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2018 Supreme(Ker) 817

IN THE HIGH COURT OF KERALA AT ERNAKULAM
K. SURENDRA MOHAN, A.M. BABU, JJ.
P. Sasikumar Senior Manager & Ors. - Petitioners
Versus
Union of India (UOI) & Ors. - Respondents
W.P.(C) Nos. 13120, 602, 1387, 1388, 1629, 2386, 2717, 3961, 4358, 4610, 4673, 4852, 4804, 5372, 5415, 5420, 5472, 5578, 5882, 6061, 6460, 6628, 6629, 6630, 6631, 6632, 6646, 6647, 6648, 6682,6683, 6751, 6752, 6753, 6754, 6755, 6756, 6757, 6758, 6759, 6760, 6812, 6942, 6943, 6944, 6945, 6946, 6947, 7096, 7288, 7482, 7483, 7492, 7792, 8134, 8279, 8294, 8357, 8461, 8468, 8536, 8623, 8681, 8682, 8689, 9445, 9658, 9657, 11629, 12078, 13107, 13124, 13160, 13181, 13185, 13220, 13249, 14229, 14763, 14834, 15602, 15892, 15895, 16230, 16389, 17082, 17099, 17502, 17513, 17967, 17971, 18075, 18889, 19279, 19899, 19987, 20391, 21011, 21012, 21278, 22087, 22388, 22679, 22736, 25578, 25793, 20911, 25813, 25817, 26806, 28719, 29071, 29300, 30010, 30470, 32590, 33137, 33150, 33936, 35815, 36731, 37041, 37236, 37487, 37748, 38994, 39439, 6941, 13222, 13223, 16214, 23583, 26349, 661, 13194, 16605, 34180, & 24465 of 2015 & 31276, 3111, 4934, 4959, 4968, 4969, 5937, 5938, 5945, 5946, 5950, 10416, 11468, 12458, 13138, 14694, 17985, 17999, 18167, 18287, 18289, 18423, 18451, 18549, 18934, 19028, 19058, 19136, 19263, 19652, 20334, 20401, 20643, 20895, 20952, 21614, 21704, 21815, 22510, 22876, 23662, 24239, 24277, 24283, 26005, 26373, 26380, 26406, 26423, 26666, 26704, 26968, 27090, 27093, 27089, 27288, 27313, 27483, 27577, 27707, 27834, 28003, 28009, 28039, 28206, 28232, 28249, 28491, 28492, 28495, 28673, 28761, 28890, 29056, 29057, 29058, 29059, 29155, 29175, 29233, 29234, 29253, 29359, 29475, 29517, 29547, 29524, 29546, 29554, 29557, 29558, 29748, 29763, 29795, 29831, 29888, 30009, 30081, 30083, 30086, 30266, 30399, 30727, 30904, 30990, 31088, 31130, 31165, 31166, 31175, 31275, 31279, 31301, 31322, 31441, 31484, 31539, 31594, 31604, 31606, 31643, 31739, 31760, 31762, 31767, 31791, 31806, 31850, 32005, 32093, 32184, 32380, 32461, 32523, 32532, 32557, 32788, 32797, 32815, 32900, 32919, 32975, 33032, 33048, 33051, 33070, 33122, 33214, 33220, 33237, 33238, 33244, 33245, 33246, 33249, 33250, 33372, 33422, 33491, 33545, 33552, 33553, 33620, 33627, 33695, 33700, 33740, 33875, 33917, 33963, 34038, 34098, 34101, 34182, 34284, 34324, 34438, 34530, 34533, 34552, 34559, 34582, 34608, 34671, 34955, 34986, 34997, 34729, 34753, 34764, 34766, 34771, 34791, 34792, 35012, 35038, 35039, 35040, 35157, 35212, 35217, 35274, 35341, 35363, 35375, 35456, 35527, 35530, 35587, 35640, 35644, 35645, 35707, 35733, 35737, 35757, 35763, 35790, 35859, 35860, 36014, 36016, 36038, 36050, 36076, 36085, 36284, 36381, 36829, 37035, 37209, 37291, 37298, 37312, 37315, 37339, 37357, 37417, 37421, 37553, 37588, 37607, 37743, 37786, 37883, 37902, 37914, 37945, 37955, 38002, 38028, 38055, 38070, 38114, 38121, 38135, 38180, 38181, 38183, 38184, 38190, 38272, 38293, 38317, 38408, 38416, 38481, 38567, 38713, 38819, 38879, 39077, 39355, 39498,39579, 39772, 39822, 40223, 40294, 40334, 40500, 40695, 9475, 9520, 9812, 32377, 34599, 38056, 38058, 39275, 39520, 39961, 40513, 40537, 41159, 18432, 27318, 27357, 27478, 29371, 29762, 28030, 28072, 28125, 28195, 28920, 30466, 30517, 31125, 31543, 31798, 34259, 37418, 38199, 39494, 39578, 39918, 40233, 40435, 25530, 29396, 37812, 40103, 38514, 37455 & 37581 of 2016 & 31, 32, 33, 34, 407, 584, 716, 914, 915, 1233, 2554, 71, 224, 333, 391, 1157, 1257, 1378, 1429, 1433, 1834, 1903, 2341, 2359, 2410, 2528, 2640, 2735, 2878, 2905, 3076, 2983, 3077, 3279, 3460, 3636, 3769, 3801, 3802, 4082, 4928 & 5186 of 2017 & 33944 of 2014
Decided On : 12-10-2018

Advocates Appeared:
For the Petitioners: Adv. Sri. P.N. Mohanan.
For the Respondents: Advs. Smt. C.G. Preetha, C.G.C. Sri. N.N. Sugunapalan (Sr.), Smt. T.N. Girija SCEPF Organisation., SPL. G.P. SRI. C.M. Suresh Babu, ASGI Sri N. Nagaresh G.P.. Smt. Pooja Surendran, Sri E.S.M. Kabeer.

