IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY FOURTH DAY OF AUGUST TWO THOUSAND AND FOUR PRESENT THE HON'BLE MR JUSTICE G. BIKSHAPATHY and THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 34411 of 1997 Between: 1 M.Prasad S/o.Innaiah Nizamabad Municipality, Nizamabad R/o.Nizamabad 2 Smt.V.Leela W/o.M.Prasad Nizamabad Municipality, Nizamabad R/o.Nizamabad 3 Smt.E.Nagamalleswari W/o.V.Srinvias Nizamabad Municipality, Nizamabad R/o.Nizamabad 4 Smt.B.Geetha W/o.Kishan Nizamabad Municipality, Nizamabad R/o.Nizamabad 5 C.Ramesh S/o.Venkayya Nizamabad Municipality, Nizamabad R/o.Nizamabad 6 M.Sanga Reddy S/o.Kista Reddy Nizamabad Municipality, Nizamabad R/o.Nizamabad 7 M.Balakrishna Prasad S/o.Raghavendra Rao Nizamabad Municipality, Nizamabad R/o.Nizamabad 8 P.Govardhan Goud S/o.Srinivasa Goud Nizamabad Municipality, Nizamabad R/o.Nizamabad 9 K.Vaman Rao S/o.Singaiah Bodhan Municipality, Nizamabad ... PETITIONERS AND 1 The Government of Andhra Pradesh rep.by its Secretary, Municipal Administration Department, Secretariat, Hyderabad 2 The Commissioner and Director of Municipal Administration, Andhra Pradesh, Hyderabad 3 The Collector & Chairman Urban Basic Service for Poor Programme, Nizamabad 4 The Municipal Commissioner Nizamabad Municipality, Nizamabad 5 The Municipal Commissioner Bodhan Municipality, Bodhan, Nizamabad Dist 6 The Andhra Pradesh Administrative Tribunal Purani Haveli, Hyderabad rep.by its Registrar ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ order or direction particularly one in the nature of writ of certiorari after calling for the records relating to common order passed in OA.Nos.4629/97 to 4634/97, 4636/97, 4648/97, 4658/97, 4670/97 and 5099/95 Dt.05/11/1997 on the file of the Andhra Pradesh Administrative Tribunal, Hyderabad and quash the same and consequently declare that the orders issued terminating the services of the petitioners in proceedings Dt.3/7/1997 by the Collector and Chairman, UBSP, Nizamabad are wholly illegal, arbitrary and in violation of the principles of natural justice apart from being violative of Art.14 and 16 of the Constitution of India and pass such other order. Counsel for the Petitioner: Mr.M.PANDURANGA RAO, Advocate Counsel for the Respondents : GP FOR SERVICES I The Court made the following: J U D G M E N T: (per G. Bikshapathy J) 1. The Writ Petition arises out of the common Order passed by the Andhra Pradesh Administrative Tribunal in O.A.NOs. 4629 of 1997 to 4634 of 1997, 4636 of 1997, 4648 of 1997, 4658 of 1997, 4670 of 1997 and 5099 of 1995, dated: 5.11.1997. 2. O.A.NO. 5099 of 1995 was filed by the petitioners for regularisation of the services and other O.As. were filed challenging the termination of their services by proceedings dated: 3.7.1997 issued by the Collector and Chairman of Urban Basic Service for the Poor, Nizamabad. 3. On the directions issued by the Government of India with regard to the implementation of the Urban Basic Service in the State of Andhra Pradesh, the scheme was made applicable from 1986 onwards in 16 Municipal towns in five Districts of State of Andhra Pradesh. However, the Government of India introduced a new scheme Urban Basic Service for the Poor (for brevity “UBSC”). The detailed guidelines were issued by the Government of India for implementation of the scheme and the entire expenditure was to be borne by the Government of India under the scheme. Accordingly, for the year 1990-91, a sum of Rs. 182.20 lakhs was sanctioned. As per the scheme, the State Government was required to work out total number of beneficiaries likely to be covered on the basis of the administrative allocation and per capita norms ranging from Rs. 58/- to Rs. 75/- and also select beneficiaries under the Urban Slum Pockets. The State Government has selected among other Districts Nizamabad District and the scheme was directed to be implemented in Nizamabad proper and Bodhan Municipalities. For the purpose of implementation of the scheme, the Government of Andhra Pradesh sanctioned the post of Asst. Project Officers. Nine posts were sanctioned for Nizamabad District. The District Collector-Chairman of the District Monitoring Cell was required to make selections for the posts of Asst. Project Officers. Accordingly, a notification was issued in the Press as well as in the Employment Exchange. Written examination and the oral tests were held. All the petitioners except Smt. B.Geetha and P. Govardhan Goud were appointed as Asst. Project Officers in Nizamabad Municipality and Bodhan Municipality of Nizamabad District. With regard to Smt. B. Geetha (Writ Petitioner No.4 in W.P.No. 34411 of 1997) (Applicant in O.A.NO. 4632 of 1997), she was initially appointed as Community Organiser by Collector, Mahabubnagar on 20.4.1987 and posted to work in Mahabubnagar Municipality. She sought for absorption as Asst. Project Officer on the recommendation of the Collector, Nizamabad and the Joint Collector, Mahabubnagar. The Government issued clearance for her appointment as Asst. Project Officer, Nizamabad in the newly created post and accordingly she was appointed with effect from 24.11.1991. 