Yogeshbhai Mafatlal Brahmbhatt vs State Of Gujarat
2021 Latest Caselaw 6463 Guj

     C/SCA/5958/2017                                   ORDER DATED: 21/06/2021




           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 5958 of 2017
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                   YOGESHBHAI MAFATLAL BRAHMBHATT
                                Versus
                      STATE OF GUJARAT & 1 other(s)
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Appearance:
MR PRABHAKAR UPADYAY(1060) for the Petitioner(s) No. 1
MR JAYNEEL PARIKH, AGP for the Respondent(s) No. 1
MR RD DAVE(264) for the Respondent(s) No. 2
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 CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                                Date : 21/06/2021

                                 ORAL ORDER

Heard learned advocate Mr.Prabhakar Upadyay for the petitioner, learned Assistant Government Pleader Mr.Jayneel Parikh for the respondent-State and learned advocate Mr.R.D.Dave for the respondent No.2 through video conference.

1. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :

"(A) Your Lordships may kindly be pleased to issue a Writ of Certiorari and/or Mandamus and/or any other appropriate Writ, direction or order to quash and set aside the impugned order dated 20.12.2010 issued by the respondent Corporation at Annexure-A to this petition.

(B) Your Lordships may kindly be pleased to hold and declared that the action on the part of the present respondent Corporation of retiring the present petitioner from service on completion of 30 years of service by an order dated 20.12.2010, on the basis of the Regulation No.19 of the Gujarat State Financial Corporation (Staff) Regulation, 1961 is ex-facie illegal, unjust, unfair, arbitrary, discriminatory and y contrary to the prevailing Regulation of the Corporation

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and it is a case of victimization.

(C) Your Lordships may kindly be pleased to direct the present respondent Corporation to reinstate the present petitioner on his original post with continuity of service alongwith full back wages with all consequential benefits to which the present petitioner is entitled too.

(D) Your Lordships may kindly be pleased to pass any other further Order/s as are deemed fit, just and proper in the facts and circumstances of the case and in the interest of justice."

2. Brief facts of the case are that :

2.1. The petitioner was appointed with respondent No.2-Gujarat State Financial Corporation with effect from 31.12.1980 on the Post of Clerk-cum-Typist and thereafter, was promoted to the posts of Assistant in the year 1986 and Senior Officer (field) in the year 1998.

2.2. It is the case of the petitioner that the petitioner was superannuated and was retired from the service with effect from 22.12.2010 on completion of 30 years of service as per the Regulation No.19 of the Gujarat State Financial Corporation (Staff) Regulation, 1961 (for short 'the Regulation, 1961').

2.3. It is the case of the petitioner that the respondent No.2-Corporation has adopted the Gujarat State Financial Corporation (Staff) Regulation, 1979 (for short 'the Regulation, 1979') and Regulation 18 thereof does not prescribe retirement on completion of 30 years of service of any employee. It is therefore, the case of the petitioner that the petitioner was entitled to be continued in service

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till he attained the age of 58 years i.e. up to 31 st May, 2017.

2.4. It appears that the issue of Regulation 19 of Regulation 1961 was agitated by the Gujarat State Financial Corporation (Staff Union) before this Court by filing Special Civil Applications along with individual employees and the learned Single Judge by order dated 09.09.2005 allowed such petitions by interpreting Regulation 19 in detail. The respondent No.2-Corporation being aggrieved by the said order preferred Letters Patent Appeal No.1253 of 2005 and other allied matters and the Division Bench of this Court vide orders dated 13.03.2008 and 14.03.2008 allowed the Appeals filed by the respondent No.2- Corporation by reading down the second provisio to the Regulation 19 and quashed and set aside the judgment and order dated 9th September, 2005 passed by the learned Single Judge.

2.5. It appears that thereafter Gujarat State Financial Corporation (Staff Union and Others) preferred Special Leave Petition before the Apex Court which was dismissed vide order dated 15.01.2010 by giving liberty to the petitioners to raise all the issues before the High Court.

2.6. The Gujarat State Financial Corporation (Staff Union) thereafter preferred Special Civil Application No.15090 of 2010. The said petition was admitted vide order dated 27.07.2011, however, subsequently

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the petition was withdrawn by the petitioners and accordingly, the same was disposed of vide order dated 11.12.2013.

