1742a

IN THE HONOURABLE SUPREME COURT OF INDIA

AT NEW DELHI

WRIT PETITION NO. XXX/2023

PETITION FILED UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA, 1950

IN THE MATTER OF

KIRAN AND ORS.

…………………………………………………………………...PETITIONER

v.

EMPLOYER

XYZ………………………………………………………………….RESPONDENT

Memorial on behalf of the Appellant

 TABLE OF CONTENTS

INDEX OF AUTHORITIES......................................................................................................3

STATEMENT OF JURISDICTION..........................................................................................4

STATEMENT OF FACTS........................................................................................................5

SUMMARY OF ARGUMENTS...............................................................................................6

I. The Appellant is entitled to the benefit of the scheme in such a manner that the
contribution must be on the actual salary...............................................................................6

ARGUMENTS ADVANCED...................................................................................................7

II. The Appellant is entitled to the benefit of the scheme in such a manner that the
contribution must be on the actual salary...............................................................................7

i. The Intention of The EPF Act Was To Provide Social Security To The Employees
And The Limitation On Pensionable Salary Was Not Intended To Be Permanent...........7

ii. The 2014 Amendment To The EPF Act Was Intended To Remove The Limitations
On The Pensionable Salary And Provide More Benefits To The Employees...................8

iii. Judicial Precedents Support the Stance that there can not be an Arbitrary Cut-Off
Date....................................................................................................................................8

iv. The Exercise of Option under Section 26(6) of the Provident Fund Scheme
Appellants Permit the Applicant to Enable Contribution Under Actual Salary...............10

PRAYER..................................................................................................................................12
 INDEX OF AUTHORITIES

Cases

Bridge Roof Co. (India) Ltd. v. Union of India, (1962) 2 SCR 609..........................................5
Employee Provident Fund Organsation and Anr. v. Sunil Kumar and Ors., (2022) SCC
OnLine 356.............................................................................................................................7
Maruti Udyog Ltd. v. Union of India, (2005) 7 SCC 625..........................................................6
R.C. Gupta v. Regional Provident Fund Commissioner Employees Provident Fund
Organization, (2018) 4 SCC 809............................................................................................6
Regional Provident Fund Commissioner (II) West Bengal v. Vivekananda Vidyamandir &
Others (2017) 3 SCC 129.......................................................................................................8
V. K. Sharma v. Regional Provident Fund Commissioner (2007), DelHC [34] 982.................8

Statutes

Employees’ Provident Funds and Miscellaneous Provisions Act 1952 (India) s 6A................5
The Employees Pension Scheme, 1995 (EPS-95): Employees’ Pension Scheme 1995 (India).
................................................................................................................................................5
 STATEMENT OF JURISDICTION

The Appellant most humbly and respectfully submits to the jurisdiction of this Honourable

Supreme Court of India, at New Delhi, under Article 136 of the Constitution of India, 1950.

It is thus submitted that this Honourable Court has complete competency and jurisdiction to

adjudicate upon the matters mentioned herein.

 STATEMENT OF FACTS

The case concerns the interpretation of the Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 and the Employees' Pension Scheme, 1995. The appellant, a retired
employee of the respondent, argued that he was entitled to receive a pension based on his
actual salary rather than on the limit prescribed by the scheme. The pension scheme limits the
maximum pensionable salary to Rs. 6,500 per month, with contributions from the employer
and employee made on this basis. However, the appellant argued that the amendment made to
the Act in 2014, which removed the Rs. 6,500 limit on pensionable salary, should be applied
retrospectively. The respondent contended that the amendment would only apply
prospectively, and therefore the appellant was not entitled to the increased pension. The case
also involved issues related to the exercise of option under Section 26(6) of the Provident
Fund Scheme, as well as the interpretation of certain clauses of the Pension Scheme.
 SUMMARY OF ARGUMENTS

I. THE APPELLANT IS ENTITLED TO THE BENEFIT OF THE SCHEME IN SUCH A

MANNER THAT THE CONTRIBUTION MUST BE ON THE ACTUAL SALARY

The appellant argues that the contribution to the pension fund must be made on the actual
salary of the employee, rather than the prescribed limit of Rs. 5,000, Rs. 6,500, or Rs. 15,000.
The appellant contends that the intention of the EPF Act and Pension Scheme was to provide
social security to the employees, and limiting the contribution to a fixed amount goes against
that intention. The appellant further argues that the option provided under 26(6) of the
Provident Fund Scheme should be available to all employees, regardless of the date of their
retirement, as there cannot be a cut-off date for availing the benefit. The appellant relies on
various landmark cases to support their stance, including the Maruti Udyog and Bridge and
Roof cases, which established the principle that social welfare legislation should be
interpreted broadly to provide maximum benefit to the employees.
 ARGUMENTS ADVANCED

