Octroi Department Employees Of Municipal Corp Have No Vested Right To Commission On Fee Collected From Evaders: Bombay High Court

The Bombay High Court recently held that employees posted in the Octroi department of a Municipal Corporation do not have any right to receive commission (Mushahira) on compromise fee collected by the department from Octroi evaders.

Justice Sandeep V Marne observed that the employees cannot demand commission for performing their duties of apprehending evading vehicles and collecting Octroi.

“The employees of Octroi Department perform their duties in apprehending vehicles evading Octroi. For performing their duties, they cannot demand any incentives in the form of commission on the Octroi so collected…no right is vested in the employee of Octroi Department of the Municipal Corporation to claim any amount towards Mushahira from the Municipal Corporation”, the court held.

Octroi tax is levied by the Municipal Corporations on certain categories of goods as they enter their jurisdiction.

The court allowed several writ petitions filed by the Pune Municipal Corporation (PMC) challenging the orders of the Industrial Court directing it to pay Mushahira the respondent employees within 3 months, failing which a 6 percent annual interest rate would be applicable.

Mushahira was a 20 percent incentive to employees on the compromise fees recovered from Octroi evaders under a Resolution adopted by the Standing Committee of PMC on August 27, 1984. PMC discontinued the system of Mushahira in 2008. The employees made several representations to the PMC seeking the payment of Mushahira.

Subsequently, they approached the Industrial Court in complaints under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. The Industrial Court ruled in the employees’ favour, prompting PMC to file the present petitions challenging the order.

Advocate Abhijit Kulkarni for PMC argued that the Octroi Department did not fall under the definition of an 'industry,' making the employees' complaints non-maintainable. He contended that it is the employees’ duty to collect Octroi and they cannot seek any additional payments over and above the salary and allowances.

Advocate AS Rao for the employees argued that the Mushahira scheme was approved through a Resolution by the General Body of the Municipal Corporation. Since this Resolution was never rescinded, they were entitled to Mushahira, he said.

The court noted the diverging interpretations in previous judgments on whether the Octroi Department qualified as an 'industry' and opted not to resolve this question, focusing instead on the facts and circumstances of the case.

Section 51 of the Maharashtra Municipal Corporations Act, 1949 provides that revision of pay scale, pay structure or grant of special pay or grade or revision of allowances requires prior sanction of the State Government.

The court said that Mushahira, though not part of salary, is a special allowance or special pay, and would require prior sanction of the state government. No material was presented before the Industrial Court to establish that the State Government granted approval for the Mushahira scheme, the court said. “…the entire system of payment of Mushahira adopted by the Municipal Corporation was dehorse the statutory provisions,” the court observed.

The court opined that the 1984 Resolution can be considered an enabling provision which granted PMC the power to sanction Mushahira for catching selected vehicles evading Octroi. However, no corresponding right to demand Mushahira was created in employees’ favour, the court held.

The court added, “Merely because the Municipal Corporation might have paid such Mushahira to its employees in the past would not create any right in their favour to continue to receive it. Municipal Commissioner has rightly discontinued the system of payment of Mushahira, which has no statutory recognition.”

The court observed that allowing some employees to receive additional payments could lead to discrimination and discontent among other employees. “such system of payment of any amount over and above salary and allowances would create discrimination amongst employees and would be a cause of heartburn for other employees not posted in Octroi Department. Such system would also create unnecessary demand amongst the employees to seek posting in the Octroi Department”, said the court.

The court highlighted the high demands made by some employees for Mushahira, citing an example of a demand for Rs. 12,00,000, which it deemed unjustifiable.

Thus, the court set aside the decision of the Industrial Court.

Case no. – Writ Petition No. 8953 of 2018

Case Title – Municipal Commissioner Pune Municipal Corporation and Anr. v. Ashish Laxman Chavan