Can Salary Be Withheld For Refusing NPS Contribution? What The Bombay High Court Says

The Bombay High Court, while hearing a case regarding salary withholding, condemned the authorities’ action. The division bench, comprising Justice G. S. Kulkarni and Dr Neela Gokhale, declared that withholding the salaries of primary school teachers because they had refused to register under the National Pension Scheme (NPS) is an unacceptable act of exploitation.

Three primary teachers from Palghar district filed the case after their monthly salaries were abruptly suspended starting July 2022. The court, by invoking Article 21 of the Constitution of India, emphasised that the right to livelihood cannot be subjected to the whims and fancies of administrative authorities.

Case Background

The dispute began in July 2022 when the district education authorities in Palghar tried to enforce NPS account opening on staff. On July 21, 2022, the Chief Executive Officer of the Zilla Parishad Palghar issued a direction to withhold salaries of teachers who had not registered under the NPS. On July 25, 2022, the Panchayat Samiti Dahanu issued a letter in this regard, ordering schools to stop paying petitioners’ salaries. After getting to know about the withholding of salaries, teachers explained that NPS was optional and requested that their salaries not be halted. But the administration proceeded with a complete withholding of their salaries from July 2022 without any prior notice, even as they continued discharging their teaching duties.      

Arguments

The counsel representing the teachers argued that the withholding of salary was an unlawful act. He also pointed out that while the authorities disbursed part of the withheld salary eventually, it was only after they were served notice of the writ petition. Notably, this was done only after coercing the teacher to open NPS accounts for which a 10 per cent deduction was arbitrarily made.

On the other hand, the counsel of the respondents defended the administration’s action by pointing out that the government order dated September 19, 2019, extended the NPS to teaching staff, and this justified their actions.  

Court Observation

After considering the argument and pursuing the official documents, the High Court rejected the administration’s arguments. The bench observed that in the Government Order of September 2019, it is nowhere mentioned that NPS registration is compulsory; instead, enrollment remains strictly at the option of the teachers. The court observed that a letter dated December 22, 2021, from the Commissioner of Education, explicitly restricted forcing teachers to switch to NPS and barred withholding of salaries. It was observed that the regional authorities defied all these directives.

It held that their action was “This is nothing but an arbitrary exercise of power by the authorities.”

It stated, “At the outset, the entire action of the Respondents is deprecated. Article 21 of the Constitution of India guarantees the right to livelihood as an integral part of the right to life, and as such, it cannot be subjected to individual fancies of the persons in authority. The management, having availed of the Petitioners’ services, cannot be permitted to decline salaries to them. This is nothing but exploitation amounting to depriving a person of his/her right to livelihood.”

Court Judgment

The court allowed the writ petition and ordered the respondents to disburse the outstanding salaries within ten days and pay 12 per cent interest on the withheld amount from July 2022 till the date these payments are cleared. The bench also granted the authorities freedom to recover this interest amount from the specific officers’ salaries directly, who permitted the illegal withholding of the teachers’ salaries.