The Regional Provident Fund Commissioner vs Kurien T.K & Ors.

Devan Ramachandran, J

Impelled for our consideration and answer is, if retrospective revision of wages would have any effect on the quantum of pension eligible to an employee under the “Employees’ Pension Scheme, 1995” (‘Scheme’ for short).

The respondents 1 and 2 are stated to have been serving the 3^rd respondent – Ernakulam Regional Co-operative Milk Products Union Ltd. (‘MILMA’ for short); and consequent to their retirement, on attaining the age of superannuation, they are stated to have been given all benefits under the “Scheme”, as per paragraph 14 thereof.

However, subsequently, the pay and other benefits of all employees were revised by the MILMA retrospectively - to a date prior to the age of superannuation of respondents 1 and 2; and consequently, a claim was made by them that the said sums be accounted for, in quantifying their benefits eligible under the “Scheme”.

The appellant – Regional Provident Fund Commissioner, did not accede to this claim, and resultantly, respondents 1 and 2 filed a writ petition before this Court, which has now been allowed; against which, the former is in appeal.

Sri.Joy Thattil Ittoop – learned Standing Counsel for the appellant, argued that the learned Single Judge has erred because, he did not take into account the operational ambit of Paragraph 6A of the “Scheme”, read with Paragraph 2(ix) thereof. He contended specifically that, when a person obtains “withdrawal benefit” from the “Scheme”, he ceases to retain membership therein; and hence, that a retrospective revision of pay would have no effect on the quantum eligible to him under it. He asserted that these issues are fully covered in his client’s favour by a judgment of this Court in Shri.K.Sadasivan v. Union of India and Others [W.A No.1043 of 2024]; and he prayed that, therefore, this appeal be allowed and the judgment of the learned Single Judge be quashed.

In response and refutation, Sri.Prakash M.P – learned counsel for respondents 1 and 2, began his submissions saying that the afore cited precedent would have no application or effect to this case because, the Hon’ble Supreme Court has, as early as in the year 1992, in its judgment in P.V.M.Mazdoor Federation v. Rajasthan Electricity Board [1992 (2) SCC 723], rendered the position pellucid that, when the basic pay/wages are substituted subsequently through a process of law, such substitution should take effect for the purpose of the provisions of the Act they were considering, namely, The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act” hereinafter). He argued that, though the statutes may be different, the operational purlieus of the same, at least with respect to the concept of basic wages and pay, are the same; and axiomatically, that the declarations would come to apply herein also.

Sri.Prakash M.P, thereafter, submitted that the contentions of the appellant, edificed on Paragraphs 6A and 2(ix) of the “Scheme”, cannot hold water because, it only refers to the period during which an employee can retain membership; but does not reflect upon the consequences of a revised pay sanctioned subsequent to retirement, but made retrospectively applicable. He contended that, in any case, this appeal is an unnecessary exercise by the appellant because, the MILMA has already remitted the contribution necessary, qua the enhanced wages, as also the applicable interest; and prayed that this appeal be dismissed.

Smt.Latha Anand – learned Standing Counsel for the MILMA, affirmed that her clients have remitted contribution adverting to the enhanced pay, as also the interest thereon; further explaining that the negotiations relating to revision of wages were initiated when the respondents 1 and 2 were in service, but on account of the unavoidable administrative reasons, to be finalised only later; thus to be given retrospective effect from a date when they were in service. She also prayed in favour of the respondents 1 and 2; and requested that this appeal be dismissed.

When we evaluate and assess the afore syllogistic contentions, it is evident that the thrust of the arguments of the appellant is on the question of pay/wages as are defined under the “Scheme”.

It is the singular contention of Sri.Joy Thattil Ittoop – learned Standing Counsel for the appellant, that P.V.M.Mazdoor Federation (supra) would not apply in a case like this because, the claims therein was under the “EPF Act”; while, in this case, it is qua the “Scheme”.

We are afraid that we cannot favour with the afore submissions of Sri.Joy Thattil Ittoop because, Paragraph 2(xiii) of the “Scheme” defines “Pay” to mean basic wages, with dearness allowance, retaining allowance and cash value of food concessions admissible, if any. In similar vein, “basic wages” – which has been noticed by the Hon’ble Supreme Court in P.V.M.Mazdoor Federation (supra) – is defined under the “EPF Act” as being:-

It is thus ineluctable that the “Scheme” defines “Pay” to mean basic wages; while, the latter is specifically defined under the “EPF Act” as supra. This provision is vitally important because, it talks about the wages paid or payable, and takes in various categories, excluding certain others.

As far as the present case is concerned, there is no dispute that the amounts in question are not wages or pay of the employees; but the singular polemic presented is that, because it is given effect retrospectively, it cannot be construed to be a sum to be accounted for under the “Scheme”, since the respondents 1 and 2 had both retired from service; and thus ceased to be members of the Fund.

This argument has an inbuilt and inherent problem in it, namely that, when the “Scheme” refers to “Retention of membership” by an employee, under Paragraph 6A thereof, it merely says that such benefit shall continue until he/she is either 58 in age, or avails a withdrawal benefit, or dies - which is to say that every benefit until that time accrues to him/her. This is perspicuous since, Paragraph 2 (ix) of the “Scheme” further defines the word ‘member’ as being an employee who becomes a member of the Employees' Pension Fund, in accordance with its provisions.

Apodictically, therefore, every benefit that the employee would have enjoyed, had he/she been in service, would become deserving post retirement – underpinned on the unavoidable legal fiction that he/she was a member of the “Scheme”, with respect to benefits accrued during such time, notwithstanding whether it is ordered later.

This is why, in P.V.M.Mazdoor Federation (supra), after incisively evaluating the concept of “basic wages” as available under the “EPF Act”, the Hon’ble Supreme Court declared that “if the original

We have little doubt that we are bound by the declarations of the Hon’ble Supreme Court in the afore citation; and for that reason, fully justified in not following the judgment of this Court cited before, namely Shri.K.Sadasivan (supra).

For the afore reasons, we find full approval with, and hence grant imprimatur to the judgment of the learned Single Judge; and consequently, dismiss this appeal.