SWARAJ ABHIYAN vs UNION OF INDIA

,,,

Madan B. Lokur, J.",,,

1.In the record of proceedings of this Court dated 9th August, 2017 it is noted that learned counsel for the petitioner would like to highlight three issues",,,

pertaining to the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (for short the Act) and the Scheme framed",,,

thereunder. These issues are:,,,

1.Delay in payment of wages and compensation to the beneficiaries under the Act and the Scheme framed thereunder.,,,

2.Reduction in person days and consequent reduction in allocation of funds from the projection made by the State Governments and the Union,,,

Territory Administrations.,,,

3.Absence of social audits being conducted.,,,

2.We have heard learned counsel for the petitioner as well as the learned Attorney General in detail in respect of these issues and have also gone,,,

through the various affidavits and written submissions.,,,

3.The Act was enacted by Parliament with the objective, inter alia, of enhancing the livelihood security of poor households in rural areas by providing",,,

at least one hundred days guaranteed wage employment to every such household whose adult members volunteer to do unskilled manual work.,,,

4.Section 3(1) of the Act provides that the State Government shall in rural areas (as notified by the Central Government) provide to every household,,,

whose adult members volunteer to do unskilled manual work not less than one hundred days of such work in a financial year in accordance with the,,,

Scheme made under the Act. Section 3(3) provides that the disbursement of daily wages shall be made on a weekly basis or in any case not later than,,,

a fortnight after such work has been done. Section 3 of the Act reads as follows:,,,

“3.Guarantee of rural employment to households. - (1) Save as otherwise provided, the State Government shall, in such rural area in the State as",,,

may be notified by the Central Government, provide to every household whose adult members volunteer to do unskilled manual work not less than one",,,

hundred days of such work in a financial year in accordance with the Scheme made under this Act.,,,

(2)Every person who has done the work given to him under the Scheme shall be entitled to receive wages at the wage rate for each day of work.,,,

(3)Save as otherwise provided in this Act, the disbursement of daily wages shall be made on a weekly basis or in any case not later than a fortnight",,,

after the date on which such work was done.,,,

(4)The Central Government or the State Government may, within the limits of its economic capacity and development, make provisions for securing",,,

work to every adult member of a household under a Scheme for any period beyond the period guaranteed under sub-section (1), as may be",,,

expedient.â€​,,,

5.Section 4 of the Act provides that to give effect to the provisions of Section 3 thereof every State Government shall frame a Scheme providing not,,,

less than one hundred days of guaranteed employment in a financial year to every household in the rural areas covered under the Scheme and whose,,,

adult members, by application, volunteer to do unskilled manual work subject to the conditions laid down in the Act and in the Scheme.",,,

6.In terms of Section 4 of the Act a working Scheme has been formulated and is in place and there is no dispute in this regard.,,,

Reduction in person days through approved labour budget and allocation of funds,,,

7.The grievance of the petitioner under this head is succinctly stated and understood by the Union of India in its written submissions of 14th March,",,,

2018 as follows:,,,

(a)“Approved Labour Budget†violates the essence of the Act which does not envisage any role for the Central or State Government in altering,,,

the labour budget in any form.,,,

(b)The labour budget projections are arrived at through the process spelt out in Section 14(6) and paragraph 7 of Schedule I of the Act and any,,,

reduction of the labour budget goes against the spirit of the Act.,,,

(c)The Central Government has started exercising discretionary powers in deciding how much a State can spend on generating employment.,,,

(d)The generation of the Muster Roll is halted once the State has reached the “Approved Labour Budgetâ€​.,,,

To appreciate the grievance of the petitioner, it is necessary to refer to a few more provisions of the Act.",,,

Approved labour budget,,,

8.Article 243-G of the Constitution was introduced by the 73rd Amendment Act and this endows the Panchayats with such powers and authority as,,,

may be necessary to enable them to function as institutions of State Government.,,,

9.Section 14 of the Act provides for the appointment of a District Programme Coordinator who is the Chief Executive Officer of the District,,,

Panchayat or the Collector or any other district level officer of an appropriate rank as decided by the State Government. The District Programme,,,

Coordinator is expected to implement the Scheme in the district, in addition to his/her other functions.",,,

