Chotila Gram Panchayat v. Jatashankar N. Dave — 1971 DIGILAW 108 (GUJ)

JUDGMENT : J.B. MEHTA, J. 1. Both the matters raise common questions and, therefore, they are deposed of by this common order. This is an unfortunate case of a Government servant whose services had been loaned to the public, municipal body and who is since for years rendered unemployed and is without wages. It is surprising that both the public bodies admitted the fact that they have not legally terminated the services of this public servant; still, the statutory guarantee embraced in Article 16 and the protection guaranteed by Article 311 have been denied to this public servant by the arbitrary and irresponsible action of the State Government. Our learned Brother had granted a declaration of continuance of service without going into other two relevant questions as to whether there was a loan of Government servant's services, whether he had been absorbed in Panchayat service. That is why the declaration has proved futile until this legal tangle is first resolved as to whose servant he is. 2. The short facts which have given rise to these two matters are as under: The concerned servant was by the then Dhrangadhra State taken up as a Sanitary Inspector on October 16, 1944 in Halvad Municipality which was then working as a State department. Dhrangadhra State merged with the Saurashtra State and this Government servant was absorbed with effect from April 1, 1948, in the Saurashtra service. The Government resolution No. 29 dated April 10, 1950, provided for a transfer of the services of the Government servant to the legally constituted Halvad Municipal body. The Chotila Municipality had sought for the loan services of this Government servant by the request made on August 19, 1950. By the order, dated August 23, 1950 of the Collector the services of this Government servant which were originally loaned to Halvad Municipality as per the aforesaid Government Resolution No. 29 were loaned to Chotila Municipality on condition that the municipality credited pension contribution and the leave contribution to the State Government. The services were accordingly loaned to Chotila Municipality from September 1, 1950. By the order dated December 22, 1952 the Collector retained lien of this Government servant in the Revenue Department as his services were loaned to the Chotila Municipality. The Collector further confirmed this Government servant in the Revenue Department as a junior clerk on June 14, 1954 in the scale of Rs. By the order dated December 22, 1952 the Collector retained lien of this Government servant in the Revenue Department as his services were loaned to the Chotila Municipality. The Collector further confirmed this Government servant in the Revenue Department as a junior clerk on June 14, 1954 in the scale of Rs. 43 to 70 and his seniority was at S. No. 20 in the Revenue Department. Thereafter, there appears to have been passed a Government Resolution on October 18, 1954, under which shadow posts were created in the Collectorate to regularise position of keeping lien of such Government servants who were on loan service. It was provided therein that such employees like this. If realvad Sanitary Inspector would have no right to revert to Government service and this shadow post was created from April 1, 1998 and an appointment order of the same date i. e. October 18, 1954, of this shadow post was passed along with a statement stating that his services were transferred to Chotila Municipality as per the order, dated August 23, 1950. Further, it was provided by a resolution of that date that the services of this Government servant had been given on condition of pension contribution. There was relaxation so far as leave contribution was concerned as the leave salary burden had been home by the Municipality. The petitioner raised two objections on November 30, 1955 and September 7, 1956, protesting against that part of this resolution under which it was provided that this Government servant could not revert to the Government service. He prayed for confirmation in the Government service, In consideration of these objections by the order, dated November 19, 1956, the petitioner was confirmed and in the final list his seniority was declared at S. No. 7 in the Revenue Department. Even after the bifurcation by the orders, dated September 26, 1962, and October 10, 1962, of the Collector his finally declared seniority is at S. No. 22 in the Collectorate. Thereafter the Municipality was converted into Panchayat on coming into force of the Gujarat Panchayats Act, 1961. The servant being Government servant his pay as Secretary had been on the Government basis of Rs. 100-8-140-10-220-15-330 and dearness allowance was also payable. Thereafter the Municipality was converted into Panchayat on coming into force of the Gujarat Panchayats Act, 1961. The servant being Government servant his pay as Secretary had been on the Government basis of Rs. 100-8-140-10-220-15-330 and dearness allowance was also payable. The Panchayat finding that its finances could not meet with this high pay requested the Government as per its resolution to take back this Government servant by the letter dated May 12, 1967. The Collector replied on September 26, 1967 that the servant