Vaghari Dahyabhai Keshavlal vs State Of Gujarat & 2 on 15 July, 2016

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Gujarat High Court

Vaghari Dahyabhai Keshavlal vs State Of Gujarat & 2 on 15 July, 2016

HC-NIC Page 1 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT By this writ-application under Article 226 of the Constitution of India, the petitioners, employees of the Mansa Nagarpalika, have prayed for the following reliefs :

"15.....a writ of mandamus and/or a writ of prohibition or any other appropriate writ, order or direction may kindly be issued under Article 226 of the Constitution of India, and further (A) Be pleased to quash and set aside the part of the order dated 15.9.2001 at Annexure-A passed by the Director of Municipalities, by which, he has deprived the petitioners from the benefits of arrears of revised pay scales of the 5th Pay Commission from 1.1.1996 to 31.8.2001 as stated in condition no.13(A) of in the said order.

(B) Be pleased to direct the respondents to pay immediately the arrears of revised pay scale of 5th Pay Commission from 1.1.1996 to 31.8.2001 to the petitioners forthwith.

16....Pending the final hearing and disposal of this petition, Your Lordships will be pleased to :-

(A) direct the respondents to implement fully the recommendations of the 5th Pay Commission including the arrears of revised pay scale from 1.1.1996 to 31.8.2001.

(B) Pass such other and further orders as may deem fit in the interest of justice."

The facts of this case may be summarised as under :

The petitioners are serving with the respondent no.3 - Mansa Nagarpalika. According to them, right from the first pay commission of 1969 till the fifth pay commission, their pay- scales have been revised. It is their case that the Municipality passed a resolution to implement the recommendations of the Page 2 of 16 HC-NIC Page 2 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT fifth pay commission. The Municipality also gave an undertaking to the Director of Municipalities, State of Gujarat, that for the purpose of implementing the fifth pay commission recommendations, it would not be requesting the State Government for any additional grant in that regard. It is also the case of the petitioners that the Collector, Gandhinagar, also recommended for the grant of the benefits of the fifth pay commission. Ultimately, the proposal forwarded by the Nagarpalika as well as the Collector was looked into by the Director, and by order dated 16th September 2001, sanctioned the proposal subject to certain terms and conditions.

The petitioners are dissatisfied with the condition no.13(A), which provides that the difference of salary for the period between 1.1.1996 and 31.8.2001 shall not be paid. The requisite amount towards the revision in accordance with the fifth pay commission shall be paid in cash with effect from 1.9.2001. According to the petitioners, they are entitled to receive the benefits of the fifth pay commission with effect from 1.1.1996 and the cutoff date which has been provided i.e. 1.9.2001 could be termed as irrational and arbitrary.

Mr.J.M.Patel, the learned counsel appearing for the petitioners, vehemently submitted that the impugned order dated 16th September 2001 in so far as it provides a cutoff date could be termed as arbitrary and erroneous. Mr.Patel submits that the Director of Municipalities seems to have erroneously exercised his power to prescribe such a condition under Section 260 of the Gujarat Municipalities Act, 1963.

Mr.Patel would submit that Section 260 of the Act speaks of the power of the Director to prevent extravagance in the Page 3 of 16 HC-NIC Page 3 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT employment and it has nothing to do so far as the grant of the benefits of the pay commission is concerned.

Mr.Patel would submit that when the Nagarpalika itself made it clear that it was capable to implement the fifth pay commission recommendations and would not request the State Government to sanction any additional grant in that regard and the Collector also gave its approval, then the Director could not have imposed such an unreasonable condition, thereby depriving the petitioners of their rightful monetary claim.

Mr.Patel also pointed out that when the impugned order was passed, the overall expenses of the Nagarpalika was within the limits of 45% vis-a-vis its income as provided in the Government Resolution dated 7th November 1977.

In such circumstances referred to above, Mr.Patel prays that there being merit in this writ-application, the same may be allowed.

On the other hand, this writ-application has been vehemently opposed by the learned AGP appearing for the respondent no.2, Director of Municipalities. The learned AGP would submit that no error, not to speak of any error of law, could be said to have been committed by the Director of Municipalities in imposing such a condition. The learned AGP further provided a list of 35 employees, which is at page-61 Annexure-R to this petition, and relying on the same, he submitted that most of the employees have retired from service and are receiving the pensionary benefits in accordance with the sixth pay commission. He further pointed Page 4 of 16 HC-NIC Page 4 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT out that those who are in service are receiving salary in accordance with the sixth pay commission.

