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E.S. Velayudhan Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectService;Constitution
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. No. 1452 of 1964
Judge
Reported inAIR1968AP50
ActsCentral Civil Services (Part B States Transferred Employees) Rules, 1953 - Rule 6; Liberalised Pension Rules, 1950 - Rules 1 and 2(2); Cochin Services Regulations - Regulations 200 and 201; Constitution of India - Articles 16, 148, 309, 311, 311(2) and 375(1); Civil Service Regulations and Central (Class IV) Services (Gratuity, Pension and Retirement) Rules, 1936; Evidence Act, 1872 - Sections 101, 102, 103, 104 and 114; Central Civil Services (Classification, Control and Appeal) Rules, 1957 - Rules 15(10) and 49; Central Civil Services Regulations - Articles 407 and 408; Government Servants Conduct Rules; Civil Pensions (Commutation) Rules; Superior Civil Services Rules; Partnership Act; Indian Contract Act; Transfer of Property Act; Registration Act; Hindu Law
AppellantE.S. Velayudhan
RespondentCommissioner of Income-tax and ors.
Appellant AdvocateA. Kuppuswamy, Adv.
Respondent AdvocateC. Kondaiah, Standing Counsel
DispositionPetition dismissed
Excerpt:
constitution - retirement - rule 6 of central civil services (part b state transferred employees) rules, 1953, rule 2 (2) of liberalised pension rule, 1950 and article 311 of constitution of india - petitioner compulsorily retired - contended retirement as violative of article 311 - proper reasons recorded - retirement not punitive and in interest of general public - different from removal or dismissal as all benefits provided to petitioner - held, retirement not violative of article 311. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it......obul reddy, j.1. this writ petition filed under article 226 of the constitution for the issue of a writ in the nature of certiorari or any other appropriate writ quashing the notice dated 12-5-1964 and the order dated 31-8-1964 issued by the commissioner of income-tax, andhra pradesh (the first respondent) directing the petitioner to retire from 1-9-1964 was referred for disposal to a bench by our learned brother justice gopal rao ekbote before whom it came up in the first instance.2. the petitioner was originally recruited as a clerk in the income-tax officer's office, cochin on 29-9-33 & was a permanent member of the public services of the erstwhile cochin state till the date of formation of the united states of travancore-cochin on 1-7-1949 and since then a member of the public.....
Judgment:

Obul Reddy, J.

1. This writ petition filed under Article 226 of the Constitution for the issue of a Writ in the nature of Certiorari or any other appropriate Writ quashing the notice dated 12-5-1964 and the order dated 31-8-1964 issued by the Commissioner of Income-tax, Andhra Pradesh (the first respondent) directing the petitioner to retire from 1-9-1964 was referred for disposal to a Bench by our learned brother Justice Gopal Rao Ekbote before whom it came up in the first instance.

2. The petitioner was originally recruited as a clerk in the Income-tax Officer's office, Cochin on 29-9-33 & was a permanent member of the public services of the erstwhile Cochin State till the date of formation of the United States of Travancore-Cochin on 1-7-1949 and since then a member of the Public Services of the Travancore Cochin State till the date of the federal financial integration of Part B States on 1-4-1950 pursuant to the agreement between the Rajpramukh of Travancore-Cochin and the President of India on 2-5-1950. Consequent on the integration and the financial integration, the members of the Public Services were given the guarantee that the permanent members of the Public Services of the erstwhile Part B State will be continued in service on terms not less advantageous than those existing on 30-6-1949 and 31-3-1950. The petitioner on the date of the financial integration and on the subsequent date of the merger of the State was an officiating Income-tax Inspector, but his claims for integration and absorption as an Income-tax Officer of the Central Services were overlooked and he was compelled to file a declaratory suit on 29-2-1956 which was substantially decreed on 25-9-1960 by the Sub Court at Ernakulam declaring him to be deemed to have been appointed as an I. T. O. with effect from 6-4-1951 on the date when there was a permanent vacancy, in the central scale of pay and partly decreeing the arrears of salary The decree of the Sub-Court it is alleged made the Commissioner of Income-tax. Kerala (respondent 2) and the Secretary, Central Board of Direct Taxes, New Delhi (respondent 3) to defeat the fruits of the decree by filing an appeal in the Kerala High Court and also initiating disciplinary proceedings against the petitioner. The appeal preferred by the Government was allowed and the decree of the Subordinate Judge was set aside by the High Court on 6-12-1962. The Commissioner of Income-tax, Kerala in the disciplinary proceedings initiated against the petitioner on 31-1-1961 charged him with having harassed the asses-sees and behaving badly towards the Assistant Commissioner. The petitioner filed his objections on 30th August, 1961 which were rejected on 28-10-1961. The petitioner thenissued the suit notice to the Commissioner on 4-1-1962, and thereafter the petitioner was transferred on 19-1-1962 to Rajahmun-dry. He then proceeded on leave and took charge at Rajahmundry as Income-tax Officer on 16-10-1962 Subsequently on 31-1-1963, the petitioner made a request for transfer to Kerala State failing which he may be permitted to retire. This request for transfer to his native State and also for voluntary retirement was turned down on 28-3-1963. Two increments were refused to the petitioner by an order dated 9-12-1963 on the ground that he had not passed the Hindi and Marwadi tests required under the rules. Relating to the charges framed against him by the second respondent, the Commissioner of Income-tax, Kerala, he was asked to appear on 16-9-1963, but without appearing before the enquiry officer he sent his written objections on 14-11-1963. The enquiry officer who conducted the enquiry in his absence proposed compulsory retirement as punishment on proof of the charges. On the basis of the proposed punishment a second show cause notice was issued by the Commissioner of Income-tax, Andhra Pradesh (respondent 1) on 27-11-1963 to show cause why he should not be compul-sorily retired. The petitioner than approached the Kerala High Court by way of a Writ Petition O. P. 187/64 on 28th January, 1964 and his application for stay of passing of final orders by the Commissioner (first respondent) was dismissed on 7-3-1964 by the Kerala High Court On 13-3-1963, the first respondent the Commissioner of Income-tax, Andhra Pradesh passed final orders withholding two increments. The Kerala High Court on 14-7-1964 dismissed the writ petition filed by the petitioner as infructuous. On 10-4-1964. the first respondent it is said examined the petitioner and asked him whether he stood by his earlier request made in his letter dated 31-3-1963 for voluntary retirement and the pelitioner informed the Commissioner (first respondent) on 13-4-1964 that he was not willing to retire from service. Thereafter on 12-5-1964 a notice of retirement of the oetitioner with effect from 1-9-1964 was served on the ground that he had completed 30 years of service and an order was passed on 31-8-1964 re-tiring him from service.

