Ranjiv Paul & Ors vs Of on 20 October, 2023

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Himachal Pradesh High Court

Ranjiv Paul & Ors vs Of on 20 October, 2023

Bench: Satyen Vaidya

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 of Union of India & Ors. ...Respondents.

Coram The Hon'ble Mr. Justice Satyen Vaidya, Judge.

rt 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 Bansal, 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 1 Whether reporters of the local papers may be allowed to see the judgment?

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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, of 1988 to 3rd May, 2010 and from 3rd May, 2010 to 30th September, 2016, he served H.P. Power Corporation Ltd., Shimla.

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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 3 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 of the amount towards the EPS, 1995 @ 8.33 % of the actual salary drawn by the employee.

5. rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 4 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 of the petitioners and later withdrew the same clandestinely. Petitioners have thus claimed the pension rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 5 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 rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 6 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 of and have also gone through the record.

10. At the time of hearing petitioners have confined rt 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.

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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 of inserted in March, 1996, did not lay any cutoff date and hence the contribution made towards EPF could be rt 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: ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 8 "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 of to a Bench of at least three Judges so that appropriate decision can be arrived at.

10. rt 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:

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(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 of 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. rt

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- ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 10 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 of 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 rt 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.

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(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-

of 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- rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 12 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.

of 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- rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 13 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 of petitioner No.3, it was submitted that the pension granted to him on higher salary was reviewed to ceiling wages in August, rt 2018, 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 14 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 of petitioners to the pension on higher salary, no commitment was made on behalf of respondents No.2 and rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 15 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 of retired on 31.12.2017 and petitioner No.1 retired on 19.02.2018. Meaning thereby that the options were rt 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.

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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 of 11(3) of the amended scheme would be contrary to the ratio of decision in R.C. Gupta's case (supra). The dual rt 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 17 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. As rt admitted by respondents No.2 and 3, such option was 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 ::: Downloaded on - 20/10/2023 20:38:41 :::CIS 18 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.

rt (Satyen Vaidya) 22 nd September, 2023. Judge (jai) ::: Downloaded on - 20/10/2023 20:38:41 :::CIS

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