THE STATE OF ANDHRA PRADESH AND ANOTHERversusSMT. DINAVAHI LAKSHMI KAMESWARI

694                       [2021]
               SUPREME COURT     1 S.C.R. 694
                              REPORTS                     [2021] 1 S.C.R.


A          THE STATE OF ANDHRA PRADESH AND ANOTHER
                                       v.
                 SMT. DINAVAHI LAKSHMI KAMESWARI
                         (Civil Appeal No. 399 of 2021)
B                             FEBRUARY 08, 2021
               [DR. DHANANJAYA Y CHANDRACHUD AND
                               M. R. SHAH, JJ.]
             Disaster Management Act, 2005 – COVID-19 – Pandemic –
      Deferment of the salaries and pensions by the State – The revenues
C     of the State were impacted by the onset of the pandemic – As an
      urgent measure, on 31.03.2020 the State deferred the salaries/wages/
      remuneration/honorarium/pensions on gross basis for the month of
      March 2020, payable in April 2020 and would continue to remain
      in force until further orders – On 04.04.2020, there was a
D     modification by the State, which provided payment of full salary to
      the employees of the medical and health department, police
      department and sanitation workers – On 26.04.2020, further
      modification was provided with direction for full payment of pension
      to pensioners - Writ petition was filed before the High Court – The
      gravamen of the grievance was that salaries and pensions are due
E     as a matter of right to employees and to the former employees who
      have served the State – Consequently, a direction was sought in the
      petition to the State Government to pay the outstanding salaries
      and pensions which had remained due – The High Court held that
      the State could not by means of a government order have provided
F     for the deferment of salaries and pension without following recourse
      to law – The High court directed (i) payment of the deferred salary
      for the months of March-April 2020 together with interest at the
      rate of 12% p.a. and payment of deferred pension for the month of
      March 2020 with a similar rate of interest – On appeal, held: On 18
      November 2020, the Court issued direction to the effect that the
G     deferred portion of the payments on account of salaries, pensions
      and honoraria due to the employees or, as the case may be, to former
      employees be paid in two equal tranches – The issue in regard to
      the payment of interest was stayed by the Court – In pursuance, the
      State complied with the directions for payment of the outstanding
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                                      694
   THE STATE OF ANDHRA PRADESH AND ANOTHER v.                              695
         SMT. DINAVAHI LAKSHMI KAMESWARI

dues in two tranches – Insofar as the interest is concerned, the rate      A
of 12% p.a. which was fixed by the High Court was scaled down –
The Government directed to pay simple interest computed at the
rate of 6% p.a. on account of deferred salaries and pensions.
        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 399 of
2021.                                                                      B
      From the Judgment and Order dated 11.08.2020 of the High Court
of Andhra Pradesh at Amravati in Writ Petition (PIL) No. 128 of 2020.
      J. N. Bhushan, AAG, Shekhar Naphade, Sr. Adv., Mahfooz Ahsan
Nazki, Polanki Gowtham, Shaik Mohamad Haneef, T. Vijaya Bhaskar
Reddy, Amitabh Sinha, Shrey Sharma, Advs. for the Appellants.              C

      Yelamanchili Shiva Santosh Kumar, Naumene Suraparaj
Karlapalem, Tarun Gupta, Advs. for the Respondent.
        The following Order of the Court was passed:
                                ORDER                                      D

        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            E
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:
                                                                           F
        “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 2019-20. 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     G
        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.
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696            SUPREME COURT REPORTS                           [2021] 1 S.C.R.


A           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
B           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:
C
               (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
D                      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
E                      Government employees, including work-charged
                       employees & persons engaged under the category of
                       direct individuals professions & through 3rd party, except
                       Class-IV Employees;
               (iv)    There shall be (10)% deferment in respect of Class-IV,
F                      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 mutatis-
                       mutandis in respect of the retired employees in the
                       respective categories.
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               (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 /
H                      Pensions.”
    THE STATE OF ANDHRA PRADESH AND ANOTHER v.                                697
          SMT. DINAVAHI LAKSHMI KAMESWARI

       4. It is also provided that the above orders would come into force     A
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              B
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                  C
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 Sessions Judge. The            D
gravamen of the grievance was that salaries and pensions are due as a
matter of right to employees and, as the case may be, to former employees
who have served the State. Consequently, a direction was sought in the
petition to the State Government to pay the outstanding salaries and
pensions which had remained due.
                                                                              E
      8. The High Court by its judgment and order dated 11 August
2020 held that:
      (i)     The PIL at the behest of a public spirited citizen was
              maintainable, the petitioner before the High Court having
              instituted the proceedings pro bono without any personal        F
              interest;
      (ii)    Pension is payable to the retired employees for the past
              services rendered by them to the State;
      (iii)   Under Rule 9 of the Andhra Pradesh Revised Pension Rules
              1980, pension can only be withheld or deferred under            G
              specific circumstances such as if the pensioner is found
              guilty of grave misconduct or negligence during employment
              in a departmental or judicial proceeding. These
              circumstances had not been established;
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698               SUPREME COURT REPORTS                          [2021] 1 S.C.R.


