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TMI Blog1997 (5) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... by him while in service, for six weeks from that date with liberty to apply for extension of the said interim order. Liberty was given to the respondents to apply for variation, modification, alteration and/or cancellation of the said order. The respondents there- after filed an application for vacating the interim order and an applica- tion for extension of interim order was also filed by the writ petitioner. The said interim order was subsequently extended up to 22-1-1996 and ultimately on 19-1-1996 there was a direction to the effect that the entire petition should be heard expeditiously and it was directed that the writ application and the application for vacating interim order to be heard analogously and time was fixed for completing all affidavits and the interim order was extended until further orders. 3. Ultimately the matter was heard on 1-3-1996 when the learned Single Judge dismissed the writ application on the ground that the respondent No. 1, namely, the Andaman Nicobar Islands Integrated Development Corporation (ANIIDCO) was a part of the Island Administration and that therefore the writ petitioner held a civil post under the Central Govern-ment. On the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Selection Committee of ANIIDCO on 7-12-1994. On 28-12-1994 the petitioner was informed by the then managing director, Ms. Nita Bali of ANIIDCO that the petitioner was duly selected and the terms and conditions of service were recorded in the offer of Appointment No. ANHDCO/Corres/88-89 of 1965 dated 28-12-1994. In all respects the terms and conditions of service mentioned in the offer of appointment definitely established beyond doubt that his service was permanent and substantive service in the ANIIDCO Ltd. particularly the terms and condition No. (4)( a ) refers to taking oath of allegiance and it is clear that the employment was not a private employ-ment but a public employment under ANIIDCO Ltd. 6. The petitioner accepted the offer of appointment as above and by his message dated 30-12-1994 informed the managing director of ANIIDCO that he had already submitted his resignation from the Post of Assistant Director of CLRI, Madras and he would likely to join on or before 1-5-1995. By letter dated 3-1-1995 the petitioner was informed by the managing director of ANIIDCO that unless the petitioner joined duties latest by 31-1-1995 it would be presumed that he was not intereste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner to send a representation to the Lt. Governor, the Chairman of the Corporation. The managing director vowed with authority that if such representation was given, the impugned order of termination would be withdrawn. In that unusual circumstances of shock, surprise and under coercion and malicious act of falsehood, the petitioner was swayed, and he received the letter of termination and cheque for Rs. 10,335." 8. The said termination has been challenged by the petitioner on the ground that no opportunity was given to the petitioner to show cause against his termination of permanent service nor the ANIIDCO acted reasonably and failed to follow the principles of natural justice. 9. It has also been contended that the service of the petitioner was a permanent one and can be terminated if at all after holding a disciplinary proceeding and after finding him guilty of any misconduct. In the instant case, the petitioner's services have been terminated with notice and pay, like a temporary employee. It has been contended that the termination of service of the petitioner is ultra vires to the article of association as also to the bye-laws framed, if any. It has also been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardi AIR 1981 SC 487 at 496. The relevant tests gathered from the decision in case has been considered in paragraph 9 of the said judgment at page 496 of the said report and the Supreme Court observed therein as follows : "(1)'One thing is clear that if the entire share capital of the corporation is held by the Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.' (2)'Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation it would afford some indication of the corporation being impregnated with governmental character.' (3)'It may also be relevant factor ..whether the corporation enjoys monopoly status which is the State conferred or State protected.' (4)'Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality.' (5)'If the functions of the corporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.' (6)'Specifically, if a department of Government i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society those which a 'State' was to oblige to fulfil. Also the finances were obtained from private resources without Govern-ment sanction. 19. The third post-1979 decisions cited by the learned advocate for the respondent is in the case of Chander Mohan Khanna v. The National Council of Education Research Training AIR 1992 SC 76. The Supreme Court in the aforesaid case noted the tests set down in the earlier decisions and stated that any one of the factors mentioned as being relevant to determine whether a Corporation was a 'State' would not be conclusive. The relevant portion is quoted hereunder : "The combination of State aid coupled with an unusual degree of control over the management and policies of the body and rendering of an important public service being the obligatory functions of the State may largely point out that the body is 'State'." 20. The aforesaid three post-1979 decisions in fact lay down the same principle as has been enunciated by the Supreme Court in the Ramana Dayaram Shetty's case ( supra ) . In the aforesaid decisions, in the facts it was held that the Government has no financial control over the State Organisations and managin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading activities of the Company are incidental to the ultimate object of securing the development of the territory as a whole and not trading for mere profits sake as would be the case of a purely commercial enterprise. 25. All pervasive governmental control is apparent also from the fact of composition, Constitution and source of finances and the nature of functions. 26. It may be noted that public participation in the shareholding has been excluded by clause 2 of the articles of association. Articles 34 to 41 of the articles of association provide for the approval of the Lt. Governor before the Directors can increase the share capital of the Company or borrow monies or secure payment for monies. Considering all the aforesaid aspects of the matter there cannot be any doubt that ANIIDCO is an instrumentality of State or Authority under article 12 and the writ petition is maintainable. 