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(VI) that the unilateral increase of retirement age of 58 to 60 years, gave rise to a 'legitimate expectation' amongst the employees that the age of superannuation would be 60 years henceforth and this legitimate expectation could not be defeated by unilateral action of the first respondent;

(VII) that, in any event, the Management of the first respondent failed to consider larger issues of public interest in taking the decision to reduce the age of superannuation to 58 years. The decision has a prejudicial effect on aspects of passenger safety and financial viability of the first respondent both of which are vital public interest considerations. The first respondent did not place all relevant material affecting public interest before the Government of India and the decision of the Government of India to approve and sanction the application of the first respondent for exemption was made without application of mind to vital and germane factors;

GROUND (I)

19. The respondents contend that the service of the employees in the first respondent, a Public Sector Undertaking, is akin to service under the Government and more a matter of status than of contract. In fact, Mr. Andhyarujina, learned Counsel for the first respondent, relied strongly on the judgments of the Supreme Court in (i) S.L. Agarwal v. Hindustan Steel Ltd., , (ii) N. Lakshmana Rao v. State of Karnataka, and (iii) K. Nagaraj v. State of A. P., , and contended that there is no vested contractual right in regard to terms of service of a public sector employee and that the legal position of a public sector employee or that of a Government servant is one of a status and not of contract- The duties of status are fixed by law and the terms of service are governed by statute or statutory rules which can be unilaterally altered by the Government without the consent of the employee. Mr. Andhyarujina, therefore, contended that it was perfectly open to the first respondent to unilaterally change the term of service and that no objection could be taken thereto.

20. The Counsel for the petitioners have, however, relied on the judgment of the learned Single Judge of the Calcutta High Court in Ranjit Kumar v. Union of India, , and the judgment of the Supreme Court in Tewari v. District Board, Agra, 1964(1) L.L.J. 1. Relying on these two judgments, it is contended by the learned Counsel for the petitioners that the first respondent is an autonomous body constituted as a Government Company and not a Department of the State. The relations between the first respondent and its employees were originally governed by the Air India Employees Service Regulations, but consequent upon the coming into force of the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994, the Service Regulations ceased to have effect as Regulations and, though they have been continued by virtue of section 8, their force is that of contractual terms and no more in view of the fact that there is no statutory obligation which is enforceable on the employees, nor is the power under the statute available to the first respondent to unilaterally change the conditions of service of the petitioners which have carried over by virtue of section 8 of Act 13 of 1994. It is urged that merely because the first respondent is a Government Company within the meaning of section 617 of the Companies Act, 1956, its juristic character has not changed and it does become identified with the State, nor do its employees become Government servants or holders of Civil posts under the Union or the State Government. Once it is held that a company registered under the Companies Act is not State or Department or agent thereof, the fact that its employees are appointed or removed by the President or that the President of India holds all the shares of the Government Company, is irrelevant and the employees do not become Government servants or holders of civil posts amenable to Article 311(2) of the Constitution. Their relations continue to be one of contract and any alteration therein can only be by way of a novatio of the contract of employment and not by unilateral action. The learned Counsel for the petitioners also relied on the judgment of the Supreme Court in Gujarat State Financial Corporation v. M/s. Lotus Hotels Put. Ltd., , and contended that merely because the dispute raised between the parties is in the realm of the contract, it cannot be contended that the remedy would only be by way of damages in a Civil Court for breach of contract and not by way of a writ petition under Article 226. It is contended that where the Company is an instrumentality of the State falling within the sweep of Article 12 of the Constitution, it cannot be allowed to commit breach of a solemn undertaking on which the other side has acted and then contend that the party suffering by the breach of the contract may sue for damages but cannot compel specific performance by resorting to the writ jurisdiction of the High Court.

21. In our view, the contentions canvassed on either side take the extreme view. We are unable to subscribe to the contention of the respondents that the conditions of service of a Public Sector Undertaking, one which is no longer governed by the provisions of the statute and in which the power of prescribing conditions of service of employees is not available under any statute, would be the same as in the case of a Government servant or that it would be a matter of status which could be altered at will by the Government. In our view, the petitioners are justified in contending that the conditions of service under the first respondent, though originally prescribed in exercise of statutory power delegated to the first respondent resulting in the staff regulations, are no longer so by virtue of the repeal of the Air Corporations Act. Once the Air Corporations Act came to an end, so did the power of prescribing the conditions of service by exercise of statutory powers. When the first respondent possessed the said power, it perhaps was possible to contend that the employment under the first respondent was a matter of status and not contract. At any rate, after the repeal of the Air Corporations Act by Act 13 of 1994, this position has drastically changed. The staff regulations which determined the conditions of service of the employees have spilled over by virtue of section 8 of Act 13 of 1994, but they do not operate as regulations propria vigore any longer, but would merely be statutorily imposed contractual terms of employment. We have no hesitation in accepting the contention of the petitioners thus far. We are, however, unable to accept the contention of the petitioners that the display of Staff Notice No. 4/98-99 dated 27th May 1998 itself amounted to a consensual variation of the contractual terms of employment of the employees, nor are we able to subscribe to the theory of the petitioners that there was a novatio of the contract of employment with regard to the age of retirement. We cannot be unmindful of the fact that the first respondent displayed the Staff Notice No. 4/98-99 dated 27th May 1999 under a directive given by the Department of Public Enterprises. Though the directive of the DPE contained in Officer Memorandum dated 19th May 1998 clearly stated that the increase in the age of retirement from 58 to 60 years would come into force from the date on which the relevant Rules and Regulations were amended by the concerned Public Sector Enterprises, the first respondent was probably over-enthusiastic. By its Staff Notice No. 4/98-99 dated 27th May 1998, the first respondent notified that the Management had decided to raise the age of retirement of below board level employees from 58 to 60 years "with immediate effect" and that it would cover all the employees on the payroll of the company as on that date. Indubitably, this was unilateral action on the part of the first respondent's Management, which gave an advantage to the employees. Similarly, by the Staff Notice No. 3/1999-2000 dated 18th June 1999, the first respondent reverted the retirement age to 58 years. Merely because during the interregnum between 27th May 1998 to 18th June 1999 a certain facility had been made available to the employees, it cannot be postulated that the terms of employment pertaining to age of retirement were changed and substituted by a new contractual term of employment which gave a vested right to the employees to continue in service upto the age of 60 years. It is difficult to agree with the contention of the petitioners that the Staff Notice No. 4/98-99 dated 27th May 1998 can be said to have introduced any change in the contract of employment. Any change in the contract of employment could only have been consensual and brought into force by both parties being ad idem thereupon, and for valuable consideration. None of the indicia of a valid contract are to be found in the present situation. Even assuming that, after the coming into force of Act 13 of 1994, the Staff Regulations continued as contractual terms of employment, we are unable to agree that by virtue of the Staff Notice No. 4/98-99 dated 27th May 1998 there was any variation in the contract of employment. At the highest, it amounted to a concession granted unilaterally by the employer, which was again unilaterally withdrawn on 18th January 1999. The contention of the petitioners that it amounts to breach of contract by the first respondent State within the meaning of Article 12 and, therefore, needs to be interfered with in writ jurisdiction is without substance and needs to be rejected.