State of Gujarat vs V.K. Shah

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C.L. Soni, J.—The State and its authorities have filed this appeal under Clause 15 of the Letters Patent to the limited extent of challenging the judgment dated 17.12.2013 passed by the learned Single Judge insofar as the learned Single Judge has while directing the appellants to consider and grant first higher grade pay scale to the respondent, ordered to pay interest at the rate of 6% on the benefits of higher grade scale.

We have heard learned advocates for the parties.

Learned Additional Advocate General Mr. Prakash Jani appearing with learned Assistant Government Pleader Mr. Rutvij Oza submitted that the benefit of higher grade scale is not available to an employee as a matter of right. The higher grade scale is an incentive provided by the Government under the special policy on completion of particular number of years of service and on satisfying other criteria under the special policy for such benefits. Mr. Jani submitted that if there are genuine reasons for delay in releasing such benefits to an employee and if the employee is ultimately found to be entitled for such benefits, he may get such benefits under the scheme but he is not entitled to any interest on such benefits because such benefits are not automatic. Mr. Jani submitted that in fact, the policy dated 16.8.1994 for higher grade scale is an amended policy, wherein it is recorded that on account of greater financial burden on the Government, the policy was streamlined on various conditions for the grant of higher grade scale only to those employees satisfying the requirement under the policy. Mr. Jani submitted that against respondent, criminal proceedings for serious charge of corruption were pending and the respondent was suspended from service with effect from 13.10.1995. He was acquitted by order dated 23.1.1998 by giving benefit of doubt. Thereafter, the Government preferred appeal before this Court on 20.4.1998. However, the respondent was reinstated on 24.9.1998 on account of his acquittal by the Sessions Court. Mr. Jani submitted that the appeal preferred by the Government was dismissed by this Court only on 9.7.2009. Mr. Jani submitted that on account of the above proceedings, the respondent''s case could not be recommended for grant of higher grade scale. But, after dismissal of the appeal, the case of the respondent was recommended and only thereafter, the respondent became entitled to higher grade scale. Mr. Jani submitted that the respondent has already got the benefit of higher grade scale on the basis of the judgment of the learned Single Judge, however since the benefit of higher grade scale is an incentive benefit, he cannot be made entitled to interest. Mr. Jani submitted that the Government has by resolution dated 31.3.2005 provided that the employee against whom any criminal case or appeal is pending shall not be entitled to the benefit of higher grade scale till such proceedings are finally decided. Mr. Jani, therefore, submitted that it cannot be said that the appellants were responsible for delay in releasing the benefit of higher grade scale to the respondent. He thus urged to quash and set aside the judgment of the learned Single Judge insofar as the learned Single Judge has directed the appellants to pay interest at the rate of 6% with higher grade scale benefits to the respondent.

As against the above arguments, learned advocate Mr. Vaibhav Vyas for the respondent submitted that the delay caused in not releasing the benefit of higher grade scale to the respondent was not for any fault on the part of the respondent but the appellants did not release such benefits for very long time though the respondent had become entitled for such benefits right from the year 1995. Mr. Vyas submitted that by virtue of the policy for higher grade scale, right had accrued to the respondent to receive such benefits on completion of 9 years in service in the same cadre. Mr. Vyas submitted that if after long time, it is found that the employee is entitled to such benefits which are withheld by the Government authorities, the concerned employee is certainly entitled to such benefits with interest otherwise the very purpose of granting such benefits will be frustrated. Mr. Vyas submitted that since the respondent was entitled to such benefits right from 1995 onwards and since such benefits were retained by the appellants till the criminal proceedings were ended in acquittal, the appellants will be under obligation to release such benefits with interest. Mr. Vyas submitted that it is on account of the proceedings initiated by the appellants against the respondent, the respondent could not get such benefits and therefore, the appellants were responsible for delay in release of such higher grade scale benefits. Mr. Vyas submitted that when the petition was admitted by the learned Single Judge vide order dated 27.2.2008, it was clearly provided therein that if the respondents will ultimately be held entitled to the benefits of higher grade scale, payment would be made to him with bank rate interest from the date he is held entitled for such benefits. Mr. Vyas submitted that in such view of the matter, the learned Single Judge has committed no error in ordering payment of higher grade scale with interest at the rate of 6% in favour of the respondent. He thus urged to dismiss the appeal.

