The Kerala High Court in the case of Kerala State Co-operative Employees Pension Board v. C. D. Udayakumar and Others, declared an important right of employees to choose the Provident Fund Organisation of their preference.
In the above case the employees of the District Co-operative Banks and the State Co-operative Bank had joined the Employees Provident Fund Scheme, 1952 and Employees Pension Scheme, 1995 for provident fund and pension respectively. While so, Section 80A was introduced to the Kerala Co-operative Societies Act, 1969 with effect from 20/08/1993 creating Self Financing Pension Scheme for establishment of Pension Fund. Even though the Self Financing Pension Scheme was established in the year 1993, the employees of both the District Co-operative Banks and the State Co-operative Bank continued to be members of the Employees Provident Fund Scheme, 1952 and the Employees Pension Scheme, 1995, and the members who have made or are making contributions are getting pension and other benefits from the said Schemes. However, in 2009, based on the request from the Co-operative Banks and the State Government, the EPF Commissioner proposed to transfer the funds of the members of the District Co-operative Banks as well as the State Co-operative Bank to the Kerala State Co-operative Employees Pension Board (appellant board), which was challenged in Writ Petitions filed by retired employees as well as serving employees of both these categories of Banks. Before the learned Single Judge, the question raised was whether the retired employees as well as the employees already continuing as members of the Employees Provident Fund Scheme, 1952 and the Employees Pension Scheme, 1995 could be compulsorily transferred by transfer of fund to the Co-operative Pension Board. The learned Single Judge held that the fund of those employees who are retired from service cannot be compulsorily transferred to the Co-operative Pension Board.
In appeal, the Division Bench consisting of Justice C. N. Ramachandran Nair & Justice C. K. Abdul Rehim categorically held that
After hearing both sides, we do not think the appellant has any justification even to file appeals against the judgment of the learned Single Judge because what is stated in Section 61(1) of the KCS Act and Section 17 of the EPF Act is that employees are free to join whichever is the Provident Fund Organisation which gives them better benefits… We feel the Appellant Board (Co-operative Pension Board) or the State Government or the Banks (Management) cannot demand transfer of funds of the employees, who are members of the Employees Provident Fund Scheme, 1952 and Employees Pension Scheme, 1995, to the appellant Board and discontinue their benefits under the Schemes of the Central Act without their consent. Since both the appellant as well as the Employees Provident Fund Organisation and the Pension Fund operate for the benefit of the employees, we feel those who wish to opt to transfer the membership from the Employees Provident Fund Scheme, 1952 and the Employees Pension Scheme, 1995 can apply for the same and in such cases the EPF Commissioner should transfer the funds. In other words, transfer of fund from Employees Provident Fund Scheme, 1952 and Employees’ Pension Scheme, 1995 of any retired or continuing member should be made only with his/her consent.
This is a landmark judgment which would have wide resonance in the development of labour law, especially regarding the right of employees to choose their fund managers.