The learned AGP would submit that it is always permissible for the Director to prescribe a cutoff date for the grant of the monetary benefits keeping in mind the financial implications.

The learned AGP submitted that the power to impose such condition flows from Section 260 of the Act 1963. He prays that there being no merit in this writ-application, the same may be rejected.

Mr.G.M.Joshi, the learned counsel appearing for the Nagarpalika submitted that at the relevant point of time his client had made it clear before the authorities that it was in a position to implement the fifth pay commission recommendations, and accordingly, had forwarded the proposal after getting the prior sanction of the Collector. Mr.Joshi has pointed out the financial condition of his client as on date by filing an affidavit-in-reply duly affirmed by the Chief Officer :

"3. I respectfully submit that though the elected wing of the Municipality had taken a decision to grant with effect from 01.01.1996 and in the order dated 15.09.2001, it is recorded that the Municipality had agreed not to demand any financial assistance from the State Government. In respect of the additional financial burden, the financial condition of the Municipality at the relevant point of time was such that it was maintaining equilibrium between income and expenditure. I respectfully submit that it was in the year 2001 that octroi was abolished in principles and not in practice. It directly and adversely affected the income and in turn, financial condition of the Page 5 of 16 HC-NIC Page 5 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT Municipality. Such factor had weighed with the State Government while according permission with effect from 01.09.2001.

4. The Municipality had faced a lot of rough weather after abolition of octroi. The compensation grant was received by the Municipality in irregular manner and it never compensated the Municipality fully in respect of the income that was received either from octroi. As on date, the compensation is hardly 50% of the amount which could have been earned from octroi if it were continued. As on date, the Municipality is owning approximately Rs.2 crores to the Gujarat Water Supply and Sewerage Board which is an amount of accumulated bills of supply drinking water to the area of Mansa Municipality. It is recurring expenditure which is accumulated every month. Therefore, as on date, the Municipality is not in a position to bear additional burden of approximately Rs.10 lacs, which is required to be paid in the event, this Hon'ble Court accepting the submissions of the petitioners.

5. At this stage, it would be out of place to notice that except 5 petitioners, rest of the other petitioners have superannuated and have received their terminal benefits also. I respectfully submit that in view of this, directions to pay arrears may not be issued. At this stage, I respectfully submit that the following factors may be considered by this Hon'ble Court.

(1) The State Government has power under Section 260 to prevent extravagance in the employment of the establishment and therefore, when the Director has given permission to confer the benefits of the recommendations of 5th Pay Commission with effect from 01.09.2001, it is presumed that the Director had done so in exercise of the powers conferred on him by Sections 271 that is referred in the order and Section 260 which also confers authority and power to prevent extravagance.

(2) The resolution of the Municipality is always subject to approval by the Director as and when it involves substantial financial implications. The Director has powers under Section 260 to prevent extravagance, specifically in the matter of Page 6 of 16 HC-NIC Page 6 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT establishment and Municipality is bound by it. In the event of Municipality flouted the direction or being found to be involved in extravagance, the Director is empowered to order recovery of such amount under Section 70 of the Municipalities Act.

(3) The financial condition of the Municipality is not bad but at the same time, it is not so good to bear the additional burden of the arrears of the pay scales and terminal benefits. It already owes approximately Rs.2 crores to Gujarat Water Supply and Sewerage Board as stated above.""

He submits that at this point of time the Court may not grant any relief to the petitioners as that would cause financial burden upon the Municipality.

Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is, whether the Director of Municipalities, State of Gujarat, committed any error in prescribing the cutoff date in the impugned order so far as grant of the benefits of the fifth pay commission is concerned.

