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Report No. 126

2.17. Even low paid lowest grade employees are not spared the tortuous litigation, disclosing arrogance and superiority complex of the executive of the public sector undertaking/Government, almost serving a notice how can a low grade employee challenge their decision. One Shankar Dass, a cash clerk in Delhi Milk Scheme under the administrative control of the Government of India, was dismissed from service even though the court trying his case had released him on probation under section 12 of the Probation of Offenders Act, 1958. The poor clerk deprived of his livelihood was forced to go to the court and he was pursued from court to court for a period of 23 years.

The Supreme Court ultimately holding that the penalty of dismissal was 'whimsical', ordered reinstatement in service with full back wages from the date of dismissal till reinstatement.1 One fails to discern any principle, object or motive in pursuing such litigation manifesting cruel, harsh, unfair and unjust treatment of a low paid employee. A humanitarian touch would have saved the Corporation of paying back wages for 23 years to a man from whom service could not be taken.

Had he been reinstated with a minor penalty, the clerk would have served and the Delhi milk Scheme would not have been compelled to fork out money, both on unproductive litigation and on absent clerk. There is a similar case of a forest guard from Madhya Pradesh disclosing same attitude and receiving same critical comments from the court.2

1. Shankar Dass v. Union of India, AIR 1985 SC 772.

2. State of Madhya Pradesh v. Ram Ratan, (1981) 30 Jab LJ" 105.

2.18. Apart from employees in service or in position, the treatment of retired employees at the hands of public sector undertakings and Government is far more blameworthy. Two cases will illustrate this point. One Padmanabha Nair was not paid his pension and gratuity admissible on retirement roughly for a period of two years and three months and that too without any rhyme or reason.

Payment of pension and gratuity are measures of social justice available on retirement when all avenues of income have come to a standstill. In this case, the employee concerned demanded interest by way of damages on the ground that the amount to which he was entitled has been unjustifiably withheld. The court, having regard to all the facts, directed payment of interest. That itself is hardly satisfactory. The agony and the litigation both are relevant factors.1

1. State of Kerala v. M. Padmanabha Nair, (1985) 1 LLJ 530.

2.19. The next case draws a more sordid picture of utter indifference and callousness bordering on vendetta. One Devaki Nandan Prasad retired after rendering service for 39 years in Bihar Education Service. Under the relevant rules he was entitled to pension. But the same was ncit paid till 1971 when he filed a petition in the Supreme Court of India claiming pension and arrears. Shockingly, a contention was taken on behalf of the State of Bihar that pension being a gratuitous payment, the action in a court is not competent for enforcing payment of the pension under the relevant rules.

A Constitution Bench negatived the contention and issued a mandamus in 1971 directing the State of Bihar to compute the pension and pay the same.1 Despite the mandamus of the Supreme Court, the failure to obey which may land the person to whom it is directed in a contempt proceeding, for a period of nearly 12 years, no action was taken by the State of Bihar and the poor pensioner was pushed from pillar to post. He again knocked at the door of the Court.

The Court noticed that a pensioner since 16 years is knocking at the doors of the Court of Justice and the Executive in search of his hard-earned pension and is being rebuffed by those who would meet the same fate by the passage of time and yet with his meagre resources he has again been dragged to the apex Court for the second time after a lapse of 12 years during which the mandamus of the court has been treated as a scrap of paper. Having gone into the facts of the case, the Court directed on April 22, 1983, to compute the pension and to pay the same by July 31, 1983, failing which an action in contempt would be initiated.

The Court directed Rs. 25,000 be paid to the pensioner as exemplary costs for the callous, indifferent and whimsical attitude of the authorities.2 The bureaucracy disclosed an attitude for which Bourbans in history were notorious, namely, they learn nothing and forget nothing. The same attitude permeated and the poor pensioner had to come to the Supreme Court for the third time. This time the Court meant business. A notice for contempt was issued.

