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CASE NO.: Appeal (civil)  1402-1404 of 2005

PETITIONER: Food Corporation of India & Ors.                                 

RESPONDENT: Bhanu Lodh & Ors.                                                

DATE OF JUDGMENT: 24/02/2005

BENCH: K.G. Balakrishnan & B. N. Srikrishna

JUDGMENT: J U D G M E N T (Arising out of SLP (C) Nos. 9016 - 9018 of 2004) with Special Leave Petition (C) No. 11475 of 2004

SRIKRISHNA, J.

       Leave granted in Special Leave Petition (Civil) Nos. 9016-9018 of  2004. These appeals are directed against the common judgment of the  Division Bench of the Gauhati High Court in Writ Appeals Nos. 78/2002,  79/2002 and 102/2002.  

The material facts relevant for deciding the present appeals lie in a  narrow compass. The appellants in the appeals arising out of Special Leave  Petition (C) Nos. 9016-9018 of 2004 are the Food Corporation of India  (hereinafter referred to as the ’FCI’), its officers and the Union of India. The  respondents in these appeals are the employees of the FCI, who were  candidates for direct recruitment to certain posts. The petitioner in Special  Leave Petition (C) No. 11475 of 2004 is one more such candidate of the  FCI, and the Union of India, FCI and its officers are the respondents in the  said special leave petition.  

Statutory Provisions: The FCI was established by the Food Corporations Act, 1964  (hereinafter referred to as ’the Act’), which was brought into force with  effect from 17th December, 1964. As the preamble of the Act indicates, this  is a Corporation established "for the purpose of trading in foodgrains and  other foodstuffs and for matters connected therewith and incidental thereto".  Section 13 of the Act declares that "it shall be the primary duty of the  Corporation to undertake the purchase, storage, movement, transport,  distribution and sale of foodgrains and other foodstuffs". For the purpose of  carrying on the business assigned to it under the Act, FCI had been invested  with the power of management of the Corporation and the authority to  employ such officers and employees as may be required for the efficient  carrying out of its statutory work.  Section 6 of the Act deals with the  management of the Corporation and provides  as under: "Management ---(1) The general superintendence,  direction and management of the affairs and business of  the Corporation shall vest in a board of directors which  may exercise all such powers and do all such acts and  things as may be exercised or done by the Corporation  under this Act.

(2)  The board of directors, in discharging its functions,  shall act on business principles having regard to the  interests of the producer and consumer and shall be  guided by such instructions on questions of policy as may  be given to it by the Central Government.

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(3)  If any doubt arises as to whether a question is or is  not a question of policy, the decision of the Central  Government thereon shall be final."

Section 12 of the Act deals with the power of the Central Government to  employ officers and other employees of Corporation and reads as under:  "Officers and other employees of Corporation ---      (1) The Central Government shall, after consultation with  the Corporation, appoint a person to be  the Secretary of  the Corporation.

(2)  Subject to such rules as may be made by the Central  Government in this behalf, the Corporation may appoint  such other officers and employees as it considers  necessary for the efficient performance of its functions.

(3)  The methods of appointment, the conditions of  service and the scales of pay of the officers and other  employees of the Corporation shall---

(a)  as respects the Secretary, be such as may be    prescribed; (b)   as respects the other officers and employees, be    such as may be determined by regulations made by  the Corporation under this Act."

Section 12A of the Act empowers the Central Government to transfer certain  types of Government employees, serving in the Department of the Central  Government dealing with food  or any of its subordinate or attached offices,   to the FCI. Section 45 of the Act invests power in the FCI to make  regulations "not inconsistent with this Act and the rules made thereunder, to  provide for all matters for which provision is necessary or expedient for the  purpose of giving effect to the provisions of this Act." Under sub section  (2)(a) of Section 45 such regulation may provide for "the methods of  appointment, the conditions of service and the scales of pay of the officers  and employees of a Food Corporation."  In exercise of its power under  Section 45, the FCI has framed regulations styled as the "Food Corporation  of India (Staff) Regulations, 1971."

