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

       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 legislation is not patently arbitrary,
the Court will not monitor implementation of such policy unless the same is
discriminatory or arbitrary. Since the Employees' Family Pension Scheme is
for the welfare of the employees, the same cannot be held to be violative of the
Constitution of India. [468-C-D]
                                                                                     B
      2. The Employees' Provident Fund and Miscellaneous Provision Act,
1952 provides for framing of appropriate schemes and the power to frame a
scheme is given to the Government. The Court will not examine the scheme
framed by the Government as if it is in appeal, but if the return obtained by
the families of the employees pursuant to such scheme is such that the               C
contribution of the employees is substantially high and the return is
negligible, then an inference can be drawn that such scheme results in
arbitrariness. [468-A-B]

        3. The Employees' Family Pension Scheme, 1995 is similar to what was
 considered and approved by this Court in Mafatlal Group StaffAssociation            D
 and Ors. v. Regional Commissioner Provident Fund and Ors. and hence does
 not require detailed examination unless the Court can definitely say that there
 is great difference between the contributions made by the employees and the
 return to their families which will amount to a kind of deprivation. The monies
 meant for Employees' Family Pension Scheme are diverted from the Provident
 Fund Scheme which represents equal contribution of employees and employers,         E
.to which certain amount is added by the Government also because such a
 scheme subserves a social purpose. It cannot be stated that each and the every
 employee must get back not only what he contributes and the contribution of
 the employees and the Government put together because the Scheme provides
 for provision in relation to employees dying before retirement or before            F
 attaining the age of 60 years or in certain cases when an employee sustains
 injuries or is otherwise not employed. It is not possible to hold that the scheme
 provides for exorbitant contribution with negligible return. (468-E-G]

     Mafatlal Group Staff Association and Ors. v. Regional Commissioner
Provident Fund and Ors., (1994] 4 sec 58, referred to.                               G
     CIVIL APPELLATE JURISDICTION : Special Leave Petition (C) No.
22316of1997.

     From the Judgment and Order dated 12.12.96 of the Madras High Court
in W.P. No. 1565 of 1996.                                                H
      460                      SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R.

  A                                           WITH

            S.L.P. (C) No. 11823-25/97, 962/98, 13161/98, 204-205199, W.P.(C) No.612/
      97, 372, 412, 379, 570, 544, 591, 651/98, 56/99, 690/98, 152, 354, 266, 428, 486/
      99, 378/2000, l.A.No.2-3 in W.P.(C) No.490/99, T.C.(C) Nos . 10, 13, 14, 15, 16,
      17, 18, 19-20, 52, 26, 28, 29, 31-33, 34, 35, 36, 39, 41, 42, 43, 44, 45, 46, 47, 48,
  B   49, 50, 51, 53, 54, 56, 57, 58, 59, 60, 61, 62198, 2, 3, 4, 5, 6, 1, 11-12, 14, 50, 51,
      52,53,54,55,57,58/99,21,22/2000,514, 775, 759,575-584,900,903/98,359/
      99 and W.P.(C) No.490of1999.

           Mukul Rohatgi, Additional Solicitor General, P.P. Malhotra, Jitendra
  C Shanna, M.S. Ganesh, Ms.Indira Jaising, K.K. Singhvi, Dr. S.K. Dholakia, N.B.
    Shetye, Raj Birbal, P.P. Rao, Bhasker P. Gupta, Bikash Ranjan Bhattacharjee,
    A.Wasim A Qadri, S.A. Matto, Bipul Kumar, Arvind Kr. Shanna, Ajay Shanna,
    C.Radha Krishna, Ms. Kiran Bharadwaj, Ms. B. Sunita Rao, Ms. Indra Sawhney,
    Umesh Kr.Shandilya, P.N. Jha, B.K. Pal, C.V.Subba Rao, Ms. Minakshi Vij, S.
    Murlidhar, S. Vallinayagam, Colin Gonsalves, Ms. Aparna Bhat, Ms.Asha
  D Pathak, Bharat Sangal, Jawahar Raja, Ms. Sangeeta Panikkar, Sanjoy Ghosh,
    K.P. Singh, R.C. Kaushaik, Raj iv Mehta, R. Rahim, Mrs. Sarla Chandra, Hiren
    Dasen, Nalin Tripati, B.N. Singhvi, Sanjay Singhvi, Vinay Kuman Garg, S.J.
    Deshmukh, Ashok K. Gupta, Farrukh Rasheed, Mrs. V.D. Khanna, Subhash
    Sharma, K.T. Anantharaman for Mis. Lawyer's Inn, Tripurari Ray, Vishwajit
    Singh, Mrs. Madhu Moolchandani, Amitesh Kumar, L.R. Singh, Gopal Singh,
  E Rajinder Mathur, Rajan Mukherjee, A.T.M. Sampath, R.K. Chopra, P.N. Puri,
    Pijush K. Roy, Ambhoj Kumar Sinha, B.S. Rajesh Roshan A., Y.K. Prasad, Ravi
    Kumar Shankar, Himanshu Munshi, Rakesh K. Khanna, Surya Kant, Ms.
    Pallavi Choudhary, Manish Garg, K.R. Sasiprabhu, Dilip Tandon, Dr. Sumant
    Bhardwaj, Mrs.Maridula Ray Bharadwaj, Pavan Chaturvedi, Ms.A. Subhashini,
  p B.K. Pal, Manoj Swarup, H.K. Puri, Rajesh Srivastava, Uijwal Banerjee, Dhruv
    Mehta, Saptarshi Ghosh, Ms. Shobha, S.K. Mehta, K.J. John, Mrs.Sheela
    Goel, Ranjan Mukherjee, V.N. Kour, Ms. J.S. Wad, Ms.Niharika Bahl, Manoj
    Wad, Raj Kumar Gupta, B.N. Tiwari, Jai Mangalwadi, Sheo Kumar Gupta, A.N.
    Bardiyar, V. Sudheer, S. Srinivasan, G.K. Bansal, Sanjay Bansal, D.S. Mehra,
    Vijay Panjawani, Vineet Kumar, Shail Kumar Dwivedi, Ms.Meenakshi Arora,
· G G.Ramakrishna Prasad, G. Prabhakar, Jaideep Gupta, Abhushek Saket, Suman
    J. Khaitan, Ashish Wad, Ms.Niharika Bahl, D.Mahesh Babu, D.K. Garg, T. V.
    Ratnam, K.Subba Rao, K.Ram Kumar, P.N. Gupta and A.L. Bhasin-in-person
    for the appearing parties.

