*THE HONOURABLE SRI JUSTICE NOOTY RAMAMOHANA RAO +W.P.No.3731 OF 2009 %11-09-2009 # Battula Veeraswamy. ….petitioner Vs. $ The Regional Provident Fund Commissioner, Barkathpura, Hyderabad and others. …. Respondents !Counsel for the Petitioner: party-in-person Counsel for the Respondents: Sri A. Rajasekhar Reddy. Sri B. Narasimha Sarma. <Gist : >Head Note: ? Cases referred: THE HON'BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WP No. 3731 of 2009 ORDER : This writ petition has been instituted essentially for securing the benefit of coverage under the Employees Pension Scheme, 1995 framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short `the Act'). The material facts which are necessary for deciding the controversy in the writ petition are thus: The writ petitioner initially joined the services of Accounts Department on 6.11.1959. While he was working as a Section Officer (Accounts), he came on deputation to Mishra Dhatu Nigam Ltd, Hyderabad, a Government of India Undertaking (hereinafter referred to as `Midhani') on 27.1.1995. He came to be permanently absorbed later on in the service of Midhani with effect from 1.8.1976. The Deputy Controller General of Defence Accounts (AN) conveyed through his proceedings No. 29011(85)/74/AN/E, dated 18.1.1977 the sanction of the President to the permanent absorption of the writ petitioner in Midhani. It was made clear in the said order that on his permanent absorption in Midhani, the petitioner shall be eligible for pro rata pension and death cum retirement gratuity based on the length of qualifying service rendered by him under the Government of India, till the date of permanent absorption in Midhani, as admissible to the Officers of the Central Civil Services in force as at that time. The pro rata pension and the death cum retirement gratuity will be calculated, assured the aforementioned order, based on average emoluments which he would have drawn as a permanent Section Officer (Accounts) in the Defence Accounts Department, as of 1.8.1976, but for his deputation to Midhani. It was further made clear that the pro rata pension and the death cum retirement gratuity would be disbursable to the officer in addition to his pay in Midhani from the date of his absorption, provided he gives an undertaking that in the event of his services being terminated at the instance of either Midhani or on his own, within the period of two years from the date of retirement from the Government of India service and permanent absorption in Midhani, the approval of Government of India would be obtained by the officer before he takes up any private employment. It was further indicated that the amount of subscriptions together with interest standing thereon in the General Provident Fund account of the petitioner, if he so desires will be transferred to his new provident fund account under Midhani. Thus, the relationship of `Master and Servant' between the Ministry of Defence and the writ petitioner has been brought to an end with the sanction of the President for the permanent absorption of the writ petitioner in the service of Midhani with effect from 1.8.1976. The writ petitioner had nearly completed 17 years of service in the Ministry of Defence by then and hence he was granted `pension’ and `Gratuity’ under the Central Civil Services (Pension) Rules, 1972. After getting absorbed in the service of Midhani, the writ petitioner became a Member of the Provident Fund Scheme, 1952 under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. He started making contributions with effect from 1.1.1977 to the aforesaid fund. However, the Ministry of Personnel, Public Grievances and Pensions, Department of Pensions and Pensioners’ Welfare through Office Memorandum dated 22.1.1990 directed all the former employees of the central government who got absorbed in public sector undertakings, like the petitioner, to opt for either being governed by the family pension scheme of the central government or to opt for continuing under the Employees Family Pension Scheme, 1971, brought forth under the Act. This option came to be accorded after due consideration of the request of the staff side at the 29th ordinary meeting of the National Council (Joint Consultative Machinery – JCM) to provide a chance of option to the absorbed employees between the family pension scheme of the central government or the Employees Family Pension Scheme, 1971 (henceforth referred to as `EFPS 1971'). Accordingly, the writ petitioner opted to be governed by the family pension scheme of the central government. In view of this option exercised by the writ petitioner, the Midhani has forwarded to the Central Provident Fund Commissioner, New Delhi, applications