Dredging Corporation Of India ... vs Marrapu Sankara Rao
2022 Latest Caselaw 405 AP

    IN THE HIGH COURT OF ANDHRA PRADESH : AMARAVATI


HON'BLE MR. JUSTICE PRASHANT KUMAR MISHRA, CHIEF JUSTICE
                                  AND
        HON'BLE MR. JUSTICE M. SATYANARAYANA MURTHY


                   W.A.Nos.221 and 281 of 2020
                 (Proceedings through physical mode)

W.A.No.221 of 2020

Dredging Corporation of India Limited,
2nd Floor, Dredge House, Port Area,
Visakhapatnam - 530001,
Represented by its Managing Director,
through its Joint Manager (Legal),
Smt.V.Usha Rani
                                         .. Appellant/respondent No.2

Versus

Marrapu Sankara Rao, S/o M.Suryanarayana, Aged 55 years, R/o.49-36-14, Garlapati Residency, NGGOs Colony, Akkayyapalem, Visakhapatnam and 5 others.

                                                  ..    Respondents

W.A.No.281 of 2020

Marrapu Sankara Rao,
S/o M.Suryanarayana,
Aged 55 years, R/o.49-36-14,
Garlapati Residency,
NGGOs Colony, Akkayyapalem,
Visakhapatnam.

                                               .. Appellant/Petitioner
      Versus

Government of India, Ministry of Shipping,
Parivahan Bhavan, 1 Sansad Marg,
New Delhi - 110 001
Represented by its Secretary and 5 others.
                                                  ..    Respondents

Counsel for the Appellant     :
(W.A.No.221 of 2020)                Mr. Vadapalli Remesh
(W.A.No.281 of 2020)                Mr. Prakash Buddarapu

Counsel for respondents       :
(W.A.No.221 of 2020)                Mr. Prakash Buddarapu
(W.A.No.281 of 2020)                Mr. Vadapalli Ramesh
                                                                 CJ and MSM,J
                                                          was_221 and 281_2020



                           COMMON JUDGMENT
                                  Dt.28.01.2022
(Per M.Satyanarayana Murthy, J)

Aggrieved by the order dated 28.04.2020 passed by the learned

single Judge in W.P.No.7350 of 2019 the petitioner and respondent

No.2 therein filed these two appeals under Clause 15 of Letters Patent

as the learned single Judge allowed the writ petition in part. The writ

petitioner preferred Writ Appeal No.281 of 2020 against the disallowed

claim, respondent No.2 in the writ petition preferred Writ Appeal

No.221 of 2020 against the relief granted in favour of the writ

petitioner.

The parties to the appeals will hereinafter be referred as arrayed

before the learned single Judge for the sake of convenience and to

avoid confusion.

Marrapu Sankara Rao filed writ petition for issue of Writ of

Mandamus declaring the proceedings issued by respondent No.2

through its Company Secretary in Letter No.DCIL/MD/2019/638,

dated 11.03.2019 and Office Order No.24/2019 in

Ref.DCl/HR/41S00890/2019-59-B dated 23.04.2019 intimating to

the petitioner that his services ceased to be continued as Director

Operations and Technical with effect from 08.03.2019 (AN) as illegal,

arbitrary and violative of the Fundamental Rights guaranteed under

the Constitution of India, particularly violative of Articles 19 (1)(g) 21

and 14 of the Constitution of India apart from the conditions

stipulated under Share Purchase Agreement dated 08.03.2019

between the respondents, consequently set aside the proceedings in

Letter No.DCIL/MD/2019/638, dated 11.03.2019 and the

consequential Office Order No.24/2019 in CJ and MSM,J was_221 and 281_2020

Ref.DCl/HR/4/S00890/2019/59-B, dated 23.04.2019 issued by

respondent No.2 by directing the respondents particularly respondent

Nos.2 to 6 to continue the petitioner as Director (Operations and

Technical) with effect from the date of Share Purchase Agreement i.e.

08.03.2019 and to declare the action of respondent No.2 in not

allowing the petitioner to exercise the option of Lien in the post of

General manager in respondent No.2 Corporation and not allowing

the petitioner as Director Operations and Technical as illegal arbitrary

and unjust, consequently direct respondent No.2 to allow the

petitioner to exercise his option of Lien in the post of General

Manager.

The factual matrix of the case is that the petitioner was

appointed as Director (Operations and Technical) in respondent No.2

- Corporation in pursuance of the notification issued by respondent

No.1 in the year 2014 vide Office Order No.2/2015 in Ref.SS-

28012/03/2014-DCI, dated 08.05.2015 and the petitioner reported to

duty in respondent No.2 - Corporation on 01.06.2015. Taking note of

the above, the Board of Directors of the respondent No.2 Corporation

appointed the petitioner as Additional Director, and thereafter the

appointment was finalised by the Annual General Meeting as per the

provisions of the Companies Act with effect from the date of joining

i.e. 01.06.2015.

As per the notification, the post of Director (Operations and

Technical) is tenure based position having 5 years tenure from the

date of joining in the said post or date of superannuation or till

passing further orders, whichever is earlier. When the officer being

selected to such post, he will be allowed to complete his tenure as

notified and on such completion of the tenure of 5 years period, if he CJ and MSM,J was_221 and 281_2020

has service in his parent organisation i.e. respondent No.2 and in

case he was not given further extension to the post of Director, then

he will join in his parent organisation to serve the rest of the service

in his substantive post. Accordingly, the petitioner is entitled to claim

deemed lien with the respondent No.2 Corporation while continuing

as Management Nominee of respondent No.1 in the post of Director

(Operations and Technical). Thus, the petitioner is entitled to

continue in service till attaining superannuation i.e., May, 2024 as

per the rules and regulations of respondent No.1 and simultaneously,

he is eligible to occupy the post of Director for a period of 5 years.

