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Wednesday, August 10, 2016

whether the claim of the respondents, a group of twenty one employees of PEPSU Roadways that in spite of transfer of that department to the Corporation they continue to be actually Government servants and therefore entitled to retiral benefits instead of CPF is acceptable or not. = we are constrained to hold that the respondents had accepted to continue as employees of Corporation pursuant to order of merger/transfer of PEPSU Roadways with effect from 16.10.1956 and on completing their service under the Corporation and reaching the age of retirement they were entitled to receive only the benefits of CPF and gratuity as admissible to them under then prevailing regulations of the Corporation. Since they accepted those retiral benefits there is no relationship left between the Corporation and the respondents and in such a situation further claim against the Corporation that it should treat the respondents to be Government servants and adjust their retiral benefits accordingly was totally untenable and wrongly allowed by the High Court. The impugned judgment of the High Court granting relief to the respondents is therefore set aside.


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 4703 of 2009

PEPSU Road Transport Corporation, Patiala          …..Appellants
Through its Managing Director & Anr.


S. K. Sharma & Ors.                                …..Respondents

                               J U D G M E N T


This  appeal  by  special  leave  assails  the  judgment  and  order   dated
24.04.2006 passed by a Division Bench of High Court of  Punjab  and  Haryana
dismissing LPA No. 700 of 2002 preferred by  the  appellants  and  affirming
the judgment of learned Single Judge dated 11.01.2002 whereby Writ  Petition
bearing CWP No. 11908 of 1992 preferred  by  some  of  the  respondents  was
allowed. Some had preferred to file  suits  and  Civil  Appeals  which  were
dismissed.  Their Regular Second Appeal No. 430 of 1995 was tagged with  the
above writ petition and was allowed by the  same  common  judgment  enabling
all the 21 respondents to refund a  part  of  CPF  (Govt.  Contribution)  or
agree for adjustment, to obtain pensionary benefits.
The respondents filed the writ petition in  1992  claiming  that  they  were
appointed originally in a department of PEPSU described as  PEPSU  Roadways,
between January 1955 and September 1956. It is not in dispute  that  in  the
PEPSU Roadways the respondents’ appointment was only  on   temporary  basis.
PEPSU Roadways lost its utility due to  creation  of  PEPSU  Road  Transport
Corporation  (hereinafter  referred  to  as  the  ‘Corporation’).  Copy   of
notification dated 07.01.1956 available on  record  shows  that  Corporation
was created by this notification under the provisions of the Road  Transport
Corporation Act, 1950  enforced  with  effect  from  10.08.1954.  The  State
Government through the Chief Secretary  issued  a  letter  dated  16.10.1956
informing the General Manager, PEPSU Roadways, Patiala  (with  reference  to
PEPSU Roadways’  communication  dated  14.10.1956)  that  His  Highness  the
Rajpramukh had ordered the transfer of PEPSU  Roadways  to  the  PEPSU  Road
Transport Corporation (with effect  from  15.10.1956  forenoon)  on  various
terms and conditions in respect to evaluation of the  assets  of  the  PEPSU
Roadways as well as sharing the burden for payment of the employees  of  the
Corporation. The letter indicates that  the  Corporation  was  requested  to
draw up the agreement required by clause (h) of sub-section (2)  of  Section
19 of the Road Transport Corporation Act, 1950 and forward the same  to  the
Government  for  approval  and  signatures.  On  account   of   the   States
Reorganization Act the merger of State of PEPSU with  the  State  of  Punjab
became effective from 01.11.1956. Through an Order no. 61  dated  30.11.1956
the Corporation admitted  that  PEPSU  Roadways  stood  taken  over  by  the
Corporation from 16.10.1956 (before  noon),  so  the  services  of  all  the
temporary employees stood transferred to the Corporation  with  effect  from
16.10.1956 on the prevailing terms and conditions till the approval  of  new
terms and conditions by the Corporation. The  respondents  never  challenged
this  declaration,  got  promotions  etc.  and  continued   to   serve   the
Corporation till they all retired between  1989  and  1991.  It  is  not  in
dispute that PEPSU Road Transport Corporation Regulations which  was  framed
in 1957 provided  for  Contributory  Provident  Fund  (CPF).  There  was  no
provision  for  grant  of  pension.   Much  after  the  retirement  of   the
respondents, only with effect from 15.06.1992 the  Corporation  framed  PRTC
Employees Pension/Gratuity and  General  Provident  Fund  Regulations,  1992
(hereinafter described as ‘Regulations of 1992’). Under  these  Regulations,
for the first time pension was introduced in the Corporation.
Soon after the enforcement of Regulations of 1992 the  respondents  who  had
already received their retiral benefits under  the  1957  Regulations  filed
the writ petition at hand. Originally the grievance of  the  respondents  in
the writ petition was as to why the Regulations of 1992 have not  been  made
retrospective but through an  amendment  in  1998,  the  writ  petition  was
substantially amended so as to claim that they continued to be employees  of
the State  in  the  department  of  PEPSU  Roadways  till  PEPSU  State  was
reorganized and from 01.11.1956, the  date  of  reorganization  they  became
employees of  State  of  Punjab  with  right  to  pension  as  available  to