             The Judgment of the Court was delivered by
  H
        OTIS ELEVA TOR EMPLOYEE UNIONS. REG. v. U.0.1. [RAJENDRA BABU, J.]     461
          RAJENDRA BABU, J. Retiral benefits such as provident fund, gratuity          A
    and pension schemes have been common in Government establishments.
    Such schemes were also introduced for the employees by certain enlightened
    employers. In addition to such benefits, the Industrial Disputes Act also
    makes statutory provisions of compensation on the termination of the service
   of an employee by way of retrenchment, on transfer or closure of an undertaking.    B
    Such social security measures have introduced an element of stability and
    protection in the midst of stress and strains of modem industrial life. As
. '_observed by the National Commission on Labour-Social Security, the concept
    of'social security' is based on human dignity and social justice. The underlying
    idea being that, social security measures would allow a citizen who has
    contributed or is likely to contribute to his country's welfare should be given    C
   protection against certain hazards.

       The provision of provident fund has been recognised as a term of
 condition of employment of industrial workmen. Legislative measures have
 also imposed the requirements of provident fund on the employers and
 employees statutorily. But in respect of industries to which the statutes do          D
 not apply, the provident fund schemes are being worked out by collective
 bargaining on certain principles.

       Gratuity was treated in the early stages of industrial adjudication as a
 gift of payment gratuitously made by an employer to his employees at his
 pleasure and the workman had no right to claim it. But in course of time it           E
 came to be treated as a term of employment and the industrial adjudication
 started treating it as a reward paid to the workman for good, efficient, faithful
 and meritorious service rendered by them to the employer for a fairly
 substantial and long period intended to help workmen after retirement on
 superannuation, death, retirement, physical incapacity, disability or otherwise.      p
       Likewise, pension is also a measure of security for old age, inability and
 death of the bread-winner. The provident fund is not an adequate cover for
 the contingencies of death and inability.

       A scheme of pension is different in scope and content from a scheme             G
 for provident fund and a scheme for gratuity. A provident fund scheme
 postulates a certain amount of contribution by the employer and equivalent
 amount of contribution by the employee, payable on his retirement or death.
 A pension is a periodic payment of a stated sum. However, these schemes
 have common objectives.to achieve efficiency, orderly and humane elimination
 from industry of superannuated or disabled employees.                                 H
    462                     SUPREME COURT REPORTS [2003) SUPP. 5 S.C.R.

A          Prior to 1952, there was no provision or obligation cast upon the
    employers or employees to organise any post service or retiral support. In the
    year 1952, the Employees' Provident Fund Act, 1952 was enacted, which has
    since been renamed as 'the Employees' Provident Funds & Miscellaneous
    Provisions Act, 1952' [hereinafter referred to as 'the Act'], which provides for
B   a system of provident fund compulsorily on contributory basis by the employer
    and employees jointly to begin w\th in a modest manner and thereafter
    enlarged gradually over the period. The contribution was initially at the rate
    of Rs. 6.25% of wages, later raised to 8.33% in 1988, to 10% from May 1977
    and subsequently to 12% from 1997. Accumulations in the said Provident
    Fund together with interest were payable to employee at retirement or to the
C   nominee or legal heir of the employee in case of death. The employee could
    also partially withdraw from the Provident Fund during employment for
    specified purposes.

