Naresh Kumar Sharma and Another Vs Employees Provident Fund Organization and Others

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�� )��)��/)��-�� )�-��-�)�� 5+�52�'5'6�!��.)��7%5"��)�� )��)��#��:��)��-��3�)�� R.C. Gupta and others Vs. Regional Provident Fund Commissioner, Employees Provident Fund Organization and others, (2018) 14 SCC 809 �� The Employees Provident Fund Organisation and another Vs. Sunil Kumar B. and others, �� SLP(C) Nos.8658�8659 of 2019, ��5>�%%�'5''��#�� )�� )��)�-�� -�� .�� )�� %%!+"�� 9��%;;6�� -��79�8? ��-�� 5%�%'�'55>�� '+�5+�'5%2��=��79�8?��)��)��)��-�� )��-�� )��)�� )�� >� Per contra, ��)�� $��%�&�'��)�-�� -��-�� )�� Sunil Kumar B. :��! supra "��#��:�� )��-��3�)��5>�-��:��-��-�� .��)��%%!+"�� 9��!��"�� %%!>"�� -��9��-��-��)��)�� 5%�5;�'5%>�� '2�5'�'5'+��

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“The Scheme

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“11(3) The maximum pensionable salary shall be limited to Rupees six thousand five hundred per month.

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Provided that if at the option of the employer and employee , contribution paid on salary exceeding Rupees six thousand and five hundred per month from the date of commencement of this Scheme or from the date salary exceeds Rupees six thousand and five hundred, whichever is later , and 8.33 per cent share of the employers thereof is remitted into the Pension Fund, pensionable salary shall be based on such higher salary.”

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The Scheme (post amendment of the year 2014)

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“11(4) The existing members as on the 1st day of September, 2014, who at the option of the employer and employee, had been contributing on salary exceeding six thousand and five hundred rupees per month, may on a 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:

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Provided that the aforesaid members have to contribute at the rate of 1.16 per cent on salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder:

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Provided further that the fresh option shall be exercised by the member within a period of six months from the 1st day of September, 2014:

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Provided also that the period specified in the second proviso may, on sufficient cause being shown by the member, be extended by the Regional Provident Fund Commissioner for a further period not exceeding six months:

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Provided also if no option is exercised by the member within such period (including the extended period), it shall be deemed that the member has not opted for contribution over wage ceiling and the contributions to the Pension Fund made over the wage ceiling in respect of the member shall be diverted to the Provident Fund account of the member along with interest as declared under the Employees' Provident Funds Scheme from time to time.”

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“26.Classes of employees entitled and required to join the fund

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(6) Notwithstanding anything contained in this paragraph [an officer not below the rank of an Assistant Provident Fund

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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, enroll such employee as a member or allow him to contribute more than rupees [fifteen thousand 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.”

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“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.7074 of 2014 filed by the Regional Provident Fund Commissioner was rejected by this Court by order dated 31.03.2016. A beneficial Scheme, in our considered view,

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ought not to be allowed to be defeated by reference to a cut9off 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.5,000/9 or Rs.6,500/9 per month, as the case may be.

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9. A further argument has been made on behalf of the Provident Fund Commissioner that the appellant9employees had already exercised their option under paragraph 26(6) of the Employees' Provident Funds Scheme. Paragraph 26(6) is in the following terms:

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26. Classes of employees entitled and required to join the fund

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(6) Notwithstanding anything contained in this paragraph, an officer not below the rank of an Assistant 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, enroll such employee as a member or allow him to contribute more than 3[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 3 Sub9section By Notification No.S9350/2/2/969SS II, dated 4th May, 2001, for "rupees five thousand".

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Earlier the words "rupees five thousand were substituted by G.S.R. 718(E), dated 23rd September, 1994, for the words "rupees three thousand and five hundred" (w.e.f. 19 1091994). charges payable and shall comply with all statutory provisions in respect of such employee].

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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

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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 .”

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“41. … our opinion is that the eligibility for enhancement cannot be restricted to those employees only who had exercised the option to remain in the scheme once their salary went beyond the capping of Rs. 6500/� per month. As we have already discussed, in case of R.C. Gupta (supra), it has been specifically held that there was no cutoff date in proviso to paragraph 11(3) as it stood before the 2014 amendment . In our opinion, the interpretation given to the proviso to paragraph 11(3) prior to 2014 amendment does not require any reconsideration. We agree with the reasoning of the two9judge Bench of this Court on this point, as expressed in the said judgement. We are not holding that no option was required to be exercised as per proviso to paragraph 11(3) of the scheme, as it stood prior to 2014 amendment. As held in the case of R.C. Gupta (supra), there was no time�limit for exercising such option.

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42. The dual option, as is contemplated in paragraph 11(4) of the pension scheme (post 2014 amendment), has to be merged into

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one . In the event the employer and employee jointly opt for coverage beyond the salary limit of Rs. 15000/�, without giving an earlier option under the unamended Clause 11(3) of the pension scheme, they would not be automatically excluded from their right to exercise option under paragraph 11(4) of the scheme, post amendment.

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43. The other condition for enhanced coverage relates to the date within which such fresh option is to be exercised by a member, which is stipulated to be within a period of six months from 1st September 2014. It would be legitimate to proceed on the basis that several members did not exercise such option earlier because of the stand taken by the Provident Fund authorities that option under proviso to paragraph 11(3) of the scheme (prior to 2014 amendment) has to be exercised within a specified date, which stand was negated in the decision of R.C. Gupta (supra). We are of the view that the time limit for coverage beyond the ceiling amount should be extended by a further period of four months from today to enable all the members of the pension fund drawing more than Rs.6500/9 to exercise the joint option as contemplated in paragraph 11(4) of the pension scheme (post 2014 amendment). Once such joint option is exercised, the transfer of fund from the provident fund corpus to the pension fund shall be effected in terms of the scheme.

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44. We accordingly hold and direct:9

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(iv) The 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) would be entitled to exercise option under paragraph 11(4) of the post amendment scheme. Their right to exercise option before 1st September 2014 stands crystalised in the judgement of this Court in the case of R.C. Gupta (supra). The scheme as it stood before 1st September 2014 did not provide for any cutoff date and thus those members shall be entitled to exercise option in terms of paragraph11(4) of the scheme, as it stands at present. Their exercise of option

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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.

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There was uncertainty as regards validity of the post amendment scheme, which was quashed by the aforesaid judgements of the three High Courts. Thus, all the employees who did not exercise option but were entitled to do so but could not due to the interpretation on cutoff date by the authorities, ought to be given a further chance to exercise their option. Time to exercise option under paragraph 11(4) of the scheme, under these circumstances, shall stand extended by a further period of four months. We are giving this direction in exercise of our jurisdiction under Article 142 of the Constitution of India.

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Rest of the requirements as per the amended provision shall be complied with.

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“The petitioners exercised option in 2018 which was rejected in 2019. The petitioners cannot be denied the benefit of revised pension on the sole ground that respondent rejected their option. The respondent at its sweet will accepted option of most of the employees and rejected in a few cases. This Court does not find any substance in the contention of the respondent to distinguish

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case of present petitioners from case of petitioners in the aforesaid writ petition.”

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VISHNU 2025.10.20 12:49 I attest to the accuracy and integrity of this document Punjab and Haryana High Court, Chandigarh

Naresh Kumar Sharma and Another v. Employees Provident Fund Organization and Others

Case brief

What is this about?

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Naresh Kumar Sharma and Another v. Employees Provident Fund Organization and Others

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