CWP No.10470 of 2008 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.10470 of 2008 Date of decision: 03.08.2010 JC-371152K,Ex. Subedar Budh Ram ....Petitioner Versus Union of India and others ....Respondents CORAM: HON'BLE MR. JUSTICE VINOD K. SHARMA 1.Whether Reporters of local papers may be allowed to see the judgment? 2.Whether to be referred to the Reporters or not? Yes 3.Whether the judgment should be reported in the Digest? Yes Present: Mr. N.R. Dahia, Advocate, for the petitioner. Ms. Amanpreet Sandhu, Central Govt. Standing Counsel. Mr. P.S. Ghuman, Advocate, for respondent No.3. ***** VINOD K. SHARMA, J (ORAL) The petitioner has invoked the writ jurisdiction of this Court to challenge the order Annexure P-3, vide which the petitioner has been denied the disability benefits cover under the Army Group Insurance Scheme. The impugned order reads as under: - PAYMENT OF DISABILITY BENEFITS COVER UNDER AGI SCHEME 1. Reference to your petition dated 07 March 2007 2. You were discharged from service in medical ground with effect from 01 March 2007 (FN) being unwilling for continue in service and your retention in service was not recommended by your CO. Therefore, you are not entitled for disability benefits under Army Group Insurance Scheme.” CWP No.10470 of 2008 -2- The facts, which are not in dispute in this writ petition are, that the petitioner joined the Army (Signals) on 20.9.1982 in category AYE- one. No ailment of any kind was noticed or recorded by the Medical Board at the time of his induction in the Army services. The petitioner developed certain disabilities while in service of the Army. There is no dispute, that the disabilities suffered by the petitioner were attributable to the Army services or aggravated by service, as the petitioner was granted 60% disability pension by the Army authorities. In view of the medical category of the petitioner being downgraded on 1.3.2007, the petitioner was transferred to pension establishment, as it was not possible for the petitioner to continue in active service due to the ailment and low medical category. As already observed above, the permanent disability of the petitioner was assessed at 60% by the Medical Board and he was granted disability pension on 13.3.2008. The petitioner was the member of AGIF i.e. Army Group Insurance Fund Scheme, therefore, he made a request for sanction of AGIF Scheme cover, but his claim was rejected vide impugned order, reproduced above. The petitioner has challenged the impugned order on the plea that the petitioner's case was wrongly rejected by invoking Clause 59(c) of the Army Order, which reads as under: - “59. xxxxxx However, the following categories of personnel are not eligible for disability cover: - (c) Personnel proceeding on pension/discharge/release at their own request or after expressing unwillingness to serve in a sheltered CWP No.10470 of 2008 -3- appointment being in permanent EEE, CEE or BEE medical category or due to any other reason.” Learned counsel for the petitioner, contended, that his case did not fall under the Army Order Clause 59(c) , reproduced above, and in the alternative the contention raised was that the impugned Clause of the Army being ultra vires the Constitution and the Scheme was liable to be declared ultra vires, and not binding on the rights of the petitioner. The contention of the petitioner is based on the fact, that after the petitioner had suffered disability, he was issued show cause notice on 26.9.2006. The show cause notice issued to the petitioner reads as under: - “1. You are placed in low med cat S1H1A1P2 (P) E1 with effect from 09 Feb 2006. Subsequently you have submitted unwillingness to continue in service and Commanding Officer has recommended you for continued retention in service for want of sheltered appointment. The Records Signals has issued your discharge order vide letter No.2872/CA-3/T-1/LMC/59 dt 07 Sep 2006 and you will be discharged from service under Army Rule 13(3) item I(iii)(c) w.e.f. 01 March 2007 (F/N). 2. You are hereby called upon to show cause as to why you should not be discharged from service in terms of AO 46/80. 3. Your reply to the show cause notice should reach the undersigned by 28 Sep 2006. 4. If no reply is received from you by 28 Sep 2006 it will be assumed that you are willing for discharge from service as ordered vide CWP No.10470 of 2008 -4- The Records Signals letter quoted in para 1 above.” The petitioner replied to the show cause notice on 27.9.2006. It was submitted, that his medical disabilities compel him to proceed on discharge, as it is not possible for him to perform duties assigned to him. The reply to the show cause notice submitted by the petitioner, reads as under: - “1. Please refer to your letter No.109/Sigs/02 dated 26 Sep 2006 2. I am suffering from the following disabilities w.e.f. date as shown against each and my disabilities have compelled me to proceed on discharge from service on medical ground: - (a)Brochial Asthma 20 Jan 1993 (b)Primary Hypertension 24 Feb 2000 (c) CMOS (LT) Ear 18 Jul 2005” In pursuance to the request made by the petitioner, though no such recommendation was made by the Unit of the petitioner, his request was accepted and the petitioner was discharged vide Annexure P-6. The discharge was on account of low medical category. In reply to the writ petition, an objection was taken with regard to the maintainability of the writ against respondent No.3, on the plea that it was a society registered under the Societies Registration Act XXI of 1860 with the Registrar, Societies, New Delhi, therefore, was not amenable to the writ jurisdiction of this Court. Mr. P.S. Ghuman, learned counsel appearing on behalf of respondent No.3 also pressed into service the judgment of the Hon'ble Delhi High Court in support of the contention, that no writ against CWP No.10470 of 2008 -5- respondent No.3 was competent. In order to consider whether respondent No.3 would be a “State” within the meaning of Article 12 of the Constitution of India, learned counsel for respondent No.3 was asked to place on record the Constitution of respondent No.3. The Board of Governors, Board of Management and Executive Committee of the Society is as under: - “13. Board of Governors – There shall be a Board of Governors as the supreme body, consisting of the Chief of the Army Staff, the Vice Chief of the Army Staff and the General Officers Commanding-in-Chief of Commands to represent all ranks of the Army. The Board of management and the Executive Committee shall be guided by the directions given by the Board of Governors in all matters of the Fund. 14. Board of Management – Subject to any general or specific directions given by the Board of Governors the general management of the Fund shall be vested in a Board of Management, which will be constituted as under: - (a) Chairman - Adjutant General. (b) Vice Chairman - Deputy Adjutant General. (c) Members i) - An officer of the rank of Major General nominated by the General Staff Branch. ii) - An officer of the rank of Major General nominated by the Quartor Master General's Branch. iii) - An officer of the rank of Major General nominated CWP No.10470 of 2008 -6- by the Master General of Ordnance Branch. iv) - An officer of the rank of Major General nominated by the Military Secretary's Branch. v) - An officer of the status of Joint Secretary nominated by the Ministry of Defence. vi) - An officer of the status of Joint Secretary nominated by the Ministry of Finance (Defence). vii)- Managing Director Army Group Insurance. (d) Secretary - Secretary Army Group Insurance Fund will act as the Secretary of the Board of Management. Note – The Chairman may invite any other person to attend a meeting in an advisory capacity. 15. Executive Committee – To assist the Board of Management and to carry out the day to day business, there shall be an Executive Committee constituted as under: - (a) Chairman - Adjutant General (b) Vice Chairman - Deputy Adjutant General (c) Member - Managing Director Army Group Insurance (d) Member-Secretary- Director Adm and Secretary Army Group Insurance Fund. It was also not in dispute, that the Society has been constituted CWP No.10470 of 2008 -7- by the Army authorities under the Army Order, on which reliance was placed to deny the relief claimed. Finances of the Society are met by the compulsory deduction from the salary of the Army personnel, and there is no option with the employees to opt out of the scheme. It would, therefore, be seen that though respondent No.3 is a Society registered under the Societies Registration Act, but it is under the complete control of the Government through its Board of Governors. The funds are generated through compulsory deduction from the salary of the employees working in the Army. It can, therefore, be safely said that the Central Government has not only deep and persuasive but direct control over the Society. It would, therefore, a “State” within the meaning of Article 12 of the Constitution of India, thus, amenable to the writ jurisdiction of this Court. The preliminary objection of respondent No.3 is rejected. The question regarding jurisdiction of this Court though initially raised was given up by the respondent in view of the judgment of the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. and another Vs. A.P. Agencies, Salem, AIR 1989 Supreme Court 1239. On merit the claim of the petitioner was contested only on the ground, that the petitioner was not discharged by the Army due to the medical disabilities, but he had voluntarily sought discharge, therefore, the benefits available to him i.e. disability pension stand released, but he is not entitled to benefit under the AGIF Scheme in view of Clause 59(c) of the Army Order, reproduced above. It was also the contention of the learned counsel for the respondent, that documents on record show, that it was the petitioner CWP No.10470 of 2008 -8- who was not willing