Official Liquidator Vs.
Dayananad & Ors. [2008] INSC 1860 (4 November 2008)
Judgment
CIVIL APPELLATE
JURISDICTION CIVIL APPEAL NO.2985 OF 2007 Official Liquidator ... Appellants
Dayanand and Others ... Respondents WITH
Civil Appeal Nos.2986 to 2990 of 2007 Civil Appeal No.6455/2008 @ S.L.P.(C)
No.12798 of 2005 and Civil Appeal No.6456/2008 @ S.L.P. No.13838 of 2006
G.S. Singhvi, J.
1.
Leave
granted in S.L.P. (C) Nos.12798/2005 and 13838/2006.
2.
These
appeals are directed against the orders of Calcutta and Delhi High Courts,
whereby directions have been issued to the appellants herein to absorb the
persons employed by the Official Liquidators attached to those High Courts
under Rule 308 of the Companies (Court) Rules, 1959 (for short `the 1959
Rules') against the posts sanctioned by the Government of India, Department of
Company Affairs.
FACTS
3.
For
the sake of convenience, we have culled out the facts from the pleadings of
Writ Petition No.1387 of 2001 filed by Tapas Chakraborty and 109 others in
Calcutta High Court, Writ Petition No.2728 of 2001 filed by Smt. Daya Dua and
others in Delhi High Court, the record of these appeals and documents
filed/produced by the learned counsel for the parties during the pendency of
the appeals. These are:
i.
There
are two categories of employees in the offices of the Official Liquidators
attached to different High Courts. The first category comprises of the
employees who are appointed against the posts sanctioned by the Government of
India, Department of Company Affairs. They are recruited in accordance with the
procedure prescribed in the rules framed under proviso to Article 309 of the
Constitution and the doctrine of equality enshrined in Articles 14 and 16 and
are paid salaries and allowances from the Consolidated Fund of India. The
second category comprises of the persons employed/engaged by the Official
Liquidators pursuant to the sanction accorded by the concerned Court under Rule
308 of the 1959 Rules.
The employees falling
in this category are described as company paid staff. They are paid salaries
and allowances from the fund created by disposal of the assets of the companies
in liquidation.
i.
ii.
For
Calcutta High Court, the Central Government had appointed a Court Liquidator
under Section 38A of the Banking Regulation Act, 1949, as amended in 1953. He
used to employ staff under Rule 308 of the 1959 Rules in connection with
liquidation of banking companies. The salaries of such staff were paid from the
assets of the banking companies under liquidation.
iii.
(In
the year 1978, the Government of India, Ministry of Law, Justice and Company
Affairs vide its letter dated 27.11.1978 circulated a scheme (hereinafter
described as `the 1978 Scheme') for absorption of company paid staff against
Group C posts in the subordinate offices of the Department of Company Affairs.
That scheme envisaged consideration of the cases of company paid staff, who
were in position on 31.3.1978 and who possessed the educational qualifications
prescribed for the post against which they were to be absorbed. It was also
provided that absorption of the company paid staff will be limited to 50%
vacancies in direct recruitment quota of Group C posts.
4.
Sixty-three
employees working under the Court Liquidator attached to Calcutta High Court
filed writ petition for grant of the status of permanent Central Government
employee with effect from the date of completion of 360 days of service besides
regular pay scales with avenues for promotion apart from pension, provident
fund and other service benefits on the basis of their length of service.
5.
The
learned Single Judge of Calcutta High Court allowed the writ petition in terms
of the prayer made. The appeal preferred by the appellants herein was dismissed
by the Division Bench, which noted that even though the writ petitioners had
been working for last 20 to 25 years, neither their services were regularized
nor they were paid at par with similar employees of other departments/offices
and they were retired at the age of 58 years without any financial benefit. The
Division Bench held that the appellants have failed to substantiate their plea
that the employees appointed by the Court Liquidator were not engaged for doing
work of perennial nature and that there was no reasonable basis for discriminating
the Court Liquidator's staff vis-`-vis the regular employees of the office of
Official Liquidator.
6.
The
company paid staff (Estate Clerks) engaged by the Official Liquidator attached
to the High Court of Kerala also filed writ petition claiming parity with the
government employees appointed in the office of the Official Liquidator. The
Division Bench of that High Court took cognizance of the fact that there were
two sets of employees under the Official Liquidator - (1) employees appointed
by the Central Government, and (2) employees (14 in number) appointed by the
Official Liquidator between 1980 and 1989 under Rule 308 of the 1959 Rules;
that all the employees were doing the same work but were being paid different
salaries and held that there was no rational basis for according unequal
treatment to similarly situated employees. The Division Bench then referred to
the 1978 Scheme, judgments of this Court in Narender Chadha vs. Union of India
[1986 (2) SCC 157], Dhirendra Chamoli vs. State of U.P. [1986 (1) SCC 637],
Surinder Singh and Another vs. Engineer-in-Chief, CPWD and Others [1986 (1) SCC
639], H.C. Puttaswamy vs. Hon'ble Chief Justice of Karnataka High Court,
Bangalore [1991 (2) Supp. SCC 421], Bhagwati Prasad vs. Delhi State Mineral
Development Corporation [1990 (1) SCC 361], Jacob M. Puthuparambil vs. Kerala
Water Authority [1991 (1) SCC 28], Delhi Development Horticulture Employees'
Union vs. Delhi Administration, Delhi [1992 (4) SCC 99], State of Haryana vs.
Piara Singh [1992 (4) SCC 118] and held that the petitioners are entitled to be
absorbed as regular Lower Division Clerks in the office of the Official
Liquidator from the date of their initial appointment.
Accordingly, a
direction was issued to the respondents in the writ petition to absorb the
Estate Clerks against the regular posts of Lower Division Clerks and pay them
salary in the regular pay scale with consequential benefits.
7.
The
Government of India and Official Liquidators appealed against the orders of
Calcutta and Kerala High Courts by filing petitions for special leave to
appeal, which were admitted and converted into Civil Appeal Nos.5642 of 1994
(Government of India and others vs. The Court Liquidator's Employees
Association and others) and Civil Appeal No.5677 of 1994 (Union of India and
others vs. P.P. Bridget and others). During the pendency of those appeals, Writ
Petition No.473 of 1998 filed by the company paid staff employed/engaged by the
Official Liquidator of Delhi High Court claiming parity with the regular
employees was also transferred to this Court.
After hearing the
arguments, the Court passed an interim order on 14.1.1998, which reads as
under:
"In all these
cases, the common question that arises for consideration is whether the persons
appointed by the Official Liquidator/Court Liquidator under the orders of
respective High Courts under Rules 308/309 of the Companies (Court) Rules, 1959
are entitled to equal pay and regularisation as the employees appointed by the
Central Government in the office of the Official Liquidator. Learned Senior
Counsel appearing for the appointees brought to our notice the findings of the
High Courts rendered on the basis of the materials placed before them. They are
broadly stated that the appointees were discharging identical duties and
functions as that of regular employees in the office of the Official
Liquidator; that they have been continuously without break working for a period
ranging from 10 to 25 years; that they have been paid only a fixed salary
without any benefit of pension, gratuity; that such employees appointed up to
1-7-1978 had been regularised by the Government; that though the Central
Government appreciated the human problem involved in these matters and came
forward before the Kerala High Court to amicably settle the issue ultimately
has shown an unsympathetic attitude and that in the light of the several
judgments of the Supreme Court, the appointees are entitled to regularisation
and salaries as paid to the regular employees in the office of the Official
Liquidator at least from three years prior to the date of the judgment of the
Single Judge of the Calcutta High Court and in the Kerala cases from the date
of appointment.
On the other hand,
Mr. Malhotra, learned Senior Counsel appearing for the Union of India submitted
that the appointees were not appointed by the Government and they were not paid
salaries from the consolidated fund. On the other hand, they were paid salaries
from the companies concerned under liquidation. In certain High Courts, there
are Official Liquidators and Court Liquidators appointed under Section 38-A of
Banking (Regulation) Act. The banking companies under liquidation originally
were 75, now only there are 32 banking companies under liquidation. The
appointment under court orders are not for a permanent department like Official
Liquidator's office and, therefore, the appointees cannot demand regularization
and payment of equal salary as that of salaries paid to regular employees in
the office of the Official Liquidator.
The hard reality is
that the appointees are continued on the basis of fixed salary without any
retiral benefits such as pension and gratuity for more than 25 years and the
functions they are discharging are similar to those discharged by the employees
in the Office of the Official Liquidator without getting equal treatment. In
the circumstances, before rendering a decision on merits by the Court, Mr
Malhotra, learned Senior Counsel desired that the Government be given an
opportunity to consider the matter in the light of the findings rendered by the
High Courts and to come forward with an acceptable solution.
The matters are
adjourned by four weeks."
8.
In
furtherance of the aforementioned order, the Government of India considered
various proposals. Thereafter an additional affidavit was filed incorporating
therein the following three options:
i.
one
option that was discussed was to repeat scheme for absorption of company-paid
staff as was done through the 1978 Scheme of Department of Company Affairs.
There are certain practical problems in following this course of action. As per
the 1978 Scheme such absorption is possible to the extent of 50% only under the
direct recruitment quota in the appropriate grade. As the position obtains in
the Department of Company Affairs, there is lack of adequate number of
vacancies in the aforesaid category (direct recruitment) for the purpose of
facilitating absorption of all these company- paid staff in the Department of
Company Affairs;
ii.
the
second alternative that was discussed was to continue the present arrangement
without absorption of these company-paid staff. In such a situation, their
salaries and service conditions could suitably be revised by the Hon'ble
Company Judges with reference to funds available with the OLs in the various
High Courts. According to information gathered, most of the OLs attached to
various High Courts have annual surpluses. The balances in the funds maintained
by many OLs are substantial; and (iii) the third option that was discussed was
to grant them age relaxation and ask them to sit in the open competitive
examination as a one-time measure. This would give them a general opening not
restricted to jobs in these two departments.
9.
Although,
the Government of India indicated its preference for option Nos.2 and 3, this
Court did not approve either of them and dismissed the appeals. The transferred
writ petition was allowed in similar terms - Govt. of India and others vs.
Court Liquidator's Employees Association and others [1999 (8) SCC 560].
Paragraphs 21 to 24 of the judgment which have bearing on these cases read as
under:
21. In view of the
peculiar facts of these cases and the positive findings of the High Courts with
which we concur, we are unable to agree with the contention of the learned
Senior Counsel for the appellants that the company-paid staff cannot be
absorbed/regularised as they were not employed by the Government in accordance
with the rules; that they knew their appointments were only temporary and that
their pay was not from the consolidated fund.
22. Undoubtedly,
counsel on both sides cited numerous authorities of this Court on earlier
occasions sustaining the orders of absorption and setting aside the orders of
absorption. We do not consider it necessary to refer to those decisions
inasmuch as the facts presented before us and the findings rendered by the High
Courts speak for themselves. As a matter of fact, the Government had considered
as one of the options to absorb the company-paid staff as was done through the
1978 Scheme of Department of Company Affairs.
23. In the
circumstances, we are satisfied that the orders of the High Court challenged in
these appeals do not call for any interference having regard to the facts
presented before the High Courts. Accordingly, we dismiss the appeals with no
orders as to costs.
24. In view of the
above, the writ petition is allowed as the relief prayed for is similar to the
one claimed by the contesting respondents/company-paid staff in the connected
civil appeals, without costs.
10.
Notwithstanding
its approval of the reasons and conclusions of Calcutta and Kerala High Courts,
this Court gave an opportunity to the appellants to absorb the company paid
staff working under the Court Liquidator in the Calcutta High Court and
Official Liquidators in other High Courts by framing a scheme modeled on the
1978 Scheme within six months. The Court also stayed the operation of the
orders appealed against and the order passed in Writ Petition (Civil) No.473 of
1998 for a period of six months to enable the appellants to frame new scheme
and implement the same. This is evident from paragraph 25 of the judgment which
is reproduced below :
25. However, we want
to give an opportunity to the appellants in the interest of justice and to
balance the equities between the parties to come forward to accept and act on
the first option given in the additional affidavit, as extracted above, and
absorb the company-paid staff working both under the Court Liquidator in the
Calcutta High Court and the Official Liquidator in other High Courts by framing
a scheme modelled on the 1978 Scheme within six months. In other words, we stay
the operation of the judgment of the High Courts under appeal and the order in
WP (C) No. 473 of 1988 for a period of six months to enable the appellants to
frame the Scheme as suggested above and to give effect to it, failing which the
judgments under appeal and the order in WP (C) No. 473 of 1988 will stand
confirmed."
11.
Within
the time limit of six months fixed by the Court, the Government of India framed
and notified new Scheme (hereinafter referred to as `the 1999 Scheme') for
absorption of the company paid staff against 50% vacancies in direct
recruitment quota and also issued letter dated 1.10.1999 containing guidelines
for implementation of the same. That letter reads as under :- "To The
Regional Director Department of Company Affairs Mumbai/Calcutta/Chennai/Kanpur.
Sub: Absorption of
company paid staff of the offices of Official Liquidators against Group C posts
in the subordinate offices of the Department of Company Affairs on the lines of
scheme devised in 1978 - Supreme Court's judgment - regarding.
I am directed to
refer to the Hon'ble Supreme Court's Judgment dated 27.08.99 (copy enclosed) on
the subject mentioned above and to say that further action in the matter of
absorption of the Company Paid Staff in regular Government service may please
be taken on the following lines :- (i) Only such Company Paid Staff of the
offices of the Official Liquidators shall be eligible for regular absorption:
(a) Who were in
position as on 27.08.99 and (b) Who possess the requisite educational
qualification laid down in the recruitment rules for the post against which
they are to be absorbed.
The Regional
Directors, in their capacity as Heads of Departments, may consider the
relaxation of age limits in deserving cases in accordance with the general
instructions existing in this regard.
(ii) The Company Paid
Staff can be absorbed against only 50% of the existing and future vacancies in
your region in Group `C' posts which, as per recruitment rules fall under
direct recruitment quota. For instance, there is hundred per cent direct
recruitment to the posts of Lower Division Clerks; accordingly, 50% of the
existing and future vacancies of Lower Division Clerks in your region can be
utilized for absorbing Company Paid Staff. Further, the posts of Upper Division
Clerks, as per recruitment rules, are to be filled up entirely by promotion;
therefore, there can be no possibility of absorbing Company Paid Staff in the
grade of Upper Division Clerks. In the case of Junior Technical Assistants 50%
of the vacancies, according to the recruitment rules are to be filled up by
promotion and the remaining 50% by direct recruitment. In this case, therefore
25% of the vacancies in the grade of Junior Technical Assistants can be
utilized for absorbing Company Paid Staff. The proportion of vacancies in other
Group `C' grades may similarly be worked out.
(iii) The Company
Paid Staff, who were in position on 27.08.99, will be screened by a Selection
Committee consisting of the following:- 1) Regional Director - Chairman 2)
Representative of the Staff Selection Commission -Member 3) Official Liquidator
of the office the company paid staff of which is to be screened - Member The
Staff Selection Commission is also being requested to nominate different
representatives for the different regions. The place, date and time of holding
meeting(s) of the Selection Committee may be finalized in consultation with
them.
(iv) As in the scheme
of 1978, there will be no test or examination for the purpose of assessing the
suitability of the Company Paid Staff. The Selection Committee will make its
recommendations on the basis of the qualification, experience etc. and personal
interview of the candidates.
