Supreme Court To Re-Examine Rc Gupta Decision

By: Aparajita Patel

In light of the Supreme Court’s judgement in the RC Gupta case in 2016, a bench of Justices UU Lalit and Ajay Rastogi indicated they are sending the case to a larger bench.

The Court reasoned that as the RC Gupta ruling was issued by a Division Bench, it would not be appropriate for another Division Bench to review the matter.

“This case has now been assigned to a three-judge bench. Two main questions to address are whether RC Gupta should be reconsidered and whether the option under paragraph 11(3) of the EPF Pension Scheme would have a cut-off date “According to the Court.

The order came after a slew of appeals were filed against a slew of High Court rulings that threw out the 2014 amendment plan.

The question before the Court in the RC Gupta case was whether there was a cut-off date for employees to take advantage of the Employees Pension Scheme (EPS) option, which allows both the employer and the employee to make uncapped pension contributions.

However, a proviso was introduced to Clause 11(3) a few months after the EPS was drafted, with effect from March 16, 1996, allowing the employer and employee to choose whether to contribute on salaries exceeding Rs. 5,000 or Rs. 6,500 per month. The Pension Fund was obligated to receive 8.33 per cent of such contributions based on full salary.

The appellant-employees in the RC Gupta case had argued on the eve of their retirement, that the proviso introduced by the amendment of 1996 was not within their knowledge and that, as a result, they should be given the benefit of it, particularly when the employer’s contribution under the Act was based on actual salary.

However, the Supreme Court had rejected this argument in RC Gupta, ruling that the date of the scheme’s inception or the date on which the salary surpasses the ceiling limit are the periods from which the option exercised is to be dealt with for calculating pensionable salary.

Following that, the amendments were challenged in several High Courts, resulting to the current round of challenges before the Supreme Court. The three-judge panel will now decide whether the RC Gupta decision would apply to the current batch of appeals.