THE HON’BLE SRI JUSTICE J.CHELAMESWAR AND THE HON’BLE SRI JUSTICE M.VENKATESWARA REDDY W.P.NOs.26072, 27820 OF 2005, 3110, 3487, 4656 & 1015 OF 2006 ORAL COMMON ORDER: (Per the Hon’ble Sri Justice J.Chelameswar) Sir Winston Churchill commented about one of his contemporaries that the man had an uncanny knack of looking at things from the wrong end of a municipal drainpipe. Such a practice is made a fine art by the Administrators of the State of Andhra Pradesh and perhaps they believe that it is justified when they are dealing with a body, whose business is to handle the sewerage of the Hyderabad City. Any inhabitation needs a source of drinking water and a proper organization to handle the polluted water generated by the mankind day-to-day in the inhabitation. T h e Hyderabad city, like any other major city in the country, has its own share of owes in handling these problems. Until 1989, the system dealing with the supply of drinking water to the inhabitants of the Hyderabad city was handled by the State of Andhra Pradesh through the personnel belonging to the services called “the A.P. Public Health and Municipal Engineering Subordinate Service and the A.P. Public Health and Municipal Subordinate Service”, while the disposal of the waste water was being handled by the Municipal Corporation of Hyderabad through its employees. For the purpose of carrying out the abovementioned twin tasks, various works were undertaken both by the State and the Municipal Corporation of Hyderabad. In the year 1989, the Legislature of Andhra Pradesh thought it fit to entrust both the functions referred to earlier to a statutory body and therefore, made an enactment called “the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989 (Act 15 of 89) (for short ‘1989 Act’). Under Section 3 of the Act, the Government is mandated to constitute a Board by the name of the Hyderabad Metropolitan Water Supply and Sewerage Board (hereinafter referred as ‘the Board’). It is further specified that the Board shall be a body-corporate having perpetual succession and a common seal with powers to acquire, hold and dispose of properties, enter into contracts etc. The constitution of the Board is also specified therein. The ex-officio Chairman of the Board is the Chief Minister of Andhra Pradesh; The Minister for Municipal Administration is the ex-officio Vice Chairman; Three Secretaries of the Departments of Housing, Finance and the Irrigation, are to be Members of the Board; The Commissioner of the Hyderabad Municipal Corporation, the Chairman of the A.P. State Pollution Control Board, the Director of Medical, Health Services and a Chief Engineer of the Board to be appointed by the Government, etc. Section 7 of the Act, describes the general duties of the Board and it reads as follows: 7. General Duties of the Board:-- (1) It shall be the duty of the Board to provide for:- (a) The supply of potable water, including planning, design, construction, maintenance, operation and management of water supply system; and (b) Sewerage, sewage disposal and sewage treatment works including planning, design, construction, maintenance, operation and management of all sewerage and sewage treatement works; in the Hyderabad Metropolitan area. (2) For the efficient discharge of the duties entrusted to it, the Board shall exercise such powers and perform such functions as are conferred or imposed by or under this Act: Provided that no scheme, the estimated cost of which exceeds rupees ten crores, shall be carried out by the Board except with the previous approval of the Government.” For the purpose of enabling the newly constituted Board to fulfill the tasks entrusted to it under the Act, the Legislature thought it fit to declare under Section 17 of the Act that all Public reservoirs, tanks, cisterns, fountains, wells, and bore wells, pumps, pipes, taps, conduits and other works connected with the supply of water to the `Hyderabad Metropolitan area’, a defined expression under Section 2(f) of the Act, shall vest with the Board and are subject to its control. Section 18 further authorizes the Board to undertake any new construction, which in the opinion of the Board is necessary for the maintenance of the services required to be undertaken by the Board, indicated under Section 7 of the Act. Examination of the various other provisions of the Act may not be necessary for the purpose of the present case, except Section 113 and few other sections. Section 113 of the Act, reads as follows: “113. Provisions to employees employed in connection with water supply and sewerage undertakings:- (1) Every officer and other employee employed with the Hyderabad Metropolitan Water Works and sewerage and sewage treatment works as the case may be, shall stand transferred to and become an officer or other employee of the Board with such designations as the Board may determine and shall hold by the same tenure, at the same remuneration the same terms and conditions of service applicable immediately before such transfer and shall continue to do so unless and until such tenure, remuneration and terms and conditions are duly altered by the Board: Provided that any service rendered by such officer or employee before such transfer shall be deemed to be service rendered under the Board. (2) Every officer or employee of the Andhra Pradesh Public Health and Municipal Engineering Service and the Andhra Pradesh Public Health and Municipal Engineering Subordinate Service serving in the posts not below the rank of Assistant Engineer in the Hyderabad Metro Water Works or Sewerage and Sewage treatment works shall continue to serve in the Hyderabad Metro Water Works or Sewerage and Sewage treatment works under the same terms and conditions applicable to them in their parent Department and until their absorption is finally determined by the Board in accordance with the rules and regulations made for this purpose under this Act : Provided that an officer or employee shall be given an opportunity