Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.2444-2445 OF 2009
[Arising out of SLP (Civil) Nos. 2171-2172 of 2006]
State of Uttaranchal …Appellant
Versus
Alok Sharma & Ors. …Respondents
WITH
CIVIL APPEAL Nos.2453, 2463, 2465, 2455, 2457, 2459, 2461, 2448,
2563, 2451, 2466, 2450, 2468 and 2470 OF 2009
[Arising out of SLP (Civil) Nos. 11543 of 2006, 12526, 12528 of 2007,
12684, 12685, 12686, 15959, 3241, 3242, 7912, 8421, 8708 of 2006 and
6451, 8239 of 2005]
J U D G M E N T
S.B. SINHA, J :
1. Leave granted.
2. Interpretation and/ or application of various circular letters issued by
the State of Uttar Pradesh which have been adopted by the State of
Uttarakhand after it was formed in terms of the U.P. State Reorganisation
Act is in question in these appeals.
2
3. Two government companies being M/s. Teletronix Ltd. and Kumaon
Television Ltd. were the subsidiary companies of Kumaon Mandal Vikas
Nigam Ltd. The employees of the said government companies were
retrenched. The State of Uttar Pradesh took a policy decision to appoint the
employees of the said government companies. For the said purpose, it
framed rules purported to be in exercise of its power under the proviso
appended to Article 309 of the Constitution of India, known as the Uttar
Pradesh Absorption of Retrenched Employees of Government of Public
Corporations in Government Services Rules, 1991 (for short “the Rules”).
4. The term “retrenched employee” is defined in Rule 2(c) of the Rules
as under:
“(c) “retrenched employee” means a person who
was appointed on a post under the Government or
a public corporation on or before October 1, 1986
in accordance with the procedure laid down for
recruitment to the post and was continuously
working in any post under the Government or such
corporation upto the date of his retrenchment due
to reduction in, or winding up of, any
establishment of the Government or the public
corporation, as the case may be and in respect of
whom a certificate of being a retrenched employee
has been issued by his appointing authority.”
3
The charging provision is contained in Rule 3(1) of the Rules, which
reads as under:
“3(1) Notwithstanding anything to the contrary
contained in any other service rules for the time
being in force, the State Government may by
notified order require the absorption of the
retrenched employees in any post or service under
the Government and may prescribe the procedure
for such absorption including relaxation in various
terms and conditions of recruitment in respect of
such retrenched employees.”
5. Admittedly, except Karan Pal, respondent No. 1 in Civil Appeal
arising out of SLP (C) No. 6451 of 2005 who was appointed in the month of
January, 1980 and Vijay Kumar Joshi, respondent No. 1 in Civil Appeal
arising out of SLP (C) No. 8239 of 2005 who was appointed on 1.07.1983
(they were absorbed in the services of the State on 14.12.2005), other
respondents herein were appointed after the cut-off date provided for in the
Rules, viz., 1.10.1986.
6. It also does not appear that pursuant to or in furtherance of the
provisions contained in Rule 3(1) of the Rules, the State Government has
issued any notified order requiring absorption of retrenched employees in
any post or service under the Government or prescribed any procedure
therefor including relaxation in various terms and conditions of recruitment
in relation to the retrenched employees.
4
The State of Uttar Pradesh, however, issued a letter to the Managing
Director of Kumaon Mandal Vikas Nigam Ltd on 30.12.1995. While
informing that approval has been granted by the Governor for winding up of
the aforementioned companies, it was stated:
“3. Order for adjustment of the employees
retrenched in result of the winding up of the
aforesaid units and relaxation in age will be issued
separately by the Personnel Department.
4. Retrenched employees will be adjusted/ re-
appointed on their equivalent posts in view of their
qualification in Kumaun Mandal.”
