IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION (CIVIL) NO. OF 2018 (Under Article 32 of the Constitution of India) VERSUS

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1 IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION (CIVIL) NO. OF 2018 (Under Article 32 of the Constitution of India) V.N. SHARMA & ORS...PETITIONERS VERSUS EMPLOYEES PROVIDENT FUND ORGANISATION &ANR...RESPONDENTS INDEX (KINDLY SEE INSIDE) Advocate for Petitioners: VASUDEVAN RAGHAVAN 1

2 SYNOPSIS &RELEVANT DATES AND EVENTS A large number of retired and serving employees of different exempted establishments (exempted from maintaining provident fund with EPFO since their schemes were not less favourableto the employees than the benefits provided under the Act or any Scheme in relation to the employees in any other establishment of similar character but unexempted insofar as Pension Fund of EPS 95 is concerned) are affected by the action of the Respondents in bringing out the amendments to the Employees Pension Scheme, 1995 (EPS 95) vide GSR 609(E) dated which is ultravires the Employees Provident Fund & Misc. Provisions Act, 1952 itself and the unilateral decision of Respondent No.1 in issuing the Circular dated , without approval of the Competent Authority or the Respondent No.2. This had the effect of denial of the benefit of the principles laid down by this Hon ble Court in R.C. Gupta s case (unreported) which allowed retired/retiring employees to opt for pension at higher wages, to exempted establishments under para 11(3) of EPS 95. Some RPFCs have taken a stand that decision of a different High Court following the said Judgement allowing such option to employees of exempted establishments are not binding on them and directing each employee to obtain court orders. Admittedly many employees of exempted establishments enjoy pension on salary higher than the ceiling limit while others similarly placed employees are being denied the same. In the circumstances, it is necessary that this 2

3 Hon ble Court pronounce a final Judgement on the issues raised so that it is binding on all concerned since the said ruling is a declaration of law binding on all RPFOs and the law declared is not confined to those who went to court but to all similarly situated employees. The present petition involves the interest of employees of exempt establishments - who (1) retired prior to ; (2) employees who were serving as on and subsequently retired; (3) employees who joined prior to and are still serving and (4) employees who joined on and after The Petitioners are aggrieved by the amendments brought about through GSR 609(E) dated , which affects the serving and retired employees, as being arbitrary, restrictive in nature and contrary to the intention of framing the scheme itself namely to secure to all employees a dignified pension. Such amendments exclude new employees joining the establishments on and from and drawing wages more than Rs. 15,000/- from pension membership completely; calculating the average monthly pay from 12 months prior to the date of retirement to 60 months and deleting the proviso to Para 11(3) of the scheme altogether and introducing a new para 11(4) with provisos thereto. The combined effect of this amendment is to exclude all new employees who joined after from joining the pension scheme altogether; to exclude the serving employees as on from benefiting from the option of contributing to the 3

4 pension scheme on maximum salary; reduce the pensionable salary considerably by averaging 60 months salary in place of 12 months to determine the last drawn salary, thereby going against all known principles of pension; denying the benefit of opting for the scheme to retired employees altogether although they are members of the scheme and had the option till even though they may not have exercised it. The intention of the amendment was to take away the right conferred on employees by the decisions of the Kerala High Court Judgements and other High Court Judgements holding that para 11(3) did not fix any cut off date and the Respondents had no authority to do so. It is the Petitioners case that the amendments are discriminatory per-se as also discriminates similarly placed employees and is ultra-vires the Act and the Constitution of India. It is also ultra-vires the powers of the Respondents to deny the benefit of the Judgement of this Hon ble Court to similarly situated employees and amounts to an improper exercise of power being a judicial determination of rights of the Petitioners. The basis of the Judgement continues and the Petitioners are entitled to the benefits of the proviso as enacted disregarding its deletion. The Petitioners submit that excluding membership to employees joining on and from and drawing wages more than Rs. 15,000/- is without any rationale, arbitrary and discriminates between similarly placed employees in the same as well as similar establishment. Classification of employees on the 4

5 basis of wages drawn on a particular date as the eligibility to join a pension scheme creates a divide between two classes of employees drawing the same wage one of whom has membership and the other is excluded. Moreover, the Act does not vests any power on the Respondents to exclude any employee from becoming member of the Pension Scheme on any ground whatsoever much less on the amount of wages earned. Under the Act every employee must be a member of the Pension Scheme under the Act unless otherwise exempted. Further, increasing the period of calculating average pay from 12 months prior to the date of retirement to 60 months is disadvantageous to the employee because the eligibility criteria is ten years of service and nearly half of his career is taken into account for calculating the average pay and reduces the overall average pay of the employee. It also creates an anomalous situations resulting in treating employees unequally in the matter of calculation and amount of pension. The said amendment also deletes proviso to para 11(3) and introduces para 11(4). The original 11(3) reads as under. 11(3)- The maximum pensionable salary shall be limited to six thousand five hundred rupees per month. Provided that if at the option of the employer and employee, contribution paid on salary exceeding Rupees six thousand five hundred/rs. 6500/- per month from the date of commencement of this scheme or from the date salary exceedsrupees six thousand five hundred/rs. 6500/- which ever is later, and 8.33% share of the employers thereof is remitted into the Pension Fund, pensionable salary shall be based on such higher salary. The ceiling amount was Rs before

