U.P. State Mineral Development Corpn. & Anr Vs. Shri K.C.P. Sinha
[1996] INSC 608 (24
April 1996)
Agrawal, S.C. (J) Agrawal, S.C. (J) Nanavati G.T. (J) S.C.Agrawal,
J. :
CITATION:
1996 SCC (5) 111 JT 1996 (6) 87 1996 SCALE (3)761
ACT:
HEAD NOTE:
This
appeal, by special leave, raises the question regarding validity of Rule 27(iv)
of the U.P.State Mineral Development Corporation Limited Employees Service
Rules, 1978 (hereinafter referred to as 'the Rules'], as amended wide the
Amendment Rules of 1988 with effect from May 15, 1988, which provides for
compulsory retirement of an employee of the U.P. State Mineral Development
Corporation (hereinafter referred to as 'the Corporation'].
The
Corporation, a company registered under the Companies Act, 1956, is an undertaking
of the Government of Utter Pradesh. The respondent joined the Corporation on January 18, 1977. Initially he was appointed on the
post of Marketing Officer. He was redesignated as Marketing Manager on April 16, 1977. He was confirmed on the post of
Marketing Manager by order dated June 2, 1984 with effect from March 14, 1978. He started officiating as Chief
Marketing Manager under order dated March 12, 1984. By order dated August 20, 1988, the respondent was compulsorily
retired from service from the date of the issuance of the said order. It was
directed that in lieu of three months notice he would be entitled to the
payment of a sum equivalent to the amount salary and allowances, if any, at the
rate applicable to him just before the retirement. The said order was passed in
exercise of the powers conferred by Rule 27(iv) of the Rules. The respondent
filed a writ petition [W.P. No. 66/88] in the Allahabad High Court, Lucknow
Bench, challenging the said order of compulsory retirement. The said writ petition
has been allowed by the High Court by the impugned judgment dated February 20, 1990. The High Court has held that Rule
27(iv) of the Rules is violative of the provisions o' Articles 14 and 16 of the
Constitution inasmuch as it does not prescribe any minimum period of service
and confers arbitrary power on the authority who can pass an order for
compulsory retirement of an employee after 1, 2, 5 or 10 years of service.
Feeling aggrieved by the said judgment of the High Court the appellants have
filed this appeal.
Apart
from supporting the judgment of the High Court striking down Rule 27(iv) of the
Rules, the learned counsel for the respondent has addressed us on the merits of
the order of compulsory retirement and has submitted that even if the rule is
held to be valid the said order cannot be sustained. We will first examine the
question regarding the validity of Rule 27(iv) of the Rules.
Rule
27 of the Rules, which was substituted by the Amendment Rules of 1988, which
came into force on May
15, 1988, provides as follows
:
"Retirement
: 27 (i) Except as otherwise provided in this rule an employee shall retire
from the service on the afternoon of the last day of the month he attains the
age of 58 years.
An
employee whose date of birth is the first day of a month shall retire from
service on the afternoon of the last day of the preceding month on attaining
the age of 58 years:
Provided
an employee of Class IV who entered into the service of the Corporation prior
to this amendment shall retire at the age of 60 years.
(ii)
Notwithstanding anything contained in these rules an employee may seek
Voluntary retirement by giving 3 months notice the appointing authority at any
time after attaining the age of 45 years or after he has completed the service
of 20 years.
(iii)
Provided that the appointing authority may waive the period of notice fully or
partially but the retirement shall be effective only after an order has been
passed by the appointing authority to this effect. In his discretion the
appointing authority may reject the offer of voluntary retirement of the
employee.
(iv)
The appointing authority may at any time retire in the public interest or in
the interest of the Corporation an employee at the age of 50 years by giving
him 3 months notice or pay in lieu thereof or pay for the said period which
falls short of the said period of 3 months.
(v) In
order to satisfy whether it will be in the public interest or in the interest
of the Corporation to retire an employee of the Corporation under sub-rule of
Rule 27 the appointing authority may take into consideration any material
relating to the employee and nothing herein contained shall be construed to
exclude from the consideration i.e, i. any entry relating to any period before
such employee was allowed to cross any efficiency bar or before he was promoted
to any post in officiating or substantive capacity or any stop gap arrangement
or any ad hoc post or ii. any entry against which a representation is pending
either before the Board or any other authority provided that the representation
is also taken into consideration along with the entry or iii. any report of
communication received from the Government or any report received from the
internal vigilance/security set-up established by the Corporation under the orders
of the Board/Chairman/Managing Director or any report of the vigilance
establishment constituted under the U.P.Vigilance Establishment Act, 1965 or
any report from the CID of the State of U.P.
iv.
