Highlights of Supreme Court judgment dated 4.11.2022 on Employees Pension Scheme 1995:
1. Validity of EPS 1995 as amended in 2014 is upheld.
2. Employees who could not opt to join the scheme can do so within the next 4 months.
3. Provision in the scheme for additional contribution by employees at 1.16% of salary in excess of Rs.15,000 per month is invalid as there is no such provision in the PF Act. However, this part of the order is suspended for 6 months to enable the government to make a suitable amendment in the Act.
4. Employees retired before 1.9.2014 will get benefits extended before the amendment. If they have not given the option for a higher salary yet, they cannot give the option now.
5. Exempted establishments will also get the benefit of the judgment.
6. Provision regarding the consideration of the last 5 years' salary instead of the last 12 months' salary for the purpose of calculating pension is upheld.
7. Fixation of the threshold of the maximum salary of Rs.15,000 per month for the purpose of calculating pension is also upheld.
8. If the salary of a person who is yet to join service exceeds Rs.15,000, they cannot join the scheme.
9. Those who are currently in service should be in a position to opt for a higher pension.
EPFO is likely to amend the scheme based on the Supreme Court order and issue a circular giving various clarifications and procedural aspects.
From India, Malappuram
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14541. Validity of EPS 1995 as amended in 2014 is upheld.
2. Employees who could not opt to join the scheme can do so within the next 4 months.
3. Provision in the scheme for additional contribution by employees at 1.16% of salary in excess of Rs.15,000 per month is invalid as there is no such provision in the PF Act. However, this part of the order is suspended for 6 months to enable the government to make a suitable amendment in the Act.
4. Employees retired before 1.9.2014 will get benefits extended before the amendment. If they have not given the option for a higher salary yet, they cannot give the option now.
5. Exempted establishments will also get the benefit of the judgment.
6. Provision regarding the consideration of the last 5 years' salary instead of the last 12 months' salary for the purpose of calculating pension is upheld.
7. Fixation of the threshold of the maximum salary of Rs.15,000 per month for the purpose of calculating pension is also upheld.
8. If the salary of a person who is yet to join service exceeds Rs.15,000, they cannot join the scheme.
9. Those who are currently in service should be in a position to opt for a higher pension.
EPFO is likely to amend the scheme based on the Supreme Court order and issue a circular giving various clarifications and procedural aspects.
From India, Malappuram
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Hi, can we expect notification from EPFO as well. If yes, any time lines plz.
From India, Hyderabad
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From India, Hyderabad
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Law Memorandum by Krishna Kumar Singh - NABARD PENSION REGULATION 1993 - Amendment thereof
In our view, clause 18 has to be read and understood differently from what has been urged by respondents. The expression 'resignation from Bank service' will have to be read disjunctively from 'dismissal or termination from it'. The expression 'resignation from bank service' will not be qualified by the subsequent references relating to anti-national activities. On the other hand, the expression 'dismissal or termination from it' will be qualified by the said expression, which would entail forfeiture of past service and disqualification so far as payment of pension is concerned. In other words, read disjunctively, resignation simpliciter from bank service would entail forfeiture of past service and no pension is to be granted in the aforesaid circumstances.
To say that since the petitioner had resigned from service, he would not be entitled to pension even though he had put in more than 21 years of service would be frustrating the very object with which the NABARD Pension Regulations 1993 came to be enacted. Once the petitioner has to his credit the minimum period of qualifying service, I am of the view that he earns a right to get a pension as provided under Regulations of 1993.
In view of the above, the petition should be succeeded. The respondent bank is to be directed to consider the claim of the petitioner for pension in accordance with the Pension Regulations 1993, more particularly keeping in mind regulation 14 and regulation 25 of the NABARD Pension Regulation 1993.
It is also pointed out that most NABARD Pensioners are former employees of the RBI, who were attached to the former organization when it was carved out of the apex bank in 1982... "Resignation of an employee from the service shall not entail forfeiture of his entire service and consequently shall qualify for pension payment if the employee is otherwise eligible for the grant of pension."
Here, it is observed that it is settled that in the case of a government servant who cannot, under his own unilateral act of tendering resignation, give up his service, normally the tender of resignation becomes effective.
Resignation is a matter of right to an employee. The Honorable Supreme Court held that Resignation is a right of an employee unless the terms of appointment otherwise provide or disciplinary proceedings are pending or contemplated, which is sought to be avoided by resigning from the services.
The petitioner noted that clause 1 of the Pension Regulations 1993 did not mention resignation nor was the petitioner made aware of the distinction between resignation and voluntary retirement; that this distinction was a product of the NABARD Pension Regulations 1993. This is to be observed by the court.