6 The new provision 11(3) & (4) reads as under: 11(3)- The maximum pensionable salary shall be limited to fifteen thousand rupees per month. (4)- The existing members as on 1st day of September, 2014, who at the option of the employer and employee, has been contributing on salary exceeding six thousand and five hundred rupees per month, may on fresh option to be exercised jointly by the employer and employee continue to contribute on salary exceeding fifteen thousand rupees per month and the pensionable salary for the existing members who prefer such fresh option shall be based on the higher salary. Provided that the aforesaid members have to contribute at the rate of 1.16 % of salary exceeding fifteen thousand as an additional contribution from and out of the contribution payable by the employee for each month under the provisions of the Act or the rules made thereunder. The result of the deletion of the proviso and introduction of fresh option within a cut off date is that employees are under compulsion of law bound to be members of the pension scheme but entitled to pension based on 8.33% contribution only upto a limit of salary of Rs. 15,000/- per month and not more. It is particularly arbitrary since those who were members of the scheme and retired prior to and those who joined prior to and retired thereafter or still serving and have already deposited their contribution above the salary limit of Rs. 15,000/- in the PF schemes and the only question that would arise is an accounting one, namely the obligation of the Respondents to accept the refund of the differential PF amount received by the retired employees and adjustment in the pension account or obligation of the Respondents to receive the transfer of funds from the PF account of establishments to the pension account with the 6

7 Respondents, in both cases, the amounts being determined and known and the funds being audited. The deletion of the proviso to para 11(3) is thus a colourable exercise of power in order to estop employees from opting for remittance of contribution from their PF based on actual salary for higher pension which goes against the grain of introduction of the said proviso in the first place. Similarly, the new para 11(4) permitting only those employees who have opted earlier for remittance of contribution on actual salary more than Rs. 6,500/- to opt afresh for remittance of contribution on actual salary more than Rs. 15,000/- is virtually closing the door for all the Petitioners who will now be destined to receive only pension limited to the pensionable salary based on Rs. 15,000/- through out their life. When the Pension Scheme was introduced in 1995, wide publicity was given in National dailies highlighting is features and details as a beneficial scheme. Neither the addition of the proviso to para 11(3) nor the amendment brought about by GSR 609(E) was given any publicity whatsoever. Even the exempted establishments of the Petitioners were not communicated with the said amendments so that it could inform its employees. The employees as such had no dealing with the Respondent No.1 during their service and hence had no occasion to keep track of all developments brought about by them. It is in these circumstances that the majority of the employees remained ignorant of the 7

8 options available to them for the betterment of their life after retirement. It is submitted that it was only after this Hon ble Court decided the case of R.C. Gupta vs Union of India in the year 2016 that there was a lot of publicity on what this Hon ble Court decided. In R.C. Gupta s case this Hon ble court has interpreted para 11(3) as under. 8. Reading the proviso, we find that the reference to the date of commencement of the Scheme or the date on which the salary exceeds the ceiling limit are dates from which the option exercised are to be reckoned with for calculation of pensionable salary. The said dates are not cut-off dates to determine the eligibility of the employer-employee to indicate their option under the proviso to Clause 11(3) of the Pension Scheme. A somewhat similar view that has been taken by this Court in a matter coming from the Kerala High Court, wherein the Special Leave Petition (C) No of 2014 filed by the Regional Provident Fund Commissioner was rejected by this Court by order dated A beneficial Scheme, in our considered view, ought not to be allowed to be defeated by reference to a cut-off date, particularly, in a situation where (as in the present case) the employer had deposited 12% of the actual salary and not 12% of the ceiling limit of Rs. 5,000/- or Rs. 6,500/- per month, as the case may be. 10. We do not see how exercise of option under paragraph 26 of the Provident Fund Scheme can be construed to estop the employees from exercising a similar option under paragraph 11 (3). If both the employer and the employee opt for deposit against the actual salary and not the ceiling amount, exercise of option under paragraph 26 of the Provident Scheme is inevitable. Exercise of the option under paragraph 26 (6) is a necessary precursor to the exercise of option under Clause 11 (3). Exercise of such option, therefore, would not foreclose the exercise of a further option under Clause 11 (3) of the Pension Scheme unless the circumstances warranting such foreclosure are clearly indicated. The Petitioner respectfully submit that by the said Judgement, this Hon ble Court laid down the principle in respect of these 8

9 provisions and not on the facts of that case, and hence is applicable to all concerned. It is settled law in service jurisprudence that a principle laid down by this Hon ble Court is applicable to even nonapplicants before the Hon ble Court and if the applicability is to be restricted, then it must do so specifically. The aforesaid amendment restricting the employees from exercising their option by conditions laid therein goes against the grain of this Hon ble Court s Judgement and thus bad in law. The provision also calls upon the existing members, w.e.f , who have earlier opted to contribute on salary exceeding Rs. 6,500/- to give a fresh option jointly with the employer if they wish to continue to contribute on salary exceeding fifteen thousand rupees per month and the pensionable salary of such existing members shall be based on the higher salary. This virtually closes the door for the retired employees who were members as on and retired there after from opting for higher pension based on actual salary as they never had the opportunity to exercise their option for contribution on actual salary above Rs. 6,500/-. It is settled law that pension is not a bounty payment to which an employee is entitled to as a matter of right as retiral benefit for services rendered by him. It is a social security provided for him to lead a dignified life. This obligation flows from Art. 39(c), 41 and 43(3) of the Constitution of India. In D.S. Nakara, this Hon ble Court observed that a Pension Scheme is to assure an assured 9