Every such decision taken in sub-rule (iv) shall be deemed to have been taken
in the public interest or in the interest of the Corporation as the case may
be." Clause (i) of Rule 27 prescribes 58 years as the age of
superannuation for 311 employees except employees of Class IV for whom the age
of superannuation is fixed at 60 years.
Clauses
(ii) and (iii) enable an employee of the Corporation to seek voluntary
retirement by giving three months notice to the appointing authority at any
time after attaining the age of 45 years or after he has completed the service
of 20 years and the period of notice can be waived fully or partially by the
appointing authority. Clause (iv) empowers the appointing authority at any time
in the public interest or in the interest of the Corporation to retire an
employee who has attained the age of 50 years by giving him 3 months notice or
pay in lieu thereof. The said clause does not prescribe a minimum period of
service for the exercise of the power of compulsory retirement by the
appointing authority, Clause (v) prescribes the material that can be taken into
consideration while exercising the power under clause (iv).
The
question is whether it is obligatory to prescribe minimum length of service in
a provision relating to compulsory retirement and whether in the absence of
such a requirement the provision relating to compulsory retirement has to be
held to be invalid.
The
object underlying a provision enabling the appointing authority to compulsorily
retire an employee before he attains the prescribed age of superannuation is to
energize the administration and make it more efficient by chopping of deadwood
and to ensure that a key post is held by a person of undoubted ability and
integrity. [ See : Union of India v. Col. J.N.Sinha, 1971 (1) SCR 791 at p.796]. The
decisions of this Court show that such provisions fall in three categories :
I. A
provision which enables compulsory retirement of an employee after he has put
in a certain period of service.
[See :
Shyam Lal vs. Union of India, 1955 (1) SCR 26 and Tara Singh, etc. vs. State of
Rajasthan & ors. air 1975 SC 1487. Compulsory
retirement permissible on completion of 25 years of qualifying service] II
Provision which enables the compulsory retirement on attaining a particular
age. [ See : Col. J.N.Sinha [supra] Fundamental Rule 56(j) - compulsory
retirement permissible on attaining the age of 50 years].
III.
Provision which enables compulsory retirement on attaining a particular age or
on completion of a particular period of qualifying service. [ See : The State
of Bombay v. Saubhagchand M.Doshi, 1958 SCR 571; T.G. Shivacharana Singh etc.
etc. v. State of Mysore, AIR 1965 SC 280; Baikuntha Nath & Anr, v. Chief
District Medical Officer, Baripada & Anr., 1992 (2) SCC 299].
In Saubhagchand
M. Doshi [supra], this Court, while distinguishing compulsory retirement from
dismissal or removal from service, has pointed out that while in the case of
retirement misconduct and efficiency merely furnish the background and there is
no duty to hold an enquiry, in the case of dismissal or removal from service
they form the very basis on which the order is made and the enquiry thereon
must be formal and must satisfy the rules of natural justice. This Court has
further observed :
"It
should be added that questions of the above character could arise only when the
rules fix both an age of superannuation and an age for compulsory retirement
and the services of a civil servant are terminated between these points of
time. But where there is no rule fixing the age of compulsory retirement, or if
there is one and the servant is retired before the age prescribed therein, then
that can be regarded only as dismissal or removal within Art.311(2)." [p. 579]
In Moti Ram Deka etc. V. General Manager, N.E.F.
Railways,
Maligaon, Pandu, etc. 1964 (5) SCR 683, while examining the validity of Rules
148(3) and 149(3) of the Indian Railway Establishment Code which provided for
termination of services of a permanent servant by giving a notice by either
side, this Court has taken note of the decisions of this Court relating to compulsory
retirement of Government employees including the decision in Saubhagchand M. Doshi
[supra] and the observations referred to above.
After
quoting the said observations. it has been observed:
"It
would be noticed that the rule providing for compulsory retirement was upheld
on the ground that such compulsory retirement does not amount to removal under
Art. 3 ) because it was another mode of retirement and it could be enforced
only between the period cf age of superannuation prescribed and after the minimum
period of service indicated in the rule had been put in. if however, no such
minimum period is prescribed by the rule of compulsory retirement. that
according to the judgment, would violate Art. 311(2) and though the termination
of a servant's services may be described as compulsory retirement, it would
amount to dismissal or removal within the meaning of Article 311(2). With
respect, we think that this statement correctly represents the true position in
law." [pp.715-716] These observations regarding prescribing a minimum
period of service have to be read in the light of the observations in Saubhagchand
M. Doshi [supra] referred to above which have been approved and which refer to
fixing of the age of compulsory retirement. The observations in Moti Ram Deka
[supra] were made in the context of the provisions of Rule 165-A of the Bombay
Civil Services Rules, as amended by the Saurashtra Government, which was under
consideration in Saubhagchand M. Doshi [supra]. It provided for compulsory
retirement of a Government servant after he had completed 25 years of
qualifying service or 50 years of age. In Saubhagchand M. Doshi [supra] the
employee was appointed in 1948 and he was compulsorily retired on October 30,
1952, after 4 years service, under the said rule since he had attained the age
of 50 years, He had not completed the period of 35 years of qualifying service.
