validity of ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme ("Scheme" for short). The main grievance of the petitioners is that the scheme is not financially viable and the entire corpus of the scheme is likely to be wiped out soon leaving the Junior employees in service completely high and dry. The petitioners have therefore, prayed for quashing and setting aside the scheme. In the alternative, they have prayed for a direction against the ONGC not to implement the scheme.
It seems that the scheme was introduced sometime in May 1990 for the officers working in ONGC, although, some 3000 officers did not join the scheme, large majority comprising of nearly 18000 officers have opted for the scheme. so far around 2000 cases of those who have retired/ expired have been settled. Nearly 293 cases of death and/ or total permanent disability while in service the pending for settlement.
In their affidavit in reply ONGC has vehemently denied the petitioners' case that the scheme is not financially viable.
However, during hearing Mr.Dada, learned Additional Solicitor General, appearing for ONGC fairly stated that the Corporation has received actuarial report from M/s K.A. Pandit that the scheme is not viable. Mr.Dada also produced a copy of the report for the perusal of the Court. The report shows that the scheme is not viable on account of unexpected time in the salary and PAGE change in the formula of D.A. M/s K.A. Pandit have recommended that to make the scheme viable it is necessary to raise fund from the sources available. The fund position should be reviewed especially when there is a change on account of wage negotiation or the long terms recruitment policy. It is recommended that in order to take cases of the fund additional contribution should be raised from the year in which exorbitant salary rise has been given, i.e. 1992 and difference with 12% interest to be paid to the fund. It is also recommended that any difference of annuity cost because of above salary rise and interest payable to LIC for 1992 to date of payment of annuity should be raised in such a way that it does not pose undue problems to the existing members.
On a careful scrutiny of the report, it is clear, that the scheme is not viable unless additional funds are raised from difference sources. Otherwise, the scheme is liable to be scrapped altogether. The question relating to generation of additional funds will have to be considered by negotiations between the Officers' Association and the Corporation. The Bombay Association has appeared through the President, STO (MRBC), ONGC and has agreed for holding negotiations with the Corporation. However, the all India Association, i.e. ASTO (CWC), ONGC has not appeared although served. The central association is hereby directed to hold similar negotiations with the Corporation for the purpose of finding out solution for saving the scheme. In the meanwhile, it is necessary to issue ad interim relief in order to ensure that the fund is not further depleted.
The ONGC is hereby restrained from paying out from the funds of the scheme except in the cases of death or total/ permanent disability while in service, the Corporation is permitted to release the funds to the extent of 50% in such cases."
Thereafter, the said writ petition came to be withdrawn on the basis of Memorandum of Understanding (MoU) submitted before the Honourable High Court of Mumbai. It is clear from the order passed by the Honourable Mumbai High Court that it was on the basis of modification of the scheme as agreed in the said (MoU), the said writ petition came to be withdrawn giving up challenge to the scheme in question. This is to show that the scheme as was stood, was found to be not viable and therefore, the same was required to be changed under the MoU in question. In that view of the matter it is clear that if the said scheme found to be not viable even for implementing from 1.4.1990 it could not have been found viable for implementing it from any earlier date.
6. Mr.Mehta, learned advocate has also invited the attention of the Court to para 9 of the affidavit in reply at page 71, wherein it is stated in no uncertain terms that respondent no.1 only required to contribute a token amount of Rs.100/-. This is one of the conditions stipulated by the Govt. of India while according NOC to entertain superannuation benefit scheme. He has also invited my attention to the averments made in para 13 at page 73 that if the scheme is made applicable for officers, who retired from 1.4.1990, the scheme would become inequitable and unviable as the number of officers would receive disproportionate benefits compared to very less contribution made by them at the cost of young officers/ members.
7. In the light of the aforesaid discussion, the petition fails. No reliefs as prayed for by the petitioners can be granted. Rule is discharged with no order as to costs.
All India Reserve Bank Retired ... vs Union Of India And Others on 10 December, 1991
Gujarat High Court
Ongc Retired Officers Asso. vs Ongc on 7 March, 2000
Equivalent citations: (2000) 4 GLR 2879
Bench: R Tripathi
JUDGMENT
1. The present petition is filed by two petitioners, one, ONGC Retired Officers' Association and Shri V.G. Srinivasan, President (as he then was) of petitioner no.1. The petition is directed against the respondent Oil & Natural Gas Commission ("the Commission" for brevity) for excluding the employees who have retired prior to 1.4.1990 from granting the benefits under superannuation benefit scheme. It is the grievance of the petitioners that the scheme, formulated by the Commission is made applicable only to those employees who retired on 1.4.1991, or thereafter. It is the case of the petitioners that in fact a draft scheme was circulated for eliciting opinion poll by the Directorate of Personnel of the Commission. In that it was mentioned in clause (1) that :
"The scheme would be compulsory for each and every employee of the Commission who came on roll of the Commission on 7th October 1987 or thereafter."
