* THE HON'BLE MR JUSTICE RAMESH RANGANATHAN + W.P.Nos.30602, 29326, 29327 and 32265 of 1997 % 02.12.2005 # Bandugula Kishan, S/o B. Narasaiah, aged about 40 years, Occ: Senior Marketing Officer, A.P. Agro Ind., Dvl. Copn., Nizamabad, Nizamabad District. … Petitioner Vs. $ The Managing Director and Vice Chairman, A.P.State Agro Industries Development Corporation Ltd., Hyderabad. … Respondent ! Counsel for the Petitioners: G. Jayaprakash Babu ^ Counsel for respondent: Sri Meher Chand Noori < Gist: >Head Note ? (1995) 1 SCC 184 2 2004(2) ALD 599 3 2004(4) ALD 181 4 AIR 1962 SC 36 5 AIR 1976 SC 490; 6AIR 1964 SC 1823 7AIR 1997 SC 645 8 AIR 1995 SC 1371 9AIR 1991 SC 2288 10 2003 (6) ALT 390 11 (1999)7 SCC 209 12 AIR 1973 SC 2641 13 (1982)2 SCC 273 14 W.P.No. 26143 of 1997, dt:05.04.1999 15 (2002)2 SCC 333 16 1992 Suppl (3) SCC 217 17 (2005) 1 SCC 394 18 AIR 1976 SC 490 19 AIR 1997 SC 303 20 (1975)3 SCC 76 21 (1993) 3 SCC 184 22 (1980) 3 SCC 29 23 (1985) 3 SCC 198 24 (1992)4 SCC 118 25 (1999) 2 SCC 317 26 (2000) 10 SCC 525 27 (2003) 2 SCC 632 THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN W.P.Nos.30602, 29326, 29327 and 32265 of 1997 COMMON JUDGMENT: W.P.No.29326 of 1997 is filed, by two senior marketing officers of the A.P. State Agro Industries Development Corporation, seeking a declaration that the proceeding dated 18.10.97 of the 1st respondent is arbitrary, illegal, in violation of principles of natural justice and in violation of Articles 14, 15(4), 16, 16(4), 21, 39 and 41 of the Constitution of India and consequently to direct the respondents to continue the petitioners as Senior Officers or in any other equivalent category. W.P.NO.29327 of 1997 is filed by the then marketing manager of A.P. State Agro Industries Development Corporation questioning the proceedings of the 1st respondent dated 29.10.1997 as arbitrary, illegal and in violation of his fundamental rights and the directive principles of State policy. W.P. No.30602 of 1997 is filed by two erstwhile senior marketing Officers of the A.P. State Agro Industries Development Corporation questioning the proceedings of the 1st respondent, in Proc.No.AMII:JM:9533:93 dated 18.10.1997 as illegal and W.P.32265 of 1997 is filed by an erstwhile senior officer of the A.P. State Agro Industries Development Corporation questioning the proceedings of the 1st respondent dated 17.11.1997 as violating principles of natural justice, in violation of G.O.Ms.No.121, Social Welfare (L-I) Department dated 31.10.1996 and in violation of the fundamental rights and directive principles of State Policy. Since the action of the 1st respondent in terminating the services of the petitioners herein, as an economy measure, is impugned in these four writ petitions, they were all heard together and are now being disposed of by a common order. The parties shall hereinafter be referred to as they are arrayed in W.P.No.30602 of 1997. All the petitioners herein, belong to the Scheduled Castes, and place reliance on G.O.Ms.No.121 dated 31.10.1996 to contend that they are entitled for special protection by way of creation of super numerary posts and that their services should be continued in the 1st respondent – Corporation. Facts, as stated in W.P.No.30602 of 1997, are illustrative of the batch of four cases, and as such are being referred to. Petitioners are agriculture graduates and were earlier employed in the A.P. Cooperative Seeds Growers Federation Limited. Pursuant to a notification issued by the 1st respondent to fill up back log vacancies, of Regional Managers and Senior Marketing Officers, in a special drive in 1990, they had applied for the posts of Senior Marketing Officers and underwent a process of selection by a duly constituted five member committee. On their being selected as senior marketing officers, they were appointed on 7.8.1991, consequent to which they resigned from the A.P. Oil Seeds Growers Federation and joined the 1st respondent – Corporation. Petitioners would submit that the 2nd respondent appointed an Expert Committee under the Chairmanship of Sri K.Subrahmanyam, I.A.S to examine the working of public sector undertakings, that the Committee recommended restructuring of the A.P. State Agro Industries Corporation and closing down of the Agro Industries Development Corporation, disposal of certain assets, diversification of activities and retrenchment of surplus staff, that the Cabinet Sub-Committee examined the recommendations and forwarded it to the Government for its acceptance, pursuant to which the Government directed closure, of the Agro Chemical Division of the 1st respondent, in G.O.Ms.No.282, Agricultural and Cooperation (FP-I) Department dated 8.7.1997 and ordered that the NMRs be retrenched, the deputationists be sent back to their parent department and that employees not covered under the Industrial Disputes Act be discharged from service. Petitioners would submit that in order to ensure that there were sufficient number of scheduled caste officers available in the Corporation, in compliance with the rules of reservation, as the Corporation has neither been