Shri Ram Prasad (Deceased) by his
Legal Representative Vs. The State of Punjab  INSC 37 (7 February 1966)
GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
CITATION: 1966 AIR 1607 1966 SCR (3) 486
D 1967 SC1260 (10)
Constitution of India Art.
357(2)-"things done or omitted to be done"-Scope of.
: Bank of Patiala Regulation and Management
Order, 1954validity of. Rule 27 of Staff Rules framed thereunderWhether
violative of art. 311Whether staff rules infringe Art. 14. Corporation-Whether
majority can exercise powers of.
Patiala State Regulations-Applied to Bank
employees by "extension "Whether extension executive act.
On March 4, 1953, the President of India
assumed Powers of the Government of PEPSU (which included Patiala) under
Article 356 of in Constitution. On February 27, 1954, in exercise of the powers
vested in him by the Proclamation, the President issued the Bank of Patiala Regulation
and Management Order 1954, to provide for the better regulation and management
of the Bank. By virtue of the powers conferred upon it by Clause 4(1)(iii) of
the Regulation Order, the Board of Directors of the Bank framed certain Staff
Rules. Rule 27 of which provided for compulsory retirement of employees of the
The appellant, who was an employee of the
Patiala State Bank was compulsorily retired by an order of the Board under Rule
27 passed in June 1958. He challenged the order in a suit mainly on the ground
that Rule 27 was illegal and void. The Trial Court granted a decree
substantially allowing the appellant's claim but on appeal, this decree was set
aside by the High Court.
In the appeal to this Court it was contended
on behalf of the appellant, inter alia, (i) that though the Regulation Order
[Clause 4(1) (iii) of Which delegated power to the Board of Directors of the
Bank to frame staff rules] was made on February, 27, 1954, it was not published
in the Gazette until March 14 1954, by which time, in view of the revocation of
the proclamation on March 7, 1954, the powers of the President to make rules
governing the service conditions of Government servants in the State had lapsed
and he delegation by the President to the Board of the Power to frame rules had
ipso facto come to an end. The Board therefore, had no authority to frame the
Staff Rules on Marah 25, 1954 and to enforce them from April, 1, 1954; that in
any event the Regulation Order was in effect and substance a legislative Act and,
in view of the provisions of Article 357(2), its operation could not extend
beyond the period of one year specified in that Article; (ii) that prior to the
promulgation of the Regulation Order in 1954 the Patiala State Regulations and
other rules or orders, except the pension rules. made by the Ruler of Patiala,
were applicable to the staff of the Patiala State Bank; the Staff Rules sought
to supersede the provisions of the patiala State Regulations and rules made by
the Board of Directors could not abrogate the Regulations promulgated by the
Ruler who exercised the 487 powers of the Legislature; (iii) that Rule 27 was
unconstitutional as it offended the guarantee under Article 311 of the
Constitution and the Staff Rules were also violative of Article 14; (v) that
the Board which promulgated the Staff Rules had not been properly constituted
inasmuch as some of the Directors were not present at the meeting.
HELD : (i) Although the Regulation Order was
made on February 27, 1954 and was not published in the Gazette until March 14,
1954, the order itself provided for its commencement on the date on which it
was made and it therefore came in to operation on February 27, 1954, i.e.,
before the termination of the Prosident's Rule in PEPSU.
On a consideration of the provisions of the
Regulation Order, it is manifest that those provisions were made for the better
regulation and management of the affairs of the Bank and' it would be an
absurdity to hold that some of the pro-visions would cease to be in operation after
the period of one year ipecified in Art. 357(2); all the clauses of the
Regulation Order, including Clause 4(1) (iii), come within the purview of the
saving clause in Aiticle 357(2) which preserves the validity of "things
done or omitted to be done" before the expiration of the period of one
year after the proclaimation has ceased to operate and the Regulation Order
therefore continued to be in operation after the expiration of that year. [494
B-H] Foster v. Pritchard  2 L.J. Ex. 215; referred to.
(ii) The Patiala State Regulations were
applied to the employees of the State Bank of Patiala as a result of an
"extension" made by the Maharaja pursuant to the executive powers
vested in him. The act of extension being as executive act it could be changed
by a similar executive act. What was changed or superseded was the extension
and not the rules. [497 E] (iii) There was no force in the contention that Rule
27 offended Article 311 or that the Staff Rules were violative of Article 14.
