U.C. Srivastava, J.
1. These two writ petitions under Article 226 of the Constitution of India are directed against the orders passed by the U.P. Public Services Tribunal, Writ Petition No. 2295 of 1978 has been filed by an employee who has been removed from service by the U.P. State Road Transport Corporation, hereinafter referred to as the Corporation, which was preferred prior to the removal order being passed against some earlier orders, and his claim has also been rejected by the U.P. Public Services Tribunal, Writ Petition No. 23 of 1978 has been preferred by the U.P. State Road Transport Corporation against the order by the U.P. Public Service Tribunal setting aside the order terminating the services of the Opposite Party to the said writ petition. As the question, whether the employees of the U.P. Government Roadways working in the U.P. State Road Transport Corporation after its coming into existence who have not yet been formally absorbed in the U.P. State Road Transport Corporation will continue to be Government servants or are to be deemed to be employees of the Corporation arises in these petitions they are being decided together.
2. The petitioner to Writ Petition No. 2296 of 1978 was initially appointed as a general grade clerk on 1-12-1951 in the U.P. Government Roadways and was later on confirmed with effect from 1-4-1956. The post held by him was re designated as Office Assistant Grade II with effect from 17th March, 1962. He was promoted to the post of Office Assistant Grade I in compliance with the orders passed by the State Government contained in Government orders Nos. 1--30-2-32-65 and 4677-30-2-527, dated 7th February, 1973 and 15th November, 1973. After coming into existence the U.P. State Road Transport Corporation, the petitioner was serving under it and certain disciplinary proceedings were taken against him, where after he was dismissed from service.
3. The dismissal order has been questioned by the petitioner on number of grounds including that he was still a Government servant, as such no disciplinary action could be taken against him by the 'Corporation'. It has also been questioned on the ground that he has been dismissed from service by an authority who was not his appointing authority but was below the rank of the appointing authority, who had no jurisdiction and authority to do so. The disciplinary proceedings have also been questioned on the ground that they were not in accordance with law and were conducted in violation of principles of natural justice.
4. The contention on behalf of the 'Corporation' is that the relationship of master and servant came into existence between the petitioner and the 'Corporation' and the petitioner was deemed to be employee of the 'Corporation' which had effective control over him and was paying wages to him. It was further contended that disciplinary action could be taken against the petitioner by the 'Corporation' and its officers who had power to do so as such the same was perfectly valid.
5. The case of the State which has also filed a counter-affidavit making reference to two notifications dated 1-6-1972 and 7-6-1972 purporting to have been issued in exercise of provisions under Section 34 of the Road Transport Corporation Act is that the petitioner was still an employee of the State Government. The notification, a reference to which will also be made hereinafter make it clear that all such employees will be on deputation under the 'Corporation'. The learned Chief Standing Counsel was asked to state as to whether the State still maintains the same stand and after obtaining instructions from the Government he stated that the petitioner was the employee of the U.P. Government and continued to be so. It is admitted position that no occasion arose for the petitioner to exercise option of absorption and at no point of time he was absorbed by the 'Corporation' which has still not framed Regulations for its employees.
6. The State Government, vide notification dated 31st May, 1972 established with effect from 1st June, 1972, U.P. State Road Transport Corporation for the State of U.P. The conduct and management of Transport Services run by the U.P. Government Roadways was taken over by the Corporation, but so far as Transport Commissioner's office is concerned, it still continues to remain in existence as the entire work was not transferred to the 'Corporation.'
7. The Government, vide its order No. 3000/ XXX-72, dated 1st June, 1972 which was subsequently modified by G.O. No. 3414/XXX-70, dated 7th June, 1972 (Annexures V and VI to the Writ Petition) directed that all the officers and staff of the U.P. Government Roadways, both temporary and permanent were deemed to be on deputation with the 'Corporation', No time limit was fixed in the said notifications. In the subsequent notification it was further directed that powers and functions which were exercised by the Transport Commissioner and other officers before 1st July, 1972 were to be exercised and performed by the General Manager and other officers subordinate to him in the Corporation, but this power was exercisable upto 31st March, 1975. Sri R.N. Trivedi learned Counsel for the U.P. State Road Transport Corporation before us that this period was extended from time to time and now it has been extended upto the year 1980.
