Andhra HC (Pre-Telangana)
Narendra Agrawal vs The Managing Director, Indian ... on 24 November, 2016
Author: A.Ramalingeswara Rao
Bench: A.Ramalingeswara Rao
THE HONBLE SRI JUSTICE A.RAMALINGESWARA RAO
Writ Petition No.4159 of 2015
24-11-2016
Narendra AgrawalPetitioner
The Managing Director, Indian Immunologicals Limited, Hyderabad (A wholly
owned subsidiary of the National Dairy Development Board), Road No.44, Jubilee
Hills,
Hyderabad and others. Respondents
Counsel for the Petitioner : Party in Person
Counsel for the Respondents:Sri Vedula Srinivas
<Gist:
>Head Note :
? Cases referred
1. (1990) 1 AnWR 675 : (1990) 1 APLJ 368
2. (2015) 148 DRJ 55 (W.P.(C).Nos. 3110 & 5809 of 2011 & CM.
Nos.6577 & 11833 of 2011, dated 02.02.2015)
3. (1986) 3 SCC 156
4. (2002) 5 SCC 111
5. 2003(2) ALD 392
6. (2013) 8 SCC 345
7. (2015) 3 SCC 251
8. (2015) 4 SCC 670
9. (1989) 2 SCC 691
10. (2012) 12 SCC 331
11. (2005) 4 SCC 649 : AIR 2005 SC 2677
12. AIR 1975 SC 1329 : (1975) 1 SCC 485
13. (1975) 1 SCC 421
14. 90 L Ed 265 : 326 US 501 (1946)
15. (1997) 3 SCC 571
16. (2003) 4 SCC 225
17. (1969) 1 SCC 585
18. (2003) 10 SCC 733
THE HONBLE SRI JUSTICE A. RAMALINGESWARA RAO
Writ Petition No.4159 of 2015
Order:
The petitioner filed this Writ Petition through his counsel initially
and later on argued the case in person. Heard the petitioner in person and
the learned counsel for the respondents.
As per the averments in the affidavit filed in support of the Writ
Petition, the petitioner states that the respondent-Company is a wholly
owned subsidiary of National Dairy Development Board and that of the
Government of India. Thus, it is amenable to the jurisdiction of this
Court. He further states that majority of the employees except the
Managing Director are engaged on contract basis. The petitioner was
appointed as Manager Grade-III in marketing department by a letter of
appointment dated 02.03.2007. He was initially appointed for a period of
three years with effect from 28.02.2007 and his services were stated to be
terminable by giving one month notice or by paying one month salary in
lieu of notice. He states that he joined the second respondent company
after having qualified in B. Pharmacy and MBA. He was sponsored by the
Company to undergo executive programme in Marketing (EPM) from IIM,
Kozhikode. The compensation payable to the petitioner was revised from
time to time and his services were also renewed from time to time. He
was promoted as Manager Grade-II with retrospective effect from
01.04.2013. By a Circular dated 20.03.2014 he was given full charge of
Marketing-HR and Training and Development of entire marketing work
force. However, things became adverse and he was denied revision of
compensation though the compensation package was enhanced to all the
employees with effect from 01.04.2014. The respondents started
harassing and humiliating him and the petitioner was asked to vacate his
cabin and share the office space with an employee who is much junior to
him on 25.11.2014. When he applied for a casual leave on 26.11.2014
the same was rejected. In those circumstances, he addressed a
representation to the fourth respondent on 25.11.2014 ventilating his
grievances and it was followed by e-mail dated 22.12.2014. Instead of
addressing the grievances, he was issued with an office order dated
02.01.2015 transferring him to distribution department at Ooty plant and
he was informed that he would not have any seat in the Head Office from
05.01.2015 onwards and he was asked to report at the transferred place
by that date. Due to this turn of events, the petitioner developed health
complications and he was admitted in the hospital on 05.01.2015, but a
show cause notice was issued on 06.01.2015 alleging that the petitioner
was unauthorisedly absent without prior permission or intimation. He
submitted a reply on 11.01.2015 after discharge from the hospital. He
was asked to vacate the quarters by 15.02.2015. The request for
personal hearing to the fourth respondent did not yield any result. The
petitioner was again admitted in hospital on 23.01.2015 and when he was
undergoing treatment, the impugned order dated 24.01.2015 was issued
terminating his services with one month notice by invoking Clause 18 of
the contract of employment. Challenging the same, the present Writ
Petition was filed.
A counter affidavit is filed on behalf of the respondents raising the
objection with regard to maintainability of the Writ Petition. It is stated
that the second respondent company is not a Government of India
establishment but it is wholly owned subsidiary company of the National
Dairy Development Board (NDDB). It has nothing to do with the
Government of India as alleged by the petitioner. The second respondent
company is independent in its governance with a Board of Directors and it
was registered as a non-government company by the Registrar of
Companies, Hyderabad. Thus, the second respondent company is not an
instrumentality of the State. It is further stated that the objectives of the
respondent company is only towards its members and customers (human
beings and animals who use and likely to use its vaccines and animal
formulations) only. It has no power to take any action affecting the rights
of the members of the public. The contract of service between the
petitioner and the second respondent cannot be termed as coming under
public law. It is a pure and simple contract of service regulating the
relationship between the petitioner and the second respondent.
It is further stated that the petitioner was initially appointed as
Manager in the grade of M-III in Marketing Department vide letter of
appointment dated 02.03.2007 on fixed tenure contract basis for a period
of three years. Thereafter, his appointment was renewed from time to
time based on organizational needs subject to meeting performance
standards and continued compatibility to organizational values and work
ethos and the tenure of the petitioner comes to an end on 31st March
2015. The petitioner, during his tenure with the respondent company,
had some or other issues with co-employees, used to disobey the
instructions of his superiors and functional heads, involves himself in
unnecessary arguments with the colleagues etc. The petitioner did not
mend his ways in spite of several warnings. In view of the disrespectful
behavior of the petitioner, he was moved from one department to another
and due to administrative reasons he was transferred to Ooty vide order
of transfer dated 02.01.2015. On receipt of the said order of transfer, the
petitioner has begun pretending to be unwell and when he was asked to
show relevant medical claim of ill-health he failed to provide the same.
Though the petitioner was supposed to report to duty at Ooty plant of the
respondent company on 05.01.2015, he failed to report despite oral and
written instructions. Though the respondent company arranged for his
travelling to Ooty by providing him with the air ticket from Hyderabad to
Coimbatore, he refused to go. He threw his transfer order and the air
ticket in the cabin of his functional head in a most disrespectful manner.
