Ranjiv Paul & Ors vs Union Of India & Ors
2023 Latest Caselaw 14416 HP

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

CWP No. 4218 of 2020.

.

Reserved on : 6th September, 2023.

Decided on : 22nd September, 2023.

     Ranjiv Paul & Ors.                                                ....Petitioners.
                                              Versus
     Union of India & Ors.                                             ...Respondents.





     Coram

The Hon'ble Mr. Justice Satyen Vaidya, Judge. Whether approved for reporting?1 Yes.

For the petitioners: Mr. Amit Singh Chandel, Advocate.

For the Respondents: Mr. Rajender Thakur, CGSC, for

respondent No.1.

Mr. Navlesh Verma, Advocate, for respondents No.2 and 3.

Mr. Anshul Attri, Advocate, for respondent No.5.

_____________________________________________________________ Satyen Vaidya, Judge.

Petitioner No. 1 remained employee of H.P. Agro

Industry Corporation Ltd. w.e.f. 10.05.1982 to 29.05.2010

and thereafter he served H.P. Power Corporation Limited

Shimla till 28.02.2018. Petitioner No.2 served H.P. Agro

Industry Corporation Limited, Shimla from 16 th April,

1988 to 31st December, 1997 and thereafter he served

Whether reporters of the local papers may be allowed to see the judgment?

H.P. Minorities Finance & Development Corporation

limited, Shimla from 01.01.1998 to 28.02.2010 and lastly

.

from 28.02.2010 to 31.12.2017, he served H.P. Power

Corporation Ltd., Shimla. Petitioner No.3 served H.P. Agro

Industries Corporation Limited, Shimla from 16 th April,

1988 to 3rd May, 2010 and from 3rd May, 2010 to 30th

Shimla.

r to September, 2016, he served H.P. Power Corporation Ltd.,

2. The establishments with which petitioners

worked were covered by the provisions of the Employees'

Provident Fund and Miscellaneous Provisions Act, 1952

(for short "the Act"). Petitioners were also members of

Employees Provident Fund (for short "EPF"). The

statutory contributions by the petitioners and their

employer were regularly submitted to the authorities

under Act.

3. Employees' Pension Scheme, 1995 (for short

"EPS 1995") was formulated by inserting Section 6A in the

Act. Initially the maximum pensionable salary was fixed

at Rs.5000/­ per month under the scheme. The ceiling of

maximum pensionable salary at Rs.5000/­ per month

was enhanced to Rs.6500/­ w.e.f. 01.06.2001.

.

4. Paragraph 11(3) of the EPS, 1995, was

amended w.e.f. 16.03.1996, whereby an option was

provided to the employer and the employee to contribute

the amount towards the EPS, 1995 @ 8.33 % of the actual

5. to salary drawn by the employee.

The case as set up by the petitioners is that

they were not aware about the addition of paragraph 11(3)

in the EPS, 1995, therefore, they could not submit their

options for contribution on the higher salary. After

joining the Himachal Pradesh Power Corporation Ltd., the

employer's contribution of provident fund in respect of the

petitioner was deducted at the rate of 8.33% of the actual

salary drawn by them and such arrangement was

continued till respective dates of their superannuation.

According to the petitioners, on their retirement, they

became entitled to pension on the basis of contribution

made on higher salary, however, their cases were rejected.

Though, petitioner No.3 immediately on retirement was

allowed the benefit of pension on the basis of contribution

on higher salary, later the same was withdrawn.

.

6. Petitioners represented their case before the

'Lok Adalat' held by the Employees' Provident Fund

Organization, which also initially recommended the case

of the petitioners and later withdrew the same

clandestinely. Petitioners have thus claimed the pension

on the basis of contribution made on higher salary.

7. Respondents No.2 and 3 by way of their reply

and affidavit have submitted that the petitioners had

never exercised the option either in terms of paragraph

11(3) or amended paragraph 11(4) of EPS 1995, during

their entire period of service and as such they were

entitled to pension on ceiling limit of salary fixed under

the EPS 1995 and not on higher wages. It is submitted

that 8.33% of the employer's share of contribution

towards EPF was to be remitted into the pension fund on

the higher salary and for such purpose option was

required to be submitted by the employer and employee in

terms of the amendment carried to the scheme EPS in

2001 and thereafter w.e.f. 01.09.2014. In the absence of

joint declaration by the employer and employee for

.

payment of pension fund contribution on full

wages/actual wages, the contribution under the pension

fund was liable to be limited to the ceiling wages/salary.

