SCA/3235/2006 1/46 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 3235 of 2006 with CIVIL application No.2677 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 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 ? ========================================================= VALIBEN JETHABHAI BHANJI - Petitioner(s) Versus PATAN MUNICIPALITY - Respondent(s) ========================================================= Appearance : MS SHRUSHTI THULA FOR MR BP GUPTA for Petitioner MR NV ANJARIA for Respondent ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 14/07/2006 ORAL JUDGMENT 1. In the present petition, the petitioner, an SCA/3235/2006 2/46 JUDGMENT employee of respondent Patan Municipality has challenged the notice/order dated 28.11.2005 by which the petitioner is ordered to be prematurely retired with effect from 28.2.2006. 2. On 28th February,2006 when this petition came up for preliminary hearing, this Court passed the following order: “1. Draft amendment allowed. 2. In the present petition, the petitioner has challenged an order/notice dated 28-11-2005 by which it is conveyed to the petitioner by the employer that her service will stand terminated on 28-02-2006 after office hours. This order has been passed by which the petitioner is compulsorily retired upon reaching the age of 55 years. 3.The petitioner has challenged the validity of rule permitting the employer to resorting to compulsory retirement. Prima facie, I find that there is no substance to the said challenge. Similar rules contained in various services including one governing the employees of the central Government contained in Fundamental rule 56-J have been upheld by the Hon'ble Supreme Court way back in the year 1954 and this view has been reiterated many times thereafter. 4. The petitioner has however, through the draft amendment stated before this Court that SCA/3235/2006 3/46 JUDGMENT since her engagement as Sweeper on 01-09-1974, she has been working honestly and sincerely and that no adverse remarks have been communicated to her at any point of time nor has she received any show cause notice nor any departmental inquiry initiated against her. It is thus the case of the petitioner that she has an unblemished service record. In view of the averments made in the draft amendment, issue notice returnable on 14th March, 2006. 5. So far as interim relief is concerned, it may be noted that the impugned order is passed on 28-11-2005. The present petition is filed on 24-02-2006 and moved for the first time on 27- 02-2006. This leaves virtually no time for the Court to issue notice to the other side and grant them hearing why the interim relief should not be granted. The learned advocate is unable to explain why the petition was not filed and moved earlier. I carry an impression that it is not the fault of the petitioner but a clear error on the part of the petitioner's advocate in not moving the petition earlier. Despite the creation of the unfortunate situation by the advocate of the petitioner, I cannot deny the relief to the petitioner which would ultimately hurt the petitioner and not her advocate. 6.On the basis of averments made in the draft amendment reproduced here-in-above, considering the fact that the petitioner is engaged as Safai Kamdar, I find that the impugned notice/order of her termination is required to be stayed at-least till the next date of hearing. Therefore, by way of ad interim SCA/3235/2006 4/46 JUDGMENT relief, it is directed that impugned order dated 28-11-2005 shall stand stayed till 14-03- 2006. Direct service is permitted today.” The above interim order continued from time to time and the petitioner was protected from termination of service. 3. At the request and with the consent of the learned advocates appearing for the parties, the petition has been taken up for final disposal at the admission stage. 4. Before adverting to the legal controversies arising, short facts need to be noted. 5. The petitioner was appointed as Sweeper by the respondent Municipality on 1.9.74. Since then she has been discharging her duties on regular establishment. The case of the petitioner is that her service is satisfactory and that there has been no complaint about her performance of duties. Despite this, respondent has issued the impugned notice dated 28.11.2005 requiring the petitioner to retire from service with effect from 28.2.2006. The notice itself records that the petitioner having completed the age of 55 SCA/3235/2006 5/46 JUDGMENT years on 15.12.2005, the said notice is issued against her terminating her service from 28.2.2006 upon completion of the period of three months of notice. 5.1It is the case of the petitioner that the action of the respondent is illegal and unlawful. Primarily, it is contended that rule 5 of the Patan Municipality Compulsory Retirement of the Employees and the Reemployment of Retired Persons Rules 1963 (hereinafter to be referred to as “the said Rules”) is unconstitutional and invalid. It is contended that the normal age of retirement being 58 years, the petitioner cannot be retired before the said age. It is also contended that in any case, the service of the petitioner has been most satisfactory. There have been no complaints, adverse remarks or inquiries against the petitioner in her 31 years of satisfactory service and therefore, the petitioner cannot be terminated unceremoniously without assigning any reason. 