In those circumstances, the respondents issued the order of termination
by letter dated 24.01.2015 as per the terms of his employment. The
termination letter along with a cheque equivalent to one month salary was
served on him on 24.01.2015. The order of termination was passed in
terms of the contract and it cannot be termed as illegal. In fact the
petitioner himself, in his various letters stated that he would discontinue
his employment with the respondent company. The performance of the
petitioner was rated as NSP (Normal Satisfactory Performance) and he
was entitled to only 7% increment as per performance management
system of the respondent company and accordingly he was given
performance incentive by proceedings dated 10.08.2007. The petitioner
was cautioned on several occasions not to write frivolous emails to people
unrelated but he continued his ways to create a negative work
environment and atmosphere within the respondent company and to bring
disrepute to the company. The petitioner was not given any permanent
employment and the term, permanent employee referred to in the pay
slips was created only in order to distinguish him from casual workers,
third party employees, contract workers and other types of employees.
The petitioner approached the Human Rights Commission of AP, at
Hyderabad, but did not state the same in his affidavit filed in support of
the Writ Petition. The other allegations made by the petitioner in his
affidavit are denied.
The petitioner filed a reply to the counter denying the status of the
respondent company as a non-governmental company by stating that the
National Dairy Development Board is declared as an Institution of National
Importance under a Special Act of Parliament, the NDDB Act 1987 (Act 37
of 1987) and the respondent company being a wholly owned subsidiary of
the said statutory authority becomes a State amenable to the jurisdiction
of this Court. The entire equity of the second respondent company is
owned by the NDDB and the second respondent is listed in the Gazette of
India as wholly owned subsidiary of NDDB. The Chairman of the NDDB is
appointed by a Committee of the Cabinet, Government of India and he
also happens to be the Chairman of the second respondent company. All
the directors of the second respondent company are appointed by the
NDDB. The letter issued by the General Manager-HR of the company says
that it is a public sector company and the vehicles bear the tag of
Government vehicles. It conducts special recruitment drive for Scheduled
Caste and Scheduled Tribe candidates and the code of conduct of the
employees prohibit the criticism of the Government. The correspondence
shows that the Government of India seeking explanation from the second
respondent company on petitioners case and the second respondent
responding to the same. The letter of appointment of the petitioner
states that the service of the petitioner is transferable to NDDB. He
further states that the children of the employees of the second
respondent company are eligible for admission in Kendriya Vidyalayas
based on the letters issued by the respondents and Parliamentary
Standing Committee carries out periodical inspection of the second
respondent company. Though the respondents cited behavioral issues
they could not issue any notice to him at any point of time in support of
their allegations. The denial of the health condition of the petitioner is
also found fault by the petitioner in the reply. The petitioner was never a
signatory to the renewals of service and hence there cannot be any
termination of contract. The petitioner further stated that the very
sanction of increment shows that his services were not contractual. The
over all employment clearly shows that the terms are not contractual as
the age of retirement was included later. The medical reports were
submitted to the respondents via internal mail after discharge and it
cannot be said that his health condition was good. Even if the status of
the petitioner was stated as permanent employee in the pay slips in order
to distinguish from other employees who were appointed on contract
basis, casual workers and third party employees, there was no necessity
to describe the same as stated, as the other employees will not have any
pay slips. He was treated as permanent employee right from the
beginning. The petitioner further stated that he approached the Human
Rights Commission at Hyderabad in December 2014, much before the
order of termination.
A rejoinder was filed to the reply filed by the petitioner though it is
not a usual practice. In the rejoinder it was denied that the Chairman of
National Dairy Development Board who would be appointed by the
Government of India is the Chairman of the second respondent company
and all the Directors of the Company are appointed by the NDDB. The
appointment of the Board of Directors would be decided in the Annual
General Body Meeting. The Managing Director is also appointed after due
selection by the Board of Directors of the company. A stray sentence in
the letter of the General Manager(HR) cannot make the second
respondent as a public sector company. The tag on the vehicles of the
company styling them as Government vehicles is dispensed with. The
other instances mentioned with regard to prohibition from criticism of
governmental activities and conducting the recruitment drive for
Scheduled Caste and Scheduled Tribe candidates would not make the
respondent company a Government company. The reply furnished to the
Ministry of Agriculture, Department of Animal Husbandry, New Delhi on
the case of the petitioner cannot make the second respondent a
Government company. The other instances also will not make the
respondents amenable to writ jurisdiction of this Court. Initially the
second respondent company was a unit of the NDDB and accordingly it
was shown in the Gazette of India dated 14.06.1988. But later on it was
incorporated as separate company, was deleted from the list of units of
NDDB and it was added in the list of subsidiaries of NDDB. Neither the
Government of India nor the NDDB has any say in the affairs of the
second respondent company. The second respondent company functions
in a highly competitive business atmosphere where several private
manufacturers operate for selling its products in the trade market and by
participating in the tender process. The second respondent did not take
any financial aid from the Government or the NDDB and it generates its
own income. The Board of the second respondent company takes all the
decisions for running the company and there is no administrative, financial
or any kind of authority exercised by the Government on the second
respondent.
After holding a preliminary hearing it was thought that the issue
could be sorted out and accordingly the matter was referred to the
Mediation Centre for which the petitioner as well as the respondents
agreed. The effort did not fructify, as a result of which the Court heard
the elaborate submissions made by the petitioner-in-person as well as by
the counsel for the respondents.
The petitioner submitted that the Writ Petition is maintainable as
the second respondent company is a wholly owned subsidiary of the
NDDB, which is a statutory authority and declared as an institution of
national importance by the Government of India while enacting the law.
He further submitted that his employment was not contractual and the
order of termination passed on the assumption that his employment was
contractual is illegal. He relied on a decision of this Court in SKCC Bank
Limited, Amalapuram, rep. by General Manager, East Godavari
District v. N. Seetharama Raju and order of the Delhi High Court in
Mother Dairy Fruit & Vegetable Private Limited Vs. Hatim Ali .
Learned counsel for the respondents submitted that though the
second respondent company is a wholly owned subsidiary of the National
Dairy Development Board, it is a statutory authority. The Writ Petition is
not maintainable against the second respondent company as it does not
fulfill the criteria required for attracting the jurisdiction of this Court. He
further submitted that the contract of the petitioner comes to an end with
effect from 31.03.2015 and his services were terminated by giving one
month salary in lieu of notice as per the terms of the contract. He relied
on the decisions reported in Central Inland Water Transport
Corporation Limited v. Brojo Nath Ganguly , Pradeep Kumar
Biswas v. Indian Institute of Chemical Biology , Krishi Foundry
Employees Union, Industrial Estate, Hyderabad v. Krishi Engines
Limited , Balmer Lawrie and Company Limited v. Partha Sarathi
Sen Roy , Board of Control for Cricket in India v. Cricket
Association of Bihar and K.K. Saksena v. International
Commission on Irrigation and Drainage .
