Avas Vikas Sansthan
& Anr Vs. Avas Vikas Sansthan Engineers Assn.
& Ors  Insc 160 (28 March
& Dr. Ar. Lakshmanan
Nos. 5303, 5305-5308, 5309-5311, 5312-5316, 5317-5322, 5323-5327, 5328-5330,
5331-5336, 5337, 5339, 5342-5348, 5349-5351, 5352-5354, 5356, 5357-5359,
5360-5365, 5366-5370, 5371-5376, 5377-5381, 5382-5385, 5386-5392 of 2004 Dr.
AR. Lakshmanan, J.
batch of appeals arise from the common final judgment and order dated
03.05.2002, passed by the High Court of Judicature for Rajasthan at Jaipur in D.B. Civil Special Appeal No. 315/2002 etc. etc.
in S.B.C.W.P. No. 1750/99 etc. etc. whereby the High Court partly allowed the
appeal of the appellants-herein by holding that the employees (respondents) are
entitled to reemployment and the various reliefs
claimed by them.
all the appeals involve common question of law, they have been heard together
with the consent of concerned parties and are being disposed of by this
Facts in brief:
Avas Vikas Sansthan (in
short 'the AVS') was registered as a Society under the Societies Registration
Act, 1860 on 17.11.1988. The AVS was brought into existence to achieve certain
objectives. The objects of the society were to collect information regarding
low cost technology for construction of houses, undertake field studies for
development of appropriate low cost building materials, undertake construction
works, imparting practical training etc. in the State of Rajasthan. The AVS was brought into existence
as a result of the Scheme formulated by the Housing and Urban Development
Corporation, New Delhi, to set up chain of building centres in the State of Rajasthan.
No.2 the Rajasthan Housing Board
sanctioned a sum of Rs. 1-5 lakhs
per building centre and provided land free of cost for setting up of 9 such centres in Rajasthan. The AVS was to raise its own
resources; the State Government or the Rajasthan Housing Board did not have any
control over the AVS.
AVS had employed the respondents. The AVS started functioning in the year 1989,
but in the year 1997, it began to incur heavy losses and could not pay its
employees their salaries after 01.12.1998. The Rajasthan Government decided
that, in view of the financial and administrative conditions of the AVS, it should
be dissolved and the State Government directed the appellant-the Rajasthan
Housing Board to take immediate steps to liquidate the AVS.
State Government also directed that the employees of the AVS would be adjusted
on priority on the vacant posts of Municipal Boards, Municipal Councils, Jaipur Development Authority and other local bodies
whenever posts fell vacant on the retirement of the employees of such local
bodies. By the resolution of the AVS dated 26.03.1999, the AVS was dissolved.
respondents (employees), feeling that their services might be terminated, filed
a writ petition in the High Court on 26.03.1999, made the following averments:
? AVS is only an agent of the State
Government of Rajasthan and of the Rajasthan Housing Board.
? The services of the respondents, who were employees of the
State Government/Rajasthan Housing Board, could not be terminated by the
Rajasthan Housing Board or the State Government or the AVS and
? Also if any termination order be passed it be quashed and
they might be retained in service with benefit of their past services in all
? The Government order dated
15.03.1999 was challenged by which the respondents were to be taken in service
by local bodies viz. Panchayat, J.D.A. etc at the
lowest grade of services without any benefit of past services.
terminated the services of all its 46 daily wage employees on 31.03.1999. On
01.06.1999, State Government issued an order which contained directions
regarding the manner in which the employees of the AVS would be given first
appointment in the local self-Government institutions in Rajasthan without
benefit of past service. The condition, which was put by the Government was
that, they would be given employment on the lowest post of pay drawn in AVS of direct
recruitment and on the minimum of the grade and no benefit of past service
would be given to them. An option was also given to the employees to retire
under Voluntary Retirement Scheme, if they so desired.
Rajasthan Housing Board and the State Government of Rajasthan contested the
writ petitions by filing replies.
? It was averred, inter alia, in
the reply by the Rajasthan Housing Board that AVS was a registered Society
under the Societies Registration Act, 1860.
? And it was neither financially nor administratively
controlled by the State Government or the Housing Board and hence the said AVS
could not be said to be a 'State' within the meaning of Article 12 of the
Constitution of India and the employees were not employees of the State Government
or Rajasthan Housing Board, they had no remedy against the State Government or
the petitioner- Housing Board.
the pendency of the writ petitions, an offer was made
to the employees of the AVS to agree to be given new appointment in local self
Government institutions on the condition mentioned in order dated 01.06.1999 of
the State Government and the employees were asked to submit undertaking in the
form of affidavits that they were willing to take employment in the Municipal
Boards, Municipal Councils, J.D.A etc. on the conditions set out in the order
and that on such affidavits being filed, they would be given employment in such
local Government institutions.
respondents and all the other permanent employees of the AVS submitted their
affidavits and were given employment in the Municipal Boards, Municipal
Councils, and J.D.A.