It is also the case of the petitioners that thereafter the scheme with some modifications was again circulated which is at Annexure 'B'. In the modified scheme it was mentioned in subclause (C) of clause 1, under the heading 'Membership' that :
"All regular employees of ONGC are entitled to become member of the scheme.
The scheme would be optional to the present serving officers of the Commission, but not to officers joining on 1st April 1990 or thereafter who will have to compulsorily become member of the scheme and no option in his case would be available to them. Option in case of existing employees once exercised will be final and irrevocable."
It is submitted on behalf of the petitioners that in view of these two schemes, the prayers at para 14 of the petition are required to be granted, whereby it is prayed that direction in the nature of mandamus be issued against the respondent Commission to apply the scheme now known as "ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme", to all its employees. It is also prayed by the petitioners that to the extent the scheme is made applicable compulsorily to the employees who are in service as on 1.4.1991, the same should be declared unconstitutional and that the Commission be directed to make the scheme applicable to all its employees on their exercising option. Mr.Majgaonkar, learned counsel vehemently urged that the action of the respondent Commission of applying the scheme in its present form whereby the scheme is made applicable only to the employees who were on the rolls of the Commission on or after 1.4.1991 is unjust, arbitrary and therefore, the prayers as prayed for are required to be granted.
2. Mr.R.H. Mehta, the learned advocate for the Commission has invited my attention to the affidavit filed on behalf of the Commission wherein para 9(ii) states that, "the scheme which was circulated in the year 1987 was only a draft scheme and it was, as the title shows, was circulated for eliciting opinion poll". It is also pointed out that it was thereafter with necessary modifications that it was recommended to the Central Govt. for making the scheme in question effective from 1.4.1990. Mr.Mehta has also invited my attention to letter dated 18.9.1991, whereby the Union Ministry of Petroleum and Natural Gas granted its approval to the scheme with a modification so far as applicability of the said scheme is concerned in clause (iii) of the said letter which reads as under :
"The scheme may be made effective from 1.4.1990 subject to the condition that all employees who retired between 1.4.1990 and 1.4.1991 will be excluded from the scheme."
Mr.Mehta, learned counsel has submitted that the said modification was made by the Union Government by its letter dated 18.9.1991 , which is already produced on record of this case with an affidavit dated 10.3.1998. Therefore, the petitioners very much knew about the decision being that of the Union Government and if at all that decision was required to be challenged it was open to the petitioners to join the Govt of India as a party respondent to defend its decision. Mr.Mehta has also submitted that the scheme implemented by the Commission is only after approval from the Union Government and the said scheme is implemented as approved by the Union Government and therefore, if at all the decision of modification of date was to be challenged, the same should have been challenged by the petitioners only after joining the Union of India as party respondent in the present petition.
3. Mr.Majgaonkar for the petitioners urged that as regards the action of the respondent Commission of forwarding the scheme to the Union Government vide letter dated 29.3.1991 with a changed date of 1.4.1990 instead of 7.10.1987, no justification is put forward by the Commission.
4. It appears from the aforesaid discussion that the cut off date which is now prescribed for implementation of the scheme is a decision of the Union Government and if at all that decision is to be challenged by the petitioners, the petitioners ought to have joined the Govt. of India as party respondent so as to enable the Union Government to put forward the justification, if any for prescribing the said date. In absence of the Union Government before this Court, no reliefs can be granted against the Commission as the Commission is only an implementing agency of the decision of the Union Government whereby the Central Government modified the proposal sent by the Commission by letter dated 29.3.1991 in the form of change of date, as stated hereinabove.
Mr.R.H. Mehta, the learned advocate for the Commission submitted that it is observed by the Honourable Supreme Court in the case of All India Reserve Bank Retired Officers Association & others v. Union of India & another, 1991 (6) JT 400, wherein the Honourable the Supreme Court was considering the question of prescribing the cut off date for implementation of pension scheme in substitution of CPF scheme. The Honourable Supreme Court held that :
"The underlying principle is that when the State decides to revise and liberalise an existing pension scheme with a view to augmenting the social security cover granted to pensioners, it cannot ordinarily grant the benefit to a section of the pensioners and deny the same to others by drawing an artificial cut off line which cannot be justified on rational grounds and is wholly unconnected with the object intended to be achieved. But when an employer introduces an entirely new scheme which has no connection with the existing scheme, different considerations enter the decision making process. One such consideration may be the financial implications of the scheme and the extent of capacity of the employer to bear the burden. Keeping in view its capacity to absorb the financial burden that the scheme would throw, the employer would have to decide upon the extent of applicability of the scheme."
