1 wp-2283-10 pdp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2283 OF 2010 1. The Synthetic & Rayon Textiles Export Promotion Council and ors. .. Petitioners Vs. 1. Smita Bharadwaj IAS and ors. .. Respondents Mr. Raj Mehta i/by M/s. R.K.M. Legal Service for petitioners. Mr. V. Tulzapurkar, Senior Advocate a/w Mr. R. R. Shetty for respondent no.1. Mr. V.S. Masurkar for respondent nos.2 and 3. CORAM: B. H. MARLAPALLE & U. D. SALVI, JJ. December 15, 2010. P.C. 1. This petition, filed under Article 226 of the Constitution of India, seeks to challenge the order dated 8/10/2010 passed by the Central Adminstrative Tribunal (CAT), Mumbai Bench, in Original Application No. 446 of 2010. The very same order has also been challenged by the Ministry of Textiles, Government of India, in Writ Petition (Lodging) No. 2 wp-2283-10 2588 of 2010. The said O.A. was filed by the respondent no.1 (hereinafter referred to as “Applicant”). 2. The petitioner no.1-Council was originally registered under Section 26 of the Companies Act, 1913 (equivalent to Section 25 of the Companies Act, 1956) and claims that it is primarily concerned with the promotion of export of synthetic fabrics and allied activities. The second and third petitioners are the Chairman and Vice Chairman of the said Council. The Council had published a proclamation in some of the leading English newspapers on 23/10/2007, inviting applications for the post of Executive Director and in response to the same, the applicant had forwarded her application for the said post on or about 30/10/2007. In all 45 applications were received and 19 of them were called for interview on 22/1/2008. After the interviews, there were five candidates shortlisted and finally the applicant was selected by the Selection Committee, consisting of the Chairman, Vice Chairman and three other members. On 30/5/2008, the Council informed the applicant that she was selected for the post of Executive Director and was issued a letter of offer. She was advised to go through the required procedure for obtaining approvals etc. On 12/11/2008, the Council informed the Under Secretary to the Government 3 wp-2283-10 of India, Ministry of Textiles regarding the selection of the applicant and the offer letter dated 30/5/2008. On 23/1/2009, the Under Secretary to the Government of India in the Ministry of Personnel and Training informed the Chief Secretary, Government of Madhya Pradesh, conveying that it had no objection to the proposed deputation of the applicant to the Council at Mumbai for a period of five years. Finally, on 7/4/2009 the Council issued the Office Order setting out the terms and conditions for the appointment of the applicant as Executive Director and stated that the offer would be applicable from 1/4/2009, though it appears that she joined the Council as the Executive Director on 3/2/2009. 3. The applicant is a direct recruit IAS officer of the 1992 batch and was assigned to the Madhya Pradesh Cadre. She approached the Tribunal to challenge the order dated 24/5/2010 issued by the Ministry of Textiles, Government of India and the consequential order issued by the Council on the very same day. As per the order passed by the Ministry of Textiles, Government of India, in accordance with the resolution passed by the Council, it was directed that the services of the applicant may be placed forthwith with the Government of Madhya Pradesh under intimation to the said Ministry and as per the order passed by the Council, the applicant 4 wp-2283-10 came to be relieved from its service with immediate effect in response to the order passed by the Ministry of Textiles, in consultation with the Department of Personnel and Training. It appears that in the 480th meeting of the Council held on 26/11/2009 at Mumbai, discussed Item No.13 i.e. to consider the resignation of Assistant Director (Finance) and the minutes of the said meeting in Clauses 13.2 to 13.4 read as under:- “13.2 The Chairman informed that he has received a note from Mr. K. Sivakumar wherein he has given the reasons for resignation. The main reason was that the Executive Director, since her appointment, is harassing him in respect of various issues related to the working of Accounts Department. The contents of the note were informed to the Committee. 13.3 The Chairman further informed that he has received a note from the Director & Secretary of the Council, Mr.E.L. Paulo where he has informed the Chairman that the ED has transferred large number of employees from one department to other department without the approval of the Chairman and approval of the Committee of Administration. This is against 5 wp-2283-10 the Articles of Association and Service rules of the Council and it has disturbed the complete working of the administration of Council. The contents of note were informed to the Committee. 