In Civil Appeal Nos.8143-8144 of 2022-SC- Employees' Pension (Amendment) Scheme, 2014 is valid; Amendments to pension scheme shall apply to employees of exempted as well as regular establishments: SC
Justices Uday Umesh Lalit, Aniruddha Bose & Sudhanshu Dhulia [04-11-2022]

Read Judgment: THE EMPLOYEES PROVIDENT FUND  ORGANISATION & ANR. ETC v. SUNIL KUMAR B. & ORS. ETC 

Tulip Kanth

New Delhi, November 5, 2022: While upholding the validity of the Employees' Pension Amendment Scheme, 2014, the Supreme Court has opined that the requirement of members to contribute at the rate of 1.16% of their salary to the extent such salary exceeds Rs 15000  per month as an additional contribution under the amended scheme is ultra vires the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

The Larger Bench of Chief Justice Uday Umesh Lalit, Justice Aniruddha Bose and Justice Sudhanshu Dhulia was considering the legality of certain amendments made by the Central Government to the Employees Pension Scheme, 1995. Such scheme has been made in pursuance of, inter-alia, Section 6A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the Act). Such changes were sought be effected in paragraphs 3, 6, 11, 12 and 14 of the 1995 scheme. 

54 writ petitions had been filed by the employees themselves or on their behalf under Article 32 of the Constitution of India seeking invalidation of the notification dated August 22, 2014. The writ petitioners were members of both exempted and unexempted establishments. The legality of the modified scheme was questioned in different writ petitions in different High Courts.

In these appeals, judgments of the High Courts of Kerala, Rajasthan and Delhi were assailed. In the case of P. Sasikumar & Others vs. Union of India (UOI) Represented by the Secretary to Govt. of India Ministry of Labour & Department of Employment and Others [in Writ Petition (C) No. 13120 of 2015], the Division Bench of the Kerala High Court in its judgment set aside the Employees Pension Amendment (Scheme), 2014 conceived in G.S.R. 609 (E).Various High Courts had invalidated the 2014 Notification.

 Paragraph 11 of the scheme dealt with determination of pensionable salary. Earlier, the maximum pensionable salary was Rs 5000 and this sum had been enhanced subsequently to Rs.6500, Pensionable salary was raised to Rs.15000 by the notification in question [numbered G.S.R. 609 (E)], which was to be effective from September 1,2014.

On the issue whether the members from an exempted establishment under the 1952 Act would be entitled to the benefits of enrolling in the scheme beyond the ceiling limit, the Bench opined that the amendment to the pension scheme brought about by the notification dated August 22, 2014 would apply to the employees of the exempted establishments in the same manner as the employees of the regular establishments. 

The Bench also held that the employees who had exercised option under the proviso to paragraph 11(3) of the 1995 scheme and continued to be in service as on 1st September 2014, will be guided by the amended provisions of paragraph 11(4) of the pension scheme.

For those members of the scheme, who did not exercise option, as contemplated in the proviso to paragraph 11(3) of the pension scheme (as it was before the 2014 Amendment), the Bench observed that they would be entitled to exercise option under paragraph 11(4) of the post amendment scheme.Their exercise of option shall be in the nature of joint options covering pre-amended paragraph 11(3) as also the amended paragraph 11(4) of the pension scheme.

As per the Bench, the employees who had retired prior to September 1, 2014 without exercising any option under paragraph 11(3) of the pre-amendment scheme had already exited from the membership thereof,  would not be entitled to the benefit of this judgment.

The employees who have retired before September 1, 2014 upon exercising option under paragraph 11(3) of the 1995 scheme shall be covered by the provisions of the paragraph 11(3) of the pension scheme as it stood prior to the amendment of 2014, the Bench held.

The Apex Court declared the requirement of the members to contribute at the rate of 1.16%  of their salary to the extent such salary exceeds Rs.15000 per month as an additional contribution under the amended scheme to be ultra vires the provisions of the 1952 Act. But the Bench suspended the operation of this part of the order for a period of six months.

The Bench was of the opinion that the provisions contained in the notification no. G.S.R. 609(E) dated August 22, 2014 were legal and valid.Thus, upholding the Scheme, the Bench allowed the appeals.