REPORTABLE
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.
Versus
S. K. Sharma & Ors. …..Respondents
J U D G M E N T
SHIVA KIRTI SINGH, J.
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
Government.
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.
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.
……………………………………..J.
[SHIVA KIRTI SINGH]
.…………………………………….J.
[R. BANUMATHI]
New Delhi.
August 8, 2016.
-----------------------
[1]
[2] (2011) 11 SCC 702
[3]
[4] AIR 1954 SC 217
[5]
[6] (2007) 8 SCC 108
[7]
[8] (1996) 10 SCC 172
[9]
[10] (1996) 3 SCC 325
[11]
[12] 1973(1) SLR 1080
[13]
[14] (2014) 5 SCC 189
[15]
[16] (2014) 4 SCC 144
[17]
[18] (1997) 10 SCC 700
[19]
[20] 1969 (1) SCC 466
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.
Versus
S. K. Sharma & Ors. …..Respondents
J U D G M E N T
SHIVA KIRTI SINGH, J.
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
Government.
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.
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.
……………………………………..J.
[SHIVA KIRTI SINGH]
.…………………………………….J.
[R. BANUMATHI]
New Delhi.
August 8, 2016.
-----------------------
[1]
[2] (2011) 11 SCC 702
[3]
[4] AIR 1954 SC 217
[5]
[6] (2007) 8 SCC 108
[7]
[8] (1996) 10 SCC 172
[9]
[10] (1996) 3 SCC 325
[11]
[12] 1973(1) SLR 1080
[13]
[14] (2014) 5 SCC 189
[15]
[16] (2014) 4 SCC 144
[17]
[18] (1997) 10 SCC 700
[19]
[20] 1969 (1) SCC 466
