M. Gangadharan v. Regional Provident Fund Commissioner (Pension) and Assistant Provident Fund Commissioner (Pension), Employees Provident Fund Organisation, Kannur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE B.P.RAY MONDAY, THE 21ST DAY OF JANUARY 2013/1ST MAGHA 1934 WP(C).No. 13156 of 2007 (N) --------------------------- PETITIONER: - -------------- M.GANGADHARAN, S/O.NARAYANAN, KRISHNAPILLAI NAGAR, PADNEKAD (PO), KASARAGOD. BY ADVS.SRI.M.SASINDRAN SRI.T.R.JAGADEESH RESPONDENTS: - ----------------- 1. THE REGIONAL PROVIDENT FUND COMMISSIONER (PENSION), EMPLOYEES PROVIDENT FUND ORGANISATION, KANNUR. 2. THE ASSISTANT PROVIDENT FUND COMMISSIONER (PENSION), EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, KANNUR. R1 & R2 BY ADV. SRI.N.N. SUGUNAPALAN, SC, P.F. R1 & R2 BY ADV. SMT.T.N.GIRIJA, SC,EPF ORGANISATION SRI.R.SUDHIR, SC, P.F. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 21-01-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 13156 of 2007 (N) : 2 : ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXT.P1 : TRUE COPY OF THE ORDER KR/KNR/CASH/P1 NO.755/GRP:05 DATED 20.07.2005. EXT.P2 : TRUE COPY OF THE LETTER NO.KR/KNR/11191/22116/AB 5(2) DATED 12.09.2005. EXT.P3 : TRUE COPY OF THE LETTER NO.KR/KNR/11191/22116/AB 5(2) DATED 12.09.2005. EXT.P4 : TRUE COPY OF THE COMMUNICATION DATED 16.03.2007 ISSUED BY THE ASSISTANT PROVIDENT FUND COMMISSIONER.** ## **RESPONDENTS' EXHIBITS: NIL** ## **//TRUE COPY//** ## **P.A. TO JUDGE** rv **“CR”** ## **B.P. RAY, J.** **- - - - - - - - - - - - - - - - - W.P.(C) No.13156 of 2007** **- - - - - - - - - - - - - - - - Dated this the 21[st] day of January, 2013.** ## **JUDGMENT** The question arises for consideration in this writ petition is whether a break in service may affect the pensionary benefits of an employee under the Employees Provident Fund Scheme, 1995 (hereinafter referred to as the 'scheme'). The writ petition is filed challenging the non-reckoning of the services rendered by the petitioner during the period from 01.06.1977 to 01.04.1985 and from 01.01.2000 to 17.04.2005 in another establishment for the pensionary benefits. 2. The petitioner joined the service of Kerala Dinesh Beedi Society, Hosdurg in the year 1969. The Employees Provident Fund Scheme, 1952 has been implemented in the Kerala Dinesh Beedi Society, Hosdurg from 01.06.1977 onwards. The petitioner left the service of the Kerala Dinesh Beedi Society, Hosdurg on 01.04.1985. Even after relieving from the service, the PF account of the petitioner was not closed. The petitioner was unemployed during the period from 02.04.1985 to 31.12.1999. Subsequently, the petitioner joined in the B Narayana Pai & Company Bharath Beedi on 01.01.2000. The provident fund account of the petitioner has been transferred to W.P.(C) No.13156/2007 -:2:- a new account and an amount of ` 11,946/- has been credited to the new account. The petitioner retired from service on 17.04.2005 on superannuation. The petitioner filed an application for Scheme Certificate for the period from 01.06.1977 to 01.04.1985 and from 01.01.2000 to 17.04.2005 and the same was rejected by the EPF Organisation stating that the petitioner is entitled only for a withdrawal benefits as there is a continuous break in reckonable service for more than one year. Hence this writ petition. 3. Heard both sides. Advs. Shri. Rony Jose, Shri. Syam Kumar and Shri. Sujin S assisted this Court ably and I record my appreciation for the valuable assistance given by them to this Court. Respondents 1 and 2 filed a counter affidavit stating that the petitioner is not entitled to receive the scheme certificate as claimed for because the petitioner was not a subscriber to EPF and other schemes for a total period of 14 years and nine months between the two periods from 01.04.1985 to 01.01.2000. It is also stated that as there is a continuous break in service for more than one year prior to 01.04.1988, which attracts the provisions under paragraph 2(f) of Employees Family Pension W.P.(C) No.13156/2007 -:3:- Scheme, 1971, and hence the petitioner's membership under the Employees Family Pension Scheme, 1971 become ceased as on 01.04.1985. 4. The learned counsel for the petitioner submitted that as per the provisions of the Employees' Pension Scheme, 1995, the duration which the petitioner contributed to the PF can be termed as pensionable service and therefore rejection of petitioner's application by the EPF Organisation is illegal and arbitrary. Paragraph 9 of Employees' Pension Scheme, 1995 deals with determination of eligible service, which reads as follows: 9. Determination of eligible service. - a) In the case of “new entrant” the “actual service” shall be treated as eligible service. The total accrual service shall be rounded off to the nearest year. The fraction of service for six months or more shall be treated as one year and the service less than six months shall be ignored. - b)In the case of “existing member” the aggregate of actual service and the 'past service' shall be treated as eligible service. Provided that if there is any period in the “past service” for which the contributions towards the Family Pension Scheme, 1971 has not been received, the said period shall count as eligible service only if the contributions thereof have been received in the Employees' Pension Fund. 5. Sub clause (vi) of paragraph 2 of the Employees' Pension Scheme, 1995 defines an existing member as: - “ Existing Member” means an existing employee who is W.P.