8. The State Government issued these directions in exercise of its powers under Section 34 of the Road Transport Corporation Act, 1950. Section 34 of the said Act reads as follows:
Direction by the State Government (1) The State Government may after consultation with a Corporation established by such Government give to the Corporation general instructions to be followed by the Corporation and such instructions may include directions relating to recruitment, conditions of service and training of its employees, wages to be paid to employees, reserves to be maintained by it and disposal of its profits or stocks (2) In the exercise of its powers and performance of its duties under the Act, the Corporation shall not depart from any general instructions issued under Sub-section (1) except with previous permission of the State Government.
9. Section 34 of the Road Transport Corporation Act confers vide powers on the State Government to issue directions. These directions cannot only be issued in respect of employees whose services are lent to it. Great emphasis was laid on behalf of the petitioner over the words, its employees' used in Section 34, referred to above, but the language of the Section itself makes it clear that the same is illustrative and not exhaustive. The powers to issue general instructions carries under it power to issue directions in respect of Government servants working with the Corporation for the time being. The directions issued under Section 34 of the Road Transport Corporation Act have got the force of law as has been held by the Supreme Court of India in Mysore State Road Transport Corporation v. Gopinath Gundachar Ghar A.I.R. 1978 S.C. 464 and The General Manager, State Road Transport Corporation V. Devraj Urs and Anr. 1976-II L.L.J. 306 : A.I.R. 1976 S.C. 1027.
10. Learned Counsel for the petitioner in respect of his contention that the petitioner and others were State Government employees and not the employees of the ' Corporation ' made reference to certain Rules contained in Financial Hand Book, Volume II and certain reported decisions as well as the judgment of Hon'ble Mufti, J., in Writ Petition No. 4580 of 1976, Bhagwati Prasad Chaurasiya v. U.P. State Public Services Tribunal and Anr. Hon'ble Mufti, J., who in result agreed with H.N. Seth, J., held that the petitioner never become employee of the U.P. State Road Transport Corporation and continued to be an employee of the U.P. State.
11. In this connection a reference to Rules 9(7), 9(7)(b) 9(13) which deal with the definition of foreign service, Government service and lien, and also made reference to Fundamental Rules 11 and 110 which, read as under, was made.
Fundamental Rule 11.
Unless in any case it otherwise distinctly provided, the whole time of Government, and he may be employed in any manner required by proper authority, without claim for additional remuneration, whether the services required of him are such as would ordinarily be remunerated from the revenues of the State or from a local fund or from the funds of a body, incorporated or not, which is wholly or substantially owned or controlled by the Government.
Fundamental Rule 110
(a) No Government servant may be transferred to foreign service against his will:
Provided that the provisions of this sub-rules shall not apply to the transfer of a Government servant to the service of a body incorporated or not which is wholly or substantially owned or controlled by the Government.
(b) No Government servant shall be transferred to foreign service out of India without the sanction of the Government.
(c) Except to the extent the power of sanctioning transfer to foreign service in India may be delegated to authorities subordinate to the Government, the transfer of a Government servant to foreign service in India also requires the sanction of the Government.
12. A perusal of these rules make it clear that even if an employee of the State Government is remunerated from some local fund or from the funds of a body incorporated or not, which is wholly or substantially owned or controlled by the Government, he will not cease to be a Government servant unless provided otherwise. Fundamental Rule 110 makes it clear that the Government servant will continue to be on deputation so long his lien does not come to an end or deputation ceases and he will become employee of the employer to whom his services have been transferred only after his lien or deputation comes to an end. It is an admitted position that Regulation under Section 45 of the Road Transport Corporation Act have not been framed and the petitioner at no stage the petitioner's deputation with the Corporation continued and he did not cease to be Government servant. Even if the actual post which the petitioner was holding ceased to exist in the Transport Department of the State of U.P. yet his status as Government servant did not come to an end.
13. In support of his contention learned Counsel made reference to Mysore State Road Transport Corporation v. A. Krishna Rao and Anr. (1973) 1 S.L.R. 1080, in which case there was a dispute between the employees and the Bangalore Road Transport Company who became employees of the Road Transport Corporation without exercising option under Section 34 of the Road Transport Corporation Act, 1950. The Supreme Court held that employees of the former Bangalore Road Transport services cannot be regarded as employees of the Corporation in the absence of giving of opinion by them.
