Supreme Court upholds validity of Employees' Pension (Amendment) Scheme of 2014

The Supreme Court on Friday upheld the validity of the 2014 Employees' Pension (Amendment) Scheme.

A bench, headed by Chief Justice U.U. Lalit and comprising Justices Aniruddha Bose and Sudhanshu Dhulia, declared the provisions of August 22, 2014 notification as legal and valid. "The provisions contained in the notification no. G.S.R. 609(E) (notification) dated 22nd August 2014 are legal and valid."

The 2014 amendment had capped the maximum pensionable salary (basic pay plus dearness allowance) at Rs 15,000 per month - and prior to the amendment, it was capped at Rs 6,500 a month.

The top court also quashed the threshold limit of Rs 15,000 monthly salary for joining the pension fund. "The requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeds Rs 15,000 per month as an additional contribution under the amended scheme is held to be ultra vires the provisions of the 1952 Act," it said.

The bench said the pension scheme ought to apply to the employees of the exempted establishments in the same manner as this scheme applies to the employees of unexempted or regular establishments.

"Amendment to the pension scheme brought about by the notification no. G.S.R. 609(E) dated 22nd August 2014 shall apply to the employees of the exempted establishments in the same manner as the employees of the regular establishments," it said.

The bench said there was uncertainty as regards validity of the post amendment scheme, which was quashed by the judgments of three high courts. Thus, all the employees who did not exercise the option though being entitled to do so but could not due to the interpretation of the cut-off date by the authorities, ought to be given a further chance to exercise their option, it added.

The top court said that employees who, due to lack of clarity, did not join the scheme will be given another four months to avail the 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," said Justice Bose, who authored the judgment on behalf of the bench.

The top court said it agrees with its 2016 judgement in R.C. Gupta vs Regional Provident Fund Commissioner, where the court held that there can be no cut-off date to avail benefit of the option under the scheme.

It also clarified that employees, who retired before the amendment on September 1, 2014 without exercising the option under para 11(3) of the unamended EPS, will not be eligible to the exercise option under the scheme.

The top court judgment on appeals filed by Employees Provident Fund Organisation and the Centre challenged the verdicts of the high courts of Kerala, Rajasthan and Delhi, which had quashed the 2014 scheme.

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