Holding

The 2014 amendment to the Employees' Pension Scheme is valid, applies to exempted establishments, but the employee contribution provision is ultra vires and its operation is suspended for six months.

Summary

The Supreme Court examined the legality of the Central Government's 2014 amendment (G.S.R. 609(E)) to the Employees' Pension Scheme, 1995, which raised the maximum pensionable salary, introduced a joint option for employees earning above Rs.15,000, and required such employees to contribute an additional 1.16% of their salary. The Court considered whether the amendment was within the powers granted by Section 7 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and whether the salary‑based classification violated Article 14 of the Constitution. It held that the amendment was valid and applies equally to employees of exempted and regular establishments, but the provision mandating employee contributions beyond the ceiling was ultra vires the Act. Consequently, the Court suspended that part of the order for six months to allow legislative correction and extended the period for exercising the joint option by four months. All the appeals were allowed, and the High Court judgments were modified accordingly.

Issues considered

The amendment G.S.R. 609(E) is within the Central Government's power under Section 7 of the EPF Act and Schedule III.
Whether the salary‑based classification of employees under the amendment violates the equality principle under Article 14.
Whether requiring employees earning above Rs.15,000 to contribute an additional 1.16% is ultra vires the EPF Act.
Validity of the change in computation of pensionable salary and the imposition of a cut‑off date.
Whether employees of exempted establishments are entitled to the same pension benefits as those of regular establishments.

Legislation cited

Constitution of Indias. Article 14, s. Article 142, s. Article 32
Employees' Provident Funds and Miscellaneous Provisions Act, 1952s. 17(A), s. 2(kA), s. 2(kB), s. 6A, s. 7

Subjects

Employees' Pension SchemeEPF ActSection 6ASection 7Article 14ultra viressalary ceilingjoint optionexempted establishmentspensionable salarycontribution requirement

Judgment

[2022] 11 S.C.R. 959 959

THE EMPLOYEES PROVIDENT FUND ORGANISATION & A
ANR. ETC.
v.
SUNIL KUMAR B. & ORS. ETC.
(Civil Appeal No. 8143 of 2022) B
November 04, 2022
[UDAY UMESH LALIT, CJI, ANIRUDDHA BOSE AND
SUDHANSHU DHULIA, JJ.]
Service Law:
C
Employees’ Provident Funds and Miscellaneous Provisions
Act, 1952: ss. 6A, 7 - Employees’ Pension Scheme, 1995 – Paras 3,
6, 11, 12 and 14 – Certain amendments and modifications made by
the Central Government to the Employees’ Pension Scheme, 1995 –
Legality of – Changes sought be effected in paragraphs 3, 6, 11,
D
12 and 14 of the 1995 scheme, whereby s. 6A was introduced to the
said Act, which contemplated formulation of a scheme for employees’
pension and the pension fund was to comprise of deposit of 8.33
per cent of the employers’ contribution made towards provident fund
corpus and determination of pensionable salary; that the maximum
pensionable salary was enhanced from Rs.5000/- to Rs.6500/- by a E
notification G.S.R. 609(E) dated 22nd August 2014, to be effective
from 1 st September 2014; that the Central Government was to
contribute to the fund at the rate of 1.16 per cent of the pay of the
members, the employees within the changed pension regime drawing
more than Rs.15000/- per month have to also contribute at the rate
F
of 1.16 % on salary exceeding Rs.15000/- as additional contribution
each month under the amended provisions; fresh option was to be
exercised by the member within a period of six months, and if not, it
would be deemed that the concerned member has not opted for
contribution over the wage Ceiling – Several writ petitions filed in
different High Courts seeking invalidation of this notification – Writ G
petitions also filed u/Art. 32 challenging the Notifications – Held:
Provisions contained in the notification no. G.S.R. 609(E) dated
22nd August 2014 are legal and valid – Amendment to the pension
scheme brought about by the notification would apply to the
employees of the exempted establishments in the same manner as
H
959
960 SUPREME COURT REPORTS [2022] 11 S.C.R.

A the employees of the regular establishments – Employees who had
exercised option under the proviso to paragraph 11(3) of the 1995
scheme and continued to be in service as on 1st September 2014,
would be guided by the amended provisions of paragraph 11(4) of
the pension scheme – Members, who did not exercise option, as
contemplated in the proviso to paragraph 11(3) of the pension
B
scheme (as it was before the 2014 Amendment) would be entitled to
exercise option under paragraph 11(4) of the post amendment
scheme – Scheme as it stood before 1st September 2014 did not
provide for any cutoff date and thus those members shall be entitled
to exercise option in terms of paragraph 11(4) of the scheme, as it
C stands at present – Time to exercise option under paragraph 11(4)
of the scheme, under these circumstances, shall stand extended by
a further period of four months – Employees who had retired prior
to 1st September 2014 without exercising any option under
paragraph 11(3) of the pre-amendment scheme have already exited
from the membership thereof, thus, they would not be entitled to the
D
benefit of this judgment – Employees who have retired before 1st
September 2014 upon exercising option under paragraph 11(3) of
the 1995 scheme shall be covered by the provisions of the paragraph
11(3) of the pension scheme as it stood prior to the amendment of
2014 – Requirement of the members to contribute at the rate of 1.16
E per cent of their salary to the extent such salary exceeds Rs.15000/
- per month as an additional contribution under the amended scheme
is held to be ultra vires the provisions of the 1952 Act – Operation
of this part of its order is suspended for a period of six months – No
flaw is found in altering the basis for computation of pensionable
salary – View taken by the Division Bench in the case of R.C. Gupta’s
F
case so far as interpretation of the proviso to paragraph 11(3) (pre-
amendment) pension scheme is concerned, is upheld – Fund
authorities to implement the directives contained in the said judgment
within the stipulated period – Impugned judgment modified
accordingly – Constitution of India – Arts. 14 and142.
G Constitution of India: Art. 14 – Reasonable classification –
Provident Funds Employees’ Pension Scheme, 1995 – Employees of
the pension scheme – Held: Cannot be considered as a homogenous
group – No distinction can be made among different categories of
employees based on their monthly salary to determine for whom the
H scheme shall operate in a particular manner – It is within the power
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 961
ETC. v. SUNIL KUMAR B. & ORS. ETC.

and authority of the statutory authorities to reasonably classify A
different sets of employees and categorise them for the nature of
benefits they might get from an existing scheme – Classification of
the employees made by the authorities on the basis of the salary
drawn in the 2014 amendment meets the test of reasonable
classification contemplated inArt. 14.
B
Allowing the appeals, the Court
HELD : 1. The provisions contained in the notification no.
G.S.R. 609(E) dated 22nd August 2014 are legal and valid. So far
as present members of the fund are concerned, this Court has
read down certain provisions of the scheme as applicable in their C
cases. The 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.
The employees who had exercised option under the proviso to
paragraph 11(3) of the 1995 scheme and continued to be in service D
as on 1st September 2014, will be guided by the amended
provisions of paragraph 11(4) of the pension scheme. The
members of the scheme, who did not exercise option, as
contemplated in the proviso to paragraph 11(3) of the pension
scheme (as it was before the 2014 Amendment) would be entitled E
to exercise option under paragraph 11(4) of the post amendment
scheme. Their right to exercise option before 1st September 2014
stands crystalised in the judgment of this Court in the case of
R.C. Gupta . The scheme as it stood before 1st September 2014
did not provide for any cutoff date and thus those members shall
be entitled to exercise option in terms of paragraph 11(4) of the F
scheme, as it stands at present. All the employees who did not
exercise option but were entitled to do so but could not due to
the interpretation on cut-off date by the authorities, ought to be
given a further chance to exercise their option. Time to exercise
option under paragraph 11(4) of the scheme, under these G
circumstances, shall stand extended by a further period of four
months. The employees who had retired prior to 1st September
2014 without exercising any option under paragraph 11(3) of the
pre-amendment scheme have already exited from the membership

H
962 SUPREME COURT REPORTS [2022] 11 S.C.R.

A thereof. They would not be entitled to the benefit of this judgment.
The employees who have retired before 1st September 2014 upon
exercising option under paragraph 11(3) of the 1995 scheme shall
be covered by the provisions of the paragraph 11(3) of the pension
scheme as it stood prior to the amendment of 2014. The
requirement of the members to contribute at the rate of 1.16 per
B
cent of their salary to the extent such salary exceeds Rs.15000/
- per month as an additional contribution under the amended
scheme is held to be ultra vires the provisions of the 1952 Act.
This Court suspends operation of this part of its order for a period
of six months. This Court does so to enable the authorities to
C make adjustments in the scheme so that the additional contribution
can be generated from some other legitimate source within the
scope of the Act, which could include enhancing the rate of
contribution of the employers. This Court does not find any flaw
in altering the basis for computation of pensionable salary. This
Court agrees with the view taken by the Division Bench in the
D
case of R.C. Gupta so far as interpretation of the proviso to
paragraph 11(3) (pre-amendment) pension scheme is concerned.
The fund authorities shall implement the directives contained in
the said judgment within a period of eight weeks, subject to
directions contained earlier in this paragraph. The judgments
E impugned are modified accordingly. [Paras 44 and 45][997-F-H;
998-A-H; 999-A-H]
2.1 The employees’ argument is that the obligation is only
on the employer to remit the sum from one fund to the other.
There is no ceiling limit and the remittance required to be made
F is of 8.33 per cent of the employee’s pay. But this point also,
does not aid the employees. While paragraphs 3 and 6 of the
scheme have laid down what the fund would be constituted of and
who would be the members of the pension scheme, paragraph
11, which is an integral part of the pension scheme, specifies the
criteria for those who become mandatory members and, from
G among the existing members, who may be permitted to exercise
option to remain in the scheme in spite of drawing salary beyond
the ceiling limit. It is a fact that those who are covered by
paragraph 26(6) of the provident fund scheme automatically enters
into the pension scheme as well. But this provision cannot be
H held to have precluded the Central Government from laying down
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 963
ETC. v. SUNIL KUMAR B. & ORS. ETC.

