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PETITIONER: SHRI RAM PRASAD (DECEASED) BY HIS LEGAL REPRESENTATIVE

       Vs.

RESPONDENT: THE STATE OF PUNJAB

DATE OF JUDGMENT: 07/02/1966

BENCH: SATYANARAYANARAJU, P. BENCH: SATYANARAYANARAJU, P. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. HIDAYATULLAH, M. RAMASWAMI, V.

CITATION:  1966 AIR 1607            1966 SCR  (3) 486  CITATOR INFO :  D          1967 SC1260  (10)

ACT: Constitution of India Art. 357(2)-"things done or omitted to be done"-Scope of. :  Bank  of Patiala Regulation and Management  Order,  1954- validity  of.  Rule  27 of Staff  Rules  framed  thereunder- Whether violative of art. 311- Whether staff rules  infringe Art.  14.  Corporation-Whether majority can exercise  powers of. Patiala  State  Regulations-Applied  to  Bank  employees  by "extension"Whether extension executive act.

HEADNOTE: On  March 4, 1953, the President of India assumed Powers  of the  Government  of  PEPSU (which  included  Patiala)  under Article  356 of in Constitution.  On February 27,  1954,  in exercise  of the powers vested in him by  the  Proclamation, the  President  issued the Bank of  Patiala  Regulation  and Management Order 1954, to provide for the better  regulation and  management  of  the  Bank.  By  virtue  of  the  powers conferred  upon  it by Clause 4(1)(iii)  of  the  Regulation Order,  the  Board of Directors of the Bank  framed  certain Staff  Rules.   Rule  27 of which  provided  for  compulsory retirement of employees of the Bank. The appellant, who was an employee of the Patiala State Bank was compulsorily retired by an order of the Board under Rule 27  passed in June 1958.  He challenged the order in a  suit mainly on the ground that Rule 27 was illegal and void.  The Trial  Court  granted a decree  substantially  allowing  the appellant’s  claim but on appeal, this decree was set  aside by the High Court. In  the appeal to this Court it was contended on  behalf  of the  appellant, inter alia, (i) that though  the  Regulation Order  [Clause  4(1) (iii) of Which delegated power  to  the Board  of  Directors of the Bank to frame staff  rules]  was made  on  February, 27, 1954, it was not  published  in  the Gazette  until March 14 1954, by which time, in view of  the revocation of the proclamation on March 7, 1954, the  powers

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of  the  President  to  make  rules  governing  the   ervice conditions  of Government servants in the State  had  lapsed and he delegation by the President to the Board of the Power to  frame  rules had ipso facto come to an end.   The  Board therefore,  had  no authority to frame the  Staff  Rules  on Marah 25, 1954 and to enforce them from April, 1, 1954; that in  any  event  the  Regulation  Order  was  in  effect  and substance a legislative Act and, in  view of  the provisions of  Article 357(2), its operation could not  extend   beyond the period of one year specified in that Article; (ii)  that prior   to the promulgation of the Regulation Order in  1954 the  Patiala State  Regulations and other rules  or  orders, except the pension rules. made by the Ruler of Patiala, were applicable  to  the,staff of the Patiala   State  Bank;  the Staff  Rules  sought  to supersede  the  provisions  of  the patiala  State  Regulations and rules made by the  Board  of Directors could not abrogate the Regulations promulgated  by the Ruler who exercised the 487 powers   of  the  Legislature;  (iii)  that  Rule   27   was unconstitutional as it offended the guarantee under  Article 311  of  the  Constitution and the  Staff  Rules  were  also violative   of  Article  14;  (v)  that  the   Board   which promulgated   the   Staff  Rules  had  not   been   properly constituted  inasmuch  as  some of the  Directors  were  not present at the meeting. HELD  :  (i)  Although  the Regulation  Order  was  made  on February 27, 1954 and was not published in the Gazette until March   14,  1954,  the  order  itself  provided   for   its commencement  on  the  date  on which it  was  made  and  it therefore  came in to operation on February 27, 1954,  i.e., before the termination of the Prosident’s Rule in PEPSU. On  a  consideration  of the provisions  of  the  Regulation Order,  it is manifest that those provisions were  made  for the  better regulation and management of the affairs of  the Bank and’ it would be an absurdity to hold that some of  the pro-visions would cease to be in operation after the  period of one year ipecified in Art. 357(2); all the clauses of the Regulation  Order, including Clause 4(1) (iii), come  within the  purview  of the saving clause in Aiticle  357(2)  which preserves  the  validity of "things done or  omitted  to  be done" before the expiration of the period of one year  after the  proclaimation has ceased to operate and the  Regulation Order  therefore  continued  to be in  operation  after  the expiration of that year. [494 B-H] Foster v. Pritchard [1857] 2 L.J. Ex. 215; referred to. (ii) The  Patiala  State  Regulations were  applied  to  the employees  of  the State Bank of Patiala as a result  of  an "extension"  made by tho Maharaja pursuant to the  executive powers  vested  in  him.   The act  of  extension  being  as executive  act  it could be changed by a  similar  executive act.   What was changed or superseded was the extension  and not the rules. [497 E] (iii)     There was no force in the contention that Rule  27 offended Article 311 or that the Staff Rules were  violative of Article 14. [498 F] Motiram Deka v. N. E. Frontier Railway [1964] 5 S.C.R.  683, and  Lachhman  Das v. State of Punjab [1963] 2  S.C.R.  353; referred to. (iv) The  High  Court had rightly held that  under  the  law governing  corporations,  a majority of the  members  i  the Corporation  is  entitled  to exercise  the  powers  of  the Corporation  and  that the rule  regarding  corporations  is equally applicable to a company.  "he Board was,  therefore, properly  constituted at the time when the Staff Rules  were

