9911796707
TMI Blog1970 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... d from that post in accordance with law. The petitioner also challenges the appointment of respondent No. 9 as Deputy Principal Secretary to the Chief Minister of Haryana. It is pleaded by him that even if the petitioner could be lawfully reverted from the Corporation to secretariat post of Secretary to Minister, he should have been considered for appointment as Deputy Principal Secretary to which post the said respondent was appointed as an act of nepotism without considering the petitioner or any other person in the cadre of secretariat service and that such action on the part of the Government denying equality of opportunity to the petitioner in the matter of his promotion was violative of article 16 of the Constitution of India. A confidential report for the year 1967-68 covering a period of about five months given to the petitioner by respondent No. 8 as chairman of the Corporation is also sought to be quashed on the ground of the alleged mala fides of the said respondent. The petitioner joined Government service in the. secretariat somewhere in the year 1940 before partition of the country and earned various promotions from time to time. In the year 1959 he was appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en filed as annexure "D" with the writ petition. The authorised share capital of the Corporation was Rs. 50 lakhs divided into shares of Rs. 100 each and all shares were held in the name of the Governor. The following officers were nominated by the State Government as the first directors of the Corporation: 1. Shri P.N. Bhalla, I.A.S. Secretary to Government, Haryana, Industries Deptt. Chairman 2. Shri P.N. Sahni, I.A.S., Director of Industries, Haryana and Additional Secretary to Government, Haryana 3. Shri L.C. Gupta, I.A.S., Additional Secretary to Government, Haryana, Finance Department. 4. Shri O.P. Sikand, Officer on Special Duty, Industries Department, Haryana. Shri L.R. Mago. Managing director I am informed that one share each was allotted to the directors whereas all the remaining shares stood in the name of the Governor of Haryana. According to the memorandum and articles of association of the Corporation, the board of directors is to be nominated by the Governor from time to time and shall consist of officers of the Haryana Government or of the Union Government or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r clause ( k ), sub-article (1) of article 68, of the articles of association of the Corporation, whereby the nomination of the petitioner as a director of the Corporation was cancelled with immediate effect. The petitioner then submitted representations by which he protested against his recall from the Corporation and stated that all that was being dona at the instance of respondent No. 8, who was actuated by mala fides . It was protested that the petitioner being the managing director of the company could be removed only by the board of directors and not by the State Government. The petitioner objected to the authority of respondent No. 8, Secretary of Industries Department, to give an adverse confidential report to the petitioner, for a period of about five months from 26th October, 1967, to 31st March, 1968, which was believed by the petitioner to be responsible for his reversion. It may be mentioned that the report was actually given on 1st May, 1968, and conveyed to the petitioner on 5th September, 1968, after his reversion order had been passed. The petitioner made representations against the adverse remarks as conveyed to him asking for expunction of the same from his reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rstwhile State of Punjab to the successor units had been finalised. This temporary post was afterwards converted into a permanent one by an order, annexure "R-4/6" of the Governor, passed on 18th November, 1968. Respondent No. 9 who was holding the post was confirmed with effect from 27th November, 1968, and made permanent. The petitioner filed another representation dated 24th August, 1968, before the Government against the appointment of respondent No. 9 as Deputy Principal Secretary in a higher grade. It was claimed by the petitioner that he was senior to this respondent and that he should have been considered for the post before any appointment was made when he was not being appointed as joint director on reversion from the Corporation to which he was entitled in the first instance. Before the appointment of respondent No. 9 was made to the post, of Deputy Principal Secretary, the case was referred to the Haryana Public Service Commission and it was mentioned in the reference that the petitioner could not be considered because he was in service with the Corporation and enjoyment of higher scale of pay. A reference was again made to the commission on 27th September, 1968, as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managing director, nor could he legally lay any claim to the post of a joint director. The applicability of article 311 of the Constitution of India or that of any rule of natural justice is denied, it being submitted that the petitioner could be retained as managing director of the Corporation or as director only so long as his retention was considered desirable by the Government. The mere fact that the petitioner had held the post of Joint Director, Industries, for about five months in the erstwhile State of