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Smt. Munni Devi v. Nagar Nigam, Allahabad - WRIT - A No. 15672 of 2007  RD-AH 5251 (23 March 2007)
Court No. 1
Civil Misc. Writ Petition No. 15672 Of 2007
Smt. Munni Devi versus Nagar Nigam, Allahabad
Hon'ble Rakesh Tiwari, J.
Heard learned counsel for the parties and perused the record.
The husband of the petitioner died on 12.9.2000. She alleges to have not been paid post retiral benefits of her late husband such as balance of bonus, encashment, 11 months arrears of pension, group insurance amount and arrears of revised pay scale w.e.f.1.1.1996 etc. by the respondents.
The counsel for the petitioner submits that the respondents may be directed to pay her entire balance post retiral dues at the bank lending rate interest from the date it has become due or at 10% compound interest since the amount was kept by the respondents illegally with them.
The counsel for the respondents placing reliance upon a judgment of the Division Bench of this Court dated 6.7.2006 passed in Special Appeal No.693 of 2006, Nagar Nigam, Kanpur Nagar and another Vs. Smt. Rajji submits that delay in payment was due to financial crunches and was not deliberate or willful and that in similar matters this Court has considered the question of rate of interest allowed simple interest at the lesser rate. The controversy in the Special Appeal was considered by the Court that-
" This Special Appeal,' under the Rules of the Court, is preferred against the judgment of the Hon'ble Single Judge of this Court dated 22.5.2006 allowing the writ petition of the sole respondent with the direction that the appellants shall make payment of retiral dues and pension of the petitioner-respondent with compound interest at the rate of 10% per annum from due date till the date of payment within a period of two months and further shall continue to pay pension provided her service is pensionable, month to month as and when it falls due.
During the course of submission learned counsel for the appellants confined his submission mainly to the rate of interest awarded by the Hon'ble Single Judge. He contended that the delay in the payment was due to financial crunches and was not deliberate or willful. It is also submitted that in similar other matters this Court has allowed simple interest at the lesser rate. He further submits that the Nagar Nigam is already facing great hardship on account of financial constraint and thus, it would be equitable in the interest of justice that the rate of interest may be at least lower and simple. It is further submitted that in the backdrop of the financial condition of the Nagar Nigam grant of compound interest at the rate of 10% per annum is highly excessive and would cause great hardship to the Nagar Nigam which has to prove civic amenities to the citizens. He further placed reliance of the judgment dated 6.12.2005 in Civil Misc. Writ Petition No. 33804 of 2004 wherein the appellant was respondent and submitted that the grievance was identical to that of the petitioner respondent and the Hon'ble Court having considered all aspects of the matter allowed 6% simple interest on the arrears of the retiral benefits. It is also submitted that it is not the case where no retiral benefits were paid to the petitioner, but in fact after retirement all the retiral benefits were paid from time to time. Subsequently, with the revised pay scale of pension and gratuity, some arrears accrued, which could not be paid to the petitioner on account of acute financial crisis prevailing in Nagar Nigam. The period of arrears of revised pension and gratuity is May 2004 to January 2005 and March 2006 to June 2006. He, therefore, submits that non-payment of the aforesaid arrears of revised benefits was not deliberate but for financial crisis, which was beyond their control."
The Court in the operative portion of the judgment dated 6.7.2006 held that-
" Learned counsel for the respondent, opposing the appeal, submitted that the judgment impugned in this appeal does not require any interference. He, however, admitted that all the retiral benefits were actually paid in time and the dispute pertains only to the revised gratuity and pension for the period as pointed out by the learned counsel for the appellant.
Thus, it appears from the submissions made before us and the pleadings that the petitioner respondent was getting pension regularly after the retirement and other retiral benefits were also paid from time to time and only the arrears on account of revision of pay scale accrued in pension and gratuity was not paid. It is also not disputed before us that this situation is not only in respect of petitioner-respondent but has prevailed in respect of other employees also. It is also not the case of the petitioner-respondent that he has only been discriminated. Therefore, keeping in view all these aspects and also looking to the facts of the case and also keeping in view that only the revised pension and benefits for a period of two years could not be paid and the rate of interest prevailing in the Banks and Govt. departments have reduced substantially during the aforesaid period, we are of the view that 10% interest on compound basis allowed by the Hon'ble Single Judge is excessive.
We therefore, in the facts and circumstances of the case modify the judgment under appeal dated 22.6.2006 to the extent that the petitioner-respondent shall be entitled for payment of retiral benefits as directed by the learned Single Judge with simple interest at the rate of 6%. Rest of the order under appeal is affirmed.
Accordingly, the Special Appeal is partly allowed and the judgment under appeal is affirmed subject to the aforesaid modifications.
Sd. Hon.S.Rafat Alam,J.
Sd. Hon.Sudhir Agarwal,J."
He further submits that that the Nagar Nigam is already facing great hardship on account of financial constraint and thus it would be equitable in the interest of justice that the rate of interest may be at least lower and simple.
It is further submitted that in the backdrop of the financial condition of the Nagar Nigam grant of interest at the bank lending rate is highly excessive and would cause great hardship to the Nigam.
No reasons appear to be explained by the respondents as to why the amount was illegally kept by them. The respondents are duty bound to pay the retiral dues of a retired employee when it becomes due. They cannot say that the department is facing great hardship on account of financial constraint as such though it has withheld the retiral dues illegally and utilized it for other purposes as well as has earned interest on it. The respondents cannot make windfall gain in this manner on the dues of the petitioner, which is in trust with them. The Court must also consider the loss and harassment of the poor employee who had been made to run from pillar to post and approach this Court to get an order for payment of his retiral dues.
