Case ID: 5322

Judgment:
vil Appeal Nos. 9 15 of 1986 etc. From the Judgment and Order dated 4.9.1985 of the Andhra Pradesh High Court in W.P. Nos. 8120	 8121	 7932	 8095	 8032	 8107 and 8 109 of 1984. B. Datta	 Additional Solicitor General	 P.P. Rao	 C.V. Subba Rao	 R.P. Srivastava	 B. Parthasarthi	 K.V. Sreekumar	 D. Vidyanandam	 M.K.D. Namboodary	 T.V.S.N. Chaff	 Ms. V. Grover	 Ms. Anita	 W.A. Qadri	 A. Subba Rao	 A.T.M. Sampath	 R. Venkataramani	 R.A	 Perumal	 S.M. Garg and section Markandeya for the appearing parties. The Judgment of the Court was delivered by CHINNAPPA REDDY	 J. The question raised in these appeals is whether an 'establishment in the public sector ' or an 'establishment in the private sector ' as defined in the may make appointments to posts to which the Act applies	 of persons not sponsored by the Employment Ex changes? A further question is whether the Act covers Gov ernment establishments also? A Division Bench of the High Court of Andhra Pradesh has held that the Act has no appli cation to Government establishments	 that the Act casts no obligation either on the public sector establishment or on the private sector establishment to make the appointments from among candidates sponsored by the 913 Employment Exchanges only and that any insistence that candidates sponsored by the Employment Exchanges alone should be appointed would be contrary to the right guaran teed by articles 14 and 16 of the Constitution. The learned Additional Solicitor General appearing for the Union of India argued that the object and the scheme of the Employ ment Exchanges (Compulsory Notification of Vacancies) Act and the instructions issued by the Government of India from time to time left no option to the employers but to confine their field of choice to candidates sponsored by the Employ ment Exchanges. It was argued that such insistence that appointments should be made from candidates sponsored by the Employment Exchanges only did not offend articles 14 and 16 of the Constitution. He also argued that the Act was applicable to Government Establishments also. We may refer to the provisions of the Employment Ex changes (Compulsory Notification of Vacancies) Act	 1959 without further ado. The title of the Act itself suggests that the compulsion is in regard to notifying of vacancies only and nothing more. The preamble to the Act	 like the title of the Act	 also does not 'suggest any compulsion in the making of appointments	 but only in the notifying of vacancies. The preamble says "An Act to provide for the compulsory notification of vacancies to employment ex changes." Section 2(e)	 (f) and (g) defines "establishment"	 "establishment in public sector" and "establishment in private sector" as follows: "(e) "establishment" means (a) any office	 or (b) any place where any industry	 trade	 business or occupation is carried on; (f) "establishment in public sector" means an establishment owned	 controlled or managed by (1) the government or a department of the Government; (2) A Government company as defined in section 617 of the ; (3) A corporation (including a cooperative society) established by or under a Central	 Provincial or State 914 Act	 which is owned	 controlled or managed by the Government; (4) A local authority; (g) "establishment in private sector" means an establishment which is not an estab lishment in public sector and where ordinarily twenty five or more persons are employed to work for remuneration;" The High Court thought that the definition of "establishment in public sector" as meaning an establishment owned	 con trolled or managed by the Government or a Department of the Government indicated that an establishment in public sector was something different from the Government or a Department of Government and did not include the Government or Depart ment of the Government. It had to be something which could be owned	 controlled or managed by the Government or a department of the Government. The High Court also thought that the expression 'public sector ' was used in contradic tion to 'private sector ' and that it could not include offices of the Government. The expression would only take in an agency or instrumentality of the State	 but not the State itself. We are unable to agree with the conclusion of the High Court on this part of the case. If the definition of 'establishment ' which includes an 'office ' is read alongside the definition of 'establishment in public sector '	 it will be clear that Government offices are also included in the expression 'establishment in public sector '. That is the interpretation which the Government itself is advancing before us and that is how the Government has always under stood the provision during these three decades as will be evident from the instructions issued by the Government from time to time to which we shall be referring later in the course of our judgment. We are unable to agree with the view of the High Court that the Act is not applicable to Govern ment establishments. Section 3 of the Act specifies posts	 vacancies to which the Act does not apply. Section 4 provides for the notifica tion of vacancies to employment exchanges. It is desirable to extract the whole of sec. 4 which is as follows: "4. (1) After the commencement of this Act in any State or area thereof	 the employer in every establishment in public sector in that State or area shall	 before filling up any vacancy in any employment in that establish ment	 915 notify that vacancy to such employment ex changes as may be prescribed. (2) The appropriate Government	 may	 by notification in the Official Gazette	 require that from such date as may be speci fied in the notification	 the employer in every establishment in private sector or every establishment pertaining to any class or category of establishments in private sector shall	 before filling up any vacancy in any employment in that establishment notify that vacancy to such employment exchanges as may be prescribed	 and the employer shall thereupon comply with such requisition. (3) The manner in which the