IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 25.03.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NOs.4440 of 2011 and 30106 of 2010 and M.P.Nos.1,1 and 1 of 2011 and 3 of 2010 W.P.No.4440 of 2011: Metropolitan Transport Corporation Oozhiar Progressive Union, (Affiliated to Labour Progressive Federation) through its General Secretary, K.Natarajan Near Kalai Arangam, Pallavan Salai, Chennai-600 002. .. Petitioner Vs. 1.The Government of Tamil Nadu, rep by its Principal Secretary to Government, Department of Transport, Fort St. George, Chennai-9. 2.Chennai Metropolitan Transport Corporation, (Chennai-North) Ltd., rep by Special Officer (appointed for bifurcation) Anna Nagar Depot, Chennai-600 101. 3.Chennai Metropolitan Transport Corporation (Chennai-South) Ltd., rep by its Managing Director, Pallavan Salai, Mount Road, Chennai-2. 4.The Metropolitan Transport Corporation (Chennai) Ltd., rep by its Managing Director, Pallavan Salai, Mount Road, Chennai-2. .. Respondents W.P.No.30106 of 2010 : 1.K.Muralitharan 2.S.Eswaran https://hcservices.ecourts.gov.in/hcservices/ 3.A.Nagesh 4.K.Partheeban 5.D.Arul 6.S.Sudakar 7.A.Kupulingam 8.M.Subramani 9.R.Lakshmipathy 10.B.Gajendran 11.A.Govindarajan .. Petitioner Vs. 1.The Government of Tamil Nadu, rep by its Principal Secretary to Government, Department of Transport, Fort St. George, Chennai-9. 2.The Metropolitan Transport Corporation (Chennai) Ltd., rep by its Managing Director, Pallavan Salai, Mount Road, Chennai-2. .. Respondents W.P.Nos.4440 of 2011 and 30106 of 2010 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records of the first respondent in connection with the Government G.O.(Ms)No.274, Transport (D1) Department, dated 11.10.2010 and the consequent G.O.(Ms)No.276, Transport (D1) Department, dated 12.10.2010 issued by the first respondent insofar as the bifurcation of the second respondent corporation (W.P.No.30106 of 2010) and fourth respondent Corporation (W.P.No.4440 of 2011) is concerned and to quash the same. For Petitioner : Mr.V.Prakash, SC for Mr.K.Sudalaikannu in both writ petitions For Respondents : Mr.P.S.Raman, Advocate General for R- 1 in both writ petitions Mr.G.Muniratnam for R-2 in W.P.30106/2010 and for RR3 and 4 in W.P.4440 of 2011 COMMON ORDER Both these writ petitions came to be posted before this court on being specially ordered by the Hon'ble Chief Justice vide order, dated 15.3.2011. 2.These two writ petitions were filed seeking to challenge the https://hcservices.ecourts.gov.in/hcservices/ Government Orders issued by the first respondent State of Tamil Nadu in G.O.(Ms.)No.274, Transport (D1) Department, dated 11.10.2010 and the consequent G.O.(Ms.)No.276, Transport (D1) Department, dated 12.10.2010 insofar as bifurcating the Metropolitan Transport Corporation (Chennai) Ltd. is concerned. 3.By the impugned order, dated 11.10.2010, bifurcation order was issued. By a further order, dated 12.10.2010, it was indicated that the Metropolitan Transport Corporation (Chennai) Ltd. will be divided as North Zone having headquarters at Anna Nagar Depot and will be called as Metropolitan Transport Corporation (Chennai- North) Ltd. and the other one functioning in the Southern Zone will be called as the Metropolitan Transport Corporation (Chennai- South) Ltd. Likewise, the Tamil Nadu State Transport Corporation (Madurai) Ltd. was also directed to be split up into two corporations which which in these writ petitions we are not concerned as there is no challenge to the said decision. In G.O. (Ms)No.276, dated 12.10.2010, it was also indicated that naming of two Corporations will be done separately by a Government Order. 4.W.P.No.30106 of 2010 is filed by 11 workers. It was admitted on 29.12.2010. Pending the writ petition, a direction was given to maintain status quo. Aggrieved by the said order, the respondent State has filed a petition to vacate the interim order of status quo in M.P.No.1 of 2011 together with supporting counter affidavit, dated 2.2.2011. While that writ petition was pending, the second writ petition in W.P.No.4440 of 2011 came to be filed by a trade union affiliated to Labour Progressive Federation represented by its General Secretary challenging the very same order. When that writ petition came up on 24.2.2011, this court directed to maintain the status quo as was granted in the earlier writ petition and also directed the writ petition to be posted along with the earlier writ petition. 5.Heard the arguments of Mr.V.Prakash, learned Senior Counsel leading Mr.K.Sudalaikannu, learned counsel appearing for petitioners, Mr.P.S.Raman, learned Advocate General assisted by Mr.R.Murali, learned Government Advocate appearing for the first respondent State and Mr.G.Muniratnam, learned Standing Counsel appearing for the Transport Corporation. 