Delhi High Court
Robin Sharma vs Apparel Training And Design ... on 10 February, 2021
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$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 2nd December, 2020
Date of decision:10th February,2021
+ W.P.(C) 4288/2020 & CM APPLs. 15434/2020, 15435/2020
ROBIN SHARMA ..... Petitioner
Through: Ms. Vibha Makhija, Sr. Advocate
with Mr. A.P. Dhamija, Mr. Praveen
Gaur, Mr. J.P. Singh & Ms. Tanya
Sharma, Advocates (M:9810633614)
versus
APPAREL TRAINING AND DESIGN CENTRE THROUGH:
DIRECTOR GENERAL & ANR. ..... Respondents
Through: Mr. Varun Singh, Ms. Deepti Arya,
Mr. Akshay Dev & Mr. Rishabh
Rana, Advocates.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUDGMENT
Prathiba M. Singh, J.
1. This judgment has been pronounced through video conferencing.
Brief Background
2. The present writ petition under Article 226/227 of the Constitution of
India has been filed by the Petitioner seeking appropriate writ/order or
direction for setting aside the letter dated 19th June, 2020 issued by the
respondent No. 2 whereby the services of the Petitioner were terminated. A
total of four writ petitions have been heard together by this Court. The same
were filed by four regular/permanent employees working with the Apparel
Training and Design Centre (`ATDC') at various positions such as Junior
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Assistant, Senior Principal, Regional Manager and Deputy Assistant.
3. Ld. Counsel for the Respondent has raised issues of maintainability
on the ground that a writ petition would not lie against ATDC as it is not
`State' under Art. 12 of the Constitution of India and is also not `Other
Authority' as it does not perform a public function. Vide order dated 17th
August 2020, the Apparel Export Promotion Council (hereinafter "AEPC"),
of which the Respondent ATDC is a part, was impleaded as Respondent
no.2. Various affidavits and documents have been filed on record by all
parties. Detailed written submissions along with copies of all judgments
relied upon have also been filed. All counsels consented for the matters to be
finally heard as recorded in order dated 3rd September 2020. The Court
accordingly heard the counsels for the parties both on the question of
maintainability as also on merits.
Submissions of the Petitioner
4. Ms. Makhija, ld. Senior counsel appearing on behalf of the Petitioner
firstly relies upon the judgment of a ld. Single Judge of this Court rendered
in the context of the AEPC. In the said judgment, being All India Garment
Exporters Common Cause Guild And Ors v. UOI & Anr, [WP(C) 5093/
1998 decided on 18 January, 2011, Delhi High Court], the Court held that
the AEPC is performing a public function under the Exim Policy. Specific
reliance was placed upon paragraphs 24, 25 and 30 of the said judgment.
She submitted that though this judgment has been subsequently considered
by the ld. Division Bench and overruled, the overruling only related to the
merits of the petition i.e., in respect of the regulation of membership to the
AEPC. On the question of public function of AEPC, the ld. Division Bench
judgment was silent. She further submitted that the AEPC is a parent
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organisation of the ATDC. AEPC functions as a monopolistic body and the
ATDC is nothing but a unit of the AEPC which is performing a public
function.
5. Ms. Makhija, thereafter, took this Court through the various clauses
of the Memorandum of Association, (hereinafter "MOA") and the Articles of
Association, (hereinafter "AOA") to show that the AEPC is fully controlled
by the Central Government. Reliance was placed upon clauses 23, 24, 36,
26(5)b,42,81, 83, 88, 89, 100 (of the AOA of the AEPC). She submitted
that the executive committee is appointed by the Government. There are
various Government nominees. The entire funding is from the Government.
The executives and employees are appointed after the prior approval of the
Central Government as per clause 89. On the basis of all these clauses she
submitted that the AEPC is fully controlled by the Government itself. The
powers of the Central Government under clause 101 are extremely wide.
The entire functioning is under the Government. She, thereafter, relied upon
the minutes of meeting to show that almost all the AEPC meetings are
presided over by the Government nominees.
6. Now coming to the ATDC, it was submitted by Ms. Makhija that in
the balance sheet of the AEPC, specific contributions were made to set up
ATDC. Reliance was placed upon the balance sheets (Income and
Expenditure Account) dated 31st March 1996, 2001, 2002, 2003 and 2004
wherein the contributions made to ATDC were specifically recorded. She
then relied upon the Statement of review of working of the AEPC during the
year 2008-09 which was laid in Parliament before both the Houses wherein
specific reference is made to the ATDC.
7. It was submitted that the AEPC, though claimed to be a non-
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governmental body, is completely under the control of the Ministry of
Textiles. Reference was, thereafter, made to the MOA and AOA of the
ATDC including the certificate of Registration of the ATDC as a Society on
15th February, 1991. The MoA shows that the address of the Society is at the
AEPC's office in Delhi.
8. Ms. Makhija referred to the appointment letter issued to the Petitioner
which shows that it is bound by the service rules of the ATDC. Once the
probation period was over, the confirmation letter was given to the
Petitioner. As per the service rules, in so far as temporary employees are
concerned, one month notice would be required to terminate the employees
but in respect of permanent employees, three months notice is required.
Since the notice in the present case was only for one month and the
Petitioners are permanent employees, the termination is illegal. Finally, it
was submitted by Ms. Makhija that the appointing authority, as is clear from
the appointment letter, was the Director and not the General Manger HR
who issued the termination letter. On all these grounds, Ms. Makhija
submitted that the ATDC performs a public function, the present writ is
therefore maintainable and the termination is illegal.
9. Relying upon Article 12 of the Constitution of India it was submitted
that the said provision has two components. One set of authorities are those
which straight away constitute State under Article 12 and the second set of
authorities are those, which may or may not be under the control of the
Government. The term 'other authorities' is not in conjunction and even if
there is no financial control of the government, if an authority performs a
public function or is meant for public purpose, it would fall under Article 12.
She sought to distinguish between public purpose and public function -
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while the latter refers to sovereign functions, the former would include any
purpose which has public impact.
10. Reference was made to the note of arguments/judgments filed on
behalf of the Petitioner. Vehement reliance was placed on the judgment of
the Constitution Bench of the Supreme Court in Sukhdev Singh v.
Bhagatram Sardar Singh Raghuvanshi (1975) 1 SCC 421 wherein various
tests, which are to be applied to consider the maintainability of a writ
petition, have been set out. Specific reliance was placed on paragraphs 119
and 122 to argue that employment under public corporations would be
public employment.
11. Reliance was also thereafter placed on the various other judgments to
show the width of `other authorities' including Ajay Hasia v. Khalid Mujib
Sehravardi, (1981) 1 SCC 722 which dealt with the Regional Engineering
College, Srinagar, Pradeep Kumar Biswas v. Indian Institute of Chemical
Biology, (2002) 5 SCC 111, which held that CSIR would be covered by
'other authorities' as also ZEE Telefilms Ltd. v. Union of India, (2005) 4
SCC 649, which held that BCCI performs a public function and is amenable
to writ jurisdiction under Article 226. Reliance was also placed on two
judgments of a Division Bench of Delhi High Court i.e. All India Lawyers
Union v. Govt. of Delhi, 2009 SCC Online Del 3011, wherein Indraprastha
Medical Corporation/Indraprastha Apollo Hospital has been held to be a
body which is performing a public duty and Centre for Policy Research v.
Brahma Chellaney & Ors., 2010 SCC Online Del 1101, wherein Centre for
Policy Research, which receives some government grants etc. has also been
held amenable to Article 226. Reliance was also placed upon Janet
Jeyapaul v. SRM University, (2015) 16 SCC 530 to argue that even a
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deemed university which may be privately set up, performs a public
function. Ms. Makhija, submitted that the nature of education being
imparted by the SRM University is of a public character and that itself
makes it amenable to writ jurisdiction under Article 226. Hari Krishna
Mandir Trust v. State of Maharashtra & Ors., 2020 SCC Online SC 631
was also cited, in which a private mandir and a private road leading to the
mandir were held to be amenable to writ jurisdiction. Therein, the Supreme
Court put a positive obligation on the High Courts to exercise jurisdiction
under Article 226.
12. According to Ms. Makhija, ld. Senior counsel even where there are
specific terms which govern a contract of appointment, once the general
service conditions are incorporated in the letter of appointment, by reference
they would be governed by the employment conditions. In case of any
conflict between the letter of appointment and the General Service Rules,
2011 the latter would prevail inasmuch as the appointment letter in the
present case is of 1996, however, the modified General Service Rules, 2011
would keep changing from time to time and they would be prevailing over
and above the letter of appointment. She further submitted that insofar as
procedure for termination is concerned, the same is also governed by the
General Service Rules, 2011. Without following the proper procedure laid
down in accordance with law, and without laying down any criteria or policy
in respect, thereof, no permanent or regular employee can be terminated.
The grounds raised for challenging the termination are that:
(i)The termination is not by the appointing authority.
In the present case, the appointing authority is the Director General,
however, the letter of termination has been signed by the General Manager.