While disposing of the matter, the Court Observed that it would do no credit to the respondent if the history of litigation is recapitulated and it would bring the administration of the State of Bihar into disrepute. The helplessness of the Chief Minister of the State who was defied by the bureaucracy was taken note of. Ultimately, the State of Bihar paid up Rs. 4,34,163 to the appellant and costs.3

1. Deokinandas Prasad v. State of Bihar, AIR 1971 SC 1409.

2. Devaki Nandan Prasad v. State of Bihar, (1983) 4 SCC 20.

3. Devaki Nandan Prasad v. State of Bihar, 1984 Suppl SCC 410.

2.20. A still agonising case may be referred to and unfortunately emanating from the State of Bihar. One Rudul Sah was acquitted by the Court of Sessions on June 3, 1968. Even after acquittal, he was detained and continued to be detained in prison for a period of. 14 years as if he was an undertrial prisoner. A writ of habeas corpus procured his release. He contended that his continued detention was unlawful and that this was in gross violation of the rules and the Constitution and, therefore, he demanded relief by way of rehabilitation, reimbursement of expenses and compensation for illegal incarceration.

The Court, after meticulously examining all the facts of the case, observed that 'the Government of Bihar could have afforded to show a little more courtesy to this Court (Supreme Court of India) and to display a greater awareness of its responsibilities by asking one of its senior officers to file an affidavit in order to explain the callousness which pervades this case'. AS usual, one lowpaid lower grade jailor was sought to be made a scapegoat for this criminal indifference.

To the claim for compensation, a caveat was filed that the petitioner may be directed to file a suit if so advised. The Court rejected this argument as manifesting inhuman attitude. The Court observed that 'the right to compensation is some palliative for the unlawful acts of instrumentalities which act in the name of public interest and which present for their protection the powers of the State as a shield. If civilization is not to perish in this country as it has perished in some others too well-known to suffer mention; it is necessary to educate ourselves into accepting that, respect for the rights of individuals is the true bastion of democracy'1.

The Court directed the State of Bihar to pay to the petitioner in all Rs. 35,000 leaving it open to the petitioner to sue for more damages, if so advised. These cases be speak not merely a bureaucratic mentality but an utter callous indifference to the process of law and the writs of the highest court, simultaneously not only manipulating litigation but exposing the State exchequer to make huge payments which are easily avoidable.

1. Rudul Sah v. State of Bihar, (1983) 4 SCC 141.

2.21. When it comes to an oppressive attitude by a public sector undertaking, it makes no difference whether the victim of oppression is a low paid employee or a highly paid officer. One A.L. Kalra was an officer employed by P & E of India Ltd., a wholly owned subsidiary of the State Trading Corporation, a Government of India undertaking. He applied for and obtained an advance for purchasing a plot of land and a new motorcycle under the relevant advance rules. There was a default in refund and repayment and the same was being recovered by deduction from his salary.

Yet a disciplinary inquiry was initiated against him and he was removed from service. An appeal to the appellate authority was dismissed. A writ petition to the High Court met the same fate on the ground that the respondent is not 'other authority' comprehended in the expression 'State' within the meaning of the expression in Article 12 of the Constitution. In an appeal under Article 136 of the Constitution, it was not disputed that the respondent is 'other authority' but a novel contention was put forth.

It was urged on behalf of the public sector undertaking that even if the respondent is comprehended in the expression 'other authority', it would still not be governed by Part XIV of the Constitution because an employee of such public sector undertaking does not hold a civil post and, therefore, his removal from service is beyond the reach of the court.

Negativing this contention, it was pointed out by the court that not only the inquiry was on a charge which can be styled as frivolous because the entire recovery was made from the salary which was a mode of recovery prescribed in the agreement granting advance but more appropriately under the rules prescribing misconduct, the action of the officer would not constitute a misconduct and, therefore, he inquiry was ab initio void.

The Supreme Court then observed that even if Part XIV of the Constitution is not attracted, the respondent, being 'other authority', would have to act within the four corners of Part III of the Constitution which includes, amongst others, Article 14, which guarantees equality before law and equal protection of laws. The action for holding an inquiry on an alleged misconduct which was non est would be a grossly arbitrary act violative of Article 14 of the Constitution. The Court observed that:-

"Failure to adjust the antenna to the operative channel and dipping the head like a proverbial ostrich in the sand so as not to view the changing kaleidoscope of the law can alone be said to be responsible for this trivial matter to be brought to this Court."1

Another improper tendency accepted by litigation undertaken by public sector undertakings/Government may now be noticed. Assuming that the Government/public sector undertaking honestly believes that its action is legally justified and, therefore, either initiates or invites litigation, surprisingly once an adverse decision is given, pursuit of litigation vertically through hierarchy of courts is relentless. This tendency clearly exhibits that initially the view was not to vindicate a right or a stand but either it was vengeance or superiority complex.

