SCA/11017/2004 1/69 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 11017 of 2004 With SPECIAL CIVIL APPLICATION No. 11019 of 2004 With SPECIAL CIVIL APPLICATION No. 11020 of 2004 With SPECIAL CIVIL APPLICATION No. 11022 of 2004 With SPECIAL CIVIL APPLICATION No. 11025 of 2004 With SPECIAL CIVIL APPLICATION No. 11027 of 2004 With SPECIAL CIVIL APPLICATION No. 11028 of 2004 With SPECIAL CIVIL APPLICATION No. 11029 of 2004 With SPECIAL CIVIL APPLICATION No. 11030 of 2004 With SPECIAL CIVIL APPLICATION No. 11031 of 2004 With SPECIAL CIVIL APPLICATION No. 11623 of 2005 With SPECIAL CIVIL APPLICATION No. 11624 of 2005 With SPECIAL CIVIL APPLICATION No. 11625 of 2005 With SPECIAL CIVIL APPLICATION No. 11626 of 2005 With SPECIAL CIVIL APPLICATION No. 11627 of 2005 With SPECIAL CIVIL APPLICATION No. 11628 of 2005 With SPECIAL CIVIL APPLICATION No. 11629 of 2005 With SPECIAL CIVIL APPLICATION No. 11630 of 2005 With SPECIAL CIVIL APPLICATION No. 11631 of 2005 SCA/11017/2004 2/69 JUDGMENT With SPECIAL CIVIL APPLICATION No. 11632 of 2005 With SPECIAL CIVIL APPLICATION No. 11633 of 2005 With SPECIAL CIVIL APPLICATION No. 11634 of 2005 With SPECIAL CIVIL APPLICATION No. 12123 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE P.B.MAJMUDAR ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================= K.D.PATEL AND OTHERS Versus GSFC -THRO- CHAIRMAN AND OTHERS ================================================= Appearance : Mr. Bhaskar P Tanna, Senior Advocate, assisted by Mr. Girish Ramakrishnan, advocate, in SCAS No. 11017 11031 of 2004. SCA/11017/2004 3/69 JUDGMENT Dr. Mukul Sinha, learned advocate petitioners in the remaining matters. Mr. N.D. Nanavati, Senior Advocate assisted by Mr. R.D. Dave for respondents. ================================================= CORAM : HONOURABLE MR.JUSTICE P.B.MAJMUDAR Date : 09/09/2005 COMMON CAV JUDGMENT 1. Since common point is involved in all these petitions, all these matters are disposed of by this common judgment. 2. For easier and quicker reference, since facts of all the petitions are almost identical, Special Civil Application No. 11623/2005 is taken as the main petition, for general reference to the contentions of both the sides as also the annexures. 3. By filing these petitions, the petitioners have challenged the action of the respondent Gujarat State Financial Corporation [hereinafter referred to as the Corporation] in SCA/11017/2004 4/69 JUDGMENT superannuating them under regulation No. 19 of the Gujarat State Financial Corporation [Staff] Regulations, 1961 [hereinafter referred to as the Regulations] on the ground that they have either attained the age of 55 years or completed 30 years of service as may be applicable in the facts of the individual case. The grievance of the petitioners ventilated in this group of petitions is that they are entitled to serve till they attain the age of 58 years and they cannot be made to retire compulsorily, before reaching the said age as according to the petitioners 58 years of age is the age for superannuation. 4. Before proceeding further, it would be relevant to look into regulation No. 19 of the Regulations, which reads as under: 19. Superannuation and Retirement :- An employee shall retire on his attaining the age of 58 years or on completion of 30 years of service, whichever is earlier :- Provided that the Board may at its discretion retain an employee in service after completing 30 years of service or on attaining the age of 58 years by sanctioning from time to extension of such SCA/11017/2004 5/69 JUDGMENT employee's employment for a period not exceeding one year at a time if such an employee is physically and mentally fit, and that such extension of service shall in no case be sanctioned beyond the age of 60 years. Provided further that the Board may after giving three month's previous notice in writing require an employee to retire from the service on the date on which such an employee attains the age of 55 years or on completion of 30 years of service whichever is earlier or any date thereafter to be specified in the notice. An employee may, however, after giving atleast three months' notice in writing to the Managing Director retire from service on the date on which he attains age of 55 years or on completion of 30 years of service whichever is earlier or on any other date to be specified in the notice. Explanation I – For the purpose of this Regulation service shall not include any period of service rendered by an employee before attaining the age of twenty one years. Explanation II – Notwithstanding anything SCA/11017/2004 6/69 JUDGMENT contained in this Regulation where an employee has at the credit of his leave account ordinary leave earned and has in sufficient time before the date of retirement either:- (1). Formally applied for leave and been refused it, or, (2). ascertained in writing from the Managing Director, that leave, if applied for, would not be granted he may be permitted to avail of the leave so refused and in that case the employee would be deemed to have retired from service on the expiry of the leave. 5. This group of petitions can be classified into three classes. (i). The employees who have completed 30 years of service. (ii). The employees who have not completed 30 years of service but have attained the age of 55 years. (iii) The employees who have completed 30 years but have not attained the age of 58 years. 