TaxTMI 
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2004 (3) TMI 409
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....rticle 226 of the Constitution of India, with a prayer to issue a writ in the nature of mandamus declaring G.O. Ms. No. 50, Public Enterprises (II) Department, dated November 15, 2001, as illegal and void. 4. The appellants represent the employees working in various categories in the A.P. State Irrigation Development Corporation Limited (for short 'the Corporation'). The Corporation is one of the State Level Public Enterprises and it is a wholly owned A.P. Government Company, registered under the provisions of the Companies Act, 1956. The primary objects of the Corporation are to survey, investigate, construct, execute and carry out schemes and works of all kinds for the exploitation of irrigation potential in the State and for maximum utilisation of available water resources, to create irrigation facilities to the upland areas through lift irrigation and ground water schemes. The paid up share capital of the Corporation was at Rs. 117.22 crores as on March 31, 2001. The company is being managed by its Board of Directors. That almost all the shares are held by the State Government except Rs. 95,00,000 of share money held by the Government of India. The State Government is the only....
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....hat there is a need to study the staff strength with reference to the changed organization structure consequent on implementation of VR Scheme. The Transaction and Financial Adviser, Implementation Secretariat of the Public Enterprises Department, conducted the study, submitted a report and recommended that the cadre strength of the 3rd respondent-Corporation should be fixed at 404 employees. The matter was placed before the Cabinet sub-Committee on Public Sector Undertakings and the Cabinet Sub-Committee in its meeting held on September 22, 2001, having considered the manpower study of the Corporation concurred with the recommendation that the cadre strength of the respondent-corporation ought to be fixed as 404 employees. Based on the recommendations of the Cabinet Sub-Committee, the Government vide G.O. Ms. No. 50 dated November 15, 2001 determined and accordingly ordered the cadre strength of the Corporation as 404 employees as detailed in the annexure appended to the said G.O. The appellants challenged the same in the writ petition unsuccessfully. 8. Sri V. Venkataramana, learned counsel, appearing on behalf of the appellants inter alia contended that the Government of Andhra....
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....e Corporation. In any event, the proposals for downsizing of the cadre strength emanated from the Corporation itself and the Corporation and members of the appellants' association were actively involved before the impugned G.O. was issued. 10. We have elaborately heard the learned counsel appearing on behalf of the appellants as well as the learned Additional Advocate-General representing the State as well as the Corporation. We have given our earnest and anxious consideration to the rival submissions made during the course of hearing of this batch of appeals. 11. In order to consider the submissions, it is just and necessary to notice a few facts about which there is no dispute. 12. The impugned G.O. dated November 15, 2001 itself reveals that the Corporation has been incurring losses continuously over the years and that the accumulated loss as on March 31, 2001 stood at Rs. 27 crores, as on March 31, 2002 it was Rs. 38 crores and as on March 31, 2003 it was Rs. 42.62 crores. 13. The accumulated losses of the Corporation are on account of several factors and it would not be possible for this Court to make a detailed enquiry notwithstanding the several accusations made by the a....
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....th the Board of Management. The Board of Directors of the Corporation determined staffing pattern at their 43rd meeting held on September 29, 1990. The staffing pattern was under continuous review from time to time. The review was based upon the requirement of staff to be need based to undertake economically viable projects. The Corporation sought for the Government's approval, from time to time to float V.R. Scheme to discharge surplus manpower. The Corporation itself submitted proposals on January 6, 1991 to further downsize the cadre strength of the Corporation so as to make the organisation economically viable and also for its survival. At one stage, the Government has proposed the cadre strength of respondent-Corporation at 281 employees and with the efforts of the management of the Corporation, it was subsequently increased to 404 employees. We have adverted to these facts in order to highlight that the Board of Directors of the Corporation are actively involved in the decision-making process and the proposals at every point of time emanated from the Board of the Corporation itself. 18. That even under Article 90 of the Memorandum of Articles of Association, the Government i....