8. As per respondents No.2 and 3, neither the

petitioners nor their employer opted for payment of

contribution on higher wages as stipulated in paragraph

11 of EPS, 1995 and hence, the contribution in excess of

wage ceiling was paid by the employer in the EPF scheme.

The petitioners never exercised the option to pay nor did

employer pay the higher due contribution(s) on actual

salary exceeding the wage ceiling under the pension

scheme, till the retirement of petitioners, therefore, the

petitioners were not entitled to pension on higher/actual

salary. It is further submitted that the higher

contribution(s) paid by the petitioners under the EPF

scheme was regularly reflected in the annual statement of

accounts issued to the petitioner throughout their service

period and they had not made any representation for

diversion of the proportionate contribution to the pension

fund. The petitioners, thus, are stated to be estopped

.

from claiming higher pension on the principal of

approbate and reprobate.

9. I have heard learned Counsel for the parties

and have also gone through the record.

10.

At the time of hearing petitioners have confined

their claim to reliefs (b), (d), (e) and (g) only.

11. The EPS Scheme was further amended w.e.f.

01.09.2014 by amending paragraph 11(3), whereby the

ceiling of maximum pensionable salary was raised to

Rs.15,000/­ per month. Paragraph 11(4) was also

inserted whereby those members, who had earlier opted

for contribution on salary higher than the ceiling limit,

could avail the further benefit under the amended

paragraph 11(4) provided such members submitted their

option in this behalf within six months. The option could

be submitted within further period of six months, in case

the authority under the Act found sufficient reasons

therefor.

12. Hon'ble Supreme Court in Civil Appeal No.

10013 of 2012, titled as R.C. Gupta and others vs.

.

Regional Provident Fund Commissioner and others.

reported in (2018) 14 SCC 809 has specifically held that

the amendment in paragraph 11(3) of EPS scheme

inserted in March, 1996, did not lay any cutoff date and

r to hence the contribution made towards EPF could be

converted as contribution towards EPC 1995 for the

benefit of employee.

13. The 2014 amendment in the EPS 1995,

whereby paragraph 11(4) was inserted was quashed and

set aside by the Kerala High Court. The judgment passed

by the Hon'ble Kerala High Court was assailed before the

Hon'ble Supreme Court by the Employees Provident Fund

Organization and others by way of SLP (C) Nos. 8658­

8659 of 2019, titled as The Employees Provident

Fund Organisation & Etc. vs. Sunil Kumar B. &

others. A two Judges bench of Hon'ble Supreme Court

vide order dated 24.08.2021 referred the matter to a

larger Bench by observing as under:­

"9. These, and the other submission touching upon

the applicability of the Principle laid down in the

.

decision in R.C. Gupta go to the very root of the

matter. Sitting in a Bench of two Judges it would not

be appropriate for us to deal with said submission.

The logical course would be to refer all these matters

to a Bench of at least three Judges so that appropriate

decision can be arrived at.

10. r The principal questions that arise for

consideration are whether there would be a cut­off

date under paragraph 11(3) of the Employees'

Pension Scheme and whether the decision in R.C.

Gupta would be the governing principle on the basis

of which all these matters must be disposed of."

14. The above matter has now been decided by a

three Judges Bench of Hon'ble Supreme Court vide

judgment dated 4.11.2022 reported in 2022 SCC Online

SC 1521 and has held as under:­

40. We shall now deal with argument of the appellants that no vested legal right of the employees has been encroached upon by the 2014 amendment. For this purpose, amended paragraph 11(4) needs to be analysed. The said paragraph 11(4) provides for extending the pension coverage in respect of individual employees drawing salary more than Rs. 15000/ per month. This paragraph however, is subject to two conditions:

(i) The first one is that to be eligible for the benefits of ex- tended coverage, the existing members as on 1 st September 2014 must contribute at the rate of 1.16 per cent on salary exceeding Rs. 15,000/ per month.