conditions to remain eligible for the pension scheme and specify A
wage or salary ceiling for individual employees beyond which the
scheme may not operate. The submission that the pension scheme
considers employees as a homogenous group and no distinction
can be made among different categories of employees based on
their monthly salary to determine for whom the scheme shall
B
operate in a particular manner cannot be accepted. It is well within
the power and authority of the statutory authorities to reasonably
classify different sets of employees and categorise them for the
nature of benefits they might get from an existing scheme. In
fact, the scheme, at its inception was made applicable to those
drawing wages upto Rs.5000/-. The provision relating to C
exercising option was introduced later, in the year 1996. [Para
30][990-D-H; ]
2.2 The amendment was made in exercise of power
otherwise vested in the authority making such amendment and
the amendments were made on the basis of certain relevant D
materials and not whimsically. The scope of judicial scrutiny to
test the constitutionality of the amendment provisions becomes
narrow. Classification of the employees made by the authorities
on the basis of the salary drawn in the 2014 amendment meets
the test of reasonable classification contemplated in Article 14 of
the Constitution of India. This Court is alive to the concern E
expressed by the High Court as regards impact on the economic
stability of retired employees suddenly being deprived of pension.
But, based on such macro-level social disparities, this Court does
not think in exercise of judicial power this Court can require the
State to operate a pension scheme in a particular manner. These F
factors would be for the policy makers to examine and prescribe.
This Court cannot issue directions on the Central Government
to work out statutory scheme in a particular fashion. So far as
fixing of cut-off date is concerned, the 2014 amendment
specifically provides for that. In the case of R.C. Gupta’s case,
the wording of the scheme in paragraph 11(3) was different. Thus, G
the ratio of that judgment cannot be applied to the changed
provision of the scheme. Fixing of cut-off date was considered in
the case of Mafatlal Group Staff Association and held to be
permissible. [Paras 32 and 33][991-G-H; 992-A-B; 992-F-H]
H
964 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 2.3 The requirement in the scheme for employee’s
contribution to the extent of 1.16 per cent for option members is
illegal. There is nothing in the 1952 Act which requires payment
to the pension fund by an employee. Section 6A of the Act also
does not have any such stipulation. Since the Act does not
contemplate any contribution to be made by an employee to
B remain in the scheme, the Central Government under the scheme
itself cannot mandate such a stipulation. What is to be considered
is that for the mandatory members, the Central Government
continues to contribute the requisite 1.16 per cent of their salary.
For option members, additional contribution by them is
C contemplated in order to remain in the scheme. A legislative
amendment of the Act would have been necessary, providing for
contribution to be made by an employee. To that extent, the
provision of the scheme requiring contribution by an individual
employee is ultra vires the parent act. At the same time, it cannot
be ignored the fact that the pension amount to be paid has been
D calculated on projections that the corpus would include the option
employees’ additional contribution of 1.16 per cent. This Court
also cannot mandate the Central Government to contribute to a
pension scheme, in absence of a legislative provision to that effect.
It would be for the administrators to readjust the contribution
pattern within the scope of the statute and one possible solution
E
could be to raise the level of the employer’s contribution in the
scheme. The operation of this part of judgment is suspended for
a period of six months so that the legislature may consider the
necessity of bringing appropriate legislative amendment on this
count. For the said period, the scheme as it stands shall continue.
F Till such time, if no such legislative exercise is undertaken, the
duty to contribute 1.16 per cent of the salary shall apply on option
members as well. This contribution shall be adjusted depending
on any amendment that may be brought. For the period of six
months, however, the opting employees shall make payment of
1.16 per cent contribution as stop gap measure. In the event no
G amendment to the statute or the scheme is made within such
extended time, then the administrators of the fund will have to
operate the pension fund for the option members from out of the
existing corpus.[Para 35][993-D-H; 994-A-C]
2.4 The change of methodology comes within the power of
H the Central Government to modify a scheme under Section 7 of
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 965
ETC. v. SUNIL KUMAR B. & ORS. ETC.

the 1952 Act read with item 10 of the Schedule III to the Act as A
also paragraph 32 of the scheme. This alteration of computation
is ancillary to determination of scale of pension along with
pensionary benefits and paragraph 32 of the pension scheme
specifically authorises the Central Government to alter the rate
of contribution payable under the Scheme or the scale of any
benefit admissible under the scheme. There is a reasonable basis B
for effecting change in the computation methodology for
determining pensionable salary and there is no illegality or
unconstitutionality in effecting this amendment. [Para 36][994-
C-F]
2.5 Clause 1(3) of the pension scheme contemplates C
keeping within its fold the establishments to which the 1952 Act
applies. These establishments would include exempted
establishments as well. The employees of exempted
establishments are integrated into the pension scheme and the
employees of an exempted establishment should not be deprived
of the benefit of getting option to remain in the pension scheme D
while drawing salary beyond the ceiling limit, in situations where
similarly situated employees of unexempted establishments can
exercise such option. In the event the scheme is construed in a
way which would exclude them, that would lead to artificial
classification of otherwise same categories of employees. Thus, E
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. [Para 38][995-D-E]
2.6 One of the arguments against their inclusion into the
scheme by exercising option is that the corpus of the contribution F
for exempted establishments have been kept in separate coffers
maintained by the trust created for such purpose and not with
the authorities specified under the Act. Taking that factor into
account, in order to be entitled to the benefits of the pension
fund, the employer and the employee, simultaneously with G
exercising option in terms of the order of this Court, shall also
have to give an undertaking of transferring the employers’
contribution at the stipulated rate maintained by the trusts, which
shall be equivalent to and not lower than the sum which would
have been transferable, had such fund been maintained by the
provident fund authorities. Such transfer shall take place, H
966 SUPREME COURT REPORTS [2022] 11 S.C.R.

A immediately after exercise of such option, within such period as
may be directed by the administrators of the pension fund. [Para
39][995-F-H; 996-A]
2.7 The paragraph 11(4) provides for extending the pension
coverage in respect of individual employees drawing salary more
B than Rs. 15000/- per month. This paragraph however, is subject
to two conditions: The first one is that to be eligible for the benefits
of extended coverage, the existing members as on 1 st September
2014 must contribute at the rate of 1.16 per cent on salary
exceeding Rs. 15,000/- per month. The second one is that a fresh
option should be exercised within a period of six months from
C the first day of September 2014. The scheme contemplates that
those members of the fund who had exercised option to remain
in the scheme as per the requirement of proviso to paragraph
11(3) of the scheme, as it stood prior to the 2014 amendment,
would be able to give fresh option with the employer if their salary
cross the ceiling limit. In respect of that provision, this Court in
D
the R.C. Gupta’s case had held that the said proviso did not
contemplate a cut-off date. So far as the first condition is
concerned, viwes are expressed as regards legality of having such
a provision. In relation to the second condition, the eligibility for
enhancement cannot be restricted to those employees only who
E had exercised the option to remain in the scheme once their salary
went beyond the capping of Rs. 6500/- per month. In case of R.C.
Gupta’s case, it has been specifically held that there was no cut-off
date in proviso to paragraph 11(3) as it stood before the 2014
amendment. The interpretation given to the proviso to paragraph
11(3) prior to 2014 amendment does not require any
F reconsideration. The reasoning of the two-judge Bench of this
Court on this point , is accepted. As there was no cut-off date to
be contemplated prior to the 2014 amendment, limiting the
entitlement of enhanced pension coverage to those employees
only who had already exercised an option under Clause 11(3) of
G the unamended scheme would be contrary to the ratio of the
decision of this Court held in the case of R.C. Gupta’s case. It is
not held that no option was required to be exercised as per proviso
to paragraph 11(3) of the scheme, as it stood prior to 2014
amendment. As held in the case of R.C. Gupta’s case, there was
no time-limit for exercising such option. [Para 40, 41][996-B-H;
H 997-A-B]
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 967
ETC. v. SUNIL KUMAR B. & ORS. ETC.

2.8 The dual option, as is contemplated in paragraph 11(4) A
of the pension scheme (post 2014 amendment), has to be merged
into one. In the event the employer and employee jointly opt for
coverage beyond the salary limit of Rs. 15000/-, without giving
an earlier option under the unamended Clause 11(3) of the
pension scheme, they would not be automatically excluded from
B
their right to exercise option under paragraph 11(4) of the scheme,
post amendment. [Para 42][997-B-C]
2.9 The other condition for enhanced coverage relates to
the date within which such fresh option is to be exercised by a
member, which is stipulated to be within a period of six months
from 1st September 2014. It would be legitimate to proceed on C
the basis that several members did not exercise such option
earlier because of the stand taken by the Provident Fund
authorities that option under proviso to paragraph 11(3) of the
scheme (prior to 2014 amendment) has to be exercised within a
specified date, which stand was negated in the decision of R.C. D
Gupta’s case. The time limit for coverage beyond the ceiling
amount should be extended by a further period of four months
from today to enable all the members of the pension fund drawing
more than Rs.6500/- to exercise the joint option as contemplated
in paragraph 11(4) of the pension scheme (post 2014 amendment).
Once such joint option is exercised, the transfer of fund from the E
provident fund corpus to the pension fund shall be effected in
terms of the scheme. [Para 43][997-C-F]
R.C. Gupta and Others vs. Regional Provident Fund
Commissioner, Employees Provident Fund Organisation
and Other (2018) 14 SCC 809 – affirmed. F
Bengal Immunity Company Limited v. State of Bihar
and Others (1955) 2 SCR 603; Union of India and
Another v. Raghubir Singh (Dead)by Lrs. Etc. (1989)
2 SCC 754 : [1989] 3 SCR 316; Keshav Mills Co. Ltd.
v. Commissioner of Income Tax Bombay North,
Ahmedabad (1965) 2 SCR 908; Waman Rao and Others G
v. Union of India and Others (1981) 2 SCC 362 : [1981]
2 SCR 1 – held inapplicable.
Case Law Reference
(2018) 14 SCC 809 affirmed Para 4
H
968 SUPREME COURT REPORTS [2022] 11 S.C.R.

A (1955) 2 SCR 603 held inapplicable Para 28
[1989] 3 SCR 316 held inapplicable Para 28
(1965) 2 SCR 908 held inapplicable Para 28
[1981] 2 SCR 1 held inapplicable Para 28
CIVIL APPELLATE/ORIGINAL/INHERENT JURISDICTION
B : Civil Appeal Nos.8143-8144 of 2022.
From the Judgment and Order dated 12.10.2018 of the High Court
of Kerala at Ernakulam in Writ Petition (C) Nos.602 and 13120 of 2015.
With
Civil Appeal Nos.8145-8146, 8147, 8149, 8155, 8156, 8150-8151,
C 8152, 8148, 8153, 8154 OF 2022, Writ Petition (C) Nos.318 of 2022,
1218 of 2020, 1332 of 2020,1312 of 2019, 875 of 2019, 832 of 2019, 601
of 2019, 500 of 2019, 512 of 2019, 466 of 2019, 86 of 2021, 1356 of 2021,
1379of 2021, 767 of 2021, 477 of 2021, 414 of 2021,1134 of 2018, 390 of
2019, 511 of 2019, 1459 of 2020, 349 of 2019, 372, 360, 233, 141, 118,
250, 406, 368, 393, 395, 371, 374, 385, 367, 369, 411, 466 of 2018, 269 of
D
2019, 327 of 2019, 352 of 2019, 69 of 2018, 804 of 2018, 594 of 2018,
884 of 2018, 778 of 2018, 874 of 2018, 1149 of 2018, 1167 of 2018, 1430
of 2018, 1433 of 2018, 1428 of 2018, 380 of 2018, 498 of 2022, Contempt
Petition (C) Nos.1917-1918 of 2018 in Civil Appeal Nos.10013-10014 of
2016 and Contempt Petition (C) Nos.619-620 of 2019 in Civil Appeal
E Nos.10013-10014 of 2016
K.K Venugopal, AG, Vikramjit Banerjee, Sanjay Jain, ASGs, R.
Balasubramanian, C.A. Sundaram, Dr. K.P. Kylasanatha Pillay, V.
Chitambaresh, P.N. Ravindran, Venkatramani, J.P. Cama, Soumya
Chakraborty, Ms. Meenakshi Arora, Siddharth Bhatnagar, R. Basant,
A.N.S. Nadkarni, R. Venkatramani, Gopal Sankaranarayanan, Jayanth
F Muthraj, Ms. V.P. Seemanthini, Vikas Singh, Sanjay Parikh, Dr. Manish
Singhvi, Sr. Advs., Ankur Talwar, Ms. Chinmayee Chandra, Ms. Ruchi
Kohli, Siddhartha Sinha, Prashant Rawat, Ms. Janhvi Prakash, Tathagat
Sharma, Shubhendu Anand, Kartik Dev, Ms. Sujatha Bagadhi, Raj
Bahadur Yadav, Amrish Kumar, Siddharth, Raman Yadav, Nring
G Chamwibo Zeliang, Ms. Rohini Musa, Abhishek Gupta, Zafar Inayat,
Amit Kumar Agrawal, C.U. Singh, Ms. Nandini Gore, Ms. Sonia Nigam,
Ms. Tahira Karanjawala, Ms. Shreyas Maheshwari, M/s. Karanjawala
& Co., A. Venayagam Balan, C.M. Sundaram Iyer, Ms. Rashmi
Singhania, Roy Abraham, Ms. Reena Roy, Akhil Abraham, Audhinder
Lal, Himinder Lal, Bahar U. Barqui, Aftab Ali Khan, Benny P. Thomas,
H Prakash Ranjan Nayak, Udayaditya Banerjee, Ms. Pracheta Kar, Aditya
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 969
ETC. v. SUNIL KUMAR B. & ORS. ETC.