Single Judge of the High Court allowed the writ petition and held as under:-
will be entitled to salary for the period worked by them;
Housing Board to create a new cell in the name of the Low Cost Housing Centre
or any other name and the employees would be employed in the said centre;
policy of the State Government to give alternate employment was quashed.
However, the employees were given option to continue in the said employment if
they so choose.
aggrieved, the Rajasthan Housing Board, the AVS and the State Government
preferred appeals before the Division Bench of the High Court.
Division Bench disposed of all the appeals by the impugned order. The Division
Bench maintained the direction to pay unpaid salary. The direction to
constitute a Low Cost Housing Centre and the quashing of State Government
decision to provide alternate employment was set aside. However, the Division
Bench on the appeal filed by the employees directed grant of following benefits:
to be counted for the purpose of pension and other retirement benefits;
benefit of fixed period higher pay sacle
available to Government employees under Government Order dated 25.01. 1992;
of 5th Pay Commission to be available on notional basis;
Narendra Kumar Sharma and few other daily wagers to
be treated as regular appointees as they were selected but not appointed on
regular basis till date of dissolution;
certain employees including Brijesh Kumar
Goel and R.K.Saini who were
working at Latur Project in Maharashtra were also entitled to alternative
employment in local bodies.
PARTICULARS OF APPEALS
appeals in the present batch of cases may be divided in the following three
The following 12 appeals have been
filed by the RHB and AVS:
Civil Appeal Nos. 5302/04, 5317-5322/04, 5312-5316/04,
5309-5311/04, 5323-5327/04, 5328-5330/04, 5331- 5336/04, 5342-5348/04, 5305-5308/04,
The following 11 appeals have been
filed by the State of Rajasthan:
Civil Appeal Nos. 5339/04, 5371-5376/04, 5366-5370/04,
5309-5352-5354/04, 5377-5381/04, 5357-5359/04, 5360- 5365/04, 5386-5392/04,
The following appeal have been filed
by the Employees:
Appeal Nos. 5349-5351/04 Against the decision of the
Division Bench of the High Court, the appellants preferred the above appeals to
heard Mr. Vijay Hansaria, learned senior counsel
appearing for the appellant and Dr. Rajeev Dhawan,
learned senior counsel, Mr. Aruneshwar Gupta and Ms. Shobha, learned counsel appearing for the respective
Vijay Hansaria, learned senior counsel for the appellants made the
after the dissolution of the AVS, in the writ petition preferred by the
respondents no ground was taken saying that the liquidation was
mala fide nor was it prayed that the decision
to liquidate be quashed.
on 18.05.1999 Cabinet decision was taken to absorb the employees of the AVS 'in
principle' as decided on 09.03.1999 by prescribing certain terms and conditions
after considering the opinion of the Finance Department.
there is no conflict between the Cabinet decisions dated 09.03.1999 and
18.05.1999, neither is there any change in policy of the State Government nor the State Government has gone back on any promise made
earlier. In the cabinet decisions dated 09.03.1999 only an 'in principle'
decision was taken to adjust the employees of the AVS in other local bodies and
'modalities' of adjustment was worked out in the Cabinet decision dated
the State Government wrote to all local bodies for appointment of employees of
the AVS in their departments along with affidavits filed by the employees of
the AVS showing their willingness to take employment in other local bodies. In
2000, all the employees of the AVS were given alternate employment as fresh
employment on certain terms and conditions. All the employees have submitted
affidavits inter- alia stating that their appointment
with local bodies will be treated as fresh appointment and will not claim
continuity of service, seniority, pay protection etc and that they will
withdraw writ petition. Several employees have even filed application for the
withdrawal of the writ petition in terms of their undertakings.
the writ petition was not amended challenging the terms of undertaking
filed by the employees of Sansthan for securing
employment with the local bodies. There is no allegation in the writ petition
that the employees were coerced/forced/unduly influenced to submit the
on Merit It was submitted by Mr. Hansaria that
abolition of posts is a matter of policy and is an inherent right of the
employer particularly on the closure of a project due to lack of funds and
heavy loss. The natural consequence of abolition of posts in any organization
is the termination of services of the employees engaged in such organization.
