Gananand Jha v. State of Bihar — 1995 DIGILAW 333 (PAT)

JUDGMENT Nagendra Rai, J. The petitioner, an employee of Bihar Rajya Pool Nirman Nigam Ltd. (hereinafter referred to as the Nigam), has filed the present writ application for quashing the office order dated 3.9.1993 (Annexure-24) issued under the signature of the Managing Director of the Nigam in pursuance of a direction issued by the State Government contained in the order dated 12.1.1993, canceling the office order elated 13th January, 1993 (Annexure19) by which the petitioner was held to be senior to Respondent no. 5 after rejecting his representation. It has been further ordered, vide Annexure-24, that the decision with regard to inter se seniority between the petitioner and Respondent no. 5 will be taken after considering the matter afresh. 2. The Bihar Bridge Construction Corporation Ltd. was incorporated under the provisions of the Companies Act as Public Limited Company in the year 1975. On 30th June, 1978 its name was changed as Bihar Rajya Pool Nirman Nigam Ltd. it is a Government Company within the meaning of Section 617 of the Companies Act. 3. According to the petitioner, the Board of Directors in its meeting created several technical and non-technical posts. In the Head Office, two posts of Routine Clerks, six posts of Assistants, one post of Section Officer and one post of Secretary (non-technical) were created apart from other Class III and IV posts. A Lateral Road Project Wing functioning under the Road Construction Department was abolished by the Government and the posts of Routine Clerks, Assistants, Section Officers and Secretary (non-technical) were made available to the Nigam. The Nigam did not frame its own rules and regulations and it adopted the rules, regulations and instructions of the State Government with regard to service conditions of its employees. In the Headquarters establishment, the post of Assistant is a initial post and below that there is no other post in Class III. The power to appoint Assistants is vested in the Board of Directors of the Nigam under Article 80, sub-article 22 of the Articles of Association and the said power has been delegated by the Board to the Managing Director. 4. Respondent no. 5, Dayanand Prasad, worked as Routine Clerk from 12th December, 1975 to 4th May, 1976 in the Headquarter and by office order dated 5th May, 1976 he was appointed as Assistant purely on ad hoc basis (vide Annexure-2). In the year 1980. 4. Respondent no. 5, Dayanand Prasad, worked as Routine Clerk from 12th December, 1975 to 4th May, 1976 in the Headquarter and by office order dated 5th May, 1976 he was appointed as Assistant purely on ad hoc basis (vide Annexure-2). In the year 1980. six posts of typists were created in the Headquarters of the Nigam and applications were invited for appoint. ment to the said posts. The petitioner along with others applied for the said posts through Employment Exchange and after test the petitioner along with others were selected. The petitioner stood second in the test and was appointed on 24th May, 1980 to the post of typist (vide Annexure-6). In pursuance of which he joined the post on 26th May, 1980. 5. In the year 1981, apart from these six posts of Assistants the Nigam created two more posts of Assistants in the Headquarters Establishment. Thus, there became 8 posts of Assistants in the Headquarters Establishment. 6. According to the decision of the State Government, which has been adopted by the Nigam, 25 percent of the posts of Assistants are to be filled up from and amongst the Routine Clerks and Typists who possess requisite qualification, namely, Graduation, 25 percent are to be filled up from amongst the ministerial clerks, who are matriculates and the rest 50 percent are to be filled up from open market. The recruitment or appointment of the departmental employees is to be made on the basis of the limited competitive examination. A copy of the aforesaid Resolution of the State Government has been annexed as Annexure-8 to the writ application. The Nigam decided to fill up two posts of Assistants from the quota of Routine Clerks and Typist and took action in the direction. The Nigam sent the proposal to the Bureau of Public Enterprises, Department of Finance through the Road Construction Department for roster clearance. The Bureau of Public Enterprises, by letter dated 18th July, 1986 (Annexure-g), cleared the roster for two posts. Thereafter, the Nigam contacted the Subordinate Service Selection Board to conduct the examination, but it was informed by the said Board that they do not conduct such examination for the employees of the Board or the Corporation. The Bureau of Public Enterprises, by letter dated 18th July, 1986 (Annexure-g), cleared the roster for two posts. Thereafter, the Nigam contacted the Subordinate Service Selection Board to conduct the examination, but it was informed by the said Board that they do not conduct such examination for the employees of the Board or the Corporation. Thereafter, the Nigam, in view of the Government circular, decided to -hold a limited test for the appointment to the two posts of Assistants from and amongst the Routine Clerks and Typists possessing requisite qualification. Petitioner and Respondents no.5 were asked to appear in the limited examination, vide letter dated 7th October, 1985 (Annexure-10). There were only two persons who were eligible to appear in the said examination at that time, as no other Routine Clerk or Typist was eligible as per the Resolution of the State Government, as contained in Annexure-8. 