Punjab before his appointment as managing director of the Punjab Export Corporation could not give any legal right to him to hold that post after his reversion from the post of managing director of the Corporation in Haryana. The claim of the petitioner that his salary as joint director was protected under the Punjab Reorganisation Act, 1966, is denied, the assertion being that the directive of the Central Government as contained in the Ministry of Home Affairs, letter No. 22/48/67-SR(S) of February, 1968, is not applicable to the case of the petitioner which could not be equated with that of the select list of officers to whom the protection has been extended. The further cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil his reputation so much so that he, went to the extent of disowning the minutes of the Corporation recorded by the petitioner find approved by the respondent. The petitioner in this connection refers to the meetings of the board of directors held on 5th December, 1967, 22nd December, 1967, 4th May, 1968, and 28th August, 1968, copies of which proceedings have been filed with the writ petition as annexure "E". The petitioner had for some time, after the reorganisation, been working as managing director of both the Punjab Corporation and the Harayana Corporation. The allegation is that in December, 1967, respondent No. 8 passed an order without the concurrence of the Governor, during the President's rule, directing the petitioner to resign from the Haryana Corporation on the plea that by continuing as managing director with the Punjab Corporation he would be able to better look after the interests of Haryana and that it was at the intervention of the Chief Secretary that these orders were subsequently withdrawn. There is a note dated 8th August, 1968, in which respondent No. 8 as chairman of the Corporation criticised certain conduct of the petitioner, it being suggested that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it was this report which brought about his reversion from the Corporation and stood in the way of his further promotion as Deputy Principal Secretary. It is pleaded that respondent No. 8 had no authority under the law to make any confidential report about the work of the petitioner as managing director of the Corporation and that it was the board alone which could do so. It is also pleaded that the adverse report was deliberately and mala fide given because of feelings of personal animosity that were being nurtured by this respondent. The alleged personal ill will of the respondent is believed by the petitioner to be founded on the belief of the former that the petitioner, as Secretary to the then Chief Minister, late S. Partap Singh Kairon, in the erstwhile State of Punjab, had a hand in his supersession for posting as Commissioner in the year 1962-63 and other punishments given to him from time to time during that, regime. In support of his plea of mala fides against respondent No. 8, the petitioner refers to certain observations made by the respondent on his (petitioner's) tour programme. They are filed as annexure " QQ ". The petitioner is stated to have gone to Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the respondent did not want the petitioner to work as managing director of the Haryana Corporation as the former was out to harm his interests is denied. The respondent pleaded that he was entitled to take a decision during the President's rule and no consultation of the Governor was necessary. The other personal allegations against this respondent are also denied and it is asserted by the respondent that he never believed that the petitioner figured or was in any way responsible for his supersession for posting as Commissioner in 1962-63, The averment of the petitioner that the respondent had expressed his feelings of annoyance to the director or to Shri P.N. Sahni was denied. It was also denied that he ever spoke in a derogatory manner about the petitioner or called him a dunce in the board meeting of the Corporation in December, 1967. It is admitted by the respondent that he stopped implementation of the proposal advanced by the petitioner which benefited a middle man and suggested the share of profit of the corporation in regard to a particular scheme to be shared with a middle man. The respondent, however, maintained that to the best of his recollection the petitioner was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his individual capacity in terms of the memorandum and articles of association of the Corporation, but by the State Government in exercise of its executive power. The submission is that the Corporation once having been brought into being and registered as a company under the Companies Act, 1956, its affairs are regulated and controlled by its articles only and the provisions of the Indian Companies Act, and that the power to remove or dismiss a managing director under article 84 vests only in the Governor and it is he alone who can, in his individual judgment, exercise that power. The removal of the petitioner by the respondent a Secretary to the State Government, who, according to the rules of business, purports to act on behalf of the Government, is, therefore, illegal and without jurisdiction". ****** I have given my careful thought to the various contentions raised by the parties and they are dealt with hereunder The main grievance of the petitioner is that he could not be reverted from the post