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This is contrary to law in view of the judgments in Sampuran Singh v. State
of Punjab 1982 3 SCC 200.In Jasmer Singh v. State of Haryana, 2015 4
SCC 458 it was held that Industrial Tribunal-cum-Labour Court has rightly
set aside the order of termination of services of the workman and awarded
the order of reinstatement with continuity of service and full back wages.
According to ld. Senior counsel only the Director General could have
terminated the Petitioners and not the General Manager. Reliance is also
placed upon paragraphs 6 and 7 of the judgment in Tejpal Singh(Dead)
Through Legal Representatives v. Union of India 2018 14 SCC 343.
(ii) The second ground for challenge is that notice has to be given in
accordance with the Rules and Service Conditions and a disciplinary enquiry
would also needed to be held. A simple reason of sizing down and financial
constraints cannot be sufficient to terminate regular and permanent
employees. Even if an employee has to be terminated, a proper criteria and
policy has to be laid down by the organization and principal such as last
come first go has to be followed. In the present case, the Petitioners have
been terminated on the ground that they are legacy employees. In fact,
legacy employees whose employment is permanent in nature could not have
been terminated without proper show-cause notice being issued and enquiry
being conducted. The issuance of one month's salary in lieu of the notice
period and the deposit of the same in the bank account would not in any
manner legalize the termination or prejudice the employee concerned.
13. Notifications dated 17th June, 2020 and 26th June, 2020 of the ATDC
are relied upon to show that more than 200 employees have been retained by
the ATDC including people in similar posts. Thus, when there is no
abolition of the post, no termination would be permissible as per the
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applicable rules.
14. Ld. Senior counsel, thereafter, relied upon Clauses 7 (f) of the General
Service Rules, 2011 to argue that the Director General is the appointing
authority for any employee in Grade A. The Petitioner is an employee who
falls in Grade A. Distinction is drawn between the procedures governing
temporary and permanent employees are concerned, as per Clauses 27 and
28. In the case of a temporary employee, Clause 27 permits termination as
per the terms set out therein. In the case of a permanent employee, notice
has to be given in writing or payment of pay and allowances for the said
period if the notice falls short of three months and if the post is abolished
only then without giving notice and payment of three months allowance, the
termination can be brought into effect. In the case of termination, where the
post is not abolished, though three months notice period is permissible under
Clause 28(1), the same would have to be by following a non-arbitrary and a
non-discriminatory process. The management is not permitted to pick and
choose in case of employees and especially in case of permanent employees.
Ld. Sr. Counsel relied upon the judgments of the Supreme Court in Delhi
Transport Corporation v. DTC Mazdoor Congress and Ors. 1991 Supp (1)
SCC 600 as also Kumari Sri Lekha Vidhyarthi and Ors v. State of UP and
Ors. 1991(1) SCC 212 to argue that in case of permanent employees, the
principles of Article 14 that the termination of the employee would have to
be non-discriminatory, is applicable. The ATDC which is a State Authority
and performing a public function has to act fairly, justly and reasonably.
15. Insofar as the further challenge to the termination is concerned, it is
the submission of ld. Senior counsel that the manner in which termination
was effected by the notice dated 19th June, 2020 shows that the same is
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devoid of any reasons and is completely unilateral.
16. On merits, Mr. A.P. Dhamija ld. counsel for the Petitioner also made
his submissions. His first submission was that the letter of appointment
provides for a period of one month notice for temporary employees.
However, insofar as permanent employees are concerned they are governed
by the ATDC General Service Rules, 2011. Under Rule 28, the permanent
employee would have to be given three months notice. Clause 6 of the
appointment letter provides that the employee would be bound by the
Service rules of the ATDC. Mr. A.P. Dhamija, ld. counsel supplementing
the submissions of ld. Senior counsel relies on the note dated 1st June, 2020
'Note for Approval of Terminations of certain legacy employees and
retaining few employees on restructured salary in the suitable job profile'
which has been placed on record by the ATDC. He argued that a perusal of
the same shows that the permanent employees i.e., legacy employees are
being terminated on the ground that they are superfluous. This itself shows
that such a conclusion has been arrived at without any basis and in complete
breach of principles of natural justice. This is a black mark termination and,
hence, without a disciplinary enquiry the same cannot be upheld by this
Court. He further submitted that as per the Service Rules, the procedure for
retirement is only upon superannuation and in case of regular employees
nothing less than superannuation would constitute retirement. Reliance is
also placed upon the judgment L Robert D Souza v. Executive Engineer,
Southern Railway and Another 1982(1)SCC645. Thus, regular employees
who are permanently on the rolls of the Centre could not have been
terminated without the three month notice period.
17. It was argued that in the case of some of the employees, the statutory
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dues and one month's salary has also not been deposited and even if the
same is deposited, the same would not in any manner prejudice the right of
the Petitioner to challenge the termination by way of writ proceedings.
18. In view of the above it was submitted that the termination is illegal
and contrary to law.
Submissions by the Respondents
19. Mr. Varun Singh, ld. Counsel appearing for the AEPC and ATDC
submitted that the service rules of the ATDC are not statutory in nature. In
any event, private contracts which are for employment do not fall within the
service rules. The first objection raised by Mr. Varun Singh, ld. Counsel was
that even under the service rules, the jurisdiction vests in the Courts in
Gurugram for any challenge as the ATDC is located in Gurugram. Thus,
even if ATDC is a public authority, this Court would not be the appropriate
Court. He, thereafter, relied upon some clauses in the service rules to argue
that even if the service rules apply, a special agreement can be made to
bypass the same and in all cases it is not required to apply the said rules. He
further submitted that as per the appointment letter itself, though the
Petitioners may be permanent employees, the letter of appointment
permitted the employer to terminate the Petitioners with 30 days' notice. He
further submitted that the ATDC has 195 institutes across the country and in
view of the pandemic, it has resorted to down-sizing. The General Manager
HR has been given the power to terminate and accordingly, submissions in
respect of illegality of the termination are not tenable.
20. He, thereafter, argued that the ATDC is not State under Article 12 of
the Constitution of India and is also not a public functionary. Mr. Singh, ld.
counsel submitted that the administrative, financial and overall control of the
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ATDC is not with the government. The ATDC does not perform public
functions. The rules are statutory.
21. Reliance was placed upon the judgment in All India Garments
Exporters Common Cause Guild And Ors (supra), Apparel Export
Promotion Council v. All India Garment Exporters Common Cause Guild
& Ors [LPA No. 356/2011, Delhi High Court decided on 25th January,
2012], K.K. Saksena v. International Commission on Irrigation and
Drainage (2015) 4 SCC 670, Ramakrishna Mission and Ors. v. Kago
Kunya and Ors (2019) 16 SCC 303 and Balwant Rai Saluja v. Air India
Limited (2014) 9 SCC 407.The submission therefore was that the writ
petition challenging the termination would not be maintainable.
22. Mr. Varun Singh, ld. Counsel sought to distinguish SRM University
(supra) by submitting that it is a deemed university which is bound by UGC
regulations and hence performs a public function.
23. He further canvassed the following three propositions:
1) That even if a body is a public body, Article 226 cannot be invoked
for enforcement of a private right. He relied upon the judgment in K.K.
Saksena (supra) which in turn quoted The Praga Tools Corporation v. C.A.
Imanual and Ors., [1969]3 SCR 773 wherein it was categorically held that
an order for reinstatement would be a private right. In the present case, he
submitted that only a contractual right is sought to be enforced and therefore
a writ is not maintainable.
2) That the activities of the AEPC or ATDC do not constitute public
functions which are in a sovereign capacity. In order for a function to
constitute a public function in a sovereign capacity, no other person should
be performing such functions. He relied upon G. Basi Reddy and Ors. v.
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International Crops Research Instt. And Ors, (2003) 4 SCC 225 wherein
the organization I.C.R.I.S.A.T which is involved in conducting research was
held to be not performing a public function.
3) That the rules governing the employment of the Petitioners are not
statutory rules. They are purely private contracts and when these are private
contracts, there is no element of public function which is involved.
24. On behalf of the AEPC, the stand of Mr. Singh, ld. counsel was that
the AEPC is not a parent body of the ATDC. He submitted that even the
AEPC is not under the administrative, financial or managerial control of the
government. There are only three government nominees on the board of the
AEPC. He relied upon the judgment of the Madras High Court in The
Apparel Export Promotion Council, New Delhi v. The Union Of India
AIR 1994 Mad 57.
25. He submitted that the earlier role of the AEPC of securing deposits
from private parties and thereafter regulating exports to a foreign exchange
for example, would not give a colour of public functionality to the ATDC.
The ATDC itself, receives subscriptions from students, State Governments,
etc. on the basis of projects which it undertakes. The total contribution by
the Central Government is only Rs.21.5 lakhs which is clear from a perusal
of the balance sheet for the year ending 2018-19. He further relied upon the
various documents placed on record by the Petitioners themselves to argue
that the following documents show that the ATDC is not performing a
public function:
i. The objectives of the ATDC are voluntary in nature (Clause 2 I
MOA);
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ii. ATDC conduct activities even beyond India (Clause 2 II MOA);
iii. There are only five government nominees out of a total 24 on the
Governing Body of ATDC. As on date, there is only a single
government nominee. So, there is no administrative control of the
government over ATDC (Clause 5 MOA, Rules and Regulations of
Society) ;
iv. Majority of the funding is not from government, but from other
sources (Clause 7a MOA, Rules and Regulations of Society).