2. Immediate steps
may please be taken for selection of eligible members of Company Paid Staff for
absorption against the existing vacancies in different grades and also the
anticipated vacancies upto 31.12.2000 next. Applications may be invited
indicating separately the existing vacancies and the vacancies which may occur
by 31.12.2000 and making it clear that the question of absorbing be persons
recommended for the anticipated vacancies will arise only if the vacancies
actually occur by 31.12.2000 and that mere recommendation of the Selection
Committee will not confer any right on any Company Paid Staff for being
appointed in Government service.
3. A quarterly report
beginning with the quarter ended 31.12.99 may be sent to the Headquarters
indicating the extent to which the Company Paid Staff has been absorbed in
regular Government service."
12.
Thereafter,
the concerned authorities undertook exercise for absorption of the company paid
staff in the regular cadres of the Department of Company Affairs. As a result
of this, 295 out of 399 company paid staff who were in position on 27.8.1999
were adjudged suitable. Of them 130 have been absorbed and 141 are awaiting
orders. 104 were not recommended for absorption. 23 of the company paid staff
either refused absorption or resigned or retired from service.
13.
In
the meanwhile, the company paid staff working under the Official Liquidators of
Calcutta and Delhi High Courts filed writ petitions and prayed for issue of
mandamus to the Union of India and others to absorb them in the regular cadres
and to treat them at par with Central Government employees working in the
office of the Official Liquidators.
Pleadings of the
parties before the High Courts Calcutta High Court
14.
Tapas
Chakraborty and others filed Writ Petition (Civil) No.1387 of 2001 in Calcutta
High Court for issue of a direction to Government of India and Official
Liquidator to absorb them in regular cadres with effect from the date of
completion of 240 days' service and also for grant of benefits like pension,
provident fund, gratuity, etc. calculated on the basis of total length of
service.
In the writ affidavit
it was pleaded by the petitioners that before appointing them, the Official
Liquidator use to take leave from the Hon'ble Judge hearing the company matter
in the High Court; that they were appointed as a company paid staff with a
stipulation that their services may be terminated at any time without assigning
any reason; that all of them have worked for more than 240 days in each and
every year of their service; that although they are entitled to regularization
of service, the respondents have not taken any action in that direction; that
their pay has not been fixed in the regular scale and they are required to
retire at the age of 58 year without any financial benefit; that on or around
30th November, 1999, the respondents asked them to appear in an interview for
absorption against the post of Lower Division Clerk or Junior Technical
Assistant in terms of letter dated 1.10.1999; that they were not party to the
proceedings before the Supreme Court; that the scheme, if any, prepared by the
respondents is arbitrary and implementation thereof is afflicted by favoritism
and that the respondents cannot take recourse to the order passed by the
Supreme Court on 27.8.1999 and deprive them of their legal right to get
absorption on completion of 240 days of continuous service. For better
appreciation of the case projected by the writ petitioners, paragraphs 5, 6, 7,
18 and 26 and Clauses a(ii) and (iii) of the prayer clause are reproduced
below:
"5. The very
common thing amongst the petitioners herein is that all of them are continuing
their service in the office of the Official Liquidator for more than 240 days
in each and every year of their service in the office of the Official
Liquidator.
6. Although your
petitioners are entitled to regularization of their service in terms of the
Central Government employees, but the respondents and each of them neglected to
give the petitioners all the service benefits as compared to a Central
Government employee.
7. Although your
petitioners have all requisite qualifications, experience, your petitioners
were denied their right to work with utmost dignity and compelled to work in
the office of respondent No.3 with a temporary status, without any service
benefits as admissible to a Central Government employee in similarly situated
conditions. In a society, where unemployment is curse, your petitioners have
had no other alternative but to accept the terms of service, as dictated by the
respondents from time to time for running their office through your
petitioners.
18. Your petitioners
state that they were not a party in the said proceedings, before the Hon'ble
Supreme Court of India, hence the aforesaid order of the Hon'ble Supreme Court
of India, is not applicable to your petitioners. Your petitioners further state
that the words `other High Courts' as referred by the Hon'ble Apex Court is not
meant for all the High Courts all over India, but it referred to those two High
Courts, the staffs of the Official Liquidator of the Kerala High Court and/or
of the Delhi High Court only.
26. Your petitioners
state that purported scheme, if any, prepared by the respondent authorities is
bad and arbitrary and without publishing the scheme for appointment and/or
regularization, the respondent authorities indulged in the favouritism at the
time of choosing the candidates for absorption in regular post. In absence of
any scheme or modes of regularization, the respondents are taking recourse to pick
and choose policy and doing gross discrimination among the temporary workers in
the office of the respondent no.3.
[Emphasis added]
Prayer Clause (a)(ii) absorb the writ petitioners in regular service under the
Central Government with an effective date i.e. soon after expiry of 240 days in
their respective services in each continuous period of service;
(iii) Furnish all the
service benefits like pension, provident funds and gratuity and pay differences
to the petitioners, calculating the service period of the petitioners with an
effective date i.e. soon after expiry of 240 days in their respective services,
in each continuous period of service.
15.
During
the pendency of the writ petition, an application was filed on behalf of the
petitioners for deleting the names of some of them and for adding additional
grounds to challenge the 1999 Scheme. The respondents in the writ petition
objected to the amendment to the writ petition, but the learned Single Judge
overruled their objection and granted the prayer of the writ petitioners. Delhi
High Court
16.
Smt.
Daya Dua and others, who belong to the category of company paid staff
employed/engaged by the Official Liquidator of Delhi High Court filed Writ
Petition No.2728 of 2001 for issue of a mandamus to the respondents (appellants
herein) to regularize their services against Group `C' post from the date of
initial appointment. An alternative prayer made by the writ petitioners was to
direct the respondents to frame a scheme for absorption of all of them against
Group `C' posts and give them other benefits like pay and allowances at par
with regular Group `C' employees working in the office of the Official
Liquidator. They pleaded that their work is of perennial nature and their
duties and functions are identical to those of regular employees, but they are
not being paid salary in the regular pay scale. They further pleaded that the
direction given by the Supreme Court was not limited to the absorption of any
particular category of company paid staff, but the 1999 Scheme is confined to
Group `C' posts and the employees who are eligible for absorption against Group
`D' posts are being discriminated. Another plea taken by the petitioners was
that only 11 of company paid staff have been absorbed/regularized against Group
`C' posts and others have been left out in lurch. Clauses (a), (b) and (c) of
the prayer clause of Writ Petition No.2728 of 2001 read as under:- "a)
regularize the service of the petitioners in Group `C' Central Government posts
from the date of their initial appointment;
b) without prejudice
to prayer (a) above, in the alternate, frame Scheme as directed by the Hon'ble
Supreme Court for absorption of all the petitioners in Group `C' Central
government posts giving therein due regard to their seniority as Group `C'
company paid staff and providing therein time bound regularization of all the
petitioners which is the letter and spirit of the directions of the Hon'ble
Supreme Court dated 27.8.1999 in W.P. (C) No.473/1988;
c) pay the
petitioners salary and allowances at par with the Central Government appointed
regular group `C' staff in the office of the Official Liquidator attached to
the Hon'ble High Court of Delhi from the date of their initial
appointment."
17.
The
claim of the writ petitioners (respondents herein) was controverted by the
Union of India and Official Liquidators of the two High Courts. The salient
features of the counter affidavits filed on their behalf were:
(i) Regular
appointments against the posts sanctioned by the Government of India, Department
of Company Affairs are made after following the procedure prescribed in the
statutory rules.
As against this, the
company paid staff is engaged/employed by the Official Liquidators for fixed
period after obtaining sanction from the Court under Rule 308 of the 1959
Rules.
(ii) The company paid
staff are neither the government servants nor their conditions of employment
are regulated by statutory rules like the Central Civil Services (Conduct)
Rules, which are applicable to the holders of civil posts under the Central
Government.
(iii) The company
paid staff cannot be equated with regular employees because the source and mode
of recruitment of the two categories and their status are entirely different.
Moreover, while the regular employees are paid from the budget sanctioned by
the Government of India, the salaries and allowances of the company paid staff
are drawn from the company fund in terms of the order passed by the Court under
Rule 308 read with Rule 309 of 1959 Rules.
(iv) The 1999 Scheme
was framed strictly in accordance with the judgment of the Supreme Court in
Govt. of India and others vs. Court Liquidator's Employees Association and
others (supra). The same was modeled on the 1978 Scheme and 50% of direct
recruitment quota posts have been filled by absorbing the company paid staff.
18.
In
the counter filed in Delhi High Court, it was also pleaded that members of the
company paid staff cannot claim absorption in Group `D' post because the 1978
and 1999 Schemes do not provide for such absorption.
Findings of the High
Courts W.P. No.13871/2001 (Calcutta High Court)
19.
The
learned Single Judge briefly referred to the pleadings of the parties and held
that relief deserves to be granted to the petitioners because the findings and
conclusions recorded by Calcutta and Kerala High Courts in the earlier round of
litigation were approved by the Supreme Court. in Govt. of India and others vs.
Court Liquidator's Employees Association and others (supra), the learned Single
Judge then prepared a comparative table of the two schemes and held that the
1999 Scheme is illusory because all the company paid staff cannot be absorbed
against 50% vacancies of the direct recruitment quota. On the issue of
absorption of the company paid staff against Group `D' posts, the learned
Single Judge observed that there is no rational reason to confine the benefit
of the 1999 Scheme qua Group `C' posts. He also delved into the legality of the
absorption of respondent Nos.5 to 26 and held that the recommendations made by
the Selection Committee de hors the seniority of the company paid staff has the
effect of vitiating the selection. He, however, declined to nullify the
absorption of the private respondents on the ground of delay and laches and
proceeded to direct the respondents to prepare fresh merit list strictly in the
order of seniority. The learned Single Judge also directed respondents to
consider the desirability of increasing the quota of 50% by creating
supernumerary posts. The operative part of the order passed by the learned
Single Judge reads thus:
"The State
respondents shall consider their scheme 1999 after ascertaining whether all
company paid staff in the office of the Official Liquidator, Calcutta High
Court can be absorbed as Group-C staff within three years reckoned from the
date of coming into force of the said Scheme of 1999.
The aforesaid
exercise shall be completed within a period of three months from date hereof.
If all the company paid staff cannot be absorbed as Group-C staff within the
said period stipulated above, State respondents shall consider the increase in
the quota of 50% or by creating supernumerary posts so that, subject to the
reservation policy of the State, all the eligible company paid staff could be
absorbed as Central Government staff in Group-C.
The State respondents
shall consider de novo the impugned panel with respect to eligible company paid
staff in Group-C strictly in the order of seniority and upon absorption of such
company paid staff on the basis of such list which shall be prepared within a
period of three months from date hereof, the seniority in the cadre of Group-C
shall be maintained ever with respect to the company paid staff respondents 5
to 26 who have already been absorbed.
As regards Group-D
staff, State respondents shall take steps for regularizing such of the
petitioners as may be eligible and qualified according to the rules to be
absorbed as Group D staff within a period of three months from date hereof.
Such regularization shall be made strictly in the order of seniority (length of
service in the organization). Upon absorption/regularization such company paid
staff shall be placed immediately below the last regularly appointed employees
in that category, class and service, as the case may be.
Until the above
directions as carried out there shall be a direction upon the respondents not
to fill up any post by direct recruitment.
It is clarified that
such of the petitioners who did not participate in the interview conducted by
the selection committee for the purpose of absorption, their cases shall not be
considered."
20.
The
Division Bench dismissed the appeal preferred by the appellants herein by
recording the following observations:
"Since the
matter regarding the right of the company paid staff of the office of the
official liquidators has been decided and confirmed upto the Hon'ble Supreme Court,
all that needs to be worked out is that manner in which such employees are to
be absorbed in the offices of the different Official Liquidators of the
different High Courts.
We are in agreement
with the sentiments expressed by the learned Single Judge that no a section but
all the company paid staff working in the office of the Official Liquidator
upto the cut off date as provided in the 1999 Scheme are to be absorbed in the
office of the Official Liquidator, High Court at Calcutta, even if it means by
creation of supernumerary post as observed by the learned Single Judge.
Needless to say, such posts will be personal to those appointed and will cease
to be in existence upon the incumbent attaining the age of
superannuation."
W.P. No.2728/2001
(Delhi High Court)
21.
The
learned Single Judge referred to the judgment in Govt. of India and Others vs.
Court Liquidator's Employees Association and Others (supra) and negatived the
plea of the appellants herein that the company paid staff can be absorbed in
the regular cadre only against Group `C' posts to the extent of 50% of direct
recruitment quota and held that the writ petitioners are entitled to be
absorbed against Group `C and `D' posts and their entire service upto the date
of absorption has to be counted for the purpose of fixation of seniority and
grant of other benefits including promotion. The relevant portions of the order
of the learned Single Judge are reproduced below:
"I do not find
any force in the argument of the respondent that 1978 scheme was only with
regard to Group `C' employees. The fact of the matter is that Group `D'
employees were appointed only in the year 1985. Therefore, there was no
question of the respondent making a scheme in 1978 for Group `D' employees. I
do not find any force in the arguments of counsel for the respondents that the
direction of the Supreme Court was limited with regard to the absorption of
Group `C' employees.
The Supreme Court has
used the words `company paid employees', the words `Group `C' and Group `D'
have not been used in the judgment of Supreme Court. As discussed earlier Group
`D' employees were also petitioners before Supreme Court.
I do not find any
substance in the arguments of counsel for the respondents that the Supreme
Court has not given a direction for giving seniority to the petitioners after
their absorption. If I agree with the interpretation of the respondent that
would mean a person who has worked for twenty or more years in the office of
Official Liquidator and now he gets absorption his past services of twenty
years or more will not be counted. The very proposition of the respondent is
preposterous. The Supreme Court in its judgment has not used the words `new
appointment' but has used the word `absorption'. The Supreme Court had
categorically given a mandate to absorb all the company paid employees and not
to give fresh appointment. Therefore, the incident of seniority by implication
is implicit in the judgment of the Supreme Court and respondents have to absorb
the petitioners giving them fitment in the their appropriate scales as well as
other promotions, if any, which has to be given as per law.
I issue a writ of
mandamus to the respondents to absorb the petitioners in their appropriate
scales with all benefits such as fitment and promotions, if any, even if posts
have to be created for the petitioners. Illegality and discrimination cannot be
allowed to perpetuate indefinitely. They will also be entitled to pension,
provident fund, gratuity and all benefits which are to be computed on the basis
of their length of service. The petitioners shall be entitled to arrears of
three years which shall be paid by the respondents to the petitioners within a
period of six months."
[Emphasis supplied]
22.
Letters
Patent Appeals preferred by the appellants were dismissed by the different
Division Benches of the High Court. While deciding LPA No.808 & 809/2003,
the Division Bench took cognizance of the fact that during the pendency of
contempt case filed in Calcutta High Court withthe complaint that order dated
26.3.2001 passed by the Single Judge of that High Court in W.P. No.211/2001 has
not been complied with, the Central Government created 51 posts of Group `B',
`C' and `D' and absorbed the staff working in the office of the Court
Liquidator with effect from the date of expiry of 360 days of their joining
service and held that the direction given by the learned Single Judge for
absorption of all Group `C' and `D' company paid staff does not call for
interference.
