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“REPORTABLE”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 4269 OF 2006

North Delhi Power Limited …. Appellant

Versus

Govt. of National Capital  Territory of Delhi & Ors. …. Respondents

WITH

CIVIL APPEAL No. 4270 OF 2006

BSES Rajdhani Power Limited & Anr. …. Appellants

Versus

Govt. of National Capital Territory of Delhi & Ors. …. Respondents

J U D G M E N T

V.S. SIRPURKAR, J

1. This judgment shall dispose of the two appeals being CA No. 4269  

of 2006 and CA No. 4270 of 2006.  Civil Appeal No.4269/2006 has been  

filed on behalf of North Delhi Power Limited and Civil Appeal No.4270 of

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2006 has been filed by BSES Rajdhani Limited.  Since a common question  

falls for consideration in both the appeals, the same are disposed of by this  

common judgment.  The question can be framed as under:

“Whether the appellants are responsible for meeting the  liabilities relating to employees who ceased to be the  employees  of  erstwhile  Delhi  Electric  Supply  Undertaking  (Predecessor  of  Delhi  Vidhyut  Board  –  DVB) prior to 1.7.2002 on account of their retirement,  removal,  dismissal  or  compulsory  retirement  in  accordance  with  the  provisions  of  Delhi  Electric  Reforms Act, 2000?”

By the impugned judgment  dated 30.3.2006 passed by the Delhi  

High Court, the High Court has held that the appellants alone would be  

responsible to meet such liabilities.   

2. In  order  to  understand  the  nature  of  controversy  and  the  

ramifications thereof, some facts common to both these appeals would be  

necessary.   

Common Facts:

3. The Legislative Assembly of the National Capital Territory of Delhi  

passed  the  Act  on  23.11.2000  being  Delhi  Electric  Reforms  Act,  2000  

(hereinafter called the “Act, 2000”).  This Act came into force on 8.3.2001.  

The Preamble of this Act reads as under:

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“An Act to provide for the constitution of an Electricity  Commission,  restructuring  of  the  electricity  industry  (rationalization of generation, transmission, distribution  and  supply  of  electricity),  increasing  avenues  for  participation of private sector in the electricity industry  and  generally  for  taking  measures  conducive  to  the  development and management of the electricity industry  in  an efficient,  commercial,  economic and competitive  manner in the National Capital Territory of Delhi and for  matter connected therewith or incidental thereto.

BE  it  enacted  by  the  Legislative  Assembly  of  the  National Capital Territory of Delhi in the Fifty-first year of  the Republic of India as follows:”

Section 2 pertains to definitions of relevant terms used in the Act  

and sub-section (1) contains the definitions clauses. Sub-sections (2) and  

(3) of Section 2 run as under:

“(2) Words and expressions used but not defined in this Act  and defined in the Electricity (Supply) Act, 1948 (Central  Act  54  of  1948)  have  the  meanings  respectively  assigned to them in that Act.

(3) Words and expressions used but not defined either in  this Act or in the Electricity (Supply) Act, 1948 (Central  Act 54 of 1948) and defined in the Indian Electricity Act,  1910  (Central  Act  9  of  1910)  have  the  meanings  respectively assigned to them in that Act.”

Thus the definitions of relevant terms under Electricity (Supply) Act,  

1948 and Electricity Act, 1910 were incorporated in the Act, 2000.  Section  

3 of the Act, 2000 provides for establishment of Delhi Electricity Regulatory  

Commission.  The functions of this Commission are provided in Section

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11.  Some of the functions, amongst others, as provided in Section 11 (1)  

are as under:

“(c) to regulate power, purchase and procurement process  of the licensees and transmission utilities including the  price  at  which  the  power  shall  be  procured  from the  generating companies, generating stations or from other  sources for transmission, sale, distribution and supply in  the National Capital Territory of Delhi;

(d) to promote competition, efficiency and economy in the  activities of the electricity industry to achieve the objects  and purposes of this Act;

(e) to aid and advise the government in matters concerning  electricity  generation,  transmission,  distribution  and  supply in the National Capital Territory of Delhi;

(h) to  promote  competitiveness  and  make  avenues  for  participation of private sector in the electricity industry in  the National Capital Territory of Delhi and also to ensure  a fair deal to the customers;

(k) to  regulate  the  assets,  properties  and  interest  in  properties concerned or related to the electricity industry  in the National  Capital  Territory of  Delhi  including the  conditions  governing  entry  into,  and  exit  from  the  electricity industry in such manner as to safeguard the  public interest;

(l) to  issue  licences  for  transmission,  bulk  supply,  distribution  or  supply  of  electricity  and  determine  the  conditions to be included in the licences;”

4. Under Section 14 of the Act, 2000, the subject of incorporation of  

companies for the purposes of generation, transmission or distribution of

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electricity  was  dealt  with.   Sub-sections  (1),  (2)  and (6)  of  Section  14,  

which are relevant for our purposes provide as under:

“14(1)The  government  may,  as  soon  as  may  be  after  the  commencement  of  this  Act,  cause  one  or  more  companies  to  be  incorporated  and  set  up  under  the  provisions of the Companies Act, 1956 (Central Act 1 of  1956)  for  the  purpose  of  generation,  transmission  or  distribution of electricity, including companies engaged  in more than one of the said activities in the National  Capital Territory of Delhi and may transfer the existing  generating  stations  or  the  transmission  system  or  distribution  system,  or  any  part  of  the  transmission  system  or  distribution  system,  to  such  company  or  companies.

14(2) The government  may designate  any  company set  up  under  sub-section  (1)  to  be  the  principal  company  to  undertake  all  planning  and  coordination  in  regard  to  generation or transmission or both; and such company  shall  undertake  works  connected  with  generation  or  transmission  and  determine  the  requirements  of  the  territory  in  consultation  with  the  other  companies  engaged in generation or transmission for the National  Capital Territory of Delhi, the Commission, the Regional  Electricity  Board  and  the  Central  Electricity  Authority  and any other authority under any law in force for the  time being, or any other government concerned.

14(6) The  government  may  convert  the  companies  set  up  under  this  Act  to  joint  venture  companies  through  a  process  of  disinvestment,  in  accordance  with  the  transfer scheme prepared under the provisions of this  Act.”

Section  15 of  the Act,  2000 provides for  Reorganisation  of  Delhi  

Vidyut Board and transfer of properties, functions and duties thereof.  Sub-

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sections (3), (6), (7) and (9) of Section 15, which are relevant for purposes  

provide:

“15(3)Such of the rights and powers to be exercised by the  Board under the Electricity (Supply) Act, 1948 (Central  Act 54 of 1948), as the government may, by notification  in the official gazette, specify, shall be exercisable by a  company or companies established as the case may be,  under Section 14, for the purpose of discharge of the  functions and duties with which it is entrusted.   

15(6) A transfer scheme may –  

(a) provide  for  the  formation  of  subsidiaries,  joint  venture,  companies  or  other  schemes  of  divisions,  amalgamation,  merger,  reconstruction  or arrangements;

(b) define the property, interest in property, rights and  liabilities to be allocated –  

(i) by  specifying  or  describing  the  property,  rights and liabilities in question,

(ii) by referring to all  the property,  interest  in  property, rights and liabilities comprised in  a  specified  part  of  the  transferor’s  undertaking, or  

(iii) partly in one way and partly in the other:

Provided  that  the  property,  interest  in  property,  rights  and  liabilities  shall  be  subject  to  such  further transfer as the government may specify;

(c) provide that  any rights,  or liabilities specified or  described in the scheme shall be enforceable by  or against the transferor or the transferee;

(d) impose on any licensee an obligation to enter into  such  written  agreements  with,  or  execute  such  other  instruments  in  favour  of  any  other

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subsequent licensee as may be specified in the  scheme;

(e) make  such  supplemental,  incidental  and  consequential  provisions  as  the  transferor  licensee considers appropriate including provision  specifying  the  order  in  which  any  transfer  or  transaction is to be regarded as taking effect;

(f) provide  that  the  transfer  shall  be  provisional  subject to the provisions of Section 18.