26. Mr. Varun Singh, ld. counsel placed vehement reliance on the
decisions Parmod Kumar Yadav v. Union of India & Others [CWP No.
22063 of 2015 decided on 20th April, 2017, Punjab & Haryana High
Court] and Pramod Kumar Yadav v. Union of India & Ors [LPA No. 1033
of 2017 decided on 28th May, 2020, Punjab & Haryana High Court] to
argue that ATDC is not a State. He submitted that ATDC operates in 21
states and, therefore, in order to maintain consistency this Court ought to
follow the decision of the Punjab and Haryana High Court. He further
submitted that it is the clear stand of the AEPC that it is not a functionary of
the State. It is also clarified in the RTI application which was replied to by
the Ministry of Textiles. He submitted that the rent is being paid by the
ATDC to the AEPC on the agreed rate and so there is no financial support to
the ATDC in any manner.
27. On the strength of the Judgment in T.M.A. Pai Foundation and Ors
v. State of Karnataka and Ors (2002) 8 SCC 481, it was urged that insofar
as educational institutions are concerned the jurisdiction is of the Education
Tribunal. In any event writ jurisdiction is not liable to be exercised.
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Reliance was placed on Janet Jeyapaul (supra) to argue that the Petitioner
ought to approach the tribunal/ District Judge. Reliance was also placed
upon the judgment in Ramesh Ahluwalia v. State of Punjab & Ors (2012)
12 SCC 331 and Committee of Management Delhi Public School and Anr.
v. M K Gandhi & Ors (2015) 17 SCC 353 to argue that all such matters of
teachers and educational institutions ought to be heard by the Educational
Tribunal, that no writ petition is maintainable and the appropriate remedy is
civil suit.
28. It was, thereafter, submitted that a contract of personal service is not
specifically enforceable and the only remedy is to seek damages. Reliance
was placed on Executive Committee of Vaish Degree College, Shamli and
Others v. Laxmi Narain and Others (1976) 2 SCC 58 and Kailash Singh v.
The Managing Committee, Mayo College, Ajmer and Others (2018)18
SCC 216.
29. Ld. counsel highlighted to the Court that under the General Service
Rules of 2011, Rule 2(d) is clear and categorical to the effect that if there is
any contract to the contrary then the service rules would not prevail and the
contract would prevail. The said Rule is extracted herein below:
"General Service Rules 2011
CHAPTER 1
PRELIMINARY
2.APPLICATION
(d) Notwithstanding anything contained in Clause
(1), the Board of Governors may, by agreement with
any employee, make such special provisions as
deemed fit regarding his conditions of service, as it
may consider necessary and, thereupon, these rules
shall not apply to such an employee to the extent to
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which the special provisions are inconsistent
therewith. The Sub Committee of the Board of
Governors may also to the extent empowered,
exercise these powers. "
30. It was highlighted that in the present writ, the letter of appointment
contains two clauses i.e., clauses 3 and 6. These two clauses would have to
be reconciled with Rule 2d of General Service Rules of 2011. A conjoint
reading of the 2011 Service Rules along with clauses 3 and 6 would show
that the employee can be terminated with one month's notice in terms of the
contract and no notice or hearing needs to be given in respect of the same.
He submitted that the principles of nature justice would not apply in the case
of private employment and, therefore, it was his argument that ATDC has
followed a contract in question and has terminated the services of the
Petitioner.
31. Insofar as the purpose for which the Petitioner had to be removed
from employment is concerned, it was his submission that it is due to a
business exigency. In view of the notice, the 30 days salary and all the
statutory dues are also paid and after receiving all the amounts the
Petitioners are not be allowed to challenge. He submitted that the employer
being a private employer, the business exigency could force the employer to
terminate the services of any employee and the same is not actionable in a
writ jurisdiction. Reliance was placed on Official Liquidator v. Dayanand
and Ors 2008 10 SCC 1 and State of Haryana and Ors v. Navneet Verma
2008 2 SCC 65. Insofar as the Central Government directions to all the
employers to continue employees during the pandemic are concerned,
reliance was placed on the judgment of the Supreme Court in Ficus Pax
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Private Limited and Ors v. Union of India (UOI)and Ors 2020 4 SCC 810
that the same would not be binding on a private employer and in any case
strict compliance cannot be expected of such office memorandum.
32. It was submitted that under the Rule 49 of the Service Rules, the
power of the Service Rules can be relaxed to relieve him / her (of any
hardship arising from the operation or in the interest of the Centre) of such
provisions and employees can be relieved of the employment.
33. He then submitted that the employees in this case were not justifying
the salaries which are paid to them and once they are terminated the question
of redundancy can only be adjudicated in the civil suit and it is a matter of
trial. The principle of last come and first go would not apply in the private
company as would apply in the Government company. The question of
issuance of notice and conducting of enquiry would not be required as in the
present case this is not punishment, however their service have been relieved
due to various reasons as contended above.
34. Ld. counsel submitted that the service rules not being statutory in
nature do not override the Contract.
35. In view of the above, it was argued that the writ petition deserves to
be dismissed.
Rejoinder Arguments on behalf of the Petitioner
36. On merits, Ms. Vibha Makhija, ld. Senior counsel submitted her
rejoinder arguments as under:
(i) The argument that the educational tribunal has jurisdiction is without
any merit as these tribunals have jurisdiction over schools and not for
societies like ATDC.
(ii) A Civil Court is not an alternative area of efficacious / alternative
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remedy inasmuch as in a Civil Court the matter would go to trial and since it
is not efficacious, writ jurisdiction can be invoked.
(iii) In response to the submission that the contract would prevail over
rules, ld. Senior counsel submitted that it is contrary to the judgment of the
Supreme Court in Union Of India (UOI) and Ors. v. Arun Kumar Roy
1986 (1) SCC 675 which clearly holds that service rules would prevail over
the contract.
(iv) Insofar as Clause 2(d) of the ATDC service rules are concerned, she
submitted that Clause 2(d) had no applicability to the Petitioners who are
Permanent employees. The said clause would only apply to contractual
employees appointed by the Board of Governors in respect of some special
employment. The Petitioners being permanent employees are governed by
clause 28 of the ATDC General Service Rules.
(v) The argument that natural justice need not be followed was
vehemently refuted. It was submitted that unless and until the post itself is
abolished or a disciplinary enquiry is underway, permanent employees have
a lien over the post as per the judgment of Delhi Transport Corporation
(supra).
(vi) Insofar as Ficus Pax Private Limited (supra) judgment is concerned,
she submitted that it is clear that the Government circular and Office
Memorandum were not set aside. The Supreme Court merely clarified that
this circular or Office Memorandum would not apply in case negotiations
were held between employer and the employees and the Workman agree for
termination. If due to negotiations, termination ensues, then termination
would be permissible. Beyond that she submitted that the Supreme Court
has not set aside the circular itself.
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(vii) It was submitted that under Rule 49 the power of relaxation cannot be
misread in the manner as it is done. The said power would mean relaxation
of each and every condition in favour of the employees but not a relaxation
resulting in termination itself. The competent authority being the Director
General (DG), unless and until the Rules are amended, the power of
relaxation cannot be invoked for termination of the employees.
(viii) She submitted that the appointing authority in this case being DG, the
termination order had not been issued by the DG and therefore the same is
not approved by the DG.
(ix) Ms. Makhija, ld. counsel sought to distinguish the judgment in
Ramakrishna Mission& Ors (supra) on the ground that the Ramakrishna
Hospital was a hospital run by a private charitable society and hence in the
facts of this case, the judgment would not be applicable. She distinguished
K.K. Saksena (supra) quoted by the Petitioner on the ground that the said
case involved contractor and sub-contractor whereas in the present case, the
Petitioners were all direct employees of ATDC.
37. Mr. A.P. Damija, ld. Counsel for the petitioner submitted:
(i) As per the affidavit of 16th October, 2020 filed by the ATDC it is
clear that the junior employees have been retained whereas senior
employees like the Petitioners have been terminated.
(ii) The business exigency argument does not hold good inasmuch as the
reason for termination has been held to be redundancy of the employees and
not business exigency. Redundancy of employees could not have been the
reason for termination and termination could not have been without enquiry.
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Analysis and Findings:
38. Copious submissions have been addressed by ld. Counsels for the
parties in these writs. There are two broad questions which arise in the
present case:
i) Whether the ATDC is a State within the meaning of Article 12 of the
Constitution of India or other authority discharging a public function
and hence amenable to writ jurisdiction under Article 226 of the
Constitution of India?
ii) Whether the termination of the Petitioners is liable to be set aside?