6.Before going into the merits of the challenge made to the impugned orders, the history leading to the issuance of the impugned Government Orders must be stated: In Tamilnadu initially running of the Transport service was done by the State Transport Department. Subsequently, with effect from 10.12.1971, Pallavan Transport Corporation Ltd. was incorporated under the Companies Act, 1956.It had initially a fleet strength of 1029 buses. The fleet strength got increased to 2332 buses as on 1.1.1994. Thereafter, Pallavan Transport Corporation was bifurcated into two separate Corporations with effect from 19.1.1994. They were named as Pallavan Transport Corporation Ltd. and Dr.Ambedkar Transport Corporation Ltd. Broadly, geographical distribution of the Corporation was made https://hcservices.ecourts.gov.in/hcservices/ having E.V.R. Periyar Salai as the dividing line. The Southern area of the E.V.R. Periyar Salai was brought within the operational jurisdiction of Pallavan Transport Corporation Ltd. and that the Northern area of E.V.R.Periyar Salai was made as the operational jurisdiction of Dr.Ambedkar Transport Corporation Ltd. Likewise several other Transport Corporations were also bifurcated into two separate corporations. 7.However, during 1997-1998, the State Government took a policy decision to merge all the 21 Transport Corporations in the State into 7 Transport Corporations and names of the Corporations were also changed. Insofar as the city of Chennai was concerned, the Pallavan Transport Corporation Ltd., Dr.Ambedkar Transport Corporation Ltd., Thiruvalluvar Transport Corporation Ltd. and Rajiv Gandhi Transport Corporation Ltd. were merged into Chennai Metropolitan Transport Corporation Ltd. and Tamil Nadu Transport Corporation Ltd. having headquarters at Chennai. Likewise, there are other Corporations having headquarters at Coimbatore, Kumbakonam, Madurai, Villupuram and Salem. These seven transport corporations had started functioning from 2.5.2001 with a total fleet strength of 18376 buses. But, however, no reason was given for removing the name of Dr.Ambedkar Transport Corporation Ltd. When the merger took place between Pallavan Transport Corporation Ltd. and Dr.Ambedkar Transport Corporation Ltd. 8.It is the claim of the Metropolitan Transport Corporation (Chennai) Ltd. that it serves nearly 53 lakhs of passengers daily with a fleet strength of 3267 buses. According to them, there are 3024 services on 635 routes covering 40791 trips per day. In addition to this, the Corporation is running 48 night services and 200 women/ children specials every day. The operational jurisdiction of the Corporation before its merger was 40 Kms. It was subsequently extended to cover 60 kms. There are requirements to further extend its operational jurisdiction. It is also expected to press into service another 1000 buses to its fleet strength under the Jawaharlal Nehru National Urban Renewal Mission Scheme (JNNURMN). 9.It was stated that since the Corporation is expanding its operations geographically as well as its fleet strength, the monitoring of daily bus operations, and maintenance of buses have become a tremendous challenge. To overcome this impediment and to provide safe and uninterrupted bus service and to close monitoring of the bus operations, it was decided to bifurcate the Metropolitan Transport Corporation Ltd. into two Corporations for effective operation of buses to the satisfaction of the public and to the efficient administration of the Corporation. Therefore, the State Government had formed a Committee vide G.O.(4D)No.3, Transport (T1) Department, dated 13.8.2008 consisting of Chairman, one Convener-cum-Member and three members to submit a report on the bifurcation of the Metropolitan Transport Corporation (Chennai) Ltd. as well as Tamil Nadu State Transport Corporation (Madurai) Ltd. Subsequently, by G.O.(4D)No.1, Transport (T1) https://hcservices.ecourts.gov.in/hcservices/ Department, dated 12.1.2010, the Committee was reconstituted and the time granted for submitting the report was also extended. The Committee had the Additional Secretary to Government, Transport Department as its Chairman. The Managing Director of Metropolitan Transport Corporation (Chennai) Ltd., the Joint Director of Finance (BPE) Department, the Director of Institute of Road Transport and the Managing Director of Tamil Nadu State Transport Corporation (Madurai) Ltd. were made its members. 10.The Committee gave its report on 4.2.2010 to the Government. After accepting the Committee's report, the Government had issued G.O.Ms.No.274, Transport Department, dated 11.10.2010 bifurcating both the Metropolitan Transport Corporation (Chennai) Ltd. and the Tamil Nadu State Transport Corporation (Madurai) Ltd. into four separate Corporations. It was further stated that by G.O.Ms.No.154, Transport Department, dated 14.10.2010, the Government had appointed the Managing Director and the Board of Directors for the Metropolitan Transport Corporation (Chennai- North) Ltd. The Deputy Registrar of Companies, Tamil Nadu had also issued a certificate of incorporation in Form I, dated 20.10.2010 incorporating Metropolitan Transport Corporation (Chennai-North) Ltd. under the provisins of the Companies Act, 1956. It was further claimed that the Board meeting of the Metropolitan Transport Corporation (Chennai-North) Ltd. was held on 21.10.2010 in accordance with the provisions of the Companies Act and that necessary resolutions were also adopted. It is this order, dated 11.10.2010 and the consequential order, dated 12.10.2010 which became the subject matter of challenge in these two writ petitions. 