Calcutta HC: Employees Cannot Claim Provident Fund’s “Reserve & Surplus” Separately

The Calcutta High Court has ruled that once a provident fund trust is dissolved, and all its funds, including the “Reserve & Surplus” amount, are transferred to the statutory Provident Fund, employees cannot claim any additional payments beyond their already received provident fund dues.

The judgment was delivered by Justice Shampa Dutt (Paul) in the case of Dilip Kumar Choudhury & Ors. v. The Regional Provident Fund Commissioner, Durgapur, EPFO & Ors. (WPA 27817 of 2023).

What Led to the Court’s Decision?

• The petitioners were employees of Hindustan Cables Ltd. (HCL) and members of its Provident Fund Trust, which had a special exemption under the Employees’ Provident Fund & Miscellaneous Provisions (EPF & MP) Act, 1952.
• On October 17, 2011, the government revoked this exemption, and all trust funds were transferred to the statutory Provident Fund under the Regional Provident Fund Commissioner (RPFC), Durgapur.
• The trust had an extra Reserve & Surplus fund of ₹15.26 crore for workers and ₹12.83 crore for officers, but it was not distributed to employees.
• The petitioners retired between 2016 and 2018 and received their full provident fund dues and pensions.
• Later, they claimed a separate share from the Reserve & Surplus fund, arguing that similar payments had been made to employees of other HCL units.

Why Did the RPFC Reject Their Claim?

On March 8, 2018, the RPFC rejected the petitioners’ request, stating that:

• The Reserve & Surplus fund had already been merged into the statutory Provident Fund.
• There was no provision for separate payments to employees after the transfer.
• Employees had already received their full dues, including any share from the surplus fund.

What Were the Key Arguments in Court?

Petitioners’ Arguments:

• The “Reserve & Surplus” amount should have been distributed among members when the trust was dissolved in 2011.
• Clause 44 of the Trust Deed mandated that surplus funds be distributed to employees.
• Similar payments were granted to employees of other HCL units.
• The claim was delayed only because they realized their right to the fund after superannuation.

Respondents’ Arguments:

• Employees had already received their full provident fund dues and pensions.
• The exemption for Hindustan Cables Ltd.’s provident fund trust was canceled in 2011, and all funds were merged into the statutory Provident Fund.
• Employees did not challenge the fund transfer in 2011 but raised the issue only in 2023.
• In the 2008 case of K.D. Sharma v. Steel Authority of India Ltd., the Supreme Court ruled that petitioners must disclose all relevant facts and cannot suppress material information.

What Did the Court Decide?

• The petitioners had already received their provident fund dues and pensions upon retirement between 2016-2018.
• The Reserve & Surplus amount was included in their final provident fund settlement.
• The exemption for the HCL provident fund trust was revoked in 2011, and all assets were transferred to the statutory Provident Fund.
• The employees did not object in 2011, nor did they claim their share when the funds were transferred.
• Their claim in 2023 was highly delayed and was therefore not justified.

Final Verdict

• The writ petition was dismissed.
• The court ruled that employees have no right to claim a separate share from the Reserve & Surplus fund.

FAQs

Can retired employees claim additional funds from the dissolved Provident Fund trust?

No, once a provident fund trust is dissolved and funds are transferred to the statutory Provident Fund, employees cannot claim additional payments.

Why did Hindustan Cables Ltd. (HCL) employees file the petition?

They believed they were entitled to a separate share of the “Reserve & Surplus” fund, which was held by the HCL Provident Fund Trust before its dissolution.

What did the Calcutta HC rule on this matter?

The court ruled that employees had already received their provident fund dues, including their share of the surplus, and no additional claims would be entertained.

What was the reason for the petition’s dismissal?

The court found that the Reserve & Surplus amount had already been merged into the statutory Provident Fund, and employees failed to raise their claim in time.

Will this ruling affect future Provident Fund disputes?

Yes, this ruling sets a legal precedent that once funds are transferred to the statutory Provident Fund, employees cannot claim additional amounts from previous trusts.

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