It was further urged that the employees whose services have been terminated as
a consequence of abolition of posts have no right to seek reemployment or
absorption in other departments. Learned senior counsel relied on the view
taken by this Court way back in 1973 in the case of M. Ramanathan
Pillai v. State of Kerala,
(1973) 2 SCC 650 that 'the discharge of the civil servant on account of
abolition of post held by him is not an action which is proposed to be taken as
a personal penalty but it is an action concerning the policy of the State
whether a permanent post should continue or not. The power to abolish any civil
post is inherent in every sovereign government. And such abolition will not
entail any right on the person holding the abolished post the right to
reemployment or to hold the same post.
senior counsel relied on the decision in K. Rajendran
v. State of Tamil Nadu, (1982) 2 SCC 273 on the same
issue in which this Court has held that, 'the question whether a person who
ceases to be Government servant according to law should be rehabilitated by
giving an alternative employment is, as the law stands today, a matter of
policy on which the Court has no voice.' Citing the decision of this Court in
the case of Rajendra v. State of Rajasthan (1999) 2 SCC 317 and S.M.Nilajkar v. Telecom District Manager (2003) 4 SCC 27
learned senior counsel submitted that when a project has been shut down due to
want of funds the employer cannot by a writ of mandamus be directed to continue
employing such employees as have been dislodged because such a direction would
amount to requisition for creation of posts though not required by the employer
and funding such posts though the employer did not have the funds available for
the purpose. And also that the same will act as a disincentive
to the state to float such schemes in future.
regard to the employment of 604 employees of the AVS, it was argued that the
State of Rajasthan had no legal obligation to offer alternative employment to
the erstwhile employees of the Sansthan. But the
State of Rajasthan did frame a scheme and offered employment in other local
bodies of the government. Therefore the terms and conditions of such
alternative employment cannot be challenged. It was also submitted that
additional financial burden will fall upon the various local bodies which have
absorbed the employees of the AVS, if the directions of the Division Bench of
the Rajasthan High Court are enforced. It was further argued that the employees
of the AVS did accept the alternative employment with the terms and conditions
set out initially by way of an affidavit and therefore they are now estopped from claiming benefit and challenging the terms
and conditions of the fresh employment by citing the decision in the case of
Bank of India v. O.P.Swarnakar (2003) 2 SCC 721 which
laid down that, "the scheme is contractual in nature. The contractual
right derived by the employees concerned, therefore, could be waived.
employees concerned having accepted a part of the benefit could not be
permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand." Placing reliance on
a very recent decision of this Court in the State of Uttaranchal
vs. Jagpal Singh Tyagi,
(2005) 8 SCC 49, learned senior counsel submitted that, "the employees did
not, at any point of time, claim that the terms of settlement were not fair,
therefore after obtaining some benefit, it was not open to the employees to
later turn away without justifiable cause and contend that the settlement was
not fair." On the question of Pay Protection and for counting services
rendered in the AVS for pension and other retiral
benefits claimed by the respondents, the arguments put forward by the appellant
was that on facts the Cabinet decision of 18-05-1999 specifically states that
"no pay protection should be granted to the employees", the same was
conveyed by the Rajasthan Housing Board letter dated 01-06-1999. This decision
was taken after considering the views of the Finance Department. So also the
undertaking by the employees when they were absorbed into other local bodies
had the same stipulation, therefore at this later stage such pay protection and
counting of services for pension and other retiral
benefits cannot be claimed for.
to the claim of the respondents for the benefit of the Government order date
25.01.1992, it was argued by the appellants that the Government Order in
question is applicable only to 'government servants' and as such the employees
of AVS are not entitled to the benefit of the said government order. And also
the employees would be governed by the terms and conditions of the local bodies
where they have been reemployed. So also the benefit of the 5th Pay Commission
is applicable only to government employees. Since the employees of the AVS are
not govt employees they are not entitled to the
benefit of the 5th Pay Commission.
regard to appointment of 46 daily wage employees, it was argued that after the
dissolution of the Society, there is no right on the part of any employee to be
reemployed. Therefore, it was argued that the daily wagers have no right
seeking regular appointment. The decision of this Court in the case of Punjab
State Electricity Board v. Malkiat Singh, (2005) 9
SCC 22 was relied on. It was held that, "it is settled law that mere
inclusion of name of a candidate in the select list does not confer on such
candidate any vested right to get an order of appointment". Thus it was
argued that the Writ issued by the Division Bench of the High Court to treat
the daily wagers at par with the regular appointees of Avas
Vikas Sansthan is wrong.
it was argued by the appellant that the decision in the case of Central Inland
Waters Transport corporation 156 and Delhi Transport Corporation vs. D.T.C. Mazdoor Congree & Ors., (1991)
Supp 1 SCC 600 have no application here because those cases relate to a term in
the employment that even services of a permanent employee can be terminated on
3 months notice without assigning any reason and such condition was
specifically assailed therein. The present matter relates to providing
alternative employment to the employees of an organization that is liquidated
and posts have been abolished. In such circumstances the employees of an
organization that is liquidated has no right to seek reemployment. It was
argued that the reliance placed by the respondents on the provisions of
Rajasthan Civil Services Rules, 1969 is wholly misconceived as the Rules
mentioned apply only to government servants. Therefore, these rules will not
apply to employees of the AVS.
