Continuing Deductions Made Under Previous Scheme Do Not Defeat Right Of Employee To Claim Automatic Benefit Of New Pension Scheme: Allahabad HC

The Allahabad High Court has held that without specific evidence in the manner contemplated under Office Memorandum, an employee could not have been said to have opted for staying under a previous pension scheme.

“The fact that the Union of India may have continued to make deductions under the CPF scheme did not militate or defeat the substantive right that arose to the respondent to claim benefit of applicability of the GPF scheme. That position in law arose solely by operation of law i.e., full enforcement of the legal fiction, noted above,” held the Court.

The bench comprising of Justice Saumitra Dayal Singh and Justice Rajendra Kumar-IV observed that migration to the GPF Scheme was automatic (by operation of law), and that to remain under the CPF Scheme, the Union ought to have produced evidence of written duplicates by the employee exercising that option under specific clause in the relevant Office Memorandum.

Factual Background

Petitioner was appointed as Primary Teacher by the Kendriya Vidyalaya Sangathan (‘KVS’) on 03.10.1978, retiring as Trained Graduate Teacher on 30.06.2012. He was not granted benefit of GPD Scheme, to which he protested, with his claim being rejected by order dated 11.06.2018. Challenge to the order in Original Application by the petitioner was allowed by the Central Administrative Tribunal. Aggrieved, the Commissioner, KVS preferred a writ petition before the High Court.

Counsel for the petitioner contended that the respondent had opted for CPF allotment before the cutoff date, and never objected to it during his years of service, or up until four years after retirement.

Counsel for the respondent-employee contended that Office Memorandum dated 01.09.1988 created a legal fiction that claims of all existing employees of KVS would migrate to the GPF Scheme. This could be reversed by any employee opting to remain with the CPF Scheme. It was argued that nothing except non-exercise of option by the respondent was required to perfect his claim. Therefore, merely making deductions under the CPF Scheme did not override the legal fiction created by the aforementioned Office Memorandum.

High Court Verdict

The Court noted that the dispute revolved around the interpretation of Office Memorandum dated 01.09.1988 issued by KVS. The Court observed that the Memorandum created a legal fiction by virtue of Clause 3 to migrate all existing employees to the GPF Scheme. This legal fiction was automatic, with the sole condition being that the person in question must be a KVS employee on the cutoff date, 01.01.1986. Only exception was under Clause 3.2, wherein the employee to remain under the CPF Scheme was required to write to the Principal by 28.02.1989, in duplicate, with the second copy retained in the original service record of the employee. This option of writing once exercised was irrevocable by virtue of Clause 3.6.

The Court observed that in the present case, no such evidence was produced either before the Tribunal or the High Court, with the Union relying only on secondary evidence. The Court, however, held that no reliance could be placed on the Closing Balance Statement annexed by the petitioner, as it only showed that it continued to treat the respondent as an employee under CPF.

The Court held that the act of continued CPF deductions does not overcome the legal fiction created by the aforementioned Office Memorandum in view of Clauses 3.2 and 3.6.

Relying on the decision of the Supreme Court rejecting an identical contention in Union of India vs. S.L. Verma and others and KVS and other vs. Jaspal Kaur and another, the Court observed that unless a document existed showing that employees had opted for CPF Scheme, mere continuance of CPF deductions, or even a change/revision of CPF number of employee itself does not cause any legal effect. “Once consequence arose in law, its full effect could not be avoided by either party on the evidentiary rule of acquiescence.” The substantive right of the respondent arose solely by operation of law.

The Court observed that the Madras High Court in N. Subramaniyam vs. Commissioner KVS and the Delhi High Court in KVS vs. V.D. Pandey rejected the claim of the Union on similar grounds as in the aforementioned cases.

Distinguishing the decision of the coordinate bench in KVS vs Prakash Chandra, the Court observed that in Prakash Chnadra case there was admission on part of the employee that option to remain under CPF Scheme was exercised. Due to finality of option once exercised, the bench had ruled against the employee on that occasion. However, in the present case, there was no such admission.

The Court held that in absence of any contrary law or statutory order, the Office Memorandum being an executive order ensured migration of the respondent to the GPF Scheme.

Accordingly, the writ petition was dismissed, with the Union of India entitled to make due deductions contributed under the CPF Scheme while granting benefit under the GPF Scheme to the respondent.

Case Title: Commissioner Kendriya Vidyalaya Sangathan vs. Central Administrative Tribunal Bench And Another [WRIT - A No. - 20745 of 2019]

Case Citation: 2023 LiveLaw (AB) 441

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