Having heard learned advocates for the parties, it appears that the respondent was not made entitled to the benefit of the higher grade scale on completion of 9 years of service under the Government Resolution dated 16.8.1994 on account of the criminal complaint lodged against the respondent under the Prevention of Corruption Act in the month of December 1994. Pursuant to such complaint, the respondent was also suspended on 13.10.1995. The criminal case ended in acquittal by the judgment of the learned Sessions Judge dated 23.1.1998. However, against such judgment, the State preferred criminal appeal before this Court on 20.4.1998. It is stated in the affidavit-in-reply that in view of the Government Resolution dated 31.3.2005, benefits of higher grade scale were not released to the respondent. It is further stated that after the appeal preferred by the State against the order of acquittal was dismissed by this Court on 9.7.2009, the respondent was given promotion to the post of Assistant Commissioner of Labour on 14.10.2009 and recommendation was also made on the same day by the Departmental Promotion Committee to grant benefit of first higher grade scale to the respondent with effect from 10.4.1995. It is further stated that after the learned Single Judge passed the order, whatever difference was to be paid to the respondent, the same was also paid on 18.3.2014.

Thus, so far as the main prayer to grant higher grade scale benefit as ordered by the learned Judge was satisfied. However, learned Single Judge has ordered that such benefits shall be inclusive of interest at the rate of 6% per annum. The question is whether the respondent could be made entitled to interest at the rate of 6% on the higher grade scale benefits released to him after the criminal appeal filed by the State was dismissed.

Clause 5 of the Government Resolution dated 31.3.2005 at Annexure-R-II provides that if an employee is acquitted for any reason in the criminal case and if no departmental inquiry is initiated for the same charges, the employee shall be entitled for higher grade scale benefits from the date such employee had become entitled. However, if the decision is taken to file appeal against the order of acquittal or to hold departmental inquiry, the employee shall not be entitled to the benefit of higher grade scale till final decision of such appeal or departmental inquiry. The decision to grant benefit shall be taken after considering the final decision in such appeal or departmental inquiry.

Therefore, as per the above-said resolution of the Government, the concerned authority is justified rather under the direction of the Government Resolution not to release the benefit of higher grade scale till the appeal is finally decided.

In the present case, criminal appeal filed against the respondent was dismissed on 9.7.2009. Therefore, it cannot be said that for no good reason, the appellants did not release the higher grade scale benefits to the respondent. If the respondent was not entitled to get higher grade scale benefits till the criminal appeal filed against him by the State was decided, it cannot be said that the appellants wrongfully withheld the amount of the respondent towards the higher grade scale benefits.

As stated above, after dismissal of the criminal appeal, the respondent was given promotion and recommendation was also made to release his higher grade scale benefits. Such process since was undertaken, the respondent could not claim as a matter of right the interest on the amount of higher grade benefits on the ground that there was delay in payment of such higher grade scale benefits to him.

When the petition was filed by the respondent in the year 2008, the criminal appeal was pending against him. Learned advocate Mr. Vyas would then submit that when the petition was admitted, it was observed in the order dated 27.2.2008, if the respondent is held entitled to the pay scale, the payment would be made with bank rate interest from the date he is held entitled to be paid. However, such observation simplicitor cannot be taken as a straight entitlement of the respondent for grant of interest.

The respondent, as stated above, could not be said to be entitled to the benefits of higher grade scale till disposal of the criminal appeal as per the resolution dated 31.3.2005 of the State Government. Thereafter, if there was a process undertaken for release of such benefits, the respondent cannot claim benefit of interest on such time taking process.