[498 F] Motiram Deka v. N. E. Frontier Railway  5 S.C.R. 683, and
Lachhman Das v. State of Punjab  2 S.C.R. 353;
(iv) The High Court had rightly held that
under the law governing corporations, a majority of the members i the
Corporation is entitled to exercise the powers of the Corporation and that the
rule regarding corporations is equally applicable to a company. "he Board
was, therefore, properly constituted at the time when the Staff Rules were
promulgated. [499 A]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 530 of 1964.
Appeal from the judgment and decree dated
December 19, 1962 of the Punjab High Court in Regular First Appeal No. 78 of
C. B. Agarwala, K. P. Bhandari and R.
Gopalakrishnan, for the appellant.
Bishan Narain, K. S. Chawla and R. N.
Sachthey, for the respondents.
488 The Judgment of the Court was delivered
by Satyanarayana Raju, J. This appeal, on certificate granted by the High Court
of Punjab, arises out of a suit filed by one Ram Prasad, against the State of
Punjab, for a declaration that the order of compulsory retirement passed by the
latter against Wm was invalid.
Ram Prasad originally entered serviced as a
Clerk, in the year 1924, in the Patiala Saddar Treasury in what was then the
Patiala State. He was subsequently transferred in the same capacity to the
Patiala State Bank on February 27,1984 Bk and was confirmed in his appointment.
On September 1,1985 bk he was promoted to the next higher grade on the
establishment of the Patiala State Bank. Thereafter, he was promoted as Manager
and posted to the Bhatinda branch of the Bank on April 1, 1944. On April 1,
1949 he was promoted as Selection Grade Manager by the Board of Directors of
the Bank in the grade of Rs. 340-20-500-525-700. On September 23, 1953 he was compulsorily
retired from service but was subsequently reinstated by the Government on June
10, 1954 since the order was legally defective. On June 11, 1958 the Board
passed an order compulsory retiring him from service.
Ram Prasad challenged the order of compulsory
retirement passed by the Board on various grounds, by means of a suit instituted
in the Court of the Sub ordinate Judge, Patiala.
He pleaded that the order of compulsory
retirement amounted to 'dismissal or removal' from service within the meaning
of art. 311 of the Constitution. He further maintained that r.
27 of the Bank of Patiala (Staff) Rules,
1954, hereinafter termed the Staff rules, under which the order of compulsory
retirement was made, was illegal and void. The order was also challenged on the
ground that it was mala fide. The substantial relief claimed by him in the
'suit was a declaration that r. 27 of the ( Staff rules was wholly unconstitutional,
null and void for the reasons stated by him.
The respondent contested the suit contending
inter alia that the order of compulsory retirement was passed by the Board of
Directors of the Bank under rules, which were legal and constitutionally valid
and governed the employees of the Bank.
The Subordinate Judge, Patiala, framed
He found all but two issues in favour of the
appellant and granted a decree substantially allowing the claims made by him.
The respondent thereupon filed an appeal in the High Court of Punjab which
allowed the appeal and set aside the judgment of the Subordinate Judge. During
the pendency of the appeal in the High Court Ram Prasad died and his widow was
brought on record as his legal representative. However, it will be convenient
to refer to Ram Prasad as the appellant.
489 Before entering into the merits of the
appeal, it would be convenient to refer very briefly to the historical
background of the legislation. The Patiala State Regulations were first
promulgated in the year 1908 and governed the employees of the State in matters
relating to pay, allowances, leave, pension and travelling allowances.
The Regulations were revised and re-published
in the year 1931. Subsequently, they were again revised and re-issued as the
Patiala Services Regulations in the year 1947.
Meanwhile, in April 1941 these Regulations
were made applicable expressly to the Bank staff of the Patiala state Bank by
the Maharaja, with the exception of the rules relating to pension. On August
20, 1948, Patiala became a constituent 'unit of the Patiala and ,East Punjab
States Union (PEPSU). On the formation of the Union, the Patiala Services
Regulations were made applicable to the entire territories of the Union by
Ordinance No. 1 of 2005 Bk.
