Judgment

RAJENDRA BABU, J.

( 1 ) RETIRAL benefits such as provident fund, gratuity and pension schemes have been common in government establishments. Such schemes were also introduced for the employees by certain enlightened employers. In addition to such benefits, the industrial Disputes Act also makes statutory provisions of compensation on the termination of the service of an employee by way of retrenchment, on transfer or closure of an undertaking. Such social security measures have introduced an element of stability and protection in the midst of stress and strains of modern industrial life. As observed by the National Commission on labour-social security, the concept of social security is based on human dignity and social justice. The underlying idea being that, social security measures would allow a citizen who has contributed or is likely to contribute to his countrys welfare should be given protection against certain hazards.

( 2 ) THE provision of provident fund has been recognised as a term of condition of employment of industrial workmen. Legislative measures have also imposed the requirements of provident fund on the employers and employees statutorily. But in respect of industries to which the statutes do not apply, the provident fund schemes are being worked out by collective bargaining on certain principles.

( 3 ) GRATUITY was treated in the early stages of industrial adjudication as a gift of payment gratuitously made by an employer to his employees at his pleasure and the workman had no right to claim it. But in course of time it came to be treated as a term of employment and the industrial adjudication started treating it as a reward paid to the workman for good, efficient, faithful and meritorious service rendered by them to the employer for a fairly substantial and long period intended to help workmen after retirement on superannuation, death, retirement, physical incapacity, disability or otherwise.

( 4 ) LIKEWISE, pension is also a measure of security for old age, inability and death of the bread-winner. The provident fund is not an adequate cover for the contingencies of death and inability.

( 5 ) A scheme of pension is different in scope and content from a scheme for provident fund and a scheme for gratuity. A provident fund scheme postulates a certain amount of contribution by the employer and equivalent amount of contribution by the employee, payable on his retirement or death. A pension is a periodic payment of a stated sum. However, these schemes have common objectives to achieve efficiency, orderly and humane elimination from industry of superannuated or disabled employees.

( 6 ) PRIOR to 1952, there was no provision or obligation cast upon the employers or employees to organise any post service or retiral support. In the year 1952, the Employees provident Fund Act, 1952 was enacted, which has since been renamed as the Employees Provident Funds and Miscellaneous provisions Act, 1952 [hereinafter referred to as the Act], which provides for a system of provident fund compulsorily on contributory basis by the employer and employees jointly to begin with in a modest manner, and thereafter enlarged gradually over the period. The contribution was initially at the rate of Rs. 6. 25 of wages, later raised to 8. 33 in 1988, to 10 from May 1977 and subsequently to 12 from 1997. Accumulations in the said provident fund together with interest were payable to employee at retirement or to the nominee or legal heir of the employee in case of death. The employee could also partially withdraw from the provident fund during employment for specified purposes.

( 7 ) IN the year 1971, family pension scheme was introduced by amending the Act, providing for payment of family pension only in the event of death of the member while in service and refund of contribution with nominal interest in lump sum to member on retirement or leaving the job. Contribution @ 2. 33 per cent from provident fund and the Central governmen