While the matter stood thus, respondent No.1 intended to put

respondent No.2 - Corporation to 'strategic sale' by 100%

disinvestment of the shares of Government of India during the year

2017. There was a huge resistance from various circles to oppose the

same, respondent No.1 decided to operate the 'strategic sale‟ by

transferring its shares in favour of respondent Nos.3 to 6, which

formed as a consortium for the purpose. Accordingly, a share

purchase agreement was entered between the President of India

represented by respondent No.1 and the respondents 3 to 6 herein

namely, Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal

Nehru Port Trust and Deendayal Port Trust. In terms of the said share

purchase agreement, the total shares of the respondent No.1 to the

extent of 73.47% were transferred to respondent Nos.3 to 6.

Consequent to such transfer, respondent No.1 completely discharged

its investment in favour of the respondent Nos.3 to 6 and henceforth

respondent Nos.3 to 6 herein which are autonomous bodies under the

Government of India have become the owners of the respondent No.2

Corporation. In other words, instead of directly controlling respondent CJ and MSM,J was_221 and 281_2020

No.2 Corporation by respondent No.1, on entering into the Share

Purchase Agreement, indirectly respondent No.1 is controlling

through respondent Nos.3 to 6 herein and thereby the control of the

Government of India continued to operate.

In view of Share Purchase Agreement, the nature of ownership

alone was changed, but the services of all the work force including the

officers and the employees, continued to be the same including lien

existing, if any, deemed to be continued and no disturbance

whatsoever been stipulated under the Share Purchase Agreement.

The Share Purchase Agreement stipulates the continuation or

otherwise of the Directors, Employee Retention, Protection of

Employees, Employees Benefits etc. Clause 11.2 of the Share

Purchase Agreement specifically stipulates that the Purchasers shall

ensure that all the employees of the Company as on the Execution

Date shall continue to be in the employment of the Company and the

Purchasers shall, directly or indirectly, not retrench any employees of

the Company for a period of one year from the Closing Date other

than any dismissal or termination of employees of the Company from

their employment in accordance with the applicable staff regulations,

standing orders of the Company and Applicable law. Similarly, the

Purchasers shall not take any action disadvantage to their service

conditions taking away any existing benefits which are available prior

to the Closing Date. Thus, a conjoint reading of Clauses 11.2 and

11.3 makes it clear that it also protects any employee who is holding

lien also be saved and such employees are entitled to employment on

completion of service as Director. In the instant case, though the

petitioner was an employee of respondent No.2 Corporation, is

continuing in the very same Corporation as Director by respondent CJ and MSM,J was_221 and 281_2020

No.1 as its Nominee for a period of 5 years and on successful

completion he is entitled to re-join in his original position which he

was holding at the time in his parent organization.

It is further contended that as per Clause 11.1, the Purchasers

shall continue the appointment of the existing Whole Time Directors,

Independent Directors and Nominee Directors until the expiry of their

present term. However, post-closing Date, the Purchasers shall be

entitled to appoint Whole Time Directors and other directors in

accordance with Clause 7 and the Applicable Law in this regard.

In view of the said clause, the petitioner is entitled to continue

as Director, but he was asked to resign even before completion of 5

years tenure since his tenure was up to May, 2020. After resignation,

the petitioner intend to join in the parent company as Manager

(Operations/projects), he was not permitted to join though he is

having lien for five (5) years.

Clause 7.2A of the Share Purchase Agreement is only a

transitional provision, whereunder on change of the management, the

existing Directors of the Company will technically be converted as

Directors under new management and for that purpose they

technically submit their resignation but same is subject to Clause

11.1 so far as the Director is concerned and Clause 11.2 so far as

Employment is concerned. In any way, the petitioner is entitled to

continue as Director or in the alternative entitled to repatriate to his

substantive post in respondent No.2 - company. He is neither allowed

to rejoin in his substantive post i.e. Manager (Operations/projects)

nor allowed to continue as Director (Operations and Technical) in

violation of clause 11.1 of Share Purchase Agreement and it amounts

to violation of right of the petitioner guaranteed under Article 19 (1) CJ and MSM,J was_221 and 281_2020

(g), 21 and 14 of the Constitution of India, requested to issue a

direction as claimed in the writ petition.

Respondent No.2 filed counter admitting initial appointment of

the petitioner, later appointment as director in respondent No.2

corporation and resignation of the petitioner in terms of Clause 7.2 of

Share Purchase Agreement while supporting the action of the

respondents in all respects.

The specific contention of the respondents is that pursuant to

clause 7.2A of the Share Purchase Agreement, the petitioner along

with all other directors tendered resignation on 08.03.2019 to the

post of Director (Operations and Technical) of respondent No.2 with

effect from 08.03.2019. As requested in his resignation letter, the

same was put up to the Board of Directors in the Board Meeting of

respondent No.2 held on 08.03.2019 in order to consider for whole-

time directorship. Purchasers sought the vigilance profile of the

whole-time directors of the Seller, who had resigned on 08.03.2019

from the Vigilance Department and in the case of the petitioner,

Ministry of Shipping in consonance with the recommendations of the

Central Bureau of Investigation (CBI) served major penalty charge

sheet on him and the proceedings are under progress. As such,

petitioner was not considered for re-appointment by the purchasers

and the Nomination and Remuneration Committee of the New Board

approved for settlement of dues of the petitioner as per the Share

Purchase Agreement. As such petitioner herein ceased to be a

Director of the company on and from 08.03.2019. In this regard,

Letter No.DCIL/MD/2019 dated 11.03.2019 was issued to the

petitioner and his name was deleted from the rolls of the Corporation CJ and MSM,J was_221 and 281_2020

vide Office Order No.24/2019 in Ref. DCI/HR/4/S00890/2019/59-B

dated 23.04.2019.

To settle the terminal benefits of the petitioner, vigilance

clearance was sought from the Ministry of Shipping through Vigilance

Department. Ministry of Shipping vide letter No.C-31016/9/2019-Vig.

dated 05.04.2019 informed that on the basis of CBI investigation

report in RC 17(A)2015 case and as decided by the Disciplinary

Authority, charge sheet for major penalty against the petitioner has

been issued on 18.01.2019 and disciplinary proceedings are pending

against him. Therefore, the payment of terminal benefits was not

completed and the respondents agreed to release the same after

completion of enquiry.

