Allahabad High Court
State Of U.P. Thru Secretary Hathkargha ... vs Smt. Durgeshwari Sharma And Others on 8 January, 2019
Bench: Sudhir Agarwal, Rajendra Kumar-Iv
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 34 1. Case :- SPECIAL APPEAL No. - 126 of 2009 Appellant :- State Of U.P. And Another Respondent :- Smt. Durgeshwari Sharma And Others Counsel for Appellant :- C.S. Singh,S.C. Counsel for Respondent :- Saurabh Srivastava 2. Case :- SPECIAL APPEAL No. - 975 of 2006 Appellant :- The State Of U.P. And Another Respondent :- Asha Porwal And Others Counsel for Appellant :- C.S. Singh,S.C. Counsel for Respondent :- Saurabh Srivastava 3. Case :- SPECIAL APPEAL No. - 976 of 2006 Appellant :- The State Of U.P. And Another Respondent :- Rajesh Kumar Srivastava And Others Counsel for Appellant :- C.S. Singh,S.C. Counsel for Respondent :- Saurabh Srivastava,A.P. Pandey,Santosh Kumar Srivastava 4. Case :- SPECIAL APPEAL No. - 127 of 2009 Appellant :- State Of U.P. And Another Respondent :- Anil Shukla And Others Counsel for Appellant :- C.S. Singh,S.C. Counsel for Respondent :- Saurabh Srivastava,A.P. Pandey 5. Case :- SPECIAL APPEAL No. - 128 of 2009 Appellant :- State Of U.P. And Another Respondent :- Chandan Singh And Others Counsel for Appellant :- C.S. Singh,C.S.C. Counsel for Respondent :- Saurabh Srivastava,A.P. Pandey,Anurag Sharma 6. Case :- SPECIAL APPEAL No. - 129 of 2009 Appellant :- State Of U.P. And Another Respondent :- Harish Chandra Gupta And Others Counsel for Appellant :- C.S. Singh,S.C. Counsel for Respondent :- Saurabh Srivastava Hon'ble Sudhir Agarwal,J.
Hon'ble Rajendra Kumar-IV,J.
1. Heard Ms. Subhash Rathi, learned Additional Chief Standing Counsel for the appellants and Sri Saurabh Srivastava, learned counsel for respondents and perused the record.
2. The aforesaid intra-Court appeals under Chapter VIII Rule 5 of Allahabad High Court Rules, 1952 (hereinafter referred to as "Rules, 1952") have arisen from judgment dated 20.01.2004 passed by learned Single Judge in Writ Petition No.6891 of 2003 (Smt. Durgeshwari Sharma and others Vs. State of U.P. and others) along with connected writ petition disposing of writ petition with common judgment with certain directions.
3. All these appeals have arisen from a common judgment dated 20.01.2004 passed by learned Single Judge deciding six writ petitions together by a common judgment. Operative part of judgment reads as under :
"The State Government is directed to forthwith release a sum of Rs. 50 lakhs for payment of current salaries of these employees. The State Government will thereafter take an entire view of the matter taking into consideration the number of employees who apply for VRS to the revival of project submitted to the State Governmetn within next three months Rs.50 lakhs shall be treated as ad hoc payment to UPICA for payment of current salary. The remaining amount of arrears of salaries shall be disbursed within next three months."
