The judgment established the principle that financial and economic implications are relevant for any policy decision, and the power to prescribe a cutoff date for extending benefits to employees is within the authority of the Director of Municipalities.

J.B. Pardiwala, J.

1. 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."

2. 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 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."

3. 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.

4. 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.

5. Mr. Patel would submit that Section 260 of the Act speaks of the power of the Director to prevent extravagance in the employment and it has nothing to do so far as the grant of the benefits of the pay commission is concerned.

6. 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.

7. 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-à-vis its income as