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PETITIONER: S.P. DUBEY

       Vs.

RESPONDENT: M.P.S.R.T. CORPN. AND ANR.

DATE OF JUDGMENT23/10/1990

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) AGRAWAL, S.C. (J)

CITATION:  1991 AIR  276            1990 SCR  Supl. (2) 328  1991 SCC  Supl.  (1) 426 JT 1990 (4)   236  1990 SCALE  (2)819  CITATOR INFO :  D          1991 SC 310  (2,3)

ACT:     Road  Transport Corporation Act, 1950: S. 34/M.P.  State Road  Transport Corporation Employees  Service  Regulations. 1964:  Regulation 59--Private company taken over and  merged with Corporation-Age of Superannuation of existing staff  at 60  years specifically prorected-Whether amenable  to  State Service  Rules--Whether Regulation can override  the  direc- tions issued under the Act.

HEADNOTE:     The  age  of  superannuation for the  employees  of  the private  transport company in which the appellant  was  ini- tially  employed  was 60 years. When the  said  company  was taken over by the State on August 31, 1955, the notification specifically  provided that the existing staff would not  be adversely  affected with regard to terms and  conditions  of service.  Again,  when  the services 01  the  staff  of  the taken-over company were transferred to the respondent-Corpo- ration established under s. 3 of the Road Transport Corpora- tion Act, 1950, the memorandum dated May 4, 1962 recited the same  assurance. A resolution passed by the Board of  Direc- tors of the Corporation on the same day also reiterated  the said  assurance.  Subsequently, when  the  State  Government issued  directions  on October 29, 1963 to  the  Corporation under  s.  34  of the Act the said  assurance  was  embodied therein  too. However, Regulation 59 of the M.P. State  Road Transport  Corporation Employees Service  Regulations,  1964 framed  by  the  Corporation under s. 45(2)(c)  of  the  Act provided  that the employees of the Corporation were  liable to compulsory retirement on the date of their completion  of 58 years of age unless specifically permitted to continue.     When the appellant was sought to be retired from service in terms of Regulation 59 of the said Regulations on attain- ing the age of 58 years with effect from June 30, 1984 by  a notice  dated May 25, 1983, he challenged it by  a  petition under Article 226/227 of the Constitution. It was  dismissed by  the High Court on the view that on August 31, 1955  when the  appellant became State Government employee his  age  of superannuation  came to be governed by the  statutory  rules

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under Article 309 of the Constitution and the age of retire- ment  of  the State servants under the said rules  being  58 years the appellant was rightly retired. 329 Allowing the appeal, the Court,     HELD:  1.  The  appellant was entitled  to  continue  in service upto the age of 60 years.     2.1  When  the  State Government takes  over  a  private company and gives an assurance that conditions of service of the  existing staff would not he adversely affected,  it  is but fair that the State Government should honour the same.     2.2 In the instant case, the appellant was in service of the company from 1947 to August 30, 1955 in which the age of superannuation  of the employees was 60 years.  The  company was  taken  over by the State Government  with  effect  from August  31,  1955 by a notification of the same  date  which specifically  stated that the existing staff of the  company would not he adversely affected with regard to their  condi- tions  of service. The State Service Rules which  fixed  the age  of  superannuation at 58 years could not thus  he  made applicable  to  the  appellant and other  employees  of  the taken-over company.     3. Furthermore, the said assurance was also incorporated in  the  directions issued by the State  Government  to  the Corporation  under s. 34 of the Act. The  Corporation  could not  frame regulations contrary to the said  directions  and the  age of superannuation which the appellant was  enjoying under  the  State  Government could not he  altered  to  his disadvantage by the Corporation. Regulation 59 framed by the Corporation was, therefore, not applicable to the appellant.     The General Manager, Mysore State Road Transport  Corpo- ration  v. Devraj Ors and Anr., [1976] 2 SCC  862,  referred to.     4.  Since the appellant had already attained the age  of 60 years, he was only entitled to two years emoluments.  The respondents are directed to pay the same to him within three months. [334B]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1731  of 1986.     From  the  Judgment and Order dated 26.4.  1985  of  the Madhya  Pradesh  High Court in Misc. Petition  No.  1729  of 1984. Avadh Behari and S.K. Gambhir for the Appellant. 330     Rameshwar  Nath,  V.S. Dabir, Rajinder  Narain  for  the Respondents. The Judgment of the Court was delivered by     KULDIP  SINGH,  J.S.P. Dubey, employed with  the  Madhya Pradesh  State Road Transport Corporation, was retired  from service on his attaining the age of 58 years. He claims that the  age  of  superannuation was 60 years and  as  such  his retirement at 58 was illegal.     We  may state the necessary facts. Dubey joined  service as  a  junior  clerk with the  Central  Provinces  Transport Service Limited (hereinafter called the company) in the year 1947. The Board of Directors of the company by a  resolution dated  July 30, 1954 fixed the age of superannuation of  all its  employees except the drivers as 60 years.  The  company was purchased and taken Over by the State of Madhya  Pradesh by  a notification dated August 31, 1955. The relevant  part of the said notification is as under:

