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2021 Supreme(SC) 394

SUPREME COURT OF INDIA
Dhananjaya Y Chandrachud, M.R. Shah, JJ.
The State of Andhra Pradesh and Another - Appellant
Versus
Smt Dinavahi Lakshmi Kameswari - Respondent
CIVIL APPELLATE JURISDICTION Civil Appeal No 399 of 2021
(Arising out of SLP (C) No 12553 of 2020)
Date : 08-02-2021

Advocates Appeared:
For the Petitioner: Mr. Shekhar Naphade, Sr. Adv. Mr. J.N. Bhushan, AAG Mr. Mahfooz Ahsan Nazki, AOR Mr. Polanki Gowtham, Adv. Mr. Shaik Mohamad Haneef, Adv. Mr. T. Vijaya Bhaskar Reddy, Adv. Mr. Amitabh Sinha, Adv. Mr. Shrey Sharma, Adv.
For the Respondent: Mr. Yelamanchili Shiva Santosh Kumar, Adv. Mr. Naumene Suraparaj Karlapalem, Adv. Mr. Tarun Gupta, AOR

Headnote:

Constitution of India,1950 - Articles 226, 21 , 300A , 136 and 162 - Andhra Pradesh Financial Code - Article 72 - Own revenue consisting of tax revenue - Deferment of the salaries and pensions - States’ own revenue consisting of tax revenue and non-tax revenue have shown a precipitous decline first quarter as compared receipts - States’ own revenue have not shown any appreciable improvement in the month decline is to an extent of 49% amounting crores for first - Economic consequences of lock down, cessation of revenue inflows and extra burden imposed on State’s resources to contain epidemic & to provide relief to people affected/likely to be affected, hereby orders for deferment of Salaries/Wages/Remuneration/Honorarium/Pensions on gross basis, as per following pattern – Held, Payment of deferred portions of salaries and pensions is unexceptionable - Salaries are due to employees of State for services rendered. Salaries in other words constitute rightful entitlement of employees and are payable in accordance with law - It is well settled that payment of pension is for years of past service rendered by the pensioners to State - Pensions are a matter of a rightful entitlement recognised by applicable rules and regulations which govern service of employees of State - State Government has complied with directions of this Court for payment of outstanding dues in two tranches – Court are of the view that rate of 12% per annum which has been fixed by High Court should be suitably scaled down - While learned counsel for respondents submits that award of interest was on account of action of Government which was contrary to law – Court are of the view that payment of interest cannot be used as a means to penalize the State Government – Court order and direct that in substitution of interest rate of 12% per annum which has been awarded by High Court - Government of Andhra Pradesh shall pay simple interest computed at rate of 6% per annum on account of deferred salaries and pensions within a period of thirty days from today shall be confined to categories - Court clarify that interest shall be paid to all pensioners of State at rate of 6% per annum on the deferred portion, for period of delay - Having regard to prevailing bank interest - Appeal is disposed of.

ORDER :

1. Leave granted.

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

    “The States’ own revenue consisting of tax revenue and non-tax revenue have shown a precipitous decline of 52% i.e. Rs 7593 crores in first quarter of 2020-21 as compared to 201920. The receipts were only Rs 7089 crores against Rs 14,682 crores of 2019-20. The States’ own revenue have not shown any appreciable improvement in the month of July, 2020 also as the decline is to an extent of 49% amounting to Rs 2,129 crores for the first 20 days of the month of July, 2019.”

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

3. By GOMs No. 26 of 31 March 2020, the State Government determined that it was necessary, as an urgent measure, to provide for a deferment of the salaries and pensions which it was obligated to pay. Consequently, paragraph 5 stipulated as follows:

    “5. Government, after careful consideration of the situation arising due to the COVID-19 outbreak, the economic consequences of the lock down, the cessation of the revenue inflows and extra burden imposed on the State’s resources to contain the epidemic & to provide relief to the people affected/likely to be affected, hereby orders for the deferment of Salaries/Wages/Remuneration/Honorarium/Pensions on gross basis, as per the following pattern:

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

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

    (iii) There shall be (50)% deferment in respect of all other Government employees, including work-charged employees & persons engaged under the category of direct individuals professions & through rd party, except Class-IV Employees;

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

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

    (vi) The above deferment shall be equally applicable to the serving & retired employees of all PSUs/Government aided Institutes/Organizations/Universities/Societies/Autonomous bodies/Semi autonomous bodies, etc. in respect of their Salaries/Wages / Honorarium / Pensions.”

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

5. On 4 April 2020, there was a modification by the State Government in terms of GOMs No.27 which provided for the payment of full salary to the employees of three departments, namely, (i) medical and health department;

(ii) police department; and (iii) sanitation workers working in rural local bodies or urban local bodies, such as Nagar Panchayats, Municipalities and Municipal Corporations.

6. On 26 April 2020, GOMs No.37 provided for a further modification under which the Government, having noticed the hardships which were being faced by the pensioners, directed the payment of full pension to all categories of pensioners.

7. A writ petition under Article 226 of the Constitution was filed before the High Court by a former District and

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