6. The Corporation, by resorting to regulation No.19 of the Regulation has passed individual orders asking the petitioners to SCA/11017/2004 7/69 JUDGMENT retire from service. Once of such order, which is impugned in SCA No. 11017 of 2004, is finding place at page 29 in the compilation of that petition. As per the same, the Administrative Manager of the Corporation has informed the said petitioner that since the petitioner of that Special Civil Application is rendering his service from 12.1.1976 and at present he is serving as Manager, and looking to his birth date, 30.11.1947, he has attained the age of 55 years. Therefore, either he has completed 30 years of service or has attained the age of 55 years, in view of the decision of the Board of Directors in its meeting dated 28.05.04, he is ordered to be relieved from service on the ground of attaining the age of superannuation. Individual orders have been passed against each of the petitioners. Accordingly, by the impugned orders passed against each of the petitioners, the petitioners have been relieved from service on the ground that the petitioners have reached the age of superannuation, i.e. either by completing 30 years of service or by attaining the age of 55 years. 7. Learned advocates for petitioners have SCA/11017/2004 8/69 JUDGMENT placed on record charts, which shows that some of the employees have completed 30 years of service but they have not attained the age of 58 years, and some employees have completed 30 years of continuous service but have not reached the age of 55 years. 8. The common point raised on behalf of the petitioners in each of these petition is that the age of superannuation is 58 years, and, therefore, the petitioners should be allowed to continue in the service till they attain 58 years which is the age of superannuation, and it is not open for the Corporation to retire an employee earlier unless specific grounds exist for retiring the employee earlier compulsorily. The only point which is required to be considered in these petitions is the age of superannuation. 9. Regulation 4 provides for as under: 4. Circulation of Amendments: Any new Regulation or alteration in an existing Regulation shall be issued in the form of a circular for circulation among the staff: Provided that no new regulation or an SCA/11017/2004 9/69 JUDGMENT alteration in an existing Regulation shall operate to reduce the scale of pay of an employee on which he is entitle to draw pay in a substantive capacity on the day the new Regulation or alteration comes into force. 10. Chapter II of the Regulations provide for appointments, probation and termination of service. Resorting to regulation No. 19 referred to herein above by the impugned orders in each petitions, the petitioners have been relieved from service on the ground that some of them have attained the age of 55 years and some of them have completed 30 years of service. As pointed out earlier, in this bunch of petitions, the Court is concerned with class of employees who have not reached the age of 58 years. The other group of employees are such who have completed 30 years or service but have not reached 58 years. There is another class of employees in the group of petitions who have not completed 30 years of continuous service, but have attained the age of 55 years. By the impugned orders, all these classes of petitioners have been relieved from service on the ground that they have either completed 30 years of service or attained age of 55 years SCA/11017/2004 10/69 JUDGMENT or both, and, therefore, they have no right to continue in service. The petitioners, by filing these petitions, have challenged the said decision on the ground that as per the practice prevailing in the Corporation, the employees have been allowed to serve unto the age of 58 years and they cannot be asked to retire from service till they attain the age of superannuation, which, according to the petitioners, is 58 years. Both the learned counsel, Mr. Tanna and Dr. Mukul Sinha have given a chart showing the date of birth, date of completion of 30 years and date of completion of 55 years and left out period for attaining the age of 58 years by the concerned employee. 11. It is not in dispute that none of the petitioners have attained the age of 58 years. However, the petitioners have either completed 30 years continuous service with the Corporation or attained the age of 55 years. The grievance of the petitioner is that unless they attain the age of 58 years, it is not open to the Corporation to make them retire by treating the age of superannuation as 55 years or on the ground that they have completed 30 years of continuous service. It is submitted SCA/11017/2004 11/69 JUDGMENT that if an employee is continued in service after he completed 30 years of service, then it is not open for the Corporation to make them retire unless they attain the age of 58 years, unless such retirement is required to be made in public interest. It is submitted on behalf of the petitioners that all throughout, the Corporation has allowed the persons to serve upto the age of 58 years, by treating the aforesaid age for the purpose of superannuation, and except in the present cases, in no other cases in the past, employees have been made retire on attaining the age of 55 years or on completion of 30 years of continuous service. It is submitted that, therefore, the action of the Corporation in retiring all these employees by a stroke of pen is arbitrary, discriminatory and violative of Article 14 of the Constitution of India, and there is no reason to depart from the said practice and the petitioners should be allowed to serve upto 58 years of age. On behalf of the petitioners, it is submitted that once an employee is allowed to continue in service, after crossing 55 years of age, it is not open for the Corporation to take shelter under Regulation 19 of the Regulations for the purpose of retiring such employee from service. SCA/11017/2004 12/69 JUDGMENT It is submitted that if the Corporation wants to retire an employee before he reaches the age of 58 years, such powers can be exercised