IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction APPELLATE SIDE Present: The Hon’ble Justice Shampa Dutt (Paul) WPA 11831 of 2024 Sabdarnagar Education & Welfare Society & Ors. Vs Union of India & Ors. For the Petitioners : Mr. Soumya Majundar, Ld. Sr. Adv. Mr. Dwaipayan Sengupta, Ms. Sanjukta Dutta. For the P. F. Authority : Mr. Shiv Chandra Prasad. Judgment reserved on : 19.08.2026 Judgment delivered on : 21.09.2026 Shampa Dutt (Paul), J.: 1. The writ application has been preferred challenging a circular dated 14.02.2024, so as to reduce the monthly pension of members who had contributed on actual salaries by making such computation of pensionable salary on pro rata basis with reference to the cut-off date of 1.9.2014 and alternatively read down the provision of paragraph 11(4) of EPS, 1995 insofar as it purports to make computation of pensionable salary on pro rata basis for such members who have contributed on actual salaries during the contributory period and for whom pensionable 2 salary can only be calculated on the basis of average pay for the last 60 months prior to the date of exit from membership of the Pension Fund. 2. It is the case of the petitioners in the writ application that all the employees concerned draw wages much in excess of ceiling limit for contribution under EPS 1995. The said contributions are deposited on the basis of option on higher salaries. After AAI was covered in 2007 under the EPF and MP Act, 1952 all contribution with interest had been deposited in the Pension Fund in the past period. Following the Hon'ble Supreme Court's judgement in 2022, law has not been amended to bear the 1.16% of contribution of the employee through some other mode. The EPS 1995 underwent an amendment in 2014 for pro-rata calculation of pensionable salary for the period before 01.09.2014 and after 01.09.2014, subject to maximum ceiling of Rs. 6,500/- and Rs. 15,000/- for the concerned periods. Thus 01.09.2014 was the cut- off date for calculation of pro-rata pensionable salary. 3. In 2016 another amendment in Para 11(4) of the EPS 1995 was introduced whereby a separate categorization/classification was made for employees who has made contribution on higher salary. For this class of employees (higher salary) there was no reference to calculation of pensionable salary on pro-rata basis. Previously the average salary for the last 12 months from the exit date of membership was considered for calculating pensionable salary. With the amendment of 2014, the average salary for the last 60 months is to be reckoned as the pensionable salary. 3 4. For employees who have contributed on actual salaries like petitioners, the pensionable salary is calculated on Basic+ DA. The average of salary, if broken into two stages for pre 01.09.2014 and post 01.09.2014, the same will reduce the average/pensionable salary by 30- 40%. This is not the intention of the 2016 amendment of Para 11 (4) under the EPS 1995. In fact, EPFO has followed the calculation basis without such segregation, as will appear from the case of Kuppu Swamy. The impugned calculation of EPFO reduces the monthly pension entitlement for the petitioners. 5. By way of supplementary affidavit the writ petitioner submits that the present writ application was taken up for consideration by this Hon'ble Court on 9th May, 2024, whereby upon hearing the parties and considering the submissions made by the respondents as well as the petitioners, the Hon'ble Court had been pleased to make certain observations in connection thereto. The learned advocate representing the PF authorities sought adjournment to take proper instruction with regard to the method of computation of the pension. On that score, the matter was directed to appear on 19th June, 2024. 6. During the pendency of the writ petition, the EPFO had issued PPOs in favour of petitioner no. 3 and many other similarly circumstanced members mentioned in the chart (annexed as Pages 23 to 29 of the writ petition) against serial numbers 1, 32, 35, 39, 52, 61, 94, 104, 109, 128 under EPS 1995 on pro rata basis with cut-off date 1.9.2014, resulting into reduced pensionable salary. 4 7. Those two members of the petitioner no. 1 had superannuated from service of respondent no. 5 on 30.11.2024 and 31.5.2022 respectively; however till date their PPOs have not been issued. 8. It is further stated that in the form of example with respect to one of the petitioners being no. 3, in whose favour the aforementioned PPO had been issued by the EPFO, it is stated that such PPO calculates the pensionable salary as Rs.47,973/- on pro-rata basis, whereas the pensionable salary ought to have been Rs.76,125/- for rendering 31 years of pensionable service continuously (Pensionable service X Pensionable salary/70); instead of Rs. 47,973/- resulting a lesser amount of Rs.28,152/-. 9. Considering the petitioners’ case, it appears that the authorities herein are calculating the pensionable salary of the employees, applying the bifurcation rule with cut-off date 01.09. 