vacancies referred to in subsection (1) or sub section (2) shall be notified to the employment exchanges and the particulars of employments in which such vacancies have occurred or are about to occur shall be such as may be prescribed. (4) Nothing in sub sections (1) and (2) shall be deemed to impose any obligation upon any employer to recruit any person through the employment exchanges to fill any vacancy merely because that vacancy has been notified under any of the sub sections. " Section 5 deals with the duty of the employers to furnish information and returns in prescribed forms. Section 6 provides for official access to records and documents. Section 7 provides for penalties. Section 8 deals with cognizance of offences. Section 9 provides for protection of action taken is good faith. Section 10 vests the rule making power in the Central Government. It is evident that there is no provision in the Act which obliges an employer to make appointments through the agency of the Employment Exchanges. Far from it	 sec. 4(4) of the Act	 on the other hand	 makes it explicitly clear that the employer is under no obligation to recruit any person through the Employment Exchanges to fill in a vacancy merely because that vacancy has been notified under sec. 4(1) or sec. In the face of sec. 4(4)	 we consider it utterly futile for the learned Additional Solicitor General to argue that the Act imposes any obligation on the employ ers apart from notifying the vacancies to the Employment Exchanges. The learned Additional Solicitor General invited our attention to the speech of the Minister of Labour and 916 Employment and Planning (Shri Nanda) made at the time of the introduction of the Employment Exchanges (Compulsory Notifi cation of Vacancies) Bill. Far from being of any assistance to the learned Addititional Solicitor General	 the speech appears to be against his submission. In his speech	 the Minister quoted from the report of the Training and Employ ment Services Organisation Committee and observed that the recommendation of the Committee offered a full explanation of the provisions of the Bill. The recommendation of the Committee which he quoted was	 "Though we have not	 for the present	 recommended compulsion on private employers to recruit through the employment exchanges	 we recommend that they be required on a compulsory basis to notify to the Exchanges all vacancies	 other than vacancies for unskilled categories	 vacancies of very temporary duration and vacan cies proposed to be filled through promotion. " The Minister further said	 "The main thing is that an obligation is being placed that after this legislation becomes operative	 from that date	 the employer in every establishment in the public sector shall	 before filling up any vacancy in any employ ment in that establishment	 notify that vacancy to such Employment Exchanges as may be prescribed. And so far as the private sector is concerned	 there is this further qualifi cation that the Government concern may specify by notifica tion that the employer in every establishment in private sector or every establishment pertaining to any class or category of establishments in private sectors shall	 before filling up any vacancy in any employment in that establish ment	 notify that vacancy to such Employment Exchanges as may be prescribed. This is the kernel of this provision. This is the main object	 that is	 an obligation placed on the employer to notify the vacancies that may occur in their establishment before filling these vacancies. " The Minister was conscious that there was a likelihood of the Bill being misunderstood as compelling the employers to make appoint ments through the Employment Exchanges only. He clarified the position saying	 "The misunderstanding is as if this Bill gives power to the Government to compel the employers to recruit only such persons as are submitted by the employ ment exchanges. That is not so. This compulsion extends only to notification of vacancies. Naturally the employer has to consider the names which are submitted by the employment exchanges but there is no compulsion that they must restrict to the choice only to the least that is submitted to them. Of course	 there is also the objection from the other side that it may not go far enough. We believe that even this will make things very much better. In any case	 when the Committee reported	 they also suggested this much advance. At present	 they said	 we should have only compulsory noti fication	 but	 not compel the emp 917 loyers to recruit only out of the least that is sent by the employment exchanges. " As we said the speech of the Minister	 at the time of the introduction of the Bill	 is totally destructive of the contention of the learned Additional Solicitor General that the employers arc under an obligation to recruit persons for appointment through the Employment Exchanges only. The learned Additional Solicitor General requested us to give a purposive interpretation to the provisions of the Act and insist that employers	 in making appointments	 should re strict their field of choice to candidates sponsored by the employment exchanges. We are unable to appreciate the argu ment since there is no provision of the Act which requires interpretation by us and which we may reasonably interpret as compelling the employer to appoint persons sponsored by the employment exchanges. On the other hand	 we have already referred to sec. 4(4) which is explicit that there is no such obligation on the part of the employer. We also notice that the object of the Act is not to restrict the field of choice in any particular manner	 but to enlarge the field of choice. That is why in his introductory speech	 the Minister said	 . . a large number of employers, particularly in similar industrial establishments and in construction works, do not employ any scientific method, but depend for their supply of labour on agents or recruit in a haphazard manner from amongst these assembled at factory gates or at works sites. The methods adopted are not always dictated by a consideration of efficient service, but as more a matter of bestowing patronage and favour. This applies in varying degrees to a large number of employers.  