.

ii) The second one is that a fresh option should be exercised within a period of six months from the first day of Septem- ber 2014. The scheme contemplates that those members of

the fund who had exercised option to remain in the scheme as per the requirement of proviso to paragraph 11(3) of the scheme, as it stood prior to the 2014 amendment, would be able to give fresh option with the employer if their salary cross the ceiling limit. In respect of that provision, this Court

in the Case of R.C. Gupta (supra) had held that the said pro- viso did not contemplate a cutoff date.

41. So far as the first condition is concerned, we have ex- pressed our views earlier in this judgment as regards legality

of having such a provision. In relation to the second condi-

tion, our opinion is that the eligibility for enhancement can- not be restricted to those employees only who had exercised the option to remain in the scheme once their salary went be- yond the capping of Rs. 6500/ per month. As we have al-

ready discussed, in case of R.C. Gupta (supra), it has been specifically held that there was no cutoff date in proviso to paragraph 11(3) as it stood before the 2014 amendment. In our opinion, the interpretation given to the proviso to para-

graph 11(3) prior to 2014 amendment does not require any reconsideration. We agree with the reasoning of the two

Judge Bench of this Court on this point, as expressed in the said judgment. As there was no cutoff date to be contem- plated prior to the 2014 amendment, limiting the entitlement of enhanced pension coverage to those employees only who

had already exercised an option under Clause 11(3) of the unamended scheme would be contrary to the ratio of the de- cision of this Court held in the case of R.C. Gupta (supra). We are not holding that no option was required to be exer- cised as per proviso to paragraph 11(3) of the scheme, as it stood prior to 2014 amendment. As held in the case of R.C. Gupta (supra), there was no time limit for exercising such option.

42. The dual option, as is contemplated in paragraph 11(4) of the pension scheme (post 2014 amendment), has to be merged into one. In the event the employer and employee jointly opt for coverage beyond the salary limit of Rs. 15000/, without giving an earlier option under the un-

amended Clause 11(3) of the pension scheme, they would not be automatically excluded from their right to exercise option under paragraph 11(4) of the scheme, post amend- ment.

.

43. The other condition for enhanced coverage relates to the date within which such fresh option is to be exercised by a member, which is stipulated to be within a period of six

months from 1 st September 2014. It would be legitimate to proceed on the basis that several members did not exercise such option earlier because of the stand taken by the Provi- dent Fund authorities that option under proviso to paragraph 11(3) of the scheme (prior to 2014 amendment) has to be ex-

ercised within a specified date, which stand was negated in the decision of R.C. Gupta (supra). We are of the view that the time limit for coverage beyond the ceiling amount should be extended by a further period of four months from today to enable all the members of the pension fund drawing more

than Rs.6500/ to exercise the joint option as contemplated in

paragraph 11(4) of the pension scheme (post 2014 amend- ment). Once such joint option is exercised, the transfer of fund from the provident fund corpus to the pension fund shall be effected in terms of the scheme.

44. We accordingly hold and direct:

(i) The provisions contained in the notification no.

G.S.R.609(E) dated 22nd August 2014 are legal and valid. So far as present members of the fund are concerned, we

have read down certain provisions of the scheme as applica- ble in their cases and we shall give our findings and direc- tions on these provisions in the subsequent subparagraphs.

(ii) Amendment to the pension scheme brought about by the notification no. G.S.R. 609(E) dated 22 nd August 2014 shall apply to the employees of the exempted establishments in the same manner as the employees of the regular establish- ments. Transfer of funds from the exempted establishments shall be in the manner as we have already directed.

(iii) The employees who had exercised option under the pro- viso to paragraph 11(3) of the 1995 scheme and continued to be in service as on 1st September 2014, will be guided by the amended provisions of paragraph 11(4) of the pension scheme.