          In the year 197 l, family pension scheme was introduced by amending
    the Act, providing for payment of family pension only in the event of death
D   of the member while in service and refund of contribution with nominal
    interest in lump sum to member on retirement or leaving the job. Contribution
    @ 2.33 per cent from provident fund and the Central Government contribution
    @ 1.16 per cent [total 3.5 per cent] contribution support for financing the
    scheme was introduced.
E         In the year 1976, a deposit linked insurance scheme was introduced
  providing for lump sum insurance benefit linked to provident fund accumulation
  additionally upon death of the member while in service with a ceiling limit
  initially at Rs.10,000 and raised from time to time to Rs. 60,000. In this scheme,.
  there was no contribution by the employees. Additional contribution of
F employer was to the extent of@ 0.5 per cent and by the Central Government
  to the extent of 0.25 per cent for financing the scheme. However, the Central
  Government contribution ceased with effect from November 1995. The validity
  of the this Scheme was challenged before this Court in Ma/at/al Group Staff
    Association and Ors. v. Regional Commissioner Provident Fund and Ors.,
    [1994) 4 SCC 58, on the ground that retiral benefits under the Scheme were
G very meagre and did not match the contribution of employees to the Fund.
    However, the challenge was rejected.

          In the year 1995, a comprehensive family pension scheme has been
    introduced replacing the family pension scheme of 1971. The pension scheme
H   is funded by diversion of 8.33% employer's share in the Provident Fund and
      OTIS ELEVATOR EMPLOYEE UNIONS. REG."· U.0.1. [RAJENDRA BABU,J.]      463
contribution of the Central Government was @ 1.6 per cent totally 9.5%.           A
Assets and liabilities of ceased family pension fund was taken over by the
new scheme and family pension fund as on 15.11.1995 forms the initial corpus
of the pension fund and all accumulations to Provident Fund upto 15.11.1995
remain intact and likewise the employees' contribution to the Provident Fund
remains untouched. Similarly, balance of 1.67% employer's share of contribution   B
to Provident Fund will continue to be part of the Fund. The salient features
of the scheme are : .

     [I] pension payment for life to member on superannuation or retirement
and in the event of becoming totally and permanently invalid during
employment period;                                                                C
      [2] family pension payment upon death of the member irrespective of
death occurring while in service, away from employment or after retirement as
a pensioner;

      [3] facility for commutation of pension upto I/3rd by member and also D
return of capital on option formula basis.

       Introduction of the scheme necessitated the amendment of the Act.
 Sections 6A and 68 of the Act which were being inserted by Act 61 of 1971
with effect from 23.4.1971 stood completely modified by Act 25 of 1996 with
effect from 16.11.1995. The said provisions and the consequent pension E
scheme introduced which came into force from 16.11.1995 are under challenge
before us in these proceedings. Main challenge is to the Employees' Provident
Funds & Miscellaneous Provisions (Amendment) Act, 1996 and the Employees'
Pension Scheme, 1995, as unreasonable, arbitrary and discriminatory inasmuch
as existing benefits from the Provident Fund have been depleted to a great
extent by diversion of 8.33% employer's share and pension payable under the F
new scheme is far below the accruals in the pension fund. Sucli challenge was
made in the High Courts of Madras, Kerala and Kamataka in a batch of cases.
Appeals against those said orders passed by the High Courts are filed.
Several writ petitions filed before the High Courts are sought to be transferred
to this Court by filing the Transfer Petitions some of which have been G
allowed. Some of the employers have also filed petitions or appeals before us
as their applications for grant of exemption from the operation of the pension
scheme have been rejected by the respective Regional Provident Fund
Commissioners or by the concerned Governments.

     The three High Courts are of the uniform vi~w that the scheme framed H
    464                    SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.