The Minister dis cussed the existing position and anticipated position in the following words: "The Act of notification of vacancies has important consequences. In the first place	 so far as the employer is concerned	 he will be placed in a position to have a much wider choice for the purpose of selection. Now	 what is the present position? Any person knocks at the gate of the factory or the mill or other establishment and from those few who are there they choose. Now it would be possible for them to have a wider area of selection. The names of so many others who may not be able to go and knock at every gate	 can be submitted and out of them	 the best can be selected. So far as the quoting of selection is concerned	 it should improve because of the wider range of choice. On the side of the worker certainly it means a more equitable distribu 918 tion of employment opportunities. It should not be necessary for a person to be all the day moving from place to place. It should be sufficient for him to register at a place	 give all the particulars about his qualifica tions and then he should be sure that at any rate	 his name will be considered along with other names and there will be some regard for fitness in the choice of people who enter these new places for employment. " It is	 therefore	 clear that the object of the Act is not to restrict	 but to enlarge the field of choice so that the employer may choose the best and the most efficient and to provide an opportunity to the worker to have his claim for appointment considered without the worker having to knock at every door for employment. We are	 therefore	 firmly of the view that the Act does not oblige any employer to employ those persons only who have been sponsored by the employment exchanges. The next question for consideration is whether the instructions issued by the Government from time to time have the effect of compelling the employers to restrict their field of choice to candidates sponsored by the employment exchanges. We may straightaway rarer to some of the instruc tions on which reliance was placed by the learned Additional Solicitor General. In O.M. No. 14/11/64 Estt. (D) dated March 21	 1964	 the Ministry of Home Affairs addressed all the Ministries regarding recruitment of staff through the agency of the National Employment Service and the utilisa tion of Employment Exchanges by quasi government institu tions and statutory organisations. It is enough if we ex tract paragraphs 1	 4 and 5 of this communication which are as follows: "1. The undersigned is directed to say that in paragraph 6 of this Ministry 's office Memoran dum No. 71/40 DGS (Apptts) dated the 11th December	 1949 (copy enclosed) it was laid down that all vacancies in Central Government Establishments	 other than those filled through the Union Public Service Commission should be notified to the nearest Employment Exchange and that no Department or office should fill any vacancy by direct recruitment unless the Employment Exchanges certified that they were unable to supply suitable	 candi dates. Subsequently in this Ministry 's Office Memorandum Nos. 71/49 DGS (Apptts) dated 30th January	 1951 and 71/222/56 CS(C) dated the 919 14th December	 1956 (copy enclosed). The Ministry of Finance etc. were requested to issue immediate instructions to all quasi Government institutions and statutory Organi sations with which they were concerned asking them to fall in line	 as far as possible	 with the Central Government establishments in the matter of recruitments	 by suitably amending their recruitment rules or adopting Resolu tions to achieve this object if necessary. The Ministries were also requested to impress upon these institutions that it was in their own interest as well as in the interest of the country as a whole that recruitment should be made through the Employment Exchanges	 as a large number of experienced and trained hands were available on their registers and the need for tapping other sources of recruitment should arise only if the Employment Exchange has certified that they were unable to nomi nate suitable recruits from their registers. . . . . . . . . . . . . . . . . . 4. Under the EE (CNV) Act	 recruitment of staff through the Employment Service is volun tary so far as the private sector is con cerned. Even so	 efforts are made by the Employment Service to persuade the private sector to accept candidates sponsored by the Employment Exchanges. The Directorate General of Employment and Training are placed in a very embarrassing situation when they have to approach the State Governments and establish ments in the private sector to utilise the Employment Service in filling up the vacan cies	 when some establishments in the public sector do not recognise the Employment Service as the normal channel of recruitment. It is accordingly requested that the Minis try of Finance etc.	 may issue instructions to all quasi Government institutions and Statuto ry Organisations with which they are concerned requiring them to notify vacancies in the manner and form prescribed in Rule 4 of the EE(CNV) Rules 1960 to the prescribed Employ ment Exchange and to fall in line with the Central Government Departments in the recruit ment of staff through the agency of the Em ployment 920 service. The need for issuing advertisements for inviting applications or tapping other sources of recruitment should be considered only if the Employment Exchanges issue non availability certificates. A copy of the instructions issued by the Ministry of Finance etc.	 may kindly be endorsed to the Ministry of Home Affairs and the Directorate General of Employment and Training. " It will be noticed that in order to give effect to such instructions in the case of quasi Government institutions and statutory organisations	 it would be necessary to suit ably amend the recruitment rules or adopt resolutions to achieve that object. This is so