(iv) The members of the scheme, who did not exercise op- tion, as contemplated in the proviso to paragraph 11(3) of the pension scheme (as it was before the 2014 Amendment) would be entitled to exercise option under paragraph 11(4)

.

of the post amendment scheme. Their right to exercise op-

tion before 1st September 2014 stands crystalised in the judgment of this Court in the case of R.C. Gupta (supra). The scheme as it stood before 1st September 2014 did not

provide for any cut off date and thus those members shall be entitled to exercise option in terms of paragraph11(4) of the scheme, as it stands at present. Their exercise of option shall be in the nature of joint options covering preamended para- graph 11(3) as also the amended paragraph 11(4) of the pen-

sion scheme.

There was uncertainty as regards validity of the post amend- ment scheme, which was quashed by the aforesaid judg- ments of the three High Courts. Thus, all the employees who

did not exercise option but were entitled to do so but could

not due to the interpretation on cutoff date by the authorities, ought to be given a further chance to exercise their option. Time to exercise option under paragraph 11(4) of the scheme, under these circumstances, shall stand extended by

a further period of four months. We are giving this direction in exercise of our jurisdiction under Article 142 of the Con- stitution of India.

Rest of the requirements as per the amended provision shall be complied with.

(v) The employees who had retired prior to 1st September 2014 without exercising any option under paragraph 11(3) of the pre-amendment scheme have already exited from the

membership thereof. They would not be entitled to the bene- fit of this judgment.

(vi) The employees who have retired before 1st September 2014 upon exercising option under paragraph 11(3) of the 1995 scheme shall be covered by the provisions of the para- graph 11(3) of the pension scheme as it stood prior to the amendment of 2014.

(vii) The requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeds Rs.15000/ per month as an additional contribution under the amended scheme is held to be ultra vires the provi- sions of the 1952 Act. But for the reasons already explained

above, we suspend operation of this part of our order for a period of six months. We do so to enable the authorities to make adjustments in the scheme so that the additional contri- bution can be generated from some other legitimate source

.

within the scope of the Act, which could include enhancing

the rate of contribution of the employers. We are not specu- lating on what steps the authorities will take as it would be for the legislature or the framers of the scheme to make nec-

essary amendment. For the aforesaid period of six months or till such time any amendment is made, whichever is earlier, the employees' contribution shall be as stop gap measure.

The said sum shall be adjustable on the basis of alteration to

the scheme that may be made.

(viii) We do not find any flaw in altering the basis for com- putation of pensionable salary.

(ix) We agree with the view taken by the Division Bench in

the case of R.C. Gupta (supra) so far as interpretation of the proviso to paragraph 11(3) (pre amendment) pension scheme is concerned. The fund authorities shall implement the direc- tives contained in the said judgment within a period of eight weeks, subject to our directions contained earlier in this

paragraph.

(x) The Contempt Petition (C) Nos.19171918 of 2018 and

Contempt Petition (C) Nos. 619620 of 2019 in Civil Appeal Nos. 1001310014 of 2016 are disposed of in the above

terms.

15. At the time of hearing, respondents No.2 and 3

submitted instructions according to which a joint option

of the petitioners under paragraph 11(4) of EPS 1995 was

submitted in the month of September, 2017, through

their employer. Another joint option under paragraph

11(4) was submitted by the petitioners along with their

pension scheme form 10­D in the year 2018. Petitioner

No.3 had submitted such option in September, 2017.

Since, the joint options submitted by the petitioners were

.

not in consonance with the provisions of para 11(4) of the

EPS, 1995 those were duly returned to the petitioners

No.1 and 2 vide letter dated 6.6.2018. As regards

petitioner No.3, it was submitted that the pension granted

August, 2018, r to to him on higher salary was reviewed to ceiling wages in

immediately after the error in

disbursement of pension was detected.

16. Respondents have further submitted that as

per the amended paragraph 11(4) of the EPS, 1995, the

existing members were required to exercise the joint

option within six months from 01.09.2014, which the

petitioners had not done. The requests submitted by the

employer of the petitioners dated 21.02.2015 and

30.03.2015 were for permission under paragraph No.

