Supreme Court Allows Switch to GPF for University Employees: University of Delhi vs. Shashi Kiran & Ors. (2022)

Date of the Judgment: 10 May 2022

Judges: Uday Umesh Lalit, J. and Vineet Saran, J.

Can employees of the University of Delhi, who initially chose to be under the Contributory Provident Fund (CPF) scheme, be allowed to switch to the General Provident Fund (GPF) and Pension Scheme? The Supreme Court of India recently addressed this question in a batch of appeals filed by the University of Delhi. The core issue revolved around whether the University could deny the switch to GPF to some employees while allowing it to others, especially after extending the deadline for switching multiple times. The judgment was delivered by a two-judge bench comprising Justice Uday Umesh Lalit and Justice Vineet Saran.

Case Background

The case involves teaching staff members of various colleges and institutions affiliated with or part of the University of Delhi. These employees’ service conditions are similar to those of Central Government employees. Initially, these employees were governed by the Contributory Provident Fund (CPF) scheme. On 06 June 1985, Central Government employees under the CPF were given the option to switch to the General Provident Fund (GPF) and Pension Scheme.

A notification on 1 May 1987, stated that all CPF beneficiaries in service on 1 January 1986, would be deemed to have switched to GPF unless they opted to remain in CPF by 30 September 1987. The University of Delhi also adopted this notification. The University issued a notification on 25 May 1987, stating that all CPF beneficiaries in service on 1 January 1986, would be deemed to have come over to GPF unless they opted to remain under CPF. Initially, 2611 employees opted to continue under CPF by the deadline of 30 September 1987. However, the University subsequently granted multiple extensions for exercising the option to remain under CPF or switch to GPF. During these extensions, 626 employees opted to continue under CPF, and 2469 employees switched from CPF to GPF.

The University Grants Commission (UGC) later communicated that the option to switch from CPF to GPF could only be exercised until 30 September 1987, and any subsequent switches were incorrect. The Ministry of Human Resource Development (MHRD) also declined to allow further options to switch from CPF to GPF. This led to several writ petitions being filed in the High Court by employees who were either not allowed to switch or were being treated as being under CPF despite not opting for it.

Timeline

Legal Framework

The primary legal framework for this case is based on the Central Government’s notification dated 1 May 1987, which allowed employees to switch from CPF to GPF. The relevant paragraphs of the notification stated:

“3.1 All CPF beneficiaries, who were in service on 1st January, 1986, and who are still in service on the date of issue of these orders viz., 1st May, 1987) will be deemed to have come over to the Pension Scheme. 3.2 The employees of the category mentioned above will, however, have an option to continue under the CPF Scheme, if they so desire. The option will have to be exercised and conveyed to the concerned Head of Office by 30-9-1987… If no option is received by the Head of Office by the above date the employees will be deemed to have come over to the Pension Scheme.”

Additionally, the University of Delhi’s Statute 28-A was amended to include a clause stating:

“(5) As and when the Central Government amends Rules giving more benefits to its employees relating to General Provident Fund, Contributory Provident Fund, Pension Gratuity, etc. which are advantageous to the employees of the University, the employees of the University will be entitled to the same benefits with effect from the date such amendment is brought into force by the Central Government with respect to its employees.”

The University’s notification dated 25 May 1987, also stated that all CPF beneficiaries in service on 1 January 1986, would be deemed to have come over to the pension scheme unless they opted to continue under CPF.

Arguments

The University of Delhi argued that:

• The difference between CPF and GPF was always present, and the rules governing them are different.
• The choice to switch was optional, and an optional scheme cannot be converted into a compulsory one.
• Comparison with employees of IITs, Department of Atomic Energy, and Insurance Companies is not valid as their terms of service are different.

The employees argued that:

• Subsequent extensions granted by the University were not communicated to all employees, causing prejudice.
• If the notification dated 01 May 1987 was to be followed strictly, the University could not have granted subsequent options to switch over.
• The University, being a Central University, should treat its employees on par with organizations like IITs and AIIMS.
• The University discriminated against them by allowing 2469 employees to switch to GPF after the cut-off date while denying the same benefit to them.

The employees further contended that the University’s actions created a discriminatory situation where some employees were allowed to switch to GPF after the deadline, while others were not, despite being similarly situated. They highlighted that the financial benefits of the GPF scheme had become significantly more advantageous than the CPF scheme due to changes in interest rates and inflation indexing.