A           (iv)    Article 72 of the Andhra Pradesh Financial Code deals with
                    the payment of salary to employees of the State, and
                    provides that salary is payable on the last day of every month;
            (v)     The entitlement to the payment of salary is intrinsic to the
                    right to life under Article 21 and to the right to property
B                   which is recognized by Article 300A of the Constitution;
            (vi)    The State could not by means of a government order have
                    provided for the deferment of salaries and pensions without
                    following recourse to law.
            (vii) Although the GOMs make reference to the state plan under
C                 Section 23 of the Disaster Management Act, 2005, none of
                  the provisions of the said Act provide for deferred payment
                  of salaries or pensions.
             9. On the above premises, the High Court directed (i) payment of
      the deferred salary for the months of March-April 2020 together with
D     interest at the rate of 12% per annum and (ii) payment of deferred
      pension for the month of March 2020 with a similar rate of interest.
              10. Aggrieved by the judgment of the High Court, the Government
      of Andhra Pradesh moved these proceedings under Article 136 of the
      Constitution. The State Government clarified in its Special Leave Petition
E     that it was restricting its challenge only to the component of interest
      which had been imposed by the judgment and order of the High Court.
      On 18 November 2020, while considering the Special Leave Petition at
      the preliminary hearing, the Court issued a direction to the effect that
      the deferred portion of the payments on account of salaries, pensions
F     and honoraria due to the employees or, as the case may be, to former
      employees be paid in two equal tranches. The first was directed to be
      paid on or before 15 December 2020, while the second was directed to
      be paid on or before 15 January 2021. The direction in regard to the
      payment of interest was stayed by this Court.
             11. In pursuance of the above directions, the Government of Andhra
G
      Pradesh has disbursed the full amount of salary and pensions which
      came to be deferred by the GOMs which have been noted earlier. The
      only issue which now survives for determination is the liability to pay
      interest.

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    THE STATE OF ANDHRA PRADESH AND ANOTHER v.                                   699
          SMT. DINAVAHI LAKSHMI KAMESWARI

       12. Mr Shekhar Naphade, learned senior counsel appearing on               A
behalf of the appellants with Mr Mahfooz Ahsan Nazki, learned counsel,
submits that the decision to defer the payment of salaries and pensions
was taken due to the precarious financial position in which the State
found itself as a consequence of the pandemic. Mr Naphade submitted
that immediately after the issuance of first GOMs, a relaxation was
                                                                                 B
provided for front-line workers such as those in the police, health and
sanitation departments. Moreover, by a subsequent relaxation a direction
was issued for payment of pensions to the pensioners. Hence, it has
been submitted that the State had acted bona fide and there would be
no reason to saddle it with the liability to pay interest. Alternately, it has
been submitted that if interest is directed to be paid, the payment should       C
be confined only in regard to the employees of the State falling in
categories 3, 4 and 5 of the GOMs dated 31 March 2020.
       13. Opposing the submissions of Mr Naphade and Mr Nazki, Mr
Yelamanchili Shiva Santosh Kumar, learned counsel appearing on behalf
of the respondents, urged that the intervention of the High Court must           D
be understood in the perspective of the background facts, namely, that
the State had intervened by issuing an administrative order in exercise
of its powers under Article 162 of the Constitution without enacting a
proper legislation for the deferment of salary or, as the case may be,
pensions. Learned counsel highlighted the serious hardships which would
have been caused to pensioners as a result of the order of deferment             E
and hence submitted that the High Court is fully justified in entertaining
the PIL and in directing payment of interest at the rate of 12% per
annum.
       14. The direction for the payment of the deferred portions of the
salaries and pensions is unexceptionable. Salaries are due to the                F
employees of the State for services rendered. Salaries in other words
constitute the rightful entitlement of the employees and are payable in
accordance with law. Likewise, it is well settled that the payment of
pension is for years of past service rendered by the pensioners to the
State. Pensions are hence a matter of a rightful entitlement recognised          G
by the applicable rules and regulations which govern the service of the
employees of the State. The State Government has complied with the
directions of this Court for the payment of the outstanding dues in two
tranches. Insofar as the interest is concerned, we are of the view that
the rate of 12% per annum which has been fixed by the High Court
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700                SUPREME COURT REPORTS                       [2021] 1 S.C.R.


A     should be suitably scaled down. While learned counsel for the respondents
      submits that the award of interest was on account of the action of the
      Government which was contrary to law, we are of the view that the
      payment of interest cannot be used as a means to penalize the State
      Government. There can be no gainsaying the fact that the Government
      which has delayed the payment of salaries and pensions should be
B
      directed to pay interest at an appropriate rate.
             15. We accordingly order and direct that in substitution of the
      interest rate of 12% per annum which has been awarded by the High
      Court, the Government of Andhra Pradesh shall pay simple interest
      computed at the rate of 6% per annum on account of deferred salaries
C     and pensions within a period of thirty days from today. This direction
      shall, however in the facts and circumstances, be confined to categories
      3, 4, 5 and 6 of GOMs No 26 dated 31 March 2020. We clarify that
      interest shall be paid to all pensioners of the State at the rate of 6% per
      annum on the deferred portion, for the period of delay. Having regard to
D     the prevailing bank interest, the rate of 12% per annum which has been
      fixed by the High Court, would need to be and is accordingly reduced.
             16. The appeal is accordingly disposed of in terms of the above
      directions. There shall be no order as to costs.
             17. Pending applications, if any, stand disposed of.
E
      Ankit Gyan                                                Appeal disposed of.




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