13.4 The matter was discussed at length and it was unanimously decided that the Chairman along with the Vice- Chairman of the Council may examine the matter related to working of Executive Director, discuss it with past Council Chairmen and other government authorities as may be necessary and put up the matter in detail before the Committee of Administration in the next meeting.” The next meeting of the Committee of Administration of the Council i.e. 481st meeting was held on 22/1/2010 and Item No.10 in the said meeting was, “To examine the issues relating to the functioning of the Executive Director of the Council.” 6 wp-2283-10 On 31/3/2010, the Committee of Administration of the Council signed its resolution to the effect that it was dis-satisfied with the working and functioning of the applicant and its work was suffering. It was further resolved that the Council would approach the Ministry of Personnel, Public Grievances and Pension to immediately call the applicant back by cancelling her deputation to the Council. Similarly, Government of Madhya Pradesh, General Administration Department, through the Chief Secretary of the State, may be requested to cancel her deputation and call her back. It was further resolved that the Chairman and Vice Chairman may take further appropriate actions as may be required to implement the said resolution. On 2/4/2010, the Council forwarded the resolution dated 31/3/2010 to the Secretary, Department of Personnel and Training, Government of India with a copy to the Secretary, Ministry of Textiles, Government of India. Consequently, the impugned order dated 24/5/2010 came to be passed. 4. On the basis of the rival contentions raised and more particularly on account of the challenge to its jurisdiction to entertain the Original Application, the Tribunal framed the following issues:- 7 wp-2283-10 (i) Whether the Tribunal has jurisdiction to entertain the O.A.? (ii) Whether the applicant was on deputation to SRTEPC and if so under which provision? (iii) If on deputation, whether the same has been prematurely terminated in an illegal manner? (iv) Whether the premature termination of deputation is otherwise stigmatic? 5. The Tribunal noted that the Council obtained a fresh certificate of incorporation on 13/9/1987 in its present name and its Memorandum of Association (MOA) indicated that its main object is to promote export of domestically manufactured Synthetic and Rayon textiles. As per Article 4(A) of the MOA, the Council receives grant from the Government of India for the promotion of its objects, if and when sanctioned. Article 47 of the MOA deals with the powers of the Central Government to give directions to the Council and as per Article 48, no addition to, modification in or deletion of, any of the articles shall be made without the prior approval of the Central Government. Article 51 dealing with the general power to modify the articles by the Central Government reads as under: 8 wp-2283-10 “51. The Central Government may at any time direct by an order in writing that the provisions of these articles shall stand modified in such manner as the Central Government may direct, as in relation to Councils generally or be in relation to a group of Councils or a particular Council where such a direction appears to be necessary in public interest.” The Tribunal noted that as per the own admission of the Council, it has received grants in the year 2008-09 from the Central Government to the extent of Rs. 88,54,000 being 40% of the total grant-in- aid. In addition, in devising the pay structure of its own officers, it is required to follow the Central Government officers’ pay structure, including intermittent revisions pursuant to the Central Pay Commission’s reports from time to time. In para 8.7 of its judgment, the Tribunal noted that the letter-head of the Council clearly mentioned right at its top “it is an entity set up by the Government of India, Ministry of Textiles”. Before the Tribunal, there was no dispute that the annual reports of the Council are placed before the Parliament. In our view, the Tribunal was, therefore, right in holding that the Council is a “State” or an “instrumentality of the 9 wp-2283-10 State” within the meaning of Article 12 of the Constitution of India. 6. The Tribunal noted that the Council was not an entity notified under Section 14(2) of the Administrative Tribunals Act, 1985. However, it referred to the scheme of Section 14(1) of the said Act and held that the application filed by the applicant was maintainable. Section 14(1) of the Act reads as under:- “14. Jurisdiction, powers and authority of the Central Administrative Tribunal.