Section 271 of the Act 1963 empowers the Municipalities to make rules. Section 271(d) and Section 271(g), as relied upon, read as under :

"271. Municipalities to make rules.- A municipality shall make rules not in consistent with this Act and the rules or orders made by the State Government under this Act, and may from time to time alter or rescind them --


                     (a) xxx xxx xxx

                     (b) xxx xxx xxx

                     (c) xxx xxx xxx



                                      Page 7 of 16

HC-NIC                              Page 7 of 16     Created On Fri Jul 22 01:05:15 IST 2016
                    C/SCA/6220/2002                                                  JUDGMENT

(d) Establishment.- determining the staff of officers and servants to be employed by the municipality and their powers and duties;

(e) xxx xxx xxx

(f) xxx xxx xxx

(g) Mode of appointing, etc., municipal servants.-

determining subject to the limitations imposed by section 47 and 50 the mode and conditions of appointing, punishing, or dismissing any officer or servant; and delegating to officers designated in the rules the power to appoint, fine, reduce, suspend or dismiss any officer or servant;"

Section 260 empowers the Director to prevent extravagance in the employment of the establishment. It reads as under :

"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 proposes 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."

It is well settled principle of law that the recommendations of the Pay Commission are subject to the acceptance/rejection with modifications of the appropriate Government. It is also well settled principle of law that a policy decision of the Government can be reviewed/altered/modified by the executive instructions. It is in these circumstances that Page 8 of 16 HC-NIC Page 8 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT a policy decision cannot be challenged on the ground of estoppel. (see : K.S.Krishnaswamy v. Union of India and another, AIR 2007 SC (Supp) 1756) In the case of M.Raja v.Ceeri Educational Society, Pilani, (2006)12 SCC 636, the appellant had joined the services in the respondent - School on 30.04.1997. The Fifth Central Pay Commission revised the scale of pay with effect from 01.01.1996 pursuant whereto the appellant claimed that he was entitled to the scale of pay Rs.5500-9000, whereas he was put in the pay scale of Rs.5000-8000. The recommendations of the Fifty Central Pay Commission, however, were applied by the respondent with effect from 01.07.1999. The appellant moved the Rajasthan Non-Government Educational Institutions Tribunal, Jaipur, on the premise that the respondents were bound to protect his scale of pay as promised by the respondents. The Tribunal allowed the said application in part holding the appellant to be entitled to pay as per the recommendations of the Fifth Central Pay Commission with effect from the date of appointment and directing the respondents to calculate the amount of difference and pay the same to him within three months. A writ petition filed by the respondents there-against was dismissed by a learned Single Judge of the High Court. The respondents preferred an intra- court appeal and the Division Bench allowed the same. In such circumstances, the appellant had to move the Supreme Court.

In the aforesaid background, the Supreme Court made the following observations in para 14:

"It may be true that even the respondents expected that Page 9 of 16 HC-NIC Page 9 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT the recommendations of the Pay Commission would be implemented from April, 1997, but if for one reason or the other, the same was given effect to from 1.07.1999, a promise cannot be said to have been made out that irrespective of the implementation of the report of the Pay Commission, the appellant would be given the benefit thereof."

It is equally well settled that the financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government, at the Centre or at the State level.

In Union of India v. P.N.Menon and others, (1994)4 SCC 68, while implementing the recommendations of the Third Pay Commission with regard to the dearness pay linked to the average index level 272, which was to be counted as emoluments for pension and gratuity under the Central Civil Services (Pension) Rules, 1972, the Central Government had fixed a certain cut-off date and directed that only those officers retiring on or after the specified date were entitled to the benefits of the dearness pay being counted for the purpose of retirement benefits. This was challenged as arbitrary and violative of Article 14 of the Constitution. The Supreme Court turned down the challenge and observed: while implementing the recommendations of the Third Pay Commission with regard to dearness pay linked to average index level 272, which was to be counted as emoluments for pension and gratuity under Central Civil Services (Pension) Rules, 1972, the Central Government had fixed a certain cut-off date and directed that only officers retiring on or after the specified date were entitled to the benefits of the dearness pay being counted for the purpose of retirement benefits. This was challenged as Page 10 of 16 HC-NIC Page 10 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT arbitrary and violative of Article 14 of the Constitution. The Supreme Court turned down the challenge and observed:

"Not only in matters of revising the pensionary benefits, but even in respect of revision of scales of pay, a cut-off date on some rational or reasonable basis, has to be fixed for extending the benefits. This can be illustrated. The Government decides to revise the pay scale of its employees and fixes the 1st day of January of the next year for implementing the same or the 1st day of January of the last year. In either case, a big section of its employees are bound to miss the said revision of the scale of pay, having superannuated before that date. An employee, who has retired on 31st December of the year in question, will miss that pay scale only by a way, which may affect his pensionary benefits throughout his life. No scheme can be held to be foolproof, so as to cover and keep in view all persons who were at one time in active service. As such the concern of the court should only be, while examining any such grievance, to see, as to whether a particular date for extending a particular benefit or scheme, has been fixed, on objective and rational considerations."