4. Details of appeal number, writ petition number and parties are given as under :
Sl.No. Special Appeal No. Writ Petition No. Name of Parties 1 126 of 2009 6891 of 2003 Smt. Durgeshwari Sharma and 12 others 2 975 of 2006 49892 of 2003 Smt. Asha Porwal and 32 others 3 976 of 2006 43918 of 2003 Sri Rajesh Kumar Srivastava and 78 others 4 127 of 2009 30284 of 2003 Sri Anil Shukla and 16 others 5 128 of 2009 13020 of 2003 Sri Chandan Singh and 9 others 6 129 of 2009 49893 of 2003 Sri Harish Chandra and 10 others
5. The facts which are not in dispute are that petitioners- respondents (hereinafter referred to as "petitioners") are all employees of U.P. Industrial Cooperative Association Ltd., Sarvodaya Nagar, Kanpur (hereinafter referred to as "UPICA") which is an apex level cooperative society registered under U.P. Cooperative Societies Act, 1965 (hereinafter referred to as "Act, 1965") having primary societies as its members. Petitioners are employees working in head office and regional offices of UPICA. Purpose of incorporation of UPICA is to develop, organize, promote and strengthen industrial cooperation and to coordinate its activities with such cooperative organization across the State and outside India, as have common objects.
6. Petitioners were not paid salary/arrears of salary/wages by the employer i.e. UPICA. They came to Writ Court by filing writ petitions under Article 226 seeking a mandamus for payment of salary.
7. It appears that during the period when matter was pending before learned Single Judge, considering the fact that State Government has deep and pervasive financial, functional and administrative control over affairs of UPICA, it directed the Government to make funds available for payment of salary to petitioners.
8. The petitioners' employer namely UPICA in a counter affidavit filed through its General Manager Sri Sandeep Kumar, pleaded that UPICA is suffering financial problem for the last ten years but is running only because of social objective to help weavers in cooperative sector. The main object of UPICA is to help weavers and weaker sections of Society and for that reason UPICA is still running. The revival project was submitted to State Government by UPICA, as it has found itself unable to meet out even its routine expenses including payment of salary to its employees. Moreso, most showrooms have become unviable and have been closed. UPICA has no funds.
9. Relying on Supreme Court decision in Kapila Hingorani Vs. State of Bihar JT 2003 (5) SC 1 (hereinafter referred to "Kapila Hingorani (I)"), learned Single Judge held that it was responsibility of State to make funds available to UPICA for payment of salaries to their employees and hence writ petitions were disposed with the directions, as noted above.
10. Learned Additional Chief Standing Counsel contended that UPICA is a separate legal personality being a Cooperative Society registered under Act, 1965. It is not a department of State Government therefore, for employees of UPICA, State Government cannot be compelled to make funds available for clearance of dues of petitioners. She also fairly stated that in the present appeals, neither liability of UPICA is being challenged nor liability of UPICA to pay salaries and arrears of salaries to its employees is under challenge. State Government is only aggrieved by the direction whereby financial obligation of UPICA has been placed upon State of Uttar Pradesh.
11. Learned counsel appearing for petitioners submitted that they are concerned with their payment of salaries and since UPICA has no fund, State Government is responsible for making payment of their salaries.
12. We find that learned Single Judge in order to lay responsibility/obligation upon State Government for providing funds has relied on Supreme Court direction contained in Kapila Hingorani Vs. State of Bihar (supra) but that was not a judgment. It was an interim order made in a writ petition filed under Article 32 of Constitution. This aspect has been clarified by Supreme Court in State of Assam Vs. Barak Upatyaka D.U. Karmachari Sanstha, (2009) 5 SCC 694 after referring to order dated 09.5.2003 passed in Writ Petition (C) no.488 of 2002 (Kapila Hingorani Vs. State of Bihar) i.e. Kapila Hingorani (I) (supra) wherein after referring to order dated 09.5.2003 passed in Kapila Hingorani (I)'s case and subsequent order dated 31.1.2005 passed in the case of Kapila Hingorani's case reported in 2005(2) SCC 262 (hereinafter referred to as "Kapila Hingorani (II)"), Court, in para 9 of judgment said :
"We have carefully examined the said two decisions. The two decisions are interim orders made in a writ petition under Article 32 of the Constitution. The said orders have not finally decided the issues/questions raised, nor laid down by any principle of law."
13. Court further said :
"..directions were not based on legal right of the employees, but were made to meet a human right problem involving starvation deaths and suicides."
