Chetan Arvindbhai Shah & 105 vs State Of Gujarat & 3 on 21 December, 2015

[Cites 15, Cited by 0]

Gujarat High Court

Chetan Arvindbhai Shah & 105 vs State Of Gujarat & 3 on 21 December, 2015

Bench: Sonia Gokani

                 C/SCA/15676/2014                                               ORDER




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD


              SPECIAL CIVIL APPLICATION No. 15676 of 2014

         =============================================================
              CHETAN ARVINDBHAI SHAH & 105....Petitioner(s)
                                Versus
                 STATE OF GUJARAT & 3....Respondent(s)
         =============================================================
         Appearance:
         Mr ASHISH B DESAI, ADVOCATE for the Petitioner(s) No. 1 - 106
         Mr RASHESH RINDANI, AGP for the Respondent(s) No. 1
         Mr SP MAJMUDAR, ADVOCATE for the Respondent(s) No. 4
         NOTICE SERVED BY DS for the Respondent(s) No. 1 - 3
         =============================================================

                       CORAM: HONOURABLE Ms. JUSTICE SONIA
                                    GOKANI
                                    23rd December 2015

         ORAL ORDER

Petitioners herein are seeking the benefit of Fifth Pay Commission recommendations from the respondent no.4- Limbdi Nagarpalika with all consequential reliefs. It is the case of the petitioners, who are 106 in number, that they are serving the respondent no.4-Nagarpalika on different posts. It is their say that the respondent no.1 had passed a Resolution dated 2nd June 1998 to apply the pay-scales recommended by the Fifth Pay Commission to the employees of Nagar Palika, pursuant to which, the Page 1 of 18 HC-NIC Page 1 of 36 Created On Sat Jan 09 02:37:22 IST 2016 1 of 36 C/SCA/15676/2014 ORDER respondent no. 4 vide its Resolution No. 10/1985 passed by the General Board on 31st October 1998 accepted the recommendations made by the Fifth Pay Commission for its employees; followed by another Resolution No. 10/1986 constituting a committee for proper implementation of the recommendations. It is further the say of the petitioners that the General Board of the Limbdi Nagarpalika vide its Resolution No. 7/155 dated 30th October 1999 resolved to provide the pay scales recommended by the Fifth Pay Commission to all its employees and an Office Order dated 20th September 2000 also came to be issued by the President of the Nagarpalika in that regard.

It is the grievance of the petitioners that the respondent no.1 vide its Order dated 20th November 2007 held that the establishment expenditure of Limbdi Nagarpalika exceeds the limit of 45% of the total revenue income, whereas in fact, it was required to be considered that when the recommendations of Fifth Pay Commission were made applicable by the respondent-Nagarpalika, the establishment expenditure was far below the said limit of 45% of the total revenue ie., it was 39.13%.

Page 2 of 18

HC-NIC Page 2 of 36 Created On Sat Jan 09 02:37:22 IST 2016 2 of 36 C/SCA/15676/2014 ORDER Incidentally, it is required to be mentioned that an Award came to be passed on 24th October 1977 in Conciliation Case No. 17 of 1977 wherein it is provided that the pay-scales which would be made applicable to the employees of the State Government would also automatically apply to the employees of Nagarpalika and such award is still in existence, and therefore, they need to be paid the benefits of the recommendations made by the Fifth Pay Commission as the same have been made applicable to the employees of the State. Reliance is placed on the decision of this Court rendered in Special Civil Application No. 11863 of 2008 decided on 2nd July 2009, wherein the Court has held and observed as under :-

"In this petition, the petitioner has prayed for a writ of certiorari to quash and set aside the impugned orders of the Director of Municipalities and also for direction to the respondent no. 4 to forthwith pay salary to the employees of Limbdi Municipality as per the recommendations of Fifth Pay Commission. Collector has taken the view that the issue is to be finally decided by the Government.

Under the circumstances, we deem it appropriate that the writ petition be disposed of with a direction to the Government to take final decision on the grievances raised by the employees of the Limbdi Municipality regarding their salary as per the recommendations of Fifth Pay Commission. Government will take appropriate decision in accordance with law in consultation with the Municipality, Director of Municipalities, District Collector and also employees' association and the Page 3 of 18 HC-NIC Page 3 of 36 Created On Sat Jan 09 02:37:22 IST 2016

3 of 36 C/SCA/15676/2014 ORDER petitioners.

With above direction, without expressing any opinion on merits of the case, this petition is disposed of. It would be appropriate for the Government to take final decision within three months from the date of receipt of this order."

This Court has directed the State Government to take a final decision on the grievances raised by the employees of Limbdi Municipality regarding their salary to be paid to the employees, as per the recommendations made by the Fifth Pay Commission. The same was to be done in consultation with the Municipality concerned, Director of Municipalities, District Collector and also Employees' Association.

As their grievance have not been redressed, they preferred Misc. Civil Application No. 821 of 2013. Pending the said application, the State was directed to take final decision with reference to the Order dated 2nd July 2009 and the order of 21st June 2013 is lamented where the authority withdrew the benefits of Fifth Pay Commission.

