Allowed

Sakharam Parasharam Ghaste v. Municipal Corporation of Brihn Mumbai and Anr.

Bombay HC21 Jan 2008WP/2952/2006

Case brief

AI extract

What is this about?

A retired employee sought interest on delayed pension and gratuity. The court held that retiral benefits are statutory rights and, given the delay caused by pending inquiries and disproportionate punishment that was later set aside, the respondent corporation must pay simple interest at 12% per annum from the date of retirement.

What did the court decide?

Respondent corporation directed to pay interest at 12% per annum from the date retiral benefits were due until payment.

Sakharam Parasharam Ghaste Vs Municipal… — Pension and Retirement Benefits | Bombay HC (2008)

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IN	THE	HIGH	COURT OF JUDICATURE	AT	BOMBAY
	ORDINARY		ORIGINAL CIVIL	JUR	ISTDICTION
	WRIT		PETITION NO. 2952	OF	2006
Sakharam Para	sharam Ghaste	V.	...Petitioner
Municipal		Corp	oration of		Brihanmumbai
& Anr.			.. Respondents
Petitioner			in		person
Mr. P.M.	Palshikar		with Ms. Shobha	Ajeet	Kumar
for					Respondents
		C	ORAM: J.N. PA	TEL	AND
			A.A. SAYE	D,	JJ.
			DATE: 21ST JANU	ARY,	2008
JUDGMENT		(PER	A.A. SAY	ED,	J.)
1.	Rule.		By consent rule made returnable

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forthwith and heard finally.

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The petitioner is an employee of Brihanmumbai Municipal Corporation. He retired from service

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w.e.f.1-08-1998 on attaining superannuation.

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The petition is filed for directions to the respondents to pay him interest at the rate of 18% on

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his delayed retiral dues from the date on which they

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became due to the actual date of payment.

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At the time of retirement of the petitioner,

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there w	as one p	reliminary and	two	de	partmental
inquiries	pending agai	nst him. By		letter	dated
26-06-1998,	respondent	No. 2,	the		Municipal
Commissioner,	informed	the petitioner that	as	he	is
retiring	form service	w.e f. 1-08-1	998,	his	pension
shall be	subject t	o provision of rule	14	of	The
Mumbai	Municipal Corpor	ation Pension Rules	1	953.	The
petitioner	replied to	the said letter	vide	his	letter
dated	27-07-1998 and	informed respondent	No.		2 that
the	alleged inquiries	were pending due	to	fail	ure of
administration	of	the respondents, thus		laying	the
blame	on the resp	ondent corporation for	t	he de	lay in
respect	of completion	of the inquiries.	It	was	his
contention	that he	had filed replies	to	the	charge
sheets	and had co	ntended that all t	he	inquiries	were

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baseless and initiated only to harass and victimize

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him.

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5.	S	oon after the r	etiremen	t of the petitio	ner,
one	inquiry	against	him	came	to	be	dropped	and
another	inqu	iry was	set	aside.	Thus	there	was	only
one	inquiry	which	re	mained	pen	ding	against	the
petitioner.		The	said	pending	inq	uiry	was	dated

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18-08-1993, and pertained to issue of 170 Work

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Orders.

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6.	The petitioner filed a writ petition	in this
Court	being Writ Petition no.	15	45 of	2001	for
release	of his retiral dues	and	payment	of	interest
at the	rate of 18% p.a. on	the	delayed	payments.	By
an or	der dated 20-12-2001, the	Divi	sion B	ench of	this
Court	directed the respondents		to	complete	the
inquiry	within 3 months. It	was	further	made	clear
in th	is order that the	said	order	was	without
prejudice	to the petitioner’s	right	to	claim	interest
in	respect of his retiral dues	and	the	petition	was

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accordingly disposed of. Thus the issue of interest

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was left open.

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7.		Pursuant to	the submission of	the repo	rt by
Mr.	V.Y.		Joshi, the	7th	Inquiry Officer	in the
inquiry	ag	ainst	the	petition	er, the	Disciplinary
Authority		passed	an order	date	d 27-09-2002	awarding
punishment		of	reduction in	th	e petitioner’s	monthly
pension	by	Rs.	1000/-	with	permanent effect.	The
petitioner’s		appeal	challenging	the	above order	was

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also rejected by order dated 6-03-2003 by the

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Appellate Authority.