Facts:

       During the period 6 to 12 November, 1993 the FCI issued an  advertisement for direct recruitment to the  posts of Joint Managers/Deputy  Managers in the Corporation. During the period 26th August, 1994                to  19th July, 1995,   the process of recruitment for the post of Joint Manager  was completed and the select list of the candidates was finalized with the  approval of the Executive Committee of the Board of     Management    of  the FCI.  On 21st August, 1995    the Government of India,                  Ministry of Food, issued a directive, purportedly in exercise of its power  under Section 6(2) of the Act.  The said directive is of some importance and  needs to be reproduced: "No. 12-6/95-FCI, Government of India Ministry of Food Procurement And Distribution

                       New Delhi dated the 21st August, 1995

O R D E R

       In exercise of the powers conferred by Section 6(2)  of the Food Corporation Act, 1964, the Central  Government is pleased to issue/reiterate the following

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policy instructions to the Food Corporation of India:-

i.      There shall not be any creation/upgradation of posts of  any level except where  completely unavoidable, New  Divisions/offices or reorganization etc., shall not be not  up/done unless absolutely essential: Even in such cases,  matching saving should be provided by surrender of  posts in the same group or of posts in the immediate lines  of promotion.  In such cases, specific prior approval of  the Board of Directors and of the Government shall be  taken.

ii.     The existing vacancies shall not be filled up by fresh  recruitment.  If, however, for specific operational reasons  filling up of any vacant post is considered absolutely  essential, prior approval of the Board and the  Government shall be obtained.

iii.    FCI shall not arrive at any understanding with Staff  Association in regard to restructuring of cadres, revision  of pay scales, including introduction of new promotion  policy and grant for new allowances, etc, unless approval  for the same has been obtained from the Board of  Directors and the Government.

iv.     FCI will not restructure cadre/revise pay scales, grant  new/revise existing allowances or change other service  conditions of its officers and staff without obtaining prior  approval of the Board of Directors and the Central  Government.

v.      FCI shall obtain prior approval of the Central  Government in fresh construction proposals/fresh  schemes which may have components of non-recurring  financial expenditure of more than Rs. One Crore or  recurring annual expenditure of more than Rs. Twenty  five lakh.

Note Paras (i), (ii) and (iii) above are in continuation of  Ministry instructions contained in D.O. Letter No. 18- 11/90 FCI dated 5.9.90                                                         Sd/-                                              (Surendra Kumar)                                         Joint Secretary (FP & D) Shri Prabhat Kumar, Chairman, Food Corporation of India, 16-20, Barakhamba Lane, New Delhi \026 110001."

While the recruitment process for direct recruitment to the post of  Deputy Managers was still being carried on, a number of complaints  were received by the Government of India with regard to the manner  in which direct recruitment of departmental candidates was being  done by excessive relaxation of the maximum age. Several reports by  the Executive Director (Vigilance) were made in this regard. Several  complaints were also received with regard to irregularities/anomalies  committed during recruitment exercise. It was found that, though the  maximum age prescribed under the Recruitment Rules was 35-40,  departmental candidates of age 52-53 years were proposed to be  appointed for the posts.  Considering all these factors, the Government  of India issued a second directive dated November 6, 1995 imposing a  complete ban on the recruitment process, and declared the recruitment  process to be treated as null and void for flagrant violation of the

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recruitment regulations for the said post.  The said directive dated 6th  November, 1995 reads as under:

"Joint Secretary Government of India Ministry of Food Krishi Bhawan, New Delhi-110001.

D.O. No. 10-4/95-FCI                    November 6, 1995

Dear Shri Asthana,

       The issue relating to direct recruitment to the post  of Deputy Manager (Genl.), Joint Manager (Accounts),  Joint Manager (Genl.), Deputy Manager (PF/& OP),   Deputy Manager (CC) Deputy Manager (Accounts) and  Deputy Manager (Legal) in the Food Corporation of  India on the basis of advertisement in November, 1993  was engaging the attention of the Ministry for quite some  time.  In this connection, letters received from Executive  Director (Vigilance) bearing numbers Vig. 21(54)/95  dated 27th March, 1995, 5th May, 1995, 28th June, 1995  and from Manager (PE) No. 12-1/95-PP dated 12th June,  1995 and No. 1-6/95-RP.1 dated 25th July, 1995 are  relevant.  The intervention in the recruitment process was  as a sequel to a number of complaints from various  quarters, including from staff Body of the Corporation  relating to irregularities/anomalies committed during the  recruitment exercise.