27. In this case the petitioner's service as a General Manager of ANIIDCO was terminated on 21-11-1995 suddenly without giving the petitioner any opportunity of being heard and for no reasons disclosed whatsoever. All that is said by the managing director of ANIIDCO was 'I am sorry to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrary manner. It has also been contended by the learned advocate for the respondent that the petitioner's service is terminated without stigma and as such, cannot be impugned. The said contention, however, cannot be accepted since he was appointed on regular basis. The other contention that the petitioner suppressed his letter of resignation also does not arise in the facts and circumstances of the case since the petitioner's service was terminated on the basis of the said letter of termination. Further conten- tion of the learned advocate for the respondent is that the Court cannot grant reinstatement and may direct an enquiry relying upon the decision of the Supreme Court in the case of Jagdish Chander ( supra ). 31. In my view, the said decision if properly construed will not apply to the facts of the instant case. In the aforesaid decision the respondent was constable who was appointed on 30-11-1985. Since he was absent from duty from 20-4-1992 to 15-5-1992 by order dated 1-1-1992, he was discharged from service as a constable exercising the power under the 12.21 of Punjab Police Rules. Important portion of the aforesaid rules is as 12.21.- "A constable who is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be taken note of. In the aforesaid decision it has been held by the Supreme Court that the Government Company or Public Corporation being State instrumentalities are State within the meaning of article 12 and as such they are subject to the observance of fundamen- tal rights embodied in Part III as well as to conform to the directive principles in Part IV of the Constitution. In other words, the service regulations or rules framed by them are to be tested by the touchstone of article 14. Furthermore, the procedure prescribed by their rules or regulations must be reasonable, fair and just and not arbitrary, fanciful and unjust. It has also been held by the Supreme Court as follows: "It is now well settled that the 'audi alterant partem 'rule which in essence enforces the equality clause in article 14 of the Constitution is applicable not only to quasi-judicial orders but to administrative orders affecting prejudicially the party in question unless the application of the rule has been expressly excluded by the Act or Regulation or Rule which is not the case here. Rules of natural justice do not supplant but supplement the Rules and Regulations. Moreover, the Rule of law which p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sically must be avoided. These powers must, therefore, be so read that the powers can be exercised on reasons, reasons should be recorded, reasons need not always be communicated, must by authorities who are competent and are expected to act fairly, objectively and independently. The occasion for the use of power must be clearly circumscribed in the above limits. These must also circumscribe that the need for exercise of those powers without holding a detailed or prolonged enquiry is there." (p. 146) In the A.L. Kalra's case ( supra ) the Supreme Court took into account its earlier decision in the case of E.P. Royappa v. State of Tamil Nadu AIR 1974 SC 555 and Ajay Hasia's case ( supra ) held and observed as follows : "It thus appears well settled that article 14 strikes at arbitrariness in executive/administrative action because any action that is arbitrary must necessarily involve the negation of equality. One need not confine the denial of equality to a comparative evaluation between two persons to arrive at a conclusion of discriminatory treatment. An action per se arbitrary itself denies equality of protection by law. The Constitution Bench pertinently obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchasers of the produce and the products of our country and they control a vast and complex machinery of distribution. The Government, its agencies and instrumentalities, Corporations set up by the Government under Statutes and Corporations incorporated under the Companies Act but owned by the Government have thus become the biggest employers in the country. There is no good reason why, if Government is bound to observe the equality clauses of the Constitution in the matter of employment and in its dealings with the employees, the corporations set up or owned by the Government, should not be equally bound and why, instead, such corporations could become citadels of patronage and arbitrary action. In a country like ours which teems with population, where the State, its agencies, its instrumentalities and its corporations are the biggest employers and where millions seek employment and security, to confirm the applicability of the equality clauses of the Constitution, in relation to matters of employment, strictly to direct employment under the Government is perhaps to mock at the Constitution and the people. Some element of public employment is all that is necessary to take the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation appears to be without any particulars. Be that as it may, it also suggests that the petitioner has been sought to be removed on certain allegation. The petitioner, however, has not been given any opportunity to defend himself against such allegation and as such, the procedure adopted violates the basic principles of natural justice. 43. Considering the facts and circumstances of this case, the termination order of the petitioner appears to be clearly illegal and arbitrary and cannot be given effect to. There was already an interim order passed by Ruma Pal, J. directing payment of emolument of the petitioner month by month. Since the termination is set aside, the petitioner is deemed to be in service with full benefits. 44. In the instant case, the service of the petitioner was terminated in an unfair and arbitrary manner by simply serving one month's notice pay. Rule, if any, to the effect that a permanent employee's service can be terminated by merely paying one month's notice pay must be held to be unreasonable and arbitrary. Order of termination accordingly is set aside and the petitioner shall be deemed to be in service without any break and shall be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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