10 decent standard of living in old age ensuring economic security. If that be the ambience of right to pension, then a decent dignified standard of living must also form a fundamental right to life under Art. 21 of the Constitution of India. Pursuant to the said Judgement, the Respondents resolved, after approval of the Competent Authority and Respondent No.2, that they would apply the principles laid down by this Hon ble Court uniformly to all similarly placed employees in all establishments without distinguishing them as exempted or unexempted which was conveyed by circular dated However, by a circular dated , the Respondent No.1 has attempted to restrict the applicability of the R.C. Gupta s Judgement only to employees of unexempted establishments on the ground that the establishment involved in the case was an unexempted establishment though no such distinction was made by this Hon ble Court or any of the High Courts. No distinction has been made in EPS 95 insofar as exempted and unexempted establishments are concerned. Pension account of exempted establishments are also managed by EPFOs only and are unexempt for all purposes. It is only in respect of PF that establishments are provided exemption from depositing the employees PF with EPFO but deposit in a trust maintained by them. It has been admitted by the Ministry of Labour& Employment in Parliament that private Provident Fund Trusts which have taken exemption under the Act are under monitoring and control of 10

11 EPFOs. Sec. 17(1A) also provides for the manner in which the trust is to be managed and furnishing of regular accounts to EPFO, etc. EPFO has been granting pension on higher salary even to employees of the exempted establishments such as: 1) Hindustan Newsprint Limited 2) Kerala Minerals & Metals Ltd., Kollam 3) Kerala State Inland Navigation Corp., KNCO 4) Kerala Agro Machinery Corp., KAMCO 5) Airport Authority of India (AAI) 6) Malabar Cements 7) Instrumentation Ltd, Palakkad 8) Indian Telephone Industries Ltd, Kerala 9) Fertilizers and Chemicals Travancore Ltd. (FACT) etc. As per EPFO retirees from exempted establishments are granted higher pension. Also, EPFO has granted pension on higher salary to some employees of an establishment and refused the same to similarly placed employees of the same establishment like Indian Telephone Industries Ltd. and Instrumentation Ltd. As per RTI replies, the Respondent No.1 has released pension on higher salary to atleast 528 number of employees for two exempted establishments, namely Instrumentation Ltd., Palakkad, Kerala and Indian Telephone Industries Ltd., Palakkad, Kerala, who retired both before and after on the basis of court orders and for some of these post retirees even calculating such revised pension on higher salary based on average pay of 12 months prior to retirement. The Petitioner respectfully submit that the circular dated being without the sanction of the CBT as well as the 11

12 Ministry of Labour& Employment and for other reasons is liable to be set aside and the Respondents directed to enforce the decision taken vide circular dated read with the Minutes/letters dated , and DATE EVENT The Employees Provident Fund And Miscellaneous Provisions Act, 1952 (Act No. 19 of 1952) was enacted in Parliament as an Act to provide for the institution of provident funds, pension fund and deposit-linked insurance fund for employees in factories and other establishments The Employees Family Pension Scheme, 1971 was introduced by the Government of India vide GSR 135 under the provisions of Section 6A of the EPF&MP Act 1952 above Employees Pension Scheme [EPS 95], a Social Security scheme, introduced by the Central Government under the provisions of Section 6A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 vide GSR 748 (E). The EFPS 1971 was wound up and merged with the new Employees Pension Scheme. 12

13 EPFO released publicity advertisement in many national dailies highlighting the Employees Pension Scheme features as better than Govt. pension and details to attract the workers to join the scheme Amendment to Scheme was introduced vide GSR 134 w.e.f which included a proviso to para 11 (3) for pension at higher salary, introduction of Commutation of pension etc GSR 774 (E) w.e.f where the ceiling value was revised to Rs from Rs This Hon ble Court delivering judgement in Otis Elevator Employees Union &Ors Vs Union of India &Ors confirming the validity of the EPS 95 Scheme and applicability to all employees of industrial establishments holding it to be a social security scheme for the welfare of the employees EPFO letter to field offices instructing them to allow contribution to PF based on higher wages as per para 26 (6) and contribution to EPS as per proviso to para 11 (3) only if opted as on or on date of crossing the ceiling limit. If allowed earlier than issue date of circular, satisfactory explanation by officer should be recorded. It also mentions earlier circulars on this matter dated , and

14 EPFO letter to field offices regarding option under para 26 (6) for contribution to permit contribution to higher wages to the EPF Scheme, subject to the condition that contribution to EPS be limited to ceiling values and reminds of earlier letters issued from 2004 to GSR 609 (E) w.e.f has many provision / changes made : 1. Wage ceiling amount is raised to Rs Pensionable salary is to be calculated on last 60 months average pay instead of last 12 months and pension and withdrawal benefits to be determined on pro-rata basis for contribution periods of Rs 6500 and Rs Option for contribution on higher salary proviso to para 11(3) is deleted and a new para 11(4) is introduced. 4. Re-option for continue to contribute on higher salary is available for 6 months (extendable at discretion of EPFO if opted after cutoff date by further 6 months) 5. Option on higher salary is subject to agreeing to contribute 1.16% above ceiling value from employer s share of PF. 6. New employees having salary above Rs will not be eligible for EPS 95 membership. 14

