Court’s Decision
The Bombay High Court (Nagpur Bench) partially allowed the petitions filed by the educational institution, holding that while the employees were entitled to arrears under the 5th, 6th, and 7th Pay Commissions, the payment of arrears would be restricted to three years prior to the date of their superannuation, along with interest at 9% per annum. The Court confirmed the Grievance Committee’s decision on entitlement but modified the period for which arrears could be claimed.
Facts
The petitioners, a trust and its unaided engineering college, challenged the Grievance Committee’s order granting ex-employees the monetary benefits under the 5th and 6th Pay Commissions from 01-08-1999 to 31-10-2016 with 9% interest. The employees had only made a representation in 2008 seeking benefits, with no follow-up until 2017, after retirement, when representations were again made, rejected by the management, leading to grievance petitions before the Committee. The Committee ruled in favour of the employees for the entire period claimed. The petitioners challenged only the period of entitlement, asserting it should be restricted to three years prior to filing, while the employees claimed the entire period was payable due to continuous cause of action.
Issues
- Whether the employees were entitled to claim arrears under the Pay Commissions for the entire period claimed (from 1999) or whether it should be restricted to three years prior to retirement.
- Whether interest at 9% per annum awarded on arrears was justified.
Petitioner’s Arguments
The petitioners argued that:
- The claim for arrears, even if maintainable, should be restricted to three years prior to filing before the Committee, not for the entire period from 1999.
- The employees made only one representation in 2008 without follow-up, showing lack of positive steps to assert their rights.
- Mere representations do not extend limitation.
- They relied on multiple Supreme Court and High Court precedents, including Union of India vs Tarsem Singh, State of MP vs Yogendra Shrivastava, Shiv Dass vs Union of India, and Jai Dev Gupta vs State of HP, arguing that stale claims should be disallowed, and only arrears for three years preceding the claim should be permitted.
- The award of 9% interest lacked justification and should be set aside.
Respondent’s Arguments
The employees argued that:
- They made representations in 2008 and again post-retirement in 2017, showing continued assertion of their rights.
- The management threatened termination if they pursued claims during service.
- Since representations were made and no adverse action was taken, it cannot be said that the claims were stale.
- The nature of the claim is a continuing wrong, and hence arrears should be granted for the entire period from 1999 onwards.
- They relied on Secretary, Mahatma Gandhi Mission vs Bhartiya Kamgar Sena, Keraleeya Samajam vs Pratibha Dattatray Kulkarni, Barun Kumar Choudhary, and Dr Suryaprakash Dhaneria, arguing that each case should be assessed on its facts regarding limitation, and that they were not prohibited from claiming full arrears.
Analysis of the Law
The Court considered:
- Articles 6 and 7 of the Limitation Act prescribing three years limitation for wage recovery.
- The principle of continuing wrong allows claims prospectively, but arrears are typically restricted to three years prior to claim filing unless facts justify otherwise.
- It referred to Tarsem Singh and Yogendra Shrivastava, holding that denial of benefits creates a continuing cause of action, but relief for past arrears is restricted unless a specific justification for the delay is established.
- Mere representations do not extend limitation unless accompanied by assertive legal steps.
- There is no fixed rule, but courts generally restrict relief to three years absent prompt assertion of rights.
- The Court noted that representations in 2008 and post-retirement in 2017 did not show consistent efforts to claim benefits, distinguishing Barun Kumar Choudhary where repeated representations were made.
Precedent Analysis
- Union of India vs Tarsem Singh (2008) 8 SCC 648: Held that in cases of continuing wrong, courts may grant relief, but arrears are generally limited to three years.
- State of MP vs Yogendra Shrivastava (2010) 12 SCC 538: Clarified that while denial of pay creates a continuing wrong, arrears recovery should be limited to three years prior to filing.
- Shiv Dass vs Union of India (2007) 9 SCC 274: Delay in claims affects arrears; relief should generally be restricted to three years.
- Maruti Wankhede (BHC) and Hukumchand Kumbhar: Summarized the law that claims for wages can be made even if delayed, but arrears are typically limited to three years unless facts warrant otherwise.
- Barun Kumar Choudhary (BHC): Recognised exceptions based on facts when there is consistent representation, but clarified the general rule of three years limitation.
Court’s Reasoning
- The employees only made a single representation in 2008 with no follow-up until 2017, showing a lack of positive steps to assert their rights.
- The claim filed in 2019 covered a period starting from 1999, which was 20 years old for the earliest claim, constituting a stale claim.
- The Court found no evidence of actual prohibition or coercion preventing the employees from raising claims earlier.
- Mere representations do not extend limitation, and without consistent action, claims beyond three years are barred.
- The 9% interest awarded was justified as the management enjoyed use of withheld amounts, warranting compensation for delayed payment.
Conclusion
The Bombay High Court:
- Partially allowed the petitions, modifying the Grievance Committee’s order to limit payment of arrears to three years prior to the employees’ superannuation with interest at 9% per annum.
- Confirmed entitlement under Pay Commissions but restricted the period of payment to avoid entertaining stale claims.
Implications
- Reinforces that employees can claim arrears under pay commission recommendations as a continuing wrong but payment of arrears will generally be limited to three years preceding the claim unless specific facts justify exceptions.
- Clarifies that mere representations without consistent follow-up do not extend limitation.
- Establishes that educational institutions and employers must pay legitimate arrears but can limit liability for stale claims, balancing employee rights with organizational interests.
Summary of Cases Referred
- Union of India vs Tarsem Singh: Relief on continuing wrong but arrears restricted to three years and applied here to limit the claim period.
- State of MP vs Yogendra Shrivastava: Similar holding on limitation in recurring wage claims.
- Shiv Dass vs Union of India: Delayed claims restrict arrears to three years.
- Barun Kumar Choudhary (BHC): Exceptionally allowed arrears beyond three years due to consistent representations, distinguished here as not applicable.
- Other cases (Maruti Wankhede, Hukumchand Kumbhar, Bhartiya Kamgar Sena) reaffirmed that limitation for arrears is three years unless facts justify otherwise.
FAQs
1. Can employees claim pay commission arrears for the entire period of employment?
No, unless there is consistent assertion of rights, arrears are generally limited to three years prior to filing a claim.
2. Does a single representation by an employee extend limitation for wage arrears?
No, mere representation without legal follow-up does not extend limitation for arrears under wage claims.
3. Is interest on arrears mandatory if employers withhold payments?
Yes, courts may award reasonable interest (9% in this case) on delayed arrears, ensuring compensation for employees for withheld amounts.