Government servants. The Single Judge  allowed  the  writ  petition  on  the
premise that the respondents had simply been  transferred  from  the  parent
department to serve in the Corporation and therefore they  continued  to  be
Government servants because there was no order passed for  their  absorption
in the Corporation. The Letters Patent Appeal preferred  by  the  appellants
was dismissed by the judgment and order  dated  24.04.2006  which  is  under
challenge in this appeal.
It is  significant  to  note  that  the  letter  of  Chief  Secretary  dated
16.10.1956 informing the General Manager, PEPSU  Roadways  of   Government’s
decision on the subject of transfer of PEPSU  Roadways  to  the  Corporation
was not placed before the High Court by the  writ  petitioners  although  it
finds a specific mention in Order no. 61  dated  30.11.1956  passed  by  the
General  Manager,  PEPSU  Road  Transport  Corporation.  Hence  this  Court,
apparently in the larger interest of  justice,  by  order  dated  20.08.2015
permitted the appellants to place on record the consent of  the  respondents
and necessary documents to show that the respondents accepted transfer  from
PEPSU Roadways to the  Corporation.  The  additional  fresh  documents  were
filed after service upon the respondents who were granted  accommodation  on
that ground on 24.11.2015. The  additional  documents  were  filed  with  an
affidavit on behalf of appellants  and   include  a  copy  of  letter  dated
16.10.1956. The  respondents  have  not  objected  to  the  correctness  and
authenticity of the additional documents  and  hence  those  documents  have
been taken on record and used by learned senior counsel for  the  appellants
in support of his contentions.
On behalf of the appellants learned senior counsel Mr. Rakesh Dwivedi  first
took us through the letter dated 16.10.1956 and also  the  subsequent  order
dated 30.11.1956.  He  showed  by  way  of  illustration  that  one  of  the
respondents Mr. O.P. Trehan through letter dated  01.03.1965  had  opted  to
serve the Corporation. He also placed reliance on order dated 02.06.1986  of
the Corporation by which Mr. S.K. Sharma, another  respondent  was  promoted
as Sr. Depot Manager which he accepted. That order clearly  stipulated  that
he will be governed by the rules in force and those  that  may  subsequently
be framed for the officers of the Corporation. Before advancing  submissions
in respect of issues of law, Mr. Dwivedi  emphasised  that  being  temporary
employees of PEPSU Roadways till  15.10.1956,  the  respondents  under  then
prevailing service rules of  the  State  Government  were  not  entitled  to
pension as temporary  employees   even  till  their  department  i.e,  PEPSU
Roadways was merged with the Corporation   by  the  decision  of  the  State
Government.  Therefore, it is contended that  they  have  not  suffered  any
adverse consequences on account of  merger;  rather  they  became  permanent
employees of the Corporation, obtained promotions and on retirement  availed
all the lawfully  admissible  benefits  of  CPF  and  gratuity  without  any
protest and demur.
On behalf of appellants Mr. Dwivedi has advanced the following submissions:
 The relevant Department, PEPSU Roadways itself ceased to  exist  and  be  a
Department and was merged with the Corporation  totally  and  completely  by
16.10.1956. The Department merged along with the posts, assets,  liabilities
and the respondent employees. There was no  protest  or  challenge  to  such
merger by way of transfer of the entire Department to the Corporation.
 The word “transfer” is not used in the Government’s decision  evidenced  by
letter dated 16.10.1956 in the narrow sense of  “transfer  and  posting”  to
another post or place. Rather, it connotes transfer as merger of the  entire
Department with assets, liabilities, posts  and  employees  including  their
service and hence there was no occasion or need for any order of  absorption
in respect of the respondents.
 Since the transfer/merger of the Department was complete  much  before  the
date 01.11.1956 when PEPSU State merged with the State of Punjab  under  the
States Reorganization Act, the  respondents  cannot  claim  to  have  become
employees  of  State  of  Punjab  by  virtue  of  Section  115   of   States
Reorganization Act. This provision  could  have  helped  them  only  if  the
Department-PEPSU Roadways could have existed till 01.11.1956 or if they  had
been simply deputed  to  work  in  the  Corporation  under  usual  terms  of
deputation while retaining their lien on posts  available  under  the  State
Learned senior counsel for the  appellants  elaborated  his  submissions  by
contending that the High Court erred in relying  upon  various  sub-sections
and provisos to Section 115 of the States Reorganization Act and such  error
was on account of failure to appreciate that the respondents ceased to  have
for them any post in the Government due to complete transfer/merger  of  the
PEPSU Roadways with the Corporation much  before  01.11.1956.  It  was  also
contended that the  High  Court  failed  to  appreciate  that  as  temporary
employees with very little service to their  credit,  the  respondents  were
not put to any disadvantage on  account  of  transfer/merger  because  being
temporary employees in 1955  and  1956,  they  were  then  not  entitled  to
pension  under  the   PEPSU   Services   Regulations   governing   pensions,
particularly sub-rule (a) of Rule 1.2 in Chapter 1  which  contains  general
rules relating to pensions for  superior  and  inferior  service.  The  rule
reads thus:
“Cases in which claims to pension are inadmissible
1.2         In the following cases no claim to pension is admitted:-