15 In the batch of 7 cases led by RPFC v. Majeed Kunju and Ors, SLP(c) No.7074/2014, arising out of Judgements of Kerala High court wherein the High Court held in favour of the employees that there was no cut off date fixed for exercise of option under para 11(3) of the pension scheme and the Respondents had no power to fix any such cut off date restricting contribution to the wage ceiling limit. This Hon ble Court dismissed all 7 SLPs, which included 3 establishments that were exempted from PF [SLP(c) Nos.7076/2014, 7107/2014 and 7108/2014] In Civil Appeal No of 2016 arising out of SLP (c) No /2015 in,r.c. Gupta and Ors. v. RPFC &Ors., this Hon ble Court held that option under paragraph 26(6) of the EPF&MP Act is a necessary pre cursor to option under Clause 11 (3) of the EPS 95 if both the employer and the employee opt for deposit against the actual salary and not the ceiling amount. This Hon ble Court held that para 26(6) of the PF scheme did not fix any cut off date to exercise option under para 11(3) of the pension scheme and an employee could opt at any time and such exercise of an option under Clause 11 (3) of the EPS 95 cannot be denied. 15

16 The Pension and EDLI Implementation Committee (PEIC) of EPFO in its 38 th meeting resolved that the Committee unanimously decided to comply with the orders of the Hon ble Supreme Court in SLP (c) No of 2015in the matter of Shri R.C. Gupta and Ors. v. RPFC (Shimla) and Ors., in respect of all similar cases to avoid further litigation in this regard. It also noted having filed more than 10 cases in Hon ble Supreme Court which have all been dismissed The Central Board of Trustees of EPFO in its meeting approved the above recommendations dated of the PEIC for all the pensioners covered by EPS 95. It was decided that the EPFO shall comply with the orders of this Hon ble Court in R.C. Gupta &Ors The EPFO forwarded its detailed proposal to the Ministry of Labour and Employment seeking the approval of the MoL&E for issuing administrative instructions to allow members of the EPS 95 who had contributed on higher wages, exceeding the statutory wage limit of Rs.6500, to the provident fund, to divert 8.33 percent of such salary exceeding the ceiling limit, to the pension fund with interest as applicable, in order to get the benefit of pension on a higher salary. It was specifically stated that this was to avoid unnecessary litigation in future. 16

17 The MoL&E thoroughly examined the proposal, and granted approvals vide its letter no. R /01/2017-SS.II to issue the aforementioned administrative instructions. It also specifically directed that officers of all field offices would act in accordance with the Supreme Court orders The EPFO vide its letter no. Pension- I/12/33/EPS-Amendment/96/Vol.II/34007 issued administrative directives to all RPFCs/ROs/SROs that the pension be revised after accepting the difference in amount w.e.f , up to date interest. 17

18 Regional Provident Fund Commissioner (Pension-I) without the approval of Competent Authority, issued another letter No. Pension- I/12/33/EPS-Amendment/96/Vol.II/4432, purporting to be a clarification, completely excluding the employees of exempted establishments from the benefits of the said Judgement of this Hon ble Court in R.C. Gupta s case stating inter-alia that (i) approval for compliance of the order of court is only with respect of PF & Pension members whose accounts are maintained by EPFO and whose PF contribution on higher wages has been received by EPFO; (ii) employees before this Hon ble Court were from unexempted establishment; (iii) contribution of appellant employees had been received in the statutory Provident Fund; (iv) in case of exempted establishment, the PF & Pension Fund are managed by separate entities and as such adjustment of contribution from PF account to Pension account as contemplated in the Judgement is not possible and the issue is referred to CBT and in the interim, no member of EPS 95 whose contribution on full salary has not been received in the account of EPFO shall be eligible for the benefit contemplated in the Judgement RTI reply of RPFC, Kozhikode stating that action have been initiated to revise the pension on higher salary for court case only in respect of 3 exempted establishments. The Respondents were thus limiting the relief to those who went to court 18

19 RTI reply of Respondent No.2 unequivocally stating that there has been no proposal received from EPFO to deny the benefit to those exempted establishments from EPF Scheme other than dated which was approved on RTI reply of EPFO, Hyderabad stating that there are no documents differentiating between exempted and non-exempted establishments as far as EPS 95 is concerned Writ Petition (Civil) No. 118 of 2018 has been filed by Retired Officers Welfare Society of Indian Oil Corporation in this Hon ble Court challenging the Circular dated and enforcing the R.C. Gupta s Judgement in respect of all the Petitioners. The said writ was listed on and notice issued to respondents. Subsequently many cases have been filed and notice issued RTI reply of Respondent No.1 stating that there are 15,584 pensioners of Exempted Establishment who are contributing full/ actual/higher wages and receiving pension on actual salary as on and total number of pensioners from exempted establishments are 11,02,723. It is submitted that the said 15,584 include about 7,200 pensioners of exempted establishments receiving pension on actual salary are without any court order. 19