Particulars of the
additional documents filed/produced during the course of hearing
23.
Learned
senior counsel appearing for Tapas Chakraborty and others filed I.A. No.10/2008
in S.L.P (C) No.12798/2008 for placing on record the following documents:
i.
Letter
No.OL-CAL/24/Staff/G-Part V/2600/G dated 13th June, 2005 sent by the Official
Liquidator of Calcutta High Court to the Secretary, Government of India,
Ministry of Company Affairs highlighting the factum of increase in the work
load and necessity of providing additional manpower.
ii.
Letter
No.12011/3/2003-Admn.II dated 2nd September, 2005 issued by the Government of
India in the matter of "Optimization of Direct Recruitment to Civilian
Posts" of Group `C' and `D' for the years 2001-2002, 2002-2003 and
2003-2004 and abolition of some such posts.
iii.
Copy
of order dated 28.2.2008 passed by the Division Bench of Kerala High Court in
Writ Petition (C) No.22810/2004 and 16471/2007.
iv.
Copy
of letter No.RD/CLA/1/717/1135 dated 3rd June, 2008, sent by Assistant Director
(Inspection), Government of India, Ministry of Corporate Affairs to the
Official Liquidators of Calcutta, Cuttack, Guwahati, Patna and Ranchi asking
them to send comprehensive proposal for requirement of staff along with
justification for the same.
v.
Letter
No.OL/24/Staff/Part VII/1875/G dated 30th June, 2008 sent by the Official
Liquidator of Calcutta High Court to the Regional Director, Eastern Region,
Kolkata reiterating the need for additional staff to meet with the increased
workload.
24.
Learned
senior counsel also produced two charts containing the details of Group `C' and
Group `D' posts lying vacant in four regions as on 1.1.2008 and the number of
Group `C' posts abolished during 2001-2002, 2003-2004. He produced two more
charts containing the details of the company paid staff as on 31.3.2008 in all
the regions and particulars of 119 company paid staff employed/engaged by the
Official Liquidator of Calcutta High Court.
25.
Ms.
Jyoti Mendiratta, learned counsel appearing for the respondents in the appeals
arising out of the orders passed by Delhi High Court filed I.A. (unnumbered) in
S.L.P. (C) No.12798/2005 for placing on record the following documents:-
i.
Copy
of the details of posts with office of Official Liquidator of High Court of
Bombay filed on 18.7.2008 along with tables consisting of names of the company
paid staff and the date of absorption and table containing names of the 26
company paid staff from Group `C' and Group `D'.
ii.
Letter
No.12011/3/2003-Admn.II dated 2nd September, 2005 sent by Under Secretary to
the Government of India, Ministry of Company Affairs to the Regional Directors
of Ministry of Company Affairs of Noida, Kolkata, Mumbai and Chennai in the
matter of optimization of direct recruitment to civilian posts of Group `C' and
`D' posts in the Ministry for the years 2001-2002, 2002-2003 and 2003-2004 and
abolition/filling up of some such posts.
iii.
Letter
No.OL/24/Staff/Part VII/1875/G dated 30th June, 2008 sent by the Official
Liquidator of Calcutta High Court to the Regional Director, Eastern Region,
Kolkata reiterating the need for increase of manpower.
iv.
Copy
of order dated 19.9.2005 passed by the Division Bench of Delhi High Court in
LPA Nos.808/2003 and 809/2003.
v.
Copy
of order dated 5.5.2003 passed by learned Single Judge of Delhi High Court in
CW No.2728/2001 and CM No.4774/2001.
vi.
Copy
of judgment dated 26.3.2001 passed by the learned Single Judge of Calcutta
High Court in W.P. No.211/2001.
vii.
Letter
No.A-12013/1/99-Ad.II dated 27.12.1999 sent by Shri D.P. Saini, Under Secretary
to the Govt. of India to all the Regional Directors of Department of Company
Affairs of Kanpur, Kolkata, Mumbai and Chennai regarding
clarifications/suggestions to facilitate the implementation of this Court's
judgment dated 27.8.1999 for absorption of company paid staff of the offices of
Official Liquidators against Group `C' posts.
26.
Shri
P.P. Malhotra, Additional Solicitor General filed reply to I.A. No.10/2008 in
S.L.P. (C) No.12798/2005 along with following documents:-
i.
Copy
of O.M. No.2/8/2001-PIC dated 16.5.2001 containing policy decision taken by the
Government of India on the issue of Optimization of Direct Recruitment to
Civilian Posts and lapsing of two-third of vacancies every year.
ii.
Copy
of O.M. No.2/8/2001-PIC dated 30th August, 2006, whereby the Government decided
to continue the scheme of Optimization of Direct Recruitment to Civilian Posts
upto 31.3.2009.
iii.
Copy
of O.M. No.A-12011/3/2002-Ad.II dated 14.3.2005 for convening meeting of the
Screening Committee to consider the issue of reducing direct recruitment to
civilian posts in the Ministry of Company Affairs along with background note.
27.
During
the course of arguments, Shri Malhotra placed before the Court xerox copy of
Writ Petition No.1387/2001 filed in Calcutta High Court along with annexed
papers and the following documents:- (i) Letter No. dated 22nd August, 2008
sent by Official Liquidator, High Court of Bombay to the Regional Director,
Western Region, Mumbai on the issue of additional requirement of posts, and
(ii) Copy of additional affidavit of Shri D.P. Saini, Under Secretary to the
Government of India, Ministry of Finance, Department of Company Affairs filed
in C.A. No.5677/1994.
Arguments
28.
Shri
P.P. Malhotra, learned Addl. Solicitor General placed reliance on paragraph 25
of the judgment in Govt. of India and others vs. Court Liquidator's Employees
Association and others (supra) and submitted that even though this Court
approved the reasoning and conclusions of Calcutta and Kerala High Courts,
orders passed by those Courts were rendered ineffective because operation and
implementation thereof was stayed for six months and in terms of opportunity
given to it, the Government of India not only framed the 1999 Scheme for
absorption of the company paid staff, but also implemented the same. Shri
Malhotra argued that High Court committed serious error by issuing direction
for absorption of all the company paid staff in the regular cadres ignoring the
fact that the 1999 Scheme was confined to Group C posts and that too upto 50%
vacancies in the direct recruitment quota. Learned counsel emphasized that the
1999 Scheme was modeled on the 1978 Scheme and argued that the same cannot be
faulted on the ground that due to abolition of posts in the Department of
Company Affairs, large number of company paid staff may not get absorbed in the
regular cadres till their retirement. Shri Malhotra pointed out that as early
as in 2001, the Government of India had taken a policy decision to
substantially reduce direct recruitment to all the cadres and recommendations
made by the Screening Committee for abolition of posts in various cadres were
accepted by the Government. Learned counsel emphasized that the policy decision
taken by the Government of India on the issue of Optimization of Direct
Recruitment to Civilian Posts was not challenged by the writ petitioners and
argued that in the absence of such challenge, the High Courts were not
justified in mandating creation of supernumerary posts for absorption of the
company paid staff and for grant of monetary benefits to them by applying the
principle of equal pay for equal work with retrospective effect. In the end, he
argued that the directions given by High Courts for wholesale absorption of the
company paid staff are legally unsustainable because that would result in
abrogation of the rules framed under proviso to Article 309 of the Constitution
of India in terms of which the appointing authority is obliged to make direct
recruitment to various cadres.
29.
Shri
Bhaskar P. Gupta, learned counsel appearing for the respondents in the appeal
arising out of S.L.P. No.12798 of 2005 argued that the judgment of this Court
in Government of India and others vs. Court Liquidator's Employees Association
& Ors. (supra) is conclusive on the issue of absorption to the company paid
staff and the 1999 Scheme is liable to be quashed because the same is not only
contrary to the judgment of this Court but is wholly unrealistic and
impractical inasmuch as it does not provide for absorption of the company paid
staff who have completed more than 10 to 20 years of service. Learned counsel
pointed out that after the promulgation of 1978 Scheme, there has been
multifold increase in the petitions instituted for liquidation of the companies
and submitted that in order to meet the imperatives of the work relating to the
companies in liquidation, the Official Liquidator was compelled to
engage/employ additional staff and continue them after obtaining sanction from
the Court under Rule 308 of the 1959 Rules. He then submitted that the
respondents joined service as company paid staff with the fond hope that their
services will be regularized and they may get opportunity of career advancement
and retrial benefits but on account of unsympathetic attitude of the Government
of India, their legal and constitutional rights have been violated. Learned
counsel referred to letters dated 13.6.2005, 3.6.2008 (Annexures A-D) and
30.6.2008 written by the Official Liquidator and Assistant Director
(Inspection), Kolkata as also letter dated 2.9.2005 written by the Under
Secretary to the Government of India, Ministry of Company Affairs to the
Regional Directors, NOIDA/Kolkata/Mumbai/Chennai on the subject of Optimization
of Direct Recruitment to Civilian Posts in Group C and D and submitted that
even though in the assessment of officers at the ground level, there is a dire
need for increasing the strength of different cadres, the Government of India
has in the garb of implementing the policy decision taken in 2001, abolished
large number of posts in the direct recruitment quota, which became available
in 2001-02 to 2003-04 and, in this manner, the 1999 Scheme has been made
redundant. Shri Gupta invited our attention to the charts and details produced
by him to show that even after being recommended by the Selection Committee as
many as 141 of the company paid staff, who were in position on 27.8.1999, have
not been absorbed till this day. He submitted that the Government of India
cannot sit tight over the matter and frustrate the right of the company paid
staff to be absorbed in the regular cadres despite the fact that they were
appointed after advertisement and as on date they have continuously worked for
10 to 20 years and fulfill the conditions of eligibility prescribed for direct
recruitment. Shri Gupta invoked the doctrine of legitimate expectation and
argued that the High Courts did not commit any illegality by recognizing the
validity of the claim made by the company paid staff and issuing direction for
their absorption in regular cadres with consequential monetary benefits by creation
of supernumerary posts.
Learned senior
counsel lamented that the manner in which the Government of India has acted in
last nine years leave no room for doubt that majority of company paid staff,
who were in position on 27.8.1999 may never get absorbed and may have to retire
without any monetary benefits like pension, gratuity, etc. Lastly, Shri Gupta
submitted that the ratio of the Constitution Bench judgment in Secretary, State
of Karnataka vs. Uma Devi [2006 (4) SCC 1] should not be applied to these cases
because the respondents had been employed/engaged after advertisement and due
selection. He also relied on Randhir Singh vs. Union of India [1982 (1) SCC
618], Dhirendra Chamoli vs. State of U.P. [1986 (1) SCC 637], Surinder Singh
vs. Engineer-in-Chief, C.P.W.D. [1986 (1) SCC 639 and UP State Electricity
Board vs. Pooran Chandra Pandey [2007 (11) SCC 92] and argued that the
respondents cannot be deprived of their constitutional right to equality in the
matter of regularization of service and payment of salary in the regular pay
scales on the pretext of non-availability of posts.
30.
Ms.
Jyoti Mendiratta referred to the pleadings of Writ Petition No.2728/2001 filed
in Delhi High Court to show that as per the appellants' own case, the 1999
Scheme was a replica of the 1978 Scheme and argued that the same is liable to
be quashed because while framing the new scheme, the Central Government
altogether ignored the factum of employment of a number of persons by the
Official Liquidator from 1985 who are eligible for absorption against Group D
posts. She further argued that the lackadaisical manner in which the Central
Government implemented the 1999 Scheme shattered the hopes of majority of the
company paid staff and, therefore, the High Court did not commit any error by
removing the discrimination practiced by the Central Government against the
company paid staff who have not been absorbed even after 20 years service. She
pointed out that the Official Liquidator of Delhi High Court employed/engaged
company paid staff after due advertisement and selection and argued that
non-availability of sanctioned posts cannot justify wholesale denial of the
right to equality guaranteed to the respondents under Articles 14 and 16 of the
Constitution. Learned counsel heavily relied on the observations made by the
Division Bench of Kerala High Court in O.P. No.9732 of 1990 decided on
27.8.1993 and vehemently argued that in view unequivocal approval of that order
in Government of India and others vs. Court Liquidator's Employees Association
& Ors. (supra), the learned Single Judge of the Delhi High Court had no
choice but to issue mandamus for regularization of the services of the
respondents herein with consequential benefits. Learned counsel invited the
Court's attention to order dated 26.3.2001 passed by the Calcutta High Court in
Writ Petition No.211 of 2001 and submitted that after having sanctioned 51
posts for absorption of the staff working under the Court Liquidator of
Calcutta High Court, it is not open to the Central Government to challenge the
direction given by Calcutta and Delhi High Courts for regularization of company
paid staff employed/engaged by the Official Liquidators on the spacious ground
of abolition of posts meant to be filled by direct recruitment.
31.
Shri
Colin Gonsalves, and Shri Ramesh Kumar, learned counsel for the intervenors,
adopted the theme of the arguments of Shri Bhaskar P. Gupta and Ms. Jyoti
Mendiratta and submitted that in view of abolition of post meant to be filled
by direct recruitment, the 1999 Scheme should be declared as unworkable and
redundant and a direction be issued to the appellants to regularize the
services of company paid staff having regard to their length of services.
Consideration by the
Court
32.
At
the outset, we consider it necessary to remove the misgivings entertained by
the respondents and the High Courts that while dismissing the appeals filed by
the appellants in the earlier round of litigation, this Court had endorsed the
directions given by Calcutta and Kerala High Courts for absorption of company
paid staff without any rider. A careful reading of paragraphs 20 to 25 of the
judgment in Govt. of India and Others vs. Court Liquidator's Employees
Association and Others (supra) makes it crystal clear that while approving the
reasons and conclusions recorded by the High Courts and dismissing the appeals,
this Court not only gave an opportunity to the appellants to frame a new scheme
modeled on the 1978 Scheme within six months and implement the same but also
stayed the operation of the orders impugned in the appeals and the one passed
in Writ Petition (C) No.473 of 1988. The use of the words "failing which
the judgments under appeal and the order in WP (C) No.473 of 1988 will stand
confirmed" in paragraph 25 leaves no manner of doubt that the orders
passed by the High Court and the one passed by this Court in WP (C) No.473 of
1988 were to become effective only if the Government of India had not framed
new scheme modeled on the 1978 Scheme. However, the fact of the matter is that
Government of India not only framed and notified the 1999 Scheme within six
months from the date of judgment, but also issued guidelines for implementation
of the same. Therefore, the orders passed by Calcutta and Kerala High Courts
and the direction given by this Court in Writ Petition (C) No.473 of 1988 will
be deemed to have become ineffective and inoperative and the respondents cannot
derive any benefit from those orders and direction.
33.
Now
on merits. Rules 308 and 309 of 1959 Rules, which were framed by this Court
under Section 643 of the Companies Act, 1956 to facilitate employment of
special or additional staff in any liquidation and payment of salaries and
allowances to such staff read as under:- 308. Employment of additional or
special staff - Where the Official Liquidator is of opinion that the employment
of any special or additional staff is necessary in any liquidation, he shall
apply to the Court for sanction, and the Court may sanction such staff as it
thinks fit on such salaries and allowances as to the Court may seem
appropriate.