Analysis of documents
39. In order to answer the questions that arise, an analysis of the various
documents placed on record would be essential. The Court has perused the
MoA, AoA and the other documents relating to ATDC and AEPC placed on
record. An analysis of documents reveals the following:
(i) The ATDC was registered as a society on 15th February, 1991. The
MOA of the ATDC shows that the main object of the society is to impart
and provide practical training in apparel manufacturing technology. It has
also incidental and ancillary objects.
(ii) The governing body of the ATDC has various individuals including
nominees of the Government and from private businesses. The members of
the society could be any recognized exporters of the AEPC. The Chairman
and Vice-Chairman of the AEPC are respectively the Chairman and Vice-
Chairman of the ATDC. All members of the governing body are also to be
nominated by AEPC as per the terms decided by the AEPC pursuant to a
resolution of the AEPC. Out of a maximum of 24, there are 5 government
nominees on the Board and constitution of the board is as under:
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• Trade - 14
• Government nominees - 5
• Eminent technical persons - 4
• Director - 1
The State Government and the Central Government can appoint members on
the Board. The board can delegate its powers for conduct of its affairs,
however, even the said delegation would be subject to AEPC's approval.
(iii) The source of funds for the ATDC would include Central
Government/State Government funds, funds by the AEPC as also various
other monies received from grants, gifts, donations, fees, subscriptions, etc.
(iv) Insofar as the powers of Central Government are concerned, Clause
16 reads as under:
"16. OTHERS
a) Central Govt. Powers - Central Govt. shall
have powers to give directions to the Board so to
exercise and performance of the functions in
matters involving Public/National interest and to
ensure that the Board gives effect to such
directions. This direction shall always prevail
over & above any other direction issued by
AEPC.
b) The Centre shall be open to the person of either
sex, and of whatever race, creed, caste or class in
the matter of admitting students or appointing
faculty members, teachers and other staff of the
Institute.
c) The AEPC may at any time enquire into the
affairs of the Society or call for such reports
returns and other information with respect to the
property and other activities of the Society or
Centre/Centres as may be required from time to
time.
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d) The AEPC may also at any time issue directives
in regards to the affairs of the Society or Centre
as it considers necessary and the Society or the
Centre shall be bound to comply with such
directives."
The above clause shows that the Central Government's directions to the
ATDC are binding and its powers are superior to that of the AEPC, which is
the body constituting the ATDC. The overall supervisory powers are with
the Central Government as is clear from clause 16(a) and the MOA of
ATDC which vests with the Central Government the power to give
directions to the Central Board to exercise and perform its functions in all
matters involving public and national interest. The Central Government thus
has deep and pervasive control over the ATDC's activities. Though,
members from the trade and industry are representatives on the ATDC's
Board, the vesting of such superior powers with the Central Government in
the functioning of the ATDC shows that there is clear Government control
in the functioning of the ATDCs.
(v) In so far as the ATDC's general activities are concerned, prior
approval of the AEPC is required for all its activities.
(vi) The annual budget of the ATDC is within the limits of the budget as
approved by AEPC.
(vii) A license agreement has been entered into between the AEPC and the
ATDC on 17th July, 1997 wherein the land, building, furniture, equipment
and other assets of the AEPC licensed to the ATDC for its use. Such land
given by the AEPC to ATDC is firstly received from the Government i.e. the
Ministry of Textiles. The license agreement also shows that the ATDC does
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not have any power on the said land and other assets and that ATDC is, in
fact, functioning under the AEPC itself.
(viii) The Ministry of Textiles has also certified vide circular dated 29 th
December, 1997 that the ATDC's centres are sponsored by the AEPC and is
also supported by the Ministry of Textiles.
(ix) It is an admitted position on record that the AEPC is a government
company under Section 25 of the Companies Act, 1956.
(x) In the annual reports of the AEPC, there is a specific mention of
ATDC and all its centres and its activities.
(xi) A perusal of the publicity material circulated by the ATDC also
shows that the ATDC is visibly stated to be sponsored by the Ministry of
Textiles, Government of India. The said material and brochures contain
speeches by the concerned Ministers as also the Secretary of Ministry of
Textiles which shows that the ATDC is considered as an agency of the
Ministry of Textiles.
(xii) The annual reports of the AEPC are also tabled in the Lok Sabha and
Rajya Sabha. A part of the annual report also deal with the activities of the
ATDC.
(xiii) The employees of the ATDC are paid salaries as per the Pay
Commissions which are notified by the Central Government.
(xiv) Funds are regularly released for the running of ATDC's centres for
various schemes as is evident from the documents on record including letter
dated 9th February, 2011, sanctioning Rs.13.8 crores for Pan India
implementation of Component I of Integrated Skill Development Scheme
ISDS-2010-11.
(xv) The bank accounts of the ATDC which receive funds from the Central
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Government are operated by the Chairman, AEPC and Director General and
CEO of the ATDC.
(xvi) The training programmes given by the ATDC from time to time are
publicized through various circulars by the Ministry of Textiles.
(xvii) Tax waivers are given to ATDC for import of machinery for
imparting skill development.
(xviii) The accounts of ATDC are subjected to regular audit by the
Government.
(xix) Various skill development schemes are implemented by the
Government through the ATDC.
(xx) Various writ petitions have been entertained against the AEPC by this
Court in the past.
(xxi) The AoA of AEPC show that the Executive Committee of the AEPC
consists of various government nominees.
(xxii) The auditor's report of the AEPC is forwarded to the Central
Government.
(xxiii) The Central Government approves the executives and the employees
of the AEPC, in case a government employee is appointed on the council.
(xxiv) No change or alteration in the article of association can be carried out
without the consent of the Central Government.
(xxv) A perusal of the balance sheet of 2018-19 shows that there are various
assets owned by the ATDC which are purchased out of the grants received
from the State Government, Central Government and various other funds.
The said heads are described in the balance sheet as under:
• Assets purchased against own funds;
• Assets purchased against grants received from State Government;
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• Assets purchased against grants received from Ministry of Textiles,
Government of India;
• Assets purchased from DDUGKY which is Deen Dayal Upadhyaya
Grameen Kaushalaya Yojna funds which is a skill training placement
program by the Ministry of Rural Development, Government of India.
It is thus clear that a substantial portion of the assets i.e. to the tune of
approximately Rs.25 crores is from the above three heads. Substantial
funding of the ATDC is by AEPC or by the Central or State Governments.
40. A perusal of the General Service Rules, 2011 which govern all the
employees of the ATDC shows that there are regular, contractual and
permanent employees in the ATDC. The Rules apply even to daily wage
workers unless exempted. The following relevant clauses are extracted
below:
"3..
(l) "Appointing Authority" In relation to any post
under the Centre, means the authority competent
to make appointments to that post.
xxx
(o) "Employee" means a person serving the
Centre as either permanent / regular or contract
employee.
xxx
(r) "Probation" - An employee on probation in a
post is one who has been appointed to that post for
determining his/her fitness for eventual substantive
appointment to that post.
xxx
w)...
x) "Permanent / Regular post" means a post
carrying a definite rate of pay sanctioned without
limit of time.
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xi) "Temporary post" means a post carrying a
definite rate of pay sanctioned for a limited time.
xii) "Tenure post" means a permanent post which
an individual employee of the Centre may not hold
for more than a limited period.
xxx
10."Contractual Employee" means an employee of
the Centre who is appointed on a fixed tenure for a
specific assignment on consolidated emoluments
or in a time scale of pay.
...
7. METHODS OF RECRUITMENT
Appointment to a post in the Centre shall be
made as per Recruitment Rules Specified by the
Board of Governors/Service Matters Committee,
from time to time.
Recruitment to a post under the Centre may be
made:
(i) By Promotion, or
(ii) By Lateral entry or
(iii) By direct recruitment, or
(iv) By transfer, or
(v) On Specified Contract, or
(vi) In normal case deputation/foreign service
are not considered.
...
e. All the promotion vacancies in Group-A
posts will be filled up on the basis of merit only.
f. Selection Committee for direct
recruitment/departmental promotion of Dy.
Registrars and Grade B, C and D employees of the
Centre is given below:
1. Director General/An Officer nominated by
DG.
2. Registrar HR
3. Deputy Registrar HR For Group B, C, D
...
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APPOINTMENT OF EMPLOYEES ON
DEPUTATION/FOREIGN SERVICE
...
(f) On the recommendations of the Selection
Committee, the appointment is made by the
Director General in all cases of employees in
grade of A, B, C & D.
...
11. TEMPORARY AND PERMANENT
SERVICE
(1) An employee shall be a temporary employee of
the Centre until he is confirmed in a post under the
Centre.
(2) An employee confirmed in a post under the
Centre shall be a permanent employee of the
Centre.
(3) No employee shall be confirmed in any post
unless the service of the employee under the
Centre is approved by the Appointing Authority.
(4) No employee shall be confirmed in any post
under the Centre unless such post is a permanent
one and no other employee has been confirmed in
it.
...
13. ASSURED CAREER PROGRESSION
SCHEME
The provisions of the assured career progression
scheme, for employees other than faculty as
amended from time to time applicable to the
employees of Apparel Training & Design Centre,
shall apply to the employees of the Centre.
