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2019 Supreme(Del) 397
IN THE HIGH COURT OF DELHI AT NEW DELHI
G.S. SISTANI, JYOTI SINGH, JJ.
Bhartiya Khadya Nigam Karamchari Sangh and Another - Appellant
Versus
Union of India and Others - Respondent
Writ Petition (Civil) No. 5678 of 2018, Civil Miscellaneous Application No. 22108 of 2018
Decided on : 22-05-2019
Advocate Appeared:
Bahar U. Barqi, Arun Bhardwaj, Nikhil Bhardwaj, Keshav Mohan, Rishi K Awasthi, B.P. Singh, Anubhav Gupta, Amit Singh, Geetanjali, Adv.
The main legal point established in the judgment is that employees of Exempted Establishments are entitled to higher pension on the basis of their contribution to the provident fund on actual salaries, without any cutoff date and de hors the ceiling limit.
Headnote:
EPF Act - Pension Scheme - Sections 5, 6, 6A, 11(3), 11(4), 17 - The court held that employees of Exempted Establishments are entitled to higher pension on the basis of their contribution to the provident fund on actual salaries, without any cutoff date and de hors the ceiling limit. The circular dated 31.05.2017 was quashed. The EPFO is at liberty to seek return of the higher provident fund contribution received by the petitioners with simple interest at the rate of 6% p.a. from the date of receipt of provident fund amount till the date of payment. The Trust is directed to transfer the remaining contributions on the actual salary to the Pension Fund of the EPFO with all gains and the interest accrued so far. The EPFO shall calculate and disburse enhanced pension to the petitioners on the basis of the actual salaries and clear the arrears of pension. The entire exercise shall be completed within a period of six months from the date of receipt of a copy of this order.
Fact of the Case:
The petitioners sought quashing of the circular dated 31.05.2017 and a further direction to comply with the orders passed by the Hon'ble Apex Court in Civil Appeal Nos. 10013-10014/2016 titled R.C. Gupta & Ors. vs. Regional Provident Fund Commissioner & Ors. dated 04.10.2016. The petitioners, employees of an Exempted Establishment, claimed entitlement to higher pension on the basis of their contribution to the provident fund on actual salaries.
Finding of the Court:
The court held that the petitioners are entitled to higher monthly pension on the basis of their contributions on the actual salary, without any cutoff date and de hors the ceiling limit. The circular dated 31.05.2017 was quashed. The petitioners were directed to return the higher provident fund benefits received by them with simple interest at the rate of 6% p.a. from the date of receipt of the provident fund amount till the date of payment. The Trust was directed to transfer the remaining contributions on the actual salary to the Pension Fund of the EPFO with all gains and the interest accrued so far. The EPFO was directed to calculate and disburse enhanced pension to the petitioners on the basis of the actual salaries and clear the arrears of pension. The entire exercise was to be completed within a period of six months from the date of receipt of a copy of this order.
Issues: The issues involved were whether the employees of the Exempted Establishments are entitled to higher pension on the basis of their contribution towards the Provident Fund, made on the actual salary, over and above the ceiling limit prescribed under the Act and its Schemes from time to time, and whether the petitioners have a right to be treated at par with the employees of the Unexempted Establishments and thus entitled to the benefits of the judgment of the Apex Court in the case of R.C. Gupta (supra).
Ratio Decidendi: The court held that the employees of Exempted Establishments are entitled to higher pension on the basis of their contribution to the provident fund on actual salaries, without any cutoff date and de hors the ceiling limit. The circular dated 31.05.2017 was quashed. The EPFO was at liberty to seek return of the higher provident fund contribution received by the petitioners with simple interest at the rate of 6% p.a. from the date of receipt of provident fund amount till the date of payment. The Trust was directed to transfer the remaining contributions on the actual salary to the Pension Fund of the EPFO with all gains and the interest accrued so far. The EPFO was directed to calculate and disburse enhanced pension to the petitioners on the basis of the actual salaries and clear the arrears of pension. The entire exercise was to be completed within a period of six months from the date of receipt of a copy of this order.