mentioned in para 1. In Office Memorandum No. 14/22/65 Estt. (H) dated June 12	 1968	 the Ministry of Home Affairs informed all the other Ministries: "The undersigned is directed to say that in paragraph 6 of this Ministry 's O.M. No. 71/49/DGS (Apptt) dated the 11th December	 1949	 it was laid down that all vacancies in Central Government Establishments	 other than those filled through the Union Public Service Commission	 should be notified to the nearest Employment Exchange and that no Department or Office should fill any vacancy by direct recruitment unless the Employment Exchange certified that they were unable to supply candidates." In office Memorandum No. 14024/2/77 Estt(D) dated April 12	 1977	 the Department of Personnel addressed all the Minis tries/Departments and said	 "As the Ministry of Agriculture and Irrigation	 etc. are aware	 in accordance with the instructions issued by the Central Govern ment (vide marginally noted communications)	 all vacancies arising under Central Government Offices/establishments (including quasi Gov ernment institutions and statutory organisa tions)	 irrespective of the nature and dura tion (other than those filled through the Union Public Service Commission)	 are not only to be notified to	 but also to be filled through	 the Employment Exchange alone and other permissible sources of recruitment can be tapped only if the Employment Exchange concerned issued a non availability ' certifi cate. There can be no departure from this recruitment procedure unless a different arrangement in this regard has been previously 921 agreed to in consultation with this Department and the Ministry of Labour (Directorate Gener al of Employment and Training). Similar in structions are also in force requiring vacan cies against posts carrying a basic salary of less than Rs.500 p.m. in Central Public Employment Exchanges. " It is clear that it is the desire of the Government of India that all Government Departments	 Government Organisa tion and statutory bodies should adhere to 'the rule that not merely vacancies should be notified to the Employment Exchanges	 but the vacancies should also be filled by candi dates sponsored by the Employment Exchanges. It was only when no suitable candidates were available	 then other sources of recruitment were to be considered. While the Government is at perfect liberty to issue instructions to its own departments and organisations provided the instruc tions do not contravene any constitutional provision or any statute	 these instructions cannot bind other bodies which are created by statute and which function under the authori ty of statute. In the observation of any statutory prescrip tion the statutory authority may however adopt and follow such instructions if it thinks fit. Otherwise	 the Govern ment may not compel statutory bodies to make appointments of person from among candidates sponsored by employment ex changes only. The question	 of course	 does not arise in the case of private employers which cannot be so compelled by any instructions issued by the Government. The further question is whether the instruction issued by the Government that in the case of Government Departments the field of choice should	 in the first instance	 be re stricted to candidates sponsored by the employment exchanges offend articles 14 and 16 of the Constitution. Shri P. Parmesh wara Rao	 learned counsel appearing for some of the respond ents strenuously urged that such a restriction would offend the equality clauses of the Constitution	 namely	 articles 14 and 16. He urged that when Parliament had gone into the question and decided that there should be no compulsion in the matter of appointment by way of restriction of the field of choice	 it was not open to the Government to impose such compulsion. He argued that it would be unreasonable to restrict the field of choice to these sponsored by the employment exchanges. In a country so vast as India	 in a country where there was so much poverty	 illiteracy and ignorance	 it was not fight that employment opportunities should necessarily be channelled through the employment exchanges when it is not shown that the network of employ ment exchanges is so wide	 that it reaches all the 922 corners of this vast country. He argued that it is futile to expect that persons living in distant places could get themselves registered with employment exchanges situated far away. The submission of Shri Parmeshwara Rao is indeed appealing and attractive. Nonetheless	 we are afraid we cannot uphold it. The object of recruitment to any service or post is to secure the most suitable person who answers the demands of the requirements of the job. In the case of public employment	 it is necessary to eliminate arbitrari ness and favouritism and introduce uniformity of standards and orderliness in the matter of employment. There has to be an element of procedural fairness in recruitment. If a public employer chooses to receive applications for employ ment where and when he pleases	 and chooses to make appoint ments as he likes	 a grave element of arbitrariness is certainly introduced. This must necessarily be avoided if articles 14 and 16 have to be given any meaning. We	 therefore	 consider that insistence of recruitment through employment exchanges advances rather than restricts the rights guaran teed by articles 14 and 16 of the Constitution. The submission that employment exchanges do not reach every where applies equally to whatever method of advertising vacancies is adopted. Advertisement in the daily Press	 for example	 is also equally ineffective as it does not reach everyone desiring employment. In the absence of a better method of recruitment	 we think that any restriction that employment in Government Departments should be through the medium of employment exchanges does not offend articles 14 and 16 of the Constitution. With this modification of the judgment of the High Court	 the appeals and the special leave petitions are disposed of. No orders are necessary in the writ petition. P.S. S Appeals dis posed of.