10.Section 14(6) of the Act requires the District Programme Coordinator to prepare, in the month of December every year, a labour budget for the",,,

next financial year containing the details of anticipated demand for unskilled manual work in the district and the plan for engagement of labourers in,,,

the works covered under the Scheme and submit it to the District Panchayat.,,,

11.The step by step requirement (as submitted by the petitioner and in which there is no serious disagreement voiced by the Union of India) for,,,

identification of works, their finalization, planning and approval of the labour budget under the Act and the Scheme is as follows:",,,

Step 1,"Gram Panchayat identifies works to

be taken up in area based on

recommendations of the Gram/Ward

Sabha","Section 16(1) of the Act:

“The Gram Panchayat shall be responsible for

identification of the projects in the Gram Sabha area to

be taken under a Scheme as per the recommendations

of the Gram Sabha and the Ward Sabha and for

executing and supervision of works.â€​",

Step 2,"Gram Panchayat to forward the

works identified by the Gram

Sabha to the Programme Officer for

scrutiny + preliminary approval","Section 16(4) of the Act:

“The Gram Panchayat shall forward its proposals

for the development projects including the order of

priority between different works to the Programme

Officer for scrutiny and preliminary approval prior to

the commencement of the year in which it is proposed

to be executed.â€​",

Step 3,"Programme Officer at the Block level

consolidates plans received by

allGram","Section 15(4) of the Act:

“The Programme Officer shall prepare a plan for

the Block under his jurisdiction by",

,Panchayats,"consolidating the project proposals prepared by the

Gram Panchayat and the proposals received from

intermediate panchayatsâ€​",

Step 4,"Block Panchayat to approve the

block level plan prepared by the

Programme Officer and forwarding it

to the District

Panchayat for approval","Section 16(3)(b) of the Act:

“to approve the Block level Plan for forwarding it

to the district Panchayat at the district level for final

approvalâ€​",

Step 5,"District Programme

Coordinator to consolidate all Block

level plans and submit it to the District

Panchayat","Section 13(3)(a) of the Act:

“The District Programme Coordinator shall

“consolidate the plans prepared by the Blocks and

project proposals received from implementing agencies

for inclusion in the shelf of projects to be approved by

the

Panchayat at the District levelâ€​",

Step 6,"District Panchayat finalizes and

approves block-wise works to be

taken up under the

Scheme","Section 13(2)(a) of the Act:

“The functions of the Panchayats at the district

level shall be-

(a) To finalise and approve block-wise shelf of

projects to be taken up under a programme

under the Schemeâ€​",

16.Essentially, the submission of learned counsel for the petitioner is that first of all there cannot be an ‘agreed to labour budget’ for the",,,

reason that once the State Government raises a demand for implementation of the Scheme under the Act, the Central Government must release the",,,

funds without any reduction in the quantum. The second objection by learned counsel for the petitioner is that if the amount demanded by the State,,,

Government is not released there is a very strong possibility of some persons not being able to get employment due to insufficiency of funds and,,,

also due to the informal cap on the availability of funds.,,,

17.We are not in agreement with learned counsel on both the submissions. We may mention that we have already dealt with some facets of this,,,

issue in our judgment and order of 13th May, 2016 and have nothing to add to that.",,,

18.Rule 5 of The National Employment Guarantee Fund Rules, 2006 provides, inter alia, for release of grants from the National Employment",,,

Guarantee Fund (NEGF) to the State Governments and Union Territory Administrations. It prescribes that:,,,

“(1)Before the beginning of each financial year on or before 31st January, all Secretaries of the State Governments and Union Territories",,,

concerned with the implementation of the Act and the State Employment Guarantee Scheme shall present their annual work plan and labour budget,,,

to the Ministry of Rural Development.,,,

(2)The State Governments and Union Territories may also in their annual work plan and labour budget submit proposals for any work other than,,,

those specified in Schedule I of the Act.,,,

(3)The Ministry of Rural Development may examine the proposals received by it on or before the 31st of January of each financial year and review,,,

the performance of the States and Union Territories with respect to the implementation of the Act and estimate the amount to be released to the,,,

State Governments and Union Territory Administrations from the National Fund.,,,

(4)Release of funds to the State Governments and Union Territory Administrations shall be made in accordance with the directions issued by the,,,

Ministry of Rural Development from time to time.â€​ [Emphasis supplied by us].,,,

19.It is quite clear that apart from anything else, the Central Government is statutorily empowered to scrutinize and assess the funds to be released",,,

to the State Governments and Union Territory Administrations for the purposes of the Act. The final assessment is made by the Empowered,,,

Committee in consultation with the State Governments and Union Territory Administrations.,,,