In view of the above submissions, the following points are framed
for consideration in the present Writ Petition.
(1) Whether the second respondent company is a State or other
authority in order to be amenable to the jurisdiction of this
Court under Article 226 of the Constitution of India
(2) If so, whether the order of termination of service of the
petitioner passed on 21.04.2015 is valid or not
In order to decide the first point the following admitted facts are
necessary to be considered:
The second respondent is a wholly owned subsidiary company of
the National Dairy Development Board which was established under the
Statute, National Dairy Development Board Act, 1987 (Act 37 of 1987). It
is registered as a non-government company by the Registrar of
Companies, Hyderabad. As per the audit report dated 30.06.2015, the
entire paid up capital of the company to the tune of Rs.9,000,001/- is held
by the National Dairy Development Board, the holding statutory body
constituting 99.99% of the shares. It borrowed its monies from Public
Sector Banks as well as NDDB. The company itself is having a subsidiary
company, Pristine Biologicals (NZ) Limited, New Zealand. It is managed
by a Chairman and four Directors.
The party-in-person submitted that the following instances are
relevant for considering whether the 2nd respondent is a State or other
authority:
(i) the Chairman of the NDDB appointed by the Appointment
Committee of the Cabinet, Government of India is also the
Chairman of the second respondent company;
(ii) the letter issued by the General Manager-HR of the second
respondent Company describes it as a public sector
company;
(iii) the respondents used the vehicles with Government
Vehicle tag;
(iv) CDA of the second respondent company says that the
employees should not criticize the Government;
(v) the second respondent company conducts special
recruitment drive for Scheduled Caste and Scheduled Tribe
candidates;
(vi) the Ministry of Agriculture, Department of Animal Husbandry
sought explanation from the second respondent company on
petitioners case;
(vii) the services of the petitioner are transferable to NDDB, and
the children of the employees of the second respondent
company are given admission in Kendriya Vidyalayas.
Though the above instances appear to give an impression that the 2nd
respondent is a State or other authority, they are not permissible indicia
to decide the nature of the Company and those aspects were
clarified/denied by the respondents in their counter also. In this factual
situation it has to be seen whether the second respondent Company is
amenable to the jurisdiction of this Court in the light of the following
decisions of the Honble Supreme Court.
In Anadi Mukta Sadguru Shree Muktajee Vandas Swami
Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani , the
Honble Supreme Court considered the term authority used in Article 226
of the Constitution and observed as follows.
20. The term "authority" used in Article 226, in the
context, must receive a liberal meaning unlike the term
in Article 12. Article 12 is relevant only for the purpose of
enforcement of fundamental rights under Article 32. Article
226 confers power on the High Courts to issue writs for
enforcement of the fundamental rights as well as non-
fundamental rights. The words "any person or authority"
used in Article 226 are, therefore, not to be confined only to
statutory authorities and instrumentalities of the State. They
may cover any other person or body performing public duty.
The form of the body concerned is not very much relevant.
What is relevant is the nature of the duty imposed on the
body. The duty must be judged in the light of positive
obligation owed by the person or authority to the affected
party. No matter by what means the duty is imposed, if a
positive obligation exists mandamus cannot be denied.
22. Here again we may point out that mandamus
cannot be denied on the ground that the duty to be
enforced is not imposed by the statute. Commenting on the
development of this law, Professor De Smith states: "To be
enforceable by mandamus a public duty does not necessarily
have to be one imposed by statute. It may be sufficient for
the duty to have been imposed by charter, common law,
custom or even contract." (S.A de Smith, Judicial Review of
Administrative Action (4th Edn., Stevens & Sons Ltd.,
London 1980) at p. 540). We share this view. The judicial
control over the fast expanding maze of bodies affecting the
rights of the people should not be put into watertight
compartment. It should remain flexible to meet the
requirements of variable circumstances. Mandamus is a very
wide remedy which must be easily available 'to reach
injustice wherever it is found'. Technicalities should not
come in the way of granting that relief under Article 226.
We, therefore, reject the contention urged for the appellants
on the maintainability of the writ petition.
In Pradeep Kumar Biswass case (supra), the Honble Supreme
Court observed as follows.
39. Fresh off the judicial anvil is the decision in
the Mysore Paper Mills Ltd. vs. The Mysore Paper Mills Officers
Association (JT 2002 (1) SC 61) which fairly represents what
we have seen as a continuity of thought commencing from
the decision in Rajasthan Electricity Board in 1967 up to the
present time. It held that a company substantially financed
and financially controlled by the Government, managed by a
Board of Directors nominated and removable at the instance
of the Government and carrying on important functions of
public interest under the control of the Government is 'an
authority' within the meaning of Article 12.
40. The picture that ultimately emerges is that the
tests formulated in Ajay Hasia v. Khalid Mujib Sehravardi
((1981) 1 SCC 722) are not a rigid set of principles so that if a
body falls within any one of them it must, ex hypothesi, be
considered to be a State within the meaning of Article 12. The
question in each case would be - whether in the light of the
cumulative facts as established, the body is financially,
functionally and administratively dominated by or under the
control of the Government. Such control must be particular to
the body in question and must be pervasive. If this is found
then the body is a State within Article 12. On the other hand,
when the control is merely regulatory whether under statute
or otherwise, it would not serve to make the body a State.
The decision in Anadi Mukta Sadguru Shree Muktajee Vandas
Swami Suvarna Jayanti Mahotsav Smarak Trusts case (supra) was
followed in Ramesh Ahluwalia v. State of Punjab .
The observations of the Honble Supreme Court in Zee Tele Films
Ltd. v. Union of India are as follows.
167. The courts exercising the power of judicial
review both under Articles 226, 32 and 136 of the
Constitution of India act as a "sentinel on the qui vive." [See
Padma v. Hiralal Motilal Desarda and others (2002) 7 SCC
564 at 577)
168. A writ issues against a State, a body exercising
monopoly, a statutory body, a legal authority, a body
discharging public utility services or discharging some public
function. A writ would also issue against a private person for
the enforcement of some public duty or obligation, which
ordinarily will have statutory flavour.
169. Judicial Review casts a long shadow and even
regulating bodies that do not exercise statutory functions
may be subject to it. (Constitutional and Administrative Law;
by A.W. Bradley and K.D. Ewing (13th Edn.) Page 303).
