Dhari Gram Panchayat Employees Union vs State of Gujarat and Another

D.H. Waghela, J.—In the first petition, SCA No. 11933 of 2000, the employees'' union representing 51 employees of respondent No. 2 Dhari Gram Panchayat (for short, "the Panchayat") has prayed to set aside the impugned order dated 26.10.2000 of respondent No. 2, whereby it was directed that the new pay scale adopted by Resolution dated 27.01.1998 being irregular and illegal, implementation thereof was to be stopped. The first effective order in the petition read as under:

Notice returnable on 20.12.2000. Meanwhile, Status Quo as on today to be maintained. Direct service permitted.

30.11.2000 Sd/- P.B. Majmudar, J.

After extension of the interim relief from time to time, the following order was made on 23.7.2001:

Rule. To be heard with SCA No. 4069 of 1998. Mr. Joshi, learned AGP waives service of Rule for respondent No. 1 and Mr. Devnani waives service of Rule for respondent No. 2. Interim relief to continue till then.

Dt. 23.7.2001 Sd/- P.B. Majmudar, J.

Thereafter, the petition appears to have been straightaway listed in the year 2009 and was heard with the two other petitions against the same Gram Panchayat for final disposal.

By Resolution No. 42 dated 27.01.1998 of the Panchayat, it was resolved to grant to the employees the benefit of pay scales in terms of the Recommendations of 5th Pay Commission, in accordance with Circular dated 07.01.1998 and other circulars of the Government issued from time to time. Accordingly, the benefits were granted by order dated 02.02.1998. According to the petition, under instructions or some order of District Development Officer (DDO), Amreli District Panchayat, Amreli, the benefits granted to the members of the petitioner union were withdrawn by the impugned order dated 26.10.2000 of Administrator of the Panchayat. In fact, as stated in the impugned order itself, DDO, Amreli had written a letter dated 12.9.2000 to instruct the Panchayat to immediately stop adoption of the 5th pay Commission Recommendations as it was against the rules and illegal. Upon that order being challenged, Administrator of the Panchayat has deposed that, as the Panchayat had passed the resolution without obtaining sanction, he had to stop, under the administrative order of the District Panchayat, the benefit of revised pay scale; and no question of complying with provisions of natural justice arose. Looking to the financial position of the Panchayat, it was not advisable to grant such benefits to the employees and if such financial burden was taken by the Panchayat, it would not have been in a position to provide even basic amenities to the residents of the area. It was not possible for the Panchayat to make both ends meet as the Panchayat was not receiving any grant from the Government, according to the affidavit of the Administrator of the Panchayat.

Under Secretary, Panchayats, Rural Housing and Rural Development Department of the State Government, has deposed for respondent No. 1 that employees of the Panchayat were not recruited and appointed by the ex-municipality or gram panchayat after following due procedure and they were neither allocated employees nor employees of the panchayat services as they were not recruited u/s 203 of the Gujarat Panchayats Act, 1961 or u/s 227 of the Gujarat Panchayats Act, 1993 (for short, "the Act"). Government Resolution (GR) dated 07.01.1998 was not applicable to the local cadre employees who were irregularly recruited and the Panchayat had not sent the proposal for adoption of 5th Pay Commission to the Government through DDO and hence the Panchayat could not have granted such benefits. Establishment expenditure required to be borne by the Panchayat u/s 228 of the Act was to be restricted to 45% of the total income as per GR dated 14.9.1993; and the Panchayat was exceeding that limit. It is also averred that the Panchayat had proceeded to recruit and appoint employees on its own resolutions, terms and conditions without following the prescribed procedure and obtaining sanction of the competent authority. GR dated 07.01.1998 did not apply to irregular appointees recruited in the local cadre of the Panchayat without following the legal procedure and the Panchayat was not empowered to grant the benefits of 5th Pay Commission without approval of the competent authority of the State Government. The aforesaid resolutions of the Government are annexed with the affidavit of the Under Secretary. It is clearly stipulated in GR dated 14.9.1993 that establishment expenditure shall be limited to 45% of the income of the Panchayat and necessary steps were to be taken within one year. Thereafter, the TDO and the DDO shall be required to review the financial status of Gram Panchayats and Nagar Panchayats and take necessary steps.

