Court directs EPFO to allow joint option for pension on higher wages for employees of exempted establishments, setting aside rejection orders relying on trust rules and non-availability of documents.
In a landmark judgment delivered on 19th October 2026, the Bombay High Court has clarified that the Employees' Provident Fund Organisation (EPFO) cannot reject applications for pension on higher wages by employees of exempted establishments based solely on the private trust rules of provident fund trusts. The court held that such trust rules, which often prescribe wage ceilings or limit employer contributions, operate only in the realm of provident fund contributions and cannot override or curtail the statutory rights of employees under the Employees' Pension Scheme (EPS), 1995.
The case arose from a batch of writ petitions filed by employees of various exempted establishments such as Abbott India Limited, Brihanmumbai Electric Supply & Transport (BEST) Undertaking, Raymond Steel Limited, and Tata Communications Ltd. These employees had applied for exercising the joint option under paragraphs 11(3) and 11(4) of the EPS, 1995, seeking pension benefits calculated on their actual/higher wages rather than the statutory wage ceiling. However, the EPFO had rejected their applications on grounds including reliance on trust deed provisions restricting pension contributions, non-submission or unavailability of old records and forms, and alleged incomplete employer contributions on all salary components.
The court thoroughly examined the issue in light of the Supreme Court's ruling in Employees Provident Fund Organisation & Ors. vs. Sunil Kumar B. & Ors. (2022), which upheld the validity of retrospective amendments allowing pension contributions on actual wages exceeding the statutory ceiling and recognized the right of employees to exercise joint option for higher pension. The High Court emphasized that employees of exempted establishments are entitled to the same pension benefits as employees of unexempted establishments unless there is a statutory exemption specifically applicable.
Rejecting the EPFO's reliance on a circular dated 18th January 2025 that mandated determining eligibility for pension on higher wages based on the extant trust rules of exempted establishments, the court held that such circulars cannot undermine rights flowing from statutory provisions and judicial pronouncements. The court also addressed the issue of non-availability of older trust rules or relevant forms, ruling that mere non-production of documents is not a valid ground for denial. The EPFO must adopt alternative verification methods and provide an opportunity of hearing to employees instead of outright rejection.
Drawing upon consistent judgments from various High Courts including Madras, Karnataka, Calcutta, and Allahabad, the court reinforced the principle that trust rules applicable to provident fund trusts cannot restrict or curtail the more beneficial statutory pension rights under the EPS. The court observed that any contractual provision in trust deeds limiting pension contributions contrary to the statutory scheme would be void in law.
Consequently, the Bombay High Court set aside all impugned orders rejecting the joint option applications and directed the EPFO to process and allow the petitioners' applications for pension on higher wages within eight weeks. The judgment provides significant relief to employees of exempted establishments seeking rightful pension benefits and reaffirms the supremacy of statutory provisions over private trust rules in the context of the Employees' Pension Scheme.
Bottom Line:
Employees' Provident Fund and Employees' Pension Scheme - Exempted establishments - EPFO cannot reject joint option applications for pension on higher wages by relying on private trust rules/deeds of provident fund trusts prescribing wage ceiling or restricting employer's contribution - Trust rules operate in the field of provident fund and cannot override statutory pension rights under EPS, 1995 - Non-availability of old records/forms is also not by itself a valid ground to deny consideration, and alternative verification must be adopted.
Statutory provision(s):
Employees' Provident Funds and Miscellaneous Provisions Act, 1952 Section 17, Employees' Pension Scheme, 1995 Paragraphs 11(3), 11(4), 26(6), 27, 27-AA, 39