Therefore the Patiala Services Regulations
continued to govern the members of the Patiala State Services even after they
became integrated into the PEPSU Services.
On March 4, 1953, the President of India
assumed the powers of the Government of PEPSU, in exercise of the powers
conferred on him by art. 356 of the Constitution.
On February 27, 1954, the President, in
exercise of the powers vested in him in relation to PEPSU by the Proclamation,
issued the Bank of Patiala Regulation and Management Order, 1954, hereinafter
called the Regulation Order, t0 provide for the better regulation and management
of the affair.,, of the said Bank. We will have occasion to refer to the
material clauses of this Order at a later stage.
By virtue of the powers conferred Upon it by
cl. 4(i)(iii) of the Regulation Order, the Board of Directors of the Bank framed
the Staff rules. Rule 27 of these rules, at the relevant date, was in the
following terms :
"An employee shall retire at fifty five
years of age provided that (i) the Bank may, at its discretion and without
giving any reasons, retire any employee from the Bank's service after he has
completed the age of fifty years or the service of twenty five years whichever
happens first and no claim to special compensation on this account will be
(ii) the Bank retains the absolute right to
retire any employee after he has completed 10 years of service without giving
any reasons and no claim to special compensation on this account will be
entertained. This right will not be exercised except when it is the interest of
the Bank 490 to dispense with the further services of an employee such as on
account of inefficiency, dishonesty, corruption or infamous conduct.
Explanation I :
The action under proviso (ii) is intended to
be taken (a) Against an employee whose efficiency is impaired but against whom
if is not desirable to make formal charge of inefficiency or, who has ceased to
be fully efficient that is, the value of the employee is clearly incommensurate
with the pay which he draws.
It is not the intention to use the provision
as a financial weapon that is to say the provision shall be used only in case
of employees who are considered unfit for retention on personal as opposed to
(b) In cases where reputation for corruption,
dishonesty or infamous conduct is clearly established even though no specific
instance is likely to be proved under those rules.
The arguments advanced by Mr. Agarwala,
learned counsel for the appellant, have covered a wide ground, but, in the
main, he has impugned the validity of r. 27 set out above. His contentions may
be briefly summarised as follows (1) Prior to the promulgation of the
Regulation Order in 1954, the Patiala State Regulations and other Rules or
Orders, except the pension rules, made by the Ruler of Patiala, were applicable
to the staff of the Patiala State Bank. The Staff rules were made by the Board
of Directors of the Bank by virtue of the delegation made in its favour under
cl. 4(1)(iii) of the Regulation Order.
The delegation in favour of the Board lapsed
on March 7, 1954 with the termination of the President's rule in PEPSU.
Thereafter, the Board had no authority or power or jurisdiction to approve of
the Staff rules on March 25, 1954 and to enforce them from April 1, 1954. (2)
The Board, assuming the delegation in its favour to be valid, was not vested
wit the power to make rules regarding compulsory retirement of the servants of
the Bank. (3) The Staff rules seek to s upersede.
The provisions of Regulation IX of the
Patiala State Regulations. Rules made by the Board cannot abrogate the Regulations
promulgated by the Ruler who exercised the powers of the legislature. (4) The
Board which promulgated the Staff Rules had not been properly constituted
inasmuch as all the Directors were not present at the meeting.
However, the main ground on which the
validity of the staff rules is challenged is that the Regulation Order, though
made on 491 February 27, 1954, was published in the Gazette only on March 14,
1954, that by reason of the revocation of the Proclamation issued by the
President the power of the President to make rules governing the service
conditions of Government servants in the State had lapsed and that the
delegation by the President to the Board power to frame rules ipso facto came
to an end when the Proclamation was revoked, on the principle that the
delegate's power comes to an automatic end by reason of the principal's power
Mr. Bishan Narain, learned counsel for the
respondent-State, countered these arguments and maintained that the Staff Rules
We may initially set out the relevant facts
with regard to the Proclamation of Emergency by the President and its
revocation. As already stated, by notification dated March 4, 1953, the
President, in exercise of the powers conferred by art. 356 of the Constitution,
assumed all functions of the government of the State of, PEPSU and all powers
vested in or exercisable by the Rajpramukh of the State. The Notification
declared that the powers of the legislature of the State shall be erercisable
by or under the authority of Parliament.
