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CASE NO.: Appeal (civil)  2411 of 2006

PETITIONER: Nagar Mahapalika (Now Municipal Corpn.)

RESPONDENT: State of U.P. & Ors.

DATE OF JUDGMENT: 02/05/2006

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T  (@ S.L.P. (CIVIL) NO. 23732 OF 2004)

S.B. SINHA, J :

       Leave granted.

       The Appellant herein is a Municipal Corporation.  It was  constituted under the U.P. Nagar Mahapalika Adhiniyam, 1959 (for short,  "the Adhiniyam").   

       For the purpose of recruitment of employees, the procedures laid  down in the Adhiniyam under which it was constituted and the rules  framed thereunder were required to be complied with by the Appellant.   The appointments of the Respondents indisputably were not made in  terms of the statute.  They were appointed as apprentices by the  Administrator of the Municipality by an order dated 11.12.1985.           The Government of Uttar Pradesh created 39 posts for  Quinquennial Assessment of tax upto 31st March, 1986 or till the time the  same were abolished in the scales of pay enumerated therein which was  communicated to the Administration by a letter dated 19.12.1985 subject  to the following conditions:

"3. Only ad-hoc appointments are to be made on the  aforesaid posts and if there is no work, or if there is  no requirement even before the sanctioned period.

4. After 31st March, 1986, all the above posts shall  be abolished compulsorily and the appointments  should not be extended beyond that period on any  condition."

       The following facts are not in dispute.  The Respondents were  appointed on an adhoc basis purported to be as apprentices on payment of  apprentice allowance at the rate of Rs. 230/- per month by an order dated  20th October, 1984.  Order of sanction for creation of some temporary  posts was issued by the State of Uttar Pradesh which was the competent  authority therefore, only on 19.12.1985.  The Respondents, however,  were appointed as apprentices in the Assessment Department by orders of  the Administrator dated 5.11.1985 and 6.12.1985 wherefor an office  order was issued on 11.12.1985.

       The tenure of the services of the Respondents came to an end with  effect from 31.12.1986.  On or about 4.2.1987, they filed an application  before the Concilliation Officer, Allahabad questioning the validity or  otherwise of the said order of termination.  However, the State of Uttar  Pradesh made a reference of the following dispute for adjudication by the

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Labour Court, Allahabad by a notification dated 26.8.1987 in respect of  the Respondent Ram Chandra Gupta:

"Whether termination of the service of Shri Ram  Chandra Gupta, son of Shri Mithai Lal from the post  of clerk by the employer w.e.f. 31.12.1986 is  justified and legal?  If not, to what benefit/ relief, the  workman concerned is entitled to receive and with  details thereof?"

       Similar references were made with regard to the  other respondents  also.  By an award dated 30th November, 1998, the Labour Court arrived  at a finding that all the workmen had worked for more than 240 days  during the period 5.11.1985 and 31.12.1986 and as their services had  been terminated in violation of the provisions of Section 6-N of the U.P.  Industrial Disputes Act, the termination of their services was illegal. The  Appellant was consequently directed to reinstate them in service.   Aggrieved by and dissatisfied with the said award, a writ petition was  filed by the Appellant before the Allahabad High Court which was  marked as CMWP No. 7279 of 1989 wherein the following judgment and  order came to be passed:

"I have heard the Ld. Counsels for the parties.   During the pendency of the Writ Petition, the  operation of the impugned award shall remain stayed  subject to the condition that workmen are reinstated  and are paid their full salary from the date of the  award within two months from today.  In addition,  the Petitioner shall also deposit half of the arrears of  pay and allowances, which can be withdrawn by  workmen on adequate security.  In case, these  conditions are not complied with, this stay order  shall automatically stand vacated."

       We may hereinafter notice some relevant provisions of the  Adhiniyam.   