15(7) All debts and obligations incurred, all contracts entered  into and all matters and things done by, with or for the  Board, or a company or companies established as the  case may be, under Section 14 or generating company  or distribution company or companies before a transfer  scheme becomes effective shall, to the extent specified  in  the  relevant  transfer  scheme,  be  deemed to  have  been incurred, entered into or done by, with or for the  government or the transferee and all suits or other legal  proceedings  instituted  by  or  against  the  Board  or  transferor,  as the case may be,  may be continued or  instituted by or  against  the  government  or  concerned  transferee, as the case may be.

15(9) The  Board  shall  cease  to  exist  with  the  transfer  of  functions and duties specified and with the transfer of  assets as on the effective date.”

Section 16 is extremely important which deals with the subject  of  

Personnel.  It provides:

“(1) The government may by a transfer scheme provide for  the  transfer  of  the  personnel  from  the  Board  to  a  company or companies established as the case may be,  under  Section  14  and  distribution  companies  (hereinafter  referred  to  as  “transferee  company  or

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companies”)  on  the  vesting  of  properties,  rights  and  liabilities in a company or companies established, as the  case  may  be,  under  Section  14  or  the  distribution  companies.

(2) Upon such transfers the personnel shall  hold office in  the  transferee company on terms and conditions that  may  be  specified  in  the  transfer  scheme  subject,  however, to the following, namely:

(a) that  the  terms  and  conditions  of  the  service  applicable  to  them  in  the  transferee  company  shall not in any way, be less favourable than or  inferior  to those applicable  to them immediately  before the transfer;

(b) that the personnel shall have continuity of service  in all respects; and

(c) that  the  benefits  of  service  accrued  before  the  transfer  shall  be  fully  recognized  and  taken  in  account for all purposes including the payment of  any and all terminal benefits.”

Section 57 of the Act, 2000 which deals with the Power to remove  

difficulties reads as under:

“(1) If any difficulty arises in giving effect to the provisions of  this Act or rules, regulations, schemes or orders made  thereunder, the government may, by order published in  the  Official  Gazette,  make  such  provisions,  not  inconsistent  with  the  provisions  of  this  Act  as  may  appear to it to be necessary or expedient for removing  the difficulty:

Provided that no order shall be made under this section  after  the  expiry  of  two  years  from  the  date  of  the  commencement of this Act.

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(2) Every order made under this section shall  be laid,  as  soon as may be after it is made before the Legislative  Assembly of the National Capital Territory of Delhi.”

5. In accordance with the above provisions a Transfer Scheme called  

“Delhi  Electricity  Reforms  (Transfer  Scheme)  Rules,  2001”  (hereinafter  

referred to as “the Scheme, 2001”) came into existence.  Rule 2 of the  

Scheme,  2001  deals  with  the  definitions  of  various  terms.   Relevant  

Clauses (b), (c), (h) and (k) of Rule 2 read as under:

“(b) “assets”  includes  all  rights,  interests  and  claims  of  whatever nature as well as block or blocks of assets of  the Delhi Vidyut Board;

(c) “Board” means the Delhi Vidyut Board constituted under  Section  5  of  the  Electricity  (Supply)  Act,  1958 (54 of  1948);

(h) “DISCOMS” means and includes DISCOM 1, DISCOM  2 and DISCOM 3 collectively.

(k) “liabilities” include all liabilities, debts, duties, obligations  and  other  outgoings  including  contingent  liabilities,  statutory liabilities and government  levies of  whatever  nature, which may arise in regard to dealings before the  date  of  the  transfer  in  respect  of  the  specified  undertakings;”

Rule 3 of the Scheme, 2000 provides for transfer of assets, etc., of  

the Board to the Government as defined in Rule 2(c) above.  It provides  

that  all  the  assets,  liabilities  and proceedings  of  the  Board  shall  stand

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transferred to and vest in the government absolutely.  Sub-Rule (2) of Rule  

3 is significant and provides as under:

“3(2) Nothing  in  Sub-rule  (1)  shall  apply  to  rights,  responsibilities  and  obligations  in  respect  of  the  personnel  and  personnel  related  mattes,  which  have  been dealt in the manner provided under Rule 6.”

Rule 4 is connected only to Rule 3(1) and has nothing to do with  

Rule 3(2) which deals with the personnel which subject is exclusively dealt  

with in Rule 6.  Sub-rule (8) of Rule 6 is very significant and runs as under:

“6(8) Subject to sub-rule (9) below, in respect of all statutory  and  other  schemes  and  employment  related  matters,  including the provident fund, gratuity fund, pension and  any  superannuation  fund  or  special  fund  created  or  existing for the benefit of the personnel and the existing  pensioners,  the  relevant  transferee  shall  stand  substituted  for  the Board for  all  purposes and all  the  rights, powers and obligations of the Board in relation to  any and all  such matters shall  become those of such  transferee and the services of  the personnel  shall  be  treated as having been continuous for the purpose of  the application of this sub-rule.”

Sub-rule (9) of Rule 6 provides:

“6(9) The government shall make appropriate arrangements  as provided in the tripartite agreements in regard to the  funding  of  the  terminal  benefits  to  the  extent  it  is  unfunded on the date of the transfer from the Board.  Till  such arrangements are made, the payment falling due  to  the  existing  pensioners  shall  be  made  by  the  TRANSCO,  subject  to  appropriate  adjustments  with  other transferees.

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For the purpose of this sub-rule, the term –  

(a) “existing pensioners” mean all  the persons eligible for  the  pension  as  on  the  date  of  the  transfer  from the  Board  and  shall  include  family  members  of  the  personnel as per the applicable scheme; and

(b) “terminal benefits” mean the gratuity, pension, dearness  and other terminal benefits to the personnel and existing  pensioners.”

6. It is an admitted case that while the government was contemplating  

unbundling  of  Delhi  Vidyut  Board  (hereinafter  referred  to  as “DVB”)  for  

handing over the distribution of electricity to private companies as also for  

restructuring  the  electricity  industry  and  rationalization  of  generation,  

transmission  and  supply  of  electricity  by  increasing  the  avenues  for  

participation  of  private  sector  in  the  electricity  industry  in  the  National  

Capital Territory of Delhi, the erstwhile employees of the DVB displayed  

their apprehension and reservations to the effect that on emergence of the  

private companies their services may not be protected.  Therefore, these  

employees were taken into confidence by assuring them that their services  

will  be  protected  by  entering  into  Tripartite  Agreements  which  were  

executed on 28.10.2000 and 9.11.2000 between Government of National  

Capital  Territory of Delhi (“GNCTD”), DVB and Delhi Vidyut Board Joint  

Action Committee.  The said committee consisted of various Unions as  

well  as  Junior  Engineer  Officer  Association.   Under  these  Tripartite  

Agreements,  the  existing  pensioners  as  well  as  the  employees  were

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protected.   All  the existing welfare  schemes and benefits  to  the retired  

employees were allowed to continue.   

