Medical Costs In India Are Rising | Calcutta High Court Rejects Terminal Benefit Plea | Increases Monthly Medical Allowance To Rs 3000 From July 2025 For Company Paid Staff Of Official Liquidator
Sanchayita Lahkar
The High Court at Calcutta Single Bench of Justice Krishna Rao directed that the existing monthly medical allowance of Rs. 2000 for Company Paid Staff working in the Office of the Official Liquidator be increased to Rs. 3000 from July 1, 2025. The Court disposed of the application filed by the said staff seeking terminal medical benefits and exemption from Income Tax under Section 10(10) of the Income Tax Act. While declining the prayer for a lump-sum terminal benefit, the Court acknowledged the rising costs of healthcare and revised the ongoing monthly allowance to mitigate post-retirement medical hardship.
The Court noted that the Company Paid Staff are already receiving benefits under previous recommendations accepted by the Court, including regular monthly medical and provident fund allowances. However, considering the fourteen-year gap since the last revision of medical benefits and escalating healthcare expenses, the Court ordered an increase in the monthly medical allowance. This directive was issued after considering the submissions from both parties and evaluating the financial capability of the Official Liquidator’s Establishment Charges Account, which currently holds substantial funds. The Court stated that while terminal benefits were not warranted, a revision in ongoing allowances was both justified and necessary.
The application was filed under Rules 308 and 309 of the Companies (Court) Rules, 1959 by Company Paid Staff in the Office of the Official Liquidator, High Court at Calcutta. The applicants sought the grant of terminal medical benefits and exemption from Income Tax under Section 10(10) of the Income Tax Act.
The Office of the Official Liquidator comprises two categories of employees: Central Government employees and Company Paid Staff. The Official Liquidator appoints Company Paid Staff with judicial sanction under the Companies Act, 1956, and related rules to manage workload.
Historically, Company Paid Staff received minimal ad hoc salaries and nominal ex-gratia amounts upon retirement. The category has seen no new appointments since 2002. In 1992, the Court took cognizance of their situation and framed a service scheme, later modified in 1996 to extend Central Government-equivalent benefits. However, only 23 employees were absorbed under a 1998 regularisation initiative.
Petitioners challenged this limited regularisation in a writ petition. While the Hon’ble Supreme Court did not order regularisation, it directed all Official Liquidators to file proper reports considering market conditions. Consequently, a one-time ex-gratia arrangement was introduced, supplementing the existing gratuity at retirement. As of the judgment date, 57 Company Paid Staff remain in service, with 38 in Group “C” and 19 in Group “D”.
Learned Senior Advocate Mr. Ranjan Bachawat, representing the applicants, argued that existing retirement benefits are insufficient for post-retirement life, particularly concerning education and medical expenses. He stated the lack of pension, medical benefits, CPF, and CGHS coverage. He argued that a 10 to 15-day hospital stay could cost Rs. 15 lakhs, putting retirees at significant risk.
Mr. Bachawat stated that Company Paid Staff currently receive only Rs. 2000 as monthly medical allowance. He submitted that the Official Liquidator’s Establishment Charges Account has Rs. 50,98,62,300.80, from which Rs. 11,02,00,000/- could be allocated as terminal medical benefits to all 57 regular Company Paid Staff. This would include Rs. 20,00,000/- for each of the 38 Group “C” staff and Rs. 18,00,000/- for each of the 19 Group “D” staff.
The applicants contended that the plea was not made as a matter of right but as a humanitarian request. They feared that a medical emergency could consume their limited savings and ex-gratia funds.
Mr. Bachawat cited multiple judgments, including Rajkaran Singh & Others v. Union of India & Ors. (2024 SCC OnLine SC 2138), Vinod Kumar & Ors. v. Union of India & Ors. (2024 SCC OnLine SC 1533), and State of Punjab and Others v. Jagjit Singh and Others (2017) 1 SCC 148, to argue that long-serving non-regular employees should not be denied substantive rights.
Opposing the plea, Senior Advocate Ms. Manju Bhuteria for the Official Liquidator submitted that Company Paid Staff receive benefits on par with or greater than comparable Central Government employees. She noted that they receive Rs. 2000 as medical allowance and Rs. 1000 for PPF, with no deductions for GPF, insurance, or CGHS as in the case of Central Government employees.