41. Recruitment to the various posts of the ATDC could be by promotion,
lateral entry, direct recruitment, transfer or on specified contract. The Rules
clearly specify the names of the posts to which persons can be appointed and
the manner in which they are to be appointed. The pay scales of each of the
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employees is stipulated in the rules. All promotion vacancies in Group A are
to be filled by merit only and for all Group B, C and D posts recruitment is
by a Selection Committee consisting of the Director General or his nominee
and two other officials. Appointment of Employees on Deputation/Foreign
Service on the recommendations of the Selection Committee is made by the
Director General in all cases of employees in grade A, B,C & D. A clear
distinction exists between temporary and permanent service. Once an
employee is confirmed, he shall be a permanent employee of the centre. In
order for an employee to be a permanent employee, the appointing authority
has to approve the same. Proper rules of seniority and assured career
progression scheme are followed as per the rules. The pay structure is
clearly specified in the Rules. Increments are also provided for.
42. Insofar as termination is concerned, the same is governed by Chapter-
VIII of the rules. There is clear distinction in the manner in which a
temporary employee can be terminated and a permanent employee can be
terminated. In case of a temporary employee, no notice would be required.
However, in the case of permanent employee, three months' notice in
writing would be required. The termination can be only by the appointing
authority. A perusal of the retirement provisions shows that even for the
purposes of retirement, three months' notice or salaries/allowances in lieu of
such notice has to be given. Detailed provision exists for suspension and
undertaking of disciplinary procedures. Major and minor penalties are
provided for. An enquiry has to be held by the disciplinary authority if
termination is due to any cause. A proper hierarchy exists for Group A, B, C
and D employees as to who constitutes the disciplinary authority, appellate
authority and reviewing authority.
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43. On the other hand, the case of the AEPC and ATDC in their affidavits
is that:
▪ They are both separate entities and ATDC is a registered society
functioning as an autonomous independent society;
▪ ATDC does not receive any funding from the AEPC nor is controlled
by the Ministry of Textiles or Government of India;
▪ AEPC itself is not amenable to writ jurisdiction under Section 25 of
The Companies Act, 1956;
▪ As on date there are no government nominees on ATDC's board;
▪ ATDC receives funding from various independent sources;
▪ ATDC or AEPC are not government organizations and are not
amenable to writ jurisdiction;
▪ ATDC is not an "Other authority" under Article 226 of the
Constitution.
The above distinguishing features which are highlighted to argue that ATDC
is not amenable to writ jurisdiction would in the opinion of this court not
have an impact on the status of ATDC. The mere fact that AEPC and ATDC
are separately registered entities for ease of working would not take away
the fact that they are so integrated as organisations. The further fact that
there may be some external funding or that there are no Government
nominees on the Board currently, would not obviate the fact that there is
overall Government supervision, funding and control. The submission on
behalf of the ATDC on maintainability needs to be considered in the light of
the various documents analyzed above. The legal position as to whether any
entity constitutes State under Article 12 or other authority under Article 226,
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is now well settled by the Supreme Court.
Discussion on the case law
44. The Respondents relied upon the judgments of the High Court of
Punjab and Haryana in the case of Parmod Kumar Yadav (supra) which
was also upheld by the ld. Division Bench. In the said case, the Petitioner
who was an employee of the ATDC was dismissed from service from
employment in the ATDC. The ld. Single Judge, after considering the
manner in which the ATDC was set up by AEPC and after applying Zee
Telefilms Ltd. (supra) held that there is no material to show that the Central
Government had any deep and pervasive control over the functioning of the
ATDC. The observation of the ld. Single Judge of this Court is as under:
"The activity in order to be amenable to writ
jurisdiction must be of public character and public
duty bound by enforceable statutory obligations in
the performance of its duties or business. Alas, no
material has been placed on the file of this case to
show positively that the Central Government has
any deep and pervasive control over the
functioning of the society not only in what has to
be done, but the manner in which it is to be
performed. Mere doles or freebies or
replenishments are not enough to hold them
amenable since those may be aimed only to
encourage the activity, otherwise every non-
government organization [NGO] may fall under
the ambit of Articles 12 and 226. There must be
deep, pervasive and functional control by State.
Mere accountability of expenditure may not be
enough since the one who parts with money may
ask for rendition of accounts. The training centre
gets no binding instructions from the Central
Government or direct aid unless, as urged, routed
through the AEPC which may qualify the
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prescriptions of Part III of the Constitution. On
that connection an opinion is not expressed. ATDC
only receives funds, as I was made to understand,
indirectly by apportionment in the Union budget in
the Ministry of Textiles, GoI or by some other
financial arrangement according to fiscal
discipline in policy to offset the expenditure
suffered by second respondent ATDC in training
students, with money diverted to defray overheads
and costs of training and imparting skill
development for the textile job market routed
through the AEPC via the Union of India to
promote clothing export to other countries. The
Central Government through the Ministry of
Textiles does not do business directly with the
ATDC training centre other that mere mention of
its existence in some of the papers on record, but
those do not confer status of an authority in the
training centre even within the widening scope of
the ambit of the net of writ jurisdiction.
...
The Central Government in the Ministry of Textiles
does not have any share holding in ATDC. The
assertion to the contrary is not enough to bring the
case within the fold of maintainability of the writ
petition. There must be strong and cogent proof that
the activity is none other than a creature of the
State. One or two Officers of the Central
Government on the management of the ATDC will
hardly make any material difference to alter the
character of the training centre as one qualifying
the tests of State/person/authority bearing inimitably
a public character, and one which is unequivocally
an under wing, an adjunct, a limb or manifestly an
organ of the State falling without convoluted
ratiocination within the law in the first expansion of
the law on the subject in beckon ruling in Anandi
Mukta Sadguru Shree Mukta etc. v. V.R.Rudani, AIR
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1989 SC 1607, 1989 (2) SCR 697, (1989) 2 SCC 691
and the law as it developed since which need not be
cited to add length to the order. There is want of
sufficient material on record from where it can be
safely concluded that this writ is maintainable in its
present form against the contesting second
respondent ATDC. I would, therefore, be
constrained to disallow this petition and leave the
petitioner to his alternative remedies available in
law. While holding in the negative, the merits of the
case have not been touched upon so as not to cause
any prejudice to any of the parties involved in view
of the conclusion reached, in my considered view,
that this writ petition does not lie since it is found,
for the reasons recorded above, not entertainable in
the High Court and accordingly has to be dismissed
for lack of maintainability and the petitioner
relegated to his remedy in a forum which is
available to him in law.
In the appeal challenging the above mentioned order, the Ld. Division
Bench affirmed the view taken by the ld. Single Judge and held that there
was no evidence of any direct control or supervision by the Ministry of
Textiles. The ld. Division Bench, further, held that the main object of the
ATDC is to impart vocational training on behalf of the Ministry of Textiles
to the unemployed youth of the country for the apparel industry through its
centers all over India. The mere fact that the Government of India may have
approved expenditure for implementation of various projects, out of which,
some funds may have gone to the ATDC, would not be sufficient to hold
that the writ petition is maintainable.
45. A perusal of the decisions of the High Court of Punjab and Haryana in
Parmod Kumar Yadav (supra) shows that the material filed in the present
case may not have been presented before the Court. The MoA and AoA as
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also the various documents which are on record in these writs, appear to
have not been placed before the Court. The Court thus holds that there is no
material to show deep and pervasive control.
46. In Sukhdev Singh and Ors. v. Bhagat Ram Sardar Singh
Raghuvanshi (1975) 1 SCC 421, the Supreme Court was concerned with an
order for removal from service of employees in the Oil and Natural Gas
Commission, Industrial Finance Corporation and Life Insurance
Corporation. The Supreme Court held that a combination of state funding
and an unusual degree of control over the management and policies would
be critical in considering whether the organization would be state. It held
that employment under public corporation would be public employment and
therefore employees would have the protection which appertains to public
employment.
47. In Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722, the
Court applied the judgment in Ramana Dayaram Shetty v. International
Airport Authority, 1979 3 SCC 489 and held that the Regional Engineering
College, Sri Nagar would be amenable to writ jurisdiction. In Pradeep
Kumar Biswas v. Indian Institute of Chemical Biology (2002) 5 SCC 111,
a Seven Judge Constitution Bench held that neither the form of the
Corporation nor its ostensible autonomy would take away its character as
state. Some of the factors which would be relevant in deciding whether the
organization would be a state are:
i) If the Government owns the entire share capital;
ii) Financial assistance by the state to meet almost the entire
expenditure;
iii) Whether the Corporation enjoys a monopoly status;
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iv) Existence of a deep and pervasive state control;
v) Functions are of public importance;
vi) If a Government department is transferred to a Corporation.