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promulgated. [499 A]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 530 of 1964. Appeal from the judgment and decree dated December 19,  1962 of  the Punjab High Court in Regular First Appeal No. 78  of 1961. C.   B. Agarwala, K. P. Bhandari and R. Gopalakrishnan,  for the appellant. Bishan Narain, K. S. Chawla and R. N. Sachthey, for the res- pondents. 488 The Judgment of the Court was delivered by Satyanarayana  Raju, J. This appeal, on certificate  granted by  the High Court of Punjab, arises out of a suit filed  by one  Ram  Prasad,  against  the  State  of  Punjab,  for   a declaration  that the order of compulsory retirement  passed by the latter against Wm was invalid. Ram  Prasad originally entered serviced as a Clerk,  in  the year  1924, in the Patiala Saddar Treasury in what was  then the  Patiala State.  He was subsequently transferred in  the same capacity to the Patiala State Bank on February  27,1984 Bk  and  was  confirmed in his  appointment.   On  September 1,1985  bk he was promoted to the next higher grade  on  the establishment of the Patiala State Bank.  Thereafter, he was promoted as Manager and posted to the Bhatinda branch of the Bank on April 1, 1944.  On April 1, 1949 he was promoted  as Selection  Grade  Manager by the Board of Directors  of  the Bank  in the grade of Rs. 340-20-500-525-700.  On  September 23,  1953 he was cc mpulsorily retired from service but  was subsequently  reinstated by the Government on June 10,  1954 since the order was legally defective.  On June 11, 1958 the Board passed an order compulsoriy retiring him from service. Ram  Prasad  challenged the order of  compulsory  retirement passed  by the Board on various grounds, by means of a  suit institiuted in the Court of the Subordittate Judge, Patiala. He pleaded that the order of compulsory retirement  amounted to ’dismissal or removal’ from service within the meaning of art. 311 of the Constitution.  He further maintained that r. 27  of the Bank of Patiala (Staff) Rules, 1954,  hereinafter termed the Staff rules, under which the order of  compulsory retirement  was made, was illegal and void.  The  order  was also  challenged on the ground that it was mala  fide.   The substantial  relief  claimed  by  him in  the  ’suit  was  a declaration that r. 27 of th( Staff rules was wholly uncons- titutional, null and void for the reasons stated by him. The respondent contested the suit contending inter alia that the  order of compulsory retirement was passed by the  Board of  Directors of the Bank under rules, which were legal  and constitutionally  valid  and governed the employees  of  the Bank. The  Subordinate Judge, Patiala, framed appropriate  issues. He  found all but two issues in favour of the appellant  and granted  a decree substantially allowing the claims made  by him.   The respondent thereupon filed an appeal in the  High Court  of Punjab which allowed the appeal and set aside  the judgment  of the Subordinate Judge.  During the pendency  of the  appeal in the High Court Ram Prasad died and his  widow was brought on record as his legal representative.  However, it  will  be  convenient  to refer  to  Ram  Prasad  as  the appellant.                             489 Before  entering into the merits of the appeal, it would  be