7. After the Act and the scheme came on the anvil, as a first step of  

privatization,  the  Request  for  Qualification  (RFQ)  Documents  for  

privatization  of  electricity  distribution  in  Delhi  was  floated  on 15.2.2001  

giving in detail the status of the DVB, the manner of the privatization where  

it was specifically provided that DVB is being offered to private companies  

as a going concern on business valuation method, transferring all the past,  

present and future liabilities including that of existing employees as well as  

the  retirees.   The  details  of  the  employees  as  on  1.1.2000  were  also  

provided.  Para 11.6 of the RFQ Document mentions about the fact that  

apart  from  existing  employees  which  were  24,634  in  number  as  on  

1.1.2000, there were about 9200 retired employees.  The aforementioned  

transfer  scheme  was  notified  on  21.11.2001.   Under  the  scheme  the  

distribution companies,  generation,  transmission and holding companies  

were identified.  At the time when the bids were put in by the companies  

who were in consideration and the negotiations were on, the DISCOMS  

put in revised bids.  The present appellants which were South-West Delhi  

Electricity  Distribution  Company  Ltd.  (now  known  as  BSES  Rajdhani  

Power  Ltd.),  as  also  North-West  Delhi  Distribution  Company  Ltd.  (now  

known as  NDPL)  were  amongst  those  who  submitted  the  revised bids

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documents.  Their demand was that the contingent liability arising out of  

any event including any legal proceedings prior to the transfer should be  

limited  to  Rs.1  crore  per  annum  considered  individually  or  collectively  

during the first five years.  Based on that sub-rule (3) in Rule 8 came to be  

added in the Scheme, 2001 on 26.6.2002 which is as under:

“Notwithstanding anything contained in these Rules including  the  schedules,  the  liabilities  arising  out  of  litigation,  suits,  claims, etc., pending on the date of the transfer and/or arising  due to events prior to the date of the transfer shall be borne by  the relevant distribution company, viz., DISCOM 1, DISCOM 2  and DISCOM 3 respectively, subject  to a maximum of Rs.1  crore  per  annum.   Any  amount  above  this  shall  be  to  the  account of the holding company in the event for any reason  the Commission does not allow the amount to be included in  the revenue requirement of the DISCOM.”

Resultantly from 1.7.2002, the DVB unbundled into six companies,  

they  being DISCOM 1 (BSES Yamuna Power Ltd.),  DISCOM 2 (BSES  

Rajdhani Power Ltd.)-appellant and DISCOM 3 (North Delhi Power Ltd.)-

appellant, Delhi Power Supply Company Ltd. (TRANSCO) and generation  

company (GENCO).  Another company called “DPCL” (holding company)  

was  also  constituted  with  aims  and  objects  to  hold  shares  in  the  

aforementioned DISCOM companies.  The said DPCL holds 49% shares  

in DISCOM 1, 2 and 3 and holds 100% shares in GENCO and TRANSCO.  

For all practical purposes DVB ceased to exist from 1.7.2002.

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8. There are various schedules attached to the Scheme, 2001.  The  

distribution undertaking its assets, liabilities and proceedings concerning  

the distribution areas are specified in Part  III  of  Schedule H.  Relevant  

Schedules are Part I for DISCOM 1, BSES and Part III  for DISCOM 3,  

NDPL.

9. Rule  12  of  the  Scheme,  2001  provides  that  the  decision  of  the  

Government shall  be final and sub-Rule (1) stipulates that if  any doubt,  

dispute,  difference or  issue shall  arise in  regard to  the  transfers  under  

these  Rules,  subject  to  the  provisions  of  the  Act,  the  decision  of  the  

government thereon, shall be final and binding on all parties.

10. On the backdrop of these legal provisions it will  now be proper to  

see the individual facts in the two appeals.

11. The Letters  Patent  Appeal  filed by the appellant  before the High  

Court  was  dismissed.   It  so  happened,  that  respondent  No.3  herein  

Shri  K.  R.  Jain,  who  was  an  erstwhile  employee  of  the  Delhi  Electric  

Supply Undertaking (DESU), superannuated from service on 31.07.1996.  

Eventually,  Delhi  Vidyut  Board  (DVB)  became  successor  of  Delhi  

Electricity  Supply  Undertaking  (DESU).  NDPL  was  incorporated  on  

04.07.2001 and inherited the distribution undertaking on 01.07.2002 along  

with  the  assets,  liabilities,  personnel  and  proceedings  in  pursuance  of

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statutory transfer scheme notified by the Government pursuant to Sections  

14-16 and 60 of  the Delhi  Electricity Reforms Act,  2000.   It  was  much  

before that, that respondent No. 3 was superannuated. His pension was  

paid from the Terminal Benefit Fund, 2002 of DVB.  The DVB had floated  

Time Bound Terminal Scale Scheme by its Office Order dated 23.07.1997  

and Resolution No. 216 dated 16.07.1997.  Claiming that though he had  

superannuated  on  31.07.96,  still  he  was  covered  by  the  scheme,  

respondent No.3 filed a Writ Petition No. 2337 of 2004 seeking appropriate  

direction against Delhi Government, Delhi Power Co. Ltd. and Delhi Power  

Supply  Company  and  claimed  benefits  arising  out  of  the  Scheme.  

Significantly enough, NDPL was not made a party nor was there any claim  

against it.  This Writ Petition was allowed by the Learned Single Judge,  

holding that respondent No.3 was entitled to avail the benefits under Time  

Bound  Promotional  Scale  Scheme  (TBPS)  and  that  DVB  had  unjustly  

denied  him  his  dues.   Holding  the  present  appellant  as  a  successor,  

Mandamus was issued against the appellant who was not a party and was  

not given an opportunity of hearing.  This was based on the statement of  

an advocate appearing for respondent Nos. 1 and 2 herein to the effect  

that  it  was  the appellant-petitioner who was the successor  and was  as  

such responsible to implement the judgment dated 23.03.2004.  

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12. On 23.11.2004 an application was filed for recall/modification of the  

judgment before the Learned Single Judge of the Delhi High Court.  This  

application was, however, allowed holding that:

(a) respondent No.3 had retired from DVB on 31.07.96 from  Ashok Vihar

(b) All  liabilities  of  DVB,  other  than  those  specifically  transferred in terms of Schedules ‘B’ to ‘F’ of the Transfer  Scheme shall be the liability of the holding company.

(c) In terms of the Rule 6 (2) and (8) of the transfer scheme,  only  such  proceedings  were  transferred  to  successor  companies  as  were  pending  on  01.07.2002.   Since  no  proceedings  were  pending  qua  the  entitlements  of  respondent No.3, hence it was the holding company and  not the present appellant who would be liable to pay the  arrears and other entitlements of respondent No. 3 under  the TBPS Scheme.   

13. Respondent No.1 and 2 filed a Letters Patent Appeal against the  

modified order of the Learned Single Judge dated 23.11.2004 vide LPA  

No. 98/2005. This appeal came to be allowed by the Division Bench of the  

High Court.  The High Court held that the appellant-petitioner alone was  

responsible for the payments claimed by respondent No.3.  

14. The second matter  has emanated out  of  the judgment and order  

dated 25.05.2006 wherein the Learned Single Judge of the High Court has  

dismissed  the  Writ  Petition  filed  by  the  appellant-petitioner  being  Writ  

Petition No. 5110 of 2005 [BSES Rajdhani Power Ltd. v. Govt. of NCT of

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Delhi & Another].  By that Writ Petition, validity and legality of the letter  

dated  21.01.2004  issued  by  the  Government  of  NCT  of  Delhi  was  

challenged.  By this letter, a clarification was issued by the Government to  

the effect that vigilance/ disciplinary/ Court cases in respect of employees  

of erstwhile DVB, who could not become part of any of the companies on  

the date of  restructuring due to retirement/dismissal/removal/compulsory  

retirement shall be processed and decided by the successor company like  

the appellant-petitioner who would have been the controlling authority of  

the  employees  but  for  their  retirement/removal/dismissal/compulsory  

retirement as per the Schedule in the Transfer Scheme.  In pursuance of  

this letter, all the cases were forwarded with records involving employees  

who,  due  to  their  retirement/suspension/  termination  or  death  were  

allegedly not transferred to DISCOMS on 01.07.2002.  This was resisted  

by  DISCOMS  including  the  appellant  herein  on  the  ground  that  such  

employees who were not transferred to them were in fact liability of the  

holding  company.   Representations  were  sent  against  this  clarificatory  

letter dated 21.01.2004.  Such representations were sent even by NDPL.  

However, in K.R. Jain’s case, the Division Bench deciding the LPA, took  

the view that such employees were the liability of the transferee DISCOMS  

like NDPL or, as the case may be, the BSES.  Relying on that judgment,  

the  Writ  Petition  of  the  petitioner  was  dismissed  by  judgment  dated  

25.05.2006 by the Learned Single Judge of the High Court.  Since it would

18

have  been  futile  for  the  appellant  to  go  to  the  Division  Bench,  it  has  

straightaway moved this Court by way of the present appeal.