48. In Zee Telefilms Ltd. (supra) the Constitution Bench of the Supreme
Court distinguished between organizations which would constitute State and
authorities under Article 226 of the Constitution of India. The BCCI was
held to be an "other authority" owing to its monopolistic functions and was
held to be amenable to writ jurisdiction under Article 226, of the
Constitution of India though, not constituting State under Article 12. The
relevant observation from Zee Telefilms Ltd is set out below:
"234. The monopoly status of the Board is
undisputed. The monopoly enjoyed by the Board
need not be a statutory one so as to conform to the
tests contained in Clause (6)of Article 19 of the
Constitution. It can be a de facto monopoly which
has overtly or covertly received the blessings of
Union of India. The de facto monopoly of the Board
is manifest as it, as a member of ICC (even if it is
technically possible to float any other association),
can send an Indian Team abroad or invite a foreign
team onto India. In absence of recognition from the
ICC, it would not be possible for any other body
including the Union of India to represent India in
the international Cricket events featuring
competitive cricket. So would be the position in
domestic cricket. The Board in view of enormity of
powers is bound to follow "the doctrine of fairness
and good faith in all its activities". [See Board of
Control for Cricket, India and Anr. v. Netaji Cricket
Club and Ors.,: AIR 2005 SC 592.
235. The object of Part III of our Constitution is to
curtail abuse of power and if by reason of the
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Board's activities, fairness in action is expected, it
would answer the description of "Other Authorities".
236. The decisions rendered in different
jurisdictions including those of this Court clearly
suggest that a body like the Board. would come
within the purview of the expression "Other
Authorities" contained in Article 12 of the
Constitution of India. For the said purpose, a
complete new look, must be bestowed on the
functions and structures of the Board. A public
authority, in my opinion, would be an authority
which not only can regulate and control the entire
sports activities in relation to cricket but also the
decisive character it plays in formulating the game
in all aspects. Even the Federations controlled by
the State and other public bodies as also the State
themselves, in view of the Board's Memorandum of
Association and the Rules and Regulations framed
by it, are under its complete control. Thus, it would
be subject to a judicial review.
...
275. An authority necessarily need not be a creature
of the statute. The powers enjoyed and duties
attached to the Board need not directly flow from a
statute. The Board may not be subjected to a
statutory control or enjoy any statutory power but
the source of power exercised by them may be
traced to the legislative entries and if the rules and
regulations evolved by it are akin thereto, its actions
would be State actions. For the said purpose, what
is necessary is to find out as to whether by reason of
its nature of activities, the functions of the Board are
public functions. It regulates and controls the field
of cricket to the exclusion of others. Its activities
impinge upon the fundamental rights of the players
and other persons as also the rights, hopes and
aspirations of the cricket loving public. The right to
see the game of cricket live or on television also
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forms an important facet of the Board. A body which
makes a law for the sports in India (which otherwise
is the function of the State), conferring upon itself
not only enormous powers but also final say in the
disciplinary matter and, thus, being responsible for
making or marring a citizen's sports career, it would
be an authority which answers the description of
"other authorities"
...
280. Applying the tests laid down hereinbefore to the
facts of the present case, the Board, in our
considered opinion, said description. It discharges a
public function. It has its duties towards the public.
The public at large will look forward to the Board
for selection of the best team to represent the
country. It must manage its housekeeping in such a
manner so as to fulfill the hopes and aspirations of
millions. It has, thus, a duty to act fairly. It cannot
act arbitrarily, whimsically or capriciously. Public
interest is, thus, involved in the activities of the
Board. It is, thus, a State actor.
281. We, therefore, are of the opinion that law
requires to be expanded in this field and it must be
held that the Board answers the description of
"Other Authorities" as contained in Article 12 of the
Constitution of India and satisfies the requisite legal
tests, as noticed hereinbefore. It would, therefore, be
a 'State'."
Even private organizations such as the Centre for policy research1, deemed
universities2, have been held to be amenable to the writ jurisdiction.
49. In Balwant Rai Saluja (supra) the question was whether workmen
engaged in statutory canteens through a contractor would be considered as
employees of Air India Ltd. The Supreme Court held that there was no
Centre for Policy Research (supra)
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employer-employee relationship and hence a writ was not maintainable.
50. In Apparel Export Promotion Council v. Union Of India 1993 SCC
OnLine Mad 242 it was held that the Government cannot tinker with the
powers of the Executive Committee of the AEPC.
51. In Committee of Management, Delhi Public School (supra) the
Supreme Court held that the Delhi Public School (DPS) being a private
school, termination of service of teachers, would not be challengeable in a
writ, as DPS would not constitute State within the meaning of Article 12.
52. In G. Basi Reddy (supra,) the Court was dealing with the question as
to whether a writ petition is maintainable against I.C.R.I.S.A.T. which was a
body sponsored by UNFAO and the Government of India. The Court held
that Article 226 of the Constitution of India would be maintainable only if it
is shown that any fundamental right has been infringed. In the said case, the
services of various employees were terminated and the Court held that a writ
under Article 226 of the Constitution of India would not lie, as it was not set
up by the Government and it also involved giving voluntary service to a
large number of countries apart from India. It was also not controlled by the
Government and not accountable to the Government. There was very
minimal contribution by the Government.
53. In Janet Jeyapaul (supra), the SRM University was a deemed
university in which the Petitioner was working as a lecturer in the
Biotechnology department, the Court held that the writ under Article 226 of
the Constitution of India is maintainable and permitted the Petitioner to
approach the Division Bench for a decision on merits. The Petitioner relies
upon this judgment to argue that even a private deemed university
Janet Jeyapaul (supra)
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performing a public function of education, is amenable to writ jurisdiction.
54. In Kailash Singh (supra), the question was whether two employees of
the institution who served for several years who were terminated, were
entitled to reinstatement. The Supreme Court held that they would only be
entitled to back wages. Though, the master-servant relationship exists.
55. In K.K. Saxena (supra), the Supreme Court was considering whether
the International Commission on Irrigation and Drainage (ICID) would be
amenable to writ jurisdiction. The Supreme Court after considering the law
on the subject held that ICID was not funded by the Government and is also
not discharging any public function under any statute. The Court upheld the
High Court's finding that ICID does not carry out any public duty for being
amenable to Article 226 of the Constitution of India.
56. In Official Liquadator (supra), the Court referred to the judgement in
Secretary, State of Karnataka v. Uma Devi (2006)II LLJ 722 SC. The
Constitution Bench adverted its attention to financial implications of
creation of extra posts and held that the Courts should not pass orders which
impose unwarranted burden on the State and its instrumentalities by
directing creation of particular number of posts for absorption of employees
appointed. It observed that any direction by the Court for absorption of all
company paid staff would be detrimental to public interest.
57. In Ramesh Ahluwalia (supra), an administrative officer working in
the DAV Public School, Amritsar was removed from service after an
enquiry being held. The argument was that a writ would not lie and the suit
would be the alternate efficacious remedy. The Court, however, directed the
matter to be listed before the Educational Tribunal for decision on merits.
58. In State of Haryana & Ors.(supra), where temporary posts were
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abolished, the Supreme Court held that the contract itself permitted the
abolition of posts and so long as the decision was taken in good faith,
interference would not be warranted.
59. In T.M.A. Pai Foundation and Ors.(supra), the Supreme Court was
dealing with minority institutions and held that the grievances of the staff
and teachers, etc. ought to be relegated to Tribunals constituted especially
for the said purpose.
60. In Ramakrishna Mission and Ors. (supra), recently the Supreme
Court considered the question as to whether the hospital run by the
Ramakrishna Mission was amenable to writ jurisdiction. The Supreme Court
observed as under:
30 . Having analysed the circumstances which were
relied upon by the State of Arunachal Pradesh, we
are of the view that in running the hospital,
Ramakrishna Mission does not discharge a public
function. Undoubtedly, the hospital is in receipt of
some element of grant. The grants which are
received by the hospital cover only a part of the
expenditure. The terms of the grant do not indicate
any form of governmental control in the
management or day to day functioning of the
hospital. The nature of the work which is rendered
by Ramakrishna Mission, in general, including in
relation to its activities concerning the hospital in
question is purely voluntary.
31. Before an organisation can be held to discharge
a public function, the function must be of a
character that is closely related to functions which
are performed by the State in its sovereign capacity.
There is nothing on record to indicate that the
hospital performs functions which are akin to those
solely performed by State authorities. Medical
services are provided by private as well as State
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entities. The character of the organisation as a
public authority is dependent on the circumstances
of the case. In setting up the hospital, the Mission
cannot be construed as having assumed a public
function. The hospital has no monopoly status
conferred or mandated by law. That it was the first
in the State to provide service of a particular
dispensation does not make it an 'authority' within
the meaning of Article 226. State governments
provide concessional terms to a variety of
organisations in order to attract them to set up
establishments within the territorial jurisdiction of
the State. The State may encourage them as an
adjunct of its social policy or the imperatives of
economic development. The mere fact that land had
been provided on a concessional basis to the
hospital would not by itself result in the conclusion
that the hospital performs a public function. In the
present case, the absence of state control in the
management of the hospital has a significant
bearing on our coming to the conclusion that the
hospital does not come within the ambit of a public
authority.
...