- (1) Save as otherwise expressly provided in this Act, the Central Administrative Tribunal shall exercise, on and from the appointed day, all the jurisdiction, powers and authority exercisable immediately before that day by all courts (except the Supreme Court) in relation to-- (a) recruitment, and matters concerning recruitment, to any All-India Service or to any civil service of the Union or a civil post under the Union or to a post connected with defence or in the defence services, being, in either case, a post filled by a civilian; (b) all service matters concerning-- (i) a member of any All-India Service; or 10 wp-2283-10 (ii) a person [not being a member of an All-India Service or a person referred to in clause (c) appointed to any civil service of the Union or any civil post under the Union; or (iii) a civilian [not being a member of an All-India Service or a person referred to in clause (c ) appointed to any defence services or a post connected with defence, and pertaining to the service of such member, person or civilian, in connection with the affairs of the Union or of any State or of any local or other authority within the territory of India or under the control of the Government of India or of any corporation [or society] owned or controlled by the Government; (c ) all service matters pertaining to service in connection with the affairs of the Union concerning a person appointed to any service or post referred to in sub-clause (ii) or sub-clause (iii) of clause (b), being a person whose services have been placed by a State Government or any local or other authority or any corporation [or society] or other body at the disposal of the Central Government for such appointment. [Explanation.-- For the removal of doubts, it is hereby declared that references to “Union” in this sub-section shall be 11 wp-2283-10 construed as including references also to a Union territory. In our opinion Clause (b) of Section 14(1) would be squarely applicable in the instant case. The applicant continued to be a member of All India Service while on deputation with the Council as an Executive Director and she had raised before the Tribunal the grievance of her service i.e. premature termination of her deputation period by the Council and under the approval of the Government of India. Hence, the findings recorded by the Tribunal on Issue No.(i) do not suffer from any infirmity. 7. On the second issue regarding the applicant being on deputation, the letter dated 23/1/2009, addressed by the Under Secretary to the Government of India to the Chief Secretary, Madhya Pradesh, clearly stated that the Department of Personnel and Training had no objection to the proposed deputation of the applicant to the Council for a period of five years. The Office Order dated 7/4/2009 issued by the Council in favour of the applicant clearly stated that All India Service (Conduct) Rules 1968 and the All India Services (Discipline and Appeal) Rules, 1969 would be applicable to her, while on deputation. The letter dated 24/5/2010 addressed to the Chairman by the Under Secretary to the Government of 12 wp-2283-10 India specifically stated that the issue of premature repatriation of the applicant was considered in the Ministry of Textiles in consultation with the department of Personnel and Training. It is nobody’s case that the applicant had resigned as a member of the All India Service or that she had applied for lien while she joined the Council as the Executive Director. The Tribunal was, therefore, right in holding that the applicant was on deputation for a period of five years. 8. On the issue of premature termination of deputation in an illegal manner, the Tribunal referred to the enunciations of the Apex Court in the case of Purshottam Lal Dhingra Vs. Union of India (AIR 1958 SC 36), Moti Ram Deka vs. North Eastern Railway, Union of India (AIR 1964 SC 600), K. H. Phadnis Vs. State of Maharashtra (AIR 1971 SC 998) and the Union of India vs. V. Ramakrishnan & ors. (AIR 2005 SC 4295) and held that the deputation of five years was illegally terminated. Para 32 of the judgment in the case of Ramakrishnan (Supra), which has been reproduced by the Tribunal in the impugned order, stated that when the tenure of deputation is specified, despite a deputationist not having an indefeasible right to hold the said post, ordinarily the term of deputation should not be curtailed except on such just grounds as, for example, 13 wp-2283-10 unsuitability or unsatisfactory performance. But, even where the tenure is not specified, an order of reversion can be questioned when the same suffers from malice and an action taken in a post-haste manner also indicates malice. We are satisfied that a well reasoned finding in answering Issue No.(ii) in the affirmative does not suffer from any error. 