Rajeev Dhawan, learned senior counsel for the
respondent submitted as follows:- According to learned senior counsel, the
judgment of the Division Bench of the Rajasthan High Court is correct in so far
as it gave:
protection (including benefit of higher scales for completing of 9,18 and 27
of service for retiral benefits for long standing
employees of the AVS.
on Law The State is expected to act as a model
employer exhibiting 'fairness of action' towards long standing employees.
Learned senior counsel relied on the decision of this Court in Gurmail Singh v. State of Punjab, (1991) 1 SCC 748. It was laid down
by this Court that even though according to the provisions of Section 25-FF of
the Industrial Disputes Act, 1947, retrenchment compensation has been paid and
accepted, the State was under a duty to treat employees who were on deputation
and those who were dismissed equally because the state was a "model
employer" exhibiting "fairness in action".
argued that the above case is an authority for the proposition that where a
state body is shut down, it is part of the obligations of the state as a model
employer dedicated to fairness in action that subject to adjustments, employees
who were on deputation and those who are dismissed should be absorbed subject
to similar equities:-
There should necessarily be: - ? Pay protection where appointments are made on
a lower scale.
? Counting of Service for retiral
? Placing the employees on par in the receiving departments
including salary Gurmail Singh (supra) has also laid down that it would not be fair to allow absorbed
employees to steal a march over the employees in the department into which they
the regular appointees of such local bodies should not be put at a
disadvantageous position by the loss of seniority due to the absorption of the
employees of the AVS.
the decision in the case of Central Inland Waters Transport corporation
limited (supra), it can be observed that:
contracts shock the conscience and are opposed to public policy.
could be caused by economic duress
Inequality of bargaining powers
vitiates contracts, such contracts also violate Article 14 of the Constitution
This Court in the present case
applied Section 23 of the Contract Act and held the contract to be
unconscionable and void.
principle deducible from the above discussions on this part of the case is in
consonance with right and reason, intended to secure social and economic
justice and conforms to the mandate of the great equality clause in Article 14.
This principle is that the courts will not enforce and will when called upon to
do so, strike down an unfair and unreasonable contract or an unfair or
unreasonable clause in the contract, entered into by two parties who are not
equal in bargaining power. It is difficult to give an exhaustive list of all
bargains of this type. No court can visualize the different situations which
can arise in the affairs of men; one can only attempt to give some
illustrations." Further, learned senior counsel submitted that this Court
in Delhi Transport Corporation v. DTC Mazdoor Congress, (supra) approved the Central Inland decision
(supra) and struck down the unconscionable 'hire & fire' clause.
attention was invited to certain observations made by Ramaswamy,
J. and B.C. Ray, J; which are as under:-
The State cannot impose
unconscionable conditions and stated that such contracts were contrary to
Public policy in contract be
construed accordingly and be drawn from the constitution.
Ray, J. observed that there should not be any limitation on the freedom of
contract and specifically approved Central Inland decision (supra) in respect
of such contracts being contrary to Article 14 guaranteed under the
Constitution. This Court further observed that, "The court has, therefore
the jurisdiction and power to strike or set aside the unfavourable
terms in contract of employment which purports to give effect to unconscionable
bargain violating Article 14 of the constitution." It was further observed
in the case of Prakash Ramachandra
v. Maruthi, 1995 Supp (2) SCC 539 that any
undertaking to the court and contractual arrangement resultant thereto does not
oust the jurisdiction or the power of the court to hear cases or grant relief.
counsel for the respondents while citing the decision in National Building
Construction Corporation v. Raghunathan, (1998) 7 SCC
66 argued that a legitimate expectation is created where employees have been
assured absorption on one basis, which is there altered to their detriment
under coercive circumstances where they have not been paid and acted on the
previous promise that they have tried to enforce in court. It was further
argued that the decisions cited by the appellant on Article 311 and abolishing
civil posts are exceptional and irrelevant to the present controversy.