The said order was upheld by this Court. The observations of this Court in Moti
Ram Deka [supra] regarding the requirement of a minimum period of service
cannot, therefore, be read to mean that a provision regarding compulsory
retirement must always provide for a minimum period of service. In Moti Ram Deka
[supra] what has been emphasized by this Court is that the validity of a rule
providing for compulsory retirement may be open to question if having fixed a
proper age of superannuation it permits a permanent servant to be retired at an
early stage of his career.
This
question came to be considered in Gurdev Singh Sidhu v. State of Punjab & Anr.,
1964 (7) SCR 587, in the context of Article 9,1 of the Pepsu Services
Regulations which provided that the Government could retire any Government
servant after he had completed 10 years of qualifying service. The said rule
was held to be invalid as being violative of Article 311(2) of the
Constitution. It has been observed :
"If
a permanent public servant is compulsorily retired under the rules which
prescribed the normal age of superannuation and provide for a reasonable long
period of qualified service after which alone compulsory retirement can be
ordered, that again may not amount dismissal or removal under Article 311(2)
mainly because that is the effect of a long series of decisions of this Court.
But where while reserving the power to the State to compulsorily retire a
permanent public servant, a rule is framed prescribing a proper age of
superannuation, and another rule is added giving the power to the State to
compulsorily retire permanent public servant at the end of 10 years on his
service, that cannot, we think, be treated as fallowing outside Art. 311(2).
The termination of the service of a permanent public servant under such a rule,
though called compulsory retirement is, in substance, removal under Art. 311(
[P. 594] The High Court, in striking down clause (iv) of Rule 27 of the Rules,
has placed reliance on the decisions of this Court in Moti Ram Deka [supra] and
Gurdev Singh Sidhu v State bank of Punjab & Anr. [supra] to hold that it
was incumbent to prescribe a minimum period of service. In taking the said view
the High Court failed to note that under clause (iv) of Rule 27 of the Rules
the power of compulsory retirement can be exercised only after an employee
attains the age of 50 years. The normal age of superannuation prescribed under
Rule 27 is 58 years. The fixation of the age of 50 years for the purpose of
compulsory retirement does not result in compulsory retirement of an employee
at an early stage of his career.
As
noticed earlier, there is a similar provision in Fundamental Rule 56(j) which
provides for compulsory retirement on attaining the age of 50 years or 55 years
as mentioned in Col. J.N.Sinha [supra] and the orders passed for compulsory
retirement under the said provision have been upheld by this court. Similarly
there are provisions where the power of compulsory retirement can be exercised
either on attaining a particular age [generally 50 years] or on completion of
the prescribed period of qualifying service and orders for compulsory
retirement passed on attaining the prescribed age have been held to be valid as
in Saubhagchand M.Doshi [supra] and T.G.Shivachandra Singh [supra] . In Saubhagchand
M. Doshi [supra] the employee had been compulsorily retired on completion of
about 4 years service only. We are, therefore, unable to agree with the view of
the High Court that clause (iv) of Rule 27 suffers from the vice of
arbitrariness and is violative of the provisions of Articles 14 and 16 of the
Constitution inasmuch as it does not prescribe a minimum length of service for
the exercise of the power of compulsory retirement.
Shri Tripathi,
the learned counsel appearing for the respondent, has urged that even if clause
(iv) of Rule 27 is held to be valid the said clause could not be applied in the
case of the respondent because the respondent joined the service of the
Corporation in 1977 end this clause was introduced after his joining the
service with effect from May 15, 1988. It has been urged that the said
provision cannot be given retrospective effect so as to apply to the respondent
who had joined the service of the Corporation prior to the introduction of the
said clause. The submission is that the amendment that was introduced in the
rules in 1988 can only operate prospectively and does not have retrospective
operation. We find no merit in this contention. The amendment that has been
introduced in the rules by the Amendment Rules of 1988 with effect from May 15,
1988 operates prospectively and the said operation cannot be held to be
retrospective in nature merely because it applies if to employees who joined
the Corporation prior to the said amendment but were in service of the
Corporation on the date of coming into operation of the amendment. The rule
operates prospectively in respect of all the employees of the Corporation who
were employed with the Corporation on May 15, 1988. Moreover, the letter of
appointment dated January
18, 1977 which was
given to the respondent contains the following terms :
"You
will be governed by the rules and regulations of the Corporation framed from
time to time" The respondent, therefore, cannot make a grievance that the
amendment that was made in the Rules in 1988 whereby Rule 27 was substituted is
not applicable to him and was wrongly applied.