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....y govern the internal management, business or administration of a company. They may be binding between the persons affected by them but they do not have the force of statute. The Articles of Association of a company incorporated under the Companies Act have never been held to have the force of law. (See: Co-operative Central Bank Ltd. v. Additional Industrial Tribunal AIR 1970 SC 245). 21. The power exercised by the Government in the instant case is as the shareholder of the Corporation and not in exercise of its power under Article 162 of the Constitution of India. In that view of the matter, it would be impermissible to apply the principles of Administrative Law in order to test the validity of the Governmental action in the instant case. Article 14 of the Constitution of India cannot be construed as a charter of judicial review of State actions and to call upon the State of account for its action in its manifold activities by stating reasons for the actions (See: L.I.C. of India v. Escorts Ltd. AIR 1986 SC 1370). The principles of Administrative law, such as against surrender of discretion and abdication of duty would apply in case of exercise of power conferred by a statute or....
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....y matters and not on day-to-day matters of administration such as determination of cadre strength, in our considered opinion, is not applicable to the fact situation on hand. In Rakesh Ranjan Verma's case (supra), the provisions of section 78-A of the Electricity (Supply) Act fell for interpretation. Section 78-A provides that in discharge of its functions, the Electricity Board shall be guided by such directions on questions of policy as may be issued by the Government from time to time. Article 90 of the Articles of Association of the Corporation, which empowers the Government of approve the staffing pattern of the Corporation, is much wider in its scope and amplitude. We have already dealt with the same. Rakesh Ranjan Verma's case (supra) has no application to the case on hand. 26. Similarly, the decision of this Court in Poddar Projects Ltd. v. A.P.S.E. Board AIR 1982 AP 189, has also no application to the instant case in which it was held that the directions issued by the State Government under section 78-A of the Electricity (Supply) Act, are not intended to regulate the contractual relationship between the Electricity Board and the consumers of electric energy supplied by i....
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....olicy decisions from time to time under the changing circumstances cannot be disputed and it is an integral part of democratic process. This Court in exercise of its jurisdiction under Article 226 of the Constitution of India, while considering the validity of the Governmental policy cannot weigh the pros and cons of the policy or to scrutinise it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on even sound reasoning. One of the inputs in formulating and reformulating the Governmental policies may be availability or lack of resources. Since the purse of the State is not under the control of the Court, it will not transgress into the field of policy decision. It would be unnecessary to burden this judgment with various authoritative pronouncements of the Supreme Court delineating the parameters of judicial review in evaluating the policy decisions of the Government. (See: State of Punjab v. Ram Lubhaya Bagga AIR 1998 SC 1703: 1998 (4) SCC 117, Narmada Bachao Andolan v. Union of India AIR 2000 SC 3751 : 2000 (10) SCC 664 and Union of India v. Tejram Parashramji Bombhate AIR 1992 SC 570 : 1991 (3) SCC 11. 31....
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....al public......the abolition of post may have the consequence of termination of service of a Government Servant. Such termination is not dismissal or removal within the meaning of article 311 of the Constitution of India. The opportunity of showing cause against the proposed penalty of dismissal or removal does not therefore arise in the case of abolition of post. The abolition of post is not a personal penalty against the Government Servant." 34. In Balco Employees Union (supra), the Supreme Court observed : "47. . . .Even though the workers may have interest in the manner in which the company is conducting its business, inasmuch as its policy decision may have an impact on the workers rights, nevertheless it is an incidence of service for an employee to accept a decision of the employer which has been honestly taken and which is not contrary to law. Even a Government servant, having the protection of not only Articles 14 and 16 of the Constitution but also of Article 311, has no absolute right to remain in service. For example, apart from cases of disciplinary action, the services of Government servants can be terminated if posts are abolished. If such employee cannot make a gr....
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....g upon the exigencies of the situation. The reasons are clearly evident from the impugned G.O. itself as to what are those circumstances that necessitated the Government to review its earlier policy and further downsize the sanctioned strength of the employees of the Corporation. We have already adverted to each one of those reasons stated and it is unnecessary to reiterate the same. 39. Reliance also has been placed on letters addressed by the Chairman of the Corporation to the Honourable Chief Minister in October, 2003, subsequent to the impugned judgment on June 4, 2002 and June 25, 2003 in support of the contention that on account of the availability of the work and administrative sanction, there is a need of increasing the cadre strength above 404 employees. We cannot place any reliance upon the letters stated to have been addressed by the Chairman of the Corporation to the Honourable Chief Minister. 40. It is evident from the averments made in the counter-affidvait that even after the impugned G.O. was issued, the actual budgetary allocations and budgetary releases for subsequent years show that the budgetary releases are far less than the breakeven point of Rs. 65 crores, ....