concerned having been put on a shadow post, the Government had accepted only pensionary liability and he had no right to come back. The Panchayat, has, therefore, passed a resolution at Annexure-L on October 21, 1967 to retrench this employee giving him notice pay and retrenchment compensation and by the order, dated October 21, 1967 at Annexure K which was served on this servant he has been retrenched. He has not accepted the amount of notice pay and the retrenchment compensation. The servant had, therefore, filed a writ petition which formed the subject matter of the Letters Patent Appeal where he has asked for quashing the resolution and the retrenchment order at Annexures-L and K and he had also prayed in the alternative that the Collector's purported order of September 26, 1967, at Annexure M, may be quashed as the Government could not refuse to take back this Government servant and he has accordingly asked for consequential reliefs for salary and his dues from the respondents. In that matter our learned Brother had come to the conclusion that under Section 307 (g) of the Gujarat Panchayats Act, 1961, hereinafter referred to as the Act, Panchal at could terminate the services of its servant only after prior sanction of the State Government. As this was not done. the order terminating his services was held to be ultra wires. Therefore, our learned Brother did not go into the other two questions as to whether the servant was the loaned servant of the State Government and whether he was absorbed in the Panchavat service. Our learned Brother further observed that in any event the stand of the Panchayat was that the service was a loan service and, therefore, it would have no jurisdiction to terminate his services from the State. Our learned Brother further observed that in any event the stand of the Panchayat was that the service was a loan service and, therefore, it would have no jurisdiction to terminate his services from the State. Therefore, declaratory relief was given after quashing the aforesaid resolution and the order of retrenchment declaring that this servant was entitled to all salary, emoluments and other benefits which he would have received if his services were not purported to have been terminated with effect from October 23, 1967. That is why the Panchayat has filed the present Letters Patent Appeal, The Panchayat has also filed a writ petition on the ground that the loan cannot be forced on the Panchayat. Therefore, in that writ petition the said order of the Collector, dated Sept. 26, 1967, at Annexure M refusing to take back this loan service has been challenged along with the consequential reliefs, so that the servant's salary and emoluments would be paid by the State. That is how these two matters have come up before us. 3. The attention of our learned Brother, it appears, was not invited to the settled distinction between the contract of service and contract for services under temporary loan from the State Government. In the present case, the facts are not disputed and even Mr. Nanavati on the basis of the aforesaid documentary evidence admits that service of this servant was loan service. The original order of the Saurashtra State of August 23, 1950, in terns mentions that his services were loaned to the Chotila Municipality for which request had been made by the Chotila Municipality on August 19, 1950. Thus, the Government retained his lien in the Collectorate by the order, dated December 22, 1952 at Annexure-F. Even the final seniority of this Government servant after he was confirmed by the order, dated June 14, 1954, has been fixed by various orders in the Revenue Department. The only plea of the State was that in order to regularise the position for keeping lien, the shadow post was created. We will immediately consider the effect of this Government resolution of October 18, 1954, but it does not put an end to this loan service. Therefore, at no stage the Government had terminated the services of this Government servant. It had merely given loan of the services oil condition that the Municipality shall also pay the pension contribution. We will immediately consider the effect of this Government resolution of October 18, 1954, but it does not put an end to this loan service. Therefore, at no stage the Government had terminated the services of this Government servant. It had merely given loan of the services oil condition that the Municipality shall also pay the pension contribution. In order to regularise this position even a shadow post was created and his confirmation was made and seniority had been fixed only in revenue department. Hence only a benefit of his services was given to the Chotila Municipality which has now become Panchayat in, question. In Chintarnan Rao vs. State of Madhya Pradesh, AIR 1958 SC 388 at p. 389 their Lordships have given normal meaning of the term a person employed, although in the context of tire Factories Act. The concept of employment as pointed out by their Lordships involved three ingredients: (1) employer (2) employee and (3) the contract of employment. The employer is one who employs i.e. one who engages the services of other persons. The employee is one who works for another for hire. The employment is the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision. Their