Paragraph 18 of the NABARD Pension Regulations 1993 states that the resignation of an employee from the service of the bank or a company shall entail forfeiture of his entire past service and consequently he shall not qualify for pensionary benefits, but does not define the term 'resignation' under NABARD Pension Regulations 1993. An employee, who has completed 20 years of qualifying service, may, by giving notice of not less than 90 days in writing to the appointing authority, retire from service; the notice of voluntary retirement shall require acceptance by the appointing authority. Since "Voluntary retirement" unlike "resignation" does not entail forfeiture of past service and instead qualifies for pension, an employee to whom paragraph 25 (2) of the pension regulations 1993 applies cannot be said to have "resigned" from service.
After the Regulations were notified, a circular was issued dated November 10, 1995. The salient features of the Regulations were set out and paragraph 8 of that circular read as follows: - "8. As clarified by IBA, employees who have voluntarily retired in terms of bank's service regulations or deemed to have voluntarily retired in terms of Settlement between 1-1-1986 to 31-10-1993 shall not be eligible for pension on voluntary retirement and this position be clarified in response to queries."
Here, this is submitted that an artificial distinction had been made between persons who retired and those who resigned at a time when there was no occasion for the concerned person to opt for retirement or seek retirement in the manner provided by the Rules.
We now come to the third issue that section 27(1) of the Pension Regulations is illegal and/or void. On behalf of the petitioners, it is pointed out that forfeiture of the entire past service and consequently denial of pension to employees who resign from service as provided for by Regulation 27(1) by clubbing them with those employees who are dismissed, removed, or terminated from service, is arbitrary, discriminatory, and bad in law. The submission is that the clubbing those who resigned/retired on their own volition with those employees who were dismissed or terminated from service by the employer is unreasonable and, therefore, the classification is arbitrary. Alternatively, it is contended that Regulation 27(1) enables the bank to grant compassionate allowance up to 2/3rd of Pension to employees, dismissed, removed, or terminated. Regulation 23(b) enables the bank to grant full pension to the employee who prematurely retired under the order of the bank and also similarly there is Regulation which enables the bank to give pension to employees who were compulsorily retired by the bank as a penalty. Excluding only those who resigned would amount to denial to them the benefit of a pension and therefore, arbitrary. Reliance is placed on the judgment in the case of Bank of India Vs. Indu Rajagopalan (Supra). It is next submitted that the expression resignation or voluntary retirement as the power of dictionary meaning is one and the same. It is next submitted that in accordance with the established principles of the interpretation of the statute, the provisions in subsequent sections/Regulations will control/override the provisions of prior sections/regulations.
Regulation 18 which provides for forfeiture of past services of the employees who were dismissed, removed, or terminated from service is negatively qualified by the provisions of Regulations 27(1), 28, and 29 as set out earlier.
It is, therefore, submitted that those who have put qualifying service and who decided to leave the bank, their case would be covered by the provisions of Regulation 29. It is further submitted that the petitioners acted on the promises held out by the respondent bank. For the aforesaid reasons, it is sought to be contended that Regulation 18 provides forfeiture of service of designees is illegal and void and/or in the alternative the word "Resignation" must be struck down.
Hence, the Regulation 18 of NABARD Pension Regulations 1993 should be amended as follows: - "18. Forfeiture of service on dismissal or Termination. (i) Dismissal or termination of an employee from service shall entail forfeiture of his entire past service and consequently shall not qualify for pension payment. (ii) Resignation of an employee from the service shall not entail for forfeiture of his entire service and consequently shall qualify for pension payment if the employee is otherwise eligible for the grant of pension.
Krishna Kumar Singh
From India, Delhi
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In our view, clause 18 has to be read and understood differently from what has been urged by respondents. The expression 'resignation from Bank service' will have to be read disjunctively from 'dismissal or termination from it'. The expression 'resignation from bank service' will not be qualified by the subsequent references relating to anti-national activities. On the other hand, the expression 'dismissal or termination from it' will be qualified by the said expression, which would entail forfeiture of past service and disqualification so far as payment of pension is concerned. In other words, read disjunctively, resignation simpliciter from bank service would entail forfeiture of past service and no pension is to be granted in the aforesaid circumstances.
To say that since the petitioner had resigned from service, he would not be entitled to pension even though he had put in more than 21 years of service would be frustrating the very object with which the NABARD Pension Regulations 1993 came to be enacted. Once the petitioner has to his credit the minimum period of qualifying service, I am of the view that he earns a right to get a pension as provided under Regulations of 1993.
In view of the above, the petition should be succeeded. The respondent bank is to be directed to consider the claim of the petitioner for pension in accordance with the Pension Regulations 1993, more particularly keeping in mind regulation 14 and regulation 25 of the NABARD Pension Regulation 1993.