In Action Committee South Eastern Railway Pensioners v. Union of India, 1991 Supp(2) SCC 544, it was held that, on merger of a part of dearness allowance as dearness pay on average price index level at 272 with reference to different pay ranges, fixing a cut-off date in such a manner was not arbitrary and the principle enunciated in D.S.Nakara v. Union of India, (1983)1 SCC 305, was not applicable. In this connection, the ratios in Krishna Kumar v. Union of India, (1990)4 SCC 207, Indian Ex-Services League v. Union of India, (1991)2 SCC 104, State Government Pensioners' Association v. State of A.P., (1986)3 SCC 501, and All India Reserve Bank Retired Officers' Association v. Union of India, 1992 Supp (1) SCC 664, are apt. In all these cases, the prescription of a cut-off date for Page 11 of 16 HC-NIC Page 11 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT implementation of such benefits was held not to be arbitrary, irrational or violative of Article 14 of the Constitution.

The importance of considering financial implications, while providing benefits for employees, has been noted by the Supreme Court in numerous judgments.

In State of Rajasthan and Anr. v. Amritlal Gandhi and Ors., AIR 1997 SC 782, the Supreme Court went so as far as to note that:

"...Financial impact of making the Regulations retrospective can be the sole consideration while fixing a cut-off date. In our opinion, it cannot be said that this cut-off date was fixed arbitrarily or without any reason. The High Court was clearly in error in allowing the writ petitions and substituting the date of 1-1-1986 for 1-1- 1990."

More recently, in T.N. Electricity Board v. R. Veerasamy and others, (1999)3 SCC 414, the Supreme Court observed that, financial constraints could be a valid ground for introducing a cut-off date while implementing a pension scheme on a revised basis. In that case, the pension scheme applied differently to persons who had retired from service before 1-7-1986, and those who were in employment on the said date. It was held that they could not be treated alike as they did not belong to one class and they formed separate classes.

In State of Punjab and Ors. v. Boota Singh and Anr., (2000)3 SCC 733, ("Boota Singh"), after considering several judgments of the Supreme Court in D.S. Nakara (supra) to K.L. Rathee v. Union of India, (1997)6 SCC 7, it was held that D.S. Page 12 of 16 HC-NIC Page 12 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT Nakara (supra) should not be interpreted to mean that the emoluments of persons who retired after a notified date holding the same status, must be treated to be the same.

In State of Punjab and Another v. J.L. Gupta and others, (2000)3 SCC 736, the views expressed in Boota Singh (supra) were reiterated, and it was held that for the grant of additional benefit, which had financial implications, the prescription of a specific future date for conferment of additional benefit, could not be considered arbitrary.

In Ramrao and Ors. v. All India Backward Class Bank Employees Welfare Association and Ors., (2004)2 SCC 76, a Division Bench of the Supreme Court said, even for the purpose of effecting promotion, the fixing of a cut-off date was neither arbitrary, unreasonable nor did it offend Article 14 of the Constitution. Moreover, the Supreme Court held that possible hardship to be endured by a person as a result did not make cut-off dates violative of Article 14.

In State of Bihar and others v. Bihar Pensioners Samaj, AIR 2006 SC 2100, the Supreme Court observed in para 17 as under:

"A supplementary affidavit filed on behalf of the State Government by Mukesh Nandan Prasad dated 9-9-2002 brings out in paragraph 8 that the total amount of financial burden, which would arise as a result of making effective the payments from 1-1-1986 would be about 2,038.34 crores. In other words, the State Government declined to pay the arrears from 1-1-1986 on the ground of financial consideration, which, undoubtedly, is a very material consideration for any administration. In State of Punjab and others v. Amar Nath Goyal and others (2005) 6 SCC 754 this Court had occasion to consider the very same issue. After referring to a number of other authorities, it was held that financial constraints could be Page 13 of 16 HC-NIC Page 13 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT a valid ground for introducing a cut-off date while introducing a pension scheme on revised basis. Thus, refusal to make payments of arrears from 1-1-1986 to 28-2-1989 on the ground of financial burden cannot be held to be an arbitrary ground or irrational consideration. Hence the argument based on Article 14 of the Constitution must fail."

