Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION(CIVIL) NO. 857 OF 2015
Swaraj Abhiyan (VI) .....Petitioner
versus
Union of India & Ors. ....Respondents
J U D G M E N T
Madan B. Lokur, J.
th
1. In the record of proceedings of this Court dated 9 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.
Signature Not Verified
Digitally signed by
MEENAKSHI KOHLI
Date: 2018.05.18
15:49:42 IST
Reason:
3. Absence of social audits being conducted.
W.P. (C) No. 857 of 2015 Page 1 of 24
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.
W.P. (C) No. 857 of 2015 Page 2 of 24
(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.”
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
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understood by the Union of India in its written submissions of 14 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
W.P. (C) No. 857 of 2015 Page 3 of 24
1
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 Budget”.
To appreciate the grievance of the petitioner, it is necessary to refer to a few
more provisions of the Act.
Approved labour budget
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8. Article 243-G of the Constitution was introduced by the 73 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
1
There shall be a systematic, participatory planning exercise at each tier of Panchayat, conducted between
August to December month of every year, as per a detailed methodology laid down by the State Government.
All works to be executed by the Gram Panchayats shall be identified and placed before the Gram Sabha, and
such works which are to be executed by the intermediate Panchayats or other implementing agencies shall be
placed before the intermediate or District Panchayats, along with the expected outcomes.
W.P. (C) No. 857 of 2015 Page 4 of 24
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
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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<br>works to be taken up in area<br>based on recommendations of<br>the Gram/Ward Sabha | Section 16(1) of the Act:<br>“The Gram Panchayat shall be responsible for<br>identification of the projects in the Gram<br>Sabha area to be taken under a Scheme as per<br>the recommendations of the Gram Sabha and<br>the Ward Sabha and for executing and<br>supervision of works.” |
|---|---|---|
| Step 2 | Gram Panchayat to forward the<br>works identified by the Gram<br>Sabha to the Programme<br>Officer for scrutiny +<br>preliminary approval | Section 16(4) of the Act:<br>“The Gram Panchayat shall forward its<br>proposals for the development projects<br>including the order of priority between<br>different works to the Programme Officer for<br>scrutiny and preliminary approval prior to the<br>commencement of the year in which it is<br>proposed to be executed.” |
| Step 3 | Programme Officer at the<br>Block level consolidates plans<br>received by allGram | Section 15(4) of the Act:<br>“The Programme Officer shall prepare a plan<br>for the Block under his jurisdiction by |
2
Essentially this is only a procedural matter. Too much should not be read into the ‘disagreement’ if any.
W.P. (C) No. 857 of 2015 Page 5 of 24
| Panchayats | consolidating the project proposals prepared<br>by the Gram Panchayat and the proposals<br>received from intermediate panchayats” | |
|---|---|---|
| Step 4 | Block Panchayat to approve<br>the block level plan prepared<br>by the Programme Officer and<br>forwarding it to the District<br>Panchayat for approval | Section 16(3)(b) of the Act:<br>“to approve the Block level Plan for<br>forwarding it to the district Panchayat at the<br>district level for final approval” |
| Step 5 | District Programme<br>Coordinator to consolidate all<br>Block level plans and submit it<br>to the District Panchayat | Section 13(3)(a) of the Act:<br>“The District Programme Coordinator shall<br>“consolidate the plans prepared by the Blocks<br>and project proposals received from<br>implementing agencies for inclusion in the<br>shelf of projects to be approved by the<br>Panchayat at the District level” |
| Step 6 | District Panchayat finalizes<br>and approves block-wise works<br>to be taken up under the<br>Scheme | Section 13(2)(a) of the Act:<br>“The functions of the Panchayats at the district<br>level shall be-<br>(a) To finalise and approve block-wise<br>shelf of projects to be taken up under a<br>programme under the Scheme” |
It is after the above exercise is complete that the role of the District Programme
Coordinator commences.
12. At this stage it is important to notice: (i) The State Government and the
Central Government have really no specific role in the formulation of
programmes for the benefit of the rural areas and in the expenditure that would
be required to carry out the development activities of the Panchayat; (ii) The
provisions and steps form the basis of the number of person days of work in a
year in each year and the fund requirement; (iii) The requirements made out are
anticipatory and indicative.