Final Decision: The court allowed the petitions, quashed the circular dated 31.05.2017, and held that the petitioners are entitled to higher monthly pension on the basis of their contributions on the actual salary, without any cutoff date and de hors the ceiling limit. The petitioners were directed to return the higher provident fund benefits received by them with simple interest at the rate of 6% p.a. from the date of receipt of the provident fund amount till the date of payment. The Trust was directed to transfer the remaining contributions on the actual salary to the Pension Fund of the EPFO with all gains and the interest accrued so far. The EPFO was directed to calculate and disburse enhanced pension to the petitioners on the basis of the actual salaries and clear the arrears of pension. The entire exercise was to be completed within a period of six months from the date of receipt of a copy of this order.
Jyoti Singh, J.
The present writ petition has been filed seeking, quashing of the letter/circular dated 31.05.2017 issued by respondent No. 2/Employees Provident Fund Organization as well as Notification dated 22.08.2014. A further direction is sought to the respondents to comply with the orders passed by the Hon'ble Apex Court in Civil Appeal Nos. 10013-10014/2016 titled R.C. Gupta & Ors. vs. Regional Provident Fund Commissioner & Ors. dated 04.10.2016 as also a direction to the respondents to treat the members of the petitioners' Association at par with the employees of unexempted establishments in getting benefits of higher pension on actual salary.
2. Before embarking on adjudication of the present case, we would like to give a brief background and genesis of the Pension Scheme with which we are concerned in this case. Due to the establishment of large number of industrial units, thousands of workmen of various categories who came from rural areas started making demands for better salaries and also for some financial security for their old age, on retirement. The Government acting under the Directive Principles, thought of devising ways to provide financial security to the industrial workers during their old age. Thus, a method was devised to constitute a Fund, and this gave birth to the Employees Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter referred to as “EPF Act”). The Provident Fund was to be constituted by contributions both from the employer and the employee. This, however, had no contribution from the State Exchequer. Thus, the EPF Act was primarily enacted for providing some terminal benefits to the employees of various establishments, post their retirements. A certain prescribed percentage of the monthly wages of the employee was to be deducted and credited to the employee's Provident Fund, with an equal amount of contribution from the employer. This was statutorily envisaged under Sections 5 & 6 of the EPF Act.
3. Under Section 6 of the EPF Act, 10% [subsequently 12%] of the basic wages including the dearness allowance is required to be deposited in the Provident Fund account of an employee as the employee's share and the employer has to contribute an equal amount. This constitutes the Provident Fund Account. Initially, the EPF Act did not provide for creation of a Pension Fund or for payment of Pension. Later on, Section 6A was inserted in the EPF Act, authorizing creation of a Pension Fund and framing of a Pension Scheme. Accordingly, in 1995, the Employees Pension Scheme was framed. As per the said Scheme, the maximum pensionable salary was Rs. 5000/-. The corpus of the Pension Fund was to be constituted by transferring 8.33% out of the employer's contribution under Section 6 of the EPF Act. Subsequently, by an amendment, the ceiling limit was enhanced from Rs. 5000/- to Rs. 6500/- w.e.f. 08.10.2001.
4. In the meantime, a proviso was added to para 11(3) of the Pension Scheme w.e.f. 16.03.1996 granting an option to the employer and the employee, on joint request, to contribute amounts towards the Provident Fund over and above the ceiling limits and on the actual salary.
5. The ceiling limit of Rs. 6500/- was subsequently enhanced to Rs.15,000/- vide Notification No. G.S.R. 609(E) dated 22.08.2014 effective from 01.09.2014. The Notification amended Para 11(1) and stipulated that the pensionable salary would be the average monthly pay drawn in any manner during the contributory period of service in the span of 60 months preceding the date of exit from the membership of the Pension Fund and the pensionable salary was to be determined on pro-rata basis for pensionable service upto 01.09.2014, subject to a ceiling of Rs.6500/- per month and for the period thereafter upto a ceiling of Rs. 15000/- per month. Further, sub-para 4 was added to provide that the employees contributing on salary exceeding Rs. 6500/- could give a fresh option to be exercised jointly by the employer and employee and c
