Supreme Court of India
The Employees Provident Fund … vs Sunil Kumar B on 24 August, 2021Author: Uday Umesh Lalit

Bench: Hon’Ble The Gogoi, Deepak Gupta, Sanjiv Khanna




The Employees Provident Fund Organisation & Etc. …. Appellant(s)

Sunil Kumar B. & Etc. ….. Respondent(s)
W.P. (C) No.767/2021; SLP (C) No.3289/2021; CONMT. PET.(C) Nos.1917-
1918/2018 IN C.A. Nos.10013-10014/2016; W.P. (C) No.406/2018; W.P. (C)
No.368/2018; W.P. (C) No.393/2018; W.P. (C) No.395/2018; W.P. (C)
No.374/2018; W.P. (C) No.372/2018; W.P. (C) No.385/2018; W.P. (C)
No.360/2018; W.P. (C) No.1134/2018; W.P. (C) No.390/2019; W.P. (C)
No.875/2019; W.P. (C) No.349/2019; W.P. (C) No.466/2019; W.P. (C)
No.352/2019, SLP (C) Nos.16721-16722/2019, W.P. (C) NO.512/2019, W.P.
(C) NO.511/2019, W.P.(C) NO.500/2019, CONTMT.PET(C)NOs.619-
620/2019 IN C.A. NOs.10013-10014/2016, W.P.(C) NO.601/2019, W.P.(C)
No.1312/2019, W.P.(C) No.832/2019, SLP(C) NO.2465/2021,
SLP(C)NO.3287/2021, DIARY NO.46219/2019, W.P.(C) No.1218/2020,
SLP(C)NO.1366/2021, W.P.(C) No.1459/2020, W.P.(C) No.1332/2020,
SLP(C) NO.3290/2021, W.P.(C) No.86/2021, SLP(C) NO.1738/2021, SLP(C)
No.1701/2021, W.P.(C) No.414/2021, W.P.(C) No.477/2021, SLP(C)
NO.8547/2021, W.P.(C) No.233/2018, W.P.(C) No.69/2018, W.P.(C)
No.141/2018, W.P.(C) No.118/2018, W.P.(C) No.250/2018, W.P.(C)
No.380/2018, W.P.(C) No.371/2018, W.P.(C) No.367/2018, W.P.(C)
No.369/2018, W.P.(C) No.411/2018, W.P.(C) No.466/2018, W.P.(C)
No.804/2018, W.P.(C) No.594/2018, W.P.(C) No.884/2018, W.P.(C)
No.778/2018, W.P.(C) No.874/2018, W.P.(C) No.1149/2018, W.P.(C)
No.1167/2018, W.P.(C) No.1430/2018, W.P.(C) No.1433/2018, W.P.(C)
No.1428/2018, W.P.(C) No.269/2019 and W.P.(C) No.327/2019,
Signature Not Verified

Digitally signed by
Indu Marwah
Date: 2021.08.24
18:52:56 IST

1. By Order dated 25.02.2021 these matters were broadly divided in

four categories with lead matters being:-
“(i) SLP (C) No(s). 8658-8659/2019, 16721-16722/2019
[arising from the judgment dated 12.10.2018 passed by the
High Court of Kerala];

(ii) SLP(C) Diary No(s). 46219/2019 [arising from the
judgment dated 22.5.2019 passed by the High Court of
Delhi] along with connected matter being SLP(C) No.
1366/2021 [arising from the judgment dated 16.12.2019
passed by the High Court of Delhi];

(iii) SLP(C) No. 2465/2021 [arising from judgment dated
28.08.2019 passed by the High Court of Rajasthan, Jaipur];

(iv) CONMT.PET.(C) No. 1917-1918/2018 in C.A. No.
10013- 10014/2016 [seeking implementation of the order
dated 04.10.2016 passed by this Court in
C.A.No.10013/201 :R.C. Gupta & Ors. Etc. etc. vs.
Regional Provident Fund Commissioner Employees
Provident Fund Organization & Ors. Etc.1] ……”

2. SLP (C) Nos.8658 – 59 of 2019 challenging the Judgment and

order dated 12.10.2018 passed by the Division Bench of the High Court of

Kerala in Writ Petition (C) Nos.602/2015 and 13120/2015 were initially

dismissed by this Court on 01.04.2019.

Thereafter, SLP (C) Nos. 16721-22/2019 at the instance of Union of

India challenging the very same judgment dated 12.10.2018 came up

before this Court on 12.07.2019. While condoning the delay in preferring

said SLPs, this Court directed that said SLPs be listed along with Review

1 (2018) 4 SCC 809

Petition (C) Nos.1430-31/2019 (which had since then been preferred

against the order dated 01.04.2019 in SLP(C) Nos.8658-59/2019) in open


3. When both sets of matters were listed before this Court on

29.01.2021, the submissions on behalf of the petitioners were noted as

“Mr. C.A. Sundaram, learned Senior Advocate appearing
for the petitioners in said Review Petitions invited our
attention to the order dated 21.12.2020 passed by another
Division Bench of the High Court of Kerala by which the
correctness of the earlier decision dated 12.10.2018 was
doubted and the matter was referred to Full Bench of the
High Court.