13. The submission of the petitioner is that, as mandated by the Act, every
W.P. (C) No. 857 of 2015 Page 6 of 24
State Government obtains detailed information from every district and prepares
a labour budget which indicates the expenditure anticipated and the person days
necessary for implementation of the programmes in the concerned rural area
However, the Central Government in the Ministry of Rural Development
through an Empowered Committee discusses the annual labour budget with
representatives of the State Governments and after such discussions, an ‘agreed
to labour budget’ (different from the labour budget) is prepared. According to
the petitioner, there is no question of having these discussions or an ‘agreed to
labour budget’ particularly when a detailed assessment has been made by the
District Programme Coordinator and the Panchayat and forwarded by the State
Government to the Central Government.
14. On the other hand, the view of the Central Government, based on
experience, is that some State Governments are not able to fully utilize the
proposed labour budget and therefore through discussions, the labour budget is
appropriately rationalized to a reasonable figure based on the person days
necessary. As mentioned above, this is objected to by the petitioner.
15. The further grievance of the petitioner is that the ‘agreed to labour
budget’ works as a cap on the expenditure for every financial year and the
generation of the Muster Roll is stopped. Therefore, even though there would
be unemployed persons willing to do some unskilled manual work but they are
prevented from doing so because of an informal cap on expenditure.
W.P. (C) No. 857 of 2015 Page 7 of 24
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
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judgment and order of 13 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:
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“(1) Before the beginning of each financial year on or before 31
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.
3
Swaraj Abhiyan (III) v. Union of India & Ors. (2016) 7 SCC 544
W.P. (C) No. 857 of 2015 Page 8 of 24
(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
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received by it on or before the 31 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.” [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
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20. It has been brought on record by the Union of India in its affidavit of 4
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
W.P. (C) No. 857 of 2015 Page 9 of 24
‘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
4
‘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%
4 th
Upto the date of the written submissions, that is, 13 April, 2018 but the data is said to be incomplete
W.P. (C) No. 857 of 2015 Page 10 of 24
funds released as per the ‘agreed to labour budget.’ In the written submissions
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filed by the Union of India on 13 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 2017-
18, the State could not generate 100% of the agreed to Labour Budget.”
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
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expressed the view in its affidavit of 3 January, 2018 that implementation of
the Scheme is the responsibility of the States and, hence, securing funds for
W.P. (C) No. 857 of 2015 Page 11 of 24
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
leave it to the Ministry of Rural Development to find a solution.
26. One of the positive measures adopted by the Ministry of Rural
Development to reduce delays in release of funds is conducting a Mid Term
Review with the State Governments and Union Territory Administrations. One
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such Mid Term Review was conducted from 29 August, 2017 to 13 October,
2017 to “reorient” them on the financial norms and the checklists to be adhered
to for preparing proposals for release of funds. We expect a similar exercise to
be conducted for 2018-19 and for subsequent years to tide over any possible
stumbling blocks.
W.P. (C) No. 857 of 2015 Page 12 of 24
27. We reiterate the necessity of meaningful discussions while approving or
finalizing the labour budget. The fact that so many States and Union Territories
have exceeded the expenditure postulated by the ‘agreed to labour budget’ is an
indication that the Scheme is either well received by the unemployed or the
Empowered Committee is being a little tight-fisted. It must be appreciated that
the release of funds is for a good socio-economic cause and therefore
expeditious and sufficient availability of funds should be the objective. Under
the circumstances, we reject the submission of learned counsel for the petitioner
that the Central Government cannot prepare an ‘agreed to labour budget’ or that
the process of preparing an ‘agreed to labour budget’ is impermissible or that
there is an informal cap on release of funds.
Compensation for delayed payment of wages
28. The second issue raised by learned counsel for the petitioner is of delay in
payment of wages to the beneficiaries and to make it worse, compensation is not
paid to them in terms of the Act. Both issues are intrinsically interlinked.