3.1 By filing affidavit-in-rejoinder, Assistant Engineer of the Panchayat has deposed, as a member of the petitioner union, that Panchayat is an independent statutory authority and local self-government and, therefore, the letter of Dy.DDO had no binding effect. That office bearers of the Panchayat were responsible for the financial position of the Panchayat. There were, in the year 2000, 51 regular employees and 82 daily wagers employed in the Panchayat. As on 14.12.2009, the total strength of employees serving in the Panchayat was 34 + 27 daily wagers. Relying upon recent GR dated 17.9.2007 of the State Government, it is averred that the employees were entitled to wages in terms of the Recommendations of 5th Pay Commission.

It was argued for the petitioners that Administrator was appointed u/s 257 of the Act and he had no power to make the impugned order, without even affording an opportunity of hearing to the employees, while the Panchayat was to bear all the additional expenditure. Relying upon judgment of this Court in Parshottambhai G. Chavda Vs. State of Gujarat and Others, it was submitted that power u/s 249 of the Act could not be exercised to suspend a resolution which was implemented. And, in any case, by GR dated 17.9.2007, the application of 5th Pay Commission to the Panchayat servants with effect from 01.01.1996 was sanctioned by the Government.

4.1 As against the above, learned Counsel Mr. Devnani, appearing for the Panchayat, submitted that, as soon as Administrator was appointed in the Panchayat, he had taken the impugned decision not to grant the benefits of 5th Pay Commission with immediate effect as it was de hors the rules. He further submitted that the employees concerned were not allocated employees and administrative expenditure of the Panchayat was exceeding 45% and hence the benefits wrongly given to the irregular employees were required to be recovered. Learned Counsel Mr. Munshaw, appearing for the District Panchayat, submitted that the Panchayat had not followed the due procedure for recruitment or appointment and the employees so appointed were not entitled to the benefit of new pay scales without prior approval of the District Panchayat or the State Government and the financial burden had, in fact, resulted into financial crisis and non -payment of salaries and wages to the employees.

It could not be gainsaid that, u/s 227 of the Act, Panchayat service is distinct from State service and it is required to be regulated by rules; and u/s 240, powers are conferred upon the Government to issue directions as it may think necessary for avoiding any overlapping of functions or shifting of responsibility and the Panchayats are bound to exercise their powers and perform their functions and duties in conformity with such directions. Under the provisions of Section 249 of the Act, Taluka Development Officer and DDO are empowered to suspend or prohibit execution of any order or resolution of a panchayat, if it is unlawful. The powers to revise or modify any order made under Sub-section (1) of Section 249 are also conferred upon DDO, which provides an alternative remedy for aggrieved parties. However, in the facts of the present case, the petitioner chose to directly approach this Court and, even as the prayer made in paragraph 14(C) of the petition to stay operation and execution of the impugned order dated 26.10.2000 having been not granted, continued to take the benefit of revised wages for its members. It is surprising and not explained by anyone on either side as to how the interim order to maintain status quo amounted to or could be interpreted as a license to evade the effect of the impugned order. There is no dispute about the fact that for the whole of nearly a decade no one either implemented the impugned order or made any effort to have the petition heard or to seek clarification of the order of interim relief. Thus, the vague order to maintain status quo was understood according to the convenience of the petitioner with the connivance of the Panchayat, amounting to abuse of the process of this Court.

