AIR INDIA EMPLOYEES SELF CONTRIBUTORY SUPERANNUATION PENSION SCHEMEversusKURIAKOSE V. CHERIAN AND ORS.

  AIR INDIA EMPLOYEES SELF CONTRIBUTORY SUPERANNUATION                          A
                      PENSION SCHEME
                             v.
               KURIAKOSE V. CHERIAN AND ORS.

                            OCTOBER 3, 2005
                                                                                B
           [Y.K. SABHARWALAND TARUN CHATTERJEE, JJ.]


     Service Law:

      Air India Employees Seif-Contributory Superannuation Pension Scheme; C.
Amendment affecting rights of the retired employees-Whether can have
retrospective application-Held, No-Rights of the employees to receive the
annuity and quantum of the annuity get crystallized at the time of purchase
of the annuity.

      The dispute in these matters basically between the appellant and the D
serving employees of Air India on one hand and retired employees on the other
is about the interpretation of Air India Employees Self-Contributory
Superannuation Pension Scheme (hereinafter referred to as 'Scheme').

      The main object of the Scheme is to provide to the members on             E
retirement a fixed amount per month. The amount is to be calculated according
to the Scheme on superannuation of an employee and annuity is required to
be purchased from Life Insurance Corporation oflndia (Liq so as to ensure
payment by LIC of a fixed monthly sum to the retired employee and on his
demise the payment of the annuity amount to his legal representatives.
                                                                                F
      According to the appellants, the existing employees, the Scheme was
defective inasmuch as large amounts were given to the retiring employees
without having regard to the contributions made by them towards the Scheme
and resultantly the old employees by making smaller contributions received
disproportionately larger amount of benefits. No fund woµId have been available
with the Scheme for giving pension to the employees retiring after 2005 G
despite they having contributed large amount to the fund under the Scheme,
thus, requiring corrective action. Under these circumstances, the Scheme
was amended with effect from 3rd April, 2002. The amendment requires the
pensioners to make payment of additional contribution towards annuities
                                    867                                         fl
                                          -.
    868                   SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A   purchased from LIC. The amendment provided that the amount of the pension
    shall be corresponding to the contribution made by the respective retired
    employees and not on the basis of 40 per cent of the last drawn salary of the
    employees. In support of these appeals, three contentions have been urged:
    (1) depletion of the fund amount if not checked would result in the retirees
    after the year 2005 not getting any pension. Therefore, there was the
B   requirement to make the impugned amendments; (2) the trustees in terms of
    Deed and the Rules have unrestricted power to amend the Scheme so as to
    apply amendment to also those who stand retired; and (3) the Scheme is not
    amenable to the writ jurisdiction. The appellants are neither an
    instrumentality or agency of the State nor other authority contemplated by
C   Article 12 of the Constitution.

          The validity of the aforesaid amendment of the Scheme was challenged
    by the retired employees in writ petition filed under Article 226 of the
    Constitution oflndia before the High Court mainly on the ground that rights
    in their favour crystallized on purchase of annuities at the time of their
D   superannuation and the same cannot be subjected to any alteration or
    amendment The contention urged before the High Court was that the trustees
    could only effect amendment to the Scheme for future benefits of existing
    employees and had no right to effect any amendment which adversely affects
    vested rights of the pensioners in regard to the pension payable to them as
E   per the amended Scheme. The plea was that their pension as per the amended
    Scheme would be considerably reduced. It was contended that on retirement
    the ex-employees sever all their relations with the Scheme, which does not
    envisage making of any additional contribution, by members after
    superannuation. The LIC having accepted annuity and having made monthly
    payments to retired employees cannot refund to the trust any amount or reduce
F   monthly payment to the detriment of the pensioners.

          The High Court by the impugned judgment held that the iIPpugned
    amendment to the Trust Deed to the extent it applies in future is legal and
    valid but the amendment cannot apply to the employees who have retired before
    the date of amendment and such employees shall continue to receive
G   pensionary benefits as before, namely, the benefits which existed at the time
    of amendment

          Dismissing the appeals, the Court

          HELD: I.I. An annuity is a right to receive de anno in annum a certain
H
             AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN                   869
sum; that may be given for life, or for a series of years; it may be given during A
any particular period, or in perpetuity; and there is also this singularity about
annuities, that, although payable out of the personal assets, they are capable
of being, even, for the purpose of devolution, as real estate; they may be given
to a man and his heirs, and may go to the heir as real estate. [885-F[

      Advanced Law Lexicon by P Ramanatha Aiyar, 3rd Edition 2005,               B
referred to.

      Commissioner of Wealth Tax v. P.K. Benerjee, (1981[ l SCC 63, In-re
Duke ofNorfolk Public Trustee v. lnland Revenue Commr., (1950) l Ch 487,
relied on.
                                                                                 c
      2.1. None of the clauses of the Trust Deed render any assistance to the
appellants. The relied upon clauses deal with the members who continue to
contribute to the Fund. The liability of the retiring member to make any such
contributing ceases on retirement. It is nobody's case that after the retirement
any contribution is made or required to be made by retired employees. The D
aforesaid clauses only show the right and power to review the Fund and the
benefits payable to the continuing members/ employees. Likewise, reliance
on Rule 14 which stipulates that the member or his beneficiary shall not have
any interest in the master policy taken out in respect of the members in
accordance with the Rules of the Scheme but shall be entitled to
superannuation benefits in accordance with the Rules, has no applicability. E
The retired employees are not claiming any interest in the master policy but
are claiming right flowing from the annuity purchased on their retirement.
The rights of the employees to receive the annuity and quantum of the annuity
get crystallized at the time of purchase of the annuity. (887-D-E[