15. In the impugned judgment, the whole history of the legislation was  

traced by the Division Bench and after noting Rules 2 (k), (n) and (l), and  

Rule 3 along with Rule 12, it was observed that the assets and liabilities as  

given  in  Schedule  A to  G to  different  companies  did  not  relate  to  the  

liabilities regarding the personnel vide Rule 3 (2).  Rule 6 was noted to be  

dealing with the responsibilities of the personnel and a categorical finding  

was  recorded  that  the  Schedules  under  Rule  4  were  not  helpful  to  

determine  the  liabilities  in  respect  of  the  personnel,  even  if  they  were  

retired personnel and pensioners.  Noting Section 16 of the DERA, 2000  

and Rule 6 of the DERR, 2001 and, more particularly, noting Rule 6 (8),  

the High Court chose not to agree with the contentions raised before it that  

the responsibility of the NDPL was only with respect to those personnel  

who  had  been  transferred  to  the  NDPL  as  per  the  list  mentioned  in  

Appendix E.  It located the following categories of the personnel required  

to be dealt with:

“16. There  would  be  the  following  categories  of  personnel required to be dealt with:

(a) existing  employees  of  DVB on  the  date  of  transfer  scheme  who  were  on  roll  and  working;

19

(b) employees  under  suspension  and  facing  disciplinary/ departmental proceedings at the  time of the transfer scheme.

(c) employees  terminated,  dismissed  as  a  consequence  of  departmental  proceedings  and  who  had  initiated  litigation/cases,  proceedings  against  DVB  and  such  proceeding/ litigation was pending at the time  of disbanding of DVB.

(d) retired employees who after retirement filed  cases  in  courts  claiming  some  benefits  or  dues, and such cases were pending at the  time of the transfer scheme.

(e) retired/dismissed  employees  of  DVB  who  filed  court  cases  after  the  transfer  scheme  and such case got decided in their favour.”

There is no dispute in respect of personnel at (a). However, Mr. Raj  

Birbal, learned Senior Counsel for NDPL contends that the responsibility of  

NDPL is only in respect of those personnel who have been transferred to  

NDPL as per the list mentioned in appendix E.  We do not agree with this  

contention.

16. The High Court also noted that except for Rule 6 (8), (9) and (11),  

other provisions dealt with existing working personnel of DVB at the time of  

transfer and that Rule 6 (11) took care of the categories (b) and (c) shown  

earlier.  It also noted Rule 8 regarding the pending suits and proceedings  

and refuted the contention raised on behalf of NDPL that Rule 8 covers  

litigations  only  in  respect  of  cases  between  DVB  and  consumers,

20

contractors  and third  parties  and not  those cases  which  were  between  

DVB and its retired employees.   For that purpose, the High Court noted  

the phraseology “all proceedings” appearing in Rule 8 (1).  It also refuted  

the argument  that  if  the liability  created in  Rule 8 (3)  had been of  the  

employees,  it  would  not  have  limited  the  liability  only  to  DISCOMS to  

rupees one crore and it would have mentioned TRANSCO and GENCO  

also, and held that the limit of rupees one crore in that provision was fixed  

at the representation of  DISCOMS like the NDPL, only in their  respect.  

The  High  Court  then  noted  Rule  5(2),  clothing  the  transferee  with  the  

responsibility of all contracts, rights, deeds, schemes, bonds, agreements  

and  other  instruments  of  whatever  nature  relating  to  respective  

undertaking and assets and liabilities transferred to it, to which Board was  

a party, subsisting or having effect on the date of transfer, in the same  

manner as the Board was liable immediately before the date of transfer  

and the same shall be in force and effect against or in favour of respective  

transferee and may be enforced effectively as if the respective transferee  

had been a party thereto instead of the Board.  Interpreting it in the light of  

various judgments of this Court, the High Court concluded that not only the  

assets and liabilities were transferred to the transferee company but the  

entire  past  and  future  litigation  were  also  transferred  to  the  transferee  

company and such litigation could have been in respect of the employees,  

consumers and other parties. It reiterated that the scheme of the Rules

21

provided  that  all  corresponding  employees  were  transferred  by  way  of  

forming list in respect to employees who were working in the respective  

area while all employees who were under suspension or termination and in  

respect of whom any kind of proceedings defined in section 2 (n) were  

pending at that stage, were also specifically made the responsibility of the  

transferee company under Rule 6 (11).  The High Court again referred to  

Rule 5(2) to note the responsibility  of  the transferee company and also  

made reference to Section 15 of the Act.  

17. Lastly, the High Court has relied on the letter dated 21-22.01.2004  

which was issued by the Government for removal of doubt, dispute and  

difference  under  its  power  under  Rule  12  (1)  which  clearly  fixed  the  

responsibility on the DISCOMS.  In that letter, on a reference having been  

made by the Delhi TRANSCO seeking clarification from the Government  

with respect to the competent authority to deal with vigilance, disciplinary  

and Court cases in relation to the employees of the erstwhile DVB who  

could not become part of any of the companies on 01.07.2002 in terms of  

the  transfer  scheme  due  to  retirement/dismissal/removal/compulsory  

retirement  by  the  then  DVB,  the  Government  clarified  that  such  cases  

would be processed and decided by such company who would have been  

the controlling authority of the employee but for their retirement/removal/  

dismissal/compulsory retirement etc. as per Schedule ‘B’, ‘C’, ‘D’, ‘E’ and

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‘F”,  thereby  clearly  fixing  the  responsibility  on  the  DISCOMS  like  the  

present appellant herein.  

18. This judgment was severely criticized by the learned Senior Counsel  

Shri  P.P.  Rao as well  as Shri  P.S.  Patwalia.   They firstly attacked the  

procedural aspect of the matter.  They pointed out that in the initial Writ  

Petition i.e. WP (C) 2331/2004 by Shri K.R. Jain, the present appellant was  

not a party and as such it had no opportunity to put its say.  They pointed  

out that in his judgment dated 23.03.2004, the Learned Single Judge, even  

in the absence of the appellant,  came to the erroneous finding that the  

appellant was the successor-in-interest of the DVB.  They then referred to  

the  two  applications  made  on  behalf  of  the  appellant  i.e.  one  for  

impleadment and the second for recalling the order dated 23.03.2004 and  

pointed out  that  by its  order  dated 23.03.2004 the Learned Judge was  

pleased to recall his earlier order and held that the order dated 23.03.2004  

would stand issued against the Delhi Power Company Ltd. i.e. the holding  

company and the appellant would stand relieved of the Mandamus issued.  

They referred to the Letters Patent Appeal filed by the Government of NCT  

and the Delhi Power Company Ltd. (DPCL) which was entertained by the  

High Court.  It is obvious that in this LPA the appellant was impleaded as a  

party.   The  contention  raised  is  that  instead  of  deciding  the  whole  

controversy  itself,  the  Division  Bench  should  have  remanded  back  the

23

matter to the Single Judge giving the opportunity to the present appellant  

to raise all  the questions, and in proceeding straightaway to decide the  

controversy  involved,  the  Division  Bench  has  caused  injustice  to  the  

appellant.  The Learned senior counsel pointed out that this was done in  

the absence of the pleadings inasmuch as, in the first instance, no written  

statement was filed by the three impleaded respondents while there was  

no  question  of  filing  the  written  submission  on  behalf  of  the  present  

appellant who was not a party to the said Writ Petition.  Again, it is pointed  

out that in the recall application, the respondents, namely, the Government  

of NCT of Delhi and the DPCL had not filed any reply whatsoever so also  

in LPA no opportunity was given to any of the parties to file pleadings with  

respect to the claims made against the appellant herein.   