170. Having regard to the modern conditions when
Government is entering into business like private sector and
also undertaking public utility services, many of its actions
may be a State action even if some of them may be non-
governmental in the strict sense of the general rule.
Although rule is that a writ cannot be issued against a
private body but thereto the following exceptions have been
introduced by judicial gloss:
(a) Where the institution is governed by a statute
which imposes legal duties upon it;
(b) Where the institution is 'State' within the meaning
of Article 12.
(c) Where even though the institution is not 'State'
within the purview of Article 12, it performs some public
function, whether statutory or otherwise.
In the said decision, the Honble Supreme Court also held that the
traditional tests of a body controlled financially, functionally and
administratively by the Government as laid down in Pradeep Kumar
Biswass case (supra) would have application only when a body is
created by the State itself for different purposes but incorporated under
the Indian Companies Act or Societies Registration Act. The Honble
Supreme Court also observed that it was not bound by the decision in
Pradeep Kumar Biswass case (supra) which was rendered in the
context of examining the decision of the Constitution Bench in Sabhajit
Tewary v. Union of India . It was ultimately held that the question is
required to be determined in each case having regard to the nature of and
extent of authority vested in the State. It is not possible to generalize the
nature of the action which would come either under public law remedy or
private law field nor is it desirable to give exhaustive list of such actions.
In Board of Control for Cricket in Indias case (supra), the
Honble Supreme Court considered whether Board of Control for Cricket in
India (BCCI) is State within the meaning of Article 12 and if it is not,
whether it is amenable to the writ jurisdiction of the High Court under
Article 226 of the Constitution of India. The Honble Supreme Court
considered the decisions in Sukhdev Singh v. Bhagatram Sardar
Singh Raghuvanshi and Marsh v. Alabama and observed as
follows.
23. In Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi (1975) 1 SCC 421), one of the questions that
fell for considerations was whether an employee of statutory
corporation like Oil and Natural Gas Commission established
under the Oil and Natural Gas Commission Act 1959, Indian
Finance Corporation, established under the Indian Finance
Corporation Act, 1948 and the Life Insurance Corporation
under the Life Insurance Corporation Act, 1956, was entitled
to claim protection of Articles 14 and 16 against the
Corporation. A Constitution Bench of this Court answered
the question in the affirmative by a majority of 4:1. Mathew,
J. in his concurring judgement referred to Marsh v. Alabama
(326 U.S. 501 (1946): 90 L Ed 265) to hold that even where
a corporation is privately performing a public function it is
bound by the constitutional standard applicable to all State
actions.
24. Marsh v. Alabama (supra), it is noteworthy, arose
out of a prosecution launched against a Jehovahs witness
for her refusal to leave the sidewalk where she was
distributing religious pamphlets. She was fined five dollars
but aggrieved by her prosecution she approached the
Supreme Court to argue that the corporation that owned the
town had denied the right of religious liberty available to
Marsh. The U.S. Supreme Court upheld the contention and
declared that administration of public bodies like a town
through private entities was tantamount to carrying out
functions of a public body. Private right of the corporation
could, therefore, be exercised only within constitutional
limitations. Black, J. speaking for the Court observed:
(Marsh case, L Ed p. 268)
The more an owner, for his advantage,
opens up his property for use by the public in general, the
more do his rights become circumscribed by the statutory
and constitutional rights of those who use it. Thus, the
owners of privately held bridges, ferries, turnpikes and
railroads may not operate them as freely as a farmer does
his farm. Since these facilities are built and operated
primarily to benefit the public and since their operation is
essentially a public function, it is subject to state
regulation.
Frankfurter, J. in his concurring opinion simply added that
the function discharged by the corporation as a municipal
corporation was a public function hence subject to State
Regulation.
It also considered the decision in Zee Tele Films Ltds case (supra) and
held that the majority view favours the view that BCCI is amenable to the
writ jurisdiction of the High Court under Article 226 even when it is not
State within the meaning of Article 12. The said view is based on
nature of duties and functions which BCCI performs. Thus, it ultimately
held that in view of the nature of functions of the BCCI, though it cannot
be called as a State within the meaning of Article 12 of the Constitution
it is certainly amenable to writ jurisdiction under Article 226 of the
Constitution of India. This view was taken by two-Judge Bench in spite of
the decision of the Constitution Bench in Zee Tele Films Ltds case
(supra).
The Honble Supreme Court in K.K. Saksenas case (supra), after
surveying the previous case law, held that a contract of personal service
cannot be enforced subject to the following exceptions;
(i) when the employee is a public servant working under the
Union of India or State;
(ii) when such an employee is employed by an authority/body
which is a State within the meaning of Article 12 of the
Constitution of India; and
(iii) when such an employee is workmen within the meaning
of Section 2(s) of the Industrial Disputes Act, 1947 and
raises a dispute regarding his termination by invoking the
machinery under the said Act.
It was further held that in respect of first two cases, the employment
ceases to have private law character and status to such an employment
is attached. In the third category of cases, it is the Industrial Disputes Act
which confers jurisdiction on the Labour Court/Industrial Tribunal to grant
reinstatement in case termination is found to be illegal. In view of the
said pronouncement, the issue that comes up for consideration in the
present case is a situation envisaged in (ii) above. Considering the cases
in Anadi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna
Jayanti Mahotsav Smarak Trust v. V.R. Rudani (supra) and K.
Krishnamacharyulu v. Sri Venkateswara Hindu College of
Engineering , it was held in K.K. Saksenas case (supra) that if the
rights are purely of a private character, no mandamus can issue and if the
management of the college is purely a private body with no public duty,
mandamus will not lie. It was held that the term authority appearing in
Article 226 of the Constitution would cover any other person or body
performing public duty. The Court took note of the decision in G. Bassi
Reddy v. International Crops Research Institute , and held that
merely because the activity of the research institute enures to the benefit
of the Indian public, it cannot be a guiding factor to determine the
character of the Institute and bring the same within the sweep of public
function or public duty. The Court took into consideration the decisions
of the said Court in Praga Tools Corporation v. C.A. Imanual and
Federal Bank Limited v. Sagar Thomas , wherein the eight
categories mentioned were quoted in the following terms.