to opt for the service of the Board or to remain in the service of his parent department. (3) The Board may employ any officer or other employee transferred under sub- section (1) in the discharge of such functions under this Act, as it may think proper and every such officer or other employee shall discharge those functions accordingly.” Sub section (1) of Section 113 declares that every officer or employee with the Hyderabad Metropolitan Water Works and Sewerage and Sewage treatment works stood transferred and become an officer or an employee as the case may be of the Board. In substance, those officers and employees who were working in connection with the operation of supply of drinking water to the Hyderabad city or disposal of the waste water of the Hyderabad city, (though as noticed earlier, are the employees of the State of Andhra Pradesh and the Municipal Corporation of Hyderabad), are mandated by the Legislature to be transferred to the newly constituted Board which is a distinct legal entity. But for the legislative mandate none of the above mentioned personnel would have any legal obligation to serve the newly constituted Board. While compelling them to work with a new master (Board), the Legislature also took care to see that their freedom of choosing their employer is not unduly restricted and therefore, stipulated further under Section 113 that the various service conditions which were applicable to each one of them prior to the transfer contemplated under Section 113, are maintained intact. It further gave an option to each one of them either to continue with the newly constituted Board or stay back with their original employer. The Board is also given the liberty either to accept the option exercised by any one of the employee, however, such a decision either to accept the option of the employee or not is required to be made in accordance with the rules and regulations to be framed by the Board. The Board being an instrumentality of the State, is obviously under a duty to act rationally in arriving at such decision, an obligation inherent in the very nature of the decision making process of such bodies. A close scrutiny of Section 113 is required having regard to the issues involved in the present case, but the same would be undertaken at the appropriate place in the judgment. Whatever indicated earlier is only the broad scheme of Section 113. As a matter of fact, on the constitution of the Board, a large number of personnel of various ranks were compelled to continue working with the newly constituted Board in view of the mandate contained under Section 113. It appears that certain regulations were framed by the Board dealing with certain service conditions of the employees of the Board in its Proceedings dated 30th January 1992. Chapter-IV of the regulations purports to deal with the absorption process of the employees contemplated under Section 113. It appears that some of the employees who stood transferred exercised their options. Though there is some dispute regarding the fact whether the Board has in fact taken a decision either to accept or reject the options exercised by the employees to continue in the service of the Board, it is not really necessary for the present to examine the said issue. This compulsion created under Section 113 on the employees of either the State of Andhra Pradesh or the Municipal Corporation of Hyderabad, resulted in a lot of litigation over a period of 16 to 17 years so far. The history of the litigation insofar as it is relevant for the present purpose is as follows. A batch of original applications in O.A.No.5792 of 2003 and others came to be filed before the Andhra Pradesh Administrative Tribunal, and the same was disposed of by a Division Bench of the Tribunal on 29th October 2004. The issue involved in the said batch of cases is whether the decision of the Government of Andhra Pradesh in seeking to withdraw the services of some of the applicants before the Tribunal from the service of the Board or the decision of the Managing Director of the Board to relieve some of the employees of the State Government, who were working with the Board, were legal and valid. One of the questions of law that fell for the consideration in the abovementioned batch of original applications is the applicability of the Andhra Pradesh Public Employment (Organisation of Local Cadres and Regulation of Direct Recruitment) Order, 1975 (for short referred as ‘the Presidential Order’) to the Board. The Tribunal, in substance, recorded a finding that certain parts of the Presidential Order have no application to the local bodies like the Board and the remaining portions of the Presidential Order are applicable. The correctness of the said decision would be examined later. Aggrieved by the said decision of the Tribunal, three writ petitions came to be filed in this Court, viz., W.P.Nos. 22365, 22886 of 2004 and 20956 of 2005. Apart from the decision of the Tribunal as to the applicability of the Presidential Order to the Board, the Tribunal came to the conclusion that some of the orders under challenge in the batch of OAs referred to earlier, were orders which could not be sustained, as such orders came to be passed on a wrong premise, notwithstanding the fact that the authority which passed the order had the necessary power to pass such orders. It appears that when the three writ petitions referred to earlier, were admitted, certain interim orders came to be passed by this Court, in substance, suspending the operation of the common order passed in the batch of the Original Applications by the Tribunal, thereby leaving it open both to the State and the Board to deal with the applicants without any reference to the decision of the Tribunal. It further appears from the record that complaining that the abovementioned interim orders of this Court, are deliberately disobeyed Contempt Cases also came to be filed in this Court, and it appears that during the pendency of the contempt