A case may be referred to here to justify this statement. An officer of the level of a head constable in Police Department was dismissed from service in 1955 for an alleged misconduct of hunting a bull in Government forest. The head constable contended that he was not afforded a reasonable opportunity to defend himself. His suit having been dismissed by the trial court, the first appellate court held that not only the inquiry did not give a fair hearing but even the charges in the notice to the delinquent of his misconduct were very vague.

The first appellate court directed reinstatement. The State was afflicted by a disease called 'appealititis' and the State of U.P. preferred an appeal to the High Court and then took the matter to the Supreme Court, in both of which the State failed. The litigation covered a period of 27 years whereafter the head constable was reinstated with back wages. But in the process, he had parted from the world.2

1. A.L. Kalra v. P&E Corporation of India Ltd., AIR 1984 SC 1361.

2. State of Uttar Pradesh v. Mohd. Sharif (dead) through legal Representative, AIR 1982 SC 937.

2.22. Digressing from the line of cases hereinabove discussed, it may now be profitable to turn to litigation where a public sector undertaking refuses to honour its commitment and invites litigation. Gujarat State Finance Corporation agreed to finance a project by giving a loan and later on, for extraneous and irrelevant reasons, backed out.

When the loanee approached the High Court for a writ of mandamus, Gujarat State Finance Corporation adopted a curious stand by commenting that contractive obligations cannot be enforced by a writ of mandamus and if the Corporation has committed a breach of the contract, the other side may sue it for damages. Rejecting this contendon, the court pointed out 'how the public sector corporation set up to give impetus to industrial development of the country, the promise of planned economy aimed at job expansion to liquidate the curse of unemployment, achieve larger production and help in price stabilisation, acts in a manner contrary to its raison d'etre and becomes counter-productive.'1

1. Gujarat State Financial Corporation v. Lotus Hotel Ltd., AIR 1983 SCC 848.

2.23. Compensation for victims of accidents is a measure of social justice inasmuch as the bread-winner may have been killed and the family may have become destitute. And yet, these compensation cases are almost fought with vengeance, more so by State Governments whose fleet of buses are exempt from the liability of third party risk insurance.

A bus belonging to Rajasthan State Road Transport Corporation was involved in an accident which resulted in the death of a person. His dependants initiated an action for compensation before a Motor Accidents Claims Tribunal. The public sector undertaking, namely, the Rajasthan Road Transport Corporation, resisted the claim putting forth frivolous objections. The Tribunal awarded compensation. The matter was brought to the Supreme Court where the Court was constrained to observe that:-

"One should have thought that nationalisation of road transport would have produced a better sense of social responsibility on the part of the management and the drivers. In fact, one of the major purposes of socialisation of transport is to inject a sense of safety, accountability and operational responsibility which may be absent in the case of private undertakings, whose motivation is profit-making regardless of risk to life; but common experience.... discloses callousness and blunted consciousness on the part of public corporations which acquire a monopoly under the Motor Vehicles Act in plying buses".

The Judges proceeded to observe that:-

"In the present case, it would have been more humane and just if instead of indulging in wasteful litigation, the Corporation had hastened compassionately to settle the claims so that goodwill and public credibility could be improved. It was improper of the Corporation to have tenaciously resisted the claim".1

1. Rajasthan State Road Transport Corporation, Jaipur v. Narayan Shankar, AIR 1980 SC 695.

2.24. There are many instances of litigation between the Central Government and State Government agencies. In one case, the Income-tax Department took the view that the income of the respondent Corporation was liable to income-tax and assessed the respondent Corporation to Income-tax for the assessment years 1958-60. The respondent Corporation filed a writ petition in the High Court contending that since the property owned by it and the income earned by it were the property and the income of the State, it was exempted from the Union taxation under Article 289(1) of the Constitution of India.

The High Court dismissed the petition. The appeal filed by the respondent Corporation in the Supreme Court was also dismissed. The respondent Corporation filed its returns in respect of the assessment years 1960-63 showing its income as NIL. In respect of the assessment of the said period, it claimed exemption under section 11 of the Income-tax Act, 1961.

The respondent Corporation's claim for exemption was rejected by the I.T.O. and in appeal respondent Corporation's claims were allowed by the Appellate Assistant Commissioner of Income-tax. But the appeal filed by the Department before the Income-tax Tribunal Bench was allowed and at the instance of the respondent Corporation, the Tribunal by a common order referred it to the High Court.