      Sasadhar Chakravarty and Anr. v. Union of India and Ors., (1996[ 11        F
sec 1, relied on.
       2.2. Any subsequent improvement in a given pension fund will benefit
only those whose moneys form part of the pension fund. As soon as an employee
retires, an annuity is purchased for his benefit under Rule 89, there remains G
no scope for any fresh contribution on his account so as to entitle him to an
increased pension prospectively on the basis of the improvement made
subsequently in the pension scheme of a fund since the existing pensioners
from a distinct class. After retirement retirees are not liable for any deficit
in the fund which is sought to be made good by recovery from them which is
the effect of retrospective amendment. Further, as already noted it was a benefit H
    870                     SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A and rolling scheme as opposed to a contributory scheme. (888-D-EJ
          2.3. Neither clauses 32 and 33 or the Trust Deed nor Rule 14 has any
    applicability on question of retrospective operation of amendment to the retired
    employees. It has been admitted that the form of insurance annuity policy with
    LIC was adopted as a result of mandate of the statute. Having done that, the
B   appellants are bound by the consequences flowing from purchase of annuity.
    In view of the above there is neither any substance in the contention that
    contract was between LIC and the trustees nor is it of any consequence in
    view of the conclusion that the amount, on retirement of employees, leaves
    the fund for purchase of annuity and the rights of the retirees are crystallized
C   on their retirement by purchase of annuity and thus no amount can be claimed
    from them by making applicable amendment dated 3rd April, 2002 with
    retrospective effect. (889-B-C-DJ

           3.1. The contention that there is no privity of contract between LIC and
    the retired employees as contract for purchase of annuities is between trust
D   and LIC has also no substance. Under Section 2(11) of the Insurance Act, the
    purchase of annuity amounts to purchase of an insurance policy. It would make'
    no difference, in the present case, as to who made the payment. LIC having
    accepted the annuity and having effected monthly payments can neither reduce
    the annuity amount nor refund it to the trust to the detriment of the retirees
    since the annuity has already crystallized and no change can be made in such
E   annuity as stipulated by the impugned amendments. LIC has obligation to fulfill
    the promise given by it tothe retirees, who are assured under the annuity
    scheme. Annuities dependent on human life constitute a species of contract
    of life insurance. (889-E-F; 890-A-B(
          Chandulal Harjivandas v. Commissioner of Income-tax, Gujarat, AIR
F   (1967) SC 816, Commissioner of Wealth Tax, Punjab, J and K, Chandigarh,
    Patiala v. Yuvraj Amrinder Singh and Ors., fl985( 4 SCC 608 and Life
    Insurance Corporation of India and Ors. v. Asha Goel (Smt.) and Anr., (2001 (
    2 sec 160; relied on.
          CIVIL APPEL LA TE JURISDICTION : Civil Appeal No. 4267 of2003.
G
         From the Judgment and Order dated 3/4.4.2003 of the Bombay High
    Court in W.P. No. 1273 of2002.
                                         WITH

H         C.A. Nos. 7035-36, 937/2003 and C.A. Nos. 2327 of2004.
  AIRINDJA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHARWALJ.] 871

      Mukul Rohtagi, V.B. Joshi and Ravi Kini for the Appellant in C.A. No. A
426712003.

      Pradeep Rajagopal, Ms. Rekha Rajagopal, Ms. Bina Madhavan for Ml
s. Lawyer's Knit & Co. for the Appellant in C.A. No. 9372/2003 and Respondent
in C.A. No. 4267/2003.
                                                                                B
      Vishwajit Singh for the Appellant in C.A. No. 2327 /2004.

     Ashok Shetty, S. Ravi Shankar and Ms. Yamunah Nachiar for the
Appellant in C.A. No. 7035/2003 and Respondent in C.A. No. 4267/2003.

      J.P. Cama, Kailash Vasdev, Navin Prakash, Ms. Ritu Biswas and Gopal C
Singh for the Appellant in C.A. No. 7036/2003 and Respondents in C.A. Nos.
4267, 7035, 9372/2003 and 232712004.

      Praveen Jain for Respondent in C.A. No. 4267/2003.

      A.V. Rangam, A. Ranganadhan and Buddy A. Ranganadhan for L.1.C.           D
      The Judgment of the Court was delivered by

      Y.K. SABHARWAL,J. The dispute in these matters basically between
the appellant and the serving employees of Air India on one hand and retired
employees on the other is about the interpretation of Air India Employees       E
Self-Contributory Superannuation Pension Scheme (hereinafter referred to as
'Scheme').

       In or about 1994, Air India proposed creation ofa Pension Scheme for
 its employees. The Scheme was based on actuarial reports. The employees
had to contribute to the fund under the Scheme, Air India contributing a F
token sum of Rs. I 00 per annum for all the employees put together. Broadly,
Scheme was that all full time employees of Air India would become members
of the Scheme and contribute a percentage of their salary to be deducted
every month and credited to the fund under the Scheme. Each member had
to contribute for a minimum period of 15 years and for those who did not have G
sufficient number of years of service from the date of the commencement of
the Scheme upto their superannuation, an amount was calculated based on
the total number of years in deficit and the member was required to make
payment of the entire sum so calculated either in lump sum or to pay the said
amount in monthly installment along with interest on the total sum due. On
 12th August, 1996, a deed of trust for incorporating the Scheme was entered H
    872                    SUPREME COURT REPORTS (2005) SUPP. 3 S.C.R.

A into between Air India and the trustees. The deed also contained rules known
    as 'Air India Employees Self-Contributing Pensionary Scheme Rules'
    (hereinafter referred to as 'the Rules'). Further, it postulated creation of a
    pension fund. A deed of variation of the trust was executed on 7th October,
    1997 to amend certain provisions of the trust deed. The trust deed, inter alia,
    stipulates that the retiring employees would get pension equivalent to 40 per
B   cent of the last pay drawn salary, consisting of basic pay, dearness allowances
    and personal pay, if any.

          To give effect to the aforesaid, an agreement was entered into with Life
  Insurance Corporation of India which issued a master policy stipulating
C variol!_S terms and conditions.
        Rules stipulate that a member or his beneficiary shall have no interest
  in the master policy taken out in respect of the members or any investment
  otherwise made by the trustees in accordance with the Rules or the Scheme
  but shall be entitled to receive superannuation benefits in accordance with
D the Rules and that the trustees shall always administer the Scheme for the
  benefit of the members and their beneficiaries in accordance with the provisions
  of the Rules.

          A staff notice dated 30th September, 1996 was issued reproducing
    therein salient features of the Scheme. It stipulated that the Scheme will take
E   effect from !st April, 1994. The main object of the Scheme is to provide to
    the members on retirement a fixed amount per month. The amount is to be
    calculated according to the Scheme on superannuation of an employee and
    annuity is required to be purchased from Life Insurance Corporation of India
    (LIC) so as to ensure payment by LIC of a fixed monthly sum to the retired
F   employee and on his demise the payment of the annuity amount to his legal
    representatives.