By an order made by the President on the same
date, the President issued a direction that all the functions of the Government
of the State of PEPSU and all the powers vested and exercisable by the
Rajpramukh of the State under the Constitution or under any other law in force
in the State shall, subject to, the superintendence, direction and control of
the President, be exercised by the Rajpramukh of the said State who was to act
on the advice of the Adviser appointed by the President in that behalf.
By notification dated March 21, 1954, in
exercise of the powers conferred by cl. (2) of art. 356 of the Constitution,
the President revoked the Proclamation issued by him under the said article on
March 4, 1953.
When a proclamation is made under art. 356,
it will be open to the President to specify in such proclamation (a) that he
will himself exercise all or any of the functions of the Govt. of the State or
all or any of the powers vested in or exercisable by the Governor or any body
or authority in the State other than the Legislature of the State; (b) declare
that the powers of the Legislature of the State shall be exercisable by or
under the authority of Parliament. When a declaration is made to this effect by
the President, it shall be competent for Parliament to direct that the
legislative power of the State Legislature shall be exercised by the President
himself or by any other authority to whom such power may be delegated by the
President under art 357 (1). Art, 357(2) provides that 492 any law made in
exercise of the power of the legislature of the State by Parliament or the
President or other authority referred to in sub-cl. (a) of cl. (1) which
Parliament or the President or such other authority would not, but for the
issue of a Proclamation under art. 356, have been competent to make shall, to
the extent of the incompetency, cease to have effect on the expiration of a
period of one year after the Proclamation has ceased to operate, but Cl. (2) of
Article 357 makes an exception............ in the case of things done or
omitted to be done before the expiry of the period of one year. It is argued
firstly that the Regulation Order was not made before the date of revocation of
the Proclamation. It is said that the Order, though purporting to have been
made on February 27, 1954 was not published in the Gazette till March 14, 1954.
It is doubtless true that the Regulation
Order, though made on February 27, 1954, was not published in the Official
Gazette tiff March 14, 1954. But cl. 1(b) of the Order provides that it shall
come into force at once and repeal all. the previous Orders and instructions in
so far as they are inconsistent with the provisions of the Regulation Order. By
reason of the fact that the Order itself provides for its commencement as the
date on which it was made, it is clear that the Order came into operation on
February 27, 1954, though it was published at a later date. The Order was
therefore made before the date of termination of the President's rule in PEPSU.
Now, it is contended by learned counsel for
the appellant that the Regulation Order is in effect and substance a
legislative act and that its operation could not extend beyond the period
specified in art. 357(2). It may be initially stated that this contention was
pot raised in the Courts below and there was no pleading or any .Issue covering
that contention. Further, there is nothing on record to show that no order was
passed during the period of one year provided by art. 357(2) extending the life
of the Regulation Order beyond that period.
Coming to the contention, the question is
whether, on a fair construction of all its provisions and its intendment, the
Regulation Order comes within the scope of ,he expression 'things done'
occurring in art. 357(2). In Craies On Statute Law, Sixth Edition, it is
pointed out at p. 415 that if, an Act is repealed with a proviso 6 except as to
things done under 'the proviso will receive a liberal interpretation. In Foster
v. Pritchard ( it was contended, with respect to an action tried after the
passing of the County Courts Act, 1856, that the trespass committed by the
defendant under colour of the process of the Court was not 'an act done under'
the repealed section, but, said the Court, 'there can be no doubt that it Was
the (1)  26 L. J. Ev. 215.
493 Intention of 'the legislature that the
words in this proviso as to acts done under the repealed statutes should be
construed in an extensive sense'. It is therefore open to the Court to find, on
a fair construction of all the provisions of the Regulation Order which must be
read as an integrated whole, whether they were intended to continue to be in
force after the period specified in ad. 357(2). It therefore becomes necessary
to examine the provisions of the Regulation Order.
The Regulation Order provides that the
management, control, supervision and direction of the affairs and business of
the Bank shall vest in a Board constituted as provided in cl.
