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TMI Blog2004 (3) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... a, with a prayer to issue a writ in the nature of mandamus declaring G.O. Ms. No. 50, Public Enterprises (II) Department, dated November 15, 2001, as illegal and void. 4. The appellants represent the employees working in various categories in the A.P. State Irrigation Development Corporation Limited (for short the Corporation ). The Corporation is one of the State Level Public Enterprises and it is a wholly owned A.P. Government Company, registered under the provisions of the Companies Act, 1956. The primary objects of the Corporation are to survey, investigate, construct, execute and carry out schemes and works of all kinds for the exploitation of irrigation potential in the State and for maximum utilisation of available water resources, to create irrigation facilities to the upland areas through lift irrigation and ground water schemes. The paid up share capital of the Corporation was at Rs. 117.22 crores as on March 31, 2001. The company is being managed by its Board of Directors. That almost all the shares are held by the State Government except Rs. 95,00,000 of share money held by the Government of India. The State Government is the only stakeholder in the company. Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... study the staff strength with reference to the changed organization structure consequent on implementation of VR Scheme. The Transaction and Financial Adviser, Implementation Secretariat of the Public Enterprises Department, conducted the study, submitted a report and recommended that the cadre strength of the 3rd respondent-Corporation should be fixed at 404 employees. The matter was placed before the Cabinet sub-Committee on Public Sector Undertakings and the Cabinet Sub-Committee in its meeting held on September 22, 2001, having considered the manpower study of the Corporation concurred with the recommendation that the cadre strength of the respondent-corporation ought to be fixed as 404 employees. Based on the recommendations of the Cabinet Sub-Committee, the Government vide G.O. Ms. No. 50 dated November 15, 2001 determined and accordingly ordered the cadre strength of the Corporation as 404 employees as detailed in the annexure appended to the said G.O. The appellants challenged the same in the writ petition unsuccessfully. 8. Sri V. Venkataramana, learned counsel, appearing on behalf of the appellants inter alia contended that the Government of Andhra Pradesh has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In any event, the proposals for downsizing of the cadre strength emanated from the Corporation itself and the Corporation and members of the appellants association were actively involved before the impugned G.O. was issued. 10. We have elaborately heard the learned counsel appearing on behalf of the appellants as well as the learned Additional Advocate-General representing the State as well as the Corporation. We have given our earnest and anxious consideration to the rival submissions made during the course of hearing of this batch of appeals. 11. In order to consider the submissions, it is just and necessary to notice a few facts about which there is no dispute. 12. The impugned G.O. dated November 15, 2001 itself reveals that the Corporation has been incurring losses continuously over the years and that the accumulated loss as on March 31, 2001 stood at Rs. 27 crores, as on March 31, 2002 it was Rs. 38 crores and as on March 31, 2003 it was Rs. 42.62 crores. 13. The accumulated losses of the Corporation are on account of several factors and it would not be possible for this Court to make a detailed enquiry notwithstanding the several accusations made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y affairs vest with the Board of Management. The Board of Directors of the Corporation determined staffing pattern at their 43rd meeting held on September 29, 1990. The staffing pattern was under continuous review from time to time. The review was based upon the requirement of staff to be need based to undertake economically viable projects. The Corporation sought for the Government s approval, from time to time to float V.R. Scheme to discharge surplus manpower. The Corporation itself submitted proposals on January 6, 1991 to further downsize the cadre strength of the Corporation so as to make the organisation economically viable and also for its survival. At one stage, the Government has proposed the cadre strength of respondent-Corporation at 281 employees and with the efforts of the management of the Corporation, it was subsequently increased to 404 employees. We have adverted to these facts in order to highlight that the Board of Directors of the Corporation are actively involved in the decision-making process and the proposals at every point of time emanated from the Board of the Corporation itself. 18. That even under Article 90 of the Memorandum of Articles of Associati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Articles of Association merely govern the internal management, business or administration of a company. They may be binding between the persons affected by them but they do not have the force of statute. The Articles of Association of a company incorporated under the Companies Act have never been held to have the force of law. (See: Co-operative Central Bank Ltd. v. Additional Industrial Tribunal AIR 1970 SC 245). 