Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(SC) 724

2009(3) Supreme 408
SUPREME COURT OF INDIA
S.B. Sinha and Asok Kumar Ganguly, JJ.
M.P. State Co-op. Dairy Fedn. Ltd. & Anr. — Appellants
versus
Rajnesh Kumar Jamindar & Ors. — Respondents
Civil Appeal No. 2442 of 2009
(Arising out of SLP (C) No.25505 of 2007)
WITH
Civil Appeal Nos. 2443,2446, 2447, 2449, 2452, 2454, 2456, 2458, 2460, 2462, 2464, 2467, 2469, 2471, 2472, 2473, 2474, 2475, 2477, 2478, 2480, 2481, 2482, 2483, 2484, 2485, 2486, 2487, 2489, 2494, 2495, 2496, 2497, 2498, 2499, 2500, 2502, 2503, 2504, 2505, 2506, 2507, 2508-2525, 2526, 2527, 2528, 2529, 2530-2531, 2532, 2533 of 2009
(Arising out of SLP (C) Nos.9, 11, 12, 20, 26, 52, 87, 184, 185, 202, 205, 249, 342, 345, 351, 353, 357, 386, 389, 396, 462, 585, 586, 624, 692, 770, 779, 784, 804, 806, 816, 817, 825, 1360, 1716, 1772, 2205, 2208, 2211, 2235, 5123, 2249, 2478, 5102-5119, 6418, 6477, 6995, 7502, 4879-4880 of 2008, 24873 of 2007 and 17705 of 2008)
Decided on : 15-04-2009

Advocates appeared:
For the Appellants :C.N. Sreekumar, M.T. George, K.N. Madhusoodanan, Dushyant Parashar, T.G. Narayanan Nair, Advocates.
For the Respondents:Vivek K. Tankha, Sr. Adv., Suryanarayan singh, Ms. Pragati Neekhra (for M/s. AP & J Chambers), Vikas Upadhyay (M/s. B.S. Banthia), Akshat Shrivastava, P.P. Singh, Inderjeet Yadav, Rahut Shrivastava, Kunal Verma, Arup Jain, Supria Jain, K. Krishan, B.K. Singh, Arun Kumar Beriwal, Jayant Kumar Mehta, Advocates.

IMPORTANT POINT
The laid down criteria which are imperative in character had to be followed and substantially complied.

Headnote:(a) Constitution of India,1950 – Article 12 – Tests for determining whether a body is ‘State’ culled out. (Paras 23)
        (2002)5 SCC 111; (1975) 1 SCC 421; (2005) 1 SCC 149; (2005) 4 SCC 649; (2006) 1 SCC 667; (2006) 11 SCC 634 – Relied upon.
        1993 MPLJ 786; (1981) 1 SCC 722; (1979)3 SCC 489; (1991) 4 SCC 578 : AIR 1992 SC 76; 2007 (2) M.P.L.J. 594; (1967) 3 SCR 377; (1984)2 SCC 141; (1975) 1 SCC 485 – Referred.
        (b) Service Law – Compulsory retirement – Provisions for compulsory retirement had been made principally for weeding out dead wood – An order of compulsory retirement being not penal in nature can be subject to judicial review in certain conditions only. (Para 32)
        (1992) 2 SCC 299; (2001) 3 SCC 314; (2005) 9 SCC 748 – Relied upon.
        (c) Service Law – Compulsory retirement – The laid down criteria which are imperative in character had to be followed and substantially complied. (Para 35)
        359 US 535; (2008) 7 SCC 639 – Relied upon.
        (d) Judicial Review – The jurisdiction is not only limited to the cases where the administrative orders are perverse or arbitrary – Superior Courts can also interfere where a statutory authority has failed to perform its statutory duty in accordance with law – An order which is passed for unauthorized purpose would attract the principles of malice in law. (Para 37)
        (1979) 1 SCC 477 : AIR 1979 SC 429; (1979) 2 SCC 491 : AIR 1979 SC 49; (2007) 9 SCC 497 – Relied upon.
        (e) Service Law – Compulsory Retirement – An order of compulsory retirement would be stigmatic in the event the employer has lost confidence, or the employee had concealed his earlier record – However, the employee can be subjected to compulsory retirement if he has outlived his utility. (Para 38)
        (f) Constitution of India,1950 – Article 14 – An authority discharging a public function must act fairly – It cannot take into consideration an irrelevant or extraneous matter which is not germane for the purpose for which the power is sought to be exercised. (Para 39)
        (g) M.P. State Cooperative Dairy Federation Ltd. Employees Recruitment, Classification and Conditions of Service Regulations, 1985 – Regulation 13 – ‘Interest of the Federation’ would not mean that services of a large number of employees should be dispensed with only for the purpose of cutting administrative expenses. (Para 41)
        (2008)4 SCC 458 – Distinguished impliedly.
       Facts of the case :
        1. Whether Madhya Pradesh State Co-operative Dairy Federation Limited is a ‘State’ within the meaning of Article 12 of the Constitution of India is the question involved in these appeals.
        2. Out of 52 concerned employees, 16 Writ Petitions were allowed by a learned Single Judge. Writ appeals filed there against by the Federation were dismissed but only 50% back wages had been granted to the employees.
        3. Respondents have not questioned the correctness of the said judgment.
        4. Remaining 36 writ petitions were dismissed by a learned Single Judge. However, writ appeals filed there against have been allowed directing reinstatement of the concerned respondents with only 20% back wages.
       Finding of the Court :
        Madhya Pradesh State Co-operative Dairy Federation Limited is a ‘State’ within the meaning of Article 12 of the Constitution of India.
        Federation must be held to have abused its power.
       Result : Appeal dismissed.

