THE STATE OF ANDHRA PRADESH AND ANOTHER versus SMT. DINAVAHI LAKSHMI KAMESWARI on 8 February 2021

ORDER

1. Leave granted.

2. This appeal arises from a judgment and order of the AndhraPradesh High Court dated 11 August 2020. The State of Andhra Pradeshissued GOMs No. 26 on 31 March 2020 and GOMs No. 37 on 26 April2020. The backdrop for the orders was the outbreak of Covid-19 andthe financial crises which had resulted as a consequence. The revenuesof the State of Andhra Pradesh were impacted by the onset of thepandemic. The financial position of the State finds reference in thejudgment of the High Court, which has been extracted below:

“The States’ own revenue consisting of tax revenue and non-taxrevenue have shown a precipitous decline of 52% i.e. Rs 7593crores in first quarter of 2020-21 as compared to 2019-20. Thereceipts were only Rs. 7089 crores against Rs. 14,682 crores of2019-20. The States’ own revenue have not shown anyappreciable improvement in the month of July, 2020 also as thedecline is to an extent of 49% amounting to Rs. 2,129 crores forthe first 20 days of the month of July, 2019.”

The above extract in the judgment of the High Court is based onthe submissions of the State.

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A3. By GOMs No. 26 of 31 March 2020, the State Governmentdetermined that it was necessary, as an urgent measure, to provide for adeferment 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 arisingBdue to the COVID-19 outbreak, the economic consequences ofthe lock down, the cessation of the revenue inflows and extraburden 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:C

(i) There shall be (100)% deferment in respect of Hon’bleC.M./Hon’ble Ministers/Hon’ble M.L.As/ Hon’bleM.L.Cs, Chairperson & Members of all Corporations,elected representatives of all Local Bodies & peopleholding equivalent posts, as per the orders issued fromDtime to time.

(ii) There shall be (60)% deferment in respect of All IndiaService Officers viz., IAS, IPS and IFS;

(iii) There shall be (50)% deferment in respect of all otherEGovernment employees, including work-chargedemployees & persons engaged under the category ofdirect individuals professions & through 3rd party, exceptClass-IV Employees;

(iv) There shall be (10)% deferment in respect of Class-IV,FOut-sourcing, Contract and the Village & WardSecretariat employees;

(v) The deferment mentioned in respect of Para 5(i), (ii),(iii) & (iv) supra shall be made applicable mutatis-mutandis in respect of the retired employees in therespective categories.

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(vi) The above deferment shall be equally applicable to theserving & retired employees of all PSUs/Governmentaided Institutes/Organizations/ Universities/Societies/Autonomous bodies/Semi autonomous bodies, etc. inrespect of their Salaries/ Wages / Honorarium /HPensions.”

4. It is also provided that the above orders would come into forcein respect of the salary, wages, remuneration and pensions for the monthof March 2020, payable in April 2020 and would continue to remain inforce until further orders.

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5. On 4 April 2020, there was a modification by the StateGovernment in terms of GOMs No.27 which provided for the paymentof full salary to the employees of three departments, namely, (i) medicaland health department; (ii) police department; and (iii) sanitation workersworking in rural local bodies or urban local bodies, such as NagarPanchayats, Municipalities and Municipal Corporations.

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6. On 26 April 2020, GOMs No.37 provided for a furthermodification under which the Government, having noticed the hardshipswhich were being faced by the pensioners, directed the payment of fullpension to all categories of pensioners.

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7. A writ petition under Article 226 of the Constitution was filedbefore the High Court by a former District and Sessions Judge. Thegravamen of the grievance was that salaries and pensions are due as amatter of right to employees and, as the case may be, to former employeeswho have served the State. Consequently, a direction was sought in thepetition to the State Government to pay the outstanding salaries andpensions which had remained due.

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8. The High Court by its judgment and order dated 11 August2020 held that:

(i) The PIL at the behest of a public spirited citizen wasmaintainable, the petitioner before the High Court havinginstituted the proceedings pro bono without any personalFinterest;

(ii) Pension is payable to the retired employees for the pastservices rendered by them to the State;

(iii) Under Rule 9 of the Andhra Pradesh Revised Pension Rules1980, pension can only be withheld or deferred underGspecific circumstances such as if the pensioner is foundguilty of grave misconduct or negligence during employmentin a departmental or judicial proceeding. Thesecircumstances had not been established; H

A(iv)Article 72 of the Andhra Pradesh Financial Code deals withthe payment of salary to employees of the State, andprovides that salary is payable on the last day of every month;

(v) The entitlement to the payment of salary is intrinsic to theright to life under Article 21 and to the right to propertyBwhich is recognized by Article 300A of the Constitution;

(vi) The State could not by means of a government order haveprovided for the deferment of salaries and pensions withoutfollowing recourse to law.