(a)   When a Government servant is holding an  appointment  of  a  temporary
nature or is paid for definite work done for the  Government  without  being
permanently employed.”

Lastly, it was contended on behalf of appellants that the High Court  should
not have entertained the  writ  petition  in  1992  or  allowed  substantial
amendments in 1998 to permit claims made belatedly after decades  and  after
superannuation from the service of the Corporation. Such claims should  have
been rejected on the ground of delay. In support of this plea  reliance  was
placed upon judgment in  the  case  of  PEPSU  Road  Transport  Corporation,
Patiala v. Mangal Singh and Ors.[1]   In  this  case  the  respondents  were
still in service as the employees of  the  appellant  Corporation  when  the
Regulations of 1992 introduced a pension scheme but they  did  not  exercise
option for pension within the stipulated time. Moreover, they  also  availed
of retiral benefits arising out of CPF and  gratuity  without  any  protest.
This Court held that the respondents on account of failure  on  their  part,
could not claim benefit under the pension scheme.  Particular  reliance  was
placed upon the following observations at the end of paragraph 35;
“…..On the receipt of CPF amount,  the  relationship  between  employee  and
employer ceases  to  exist  without  leaving  any  further  legal  right  or
obligation qua each other.”

      Since most of the respondents in that  case  also  had  retired  after
serving for several years since the enforcement of Regulations of  1992  and
had advanced claim for pension after accepting CPF etc.,  in  para  52  this
Court counted the delay of  about  eight  years  from  the  introduction  of
pension scheme in 1992 and held such delay was unreasonable. On  that  basis
it has been urged on behalf of appellants that  through  amendment  made  in
1998 the respondents gave up their claim for pension under  the  Regulations
of 1992 and instead claimed  pensionary  rights  by  indirectly  mounting  a
challenge to the decision of the State Government evident from letter  dated
16.10.1956, merging PEPSU Roadways with  the  Corporation.  Their  claim  of
being in the employment of State and to have suffered the effect  of  States
Reorganization Act and merger of PEPSU State with the  State  of  Punjab  on
01.11.1956 was clearly a claim made after unusual delay of  several  decades
and the High Court should not have condoned such delay.
In reply, Mr. S.K. Sharma  learned  counsel  for  the  respondents  advanced
arguments in support of the impugned judgment. As per his submissions,  even
after the transfer of Roadways Department  to  the  Corporation,  there  was
legal necessity of issuing formal orders showing absorption  of  respondents
as employees of Corporation under a valid resolution of the Corporation.  He
relied upon  findings  of  the  High  Court  that  there  was  no  order  or
resolution for such  absorption.  On  behalf  of  respondents  reliance  was
placed upon judgment in the case of  Vice  Chancellor,  Utkal  University  &
Ors. v. S.K. Ghosh & Ors.[2], to support the proposition  that  a  corporate
body like University acts through formal resolution arrived at in  a  proper
manner by  the  competent  body.  The  facts  of  this  case  were  entirely
different.  The  appellant  before  this  Court  was  Vice-Chancellor  of  a
University who was aggrieved by the High  Court  judgment  interfering  with
the cancellation of an examination through  resolutions  of  the  University
Syndicate. The High Court invalidated the  resolution  for  want  of  proper
notice vide agenda for the meeting as well  as  lack  of  justification  for
cancellation of the examination. This Court reversed  the  judgment  of  the
High Court on both counts. The ratio of  the  judgment  does  not  help  the
Respondents next relied upon judgment in the case  of  State  of  Punjab  v.
Nirmal Singh.[3] In this case State of  Punjab  was  aggrieved  by  impugned
judgment of the High Court whereby  minor  punishment  imposed  upon  Nirmal
Singh was set  aside.  This  Court  allowed  the  appeal  and  reversed  the