2.7. It appears that the petitioner has filed this petition subsequently on attaining the age of 58 years with the aforesaid prayers on the ground that the Rule 19 of Regulation 1961 was substituted by the respondent No.2-Corporation deleting the condition of retirement on completion of 30 years of service in exercise of powers conferred under Section 48 of the State Financial Corporation Act, 1951 and such substituted Rule 19 has come into effect prospectively on publication of such notification and Government Gazette on 12.02.2016. Therefore the case of the petitioner is that the petitioner is entitled to such substituted notification. It is also the case of the petitioner that when petitioner was compulsorily retired on 20.12.2010, Special Civil Application No.15090 of 2010 was pending before this Court and therefore there is no delay or laches on the part of the petitioner to file this petition. It is also the case of the petitioner that the Special Civil Application No.15090 of 2010 is not decided on merits and therefore, the petitioner is entitled to agitate his grievance by this petition.

3.1. Learned advocate Mr.Upadhyay submitted that the Regulation 1979 was made applicable by the respondent No.2-Corporation till 2004 and all the employees of the respondent No.2-Corporation were governed by the

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Regulation 1979 and none of the employee of the respondent No.2-Corporation was made compulsorily retired on completion of the period of service of 30 years as per the Regulation 19 of Regulation 1961 and all the employees were permitted to continue in service up to the age of 58 years as per Regulation 18 of Regulation 1979.

3.2. Learned advocate Mr.Upadhyay further submitted that the Supreme Court while dismissing the Special Leave Petition had granted liberty to the petitioners to raise all the issues before the High Court and accordingly, Special Civil Application No.15090 of 2010 was preferred by the said Union along with the petitioners but the said petition was withdrawn without the knowledge of the petitioner and therefore when such petition is not decided by the Court on merits, the petitioner is entitled to agitate before this Court raising all the contentions which were raised in the said petition on behalf of the petitioner.

3.3. Learned advocate Mr.Upadhyay further submitted that this Court by order dated 27.07.2011 admitted the Special civil Application No.15090 of 2010 but the same was withdrawn without the permission and knowledge of the petitioner.

3.4. Learned advocate Mr.Upadhyay further relied upon the additional affidavit filed on behalf of the petitioner raising the grounds that subsequent

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notification dated 12.02.2016 whereby, Regulation 19 of the Regulation 1961 has been amended with prospective effect ought to have been applied in the case of the petitioner who has attained the age of 58 years after coming into force the notification in the year 2016. It was therefore submitted that the premature compulsory retirement of the petitioner in the year 2010 is required to be quashed and set aside and the service of the petitioner is required to be considered till he attained the age of 58 years in the year 2017.

4.1. On the other hand, learned advocate Mr.R.D.Dave appearing for the respondent No.2-Corporation submitted that the substituted Regulation 19 of Regulation 1961 has come into effect in the year 2016 only and therefore, when the petitioner was made compulsorily retired on completion of 30 years of service in the year 2010 when unamended Regulation 19 was in operation which cannot be reconsidered as substituted Regulation has been made applicable prospectively.

4.2. It was submitted that if such Regulation is given retrospective effect then the same would not have been approved by the State Government as it would have resulted into enormous financial burden upon the State Government. It was also submitted that as the petitioner was member of the Staff Union, his case was represented before this Court and therefore, the petitioner now cannot re-agitate the issue on the

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ground that no consent or permission was taken from the petitioner before withdrawing the Special Civil Application No.15090 of 2010.

4.3. Learned advocate Mr.Dave submitted that the petitioner was aware about the Regulation 19 of Regulation 1961 when he joined the service in the year 1980 and accordingly, the petitioner retired on completion of 30 years of service as it was an automatic retirement pursuant to the Regulation 19 which was existing on completion of 30 years of service of the petitioner in the year 2010.

4.4. It was submitted that the impugned order dated 20th December, 2010 which was passed informing the petitioner about his retirement on completion of 30 years of service as per law cannot be assailed on any ground more particularly when the Division Bench of this Court in Letters Patent Appeal No.1253 of 2005 has held that the regulations are framed in exercise of power conferred by Section 48 of the Act of the State Financial Corporation Act, 1951 i.e. they are statutory in nature, they are binding to the Corporation and its employees with equal force. The Substantive provision under Regulation 19 makes it compulsory for the employee of the Corporation to retire after completion of 30 years of service and such a provision is a binding provision. Unless the Corporation exercises discretion to extend the service of an employee after he completes 30 years of service, the employee concerned has to retire. Such

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an employee would have no right to claim extension or continuance in service after he completes 30 years of service.

