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EPS Case : Pension Corpus Remains Intact, Payments Coming From Interest, EPFO Can't Raise Fund Issues - Employees To Supreme Court [Day 5 Hearing]

Rintu Mariam Biju
11 Aug 2022 3:54 AM GMT
EPS Case : Pension Corpus Remains Intact, Payments Coming From Interest, EPFO Cant Raise Fund Issues - Employees To Supreme Court [Day 5 Hearing]
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On the fifth day of the EPF Pension case hearing (Wednesday), the pensioners told the Supreme Court that the verdict in R.C. Gupta v. Regional Provident Fund Commissioner, which held that there is no cut-off for opting for pension, is correct and applies to them in the present case.The argument was put forth by Senior Advocate Gopal Sankaranarayanan before a 3-judge bench comprising...

On the fifth day of the EPF Pension case hearing (Wednesday), the pensioners told the Supreme Court that the verdict in R.C. Gupta v. Regional Provident Fund Commissioner, which held that there is no cut-off for opting for pension, is correct and applies to them in the present case.

The argument was put forth by Senior Advocate Gopal Sankaranarayanan before a 3-judge bench comprising Justices UU Lalit, Aniruddha Bose and Sudhanshu Dhulia.
The Bench was considering the appeals filed by the Employees Provident Fund Organization challenging the Kerala, Rajasthan and Delhi High Court judgments which had quashed the 2014 Amendment Scheme.
In 2018, the Kerala High Court, while setting aside the Employee's Pension (Amendment) Scheme, 2014 [2014 Amendment Scheme], allowed paying pension in proportion to the salary above the threshold limit of Rs 15,000 per month.
On February 25, 2021, the division bench of Justice UU Lalit and Justice KM Joseph restrained the High Court of Kerala, Delhi and Rajasthan from initiating contempt proceedings against the Central Government and the EPFO over the non-implementation of the HC verdicts.
In August 2021, a 2-judge bench of the Supreme Court had referred the appeals to a 3-judge bench to consider the following issues:
1. Whether there would be a cut-off date under paragraph 11(3) of the Employees' Pension Scheme and
2. Whether the decision in R.C. Gupta v. Regional Provident Fund Commissioner (2016) would be the governing principle on the basis of which all these matters must be disposed.
Here are key aspects discussed yesterday:
RC Gupta
The Kerala High Court, while setting aside the 2014 amendments by its 2018 judgment, had declared that all 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.
This was rebutted by the EPFO as well as the Union of India stating that exercising the option under paragraph 26 of the EPF cannot be retrospective. And, the respondents, i.e. counsel appearing for various pensioners argued otherwise. Sankaranarayan too, made a similar argument.
He also argued that the Provident Fund and Pension of employees flow from the same Fund and has similar characteristics. And how the Fund only had to be moved from A to B.
Hearing this, the Bench then observed,
"Justice Gogoi's observation in RC Gupta is, from one fund to the other makes no difference. Therefore, does it really make a difference or is it something which can be categorized as no difference? ……The Distinction with the investments the fund was required to make which is discernible from 52 and 26 is not qualitatively different. Its the same fund, same securities, same kind of application, same interest bearing securities. you are not guided by different set of impact theory. In light of Gogoi's observation...someone was denied to make the crossover from A to B. That denial….the burden of the song is that there is a large number of people in that category where there is no impact at all. Therefore, where is the question of taking a different view".
Giving a bit of background with regard to the RC Gupta case, the court said,
"First comes RC Gupta. That is relied upon by various courts. When the matter from Kerala HC comes before this court, three judges bench dismissed the SLP. Therefore, they affirmed the principles in RC Gupta. Then another avatar. Court says to list the review petition along with the other matters. There is no pronouncement. So, the Matter has to be tested on: Is this impact going to be of drastic nature that you must deny the benefit to the employees? You are coming to that level saying that the impact is no negligible that others must also be given the same benefit."
In response, the senior advocate said,
"This factual aspect is only consequential. As far as we are concerned, the verdict in RC Gupta is correct and applies also to us."
"We were given to understand that somebody who had never applied now gets a chance. Therefore, everything becomes retrospective. We would like to know how many employees are going to walk away with a chance, who had not exercised any option earlier. How many are these exempted categories of employees who may get affected as a result of this. These two pointers also", the Court further queried.
"If RC Gupta holds the field, RC Gupta ought to be followed not only because its legally correct but because it has been implemented",
Option Aspect
Further, he argued that if RC Gupta isn't considered, then option that pensioners would have to exercise is only at one stage. Highlighting this, he said,
"Independent of RC Gupta, if we don't take shelter under RC Gupta, the option we have to exercise under the statute is only at one stage, that is as far as the Provident Fund is concerned. Everything else has to be read in the wake of that which includes 11 (3), proviso to 11 (4) [of the Amendment Scheme]".
"So, what you say is option only at one stage?" the Bench rephrased his argument.
"The 26 (6) option. Thereafter, it's only a question of remitting funds from A to B", the senior advocate clarified.
"If at all it's valid to ask for a second option, the consequences are there which creates anomalies", he further added.
This apart, Shankaranarayanan further submitted it would be incorrect to say that the Pensioners haven't contributed to the Fund or exercised the option.
"All of us here have contributed to the Provident Fund. So, it may be bogus to say, look, here are lots of people who have not contributed and that they have not exercised their option. Here we have exercised the option, we have actually contributed....As far as we are concerned, we are only dealing with remittance."
Pension Corpus Untouched
Earlier, the EPFO had cited financial burden as well in allowing pension in proportion to the salary above the threshold limit. Subsequent to this, the Supreme Court had also posed queries to the Union Government and sought materials to show the financial burden which will be created on the implementation of the High Court judgments.
This was countered by the senior advocate.
"The reason why the Pension Corpus remains intact even after 30 years, is one, people have died, two, accounts and amounts continue being pushed into the Corpus, which is why you have a majestic corpus sitting today. So, it's shocking that they would even make this argument, that EPFO has some fund issues. It's like Reliance coming and saying we are strapped. Let's be realistic, of all the people in the country, EPFO comes and says that we don't have funds.
They haven't once touched the corpus, not once. The entire payment, all these years, to everybody had been coming from the interest on the Fund. A portion of the interest, see the interest, 6000 crores a year is interest. So the Central Board of Trustees is fully conscious of this situation, took a conscious decision."
Apart from Shankarnarayan, another advocate representing three associations including a Pensioners Welfare society made submissions primarily on proviso to 11 (3) under the 2014 Amendment Scheme and 26 (6) of the EPF Scheme, 1952.
"If you exercise an option under 26 (6) of the EPF Scheme,1952, then there is no requirement to exercise any further option under proviso to 11 (3) of the 2014 Amendment Scheme. The option under 11(3) is subsumed under the option one exercises under 26 (6)", the counsel submitted.
The court will resume hearing the matter today when the EPFO and Union of India will make submissions on the rejoinder filed.
Case Title: EPFO vs Sunil Kumar and Ors

EPF Pension Case : Provident Fund Members Don't Automatically Become Eligible Under EPS, EPFO Tells Supreme Court[ Day 1]


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