Aggrieved petitioners challenged the said Order dated 21st June 20123 by preferring Special Civil Application No. 12112 of 2013 and also sought a declaration that Sections 275, 258 & 260 of the Gujarat Page 4 of 18 HC-NIC Page 4 of 36 Created On Sat Jan 09 02:37:22 IST 2016 4 of 36 C/SCA/15676/2014 ORDER Municipalities Act,1963 to be held ultra vires the mandate of Articles 243Y & 243ZF of the Constitution of India.

Eventually, the said writ petition came to be dismissed by this Court vide Order dated 5th September 2014 wherein the Court restricted the scrutiny only on the question of vires of the provisions and had not gone into other questions; including the merits of the Circulars. And therefore, the present petition, seeking the following reliefs :

"[A] to allow and admit the present petition; [B] to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order of direction quashing and setting aside the impugned order dated 21st June 2013 and all consequential orders and further be pleased to restore to the employees of Limbdi Nagarpalika, the salary in the pay scales recommended by the Fifth Pay Commission;

[C] to direct the respondent-authorities to treat the petitioners as the employees of State Government and further be pleased to direct the respondent- authorities to grant all the benefits of employees of State Government to the petitioners; [D] to stay further implementation, operation, execution and enforcement of Order dated 21st June Page 5 of 18 HC-NIC Page 5 of 36 Created On Sat Jan 09 02:37:22 IST 2016

5 of 36 C/SCA/15676/2014 ORDER 2013 and also consequential orders and further direct the respondent-authority to pay forthwith the scale to the employees of Limbdi Nagarpalika as per the recommendations of Fifth Pay Commission pay- scale, pending hearing and final disposal of this writ petition;

[E] to grant such other and further reliefs, as may be deemed fit and equitable in the interest of justice."

Learned advocate Mr. Ashish B Desai appearing for petitioners has urged that the benefits flowing from the recommendations made by the Fifth Pay Commission, which have been made applicable to the employees of the State Government, have been denied by virtue of an Order dated 21st June 2013 which deserves to be quashed.

He has placed reliance upon the decision of this Court rendered in case of S.A Jafai & Ors. v. State of Gujarat, reported in (2011) 2 GLR 1223 to contend that the employees in the regular establishments receiving the scales of pay cannot be made to suffer on the basis of expenditure, if incurred towards daily wagers/fixed wagers/part-time employees who have not been appointed against regular posts, or after seeking the approval of the Director of Municipalities. He further urged Page 6 of 18 HC-NIC Page 6 of 36 Created On Sat Jan 09 02:37:22 IST 2016 6 of 36 C/SCA/15676/2014 ORDER that the said aspect has neither been considered by the Director of Municipalities nor by the State Government. He also placed reliance upon a decision of this Court rendered in Special Civil Application No. 12030 of 2015 which is decided along the line of decision in case of S.A Jafai & Ors. [Supra].

Learned Assistant Government Pleader Mr. Rindani appearing for the respondent-State has submitted that in the Financial Years 2010-11; 2011-2012 and 2012-2013, the expenditure of the Municipality was 55.70%; 66.80% and 64.24% respectively against its revenue income. He urged that SLP [Civil] No. 9016-9026 of 2012 are pending before the Supreme Court, and therefore, no order at this stage may be passed. He, however, fairly submitted that no order of stay is passed by the Apex Court in the said SLP. It is further his say that as to in what manner the expenditure of the Municipality is required to be calculated is provided by the Court. Thus, the actual pay and allowances of the employees working on approved set-up in the concerned financial years, when calculated if works out to be less than 48% of the total revenue income Page 7 of 18 HC-NIC Page 7 of 36 Created On Sat Jan 09 02:37:22 IST 2016 7 of 36 C/SCA/15676/2014 ORDER of the concerned Municipality, the employees would be entitled to such benefits. The Court also has been categorical as to which kind of expenditures cannot be taken into account while calculating such expenses. It is also held that the expenditure concerning those who are appointed against non-sanctioned posts or posts which are ad hoc or part-time or if appointed without approval of the Director of Municipalities, cannot be regarded.

Learned advocate Mr. NK Majmudar appearing for the respondent no. 4 submits that if necessary directions are issued, the respondent can forward the proposal to the Director of Municipalities through the Collector within a fortnight from the date of receipt of copy of the order. He does not dispute entitlement of the employees, however, the factum of establishment expenditure being less than 48% during the foregone years, according to him, deserves consideration.

Having thus heard both the sides and having considered the decision rendered in S.A Jafai & Ors.

[Supra] and the one which is rendered in cases of Rajpipla Nagarpalika Karmachari Mandal & Ors. v.

Page 8 of 18

HC-NIC Page 8 of 36 Created On Sat Jan 09 02:37:22 IST 2016 8 of 36 C/SCA/15676/2014 ORDER State of Gujarat [SCA No. 12030 of 2013 :: Decided on 9th December 2015 and in case of President-Nagar Godhra Karmachari Mandal v. State of Gujarat & Ors. [S.C.A No. 11629/2013 :: Decided on 5th November 2015] wherein, following the decision in case of S.A Jafai & Ors. [Supra], this Court permitted the Municipality to take stock of the situation and if the expenses does not exceed 48% of the total income of the Nagarpalika, the employees of the Rajpipla Nagarpalika were extended the benefits of Sixth Pay Commission recommendations.