        Besides the Scheme, the existing employees represented by their
  respective associations are the appellants before us. According to the
  appellants, the Scheme was defective inasmuch as large amounts were given
G to the retiring employees without having regard to the contributions made by
  them towards the Scheme and resultantly the old employees by making
  smaller contributions received disproportionately larger amount of benefits.
  No fund would have been available with the Scheme for giving pension to
  the employees retiring after 2005 despite they having contributed large amount
  to the fund under the Scheme, thus, requiring corrective action. Under these
H circumstances, the Scheme was amended with effect from 3rd April, 2002. The
  AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHAR WAL, J.] 873

amendment requires the pensioners to make payment of additional contribution A
towards annuities purchased from LIC. The amendment provided that the
amount of the pension shall be corresponding to the contribution made by
the respective retired employees and not on the basis of 40 per cent of the
last drawn salary of the employees. Corresponding amendments were also
made in the Rules, inter alia, providing that the employees who have retired
upto 31st October, 200 I shall contribute the amount so as to make up the B
difference between cost of annuity purchased for them from the pension fund
from LIC and the total contribution made by them till date of retirement. Other
consequential amendments were also made providing that the trustees shall
notify LIC for retrieval of the shortfall in the contribution from the purchase
price of the annuity paid to LIC in respect of such members and for appropriate C
reduction in the monthly amount payable to such employees. The amount so
retrieved is required to be added to and form part of the corpus of the trust
fund to be equally distributed amongst the contributing members.

      The validity of the aforesaid amendment of the Scheme was challenged
by the retired employees in writ petition filed under Article 226 of the D
Constitution of India before the High Court mainly on the ground that rights
in their favour crystallized on purchase of annuities at the time of their
superannuation and the same cannot be subjected to any alteration or
amendment. The contention urged before the High Court was that the trustees
could only effect amendment to the Scheme for future benefits of existing E
employees and had no right to effect any amendment which adversely affects
vested rights of the pensioners in regard to the pension payable to them as
per the amended Scheme. The plea was that their pension as per the amended
Scheme would be considerably reduced. It was contended that on retirement
the ex-employees sever all their relations with the Scheme, which does not
envisage making of any additional contribution, by members after F
superannuation. The LIC having accepted annuity and having made monthly
payments to retired employees cannot refund to the trust any amount or
reduce monthly payment to the detriment of the pensioners.

      These appeals have been filed by the Scheme, Air India, Cabin Crew
Association, Ground Staff Association, Officers Association, and Employees G
Guild Association. Learned counsel for the appellants contend that out of
I 8,386 employees who were members of the Scheme from· the year 1994 till .
date, 1852 employees retired leaving 16534 employees in service. They pointed
out that though retirees were only about I 0 per cent of the employees but
had taken 60 per cent of the total contribution made by all the employees H
    874                     SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R.

A against their contribution of about 17 .98 per cent. If this trend continues the
    corpus would get fully exhausted and the result would be that the employees
    who retire after the year 2005 will not get any benefit since by that time no
    amount will be left in the fund. It is contended that the annuities continue
    to remain the property of the scheme and as such trustees have a right to
    review the situation and amend the scheme. The contention is that the
B   trustees have unrestricted power to amend or alter the Scheme even
    retrospectively. Further, it is urged that strictly speaking the amendment is not
    retrospective inasmuch as the revision of the pension is prospective. The
    amount of the pension would be reduced on non-fulfillment of the conditions
    by the retiring employees after the date of the amendment.
c         The High Court by the impugned judgment held that the impugned
    amendment to the Trust Deed to the extent it applies in future is legal a11d
    valid but the amendment cannot apply to the employees who have retired
    before the date of amendment and such employees shall continue to receive
    pensionary benefits as before, namely, the benefits which existed at the time
D   of amendment.

          For the aforesaid conclusion, the main ground which prevailed with the
    High Court is that the right to annuity in favour of retired employees crystallized ·
    on the date of superannuation and the same cannot be changed by amendment.

E        The High Court held that annuitant has no connection with the quantum
  of the remaining trust fund; whether it increases or decreases and that on
  retirement of the employee, the quantum of corpus, which yields the annuity,
  is paid over to the LIC and physically leaves the trust fund. The retiree gets
  a life long annuity and on his demise his heirs get the designated corpus.
F Thus the designated corpus which leaves the trust on date of superannuation
  never returns. The trust is created because of the requirement of Income Tax
  Act and for the purpose of administrative convenience. Annuitants are in no
  way concerned with the financial health of the trust fund which originally
  purchased the annuities. They are not entitled to look to original trust for any
  assistance in case the interest rate of LIC falls and they cannot claim any
G additional benefit even if trust decides to increase the benefits for such
  existing employees.

          Challenging the impugned judgment, learned counsel for the appellants
    contend that the beneficiaries, namely, retired employees cannot have any
    interest in the insurance policy entered by the trustees; the entire fund is
H   within the control of the trustees; legal obligation is cast on the trustees that
  AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHAR WAL, J.] 875

none of the member is deprived of pension. The trustees have not only right A
but an obligation to correct the mistake and amend the Scheme so that the
employees retiring after 2005 also get pension and are not deprived of it
despite having contributed to the fund from their salary. Amendment became
necessary on finding out that the funds are likely to be depleted as a result
of the bona fide mistake. It is because of such mistake disproportionate B
amounts have been paid to the retirees without regard to the contributions
made by them.

      The crucial question is whether the benefits, which the retired employees
are getting, can be curtailed because of reduction of the fund amount.

      In support of these appeals, three contentions have been urged: (I)
                                                                                  c
depletion of the fund amount if not checked would result in the retirees after
the year 2005 not getting any pension. Therefore, there was the requirement
to make the impugned amendments; (2) the trustees in terms of Deed and the
Rules have unrestricted power to amend the Scheme so as to apply amendment
to also those who stand retired; and (3) the Scheme is not amenable to the D
writ jurisdiction. The appellants are neither an instrumentality or agency of
the State nor other authority contemplated by Article 12 of the Constitution.