       Sub-clause (2) of Section 106 of the Adhiniyam provides that  qualification of a person to be appointed to the post created under sub- clause (1) thereof shall be such as may be prescribed by the State  Government.  Section 107 of the Adhiniyam deals with the appointment  to the post.  Section 108 of the Adhiniyam provides that notwithstanding  anything contained in Section 107, officiating and temporary  appointments to posts mentioned in sub-sections (1), (2) and (3) thereof  may be made by the appointing authorities specified in those sub-sections  without consulting the State Public Service Commission or obtaining the  recommendations of the Selection Committee but no such appointment  shall continue beyond the period of one year or shall be made where it is  expected to last for more than a year without consulting the State Public  Service Commission or otherwise than in accordance with the  recommendations of the Selection Committee, as the case may be.

       Section 109 of the Adhiniyam provides that the emoluments and  other conditions of services of officers, staff and other servants of the  Nagar Mahapalika shall be such as may be prescribed by the State  Government.  Section 111 of the Adhiniyam confers power on the State  Government to make appointments where any authority specified in  Section 107 fails within a reasonable time to make appointment to any  post specified in Section 106 or created thereunder.

       Section 112-A of the Adhiniyam reads as under:

(1)     Notwithstanding anything contained in Sections 106 to 110 the  State Government may at any time by rule provide for one or  more services of such officers and servants as the State

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Government may deem fit common to the Mahapalikas or to the  Municipal Board, Jal Sansthan of the State. (2)     that when any such service is created, officers and servants  serving on the post included in the service as well as the officers  and servants performing duties and functions of those posts  under sub-clause (1) of clause (ee) of Section 577 may if found  suitable be absorbed in the service provisionally or finally and  the services of others shall stand determined in the prescribed  manner. (3)     That without prejudice to the generality of the provision of sub- sections (1) and (2) such rule may also provide for consultation  with the State Public Service Commission in respect of any of  the matters referred to in the said sub-section.

       Before the High Court, a contention was raised that appointment of  the Respondents being for a fixed period as envisaged under Section  2(oo)(bb) of the Industrial Disputes Act, 1947 and furthermore in view of  the fact that their appointments being governed by the provisions of the  U.P. Municipal Corporation Adhiniyam, 1959, the award of reinstatement  was unwarranted in law.

       It was furthermore urged that in any event, the said Respondents  having been appointed only on an adhoc basis and not in terms of the  provisions of the said Adhiniyam and the rules framed thereunder, had no  legal right to continue in service.  Moreover, they having been appointed  on daily wages, their disengagement from services cannot be construed to  be ’retrenchment’ under the provisions of the U.P. Industrial Disputes  Act.

       The High Court, however, did not go into the aforementioned  questions at all.  The High Court dismissed the said writ petition only on  the premise that the workmen having completed 240 days of continuous  service and as they had been reinstated in service pursuant to the interim  order passed by the High Court, it would not be appropriate to displace  the workmen from employment and to offer other reliefs, particularly,  when a relief of reinstatement can be granted for violation of the  provisions of Section 6-N of the Act in view of the decision of this Court  in Hindustan Tin Works Pvt. Ltd. v. Employees of M/s Hindustan Tin  Works Pvt Ltd. and Others, [(1979) 2 SCC 80 : AIR 1979 SC 75].   However, they were directed to be paid 50% of the backwages.

       The learned counsel appearing on behalf of the Appellant would  contend that having regard to the nature of appointment, the impugned  award could not have been passed.  The learned counsel appearing on  behalf of the Respondent, on the other hand, would support the impugned  award.  

       This is one of those cases which clearly depict as to how the  officers of the local-self government at their own whims and caprice have  been making appointments without following the procedures laid down  under the Adhiniyam.  The Administrator of a Municipal Corporation is a  public servant.  He was bound to follow the provisions of the Adhiniyam  and the Rules.  It is surprising  how the Respondents could be appointed  even prior to creation of the temporary posts by the State.  The  Appointing Authority has now taken a stand that the Respondents had  been appointed in terms of the order of sanction dated 19.12.1985.  The  offers of appointment, precede the said date.  The Respondents although  purported to have been appointed as apprentices, were appointed as   clerks on daily wages in the Assessment Department.  Evidently, the  provisions of the Apprentice Act, 1961 have also not been followed.  The  officers appeared to be absolutely ignorant of the provisions of the said  Act.  They even do not know how offers of appointment should be issued.