33 . Thus, contracts of a purely private nature would
not be subject to writ jurisdiction merely by reason
of the fact that they are structured by statutory
provisions. The only exception to this principle
arises in a situation where the contract of service is
governed or regulated by a statutory provision.
Hence, for instance, in K K Saksena (supra) this
Court held that when an employee is a workman
governed by the Industrial Disputes Act, 1947, it
constitutes an exception to the general principle that
a contract of personal service is not capable of
being specifically enforced or performed.
A perusal of the above judgment shows that it was held that the hospital of
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the Ramakrishna Mission did not come within the ambit of the public
authority. However, the Supreme Court further observed that contracts of
purely private nature would not be subject to writ jurisdiction and the
exception would be when a contract of service would be governed and
regulated by a statutory provision.
61. In All India Garment Exporters Common Cause Guild & Ors
(supra), the writ petition was for a direction to restrain the AEPC from
making any distinction between the registered exporters and member
exporters by conferring certain important rights and privileges only on the
member exporters. The Petitioner sought the quashing of the relevant AOA
and Rules and Regulations of AEPC that brought about such classification.
Further reliefs were sought in respect of the election to the Executive
Committee. The Court held that the AEPC, even if it were presumed that it
is not a State within the meaning of Article 12 of the Constitution, as long as
AEPC exercised public functions, it was amenable to the jurisdiction of the
High Court under Article 226 of the Constitution. Applying the ratio of the
judgment in Zee Telefilms (supra), it was held that that the AEPC exercised
an important public function of ensuring the implementation of the Exim
Policy which is a statutory document. The AEPC was a monopolistic body
through whom every exporter was bound to export garments to the quota
countries, AEPC controlled the export of garments, its decisions affected the
rights and interests of garment exporters, it was a statutory body that
received support from the central government. The AEPC exercised public
functions and was therefore amenable to the jurisdiction of this Court under
Article 226 of the Constitution. The writ petition was allowed and the
Regulations of Membership made by the AEPC to the extent they were
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inconsistent with the Exim Policy were held as unconstitutional and ultra
vires of the Exim Policy and struck down.
62. In appeal, the Division Bench in Apparel Export Promotion Council
(supra) observed that the judgment of the Learned Single Judge impugned
was in the context of the situation as prevailing at the time of filing of the
writ petition i.e. the year 1998. The subsequent changes of the year 2000
knocked off the basis laid in the writ petition for the relief claimed and
granted by the learned Single Judge. It observed that the respondents/writ
petitioners did not take any steps whatsoever for challenging the said
amendment of Exim Policy in March 2000. The court then observed that the
challenge by the writ petitioners at the time of filing of the writ petition to
such classification (creating classification of voting and non-voting
members), even if maintainable when the writ petition was filed, in the light
of the amendments, did not survive. The appeal was allowed. The judgment
of the Learned Single Judge was set aside and the writ petition was
dismissed. The Division Bench did not make any observations in respect of
the findings of the Ld. Single Judge relating to the role and standing of
AEPC.
63. An analysis of the case law cited on behalf of both sides and applying
the same to the facts of this case, clearly shows that the ATDC, though an
independent society, registered under the Societies Registration Act is
generally treated as a Government controlled organization. The
appointments in the ATDC are made in accordance with the General Service
Rules, 2011 and all the employees are governed by the said rules. The
various documents also show that there is a substantial amount of funding
by the Government in the setting up of the ATDC. A large portion of the
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assets of the ATDC belong to the State Government, Central Government
and other schemes floated by the Government which are implemented
through the ATDC. Various documents also show that various educational
programs including that of skill development of the Government are
generally implemented through the ATDC. The powers of the Central
Government under Clause 16 of the MOA of the ATDC leave no doubt that
directions of the Central Government prevailed over and above any
directions issued by the AEPC. This shows that the Government has deep
and pervasive control over the activities of the ATDC, though, it may
choose not to interfere on a daily basis.
64. Considering the various tests laid down in the case laws set out herein
above, a writ petition would be maintainable against the ATDC for the
following reasons:
▪ That there is a substantial funding by the state;
▪ That it performs various educational and skill development functions
and also is involved in the implementation of various governmental
schemes which clearly gives it a character of conducting activities of
public importance;
▪ That the ATDC is the body vested with the authority to award B.Voc
degrees for Rajiv Gandhi National Institute of Youth Development
(RGNIYD). RGNIYD is an institute of national importance by the act
of Parliament offering educational programmes in the area of Youth
Development and ATDC claims to be the largest Pan India Vocational
Training Provider for the Apparel sector providing employable skills
to youth. ATDC centres are the skill knowledge provider approved by
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AICTE, Ministry of Human Resource Development, Government of
India.
▪ That the Government also exercises deep and pervasive control over
the functioning of the ATDC, both through nominations on the board
as also by enjoying a veto power in its activities.
65. The documents and the material which have been analyzed
hereinabove do not appear to have been placed before the the Punjab and
Haryana High Court, in Parmod Kumar Yadav (supra). Thus, this Court
respectfully disagrees with the said view of the Punjab and Haryana High
Court. The objection as to maintainability raised by the Respondents is
accordingly rejected.
On merits:
66. The Petitioner was appointed a Lecturer on 19 th September, 1996 and
was on one year probation. During the probation period, the Petitioner could
be terminated on 24 hours' notice. After confirmation, services could be
terminated with one month's notice. However, Clause 6 of the appointment
letter reads as under:
"xxx
6. You will be bound by the Service Rules of the ATDC
as existing or a may be framed or modified from time to
time....."
On 16th December, 1997, the Petitioner was confirmed as Lecturer. On 27 th
July, 1999 the Petitioner was transferred to ATDC, Okhla, NewDelhi. On
2nd September, 2009 the Petitioner was confirmed on the post of Principal.
On 1st July, 2011, the Petitioner was assigned additional responsibility of
Assessment Activity. The Petitioner was given approval for being placed on
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the rolls of the AEPC w.e.f 1.4.2012. On 5th July, 2012, the Petitioner was
deputed with the AEPC for a period of one year. On 22nd December, 2014,
the Petitioner confirmed in the grade of Addl. Chief Coordinator / Joint
Director by the AEPC. On 23rd June 2015, the Petitioner was transferred
from ATDC NOIDA to ATDC Okhla. On 15.4.2015, the petitioner was
relieved from the AEPC and he joined back the respondent on 16.4.2015 as
Sr. Principal. On 16th November, 2018, the Petitioner who was currently
Regional Manager, UP (Noida - Agra) & Delhi, ATDC was assigned the
responsibility of Regional Manager Delhi with additional responsibility as
OSD for implementation of 'Himayat-DDU-GKY' programme. The
Petitioner was served with the letter of termination on 19 th June, 2020. The
termination was with immediate effect i.e. from 19th June, 2020. No enquiry
was held and no notice was given prior to the termination.
67. During the lock-down resulting from the outbreak of the COVID-19
pandemic, the services of the Petitioner have been terminated. The decision
to terminate the services was taken by the ATDC's HRD committee in a
meeting held in June, 2020. The termination letter dated 19 June 2020 reads
as under:
"Referring to clause No. 3 of your appointment
letter we regret to inform you that your services
with ATDC stands terminated with immediate
effect i.e. from the closing hours of 19th June,
2020.
You are advised to handover all the filed,
documents, assets of ATDC in your custody to Ms.
Manju Singh, Joint registrar National Industry
Relations & Placement Officer immediately and
submit "No Dues Certificate" to process your Full
& Final settlement.
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An amount of Rs. 154219.00 is being transferred to
your Bank AlC No. 224901000001943 in lieu of
notice period as per the terms of your appointment
order.
We wish you Godspeed and success in all your
future endeavours."
68. The background of the termination was that a note dated 1st June,
2020 was put up which sought approval of termination of legacy employees
and retention of few employees on restructured salaries in suitable job
profile. The said note reads as under:
"Note for Approval of Terminations of certain
Legacy employees and retaining few employees
on Re-structured Salary in the suitable job
profile.
Due to Extreme Financial Pressure on Cash flow
and no revenue forthcoming during the lockdown
from March to may be July 2020 atleast beyond,
verticals, ATDC had been trying from some time to
terminate the services of some regular/Legacy
employees who are superfluous and to retain few
reasonably good employees on restructured salary.
Various options have been explored to exercise
these activities which are under consideration of
Management. But on passing the Judgement in
Case of P.K. Yadav vs. Union of India and Others,
Hon'ble High Court (2 Judges bench) of Punjab
and Haryana have clearly established that ATDC
is not a Government Body or Organisation and
working like a private person/organization in
which case rules which are applicable on
Government Organisation will not be applicable
on ATDC and it is working like any private body
working with in the law. Hence for employment
rules of private organization will be applicable in
which terms of employment are governed by the
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Appointment letter signed by the employee with the
organization. In the appointment letter services of
an employee can be terminated by giving one
month Notice or Salary in lieu of Notice pay.
Hence this clause may be exercised to terminate
the salary of superfluous employees. As directed to
exercise this option HR Department has worked
out the details as per Annexure-I and II for
employees who can be terminated and who can be
retained on restructured Salaries.