2014 which is resulting in reduced amount of pension and is against Section 11 of the EPF Scheme, 1995. 10. The respondent nos. 2 to 4 being the provident fund authorities have filed affidavit-in-opposition and also a written note wherein they have submitted that the members of the pension scheme pool their contribution in a common fund for cross-subsidising inadequate contributions. This is essential because the pension scheme defines the benefits in advance as the function of their wages at the time of their exit from the scheme, irrespective of if the contribution is adequate or not. Cross subsidisation compensates the inadequate contributions. 5 11. The pooling entails that the members contribute at comparable rates, i.e. they must have comparable wages, and must draw benefits at comparable rates. Otherwise, low wage earners within the pool would perpetually subsidise high wage earners. 12. The contribution is computed on the members' monthly wages under paragraph 3(1) of the pension scheme. The benefits are computed on pensionable salary, pensionable service and the pension factor under paragraph 12(2), thus Monthly pension Pensionable Salary/70+ Pensionable Service. 13. Therefore, monthly pension is pensionable salary that accrues at the rate of 1/70 per month of the pensionable service. Pensionable service is defined in paragraph 2(xv) read with paragraph 10 as the service period for which employees' contributions are received or receivable. Pensionable salary is defined in paragraph 11 as an employee's salary during the pensionable service. Thus, the determination of pensionable salary is predicated on the pensionable service. Pensionable salary cannot be determined independently of the pensionable service. 14. Paragraph 11 and other provisions of the pension scheme were amended by GSR 609(E) dated 22.08.2014 and came into effect on 01.09.2014. The amendment was necessitated because payment of pension computed on actual wages instead of wage ceiling had caused an actuarial deficit. 15. Until 2014, an employee was considered to have a single spell of pensionable service starting from 16.11.1995 when the pension scheme came into effect until the employee’s exit from the pension scheme. 6 Therefore, the pensionable salary was defined as the average salary of an employee in the last 12 months of his membership in the pension scheme, which were the last 12 months of that spell of pensionable service. 16. However, the amendment of 2014 recognised an employee to have two different spells of pensionable service: the first spell from 16.11.1995 till 31.08.2014, and the second spell from 01.09.2014 until the employee's exit from the pension scheme. Therefore, the determination of pensionable salary in paragraph 11 was amended with effect from 01.09.2014 to be computed independently for the different spells of pensionable service pro-rata the contribution received. Consequently, paragraph 12(2) was also amended for computation of pension pro rata to the contribution received. This pro rata calculation of pensionable salary and pension is a fundamental principle flowing from paragraph 32 of the pension scheme which enjoins the respondents to keep the scales of benefits proportionate to the rates of contribution according and in line with the periodic valuation of the pension fund. The final pension is the sum total of the different pensions so calculated. 17. Pension for the pensionable service from 16.11.1995 till 31.08.2014 is calculated as per the formula under paragraph 12(2). The pensionable salary for this spell of pensionable service is the average of the last 60 months of the employee’s membership of the pension scheme, subject to the highest salary received up to 31.082014. Since the highest salary for the employees on the wage ceiling is the wage ceiling itself, therefore 7 their pensionable salary is the average salary of the last 60 months up to 31.08.2014, subject to the wage ceiling. 18. Similarly, the pension for the pensionable service from 01.09.2014 is also calculated as per the formula in paragraph 12(2) of the pension scheme. The pensionable salary for this spell of pensionable service is the average of the last 60 months of the employee's membership of the pension scheme, subject to the highest salary received after 31.08.2014. Almost always, the average of the last 60 months is lesser than the highest salary which is the salary paid in the last month of the employee's membership of the pension scheme. 19. It is apposite to mention here even prior to the 2014 amendment, the pension scheme calculated pension for different spells of pensionable service independently of each other. Thus, pension for pensionable service under the Family Pension Scheme, 1971 up to 16.11.1995 when the pension scheme came into effect, is calculated under paragraph 12(3) of the pension scheme as 'past service benefit', independently of the pension for the pensionable service under the pension scheme. Thus, as submitted above, calculation of pension for each spell of pensionable service is fundamental to the pension scheme and flows from paragraph 32 of the pension scheme. 