of 28 employees absorbed by it from the central government, for the grant of exemption from the EPPS, 1971 in terms of Section 17(1-C) of the Act. Accordingly, the Central Provident Fund Commissioner through his notifiation dated 30.9.191 exercised the power conferred by sub-section (1-C) of Section 17 of the Act, and granted exemption to the individual employees of Midhani mentioned in Schedule I thereof. The name of the writ petitioner figures at Sl. No. 9 of the 28 names found in Schedule I of the said notification. By virtue of this notification, these employees ceased to be governed by the EFPS, 1971 with effect from the date of issue of the said notification. Thus, the writ petitioner was declared to have ceased to be a member of EFPS, 1971 with effect from 30.9.1991. Accordingly, the writ petitioner has withdrawn all the benefits under EFPS, 1971 which has accrued as on the date of the exemption. The writ petitioner ultimately retired from service of Midhani on attaining the age of superannuation on 1.8.1994. EFPS, 1971 has been replaced by Employees Pension Scheme, 1995 with effect from 16.11.1995 (henceforth, for brevity, called EPS, 1995). Some of the important features of this scheme are contained in paras 1, 2, 3,4, 6,7, 9, 10, 16-A, 17 and 44. They read as under: “1. Short title, Commencement and Application – (1) This scheme may be called the Employees Pension Scheme, 1995; (2) (a) This scheme shall come into force on the 16th day of November, 1995 (b) Subject to the provisions of this Scheme the employees have an option to become the members of the Scheme with effect from the 1st April, 1993. (3) Subject to the provisions of Section 16 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, this Scheme shall apply to the employees of all factories and other establishments to which the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 applies or is applied under sub- section (3) or sub-section (4) of section 1 or section 3 thereof. 2. Definitions :- (1) In this Scheme unless the context otherwise requires :- (i) “Act” means the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952). (ii) “Actual Service” means the aggregate of periods of service rendered from the 16th November, 1995 or from the date of joining any establishment whichever is later, to the date of exit from the employment of the establishment covered under the Act; (iii) “Commissioner” means a Commissioner for Employees’ Provident Funds appointed under Section 5-D of the Act; (iv) “Contributory Service” means the period of `actual service’ rendered by a member for which the contributions to the fund have been received or are receivable. (v) “Eligible Member” means an employee who is eligible to join the Employees’ Pension Scheme. (vi) “Existing Member” means an existing employee who is a Member of the Employees’ Family Pension Scheme, 1971. (viii) “Pension” means the pension payable under the Employees’ Pension Scheme and also includes the Family Pension admissible and payable under the Employees’ Family Pension Scheme, 1971 immediately preceding the commencement of the Employees Pension Scheme, 1995 with effect from the 16th November, 1995. (ix) “Member” means an employee who becomes a member of the Employees’ Pension Fund in accordance with the provisions of this Scheme. 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 the Scheme, whichever is earlier. (x) “Non-Contributory Service” is the period of “Actual Service” rendered by a member for which no contribution to the “Employees’ Pension Fund” has been received or are receivable. (xii) “Past Service” means the period of service rendered by an existing member from the date of joining Employees’ Family Pension Fund till the 15th November, 1995. (xv) “Pensionable Service” means the service rendered by the member for which contributions have been received or are receivable. (xviii) The words and expressions defined in the Act but not defined in this Scheme shall have the same meaning as assigned to them in the Act. 3. Employees' Pension Fund. ( 1 ) From and out of the contributions payable by the employer in each month under Section 6 of the Act or under the rules of the Provident Fund of the establishment which is exempted either under clauses (a) and (b) of sub-section (1) of Section 17 of the Act or whose employees are exempted under either paragraph 27 or paragraph 27-A of the Employees' Provident Fund Scheme, 1952, a part of contribution representing 8.33 per cent of the Employee's pay shall be remitted by the employer to the Employees' Pension fund within 15 days of the close of every month by a separate bank draft or cheque on account of the Employees' Pension Fund contribution in such manner