2008 (11) TMI 679 - SC - Indian Laws

Regularization of permanent services from the date of completion of 360 days of service with salary and other benefits - Entitlement for absorption against Group C and D' posts and their entire service upto the date of absorption has to be counted for the purpose of fixation of seniority and grant of other benefits including promotion - Government scheme for absorption of company-paid staff as was done through the 1978 Scheme of Department of Company Affairs - discriminating the Court Liquidator's staff vis--vis the regular employees of the office of Official Liquidator - principle of equal pay for equal work for men and women - due process of law - doctrine of legitimate expectation - petitioners had been working for last 20 to 25 years, neither their services were regularized nor they were paid at par with similar employees of other departments/offices and they were retired at the age of 58 years without any financial benefit. HELD THAT - We consider it necessary to remove the misgivings entertained by the respondents and the High Courts that while dismissing the appeals filed by the appellants in the earlier round of litigation, this Court had endorsed the directions given by Calcutta and Kerala High Courts for absorption of company paid staff without any rider. However, the fact of the matter is that Government of India not only framed and notified the 1999 Scheme within six months from the date of judgment, but also issued guidelines for implementation of the same. Therefore, the orders passed by Calcutta and Kerala High Courts and the direction given by this Court in Writ Petition will be deemed to have become ineffective and inoperative and the respondents cannot derive any benefit from those orders and direction. Now on merits. Rules 308 and 309 of 1959 Rules, which were framed by this Court u/s 643 of the Companies Act, 1956 to facilitate employment of special or additional staff in any liquidation and payment of salaries and allowances to such staff. They were neither selected in accordance with the procedure prescribed under the rules framed under proviso to Article 309 of the Constitution nor they were appointed against the posts sanctioned by the Government of India. It is thus clear that the company paid staff constitute a separate and distinct class. While deciding the appeals in the earlier round of litigation, this Court must have been alive to the aforementioned facts and this appears to be the reason why the directions given by Calcutta and Kerala High Courts for absorption of all company paid staff were stayed for six months and an opportunity was given to the Central Government to frame a new scheme within that period. In our opinion, after having applied for and accepted employment/engagement as company paid staff with fixed tenure superimposed by a stipulation that they will have no right to continue in service or to be absorbed in the regular cadres, the respondents are estopped from seeking a direction for their absorption against the posts sanctioned by the Government of India and the High Courts committed a serious error in granting their prayer. In view of the above stated legal position, we hold hat the directions given by the High Courts for creation of supernumerary posts to facilitate absorption of the company paid staff are legally unsustainable and are liable to be set aside. The concept of due process of law has played a major role in the development of administrative law. It ensures fairness in public administration. The administrative authorities who are entrusted with the task of deciding lis between the parties or adjudicating upon the rights of the individuals are duty bound to comply with the rules of natural justice , which are multifaceted. The absence of bias in the decision making process and compliance of audi alteram partem are two of these facets. The doctrine of legitimate expectation is a nacent addition to the rules of natural justice. It goes beyond statutory rights by serving as another device for rendering justice. At the root of the principle of legitimate expectation is the constitutional principle of rule of law, which requires regularity, predictability and certainty in government's dealings with the public The principle of equal pay for equal work for men and women embodied in Article 39(d) was first considered in Kishori Mohanlal Bakshi vs. Union of India 1961 (4) TMI 3 - SUPREME COURT and it was held that the said principle is not capable of being enforced in a Court of law. After 36 years, the issue was again considered in Randhir Singh vs. Union of India 1982 (2) TMI 314 - SUPREME COURT , and it was unequivocally ruled that the principle of equal pay for equal work is not an abstract doctrine and can be enforced by reading it into the doctrine of equality enshrined in Articles 14 and 16 of the Constitution of India. In Halsbury's laws of England (Fourth Edition), the doctrine of legitimate expectation has been described in the following words A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past practice. On the basis of our discussions, we hold that- (i) the respondents are not entitled to absorption against the sanctioned posts in Group C of the Department of Company Affairs, Government of India, as of right. (ii) The 1999 Scheme does not suffer from any legal or constitutional infirmity insofar as it provides for absorption of the company paid staff only to the extent of 50% vacancies in direct recruitment quota of Group C posts. (iii) The decision taken by the Government of India to reduce the number of posts in direct recruitment quota and consequential abolition of posts in the Department of Company Affairs is not vitiated by arbitrariness or violation of the doctrine of equality or malafides. (iv) The doctrine of legitimate expectation cannot be invoked for sustaining the directions given by the High Courts of Calcutta and Delhi for creation of supernumerary posts to facilitate absorption of all company paid staff in the regular cadres. (v) The respondents are not entitled to have their pay fixed in the regular scales and other monetary benefits at par with regular employees working under the Official Liquidators. Notwithstanding our conclusion that the directions given by the Calcutta and Delhi High Courts for absorption of company paid staff against Group C posts and grant of monetary benefits to them at par with regular employees of the Department of Company Affairs are legally unsustainable, we are inclined to accept the contention of the respondents that failure of the Government of India to frame scheme for absorption of Group D posts has resulted in invidious discrimination qua one section of the company paid staff. Since the employees who could be eligible for absorption on Group D posts were appointed in 1985 and thereafter, the Government of India should have, while framing the 1999 Scheme, taken cognizance of their presence and made appropriate provision for their absorption. Its failure to do so has certainly resulted in unintended discrimination qua one section of the company paid staff. It is, therefore, appropriate to direct that the Government of India should frame a scheme for absorption of eligible and suitable employees against Group D posts. The scheme should be modeled on the 1999 Scheme. The needful be done within six moths. Thereafter, eligible and suitable members of the company paid staff should be absorbed against Group D posts. We also feel that the salaries and allowances payable to the company paid staff should be suitably increased in the wake of huge escalation of living cost. We direct the Official Liquidators attached to various High Courts to move the concerned Court for increasing the emoluments of the company paid staff. In the result, the appeals are allowed. The impugned judgments and orders are set aside subject to the direction for framing of scheme for absorption of eligible and suitable employees against Group D posts and implementation thereof and increase in the salaries and emoluments payable to the company paid staff.

