Bombay HC Directs EPFO To Grant Higher Pension To Employees Of Exempted Firms

Mumbai: The Bombay High Court has directed the Employees’ Provident Fund Organisation (EPFO) to process and allow applications for higher pension filed by employees and retired employees of exempted establishments, ruling that private provident fund trust rules cannot override statutory pension benefits.

Justice Sandeep Marne, in a common judgment dated October 19, set aside orders rejecting higher pension applications filed by employees associated with establishments including BEST, Abbott India and Tata Communications. The EPFO has been directed to process and allow their applications within eight weeks.

The court held that employees cannot be denied higher pension merely because the rules of their employers’ provident fund trusts impose a wage ceiling, restrict contributions or do not expressly provide for a joint option to claim pension on higher wages.

“The rules/deeds of provident fund trusts of an exempted establishment operate only in respect of the provident fund,” the court observed, adding that a joint option cannot be rejected on the ground that trust rules restrict contributions or do not provide for higher pension.

The six petitions challenged EPFO orders rejecting applications under the Employees’ Pension Scheme (EPS), 1995. Advocate Satyam Surana for the employees argued that their entitlement to higher pension could not be restricted by internal trust rules, particularly when they had made provident fund contributions on actual wages exceeding the statutory wage ceiling.

The EPFO’s advocate Payoja Gandhi opposed the petitions, arguing that some employers had failed to produce relevant trust rules, forms and other records required to determine eligibility. It also relied on a January 2025 circular directing its officials to assess higher pension claims of employees of exempted establishments with reference to the applicable trust rules.

Rejecting these grounds, Justice Marne relied on judgments of the Madras, Karnataka, Calcutta and Allahabad High Courts, which held that internal trust rules cannot curtail benefits available under the statutory pension scheme.

The court also said that the absence of historical records should not automatically lead to rejection of claims. Where documents were unavailable or could not be produced by employers, authorities should adopt alternative methods of verification, including giving employees an opportunity to be heard.

The court noted that several petitioners were retired employees and said their cases should not be kept pending indefinitely when other High Courts had already considered the issue.

Allowing all six petitions, the court quashed the EPFO’s rejection orders and directed it to grant the employees’ joint options for higher pension within eight weeks.

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