29. Section 3(3) and Section 3(4) of the Act provide that every person who
has done work given to him or her under the Scheme shall be entitled to receive
wages and the disbursement of daily wages shall be on a weekly basis or in any
case not later than a fortnight after the date on which such work was done.
30. In this context, Schedule II to the Act mentions the conditions for
W.P. (C) No. 857 of 2015 Page 13 of 24
guaranteed rural employment and the minimum entitlements of labourers.
Paragraph 29 relates to wage payment and is of great significance. It provides,
inter alia , that in case wages are not paid within 15 days from the date of
closure of the Muster Roll, the wage seeker or labourer shall be entitled to
receive compensation for the delay at 0.05% of the unpaid wages per day of
delay beyond the sixteenth day of closure of the Muster Roll.
Paragraph 29 of Schedule II of the Act reads as follows:
“ Wage payment:––
29. (1) In case the payment of wages is not made within fifteen days
from the date of closure of the muster roll, the wage seekers shall be
entitled to receive payment of compensation for the delay, at the rate
of 0.05% of the unpaid wages per day of delay beyond the sixteenth
day of closure of muster roll.
(a) Any delay in payment of compensation beyond a
period of fifteen days from the date it becomes
payable, shall be considered in the same manner as the
delay in payment of wages.
(b) For the purpose of ensuring accountability in payment
of wages and to calculate culpability of various
functionaries or agencies, the States shall divide the
processes leading to determination and payment of
wages into various stages such as––
i. measurement of work;
ii. computerising the muster rolls;
iii. computerising the measurements;
iv. generation of wage lists; and
v. uploading Fund Transfer Orders (FTOs),
and specify stage-wise maximum time limits along
with the functionary or agency which is responsible for
discharging the specific function.
W.P. (C) No. 857 of 2015 Page 14 of 24
(c) The computer system shall have a provision to
automatically calculate the compensation payable
based on the date of closure of the muster roll and the
date of deposit of wages in the accounts of the wage
seekers.
(d) The State Government shall pay the compensation
upfront after due verification within the time limits as
specified above and recover the compensation amount
from the functionaries or agencies who is responsible
for the delay in payment.
(e) It shall be the duty of that District Programme
Coordinator or Programme Officer to ensure that the
system is operationalised.
(f) The number of days of delay, the compensation
payable and actually paid shall be reflected in the
Monitoring and Information System and the Labour
Budget.
(2) Effective implementation of sub-paragraph (1) shall be
considered necessary for the purposes of the section 27 of the Act.”
31. A perusal of Section 3(3) read with Section 3(4) and paragraph 29 of
Schedule II of the Act mandates timely payment and compensation for
delayed payment. This needs to be emphasized.
32. The Central Government does admit that there has been delay in
payment of wages and some of the causes for delay have been explained.
These include delay in filling of attendance sheet, delay in measurement of
work, delay in check measurement, delay in generation of wage list and non-
submission or partial submission of requisite documents by the States to the
Ministry of Rural Development etc. Since funds are released in accordance
with the provisions of the General Financial Rules (GFR) and if the State
W.P. (C) No. 857 of 2015 Page 15 of 24
Governments does not submit the papers or documents in accordance with
the GFR, it is difficult for the said Ministry to release funds.