Shri Tripathi
has next submitted that even if clause (iv) of Rule 27 is held to be valid the
application of the said rule in the case of the respondent suffers from the
vice of arbitrariness inasmuch as the services of the respondent have been
arbitrarily terminated. In support of his aforesaid submission, Shri Tripathi
has invoked the principles laid down by this Court in Delhi Transport
Corporation v. DTC Mazdoor Congress, 1990 Supp. (1) SCR 142;
Central
Inland Water Transport Corporation Ltd. & Anr, vs. Brojo Nath Ganguly &
Anr., 1986 (3) SCC 156; and West Bengal State Electricity Board v. D.B.Gupta,
1985 (3) SCC 116, In our opinion, this submission is without substance. As
pointed out by this Court in Shyam Lal [supra] compulsory retirement differs
from dismissal or removal from service in the sense that while in the case of
dismissal or removal involves loss of benefit already earned an officer who is
compulsorily retired does not lose any part of the benefit that he has earned
and on compulsory retirement he would be entitled to the benefit that he has
actually earned and that there is no diminution of the accrued benefit [p.42].
It is not the case of the respondent that he has been denied the benefit which
accrued to him on the basis of his service in the Corporation. The fact that
the respondent joined service at a late stage when he was about 41 years old
and on account of his being compulsorily retired his services stood terminated
after putting about 9 years of service only does not mean that the order of
compulsory retirement ceases to be an order for compulsory retirement and
should be treated as an order for removal from service. Merely because the
respondent would not be able to earn pension since he had not put in the
prescribed period of qualifying service would not invalidate the order of
compulsory retirement if it is other wise found to have been passed in
accordance with the requirements of Rule 27(iv).
The
impugned order of compulsory retirement was passed on the basis of the
recommendations of a Screening Committee consisting of the Managing Director
and two Directors of the Corporation. In the Confidential Report of the
respondent for the year 1933-84 following remarks have been made by the
Reviewing Officer : f "I regret that I cannot agree with the Reporting
Officer. Shri K.C.P.Sinha evaded responsibility and his general reputation for
integrity was bad. He got his own brother-in-law appointed as Sales Agent for
Silica sand and other products without disclosing this fact to the Management
and continued to deal with him throughout without disclosing this relationship.
His general reputation somehow has not been very good. I was not satisfied even
with his administrative ability. I would assess his performance and leadership
qualities inadequate. He might be able to work successfully under close supervision
but is unsuitable for an independent assignment. His written work is well below
average.
I
would rate his performance as poor." Shri Tripathi has submitted that the
said remarks were made by Shri A.P.Singh on May 19, 1985 after he had ceased to be the Managing Director of the
Corporation and that he had taken the file with him when he left the
Corporation and he returned the file only in 1987. It has also been urged by Shri
Tripathi that the respondent had submitted a representation against the remarks
and the same has not been considered. The fact of the respondent having
submitted a representation against the said remarks was denied by the
appellants before the High Court. The High Court felt that this being a
disputed question of fact, could not be decided in writ jurisdiction. We are in
agreement with the said view of the High Court. Insofar as the remarks are
concerned, we are of the view that the same cannot be ignored only because the
relevant file was taken away by Shri A.P.Singh, the Reviewing Officer, with him
and the file was sent back after two years in 1987. No case of mala fides has
been made out by the respondent against the Reviewing Officer. The said remarks
contain a reflection on the integrity of the respondent in the matter of discharging
his duties. Having regard to the said remarks it is not possible to hold that
the compulsory retirement of the respondent by the appointing authority under
order dated August 20,
1988 was not in public
interest. We are, therefore, of the view that the order of compulsory
retirement of the respondent does not suffer from any infirmity and the High
Court was not justified in setting aside the said order.
By
order dated August 27, 1990, this Court had stayed the reinstatement of the
respondent on condition that the appellants will continue to pay 60% of the
salary to the respondent and the respondent had agreed that the receipt of the
said payment would be subject to further orders of this Court. It appears that
the respondent was paid 60% of the salary in accordance with the said order but
subsequently the Corporation, instead of paying 60% of the salary without
obtaining his services considered it essential in the interest of the
Corporation to obtain his services and by order dated January 12, 1995 he has
been appointed as Chief marketing Manager and he is functioning on that post
now.
Since
we are upholding the order of compulsory retirement it will be open to the
Corporation to consider whether the respondent should continue on the post of
Chief Marketing Manager. As regards the period for which he respondent had been
paid 60% of the salary in pursuance of the order dated August 27, 1990 the said amount shall be refundable
by the respondent to the Corporation. The said amount shall be refunded by the
respondent within a period of three months.
In the
result the appeal is allowed, the impugned judgment of the High Court . is set
aside and the writ petition filed by the respondent is dismissed. No orders as
to costs.
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