309. Apportionment of
expenses of common staff - Where any staff is employed to attend to the work of
more than one liquidation, or any establishment or other charges are incurred
for more than one liquidation, the expenses incurred on such staff and the
common establishment and other charges, shall be apportioned by the Official
Liquidator between the several liquidations concerned in such proportions as he
may think fit, subject to the directions of the Judge, if any.
The above reproduced
rules were framed with a view to ensure that the proceedings of liquidation are
not hampered on account of shortage of staff. It was felt that if additional
manpower is required for effectively dealing with liquidation cases, the
Official Liquidator may apply to the Court and employ such staff after receipt
of the sanction. The additional staff is paid from the company fund. If the
staff employed under Rule 308 is required to attend the work of more than one
liquidation or any establishment or other charges are incurred for more than
one liquidation, then the Official Liquidator is required to apportion the
expenses subject to the direction, if any, of the Judge concerned.
34.
It
is not in dispute that the respondents were engaged/employed by the Official
Liquidators pursuant to the sanction accorded by the Court under Rule 308 of
the 1959 Rules and from the inception of their employment, they are being paid
from the fund created by disposal of the assets of the companies in liquidation.
They were neither selected in accordance with the procedure prescribed under
the rules framed under proviso to Article 309 of the Constitution nor they were
appointed against the posts sanctioned by the Government of India. It is thus
clear that the company paid staff constitute a separate and distinct class.
While deciding the appeals in the earlier round of litigation, this Court must
have been alive to the aforementioned facts and this appears to be the reason
why the directions given by Calcutta and Kerala High Courts for absorption of
all company paid staff were stayed for six months and an opportunity was given
to the Central Government to frame a new scheme within that period.
35.
Although
neither of the parties to the appeals nor the intervenors have placed before
the Court advertisements issued by the Official Liquidators of Bombay,
Calcutta, Delhi and Madhya Pradesh or any other High Court for employment of
special or additional staff in accordance with the sanction accorded by the
concerned Court and we have not been apprised of the specific terms and
conditions, subject to which the respondents were employed/engaged by the
Official Liquidators but from the tenor of the pleadings and other records, it
can be safely inferred that the respondents were appointed on purely temporary
basis for fixed period with a stipulation that they shall not be entitled to
seek regularization or absorption in the regular cadre against the sanctioned
post. Those who applied in response to the advertisements issued by the
Official Liquidators must have been aware of the fact that they were being
engaged/employed pursuant to the sanction accorded by the Court under Rule 308
of the 1959 Rules in connection with liquidation proceedings; that their
appointments will not be against the posts sanctioned by the Government; that
they will have no right to claim absorption in the regular cadre and that they
will be paid salaries and allowances which may be fixed by the Court. They must
have accepted the appointment/engagement knowing fully well that they will have
fixed tenure without any right to continue in service or to seek absorption
against the sanctioned posts. It was neither the pleaded case of the
respondents before the High Courts nor Shri Bhaskar P. Gupta and other learned
counsel appearing on their behalf argued before this Court that their clients
were lured into accepting employment as company paid staff by the Official
Liquidators by promising absorption in future against the sanctioned posts or
that they were coerced by some authority to accept such employment. Therefore,
they cannot be heard to complain of the violation of Articles 14 and 16 of the
Constitution on the ground that even after having worked for more than one
decade, they have not been absorbed in the regular cadres under the Government.
In our opinion, after having applied for and accepted employment/engagement as
company paid staff with fixed tenure superimposed by a stipulation that they
will have no right to continue in service or to be absorbed in the regular
cadres, the respondents are estopped from seeking a direction for their
absorption against the posts sanctioned by the Government of India and the High
Courts committed a serious error in granting their prayer.
36.
The
argument of Shri Bhaskar P. Gupta and other learned counsel appearing for the
respondents and intervenors that the 1999 Scheme is arbitrary and unreasonable
and the same should be treated as having become redundant on account of
abolition of posts meant for direct recruitment, which found favour with the
High Courts, proceeds on the hypothesis that in the earlier round of litigation
this Court, while endorsing the reasons and conclusions recorded by Calcutta
and Kerala High Courts issued direction for absorption of all members of the company
paid staff and the Government of India was bound to frame a scheme for that
purpose. However, the very premise on which this argument is based is
incorrect. Admittedly, appointment to the service comprising sanctioned posts
is regulated by the rules framed under proviso to Article 309 of the
Constitution of India. The mode of recruitment and methodology of selection are
prescribed under the rules. The absorption of the company paid staff employed
under Rule 308 of the 1959 Rules is not one of the prescribed modes of
recruitment. Therefore, it is extremely doubtful whether the Government of
India could, without amending the statutory rules, frame the 1978 Scheme for
absorption of the company paid staff in the regular cadres. However, as this
Court has not only indirectly approved the 1978 Scheme, but also directed the
Government of India to frame new scheme, we do not consider it necessary to
dilate further on the subject.
37.
As
mentioned above, while approving the reasons and conclusions recorded by the two
High Courts and dismissing the appeals, this Court not only permitted the
Government of India to frame a scheme modeled on the 1978 Scheme but also
stayed implementation of the orders impugned in the appeal and the one passed
by itself in the transferred writ petition. If the Court intended that all
members of the company paid staff working on the date of judgment i.e.
27.8.1999 should be absorbed in the regular cadres against Group `C' and `D'
posts, then a simple direction to that effect would have been sufficient and
there was no occasion to stay the implementation of the orders of the High
Courts for six months with liberty to the Government of India to frame a new
scheme within the same period. The absence of such a direction shows that the
Court was very much conscious of the fact that recruitment to the regular
cadres is governed by the rules framed under Article 309 of the Constitution
and it would be highly detrimental to public interest to issue direction for
wholesale absorption/regularization of the company paid staff and thereby
abrogate/stultify opportunity of competition to younger generation comprising
more meritorious persons who may be waiting for a chance to apply for direct
recruitment. Obviously, the Court did not want to sacrifice the merit by
showing undue sympathy with members of the company paid staff who joined
service with full knowledge about their status, terms and conditions of their
employment and the fact that they were to be paid from the company fund and not
Consolidated Fund of India.
In this context, we
may also mention that though the Official Liquidators appear to have issued
advertisements for appointing the company paid staff and made some sort of
selection, more qualified and meritorious persons must have shunned from applying
because they knew that the employment will be for a fixed term on fixed salary
and their engagement will come to an end with the conclusion of liquidation
proceedings. As a result of this, only mediocres must have responded to the
advertisements and jointed as company paid staff. In this scenario, a direction
for absorption of all the company paid staff has to be treated as violative of
the doctrine of equality enshrined in Articles 14 and 16 of the Constitution.
38.
Since
the 1999 Scheme was framed by the Government of India in furtherance of the
opportunity given by this Court and no deviation is shown to have been made
from the 1978 Scheme insofar as Group `C' posts are concerned, the same cannot
be dubbed as arbitrary, irrational and unreasonable, simply because all the
company paid staff who were in position as on 27.8.1999 may not get absorbed in
the regular cadres. Here, it is worth noticing that as per the details of 119
company paid staff furnished by the senior counsel appearing for Tapas Chakraborty
and others, only 54 had completed tenure of 10 years on 27.8.1999 i.e. the date
specified in the 1999 Scheme. Of them, 21 were Lower Division Clerks, 16 were
Upper Division Clerks (there is no provision for appointment to the post of
Upper Division Clerk by direct recruitment), 1 was Assistant, 1 was
Superintendent, 1 was Assistant Commander, 1 was Commander, 2 were Technical
Assistants and the rest were Record Arrangers, Peons and Security Guards. Of
the remaining 65 employees, 3 were appointed in the year 2000 and others had
worked for periods ranging from 13 months to 8 years 3= months as on 27.8.1999.
This means that not even 50% of the writ petitioners had completed 10 years
tenure which was considered by the Courts as benchmark for issuing direction
for regularization of the services of temporary/ad hoc/daily wagers employed in
Government departments. The position of the company paid staff of Delhi High
Court is different. The details furnished by Ms. Jyoti Mendiratta show that 27
of the company paid staff have been absorbed under the 1999 Scheme. Of the
remaining 26 company paid staff, all except 1 had worked for more than 10 years
as on 27.8.1999. 9 of the company paid staff had worked for 20 years or more.
However, they could
not be absorbed due to abolition of posts in furtherance of the policy decision
taken by the Government of India.
39.
The
additional documents produced by Shri Malhotra show that in the year 2001, the
Government of India had taken a policy decision to reduce the strength of civilian
staff in all the cadres. This was reflected in the speech made by the Finance
Minister, Government of India, while presenting the budget for 2001-02. He
stated that all requirements of recruitment will be scrutinized to ensure that
fresh recruitment is limited to 1% of total civilian staff strength and there
will be reduction in manpower by 2% per annum, achieving a reduction of 10% in
5 years. Thereafter, OM No.2/8/2001-PIC dated 16.5.2001 was issued by the
Government of India. Paragraphs 2.1 and 2.2 of that OM read as under :
"2.1 All
Ministries/Departments are accordingly requested to prepare Annual Direct
Recruitment Plans covering the requirements of all cadres, whether managed by
that Ministry/Department itself, or managed by the Department of Personnel and
Training, etc. The task of preparing the Annual Recruitment Plan will be
undertaken in each Ministry/Department by a Screening Committee headed by the
Secretary of that Ministry/Department with the Financial Advisor as a Member
and JS (Admn.) of the Department as Member Secretary. The Committee would also
have one senior representative each of the Department of Personnel and Training
and the Department of Expenditure. While the Annual Recruitment Plans for
vacancies in Groups `B', `C' and `D' could be cleared by this Committee itself,
in the case of Group `A' Services, the Annual Recruitment Plan would be cleared
by a Committee headed by Cabinet Secretary with secretary of the Department
concerned, Secretary (DoPT) and Secretary (Expenditure) as Members.
2.2 While preparing
the Annual Recruitment Plans, the concerned Screening Committees would ensure
that direct recruitment does not in any case exceed 1% of the total sanctioned
strength of the Department. Since about 3% of staff retire every years, this
would translate into only 1/3rd of the direct recruitment vacancies occurring
in each year being filled up. Accordingly, direct recruitment would be limited
to 1/3rd of the direct recruitment vacancies arising in the year subject to a
further ceiling that this does not exceed 1% of the total sanctioned strength
of the Department. While examining the vacancies to be filled up, the
functional needs of the organization would be critically examined so that there
is flexibility in filling up vacancies in various cadres depending upon their
relative functional need. To amplify, in case an organization needs certain
posts to be filled up for safety/security/operational considerations, a
corresponding reduction in direct recruitment in other cadres of the
organization may be done with a view to restricting the overall direct
recruitment to one-third of vacancies meant for direct recruitment subject to
the condition that the total vacancies proposed for filling up should be within
the 1% ceiling. The remaining vacancies meant for direct recruitment which are
not cleared by the Screening Committee will not be filled up by promotion or
otherwise and these posts will stand abolished."
40.
For
implementation of the aforementioned decision, the Screening Committee met
sometime in March, 2005 and decided to reduce the number of posts in the
regular cadres of the Department of Company Affairs. The background note
circulated to the members of the Screening Committee vide Office Memo
No.A.12011/3/2003-Ad.II dated 14.3.2005 made a clear mention of the orders
passed by the Calcutta and Delhi High Courts in favour of the company paid
staff, dismissal of the appeal by the Division Bench of Calcutta High Court,
pendency of similar appeals before the Division Bench of Delhi High Court and
the Government's decision to process the matter for filing SLP against the
orders of Calcutta High Court. The Screening Committee which met on 16.3.2005
considered and approved abolition of the direct recruitment quota posts for the
years 2001-2002, 2002-2003 and 2003-2004. The decision of the Screening
Committee was circulated to various offices of the Ministry of Company Affairs
vide letter No.A.12011/3/2003-Admn.II dated 2.9.2005.
This exercise was in
consonance with the policy decision taken by the Government of India. The
respondents have neither assailed the decision of the Government to abolish the
posts on the ground of malafides nor the learned counsel could show that the
exercise undertaken by the Screening Committee is vitiated by arbitrariness or
non-application of mind or the same is influenced by extraneous reasons.
Therefore, the view expressed by the Calcutta and Delhi High Courts that the
1999 Scheme is unworkable or impractical or has become redundant, cannot be
approved.
41.
The
creation and abolition of posts, formation and structuring/ restructuring of
cadres, prescribing the source and mode of recruitment and qualifications and
criteria of selection etc. are matters which fall within the exclusive domain
of the employer. Although the decision of the employer to create or abolish
posts or cadres or to prescribe the source or mode of recruitment and lay down
the qualification etc. is not immune from judicial review, the Court will
always be extremely cautious and circumspect in tinkering with the exercise of
discretion by the employer.
The Court cannot sit
in appeal over the judgment of the employer and ordain that a particular post
or number of posts be created or filled by a particular mode of recruitment.
The power of judicial review can be exercised in such matters only if it is
shown that the action of the employer is contrary to any constitutional or
statutory provisions or is patently arbitrary or vitiated by malafides.
42.
In
State of Haryana vs. Navneet Verma [2008 (2) SCC 65], a Division Bench of
two-Judges referred to M. Ramanatha Pillai vs. State of Kerala [1973 (2) SCC
650], Kedar Nath Bahi vs. State of Punjab [1974 (3) SCC 21], State of Haryana
vs. Des Raj Sangar [1976 (2) SCC 844], Dr. N.C. Singhal vs. Union of India [1980
(3) SCC 29) and Avas Vikas Sanghathan vs. Engineers Association [2006 (4) SCC
132) and culled out the following principles :
a. " the power to
create or abolish a post rests with the Government;
b. whether a particular
post is necessary is a matter depending upon the exigencies of the situation
and administrative necessity;
c. creation and
abolition of posts is a matter of government policy and every sovereign
government has this power in the interest and necessity of internal
administration;
d. creation, continuance
and abolition of posts are all decided by the Government in the interest of
administration and general public;
e. the court would be
the least competent in the face of scanty material to decide whether the
Government acted honestly in creating a post or refusing to create a post or
its decision suffers from mala fides, legal or factual;
f. as long as the
decision to abolish the post is taken in good faith in the absence of material,
interference by the court is not warranted."
43.
In
Secretary, State of Karnataka vs. Uma Devi (supra), the Constitution Bench
adverted its attention to financial implications of creation of extra posts and
held that the Courts should not pass orders which impose unwarranted burden on
the State and its instrumentalities by directing creation of particular number
of posts for absorption of employees appointed on ad hoc or temporary basis or
as daily wagers.
44.
In
Divisional Manager, Aravali Golf Club and another vs. Chander Hass and another
[(2008) 1 SCC 683] also, a two-Judges Bench considered the issue relating to
creation of post and held :- "15. The court cannot direct the creation of
posts. Creation and sanction of posts is a prerogative of the executive or
legislative authorities and the court cannot arrogate to itself this purely
executive or legislative function, and direct creation of posts in any
organisation. This Court has time and again pointed out that the creation of a
post is an executive or legislative function and it involves economic factors.
Hence the courts cannot take upon themselves the power of creation of a post.
Therefore, the directions given by the High Court and the first appellate court
to create the posts of tractor driver and regularise the services of the
respondents against the said posts cannot be sustained and are hereby set
aside."
45.