33. Learned counsel for the petitioner submitted that one of the major
causes of delay in payment of wages is the State Government having
insufficient funds even as per the approved or agreed to labour budget. It is
also submitted that the wage payment process or wage cycle is as follows:
| MGNREGA Wage Payment Process | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Sl | Activity | Description | Responsibility | ||||||||
| 1. | Muster Roll<br>is closed | Muster Roll is a document,<br>which record the attendance<br>of workers at the worksite | State<br>Government | ||||||||
| 2. | Data entry of<br>Muster Roll +<br>measurement<br>book | The details of the<br>attendance and the<br>measurement of the work<br>done are entered into the<br>Management Information<br>System. | State<br>Government | ||||||||
| 3. | Generation of<br>Wage List | After these two items are<br>recorded, the wages<br>payable to the worker is<br>calculated and an electronic<br>Fund Transfer Order (FTO)<br>is generated. | State<br>Government | ||||||||
| 4. | 1st Signature<br>on Fund<br>Transfer<br>Order | This is approved<br>electronically by a<br>designated authority. It<br>requires two electronic<br>signatures. This is the<br>“maker” portion. | State<br>Government | ||||||||
| 5. | 2nd signature<br>on Fund<br>Transfer<br>Order | After the first signature, it<br>is electronically sent to the<br>second signatory. This is<br>the “checker” portion. This<br>then gets pushed as an e-<br>pay order onto the<br>MNREGA server. | State<br>Government |
W.P. (C) No. 857 of 2015 Page 16 of 24
| 6. | Sent to<br>Public Fund<br>Management<br>System (run<br>by Ministry<br>of Finance) | These files are then pulled<br>from the MGNREGA<br>server to the Public Fund<br>Management System<br>(PFMS) server. The<br>following steps happen at<br>that level:<br>Public Fund Management<br>System will send these files<br>to the accredited bank.<br>The accredited bank will<br>send the files to the sponsor<br>bank.<br>Sponsor Bank will process<br>the files using National<br>Payments Corporation of<br>India.<br>PFMS shares responses<br>with NREGASoft. | Central<br>Government/<br>Payment<br>Agency |
|---|---|---|---|
| 7. | Sent to State<br>Employment<br>Guarantee<br>Fund –<br>NeFMS | The PFMS window<br>notionally sends it to the<br>State Employment<br>Guarantee Fund. This bank<br>account under the NeFMS<br>is solely for wage payments | Central<br>Government/<br>Payment<br>Agency |
| 8. | Sent to Post<br>Office/Bank | After notionally passing<br>through the State<br>Employment Guarantee<br>Fund it is then sent to the<br>Post Office/Bank. | Central<br>Government/<br>Payment<br>Agency |
| 9. | Deposited in<br>workers<br>account | The payment agency<br>deposits the money into the<br>workers account. | Central<br>Government/<br>Payment<br>Agency |
34. According to the petitioner, the delay caused by the Central
Government in steps No. 6 to 9 is not taken into account for the purpose of
W.P. (C) No. 857 of 2015 Page 17 of 24
payment of compensation, meaning thereby that the Central Government
washes its hands off any liability for payment of compensation.
35. While admitting and appreciating that there is delay in payment of
wages (whatever the cause) the Central Government has stated in its
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affidavit of 4 December, 2017 that steps have been taken to ensure that
payment of wages is not delayed. Initially, the onus to prove the delay and to
claim compensation was on the worker but now it has been provided (since
January 2014) that the responsibility for payment of compensation is that of
the State Government which may recover the compensation from the
defaulting functionary/agency responsible for the delay in payment of
wages. In other words, the Central Government has realized and appreciated
the importance of timely payment of wages to the workers and has taken
steps in this regard. The Central Government has suggested the following
timelines for payment of wages within 15 days:
| PROCESSES | PERIOD | ||||
|---|---|---|---|---|---|
| STAGE – I | T+8 | ||||
| Last date of Muster roll as per e-muster | T | ||||
| Data entry of attendance into MIS | T+2 | ||||
| Measurement of the work and entering the same in<br>NREGASoft | T+5 | ||||
| Generation of wage list. | T+6 | ||||
| Generation of FTOs (1st Signatory). | T+7 | ||||
| Approval of FTO for payment (2nd Signatory). | T+8 | ||||
| STAGE – II | T+9 to T+15 | ||||
| Signing of Pay Orders by US of MoRD (In<br>NeFMS States/UTs) | T+9 to T+11 | ||||
| Crediting into Bank Accounts of Beneficiary by<br>FIs | T+10 to T+15 |
W.P. (C) No. 857 of 2015 Page 18 of 24
36. In addition to the above, the Central Government has required the State
Governments and Union Territory Administrations to formulate rules or issue
notifications for payment of compensation for delayed payment of wages. As
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stated in the affidavit of 4 December, 2017 as many as 27 States and Union
Territories have formulated and issued rules or notifications or guidelines or
advisories in this regard.