II. THE APPELLANT IS ENTITLED TO THE BENEFIT OF THE SCHEME IN SUCH A

MANNER THAT THE CONTRIBUTION MUST BE ON THE ACTUAL SALARY

The Appellant draws the Court’s attention to the fact that in 1995, the Government
introduced a pension scheme under Section 6A of the EPF Act. The Employees Pension
Scheme, 1995 (EPS-95) provided that the employer’s contribution of 8.33% should be
towards the pension scheme. The EPS-95 capped the maximum monthly pension at
Rs.5,000 or Rs.6,000. Thus, employers had to contribute 8.33% of Rs.5,000, which was
later raised to Rs.6,500, towards the pension scheme.1

In March 1996, a provision was added to para 11(3) of the EPS-95, giving the employer
and employee an option to contribute 8.33% of actual salary (above the cap of Rs.5,000
or Rs.6,500) to the EPS. Such a higher salary would be considered a pensionable salary.2

iii. The Intention of The EPF Act Was To Provide Social Security To The
Employees And The Limitation On Pensionable Salary Was Not Intended To
Be Permanent

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 was enacted to
provide for the institution of provident funds, pension funds and deposit linked insurance
funds for employees in factories and other establishments. The purpose of the Act was to
provide social security to the employees. The Act was amended in 1995 to introduce the
Employees' Pension Scheme, which was meant to provide for the payment of pension to
retiring employees. The limitation on the pensionable salary under Clause 11(3) was not
intended to be permanent and was subject to change. In fact, the limitation was increased
from Rs.5,000/- to Rs.6,500/- per month with effect from 08.10.2001.

In the case of Bridge Roof Co. (India) Ltd. v. Union of India3, the Supreme Court held
that the object of the Employees' Provident Funds and Miscellaneous Provisions Act,
1952 was to provide for the institution of provident funds, pension funds and deposit-
linked insurance funds for the benefit of employees in factories and other establishments.
The court held that the expression "benefit of employees" must be given a broad and
liberal interpretation, and any doubt or ambiguity must be resolved in favour of the

1
Employees’ Provident Funds and Miscellaneous Provisions Act 1952 (India) s 6A.
2
The Employees Pension Scheme, 1995 (EPS-95): Employees’ Pension Scheme 1995 (India).
3
Bridge Roof Co. (India) Ltd. v. Union of India, (1962) 2 SCR 609.
 employees. This decision further supports the appellant's argument that the EPF Act and
Pension Scheme should be interpreted in a manner that provides maximum benefits to
employees, without any arbitrary cut-off dates.

A similar stance has also been taken in the case of Maruti Udyog Ltd. v. Union of India4,
where it was held that the intention of the Employees' Provident Fund and Miscellaneous
Provisions Act, 1952 was to benefit employees and any ambiguity in the interpretation of
the provisions should be resolved in favour of the employees.

iv. The 2014 Amendment To The EPF Act Was Intended To Remove The
Limitations On The Pensionable Salary And Provide More Benefits To The
Employees.

The government amended the EPS-95 scheme effective from 01/09/2014. It increased the
maximum pensionable salary to Rs.15,000. It also omitted the provision to para 11(3), i.e.
exercise of the option by the employer and employee to contribute EPS on a higher salary
amount.

However, the employees who were part of EPS-95 or joined before 01/09/2014 could
contribute 8.33% to EPS on the actual salary as against the cap of Rs.15,000 if they filed
a new joint option with the EPFO within six months, i.e. 28/02/2015.

The 2014 amendment to the EPF Act was intended to simplify and improve the social
security benefits provided to the employees. The amendment aimed to remove the
limitations on the pensionable salary and provide more benefits to the employees. The
amended Section 6(1) provides that the contribution of the employer and employee shall
be paid on the full salary of the employee. This means that the contribution of the
employer and employee shall not be limited to the pensionable salary, but shall be paid on
the actual salary of the employee.

v. Judicial Precedents Support the Stance that there can not be an Arbitrary
Cut-Off Date

The case of R.C. Gupta v. Regional Provident Fund Commissioner Employees Provident
Fund Organization,5 is directly relevant in the present factual scenario.

4
Maruti Udyog Ltd. v. Union of India, (2005) 7 SCC 625.
5
R.C. Gupta v. Regional Provident Fund Commissioner Employees Provident Fund Organization, (2018) 4 SCC
809.
 The RC Gupta case was decided by a two-judge bench of the Supreme Court in 2016. The
issue before the Court was whether there was a cut-off date for employees to avail benefit
of the option under the Employees Pension Scheme (EPS), which permits the employer
and employee to make uncapped pension contribution. Initially, when the EPS was
introduced in 1995, clause 11(3) of the scheme mandated that the maximum pensionable
salary was limited to Rs. 5,000, which was subsequently enhanced to Rs.6,500 per month
in 2001. However, a couple of months after the EPS was framed, a proviso was added to
Clause 11 (3) with effect from March 16, 1996 permitting an option to the employer and
an employee for contribution on salary exceeding Rs. 5,000 or Rs. 6,500 per month.
8.33% of such contribution on full salary was required to be remitted to the Pension Fund.

