1. Simplified Explanation of the Judgment

This judgment from the Patna High Court deals with an important and often misunderstood question: can retired employees of an exempted establishment claim a higher pension from the Employees’ Pension Scheme (EPS), 1995 based on actual (higher) wages if no formal “joint option” was exercised during their service? The petitioners, retired employees of the Bihar State Food and Civil Supplies Corporation Ltd. (an exempted establishment for a long period), sought directions to the Employees’ Provident Fund Organisation (EPFO) to fix their EPS pension on their higher pensionable salary. They relied on the Supreme Court’s decision in R.C. Gupta, which many retirees believe permits a later correction to treat contributions on higher wages as qualifying for higher EPS pension.

The High Court first recorded the basic facts. The petitioners retired from the Corporation and said they and the employer had been contributing to EPF on higher wages since 1997. Yet, their pension had been fixed around the old statutory wage ceiling (₹6,500), not on actual wages. They argued that as they received a significantly higher last drawn pay, their pension should be recalculated on that basis.

EPFO opposed, pointing out that the Corporation was an “exempted establishment” under Section 17 of the EPF & MP Act, 1952 from 1987 to 31.03.2004. During exemption, a Board of Trustees handled contributions. The statutory ceiling (₹5,000, later ₹6,500) applied, and there was no evidence of the mandatory “joint request/option” under Para 26(6) of the EPF Scheme, 1952 to contribute on actual wages above the ceiling. EPFO stressed that exercising Para 26(6) is a necessary precursor to exercising the higher-pension option under Para 11(3) of the EPS, 1995—exactly what the Supreme Court clarified in R.C. Gupta.

The Court then surveyed the statutory framework and crucial amendments. Under the Act and the EPF/EPS Schemes: (i) employer and employee contributions are generally capped at a wage ceiling (₹6,500 pre-2014; ₹15,000 post-01.09.2014), (ii) contributing above the ceiling requires a joint request under Para 26(6) of the EPF Scheme, and (iii) EPS Para 11 governs pensionable salary, with a proviso that allows higher pension if, at the option of the employer and employee, contributions on salary above the ceiling were actually made and properly diverted to the pension fund. These provisions were later amended on 01.09.2014, introducing a fresh option window and consequences for those who did not exercise it.

Most importantly, the Court applied the Supreme Court’s Constitution Bench–era guidance in Employees’ Provident Fund Organisation v. Sunil Kumar B., which authoritatively settled that employees who retired before 01.09.2014 without exercising any option under the pre-2014 Para 11(3) had already exited the Scheme and are not entitled to higher pension benefits under that ruling. The Supreme Court also read down and harmonised parts of the 2014 amendment but explicitly carved out pre-01.09.2014 retirees with no option from the benefit.

On the facts of this case, the High Court found:

• The Corporation had indeed been an exempted establishment for a long period; the petitioners and employer had not exercised a valid joint option under Para 26(6) to contribute above the wage ceiling; and even a Board decision in 2006 that appeared to consent to higher-wage contributions under EPS was not a valid Para 26(6) option and was later withdrawn in 2012 following objections from the Accountant General.
• The petitioners had superannuated in 2007–2008, i.e., well before 01.09.2014, and without exercising the necessary options contemplated by the EPF/EPS framework. Under Sunil Kumar B., such retirees are not entitled to the higher pension route in the absence of the statutory options.

Given these findings and binding Supreme Court law, the Court dismissed the writ petition. However, in a measure of fairness, it directed that if any excess contribution had been realized from the petitioners’ wages and sent to EPFO, the same should be refunded with statutory interest at 6% per annum within eight weeks of receipt/production of the order.

In essence, this ruling clarifies that for higher EPS pension based on actual wages, formal compliance matters. Without a valid joint option under Para 26(6) (and, post-2014, compliance with Para 11(4)), retirees—especially those who left service before 01.09.2014—cannot demand recalculation of pension on higher wages merely because contributions above the ceiling were deducted or because the employer “consented” internally at some point. The program is statutory and option-driven; sympathetic facts cannot substitute for the required legal steps.