Apparently, as a result of the aforesaid state of affairs, the Panchayat ran into financial difficulty and failed to pay wages to its employees for months on end. Therefore, the second petition being SCA No. 345 of 2009 came to be filed in the name of another trade union of employees with the prayers to direct the Panchayat to make payment of outstanding amounts of salary and allowances to 34 employees and to direct the State Government to release octroi maintenance grant regularly so as to make the Panchayat pay salary regularly. It is contended for the petitioner that the respondents could not deprive the 34 employees of the Panchayat of their salary and allowances and even as the Panchayat had received octroi maintenance grant amount of Rs. 48,57,872/- from 01.4.2007 to 31.3.2008, the Panchayat had paid Rs. 3,37,454/- per month to the employees, but the Panchayat was spending its income on non-productive expenses. Responding to that petition, Secretary of Panchayats has deposed that it was required to provide proper facilities and amenities to the residents and required funds so to as to discharge its duties. From December 2006 to December 2008, the Panchayat received octroi maintenance grant of Rs. 1,01,21,175/- and collected Rs. 21,61,443/-. The total salary paid to its employees including daily wagers was to the tune of Rs. 1,22,65,043/- which was far more than the octroi maintenance grant received from the State Government. The grievance is made that the Government was not releasing octroi maintenance grant as per its GR of May 2001; and it was only because of the default of the State Government that the Panchayat was unable to pay salaries regularly. By filing a further affidavit, it is also stated that, when the Panchayat came into existence on 04.3.1963, population of Dhari was 7353 as per the Census of 1961 and total sanctioned strength of the Panchayat was of 63 persons. The set-up of staff was modified in the year 1971 to increase it to 73 persons and then in 1975 to 75 persons. In spite of the population increasing to more than 17,000 as per the Census of 2001, additional staff was not approved by the Government, as against which 34 employees were employed and their appointments regularized. It was thought fit to appoint other daily wagers for carrying out day to day work and safai kamdars were paid Rs. 3,500/- per month as daily wager, as against regular salary of approximately Rs. 8,000/-. Out of such 83 daily wagers appointed by the Panchayat, 53 were appointed as safai kamdars and others were also employed for essential services.

6.1 Secretary of the respondent Panchayat has placed on record statements of income and expenditure for three years from April 2006 to December 2008. Taluka Development Officer has, in his affidavit, deposed that population of Dhari is 14,564 as per the Census of 2001 and has employed 34 permanent employees and 83 daily wagers and no grant or assistance are legally permissible and provided by the District Panchayat or the State Government. The Panchayat has huge burden of paying wages to its employees and most of its income is spent only on payment of establishment and administrative charges. It is averred that the Panchayat and its employees are responsible for the poor state of affairs as, on the one hand there is over-staffing and on the other hand they have failed to collect property tax, vehicle tax, water tax, electricity charges etc. That nearly Rs. 80 lakhs as on 01.01.2009 were recoverable from the villagers and due to lethargy, indiscipline and mismanagement, ultimate sufferer was the public at large. It is further stated that the expenses on staff, daily wagers and administration was more than 85% as against the limit of 45%.

6.2 The DDO has, in his affidavit, also reiterated that the GR dated 14.9.1993 contains specific directions to see that establishment expenses of the Panchayat were kept within the limit of 45% of the total income, that the Panchayat and its employees had failed to collect various taxes during the last three years and the outstanding amount was nearly Rs. 80 lakhs. A circular dated 16.2.2009 was sent to all TDOs instructing them to see that irregular recruitments were prevented and necessary actions were taken. Necessary actions were being taken to see that establishment expenditure was reduced by all the Gram Panchayats so that income of the Panchayats could be diverted to developmental activities and day to day facilities to the villagers.