according to learned senior counsel, the law clearly establishes that,
State must be a model employer and show fairness in action
where all statutory requirements (such as Section 25 FF) and technicalities
have been complied with, the State must be fair enough to absorb employees on a
minimal fairness basis which includes:
to pay scale
of past service for pensionary benefits
seniority over new employees in the new organization
treatment in future with all employees
contracts and undertakings are contrary to section 23 of the Indian Contract
Act, public policy, Article 14 of the Constitution and Directive Principles of
Undertakings not accepted by the lower court (and even if
accepted) do not inhibit this Court's jurisdiction to hear a matter and grant
regard to the argument of the appellant's counsel that:
employees should not be given pensions;
Division Bench should not have ordered increments at 7,13 & 27 years as are
available to other employees the learned counsel argued that, if this was made
practicable, the employees after joining the new department cannot be meted out
discriminatory treatment. They will lose seniority, but they cannot be denied
benefits available to others. The respondent's counsel also stated that a
situation cannot be created where, a former AVS worker has no pension or
Provident Fund and also not to discriminate by not to extending 9,18 & 27 years of service which would be available to
Mr. Aruneshwar Gupta, learned counsel for the respondent made
the following submissions:- That AVS falls within the
definition of 'other authorities' under Article 12 of the Constitution and was
managed, controlled and owned by the State of Rajasthan and was dealing with
the affairs of the State by referring to the decisions of this Court in Federal
Bank Ltd v. Sagar Thomas, (2003) 10 SCC 733 and Pradeep Kumar Biswas v. Indian
Institution of Chemical Biology, (2002) 5 SCC 111. It was further argued that
the learned Single Judge clearly held that the entitlement of the employees was
not on any humanitarian ground but because the employees had a right to be
absorbed and to be treated in a reasonable, just and proper manner.
to Mr. Aruneshwar Gupta, the employees, who have been
absorbed in the other authorities, were entitled to the following reliefs: -
Fitment in the stage of the pay
scale, which they were already drawing in the Avas Vikas Sansthan and consequent
Arrears of pay on the basis of the
Seniority of the AVS vis-`-vis employees in the authorities
in which they were absorbed. They are entitled to seniority in the other
undertakings etc on the basis of date of their substantive appointment.
Therefore inter se seniority of the employees of Avas
Vikas Sansthan who were
absorbed in other authorities.
Corresponding designation of post in
the authorities in which they were absorbed.
Ms. Shobha, learned counsel appearing for the daily wagers
submitted that some of the daily wagers were declared qualified but kept in the
waiting list for non-availability of sanctioned vacant posts. According to her,
the High Court has rightly appreciated the facts and circumstances of the
present controversy issued appropriate directions for absorption and that the
balance of equity lies in their favour in view of the
fact that the respondents have successfully cleared the exemption for regular
appointment and had to remain in the waiting list on the pretext that no vacant
sanctioned post is available. It was also submitted that the appellants have
absorbed/adjusted numerous employees of the AVS but few of them including the
respondents have been left on the pretext that they were not the regular
appointed employees. Concluding her arguments, she submitted that they are also
entitled for similar treatment being duly selected employees of the AVS. It is
also relevant to mention that the employees were not appointed against any
project and the termination order was passed due to financial inviability of the AVS and not because of some fault of
have carefully considered the lengthy submissions made by learned counsel
appearing for both the parties. We have also perused all the pleadings, annexures as well as the judgments of both the Single Judge
and the Division Bench of the Rajasthan High Court In our opinion, the
submissions made by learned senior counsel for the AVS merit acceptance and
stand to reason in the peculiar facts and circumstances of the case. Though the
arguments of Dr. Rajeev Dhawan and Mr. Aruneshwar Gupta, learned counsel appearing for the
employees are attractive on the first blush, yet on a careful reconsideration
of the same, it has no merits.
view, after the liquidation of the AVS due to any reason unless such
liquidation was malafide, there exists no right on
the employees of such liquidated society for reemployment. In the present case,
the Rajasthan Government did formulate a scheme to absorb the employees of the
society into various other organizations with various terms and conditions to
which the respondent employees agreed. There is no allegation in the writ
petition that the employees were coerced/forced/unduly influenced to submit the
at a later stage it is unfair to take claims of service conditions other than
the ones that are stipulated and accepted earlier.
case of Rajendra v. State of Rajasthan, (1999) 2 SCC
317 and S.M. Nilajkar v. Telecom District Manager,
(2003) 4 SCC 27 where a project has been shut down due to want of funds the
employer cannot by a writ of mandamus be directed to continue employing such
employees as have been dislodged because such a direction would amount to
requisition for creation of posts though not required by the employer and
funding such posts though the employer did not have the funds available for the
purpose. This finding is applicable in the present matter and therefore the
finding of the High Court is not fair to common conscience and also that the
same will act as a disincentive to the state to float such schemes in future
thereby reducing the employment opportunities of many.
POWER TO ABOLISH CIVIL POSTS
settled law that the power to abolish any civil post is inherent in every
sovereign government and such abolition will not entail any right on the person
holding the abolished post the right to reemployment or to hold the same post.
In the present case, the State Government was benevolent enough to float a
scheme to absorb such employees whose posts were abolished.
in our opinion, the arguments advanced by counsel for the respondents with
regard to unfairness meted out to the employees of Avas
Vikas Sansthan hold no
regard to 604 employees of the AVS, it was argued that the State of
Rajasthan had no legal obligation to offer
alternative employment to the erstwhile employees of the AVS. But the State of
Rajasthan in all fairness did frame a scheme
and offered employment in other local bodies of the government.
the terms and conditions of such alternative employment cannot be challenged.