A by the Government impugned herein is reasonable and rejected the contentions
  to the contrary. The line of reasoning adopted by them is that there is no
  ex~essive delegation under the Act and it cannot also be said that there is
  lack of proper statutory guidelines in the statute by the legislature to the
  executive in the matter of formulation of the pension scheme. They adverted
  to the provisions contained in Section 6A of the Act, which indicate clearly
B the objectives and policy of the legislation and the broad basis and outlines
  as also the core and frame of the pension scheme delineated in Section 6A
  of the Act itself and Schedule III to the Act and, therefore, that contention
  deserves to be rejected. They further noticed that the obligation to lay the
  scheme, as soon as it is formulated, before each House of Parliament is a
C further safeguard in the matter of delegated legislation. On the charge of
  arbitrariness and unreasonableness of the impugned provisions of the Act
  and the Scheme is on the ground that the pension scheme introduced is not
  profitable to the employees and subscribers and there is no proper equitable
  return to the subscriptions or contributions made to their account inasmuch
  as the return which employees received by way of interest on the contribution
D to the statutory provident fund was much higher than the return which the
  employees may receive under the impugned Pension Scheme. Apart from the
  denial of benefits arising out of the employers' share of contribution to the
  employees that the employees had no vested rights over the contributions
  made by the employers and this aspect was considered by this Court in
E Ma/at/al Group Staff Association's case (supra) wherein it was observed that
  courts should also bear in mind that the Government have to keep in rr.ind
  the cost of totality of the benefits that accrue under the Scheme and the
  employees cannot insist that they are entitled to the entire return to be
  calculated on the basis of the interest which accrues on the contributions to
  the provident fund. The questions concerning the volume, and extent of
F benefits arising to at old age by way of old age pension when the bread
  winner of the family dies and at what rate the same should be given are
  matters of policy over which the State and the Legislature should be allowed
  a liberal latitude to achieve the ultimate goal of effectively implementing the
  various social security and social insurance schemes. The fact that a particular
G pattern of these schemes prevailed at a particular point of time is not to be
  viewed as a matter of any vested right in any one for the continuance forever
   of such pattern so as to constitute an embargo for all times in future on the
   power of the State and the Legislature to introduce innovations and undertake/
   overhauling and reorientation of the existing schemes in the best possible
   manner as the Legislature proposes by adjusting equities and rights to achieve
H the ultimate goal of social security and insurance in the form of old age
      OTIS ELEVATOR EMPLOYEE UNIONS. REG. v. U.0.1. [RAJENDRA BABU, J.]    465
 pension and other benefits. The High Courts also noticed that the provident A
fund scheme when it was initially introduced was only a step towards the
ultimate goal of providing a social welfare scheme to protect the workers and
the members of their families not only during the period of employment but
even after superannuation as also at times of calamities in the family resulting
in the loss of bread winner. Thus they concluded that if the State as a ma.tter
of policy considered that the stage to have reached for implementation of a B
pension scheme which was ambitious goal towards social welfare security
measure to be achieved, it is not for the courts to weigh the propriety of the
scheme with microscopical examination and determine whether there is any
distinction or discrimination to find loopholes to annihilate the same even at
the threshold without allowing. a trial to be made even to gain and reform       c
further for better advantage of the experience in the process. The High Courts
also rejected the contention that there is deprivation of right to property and
benefits. The impugned scheme had visualised for family pension under the
provisions of the impugned Act and The Employees Pension Fund Scheme
1995 and they provide a process by which the social need of securing a kind D
of insurance to the employees during old age and at other occasions such
as loss of the bread winner of the family. It is only an alternative or modification
of the scheme that has been introduced earlier and cannot be termed as
depriving the rights of a party. The High Courts felt that it is not for the court
to weigh in golden scales and to impose the view of the courts so that the
scheme as prepared is not on a proper hypothesis and found that the E
contentions in this regard to be baseless. On the question where certain
exemptions have been claimed by certain managements had not been disposed
of the same was directed to be disposed of expeditiously. We are broadly in
agreement with the view of the High Courts.

      The High Court of Kerala merely adverted to various averments in the F
matter .and disposed of the matter. The Kamataka High Court basically followed
the decision of the High Court of Madras in the case of Ashok Leyland
Employees' Union v. Union of India, in W.P. Nos. 17208/95 etc., and placed
very heavy reliance on the decision of this Court in Ma/at/al Group Staff
Association's case [supra] and did not set out any fresh reasoning in the G
course of its order.

      The challenge to the validity of the provisions in the Act are not in
serious challenge and we accept the view of the High Courts in this regard.

     Some of the learned counsel who appeared in the case insisted that this H
    466                    SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.

A Court should hold an enquiry as to the correctness or otherwise of the rival
    contentions and particulars furnished by the parties to arrive at a conclusion
    whether there is a broad correspondence between what employees contribute
    and what they get in return. Placing reliance on Mafat/a/ Group Staff
    Association's case [supra], it is contended that it is the statutory duty of the
B   respondents to ensure that both the contributions by the employees and the
    benefits flowing to them must be broadly commensurate and actuarial appraisal
    done on the part of the respondents not being satisfactory in the light of the
    materials supplied by the petitioners or the appellants, we have been called
    upon to institute an enquiry into the matter and decide the same. The stand
    of the respondents in this regard is that the petitioners/appellants have
C   picked and chosen paragraphs, observations and comments out of context
    without referring to the preceding and the concluding portions of the paragraph
    of the relevant observation of the Report which contain the conclusions and
    recommendations and which conclusions and recommendations are not adverse.
    Therefore,. they submitted that these contentions should not be accepted.