7. It is contended that in terms of paragraph 3 of the said circular letter,
no such order had been issued by the Personnel Department of the State of
Uttar Pradesh. However, it appears that the Secretary to the Government of
Uttar Pradesh issued a letter addressed to all Principal Secretaries /
Secretaries of the Government of Uttar Pradesh, all Heads of the
Departments and all Commissioners, Uttar Pradesh stating that on
humanitarian ground a decision has been taken by the State for adjustment
of the employees/ officers retrenched from the said units, subject to the
terms and conditions laid down therein; some of which are inter alia being:
“(1) For the Government/ Corporations/
Enterprises service only such employees will be
eligible whose services had been regularized with
M/s. Teletronics and Kumaun Television Limited,
5
the sister units of Kumaun Mandal Vikas Nigam
st
Limited on or before 1 October 1986 and have
been continuously working with the aforesaid
Teletronics and Kumaun Television on the date of
its winding up.”
The said orders were issued with the consultation and approval of the
Personnel Department.
8. As despite framing of the aforementioned rules and issuance of the
aforementioned circulars, respondents had not been absorbed in the services
of the State, they filed writ applications before the High Court of
Uttaranchal.
9. The case of Vijay Kumar Joshi, respondent No. 1 in the Civil Appeal
arising out of SLP (C) No. 8239 of 2005 was decided first wherein having
regard to the fact that he was appointed prior to the cut-off date, his writ
petition was allowed by an order dated 03.11.2004. Following the said
judgment, other writ petitions were also allowed by an order dated
6.06.2005, noticing:
“Learned Counsel for the petitioners has filed the
copy of the judgment passed in Civil Writ Petition
No. 6609 of 2001 (S/S) Vijay Kumar Joshi &
others Vs. State of Uttar Pradesh & others and has
submitted that this Court has allowed the writ
petition of certain other retrenched employees with
the directions that the State of Uttar Pradesh and
the counter part of respondent No. 1 and 2 i.e.
Director, Training and Employment, Government
6
of U.P., Lucknow, in the State of Uttaranchal to
give appointment to the petitioners in suitable post
in compliance of the Government Orders dated
30.12.1995 and 26.02.1996 with full salary w.e.f.
1st April, 1996.”
10. Intra-court appeals preferred thereagainst were dismissed by the High
Court opining that this Court had issued limited notice in the special leave
petitions filed thereagainst. It was held:
“Similar controversy was involved in earlier Civil
Writ Petition No. 1322/2003 (S/S) which was
decided by the Court per judgment dated
26.10.2004 and the State instead of preferring
Special Appeal before the Division Bench went up
in S.L.P. before the Hon’ble Supreme Court S.L.P.
(Civil) No. 6451/2005 was registered and by order
dated 7.3.2005 the Hon’ble Judges of the Apex
Court admitted the S.L.P. only on the point of
direction of payment of back wages to that
petitioner. Learned Brief Holder for the State
submits that the petitioners of the earlier Writ
Petition [(1322/2003(S/S)] had already been given
appointment in compliance of the order dated
26.10.2004. There can be no controversy that the
respondent – petitioners shall also be placed on
same footing by the State in regard to the
compliance to the direction of the Court regarding
appointment as contained in the impugned
judgment dated 6.6.2005 and the respondent –
petitioners have to be given appointment in the
establishments of the State as observed in the
judgment under appeal.”
11. Ms. Pinki Anand, learned Addl. Advocate General appearing on
behalf of the State, would submit that the respondents herein having not
7
fulfilled the conditions precedent for application of the said circulars dated
30.12.1995 and 26.02.1996 as they were appointed after the cut-off date, and
as they had not been working continuously and furthermore as no
notification was issued by the Personnel Department, the impugned
judgments cannot be sustained.
It was furthermore contended that in terms of the Rules, notified
orders were required to be issued and the said condition having not been
complied with, the Rules could not be said to have come into force.
Statutory rules, it was urged, could not have been superseded, modified or
altered by reason of executive instructions as the procedures laid down for
making a rule were required to be followed therefor.