4. With regard to Mr. P. Govardhan Goud, 8th petitioner, it was submitted that he was rendering necessary assistance regarding valuation of civil works. Therefore, he was appointed by the Collector, Nizamabad, as Technical Supervisor in the U.B.S.P. Nizamabad. It is the case of the petitioners that ever since they were appointed, they have been discharging their duties to the best of their ability and to the entire satisfaction of their controlling Officers. No complaint whatsoever was brought to their notice with regard to the discharge of their functions. However, the salaries of the petitioners were stopped from October, 1996. Even though, representations were made, salaries were not paid and no reasons were being given for withholding salary. When the matter was represented to the Government, the Government directed the respondent and other officials for immediate payment of salaries, however, salaries were not paid. The petitioners were appointed initially on contract basis for one year on a remuneration of Rs.1,700/- per month. But, however, the appointment continued indefinitely. Since, their services were not regularised for having worked for several years, all the petitioners filed O.A.NO. 5099 of 1995 in Andhra Pradesh Administrative Tribunal for regularisation of their services and the same was pending. It is also their case that similarly situated persons appointed under the scheme in other States like Haryana, New Delhi etc. were paid regular scales of pay. 5 . While so, during the review meeting of the implementation of the U.B.S.P. for Nizamabad and Bodhan held on 4.7.1997 under the Chairmanship of District Collector, certain irregularities were alleged in the functioning of the scheme. Local Fund Accounts Officer and the Audit Officers were asked to take up the audit proceedings. Simultaneously, the District Collector appointed Nodal Officers and Technical Officers to verify the works of U.B.S.P. with respect to quality and cost. Accordingly, Audit Officers and Nodal Officers submitted their report on 8.11.1996 and 20.11.1996. Basing on the said reports, the charges were framed against the petitioners and charge memos were issued to them alleging that there were no proper measurements for the works completed and the payments were made in excess and that there were no vouchers in support of the payments and thus over- payments were made and amounts were misappropriated. The charges were denied by the petitioners. But, however, without affording any further opportunity and without conducting any enquiry in accordance with rules and in gross violation of the principles of natural justice, a stereotyped Order dated: 3.7.1997 was passed by the District Collector-3rd respondent herein terminating the services. The said terminations came to be challenged by the petitioners in the O.As. referred to above. 6. It was the case of the petitioners that they were appointed to regular posts and that they were entitled for regularisation and for which O.A.NO. 5099 of 1995 was pending and in order to circumvent their demand and to throttle the service continuity, salaries of the petitioners were stopped abruptly without there being any reason from October, 1997 and without giving any notice to them. It was also the contention of the petitioners that their services could not be terminated, without conducting proper enquiry and without affording proper opportunity. When the charges were framed on the basis of the alleged reports of the Audit Officer and Nodal Officer, such reports were not furnished to them and the charges ought to be established in the regular enquiry. Neither witnesses were examined in the enquiry nor any opportunity was given to the petitioners to cross-examine the witnesses or opportunity was given to them to offer their statements. 7. It is the case of the petitioners that they were executing the instructions of the higher Officers namely Project Officer and Municipal Commissioners. They have no independent powers to execute any work and that they have been discharging the duties only on the specific directions of the higher Officers. Under those circumstances, the question of entrusting the work running into lakhs of rupees does not arise. Therefore, it is only with a view to protect the higher Officers, the petitioners were made scapegoats and the services were illegally terminated and thus terminations are illegal and in violation of Article 311 of Constitution of India. 