2004 (3) TMI 409 - HC - Companies Law

Summary

Issues Involved:
1. Power of Government to issue the impugned G.O. downsizing cadre strength.
2. Validity of policy decision and abolition of posts.
3. Principles of natural justice in the context of downsizing.
4. Review of policy decisions from time to time.
5. Identification of surplus employees and related procedures.
6. Specific claims of different categories of employees (e.g., women, backward classes, physically handicapped).
7. Validity of Staff Regulation 21.

Detailed Analysis:

1. Power of Government to Issue the Impugned G.O.:
The appellants contended that the Government of Andhra Pradesh had no authority to issue G.O. Ms. No. 50, which downsized the cadre strength of the Corporation to 404 employees. They argued that such decisions fell within the exclusive domain of the Corporation. The court, however, held that Article 90 of the Memorandum of Articles of Association empowered the Government to issue directives regarding staffing patterns. The Government acted within its rights as a shareholder and not under its executive power, thus the decision was valid.

2. Validity of Policy Decision and Abolition of Posts:
The court recognized the downsizing as a policy decision aimed at restructuring and improving the performance of State Level Public Enterprises. The decision was not arbitrary or in violation of Articles 14 and 16 of the Constitution. The court emphasized that policy decisions are within the prerogative of the elected Government and are not subject to judicial review unless they violate constitutional provisions.

3. Principles of Natural Justice:
The appellants argued that the downsizing process violated principles of natural justice as they were not given an opportunity to be heard. The court held that principles of natural justice do not apply to policy decisions regarding cadre strength and abolition of posts. The decision in M. Ramnatha Pillai v. State of Kerala was cited, which states that abolition of posts is a matter of policy and does not require adherence to principles of natural justice.

4. Review of Policy Decisions:
The appellants contended that the Government's earlier statements regarding the finality of the VR Scheme should prevent further downsizing. The court rejected this argument, stating that policy decisions are not static and can be reviewed based on changing circumstances. The reasons for the review were clearly stated in the impugned G.O.

5. Identification of Surplus Employees:
The appellants challenged the identification of surplus employees as arbitrary. The court found that the Corporation applied the principle of "last come, first go" uniformly, which is a recognized and reasonable procedure. The court rejected the argument that the principle of "stepping down" should have been applied, stating that the chosen method was neither arbitrary nor in violation of constitutional provisions.

6. Specific Claims of Different Categories of Employees:
- Women Employees and Employees Appointed on Compassionate Grounds: The court found no merit in the claim that women employees should be retained based on a backward application of the reservation roster, as none were appointed under any quota. Similarly, employees appointed on compassionate grounds do not have preferential claims over regular employees.
- Backward Classes and Scheduled Castes: The court agreed with the single judge's direction to apply the reservation roster backwards for Scheduled Castes and Scheduled Tribes but rejected the claim for similar treatment for Other Backward Classes, as Article 16(4) is an enabling provision and not a mandate.
- Physically Handicapped: The court directed the Corporation to consider applying the roster backwards for physically disabled employees, in line with the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

7. Validity of Staff Regulation 21:
The appellants challenged the constitutional validity of Regulation 21, which allows the Corporation to terminate employees with three months' notice. The court did not address this issue, as it was not invoked in the current downsizing process. The question was left open for future consideration.

Conclusion:
The court upheld the validity of G.O. Ms. No. 50 and the subsequent downsizing of the cadre strength to 404 employees. The policy decision and the identification process for surplus employees were found to be reasonable and not in violation of constitutional provisions. Specific claims by different categories of employees were largely rejected, except for the direction to reconsider the cases of physically disabled employees. The challenge to the validity of Staff Regulation 21 was not addressed in this judgment.