Sathees Kumar K. and Ors. v. Union of India and Ors.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **THURSDAY, THE 05TH DAY OF MARCH 2020 / 15TH PHALGUNA, 1941** ## **WP(C).No.3367 OF 2020(U)** ## **PETITIONER/S:** - **1 SATHEES KUMAR K., AGED 61 YEARS, AKATHEMADHOM, NF GATE, TRIPUNITHURA, ERNAKULAM, PF A/C NO.KR/4780/100, P.P.O.NO.KR/KCH/58468.** - **2 UNNIKRISHNAN M. S., KASTHUBHAM, 31/612A, KACHAPPILLY ROAD, VYTTILA, ERNAKULAM, PF A/C NO.KR/4780/44, P.P.O.NO.KR/KCH/49657.** - **3 JOHNSON K. J., KAIPALLIL HOUSE, VALLARPADAM, ERNAKULAM - 682 031, PF A/C NO.KR/4780/13, P.P.O.NO.KR/KCH/7387.** - **4 PAUL K. K., KUNDUKULANGARA HOUSE, UNITY STREET, KOLAZHY P. O., THRISSUR, PF A/C NO.KR/4780/184, P.P.O.NO.KR/KCH/77110.** - **5 BALAKRISHNAN, KOVATH HOUSE, VELLANIKKARA WEST, MADAKKATHARA P.O., THRISSUR, PF A/C NO.KR/4780/54, P.P.O.NO.KR/KCH/50843.** - **6 T. R. SATHEESAN, 37/2854 A SREE SAI KRIPA ASHRAMAM LANE, AZAD ROAD, KALOOR P. O., ERNAKULAM, PF A/C NO.KR/4780/114, P.P.O.NO.KR/KCH/49241.** - **7 KRISHNA KUMAR S., XIV/484, ARAPPATH HOUSE, AMBADY LANE, VELIYANNUR, THRISSUR - 680 021., PF A/C NO.KR/KCH/0004780/131.** - **8 KURIAN GEORGE, MATTAMANA HOUSE, KURUPPAMPADY P. O., ERNAKULAM - 683 545, PF A/C NO.KR/KCH/0004780/115, UAN NO.101375568585.** - **9 JOHNSON JOSEPH, PADINJAREKKARA, 28/2898 A, VIKAS NAGAR, SOUTH PONNETH ROAD, ERNAKULAM, COCHI, PF A/C NO.KR/KCH/0004780/112.** **WP(C).No.3367 OF 2020(U)** **2** **10 EBRAHIM M. A., MOLADAN HOUSE, ASAMANNOOR P. O., ERNAKULAM - 683 549, PF A/C NO.KR/KCH/0004780/134.** **BY ADVS. SRI.P.N.MOHANAN SRI.C.P.SABARI** ## **RESPONDENT/S:** - **1 UNION OF INDIA (UOI), REPRESENTED BY THE SECRETARY TO GOVERNMENT OF INDIA, MINISTRY OF LABOUR AND DEPARTMENT OF EMPLOYMENT, NEW DELHI - 110 001.** - **2 REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION (EPFO), BHAVISHANIDHI BHAVAN, PATTOM PALACE, THIRUVANANTHAPURAM, PIN - 695 004.** - **3 ASSISTANT PROVIDENT FUND COMMISSIONER, SUB REGIONAL OFFICE, EMPLOYEES PROVIDENT FUND ORGANISATION (EPFO), BHAVISHANIDHI BHAVAN, KALOOR, ERNAKULAM - 682 017.** - **4 EMPLOYEES PROVIDENT FUND TRUSTEE, REPRESENTED BY MANAGING TRUSTEE, EMPLOYEES PROVIDENT FUND OFFICE, BHAVISHYA NIDHI BHAVAN, WAZIRPUR, NEW DELHI - 110052.** - **5 REGIONAL PROVIDENT FUND COMMISSIONER - 1 (PENSION), BHAVISHYA NITHI BHAVAN, 14-BHIKAJI CAMA PALACE, NEW DELHI - 110066.** - **6 KERALA INDUSTRIAL AND TECHNICAL CONSULTANCY ORGANISATION, REPRESENTED BY MANAGING DIRECTOR, PUTHIAROAD, NH BYPASS, VENNALA, KOCHI - 682 028.** - **R1 BY ADV. MR.JOSEPH RONY JOSE, CGC R2 & R3 SMT.NITA N.S., SC, EPF** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.3367 OF 2020(U)** **3** ## **JUDGMENT** The petitioners are retired employees of the Kerala Industrial and Technical Consultancy Organization. The said establishment is covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (‘EPF Act’ for the sake of brevity). Being aggrieved by the refusal of the respondents to extend the provisions of the Employees’ Pension Scheme, 1995 in its full vigor and mandate, they have approached this Court with this petition. To canvass the relief sought for, they mainly rely on a judgment of a Division Bench of this Court in **Sasikumar P. and Ors** ## **v. Union of India and Ors.[1]** 2. For deciding the issues involved, it is necessary to recapitulate the skeletal facts. 3. The 6[th] respondent establishment where the petitioners were employed was covered under the provisions of the EPF Act. The EPF Act provides for formulation of a Scheme for the creation of a Provident Fund account in the name of each employee of a covered establishment. The Fund was to be constituted by depositing an employee’s share at the rate of 1 [ILR 2019 (1) Ker. 614] **WP(C).No.3367 OF 2020(U)** **4** 10% or 12% of the basic wages including Dearness Allowance. The employer has also to constitute an identical amount and the entire corpus would constitute the Provident Fund. Originally, the Act did not provide for the creation of a Pension Fund. It is contended that Section 6A of the Act was introduced for creating a pension scheme to the employees and the Employees’ Pension Scheme, 1995 was framed. The maximum pensionable salary was initially fixed at Rs.5,000/- which was later enhanced to Rs.6,500/- and such sums from the employer’s contribution under Section 6 not exceeding 8.33% of the basic wages, Dearness Allowance and retaining allowance were to be the corpus of the Pension Fund. Subsequently, a proviso was added to Clause 11(3) of the Employees' Pension Scheme, 1995 with effect from 16.03.1996 granting an option to the employer and the employee to contribute amounts towards the Pension Fund at the rate of 8.33% of the actual salary, where the salary exceeded Rs.6,500/- per mensem. Thereupon, most of the employees, who were drawing salaries in excess of the prescribed limit, opted to pay contributions on the basis of the actual salary paid by them. 