Calcutta High Court
Ashok Kumar Gupta And Ors. vs Union Of India (Uoi) And Ors. on 11 May, 2007
Equivalent citations: AIR2007CAL195, (2007)2CALLT522(HC), 2007(3)CHN107, AIR 2007 CALCUTTA 195, 2007 (5) AKAR (NOC) 616 (CAL), 2007 AIHC NOC 444, (2007) 3 CAL HN 107, (2007) 2 CALLT 522, (2007) 140 COMCAS 610, (2007) 4 SERVLR 305
Author: Pranab Kumar Chattopadhyay
Bench: Pranab Kumar Chattopadhyay
JUDGMENT Pranab Kumar Chattopadhyay, J.
1. On behalf of the respondent company, a preliminary objection has been raised regarding maintainability of this appeal in view of cessation of the status of the respondent company. In the aforesaid circumstances, we are of the opinion that the issue relating to the maintainability of this appeal should be decided first before deciding any other issue raised in this appeal on merits. Therefore, only point is to be decided at this stage is whether the instant appeal is maintainable. The learned Counsel of the respective parties has also confined their arguments only in relation to the question of maintainability of the instant appeal.
2. The writ petition out of which the present appeal arises was filed when the respondent-company was treated as sick company and the question of revival was pending before the BIFR. The writ petitioners, who were employees of Jessop & Co. Ltd. took voluntary retirement under the Voluntary Retirement Scheme, 1998 during March to October, 1998, The writ petitioners had prayed in the writ petitionfor recomputation of the benefits under the Voluntary Retirement Scheme after giving fitment benefit w.e.f. lst January, 1992 in view of revision of pay scales introduced on 1st January, 1999 w.e.f, lst January, 1992 pursuant to the policy decision of the Government of India dated 19th July, 1995.
3. It has also been contended on behalf of the appellants that the said appellants/writ petitioners do not get pension and retired upon accepting a meagre amount which is insufficient to live a decent life in the present days. Jessop & Co. became sick and therefore, it was referred to the Board for Industrial and Financial Reconstruction (hereinafter referred to as BIFR). The scheme for rehabilitation sanctioned by BIFR fell through. Finally, the Government of India effected disinvestments by transferring its shares to private party.
4. It has been submitted on behalf of the respondent-company that the said Jessop & Co. ceased to be a Government company or an authority within the meaning of Article 12 of the Constitution of India in view of privatisation of the said company. The learned Counsel of the respondent Jessop & Co. immediately after commencement of the hearing of the appeal raised the aforesaid preliminary objection regarding maintainability of the appeal on the ground that the said Jessop & Co. has ceased to be a Government company and therefore, not amenable to the writ jurisdiction.
5. Mr. L.K. Gupta, learned Senior Counsel of the respondent-company submits that an appeal being a continuation of the writ proceeding, the appellants are not entitled to pursue the matter any longer in the present case as no writ can be issued against the present management of the Jessop & Co. Mr. Gupta further submits that in order to maintain a writ petition the petitioners have to show that they have locus standi. The said learned Counsel of the respondent-company submits that a petitioner can have locus standi when he has a legal right which has been infringed or is threatened to be infringed and in absence thereof, a writ petition is not entertainable. Mr. Gupta also submits that on the date of filing the writ petition even if the writ petitioner had the locus standi but subsequently in course of the proceeding if the said legal right was extinguished then the said writ petitioners would not be entitled to maintain the proceeding any more due to loss of locus standi.
6. It has also been submitted on behalf of the respondent-company that the maintainability of a writ petition and further proceedings arising therefrom by way of appeal depends on the respondents since a writ petition is maintainable against a "State" or "other authority" mentioned in Article 12 of the Constitution. The learned Senior Counsel of the respondent-company submitted before this Court that at the time of presentation of the writ petition, the respondent-company was amenable to writ jurisdiction under Article 226 of the Constitution of India since it used to perform public or statutory duties. However, in course of the proceeding, according to the respondent-company, there was cessation of status of the said Jessop & Co. due to privatisation/disinvestments through transfer of shares to private hands and therefore, the pending proceeding also ceases to be maintainable.