Lordships pointed out that there was a settled distinction between the contractor and workmen and between a contract for service and a contract of service. In the latest decision in Pyarchand Kesarimal Porval Bidi Factory vs. Onkar Laxman Thenge, AIR 1970 SC 823 , their Lordships again pointed out this distinction between a contract of service and a contract under which the benefit of services was only transferred to another employer whether under a loan or otherwise. At page 825 their Lordships pointed out the general rule in respect of relationship of master and servant to the effect that a subsisting contract of service with one master was a bar to service with any other master unless the contract otherwise provided or the master consented. A contract of employment involving personal service was incapable of transfer. 4. At page 825 their Lordships pointed out the general rule in respect of relationship of master and servant to the effect that a subsisting contract of service with one master was a bar to service with any other master unless the contract otherwise provided or the master consented. A contract of employment involving personal service was incapable of transfer. 4. Their Lordships also pointed out that there was it presumption against there being transfer of an employee to temporary employer to whom the services have been transferred and a heavy burden rests on the party seeking to establish that the relationship of master and servant did not constitute no has vie between the temporary employer and an employee. The position in law was clear that except in case of statutory provision the contrary right to the service of the employee cannot be the subject matter of a transfer by employer to a third part) without employee's consent. Further proceeding at page 827, their Lordships pointed out that a contract of service being thus incapable of transfer unilaterally, such a transfer of service from one employer to another can only be effected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to make a new contract between the employee and the third party. Such a change in legal relation can only be effected by a tripartite agreement between the employer, the employee and the third party. Therefore, so long as the contract of service was not terminated, a new contract was not made as aforesaid and the employee continued to be in the employment of the employer. The only thing that happens in such a case is that he carries out the orders of master. The employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired. It may be that such third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer. That does not preclude the employee from claiming his wages from the employer. It may be that such third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer. That does not preclude the employee from claiming his wages from the employer. The hirer may also exercise control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done. But if the employee fails to carry out his directions, he cannot dismiss him and can only complain to the employer. The right of dismissal vests in the employer. Therefore, on this settled legal position if this distinction was pointed before the learned Single judge, in the present case there being only loan of services and not a transfer of the contract of service itself, the liability of the State Government obviously continued to pay his wages and the concerned employee continued to be the State Government servant. It was the State Government which alone could terminate his services and the Municipality or the Panchayats were merely loanees taking benefit of loaned services and had no jurisdiction whatever to put an end to the service of this Government servant. 5. Mr. Nanavati for the State, however, vehemently supported the reasoning of the learned Single judge by invoking Section 307 (g). According to Mr. Nanavati this was the case of a statutory transfer of the services to the State itself. There are inherent difficulties in this submission of Mr. Nanavati. Section 307 is in Chapter XVI which provides for conversion of a municipality into a Panchayat and even amalgamation and division of Panchayats, Section 307 therefore provides for the effect of conversion of a municipality into a Panchayat. One of the effects in clause (g) is as under:- "all officers and servants in the employ of the municipality immediately before the said date shall be officers and servants of the interim panchayat 'under this Act and shall, until other provision is made in accordance with the provisions of this Act, receive salaries and allowances and be subject to the conditions of service to which they were entitled or subject on such date. Provided that it shall be competent to the interim panchayat subject however to the previous sanction of the State Government, to discontinue the services of any officer or servant who, in its opinion, is not necessary or suitable to the requirements of the service of the interim panchayat, after giving such officer or servant such notice as is required to be given by the terms of his employment and every officer or servant whose services are discontinued shall be entitled to such leave, pension, provident fund and gratuity as he would