Summary
The Supreme Court upheld the statutory process of agreeing annual MGNREGA labour budgets and found the alleged informal funding cap unestablished. It nevertheless rejected the Union’s attempt to exclude wage-payment delays after Fund Transfer Orders from compensation. Both levels of government must secure timely wages and prescribed compensation. The Ministry was directed to frame an urgent, time-bound mandatory payment programme in consultation with States and Union Territories; all issues concerning the Act were closed.
Issues
- Whether the agreed labour-budget process and the alleged cap on funds violated the employment-guarantee framework.
- Whether compensation excludes delays after Fund Transfer Orders and which governments bear compliance duties.
Provisions considered
- Section 3, Mahatma Gandhi National Rural Employment Guarantee Act, 2005Workers are entitled to wages within a fortnight of work; administrative failures cannot excuse breach of the statutory payment obligation. (¶¶ 4, 39, 44)
- Schedule II, paragraph 29, Mahatma Gandhi National Rural Employment Guarantee Act, 2005Prescribed delay compensation extends to payment reaching workers, including delays after Fund Transfer Orders; States must pay upfront and may recover from responsible functionaries or agencies. (¶¶ 30, 39, 41, 44)
- Rule 5, National Employment Guarantee Fund Rules, 2006The Ministry may examine annual work plans and labour budgets, review implementation and estimate releases; the consultative approved-budget process has statutory support. (¶¶ 18, 19, 27)
Held
- The consultative agreed labour budget was permissible under Rule 5. Releases above agreed budgets and the absence of demonstrated State objections or denied demands did not establish the alleged informal cap. Meaningful budget discussions and sufficient, expeditious funding remained necessary. (¶¶ 17, 18, 19, 20, 24, 27)
- The Union could not disclaim responsibility after the second signature on a Fund Transfer Order. Administrative inefficiency, documentation failures or banking stages cannot deprive workers of timely wages and prescribed compensation. (¶¶ 37, 38, 39, 41, 42, 43)
- The duty to secure wages within a fortnight and compensation on default rests on States, Union Territories and the Central Government. None may shift its compliance burden to another. (¶ 44)
- The Ministry of Rural Development must urgently prepare, with States and Union Territories, a time-bound mandatory programme for payment of wages and compensation. The social-audit grievance was not urged, and all issues pertaining to the Act were closed. (¶¶ 45, 46, 47)
Result
Directions issued for an urgent, time-bound mandatory programme securing wage and compensation payments. Challenges to the agreed labour-budget process and alleged informal cap rejected; all issues pertaining to the Act closed.