Accepting Terminal Benefits Under EPF Forfeits State Pension Rights: Jharkhand High Court

Background Facts

The employee was initially appointed as a Chowkidar in the Food Supply Department of the Bihar Government in May 1967. Then he was deputed to the Bihar State Food and Civil Supplies Corporation in October 1973, where he continued working until his retirement. After his retirement, the employee claimed he was entitled to a pension from the State of Bihar. His contention was that his services had never been formally handed over to the Corporation, and no option regarding his service transfer had been sought from him. He also pointed to the case of another employee, who was in a similar situation but had been granted pensionary benefits.

However, the employee had received all his terminal benefits from the Corporation upon retirement, including his provident fund accumulation. He had also voluntarily switched to the Employees' Provident Fund (EPF) scheme during his tenure with the Corporation. He filed a writ petition before the High Court seeking payment of his pension.

The Single Judge allowed his petition, directing the State of Bihar to disburse the pension. Aggrieved by the same, the State of Bihar filed an appeal.

It was argued by the State that the employee could not be allowed to claim pensionary benefits after delay of sixteen years, after having already accepted and received all terminal benefits from the Corporation. That the employee had voluntarily switched over to the Employees' Provident Fund (EPF) Scheme and had demonstrated his acceptance of being governed by the Corporation's rules by opening an EPF account, contributing to it monthly, and accepting the final EPF payment upon retirement.

Additionally, it was contended that the principle of parity with the other employee was misapplied as other employee had rendered more than ten years of qualifying service under the State Government, making him eligible for a proportionate pension, whereas the original employee had only completed about six years.

On the other hand, it was argued by the employee that his service had not been handed over by the State in favour of the Bihar State Food and Civil Supplies Corporation. It was contended that the right to pension is a constitutional right and not a mere bounty, which cannot be taken away without any option of transferring his services from the State to Bihar State Food and Civil Supplies Corporation.

Findings of the Court

It was observed by the Court that pension is influenced by the conduct of the employee. The employee had voluntarily switched to the EPF scheme and contributed to it throughout his service. He accepted all terminal benefits including his EPF upon his retirement in 1991 without any protest.

It was further noted by the Court that the employee remained silent for over sixteen years after retirement. Hence, he was estopped due to prolonged delay along with his acceptance of benefits under the EPF scheme. Therefore, the employee waived his right to subsequently claim pension.

It was held by the court that the pension is a right but once other alternative arrangement has been accepted by switching over to EPF Scheme, then subsequently the employee cannot turn back and seek pensionary benefits.

Consequently, finding recorded by the Single Judge was was set aside. With the aforesaid observations, the appeal filed by the State of Bihar was allowed by the Division Bench.

Case Name : State of Bihar vs. Savitri Devi & Ors.

Case No. : L.P.A. No. 236 of 2014

Counsel for the Appellant : S.P. Roy, GA (Bihar), Ranjit Kumar, Advocate

Counsel for the Respondents : A.K. Verma, Advocate, Jitendra Shankar Singh, Advocate, Mrinal Kanti Roy, Advocate, Gaurang Jadodia, AC to GP-II