7. On 13th October, 1985, the examination was conducted in which petitioner and respondent no. 5 appeared and the petitioner secured 74 percent marks, whereas. respondent no. 5 secured 60 percent marks. A copy of the marks list has been annexed as Annexure-11 to the writ application. It is also asserted that the said examination was conducted by a Committee constituted by the Nigam for the said purpose consisting of Secretary (Planning and Administration), Deputy Chief Engineer (Planning) and Secretary (Non-technical). Thereafter, the petitioner and respondent no. 5 were appointed to the post of Assistants by order dated 29.10.85 (Annexure-4). 8. It is further asserted on behalf of the petitioner that for determining the seniority the Government of Bihar has laid down a policy which is applicable in the Nigam also. The Circular containing the said policy decision was issued on 26th October, 1972, vide Annexure-12, which provides, inter alia, that the seniority of direct recruits shall be determined according to their position as recorded by the competent authority at the time of their first appointment. Earlier ad hoc appointment to the post is not to be considered for determining the inter se seniority. The petitioner and the respondent no. 5 maintained their position on the basis of the result in the limited test and, in the year 1991, one Sk. Mohammad Ali, Section Officer, was transferred to the parent department, i.e. Road Construction Department, and the petitioner being the senior most Assistant was made Incharge Section Officer. The petitioner and the respondent no. 5 maintained their position on the basis of the result in the limited test and, in the year 1991, one Sk. Mohammad Ali, Section Officer, was transferred to the parent department, i.e. Road Construction Department, and the petitioner being the senior most Assistant was made Incharge Section Officer. The matter with regard to the seniority between the petitioner and the respondent no. 5 was examined in the office of the Nigam and on the order of the Managing Director a provisional gradation list was prepared on 6th January, 1992 and that was served upon the petitioner and the respondent no. 5 inviting objections, if any, within a period of one month (vide' Annexure-15). In the said gradation list the petitioner was shown senior to respondent no. 5. Again on 8.1.1992 the period for inviting objections was extended from one month to three months, vide Annexure 15/A to the writ application. 9. Respondent no. 5 filed representation on 4th April, 1992, wherein, he claimed that as he was working on the post of Assistant for the last 91/2 years, Le., from 2 1976 before his appointment (vide Annexure-4), he should be declared senior to the petitioner, vide Annexure-16 to the writ application. The aforesaid representation was examined in the office of the Nigam in the light of the Government Circular concerning determination of inter se seniority and thereafter the petitioner was found to be senior to Respondent no. 5 and the Managing Director requested the Road Construction Department to obtain opinion from the Department of Personnel and Administrative Reforms, Government of Bihar, in the matter. The Road Construction Department examined the matter and found that as the selection has been made on the basis of the limited recruitment test by a duly constituted Selection Committee, their inter se seniority has to be decided on the basis of the merit list prepared by the Selection Committee and, according to the merit list the petitioner is senior to respondent no. 5. The Bureau of Public Enterprises as well as the Department of Personnel and Administrative Reforms also took the same view and taking into consideration the views of the three Departments of the Government the Nigam rejected the representation of respondent no. 5 and finally published the gradation list of Assistants on 13.1.1993 (Annexure-13). 10. 5. The Bureau of Public Enterprises as well as the Department of Personnel and Administrative Reforms also took the same view and taking into consideration the views of the three Departments of the Government the Nigam rejected the representation of respondent no. 5 and finally published the gradation list of Assistants on 13.1.1993 (Annexure-13). 