Employees Provident Fund Organisation & Anr. Etc. Vs Sunil Kumar B. & Ors. Etc. (Supreme Court of India)
The Apex Court on Friday upheld the amended Employees’ Pension Scheme (EPS), which caps the basic salary of an employee at Rs 15,000 a month for the pension component derived from it to be calculated.
A Bench comprising Chief Justice of India Uday Umesh Lalit, Justice Aniruddha Bose, and Justice Sudhanshu Dhulia has allowed the appeals of the Employees’ Provident Fund Organisation and the Union government challenging the judgments of the High Courts of Kerala, Rajasthan, and Delhi, which had quashed the EPS Amendment of 2014.
Also Read:
2. EPS -95- Eligibility For Higher Pension – Part-II
3. EPS 95 Scheme – Eligibility For Higher Pension – Part-I
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Leave granted.
2. In this judgment, we shall deal with the legality of certain amendments and modifications made by the Central Government to the Employees’ Pension Scheme, 1995 (“1995 Scheme”). Such scheme has been made in pursuance of, interalia, Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“the Act”). Such changes, interalia, are sought be effected in paragraphs 3, 6, 11, 12 and 14 of the 1995 scheme. The Act originally did not provide for any pension scheme and Section 6A was introduced to the said Act by way of an amendment made in 1995. The amendment of 1995 contemplated formulation of a scheme for employees’ pension and the pension fund was to comprise of deposit of 8.33 per cent of the employers’ contribution made towards provident fund corpus as per the prevailing Statue. Paragraph 11 of the scheme dealt with determination of pensionable salary. At that point of time, maximum pensionable salary was Rs.5000/ and this sum had been enhanced subsequently to Rs.6500/. Pensionable salary was raised to Rs.15000/ by a notification dated 22nd August 2014 [numbered G.S.R. 609 (E)], which was to be effective from 1st September 2014. This notification brought certain other modifications in the scheme mainly restricting its coverage and we shall discuss these modifications later in this judgment.
3. In the appeals before us, judgments of the High Courts of Kerala, Rajasthan and Delhi are assailed. In the case of P. Sasikumar & Others vs. Union of India (UOI) Represented by the Secretary to Govt. of India Ministry of Labour & Department of Employment and Others [in Writ Petition (C) No. 13120 of 2015], a Division Bench of the Kerala High Court in its judgment delivered on 12th October 2018 set aside the Employees’ Pension Amendment (Scheme), 2014 conceived in G.S.R. 609 (E). The Delhi High Court in its judgment delivered on 22nd May 2019 in the case of Bhartiya Khadya Nigam Karamchari Sangh and Anr. vs. Union of India and Ors. [in Writ Petition (C) No. 5678 of 2018] followed the view expressed by the Kerala High Court and quashed a circular issued by the provident fund authorities on 31st May 2017 precluding exempted establishments from the benefits of higher pension. In a decision delivered on 28th August 2019 in the case of Union of India and Others vs. Jale Singh and Others [in D.B. Special Appeal Writ No. 436 of 2019] a Division Bench of the Rajasthan High Court also expressed the same opinion. Appeals arising out of SLP (C) No. 3289 of 2021, SLP (C) No. 3290 of 2021, SLP (C) No. 2465 of 2021 and SLP (C) No. 3287 of 2021 are directed against the aforesaid judgment of the Rajasthan High Court and a subsequent decision of a Bench of equal strength delivered on 24th September 2019 in the same line. The appeals originating from SLP (C) Nos. 1506315064 of 2022 are against the judgment of the Delhi High Court delivered on 22nd May 2019, whereas in appeals having their roots in SLP (C) No. 1366 of 2021, SLP (C) No. 1738 of 2021, judgments of the Delhi High Court delivered following the case of Bhartiya Khadya Nigam Karamchari Sangh (supra) have been assailed. In another judgment delivered by the same Bench of the Kerala High Court in the case of Sunil Kumar and Ors. vs. Union of India & Ors. [in Writ Petition (C) No. 602 of 2015] on the same day, i.e. 12th October 2018, the aforesaid notification of 22nd August 2014 was invalidated. That judgment is under challenge in the appeals in connection with SLP (C) Nos. 1672116722 of 2019. In a contempt action brought before the Kerala High Court by aspiring beneficiaries of the pension scheme for implementation of the directions issued in the judgment dated 12th October 2018, certain directions have been issued by the Kerala High Court. The judgment to that effect delivered on 6th November 2020 is impugned in SLP (C) No. 8547 of 2021.
