:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISTDICTION WRIT PETITION NO. 2952 OF 2006 Sakharam Parasharam Ghaste ...Petitioner V. Municipal Corporation of Brihanmumbai & Anr. .. Respondents Petitioner in person Mr. P.M. Palshikar with Ms. Shobha Ajeet Kumar for Respondents CORAM: CORAM: CORAM: J.N. J.N. J.N. PATEL AND PATEL AND PATEL AND A.A. A.A. A.A. SAYED, JJ. SAYED, JJ. SAYED, JJ. DATE: DATE: DATE: 21ST 21ST 21ST JANUARY, 2008 JANUARY, 2008 JANUARY, 2008 JUDGMENT JUDGMENT JUDGMENT (PER (PER (PER A.A. SAYED, J.) A.A. SAYED, J.) A.A. SAYED, J.) 1. Rule. By consent rule made returnable forthwith and heard finally. 2. The petitioner is an employee of Brihanmumbai Municipal Corporation. He retired from service w.e.f.1-08-1998 on attaining superannuation. 3. The petition is filed for directions to the respondents to pay him interest at the rate of 18% on his delayed retiral dues from the date on which they became due to the actual date of payment. :2: 4. At the time of retirement of the petitioner, there was one preliminary and two departmental inquiries pending against 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. 1-08-1998, his pension shall be subject to provision of rule 14 of The Mumbai Municipal Corporation Pension Rules 1953. 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 failure of administration of the respondents, thus laying the blame on the respondent corporation for the delay in respect of completion of the inquiries. It was his contention that he had filed replies to the charge sheets and had contended that all the inquiries were baseless and initiated only to harass and victimize him. 5. Soon after the retirement of the petitioner, one inquiry against him came to be dropped and another inquiry was set aside. Thus there was only one inquiry which remained pending against the petitioner. The said pending inquiry was dated 18-08-1993, and pertained to issue of 170 Work :3: Orders. 6. The petitioner filed a writ petition in this Court being Writ Petition no. 1545 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 order dated 20-12-2001, the Division Bench of this Court directed the respondents to complete the inquiry within 3 months. It was further made clear in this 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 accordingly disposed of. Thus the issue of interest was left open. 7. Pursuant to the submission of the report by Mr. V.Y. Joshi, the 7th Inquiry Officer in the inquiry against the petitioner, the Disciplinary Authority passed an order dated 27-09-2002 awarding punishment of reduction in the petitioner’s monthly pension by Rs. 1000/- with permanent effect. The petitioner’s appeal challenging the above order was also rejected by order dated 6-03-2003 by the Appellate Authority. :4: 8. The petitioner therefore filed writ petition in this Court, being Writ Petition no. 1909 of 2003, challenging the order dated 27-09-2002 of the Disciplinary Committee and the order dated 6-03-2003 of the Appellate Authority. By order dated 16-06-2006, the learned Single Judge of this Court set aside the punishment orders dated 27-09-2002 and 6-03-2003 and observed that the orders were perverse, not justified and made only with a view to harass the petitioner and further held that the punishment was disproportionate to the acts of the petitioner. The learned Single Judge further observed that the petitioner was in the maze of inquiry for the last one and a half decade and that the facing of the inquiry of this dimension alone is itself a punishment for the petitioner. 9. After the disposal of the above Writ Petition No. 1909 of 2003 on 16-06-2006, the petitioner vide his letter dated 18-07-2006 called upon the respondents to make payment of interest of 18% p.a. on delayed payment of his retiral dues. As there was no response from the respondents, the petitioner filed a Notice of Motion bearing No. 366 of 2002 in Writ Petition No. 1545 of 2001, for interest on the :5: delayed payments. However,it appears that as the notice of motion was filed in a disposed of writ petition, this Court was pleased to allow the petitioner to withdraw the notice of motion and liberty was granted to him to file a fresh petition. That is how the present writ petition came to be filed by the petitioner. 10. The petitioner has appeared in person. He submitted that under the amended rule 14-B of The Mumbai Municipal Corporation Pension Rules, 1953, the Standing Committee, who is the competent authority, may withhold pension in whole or part in cases of proved misconduct only and therefore, in absence of any proved misconduct against him at the relevant time, the action of non payment of his monthly pension and other retiral benefits by the respondents was illegal and malafide. 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 illegal. He further submitted that in view of the order passed by the Division Bench of this Court whereby the issue of interest was left open, and in view of the setting aside of the punishment order of withholding his pension of Rs. :6: 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. 11. In support of his contentions the petitioner has relied upon the case of D.V. Kapoor Vs. UOI & D.V. Kapoor Vs. UOI & D.V. Kapoor Vs. UOI & Ors. Ors. Ors. reported in AIR 1990 SC 1923 to show that the right to gratuity and pension are statutory rights and the act of withholding retiral benefits has been held to be illegal by the Hon’ble Supreme Court. The petitioner has also relied upon the case of Vijay L. Vijay L. Vijay L. Mehrotra Mehrotra Mehrotra Vs. State of UP & Ors. Vs. State of UP & Ors. Vs. State of UP & Ors. reported in 2000 AIR SCW 2678, wherein the Hon’ble Supreme Court had granted interest at the rate of 18% p.a. on retiral benefits from the date of retirement till the date of payments. Relying 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 actual payment. The petitioner 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 :7: Section 7 which provides for interest on delayed payment of gratuity. 12. The respondents have 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 Commissioner (G.A.), provisional pension and PF amount was released in favour of the petitioner and 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 orders 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 :8: respondent-corporation had rightly withheld his pension. 