PAYMENT OF OLD ARREARS - WHY NOT AT CURRENT RUPEE VALUE

OLD ARREARS : WHY NOT BE PAID AT PRESENT RUPEE VALUE BY INDEXATION

Since independence there have been numerous cases where the government employees had been denied their rightful dues for some reason or the other, compelling them to take legal recourse to get them after years of  legal battles and counter battles. The net worth of the arrears which, one may get paid after obtaining a favourable decision from the Apex Court after years of delay is many times low due to inflation over the period. The value loss thereby in the current real value of the arrears and the question whether or not the

employee be rightfully compensated for this diminished value by the erring department  is a matter for serious debate.

There is an official method of Indexation to get the real value of the old assets already prevailing in the Department of Direct Taxes which should be considered for application while the arrears are to be worked out for payment to the employees for their rightful compensation of value loss.  Indexation is a process by which the Government compensates its citizen in debt, gold, real estate etc so that they don’t have to suffer losses in real terms due to inflation from time to time. The ‘Cost Inflation Index’  is being notified by the Government of India for every year wef 1980-81. This index takes into account only 75% of the Inflation for a particular financial year.

The Government thus allows inflation adjustment of old value assets to the near current value of these assets duly compensating the individuals and investors and determining the Capital Gains for tax purposes.

The question then arises as to why these arrears be not paid at the current indexed value rather than the years old numbers in currency. Any dues which were due to an employee in 1981 and are paid in 2016 will have just  one tenth of its earstwhile value.  The Rupee Value i.e the buying power of Rs 1000 in currency if due in 1981, will just equal the buying power of  Rs 10,000 as of today.   Is this not a sheer loss and injustice to the employee and his family is a pertinent question, as such,  why then the Government should not compensate its employees.

Let us take the example of Rank Pay Case which had been fought for all the Indian Armed Forces Officers by the Retired Defence Officers Association. The 4^th CPC recommended an additional element of pay termed as Rank Pay to all officers of the Indian Armed forces from Captains to Brigadiers and their equivalent ranks in Indian Navy and Indian Air Force. The MOD and the office of CGDA, however, circumvented this additional element of pay by first deducting the same from basic pay of the officers before refixing and there after adding the Rank Pay element after refixing the basic for 4^th CPC. This was a novel way of denying  the additional element of pay to the officers.

Maj Dandapalan filed a case and  won the same in Kerala High Court. He was paid the arrears of Rank Pay by MOD.  Similar case was then filed by RDOA. The Honourable Supreme Court of India gave judgment in favour and  subsequent appeals and petitions filed by the Government were rejected. The Government  paid in 2013 and 2014. One can well know the loss in the real value of rupee from 1986 to year 2013 i.e over a period of 27 years. Why should the Government, therefore, not compensate its employees  properly and in a just manner by paying them the indexed value.

Fin Year	Cost Inflation Index	The Asrrears	Indexed value in 2013-14
1986-87	140	6000	40243
1987-88	156	6000	36115
1988-89	164	6000	34354
1989-90	172	6000	32756
1990-91	182	6000	30956
1991-92	199	6000	28312
1992-93	223	6000	25265
1993-94	244	6000	23090
1994-95	259	6000	21753
	Total	54000	272843

 Let us see how the arrears should have been  worked out, the Cost Inflation Index pertaining to the year 2013-14 so notified is equal to 939, while the same for other years  are as given in the table placed here. It will be seen that for a small sum of Rs 500 as arrears per month  during the 4th CPC period the dues will add up to only Rs 54000/- as total arrears  against the indexed value if taken for the year 2013-14 amounting to Rs 2,72,843/-  which is more than four times.

There is thus, a valid case in merit to obtain justice for the government employees through a Supreme Court Judgment,  who have been denied their rightful  dues in the past for some reasons known to the departments which could be either sheer negligence, malafide intentions or willful mischief.

Can some organization or a group of individuals consider to take on this case as a welfare measure for the  employees in getting them rightful value of their dues.

                                             

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