The petitioner while taking the charge as Director (Operations

and Technical), he did not exercise his option for Lien to the post of

General Manager (Project Engineering) which he had held prior to

taking over charge as Director (Operations and Technical). As per DPE

OMs No.23(9)/93-GM dated 31.01.1994 No.23/19/98/GL-014/0PE

(GM) dated 13.01.1989 and F.No.16(10)12010-GM dated 27.11.2018,

below Board level employees of CPSEs be permitted to retain lien on

their below board level post for a period of 6 years when they are

selected and appointed to Board level posts in the same or other

CPSEs. The Government of India, Department of Public Enterprises

issued OM dated 31.01.1994 directing that the Public Enterprises

should permit retention of lien for a period of not exceeding 3 years

for employees holding posts below Board level when they are

appointed to the post of Board level within the same PSU or any other

Central PSU, Government of India, subsequently vide OM dated

13.01.1999, extended the maximum period of 3 years for retention of CJ and MSM,J was_221 and 281_2020

lien to 5 years. By further OM dated 27.11.2018 the maximum period

for retention has been extended to 6 years. Thus as per OM dated

31.01.1994, read with OM dated 31.01.1999 and 27.11.2018, below

Board level employee is entitled for retention of lien for a period up to

6 years when they are appointed to any post at the Board level. The

use of the words 'should permit' indicates that an application needs to

be made by the concerned employee for retention of lien and that

permission to retain lien can be granted by the CPSE. This is because

in certain cases employees may not be interested in retaining lien.

Therefore retention of lien is not deemed or automatic but subject to

making an application and granting of such application by the CPSE.

In the present case, the petitioner has failed to make an application

for retention of lien in the Corporation after his appointment as

Director (Operations and Technical). Therefore, in the absence of

exercise of option, the petitioner is not entitled to claim any lien to the

post of General Manager (Project Engineering) in the parent

Corporation. Thus, the petitioner never interested to retain his lien for

the post of General Manager (Project Engineering). In fact, petitioner,

who was also holding the additional charge of Head of the Department

(Human Resources) apart from General Manager (Project Engineering)

had, himself, initiated the recruitment process for filling up the post

of General Manager (Project Engineering) through open

advertisement. Accordingly, the said post of General Manager (Project

Engineering) which the petitioner held prior to his selection as

Director, was filled up through direct recruitment. The question of

petitioner being repatriated as General Manager (Project Engineering)

does not arise since the said post is already filled up by the petitioner

himself being the in-charge of Head of the Department (Human CJ and MSM,J was_221 and 281_2020

Resources). Thus, the petitioner is disentitled to claim lien over the

post of General Manager (Project Engineering).

The respondents specifically contended that the final retiral

benefits were not settled to the petitioner due to pendency of Vigilance

proceedings etc. and made several other allegations about the

retention of public property, which are not relevant for the purpose of

deciding the present controversy. Finally, the respondents requested

to dismiss the writ petition.

Learned single Judge, upon hearing argument of both the

counsel, allowed the writ petition in part granting the following relief:

"For all the reasons mentioned above, the writ petition is partly allowed. It is held that the petitioner is entitled to continue in the post of General Manager (Operations) in the 2nd respondent DCI till his superannuation and as per the rules /regulations. As a result of this order, the petitioner is entitled to all the benefits that would naturally/consequentially flow and arise."

Aggrieved by the order of learned single Judge, the petitioner

and respondent No.2 filed these two appeals. The writ petitioner filed

Writ Appeal No.281 of 2020 aggrieved by the denial of relief to the

petitioner to continue him as Director in the Corporation after his

resignation to the post of Director (Operations and Technical). The

writ petitioner raised specific ground that the learned single Judge did

not consider the clauses 7.2A, 7.4 and 11 of Share Purchase

Agreement (SPA) dated 08.03.2019 whereunder the

appellant/petitioner is entitled to continue as Director of respondent

No.2 - Corporation, but simply relying on clauses 7.2A and 11.1

passed the impugned order denying part of the relief erroneously. If

the clauses 7.2A, 7.4 and 11 are considered conjointly, learned single

Judge ought to have allowed the prayer for continuation of the CJ and MSM,J was_221 and 281_2020

petitioner as Director in respondent No.2 Corporation after purchase

of the Corporation.

Learned single Judge also did not consider the balance tenure

of writ petitioner for a period 15 months and mainly concentrated on

interpretation of various clauses in Share Purchase Agreement

committed grave error, requested to grant relief as claimed while

ordering to continue the petitioner as Director (Operations and

Technical).

Respondent No.2 filed Writ Appeal No.221 of 2020 aggrieved by

the relief granted to the petitioner on various grounds. The main

grounds urged before this Court are that when the petitioner tendered

resignation to the post of Director (Operations and Technical) in

pursuance of terms and conditions of „share purchase agreement‟ and

accepted by the Corporation, he cannot claim lien over the post which

he was holding prior to his appointment as Director. Apart from that

the petitioner did not exercise option to retain his lien over the post

which he was holding prior to his appointment as Director, so also

another person was appointed for the post of General Manager

(Project Engineering) by the petitioner himself being the in-charge of

the Head of Department (Human Resources). Practically there is no

vacant post in the cadre of General Manager (Project Engineering),

therefore, the question of repatriating the petitioner as General

Manager (Project Engineering) does not arise as the petitioner waived

his right of lien over the post of General Manager (Project

Engineering), requested to set aside the relief granted by the learned

single Judge and dismiss the writ petition.

During hearing, Sri A.Satya Prasad, learned senior counsel for

the writ petitioner, contended that the learned single Judge on CJ and MSM,J was_221 and 281_2020

misconstruing or on wrong interpretation of various clauses in the

Share Purchase Agreement, denied the relief of continuation of

petitioner in the company as Director (Operations and Technical),

requested to re-appreciate various clauses in the Share Price

Agreement and pass an order directing respondent No.2 to continue

the petitioner as Director (Operations and Technical) in respondent

No.2 Corporation for the remaining period of 15 months out of 5 years

tenure as Director.

