1987 (10) TMI 379 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Court.
2. Whether the Company is a "State" under Article 12 of the Indian Constitution.
3. Validity of Regulation 2.18 of the Staff Regulations.
4. Legality of the termination order dated April 21, 1980.

Detailed Analysis:

1. Jurisdiction of the Court:
The primary issue was whether the High Court had jurisdiction to entertain the petition. The respondents argued that no part of the cause of action arose within the jurisdiction of the Court since the termination order was passed in New Delhi. However, the petitioner contended that the cause of action arose in Ahmedabad as the termination order was served on him there. Citing the Supreme Court's decision in *State of Punjab v. Amar Singh Harika*, the Court held that the order of termination becomes effective only when it is communicated to the concerned employee. Since the order was served in Ahmedabad, part of the cause of action arose there, thus conferring jurisdiction on the Court.

2. Whether the Company is a "State" under Article 12:
The petitioner argued that the Company is a "State" under Article 12 of the Constitution, making it amenable to writ jurisdiction. The Court examined the Memorandum and Articles of Association of the Company, noting that 99% of its shares were held by the Central Government, State Governments, and Statutory Corporations controlled by the Central Government. The Court referred to the Supreme Court's decisions in *R. D. Shetty v. The International Airport Authority of India* and *Ajay Hasia v. Khalid Mujib*, which laid down tests for determining whether an entity is an instrumentality or agency of the Government. The Court concluded that the Company met these criteria due to the deep and pervasive control exercised by the Central Government, thus qualifying as a "State" under Article 12.

3. Validity of Regulation 2.18 of the Staff Regulations:
The petitioner challenged Regulation 2.18, which allowed termination of a confirmed employee's services with 90 days' notice or pay in lieu thereof, as arbitrary and discriminatory. The Court referred to the Supreme Court's decision in *Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly*, where a similar rule was struck down for being arbitrary and violative of Articles 14 and 16 of the Constitution. The Court found that Regulation 2.18 conferred absolute, arbitrary, and unguided power on the Company, violating the principles of natural justice. Consequently, the Court held Regulation 2.18 to be illegal, ultra vires, and void.

4. Legality of the Termination Order:
Given that Regulation 2.18 was declared invalid, the termination order dated April 21, 1980, which was based on this regulation, was also held to be illegal and void. The Court directed the Company to reinstate the petitioner with full back wages and continuity of service from the date of termination.

Conclusion:
The petition was allowed, and the Court declared Regulation 2.18 of the Staff Regulations illegal and ultra vires. The termination order dated April 21, 1980, was also declared void. The respondents were directed to reinstate the petitioner with full back wages and continuity of service. The ruling emphasized the necessity of adhering to principles of natural justice and the constitutional safeguards provided under Articles 14 and 16.