The appellant-employees in the RC Gupta case had, on the eve of their retirement i.e.
sometime in the year 2005, taken the plea that the proviso brought in by the amendment
of 1996 was not within their knowledge and, therefore, they may be given the benefit of
the same, particularly, when the employer’s contribution under the Act has been on actual
salary and not on the basis of ceiling limit of either Rs.5,000 or 6,500 per month. This
contention was negatived by the Provident Fund Authority on the ground that the proviso
visualized a cut-off date for exercise of option, namely, the date of commencement of
scheme or from the date the salary exceeded the ceiling amount of Rs.5,000 or 6,500 per
month. As the request of the appellant-employees was subsequent to either of the said
dates, the same cannot be acceded to.

The Supreme Court reversed this view and held that there is no cut-off date and that a
beneficial scheme should not be defeated by reference to a cut-off date.

A similar stance was also take in the case of Employee Provident Fund Organsation and
Anr. v. Sunil Kumar and Ors.,6 decided by a two-judge bench of Supreme Court on
November 4, 2022. This case upheld Employees’ Pension (Amendment) Scheme, 2014
and allowed employees to opt for higher pension coverage alongside their employers in
four months’ time. The Supreme Court also allowed another opportunity to members of
the EPFO, who have availed of the EPS, to opt for higher annuity over the next four
months.

In V. K. Sharma v. Regional Provident Fund Commissioner7, the Delhi High Court held
that an employee cannot be denied the benefit of a provident fund scheme on the ground
6
Employee Provident Fund Organsation and Anr. v. Sunil Kumar and Ors., (2022) SCC OnLine 356.
7
V. K. Sharma v. Regional Provident Fund Commissioner (2007), DelHC [34] 982.
 that he had not exercised the option to contribute to the pension fund before a certain cut-
off date. The Court observed that the purpose of the scheme is to provide for the welfare
of the employees and that this purpose cannot be defeated by arbitrary cut-off dates.

vi. The Exercise of Option under Section 26(6) of the Provident Fund Scheme
Appellants Permit the Applicant to Enable Contribution Under Actual
Salary

Under Section 26(6) of the Provident Fund Scheme, an employer and an employee have
the option to contribute to the Provident Fund on the actual salary in excess of the
prescribed limit of Rs.15,000/-. The option was introduced by the Employees' Provident
Fund (Amendment) Scheme, 2000, and the relevant amendment came into effect on
September 1, 2014. This provision further supports the appellant's contention that the
contribution must be made on the actual salary, and not on the limit of either Rs.5,000/-,
Rs.6,500/- or Rs.15,000/-.

If an employer and employee exercise the option under Section 26(6) of the Provident
Fund Scheme, then the contribution must be made on the actual salary in excess of
Rs.15,000/-. This provision was introduced to benefit employees who earn a salary in
excess of the prescribed limit of Rs.15,000/-, as they would be able to receive a higher
contribution towards their Provident Fund. Therefore, if an employer and employee
exercise this option, it implies that the contribution is made on the actual salary, and not
on the prescribed limit.

This argument is further supported by the decision of the Hon'ble Supreme Court in the
case of Regional Provident Fund Commissioner (II) West Bengal v. Vivekananda
Vidyamandir & Others8, where the Court held that the employer and employee have the
option to contribute on the actual salary in excess of the prescribed limit. The Court
further held that the contribution must be made on the actual salary, and not on the limit
of either Rs.5,000/-, Rs.6,500/- or Rs.15,000/-. The Court observed that the objective of
the Provident Fund Scheme is to provide social security to employees and to ensure that
they are able to maintain a decent standard of living after retirement. Therefore, the
contribution must be made on the actual salary, which will enable employees to receive a
higher benefit under the scheme.

8
Regional Provident Fund Commissioner (II) West Bengal v. Vivekananda Vidyamandir & Others (2017) 3
SCC 129.
 In the aforementioned RC Gupta case,9 the Court also held that exercise of option under
Para 26 of the Provident Fund Scheme is a necessary precursor to the exercise of option
under Clause 11(3) of the Pension Scheme and does not foreclose the latter option. The
Court observed that if both the employer and employee opt for deposit against actual
salary and not ceiling amount, exercise of option under Para 26(6) is inevitable.

9
Id.
 PRAYER

Wherefore, in view of the facts and arguments presented, it is most respectfully prayed before
this Hon'ble Supreme Court that it may be pleased to:

 Set aside the impugned judgement and order passed by the High Court.
 Declare that the Appellant is entitled to the benefit of the Pension Scheme on the
actual salary drawn by him and not on the prescribed ceiling limit.
 Direct the Respondent to calculate the Appellant's pension based on the actual salary
drawn by him and not on the prescribed ceiling limit.

Grant any other order or relief that this Hon'ble Court may deem fit and proper in the facts
and circumstances of the case.

All of which is most humbly and respectfully submitted.

Date- April 2, 2023 Counsel for the Appellant

Place- New Delhi Counsel No. 1742