5.2 On the other hand, the case of the respondent is that as per rule 5 of the said Rules, the SCA/3235/2006 6/46 JUDGMENT respondent Municipality enjoys a wide discretion to retire an employee once he or she crossed the age of 55 years. This can be done by giving notice of three months without assigning any reasons. It is in exercise of these powers, the respondent Municipality has sought to terminate the services of the petitioner. It is contended that the Municipality is facing severe financial crisis. A resolution, therefore, came to be passed by by the Municipality on 30th October 2005. In the said resolution, it was decided that in order to reduce the staff, such powers should be exercised in cases of those employees who crossed the age of 55 years. It is, therefore, the contention of the respondent that the powers are exercised by the respondent Municipality in public interest and this Court, therefore, should not interfere with the exercise of such powers. It is also contended that unless the order is shown to be arbitrary, malafide or based on no material at all, this Court in exercise of writ jurisdiction would not interfere with the exercise of powers by the employer. SCA/3235/2006 7/46 JUDGMENT 5.3 A detailed affidavit has been filed by the respondent Municipality containing the above mentioned aspects of defence of the Municipality. Additionally, it is also stated that for better administration, it is open for the respondent to chop off the dead wood. With respect to the validity of rule 5 of the said Rules, it is denied that the same gives unbridled or unfettered powers. In short, it is contended that it is always open for the respondents to exercise such powers in public interest. 6. On the basis of the above material on record, learned advocates appearing for the parties have made submissions before this Court. 7. Learned advocate Ms.Shrusti Thula for the petitioner submitted that the impugned notice/order is wholly illegal and unlawful. She contended that rule 5 of the said Rules is invalid and should be declared inoperative. She submitted that the said rule gives uncontrolled and unguided powers to the respondent Municipality to require any employee to SCA/3235/2006 8/46 JUDGMENT prematurely retire after 55 years of age by issuance of notice for a period of three months without assigning any reasons. She contended that such powers are always open to misuse. In support of her contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of N.C.Dalwadi v. State of Gujarat, (1987) 3 SCC 611 wherein the Hon'ble Supreme Court observed that even if the order of compulsory retirement is made under such a rule, the Government must show that the order was necessary in public interest, otherwise the order would be bad. 7.1Reliance was also placed on a decision of the learned single Judge of this Court in the case of J.K.Rasania v. Gujarat Housing Board, 2003 (1) GLR 466 wherein under similar situation, learned Judge had made similar observations. 7.2 It was further contended that the age of retirement has been fixed under the said Rules. Through executive instructions, the respondent cannot vary or modify the age of retirement and require the employee to retire earlier than the SCA/3235/2006 9/46 JUDGMENT normal age of superannuation. It was also contended that in the present case, the respondent has failed to demonstrate any public interest in requiring the petitioner to retire early. To suggest that the respondent Municipality decided to reduce the staff and that, therefore, the order of premature retirement was resorted to cannot be the basis to contend that the same was in public interest. In support of her contention, reliance was placed in the case of Rajat Baran Roy v. State of W.B., (1999) 4 SCC 235 wherein the Hon'ble Supreme Court finding that the order was not passed in public interest was pleased to quash the same. 7.3 Reliance was also placed on the decision of this Court in the case of Doshi Fatechan Morarji reported in 2002 (1) GLH 50 wherein the learned Judge observed that normal age of superannuation cannot be left to the sweet will or caprice of the authority. 8. On the other hand, learned advocate Shri N.V.Anjaria appearing for the respondent Municipality sought to support the impugned SCA/3235/2006 10/46 JUDGMENT order. He submitted that for economic reasons, the Municipality decided to reduce the staff which was necessary since the financial burden on the Municipality was difficult to bear. The governing body of the Municipality, therefore, passed a resolution deciding to require all employees who crossed the age of 55 years to retire in exercise of powers under rule 5 of the of the said Rules. He submitted that the action is, therefore, based on public interest. He submitted that the employer has wide discretion to require an employee to retire from service in terms of service rules. Under rule 5 of the said Rules, the only requirement is of giving three months notice and that such an action should be based on public interest. 8.1He further submitted that unless and until the powers exercised by the employer in this regard are found to be wholly arbitrary, malafide or based on no material, this Court would not interfere in exercise of powers of writ jurisdiction. Reliance was placed on a decision of the Hon'ble Supreme Court in the case of SCA/3235/2006 11/46 JUDGMENT Baikuntha Nath Das v. Chief Dist. Medical Officer, (1992) 2 SCC 299 wherein while discussing the concept of retirement, the Hon'ble Supreme Court observed that the order of compulsory retirement does not amount to punishment and the principles of natural justice are not required to be observed. Learned counsel particularly relied on the observations made by the Hon'ble Supreme Court wherein it was stated that judicial review in such cases is open only on grounds of malafides, arbitrariness and perversity. He submitted that the ratio laid down in the said decision of Baikunth Nath Das (supra) has been followed by the Hon'ble Supreme Court in number of decisions subsequently and reference to the subsequent decisions is, therefore, not necessary. 