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convenient   to  refer  very  briefly  to   the   historical background   of   the  legislation.    The   Patiala   State Regulations  were  first promulgated in the  year  1908  and governed  the employees of the State in matters relating  to pay,  allowances, leave, pension and travelling  allowances. The  Regulations were revised and re-published in  the  year 1931.   Subsequently, they were again revised and  re-issued as  the  Patiala  Services Regulations  in  the  year  1947. Meanwhile,  in  April  1941  these  Regulations  were   made applicable expressly to the Bank staff of the Patiala  state Bank  by  the  Maharaja, with the  exception  of  the  rules relating  to pension.  On August 20, 1948, Patiala became  a constituent  ’unit  of the Patiala and ,East  Punjab  States Union  (PEPSU).  On the formation of the Union, the  Patiala Services  Regulations  were made applicable  to  the  entire territories  of  the Union by Ordinance No. 1  of  2005  Bk. Therefore  the  Patiala Services  Regulations  continued  to govern the members of the Patiala State Services even  after they became integrated into the PEPSU Services. On March 4, 1953, the President of lndia assumed the  powers of  the  Government  of PEPSU, in  exercise  of  the  powers conferred on him by art. 356 of the Constitution. On  February  27, 1954, the President, in  exercise  of  the powers   vested  in  him  in  relation  to  PEPSU   by   the Proclamation,  issued  the Bank of  Patiala  Regulation  and Management  Order, 1954, hereinafter called  the  Regulation Order,  t0 provide for the better regulation and  management of the affair.,, of the said Bank.  We will have occasion to refer  to  the  material clauses of this Order  at  a  later stage. By  virtue of the powers conferred Upon it by cl.  4(i)(iii) of the Regulation Order, the Board of Directors of the  Bank framed  the  Staff rules.  Rule 27 of these  rules,  at  the relevant date, was in the following terms :               "An employee shall retire at fifty five  years               of age provided that               (i)   the  Bank  may, at  its  discretion  and               without   giving  any  reasons,   retire   any               employee from the Bank’s service after he  has               completed  the  age  of  fifty  years  or  the               service of twenty five years whichever happens               first and no claim to special compensation  on               this account will be entertained;               (ii)  the  Bank retains the absolute right  to               retire any employee after he has completed  10               years  of service without giving  any  reasons               and  no claim to special compensation on  this               account will be entertained.  This right  will               not  be  exercised  except  when  it  is   the               interest of the Bank               490               to  dispense with the further services  of  an               employee  such as on account of  inefficiency,               dishonesty, corruption or infamous conduct.               Explanation I :               The  action under proviso (ii) is intended  to               be taken               (a)   Against an employee whose efficiency  is               impaired but against whom if is not  desirable               to make formal charge of inefficiency or,  who               has ceased to be fully efficient that is,  the               value    of    the   employee    is    clearly               incommensurate  with the pay which  he  draws.               It  is not the intention to use the  provision               as  a  financial  weapon that is  to  say  the