10. After the issuance of the aforesaid order determining the seniority between the petitioner vis-a-vis the respondent no. 5, the Minister Incharge of the Road Construction Department called for the file on a buffsheet on 25th January, 1993. On the buffsheet itself the Minister cancelled the order dated 13th January, 1993, a copy of the order of the Minister on buff-sheet has been made Annexure-20 to the writ application. Thereafter the Minister again called for the relevant file and by order dated 26th August, 1993 (Annexure-22) held that respondent no. 5 is senior to the petitioner on the ground that respondent no. 5 was appointed earlier to the petitioner and the limited examination was not conducted according to law. In pursuance of the aforesaid order of the Minister, the order contained in Annexure-24 has been issued by the Managing Director cancelling the final seniority list by which the petitioner was shown senior to respondent no. 5. 11. Counter affidavits have been filed on behalf of the Nigam as well as on behalf of respondent no. 5. According to the counter affidavit of the Nigam, the Nigam is under the control of the Road Construction Department and, as such, the said department is quite competent to pass any order regarding Nigam. It is also stated that respondent no. 5 was appointed as Correspondence Clerk in the year 1973 in the office of the Superintending Engineer, National Highway Circle, Biharsharif and was posted in the National Highway Division, Nawadah. Thereafter, he was transferred to several places and from 12.12.75 to 4.5.76 he worked as Routine Clerk in the Nigam and, thereafter, appointed as an ad hoc Assistant in the Nigam in the year 1976. The petitioner was appointed on the post of typist in the year 1980. It is also asserted that a sub-committee was constituted in view of the resolution of the State Government dated 11.2.1985 with the approval of the Managing Director for conducting limited examination for the appointment to the post of Assistant in the Nigam. The petitioner and the respondent no. It is also asserted that a sub-committee was constituted in view of the resolution of the State Government dated 11.2.1985 with the approval of the Managing Director for conducting limited examination for the appointment to the post of Assistant in the Nigam. The petitioner and the respondent no. 5 appeared in the limited examination and the petitioner stood first and respondent no. 5 stood second. On the basis of the merit list of the examination, a provisional seniority list was circulated inviting objections, if any, and after receipt of the objection, a provisional seniority list was finalised with the approval of the Road Construction Department, Personnel and Administrative Reforms Department and Bureau of Public Enterprises and the same was published on 13.1.1993 (vide Annexure-22). Thereafter, the file was called for by the Minister, who cancelled the order dated 13.1.1993 in pursuance of which the impugned order, as contained in Annexure-24, has been issued. 12. It is also asserted that the services of respondent no. 5 were regularised as Assistant with effect from 20.10.85, that is the date when the petitioner and the respondent no. 5 both were appointed as Assistants. In brief, the Nigam has virtually admitted the case of the petitioner to the effect that in the limited examination conducted for the appointment to the post of Assistant from the departmental candidates, the petitioner stood first and, according to the Government Circular, he was treated senior to respondent no. 5 after consulting the concerned department of the Government and, therefore, the said order has been cancelled by the Minister. 13. The stand of respondent no. 5, as it appears from the counter affidavit and the supplementary counter affidavit is that he was appointed as Peon in the year 1972 in the National Highway Wing, PW.D., and in the year 1973 he was appointed as Correspondence Clerk. In the year 1975 the National Highway Wing merged in the Nigam and all the staff, ipso facto, became the employees of the Nigam. 14. In the Nigam there were two types of employees, namely, Deputationists and the employees who became the employees by virtue of merger. All the six posts of Assistants were manned by the deputationists. In the year 1976, out of six posts of Assistants one post became vacant and the respondent no. 14. In the Nigam there were two types of employees, namely, Deputationists and the employees who became the employees by virtue of merger. All the six posts of Assistants were manned by the deputationists. In the year 1976, out of six posts of Assistants one post became vacant and the respondent no. 5, who was working at that time as Correspondence Clerk, was appointed as Assistant on ad hoc basis, vide Annexure-2 to the writ application, and since then he has been working on the said post and getting his increment. The petitioner for the first time in the year 1980 was appointed as Typist in the Nigam. Respondent no. 5 admitted that in the year 1980 two more posts of Assistants were sanctioned in the Nigam and the Nigam decided to fill up those posts from amongst the clerks working under the Nigam. At that time, there were about 59 clerks in the Nigam. The aforesaid• decision was not communicated to the clerks working in the Nigam and it was the petitioner who was asked to appear in the limited examination. Respondent no. 5 was also asked to appear in the said examination not for the purpose of appointment but for the purpose of regularisation of his service. Respondent no. 5 does not dispute the assertion made on behalf of the petitioner that in the limited examination he secured less marks than the petitioner. However, he states that his seniority should be reckoned from 5.5.1976, the date when he was appointed as an Assistant on ad hoc basis, as his services have been regularised in the year 1985 and once his servic8s have been regularised, the entire length of his officiation will be counted for determining his seniority. 