26(6) of the scheme. The petitioners have again

submitted their joint options after the judgment dated

4.11.2022 passed by the Hon'ble three Judges Bench in

EPFO vs. Sunil Kumar B & Etc., reported in 2022 SCC

online 1521. There being large number of such options,

the same are being scrutinized and the options of the

.

petitioners will also be scrutinized in due course.

17. Despite pertinent query by the Court on the

specific stand of respondents as to the entitlement of the

petitioners to the pension on higher salary, no

commitment was made on behalf of respondents No.2 and

3, which necessitated the adjudication of the claim of the

petitioners on merits.

18. It is not in dispute that the petitioners were

employees of the establishment(s) covered under the Act.

Respondents No.2 and 3 have also not disputed the fact

that the contribution(s) towards EPF in respect of the

petitioners by their employer was being made on the

salary higher than the ceiling wages/salary. The only

defence of respondents No.2 and 3 is that the petitioners

had not opted for pension on the higher salary in terms of

the amendments carried in the scheme before 2014 and

thereafter. As regards non submission of options after

01.09.2014, it has come on record by way of instructions

that the employer of the petitioners had submitted the

options on 21.02.2015 and 30.03.2015 for permission

.

under paragraph 26(6) of the EPF scheme. It has also

been admitted that joint options were submitted in the

months of September, 2017, whereas petitioner No.2

retired on 31.12.2017 and petitioner No.1 retired on

19.02.2018.

Meaning thereby that the options were

submitted prior to the retirement of petitioners No.1 and

2. Thus, the objections of respondents No.2 and 3

remains confined to the fact that the options after

01.09.2014 were not submitted within six months or at

least one year as per the mandate of the scheme.

19. In R.C. Gupta (Supra), Hon'ble Supreme Court

had held that there was no cutoff date for submission of

options and in case the contribution was made on higher

salary, mere non submission of option would not be an

impediment in grant of pension on higher salary to the

employee. Dictum in R.C. Gupta (supra) to the above

effect has been upheld by the Hon'ble Supreme Court in

The Employees Provident Fund Organization & Anr.

Vs. Sunil Kumar B. & Ors (supra). It has further been

held that cutoff date as provided by amendment made

.

effective w.e.f. 01.09.2014 was valid, however, to limit the

entitlement of enhanced pension coverage to only those

employees who had already exercised option under clause

11(3) of the amended scheme would be contrary to the

ratio of decision in R.C. Gupta's case (supra). The dual

option as contemplated in paragraph 11(4) of the pension

scheme has to be merged into one. In the event of

employer and employee jointly opted for coverage beyond

salary limited to Rs.15,000/­ without giving an earlier

option under the un­amended clause 11(3) of the pension

scheme, they would not be automatically exclude from

their right to exercise the option under paragraph 11(4) of

the scheme post amendment. As regards the date, within

which such option was to be exercised, the Hon'ble

Supreme Court vide aforesaid judgment has extended the

same for further period of four months from the date of

passing of judgment to enable all the members of pension

fund drawing more than Rs.6500/­ to exercise a joint

option as contemplated in paragraph 11(4) of pension

scheme (post 2014 amendment) and once such joint

.

option is exercised, the transfer of fund from the

provident fund corpus to the pension fund shall be

effected in terms of the scheme.

20. As noticed above, it cannot be said that the

petitioner had not submitted their joint options.

admitted by respondents No.2 and 3, such option was r As

received by them in September, 2017. Petitioners have

again submitted their option within the time granted by

Hon'ble Supreme Court. In view of the fact that the

contribution towards EPF had been made on higher

salary, there should not be any impediment in grant of

pension on higher salary to the petitioner. The objections

as raised by the respondents stands removed by the

judgment passed by Hon'ble Supreme Court in Sunil

Kumar B. (supra).

21. Accordingly, the petition is allowed and the

respondents are directed to grant pension to the

petitioners at higher salary with effect from the dates of

their respective retirements. The due and admissible

arrears shall be paid to the petitioners within three

.

months from the date of passing of this judgment failing

which such arrears shall entail interest at the rate of 9%

per annum from due date till the date of payment.

22. Petition is accordingly disposed of, so also, the

pending applications.

                       r         to           (Satyen Vaidya)

    22   nd
              September, 2023.                    Judge
          (jai)