13. Having heard the petitioner in-person and the learned Counsel for the respondents, the short point which arises for our consideration is - whether the petitioner is entitled to interest on delayed payment of his retiral dues? If yes, at what rate? 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:- "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. 15. In the case of D.S. Nakara V. Union of D.S. Nakara V. Union of D.S. Nakara V. Union of India, India, India, reported in (1983) 1 SCC 305 a Constitution Bench of the Hon’ble Supreme Court dealing with the issue of pension, has observed as follows:- :9: "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." The Apex Court further observed that: "Pension as a retirement benefit is in consonance with and furtherance of the goals of the Constitution. The goals for which pension is paid themselves give a fillip and push to the policy of setting up a welfare State because by pension the socialist goal of security from cradle to grave is assured at least when it is most needed and least available, namely in the fall of life. Therefore, when a Government employee is sought to be deprived of his pensionary right which he had earned while rendering services under the State, such deprivation must be in accordance with law" It may be noted that in the case in hand, the term ’pension’ under Rule 5(i)(d) of The Mumbai Municipal Corporation Pension Rules, 1953 includes gratuity. :10: 16. It is admitted in the affidavit filed by the respondent-corporation that gratuity, commutation of pension and encashment of unutilised leave were withheld by the respondent-corporation in view of the inquiry pending against the petitioner. Also admittedly, pursuant to the order of Additional Municipal Commissioner 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 dropped on 28.8.1998 and one inquiry 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 requesting the respondent-corporation to complete the inquiry 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 prejudice to the right of the petitioner to claim interest in respect of his :11: retiral dues. However, as the respondents failed to comply with the order dated 20.12.2001 the petitioner filed a contempt petition being Contempt Petition No.65/2002. The said contempt petition came to be disposed of by order dated 25.10.2002 on a personal undertaking of the counsel of the respondents, which resulted in the respondents ultimately handing over a cheque of Rs. 2,83,715/- to the petitioner. 17. Undisputedly the punishment order dated 27.9.2002 and 6.3.2003 came to be set aside by an order dated 16.6.2006 by learned Single Judge of this Court in Writ Petition No.1909/2003, which writ petition was filed challenging the punishment order dated 27.9.2002 of the Disciplinary Committee and order dated 6.3.2003 of the Appellate Authority. While setting aside the abovesaid orders, the learned Single Judge of this Court observed as under:- "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 :12: the acts for which he is charged. Such punishment cannot therefore, stand." The learned Single Judge directed the respondent-corporation to pay the pension to the petitioner within four months and to pay the full pension to him thereafter. 18. It is expected that all retiral benefits of an employee should be paid on the date of his retirement or so soon thereafter as reasonably possible if on account of any unforeseen circumstances, the payment could not be made on the date of retirement. It is noted that there was a change of seven inquiry officers in respect of the inquiry against the petitioner. The inquiry against the petitioner was kept pending for an unreasonably long period and that this act on the part of the respondent-corporation was not bonafide. Moreover, the learned Single Judge of this Court, has held that the orders in the inquiry were perverse and made only with a view to harass the petitioner. The deprivation of pension in absence of the petitioner being found ’guilty’ of grave misconduct or negligence, at the relevant time, was not in accordance with Rule 14-B of The Mumbai Municipal Corporation Pension Rules 1953 which :13: provides for withholding pension in certain cases only, and reads thus:- "Competent 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 Corporation if in any departmental or judicial proceedings, the pensioner is found guilty of grave misconduct or negligence during a period of his service including service rendered upon employment after retirement. Provided that if a part of pension is withheld or withdrawn, the amount of remaining pension shall not be reduced below the minimum pension fixed." Thus, the exercise of power of withholding pension of the petitioner by the respondents was without justification. 19. As recorded in our order dated 1.8.2007, the learned counsel for the respondents was 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. However, on the following date the learned counsel for the respondents expressed his inability to make any statement in that regard after taking instructions from the respondent-corporation. :14: 20. In the case of O.P. Gupta V. Union and O.P. Gupta V. Union and O.P. Gupta V. Union and Others Others Others, reported in (1987) 4 S.C.C. 328 the Apex Court while granting 12% interest on delayed payment of pension observed as follows:- Normally, this Court, as a settled practice, has been making direction for payment of interest at 12 per cent on delayed payment of pension. There is no reason for us to depart from that practice in the facts of the present case." 21. Considering the facts and circumstances of the case and the findings and observations of the learned Single Judge of this court 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 entitled to simple interest on account of the respondent-corporation withholding the retiral benefits of the petitioner. In our view, awarding interest at the rate of 12% p.a. would meet the ends of justice. 22. We therefore direct the respondent-corporation to pay to the petitioner interest at the rate of 12% per annum from the date on which the retiral benefit amounts became due to him on his retirement until payment. Such amount to be computed by the respondent-corporation and to be paid to the :15: petitioner within 12 weeks. 23. Consequently, for the reasons aforestated, the petition is allowed. Rule is made absolute in above terms. No costs. (J.N. (J.N. (J.N. PATEL, J.) PATEL, J.) PATEL, J.) (A.A. (A.A. (A.A. SAYED, J.) SAYED, J.) SAYED, J.)