SC upholds 2014 EPS Scheme, reads down provisions for employees benefit

A three-judge bench presided over by Chief Justice of India U U Lalit declared the provisions of August 22, 2014 notification as legal and valid

The Supreme Court on Friday upheld the validity of the 2014 Employees’ Pension (Amendment) Scheme even as it read down some of its provisions to make it beneficial to employees.

A three-judge bench presided over by Chief Justice of India U U Lalit declared the provisions of the August 22, 2014 notification as legal and valid.

However, the top court read down some of the provisions by allowing in-service employees to avail the benefit of the option under EPS, which permits the employer and employees to make uncapped pension contributions.

The bench, also comprising Justices Aniruddha Bose and Sudhanshu Dhulia, declared that exempted and un-exempted establishments have to be treated equally for the purposes of EPS.

Justice Bose, who pronounced the judgement on behalf of the bench, also ordered that employees who did not exercise the option to join the scheme due to lack of clarity will be given another four months to avail the option.

The bench also upheld its 2016 judgement in R C Gupta vs Regional Provident Fund Commissioner by which it was held that there can be no cut-off date to avail benefit of the option under the scheme.

However, employees, who retired before the amendment on September 1, 2014 without exercising the option under para 11(3) of the unamended EPS, will not be eligible for the exercise option under the scheme, the court said.

The court also ordered that exempted and unexempted establishments are to be treated equally. In its decision, the bench also upheld provisions in the amendment scheme which put Rs 15,000 as a ceiling for computation of pension instead of actual salary.

The judgement has come on appeals filed by EPFO against orders by the Kerala, Rajasthan and Delhi High Courts.

“There was uncertainty as regards the validity of the post-amendment scheme, which was quashed by the judgements of the three high courts. Thus, all the employees who did not exercise the option but were entitled to do so but could not due to the interpretation of a cut-off date by the authorities, ought to be given a further chance to exercise their option. We are giving this direction in the exercise of our jurisdiction under Article 142 of the Constitution,” the bench said.