Revenue Surplus - SEEA/P/PF/0611

Executive Director & I/c
RDCIS/ SAIL,
Ranchi-834002.

Sub: Non-Payment of P.F. Revenue surplus for the years 1996-97 to 2000-2001 and 2002-03 by HSPF Trust to its members.

Ref.: Letter No. RD/RI(05)/12 dated 28/09/2006 (and the enclosures) from GM (P&A) & Appellate Authority under RTI Act 2005.

Dear Sir,

1. We hope and believe that the above referred letter along with the enclosures attached therein is complete in all respects on the issue of non-payment of PF Revenue Surplus and nothing more is hidden or kept away as expected under RTI Act 2005. Assuming this to be the correct position we observe that the above referred letter indicated the basic following points:

(i) Amended Rule 24 of HSPF Trust Rules deals with statutory rate of interest only and does not deal with crediting of additional interest beyond statutory rate. Payment of additional interest to PF members is the prerogative of Trustees (Para 2,3,4,5(4) & 6(2) of your letter)

(ii) SAIL Corporate Office issued guidelines to release part of additional interest and to hold back the balance part as Reserve and Trust has followed Corporate Guidelines and released payments accordingly for the years 1996-97 to 2000-2001 and 2002-2003.

(iii) CPFC in his letter dated 21.11.2003 has not given direction to pay entire interest rather they have given clarification and hence the same is not statutorily binding (Page 4).

(iv) A private Auditor said that everything is correctly done by our HSPF Trust managers on the issue.

2. Our observation to the aforesaid Para 1 is that there appears to be acute misunderstanding with SAIL as well as HSPF Trust about the legal position of HSPF Trust. The Company seems to be treating the Trust as one of its departments and taking decision as per its convenience. The Trustees appear to be more interested in following Company’s guidelines than the provisions of HSPF Trust Rules and EPF & MP Act 1952. We are giving below our clarification about the legal PF provisions.

a) HSPF trust enjoys the statutory protection accorded under EPF & MP Act 1952. CPFC has also confirmed this fact in their letter No. E-III(3)(1) 2000/BR/70438 dated 17.01.20029 (Annexure 4 of your letter).

b) The company may as per Rule 3(b) of HSPF Trust Rules amend the HSPF Rules in consultation with the Trust, PF and Income Tax Departments. Without amendment Company can not interfere in Trust functions. The Fund shall be governed by HSPF Rules (Rule 3(9)).

c) As per Rule 17 of HSPF Trust Rules the Functions and Responsibilities of Trustees is to manage the Fund as per these Rules. Neither the Trustees nor SAIL Board have any prerogative to decide anything against these Rules.

d) HSPF Rules do not provide for creation of any Reserve out of Revenue Surplus of the Trust.

e) As per provision of Rule 3(a) of HSPF Rules PF Department’s clarification on disputes between Trust PF members about interpretation of any PF Rules will be final and binding on both. As such CPFC clarifications vide their letter No. E III 3(1)2000/BR-GEN/6269 dated 21.11.2003 (Annexure 11 of your letter) about distribution of entire surplus to member is binding on HSPF Trust.

Rule 24 of HSPF Rules provides for distribution to members of entire net balances in the Revenue Account of the Trust. Holding back any sum out of the net balance is against Rule 24. CPFC vide their letter No. 6269 dated 21.11.2003 addressed to RPFC Ranchi and forwarded to you has also upheld this view. This will naturally be extended to distribution of Surplus Revenue in 2002-03. Abstract of Para 2 of CPFC’s above letter is given below once again for your quick reference:

“As per Rule 24 of the HSPF Trust Rules the entire surplus earned by the Trust in a year is to be distributed among the members of the Trust on pro-rata basis in the same year which implies that surplus available with the Trust is to be distributed among all members of the Trust existing between 96-97 to the date of declaration of surplus interest”.

f) The 1990 amendment of Rule 24 has not withdrawn any existing benefits rather it has added one more benefit to the members. Before amendment the methodology to be adopted for distribution of interest was on the basis of Annual opening balance in case of insufficient revenue surplus and progressive monthly opening balance basis in case of sufficient revenue generation by Trust. Amendment has improved this. Methodology of Progressive monthly balance basis is to be adopted even in case of insufficient Surplus Revenue. This means the members will get more benefit and Company will make good the shortage in Revenue. There is no other change in Rule 24 due to this Amendment. Statutory rate at minimum was available earlier also as well as after amendments. Hence it is incorrect to say that Amended Rule 24 deals with statutory rate only.

g) In view of the aforesaid facts the engagement and report of private Auditors has no locus standi in the matter (Annexure 13 of GM’s letter). Though we propose to take up this issue with appropriate authorities and agencies separately yet you may consider suitable action against those responsible in your organization for misuse of Company’s money followed by recovery of the uncalled for wasteful expenditure from Company fund done in this regard.

3. From the facts stated above it would be very clear that non-distribution of the entire Revenue Surplus for the years 1996-97 to 2000-2001 and 2002-03 tantamount to violation of PF Rules. Company’s directives and Trustees actions in holding back part of Revenue Surplus undistributed even after clarifications given by CPFC and repeated requests by various PF members may be treated as willful disobedience of PF Rules. In case the Trust does not agree to rectify the mistakes there may be danger of withdrawal of Exemptions under section 17 of EPF Act which will put all existing PF members in uncalled for trouble.

4. The PF Act puts liability on Employer for proper functioning of PF Trust. We would, therefore, request you to kindly review your earlier decision, look into the above discrepancies and arrange to take remedial action at an early date so that PF members are paid their due amount without further harassment. The issue is already nine years old.

Thanking You,

Yours Faithfully,

(V.N.Sharma)