2.      Having regard to the views/facts furnished by the  Corporation, established violation of Recruitment Rules  and in the interest of fairness and equity and Government  has decided that the whole direct recruitment process in  respect of the aforesaid categories/number of posts be  treated as null and void because of flagrant violations of  the Recruitment Regulations of the concerned posts, For  example, departmental candidates of age 52-53 years  were proposed to be appointed when the maximum age  prescribed under Recruitment Rules is 35/40 years. It  would be desirable to follow the Recruitment Regulations  more objectively.

3.      The FCI may separately approach the Ministry for  clearance for making direct recruitment to specified  number/category of posts as required under the  Directives dated 21st August 1995, with full justification.

               With regards,                                                          Yours Sincerely,

                                                      Sd/-                                                 (Surendra Kumar) Shri Prabhat Kumar, Chairman, Food Corporation of India, 16-20, Barakhamba Lane, New Delhi-110001."

Though, as a consequence of the said directive, the FCI did not further  process for the selection for the posts of Deputy Managers, which had not

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yet been approved by the Executive Committee of the Board of FCI, the  process was carried further in the case of  selection to the posts of Joint  Managers, these had already been approved, and  the number of such posts  was about seven. The freeze put on the appointment of departmental  candidates resulted in a spate of litigation. The officers/employees in Andhra  Pradesh region moved the High Court of Judicature, Andhra Pradesh by writ  petition No. 18960 of 1994 challenging the action by the Central  Government as beyond the purview of Section 6 of the Act. The learned  Single Judge of the Andhra Pradesh High Court dismissed the writ petition  by taking the view that the directives were very much within the ambit and  scope of Section 6 of the Act. A Letters Patent appeal thereagainst was also  summarily dismissed.  A similar view was also taken by the learned Single  Judge of the Jammu & Kashmir High Court, though we are informed that a  writ appeal filed there is pending disposal.

       The present respondent-employee filed writ petition No. 414 of 1999  before the Gauhati High Court impugning the directives issued by the  Central Government. The only question which appears to have been pressed  for decision before the learned Single Judge was: "Whether the Government of India has any lawful  authority to interfere with the internal administration of  FCI, particularly relating to the matter regarding internal  management viz appointment and service of its staff ?"

After considering the arguments addressed to him, the learned Single  Judge came to the conclusion that the power of the Central Government  under sub-sections (1) and (2) of Section 6 of the Act was confined to policy  decisions concerning the business of the Corporation. The learned Single  Judge came to the finding: "On careful perusal of the afore quoted sub-section (1)  and (2) of Section 6 of FC ACT, 1964 it appears that so  far policy decision is concerned regarding the business of  the Corporation which obviously includes procurement  storage, distribution, sale of the food grains/food stuff,  the Central Government has undoubtedly power to give  policy directions but so far internal management of its  staff is concerned which includes appointment,  promotion, transfer of the staff and employees of the  Corporation the Central Government has nothing to say."

       Three writ appeals, two by the Union of India and one by an  employee-Bhanu Lodh, were carried against the judgment of the learned  Single Judge.  The Division Bench of the High Court agreed with the  learned Single Judge with regard to the nature of the power of the Central  Government under Section 6(2) of the Act.  The Division Bench also was of  the view that service matters of the employees of the Corporation did not fall  within the ambit and scope of the expression, "business principles having  regard to the interest of the producers and consumers" occurring in Section  6(2) of the Act. Hence, according to the Division Bench, "the Central  Government had no power to issue the impugned directives". On facts, the  Division Bench was satisfied that 39 departmental candidates, who were  above the maximum age limit of 40 years, were included in the select list for  the post of Deputy Manager (Genl. Admn.) contrary to the Recruitment  Regulations. The Division Bench directed the FCI to exclude the 39  specified candidates from consideration, and consider the other employees  who qualified for appointment to the 34 posts of Deputy Manager (Genl.  Admn.) from the select list and in accordance with law.  

