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TMI Blog2024 (10) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... in generation, transmission and distribution company(ies) (supra). The same appears to be the most clinching fact herein since all these assessees had been assigned to their respective new employers after getting protection of their service conditions in light of sec.133(2) read with Proviso and Explanation thereto. Needless to state, these four assessees have also undergone the very reorganization finally culminating in their respective superannuation(s). It is thus concluded that not only these four assessees have to be held entitled for sec.10(10A) and sec.10(AA) as employees of MSEB but also they have to held eligible for the impugned exemptions in the newly set-up transferee entities (once their services vested in the State Government); which in turn, carried grand-fathering clause in sec.133 of the Electricity Act. The necessary corollary thereof is that these four assessees have to be invariably treated as employees of a State Government duly eligible for sec.10(10A) and sec.10(10AA) benefits; as the case may be. These four assessees identical sole substantive ground is accepted in very terms. - SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER For the Assessees: Shri Abhay Agra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessees herein to claim the impugned exemption(s). This leaves all these assessees aggrieved. 4. Learned DR quotes Kamal Kumar Kalia vs. Union of India [2019] 111 taxmann.com 409 (Del.) that even the foregoing employees entities are treated as PSUs ; they are still not a State Government u/sec.10(10A)(i) as well as u/sec.10(10AA)(i); as the case may be. 5. I have given my thoughtful consideration to the vehement rival stands. The undisputed fact herein is that these four assessees had joined the then Maharashtra State Electricity Board in regular employment in different pay- scales. All of them admittedly ended-up retiring from the re- designated power company(ies); be it distribution or generation or transmission of electricity; constituted under the provisions of the newly introduced The Electricity Act, 2003 by the Parliament of India. The Revenue s endeavor herein is that be it Maharashtra State Electricity Board or the newly re- designated company(ies), these assessees could not be treated as having an employer-employee relationship with the Maharashtra State Government so as to be eligible for the impugned sec.10(10A) and sec.10(10AA) exemption(s). 6. I find no merit in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural University. 4, The Officers who are appointed for a short assignment will also be admitted to the General Provident Fund Rules. The rate of interest to be paid to the subscribers will be the same as adopted by the Tamil Nadu Government from time to time. 14. Section 7 of the TNAU Act provides for an unfettered right of the State to inspect and conduct enquiry into the management of the University, its various activities including teaching, the work conducted by the University, conduct of examination as well as person or persons who are connected with the administration or finances of the University, by the State. 15. The power exercised by the State Government in the functioning and management of the University is unbridled. The Governor of Tamil Nadu is. in terms of section 9 of the Act, the Chancellor of the University. It is also an admitted position that the funding of the University is entirely at the behest of the State Government. 16. Chapter VI of the TNAU Act deals with funds and accounts. Section 28 deals with General Fund and reads as follows: 28. General Fund (1) The University shall have a General Fund (0 which shall be credited. (a) Its income from fees, endowm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: ** ** ** 22. Above is the ratio decidendi laid down by a seven Judge Bench of this Court which is binding on this Bench. The facts of the case in hand will have to be tested on the touch stone of the parameters laid down in Pradeep Kumar Biswas's case (supra). Before doing so it would be worthwhile once again to recapitulate what are the guidelines laid down in Pradeep Kumar Biswas s case (supra) for a body to be a State under article 12. They are:- (1) Principles laid down in Ajay Hasia are not a rigid set of principles so that if a body falls with in any one of them it must ex hypothesi, be considered to be a State with in the meaning of article 12. (2) The Question in each case will have to be considered on the bases of facts available as to whether in the light of the cumulative facts as established, the body is financially, functionally, administratively dominated, by or under the control of the Government. (3) Such control must be particular to the body in question and must be pervasive. (4) Mere regulatory control whether under statute or otherwise would not serve to make a body a State. 21. In Kamal Kumar Kalia's case (supra), the petitioners were employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a Government servant is more one of status than of contract. The hallmark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of the parties. The emolument of the Government servant and his terms of service are governed by statute or statutory rules which may be unilaterally altered by the Government without the consent of the employee. It is true that article 311 imposes constitutional restrictions upon the power of removal granted to the President and the Governor under article 310, But it is obvious that the relationship between the Government and its servant is not like an ordinary contract of service between a master and servant. The legal relationship is something entirely different, something in the nature of status. It is much more than a purely contractual relationship voluntarily entered into between the parties. The duties of status are fixed by the law and in the enforcement of these duties society has an interest. In the language of jurisprudence status is a condition of membership of a group of which powers and duties are exclusively determined by law and not by agreement between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... multiple