(C) No.13156/2007 -:4:- a member of the Employees' Family Pension Scheme, 1971”. 6. The Employee's Pension Scheme, 1995 is a continuation to the Employee's Family Pension Scheme, 1971. It is evident that the petitioner was a member of the erstwhile Employee's Family Pension Scheme, 1971. Thus, the petitioner is an 'existing member”, by virtue of sub clause (vi) of paragraph 2 of the Employees' Pension Scheme, 1995. As a result, while counting the eligible service of the petitioner, the aggregate of actual service rendered under the Employee's Pension Scheme, 1995 and the the Employee's Pension Family Scheme, 1971 shall be treated as eligible service. Hence, the petitioner has an aggregate actual service of 13 years under the Pension Schemes. 7. Section 2(xv) of the Employees' Pension Scheme, 1995 reads as follows: - a. Pensionable Service means the service rendered by the member for which contributions have been received or are receivable. 8. It is pertinent to note that the petitioner has not defaulted in the contributions towards the EPF Oraganisation during the period 01.06.1977 to 01.04.1985 and from 01.01.2000 to 17.04.2005. Thus, the period the petitioner contributed towards the EPF Organisation can be treated as the petitioner's W.P.(C) No.13156/2007 -:5:- pensionable service. Therefore, the petitioner has pensionable service for more than 13 years, aggregately. This would indubitably makes the petitioner eligible for monthly pension under the Employee's Pension Scheme, 1995. The proviso reads as follows: Para 12 Monthly Member's Pension:- 1. A member shall be entitled to - a. superannuation pension if he has rendered eligible service of 10 year or more and retires on attaining the age of 58 years. 9. The learned counsel for the petitioner placed reliance upon the decision reported in (2003) IIILLJ 102 MP - **Regional Provident Fund v. Smt. Vijay Mala Bhonsle and others** . The relevant portion reads as follows: “Needless to say that the Family Pension Scheme is a beneficial piece of legislation and therefore the relevant provisions have to be construed keeping in mind the welfare of the family of the employees. An explanation has been added to sub-para 2(A) of Para 9 of the 1971 Scheme in 1992 which says that even for non-reckonable period, money lying to the credit of a member of the Provident Fund Scheme or the Pension Scheme, both being under the control of the Commissioner, could be diverted to Pension Scheme if there is a break in continuity of the contribution for that period. That apart, the provisions whereunder the family could have been deprived of pensionary benefits for failure to contribute during non-reckonable period of service has been dropped by the Govt. itself. Further, the 1971 scheme has merged into 1995 Scheme and under the provisions of the later one, it is the duty of the Commissioner to divert funds from the Provident Fund amount to the Family Pension Fund and in a case of default, an interest of 12% has to be paid W.P.(C) No.13156/2007 -:6:- and the amount in question can be deducted from the salary of the Commissioner.” The application for scheme certificate of the petitioner has been rejected on the ground that there is a break in service in respect of the petitioner for more than one year prior to 01.04.1988. As per sub para (f) (ii) of para 2 of the Employees Family Pension Scheme, 1971, as stood prior to 01.04.1988, it has been specified that in case the period of break in service prior to 01.04.1988 is in excess of one year, the same cannot be regularised by diversion of EPF contributions as family pension fund contribution. The provision reads as follows: “para 2(f):- “Reckonable service” means service rendered by a member of the Family Pension Fund in respect of which contributions are payable under the Scheme (and includes any period of service of temporary closure of the establishment, strike, lockout or have without pay or for any other reason, of a similar nature or otherwise and in respect of which contributions (both the member's and employer's share) are payable by diversion from his Provident Fund Account as provided in sub-paragraph (2a) of Paragraph 9 of this Scheme (and also includes any period of service in respect of which wages are drawn but no contributions are payable in terms of sub paragraph (4) of paragraph 9 and which shall be deemed to have been paid for purposes of paragraphs 28, 31 and 32 of this scheme.) Provided that no period of service in respect of which no wages are drawn by a member:- - 1) after the name of the member has been struck off from the rolls of the employer of the member; or - 2) which is in excess of one year; or - 3) after their ceases to be any amount in the Fund or in provident fund of an exempted establishment, as the case W.P.