Pay & Pension cannot be deferred - S C
CA 399/2021
1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 399 of 2021
(Arising out of SLP (C) No 12553 of 2020)
The State of Andhra Pradesh and Another Appellant(s)
Versus
Smt Dinavahi Lakshmi Kameswari Respondent(s)
O R D E R
1 Leave granted.
2 This appeal arises
from a judgment and order of the Andhra Pradesh High Court dated 11 August
2020. The State of Andhra Pradesh issued GOMs No.26 on 31 March 2020 and GOMs
No. 37 on 26 April 2020. The backdrop for the orders was the outbreak of
Covid-19 and the financial crises which had resulted as a consequence. The
revenues of the State of Andhra Pradesh were impacted by the onset of the
pandemic. The financial position of the State finds reference in the judgment
of the High Court, which has been extracted below:
“The States’ own
revenue consisting of tax revenue and nontax revenue have shown a precipitous
decline of 52% i.e. Rs 7593 crores in first quarter of 2020-21 as compared to
2019-
20. The receipts were
only Rs 7089 crores against Rs 14,682 crores of 2019-20. The States’ own
revenue have not shown any appreciable improvement in the month of July, 2020
also
as the decline is to
an extent of 49% amounting to Rs 2,129 crores for the first 20 days of the
month of July, 2019.” The above extract in the judgment of the High Court is
based on the
submissions of the
State.
3 By GOMs No. 26 of
31 March 2020, the State Government determined that it was necessary, as an
urgent measure, to provide for a deferment of the salaries and pensions which
it was obligated to pay. Consequently, paragraph 5 stipulated as follows:
“5. Government, after
careful consideration of the situation arising due to the COVID-19 outbreak,
the economic consequences of the lock down, the cessation of the revenue inflows
and extra burden imposed on the State’s resources to contain the epidemic &
to provide relief to the people affected/likely to be affected, hereby orders
for the deferment of Salaries/ Wages/ Remuneration/
Honorarium/Pensions on gross basis, as per the following pattern:
(i) There shall be
(100)% deferment in respect of Hon’ble C.M./Hon’ble Ministers/Hon’ble M.L.As/ Hon’ble
M.L.Cs, Chairperson & Members of all Corporations, elected representatives
of all Local Bodies & people holding equivalent posts, as per the orders
issued from time to time.
(ii) There shall be
(60)% deferment in respect of All India Service Officers viz., IAS, IPS and
IFS;
(iii) There shall be
(50)% deferment in respect of all other Government employees, including
workcharged employees & persons engaged under the category of direct
individuals professions & through 3rd party,
except Class-IV Employees;
(iv) There shall be
(10)% deferment in respect of Class-IV, Out-sourcing, Contract and the Village
& Ward Secretariat employees;
(v) The deferment
mentioned in respect of Para 5(i), (ii),(iii) & (iv) supra shall be made
applicable mutatismutandis in
respect of the retired employees in the respective categories.
(vi) The above
deferment shall be equally applicable to the serving & retired employees of
all
PSUs/Government aided
Institutes/Organizations/Universities/Societies/Autonomous bodies/ Semi autonomous
bodies, etc. in respect of their Salaries/ Wages / Honorarium / Pensions.”
4. It is also
provided that the above orders would come into force in respect of the salary,
wages, remuneration and pensions for the month of March 2020,payable in April
2020 and would continue to remain in force until further orders.
5. On 4 April 2020,
there was a modification by the State Government in terms of GOMs No.27 which
provided for the payment of full salary to the employees of three departments,
namely, (i) medical and health department;
(ii) police
department; and (iii) sanitation workers working in rural local bodies or urban
local bodies, such as Nagar Panchayats, Municipalities and Municipal
Corporations.
6. On 26 April 2020,
GOMs No.37 provided for a further modification under which the Government,
having noticed the hardships which were being faced by the pensioners, directed
the payment of full pension to all categories of pensioners.
7. A writ petition
under Article 226 of the Constitution was filed before the High Court by a
former District and Sessions Judge. The gravamen of the grievance was that
salaries and pensions are due as a matter of right to employees and, as the
case may be, to former employees who have served the State. Consequently, a
direction was sought in the petition to the State Government to pay the
outstanding salaries and pensions which had remained due.