3. It is the case of the petitioner that he has been retired against his will on the ground that he had completed 30 years of qualifying service applying the Liberalised Pension Rules, 1950 and that the relevant rule. Rule 2(2) or other liberalised pension rules have no legal effect and that they cannot override the fundamental rules and the Civil Service Regulations which derive theit authority under Article 309 of the Constitution It is also his case that permanent Govemment servant of the Public Services of Kerala who was later absorbed in the Central Services is governed by theCochin Service Regulations and in the Cochin Service Regulations there is no provision for compulsory retirement and the Liberalised Pension Rules therefore can have no application to a person who is governed by the Cochin Service Regulations. It is also contended by him that he has not completed 30 years of qualifying service and that the certificate given by the Accountant General that he had completed 30 years of qualifying service is incorrect and that the compulsory retirement now sought against him is only a ruse for punishing him and depriving him of his emoluments. The im-qugned action thus contravenes the provisions of Article 311 of the Constitution. It is also alleged that his retirement has not been ordered in the interests of the public and in good faith.

4. Hence this petition for quashing the notice of retirement and the order of retirement dated 31-8-1964.

5. The first respondent (Commissioner of Income-tax, Andhra Pradesh) filed a counter affidavit denying the material allegations as untrue and untenable and setting out what are correct or true facts accord-ing to him. The petitioner was absorbed in the Income-tax Department, Government of India with effect from 1-4-1950 consequent on the financial integration of the erstwhile Part B States of India. He then opted for the central scales of pay and other conditions of service as evidenced by the endorsement dated 9-5-1953 in the Service Book of the petitioner. He is therefore governed by the Central Civil Services Regulations (including the Liberalised Pension Rules, 1950 and the fundamental rules and supplementary rules). He was promoted as Income-tax Officer, Class II on 25-9-1958 and disciplinary proceedings were initiated against him in 1961 by the Commissioner of Income-tax (Respondent 2) on the ground that he was harassing the assessees and was guilty of gross indiscipline in defying superior officers' instructions. An enquiry officer was appointed under the Central Civil Services (Classification, Control and Appeal) Rules, 1957 and during the pendency of the enquiry, he was transferred in 1962 to Andhra Pradesh and posted as Second Additional Income-tax Officer, Raiahmundry.

Before the enquiry against him could be finalised, the petitioner sent an application to the Central Board of Revenue requesting either for retransfer to Kerala or for permission to retire on the ground that he had completed 30 years of qualifying service. The Central Board of Revenue replied stating that the question of permitting him to retire would be considered after the disciplinary proceedings were finalised, and the request for re-transfer to Kerala State was turned down. The report of the Enquiry Officer was received by respondent 1 in November, 1903 andthis report showed that the enquiry officer was 'prima facie' of the view that the petitioner is not fit to be retained in service and issued a show cause notice dated 27-11-1963 under Rule 15 (10) (i) of the Central Civil Services (Classification, Control and Appeal) Rules requiring the petitioner to send his reply within 15 days. The petitioner after obtaining several adjournments submitted his representation dated 25-1-64 which was received by the Commissioner on 31-1-64. He availed of the several extensions of time given to him and went to Kerala on casual leave and filed a Writ Petition in the Kerala High Court on 24-1-1964 against the Commissioner of Income-tax, Kerala challenging the validity of the enquiry officer's report. His application for stay of further proceedings pending disposal of the writ petition was dismissed by the High Court of Kerala on 13-3-64 and thereafter the first respondent on a consideration of the representations and on the facts placed before him opined that the charges have been proved against the petitioner, but he however dealt with him leniently by imposing a minor penalty of stopping his increment for one year without the effect of postponing his future Increments. Thereafter, he was asked whether he stood by his earlier request to retire but the petitioner informed the Commissioner as he had filed a Writ Petition in the Kerala High Court he was not willing to retire. In the meanwhile, a number of complaints were received against the petitioner from the assessees, advocates and chartered accountants of Raiahmundry alleging harassment, ill-treatment and insulting behaviour, in addition to over-assessments.