3(1). There can be no doubt that the
management, control, supervision and direction of the affairs and business of
the Bank are matters which were provided for not for a limited period but for
an unspecified period even beyond the period of one year as provided by art.
357(2). Clause 4(1) is important. It provides that the Board shall pass the
half yearly balance-sheets and annual budget estimates and frame rules for the
day to day working of the Bank. We may, for the present, omit cl. 4(i)(iii)
Sub-cl. (iv) provides that the Board may grant advances and fix limits upto
which bills of exchange drawn by individual constituents may be accepted and
frame rules in that behalf. Sub-cl. (V) provides for the Board framing rules
regarding the Provident Fund for employees of the Bank, and sub-cl. (vi) for
sanctioning expenditure and framing rules for its sanction by the Managing
Director and other officers of the Bank. Under sub-cl. (vii), the Board shall
invest the funds of the Bank in Government Securities, shares, debentures and
other securities and sell them; under sub-cl. (viii) the Board shall borrow
moneys and negotiate, transfer, sell endorse, renew, pledge or mortgage
Government promissory notes and other securities for the purpose of taking
overdrafts and demand loans on their security; under sub-cl. (ix) issue
instructions for the guidance of the Managing Director and require him to
submit to the Board all information regarding the transactions of the. Lastly,
under sub-cl. (x) the Board shall delegate to the Managing Director, or subject
to the Managing Director's supervision, to any of the other employees of the
Bank any of the aforesaid powers.
Clause 5 provides that the Board shall comply
with such general or special directions as may from time to time be issue by
the State Government.
Clause 6 provides for the meetings of the
Board being held at least once in every three months or at such shorter
intervals as the Chairman may decide and cl. 7 specifies the powers of the
Managing Director. Clause 8 provides for the conduct of the business of the
Bank. Clause 9 provide for the applicability of some of the provisions of the
Banking Companies Act to the Bank. Clause 10 provides for the audit of the a
:counts of the Bank and cl. II provides that the Board shall, at the end of
every calendar 494 year, submit to the State Government the annual balance sheet
of the Bank accompanied by a report on the working of the Bank and that the
Board shall submit to the State Government such other information concerning
the affairs of the Bank as may from time to time be required by the State
On a consideration of the provisions of the
Regulation Order" set out above, it is manifest that those provisions have
been made, as is stated in the preamble to the Order, for the better regulation
and management of the affairs of the Bank.Indeed, cl. 3 of the Order provides
for the constitution of a Board of Directors for the management, control,
supervision and direction of the affairs. and business of the Bank. The matters
provided, barring cl.
4(i) (iii), relate to the day-to-day
administration of the affairs of the Bank. It is impossible to say that the
matters provided for in the Order would cease to be in operation after the
period of one year. It will result in an absurdity to hold, for instance, that
provisions like the one for sanction of expenditures. would cease to be in
operation after the period of one year.
We may now deal with cl. 4(1) (iii) which
provides that the Board shall appoint, remove, dismiss and lay down the general
conditions of service of the employees of the Bank other than the Managing
Director and frame rules in that behalf. It is pursuant to the powers vested in
it tinder this clause that the Board of Directors of the Bank made the Staff
rules, including r. 27 whose validity is questioned.
The expression 'things done' occurring in
art. 357(2), in our opinion, must receive a liberal and extensive construction.
As already indicated, all the clauses of the Regulation Order must be read
together as an integrated whole and we have to find, on a construction of all
the clauses, whether they were intended to continue beyond the period of one
year provided by art. 357(2). In the context in which cl. 4(1) (iii) occurs, it
is not unreasonable to construe the power to make rules vested in the Board
under that clause as things done' within the meaning of art.
357(2). There can be no doubt about the
intention to preserve and continue the rules even after the period of one year
after the cessation of the Emergency so that there may not be any hiatus in the
administration of tie affairs of the Bank.