only in an individual case, if it is found that such employee is required to be retired in public interest, and that it is not in public interest to continue the services of such an employee in view of the service record of the concerned employee. It is submitted that in any case, the action of the Corporation retiring some of the employees who have not even completed 30 years of continuous service but have only attained 55 years, is absolutely arbitrary, as some of the employees have been asked to retire on the ground that they have completed 30 years of service even though they have not attained the age of 58 years. It is submitted that the aforesaid cases clearly reflect the high handed action on the part of the Corporation. It is submitted that since the Employees' Union of the GSFC has filed a writ petition in connection with the reduction of their pay scale, the Corporation has taken the decision to relieve the petitioners from service of the Corporation under the guise that they have attained the age of 55 years or completed 30 years of service. It is submitted that the said action of the Corporation is, therefore, SCA/11017/2004 13/69 JUDGMENT not bonafide and is based on ulterior motive. It is also submitted on behalf of the petitioners that the Regulations have been replaced by the Gujarat State Financial Corporation (Staff) Regulations, 1979, particularly Regulation 18 thereof, and, therefore, the Corporation could not have retired the employees merely on the ground that they have completed 30 years of service and such employees are entitled to continue in service till they attain the age of 58 years. It is also argued that even assuming that the 1961 Regulations still hold the field, the power under the 2nd proviso to Regulation 19 of the 1961 Regulations cannot be exercised without examining the service record of each individual employee and such powers cannot be exercised on the ground that the Corporation is over-staffed as reflected in the decision of the Board of Directors while dismissing the petitioners' appeals. It is also submitted on behalf of the petitioners that the petitioners had legitimate expectation of continuing in service till the age of 58 years and they have made several financial commitments on that basis. If the impugned orders are permitted to be implemented, the petitioners will suffer irreparable loss and injury which cannot be SCA/11017/2004 14/69 JUDGMENT compensated in terms of money, as the petitioners have several social and financial obligations to fulfill at the fag end of their service. In support of the contentions raised and argued on behalf of the petitioners, reliance was made on various decisions of the High Courts and Apex Court. On behalf of the petitioners, it is submitted that considering the facts and circumstances of the case, the petitions are required to be allowed and appropriate writ, order, or direction is required to be issued under Article 226 of the Constitution of India, directing the respondent GSFC to allow the petitioners to continue in service till they attain the age of 58 years as all throughout in the past, the Corporation has followed the practice of superannuating its employees on attaining the age of 58 years. 12. On behalf of the Corporation, learned Senior Advocate, Mr. N.D. Nanavati, relying on the first part of Regulation No.19, has submitted that on completion of 30 years of service, an employee has no right to continue in service. He submitted that the said regulation clearly provides that an employee shall retire on his attaining the age of 58 years or on completion of 30 years of service, SCA/11017/2004 15/69 JUDGMENT whichever is earlier. He further submitted the second proviso to the aforesaid Regulation No. 19 clearly provides that the Corporation has the power to retire any employee from the service on the date on which such an employee attains the age of 55 years or on completion of 30 years of service whichever is earlier or any date thereafter. He further submitted that if the Corporation has continued an employee even after completion of 30 years of service, such continuation should be treated as an extension of service, and by that no right is created in favour of the employee. It is further submitted that an employee has no right to continue in service the moment he completes 30 years of continuous service, and that an employee has no right to continue in service till he attains the age of 58 years. It is submitted that as per Regulation No. 19 there are three stages where an employee can be made to retire from service: 1. On attaining the age of 58 years. 2. On completing 30 years of service 3. On attaining 55 years of age. 13. According to Mr. Nanavati, whichever event occurs earlier, an employee is required to retire from service as provided under the SCA/11017/2004 16/69 JUDGMENT aforesaid regulation. He therefore submitted that in view of the aforesaid regulation, even if an employee has not completed 30 years of service, but if he has reached the age of 55 years, he can be retired under the proviso to Regulation No.19. He submitted that it is not necessary that only in public interest an employee can be retired before he attains the age of 58 years of age. He further submitted that in all these cases, each of the petitioners should be treated to have continued by extension as they have no right to continue in service once they attain the age of 55 years or complete 30 years of service. Mr. Nanavati also relied on various judgments to substantiate his submissions. Mr. Nanavati submitted that the financial position of the Corporation is weak, and the Board of Directors have decided to retire the employees who have either completed 30 years of service or have attained the age of 55 years. He