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"The  undertaking  will  as from the 31st  August,  1955  be entitled  ’The Central Provinces Transport  Services  (under Government  Ownership)". So far as the public  is  concerned there  will  be no change or interruption in the  course  of business  and the continuity of operation will not  be  dis- turbed and the existing staff will not be adversely affected with  regard to terms and conditions of their services.  The statutory instrument to be made in due course will  provide, among  other things that all the rights and  liabilities  of the  Central Provinces Transport Services Ltd.  will  become the  rights and liabilities of the Central Provinces  Trans- port Services (Under Government ownership) and from a  legal point of view the staff, customers and contractors can  look to  the Central Provinces Transport Services (Under  Govern- ment  ownership) to discharge all the obligations and  exer- cise  all the rights that at present rest with  the  Central Provinces  Transport Service Ltd., Rules for the conduct  of business  of the above constituted Board of  Management  are being published separately."     It  is  thus obvious that the  Government  continued  to maintain  the  Central  Provinces Transport  Services  as  a separate entity. The conditions of service, of the staff  of the taken-over company, were specifically protected. 331     The  State of Madhya Pradesh was recoganised  under  the States Reorganisation Act, 1956. The Central Government,  by a notification dated February 28, 1961, extended the  provi- sions  of Road Transport Corporation Act, 1958  (hereinafter called ’the Act’) to the State of Madhya Pradesh with effect from April 1, 1961. Thereafter the Madhya Pradesh Government acting  under  Section 3 of the Act established  the  Madhya Pradesh State Road Transport Corporation (hereinafter called Corporation)  with  effect  from May 21,  1962.  The  Madhya Pradesh Government issued two memorandums on May 4, 1962. By one  memorandum  the  services of  the  concerned  employees including  Dubey-were transferred to the Corporation and  by the  second  it  was clarified that the  said  transfer  was subject to the conditions that their service would be treat- ed  as uninterrupted and their pay-scales and conditions  of service would not be affected. On the same day and Board  of Directors  of  the Corporation passed a  resolution  to  the following effect: "Resolved that the services of the employees employed  under M.B.R.  and  C.P.T.S. on 31.5.1962 are  transferred  to  the Corporation  temporarily until further orders from  1.6.1962 on the following conditions: 1. The pay scale and conditions of service are not  affected by the transfer. 2.  The transfer will not be considered as  interruption  of services.          3.  In case of employees coming under the  category of  workman  as defined under the Industrial  Disputes  Act, 1947, the Corporation in the event of retrenchment will  pay compensation on the basis that the services had been contin- ued and had not affected by transfer."     The State Government issued directions dated October 29, 1963  to the Corporation under Section 34 of the Act.  Rele- vant part of the directions is as under: "The members of the staff of the Madhya Bharat Roadways  and Central  Provinces  Transport Services, who  have  opted  to serve  under  the Corporation in pursuance  of  the  notices issued  to them by the Commerce and Industry  Department  or any authority of the Madhya Bharat Road- 332 ways  and Central Provinces Transport Service shall  be  em-