3. Significance or Implication of the Judgment (For general public or government)

For Retirees and Employees: This judgment underscores that higher EPS pension is not automatic, even if higher EPF contributions were made. Two gates must be crossed—(i) a joint option under Para 26(6) permitting contributions over the ceiling to EPF, and (ii) a corresponding option under Para 11(3)/(11)(4) for pension on higher wages. Retirees who left before 01.09.2014 without exercising the relevant options cannot now claim higher EPS pension solely on the strength of past higher contributions.

For Government/EPFO: The judgment supports consistent application of the Supreme Court’s Sunil Kumar B. framework to exempted and regular establishments alike, and discourages ad-hoc relaxation where statutory options were never exercised. It also encourages timely refund with interest of any “excess” contributions wrongly treated as EPS-eligible, thereby reducing avoidable litigation.

For Exempted Establishments: Boards and HR departments should ensure that any decision to allow contribution on actual wages is formalised into a valid Para 26(6) joint request and that EPS diversion is handled strictly per Para 11. Internal resolutions alone will not suffice, particularly where later withdrawn or not followed by statutory filings.

4. Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether retirees of an exempted establishment who left service prior to 01.09.2014 without exercising a joint option under Para 26(6) and Para 11(3) can claim higher EPS pension on actual wages.
  Decision: No. The Supreme Court in Sunil Kumar B. holds that such retirees have exited the Scheme and are not entitled to higher pension benefits. Further, exercise of Para 26(6) is a necessary precursor to Para 11(3)/11(4). The petitioners had neither exercised the joint option nor remained in service on 01.09.2014.
• Whether internal Board resolutions or employer “consent” without a valid joint option can validate higher-wage EPS pension claims.
  Decision: No. A 2006 resolution was neither a valid Para 26(6) joint option nor sustained (it was withdrawn in 2012). Without statutory compliance, excess contributions are treated as erroneous, and pensionable salary remains limited to the statutory ceiling.
• Relief, if any, in case of excess deductions sent to EPFO without legal basis.
  Decision: Refund to the petitioners with 6% interest within eight weeks, upon production of the order.

5. Judgments Referred by Parties

• R.C. Gupta & Ors. v. Regional Provident Fund Commissioner, EPFO & Ors., (2018) 14 SCC 809. (relied upon by petitioners to seek higher pension based on actual wages)
• Ram Nandan Prasad v. Union of India & Ors., 2014 (3) PLJR 98 (Patna) (relied upon by EPFO to show that, absent valid options, excess contributions are erroneous and pension is confined to the statutory ceiling).

6. Judgments Relied Upon or Cited by Court

• Employees’ Provident Fund Organisation & Ors. v. Sunil Kumar B. & Ors., 2023 (1) PLJR 104 (SC) — Constitution Bench–era decision clarifying entitlement, options, and the position of pre-01.09.2014 retirees.
• R.C. Gupta & Ors. v. Regional PF Commissioner, EPFO & Ors., (2018) 14 SCC 809 — particularly on the relationship between Para 26(6) and Para 11(3) and the non-treating of certain dates as cut-offs for eligibility; however, the High Court applied it in light of Sunil Kumar B. and the petitioners’ pre-2014 retirement without options.
• Ram Nandan Prasad v. Union of India & Ors., 2014 (3) PLJR 98 — a coordinate bench decision on the Corporation’s employees, holding that in the absence of valid options, excess contributions are “erroneous” and pensionable salary is confined to the statutory ceiling.

7. Case Title

Sudhir Kumar v. Union of India & Others (relating to higher EPS pension for employees of an exempted establishment).

8. Case Number

Civil Writ Jurisdiction Case No. 20195 of 2019.

9. Citation(s)

2025 (1) PLJR 560

10. Coram and Names of Judges

Hon’ble Mr. Justice Harish Kumar. (Judgment dated 19-12-2024).

11. Names of Advocates and who they appeared for

• Mr. Nirmal Kumar — for the petitioner(s)
• Dr. Anjani Pd. Singh, CGC — for the Union of India
• Mr. Prashant Sinha — for EPFO
• Mr. Sanjay Prasad — for Bihar State Food and Civil Supplies Corporation Ltd.

12. Link to Judgment

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