37. It is stated by the Central Government in its written submissions dated
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14 March, 2018 that the compensation envisaged under the Act is only for
the delay caused due to inefficiency on the part of different State
functionaries. Compensation is, therefore, only for the delay in uploading the
Fund Transfer Orders and it does not account for any delay caused thereafter.
38. Learned counsel for the petitioner has drawn our attention to a note
prepared by the Department of Expenditure in the Ministry of Finance of the
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Government of India. The note is dated 21 August, 2017 and forms a part of
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the supplementary affidavit of the petitioner dated 30 November, 2017. The
note acknowledges (to the extent relevant) the contents of an article in the
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Business Standard of 8 August, 2017 to the effect that “the current rules do
not compute or compensate the delay in payments after the generation of
FTOs [Fund Transfer Orders].” It is true that between 10 and 15 lakh pay
orders are issued on an average day and delays are due to infrastructural
bottlenecks, availability of funds and a lack of administrative compliance.
W.P. (C) No. 857 of 2015 Page 19 of 24
39. Notwithstanding the large number of pay orders, we are afraid delays
are simply not acceptable. The law requires and indeed mandates payment of
wages not later than a fortnight after the date on which the work was done by
the worker or labourer. Any reason for the delay in receiving wages is not at
all the concern of the worker. He or she is entitled to get the due wages within
a fortnight of completion of the work. If there are any administrative
inefficiencies or deficiencies or laxity, it is entirely for the State Government
and the Ministry of Rural Development to sort out the problem. Bureaucratic
delays or red tape cannot be pedalled as an excuse to deny payment of wages
to the workers. It is precisely to overcome any inefficiency or deficiency that
payment of compensation is postulated, otherwise the purpose of Section 3
and paragraph 29 of Schedule II of the Act would get completely defeated.
40. We may add that delayed payment adds several crores to the
compensation bill. This is to nobody’s advantage and merely adds an
avoidable financial burden on the Central Government.
41. We also cannot countenance the view advanced by the Central
Government that it has no responsibility after the second signature is placed
on the FTO. The wages due to the worker in terms of Stage II above must be
transferred immediately and the payment made to the worker forthwith failing
which the prescribed compensation would have to be paid. The Central
Government cannot be seen to shy away from its responsibility or taking
W.P. (C) No. 857 of 2015 Page 20 of 24
advantage of a person who has been placed in the unfortunate situation of
having to seek employment under the Act and then not being paid wages for
the unskilled manual labour within the statutorily prescribed time. The State
Governments and Union Territory Administrations may be at fault, but that
does not absolve the Central Government of its duty.
42. Learned counsel for the petitioner has drawn our attention to the
Annual Master Circular (FY 2017-2018). This validates the objection raised
by learned counsel that payment of compensation goes beyond the signing of
FTOs. The relevant provisions of the Annual Master Circular relied on by
learned counsel read as follows:
“10.4 NREGASoft has a provision to calculate the total compensation
payable, after due verification, based on the date of closure of Muster
Roll (MR) and the date of generation of the pay order (Fund Transfer
Order) for paying wages taking into account:
a. Date of uploading of FTO for payment of wages in the account of
wage seeker.
b. Date of closure of muster roll.
c. The duration of such delay.
d. Total wage payable.
e. Rate of compensation (0.05% per day).
10.5 The compensation is to be paid after due verification. Every
Programme Officer shall, within 15 days from the date that the
delay compensation becomes due, decide whether the compensation
that has been calculated by the NREGASoft is payable or not. The
compensation shall be met from the State Employment Guarantee Fund
(SEGF) upfront. This can be recovered from the functionaries/agencies
responsible for the delay.
W.P. (C) No. 857 of 2015 Page 21 of 24
10.6 The exceptions when compensation is not payable are:
a. Compensation is not due.
b. Natural calamities.
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
th
submissions of 13 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.
W.P. (C) No. 857 of 2015 Page 22 of 24
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
W.P. (C) No. 857 of 2015 Page 23 of 24
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.
.....................................J
(Madan B. Lokur)
New Delhi; .....................................J
May 18, 2018 (N.V. Ramana)
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