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.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 399 of 2021
The State of Andhra Pradesh Vs Smt Dinavahi Lakshmi Kameswari
Dated: February 8, 2021
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) 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.
15 We accordingly order and direct that in substitution of the interest rate of
12% per annum which has been awarded by the High Court, the Government
of Andhra Pradesh shall pay simple interest computed at the rate of 6% per
annum on account of deferred salaries and pensions within a period of thirty
days from today. This direction shall, however in the facts and circumstances,
be confined to categories 3, 4, 5 and 6 of GOMs No 26 dated 31 March 2020.
We clarify that interest shall be paid to all pensioners of the State at the rate
of 6% per annum on the deferred portion, for the period of delay. Having
regard to the prevailing bank interest, the rate of 12% per annum which has
been fixed by the High Court, would need to be and is accordingly reduced.
16 The appeal is accordingly disposed of in terms of the above directions. There
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
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