IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.10355 of 2009 KRISHNA KANT LAL s/o late Sridhar Lal Das, resident of village- Bajitpur, P.O. Bajitpur, P.S. Mani Gachi, District- Darbhanga (Bihar) at present posted as Accountant, Head Office, Bihar State Small Industries Corporation , Indira Bhawan, Patna. Versus 1. THE STATE OF BIHAR . 2. The Industrial Development Commissioner-cum-Secretary, Department of Industries, Bihar,Patna. 3. The Director of Industries, Bihar,Patna. 4. The Secretary, Finance (Bureau of Public Enterprises),Finance Department, Bihar,Patna. 5. The Secretary, Personnel & Administrative Reforms Department,Bihar, Patna. 6. The Deputy Secretary, Industries Department,Bihar,Patna. 7. The Managing Director,Bihar State Small Industries Corporation , Indira Bhawan,Patna. ----------- For the Petitioner : Mr. Rajendra Kumar Jain For the State : Mr. Kumar Alok, S.C-19. For the Corporation : Mr. Umakant Singh 4 16.10.2009 Petitioner is a permanent employee of the Bihar State Small Industries Corporation Limited, which is a government Corporation duly incorporated under the Companies Act. It is a wholly owned State Government undertaking . It is not in dispute that for its employees it had not framed any Service Rules of its own. The Board of Directors, it is not in dispute, took a decision as far back as on 22.12.2001 (as apparent from Annexure 3 being communication dated 16.7.2005 of the Managing Director of the Corporation to the Industrial Development Commissioner) that in absence of its own rule, Bihar Service Code will be applicable in all aspects to its employees. Rule 73 of the Bihar Service Code deals with the age of superannuation of employees and as stood , at the relevant time, it was 58 years. It is pursuant to this that by Annexure 1, the petitioner, who 2 is an Accountant in the said Corporation, has been directed to superannuate on 31.7.2009 on attaining 58 years of age. This is what is under challenge. A counter affidavit has been filed on behalf of the State as well as on behalf of the Corporation. Rejoinder has also been filed. With the consent of the parties, the writ petition is being heard for disposal at this stage itself. It is not in dispute that , as noted above, that Bihar Service Code is applicable to the employees of the Corporation as per decision of the Board of Directors of the Corporation. It is not in dispute that the Corporation is a body incorporated under the Companies Act and the sole share holder is the State. The consequence of a Corporation , being incorporated under the provisions of the Companies Act, is that it became a juridical personality incorporated and had its own independent existence.The supreme governing body of the Corporation is the Board of Directors, who have to take all policy decisions in respect of the Corporation. The Corporation and its Board of Directors are autonomous bodies and not subordinate to any authority or officer. In fact, the counter affidavit of the Corporation categorically takes such a stand as well . It was further stated that it is independent of the government and its Board of Directors are independent to take decision in their respect. This Court can only add that the control of the government over the Corporation is not independent but is through their nominee Directors, who are all government officials. Government or any department of the Government has no authority to issue any binding 3 direction to the Corporation directly. That would impinge upon the autonomous Corporation status of the Corporation. That can be achieved by the government only by asking its nominee Directors in the Board of the Corporation to take decision as per government policy and they being the competent bodies, if they choose to take such a decision as Members of the Board of Directors, it is those decisions, which would bind the Corporation. This is so far as corporate identity is concerned. Now we come to the Service Conditions of the employees. As noted above, the Service Conditions are undisputedly governed by the Bihar Service Code of which Rule 73 deals with , inter alia, the age of superannuation of employees. Thus, instead of making its own rule, the Corporation has accepted to follow the Bihar Service Code in all its aspects. It is not in dispute that on 24.3.2005, the State Government took a decision to extend the age of superannuation of employees from 58 years to 60 years. Rule 73 of the Bihar Service Code was accordingly immediately amended. The amended rule with effect from 24.3.2005 provided that the age of superannuation was 60 years. Petitioner rightly contends that no sooner Rules are so amended, which rules have been accepted by the Corporation to be the rules to govern the Service Conditions of its employees, the said rules in its application to Corporation also stood amended accordingly. Learned counsel for the Corporation and the State do not dispute that the age of superannuation of employees of the Corporation, which was earlier taken to be 58 years was by virtue of this very Rule 73. Thus, in my view, the moment Rule 73 stood 4 amended, the age of employees of the Corporation also stood amended automatically. Further it is not in dispute that Board of Directors of the Corporation met on 26.7.05 and in the meeting of the Board of Directors it was specifically decided in Agenda item no. 18014 that in pursuance to the decision of the State Government dated 24.3.2005 by which the age of superannuation was increased from 58 to 60 years would equally be applicable to the employees of the Corporation but assuming itself be bound by the State in certain matters, having so decided, sought approval from the State in this regard. As noted above, this was wholly unnecessary as firstly no sooner the Rule 73 got amended, the amended provisions apply with or without decision of the Board of Director. Secondly, Board of Directors had independent authority to take a decision. Their decisions are not subject to approval nor any such approval is required, as pointed out, they are autonomous body having independent corporate identity. Thus, is my view, which is consistent with the judgment of the Apex Court in the case of Harwindra Kumar –v- Chief Engineer, Karmik & ors. since reported in AIR 2006 SC 365 and a Division Bench judgment of this Court in the case of Lala Nand Kumar –v- Bihar State Food & Civil Supplies Corporation Ltd. since reported in 2008(1) PLJR 579. In the Division Bench judgment of this Court, this very aspect of Rule 73 and effect of the decision of the State Government has been noted. It has also noted that no sooner State Government took a decision, it automatically applies and no further decision was required by the Board of Directors. 