of managing director by an executive order of the State Government and that it was the Governor alone who in his individual capacity could pass an order as envisaged in article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be taken or expressed in the name of the Governor within the meaning of article 1G6 of the Constitution. The argument indeed is that the State and a Corporation formed under a statute, though owned and controlled by the State, are two distinct legal entities and a Corporation cannot be treated as a department or an agent of the State and that it will be governed only by its articles of association and the Act incorporating the same. In support of his contention that a State-owned Corporation and the State are two separate legal entities, the learned counsel has invited my attention to a number of authorities, such as State Trading Corporation of India Ltd. v. Commercial Tax Officer [1963] 33 Comp. Cas. 1057; AIR 1963 SC 1811 , Andhra Pradesh State Road Transport Corporation v. Income-tax Officer B-1, B-Ward, Hyderabad [1964] 52 ITR 524; 34 Comp. Cas. 473; [1964] 7 SCR 17 (SC), Tata Engineering and Locomotive Co. Ltd. v. State of Bihar [1964] 34 Comp. Cas. 458 ; [1964] 6 SCR 885 (SC), D.R. Gurushanthappa v. Abdul Khuddus Anwar AIR 1969 SC 744 and Profulla Kumar Sen v. Calcutta State Transport Corporation AIR 1963 Cal. 116, all of which it is not necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in which the funds of the State are invested had to act in his individual capacity and that since his name appears in the articles as such he has ceased to be the repository of the executive power of the State. The functions performed by him in the matter of trade and business intended to be carried on by the State Government by creating a Corporation are in fact the executive functions of the State in the exercise whereof he has to be aided and advised by his council of Ministers and it cannot be said to be a function which is required under the Constitution to be discharged in his discretion. In the circumstances in which the instant Corporation was created, the funds of the State invested and shares allotted to different officers in order to satisfy the conditions necessary to promote a company with the overriding power given to the Governor to nominate the directors or a managing director and to remove them from time to time, no room for doubt is left that the Governor is to be deemed to be exercising only the executive power of the State when he is transacting business as a shareholder of the company. In other words, it is the State that is exercising its executive functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders, annexures "G" and "H", cannot be challenged. Apart from the question whether the State Government could validly exercise powers exercisable by the Governor under the memorandum and articles of association of the Corporation, there is yet another approach in the matter. The petitioner was on deputation to foreign service with the Corporation. He could at any time be recalled by the State Government and the impugned orders, annexures "G" and "H", of the so-called reversion from the post, of a managing director and simultaneous cancellation of his nomination as director to all intents and purposes amounted only to a recall of the petitioner from foreign service back to his parent department. It has been held by a Full Bench of this court in Sohan Singh v. State of Punjab [1970] SLR 291 (Punj.) [F.B.] that a Government servant sent on deputation under rule 10.2 of the Punjab Civil Services Rules, volume 1, part 1, does not get an indefeasible right to insist that he could not be recalled and that the Government retains full and effective control over its employee. The mere fact that the officer on deputation was getting more emoluments and enjoying higher status coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said post substantively. The affidavit was supposed to have been sworn as true on the basis of knowledge that the respondent derived from the necessary records. The petitioner was the first incumbent of a newly sanctioned post of Joint Director of Industries, Rural Industrialisation, in the senior scale of I.A.S. and he was appointed to that post on 12th February, 1963, as per Gazette notification, annexure "A". Under the directions of the Central Government projects for small industries in rural areas were taken in hand by the State Government and different posts were being created for that purpose. As a matter of fact, letter No. 33-2IBI-63/282 dated 7th January, 1963, addressed by the Secretary, Industries Department, to the Director of Industries, Punjab, filed by the respondents as annexure "R-3/9", shows that after the matter having been processed through the Finance Department, sanction was actually granted on 7th January, 1963. The document, which is in the nature of an office noting, produced by the respondents as annexure "R-3/4", shows that it was a temporary post initially sanctioned up to 29th February, 1964, and renewed every year till it was finally made permanent on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.A.S. but could not be absorbed there for want of field experience etc ., but the Chief Minister felt like giving him an equivalent post which, according to him, the petitioner deserved. Whatever might be the opinion of the establishment board or of any of the respondents about the desirability