D        The main contention advanced on behalf of the petitioners is on the
  basis of certain observations made by this Court in Mafat/a/ Group Staff
  Association's case (supra). In that case, this Court was concerned with the
  scope and effect of Employees' Family Pension Scheme, 1971 framed under
  Section 6A of the Act. The Staff Association contended before this Court
E that the manner in which the scheme was being operated' was in effect
  prejudicial to the employees inasmuch as the amount collected from them was
  far in excess of the benefits occurring to them. The other side having
  contradicted this argument, this Court, without examining the correctness of
  the data on which the parties have placed reliance for their arguments, held
  that the conclusion should be drawn by taking an overall view of the scheme
F and not by taking separate instances. A direction was, however, given for
  ensuring a broad correspondence between contribution made by the employees
  and the bene.fits made available to the employees. This Court stated that in
  view of the conflicting versions put forth before the Court, it was noticed that
  the facts and figures and particulars furnished by the parties are in serious
G dispute. Each of the parties had furnished their own separate facts and figures
  and this Court adverted to the statement made in C.A.5159/93 in which it was
  stated as follows:

            "The rates are so designed as to ensure that the employee gets back
            the amount of his own contribution with certain additional amount of
H           interest. The amount of contribution by the employer and the Central
     OTIS ELEVATOR EMPLOYEE UNIONS. REG. v. U.0.l. [RAJENDRA BABU, J.]   467
       Government and interest of employees' contribution is retained and A
       utilised to provide payment of other two benefits, namely, monthly
       family pension fund and life assurance benefit, to the widows or minor
       sons or unmarried daughters of those unfortunate members who die
       prematurely during employment. Thus the entire amount of
       contributions to the family pension fund is utilised for giving benefits B
       to the member of the fund himself or to his destitute surviving family
       members in case of his death in one of the aforesaid four ways and
       no part of it is utilised for any other purpose.

Thereafter, this Court observed as follows:

       "While it is not possible for us to embark upon an enquiry into the C
       correctness or otherwise of the rival statements and particulars
       furnished by the parties, the fact remains-which we should emphasise
       that there should be a broad correspondence between what the
       employees contribute and what they get in return. We have already
       expressed ourselves on this aspect while dealing with the plea of D
       discrimination, which we do not think it necessary to repeat here. The
       benefits to be provided to them under the several schemes should
       broadly approximate to and be commensurate with what they contribute.
       This is what clause 34-D of pension scheme provides, in particular
       sub-clause (2) thereof. Though, worded as an enabling provision, it
       contains a salutary and an obligatory principle which the Government E
       should always keep in view. We agree, as already emphasized
       hereinbefore, that no conclusions should be drawn by taking any
       single instance and that the matter must be decided taking an overall
       view, yet the inescapable test remains, viz., there must be a broad
       correspondence between what the employees pay and what they and F
       their families get ultimately. It cannot be that while the Fund
       accumulates, the employees-and their families-decay. The scheme is
       one conceived in their interest and for their benefit and it should
       prove so in practice. It is the statutory duty of the respondents to
       ensure that both the contributions by employees and the benefits
       flowing to them must be broadly commensurate. Since actuarial G
       appraisal is done every three years, as provided by the statutory
       scheme itself, we are sure that the observations made herein will be
       kept in mind and necessary adjustments made."

     The whole case turns on the observations made by this Court in
Mafatla/ Group Staff Association's case (supra) and the effect thereof. We     H
    468                     SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.

A must not forget that the Act provides for framing of appropriate schemes and
    that power is given to the Government. This Court will not examine the
    Scheme framed by the Government as if it is an appeal, but if the return
    obtained by the families of the employees pursuant to such scheme is such
    that the contribution of the employees is substantially high and the return is
    negligible, then an inference can be drawn that such scheme results in
B   arbitrariness. It is only in the context of testing the validity of the scheme with
    reference to Article 14, the observations by this Court have been made in
    Mafatlal Group Staff Association's case (supra) to which we have adverted
    to.

C       The Act is a social welfare legislation to "provide for the institution of
  Provident Fund. Pension Fund and Deposit Linked Insurance Fund for
  employees in factories and other establishments." If the legislation is not
  patently arbitrary, this Court will not monitor implementation of such policy
  unless the same is discriminatory or arbitrary. Since the Scheme is for the
  welfare of employees, the same cannot be held to be violative of the
D Constitution.
         Some learned counsel made detailed reference to different tables in the
  Scheme and submitted that if similar amount is invested in Tenn/Fixed Deposits
  the same would earn more. This approach cannot be accepted for the Scheme
  that is similar to what was considered and approved by this Court in Mafatlal
E Group Staff Association's case (supra) and hence does not require detailed
  examination. But what we have to bear in mind is unless this Court can
  definitely say that there is a great difference between the contributions made
  by the employees and the return to their families which will amount to a kind
  of deprivation. The monies meant for family pension scheme are diverted from
p the Provident Fund Scheme which represents equal contributions of employees
  and employers, to which certain amount is added by the Government also
  because such a scheme subserves a social purpose. It cannot be stated that
  each and every employee must get back not only what he contributes and the
  contributions of the employees and the Government put together because the
  scheme provides for provision in relation to employees dying before retirement
G or before attaining the age of 60 years or in certain cases when an employee
  sustains injuries or is otherwise not employed. Hence, it is not possible to
  hold that the Scheme provides for exorbitant contribution with negligible
  return. The grievance that the Scheme is discriminatory as between the
  daughters and sons marrying before the age of 25 years and as between the
H widows and widowers in the event of their marriage or remaining unmarried
      OTIS ELEVATOR EMPLOYEE UNIONS. REG. v. U.0.1. [RAJENDRA BABU, J.]     469