7. The appellants herein prayed for recomputation of their Voluntary Retirement Scheme benefits on the basis of the orders of the Government of India in relation to the revision of pay as mentioned in office memorandums dated 19th July, 1995, 29th January, 1999 and subsequent office memorandum dated 8thDecember, 2000. Mr. Gupta, learned senior Counsel of the respondent-company submits that the present appeal against the Jessop & Co. can be maintained only if the aforesaid circulars are binding on the Jessop & Co. According to Mr. Gupta, when Jessop & Co. was Public Sector Enterprise, the Government of India could dictate to it in financial matters as the said Government of India exercised deep and pervasive control financially, administratively and functionally over the said Jessop & Co. at that point of time. Mr. Gupla further submits that after privatisation of the Jessop & Co., those circulars, cannot bind the said company. It has been specifically urged on behalf of the respondent-company that the liability of the erstwhile Government company, if any, under the aforesaid circulars cannot be the liability of the present management. Mr. Gupta submits that there is no law which can transfer such liability.
8. Referring to the decision of this Hon'ble Court in the case of Subodh Ranjan Das v. Union of India and Ors. reported in 1990 (2) CHN 278, Mr. Gupta submits that the claim made in the writ petition is not enforceable against the present Jessop & Co. Ltd. It has been submitted on behalf of the respondent-company that the present management of Jessop took over charge on 2003 after transfer of shares and the validity of which was upheld by a Division Bench of this Hon'ble Court. The appellants/writ petitioners admittedly retired in the year 1998. The learned Counsel of the respondent-company submits that there was never any employer-employee relationship between the present management and the appellants and hence, the present management of the respondent-company has no liability towards the appellants/writ petitioners. Mr. Gupta, learned Counsel of the respondent-company submits that when the said respondent-company was a Public Sector Enterprise could have at the highest a contingent liability depending on the future generation of funds out of its working as per Para (ii) of office memorandum dated 29th January, 1999. Mr. Gupta further submits that the Government of India had at the relevant time a control over the respondent-company because of its share holdings although the Government of India was neither a part of the public sector enterprise nor the said public sector enterprise was a part of the Government of India. According to Mr. Gupta, Government of India cannot have any liability in view of the specific provision as mentioned in Para (ii) of the said office memorandum dated 29th January, 1999.
9. On behalf of the respondent-company it has been submitted that the question of legality of the transfer of shares by the Government of India in respect of the respondent-Jessop & Co, in favour of the private party was the subject-matter of legal proceedings and the Division Bench of this Hon'ble Court had held such transfer to be legal and proper. On behalf of the respondent-company, learned Counsel Mr. Gupta relying on the decision of the Supreme Court in the case of Shri Baradakanta Mishra v. Shri Bhimsen Dixit submits that unless an order of stay is granted by the higher Court, existing judgment holds the field and continues to be a binding precedent until set aside by the higher Court.
10. Mr. Saktinath Mukherjee, learned Senior Counsel of the appellants submits that the said judgment has not reached its finality as further proceeding therefrom is now pending in the Supreme Court. Mr. Mukherjee further submits that now it cannot be said that the respondent-company is finally under the private management in view of the pendency of the proceedings before the Supreme Court regarding transfer of shares of the said company. Mr. Mukherjee referred to and relied on the decisions of this Hon'ble Court in the case of Satyanarayan Prasad v. Diana Engineering reported in 55 CWN Page 509 and in the case of Zodiac Investment v. Durga Investment Trading reported in 1988(2) CLJ 491 and submits that the appeal destroys the finality of the decision.
11. In the case of Satyanarayan Prasad (Supra), this Hon'ble Court specifically held as hereunder:
A decision liable to appeal may be 'final' until the appeal is preferred. But once the appeal is filed the decision loses its character of 'finality' and what was once res judicata again becomes res sub-judice, that is, a matter under judicial inquiry. The appeal destroys the finality of the decision, the decree of the lower Court is superseded by the decree of the Appellate Court, in other words, once an appeal is filed from a decree or order in a matter, it becomes a pending matter.
12. The relevant passage from the decision of the Zodiac Investment (Supra) reported in 1988(2) CLJ 491 is set out hereunder:
Be that as it may, the observations of the Supreme Court in (15) Gojer Brothers v. Ratan Lal Singh and also in the various earlier decisions referred to and relied on therein would go to show that the observations in the Division Bench decision of this Court in Satyanarayan Prosad (Supra) extracted hereinbefore, require consideration. It has been pointed out in Gojer Brothers (Supra), that once an appeal is filed against a decree, the Appellate Court would have to confirm, modify or reverse the decree and that and in all these cases the operative decree would be the decree of the Appellate Court, not only when it reverses or modifies the decree but even when it confirms it and the decree under appeal would lose its identity and it may be urged that these observations in Gojer Brothers (Supra), go to lend considerable support to the observations of this Court in Satyanarayan Prosad (Supra), than on an appeal from a decree the matter covered and decided by the decree become "pending matters" and the decree shall obviously stand displaced by the appellate decree, in whichever way the appeal is eventually decided.