20 Petitioner No.5 issues appeal to all CBT members of EPFO for consideration of grant of higher pension on actual salary in line with Hon ble SC judgement of without any discrimination to exempted employees This Hon ble Court issuing notice in W.P.(C) No. 778 of 2018 titled BHEL Superannuated Executive Forum (Delhi) &Ors. vs Union of India &Ors. wherein the Petitioners therein had sought quashing of GSR 609(E) dated as also the circular dated (Annx. P-23. Pages ) Present Writ Petition filed for suitable relief as there are a large number of affected persons of EPS 1995 from the various sectors of industry both private and public and also both retired and still serving in the exempted establishments all over the country. 20

21 IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION (CIVIL) No. OF 2018 IN THE MATTER OF: 1. V N Sharma, Age 74 years, S/o Late Ramesh Chandra Sinha R/o A-100, SAIL Satellite Township, Ranchi, Jharkhand Nayan Kumar, Age 62 years S/o Shri Anirudhbhai Pandit R/o 105, Vijay Complex Janpat Society, Ghodasar Ahmedabad Gujarat 3. N. Narayana, Age 43 Yrs., S/o Narigadu, R/o No. 29, Type 4 Officers Quarters BEML Nagar KGF Karnataka 4. Ms M Kavitha, aged 33 years D/o Shri. A Murthy R/o No. 73, 3rd Cross, Pillamma Block, Sreeramapuram, Bengaluru National Confederation of Retirees, a registered society having its Registered office at 99-C, Pocket 1, Mayur Vihar Ph.-I, New Delhi Through its Secretary Shri S.C. Moton. 6. National Confederation of Officers Association a registered under Trade Union Act, 1926 Madhu Malthi, 19 Saket Coop Housing Society, Panwal, Dist. Raigad, (Maharashtra) Through its Secretary General Shri Vinod Kumar Tomar...Petitioners Versus 1. Employees Provident Fund Organisation Through Central Provident Fund Commissioner 21

22 (CPFC) Bhavishya Nidhi Bhawan 14-Bhikaji Cama Place, New Delhi Union of India through the Secretary Ministry of Labour& Employment Shram Shakti Bhavan, Rafi Marg, New Delhi Respondents AND IN THE MATTER OF: A PETITION UNDER ART. 32 OF THE CONSTITUTION OF INDIA INTER-ALIA SEEKING QUASHING OF GSR 609(E) DATED AS BEING ULTRA-VIRES AND UNCONSTITUTIONAL AND THE QUASHING OF EPFO CIRCULAR DATED AS HAVING BEEN ISSUED WITHOUT AUTHORITY OF LAW AND BEING ILLEGAL AND FOR ENFORCEMENT OF THE EPFO CIRCULAR DATED DECIDING TO GIVE OPTION TO ALL MEMBERS OF PENSION SCHEME TO OPT FOR PENSION ON HIGHER SALARY; INTEREST ON ARREARS OF PENSION AND ADJUSTMENT OF PF DIFFERENTIAL AMOUNT RETURNABLE WITH ARREARS OF PENSION RECEIVABLE. TO, THE HON BLE CHIEF JUSTICE OF INDIA AND HIS COMPANION JUSTICES OF THE HON BLE SUPREME COURT OF INDIA. The Petitioners above named MOST RESPECTFULLY SHOWETH: 1. By the present petition, the Petitioners seek to challenge GSR 609(E) dated amending certain provisions of the Employees Pension Scheme, 1995 which affects the serving and retired employees, as being arbitrary, restrictive in nature and contrary to the intention of framing the scheme itself. Such amendment also exclude new employees joining the establishments on and from and drawing wages more than Rs. 15,000/- from pension membership completely; changes 22

23 the calculation of average monthly pay from 12 months prior to the date of retirement to 60 months and deleting the proviso to Para 11(3) of the scheme altogether and introducing a new para 11(4) with a proviso thereto. It is the Petitioners case that the amendments are discriminatory per-se as also discriminates similarly placed employees and is ultra-vires the Act and the Constitution of India Art. 14 & Petitioner No. 1 joined the service of Steel Authority of India Limited (SAIL) at the age of 35 yearsas a Junior Research Engineer with Employee No. ER He became a member of the Employees Provident Fund Trust, an exempted establishment under Para 17 of the Employees Provident Fund Act, 1952 and his membership with PF account No. ER-374. He started contributing to PF account at the rate of 10%/12% of his actual salary with a matching contribution of 10%/12% from the employer right from the date of joining the service. He was also a member of the Employees Family Pension Scheme, 1971 and monthly contributions at 1.16% of actual salary by employer and employee were remitted to EPFO from his Provident Fund account. On introduction of Employees Pension Scheme, 1995 from , he automatically became member to EPS 1995 as per para 6 of the Pension Scheme and monthly contributions to EPFO pension fund was remitted by the employer at the rate of 8.33% of the actual salary when it was below ceiling value of Rs 5,000/ and later at the ceiling value of Rs 5,000/6,500 from out of the 23

