Page 12 - Banking Finance October 2015

LEGAL UPDATE

Bank accountable for procedural delays in payment ONGC not liable to pay

of pension sub-contractors

Bimla Kashyapa retired on November trict Forum against both the banks. When a corporation grants a con-
30, 1987, and started drawing a pen- tract to a con-
sion. Her basic pension was Rs 11,396 During the course of the hearings, an struction firm,
plus admissible allowances till her officer of Syndicate Bank admitted that the sub-con-
death on March 7, 2011. Thereafter, the arrears had to be paid. Though his tractors can-
the family pension of Rs 6,838 plus ad- primary grievance has been redressed not sue the
missible allowances was be- and the complaint stands disposed, the corporation
ing paid to her husband, M. for its dues.
Kashyapa. grievance that remains to The sub-con-
be decided is with regard to
Kashyapa's account was with the harassment he had suf- tractors have no privity of contract
Syndicate Bank's Anand fered at the hands of the re- with the corporation.
Vihar branch in Delhi. Since spondents, the cost of the
he found it difficult to with- litigation that was thrust Stating so, the Supreme Court ex-
draw his monthly pension, upon him and the penal in- empted Oil and Natural Gas Corpo-
he had the account trans- terest on the arrears paid to ration (ONGC) from paying the
ferred to Punjab & Sind him. amount in the arbitral award to a
Bank's Anand Vihar branch, which was sub-contractor in the case, Essar Oil
closer to his residence. The grievance was redressed, albeit vs Hindustan Shipyard Ltd. In this
after the filing of the complaint. Yet, case, ONGC granted a contract to
The Haryana government framed the 88-year-old Kashyapa continued the Hindustan Shipyard to carry out
Revised Pension Rules, 2009, under case seeking compensation for the ha- work of fabrication, skidding, sea
which pensioners prior to the year rassment caused to him. fastening, transportation at various
2006 became entitled to enhanced stations in the coastal areas.
basic pension of Rs 13,903. Similarly, The Forum concluded that the transfer
there was an increase in the family of the pension account while holding Hindustan Shipyard gave a sub-con-
pension. Kashyapa demanded that the back the relevant information relating tract to Essar Oil. While the work
arrears of pension for the period Janu- to the account would constitute a defi- was in progress, Essar was given
ary 1, 2009, to March 7, 2011, and ciency in service. Hence, the Forum in- some amounts by ONGC as it
thereafter the family pension should dicted Syndicate Bank for its indiffer- wanted the project to be completed
be paid in accordance with pension ence to the hardships of a 88-year-old faster. Later disputes arose be-
scheme. Since no heed was paid to his senior citizen. The Forum also observed tween Essar and Hindustan Ship-
representations, he filed a consumer that Punjab & Sind Bank had also been yard. The issues were referred to
complaint before the Delhi (East) Dis- callous and had not bothered to even arbitration.
contest the complaint.
By majority, the tribunal decided
ESI court not eligible to grant exemptions that Essar Oil's demand should be
met by Hindustan Shipyard. Against
The court dealing with disputes between employers and employees under the this, the latter moved the Andhra
Employees State Insurance (ESI) Act can adjudicate issues Pradesh High Court. It ruled that all
between them, but it cannot grant exemption to an estab- the three had contractual obliga-
lishment from the rules. In the case, Zuari Cement Ltd vs tions and therefore Essar could get
ESI Corporation the ESI court had granted exemption from its dues from ONGC. Thus the high
liabilities under the Act to the company. court quashed the award. Essar
therefore moved the Supreme
The corporation appealed to the Andhra Pradesh High Court. It ruled that the Court. It set aside the high court
ESI court had no power of exemption. Upholding that view, the Supreme Court order and upheld the majority view
said: "As per the scheme of the Act, the appropriate government alone could of the tribunal.
grant or refuse exemption. When the statute prescribed the procedure for grant
or refusal of exemption from the operation of the Act, it is to be done in that
manner and not in any other manner."

12 | 2015 | OCTOBER | BANKING FINANCE

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