In Special Appeal No. 151 of 2006, Managing Director, U.P. State Handloom Corporation Ltd. Vs. Dinesh Maurya and others a Division Bench of this Court vide judgment and order dated 23.2.2006 has affirmed the judgment and order dated 16.1.2006 passed by learned Single Judge of this Court by which the Corporation was directed to make payment entire arrears of the writ petitioners with 10% compound interest and 6% penal interest. The judgment and order dated 23.2.2006 is as under:-
" Heard learned counsel for the appellant and the learned counsel appearing for the respondents.
This appeal has been filed against the judgment and order dated 16.1.2006 passed by a learned Single Judge disposing of the writ petition directing the Corporation to make payment of entire arrears to the writ petitioners with 10% compound interest and 6% penal interest.
Learned counsel for the appellant submitted that the Corporation is suffering under the great financial stress and the amount, which is received by the State Government for disbursement of V.R.S. amount, has already been disbursed. He further contends that the State Government has not released the sufficient funds for making the payment of the dues.
Learned Single Judge by the impugned judgment has directed the Corporation to make the payment. Learned counsel for the appellant has not disputed the liability of the Corporation to pay arrears to the writ petitioners. The writ petitioners are clearly entitled for the arrears of salary along with interest.
We are satisfied that no error has been committed by the learned Single Judge in directing the Corporation to make the payment with compound interest. However, we are of the view that the direction for payment of 6% penal interest was not necessary in the facts and circumstances of the present case. Except the direction for payment of 6% penal interest, the judgment of the learned Single Judge is affirmed.
The appeal is dismissed.
We make it clear that the amount of pension to which the writ petitioners are entitled may be paid as directed, but necessary steps be taken within the power of the appellant as required under law.
Sd.Hon.Ajay Nath Ray,C.J.
Sd. Hon. Ashok Bhushan,J."
Vide 74th amendment of the Constitution, Nagar Panchayats and Nagar Nigams have become autonomous institutions. By an amendment Part IX regarding Panchayats and Municipalities has been enacted in the Constitution.
The State Finance Commission grants financial assistance to Nagar Panchayats and Nagar Nigams for developmental works. As per recommendations of the State Finance commission, 7% of the total tax recovered by the State Government is provided to the Local Bodies, out of which 3.12% is given to Nagar Nigams, 3.12% to the 195 Nagar Palika Parishads and the rest 0.76% to the 417 Nagar Panchayats. This proportion has been fixed considering the ratio of population and the area of Local Body. Further, under Section 128 read with Section 296 of the U.P. Municipalities Act, 1916, Local Bodies are liable to impose taxes/fees within its area. Local Bodies can impose taxes, issue bonds and raise public funds for increasing revenue. They being local self Government, are ''State' within the meaning of Article 12 of the Constitution and have responsibility towards people being a welfare State.
It appears that a large number of cases of Nagar Nigam, Allahabad are coming to this Court where retiral dues of the employees who have retired long back even in 1993-94, have not been paid to them. There appears to be no financial discipline and there is complete anarchy in Nagar Nigam, Allahabad.
The object and purpose of autonomy given to the local bodies was to allow them to develop and to be governed by local conditions and try to fulfill the aspirations of the people.. Wherever it is found that such purpose has not been achieved and that instead of carrying out any development work, the over staffed Nagar Panchayats are not able to recover the dues and even pay the salary, the State Government must take statutory actions to dissolve local bodies and/or to take action for removing its Chairman and Executive Officers. The Court has taken judicial notice of the fact in Balveer Singh Yadav V. State of U.P. and others (Civil Misc. Writ Petition No. 21271 of 2003 decided on 11.5.2005) that the Nagar Nigam, Allahabad is highly mismanaged both administratively and financially. In the aforesaid case, the Court has taken judicial notice as under :-
"The situation of most of the Nagar Panchayats, Nagar Palika Parishads and Nagar Nigam is the State. The State Government has a statutory duty to carry out enquiries into these matters and to take appropriate steps wherever it finds that the development funds are being paid only towards salary and that local bodies are not realizing the statutory dues, and carrying out statutory duties the State Government should not sit silent and must take immediate action, irrespective of the political parties to which these persons are allegiances or switch over, as they often do.
The Court has further observed that :-
"It is not for this Court to find out the means and sources for payment of arrears of salaries and pensions of the employees of the Nagar Panchayats. This matter must be looked into by the State Government which has a statutory duty to supervise the functions of Local Bodies."
Non- payment of retiral dues in my opinion, hits squarely Article 21 of the Constitution. Not only the employees have a right to live but also have right to live with dignity. The Nagar Nigam being a local self Government cannot ignore the rights of the employees. The Nagar Nigams and Nagar Panchayats have to raise their own funds and they have to work for betterment of the people and not divert the amount of funds to any other heads instead of paying the employees of their legal dues.
It appears that the counsel in Special Appeal No. 693 of 2006, Nagar Nigam Kanpur Nagar (supra) did not bring to the notice of the Court that there already exists a judgment of the Division Bench in Special Appeal No. 151 of 2006, Managing Director U.P. State Handloom Corporation (supra) wherein the direction for payment of compound interest has been upheld by the Court, as such the decision in Special Appeal No. 697 of 2006 is per-in-curium.
In the circumstances earlier judgment is preferred and the respondent is directed either to pay the aforesaid dues of the petitioner with 10% compound interest from due date till the date of payment within a period of six weeks from today or they may show cause within the aforesaid period by filing counter affidavit. In case the cause is not shown by filing counter affidavit within the time allowed by this Court, respondent shall be personally present in Court on the date fixed. Rejoinder affidavit may be filed within 4 weeks thereafter.
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