Being aggrieved, the Food Corporation of India is in appeal before us  in civil appeals arising out of Special Leave Petition Nos. 9016-9018 of  2004.  

Special Leave Petition No. 11475 of 2004 appears to have been filed

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by Bhanu Lodh only to canvass some of the points taken in the writ appeal,  on the ground that they were not considered in the judgment. The petitioner,  in this case, was a person whose name appears at Sl. No. 53 of the select list  and was hopeful of being appointed to one of the 34 vacancies, consequent  upon the exclusion of  39 candidates from the select list.

Contentions:

       We may first dispose of the contention raised by Mr. Sanjay Parikh,  learned counsel for the petitioner in Special Leave Petition (Civil) No.  11475 of 2004. Having perused the judgment of the learned Single Judge in  the writ petition, we find that the only question which was argued before the  learned Single Judge was the one which we have extracted hereinbefore.  No  other point seems to have been addressed to the court. A perusal of the  judgment in the writ appeal also supports this view.  In the face of this  record, it is not possible to accept the contention of the learned counsel for  the petitioner that any other arguments were addressed.  We must accept as  correct the facts as obtaining from the judgment of the High Court, which  cannot be controverted by the averments made in present special leave  petition, nor by the statement made across the Bar. We are, therefore, not in  a position to accept that any contention other than the contention placed  before the High Court was urged before the High Court. (See the  observations of this Court in Para 4 in the judgment of  State of  Maharashtra  v.  Ramdas Shrinivas Nayak and Anr. . The only  contention which appears to have been urged and examined by the High  Court pertained to the power of the Central Government to issue direction  under sub section (2) of Section 6 of the Act, which have the effect of  putting an embargo on the direct recruitment of employees.

       In our view, the words of sub section (2) of Section 6 of the Act are  very material and direct that the Board of Directors in discharging its  functions "shall act on business principles" having regard to the "interests of  the producer and consumer" and shall be guided by "such instructions on  questions of policy" as may be given to it by the Central Government.  First,  the expression "business principles" is one of widest import. We see no  reason as to why the policy of recruitment of officers/staff, which would  obviously have serious financial impact on the Corporation, is not subsumed  under this expression. Secondly, the Board of management is required to  have regard to the interest of the ’producers and the consumers’, and not  merely of the officers and employees of the FCI.  Finally, the Board is  required to discharge all its functions and be guided by the instructions on  questions of policy, which   may be given to it by the Central Government.  Questions of policy could be, not only with regard to the organization of the  FCI, its management and function, but also with regard to its employment  policy, recruitment and many other details which would, in the long run,  affect the interests of the consumers/producers for whom alone the FCI is  established under the Act. Testing it on this anvil, we find no difficulty in  holding that the directive dated 21st August, 1995 followed by the directive  dated 6th November, 1995 are well within the ambit of sub section (2) of  Section 6 of the Act. The directive dated 21st August, 1995 indicates that the  policy was not to have any creation/ upgradation of posts of any level except  where completely unavoidable. The policy was that "the existing vacancies  shall not be filled up by fresh recruitment", and that there shall be no further  revision in the conditions of service without the prior approval of the Central  Government. The policy directive issued on 6th November, 1995 was a  sequel and  highlighted something being done contrary to the Regulations.  While the maximum age prescribed under the Recruitment Rules is 35/40  years for the concerned posts, departmental candidates in the age of 52-53  years were proposed to be appointed. Even assuming that there is a power of  relaxation under the Regulations, we think that the power of relaxation  cannot be exercised in such a manner that it completely distorts the  Regulations.  The power of relaxation is intended to be used in marginal  cases where exceptionally qualified candidates are available. We do not  think that they are intended as an ’open Sesame’ for all and sundry. The