(vii) Although the GOMs make reference to the state plan underCSection 23 of the Disaster Management Act, 2005, none ofthe provisions of the said Act provide for deferred paymentof salaries or pensions.

9. On the above premises, the High Court directed (i) payment ofthe deferred salary for the months of March-April 2020 together withDinterest at the rate of 12% per annum and (ii) payment of deferredpension for the month of March 2020 with a similar rate of interest.

10. Aggrieved by the judgment of the High Court, the Governmentof Andhra Pradesh moved these proceedings under Article 136 of theConstitution. The State Government clarified in its Special Leave PetitionEthat it was restricting its challenge only to the component of interestwhich had been imposed by the judgment and order of the High Court.On 18 November 2020, while considering the Special Leave Petition atthe preliminary hearing, the Court issued a direction to the effect thatthe deferred portion of the payments on account of salaries, pensionsFand honoraria due to the employees or, as the case may be, to formeremployees be paid in two equal tranches. The first was directed to bepaid on or before 15 December 2020, while the second was directed tobe paid on or before 15 January 2021. The direction in regard to thepayment of interest was stayed by this Court.

11. In pursuance of the above directions, the Government of AndhraGPradesh has disbursed the full amount of salary and pensions whichcame to be deferred by the GOMs which have been noted earlier. Theonly issue which now survives for determination is the liability to payinterest.

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12. Mr Shekhar Naphade, learned senior counsel appearing onbehalf of the appellants with Mr Mahfooz Ahsan Nazki, learned counsel,submits that the decision to defer the payment of salaries and pensionswas taken due to the precarious financial position in which the Statefound itself as a consequence of the pandemic. Mr Naphade submittedthat immediately after the issuance of first GOMs, a relaxation wasprovided for front-line workers such as those in the police, health andsanitation departments. Moreover, by a subsequent relaxation a directionwas issued for payment of pensions to the pensioners. Hence, it hasbeen submitted that the State had acted bona fide and there would beno reason to saddle it with the liability to pay interest. Alternately, it hasbeen submitted that if interest is directed to be paid, the payment shouldbe confined only in regard to the employees of the State falling incategories 3, 4 and 5 of the GOMs dated 31 March 2020.

13. Opposing the submissions of Mr Naphade and Mr Nazki, MrYelamanchili Shiva Santosh Kumar, learned counsel appearing on behalfof the respondents, urged that the intervention of the High Court mustbe understood in the perspective of the background facts, namely, thatthe State had intervened by issuing an administrative order in exerciseof its powers under Article 162 of the Constitution without enacting aproper legislation for the deferment of salary or, as the case may be,pensions. Learned counsel highlighted the serious hardships which wouldhave been caused to pensioners as a result of the order of defermentand hence submitted that the High Court is fully justified in entertainingthe PIL and in directing payment of interest at the rate of 12% perannum.

14. The direction for the payment of the deferred portions of thesalaries and pensions is unexceptionable. Salaries are due to theemployees of the State for services rendered. Salaries in other wordsconstitute the rightful entitlement of the employees and are payable inaccordance with law. Likewise, it is well settled that the payment ofpension is for years of past service rendered by the pensioners to theState. Pensions are hence a matter of a rightful entitlement recognisedby the applicable rules and regulations which govern the service of theemployees of the State. The State Government has complied with thedirections of this Court for the payment of the outstanding dues in twotranches. Insofar as the interest is concerned, we are of the view thatthe rate of 12% per annum which has been fixed by the High Court A

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Ashould be suitably scaled down. While learned counsel for the respondentssubmits that the award of interest was on account of the action of theGovernment which was contrary to law, we are of the view that thepayment of interest cannot be used as a means to penalize the StateGovernment. There can be no gainsaying the fact that the Governmentwhich has delayed the payment of salaries and pensions should beBdirected to pay interest at an appropriate rate.

15. We accordingly order and direct that in substitution of theinterest rate of 12% per annum which has been awarded by the HighCourt, the Government of Andhra Pradesh shall pay simple interestcomputed at the rate of 6% per annum on account of deferred salariesCand pensions within a period of thirty days from today. This directionshall, however in the facts and circumstances, be confined to categories3, 4, 5 and 6 of GOMs No 26 dated 31 March 2020. We clarify thatinterest shall be paid to all pensioners of the State at the rate of 6% perannum on the deferred portion, for the period of delay. Having regard to Dthe prevailing bank interest, the rate of 12% per annum which has beenfixed by the High Court, would need to be and is accordingly reduced.

16. The appeal is accordingly disposed of in terms of the abovedirections. There shall be no order as to costs.

17. Pending applications, if any, stand disposed of.

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Ankit Gyan

Appeal disposed of.

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