Swaraj Abhiyan Vs Union of India

W.P. (C) No. 857 of 2015 Page 1 of 24

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.

1. In the record of proceedings of this Court dated 9th 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.

3. Absence of social audits being conducted.

W.P. (C) No. 857 of 2015 Page 2 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 3 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

understood by the Union of India in its written submissions of 14th 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 4 of 24

spelt out in Section 14(6) and paragraph 7 of Schedule I of the Act1

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

8. Article 243-G of the Constitution was introduced by the 73rd 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

1There 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 5 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

there is no serious disagreement voiced by the Union of India)2 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

works to be taken up in area

based on recommendations of

the Gram/Ward Sabha

Section 16(1) of the Act:

“The Gram Panchayat shall be responsible for

identification of the projects in the Gram

Sabha area to be taken under a Scheme as per

the recommendations of the Gram Sabha and

the Ward Sabha and for executing and

supervision of works.”

Step 2 Gram Panchayat to forward the

works identified by the Gram

Sabha to the Programme

Officer for scrutiny +

preliminary approval

Section 16(4) of the Act:

“The Gram Panchayat shall forward its

proposals for the development projects

including the order of priority between

different works to the Programme Officer for

scrutiny and preliminary approval prior to the

commencement of the year in which it is

proposed to be executed.”

Step 3 Programme Officer at the

Block level consolidates plans

received by allGram

Section 15(4) of the Act:

“The Programme Officer shall prepare a plan

for the Block under his jurisdiction by

2Essentially 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 6 of 24

Panchayats

consolidating the project proposals prepared

by the Gram Panchayat and the proposals

received from intermediate panchayats”

Step 4 Block Panchayat to approve

the block level plan prepared

by the Programme Officer and

forwarding it to the District

Panchayat for approval

Section 16(3)(b) of the Act:

“to approve the Block level Plan for

forwarding it to the district Panchayat at the

district level for final approval”

Step 5 District Programme

Coordinator to consolidate all

Block level plans and submit it

to the District Panchayat

Section 13(3)(a) of the Act:

“The District Programme Coordinator shall

“consolidate the plans prepared by the Blocks

and project proposals received from

implementing agencies for inclusion in the

shelf of projects to be approved by the

Panchayat at the District level”

Step 6 District Panchayat finalizes

and approves block-wise works

to be taken up under the

Scheme

Section 13(2)(a) of the Act:

“The functions of the Panchayats at the district

level shall be-

(a) To finalise and approve block-wise shelf of projects to be taken up under a

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 7 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 8 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

judgment and order of 13th May, 20163 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:

“(1) Before the beginning of each financial year on or before 31st

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 9 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

received by it on or before the 31st 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

20. It has been brought on record by the Union of India in its affidavit of 4th

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 10 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

‘agreed to labour budget’ and funds released.4 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%

4Upto the date of the written submissions, that is, 13th April, 2018 but the data is said to be incomplete

W.P. (C) No. 857 of 2015 Page 11 of 24

funds released as per the ‘agreed to labour budget.’ In the written submissions

filed by the Union of India on 13th 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

expressed the view in its affidavit of 3rd 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 12 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

such Mid Term Review was conducted from 29th August, 2017 to 13th 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 13 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 14 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 15 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 16 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

is closed

Muster Roll is a document,

which record the attendance

of workers at the worksite

State

Government

2. Data entry of Muster Roll +

measurement

book

The details of the

attendance and the

measurement of the work

done are entered into the

Management Information

System.

State

Government

3. Generation of

Wage List

After these two items are

recorded, the wages

payable to the worker is

calculated and an electronic

Fund Transfer Order (FTO)

is generated.

State

Government

4. 1st Signature

on Fund

Transfer

Order

This is approved

electronically by a

designated authority. It

requires two electronic

signatures. This is the

“maker” portion.

State

Government

5. 2nd signature

on Fund

Transfer

Order

After the first signature, it

is electronically sent to the

second signatory. This is

the “checker” portion. This

then gets pushed as an e-

pay order onto the

MNREGA server.

State

Government

W.P. (C) No. 857 of 2015 Page 17 of 24

6. Sent to

Public Fund

Management

System (run

by Ministry

of Finance)

These files are then pulled

from the MGNREGA

server to the Public Fund

Management System

(PFMS) server. The

following steps happen at

that level:

Public Fund Management

System will send these files

to the accredited bank.

The accredited bank will

send the files to the sponsor

bank.

Sponsor Bank will process

the files using National

Payments Corporation of

India.

PFMS shares responses

with NREGASoft.

Central

Government/

Payment

Agency

7. Sent to State

Employment

Guarantee

Fund –

NeFMS

The PFMS window

notionally sends it to the

State Employment

Guarantee Fund. This bank

account under the NeFMS

is solely for wage payments

Central

Government/

Payment

Agency

8. Sent to Post

Office/Bank

After notionally passing

through the State

Employment Guarantee

Fund it is then sent to the

Post Office/Bank.

Central

Government/

Payment

Agency

9. Deposited in

workers

account

The payment agency

deposits the money into the

workers account.

Central

Government/

Payment

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 18 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

affidavit of 4th 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

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

NeFMS States/UTs)

T+9 to T+11

Crediting into Bank Accounts of Beneficiary by

FIs

T+10 to T+15

W.P. (C) No. 857 of 2015 Page 19 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

stated in the affidavit of 4th 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

14th 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

Government of India. The note is dated 21st August, 2017 and forms a part of

the supplementary affidavit of the petitioner dated 30th November, 2017. The

note acknowledges (to the extent relevant) the contents of an article in the

Business Standard of 8th 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 20 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 21 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 22 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

submissions of 13th 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 23 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 24 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)

SWARAJ ABHIYAN Vs UNION OF INDIA

SWARAJ ABHIYAN Vs UNION OF INDIA