Apt it would be, to reproduce relevant observations and findings given in the decision rendered in case of President-Nagar Godhra Karmachari Mandal v. State of Gujarat & Ors. [Supra], which reads thus-

"8. Having thus heard both the sides, and having also considered the material on record, firstly it is required to be noted that the issue is no longer res integra. This court in S.A. Jafai (supra) has considered and determined the matter in the following manner :

13. For determination of the issue, it is not only pertinent to notice the relevant provisions of law relating to the officers, employees and other staff of the Municipalities, but also the actual expenditure as being made by the Bagasara Municipality, as discussed hereunder.

OFFICERS AND SERVANTS UNDER THE ACT AND Page 9 of 18 HC-NIC Page 9 of 36 Created On Sat Jan 09 02:37:22 IST 2016 9 of 36 C/SCA/15676/2014 ORDER WORKING UNDER THE MUNICIPALITY

14. Under Section 47 of the Gujarat Municipalities Act, 1963, there shall be a Chief Officer appointed by the State Government and the Municipality, with the previous sanction of the Director, if so required by the State Government, can create posts of (i) a Municipal Engineer, [ii] Water Works Engineer, [iii] a Municipal Health Officer, [iv] a Municipal Auditor, [iv] Municipal Education Officer, and [v] any other officers as may be designated by the State.

Under sub-section (3) of Section 47, subject to the provisions of Section 47A, the recruitment and conditions of service of the officers referred to in sub-sections (1) and (2) are to be filled up by the Municipalities.

Under Section 47A, the State Government can constitute Municipal Services in respect of all Municipalities comprising Chief Officers of such Municipalities and all or any other officers referred in sub-section (2) of Section 47 and such classes, cadres and posts, (including grades and posts) and specify the initial strength of officers in each such class or cadre. The State Government may make Rules for regulating the mode of recruitment, can provide terminal benefits, compensation, pension, gratuity, etc. and the conditions of service of persons appointed to, or absorbed to, such Municipal Services.

Under Section 256 of the Municipalities Act, for the purpose of enabling the Municipalities to discharge their functions and duties, the State Government can depute the officers of All India Service and the officers of the State Service, except Class IV employees. The pay and allowances of such officers of the State posted in the Municipalities are to be paid by the Municipalities from their fund.

Under Section 260 of the Municipalities Act, the Director is empowered to prevent extravagance in the employment of establishment of the Municipality by reducing the number of persons and remuneration of such persons or person. This provision being the relevant for the present case is quoted hereunder :-

Page 10 of 18

HC-NIC Page 10 of 36 Created On Sat Jan 09 02:37:22 IST 2016 10 of 36 C/SCA/15676/2014 ORDER

260. Power of Director to prevent extravagance in the employment of establishment. - If in the opinion of the Director the number of persons who are employed by a municipality as officers or servants, or whom a municipality proposed to employ or the remuneration assigned by the municipality to those persons or to any particular person is excessive the municipality shall, on the requirement of the Director reduce the number of the said persons or the remuneration of the said person or persons :

Provided that the municipality may appeal against any such requirement to the State Government whose decision shall be conclusive.

15. From the aforesaid provisions, it will be evident that except for the following officers and servants, no other officers can be employed by any of the Municipalities :-

(i) a Municipal Engineer,

(ii) a Water Works Engineer,

(iii) a Municipal Health Officer,

(iv) a Municipal Auditor, (v ) a Municipal Education Officer, and

(vi) any other officers as may be designated by the State Government.

The power of appointment to the posts aforesaid, except the posts of the Chief Officer of the Municipality, is vested with the Municipality. Their conditions of service under Section 47A shall be fixed by the State Government.

16. In view of the aforesaid provisions of law, it will be evident that except the State Government, no other officer including the Director of Municipalities is empowered to decide the conditions of service of a person appointed to, or absorbed to, the Municipal services. Therefore, the sales of pay of such municipal employees, one of the conditions of service, can be fixed only by the State Government and not by the Regional Director of Municipalities.

EXPENSES AS INCURRED BY BAGASARA MUNICIPALITY AND NOTICED BY THE REGIONAL Page 11 of 18 HC-NIC Page 11 of 36 Created On Sat Jan 09 02:37:22 IST 2016 11 of 36 C/SCA/15676/2014 ORDER DIRECTOR

17. From the impugned order dated 9.10.2003, the following facts relating to income and expenditure appear :-

(i) Annual income of the Municipality Rs.1,43,64,065/-

(ii) Outstanding dues Rs.1,79,24,592/- +Rs. 32,66,400/- = Rs.2,11,90,992/-

(iii) There are arrears of GEB bills on which the Municipality has to pay interest @ 14%.

(iv) Demand of taxes of the Municipality during the year 2002-2003 : Rs. 28,67,965/-

(v) Against the aforesaid amount, recovery is Rs.6,57,177/- and there is only 22.91% recovery against 100% Expenditure of the Municipality towards pay and allowances during the year 2002-03

(i) Pay and allowances of the employees on approved set-up Rs. 41,29,978/-;

(ii) Pay and allowances of those who are not working on approved set up but appointed by the approval of Director Rs.58,107/-

(iii) Pay and allowances of those who are not working on approved set up and also not appointed by approval of the Director : Rs. 29,01,293/-

(iv) Pay and remuneration to all daily wagers Rs 30,14,184/-

(v) Expenditure of the fixed pay employees : Nil

(vi) Expenses towards the contract employees Rs.3,13,539/-

Total establishment expenses Rs. 1,04,17,100/- Therefore, the pay and salary expenditure on the establishment for the year 2002-03 is Rs.72.52%.