5 Now I must consider certain objection that was raised by the State in this regard. State submits that these Corporations are government Corporations for serving the purposes of government governance and as such it has financial implication on the government. I am not surprised at this stand of the government but unfortunately this is not the consistent stand when it goes to increase the alleged financial burden of the State, on the presumption that the State has to meet the expenses of the employees of the Corporation running in loss, the State Government takes this stand to stop it, which would encumber the Corporation but at the same time when employees of the Corporation approach this Court for payment of their wages and other service dues in respect of government Corporations, which are financial defunct or are running in loss , the State Government put its hands up and take the stand that the Corporations are independent corporate identities, who have to meet their liability out of their own fund and the government is not liable to pay the same and no writ can be issued to the government to pay the dues of the employees. Such is a diabolical stand of the Government. I am afraid, State cannot approbate and reprobate at the same time . Having created an independent corporate identity in the shape of Corporation,it must give it (Corporation) full financial and administrative autonomy as is contemplated of corporate identity and exercise its control through its nominee Director or treat the Corporation as its own body and creation and accept all liability in that regard. In such a situation, the stand of the Government that the Corporation cannot take decision which would increase the liability of 6 the government in any manner cannot be accepted. Categorically stand of the Corporation in its counter affidavit is that it is an independent corporate identity and the supreme body to take decision is its Board of Directors. That stand is correct. The Corporation has relied on two unreported judgments of this Court to deny relief to the petitioner. The first is the case of Abdul Bari Parathmik Shikshak Prashichakn Mahavidyalaya, Chapra –v- The State of Bihar & ors. being C.W.J.C.No. 4235 of 2006, which was disposed of on 12.9.2006. In my view, the said judgment has absolutely no relevance to the present case in as much as it related to permission of a set of students, to appear in examination conducted by Bihar School Examination Board . Then we came to the decision in the case of Anjani Ranjan Sriwastava –v- The State of Bihar being C.W.J.C.No. 7066 of 2005, which was dismissed on 31.8.2007. This case deals with the employees of the Bihar State Small Scale Industries Corporation Limited itself. In the short order dismissing the writ petition, the only point that has been noted is that the State Government not having granted approval to the decision of the Board of Directors, the decision would not apply. As apparent from the judgment in the said case no party brought to the notice of their Lordship the provision of Rule 73 and the consequence of its amendment, which was the material fact to determine the right of the parties. Apart from that, the said order was passed on 31.8.2007 whereas this aspect of the matter was then considered by a Division Bench of this Court in the case of Lala Nand Kumar (supra), which judgment was delivered on 17.1.2008 wherein this aspect of the matter 7 was clearly discussed and decided. I am bound by the Division Bench judgment of this Court which has followed the Apex Court judgment in this regard, as noted therein. In fairness to learned counsel for the State and the Corporation I must also notice their stand that the State Government took a policy decision on 21.11.2008 (Annexure A to the counter affidavit of the State) asking the Corporation and public sector undertaking not to increase the age of superannuation from 58 to 60 years if the Corporations were in loss. Learned counsel for the State urges that it is undisputed that the Corporation is running in loss and as such the Board of Directors could not have taken decision to increase the age. This argument cannot be accepted for two reasons. Firstly, the decision of the Board Directors was taken in the year 2005 and a policy decision, if at all applicable, was taken by the State in the year 2008. Such a policy can only have prospective application but it cannot take away the decision which was taken earlier. Secondly, as noted above, as also held by the Division Bench, no decision is required to be taken in the facts of the case. No sooner State had taken a decision and amended Rule 73 of the Bihar Service Code, that became automatically applicable. The only manner known in law to undo that was or is to amend Rule 73 in its applicable to the Corporation but till such time the same is not done it is the amended rule that would apply. Regrettably , neither the State nor the Corporation is alive to the legal situation at all. The operation of statutory rule or a rule having force of law cannot be stultified by mere executive instruction or policy decision. Thus, on all counts, the 8 writ petition must succeed and the impugned order directing that the petitioner would superannuate with effect from 31.7.2009, as contained in Annexure 1, cannot be sustained as legally correct. The same is accordingly quashed. It is held that the petitioner would superannuate in terms of amended Rule 73 of the Bihar Service Code on attaining the age of 60 years and he continues in service till then.. The writ petition, with the above observation and direction, stands allowed. Singh (Navaniti Prasad Singh, J.)