In a significant ruling reinforcing the principle of employee welfare, the Jharkhand High Court has held that an employee appointed prior to 1 January 1986 would be deemed to have shifted from the CPF (Contributory Provident Fund) Scheme to the more beneficial General Provident Fund-cum-Pension Scheme if no positive option to continue under CPF was exercised within the prescribed cut-off date. The Division Bench clarified that the absence of an express option cannot be used to deny pensionary benefits when the governing scheme itself provides for a deemed conversion in favour of employees.
Case Overview
- Parties: Kendriya Vidyalaya Sangathan vs. Sh. Bhrigu Nandan Sharma & Devendra Singh Rana (reported by LiveLaw).
- Court: Jharkhand High Court (Division Bench)
- Bench: Chief Justice Tarlok Singh Chauhan & Justice Rajesh Shankar
- Date: 25 December 2025 (reporting date)
Facts
- The employee worked as a yoga teacher in a Central Government school and was appointed in 1981.
- He initially came under the Contributory Provident Fund (CPF) Scheme.
- In 1988, KVS and the Government issued a Memorandum providing that employees in service on 1 Jan 1986 would be deemed to have switched to the General Provident Fund-cum-Pension Scheme (GPF-cum-Pension) unless they exercised a positive option to remain in CPF by the cut-off date.
- The employee did not submit any option to remain in CPF by that deadline.
- Upon retirement in March 2019, he sought conversion of his retirement benefits from CPF to the GPF-cum-Pension Scheme.
- KVS denied this, claiming he had chosen CPF earlier and could not change later.
Legal Journey
- The Central Administrative Tribunal (CAT) sided with the employee and directed KVS to convert his account to the pension scheme.
- KVS challenged the CAT order before the Jharkhand High Court, disputing the conversion order.
High Court’s Ruling
The High Court upheld the Tribunal’s decision and clarified:
Deeming Provision Applies Even Without Option
- If an employee did not exercise a positive option to remain under the CPF by the specified cut-off date, then he is deemed to have switched to the more beneficial GPF-cum-Pension Scheme.
- This holds even if the employee initially chose CPF but failed to file a valid option before the deadline.
Relevant Legal Basis
- The court relied on the terms of the relevant Government/organization memorandum, which provided that employees still in service on 1 Jan 1986 would be “deemed to have come over” to the pension scheme *unless they exercised an option to stay in CPF by the cut-off date”.
- Supreme Court precedents (e.g., University of Delhi vs. Shashi Kiran and similar cases) were considered to support the interpretation that the deeming provision applies in absence of a valid option within time.
Equity and Employee Welfare
- The High Court observed that denying pension benefits on account of timing of option would be discriminatory, especially where the scheme aims to benefit employees.
Outcome
- The High Court dismissed the KVS writ petitions and affirmed the Tribunal’s direction for conversion to the GPF-cum-Pension Scheme.
Key Legal Takeaways
- No Option ≠ No Loss of Benefit: Where an employee fails to exercise the option within the stipulated period, the law deems conversion to the more beneficial pension scheme.
- CPF vs GPF-cum-Pension: The rule applies specifically to employees who were in service before 1 January 1986 when the pension switch provisions came into effect.
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Express Option Not Mandatory: A positive option to remain in CPF is necessary for retention under that scheme; absence of such makes the deeming provision applicable.