as may be specified in this behalf by the Commissioner. The cost of the remittance, if any, shall be borne by the employer. (2) The Central Government shall also contribute at the rate of 1.16 per cent of the pay of the members of the Employees' Pension Scheme and credit the contribution to the Employees' Pension Fund: Provided that where the pay of the member exceeds rupees six thousand and five hundred per month the contribution payable by the employer and the Central Government be limited to the amount payable on his pay of rupees six thousand and five hundred only. (3) Each contribution payable under sub-paragraphs (1) and (2) shall be calculated to the nearest rupee, fifty paise or more to be counted as the next higher rupee and fraction of a rupee less than fifty paise to be ignored. (4) The net assets of the Family Pension Scheme, 1971 shall vest in and stand transferred to the Employees' Pension Fund. 4. Payment of contribution (1) The employer shall pay the contribution payable to the Employees' Pension Fund in respect of 10[each member] of the Employees' Pension Fund employed by him directly or by or through a contractor. 10. Subs. by G.S.R.134 dated the 28th February, 96, for "the member" (w.e.f. 16th March, 1996) (2) It shall be the responsibility of the principal employer to pay the contributions payable to the Employees' Pension Fund by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor. 6. Membership of the Employees' Pension Scheme – Subject to sub-paragraph (3) of paragraph 1, the Scheme shall apply to every employee - (a) who on or after the 16th November, 1995, becomes a member of the Employees' Provident Fund Scheme, 1952 or of the Provident Funds of the Factories and other establishments exemped 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, from the date of such membership; (b) who has been a member of the ceased Employees' Family Pension Scheme, 1971 before the commencement of this Scheme from 16th November, 1995. (c) who ceased to be a member of the Employees' Family pension Scheme, 1971 between 1st April 1993 and 15th November, 1995 and opts to exercise his option under Paragraph 7 (d) who has been a member of the Employees' Provident Funds or of 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 ceased Employees' Family Pension Scheme, 1971 opts to exercise his option under Paragraph 7. 7. Option for joining the Scheme - (1) Members referred to under sub-para (c) of Paragraph 6 who have died between 1st April, 1993 and 15th November, 1995 shall be deemed to have opted to join the scheme on the date of his death. (2) Members referred to in sub-paragraph (c) of Paragraph 6 who are alive shall have the option to join the Scheme as per the provisions of Paragraph 17 from the date of exit from the employment. (3) Members referred to in sub- paragraph (d) of Paragraph 6 shall have the option to join the Scheme as per the provisions of Paragraph 17 from 16th November, 1995. 9. Determination of Eligible Service - The eligible service shall be determined as follows: (a) In the case of "new entrant" the "actual service" shall be treated as eligible service. The total actual service shall be rounded off to the nearest year. The fraction of service for six months or more shall be treated as one year and the service less than six months shall be ignored. Explanation. In the case of employees employed seasonally in any establishment the period of "actual service" in any year, notwithstanding that such service is less than a year shall be treated as a full year. (b) In the case of the "existing member" the aggregate of actual service and the 'past service' shall be treated as eligible service. Provided that if there is any period in the "past service" for which the contributions towards the Family Pension Scheme, 1971 has not been received, the said period shall count as eligible service only if the contributions thereof have been received in the Employees' Pension Fund. Explanation: For the purpose of this sub-paragraph the total past service for less than six months shall be ignored and the total past service for six months and above shall be rounded to a year. 10. Determination of Pensionable Service (1) The pensionable service of the member shall be determined with reference to the contributions 16[received or receivable] on his behalf in the Employees' Pension Fund. 16. Subs. by G.S.R. 134 dated the 28th February, 1996 for "received" (w.e.f. 16th March, 1 9 9 6 ) (2) In the case of the member who superannuates on attaining the age of 58 years, and/or who has rendered 20 years pensionable service or more, his pensionable service shall be increased by adding a weightage of 2 years. 