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....d on the said Bill being passed it becomes the "Appropriation Act". Article 204(3) of the Constitution of India prohibits withdrawal of money from the Consolidated Fund of the State except under appropriation made by law passed in accordance with the provisions of Article 204. Thus budgetary allocation, made under the Appropriation Act, is law made by the State Legislature and cannot be deviated from. The budgetary releases from out of the allocations made under the Appropriate Act are once again dependent on several factors, such as, actual receipt of estimated revenue, expenditure required to be incurred for certain unforeseen contingencies etc. These are also once again placed for approval of the Legislature and on being passed becomes law as "Appropriation Act-II". Thus, both the budgetary allocations and budgetary releases are in effect to the laws made by the State Legislature. 45. It is very well settled that this Court in exercise of the power under Article 226 of the Constitution of India, cannot issue a writ of mandamus to make law. 46. In State of Himachal Pradesh v. Umed Ram Sharma AIR 1986 SC 847: 1986 (2) SCC 68, the Supreme Court held: ".... that total sanction of....
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....tion of India. We accordingly reject the contentions raised in this regard. G.O. Ms. No. 50, dated November 15, 2001 is accordingly upheld. Writ Appeal No. 1594 of 2003 and Batch 50. In this batch of cases, the appellants challenge the action of the Corporation in identifying surplus employees and calling upon those identified surplus employees to exercise their option for V.R. Scheme. The circular dated September 7, 2002 and the notice dated September 7, 2002 issued by the Corporation are impugned on various grounds. Both the proceedings have been issued consequent upon the Government Orders vide G.O. Ms. No. 50 dated November 15, 2001 fixing the cadre strength of the Corporation at 404 employees. Be it noted that the said G.O. having been adopted by the Corporation decided itself to implement the same. That after the Govenrment accorded approval to float the V.R. Scheme to discharge the manpower, the entire matter has been placed once again before the Board on its 138th meeting held on September 8, 2002 and the Board has decided to float cadre-based V.R. Scheme to surplus identified employees. The Scheme is known as "APSIDC Employees Voluntary Retirement Scheme-2002, Phase-V.d"....
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....become the senior most in the cadre to which he will be rolled down and thus the Corporation would be in a position to retain senior employees with rich experience. The learned counsel further contended that there is no rationale behind the classification of the employees into surplus and non-surplus and therefore the classification is not a valid classification. The learned counsel further submitted that the Corporation ought to have first invited such of those employees of the work charged establishment, who continued to work in the provincial establishment, as surplus. 55. Sri Nuty Ram Mohan Rao, learned counsel submitted that the identification of the appellants as surplus is unscientific since it is not based on any material except the report of the one-man committee. He reiterated the submission made by Sri A. Suryanarayana Murthy that the Corporation ought to have applied the principle of "roll back" or "stepping down". Had the Corporation followed such rule, the appellants would not have been identified as surplus. The learned counsel further contended that the Corporation should have applied the reservation roster in the reverse order for identification of surplus employe....
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....ikes at arbitrariness in executive/administrative action because any action that is arbitrary must necessarily involve the negation of equility. At the same time, we are required to bear in mind that even if the Corporation is an instrumentality of the State as comprehended in Article 12 of the Constitution, yet the employees of the Corporation are not governed by Part-XIV of the Constitution. The Supreme Court, took the view that there is no good reason why, if Government is bound to observe the equality clauses of the Constitution in the matter of employment and in its dealings with the employees, the Corporations set up or owned by the Government should not be equally bound and why, instead, such Corporations could become citadels of patronage and arbitrary action. The independence and integrity of those employed in the public sector should be secured as much as independence and integrity of civil servants. The Supreme Court found that the distinction sought to be drawn between protection of Part-XIV of the Constitution and Part-III has no significance (See: Managing Director, Uttar Pradesh Warehousing Corpn. v. Vinay Narayan Vajapayee AIR 1980 SC 840 and A.L. Kalra v. Project a....