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8. The	petitioner the	refore file	d writ petiti	on
in this Court,	being	Writ	Petition	no.	1909	of	2003,
challenging the	order	date	d	27-09-200	2 o	f	the
Disciplinary	Committee	and	the	order	dated	6-	03-2003
of the Ap	pellate	Authorit	y.	By	order		dated
16-06-2006, the	le	arned	Single	Judge	of this		Court
set aside	the pu	nishment	orders	dated	27-09	-2002	and
6-03-2003 and	observed	that	the	orders	were	p	erverse,
not justified and	made	only	with	a view	to	harass	the
petitioner and	further	held	that	the	punishment		was
disproportionate	to th	e ac	ts of	the	petitioner.		The
learned Single	Judge	fu	rther	observ	ed	that	the
petitioner was	in	the m	aze of	inquiry	for	the	last
one and a	half	decade	and th	at the	facing	of	the

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inquiry of this dimension alone is itself a punishment for the petitioner.

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9.			After	the dispo	sal of the a	bove Writ	Petition
No.			1909	of	2003	on 16	-06-2006,	the	petiti	oner	vide
his		lett	er	dated	18-07-	2006	called		upon		the
respo	nde	nts	to	make	payme	nt of	interest	of	18%		p.a.
on	d	elayed	paym	ent of	his	retiral	dues.	As		there	was
no		resp	onse	from		the res	pondents,	the		peti	tioner
filed		a	Notice	of	Motion	bearing	No.	366	of	2002	in
Writ		Pe	tition	No.	1545	of	2001, fo	r inte	rest	on	the

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delayed	paym	ents.	Ho	wever,it	app	ears	that	as	the
notice	of	motion	was	filed	in	a	disposed	of	writ
petition,	this	Court	was		plea	sed	to	allow	the
petitioner	to	withdraw		the	notice		of	motion	and
liberty	was	granted	to	him	to	file	a	fresh	petition.

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That is how the present writ petition came to be

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filed by the petitioner.

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10.	The petitioner has	appear	ed in person. H	e
submitted	that under	the	amended	rule 14-B of	The
Mumbai	Municipal Cor	poration	Pension	Rules, 1953,	the
Standing	Committee,	who	is the	competent	authority,
may	withhold pension	in	whole or	part in cases	of
proved	misconduct on	ly	and theref	ore, in absence	of
any	proved miscond	uct	against him	at the	relevant
time,	the action o	f	non payme	nt of his	monthly
pension	and other	retiral	benefits	by the re	spondents
was	illegal and mala	fide.	The	petitioner has	further
contended	that he	was	without	pension from	1-08-1998
to	28-11-2001 and	that	the act	of withholding	his
retiral	benefits was	ille	gal.	He further	submitted
that	in view of	the	order pas	sed by the	Division
Bench	of this Court	whe	reby the	issue of interes	t was
left	open, and in	view	of the	setting aside of	the
punishmen	t order	of	withholding	his pension of	Rs.

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1000/p.m., and in view of the observations of the learned Single Judge of this Court in its order dated 16.06.2006 in Writ Petition No. 1909 of 2006, he was entitled to interest on the delayed payments of his retiral dues.

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11.	In supp	ort of his contentions the petitioner
has r	elied upon	the case of D.V. Kapoor	Vs. UOI	&
Ors.	reported	in AIR 1990 SC 1923 to	show that	the
right	to	gratuity and pension are	statutory	rights
and	the ac	t of withholding retiral	benefits has	been
held to	be ille	gal by the Hon’ble Suprem	e Court.	The
petitioner	has	also relied upon the cas	e of Vijay	L.
Mehrotra	Vs.	State of UP & Ors.	reported in	2000
AIR	SCW 267	8, wherein the Hon’ble Supr	eme Court	had
granted	interest	at the rate of 18%	p.a. on	retiral
benefits	from th	e date of retirement till	the date	of
payments.	Rel	ying upon the above	decisions,	the
petitioner	has	prayed for directions	to	the
respondents	to	pay him interest @ 18%	per annum	from
the	dates on	which the amounts became	due, upto	the
date	of act	ual payment. The petition	er has	also
pointed	out	sub-section 3 of section 7	of Payment	of
Gratuity	Act,	1972, which provides for	payment	of
gratuity	within	30 days and also sub	section 3A	of

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Section 7 which provides for interest on delayed

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payment of gratuity.

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12.	The r	espondents hav	e filed their affidavit in
reply	opposing	the	petition. It is stated in	the
affidavit	in	reply	that as the inquiry was	pending
against	the	petitioner,	as per orders of the	Dy.
Municipal	C	ommissioner	(G.A.), provisional	pension
and PF	amou	nt was	released in favour of	the
petitioner	an	d gratuity	, commutation of pension	and
enchashment	of	unutilized	leave of the petitioner	was
held	up.	It is	further mentioned in the	affidavit
that	after	the or	ders passed by this Court	dated
16-06-2006,	arrears	of	pension have been paid and	the
pension	has	been	restored to the petitioner	from
October	2006.	The	affidavit in reply encloses	a
schedule	of	payments	at Ex 1, setting out	the
payments	made	to	the petitioner on various	dates.
The	Ld.	Counsel	for the respondents submitted	that
under	The	Mumbai	Municipal Corporation Pension	Rules
1953,	the	respondents	are empowered to	withhold
pension	in	whole	or portion thereof. He	further
submitted	that	it is	undisputed that at the time	of
the	retirement	of	the petitioner, one inquiry	was
pending	against	him.	He therefore submitted that	the

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respondent-corporation had rightly withheld his

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pension.

