In a significant judgment, the Calcutta High Court has allowed a review petition filed by Ambujaksha Mahanti, a former faculty member of the Indian Institute of Management (IIM) Calcutta, thereby confirming his automatic inclusion into the General Provident Fund (GPF)-cum-Pension-cum-Gratuity Scheme as per a 1987 memorandum.
Background
Mahanti was employed at IIM Calcutta before 1985 under the Contributory Provident Fund (CPF) scheme. In 1987, following the recommendations of the 4th Pay Commission, IIM Calcutta issued a memorandum introducing a new pension scheme. This memorandum stipulated that employees who wished to remain under the CPF scheme were required to opt out within six months; failure to do so would result in automatic migration to the new GPF-cum-Pension-cum-Gratuity Scheme. Mahanti did not exercise any option within the specified period; however, IIM Calcutta continued to treat him as a CPF beneficiary.
Previous Judgment
In 2020, a Division Bench of the Calcutta High Court dismissed Mahanti's claim for inclusion in the new pension scheme, holding that he had failed to explicitly opt in. The court's decision was based on the interpretation that an explicit option was necessary for inclusion in the new scheme.
Review Petition and Arguments
Mahanti filed a review petition against the 2020 judgment, arguing that the 1987 memorandum created a legal fiction whereby employees who did not opt out within the stipulated period were automatically enrolled in the new pension scheme. He contended that the previous judgment contained an error apparent on the face of the record, as it contradicted the explicit provisions of the memorandum. Mahanti's counsel relied on the Supreme Court's judgment in Union of India v. S.L. Verma [(2006) 12 SCC 53], which dealt with similar provisions and upheld automatic inclusion in the absence of an opt-out.
On the other hand, IIM Calcutta's counsel argued that Mahanti had continued to withdraw benefits under the CPF scheme and did not challenge his classification until much later, implying acquiescence to his status as a CPF beneficiary.
High Court's Decision
The Division Bench of Justices Rajasekhar Mantha and Ajay Kumar Gupta allowed the review petition, holding that the relevant pension rules automatically covered employees who did not opt out within the specified period. The court observed that the earlier Division Bench had erred in holding that an explicit opt-in was necessary, as this interpretation contradicted both the provisions of the 1987 memorandum and the precedent set in the S.L. Verma case. The court emphasized that the 1987 memorandum's provisions were clear in stipulating automatic inclusion for employees who did not exercise the opt-out option, thereby creating a legal fiction that did not require any further action on the part of the employee.
Implications
This judgment has significant implications for similarly situated employees who were employed under the CPF scheme prior to the introduction of the new pension scheme and did not exercise the opt-out option. The court's decision reinforces the principle that when a policy or memorandum explicitly provides for automatic inclusion in the absence of an opt-out, such provisions create a legal fiction that must be honored by the employer. Employers are thus obligated to adhere strictly to the terms of such memoranda and cannot deny benefits on the grounds of an employee's failure to explicitly opt in when the memorandum does not require such an action.
Conclusion
The Calcutta High Court's ruling underscores the importance of adhering to the explicit terms of policy documents and memoranda, particularly concerning employee benefits and entitlements. It affirms that employees are entitled to benefits as per the provisions of such documents, and any deviation by the employer can be subject to judicial review and correction.
0 Comments
Thank you for your response. It will help us to improve in the future.