The aforesaid facts have been noticed by the Regional Director of Municipalities, Rajkot, who exercised powers under Section 260 of the Municipalities Act and cancelled the notification by which the pay and allowances were granted to the regular employees on the establishment of the Bagasara Municipality on the basis of the recommendations of the 5th Pay Commission at par with the State Government employees.

18. The State is empowered to determine the conditions of service of Municipal employees under Section 47A. Revision of pay as per the recommendations of the 5 th Pay Commission was Page 12 of 18 HC-NIC Page 12 of 36 Created On Sat Jan 09 02:37:22 IST 2016 12 of 36 C/SCA/15676/2014 ORDER decided by the Resolution dated 2.6.1998. Therein, the only condition imposed was restriction of expenditure of the establishment of employees within 45% of the total income of the Municipality. Thus, it will be evident that the said restriction is limited to the salary to the employees of the Municipalities i.e. those appointed against the posts in accordance with law.

From the aforesaid Resolution dated 2.6.1998 if read with Sections 47 and 47A of the Municipalities Act, 1963, it will be clear that the same do not relate to any workmen engaged on daily wage or fixed wage basis for any specific scheme. It does not relate to any person who has not been engaged against a post as created under the Act or the persons who have been engaged on contract basis.

19. The Director has not been vested with the power to appoint or approve the appointment made under the Municipalities Act, 1963. Such power is vested with the Municipality under Section 47(2)(3) of the Act.

20. We, therefore, hold that any person engaged on daily wage or fixed wage or contract basis, for any one or other nature of job of the Municipality, do not fall within the meaning of employees in establishment of the Municipality. The direction of the learned Single Judge as given by earlier order dated 3.10.2002 in Special Civil Application No. 8434 of 2002 , at para 10(ii), directing the Director to consider, inter alia, the salary and allowances paid to the daily wage employees and that those not on the sanctioned posts, but appointed with the sanction of the Director of Municipalities, is contrary to the provisions of law.

21. The establishment of the Municipality has a sanctioned strength of posts created under the Act or in accordance with the Act. The appointment against non-existent posts is not only illegal being violative of Article 14 of the Constitution, but also ab-initio void. Therefore, the question of approval of the employees working against non-existent posts, does not arise. Those who have appointed without following any procedure, their appointments were also illegal being violative of Articles 14 and 16 of the Constitution of India. Therefore, in case if a Page 13 of 18 HC-NIC Page 13 of 36 Created On Sat Jan 09 02:37:22 IST 2016 13 of 36 C/SCA/15676/2014 ORDER persons is found to have been appointed without following the procedure against a non-existing vacancy, such appointment cannot be taken into consideration as also engagement of daily wage, fixed wage or contract worker for computing the expenditure of establishment of the employees to determine whether it is within the limit of 45% of the total income of the Municipality.

Section 260 of the Municipalities Act, 1963 empowers the Director of Municipalities to reduce the number of persons or remuneration of any person or persons in the employment of the establishment. No prescription has been made thereunder to decide the same taking into consideration the total income of the Municipality and the expenditure incurred towards the salary of employees of the establishment of the Municipality. It is only by Resolution dated 2.6.1998, while granting the revised scale as per the recommendations of the 5th Pay Commission to the regular employees, the limitation of 45% of total income of the Municipality has been prescribed to be determined on the basis of the expenditure of salary of regular employees of the establishment. Such power under Section 260 is subject to the following conditions:-

(i) In case the number of regular employees against the post is excessive;

(ii) If the Municipality proposes to appointment excessive employee;

(iii) If the remuneration assigned by the Municipality is excessive to a group of persons or any individual.

If any of the aforesaid contingencies arises, the Director under Section 260 may pass the following orders :-

             (i)     reduce the number of employees;

             (ii)    reduce the remuneration of an individual;

(iii) reduce the remuneration of a group of employees.

From the aforesaid provisions, it is clear that depending on the exigencies and circumstances, the Director is empowered under Section 260 to take recourse of one or other measures, as discussed Page 14 of 18 HC-NIC Page 14 of 36 Created On Sat Jan 09 02:37:22 IST 2016 14 of 36 C/SCA/15676/2014 ORDER hereinabove.

23. In the present case, the question arises whether the Director of Municipalities has applied mind while exercising power under Section 260 and before passing the impugned order.

24. The order dated 9.11.1998 issued by the Regional Director of Municipalities, Rajkot allowing benefits of revision of pay as per the recommendations of the 5th Pay Commission, as per Government Resolution dated 2.6.1998 shows that the administrative exigency towards employees' salary was within the limit of 45% of the income of the Municipality.

25. There is nothing on record to suggest that the income of the Municipality subsequently gone down and therefore, the administrative expenditure of salary of the establishment of the Municipality has gone beyond the limit of 45% of the total income of the Municipality. On the contrary, from the impugned order dated 9.10.2003, it will be evident that while computing the expenditure of the Municipality towards pay and allowance to the employees, not only the pay and allowances of the employees on the sanctioned set up has been taken, which has not been correctly taken, but the Director also took into consideration the pay and allowances and wages paid to the employees of the other groups for the financial year 2002-03 as shown hereunder :

(i) Pay & allowances of those who are not working on approved set up, but appointed by approval of the Director = Rs. 58,107/=

(ii) Pay and allowances of those who are not working on approved set up and not appointed by the approval of the Director = Rs. 29,01,292/=

(iii) Pay and remuneration of daily wagers = Rs.