cases, the respondents issued various orders on 16th, 17th and 18th of November 2005, in purported compliance of the interim orders of this Court. The above referred orders of 16th, 17th and 18th of November, 2005 are issued by the Secretary to Government, the Engineer-in-Chief, Public Health Department, Hyderabad and the Managing Director, Hyderabad Metropolitan Water Supply and Sewerage Board respectively. The substance of the order of the Government of Andhra Pradesh dated 1.11.2005 is that the Government directed the Engineer-in-Chief to withdraw the Deputy Executive Engineers and Assistant Executive Engineers belonging to Zones-I to V be withdrawn from the service of the Board and repatriate to the respective Zones to which they originally belonged. The orders dated 17th and 18th are consequential orders to the orders dated 16th November, 2005. Challenging the above mentioned orders, five Original Applications viz., O.A.Nos.1109, 1111, 1189, 92 and 685 of 2006 were filed by the persons affected by the said order. In the meanwhile another O.A. vide O.A.No.18721 of 2005 was filed by some of the persons working with the Board who belong to Public Health and Municipal Engineering Services, but were posted to the Board subsequent to the commencement of 1989 Act and have been working with the Board as such. They claimed in the said O.A that restricting the option contemplated under Section 113(2) of the Act of 1989 to only those persons who stood transferred to the Board pursuant to the mandate under Section 113(1) of the Act, 1989 and not giving such an option to those who were posted to work with the Board subsequent to the formation of the Board, is illegal and violative of Article 14 of the Constitution of India. It appears that some more O.As seeking a similar relief as one sought in O.A.No.18721 of 2005 were pending on the file of the A.P. Administrative Tribunal. They were filed by persons who had at some point of time or other worked with the Board, but not on the date of the commencement of the Act. During the pendency of those various applications, the Government of A.P. issued G.O.Ms.No.321 MA, Municipal Administration & Urban Development (C2) Department, dated 16.04.2005, the relevant portion reads as follows: “1. The Hyderabad Metropolitan Water Supply and Sewerage Board was constituted in the year 1989 through the Act 15, of 1989 and it has come into functioning as an autonomous body with effect from 01-11-1989 through the notification. 2. In the G.O. 2nd read above, Government have accorded approval to the Draft Service Regulations of the Hyderabad Metropolitan Water Supply & Sewerage Board as finalized by the Sub-committee constituted for the purpose under section 80 of Hyderabad Metropolitan Water Supply & Sewerage Act. 3. In the reference 3rd to 5th read above, there are number of cases filed before the Court and the same have been still pending on the question of absorption of Engineering personnel in HMWS&SB. Hence, there is dire need for the Government to take a decision and set at rest the legal battles pending before the Courts. 4. In pursuance to the above, the Government have convened a meeting on 9-3-2005 with the Engineer-in-Chief (Public Health) and the Managing Director, HMWS&SB along with all the recognized service Associations of P.H. & M.E. Department and HMWS&SB. 5. In the references 6th to 8th read above, the Recognized Services Associations of P.H. & M.E. & HMWS&SB have expressed their opinions and ultimately agreed to abide by the decision taken by the Government in the matter. 6. After careful examination of the matter and to put an end to unending litigation, for better and efficient functioning of the HMWS&SB and also to improve promotional opportunities to the Engineering personnel in the HMWS&SB, the Government under Section 80/81 of Hyderabad Metropolitan Water Supply & Sewerage Board Act, (Act No.15 of 1989) hereby order to finalize the options exercised in the year 1992, and Sub-sequent options, if any, given by those persons who were working in the Board as on 01- 11-1989 shall also be taken into consideration. 7. The Managing Director, HMWS&SB and the Engineer-in- Chief (P.H.) Hyderabad are directed to finalise the options exercised in the year 1992 and subsequent options, if any, given by those persons who were working in the Board as on 01-11-1989 shall also be taken into consideration. 15 days time may be given to the candidates who have been absorbed in the Board for considering their services in the Board. 8. The entire process must be completed expeditiously.” In this batch of O.As, the Tribunal declined to grant any relief by its order dated 01.12.2005. Insofar as the other set of O.As where the proceedings of the Government dated 16.11.2005 were questioned, the O.As were admitted but, the Tribunal declined to grant any interim relief sought for by the applicants. Therefore, the applicants approached this Court by these various writ petitions. The writ petitions were admitted and certain interim orders were granted suspending the orders challenged in the above-mentioned O.As. In view of the complications involved in this batch of writ petitions having regard to the fact that the litigation regarding the absorption of employees into the Board is pending quite for some time and repeatedly this Court faced with issues pertaining to this absorption into the service of the Board, this Court thought it fit to direct that all the writ petitions be heard at an early date. Accordingly, the writ petitions were listed. Insofar as the writ petitions filed aggrieved by the decision of the Tribunal not to grant interim relief in favour of the applicants who challenged the decision of the Government dated 16.11.2005 is concerned, a preliminary objection was raised by the learned counsel for the contesting respondents Sri Bala Krishna Murthy and Sri D.V.Seetharama Murthy that normally this Court would not interfere in a matter where the main application is pending