Service Law: Pensionary benefits – Contributory Provident Fund-CPF and General Provident Fund and Pension Scheme-GPF – Shift from CPF to GPF after the cut-off date – On facts, issuance of Notification by the University on 25.05.1987 that all CPF beneficiaries in service on 01.01.1986 would be deemed to have “come over” to GPF under Statute 28-A unless such employees had opted to continue under CPF – By cut-off date, of 30.09.1987, 2611 employees of the University opted to continue under CPF while the rest of the employees, were deemed to have “come over” to GPF – Thereafter, grant of extensions for exercising the option to remain under CPF wherein option exercised by 626 employees – University kept extending the cut off date for switchover from CPF to GPF – Cut off date for exercise of option under the last notification was 31.01.1999 – 2469 employees exercised their option for switchover from CPF to GPF – After the deadline the option given for switchover was incorrect – Writ petition by employees, those who did not exercise their choice, but continued to make payment of contribution towards CPF (first batch), employees who chose CPF in the first two extensions but later wanted to shift to GPF (second batch), and employees who chose CPF before the cut-off date but wanted to change to GPF (third batch) – Case of first and second batch allowed - However, as regards the third batch, the Single Judge held that the employees having consciously exercised the option to be under CPF, their prayer of switchover cannot be accepted whereas the Division Bench held that switch-over to the Pension Scheme was permitted upto 31.12.2003 to several other autonomous institutions, thus, denying the right to opt to the Pension Scheme in the case of the third batch unsustainable – On appeal, held: Differential treatment afforded to those 2469 employees as against the employees in third batch of cases, not founded on any rationale – If those 2469 employees could be afforded chance to exercise an option of switchover to GPF, even though they had consciously opted to be under CPF, on principle of parity or equality, the case was certainly made out – Going by the intent of the notification, those who were to opt for CPF, were an exception and the general rule was that everybody after 01.01.1986 would normally be covered by GPF – In the third batch of cases, the concern is with only 75 persons – Bulk of people namely 2469 employees were granted the choice of reverse switchover and they were allowed all the benefits under GPF – When the notification dated 01.05.1987 was issued, the authorities were conscious of the possibility that all the employees may ‘come over’ to GPF and accordingly the fund was constituted and the affairs were arranged – Shift of those 75 employees would not in any way affect the strength and the character of the fund – Thus, the decision by the Division Bench of the High Court in the third batch does not call for any interference except to the extent of direction for recouping of the contribution under CPF with 8% simple interest pa.
Disposing of the appeals, the Court
HELD: 1.1 The common thread which ran through the decisions of the Single Judge pertaining to three batches of cases, was that the text of the notification dated 01.05.1987 was clear that if no option was exercised by the concerned employees before the cut-off date, they would be deemed to have ‘come over’ to GPF. It was only a positive option exercised by the employees to continue to be under CPF which could have departed from such deeming provision. Once exercised, the option was final and as such, there could be no switchover from those who had consciously opted to be under CPF. Further, relying on the decision in S.L. Verma, it was observed that any exercise of option after the deadline or the cut-off would be inconsequential. It was on this premise that the cases in R.N. Virmani batch of cases and N.K. Bakshi batch of cases were allowed by the learned Single Judge. As regards Shashi Kiran batch of cases, the Single Judge observed, that once the conscious decision was taken and option was exercised to continue to be under CPF, there was “no room for any come back situation.” The cases in the third batch were therefore, rejected. [Para 12][995-E-H; 996-A]
1.2 As regards, the 2469 employees who were given facility of such switchover after the cut-off date, the Single Judge observed that though they had also consciously opted to be under CPF, were not before the Court, and as such, their cases had to be left untouched. It is a matter of record and which aspect is clear from the communications referred to that most of those 2469 employees, at the time of retirement, were given all the benefits that were available to those who had opted to be under GPF. Thus, those 2649 employees were certainly allowed to avail the benefit of switchover which was not granted in favour of the employees in the third batch of cases. Affirming the view taken by the Single Judge in the first two batches of cases, the Division Bench set aside the view of the Single Judge only in the third batch of cases i.e. in Shashi Kiran batch of cases. As the observations made by the Division Bench indicate, the matter was placed on the ground of discrimination and principles of equality. [Paras 13, 14][996-B-D]
1.3 According to the notification dated 01.05.1987 two situations were contemplated. First, the deeming provision in terms of which the concerned employee was taken to have ‘come over’ to GPF. The second situation being where a conscious option was exercised before the cut-off date to continue to be under CPF. R.N. Virmani batch of cases was therefore rightly allowed by the Single Judge and the Division Bench of the High Court, as no conscious option was exercised by the cut-off date. Consequently, the concerned employees must be deemed to have ‘come over’ to GPF. Logically, it would be immaterial whether the concerned employee continued to make contribution assuming himself to be covered under CPF, even though contributions were made by the concerned authorities. The benefit was therefore rightly granted in favour of the employees and the entire contribution was directed to be refunded. The University has chosen not to appeal against that decision and thus the matter has attained finality. [Para 15][996-E-G]