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             provision  shall  be  used  only  in  case  of               employees   who  are  considered   unfit   for               retention on personal as opposed to  financial               grounds;               (b)   In    cases   where    reputation    for               corruption, dishonesty or infamous conduct  is               clearly  established even though  no  specific               instance  is likely to be proved  under  those               rules. The arguments advanced by Mr. Agarwala, learned counsel  for the appellant, have covered a wide ground, but, in the main, he  has impugned the validity of r. 27 set out  above.   His contentions may be briefly summarised  as follows               (1)   Prior   to  the  promulgation   of   the               Regulation  Order in 1954, the  Patiala  State               Regulations and other Rules or Orders,  except               the  pension  rules,  made  by  the  Ruler  of               Patiala,  were applicable to the staff of  the               Patiala State Bank.  The Staff rules were made               by  the  Board  of Directors of  the  Bank  by               virtue  of the delegation made in  its  favour               under  cl. 4(1)(iii) of the Regulation  Order.               The  delegation in favour of the Board  lapsed               on  March 7, 1954 with the termination of  the               President’s  rule in PEPSU.   Thereafter,  the               Board   had   no   authority   or   power   or               jurisdiction to approve of the Staff rules  on               March 25, 1954 and to enforce them from  April               1,   1954.   (2)  The  Board,   assuming   the               delegation in its favour to be valid, was  not               vested  wit the power to make rules  regarding               compulsory retirement  of the servants of the                             Bank.  (3) The Staff rules seek  to  s upersede.               The provisions of Regulation IX of the Patiala               State  Regulations.  Rules made by the  Board               cannot abrogate the Regulations promulgated by               the  Ruler  who exercised the  powers  of  the               legislature.  (4) The Board which  promulgated               the   Staff  Rules  had  not   been   properly               constituted inasmuch as all the Directors were               not present at the meeting. However, the main ground on which the validity of the  staff rules  is  challenged is that the Regulation  Order,  though made on 491 February  27,  1954, was published in the  Gazette  only  on March  14,  1954, that by reason of the  revocation  of  the Proclamation  issued  by  the President  the  power  of  the President to make rules governing the service conditions  of Government  servants  in the State had lapsed and  that  the delegation  by  the President to the Board  power  to  frame rules  ipso facto came to an end when the  Proclamation  was revoked, on the principle that the delegate’s power comes to an  automatic end by reason of the principal’s power  having lapsed. Mr. Bishan Narain, learned counsel for the respondent-State, countered  these  arguments and maintained  that  the  Staff Rules were valid. We  may initially set out the relevant facts with regard  to the  Proclamation  of  Emergency by the  President  and  its revocation.  As already stated, by notification dated  March 4, 1953, the President, in exercise of the powers  conferred by  art. 356 of the Constitution, assumed all  functions  of the government of the State of, PEPSU and all powers  vested

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in  or  exercisable  by the Rajpramukh of  the  State.   The Notification declared that the powers of the legislature  of the State shall be erercisable by or under the authority  of Parliament. By  an  order made by the President on the  same  date,  the President  issued a direction that all the functions of  the Government  of the State of PEPSU and all the powers  vested and  exercisable  by the Rajpramukh of the State  under  the Constitution  or under any other law in force in  the  State shall,  subject  to,  the  superintendence,  direction   and control of the President, be exercised by the Rajpramukh  of the  said State who was to act on the advice of the  Adviser appointed by the President in that behalf. By  notification  dated March 21, 1954, in exercise  of  the powers conferred by cl. (2) of art. 356 of the Constitution, the  President revoked the Proclamation issued by him  under the said article on March 4, 1953. When a proclamation is made under art. 356, it will be  open to the President to specify in such proclamation (a) that he will  himself  exercise all or any of the functions  of  the Govt. of the State or all or any of the powers vested in  or exercisable by the Governor or any body or authority in  the State  other than the Legislature of the State; (b)  declare that  the  powers of the Legislature of the State  shall  be exercisable by or under the authority of Parliament.  When a declaration  is  made to this effect by  the  President,  it shall  be  competent  for  Parliament  to  direct  that  the legislative   power  of  the  State  Legislature  shall   be exercised by the President himself or by any other authority to  whom such power may be delegated by the President  under art 357 (1).  Art, 357(2) provides that 492 any law made in exercise of the power of the legislature  of the State by Parliament or the President or other  authority referred  to in sub-cl. (a) of cl. (1) which  Parliament  or the President or such other authority would not, but for the issue of a Proclamation under art. 356, have been  competent to  make shall, to the extent of the incompetency, cease  to have effect on the expiration of a period of one year  after the  Proclamation  has  ceased to operate, but  Cl.  (2)  of Article  357 makes an exception............ in the  case  of things  done or omitted to be done before the expiry of  the period  of  one  year.   It  is  argued  firstly  that   the Regulation Order was not made before the date of  revocation of  the  Proclamation.  It is said that  the  Order,  though purporting  to have been made on February 27, 1954  was  not published in the Gazette till March 14, 1954. It is doubtless true that the Regulation Order, though  made on  February  27, 1954, was not published  in  the  Official Gazette  tiff  March 14, 1954.  But cl. 1(b)  of  the  Order provides  that it shall come into force at once  and  repeal all. the previous Orders and instructions in so far as  they are  inconsistent  with  the provisions  of  the  Regulation Order.  By reason of the fact that the Order itself provides for its commencement as the date on which it was made, it is clear  that  the Order came into operation on  February  27, 1954,  though it was published at a later date.   The  Order was  therefore  made before the date of termination  of  the President’s rule in PEPSU. Now,  it is contended by learned counsel for  the  appellant that  the  Regulation  Order is in effect  and  substance  a legislative  act  and that its operation  could  not  extend beyond  the  period  specified in art. 357(2).   It  may  be initially stated that this contention was pot raised in  the Courts  below  and  there  was no  pleading  or  any  .Issue