Although
in paras 20, 26, 27, 28 and 33 of the last mentioned judgment some sweeping
observations have been made suggesting that the orders passed by the High Courts
and this Court in some of the cases amount to an encroachment on the domain of
the executive and legislature, we do not propose to deal with the same and
decide whether those observations were at all called for in the backdrop of
factual matrix of that case and leave the same to be decided in an appropriate
case.
46.
In
view of the above stated legal position, we hold hat the directions given by
the High Courts for creation of supernumerary posts to facilitate absorption of
the company paid staff are legally unsustainable and are liable to be set
aside.
47.
The
next issue which needs to be address is whether the impugned orders can be
sustained on the ground that by having worked continuously for 10 years or more
as company paid staff as on 27.8.1999, some of the respondents acquired a right
to be absorbed in the regular cadre or regularized in service and they are
entitled to the benefit of the principle of equal pay for equal work and have
their pay fixed in the regular pay scales prescribed for the particular posts.
48.
The
questions whether in exercise of the power vested in it under Article 226 of
the Constitution of India, the High Court can issue a mandamus and compel the
State and its instrumentalities/agencies to regularize the services of
temporary/ad-hoc/daily wager/casual/contract employees and whether direction
can be issued to the public employer to prescribe or give similar pay scales to
employees appointed through different modes, with different condition of
service and different sources of payment have become subject matter of debate
and adjudication in several cases.
49.
The
judgments of 1980s and early 1990s - Dhirendra Chamoli vs. State of U.P. [1986
(1) SCC 637], Surinder Singh and Another vs. Engineer-in-Chief, CPWD and Others
[1986 (1) SCC 639], Daily Rated Casual Labour vs. Union of India [1988 (1) SCC
122], Dharwad District P.W.D. Literate Daily Wage Employees' Association vs.
State of Karnataka [1990 (2) SCC 396], Bhagwati Prasad vs. Delhi State Mineral
Development Corporation (supra), State of Haryana vs. Piara Singh (supra) are
representative of an era when this Court enthusiastically endeavored to expand
the meaning of equality clause enshrined in the Constitution and ordained that
employees appointed on temporary/ad hoc/daily wage basis should be treated at
par with regular employees in the matter of payment of salaries and allowances
and that their services be regularized. In several cases, the schemes framed by
the governments and public employer for regularization of temporary/ad-
hoc/daily wag/casual employees irrespective of the source and mode of their
appointment/ engagement were also approved. In some cases, the courts also
directed the State and its instrumentalities/agencies to frame schemes for
regularization of the services of such employees. In State of Haryana vs. Piara
Singh (supra), this Court while reiterating that appointment to the public
posts should ordinarily be made by regular recruitment through the prescribed
agency and that even where ad-hoc or temporary employment is necessitated on
account of the exigencies of administration, the candidate should be drawn from
the employment exchange and that if no candidate is available or sponsored with
the employment exchange, some method consistent with the requirements of
Article 14 of the Constitution should be followed by publishing notice in
appropriate manner for calling for applications and all those who apply in
response thereto should be considered fairly, proceeded to observe that if an
ad-hoc or temporary employee is continued for a fairly long spell, the
authorities are duty bound to consider his case for regularization subject to
his fulfilling the conditions of eligibility and the requirement of
satisfactory service. The propositions laid down in Piara Singh's case were followed
by almost all High Courts for directing the concerned State Governments and
public authorities to regularize the services of ad- hoc/temporary/daily wage
employees only on the ground that they have continued for a particular length
of time. In some cases, the schemes framed for regularization of the services
of the backdoor entrants were also approved.
50.
The
above noted judgments and orders encouraged the political set up and
bureaucracy to violate the soul of Article 14 and 16 as also the provisions
contained in the Employment Exchanges (Compulsory Notification of Vacancies)
Act, 1959 with impunity and the spoil system which prevailed in the United
Stats of America in sixteenth and seventeenth century got firm foothold in this
country. Thousands of persons were employed/engaged throughout the length and
breadth of the country by backdoor methods. Those who could pull strings in the
power corridors at the higher and lower levels managed to get the cake of
public employment by trampling over the rights of other eligible and more
meritorious persons registered with the employment exchanges. A huge illegal
employment market developed in different parts of the country and rampant
corruption afflicted the whole system. This was recognized by the Court in Delhi
Development Horticulture Employees Union vs. Delhi Administration, Delhi and
others [1992 (4) SCC 99] in the following words:
"23. Apart from
the fact that the petitioners cannot be directed to be regularised for the
reasons given above, we may take note of the pernicious consequences to which
the direction for regularisation of workmen on the only ground that they have
put in work for 240 or more days, has been leading. Although there is an
Employment Exchange Act which requires recruitment on the basis of registration
in the Employment Exchange, it has become a common practice to ignore the
Employment Exchange and the persons registered in the Employment Exchanges, and
to employ and get employed directly those who are either not registered with
the Employment Exchange or who though registered are lower in the long waiting
list in the Employment Register. The courts can take judicial notice of the
fact that such employment is sought and given directly for various illegal
considerations including money. The employment is given first for temporary
periods with technical breaks to circumvent the relevant rules, and is
continued for 240 or more days with a view to give the benefit of
regularization knowing the judicial trend that those who have completed 240 or
more days are directed to be automatically regularized. A good deal of illegal
employment market has developed resulting in a new source of corruption and
frustration of those who are waiting at the Employment Exchanges for years. Not
all those who gain such backdoor entry in the employment are in need of the
particular jobs. Though already employed elsewhere, they join the jobs for
better and secured prospects. That is why most of the cases which come to the
courts are of employment in government departments, public undertakings or
agencies. Ultimately it is the people who bear the heavy burden of the surplus
labour. The other equally injurious effect of indiscriminate regularization has
been that many of the agencies have stopped undertaking casual or temporary
works though they are urgent and essential for fear that if those who are
employed on such works are required to be continued for 240 or more days they
have to be absorbed as regular employees although the works are time-bound and
there is no need of the workmen beyond the completion of the works undertaken.
The public interests are thus jeopardised on both counts."
51.
The
menace of illegal and backdoor appointments compelled the Courts to have
rethinking and in large number of subsequent judgments this Court declined to
entertain the claims of ad-hoc and temporary employees for regularization of
services and even reversed the orders passed by the High Courts and
Administrative Tribunals - Director, Institute of Management Development, U.P.
vs. Pushpa Srivastava [1992 (4) SCC 33], Dr. M.A. Haque and Others vs. Union of
India and Others [1993 (2) SCC 213], J & K Public Service Commission vs.
Dr. Narinder Mohan [1994 (2) SCC 630], Dr. Arundhati Ajit Pargaonkar vs. State
of Maharashtra [1994 Suppl. (3) SCC 380], Union of India vs. Kishan Gopal Vyas
[1996 (7) SCC 134], Union of India vs. Moti Lal [1996 (7) SCC 481], Hindustan
Shipyard Ltd. vs. Dr. P. Sambasiva Rao [1996 (7) SCC 499], State of H.P. vs.
Suresh Kumar Verma [1996 (7) SCC 562], Dr. Surinder Singh Jamwal vs. State of
J&K [1996 (9) SCC 619], E. Ramakrishnan vs. State of Kerala [1996 (10) SCC
565], Union of India and Others vs. Bishambar Dutt [1996 (11) SCC 341], Union
of India vs. Mahender Singh [1997 (1) SCC 247], P. Ravindran and Others vs.
Union Territory of Pondicherry and Others [1997 (1) SCC 350], Ashwani Kumar and
Others vs. State of Bihar and Others [1997 (2) SCC 1], Santosh Kumar Verma and
Others vs. State of Bihar and Others [1997 (2) SCC 713], State of U.P. and
Others vs. Ajay [1997 (4) SCC 88], Patna University vs. Dr. Amita Tiwari [1997
(7) SCC 198] and Madhyamik Shiksha Parishad vs. Anil Kumar Mishra [2005 (5) SCC
122].
52.
The
shift in the Court's approach became more prominent in A. Umarani vs.
Registrar, Cooperative Societies [2004 (7) SCC 112], decided by a three-Judges
Bench, wherein it was held that the State cannot invoke Article 162 of the
Constitution for regularization of the appointments made in violation of the
mandatory statutory provisions. In Secretary, State of Karnataka vs. Uma Devi
(supra), the Constitution Bench again considered the question whether the State
can frame scheme for regularization of the services of ad-hoc/temporary/daily
wager appointed in violation of the doctrine of equality or the one appointed
with a clear stipulation that such appointment will not confer any right on the
appointee to seek regularization or absorption in the regular cadre and whether
the Court can issue mandamus for regularization or absorption of such appointee
and answered the same in negative. The Court adverted to the theme of
constitutionalism in a system established in rule of law, expanded meaning
given to the doctrine of equality in general and equality in the matter of
employment in particular, multi-facet problems including the one relating to
unwarranted fiscal burden on the public exchequer created on account of the
directions given by the High Courts and this Court for regularization of the
services of persons appointed on purely temporary or ad hoc basis or engaged on
daily wages or as casual labourers, referred to about three dozen judgments
including R.N. Nanjundappa vs. T. Thimmiah [1972 (1) SCC 409], Daily Rate
Casual Labour vs. Union of India [1988 (1) SCC 122], Bhagwati Prasad vs. Delhi
State Mineral Development Corporation [1990 (1) SCC 361], Dharwad District
P.W.D. Literate Daily Wage Employees Association and others vs. State of
Karnataka and others [1990 (2) SCC 396], State of Haryana vs. Piara Singh [1992
(4) SCC 118] and State of Punjab vs. Surinder Kumar [1992 (1) SCC 489] and
held:
"47. When a
person enters a temporary employment or gets engagement as a contractual or
casual worker and the engagement is not based on a proper selection as
recognised by the relevant rules or procedure, he is aware of the consequences
of the appointment being temporary, casual or contractual in nature. Such a
person cannot invoke the theory of legitimate expectation for being confirmed
in the post when an appointment to the post could be made only by following a
proper procedure for selection and in cases concerned, in consultation with the
Public Service Commission.
Therefore, the theory
of legitimate expectation cannot be successfully advanced by temporary,
contractual or casual employees. It cannot also be held that the State has held
out any promise while engaging these persons either to continue them where they
are or to make them permanent. The State cannot constitutionally make such a
promise. It is also obvious that the theory cannot be invoked to seek a
positive relief of being made permanent in the post.
48. It was then
contended that the rights of the employees thus appointed, under Articles 14
and 16 of the Constitution, are violated. It is stated that the State has treated
the employees unfairly by employing them on less than minimum wages and
extracting work from them for a pretty long period in comparison with those
directly recruited who are getting more wages or salaries for doing similar
work. The employees before us were engaged on daily wages in the department
concerned on a wage that was made known to them. There is no case that the wage
agreed upon was not being paid. Those who are working on daily wages formed a
class by themselves, they cannot claim that they are discriminated as against
those who have been regularly recruited on the basis of the relevant rules. No
right can be founded on an employment on daily wages to claim that such
employee should be treated on a par with a regularly recruited candidate, and
made permanent in employment, even assuming that the principle could be invoked
for claiming equal wages for equal work. There is no fundamental right in those
who have been employed on daily wages or temporarily or on contractual basis,
to claim that they have a right to be absorbed in service. As has been held by
this Court, they cannot be said to be holders of a post, since, a regular
appointment could be made only by making appointments consistent with the
requirements of Articles 14 and 16 of the Constitution. The right to be treated
equally with the other employees employed on daily wages, cannot be extended to
a claim for equal treatment with those who were regularly employed.
That would be
treating unequals as equals. It cannot also be relied on to claim a right to be
absorbed in service even though they have never been selected in terms of the
relevant recruitment rules. The arguments based on Articles 14 and 16 of the
Constitution are therefore overruled.
49. It is contended
that the State action in not regularising the employees was not fair within the
framework of the rule of law. The rule of law compels the State to make
appointments as envisaged by the Constitution and in the manner we have
indicated earlier. In most of these cases, no doubt, the employees had worked
for some length of time but this has also been brought about by the pendency of
proceedings in tribunals and courts initiated at the instance of the employees.
Moreover, accepting an argument of this nature would mean that the State would
be permitted to perpetuate an illegality in the matter of public employment and
that would be a negation of the constitutional scheme adopted by us, the people
of India. It is therefore not possible to accept the argument that there must
be a direction to make permanent all the persons employed on daily wages. When
the court is approached for relief by way of a writ, the court has necessarily
to ask itself whether the person before it had any legal right to be enforced.
Considered in the light of the very clear constitutional scheme, it cannot be
said that the employees have been able to establish a legal right to be made
permanent even though they have never been appointed in terms of the relevant
rules or in adherence of Articles 14 and 16 of the Constitution."
53.
In
paragraph 25, the Constitution Bench specifically referred to the conclusions
recorded in paragraphs 45 to 50 of the judgment in State of Haryana vs. Piara
Singh (supra) and observed:
"26. With
respect, why should the State be allowed to depart from the normal rule and
indulge in temporary employment in permanent posts? This Court, in our view, is
bound to insist on the State making regular and proper recruitments and is
bound not to encourage or shut its eyes to the persistent transgression of the
rules of regular recruitment. The direction to make permanent--the distinction
between regularisation and making permanent, was not emphasized here--can only
encourage the State, the model employer, to flout its own rules and would confer
undue benefits on a few at the cost of many waiting to compete. With respect,
the direction made in para 50 (of SCC) of Piara Singh is to some extent
inconsistent with the conclusion in para 45 (of SCC) therein. With great
respect, it appears to us that the last of the directions clearly runs counter
to the constitutional scheme of employment recognised in the earlier part of
the decision. Really, it cannot be said that this decision has laid down the
law that all ad hoc, temporary or casual employees engaged without following
the regular recruitment procedure should be made permanent."
54.
In
paragraph 54, the Constitution Bench clarified that the earlier decisions which
run counter to the principles settled by it will stand denuded of their status
as precedents.
55.
In
Jawaharlal Nehru Technological University vs. T. Sumalatha (Smt.) and others
[2003 (10) SCC 405], a two-Judges Bench considered an issue somewhat similar to
the one being considered in these appeals. The facts of that case show that the
respondents, who were graduates, were appointed as investigators on
consolidated pay between 1985 and 1991 in the Nodal Centre set up in the
University under the scheme known as the National Technical Manpower
Information System sponsored by the then Ministry of Education and Culture,
Government of India. The Nodal Centre was financed entirely by the Ministry of
Education and Culture, Government of India. Initially, the term of the Nodal
Centre was 1 year and 9 months, but it was continued thereafter. The respondents
were appointed for 89 days but their services were extended from time to time
on similar terms. Their consolidated pay was also revised twice. They filed
writ petition claiming regularization of service in the University. Some
directions were issued by the High Court for consideration of the cases of the
respondents for absorption. The University declined their prayer. In the second
round of litigation, the High Court directed the University to absorb the
respondents by applying GO No.212 dated 22.4.1994 issued by the State
Government for regularization of the services of temporary/ad hoc/daily wage
employees of the Government departments. While reversing the order of the High
Court, this Court referred to GO No.212 and held :
"7. Can it be
said that by virtue of this provision, the State Government assumes the
responsibility of absorbing the staff employed in the organizations or
establishments with which it has no administrative or financial nexus, merely
because an instrumentality of the State is involved in managing it, that too,
in a limited sense? The answer could only be in the negative. When the State
Government or its instrumentalities have not created the posts on their own and
do not bear any part of the financial burden, the question of getting the
clearance from the Finance and Planning Department of the Government for the
purpose of regularization or absorption does not arise. Viewed from any angle,
GO No. 212 would be wholly out of place for those working in the nodal centre
which is created and nurtured by the Central Government. It is not within the
domain of the State Government or even the University to regulate the staff
pattern or the monetary benefits of the staff working therein, without the
approval of the Central Government. Therefore, no directions should have been
issued to the State Government or to the University to regularize the services
of Respondents 1 to 5, if necessary, by creating additional posts."
