EPF Pension Case : Supreme Court To Hear On August 17 Pleas Against HC Verdicts On Pension Proportionate To Salary

While adjourning the matter, the division bench of Justice UU Lalit and Justice Ajay Rastogi said,

"We'll mark this matter as part-heard and we will put it as item 1 on Tuesday. At this stage, we will not be able to do anything but only list it as part-heard. We'll start with the lead matters first and any counsel appearing in the lead matter, we'll hear them first.

On February 25, 2021, the division bench of Justice UU Lalit and Justice KM Joseph while specifying that the matter shall be taken up on a day to day basis and listing the lead matters, had restrained the High Court of Kerala, Delhi and Rajasthan from initiating contempt proceedings against the Central Government and the EPFO over non-implentation of the HC verdicts.

"Pending further consideration, no contempt application seeking implementation of any of the orders passed in the aforesaid four categories of matters, shall be taken up by any Court," Court in its order said.

In a reprieve to the Central Government and the EPFO, on January 29, 2021, the Top Court bench comprising Justices Uday Umesh Lalit, S. Hemant Gupta and Ravindra Bhat had recalled its order dismissing the Special Leave Petition filed against the Kerala High Court judgment that set aside Employee's Pension (Amendment) Scheme, 2014 that capped maximum pensionable salary to Rs.15, 000 per month and had posted the SLPs filed against the High Court judgment by the Union of India and Employees Provident Fund Organisation for preliminary hearing on February 25, 2021.

The Central Government's contention was that as a result of the directions issued by the High Court, the benefit would get conferred upon employees retrospectively which, in turn, would create great imbalance.

Kerala High Court 2018 Judgment

The Kerala High Court, in October 2018, allowed the writ petitions filed by employees of various establishments covered by the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Their grievance was with the changes brought about by the Employees' Pension (Amendment) Scheme, 2014, which drastically reduced the pension payable to them.

What Changes Did Employees' Pension (Amendment) Scheme, 2014 Implemented

1. Limits the maximum pensionable salary to Rs.15,000 per month. Prior to the amendment, though the maximum pensionable salary was only Rs.6,500 per month, the proviso to the said paragraph permitted an employee to be paid pension on the basis of the actual salary drawn by him provided, contribution was remitted by him on the basis of the actual salary drawn by him preceded by a joint request made for such purpose jointly with his employer.

The said proviso has been omitted by the amendment thereby capping the maximum pensionable salary at Rs.15,000. The Scheme has been amended further by a subsequent notification, the Employee's Pension (Fifth Amendment) Scheme, 2016 to provide that the pensionable salary for the existing members who prefer a fresh option, shall be based on the higher salary

2. Confers an option on the existing members as on 01.9.2014 to submit a fresh option jointly with their employer to continue to contribute on salary exceeding Rs.15,000 per month. Upon such an option, the employee would have to make a further contribution at the rate of 1.16% on the salary exceeding Rs.15,000/-, additionally.Such a fresh option would have to be exercised within a period of six months from 1.9.2014. A power to condone the omission to exercise the fresh option within the said period of six months by a further period of six months is conferred on the Regional Provident Fund Commissioner. If no such option is made, the contribution already made in excess of the wage ceiling limit would be diverted to the Provident Fund Account, along with interest.

3. Provides that monthly pension shall be determined on pro-rata basis for pensionable service up to 1st of September, 2014 at the maximum pensionable salary of Rs.6,500 and for the period thereafter at the maximum pensionable salary of Rs.15,000 per month.

4. Provides for withdrawal of the benefits where a member has not rendered the eligible service as required.

SLP Filed by EPFO Dismissed In Limine

On 1st April 2019, the bench comprising the CJI Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna in limine dismissed the SLP filed by Employees Provident Fund Organisation observing that it does not find any merit in it.

EPFO Filed Review Petition and Centre filed SLP

After this dismissal, the Centre filed SLP against the same High Court judgment and EPFO filed review petitions. When these cases were taken, the Centre brought to the notice of the Court an order dated 21.12.2020 passed by another Division Bench of the High Court of Kerala by which the correctness of the earlier decision dated 12.10.2018 was doubted and the matter was referred to Full Bench of the High Court. It was submitted that the effect of impugned order of the High Court is that the benefit would get conferred upon employees retrospectively which, in turn, would create great imbalance.

Case Title: The Employees Provident Fund Organisation And Anr. Versus Sunil Kumar B And Ors and connected cases

Bench: Justice UU Lalit and Justice Ajay Rastogi

Click Here To Read/ Download Order