24 employer s contribution of 12% of actual salary to provident fund and balance employer s contribution remained with his PF account. He was not aware of the provision that he could opt for contribution to Pension fund on actual salary and there was a cut-off date for exercising that option by employee and employer. After completing 22 years of service and just before attaining the age of 58 years, he opted for voluntary retirement on as Principal Research Manager with the last salary of Rs 29,335 (Basic pay Rs 21,650 + DA 35.5%) pm. Based on the pensionable service period and pensionable salary of Rs 6500, then statutory ceiling value, his pension order was released by EPFO/RPFC vide P.P.O. No. JH/RAN/13202 at a monthly pension of Rs 603/- after adjusting withdrawal benefit amount (1/3 rd ). This was later revised to Rs. 710/- p.m. with the grant of 2 years weightage for past services of completing 20 years including prior service period under Family Pension Scheme On seeing the EPFO letter dated , he was preparing to apply for higher salary pension but denied to apply on the basis of another letter dated from EPFO. On his rightful due for pension on actual salary, he is willing to refund the differential amount of past contribution for pension fund to EPFO as per directions of this Hon ble Court in R.C. Gupta s case. 3. Petitioner No. 2 joined the service of Gujarat Electricity Board (later named as GUVNL after unbundling of GEB into 7 subsidiary companies) at the young age of 27 as a Junior Assistant with 24

25 Employee No He became a member of the Employees Provident Fund Trust, an exempted establishment under Para 17 of the Employees Provident Fund Act, 1952 and his membership with PF account No. KLP He started contributing to PF account at the rate of 12% of his actual salary with a matching contribution of 12% from the employer right from the date of joining the service. He was also a member of the Employees Family Pension Scheme, 1971 and monthly contributions at 1.16% of the salary, from employer and employee were remitted to EPFO from his Provident Fund account. On introduction of Employees Pension Scheme, 1995 from , he automatically became member to EPS 1995 as per para 6 of the Pension Scheme and monthly contributions to EPFO pension fund was remitted by the employer at the rate of 8.33% of the actual salary when it was below the ceiling value of Rs 5,000/- and later at the ceiling value of Rs 5,000/6,500/15000 from out of the employer s contribution of 12% of actual salary to provident fund and balance employer s contribution remained with his PF account. He was not aware of the provision that he could opt for contribution to Pension Fund on actual salary and there was a cut-off date for exercising that option by employee and employer. After completing 31 years of service and attaining the age of 58 years, he superannuated on as Superintendent Accounts, with the last salary of Rs 75,280 pm. Based on the pensionable service period and pensionable salary on pro-rata of Rs 6,500 and 15,000 then 25

26 statutory ceiling value his pension order was released by RPFC vide P.P.O. No. GJ/VAT/ at a monthly pension of Rs 2,518/- with the grant of 2 years weightage for past services of completing 20 years including prior service period under Family Pension Scheme On seeing the EPFO letter dated , he was preparing to apply for higher salary pension but denied to apply on the basis of another letter dated from EPFO. He is also affected by the changes brought in the Pension Scheme introduced by EPFO vide GSR 609(E) dated with effect from He had represented to RPFC for a higher pension based on actual salary on , for which he has not got any response. On his rightful due for pension on actual salary, he is willing to refund the differential amount of past contribution for pension fund to EPFO as per directions of this Hon ble Court in R.C. Gupta s case. 4. Petitioner No. 3 joined the service of BEML Limited, KGF at the age of 31 as Engineer Grade -II with Employee No He became a member of the Employees Provident Fund Trust, an exempted establishment under Para 17 of the Employees Provident Fund Act, 1952 and his membership with PF account No. UAN He started contributing to PF account at the rate of 12% of his actual salary with a matching contribution of 12% from the employer right from the date of joining the service as per para 26(6) of the PF Scheme, as his initial salary was Rs 16,234 (Basic + DA). He also became member to EPS 1995 as per 26

27 para 6 of the Pension Scheme and monthly contributions to EPFO pension fund was remitted by the employer at the rate of 8.33% of the ceiling value of Rs 6,500/15,000 from out of the employer s contribution of 12% of actual salary to provident fund and balance employer s contribution remained with his PF account. He was not aware of the provision that he could opt for contribution to Pension Fund on actual salary and there was a cut-off date for exercising that option by employee and employer. His present designation is Manager Grade IV and monthly pay (Basic+DA) is Rs 67,768. On seeing the EPFO letter dated , he was preparing to exercise the option retrospectively, for contribution to pension fund in excess of statutory ceiling amount but on actual salary but denied to apply on the basis of another letter dated from EPFO which excluded employees of exempted establishments from the benefit of the option under para 11(3) of the Employees Pension Scheme He is also affected by the changes brought in the Pension Scheme introduced by EPFO vide GSR 609(E) dated with effect from He is unable to exercise the option for higher monthly contribution now, as he had not opted for same earlier, as he was not aware of such a provision in the Scheme. He is deprived of a decent pension amount based on his actual salary after his retirement throughout his life. BEML Officers Guild had represented to the employer for a higher pension based on actual salary on and , but no follow up action could be taken in view of EPFO letter dated 27