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 date was fixed as the cut off date. This was challenged before this Court by certain **WP(C).No.3367 OF 2020(U)** **5** employees by filing W.P.(C) Nos.6643 and 9929 of 2007. A learned Single Judge of this Court, by judgment dated 04.11.2011, in W.P.(C) No.6643 of 2007 and connected cases, held that the proviso which was added with effect from 16.03.1996 was retrospective and is operative from the date of commencement of the Scheme which was on 16.11.1995. It was further held that the cut off date fixed by the organization as 01.12.2004 is clearly without jurisdiction. It was also held that, if a joint application is filed by the employee as well as the employer at any time, the benefits of the proviso to Clause 11(3) of the Employees’ Pension Scheme cannot be denied to the employees. The operative part of the order is extracted below for easy reference. “In the above circumstances, I allow these writ petitions quashing the orders impugned in these two writ petitions. It is declared that the fixation of cut off date of 1.12.2004 is without jurisdiction and despite the fact that the petitioners have filed the applications for benefit under the proviso to clause 11(3), after the cut off date so fixed, the petitioners are entitled to avail of the benefit under the proviso to clause 11(3) of the Employees' Pension Scheme. As such I declare that the benefits was rightly given to the petitioners. Consequently, the arrears of contributions payable by the petitioners for availing of the benefit of the said proviso shall again to be transferred from the Provident Fund account of the petitioners to the Employers' Pension Fund account of the **WP(C).No.3367 OF 2020(U)** **6** petitioners. Orders in this regard shall be passed, as expeditiously as possible, at any rate, within one month from the date of receipt of a copy of this judgment.” 4. The said judgment was taken in appeal by the Union of India as well as the EPF Organisation. A Division Bench of this Court by judgment dated 5.3.2013 in W.A.No.568 of 2012 dismissed the appeals. Though the judgment of the Division Bench was challenged before the Hon'ble Supreme Court, the same was dismissed by order dated 31.3.2016 in S.L.P. No.7074 of 2014. 5. The petitioners contend that in **R.C. Gupta & Others.** v. **Regional Provident Fund Commissioner Employees Provident Fund** **Organization & Others[2]** , the Hon'ble Supreme Court had occasion to consider the question as to whether the employees would be entitled to the benefit of deposit of 8.33% of their actual salary in the Pension Fund irrespective of the ceiling limit. In the said case, the employees on the eve of their retirement, i.e., some time in the year 2005, took the plea that the proviso brought in by the amendment of 1996 was not within their knowledge and therefore, they were not given the benefit thereof. The Division Bench of the High Court rejected their request to exercise the > 2 [2018 (14) SCC 809] [Civil Appeal Nos.10013-10014 of 2016 (arising out of SLP(C) Nos.33032-33030 of 2015] **WP(C).No.3367 OF 2020(U)** **7** option under clause 11(3) of the Pension Scheme. Allowing the appeal filed by the employees, the Hon'ble Supreme Court has held thus in the report. “10. We do not see how exercise of option under paragraph 26 of the Provident Fund Scheme can be construed to estop the employees from exercising a similar option under paragraph 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 paragraph 26 of the Provident Scheme is inevitable. Exercise of the option under paragraph 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. 11. The above part 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 concerned employees 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 **WP(C).No.3367 OF 2020(U)** **8** granted to the said employees. 12. Consequently and in light of the above, we allow these appeals and set aside the order of the Division Bench of the High Court.” 6. Later, EPF Scheme was amended by GSR 609(E) dated 22.8.2014 w.e.f 1.9.2014 omitting proviso to Clause 11 (3) of the Scheme which provides for the exercise of the option. The maximum pensionable salary was altered to mean the average monthly pay drawn for a span of 60 months preceding the date of exit from the membership of the pension fund and the maximum pensionable salary was fixed at Rs.15,000/- per mensem. Aggrieved by the changes brought to the Act and the Scheme, the validity of the amendments were challenged before this Court by several of the employees. 