13. Mr. Mukherjee also referred to a recent decision of the Hon'ble Supreme Court in the case of Union of India v. West Coal Paper Mills . In the aforesaid decision Supreme Court observed as hereunder:
14. ...Article 136 of the Constitution of India confers a special power upon this Court in terms whereof an appeal shall lie against any order passed by a Court or Tribunal. Once a special leave is granted and the appeal is admitted, the correctness or otherwise of the judgment of the Tribunal becomes wide open. In such an appeal, the Court is entitled to go into both questions of fact as well as law. In such an event, the correctness of the judgment is in jeopardy.
14. Mr. Mukherjee submits that in the instant case since the appeal has been referred to a larger Bench of the Supreme Court, the Division Bench judgment of the Calcutta High Court is in jeopardy.
15. Considering the aforesaid decisions we are of the opinion that the Division Bench judgment of this Hon'ble Court in the matter of transfer of shares to the respondent Jessop & Co, cannot become final in view of pendency of the appeal in the Supreme Court from the said judgment of this Court.
16. Mr. Mukherjee further submits that the order of BIFR approving the scheme for disinvestments is also subject-matter of appeal which is pending before AAIFR. The privatisation of Jessop under the scheme approved by the BIFR is also pending before AAIFR. Mr. Mukherjee also submits that there is one fundamental principle governing the procedural law. According to Mr. Mukherjee, the parties to litigation cannot affect the pending proceeding by their own unilateral action and cannot absolve themselves from liability in a pending litigation. Mr. Mukherjee referred to the principle underlying in Section 52 of the Transfer of Property Act dealing with the concept of lis pendens. In this connection Mr. Mukherjee referred to the following passage from Mulla's Transfer of Property Act, Ninth Edition:
These judgments were quoted and followed by the Privy Council in Faiyaz Hussain Khan v. Prag Narain 1907 (29) All 389, which is the leading case on the doctrine of lis pendens in India, In a Calcutta case, Mookerjee, J, speaking of the application of the doctrine of suits for specific performance of contracts to transfer immovable property, said that if, when the jurisdiction of the Court had once attached, it could be ousted by the transfer of the defendant's interest, there would be no end to litigation and justice would be defeated.
17. Learned Senior Counsel of the appellants very strongly urged before this Court that the provisions of Order 22 Rule 10 of the Code of Civil Procedure permits the continuance of a pending proceeding as originally framed notwithstanding any assignment creation or devolution of any interest during the pendency of the proceeding.
18. Sir Asutosh Mookerjee in a celebrated judgment in Ray CharanMandal v. Biswa Nath Mondal reported in 20 CLJ Page 107 held:
The Rule was recognised in Radhey Koer v. Ajodhya Das that a suit must be tried in all its stages on the cause of action as it existed at the date of its commencement. This is in accord with the observation of Lord Kings Down in Anundmoyee v. Sheeb Chunder that in appeal the question is whether the decision of the primary Court is correct on the facts as they stood when the judgment was rendered, and that no subsequent event or devolution of interest can affect that question, because to give effect to them, should justice require it, would be the office, not of any appeal but of some supplementary proceeding (at page 108).
19. Mr. Saktinath Mukherjee also referred to Paragrpah 406 from Story on Equity, 3rd Edition, Page 166, which is reproduced hereinbelow:
Ordinarily it is true that the judgment of a Court binds only the parties and their privies in representation or estate. But he who purchases during the pendency of an action is held bound by the judgment that may be made against the person from whom he derives title. The litigating parties are exempted from taking any notice of title so acquired; and such purchaser need not be made a party to the action. Where there is a real and fair purchase, without any notice, the rule may operate very hardly. But it is a rule founded upon a great public policy for otherwise, alienations made during an action might defeat its whole purpose, and there would be no end to litigation. And hence arises the maxim, pendente lite, nihil innovator; the effect of which is not to annual the conveyance, but only to render it subservient to the rights of the parties in the litigation. (At page 166 at Para 406).
