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TaxTMI 
TaxTMI 
TaxTMI 
2008 (5) TMI 642
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....lopment Corporation Ltd. ('Corporation' for short) was incorporated as a Government Company under Section 617 of the Companies Act, 1956. The Corporation was established with a view to provide acceleration in the field of mining and other incidental activities. Initially, the Corporation was floated with authorized share capital of Rs. 20 crores which was subsequently increased to Rs. 60 crores. It was a Government Company wherein 100% paid up share capital was by the State. It was thus completely owned by the Government. It was under the direct control and supervision of the State Government. The Corporation was thus an 'instrumentality' of the State. In the beginning, the Corporation showed profits. Subsequently, however, the financial status was deteriorated and it started incurring losses. The Board of Directors, therefore, on December 19, 1996 decided to retrench 460 employees. The Board was required to pay retrenchment compensation to those employees. Accordingly, a request was made to the State Government to advance loan of Rs. 5 crores to enable the Corporation to pay retrenchment compensation to the employees. A resolution to that effect was also passed by ....
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....allegation of the Samiti in the writ petition that loss has been sustained by the Corporation because of various wrong policy decisions taken by the U.P. Government and the Corporation. Several employees of the Corporation were not paid their salary and they were facing great hardship. Their family members had also suffered a lot and they were on the verge of starvation. 7. A counter-affidavit was filed on behalf of the Corporation through its Managing Director. By way of preliminary objections, it was contended that the petition was premature inasmuch as no action of retrenchment was taken by the Corporation. Moreover, alternative and efficacious remedy under the U.P. Industrial Disputes Act was available to the petitioners. On merits, it was contended that in view of shrinkage in the activities of the Corporation and also increase of wage bill because of huge surplus manpower, the Board of Directors of the Corporation took a decision on December 19, 1996 to retrench excess employees in accordance with law. According to the deponent, the Corporation was in acute financial crisis and totally dependant on grant-in-aid from the U.P. Government. The Corporation had closed down its mi....
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....d the business had come to an end, by several interim orders passed from time to time, the High Court directed the Corporation and the State to pay salary to the workmen though they had not worked. By such interim orders, crores of rupees had been paid to the workmen. Highlighting the difficulties of the Government and Public Sector Undertakings in commercial establishments, His Lordship made larger and wider observations as to the policy of the Government in commercial matters. His Lordship recommended the Central and State Governments to rapidly privatize most of the public sectors and services like banks, telephone, electricity, water works, municipal services, etc. We, however, express no opinion on that issue. 9. As regards, the appellant-Corporation, His Lordship said that it was a 'totally sick' unit. On the prayers of the Samiti, it was observed that the workers had been treated over-indulgently. Most of them had been without work and were surplus and crores of rupees had been paid to them for doing nothing. The money had come from public purse and it was unfair to grant relief in such a petition. Accordingly, the petition was ordered to be dismissed. 10. The othe....
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....nt. His Lordship, in the circumstances was of the view that the writ petition was required to be allowed. The petition was accordingly allowed and a writ in the nature of mandamus was issued directing the respondents to pay salary to the employees within four months from the date of the order and also to take necessary steps for their absorption in various organizations of the State Government/Public Sector Undertakings expeditiously. Liberty, however, was granted to the respondents to take appropriate steps for the retrenchment of the employees keeping in view the resolution passed by the Corporation. 13. In view of difference of opinion between two Hon'ble Judges of the Division Bench, an order was passed on the same day, signed by both the Hon'ble Judges to place the papers before the Hon'ble Chief Justice for constituting an appropriate Bench. 14. It appears that in view of cleavage of opinion, the matter was placed before a third Judge (Hon'ble Mr. Justice S.H.A. Raza), who after hearing the parties and considering opinions of two judges, held that he was in agreement with the view expressed by Hon'ble Mr. Justice Dhaon. His Lordship, however, observed th....
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....was then placed before a Division Bench (Coram : U.K. Dhaon & J.M. Paliwal, JJ.) The Corporation on May 9, 2005, filed supplementary counter-affidavit placing on record inter alia the following facts and materials; (i) Absorption Rules, 1991; (ii) Policy of the State Government regarding absorption of employees, dated July 10, 2000; (iii) Application for modification of undertaking of Harminder Raj Singh recorded in the order dated August 4, 1999; (iv) Absorption Rules, 2003. 24. On July 19, 2005, the Division Bench of the High Court, instead of deciding the writ petition decided the application, dated March 10, 2005 (which was for listing of the matter before a Division Bench). It was observed that the matter was heard and finally decided by the Hon'ble Third Judge in accordance with Rule 3 of Chapter VIII of the Allahabad High Court Rules, 1952 and, hence, no further order was required to be passed. The application was, therefore, rejected. 25. The High Court was obviously in error in passing the above order. The State and the Corporation, therefore, filed Special Leave Petition in this Court which was registered as Civil Appeal No. 5473 of 2005. It was contended before....