wound up nor closed and is functioning with other divisions like implementation section, land development sanction etc, they should not have been thrown out of employment and instead should have been absorbed in any of the other sections of the Corporation or any other department of the government. It is stated that persons juniors to the petitioners, in cadre of senior marketing officers and equal cadres, were being continued in other divisions whereas the petitioners were sought to be terminated, which action is contended to be arbitrary, illegal and in violation of Articles 14 and 16 of the Constitution of India. Reference is made to the minutes of the meeting of the Board of Directors held on 22.10.1996 and 4.1.1997 wherein the decision to fill up backlog vacancies in posts, reserved for Scheduled Castes, which were still available in the Corporation, is said to have been taken. It is contended that on the one hand, the Corporation was seeking to fill up backlog vacancies still available in the Corporation and on the other hand discharging scheduled caste employees who were regularly appointed in the limited recruitment held earlier for filling up backlog reserved vacancies. Petitioners would contend that they had left their earlier job and joined in the respondent corporation hoping for a better future, that they did not opt for a particular division but were merely posted in the agro chemical division of the corporation on administrative grounds, and merely because the division in which they were posted had been closed down, the respondent Corporation was not entitled to terminate the services of the petitioners and the Corporation should, instead, have adjusted them in its other divisions. Reference is made to G.O.Ms.NO.121, Social Welfare Department dated 31.10.1996 issued, by the government, in compliance with the directions of the Supreme court in Government of A.P. v. Balamusalaiah. Petitioners would submit that, as per G.O.Ms.No.121, even if there are no vacancies, supernumerary posts have to be created for continuation of Scheduled Caste employees and if any of them are required to be retrenched they should be adjusted against future vacancies. It is stated that the Corporation introduced a voluntary retirement scheme for persons who were to be sent out consequent upon its decision to close down the agro chemicals division, that the petitioners were being forced to sign on an unconditional undertaking to opt for V.R.S. and since the petitioners did not intend to take VRS and desired to continue in the Corporation, they had chosen not to exercise their option for V.R.S., though they had completed 40 years of age. Petitioners were informed, vide proceedings of the 1st respondent dated 18.10.1997, that if the they did not exercise option for V.R.S. on or before 27.10.1997, it would be construed that they were not interested in exercising unconditional option and that they were prepared for termination/retrenchment. The order asking the petitioners to opt for V.R.S. is impugned in this writ petition, as, in effect, being an order of termination. A counter affidavit is filed on behalf of the 1st respondent wherein it is stated that the agro chemicals activity of the respondent – Corporation, including the pesticides formulation units at Khammam and Kurnool, had been closed down and the posts operated for the said activities stood abolished. It is stated that the Sri K.Subrahmanyam Committee had not recommended for restructuring of the A.P. State Agro Industries Development Corporation and had instead directed its winding up with attendant disposal of certain assets. Respondents would submit that it is the Cabinet Sub-committee which had recommended restructuring of the A.P. State Agro Industries Development Corporation duly closing down the agro chemicals division, disposal of unproductive assets of the Corporation and for retrenching the staff working in the said division, that the cabinet sub-committee had recommended that the respondent – Corporation be continued, with land development activity as its focal activity and to promote and propagate modern agricultural implements, as a nodal agency in the State. Reference is made to G.O.Ms.No.282, Agriculture & Cooperation (FP.I) Department dated 8.7.1997 which provided for closing down the aforesaid activities including two fruit preservation units and for extension of V.R.S. benefits to such of those employees whose services were liable to be terminated or retrenched on account of closure of the said activities. It is stated that while the State of Andhra Pradesh was a major share holder, holding 72% of the shares of the respondent company, the remaining shares were held by the Central Government, that the respondent – company is not fettered, under its Articles of Association, by any of the government orders or directions and it is for the Board of Directors to pass an appropriate resolution adopting or deciding to implement policies and programmes of the state government. It is stated that some of the decisions require approval of the general body of the company and