### Employees retired pre-2014 having exercised joint options are entitled to higher pension benefits.

The petitioners are retired employees of various cooperative banks and federations in Chhattisgarh who retired prior to September 1, 2014

During their service, they contributed to the Employees' Provident Fund (EPF).

Following the Supreme Court’s decision in R.C. Gupta v. Regional P.F. Commissioner (2018), and pursuant to an EPFO circular dated 23.03.2017, the petitioners submitted joint options and deposited differential arrears to qualify for higher pension based on actual salaries exceeding the statutory ceiling

Consequently, the EPFO revised their Pension Payment Orders (PPOs) and granted higher pensions

However, following the subsequent Supreme Court judgment in EPFO v. Sunil Kumar B. (2022), the EPFO issued the impugned orders in 2023, discontinuing the higher pensions and reverting the petitioners to lower pension rates on the ground that they had retired prior to 01.09.2014 without exercising an option under the unamended scheme

1. Whether the EPFO’s action in reducing the higher pension previously granted to the petitioners is legally sustainable in light of the Supreme Court's rulings in R.C. Gupta and Sunil Kumar B.?

2. Whether the petitioners, having retired before 01.09.2014 but having exercised an option under the pre-amended scheme, fall under the restrictive category of paragraph 50.7 or the protected category of paragraph 50.8 of the Sunil Kumar B. judgment?

The court primarily applied Paragraph 11 of the Employees’ Pension Scheme, 1995, regarding the determination of pensionable salary

Paragraph 26(6) of the EPF Scheme, 1952, regarding contributions on higher wages.

It relied on the precedent in R.C. Gupta v. Regional Provident Fund Commissioner (2018) 14 SCC 809, which held that Paragraph 11(3) did not prescribe a cut-off date for exercising options for higher pension

It further applied the directions from EPFO v. Sunil Kumar B. (2023) 12 SCC 701, specifically distinguishing between employees who "retired without exercising any option" (Para 50.7) and those who "retired upon exercising option under Paragraph 11(3)" (Para 50.8).

The Court analyzed the EPFO's contention that the petitioners were ineligible under Para 50.7 of Sunil Kumar B. because they retired before 01.09.2014.

However, the Court observed that the petitioners had indeed exercised their joint options and deposited the required differential contributions following the R.C. Gupta ruling and the EPFO’s own 2017 circular.

The Court interpreted the word "any" in Para 50.7 of Sunil Kumar B. to mean that only those who never exercised an option are excluded.

Since the petitioners had submitted options (even if retrospectively allowed by the 2017 circular), their cases are governed by Para 50.8, which protects employees who retired before 01.09.2014 upon exercising such options.

The Court rejected the EPFO’s argument of "rectifying a mistake," noting that the grant of higher pension was in strict conformity with the law then prevailing and affirmed by the Supreme Court.

Furthermore, the Court dismissed the EPFO’s financial argument, clarifying that the "excess" payments claimed by the EPFO were actually lawful arrears of pension and not a refund of the petitioners’ deposits.

The Court quashed the impugned orders reducing the pensions.

The EPFO was directed to: (i) Restore the higher pension forthwith; and (ii) Calculate and release all arrears within 90 days, failing which the amount shall carry interest at 6% per annum.

The writ petitions were allowed.