4.5. It was therefore submitted that as the petitioner has completed 30 years of service in the year 2010, he cannot claim any right to continue in service in view of the Regulation 19 of Regulation 1961 as it existed in 2010 which was binding upon the respondent-Corporation.

4.6. Learned advocate Mr.Dave further submitted that the Division Bench also considered the applicability of the draft regulations up to year 2004 to the employees and relied upon the observations made by the Division Bench to the effect that the Corporation has closed down due to such approach and therefore the petitioner cannot be given such benefit.

4.7. It was also submitted that the judgment of the Division Bench was passed in the year 2008 wherein, categorically it is held that the Regulation 19 of Regulation 1961 would be applicable to the employees of the Corporation and therefore, when the petitioner completed 30 years of service in 2010, the judgment of the Division Bench was binding upon the Corporation and the petitioner has no other option but to retire as the Corporation did not press into service either 1st Provisio or 2nd Provisio to Regulation 19 extending the service of the petitioner on completion of 30 years. It was therefore submitted

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that the petition is devoid of any merit and is required to be dismissed.

5. Having heard the learned advocates for the respective parties and having gone through the materials on record, the only issue raised by the petitioner that the Regulation 19 of regulation 1961 is not applicable to the petitioner but Regulation 18 of Regulation 1979 is applicable to the petitioner is not tenable in view of the decision of the Division Bench in Letters Patent Appeal No.1253 of 2005 in case of Gujarat State Financial Corporation Vs. K.D.Patel Manager (Accounts Section) & 1 wherein, the Division Bench has held as under :

"We are unable to agree with Mr.Nanavati that Regulation 19 provides for three different termini for the employees of the Corporation. Indisputably, the retirement on reaching the age of superannuation is a condition of service, so it is for the employees of the Corporation. Ordinarily the date of superannuation is and has to be a definite date, generally the attainment of a certain age. In case of the Corporation, the criterion is not the attainment of the age but the length of service i.e. 30 years of service rendered after attaining the age of 21 years but not later than attainment of the age of 58 years. Thus the date of superannuation of the employee of the Corporation is a definite date i.e. the date on which the concerned employee completes 30 years of service or attains the age of 58 years, whichever be the earlier. In other words, if an employee attains the age of 58 years before he completes the service of 30 years, he would retire on attaining the age of 58 years and will have no right to continue in service till he completes 30 years of service.

The first proviso to Regulation 19 empowers the Corporation to extend the service of its employees after he completes 30 years of service or attains the age of 58 years but not beyond the age of 60 years. The first proviso confers a discretion upon the Corporation to extend the service of its employees but does not confer a corresponding right upon the employee to claim such extension. In our opinion, if at all the service of an employee is intended to be extended in exercise of the powers conferred by the first proviso, the Corporation is required to give its active consideration and make a specific order.

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The 2nd proviso to Regulation 19, inter alia, confers power upon the Corporation to retire its employee on his attaining the age of 55 years or on completion of 30 years of service whichever is earlier or on any date thereafter after giving three months previous notice in writing. In our opinion, the reference to completion of 30 years in this proviso is otiose in as much as completion of 30 years of service is the date of compulsory retirement under the substantive Regulation 19. Such retirement would not amount to premature retirement or unexpected curtailment of the service. In other words, this proviso can be invoked to curtail the service of the employee of the Corporation on his attaining the age of 55 years before he reaches the age of superannuation under the substantive Regulation 19 i.e. before he completes 30 years of service.

As recorded hereinabove, the Regulations are framed in exercise of power conferred by Section 48 of the Act of 1951 i.e. they are statutory in nature; they are binding to the Corporation and its employees with equal force. The substantive provision under Regulation 19 makes it compulsory for the employee of the Corporation to retire after completion of 30 years of service. It is a binding provision. Unless the Corporation exercises discretion to extend the service of an employee after he completes 30 years of service, the employee concerned has to retire. Such an employee will have no right to claim extension or continuance in service after he completes 30 years of service.