30,14,184/-

Total= Rs. 59,73,583/-

Therefore, it will be evident that the salary expenditure has been shown as 72.52% for the financial year 2002-03 as wrongly inflated by adding the salary and wages of employees paid to the posts which are not in the establishment of the Municipality, and who have been appointed without Page 15 of 18 HC-NIC Page 15 of 36 Created On Sat Jan 09 02:37:22 IST 2016 15 of 36 C/SCA/15676/2014 ORDER any post, with approval of the Director or without approval of the Director. The wages of daily wage and contract employees who may have been engaged in terms with one or other scheme has also been reflected as expenditure of the establishment though such engagement under a scheme is not in the establishment having fixed number of posts.

26. The actual pay and allowances of the employees on the approved set up for the financial year 2002-03 is Rs.41,29,978, which if calculated, comes to much less than 45% of the total income of the Municipality, as shown in the expenses incurred by the Municipality and the details as quoted at para 17 hereinabove.

27. Non application of mind on the part of the Director of the Municipalities is evident who has failed to notice the aforesaid fact and, thereby, instead of taking recourse of reducing the number of persons, who have been illegally appointed without any post or engaged in absence of any scheme, which is one of the measures which could have been taken under Section 260 of the Act, and have reduced the scale of pay of regular employees who have been appointed against sanctioned posts and in accordance with law. Thus, without application of mind, scales of pay of regular employees have been reduced, who were rightly provided with the revised scale of pay and, thereby, given advantage to the illegal appointees in violation of Article 14 of the Constitution. Such illegal action on the part of the Director being passed without application of mind and being violative of Article 14 of the Constitution cannot be upheld and, thereby, we set aside the impugned decision dated 9.10.2003 passed by the Regional Director of Municipalities, Rajkot and the orders passed by the State approving such illegal order.

The respondents are directed to pay the employees of regular establishment, who have been appointed against sanctioned posts, revised scale of pay as per the recommendations of the 5 th Pay Commission, granted by resolution dated 2.6.1998 and given effect vide letter dated 9.11.1998 and the arrears of salary in the said scale within two months from the date of receipt/production of a copy of this judgment. They be also provided such revised scale Page 16 of 18 HC-NIC Page 16 of 36 Created On Sat Jan 09 02:37:22 IST 2016 16 of 36 C/SCA/15676/2014 ORDER of pay with immediate effect. But this order shall not stand in the way of the Director of Municipalities to pass appropriate order under Section 260 with respect to those appointed against no post or unsanctioned posts and/or not appointed by the approval of the Director. If there is any scheme specifically framed by the State Government for the Municipalities or by the Municipalities and for giving effect to the same, if daily wage or contract employees are required, they may be paid wages under the scheme, but their salary and wages cannot be clubbed together with the salary to which the employees of regular establishment."

Resultantly, this writ petition is also allowed. The petitioners are entitled to receive the benefits of Fifth Pay Commission recommendations; subject to establishment expenditure of the respondent no.1-Limbdi Nagarpalika not exceeding 48% in a particular year, as provided in the decision rendered in case of S.A Jafai & Ors. v. State of Gujarat & Ors. [Supra]. Once such condition is fulfilled, the arrears of salary shall be paid to the petitioners within twelve weeks from the date of passing of such order.

Respondent Limbdi Nagarpalika shall ensure that the proposal for extending the benefits of Fifth Pay Commission recommendations shall be forwarded to the Regional Director of Municipalities, through proper channel, within a fortnight of the receipt of copy of this order, which shall be considered by the concerned Page 17 of 18 HC-NIC Page 17 of 36 Created On Sat Jan 09 02:37:22 IST 2016 17 of 36 C/SCA/15676/2014 ORDER authority in accordance with law as expeditiously as possible.

Notice discharged with no order as to costs. Direct service is permitted.

{Ms. Sonia Gokani, J.} Prakash* Page 18 of 18 HC-NIC Page 18 of 36 Created On Sat Jan 09 02:37:22 IST 2016 18 of 36 C/SCA/15676/2014 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 15676 of 2014 ============================================================= CHETAN ARVINDBHAI SHAH & 105....Petitioner(s) Versus STATE OF GUJARAT & 3....Respondent(s) ============================================================= Appearance:

Mr ASHISH B DESAI, ADVOCATE for the Petitioner(s) No. 1 - 106 Mr RASHESH RINDANI, AGP for the Respondent(s) No. 1 Mr SP MAJMUDAR, ADVOCATE for the Respondent(s) No. 4 NOTICE SERVED BY DS for the Respondent(s) No. 1 - 3 ============================================================= CORAM: HONOURABLE Ms. JUSTICE SONIA GOKANI 23rd December 2015 ORAL ORDER Petitioners herein are seeking the benefit of Fifth Pay Commission recommendations from the respondent no.4- Limbdi Nagarpalika with all consequential reliefs. It is the case of the petitioners, who are 106 in number, that they are serving the respondent no.4-Nagarpalika on different posts. It is their say that the respondent no.1 had passed a Resolution dated 2nd June 1998 to apply the pay-scales recommended by the Fifth Pay Commission to the employees of Nagar Palika, pursuant to which, the Page 1 of 18 HC-NIC Page 19 of 36 Created On Sat Jan 09 02:37:22 IST 2016

