### Employees retired prior to 2014 exercising pre-retirement options are entitled to higher pension benefits.

In brief

The question

1. Whether members who retired prior to September 1, 2014, having already exercised an option and contributed on actual salary, are entitled to the restoration of higher pension despite the judgment in Sunil Kumar B.

The court held

The Court held that the petitioners are eligible for higher pension as they had exercised their options and fulfilled the contribution requirements prior to the reduction.

It also directed

The Court quashed the impugned orders reducing the pension.

It directed the EPFO to restore the higher pension forthwith and release all withheld arrears within 90 days, failing which the amount would carry 6% interest per annum.

The writ petitions were allowed.

01Facts

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

¶ 5(g)

During their service, they contributed to the Provident Fund on wages exceeding the statutory ceiling of ₹6,500/-.

Following the Supreme Court’s decision in R.C. Gupta v. Regional P.F. Commissioner (2018), the EPFO issued a circular on March 23, 2017, allowing eligible retirees to opt for higher pension.

¶ 5(d)

The petitioners submitted joint options, deposited the required differential contributions, and were subsequently granted higher pensions.

¶ 5(e)

However, following the 2022 Supreme Court judgment in EPFO v. Sunil Kumar B., the EPFO issued impugned orders (e.g., dated March 22, 2023) discontinuing the higher pension and restoring the lower original pension on the grounds that pre-2014 retirees who had not exercised an option under the unamended Scheme were ineligible.

¶ 6(e)

02Issues

i.1. Whether members who retired prior to September 1, 2014, having already exercised an option and contributed on actual salary, are entitled to the restoration of higher pension despite the judgment in Sunil Kumar B.

¶ 19

ii.2. Whether the petitioners fall under the exclusion category of Paragraph 50.7 or the protection of Paragraph 50.8 of the Sunil Kumar B. judgment.

¶ 27

03Law Applied

The Court applied Paragraph 11 of the Employees’ Pension Scheme, 1995 (pre and post-2014 amendment) regarding the determination of pensionable salary.

¶ 20

It relied on the precedent of R.C. Gupta v. Regional P.F. Commissioner (2018) 14 SCC 809, which established that the proviso to Rule 11(3) did not contain a cut-off date for exercising options for higher pension.

¶ 8

It further reconciled these with the directions in EPFO v. Sunil Kumar B. (2023) 12 SCC 701, specifically Paragraph 50.7 (excluding those who never opted) and Paragraph 50.8 (protecting those who retired before 2014 after exercising options).

¶ 25-26

Provisions in the judgment · 3

Employees Provident Funds and Miscellaneous Provisions Act, 1952 Section 2Section 6ASection 17

04Reasoning

The Court analyzed the EPFO’s contention that the petitioners were ineligible under Para 50.7 of Sunil Kumar B. as they supposedly "exited" the scheme without opting.

¶ 14

However, the Court observed that the petitioners had indeed submitted joint options and deposited differential amounts in accordance with the 2017 circular issued post-R.C. Gupta.

¶ 24, 27

The Court interpreted the term "any option" in Para 50.7 to mean "none whatsoever"; since the petitioners had exercised their option (even if post-retirement via the window opened by R.C. Gupta), their cases were governed by Para 50.8.

¶ 26-27

The Court rejected the EPFO's "mistake" argument, noting that the grant of higher pension was a lawful implementation of the Supreme Court's mandate and could not be unilaterally withdrawn.

¶ 28

The Court further clarified that the arrears paid to petitioners were a legal entitlement based on recalculated pension, not an "excess payment" that justified reduction.

¶ 32

05Holding

The Court held that the petitioners are eligible for higher pension as they had exercised their options and fulfilled the contribution requirements prior to the reduction.

¶ 27, 33

The Court quashed the impugned orders reducing the pension.

¶ 35

It directed the EPFO to restore the higher pension forthwith and release all withheld arrears within 90 days, failing which the amount would carry 6% interest per annum.

¶ 34

The writ petitions were allowed.

¶ 35

LawLens.Chhattisgarh High Court

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