4. Fiftyfour writ petitions have been filed by the employees themselves or on their behalf under Article 32 of the Constitution of India seeking invalidation of the notification dated 22nd August 2014. The writ petitioners are members of both exempted and unexempted establishments. We shall address these writ petitions as well in this judgment, as they involve the same questions of law. We find that notices are yet to be issued in W.P. (C) No. 1356 of 2021, W.P. (C) No. 1379 of 2021, W.P. (C) No. 767 of 2021 and W.P. (C) No. 477 of 2021 but these petitions also involve the same questions of law and the main respondents have participated in addressing us on these points. As such, these writ petitions shall also be dealt with in this judgment. We have also heard the intervenors, most of whom support the employees. In addition, there are contempt petitions (Contempt Petition (C) Nos. 19171918 of 2018 and Contempt Petition (C) No. 619620 of 2019) in which implementation of a judgment of this Court in the case of R.C. Gupta and Others vs. Regional Provident Fund Commissioner, Employees Provident Fund Organisation and Other [(2018) 14 SCC 809] delivered on 4th October 2016 has been asked for. This judgment dealt with the question of entitlement of members of the pension scheme, whose pensionable salary exceeded Rs.6500/ per month to exercise option in terms of proviso to paragraph 11 (3) of the scheme. In this judgment, a Division Bench of this Court repelled the contention of the provident fund authorities that the said proviso contemplated exercise of option within a specified time. The said proviso has been omitted by the amendment of 2014. Rs.6500/ was the maximum pensionable salary prior to 1st September 2014. We shall discuss this judgment in greater detail later.
5. With effect from 16th March 1996, the proviso was added to paragraph 11(3) of the scheme giving an option to the employer and employee for contribution on salary exceeding the aforesaid ceiling of Rs.6500/, (which was Rs.5000/ per month prior to 8th October 2001) to retain the right to pension as per the scheme. 8.33 per cent of employer’s contribution of salary of an employee out of the deductible amount towards provident fund had to be remitted to the pension fund. Stand of the authorities was that there were certain restrictions as regards the time for exercising such option. A set of employees had approached the provident fund authorities much beyond such perceived specified date, mostly on the eve of their retirement, seeking to be included in the pension scheme. The point urged by them was that the amendment of 1996 was not within their knowledge, the same not having been widely publicised. The provident fund authorities had rejected their plea. One set of employees successfully brought action before a Single Judge of the High Court of Himachal Pradesh. Their right to exercise such option beyond the time of their salary exceeding the pensionable limit was in question. According to the authorities, that was the cutoff limit. The Division Bench of the High Court, however, accepted the stand of the provident fund authorities holding that paragraph 11(3) of the pension scheme, as it prevailed then, stipulated a cutoff limit. The matter ultimately came to this Court and in the case of R.C. Gupta (supra), a Division Bench of this Court accepted the employees’ stand and, interalia, held:
“7. Reading the proviso, we find that the reference to the date of commencement of the Scheme or the date on which the salary exceeds the ceiling limit are dates from which the option exercised are to be reckoned with for calculation of pensionable salary. The said dates are not cutoff dates to determine the eligibility of the employeremployee to indicate their option under the proviso to Clause 11(3) of the Pension Scheme. A somewhat similar view that has been taken by this Court in a matter coming from the Kerala High Court [Union of India v. A. Majeed Kunju, Writ Appeal No. 1135 of 2012, order dated 532013 (Ker)] , wherein Special Leave Petition (C) No. 7074 of 2014 filed by the Regional Provident Fund Commissioner was rejected by this Court by order dated 3132016 [Regl. Provident Fund Commr. v. A. Majeed Kunju, 2016 SCC OnLine SC 1744, wherein it was directed: “SLPs (C) Nos. 707476, 7107108, 7224 of 2014 and 697 of 2016 Heard the learned counsel for the parties and perused the relevant material. We do not find any legal and valid ground for interference. The special leave petitions are dismissed SLPs (C) Nos. 19954 and 3303233 of 2015 List these special leave petitions on 2642016. As prayed for, liberty is granted to file additional documents.”]. A beneficial scheme, in our considered view, ought not to be allowed to be defeated by reference to a cutoff date, particularly, in a situation where (as in the present case) the employer had deposited 12% of the actual salary and not 12% of the ceiling limit of Rs 5000 or Rs 6500 per month, as the case may be.
8. xxx xxx xxx
9. We do not see how exercise of option under Para 26 of the Provident Fund Scheme can be construed to estop the employees from exercising a similar option under Para 11(3). If both the employer and the employee opt for deposit against the actual salary and not the ceiling amount, exercise of option under Para 26 of the Provident Scheme is inevitable. Exercise of the option under Para 26(6) is a necessary precursor to the exercise of option under Clause 11(3). Exercise of such option, therefore, would not foreclose the exercise of a further option under Clause 11(3) of the Pension Scheme unless the circumstances warranting such foreclosure are clearly indicated.
10. The above apart in a situation where the deposit of the employer’s share at 12% has been on the actual salary and not the ceiling amount, we do not see how the Provident Fund Commissioner could have been aggrieved to file the LPA before the Division Bench of the High Court. All that the Provident Fund Commissioner is required to do in the case is an adjustment of accounts which in turn would have benefited some of the employees. At best what the Provident Commissioner could do and which we permit him to do under the present order is to seek a return of all such amounts that the employees concerned may have taken or withdrawn from their provident fund account before granting them the benefit of the proviso to Clause 11(3) of the Pension Scheme. Once such a return is made in whichever cases such return is due, consequential benefits in terms of this order will be granted to the said employees.”
6. Further modification to the scheme, as we have already indicated, came on 22nd August 2014 to be effective from 1st September 2014. Paragraph 11 of the scheme, before such modification by G.S.R. No. 609 (E) of 22nd August 2014 was introduced, and subsequent to the said G.S.R. becoming operational, read:
