Regional Provident Fund Commissioner, EPF Organisation v. T. Radhakrishnan and Union of India and Ernakulam Regional Co-Operative Milk Producers Union Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** ## **&** ## **THE HONOURABLE MRS. JUSTICE C.S. SUDHA** **THURSDAY, THE 22[ND] DAY OF FEBRUARY 2024 / 3RD PHALGUNA, 1945** ## **WA NO. 912 OF 2021** **AGAINST THE JUDGMENT DATED 18.02.2020 IN WP(C) NO.26944 OF 2019 OF** **HIGH COURT OF KERALA** ## **APPELLANT/3RD RESPONDENT IN WP(C):** **REGIONAL PROVIDENT FUND COMMISSIONER EPF ORGANISATION, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI-682 017.** ## **BY ADV SAJEEV KUMAR K.GOPAL** ## **RESPONDENTS/PETITIONER/RESPONDENTS 1, 2 AND 4:** - **1 T.RADHAKRISHNAN AGED 64 YEARS S/O.LATE THANKAPPAN ASARI, NEERCHALIL HOUSE, MANATHUPADOM ROAD,UNICHIRA, ERNAKULAM-682 033.** - **2 UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF LABOUR AND EMPLOYMENT, DEPARMENT OF EMPLOYMENT, NEW DELHI-110 001.** - ***3 (BOARD OF TRUSTEES OF EMPLOYEES PROVIDENT FUND ORGANIZATION, REPRESENTED BY THE CENTRAL PROVIDENT COMMISSIONER, BHAVISHYA NIDHI BHAVAN, 14, BHIKAJI CAMA PALACE, NEW DELHI-110 066.)*DELETED** - **R3 IS DELETED FROM THE PARTY ARRAY AS PER ORDER DATED 22/02/2024 IN W.A.912/2021.** - **4 ERNAKULAM REGIONAL CO-OPERATIVE MILK PRODUCERS UNION LTD.,** - **NO.E-150(D),REPRESENTED BY ITS MANAGING DIRECTOR, HEAD OFFICE, EDAPPALLY,COCHIN-682 024.** **BY ADV M.P.PRAKASH** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 22.02.2024,** **THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Writ Appeal No. 912 of 2021 2 **AMIT RAWAL & C.S.SUDHA, JJ. ------------------------------------------------------Writ Appeal No. 912 of 2021 ---------------------------------------------------Dated this the 22[nd] day of February 2024** ## **J U D G M E N T** ## **Amit Rawal, J.** The judgment of the learned Single Bench allowing the writ petition of the 1[st] respondent/petitioner for getting the benefit of proviso to Clause 11(3) of the Employees Pension Scheme, 1995 on having made the contribution to the Fund, entitling him for higher pension benefits, in view of the principles culled out in the judgment in **R.C.Guptas and Others v. Regional Provident Fund Commissioner, Employees Provident Fund Organization and Others, 2018 (14) SCC 809** is under challenge. Respondent/ petitioner after having rendered the service, retired on superannuation on 30/11/2013, at that time was covered under the contributory fund in terms of para 26 (6) of the Provident Fund Scheme, 1952. The maximum pensionable salary was initially fixed as ₹5,000/- which was later enhanced to ₹6,500/- and such sums from the employers Writ Appeal No. 912 of 2021 3 contribution, not exceeding 8.33% of the basic wage. On 16/03/1996, a proviso was added to Clause 11(3) of the Employees Pensions Scheme, 1995 granting an option to an employer and an employee to contribute amounts towards pension fund at the rate of 8.33 % of actual salary, where the salary exceeded ₹6,500/- per month. Most of the employees who were drawing salary in excess of the prescribed limit opted to pay the contributions on the basis of the actual salary. However, the requests made by some of the employees were rejected on the ground that the option to pay higher contribution was not exercised on or before 01/12/2004, which was set to be a cut off date. The controversy erupted in this Court in writ petition Nos. 6643/2007 and 9929/2007 and this Court vide judgment dated 04/11/2011 held that the proviso added with effect from 16/03/1996 was retrospective and operative from the date of the commencement of the scheme, which was 16/11/1995 in the absence of any cut off date and thus the alleged cut off date by the organization of 01/12/2004 was held to be without jurisdiction. The matter reached ultimately to the Supreme Court in the **R.C.Gupta** ( _Supra_ ) which was affirmed. 2. In the meantime, an amendment was brought to the Writ Appeal No. 912 of 2021 4 Employees Pension Scheme, 1995 vide notification dated 22/08/2014 effective from 01/09/2014 whereby proviso to para 11(3) of the Scheme was deleted and the maximum pensionable salary was limited to ₹15,000/-, meaning thereby, a person having a salary of ₹15,000/was entitled to take the benefit of the scheme. 3. Provident Fund Commissioner issued a circular dated 22/03/2017 to all Employees Provident Fund Organizations and Commissioners based upon the judgment of **R.C.Gupta** _(supra)._ 4. On 10/04/2017, the respondent/petitioner along with the employer submitted a joint option to take the benefit of amendment caused to para 11(3) of the 1995 Scheme which was held to be effective from the Scheme of November, 1995 and not from 01/12/2004 as noticed above. 5. In the meantime, the new amendment caused by fixing the pensionable salary as ₹15,000/- was also assailed in various courts including this Court and the amendment brought to the Pension Scheme with effect from 01/09/2014 was set aside by the Division Bench of this Court. However, vide judgment rendered in **Employees Provident Fund Organisation & Another v. Sunil Kumar B. &** 5 Writ Appeal No. 912 of 2021 **Others, 2022 (7) KHC 12 (SC)** the Larger Bench of the Supreme Court in paragraph 44 held that the employees retired prior to 01/09/2014 had already exited from the Scheme and therefore would not be entitled to get the benefit of the judgment, as other directions accorded the benefits to the persons who had not retired. 6. Mr.Sajeev Kumar K.Gopal, the learned counsel appearing on behalf of the appellant submitted that in view of the judgment in **Sunil Kumar B** _(Supra),_ the respondent/petitioner had already retired from the service on 30/11/2013 and therefore, exited from the scheme and could not have been permitted to exercise the option in view of the amendment on 01/09/2014. Already directions have been issued to all the EPFC Zonal Officers vide communication dated 25/01/2023 to comply strictly with the directions contained in the judgment of **Sunil Kumar B** _(Supra)_ . The learned Single Judge has committed an illegality in not appreciating the import of the judgment rendered in paragraph 44 (v) applicable to the facts and circumstances of the case and therefore the judgment is liable to be set aside. 7. On the other hand Mr.Prakash M.P., the learned counsel appearing on behalf of the respondent/petitioner submitted that the Writ Appeal No. 912 of 2021 6 argument is wholly misconceived as it is based upon the fact as if the respondent/petitioner had intended to take the benefit of the second amendment caused on 22/08/2014 effective from 01/09/2014, whereas the pith and substance of the claim as well as the judgment of the learned Single Bench, prove it is not so. The cut off date fixed by the organization, in view of the previous amendment caused in 11(3) on 16/03/1996 which has already been held effective from the date of coming into force of the scheme with effect from 16/11/1995 and not from December 2004 as fixed by the organization, was held to be without jurisdiction. The employer and employee jointly submitted the request in 2017. Infact the appellant have already complied with the judgment of this Court in view of the communications handed over to this Court for, the respondent/petitioner's salary was more than ₹6,500/- and therefore had returned the contribution at the rate of 8.33% and urged this Court for dismissal of the writ appeal. 8. We have heard the learned counsel for the parties and appraised the paper book. **R.C.Gupta** ( _Supra_ ) was a case which dealt with the amendment caused for the first time in the Pension Scheme of 1995 whereby the proviso was added to the paragraph 11(3) giving Writ Appeal No. 912 of 2021 7 option to the employee for contribution of their salary exceeding the limit of ₹6,500/-. Where, the limit was more, the employees were required to return the amount at the rate fixed therein. In **R.C.Gupta** ( _Supra_ ), this controversy, for all intends and purposes is settled in paragraphs 8 to 11 which was held as under:- _“ 8. 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 cut-off dates to determine the eligibility of the employer-employee 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 Writ Appeal No. 1135 of 2012, order dated 5-3-2013 (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 31-3-2016. A beneficial scheme, in our considered view, ought not to be allowed to be defeated by reference to a cut-off 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._ _9. A further argument has been made on behalf of the Provident Fund Commissioner that the appellant employees had already exercised their option under Para 26(6) of the_ Writ Appeal No. 912 of 2021 8 _Employees' Provident Funds Scheme. Para 26(6) is in the following terms:_ _“26. Classes of employees entitled and required to join the fund._ _(6) Notwithstanding anything contained in this paragraph, an officer not below the rank of an Assistant Provident Fund Commissioner may, on the joint request in writing, of any employee of a factory or other establishment to which this Scheme applies and his employer, enroll such employee as a member or allow him to contribute more than [1] [six thousand five hundred rupees] of his pay per month if he is already a member of the fund and thereupon such employee shall be entitled to the benefits and shall be subject to the conditions of the fund, provided that the employer gives an undertaking in writing that he shall pay the administrative charges payable and shall comply with all statutory provisions in respect of such employee.”_ _10. 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_ Writ Appeal No. 912 of 2021 9 _circumstances warranting such foreclosure are clearly indicated._ _11. 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.”_ 9. No doubt the amendment had come into force with effect from the 01/09/2014 but thereafter the respondent/petitioner had submitted an option in 2017 in view of the confusion owing to the previous amendment/subsequent amendment and exercised the option particularly when the matter was pending in the court and later the amendment was set aside by this Court. The controversy was finalised only in 2022 in **Sunil Kumar B** _(Supra)_ wherein paragraph 44 the Hon'ble Supreme Court held as under :- Writ Appeal No. 912 of 2021 10 “ _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 applicable in their cases and we shall give our findings and directions on these provisions in the subsequent sub-paragraphs._ _(ii) Amendment to the pension scheme brought about by the notification no. G.S.R.609(E) dated 22nd August 2014 shall apply to the employees of the exempted establishments in the same manner as the employees of the regular establishments. 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 proviso 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 option, 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 option 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 258 option shall be in the nature of joint options covering pre-amended paragraph 11(3) as also the amended paragraph 11(4) of the pension scheme._ _There was uncertainty as regards validity of the post amendment_ Writ Appeal No. 912 of 2021 11 _scheme, which was quashed by the aforesaid judgments 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 cut-off 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 Constitution 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 preamendment scheme have already exited from the membership thereof. They would not be entitled to the benefit 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 paragraph 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.15,000/- per month as an additional contribution under the amended scheme is held to be ultra vires the provisions 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 contribution can be generated from some other legitimate source within the scope of the Act, which could include enhancing the rate of contribution_ Writ Appeal No. 912 of 2021 12 _of the employers. We are not speculating on what steps the authorities will take as it would be for the legislature or the framers of the scheme to make necessary 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 computation 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 directives 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.1917-1918 of 2018 and Contempt Petition (C) Nos. 619-620 of 2019 in Civil Appeal Nos. 10013-10014 of 2016 are disposed of in the above terms.”_ 10. There would have been a force in the argument of Mr.Sajeev Kumar K.Gopal, the learned counsel for the appellant had the respondent/petitioner intended to exercise the option by taking the benefit of the amendment caused with effect from 01/09/2014, but it is not so in view of the claim in the writ petition and as well as the directions of the learned Single Bench contained in paragraph 11 of the judgment, which reads as under:- Writ Appeal No. 912 of 2021 13 _“11. I have considered the submissions advanced. From Ext.P6 affidavit filed by the Assistant Provident Fund Commissioner, it is apparent that pursuant to the judgment of the Hon’ble Supreme Court in R.C.Gupta, a Circular dated 23.3.2017 vide No.Pension-1/12/33/EPS Amendment/96/Vol.II, as per which the members of the Employees’ Pension Scheme 1995, who had contributed on higher wages exceeding the statutory wage ceiling of Rs.6500/- in the Provident Fund were allowed to divert 8.33% of the salary exceeding the said ceiling to the Pension Fund with up-to-date interest as declared under the Scheme to get the benefit of pension on higher salary on receipt of joint option of employer and employee. The petitioner is therefore entitled to the benefits of Ext.P1 judgment as well the judgment in_ _**R.C.Gupta** (supra) and therefore, he cannot be denied of his rights to enjoy the benefits under the proviso to Clause 11(3) of the Employees’ Pension Scheme.”_ 11. We cannot remain unmindful of the fact that vide communication dated 29/06/2020 the Assistant Provident Fund Commissioner, Kochi, had already requested the respondent/petitioner to remit a sum of ₹4,13,850/- (Rupees Four lakhs thirteen thousand eight hundred and fifty only) by 31/07/2020 by Demand Draft in favour of the Regional Provident Fund Commissioner for the purpose of giving the benefit of the scheme as amended in 16/03/1996 effective from November 1995. The contents of the letter reads as under - Writ Appeal No. 912 of 2021 14 _“In order to consider your request for higher pension, you are requested to remit 8.33% of the employer's contribution proportionate to the salary of the employee in excess of Rs.5000/- & Rs.6500/- as the case may be, to the pension fund account along with accrued interest._ _Accordingly, you are requested to remit Rs.413850/- latest by 31/07/2020 by Demand Draft in favour of_ _**Regional PF Commissioner, Kochi, payable at KOCHI** . In case of delay beyond JULY 2020, the following varied amount may be remitted as given below:_ _**Name of the pensioner PPO No. Amount to be remitted** T.RADHAKRISHANAN KR/KCH/83431 Rs.416750/(Within AUGUST 2020) Or Rs.419649/(Within SEPTEMBER 2020)_ _The said DD in cover duly super scribing '_ _**DD FOR HIGHER WAGES PENSION** ' should be sent by name to K.J.Xavier, APFC, EPFO, RO Kochi- 682 017. In case of any discrepancy is seen in calculation sheet, the same shall be brought to the notice of this office before remitting the amount, failing which no further request for re-revision shall be entertained._ _You are also requested to submit the following along with the_ _**DEMAND DRAFT** :_ ## _**1) Self declaration from duly filled and signed (copy enclosed)**_ ## _**2) Photocopy of DD**_ ## _**3) Original PPO**_ _**4) 3 copies of joint passport size photograph of pensioner with spouse duly attested by employer/bank manager.**_ _**5) Photocopy of PAN CARD.** ”_ Writ Appeal No. 912 of 2021 15 12. In view of the aforesaid communication, the respondent/petitioner has already deposited the amount and his pension has been revised in view of the documents submitted to us. This fact has not been denied. We are of the view that appellant misconceived to interpret the judgment on the premise that the benefit granted to the respondent/petitioner was on the basis of the amendment caused on the 01[st] September 2014, which is not so. For the reason aforesaid, we do not find any illegality or perversity in the judgment of the single bench. _sans_ Appeal merit, accordingly dismissed. **AMIT RAWAL JUDGE** **C.S.SUDHA JUDGE** jms