The Bombay High Court recently delivered a judgement in favour of private sector employees seeking higher pensions by contributing to the Employees’ Pension Scheme (EPS) on their actual wage basis. The high court held that higher pensions can be given even if their PF trust rules capped contributions at the statutory wage ceiling limit.
In this case, more than 40 employees of private sector companies like Tata Communications, Abbott India, Raymonds Steel, and others wanted to get higher pensions by contributing on an actual wage basis. However, the Employees’ Provident Fund Organisation (EPFO) rejected their joint application on the ground that the companies where these employees work have their own PF trust, and the trust rules capped the contributions at the statutory wage ceiling limit.
For those who are unaware, this higher pension issue has been a long-standing battle for private sector and non-government employees who wanted to contribute to the EPS based on their actual salaries, but EPFO rejected their applications. Thus, the aggrieved employees across the country filed multiple court cases. In 2022, the Supreme Court ruled (2022 INSC 1171) that the EPFO must consider such higher pension applications from employees who submitted a joint declaration with their employers and contributed on the actual wage basis and met all the specified terms and conditions.
This article highlights the case for higher pensions for private sector employees whose employers have their own PF trust.
In this Bombay High Court case, the employees wanted to exercise the joint option to contribute to the Employees’ Pension Scheme (EPS), 1995, on their actual wages rather than the statutory wage ceiling so that their pension could be calculated on higher pensionable wages. On October 19, 2026, the employees won the case in the Bombay High Court. This means now EPFO has to accept their joint declaration for a higher EPS pension and then decide the application on its merits, subject to the terms and conditions specified.
The Bombay High Court ruled that a joint option cannot be rejected on the ground that the PF Trust rules either envisage a cap/ceiling or employer’s contribution or that PF Trust rules did not provide for a joint option on higher pension on the ground that the employer did not remit pension contribution on the wages exceeding the ceiling.
Also the Bombay Court rejected the EPFO’s reliance on its head office circular dated January 18, 2025, which required higher-pension eligibility in cases involving exempted PF trust establishments to be determined with reference to the applicable PF trust rules.
(The statutory wage ceiling limit was revised to Rs 15,000 in 2014 and again revised to Rs 25,000 in 2026.)
Read below to find out what the Bombay High Court said and how these private sector employees won the case.
Bombay High Court discussion
Advocate Satyam Surana, representing all aggrieved private sector employees, argued before the Bombay High Court (2026:BHC-AS:43020) that this issue about higher pensions is addressed by the Supreme Court in the case of Sunil Kumar B. (supra), wherein the Supreme Court held that an exempted and unexempted establishment PF trust stands on par with EPF.
Surana argued that the PF Trust rules apply only to provident funds and have no bearing on an employee’s entitlement to a higher pension based on actual wages. Surana also highlighted that the Karnataka High Court in the case of Bharath Earth Movers & Ors. Vs. Union of India and Ors has also held that it is impermissible to reject an application for pension on higher wages on the ground that applicable Trust Rules of the establishment did not provide for contribution to the pension fund.
Advocate Ms. Payoja Gandhi, representing the EPFO, argued before the Bombay High Court that EPFO has rightly rejected the higher pension applications after duly applying its mind to the entire material on record. She submitted that in many cases, petitioners/employers have failed to produce either the rules of the Trust or the relevant form /records for the purpose of deciding their entitlements.
Ms. Gandhi argued that in the case of one employer, the company has not deposited PF contribution on all eligible heads of salary. Gandhi also argued that as per gazette notification dated May 3,2023 if employees need higher pensions, then their employer also needs to contribute 9.49% of the basic wages, dearness allowance, and retaining allowance of each member to the pension fund with effect from September 1, 2014, but the company has failed to comply with this requirement.
Gandhi also cited a circular issued by EPFO Head Office, which said that the regional offices of the EPFO need to verify whether the employer’s share towards PF contribution is remitted on the employee’s pay exceeding the prevalent statutory wage ceiling from the day the pay exceeded the wage ceiling or November 16, 1995, whichever is later till the date of retirement.
Justice Sandeep V. Marne of the Bombay High Court said that in all six petitions being heard in a single common judgement, the common ground for rejecting the employees’ joint options is their failure to comply with the Trust Rules of the exempted establishment in line with the pension scheme.
The EPFO has relied on paragraph 2 of their own circular issued by their head office, which said that the eligibility for pension on higher wages should be determined on the basis of the extant Trust Rules of the exempted establishments. The Bombay High Court said that the circular further suggested that in case the Trust Rules are amended post the decision of the Supreme Court in the Sunil Kumar B case, the application of members of such Trust may not be considered.
Paragraph 2 of the Circular dated 18 January 2025 reads: The eligibility for PoHW cases should be determined on the basis of the extant Trust Rules of the exempted establishment, in consonance with the directions of the Hon’ble Supreme Court in the Sunil Kumar case. Further, in case the Trust rules are amended post decision dated 04.11.2022 in the Sunil Kumar case, applications of members of such Trusts may not be considered
However, this circular, which the EPFO cited in the Bombay High Court, was already set aside by the Madras High Court in a judgement last year.
Thus, the Bombay High Court said that the issue involved appears to be no more res integra. In the D. Chandirasegar case, the Madras High Court has decided a batch of petitions filed by 86 former employees of BHEL, challenging the order of the EPFO by which joint option requests submitted by employees to avail benefits of higher pension were rejected, primarily relying on the Trust Rules applicable to the exempted organisations of BHEL.
The Bombay High Court said: “The Madras High Court accordingly set aside the circular dated January 18, 2025, treating the same as in violation of the order passed by the Apex Court.”
The Bombay High Court said that various high courts across the country have consistently held that it is impermissible to deny the benefit of exercising the joint option to contribute to the pension funds in actual wages by citing the Trust Rules.
Thus, the Bombay High Court said that in the present case, the EPFO has rejected applications by citing the Trust Rules and by relying on the EPFO circular dated January 18, 2025, which is already set aside by the various high courts.
So, the Bombay High Court ruled that in their view the orders passed by the EPFO are clearly unsustainable and liable to be set aside. The Bombay High Court said that in their view, therefore, all the employees who filed this case deserve to be allowed.
The Bombay High Court said: “As consistently held by various high courts, the rules/deeds of provident fund trusts of an exempted establishment operate only in respect of the provident fund, unless an exemption under Section 17(1)(c) of the EPF Act read with paragraph 39 of the EPS, 1995, including joint option, applies to the employees in the same manner as the employees of unexempted establishments.”
Therefore, the Bombay High Court ruled that a joint option cannot be rejected on the ground that the Trust Rules either envisage a cap/ceiling or employer’s contribution or that Trust Rules did not provide for a joint option on higher pension on the ground that the employer did not remit pension contribution on the wages exceeding the ceiling.