judgment of the High Court on a finding that there was no requirement  under
the rule to grant a personal hearing for imposition of a minor  penalty  and
that the High Court had  erred  in  treating  the  order  of  the  competent
authority as a non-speaking order.  This  case  also  is  not  relevant  for
deciding the controversy at hand.
To meet the allegation of delay, reliance was placed upon S.R.  Bhanrale  v.
Union of India and Ors.[4] The appellant in that case retired as an  officer
in the Department of Telecommunications, Government of  India  and  received
pension immediately on retirement.  For no good reasons  his  other  retiral
benefits and claims remained unsettled in spite of several  representations.
After serving the notice under Section 80 CPC and approximately after  three
years he moved the Central Administrative Tribunal.  While  the  matter  was
pending with this Court, upon directions of the  Department,  the  appellant
was paid some of the benefits. At the stage of  final  hearing,  this  Court
considered the circumstances and observed that in the facts of the case  the
Union of India was not justified in raising the bar  of  limitation  against
the dues of the appellant. It cannot be  claimed  by  way  of  general  rule
simply on the basis of aforesaid judgment that in all  cases  of  claim  for
pension, the plea of delay or limitation cannot  be  considered  by  a  writ
court. Only where the retiral benefits have been wrongly  withheld  and  not
paid despite numerous representations and as  observed  in  para  4  of  the
aforesaid judgment the delay is not of  decade  or  so  the  Court  may  not
appreciate a plea of limitation raised by the  Government.  In  the  present
case admission or declaration made by the Corporation on 30.11.1956  through
Order no. 61 that services  of  the  respondents,  i.e.,  of  all  temporary
employees stood transferred to the Corporation with effect  from  16.10.1956
and shall be governed by the new terms and conditions as and  when  approved
by the Corporation was within the knowledge  of  the  respondents  and  they
accepted such orders of the Government and the Corporation  from  1956  till
their retirement and even thereafter till the enforcement of Regulations  of
1992 which led to filing of writ petition by  them  in  1992.   Clearly  the
respondents acquiesced to the entire situation and accepted their status  as
employees of the Corporation leading  to  admissible  retiral  benefits.  In
such circumstances, the aforesaid judgment cannot help the respondents.  The
appellant Corporation was fully justified in raising the plea of  delay  and
latches. The High Court erred in ignoring  such  plea  when  the  delay  was
quite unusual. We find no material to satisfactorily explain such delay.
Appearing for some of the respondents, further reply  was  advanced  by  Mr.
M.K. Dua, Advocate. He contended that  as  per  Section  11  of  the  States
Reorganization Act, the merger of PEPSU with Punjab State  was  effected  on
01.11.1956 and therefore from such date, by virtue of Section 115(1) of  the
States Reorganization Act the respondents were rightly treated by  the  High
Court to have acquired the status of Government  servant  in  the  successor
State of Punjab. He referred to  pleadings  in  the  writ  petition  to  the
effect that in 1956 the respondents  were  transferred  to  the  Corporation
without being given any opportunity of exercising option. It was also  urged
that in reply the other side did not controvert such a plea  nor  there  was
any reply to the claim that the respondents were not issued with any  formal
order of absorption. He relied upon judgment of  this  Court  in  Fertilizer
Corporation of India Ltd. v. Union of  India  &  Ors.[5]  in  support  of  a
proposition that unless the absorbing body/authority  issues  an  order  for
absorption of a Government officer in its  service  on  a  permanent  basis,
mere correspondence or any order of notification  issued  by  others  cannot
confer benefits of absorption on such Government officer. It  would  suffice