19. The Learned Counsel also relied on Rules I and I-A of the Delhi High  

Court rules for issue of various writs which require every application for the  

issue of a direction to set forth all facts on which the relief is sought and to  

file an affidavit in support thereof.  Our attention was also invited to Rule 6  

which requires filing of an answer to rule nisi and Rule 7 which provides for  

ordering the rule nisi to be served on any party to be affected by any order  

which the Court may make in the matter.  It was pointed out that no such  

applications  were  filed  by the  Government  of  NCT and DPCL claiming  

relief against the appellant and the Division Bench had no jurisdiction to

24

entertain the claim of both for the first time in their Letters Patent Appeal  

No.98/2005.  They, therefore, demanded remand on that basis.

20. There can be no dispute that the procedure in this case was slightly  

unusual.   There was  no justification in  the order of  the Learned Single  

Judge accepting a statement to the effect that the appellant herein was the  

successor-in-interest of the DVB and then to fix the liability on the same  

without even hearing the appellant.  That was certainly incorrect in law as  

well as in practice.  However, once the recall application was made before  

the learned Single Judge, the Learned Single Judge recalled its order and  

proceeded to hold the DPCL responsible in place of the appellant, thereby  

exonerating  the  present  appellant  completely.   Once  a  Letters  Patent  

Appeal  was filed against  the order of  the Learned Single Judge to that  

effect, it would have been in the fitness of things for the Division Bench to  

remand  the  matter  back,  perhaps  issuing  the  direction  that  a  de novo  

hearing should be done after impleading the NDPL in their initial pleadings.  

But that was not done.  In stead, the Division Bench gave an opportunity to  

the appellant herein to file their written submissions.  We find these written  

submissions  on  record.   Very  significantly,  however,  in  the  written  

submissions,  the  appellant  herein  has  not  insisted  on  remand  on  the  

technical issue of the absence of pleadings and the loss of opportunity to  

it.   In  stead,  detailed  submissions  were  filed  predominantly  raising  the

25

question that the appellant-NDPL was not in any way liable to pay for the  

past liability of the retired employees who were not the employees on the  

date of transfer.  In the said written submission, the appellant has taken a  

complete  survey  of  the  relevant  provisions  of  DERA  and  the  Transfer  

Scheme Rules, 2001 and every effort was made to show from the said  

proceedings that the NDPL could not be made liable for the dues, if any, of  

the retired employee who was not on the rolls on the date of transfer.

21. We have seen these submissions very carefully only to find that this  

question was not raised.  The order of the Division Bench is also silent  

about any such procedural question having been raised by the appellant.  

Perhaps, had such question been raised, the Division Bench would have  

been justified in remanding the matter to the Learned Single Judge for  

deciding all  the issues afresh after  joining the NDPL as a party  to  the  

original  petition.   The question not  having been raised before the High  

Court, cannot be considered at this stage of litigation when much water  

has  flown  under  the  bridge.   Considering  the  submissions  before  the  

Division Bench which are in extenso, it is difficult to accept the contention  

that any prejudice was caused to the appellant.  On the other hand, the  

question of liability seems to have been thrashed very minutely in the light  

of  the  provisions  of  the  DERA,  the  Transfer  Scheme,  Rules,  Tripartite  

Agreements and the other agreements including the bid documents. If all

26

this is insufficient, we do not find this question to have been raised in the  

present appeal also.  The contention raised is, therefore, rejected.

22. Shri  Rao and Shri  Patwalia then urged that the whole scheme of  

disinvestment brought in by the DERA, 2000 was based on the consent of  

the  interested  private  parties.   The  Act  had  postulated  joint  venture  

companies with private investment and participation to take over the task  

of entire distribution of electricity.  For that purpose, bids were invited and  

the terms of the transfer were settled by mutual consent taking note of the  

Tripartite  Agreements  and  the  bid  agreement  and  it  was  then  that  the  

scheme was notified in the shape of Rules under the Act.   Under such  

circumstances,  there  can  be  no  further  amendment  to  the  scheme  

involving  additional  liability  which  has  to  be  essentially  only  with  the  

consent of the partners of the joint venture.   

23. We have absolutely no quarrel with this proposition.  However, this  

could  be  true  if  there  was  no  “additional  liability”  brought  in.   For  the  

reasons which follow,  we do not think that in clothing the NDPL with a  

liability regarding the personnel who were retired, compulsorily retired or  

otherwise dead, dismissed etc. could be termed as “additional lilability.”  In  

fact  the  reading  of  the  Rules  and,  more  particularly,  Rule  6(8)  would  

indicate that liability was innate and accepted by the DISCOMS.

27

24. Reliance was made on Sections 15 (1) and, more particularly, sub-

Section (6) and (7) by Shri Rao.  That Section deals with the subject of  

reorganisation  of  DVB and  transfer  of  properties,  functions  and  duties.  

Sub-rule (6) refers to the transfer scheme while sub-section (7) specifically  

provides  that  the  obligations  incurred  by  the  Board  or  companies  

established  under  Section  14  or  generating  company  or  distribution  

company before a transfer scheme becomes effective shall, to the extent  

specified  in  the  relevant  transfer  scheme,  be  deemed  to  have  been  

incurred,  entered  into  or  done  by,  with  or  for  the  government  or  the  

transferee.  Section 16 deals with the provisions relating to the transfer of  

personnel.  Shri Rao tried to contend that, therefore, for resolution of the  

controversy,  transfer scheme alone would have to be considered in the  

light of the provisions of the Act.  He is, no doubt, correct.  However, in  

order  to  show  that  the  transfer  scheme  does  not  contemplate  such  

liabilities as are in question, Shri Rao relied on Rule 3(1).  In our opinion,  

Rule  3(1)  has  got  nothing  to  do  with  such  liabilities.   That  Rule  is  

independent of Rule 3(2) which reads as under:

“Nothing  in  sub-rule  (1)  shall  apply  to  rights,  responsibilities  and  obligations  in  respect  of  the  personnel  and personnel  related  matters,  which  have  been dealt in the manner provided under Rule 6.”

28

25. By necessary reference, therefore, Rule 4 would also be pushed to  

the background as that Rule specifically relates to the assets and liabilities  

and proceedings transferred to the Government under sub-Rule (1) of Rule  

3.  Therefore, Rule 4 (a) to (g) would have no application whatsoever when  

it  comes  to  consideration  of  the  liability  in  question  of  personnel  and  

personnel related matters.  For that matter, even Rule 5 would be of no  

consequence for such matters as it specifically provides that all the rights,  

responsibilities  and  obligations  in  respect  of  personnel  and  personnel  

related to matters have been dealt with in Rule 6 alone.  The reliance of  

the learned counsel on Rules 4 and 5 is, therefore, uncalled for.  The only  

relevant Rule which would have to be considered for this purpose is Rule 6  

which is a complete code by itself in relation to personnel and personnel  

related matters.  The words used in Rule 3(2), namely, personnel related  

matters are sufficiently broad to take into their sweep the matters regarding  

the retired, dismissed or dead personnel also.  Rule 6(8) which we have  

already quoted but would repeat again for the ready reference is as under:

“(8) Subject  to  sub-rule  (9)  below,  in  respect  of  all  statutory  and  other  schemes  and  employment  related  matters,  including  the  provident  fund,  gratuity  fund,  pension  and  any  superannuation  fund or  special  fund created  or  existing  for  the  benefit  of  the  personnel  and  the  existing  pensioners,  the  relevant  transferee  shall  stand  substituted for the Board for all purposes and all  the rights, powers and obligations of the board in

29

relation to any and all such matters shall become  those of such transferee and the services of the  personnel  shall  be  treated  as  having  been  continuous for  the purpose of the application of  this sub-rule.”