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wholesale go by given to the Regulations, and the manner in which the  recruitment process was being done, was very much reviewable as a policy  directive, in exercise of the power of the Central Government under Section  6(2) of the Act. That is the reason why by Paragraph 3 of the communication  dated 6th November 1995, the Central Government said "the FCI may  separately approach the Ministry for clearance for making direct recruitment  to specified number/category of posts as required under the Directives dated  21st August, 1995, with full justification."  In our view, there is no manner of doubt that the two directives in  question were clearly within the power of the Central Government under  Section 6(2) of the Act. In Shankarsan Dash  v.  Union of India  a  Constitution Bench of this Court laid down that there is no absolute right in  favour of a candidate whose name is included in the selection list to be  appointed. Said, the Constitution Bench, (vide para 7): "It is not correct to say that if a number of vacancies are  notified for appointment and adequate number of  candidates are found fit, the successful candidates  acquire an indefeasible right to be appointed which  cannot be legitimately denied. Ordinarily the notification  merely amounts to an invitation to qualified candidates to  apply for recruitment and on their selection they do not  acquire any right to the post. Unless the relevant  recruitment rules so indicate, the State is under no legal  duty to fill up all or any of the vacancies.  However, it  does not mean that the State has the licence of acting in  an arbitrary manner. The decision not to fill up the  vacancies has to be taken bona fide for appropriate  reasons. And if the vacancies or any of them are filled up,  the State is bound to respect the comparative merit of the  candidates, as reflected at the recruitment test, and no  discrimination can be permitted. This correct position has  been consistently followed by this Court, and we do not  find any discordant note in the decisions in State of  Haryana  v.  Subhash Chander Marwaha , Neelima  Shangla  v.  State of Haryana , or Jatendra Kumar  v.   State of Punjab ."

Merely because vacancies are notified, the State is not obliged to fill  up all the vacancies unless there is some provision to the contrary in the  applicable rules.  However, there is no doubt that the decision not to fill up  the vacancies, has to be taken bona fide and must pass the test of  reasonableness so as not to fail on the touchstone of Article 14 of the  Constitution.  Again, if the vacancies are proposed to be filled, then the State  is obliged to fill them in accordance with merit from the list of the selected  candidates. Whether to fill up or not to fill up a post, is a policy decision,  and unless it is infected with the vice of arbitrariness, there is no scope for  interference in judicial review. (See in this Connection: Government of  Orissa  v.  Haraprasad Das and Ors.  and State of Orissa and Ors.  v.  Bhikari Charan Khuntia and Ors. ).

The learned counsel for the respondents, however, strenuously urged  that even assuming the directives issued by the Central Government were  well within the parameters of Section 6(2) of the Act, there was arbitrariness  writ large in the action of the Central Government and, therefore, there was  justification for judicial interference.  It is pointed out that the posts of Joint  Manager (Accounts), and Joint Manager (Gen. Admn.) were filled, despite  the two directives.  This amounts to discrimination in the recruitment  process, according to the learned counsel for the respondents, and, therefore,  falls within the exception indicated by the Constitution Bench.  Learned  counsel for the respondents also placed reliance on Rakesh Ranjan Verma  and Ors.  v.  State of Bihar and Ors.  and Real Food Products Ltd.  and  Ors. v.  A.P. State Electricity Board and Ors. ,  to contend that, in similar  circumstances, under the provisions of the Electricity (Supply) Act, 1948,  containing similar provisions, this Court had interdicted interference by the  State Government.

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We may dispose of the contention based on discrimination first. In the  first place, this question does not appear to have been canvassed before the  High Court, irrespective of whether it was raised in the pleadings or not.  Secondly, the contention is wholly misplaced. The discrimination, if any,  can only arise as between the persons who are similarly, if not identically  situated.  It is not possible for the candidate for Deputy Manager’s post to  claim that he had been discriminated because a Joint Manager had been  appointed, for there is nothing common between these two posts.  It is  perfectly valid for the employer to fill up one category of posts and decline  to do so the other for various business reasons.  The argument of  discrimination is without basis or merit.