19 of 36 C/SCA/15676/2014 ORDER respondent no. 4 vide its Resolution No. 10/1985 passed by the General Board on 31st October 1998 accepted the recommendations made by the Fifth Pay Commission for its employees; followed by another Resolution No. 10/1986 constituting a committee for proper implementation of the recommendations. It is further the say of the petitioners that the General Board of the Limbdi Nagarpalika vide its Resolution No. 7/155 dated 30th October 1999 resolved to provide the pay scales recommended by the Fifth Pay Commission to all its employees and an Office Order dated 20th September 2000 also came to be issued by the President of the Nagarpalika in that regard.

Page 2 of 18

HC-NIC Page 20 of 36 Created On Sat Jan 09 02:37:22 IST 2016 20 of 36 C/SCA/15676/2014 ORDER Incidentally, it is required to be mentioned that an Award came to be passed on 24th October 1977 in Conciliation Case No. 17 of 1977 wherein it is provided that the pay-scales which would be made applicable to the employees of the State Government would also automatically apply to the employees of Nagarpalika and such award is still in existence, and therefore, they need to be paid the benefits of the recommendations made by the Fifth Pay Commission as the same have been made applicable to the employees of the State. Reliance is placed on the decision of this Court rendered in Special Civil Application No. 11863 of 2008 decided on 2nd July 2009, wherein the Court has held and observed as under :-

"In this petition, the petitioner has prayed for a writ of certiorari to quash and set aside the impugned orders of the Director of Municipalities and also for direction to the respondent no. 4 to forthwith pay salary to the employees of Limbdi Municipality as per the recommendations of Fifth Pay Commission. Collector has taken the view that the issue is to be finally decided by the Government.

Under the circumstances, we deem it appropriate that the writ petition be disposed of with a direction to the Government to take final decision on the grievances raised by the employees of the Limbdi Municipality regarding their salary as per the recommendations of Fifth Pay Commission. Government will take appropriate decision in accordance with law in consultation with the Municipality, Director of Municipalities, District Collector and also employees' association and the Page 3 of 18 HC-NIC Page 21 of 36 Created On Sat Jan 09 02:37:22 IST 2016

21 of 36 C/SCA/15676/2014 ORDER petitioners.

Aggrieved petitioners challenged the said Order dated 21st June 20123 by preferring Special Civil Application No. 12112 of 2013 and also sought a declaration that Sections 275, 258 & 260 of the Gujarat Page 4 of 18 HC-NIC Page 22 of 36 Created On Sat Jan 09 02:37:22 IST 2016 22 of 36 C/SCA/15676/2014 ORDER Municipalities Act,1963 to be held ultra vires the mandate of Articles 243Y & 243ZF of the Constitution of India.

"[A] to allow and admit the present petition; [B] to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order of direction quashing and setting aside the impugned order dated 21st June 2013 and all consequential orders and further be pleased to restore to the employees of Limbdi Nagarpalika, the salary in the pay scales recommended by the Fifth Pay Commission;

[C] to direct the respondent-authorities to treat the petitioners as the employees of State Government and further be pleased to direct the respondent- authorities to grant all the benefits of employees of State Government to the petitioners; [D] to stay further implementation, operation, execution and enforcement of Order dated 21st June Page 5 of 18 HC-NIC Page 23 of 36 Created On Sat Jan 09 02:37:22 IST 2016

23 of 36 C/SCA/15676/2014 ORDER 2013 and also consequential orders and further direct the respondent-authority to pay forthwith the scale to the employees of Limbdi Nagarpalika as per the recommendations of Fifth Pay Commission pay- scale, pending hearing and final disposal of this writ petition;

[E] to grant such other and further reliefs, as may be deemed fit and equitable in the interest of justice."

He has placed reliance upon the decision of this Court rendered in case of S.A Jafai & Ors. v. State of Gujarat, reported in (2011) 2 GLR 1223 to contend that the employees in the regular establishments receiving the scales of pay cannot be made to suffer on the basis of expenditure, if incurred towards daily wagers/fixed wagers/part-time employees who have not been appointed against regular posts, or after seeking the approval of the Director of Municipalities. He further urged Page 6 of 18 HC-NIC Page 24 of 36 Created On Sat Jan 09 02:37:22 IST 2016 24 of 36 C/SCA/15676/2014 ORDER that the said aspect has neither been considered by the Director of Municipalities nor by the State Government. He also placed reliance upon a decision of this Court rendered in Special Civil Application No. 12030 of 2015 which is decided along the line of decision in case of S.A Jafai & Ors. [Supra].