       Taking the last contention first, the High Court rejected it observing
that the creation of pension fund flows from the socio economic obligations
of the States and that the pension is not a charge or bounty nor is it a E
gratuitous payment depending on the whims of the employer. The High Court
is of the view that writ is maintainable as it was mainly directed against LIC.
It is, however, contended on behalf of the appellants that the nature of the
Scheme under consideration is different. Despite use of the term 'pension',
the benefit under the Scheme is not 'pension' as understood in service p
jurisprudence. The observations made in the impugned judgment relying
upon various earlier precedents dealing with pension and holding that it is
not a bounty may not strictly apply to the benefits stipulated for the retiring
employees under the Scheme in question. Further, it is possible to contend
that UC is only a proforma party to the litigation and that it cannot be said
that writ is directed mainly against LIC, the main question being the power G
of the trustees to amend the Scheme with retrospective effect. We need not,
however, examine, in the present case, the aforesaid question and the
correctness of the view of the High Court on the aspect of maintainability of
the writ petition since learned counsel challenging the correctness of the
impugned judgment, have adopted a pragmatic and fair approach that this H
    876                    SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.
                                                               ·'
A Court having heard the matter in detail, it would not serve either the interest
    of the retired employees or the employees in service or the Scheme, if the
    parties are relegated to litigation before other forums on this court reversing
    view of the High court on the question of maintainability of the writ petition.
    Under these circumstances, we leave open the question of maintainability of
    the writ to be decided in an appropriate case.
B
          Now, we will examine other two contentions. The object of introducing
    the Scheme was to enable the employees to obtain monetary benefit on their
    superannuation and/or payment to the beneficiaries in the event of death of
    the employee. How it was sought to be achieved shall have to be considered
C   in the light of the Scheme, the stand of the appellants and also the provisions
    of the Income Tax Act and the Rules. Air-India Employees' Superannuation
    Pension Trust (for short 'Trust') was established to administer the pension
    scheme also in fulfillment of the requirement under the Income Tax Act, 1961.
    The pension scheme was approved by the Commissioner of Income Tax.

D         Under Section 2(6) of the Income Tax Act, 'approved superannuation
    fund' has been defined to mean superannuation fund or any part of the
    superannuation fund which has been and continues to be approved by the
    Chief Commissioner or Commissioner in accordance with the Rules contained
    in Part B of the Fourth Schedule.

E       Part B of Schedule IV of the Income Tax Act, 1961 deals with approved
  superannuation funds. Under clause 3 thereof, in order that the superannuation
  fund may receive and retain approval, it shall satisfy the conditions set out
  in the said clause and any other conditions which the Board may, by Rules,
  prescribe. One of the conditions is their fund shall be a fund established
F under an irrevocable trust. Another condition is that fund shall have for its
  sole purpose the provision of annuities for employees in the trade or
  undertaking on their retirement at or after a specified age or on their becoming
  incapacitated prior to such retirement, or for the widows, children or dependents
  of persons who are or have been such employees on the death of those
  persons.
G
        Part XIII of Income Tax Rules, 1962 covering Rules 82 to 97 dealing with
  approved superannuation funds is framed in exercise of the powers conferred,
  intera/ia, under clause l l(l)(cc) of Part B of Schedule IV. Under Rule 85, it
  is, inter alia, stipulated that all monies contributed to the approved
  superannuation fund are required to be invested in a post office savings bank
H account in India or in a current account or in a savings account with scheduled
  AIR INDIA EMPLOYEES v. KURIAKOSEV.CHERIAN [SABHARWAL,J.] 877

bank or utilized in accordance with Rule 89 for making payment under a A
scheme of insurance or for purchase of annuities referred to in that rule.
Under Rule 87, the ordinary annual contribution by the employer to a fund
in respect of any particular employee shall not exceed 25% of his salary for
each year as reduced by the employer's contribution, if any, to any provident
fund (whether recognized or not) in respect of the same employee for that
year.                                                                         B
       Rule 89, inter a/ia, provides that for the purpose of providing the
annuities for the beneficiaries, the trustees shall enter into a scheme of
insurance with LIC and accumulate the contributions in respect of each
beneficiary and purchase an annuity from the said LIC at the time of the C
retirement or death of each employee or on his becoming incapacitated prior
to retirement.

      Clause 3 of the trust deed, inter a/ia, provides that pension fund is to
be established under irrevocable trust and the fund shall have for its sole
purpose the provision of annuities for employees.                              D
      Clause 14 provides that power of appointing the Trustee shall be vested
in the employer. The Board of Trustees shall consist of three representatives
of the employer and eight members who are employees. The employer shall
appoint, its representatives, the representatives of the members, who shall be
the employees. The employer shall exercise power of filling up any vacancies     E
and removing any Trustee and the employer shall nominate one of its
representative Trustees as Chairman of the Trust.

      Clause 19 provides that the employer shall have the power to appoint
any officer to act as Secretary of Fund who will be invested with such powers
of management of the Trust as the Trustees may from time to time in their        F
discretion determine. With the consent of the employer the trustees shall have
power to employ any person or persons to do any legal, accountancy or other
work.

      The Trust deed shows that the trustee agreed to act as such of the G
pension fund at the behest of the employer. It further shows that the employer
has considerable control over the functions as well as the administration of
the Scheme.

     Clause 5 of the trust deed deals with power to amend. It reads as under:
                                                                                 H
    878                    SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A          "The Trustees may at any time with the previous concurrence and/
           or approval in writing of the employer alter, vary or amend any of the
           trusts or provisions of this Deed and the Ru Jes.

           Provided that no such alteration or variation shall be inconsistent
           with the main objects of the trusts hereby created.
B
           Provided further that no such alteration or variation shall be made
           without the prior approval of the Commissioner of Income-tax having
           jurisdiction over the Fund."

          Clause 8 provides that members to have no legal right. It reads thus:
c          "Except as provided for in this Deed or in the Rules, no Member,
           Beneficiary or other person claiming right from such Member shall
           have any legal claim, right or interest in the Fund."

        We may also reproduce clauses 24, 26, 27, 32 and 33 which read as
D under:
           "24. Trust Fund-The Fund shall consist of the contributions as
           specified in this Deed and the Rules governing the Fund and
           contributions received by the Trustees from the Company and of the
           accumulations thereof and of the securities and the annuities purchased
E          therewith and interest thereon and of any capital gains arising from
           the sale of the capital assets of the Fund. The Trustees shall hold the
           Fund upon such trust and with and subject to such powers and
           provisions as are or shall be contained in this Deed and the Rules for
           the time being in force to the intent that the said Fund shall be
           established for the benefit of the Members and/or their Beneficiaries.
F          The Fund shall. be vested in the Trustees. The Trustees shall have the
           entire custody, management and control of the Fund. No monies
           belonging to the Fund shall be recoverable by the Employer under
           any circumstances nor shall the Employer have any lien or charge
           over the Fund, except or any loans that may be lent by the Employer
G          to the Fund for meeting its immediate liabilities.