Sidhra, Nadeem Afroz, Raghenth Basant, Ms. Liz Mathew, Vishnu A
Pazhanganat, Akshay Sahay, Ms. Roopali Lakhotia, P. S. Sudheer, Rishi
Maheshwari, Ms. Anne Mathew, Ms. Shruti Jose, Bharat Sood,
Purushottam Sharma Tripathi, Ravi Chandra Prakash, Mukesh Kumar
Singh, Narendra Kumar Goyal, Ms. Kajal Rani, Neeraj Chaudhri, Ms.
Rashmi Verma, Ms. Pooja Dhar, Pratul Pratap Singh, Mantavya Sharma,
Ms. Tanya Srivastava, Ms. Vani Vyas, Abhishek Tripathi, Amit, Rajiv B
Kumar, Nishe Rajen Shonker, Abraham C. Mathews, Ms. Anu K. Joy,
Alim Anvar, Ms. Sushma Singh, Trilok Nath Saxena, L. Nidhiram Sharma,
Ms. Srishti Agnihotri, Satwik Parikh, Ms. Sanjana Grace Thomas, Deepak
Goel, Chaman Rana, Ms. Urvashi Sharma, R. Anand Padmanabhan,
Shashi Bhushan Kumar, Neeleshwar Pavani, Vedavalli Kumar, Vipin C
Kumar Saxena, Vipin Sundu, Yatish Yadav, Maneesh Saxena, Ms. Kajal
Rani, Pawan Kumar, Ikshit Singhal, Sagar Kumar, Ranvir Singh Chhillar,
Mukesh Kumar, Shantanu Jugtewat, Mohit Paul, Kartik Nayar, Rishab
Kumar, Rohan Thawani, Ramjee Pandey, Sujit Kumar Jha, Grijesh
Pandey, Raghvendra Shukla, Uday Prakas, Girijesh Pandey, Kafeel
Ahmad, Ms. Alapana Pandey, Ajay Tiwari, Akash Kakade, Somanath D
Padhan, Neelmani Pant, Ms. Sukhada Kakade, Swetab Kumar, Anand
Varma, Ms. Apoorva Pandey, Ms. Adyasha Nanda, Jagjit Singh Chhabra,
Saksham Maheshwari, Ms. Binisa Mohanty, Mritunjay Kumar Sinha, Y.
Raja Gopala Rao, Korada Pramod Kumar, Dhuli Gopi Krishna, Himanshu
Gupta, Manoj C. Mishra, Ashwin Kumar DS, Ms. Aditi Dani,
Rangasharan Mohan, Ms. Surbhi Mehta, Pranesh, S. S. Bandyopadhyay, E
Rajiv Shukla, Md. Shahid Anwar, Dr. Shakeelazama Ansari, Syed Rehan,
Aryan P. Nanda, Nikhil Goyal, Rishabh Sancheti, Anchit Bhandari, Suyash
Jain, K. Paarivendhan, V.N. Koura, Mrs. Paramjeet Benipal, Avneesh
Arputham, Praveen Kr. Singh, M/s. Arputham Aruna and Co, Gunnam
Venkateswara Rao, Dishant Bhati, Ms. Anushka Sharda, Rohit Ghosh,
F
M/s. Khaitan & Co., Rakesh Sinha, MG Akbar, Jeemon Raju K, Arvind
Gupta, Ms. Laxmi Kumari, Amit Kumar, Puneet Taneja, Ms. Priti,
Manmohan Singh Narula, Ms. Anupriya, Sameer Parekh, D.P. Mohanty,
Aditya Sharma, Ishan Nagar, Abhiram Naik, M/s. Parekh & Co., Tabrez
Malawat, Sourajit Sarkar, Syed Hamza, N D Kaushik, Abhaya Nath
Das, V K Shukla, Rahul Gupta, Shashank Sharma, Ms Riya Soni, Satish G
Kumar, Punit Dutt Tyagi, Abhijeet Kumar Pandey, Ashish Bhan, Mohit
Rohatgi, Rajendra Dangwal, Kaustub Narendran, Syed Jafar Alam, K.C.
Kaushik, Rahul Kaushik, Bhuvneshwari Pathak, Ms. Shilpi Satyapriya
Satyam, Ms. Sangeeta Bharti, Ashish Kumar, Malvi Balyan, Sushil Kumar
Singh, Ajit Pudussery, Vijayan K., R.K. Kapoor, Rajat Kapoor, Ms.
H
970 SUPREME COURT REPORTS [2022] 11 S.C.R.

A Kheyali Singh, Karunakar Mahalik, B. Paramesh, Sarbendra Kumar,
Onkar Singh, Vimal Johnson Kerketta, Ms. Neha Tripathi, Ms. Monika,
C. K. Sasi, Abdulla Naseeh V.J., Ms. Meena K. Poulose, Ms. Neetica
Sharma, Rishabh Dua, M/s M.V.Kini & Associates, M. Gireesh Kumar,
Ankur S. Kulkarni, Ms. Puspita Basak, Sunil Kumar, Rakesh Mishra,
Sandeep Kumar Dwivedi, Umesh Dubey, Pradeep Kumar Dwivedi,
B
Raghuvendra Upadhyay, Kisalaya Shukla, Ms. Purnima Jain, Vaibhav
Tripathi, Awadhesh Kumar, Thampan Thomas, K.V. Mohan, Ms. Tessy
Varghese, K.V. Balakrishnan, Rahul Kumar Sharma, K. Parameshara,
Anand Dilip Landge, Ms. A. Sregurupriya, P. S. Sudheer, Rahul Jain,
Ms. Lalit Mohini Bhat, Hetu Arora Sethi, Sriram P., Santhosh Krishnan,
C Mohammed Sadique T.A., Devashish Bharuka, Kunal Rawat, Ms.
Radhika Maharwal, Ms. Pratiksha Sharma, Mueed Shah, Ankit Acharya,
S. Rajappa, Ms. Shilpa Liza George, Shashank Shekhar, Chander Shekhar
Ashri, Aditya Dhawan, Ms. Kiran Dhawan, Ms. Madhvi S. Sawant,
Hitesh Kumar Sharma, Akhileshwar Jha, Ms. Deepti S. Rane, Subhash
S. Kadam, Naresh Kumar, Dr. Ashwani Bhardwaj, Ms. Vinay Bhardwaj,
D
Manoj Pandey, Sibo Sankar Mishra, Debabrata Dash, Niranjan Sahu,
Rajesh Kumar Nayak, Ms. Kanika Chug, Satish Bhargawa, Lakshmeesh
S. Kamath, Ms. Samriti Ahuja, Mohan Lal Sharma, Ms. Shikha Sharma,
Rajesh Gupta, Harpreet Singh, Ajay Chandra, Sumit R. Sharma, Preet
Pal Singh, Prasenjit Keswani, Rohan Thawani, Upmanyu Tewari, Ms.
E Sonia Dube, Shatadru Chakraborty, Ms. Kanchan Yadav, Ms. Surbhi
Anand, M/s. Legal Options, Mrs. Lalita Kaushik, Ms. Madhumita
Bhattacharjee, Ms. Manjula Gupta, Mrs. Rani Chhabra, Rahul Pratap,
Anil Nag, S.D. Singh, Harsh Nandwana, Ram Kripal Singh, Siddharth
Singh, Ms. Bharti Tyagi, Varinder Kumar Sharma, Siddharth Mittal, Ankit
Goel, Ashish Rana, S. K. Bhattacharya, L.K. Paonam, Ms. Tomthinnganbi
F
Koijam, Niraj Bobby Paonam, Santosh Kumar - I, P. A. Noor Muhamed,
Ms. Vandana Sehgal, Advs. for the appearing parties.
The Judgment of the Court was delivered by
ANIRUDDHA BOSE, J.
Leave granted.
G
2. In this judgment, we shall deal with the legality of certain
amendments and modifications made by the Central Government to the
Employees’ Pension Scheme, 1995 (“1995 Scheme”). Such scheme has
been made in pursuance of, inter-alia, Section 6A of the Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 (“the Act”).
H Such changes, inter-alia, are sought be effected in paragraphs 3, 6, 11,
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 971
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

12 and 14 of the 1995 scheme. The Act originally did not provide for any A
pension scheme and Section 6A was introduced to the said Act by way
of an amendment made in 1995. The amendment of 1995 contemplated
formulation of a scheme for employees’ pension and the pension fund
was to comprise of deposit of 8.33 per cent of the employers’ contribution
made towards provident fund corpus as per the prevailing Statue.
B
Paragraph 11 of the scheme dealt with determination of pensionable
salary. At that point of time, maximum pensionable salary was Rs.5000/
- and this sum had been enhanced subsequently to Rs.6500/-. Pensionable
salary was raised to Rs.15000/- by a notification dated 22nd August 2014
[numbered G.S.R. 609 (E)], which was to be effective from 1st
September 2014. This notification brought certain other modifications in C
the scheme mainly restricting its coverage and we shall discuss these
modifications later in this judgment.
3. In the appeals before us, judgments of the High Courts of Kerala,
Rajasthan and Delhi are assailed. In the case of P. Sasikumar & Others
vs. Union of India (UOI) Represented by the Secretary to Govt. D
of India Ministry of Labour & Department of Employment and
Others [in Writ Petition (C) No. 13120 of 2015], a Division Bench of
the Kerala High Court in its judgment delivered on 12th October 2018
set aside the Employees’ Pension Amendment (Scheme), 2014 conceived
in G.S.R. 609 (E). The Delhi High Court in its judgment delivered on
22nd May 2019 in the case of Bhartiya Khadya Nigam Karamchari E
Sangh and Anr. vs. Union of India and Ors. [in Writ Petition (C) No.
5678 of 2018] followed the view expressed by the Kerala High Court
and quashed a circular issued by the provident fund authorities on 31st
May 2017 precluding exempted establishments from the benefits of higher
pension. In a decision delivered on 28th August 2019 in the case of Union F
of India and Others vs. Jale Singh and Others [in D.B. Special
Appeal Writ No. 436 of 2019] a Division Bench of the Rajasthan High
Court also expressed the same opinion. Appeals arising out of SLP (C)
No. 3289 of 2021, SLP (C) No. 3290 of 2021, SLP (C) No. 2465 of 2021
and SLP (C) No. 3287 of 2021 are directed against the aforesaid judgment
of the Rajasthan High Court and a subsequent decision of a Bench of G
equal strength delivered on 24th September 2019 in the same line. The
appeals originating from SLP (C) Nos. 15063-15064 of 2022 are against
the judgment of the Delhi High Court delivered on 22nd May 2019,
whereas in appeals having their roots in SLP (C) No. 1366 of 2021, SLP
(C) No. 1738 of 2021, judgments of the Delhi High Court delivered
H
972 SUPREME COURT REPORTS [2022] 11 S.C.R.