She detailed other allowances provided to Company Paid Staff, including LTC, TA, MACPs, and others. She added that Central Government employees contribute Rs. 250 to Rs. 650 monthly for CGHS and must deposit Rs. 78,000 at retirement for continued medical coverage.
Ms. Bhuteria pointed out that recently retired Company Paid Staff received substantial retirement benefits: Rs. 46,90,581/-, Rs. 46,39,353/-, and Rs. 47,52,638/-. She also referenced a previous recommendation accepted by the Court in Company Application No. 246 of 2011, which revised medical and provident fund allowances to Rs. 2000 and Rs. 1000, respectively.
The Court noted that the Establishment Charges Account, with over Rs. 50 crores in fixed deposit, is distinct from funds for specific company liquidations and is meant for administrative and operational expenses of the Official Liquidator's Office. It is not generally permissible to use this for employee terminal benefits.
The Court acknowledged that medical costs have risen due to chronic illnesses, increased healthcare demand, and the high cost of medical technologies. In light of this, while the Court declined the plea for terminal benefits, it agreed to enhance monthly medical allowance.
The Court recorded that "the applicants are getting only 24,000/- per year as Medical Allowance which is inadequate in this present medical perspective."
It further noted that "the applicants are getting the Medical Allowance in terms of the report of the Committee which was duly affirmed by this Court."
Referring to the Supreme Court's direction in Official Liquidator v. Dayanand & Ors. (2008) 10 SCC 1, the Court quoted: "They were neither appointed against sanctioned posts nor were they paid out from the Consolidated Fund of India. Therefore, the mere fact that they were doing work similar to the regular employees of the Offices of the Official Liquidators cannot be treated as sufficient for applying the principle of equal pay for equal work."
On the issue of increased emoluments, the Supreme Court had earlier stated: "We direct the Official Liquidators attached to various High Courts to move the Courts concerned for increasing the emoluments of the company-paid staff... Such a request should be sympathetically considered by the Courts concerned and the emoluments... be suitably enhanced and paid subject to availability of funds."
The Calcutta High Court echoed this sentiment, stating: "The Hon’ble Supreme Court in the case Official Liquidator vs. Dayanand & Ors. held that the salaries and allowances payable to the Company Paid Staffs should be suitably increased in the wake of huge escalation of living of cost."
It acknowledged that "medical cost in India are rising. This increase is driven by factors such as increased demand for quality health, rising prevalence of chronic illness and the high cost of medical technology."
The Court also referred to an earlier Committee recommendation: "Committee has also noticed that the Company Paid Staff are not eligible for coverage neither Central Government Health Scheme nor any other Group Health Scheme to cover their medical needs... In view of escalation of prices, the Committee recommends enhancement of medical allowance to ₹ 2,000/-"
The Court found no cause to approve the lump sum terminal benefit request. However, it stated: "It cannot be ignored that medical cost in India are rising... The applicants are getting medical allowance of Rs. 2000/- per month since January, 2011 and fourteen years have been passed the medical allowance is not increased though the medical expenses has been sufficiently increased."
Based on this, the Court approved a revised monthly medical allowance.
The Court directed: "In view of the above, the Official Liquidator is directed to pay Rs. 3000/- per month as Medical Allowance to the Company Paid Staffs instead of Rs. 2000/- per month from the 1st July, 2025."
The Court concluded: "C.A. No. 93 of 2025 is disposed of."
Advocates Representing the Parties:
For the Petitioners: Mr. Ranjan Bachawat, Sr. Adv., Mr. Sarosij Dasgupta, Adv., Mr. Nilay Sengupta, Adv., Mr. Sujit Banerjee, Adv.
For the Respondents: Ms. Manju Bhuteria, Sr. Adv., Ms. Arundhati Barman Roy, Ms. Shreya Choudhary, Adv.
Case Title: Fire & General Insurance Company of India Ltd. (in liqn.) & Ors. v. The Official Liquidator, High Court, Calcutta
Case Number: C.A. No. 93 of 2025 in C.P. No. 4 of 1956
Bench: Justice Krishna Rao