7. A Division Bench of this Court in **Sasikumar** (supra) held that the impugned amendments are arbitrary, ultra vires the EPF Act and are unsustainable and allowed the writ petition and the following orders were issued. “For the foregoing reasons, the petitioners are entitled to succeed. The writ petitions are all allowed as follows: i) The Employee's Pension (Amendment) Scheme, 2014 **WP(C).No.3367 OF 2020(U)** **9** brought into force by Notification No. GSR. 609(E) dated 22/08/2014 evidenced by Ext.P8 in W.P.(C) No. 13120 of 2015 is set aside; ii) All consequential orders and proceedings issued by the Provident Fund authorities / respondents on the basis of the impugned amendments shall also stand set aside. iii) The various proceedings issued by the Employees Provident Fund Organization declining to grant opportunities to the petitioners to exercise a joint option along with other employees to remit contributions to the Employees Pension Scheme on the basis of the actual salaries drawn by them are set aside. iv) The employees shall be entitled to exercise the option stipulated by paragraph 26 of the EPF Scheme without being restricted in doing so by the insistence on a date. v) There will be no order as to costs. 8. Though the EPF organization challenged the judgment before the Hon’ble Supreme Court, the SLP was dismissed by order dated 1.4.2019 in S.L.P.(Civil) No. 9610 of 2019. It is submitted across the bar that the EPF Organization has preferred a review petition which is pending. It is also submitted that the Union of India has challenged the judgment of this Court and the same is pending. 9. According to the petitioners, in view of the concluded **WP(C).No.3367 OF 2020(U)** **10** judgments, they are also entitled to enjoy the benefits under the proviso to clause 11(3) of the Pension Scheme based on its contribution made to the Provident Fund Scheme on their gross pay exceeding the ceiling limit. It is contended that if both the employer and the employee opt for deposit against the actual salary and not the ceiling amount, exercise of option under paragraph 26 of the Employees’ Provident Fund Scheme is inevitable as held in **R.C.Gupta** (supra). It is further contended that exercise of option under paragraph 26(6) would not foreclose the exercise of a further option under clause 11(3) of the Pension Scheme. They have accordingly prayed for a direction to the EPF to collect pension contribution towards the EPF Pension Scheme on the basis of actual salary drawn by them in terms of the proviso to clause 11(3) of the Pension Scheme and also for a declaration that they are entitled to pension contribution on the basis of actual salary drawn by them in terms of clause 11(3) of the Pension Scheme. 10. Though an opportunity was granted to the respondents to file a statement, the same was not done. Almost identical matters were considered by this Court in the light of **P. Sasikumar** (supra) and a common order was passed. The learned Standing counsel reiterated the **WP(C).No.3367 OF 2020(U)** **11** contentions and it was argued that the petitioners having ceased to be an employee cannot now come forward and seek to exercise the option under Clause 11(3) of the Scheme. It is further contended that the judgment of this Court in **Sasikumar** (supra) has been challenged before the Hon’ble Supreme Court by the Union of India. The Provident Fund Organization has filed a review petition as well and both these matters are pending. It is further contended that unless a joint option is exercised by the employer and employee and that too, in terms of the provisions of the statute, the benefits as sought for cannot be extended. 11. I have considered the submissions advanced. The contentions advanced by the respondents are noticed to be rejected. In those cases, where the employee had retired prior to 1.9.2014 and who were not permitted to exercise their higher option by the Organization, the issue is covered by the judgment of this Court in W.P.(C) No.6643/2007 and connected cases which was rendered on 4.11.2011. The said judgment has become final. The Hon’ble Supreme Court in **R.C.Gupta** (supra) has also reiterated the very same position. The contention of the respondents that those employees have ceased to be members of the scheme and therefore they are not entitled to claim the benefits are only to be ignored. The **WP(C).No.3367 OF 2020(U)** **12** Hon’ble Supreme Court in **R.C. Gupta** (supra) has held that the beneficial scheme ought not be defeated by such contentions. In the case of serving employees and those employees who were continuing in service as on 1.9.2014, the judgment of this court in **Sasikumar** (supra), would apply on all fours. 