16A. Guarantee of pensionary benefits None of the pensionary benefits under the Scheme shall be denied to any member or beneficiary for want of compliance of the requirement by the employer under sub-paragraph (1) of paragraph 3 provided, however, that the employer shall not be absolved of his liabilities under the Scheme. 17. Payments on Exercise of Option - (1) Beneficiaries of the deceased members of Employees' Family Pension Scheme, referred to in sub-para (1) of Paragraph 7, shall receive higher of the benefits available under the Employees' Family pension Scheme, 1971 or under this Scheme. (2) Members referred to in sub- paragraph (2) of Paragraph 7, shall have the option to join this Scheme by returning the amount of withdrawal benefit received, if any, together with interest at the rate of 8.5 per cent per annum from the date of payment of such withdrawal benefit and date of exercise of the option, to receive monthly pension as per the provisions of this Scheme. (3) Members referred to in sub- paragraph (3) of Paragraph 7 shall be deemed to have joined the ceased Employees' Family pension Scheme, 1971, with effect from 1.3.1971 on remittance of past period contribution with interest thereon. 44. Repeal and savings. (1) On commencement of this Scheme, the Employees' Family Pension Scheme, 1971, in force immediately before such commencement shall cease to operate with effect from the 16th November, 1995. (2) Notwithstanding anything contained in sub-paragraph (1) every nomination made under the Employees' Family Pension Scheme, 1971, and every form regarding the details of Family of an employee for the purposes of the Employees' Family Pension Scheme, 1971, shall be deemed to have been made under the provisions of this Scheme. (3) All orders/authorisations/Pension Payment Orders issued under the Family Pension Scheme, 1971, shall be deemed to have been made under this Scheme. (emphasis is brought out) Since paragraph 6(c) has provided that the present scheme shall apply to those employees who ceased to be the members of EFPS, 1971 between 1.4.1993 and 15.11.1995, but who opt to come over under paragraph (7), the writ petitioner has preferred this writ petition questioning the validity of the notification dated 30.9.1991 granting exemption to him along with others by the Central Provident Fund Commissioner. He also prayed for consequential directions to the respondents to permit him to opt for the EPS, 1995 in terms of Para 7 thereof, notwithstanding the benefit of CCS Pension Rules by which he was governed. It will be important at this stage to notice that this writ petitioner has instituted, earlier WP No. 6527 of 2007 in this court. That writ petition was decided along with another connected WP No. 14711 of 2007 vide the judgment rendered on 16.7.2008. Both the writ petitions came to be disposed of with directions to the Central Provident Fund Commissioner to verify the following and pass appropriate orders thereinafter within a period of three months:- a) whether there existed any scheme comparable to, or more beneficial than the one under the Employees Family Pension Scheme 1971 in the PSU's, where the petitioners were working as on the date on which they were required to exercise their option under official memo, dated 22.1.190, issued by the Government of India; b) whether the petitioners are entitled to revoke their options exercised by them and to come under the purview of the 1995 Scheme; and if so, c) the conditions subject to which the re- entry into the 1995 scheme can be ordered. In terms of this judgment, the Central Provident Fund Commissioner passed orders, which in turn came to be communicated by the Assistant Provident Fund Commissioner (Legal), Regional Office, Employees' Provident Fund Organisation, Hyderabad on 26.12.2008, answering the issues directed to be examined by this court in its judgment rendered in WP No. 6527 and 14711 of 2007 in the following manner: (a) The employees of the PSU M/s. Mishra Dhatu Nigam Ltd. (MIDHANI) were covered by the EFPS 1971 as on the date on which the petitioner was required to exercise the option. However the petitioner had opted for the pension scheme of Central Government under CCS (Pension) Rules, 1971 in lieu of EFPS' 1971 as the latter was more beneficial than the Employees Family pension Scheme, 1971. Accordingly the member was exempted through the Notification dated 30.9.1991 invoking the powers under Sectio 17(1-C) of the Act. (b) As per the Exemption Notification dated 30.9.1991 the petitioner cannot revoke the option once exercised in favour of CCS Pension. Moreover the petitioner had ceased to be a member of EFPS from the date of the above notification with reference to para 6 of EFPS 1971 