IMPORTANT POINT
Clause (iv) of Rule 27 of the U.P. State Mineral Development Corporation Limited Employees Service Rules, 1978, does not suffer from the vice of arbitrariness and is not violative of the provisions of Articles 14 and 16 of the Constitution inasmuch as it does not prescribe a minimum length of service for the exercise of the power of compulsory retirement.

JUDGMENT

S.C. Agrawal, J.-This appeal, by special leave, raises the question regarding validity of Rule 27(iv) of the U.P. State Mineral Development Corporation Limited Employees Service Rules, 1978 (hereinafter referred to as the Rules ), as amended vide the Amendment Rules of 1988 with effect from May 15, 1988, which provides for compulsory retirement of an employee of the U.P. State Mineral Development Corporation (hereinafter referred to as the Corporation ).

2. The Corporation, a company registered under the Companies Act, 1956, is an undertaking of the Government of Uttar Pradesh. The respondent joined the Corporation on January 18, 1977. Initially he was appointed on the post of Marketing Officer. He was redesignated as Marketing Manager on April 16, 1977. He was confirmed on the post of Marketing Manager by order dated June 2, 1984 with effect from March 14, 1978. He started officiating as Chief Marketing Manager under order dated March 12, 1984. By order dated August 20, 1988, the respondent was compulsorily retired from service from the date of the issuance of the said order. It was directed that in lieu of three months notice he would be entitled to the payment of a sum equivalent to the amount of salary and allowances, if any, at the rate applicable to him just before the retirement. The said order was passed in exercise of the powers conferred by Rule 27(iv) of the Rules. The respondent filed a writ petition (W.P. No.66/88) in the Allahabad High Court, Lucknow Bench, challenging the said order of compulsory retirement. The said writ petition has been allowed by the High Court by the impugned judgment dated February 20, 1990. The High Court has held that Rule 27(iv) of the Rules is violative of the provisions of Articles 14 and 16 of the Constitution inasmuch as it does not prescribe any minimum period of service and confers arbitrary power on the authority who can pass an order for compulsory retirement of an employee after 1, 2, 5 or 10 years of service. Feeling aggrieved by the said judgment of the High Court the appellants have filed this appeal.

3. Apart from supporting the judgment of the High Court striking down Rule 27(iv) of the Rules, the learned counsel for the respondent has addressed us on the merits of the order of compulsory retirement and has submitted that even if the rule is held to be valid the said order cannot be sustained. We will first examine the question regarding the validity of Rule 27(iv) of the Rules.

4. Rule 27 of the Rules, which was substituted by the Amendment Rules of 1988, which came into force on May 15, 1988, provides as follows :

"Retirement : 27

(i) Except as otherwise provided in this rule an employee shall retire from the service on the afternoon of the last day of the month he attains the age of 58 years.

An employee whose date of birth is the first day of a month shall retire from service on the afternoon of the last day of the preceding month on attaining the age of 58 years.

Provided an employee of Class IV who entered into the service of the Corporation prior to this amendment shall retire at the age of 60 years.

(ii) Nothwithstanding anything contained in these rules an employee may seek Voluntary retirement by giving 3 months notice to the appointing authority at any time after attaining the age of 45 years or after he has completed the service of 20 years.

(iii) Provided that the appointing authority may waive the period of notice fully or partially but the retirement shall be effective only after an order has been passed by the appointing authority to this effect. In his discretion the appointing authority may reject the offer of voluntary retirement of the employee.

(iv) The appointing authority may at any time retire in the public interest or in the interest of the Corporation an employee at the age of 50 years by giving him 3 months notice or pay in lieu the