12. Ms. Rachana Srivastava, learned counsel appearing on behalf of the
Kumaon Mandal Vikas Nigam Ltd., would contend that the names of the
candidates should have been in the rolls of the employment exchange. In
any event, as the names of the companies having not been mentioned in the
IX Schedule appended to the U.P. Reorganisation Act, 2000, as envisaged
under Section 66 thereof, the State of Uttarakhand and for that matter, her
client had no liability to pay any amount in regard to the dues of the
companies.
8
13. Mr. M.N. Rao, learned senior counsel and Mr. Deba Prasad
Mukherjee, learned counsel, appearing on behalf of the respondents, on the
other hand, urged:
(i) Notices having been issued limited to the payment of back wages
in two matters, this Court should not exercise its discretionary
jurisdiction as the respondents are ready and willing to forego their
claim for back wages.
(ii) In Civil Appeal arising out of SLP (C) No. 6451 of 2005 [State of
U.P. & Anr. v. Karan Pal & Ors.], the only objection taken by the
State being that he did not possess the requisite educational
qualification, the contentions raised before this Court for the first
time should not be permitted to be raised.
(iii) A large number of retrenched employees having been absorbed in
the services of the State pursuant to the aforementioned circular
letters although their initial appointment took place after the cut-
off date, viz., 1.10.1986, respondents herein must be held to have
been discriminated against.
(iv) The State itself having absorbed the employees in its services
despite fixation of cut-off date, the same would amount to grant of
suo motu relaxation by the State and in that view of the matter
respondents being similarly situated are entitled to be treated alike.
9
(v) Some of the respondents being respondent Nos. 5 and 6 in Civil
Appeal arising out of SLP (C) No. 12526 of 2007, respondent Nos.
1 and 3 in Civil Appeal arising out of SLP (C) No. 3241 of 2006
having been appointed temporarily and working in that post, the
other respondents, in particular respondent Nos. 1 and 2 in Civil
Appeal arising out of SLP (C) Nos. 2171-2172 of 2006, respondent
in Civil Appeal arising out of SLP (C) No. 3242 of 2006 are out of
job which itself go to show that the appellant had not been taking
the same stand in the case of similarly situated persons.
(vi) Even if the circular letters are held to be not applicable, the
principles of industrial law, viz., last-cum-first-go should be
applied in this case.
(vii) The employees of the erstwhile companies having been subjected
to gross injustice, this Court should not exercise its discretionary
jurisdiction under Article 136 of the Constitution of India.
14. The relationship between the respondents herein and the said
government companies was that of employee and employer. The companies
under liquidation although were incorporated and registered under the
Companies Act, 1956, they are ‘State’ within the meaning of Article 12 of
the Constitution of India. As a ‘State’, therefore, they were bound to comply
10
with the equality clause contained in Articles 14 and 16 of the Constitution
of India; in terms whereof cases of all the eligible candidates for
appointment were required to be considered. Recruitment in government
service must be carried out in terms of the Rules framed under a statute or
the proviso appended to Article 309 of the Constitution of India.
15. In Secretary, State of Karnataka and Others v. Umadevi (3) and
Others [(2006) 4 SCC 1], a Constitution Bench of this Court while laying
emphasis on the strict application of the principles of equality clauses
contained in Articles 14 and 16 of the Constitution of India, held:
“37. It is not necessary to multiply authorities on
this aspect. It is only necessary to refer to one or
two of the recent decisions in this context. In State
of U.P. v. Neeraj Awasthi this Court after referring
to a number of prior decisions held that there was
no power in the State under Article 162 of the
Constitution to make appointments and even if
there was any such power, no appointment could
be made in contravention of statutory rules. This
Court also held that past alleged regularisation or
appointment does not connote entitlement to
further regularisation or appointment. It was
further held that the High Court has no jurisdiction
to frame a scheme by itself or direct the framing of
a scheme for regularisation. This view was
reiterated in State of Karnataka v. KGSD Canteen
Employees’ Welfare Assn.”
