State Cannot Reduce Its Share in Honorarium to Neutralize Central Government Enhancements; Interest on Arrears Not Mandatory Without Statutory Basis

The respondent, a registered organization representing Anganwadi Workers/Helpers, challenged a State Government order dated 27.06.2019.

While the Central Government had enhanced its contribution to the honorsarium for these workers, the State Government simultaneously reduced its own share, effectively neutralizing the financial benefit intended for the workers.

A Single Judge of the High Court, via order dated 03.02.2026, directed the State to restore its contribution, pay arrears with interest, and consider granting gratuity benefits.

The State appealed this decision, arguing that honorarium is a policy matter with fiscal implications and that the direction to pay interest was legally unsustainable in the absence of statutory provisions or specific pleadings.

1. Whether the Single Judge was justified in directing the restoration of the State Government’s share of the honorarium and the consideration of gratuity benefits.

2. Whether the direction to pay interest on the arrears was legally valid in the absence of a statutory mandate or specific prayer.

Section 2(1) of the Madhya Pradesh Uchcha Nyayalaya (Khand NyayaPeeth Ko Appeal) Adhiniyam, 2005 regarding intra-court appeals.

The precedent set by the Hon'ble Supreme Court in Maniben Maganbhai Bhariya v. District Development Officer Dahod, Civil Appeal No. 3153/2022, which established the applicability of the Payment of Gratuity Act to Anganwadi Workers and Helpers.

Regarding judicial restraint in awarding interest, the Court referenced Makardhwaj Ram v. Jagdish Rai (Dead), 2026 SCC OnLine SC 1112, which mandates that relief must be confined to the issues arising from pleadings.

The Division Bench found that the reduction of the State’s contribution was arbitrary as it diluted the welfare benefits intended by the Central Government; thus, the Single Judge's direction for restoration was based on administrative reasonableness and fairness.

Regarding gratuity, the Court noted that the direction merely required the State to "consider" claims in accordance with existing Supreme Court law, which does not create an unauthorized new right.

The Bench found the award of interest problematic, reasoning that interest is typically founded on statutory mandates or contractual stipulations, neither of which were present or specifically pleaded in this case.

Under equitable principles, while the restoration of arrears was justified to correct an injustice, the additional fiscal burden of interest was unwarranted.

The Court partly allowed the appeal and modified the original order by deleting and setting aside the direction to pay interest on the arrears.