8. It is further brought out before the tribunal that similarly situated persons, who were appointed as Asst. Project Officers in the other Districts of the State, where the U.B.S.P. scheme was implemented, they were absorbed as Community Organisers in pursuance of the rules framed by the Government in G.O.Ms.No. 547 Municipal Administration and Urban Development Department, dated: 13.10.1998. The said G.O. was issued in exercise of the powers conferred by proviso to Article 309 of Constitution of India and the rules called A.P. Urban Poverty Alleviation (Municipal Administration) Service Rules were brought into effect. Under the said Rules, the post of Community Organisers were to be filled by direct recruitment through Employment Exchange and giving notification in the newspapers. But, under proviso (3), the Asst. Project Officers working under U.B.S.P. will be absorbed as Community Organisers. Therefore, such of those A.P.Os. who were in service as on date of G.O. were absorbed as Community Organisers and this benefit was denied to the petitioners on account of the illegal termination of services of the petitioners. 9. The challenge made by the petitioners was opposed by the respondent on the ground that it is a contract appointment and the petitioners were not holding the civil post and therefore, Article 311 of Constitution of India was not applicable to them. The termination took place by virtue of the contract appointment as they were appointed for one year initially and they continued as such till the services were terminated. The appointment was terminated under the terms of the contract and therefore, it is not open for them to challenge the same before the tribunal. It is also submitted that the petitioners failed to discharge their duties properly and there was number of audit objections and they resorted to large scale misappropriation and therefore, the Audit Officer and the Nodal Officers were directed to enquire into the matter and submit reports. Basing on the reports of these Officers, charge memos were issued to them. Some of the petitioners submitted explanation and some of them have not submitted. But, however, on the recommendations of the Nodal Officers, some of the charges were held to be proved and therefore, they were terminated from service. Hence, no enquiry need be conducted into the alleged irregularity committed by them and failure to conduct the enquiry would not nullify the action of the authorities in terminating the services. 10. The learned tribunal, however, held that the petitioners were not holding the civil post in the State Government and their services were terminated under the terms of the contract and therefore, they cannot seek any protection under Article 311 of Constitution of India. The tribunal further held that the work of the applicants was unsatisfactory and they were responsible for embezzlement of lakhs of rupees. They were also given the opportunity of representation. Holding that termination Orders were issued by invoking the terms and conditions of appointment and therefore, the termination of services was legal and accordingly dismissed the O.As. by an Order dated: 5.11.1997. However, the tribunal directed the respondents to pay the salary from October, 1996 till the date of their termination. As already noted above O.A.NO. 5099 of 1995 was filed for regularisation since the termination was upheld the tribunal did not go into the aspect of the regularisation of the services and accordingly it was also dismissed. Against the said common Order, the present Writ Petitions have been filed by the petitioners before this Court. 11. The learned counsel for the petitioners submit that the finding recorded by the tribunal is wholly misconceived. Even though, they were appointed on contract basis, the tribunal failed to see the protection of Article 311 of Constitution of India was still available, when they were sought to be terminated on the basis of the alleged charges. No proper opportunity was given to them and without conducting enquiry in accordance with rules, the termination Orders could not have been issued. The learned counsel would submit that the petitioners were appointed in accordance with rules or atleast they shall be deemed to have been appointed under Rule 9 of A.P. State and Subordinate Service Rules, 1996 and therefore, termination of their services cannot be effected without following the Rules. He submits that even under the Rules A.P. State & Subordinate Service Rules, 1996, the contract appointment is also an appointment of the Service Rules and therefore, it is a civil post. Their services were terminated on the ground that they committed misconducts including misappropriation of funds. In such an event, even if they were appointed on contract basis, yet, without conducting proper enquiry their services cannot be terminated under the cloak of simple termination under the contract of appointment. 12. Per contra the learned counsel for the respondents submit that the petitioners were appointed on contract basis and therefore, their services were validly terminated under the terms of the contract. The Tribunal correctly upheld the termination Orders. Hence, the Writ Petition is liable to be dismissed. 