A following the case of Bhartiya Khadya Nigam Karamchari Sangh
(supra) have been assailed. In another judgment delivered by the same
Bench of the Kerala High Court in the case of Sunil Kumar and Ors.
vs. Union of India & Ors. [in Writ Petition (C) No. 602 of 2015] on
the same day, i.e. 12th October 2018, the aforesaid notification of 22nd
August 2014 was invalidated. That judgment is under challenge in the
B
appeals in connection with SLP (C) Nos. 16721-16722 of 2019. In a
contempt action brought before the Kerala High Court by aspiring
beneficiaries of the pension scheme for implementation of the directions
issued in the judgment dated 12th October 2018, certain directions have
been issued by the Kerala High Court. The judgment to that effect
C delivered on 6th November 2020 is impugned in SLP (C) No. 8547 of
2021.
4. Fifty-four writ petitions have been filed by the employees
themselves or on their behalf under Article 32 of the Constitution of
India seeking invalidation of the notification dated 22nd August 2014.
D The writ petitioners are members of both exempted and unexempted
establishments. We shall address these writ petitions as well in this
judgment, as they involve the same questions of law. We find that notices
are yet to be issued in W.P. (C) No. 1356 of 2021, W.P. (C) No. 1379 of
2021, W.P. (C) No. 767 of 2021 and W.P. (C) No. 477 of 2021 but these
petitions also involve the same questions of law and the main respondents
E have participated in addressing us on these points. As such, these writ
petitions shall also be dealt with in this judgment. We have also heard the
intervenors, most of whom support the employees. In addition, there are
contempt petitions (Contempt Petition (C) Nos. 1917-1918 of 2018 and
Contempt Petition (C) No. 619-620 of 2019) in which implementation of
F a judgment of this Court in the case of R.C. Gupta and Others vs.
Regional Provident Fund Commissioner, Employees Provident
Fund Organisation and Other [(2018) 14 SCC 809] delivered on 4th
October 2016 has been asked for. This judgment dealt with the question
of entitlement of members of the pension scheme, whose pensionable
salary exceeded Rs.6500/- per month to exercise option in terms of
G proviso to paragraph 11 (3) of the scheme. In this judgment, a Division
Bench of this Court repelled the contention of the provident fund authorities
that the said proviso contemplated exercise of option within a specified
time. The said proviso has been omitted by the amendment of 2014.
Rs.6500/- was the maximum pensionable salary prior to 1st September
2014. We shall discuss this judgment in greater detail later.
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 973
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

5. With effect from 16th March 1996, the proviso was added to A
paragraph 11(3) of the scheme giving an option to the employer and
employee for contribution on salary exceeding the aforesaid ceiling of
Rs.6500/-, (which was Rs.5000/- per month prior to 8th October 2001)
to retain the right to pension as per the scheme. 8.33 per cent of
employer’s contribution of salary of an employee out of the deductible
B
amount towards provident fund had to be remitted to the pension fund.
Stand of the authorities was that there were certain restrictions as regards
the time for exercising such option. A set of employees had approached
the provident fund authorities much beyond such perceived specified
date, mostly on the eve of their retirement, seeking to be included in the
pension scheme. The point urged by them was that the amendment of C
1996 was not within their knowledge, the same not having been widely
publicised. The provident fund authorities had rejected their plea. One
set of employees successfully brought action before a Single Judge of
the High Court of Himachal Pradesh. Their right to exercise such option
beyond the time of their salary exceeding the pensionable limit was in
D
question. According to the authorities, that was the cut-off limit. The
Division Bench of the High Court, however, accepted the stand of the
provident fund authorities holding that paragraph 11(3) of the pension
scheme, as it prevailed then, stipulated a cut-off limit. The matter
ultimately came to this Court and in the case of R.C. Gupta (supra), a
Division Bench of this Court accepted the employees’ stand and, inter- E
alia, held:-
“7. Reading the proviso, we find that the reference to the date
of commencement of the Scheme or the date on which the
salary exceeds the ceiling limit are dates from which the option
exercised are to be reckoned with for calculation of F
pensionable salary. The said dates are not cut-off dates to
determine the eligibility of the employer-employee to indicate
their option under the proviso to Clause 11(3) of the Pension
Scheme. A somewhat similar view that has been taken by this
Court in a matter coming from the Kerala High Court [Union
of India v. A. Majeed Kunju, Writ Appeal No. 1135 of 2012, G
order dated 5-3-2013 (Ker)] , wherein Special Leave Petition
(C) No. 7074 of 2014 filed by the Regional Provident Fund
Commissioner was rejected by this Court by order dated 31-
3-2016 [Regl. Provident Fund Commr. v. A. Majeed Kunju,
2016 SCC OnLine SC 1744, wherein it was directed: “SLPs
H
974 SUPREME COURT REPORTS [2022] 11 S.C.R.

A (C) Nos. 7074-76, 7107-108, 7224 of 2014 and 697 of 2016
Heard the learned counsel for the parties and perused the
relevant material. We do not find any legal and valid ground
for interference. The special leave petitions are dismissed SLPs
(C) Nos. 19954 and 33032-33 of 2015 List these special leave
petitions on 26-4-2016. As prayed for, liberty is granted to
B
file additional documents.”]. A beneficial scheme, in our
considered view, ought not to be allowed to be defeated by
reference to a cut-off date, particularly, in a situation where
(as in the present case) the employer had deposited 12% of
the actual salary and not 12% of the ceiling limit of Rs 5000
C or Rs 6500 per month, as the case may be.
8. xxx xxx xxx
9. We do not see how exercise of option under Para 26 of the
Provident Fund Scheme can be construed to estop the
employees from exercising a similar option under Para 11(3).
D If both the employer and the employee opt for deposit against
the actual salary and not the ceiling amount, exercise of option
under Para 26 of the Provident Scheme is inevitable. Exercise
of the option under Para 26(6) is a necessary precursor to
the exercise of option under Clause 11(3). Exercise of such
option, therefore, would not foreclose the exercise of a further
E option under Clause 11(3) of the Pension Scheme unless the
circumstances warranting such foreclosure are clearly
indicated.
10. The above apart in a situation where the deposit of the
employer’s share at 12% has been on the actual salary and
F not the ceiling amount, we do not see how the Provident Fund
Commissioner could have been aggrieved to file the LPA before
the Division Bench of the High Court. All that the Provident
Fund Commissioner is required to do in the case is an
adjustment of accounts which in turn would have benefited
some of the employees. At best what the Provident
G
Commissioner could do and which we permit him to do under
the present order is to seek a return of all such amounts that
the employees concerned may have taken or withdrawn from
their provident fund account before granting them the benefit
of the proviso to Clause 11(3) of the Pension Scheme. Once
H such a return is made in whichever cases such return is due,
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 975
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

consequential benefits in terms of this order will be granted A
to the said employees.”
6. Further modification to the scheme, as we have already
indicated, came on 22nd August 2014 to be effective from 1st September
2014. Paragraph 11 of the scheme, before such modification by G.S.R.
No. 609 (E) of 22nd August 2014 was introduced, and subsequent to the B
said G.S.R. becoming operational, read:-
Befor e M o dificatio n After M o dificatio n
11 .Determi nat ion of Pensi ona bl e 1 1. Determina tio n of Pen sion ab le
Sa lary. - (1 ) Th e p ensio na ble S ala ry. - (1 ) Th e pen sion a ble s ala ry
sal ary sh all b e the avera ge mon th ly p a y sh all b e the a ver ag e mo nt hly pa y
dra wn in any man ner in clud ing o n d raw n in an y mann er inclu din g on
piece ra te ba sis du rin g co ntr ibu tory p iece rate b a sis d uri ng con trib uto ry C
perio d of ser vice in the sp an o f 1 2 p eriod o f service in th e sp an of sixty
mo n ths p recedin g th e dat e o f exit from mo nth s pr eced ing the d ate of exit fro m
the member ship of t he Emplo yees ’ th e mem b ersh ip of th e P ens ion Fu nd
Pen sio n Fun d. a nd the pen sio na ble sa lary s hal l b e
Pr ovid ed tha t if a memb er w as n ot in d eter mined o n pro -rata ·ba sis fo r th e
receipt o f f ull p ay du rin g the p erio d of p ensio na ble service up to the 1 st d ay o f
twelve mo nth s pr eced ing th e day h e S eptember , 2 01 4, su bject to a maximu m
cea sed to b e the memb er of th e Pensio n o f six tho us an d an d five hu nd red r up ees D
Fu nd , the avera ge o f previo us 1 2 p er mon th, an d fo r the per iod t herea fter
mo n ths f ull p ay d raw n b y him d urin g a t the m a ximum o f fifteen t hou sa nd
the p erio d fo r wh ich cont ribu tio n to th e ru pees p er mon th :
pen sion fu nd w as recovered , sh all b e Pro vided th at if a m emb er wa s n o t in
taken int o accou nt as p ensio na bl e receip t of ful l pay d uri ng th e perio d o f
sal ary for ca lcula tin g pen sion . si xty mo nt hs precedi ng the d ay h e
ceas ed to be th e memb er o f the P ens ion
Fun d, th e avera ge o f previo us sixty E
(2 ) If d uri ng t he sa id s pa n of 12 m ont hs mo nth s ful l pa y d ra wn by him d ur ing
there ar e n on -co ntr ibu tor y p eriod s of th e peri od for whi ch con trib utio n to th e
service inclu din g ca ses wh ere th e p ensio n fun d wa s r eco vered, sha ll b e
memb er ha s dra wn s ala ry fo r a pa rt of ta ken i nto a cco un t a s pen sion ab le
the mon th, th e to tal w ag es du rin g th e sa lar y fo r cal cu lat ing p ensi on .
12 mo nth s spa n sh all b e divid ed by th e
actu al nu m ber of d ays fo r wh ich sa lar y (2) If du rin g th e s aid sp an o f 6 0 mon th s
ha s been dr aw n an d the amo un t so th ere a re no n-con trib uto ry perio ds o f F
derived sh all be mu ltiplied by 30 to ser vi ce in clud ing cases wher e t he
wor k o ut th e a vera ge mon thly pa y. mem ber h as d raw n sa lary for a p ar t o f
th e mo nth , the tota l wa ges d uri ng th e
(3 ) Th e maximu m pen sion ab le sa lar y 6 0 mon ths sp an sha ll be d ivided b y th e
sha ll b e limited to Rup ees S ix th ou san d a ctua l n umber of da ys fo r whi ch s ala ry
five h un dr ed per mo nth . h as b een d ra wn a nd th e a mou nt so
Pr ovid ed tha t if at th e op tion of th e d erived s ha ll b e multip lied b y 3 0 to
emp lo yer a n d emplo yee, con trib utio n wo rk ou t the a ver age mo nth ly p ay. G
pa id o n s ala ry exceedin g R up ees si x
tho usa n d a nd five h u ndr ed p er mon th (3) The ma xim um p en sio na bl e s ala ry
fro m th e d at e o f co mmencement o f th is sh all b e limited to fif teen t hou sa nd
Sch eme o r fro m th e da te sala ry exceeds ru pees p er mon th.
Ru pees S ix tho us an d five hu nd red ,
whi ch ever is later , an d 8.33 p er cent
sha re of th e emp loyers th ereof is
H
976 SUPREME COURT REPORTS [2022] 11 S.C.R.