Mr. Sundaram, also invited our attention to the decision of
this Court in M/s Pawan Hans Ltd. & Ors. vs. Aviation
Karmachari Sanghatana & Ors [2020(2)SCALE 1942] and
specially paragraph 6.6 of the decision.

It was submitted that as a result of the directions issued by
the High Court in its order dated 12.10.2018, benefit would
get conferred upon employees retrospectively which, in
turn, would create great imbalance.”

4. Thereafter, this Court recalled the order dismissing SLP (C)

Nos.8658-8659 of 2019 and the entire bunch of matters was directed to be

listed for disposal.

5. It may be noted here that the Division Bench of the High Court of

Kerala in its order dated 12.10.2018 had relied upon the decision of two

Judges of this Court in R.C. Gupta1. Said decision had set aside the

2 Also reported : (2020) 13 SCC 506

judgment and order passed by the Division Bench of the High Court of

Himachal Pradesh in LPA Nos.411-12 of 2012 which had inter alia

accepted the submission that under the proviso to Clause 11(3) of the

Employees’ Pension Scheme there was a cut-off date. Paragraphs 7, 9 and

10 of the decision in R.C. Gupta1 were as under:-

“7. 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 Court3, wherein Special Leave Petition (C)
No. 7074 of 2014 filed by the Regional Provident Fund
Commissioner was rejected by this Court by order dated
31-3-20164. 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 5000 or Rs
6500 per month, as the case may be.
…. …. ….
9. We do not see how exercise of option under Para 26 of
the Provident Fund Scheme can be construed to estop the
employees from exercising a similar option under Para
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 Para 26 of the Provident Scheme

3 Union of India v. A. Majeed Kunju, Writ Appeal No.1135 of 2012, order dated 5-3-
2013 (Ker)
4 Reg. Provident Fund Commr. v. A. Majeed Kunju, 2016 SCC OnLine SC 1744,
wherein it was directed:
“SLPs (C) Nos.7074-76, 7107-108, 7224 of 2014 and 697 of 2016.
Heard the learned counsel for the parties and perused the relevant material. We
do not find any legal and valid ground for interference. The special leave petitions are
dismissed. SLPs (C) Nos.19954 and 33032-33 of 2015.
List these special leave petitions on 26-4-2016. As prayed for, liberty is
granted to file additional documents.”

is inevitable. Exercise of the option under Para 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.

10. The above apart in a situation where the deposit of the
employer’s share at 12% has been on the actual salary and
not the ceiling amount, we do not see how the Provident
Fund Commissioner could have been aggrieved to file the
LPA before the Division Bench of the High Court. All that
the Provident Fund Commissioner is required to do in the
case is an adjustment of accounts which in turn would have
benefited some of the employees. At best what the
Provident Commissioner could do and which we permit
him to do under the present order is to seek a return of all
such amounts that the employees concerned may have
taken or withdrawn from their provident fund account
before granting them the benefit of the proviso to Clause
11(3) of the Pension Scheme. Once such a return is made in
whichever cases such return is due, consequential benefits
in terms of this order will be granted to the said

6. Relying on the decision in R.C. Gupta1, the Division Bench of the

High Court of Kerala made following observations in the judgment which

is under challenge in matters of the first category: –
“32. The Apex Court has thus found the insistence on a date
for exercise of the joint option to be without any
justification. In other words, the proviso to paragraph 11 of
the Pension Scheme does not stipulate a cut off date at all.
Any such stipulation of a cut-off date for conferring
benefits under the Pension Scheme would have the effect of
classifying the employees into persons who have retired
before or after the said date”

6.1 The Division Bench of the High Court then found that the effect of

the amendment to the Pension Scheme created following classes of

pensioners on the basis of the date namely 01.09.2014: –

“(i) employees who have exercised option under the
proviso to paragraph 11(3) of the 1995 Scheme and
continuing in service as on 01.09.2014;
(ii) employees who have not exercised their option under
the proviso to paragraph 11(3) of the 1995 Scheme, and
continuing in service as on 01.09.2014;
(iii) employees who have retired prior to 01.09.2014
without exercising an option under paragraph 11(3) of the
1995 Scheme.
(iv) employees who have retired prior to 01.09.2014 after
exercising the option under paragraph 1193) of 1995

6.2 The amendments to the Pension Scheme were therefore found to be

arbitrary and the Writ Petitions were allowed with following directions: –

“(i) The Employee’s Pension (Amendment) Scheme, 2014
brought into force by Notification No.GSR. 609€ dated
22.08.2014 evidenced by Ext.P8 in W.P.(C) No.13120 of
2015 is set aside;
(ii) All consequential orders and proceedings issued by the
Provident Fund authorities/respondents on the basis of the
impugned amendments shall also stand set aside.
(iii) 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.
(iv) 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.”