20. Thus, the 2014 amendment applies equally to those who contribute on the wage ceiling and those who contribute on their actual salary, which category includes the petitioners. In both the cases, the amendment sought to capture the progression in the salary across various spells of pensionable service. Therefore, the petitioner's contention that the 8 calculation prescribed in the impugned circular violates the pension scheme, is manifestly incorrect. Further, it may be submitted that actuarial deficit only in the case of employees' contributing up to the wage ceiling was assessed as Rs. 57,012 crores which prompted the Central Government to specify pro rata calculation of pension. 21. It must be noted that this amendment was not forced upon the employees contributing to the pension scheme on their actual salaries. They were offered under paragraph 11(4) of the amended pension scheme, the option to confine their contribution to the wage ceiling and have their contribution above the wage ceiling remanded to their provident fund accounts. The petitioners declined the offer and willingly consented under paragraph 11(4) to the computation of their pension based on this altered definition. Hence, they are cstopped from disputing the altered computation of pension. 22. The respondents have further denied the case of the petitioners. 23. It is further stated by the respondents herein that circular dated 14.02.2024 was for internal circulation. Circulars are issued for officers and staffs of EPFO to educate, guide, train by providing information in simple language and examples to make them understand the process. The internal circulars dated 14.02.2024 has been issued to understand the calculation of pension on pro-rata basis without making any inadvertent errors/mistake. 24. Vide Gazette Notification G.S.R. 609 (E) dated 22/08/2014 Para 11 has been modified which has been read as under: 9 “Determination of Pensionable Salary, (1) the pensionable salary shall be the average monthly pay drawn in any manner including on Piece rate basis, during contributory period of service in the span of Sixty months preceding the date of exit from the membership of the Pension Fund and the pensionable salary shall be determined on pro-rata basis for the pensionable service up to the 1st day of September, 2014, subject to a maximum of six thousand and five hundred rupees per month, and for the period thereafter at the maximum of fifteen thousand rupees per month.” 25. The petitioners have relied upon the judgment in Employees’ Provident Fund Organization & Anr. Vs. Sunil Kumar B. and Ors. reported in (2023) 12 SCC 701. 26. The respondent/P.F. Authorities have relied upon the judgment of the Division Bench in MAT 77 of 2026 dated 27th July, 2026 at the Circuit Bench at Port Blair. 27. Para 11 and 12 of the Employees’ Pension Scheme, 1995 lays down:- “11. Determination of Pensionable Salary.- [(1) The pensionable salary shall be the average monthly pay drawn in any manner including on piece rate basis during contributory period of service in the span of sixty months preceding the date of exit from the membership of the Pension Fund and the pensionable salary shall be determined on pro-rata basis for the pensionable service up to the 1st day of September, 2014, subject to a maximum of six thousand and five hundred rupees per month and for the period thereafter at the maximum of fifteen thousand rupees per month: 10 Provided that if a member was not in receipt of full pay during the period of sixty months preceding the day he ceased to be the member of the Pension Fund, the average of previous sixty months full pay drawn by him during the period for which contribution to the pension fund was recovered, shall be taken into account as pensionable salary for calculating pension.] (2) If during the said span of [sixty months] there are non-contributory periods of service including cases where the member has drawn salary for a part of the month, the total wages during the [sixty months] span shall be divided by the actual number of days for which salary has been drawn and the amount so derived shall be multiplied by 30 to work out the average monthly pay. (3) The maximum pensionable salary shall be limited to [fifteen thousand rupees] per month: * * * [(4) The existing members as on the 1st day of September, 2014, who at the option of the employer and employee, had been contributing on salary exceeding six thousand and live hundred rupees per month, may on a fresh option to be exercised jointly by the employer and employee continue to contribute on salary exceeding fifteen thousand rupees per month [and the pensionable salary for the existing members who prefer such fresh option shall be based on the higher salary: Provided that the aforesaid members have to contribute at the rate of 1.16 per cent on salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder: Provided further that the fresh option shall be exercised by the