            26. Provisioins of Benefit-The trustees may enter into any Scheme
            of insurance or contracts with the Life Insurance Corporation of India
            to provide for all or any part of the benefits which shall be or may
            become payable under these presents and may pay out of the Fund
H           all payments to be made by it under such Scheme or contracts.
 AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHARWAL, J.] 879

       27. Investment ofFunds-{ a) All monies from time to time in the hands A
       of the Trustees and not immediately required for the purpose of the
       Trust shall be deposited/invested by the Trustees within 15 days from
       the date of receipt or accrual, as the case may be, in accordance with
       Rule 85 of the Income-tax Rules, 1962 or any modification or re-
       enactment or reframing or renumbering thereof.
                                                                                   B
       (b) The Trustees shall have power at any time and from time to time
       to vary, transpose or sell such investments and reinvest the Funds in
       other investments of the nature hereby authorised, within the guidelines,
       notifications or Rules issued by the Government from time to time.

       32. Review of Funds-The Trustee shall review the availability of C
       Funds of the Scheme annually or at such intervals as may be deemed
       fit by the Trustees and to decide any revision in the maximum benefit
       or rate of the member's contribution under the Scheme.

       33. Review of Benefits-Notwithstanding anything to the contrary
       contained in these presents or in the rules the Trustees shall have and D
       shall always be deemed to have the right to review any limit the
       benefits payable to the Beneficiaries including the right to reduce the
       benefits payable in accordance with the rules in the event of any or
       all the members ceasing or reducing to make contribution to the Fund
       in accordance with these presents and the Rules.                        E
      Rule 14 provides that members or his beneficiary shall have no interest
in the master policy. It reads as under:

       "A member or his beneficiary shall have no interest in the Master
       Policy taken out in respect of the members or any investment otherwise F
       made by the Trustees in accordance with the Rules of the Scheme but
       shall be entitled to receive superannuation benefits in accordance
       with the Rules. Provided always that the Trustees shall administer the
       Scheme for the benefit of the members and their beneficiaries in
       accordance with the provisions of these Rules."
                                                                                   G
      Dealing now with the first contention as to the depletion of the fund
amounts, case of the appellants is that the scheme was based upon actuarial
valuation carried out in the year 1993/1994 on assumptions as under:

       (I) Basic pay and DA were taken as pre-revised scales.
       (2)   Assumption that the contribution will start flowing on monthly H
    880                    SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A                basis from April, 1994.
           (3) Rate of interest was assumed at 12 per cent.
           (4) Contribution of Rs. 350 per month was supposed to increase by
               10% per annum.
B          (5) Total number of members of the Scheme at any given time would
               remain constant i.e. retirees are replaced by recruits.

          it is urged that when the Scheme was launched in 1996 none of the
    above assumptions were found to be in existence as evidenced from the
    following:-
c          (!)   With the wage agreement in 1996, the salary scales were
                 substantially revised.
           (2) Monthly deductions of contribution started only from September,
               1996 and arrears of contributions for the period April, 1994 to
               August, 1996 were received by the Trust from March 2000 only.
D
           (3) Rate of interest has been progressively declining.
           (4) The contribution of Rs. 350 p.m. has not been escalated by 10%
               per annum.
           (5) Number of employees contributing to the Scheme has
E              progressively declined in view of non-recruitment since 1995.

          Further, according to the appellants, there was shortfall of Rs. 155
    crores which is as under:

                                                             "Rs. in Crores
F          (a) Increase in annuity cost on account of                    65
               revision of grades and pay scales

           (b) Non-escalation of additional contributions                60
               since 1995@ 10%
G
           (c) Loss of interest on contribution from April               30
               1994 to April 1996                                    Rs.155"
          It is contended that the aforesaid deficit of Rs. 155 crores, as assessed
    by the actuaries, only represents the gap between the present value of all
H   future pension liability of the Trust as per the original defined benefit scheme
  AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHARWAL, J.] 881

and the present value of all future contributions to be collected by the trust,   A
as originally determined. The actuaries had assessed the increase in annuity
cost on account of revision of pay scale at Rs. 65 crores. This is sought to
be illustrated by the appellants by giving figures of pre-revised Basic + DA
and pension calculated at the rate of 40% and cost of annuity and contribution
of retiring employee and also giving figures of revised scales and resultant
increase of cost of annuity without proportionate increase at employee's          B
contribution.

       The break up of 60 crores on account of non-increase in the additional
contribution of Rs. 350 has also been given. The break up of deficit of Rs.
30 crores has also been given. As per the Scheme, the contribution of the C
members was in two parts (a) 1% to 5% contribution of Basic and D.A. and
(b) additional contribution of Rs. 350 per month. Further, all members who
retired in the period from April, 1994 to August, 1996 did not make the
additional contribution of Rs. 350 p.m. in their 15 years lump sum contribution.
The impact of non-escalation of additional contribution of Rs. 350 has been
assessed at Rs. 60 crores. It has been pointed out that the Scheme was D
applicable to all employees who retired from I st April, 1994 but actual deductions
of contributions from monthly salary commenced from September, 1996. It is
stated that various unions representing the members were not agreeable for
their members making a lump sum contribution and requested Air India
Management to appropriate and pay the Trust such arrears of contribution E
for the period April, I 994 to August, 1996 from the wage agreement arrears
as and when these were paid. Air India was facing a severe financial crunch
at that point of time and the Management had signed agreement with the
Unions to the effect that though revised pay scales were implemented
immediately, arrears would be paid only when the company's liquidity position
permitted the same. It was understood that the Management was not to pay F
any interest on such deferred payment of arrears. The payment of arrears of
pension contribution to the Trust, therefore, was also deferred until the
settlement of wage arrears i.e. till March 2000. This resulted in loss of interest
on such arrears.

      The aforesaid financial position has been disputed and retirees have G
sought to explain that the facts and figures given and conclusions drawn by
the Scheme are entirely incorrect and misleading. It was pointed out that in
addition to the simple computation mistakes, the projection has not taken into
account the interest accrual. According to retirees, as per the correct position
the shortfall if at all will be minimal and in any case it was to be borne in mind H
    882                    SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A that the Scheme as originally fonnulated was rolling scheme and benefits were
    not confined to the extent of contributions made.