13. The issue that calls for consideration is whether the Order of the tribunal is sustainable in law? 14. Admittedly, all the petitioners except two petitioners referred to above were appointed on 24.11.1991. The appointment Order was issued in pursuance of the directions issued by the Government in G.O.Ms.No. 269, dated: 17.5.1991. The following are the conditions of appointment: “1. The candidates should execute an agreement binding himself/herself to abide by the terms of contract laid down therein. A proforma contract agreement from is available with the concerned Municipal Commissioner. 2. The candidates should furnish their original certificates with regard to qualification, age and experience etc. at the time of their reporting to the Municipal Commissioners who in return will cause verification of these certificates and will send their report to the undersigned a report on the verification of certificates. 3. The undersigned reserves the right to terminate the contract at any time if it is found that the implementation of the U.B.S.P. is slow and the work of the APOs is not satisfactory. 4. The contract is also liable for termination at any time without notice and without assigning any reasons therefore and the candidates will be discharged from service following termination of contract.” 15. Under the contract agreement, the following are some of the terms: “1. The contract is for a period of one year with effect from 24.11.1991 likely to be renewed for further periods subject to the satisfactory performance of the incumbent. 2. The contract is liable for termination at any time without any prior notice or assigning any reasons thereof. 3. A monthly remuneration of Rs. 1,700/- plus a Conveyance allowance of Rs. 100/- per month is paid for working as Assistant Project Officers. 4. The Job work to be performed by the Assistant Project Officer is given in the Annexure. The Asst. Project Officer is required to work within the beneficiary communities as per the convenience of these communities. 5. This contract does not accrue any rights privileges on the incumbent to cm for regular appointment in Government service or continuance in the post. 6. Persons coming under this contract shall work under the control and as per the direction of the Project Officer (U.B.S.P.) Municipal Commissioner, Nizamabad and shall abide by the rules and Regulations in vogue in department. They shall submit Monthly/Fortnightly diaries on their field work, and progress reports on the U.B.S.P. activities as prescribed under scheme.” It is a cyclostyled Order issued to all the petitioners except two petitioners referred to above. But, even in respect of the other two petitioners similar conditions were stipulated in their respective appointments. 16. The respondents tried to take the plea that the appointment is governed by the contract between the respondents and the employee and therefore, it is always open for the respondents to terminate the services. 17. Let us consider how far their engagement is covered by the provisions of the relevant service Rules. The Government issued G.O.Ms.No. 436, dated: 15.10.1996 framing the Rules called A.P. State and Subordinate Service Rules, 1996. The said Rules were framed in supersession of the earlier 1962 Rules. Under Rule 4 of the said Rules, the method of appointment is stipulated. One of such method permitted under the rule is by contract appointment. Rule 4 is extracted below: “4. Method of appointment :-(a) Appointment to any service, class or category shall be by one or more of the methods indicated below as may be specified in the Specials Rules applicable to the relevant post,-- (1) Direct recruitment; (2) Recruitment / Appointment by transfer; (3) Promotion; or (4) Contract / Agreement / Re-employment. b. xxx c. xxx” 18. Rules 9 covers appointment by agreement or contract, which reads thus: “9. Appointment by agreement or contract :--(a) (i) Notwithstanding anything contained in these rules or special rules it shall be open to the State Government to make appointment to any post in a service, class or category, otherwise than in accordance with these rules or special rules and to provide by agreement or contact with the person(s) so appointed, for any of the matters in respect of which, in the opinion of the State Government, special provisions are required to be made and to the extent to which such provisions are made in the agreement or contract, nothing in these rules or the special rules shall apply to any person so appointed in respect of any matter for which provisions is made in the agreement or contract: Provided that in every agreement or contract made in exercise of the powers conferred by these rules, it shall further be provided that in respect of any matter in which no provision has been made in the agreement or contract provisions of these rules or special rules relatable to the post shall apply. (ii) The agreement or contract may inter alia include provisions in respect of conditions of service, pay and allowances, discipline, contract period of appointment notice period for termination of appointment by either party and other relevant matters. (iii) The Government may, be order, prescribe the form of such agreement of contract. (b) A person appointed under sub-rule (a) shall not be regarded as a member of the service, in which the post to which he is appointed, is included and shall not be entitled by reason only of such appointment, to any preferential right to any other appointment in that or in any other service.” 