8.2 With respect to the validity of rule 5, he submitted that the requirement that the action of the respondent should be in public interest is inbuilt in the rules and especially when the respondent is in a position to demonstrate that in the present case such powers have been exercised in fact in public interest, the rule cannot be SCA/3235/2006 12/46 JUDGMENT declared invalid or ultra vires the Constitution. Learned advocate Shri Anjaria further submitted that the provisions of rule 5 of the said Rules can be read down as to include the concept of such powers being exercised only in public interest and the rule thus need not be declared unconstitutional. Reliance this regard was placed on a decision of the Hon'ble Supreme Court in the case of Jagdish Pandey v. Chancellor, Bihar University, AIR 1968 SC 353. 9. Before going into the question of justness of the impugned order, the challenge of the petitioner to rule 5 of the said Rules can be considered. 9.1 Rule 3 (e) of the said Rules provides that the age of compulsory retirement shall mean the age of 58 years. Rule 5 of the said Rules provides, inter alia, that every Municipal servant shall compulsorily retire from service of the Municipality on the date on which he attains the age of compulsory retirement. Proviso to rule 5 of the said Rules, however, provides that the Municipality may require a Municipal servant to SCA/3235/2006 13/46 JUDGMENT retire at any time on or after crossing the age of 55 years on giving three months notice without assigning reasons and that the Municipal servant may also retire after he attains the age of 55 years voluntarily on giving such notice to the Municipality. 9.2 Rule 6 of the said Rules, inter alia, provides that no Municipal servant who has reached the age of compulsory retirement shall be retained or re- employed in the Municipality except as otherwise provided in the said Rules. Rule 5 of the said Rules reads as follows:- “5. Every Municipal servant shall compulsorily retire from the service of the Municipality on the date on which he attains the age of compulsory retirement. Provided that the Municipality may require a Municipal servant to retire at any time on or after he attains the age of 55 years on giving him three months notice without assigning reason and that a Municipal servant may also retire on or after he attains the age of 55 years voluntarily on giving such notice to the Municipality.” SCA/3235/2006 14/46 JUDGMENT It can thus be seen that the normal age of superannuation for the employees of the respondent Municipality is 58 years. Upon crossing the said age, the Municipal servant has to per force retire from service. Proviso to rule 5, however, gives power to the Municipality to require a Municipal servant to retire at any time after attaining the age of 55 years by giving three months notice, however, without assigning any reasons. Correspondingly, the employee has a right to retire after he attains the age of 55 years by giving similar notice of three months. 10.Such right to retire an employee of Government or its Corporations after crossing certain age in public interest is well-recognized right in service jurisprudence. Rule 161 of the BCSR gives similar power to the State Government with respect to its employees while Fundamental Rule 56(j) gives similar power to the Central Government with respect to its employees. Validity of such rules has been tested before different courts in past. SCA/3235/2006 15/46 JUDGMENT 11. Somewhat similar provisions of rule 161 of BCSR came up for consideration before this Court in the case of Ishwarlal v. State, 1963 GLR 945 and a Division Bench of this Court held that such termination is termination simpliciter flowing from a condition of service and is neither dismissal nor removal nor reduction in rank within the meaning of Article 311 of the Constitution. Rule 161(c)(ii)(2) of BCSR was therefore, declared valid and it was held that the same does not suffer from invalidity and the same is founded on a definite policy, a definite object or a criterion, namely, administrative efficiency and public interest. 11.1Provisions contained in Article 465-A of the Civil Service Regulations 1920 which gave similar powers to the Central Government came up for consideration before the Hon'ble Supreme Court in the case of Shyamlal l v. State of U.P., AIR 1954 SC 369. The relevant provisions stated that the Government retains an absolute right to retire any officer after he has completed twenty-five years' qualifying service without giving any SCA/3235/2006 16/46 JUDGMENT reasons. Validity of such rule was upheld by the Hon'ble Supreme Court in the said decision holding that the termination of an employee in exercise of such powers does not amount to removal or dismissal and the rule, therefore, would not violate the constitutional provisions contained in Article 311 of the Constitution. This view of the Hon'ble Supreme Court was subsequently followed in the case of Shivcharana v. State of Mysore, AIR 1965 SC 280. In the case of Union of India v. J.N.Sinha, AIR 1970 SC 40, referring to Fundamental Rule 56(j), the Hon'ble Supreme Court found that the powers contained therein can be exercised in public interest and the employee so made to retire retains his service rights and he does not lose any of the right acquired by him before retirement and the order of retirement therefore involves no civil consequences. 12.With this background in mind, if one reverts back to the present case, one finds that against the normal age of superannuation being 58 years, the rules permit the respondent Municipality to SCA/3235/2006 17/46 JUDGMENT require its employees to retire upon giving a notice of three months after attaining the age of 55 years. Though not specifically stated, the requirement of such exercise only in public interest can be read into the rules and the validity of the rule itself need not be questioned. It is undoubtedly true that each order that may be passed by the Municipality shall have to be judged on the basis whether the exercise of powers itself is in public interest or not. It is, however, not necessary to strike down the rule itself on this basis alone. Even in case of N.C.Dalwadi (supra), the Hon'ble Supreme Court and in the case of J.K.Rasania (supra), this Court adopted such a course. It was found that the order that the employer may pass in such a case has to be demonstrated to be in public interest. Challenge to the constitutional validity of rule 5 of the said Rules therefore is required to be turned down. In the case of Jagdish Pandey v. Chancellor, Bihar University (supra) also, the Hon'ble Supreme Court read down the provisions SCA/3235/2006 18/46 JUDGMENT so as to hold them constitutionally valid. The factual background and the rules in question in the said decision though were different from the present case, I do not see any reason why in the present case, such a course should not be adopted. 