28 On his rightful due for pension on actual salary, he is willing to refund the differential amount of past contribution for pension fund to EPFO as per directions of this Hon ble Court in R.C. Gupta s case. 5. Petitioner No. 4 joined the service of M/s BEML LIMITED, Bengaluru on at a young age of 30 as a Senior Technician with Staff No. R with an initial salary of Rs (Basic pay Rs 10,000 and 100.3% DA at Rs 10030). She became a member of the Employer s Provident Fund Trust, an exempted establishment under Para 17 of the Employees Provident Fund Act, 1952 and her membership is granted under para 26(6) of EPF Scheme 1952 as her salary was more than the statutory ceiling value of Rs 15000/, with PF account UNA No She is contributing to PF account at the rate of 12% of her actual salary with a matching contribution of 12% from the employer right from the date of joining the service. She is also entitled to be a member of the Employees Pension Scheme, 1995 but is denied the same due to the amendment in the Scheme introduced by EPFO vide GSR 609(E) dated with effect from The provision that she could opt for contribution on actual salary to Pension Fund is also not extended to her because of the above change in scheme. On her right for membership to EPS 1995 and contribution for pension on actual salary, she is willing to make past contribution at 8.33% of actual salary to pension fund of EPFO, from out of employer s share of 28

29 12% of salary to her PF account, as per directions of this Hon ble Court. 6. The Petitioner No. 5 is a registered society established for the welfare of retirees. The Petitioner has as its members nearly 103 number of affiliated groups, each governed by their bye-laws, from private and public sector (both Centre and State) companies covering all sectors of industries such as Energy (Oil, Gas, Power), Transport, communication, Manufacturing, Financial (Co-operative Banks), Pharma, Hospitality (Tourism), Media (Print & Visual) etc. from across the country. Collectively, Petitioner No.5 represents about 42,555 retirees who are all covered under the Employees Pension Scheme, 1995 under the Employees Provident Fund & Miscellaneous Provisions Act, All have contributed to their Provident Fund 12% of their actual salary with a matching contribution of 12% from their employer. Out of employer s share, contribution to Pension Fund was 8.33% of the statutory ceiling value. All such employees have authorised their respective groups to represent them in this Hon ble Court in respect of their grievances who in turn have authorised the Petitioner No.5 to represent them before this Hon ble Court. Out of these 42,555 retirees, 34,044 retired before and 8,511 retired after are affected by the actions of Respondent No.1 in changes brought about by GSR 609(E) w.e.f and also EPFO letter dated True copy of the Registration Certificate of Petitioner No.5 is annexed hereto as Annexure P- 29

30 1.(Page Nos. to ) All Petitioner s members are willing to refund the differential amount of past contribution for pension fund to EPFO as per directions of this Hon ble Court. 7. Petitioners No. 6 is an Association of Officers serving the Central Public Sector Undertakings registered under the Trade Unions Act,1926. Petitioner No.6 represents 19,118 serving employees from 10 members of employees organisations of Central Public Sector Undertakings., each governed by their byelaws. This number includes approx. 150 serving employees joined service after (affected by changes brought by the Respondents through GSR 609 w.e.f and the letter dated ) and thereby denied membership of EPS 95. All those represented by Petitioner 6 are covered under the Employees Pension Scheme, 1995 under the Employees Provident Fund & Misc. Provisions Act, All have contributed to their Provident Fund 12% of their actual salary with a matching contribution of 12% from their employer. Out of employer s share, contribution to Pension Fund was 8.33% of the statutory ceiling value. All such employees have authorised their respective groups to represent them in this Hon ble Court in respect of their grievances who in turn have authorised the Petitioner No.6 to represent them before this Hon ble Court. True copy of the Registration Certificate of Respondent No.6 is annexed hereto as Annexure P-2 (Page Nos. to ).All Petitioner s members 30

31 are willing to refund the differential amount of past contribution for pension fund to EPFO as per directions of this Hon ble Court. 8. The Respondent No.1 is a statutory body formed under the Employees Provident Fund & Miscellaneous Provisions Act, The statutory body undertakes the essential function of managing and administering the provident fund, pension fund and depositlinked insurance of its members-employees under the Employees Provident Fund Scheme, 1952, the Employees Pension Scheme, 1995 and the Employees Deposit-Linked Insurance Scheme, The Respondent No.1 is also responsible for supervising the functioning of the Provident Fund Trusts of the establishments exempted under Sec. 17 of the Act from depositing the provident fund of its employees with the Respondent No.1 but maintaining their PF through such trusts. Respondent No. 1 is under the control of Respondent No.2 i.e. the Ministry of Labour& Employment. The Respondents are thus State within the meaning of Art. 12 of the Constitution of India. 9. In the year 1952, the Employees Provident Fund Act, 1952 was enacted which was since renamed as the Employees Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act ). The provisions of Employees Provident Fund & Misc. Provisions Act, 1952 was made applicable to every establishment employing 20 or more persons or as notified by Central Government, the only exception being establishments exempted under Sec. 16 of the Act. The entire purpose of the Act was to 31