20. It has also been submitted before this Court on behalf of the appellant that a proceeding which is maintainable on the date of institution does not become non-maintainable because of change of law unless such change expressly makes it non-maintainable and similarly a proceeding non-maintainable on the date of its institution cannot become maintainable because of subsequent change of law unless the Statute clearly provides for such consequences.
21. Mr. Mukherjee submits that even before the BIFR said appellants ventilated their grievances and the BIFR granted leave to the appellants to seek relief at the appropriate forum. It has also been submitted on behalf of the appellants that the VRS Scheme was introduced at the inslnncc of the Government of India and the said scheme was also financed by the Government of India. Mr. Mukherjee further submits that the appellants herein have been claiming relief from the Union of India and also from the respondent-company which was undisputedly an agency of the said Union of India at least at the time of filing of the instant appeal. The learned Senior Counsel of the appellants submits that it is not open to the Union of India and also the respondent-company to devise any scheme which will absolve them from the liability in a pending appeal. Mr. Mukherjee also submits that under the Voluntary Retirement Scheme, ex gratia amount has always been paid by the Government of India.
22. According to Mr. Mukherjee, the appellants herein have only claimed recalculation of the ex gratia payment on the basis of the revised pay scale which was implemented in the respondent-Jessop & Co w. e.f. 1st January, 1992. Mr. Mukherjee also submits that as per extant policy ex gratia payments are made to the voluntary retirees by the Government of India. It has been specifically submitted on behalf of the appellants that the Government of India, Department of Heavy Industries, time to time issued order extending various benefits to the voluntary retired officers of PSEs in connection with pay revision and the reference has been made in this regard to the office memorandum dated 8th December, 2000 issued by the Heavy Industries and Public Enterprises Department, Government of India wherein it has been categorically mentioned that ex gratia will recalculated on the basis of the revised pay scale and the difference would be paid as arrears of ex gratia even subsequent to voluntary separation. The learned Counsel of the appellants submits that the appellants herein are entitled to recalculation of ex gratia in 1992 revised scale and receive payment of difference money in terms of the aforesaid office memorandum dated 8th December, 2000 since the pay revision has already been sanctioned and implemented in respect of Jessop & Co. subsequent to the voluntary separation of the appellants herein. The learned Counsel of the appellants further submits that the appellants herein cannot be denied benefits of 1992 pay revision as the said appellants were very much in service at that time.
23. Mr. Dinesh Roy, learned Counsel representing the Union of India adopted the arguments advanced by Mr. Gupta on behalf of the respondent-company.
24. Considering the rival contentions of the respective parties we are of the opinion that the issues relating to the entitlement of the appellants/writ petitioners to enjoy the fitment benefits and ex gratia and/or other corresponding terminal benefits as well as arrears of pay on the basis of revised pay scale w.e.f. 1st January, 1992 or liability of the present management of the respondent company for payment of any amount to the said appellants towards the arrear dues, if any, are not required to be decided at this stage for the purpose of deciding the preliminary objection regarding maintainability of this appeal. It is not in dispute that on the date the writ application was moved i.e. in August, 2001. as well as on the date the writ petition was dismissed by the learned Single Judge i.e. onApril 9, 2002, and on the date of filing of the instant appeal, Jessop & Company undisputedly was a public sector undertaking. Furthermore, it is also on record that the Jessop & Co. became Public Sector Undertaking consequent upon its nationalisation by an Act of Parliament and its privatisation was brought about by disinvestments in shares on the basis of an executive decision. The propriety and legality of the aforesaid privatisation is the subj ect-matter of the proceedings now pending before the larger Bench of the Hon'ble Supreme Court.
25. The appeal which was valid at the time of commencement could not become invalid even by subsequent legislation unless retrospective effect is given. The provisions of Order 22 Rule 10 of the Code of Civil Procedure are very much applicable in this regard. The aforesaid provisions of Order 22 Rule 10 of Code of Civil Procedure are set out hereunder:
Order. 22, Rule 10. Procedure in case of assignment before final order in suit.--(1) In other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved.
(2) The attachment of a decree pending an appeal therefrom shall be deemed to be an interest entitling the person who procured such attachment to the benefit of Sub-rule (i).
