The aforesaid two petitions are being disposed off by this common order as these petitions involve common question of law for consideration in the matter of payment of interest on provident fund deposit to an employee of respondent/Municipal Corporation, Rajnandgaon.

2. Murlidhar Hariharno, petitioner in WP No.4640 of 1999 and petitioner Laxmi Kant Taywade in WPS No.3458 of 2007 were initially appointed in the services of the then Municipal Council Rajnandgaon. While these two employees were continuing in the services of the Municipal Council, Municipal Council was upgraded and notified as Municipal Corporation under the provisions of Madhya Pradesh Municipal Corporation Act, 1956 (In short “the Act of 1956”). Both the petitioners were continuing in service and finally retired as employee of Municipal Corporation Rajnandgaon. Petitioner-Murlidhar Hariharno retired from the post of Lecturer upon attaining the age of superannuation on 28-02-1988. Petitioner Laxmikant Taywade was also retired from the post of Lower Division Clerk on 31-1-2004. The aforesaid facts are not disputed and admitted by all the parties.

3. At the time of their respective retirement, respective petitioners were paid interest @ 5% on their provident fund deposits. The case of the petitioners is that the petitioners were initially appointed in the services of the then existing Municipal Council, Rajnandgaon and the terms and conditions of Municipality were governed by the provisions contained in Madhya Pradesh Municipal Employees (Recruitment and Conditions of Service) Rules, 1968 (In short “the Rules of 1968”). Rule 24 of the Rules of 1968 provided that the Madhya Pradesh General Provident Fund Rules as amended from time to time shall apply to Municipal Employees in the same way as are applicable to government servant of similar status except in so far as they are not inconsistent with the provisions of the Madhya Pradesh Municipalities Act, 1961 and the Rules of 1968 with proviso that the rules may not apply to these Municipal Employees who have given their option under proviso(c) of Rule 23(2). When the Municipal Council, Rajnandgaon was upgraded as Municipal Corporation, Rajnandgaon in the year 1983, the petitioner became employee of the Municipal Corporation. However, the existing terms and conditions of their services were saved under Section 442(5), which provided that notwithstanding anything contained in the Act of 1956 or any rule or bye laws made thereunder, the conditions of services, pay allowances existing in respect of permanent Officers and Servants of the Municipal Council on the date immediately before the date the Municipal Council was notified as Municipal Corporation are deemed to be their existing terms and conditions of services, pay and allowances under the Act of 1956. Therefore, it is contended that the saving clause entitles the petitioner to get the same rate of interest, which was payable to them by virtue of Rule 24 of the Rules of 1968 and the rate applicable in the Municipal Corporation and the decision of the Municipal Corporation to apply lower rate of interest @ 5% on the provident fund deposits on such class of employees like the petitioner, who became employee of the Municipal Corporation while continuing as employee of Municipal Council, would not be applicable. Another submission of learned counsel for the petitioner is that in view of the circular dated 27-05-2002 of the State of Chhattisgarh, the benefits which the petitioners were getting as employee of the Municipal Corporation could not be taken away. Lastly, it was submitted that the Division Bench of High Court of Madhya Pradesh in the case of Mohammad Adnan Khan vs. Municipal Corporation, Bhopal and another, 1982 MPLJ 80, held that in the absence of any bye laws framed by the Municipal Corporation, the saving clause under Section 442(5) would operate to continue application of the existing terms and conditions of services of Municipal employees notwithstan