member within a period of six months from the 1st day of September, 2014: Provided also that the period specified in the second proviso may, on sufficient cause being shown by the member, be extended by the Regional Provident Fund Commissioner for a further period not exceeding six months: Provided also that if no option is exercised by the member within such period (including the extended 11 period), it shall be deemed that the member has not opted for contribution over wage ceiling and the contributions to the Pension Fund made over the wage ceiling in respect of the member shall be diverted to the Provident Fund account of the member along with interest as declared under the Employees Provident Fund Scheme from time to time.] 12. Monthly Member's Pension.-(1) A member shall be entitled to:- (a) superannuation pension if he has rendered eligible service of 10 years or more and retires on attaining the age of 58 years; (b) early pension, if he has rendered eligible service of 10 years or more and retires or otherwise ceases to be in the employment before attaining the age of 58 years. (2) In the case of a new entrant, the amount of monthly superannuation pension or early pension, as the case may be, shall be computed in accordance with the following factors, namely:- Monthly member's pension = Pensionable salary x Pensionable service/70 Provided that the members' monthly pension shall be determined on a pro-rata basis for the pensionable service up to the 1st day of September, 2014 at the maximum pensionable salary of six thousand and five hundred rupees per month and for the period thereafter at the maximum pensionable salary of fifteen thousand rupees per month.]………….” 28. Mr. Majumder has relied upon the judgment of the High Court of Punjab and Haryana at Chandigarh, in Surinder Kumar vs Union of India & Ors., delivered on 27.05.2026, wherein the Court held:- “21. As noted above, the 1995 Pension Scheme unequivocally defines "pensionable salary" as the average monthly pay drawn during the contributory service period comprised within the 60 months immediately preceding the member's exit. While Paragraph 11(1) contemplates pro-rata computation in cases where contributions are subject to the statutory wage ceiling, Paragraph 11(4), which governs higher-wage cases, specifically envisages computation on the basis of the actual higher salary. 12 23. Furthermore, this Court is unable to accept the contention of learned counsel for the respondents that the Hon'ble Supreme Court in Sunil Kumar B. (supra) had upheld the applicability of the pro-rata formula for computation of pensionable salary in "higher wages" cases. A careful reading of the said judgment reveals that the issue concerning the application of the pro-rata methodology in such cases was neither raised before nor adjudicated by the Hon'ble Apex Court. Rather, as noticed hereinabove, the said methodology appears to have been introduced for the first time through the e-mail dated 14.02.2024 (Annexure P- 7), and therefore, was not even in existence at the time when the matter was under consideration before the Hon'ble Supreme Court. 24. Accordingly, this Court is of the considered opinion that the pro-rata methodology for "Higher Wages" cases sought to be introduced through the e-mail dated 14.02.2024 (Annexure P-7) and MOHD YAKUB 2026.05.27 19:30 I attest to the accuracy and authenticity of this document Punjab & Haryana High Court, Chandigarh. clarification dated 18.01.2025 (Annexure P-8), travels beyond the statutory framework of the 1995 Pension Scheme and cannot be sustained in law. In such cases, the pensionable salary is required to be determined based on average monthly pay drawn during contributory period of service in the span of 60 months preceding the date of exit from the membership of the pension fund. Accordingly, the first issue stands answered in the aforesaid terms.” 29. Mr. Prasad has placed a copy of an order dated 27.07.2026 of the Division Bench, Punjab & Haryana High Court, where in the judgment of the Single Bench is under challenge. An issue similar to the one raised in this writ application is now before the Court to be decided, wherein the Bench has observed:- “The issue raised in the present appeal(s) is as to whether, there has to be a different formula for the calculation of the pension in case, prior to an amendment on account of deletion of the joint option as on 01.09.2014, an employee was contributing at the ceiling of Rs.6500/- and up to sum of Rs.15000/- thereafter as compared to an employee who 13 was contributing more than Rs.6500/- prior to 01.09.2014 and more than Rs. 15000/-thereafter or whether the computation has to be on the same formula and only the pension will be different or whether the formula has to be differently applied keeping in view the contribution extended. The question is that, once, there were two different amounts which were being deposited as pension contribution prior to 01.09.2014 and thereafter, whether the calculation of pension admissible has to be