It must therefore be held that all the
clauses of the' Regulation Order, including cl. 4(1) (iii), come within the
purview of the saving clause occurring in art. 357(2) of the Constitution and
that they continue to be in operation after the period specified in that
On this conclusion it follows that the
delegation made by the President in favour of the Board of Directors of the
Bank under the Regulation Order did not lapse on the terminatio of the
Presidents rule in PEPSU. It is therefore unnecessary to 495 consider the
decisions bearing on the question of the extent of the authority or power of a
Learned counsel for the appellant has
contended that the Patiala Services Regulations were existing law made by the
Maharaja and it was not competent for the President to make the Regulation
Order empowering the Board of Directors of the Bank to supersede those
Regulations. The learned Judges of the High Court held that the President was
competent to promulgate the Regulation Order under art. 309 read with arts.
330'and 372 of the Constitution. Having regard to the conclusion reached by us,
that the Regulation Order was validly made, we consider it unnecessary to go
into the larger question whether the Regulation Order had the force of rules
framed under art. 309.
It is then contended that the Patiala State
Regulations governing the conditions of service of public servants were laws
made by the erstwhile ruler of Patiala and could not be changed to the
disadvantage of such public servants. The rules, published on February 17, 1930
contain the following, in Part 1, Preliminary, under the heading 'Right of
Changing Rules' "1. The rules contained in these Regulations may not be
modified or departed from except under the orders of the Ijlas-i-Khas based
upon a report of the Finance Minister.
4. The rules in these regulations apply to
all officers holding appointments in the Patialal State, except in so far as
they are over-ridden by distinct provision in any formal agreement entered into
with the State by any officer." It is not the appellant's case that there
was any formal agreement between him and the State of Patiala that the rules
shall not be changed during the period of his service The Patiala Services
Regulations, Vol. 1, published in 1947, preserved the right of the Maharaja to
change the rules. Rule 1.7, of Chapter I, reads "Right of changing rules :
The rules contained in these Regulations shall not be modified or departed from
except under the orders of the Ijlas-i-Khas based upon a report of the Finance
Minister." Rule 1.7 of the 1947 Regulations corresponds to rr. 1 and 4 of
the 1930 Regulations. The contention of the appellant that the rules could not
be changed is not therefore sustainable. They can certainly be changed by an
authority competent to change them, as is evident from Exhibit P. 8, dated July
19, 1940. The change 10 Sup. CI/66-19 496 was in fact effected by the Maharaja
in his administrative capacity.
Exhibit P-8 is as follows :
"The Patiala State Bank is a State
Department governed by its Constitution laid down by the Ijlas-i-Khas, but
being at the same time autonomous as regards its accounts, which are kept on
commercial basis, it has become necessary to define how far the rules applying
to other State Departments and the Patiala State Regulations shall apply to the
The Board of Directors think and recommend
that the internal management of the Bank shall be subject to rules and
regulations framed by them subject to the following exceptions :
(a) The P. S. R. shall apply to the Bank
Staff with the exception of the pension rules, but instead thereof will have
the benefit of, a contributory Provident Fund, as already established.
(c) The Bank service shall be recognised as
State service for the purposes of employment in State service of suitable
candidates among the descendants of Bank employees.
The Chairman of the Board of Directors put up
a note to the Maharaja of Patiala underneath :
"I respectfully request that the
recommendations of the Board of Directors of the Bank, as stated above, may
graciously be sanctioned." On this, the Finance Committee recommended as
follows "The Finance Committee recommends that (1) Requests of the
Chairman, Board of Directors, at (c), (e), (f) and (g) may be sanctioned.
(2) The request at (a) may be sanctioned
adding the following 'and other State Rules or orders' after Patiala State
Regulations' in the first line.
This recommendation was made by the Revenue
Minister and the Finance Minister who constituted the members of the Finance
Committee. On this the Cabinet supported the recommendations of the Finance
Committee and submitted the same to the Maharaja. These recommendations were
accepted by the Maharaja on April 8, 1941.
497 It may be noted that the Order issued by
the Maharaja on July 19, 1940, viz., Ex-P. 8 quoted above, is headed :
'Precis'. It states that by reason of the
fact that the Patiala State Bank is an autonomous department it became
necessary to define how are the rules applying to other State departments and
the Patiala State Regulations applied to the Bank. It was specifically stated
in the recommendation made by the Board of Directors that the internal
management of the Bank shall be subject to rules and regulations framed by
them. Two important exceptions were made and those were that the Patiala State,
Regulations shall apply to the Bank staff with the exception of the pension
rules, but that the staff shall have the benefit of a contributory provident
fund and that the Bank service shall be recognized as a State service for the
purposes of employment in State service of suitable candidates from among the
descendants of the Bank employees.