15. It is further asserted on behalf of the respondent no. 5 that the Minister of P.W.D. has complete control over the Nigam according to the rules of executive business , j framed by the Governor in exercise of power conferred under Article 166 (3) of the Constitution of India and in that capacity he has passed the impugned order. The respondent no. 5 has also challenged the holding of limited examination by the Nigam, as, according to the decision of the Road Construction Department dated 28.9.85, the Nigam was directed to make appointment on the basis of the recommendation of the Awar Seva Chayan Parishad. 16. The respondent no. 5 has also challenged the holding of limited examination by the Nigam, as, according to the decision of the Road Construction Department dated 28.9.85, the Nigam was directed to make appointment on the basis of the recommendation of the Awar Seva Chayan Parishad. 16. Learned counsel for the petitioner has challenged the order, as contained in Annexure-24, on two grounds, namely, the final gradation list determining the seniority of the' petitioner vis-a-vis respondent no. 5 has been cancelled by the Minister, Road Construction Department, without observing the principles of natural justice, in the sense that the order has been passed without affording an opportunity of hearing to the petitioner and, secondly, it has been submitted that the Nigam is a Public Limited Government Company governed by the Memorandum and' Articles of Association and that does not empower the Minister to interfere with the day to day administration of the Company. The power to appoint Assistants which also includes the power to determine seniority vests in the Board of Directors and the Board of Directors delegated the said power to the Managing Director and he has passed the order contained in Annexure-19 determining the seniority of the petitioner and the respondent no. 5 according to the relevant rules and the Minister has no jurisdiction to annul the same. 17. Learned counsel appearing for the Nigam as well as respondent no. 5 could not dispute the assertion made on behalf of the petitioner that the order was passed behind the back but asserted that it was not necessary to afford an opportunity of hearing to the petitioner in the facts of this case, as the final gradation list was prepared against the rule with regard to determination of seniority. It was also submitted that the Governor has power to issue directions with regard to the conduct of business of the Company and the Directors, as per the provisions of the Articles of Association of the Company and the Governor being the Constitutional Head of the Executive and he has to act on the aid and advice of the Council of Minister, the Minister, Road Construction Department, was competent to pass the impugned order in this case. 18. From the narration of the facts, it is clear that respondent no. 18. From the narration of the facts, it is clear that respondent no. 5 was working as an Assistant since 1976 on ad hoc basis and limited examination was held in the year 1984, in which the petitioner secured higher marks than respondent no. 5 and both were appointed as Assistants, vide Annexure- 4, on 29.10.1985. The provisional gradation list of seniority was prepared in which the petitioner was shown as senior and the same was finally approved, vide Annexure-19. According to the petitioner, as the appointment was made on the basis of the selection list prepared according to the Government Circular which has been adopted by the Nigam wherein he was shown senior to respondent no. 5. Whereas, according to respondent no. 5 as he was working since 1976 as an ad hoc Assistant his services have also to be counted from that date. By Annexure-4 he was not appointed but his services were regularised. 19. No doubt, the Nigam is a Government Company u/s 617 of the Companies Act and all its shares are held by the State Government, but that does not mean that it is a Wing or a Department of the Government. Under the provisions of the Companies Act it has framed its own Memorandum and Articles of Association. It has separate legal identity or character from that of its shareholders. The State Government cannot 'interfere with the day to day business of the Nigam. Its power of interference is limited and is controlled by the provisions of the Memorandum and the Articles of Association. The Memorandum deals with the main object for which the Company has been established and the Articles of Association contain the provisions with regard to different matters. The relevant articles of the Articles of Association are Articles 79, 80, 92 and 123. Article 79 deals with the general powers of the Company vested in Board. Article 80 