done on pro-rata basis irrespective of the actual contribution or not.” 30. From the impugned notice dated February 14, 2024, the decision of the authority is as follows:- “3. Accordingly, it is once again clarified that as per provisions of EPS, 1995 pro-rata calculation is being done since 01.09.2014 in normal pension cases (please refer circular no. Actuarial/18(2)/2008/Vol.III/7738 dated 29.08.2014). Now, after implementation of judgement of Hon'ble Supreme Court, in eligible cases, the normal pension earlier given has to be enhanced to pension on higher wages. Since, there is no separate formula in EPS, 1995 for calculation of pension on higher wages in respect of ordinary EPS members, therefore in Higher Wages cases also as per provisions of EPS, 1995 calculation shall be done similarly, where date of commencement is on and after 01.09.2014: a. Calculation of Pension in Higher Wages Cases will be on pro-rata basis as per provision of EPS, 1995: Monthly Member's Pension = Pensionable salary x Pensionable service/70 14 pro-rata calculation will entail separate calculation for pensionable service prior to 01.09.2014 and pensionable service post 01.09.2014 b. Calculation of Pensionable Salary in Higher Wages Cases: i. For pensionable service prior to 01.09.2014: Pro-rata pensionable salary i.e. highest monthly salary prior to 01.09.2014 or 60 Months average of salary preceding the date of exit from the membership of the Pension Fund, whichever be less. ii. For pensionable service post 01.09.2014: Pro-rata pensionable salary i.e. highest monthly salary post 01.09.2014 or 60 Months average of salary preceding the date of exit from the membership of the Pension Fund, whichever be less. c. 2 year weightage, where due, is to be added to pensionable service prior to 01.09.2014 i.e. in b (i) above.” 31. It appears that Para 12(2) proviso of the EPF Scheme has been applied, to clarify and apply the same to Para 11(4) of the scheme in respect of computation of pension of members contributing on higher salary. 32. Proviso to Para 12(2) of the scheme provides:- “Para12(2) In the case of a new entrant, the amount of monthly superannuation pension or early pension, as the case may be, shall be computed in accordance with the following factors, namely:- Monthly member's pension = Pensionable salary x Pensionable service /70 Provided that the members' monthly pension shall be determined on a pro-rata basis for the pensionable service up to the 1st day of September, 2014 at the maximum pensionable salary of six thousand and five hundred rupees per month and for the period thereafter at the maximum pensionable salary of fifteen thousand rupees per month.]” 15 33. The proviso to Para 12(2) of the scheme has been inserted by G.S.R. 609(E) dated 22nd August, 2014 (w.e.f 2014). 34. Para 11(4) of the scheme was inserted by G.S.R. 609(E) dated 22nd August, 2014 (w.e.f. 1.9.2014). 35. Para 11(4) of the Employees’ Pension Scheme, 1995, lays down:- “[Para 11(4) The existing members as on the 1st day of September, 2014, who at the option of the employer and employee, had been contributing on salary exceeding six thousand and live hundred rupees per month, may on a fresh option to be exercised jointly by the employer and employee continue to contribute on salary exceeding fifteen thousand rupees per month [and the pensionable salary for the existing members who prefer such fresh option shall be based on the higher salary………..” 36. The part “and the pensionable salary for the existing members who prefer such fresh option shall be based on the higher salary”, has been inserted by G.S.R. 657(E) dated 1st July, 2016 (w.e.f 1.7.2016), as such, admittedly the said portion has been inserted on 1.7.2016 and thus after the insertion of proviso to Para 12(2), which was on 1.9.2014, on a conscious decision being taken. 37. Thus the proviso to Para 12(2) of the EPF scheme will not apply in the present case and it is clear that “the pensionable salary for the existing members who prefer such fresh option (Para 11(4)) shall be on the higher salary” and not on prorata basis, as provided by proviso to Para 12(2) of the scheme as clarified by the impugned letter dated February 14, 2024. 16 38. Accordingly the impugned clarificatory letter dated 14.02.2024 being beyond the powers and scope of the authorities and based on over looking/ignoring, the insertion dated 1.7.2016 to Para 11(4), is bad in law and is thus quashed and set aside. 39. The pensionable salary in respect of members covered under Para 11(4) shall be governed by the G.S.R. 657(E) dated 1st July, 2016 (w.e.f. from 1.7.2016), based on higher salary and not on prorata basis. All arrears to be paid along with interest at the statutory rate. 40. WPA 11831 of 2024 is allowed. 41. Applications, if any, connected thereto stand disposed of consequently. 42. Interim order, if any, stands vacated. 43. Photostat certified copy of this Judgment, if applied for, be given to the parties on priority basis upon compliance of all formalities. (Shampa Dutt (Paul), J.)