Cen.Elect.Supply Utility Of Odisha vs Dhobei Sahoo & Ors

2. Assailing the judgment and order dated 28.3.2012 passed by the High Court of Orissa, Cuttack in WP(C) No. 23268 of 2011 whereby the Division Bench has quashed the appointment of the respondent No. 5 herein and further directed the present appellant to recover the amount paid to the 5th respondent towards honorarium, in a public interest litigation preferred by the 1st respondent, the present appeals, one by the Central Electricity Supply Utility of Odisha (CESU) and the other by the affected person have been preferred, by special leave. The factual matrix and the bedrock of challenge being similar we shall state the facts which are requisite to understand the controversy. However, the description of the parties shall be in accordance with their rank ascribed to them in the appeal preferred by CESU.

3. The appellant-CESU has been created under Section 22 of the Electricity Act, 2003 (for brevity, “the Act”) passed by the Orissa Electricity Regulatory Commission (for short “the Commission”). CESU is a deemed licensee under the Act for the distribution of electricity in the Central Zone of Odisha. It is necessary to state here that on 1.4.1996 Orissa Electricity Reforms Act, 1995 came into force providing for restructuring of the Electricity Sector in the State of Odisha. Thereafter, Orissa Electricity Reform (Transfer of Undertakings, Assets, Liabilities, Proceedings and Personnel) Scheme Rules, 1996 came into existence and on that base a newly constituted, wholly owned Company of the Government of Orissa, namely, Grid Corporation of Orissa Limited (GRIDCO) was vested with the Transmission, Distribution and Retail Supply functions of the erstwhile Orissa State Electricity Board. On 1.4.1999 by virtue of Orissa Electricity Reform (Transfer of Assets, Liabilities, Proceedings and Personnel of Grid Corporation of Orissa (GRIDCO) to Distributions Companies) Rules, 1998, the distributions and retail Supply functions of GRIDCO were vested with in four newly constituted Distribution Companies out of which one was Central Electricity Supply Company of Orissa Limited (CESCO) which was given the responsibility of Distributions Undertakings of the Central Zone and to carry out them, granted a license for distribution of electricity by the Commission. Be it noted, 51% Shareholding and Management of CESCO vested in a private Company, namely, AES Orissa Distribution Pvt. Ltd. (AESODPL) and the balance 49% was held by GRIDCO. After coming into force of the Act on 10.06.2003 the said arrangement continued as there was nothing inconsistent with the new legislation. On 26.2.2005 as management of AESODPL abandoned the management of CESCO, the license granted in favour of CESCO was revoked by the Commission under Section 19 of the Act w.e.f. 1.04.2005. On 2.04.2005 an Administrator was appointed by the Commission for management and control of CESCO.

4. As the factual matrix would further unfurl on 8.9.2006 the Commission initiated the process for sale of utility of CESCO under Section 20 of the Act. However, as the Utility could not be sold, by order dated 8.9.2006 the Commission created a new Utility, namely, CESU and formulated Central Electricity Supply Utility of Orissa (Operation and Management) Scheme, 2006 (hereinafter referred to as “the Scheme”) for Operation and Management of CESU. On 5.5.2007, the Scheme was amended by the Commission. Clause 5 of the Scheme defined the powers and functions of the Chairman, CEO (CEO), Chief Finance Officer (CFO) and Chief Operating Officer (COO). On 31.10 2007, one S.K. Dasgupta was appointed as CEO of CESU with a financial package of Rs. 22 lakhs per annum. On 31.3.2010, respondent No. 5, who had earlier served as Chairman and Managing Director of GRIDCO as well as Member of the Commission from 2001 to 2006 and had forty-five years of experience in the electricity sector was nominated as member as well as Chairman of the Management Board and of CESU without any remuneration. The Chairman was only entitled to sitting fee of Rs. 2000/- per meeting.

9. The High Court referred to the maintainability of the writ petition and came to hold that as the post of the CEO, CESU, had not been filled in accordance with the Service Regulations of GRIDCO, the challenge to the effect that the Chairman being higher in rank than the CEO could not have been asked to discharge the function of CEO and granting honorarium of Rs.70,000/- in addition to his usual perquisites, a writ of quo warranto would lie. Thereafter, the High Court proceeded to scrutinize the order passed by the Commission asking the 5th respondent to discharge the functions of CEO as a temporary measure and opined that it has to be construed as an appointment and the person concerned was not suitable to hold the post as the service regulations do not provide for the same. The High Court referred to clause 4(iv) and clause 5 of the Scheme and the impugned order dated 12.11.2010 whereby the 5th respondent, Mr. Jena, was given Rs.70,000/- per month as a consolidated honorarium in addition to the usual perquisites being enjoyed by the CEO like telephone, vehicle, travelling allowances excluding the house rent and opined ascribing certain reasons that the said appointment was illegal and, accordingly, quashed the same. The High Court further directed for recovery of the amount from the 5th respondent. It is also apt to note here that the High Court directed that the Commission shall immediately take steps to fill up the post of CEO within a period of two months from the date of receipt of the copy of the judgment and the Chairman shall not be allowed to function till filling up of the post of CEO and some other responsible officer of CESU shall act as in-charge CEO.

10. At this stage, we think it apposite to summarise the principal reasons which have been ascribed by the High Court while setting aside the order whereby the 5th respondent was asked to function as CEO and given the consolidated honorarium:

28. Regard being had to the aforesaid enunciation of law relating to two spheres, namely, issue of a writ of quo warranto and the directions which are justified to be issued in a public interest litigation in the said context, we shall proceed to scrutinize the legal substantiality of the judgment of the High Court.

42. We may proceed to state that once we have dislodged the the decision of the High Court whereby it has opined that the Chairman could not have been allowed to remain in-charge of CEO as a logical corollary the direction for recovery gets annulled. But we think it appropriate to add something. Even in a writ of quo warranto while declaring that a person is not eligible to hold the post had rendered service, we are disposed to think, there cannot be recovery of amount. While exercising the power for issue of writ of quo warranto the Court only makes a public declaration that the person holding the public office is a usurper and not eligible to hold the post and after the declaration is made he ceases to hold the office. Till the declaration is made, the incumbent renders service and when he has rendered service he cannot be deprived of his salary. Denial of pay for the service rendered tantamounts to forced labour which is impermissible. When an appointment is admitted and the incumbent functions in the post and neither suspended nor removed from service, he is entitled to get salary, for it is his legal right and it is the duty of the employer to pay it as per the terms and conditions of the appointment. The matter may be different when someone continues after retirement by a false declaration or misrepresentation. Recovery of salary would amount to deprivation of payment while the incumbent was holding the post and had worked. Asking someone to work and when his appointment is nullified by issue of a writ of quo warranto by the Court, we think that neither the employer can recover the amount nor the Court can direct for recovery of the same. There has to be some other reason for denial of payment, recovery of salary or honorarium. In this context, we may fruitfully reproduce a passage from People’s Union for Democratic Rights and others v. Union of India and others[17]: -

45. Resultantly, the appeals are allowed and the judgment and order passed by the High Court is set aside. In the facts and circumstances of the case there shall be no order as to costs.

November 01, 2013.