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covering  that  contention.  Further, there  is  nothing  on record to show that no order was passed during the period of one  year provided by art. 357(2) extending the life of  the Regulation Order beyond that period. Coming to the contention, the question is whether, on a fair construction  of all its provisions and its intendment,  the Regulation  Order comes within the scope of ,he  expression ’things  done’  occurring  in art.  357(2).   In  Craies  On Statute Law, Sixth Edition, it is pointed out at p. 415 that if, an Act is repealed with a proviso 6 except as to  things done   under   ’the   proviso   will   receive   a   liberal interpretation.  In Foster v. Pritchard ( it was  contended, with  respect  to an action tried after the passing  of  the County Courts Act, 1856, that the trespass committed by  the defendant  under colour of the process of the Court was  not ’an  act  done under’ the repealed section,  but,  said  the Court, ’there can be no doubt that it Was the (1) [1857] 26 L. J. Ev. 215. 493 Intention of ’the legislature that the words in this proviso as  to  acts  done under the  repealed  statutes  should  be construed  in an extensive sense’.  It is therefore open  to the  Court  to  find,  on a fair  construction  of  all  the provisions of the Regulation Order which must be read as  an integrated whole, whether they were intended to continue  to be  in force after the period specified in ad.  357(2).   It therefore becomes necessary to examine the provisions of the Regulation Order. The Regulation Order provides that the management,  control, supervision and direction of the affairs and business of the Bank  shall vest in a Board constituted as provided  in  cl. 3(1).   There can be no doubt that the management,  control, supervision and direction of the affairs and business of the Bank  are matters which were provided for not for a  limited period but for an unspecified period even beyond the  period of  one  year as provided by art. 357(2).   Clause  4(1)  is important.  It provides that the Board shall pass the  half- yearly balance-sheets and annual budget estimates and  frame rules  for the day to day working of the Bank.  We may,  for the  present, omit cl. 4(i)(iii) Sub-cl. (iv) provides  that the Board may grant advances and fix limits upto which bills of exchange drawn by individual constituents may be accepted and  frame rules in that behalf.  Sub-cl. (V)  provides  for the  Board  framing rules regarding the Provident  Fund  for employees  of  the Bank, and sub-cl.  (vi)  for  sanctioning expenditure  and  framing  rules for  its  sanction  by  the Managing  Director  and other officers of the  Bank.   Under sub-cl. (vii), the Board shall invest the funds of the  Bank in  Government  Securities,  shares,  debentures  and  other securities  and  sell them; under sub-cl. (viii)  the  Board shall  borrow moneys and negotiate, transfer, sell  endorse, renew,  pledge or mortgage Government promissory  notes  and other  securities for the purpose of taking  overdrafts  and demand  loans  on their security; under sub-cl.  (ix)  issue instructions  for the guidance of the Managing Director  and require   him  to  submit  to  the  Board  all   information regarding the transactions of the. Lastly, under sub-cl. (x) the  Board  shall  delegate to  the  Managing  Director,  or subject to the Managing Director’s supervision,   to any  of the other employees of the Bank any of the aforesaid powers. Clause  5  provides that the Board shall  comply  with  such general  or special directions as may from time to  time  be issue by the State Government. Clause  6 provides for the meetings of the Board being  held at  least  once  in every three months or  at  such  shorter