56.
After
rejecting the plea of the respondents for regularization of service, this Court
adverted to the issue of increase in their salary and held :
"9. Though the
plea of regularization in respect of any of the fifth respondents cannot be
countenanced, the respondent employees should have a fair deal consistent with
the guarantee enshrined in Articles 21 and 14 of the Constitution. They should
not be made to work on a meager salary for years together. It would be unfair
and unreasonable to extract work from the employees who have been associated
with the nodal centre almost from its inception by paying them remuneration
which, by any objective standards, is grossly low. The Central Government
itself has rightly realized the need to revise the consolidated salary and
accordingly enhanced the grant on that account on two occasions. That revision
was made more than six years back. It is high time that another revision is
made. It is therefore imperative that the Ministry concerned of the Union of
India should take expeditious steps to increase the salary of the investigators
viz. Respondents 1 to 4 working in the nodal centre in Hyderabad. In the
absence of details regarding the nature of work done by the said respondents
and the equivalence of the job done by them to the other posts prevailing in
the University or the Central Government institutions, we are not in a position
to give any direction based on the principle of "equal pay for equal
work". However, we consider it just and expedient to direct Respondent 7
or 8, as the case may be, to take an expeditious decision to increase the
consolidated salary that is being paid to Respondents 1 to 4 to a reasonable
level commensurate with the work done by them and keeping in view the minimum
salary that is being paid to the personnel doing a more or less similar job.
As far as the fifth
respondent is concerned, though we refrain from giving similar directions in
view of the fact that the post is not specifically sanctioned under the Scheme,
we would like to observe that the Central Government may consider increasing
the quantum of office expenditure suitably so that the University will be able
to disburse higher salary to the fifth respondent."
[Emphasis supplied]
57.
By
virtue of Article 141 of the Constitution, the judgment of the Constitution
Bench in Secretary, State of Karnataka vs. Uma Devi (supra) is binding on all
the courts including this Court till the same is overruled by a larger Bench.
The ratio of the Constitution Bench judgment has been followed by different
two-Judges Benches for declining to entertain the claim of regularization of
service made by ad hoc/temporary/ daily wage/casual employees or for reversing
the orders of the High Court granting relief to such employees - Indian Drugs
and Pharamaceuticals Ltd. vs. Workmen [2007 (1) SCC 408], Gangadhar Pillai vs.
Siemens Ltd. [2007 (1) SCC 533], Kendriya Vidyalaya Sangathan vs. L.V.
Subramanyeswara [2007 (5) SCC 326], Hindustan Aeronautics Ltd. vs. Dan Bahadur
Singh [2007 (6) SCC 207]. However, in U.P. SEB vs. Pooran Chand Pandey [2007
(11) SCC 92] on which reliance has been placed by Shri Gupta, a two-Judges
Bench has attempted to dilute the Constitution Bench judgment by suggesting
that the said decision cannot be applied to a case where regularization has
been sought for in pursuance of Article 14 of the Constitution and that the
same is in conflict with the judgment of the seven-Judges Bench in Maneka
Gandhi vs. Union of India [1978 (1) SCC 248].
58.
The
facts of U.P. SEB vs. Pooran Chand Pandey (supra) were that the respondents (34
in number) were employed as daily wage employees by the Cooperative Electricity
Supply Society in 1985. The Society was taken over by Uttar Pradesh Electricity
Supply Board in 1997 along with daily wage employees. Earlier to this, the
Electricity Board had taken a policy decision on 28.11.1996 to regularize the
services of its employees working on daily wages from before 4.5.1990, subject
to their passing the examination. The respondents moved the High Court claiming
benefit of the policy decision dated 28.11.1996. The learned Single Judge of
the High Court held that once the employees of the society became employees of
the Electricity Board, there was no valid ground to discriminate them in the
matter of regularization of service. The Division Bench approved the order of
the Single Bench. A two-Judges Bench of this Court dismissed the appeal of the
Electricity Board. In para 11 of its judgment, the two-Judges Bench
distinguished Secretary, State of Karnataka vs. Uma Devi (supra) by observing
that the ratio of that judgment cannot be applied to a case where
regularization has been sought for in pursuance of Article 14 of the
Constitution. The two-Judges Bench then referred to State of Orissa vs.
Sudhanshu Sekhar Misra [AIR 1968 SC 647], State of Gujarat vs. Ambica Quarry
Works [1987 (1) SCC 213], Bhavnagar University vs. Palitana Sugar Mill Pvt.
Ltd. [2003 (2) SCC 111], Bharat Petroleum Ltd. vs. N.R. Viramani [2004 (8) SCC
579] and observed:
"We are
constrained to refer to the above decisions and principles contained therein
because we find that often Umadevi (3) case is being applied by courts
mechanically as if it were a Euclid's formula without seeing the facts of a
particular case. As observed by this Court in Bhavnagar University and Bharat
Petroleum Corpn. Ltd. a little difference in facts or even one additional fact
may make a lot of difference in the precedential value of a decision. Hence,
in our opinion, Umadevi (3) case cannot be applied mechanically without seeing
the facts of a particular case, as a little difference in facts can make Umadevi
(3) case inapplicable to the facts of that case."
"We may further
point out that a seven-Judge Bench decision of this Court in Maneka Gandhi vs.
Union of India has held that reasonableness and non-arbitrariness is part of
Article 14 of the Constitution. It follows that the Government must act in a
reasonable and non-arbitrary manner otherwise Article 14 of the Constitution
would be violated. Maneka Gandhi case is a decision of a seven-Judge Bench,
whereas Umadevi (3) case is a decision of a five-Judge Bench of this Court. It
is well settled that a smaller Bench decision cannot override a larger Bench
decision of the Court.
No doubt, Maneka
Gandhi case does not specifically deal with the question of regularisation of
government employees, but the principle of reasonableness in executive action
and the law which it has laid down, in our opinion, is of general
application."
[ Emphasis supplied]
59.
We
have carefully analyzed the judgment of the two-Judges Bench and are of the
considered view that the above reproduced observations were not called for. The
only issue which fell for consideration by two-Judges Bench was whether the
daily wage employees of the society, the establishment of which was taken over
by the Electricity Board along with the employees, were entitled to be
regularized in terms of the policy decision taken by the Board and whether the
High Court committed an error by invoking Article 14 of the Constitution for
granting relief to the writ petitioners. The question whether the Electricity
Board could frame such a policy was neither raised nor considered by the High
Court and this Court. The High Court simply adverted to the facts of the case
and held that once the daily wage employees of the society became employees of
the Electricity Board, they could not be discriminated in the matter of
implementation of the policy of regularization. Therefore, the two-Judges Bench
had no occasion to make any adverse comment on the binding character of the
Constitution Bench judgment in Secretary, State of Karnataka vs. Uma Devi
(supra).
60.
There
have been several instances of different Benches of the High Courts not
following the judgments/orders of coordinate and even larger Benches. In some
cases, the High Courts have gone to the extent of ignoring the law laid down by
this Court without any tangible reason. Likewise, there have been instances in
which smaller Benches of this Court have either ignored or bypassed the ratio
of the judgments of the larger Benches including the Constitution Benches.
61.
These
cases are illustrative of non-adherence to the rule of judicial discipline
which is sine qua non for sustaining the system. In Mahadeolal Kanodia vs.
Administrator General of W.B. [1960 (3) SCR 578], this Court observed:
"If one thing is
more necessary in law than any other thing, it is the quality of certainty.
That quality would totally disappear if Judges of coordinate jurisdiction in a
High Court start overruling one another's decisions. If one Division Bench of a
High Court is unable to distinguish a previous decision of another Division
Bench, and holding the view that the earlier decision is wrong, itself gives
effect to that view the result would be utter confusion. The position would be
equally bad where a Judge sitting singly in the High Court is of opinion that
the previous decision of another Single Judge on a question of law is wrong and
gives effect to that view instead of referring the matter to a larger Bench. In
such a case lawyers would not know how to advise their clients and all courts
subordinate to the High Court would find themselves in an embarrassing position
of having to choose between dissentient judgments of their own High
Court."
[Emphasis added] 61.
In Lala Shri Bhagwan vs. Ram Chandra [AIR 1965 SC 1767], Gajendragadkar,
C.J.observed :
"It is hardly
necessary to emphasize that considerations of judicial propriety and decorum
require that if a learned Single Judge hearing a matter is inclined to take the
view that the earlier decisions of the High Court, whether of a Division Bench
or of a Single Judge, need to be reconsidered, he should not embark upon that
enquiry sitting as a Single Judge, but should refer the matter to a Division
Bench or, in a proper case, place the relevant papers before the Chief Justice
to enable him to constitute a larger bench to examine the question. That is the
proper and traditional way to deal with such mattes and it is founded on
healthy principles of judicial decorum and propriety. It is to be regretted
that the learned Single Judge departed from this traditional way in the present
case and chose to examine the question himself."
62.
In
Union of India vs. Raghubir Singh [1989 (2) SCC 754], R.S. Pathak, C.J. while
recognizing need for constant development of law and jurisprudence emphasized
the necessity of abiding by the earlier precedents in following words :
"The doctrine of
binding precedent has the merit of promoting a certainty and consistency in
judicial decisions, and enables an organic development of law, besides
providing assurance to the individual as to the consequence of transaction
forming part of his daily affairs. And, therefore, the need for a clear and
consistent enunciation of legal principle in the decisions of a court."
63.
In
Sundarjas Kanyalal Bhatija and others vs. Collector, Thane [1989 (3) SCC 396],
a two- Judges Bench observed as under :
"In our system
of judicial review which is a part of our constitutional scheme, we hold it to
be the duty of judges of superior courts and tribunals to make the law more
predictable. The question of law directly arising in the case should not be
dealt with apologetic approaches. The law must be made more effective as a
guide to behaviour.
It must be determined
with reasons which carry convictions within the courts, profession and public.
Otherwise, the lawyers would be in a predicament and would not know how to
advise their clients. Sub-ordinate courts would find themselves in an embarrassing
position to choose between the conflicting opinion. The general public would be
in dilemma to obey or not to obey such law and it ultimately falls into
disrepute."
64.
In
Dr. Vijay Laxmi Sadho vs. Jagdish [2001 (2) SCC 247], this Court considered
whether the learned Single Judge of Madhya Pradesh High Court could ignore the
judgment of a coordinate Bench on the same issue and held :
"33. As the
learned Single Judge was not in agreement with the view expressed in Devilal
case it would have been proper, to maintain judicial discipline, to refer the
matter to a larger Bench rather than to take a different view. We note it with
regret and distress that the said course was not followed. It is well-settled
that if a Bench of coordinate jurisdiction disagrees with another Bench of
coordinate jurisdiction whether on the basis of "different arguments"
or otherwise, on a question of law, it is appropriate that the matter be
referred to a larger Bench for resolution of the issue rather than to leave two
conflicting judgments to operate, creating confusion. It is not proper to
sacrifice certainty of law. Judicial decorum, no less than legal propriety
forms the basis of judicial procedure and it must be respected at all
costs."
65.
In
Pradip Chandra Parija and others vs. Pramod Chandra Patnaik and others [2002
(1) SCC 1], the Constitution Bench noted that the two learned Judges denuded
the correctness of an earlier Constitution Bench judgment in Bharat Petroleum
Corpn. Ltd. vs. Mumbai Shramik Sangha [2001 (4) SCC 448] and reiterated the
same despite the fact that the second Constitution Bench refused to reconsider
the earlier verdict and observed :
"3. We may point
out, at the outset, that in Bharat Petroleum Corpn. Ltd. v. Mumbai Shramik
Sangha(2001 (4) SCC 448) a Bench of five Judges considered a somewhat similar
question. Two learned Judges in that case doubted the correctness of the scope
attributed to a certain provision in an earlier Constitution Bench judgment
and, accordingly, referred the matter before them directly to a Constitution
Bench. The Constitution Bench that then heard the matter took the view that the
decision of a Constitution Bench binds a Bench of two learned Judges and that
judicial discipline obliges them to follow it, regardless of their doubts about
its correctness. At the most, the Bench of two learned Judges could have
ordered that the matter be heard by a Bench of three learned Judges.
5. The learned
Attorney-General submitted that a Constitution Bench judgment of this Court was
binding on smaller Benches and a judgment of three learned Judges was binding
on Benches of two learned Judges -- a proposition that learned counsel for the
appellants did not dispute. The learned Attorney-General drew our attention to
the judgment of a Constitution Bench in Sub-Committee of Judicial
Accountability v. Union of India (1992 (4) SCC 97) where it has been said that
"no coordinate Bench of this Court can even comment upon, let alone sit in
judgment over, the discretion exercised or judgment rendered in a cause or
matter before another coordinate Bench" (SCC p. 98, para 5). The learned
Attorney-General submitted that the appropriate course for the Bench of two
learned Judges to have adopted, if it felt so strongly that the judgment in
Nityananda Kar (1991 Supp. (2) SCC 506) was incorrect, was to make a reference
to a Bench of three learned Judges. That Bench of three learned Judges, if it
also took the same view of Nityananda Kar, could have referred the case to a
Bench of five learned Judges.
6. In the present case
the Bench of two learned Judges has, in terms, doubted the correctness of a
decision of a Bench of three learned Judges. They have, therefore, referred the
matter directly to a Bench of five Judges. In our view, judicial discipline and
propriety demands that a Bench of two learned Judges should follow a decision
of a Bench of three learned Judges. But if a Bench of two learned Judges
concludes that an earlier judgment of three learned Judges is so very incorrect
that in no circumstances can it be followed, the proper course for it to adopt
is to refer the matter before it to a Bench of three learned Judges setting
out, as has been done here, the reasons why it could not agree with the earlier
judgment. If, then, the Bench of three learned Judges also comes to the
conclusion that the earlier judgment of a Bench of three learned Judges is
incorrect, reference to a Bench of five learned Judges is justified.
[Emphasis supplied]
66.
In
State of Bihar vs. Kalika Kuer and others [2003 (5) SCC 448], the Court
elaborately considered the principle of per incuriam and held that the earlier
judgment by a larger Bench cannot be ignored by invoking the principle of per
incuriam and the only course open to the coordinate or smaller Bench is to make
a request for reference to the larger Bench. In State of Punjab vs. Devans
Modern Breweries Ltd. [2004 (11) SCC 26], the Court reiterated that if a
coordinate Bench does not agree with the principles of law enunciated by
another Bench, the matter has to be referred to a larger Bench. In Central
Board of Dwaoodi Bohra Community vs. State of Maharashtra [2005 (2) SCC 673],
the Constitution Bench interpreted Article 141, referred to various earlier
judgments including Bharat Petroleum Corpn. Ltd. vs. Mumbai Shramik Sangha (supra),
Pradip Chandra Parija and others vs. Pramod Chandra Patnaik and others (supra)
and held that "the law laid down in a decision delivered by a Bench of
larger strength is binding on any subsequent Bench of lesser or co-equal
strength and it would be inappropriate if a Division Bench of two Judges starts
overruling the decisions of Division Benches of three Judges. The Court further
held that such a practice would be detrimental not only to the rule of
discipline and the doctrine of binding precedents but it will also lead to
inconsistency in decisions on the point of law; consistency and certainty in
the development of law and its contemporary status - both would be immediate
casualty"
67.