A preliminary enquiry was held by the Assistant Commissioner, Income-tax in the presence of the petitioner and he was given an opportunity to cross-examine the complainants. After the first respondent received the Assistant commissioner's report, he (Rule 1) examined the confidential record of the petitioner and found that damaging adverse remarks have been entered against him in his personal file for several years from 1950-1951 to 1963-1964. It was also noticed that the adverse confidential remarks entered by the superiors were also communicated to the petitioner and the explanation offered by the petitioner in this regard has been considered and rejected. Further his relations with the public, his behaviour towards his superiors attributing motives to them and writing petitions against them and the strained relationship with the assessee public and the auditors had greatly damaged the prestige of the department at Rajahmundry and it was felt that his further continuance in service would jeopardise the public relations as there was no sign of improvement in his conduct. Although fresh disciplinary proceedings could be started against him for his behaviour and conduct, the first respondent in the interests of the administration and in thepublic Interest thought fit to retire him com-pulsorily by giving a notice under Rule 2 (2) of the Liberalised Pension Rules as he had put in thirty years of qualifying services and recorded his reasons for the retirement. The petitioner made representations stating that he had not completed 30 years of qualifying service, but only completed 28 years, 10 months and 21 days, as he understood Articles 407 and 408 of the Central Civil Service Regulations and later filed this writ petition to quash the notice dated 12-5-1964 and the order of retirement dated 31-8-1964. Regarding the allegation made against the first respondent that he did not act in good faith and that he was biased it is stated by the Commissioner of Income-tax Andhra that there is absolutely no prejudice or mala fide intention against the petitioner and he did not know the petitioner till he was posted as Commissioner of Income-tax at Hyderabad. It is also the case of the Commissioner, Income-tax (respondent 1) that the allegation of the petitioner that his retirement under Rule 2 (2) of the Liberalised Pension Rules would amount to infliction of two punishments for the same offence without being heard is not violative of the principles of natural justice and Arts. 375 (1) (b) and 311 of the Constitution. Under Rule 2 (2), the Commissioner of Income-tax is justified and entitled to ask the petitioner to retire from 1-9-1964 as he had completed 30 years of qualifying service. The proceedings initiated for retirement of the petitioner are administrative in nature and are not liable to be quashed and the retirement of the petitioner under Rule 2 (2) of the Liberalised Pension Rules is not a punishment within the meaning of Article 311(2) of the Constitution and hence no fundamental rights or any legal right of the petitioner are affected or violated.

6. The petitioner filed reply affidavit denying the allegations of the first respondent and maintaining that the notice is not a bona fide one and he was being retired in a vindictive manner by way of punishment He also attributed mala fides by alleging that the second respondent and the first respondent were colleagues and had been friends from the time they were students in England and that formed the basis which prompted the first respondent to victimise the petitioner. The petitioner also denied in the reply the allegation of insubordination as also the alleged harassment of the assessee public and the impertinent behaviour to the Advocates and auditors.

7. The learned counsel Mr. Kuppuswamy appearing for the petitioner posed five points:

(1) the petitioner, a permanent Government servant of Kerala later taken into the Central Services is governed by the Cochin Service Regulations and there is no provision in the Cochin Service Regu-lations for compulsory retirement, and as such the Liberalised Pension Rules under which he was retired have no application to the person governed by the Cochin Civil Services Regulations.

(2) The Liberalised Pension Rules have no legal effect and they cannot override the fundamental rules and the Civil Service Regulations which derive their authority under Article 309 of the Constitution;

(3) Even if the Liberalised Pension Rules apply, the conditions quoted in Rule 2 (2) of the Liberalised Pension Rules are not fulfilled:

(4) The first respondent, the Commissioner of Income-tax, Andhra Pradesh, has no jurisdiction to pass the impugned notice and order; and lastly

(5) The notice of 12-5-1964 and the order dated 31-8-64 retiring the petitioner from service are vitiated by mala fides and bias.

8. Having regard to the first contention raised by Mr Kuppuswamy, it is necessary to go into the history of the service of the petitioner and the conditions of service of public servant in the erstwhile Cochin State and the condition of service of a Central Government servant and how far the Cochin Service Regulations govern him in spite of the fact that the United States of Travan-core-Cochin was formed on 1-7-49 and later there was the federal financial integration of Part B States on 1-4-50 pursuant to an agreement entered into between the Raj-pramukh of Travancore-Cochin State and the President of India on 25-2-50. It is the case of the petitioner that the covenant for the formation of the Travancore-Cochin State and the federai financial integration guaranteed the permanent members of the public services the continuance in service on terms not less advantageous than those obtained prior to the coming into effect of the United States of Travancore-Cochin and later the integration of the Part B States with the rest of the Indian Union. On 1-4-40 the petitioner was appointed as Inspector of Income-tax in the scale of pay then existing in Cochin. His absorption into the central service and giving him the central scale of pay admissible to an officer of his rank was made on 17-3-52. He filed a declaratory suit that he should be deemed to have been appointed as Inspector of Income-tax with effect from the date of financial integration i.e. 1-4-50 is not quite relevant for the purpose of this petition, as ultimately this decree was set aside by the High Court on an appeal preferred by the Government. This date 17-3-52 is relevant for the purpose that he was absorbed permanently in the central services and the benefits of the central pay scales admissible to an officer on his rank were made applicable to him. It may be relevant to notice the Cochin Services Regulations relating topay, leave and pension. Under Rule 200, superannuation pension is granted to an officer entitled or compelled by rule to retire at a particular age. Rule 201 read:

'An officer in superior service who has attained the age of fifty five years shall, subject to the provisions of Article 139-B will retire automatically, unless the Diwan considers that the public interests require his retention and permits him to remain in the service. In the case of all ofiicers whose appointments require the issue of a Theettoo-ram from His Highness under the Standing Orders of the Government, retention after the age of fifty five years can be allowed only with the sanction of His Highness.

Each such officer's case should be taken up before he is fifty five years old and before the expiry of each extension of service. In every case, the extension should be given for not more than one year at a time.'