Sri M.Surender Rao, learned senior counsel, for respondent

No.2 would contend that when the petitioner himself resigned to the

post of Director (Operations and Technical) in terms of Share

Purchase Agreement, he is disentitled to claim lien over the post of

General Manager (Project Engineering) and that he did not opt for

continuation of lien over the said post. When the petitioner did not

exercise his option to continue lien over the post of General Manager

(Project Engineering), he cannot claim lien over the said post and

repatriation to the original post in the corporation.

He further contended that the post of General Manager (Project

Engineering) was already filled, and the petitioner is one of the

members in the selection committee being in-charge of Head of the

Department (Human Resources). Thus, no vacant post in the cadre of

General Manager (Project Engineering) as on date, in such case the

question of taking the petitioner to the post of General Manager

(Project Engineering) does not arise, requested to dismiss the writ

petition in toto allowing the appeal filed by respondent No.2.

Sri M.Surender Rao, learned senior counsel, for respondent

No.2, also brought to our notice about the pendency of vigilance CJ and MSM,J was_221 and 281_2020

enquiry against the petitioner on serious allegations and contended

that he cannot be repatriated to the original post of General Manager.

Considering rival contentions, perusing the material available

on record, the points need be answered by this Court are as follows:

(1) Whether the writ petitioner is required to exercise any option in terms of Standard Terms and Conditions for 2017 Pay Scales, Government of India? If not, whether the lien on the post is absolute right, consequently the petitioner is entitled to claim lien over the post of General Manager (Project Engineering) in respondent No.2 Corporation?

(2) Whether the petitioner is entitled to claim retention as Director (Operations and Technical) in respondent No.2

- Corporation in terms of Share Purchase Agreement?

(3) If point Nos.1 and 2 are decided in affirmative, whether the order of learned single Judge be sustained?

P O I N T No.1:

The major contention of the petitioner is that he is entitled to

claim lien over the post of General Manager (Project Engineering) as

per the terms and conditions of Share Purchase Agreement and

Standard terms and conditions for 2017 pay scales, Government of

India. Whereas, respondent No.2 vehemently contended that since the

petitioner failed to exercise option to continue lien over the post of

General Manager (Project Engineering), he is disentitled to claim lien

over the said post. At the same time, when the General Manager

(Project Engineering) was appointed by the petitioner himself,

question of repatriation to the post of General Manager (Project

Engineering) does not arise. On this ground also, the claim of the

petitioner has to be thrown out in toto.

CJ and MSM,J was_221 and 281_2020

In view of the little controversy, it is appropriate to examine the

issue with reference to Standard terms and conditions for 2017 pay

scales, Government of India to find out whether the petitioner is

required to exercise option, if not, disentitled to claim any lien over

the post of General Manager (Project Engineering). Before going to

Standard terms and conditions for 2017 pay scales, Government of

India, we shall now examine what the word 'lien' means. The word

'lien' originally means "binding"; it derived from the Latin word

„ligamen‟. Its lexical meaning is "right to retain". The word 'lien' is now

variously described and used under different context such as

'contractual lien', 'equitable lien', 'specific lien', 'general lien', 'partners

lien', etc. etc. in Halsbury's Laws of England, Fourth Edition, Volume

28 at page 221, para 502 it is stated :

In its primary or legal sense "lien" means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims are satisfied.

In Stroud's Judicial Dictionary, 5th Edition, Volume 3 at page

1465 the following passage is found:

LIEN. (1) A lien-(without effecting a transference of the property in a thing)- is the right to retain possession of a thing until a claim be satisfied; and it is either particular or general. So, as regards Scotland, "lien" is defined as including "the right of retention" (Sale of Goods Act 1893 (c. 71), Section 62), or it "shall mean and include right of retention" (Factors (Scotland) Act 1890 (c.

40), Section 1) see here on Great Eastern Railway v. Lords Trustees (1909) A.C.

109.

In words and Phrases, Permanent Edition Vol. 25 the definition

of word 'lien' when used to explain the equitable lien, is given thus:

A 'lien' from a legal standpoint, embodies the idea of a deed or bond, and necessarily implies that there is something in existence to which it attaches.

At page 393 of the same Volume it is stated:

CJ and MSM,J was_221 and 281_2020

The word 'lien' has a well-known signification. In law it signifies an obligation, tie, or claim annexed to or attaching upon any property, without satisfying which such property cannot be demanded by its owner, vide Storm v. Waddell, N.Y.,2 Sandf. Ch. 494, 507, 508.

Again at page 399 of the same Volume it is stated:

Lien" is a term of very large and comprehensive signification, but which never imports more than security, vide Mobile Building & Loan Ass'n v. Robretson, 65 Ala. 382, 383.

In Black's Law Dictionary, 6th Edition, at page 922 the following passage is found:

The word 'lien' is a generic term and, standing alone, includes liens acquired by contract or by operation of law.

Lien represents the right/title of a Government employee to

hold a regular post, whether permanent or temporary, either

immediately or on the termination of the period of absence. The

benefits of having a lien in a post/service/cadre is enjoyed by all,

officers who are confirmed in the post/service/cadre of entry or who

have been promoted to a higher post declared as having completed

the probation where it is prescribed, or those who have been

promoted on regular basis to a higher post where no probation is

prescribed under the rules, as the case may be.

The above right/title will, however, be subject to the condition

that the junior-most person in the cadre will be liable to be reverted to

the lower post/service/cadre if at any time the number of persons so

entitled is more than the posts available in that cadre/service. For

example, if a person who is confirmed or whose probation in a higher

post has been declared as having been completed or one who is

holding a higher post for which there is no probation on a regular

basis, reverts from deputation or foreign service and if there is no

vacancy in that post/service/cadre to accommodate him, the junior-

CJ and MSM,J was_221 and 281_2020

most person will be reverted. If, however, this officer himself is the

junior-most, he will be reverted to the next lower post/service/cadre

from which he was earlier promoted. (Vide: Office Memorandum

No.18011/1/86-Estt.(D) dated 28.03.1988).

A Government servant who has acquired a lien on a post

retains a lien on that post-

(a) while performing the duties of that post:

(b) while on foreign service, or holding a temporary post

or officiating in another post;

(c) during joining time on transfer to another post;

unless he is transferred substantively to a post on lower

pay, in which case his lien is transferred to the new

post from the date on which he is relieved of his duties in

the old post;

(d) while on leave; and

(e) while under suspension.