has also been taken care of. The Respondents have taken steps to remove            A
this anomalies and hence no further consideration is required on this aspect.
Thus, the grievance of discrimination or arbitrariness on account ·of attracting
the wrath of Article 14 cannot be sustained and hence, we cannot interfere
with the Scheme framed by the Government.

       The contention that the opinion survey report does not support the          B
Government's claim for demand of pension by majority of employees' pension
fund subscribers and that the members were happy with the provident fund
scheme, may not be accurate. The Report states "finally, the members would
also like to have the security of some protective umbrella to maintain the
intrinsic value of their savings, which is otherwise eroded by the effects of      C
inflation". It further states that:

       "6.17.l While there is a need to continue the provident fund scheme,
       a mandatory pension scheme should also be introduced due to, among
       other reasons, the emergence of nuclear families, increase in longevity
       and the use of the provident fund accumulations to meet periodic            D
       family responsibilities in favour of the younger generation. A pension
       scheme, most importantly, will lead to a degree of inter generational
       transfer between those who toiled yesterday for what we have attained
       today and from those who benefit today, and will benefit tomorrow,
       from the investments made yesterday."
                                                                                   E
      The next contention that the actuarial liability for ceased Employees'
Family Pension Scheme, 1971 has been assessed at Rs.1605 crores only by
the Actuary upon value of the said fund on 15.11.1995, corpus accretion of
the fund was Rs.8,419.54 crores for the year 1994-95 and the fund thus
accumulated much more than the liability requirement and hence the benefit         F
was not commensurate with the contribution quantum collected as also that
the surplus has been taken over by the new fund depriving the outgoing
members of the ceased scheme. The actuarial liability of Rs.1605 crores
indicated in the valuation report as on 15.11.1995 represents the liability for
payment of family pension only payable under the ceased scheme as clearly
indicated in the report itself. Pension was payable under the old Family           G
Pension Scheme of 1971 only in the event of member's death while in service
vide para 28 of the ceased scheme, which numbered around 1.70 lakhs and
the remaining surviving members on leaving the job upon retirement or
otherwise were entitled for retirement-cum-withdrawal benefit payment in
lumpsum as per provisions contained in para 32 of the ceased Employees'
                                                                                   H
    470                     SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.

A Family Pension Scheme, 1971. The balance amount of corpus primarily covered
    the said retirement-cum-withdrawal benefit liability and not the surplus
    contribution and hence the allegation of deprivation is, therefore, factually
    incorrect. Upon introduction of Employees' Pension Scheme, 1995 the corpus
    and membership of the ceased Employees' Family Pension Scheme, 1971 have
    been carried over to the new pension scheme of 1995 with benefit of pensionary
B   entitlement to the said members against their membership in the ceased
    Employees' Family Pension Scheme, 1971 period lieu of retirement-cum-
    withdrawal benefit vide provisions contained in para 12(3)(b) of the new
    pension scheme of 1995. Thus corpus along with its liability has been merged
    with the pension fund. The amount of actual surplus that was noticed by the
C   Actuaries as indicated in the analysis contained in the said report has already
    been allowed as additional pension relief to the respective Family Pension
    Scheme pensioners.

        The next contention urged is that analysis of member movement indicated
  in the value report suggests very small percentage of persons deriving the
D benefit of pension on superannuation in view of cases of exit on retirement
  prior to superannuation age or voluntary retirement at younger age of
  cessation. The scheme contemplates payment of pension benefit to the members
  as under:

           (i)    superannuation pension on attaining the age of 58 years;
E
           (ii)   retirement pension on leaving the job before attaining the age of
                  58 years but not before 50 years of age;
           (iii) invalidity pension without any eligibility requirement and age bar.

        In addition to the above, the member on leaving the service before
F becoming entitled for pension payment is entitled for following benefits vide
  para 14 of the scheme:

           (i)    Withdrawal benefit as per Table D if the member leaves the
                  service on attaining the age of 58 years without putting i.n I0
                  years eligible service.
G
           (ii)   In case of leaving the service before attaining the age of 58 years
                  without putting in eligible period of service entitling pension, the
                  member has the option of either obtaining the scheme certificate
                  and retaining the membership for adding future entitlement or
                  avail the withdrawal benefit and quit the membership of the
H                 scheme.
      OTIS ELEVATOR EMPLOYEE UNIONS. REG. v. U.0.1. [RAJENDRA BABU, J.]     471
In the event member obtains a scheme certificate he retains his membership          A
and remains covered for pensionary benefit to the family in case of his death.
As such, every member and all family members dependent upon the member
are entitled for either pensionary or withdrawal benefit and no one is left with
no benefit at all as alleged.