It is on the basis of these rules that Mr. Kuppuswamy has argued that the petitioner belongs to the permanent public services of Cochin and there is nothing in the superannuation rules that provides for the retirement of a public servant in the service of the Cochin State which requires him to retire after a period of service of 25 or 30 years and that age of superannuation is 55 years and the petitioner has not reached the age of superannuation i.e. 55 years and therefore the retirement order is violative of the conditions of service guaranteed at the time of the integration and further, the conditions of service cannot be varied by the Government of India to the disadvantage of the petitioner, and that he is entitled to the be-nefit of the advantage under the Cochin Service Regulations which regulations alone according to the petitioner govern his date of superannuation. It may be necessary in this connection to notice the Notification published in Part II, Section 3 of the Gazette of India, Government of India, Ministry of Finance. New Delhi dated 29th April 1953. The rules made thereunder are called the Central Civil Services (Part B State Transferred Employees) Rules, 1953 and they have come into force so far as the transferred employees of Part B State of Travancore-Cochin are concerned on 1-4-50. It may be noticed that these rules are made by the President in exercise of the powers conferred by the proviso to Article 309 and Clause (5) of Article 148 of the Constitution in consultation with the Comptroller and Auditor General of India Rule 6 relates to election between State Rules and Central Rules and it reads:

'6(1) A transferred employee on absorption in a department under the Government shall elect on or before a date to be specified in this behalf by the Government to be governed by the State rules or Central rules. The election shall be-

(i) for the State rules or the Centralrules as a whole and not merely any part or parts thereof;

(ii) made in writing in such form as may be prescribed by Government.

Provided that in all administrative matters such as applicability of Government Servants Conduct Rules, Civil Services (Classification, Control and Appeal) Rules, hours of work, holidays and transfer, there shall be no option and in all such matters every transferred employee shall be treated from the date he was taken over by the Government in the same way as other Government servants holding corresponding posts under the Central Government.

(2) Subject to such special orders as the Government may issue in this behalf an election once made, shall, except to the extent specified in Rule 8, be final.

(3) .....

(4) A transferred employee who fails to exercise any option by the date specified by Government under Sub-rule (1) or who in the opinion of the Government has exercised his option ambiguously shall be treated as an optee for the Central Rules.'

(9) (Leave and Pension):

(2) A transferred employee who elects the Central rules shall be subject to the Revised Pension Rules published in the Ministry of Finance Office Memorandum No. 3(1)-Est (Spl)/47 dated the 17th April, 1950 as applicable to post-1938 entrants aa amended from time to tune and all the permanent or temporary service rendered by him under the State Government prior to absorption shall be treated as permanent or temporary service rendered under Government;

(3) A transferred employee who elects the Central rules shall be eligible to the benefits of commutation of pension under the Civil Pensions (Commutation) Rules read with the Revised Pension Rules promulgated in the Ministry of Finance Office Memorandum No. F. 3(1) Est (Spl)/47 dated the 17th April, 1950 as amended from time to time.'

We may also notice an Office Memorandum of the Ministry of Finance relating to the liberalisation of pension rules on the recommendations of the Central Pay Commission, dated 17th April, 1950.

'The undersigned is directed to say that the recommendations of the Central Pay Commission regarding retirement benefits for Government servants in pensionable service have been under the consideration of the Government of India. It has now been decided and the President is pleased to direct that the existing pension provisions contained in the Superior Civil Services Rules, the Civil Service (Regulations and the Central Class IV) Services (Gratuity, Pension and Retirement) Rules. 1936. in their application to persons appointed to services andposts in connection with the affairs of the Union, shall be modified to the extent indicated below. In so far as persons serving in the Indian Audit and Accounts Department are concerned, these modifications have been directed after consultation with the Comptroller and Auditor General.'

Section 1-Pension.

Rule 2(2): 'An officer may retire from service any time after completing 30 years qualifying service provided that he shall give in this behalf a notice in writing to the appropriate authority, at least three months before the date on which he wishes to retire Government may also require an officer to retire any time after he has completed 30 years' qualifying service provided that the appropriate authority shall give in this behalf a notice in writing to the officer, at least three months before the date on which he is required to retire.

Note:--A Government servant who has given tc the appropriate authority notice of retirement has no right subsequently to withdraw the same and return to duty. There would, however, be no objection to permission being given to such a Government servant, on consideration of the circumstances of his case, to withdraw the notice given by him, but ordinarily such permission should not be granted unless he is in a position to show that there has been a material change in the circumstances in consideration of which the notice was originally given.....

(3) An Officer who retires or is retiredonly in the manner indicated in sub-paragraph (2) may be granted a retiring pensionnot exceeding 30/80th of average emoluments (average pay in the case of an officerbelonging to a Central service Class IV) sub-iect to a maximum of Rs 6750 per annum

(4) ..... ..... ..... Note 6: The retirement under paragraph 2(2) of this appendix can be effected, when such retirement is necessary in the public Interest. The grounds of public interest may well be that the officer has ceased to be efficient or suffering from a physical infirmity; action taken under this paragraph does not amount to removal or dismissal within the meaning of Article 311(2) of the Constitution and the penal provisions of the Civil Service Regulations relating to forfeiture of pension on dismissal or removal will not therefore be attracted.'

'C. B. R. Bulletin. 1955. Admn. Part page 62.

With reference to the sub-paragraph (2) of paragraph (2) of this Ministry's office Memorandum No. F. 3(1) Est. (Spl) 47 dated 17-4-50, questions have been raised as to the authority competent to serve the notice of retirement thereunder, and the circum-stances under which such retirement can beeffected.

This matter has been carefully considered and it has been decided that the autho-rity competent to retire an officer under that sub-paragraph should be the authority which has power to make substantive appointments to the post or service from which the Government servant is proposed to be retired. It has further been decided that such retirement should ordinarily be effected only when it becomes necessary in the public interest to do so. Such reasons should be formally recorded at the time of the authority competent to retire an officer.' We may also extract the relevant fundamental rule relating to compulsory retirement.

F. R 56(a). 'Except as otherwise provided in the other clauses of this Rule, the date of compulsory retirement of a Government servant other than a ministerial servant, is the date on which he attains the age of 55 years. He may be retained in service after the date of compulsory retirement with the sanction of the local Government on public grounds, which must be recorded in writing, but he must not be retained after the age of 60 years, except in very special circumstances.'