A Government servant on acquiring a lien on a post will cease

to hold any lien previously acquired on any other post.

If a permanent employee is selected on the basis of his

application for posts in other Central Government Department/

Offices/State Government, his lien may be retained in the parent

department for a period specified in the Office Memorandum, but . If

the employee concerned is not permanently absorbed within a period

specified from the date of his appointment in the new post, he should

immediately on expiry of the period, either resign from the service or

revert to his parent cadre.

CJ and MSM,J was_221 and 281_2020

In view of the specific contention, it is now necessary to advert

to the Standard terms and conditions for 2017 pay scales,

Government of India. Clause 1.18 is relevant clause, which deals with

lien, which we extracted hereunder for better appreciation.

"1.18 Lien: In case, he/she was holding a below board level post before his/her appointment to the board level post in CPSE, he/she will retain lien on their below board level post, if applicable, as per the extant guidelines of DPE/CPSE concerned.

In respect of any other item, concerning him/her which is not covered in preceding paras, he/she will be governed by the relevant rules/instructions of the CPSE concerned/Government."

Respondent No.2 contended that Government of India,

Department of Public Enterprises (DPE) vide Office Memorandum

No.23 (9)/93-GM dated 31.01.1994 directed that below board level

employee shall be entitled to retain lien initially for a period of not

exceeding 3 years, which is as follows:

It has now been decided that a uniform policy should be followed by all the PSEs in regard to retention of lien of their employees when selected and appointed to board level posts in the same PSE or in any other Central PSE. Accordingly, the public sector enterprises should permit retention of lien for a period not exceeding three* years to their employees holding posts below board level when they are appointed to posts at the board level within the same PSE or in any other Central PSE. The lien will automatically stand terminated at the conclusion of the three* year period. This decision will have prospective effect only.

Subsequently, the period of retention of lien has been extended

to five years vide DPE OM No.23/19/98/GL-014/DPE (GM) dated

13.01.199 and to six years vide OM F.No.16(10)/2010-GM dated

27.11.2018.

Taking advantage of the words „should permit‟ used in the said

office memorandum, respondent No.2 contended that the words CJ and MSM,J was_221 and 281_2020

„should permit‟ mean that only respondent No.2 has to permit the

employee for retention of lien.

However, learned single Judge did not agree with this

contention on harmonious construction of language employed in

Office Memorandum No.23 (9)/93-GM dated 31.01.1994, DPE OM

No.23/19/98/GL-014/DPE (GM) dated 13.01.199 and OM

F.No.16(10)/2010-GM dated 27.11.2018. Even after perusal of Office

Memorandum No.23 (9)/93-GM dated 31.01.1994, DPE OM

No.23/19/98/GL-014/DPE (GM) dated 13.01.199 and OM

F.No.16(10)/2010-GM dated 27.11.2018, we find no such clause

giving option to the employee to exercise lien when he/she deputed to

foreign service or any other service. In the absence of such clause, the

contention of respondent No.2 that the petitioner failed to exercise

lien, thereby not entitled to claim lien is without any merit.

When the petitioner was working as General Manager (Project

Engineering), which is below board level post, he was appointed as

Director (Operations and Technical) and his services were regularised

as Director (Operations and Technical) in the board of directors. Thus,

it is a regular post though it is a period of five (5) years or till

termination, whichever is earlier. A similar or identical question came

up before the Apex Court in "Dr.L.P. Agarwal v. Union of India

(UOI)1", where Dr.L.P.Agarwal was appointed as a Professor of

Ophthalmology and the Director of the Institute. It was a composite

appointment. Thereafter, when he was compulsorily retired as a

Professor, the question arose: whether his tenure post as a Director

has also automatically come to a terminus? In that behalf, the Court

AIR1992SC1872 CJ and MSM,J was_221 and 281_2020

had considered the question and had held that even an outsider (not

an existing employee of AIIMS) can be selected and appointed to the

post of Director. Can such person be retired pre-maturely to the post

of director? The Apex Court held that the appointment to the post of

Director is governed by the Fundamental Rules and he is independent

of the tenure which he holds in any other post either on permanent or

temporary basis. Accordingly, on his ceasing to be a Director, he does

not have the right to fall back upon the previous permanent post held

by him as Professor and Head of the ENT Department. The

observation of the Apex Court is extracted hereunder for better

appreciation:

We have given our thoughtful consideration to the reasoning and the conclusions reached by the High Court. We are not inclined to agree with the same. Under the Recruitment Rules the post of Director of the AIIMS is a tenure post. The said rules further provide the method of direct recruitment for filling the post. These service-conditions make the post of Director a tenure post and as such the question of superannuating or prematurely retiring the incumbent of the said post does not arise. The age of 62 years provided under Proviso to Regulation 30(2) of the Regulations only shows that no employee of the AIIMS can be given extension beyond that age. This has obviously been done for maintaining efficiency in the Institute-Services. We do not agree that simply because the appointment order of the appellant mentions that "he is appointed for a period of five years or till he attains the age of 62 years", the appointment ceases to be to a tenure-post. Even an outsider (not an existing employee of the AIIMS) can be selected and appointed to the post of Director. Can such person be retired prematurely curtailing his tenure of five years? Obviously not. The appointment of the appellant was on a Five Years Tenure but it could be curtailed in the event of his attaining the age of 62 years before completing the said tenure. The High Court failed to appreciate the simple alphabet of the service jurisprudence. The High Court's reasoning is against the clear and unambiguous language of the Recruitment Rules. The said rules provide "Tenure for five years inclusive of one year probation" and the post is to be filled "by direct recruitment". Tenure means a term during which an office is held. It is a condition of holding the office. Once a person is appointed to a tenure post, his appointment to the said office begins when he joins and it comes to an end on the completion of the tenure unless curtailed on justifiable grounds. Such a person does not superannuate, he only goes out of the office on completion of his tenure. The question of prematurely retiring him does not arise. The CJ and MSM,J was_221 and 281_2020