We are of the opinion, that the decision of the High Court granting relief of
reemployment with pay protection, seniority and pension is erroneous. We,
therefore, direct the State of Rajasthan to strictly adhere to and implement
its decision to offer employment in other local bodies in letter and spirit.
further make it clear that all the erstwhile employees, if not already
employed, should be employed in the local bodies as per the scheme formulated
by the Government of Rajasthan in a war footing.
question of Pay Protection claimed by the respondents, it is seen from the
Cabinet decision of 18.05.1999 that "no pay protection should be granted
to the employees". The same was conveyed by the Rajasthan Housing Board
vide letter dated 01.06.1999. This decision was taken after considering the
views of the Finance Department. So the undertaking by the employees when they
were absorbed into other local bodies had the same stipulation. This being so,
such claim for pay protection, at this late stage, cannot be made. Thus,
considering the categorical condition that the employees will not be given any
pay protection, and moreover due to the absence of any legal right for pay
protection to the employees of the AVS, such claims, in our opinion, cannot be
regard to the claim of the respondents for counting services rendered in the
AVS, the Cabinet decision of 18.05.1999 specifically states that "the
benefit of past service is not to be counted for any purpose". The same
was conveyed by the Rajasthan Housing Board letter dated 01.06.1999. Therefore
the undertaking by the employees when they were absorbed into other local
bodies had the same stipulation; therefore at this late stage such claim for
counting services rendered in the AVS for the pension and other retiral benefits, in our opinion, cannot be made.
the employees of the AVS are not treated as government servants, they are not
entitled to claim the benefit of Government Order dated 25.01.1995, which is
specifically applicable only to government employees and the benefit of the 5th
Pay Commission Report also stands inapplicable as this was not a claim that was
sought by the respondents at any stage in any court that had entertained this
matter. Also the Rajasthan Civil Services (Absorption of Surplus Personnel)
Rules, 1969 will not apply as such to these employees of the AVS as they
clearly do not fall within the definition of Surplus Personnel as defined in
the Rajasthan Civil Services (Absorption of Surplus Personnel) Rules, 1969.
regards the question of whether Rajasthan Housing Board can be considered
'State' under Article 12 of the Constitution, no serious arguments were made by
either counsel for the parties and, therefore, we are not expressing any
opinion on the same and decide the other issues on the basis of the arguments
RIGHTS OF DAILY WAGERS
regard to the appointment of 46 daily wage employees after the dissolution of
the Society, we hold that, in the facts and circumstances of this case there is
no right on the part of any employee to be reemployed. Also daily wage
employees cannot, by any stretch of imagination, be put on par with regular
employees under any law prevalent as of date. The finding of the Division Bench
that they can be treated on par with regular employees and be given various reliefs is wrong and erroneous under law. Therefore, we are
not granting any relief to the daily wage employees as their claim is not
justified under law.
the Government of Rajasthan may sympathetically consider absorption of these
employees in the vacancy available if any in future by giving them preference
to other new applicants in any of their local bodies etc. subject to the
The employees will be entitled to
salary/wages from the date of their re-employment and shall not claim for any
The employees will not be entitled
to pay protection, benefit of GO dated 25.01.1992, 5th Pay Commission and the
service rendered by the employees will not be considered for pension and/or
other retrial benefits;
The appointment of Degree
holder/Diploma holder Engineers shall be on the post of Junior Engineer on the
minimum scale of pay;
The appointment of employees of
Administrative Department would be on the post of Junior Clerk on the minimum
scale of pay;
The appointment would be subject to
suitability and physical fitness;
The alternative employment would be
granted subject to availability of vacancy preferably within a period of 3
they are absorbed in future the same will be treated as a fresh employment and
employees/appointees will be governed by the rules and regulations of the
absorbing Department if they are found suitable.
POWER TO ABOLISH POSTS AS A MEASURE
well settled that the power to abolish a post which may result in the holder
thereof ceasing to be a Government Servant has got to be recognized. The
measure of economy and the need for streamlining the administration to make it
more efficient may induce any State Government to make alterations in the
staffing pattern of the civil services necessitating either the increase or the
decrease in the number of posts or abolish the post. In such an event, a
Department which was abolished or abandoned wholly or partially for want of
funds, the Court cannot, by a writ of mandamus, direct the employer to continue
employing such employees as have been dislodged. In the instant case, the State
of Rajasthan has framed a scheme and offered
alternative employment in the other local bodies as a Welfare State on humanitarian
grounds. As already noticed, the employees of the AVS have accepted alternative
employment on terms and conditions of the local bodies and having filed a
solemn statement by way of affidavit that they will not claim continuity of
service by protection of seniority etc. nor will they challenge the terms of
such employment and shall also withdraw the writ petition filed by them. They
cannot now go around and say that the judgment of the Division Bench should be
given effect to. In our view, they are estopped from
claiming the benefits and challenging the terms and conditions of the fresh
employees have no right to resile from the affidavits
filed before the High Court. We have searched in vain in order to see as to
whether there is any material to show that the settlement was intended to
frustrate the order passed by the High Court.