In
State of U.P. and others vs. Jeet S. Bisht and another [2007 (6) SCC 586], when
one of the Hon'ble Judges (Katju, J.) constituting the Bench criticized the
orders passed by various Benches in the same case, the other Hon'ble Judge
(Sinha, J.) expressed himself in the following words :
"100. For the
views been taken herein, I regret to express my inability to agree with Brother
Katju, J. in regard to the criticisms of various orders passed in this case
itself by other Benches. I am of the opinion that it is wholly inappropriate to
do so. One Bench of this Court, it is trite, does not sit in appeal over the
other Bench particularly when it is a coordinate Bench. It is equally
inappropriate for us to express total disagreement in the same matter as also
in similar matters with the directions and observations made by the larger
Bench. Doctrine of judicial restraint, in my opinion, applies even in this
realm. We should not forget other doctrines which are equally developed viz.
Judicial Discipline and respect for the Brother Judges."
68.
In
U.P. Gram Panchayat Adhikari Sangh vs. Daya Ram Saroj [2007 (2) SCC 138], the
Court noted that by ignoring the earlier decision of a coordinate Bench, a
Division Bench of the High Court directed that part-time tube-well operators
should be treated as permanent employees with same service conditions as far as
possible and observed :
"26. Judicial
discipline is self-discipline. It is an inbuilt mechanism in the system itself.
Judicial discipline demands that when the decision of a coordinate Bench of the
same High Court is brought to the notice of the Bench, it is to be respected
and is binding, subject of course, to the right to take a different view or to
doubt the correctness of the decision and the permissible course then open is
to refer the question or the case to a larger Bench. This is the minimum
discipline and decorum to be maintained by judicial fraternity."
69.
It
is interesting to note that in Coir Board, Ernakulam vs. Indira Devi P.S. [1998
(3) SCC 259], a two-Judges Bench doubted the correctness of the seven-Judges
Bench judgment in Bangalore Water Supply & Sewerage Board vs. A. Rajappa
[1978 (2) SCC 213] and directed the matter to be placed before Hon'ble the
Chief Justice of India for constituting a larger Bench.
However, a
three-Judges Bench headed by Dr. A.S. Anand, C.J., refused to entertain the
reference and observed that the two-Judges Bench is bound by the judgment of
the larger Bench - Coir Board, Ernakulam, Kerala State vs. Indira Devai P.S.
[2000 (1) SCC 224].
70.
We
are distressed to note that despite several pronouncements on the subject,
there is substantial increase in the number of cases involving violation of the
basics of judicial discipline.
The learned Single
Judges and Benches of the High Courts refuse to follow and accept the verdict
and law laid down by coordinate and even larger Benches by citing minor
difference in the facts as the ground for doing so. Therefore, it has become
necessary to reiterate that disrespect to constitutional ethos and breach of
discipline have grave impact on the credibility of judicial institution and
encourages chance litigation. It must be remembered that predictability and
certainty is an important hallmark of judicial jurisprudence developed in this
country in last six decades and increase in the frequency of conflicting
judgments of the superior judiciary will do incalculable harm to the system
inasmuch as the courts at the grass root will not be able to decide as to which
of the judgment lay down the correct law and which one should be followed. We
may add that in our constitutional set up every citizen is under a duty to
abide by the Constitution and respect its ideals and institutions. Those who
have been entrusted with the task of administering the system and operating
various constituents of the State and who take oath to act in accordance with
the Constitution and uphold the same, have to set an example by exhibiting
total commitment to the Constitutional ideals. This principle is required to be
observed with greater rigour by the members of judicial fraternity who have
been bestowed with the power to adjudicate upon important constitutional and
legal issues and protect and preserve rights of the individuals and society as
a whole. Discipline is sine qua non for effective and efficient functioning of
the judicial system. If the Courts command others to act in accordance with the
provisions of the Constitution and rule of law, it is not possible to
countenance violation of the constitutional principle by those who are required
to lay down the law.
71.
In
the light of what has been stated above, we deem it proper to clarify that the
comments and observations made by the two-Judges Bench in UP State Electricity
Board vs. Pooran Chandra Pandey (supra) should be read as obiter and the same
should neither be treated as binding by the High Courts, Tribunals and other
judicial foras nor they should be relied upon or made basis for bypassing the
principles laid down by the Constitution Bench. Equal Pay for Equal Work
72.
The
respondents' claim for fixation of pay in the regular scale and grant of other
monetary benefits at par with those appointed against the sanctioned posts has
been accepted by the High Courts on the premise that their duties and functions
are similar to those performed by regular employees. In the opinion of the High
Courts, similarity in the nature of work of the company paid staff on the one
hand and regular employees on the other hand, is by itself sufficient for
invoking the principle of equal pay for equal work, In our view, the approach adopted
by the High Courts is clearly erroneous and directions given for bringing about
parity between the company paid staff and regular employees in the matter of
pay, allowances etc. are liable to be upset.
73.
The
principle of equal pay for equal work for men and women embodied in Article
39(d) was first considered in Kishori Mohanlal Bakshi vs. Union of India [AIR
1962 SC 1139] and it was held that the said principle is not capable of being
enforced in a Court of law. After 36 years, the issue that the principle of
equal pay for equal work is not an abstract doctrine and can be enforced by
reading it into the doctrine of equality enshrined in Articles 14 and 16 of the
Constitution of India. Dhirendra Chamoli vs. State of U.P. (supra), Surinder
Singh and Another vs. Engineer-in-Chief, CPWD and Others (supra), Daily Rated
Casual Labour vs. Union of India (supra), Dharwad District P.W.D. Literate
Daily Wage Employees' Association vs. State of Karnataka (supra) and Jaipal vs.
State of Haryana [1988 (3) SCC 354] and it was held that even a daily wage
employee who is performing duties similar to regular employees is entitled to
the same pay. However, in Federation of All India Customs and Central Excise
Stenographers (Recognized) Union vs. Union of India [1988 (3) SCC 91], Mewa Ram
Kanojia vs. A.I.I.M.S. [1989 (2) SCC 235], V. Markandeya vs. State of A.P.
[1989 (3) SCC 191], Harbans Lal and others vs. State of Himachal Pradesh and
others [1989 (4) SCC 459], State of U.P. and others vs. J.P. Chaurasia and
others [1989 (1) SCC 121], Griha Kalyan Workers' Union vs. Union of India [1991
(1) SCC 619], Ghaziabad Development Authority vs. Vikram Chaudhary [1995 (5)
SCC 210], State of Haryana and others vs. Jasmer Singh and others [1996 (11)
SCC 77], State of Haryana vs. Surinder Kumar [1997 (3) SCC 633], Union of India
vs. K.V. Baby [1998 (9) SCC 252], State of Orissa vs. Balram Sahu [2003 (1) SCC
250], Utkal University vs. Jyotirmayee Nayak [2003 (4) SCC 760], State of
Haryana and another vs. Tilak Raj and others [2003 (6) SCC 123], Union of India
vs. Tarit Ranjan Das [2003 (11) SCC 658], Apangshu Mohan Lodh vs. State of
Tripura [2004 (1) SCC 119], State of Haryana vs. Charanjit Singh [2006 (9) SCC
321], Hindustan Aeronautics Ltd. vs. Dan Bahadur Singh (supra), Kendriya Vidyalaya
Sangathan vs. L.V. Subramanyeswara (supra) and Canteen Mazdoor Sabha vs.
Metallurgical & Engineering Consultants (India) Ltd. [2007 (7) SCC 710],
the Court consciously and repeatedly designation or quantum of work are not
determinative of equality in the matter of pay scales and that before
entertaining and accepting the claim based on the principle of equal pay for
equal work, the Court must consider the factors like the source and mode of
recruitment/appointment, the qualifications, the nature of work, the value
judgment, responsibilities, reliability, experience, confidentiality,
functional need etc. In State of Haryana and others vs. Jasmer Singh and others
(supra), the two-Judges Bench laid down the following principle :
"8. It is,
therefore, clear that the quality of work performed by different sets of
persons holding different jobs will have to be evaluated. There may be
differences in educational or technical qualifications which may have a bearing
on the skills which the holders bring to their job although the designation of
the job may be the same.
There may also be
other considerations which have relevance to efficiency in service which may
justify differences in pay scales on the basis of criteria such as experience
and seniority, or a need to prevent stagnation in the cadre, so that good
performance can be elicited from persons who have reached the top of the pay
scale. There may be various other similar considerations which may have a
bearing on efficient performance in a job. This Court has repeatedly observed
that evaluation of such jobs for the purposes of pay scale must be left to
expert bodies and, unless there are any mala fides, its evaluation should be
accepted."
74.
In
Harbans Lal and others vs. State of Himachal Pradesh and others (supra), the
Court held that the claim of carpenters employed by an incorporated company for
party in wages payable to their counterparts in Government service is
unsustainable. In Jawaharlal Nehru Technological University vs. T. Sumalatha
(Smt.) and others (supra), it was held that the respondents who were employed
under a scheme known as National Technical Manpower Information System, which
was sponsored by the then Ministry of Education and Culture, cannot claim
parity with the regular Government employees in the matter of pay scale.
75.
In
Canteen Mazdoor Sabha vs. Metallurgical & Engineering Consultants (India)
Ltd. (supra), another two-Judges Bench held that simply because some employees
of a contractor of the alleged head employer are performing the task or duties
similar to the employees of the head employer, it will not entitle such
employees to claim parity.
76.
As
mentioned earlier, the respondents were employed /engaged by the Official
Liquidators pursuant to the sanction accorded by the Court under Rule 308 of
the 1959 Rules and they are paid salaries and allowances from the company fund.
They were neither appointed against sanctioned posts nor they were paid out
from the Consolidated Fund of India. Therefore, the mere fact that they were
doing work similar to the regular employees of the office of the Official
Liquidators cannot be treated as sufficient for applying the principle of equal
pay for equal work. Any such direction will compel the Government to sanction
additional posts in the offices of the Official Liquidators so as to facilitate
payment of salaries and allowances to the company paid staff in the regular pay
scale from the Consolidate Fund of India and in view of our finding that the
policy decision taken by the Government of India to reduce the number of posts
meant for direct recruitment does not suffer from any legal or constitutional
infirmity, it is not possible to entertain the plea of the respondents for
payment of salaries and allowances in the regular pay scales and other monetary
benefits at par with regular employees by applying the principle of equal pay
for equal work.
Legitimate
Expectation
77.
We
shall now advert to the question whether the respondents can invoke the
doctrine of legitimate expectation for supporting the impugned orders. This
part of the respondent's claim is founded on their assertion that
notwithstanding the contrary stipulation contained in the orders of
appointment, they had expected that in view of the 1978 Scheme the Government
will absorb them in the regular cadres on some future date and give benefit of
the principle of equal pay for equal work. The argument of Shri Bhaskar P.
Gupta and Ms. Jyoti Mendiratta is that the respondents had joined as company
paid staff with the hope that they will be absorbed in the Government service,
but their hopes have been totally belied because instead of creating adequate
number of posts for absorption of company paid staff in accordance with the
1999 Scheme, the Government has arbitrarily abolished large number of posts in
direct recruitment quota and on that account, even those who have been adjudged
suitable will never get absorbed in the regular cadres. In our opinion, there
is no merit in this argument. The pleadings of the parties and records produced
before the High Courts and this Court do not show that any competent authority
of the Government of India had ever given any assurance much less made a
promise to the respondents that they will get absorbed against the sanctioned
posts or that there will be no abolition of posts meant to be filled by direct
recruitment. As a matter of fact, the respondents joined as company paid staff
knowing fully well that they were being employed as additional staff in
connection with the liquidation proceedings and on the basis of sanction
accorded by the concerned Court and further that they will have no right to
seek absorption. They also knew that their employment will come to an end on
the expiry of the tenure specified in the letter/order of appointment or on
cessation of the liquidation proceedings. In this scenario, the doctrine of
legitimate expectation cannot be invoked for sustaining the directions given by
the High Courts for absorption of all company paid staff with consequential
benefits or for nullifying the policy decision taken by the Government to
gradually reduce the direct recruitment quota.
78.
The
concept of "due process of law" has played a major role in the
development of administrative law. It ensures fairness in public
administration. The administrative authorities who are entrusted with the task
of deciding lis between the parties or adjudicating upon the rights of the
individuals are duty bound to comply with the rules of natural justice, which
are multifaceted. The absence of bias in the decision making process and
compliance of audi alteram partem are two of these facets. The doctrine of
legitimate expectation is a nacent addition to the rules of natural justice. It
goes beyond statutory rights by serving as another device for rendering
justice. At the root of the principle of legitimate expectation is the
constitutional principle of rule of law, which requires regularity,
predictability and certainty in government's dealings with the public - J. Raz,
The Authority of Law [(1979) Ch. 11]. The `legal certainty' is also a basic
principle of European Community. European law is based upon the concept of
"vertrauensschutz" (the honouring of a trust or confidence). It is for
these reasons that the existence of a legitimate expectation may even in the
absence of a right of private law, justify its recognition in public law.
79.
In
Halsbury's laws of England (Fourth Edition), the doctrine of legitimate
expectation has been described in the following words :
"A person may
have a legitimate expectation of being treated in a certain way by an
administrative authority even though he has no legal right in private law to
receive such treatment. The expectation may arise either from a representation
or promise made by the authority, including an implied representation, or from
consistent past practice."
80.
A
formal statement on the doctrine of legitimate expectation can be found in the
judgment of House of Lords in Council of Civil Services Union vs. Minister of
the Civil Service [1985 AC 374 (HL]. In that case the Government tried to
forbid trade unionism among civil service. For this, Civil Service
Order-in-1982 Council was issued. The Court of appeal declared that the
Minister had acted unlawfully in abridging the fundamental right of a citizen
to become a member of the trade union. The House of Lords approved the judgment
of the Court of appeal and held that such a right could not be taken away
without consulting the concerned civil servant.
81.
In
India, the Courts have gradually recognized that while administering the
affairs of the State, the Government and its departments are expected to honour
the policy statements and treat the citizens without any discrimination. The
theory of legitimate expectation first found its mention in Navjyoti Coop.
Group Housing Society vs. Union of India [1992 (4) SCC 477]. In that case the
right of a housing society for right to priority in the matter of registration
was recognized in the following words :
"... In the
aforesaid facts, the Group Housing Societies were entitled to `legitimate
expectation' of following consistent past practice in the matter of allotment,
even though they may not have any legal right in private law to receive such
treatment.