JUDGMENT

S.B. Sinha, J.—

1. Leave granted.

2. Whether Madhya Pradesh State Co-operative Dairy Federation Limited (for short “the Federation”) is a ‘State’ within the meaning of Article 12 of the Constitution of India is the question involved in these appeals.

3. Before us, there are 52 matters. Out of 52 concerned employees, 16 Writ Petitions were allowed by a learned Single Judge. Writ appeals filed there against by the Federation were dismissed but only 50% back wages had been granted to the employees. Respondents have not questioned the correctness of the said judgment. Remaining 36 writ petitions were dismissed by a learned Single Judge. However, writ appeals filed there against have been allowed directing reinstatement of the concerned respondents with only 20% back wages.

4. Federation is a society registered and incorporated under the provisions of the Madhya Pradesh Cooperative Societies Act, 1960 (for short “the Act”). It is an apex society classified as a Central Society. It is registered under Section 9 of the Act. The Government of Madhya Pradesh through its Veterinary Department had been carrying out in certain areas of the State activities of supply of milk through its offices established for the said purpose. A company known as Madhya Pradesh State Dairy Development Corporation Limited was incorporated on or about 22.03.1975 for carrying out the business of sale of milk and its products. It was registered under the Indian Companies Act, 1956. Its object was development and procurement of milk and for bringing out a ‘white revolution’.

5. Federation was constituted to promote sale of milk and its products inter alia with a view to providing employment to agriculturists, milk suppliers so as to enable it to implement a World Bank scheme effectively. The said company underwent voluntary winding up. Its assets both movable and immovable were transferred to the Federation as part of shareholdings of the State Government.

6. Federation is a federal society within the meaning of Section 2(k) of the Act. It is also an apex society within the meaning of Section 2(a-1) of the Act. It has its own bye-laws. Bye-law No. 3 provides for betterment of the economic conditions of agriculturists and milk producers by monitoring the activities as also different programmes relating to production, collection, Processing, distribution and marketing of milk and milk products. From time to time, it helps and provides technical assistance to the primary societies, independent bodies which are engaged in the production of milk and its proper distribution in urban areas. It also issues guidelines. Its functions are enumerated in Bye-law Nos. 3.2.1 to 3.2.26.

7. In terms of Section 55 of the Act, the Registrar framed regulations known as the M.P. State Cooperative Dairy Federation Ltd. Employees Recruitment, Classification and Conditions of Service Regulations, 1985 (for short “the Regulations”). Indisputably, terms and conditions of employment of the employees of the Federation are governed by the said Regulations; Regulation 13 whereof provides for compulsory retirement of an employee on attaining the age of 55 years or on completion of 25 years of service. Regulation 13 was amended with effect from 24.12.2001 providing for compulsory retirement of an employee of the Federation on attaining the age of 50 years or completion of 20 years of service. It reads as under:

“13. Compulsory Retirement

1. The appointing officer has the powers that he can without giving any reason compulsory retire any employee on completion of twenty years of his service and on this ground any claim for special compensation would not be rejected, however, this power would be exercised in those circumstances when the appointing officer is of the view that it is in the interest of the Federation and it can be done by giving 3 months prior intimation otherwise not.

2. Any employee who has completed 20 years of service at any time would be able to retire from the Feder

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2009 Supreme(SC) 724

IMPORTANT POINT The laid down criteria which are imperative in character had to be followed and substantially complied.

Cases Referred (27)

IMPORTANT POINT
The laid down criteria which are imperative in character had to be followed and substantially complied.