Learned counsel for the respondents relied on Union of India and  Ors.  v.  Rajesh P.U., Puthuvalnikathu and Anr. .  That was a judgment  in which the selection process was held vitiated on account of wide spread  infirmities in the written examination. However, it was found that the  infirmities did not affect 31 candidates who were declared successful for  appointment. In the peculiar facts and circumstances, this Court held that the  situation was not one of ’all or none’, and the selection of 31 candidates  need not have been set aside. We do not see how this judgment can be of any  help in advancing the argument of the learned counsel.  

Rakesh Ranjan Verma (supra) was a case with respect to exercise of  the power under Section 78-A of the Electricity (Supply) Act, 1948, which  was reproduced in Para 9 of the report. We notice that sub section (1) of  Section 78-A merely states, "in the discharge of its function, the Board shall  be guided by such directions on questions of policy as may be given to it by  the State Government". This is a far cry from the phraseology used in sub  section (2) of Section 6 of the Act, which we have reproduced. On facts,  therefore, the situation is quite distinguishable and this authority does not  help in determining the ambit or scope of a directive under Section 6(2) of  the Act.   Real Food Products Ltd. (supra) also arose in connection with  Section 78-A of the Electricity (Supply) Act, 1948. In this context, it was  held that where the direction of the State Government was to fix a  concessional tariff for agricultural pump-sets at a flat rate per H.P., it does  relate to a question of policy which the Board must follow. However, in  indicating the specific rate in a given case, the action of the State  Government was held to be in excess of the power of giving a direction on  the question of policy, which the Board, if its conclusion be different, was  not obliged to be bound by. We do not think that any principle, as canvassed,  can be founded on the ratio of this judgment.

Learned counsel for the respondent contended that the directives  issued by the appellants and their action in putting a freeze on the process of  direct recruitment of candidates to the Deputy Manager’s post was in  contravention of the Food Corporation of India (Staff) Regulations, 1971.   The contention is that, although Regulation 7(2) requires all appointments to  be made only if a person satisfies the qualifications and is within age limit  prescribed, there is a power of relaxation vested in the Board, which may by  order relax any of the provisions of the Recruitment Rules contained in  Appendix I, if in their opinion it is necessary or expedient so to do. The  learned  counsel contend that the Board was therefore the only authority to  arrive at the opinion that it was necessary and expedient to relax the  maximum age limit, and in doing so the Board had absolute discretion and it  was not open to the Central Government to interfere with such discretion by  the so called exercise of its powers under section 6(2) of the Act.  For this  reason also, counsel contends that the action of the appellants is liable to be  faulted.  

In our view, the contention is without merit.  In the first place, section  45 of the Act makes  it clear that the power of the Food Corporation of India  to frame regulations under the Act is subject to the general restriction that  the regulations are not inconsistent with the Act and the Rules made

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thereunder.  Section 6(2) is a provision of the Act itself which empowers the  Central Government to issue directives and bind the Board of Directors of  Food Corporation to comply with such directives. Hence, it is not possible to  read any regulation framed under section 45 as inconsistent with or  overriding a directives or instruction validly given by the Central  Government to FCI under section 6(2) of the Act. Apart therefrom, we are  not able to appreciate the argument that the power of the Board of Directors  to relax the prescribed age limit can be exercised  in such an unreasonable  manner as to distort the regulation itself.  As we have noticed, the relaxation  could not have been done for the benefit of persons who were over-aged by  about 15 years.  For both reasons, the contention fails.

Conclusion:

       In the result, we allow the appeals arising out of special leave petition  Nos. 9016-9018 of 2004. The impugned common judgment and Order dated            23rd February, 2004 of the High Court of Gauhati in Writ Appeal Nos. 78, 79  and 102 of 2002 is set aside and the corresponding writ petitions are  dismissed.

       Consequently, Special Leave Petition No. 11475 of 2004 and the  impleadment applications are dismissed.          In the circumstances of the case, there shall be no order as to costs.