          The retirees have also given facts and figures giving calculations based
    on pre-revised Basic and DA with accrued interest (without escalation) as
    also calculations based on revised Basic and DA without escalation and the
B   calculations based on with escalation.

          Further, according to the retirees, the trustees took no steps to either
    approach Air India to recover the monies which is stated to be due from Air
    India nor they approached the Income Tax Officer for permission to invest
    amounts in short term deposits nor have they taken steps to revise
C   contributions. According to them, the trustees to save their own skin attempted
    to recover the amounts from the retirees under the guise of acting fairly to
    balance out the difference without explaining as to what prevented them from
    taking requisite steps while the retirees were still in employment. They have
    also highlighted the factor of failure of trustees to take steps for making the
D   recoveries from Air India which kept amount after deducting the same from
    the salaries of the employees.

          It is not necessary to go into detail calculations. It does appear that
    there is shortfall in the Fund though a lot can be said in respect of calculation
    submitted by both sides. No doubt, the amount which went out of the fund
E   for purchase of annuity for retiring employee was considerably more than
    what was contributed by the outgoing employee but it is also true, at the
    same time, that the huge amounts did not come to the fund from Air India
    and some of assumptions on which Scheme was fonnulated did not hold good
    on commencement of the Scheme. The reason for the position of the fund
F   which necessitated the amendment cannot be attributed entirely on account
    of the gap between the amount contributed by the retiring employee and the
    amount used for purchase of annuity. It may also be noted that the appellant's
    own case is that there was basic fallacy in the Scheme from its inception. The
    Scheme, as originally conceived was flawed, is the stand of the appellants in
    CA No. 4267 of 2003. It is further their own stand that concept of granting
G   annuities on a defined benefit basis in a self-contributory fund is inherently
    fallacious as in the self-contributory scheme the only consideration is the
    contributions made by the members and hence the benefit has to necessarily
    flow from their contributions and the interest accrued thereon. As against
    this, the present is a case of defined benefit Scheme. This basic fallacy in the
H   Scheme was never rectified from inception. It is the own case of the appellants
  AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN (SABHAR WAL, J.) 883

that in addition to this inherent fallacy in the formation of the Scheme, the       A
situation was aggravated by various factors noticed above.

       We would assume that there were several contributory factors as a
result of which the fund position became quite bad. The factors included the
non-receipt of huge funds in time from Air India, lack of proper investment
by the trust resulting in loss of interest in addition to the fallacy in the scheme B
being gap between the contribution and the amount required for purchase of
annuity to ensure return of specified amount to the retirees.

      It may be that the last of the aforesaid factor contributed most in the
depleted financial position of the fund requiring the trustees to make the          C
amendments in the scheme on 3rd April, 2002, but it has to be borne in mind
that the original scheme was a 'Benefit Defined Scheme' as opposed to a
'Contribution Defined Scheme'. It has now been conceded on behalf of the
appellants that there was no fraud in formulation or implementation of the
scheme. Besides aforesaid factor, there were other factors, such as, considerable
delay in Air India remitting arrears of pension contribution amounting to Rs.       D
23 crores to the trust, non-payment of interest by Air India on late payments
etc.

       The retirees received what was receivable by them according to the
existing scheme on the date of retirement. The pension scheme, as originally
conceived and formulated, was a rolling scheme postulating outgoing                 E
employees on retirement and their place being taken by induction of new
employees whose contributions would add to the fund. According to the
figures given above, the shortfall in the fund was in the sum of Rs. 41.83
crores which was sought to be made up from 1852 retirees. According to the
retirees, if they are asked to make good that amount, on average each pensioner     p
will have to repay a sum of Rs. 2,25,863. At the same time, if the amount is
contributed by the existing over 16,500 employees to make good the aforesaid
differential amount of Rs. 41.83 crore, they would be required to pay about
Rs. 25,000 each which can be split into convenient installments.

      On distinction between 'Defined Benefit Plan' and 'Defined Contribution       G
Plan' Mr. Arun S. Murlidhar in 'Innovations in Pension Fund Management'
states :

      "Defined Benefit Plans

        In the DB pension plan, participants and/or sponsors make H
    884                    SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A           contributions, and these contributions could change over time. The
            scheme then provides a defined benefits prescribed annuity in either
            absolute currency or as a faction of a measure of salary (e.g., 50 per
            cent of final salary or the average the last five years of salary. The
            guaranteed pension benefit could be in either real or nominal terms.
            The ralio of annuity or benefit to a measure of salary is known as
B
            the replacement rate.

          Defined Contribution Plans

            Under the DC scheme, participants and/or sponsors make prespecified
            contributions. These contributions could be specified in either
c           absolute currency or as a fraction of a measure of salary (e.g. 5 per
            cent of annual pretax salary). The participants invest the contributions
            in assets. However, the pension depends entirely on the asset
            performance of accumulated contributions. As a result, two individuals
            with identical contributions could receive very different pensions.
D           Bader (1995), Bodie, Marcus, and Merton (1988), and Blake (2000)
            provide more detailed descriptions of DB and DC plans."

                                                       (Emphasis supplied by us)

          According to learned author, there are several ways in which the aforesaid
E plans can be funded. In general, country's social security systems are pay-
    as-you-go (PA YG), Defined Benefit schemes which tax current participants to
    pay retiree benefits. However, corporate or occupational defined benefit or
    defined contribution schemes tend to be funded both partially and fully.
    Funding requires allocating funds prior to retirement in order to service future
    liabilities.
F
          The scheme envisages a Defined Benefit Plans and not a Defined
    Contribution Plans. It also envisages allocating funds at the time of retirement
    of employees, i.e. the amount for which the annuity is purchased. None has
    questioned the power of the trustees to amend the scheme prospectively from
G   the date of amendment. We would also assume that there is a corpus deficiency
    which, to a considerable extent, has taken place as a result of gap between
    contribution and amount of annuity purchased. All the same, the basic
    question is whether by the amendment of the scheme, this gap can be bridged
    by making recoveries from those who have already retired and are getting
    benefit from LIC as a result of purchase of annuity and/or from their heirs who
H
  AIR INDIA EMPLOYEES v. KURIAKOSEV.CHERIAN [SABHARWAL,J.) 885

would otherwise receive annuity amount after the demise of the retiree. This     A
necessarily takes us to the second question as to the power to amend the
scheme retrospectively.