Learned Assistant Government Pleader Mr. Rindani appearing for the respondent-State has submitted that in the Financial Years 2010-11; 2011-2012 and 2012-2013, the expenditure of the Municipality was 55.70%; 66.80% and 64.24% respectively against its revenue income. He urged that SLP [Civil] No. 9016-9026 of 2012 are pending before the Supreme Court, and therefore, no order at this stage may be passed. He, however, fairly submitted that no order of stay is passed by the Apex Court in the said SLP. It is further his say that as to in what manner the expenditure of the Municipality is required to be calculated is provided by the Court. Thus, the actual pay and allowances of the employees working on approved set-up in the concerned financial years, when calculated if works out to be less than 48% of the total revenue income Page 7 of 18 HC-NIC Page 25 of 36 Created On Sat Jan 09 02:37:22 IST 2016 25 of 36 C/SCA/15676/2014 ORDER of the concerned Municipality, the employees would be entitled to such benefits. The Court also has been categorical as to which kind of expenditures cannot be taken into account while calculating such expenses. It is also held that the expenditure concerning those who are appointed against non-sanctioned posts or posts which are ad hoc or part-time or if appointed without approval of the Director of Municipalities, cannot be regarded.

Learned advocate Mr. SP Majmudar appearing for the respondent no. 4 submits that if necessary directions are issued, the respondent can forward the proposal to the Director of Municipalities through the Collector within a fortnight from the date of receipt of copy of the order. He does not dispute entitlement of the employees, however, the factum of establishment expenditure being less than 48% during the foregone years, according to him, deserves consideration.

Having thus heard both the sides and having considered the decision rendered in S.A Jafai & Ors.

[Supra] and the one which is rendered in cases of Rajpipla Nagarpalika Karmachari Mandal & Ors. v.

Page 8 of 18

HC-NIC Page 26 of 36 Created On Sat Jan 09 02:37:22 IST 2016 26 of 36 C/SCA/15676/2014 ORDER State of Gujarat [SCA No. 12030 of 2013 :: Decided on 9th December 2015 and in case of President-Nagar Godhra Karmachari Mandal v. State of Gujarat & Ors. [S.C.A No. 11629/2013 :: Decided on 5th November 2015] wherein, following the decision in case of S.A Jafai & Ors. [Supra], this Court permitted the Municipality to take stock of the situation and if the expenses does not exceed 48% of the total income of the Nagarpalika, the employees of the Rajpipla Nagarpalika were extended the benefits of Sixth Pay Commission recommendations.

"8. Having thus heard both the sides, and having also considered the material on record, firstly it is required to be noted that the issue is no longer res integra. This court in S.A. Jafai (supra) has considered and determined the matter in the following manner :

13. For determination of the issue, it is not only pertinent to notice the relevant provisions of law relating to the officers, employees and other staff of the Municipalities, but also the actual expenditure as being made by the Bagasara Municipality, as discussed hereunder.

OFFICERS AND SERVANTS UNDER THE ACT AND Page 9 of 18 HC-NIC Page 27 of 36 Created On Sat Jan 09 02:37:22 IST 2016 27 of 36 C/SCA/15676/2014 ORDER WORKING UNDER THE MUNICIPALITY

Page 10 of 18

HC-NIC Page 28 of 36 Created On Sat Jan 09 02:37:22 IST 2016 28 of 36 C/SCA/15676/2014 ORDER

260. Power of Director to prevent extravagance in the employment of establishment. - If in the opinion of the Director the number of persons who are employed by a municipality as officers or servants, or whom a municipality proposed to employ or the remuneration assigned by the municipality to those persons or to any particular person is excessive the municipality shall, on the requirement of the Director reduce the number of the said persons or the remuneration of the said person or persons :

Provided that the municipality may appeal against any such requirement to the State Government whose decision shall be conclusive.

15. From the aforesaid provisions, it will be evident that except for the following officers and servants, no other officers can be employed by any of the Municipalities :-

(i) a Municipal Engineer,

(ii) a Water Works Engineer,

(iii) a Municipal Health Officer,

(iv) a Municipal Auditor, (v ) a Municipal Education Officer, and

(vi) any other officers as may be designated by the State Government.

EXPENSES AS INCURRED BY BAGASARA MUNICIPALITY AND NOTICED BY THE REGIONAL Page 11 of 18 HC-NIC Page 29 of 36 Created On Sat Jan 09 02:37:22 IST 2016 29 of 36 C/SCA/15676/2014 ORDER DIRECTOR

17. From the impugned order dated 9.10.2003, the following facts relating to income and expenditure appear :-

(i) Annual income of the Municipality Rs.1,43,64,065/-

(ii) Outstanding dues Rs.1,79,24,592/- +Rs. 32,66,400/- = Rs.2,11,90,992/-

(iii) There are arrears of GEB bills on which the Municipality has to pay interest @ 14%.

(iv) Demand of taxes of the Municipality during the year 2002-2003 : Rs. 28,67,965/-

(v) Against the aforesaid amount, recovery is Rs.6,57,177/- and there is only 22.91% recovery against 100% Expenditure of the Municipality towards pay and allowances during the year 2002-03

(i) Pay and allowances of the employees on approved set-up Rs. 41,29,978/-;

(ii) Pay and allowances of those who are not working on approved set up but appointed by the approval of Director Rs.58,107/-

(iii) Pay and allowances of those who are not working on approved set up and also not appointed by approval of the Director : Rs. 29,01,293/-

(iv) Pay and remuneration to all daily wagers Rs 30,14,184/-

(v) Expenditure of the fixed pay employees : Nil

(vi) Expenses towards the contract employees Rs.3,13,539/-

Total establishment expenses Rs. 1,04,17,100/- Therefore, the pay and salary expenditure on the establishment for the year 2002-03 is Rs.72.52%.