1.4 Theoretically, extension of the same principle would be that if no option was exercised before the cut-off date, but an option was exercised after the cut-off date was extended; and if no switchover could be allowed after the cut- off date, the decisions rendered by the Single Judge and the Division Bench in the N.C. Bakshi batch of cases were also quite correct. Consequently, irrespective of the fact that the concerned employees had exercised the option to continue to be under CPF, such exercise of option would be non est in the eyes of law. That in fact is the ratio of the decision in S.L. Verma’s case. Thus, both these batches of cases were rightly decided by the Single Judge and the Division Bench. Therefore, the appeal in N.C. Bakshi batch of cases is dismissed. [Para 15][996-H; 997-A-B]
1.5 As indicated by the University in its affidavit filed after the Order dated 02.03.2020 was passed by this Court, 2611 employees had opted to be under CPF Scheme by the cut-off date, i.e. by 30.09.1987. Additionally, 626 employees exercised the option to be under CPF after the original cut-off, but within initial two extensions granted by the University. Thus, as against the entire body of employees of the University, 3237 (2611+626) employees had exercised the option to be under CPF. Out of these 3237 employees, by virtue of further extensions granted by the University, about 2469 employees exercised the reverse option and opted to “come over” to GPF, leaving only 768 (32372469) employees to be under CPF. The answers to queries ‘d’ and ‘e’ given by the University in its affidavit indicate that the number of employees in CPF Scheme was 86 while the petitioners in Shashi Kiran batch were 75. Thus, the concern is with 75 original petitioners in Shashi Kiran batch of cases. [Para 17][997-C-E]
1.6 As the Judgment of the Division Bench discloses, the matter was considered by it from the standpoint of discrimination between the same category of persons, that is to say, those who had opted to be under CPF. The different groups in the same category were:- those who had not exercised any option but continued to make payment of contribution towards CPF (R.K. Virmani batch of cases); those who exercised the option to be under CPF but the option was exercised after the cut-off. Since the option was exercised after the cut-off, they were deemed to have ‘come over’ to GPF and were granted benefit (N.C. Bakshi batch of cases); and those who consciously exercised the option to be under CPF; but taking advantage of further options granted through 11 extensions to switchover, had been allowed to ‘come over’ to GPF (2469 employees).It was against these three sub categories coming from the same category of employees that the argument of discrimination was considered by the Division Bench. [Paras 20, 21][1002-E-H; 1003-A]
1.7 The matter was further considered by the Division Bench in the context of the employees of educational institutions such as IITs, who are directly under the Central Government, just as the employees of the University, which is a Central University. If the option was allowed to be exercised by granting extension to the employees of the other educational institutions, the Division Bench did not find any reason why similar choice/option could not be given to the employees in Shashi Kiran batch of cases. [Para 21][1003-B-C]
1.8 The differential treatment afforded to those 2469 employees as against the employees in Shashi Kiran batch of cases, was not founded on any rationale. No justifiable reason was coming forth. If those 2469 employees could be afforded chance to exercise an option of switchover to GPF, even though they had consciously opted to be under CPF, on principle of parity or equality, the case was certainly made out. [Para 22][1003-DE]
1.9 The matter would be considered from the perspective of financial impact if the decision of the Division Bench is affirmed. According to the notification dated 01.05.1987, the employees joining the service after 01.01.1986 would always be under GPF. With respect to those who were in service on 01.01.1986, said employees would be deemed to have “come over” to GPF unless an option to continue to be under CPF was consciously exercised before the cut-off date. Thus, when the Scheme was framed and was sought to be implemented, the concerned authorities must have taken into account the entire magnitude such as, the number of employees and the likelihood of impact on the management of the fund, so that reasonable returns can be effected by way of pension upon retirement of such persons. Going by the intent of the notification, those who were to opt for CPF, were an exception and the general rule was that everybody after 01.01.1986 would normally be covered by GPF. It is in this context that the number of original petitioners in Shashi Kiran batch of cases has to be seen. The concerned is with only 75 persons. On the other hand, the bulk of people namely 2469 employees were granted the choice of reverse switchover and they were allowed all the benefits under GPF. It can reasonably be said that when the notification dated 01.05.1987 was issued, the authorities were conscious of the possibility that all the employees may ‘come over’ to GPF. With that possibility in mind, the fund was constituted and the affairs were arranged. The shift of those 75 employees would not in any way affect the strength and the character of the fund if a direction that the entire contribution made by the authorities be returned with reasonable rate of interest is issued. These 75 petitioners had approached the Court in the year 2010. At this length of time, it is not as if any floodgates are going to open and there will be drain on the resources of the State. A direction can, therefore, be issued, as was done by the Single Judge in his Judgment in R.N. Virmani batch of cases and which aspect was mentioned in the letter dated 23.01.2017 referred to in paragraph 8, for recouping the contribution under CPF with 8% simple interest per annum. [Paras 23-24][1003-E-H; 1004A-D]
1.10 Considering the circumstances on record, the decision rendered by the Division Bench of the High Court in Shashi Kiran batch of cases does not call for any interference except to the extent of direction for recouping of the contribution under CPF with 8% simple interest per annum. It is possible that at this length of time, some of the employees in Shashi Kiran batch of cases may not be interested in switchover to GPF. But an option must be afforded to them in such manner as the authorities deem appropriate. [Para 25][1004-E]
Krishena Kumar vs. Union of India and others (1990)
4 SCC 207 : [1990] 3 SCR 352; Rajasthan Rajya Vidyut Vitran Nigam Limited vs. Dwarka Prasad Koolwal and others (2015) 12 SCC 51 : [2014] 13 SCR 492 – distinguished.
Union of India and another v. S.L. Verma and others (2006) 12 SCC 53 : [2006] 9 Suppl. SCR 770; D.S. Nakara vs. Union of India (1983) 1 SCC 305 : [1983]
2 SCR 165 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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