Pension Under Non-Contributory Scheme Is ‘Wages’ | HC

Case Details: Heinen and Hopman Engineering (I) (P.) Ltd. vs. State of West Bengal [2025] 181 taxmann.com 964 (HC-Calcutta)

Judiciary and Counsel Details

• Shampa Dutt (Paul), J.
• Barnamoy Basak for the Petitioner.
• Tamal Taru Panda, Saurabh Sankar Sengupta, Richik Rakshit & Biswabrata Basu Mallik, AGP for the Respondent.

Facts of the Case

In the instant case, the petitioner-employer maintained a non-contributory pension scheme through a trust. By a later Deed of Variation, the employer sought to restrict benefits to employees retiring at age sixty with at least twenty years’ continuous service, except for certified total invalidity; approval was granted with effect from July 2022, and employees were informed. The employee thereafter resigned, was relieved, and received full-and-final settlement and gratuity, with superannuation benefits noted as remaining due as per an earlier circular.

The employee filed a Form-N claim under the West Bengal Shops and Establishment Rules; the employer objected to maintainability, asserting that the Shops & Establishment Act has no provision to address superannuation.

After hearing the parties, the Referee and Controlling Authority held that the pension under the company’s superannuation plan formed part of the terms and conditions of employment and was to be treated as “wages” under Section 2(vi) of the Payment of Wages Act, overruled the jurisdictional objection, and decided to proceed with the claim.

On writ petition before the High Court, the employer challenged the Controlling Authority’s jurisdiction, contending that Section 2(vi)(3) of the Payment of Wages Act excludes employer contributions to pension/provident fund and interest thereon from “wages” and that the employee’s remedy lay in a civil court. It was also argued that, as the employee resigned and a pension is payable only on superannuation, no pension was due.

High Court Held

The High Court noted that where the petitioner-employer had created a non-contributory pension scheme for its employees and the respondent No. 3, being an employee of the petitioner, resigned from service, the respondent No. 3 was entitled to receive pension benefits as per the scheme.

The High Court held that since the claim for pension was well within the definition of ‘wages’, as it was a sum payable to a person employed in respect of his employment for work done in such employment, in the manner as ‘wages’ are paid.

Therefore, the prayer for ‘pension’ being within the definition of ‘wages’ under Section 2(vi) of the Act, is not covered under Section 2(vi)(3) of the Act, and the Controlling Authority under the West Bengal Shops & Establishment Act, 1963 had jurisdiction to entertain the claim.

List of Cases Reviewed

• Order of the Referee and Controlling Authority under the West Bengal Shops & Establishment Act, 1963, Barrackpore in S.P.-01/2024, dated 18.11.2024 (para 22) affirmed

List of Cases Referred to

• Sudhir Chandra Sarkar v. Tata Iron and Steel Co. Ltd. 1984 taxmann.com 1282 (SC) (para 5)
• Inspector, Railway Protection Force v. Mathew K Cherian 2025 SCC OnLine SC 51 (para 5)
• Union of India v. Elphinstone Spinning and Weaving Co. Ltd. (2001) 4 SCC 139 (para 5)
• Balaram Abaji Patil v. M. C. Ragojiwalla [Special Civil Appln. No. 1322 of 1959, dated 22-3-1960] (para 6)
• Bridge and Roof Co. (India) Ltd. v. Union of India (1963) 3 SCR 978 (para 7).