HC: Pensioners can’t be denied higher benefits for not exercising joint option before 2014 amendment-OxBig News Network

In a ruling set to benefit thousands of retired employees, the Punjab and Haryana High Court has rejected the Employees’ Provident Fund Organisation’s (EPFO) claim that retired employees who did not exercise the joint option before September 1, 2014, automatically stood excluded from higher pension under the amended scheme.

The Division Bench of Justice Sureshwar Thakur and Justice HS Grewal held that denying higher pension to such employees was unjustified, as the scheme in force at the time of their retirement did not stipulate any requirement for exercising a joint option. The Bench found that the rejection of the claim of the petitioners on the ground that they had not exercised any option, when a provision did not even stipulate any such requirement, could not be justified.

The judgment came on 119 petitions challenging a series of EPFO circulars — dated December 29, 2022, January 25, 2023, and February 20, 2023 — issued after the Supreme Court’s decision in the case of “EPFO versus Sunil Kumar B”.

These circulars required employees to once again exercise the joint option to qualify for higher pension, even if they had already contributed on actual salaries beyond the wage ceiling. In many cases, the pension was capped at the statutory limit pending compliance.

Appearing in one of the lead petitions, senior advocate DS Patwalia with counsel Gauravjit S Patwalia submitted that the petitioners had consistently contributed on actual salaries, yet were arbitrarily denied the benefit.

The dispute traces back to the September 1, 2014, amendment to the Employees’ Pension Scheme (EPS), 1995. The Centre raised the wage ceiling for pensionable salary from Rs 6,500 to Rs 15,000 and deleted the proviso to para 11(3), which had earlier enabled employees to opt, along with employers, for higher contributions on actual wages. The change closed the door for fresh higher contributions, and created confusion over the rights of existing contributors.

Before the amendment, joint options could be exercised anytime. In the case of “R.C. Gupta vs Regional Provident Fund Commissioner” (2016), the Supreme Court ruled that if contributions had already been made on actual salary, a separate joint option wasn’t necessary. The EPFO’s 2017 circulars reflected this position. However, the new post-Sunil Kumar circulars imposed a fresh requirement, disregarding past compliance.

Striking down the EPFO’s rejection orders, the high court directed reconsideration of the petitioners’ claims. It held that pensioners could not be deprived of benefits for failing to comply with a condition that was neither applicable nor existent when they retired. The ruling is likely to have significant implications nationwide.