       At the outset, it may be noted that there is no merit in the contention,
half-heartedly canvassed, that the amendment is not retrospective on the
ground that the rights of the retirees only after the amendment of the scheme B
are being effected as the amount already paid to them under the unamended
scheme is not being asked to be returned. There is fallacy in the argument.
It is evident that the retirees, as a result of amendment, are being asked to
pay to make good the gap between the amount of annuity and the
contributions made by them and, if not, either their monthly pension would C
be reduced or their heirs would not get the annuity amount at the relevant
stage. The amounts already taken by the retirees have also been taken~ into
consideration while working out the figures. Therefore, it cannot be said that
the amendment is not retrospective. Various clauses on the basis whereof
learned counsel for the appellants contend that it is permissible to amend the
scheme with retrospective effect have already been noted hereinbefore. To D
consider the effect thereof and to appreciate contentions urged by learned
counsel for the appellants, first let us examine the true meaning of expression
'Annuity'.

      The expression 'Annuity' has no statutory definition. However, according
to Black's Law Dictionary, it means an obligation to pay a stated sum usually    E
monthly or annually to a stated recipient.

      An annuity is a right to receive de anno in annum a certain sum; that
may be given for life, or for a series of years; it may be given during any
particular period, or in perpetuity; and there is also this singularity about    F
annuities, that, although payable out of the personal assets, they are capable
of being, even, for the purpose of devolution, as real estate; they may be
given to a man and his heirs, and may go to the heir as real estate (see :
Advanced Law Lexicon by P Ramanatha Aiyar, 3rd Edition 2005)

      In Commissioner of Wealth Tax v. P.K.Benerjee, (1981] I sec 63, this G
court held that in order to constitute an annuity, the payment to be made
periodically should be a fixed or pre-determined one, and it should not be
liable to any variation depending upon or on any ground relating to the
general income of the fund or estate which is charged for such payment. The
court cited with approval the observations of observations of Jenkins L. J in
In-re Duke of Norfolk Public Trustee v. Inland Revenue Commr .. (1950) I Ch H
    886                     SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A 487 which reads thus:
            "An annuity charged on property is not, nor is it in any way equivalent
            to an interest in a proportion of the capital of the property charged
            sufficient to produce its yearly amount. It is nothing more or less than
            a right to receive the stipulated yearly sum out of the income of the
B           whole of the property charged (and in many cases out of the capital
            in the event of a deficiency of income). It confers no interest in any
            particular part of the property charged, but simply a security extending
            over the whole. The annuitant is entitled to receive no less and no
            more than the stipulated sum. He neither gains by a rise nor loses by
            a fall in the amount of income produced by the property, except in so
c           far as there may be a deficiency of income in a case in which recourse
            to capital is excluded."

         Learned counsel for the appellants have, however, placed strong reliance
  on the Trust Deed and the Rules to contend that the Trustees have full right
D to amend the Scheme with retrospective effect and that ,the members or
  beneficiaries have no right, title or interest in the fund or even in the annuities
  purchased from the fund on the retirement of beneficiary. In this respect,
  reliance is placed upon Clause 5 of the Trust Deed above reproduced stating
  that the Trustee may at any time with previous concurrence or approval in
  writing of the employer alter, vary or amend any of the provisions of the Trust
E Deed and the Rules. The first proviso to the aforesaid clause, however
  stipulates that no such alteration or variation shall be inconsistent with the
  main objects of the Trust thereby created. Reliance has also been placed to
  Clause 8 of the Trust Deed stipulating that except as provided for in this Deed
  or Rules, no member, beneficiary or other person claiming right from such
F member shall have any legal claim, right or interest in the Fund. But, the
  proviso to the said clause enjoins upon the Trust Deed to administer the
  Fund for the benefit of the members and/or their beneficiaries in accordance
  with the provisions of the Deed and the Rules. Reliance on Clause 24 has
  been strongly placed submitting, inter alia, that the members' Fund shall
  consist of contributions as specified in the Trust Deed and the Rules governing
G the Fund and contributions received by the Trustees from the Air India and
  of the accumulations thereof and of the securities and annuities purchased
  therewith and interest thereon and that the said Fund shall be established for
  the benefit of the members and/or their beneficiaries and shall be vested in
                                                                                        -
  the Trustees. Further, Clause 26 is relied upon which stipulates that the
H trustees may enter into any scheme of insurance or contracts with the LJC
  to provide for all or any part of the benefits which shall be or may become
  AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHAR WAL, J.) 887

payable under this deed and may pay out of the Fund all payments to be A
made by it under such scheme or contracts.

       Besides the aforesaid clauses, learned counsel for the appellant have
placed strong reliance on Clause 32 and Clause 33 of the Trust Deed. Clause
32 provides the power of the Trustee to review the availability of Funds of
the Scheme annually or at such intervals as may be deemed fit by the B
Trustees and to decide any revision as to the rate of the member's contribution
under the Scheme. Clause 33 i.e. power of review of benefits stipulates the
Trustees right to review any limit the benefits payable to the beneficiaries
including the right to reduce the benefits payable in accordance with the rules
in the event of any or all the members ceasing or reducing to make contribution C
to the Fund.

       None of the aforesaid clauses render any assistance to the appellants.
The relied upon clauses deal with the members who contilll!e to contribute
to the Fund. The liability of the retiring member to make any such contribution
ceases on retirement. It is nobody's case that after the retirement any D
contribution is made or required to be made by retired employees. The aforesaid
clauses only show the right and power to review the Fund and the benefits
payable to the continuing members/employees. Likewise, reliance on Rule 14
which stipulates that the member or his beneficiary shall not have any interest
in the master policy taken out in respect of the members in accordance with
the Rules of the Scheme but shall be entitled to superannuation benefits in E
accordance with the Rules, has no applicability. The retired employees are not
claiming any interest in the master policy but are claiming right flowing from
the annuity purchased on their retirement.

      The rights of the employees to receive the annuity and quantum of the    F
annuity get crystallized at the time of purchase of the annuity.