It is required to be noted that the higher grade scale benefits are kind of incentives given by the State Government by way of special policy under the Government Resolution dated 16.8.1994. Under this resolution, employee does not become automatically entitled to such benefits. In fact, in this very resolution, it is stated that the Government had to suffer heavy financial burden, therefore, this amended policy was required to be brought into force. The policy being the kind of additional benefit for the employees who remain stagnant in getting promotion, if for genuine reasons, the benefits under the policy could not be released to any employee, the Government cannot be further burdened by making the employee entitled to interest on such benefits. We, therefore, find that in the facts of the case, the respondent was not entitled to any interest on the benefit of higher grade scale made available to him under the above-said policy.

In the case of Union of India (UOI) and Others Vs. Dr. J.K. Goel, , the Hon''ble Supreme Court has held and observed in para 9 as under:-

In these circumstances we have to examine whether the order of the Tribunal granting interest @ 12% per annum to the respondent for the period January 1986 to March 1992 can be upheld. In the first place, there is no provision of law under which such interest can be granted. Learned Advocate for the respondent, however, has contended before us that on equitable considerations, the Tribunal has granted interest @ 12% per annum to the respondent and we need not interfere with the discretion exercised by the Tribunal in this regard. But looking to the facts and circumstances of the present case, we cannot accept the submission made by learned Advocate for the respondent. Before any interest can be granted on equitable considerations, it is necessary that the facts of the case should be examined to ascertain whether there are any special equities which would justify the grant of such interest although there is no provision in law for such grant. We have failed to find any such equities in favour of the respondent in the present case. The respondent along with others was considered by the Departmental Promotion, Committee for the grant of selection grade only in 1990. All those who were selected by the Departmental Promotion Committee and granted selection grade w.e.f. 1.1.86 were given the difference in salary and other emoluments soon after the issuance of the order granting them selection grade. None of them received interest from January 1986 on the amounts so paid, although they were granted selection grade w.e.f. 1.1.86 In the case of the Departmental Promotion committee immediately and the sealed cover procedure had to be resorted to because his integrity was not certified by the Department in view of the two memoranda having already been issued to the respondent. We will assume in favour of the respondent that these memoranda as well as the charge-sheet which has been subsequently issued, are unwarranted. Nevertheless, the Departmental Promotion Committee was required to adopt the sealed cover procedure for valid reasons, it was only on account of the order dated 3rd of January, 1991 issued by the Central Administrative Tribunal, Delhi, that the sealed cover was opened, although investigations were pending and a charge-sheet had also been issued. In these circumstances selection grade was granted to the respondent by the order dated 11th of March 1992. It is difficult to see any equities in favour of the respondent which would require granting on any interest to him form 1st January, 1986 as has been done in the present case. At any rate, when the Departmental Enquiry is not complete and the respondent has not so far been exonerated of the charges made against him, the grant of interest appears to be wholly unjustified.

In light of the above principles of law, interest on equitable consideration cannot be granted on the benefits under the policy for higher grade scale. In a given facts of the case, when it is found that there is wrongful withholding of any amount of the employee without any reason and in arbitrary manner, the Court may exercise its discretion in particular facts situation for grant of interest but it is not available to an employee as a matter of right. It is not a case where it could be alleged that there was unjust enrichment by the appellants by wrongfully withholding of any amount belonging to the respondent. If such was not the case, awarding of interest would amount to restitution of an amount which never belonged to the respondent. Under the circumstances, the order awarding interest by the learned Single Judge needs to be interfered with.

We, therefore, allow the appeal and quash and set aside the judgment dated 17.12.2013 passed by the learned Single Judge insofar as the learned Single Judge has awarded interest at the rate of 6% to the respondent on the benefit of higher grade scale and other consequential benefits. The appeal is disposed of accordingly with no order as to costs.

In view of the order passed in the Letters Patent Appeal, Civil Application would not survive and shall stand disposed of accordingly.