18. The State is empowered to determine the conditions of service of Municipal employees under Section 47A. Revision of pay as per the recommendations of the 5 th Pay Commission was Page 12 of 18 HC-NIC Page 30 of 36 Created On Sat Jan 09 02:37:22 IST 2016 30 of 36 C/SCA/15676/2014 ORDER decided by the Resolution dated 2.6.1998. Therein, the only condition imposed was restriction of expenditure of the establishment of employees within 45% of the total income of the Municipality. Thus, it will be evident that the said restriction is limited to the salary to the employees of the Municipalities i.e. those appointed against the posts in accordance with law.

21. The establishment of the Municipality has a sanctioned strength of posts created under the Act or in accordance with the Act. The appointment against non-existent posts is not only illegal being violative of Article 14 of the Constitution, but also ab-initio void. Therefore, the question of approval of the employees working against non-existent posts, does not arise. Those who have appointed without following any procedure, their appointments were also illegal being violative of Articles 14 and 16 of the Constitution of India. Therefore, in case if a Page 13 of 18 HC-NIC Page 31 of 36 Created On Sat Jan 09 02:37:22 IST 2016 31 of 36 C/SCA/15676/2014 ORDER persons is found to have been appointed without following the procedure against a non-existing vacancy, such appointment cannot be taken into consideration as also engagement of daily wage, fixed wage or contract worker for computing the expenditure of establishment of the employees to determine whether it is within the limit of 45% of the total income of the Municipality.

(i) In case the number of regular employees against the post is excessive;

(ii) If the Municipality proposes to appointment excessive employee;

(iii) If the remuneration assigned by the Municipality is excessive to a group of persons or any individual.

If any of the aforesaid contingencies arises, the Director under Section 260 may pass the following orders :-

             (i)     reduce the number of employees;

             (ii)    reduce the remuneration of an individual;

(iii) reduce the remuneration of a group of employees.

From the aforesaid provisions, it is clear that depending on the exigencies and circumstances, the Director is empowered under Section 260 to take recourse of one or other measures, as discussed Page 14 of 18 HC-NIC Page 32 of 36 Created On Sat Jan 09 02:37:22 IST 2016 32 of 36 C/SCA/15676/2014 ORDER hereinabove.

23. In the present case, the question arises whether the Director of Municipalities has applied mind while exercising power under Section 260 and before passing the impugned order.

(i) Pay & allowances of those who are not working on approved set up, but appointed by approval of the Director = Rs. 58,107/=;

(ii) Pay and allowances of those who are not working on approved set up and not appointed by the approval of the Director = Rs. 29,01,292/=;

(iii) Pay and remuneration of daily wagers = Rs.

30,14,184/-

Total= Rs. 59,73,583/-

Therefore, it will be evident that the salary expenditure has been shown as 72.52% for the financial year 2002-03 as wrongly inflated by adding the salary and wages of employees paid to the posts which are not in the establishment of the Municipality, and who have been appointed without Page 15 of 18 HC-NIC Page 33 of 36 Created On Sat Jan 09 02:37:22 IST 2016 33 of 36 C/SCA/15676/2014 ORDER any post, with approval of the Director or without approval of the Director. The wages of daily wage and contract employees who may have been engaged in terms with one or other scheme has also been reflected as expenditure of the establishment though such engagement under a scheme is not in the establishment having fixed number of posts.

The respondents are directed to pay the employees of regular establishment, who have been appointed against sanctioned posts, revised scale of pay as per the recommendations of the 5 th Pay Commission, granted by resolution dated 2.6.1998 and given effect vide letter dated 9.11.1998 and the arrears of salary in the said scale within two months from the date of receipt/production of a copy of this judgment. They be also provided such revised scale Page 16 of 18 HC-NIC Page 34 of 36 Created On Sat Jan 09 02:37:22 IST 2016 34 of 36 C/SCA/15676/2014 ORDER of pay with immediate effect. But this order shall not stand in the way of the Director of Municipalities to pass appropriate order under Section 260 with respect to those appointed against no post or unsanctioned posts and/or not appointed by the approval of the Director. If there is any scheme specifically framed by the State Government for the Municipalities or by the Municipalities and for giving effect to the same, if daily wage or contract employees are required, they may be paid wages under the scheme, but their salary and wages cannot be clubbed together with the salary to which the employees of regular establishment."

Respondent Limbdi Nagarpalika shall ensure that the proposal for extending the benefits of Fifth Pay Commission recommendations shall be forwarded to the Regional Director of Municipalities, through proper channel, within a fortnight of the receipt of copy of this order, which shall be considered by the concerned Page 17 of 18 HC-NIC Page 35 of 36 Created On Sat Jan 09 02:37:22 IST 2016 35 of 36 C/SCA/15676/2014 ORDER authority in accordance with law as expeditiously as possible.

Notice discharged with no order as to costs. Direct service is permitted.

{Ms. Sonia Gokani, J.} Prakash* Page 18 of 18 HC-NIC Page 36 of 36 Created On Sat Jan 09 02:37:22 IST 2016 36 of 36

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