(C) No.13156/2007 -:7:- may be, lying to the credit of the member concerned, shall be treated as reckonable service.” 10. Adv. Shri. Rony Jose, who is appointed to assist this Court, has submitted that the petitioner was a member of the erstwhile Employees Family Pension Scheme, 1971, and automatically, by virtue of paragraph 6 of the Employees Pension Scheme, 1995 he would become a member in the Employees Pension Scheme, 1995. Paragraph 6 of the Employees Pension Scheme, 1995 reads as follows: 6. Membership of the Employees' Pension Scheme Subject to sub-paragraph (3) of paragraph 1, the scheme shall apply to every employee: - a) who on or after the 16[th] November, 1995, becomes a member of the Employees' Provident Fund Scheme, 1952, or of the Provident Funds of the factories and other establishments exempted by the appropriate Government under Section 17 of the Act, or in whose case exemption has been granted under paragraphs 27 or 27-A of the Employees' Provident Fund Scheme, 1952, from the date of such membership; - b) who has been a member of the ceased Employees' Family Pension Scheme, 1971 before the commencement of this Scheme from 16[th] November, 1995; - c) who ceased to be a member of the Employees' Family Pension Scheme, 1971 between 1[st] April, 1993 and 15[th] November, 1995 and opts to exercise his option under paragraph 7; - d) who has been a member of the Employees' Provident fund or of Provident Funds of factories and other establishments exempted by the appropriate Government under Section 17 of the Act or in whose case exemption has been granted under Paragraph 27 or 27A of the Employees' Provident Fund Scheme, 1952, on 15[th] November, 1995 but not being a member of the ceased Employees' Family Pension Scheme, 1971 opts to exercise his option under paragraph 7. W.P.(C) No.13156/2007 -:8:- 11. The learned amicus curie further enlightened me the legislative intention of the Employees Pension Scheme, 1995 and urged that the petitioner would be eligible for monthly pension benefits once the entire period of service reckoned as eligible service. The learned amicus curie further submitted that there is no illegality in reckoning the portions of the service rendered for the pensionary benefits during the period (from 01.06.1977 to 01.04.1985) and (from 01.01.2000 to 17.04.2005) irrespective of the break in service occurred. 12. Considering the rival contentions and the submissions by the amicus curie, I am of the view that, in a beneficial legislation like the Employees Pension Scheme, the advantage should go to the employee in order to safeguard the social welfare and social protection. The contention raised by the learned counsel for the respondent would not stand in the instant case as the para 2(f) of the erstwhile Employees Family Pension Scheme, 1971 deals with regard to the reckonable service in respect of which no wages are drawn by a member. The provision is incorporated in the erstwhile Act absolutely with regard to the reckoning of break in service, while the subject matter in the instant case is whether two portions of services can W.P.(C) No.13156/2007 -:9:- be merged together under the Employees Pension Scheme, 1995 as eligible service. Eligible service has been defined in the Employees Pension Scheme, 1995 including that portion of service rendered under the erstwhile Employees Family Pension Scheme, 1971. The petitioner is seeking a scheme certificate, for the eligible service of the petitioner, during the period (from 01.06.1977 to 01.04.1985) and (from 01.01.2000 to 17.04.2005) for pensionary benefits. The Employees Pension Scheme, 1995 has explicitly defined the pensionable service as the total service rendered by the member for which contributions have been received or are receivable. In the instant case, the petitioner made no default in paying the contributions during the period from 01.06.1977 to 01.04.1985 and from 01.01.2000 to 17.04.2005. Thus, the period for which the petitioner paid contributions can be considered for the pensionary benefits under a beneficial scheme like the Employees Pension Scheme, 1995. 13. Considering the totality of the facts and circumstances of the case, I find that Ext.P4 order is absolutely illegal and arbitrary. The writ petition is allowed holding that the entire period of service during which the petitioner has paid W.P.(C) No.13156/2007 -:10:- contribution i.e., 01.06.1977 to 01.04.1985 and from 01.01.2000 to 17.04.2005 are one reckonable for pension. The petitioner is, thus, eligible for the monthly pensionary benefits under the Employees Pension Scheme, 1995. Accordingly, Ext.P4 is set aside and I direct the respondents to issue scheme certificate to the petitioner within one month from the date of receipt of a copy of this judgment and the consequential benefits flowing from the scheme certificate shall be disbursed within one month thereafter. This writ petition is disposed of as above. **sd/- B.P. RAY, JUDGE.** rv W.P.(C) No.13156/2007 -:11:-