9. The question is whether he is governed by the Cochin Service Regulations or the Central Civil Service Regulations including the Liberalised Pension Rules. Prior to his promotion as an Income-tax Officer, Class II on 25-9-58. he was working as an Income-tax Inspector That he was absorbed in the Income-tax Department, Government of India with effect from 1-4-50. the date of the financial integration of the Tra-vancore-Cochin State with the Indian Union is not in dispute His service book evidences that he had opted for the Central Scales of Pay and the other conditions of service as per the entry or the endorsement made on 9-5-53. The Cochin Service Regulations do not provide for voluntary retirement or compulsory retirement by the competent authority in public interests if an officer puts in 30 years of qualifying service How he Is governed by the Cochin Service Regulations and how the Central Service Regulations are less advantageous to the petitioner is what the petitioner will have to show if he should succeed. Apart from the fact that the endorsement in the service register dated 9-5-53 shows that he had opted for the central scales of pay and other conditions of service. Rule 6 of the Central Services Part B States Tranferred Employees Rules 1953 makes it clear that a transferred employee is given the option for election either to the State Rules or the Central Rules as a whole and not merely any part or parts thereof. If a transferred employee fails to exercise his option by the date specified by the Government or if in the opinion of the Government he had exercised the opinion in ambiguous terms, he shall be treated as an optee for the central rules Rule 6 applicable to the Part B States Transferred Employees does not permit in optee to pick and choose such benefits asare advantageous to him and say that he shall be governed to the extent the rules are beneficial or advantageous to him. The option is to the whole and not to any part of either the State Service Rules or the Central Service Rules. Having exercised the option, the petitioner cannot now contend that he is governed by the Cochin Service Regulations and there is no corresponding provision to Rule 2(2) for retirement of a Government servant after he has put in the qualifying service of 30 years.

10. To show that the conditions of service of a permanent Government servant of the Public Services of Part B State cannot be varied to his disadvantage, the learned counsel Sri Kuppuswami has relied upon the decision of the Supreme Court in Bholanath J. Thaker v. State of Saurashtra, : (1955)ILLJ355SC . In that case, the appellant was an employee of Wadhwan State till the administration of the State was made over to the Saurashtra Government on 16-3-48. The Ruler of Wadhwan State had fixed the superannuation age for the State Civil Services at 60. The appellant's services were transferred to the Saurashtra State and the Saurashtra State had guaranteed continuance in service the permanent members of the Public Services of the Wadhwan State and the other covenanting States on conditions which would not be less advantageous than those on which they were serving before the date on which the administration of the State was made over to the Rajpramukh of the State. By an order dated 29-6-48, the appellant was retired by the Saurashtra State on the ground that he has passed the age of superannuation, i.e., 55 vears of age. Upon this order he laid the action against the Saurashtra State claiming compensation by reason of his premature compulsory retirement which went against the superannuation age of 60 years for the Civil Services of Wadhwan State. The Saurashtra State contended that the guarantee contained in the covenant which was sought to be enforced could not be enforced in the municipal courts and the suit was therefore incompetent. The services of the appellant with the Wadhwan State was during the pleasure of the Ruler of the State and the Ruler of the State could have compulsorily retired him without being liable to pay compensation whatever and therefore his position was no better so far as the Saurashtra State also was concerned. On these facts their Lordships of the Supreme Court held:

'The Ruler of the Wadhwan State in the exercise of his legislative capacity passed the Dhara No. 29 of St. 2004 which gave the appellant certain statutory rights. Even though the Ruler may have had the power to repeal this enactment he did not do so and therefore so long as the Dhara remained in force the appellant was entitled to the benefit of it and could have enforced his rights under it in the State Courts eitheragainst the State Itself or at any rate against such of the officers of the State as wrongfully withheld his salary or wrongfully dismissed him.

When the Wadhwan State merged with the Saurashtra State and again when it acceded to the Dominion of India all the existing laws continued until repealed. It follows that the appellant's rights under the Dhara No. 29 of St. 2004 were still good and could have been enforced in the Municipal Courts until either repealed or repudiated as an act of State. These rights were carried over after the Constitution when the Indian Republic was formed with this important difference viz., that as the appellant then became an Indian citizen the repudiation 'as an act of State' was not any longer possible. The only way therefore to defeat his rights was by legislation if that could be done under the Constitution.

There was in fact no such legislation and therefore his rights remained and the Municipal Courts would be entitled to examine the contract and apply the Dhara No. 29 of St. 2004 and enforce whatever rights the appellant had under that Dhara and his contract of service.'

11. This decision does not help Mr. Kuppuswamy as the rights conferred on the petitioner under the Cochin Civil Service Regulations were not carried over after the Constitution and after the financial integration of Part B States with the Indian Union by reason of the fact that the rules were framed by the President under Article 309 and Article 148 of the Constitution for the transferred civil servants of Part B State and the petitioner had elected to be governed by the Central Civil Services (Classification, Control and Appeal) Rules and even if he had failed to exercise any option, he would still be governed as if he was an optee for the central rules. So far as Wadhwan State employees were concerned, their rights were carried over after the formation of the Saurashtra State and these rights were not defeated by any legislation or any rules framed under Article 309 of the Constitution and hence their Lordships of the Supreme Court held that the appellant before them was entitled to a decree for compensation as he was compulsorily retired.

12. It may be relevant in this connection to notice what their Lordships of the Supreme Court stated in Rajvi Amar Singh v. State of Raiasthan, : [1958]1SCR1015 .

'It is well established that when one State is absorbed in another, whether by accession, consequent, merger or integration all contracts of service between the prior Government and its servants automatically terminate and thereafter those who elect to serve in the new State, and are taken on by it, serve on such terms and conditions as the new State may choose to impose. This is nothing more (though on a more exaltedscale) than an application of the principle that underlies the law of Master and Servant when there ie a change of masters.'

