DEPUTY DIRECTOR OF INCOME TAX FARIDABAD V. BAL RAM BALI

RSA/176/2012

AI Insights

Bal Ram Bali, a former employee of the Income Tax Department, filed a suit seeking interest on delayed salary arrears amounting to Rs.95,051, which were paid to him with retrospective effect from various dates between 1987 and 2001. The trial court dismissed his suit, but the appellate court awarded him interest at 9% per annum, with an additional 6% if the arrears were not paid within two months. The Deputy Director of Income Tax appealed against this decision. The High Court upheld the appellate court's decision, emphasizing the plaintiff's entitlement to interest due to the department's delay in payment, which violated his rights under Article 16 of the Constitution.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 739156 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 05-10-2012
• Assessment Year: misc
• Other Referred Cases: Lt. Colonel (Now Major) Surjit Singh Vs. General Officer Commanding 33, Mechanised Division, C/o 56 A.P.O. and others, Surinder Singh Vs. Union of India and others, Chanan Singh Vs. Punjab State Electricity Board, Patiala, State of Haryana and others Vs. Vidyawanti
• Laws Referred To: Article 16 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BAL RAM BALI
• Assessee Lawyers: K K KAHLON
• Keywords: Delay in payment; Interest on Arrears; Promotion; Retrospective effect; Salary Arrears
• Section: 12% per annum