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Having heard the petitioner in-person and the learned Counsel for the respondents, the short point which arises for our consideration is - whether the

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petitioner is entitled to interest on delayed payment

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of his retiral dues? If yes, at what rate?

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14 It is settled position of law that retiral benefits are statutory rights. This principle is reiterated in the case of D.V. Kapoor V. Union of India and Ors. (Supra) relied upon by the petitioner wherein it was observed as follows:-

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"The employees right to pension is a statutory
right. Therefore, deprivation of such right
must be in accordance with law. The measure
of deprivation must be correlative to or
commensurate with the gravity of the grave
misconduct or irregularity as it offends the
right to assistance at the evening of his life
as assured under Article 41 of the
Constitution.

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Bench of the Hon’ble Supreme Court dealing with the issue of pension, has observed as follows:-

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"Pension is not only compensation for loyal service rendered in the past, but also by the broader significance in that it is a social welfare measure rendering socioeconomic justice by providing economic security in the fall of life when physical and mental prowess is ebbing corresponding to ageing process and, therefore, one had given his best in the hey-day of life to his employer, in days of invalidity, economic security by way of periodical payment is assured. therefore, it is a sort of stipend made in consideration of past service or a surrender of rights of emoluments to one retired from service. Thus pension is earned by rendering long and efficient service and therefore can be said to be deferred portion of the compensation for service rendered. In one sentence one can say that the most practical raison d’etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon."

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The Apex Court further observed that:

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"Pe	nsion as	a retirement bene	fit is	in
consonance	with	and furtherance of	the	goals
of the	Constitu	tion. The goals	for	which
pension	is paid	themselves give a	fillip	and
push to	the	policy of setting up	a	welfare
State bec	ause by	pension the sociali	st goal	of
security	from	cradle to grave is	assured	at
least wh available, Therefore,	en it namely when	is most needed in the fall a Government	and of employee	least life. is
sought which	to be he had	deprived of his earned while renderi	pensionary ng	right services
under accordance	the State,	such deprivation mus with	t be	in law"
It may be	noted that	in the case in hand	, the	term

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’pension’ under Rule 5(i)(d) of The Mumbai Municipal

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Corporation Pension Rules, 1953 includes gratuity.

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It is admitted in the affidavit filed by the

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respondent-	corporation		that	gratuity, commutation	of
pension	and		encashment of	unutilised leave	were
withheld	by	the	respondent-corpor	ation in view of	the
inquiry	pendi	ng	against	the petitioner.	Also
admittedly,	purs	uant	to the	order of Ad	ditional
Municipal	Co	mm	issioner dated	27.9.2002, pension	of
the	petitioner		was reduced by	Rs. 1000/- per	month.
It is	further		not disputed	that out of	three
inquiries,	one		inquiry was dr	opped on 28.8.1998	and
one i	nquiry	was	set aside	on 12.2.1999 by	the
appellate	authority.		In respect	of one inquiry	which
remained	pending,		it is noted	that the petitioner	had
been	reques	ting	the	respondent-corporation	to
complete	the	inqu	iry expeditiously.	It was only	when
the	petitioner		filed a writ	petition being	Writ
Petition	No.		1545/2001 in	respect of release of	his
retirement	dues		that an order	came to be passed	on
20.12.2001	by		the Division	Bench of this Court	and
this	Court	was	pleased to	direct the respondents	to
complete	the		inquiry within	three months.	While
disposing	of	the	writ petition	it was clarified,	that
this	order	was	without prejud	ice to the right of	the
petitioner	to		claim interest	in respect of	his

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retiral	dues.		However, a	s th	e respon	dents	fai	led to
comply	with	the	order dat	ed	20.12.2001	the		petitioner
filed	a	cont	empt petition	being	Co	ntempt		Petition
No.65/2002.		The	said con	tempt	petition	came	to	be
disposed	of	by	order dated	25.10.	2002 on	a		personal
undertaking		of	the counsel	of	the	responden	ts,	which

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resulted in the respondents ultimately handing over a

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cheque of Rs. 2,83,715/- to the petitioner.