Innovativeness of the argument: The employees’ argument was innovative in highlighting the discriminatory treatment, especially given the changing economic landscape that made the GPF scheme more beneficial. The University’s argument was more traditional, focusing on the legal technicalities of the original notification.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the employees of the University of Delhi, who initially opted for the Contributory Provident Fund (CPF) scheme, can be allowed to switch to the General Provident Fund (GPF) and Pension Scheme, especially when the University had granted such switches to other employees after the initial cut-off date.
2. Whether the University’s actions in granting multiple extensions for switching from CPF to GPF were valid and if they created a discriminatory situation.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Union of India and another v. S.L. Verma and others [(2006) 12 SCC 53]: The court relied on this case to emphasize that if no option was exercised by the cut-off date, the employee would be deemed to have come over to GPF.
• Krishena Kumar vs. Union of India and others [(1990) 4 SCC 207]: The court discussed the distinction between the Provident Fund Scheme and the Pension Scheme and held that the retirees in both categories did not belong to the same class.
• D.S. Nakara vs. Union of India [(1983) 1 SCC 305]: This case was cited by the petitioners to argue for equal treatment of all retirees. However, the court distinguished this case by stating it was not dealing with any fund.
• Rajasthan Rajya Vidyut Vitran Nigam Limited vs. Dwarka Prasad Koolwal and others [(2015) 12 SCC 51]: The court noted that an employee has no inherent right to demand an extension for exercising the switchover option.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle of equality and the discriminatory treatment of the employees in the Shashi Kiran batch. The Court emphasized that while the initial notification and cut-off date were valid, the subsequent extensions and the allowance of switchovers for 2469 employees created a situation where some employees were unfairly disadvantaged. The court noted that the financial impact of allowing the switch for the remaining employees was minimal, and the principle of parity should be maintained.

The court’s reasoning was influenced more by the factual aspects of the case, such as the extensions granted and the differential treatment of employees, than by pure legal interpretations. The court emphasized the need for fairness and equality in the application of the rules.

Logical Reasoning

Key Takeaways

• Employees of the University of Delhi who were in service on 1 January 1986, and who had initially opted for CPF but were denied the switch to GPF, are now allowed to switch to GPF.
• The University must refund the contribution made by the employees under the CPF scheme with 8% simple interest per annum.
• The principle of equality must be maintained, and differential treatment without a valid reason is not permissible.
• The judgment highlights the importance of clear communication and consistent application of rules by employers.

Directions

The Supreme Court directed the University of Delhi to:

• Allow the employees in the Shashi Kiran batch to switch to GPF.
• Recoup the contribution made by the employees under the CPF scheme with 8% simple interest per annum.
• Offer an option to the employees in the Shashi Kiran batch to switch to GPF, in a manner deemed appropriate by the authorities.

Development of Law

The ratio decidendi of this case is that differential treatment of similarly situated employees without a justifiable reason is not permissible. The Supreme Court upheld the principle of equality and emphasized that once a benefit is extended to a group of employees, it should be extended to all similarly situated employees. This judgment clarifies that even if an initial cut-off date is valid, subsequent actions by the employer that create discriminatory situations can be challenged. The judgment also highlights that the principle of equality should prevail over technicalities of rules and regulations.

Conclusion

The Supreme Court’s judgment in the University of Delhi vs. Shashi Kiran case allows employees who were initially under the CPF scheme to switch to the GPF scheme, emphasizing the principle of equality and non-discrimination. The Court directed the University to provide a switchover option to the employees in the Shashi Kiran batch, along with a refund of their CPF contributions with 8% interest. This decision underscores the importance of fair and consistent application of rules by employers, especially in matters of employee benefits.

Category

• Service Law
  • Pension
  • Provident Fund
  • Retirement Benefits
  • University Employees
• Central Government Notifications
  • Notification dated 1 May 1987
• University Statutes
  • Statute 28A, University of Delhi

FAQ

Q: Who is affected by this judgment?

A: This judgment primarily affects employees of the University of Delhi who were in service on 1 January 1986, and who initially opted for the Contributory Provident Fund (CPF) scheme but were later denied the option to switch to the General Provident Fund (GPF) and Pension Scheme.

Q: What does this judgment mean for those who were denied the switch to GPF?

A: The Supreme Court has directed the University of Delhi to allow these employees to switch to the GPF scheme. Additionally, the University must refund the contribution made by these employees under the CPF scheme with 8% simple interest per annum.

Q: What was the main reason for the Supreme Court’s decision?

A: The Supreme Court based its decision on the principle of equality and non-discrimination. The Court found that the University had created a discriminatory situation by allowing some employees to switch to GPF after the initial cut-off date while denying the same benefit to others.

Q: What should employees do if they are affected by this judgment?

A: Affected employees should wait for the University of Delhi to issue a notification regarding the procedure for switching to the GPF scheme. They should also ensure that they receive the refund of their CPF contributions with 8% simple interest.

Q: Does this judgment apply to other universities or institutions?

A: While this judgment directly applies to the University of Delhi, it sets a precedent that may influence similar cases in other universities or institutions. The principle of equality and non-discrimination is universally applicable.

Q: What is the difference between CPF and GPF?

A: CPF is a contributory provident fund where employees and employers both contribute. GPF, on the other hand, is a general provident fund where employees contribute, and it is generally linked to a pension scheme. The benefits of GPF have become more advantageous due to changes in interest rates and inflation indexing.