True, the said provision has not been complied with in past. That only displays lack of regard/respect for the statutory regulations framed by the Corporation. No wonder the Corporation is on the verge of closure. The learned Single Judge has held that since the said regulation has not been implemented/invoked thus far, it cannot now be implemented or its implementation now would amount to discrimination amongst the employees of the Corporation. We beg to defer from the view expressed by the learned Single Judge. We have recorded hereinabove and we reiterate that the regulations are statutory and are binding. The implementation of the regulations is mandatory and not a matter of discretion. If the Corporation has roused from its slumber at a belated stage and it has now started to implement the binding Regulations, we will not call it an arbitrary action. We, therefore, hold that the action of the Corporation in retiring the concerned respondents who had completed 30 years of service was in consonance with Regulation 19 and cannot be questioned. It may, however, be noted that in the present set of matters the concerned respondents had not been retired on the date they completed 30 years of service as they ought to have been in compliance with Regulation 19. In our view, the Corporation has indeed made delay in implementing Regulation 19. But, merely because such employees were continued in service beyond

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the due date of superannuation, in absence of an express order extending their service, such employees did not have a right to continue in service once they had reached the age of superannuation. The fact that they were retired from service after giving notice of three months as envisaged by the 2 nd proviso of Regulation 19 was, in our opinion, of no consequence. Retirement on completion of 30 years' service is compulsory. The retirement of concerned respondents who had completed 30 years' service was under substantive Regulation 19 and not under the 2nd proviso to Regulation 19 as urged by Mr.Sinha.

We do agree that the 2nd proviso to Regulation 19 does not incorporate into itself the criteria on which or the circumstances in which the said 2nd proviso may be invoked. But, should that in itself render the said 2nd proviso unconstitutional and invalid; cannot the said 2 nd proviso be read down, as it has been done in case of many a legislative enactment, to read "public interest" in it to make it constitutionally valid. We believe that can be done. We, therefore, hold that the Corporation is authorised to invoke the 2nd proviso to Regulation 19 if it is of the opinion that in the interest of public it is required to curtail the service of any of its employees before he reaches the age of superannuation, i.e. before he completes 30 years of service and before he attains the age of 58 years. If the public interest warrants, the Corporation can invoke the power conferred by the 2nd proviso to Regulation 19 and retire its employee on his attaining the age of 55 years after giving him three months' notice.

This brings us to the last question, whether on the facts of the present case the action of the Corporation in retiring its employees, the concerned respondents on their attaining the age of 55 years, before the due date of superannuation, after giving them notice of retirement of three months was valid or not or was in public interest or not.

In answer to the petitions, the Corporation has made counter affidavit. It is stated that the Corporation is established and is engaged in financing the entrepreneurs in the State of Gujarat to ensure an overall industrial growth in the State of Gujarat. For various reasons beyond the control of the Corporation, the repayment by the industrial units has been adversely affected. The Corporation is unable to make recovery. A large number of industrial units are declared "non-performance assets". As a result, the Corporation has suffered heavy loss. By 31st March, 2004 the accumulated losses had risen to Rs.734.58 crores. In the circumstances the Corporation itself required financial restructuring, several measures were taken towards it. The Corporation has stopped extending finance to the new loanees since the year 2001. The only activity now the Corporation carries on is the recovery of its outstanding dues from the concerned borrowers. In the

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year 2003 the Corporation had also offered voluntary retirement scheme for its employees to overcome the problem of surplus staff. However, not many of its employees availed of or accepted the said offer. The employees before this Court, the concerned respondents are those employees who did not accept the offer of voluntary retirement. The Corporation was, therefore, required to take drastic measures to reduce its establishment cost with a view to reducing its financial burden. In furtherance of its decision to reduce the financial burden, the Corporation decided to terminate the service of the surplus staff by invoking the power conferred by the 2 nd proviso to Regulation 19. Thus, the service of the employees who attained the age of 55 years was terminated by giving them notice of retirement of three months as envisaged by the 2 nd proviso. Thus, there is no dispute that the power of premature retirement conferred by the 2nd proviso to Regulation 19 has been invoked with a view to removing the surplus staff, or in the language of Mr.Sinha, to reduce the surplusage.

This raises the issue, whether the exercise of power of premature retirement with a view to reducing the staff strength or steps taken to reduce the establishment cost can be said to be the action taken in public interest. The words "public interest" are defined nowhere. Every such case is required to be examined on the touchstone of "public interest" keeping in view the attending factors. It is indisputable that the Corporation is a statutory corporation, a State within the meaning of Article 12 of the Constitution of India. It is funded by the public funds. The loss incurred by the Corporation is loss to the public fund. The expenses incurred by the Corporation are also funded by the public exchequer. In our view, if any action is taken to save the public funds or public exchequer, such action would definitely fall within the meaning of the phrase "public interest".

In view of the above discussion, we read down the 2 nd proviso to Regulation 19 to read the words "in public interest" in it to uphold the constitutional validity of the said 2nd proviso. We further hold that the action of the Corporation in retiring its employees on their attaining the age of 55 years by giving them notice of retirement of three months with a view to reducing its establishment cost or with a view to shedding off its financial burden was in public interest. Such an action need not be interfered with.