have been entitled to take or receive on being invalidated out of service as if the municipality in the employ of which lie was, had not ceased to exist." Section 30(g) therefore provides for all the officers and servants who were employees of the municipality immediately before the relevant date being converted into officers and servants of the interim panchayat, until other provision is made as per the provisions of the Act, and it provides for their salaries and allowances being paid by the interim panchayat. That is why the proviso, as it gives a limited right to the interim panchayat to discontinue the services of any officer or servant who was not in its opinion necessary or suitable to the requirements of the interim panchayat, enacts that such termination shall be after the previous sanction of the State Government and only after giving the requisite notice which a person was entitled under the terms of his employment and on payment of his leave, pension, provident fund, gratuity which be would provident been entitled to take or receive on being invalidated out of service as if the municipality, in the employ of which he was, had not ceased to exist. The proviso, therefore, creates a safeguard for these municipal officers or servants in the shape of previous sanction of the State Government if his services were to be discontinued on the ground that the interim Panchayat did not require those servants or they were not suitable to their requirement. Both the proviso and the substantive section only apply to an officer or servant who was previously in the municipal service. That is why the proviso in terns speaks of all the rights to be given to the servants of leave, pension, provident fund and gratuity to which lie was entitled when lie was an employee of the former municipality. Both the proviso and the substantive section only apply to an officer or servant who was previously in the municipal service. That is why the proviso in terns speaks of all the rights to be given to the servants of leave, pension, provident fund and gratuity to which lie was entitled when lie was an employee of the former municipality. Therefore, this provision in Section 307 (g) only provides for continuance of the services of the officers and the servants who were in the employ of the old municipality subject to the, limited right given to the interim panchayat to terminate the services after previous, sanction of the State Government on the ground that he was not necessary or suitable to the requirement of the Panchayat. In this context the term 'in the employ of the municipality' can have no other meaning than the ordinary settled meaning of an employee under a contract of service. Mr. Nanavati urged for a wider construction that the term in the employment of the municipality would cover even any person actually working in the municipality including State loaned servants. This is against the plain intendment of the section. In case of a loaned servant his services shall continue as per the settled legal position with the old employer i.e. by the State. The Panchayat would have no right to pass an order of dismissal or discharge, for that order against it Government servant can only be pissed by the Government and by no other body. Mr. Nanavati's construction would be in plain violation of the constitutional mandate of Article 311. It is a settled rule of construction that it provision must be so interpreted that it does not violate the constitutional protection. Therefore, the wider construction is plainly out of question as it would lead to extinction of the status as a civil servant of the concerned Government servant. Besides this intrinsic evidence in Section 307 (g) itself, even the other provisions of the Act support this narrow construction. The legislature has at the same time provided in Section 325 (x), similar consequences of a repeal of the Bombay Village Panchayats Act, 1958. Besides this intrinsic evidence in Section 307 (g) itself, even the other provisions of the Act support this narrow construction. The legislature has at the same time provided in Section 325 (x), similar consequences of a repeal of the Bombay Village Panchayats Act, 1958. It provides as under:- "the Secretaries, all officers and servants in the employ of the old Village Panchayats immediately before the said date shall he Secretaries, officers and servants of the new grain panchayats and shall until other provision is made in accordance with the provisions of this Act, receive the salaries and allowances and be subject to the conditions of service to which they were entitled or subject on such date." The proviso enables the State Government to terminate the services of a servant if he was not necessary or suitable to the requirements of the Panchavat service. Similarly Section 326 (k) Sic that all officers and servants in the employment of an existing board immediately before the appointment day, shall, subject to the provisions of this Act, be deemed to be transferred to the service of the successor panchayat. This is also a similar consequence of the repeal of the Bombay Local Boards Act, 1923. Therefore, when similar bodies had because of the repeal of the Act ceased to exist on panchavats coming into existence, services of the