26. The  language  is  extremely  clear.   It  not  only  specifies  the  

employment related matters but also clarifies what those matters would be  

which  include  pension  and  any  superannuation  fund  or  special  fund  

created  or  existing  for  the  benefit  of  the  personnel  and  the  existing  

pensioners.  The words ‘existing pensioners’ are extremely important.  A  

plain reading of this Rule would leave no manner of doubt in respect of the  

liability having been transferred to transferee company and the NDPL is  

certainly the one.  The language is broad enough to include all dismissed,  

dead,  retired  and  compulsorily  retired  employees.   As  if  that  was  not  

sufficient,  sub-Rule  (9)  requires  the  Government  to  make  appropriate  

arrangements in terms of the Tripartite Agreements in regard to the fund of  

terminal benefits to the extent it is unfunded on the date of transfer from  

the Board.  Rule 9(a) and (b) are also very significant and are as under:

“9. The  Government  shall  make  appropriate  arrangements  as  provided  in  the  tri-partite  agreements  in  regard  to  the  funding  of  the  terminal benefits to the extent it  is unfunded on  the  date  of  transfer  from the  Board.   Till  such  arrangements are made, the payment falling due  to the existing pensioners shall be made by the

30

TRANSCO,  subject  to  appropriate  adjustments  with other transferees.

“For the purpose of this sub-rule, the term-

(a) “existing pensioners” mean all the persons  eligible for  the pension as on the date of  the  transfer  from  the  Board  and  shall  include family members of the personnel as  per the applicable scheme; and

(b) “terminal  benefits”  mean  the  gratuity,  pension,  dearness  and  other  terminal  benefits  to  the  personnel  and  existing  pensioners.”

27. A glance at these sub-rules is sufficient to come to the conclusion  

that  the  liabilities  have  undoubtedly  been  transferred  to  the  DISCOMS  

which include both NDPL as well as the BSES.  A feeble argument was  

raised that sub-rule (8) does not contemplate pension or any liability on  

account of the revised pay-scale or interpretation of respective scheme of  

promotion  so  far  as  existing  pensioners  or  the  erstwhile  DVB  are  

concerned to the DISCOMS.  Considering the broad language of the Rule,  

we do not think that such contention is possible.   

28. Again relying on Rule 2 (r) it was feebly tried to be suggested that  

the DISCOMS were not the only transferees but it  was also the holding  

company, namely, the Delhi Power Company Ltd (DPCL).  The argument  

is obviously incorrect as no employees were ever transferred to the DPCL.  

All  transferees  came  only  to  the  DISCOMS  like  the  NDPL  under  the

31

transfer scheme.  The High Court has correctly interpreted these Rules  

and has correctly come to the conclusions that the liabilities would rest with  

the DISCOMS including NDPL and BSES.  

29. The learned counsel next contended that the High Court had erred  

in interpretation of Rule 8(3) of the transfer scheme.  It was urged that if  

the Rule is construed widely, it will be arbitrary and affect the foundation of  

the privatisation which is mutual agreement.  We do not think so.  On the  

other hand, the purpose of sub-Rule (3) is to cap any liability arising out of  

litigation, suits, claims etc. either pending on the date of transfer and/ or  

arising  due  to  events  prior  to  the  date  of  transfer  to  be  borne  by  the  

relevant DISCOM 1, DISCOM 2 or DISCOM 3, respectively.  However, it  

will  be subject  to a maximum of  rupees one crore per annum and any  

amount above this shall be to the account of the holding company and,  

even for  any reason the Commission does not  allow the amount to be  

included in the revenue requirements of the DISCOMS.  The language is  

extremely clear.  All that it obtains is capping of the liability.  However, the  

nature of the liability and its being imposed on the DISCOMS alone is as  

clear as sunshine.  To that extent, there can be no doubt that it includes all  

the liabilities including the liabilities on account of the personnel.  Unlike  

Rule 3, Rule 8 (3) does not make any difference between the liabilities

32

arising out of the transfer under Rule 4 or the liabilities contemplated in  

Rule 6.  The contention is clearly incorrect.   

30. It was suggested that the non obstante clause in Rule 8(3) if widely  

construed, would render the clause unconstitutional.  We do not think that  

the clause can be rendered unconstitutional in any manner.  The language  

is clear, unambiguous and must be given its natural meaning.  If such a  

meaning is given, we do not think that any other interpretation is possible  

except the one rendered by the High Court.  Shri Rao and Shir Patwalia  

relied  on  paragraphs  28  and  29  of  the  reported  judgment  in  M.  

Rathinaswami & Ors.  v.  State of Tamil Nadu & Ors.  [2009 (5)  SCC  

625]. In the said paragraphs, it is reiterated that in order to save a statutory  

provision  from the  vice  of  unconstitutionality  sometimes  a  restricted  or  

extended interpretation of  the statute has to be given.   Since we don’t  

agree that the clause can be rendered unconstitutional in any manner, in  

our opinion, the judgment is not apposite.   

31. Similarly  reliance  was  made by  Shri  Rao on ICICI  Bank Ltd.  v.   

SIDCO Leathers Ltd.  & Others  [2006 (10)  SCC 452],  Ramdev Food  

Products  (P)  Ltd.v.  Arvindbhai  Rambhai  Patel  [2006  (8)  SCC 726],   

Madan Mohan Pathak & Anr. v. Union Of India & Ors.[1978 (2) SCC  

50], Venture Global Engineering v. Satyam Computer Services Ltd. &  

Anr. [2008  (4)  SCC  190]  and  Shin-EtsuChemical  Co.  Ltd.  v.  Aksh

33

Optifibre Ltd. & Anr. [2005 (7) SCC 234].  We have absolutely no quarrel  

with  the principles  in  all  these reported decisions.   However,  since the  

constitutionality of Rule 8(3) cannot be doubted under any circumstances,  

all  these decisions do not apply to the present  controversy.   We must,  

however, point out that the capping of the liability of one crore of rupees  

was at the instance of the DISCOMS only.  They were more aware of the  

language brought in.  They were also aware of the liabilities which arose,  

particularly, in view of Rule 6 (8) and they had open eyedly accepted Rule  

8(3).  They cannot now find fault with the constitutionality of the provisions.

32. It was tried to be suggested by Shri Rao, learned Senior Counsel  

that under Section 15(1) of the Act, any property, interest in property, rights  

and liabilities which immediately before the effective date belonged to the  

Board, stood vested in the Government with effect from the date on which  

the Transfer Scheme came into existence by way of its publication.  It was  

also suggested that under sub-Section (2) of Section 15 of the Act, it was  

for the Government to transfer such property and interest in the property,  

rights and liabilities to any company established under Section 14 of the  

Act.  It was then tried to be urged that such transfer of undertaking has  

been taken care of in Rule 5 of the Transfer Scheme Rules, 2001.  It was  

then pointed out that as per the Schedules, the transfer was effected and  

in case of the present appellant, the transfer was effected as per Schedule

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‘F’.  The learned Senior Counsel very earnestly suggested that this was all  

that was transferred and, therefore, a liability which was not covered under  

Schedule ‘F’ could not be said to have been transferred to the appellant.  It  

was then pointed out by reference to Rule 2(t) that ‘undertaking’ includes  

“wherever the context so admits the personnel”.  It was, therefore, urged  

that  the  personnel  transferred  to  the  appellant  company were  only  the  

ones who were included in the lists.  It was also suggested that under Rule  

2(r),  the  ‘transferee’  includes  not  only  DISCOMS,  like  the  present  

appellant,  but  also  the  Holding  company  like  Delhi  Power  Company  

Limited.  It was, therefore, urged that considering the provisions of Rule 5  

read with Rule 2(r), 2(t), Schedules ‘F’ and ‘G’, was be all and end all of  

the matter.  It was urged that in the absence of any liability allocated to  

DISCOM  3  in  Schedule  ‘F’  and  in  terms  of  para  2  of  Schedule  ‘G’,  

allocating  of  residuary  liabilities  to  the  Holding  company,  the  liability  in  

respect of existing pensioners would devolve on the Holding company, i.e.  

DPCL and not on the present appellant.  The argument is clearly incorrect.  