A remitted into the Pension Fund, (4) The existing members as on the 1st
pensionable salary shall be based on day of September, 2014, who at the
such higher salary. option of the employer and employee,
had been contributing on salary
exceeding six thousand and five
hundred rupees per month, may on a
fresh option to be exercised jointly by
B the employer and employee continue to
contri bute on salary exceeding fift een
thousand rupees per mont h and t he
pensionable salary for the existing
members who prefer such fresh option
shall be based on the higher salary:
Provided that the aforesaid members
have to contribute at the rate of 1.16
C per cent. on salary exceeding fift een
thousand rupees as an additional
contri bution from and out of the
contri butions payable by the employees
for each month under the provisions of
the Act or the rules made thereunder:
Provided f urther that the fresh option
D shall be exercised by the member
wi thin a period of six months from the
1st day of September, 2014:
Provided also that the period specified
in the second proviso may, on sufficient
cause being shown by the member, be
extended by the Regional Provident
E Fund Commissioner f or a further
period not exceeding six months:
Provided also if no option is exercised
by the member within such period
(including the extended period), it shall
be deemed that the member has not
opted for contribution over wage
ceiling and the contributions to the
F Pension Fund made over the wage
ceiling in respect of the member shall
be diverted to the Provident Fund
account of the member along with
interest as

7. The legality of the modified scheme was questioned in different
G writ petitions in different High Courts. The Bench decisions of the High
Courts of Kerala, Rajasthan and Delhi went in favour of the employees.
The appeals which we shall be dealing with in this judgment arise out of
the decisions of the said High Courts. We shall mainly be addressing the
judgment of the Division Bench of the Kerala High Court delivered on
12th October 2018 [in Writ Petition (C) No. 13120 of 2015] which
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 977
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

sustained the employees’ contentions and invalidated the notification of A
22nd August 2014. The Division Benches of the Rajasthan and Delhi
High Court followed the ratio of the decision in the case of R. C. Gupta
(supra) broadly on the same reasoning forming foundation of the judgment
of the Kerala High Court. The petitions for special leave to appeal filed
by the Employees Provident Fund Organization (“EPFO”) [SLP (Civil)
B
Nos. 8658-59 of 2019] assailing the judgment of the Division Bench of
the Kerala High Court was initially dismissed by a Coordinate Bench of
this Court on 1st April 2019. In SLP (C) Nos. 16721-16722 of 2019, the
Union of India also appealed against the same judgment. A Review
Petition was filed by the EPFO in respect of the order dated 1st April
2019 dismissing their Special Leave Petition. On 12th July 2019, this C
Court directed listing of the SLPs filed by the Union of India along with
the Review Petitions in open Court. On 29th January 2021, this Court
allowed the Review Petitions and the order of 1st April 2019 was recalled.
A point has been taken on behalf of the employees that the Employees
Provident Fund Organisation has no locus standi to maintain these
D
appeals. This objection is technical in nature and having regard to the
fact that we are also hearing writ petitions challenging the legality of the
2014 amendments, we do not consider it necessary to dilate on this issue.
Moreover, in the appeals arising out of SLP (C) Nos.16721-16722 of
2019, the Union of India is the appellant. Since the amendment made by
the Central Government has been quashed, the locus of Union of India E
remains undisputed.
8. The pension scheme was conceived by way of introduction of
Section 6A to the 1952 Act, under Act 25 of 1996, with effect from 16th
November 1995. The said Section stipulates: -
“6A. Employees’ Pension Scheme — F

(1) The Central Government may, by notification in the Official
Gazette, frame a scheme to be called the Employees’ Pension
Scheme for the purpose of providing for—
(a) superannuation pension, retiring pension or permanent
G
total disablement pension to the employees of any
establishment or class of establishments to which this Act
applies; and
(b) widow or widower’s pension, children pension or orphan
pension payable to the beneficiaries of such employees.
H
978 SUPREME COURT REPORTS [2022] 11 S.C.R.

A (2) Notwithstanding anything contained in section 6, there
shall be established, as soon as may be after framing of the
Pension Scheme, a Pension Fund into which there shall be
paid, from time to time, in respect of every employee who is a
member of the Pension Scheme,—
B (a) such sums from the employer’s contribution under section
6, not exceeding eight and one-third per cent, of the basic
wages, dearness allowance and retaining allowance, if any,
of the concerned employees, as may be specified in the
Pension Scheme;
(b) such sums as are payable by the employers of exempted
C establishments under sub-section (6) of section 17;
(c) the net assets of the Employees’ Family Pension Fund as
on the date of the establishment of the Pension Fund;
(d) such sums as the Central Government may, after due
appropriation by Parliament by law in this behalf, specify.
D
(3) On the establishment of the Pension Fund, the Family
Pension Scheme (hereinafter referred to as the ceased scheme)
shall cease to operate and all assets of the ceased scheme
shall vest in and shall stand transferred to, and all liabilities
under the ceased scheme shall be enforceable against, the
E Pension Fund and the beneficiaries under the ceased scheme
shall be entitled to draw the benefits, not less than the benefits
they were entitled to under the ceased scheme, from the Pension
Fund.
(4) The Pension Fund shall vest in and be administered by
F the Central Board in such manner as may be specified in the
Pension Scheme.
(5) Subject to the provisions of this Act, the Pension Scheme
may provide for all or any of the matters specified in Schedule
III.
G (6) The Pension Scheme may provide that all or any of its
provisions shall take effect either prospectively or
retrospectively on such date as may be specified in that behalf
in that Scheme.
(7) A Pension Scheme, framed under sub-section (1), shall be
laid, as soon as may be after it is made, before each House of
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 979
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

Parliament, while it is in session, for a total period of thirty A
days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the
session immediately following the session or the successive
sessions aforesaid, both Houses agree in making any
modification in the scheme or both Houses agree that the
B
scheme should not be made, the scheme shall thereafter have
effect only in such modified form or be of no effect, as the
may be; so, however, that any such modification or annulment
shall be without prejudice to the validity of anything previously
done under that Scheme.]”
9. Under the same Amendment Act, Sections 2(kA) and 2(kB) C
were introduced to the Act. These provisions specify: -
“2. Definitions.—In this Act, unless the context otherwise
requires,—
[(kA) “Pension Fund” means the Employees’ Pension Fund
established under sub-section (2) of section 6A;] D
[(kB) “Pension Scheme” means the Employees’ Pension
Scheme framed under sub-section (1) of section 6A;]”
10. The pension scheme was framed in terms of Section 6A of
the Act and brought into operation by G.S.R. 748(E) dated 16th November
1995. The crucial paragraph, so far as these proceedings are concerned, E
is paragraph 11 thereof. We have already quoted this paragraph. The
quantum of pension is to be fixed as per the formula specified in paragraph
12 of the scheme, which contemplates, inter-alia, superannuation pension
for a member of the Scheme after service of 10 years and retiring on
attaining the age of 58 years. Sub-clause (2) of paragraph 12 as sought
F
to be amended by the 2014 amendment stipulates the methodology of
computation of monthly member’s pension. Sub-clauses (1) and (2) of
this paragraph are reproduced below:-
“12. Monthly Member’s Pension. - (1) A member shall be
entitled to : -
G
(a) superannuation pension if he has rendered eligible service
of 10 years or more and retires on attaining the age of 58
years;
(b) early pension, if he has rendered eligible service of 10
years or more and retires or otherwise ceases to be in the
employment before attaining the age of 58 years. H
980 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 12 (2). In the case of a new entrant, the amount of monthly
superannuation pension or early pension, as the case may
be, shall be computed in accordance with the following
factors, namely:-
Monthly member ’s pension= Pensionable Salary x
B Pensionable Service
70
Provided that the members’ monthly pension shall be
determined on a pro-rata basis for the pensionable service
up to the 1st day of September, 2014 at the maximum
C pensionable salary of six thousand and five hundred rupees
per month and for the period thereafter at the maximum
pensionable salary of fifteen thousand rupees per month.”
11. The initial entry into the pension scheme is contemplated in
paragraph 26(6) of Employees Provident Funds Scheme, 1952 read with
D paragraph 6 of the pension scheme. Paragraph 6 of the pension scheme
as it stood prior to the amendment of 22nd August 2014 and thereafter
reads:-
Before 22nd August 2014 After 22nd August 2014
“6. Membership of the Employees' “6. Membership of the Employees'
Pension Scheme. - Subject to sub- Pension Scheme. - Subject to sub-
E paragraph (3) of paragraph 1, the Schemeparagraph (3) of paragraph 1, the
shall apply to every employee – Scheme shall apply to every employee –
(a) who on or after the 16th November, (a) who on or after the 16th November,
1995, becomes a member of the 1995, becomes a member of the
Employees' Provident Fund Scheme, Employees' Provident Fund Scheme,
1952, or of the Provident Funds of the 1952, or of the Provident Funds of the
factories and other establishments factories and other establishments
F exempted by the appropriate Government exempted by the appropriate
under section 17 of the Act, or in whoseGovernment under section 17 of the Act,
case exemption has been granted under or in whose case exemption has been
paragraph 27 or 27-A of the Employees' granted under paragraph 27 or 27-A of
Provident Fund Scheme, 1952 from the the Employees' Provident Fund Scheme,
date of such membership; 1952 and whose pay on such date is less
G than or equal to fifteen thousand rupees,
from the date of such membership;
(b) who has been a member of the ceased (b) who has been a member of the
Employees' Family Pension Scheme, 1971 ceased Employees' Family Pension
before the commencement of this Scheme Scheme, 1971 before the commencement
from 16th November, 1995; of this Scheme from 16th November,
1995;
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 981
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

(c) who ceased to be a member of the (c) who ceased to be a member of the A
Employees' Family Pension Scheme, 1971 Employees' Family Pension Scheme,
between 1st April, 1993 and 15th 1971 between 1st April, 1993 and 15th
November, 1995 and opts to exercise his November, 1995 and opts to exercise his
option under Paragraph 7;” option under Paragraph 7;
(d) who has been a member of the
Employees' Provident Fund or of
Provident Funds of factories and other B
establishments exempted by the
appropriate Government under section
17 of the Act or in whose case exemption
has been granted under Paragraph 27
or 27 A of the Employees' Provident
Fund Scheme, 1952, on 15th November,
1995 but not being a member of the C
ceased Employees' Family Pension
Scheme, 1971 opts to exercise his option
under paragraph 7. Explanation. - An
employee shall cease to be the member
of Pension Fund from the date of
attaining 58 years of age or from the
date of vesting admissible benefits under D
the Scheme, whichever is earlier.”
12. Section 7 of the 1952 Act empowers the Central Government
to amend the said scheme both prospectively and retrospectively, subject
to certain procedural compliances, as outlined in the said provision. This
provision specifies:- E
“7. Modification of scheme.—
(1) The Central Government may, by notification in the Official
Gazette, add to [amend or vary, either prospectively or
retrospectively, the Scheme, the [Pension] Scheme or the
Insurance Scheme, as the case may be]. F
[(2) Every notification issued under sub-section (1) shall be
laid, as soon as may be after it is issued, before each House
of Parliament, while it is in session, for a total period of thirty
days, which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the G
session immediately following the session or the successive
sessions aforesaid, both Houses agree in making any
modification in the notification, or both Houses agree that
the notification should not be issued, the notification shall
thereafter have effect only in such modified form or be of no
H
982 SUPREME COURT REPORTS [2022] 11 S.C.R.

A effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the
validity of anything previously done under that notification.]”
13. The judgment of this Court in R.C. Gupta (supra) was
delivered examining the provisions of paragraph 11 of the scheme as it
B stood prior to issue of the 2014 notification. The changes brought by the
amended provision altered the methodology of computing pensionable
salary, which ultimately would have an impact on the quantum of monthly
pension. Instead of taking twelve months of average pay in the year
preceding the date of a member’s exit from the pension fund, computation
was contemplated on the basis of average monthly pay drawn during
C the contributory period of service in the span of 60 months preceding the
date of exit.
14. In the post amendment context, the maximum pensionable
salary was to be kept to Rs.15000/- per month, raising the earlier ceiling
of Rs.6500/- per month. It was also provided that an existing member
D who, at the option of the employer and employee as on 1st September
2014, had been contributing on a salary exceeding Rs.6500/- per month
could exercise fresh option jointly with the employer to continue to remain
in the fund even if the salary went beyond Rs.15000/- per month and the
pensionable salary for the existing member exercising such an option
E was to be based on the higher salary.
15. As per paragraph 3(ii) of the pension scheme, the Central
Government was to contribute to the fund at the rate of 1.16 per cent of
the pay of the members. Employees within the changed pension regime
drawing more than Rs.15000/- per month have to also contribute at the
F rate of 1.16 per cent on salary exceeding Rs.15000/- as additional
contribution each month under the amended provisions. Further, fresh
option was to be exercised by the member within a period of six months
from the 1st day of September 2014, which was extendable up to about
6 months on sufficient cause shown by the member.
16. Under the post-2014 regime, the fourth proviso to sub-clause
G
(4) of paragraph 11 specifies that if no option is exercised by a member
within the aforesaid period, it would be deemed that the concerned
member has not opted for contribution over the wage ceiling. In such a
case, the contributions to the pension fund made beyond the wage limit
in respect of such a member is to be diverted to the provident fund
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 983
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

account of the member along with interest, as declared under the A
provident fund scheme from time to time.
17. It was held in the case of R. C. Gupta (supra), dealing with
pre-2014 position of the scheme that the dates or time-limit specified in
clause 11(3) of the pension scheme were not cut-off dates. The said
time-limit determined the eligibility of the employer and employee to B
exercise their option under the proviso to the said paragraph. It was also
observed in this judgment that a beneficial scheme ought not to be allowed
to be defeated by refence to a cut-off date in a situation where the
employer was not following the ceiling limit of Rs.5000/- or Rs.6500/-
and had deposited 12 per cent of the actual salary.
18. Main submission of the employees in support of the judgments C
under appeal has been that there was no additional burden imposed on
the provident fund authorities or the Central Government if the earlier
system continued and no cut-off date was factored in, as entry into the
hybrid regime of provident fund plus pension beyond the ceiling limit
only entailed switching of funds. The authorities had to remit the 8.33 D
per cent from the employer’s share of the contribution lying in the
provident fund corpus to the corpus of the pension fund. It has been
argued before us that the pattern of investment that was permissible
under both the schemes were broadly the same and hence interest
generated by such investment ought to correspond to in each situation.
E
19. The Division Bench of the Kerala High Court examined the
impact of the amendment to the pension scheme in respect of the following
classes of pensioners or potential pensioners: -
“(i) Employees who had exercised option under the proviso
to para 11 (3) of the 1995 Scheme and continued to be in
service as on 1st September 2014. F
(ii)Employees who had not exercised their option under the
proviso to paragraph 11(3) of the 1995 Scheme and were
continuing in service as on 1st September 2014.
(iii) Employees who had retired prior to 1st September 2014
without exercising an option under paragraph 11(3) of the G
1995 Act scheme.
(iv) Employees who had retired prior to 1st September 2014
after exercising of an option under the paragraph 11(3) of
the 1995 Scheme.”
H
984 SUPREME COURT REPORTS [2022] 11 S.C.R.

A 20. It was held by the Kerala High Court, following the judgment
of this Court in the case of R.C. Gupta (supra), that paragraph 11 of the
pension scheme did not stipulate a cut-off date at all. Any such stipulation,
in the opinion of the High Court, would have the effect of defeating the
purpose of a beneficial scheme. After the relevant date, that is 1st
September 2014, on the question of capping the salary to Rs.15000/- per
B
month for continuing in the pension scheme, it was, inter-alia, held by the
High Court:-
“33. As per the amendments, the maximum pensionable salary
has been fixed at Rs.15,000/- thereby disentitling the persons
who have contributed on the basis of their actual salaries to
C any benefits on the basis of the excess contributions made by
them. The said provision is arbitrary and cannot be sustained.
The employees, who have been making contributions on the
basis of their actual salaries after submitting a joint option
with their employers as required by the Pension Scheme, are
D denied the benefits of their contributions by the said
amendments without any justification. Apart from the above,
to cap the salary at Rs. 15,000/- for quantifying pension is
absolutely unrealistic. A monthly salary of Rs.15,000/- works
out only to about Rs.500/- per day. It is common knowledge
that, even a manual labourer is paid more than the said
E amounts as daily wages. Therefore, to limit the maximum salary
at Rs.15,000/- for pension would deprive most of the
employees of a decent pension in their old age. Since the
pension scheme is intended to provide succour to the retired
employees, the said object would be defeated by capping the
F salary. The duty of the trustees of the Fund is to administer
the same for the benefit of the employees - by wise investments
and efficient management. They have no right to deny the
pension legitimately due to them on the ground that the fund
would get depleted. The demand of additional payment of
1.16% of their salaries exceeding Rs.15,000/- is unsustainable
G for the reason that, Section 6A does not require the employees
to make any additional contribution to constitute the Pension
Fund. Nor does it empower the authorities to demand
additional contribution. In the absence of any statutory
backing, the said provision in the Pension Scheme is ultra
H vires. The amendment in so far as it stipulates the average
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 985
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

monthly pay drawn over a span of 60 months preceding the A
date of exit as the pensionable service is also arbitrary for
the reason that it deprives the employees of a substantial
portion of the pension to which they would have been eligible
had it not been for the amendment. The provision as it originally
stood stipulated computation of pensionable salary on the
B
basis of the monthly pay drawn over a period of 12 months
prior to their exit. The reason for the amendments as disclosed
by the counter affidavit filed is that payment of pension on
the basis of the Scheme as it stood prior to the amendment
would result in depletion of the Fund. Absolutely no material
or data to support the above contention has been placed C
before us. On the contrary, placing reliance on a news report
carried by “The Hindu” newspaper on 17.8.2014, it is
contended by the petitioners that, a staggering amount of
Rs.32,000 Crores of unclaimed amount is lying in various
inoperative accounts across the country, as unclaimed pension
D
as disclosed by the Central Provident Fund Commissioner at
an interactive session with employees at Hyderabad. In the
absence of any material to support the contention that the
fund is likely to be depleted, we reject the said contention.
Apart from the above, there is no provision in the Act that
stipulates the pension payments to commensurate with the E
amounts actually remitted by an employee and his employer.
It is also a fact that the administrators of the Fund invest the
amounts and generate profit from such investments.”
21. The High Court made its assessment of ground realities on
the wage structures in the economy and found capping of Rs.15000/- F
per month as pensionable salary would deprive most of the employees
of decent pension in their old age.
22. As regards requirement of an employee to contribute 1.16 per
cent of their pay under the amended scheme, the High Court found that
there is no statutory basis under which an employee can be made to G
make additional contribution to the pension fund. On the aspect of altering
the basis of calculation of average monthly pay, the High Court held
such alteration to be arbitrary as it deprived the employees of a substantial
portion of the pension to which they would have been entitled to under
the scheme as it originally prevailed. On justification of the amendment
H
986 SUPREME COURT REPORTS [2022] 11 S.C.R.

A on potential depletion of fund, a point which has also been argued before
us by the EPFO, it was observed by the High Court that there was no
material or data to support this contention taken by the fund organisation.
The High Court also referred to the growing number of workforce in
our country, which, as per this judgment, was constantly adding to the
base of the fund by accumulation to fund contribution. In paragraphs 37
B
and 38 of the judgment under appeal, the reasoning of the High Court
was summarised:-
“37. The stated objective of the amendments is to prevent
depletion of the fund. The said apprehension is absolutely
baseless for the reasons stated above. The number of persons
C who are contributing to the Provident Fund as well as the
Pension Fund have only grown over the years. The work force
in our country would only grow further in the future. It has to
be stated here that in view of the increase in the number of
workers over the years, the contributions would also grow.
D The phenomenon is only bound to continue in future.
Therefore, even when payments of pension are made to the
retired employees, the pension fund would continue to get
replenished with the contributions of the new entrants. The
said ongoing process would maintain the Fund in a stable
condition. If at all, a situation where the Fund base gets eroded
E occurs, the situation could be remedied at that time by
enhancing the rates of contributions of persons contributing
to the Fund through a legislative exercise. The attempt to
maintain the stability of the fund by reducing the pension
would only be counter productive and would defeat the very
F purpose of the enactment.
38. As rightly contended by the counsel appearing for the
petitioners, the effect of the amendments to the Pension Scheme
is to create different classes of pensioners on the basis of the
date, 1.9.2014, the date on which the amended Scheme came
into force. Consequently, there would be -
G
(i) employees who have exercised option under the proviso to
paragraph 11(3) of the 1995 Scheme and continuing in
service as on 1.9.2014;
(ii) employees who have not exercised their option under the
proviso to paragraph 11(3) of the 1995 Scheme, and
H continuing in service as on 1.9.2014;
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 987
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

(iii) employees who have retired prior to 1.9.2014 without A
exercising an option under paragraph 11(3) of the 1995
Scheme; (iv) employees who have retired prior to 1.9.2014
after exercising the option under paragraph 11(3) of 1995
Scheme. The rationale in so classifying the employees covered
by the Pension Scheme on the basis of the above date is not
B
forthcoming. The object sought to be achieved is stated to be
prevention of depletion of the Pension Fund, which cannot
be accepted as a justification to support the classification.
Inasmuch as the statutory scheme is to make the Pension Fund
ensure to the benefit of the homogeneous class of the totality
of employees covered by the Provident Fund, a further C
classification of the said class by formulating a Scheme is
ultra vires the power available to the Central Government
under Sections 5 and 7 of the EPF Act. Therefore, it has to be
held that, the impugned amendments are arbitrary, ultra vires
the EPF Act and unsustainable. For the foregoing reasons,
D
the petitioners are entitled to succeed. The writ petitions are
all allowed as follows:
i) The Employee’s Pension (Amendment) Scheme, 2014
brought into force by Notification No. GSR. 609(E) dated
22.8.2014 evidenced by Ext.P8 in W.P.(C) No. 13120 of 2015
is set aside; E

ii) All consequential orders and proceedings issued by the
Provident Fund authorities/respondents on the basis of the
impugned amendments shall also stand set aside.
iii) The various proceedings issued by the Employees Provident F
Fund Organisation declining to grant opportunities to the
petitioners to exercise a joint option along with other
employees to remit contributions to the Employees Pension
Scheme on the basis of the actual salaries drawn by them are
set aside.
G
iv) 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.
v) There will be no order as to costs.”
H
988 SUPREME COURT REPORTS [2022] 11 S.C.R.

