Supreme Court directs appointment of auditor, orders fresh calculations and prompt payment in contempt matter against municipal corporation

A bench of Justice Vikram Nath and Justice Sandeep Mehta heard a contempt petition arising from non‑compliance of this Court’s judgment dated 07.04.2017 in Civil Appeal No. 4929 of 2017, which had modified an Industrial Tribunal award directing the Brihanmumbai Municipal Corporation (BMC) to treat certain contractual workers as permanent and extend consequential benefits. The petitioners challenged the BMC’s delay in implementing the Court’s directions and sought contempt proceedings for failure to pay dues and regularise staff as ordered.

The Court directed the appointment of a retired BMC officer as an independent Auditor to verify records, re‑compute entitlements and ensure payment to the workers found to be entitled. It directed that the Auditor’s report be submitted to the Corporation with a copy to the petitioner union and that amounts quantified by the Auditor be paid by the BMC within four weeks of submission of his report. The Court recorded that the BMC accepted the appointment of Mr. Shrikant Kamble, former Deputy Municipal Chief Auditor, and held that the Auditor would be provided attendance records, pay slips and given power to require employees to produce bank statements or other proof of work for periods with missing attendance. The Court noted that recoveries already claimed by the BMC would be examined by the Auditor after affording an opportunity of hearing to affected employees, and that the emoluments of the Auditor would be borne by the BMC. The Court observed earlier that "This order shall not be treated as a precedent as by and large, it is based on consensus." The Court, in its reasoning, observed: The Court further reiterated the earlier position that "the Corporation will have a right to recover it but only after routing it through the petitioner‑Association and in a reasonable manner on month to month basis from the salary of the employees."

Background The dispute arose from an Industrial Tribunal award dated 13.10.2014 directing the Municipal Corporation of Greater Mumbai to treat some 2,700 contractual solid waste workers as permanent and grant retrospective benefits from completion of 240 days of service. The High Court affirmed the Tribunal on 22.12.2016, and this Court partly allowed the appeal on 07.04.2017 by modifying relief to provide monetary benefits w.e.f. the date of the Award and by conferring permanent status as a special case for those who had died or become permanently incapacitated, while directing notional fixation for others. The Court noted that verification undertaken pursuant to interim orders had established only about 1,600 verified employees and directed fresh verification.

Contempt proceedings were initiated in 2018 for alleged substantial non‑compliance. After repeated hearings and personal appearances by senior BMC officers, the parties exchanged detailed notes in 2024–2025 identifying outstanding issues: alleged incorrect fitment of basic pay, discrepancies in break‑up charts, recovery notices issued to workers claiming excess payments, delayed gratuity payments for which interest under Section 7(3A) of the Payment of Gratuity Act, 1972 was claimed, and a large outstanding provident fund claim noted by the EPFO. The BMC accepted the proposal to appoint Mr. Shrikant Kamble as Auditor and agreed to provide records and cooperate; the issue of provident fund deposits was left to the Bombay High Court, where related proceedings were pending. Ultimately, the Supreme Court appointed the Auditor, prescribed his scope (including re‑fixation, preparation of detailed break‑up charts, verification of attendance and bank statements, and examination of recoveries), directed payment within four weeks of the Auditor’s report, ordered that the Auditor’s emoluments be paid by the BMC, discharged notices and closed the contempt proceedings while leaving liberty to approach the Court for further clarification or directions.

Case No.: 2025 INSC 1227 (Contempt Petition (C) No. 1264 of 2018 in Civil Appeal No. 4929 of 2017) Case Title: Kachara Vahatuk Sharamik Sangh v. Ajoy Mehta & Ors. Appearances: (List advocates if available, for both sides using the format) For the Petitioner(s): Ms. Rohini Thyagarajan, Advocate For the Respondent(s): Mr. Dhruv Mehta, Senior Advocate