old officers and servants in the employment of the old panchayat or existing board are continued. Therefore, wiping out of the old employer does not operate as discontinuance of the old servants because of the statutory provision of law which transfers statutorily those old servants and officers to the succeeding panchayat which has come into existence. Even in the case of school boards under Section 155 they are dissolved and their functions are transferred to the Panchayat and therefore under Section 155 (e) it is provided that the employees of the existing school board shall stand transferred to the taluka panchayats and the district panchayat in accordance with the distribution made in that behalf and on such terms and conditions as may be provided, in the said order, provided those terms and conditions were not less favourable. Even when functions of the State Government are transferred to the Panchavats, Sections 157 and 158 provide that the functions shall be transferred to the Panchayats together with the funds and the staff employed. Even when functions of the State Government are transferred to the Panchavats, Sections 157 and 158 provide that the functions shall be transferred to the Panchayats together with the funds and the staff employed. That is why when the Panchayat service is constituted in Chapter X-I as it separate distinct service from the State service under Section 206 (1), appointment to the posts of Panchayat service under Section 205 are provided for by the direct recruitment, by promotion or by transfer of it member of State service to the Panchayat service. Section 206 (1) provides for allocation of officers and servants to the Panchavat service by general or special order. Sub-clause (i) provides for such number of officers and servants out of the staff allotted or transferred to a panchayat under Sections 157, 158 and 325 as it may deem fit, Under clause (i-a) allocation can be so done of all officers and servants of the municipalities dissolved under Section 307. Under sub-clause (ii) allocation is of all officers and servants in the service of district local boards and district school boards immediately before the dissolution under this Act and transferred to the panchavats under Sections 155 and 326. Finally, sub-clause (iii) provides that such other officers and servants employed in the State service may be allocated as may be necessary to enable the panchayats to discharge efficiently their functions and duties under the Act. Section 206 (2) provides that the officers and servants allocated to the Panchayat service under sub-section (1) shall be taken over by such panchayats in such cadre and on such tenure, remuneration and other conditions of service as the State Government may by general or special order determine, provided that the conditions of service of any such officer or servant shall not be less favourable than those applicable to him immediately before such allocation. Section 206-A provides that the allocation to the panchavat service under Section 206 of officers or servants allotted or transferred to a panchayat under Section 157 or 158 shall initially be provisional and it shall be lawful for the State Government to review their allocation within it period of four years from the 1st April 1963, and if necessary to reallocate by an order made in that behalf any of such officers or servants to the State service for the reasons mentioned therein. Section 207 deals with deputation by general or special order of the State of such number of officers of Indian Administrative Service and of Class I and Class II services of the State and such number of officers and servants allotted to or transferred to Panchayat under Section 157 or 158 who are not allocated under Section 206. Section 208, which is material, provides that any panchayat may subject to the rules made in this behalf, obtain the services of any officer of Government on loan. There is no dispute that no rules for loan have been prescribed. 6. Therefore, the aforesaid scheme clearly shows that the Government had continued the loan of this secretary to the panchayat only under Section 208 which provides for such loan services for occupying this office of the panchayat secretary which is a statutory office under Section 102 (1). Section 102 (1) enacts that subject to the Act and the rules there shall be secretary for every Panchayat who shall be appointed in accordance with the rules. There is no dispute that in the present case at the relevant time there was no order of allocation under Section 206 or deputation under Section 207. Therefore, the case of this employee only falls under Section 208 which does not talk if any contract of service being transferred of the municipality. 