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intervals as the Chairman may decide and cl. 7 specifies the powers of the Managing Director.  Clause 8 provides for  the conduct  of the business of the Bank.  Clause 9 provide  for the  applicability of some of the provisions of the  Banking Companies Act to the Bank.  Clause 10 provides for the audit of  the a :counts of the Bank and cl. II provides  that  the Board shall, at the end of every calendar 494 year,  submit  to the State Government the  annual  balance- sheet of the Bank accompanied by a report on the working  of the  Bank  and  that the Board shall  submit  to  the  State Government such other information concerning the affairs  of the  Bank as may from time to time be required by the  State Government. On  a  consideration  of the provisions  of  the  Regulation Order"  set out above, it is manifest that those  provisions have  been made, as is stated in the preamble to the  Order, for  the better regulation and management of the affairs  of the  Bank.-  Indeed,  cl. 3 of the Order  provides  for  the constitution  of  a Board of Directors for  the  management, control,  supervision  and  direction of  the  affairs.  and business  of  the Bank.  The matters provided,  barring  cl. 4(i)  (iii), relate to the day-to-day administration of  the affairs  of  the  Bank.  It is impossible to  say  that  the matters  provided  for  in the Order would cease  to  be  in operation  after the period of one year.  It will result  in an absurdity to hold, for instance, that provisions like the one  for  sanction  of expenditures. would cease  to  be  in operation after the period of one year. We may now deal with cl. 4(1) (iii) which provides that  the Board  shall  appoint,  remove, dismiss  and  lay  down  the general  conditions of service of the employees of the  Bank other  than  the Managing Director and frame rules  in  that behalf.   It is pursuant to the powers vested in  it  tinder this clause that the Board of Directors of the Bank made the Staff  rules, including r. 27 whose validity is  questioned. The  expression ’things done’ occurring in art.  357(2),  in our   opinion,   must  receive  a  liberal   and   extensive construction.  As already indicated, all the clauses of  the Regulation  Order  must be read together  as  an  integrated whole  and  we have to find, on a construction  of  all  the clauses,  whether they were intended to continue beyond  the period of one year provided by art. 357(2).  In the  context in  which cl. 4(1) (iii) occurs, it is not  unreasonable  to construe  the power to make rules vested in the Board  under that  clause  as  things done’ within the  meaning  of  art. 357(2).   There  can  be no doubt  about  the  intention  to preserve and continue the rules even after the period of one year after the cessation of the Emergency so that there  may not  be any hiatus in the administration of tie  affairs  of the Bank. It must therefore be held that all the clauses of the’ Regu- lation  Order,  including cl. 4(1) (iii),  come  within  the purview of the saving clause occurring in art. 357(2) of the Constitution and that they continue to be in operation after the period specified in that article. On  this conclusion it follows that the delegation  made  by the  President  in favour of the Board of Directors  of  the Bank  under  the  Regulation  Order did  not  lapse  on  the terminatio of the Presidents rule in PEPSU.  It is therefore unnecessary to                             495 consider the decisions bearing on the question of the extent of the authority or power of a delegates. Learned  counsel  for the appellant has contended  that  the