Annexure I: List of 15 Employees to be retained on
restructured salary/CTC
Annexure II: List of 15 Employees to be
terminated.
For consideration, advise and Approval pls."
The above note is signed by General Manager, HR Administration, the
Executive Director, DG&CO, ATDC and the Vice-Chairman, ATDC.
69. A perusal of the above note and the decision taken thereon shows that
the decision to terminate was justified on the ground of financial pressure
and cash flow. The Petitioner is described as a regular/legacy employee who
is superfluous. While deciding to terminate the services, the ATDC has
decided to retain those employees who are described as `few reasonably
good employees' on restructured salaries. The ATDC has relied upon the
Punjab and Haryana High Court's judgment of Parmod Kumar Yadav
(supra) and on the basis of the said judgement, observed that rules of a
private organization would be applicable. Thus the employees were
terminated by giving one month's notice or salary in lieu of notice. The said
employees have been treated as superfluous employees. The decision to
terminate was taken in June, 2020 and the same was with immediate effect.
One of the reasons for termination is also that the legacy employees draw
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30% to 40% more salaries than other contractual employees of ATDC. The
Petitioner has also been classified as redundant employee. Certain legacy
employees have also been put on time bound targeted performance and
under watch by the organization.
70. Both these documents clearly establish that the ATDC was conscious
of the fact that the Petitioner was a regular employee who has been
appointed on a permanent basis. He has been terminated without even a
day's notice. The note seems to suggest that these employees are
superfluous and are termed as redundant. The treatment given to the
Petitioners in these writ petitions has clearly been discriminatory inasmuch
as similarly situated employees on the same posts have been retained by the
ATDC. The termination is also not without stigma as the Petitioners have
been described as `redundant' employees. The entire intention appears to
have been to terminate them on one ground or the other. No fair and
transparent procedure was adopted. No attempt was made to enter into any
negotiation with them to ask if they would be willing to accept a lower
salary as was observed by the Supreme Court in Ficus Pax Private Limited
(supra). In the said case, the Petitioner challenged D.O. dated 20th March,
2020 and order dated 29th March 2020 issued by the Central Government
which cast obligations on private employers to make full payment of wages
to the employees during the period of lockdown. The vires of Section
10(2)(1) of Disaster Management Act, 2005, was also questioned. The
Union of India issued the said directions as a temporary measure to mitigate
the financial hardship of the employees and workers especially contractual
and casual workers during the lockdown period to prevent perpetration of
financial crisis. The order dated 29th March, 2020 stood withdrawn by a
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subsequent order dated 17th May, 2020 as a consequence of which the
obligations upon private employers to make payments was no longer in
operation. The Supreme Court observed that the Government issued these
directions to mitigate the financial hardship of employees including the
contractual and casual workers. The Supreme Court observed that efforts
ought to be made between employers and employees to sort out their
differences.
71. In Delhi Transport Corporation (supra), the Supreme Court has
categorically held that permanent employees enjoy a lien on their post and
cannot be terminated without following the procedure established by the
law. Employees like the Petitioner enjoy security of tenure and having
worked for more than 24 years with the ATDC, the manner in which the
Petitioner has been terminated is unacceptable. Termination of permanent
employees without assigning any reason in the manner described above is
also arbitrary and discriminatory.
72. Another issue which has been raised is that the termination has been
issued by a person who is lower than the appointing authority for the
Petitioner. This argument may not be tenable as, a perusal of the note shows
that the decision was taken at the highest level and it was a letter of
communication of the decision which has been issued under the signature of
the General Manager.
73. In Kumari Shrilekha Vidyarthi (supra),the Supreme Court held that
the termination of this nature which is arbitrary is reviewable under Article
226 of the Constitution of India. Even though the employer-employee may
be governed by a contractual relationship, once there is a public element in
an appointment, judicial review is permissible. The employees in the present
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set of petitions are not like private employees. Their service conditions are
governed by the General Service Rules, 2011 which are similar to those
applicable to government employees. The ATDC does not function like a
private organization. It is a body sponsored by the Ministry of Textiles,
Government of India through the AEPC. Thus, the Petitioners who were
regular and permanent employees, cannot be terminated in an arbitrary
manner.
74. Reliance has been placed by the Respondent on the Rule 2(d) in the
General Service Rules to argue that the contract would prevail over the
General Service Rules. The said Rule merely recognises that special
provisions stipulating conditions of service can be prescribed. Such a Rule
would have application when some employees are recruited for performing
certain specialised tasks etc., for whom special provisions can be made. The
same would not apply in general in respect of all regular/permanent
employees. In Union of India (UOI) and Ors. v. Arun Kumar Roy (supra),
the question was whether a temporary government servant could be
terminated as the one month's salary and allowance was not paid. The Court
held that the employees were governed by Central Civil Service Temporary
Service Rules, 1965 and not the order of appointment. Once an employee is
appointed by a public authority, though the employment originates in a
contract, it acquires a status under the service rules and would no longer be
under the contract. Paragraphs 18 and 19 are relevant and are set out below:
"18. The question whether the terms embodied in
the order of appointment should govern the service
conditions of employees in government service or
the rules governing them is not an open question
now. It is now well settled that a government
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servant whose appointment though originates in a
contract, acquires a status and thereafter is
governed by his service rules and not by the terms
of contract. The powers of the Government
under Article 309 to make rules, to regulate the
service conditions of its employees are very wide
and unfettered. These powers can be exercised
unilaterally without the consent of the employees
concerned. It will, therefore, be idle to contend
that in the case of employees under
the government, the terms of the contract of
appointment should prevail over the rules
governing their service conditions. The origin of
government service often times is contractual.
There is always an offer and acceptance, thus
bringing it to being a completed contract between
the government and its employees. Once
appointed, a government servant acquires a status
and thereafter his position is not one governed by
the contract of appointment. Public law governing
service conditions steps into regulate the
relationship between the employer and employee.
His emoluments and other service conditions are
thereafter regulated by the appropriate statutory
authority empowered to do so. Such regulation is
permissible in law unilaterally without reciprocal
consent. This Court made this clear in two
Judgments rendered by two Constitution Benches
of this Court in Roshan Lal Tandon v. Union of
India and in State of J & K v. Triloki Nath Khosa..
19. Thus it is clear and not open to doubt that
the terms and conditions of the service of an
employee under the government who enters service
on a contract, will once he is appointed, be
governed by the rules governing his service
conditions. It will not be permissible thereafter for
him to rely upon the terms of contract which are
not in consonance with the rules governing the
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service."
75. A perusal of the General Service Rules, 2011 which were applicable
to the Petitioner and the letter of appointment shows that under the
appointment letter, the Petitioner could be terminated with one month's
notice or salary in lieu of one month's notice. Under the Service Rules, three
months' notice was essential. Moreover, in respect of a regular employee,
termination could take place without notice if the post is abolished. If the
post existed, issuance of notice would be mandatory. In the present case, no
notice was issued prior to the termination which was clearly contrary to the
service rules. Similar posts have also not been abolished which is clear from
the documents placed on record. The decision to retain some employees and
to terminate some employees, has been taken in a completely arbitrary and
discriminatory fashion. Considering that the ATDC is an authority
performing public functions and is a public authority, challenge by the
Petitioner in the present writ petition to his termination is clearly
maintainable. A perusal of the note and the decision which was taken also
shows that while the reason for termination arose from financial pressures,
the Petitioner has been described as a `redundant employee' earning more
salary. Thus, the termination is not without stigma. Submissions have also
been made to the effect that the employees junior to the Petitioner have been
retained in the ATDC, which are not disputed. This Court is of the view that
the ATDC is not permitted to `pick and choose' the employees which it
wishes to retain, especially in case of permanent employees.
76. The conduct of the ATDC, especially during the lock-down period
when most employees would have been facing severe financial crunch, of
Signature Not Verified
Digitally Signed
Signing Date:10.02.2021 19:31
Signature Not Verified
Digitally Signed By:DINESH
SINGH NAYAL
Signing Date:10.02.2021
22:31:19
terminating them without even a day's notice, is contrary to law. If the
primary reason for termination was a financial crunch in the organization, it
was incumbent upon the ATDC to have a conversation with the employees,
negotiate and arrived at some sort of settlement. No such attempt has been
made by the ATDC. While this Court does not doubt that organizations like
ATDC was under severe financial pressure during the lock-down period, at
the same time, resorting to such termination, cannot also be upheld and
legitimized.
77. In view of the above discussion, this Court holds that the writ petition
is maintainable and the order of termination dated 19th June 2020 is quashed
and set aside. The Respondent is accordingly directed to reinstate the
Petitioner within a period of four weeks and pay all his emoluments for the
previous period of June, 2020 till date within a period of four weeks
thereafter.
78. The Court would like to place on record its appreciation for the
detailed submissions and assistance given by the counsels in these petitions.
Writ petition is allowed in the above terms.
PRATHIBA M. SINGH
JUDGE
FEBRUARY 10, 2021
Rahul/DJ/RC
Signature Not Verified
Digitally Signed
Signing Date:10.02.2021 19:31