26. We, therefore, do not understand how the appellant can be non-suited during pendency of the present appeal. This Court in the case of Zodiac Investment v. Durga Investment Trading & Co. and Anr. reported in 1988(2) CLJ 491 held:
13. Mr. Mukherjee, the learned Counsel appearing for the appellants, has very strongly urged that while a decree for against a tenant would divest him of his status as a tenant, such a decree must be a final one and that once an appeal is filed and is pending against such decree, the decree would be deprived of its final character during the pendency of the appeal and cannot, therefore, during the pendency of the appeal, made the tenant cease to be a tenant. Mr. Mukherjee has placed strongest reliance on the following observations in the Division Bench decision of this Court in (10) Satyanarayan Prosad v. Diana Engineering 55 CWN 509 at 514:
A decision liable to appeal may be 'final' until the appeal is preferred. But once the appeal is filed the decision loses it character of finality' and what was once res judicata again becomes res sub judice, that is, a matter under judicial inquiry. The appeal destroys the finality of the decision, the decree of the lower Court is superseded by the decree of the Appellate Court in other words, once an appeal is filed from a decree or order in a matter, it becomes a pending matter.
27. In the present case, we find that the status of the respondent-company was a Public Sector Enterprise at least on the date of filing of the instant appeal and therefore, the said appeal cannot become invalid due to the subsequent decision of the respondent Government of India on account of privatization of the company by transferring its shares in favour of private individuals. The respondent-Government of India or the respondent-company by its subsequent action cannot render a pending appeal infructuous.
28. In the case of Rai Cbaran Mandal (supra), Sir Asutosh Mookerjee, speaking for the Division Bench specifically held:
The successor-in-interest may, if he chooses, obtain leave of the Court under Order 22 Rule 10; but if he does not do so, the original plaintiffs are entitled to continue the suit, and their successor will be bound by the result of the litigation.
29. It has been held by the Supreme Court in the case of Kapila Hingorani v. State of Bihar that the State has an additional duty to see that the rights of the employees of the Government companies are not infringed. The relevant paragraph of the aforesaid decision is set out hereunder:
22. This Court further relying upon the doctrine of "lifting the corporate veil" observed:
30. The Government companies/public sector undertakings being 'States' would be Constitutionally liable to respect life and liberty of all persons in terms of Article 21 of the Constitution of India. They, therefore, must, do so in cases of their own employees. The Government of the State of Bihar for all intent and purport is the sole shareholder. Although in law, its liability towards the debtors of the company may be confined to the shares held by it but having regard to the deep and pervasive control it exercises over the Government companies; in the matter of enforcement of human rights and/or rights of the citizen to life and liberty, the State has also an additional duty to see that the rights of employees of such corporations are not infringed....
30. Before disinvestment of shares, Jessop & Co. was undisputedly, a Government company and the Government of India was, therefore, under an obligation to see that the rights of the employees of the said Government company are not infringed in any mariner. The Government of India, however, allowed disinvestment of shares during the pendency of the appeal and such transfer of shares in favour of the private individual is the subject-matter of challenge before the Supreme Court. Since the Government of India during the pendency of the appeal permitted the transfer of shares of the respondent-company, it cannot avoid its responsibility to protect the rights of the employees to enjoy the benefits on the basis of the earlier circulars or orders issued by the competent authority of the said' Government of India.
31. In the case of Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao and Ors. , Hon'ble Supreme Court rejected the contention that due to events subsequent to filing of the petition, the application was no longer maintainable with the following words:
...The validity of a petition must be judged on the facts as they were at the time of its presentation, and a petition which was valid when presented cannot, in the absence of a provision to that effect in the statute, cease to be maintainable by reason of events subsequent to its presentation....
32. It is nobody's case that the writ petition was not maintainable when it was filed. The cause of action for filing the writ petition crystallized at a point of time when the respondent authority was, admittedly, subject to the writ jurisdiction. The said cause of action confers a vested right to the writ petitioners to have their grievances adjudicated in a writ proceeding. No one can contend that the writ petitioners have brought about the present situation by their conduct. The change of circumstances is not attributable to the writ petitioners.
33. For the aforesaid reasons, we are of the opinion that the instant appeal is very much maintainable and the preliminary objection raised on behalf of the respondent-company cannot be sustained in the eye of law. Therefore, the said preliminary objection regarding maintainability of this appeal as raised by the respondent company is rejected.
34. Let the appeal be now listed for further hearing in order to adjudicate the other issues raised in the appeal on merits.
35. Let urgent Xerox certified copy of this judgment and order, if applied for, be given to the learned Advocates of the parties on usual undertaking.
Arunabha Basu, J.
36. I agree.