before the Tribunal and the Tribunal only directed notice in the Miscellaneous Applications seeking interim orders. In our view, the preliminary objection need not deter us from examining the various issues involved in this batch of writ petitions for the reason that on more than one occasion various Divisions Benches of this Court held that in an appropriate case this Court would still exercise the jurisdiction under Article 226 of the Constitution wherever the ends of justice demands such intervention. As already pointed out it is not perhaps the grievance of the individual petitioners that warrants an examination of the issue in this batch of cases, but the fact that this litigation pertaining to the Board in the context of absorption is proceeding endlessly and no pronouncement on the correct legal position governing the issue is available from this Court that compels us to examine the entire issue with a view to put an end to the litigation – hopefully! Since all these writ petitions raise issues which are inter connected, it is agreed by the counsel appearing for various parties in this batch of writ petitions and believed by the Bench that it is better that all these writ petitions are heard and disposed of together and accordingly all these writ petitions were heard together. The undisputed facts based on which the issues involved in this batch of writ petitions are required to be decided are: (1) Under the 1989 Act a statutory body like the Board, having powers and obligations created under statute including the authority to enter into contracts and make appointments to the various posts under the body for discharging the functions under the Act is created; (2) the State of A.P. in the Department of Public Health and Municipal Engineering went on passing orders posting various officers from time to time to the Board, (3) the Board never resisted such an exercise of power on the part of the State. From the above three basic facts, the parties claim various rights and obligations. The employees of the State of A.P. governed by the Public Health and Municipal Engineering Service Rules, 1965 who were not posted to the various offices connected with the supply of drinking water to Hyderabad on the date of the commencement of 1989 Act, complain, that Section 113(2) insofar as it sought to be interpreted by the Board and the State as authorizing the absorption of only those employees who were in fact working in the posts connected with the above-mentioned operations on the date of commencement of the Act are only entitled to exercise an option either to join the service of the Board or stay back in their parent service is violative of Articles 14 and 16 of the Constitution of India since such an interpretation of Section 113(2) creates an artificial classification between the employees governed by the PH&ME Engineering Service on the basis of a mere accident of their posting on the date of the commencement of the Act. The other legal issue, which is required to be considered in the present case is whether the posting of the Engineers of the PH & ME services belonging to Zones I to V to the Board is violative of the Presidential Order. Under the Presidential Order, the posts of Deputy Executive Engineers in the service of the State of Andhra Pradesh are organized into a local cadre with reference to Zones specified in the Second Schedule to the Presidential Order. The City of Hyderabad is treated as a separate unit under Para 3 sub-para (6) of the Presidential Order, which enables the Central Government to notify the various departments in which the categories of posts are required to be organized into a separate cadre for the City of Hyderabad. The objection of some of the contesting respondents is that the writ petitioners belong to the various Zones i.e. Zones I to V organized in terms of the Presidential Order and they could not have been posted in the Board. Before we deal with the above-mentioned issues, we are required to deal with certain incidental issues. The authority of the State to post any one of its employees to the Board is required to be examined. We have already noticed that under Section-3 of the 1989 Act the Board is declared to be a body corporate having perpetual succession and a common seal, with power, (subject to the provisions of this Act and the rules made thereunder), to acquire, hold and dispose of property, and enter into contracts, and shall by the said name sue and be sued. Under Section-6 of the Act, the Legislature authorized the Board to appoint a Chief Engineer, Public Health Engineer, and such other officers and employees as may be required to enable the Board to carry out its functions under this Act. In the ultimate analysis employment which creates master and servant relationship is essentially a contract; the Board is authorized to enter into such contract under Section-3 of the Act. When the State is deploying some of its employees to discharge various functions of the Board, such deployment is required to be under some authority of law. Such an authority can be conferred either by an express provision of a statute or by an understanding between the Board and the Government if the Board seeks the assistance of the State requesting that the service of some of the employees of the State be lent to the board, an arrangement, which is normally understood in the service jurisprudence, as deputation. In the absence of either of the above-mentioned situations, the State would be plainly incompetent to post any one of its employees on an autonomous entity like the Board. Statutory bodies like the Board are required to function strictly in accordance with the provisions of the enactment under which they are created. No specific provision under the 1989 Act is brought to our notice to establish that either the State is invested with such authority to deploy its employees to the Board as it pleases or any material is placed before this Court to establish that the Board,