It was furthermore opined:
11
“43. Thus, it is clear that adherence to the rule of
equality in public employment is a basic feature of
our Constitution and since the rule of law is the
core of our Constitution, a court would certainly be
disabled from passing an order upholding a
violation of Article 14 or in ordering the
overlooking of the need to comply with the
requirements of Article 14 read with Article 16 of
the Constitution. Therefore, consistent with the
scheme for public employment, this Court while
laying down the law, has necessarily to hold that
unless the appointment is in terms of the relevant
rules and after a proper competition among
qualified persons, the same would not confer any
right on the appointee. If it is a contractual
appointment, the appointment comes to an end at
the end of the contract, if it were an engagement or
appointment on daily wages or casual basis, the
same would come to an end when it is
discontinued. Similarly, a temporary employee
could not claim to be made permanent on the
expiry of his term of appointment. It has also to be
clarified that merely because a temporary
employee or a casual wage worker is continued for
a time beyond the term of his appointment, he
would not be entitled to be absorbed in regular
service or made permanent, merely on the strength
of such continuance, if the original appointment
was not made by following a due process of
selection as envisaged by the relevant rules. It is
not open to the court to prevent regular recruitment
at the instance of temporary employees whose
period of employment has come to an end or of ad
hoc employees who by the very nature of their
appointment, do not acquire any right. The High
Courts acting under Article 226 of the
Constitution, should not ordinarily issue directions
for absorption, regularisation, or permanent
continuance unless the recruitment itself was made
regularly and in terms of the constitutional scheme.
Merely because an employee had continued under
12
cover of an order of the court, which we have
described as “litigious employment” in the earlier
part of the judgment, he would not be entitled to
any right to be absorbed or made permanent in the
service. In fact, in such cases, the High Court may
not be justified in issuing interim directions, since,
after all, if ultimately the employee approaching it
is found entitled to relief, it may be possible for it
to mould the relief in such a manner that ultimately
no prejudice will be caused to him, whereas an
interim direction to continue his employment
would hold up the regular procedure for selection
or impose on the State the burden of paying an
employee who is really not required. The courts
must be careful in ensuring that they do not
interfere unduly with the economic arrangement of
its affairs by the State or its instrumentalities or
lend themselves the instruments to facilitate the
bypassing of the constitutional and statutory
mandates.”
It was, however, observed:
“53. One aspect needs to be clarified. There may
be cases where irregular appointments (not illegal
appointments) as explained in S.V. Narayanappa,
R.N. Nanjundappa and B.N. Nagarajan and
referred to in para 15 above, of duly qualified
persons in duly sanctioned vacant posts might have
been made and the employees have continued to
work for ten years or more but without the
intervention of orders of the courts or of tribunals.
The question of regularisation of the services of
such employees may have to be considered on
merits in the light of the principles settled by this
Court in the cases abovereferred to and in the light
of this judgment. In that context, the Union of
India, the State Governments and their
instrumentalities should take steps to regularise as
a one-time measure, the services of such
irregularly appointed, who have worked for ten
13
years or more in duly sanctioned posts but not
under cover of orders of the courts or of tribunals
and should further ensure that regular recruitments
are undertaken to fill those vacant sanctioned posts
that require to be filled up, in cases where
temporary employees or daily wagers are being
now employed. The process must be set in motion
within six months from this date. We also clarify
that regularisation, if any already made, but not
sub judice, need not be reopened based on this
judgment, but there should be no further bypassing
of the constitutional requirement and regularising
or making permanent, those not duly appointed as
per the constitutional scheme.
54. It is also clarified that those decisions which
run counter to the principle settled in this decision,
or in which directions running counter to what we
have held herein, will stand denuded of their status
as precedents.”
