MUMBAI: Biscuits major Britannia Industries has approached the agitating Pensioners Welfare Association (PWA) to consider "an ex-gratia offer"� 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 But the pensioners have rejected the offer, fearing that it could be withdrawn later, and have insisted that the agreed payments should be through LIC Annuity.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.

When contacted, 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." � 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.

The withdrawal 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CC Chokshi & Co has argued that the money was withdrawn from the Britannia Pensioner's Fund on the premise that the money paid by the company over the past 10 years was ultra-vires (or beyond its power) due to two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.

The pensioners 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 month.