gives the specific powers to Board. Clause (22) of the Article 80 runs as follows :- "To appoint and at their discretion remove or suspend such secretaries, accountants, officers, agents and servants as they may from time to time think fit and to determine their powers and duties and fix their salaries or emoluments and require security in such instances and to such amounts as they may think fit. Provided, however, that no post, the basic pay of which either exceeds Rs. Provided, however, that no post, the basic pay of which either exceeds Rs. 1600 per month or the maximum of the scale of which exceeds Rs. 1600 shall be created and filled without the prior approval of the Governor. Provided further that no appointment of foreign technical personnel to any post without any ceiling of salary to such personnel and also when such appointment is in broad conformity with the policy of the Government. So far as present case is concerned, admittedly, the provision regarding prior approval of the Governor is not applicable." 20. Article 92 contains the provision with regard to power of Governor. It provides, inter alia, that the Board of Directors shall reserve for the decision of the Governor any proposal for terms and conditions of service of the employees. Article 123 defines the rights of the Governor, which runs as follows :- "Notwithstanding anything contained in any of these Articles, the Governor in keeping with the statutory requirements of the Companies Act, 1956 may from time to time issue such directive as he may consider necessary in regard to the conduct of business of the Company or Directors thereof and in like manner may vary and annul any such directive. The Company shall give immediate effect to the directive so issued." The relevant Articles, quoted above, contain the provisions regarding the power and right of the Governor of the State with regard to the different matters of the Nigam. Under the Constitution of India, the Governor has to act on the aid and advice of the Council of Ministers except in regard to any function required by the Constitution to be exercised by the Governor in his discretion. The word 'Governor' has been mentioned in the Articles of Association as a Constitutional Head of the Executive. He has to exercise his power on the aid and advice of Council of Ministers to whom functions have been allotted according to rules of business made under Article 163 (3) of the Constitution of India. As stated in the counter affidavit, the Minister, Road Construction Department, has been empowered to pass necessary orders or directions with regard to Nigam in question. In that view of the matter, the Governor has to act under the aid and advice of the Minister, Road Construction Department with regard to the matters of Nigam to the extent permissible in law. In that view of the matter, the Governor has to act under the aid and advice of the Minister, Road Construction Department with regard to the matters of Nigam to the extent permissible in law. In other words, the Governor will act on the aid and advice of the concerned Minister with regard to the matters as mentioned in the Articles of Association. However, it is difficult to accept the stand of the respondents that the Nigam is under the control of the Road Construction Department and it can pass any order with regard to the same. As stated above, the Minister, Road Construction Department, has power to aid and advice the Governor only to the extent as provided in the Articles of Association. 21. As stated above, Article 80 (22) vests the power in the Board of Directors to appoint servants and officers and the only rider is that in a case where the basic pay of the post exceeds Rs. 1600/-per month or maximum of the scale of which exceeds Rs.1600/- then the said posts shall not be created and filled up without the prior approval of the Governor. It is an admitted fact that the post of Assistants was created according to law, as such provision is not attracted. It is also an admitted fact that the Board of Directors has vested the power to appoint Assistants and others in the Managing Director, in terms of Articles of Association (See Article 82). .22. A bare perusal of the entire Article 92 shows that the proposals which are to be reserved for the decision of the Governor relates to policy matters regarding sale etc. of the whole or substantially the whole of the undertaking of the Company, formation of subsidiary company, winding up of the Company, terms and conditions of the employees and other matters enumerated therein. The terms and conditions of service of the employees referred to in the said Article covers a case where terms and conditions are laid down by the Company with regard to all or particular grade or class of employees. It relates to policy matters regarding the terms and conditions of service. It does not cover determination of individual dispute regarding service where no general policy is involved. 23. It relates to policy matters regarding the terms and conditions of service. It does not cover determination of individual dispute regarding service where no general policy is involved. 