21. The power exercised by the Government in the instant case is as the shareholder of the Corporation and not in exercise of its power under Article 162 of the Constitution of India. In that view of the matter, it would be impermissible to apply the principles of Administrative Law in order to test the validity of the Governmental action in the instant case. Article 14 of the Constitution of India cannot be construed as a charter of judicial review of State actions and to call upon the State of account for its action in its manifold activities by stating reasons for the actions (See: L.I.C. of India v. Escorts Ltd. AIR 1986 SC 1370). The principles of Administrative law, such as against surrender of discretion and abdication of duty would apply in case of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention that the Government could give direction only on policy matters and not on day-to-day matters of administration such as determination of cadre strength, in our considered opinion, is not applicable to the fact situation on hand. In Rakesh Ranjan Verma s case ( supra ), the provisions of section 78-A of the Electricity (Supply) Act fell for interpretation. Section 78-A provides that in discharge of its functions, the Electricity Board shall be guided by such directions on questions of policy as may be issued by the Government from time to time. Article 90 of the Articles of Association of the Corporation, which empowers the Government of approve the staffing pattern of the Corporation, is much wider in its scope and amplitude. We have already dealt with the same. Rakesh Ranjan Verma s case ( supra ) has no application to the case on hand. 26. Similarly, the decision of this Court in Poddar Projects Ltd. v. A.P.S.E. Board AIR 1982 AP 189, has also no application to the instant case in which it was held that the directions issued by the State Government under section 78-A of the Electricity (Supply) Act, are not intended to regulate the contractual relationship betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterfered with by the Court." 30. The right of the State or of its instrumentality to change its policy decisions from time to time under the changing circumstances cannot be disputed and it is an integral part of democratic process. This Court in exercise of its jurisdiction under Article 226 of the Constitution of India, while considering the validity of the Governmental policy cannot weigh the pros and cons of the policy or to scrutinise it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on even sound reasoning. One of the inputs in formulating and reformulating the Governmental policies may be availability or lack of resources. Since the purse of the State is not under the control of the Court, it will not transgress into the field of policy decision. It would be unnecessary to burden this judgment with various authoritative pronouncements of the Supreme Court delineating the parameters of judicial review in evaluating the policy decisions of the Government. (See: State of Punjab v. Ram Lubhaya Bagga AIR 1998 SC 1703: 1998 (4) SCC 117, Narmada Bachao Andolan v. Union of India AIR 2000 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. The creation, the continuance and the abolition of post are all decided by the Government in the interest of administration and general public......the abolition of post may have the consequence of termination of service of a Government Servant. Such termination is not dismissal or removal within the meaning of article 311 of the Constitution of India. The opportunity of showing cause against the proposed penalty of dismissal or removal does not therefore arise in the case of abolition of post. The abolition of post is not a personal penalty against the Government Servant." 34. In Balco Employees Union ( supra ), the Supreme Court observed : "47. . . .Even though the workers may have interest in the manner in which the company is conducting its business, inasmuch as its policy decision may have an impact on the workers rights, nevertheless it is an incidence of service for an employee to accept a decision of the employer which has been honestly taken and which is not contrary to law. Even a Government servant, having the protection of not only Articles 14 and 16 of the Constitution but also of Article 311, has no absolute right to remain in service. For example, apart f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Govenrment and the Corporation from reviewing their earlier policy. The policy decisions are not static and they keep on evolving from time to time depending upon the exigencies of the situation. The reasons are clearly evident from the impugned G.O. itself as to what are those circumstances that necessitated the Government to review its earlier policy and further downsize the sanctioned strength of the employees of the Corporation. We have already adverted to each one of those reasons stated and it is unnecessary to reiterate the same. 39. Reliance also has been placed on letters addressed by the Chairman of the Corporation to the Honourable Chief Minister in October, 2003, subsequent to the impugned judgment on June 4, 2002 and June 25, 2003 in support of the contention that on account of the availability of the work and administrative sanction, there is a need of increasing the cadre strength above 404 employees. We cannot place any reliance upon the letters stated to have been addressed by the Chairman of the Corporation to the Honourable Chief Minister. 