decisions that employees of Public Sector Undertakings are not at par with government servants (Ref Officers Supervisors of I.D.P.L. . Chairman M.D. I.D.P.L. AIR 2003 SC 2870). In the noted case of AK. Bindal v. Union of India [2003] 5 SCC 163, while considering the issue of revision of the pay scales of employees of government companies/PSUs at par with government employees , it was held that the employees of government companies cannot claim the same legal rights as government employees. The relevant extract from the said judgment reads as under : 17. The legal position is that identity of the government company remains distinct from the Government. The government company is not identified with the Union but has been placed under a special system of control and conferred certain privileges by virtue of the provisions contained in sections 619 and 620 of the Companies Act. Merely because the entire share holding is owned by the Central Government will not make the incorporated company as Central Government. It is also equally well settled that the employees of the government company are not civil servants so are not entitled to the protection afforded by article 311 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 24, There are vital distinctions between the employers in that case and that in the present 006, Firstly, PSUs are constituted under the provisions of the Companies Act, 1956, where as, the Tamil Nadu Agricultural University 5 constituted under a State enactment coming directly within and under the control of the State. PSUs are independent companies and regulation by the Government is restricted. As far as Banks are concerned, the regulatory agency is the Reserve Bank of India. 25. The TNAU is managed, administered and substantially funded out of Government funds and grants, while PSUs are commercially run companies and have independent sources of revenues. So too with Banks that have a direct source of revenue. The TNAU is administered and managed by Regulations framed by the Statute and relatable to State power. 26. This is not the case with PSUs and banks that are managed by Boards of Directors who exercise independent control over the management. Though a government nominee may be envisaged as part of the Board, their presence is in addition, and supplemental to several other professionals and Directors. The degree of control and oversight by the State in the management of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment , in sections 131-133 as follows : Section 131. (Vesting of property of Board in State Government): (1) With effect from the date on which a transfer scheme, prepared by the State Government to give effect to the objects and purposes of this Act, is published or such further date as may be stipulated by the State Government (hereafter in this Part referred to as the effective date), any property, interest in property, rights and liabilities which immediately before the effective date belonged to the State Electricity Board (hereinafter referred to as the Board) shall vest in the State Government on such terms as may be agreed between tire State Government and the Board. (2) Any property, interest in property, rights and liabilities vested in the State Government under sub- section (1) shall be re-vested by the State Government in a Government company or in a company or companies, in accordance with the transfer scheme so published along with such ether property, interest in property, rights and liabilities of the State Government as may be stipulated in such scheme, on such terms and conditions as may be agreed between the State Government and such company or companies be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y rights or liabilities stipulated or described in the scheme shall be enforceable by or against the transferor or the transferee; (d) impose on the transferor an obligation to enter into such written agreements with or execute such other instruments in favour of any other subsequent transferee as may be stipulated in the scheme; (e) mention the functions and duties of the transferee; (f) make such supplemental, incidental and consequential provisions as the transferor considers appropriate including provision stipulating the order as taking effect; and (g) provide that the transfer shall be provisional for a stipulated period. (6) All debts and obligations incurred, all contracts entered into and all matters and things engaged to be done by the Board, with the Board or for the Board, or the State Transmission Utility or generating company or transmission licensee or distribution licensee, before a transfer scheme becomes effective shall, to the extent specified in the relevant transfer scheme, be deemed to have been incurred, entered into or done by the Board, with the Board or for the State Government or the transferee and all suits or other legal proceedings instituted by or aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t going by a conjoint reading of section(s) 131 r.w.s. 133 hereinabove, the services of all officers and employees of the erstwhile MSEB first stood vested in the State Government of Maharashtra on Reorganization of the Board , followed by the transfer to various transferee entities in generation, transmission and distribution company(ies) (supra). The same appears to be the most clinching fact herein since all these assessees had been assigned to their respective new employers after getting protection of their service conditions in light of sec.133(2) read with Proviso and Explanation thereto. Needless to state, these four assessees have also undergone the very reorganization finally culminating in their respective superannuation(s). It is thus concluded that not only these four assessees have to be held entitled for sec.10(10A) and sec.10(AA) as employees of MSEB but also they have to held eligible for the impugned exemptions in the newly set-up transferee entities (once their services vested in the State Government); which in turn, carried grand-fathering clause in sec.133 of the Electricity Act. The necessary corollary thereof is that these four assessees have to be invariably ..... X X X X Extracts X X X X X X X X Extracts X X X X
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