11.Mr.V.Prakash, learned Senior Counsel appearing for the Trade union as well as for individual workmen attacked the Government Orders and made the following submissions: While issuing the impugned orders, the Government did not constitute any Expert Committee, whereas in the earlier merger and demerger, the State Government had appointed a Committee under the Chairmanship of C.R.Pattabiraman, an Advocate and a former Central Minister during 1976-77. Thereafter Thillainayagam Committee was appointed for demerger of the Metropolitan Transport Corporations. But, in the instant case, there was no such committee of Experts appointed. Therefore, the Government was bereft of any expert opinion. In such circumstances, the decision taken by the State Government is not only not based upon any rational materials, but also contrary to public interest. 12.It was further contended by the learned Senior Counsel that bifurcation of Metropolitan Transport Corporation (Chennai) Ltd. into North and South Corporations was likely to lead retrenchment. In the absence of any notice under Section 9-A of the Industrial Disputes Act, 1947, the impugned orders are liable to be set aside. It was also stated that there is no application of mind in forming two Corporations. They have not considered the financial viability to form the two Corporations. If the operational jurisdiction of the Corporations was made making the E.V.R.Periyar https://hcservices.ecourts.gov.in/hcservices/ Salai as a divider, then most of the revenue yielding routes will go to the South Corporation and that the North Corporation will be incurring huge loses. Hence there was no study on the revenue yielding pattern, costing, profit and loss before the impugned decisions. By having two separate Corporations, if there will be an increase in the administrative structure, it will lead to increase in overheads and that the cost implications were not considered. After 1993 bifurcation, it was once again merged into single Corporation in the year 1997. After amalgamation now again to go for bifurcation is nothing but an arbitrary exercise of power. Even due to earlier demerger and merger and once again demerger, the confusion created to workers remains unresolved. Therefore, the impugned orders must be set aside. Similar was the contention raised by the individual workers. 13.In reply to these allegations, in the counter affidavit filed by the first respondent State, it was stated that the allegations made by the petitioners trade union and workers are based on assumptions and presumptions to suit their self interest. The writ petitions with such alleged fears on assumptions are not maintainable. The Government had constituted a Committee and had deliberated various issues including fleet strength, infrastructure facilities, allocations of depots, staff allocations, transfer of assets and liabilities, service condition of employees, maintenance of Provident Fund and Gratuity Trust, management of revenue and had submitted a detailed report to the Government. The same was accepted by the Government. Inasmuch as both the Corporations have already come into existence even on 28.12.2010, the formation cannot be undone. It is only with an intention to cater to the needs of traveling public and for effective and efficient administration, it had become necessary for bifurcation. It is the policy decision of the Government. No financial imbalance would occur in the formation of the Corporation. 14.With reference to the apprehension of service conditions of workmen, which is likely to be altered without notice under Section 9-A, in paragraph 13(a) of the counter affidavit, it was assured as follows: "(a)the said G.O.s, by no stretch of imagination would lead to retrenchment at any point of time. The said G.O.s clearly demarcate the staff between the two Corporations in as much as the staff working in respective sections/jurisdiction continue to be in the same position with all service, monetary and attendant benefits applicable. Section 9A of the Industrial Disputes Act, 1947 (Central Act 14 of 1947) has no relevance to the facts of the case since no service condition applicable to any workmen in respect of any matter specified in the IV Schedule of the Act is put to change as assumed by the petitioners...." https://hcservices.ecourts.gov.in/hcservices/ 15.It was also stated that the Government took into account the report given by a Committee and on proper application of mind had taken the policy decision. The bifurcation was done keeping in mind the ever growing need to meet the demands of having an uninterrupted bus service. By the expansion of its fleet strength and introduction of modern techniques, the Corporation is having good revenue income. The provisions for sharing of revenue and optimum usage of its resources were clearly spelt out in the Government Orders. 