14. Having said so, Supreme Court in State of Assam Vs. Barak Upatyaka D.U. Karmachari Sanstha (supra) further said :
"A precedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi. An interim order which does not finally and conclusively decide an issue cannot be a precedent. Any reasons assigned in support of such non-final interim order containing prima facie findings, are only tentative. .... The interim directions were also clearly in exercise of extra-ordinary power under Article 142 of the Constitution."
15. Having said so, Court negatived contention advanced on behalf of employees of Companies and Corporations of Government that in the case of the employees of Companies and Corporation and Public Sector Undertakings of Government, liability and responsibility of payment of dues would be that of Government. In para 12 of judgment, Court said :
"We, therefore, reject the interpretation put forth by the respondent, on the tentative observations in Kapila Hingorani (I) and (II), to contend that the government would be liable for payment of salaries and other dues of employees of the public sector undertakings. We are of the considered view that the decision of the High Court cannot therefore be sustained."
(emphasis added)
16. Court thereafter relied on its earlier decision of a Constitution bench in Steel Authority of India Vs. National Union Waterfront Workers (2001) 7 SCC 1 wherein Court said :
"We wish to clear the air that the principle, while discharging public functions and duties the government companies/ corporations/ societies which are instrumentalities or agencies of the government must be subjected to the same limitations in the field of public law - constitutional or administrative law - as the government itself, does not lead to the inference that they become agents of the Centre/state government for all purposes so as to bind such government for all their acts, liabilities and obligations under various Central and/or State Acts or under private law. "
17. The interpretation of Kapila Hingorani (I) and (II) (supra) in State of Assam Vs. Barak Upatyaka D.U. Karmachari Sanstha (supra) have been referred and approved in Roger Shashoua and Ors. vs. Mukesh Sharma and Ors. 2017(14) SCC 722 and State of Himachal Pradesh and Ors. Vs. Rajesh Chander Sood and Ors. 2016 (10) SCC 77.
18. We also find that Kapila Hingorani (supra) matter came to be finally disposed of vide supreme Court's order reported in 2008(17) SCC 394 whereby it directed Jharkhand High Court to decide all questions in a pending writ petition and no final verdict was given by Supreme Court.
19. A some more similar question came to be considered by a three Judges judgment of Supreme Court in Balwant Rai Saluja Vs. Air India Ltd. (2014) 9 SCC 409. Air India Ltd. is a company incorporated under Indian Companies Act, 1956 (hereinafter referred to as "Act, 1956") and is owned by the Government of India. It formed another independent Company namely Hotel Corporations of India Limited (hereinafter referred to as "HCIL"), which was also registered under Act, 1956. HCIL was a subsidiary of wholly owned subsidary of Air India Ltd. The employees of HCIL were engaged to operate canteens, claimed to be the workmen of holding over Company i.e. Air India Ltd. and claimed various service benefits against Air India Ltd. on the ground that for all purposes, it is Air India Ltd., which is the principal employer. The Court referred to earlier judgment in Vodafone International Holdings BV Vs. Union of India (2012) 6 SCC 613 , and said :
"257. Legal relationship between a holding company and wholly-owned subsidiary is that they are two distinct legal persons and the holding company does not own the assets of the subsidiary and, in law, the management of the business of the subsidiary also vests in its Board of Directors....
258. Holding company, of course, if the subsidiary, may appoint or remove any Director if it so desires by a resolution in the general body meeting of the subsidiary. Holding companies and subsidiaries can be considered as single economic entity and consolidated balance sheet is the accounting relationship between the holding company and subsidiary company, which shows the status of the entire business enterprises. Shares of stock in the subsidiary company are held as assets on the books of the parent company and can be issued as collateral for additional debt financing. Holding company and subsidiary company are, however, considered as separate legal entities, and subsidiary is allowed decentralized management. Each subsidiary can reform its own management personnel and holding company may also provide expert, efficient and competent services for the benefit of the subsidiaries.