of initial appointment of the petitioner as joint director, or the reasons that led to his appointment, the fact remains that he was appointed as such and we have to recognise his appointment. When he proceeded on deputation to the Punjab Export Corporation which was the company registered under the Indian Companies Act, the Director of Industries made a recommendation, as can be seen from annexure "R-3/14," that the lien of the petitioner as joint director be retained. The terms and conditions of his deputation job as managing director of the Corporation included, among other things, that he was to be allowed to continue to draw the salary of a joint director with 20 per cent, of the deputation pay of such office. As regards lien, the view taken by the administrative department was that the lien could be retained only on a substantive post but in view of the recommendation of the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of arguments and placed on the record as annexure "II". The subsequent post of joint director created on 12th February, 1963, to which post the petitioner was appointed has, therefore, to be treated as a part, of the cadre by virtue of note 3 to rule 4.21 of the Punjab Civil Service Rules, volume 1, part I. Rule 4.21 and note 3 may be reproduced hereunder for facility of reference: "4.21. when a temporary post is created which will probably be filled by a person who is already a Government servant, its pay shall be fixed by the competent authority with due regard to - ( a )the character and responsibility of the work to be performed ; and ( b )the existing pay of Government servants of a status sufficient to warrant their selection for the post............. Note 3 . (1) Temporary posts may be divided into two categories, viz ., posts created to perform the ordinary work for which permanent posts already exist in a cadre, the only distinction being that the new posts are temporary and not permanent, and isolated posts created for the performance of special tasks unconnected with the ordinary work which a service is called upon to perform. An example of the latter type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich a service was called upon to perform. According to the above quoted note 3 to rule 4.21, temporary posts may be divided into two categories, namely, those created to perform the ordinary work for which permanent posts already exist in a cadre and isolated posts unconnected with the ordinary work of the service. In my opinion, the post of a joint director was one created only to perform the ordinary work of the service and, though temporary, it was an addition to the cadre of the service forming part thereof, no matter which individual was appointed to the post. Cadre in a service can consist of both permanent and temporary posts. Cadre as denned by rule 2.9 of the Punjab Civil Services Rules, volume I, part I, means only the strength of a service sanctioned as a separate unit and not that it must be comprised of permanent posts only. The contention of the learned counsel for the State that the temporary post of a joint director was an ex-cadre post has, therefore, no substance. Chapter X of the Punjab Civil Services Rules, volume I, part I, deals with foreign service and rule 10.5 provides that a Government servant transferred to foreign service remains in the cadre or ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I am in respectful agreement with the view taken by the learned judge of the Calcutta High Court and in the case before us there is also the statutory provision contained in rule 10.5 of the Punjab Civil Services Rules, volume I, part I, which too irresistibly leads to the conclusion that the petitioner was entitled on reversion from deputation on foreign service to be posted back to his original post which he left. The learned Additional Advocate-General has not been able to point out any order of the. State Government reverting him from the post of an officiating joint director. The State Government seems to have been under the impression that since the petitioner held permanent substantive post of a Secretary to Minister, it was that post to which he was to be reverted and that it was of no significance that the petitioner had for about five months held the post of a joint director before being sent on deputation. It failed to appreciate that a promotion had been given to the petitioner inasmuch as he was appointed as an officiating joint director and that status and salary of that post he was allowed to retain so long as he remained on deputation. The argument raised before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was always considered to hold that status. In these circumstances, it must be held that the petitioner would have continued as a joint director for more than three years if he had not been sent on deputation and after reorganisation he is entitled to continue to draw the salary of that post till he is reverted from that post in accordance with law. It is, of course, open to the Government at any time to consider the question of reversion of the petitioner from the post of an officiating joint director. The main ground of attack directed against the appointment of respondent No. 9 as Deputy Principal Secretary to the Chief Minister is that the petitioner was not considered though he was senior to him and in the same cadre. The omission of the Government, according to the petitioner, denied to