19. In case of necessity to fill up the vacancies on emergency basis in public interest, rule 10 covers the situation. Therefore, under 1996 Rules also the appointment by contract is recognised as one of the modes of appointment and consequently the A.P. Civil Services (C.C.A.) Rules, 1991 are made applicable to the appointment made under the A.P. State and Subordinate Service Rules. Under the A.P. Civil Services (Classification, Control and Appeal) Rules, 1991 (for brevity “C.C.A. Rules”), the Government servant is defined as follows: “'Government Servant' means a person who (i) is a member of a Civil Service of the State or holds a civil post in connection with the affairs of the State, whether temporary or permanent appointed thereto before, on or after the date specified in rule 1 and includes such Government Servant whose services are temporarily placed at the disposal of the Government of India, the Government of another State or a company, corporation or organisation owned or controlled by Government, or a local or other authority, notwithstanding that his salary is drawn from sources other than the Consolidated Fund of the State. (ii) is a member of a Civil Service of or holds a civil post under the Government of India or the Government of another State and whose services are temporarily placed at the disposal of Government; (iii) is in the service a local or other authority and whose services are temporarily placed at the disposal of Government” Therefore, the petitioners, who were employed on contract basis can be said to hold a civil post in connection with the affairs of the State and they are entitled for protection under Article 311 of the Constitution of India. Further they were appointed in 1991 for a period of one year and they were continuing for the last several years without any renewal of contract, in such a situation, the issue that arises for consideration is whether they continued to be the contract employees or whether they are to be treated as temporary employees? 20. When once the period of one year has expired and when the tenure has not been extended, nor their services were terminated on the expiry of one year but, yet, they are continued in the said post, it has to be held that they are deemed to have been appointed on temporary basis in respective posts as held by the Supreme Court. 21. When a contract for a fixed term expires, it is open to Government to reemploy the Officer on a fresh basis, and if the re-employment is made on different terms, the Officer holds on the terms of such re-employment, even though the new terms were inferior. If, however, after the expiry of the contractual period, no fresh engagements is made and the Officer continues to hold on without any period being fixed, he holds on as a ‘temporary’ Government servant, and Article 311(2) of Constitution of India would be applicable to the termination of such temporary employment (See: Para 3 Page 1405 of Shorter Constitution of India – Dr. D.D. Basu 13th Edn. Reprint). In view of the above legal position, the petitioners are to be treated as temporary employees in which event they would swim into the protection of Article 311 of Constitution of India. 22. The subsequent question that calls for consideration is whether the impugned Order is termination simplicitor or penal in nature attaching stigma. 23. It is now well settled by the catena of decisions of the Supreme Court that even temporary employee if he is sought to be terminated for a misconduct, an enquiry has to be conducted duly giving opportunity to the employee and thereafter appropriate Orders have to be passed. 24. The issue has been considered by the Supreme Court time and again right from 1958. The petitioners are undoubtedly appointed on contract basis. Even assuming that the petitioners were appointed on contract basis, they were deemed to be temporary employees. It cannot be said that they have a right to the post. But, however, can they be terminated from service on the ground of misconduct by touching the stigma to their career without proper enquiry by passing Order of termination simplicitor. 25. In PARSHOTAM LAL Vs. UNION OF INDIA, it has been observed by the Supreme Court as follows: "In short, if the termination of service is founded on the right flowing from contract or the service rules then, prima facie the termination is not a punishment and carries with it no evil consequences and so Art. 311 is not attracted. But