5. Mr.Mehta has also pointed out that the present scheme was also the subject matter of a writ petition being W.P. No.1718 of 1996 under Article 226 of the Constitution before the High Court of Mumbai, wherein it was challenged by the petitioners therein that the scheme in question was not having financial viability and equitableness. Therefore, requested for the following reliefs :
- To quash and set aside the scheme.
- Directions be issued for not implementing the scheme.
- Operation of the scheme should be stayed.
- The respondent be directed to restrain from paying out the said funds in any manner for any purpose.
The High Court of Mumbai was pleased to pass an order on 5.11.1996, which reads as under :
"This petition under Article 226 is filed by some of the employees of Oil & natural Gas Commission (ONGC) challenging the validity of ONGC Self Contributions Post Retirement and Death in Service Benefits Scheme ("Scheme" for short). The main grievance of the petitioners is that the scheme is not financially viable and the entire corpus of the scheme is likely to be wiped out soon leaving the Junior employees in service completely high and dry. The petitioners have therefore, prayed for quashing and setting aside the scheme. In the alternative, they have prayed for a direction against the ONGC not to implement the scheme.
It seems that the scheme was introduced sometime in May 1990 for the officers working in ONGC, although, some 3000 officers did not join the scheme, large majority comprising of nearly 18000 officers have opted for the scheme. so far around 2000 cases of those who have retired/ expired have been settled. Nearly 293 cases of death and/ or total permanent disability while in service the pending for settlement.
In their affidavit in reply ONGC has vehemently denied the petitioners' case that the scheme is not financially viable.
However, during hearing Mr.Dada, learned Additional Solicitor General, appearing for ONGC fairly stated that the Corporation has received actuarial report from M/s K.A. Pandit that the scheme is not viable. Mr.Dada also produced a copy of the report for the perusal of the Court. The report shows that the scheme is not viable on account of unexpected time in the salary and PAGE change in the formula of D.A. M/s K.A. Pandit have recommended that to make the scheme viable it is necessary to raise fund from the sources available. The fund position should be reviewed especially when there is a change on account of wage negotiation or the long terms recruitment policy. It is recommended that in order to take cases of the fund additional contribution should be raised from the year in which exorbitant salary rise has been given, i.e. 1992 and difference with 12% interest to be paid to the fund. It is also recommended that any difference of annuity cost because of above salary rise and interest payable to LIC for 1992 to date of payment of annuity should be raised in such a way that it does not pose undue problems to the existing members.
On a careful scrutiny of the report, it is clear, that the scheme is not viable unless additional funds are raised from difference sources. Otherwise, the scheme is liable to be scrapped altogether. The question relating to generation of additional funds will have to be considered by negotiations between the Officers' Association and the Corporation. The Bombay Association has appeared through the President, STO (MRBC), ONGC and has agreed for holding negotiations with the Corporation. However, the all India Association, i.e. ASTO (CWC), ONGC has not appeared although served. The central association is hereby directed to hold similar negotiations with the Corporation for the purpose of finding out solution for saving the scheme. In the meanwhile, it is necessary to issue ad interim relief in order to ensure that the fund is not further depleted.
The ONGC is hereby restrained from paying out from the funds of the scheme except in the cases of death or total/ permanent disability while in service, the Corporation is permitted to release the funds to the extent of 50% in such cases."
Thereafter, the said writ petition came to be withdrawn on the basis of Memorandum of Understanding (MoU) submitted before the Honourable High Court of Mumbai. It is clear from the order passed by the Honourable Mumbai High Court that it was on the basis of modification of the scheme as agreed in the said (MoU), the said writ petition came to be withdrawn giving up challenge to the scheme in question. This is to show that the scheme as was stood, was found to be not viable and therefore, the same was required to be changed under the MoU in question. In that view of the matter it is clear that if the said scheme found to be not viable even for implementing from 1.4.1990 it could not have been found viable for implementing it from any earlier date.
6. Mr.Mehta, learned advocate has also invited the attention of the Court to para 9 of the affidavit in reply at page 71, wherein it is stated in no uncertain terms that respondent no.1 only required to contribute a token amount of Rs.100/-. This is one of the conditions stipulated by the Govt. of India while according NOC to entertain superannuation benefit scheme. He has also invited my attention to the averments made in para 13 at page 73 that if the scheme is made applicable for officers, who retired from 1.4.1990, the scheme would become inequitable and unviable as the number of officers would receive disproportionate benefits compared to very less contribution made by them at the cost of young officers/ members.
7. In the light of the aforesaid discussion, the petition fails. No reliefs as prayed for by the petitioners can be granted. Rule is discharged with no order as to costs.
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