Therefore, it is not as if the ‘agreed to labour budget’ or the ‘approved labour budget’ is fixed arbitrarily by the Central Government.",,,

We do not see anything objectionable in this, more particularly since the process is backed by statutory provisions.",,,

Cap on funds,,,

20.It has been brought on record by the Union of India in its affidavit of 4th December, 2017 that not only is there no informal cap on the release of",,,

funds, but whenever required, necessary funds have been released over and above the ‘agreed to labour budget’. It is stated that in 2015-16",,,

as many as 16 State Governments and Union Territory Administrations had exceeded the ‘agreed to labour budget’ and funds had been,,,

released. In 2016-17 as many as 20 State Governments and Union Territory Administrations had exceeded the ‘agreed to labour budget’ and,,,

funds released. The position was similar for 2017-18 with 12 State Governments and Union Territory Administrations exceeding the ‘agreed to,,,

labour budget’ and funds released. This is possible only if there is no cap, informal or otherwise and the generation of the Muster Roll",,,

continues.,,,

21.Learned counsel for the petitioner pointed out instances where there had been a shortage of funds released to two States namely Tripura and,,,

Telangana.,,,

22.In this regard, it was pointed out by the learned Attorney General that as far as Tripura is concerned, there were some allegations of corruption",,,

in the sense of mis-utilization of funds and that was being investigated. It was reported that the funds made available had not been used for the,,,

purpose for which they were released. We need not delve into this issue at all and leave it at that.,,,

23.As far as the State of Telangana is concerned it was stated that according to the State functionaries there was 100% utilization by June 2017,,,

itself that is in a period of about two months. We find this difficult to appreciate and in fact we were informed by the learned Attorney General that,,,

the factual position is otherwise and it was found that Telangana had not been able to utilize 100% funds released as per the ‘agreed to labour,,,

budget.’ In the written submissions filed by the Union of India on 13th April, 2018 it is stated as follows:",,,

“However, the State has never exceeded 12 crores person days except in FY 2015-16 which was a severe drought year and provision for",,,

additional 50 days were granted by Central Government to help the rural poor tide over the impacts of the national calamity. The State after due,,,

consultation with the Ministry agreed to 12 crores person days for FY 2017-18. This was 20% more than the approved Labour Budget of FY,,,

2016-17 and due consideration was given to the increased demand for work under the scheme. It is important to mention here that Telangana,,,

received the highest ever allocation (Rs.2539.20 Cr) of MGNREGA funds in FY 2017-18. Despite having no paucity of funds in FY 201718, the",,,

State could not generate 100% of the agreed to Labour Budget.â€​,,,

24.What is most significant and important, in our opinion, is that if there is some sort of a cap or an unreasonable reduction in the funds made",,,

available to the State Governments it is really for the concerned State Government to object to the cap and non-availability of funds. We have not,,,

been shown any objection raised by any State to the effect that it has not received adequate funds for implementation of the Scheme for various,,,

activities. In the absence of any objection or demand having been raised for funds by the State Governments (and denial of funds by the Central,,,

Government) we are of the view that the petitioner cannot be allowed to raise such a contention which ought really to be raised by the affected,,,

State Government.,,,

25.The Central Government through the Ministry of Rural Development has expressed the view in its affidavit of 3rd January, 2018 that",,,

implementation of the Scheme is the responsibility of the States and, hence, securing funds for implementation is the responsibility of the States. We",,,

cannot accept this blanket statement, particularly when it concerns delayed payments. It is true that when the Mother Sanction based on the",,,

‘agreed to labour budget’ nears exhaustion or is exhausted, the concerned State or Union Territory must obtain another Mother Sanction by",,,

providing the Central Government with the requisite documents as per the financial norms. According to the Central Government, there is some",,,

laxity in this regard by the State Governments and Union Territory Administrations, which cannot be overlooked in view of the General Financial",,,

Rules. This is a bottleneck that must be addressed and, as stated in the affidavit, checklists have been prepared in consultations with the State",,,

Governments and Union Territory Administrations to facilitate smoother processing of proposals. Perhaps something more needs to be done and we,,,

