Employer Entitled to Adjust CPF Contributions Against Arrears of Pension Contribution for Deputation Period

The Appellant, Sunil Kukreja, was an employee of Respondent No. 2 (M/s. Projects and Equipment Corporation of India Ltd.) who served on deputation with Respondent No. 1 (National Rural Roads Development Agency) from 2010 to 2015.

During this period, Respondent No. 2 introduced the Employees’ Defined Contribution Superannuation Fund Scheme (“EDCSF Scheme”), described as a pension scheme, effective from 01.01.2007.

Respondent No. 1 refused to remit employer contributions toward this scheme for the deputation period, claiming it already paid the employer’s share of the Contributory Provident Fund (“CPF”) and that government rules prohibit paying both.

The Appellant filed a Writ Petition, which was allowed; however, the Court directed Respondent No. 1 to remit the pension contribution only after "adjusting" it against the CPF amounts already paid.

The Appellant challenged this specific direction of adjustment, seeking both benefits concurrently.

1. Whether the EDCSF Scheme is an independent supplementary benefit scheme intended to operate in addition to the Contributory Provident Fund (CPF) rather than in substitution of it.

2. Whether the Court was legally justified in permitting the Respondent to adjust (offset) CPF contributions against the required EDCSF pension contributions.

The Court examined the Employees’ Defined Contribution Superannuation Fund Rules (“EDCSF Rules”), specifically Rule 6(b)(ii), which places a cap on total contributions (EDCSF plus Provident Fund) relative to aggregate salary under the Income Tax Act, 1961.

It also considered Rule 4 of the Contributory Provident Fund Rules, 1962 (“CPF Rules”) and the Fundamental Rules (Rule 115), which govern the financial liabilities of borrowing organizations during deputation.

The overarching principle applied is that under Central Government norms, an employee is generally entitled to either CPF benefits or pensionary benefits under the CCS (Pension) Rules, 1972, but not both simultaneously from the public exchequer.

The Court rejected the Appellant’s argument that the EDCSF was a mere "annuity arrangement" distinct from a pension.

It noted that the Appellant had voluntarily opted into the EDCSF specifically as a "pension optee".

While Respondent No. 1, as a government-funded autonomous body, was obligated to contribute toward the pension of an employee on deputation, the Court reasoned that the Fundamental Rules do not permit the "double benefit" of both Contributory Pension and the employer's share of CPF.

Since Respondent No. 1 had already discharged its liability by paying CPF during the deputation, it was equitable and legally sound to allow those payments to be adjusted against the newly claimed EDCSF pension contributions to prevent an unauthorized dual liability for the employer.

The Court dismissed the appeal and upheld the Impugned Judgment, affirming the direction allowing Respondent No. 1 to remit the pension contribution for the deputation period (30.11.2010 to 22.05.2015) after making necessary adjustments against the employer's share of CPF already contributed.