16.With reference to the alleged confusion regarding Provident Fund and Gratuity, it was stated that effective management of Provident Fund and Gratuity Trust have been put in place and there was no confusion in this regard. In paragraph 13(g) of the counter it was averred as follows: "(g)no service benefits including workmen's Provident Fund, Gratuity, Leave and other service defects would be imperiled. Necessary negotiations with the recognized Union would take place at the appropriate time and based on the necessity at the relevant point of time. No hardship of any nature would be caused to any workmen by the further implementation of the G.O.s under challenge. ...." Therefore, the respondents have prayed for dismissal of both writ petitions. 17.With reference to the scope of judicial review, Mr.V.Prakash, learned Senior Counsel placed reliance upon the following judgments of the Supreme Court. First he referred to a judgment of the Supreme Court in Union of India v. Dinesh Engineering Corporation reported in (2001) 8 SCC 491. It is for the purpose of contending that if there are arbitrariness in the policy decision taken without considering the relevant facts, the scope for judicial review is available to this court. He relied upon the following passage found in paragraph 12 which is as follows: "12......Any decision, be it a simple administrative decision or a policy decision, if taken without considering the relevant facts, can only be termed as an arbitrary decision. If it is so, then be it a policy decision or otherwise, it will be violative of the mandate of Article 14 of the Constitution." 18.The learned Senior Counsel further referred to a judgment of the Supreme Court in Reliance Energy Ltd. v. Maharashtra State Road Development Corporation Ltd. reported in (2007) 8 SCC 1 and contended that commitment of rule of law is the heart of parliamentary democracy. He also referred to the following passage found in paragraph 36 of the said judgment, which reads as follows: "36...... One of the important elements of the “rule of law” is legal certainty. Article 14 https://hcservices.ecourts.gov.in/hcservices/ applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of “reasonableness”, then such an act or decision would be unconstitutional." 19.Thereafter, he referred to a judgment of the Supreme Court in Shimnit Utsch India (P) Ltd. v. West Bengal Transport Infrastructure Development Corporation Ltd., reported in (2010) 6 SCC 303. This is for the purpose of contending that though the Government has discretion to adopt different policies, alter, change its policies to serve public interest, but the change of policy must be in conformity with the Wednesbury's principle of reasonableness and free from arbitrariness or irrational, bias and malice. For this purpose, the learned Senior Counsel referred to the following passages found in paragraphs 45 and 48, which reads as follows: "45.In Directorate of Education v. Educomp Datamatics Ltd.17 this Court, inter alia, applied the principles enunciated in Tata Cellular010 and Monarch Infrastructure (P) Ltd.515 and held as follows: (Directorate of Education case717, SCC p.24, para 12) “12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.” ....... 48.In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd.20 the legal position highlighted in Tata Cellular010 was reiterated in the following words: (Master Marine case20, SCC p.147, para 12) “12. After an exhaustive consideration of a large number of decisions and standard books on https://hcservices.ecourts.gov.in/hcservices/ administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury7 principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” 20.Lastly, the learned Senior Counsel referred to a judgment of the Supreme Court in All India Railway Recruitment Board v. K. Shyam Kumar, reported in (2010) 6 SCC 614 for the purpose of contending that Wednesbury's principle of unreasonableness and proportionality are available for judicial review over all administrative matters. For this purpose, he referred to the following passage found in paragraph 42 of the said judgment which reads as follows: "42. ...... The proportionality test may require the attention of the court to be directed to the relative weight according to interest and considerations......." It is in the light of these contentions, the learned Senior Counsel submitted that the court must strike down the impugned orders. 