MGNREGA Wage Payment Process,,,

Sl,Activity,Description,Responsibility

1.,"Muster Roll is

closed","Muster Roll is a document,

which record the attendance of

workers at the worksite","State

Government

2.,"Data entry of

Muster Roll +

measurement book","The details of the attendance

and the measurement of the

work done are entered into the

Management Information

System.","State

Government

3.,"Generation of

Wage List","After these two items are

recorded, the wages payable to

the worker is calculated and an

electronic Fund Transfer

Order (FTO) is generated.","State

Government

4.,"1st Signature on

Fund Transfer

Order","This is approved electronically

by a designated authority. It

requires two electronic

signatures. This is the

“makerâ€​ portion.","State

Government

5.,"2nd signature on

Fund Transfer

Order","After the first signature, it is

electronically sent to the

second signatory. This is the

“checkerâ€​ portion. This

then gets pushed as an epay

order onto the

MNREGA server.","State

Government

6.,"Sent to

Public Fund

Management

System (run by

M in is t r y of

Finance)","These files are then pulled

from the MGNREGA

server to the Public Fund

Management System (PFMS)

server. The following steps

happen at that level:

Public Fund Management

System will send these files to

the accredited bank.

The accredited bank will send

the files to the sponsor bank.

Sponsor Bank will process the

files using National Payments

Corporation of India.

PFMS shares responses with

NREGASoft.","Central

Government/

Payment

Agency

7.,"Sent to State

Employment

Guarantee

Fund â€" NeFMS","The PFMS window

notionally sends it to the

State Employment

Guarantee Fund. This bank

account under the NeFMS is

solely for wage payments","Central

Government/

Payment

Agency

8.,"Sent to Post

Office/Bank","After notionally passing through

the State

Employment Guarantee

Fund it is then sent to the Post

Office/Bank.","Central

Government/

Payment

Agency

9.,"Deposited in

workers account","The payment agency deposits

the money into the workers

account.","Central

Government/

Payment

Agency

10.7.The Programme Officer will ensure that compensation claims are settled during the prescribed time, i.e. within 15 days of compensation being",,,

due, and such claims will not be allowed to be accumulated without any decision of acceptance or rejection. In all cases of rejection, the",,,

Programme Officer shall give detailed reason(s) for rejection on NREGASoft and maintain record of the same, in her/his office for future",,,

verification. All cases approved for payment of compensation shall be done in the same manner as payment of wages. District Programme,,,

Coordinator will monitor this regularly.,,,

10.8.Failure to settle claims during the prescribed time shall result in payment of due amount into the account of the worker.†[Emphasis supplied,,,

by us].,,,

Surely, the Central Government cannot violate its own Master Circular and seek to otherwise absolve itself of any liability.",,,

43.Apparently realizing its responsibility, it is stated in the written submissions of 13th April, 2018 that the Ministry of Rural Development is making",,,

all efforts for improving the Stage-I and Stage-II of the wage payment process. Due to the concerted efforts, the Stage - I timely payment has",,,

increased from 26.85% in FY 2014-15 to 86% in FY 2017-18 and Stage-II has increased from 17% in FY 2016-17 to 43% in FY 2017-18. While,,,

there is some improvement, it is not enough. There cannot be any justifiable reason to delay payment of wages or justifiable denial of compensation",,,

for delayed payment of wages. Any delay in payment of wages or compensation violates statutory provisions.,,,

44.We therefore make it clear and direct that in terms of the Act and Schedule II thereof a worker is entitled to payment of wages within a,,,

fortnight of the date on which the work was done, failing which the worker is entitled to the compensation as prescribed in paragraph 29 of the",,,

Schedule II of the Act. The burden of compliance is on the State Governments and Union Territory Administrations as well as the Central,,,

Government. One entity cannot pass on the burden to another and vice versa.,,,

45.In view of the above, we direct the Central Government through the Ministry of Rural Development, in consultation with the State Governments",,,

and Union Territory Administrations to prepare an urgent time bound mandatory program to make the payment of wages and compensation to the,,,

workers. This is not only in the interest of the workers who have expended unskilled manual labour but also in furtherance of the rule of law which,,,

must be followed in letter and spirit.,,,

46.The third grievance relating to social audits was not urged before us.,,,

Conclusion,,,

47.All issues pertaining to the Act now stand closed and concluded. The petitioner has, from time to time, highlighted issues of seminal importance",,,

and must be complimented for it. The Ministry of Rural Development has reacted positively and brought about some significant changes to make,,,

the Act and the Scheme more effective and must also be complimented. It must, however, take urgent remedial steps to iron out the creases, since",,,

there is still some way to go before the Act finally touches the lives of millions of unemployed persons. The efforts of the petitioner and the said,,,

Ministry should continue to be inexorably for the socio-economic benefit of the millions of unemployed persons in the country.,,,