appointment order gave a clear tenure to the appellant. The High Court fell into error in reading "the concept of superannuation" in the said order. Concept of superannuation which is well understood in the service jurisprudence is alien to tenure appointments which have a fixed life span. The appellant could not therefore have been prematurely retired and that too without being put on any notice whatsoever. Under what circumstances can an appointment for a tenure be cut short is not a matter which requires our immediate consideration in this case because the order impugned before the High Court concerned itself only with premature retirement and the High Court also dealt with that aspect of the matter only. This court's judgment in Dr. Bool Chand v. The Chancellor Kurukshetra University (1968)IILLJ135SC relied upon by the High Court is not on the point involved in this case. In that case the tenure of Dr. Bool Chand was curtailed as he was found unfit to continue as Vice-Chancellor having regard to his antecedents which were not disclosed by him at the time of his appointment as Vice-Chancellor. Similarly the judgment in Dr. D.C. Saxena v. State of Haryana (1987)IILLJ360SC has no relevance to the facts of this case.

The Apex Court in "S.K. Kacker v. All India Institute of

Medical Sciences2" considered the same principle. Few facts of the

said case are necessary for better appreciation of the law and its

application to the present facts of the case.

One Dr.S.K.Kacker was appointed as professor and Head of

ENT Department. Later, he was selected and appointed as director of

AIIMS. It is also an admitted position that any Professor in India is

entitled to apply for and seek selection to the post of Director. It is a

selection post to be filled by competition in the open market.

Therefore, once a Director is selected and appointed with the

concurrence of the Central Government, it becomes an independent

permanent appointment. But the contention of the petitioner therein

was that the post of director is on temporary basis as it is for tenure

and after completion of tenure, he is entitled to claim original post of

Professor and Head of ENT department in AIIMS. This contention was

rejected by the Apex Court and held that the Director of AIIMS is a

(1996)10SCC734 CJ and MSM,J was_221 and 281_2020

permanent post; as the petitioner is a permanent Government servant

governed by the Fundamental Rules, he cannot hold two substantive

posts at the same time, namely the post of Professor and Head of the

Department and also the post of Director. Further, when the

petitioner was appointed as director and his services were regularised

in the post of Director, he cannot claim lien over the original post of

Professor, Head of the ENT department. Thus, the Apex Court is of

the opinion that the High Court was right in holding that the

Dr.S.K.Kacker cannot revert as Professor and Head of the ENT

Department, on his ceasing to be the Director of AIIMS.

Finally, the Apex Court rejected the contention of Dr.S.K.Kacker

while upholding the order of the High Court holding that both the

posts are substantive posts and the Dr.S.K.Kacker cannot fall back on

the original appointment of Professor, Head of the ENT Department.

The same principle is applicable even to the present facts of the

case for the reason that the petitioner was appointed as General

Manager (Project Engineering) based on the notification issued by

respondent No.2 and he was selected in the process of selection.

Therefore, he was holding substantive post of General Manager

(Project Engineering). Later, he was appointed as Director (Operations

and Technical) in pursuance of the notification No.7/3/2014-PESB

dated 23.05.2014. As per the said notification, any person can be

appointed to the post of Director, not the employee working in

respondent No.2 Corporation alone. Therefore, on appointment as

Director (Operations and Technical) and regularisation of services as

Director, the petitioner is ceased to hold original substantive post of

General Manager (Project Engineering) as he cannot hold two CJ and MSM,J was_221 and 281_2020

substantive posts at a time i.e. General Manager (Project Engineering)

and Director (Operations and Technical). When he tendered technical

resignation in terms of Share Purchase Agreement, he is not ceased to

be the Director for all practical purposes since the resignation is

purely technical in nature for the purpose of compliance of terms and

conditions of Share Purchase Agreement. Though he ceased to be a

director either on completion of 5 years tenure or before completion of

5 years, he is not entitled to claim lien over the below board level post

i.e. General Manager (Project Engineering) in view of the law laid down

by the Apex Court in "Dr.L.P. Agarwal v. Union of India (UOI)" and

"S.K. Kacker v. All India Institute of Medical Sciences" (referred

supra).

As per the notification No.7/3/2014 -PESB dated 23.05.2014,

respondent No.2 invited applications for the post of Director

(Operations and Technical) and also specified the minimum age,

qualifications, pay-scale and duration of appointment etc.

In response to the said notification, several persons appeared

for interview, out of 10 persons interviewed, first four persons from

respondent No.2 Corporation and other six members i.e. Davinder

Wadehra, Additional GM, SJVNL, Gaddam David, Additional GM,

PFC, S.R.Varma, GM, HSL, M.V.Rao, GM, BEML, P.K.Saxena, Joint

GM, HMT (MT) and CMDE A.N.Sonsale, MOD from different

enterprises. Thus, any person including an outsider is entitled to

apply for the post of Director (Operations and Technical) and the

petitioner was selected ultimately. Therefore, the principle laid down

in "S.K. Kacker v. All India Institute of Medical Sciences"

(referred supra) is directly applicable to the present facts of the case.

CJ and MSM,J was_221 and 281_2020

Learned single Judge decided that the petitioner is entitled to

claim lien over the below board level post i.e. General Manager

(Project Engineering) without considering his regularisation in the

post of Director (Operations and Technical), which is a substantive

post. Hence, the petitioner is not entitled to hold two substantive

posts at a time and when his services are regularised in substantive

post, he loses his right to claim lien over the below board level post

i.e. General Manager (Project Engineering).

Learned single Judge did not consider automatic termination of

lien over the original post consequent upon the regularisation of

services of petitioner as Director (Operations and Technical).

Therefore, the conclusion arrived by the learned single Judge that the

petitioner is entitled to claim lien over the below board level post i.e.

General Manager (Project Engineering) and the direction issued to

continue the petitioner in the said post is an illegality. In view of the

law laid down by the Apex Court in "S.K. Kacker v. All India

Institute of Medical Sciences" (referred supra), the petitioner is not

entitled to claim lien over the post of General Manager (Project

Engineering) consequent upon regularisation of his services as

Director (Operations and Technical), but the learned single Judge

erroneously arrived at such conclusion, thereby the order of the

learned single Judge is liable to be set aside.