23. Article 123 defines rights of the Governor and it provides that in regard to the conduct of business of the Company or Directors, the Governor may issue necessary directions. The words "business" has to be given the wider meaning in the sense that it cannot be confined to only commercial activities of the Nigam. The word 'conduct' with reference to the aforesaid Article means to manage or carryon and as such the words 'conduct of business' mean in relation to management of the business of the Nigam. Thus, the aforesaid Article empowers the Government to issue directions which are necessary for the proper management of the business and the directions with regard to the terms and conditions of the service of the employees will also be covered by the said Article. However, the question is as to what extent the Governor can issue directions under the aforesaid Articles. As stated above, it is a Government Company governed by the Memorandum and Articles of Association, it has a separate identity and if this article is interpreted to mean that the Governor has power under this article to interfere with regard to day to day administration, then the very object of creating the Nigam will be frustrated. Wade in his Treatise on Administrative Law (page 143, 5th edn.) observed : "There has to be a distinction between the broad policy and day to day administration, the former being the sphere in which the Government itself interfere and the latter belongs to the sphere of independent self management." 24. In my view, the aforesaid article empowers the Governor to issue directions with regard to conduct of business of the Company and the Board of Directors only with regard to the broad policy matters and not with regard to day to day administration. Even with regard to appointment, seniority, promotion etc. of the employees of the Nigam, the Governor could issue directions in the nature of broad policy and he cannot issue direction which amounts to interference in day to day administration. For example, the Governor can issue directions with regard to the appointment, promotion, seniority, dismissal etc. Even with regard to appointment, seniority, promotion etc. of the employees of the Nigam, the Governor could issue directions in the nature of broad policy and he cannot issue direction which amounts to interference in day to day administration. For example, the Governor can issue directions with regard to the appointment, promotion, seniority, dismissal etc. of the employees of the Nigam, if the same is being made contrary to the constitutional provisions or the same is made in excess of the requirement putting additional financial burden on the Nigam. But once the Nigam has followed the procedure applicable for appointment, determination of seniority etc. and passed the order then the Governor cannot interfere with the same as appellate authority though no question of policy is involved in the same. 25. In the present case, the question involved is not as to any policy matter with regard to the terms and conditions of the service of the employees. In this case, as stated above, the seniority has been determined after taking the opinion of the Road Construction Department, the Department of Personnel and Administrative Reforms, Government of Bihar and the Bureau of Public. Enterprises. It was a simple case of determination of the seniority of the employees for which the Nigam is a competent body. It is not the case of respondent no. 5 that there is any violation of any constitutional or statutory rules in determining the seniority of the employees. In that view of the matter, the Minister was not justified in interfering with the order passed by the Nigam, which, in my view, amounts to interference with the day to day business of the Nigam. Accordingly, the orders, as contained in Annexure 20 and 22, passed by the Minister cancelling the final gradation list and the consequential order, as contained in Annexure-24, passed by the Managing Director, are fit to be quashed on this ground alone. 26. In this case, admittedly, no opportunity of hearing was given to the petitioner by the Minister or the Managing Director before cancelling the order determining the seniority of the petitioner vis-a-vis respondent no. 5. Both the orders (contained in Annexures-22 and 24) are administrative one, but once the order has been passed treating the petitioner senior to respondent no. 5, the same could not be annuled without observing the principles of natural justice. 5. Both the orders (contained in Annexures-22 and 24) are administrative one, but once the order has been passed treating the petitioner senior to respondent no. 5, the same could not be annuled without observing the principles of natural justice. The order visits with civil consequences in the sense that the petitioner has been deprived of an order passed in his favour treating him senior to respondent no.5. Thus, the aforesaid orders are also vulnerable on the ground of non-observance of the principles of natural justice. 27. In the result, the application is allowed and the orders, as contained in Annexures-20, 22 and 26 are hereby quashed.