The aforementioned dicta laid down in Umadevi (supra) has been
followed by this Court in a large number of cases. [For example, see Post
Master General, Kolkata and Others v. Tutu Das (Dutta) (2007) 5 SCC 317,
State of Punjab v. Bahadur Singh and Ors., 2009 (1) SCALE 316 Official
Liquidator v. Dayanand and Others (2008) 10 SCC 1, State of Bihar v.
Upendra Narayan Singh & Others 2009 (4) SCALE 282]
16. In case of liquidation of the companies, the employees were entitled to
back wages and other amounts by way of compensation as may be
admissible to them under the Industrial Disputes Act, 1947. The State,
14
however, framed the Rules purported to be in exercise of its power under the
proviso to Article 309 of the Constitution of India. Validity of the said
Rules is not under challenge. For the purpose of invoking the provisions of
the Rules, however, the employee concerned must be a retrenched employee.
In view of the definition of retrenched employee, as contained in Rule 2(c)
of the Rules, appointment should have taken place on or before 1.10.1986.
17. The conditions for application of the Rules do not stop there. The
Rules envisage issuance of notified order notifying absorption of the
retrenched employee. The procedures therefor including relaxation of
various terms and conditions of recruitment, if any, were required to be
prescribed. It is conceded at the bar that a statutory rule cannot be modified
or altered by reason of an executive instruction far less by way of a circular
letter. It has been so held in Punjab State Warehousing Corpn., Chandigarh
v. Manmohan Singh and Another [(2007) 9 SCC 337], stating:
“12. Furthermore, when the terms and conditions
of the services of an employee are governed by the
rules made under a statute or the proviso appended
to Article 309 of the Constitution of India laying
down the mode and manner in which the
recruitment would be given effect to, even no
order under Article 162 of the Constitution of India
can be made by way of alterations or amendments
of the said rules. A fortiori if the recruitment rules
could not be amended even by issuing a
notification under Article 162 of the Constitution
15
of India the same cannot be done by way of a
circular letter.”
18. Keeping in view the principles laid down by the Constitution Bench
of this Court in Umadevi (supra), there cannot be any doubt whatsoever that
any condition laid down in any rules which is in derogation of the
recruitment rules framed by the State, should receive strict construction.
19. The learned Single Judge committed an error insofar as it proceeded
on the basis that the decision of the High Court in Vijay Kumar Joshi was
not under challenge. Vijay Kumar Joshi is subject matter of the Civil
Appeal arising out of SLP(C) No. 8239 of 2005. The High Court also failed
to take into consideration that the circular letters dated 30.12.1995 and
26.02.1996 being not notified orders as envisaged in the Rules would not be
law within the meaning of Article 13 of the Constitution of India.
20. The High Court did not find that the cut-off date to be arbitrary or
discriminatory and was, thus, liable to be struck down being ultra vires
Article 14 of the Constitution of India. It did not hold that the conditions
precedent contained in the Rules prescribing procedure for such recruitment
and/ or grant of power of relaxation have been complied with. An authority,
unless a power is conferred on it expressly, cannot exercise a statutory
power. Power of relaxation must be specifically conferred. Such power
16
having been envisaged to be conferred by reason of a rule made under the
proviso appended to Article 309 of the Constitution of India, the contention
of the learned counsel for the respondents that relaxation must be deemed to
have been granted cannot be accepted.
In Kendriya Vidyalaya Sangathan v. Sajal Kumar Roy [(2006) 8 SCC
671], this Court held:
“11. The respondents are not members of the
Scheduled Caste or Scheduled Tribe. Age-limit is
prescribed for appointment to the general category
of employees. The upper age-limit for appointment
to the post of LDC is 25 years. The advertisement
also says so. The Rules, as noticed hereinbefore,
are in two parts. The first part talks about the age-
limit. The second part provides for relaxation.
