Supreme Court rejects EPFO plea against Kerala High Court verdict

The ruling had held it unrealistic to cap salary at ₹15,000 for quantifying pension

April 03, 2019 10:26 pm | Updated April 04, 2019 01:35 am IST - NEW DELHI

The Supreme Court has dismissed a special leave petition filed against an October 2018 verdict of the Kerala High Court setting aside the Employees Pension (Amendment) Scheme (GSR609(E)) introducing various changes that have drastically reduced the pension eligibility of employees.

“We find no merit in the special leave petition. The same is, accordingly, dismissed,” a Bench led by Chief Justice of India Ranjan Gogoi said, rejecting the appeal filed by the Employees Provident Fund Organisation in a short order on April 1.

The Supreme Court’s order in this case would have an impact on a pending petition filed by retirees and members of the Employees Pension Scheme (EPS) 1995, against the government and the Employees Provident Fund Organisation (EPFO). That case was posted by the apex court for final arguments in May. In that plea, the petitioners have claimed that a 2014 amendment and a 2017 circular exclude thousands from receiving their rightful benefits under EPS 95.

The April 1 order of the apex court related to the appeal against a Division Bench judgment of the Kerala High Court on petitions filed by various organisations and employees challenging the 2014 amendment.

The petitioners in the High Court had pointed out that the amendment order issued in August 2014 limited the maximum pensionable salary to ₹15,000 per month.

The High Court had held that it was absolutely unrealistic to cap the salary at ₹15,000 for quantifying pension. A monthly salary of ₹15,000 then worked out only to about ₹500. Even a manual labourer was paid more than this amount as daily wage. The amendment limiting the maximum salary to ₹15,000 for pensions would deprive most of the employees of a decent pension in their old age. Since the pension scheme was intended to provide succour to the retired employees, this objective would be defeated by capping the salary. The HC added that the PF authority had no right to deny pension legitimately due to the employees on the ground that the fund would get depleted.

Further, the amendment calculated pension on an average of 60 months’ pay instead of 12 months. The High Court held that this stipulation would deprive employees of a substantial portion of their pension.

“No scheme that defeats the purpose of enactment by reducing the pension payable to the employees in their old age to a ridiculously low amount, which is not sufficient even for ensuring a decent life to them cannot be sustained,” the October 2018 order had observed.

Besides, the High Court had also held the requirement of additional contribution at 1.6% in the case of existing employees as legally untenable.

The High Court set aside the orders of the Employees Provident Fund Organisation declining to grant opportunities to petitioners to exercise a joint option to remit contributions to the Employees Pension Scheme on the basis of actual salaries drawn by them.

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