In that case, the appellant was a District and Sessions Judge in the former Bikaner State and consequent on the integration of the State of Bikaner with the State of Rajasthan, the appellant was appointed substantially as a Civil Judge, retaining his pay and emoluments as before. His earned increments were not affected except for the change in the designation. His conditions of service were not worse than what they were when he was in the service of the Bikaner State. The appellant's contention there was that under the guarantee given by the State of Rajasthan, he was entitled to be posted as District and Sessions Judge in the new set up and that his present post as a Civil Judge was a reduction in rank and that this reduction in rank was also made without affording him an opportunity to show cause and hence it was violative of Article 311 of the Constitution. On a construction of the covenant and other relevant material, their Lordships held that no question of reduction in rank arose and that therefore Article 311 was not attracted.

13. We may also notice the other decision cited from the Bar in Shamlal v. State of Uttar Pradesh, : (1954)IILLJ139SC . In this case, their Lordships of the Supreme Court observed at page 375:

'Finally, Rule 49 of the Civil Services (Classification, Control and Appeal) Rules clearly indicates that dismissal or removal is a punishment. This is imposed on an officer as a penalty. It involves loss of benefit already earned. The officer dismissed or removed does not get pension which he has earned. He may be granted a compassionate allowance but, that, under Article 353 of the Civil Service Regulations, is always less than the pension, actually earned and is even less than the pension which he would have got had he retired on medical certificate. But an officer who is compulsorily retired does not lose any part of the benefit that he has earned.

On compulsory retirement he will be entitled to the pension etc. that he has actually earned. There is no diminution of the accrued benefit. It is said that compulsory retirement like dismissal or removal deprives the officer of the chance of serving and getting his pay till he attains the age of superannuation and thereafter to get an enhanced pension and that is certainly a punishment. It is true that in that wide sense the officer may consider himself punished but there is a clear distinction between the loss of benefit already earned and the loss of prospet of earning something more.

In the first case it is a present and certain loss and is certainly a punishment but the loss of future prospect is too uncertain, for the officer may die or be otherwise incapacitated from serving a day longer and cannot therefore be regarded in the eye of the law as a punishment. The more important thing is to see whether by compulsory retirement the officer loses the benefit he has earned as he does by dismissal or removal. The answer is clearly in the negative. The second element for determining whether a termination of service amounts to dismissal or removal is therefore also absent in the case of termination of service brought about by compulsory retirement.

The foregoing discussion necessarily leads us to the conclusion that a compulsory retirement does not amount to dismissal or removal and therefore does not attract the provisions of Article 311 of the Constitution.'

14. In State of Bombay v. Saubhagchand, : [1958]1SCR571 , dealing with the rule compulsorily retiring a civil servant before the age of superannuation and if such a rule is ultra vires, their Lordships observed:

'It does not make any difference in the position that Rule 165-A provides, unlike Note I to Article 465-A in : (1954)IILLJ139SC that the power is not to be exercised except in cases of misconduct or inefficiency. When the Government decides to retire a servant before the age of superannuation, it does so for some good reason and that in general would be misconduct or inefficiency .....The fact to be noted is that while misconduct and inefficiency are factors that enter into account where the order is one of dismissal or removal or of retirement, there is this difference that while in the case of retirement they merely furnish the back-ground and the enquiry, if held and there is no duty to hold an enquiry -- is only for the satisfaction of the authorities who have to take action. In the case of dismissal or removal, they form the very basis on which the order is made and the enquiry thereon must be formal, and must satisfy the rules of natural iustice and the requirements of Article 311(2) .....

The provision in Rule 165-A does not, on its true construction, impose any fetter on the power previously conferred on the State in terms absolute to terminate the services of its servants without assigning any reason. It is really in the nature of departmental instructions to be followed when action is proposed to be taken under that rule, and makes it cleat that the enquiry into the charges is only for the satisfaction of the authorities, Consequently, Rule 165-A is not violative of Article 311(2) and is intra vires and the order compulsorily retiring the civil servant who had attained the age of 50 years, but before superannuation, without holding an inquiry is valid.'

15. Their Lordships of the Supreme Court in Balakotaiah v. Union of India : [1958]1SCR1052 observed that it is not everyternsination of the service of an employee that falls within the operation of Article 311. It is only when the order is by way of punishment that it is one of dismissal or removal under that Article, and that where the terms of employment provide for the services being terminated on a proper notice, no question of premature termination arises. It was also observed that the appellants have no doubt a fundamental right to form associations under Article 19(1)(c), but they have no fundamental right to be continued in employment by the State, and that when their services are terminated by the State they cannot complain of the infringement of any of their constitutional rights when no question of violation of Article 311 arises.

16. Therefore, there is no doubt from the foregoing discussion that the petitioner was no longer governed by the Cochin Service Regulations after he elected for the Central Civil Services Rules applicable to Part B States Transferred Employees, that compulsory retirement and the Liberalised Pension Rules are applicable to him, that he cannot pick and choose what is advantageous to him in the Central Civil Service Rules and the Liberalised Pension Rules made thereunder as the election is for the whole of the rules and not for any part thereof, that under Rule 2(2) of the Liberalised Pension Rules, an officer may be retired from service at any time after completing 30 years of qualifying service, provided he is given at least 3 months' notice in writing by the appropriate authority and in this case he was given three months' notice required under Rule 2(2) and that an order of retirement under Rule 2(2) differs from both an order of dismissal and order of removal in that it is not a form of punish-ment prescribed by the Rules and involves no penal consequences inasmuch as the person retired is entitled to the full benefits of pension and that he had no fundamental right to be continued in employment after he had put in the qualified service of 30 years.