20. Consequently, Court held that Air India and HCIL both are distinct legal entities. The management of business of HCIL is under its own Board of Directors therefore employees of HCIL cannot claim themselves to be employees of Air India Ltd.
21. In T.M. Sampath Vs. Secretary, Ministry of Water Resources 2015 (5) SCC 333, employees of National Water Development Agency (hereinafter referred to as "NWDA"), a Society registered under Societies Registration Act, 1860 (hereinafter referred to as "Act, 1860") and for administrative and financial control, falls under the aegis of Ministry of Water Resources and fully funded by Government of India, claimed parity in the matter of retiral benefits with the Central Government Employees. Claiming benefit of pension scheme under letter dated 16.3.2000 issued by Finance Ministry, Court observed that employees of NWDA cannot claim parity with Central Government employees. NWDA cannot be treated as an instrumentality of State under Article 12 of the Constitution of India merely on the basis that its funds are granted by Central Government. An autonomous body having some nexus with the Government by itself would not bring itwithin the sweep of the expression 'State'. Court also held that employees of NWDA cannot be held to be Central Government employees so as to clain benefit under relevant office memo dated 01.05.1987.
22. It is then argued by learned counsel for petitioners that State ultimately is a model employer, must show fairness in action. As a bald proposition we have no quarrel with the same. In Som Prakash Rekhi Vs. Union of India and Ors. 1981(1) SCC 449, Court said :
"Social justice is the conscience of our Constitution, the State is the promoter of economic justice, the founding faith which sustains the Constitution and the country is Indian humanity. The public sector is a model employer with a social conscience not an artificial person without soul to be damned or body to be burnt." (emphasis added)
23. In Balram Gupta Vs. Union of India and others 1987 (Suppl) 1 SCC 228 Court said :
"As a model employer the government must conduct itself with high probity and candour with its employees." (emphasis added)
24. In Bhupendra Nath Hazarika and Anr. vs. State of Assam and Ors. 2013 (2) SCC 516 Court said :
"It should always be borne in mind that legitimate aspirations of the employees are not guillotined and a situation is not created where hopes end in despair. Hope for everyone is gloriously precious and a model employer should not convert it to be deceitful and treacherous by playing a game of chess with their seniority. A sense of calm sensibility and concerned sincerity should be reflected in every step. An atmosphere of trust has to prevail and when the employees are absolutely sure that their trust shall not be betrayed and they shall be treated with dignified fairness then only the concept of good governance can be concretized. "
25. In the light of above exposition of law and complying 'Rule of law' with equal force, we find it difficult to hold State Government, in the present case, responsible for payment of salary of employees of UPICA. Atleast this Court finds it difficult to justify such direction for the reason that funds available with State are nobody's private property, but, it is tax-payers money, which has to be utilized in the manner legislature has passed in the proposed budget and responsibility of State cannot be extended to the employees of bodies, which cannot be said to be department of State and where we find no provision available in law to make State Government responsible or obliged to ensure payment of salary of employees of such bodies. Relationship of employer and employee is a privity of contract between employer and employee. Employer being UPICA, a Society under Act, 1965, in absence of any provision, its responsibility cannot be transferred or shifted to State Government.
26. In view thereof, judgment of learned Single Judge, insofar as it has directed that State Government must ensure payment of salary, arrears and other dues of employees of UPICA cannot be sustained. To this extent, judgment in question is hereby set aside. In the result all the appeals are partly allowed. However, this order shall not be construed so as not to take appropriate steps by UPICA to ensure payment of dues to its employees including petitioners. We also make it clear that in case State Government, on its own, is taking any step to provide funds/financial assistance to UPICA, to clear off its liability including salary of its employees, the same may proceed and this order shall not preclude State Government from doing so.
Order Date :- 08.01.2019 Manoj/KA