If Amount Legally Due To Party Is Not Paid Then Party Responsible For Withholding It Must Pay Interest At A Rate Considered Reasonable By Court: Bombay HC

The Bombay High Court held that if the amount legally due to a party is not paid, the responsible party must pay interest at a rate considered reasonable by the court.

The Court allowed the writ petition challenging the judgment and order passed by the Mumbai Bench of the Central Administrative Tribunal (CAT), which dismissed their Application.

The Court noted that the terms of the Petitioner's deputation appointment bind both the employee and the concerned departments. Rejecting the petitioner's claim violated these terms. Additionally, the specified Foreign Allowance was lower than what the petitioner was entitled to, requiring interest on the wrongfully withheld amount.

The Bench headed by Chief Justice Devendra Kumar Upadhyaya and comprising Justice Arif S. Doctor observed, “it is settled law that if it is established that an amount legally due to a party is not paid, the party responsible for withholding the same must pay interest at a rate considered reasonable by the court”.

Advocate G. R. Sharma appeared for the Union.

The Petitioner, through a petition under Article 226 of the Constitution of India, challenged the judgment and order passed by the Mumbai Bench of the Central Administrative Tribunal (CAT), which dismissed their Application. The Petitioner also contested the dismissal of their review application for the same judgment and order. Furthermore, the petitioner challenged the order, issued by the Government of India, Ministry of External Affairs, regarding the revision of Foreign Allowance for employees working on deputation in the Indian Technical and Economic Cooperation Programme (ITEC). The Petitioner sought the quashing of an order, that rejected their claim for Foreign Allowance, and requested the release of withheld amounts along with interest. The case involved the petitioner's appointment on deputation to Indira Gandhi Memorial Hospital under the ITEC programme, with disputes arising over the payment of Foreign Allowance as per government orders and agreements.

The Court framed the following issues: “Whether the deduction of EWF component from the amount of Foreign Allowance paid to the petitioner contravenes the terms of deputation on which he was appointed as ITEC expert at IGMH at Male (Maldives)?”

The Court noted that in service jurisprudence, deputation was recognized as a mode of appointment requiring consent and agreement among three parties: the parent department, the borrowing department, and the employee. The employee typically agrees to a deputation assignment based on certain representations or terms offered by the borrowing department. Without consent from all three parties, such appointments are not permissible. Once the employee agrees to the terms and conditions and consents to the deputation, any deviation from these agreed-upon terms is not permissible. This principle guides the analysis of the petitioner's claim.

The Bench observed that an order appointing the petitioner on deputation stated that, in addition to a monthly pay of Rs. 3,100/- in the specified pay scale, the deputation period would be three years. The Bench observed that the terms and conditions of deputation are governed by Annexure III to the Ministry’s letter dated 2nd February 1987. The petitioner was informed by the Ministry of External Affairs, Government of India, in a letter dated 4th October 1993, that certain facilities, including fully furnished family accommodation and free electricity, water, and groundwater, would be provided by the Government of Maldives. These facilities were detailed in an enclosure to the said letter. Additionally, Annexure III to the letter dated 2nd February 1987 specifies that deputationists are entitled to draw compensatory (Foreign) Allowance at rates determined by the Ministry of External Affairs for the country of assignment.

The Bench observed that an order dated 16th February 1989 from the Ministry of External Affairs specifies that non-IFS Group-A officers are entitled to Foreign (Compensatory) Allowance equivalent to that of a Second Secretary level officer working with the Indian Mission abroad. Combining this with the terms outlined in the petitioner's deputation appointment order from 2nd September 1993 and Annexure III of the Government letter dated 2nd February 1987, it is evident that the petitioner was entitled to the same Foreign Allowance as a Second Secretary level officer in Male (Maldives). Therefore, any reduction in the petitioner's Foreign Allowance, as stated in the order dated 10th January 2001, based on the FSI team's recommendation regarding provided facilities, was deemed invalid.

The Bench observed that the enclosure appended to the letter dated 4th October 1993, which the petitioner received at the time of accepting their deputation appointment, clearly outlined that the petitioner would be provided fully furnished family accommodation along with free electricity and water by the Government of Maldives. Based on these terms, as well as the order from the Ministry of External Affairs dated 16th February 1989 and Annexure III from the letter dated 2nd February 1987, which were communicated to the petitioner, they agreed to the deputation appointment as Deputy Director (Administration) to IGMH at Male (Maldives). Therefore, the reasons given in the order dated 10th January 2001, which denied the petitioner's claim for Foreign Allowance equivalent to that of a Second Secretary level officer, are considered untenable as they violate the terms of the petitioner's appointment. The petitioner accepted the appointment based on the offer made by the Government of Maldives for accommodation and utilities, and the respondent cannot retract from this offer. Additionally, the reliance on the order dated 4th September 1995 by the respondent is irrelevant to this case, as at the time of the petitioner's appointment in 1993, this order was not applicable; instead, the relevant documents were the circular/letter from 2nd February 1987 and the order from the Ministry of External Affairs dated 16th February 1989.

Additionally, the Petitioner, upon accepting their deputation appointment, received an enclosure with the letter dated 4th October 1993, outlining the provision of fully furnished family accommodation, along with free electricity and water, by the Government of Maldives. Considering these terms, along with the Ministry of External Affairs' order from 16th February 1989 and Annexure III from the letter dated 2nd February 1987, the petitioner agreed to the deputation as Deputy Director (Administration) to IGMH at Male (Maldives). Consequently, the reasons behind the denial of the petitioner's claim for Foreign Allowance in the order dated 10th January 2001 are deemed untenable as they contradict the terms of the petitioner's appointment. The petitioner accepted the appointment based on the offer made by the Government of Maldives regarding accommodation and utilities, which cannot be retracted by the respondent. Moreover, the respondent's reliance on the order dated 4th September 1995 is irrelevant to this case since it was not applicable at the time of the petitioner's appointment in 1993; instead, the relevant documents were the circular/letter from 2nd February 1987 and the order from the Ministry of External Affairs dated 16th February 1989.

The Court observed that a portion of the Foreign Allowance rightfully due to the petitioner was unlawfully withheld, the petitioner is entitled to receive interest on that withheld amount. The rate of interest will be determined by the Court based on the specifics of the case.

Accordingly, the Court allowed the Petition and quashed the judgment and order

Cause Title: Basant Kumar Bihani v Union of India (2024:BHC-AS:6277-DB)

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