Summary:
Sub section (1) of section 4 of the requires every establishment in public sector to notify vacancy in any employment to the employment exchange. Sub section (2) lays down similar requirement in respect of every establish ment in private sector	 while sub section (4) lays down that nothing in sub sections (1) and (2) shall be deemed to impose any obligation upon any employer to recruit any person through the employment exchanges to fill any vacancy merely because that vacancy has been notified. An 'establishment ' is de fined in section 2(e) of the Act to mean any office or any place where any industry	 trade	 business or occupation is carried on	 an 'establishment in public sector 'in section 2(f) as an establishment owned	 controlled or managed by the Government or a Department of the Government	 and an 'establishment in private sector ' in section 2(g) as an establishment which is not an establishment in public sector. Instructions issued by the Government of India from time to time enjoined upon employers Central Government offices	 quasiGovernment institutions and statutory organi sations and establishments in the private sector to restrict their field of choice for vacancies to which the Act applied in the first instance	 to candidates sponsored by employment exchanges. A question arose as to whether an 'establishment in the public sector '	 or an 'establishment in the private sector '	 as defined in the Act	 could make appointments to posts to which the Act applies	 of 911 persons not sponsored by the employment exchanges	 and whether the Act covers Government establishments also. The High Court held that the Act had no application to Government establishments	 that it casts no obligation either on the public sector establishments or on the private sector establishments to make the appointment from among candidates sponsored by the employment exchange only	 and that any insistence that candidates sponsored by the employ ment exchanges alone should be appointed would be contrary to the right guaranteed by articles 14 and 16 of the Constitu tion. Disposing of the Appeal of the Union of India	 the Court	 HELD: 1. The High Court was wrong in holding that the Act was not applicable to Government establishments. If the definition of 'establishment ' in section 2(e). which includes an 'office '	 is read alongside the section 2(1 ')	 it will be clear that Government offices are also included in the expression 'establishment in public sector '. [914E] 2.1 There is no provision in the Act which obliges an employer to employ those persons only who have been spon sored by the employment exchanges. Section 4(4) of the Act makes it explicitly clear that the employer is under no obligation to recruit any person through the employment exchanges to fill in a vacancy merely because that vacancy has been notified under sections 4(1) and 4(2). The compulsion extends only to notification of vacancies that may occur in the establishment before filling them up. [915G H; 916G] 2.2 The object of the Act is not to restrict	 but to enlarge the field of choice so that the employer may choose the best and the most efficient and to provide an opportuni ty to the worker to have his claim for appointment consid ered without having to knock at every door for employment. [918B C] 3. The Government is at perfect liberty to issue in structions to its own departments and organisations to adhere to the rule that not merely vacancies should be notified to the employment exchanges but the vacancies should also be filled by candidates sponsored by the employ ment exchanges	 provided the instructions do not contravene any constitutional provision or any statute. But these instructions cannot bind other bodies which are created by statute and which function under the authority of statute. In the absence of any statutory presumption	 the statutory authority may adopt and follow such instructions if it thinks 912 fit. Otherwise	 the Government may not compel statutory bodies appointment of persons from among candidates spon sored by employment exchanges only. Private employers cannot be so compelled by any instructions issued by the Govern ment. [921C E] 4. Any restriction that employment in Government Depart ments should be through the medium of employment exchanges does not offend articles 14 and 16 of the Constitution. In public employment	 it is necessary to eliminate arbitrari ness and favouritism and introduce uniformity of standards and orderliness. There has to be an element of procedural fairness in the recruitment. A public employer cannot choose to receive applications for employment where and when he pleases and to make appointments as he likes. The insistence on recruitment through employment exchanges therefore	 advances rather than restricts the rights guaranteed by articles 14 and 16. [922E; B D]