to continue in service in spite of offer having been made to him to continue, thus, his claim rightly stood rejected. On consideration, it is held that the case of the petitioner would not strictly fall under Section 59(c) of the Army Order, in as much as it is not a voluntary discharge sought by the petitioner, as prior to his discharge the petitioner was issued a show cause notice, reproduced above. It was only in pursuance to the said show cause notice, that the petitioner had shown his willingness to be discharged from Army being in low medical category. What transpired between the Unit and the authorities to accept discharge, loses importance, once it is not disputed that the request of the petitioner in pursuance to the show cause notice stood accepted. This cannot be said a voluntary discharge falling under Clause 59(c) of the Army Order, to deny him benefit under AGIF Scheme. Even otherwise also Clause 59(c) of the Army Order cannot be sustained in law being contrary to very object of the Scheme. The Army Group Insurance Fund Scheme was introduced under the authority of Government of India, Ministry of Defence, vide letter No.PC No.A/37586/AG/PC & JEC/9302/D (Pay/Services) dated 15.12.1975 with an object to cater for the socio-economic needs of the Army personnel and their families. Further improvements were made by enhancing insurance cover and benefits while in service and on retirement. It is a compulsory, contributory, self-sustaining group Scheme which is totally departmental and run at Army Headquarters by the Army CWP No.10470 of 2008 -9- Group Insurance Fund, which is a Society Registered under the Societies Registration Act, as already noticed above. The main objects of the Scheme as per Army Order are: - “(a) Provide insurance benefits speedily to the families of those Army personnel, who may die while in service. (b) Provide lump sum maturity/terminal benefits at the time of retirement. (c) Provide disability cover to entitled service Army personnel depending on their percentage of disability, if their contractual period of service is cut short. (d) Provide Extended Insurance Cover to members upto a specified period and amount after retirement. (e) Provide special insurance cover to personnel of Army Aviation Corps and Infantry Medium Machine Gunners employed on flying duties. (f) Provide any other benefits/assistance as may be decided by the Management from time to time.” Thus, it would be seen that the main object of the Scheme is to provide disability cover to entitled service Army personnel on their percentage of disability, if their contractual period of service is cut short. There is no provision under the Army Act or Rules under which the personnel can voluntarily go out of service without the consent of the employer. Once, a person whose medical category has been downgraded and discharged under the Army Order, merely because he is discharged at his own request, cannot be a ground to defeat the very object for which the Scheme has been framed. Therefore, Clause 59(c) with respect to the personnel eligible CWP No.10470 of 2008 -10- for being boarded out, would be ultra vires the Scheme itself, as it has no nexus with the object sought to be achieved. This Clause only can be applied to the personnel, who seek voluntary retirement without being categorised in low medical category, under which they can be discharged under the Army Order. In these cases the society may be justified in refusing the benefits to such Army personnel who opt out of service voluntarily, but it cannot be applied to the personnel, who are in such medical category under which they are liable to be boarded out. This Clause, being capable of being misused, to deny the benefit to an employee, who otherwise deserves to be discharged, therefore, can be termed as arbitrary and thus violative of Article 14 of the Constitution, and contrary to very object of the scheme. This Clause cannot be sustained. However, the Society would be at liberty to amend the Clause suitably to cover those personnel who are fit for Army service and seek voluntary retirement as it would then form a different class. There can be no discrimination between the similarly situated employees i.e. the employees in low medical category, merely on the ground that a person seeks voluntary retirement, and those discharged on account of low medical category. This view has been taken for the reason that voluntary retirement on ground of low medical category is also with the consent of the authorities. For the reasons stated, this writ petition is allowed, the impugned order is set aside, the respondents are directed to release the benefits to the petitioner on account of his medical disabilities, under the CWP No.10470 of 2008 -11- Army Group Insurance Fund Scheme. The amount due to the petitioner be released to the petitioner within two months, of the receipt of certified copy of this order. No costs. (Vinod K. Sharma) Judge August 03, 2010 R.S.