13. This brings me to the central controversy arising in this petition. As noted earlier, the case of the petitioner is that having put in 31 years of spotless service, it is not open for the respondent to retire her prematurely only on the ground that the Municipality wishes to reduce its staff. Whereas the case of the Municipality has been that to retire an employee prematurely is the power which the Municipality enjoys and if such power is exercised to reduce financial burden, the same must be construed as having been exercised in public interest. Before deciding the said issue, one may notice that in service jurisprudence, there are different kinds of retirement envisaged. In a recent decision rendered in Special Civil Application No.572 of 2005 on 7.7.2006, this SCA/3235/2006 19/46 JUDGMENT Court made the following observations:- “10. With this background in mind, one may recall that in service jurisprudence, different kinds of retirements are envisaged. (i)Superannuation retirement takes place when an employee crosses the maximum age prescribed under the service rules beyond which he cannot remain in active service. (ii)Compulsory retirement is one of the penalties under different service regulations. It can be imposed on an employee upon a departmental inquiry on the basis of proved charges. For example, in Gujarat Civil Service (Discipline and Appeal) Rules, (rule 6(6)) compulsory retirement is provided as one of the major penalties. (iii) Premature retirement is a concept where the employer in terms of service regulations has power to order retirement of an employee upon crossing certain age or completion of certain number of years of service in public interest. Rule 161 of the BCSR gives such powers to the State Government with respect to its employees. Fundamental Rule 56J gives similar SCA/3235/2006 20/46 JUDGMENT powers to the Central Government with respect to Central Government employees. (iv)Voluntary retirement is a concept where an employee upon completion of certain number of years of qualifying service can with the permission of the employer proceed on voluntary retirement. If the employee has put in sufficient number of years of service and is permitted to retire on voluntary retirement basis, he retains all the benefits of the service already put in and would be entitled to all post retiral benefits on the basis of number of years of service put in by him. (v)In certain service regulations, there is also a concept of retirement on medical grounds permitting the employee to seek pension called invalid pension even though the employee may not have put in sufficient number of qualifying years of service to seek pension under the normal rules. To this kind of retirement, we need not go into in the present petition.” It may be noted that the term compulsory retirement is often used for non-penal premature SCA/3235/2006 21/46 JUDGMENT retirement. One may, however, not lose sight of the fact that there is a distinct difference between these two kinds of retirements, namely, penal retirement upon departmental inquiry on the basis of proved misconduct which normally results into disentitling an employee from seeking any pensionary benefits and a non-penal retirement referred to as the premature or compulsory retirement upon completion of certain number of years of service in which case the employee retains all the benefits of the past service and is entitled to full post retiral benefits on that basis. One may also notice that in recent past, voluntary retirements pursuant to voluntary retirement schemes are getting currency. Employers often come up with voluntary retirement schemes to reduce the staff and the salary burden. Such schemes are construed as an invitation to offer as was held by the Hon'ble Supreme Court in the case of Bank of Inida v. O.P.Swarnakar, reported in (2003) 2 SCC 721. 14.In the present petition, this Court is concerned with a case of premature/compulsory retirement SCA/3235/2006 22/46 JUDGMENT of an employee who is required to be retired before the normal age of superannuation by the employer upon completion of 55 years of age. Short question is whether retiring such an employee on the ground that the employer requires to reduce the staff would be a valid exercise of the powers and whether such a purpose can be termed to be in public interest as is sought to be suggested. 15.The term “compulsory retirement” as a non- penal premature retirement has received a certain definite connotation through series of decisions of the Hon'ble Supreme Court. Through large number of decisions, it is by now well understood that such powers, be it under rule 161 of the BCSR in case of State Government or be it FR 56(j) in case of the Central Government or any other such service conditions are available to the employer for better efficiency of the administration and to chop off the dead wood. It is held time and again that an employee who has crossed certain age that may be specified in the service rules and whose service SCA/3235/2006 23/46 JUDGMENT is found to be not satisfactory may be required to be retired compulsorily before attaining the age of superannuation and such powers have been recognized and protected by the Courts in public interest. 16.As noted