Important Point:
When payments of pension are made to the retired employees, the pension fund would continue to get replenished with the contributions of the new entrants-The Fund base gets eroded occurs, the situation could be remedied at that time by enhancing the rates of contributions of persons contributing to the Fund through a legislative exercise- The attempt to maintain the stability of the fund by reducing the pension would only be counter productive and would defeat the very purpose of the enactment.

Headnote:The EPF Act- Sections 5 and 6- Section 6A - The effect of the amendments to the Pension Scheme is to create different classes of pensioners on the basis of the date, 1.9.2014, the date on which the amended Scheme came into force.
       Facts of the case:
       The petitioners are all employees of various establishments covered by the provisions of the EPF Act- The Act provides for the 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 10% or 12% of the basic wages including Dearness Allowance- The employer has also to contribute an identical amount, which together would constitute the Provident Fund- 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 Act-The maximum pensionable salary was initially fixed as Rs. 5000/- and was later on enhanced to Rs.6500/- Pproviso was added to paragraph 11(3) of the Pension Scheme 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 drawn by the employee, where the salary exceeded Rupees Six thousand five hundred per month-Most of the employees who were drawing salaries in excess of the prescribed limit opted to pay contributions on the basis of the actual salaries drawn by them- The option was not exercised on or before 01.12.2004. -The said action was under challenge before this Court in W.P.(C) Nos.6643 and 9929 of 2007.
       " Whether the provisions of the Employees Pension Scheme, 1995 and the Employees` Pension (Amendment) Scheme, 2014 are valid and sustainable or not?
       Finding of the Court:
       Prevention of depletion of the Pension Fund, which cannot be accepted as a justification to support the classification-In as much as the statutory scheme is to make the Pension Fund enure to the benefit of the homogeneous class of the totality of employees covered by the Provident Fund, a further classification of the said class by formulating a Scheme is ultra vires the power available to the Central Government under Sections 5 and 7 of the EPF Act- The impugned amendments are arbitrary, ultra vires the EPF Act and unsustainable.
       " 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
       " 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.
       Result: The writ petitions are allowed

JUDGMENT :

SURENDRA MOHAN, J.

1. The petitioners in these Writ Petitions are all employees of various establishments covered by the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the EPF Act' for short). They are all aggrieved by the refusal of the respondents to extend the provisions of the Employees Pension Scheme, 1995 to them. They are also aggrieved by the changes brought about by the Employees' Pension (Amendment) Scheme, 2014. According to them, the provisions of the said amended Scheme drastically reduces the pension payable to them. In many of the Writ Petitions, the validity of the amendments have been challenged. Since the legal issues that arise for consideration are common, these cases have been heard together and are all disposed of by this common judgment.

2. The main question that arises for consideration here is whether the provisions of the Employees Pension Scheme, 1995 and the Employees' Pension (Amendment) Scheme, 2014 are valid and sustainable or not?

3. The bare facts necessary to be taken note of before the questions of law are addressed, are the following. As already noticed above, the petitioners are all employees of various establishments covered by the provisions of the EPF Act. The Act provides for the 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 10% or 12% of the basic wages including Dearness Allowance. The employer has also to contribute an identical amount, which together would constitute the Provident Fund. Initially, the Act did not provide for the creation of a Pension Fund or for the payment of pension. Later on, Section 6A was inserted, authorizing the creation of a scheme for the purpose of providing pension to the employees. Accordingly, the Employees Pension Scheme, 1995 was framed. As per the said scheme the maximum pensionable salary was Rupees six thousand five hundred per month and contributions to the pension fund were to be made only on that amount. 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 Act. As per the scheme, the maximum pensionable salary was initially fixed as Rs. 5000/- and was later on enhanced to Rs.6500/- . Accordingly, contribution was payable only in respect of the said amount. Subsequently, a proviso was added to paragraph 11(3) of the Pension Scheme 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 drawn by the employee, where the salary exceeded Rupees Six thousand five hundred per month. 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 salaries drawn by them. However, requests made by some of the employees were rejected on the ground that the option was not exercised on or before 01.12.2004. The said action was under challenge before this Court in W.P.(C) Nos.6643 and 9929 of 2007.

4. This Court considered the respective contentions, analysed the provisions of the Scheme and allowed the Writ Petitions by judgment dated 04.11.2011. A copy of the judgment is evidenced in these proceedings by exhibit P2 in W.P. (C) No.13120 of 2015. This Court held that the proviso to paragraph 11(3) of the Pension Scheme, added with effect from 16.12.1996 was retrospective in operation, applicable from the date of commencement of the Scheme. It was further held that, the cut off date of 01.12.2004 on the basis of which some of the options made by the employees were rejected was unsustainable. In the absence of any cut off date, this Court found that a joint application by the employer and the employee could be made at any time and on the basis of such joint appli

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2018 Supreme(Ker) 817

Cases Referred (3)