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....y have satisfied the test under Articles 14 and 16 of the Constitution of India. But unless this Court comes to the conclusion that the principle of "last come first go in each category" applied by the Corporation is arbitrary and in violation of Articles 14 and 16 of the Constitution of India, no directions can be issued directing the Corporation to adopt the procedure of "stepping down" in substitution of the adopted procedure. When there are two reasonable modes for identification of the surplus employees available, the Corporation is entitled to choose one such reasonable mode and in such a situation this Court in exercise of its jurisdiction under Article 226 of the Constitution of India, cannot compel the Corporation to adopt the other mode which in its view may equally be reasonable and efficacious. "Stepping down" Procedure: 64. In the affidavit filed in support of the writ petitions, it is asserted that "it is the fundamental principle governing the service as and when reduction of posts and persons are being reverted or retrenched, the seniority in substantive post has to be taken into account for retention." In the counter-affidavit, the challenge is met by the State e....
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....ants that the action of the Corporation in identifying the surplus employees is a colourable exercise of power. Neither any post was created nor promotions effected with a view to declare such promoted employees as surplusage. On the other hand, the Corporation identified nearly 450 employees as surplus by uniformly applying the principle of "last come first go in each category" except in case employees belonging to Scheduled Castes and Scheduled Tribes category. 66. The observations of the Courts are not to be read as "Euclid's theorems" nor as provisions of the statute. These observations must be read in the context in which they appear. The judgments of Courts are not to be construed as statute. [See: Haryana Financial Corpn. v. Jagadamba Oil Mills 2002 (3) SCC 496 and Ashwani Kumar Singh v. U.P. Public Service Commission AIR 2003 SC 2661]. 67. In Des Raj Sangar's case (supra) the Supreme Court observed that whether a post should be retained or abolished is essentially a matter for the Government to decide. As long as such decision of the Government is taken in good faith, the same cannot be set aside by the Court. It is not open to the Court to go behind the wisdom of the dec....
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....visional seniority list of Assistants as on November 1, 2001 was communicated to all the concerned vide the Corporation proceedings dated December 6, 2001 and December 14, 2001 requiring the employees to submit their objections, if any, within 20 days from the date of the order. It is evident from the record that the employees from the work charged establishments, who were promoted as Junior Assistants, prior to conversion of the appellants, from the posts of Typist to the posts of Junior Assistant, were placed higher in the provisional seniority list, as also in the provisional seniority lists for the previous years. There is no dispute that the regulations of the Corporation provides for promotion of employees in the work charged establishment, to the category of Junior Assistants. The promotions were effected by the Corporation much prior to conversion of the appellants from the category of Typists of the category of Junior Assistants. Those promotions remained unchallenged. 70. However, the contention was that the Government had not approved the proposals for regularisation and conversion of employees in the work charged establishment to the provincialised category and in such....
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....sons interested in such retrenchment may by order for reasons recorded in writing grant or refuse to grant such permission as prayed for by the employer. The rights of the employees in the workmen category are so well protected and failure on the part of the Corporation in giving them an opportunity of being heard at this stage is of no consequence since they are not being retrenched straightaway by the Corporation at this stage. 74. The plea that the entire exercise of identification is vitiated for non-compliance with the principles of natural justice is only available to the identified surplus employees in the non-workmen category, who have not taken VR Scheme. 75. The learned counsel for the appellants in support of their submission placed reliance upon the decision of the Supreme Court in A.K. Kraipak v. Union of India AIR 1970 SC 150 : 1969 (2) SCC 262, Central Inland Water Transport Corpn. v. Brojo Nath Ganguly AIR 1986 SC 1571 : 1986 (3) SCC 156 and Delhi Transport Corpn. v. D.T.C. Mazdoor Congress AIR 1991 SC 101. 76. In A.K. Kraipak's case (supra), the Supreme Court observed, "the aim of the rules of natural justice is to secure justice or to put it communicatively to ....