It is also pointed out that most NABARD Pensioners are former employees of the RBI, who were attached to the former organization when it was carved out of the apex bank in 1982... "Resignation of an employee from the service shall not entail forfeiture of his entire service and consequently shall qualify for pension payment if the employee is otherwise eligible for the grant of pension."
Here, it is observed that it is settled that in the case of a government servant who cannot, under his own unilateral act of tendering resignation, give up his service, normally the tender of resignation becomes effective.
Resignation is a matter of right to an employee. The Honorable Supreme Court held that Resignation is a right of an employee unless the terms of appointment otherwise provide or disciplinary proceedings are pending or contemplated, which is sought to be avoided by resigning from the services.
The petitioner noted that clause 1 of the Pension Regulations 1993 did not mention resignation nor was the petitioner made aware of the distinction between resignation and voluntary retirement; that this distinction was a product of the NABARD Pension Regulations 1993. This is to be observed by the court.
Paragraph 18 of the NABARD Pension Regulations 1993 states that the resignation of an employee from the service of the bank or a company shall entail forfeiture of his entire past service and consequently he shall not qualify for pensionary benefits, but does not define the term 'resignation' under NABARD Pension Regulations 1993. An employee, who has completed 20 years of qualifying service, may, by giving notice of not less than 90 days in writing to the appointing authority, retire from service; the notice of voluntary retirement shall require acceptance by the appointing authority. Since "Voluntary retirement" unlike "resignation" does not entail forfeiture of past service and instead qualifies for pension, an employee to whom paragraph 25 (2) of the pension regulations 1993 applies cannot be said to have "resigned" from service.
After the Regulations were notified, a circular was issued dated November 10, 1995. The salient features of the Regulations were set out and paragraph 8 of that circular read as follows: - "8. As clarified by IBA, employees who have voluntarily retired in terms of bank's service regulations or deemed to have voluntarily retired in terms of Settlement between 1-1-1986 to 31-10-1993 shall not be eligible for pension on voluntary retirement and this position be clarified in response to queries."
Here, this is submitted that an artificial distinction had been made between persons who retired and those who resigned at a time when there was no occasion for the concerned person to opt for retirement or seek retirement in the manner provided by the Rules.
We now come to the third issue that section 27(1) of the Pension Regulations is illegal and/or void. On behalf of the petitioners, it is pointed out that forfeiture of the entire past service and consequently denial of pension to employees who resign from service as provided for by Regulation 27(1) by clubbing them with those employees who are dismissed, removed, or terminated from service, is arbitrary, discriminatory, and bad in law. The submission is that the clubbing those who resigned/retired on their own volition with those employees who were dismissed or terminated from service by the employer is unreasonable and, therefore, the classification is arbitrary. Alternatively, it is contended that Regulation 27(1) enables the bank to grant compassionate allowance up to 2/3rd of Pension to employees, dismissed, removed, or terminated. Regulation 23(b) enables the bank to grant full pension to the employee who prematurely retired under the order of the bank and also similarly there is Regulation which enables the bank to give pension to employees who were compulsorily retired by the bank as a penalty. Excluding only those who resigned would amount to denial to them the benefit of a pension and therefore, arbitrary. Reliance is placed on the judgment in the case of Bank of India Vs. Indu Rajagopalan (Supra). It is next submitted that the expression resignation or voluntary retirement as the power of dictionary meaning is one and the same. It is next submitted that in accordance with the established principles of the interpretation of the statute, the provisions in subsequent sections/Regulations will control/override the provisions of prior sections/regulations.
Regulation 18 which provides for forfeiture of past services of the employees who were dismissed, removed, or terminated from service is negatively qualified by the provisions of Regulations 27(1), 28, and 29 as set out earlier.
It is, therefore, submitted that those who have put qualifying service and who decided to leave the bank, their case would be covered by the provisions of Regulation 29. It is further submitted that the petitioners acted on the promises held out by the respondent bank. For the aforesaid reasons, it is sought to be contended that Regulation 18 provides forfeiture of service of designees is illegal and void and/or in the alternative the word "Resignation" must be struck down.
Hence, the Regulation 18 of NABARD Pension Regulations 1993 should be amended as follows: - "18. Forfeiture of service on dismissal or Termination. (i) Dismissal or termination of an employee from service shall entail forfeiture of his entire past service and consequently shall not qualify for pension payment. (ii) Resignation of an employee from the service shall not entail for forfeiture of his entire service and consequently shall qualify for pension payment if the employee is otherwise eligible for the grant of pension.
Krishna Kumar Singh
From India, Delhi
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