to note that the claim of absorption  made  by  an  individual  officer  was
being denied by the absorbing body  and  the  proposition  noted  above  was
mooted by the Court in the  facts  where  such  individual  claim  is  being
denied by the concerned organization. The facts  in  the  present  case  are
entirely different. In support of same proposition of law reliance has  been
placed upon Mysore State Road Transport Corporation v. A.  Krishna  Rao  and
Anr.[6] In Mysore State R.T.C. case  the  concerned  employee  of  Bangalore
Transport Company Ltd. by virtue of statutory provisions became employee  of
the State. Thereafter there was no  order  of  transfer  or  merger  of  the
concerned  department  with  the  subsequently   formed   Corporation.   The
Corporation was directed to take over only those  employees  who  opted  for
its service. Since the concerned respondent-  employee  was  not  given  any
notice of option it was held that he could not claim to be  an  employee  of
the Corporation.
Respondents have placed  reliance  also  upon  case  of  National  Insurance
Company Ltd. v. Kirpal Singh[7] to contend that since provision for  payment
of pension is beneficial  in  nature,  the  provision  ought  to  receive  a
liberal interpretation so as to serve the object of the  pension  scheme  as
well as any special scheme like a voluntary retirement scheme. On facts  the
said judgment dealt with  the  provisions  of  Voluntary  Retirement  Scheme
which required interpretation. The present case  does  not  raise  any  such
issue as to interpretation of any pension scheme. Reliance was  also  placed
upon case of S.K. Rattan v. Union  of  India  &  Ors.[8]  Para  13  of  that
judgment contains the reasons indicated by this Court for  holding  that  by
sheer transfer of an employee  from  an  institution  like  CBI  to  another
organization,  the  officer  cannot  be  made  to  suffer  in  his   service
conditions without framing  appropriate  rules  under  Article  309  of  the
Constitution as  it  would  amount  to  discrimination  for  no  justifiable
reasons. In that case, the submission on behalf of the Union of  India  were
not accepted because this Court found that till  the  officer  retired  from
service, no separate service rules had been framed for the officers  of  the
organization where he was transferred but in the  case  at  hand  the  PEPSU
Road Transport Corporation Regulations providing for CPF has been framed  as
back as in 1957. The said judgment is therefore of no help  to  respondents.
Reliance placed upon State of Haryana &  Ors.  v.  Amar  Nath  Bansal[9]  is
equally misconceived because in that case there  was  no  dispute  that  the
respondent was an employee of the State of  PEPSU  and,  therefore,  on  and
from the appointed date he became amenable to  Punjab  Service  Rules  under
which he was rightly retired  at  the  prescribed  age.  In  reply,  learned
senior counsel for the appellants has rightly taken a  stand  that  most  of
the cases noted above on which respondents have placed  reliance  relate  to
individual employees who had been transferred on deputation and,  therefore,
are clearly distinguishable. They can have no  application  to  the  present
matter because  prior  to  01.11.1956  the  respondents  had  ceased  to  be
Government servants under the PEPSU State with effect  from  16.10.1956  and
had become servants of the Corporation.
Further reply of the appellants is that respondents chose not  to  challenge
or resist the decision of the PEPSU  State  whereby  the  entire  department
where they were working as temporary employee was by  transfer  merged  with
the Corporation. They chose this course because they had no  right  to  post
held by them and could have been out of  employment.  Since  the  department
itself ceased to exist there were no posts on which  the  respondents  could
claim lien and in absence of any such post or lien they cannot claim  to  be
Government employee of PEPSU State till 01.11.1956, the date of  the  merger
of PEPSU State with Punjab. By placing reliance upon Section 34 of the  Road
Transport Corporation Act,  1950,  it  has  been  urged  on  behalf  of  the