40. It is evident from the averments made in the counter-affidvait that even after the impugned G.O. was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. That after grants under Article 203 of the Constitution of India have been made by the Assembly, a Bill is required to be introduced in the Legislative Assembly under Article 204(1) of the Constitution of India, to provide for appropriation out of the Consolidated Fund of the State and on the said Bill being passed it becomes the "Appropriation Act". Article 204(3) of the Constitution of India prohibits withdrawal of money from the Consolidated Fund of the State except under appropriation made by law passed in accordance with the provisions of Article 204. Thus budgetary allocation, made under the Appropriation Act, is law made by the State Legislature and cannot be deviated from. The budgetary releases from out of the allocations made under the Appropriate Act are once again dependent on several factors, such as, actual receipt of estimated revenue, expenditure required to be incurred for certain unforeseen contingencies etc . These are also once again placed for approval of the Legislature and on being passed becomes law as "Appropriation Act-II". Thus, both the budgetary allocations and budgetary releases are in effect to the laws made by the State Legislature. 45. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons we are not persuaded to interfere with the well considered judgment, of the learned single Judge. 49. The downsizing of the cadre strength that had resulted in abolition of certain posts does not suffer from any constitutional infirmities. The decision is not violative of Articles 14 and 16 of the Constitution of India. We accordingly reject the contentions raised in this regard. G.O. Ms. No. 50, dated November 15, 2001 is accordingly upheld. Writ Appeal No. 1594 of 2003 and Batch 50. In this batch of cases, the appellants challenge the action of the Corporation in identifying surplus employees and calling upon those identified surplus employees to exercise their option for V.R. Scheme. The circular dated September 7, 2002 and the notice dated September 7, 2002 issued by the Corporation are impugned on various grounds. Both the proceedings have been issued consequent upon the Government Orders vide G.O. Ms. No. 50 dated November 15, 2001 fixing the cadre strength of the Corporation at 404 employees. Be it noted that the said G.O. having been adopted by the Corporation decided itself to implement the same. That after the Govenrment accorded approval to float the V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Corporation without any prior notice and hearing to the affected employees is liable to be set aside. The learned counsel further contended that the identification of surplus staff must be based on the principle of "stepping down". If such principle is applied, the employee who ranks last in the cadre in which he is presently working, will become the senior most in the cadre to which he will be rolled down and thus the Corporation would be in a position to retain senior employees with rich experience. The learned counsel further contended that there is no rationale behind the classification of the employees into surplus and non-surplus and therefore the classification is not a valid classification. The learned counsel further submitted that the Corporation ought to have first invited such of those employees of the work charged establishment, who continued to work in the provincial establishment, as surplus. 55. Sri Nuty Ram Mohan Rao, learned counsel submitted that the identification of the appellants as surplus is unscientific since it is not based on any material except the report of the one-man committee. He reiterated the submission made by Sri A. Suryanarayana Murt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration is an instrumentality of the State Govenrment and hence, is a State within the meaning of Article 12 of the Constitution of India for the purposes of Part-III of the Constitution and that all its actions are liable to be tested on the touchstone of Articles 14 and 16 of the Constitution of India. It is well settled that Article 14 of the Constitution of India strikes at arbitrariness in executive/administrative action because any action that is arbitrary must necessarily involve the negation of equility. At the same time, we are required to bear in mind that even if the Corporation is an instrumentality of the State as comprehended in Article 12 of the Constitution, yet the employees of the Corporation are not governed by Part-XIV of the Constitution. The Supreme Court, took the view that 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. The independence and integrity of those employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principle of "last come first go in each category" to achieve the objective of having a desirable age mix to cope with the changing needs. There was a possibility to apply the procedure of "step down" canvassed by the appellant for identifying surplus employees, based on their total length of service in the Corporation. Even such a procedure could have been reasonable procedure and may have satisfied the test under Articles 14 and 16 of the Constitution of India. But unless this Court comes to the conclusion that the principle of "last come first go in each category" applied by the Corporation is arbitrary and in violation of Articles 14 and 16 of the Constitution of India, no directions can be issued directing the Corporation to adopt the procedure of "stepping down" in substitution of the adopted procedure. When there are two reasonable modes for identification of the surplus employees available, the Corporation is entitled to choose one such reasonable mode and in such a situation this Court in exercise of