40. Somewhat more pointed and lucid discussion can
be found in Federal Bank Ltd. v. Sagar Thomas (2003) 10
SCC 733), inasmuch as in that case the Court culled out the
categories of body/ persons who would be amenable to writ
jurisdiction of the High Court. This can be found in para 18
of the said judgment, specifying eight categories, as follows:
"18. From the decisions referred to above, the
position that emerges is that a writ petition under
Article 226 of the Constitution of India may be
maintainable against
(i) the State (Government);
(ii) an authority;
(iii) a statutory body;
(iv) an instrumentality or agency of the State;
(v) a company which is financed and owned by the
State;
(vi) a private body run substantially on State
funding; (vii) a private body discharging public
duty or positive obligation of public nature; and
(vii) a person or a body under liability to discharge
any function under any statute, to compel it to
perform such a statutory function."
.
43. What follows from a minute and careful reading of
the aforesaid judgments of this Court is that if a person or
authority is a 'State' within the meaning of Article 12 of the
Constitution, admittedly a writ petition under Article 226
would lie against such a person or body. However, we may
add that even in such cases writ would not lie to enforce
private law rights. There are a catena of judgments on this
aspect and it is not necessary to refer to those judgments as
that is the basic principle of judicial review of an action
under the administrative law. The reason is obvious. A
private law is that part of a legal system which is a part of
Common Law that involves relationships between
individuals, such as law of contract or torts. Therefore, even
if writ petition would be maintainable against an authority,
which is 'State' under Article 12 of the Constitution, before
issuing any writ, particularly writ of mandamus, the Court
has to satisfy that action of such an authority, which is
challenged, is in the domain of public law as distinguished
from private law.
The facts in this case show that the second respondent Company is
a wholly owned subsidiary of the statutory Corporation which is declared
to be a Company of national importance. Though on the basis of nature
of duties discharged by the second respondent Company on its own, it
cannot be conclusively held that it is discharging a public duty, but, in
view of the relationship of the second respondent Company with the
statutory Corporation, it has to be examined whether the attributes that
are applicable to the holding company can be extended to the wholly
owned subsidiary also.
As per the Articles of Association of the second respondent
Company, the number of Directors shall not be less than four (4) and shall
not be more than twelve (12). It was stated in Article 10(2) that NDDB
shall have a right to appoint directors on the Board of the Company and
the Chairman, NDDB shall be the Chairman of the Company and the
relevant portion of Article 10(2) to (6) reads as follows.
(2) Subject to Article 9, NDDB shall have a right to appoint
directors on the Board of the Company.
(3) The Chairman, NDDB shall be the Chairman of the
Company.
(4) The Chairman and Managing Director of the Company
shall be the non-rotational directors.
(5) The term of office of remaining Directors shall be three
years and such Directors shall retire on the expiry of the
said term or on their ceasing to be in the employment of
their organizations whether on resignation or otherwise;
whichever is earlier. However, NDDB may re-appoint
any Director or Directors for such period as it may
decide.
(6) Subject to the provisions of Sec.284 of the Companies
Act, the NDDB may remove any director from office at
any time before they complete the term.
The preamble to the National Dairy Development Board Act, 1987 (37 of
1987) reads as follows.
to declare the institution known as the National Dairy
Development Board in the State of Gujarat to be an
institution of national importance and to provide for its
incorporation and for the vesting in that body corporate of
the undertakings of the Indian Dairy Corporation with a view
to provide for the administration and the carrying on of the
functions to be performed by the body corporate more
effectively throughout the country and for matters
connected therewith and incidental thereto.
(emphasis supplied)
Section 8(3) of the National Dairy Development Board Act, 1987 says that
the Chairman and the official director shall be nominated by the Central
government and other directors shall be nominated by the Central
Government after consultation with the Chairman. Section 27 says that
the Board shall cause the books and accounts to be closed and balanced
as on the 31st day of March each year with the concurrence of the Central
Government. The appointment of auditors and remuneration shall be
subject to the approval of the Central Government and the auditors shall
submit their report to the Board which shall forward a copy of their report
to the Central Government as could be seen from Section 28. Section 29
says that the Central government shall cause the report of the auditors to
be laid before both the Houses of Parliament as soon as it is received by
the Central Government. Section 48(2)(i) provides for making the
regulations in accordance with the provisions of the Act by notification in
the Gazette of India providing for various matters including conditions of
service of officers and other employees. Section 49 empowers the Central
Government to remove any difficulty by an order published in the official
Gazette. The notes to financial statements enclosed to the accounts of
the 2nd respondent company indicate the following particulars for the year
ended 31st March 2015.
Notes to financial statements (continued)
(All amounts are in Indian Rupees (Rs.) in millions except for share data or
otherwise
stated)
2.31 Related party disclosures (continued)
(b) Particulars of related party transactions
Transactions during the year
For the year
ended
31st March
2015
For the year
ended
31st March
2014
Term loans repaid to NDDB
Working capital demand loan taken from NDDB
Interest expense to NDDB
Rent to NDDB
Royalty to NDDB
Dividend paid to NDDB
Testing and Analysis charges paid to NDDB
Reimbursement of expenses to NDDB
Reimbursement of expenses to NDDB Dairy Services
Private Limited
Stores and Spares from IDMC Limited
Loan given to PBNL
Interest income on loan to PBNL
Sales to
Mother Dairy Fruit & Vegetable Private Limited
Fixed assets purchased from IDMC Limited
Remuneration paid to:
Managing Director
Deputy Managing Director
Chief Financial Officer
Company Secretary
40.17
250.00
67.81
24.71
0.24
13.50
0.24
24.30
-
1.38
30.83
0.81
1.58
202.98
10.59
8.04
2.99
2.09
123.11
0.03
62.41
25.17
0.08
13.50
-
-
0.15
0.04
-
-
0.68
59.12
9.78
7.23
2.72
1.71
Does not include insurance, which is paid for the Company as a whole and
gratuity and
compensated absences as this is provided in the books of account on the basis of
actuarial valuation for the Company as a whole and hence individual amount
cannot be
determined.
The balance sheet of NDDB discloses that the second respondent
company is a wholly owned subsidiary of it and there is no dispute with
regard to that.
The word holding company and subsidiary are defined in Section
4 of the Companies Act. Section 2 of the Companies Act defines the
subsidiary company as follows.
(87) "subsidiary company" or "subsidiary", in relation to any
other company (that is to say the holding company), means
a company in which the holding company-
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total
share capital either at its own or together with one or more
of its subsidiary companies:
Provided that such class or classes of holding companies as
may be prescribed shall not have layers of subsidiaries
beyond such numbers as may be prescribed.