that government orders are not per se binding on the respondent company. While admitting that the petitioners were appointed in backlog reserved vacancies, that the respondent – Corporation has not been totally wound up and that other divisions such as administration, implements, land development etc., continued to function, it is stated that the petitioners are graduates in agricultural sciences and were recruited exclusively for the agro chemical division which deals with distribution of fertilizers, manufacture and sale of pesticides etc, that the qualifications and experience which the petitioners possess are different and dissimilar to the qualifications required for holding posts in the remaining divisions and that the petitioners are not suitable for being accommodated in any other division the respondent – corporation. It is stated that in view of the closure of certain activities, to which the petitioners were exclusively recruited and had worked therein, the respondent had no other alternative but to dispense with their services along with other employees who were similarly situated. It is contended that since the activity, for which the petitioners were recruited, is no longer carried on, the question of continuing any employee or maintaining the rule of reservation does not arise, that the respondent – Corporation had issued several circulars regarding closure and restructuring of its activities, consequent termination or retrenchment of the staff, that V.R.S. had been offered to employees in 1997 and that subsequently, vide letter dated 18.10.1997, employees who had not opted for V.R.S. were explained the pros and cons of the Scheme. It is contended that the petitioners had chosen not to opt for V.R.S though a higher package of compensation had been offered under the said scheme than what they would have been entitled to consequent upon their termination under the service rules of the respondent – corporation. While denying the allegation that the petitioners were posted in a certain division as per administrative convenience, it is stated that the petitioners were exclusively recruited for and had worked throughout in the agro chemicals division. It is further stated that there is no other activity where the petitioners could have been accommodated in relation to their qualification, experience and career background and that the petitioners were neither qualified nor functionally suitable to be accommodated in any posts operated by engineering/professional personnel. It is contended that G.O.Ms.No.121 dated 31.10.1996 has no application to the respondent – corporation and that, in any event, the said G.O. contemplates creation of supernumerary posts in case of retrenchment consequent on re-organization of the department or reduction of posts and not in case of closure of activities in an industrial establishment. The respondent would contend that the petitioners cannot compare themselves with employees in other divisions who are being continued and they cannot claim to be seniors to such employees, since they are not similarly situated. It is stated that cadres in engineering or finance divisions were essentially different and dissimilar and did not form part of a common cadre along with the cadre of senior marketing officers. The allegations of discrimination and violation of Articles 14 and 16 of the Constitution of India are denied. A reply affidavit is filed by the petitioner wherein the contention of the respondent that the petitioners were exclusively recruited for agro chemical activities is denied. It is stated that the petitioners’ appointment order dated 7.8.1991 would show that they were appointed as employees of the Corporation and not for any particular division or any particular activity and therefore their seniority in the entire Corporation was required to be considered and not division-wise. The petitioners, while giving the names of others who had been accommodated elsewhere, would deny the allegation that they were not qualified and not suitable for being accommodated in any other activity of the respondent – Corporation. They would contend that closing down a wing of the Corporation was different from closing down the Corporation in its entirety and in cases where restructuring of the Corporation had resulted in closure of one division, the services of the junior most officer in the entire corporation, that too following the rule of reservation, should have been terminated instead of terminating the services of all officers and employees working in the agro chemicals division. It is stated that while the petitioners were recruited as employees of the Corporation, their posting in the agro chemicals division was at discretion of the management and merely because some employees were posted in a particular division, which was subsequently decided to be closed, would not entitle the Corporation to terminate their services, while retaining those appointed subsequent to them, only on the ground that they were working in divisions whose activities were being continued. The petitioners would seek