point of time, the employees raised any dispute as regards the fairness of the
settlement. Having obtained the benefit, it was not open to them to turn down
without justifiable reasons to contend that the settlement was not fair and
they should be given pay protection, counting of service for retiral benefits and placing the employees on par in the
receiving Department. The cabinet decision of not granting pay protection was
taken after taking into consideration the views of the Finance Department as it
has huge financial burden on the local bodies offering re- employment after
relaxing their own recruitment rules. In our view, the aforesaid categorical
condition that the employees would not be entitled to pay protection and in the
absence of any legal right of pay protection and fresh employment consequent
upon on fresh appointment on humanitarian grounds, the decision of the High
Court to grant protection of pay is unsustainable and liable to be interfered
Rajeev Dhawan, learned senior counsel for the
respondents, cited many decisions. Those cases, in our view,
is distinguishable on facts and on law. In those cases, the High Court
has directed protection of pay on the facts and circumstances as can be seen
from a perusal of the same.
cabinet decision dated 18.05.1999 specifically decided that their period of
earlier service shall not be valid for any purpose. This was specifically
conveyed by the State Government to the Rajasthan Housing Board vide letter
dated 01.06.1999 and also the letter of the State Government dated 26.02.2000
to the various local bodies. It is stated that one of the terms of
re-employment would be that earlier service tenure shall not be considered for
any purpose. Furthermore, under the provisions of the AVS Employees Service
Regulation, 1993, the employees of the AVS were entitled to provident fund.
Rule 14 provide as under:- "An employee of Sansthan shall be required to subscribe to the Contributory
Provident Fund in accordance with such Rules as may be prescribed by the Board
of Management." The employees of the AVS were having the benefit of
contributing provident fund and were not entitled to any other pensionary/retiral benefits. The employees have withdrawn
provident fund including the employer's contribution after termination of
service from the AVS. It is thus crystal clear that the services rendered by
the employees with AVS cannot be counted for the purpose of pension and other retiral benefits since such benefits were not available to
them even in their parent organization and it was a specific condition of fresh
employment that their past services with AVS will not be considered for any
in A.I. Railway Parcel & Goods Porters Union vs. Union of India & Ors,
(2003) 11 SCC 590 at 603 page 34 one of us was a member (Dr. AR. Lakshmanan, J} while giving various directions in the
matter of regularisation of contract labour, this Court did not direct that the services
rendered by the contract labourers with the
contractor would be counted for the purpose of grant of retiral
benefits by the principal employer. The recommendations of the 5th Pay
Commission is applicable only to Government Servants and as such the employees
of AVS who are not government employees are not entitled to 5th Pay Commission
even in the writ petition filed by the organisation
there was no prayer for grant of benefit of 5th Pay Commission.
the High Court has erred in directing that the benefit of recommendations of
5th Pay Commission shall be given to the employees of the AVS on notional
basis. We make it clear that the employees would be governed by the terms and
conditions of the local bodies where they have been re-employed.
time of hearing, a submission under the heading doubts of financial bona fides
was made. It is submitted that the said plea is without any pleading in the
writ petition. There is no pleading either on facts or in the grounds in the
writ petition that the averments contained in the note dated 09.03.1999 and
18.05.1999 to the effect that the AVS has no capital base or reserve capital
and has huge financial outstanding is incorrect. It is also not in dispute that
the employees of the AVS could not be paid salaries of December, 1998 that
amounted to about more than Rs.2 crores nor the writ
petitioners/respondent employees have argued either before the Single Judge or
before the Division Bench of the High Court that the liquidation of the AVS was
mala fide and or extraneous consideration. So also
there is no averment in the writ petition as regards the constitution of the
AVS or the work of the AVS being transferred to the AVS. As a matter of fact,
the AVS was incorporated under the Companies Act in the year 1996 and the AVS
has majority share holding in AVS in the absence of any other pleading and
contention raised before the High Court such submission on facts cannot at all
be countenanced before this Court in the present proceedings. Likewise, the submission
made by learned counsel appearing for the employees that the State has gone
back on its decision and they have coerced the employees to agree to certain
conditions cannot at all be countenanced.