Explanation.-For the purposes of this clause,-
(a) a company shall be deemed to be a subsidiary company
of the holding company even if the control referred to in
sub-clause (i) or sub-clause (ii) is of another subsidiary
company of the holding company;
(b) the composition of a company's Board of Directors shall
be deemed to be controlled by another company if that
other company by exercise of some power exercisable by it
at its discretion can appoint or remove all or a majority of
the directors;
(c) the expression "company" includes any body corporate;
(d) "layer" in relation to a holding company means its
subsidiary or subsidiaries;
The issue with regard to the control exercised by the Central
Government over the wholly owned subsidiaries of the NDDB was
considered by the High Court of Delhi in a different context in a Writ
Petition considering the application of the provisions of the Information
Act, 2005, in Mother Dairy Fruit & Vegetable Private Limiteds case
(supra). It was observed as follows:
14. Plainly, the control exercised by a shareholder
holding the entire share capital of a company is qualitatively
different from the control exercised by any regulatory
authority such as a Registrar of Companies or a Registrar of
Cooperative Societies. The extent of control exercised by
such authorities is defined and circumscribed by its purpose;
that is, to ensure compliance with the governing statutes,
rules and regulations. An incorporated entity is required to
conform with the statute under which it is incorporated.
Such control does not, directly or indirectly, influence the
manner in which the affairs of an incorporated entity are to
be conducted or the course, which such incorporated entities
may legitimately take. The Registrar of Companies is not
concerned in the manner in which a company conducts its
business as long as it does not violate the provisions of the
enactment under which it is incorporated or transgresses its
charter documents (i.e Memorandum of Association or
Articles of Association). It is open for a company to carry on
its business in the manner as its shareholders or its directors
deem fit. The nature of control exercised by shareholders is
qualitatively different from the control exercised by the
Registrar of Companies over such incorporated entity. The
shareholders have the ability to laydown the policy to be
followed by a company and further guide its affairs in the
direction that they deem appropriate in their wisdom. The
control exercised by shareholders, pervades the entire
functioning of the company. The fact that such control may
be exercised by amending the Articles of Association or by
appointment/removal of directors does not dilute the grip of
the majority shareholders over the affairs of the company.
15. In LIC v. Escorts Ltd. (1986) 1 SCC 264)
(supra) the financial institutions, which held 52% shares in
Escorts Ltd., a public company, used their voting power to
remove non-executive directors to ensure that Escorts Ltd.
did not pursue a litigation against Reserve Bank of India and
the Central Government. The Supreme Court declined to
interfere with the right exercised by the financial institutions
as shareholders as it was considered within their power to
control the affairs of the company and exercise their voting
powers as they deemed fit.
16. The fact that shareholders of a company do not
interfere with the day to day functions of the company
cannot lead to a conclusion that shareholders do not control
the company. In my view, managing a company, cannot be
read as synonymous to controlling a company. There is
nothing in the language of Section 2(h)(d)(i) of the Act,
which indicates that the appropriate government must
directly control a public authority or such control must be
manifested by direct interference with the day-to-day
management of the company. If an appropriate government
has the ability to direct the affairs of a body and exercise its
dominion over its affairs, the fact that it does so by
appointing its representatives as managers of the said body
or ensuring that its representatives are so appointed, would
not mean that the body is not controlled by the appropriate
government. The test as laid down by the Supreme Court in
Thalappalam Service Cooperative Bank Limited and
Others v. State of Kerala ((2013) 16 SCC 82) (supra) is
the qualitative test; the control exercised by an appropriate
government, which is restricted only to ensuring regulatory
compliance, would not make a body a public authority under
section 2(h) of the Act. However, if the control of an
appropriate government is pervading and not restricted to
enforcing regulatory compliance, the body controlled by the
appropriate government would be a public authority.
17. The Supreme Court in Balmer Lawrie & Co.
Ltd. & Ors v. Partha Sarathi Sen Roy & Ors.: (2013) 8
SCC 245 held as under:-
24. When we discuss pervasive control, the term
control is taken to mean check, restraint or influence.
Control is intended to regulate, and to hold in check, or to
restrain from action. The word regulate, would mean to
control or to adjust by rule, or to subject to governing
principles.
18. In Krishak Bharti Cooperative Ltd. v.
Ramesh Chander Bawa: W.P. (C) 6129/2007, decided on:
14.05.2010, a coordinate bench of this Court held as under:-
18. At this juncture a brief reference may be made
to the legal and ordinary meanings of the word 'control'.
The word 'control' has been defined in Black's Law
Dictionary (6th Edn.) to mean 'power or authority to
manage, direct, superintend, restrict, regulate, govern,
administer, or oversee. The ability to exercise a restraining
or directing influence over something.' The Shorter Oxford
English Dictionary (5th Edn.) defines it as 'the act of power
of directing or regulating; command, regulating influence'
or 'a means of restraining or regulating; a check; a
measure adopted to regulate prices, consumption of goods
etc.' In both senses therefore the key word is 'influence'
and not necessarily domination.
28. The controversy to be addressed is whether
vesting certain undertakings by NDDB in a wholly owned
subsidiary would result in the Central Government losing
control over those undertakings. In my view, the answer to
this must be in the negative. It is apparent that the
incorporation of the petitioner as a wholly owned subsidiary
of NDDB was for the purpose of better management of
certain undertakings and the petitioner was to continue
functioning to further the objectives of NDDB. Plainly, NDDB
is under the control of the Central government and the
petitioner being a subsidiary of NDDB would be indirectly
under the control of the central government.
29. A constitution bench of the Supreme Court in CIT
v. Messers Jeewanlal Limited, Calcutta: AIR 1953 SC
473 had way back in 1953, while considering the expression
controlling interest had observed that:
6. In common parlance a person is said to have a
controlling interest in a company when such a person
acquires, by purchase or otherwise, the majority of the
vote-carrying shares in that company, for the control of
the company resides in the voting powers of its
shareholders. In this sense, the directors of a company
may well be regarded as having a controlling interest in
the company when they hold and are entered in the share
register as holders of the majority of the shares which,
under the Articles of Association of the company, carry the
right to vote. (See Glasgow Expanded Metal Co. Ltd.
v. Commissioners of Inland Revenue [(1923) 12 Tax
Cas 573] and Commissioners of Inland Revenue v.
B.W. Noble [(1926) 12 Tax Cas 911] ). It is not, however,
necessary that in order to have a controlling interest the
person or persons who hold the majority of the vote-
carrying shares must have a beneficial interest in the
shares held by them. These persons may hold the shares
as trustees and may even be accountable to their
beneficiaries and may be brought to book for exercising
their votes in breach of trust, nevertheless, as between
them as shareholders and the company, they are the
shareholders, and as such, have a controlling interest in
the company. (See Inland Revenue Commissioners v.