Such relaxation can be granted for the purpose
specified i.e. in favour of those who answered the
descriptions stated therein. Relaxation of age-limit
even in relation to the Scheduled Caste and the
Scheduled Tribe candidates or the retrenched
Central Government employees, including the
defence personnel is, however, not automatic. The
appointing authorities are required to apply their
mind while exercising their discretionary
jurisdiction to relax the age-limits. Discretion of
the authorities is required to be exercised only for
deserving candidates and upon recommendations
of the Appointing Committee/Selection
Committee. The requirements to comply with the
rules, it is trite, were required to be complied with
fairly and reasonably. They were bound by the
rules. The discretionary jurisdiction could be
exercised for relaxation of age provided for in the
rules and within the four corners thereof. As the
17
respondents do not come within the purview of the
exception contained in Article 45 of the Education
Code, in our opinion, the Tribunal and
consequently, the High Court committed a
manifest error in issuing the aforementioned
directions.”
[See also State of Karnataka and Another v. R.Vivekananda Swamy
(2008) 5 SCC 328]
21. It is in the aforementioned backdrop, the circular letters dated
30.12.1995 and 26.02.1996 are required to be construed. Although in the
former, no cut-off date as such has been mentioned and paragraph 4 thereof
refers to retrenched employees, by reason whereof they were to be adjusted/
re-appointed on their equivalent posts in view of their qualification in
Kumaun Mandal, the term ‘retrenched employees’ would carry the same
meaning as contained in the rules. Furthermore, the circular letter dated
26.02.1996 was issued in continuation of the earlier letter dated 30.12.1995,
which provided for a cut-off date. Both the circular letters are to be read
together. If, thus, the respondents were kept outside the purview of the said
circular letters, indisputably, they cannot be said to have derived any legal
right so as to enable them to pray for issuance of a writ of or in the nature of
mandamus.
18
22. Our attention has been drawn to an additional affidavit filed by the
respondents wherein inter alia it has been shown that a large number of
employees who had been absorbed were initially appointed after 1.10.1986.
Article 14 carries with it a positive concept. It would have no
application in the matter of enforcement of an order which has its source in
illegality. In other words, equality cannot be applied in illegality. [See Post
Master General, Kolkata (supra) and Punjab State Electricity Board and
Others v. Gurmail Singh (2008) 7 SCC 245]
23. Moreover, the matter relating to division of assets of a government
company which had been functioning in the State of Uttar Pradesh as also in
the territories forming the State of Uttarakhand could be given effect to only
in terms of notified order as contemplated in Section 2(g) of the U.P.
Reorganisation Act, 2000 defining it to mean “an order published in the
Official Gazette”. It has not been denied or disputed that the name of the
two companies do not find place in the IXth Schedule appended to the U.P.
Reorganisation Act, 2000.
24. We may furthermore notice that in Civil Appeal arising out of SLP
(C) No. 8708 of 2006, the post in which the respondent was working has to
be filled up on the basis of the recommendations of the Public Service
19
Commission. Public Service Commission being a constitutional authority, it
cannot be by-passed by way of a circular letter or otherwise. It, furthermore,
appears that he was employed in another concern. In most of the other
cases, orders had been passed ex-parte. He had also been paid a huge
amount pursuant thereto.
25. For the reasons aforementioned, the impugned judgments cannot be
sustained, which are set aside accordingly. However, if any amount has
been paid to the respondents, the same shall not be recovered from them.
26. So far as Civil Appeal arising out of SLP (C) No. 6451 of 2005 and
Civil Appeal arising out of SLP (C) No. 8239 of 2005 are concerned,
although limited notice having been issued confining the case to back wages,
but keeping in view the order passed in the other cases, we are of the opinion
that the said order shall be recalled and leave on all points should be granted.
Respondents being placed similarly should not, in our opinion, be treated
differently. This order is being passed in exercise of our jurisdiction under
Article 142 of the Constitution of India. However, we make clear that if any
amount has been paid to the said respondents, the same should not be
recovered. The appeals are allowed with the aforementioned directions. No
costs.
20
………………………….J.
[S.B. Sinha]
..…………………………J.
[Cyriac Joseph]
New Delhi;
April 15, 2009