The Finance Committee, as provided in rr. 1-7
of the rules, recommended that the request might be sanctioned. The Cabinet
supported the recommendation of the Finance Committee. On this, the Maharaja
made an endorsement : "We approve the recommendation of the Cabinet".
This was dated April 11, 1941.
It is therefore clear that the extension of
the rules governing the conditions of service of Government servants to the
employees of the State Bank of Patiala was the result of 'an extension' made by
the Maharaja pursuant to the executive power vested in him. The act of
extension being an executive act, there can be no doubt that it could be
changed by a similar executive act. Therefore it is clear that what was changed
or superseded was the extension and not the rules.
It is contended on behalf of the appellant
that r. 27 of the Staff rules is not valid since it violates the constitutional
guarantee under art. 311 of the Constitution.
We may here refer to the position in law with
regard to a rule providing for compulsory retirement. In Moti Ram Deka v. N. E.
Frontier Railway(1) where the decisions on the question were reviewed it was
"The next decision in the same volume is
the State of Bombay v. Saubhag Chand M. Doshi, (1958) S.C.R. 571 =A.I.R. 1957
S.C. 892. This was a case of compulsory retirement under r.
165-A of the Bombay Civil Services Rules as
amended by the Saurashtra Government. In so far as this case dealt with the
compulsory retirement of a civil servant, it is unnecessary to consider the
Rule in question or the facts relating to the compulsory retirement of the
civil servant. It is of interest to note that in dealing with the question as
to whether (1)  5 S.C.R. 683. 715=AIR 1964 S.C. 600,613.
L 10 sup. CI/66-20 498 compulsory retirement
amounted to removal or not, the tests which were applied were in regard to the
loss of benefit already accrued and stigma attached to the civil servant. It
is, however, significant that in considering the objection based on ,the
contravention of Art. 311(2), Venkatarama Aiyar J., took the precaution of
adding that 'questions of the said character could arise only when the rules
fix both an age of superannuation and an age for compulsory retirement and the
services of a civil servant are terminated between these two points of time.
But where there is no rule fixing the age of compulsory retirement, or if there
is one and the servant is retired before the age prescribed therein, then that
can be regarded only as dismissal or removal within art. 311(2),. It would be
noticed that the rule providing for compulsory retirement was upheld on the
ground that such compulsory retirement does not amount to removal under art.
311(2) because it was another mode of retirement and it could be enforced only
between the period of age of superannuation prescribed and after the minimum
period of service indicated in the rule had been put in.
If, however, no such minimum period is
prescribed by the rule of compulsory retirement, that according to the
judgment, would violate art. 311(2) and though the termination of a servant's
services may be described as compulsory retirement, it would amount to
dismissal or removal within the meaning of art. 311(2). With respect, we think
that this statement correctly represents the true position in law".
The validity of r. 27 cannot, in the instant
case, be assailed on this ground.
It is then argued that the Staff rules are
invalid because they offend art. 14. The ground of complaint is that different
rules govern different public servants in the same State and that they are bad
because they are discriminatory.
This Court has held in a series of decisions
culminating in the judgment of this Court in Lachhman Dass v. State of Punjab
(1) that after the enactment of the States Reorganisation Act, 1956, different
Acts in different parts of the same State could be sustained on the ground that
the differentiation arises from geographical classification based on historical
reasons. The contention raised by the learned counsel therefore fails.
There remains a minor contention which is
that the Staff rules were not properly made by the Board of Directors. It is
stated that cl. 3 of the Regulation Order, which provides for a minimum number
of six members, was not complied with and that since the Staff rules were made
by four members instead of six, they (1)  2 S.C.R. 353 = A.I.R. 1963 S.C.
499 were invalid. As pointed out by the
learned Judges of the High Court, under the law governing corporations a majority
of the members of the corporation is entitled to exercise the powers of the
corporation and that the rule regarding corporations is equally applicable to a
company. We are in agreement with this view.
As a result of the conclusions reached by us,
this appeal must fail and is dismissed. In the circumstances of the case there
will be no order as to costs.