appellants that the  State  Government  has  statutory  power  to  give  the
Corporation  general  instructions  including  directions  relating  to  the
recruitment, conditions of service and wages to be  paid  to  the  employees
etc. The Corporation is saddled with a statutory obligation  not  to  depart
from such general instructions. Therefore, the  letter  of  Chief  Secretary
dated 16.10.1956 containing direction of the State  Government  was  binding
upon  the  appellant-Corporation  and  as  a  result  without  need  of  any
individual orders of absorption the entire establishment of the  transferred
department had to be taken over by the Corporation. The  absorption  of  the
employees in law was complete on 16.10.1956 due to such  order  of  transfer
and amalgamation. The Corporation had no  option  to  seek  options  and  to
issue orders of absorption as per its discretion or  will.  The  respondents
being temporary employees had the option either to quit the service  of  the
Corporation or challenge the orders or directions of  the  State  Government
but they chose to do neither.
By relying upon paragraph 54 of the unamended writ petition  learned  senior
counsel for the appellants  submitted  that  in  fact  the  respondents  had
admitted in  their  initial  stand  that  PEPSU  Roadways  merged  with  the
Corporation on 16.10.1956.  A  perusal  of  said  paragraph  54  shows  that
respondents accepted the aforesaid facts and  their  only  stand  was  since
“they did not give any option  to  the  effect  they  would  not  claim  any
pensionary benefits”, they will  remain  Government  employees  entitled  to
pensionary benefits.
The main controversy in this case is whether the claim of  the  respondents,
a group of twenty one employees of PEPSU Roadways that in spite of  transfer
of  that  department  to  the  Corporation  they  continue  to  be  actually
Government servants and therefore entitled to retiral  benefits  instead  of
CPF is acceptable or not. In this controversy,  a  judgment  of  this  Court
though rendered  in  slightly  different  factual  matrix  is  substantially
relevant and helpful. In D.R.  Gurushantappa  v.  Abdul  Khuddus  Anwar  and
Ors.[10]  an  issue  arose  in  the  context  of  election  of  the   Mysore
Legislative Assembly as to whether the  respondent  was  holding  office  of
profit under  the  Government.  The  respondent  no.  1  of  that  case  was
initially a Government  servant  but  subsequently  the  Government  concern
where he was working was taken  over  by  a  company  registered  under  the
Indian Companies Act, 1956. The shares of the company were  fully  owned  by
the Government but after the Government undertaking was taken  over  by  the
company, the employees were no longer governed by the Mysore Civil  Services
Regulations, their conditions of  service  came  to  be  determined  by  the
standing orders of the company. The first contention against respondent  no.
1 was that since he was initially  a  Government  servant,  even  after  the
concern was taken over by the  company  he  would  continue  to  be  in  the
service of the Government. While dealing with this  issue  in  paragraph  3,
this Court rejected the contention in the following words:
“3. So far as the first point is concerned, reliance is placed primarily  on
the circumstance that, when the concern was taken over by the  Company  from
the Government there were no specific agreements terminating the  Government
service of Respondent 1,  or  bringing  into  existence  a  relationship  of
master and servant between the Company and Respondent 1. That  circumstance,
by itself, cannot lead to the conclusion that Respondent 1 continued  to  be
in government service. When the undertaking was taken over  by  the  Company
as a going concern, the employees  working  in  the  undertaking  were  also
taken over and since, in law, the Company has to be  treated  as  an  entity
distinct and separate from the Government, the employees,  as  a  result  of
the transfer of the undertaking, became employees of the Company and  ceased
to be employees of the Government.”