       This Court in a large number of decisions has expressed its concern  on how and in what manner appointments on daily basis or by way of ad

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hoc arrangement are made in flagrant violations of constitutional  provisions enshrined under Articles 14 and 16 of the Constitution of India  and/ or the statutory recruitment rules.  This Court has also been noticing  that the State or the public sector undertakings or the local self  governments themselves are making all endeavours to regularise the  services of such employees who have entered the services through the  backdoor.  The Industrial Tribunals, in some cases the High Courts also,  had been generous enough to direct regularisation for the services of such  workmen without proper application of mind.   

       Recently, a Constitution Bench of this Court has held that such  appointments being contrary to the provisions of Articles 14 and 16 of the  Constitution of India are illegal. [See Secy., State of Karnataka & Ors. v.  Umadevi & Ors., [2006 (4) SCALE 197].

       It is, however, difficult for us to accept that the Respondent have  been appointed on temporary basis pursuant to the said GO dated  9.12.1985 or such appointments were made for a fixed tenure within the  meaning of the provisions of sub-clause (bb) of clause (oo) of Section 2  of the Industrial Disputes Act.

       We, however, do not agree with the High Court that as by way of  an interim order the award was directed to be implemented, the same  should itself form the basis for dismissing the writ petition.   

       The High Court exercised its discretion in not granting an interim  relief in favour of the Appellant.  In view of the refusal on the part of the  High Court to grant an interim relief as was prayed for by the Appellant,  the Appellant implemented the award pending the appeal which can only  be subject to appeal, that would not mean that the High Court would not  or should not go into the merit of the matter.  In fact it is the duty of the  High Court to consider the appeal on merits.  It is unfortunate that the  writ petition filed in the year 1989 has been disposed of in 2004 but the  Appellants cannot be blamed therefor.  The Respondents might have  continued in service for more than 14 years only because the High Court  did not pass any interim order, but the same, in our opinion, should not  have formed the basis for making the interim order absolute or for non- consideration of  the merit of the matter.

       In our opinion, the High Court did not adopt a correct approach in  the matter.   

       Non-compliance of the provisions of Section 6-N of the U.P.  Industrial Disputes Act, although, may lead to the grant of a relief of  reinstatement with full backwages and continuity of service in favour of  the retrenched workmen, the same would not mean that such a relief is to  be granted automatically or as a matter of course.   

       The Labour Court in its award did not take into consideration the  relevant facts for exercise of its discretion in granting the relief.             It is now well-settled, by reason of a catena of decisions of this  Court, that only because the Labour Court may grant the relief of  reinstatement with full backwages, the same should be granted as a matter  of course.  The Appellant herein has clearly stated that the appointments  of the Respondents have been made in violation of the provisions of the  Adhiniyam.  An appointment made in violation of the provisions of  Adhiniyam is void.  The same, however, although would not mean that  the provisions of the Industrial Disputes Act are not required to be taken  into consideration for the purpose of determination of the question as to  whether the termination of workmen from services is legal or not but the  same should have to be considered to be an important factor in the matter  of grant of relief.  The Municipal Corporation deals with public money.   Appointments of the Respondents were made for carrying out the work of  assessment.  Such assessments are done periodically. Their services, thus,

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should not have been directed to be continued despite the requirements  therefor having come to an end.  It is, therefore, in our considered view,  not a case where the relief of reinstatement should have been granted.  

       In Branch Manager, M.P. State Agro Industries Development  Corpn. Ltd. & Anr. v. Shri S.C. Pandey [(2006) 2 SCALE 619], it is  stated:

"The Industrial Court as also the High Court  applied the principles of estoppel  on the finding  that the respondent was transferred from Morena  to Gwalior.  If his appointment was void, being  contrary to regulations, in our opinion, the  procedural provisions like estoppel or waiver were  not applicable.  If an appointment made by the  Branch Manager was wholly without jurisdiction,  the order of appointment itself was void.   Furthermore, the contention of the appellant had  been that in terms of Regulation 16 of 1976  Regulations only the Managing Director of the  Corporation could issue an offer of appointment.   It has not been found  by the Industrial Courts or  the High Court that the Branch Manager and the  Regional Manager were authorized to make  such  appointments.  The appointment of the respondent,  thus, must be held to have been made only to meet  the exigencies of services and not in terms of the  service regulations.  The appointment of the  Respondent, thus, could not have been made for  filling up a regular vacancy for the purpose of  invoking Rule 2 of the Standing Orders.   