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Patiala  Services Regulations were existing law made by  the Maharaja and it was not competent for- the President to make the  Regulation Order empowering the Board of  Directors  of the Bank to supersede those Regulations.  The learned Judges of  the High Court held that the President was competent  to promulgate  the  Regulation Order under art. 309  read  with arts. 330’and 372 of the Constitution.  Having regard to the conclusion  reached  by us, that the  Regulation  Order  was validly  made,  we consider it unnecessary to  go  into  the larger  question whether the Regulation Order had the  force of rules framed under art. 309. It  is  then contended that the  Patiala  State  Regulations governing the conditions of service of public servants  were laws made by the erstwhile ruler of Patiala and could not be changed  to the disadvantage of such public. servants.   The rules, published on February 17, 1930 contain the following, in Part 1, Preliminary, under the heading ’Right of Changing Rules’               "1.  The rules contained in these  Regulations               may  not be modified or departed  from  except               under  the  orders of the  Ijlas-i-Khas  based               upon a report of the Finance Minister.               4.    The rules in these regulations apply  to               all  officers  holding  appointments  in   the               Patialal  State, except in so far as they  are               over-ridden  by  distinct  provision  in   any               formal  agreement entered into with the  State               by any officer."               It is not the appellant’s case that there  was               any formal agreement between him and the State               of Patiala that the rules shall not be changed               during the period of his service               The  Patiala  Services Regulations,  Vol.   1,               published in 1947, preserved the right of  the               Maharaja  to change the rules.  Rule  1.7,  of               Chapter I, reads               "Right   of  changing  rules  :   The    rules               contained  in these Regulations shall  not  be               modified  or  departed from except  under  the               orders of the Ijlas-i-Khas based upon a report               of the Finance Minister." Rule 1.7 of the 1947 Regulations corresponds to rr. 1 and  4 of  the 1930 Regulations.  The contention of  the  appellant that  the  rules  could  not be  changed  is  not  therefore sustainable.  They can certainly be changed by an  authority competent  to change them, as is evident from Exhibit P.  8, dated July 19, 1940.  The change 10 Sup.  CI/66-19 496 was  in fact effected by the Maharaja in his  administrative capacity. Exhibit P-8 is as follows :               "The Patiala State Bank is a State  Department               governed by its Constitution laid down by  the               Ijlas-i-Khas,  but  being  at  the  same  time               autonomous as regards its accounts, which  are               kept  on  commercial  basis,  it  has   become               necessary to define how far the rules applying               to  other  State Departments and  the  Patiala               State  Regulations  shall apply to  the  Bank.               The  Board  of Directors think  and  recommend               that the internal management of the Bank shall               be subject to rules and regulations framed  by               them subject to the following exceptions :               (a) The P. S. R. shall apply to the Bank Staff

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             with               the   exception  of  the  pension  rules,  but               instead thereof               will  have  the  benefit  of,  a  contributory               Provident Fund, as already established.               (c)   The Bank service shall be recognised  as               State  service for the purposes of  employment               in State service of suitable candidates  among               the descendants of Bank employees. The Chairman of the Board of Directors put up a note to  the Maharaja of Patiala underneath :               "I     respectfully    request    that     the               recommendations  of the Board of Directors  of               the  Bank, as stated above, may graciously  be               sanctioned."               On this, the Finance Committee recommended  as               follows               "The Finance Committee recommends that               (1)   Requests  of  the  Chairman,  Board   of               Directors,  at  (c), (e), (f) and (g)  may  be                             sanctioned.               (2)   The  request  at (a) may  be  sanctioned               adding the following ’and other State Rules or               orders’  after Patiala State  Regulations’  in               the first line. This recommendation was made by the Revenue Minister and the Finance Minister who constituted the members of the  Finance Committee.     On   this   the   Cabinet    supported    the recommendations  of the Finance Committee and submitted  the same to the Maharaja. These recommendations were accepted by the Maharaja on April 8, 1941. 497 It  may  be noted that the Order issued by the  Maharaja  on July  19,  1940,  viz., Ex-P. 8 quoted above,  is  headed  : ’Precis’.   It  states that by reason of the fact  that  the Patiala  State  Bank is an autonomous department  it  became necessary  to  define how are the rules  applying  to  other State departments and the Patiala State Regulations  applied to   the   Bank.   It  was  specifically   stated   in   the recommendation  made  by  the Board of  Directors  that  the internal  management of the Bank shall be subject  to  rules and  regulations framed by them.  Two  important  exceptions were made and those were that the Patiala State, Regulations shall  apply  to the Bank staff with the  exception  of  the pension rules, but that the staff shall have the benefit  of a  contributory  provident fund and that  the  Bank  service shall  be recognized as a State service for the purposes  of employment  in  State service of  suitable  candidates  from among the descendants of the Bank employees. The Finance Committee, as provided in rr. 1-7 of the  rules, recommended  that  the  request might  be  sanctioned.   The Cabinet   supported  the  recommendation  of   the   Finance Committee.  On this, the Maharaja made an endorsement :  "We approve the recommendation of the Cabinet".  This was  dated April 11, 1941. It  is  therefore  clear that the  extension  of  the  rules governing  the conditions of service of Government  servants to the employees of the State Bank of Patiala was the result of  ’an  extension’  made by the Maharaja  pursuant  to  the executive  power vested in him.  The act of extension  being an  executive  act, there can be no doubt that it  could  be changed  by a similar executive act.  Therefore it is  clear that  what was changed or superseded was the  extension  and not the rules. It is contended on behalf of the appellant that r. 27 of the