6.3 By filing a further affidavit of the Secretary of Panchayats, it is stated that, as against the total sanctioned strength of 75 persons, only 35 persons were employed and 41 posts were vacant. Out of the employees working on the sanctioned set-up in 2009, only 17 persons were appointed regularly, i.e. after following proper procedure for appointment, and the remaining 18 persons were appointed without following the due process, simply by passing resolution. By filing affidavit of Under Secretary, Panchayats, Rural Housing and Rural Development Department, it is stated by the State Government that benefit of 5th Pay Commission was granted by the Panchayat without obtaining necessary approval from the competent authority. Even under GR dated 17.9.2007, it is envisaged that the benefits stipulated thereunder were available to allocated employees and employees working on regular pay scale and on posts which were sanctioned by the competent authority. It is averred on oath that even the benefits of 4th Pay Commission were extended to the employees of Dhari Gram Panchayat without prior approval of the Development Commissioner and in violation of GR dated 17.10.1989. Vide GR dated 14.9.1993, the Government has imposed conditions upon all Gram Panchayats to observe the limit of 45% on establishment expenditure, in line with the policy decision of the State Government with the wholesome purpose that substantial income of the Panchayat was not spent on salaries of the employees. It is also stated that majority of employees of the Panchayat were illegal appointees who could not claim any equity, equality or parity with either the allocated employees or the employees appointed after following due procedure. It is also stated that the District Panchayat was competent to reduce remuneration of officers and servants of the Panchayat under the provisions of Section 248 of the Act.

It is clear from the above summary of facts and contentions in the second petition (SCA No. 345 of 2009) that wages of even monthly rated regular employees were in arrears and the parties were blaming each other for the default in payment of regular salaries. Under the circumstances, this Court (Coram: M.R. Shah, J.) made an order herein on 24.3.2009, as under:

...

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In view of the above and without prejudice to the rights and contentions of the respective parties and only as a stopgap arrangement, the concerned State Government is directed to see that the actual grant is received by the concerned Panchayat on or before 26th March, 2009 and in turn respondent No. 2-Panchayat is directed to make the payment of one month salary to the concerned employees and pay the amount of premium under the policy of LIC, which is to be paid on or before 31st March, 2009. Respondent No. 2-Panchayat is directed not to disburse any amount out of the grant received except for the aforesaid purpose. In the meantime, respondent No. 2-Panchayat shall come out with a specific proposal how to deal with the excess staff/daily wager, because of whom, the problem is created. Stand Over to 20/04/2009.

Direct service is permitted.

(M.R. Shah, J.)

Pursuant to the above order and the observations made therein, the Panchayat has taken the action of terminating services of 56 daily rated employees to ensure payment of regular wages to permanent employees who were already before this Court. Out of those 56 employees, 26 sweepers employed on daily wage basis for 10 to 15 years under the Panchayat have approached this Court in the third petition, being SCA No. 342 of 2010, to challenge termination of their service by order dated 24.6.2009 and with prayers to order their reinstatement. It was, however, conceded on their behalf by learned senior advocate Mr.Girish Patel that, though the safai kamdars were employed on the work of permanent nature in discharge of essential statutory duties of the Panchayat and denial to them of regular salaries as also termination of their service was illegal and unconstitutional, they were immediately praying for only immediate reinstatement for restoring their livelihood, even as some of the employees concerned had also approached the Labour Court by raising individual industrial dispute. Thus, the prayer was restricted to reinstatement and continuation of the employees concerned at least as daily wagers in the interest of the employees, the essential services and justice.

The overall facts emerging from the above chronology of events depict a picture and a sad story of gross mismanagement, abuse of the process of Court, disregard for the statutory provisions, suffering of citizens and denial of justice. Firstly, adoption and grant of pay structure to the employees of the Panchayat in terms of the Recommendations of 5th Pay Commission was in clear violation of GR dated 14.9.1993; and when the policy contained therein to restrict establishment expenditure to 45% of the income was sought to be enforced, the employees had chosen to rush to this Court rather than exhaust the appropriate alternative remedy provided in the provisions of Sections 248 and 249 of the Act. Secondly, the interim order of this Court was conveniently interpreted by the parties to continue payment of higher wages in spite of the operation of impugned order dated 26.10.2000 being not stayed. Thirdly, neither the employees nor the Panchayat cared to seek any clarification of the interim order of this Court for nine years; but the employees filed another petition to claim regular payment of higher wages and allowances in the face of financial crisis faced by the Panchayat. Fourthly, the interim order in the second petition was put to the use of discharging daily rated employees rendering essential services in the sanitation department which discharges essential duties and functions of the Panchayat, enumerated in Schedule-I to the Act. Fifthly, the Panchayat as well as the employees have sought to blame the State Government for not releasing sufficient funds in time to ensure regular payment of salaries, without caring to take steps for increasing the income and reducing and restricting the establishment expenditure to the permissible limit.