It is also the grievance of the concerned employees that they are the only ones who are singled out for implementing Regulation 19. Neither before them or after them any of the employees of the Corporation has been retired from service before he attained the age of 58 years. After the retirement of the concerned respondents service of many of the Corporation's employees is saved by sending them out on deputation. The concerned respondents also could be meted the same treatment.

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Mr.Nanavati has submitted that in view of the pending litigation the Corporation has stayed its hand in implementing Regulation 19. It is obvious that in due deference to the judgment of the learned Single Judge, though its implementation is stayed pending these Appeals, the Corporation has not taken any action in contravention of the decision rendered by the learned Single Judge. We are of the opinion that such action by the Corporation does not amount to discrimination as urged by Mr.Sinha. As discussed hereinabove, the Corporation cannot be prevented from implementing the Regulations, which are mandatory in nature.

In view of the above discussion, we allow all these Appeals. The impugned judgment and order dated 9th September, 2005 passed by the learned Single Judge in the above writ petitions is quashed and set-aside. The writ petitions are dismissed. The parties will bear their own cost."

6. Against the above judgment of the Division Bench, Writ Petition (Civil) No(s). 13 of 2010 filed by the Gujarat State Financial Corporation Staff Union and Another was dismissed by the Apex Court by order dated 15.01.2010. As such there was no other issue required to be raised before the High Court as all issues are considered by the Division Bench which are raised in this petition as stated in the aforesaid order and therefore, the subsequent petition filed by the Gujarat State Financial Corporation Staff Union raising similar issue was rightly not pressed before this Court as the issue was squarely covered by the aforesaid decision of the Division Bench.

7. With regard to the notification dated 12.02.2016 by which Regulation 19 of Regulation 1961 is substituted also cannot be applied retrospectively as such notification specifically states that the substituted Regulation 19 would come into force from

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the date of publication of such notification in the Official Gazette. The petitioner has been compulsorily retired in the year 2010 on completion of 30 years of service as per Regulation 19 of Regulation 1961 which was prevailing at relevant time together with the direction of the Division Bench and therefore, the respondent Corporation has no other option but to retire the petitioner on completion of 30 years as the respondent Corporation did not invoke 1st Provisio or 2nd Provisio of Regulation 19 for extension of service of the petitioner.

8. It is necessary to refer to Regulation 19 of Regulation 1961 which reads as under :

"19. Superannuation and Retirement:- An employee shall retire on his attaining the age of 58 years or on completion of 30 years of service whichever is earlier :-

Provided that the Board may at its discretion retain an employee in service after completing 30 years of service or on attaining the age of 58 years by sanctloning from time to time extension of such employee's employment for a period not exceeding one year at a time if such an employee is physically and mental fit and that such extension of service shall in no case be sanctioned beyond the age of 60 years.

Provided further that the Board may after giving three months previos notice in writing required an employee to retire from the service on the date on which such an employee attains the age of 58 years or or completion of 30 years of service whichever is earlier or any date thereafter to be specified in the notice. An employee may, however, after giving at least three months' notice in writing to the Managing Director retire from service on the date on which he attains age of 55 yeers or on completion of 30 years of service whichever Is earlier or on any other date to specified in the notice.

Explanation -- I : For the purpose of this Regulation service shall not include any period of service rendered by an employee before attaining the age of twenty one years.

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Explanation ~ Il : Notwithstanding anything contained in this Regulation where an employee has at the credit of his leave accourit ordinary leave earned and has insufficient time before the date of retirement either:-

(1) Formally applied for leave and been refused it, or

(2) ascertained in writing from the Managing Director, that leave if applied for would not be granted he may be permitted to avail of the leave so refused and in that case the employee would be deemed to have retired from service on the expiry of the leave."

9. The aforesaid Regulation has been applied by the respondent No.2-Corporation. The reliance placed by the petitioner on the Regulation of 1979 is also misplaced in view of the fact that Regulation 1979 has never been approved or adopted by the respondent No.2-Corporation as discussed in detail in the order of the Division Bench as quoted herein above and therefore no further elaboration is required to be made on this submission made on behalf of the petitioner.

10. In view of the foregoing reasons and considering the fact of the case, no case is made out by the petitioner and accordingly, the petition is dismissed. Notice is discharged.

(BHARGAV D. KARIA, J) PALAK