21.However, Mr.P.S.Raman, learned Advocate General circulated the report of the Committee on Bifurcation of Metropolitan Transport Corporation (Chennai) Ltd., which was formed vide G.O. (4D)No.1, Transport (T1)Department, dated 12.1.2010. A perusal of the report shows that the Committee had taken into account the need for bifurcation, allocation of buses and routes, infrastructure facilities and allocation of depots, staff allocation, transfer of assets and liabilities and accounting treatment. The report also annexed various tables. 22.Though the learned Senior Counsel for the petitioner contended that the impugned Government Orders were not having the benefit of any expert opinion, the G.O in its 5th reference https://hcservices.ecourts.gov.in/hcservices/ referred to the formation of a Committee. The Government had verbatim taken the recommendations of the Committee. In the impugned order in paragraph 3, the report of the Committee was considered by the State Government. It was contended by the learned Senior Counsel for the petitioners that that the policy decision was first announced by the Hon'ble Transport Minister in the floor of Assembly on 9.4.2008. Thereafter, the brief that was given to the Committee was to go into the modality alone. But the very reason to bifurcate the Corporation was not supported by an Expert opinion before such a policy decision was made. Therefore, it is vitiated. Secondly, the composition of the committee only comprised of the Government and Transport officials and it cannot be called as expert committee. 23.The arguments advanced by the learned Senior Counsel for the petitioners are without any merits. The first argument that the impugned Government Orders were passed without application of mind was without any basis. The Government was guided by the report given by the committee. That report was produced before this Court. Though the learned Senior Counsel stated that it was a fait accompli, but it must be seen that under section 34 of the Road Transport Corporations Act, 1950, the State Government has power to give general instruction to be followed by a Road Transport Corporation. Section 34 reads as follows: "34.Directions by the State Government.-(1)The State Government may, after consultation with a Corporation established by such Government, give to the Corporation general instructions to be followed by the Corporation, and such instructions may include directions relating to the recruitment, conditions of service and training of its employees, wages to be paid to the employees, reserves to be maintained by it and disposal of its profits or stocks. (2)In the exercise of its powers and performance of its duties under this Act, the Corporation shall not depart from any general instructions issued under sub-section (1) except with the previous permission of the State Government." 24.Likewise, even after the Corporation is formed, Section 17- A provides for establishment of subsidiary corporations. Section 17-A(1) reads as follows: "17-A.Establishment of Subsidiary Corporations.- (1)Where a Corporation (hereinafter in this section referred to as the parent Corporation) is satisfied that it is expedient or necessary so to do for the more efficient discharge or its functions under this Act, it may, with the concurrence of the State Government and the Central Government, frame by notification in the https://hcservices.ecourts.gov.in/hcservices/ Official Gazette a scheme or schemes providing for the establishment of one or more subsidiary corporations." 25.The other contention that the Committee had only Government officials who lack in expertise also cannot be accepted. In fact, the Pattabiraman Committee referred to by the petitioner, Mr.C.R.Pattabiraman, was a Barrister and a lay person to Transport sector. The other members of the Committee were all officials of the Government. Likewise, Mr.Thillainayagam was a Managing Director of the Transport Corporation. Even otherwise the Supreme Court in the context of constituting advisory Boards for framing minimum wages had held that the Government officials can be considered to be independent persons. They have knowledge of working in a particular employment. Further, such Committee's reports are only recommendatory and not binding on the Government. 26.In this context, it is necessary to refer to the following judgments of the Supreme Court made in the context of fixation of minimum wages. The first case related to the State of Andhra Pradesh v. Narayana Velur Beedi Mfg. Factory, reported in (1973) 4 SCC 178. The following passage found in paragraph 9 may be usefully reproduced below: "9.In our judgment the view which has prevailed with the majority of the High Courts must be sustained. The committee or the advisory board can only tender advice which is not binding on the Government while fixing the minimum wages or revising the same as the case may be. Of course, the Government is expected, particularly in the present democratic set-up, to take that advice seriously