The existence of
`legitimate expectation' may have a number of different consequences and one of
such consequences is that the authority ought not to act to defeat the
`legitimate expectation' without some overriding reason of public policy to
justify its doing so. In a case of `legitimate expectation' if the authority
proposes to defeat a person's `legitimate expectation' it should afford him an
opportunity to make representations in the matter. In this connection reference
may be made to the discussions on `legitimate expectation' at page 151 of
Volume 1(1) of Halsbury's Laws of England -- Fourth Edition (re-issue). We may
also refer to a decision of the House of Lords in Council of Civil Service
Unions v. Minister for the Civil Service. It has been held in the said decision
that an aggrieved person was entitled to judicial review if he could show that
a decision of the public authority affected him of some benefit or advantage
which in the past he had been permitted to enjoy and which he legitimately
expected to be permitted to continue to enjoy either until he was given reasons
for withdrawal and the opportunity to comment on such reasons.
It may be indicated
here that the doctrine of `legitimate expectation' imposes in essence a duty on
public authority to act fairly by taking into consideration all relevant
factors relating to such `legitimate expectation'. Within the conspectus of
fair dealing in case of `legitimate expectation', the reasonable opportunities
to make representation by the parties likely to be affected by any change of
consistent past policy, come in. We have not been shown any compelling reasons
taken into consideration by the Central Government to make a departure from the
existing policy of allotment with reference to seniority in Registration by introducing
a new guideline."
(emphasis supplied)
82.
In
Food Corporation of India vs. Kamdhenu Cattle Feed Industries [1993 (1) SCC
71], this Court considered whether rejection of the tender of the respondent
was vitiated by arbitrariness.
The claim of the
respondents was negated in the following words :
"In the
contractual sphere as in all other State actions, the State and all its
instrumentalities have to conform to article 14 of the Constitution of which
non- arbitrariness is a significant facet. There is no unfettered discretion in
public law : A public authority possesses powers only to use them for public
good. This imposes the duty to act fairly and to adopt a procedure which is
`fairplay in action'. Due observance of this obligation as a part of good
administration raises a reasonable or legitimate expectation in every citizen
to be treated fairly in his interaction with the State and its
instrumentalities, with this element forming a necessary component of the
decision making process in all State actions. To satisfy this requirement of
non- arbitrariness in a State action, it is, therefore, necessary to consider
and give due weight to the reasonable or legitimate expectations of the persons
likely to be affected by the decision or else that unfairness in the exercise
of the power may amount to an abuse or excess of power apart from affecting
the bona fides of the decision in a given case. The decision so made would be
exposed to challenge on the ground of arbitrariness. The rule of law does not
completely eliminate discretion in the exercise of power, as it is unrealistic,
but provides for control of its exercise of by judicial review.
The mere reasonable
or legitimate expectation of a citizen, in such a situation, may not by itself
be a distinct enforceable right, but failure to consider and give due weight to
it may render the decision arbitrary, and this is how the requirement of due
consideration of a legitimate expectation forms part of the principle of non-
arbitrariness, a necessary concomitant of the rule of law. Every legitimate
expectation is a relevant factor requiring due consideration in a fair
decision-making process. Whether the expectation of the claimant is reasonable
or legitimate in the context is a question of fact in each case. Whenever the
question arises, it is to be determined not according to the claimant's
perception but in larger public interest wherein other more important
considerations may outweigh what would otherwise have been the legitimate
expectation of the claimant. A bona fide decision of the public authority
reached in this manner would satisfy the requirement of non- arbitrariness and
withstand judicial scrutiny. The doctrine of legitimate expectation gets
assimilated in the rule of law and operates in our legal system in this manner
and to this context."
[Emphasis supplied]
83.
In
Union of India and others vs. Hindustan Development Corporation and others
[1993 (3) SCC 499] this Court considered the doctrine of legitimate expectation
and held :
"For legal
purposes, the expectation cannot be the same as anticipation. It is different
from a wish, a desire or a hope nor can it amount to a claim or demand on the
ground of a right. However earnest and sincere a wish, a desire or a hope may
be and however confidently one may look to them to be fulfilled, they by
themselves cannot amount to an assertable expectation and a mere disappointment
does not attract legal consequences. A pious hope even leading to a moral
obligation cannot amount to a legitimate expectation. The legitimacy of an
expectation can be inferred only if it is founded on the sanction of law or
custom or an established procedure followed in regular and natural sequence.
Again it is distinguishable from a genuine expectation.
Such expectation
should be justifiably legitimate and protectable. Every such legitimate
expectation does not by itself fructify into a right and therefore it does not
amount to a right in the conventional sense."` [Emphasis supplied]
84.
In
Punjab Communications Ltd. vs. Union of India [1999 (4) SCC 727], the Court
observed as under :
"The principle
of `legitimate expectation' is still at a stage of evolution. The principle is
at the root of the rule of law and requires regularity, predictability and
certainty in the Government's dealings with the public. The procedural part of
it relates to a representation that a hearing or other appropriate procedure
will be afforded before the decision is made. ...
85.
However,
the more important aspect is whether the decision-maker can sustain the change in
policy by resort to Wednesbury principles of rationality or whether the court
can go into the question whether the decision-maker has properly balanced the
legitimate expectation as against the need for a change. ... In sum, this means
that the judgment whether public interest overrides the substantive legitimate
expectation of individuals will be for the decision-maker who has made the
change in the policy. The choice of the policy is for the decision-maker and
not for the court. The legitimate substantive expectation merely permits the
court to find out if the change in policy which is the cause for defeating the
legitimate expectation is irrational or perverse or one which no reasonable
person could have made."
(emphasis in
original) doctrine of legitimate expectation in favour of the appellant who
claimed compensation of pre- mature termination of the contractual appointment
as Judicial Member of the Rajasthan Taxation Appellate Tribunal.
86.
In
Dr. Chanchal Goyal (Mrs.) vs. State of Rajasthan [2003 (3) SCC 485], the
appellants claim for absorption in the regular cadre/regularization of service
was rejected by the High Court. While approving the orders of the Single and
Division Benches of the High Court, this Court observed :
"23. On the
facts of the case delineated above, the principle of legitimate expectation has
no application. It has not been shown as to how any act was done by the
authorities which created an impression that the conditions attached in the original
appointment order were waived. Mere continuance does not imply such waiver. No
legitimate expectation can be founded on such unfounded impressions. It was not
even indicated as to who, if any, and with what authority created such
impression. No waiver which would be against requisite compliances can be
countenanced. Whether an expectation exists is, self-evidently, a question of
fact. Clear statutory words override any expectation, however founded."
87.
In
Secretary, State of Karnataka vs. Uma Devi (supra), the Constitution Bench
referred to the claim of the employees based on the doctrine of legitimate
expectation and observed as under :
"The doctrine
can be invoked if the decisions of the administrative authority affect the
person by depriving him of some benefit or advantage which either (i) he had in
the past been permitted by the decision-maker to enjoy and which he can
legitimately expect to be permitted to continue to do until there have been
communicated to him some rational grounds for withdrawing it on which he has
been given an opportunity to comment; or (ii) he has received assurance from
the decision-maker that they will not be withdrawn without giving him first an
opportunity of advancing reasons for contending that they should not be withdrawn."
88.
In
Kuldeep Singh vs. Govt. of NCT of Delhi [2006 (5) SCC 702], the Court refused
to invoke the doctrine of legitimate expectation to nullify the revised policy
decision taken by the Government not to grant fresh liquor licenses.
89.
In
Ram Pravesh Singh vs. State of Bihar [2006 (8) SCC 381], a two-Judges Bench
considered the question whether the employees of Futwah Phulwarisharif Gramya
Vidyut Sahakari Samiti Ltd., which was a cooperative society, could claim
absorption in the services of Bihar State Electricity Board by invoking the
doctrine of legitimate expectation. The facts of that case show that the
society was brought into existence by the State Government, the Electricity
Board and the Rural Electrification Corporation for effective implementation of
Rural Electrification Scheme meant for better distribution of electricity to
rural areas, but the license of the society was revoked in the year 1995 and
the Board refused to absorb the employees of the society. The learned Single
Judge and Division Bench of the High Court declined to interfere with the
decision of the Board.
This Court dismissed
the appeal of the employees and observed:
"What is
legitimate expectation? Obviously, it is not a legal right. It is an
expectation of a benefit, relief or remedy, that may ordinarily flow from a
promise or established practice. The term "established practice"
refers to a regular, consistent, predictable and certain conduct, process or
activity of the decision-making authority. The expectation should be legitimate,
that is, reasonable, logical and valid. Any expectation which is based on
sporadic or casual or random acts, or which is unreasonable, illogical or
invalid cannot be a legitimate expectation. Not being a right, it is not
enforceable as such. It is a concept fashioned by the courts, for judicial
review of administrative action. It is procedural in character based on the
requirement of a higher degree of fairness in administrative action, as a
consequence of the promise made, or practice established. In short, a person
can be said to have a "legitimate expectation" of a particular
treatment, if any representation or promise is made by an authority, either
expressly or impliedly, or if the regular and consistent past practice of the
authority gives room for such expectation in the normal course. As a ground for
relief, the efficacy of the doctrine is rather weak as its slot is just above
"fairness in action" but far below "promissory estoppel".
It may only entitle an expectant: (a) to an opportunity to show cause before
the expectation is dashed; or (b) to an explanation as to the cause for denial.
In appropriate cases, the courts may grant a direction requiring the authority
to follow the promised procedure or established practice. A legitimate expectation,
even when made out, does not always entitle the expectant to a relief. Public
interest, change in policy, conduct of the expectant or any other valid or bona
fide reason given by the decision-maker, may be sufficient to negative the
"legitimate expectation". The doctrine of legitimate expectation
based on established practice (as contrasted from legitimate expectation based
on a promise), can be invoked only by someone who has dealings or transactions
or negotiations with an authority, on which such established practice has a
bearing, or by someone who has a recognised legal relationship with the
authority."
After noticing the
judicial precedents on the subject, the Court held that employees of the
erstwhile society cannot invoke the theory of legitimate expectation for
compelling the Board to absorb them despite its precarious financial condition.
90.
By
applying the ratio of the aforementioned judgment to the facts of this case, we
reiterate that the respondents cannot invoke the doctrine of legitimate expectation.
At the cost of repetition, it needs to be emphasized that the respondents were
employed by the Official Liquidators as additional staff pursuant to the
sanction accorded by the concerned Courts. The conditions of their appointment
clearly envisaged cessation of employment at the end of fixed tenure or on
completion of liquidation proceedings. Of course, as it later turned out, the
respondents were made to work in relation to different liquidation proceedings
and for that purpose, the term of their employment/engagement was extended from
time to time and they continued in service for many years in the same capacity.
However, no material has been placed before this Court to show that any promise
was made or any assurance was held out to the respondents by any competent
authori9ty of the Government of India for their absorption in the regular
cadres. There is nothing in the language of Rule 308 of the 1959 Rules from
which it can be inferred that those employed as additional staff in connection
with the liquidation proceedings will, in future, be absorbed in the regular
cadres. The 1978 as also the 1999 Schemes are merely illustrative of
compassionate approach adopted by the Government of India for facilitating
absorption of the company paid staff against the sanctioned posts to the extent
of 50% vacancies in the direct recruitment quota. These schemes cannot be read
as a charter for legitimating the claim of company paid staff to be absorbed in
the Government service de hors availability of vacancies, more so when the
Government has taken a rational policy decision to reduce direct recruitment to
various services in a phased manner.
In our opinion, any
direction by the Court for absorption of all company paid staff would be
detrimental to public interest in more than one ways. Firstly, it will compel
the Government to abandon the policy decision of reducing the direct
recruitment to various services. Secondly, this will be virtual abrogation of
the statutory rules which envisages appointment to different cadres by direct
recruitment.
91.
Before
parting, we consider it necessary to take cognizance of the fact that in
compliance of order passed by Calcutta High Court in Writ Petition No.211 of
2001, the Government of India created 51 posts for absorption of staff employed
by the Court Liquidator. However, that cannot be made basis for granting relief
to the respondents because creation of those posts was clouded by the threat of
contempt, for which proceedings had been initiated by the aggrieved employees.
92.
On
the basis of above discussion, we hold that –
i.
the
respondents are not entitled to absorption against the sanctioned posts in
Group C of the Department of Company Affairs, Government of India, as of right.
ii.
The
1999 Scheme does not suffer from any legal or constitutional infirmity insofar
as it provides for absorption of the company paid staff only to the extent of
50% vacancies in direct recruitment quota of Group C posts.
iii.
The
decision taken by the Government of India to reduce the number of posts in direct
recruitment quota and consequential abolition of posts in the Department of
Company Affairs is not vitiated by arbitrariness or violation of the doctrine
of equality or malafides.
iv.
The
doctrine of legitimate expectation cannot be invoked for sustaining the
directions given by the High Courts of Calcutta and Delhi for creation of
supernumerary posts to facilitate absorption of all company paid staff in the
regular cadres.
v.
The
respondents are not entitled to have their pay fixed in the regular scales and
other monetary benefits at par with regular employees working under the
Official Liquidators.
93.
Notwithstanding
our conclusion that the directions given by the Calcutta and Delhi High Courts
for absorption of company paid staff against Group C posts and grant of
monetary benefits to them at par with regular employees of the Department of
Company Affairs are legally unsustainable, we are inclined to accept the
contention of the respondents that failure of the Government of India to frame
scheme for absorption of Group D posts has resulted in invidious discrimination
qua one section of the company paid staff. The appellants have not placed any
material before this Court to show that the finding recorded by the learned
Single Judge of Delhi High Curt that a number of persons were employed by the
Official Liquidator in 1985 and thereafter who could be considered for
absorption against Group D posts. This means that at the time of framing of the
1978 Scheme the existing company paid staff did not include the employees who
could be absorbed on Group D posts and this appears to be the reason why the
said scheme was confined to absorption of company paid staff against Group C
posts. Since the employees who could be eligible for absorption on Group D
posts were appointed in 1985 and thereafter, the Government of India should
have, while framing the 1999 Scheme, taken cognizance of their presence and
made appropriate provision for their absorption. Its failure to do so has
certainly resulted in unintended discrimination qua one section of the company
paid staff. It is, therefore, appropriate to direct that the Government of
India should frame a scheme for absorption of eligible and suitable employees
against Group D posts. The scheme should be modeled on the 1999 Scheme. The
needful be done within six moths. Thereafter, eligible and suitable members of
the company paid staff should be absorbed against Group D posts.
94.
We
also feel that the salaries and allowances payable to the company paid staff
should be suitably increased in the wake of huge escalation of living cost. In
Jawaharlal Nehru Technological University vs. T. Sumalatha (Smt.) and others
(supra), a two-Judges Bench, after taking note of the fact that emoluments
payable to the Investigators appointed in the Nodal Centre at Hyderabad had not
been revised for six years directed the Union of India to take expeditious
steps in that direction.
Keeping that judgment
in mind, we direct the Official Liquidators attached to various High Courts to
move the concerned Court for increasing the emoluments of the company paid
staff. Such a request should be sympathetically considered by the concerned
Courts and the emoluments of the company paid staff be suitably enhanced and
paid subject to availability of funds.
95.
In
the result, the appeals are allowed. The impugned judgments and orders are set
aside subject to the direction for framing of scheme for absorption of eligible
and suitable employees against Group D posts and implementation thereof and
increase in the salaries and emoluments payable to the company paid staff.
............................J.
[ B.N. Agrawal ]
............................J.
[ Harjit Singh Bedi ]
............................J.
[ G.S. Singhvi ]
New
Delhi
November
4, 2008.
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