The High Court held in favour of the respondent Corporation and also granted certificate of fitness for appeal to the Supreme Court. The Supreme Court held that the respondent Corporation was entitled to the exemption claimed by it both under the Road Transport Corporation Act, 1922 and the Income-tax Act, 1961. This is another patent case of unnecessary litigation showing that there is no internal agency/authority constituted to resolve the dispute between the Government and its agency.

2.25. Is there a lesson and message to be drawn from this extensive discussion of viewing the litigation undertaken by public sector undertakings/Government from the vantage point of courts? The decisions herein discussed, and they can be multiplied manifold, are merely symptomatic of the litigious culture recklessly cultivated by bodies such as public sector undertakings/Government who, under the Constitution, are under an obligation to manifest constitutional culture in their dealings and conduct.

They have undertaken litigation at the drop of a hat and having tasted blood, the litigation has been pursued right up to the apex court. In their case, the public pays the court fees; litigation costs as the expenses come out from the coffers of the State which expression includes public sector undertaking. The officer who either initiates or defends litigation and then prefers appeals after appeals is never personally responsible for the outcome.

There is no social audit of his behaviour. Not a single case has been brought to the notice of the court or the public or even the Public Accounts Committee of the Parliament where an officer who frivolously pursued litigation was hauled up for his improper behaviour inconsistent with the duties of his office. Their wrath was visited upon poor employees or officers and consumers of product are victims of their oppression. Why?

As pointed out earlier, the individual has to fight litigation; compared as between Goliath and dwarf, the one enjoys the benefit of litigating at somebody's cost and the individual pays from his own pocket. The picture becomes devastatingly cruel where a dismissed employee has been fought up to the Supreme Court. The employee has lost his livelihood; he cannot procure alternative employment; he has to maintain family; he has to procure funds for litigation and wait for the date of resurrection.

The corporation which fights him is economically better placed to tire him and the courts' dockets get more and more congested, heaping indirectly greater financial liability on the exchequer. The depressing feature of such litigation becomes more manifest when an individual on one side and public sector Corporation on the other is replaced by Government on one side and public sector undertaking on the other side or between two public sector undertakings.

2.26. It appears, specially in public sector undertakings, accountability generally is of what an officer does and what he does not do. This had been brought out in an interview on 5th April, 1987 on the Television, by certain public and private sector executives. Consequently, the managerial executives prefer not to take responsibility in resolving the disputes.

Because of such lack of responsibility on the part of the managerial executives, the disputes between the public sector undertaking vis-a-vis the other parties, which could have been ironed out with little more endeavour, are allowed to continue pending in the courts.

Even where the cases are decided against the Government or the public sector undertakings by the court at the lowest level, the overenthusiastic Department of the Government as well as the public sector undertakings choose to prefer appeals to the highest forum with the hope that their stand may be stamped in their favour by the highest court, irrespective of the cost and time involved therein. This approach betrays a lack of under standing of cost-benefit ratio.

2.27. One of the major disadvantages which ensues from the redundant litigation by and against the public sector undertakings is that the expenditure required for meeting the litigation expenses add to the cost of the products manufactured by the public sector undertakings and consequently, the cost of the product soars high and the profit dips low. The capital output ratio is, therefore, directly affected because of mounting expenses required to be incurred by the public sector undertakings on litigation. One Corporation in its letter pin-points the main impact of the litigation and delays in cases of public sector undertakings.

It mentions that there has been an enormous increase of investment in public sector undertakings in the recent past. As on 31-3-1986, the number has gone up to 225 with an investment of Rs. 50,341 crores. During execution of projects cost-over-run due to time-over-run has become a serious concern for the Government. Profitability of Public sector undertakings is yet another serious issue to the Government. Litigation and delays in hearing of cases have also contributed to a great extent leading to a time-over-run and cost-over-run of the projects as also to the low profile of profitability.

The money in the coffers of the exchequer is the main source to meet the expenditure required to be incurred on the litigation by and against the public secto.- undertakings. It is nothing but wastage of precious exchequer's funds collected through the hard-earned money of the public, utilised merely for the whims and fancies of certain over-enthusiastic Departments of the Government and certain public sector undertakings to keep on litigating for frivolous reasons such as a matter of prestige etc. This also heavily congests the dockets of the court and its graph of arrears rises upward.

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