OTIS ELEVATOR EMPLOYEE UNION S. REG. AND ORS. versus UNION OF INDIA AND ORS.

Citation: [2003] SUPP. 5 S.C.R. 457 · Decided: 11-11-2003 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

OTIS ELEVATOR EMPLOYEE UNION S. REG. AND ORS. 
A 
v. 
UNION OF INDIA AND ORS. 
NOVEMBER 11, 2003 
[S. RAJENDRA BABU AND K.G. BALAKRISHNAN, JJ.] 
B 
Employee's Provident Fund and Miscellaneous Provisions Act, 1952-
Section 6-A-Employee' Family Pension Scheme-Judicial review-Scope 
of-Scheme fended by part of employers' contribution to the Provident Fund C 
and by contribution by Central Government-Scheme challenged as being 
prejudicial to the interest of the employees-Held, the court cannot sit in 
appeal-If contribution is substantially high and the return is negligible, 
court can interfere as it would be arbitrary. 
In 1971, the Employees' Provident Funds and Miscellaneous Provisions D 
Act, 1952, was amended and Sections 6A and 68 were introduced in the said 
Act. Under the Provisions of the amended Sections, Employees' Family pension 
Scheme, 1971 was introduced providing for payment of family pension in the 
event of death of a member while in service and refund of contribution with 
nominal interest in lump-sum to member on retirement or leaving the job. 
The scheme was to be funded by contribution from Provident Fund at the rate E 
of2.33% and by the Central Government at the rate ot 1.16%. Again in 1976, 
a deposit linked insurance scheme was introduced providing for lump-sum 
insurance benefit linked to the Provident Fund accumulation additionally upon 
death of the member while in service. The validity of the scheme was challenged 
before the Court and the Court rejected the said challenge vide its judgment F 
in Mafat/a/ Group Staff Association and Ors. v. Regional Commissioner 
Provident Fund and Ors., (1994), 4 SCC 58. 
With effect from 16.11.1995, the provisions of Section 6A and 68 of 
the Employee' Provident Fund and Miscellaneous Provisions Act, 1952 were 
amended and a comprehensive Employees' Family Pension Scheme, 1995 was G 
introduced replacing the Employees' Family Pension Scheme of 1971. This 
scheme was funded by diversion of 8.33% employer's share in the Provident 
Fund and contribution of the Central Government at the rate of 1.6%. The 
assets and the liabilities of the Employees' Family Pension Scheme, 1971 were 
457 
458 
SUPREME COURT REPORTS (2003) SUPP. 5 S.C.R. 
A taken over by the new Scheme and the Family Pension Fund under the old 
Scheme provided the initial corpus of the Pension Fund under the new Scheme. 
All accumulations to Provident Funds up to 15.11.1995 remained intact and 
likewise the employee' contribution to the Provident Fund remained untouched. 
The scheme provided for 
B 
(i) pension payment for life to its members on superannuation or 
retirement and in the event of becoming totally and pennanently invalid during 
employment period; 
(ii) family pension upon death of the member irrespective of death 
C occurring while in service, away from employment or after retirement as a 
pensioner; and 
(iii) facility for commutation of pension up to I/3rd by member and also 
retur.n of capital on option formula basis. 
D 
Several writ petitions were filed in various High Courts challenging 
the amendments to the Employees' Provident Fund and Miscellaneous 
Provisions Act, 1952 and also the Employec;s' l<'amily Pension Scheme, 1995 
on the ground that they were arbitrary, un.,;asonable and discriminatory and 
violative of Article 14 of the Constitution of India. The writ petitions were 
dismissed by the High Court. 
E 
The petitioners preferred·special leave petition before the Court. The 
petitioners contended that the Employees' Family Pension Scheme, 1995 was 
prejudicial to the interest of the employees on grounds, inter a/ia, that 
(i) the existing benefits from the Provident Fund bad been depleted to a 
F great extent by diversion of 8.33% employer's share and pension payable 
under the new scheme is far below the accruals in the pension fund; 
(ii) the return which the employees would have received by way of interest 
on their contribution to the statutory Provident Fund was much higher that 
the return which the employees may receive under the Employees' Family 
G Pension Scheme, 1995. 
Dismissing the special leave petitions, the Court 
HELD: 1.1. The grievance of discrimination or arbitrariness on account 
of the wrath of Article 14 of the Constitution oflndia cannot be sustained. 
H 
[469-AI 
OTIS ELEY.ATOR EMPLOYEE UNIONS. REG. 1·. U.O.l. 
459 
1.2. The Employees' Provid~nt fund and Miscellaneous Provisions Act, A 
1952 is a social welfare legislative.' If the legis

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