In view of our foregoing discussion, we hold that the petitioner

ceased to be a General Manager (Project Engineering), which is below

board level post, consequent upon his regularisation in a substantive

post of Director (Operations and Technical) as the petitioner cannot

continue in two substantive posts, thereby disentitled to claim lien CJ and MSM,J was_221 and 281_2020

over the post of General Manager (Project Engineering). Accordingly,

the point is answered in favour of the respondents and against the

petitioner.

P O I N T No.2:

The writ petitioner preferred a separate appeal aggrieved by the

part of the order passed by the learned single Judge declining to grant

2nd part of relief i.e. continuing as Director for the remaining period of

15 months out of 5 years tenure.

Learned single Judge interpreted the terms of Share Purchase

Agreement more particularly Clause 7.2A and 11.1 applying the

principle laid down by the Apex Court in "DLF Universal Ltd. V.

Director, Town and Country Planning, Haryana 3", and

concluded that the petitioner is disentitled to claim continuation of

service as Director (Operations and Technical) in respondent No.2 -

Corporation.

Aggrieved by the finding recorded by the learned single Judge,

the writ petitioner preferred an appeal on various grounds more

particularly contending that various clauses in Share Purchase

Agreement were not appreciated properly.

Undoubtedly, the consortium of respondent Nos.3 to 6 entered

into Share Purchase Agreement with respondent No.2 and purchased

entire shares in respondent No.2 Corporation and the consortium

became the owner of respondent No.2 though it is being run by

respondent No.2 itself. Clause 7.2A and 11.1 are the relevant clauses,

which deals with the issue relating to „Director‟. Hence, it is apposite

AIR 2011 SC 1463 CJ and MSM,J was_221 and 281_2020

to extract those two clauses for better appreciation. Accordingly, they

are extracted hereunder.

Clause 7.2A is as follows:

7.2A. On the closing date, the Directors of the Company nominated by the Seller shall tender their resignation and the Whole Time Directors shall be eligible for re-appointment. The Purchasers shall appoint its nominees on the Board to replace the directors who have resigned."

Clause 11.1 is as follows:

11.1 Directors: The Purchasers shall continue the appointment of the existing Whole Time Directors, Independent Directors and Nominee Directors until the expiry of their present term. However, post-Closing Date, the Purchasers shall be entitled to appoint Whole Time Directors and other directors in accordance with Clause 7 and the Applicable Law in that regard.

Clause 7.2A consists of two limbs. The first limb deals with

resignation of directors nominated by respondent No.2 and also

specifies that the whole time directors are eligible for re-appointment.

Second limb permits the purchasers i.e. respondent Nos.3 to 6 to

appoint its nominees on the Board to replace the directors who have

resigned. Thus, absolute right is conferred on respondent Nos.3 to 6

to appoint its nominees on the Board to replace the directors who

have resigned, though the resigned directors are eligible for re-

appointment.

In view of the language employed in Clause 7.2A, more

particularly the word „shall‟ in two limbs of Clause 7.2A, Board of

Directors on the closing date mandatorily resign to their post and the

purchasers respondent Nos.3 to 6 shall appoint their own directors in

the place of resigned directors. Whereas, clause 11.1 mandates

continuation of existing Whole Time Directors, Independent Directors CJ and MSM,J was_221 and 281_2020

and Nominee Directors until the expiry of their present term.

However, as on closing date, the purchasers i.e. respondent Nos.3 to 6

are entitled to appoint Whole Time Directors and other directors in

accordance with Clause 7 and the applicable law in that regard.

Thus, clause 7.2A and 11.1 of Share Purchase Agreement are

totally inconsistent and irreconcilable with one another. Even two

limbs in Clause 7.2A are irreconcilable.

Learned single Judge based on the law declared in "DLF

Universal Ltd. V. Director, Town and Country Planning,

Haryana" (referred supra), regarding interpretation of contract,

concluded that the contract should be read in its entirety. The

principle referred in "DLF Universal Ltd. V. Director, Town and

Country Planning, Haryana" (referred supra), is extracted

hereunder.

11. It is settled principle in law that a contract is interpreted according to its purpose. The purpose of a contract is the interests, objectives, values, policy that the contract is designed to actualize. It comprises joint intent of the parties. Every such contract expresses the autonomy of the contractual parties' private will. It creates reasonable, legally protected expectations between the parties and reliance on its results. Consistent with the character of purposive interpretation, the court is required to determine the ultimate purpose of a contract primarily by the joint intent of the parties at the time the contract so formed. It is not the intent of a single party; it is the joint intent of both parties and the joint intent of the parties is to be discovered from the entirety of the contract and the circumstances surrounding its formation.

CJ and MSM,J was_221 and 281_2020

Learned single Judge also adverted to the law laid down in

"Radha Sundar Dutta v. Mohd. Jahadur Rahim4" and "India

Trade Promotion Organisation v. International Amusement

Limited5" . In "Radha Sundar Dutta v. Mohd. Jahadur Rahim"

the Apex Court held that if, in fact, there is a conflict between the

earlier clause and the later clauses and it is not possible to give effect

to all of them, then the rule of construction is well established that it

is the earlier clause that must override the later clauses and not vice

versa.

In "Forbes v. Git6", Lord Wrenbury stated the rule in the

following terms :

"If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails. In this case the two clauses cannot be reconciled and the earlier provision in the deed prevails over the later."

If the principle laid down in "Forbes v. Git" (referred supra) is

applied to the present facts of the case, clause 7.2A will prevail over

clause 11.1 of Share Purchase Agreement. In such case, harmonious

construction of whole contract is to be adopted to trace the purpose of

agreement.

Copy of Share Purchase Agreement is placed on record. But the

intention of the parties to the agreement can be gathered from the

contents of agreement, but we could find nothing except

disinvestment in terms of Cabinet decision. In any view of the matter,

legal position referred above is not in controversy. Hence, clause 7.2A

AIR 1959 SC 24

Manu/DE/8215 2007

[1922] 1 A.C. 256 CJ and MSM,J was_221 and 281_2020

will prevail over clause 11.1 of Share Purchase Agreement. Therefore,

it is difficult to reconcile two limbs of Clause 7.2A of Share Purchase

Agreement. But this Court has no option except to follow the law laid

down by the Apex Court in the judgments (referred supra). By

applying the same principle to the facts of the present case, we hold

that clause 7.2A will override clause 11.1 of the Share Purchase

Agreement.