       In Sasadhar Chakravarty and Anr. v. Union of India and Ors., [J 996)
11 SCC I, the question arose as to when the right of employee to receive
annuity and the quantum thereof gets crystallized. In that case, the employer
had set up a non-contributory superannuation fund under the provisions of G
Income Tax Act, 1961. On retirement, under the rules of the fund, the retired
employee was receiving an annuity under the policy purchased by the members
of the fund from LIC. A writ petition was filed by retired employee contending
that certain improvements have been effected in the executive staff fund to
which the pensioners who had already retired were entitled and denial thereof
                                                                              H
    888                    SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.
                                                 •
A was arbitrary and violative of Article 14 of the Constitution. The retired
  employee claimed right to the larger benefits which though not available at
  the time of his retirement but were being given to the employees who retired
  after the improvements to the fund have been made. This Court held that the
  right of the employee to receive an annuity and the quantum thereof get
  crystallized at the time of purchase of the annuity under the then existing
B scheme of the LIC and any subsequent improvements in a given pension fund
  scheme would not be available to those persons whose rights are already
  crystallized under the scheme by which they are governed because the
  amounts contributed by the employer in respect of such persons are already
  withdrawn from pension fund to purchase the annuity. With reference to
C Rules 85 and 89 of Income Tax Rules, this Court held that the same are meant
  to safeguard the monies deposited in the superannuation and to secure the
  annuitant annuity amount. Undoubtedly, Rule 89 requires the Trustee to
  purchase an annuity from the LIC to the exclusion of any one else but this
  provision must be judged in the context of the fact that the contracts of life
  insurance which are entered into by the LIC are backed by a government
D guarantee which is provided by Section 37 of the Life Insurance Act, 1956.
  The Court observed right of an employee to receive the annuity and the
  quantum gets determined at the time when the annuity is purchased. Any
  subsequent improvement in a given pension fund will benefit only those
  whose moneys form part of the pension fund. As soon as an employee retires,
E an annuity is purchased for his benefit under Rule 89, there remains no scope
  for any fresh contribution on his account so as to entitle him to an increased
  pension prospectively on the basis of the improvements made subsequently
  in the pension scheme of a fund since the existing pensioners form a distinct
  class.

F        The decision was sought to be distinguished on the ground that in the
  said case, this Court was concerned with the scheme financed by the employer
  unlike the present scheme where employer's contribution was almost nil and
  that it was self-contributing scheme. We are, however, unable to accept this
  contention. The ratio decidendi of the case is that the moment annuity is
G purchased, the fund leaves the corpus and the relations between the two are
  snapped. The corpus to the extent required for purchase of annuity leaves
  the trust fund and all connections between trust fund and retirees are severed.
  Thus, once the annuity is purchased, there remained no connection with the
  quantum of the fund. Therefore, annuitants are in no way concerned with the
  financial position of the fund for which annuity was purchased. They cannot
H be asked to further contribute. That is the basic question in the present case.
  AIR INDIA EMPLOYEES v. KURIAKOSE V. CHERIAN [SABHARWAL, J.] 889

It matters little that the present case is of reverse position inasmuch as in the A
case of Sasadhar Chakravarty this Court was considering the case of a
retired employee who was seeking right in the improvement whereas in the
present case the question is about reducing the benefits or rights of the
retired employees. The question is about applicability of the principle. Applying
the principle in Sasadhar Chakravarty 's case to the present case, we have
no doubt that after retirement retirees are not liable for any deficit in the fund B
which is sought to be made good by recovery from them which is the effect
of retrospective amendment. Further, as already noted it was a benefit and
rolling scheme as opposed to a contributory scheme. Neither clauses 32 and
33 or the Trust Deed nor Rule 14 has any applicability on question of
retrospective operation of amendment to the retired employees. It has been C
admitted that the form of insurance annuity policy with LIC was adopted as
a result of mandate of the statute. Having done that, the appellants are bound
by the consequences flowing from purchase of annuity. In view of what we
have said above there is neither any substance in the contentiou !!wt contract
was between LIC and the trustees nor is it of any consequence in view of
our conclusion that the amount, on retirement of employees, leaves the fund D
for purchase of annuity and the rights of the retirees are crystallized on their
retirement by purchase of annuity and thus no amount can be claimed from
them by making applicable amendment dated 3rd April, 2002 with retrospective
effect. Therefore, we find no substance in the second contention.

       The-contention that there is no privity of contract between LIC and the
                                                                                  E
retired employees as contract for purchase of annuities is between trust and
LIC, has also no substance. In Chandulal Harjivandas v. Commissioner of
Income-tax, Gujarat, AIR (1967) SC 816 insurance policy was purchased by
the father of the assessee and the life assured was that of the assessee. The
claim of asses see for rebate of insurance premium under Section 15( I) of the F
Income Tax Act, 1922 was rejected. On reference, the High Court upheld this
view of the Revenue holding that contract of insurance with LIC was entered
into by the father of the assessee and that the contracting parties were the
father of the assessee and the LIC. This court reversing decision of the High
Court held that the contract of insurance must be read as a whole; in substance G
it is a contract of life insurance with regard to the life of the assessee and
that the main intention of the contract was the insurance on the life of the
assessee and other clauses are merely ancillary or subordinate to the main
purpose, under Section 2(11) of the Insurance Act, the purchase of annuity
amounts to purchase of an insurance policy. It would make no difference, in
the present case, as to who made the payment.                                   H
    890                     SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R.

A          The LIC having accepted the annuity and having effected monthly
    payments can neither reduce the annuity amount nor refund it to the trust to
    the detriment of the retirees since the annuity has already crystallized and no
    change can be made in such annuity as stipulated by the impugned
    amendments. LIC has obligation to fulfill the promise given by it to the
    retirees, who are assured under the annuity scheme.
B
        In Commissioner of Wealth Tax, Punjab, J & K, Chandigarh, Patiala
  v. Yuvraj Amrinder Singh and Ors., [1985] 4 SCC 608, it was held that
  annuities dependent on human life constitute a species of contract of life
  insurance. In Life Insurance Corporation of India and Ors. v. Asha Goel
C (Smt.) and Anr. [2001] 2 SCC 160) interpreting scope of Section 45 of the
  Insurance Act, 1938, this Court laid down the parameters within which powers
  under Section 45 could be exercised to repudiate the claim under a contract
  of insurance.

          In our opinion, the view of the High Court is unassailable. In the result,
    all appeals are dismissed.

    B.K.                                                       Appeals dismissed.