Calcutta High Court Quashes EPFO Order Denying Higher Pension To Eligible Retirees, Calls It Abuse Of Law

The Calcutta High Court has set aside a series of Employees Provident Fund Organisation (EPFO) orders rejecting joint options for higher pension submitted by employees of exempted establishments. Justice Shampa Dutt (Paul) held that the EPFO acted contrary to Supreme Court rulings and relied on an “illegal” interpretation of Trust Rules to deny benefits.

“Such thought process and conduct on the part of the authority is not acceptable and hence not sustainable… It is clearly an abuse of the process of law," the court said.

The petitioners, retired employees of various SAIL units and other exempted establishments, were all eligible to exercise the joint option for higher pension on actual wages under the Employees Pension Scheme, 1995, as clarified in the Supreme Court cases of R C Gupta and Sunil Kumar B. Their employers verified and forwarded their joint options online, but the EPFO rejected them, stating that the relevant Trust Rules capped contributions at the statutory wage ceiling and had not been amended after the Supreme Court judgment of 4 November 2022.

EPFO relied on a Head Office circular dated 18 January 2025, which directed that eligibility for pension on higher wages in the case of exempted establishments “should be determined on the basis of extant Trust Rules”. The circular also said that applications of members of Trusts that amended their rules after 4 November 2022 “may not be considered”.

Trust Rules Not a Barrier, EPFO breached Natural Justice

The Court observed that EPFO had read conditions into the Supreme Court's judgment that did not exist. “There is not a single word in the judgment about internal Trust Rules,” the Court noted.

The Court held that EPFO's view that identifying the more beneficial provision was a “subjective consideration” was erroneous. It reminded the authority: “Such exclusive power is to be exercised with responsibility and proper application of mind.”

Justice Dutt found that EPFO had created an artificial barrier. Some exempted establishments had been granted pension on higher wages without reference to Trust Rules, while others had been denied solely because their Trust Rules mentioned the wage ceiling. The Court said this amounted to “sub classification between exempted establishments” and violated Article 14.

Uniform Treatment Required

Relying on Sunil Kumar B, the Court reiterated that employees of exempted and unexempted establishments must be treated alike. It quoted the Supreme Court's observation that excluding exempted establishment employees “would lead to artificial classification of otherwise same categories of employees”. The Court said EPFO had created such an impermissible sub-classification by granting benefits to some establishments but denying others on the basis of their Trust Rules.

EPFO Circular Held Illegal

The Court struck down the EPFO's 18 January 2025 circular, calling it “totally against the directions of the Supreme Court”. It was observed that the circular added conditions not found in any judgment, and “closes all avenues for getting benefits”.

The Court found that employees were not heard before their options were rejected. It noted that EPFO had consulted only employers, remarking that “the persons affected are the employees, and they were not heard”.

Thus, the Court quashed all rejection orders issued between February and June 2025. It directed that any joint option submitted on or before 31 January 2025, or within any extended deadline, must be accepted. Once employees deposit the differential contribution with interest, “a higher pension shall be disbursed from the succeeding month”.

The writ petitions were allowed without costs.

Case: Nitya Gopal Sarkar & Ors. Vs The Union of India & Ors

Case No: WPA 11599 of 2025

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