9. Now let us examine the circumstances under and the reasons for which the applicant was made to face the premature termination of her deputation. In paragraph 3 of this order we have reproduced Clause 13.2 to 13.4 of the minutes of the 480th meeting of the Council held on 26th November, 2009. Shri K. Sivakumar, Assistant Director (Finance) had purportedly submitted a note giving the reasons for his resignation and there was another note received by the Chairman from the Director and Secretary from Shri E.L. Paulo, Director and Secretary of the Council, informing the Chairman that the Executive Director had transferred a large number of employees from one department to another without the approval of the Chairman and the Committee of the Administration. It was alleged that these transfers were against the Articles of Association and Service Rules of the Council and in addition the transfers had disturbed the complete working of the administration of the Council. 14 wp-2283-10 It is interesting to note that after the 480th meeting of the Council the applicant addressed a letter dated 18th January, 2010 to Ms. Rita Menon, Secretary (Textiles), in the Ministry of Textiles, Government of India and furnished the following explanation in regard to items Nos. 13.2 and 13.3 of the said meeting. She stated as under:- Regarding Item No.13.2 (i) I am not aware of any note signed by the AD(Fin) and given to the Chairman in November, 2009. In fact, my comments on the note should have been taken by the Chairman before putting up the matter for discussion in the Committee of Administration held on 26.11.09. This discussion was done in my absence during that meeting. Even till date I am not aware of any such note stating that the AD(Fin) has been harassed unnecessarily by me. On the contrary, he has habitually failed to perform the tasks on time. (ii) The Chairman is fully aware of the financial irregularities committed by the AD(Fin): (a) A note was sent by the Chairman to me dtd. 26th May’09, “to ask Shri Nitin Jhaveri, Auditor for SRTEPC to audit the Petty CAsh and Medical bills from 1st January, 2009 to 15th May, 2009” (Annexure III). In this regard, a meeting was called by the Chairman inviting Shri Sanjeev Saran, Shri Rakesh Mehra and the Executive Director to discuss this matter. It was unanimously decided to ask the Chartered Accountant of SRTEPC to look into the matter. The CA’s report confirmed procedural lapses and discrepancies in 15 wp-2283-10 financial matters. (b) There were several complaints of delay in official matters by the AD(Fin). He has himself accepted the mistakes in writing and requested to condone the delays on several occasions. (c) The negligence in calculating 6th pay commission arrears was brought to the notice of the Chairman. AD (Fin) had taken higher grade pay for himself without taking due approvals which would have financial implications for SRTEPC (Annexure IV). AD (Fin) is making baseless allegations against the Executive Director of the Council to avoid inquiry into the above- mentioned financial irregularities. In fact, I have only tried to ensure that work is completed on time with effective financial management. Regarding Item No.13.3 (i) It is incorrect to say that I have transferred large number of employees. The following transfers were done with the approval of the Chairman and on the recommendation of the Regional Chairman, Surat: Name Place Date Anjan Datta From Surat to Mumbai 03.08.09 Sanctus Ephrems From Mumbai to Surat 03.08.09 (ii) As per Rule No. 13 of Service Rules of SRTEPC regarding transfers “The services of an employee shall be liable to transfer at any time as exigencies of work in connection with the Council would demand from time to time to any other offices and in the event of such transfer the terms and conditions of the employee’s service unless otherwise agreed upon by any charges, will remain same and the 16 wp-2283-10 employee shall be deemed to be in the service of the office to whom services are transferred.” According to the Memorandum of Articles of Association 33.1 of SRTEPC, the Executive Director will be the overall in- charge of the administration of the Council and shall supervise the work of all the officers. Under the overall administration charge, the Executive Director also supervises the work of the staff of the Council. Any work re-allocation of the staff within the Head Office may be done by the Executive Director for better functioning of the office. These charges in the office have resulted in better administration and financial management for SRTEPC. (iii) The following persons were shifted with new work responsibilities within the Head Office from February 2009 to January 2010: Ms. Bharati Panchal on 26th