However, it has not been contended that the  services of the respondent were not governed by  the provisions of the Industrial Disputes Act.  He  worked from 16.9.1985 to 19.5.1987.  He must  have, thus, completed 240 days of service.  The  termination of his services without complying with  the provisions of Section 25F of the Industrial  Disputes Act was, thus, illegal.  He, however,  had  unjustly been directed to continue in service by   reason of an interim order.  He has been continuing  in service pursuant thereto.  

       The appellant, in our opinion, cannot be  made to suffer owing to a mistake on the part of  the court.  The respondent also cannot take  advantage of a wrong order.

In the peculiar facts and circumstances of  the case, we, therefore, of the opinion that interest  of justice would be sub-served  if, in place of  directing reinstatement of the services of the  respondent, the appellant is directed to pay a sum  of Rs. 10,000/- by way of compensation to him.  It  is directed accordingly.  The orders under  challenge are set aside.  The appeal is allowed with  the aforementioned directions and observations."    

       The learned counsel appearing on behalf of the Respondents has  strongly relied upon a decision of this in S.M. Nilajkar and Others v.  Telecom District Manager, Karnataka [(2003) 4 SCC 27] wherein this  Court was considering the question as to whether the interpretation of the

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expression "the termination by the employer of the service of a workman  for any reason whatsoever" has been employed by the Parliament while  defining the term "retrenchment".  It was held:

"12. "Retrenchment" in its ordinary connotation is  discharge of labour as surplus though the business or  work itself is continued. It is well settled by a catena  of decisions that labour laws being beneficial pieces  of legislation are to be interpreted in favour of the  beneficiaries in case of doubt or where it is possible  to take two views of a provision. It is also well  settled that Parliament has employed the expression  "the termination by the employer of the service of a  workman for any reason whatsoever" while defining  the term "retrenchment", which is suggestive of the  legislative intent to assign the term "retrenchment" a  meaning wider than what it is understood to have in  common parlance. There are four exceptions carved  out of the artificially extended meaning of the term  "retrenchment", and therefore, termination of service  of a workman so long as it is attributable to the act of  the employer would fall within the meaning of  "retrenchment" dehors the reason for termination. To  be excepted from within the meaning of  "retrenchment" the termination of service must fall  within one of the four excepted categories. A  termination of service which does not fall within  categories (a), (b), (bb) and (c) would fall within the  meaning of "retrenchment"."

       In Nilajkar (supra), this Court cannot be said to have laid down a  law having  universal application.  In that case also backwages had been  denied by the learned Single Judge of the High Court which order was  held to be just and reasonable.  Therein, the question which arose was  whether in fact the Appellants therein were appointed in a project work.   

       The said decision has been distinguished by this Court in various  decisions including Executive Engineer, ZP Engg. Divn. And Another v.  Digambara Rao and Others [(2004) 8 SCC 262] which in turn has been  followed in a large number of decisions.

       However, there cannot be any dispute that provisions of Section 6- N of the U.P. Industrial Disputes Act have not been complied with.  We  are, however, of the opinion that in stead and in place of issuing a  direction for reinstatement of service, interests of justice shall be sub- served if compensation of Rs.30,000/- per person is directed to be paid.   

       It goes without saying that the Respondents would be entitled to  wages and other remunerations in terms of the interim order passed by the  High Court so long they have actually worked.  We, furthermore, hope  and trust that in all future appointments, the Appellant shall strictly  follow the provisions of the Adhiniyam and the Rules.

       The Appeal is allowed in part and to the extent mentioned  hereinbefore.  No costs.