7. The aforesaid scheme nukes it abundantly clear that there is statutory provision created by law under this Act in cases where officers and servants of the old bodies which have ceased to exist are statutorily transferred to the panchayat. That is why Section 307 (g), which is 'a transitional provision until provision is made in accordance with the Act for transfer of the employment of officers and servants of the old municipality to the Panchayat, would only apply to those officers and servants who were under a contract of service and not to such loaned servants who could never be said to be in the employ of the municipality. They were in the employment of the State Government so far as their contract of service was concerned. The final provision which is contemplated under Section 307 (g) is obviously under Section 206 by an allocation order which has to be made in respect of all officers and servants of the municipality absorbed under Section 307 under clause (i-a) of Section 206 (1). The final provision which is contemplated under Section 307 (g) is obviously under Section 206 by an allocation order which has to be made in respect of all officers and servants of the municipality absorbed under Section 307 under clause (i-a) of Section 206 (1). Therefore, Section 307 (g) could never be interpreted in the wider sense as to cover even loaned Government servant, especially as it would deprive him of his constitutional protection. 8. We should also keep in mind that although the contract of service can by operation of law be statutorily transferred without the consent of the servant, that principle would have to be examined in the light of the constitutional protection given under Article 311 in so far as the civil servants were concerned. It is true that the Supreme Court with reference to the Maharashtra Act has held in C.A. No. 2425 of 1968, Jalgaon Zilla Parishad case - decided on 20.12.1968 (SC) that the effect of the allocation orders was that by operation of law there was termination of the services of the Talatis from the Government service and they became the employees in Class III services of the Zilla Parishad. Therefore, the Maharashtra High Court was held to be right in its conclusion that on allocation of these persons their employment with the Government ceased and they became employees of the Zilla Parishad to whose service they were allocated. It appears that in that decision the question of constitutional guarantee under Article 311 was not raised. That position was only examined in the decision of the learned Chief Justice in G.L. Shukla vs. State, (1967) 8 GLR 833 at p. 836. The learned Chief Justice has found out an ingenious solution of this problem by holding that the Panchayat service was distinct and separate service set up for serving the Panchayat organisation of the State and it is as much a civil service of the State as the State service. The State could have many services such as State service, police service, engineering service etc. and panchayat service was one of them. In the panchayat service as in the State service, the State is the Master and every officer or other servant employed in the panchayat service was the servant of the State and not of the Panchayat under which he might be serving for the time being. and panchayat service was one of them. In the panchayat service as in the State service, the State is the Master and every officer or other servant employed in the panchayat service was the servant of the State and not of the Panchayat under which he might be serving for the time being. The panchayat service was one single service with the State as the master. There was, therefore, no termination of service when an officer or servant of the State service was allocated to the panchavat service. On allocation he was merely transferred from one civil service of the State to another, his master remaining the same, namely, the State. His service under the State continues unbroken and uninterrupted, the only difference being that whereas prior to the order of allocation, he was a member of the civil service of the State, namely the State service, he is, after the order of allocation, a member of another civil service of the State, namely, the panchayat service. The order of allocation did not, therefore, bring about termination of service of the officer or servant of the State who was allocated to the panchayat service and S. 206 could not be assailed as authorising or permitting violation of the constitutional guarantee contained in Article 311 (2). Therefore, the aforesaid Jalgaon Zilla Parishad decision where this question was not examined could not be pressed in service. Even there because of allocation order, the status of the allocated servant as a Government servant is not extinguished because Panchavat service is also one wing of the State service. But for this ingenious solution offered by the learned Chief justice such a statutory transfer of a contract of service of the State to the Panchayat would have clearly violated guarantee of Article 311 (2) of the Constitution, That position is now well settled after the decision in the State of Mysore vs. H.P. Gowda, 1970 (3) SCC 545 : AIR 1971 SC 191 . In that case the control and management of a large number of research and educational institutions (including the Agricultural Research Institute), had been transferred to the University under Section 7 (4) of the University of Agricultural Sciences Act, 1963. In that case the control and management of a large number of research and educational institutions (including the Agricultural Research Institute), had been transferred to the University under Section 7 (4) of the University of Agricultural Sciences Act, 1963. Sub-section (5) provided that every person employed in any of the colleges