application of the principle of ‘last come first go’ in the entire corporation, in which event the junior most employees, in the corporation as a whole, ought to have been sent out first. While contending that G.O.Ms.No.121 would apply to them, petitioners would refer to the cases of Sri Y.V.Raghavaiah, working in the A.C. Division, who was posted in the personnel, legal and engineering divisions and was allowed to retire on superannuation, Sri Vidyasagar and Sri Panduranga Reddy, who though engineers were posted in the personnel division, and Sri Latchi Raju, who though an engineer had worked for several years as a Dy. Manager and a Manager in the agro chemical division. Petitioners would submit that many of the engineering staff were posted for physical verification in the agro chemicals division and there was no reason why agriculture graduates could not be accommodated in other divisions. Petitioners would also refer to G.O.Ms.No.114, Agriculture & Cooperation (FP-I) Department, dated 20.5.2005 whereby permission was accorded, by the government, for setting up of agro rythu seva kendras for routing products like seeds, fertilizers, pesticides and implements for supply to the farmers and ensuring quality and price line. Petitioners would contend that since the policy of the Government, under G.O.Ms.No.114, dated 20.05.2005, was to revive the activity of the closed agro chemicals division, which was hitherto marketing fertilizers and pesticides, they should be taken back to duty and continued in service. Sri G. Jayaprakash Babu, learned counsel for the petitioners, would submit that appointment of the petitioners was in the A.P. Agro Industries Development Corporation and not in any particular division. Learned counsel would refer to the appointment order dated 06.05.1987 and submit that clause - 6 thereof was clear in that the services of the petitioners were liable to be transferred to any other department/branch in the discretion of the management which would indicate that their appointment was in the Corporation, and not to in any particular division. Learned counsel would submit that since appointments were made to the Corporation and not any particular division, the seniority in the Corporation was required to be taken into account while applying the principle of ‘last come, first go’ in addition to following the roster system. Learned counsel would submit that G.O.Ms.No.121 dated 31.10.1996 was issued by the government pursuant to the judgment of the Supreme Court in Balamusalaiah (1 supra) and as per the guide lines prescribed thereunder the petitioners were required to be continued, if necessary, by creating supernumerary posts. Learned counsel would submit that posting of the petitioners, in the agro chemicals division, was at the option of the management and did not entitle the respondents to terminate their services merely on the ground that the division, in which they were posted, had been closed. Learned counsel would submit that the posts of area managers, assistant managers, and senior marketing officers are equal post and are inter-transferable. Similarly marketing managers, deputy managers and regional marketing managers are equal posts and are inter-changeable and as such the junior most in these categories, in the entire corporation, were required to be sent out first, on the application of the principle of ‘last come first go’. Continuing juniors, while terminating the services of seniors on the ground that they were posted in the agro chemicals division, is contended to be arbitrary and illegal. Learned counsel would submit that if the petitioners are sent out, there will be no scheduled caste employee left in the executive categories of the corporation and would refer to the list, furnished by the respondents to this court, to contend that while 37 employees, belonging to the Scheduled castes, were continued in service, they were all working in Class III and Class IV posts. It is also contended that subjects in agricultural engineering form part and parcel of the subjects prescribed for B.Sc. (Agriculture) and that the petitioners are competent to work in any of the other existing divisions of the respondent – Corporation. Learned counsel would submit that the functions which were hitherto carried out through the agro vikraya seva kendras, now named and styled as agro rythu seva kendras, established pursuant to G.O.Ms.No.114, in effect, amounted to revival of the said division, and since there were 60 agriculture graduates, apart from other staff, working earlier in the division, to supervise the agro vikraya seva kendras, prior to its closure, and as the activity is now again being undertaken, albeit in the name of agro rythu seva kendras, the petitioners could be accommodated in jobs available for carrying out the said activity. Learned counsel would submit that two of the petitioners herein had been sent on deputation to the state warehousing Corporation but, on revival of the activities of agro rythu seva kendras, were called back and assigned duties in the corporation which they were discharging