17. It is next argued by Mr. Kuppu-swamy that the Liberalised Pension Rules have no statutory force or legal effect inasmuch as they are not made under Article 309 of the Constitution and therefore they cannol override the fundamental rules and the Civil Service Regulations which derive their authority under Article 309 of the Constitution. We may at once point out that this argument is devoid of any force. It is conceded by Mr. Kuppuswamy that the fundamental rules and the Civil Service Regulations governing the Central Government servants are made under Article 309 of the Constitution, but it is his case that the Liberalised Pension Rules, though called 'Rules' are in fact a 'memorandum' and there is nothing to show in the memorandum that they are issued by the President in exercise of the powers conferred upon him underArticle 309 of the Constitution. The 'subject' of this 'memorandum' is liberalisation of Pension Rules on the recommendation of the Central Pay Commission and it is manifest from the first paragraph that

'the President is pleased to direct that the existing pension provisions contained in the Civil Service Regulations and Central (Class IV) Services (Gratuity, Pension and Retirement) Rules, 1936 in their application to persons appointed to services and posts in connection with the affairs of the Union are modified to the extent indicated.'

Therefore there could be little doubt that these Liberalised Pension Rules art; modifications or amendments to the 'existing' provisions of the Central Civil Services Rules and the Civil Service Regulations which are admittedly made by the President under Article 309 of the Constitution. Although it may be desirable that there should be a formal recital in the memorandum that the President has been pleased to make the necessary modifications or amendments to the Civil Service Rules, the mere absence of it will not in any way affect the validity or the legal sanction of the Rules. In Saksena v. State of Madhya Pradesh, : AIR1964MP248 dealing with a similar case, the learned Judges observed:

'A rule, after all is that which prescribes or lays down a general standard or guide to conduct, and when such a general established standard or guide to conduct is made effective from a certain date and has behind in the sanction of a statutory provision, then the general principle of conduct so laid down is a statutory rule having the force of law from the date fixed for the commencement of its operation.

It is no doubt very desirable that in making rules under statutory provisions the standard form and language should be adhered to. But the absence of a formal recital in a memorandum to the effect that 'the Governor has been pleased to make the directions in the exercise of the powers conferred on him by the proviso to Article 309' does not in any way detract from the character and effectiveness, as rules, of the directions contained in the memorandum, if they are in substance rules made under the proviso to Article 309 of the Constitution. It is the substance and not the form or the name that matters '

18. It is no doubt true that it is essential that the authorities making rules should also disclose under what rule making power or the authority conferred by the Statute that such a rule is being made. But the mere non-mention of the provisions of Article 309 will not make the rules ultra vires for the reason that the impugned Rule 2(2) of the Liberalised Pension Rules is only an amendment or a modification to the existing Civil Service Rules which were made by the President in exercise of the powers conferredupon him under Article 309 of the Constitution and therefore the impugned rule undoubtedly is an addition by way of modification of the rules made by the President under Article 309 of the Constitution. It is the substance of the memorandum of the rules that matters and is relevant and not the form in which it is worded. But in this case, as it is not disputed that the Civil Service Regulations and the Fundamental Rules derive their authority under Article 309 of the Constitution, the modifications by way of a Memorandum issued by the President to the aforesaid rules cannot alter the position and certainly Rule 2(2) of the Liberalised Pension Rules made by the President has statutory force under Article 309 of the Constitution.

19. The next three points urged by the learned counsel could be conveniently dealt with together. It is his case that even if Rule 2(2) of the Liberalised Pension Rules apply the conditions necessary for invoking the said Rule have not been fulfilled. According to the petitioner he has not completed 30 years of service and has completed only 28 years, 10 months and 21 days as per his calculations under Articles 407 and 409 of the Central Civil Services Regulations and therefore the primary requisite is not satisfied. This contention is devoid of any merit for the reason that the Accountant General has given his certificate after scrutiny of the service register that the petitioner has put in 30 years of qualifying service and it Is not shown how the calculation arrived at by the Accountant General is incorrect. It is significant to remember that the petitioner himself in his letter dated 2-10-63 asking for voluntary retirement or for retransfer to the Kerala State stated that he had completed 30 years of service.

20. So far as the notice of compulsory retirement is concerned, which was given on 12-5-64 giving Mm three months' notice that his retirement would take effect from 1-9-64 and the order retiring him was made by the first respondent on 31-8-64. The Commissioner of Income-tax, Andhra Pra-desh was not instituting any disciplinary proceedings against the petitioner, but he was taking action under Rule 2(2) and it is not in dispute that he is the competent authority to compulsorily retire an officer of the rank of the petitioner under the impugned rule, Rule 2(2).

21. It is next contended for the petitioner that the grounds of public interest have not been disclosed and the power given to the competent authority is not intended to be exercised arbitrarily or in a capricious manner and in this case it is a mala fide action taken by the first respondent to circumvent the provisions of Article 311 of the Constitution. Note 6 appended to the impugned rule which has already been extracted makes it clear that the grounds of publicinterest cover cases where an officer has ceased to be efficient or suffering from physical infirmity and that the action taken under the impugned rule does not amount to removal or dismissal within the meaning of Article 311 of the Constitution and that there is no question of forfeiture of pension or any of the disadvantages of removal or dismissal effected in accordance with the provisions of Article 311. A clarification was issued by the Ministry of Finance with reference to the impugned Rule 2(2) and this clarification makes it clear that the authority competent to retire should effect such retirement of an officer only when it becomes necessary in the public interest and that he should formally record the reasons for taking action under Rule 2(2) to compulsorily retire an officer While the competent authority as in this case the first respondent should formally record the reasons for retiring the petitioner, it is not incumbent or obligatory on his part to communicate the reasons which he recorded; but the reasons recorded should disclose that the order was made in the public interest. In this connection, it may be necessary to notice the case of Moti Ram v. N E. Frontier Railway, : (1964)IILLJ467SC , The question that arose in that case was that if the service of a permanent Civil Servant is terminated otherwise than by operation of the rule of superannuation or the rule of compulsory retirement does such a termination amount to removal under Article 311(2) or not? It was answered by their Lordships that a person who substantively holds a permanent post has a right to continue in service subject of course to the rule of superannuation and rule as to compulsory retirement. If for any other reason that right is invaded and he is asked to leave his service, the termination of his service must inevitably mean the defeat of his right to continue in service and as such it is in the nature of a penalty and amounts to removal. In other words, the termination of the services of a permanent servant otherwise than on the ground of superannuation or compulsory retirement must per se amount to his removal and if by Rule 148(3) or Rule 149(3) such a termination is brought about, the Rule clearly contravenes Article 311(2) and must be held to be invalid. There, the test laid down by their Lordships for determining whether the termination of the services of a Government servant is by way of punishment, is to ascertain whether the servant but for such termination had the right to hold the post. Their Lordships of the Supreme Court in another case Gurdev Singh v. State of Punjab, AIR 1964 SC 15R5 observed that 'if a permanent public servant is asked to retire on the ground that he has reached the age of superannuation which has been reasonably fixed. Article 311(2) does not apply, because such retirement is neither dismissal nor removal of the public servant, that if a per-manent public servant is compulsorily retired under the rules which prescribe the normal age of superannuation and provide for a reasonably long period of qualified service after which alone compulsory retire-merit can be ordered, and that again may not amount to dismissal or removal under Article 311(2) mainly because that is the effect of a long series of decisions of this Court.

