Delhi High Court Upholds Classification Between Foreign and Domestic Employees in Provident Fund Scheme

The Court finds the distinction between foreign and domestic employees in the Employees' Provident Fund Scheme reasonable, dismissing Spice Jet Ltd.'s challenge.

In a significant judgment delivered on November 4, 2025, the Delhi High Court upheld the validity of the classification made between foreign and domestic employees under paragraph 83 of the Employees' Provident Fund Scheme, 1952. The case, titled "Spice Jet Ltd. v. Union of India," was presided over by Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela.

Spice Jet Ltd. challenged the notifications introducing paragraph 83, arguing that the classification mandating foreign employees to contribute to the Provident Fund without a pay cap was discriminatory, as domestic employees were only required to contribute if their pay was below Rs. 15,000 per month. The petitioner contended that this distinction violated Article 14 of the Indian Constitution, which guarantees equality before the law.

The Court, however, found the classification reasonable. It held that the distinction was based on the economic duress faced by Indian employees, who typically have longer employment periods compared to foreign employees who work in India for shorter durations. The Court emphasized that the classification was intended to provide social security to employees while mitigating economic hardship for Indian workers.

Moreover, the Court dismissed the challenge to the demand notices and summons issued to Spice Jet Ltd. by the Employees' Provident Fund Organization (EPFO), noting that these were based on valid notifications. The Court also rejected the argument that the notifications constituted a colorable exercise of power, stating that they were in alignment with India's international treaty obligations under Social Security Agreements.

The judgment aligns with a similar ruling by the Bombay High Court, which also recognized 'International Workers' as a distinct class. However, it diverges from the Karnataka High Court's earlier decision, which had struck down paragraph 83 as unconstitutional.

This decision reiterates the judiciary's stance on allowing reasonable classification under Article 14, provided it is based on intelligible differentia and has a rational nexus to the objective sought to be achieved.

Bottom Line:

Employees Provident Fund Scheme, 1952 - Distinction made between foreign employees and domestic employees under paragraph 83 of the Scheme held reasonable - Classification is based on economic duress faced by Indian employees due to longer employment periods as compared to foreign employees who typically work in India for shorter durations.

Statutory provision(s): Constitution of India, Article 14; Employees' Provident Fund Scheme, 1952, Paragraphs 26, 26A, 69, 83; Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Sections 5, 6, 7, 7A.

Spice Jet Ltd. v. Union of India, (Delhi)(DB) : Law Finder Doc Id # 2804310