      It was next contended that the Panel of Actuaries was not allowed to          B
do the revaluation of the Fund. Paragraph 1.2.4 of the report reads as under:

        "1.2.4 During the discussions leading to appointment of the panel and
        in the first meeting of the panel held on 28.4.1998 Shri A.N. Roy, Addi.
        CPFC (Pension) had clarified that the panel was not required to carry
        out re-valuation and panel's opinion was wanted based on and in             C
        respect of the FVR. However, it was agreed that relevant approximate
        calculations and analysis of supplementary data will be needed so as
        to form basis of panel's conclusions. All such data/information was
        agreed to be supplied and for the sake of convenience it was arranged
        that all the work, analysis of data, secretarial etc. will be carried out   D
        in the office of Shri Liyaquat Khan. The work of the panel and
        conclusions arrived at are accordingly based on analysis of necessary
        data and study of relevant material duly provided by the office of Shri
        A.N. Roy, Addi. CPFC (Pension) and EPFO Actuary Shri Bhudev
        Chatterjee."
                                                                                    E
If the aforesaid paragraph is read in totality, the criticism is belied.

      On the question of outgo for pension under the 1971 Scheme neeC: be
paid from public account accretions and not from the current receipts depleting
the pension fund, it was submitted that the action on the recommendations
has already been initiated by EPFO. On reference made by the Ministry of            F
Labour the matter is under actual consideration of the Ministry of Finance.

     The petitioners/appellants next contended that there has been
inconsistency in membership position indicated from annual report for 1996-
97 and it was pointed out that in the Valuation Report :
                                                                                    G
       (i)    inadequate data was made available and that representative
              character of sample data could not be verified;
       (ii)   crediting of Government contribution to pension fund in public
              account is notional than actual; and
                                                                                    H
    472                     SUPREME COURT REPORTS [2003] SUPP. 5 S.C.R.

A          (iii) input from EPFO actuary on exemption applications be encouraged
                 in processing the exemption cases and disposal accelerated.

          As rightly clarified by the respondents, the figure of 1,87,24,000 reported
    for the period ending 31.3.1995 as per Annual Report is the total membership
    of the provident fund and in respect of ceased Employees' Family Pension
B   Scheme the membership as on 15.11.1995 is 1,63,81,000 and the balance
    represents the number of provident fund members who did not opt for and
    joined the old family pension scheme of 1971. There is thus no inconsistency
    as regards the membership position as alleged by the petitioners/appellants.

          It is clear that the report while referring to certain difficulties in the
C working of the scheme during initial growing period has noticed operational
    limitations. However, the panel of actuaries on being satisfied endorsed the
    valuation result and the Government announced a raise of 4% in the pension
    payment. At any rate these difficulties do not constitute a legal challenge to
    the validity of the scheme.
D         The Government makes its contribution on an annual basis by crediting
    its contribution to the public account as per statutory provision. Deposit in
    public account is an investment and earns interest at the rate decided by the
    Government at the relevant time. It is, therefore, incorrect to say t:-tat the
    Government contribution is notional only.
E
          It was submitted that investment in PSU bonds and State Government
    securities of States with poor fiscal States like those of Bihar and Uttar
    Pradesh raises doubt about its soundness. However, inasmuc:h as the relevant
    investments are done as per statutory provision, there is no substance in this
    contention.
F
        On the question that the actuary has assumed higher rate of interest
  earning in developing the scheme and the interest rates are falling substantially
  endangering sustainability of the fund position and that the Actuary has
  already cautioned as to the possible reduction in pension relief quantum in
  future years due to reduction in interest earning. Inasmuch as vagaries in
G interest rate was considered by the Actuary at the time of formulation of the
  Scheme and necessary cushion provided to take care of such contingencies,
  the matter need not be examined further. The scheme is successful and
  solvent which is apparent from successive valuation reports and the fact that
  in every consecutive year a raise has been given and is being given.
H
      OTIS ELEVATOR EMPLOYEE UNIONS. REG. v. U.0.1. [RAJENDRA BABU, J.]     473
SLP (C) No. 2231611997, 96211998, 204-20511999 and 1316111998                      A
       Employees' Writ Petitions challenging the validity ofEmployees Provident
Fund and Miscellaneous Provisions (Amendment) Act "1996 and Employees'
Pensions Scheme, 1995 were dismissed by the High Court and their claims for
exemption from the Scheme were also rejected. The High Court also observed
that the dismissal of the Writ Petitions shall not stand in the way of the         B
managements concerned approaching the competent authorities for according
exemption from the scheme by satisfying such authorities with particulars
relating to their own scheme and substantiating that such benefits on the
whole are not less favourable to the employees than the benefit provided
under the Act or the Family Pension Scheme relating to employees in any            C
other similar establishment.