Summary

Issues Involved:
1. Absorption of company paid staff under Rule 308 of the Companies (Court) Rules, 1959.
2. Validity and implementation of the 1999 Scheme for absorption.
3. Discrimination between Group C and Group D posts.
4. Application of the doctrine of legitimate expectation.
5. Principle of equal pay for equal work.

Issue-wise Detailed Analysis:

1. Absorption of Company Paid Staff under Rule 308 of the Companies (Court) Rules, 1959:
The appeals were directed against orders of the Calcutta and Delhi High Courts, which directed the appellants to absorb persons employed by the Official Liquidators under Rule 308 of the Companies (Court) Rules, 1959. The Supreme Court noted that the company paid staff were employed/engaged by the Official Liquidators after obtaining sanction from the Court under Rule 308 and were paid from the fund created by the disposal of assets of companies in liquidation. The Court held that the company paid staff constitute a separate and distinct class from regular employees who are appointed against posts sanctioned by the Government of India and paid from the Consolidated Fund of India.

2. Validity and Implementation of the 1999 Scheme for Absorption:
The 1999 Scheme, modeled on the 1978 Scheme, was framed for the absorption of company paid staff against 50% vacancies in the direct recruitment quota of Group C posts. The Supreme Court held that the 1999 Scheme does not suffer from any legal or constitutional infirmity. The Court noted that the Government of India had taken a policy decision to reduce the number of posts in the direct recruitment quota and had abolished certain posts. The decision of the Screening Committee to reduce the number of posts was found to be in consonance with the policy decision and not vitiated by arbitrariness or malafides.

3. Discrimination Between Group C and Group D Posts:
The Supreme Court acknowledged that the 1999 Scheme did not provide for the absorption of company paid staff against Group D posts. The Court directed the Government of India to frame a scheme for the absorption of eligible and suitable employees against Group D posts within six months, modeled on the 1999 Scheme, to address the unintended discrimination.

4. Application of the Doctrine of Legitimate Expectation:
The respondents claimed that they had a legitimate expectation of being absorbed in the regular cadres based on the 1978 Scheme. The Supreme Court rejected this claim, stating that the respondents were employed as additional staff with the knowledge that their employment was temporary and contingent on the continuation of liquidation proceedings. The Court held that the doctrine of legitimate expectation could not be invoked as no promise or assurance was given by any competent authority for their absorption in regular cadres.

5. Principle of Equal Pay for Equal Work:
The High Courts had directed that the company paid staff should be paid salaries and allowances at par with regular employees based on the principle of equal pay for equal work. The Supreme Court held that the mere similarity in the nature of work performed by company paid staff and regular employees is not sufficient to apply the principle of equal pay for equal work. The Court noted that the company paid staff were not appointed against sanctioned posts and were paid from the company fund, not the Consolidated Fund of India. Therefore, the directions for parity in pay were found to be legally unsustainable.

Conclusion:
The Supreme Court allowed the appeals, setting aside the judgments and orders of the Calcutta and Delhi High Courts, subject to the direction for framing a scheme for absorption of eligible and suitable employees against Group D posts and increasing the salaries and emoluments payable to the company paid staff. The Court emphasized the need for judicial discipline and adherence to the principles laid down by larger Benches.