In the facts of the case, we have no hesitation to hold that the High  Court
erred in allowing the writ petition and second  appeal  of  the  respondents
and  in  dismissing  the  Letters  Patent  Appeal  of  the  appellants.  The
judgments on which the  respondents  have  relied  upon  for  advancing  the
submission that they cannot lose the status of  a  Government  servant  till
they are absorbed in the Corporation after offering an option in  favour  of
such absorption is entirely misconceived and inapplicable in  the  facts  of
the present case. The stand of the respondents could  have  been  acceptable
had there been no decision of the PEPSU State as evidenced by the letter  of
Chief Secretary dated 16.10.1956 which finds mention and reiteration by  way
of admission by the Corporation in order dated 30.11.1956. There can  be  no
such belated  challenge  to  the  decision  of  PEPSU  State  whereby  PEPSU
Roadways, one of the departments came into and merged with  the  Corporation
lock,  stock  and  barrel  before  the  merger  of  PEPSU  with  Punjab   on
01.11.1956. Hence, the provisions of the States  Reorganization  Act  ceased
to have any significance in the matter because the respondents ceased to  be
employees of State Government of PEPSU prior to  01.11.1956.  They  accepted
such merger and alteration of their service conditions without any  protest.
Since 1957, under the Regulations of the Corporation they  participated  and
contributed to the scheme of CPF and obtained  the  benefits  of  retirement
from the Corporation between 1985 and 1991 without  any  protest.  The  High
Court clearly erred in ignoring such conduct of the respondents, the  effect
of the Chief Secretary’s letter  dated  16.10.1956  containing  decision  of
PEPSU State and its acceptance by the Corporation  reflected  by  the  order
dated 30.11.1956. The High Court further erred in relying upon law which  is
applicable when there is no merger of Government concern  with  the  private
concern but only individual employees are transferred on  deputation  or  on
foreign  service  to  other  organizations/services.   The  ordinary   rules
providing for asking of option or issuance of letters of  absorption  depend
upon  nature  of  stipulations  which  may  get  attracted  to  a  case   of
deputation.  There  may  be  similar  stipulations  in  case  of  merger  by
transfer. But if there are no such stipulations like  in  the  present  case
then the transferee concern like the Corporation has no  obligation  to  ask
for options and to issue letters of  options  to  individual  employees  who
become employees of the transferee organization simply by  virtue  of  order
and action of transfer of the whole concern leading to merger. No  doubt  in
case of any hardship, the affected employees have the option to protest  and
challenge either the merger itself or any adverse stipulation.  However,  if
the employees choose to accept the transition  of  their  service  from  one
concern to another and acquiesce then after  decades  and  especially  after
their retirement they cannot be permitted to turn  back  and  challenge  the
entire developments after a gap of decades.
On the basis of laws and facts discussed above, we are constrained  to  hold
that the respondents had accepted to continue as  employees  of  Corporation
pursuant to order of merger/transfer of  PEPSU  Roadways  with  effect  from
16.10.1956 and  on  completing  their  service  under  the  Corporation  and
reaching the age of retirement  they  were  entitled  to  receive  only  the
benefits of CPF and gratuity as admissible to  them  under  then  prevailing
regulations of the Corporation. Since they accepted those  retiral  benefits
there is no relationship left between the Corporation  and  the  respondents
and in such a situation  further  claim  against  the  Corporation  that  it
should treat the respondents to be  Government  servants  and  adjust  their
retiral benefits accordingly was totally untenable and  wrongly  allowed  by
the High Court. The impugned judgment of the High Court granting  relief  to
the respondents is therefore set aside.  The  second  appeal  and  the  writ
petition  of  the  respondents  shall  stand  dismissed.  This   appeal   is
accordingly allowed but the parties are left to bear their own costs.

                       [SHIVA KIRTI SINGH]

                             [R. BANUMATHI]

New Delhi.
August 8, 2016.

      [2] (2011) 11 SCC 702
      [4] AIR 1954 SC 217
      [6] (2007) 8 SCC 108
      [8] (1996) 10 SCC 172
      [10] (1996) 3 SCC 325
      [12] 1973(1) SLR 1080
      [14] (2014) 5 SCC 189
      [16] (2014) 4 SCC 144
      [18] (1997) 10 SCC 700
      [20] 1969 (1) SCC 466

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