Judgment

BEG. C. J.

( 1 ) THE Mysore State Road Transport Corporation is the appellant by special leave before us. The First respondent, a conductor in the Mysore Govt. Road Transport Department, had petitioned in the High Court under Article 226 against the appellant and the State of Mysore and asked it to quash an order of his dismissal, passed on 25-1-1961, in disciplinary proceedings taken against him at a time when he was a servant of the Mysore Govt. Road Transport Department. The Government Department was abolished on 1-8-1961. But, before this event happened, the Mysore Govt. had sent notices to its employees on 23-6-61 proposing to transfer all those persons who were actually in its service on the date of issue of these notices and had accepted offers of appointment as employees of the Corporation. The first respondent, having been already dismissed for misconduct on 25-1-1961 was not the recipient of one of these notices to exercise an option.

( 2 ) IN his writ petition, questioning the order of his dismissal the first respondent had also asked for a declaration that he had continued in service since the date of his suspension and commencement of disciplinary proceedings. The High Court of Mysore merely quashed the dismissal order of 25-1-1961 and the order of suspension dated 23-7-60. It did not grant the declaratory relief asked for. It observed: "it is further ordered that this is without prejudice to the holding of fresh enquiry if they consider the same necessary. " This order could not possibly amount to a declaration that the first respondent had continued in the service of either the Mysore Govt. or had become the servant of the appellant Corporation, a separate legal entity which came into existence by means of a Notification under Section 3 of the Road Transport Corporations Act, 1950 (hereinafter referred to as the Act ). As a separate legal entity, the Corporation could not be said to have stepped automatically into the shoes of the Mysore Road Transport Department. No provision of the Act or rules made thereunder has been shown to us which could have that effect.

( 3 ) THE first respondent, however, relied upon a notification under Section 34 of the Act which contains, inter alia, clause 3 which preserves:

" (3) All rights and liabilities which have accrued or are incurred or which may accrue or may be incurred undd under any contract made by the State Government or by any Officer of the Road Transport Department, excepting the Bangalore Transport Service Division prior to the First August 1961, which would have been the rights and liabilities of the Corporation. "

HE also cites another Notification which reads as follows:-

"1. The employees of the Mysore Government Road Transport Department who have opted to serve under the Corporation in pursuance of the Notices issued to them by the Government shall be employed by the Corporation subject to such regulations as may be made by it under Section 45 (2) (c) of the Road Transport Corporations Act. 1950 and also subject to the following conditions, namely:-

(A) The transfer of the service of the employees of the Mysore Government Road Transport Department to the Corporation shall not amount to interruption of service and shall not entail any loss of seniority previously held by such employees.

(B) The terms and conditions of service applicable to such transferred employees including those relating to Provident Fund, Gratuity and other benefits shall not in any way be less favourable than those applicable to them immediately before the transfer.

(C) Benefits regarding leave and other conditions of service available to such transferred employees immediately before the transfer shall be continued.

(D) In the event of retrenchment of such transferred employees, in determining the retrenchment compensation, if any length of service rendered by such transferred employees before the transfer shall also be considered.

(E) Changes in the conditions of service of the trans