       We uphold the view taken by the High Courts and dismiss these
petitions.

SLP (c) l /823-1182511997
                                                                                   D
       This special leave petition has been filed by the Union of India. Writ
Petition filed by the Employees challenging the validity of Employees' Provident
Fund and Miscellaneous Provisions (Amendment) Act 1996 and Employees'
Pension Scheme, 1995 are pending in the Calcutta High Court. The Division
Bench of the High Court directed to maintain status quo regarding                  E
implementation of the Employees Pension Scheme limited to the establishments
who are respondents before the High Court in the Writ Petitions.

      This petition is against interim order. In the light of the orders made by
us above, it is unnecessary to give any particular direction since this petition
has now become infructuous and shall stand disposed of. The High Court of          F
Calcutta is directed to disposed of the same in accordance with the orders
made by us.

W.P. (C) No. 612197, 570198, 56199, 152199, 266199, 428199, 490199, 3781
2000, T.C. No. 15198, 4199, //-12199, 614198, 29198, 31198, 32198, 33198,          G
56198, 61198, 51199, 57199.

       (I)   Validity of the Employees' Provident Fund and Miscellaneous
             Provisions (Amendment) Act 1996 and Employees' Pension
             Scheme, 1995 has been challenged by the employees/unions.

      In the light of the orders made by us above, the validity of the schemes     H
    474                    SUPREME COURT REPORTS [2003) SUPP. 5 S.C.R.

A is upheld.
           (2) Excepting in the establishment concerned in T.C. 15/98, all other
               concerned establishments have their own Pension Schemes.

          Writ Petition No. 490/99 is filed by the management of ONGC Limited.
B The management adopted its own scheme called "Post Retirement and Death
    in Service Benefit Scheme" and sought exemption from Employees' Pension
    Scheme, 1995. The exemption has been rejected by the Government. The
    management has prayed for exemption from operation of Employees' Pension
    Scheme, 1995.

C         If the establishments which have their own Pension Schemes apply to
    the concerned authorities, the concerned authorities shall examine the same
    in the light of what we have stated above.

          These writ petitions and transferred cases are disposed of accordingly.

D W.P. (C) 544198 and 651198
       Writ Petition 544/98 has been filed by the management of Centre for
  Women Development Studies and Writ Petition 651/98 has been filed by the
  management of Machine Tools (India) Ltd. wherein validity of the Employees'
  Provident Fund and Miscellaneous Provisions (Amendment) Act 1996 and
E Employees' Pension Scheme, 1995 has been challenged.
          In view of the orders made by us above, the validity of the scheme is
    upheld. These writ petitions are dismissed accordingly.

  W.P.(C) Nos. 372198, 379198, 412193, 591198, 690198, 486199, 354199, T.C.
F Nos.10198, 13198, 14198, 16198, 17198, 18198, 19198, 20198, 26198, 27198,
  28198, 34198, 35198, 36198, 39198, 41198, 42198, 43198, 44198, 45198, 461
  98, 47198, 48198, 49198, 50198, 51198, 52198,53198, 54198, 57/98, 58198, 591
  98, 60198, 62198, 2199, 3199, 5199, 6199, 7199, 14199, 50199, 52199, 53199,
  54199, 55199, 58199, 2112000, 2212000, T.P.(C) Nos. 575-584198, 759198,
G 775198, 900198, 903198, 359199.
          Validity of the Employees' Provident Fund and Miscellaneous Provisions
    (Amendment) Act, 1996 and Employees' Pension Scheme, 1995 has been
    challenged by the Employees/Unions.

H         In view of the orders made by us above, the validity of the scheme is
     OTIS ELEVATOR EMPLOYEE UNIONS. REG. v. U.O.l. [RAJENDRA BABU, J.]   475
upheld. These writ petitions and transferred cases are dismissed accordingly. A
Rest of the Transfer Petitions shall stand dismissed.

      In some of the petitions and transferred cases, the question raised, in
addition to the validity of the schemes which we have now upheld, .is as
regards the exemption claimed by them on the basis that the schemes framed
in the respective establishments are better than the schemes available under B
the Acts. We have perused the orders made by the concerned authorities and
have found that they have not taken into consideration the necessary facts
which require to be considered in a matter of this nature. Therefore, we set
aside all those orders whether affirmed by the High Courts or not in writ
proceedings and remit the same to the concerned authorities for fresh disposal C
in accordance with law after giving due opportunity to all parties concerned.

      These cases and petitions shall stand dismissed, except those in which
claim is made with respect to exemption and they are allowed to the extent
indicated herein.
                                                                               D
B.K.M.                                                  Petitions dismissed.