Statutory service rules and equitable relief under Article 136 shaped the outcome, with reinstatement ordered on modified terms.

A statutory service rule cannot be displaced by estoppel where the record shows that earlier service had ended and the later engagement was made on humanitarian grounds; the 1963 appointment was therefore a fresh appointment, not reinstatement with continuity of service. The Court also held that, even after finding the High Court's legal conclusion unsustainable, it could mould relief under Article 136 to do complete justice. Taking account of the long lapse of time, the employee's age and the employer's willingness to take him back, the Court directed reinstatement on modified terms, without back wages for the intervening period, but with continuity limited to future pay fixation and increments.

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Issues: (i) Whether the employee's appointment dated 28 August 1963 was a fresh appointment or reinstatement with continuity of service. (ii) Whether, after holding the High Court's view to be legally erroneous, relief should be moulded in exercise of extraordinary jurisdiction under Article 136 of the Constitution of India.

Issue (i): Whether the employee's appointment dated 28 August 1963 was a fresh appointment or reinstatement with continuity of service.

Analysis: The resolutions showed that the earlier service had come to an end and that a new appointment was made on humanitarian grounds. The request for revocation of suspension and payment for the suspension period was rejected. On those facts, the later appointment could not be treated as reinstatement carrying continuity of service. Since the rules were statutory, no plea of estoppel could override their effect.

Conclusion: The appointment was a fresh appointment and not reinstatement with continuity of service.

Issue (ii): Whether, after holding the High Court's view to be legally erroneous, relief should be moulded in exercise of extraordinary jurisdiction under Article 136 of the Constitution of India.

Analysis: Although the High Court's legal conclusion was unsustainable, the Court took into account the long lapse of time, the employee's age, the employer's willingness to take him back, and the need to balance legality with equity. The Court held that the extraordinary jurisdiction under Article 136 permits the Court to modify relief so that justice is done to both sides.

Conclusion: Relief was moulded by directing that the employee be treated as in service, without back wages for the intervening period, with continuity only for fixation of future pay and increments.

Final Conclusion: The appeal succeeded, the High Court's judgment was substantially set aside, and the employee was directed to be reinstated on modified terms balancing legal correctness with equitable relief.

Ratio Decidendi: A statutory service rule cannot be displaced by estoppel, and under Article 136 the Court may, in an appropriate case, correct the legal error while moulding the final relief on equitable considerations.

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