14. The Government service is a matter of status and not of contract and merely because services of an employee are transferred, it does not mean that a contract has come into existence with the employer to whom services have been transferred or with whom he has been sent on deputation. Merely because the Corporation exercise the power of control over the petitioner and pays him salary, it could not be taken to mean that the contract has come into existence between the petitioner and the Corporation and he ceased to be Government servant and became employee of the Corporation.
15. In Porwal Bidi Factory v. Onkar Lakman Mange A.I.R. 1970 S.C. 823, the Supreme Court pointed out distinction between a contract of service and a contract. It was pointed out in the said case that the general rule in respect of relationship of master and servant is to the effect that a subsisting contract of service with one master was a bar to service with any other master unless the contract otherwise provided or the master consented. A contract of employment involving personal service was incapable of transfer.
16. It is thus clear that a legal relationship can only be affected by an agreement between the employer and the third party and there being no such agreement also in this case, the legal relationship of master and servant between the Corporation and the petitioner did not come into existence at any point of time. The Rules framed under Article 309 of the Constitution of India continued to govern the service conditions of the petitioner.
17. The relationship of master and servant under the general law or under the Industrial Disputes Act has got no applicability to a case. Whereby operation of law, services of an employee have been transferred and such an employee becomes employee on deputation of the loanee so long he is not absorbed by it. The cases which have been cited on behalf of the 'Corporation' regarding assignment of employees of the real criteria for determining the relationship of master and servant have got no relevancy to such a case like the present one. So far as payment of wages is concerned undoubtedly the original employer cannot deny its liability to pay the wages but the loanee is also liable to pay the wages and emoluments if services of an employee are taken by it. In Bihar State Road Transport Corporation v. State of Bihar : (1970)IILLJ138SC , the Supreme Court held that successor Rajya Transport Authority is liable to pay wages and emoluments to the employees. Similarly if effective control is exercised by the loanee that by itself is not decisive factor to hold that a particular person is now its employee. Exercise of effective control by itself is not sufficient to determine the relationship of master and servant.
18. We are thus of the view that the petitioner at the relevant time continued to be an employee of the State Government and was only on deputation with the U.P. State Road Transport Corporation where he had not been absorbed so far.
19. The other contention of the learned Counsel for the petitioner was that the disciplinary proceedings as well as the dismissal order were neither taken for passed by the appointing authority, but by one who was subordinate in rank to the appointing authority. According to the petitioner his appointing authority was the Deputy Transport Commissioner who initially appointed him in the Department and no one other than Deputy Transport Commissioner or one who was exercising powers of the Deputy Transport Commissioner was equivalent in rank could have taken action against him.
20. On 1-12-1951 the petitioner was appointed as a general clerk in the Department. At that time in view of the Notification 59 12T-/XXX-43-T/51, dated 28-5-1951 which was issued in exercise of the powers conferred by the proviso to Article 309 of the Constitution of India, the appointing authority of Junior Grade Clerks and other clerical staff was the Deputy Transport Commissioner. A copy of the said notification has been annexed to the writ petition as Annexure 6. On the application of the petitioner for getting an appointment in the department, a copy of which has been annexed to the supplementary rejoinder affidavit as Annexure 4, he was appointed general clerk subject to the approval of the Central Selection Committee under the directions of the Deputy Transport Commissioner. Initially he was appointed for a period of three months but he was regularised for continuous appointment in the existing vacancy. The appointment letter was issued under the signatures of the General Manager who was an authority lower in rank of the Deputy Transport Commissioner who had no authority to make appointment to the post on which the petitioner was appointed. Subsequently the petitioner was confirmed and the confirmation order was issued by the General Manager on 17th June, 1967. He was promoted to the post of Office Assistant Grade I which was a post equivalent to the post of General Clerk with effect from 12-3-62 vide order dated 27-8-1976 passed by the Deputy General Manager (Personnel) U.P. State Road Transport Corporation in compliance with the G.O. dated 15-1-1973. This fact has been admitted in the counter-affidavit and admitted on behalf of the petitioner. Under the notification dated 20th May, 1972, the Deputy Transport Commissioner was designated as Deputy General Manager of the Corporation. Thus this promotion order was passed by one who was Deputy Transport Commissioner of the Transport Department of U.P. Government. The said notification No. 2015/38 8-136-N/7, dated 29th May, 1972 came in force with effect from 1-6-1972 and the State Government vide the said notification gave new designations to its officers on establishment of the Road Transport Corporation. The post of General Manager was re designated as Regional Manager and that of Assistant General Manager as Assistant Regional Manager. It will be relevant to point out that opposite parties 4 and 5 were only Assistant General Manager in the Transport Department and were never appointed as General Manager by the State Government, The post of General Manager was within the purview of Public Service Commission. In Transport Corporation their designation changed to that of Assistant Regional Manager. It is the Corporation which before framing of Regulations appointed them as Regional Manager, that is, to the re designated post of General Manager.