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Staff   rules   is   not  valid  since   it   violates   the constitutional guarantee under art. 311 of the Constitution. We  may here refer to the position in law with regard  to  a rule providing for compulsory retirement.  In Moti Ram  Deka v.  N.  E. Frontier Railway(1) where the  decisions  on  the question were reviewed it was stated :               "The  next decision in the same volume is  the               State  of  Bombay v. Saubhag Chand  M.  Doshi,               (1958) S.C.R. 571 =A.I.R. 1957 S.C. 892.  This               was  a case of compulsory retirement under  r.               165-A  of the Bombay Civil Services  Rules  as               amended  by the Saurashtra Government.  In  so               far  as  this case dealt with  the  compulsory               retirement  of  a  civil servant,  it  is  un-               necessary to consider the Rule in question  or               the   facts   relating   to   the   compulsory               retirement  of  the civil servant.  It  is  of               interest  to  note that in  dealing  with  the               question as to whether               (1)  [1964]  5 S.C.R. 683. 715=AIR  1964  S.C.               600,613.               L 10 sup.  CI/66-20               498               compulsory  retirement amounted to removal  or               not,  the  tests which were  applied  were  in               regard to the loss of benefit already  accrued               and stigma attached to the civil servant.   It               is,  however, significant that in  considering               the  objection based on ,the contravention  of               Art.  311(2), Venkatarama Aiyar J.,  took  the               precaution  of adding that ’questions  of  the               said character could arise only when the rules               fix  both an age of superannuation and an  age               for compulsory retirement and the services  of               a  civil servant are terminated between  these               two  points  of time.  But where there  is  no               rule fixing the age of compulsory  retirement,               or if there is one and the servant is  retired               before the age prescribed therein, then that               can  be regarded only as dismissal or  removal               within art. 311(2),.  It would be noticed that               the  rule providing for compulsory  retirement               was upheld on the ground that such  compulsory               retirement  does not amount to  removal  under               art.  311(2)  because it was another  mode  of               retirement  and  it  could  be  enforced  only               between  the period of age  of  superannuation               prescribed  and  after the minimum  period  of               service indicated in the rule had been put in.               If,   however,  no  such  minimum  period   is               prescribed   by   the   rule   of   compulsory               retirement,  that according to  the  judgment,               would  violate  art.  311(2)  and  though  the               termination  of  a servant’s services  may  be               described  as compulsory retirement, it  would               amount  to  dismissal or  removal  within  the               meaning  of  art. 311(2).   With  respect,  we               think that this statement correctly represents               the true position in law". The  validity  of  r. 27 cannot, in  the  instant  case,  be assailed on this ground. It  is then argued that the Staff rules are invalid  because they  offend  art.  14.  The ground  of  complaint  is  that different rules govern different public servants in the same State and that they are bad because they are discriminatory.

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This Court has held in a series of decisions culminating  in the  judgment  of this Court in Lachhman Dass  v.  State  of Punjab   (1)  that  after  the  enactment  of   the   States Reorganisation Act, 1956, different Acts in different  parts ,of the same State could be sustained on the ground that the differentiation  arises  from  geographical   classification based  on historical reasons.  The contention raised by  the learned counsel therefore fails. There  remains  a minor contention which is that  the  Staff rules were not properly made by the Board of Directors.   It is stated that cl. 3 of the Regulation Order, which provides for  a minimum number of six members, was not complied  with and  that  since the Staff rules were made by  four  members instead of six, they (1)  [1963] 2 S.C.R. 353 = A.I.R. 1963 S.C. 222.                             499 were  invalid.  As pointed out by the learned Judges of  the High Court, under the law governing corporations a  majority of  the members of the corporation is entitled  to  exercise the  powers of the corporation and that the  rule  regarding corporations is equally applicable to a company.  We are  in agreement with this view. As  a result of the conclusions reached by us,  this  appeal must  fail  and is dismissed.  In the circumstances  of  the case there will be no order as to costs. Appeal dismissed. 500