22. The reasonableness of the rule fixing 30 years of qualified service cannot be questioned for the reason that it has been raised from 25 years to 30 years of service & on no test this fixation of qualifying service can be said to be unreasonable, and in the case of the petitioner, the notice was served having regard to the fact that he had 30 years of qualifying service which clothed the competent authority with power to retire him if it were in the public interest. It cannot be said that but for the termination of his services, he had a right to hold the post as the qualifying service has been fixed at 30 years and therefore the compulsory retirement of the petitioner is not by way of punishment as he enjoys all the benefits of the pension rules. The only test in such cases is whether the powers conferred by Rule 2(2) is in the public interest. As pointed out in Ram Dial v. State of Punjab, : [1965]2SCR858 the expression 'Public interest' is of wide import and what would be a matter which is in the public interest would necessarily depend upon the time and place and circumstances with reference to which the consideration of the question arises but it is not a vague or an indefinite ground. Their Lordships in Dalip Singh v. State of Punjab, : 1953CriLJ1465 observed that

'while misconduct and inefficiency are factors that enter Into the account where the order is one of dismissal or removal or of retirement there is this difference that while in the case of retirement they merely furnish the background and the enquiry, if held and there is no duty to hold an enquiry is only for the satisfaction of the authorities who have to take action in the case of dismissal or removal, they form the very basis on which the order is made and the enquiry thereon must be formal and must satisfy the rules of natural justice and the requirements of Article 311(2). Where in a case the officer concerned has been allowed full pension there is no question of his having lost a benefit earned and the order of retirement is clearly not by way of punishment and does not amount to removal from service so as to attract the provisions of Article 311'.

His Lordship Chief Justice Gajendragadkar In Shivacharana Singh v. State of Mysore, : (1967)IILLJ246SC delivering the judgment of the Bench stated that the law in relation to the validity of the rules permitting compulsory premature retirement of Government servants had been well settled by the prior decisions of the Supreme Court andneed not be reopened and that whether or not the petitioner's retirement was in the public interest was a matter for the State Government to consider and as to the pleathat the order was arbitrary and illegal, it was impossible to hold on the material placed by the petitioner before the Court that the said order suffered from the vice of mala fides.

23. The first respondent belongs to the State of Guirat and he is not known to the petitioner prior to the petitioner serving under him as an Income-tax Officer. He himself had occasion to watch his work and his behaviour towards the respresentatives of the assessees like chartered accountants and advocates. He had also occasion to observe the conduct and behaviour of the petitioner towards his superiors. The petitioner was known from the beginning of his service as an I. T. O. to make heavy over assessments which were invariably set aside by the appellate authorities. He (Rule 1) had the entire personal file and the confidential record maintained under the Government Servants Conduct Rules from time to time from 1950 onwards. The first respondent who is the competent authority has recorded his reasons and the reasons have been placed for our perusal in addition to entire file relating to the petitioner from 1-4-50, the date when the Financial Integration took place. We have perused the confidential notes mads by the superiors of the petitioner regarding his conduct, work, and behaviour towards the assessees and his superiors. All the adverse remarks made against him were communicated to the petitioner and his explanation was called for and at no time his explanation was found satisfactory. His conduct and behaviour towards his superiors has been a very unhappy record which does not befit his status of an Income-tax Officer. Successive officers for 16 years were constrained to make adverse remarks which ws do not propose to narrate here. In fact when his explanation was called for his behaviour and disobedience of the instructions of the Assistant Commissioner of Income-tax it evoked a reply which no disciplined Government servant should ever venture to make viz., that the particular Assistant Commissioner was not even fit to be an U. D. C. under him 'and knowing as he do, little or nothing of either Income-tax Law or the laws of three taxes, or accountancy or the allied laws of Partnership Act, Contract Act, Transfer of Property Act, Registration Act, Hindu Law as modified and codified recently etc.' and he ended his explanation quoting the Bible 'My Lord! He knoweth not what he sayeth or doeth. Forgive him. Amenl'. The reasons are to be recorded by the competent authority to Ms satisfaction, Having perused the files relating to his service from 1-4-50 onwards, we have no doubt that the competent authority the first respondent has not acted in any capricious orarbitrary manner and that he was not motivated by any personal animosity or 111 will against the officer, that the reasons recorded by him are well founded and that they disclose that the action taken by him against the petitioner under the impugned rule is in the public interest.

24. We are therefore satisfied that the petitioner cannot claim any right to con-tinue in service after he has completed 30 years of qualifying service and that the first respondent in exercise of the powers vested in him has made the order retiring the petitioner from service in the public interest dispensing with the further service of the petitioner as an Income-tax Officer.

25. Ths Writ petition therefore failsand is dismissed with costs. Advocate's feeRs. 100.


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