One of the major contentions of the writ petition is that the

learned single Judge did not consider clauses 7.2A, 7.4 and 11

together and committed an error in interpreting the clauses.

According to clause 7.2A on the closing date, the Directors of the

Company nominated by the seller tender their resignation, whereas

clause 7.4 permits the purchaser to re-appoint the Whole Time

Directors who have resigned, failing which such Whole Time Directors

shall be entitled to compensation from the company in accordance

with the terms of their employment contract, which shall be in

addition to any terminal benefits, leave encashment, gratuity, benefits

under VRS, which they are entitled to under their contract for

employment.

Even if the clauses 7.2A and 7.4 are read together, option is

given to the purchaser to re-appoint the Whole Time Directors who

have tendered resignation in terms of clause 7.2A, but made it clear

that the Whole Time Directors, who were not re-appointed, are

entitled to compensation from the company in accordance with the

terms of their employment contract, which shall be in addition to any

terminal benefits, leave encashment, gratuity, benefits under VRS,

which they are entitled to under their contract for employment.

CJ and MSM,J was_221 and 281_2020

Clause 7.4 did not obligate the purchaser to re-appoint Whole Time

Directors, it is only an option given to the purchaser. Even if, these

two clauses are read together, it may not improve the case of the

petitioner, but the petitioner is entitled to claim compensation in

addition to the terminal benefits.

Coming to the controversy regarding entitlement of the

petitioner to continue as Director (Operations and Technical),

undoubtedly, it is a tenure post for 5 years. At the same time, it is

also not in dispute that contract of employment is governed by the

conditions of appointment.

Admittedly, the petitioner was appointed as Director

(Operations and Technical) for a period of 5 years from the date of his

assumption of charge of the post on or after 01.06.2015, or till the

date of the superannuation, or until further orders, whichever is the

earlier. When an employee was appointed on tenure basis, he cannot

be removed by any order except on the terms and conditions of the

employment as held in "Dr.L.P. Agarwal v. Union of India (UOI)"

and "S.K. Kacker v. All India Institute of Medical Sciences"

(referred supra).

The Apex Court in "P.Venugopal v. Union of India7" relying on

"Dr.L.P. Agarwal v. Union of India (UOI)" (referred supra) held that

the principle of law stipulated by this Court that curtailment of the

term of five years can only be made for justifiable reasons and

compliance with principles of natural justice for premature

termination of the term of a Director. Thus there was never any

permissibility for any artificial and impermissible classification

(2008) 5 SCC 1 CJ and MSM,J was_221 and 281_2020

between the writ petitioner on the one hand and any future Director

of the institution on the other when it relates to the premature

termination of the term of office of the Director. The decision of the

Board of Directors clearly falls foul of Article 14 of the Constitution

being an apparent case of "naked discrimination".

Hence, it is clear from the law laid down by the Apex Court that

when once employee was appointed on tenure basis except for

justifiable reasons he cannot be removed before completion of tenure

and no order need be passed after completion of tenure since it is an

automatic termination from service. Therefore, the petitioner is

entitled to continue in service till his services are terminated on

justifiable grounds in compliance of principles of natural justice. But

no such termination had taken place in the present facts of the case.

More curiously, the petitioner himself tendered resignation in terms of

clause 7.2A of Share Purchase Agreement. The contention of the

petitioner is that the resignation is only a "technical resignation" and

not intended to resign from service as Director (Operations and

Technical).

Technical resignation is not defined anywhere.

As per the Ministry of Finance OM No.3379-E.III (B)/65 dated

the 17.06.1965, the resignation is treated as a technical formality

where a Government servant has applied through proper channel for

a post in the same or some other Department, and is on selection,

required to resign the previous post for administrative reasons. The

resignation will be treated as technical resignation if these conditions

are met, even if the Government servant has not mentioned the word

"Technical" while submitting his resignation. The benefit of past CJ and MSM,J was_221 and 281_2020

service, if otherwise admissible under rules, may be given in such

cases. Resignation in other cases including where competent

authority has not allowed the Government servant to forward the

application through proper channel will not be treated as a

technical resignation and benefit of past service will not be

admissible. Also, no question of benefit of a resignation being

treated as a technical resignation arises in case of it being from a

post held on ad hoc basis.

In view of the meaning of word „technical resignation‟, the

resignation of the petitioner would not fall within the definition of the

technical resignation. Even if, it is treated as technical resignation, he

is entitled to claim benefits of service, but not entitled to continue in

the post as clarified in OM No.3379-E.III (B)/65 dated the 17.06.1965.

If the petitioner is a Whole Time Director and not re-appointed on

resignation in terms of Clause 7.2A of Share Purchase Agreement, at

best, he is entitled to claim benefits under Clause 7.4 i.e.

compensation from the company in accordance with the terms of his

employment contract, which shall be in addition to any terminal

benefits, leave encashment, gratuity, benefits under VRS, which he is

entitled to under the contract for employment.

Hence, the petitioner is entitled to claim only benefits of service

as per Office Memorandum and not entitled to continue in the post as

Director (Operations and Technical) till completion of his term

of 5 years. Learned single Judge rightly declined to grant such relief.

However, we made it clear that the petitioner is entitled to service

benefits while agreeing with the view taken by the learned single

Judge. Accordingly, the point is answered.

CJ and MSM,J was_221 and 281_2020

In the result Writ Appeal No.221 of 2020 is allowed setting

aside the order dated 28.04.2020 passed by the learned single Judge

in W.P.No.7350 of 2019. Writ Appeal No.281 of 2020 is dismissed. No

costs.

The miscellaneous petitions pending, if any, shall also stand

closed.

PRASHANT KUMAR MISHRA, CJ M. SATYANARAYANA MURTHY,J Ksp