specified in sub-section (1) or in any of the institutions referred to before the relevant date, as from the relevant date became employee of the University on such terms and conditions as may be determined by the State Government in consultation with the Board. Under the said provisions under a notification, control and management of the institutions in question had been transferred to the University. That is why this officer of the institution claimed protection of his guarantee under Article 311 as the status as Government servant was extinguished as a result of the notification by the statutory provision. In that context at page 547, their Lordships in terms held that it was wholly immaterial whether the prospects in the University were the same or not because for better or for worse notification resulted in the extinction of the status as a civil servant. It was in blatant violation of Article 311. 9. In that view of the matter it is settled legal position that unless this Government servant was absorbed in the Panchayat service which was a wing of the State service, his status as a civil servant would he clearly extinguished. If the Government seeks to contend that his services have been statutorily transferred, such provision would be clearly unconstitutional. In the present case as we have earlier mentioned there is no dispute that there is no allocation order or any other order which has been passed by the Government under the Act for absorbing this servant in the Panchayat service. Therefore, he continues to remain a loaned Government servant and his employment can only be terminated by the State and not by the loanee Panchayat. Even the liability to pay the salary amounts remained of the employer-the State and it would not be of the loanee. 10. Mr. Nanavati, therefore, next concentrated his attack on the ground that this servant has no right to revert to the Government service because of the Government Resolution of October 18, 1954 creating shadow post. Even the liability to pay the salary amounts remained of the employer-the State and it would not be of the loanee. 10. Mr. Nanavati, therefore, next concentrated his attack on the ground that this servant has no right to revert to the Government service because of the Government Resolution of October 18, 1954 creating shadow post. The State has not filed any affidavit against the petition of the Panchayat but this contention was raised before the learned Single judge as in that matter in the affidavit this stand was taken. This stand hardly lies in the mouth of the Government when it clearly seeks to extinguish the status of a civil servant in plain violation of the constitutional mandate of Article 311 (2). The State may have mentioned in its resolution that the Government servant will have no right to revert but that would not have any legal operation so as to extinguish the status of this civil servant as a Government servant who all along continued to remain it loaned servant. In fact, this was under complete misconception and the appellant was never a party to this. Mr. Nanavati is obviously wrong when he styles this as a tripartite agreement only at the time of arguments. The servant vehemently objected to this both on November 30, 1955 and September 7, 1956 and he insisted on his confirmation being made on the basis of his remaining a Government servant. The authority had ultimately accepted this objection of this servant and both on November 19, 1956 and after bifurcation in September-October 1962, the appellant was given his seniority in the final list in the Revenue Department where he was duly confirmed after considering these objections as is clearly mentioned in the Annexure H dated November 19, 1956. Any such direction of no right to revert would even otherwise, as we have examined the legal position, be ultra vices being in plain violation of Article. 311 (2). In any event, the servant was not a party to this. It could never be urged against him that he had no right to revert because lie had not entered into a new contract with the Panchayat after duly terminating his Government service. 11. Finally, Mr. Nanavati argued that the Panchayat had not properly terminated the agreement of the loan service. It could never be urged against him that he had no right to revert because lie had not entered into a new contract with the Panchayat after duly terminating his Government service. 11. Finally, Mr. Nanavati argued that the Panchayat had not properly terminated the agreement of the loan service. This is not a point raised by filing any affidavit but is only a contention at the time of arguments. Nothing was urged before us to show why this contractual loan was not dimly terminated by the Panchayat when it asked the State on May 12, 1967 to take back this loaned employee. It was the Collector who replied on September 26, 1967 that the servant was on the shadow post for whom only permission liability was accepted and, therefore, ho had no right to revert. This was under a complete misconception of law. A loan can never be forced on an unwilling person. The Act in question has envisaged statutory rules for Government staff on loan service under Section 208 but admittedly no rules have been made by the State Government. In the absence of any statutory rule we cannot hold that the Panchayat has not terminated the loan arrangement by duly intimating the State after making a due request in this connection to take back this employee in the Collectorate where his lien was kept. Therefore, there is no substance even in this third contention of Mr. Nanavati. 