A For these reasons, the High Court quashed the Employees’
Pension (Amendment) Scheme 2014 sought to be brought into force by
notification no. G.S.R. 609(E) dated 22nd August 2014.
23. The first point on which argument has been made on behalf of
the appellants before us is that the aforesaid amendment had been made
B in exercise of power under Section 7 of the 1952 Act read with entry 10
of the III Schedule of the Act. Thus, the legislative authorisation is there
for modification of a scheme whether prospectively or retrospectively.
Moreover, our attention has been drawn to paragraph 32 of the 1995
scheme, which stipulates :-
“32. Valuation of the Employees’ Pension Fund and review
C of the rates of contributions and quantum of the pension and
other benefits. - (1) The Central Government shall have an
annual valuation of the Employees’ Pension Fund made by a
Valuer appointed by it:
Provided that it shall be open to the Central Government to
D direct a valuation to be made at such other times s it may
consider necessary.
(2) At any time, when the Employees’ Pension Fund so permits,
the Central Government may alter the rate of contributions
payable under this Scheme or the scale of any benefit
E admissible under this Scheme or the period for which such
benefit may be given.”
Entry 10 of the III Schedule to the Act, which refers to matters
for which provision may be made in the pension scheme, provides:-
“10. The scale of pension and pensionary benefits and the
F conditions relating to grant of such benefits to the employees.”
24. Stand of the appellants is that there has been no encroachment
on any vested legal right of existing members. It has been highlighted
that after the 2014 amendments, the option of the members to further
opt to remain in the scheme beyond the ceiling limit has been taken
G away. But the existing option members who had chosen to contribute
beyond the salary limit has been permitted to exercise fresh option to
continue with such contribution upon payment of an additional 1.16 per
cent of their salary beyond the said ceiling.
25. In assailing the said judgments, it has also been contended on
H behalf of the appellants that the membership of the pension scheme may
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 989
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

have become a vested right for those opting under paragraph 26(6) of A
the EPFS before amendment to paragraph 6 of the pension scheme.
Those who were yet to exercise option under paragraph 26(6) could not
claim such vested right of membership to pension scheme. The omission
of proviso 3 to paragraph 11 of the pension scheme also did not affect
the membership of those who had already come within the scheme by
B
exercising option under paragraph 26(6), but to remain in the scheme
beyond the ceiling limit an existing option member had to exercise fresh
option.
26. Submission of the appellants is that all the employees of an
establishment do not constitute a homogenous class. It is within the power
and authority of the Central Government to differentiate between C
employees earning lower wages and those earning higher salary and
offer improved social benefits for those in the lower wage bracket.
27. Arguments have been advanced on two other features of the
post-amendment scheme. Legality of requirement of the employees who
go beyond the salary threshold to contribute to the pension scheme at D
the rate of 1.16 per cent of their salary has been questioned. The other
point in controversy is that for existing pensioners also the basis of
computation of pensionable salary having changed, there could be
reduction in the monthly pension. It is, however, contention of the
appellants that the amendment had extended the period prescribed in E
paragraph 12(1) from 12 months prior to a member’s exit from the pension
scheme to 60 months. This, according to appellants, has been done to
achieve a clearer picture of the pensionable salary to eliminate the
possibility of fluctuations in pay drawn in the last 12 months for
determining the quantum of pension. Illustration has been given of manual
labourers and women who drawing low wages, who may suffer such F
fluctuation on account of ill health, incapacitation, etc., and in the case of
such employees, if only 12 months’ pay is accounted for, they may get
reduced pension.
28. On behalf of the employees it has been urged that the decision
of this Court in R.C. Gupta (supra) does not require any revisit as this G
decision has held good for almost six years. In support of this argument,
following authorities have been relied upon:-
(i) Bengal Immunity Company Limited v. State of Bihar
and Others [(1955) 2 SCR 603]
H
990 SUPREME COURT REPORTS [2022] 11 S.C.R.

A (ii) Union of India and Another v. Raghubir Singh (Dead)
by Lrs. Etc. [(1989) 2 SCC 754]
(iii) Keshav Mills Co. Ltd. v. Commissioner of Income
Tax Bombay North, Ahmedabad [(1965) 2 SCR 908]
(iv) Waman Rao and Others v. Union of India and Others
B [(1981) 2 SCC 362].
29. In the given context, however, this point may not hold good as
what we are examining in this judgment is certain amendments to the
scheme which were not before this Court based on which the judgment
of R.C. Gupta (supra) was delivered. In the said judgment, the provisions
C of law as it subsisted prior to issue of the amendment notification was
considered. Thus, the ratio of the four authorities referred to in the
preceding paragraph would not be applicable in the given context.
30. The employees have argued that under the law, there is no
requirement of exercising second option. In this regard, our attention
D has been drawn to paragraphs 3(1) and 3(2) of the scheme, which requires
remittance of a part of contribution of the employer to the provident
fund scheme. The employees’ argument is that the obligation is only on
the employer to remit the sum from one fund to the other. There is no
ceiling limit and the remittance required to be made is of 8.33 per cent of
E the employee’s pay. But this point also, in our opinion, does not aid the
employees. While paragraphs 3 and 6 of the scheme have laid down
what the fund would be constituted of and who would be the members
of the pension scheme, paragraph 11, which is an integral part of the
pension scheme, specifies the criteria for those who become mandatory
members and, from among the existing members, who may be permitted
F to exercise option to remain in the scheme in spite of drawing salary
beyond the ceiling limit. It is a fact that those who are covered by paragraph
26(6) of the provident fund scheme automatically enters into the pension
scheme as well. But this provision cannot be held to have precluded the
Central Government from laying down conditions to remain eligible for
G the pension scheme and specify wage or salary ceiling for individual
employees beyond which the scheme may not operate. We also do not
accept the argument that the pension scheme considers employees as a
homogenous group and no distinction can be made among different
categories of employees based on their monthly salary to determine for
whom the scheme shall operate in a particular manner. It is well within
H the power and authority of the statutory authorities to reasonably classify
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 991
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

different sets of employees and categorise them for the nature of benefits A
they might get from an existing scheme. In fact, the scheme, at its
inception was made applicable to those drawing wages upto Rs.5000/-.
The provision relating to exercising option was introduced later, in the
year 1996.
31. On behalf of the employees, argument was also advanced B
against the claim of negative financial impact on the corpus in response
to the stand of the appellants that having a large scale of beneficiaries
from higher salary earners may result in remitting asymmetrical sums
from the corpus to them as pension. In this regard, learned senior counsel
for the appellants (Provident Fund Organisation and Union of India)
have made distinction between the provident fund scheme and pension C
scheme in their respective operation. While provident fund scheme entails
a one-time settlement in favour of the member, the pension scheme
carries, by its very nature, benefits for an unspecified time, which has to
be based on actuarial calculation. This difference has been recognised
in the judgments of this Court in the cases of Otis Elevator Employees’ D
Union S. Reg. and Ors. vs. Union of India & Others [(2003) 12
SCC 68] and Pepsu Road Transport Corporation, Patiala vs.
Mangal Singh & Others [(2011) 11 SCC 702]. In an actuarial report
relied on by the appellants after delivery of the Kerala High Court
judgment, the net liability of the fund is projected to be Rs.5,75,918.88/-
crores for the pension fund, exclusive of the provident fund balance that E
might be transferred. This assessment has been made on 27th December
2018 and the report has been annexed to the Rejoinder Affidavit of the
appellants in the appeals arising out of SLP (C) Nos.8658-8659 of 2019
filed on 20th March 2021 with I.A. No.43576 of 2021 at page 410 of that
document. This projection is based on assumption that every person will F
opt for higher contribution and statutory salary is restored to Rs.6500/-
per month.
32. We find that the amendment was made in exercise of power
otherwise vested in the authority making such amendment and the
amendments were made on the basis of certain relevant materials and G
not whimsically. In this context, the scope of judicial scrutiny to test the
constitutionality of the amendment provisions becomes narrow. This is
the opinion of the Constitution Bench of this Court in the case of Krishena
Kumar vs. Union of India and Others [(1990) 4 SCC 207]. In our
view, classification of the employees made by the authorities on the
basis of the salary drawn in the 2014 amendment meets the test of H
992 SUPREME COURT REPORTS [2022] 11 S.C.R.

A reasonable classification contemplated in Article 14 of the Constitution
of India. The newspaper report quoted in the Kerala High Court judgment,
in our opinion, would not give an effective guidance as regards position
of the pension fund and it would be prudent for the Court leave such
decisions to be made by the scheme framing body. This approach would
be in line with the reasoning of the Constitution Bench in the case of
B
Krishena Kumar (supra). In the case of Mafatlal Group Staff
Association and Others vs. Regional Commissioner Provident
Fund and Ors. [(1994) 4 SCC 58], it was held by a Coordinate Bench
of this Court:-
“10. …Merely because the employees who were the members
C of the Employees Provident Fund Scheme before March 1,
1971 were given an option to become or not to become
members of the Family Pension Scheme, it does not follow
that the employees who become members of the Provident Fund
Scheme after March 1, 1971, and who are not given such
D option are discriminated against…”
33. The Division Bench of the Kerala High Court, in coming to its
finding that the amendment was arbitrary, mainly relied on various
economic factors. The reasoning of the Bench was based on macro-
economic reasons like general increase in salary, addition to the base of
E the fund and the negative impact on denial of pension benefits for a
large number of employees. The High Court rejected the argument based
on depletion of fund on the ground that over the years, more and more
persons are contributing to the provident fund and the corpus of the fund
is growing. We are alive to the concern expressed by the High Court as
regards impact on the economic stability of retired employees suddenly
F being deprived of pension. But, based on such macro-level social
disparities, we do not think in exercise of judicial power we can require
the State to operate a pension scheme in a particular manner. These
factors would be for the policy makers to examine and prescribe. We
cannot issue directions on the Central Government to work out statutory
G scheme in a particular fashion. So far as fixing of cut-off date is
concerned, the 2014 amendment specifically provides for that. In the
case of R.C. Gupta (supra), the wording of the scheme in paragraph
11(3) was different. Thus, the ratio of that judgment cannot be applied to
the changed provision of the scheme. Fixing of cut-off date was considered
in the case of Mafatlal Group Staff Association (supra) and held to be
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 993
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

permissible. We have quoted earlier the relevant passage from that A
judgment.
34. The case of Bank of Baroda and Another vs. G. Palani &
Others [(2022) 5 SCC 612] was cited in support of the proposition that
pension is not a bounty but a right and such right cannot be taken away
retrospectively. In the context of the provisions which we are examining B
in this judgment, existing members have been given option to remain in
the scheme even if their salary go beyond the ceiling limit. Thus, the
right of such members to draw pension is protected. The other area
where the pension amount may get impacted is on determination of
monthly pension on the basis of altered computation method. But this
judgment is not the authority for the proposition that pension amount C
cannot be altered at all. The factual basis of this judgment was that a
joint note/agreement in derogation of statutory regulations was giving
retrospective effect. It was in that context the said decision was delivered.
In the cases before us, amendment is contemplated of the scheme itself.
35. The requirement in the scheme for employee’s contribution to D
the extent of 1.16 per cent for option members, in our opinion, is illegal.
There is nothing in the 1952 Act which requires payment to the pension
fund by an employee. Section 6A of the Act also does not have any such
stipulation. Since the Act does not contemplate any contribution to be
made by an employee to remain in the scheme, the Central Government
under the scheme itself cannot mandate such a stipulation. What is to be E
considered here is that for the mandatory members, the Central
Government continues to contribute the requisite 1.16 per cent of their
salary. For option members, additional contribution by them is
contemplated in order to remain in the scheme. In such a situation, in our
opinion, a legislative amendment of the Act would have been necessary, F
providing for contribution to be made by an employee. To that extent,
the provision of the scheme requiring contribution by an individual
employee is ultra vires the parent act. At the same time, we cannot
ignore the fact that the pension amount to be paid has been calculated
on projections that the corpus would include the option-employees’
additional contribution of 1.16 per cent. We also cannot mandate the G
Central Government to contribute to a pension scheme, in absence of a
legislative provision to that effect. It would be for the administrators to
readjust the contribution pattern within the scope of the statute and one
possible solution could be to raise the level of the employer’s contribution
in the scheme. We shall, however, suspend the operation of this part of H
994 SUPREME COURT REPORTS [2022] 11 S.C.R.