Judgement Text

"Regular Second Appeal No. 176 of 2012 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Regular Second Appeal No. 176 of 2012 (O&M) Date of decision: 05.10.2012 Deputy Director of Income Tax ……Appellant Versus Bal Ram Bali …….Respondent CORAM : HON’BLE MR. JUSTICE A.N. JINDAL Present: Ms. K.K. Kahlon, Advocate, for the appellant. Mr. Bal Ram Bali-respondent, in person. ***** A.N. Jindal, J. Bal Ram Bali, plaintiff-respondent (hereinafter referred as 'the plaintiff') had filed a suit for declaration claiming interest at the rate of 12% on accumulated amount of arrears of Rs.95,051/- paid for the period from August 1987 to March 2006 up to 22.06.2006 i.e. the date of payment of the said arrears. He also prayed that the said interest may be treated as notional principal for onward payment of interest up to the date of payment of interest. The trial Court, vide judgment dated 16.09.2009, dismissed the suit of the plaintiff with costs, against which, an appeal was preferred by him. However, the Appellate Court, vide judgment dated 15.02.2010, allowed the appeal of the plaintiff and held him entitled to interest at the rate of 9% per annum upon arrears of salary payable, till payment of arrears in 2006. It was further 1 Regular Second Appeal No. 176 of 2012 (O&M) directed that in case due amount was not paid within a period of two months, the plaintiff shall be entitled to interest at the rate of 6% per annum from the date of filing of the suit till realization on the due amount. It was also made clear that 9% interest was not to be calculated on the sum of Rs.95,051/-, but had to be calculated upon the amount which became due to the plaintiff on month to month basis since 1987. As such, this appeal has been preferred by the Deputy Director of Income Tax, defendant-appellant (hereinafter referred as 'the defendant'). The factual background of the case is that plaintiff was appointed as a Clerk in the Income Tax Department. Subsequently, his services were terminated, which he challenged before the Central Administrative Tribunal. Thereafter, he was reinstated, but due to the pendency of another enquiry against him, he was not promoted. Ultimately, he was promoted to the next rank i.e. Head Clerk with retrospective effect from 15.01.1987 vide order dated 02.02.2005 passed by the Director of Income Tax (Inv.), Panchkula. Then he was promoted as Supervisor Grade-II with retrospective effect from 07.12.1989. Thereafter, he was promoted as Inspector with retrospective effect from 21.02.1991 and as Income Tax Officer with retrospective effect from 14.12.2001 vide separate orders. The arrears of pay to the tune of Rs.95,051/- were paid to him on 22.06.2006. The plaintiff has claimed that as he was reinstated in the service, therefore, he was entitled to receive interest on the delayed payment. On notice, the defendant besides raising some preliminary objections, submitted that the arrears were paid to the plaintiff within reasonable time from the date of sanctioning of payment with retrospective effect, therefore, the plaintiff was not entitled to any interest thereon. 2 Regular Second Appeal No. 176 of 2012 (O&M) From the pleadings of the parties, following issues were framed by the trial Court:- “1. Whether the plaintiff is entitled for interest at the rate of 12% on arrears of G.P.F. of Rs.95,051/-? OPP 2. If issue No.1 is proved, whether plaintiff is entitled for decree of mandatory injunction, as prayed for? OPP 3. Whether the suit of the plaintiff is not maintainable in the present form? OPD 4. Whether the suit of the plaintiff is barred by Order 2, Rule 2 CPC? OPP 5. Whether the plaintiff has no cause of action to file the present suit? OPD 6. Whether the plaintiff has not affixed the ad valorem Court fee, if so, its effect? OPD 7. Relief.” It is not in dispute that the plaintiff was suspended from service at the time of his posting as a Clerk. Thereafter, he was reinstated. Later on, he was also given promotions to the ranks, which became available to him from time to time. His salary was re-fixed with retrospective effect from 15.01.1987 for the post of Head Clerk, with retrospective effect from 07.12.1989 for the post of Supervisor Grade-II, with retrospective effect from 21.02.1991 for the post of Inspector and with retrospective effect from 14.12.2001 for the post of Income Tax Officer. After re-fixation the salary, arrears amounting to Rs.95,051/- were paid to him vide order dated 10.01.2006. Once it is proved that the plaintiff was not responsible for the delay in payment of arrears, which had been withheld by the department, then the defendant is bound to pay interest on the said amount. The delay in granting promotion appears to be without any reasonable cause. Rather, it is in violation of the rights granted to an employee under Article 16 of the 3 Regular Second Appeal No. 176 of 2012 (O&M) Constitution of India. The plaintiff being an employee of the defendant, was entitled to be considered for promotion within due time. As such, his salary having been not granted within time, he was certainly entitled to interest. The matter relating to interest, came up for discussion before this Court from time to time. In a judgment passed by this Court in case Lt. Colonel (Now Major) Surjit Singh Vs. General Officer Commanding 33, Mechanised Division, C/o 56 A.P.O. and others, 1988 (3) SLR 439, it was observed that since the arrears of salary were not given to the employee within time, therefore, he was entitled to interest at the rate of 12% per annum. Similarly in case Surinder Singh Vs. Union of India and others, 1988 (7) SLR 645, the Central Administrative Tribunal, Chandigarh, had awarded interest at the rate of 12% per annum. It was further ordered that the interest was to be calculated on year wise basis. Further in case Chanan Singh Vs. Punjab State Electricity Board, Patiala, 1992 (2) Recent Services Judgments 451, this Court has observed as under:- “5. The appellant has claimed interest on the amount of dues which have accrued to him. As a normal rule, the appellant was entitled to be placed in the scale of Rs.800-1400. It was illegally denied to him. Consequently, the normal rule of payment of interest on the wages which were illegally denied to the appellant deserves to be upheld. Taking the totality of the circumstances into consideration, it is held that the appellant shall be paid interest at the rate of 12 per cent per annum from the date, the wages accrued till the date of actual payment.” This Court in case State of Haryana and others Vs. Vidyawanti, 2002 (2) RSJ 588, approved the principle of awarding interest at the rate of 12% per annum. Since the amount, paid to the plaintiff was not a charity, but it was his right to claim the same as a consequence of his promotion in service 4 Regular Second Appeal No. 176 of 2012 (O&M) from time to time, therefore, he is entitled to get interest on the delayed payment, as awarded by the first Appellate Court. No substantial question of law arises for determination by this Court. Dismissed. (A.N.Jindal) 05.10.2012 Judge ajp 5 "