J. Bibby & Sons Ltd. [(1946) 14 ITR (Supp) 7] and CIT
v. Bipin Silk Mills Ltd. [AIR 1947 Bom 45 : 14 ITR 344]
.) According to the facts found in the statement of the
case the directors of the respondent company do not
themselves hold the majority of shares which, on the
contrary are registered in the name of the Aluminium Ltd.
and therefore, according to the principles discussed above,
they cannot be said to have a controlling interest in the
respondent company.
30. In common parlance the expression controlling
interest would denote the majority equity interest in a
company. This concept of controlling interest in the
context of a corporate structure consisting of holding
companies and subsidiary companies was considered by the
Supreme Court in Vodafone International Holdings BV
v. Union of India: (2012) 6 SCC 613. In that case, the
Court examined the issue of transfer of controlling interest in
a downstream subsidiary company in India by transfer of
share capital of its holding company overseas. The Income
Tax Authorities sought to tax gains, which had resulted from
transfer of shares of an ultimate holding company
incorporated in Cayman Islands as arising in India since it
resulted in the transfer of controlling interest in an Indian
company. The Supreme Court recognized that acquisition of
the share capital of the overseas holding company provided
the acquirer a controlling interest in the downstream Indian
subsidiary, however, held that controlling interest was an
effect of the transaction of sale and purchase of shares and
could not be taxed in India. Some of the relevant
observations of the Supreme Court are quoted below:
354. Vodafone on acquisition of the CGP share got
controlling interest of 42% over HEL/VEL through voting
rights through eight Mauritian subsidiaries, the same was
the position of HTIL as well. On acquiring the CGP share,
CGP has become a direct subsidiary of Vodafone, but both
are legally independent entities. Vodafone does not own
any assets of CGP. Management and the business of CGP
vests in the Board of Directors of CGP but of course,
Vodafone could appoint or remove members of the Board
of Directors of CGP. On acquisition of CGP from HTIL,
Array became an indirect subsidiary of Vodafone. Array is
also a separate legal entity managed by its own Board of
Directors.
355. Share of CGP situates in the Cayman Islands
and that of Array in Mauritius. Mauritian entities which
hold 42% shares in HEL became the direct and indirect
subsidiaries of Array, on Vodafone purchasing the CGP
share. Voting rights, controlling rights, right to manage,
etc., of Mauritian companies vested in those companies.
HTIL has never sold nor has Vodafone purchased any
shares of either Array or the Mauritian subsidiaries, but
only CGP, the share of which situates in the Cayman
Islands.......
357. Mauritian entities being a WOS of Array, Array
as a holding company can influence the shareholders of
various Mauritian companies. Holding companies like CGP,
Array, may exercise control over the subsidiaries, whether
a WOS or otherwise by influencing the voting rights,
nomination of members of the Board of Directors and so
on. On transfer of shares of the holding company, the
controlling interest may also pass on to the purchaser
along with the shares. Controlling interest might have
percolated down the line to the operating companies but
that controlling interest is inherently contractual and not a
property right unless otherwise provided for in the
statute......
31. The question whether a body is controlled by an
appropriate government in the context of section 2(h) of the
Act has to be answered by considering the expression
controlled as plainly understood in common parlance and
not in a technical sense.
32. A number of business houses organize their
affairs through several subsidiary companies, which are held
through a holding company. It is well accepted fact that
subsidiary companies are sometimes created for better and
a focused management of cohesive units. This does not
imply that the ultimate shareholders have ceded control over
the affairs of the corporate entities or their business
undertakings. The influence and control exercised by
shareholders of the holding company extends not only to the
holding company but also to its downstream subsidiaries.
Commercially, it is well understood that control of wholly
owned subsidiaries, vests with the majority shareholders of
the holding company.
33. The position of the Central Government is akin to
the position of shareholders of a holding company. The
influence of Central Government in controlling the affairs of
NDDB cannot be disputed. By virtue of Section 8(3) of the
NDDB Act, the entire Board of Directors of NDDB is to be
appointed by the Central Government. Thus, in this aspect,
the power of Central Government is similar to that of
shareholders of a company. Viewed from this perspective, it
can hardly be disputed that the petitioner is a body that is
under the control of the Central Government. The fact that
the same is exercised by NDDB would not in any manner
dilute the Central Governments control over the petitioner.
There is no reason to assume that the control of the
appropriate government as contemplated under Section
2(h)(d)(i) of the Act must be a direct control and not
through any other incorporated body. A body which is
owned or controlled by an appropriate government would
not cease to be controlled by an appropriate government
only because an intermediary corporate entity is introduced
for better management.
In this context learned counsel appearing for the second
respondent cited a decision of this Court in Krishi Foundry Employees
Unions case (supra) arising out of proceedings of liquidation of a holding
company. In the said case the employees of the subsidiary company
claimed inclusion of their claim in the claim of the workmen of the holding
company in liquidation. This Court framed the following two questions:
(1) the question of lifting the veil and
(2) the right of the workmen of the subsidiary company under
Section 529-A of the Companies Act.
In respect of question No.1, after considering the various decisions cited
by the counsel, this Court held as follows.
11. The company incorporated under the Companies
Act is entirely different from its shareholders. It has its own
name, seal and assets. It is distinct juristic person inviolable
personality. Whether it is a holding company or subsidiary
company, this fundamental principle of company law does
not get obliterated. It remains always same. Both the
companies remain distinct and independent of each other
though in the case of holding company and subsidiary
company the former may to some extent be inter-dependent
of the latter and vice versa. It is no doubt true that the
doctrine of lifting the veil has been applied in the case of
holding company and subsidiary company. The same,
however, is not universal principle. To a limited extent, in
certain situations, the holding company was held omnipotent
in the affairs of the subsidiary.
20. Applying these principles to the facts of the case
on hand, it is no doubt true that undisputedly the subsidiary
company was supplying its produce to the holding company.
That, however, is not crucial. To start with, subsidiary was
incorporated as private limited company and later converted
as public limited company and made a subsidiary of the
holding company. Board of Directors were different. It is not
disputed that the employees of the subsidiary company were
recruited by the subsidiary company and there was no
employment policy in the holding company to take
employees from subsidiary either by transfer or deputation
from the holding company. The stray cases where some
employees were sent to holding company is not crucial
unless there was any common cadre of service in both
holding company and subsidiary company. Nothing is
pleaded or proved that holding company stood guarantee for
any of the loans raised by subsidiary company. It is not
denied that secured creditors of the holding company and
subsidiary company are different. Financial investments were
different. Therefore, while deciding the question whether
workmen and employees of the subsidiary company can be
treated as such of holding company, it is not permissible to
pierce the corporate veil of subsidiary company. Whether
holding company has any legal obligation under industrial
law or company law to safeguard the interests of the
employees of the subsidiary company This question is next
point for consideration in this case.
