Full Judgment Text
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PETITIONER:
U.P.STATE MINERAL DEVELOPMENT CORPN. & ANR.
Vs.
RESPONDENT:
SHRI K.C.P.SINHA
DATE OF JUDGMENT: 24/04/1996
BENCH:
AGRAWAL, S.C. (J)
BENCH:
AGRAWAL, S.C. (J)
NANAVATI G.T. (J)
CITATION:
1996 SCC (5) 111 JT 1996 (6) 87
1996 SCALE (3)761
ACT:
HEADNOTE:
JUDGMENT:
S.C.AGRAWAL, J. :
J U D G M E N T
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
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compulsory retirement of an employee after 1, 2, 5 or 10
years cf 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
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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.
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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
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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
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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
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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
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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.