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....ons have to the case before us. No such regulation, which empowered identification of the surplusage, is in question before us. 80. The question that falls for consideration is whether the observance of rule of audi alteram partem was necessary for a just decision, on the facts of the case? 81. We have noted the sequence of events right from the stage of G.O. Ms. No. 50 dated November 15, 2001, ordering the cadre strength of the Corporation for 404 employees as detailed in the annexure thereto. We have also noted that the Corporation adopted uniform procedure of "last come first go in each category" and found the same to be a reasonable procedure. In such view of the matter nothing further remains to be decided by the Corporation at this stage. No real prejudice, therefore said to have been caused to the appellants, on account of the failure on the part of the Corporation in giving them an opportunity of being heard before identifying them as surplus. It is, by now, well settled that in all cases of violation of the principle of natural justice, the Court in exercise of its jurisdiction under Article 226 of the Constitution of India, need not necessarily interfere and set at naug....
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....and the reasonable possibility of prejudice are some of the factors which weigh with the Court in considering the effect of violation of the principles of natural justice. When undisputably the action taken is within the parameters of the rules governing the payment of HRA and CCA and moreover the university authorities themselves espoused the cause of employees while corresponding with the Government, it is difficult to visualize any real prejudice to the respondents on account of not affording the opportunity to make representation..." (P. 885) 88. On the facts and in the circumstances, we find that no useful purpose could have been served by putting the appellants on notice before the actual identification of the surplusage. No real prejudice has been caused to the appellants on account of not affording the opportunity to make representation. The Corporation uniformly applied the rule of "last come first go in each category" in the process of identification of the surplusage. In the circumstances it is not possible to interfere with the decision of the Corporation on the ground of infraction of rule of audi alteram partem. Subsidiary contentions: 89. Now we shall proceed to e....
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....s the contention urged on their behalf. Women employees and those appointed on compassionate grounds: 93. The appellants contended that since they are women, they are entitled for quota of 33-1/3% and applying roster backwards, they should be retained in the service to the extent of the their quota. Suffice it to notice that none of those women (appellants) were appointed in the Corporation under any quota. As such the question of application roster backwards for women categories does not arise. Similarly an employee appointed on compassionate grounds is not entitled to claim any preferential claim vis-a-vis the other employees. Their claim cannot be over and above the regular employees. We find no merit in their claims. The claim of employees belonging to Backward Classes and categorisation of Scheduled Castes: 94. The appellants who (sic ) belong to other Backward Classes (OBC) category claim that they are entitled for similar protection as given to Scheduled Castes and Scheduled Tribes employees and that the roster backwards should be applied in their case also. It is required to notice that the Corporation even in case of Scheduled Castes and Scheduled Tribes employees did ....
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....Scheduled Tribes. 96. Similarly, the contention that the A.P. Scheduled Castes (Rationalisation of Reservation) Act, 2000, applied and by so applying roster it should be ensured that Scheduled Caste employees in their respective categories are retained in service is untenable and unsustainable. It is needless to observe that the appellants/petitioners were appointed much prior to the said Act coming into force and were not given the benefits of categorisation at the time of their appointment and promotion since the said Act came into force only with effect from December 9, 1999. We find no merit in the contention. Employees in the work charged establishment: 97. Pursuant to G.O. Ms. No. 50 dated November 15, 2001 the work charged establishment has been abolished in its entirety. The reduction of sanctioned strength under G.O. Ms. No. 50 dated November 15, 2001, once found to be valid, the claim of the appellants/employees in the work charged establishment cannot be considered. No relief can be granted to them. Employees sent on deputation: 98. The contention that since the appellants/petitioners were working in other organisations, they should be promoted to work in the place ....
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....O.Ms. No. 121 dated October 31, 1991, the petitioners contend that instead of applying roster backwards, the identified surplus Scheduled Castes and Scheduled Tribes employees ought to have been retained in service by creating the required supernumerary posts. We have noticed that the Corporation applied roster backwards in case of Scheduled Castes and Scheduled Tribes employees on the directions of this Court. The Corporation itself did not apply the roster backwards on its own. 102. Be it as it may, G.O. No. 121 dated October 31, 1991, admitted is applicable to Government Departments only and does not have universal application. The Corporation did not adopt the said G.O. and therefore it has no application to the employees of the Corporation. 103. That apart the very scheme and policy of reduction in sanctioned strength and consequent abolition of posts is to ensure self-sustenance, and survival of the Corporation. The creation of supernumerary posts would be counter-productive as employees to that extent of supernumerary posts created would exceed the sanctioned strength of 404 employees which would in turn be in violation of G.O. Ms. No. 50 dated November 15, 2001. Hence, we....