12. It is true that the Panchayat has sought to retrench this employee as it was helpless. When the State Government was refusing to take back this loaned employee it had to terminate the loan arrangement by refusing to take his services. The employee has not accepted this retrenchment order by accepting notice pay or compensation amount. As per the settled legal position where the loan comes to an end, the real employer who had loaned the services has the liability to pay all the wages thereafter because it is he alone who can terminate services of the loaned servant. The loanee has no right to terminate services and equally it had no obligation to pay wages. Therefore, our learned Brother on this point, with great respect, was in error as he had not gone into this settled legal position by examining this settled distinction between the contract of service and contract for loan of service. The loanee has no right to terminate services and equally it had no obligation to pay wages. Therefore, our learned Brother on this point, with great respect, was in error as he had not gone into this settled legal position by examining this settled distinction between the contract of service and contract for loan of service. In that view of the matter, this Letters Patent Appeal must be allowed by setting aside the decision of the learned Single Judge. It must be held that the effect of the resolution and the order of the Panchayat at Annexures-L and K is only to terminate the loan which necessarily results in the continuance of his services with the State Government and the liability of the State Government to pay salary and emoluments and other benefits to this employee by taking him in the State service. This is a case where we think even declaratory relief has proved futile and for four years this servant who was drawing a total emoluments of about Rs. 500/- has remained without any employment. The amount of arrears would run to about Rs. 25000/-. That is why we propose to give mandamus to the State to take back this loaned employee with back effect from October 23, 1967 and to pay him all his salary, emoluments and other benefits to which he is legally entitled in Government service where his lien was retained. Such a mandamus is given by the Supreme Court in K.R. Deo vs. Collector, Central Excise, AIR 1971 SC 1417 at p. 14.50 where after c cashing the order their Lordships declared that the servant should be treated as still continuing in service and should be paid his pay and allowances for the period he had been out of office. We also give a liberty to the servant concerned to mention if these directions are not carried out by the State Government within a period of two months from today. Such a liberty was also given ill Atlas Cycle Industries Case in (1971) 2 SCC 564 : AIR 1972 SC 121 . 13. We also give a liberty to the servant concerned to mention if these directions are not carried out by the State Government within a period of two months from today. Such a liberty was also given ill Atlas Cycle Industries Case in (1971) 2 SCC 564 : AIR 1972 SC 121 . 13. In the result, we allow both the Letters Patent Appeal and the Special C. A. and the rule in both the matters is made absolute only to the limited extent that it is declared that the effect of the resolution and the order of the Panchayat is only to terminate the loaned service of the concerned Government servant and that the said servant continues to remain Government servant notwithstanding the resolution and the order at Annexures-L and K. The State Government is further directed to pay all salary and emoluments and other benefits to which this servant is entitled in the Government service with back effect from October 23, 1967, within a period of two months from today. Liberty to mention to the servant concerned if the payment is not made by the State Government within that period. 14. While parting we would only say that during the pendency of this matter when contempt motion was taken out by the concerned servant the Panchayat had initially paid an amount of Rs. 2500/-. Thereafter when the matter was adjourned to enable the State Government to consider the legal position in order to amicably settle this matter, the Panchayat had further paid a sum of Rs. 1000/-. At the time of the stay order these amounts were required to be paid on the basis that they would be adjusted when the relative liability is fixed between the Panchayat and the State in this connection. Now we have finally determined the liability of the State in this connection. The Panchayat will therefore be entitled to get back these amounts from the State and the concerned servant will be paid the remaining amount on the basis of the aforesaid directions. Rule accordingly made absolute to this limited extent. The State shall pay costs of the servant concerned in all the proceedings while the Panchayat and State shall bear their own costs in all the proceedings. Order accordingly.