Ultimately, it considered Section 529-A of the Companies Act and held
that the employees of subsidiary company cannot claim to be employees
of holding company. But the facts in the said case are different and the
context is also different. In the said case the subsidiary company became
sick and management of the affairs of the company were taken over by
the APIDC by virtue of the orders passed by the Government in
G.O.Ms.No.150 dated 18.02.1976 and G.O.Ms.No.151 dated 04.04.1988.
Subsequently, APIDC stopped the affairs of the subsidiary company and it
was ultimately wound up on 09.11.1998. Even before that, a Company
Petition against the holding company for winding up was also pending as
on 16.11.1991. When the workmen realised that the subsidiary company
has no assets, they filed the application before the Official Liquidator
under Section 529-A of the Act, which was held to be of no application to
the workers of the subsidiary company seeking priority payment after the
liquidation proceedings of the holding company. Hence, in that case, this
Court was considering the relationship of the subsidiary company with the
holding company when the petitioner was claiming to be an employee of
holding company.
In the instant case, we are examining whether the subsidiary
company is an authority amenable to jurisdiction under Article 226 of the
Constitution of India. A perusal of the provisions of NDDB Act and the
Memorandum and Articles of Association of the second respondent clearly
shows the control exercised by the holding company in the affairs of the
subsidiary company. Thus, it can be concluded that the holding company
is having financial, functional and administrative domination under the
supervision of the Central Government, though the subsidiary company is
being managed by the Board of its own with its own Memorandum and
Articles of Association regulating its affairs. In view of this, the second
respondent is amenable to the jurisdiction of this Court under Article 226
of the Constitution of India.
Having held so with regard to maintainability of the Writ Petition, it
has to be considered whether the impugned order dated 24.01.2015 is
valid in law. In order to decide the said issue the following facts are
necessary to be examined:
The petitioner was appointed by letter of appointment dated
02.03.2007 initially for a period of three years with effect from 28.02.2007
with a basic salary of Rs.35,000/- per month and allowances mentioned
therein. It was stated that he was liable to work in any department of the
Company or posted to any establishment of Indian Immunologicals
Limited or of National Dairy Development Board. During the three years
term of employment, the Company reserved its right to terminate his
services by giving one month notice or by paying one month salary in lieu
of notice and similar right was conferred on the petitioner. The other
terms and conditions as mentioned in the letter of appointment would be
governed by the administrative rules of the Company as modified from
time to time. It was also stated that if the services are found good and if
the requirement exists, he will be offered a renewal of employment of the
Company. Later on, the increment at 7% was fixed based on his
performance by letter dated 10.08.2007. It was specifically stated that he
would be retiring on attaining the age of 58 years in accordance with the
rules and regulations of the Indian Immunologicals Limited. The
compensation was further revised by letter dated 01.09.2008 with effect
from 01.08.2008. A letter was issued on 01.04.2009 renewing the
services of the petitioner for a further period of three years with effect
from 01.04.2009, though, even by that date also the initial period of three
years with effect from 28.02.2007 did not come to an end. While
recommending his case for issuance of passport, it was certified that the
organization is under public sector. The service of the petitioner was
further renewed by letter dated 01.04.2012 for a period of three years.
The notice period of one month on either side was changed to three
months by letter dated 24.04.2013 in respect of employees who were on
contract service. He was promoted as Manager in the grade of M-II with
effect from 01.04.2013. It appears that the reversal of fortunes started
from 25th June 2014 and correspondence ensued. He was asked to
vacate his cabin and move to another persons cabin by e-mail dated
25.11.2014 and the petitioner protested for the same. He was excluded
from monthly departmental review meetings, was demanded daily work
report and casual leave applications were also rejected. His efforts to
draw attention of the Managing Director did not yield any result. He
submitted a petition to the Chairperson of the Human Rights Commission
on 21.12.2014 and he was transferred to Ooty plant by order dated
02.01.2015. It appears that the petitioner was hospitalised on 04th
January 2015 and his wife sent a mail for cashless discharge from the
hospital. Instead of helping him, a letter was issued on 06.01.2015 asking
him to submit explanation for his unauthorised absence and proposing to
take action under Rules 5, 9 and 11 of the CDA Rules applicable to the
employees. The petitioner was asked to vacate the quarter by
15.02.2015 by letter dated 16.01.2015. He addressed a letter through
e-mail to the Chairman and the Managing Director seeking appointment
on 22.01.2015 as he has to undergo surgery on 23.01.2015 and it did not
elicit any response. Ultimately, his services were terminated by letter
dated 24.01.2015 when he was hospitalised and it was stated that in view
of the same the earlier show cause notice and other correspondence was
deemed to have been dropped.
Though, initially the petitioner was appointed for a period of three
years effective from 28.02.2007, in view of the letter dated 10.08.2007
stating that he would be retiring on attaining the age of 58 years in
accordance with rules and regulations of the second respondent company,
it cannot be contended that the appointment of the petitioner is
contractual. The services of the petitioner were extended from time to
time with basic salary and usual allowances. Even as per the counter
affidavit, the term of the petitioner comes to an end only on 31.03.2015
and the order of termination was passed much before that on 24.01.2015.
In view of the subsequent correspondence after the initial letter of
appointment this Court is of the opinion that the appointment of the
petitioner is not contractual but a permanent employment.
The conduct, discipline and appeal rules of the second respondent
company defines an employee as a person employed other than casual,
work-charged or contingent staff but includes a person on deputation to
the Indian Immunologicals Ltd. The petitioner, thus comes under the
definition of the employee and as a consequence, the procedure
prescribed therein for imposing the major punishment of
termination/removal from service has to be followed, if the services of the
petitioner has to be terminated. On this count also the termination of the
services of the petitioner is invalid.
Having come to such conclusion, it is clear that the termination of
the services of the petitioner by letter dated 24.01.2015 without following
any procedure is illegal and is accordingly set aside.
In view of holding the second respondent company as an authority
amenable to the writ jurisdiction of this Court and the impugned letter of
termination as illegal, the consequence would be to set aside the order of
termination dated 24.01.2015 and the petitioner is deemed to have been
continued in service with all pay and allowances attached to his post. The
Writ Petition is accordingly allowed with costs of Rs.5,000/- (Rupees Five
Thousand only) payable to the petitioner.
As a sequel thereto, the miscellaneous petitions, if any, pending in
this Writ Petition shall stand closed.
___________________________
A. RAMALINGESWARA RAO, J
Date: 24th November 2016