It was as late as in the year 2007 that by resolution dated 17.9.2007, the State Government resolved to revise salaries of employees of the Panchayat in tune with the Recommendations of 5th Pay Commission, with effect from 01.01.1996 but subject to the conditions stipulated in the GR. One of the important clauses of that GR is that revised wages were to be paid by the Panchayat concerned from its own funds and keeping in view its financial condition. The revision of pay scale under the resolution is made applicable only to allocated employees of a gram panchayat and to the employees appointed on regular pay scale on the posts created with prior sanction of the Government. As stated at the bar, DDO, Amreli was the appropriate authority under Clause 10 of GR dated 17.9.2007 to decide upon the issue of applicability of the GR in cases of new employees and the date and manner of giving effect to the revised pay scales in such cases. Therefore, even as the first petition being SCA No. 11933 of 2000 is required to be dismissed for the reasons discussed hereinabove and part of the salaries paid in excess to the employees may be required to be recovered as a result thereof, the final relief has to be moulded in light of the subsequent development in the form of later GR dated 17.9.2007. Similarly, it having been submitted that the problem of arrears may not survive upon appropriate fixation from appropriate date of revised wages to be paid to the employees, the second petition for regular payment of wages would also not survive, if the final relief is suitably moulded. And in view of the limited prayer made in the third petition, the following directions, in the peculiar facts and circumstances of the cases, would meet the ends of justice while ensuring compliance with the relevant provisions of law.

Accordingly, all the three petitions are disposed with the following directions:

(1) SCA No. 11933 of 2000 is dismissed, subject to the direction that the cases of permanent or regular monthly rated employees appointed on permanent posts shall be referred to the District Development Officer, District Panchayat, Amreli (DDO) within a period of two months for fixing date of revision of their pay scales and he shall decide, after giving an opportunity of hearing to the Panchayat and union/representative of its employees, the date from which and the pay-scale to which the employees concerned shall be entitled, in terms of G.R. Dated 14.09.1993 and 17.09.2007 mentioned herinabove. The Chief Officer of the Panchayat shall, within a period of one month, furnish necessary details of the employees and payments made to them in tabular form to the DDO. Thereafter, the respondent Panchayat shall prepare a statement of amounts paid in excess or less than required to be paid according to decision of the DDO, and such amounts of arrears shall be recovered or paid, as the case may be, in accordance with the following further directions.

(2) SCA No. 345 of 2009 is disposed with the direction that the regular monthly rated employees shall be regularly paid, from month to month, at least 50% of their gross salaries after deducting the amounts, if any, required to be recovered as arrears on account of earlier excess payment and after re-fixing their salaries in accordance with the decision of the DDO as aforesaid. As for the employees from whom no amounts are required to be recovered or remaining to be recovered, the Panchayat shall regularly pay full salaries to which they may be legally entitled in accordance with the provisions of the Payment of Wages Act and the Minimum Wages Act. If any arrear is required to be paid to any employee in addition to regular salary and allowances, if may be paid in maximum twelve monthly instalments.

(3) SCA No. 342 of 2010 shall stand disposed with the direction that, without prejudice to the rights and contentions of the parties in any other proceedings before any other forum, the Panchayat shall re-employ such of the daily rated employees who are available and whose services could be availed, in order of their seniority, and pay them minimum wages prescribed under the Minimum Wages Act or such higher wages as the Panchayat may determine, having regard to its financial condition and government resolutions or regulations in that regard.

(4) The above directions shall be subject to and not in derogation of the applicable provisions and powers of the Taluka Development Officer and District Development Officer under the Gujarat Panchayats Act, 1961.

Civil Applications stand dismissed in view of disposal of the main petitions in above terms.