him his fundamental right of equality of opportunity in the matter of appointment and promotion of Government servants as guaranteed by article 16 of the Constitution. The submission is that the post was in fact created for respondent No. 9 and the petitioner had been superseded by the State Government because of the manoeuvres and mala fide action of respondent No. S who, it is alleged, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other notification, annexure "R-4/5" was issued by the Governor whereby respondent No. 9 was appointed to the newly created post on a purely temporary basis. It was specifically stated in his notification that the promotion was to be provisional till the allocation of the various services of the erstwhile State of Punjab had been finalised. The Chief Minister then desired that the post be made permanent and suggested that respondent No. 9 who was already holding the post on a temporary basis be confirmed in that post whenever it was made permanent. As a matter of fact the respondent had been making representations to the Governor asking for higher grade of pay because of his outstanding performance in various assignments including that of officer on special duty to the Governor, Haryana, after dissolution of the ministry for some time. The matter was again referred to the Finance Department which accorded the necessary sanction to the conversion of the temporary post of Deputy Principal Secretary into a permanent one by permanently abolishing the post of superintendent and keeping in abeyance the post of Secretary to the Chief Minister. The Chief Minister seemed to carry the impr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntment of respondent No. 9 and the Governor issued an order, annexure "R-4/5" on 18th July, 1968, appointing him who undoubtedly was next in seniority to the petitioner. Whatever might have been the motive with respondent No. 8 in giving a confidential report adverse to the petitioner, the Government was justified in informing the commission about the actual state of affairs and the involvement of the petitioner in some eases, well founded or otherwise, pending against him with the vigilance department. The Government was equally justified in expressing its views that it was not possible to give a higher grade of pay to the petitioner at that time when the complaints against him had not been finally disposed of. In these circumstances, it cannot possibly be said that the petitioner was not considered. He was considered though the consideration went against him because of the situation as it existed at the time when the appointment to the post of Deputy Principal Secretary was to be made. The contention of the learned counsel for the petitioner that the post was created for respondent No. 9 is without substance. The Chief Minister created this post by abolishing the post of superi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter of a confidential report is not justiciable. There is no doubt that relations between the petitioner and respondent No. 8 were quite unhappy. As between them a tug of war seems to have been going on for some time as to who should go abroad to attend international fairs. The explanation of the petitioner was once called for having left the station without previous permission and he instead of trying to inform the chairman about the urgency of the situation which compelled him to abruptly leave, challenged the authority of the chairman to ask for any such explanation. Respondent No. 8, as it appears from the record, was rather rash in making accusations with regard to the recording of the minutes of the meetings by the petitioner. Amongst the board of directors of the Corporation, there were some who were not supporting the chairman and the petitioner also at times took a stand which was not correct. I am inclined to believe that the petitioner must have been addressed as a "dunce" by respondent No. 8 in one of the meetnigs as alleged in the writ petition. The petitioner states that the meeting was attended by Shri P.N. Sahni, Director of Industries, and Shri O.P. Sikand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to Government, Haryana, Industries Department, was entitled to give a confidential report of the petitioner on the basis of the impressions formed by him about the integrity or efficiency of the latter. The mere fact that the relations between the two were not cordial did not take away the right of respondent No. 8 to give the confidential report. The bald statement of the petitioner that respondent No. 8 was actuated by malice on account of certain illwill that he carried since the time of late S. Partap Singh Kairon cannot be accepted at its face value. No circumstances have been pointed out which could reasonably lend support to any such apprehension of the petitioner. This court cannot sit in appeal over the merits of the confidential report. Moreover, mala fides alleged by the petitioner depend on the disputed questions of fact which it is not possible to resolve in these proceedings. The Chief Minister has stated in his affidavit that in regard to the recall of the petitioner from the Corporation, he looked into the files himself and it was after being satisfied that he passed the impugned order of recall from the Corporation. In the matter of appointment of respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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