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17.	Undisput	edly the punishment	order	dated
27.9.2002	and	6.3.2003 came	to	be	set	aside by	an
order	dated 16.6	.2006 by le	arned	Si	ngle	Judge of	this
Court	in W	rit Petition		No.1909	/2003,	which	writ
petition	was	filed challeng	ing	the	p	unishment	order
dated	27.9.2002	of the	Disc	iplinary		Committee	and
order	dated	6.3.2003 o	f	the	A	ppellate A	uthority.

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While setting aside the abovesaid orders, the learned

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Single Judge of this Court observed as under:-

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"The impugned orders in the inquiry passed against the petitioner for the acts charged against him are therefore, seen to be perverse and made only with a view to harass the petitioner alone. Such orders therefore, cannot stand the test of justness. The charge against the petitioner cannot be seen to be made out in view of the sanction by the DMC himself. The facing of the injury of this dimension alone is itself punishment for the petitioner. The punishment awarded against the petitioner is wholly disproportionate to

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the acts for which he is charged. Such punishment cannot therefore, stand."

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The learned	Single		Judge		directed	the
respondent-corporation	to	pay	the	pension	to	the

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petitioner within four months and to pay the full pension to him thereafter.

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18.		It is expected th	at all retiral benefi	ts of an
employee	sho	uld be	paid on	the	date of	his r	etirement
or	so	soon	thereafter as	rea	sonably poss	ible if	on
account		of any	unforeseen		circumstances,	the	payment
could	not	be made	on the	date	of retireme	nt. It	is
noted	that	there	was a	chan	ge of	seven	inquiry
officers	in	respect	of	the	inquiry	against	the
petitioner.		The	inquiry	against	the pe	titioner	was
kept	pending	for	an unreason	ably	long per	iod and	that
this	act	on	the part	of	the	respondent-co	rporation
was	not	bonafide.	Moreover,	t	he learned	Single	Judge
of	this	Court,	has held	that	the ord	ers in	the
inquiry	we	re perv	erse and m	ade	only with	a view	to
harass	the	petitioner.	The	de	privation of	pension	in
absence	o	f the	petitioner	being	found	’guilty’	of
grave	misco	nduct or	negligence,		at the	relevant	time,
was	not	in acc	ordance with	Rule	14-B of	The	Mumbai
Municipal		Corporatio	n Pension		Rules	1953	which

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provides for withholding pension in certain cases

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only, and reads thus:-

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	"Comp	etent authority may, by order in writing,
	withhold	or withdraw a pension or any part of
	it whether	permanently or for specified period
	and also	order the recovery from such pension,
	the whole	or part of any pecuniary loss caused
	to the judicial guilty of during a service	Corporation if in any departmental or proceedings, the pensioner is found grave misconduct or negligence period of his service including rendered upon employment after
	retirement.	Provided that if a part of
	pension	is withheld or withdrawn, the amount
	of remain	ing pension shall not be reduced
	below	the minimum pension fixed."
Thus,	the exercise	of power of withholding pension of

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the petitioner by the respondents was without

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justification.

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As recorded in our order dated 1.8.2007, the

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learned	counsel	for	the	responden	ts wa	s to	seek
instructions	and	inform	the		Court	whether	the
respondents	are	agreeable	to	pay	interest	at the	rate
of 9%	per	annum to	the	petitioner	. Ho	wever, on	the
following	date	the	lear	ned	counsel	for	the
respondents	expr	essed hi	s	inability	to	make	any

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statement in that regard after taking instructions

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from the respondent-corporation.

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In the case of O.P. Gupta V. Union and Others , reported in (1987) 4 S.C.C. 328 the Apex

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Court while granting 12% interest on delayed payment

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of pension observed as follows:-

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	Norma	lly,	this	Court,	as	a	settl	ed	practice,
has	been	maki	ng	directi	on	for		payment	of
interest		at 12	per	cent	on	del	ayed	payme	nt of
pension.		There	is	no	reason	fo	r	us to	depart
from case."	that	practice	in	the	fact	s	of	the	present

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Considering the facts and circumstances of the

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case	and the	finding	s and	observati	ons of	the	learned
Single	Judge	of	this co	urt in	the	order	dated
16.6.2003	in	Writ	Petition	No.	1909/2003,	and	the
rulings	cited	above,	we	are	satisfied	that	the
petitioner	is	entitl	ed to	simple	interest	on	account
of	the	respondent-	corporation	withh	olding	the	retiral
benefits	of	the	petitioner.	In	our view,		awarding

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interest at the rate of 12% p.a. would meet the ends

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of justice.

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22.	We th	erefore d	irect the	respondent-	corpora	tion
to	pay to	the	petiti	oner in	terest	at	the	rate of	12%
per	annum	from	the	date	on	which	the	retiral	benefit
amounts	became		due	to him	on	his	re	tirement	until
payment.	Su	ch	amount	to	be	com	puted	by	the