its jurisdiction under Article 226 of the Constitution of India, cannot compel the Corporation to adopt the other mode which in its view may equally be reasonable and effic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d employee and declaring him as surplus was to be accepted, then it would arm the employer with a new weapon to promote an employee after creating a new post, abolish it after some time and relieve him from duties on the plea of surplusage. But we are required to notice that the Corporation in the instant case did not single out any employee for any adverse treatment as such. It is not the case of the appellants that the action of the Corporation in identifying the surplus employees is a colourable exercise of power. Neither any post was created nor promotions effected with a view to declare such promoted employees as surplusage. On the other hand, the Corporation identified nearly 450 employees as surplus by uniformly applying the principle of "last come first go in each category" except in case employees belonging to Scheduled Castes and Scheduled Tribes category. 66. The observations of the Courts are not to be read as "Euclid s theorems" nor as provisions of the statute. These observations must be read in the context in which they appear. The judgments of Courts are not to be construed as statute. [ See: Haryana Financial Corpn. v. Jagadamba Oil Mills 2002 (3) SCC 496 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees not borne in the cadre and identifying those who are borne in the cadre of surplus is wholly arbitrary and offends the equality clause enshrined in Article 14 of the Constitution of India. The appellants were originally appointed in the Corporation as Typists. That in terms of Staff Regulations Chapter-X Item-10 of the Corporation they were converted as Junior Assistants vide proceedings of the Corporation dated December 10, 1990. The provisional seniority list of Assistants as on November 1, 2001 was communicated to all the concerned vide the Corporation proceedings dated December 6, 2001 and December 14, 2001 requiring the employees to submit their objections, if any, within 20 days from the date of the order. It is evident from the record that the employees from the work charged establishments, who were promoted as Junior Assistants, prior to conversion of the appellants, from the posts of Typist to the posts of Junior Assistant, were placed higher in the provisional seniority list, as also in the provisional seniority lists for the previous years. There is no dispute that the regulations of the Corporation provides for promotion of employees in the work charged establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t less than one year under an employer shall be retrenched. The application for permission is required to be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner. The Government or the specified authority after giving a reasonable opportunity of being heard to the employer and the workmen and the persons interested in such retrenchment may by order for reasons recorded in writing grant or refuse to grant such permission as prayed for by the employer. The rights of the employees in the workmen category are so well protected and failure on the part of the Corporation in giving them an opportunity of being heard at this stage is of no consequence since they are not being retrenched straightaway by the Corporation at this stage. 74. The plea that the entire exercise of identification is vitiated for non-compliance with the principles of natural justice is only available to the identified surplus employees in the non-workmen category, who have not taken VR Scheme. 75. The learned counsel for the appellants in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unbridled, unrestricted power to terminate the services of a permanent employee without recording any reasons for the same and without adhering to the principles of natural justice and equality before the law was declared void. The Supreme Court took the view that conferment of power with wide discretion without any guidelines, without any just, fair or reasonable procedure is constitutionally anathema to Articles 14, 16(1), 19(1)( g ) and 21 of the Constitution of India. 79. We fail to see what relevance those decisions have to the case before us. No such regulation, which empowered identification of the surplusage, is in question before us. 80. The question that falls for consideration is whether the observance of rule of audi alteram partem was necessary for a just decision, on the facts of the case? 81. We have noted the sequence of events right from the stage of G.O. Ms. No. 50 dated November 15, 2001, ordering the cadre strength of the Corporation for 404 employees as detailed in the annexure thereto. We have also noted that the Corporation adopted uniform procedure of "last come first go in each category" and found the same to be a reasonable procedure. In such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter on the ground that in all cases of violation of principles of natural justice the Court need not necessarily interfere and set at naught the action taken. 