21. Under the Notification No. 5812-T/XXX 42-T/51, dated April 20/ May 10, 1954 issued under Article 309 of the Constitution of India, reference to which has been made earlier, the appointing authority of general clerks which post was converted into the post of Office Assistant Grade II was the General Manager. At the bottom of the said notification it was mentioned with the remarks that the power of inflicting the punishment of dismissal and removal on the existing staff that was appointed by the authorities higher than those who are now competent to appoint cannot be exercised by these authorities and such cases will continue to be dealt with by the original appointing authorities. This note makes it clear that so far as disciplinary authority in respect of existing staff appointed by higher authorities is concerned, it is he who would be the disciplinary authority and not one who under the notification was made the appointing authority.
22. The petitioner was initially appointed under instructions of the Deputy Transport Commissioner, the appointing authority to the post in the Department and his last promotion was also made by an officer on deputation with the U.P. State Road Transport Corporation equivalent to the rank of Deputy Transport Commissioner. Thus the petitioner's appointing authority for the post held by him at the time of removal order was the Deputy Transport Commissioner who continued to be such also in view of the notification of the year 1954, referred to above.
23. In this view the services of the petitioner have been terminated by one who was not competent to do and the order removing or dismissing the petitioner from service is violative of Article 311 of the Constitution of India. We are thus of the view that the petitioner was still a Government servant and his services have been terminated in violation of Article 311 of the Constitution of India by an officer who was neither his appointing authority nor superior or equivalent in rank to his appointing authority. The order removing the services of the petitioner is thus manifestly illegal and without jurisdiction.
24. No arguments were addressed before us on other pleas which were raised on behalf of the petitioner in the petition, namely, that the. principle of natural justice were violated and enquiry was not conducted against him in accordance with the rules applicable to him. Hence his other pleas are negatived.
25. In Writ Petition No. 23 of 1978 the U.P. Public Services Tribunal to the view that the services of the Opposite Party No. 2 to the writ petition who filed a writ in the Court of Munsif, Allahabad were wrongly terminated and he continued to be in services of the U.P. State Opposite Party No. 2 to the said Writ Petition was a Conductor and he was still a temporary employee when his services were terminated by the Assistant General Manager. The Tribunal took the view that the services of Opposite Party No. 2 were terminated by the Assistant General Manager who was the appointing authority vide order dated 16-10-1973 as a result of the incident which took place on 10-10-1973. We have already taken the view that all these persons were still employees of the U.P. State on deputation with the U.P. State Road Transport Corporation and the services of Opposite Party No. 2 thus could have been terminated in accordance with the rules framed under Article 309 of the Constitution by giving him one month's notice or salary in lieu thereof which was done in the present case. Merely because there was close proximity between the incident which took place on 10-10-1973 and the date on which his services were terminated, it cannot be said that they were by way of punishment. The Tribunal which had an occasion to look into the record has not dealt with this question as to how the services were terminated by way of punishment.
26. In State of U.P. v. Bhup Singh Verma (1979) II S.C.C. III, the Supreme Court held that 'if the alleged past misconduct which may have provided the motive for the order of termination but if it is not made, the foundation of the order is not attracted and the authority may choose to discharge the temporary servant on the basis of preliminary enquiry instead of punishing him.'
27. The Services Tribunal without entering into the question held that the services of the Tribunal is manifestly erroneous and the writ petition deserves to be allowed.
28. Writ Petition No. 2295 of 1978 is allowed in part and Annexure 14, order of punishment imposed upon the petitioner is quashed. Let a mandamus be issued to the opposite parties to treat the petitioner in service. It shall, however, be open to the competent authority to take further action, if any, in accordance with law.
29. Writ petition No. 23 of 1978 is also allowed and the order dated 22-7-1977 (Annexure 1) passed by the U.P. Public Services Tribunal is quashed and U.P. Public Services Tribunal is directed to restore the reference to its original number and hear and decide the same in accordance with law in the light of the observation made above. No order as to costs.