Biscuits major Britannia Industries has approached the agitating
Pensioners Welfare Association (PWA) to consider "an ex-gratia offer"ï¿½ to meet the shortfall in the proposed
pensions. But the pensioners have rejected the offer, fearing that it
could be withdrawn later, and have insisted that the agreed payments
should be through LIC Annuity.
The move is seen
as an attempt by the company to buy peace with the pensioners and prevent
them from raising the issue at the forthcoming AGM on September 19. Some
of the pensioners ET spoke to said in the past too, Britannia had made
similar offers just before the AGM, only to drop it later.
Britannia may be
keen to resolve its differences with the pensioners before the proposed
settlement with its joint venture partner, Danone.
the Britannia spokesperson declined to comment on the matter. One of the
pensioners, Ashit Sarkar,
a former advisor & VP-HR of Britannia, said, "We are hoping for a
revised offer which will be fair to the ex-employees." ï¿½ Mr Sarkar is a part of the PWA's executive committee.
Sources said the
board had at a recent meeting discussed the pension issue and agreed to
offer some relief to the pensioners. It is also learnt that the board has
the details of some past Supreme Court rulings relating to pension issues
and pensioners' rights.
As reported by
ET, following non-payment of pensions as per the original Pension Fund
rules to all retiring managers and officers since March 2003, the
pensioners formed a PWA. It also filed a complaint with the Institute of
Chartered Accountants of India (ICAI) against the pension fund auditor,
CC Chokshi & Co, for endorsing a transaction
through which Britannia withdrew over Rs 12 crore
from the Pension Fund during January/February 2004 period.
was allegedly against specific fund and tax rules. Pensioners said the
auditor's collaboration with the company is against ICAI's
code of ethics and that the auditors failed to disclose the fact that the
trustees followed the proposed rules in lieu of approved rules, despite
the fact that proposals to change fund rules were not given any prior
approval by the commissioner.
CC Chokshi & Co has argued that the money was
withdrawn from the Britannia Pensioner's Fund on the premise that the
money paid by the company over the past 10 years was ultra-vires (or beyond its power) due to two reasons: lack
of board approvals for specific payments, and an income tax rule which
said the company cannot contribute more than 27% of the employee's gross
salary. Based on a similar view, Britannia chose to withdraw money
directly from the fund, possibly claiming it to be in excess of the
ordinary contributions permitted by I-T rules.
claim that it was illegal for the company to withdraw any money from
pension trust once deposited since it left very little funds for
disbursements. Some pensioners have approached the Madras High Court for
denying the proposed adverse rule changes retrospectively, and were
granted interim injunction. The Association recently moved the Calcutta
High Court demanding release of stopped pensions from 2003, and the due
adjustments for the pensioners from April 2004 and April 2007
respectively, as per rules or terms of service and based on custom, usage
and past practice, as carried out in 1992, 1995, 1998 and 2001. ICAI's verdict on the auditor case is expected next