prior to the closure of the agro chemicals division. Learned counsel would submit that employees in other departments have been posted as marketing executives in different districts, though the qualification prescribed for the said post is graduation in agriculture, that terminating the services of the petitioners and posting others, who were not qualified as marketing executives, would render the action of the respondents arbitrary and illegal, that the respondents had decided to open 210 centres of agro rythu seva kendras in 10 districts and proposed to extend it to other districts in the next spell, that to ensure its smooth functioning and proper supervision, qualified and experienced agriculture graduates are required and that the petitioners are best suited to be appointed in such posts. Learned counsel would refer to Sri Sudhakar Reddy, Senior Scientist, earlier working in the agricultural university, who was brought on deputation to the respondent – corporation as manager - Implements, which is alleged to be an activity similar to the activities carried on earlier by the agro chemicals division. According to the learned counsel, this would indicate that the Corporation requires personnel to manage activities similar to the activities carried on earlier by the agro chemicals division and that this system is being resorted to only to accommodate persons for extraneous reasons. Reference is also made to Sri C.S. Reddy, M.Sc. (Agriculture), a retired employee of KRIBHCO, who is alleged to have been brought into the respondent corporation as a marketing executive. It is contended that the petitioners could have been accommodated instead of bringing employees from outside. Learned counsel would submit that while there are 311 employees in the corporation, the scheduled castes are not adequately represented, much less, in the cadre of officers. Learned counsel would submit that there is not even a single scheduled caste employee in the officers cadre which makes a mockery of the rule of reservation and the special protection conferred on them under the Constitution. Learned counsel would rely on Irrigation Development Employees Association v. Government of A.P., B.Rehelamma v. A.P. State Agro Industries Development Corporation Limited, Hyderabad to contend that the principle, of operating roster backwards, must be extended to the petitioners and that they should be given the benefit of being continued in service. Learned counsel would also refer to the judgments in W.P.No.19135 of 2002 dated 30.10.2003 wherein the benefit of G.O.Ms.NO.121 dated 30.10.1996 was extended to certain employees. Reference is also made to the order of this Court in W.P.No.28049 of 1995 dated 25.7.2005 wherein certain junior marketing officers appointed on N.M.R. basis were directed to be considered for regularization. Learned counsel would submit that if employees were found to be surplus, the N.M.Rs. should have been the first to be discontinued from service. On the other hand they were being recommended for regularization whereas the petitioners, who had put in more than 20 years of regular service, were sent out. Reference is also made to three employees, working in Allwyn Company who, on its closure, were taken into the 1st respondent – corporation. Learned counsel would submit that the government had sanctioned Rs.15 Crores to the 1st respondent corporation, (Rs.10 Crores from the Central Marketing Fund and Rs.5 Crores from the General Fund), and with the said budget the corporation was planning to monitor the agro rythu seva kendras which required agriculture graduates with experience similar to what the petitioners possess. It is contended that the government had also recommended that the 1st respondent revive the closed units i.e., fruit preservation unit at Anantarajupet, Cuddapah District and the pesticides formulation units, at Kurnool and Khammam for which experienced agriculture graduates were required, and that the petitioners were therefore entitled to be continued in these posts. Learned counsel would rely on General Manager, Southern Railway v. Rangachari; State of Kerala V. N.M. Thomas; R.Chitralekha v. State of Mysore; Air India Statutory Corporation v. United Labour Union; R.K. Sabharwal v. State of Punjab; Comptroller & Auditor General of India v. Mohan Lal Mehrotra in this regard. Sri Meher Chand Noori, learned counsel for the respondent, would submit that the petitioners were recruited and appointed as senior marketing officers in the agro chemicals division and their posts were exclusively connected with agro chemicals activity. He would submit that the Corporation has not adopted G.O.Ms.No.121 dated 31.10.1996 and that the said G.O. has no application to employees of the Corporation. According to the learned counsel, the petitioners are not eligible to hold similar posts in the other divisions namely, administration, agricultural engineering, finance & accounts divisions since they do not possess the required qualifications, and that abolition of the posts of senior marketing officers, to which the petitioners were recruited,