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1994 Supreme(SC) 380

SUPREME COURT OF INDIA
KULDIP SINGH, B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.
Mafatlal Group Staff Association and others etc.etc., Appellants
Versus
Regional Commissioner, Provident Fund and others, Respondents.
Civil appeal No. 5158 of 1993, (with C.A. Nos. 2153, 2192 and 2154 of 1994 and 5159 of 1993 and W.P. (C) No. 752 of 1993 and S.L.P. (C) Nos. 16858, 15841 and 17383 of 1993),
D/- 29-3-1994.

Advocates:
ANIL KATIYAR, APARNA BHAT, INDIRA JAISINGH, J.S.VAD, JITENDRA SHARMA, M.KARANJAVALA, N.N.GOSWAMY, NANDINI GORE, PRANAB MULLICK, RAIAN KARANJAVALA, RUBY SINGH AHUJA, S.C.GUPTA, SHASHI KIRAN SHETTY, SUNIL JAIN, YASHANK ADHYARU

Headnote:

Employees Provident Fund and Miscellaneous Provisions Act, 1952 - Amendment Act 1971 - Section 6A - Employees Family Pension Scheme - Employees Provident Fund Schemes - Validity of Employees Family Pension Scheme – Pension - Employees engaged in factories and other establishments, Parliament enacted The Act provides inter alia for framing of "Employees Provident Fund Schemes". A certain percentage of monthly wages of the workers is deducted and credited to the said Fund - Employer is also made liable to contribute an equal amount to the Fund. The employee member of the Fund is entitled to withdraw the full amount to his credit in the Fund on his retirement or termination of service, as the case may be. He can also draw advances out of the Fund in certain situations like illness, marriage or education of children and so on. But there were many cases in which the amount payable, on the death of an employee, to his wife and minor children was too small to be of any help to them particularly where an employee died within a few years of his employment – Held, We agree, as already emphasised hereinbefore that no conclusions should be drawn by taking any single instance and that the matter must be decided taking an overall view, yet the inescapable test remains, viz., there must be a broad correspondence between what the employees pay and what they and their families get ultimately. It cannot be that while the Fund accumulates, the employees - and their families –decay, scheme is one conceived in their interest and for their benefit and it should prove so in practice. It is the statutory duty of the respondents to ensure that. Both the contributions by employees and the benefits flowing to them must be broadly commensurate. Since actuarial appraisal is done every three years, as provided by the statutory scheme itself, we are sure that observations made herein will be kept in mind and necessary adjustments made - Appeal dismissed

Judgment

B. P. JEEVAN REDDY, J.:- Leave granted in S.L.Ps.

2. For the sake of convenience, we shall take up the facts in Civil Appeal No. 5158 of 1993 as illustrative of the facts in all the matters since they are all practically similar.

3. Civil Appeal No. 5158 of 1993:

In this appeal preferred against the judgment of the Bombay High Court, the validity of the Employees Family Pension Scheme is called in question. The writ petition was initially allowed by a learned single Judge of the Bombay High Court on the ground that the scheme violates the equal protection clause in Art. 14 of the Constitution of India. On appeal being preferred by the Regional Provident Fund Commissioner, however, the Division Bench took a contrary view. It upheld the validity of the Scheme.

4. With a view to provide certain terminal and other benefits to the employees engaged in factories and other establishments, the Parliament enacted the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Act provides inter alia for framing of "Employees Provident Fund Schemes". A certain percentage of the monthly wages of the workers is deducted and credited to the said Fund. The employer is also made liable to contribute an equal amount to the Fund. The employee member of the Fund is entitled to withdraw the full amount to his credit in the Fund on his retirement or termination of service, as the case may be. He can also draw advances out of the Fund in certain situations like illness, marriage or education of children and so on. But there were many cases in which the amount payable, on the death of an employee, to his wife and minor children was too small to be of any help to them particularly where an employee died within a few years of his employment. With a view to provide long term payments (Pension) to the widow or minor children in such cases, the Parliament thought of creating a Family Pension Fund Scheme. For this purpose, it introduced Section 6A (read with Schedule III) and certain other provisions in the Act, by the Amendment Act 16 of 1971. Section 6A empowered the Central Government to frame a scheme called "the Employees Family Pension Scheme" to provide family pension and life assurance benefits to the employees of any establishment or class of establishments to which the Act applied, The Statement of Objects and Reasons leading to the introduction of the Family Pension Fund Scheme throws light upon the objectives and purposes sought to be achieved by the new Scheme:

"The Coal Mines Provident Fund and Bonus Scheme Act, 1948 and the Employees Provident Fund Act, 1952 provides for the institution of provident funds for employees in coal mines, factories and other establishments. Provident Fund is an effective old age and survivorship benefit but when the employee happens to die prematurely, the accumulation to the Provident Fund are too small to render adequate and long-term protection to his family. With a view to providing long-term financial security to the families of industries employees in the event of their premature death, it is proposed to introduce a Family Pension Fund for the employees covered under the two Acts, and to create a Family Pension Fund for this purpose by diverting a portion of the employers and the employees contribution to the Provident Fund, to which will be added a contribution by the Central Government. Out of the fund so set up, it is proposed to pay Family Pension at prescribed scales to the survivors of employees who die while in service before reaching the age of superannuation."

5. Sub-section (2) of Section 6A provides for diversion of a portion of the contributions made by the employees and employers to the Provident Fund under section 6 of the Act to the Pension Fund. It also provides for contribution by the Government of an amount equal to the employees contribution to the Pension Fund. The Fund thus has a new element - contribution by the State. The Family Pension Fund Scheme came into force on and





















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