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ployed by the Corporation subject to such regulations as may be made by it under Section 45(2)(c) of the ’Road  Transport Corporation  Act,  1950  ’(Central Act LXIV  of  1950),  and subject to ’such assurance as may have been given to them by the State Government."     The  Corporation  framed-regulations called  The  Madhya Pradesh  State Road Transport Corporation Employees  Service Regulations, 1964." Regulation 59 which provided the age  of superannuation was as under: "Employees  of/he State Transport are liable  to  compulsory retirement  on the date of their completion of fifty  eight- years  of age unless specifically permitted by the  Corpora- tion to continue in service for a specified period  thereaf- ter, but he must not be retained after the age of 60  years, without the sanction of State Government."     The  corporation issued a notice dated May 25,  1983  to Dubey  informing him that he was due to retire from  service on June 30, 1984 on attaining the age of 58 years. He  chal- lenged  the  said  notice by way of a  writ  petition  under Article  226/227  of the Constitution of  India  before  the Madhya Pradesh High Court at Jabalpur, The High Court by its judgment  dated April 26, 1985 dismissed the writ  petition. The  present  appeal  by way of special  leave  petition  is against the judgment of the High Court.     The  High  Court, following its earlier  Division  Bench judgment,  came  to the conclusion that on August  31,  1955 when the appellant became State Government employee his  age of superannuation came to be governed by the statutory rules under Article 309 of the Constitution of India operating  in respect  of the Government employees of the State of  Madhya Pradesh  and  the age of retirement of  the  State  servants under the said rules being 58 years the appellant was right- ly retired.     The appellant was in service of the company from 1947 to August  30, 1955. Admittedly, the age of  superannuation  of the company employees was 60 years. The Government of Madhya Pradesh  took over the company with effect from  August  31, 1955  by a notification of the same date.  The  notification specifically  stated that the existing staff of the  company would not be adversely affected with regard to 333 their conditions of service. It is no doubt correct that  on August 31, 1955 rules were operating in respect of the State Government employees according to which the age of  superan- nuation  was 58 years but the persons who were service  with the  company were taken into Government serving with-a  spe- cific  assurance  that their conditions  of  service  were.. not  to  be adversely affected. When the.  State  Government takes  over a private company and gives an assurance of  the types it is but fair that the State Government should honour the same. Thus, the State Service rules which fixed the  age of  superannuation at 58 years could not be made  applicable to  the  appellant  and other employees  of  the  taken-over company.  We, therefore, do not agree with the reasoning  of the High Court.     It  was then urged that on the transfer  of  appellant’s service  to the Corporation he was governed by  the  Regula- tions framed by the Corporation under the Act and Regulation 59 provided 58 years as the age of superannuation. We do not agree  with  the  contention. The  State  Government  issued directions under Section 34 of the Act which we have  repro- duced above. The said directions are binding on the corpora- tion.  This Court in The General Manager, Mysore State  Road Transport  Corporation v. Devraj ors and another,  [1976]  2 SCC 862 interpreting Section 34 of the Act held as under:

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"Directions given by the State Government are binding on the corporation  and it cannot depart from any general  instruc- tions issued under sub-section (1) of Section 34 except with the  previous permission of the State Government.  Such  in- structions have the force of law  ....  Therefore breach  of the  directions given by State Government in the  matter  of disciplinary action against the respondents was a breach  of the  statutory duty and made the action of  the  corporation amenable to the jurisdiction of the High Court under Article 226 of the Constitution".     The State Government and also the Corporation had  given assurance  to  the appellant and other  employees  who  were transferred  to  the Corporation that  their  conditions  of service would not be adversely affected. The said  assurance was incorporated in the directions issued under the Act. The Corporation cannot frame regulations contrary to the  direc- tions issued by the State Government under Section 34 of the Act. The age of superannution which the appellant was enjoy- ing  under the State Government could not be altered to  his disadvantage by the 334 Corporation. We are, therefore, of the view that  Regulation 59  flamed  by  the Corporation was not  applicable  to  the appellant.  He was entitled to continue in service upto  the age of 60 years.     We, therefore, allow the appeal with costs and set aside the  judgment of the High Court. The appellant  has  already attained  the  age of 60 years. He is only entitled  to  two years  emoluments. The respondents are directed to  pay  the same  to  the appellant within three months from  today.  We quantify the costs as Rs.5,000. P.S.S.                                       Appeal allowed. 335