A our judgment for a period of six months so that the legislature may
consider the necessity of bringing appropriate legislative amendment on
this count. For the aforesaid period, the scheme as it stands shall continue.
Till such time, if no such legislative exercise is undertaken, the duty to
contribute 1.16 per cent of the salary shall apply on option members as
well. This contribution shall be adjusted depending on any amendment
B
that may be brought. For the period of six months, however, the opting
employees shall make payment of 1.16 per cent contribution as stop gap
measure. In the event no amendment to the statute or the scheme is
made within such extended time, then the administrators of the fund will
have to operate the pension fund for the option members from out of the
C existing corpus.
36. The other aspect of the controversy involves changing the
method of computation of the pensionable salary. We have given the
points and counter points articulated by the contesting parties pertaining
to this feature of the controversy earlier in this judgment. In our opinion,
D this change of methodology comes within the power of the Central
Government to modify a scheme under Section 7 of the 1952 Act read
with item 10 of the Schedule III to the Act as also paragraph 32 of the
scheme. This alteration of computation is ancillary to determination of
scale of pension alongwith pensionary benefits and paragraph 32 of the
pension scheme specifically authorises the Central Government to alter
E the rate of contribution payable under the Scheme or the scale of any
benefit admissible under the scheme. There is a reasonable basis for
effecting change in the computation methodology for determining
pensionable salary and we do not find any illegality or unconstitutionality
in effecting this amendment.
F 37. We shall now address the question as to whether the members
from an exempted establishment under the 1952 Act would be entitled
to the benefits of enrolling in the scheme beyond the ceiling limit. We
would point out here that before us no argument has been advanced as
regards members of the pension scheme of exempted establishments in
G terms of paragraph 39 of the said scheme. Thus, in this judgment, we
are not addressing the cases of that category of members. We find from
Section 17 (A) of the Act that the investment of the provident fund for
the trust fund are also to be as per the directions of the Central
Government. In quashing the circular dated 31st May 2017, the Delhi
High Court has held that the employees of unexempted establishments
H
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 995
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

and exempted establishments form a homogenous group. Section 6A of A
the Act also envisages coverage of employees of exempted
establishments under Section 17(6) of the Act within the pension scheme.
Section 17(6) of the Act stipulates: -
“(6) Subject to the provisions of sub-section [(1C)] the
employer of an exempted establishment or of an exempted B
employee of an establishment to which the provisions of the
[Pension] Scheme apply, shall, notwithstanding any exemption
granted under sub-section (1) or sub-section (2), pay to the
[Pension] Fund such portion of the employer’s contribution
to its provident fund within such time and in such manner as
may be specified in the [Pension] Scheme.” C

38. Further, Clause 1(3) of the pension scheme contemplates
keeping within its fold the establishments to which the 1952 Act applies.
These establishments would include exempted establishments as well.
The employees of exempted establishments are integrated into the pension
scheme and we are of the opinion that the employees of an exempted D
establishment should not be deprived of the benefit of getting option to
remain in the pension scheme while drawing salary beyond the ceiling
limit, in situations where similarly situated employees of unexempted
establishments can exercise such option. In the event the scheme is
construed in a way which would exclude them, that would lead to artificial E
classification of otherwise same categories of employees. Thus, 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.
39. One of the arguments against their inclusion into the scheme F
by exercising option is that the corpus of the contribution for exempted
establishments have been kept in separate coffers maintained by the
trust created for such purpose and not with the authorities specified
under the Act. Taking that factor into account, we are of the view that in
order to be entitled to the benefits of the pension fund, the employer and
the employee, simultaneously with exercising option in terms of the order G
of this Court, shall also have to give an undertaking of transferring the
employers’ contribution at the stipulated rate maintained by the trusts,
which shall be equivalent to and not lower than the sum which would
have been transferable, had such fund been maintained by the provident
fund authorities. Such transfer shall take place, immediately after H
996 SUPREME COURT REPORTS [2022] 11 S.C.R.

A exercise of such option, within such period as may be directed by the
administrators of the pension fund.
40. We shall now deal with argument of the appellants that no
vested legal right of the employees has been encroached upon by the
2014 amendment. For this purpose, amended paragraph 11(4) needs to
B be analysed. The said paragraph 11(4) provides for extending the pension
coverage in respect of individual employees drawing salary more than
Rs. 15000/- per month. This paragraph however, is subject to two
conditions:-
(i) The first one is that to be eligible for the benefits of extended
C coverage, the existing members as on 1st September 2014
must contribute at the rate of 1.16 per cent on salary
exceeding Rs. 15,000/- per month.
ii) The second one is that a fresh option should be exercised
within a period of six months from the first day of September
D 2014. The scheme contemplates that those members of the
fund who had exercised option to remain in the scheme as
per the requirement of proviso to paragraph 11(3) of the
scheme, as it stood prior to the 2014 amendment, would be
able to give fresh option with the employer if their salary
cross the ceiling limit. In respect of that provision, this Court
E in the Case of R.C. Gupta (supra) had held that the said
proviso did not contemplate a cut-off date.
41. So far as the first condition is concerned, we have expressed
our views earlier in this judgment as regards legality of having such a
provision. In relation to the second condition, our opinion is that the
F eligibility for enhancement cannot be restricted to those employees only
who had exercised the option to remain in the scheme once their salary
went beyond the capping of Rs. 6500/- per month. As we have already
discussed, in case of R.C. Gupta (supra), it has been specifically held
that there was no cut-off date in proviso to paragraph 11(3) as it stood
G before the 2014 amendment. In our opinion, the interpretation given to
the proviso to paragraph 11(3) prior to 2014 amendment does not require
any reconsideration. We agree with the reasoning of the two-judge Bench
of this Court on this point, as expressed in the said judgment. As there
was no cut-off date to be contemplated prior to the 2014 amendment,
limiting the entitlement of enhanced pension coverage to those employees
H only who had already exercised an option under Clause 11(3) of the
THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 997
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

unamended scheme would be contrary to the ratio of the decision of this A
Court held in the case of R.C. Gupta (supra). We are not holding that
no option was required to be exercised as per proviso to paragraph 11(3)
of the scheme, as it stood prior to 2014 amendment. As held in the case
of R.C. Gupta (supra), there was no time-limit for exercising such option.
42. The dual option, as is contemplated in paragraph 11(4) of the B
pension scheme (post 2014 amendment), has to be merged into one. In
the event the employer and employee jointly opt for coverage beyond
the salary limit of Rs. 15000/-, without giving an earlier option under the
unamended Clause 11(3) of the pension scheme, they would not be
automatically excluded from their right to exercise option under paragraph
11(4) of the scheme, post amendment. C

43. The other condition for enhanced coverage relates to the date
within which such fresh option is to be exercised by a member, which is
stipulated to be within a period of six months from 1st September 2014.
It would be legitimate to proceed on the basis that several members did
not exercise such option earlier because of the stand taken by the D
Provident Fund authorities that option under proviso to paragraph 11(3)
of the scheme (prior to 2014 amendment) has to be exercised within a
specified date, which stand was negated in the decision of R.C. Gupta
(supra). We are of the view that the time limit for coverage beyond the
ceiling amount should be extended by a further period of four months E
from today to enable all the members of the pension fund drawing more
than Rs.6500/- to exercise the joint option as contemplated in paragraph
11(4) of the pension scheme (post 2014 amendment). Once such joint
option is exercised, the transfer of fund from the provident fund corpus
to the pension fund shall be effected in terms of the scheme.
F
44. We accordingly hold and direct:-
(i) The provisions contained in the notification no. G.S.R.
609(E) dated 22nd August 2014 are legal and valid. So far
as present members of the fund are concerned, we have
read down certain provisions of the scheme as applicable G
in their cases and we shall give our findings and directions
on these provisions in the subsequent sub-paragraphs.
(ii) 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
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998 SUPREME COURT REPORTS [2022] 11 S.C.R.

A the same manner as the employees of the regular
establishments. Transfer of funds from the exempted
establishments shall be in the manner as we have already
directed.
(iii) The employees who had exercised option under the proviso
B to paragraph 11(3) of the 1995 scheme and continued to be
in service as on 1st September 2014, will be guided by the
amended provisions of paragraph 11(4) of the pension
scheme.
(iv) The members of the scheme, who did not exercise option,
as contemplated in the proviso to paragraph 11(3) of the
C pension scheme (as it was before the 2014 Amendment)
would be entitled to exercise option under paragraph 11(4)
of the post amendment scheme. Their right to exercise
option before 1st September 2014 stands crystalised in the
judgment of this Court in the case of R.C. Gupta (supra).
D The scheme as it stood before 1st September 2014 did not
provide for any cut-off date and thus those members shall
be entitled to exercise option in terms of paragraph11(4) of
the scheme, as it stands at present. Their exercise of option
shall be in the nature of joint options covering pre-amended
paragraph 11(3) as also the amended paragraph 11(4) of
E the pension scheme.
There was uncertainty as regards validity of the post
amendment scheme, which was quashed by the aforesaid
judgments of the three High Courts. Thus, all the employees
who did not exercise option but were entitled to do so but
F could not due to the interpretation on cut-off date by the
authorities, ought to be given a further chance to exercise
their 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
G
142 of the Constitution of India.
Rest of the requirements as per the amended provision shall
be complied with.
(v) The employees who had retired prior to 1st September 2014
without exercising any option under paragraph 11(3) of the
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THE EMPLOYEES PROVIDENT FUND ORGANISATION & ANR. 999
ETC. v. SUNIL KUMAR B. & ORS. ETC. [ANIRUDDHA BOSE, J.]

pre-amendment scheme have already exited from the A
membership thereof. They would not be entitled to the
benefit of this judgment.
(vi) The employees who have retired before 1st September 2014
upon exercising option under paragraph 11(3) of the 1995
scheme shall be covered by the provisions of the paragraph B
11(3) of the pension scheme as it stood prior to the
amendment of 2014.
(vii) 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.15000/- per month as an additional contribution C
under the amended scheme is held to be ultra vires the
provisions of the 1952 Act. But for the reasons already
explained above, we suspend operation of this part of our
order for a period of six months. We do so to enable the
authorities to make adjustments in the scheme so that the
additional contribution can be generated from some other D
legitimate source within the scope of the Act, which could
include enhancing the rate of contribution of the employers.
We are not speculating on what steps the authorities will
take as it would be for the legislature or the framers of the
scheme to make necessary amendment. For the aforesaid E
period of six months or till such time any amendment is
made, whichever is earlier, the employees’ contribution shall
be as stop gap measure. The said sum shall be adjustable
on the basis of alteration to the scheme that may be made.
(viii) We do not find any flaw in altering the basis for computation F
of pensionable salary.
(ix) We agree with the view taken by the Division Bench in the
case of R.C. Gupta (supra) so far as interpretation of the
proviso to paragraph 11(3) (pre-amendment) pension
scheme is concerned. The fund authorities shall implement
G
the directives contained in the said judgment within a period
of eight weeks, subject to our directions contained earlier
in this paragraph.
(x) The Contempt Petition (C) Nos.1917-1918 of 2018 and
Contempt Petition (C) Nos. 619-620 of 2019 in Civil Appeal
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1000 SUPREME COURT REPORTS [2022] 11 S.C.R.

A Nos. 10013-10014 of 2016 are disposed of in the above
terms.
45. All the appeals which we have heard simultaneously are allowed
in the above terms and the judgments impugned are modified accordingly.
The writ petitions brought by employees or their representatives shall
B also stand disposed of in the same terms.
46. Pending application(s), if any, shall also stand disposed of.
47. There shall be no order as to costs.

C Nidhi Jain Appeals allowed.
(Assisted by : Shubhanshu Das, LCRA)

D

E

F

G

H