Although Section 260 of the Act, in so many words, does not provide power to the Director to prescribe a particular cutoff date for extending the benefits of the pay commission to the employees of the Municipalities, yet having regard to the object of Section 260, such intention of the Legislature could be "read in".

In Lf. Col. Prithi Pal Singh Bedi v. Union of India, (1982)3 SCC 140, at pages 404 - 405, it was observed as follows: (see SCC page 150 para 8):

"The dominant purpose in construing a statute is to ascertain the intention of the Parliament. One of the well recognised canons of construction is that the legislature speaks its mind by use of correct expression and unless there is any ambiguity, in the language of the provision the Court should adopt literal construction if it does not lead to an absurdity. The first question to be posed is whether there is any ambiguity in the language used in. Rule 40. If there is none, it would mean the language used, speaks the mind of Parliament and there is no need to look somewhere else to discover the intention or meaning. If the literal construction leads to an absurdity, external aids to construction can be resorted to. To ascertain the literal meaning it is equally necessary first to ascertain the juxtaposition in which the rule is placed, the purpose for which it is enacted and the object which it is required to subserve and the authority by which the rule is framed. This necessitates, examination of the broad features of the Act.

Thus, the doctrine of reading down or reading in can be Page 14 of 16 HC-NIC Page 14 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT applied in limited situations. It is essentially used, first, for saving a statute from being struck down on account of its unconstitutionality. It is an extension of the principle that when two interpretations are possible -- one rendering it constitutional and the other making it unconstitutional, the former should be preferred. The unconstitutionality may spring from either the incompetence of the legislature to enact the statute or from its violation of any of the provisions of the Constitution. Secondly, where the provisions of the statute are vague and ambiguous and it is possible to gather the intentions of the legislature from the object of the statute, the context in which the provision occurs and the purpose for which it is made. However, when a rule is cast in a definite and unambiguous language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord with good reason and conscience.

Section 260 clearly indicates the guidelines that whenever there is an extravagant expenditure or excessive staff, the Director of Municipalities is enabled to issue directions to the municipality to put the things right by directing the municipality to act accordingly. If the Director of Municipalities is of the view that on account of implementation of a pay commission the municipality will have to incur heavy expenditure or financial burden, which otherwise it would not be able to bear, then the Director definitely has the power to ask the municipality to implement the recommendations of the pay commission from a prescribed cutoff date. It cannot be said that there are arbitrary and unguided powers conferred on the Director. The Director is not empowered to issue directions in respect of a particular employee or employees and, Page 15 of 16 HC-NIC Page 15 of 16 Created On Fri Jul 22 01:05:15 IST 2016 C/SCA/6220/2002 JUDGMENT therefore, there is no question even of giving any hearing to any individual employee. The Director merely takes an administrative or management decision which, ordinarily, should be taken by the municipality itself. If the Director finds that the municipality has failed to act in a prudent manner, then he is enabled to issue directions to the municipality to achieve these purposes which are purely management functions and policy decision.

In the overall view of the matter, I find it difficult to dub the cutoff date fixed by the Director for extending the benefits of the fifth pay commission to the petitioners who are the employees of the Mansa Nagarpalika. There is no mathematical or logical way of fixing the cutoff date precisely and the decision of the State Government must be accepted, unless it can be said to be absolutely unreasonable. Even if no particular reason is forthcoming for the choice of a particular date, it should not be dubbed as arbitrary, unless it is shown to be capricious or whimsical in the circumstances.

For the foregoing reasons, this writ-application fails and is hereby rejected. Rule discharged.

(J.B.PARDIWALA, J.) MOIN Page 16 of 16 HC-NIC Page 16 of 16 Created On Fri Jul 22 01:05:15 IST 2016

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