We have already  pointed out  that  Schedule  ‘F’  cannot  be  read as  the  

exhaustive list of transfers as regards the assets and liabilities.  This is  

because of the peculiar language of Rule 3(1) and Rule 3(2).  Rule 3(2)  

very specifically provides that in the matter of  personnel  and personnel  

related matters, Rule 3(1) would be of no consequence.  What is provided  

in Rule 4, on which the heavy reliance was being placed, is relatable to

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Rule 3(1) alone.  Same logic applies to Rule 5, which provides for transfer  

of undertaking.  It flows only from Rule 4.  A reading of Rule 5 and, more  

particularly, Clauses (a) to (g) of Rule 5(1) correspond to Clauses (a) to (g)  

in Rule 4(1).  Rule 4(1) is again specific and takes into sweep only sub  

Rule (1) of Rule 3.  It is very clear that Rule 3(2) makes all the difference  

and in the clearest possible language, Rules 4 and 5 relate to the assets,  

liabilities and proceedings covered only under Rule 3(1).  Rule 5 also has  

to be read in that context.   

33. The  transfer  of  personnel  and  all  the  principles,  therefore,  are  

governed  by  Rule  6  alone.   As  provided  in  Rule  6(2),  there  are  lists  

wherein the personnel have been classified into five groups based on the  

principle of “as is where is”, where a specific reference is to be found to  

GENCO, TRANSCO and three DISCOMS.  Very significantly, there is no  

reference to DPCL.  Thus, no employee was transferred to DPCL.  This is  

in  case of  the  existing  employees.   Sub Rule  (8),  however,  takes  into  

sweep not only the existing employees, who find the reference in the lists  

prepared under Rule 6(2), but also makes a reference to the employment  

related matters including provident  fund, gratuity fund, pension and any  

superannuation fund or special fund created or existing for the benefit of  

personnel and the existing pensioners.  There was no question of existing  

pensioners being covered under the lists prepared under Rule 6(2).  By

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using the words “existing pensioners” and by providing that the relevant  

transferee would stand substituted for the Board for all purposes and all  

the rights, powers and obligations of the Board in relation to any and all  

such matters, the legislative intention is very clearly displayed to the effect  

that the existing pensioners on the day of transfer were also covered and  

stood transferred to the DISCOMS and not  to DPCL and it  is  only the  

transferee  DISCOM,  who  would  substitute  for  the  Board.   Once  these  

Rules are read in proper perspective, there is hardly any doubt about the  

liability  of  DISCOMS  in  respect  of  existing  pensioners  on  the  day  of  

transfer.  There can be no dispute that those who retired and those who  

were serving with  the Board would  stand transferred in  respect of  their  

liabilities etc. to the successor company, i.e. DISCOM-3.  The High Court  

has correctly appreciated this position.

34. This takes us to the next contention of Shri Rao and Shri Patwalia  

that the decision given by the Government on such liability was without any  

authority or non est in the light of the provisions of the Act and the Rules.  

In that behalf, Shri Rao, Learned Senior Counsel invited our attention to  

Rule  12(1),  whereunder  a  finality  is  given  to  the  decision  of  the  

Government  in  respect  of  any  doubt,  dispute,  difference  or  issue  as  

regards the transfers under these Rules.  The Rule provides that under  

any such eventuality, the decision of the Government shall be final subject

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to the provisions of the Act.  Sub Rule (2) of Rule 12 provides that the  

Government  may,  by  order,  publish  in  the  Official  Gazette,  make such  

provisions, not inconsistent with the provisions of the Act, which provisions  

may  appear  to  be  necessary  for  removing  the  difficulties  arising  in  

implementing the transfers under these Rules.  Section 57 of the Act is  

also  clear  and  provides  power  to  the  Government  to  remove  any  

difficulties.  However, there is a rider to the effect that no such order to  

remove difficulties could be made by the Government after expiry of two  

years from the date of commencement of the Act.  It is also provided by  

sub-Section (2) of Section 57 that every such order after it is made shall be  

laid before the Legislative Assembly.  Heavily relying on Section 57, Shri  

Rao  and  Shri  Patwalia,  learned  Senior  Counsel  contended  that  the  

Government’s power to make any such order had already come to an end  

with the expiry of two years after the date of notification.  This argument  

and the reliance of  the Learned Senior  Counsel  on Section 57 can be  

understood, as in this matter, the Government has issued the letter dated  

21.01.2004 i.e. after more than two years of the relevant date.  This letter  

is authored by one Shri Y.V.V.J. Rajashekhar, Deputy Secretary (Power)  

and  is  addressed  to  Delhi  TRANSCO  Ltd.  which  is  a  100  per  cent  

Government company.  The subject thereof is removal of doubts, disputes  

and differences under the provisions of Delhi Electricity Reforms (Transfer  

Scheme) Rules, 2001 and issue of clarificatory order of the Government

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under Rule 12.  It is an answer to the letter received from Delhi TRANSCO  

Ltd.  seeking  clarifications  from  the  Government  with  respect  to  the  

competent  authority/new  entity  to  deal  with  vigilance/  disciplinary/court  

cases in relation to the employees of erstwhile DVB who could not become  

part of any of the companies on 01.07.2002 in terms of the Delhi Electricity  

Reforms (Transfer Scheme) Rules, 2001.  In that, a reference was made in  

the second paragraph to Section 6 of the Act read with Section 15 and 16  

of the DERA read with Rule 12 of the Delhi Electricity Reforms (Transfer  

Scheme) Rules, 2001.  It was then conveyed that being empowered by the  

directions issued vide No.11 (94)/2003/Power/103 dated 09.01.2004, it is  

clarified that the vigilance, disciplinary and Court cases in respect of the  

employees  of  the then DVB who  could not  become part  of  any of  the  

companies,  namely,  DPCL,  Delhi  TRANSCO,  Indraprastha  Power  

Generation Co. Ltd.,  BSES Yamuna Power Ltd.,  BSES Rajdhani Power  

Ltd.  and  NDPL  on  01.07.2002  i.e.  on  the  date  of  restructuring  due  to  

retirement/dismissal/  removal/compulsory  retirement  shall  be  processed  

and  decided  by  such  company  which  would  have  been  the  controlling  

authority  of  the  employee  but  for  their  

retirement/dismissal/removal/compulsory retirement etc. as per Schedule  

‘B’, ‘C’, ‘D’, ‘E’ and ‘F’ of the Delhi Electricity Reforms (Transfer Scheme)  

Rules, 2001.  It is absolutely clear that by this letter the whole liability was  

put  on  the  head  of  the  DISCOMS.  The  appellant  is  only  one  of  the

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DISCOMS who would have been the controlling authority of the employees  

had those employees continued.   

35. This  position  was,  however,  opposed  by  the  Learned  Senior  

Counsel for the appellants pointing out the two earlier letters i.e. a letter  

dated 17.09.2002 authored by one Shri Jagdish Sagar, Principal Secretary  

(Power) to DISCOM 1 and DISCOM 2 as also the subsequent Office Order  

dated 30.09.2002 issued by one G. Srinivas, Administrative Officer (G) of  

Delhi Power Supply Ltd.  In the aforementioned letter dated 17.09.2002,  

Shri  Jagdish Sagar,  Principal  Secretary (Power)  had informed one Shri  

Chalasani, Chief Executive Officer, BSES Rajdhani Power Ltd. that a copy  

of the advice of the Law Department of the Delhi Government which had  

been accepted by the Government was enclosed with that letter. Amongst  

the  other  liabilities,  Part  II  of  this  Government  decision  concerns  the  

liabilities relating to distribution, business for the tasks undertaken in the  

period immediately before the date of transfer but payment against which  

would have been made after the date of transfer.   

36. A question has been posed in the following form:

“Whether  the  DISCOMS  are  under  obligation  to  discharge liabilities in respect of any works completed  or liabilities incurred in respect of staff pertaining to the  period  before  30.06.2002  on  the  basis  that  such  payments are normally made in the month of July?”