March, 2009 Shri Prakash Agre on 22nd July, 2009 Ms. Deniza Coutinho on 22nd July, 2009 Shri Ravi Rege on 14th October, 2009 (iv) I am informed that in the past when such inter- departmental transfers took place, prior approval of the Chairman was not taken and neither was it put up for the approval for the COA. (v) The Council may be asked to provide the office copies of the approval of the Past Chairmen and the minutes of the COA meetings for the transfer orders within the Mumbai office from 2001 to 2006. (Annexure V) It is also surprising that DS did not raise this issue for 9 months since March 2009, when the first inter-departmental reallocation of work was done. The DS was aware of such transfers within the Mumbai office. Keeping utmost secrecy, he has put up the matter to the Chairman, who has cancelled the inter-departmental transfers in the Head Office (Annexure 17 wp-2283-10 VI). The Chairman did not take any opinion or my comments, orally or in writing, before issuing the cancellation orders dtd. 31.12.09. This, in fact will lead to insubordination by the staff and lack of team spirit which will adversely affect the functioning of SRTEPC. The note put up to the Chairman by the DS in November, 2009, has not yet been given to me for my comments. The matter was directly taken to the COA meeting without my knowledge and in my absence. Till date, no information has been given to me regarding this issue.” 10. The explanation so submitted by the applicant to the Secretary (Textiles) goes to show that the Assistant Director (Finance) had failed to perform the tasks assigned to him by the Executive Director from time to time and had indulged in number of financial irregularities and he had approached the Chairman, may be, to avoid an enquiry into these irregularities. The same officer had also taken higher grade pay for himself without taking due approval which would have financial implications for the Council. So far as the note of Mr. Paulo is concerned, the applicant pointed out in her report that there were only two officers who were transferred inter se from Mumbai to Surat and vice versa on 3rd August, 2009. In addition there were four departmental transfers at the head office from March to October, 2009 and the approval of the Chairman was not required for these transfers. 18 wp-2283-10 11. It is, therefore, evident that the Chairman and the other members of the Committee of Administration found that the applicant was an inconvenient officer and the administrative measures she had taken in her capacity as the Executive Director were not as per their liking and that was the only reason that she was sought to be ousted from the post of Executive Director. There is no material on record even to reach a prima facie conclusion that the applicant was proved to be incompetent, dishonest, high handed or whimsical in her approach or that while discharging her duties she acted against the interests of the Council. 12. Along with the Council's letter dated 2nd April, 2010 addressed to the Secretary, Department of Personnel and Training, a copy of the resolution passed in respect of agenda No.10 in the 481st meeting of the Council was forwarded and it was resolved in the said meeting that the Council was dissatisfied with the working and functioning of the applicant and the work of the Council was suffering. This resolution was certainly an adverse opinion recorded by the Council against the applicant and it would always remain in her service record, as an I.A.S. Officer. Though the subsequent order dated 24th May, 2010 issued by the Government of 19 wp-2283-10 India to the Chairman of the Council and the Council's order of the same date addressed to the applicant did not state anything about her performance or style of working as the Executive Director, it is evident that these orders were based on the resolution passed by the Committee of Administration of the Council in its 481st meeting held at Mumbai on 31st March, 2010. Hence, the impugned orders have been rightly held to be stigmatic by the Tribunal. The Tribunal also noted that the applicant did not have any notice either for the 480th meeting or 481st meeting of the Committee of Administration and before the Council approached the Secretary in the Department of Textiles, either the Chairman or the Vice Chairman did not call upon the applicant to submit her explanation or response to the resolutions so passed or to the notice submitted by the Assistant Director of Finance as well as Mr. Paulo. The Chairman and Vice Chairman found the applicant as a stumbling block in their style of functioning while carrying out the reins of the Council and therefore, they resorted to the summary removal of the applicant from the post of Executive Director and