87. It is held that Mangalore University Non-Teaching Employees Association s case ( supra ): "11. ...But, it is by now well settled that in all cases of violation of the principles of natural justice the Court exercising jurisdiction under Article 226 of the Constitution need not necessarily interfere and set at naught the action taken. The genesis of the action contemplated the reasons thereof and the reasonable possibility of prejudice are some of the factors which weigh with the Court in considering the effect of violation of the principles of natural justice. When undisputably the action taken is within the parameters of the rules governing the payment of HRA and CCA and moreover the university authorities themselves espoused the cause of employees while corresponding with the Government, it is difficult to visualize any real prejudice to the respondents on account of not affording the opportunity to make representation..." (P. 885) 88. On the facts and in the circumstances, we find that no useful pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Workmen through Rehabilitation Employees Union AIR 1997 SC 852 : 1997 (2) SCC 296 : the Supreme Court while referring to G. Govinda Rajulu s case ( supra ) observed that "in the said case neither there has been any discussion on any question of law nor any circumstances have been indicated under which the direction was given. The being the position the aforesaid decision cannot be of universal application in all cases where there has been a closure of the project which resulted in termination of the employees." The judgment of the Supreme Court in G. Govinda Rajulu s case ( supra ), in no manner helps the contention urged on their behalf. Women employees and those appointed on compassionate grounds: 93. The appellants contended that since they are women, they are entitled for quota of 33-1/3% and applying roster backwards, they should be retained in the service to the extent of the their quota. Suffice it to notice that none of those women (appellants) were appointed in the Corporation under any quota. As such the question of application roster backwards for women categories does not arise. Similarly an employee appointed on compassionate grounds is not entitled to cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheduled Tribes. Their claim is based upon Article 16(4) of the Consti-tution of India which is enabling provision as held by the Supreme Court in Ajit Singh v. State of Punjab AIR 1999 SC 3471 : 1999(7) SCC 209 and Raees Ahmad v. State of U.P. AIR 2000 SC 583 : 2000 (1) SCC 432. In the circumstances, no mandamus can be issued directing the Corporation to apply roster backwards even in case of employees belonging to Backward Classes. Employees belonging to Backward Classes cannot, as a matter of right, claim that they should also be given the benefit of application of roster backwards, similar to that of Scheduled Castes and Scheduled Tribes. 96. Similarly, the contention that the A.P. Scheduled Castes (Rationalisation of Reservation) Act, 2000, applied and by so applying roster it should be ensured that Scheduled Caste employees in their respective categories are retained in service is untenable and unsustainable. It is needless to observe that the appellants/petitioners were appointed much prior to the said Act coming into force and were not given the benefits of categorisation at the time of their appointment and promotion since the said Act came into force only w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for taking such a view in the matters. The decision cannot be said to be an arbitrary one. We find no merit in the claim. 100. Likewise the single post of Computer Operator has been abolished since it has become redundant for the reason that most of the employees in the Corporation have been trained on computers. The policy decision behind the abolition of the single post of computer is self-evident. We cannot interfere with such policy decision, which is supported by valid reasons. The claim of Employees declared Surplus consequent upon abolition of Roster Backwards in the case of Scheduled Castes and Scheduled Tribes: 101. That placing reliance upon G.O.Ms. No. 121 dated October 31, 1991, the petitioners contend that instead of applying roster backwards, the identified surplus Scheduled Castes and Scheduled Tribes employees ought to have been retained in service by creating the required supernumerary posts. We have noticed that the Corporation applied roster backwards in case of Scheduled Castes and Scheduled Tribes employees on the directions of this Court. The Corporation itself did not apply the roster backwards on its own. 102. Be it as it may, G.O. No. 121 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contend that they acquired physical disabilities while in service. The Act itself has been enacted in order to ensure the full participation and equality of people with disabilities. The Act is special in its nature. The rights of the persons with the disabilities are required to be protected. The persons with the disabilities constitute themselves into a separate class. In our considered opinion, the Corporation is required to consider whether it is required to deviate from application of rule of "last come first go in each category" and apply the roster backwards in the case of physically disabled employees and apply the same in similar manner as in the case of Scheduled Castes and Scheduled Tribes employees. We accordingly consider it appropriate to direct the respondent-Corporation to examine the feasibility of applying the roster backwards in the case of physically disabled employees and take an appropriate decision as expeditiously as possible. Validity of Staff Regulation 21: 108. The Regulation 21 of Andhra Pradesh State Irrigation Development Corporation Limited Staff Regulations enables the Corporation to terminate the services of employees by giving three month ..... X X X X Extracts X X X X X X X X Extracts X X X X
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