12. The stand of the EPF Organization is that the option contemplated by paragraph 26 (6) of the EPF Scheme and the option contemplated by clause 11(4) of the Pension Scheme are different and also that the pension can be paid only from the date of remittance of the higher amount by an employee and not from the dates of retirement in the case of employees who have already retired without making contributions in excess of the stipulated salary limit. Their Lordships of the Division Bench in paragraph No.31 of the judgment in **Sasikumar** (supra) have held that the Pension Scheme was to inure to the benefits of all the employees covered by the EPF Scheme. Since the option was given to the employees to make contributions in excess of their ceiling limit and on the basis of the actual salaries drawn by them, no other restriction can be imposed on their right to receive pension. If for any reason, the employer has failed to contribute on wages exceeding the ceiling limit, the Organization shall permit the **WP(C).No.3367 OF 2020(U)** **13** employee to replenish the amount, as after all, the pension was introduced for the purpose of providing succour to the employees in their old age, taking into account the further fact that the fund is created by collecting contributions from the employers and employees, casting no financial burden on the State. The EPF Organization will not be justified in taking a stand which defeats the purpose of the enactment by reducing the pension of the poor employees, who, if prevented from exercising the option, is entitled only to a measly amount which may not be enough for their sustenance in this age. If in respect of retired employees, benefits have been disbursed, at best, as held by the Hon’ble Supreme Court, what the Provident Fund Commissioner could do is to seek a return of all such amounts that the concerned employees may have taken or withdrawn from the Provident Fund Account before granting him 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 will have to be granted to the employee. 13. The Division Bench in **Sasikumar** (supra), has set aside the Employee's Pension (Amendment) Scheme, 2014 brought into force by Notification No. GSR. 609(E) dated 22/08/2014 evidenced by Ext.P8 in W.P. **WP(C).No.3367 OF 2020(U)** **14** (C) No. 13120 of 2015 and has quashed all consequential orders and proceedings issued by the Provident Fund authorities / respondents on the basis of the impugned amendments. It is held that those petitioners, who fall into the category of the employees given in para 38 of the judgment in **Sasikumar** (supra) will be entitled to the benefit of the above judgment. In respect of those employees who had retired prior to 1.9.2014 and who were not permitted to exercise their higher option by the Organization, the benefits of the judgment of this Court in W.P.(C) No.6643/2007 and connected cases which was rendered on 4.11.2011 as reiterated by the Hon’ble Supreme Court in **R.C.Gupta** (supra) shall be extended. The various proceedings issued by the Employees Provident Fund Organization declining to grant opportunities to the petitioners to exercise a joint option along with other employees to remit contributions to the Employees Pension Scheme on the basis of the actual salaries drawn by them are also set aside. If benefits due to the retired employees have been disbursed, the Provident Fund Commissioner may act in terms of the directions issued by the Hon’ble Supreme Court in **R.C.Gupta** referred to in paragraph No.5 of the judgment, which has been reiterated in para 31 in **Sasikumar** (supra). The employers of the establishments shall cooperate with the employee as well as the Employees Provident Fund Organisation and they shall render all **WP(C).No.3367 OF 2020(U)** **15** assistance in quantifying the amount. Appropriate orders shall be passed expeditiously, at any rate, within a period of 6 months from the date of receipt of a copy of this judgment. There will be no order as to costs. This Writ Petition is allowed as above. **Sd/-** ## **RAJA VIJAYARAGHAVAN V** **JUDGE** DSV/6.3.2020 **WP(C).No.3367 OF 2020(U)** **16** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE JUDGMENT DATED 4.11.2011 IN W.P.(C) NO.6643/2007.** **EXHIBIT P2 A TRUE COPY OF THE ORDER DATED 31.3.2016 IN SLP NO.7074/2014.** **EXHIBIT P3 TRUE COPY OF THE PROCEEDINGS DATED 20.2.2007 ISSUED BY THE SECOND RESPONDENT.** **EXHIBIT P4 A TRUE COPY OF THE JUDGMENT DATED 12.10.2018 IN W.P.(C) NO.18549/2016.** **EXHIBIT P5 A TRUE COPY OF THE ORDER DATED 1.4.2019 IN SLP NO.9610/2019 IN JUDGMENT DATED 12.10.2018 IN W.P.(C) NO.13120/2015.** **RESPONDENT'S/S EXHIBITS:** **NIL** **//TRUE COPY// P.A.TO JUDGE**