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Answer to this question is to be found to have been given in the  

negative.  Learned Senior Counsel insists that the words in the question  

regarding the liabilities incurred in respect of staff pertaining to the period  

before 30.06.2002 would clearly show that the Government had taken a  

decision that such liabilities could not be put on the head of the DISCOMS  

and, therefore, it was clearly the liability of the holding company in terms of  

the answer given to this question.  Learned counsel further pointed out that  

in pursuance of that, a further Office Order came to be issued under the  

signatures of one Shri G. Srinivas, Administrative Officer on 30.09.2002 in  

the following manner:

“Consequent  upon  unbundling  of  DVB,  a  doubt  has  been raised by Finance Department regarding payment  of arrears of pay and allowance to retired employees to  which company has to pay the same.

It is now clarified that all such liabilities of erstwhile DVB  have been transferred to the Holding Company as per  Transfer  Scheme Rule.   Therefore,  such  payment  of  arrears pay and allowances to the retirees on account of  revision  of  pay/court  orders,  etc.  for  the period up to  30.06.2002 i.e. prior to unbundling of DVB will be borne  and paid by the Holding Company.

All such claims will be prepared by APO(B) concerned  and after duly auditing the same, will  be forwarded to  Holding Company for effecting the payment.”

37. Now  relying  on  this  office  order  very  heavily,  Learned  Senior  

Counsel pointed out that the liabilities would be only that of the holding

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company  and  not  of  the  DISCOMS,  like  the  appellant  herein.   In  our  

opinion,  the  argument  is  clearly  incorrect.   Firstly,  a  query  made  and  

answered in the letter dated 17.09.2002 does not, in our opinion, pertain to  

the  liability  which  is  in  question.   The  query  is  simple  and  it  raises  a  

question, whether, if  any, work is completed or liabilities are incurred in  

respect of the staff pertaining to period before 30.06.2002, in which case  

the payments have to be made in the month of July, would the DISCOMS  

be under obligation to discharge such liability.  The liability covered under  

second query, does not, in our opinion, take into its sweep the liabilities  

like the present liability.  The answer which was provided when construed  

closely would bring about the following:

“This interpretation is further supported by the provision  in Schedule ‘G’ by which all the receivables from sale of  power to the consumer of the erstwhile Board other than  to the extent specifically included in schedules D, E and  F shall be to the account of the Holding Company.  The  Schedule ‘G’ further goes on to say that the DISCOMS  will  be  authorized  to  release  the  receivable  of  the  holding  company  and it  is  apparently  for  that  reason  they retain its 20 % share in such receivables as are  collected,  which  are  over  and  above  the  amounts  included in Schedule D, E and F in respect of which no  such  share  in  the  nature  of  collection  charges  is  payable.   It  would  not  be reasonable  to  interpret  the  rules  as assigning the liabilities  for  any period to  the  company which was not also entitled to the receivables  pertaining to the same period,  in  the absence of  any  specific provision to the contrary.  Therefore, my answer  to the first question is in the negative.”

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In our opinion, therefore, the reliance on this would be uncalled for.  

38. The office order dated 30.09.2002 is undoubtedly clear in support of  

the appellants.  However, this office order does not show on what basis  

this  was  issued  and  under  what  authority.   This  seems  to  have  been  

issued by an Administrative Officer of the DPCL.  However, the last letter  

dated 21.01.2004 which has been issued by the Deputy Secretary (Power)  

very clearly spells out the liability and the said decision has the authority of  

Section 60 read with Section 15 and 16 read with Rule 12 of the Transfer  

Scheme Rules.  It has superseded the earlier direction dated 09.01.2004.  

However, it  has not been made available to us.  Be that as it may, the  

clarification  is  more  than  clear  which  puts  the  responsibilities  of  the  

erstwhile staff on the DISCOMS.   

39. It  was  tried  to  be  argued that  under  Section 57  of  the  Act  such  

decision could not be taken after two years of the transfer.  This argument  

is  clearly incorrect.   Section 57 operates in entirely different sphere.  It  

speaks about the power of the Government to remove doubts.  It is the  

power  to make provisions for  the smooth operation of  the Act  and the  

Rules which have to be brought into effect by passing orders which are  

required to be published in the Official Gazette and such orders would then  

be given effect by making provisions which are not inconsistent with the  

Act.  It is for such kind of orders that the Rules apply.  What is referred to

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in  the  aforementioned  decision  is  in  pursuance  of  the  power  of  the  

Government to make rules under Section 60 pertaining to Section 15 and  

16 of the Act.  It was tried to be argued that even if Section 60 was referred  

to in the aforementioned order, such rules had to be notified.   

40. It is then argued that Section 60 does not empower rule making by a  

letter.  It was also suggested that the letter dated 21.01.2004, the purpose  

of which was mentioned as ‘removal of doubts’ which could not only be  

done by Section 15 of the Act and, therefore, that was not question of the  

letter being effective, particularly, because it has been passed after two  

years of the relevant date and would clearly be hit by provision of Section  

57 which does not empower any rules to be made after two years of the  

date of transfer.  Learned Senior Counsel, therefore, very heavily relied on  

this Section, which argument, in our opinion is incorrect.  There is a clear  

reference made to Rule 12 which runs as under:

12. Decision of Government-Final:  

(1) If  any  doubt,  dispute,  difference  or  issue  shall arise in regard to the transfers under  these rules, subject to the provisions of the  Act,  the  decision  of  the  government  thereon,  shall  be  final  and  binding  on  all  parties.

(2) The government may by order published in  the Official Gazette, make such provisions,  not  inconsistent with  the provisions of the  Act,  as  may  appear  to  be  necessary  for  removing  the  difficulties  arising  in

44

implementing  the  transfers  under  these  rules.”

41. It must be said that the powers under sub-Rule (1) and (2) are of  

different kinds.  The finality of the Government decision is writ large from  

the provisions of sub-Rule (1) of Rule 12, while under the provisions of  

sub-Rule (2), the Government has the power to make provisions by order  

published in the Official Gazette.  Therefore, in our opinion, the position  

taken  by  the  Government  in  the  letter  dated  21.01.2004  is  clear  and  

doubtless.   

42. One feeble argument was made that the Government had already  

exhausted its  power  under Rule  12 (1)  while  taking the decision dated  

17.09.2002 and, hence, it  had lost the power to pass any fresh orders.  

The argument is clearly incorrect.  There can be no finality in the matter of  

removal doubts or the removal difficulties and also taking the decisions  

under Rule 12(1).  The argument that once the Government has exercised  

the powers under Rule 12(1), the power gets exhausted and the decision  

becomes final and binding on all the parties, including the Government, is  

clearly incorrect.  The argument that there is no further power under Rule  

in  the  Government  to  issue  any  letter  dated  21.01.2004,  is  also  an  

incorrect argument.  In our opinion, nothing stopped the Government from  

taking any decision and it has taken a clearest possible decision by letter

45

dated 21.01.2004 which is binding on all the parties.  This is apart from the  

fact  that  the  Government  has  not  dealt  with  the  subject  in  its  earlier  

decision dated 17.09.2002 as regards the controversy which has fallen for  

consideration in this matter.  It was in respect of other liabilities which were  

covered by Schedules ‘D’, ‘E’, ‘F’ and ‘G’.  We have already clarified that  

those liabilities were different from the liabilities which arose on account of  

the employees who could not become the employees of the DISCOMS on  

the date of transfer due to their retirement, dismissal, death etc.  In our  

opinion, therefore, the view taken by the Delhi High Court is the correct  

view.  We have already clarified about the so-called Office Order dated  

30.09.2002  which  is  overridden  by  the  final  decision  taken  by  the  

Government in its letter dated 21.01.2004.

43. On the overall consideration, we are of the clear opinion, that these  

appeals do not have any merits and must be dismissed.  There shall be no  

order as to costs.

         ………………………………… …….J.

          (V.S. SIRPURKAR)

          ………………………………………J.  (SURINDER SINGH NIJJAR)

New Delhi; May 3, 2010

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