FAIRNESS IN ACTION:
opinion, the State of Rajasthan has acted fairly and benevolently
though the State has no constitutional and legal obligation to offer
alternative employment to the employees of the AVS upon abolition of posts.
Consequent to the liquidation of the AVS itself, it had framed a scheme to
adjust the employees in other local bodies by relaxing the rules of such bodies
and terms and conditions were fixed without financial economic compulsions of
the State. The present case is one of liquidation of an organisation
and consequent abolition of post in the said organisation.
There is also no pleading that the conditions contained in the undertaking are
contrary to Section 23 of the Contract Act or violative
of Article 14 of the Constitution or inconsistent with the directive principles
of state policy. The Central Inland Waterways case
(supra) and Delhi Transport Corpn. Case
(supra) relied on by these employees, in our view, have no application
of the present case and is distinguishable on facts and law. Those cases relate
to a term in the employment that even services of a permanent employee can be
terminated on 3 months' notice without assigning any reason and such condition
was specifically assailed therein. However, the present case relates to
providing alternative employment to the employees of an organisation
that is liquidated and posts have been abolished. In such circumstances, this
Court has held in a number of cases that the employees have no right to seek
re- employment in any other organisation. So also,
there has been no challenge in any of the case decided by the High Court to the
terms and conditions of undertaking that they were unfair, arbitrary and are
contrary to public policy and as such violative of
Section 23 of the Contract Act or Article 14 of the Constitution of India or
any directive principles of state policy.
question of legitimate expectation has also not been raised at any stage and as
such cannot be agitated before us in this court The reliance on the provisions
of Rajasthan Civil Services (Absorption of Surplus Personnel) Rules, 1969 is
wholly misconceived in as much as the said rule apply only to "surplus
personnel" who were "appointed to various services or posts in
connection with the affairs of the state" in terms of Rule 2 of the said
Rules. Surplus personnel have been defined in Rule 3(1) as follows:
Personnel" or "Surplus Employee" means the Government servant to
whom the Rajasthan Services Rules, 1951 apply and who are declared surplus by
the government or by the appointing authority, under directions of the
government, on their being rendered surplus to the requirements of a particular
department of the government due to the reduction of posts or abolition of
offices therein as measures of economy or on administrative grounds but in
whose case the Government decides not to terminate their services but to retain
them in service by absorption on other posts." A bare perusal of the
aforesaid Rule clearly demonstrates that the rules are applicable only to the
Government servants to whom Rajasthan Service Rules, 1951 apply. The employees
of Avas Vikas Sansthan are not government servants nor Rajasthan Service
Rules, 1951 were applicable to them and as such the provisions of Rajasthan
Civil Services (Absorption of Surplus Personnel) Rules, 1969 are not applicable
in the present case.
submissions of the learned counsel that the employees must be posted on the
posts earlier held by them is without any merit since these employees had no
right to claim adjustments to other local bodies. The Cabinet decision dated
18.05. 1999 have categorically stated as under:
these appointments should be made to the lowest posts and engineers should be
appointed only on the post of Junior Engineers and Employees of Administrative
Departments should be appointed only on the post of Junior Clerk." So also
all these employees have given undertaking not to raise any dispute in the
matter. Thus this contention is untenable and is liable to be rejected.
the foregoing reasons, the impugned judgments of the High Court are set aside
and we hold that all the civil appeals filed by the Rajasthan Housing Board,
the AVS and the State of Rajasthan are allowed. The Civil Appeals filed by the
employees stand dismissed. No costs.
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL
APPEAL NO. 5338 OF 2004 State of Rajasthan .. Appellant (s) Versus Radha Krishan Karwashra & Ors.
.. Respondent (s) WITH
CIVIL APPEAL NOS. 5340-41/2004 ORDER It was submitted by Mr. Badridas Sharma, learned counsel for the appellants, that
the above appeals are of an entirely different type in which the respondent had
challenged the order dated 25.04.1998 of the Avas Vikas Sansthan and by that
letter/order, it was pointed out that 10 employees including Mr. Radha Krishan Karwashra
had not accepted to join and do the alternative work offered to them and,
therefore, those persons were treated as no more in the service of the Avas Vikas Sansthan.
That the order of 25.04.1998 was not at all related to
dismissal of service of employees as a result of dissolution of the Society.
It was submitted that the writ petitions challenging the said order dated
25.04.1998 are still pending in the High Court at Jaipur
in writ petition Nos. 5370/1998 and 5383/1998.
this fact was pointed out by Mr. Badridas Sharma
during the time of hearing of these appeals, we do not consider the merits of
the claim made in this appeal. In view of this, the above appeals are delinked from the batch of appeals in Civil Appeal Nos.
5302/2004 etc. etc. and disposed of accordingly.
parties are at liberty to pursue the pending writ petitions before the High
Court in accordance with law. No costs.