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....he application is, therefore, rejected. The writ petition is finally disposed of in the following terms; The writ petition is allowed and a writ of mandamus is issued directing the opposite parties to absorb the employees of the petitioners-association within four months from today in various organizations of the State Government/Public Sectors and to pay compensation, in accordance with law. However, it will be open for the opposite parties to take necessary steps for the retrenchment of the employees of the petitioners-association keeping in view the resolution dated 19.12.1996 of the Board of Directors of the Corporation. Parties shall bear their own costs." (emphasis supplied) 28. It is this order which is challenged by the appellants in the present appeal. 29. Notice was issued on December 11, 2006. The respondents appeared, accepted the notice and prayed time to file counter affidavit. Meanwhile, operation of the judgment was stayed. The Registry was thereafter asked to place the matter for final hearing on a non- miscellaneous day and that is how the matter has come up before us. 30. We have heard learned counsel for the parties. 31. The learned counsel for the appella....
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.... time. A public authority cannot act inconsistent with or contrary to statutory rules. It was stated that no statement was made by any officer on behalf of the Corporation that the employees of the Corporation would be absorbed by the Government either in Government service or in any Public Sector Undertaking. But, even if some statement was made, it had no legal force and binding effect and cannot be enforced inasmuch as no statement could have been made which is not in consonance with law or against statutory rules. In the instant case, an application was also made by the Secretary of the Corporation stating therein that no assurance was given by him to the Court that the retrenched employees would be absorbed nor such assurance could be given by any one else. But the High Court, unfortunately, rejected the said application and proceeded to decide the matter on so-called assurance. According to the learned counsel, there can be no estoppel against a statute. If the relevant provisions of law do not entitle an employee after retrenchment to be absorbed in any other Department or Undertaking, no such right can flow from a statement, assurance or even undertaking if it is not in con....
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....ch has been done. No fault can be found against such an action and the grievance raised by the Corporation is not well-founded. The Court, considering all the facts and circumstances, issued certain directions which are in consonance with law. It was also stated that several interim orders which were passed by the Court from time to time were confirmed even by this Court. It was only because the matter was not placed before a Division Bench of the High Court and the earlier order was not complied with that this Court allowed the appeal filed by the State and remitted the matter to the High Court to be dealt with and decided by a Division Bench. But once the Division Bench has decided the matter and passed an order, no interference is called for. It was also submitted that the Government has absorbed several employees by adopting 'pick and choose' method which shows that it wants to oblige 'fortunate few' without any legal basis or principle. It was further stated that it is not true that the Corporation has closed its activities and mining work. It is working and several persons are still in service performing their functions and discharging their duties. For all th....
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....ct this petition on the ground of alternative remedy having regard to the fact that the petition has been entertained and an interim order passed". (emphasis supplied) 38. Even otherwise, the learned Judge was not right in law. True it is that issuance of rule nisi or passing of interim orders is a relevant consideration for not dismissing a petition if it appears to the High Court that the matter could be decided by a writ-Court. It has been so held even by this Court in several cases that even if alternative remedy is available, it cannot be held that a writ- petition is not maintainable. In our judgment, however, it cannot be laid down as a proposition of law that once a petition is admitted, it could never be dismissed on the ground of alternative remedy. If such bald contention is upheld, even this Court cannot order dismissal of a writ petition which ought not to have been entertained by the High Court under Article 226 of the Constitution in view of availability of alternative and equally efficacious remedy to the aggrieved party, once the High Court has entertained a writ-petition albeit wrongly and granted the relief to the petitioner. 39. On the facts and in the circum....
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....e conditions laid down in those rules, it was the duty of the High Court to consider those rules and to decide whether under the statutory rules, such absorption could be ordered. 43. After all, the High Court was considering the prayer of the petitioners to grant a writ in the nature of mandamus. It was, therefore, expected of the High Court to keep in view the relevant provisions of law. The High Court mainly relied upon an assurance said to have been given by the Secretary on behalf of the Corporation that excess employees would be absorbed either in the Government Department or in other Public Sector Undertakings. From the record it appears that it was the case of the Secretary of the Corporation that no such assurance was given by him to the Hon'ble Court. But even if he had given such assurance, it was of no consequence since in the teeth of statutory rules, such assurance had no legal efficacy. Moreover, an application was made on affidavit by the Secretary of the Corporation clarifying the position and praying for modification of the earlier order passed by the High Court in which such statement on behalf of the Corporation appeared. The High Court, however, rejected e....
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....f absorption of all employees of the Corporation either in Government Department or in any other Public Sector Undertaking is in accordance with law, no writ can be issued. Therefore, even on that ground, the directions of the High Court deserve to be set aside. 47. Regarding payment of compensation to the employees also, the High Court was not right. We have extracted the operative part of the order of the High Court in earlier part of the judgment. The High Court has stated that the appellants herein would absorb the employees of the Corporation and would "pay compensation in accordance with law". It was contended by the Corporation that there was no foundation in the entire writ petition as to the provisions of law under which such compensation could be claimed and violation of the law by the Corporation or by the State. No finding has been recorded by the High Court that a specific or particular provision of law had been violated which entitled the workers to claim compensation. No reasons had been recorded by the High Court in the impugned judgment for issuing such direction nor any basis for such direction has been shown. In our opinion, therefore, no such blanket direction ....