further submitted that at present the1961 Regulations are in force and the Corporation has passed the orders resorting to Regulation No. 19 of the 1961 Regulations. Mr. Nanavati has vehemently submitted that even if any employee has continued after completion of 30 years of service or after attaining 55 years of age, SCA/11017/2004 17/69 JUDGMENT such continuation of service should be treated as an extension of service only which would not confer any right on such employee to continue in service till he attains the age of 58 years and at any point of time before he attains the age of 58 years, the Corporation has got the right to retire him from service. Mr. Nanavati, therefore, submitted that there is no substance in the petition. It is alternatively submitted that since without prejudice to the rights and contentions some of the petitioners have taken retirement benefits, even if ultimately these petitions are allowed, no order reinstating them in service should be passed without first asking them to repay the amount. This argument is made as an alternative argument and the main contention of Mr. Nanavati is that the petitioners have no right to continue in service after completion of 30 years of service or on attaining the age of 55 years. 14. I have heard both the learned counsel at great length. I have also gone through the Regulation as well as various judgments cited by both the sides. At the time of admitting Spl. C.A. No. 11017 of 2004 and cognate matters, the learned Single Judge, while SCA/11017/2004 18/69 JUDGMENT refusing to grant interim relief, observed that it would be open to the petitioners to get all their retiral benefits without prejudice to their rights and contentions in these petitions. 15. Mr. Sinha has also argued that Regulation 19 is ultravires inasmuch as it is not providing any guidelines as to in which manner powers are to be exercised nor it provides for retiring a person on the ground of public interest. He submitted that under the guise of resorting to power under regulation 19, virtually the Corporation has resorted to termination of services of the employee in an arbitrary manner. He submitted that in any case, the Corporation can resort to such powers by retiring a person before he attains the age of 58 years, which is the age of superannuation in public interest only if it is found that such employee is incompetent or is like dead- wood. He submitted that the Corporation cannot act in an arbitrary manner by resorting to Regulation No. 19 by continuing certain employees upto the age of 58 years of age and retiring some employees before attaining that age. It is required to be noted that it is not in dispute that till the aforesaid orders SCA/11017/2004 19/69 JUDGMENT are passed against the present set of employees, all throughout the Corporation has resorted to Regulation No.19 by retiring a person at the age of 58 years. It is not in dispute that at no point of time, the Corporation has applied regulation No. 19 for retiring a person on the basis of completion of 30 years of service or attaining 55 years of age. The present cases are solitary cases since the inception of the Corporation whereby the Corporation is trying to resort to regulation No. 19 for retiring a person even if he has not attained 58 years of age but has completed 30 years of service. However, in the affidavit in reply filed by one Mr. Mahendra Natverlal Shah, who is working as Deputy General Manager with the respondent Corporation it is averred that the petitioners have been made to etire by operation of law and the regulation and that the retirement is in accordance with 1961 Regulations which are part of the condition of service, which is in existence since the petitioners joined the services and the regulations have become part of the contract. In the relevant part of paragraph 6.3 of the affidavit-in-reply, it is stated as under: SCA/11017/2004 20/69 JUDGMENT “Accordingly, an employee shall retire at the stage of 58 years or on completion of 30 years of service, whichever is earlier. It further provides that the Board may, after giving three month's prior notice in writing require an employee to retire from service on the date on which such employee attains the age of 55 years or completes 30 years of service, whichever is earlier, or any date thereafter to be specified in the notice. Likewise, an employee can also make an application for retirement by giving three months' notice in writing to Managing Directors on the date o n which he attains 55 years of age or on completion of 30 years of service. These Regulations are in operation and in existence since 1961, which are binding to all the Officers and Employees.” In paragraph 6.4 of the affidavit in reply, it is averred that the Corporation is facing a financial crisis. The relevant part of paragraph 6.4 in this regards is as under: “Therefore, the Board of Directors and the State Government have decided for SCA/11017/2004 21/69 JUDGMENT restructuring the organization by taking various measures and steps. One of them was to stop giving any finance to new loanee from the year 2001. Thus, there is no activity of giving finance by GSFC. Therefore, the only activity which is left out is to recover outstanding dues from the borrowers. Therefore, except the activity of recovery, no other activity is left out. The State Government introduced Voluntary Retirement Scheme (VRS) in the year 2003 for all the employees and officers, including the officers and employees, who attained the age of 55 years. However, very poor response was received as only 176 employees/officers opted for VRS under the Scheme. “ 16. Thus, it appears from the tenor of the affidavit in reply that the Corporation has taken the action impugned in these petitions