7. Challenging the view taken by the High Court Mr. C.A. Sundaram,

learned Senior Advocate inter alia relied upon the decision of the

Constitution Bench of this Court in Krishena Kumar Vs. Union of India 5.

Paragraphs 1 and 2 of said decision disclose that the petitioners in SLP (C)

No.8461 of 1986 and in WP No.1165 of 1989 had retired with Provident

Fund benefits and their claims to switch to pension scheme after retirement

having been rejected, specific challenge was raised. In support of such

challenge, reliance was placed on the decision of this Court in D.S.

Nakara and Others vs. Union of India6. The challenge was rejected by

the Constitution Bench with following observations: –

“32. In Nakara5 it was never held that both the pension
retirees and the PF retirees formed a homogeneous class
and that any further classification among them would be
violative of Article 14. On the other hand the court clearly
observed that it was not dealing with the problem of a
“fund”. The Railway Contributory Provident Fund is by
definition a fund. Besides, the government’s obligation
towards an employee under CPF Scheme to give the
matching contribution begins as soon as his account is
opened and ends with his retirement when his rights qua
the government in respect of the Provident Fund is finally
crystallized and thereafter no statutory obligation
continues. Whether there still remained a moral obligation
is a different matter. On the other hand under the Pension
Scheme the government’s obligation does not begin until
the employee retires when only it begins and it continues
till the death of the employee. Thus, on the retirement of an
employee government’s legal obligation under the
Provident Fund account ends while under the Pension
Scheme it begins. The rules governing the Provident Fund
and its contribution are entirely different from the rules
governing pension. It would not, therefore, be reasonable to
5 (1990) 4 SCC 207
6 (1983) 1 SCC 305

argue that what is applicable to the pension retirees must
also equally be applicable to PF retirees. This being the
legal position the rights of each individual PF retiree finally
crystallized on his retirement whereafter no continuing
obligation remained while, on the other hand, as regard
Pension retirees, the obligation continued till their death.
The continuing obligation of the State in respect of pension
retirees is adversely affected by fall in rupee value and
rising prices which, considering the corpus already received
by the PF retirees they would not be so adversely affected
ipso facto. It cannot, therefore, be said that it was the ratio
decidendi in Nakara5 that the State’s obligation towards its
PF retirees must be the same as that towards the pension
retirees. An imaginary definition of obligation to include all
the government retirees in a class was not decided and
could not form the basis for any classification for the
purpose of this case. Nakara5 cannot, therefore, be an
authority for this case.”

8. Mr. Sundaram relied upon the observations that Pension Retirees

and Provident Fund Retirees did not form a homogeneous class and that

the Rules governing the Provident Fund Scheme were entirely different

from the Rules governing Pension Scheme.

After inviting our attention to the various provisions of the

Employees’ Pension Scheme, it was submitted that the difference between

the Provident Fund Scheme on the one hand and the Pension Scheme on the

other was well recognised. Under the former scheme, the contributions

made by the employer and the employees during the employment of the

employee would be made over to the employee along with interest accrued

thereon at the time of his retirement. Thus, the obligation on the part of the

operators of the Provident Fund Scheme would come to an end, after the

retirement of the employee; whereas the obligation under the Pension

Scheme would begin when the employee retired. Under the former scheme,

the liability was only to pay interest on the amount deposited and to make

over the entire amount at the time of his retirement. On the contrary, in the

latter scheme, it would be for the operators of the Pension Scheme to invest

amount deposited in such a way that after the retirement of the concerned

employee the invested amount would keep on giving sufficient returns so

that the pension would be paid to the concerned employee not only during

his life time but even to his family members after his death. If the option

under paragraph 11(3) of the Scheme, was to be afforded well after the cut-

off date, it would create great imbalance and would amount to cross-

subsidization by those who were regularly contributing to the Pension

Scheme in favour of those who come at a later point in time and walk away

with all the advantages.

It was submitted that the emphasis on investment of the amount in

both the funds would qualitatively be of different dimension. The

difference between two schemes which was fulcrum of the decision in

Krishena Kumar5 was not so noted in the subsequent decision in R.C.

Gupta1. In his submission it would not be a mere adjustment of amount to

transfer from one fund to another as stated in R.C. Gupta1 and that the

decision in R.C. Gupta1 was required to be re-visited.

9. These, and the other submissions touching upon the applicability

of the principle laid down in the decision in R.C. Gupta1 go to the very

root of the matter. Sitting in a Bench of two Judges it would not be

appropriate for us to deal with said submissions. The logical course would

be to refer all these matters to a Bench of at least three Judges so that

appropriate decision can be arrived at.

10. The principal questions that arise for consideration are whether

there would be a cut-off date under paragraph 11(3) of the Employees’

Pension Scheme and whether the decision in R.C. Gupta1 would be the

governing principle on the basis of which all these matters must be

disposed of.

11. The Registry is, therefore, directed to place these matters before

the Hon’ble the Chief Justice for requisite directions so that these matters

can be placed before a larger Bench.


New Delhi,
August 24, 2021


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