Statutory Pension Schemes Prevail Over Restrictive Trust Rules in Determining Higher Pension Entitlements for Exempted Establishments.

The petitioners are retired employees of Hindustan Aeronautics Limited (HAL), Lucknow. HAL is an "exempted establishment" under Section 17 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952.

Throughout their service, both the employer and employees contributed to the pension fund based on their actual salary, which often exceeded the statutory ceiling.

However, when the petitioners submitted "joint option forms" for higher pension post-retirement, the Regional Provident Fund Commissioner (RPFC) rejected them. The rejection was based on HAL Trust Rules 20.1 and 20.2.1, which ostensibly capped the pensionable salary at ₹6,500/-, despite the statutory ceiling being raised to ₹15,000/- in 2014.

1. Whether the ceiling on pension contributions should be governed by the restrictive HAL Trust Rules or by the statutory provisions and joint options for higher pension based on actual salary.

2. Whether an exempted establishment's internal Trust Rules can override the beneficial provisions of the Employees' Pension Scheme, 1995 and the mandate of the Supreme Court.

The Court primarily applied the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, specifically Section 17(1C) regarding exemptions and Section 6A regarding the Pension Scheme.

Specifically Paragraph 26(6) of the EPF Scheme 1952, which allows contributions on salary exceeding the ceiling upon joint request.

The Court followed the precedents of R.C. Gupta v. RPFC (2018) 14 SCC 809, which held there is no cut-off date for exercising joint options.

The precedent of EPFO v. Sunil Kumar B. (2023) 12 SCC 701, which affirmed that 2014 amendments apply to exempted establishments and re-opened the window for joint options.

Rules 38 and 42 of the HAL Trust Rules, which specify that more beneficial statutory amendments apply automatically and that the Central Scheme prevails in case of conflict.

The Court reasoned that HAL, despite being an exempted establishment for provident fund management, remains governed by the Employees' Pension Scheme, 1995.

The Court found that the RPFC erred in relying on the limb of the Trust Rules that capped salary at ₹6,500/-, as the Trust’s own internal regulations (Rules 38 and 42) mandate that any "more beneficial" amendment to the Central Scheme applies automatically to employees.

The Court observed that since actual deductions were already made on higher salaries and the employer (HAL) expressed no objection to the higher pension, there was no additional financial burden or legal barrier.

The court determined that the 1995 Scheme is a "beneficial scheme" and its statutory intent cannot be defeated by procedural gaps or restrictive trust clauses.

The Court quashed the impugned rejection orders and allowed the writ petitions. It directed the respondent (RPFC) to take a fresh decision in light of the judgment, effectively mandating the approval of the joint options for higher pension based on actual salary deductions.