32 ensure that every employee or his legal heirs had social security on retirement or his death respectively. Sec. 6A was enacted by Act 25 of 1996 w.r.e.f with the same purpose in mind and referred to a Pension Scheme being framed as applicable to establishments. Sec. 17(1) provided for exemption from applicability of the provident fund scheme of Respondent No.1 to any establishment only if the rules of provident fund of such establishment are not less favourable to those specified in Sec.6 and the employees are in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under the Act. The aforesaid exemption is only in respect of PF contribution of employees. All employees of all such exempted establishments are, however, bound to become members of the Employees Pension Scheme, 1995 (EPS 95) insofar as their pension benefits are concerned unless an establishment itself is exempted under Sec. 17(1C) of the Act and Para 39 of the EPS 95 because employees of such establishments are members of any other pension scheme or propose to be members of such pension scheme where the pensionary benefits are at par or more favourable than the Pension Scheme under the Act. Even in these provisions, it is the establishments which apply for exemption which may or may not be granted by the Government. 10. The Employees Provident Fund Scheme, 1952 (EPF Scheme) was also framed as provided under the Act which provided for a 32

33 system of provident fund compulsorily on contributory basis by the employer and employees jointly. The contribution was initially at the rate of 6.25% of wages, later raised to 8.33% in 1988, to 10% from May,1977 and subsequently to 12% from Accumulation in the said provident fund together with interest were payable to employees at retirement or to the nominee or legal heir of the employee in case of death. 11. Para 26 of the EPF Scheme provided for class of employees entitled and required to join the fund. Sub-para 6 provided for contributing more than the amount of rupees six thousand five hundred. Para 26(6) reads as under. Notwithstanding anything contained in this paragraph, an officer not below the rank of an Asst Provident Fund Commissioner may, on the joint request in writing of any employee of a factory or other establishment to which this scheme applies and his employer, enrol such employee as a member or allow him to contribute more than six thousand five hundred rupees of his pay per month if he is already a member of the fund and thereupon such employee shall be entitled to the benefits and shall be subject to the conditions of the fund, provided that the employer gives an undertaking in writing that he shall pay the administrative charges payable and shall comply with all statutory provisions in respect of such employee. 12. As stated earlier, Section 17 of the Act gave power to the Central Govt., inter-alia, to exempt, either prospectively or retrospectively, from the operation of all or any of the provisions of any scheme, any establishment to which the Act applies if the rules of its provident fund with respect to the rates of contribution 33

34 are not less favourable than those specified in Sec. 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under the Act or any scheme in relation to the employees in any other establishment of a similar character. Sub-section 1A provided for the manner in which the establishments, who have been granted such exemption, were to maintain the fund and the conditions that may be imposed for the grant of such exemption. Sub-section 1A(d) also provided for the Board of Trustees of such fund to maintain detailed account of the contributions credited, withdrawals, interest accrued in respect of each employee; submitting of returns to the Regional PF Commissioner from time to time; invest the fund in accordance with the directions of the Central Govt. from time to time; etc. Subsec. 1B provided for punishment for contravention or defaults in complying with the provisions of sub-sec. 1A(d). The Petitioners submit that though the provident fund of the exempted establishments were maintained by a Board of Trustees of such establishments, they were always under the control and supervision of the Respondent No.1. The accounts of the EPF Trust are inspected/audited regularly by Respondent No.1 on annual basis. Any short coming results in withdrawal of exemption. The exemption is for provident fund only and both unexempted and exempted employees are on same footing on contribution to the Pension Fund and for the pensionary benefits 34

35 under the Pension Scheme as for all such employees, the Pension Fund was maintained by EPFO only. 13. In the year 1971 a 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. 2.33% from provident fund and Central Govt. 1.16% (total 3.5%) contribution support for financing the scheme was introduced. In the year 1995, Sec. 6A was amended providing for framing of Employees Pension Scheme for the purpose of providing for superannuation pension, retiring pension or total disablement pension to employees of establishments to which the Act applied and widow or widower s pension, children pension or orphan pension payable to beneficiaries of such employees. Sub-sec. (2) provided as follows: (2) Notwithstanding anything contained in Sec. 6, there shall be established as soon as may be after framing of the Pension Scheme, a Pension Fund into which there shall be paid, from time to time, in respect of every employee who is a member of the Pension Scheme,- (a) such sums from the employer s contribution under Sec. 6, not exceeding eight and one-third per cent, of the basic wages, dearness allowance and retaining allowance, if any, of the concerned employees, as may be specified in the Pension Scheme; (b) Such sums as are payable by the employers of the exempted establishments under sub-sec. 6 of Sec. 17; 35

36 (c) &(d). 14. A comprehensive pension scheme namely the Employees Pension Scheme (EPS 95) was introduced replacing the family pension scheme, In the said scheme, pension was funded by diversion of 8.33% of employer s share in the provident fund & contribution of the Central Govt. 1.16% totalling 9.5%. Assets & liabilities of the ceased family pension scheme was taken over by the new scheme as on forming the initial corpus of the pension fund, all accumulations to provident fund remaining intact. 15. Para 6 of the EPS provided for membership of the EPS which read as follows. 6. Membership of the Employees Pension Scheme.- Subject to sub-paragraph (3) of paragraph 1, this scheme shall apply to every employee,- (a) who on or after the 16th November, 1995 becomes a member of the Employees Provident Fund Scheme, 1952 or of the Provident Funds of the factories and other establishments exempted by the appropriate Government under Section 17 of the Act, or in whose case exemption has been granted under para 27 or 27A of the Provident Fund Scheme, 1952, from the date of such membership; (b) (c) (d) The said provision made it clear that it is applicable to all establishments irrespective of whether they were exempt or 36