8. The High Court by
its judgment and order dated 11 August 2020 held that:
(i)
The PIL at the behest of a public spirited citizen
was maintainable, the petitioner before the High Court having instituted the
proceedings pro bono without
any personal interest;
(ii)
(ii) Pension is payable to the retired employees for
the past services rendered by them to the State;
(iii) Under Rule 9 of
the Andhra Pradesh Revised Pension Rules 1980,pension can only be withheld or
deferred under specific circumstances such as if the pensioner is found guilty
of grave misconduct or negligence during employment in a departmental or
judicial proceeding. These circumstances had not been established;
(iv) Article 72 of
the Andhra Pradesh Financial Code deals with the payment of salary to employees
of the State, and provides that salary is payable on the last day of every
month;
(v) The entitlement
to the payment of salary is intrinsic to the right to life under Article 21 and
to the right to property which is recognized by Article 300A of the
Constitution;
(vi) The State could not by means of a
government order have provided for the deferment of salaries and pensions
without following recourse to law.(vii) Although the GOMs make reference to the
state plan under Section 23 of the Disaster Management Act, 2005, none of the
provisions of the said Act provide for deferred payment of salaries or
pensions.
9. On the above
premises, the High Court directed (i) payment of the deferred salary for the
months of March-April 2020 together with interest at the rate of 12% per annum
and (ii) payment of deferred pension for the month of March 2020 with a similar
rate of interest.
10. Aggrieved by the
judgment of the High Court, the Government of Andhra Pradesh moved these
proceedings under Article 136 of the Constitution. The State Government
clarified in its Special Leave Petition that it was restricting its challenge
only to the component of interest which had been imposed by the judgment and
order of the High Court. On 18 November 2020, while considering the Special
Leave Petition at the preliminary hearing, the Court issued a direction to the
effect that the deferred portion of the payments on account of salaries,
pensions and honoraria due to the employees or, as the case may be, to former
employees be paid in two equal tranches. The first was directed to be paid on or
before 15 December 2020, while the second was directed to be paid on or before
15 January 2021. The direction in regard to the payment of interest was stayed
by this Court.
11. In pursuance of
the above directions, the Government of Andhra Pradesh has disbursed the full
amount of salary and pensions which came to be deferred by the GOMs which have
been noted earlier. The only issue which now survives for determination is the
liability to pay interest.
12. Mr Shekhar
Naphade, learned senior counsel appearing on behalf of the appellants with Mr
Mahfooz Ahsan Nazki, learned counsel, submits that the decision to defer the
payment of salaries and pensions was taken due to the precarious financial
position in which the State found itself as a consequence of the pandemic. Mr
Naphade submitted that immediately after the issuance of first GOMs, a
relaxation was provided for front-line workers such as those
in the police, health
and sanitation departments. Moreover, by a subsequent relaxation a direction
was issued for payment of pensions to the pensioners.Hence, it has been
submitted that the State had acted bona fide
and there would be no reason to saddle it with the liability to
pay interest. Alternately,it has been submitted that if interest is directed to
be paid, the payment
should be confined
only in regard to the employees of the State falling in categories 3, 4 and 5
of the GOMs dated 31 March 2020.
13. Opposing the
submissions of Mr Naphade and Mr Nazki, Mr Yelamanchili Shiva Santosh Kumar,
learned counsel appearing on behalf of the respondents, urged that the
intervention of the High Court must be understood in the perspective of the
background facts, namely, that the
State had intervened
by issuing an administrative order in exercise of its powers under Article 162
of the Constitution without enacting a proper legislation for the deferment of
salary or, as the case may be, pensions.
Learned counsel
highlighted the serious hardships which would have been caused to pensioners as a result of the order
of deferment and hence submitted that the High Court is fully justified in
entertaining the PIL and in directing payment of interest at the rate of 12%
per annum.
14. The direction for
the payment of the deferred portions of the salaries and
pensions is unexceptionable. Salaries are due to the employees of the State for services rendered. Salaries in other words constitute the rightful entitlement of the employees and are payable in accordance with law. Likewise, it is well settled that the payment of pension is for years of past service rendered by the pensioners to the State. Pensions are hence a matter of a rightful entitlement recognised by the applicable rules and regulations which govern the service of the employees of the State. The State Government has complied with the directions of this Court for the payment of the outstanding dues in two tranches. Insofar as the interest is concerned, we are of the view that the rate of 12% per annum which has been fixed by the High Court should be suitably scaled down. While learned counsel for the respondents submits that the award of interest was on account of the action of the Government which was contrary to law, we are of the view that the payment of interest cannot be used as a means to penalize the State
Government. There can
be no gainsaying the fact that the Government which has delayed the payment of
salaries and pensions should be directed to pay interest at an appropriate
rate.
shall be no order as
to costs.
17. Pending
applications, if any, stand disposed of.
….....…...….......………………........J.
[Dr Dhananjaya Y Chandrachud]
..…....…........……………….…........J.
[M R Shah]
New Delhi;
February 8, 2021
CKB
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