whereby the petitioner had become entitled to withdraw the benefits from the date of the above exemption. (c) As the membership of the petitioner under EFPS, 1971 had ceased with effect from the date of notification, there is no provision as such under the Employees' Pension Scheme, 1995 which would enable the petitioner an entry into the Employees' Pension Scheme, 1995. In the circumstances, the petitioner is not entitled for membership and pension under the Employees' Pension Scheme, 1995.” (emphasis is brought out) The respondents have filed a detailed counter in the matter and reiterated the same stand which they have taken for setting out that the writ petitioner is not entitled to become a member of EPS 1995. Therefore, the questions that fall for consideration in this writ petition are these: (1) Whether the orders of the Central Provident Fund Commissioner, granting exemption in terms of sub-section (1-C) of Section 17 of the Act on 30.9.1991, are justified, legal and valid? (2) If the writ petitioner ceased to be a member of EFPS, 1971 by virtue of the exemption granted on 30.9.1991, can he be precluded from becoming a member of EPS, 1995? Employees Provident Fund and Miscellaneous Provisions Act has been ushered in by the Parliament for conferring certain assured benefits upon the class of employees engaged in any industry in which 20 or more persons are employed. This Act is a social security measure which provides for terminal benefits which are unattachable and unwithdrawable, excepting in compelling circumstances such as to help the beneficiary to buy a house or for meeting the expenses of a marriage or for providing assistance for educational facilities of his wards etc. This Act is intended to instil a sense of compulsory savings by the employees to help them in their later period of life. The scheme of the Act is woven around the concept of creating a “financial nest” to which the eggs would be contributed compulsorily both by the employer and the employee, largely, in equal measure throughout the period of coverage spanning the entire length of employment. The accrued sum, which includes the interest earned on the deposits so made, is liable for disbursement to employee at the time of his retirement or upon his untimely death, to the dependants of the beneficiaries. For securing pension on a month to month basis as an additional component of social security, the EPS, 1995 has been put in place. It would also be appropriate to notice some of the important features of the Act. Under Section 5 of the Act, the Central Government has been empowered to frame the Employees Provident Fund Scheme for establishment of provident funds under the Act for the benefit of the employees. The said fund was vested in a Central Board, to be administered by it. Section 5A of the Act gave power to the Central Government to constitute a Multi Member Board of Trustees for the Central Board and endowed the Board with the power to invest the funds for securing most appropriate returns, to be distributed to the beneficiaries. Under Section 5D of the Act, the Central Government has been empowered to appoint a Central Provident Fund Commissioner, who shall be the Chief Executive Officer of the Central Board and function under its control and superintendence. Section 6 of the Act is the most crucial piece of legislation which charged every employer to make a compulsory contribution at a fixed percentage of the basic wages of those employed by him. The percentage of contribution was initially fixed at 6.25% which has been raised to 8.33% and has since been raised to 10% with effect from 22.9.1997. Section 6 also thrust a compulsion on every employee to contribute in equal measure and left the choice to such an employee to contribute much more. As was already noticed, Section 6 was the charging provision creating an obligation and compulsion for the employer and the employee to set apart and contribute certain percentage of the basic wags towards retiral benefits. Section 6A empowered the Central Government to frame the Employees Pension Scheme for the purpose of providing superannuation pension, retiring pension or permanent total disablement pension, as the case may be, to the employees or in case of their untimely death to the widows. Section 6C of the Act also empowered central government to establish Employees Deposit – Link Insurance Scheme for the purpose of providing life insurance benefits to the employees. Section 6D requires all such schemes referred to supra, to be placed before each House of the Parliament so as to secure its scrutiny, guidance and control. If the Parliament makes any modifications or alterations, the schemes shall be given