The category-wise ratio of employees to be absorbed under Section 19 (3) of the Karnataka Contract Carriages (Acquisition) Act, 1976 was mandatory and not directory.

Headnote:
Karnataka Contract Carriages (Acquisition) Act, 1976 - Section 19 (3) - Category-wise ratio of employees to be absorbed was mandatory and not directory - Contemporanea expositio had no application to the construction of the first proviso to Section 19 (3) of the Act - Termination of employees in excess of the category-wise ratio was not barred by the doctrine of equitable estoppel or promissory estoppel - Regularisation of conductors who are not absorbable under the Act, does not render the decision of the KSRTC for not absorbing those in excess of the ratio of other categories discriminatory and violative of Articles 14 and 16 of the Constitution.
Fact of the Case:

The Karnataka State Road Transport Corporation (KSRTC) acquired 603 vehicles under the Karnataka Contract Carriages (Acquisition) Act, 1976 and the Karnataka Contract Carriages (Acquisition) Ordinance, 1976. The KSRTC absorbed 2615 persons in different categories as detailed in the judgment. The KSRTC issued termination notices to 246 Supervisory staff and 67 Ministerial and Secretarial staff as unabsorbable under the category-wise quota allowed to them under the Act. The terminated employees challenged the termination notices in writ petitions before the Karnataka High Court.
Finding of the Court:

The High Court held that the category-wise ratio of employees to be absorbed under Section 19 (3) of the Act was directory and not mandatory, and that the termination of employees in excess of the category-wise ratio was barred by the doctrine of equitable estoppel. The High Court also held that the regularisation of conductors who are not absorbable under the Act, rendered the decision of the KSRTC for not absorbing those in excess of the ratio of other categories discriminatory and violative of Articles 14 and 16 of the Constitution.
Issues: 1. Whether Section 19 (3) of the Act prescribing category-wise scale was mandatory or directory? 2. Whether the principle of contemporanea expositio governs the construction of Section 19 (3) of the Act or not? 3. Whether the termination of employees in excess of the category-wise ratio was barred by the doctrine of equitable estoppel as held by the Learned Judge or not or on the doctrine of promissory estoppel supported by the Respondents? 4. Whether the regularisation of conductors who are not absorbable under the Act, renders the decision of the KSRTC for not absorbing those in excess of the ratio of other categories discriminatory and violative of Articles 14 and 16 of the Constitution or not?
Ratio Decidendi: 1. The category-wise ratio of employees to be absorbed under Section 19 (3) of the Act was mandatory and not directory. The first proviso to Section 19 (3) of the Act on the true construction of which the question hinges re-grouped the category of employees into four categories only as against 6 categories specified in the proviso to Section 20 (3) of the Ordinance, and the ratio fixed for the Drivers and technical staff including Foreman in the Ordinance was continued in the Act. But, the ratio fixed for Supervision staff and Managers and Ministerial and Secretarial staff were considerably reduced. The provisions made in the Ordinance for conductors at Item No. 2 and 'higher supervision staff and Managers' at item No. 4 were totally deleted in the Act or they become totally unabsorbable under the Act. Under the Ordinance, the total of different categories absorbable per vehicle was 7. 75 which stood reduced to 4. 45 under the Act and there is no dispute that such total ratio was not violated, though there was infraction of category-wise ratio. 2. Contemporanea expositio had no application to the construction of the first proviso to Section 19 (3) of the Act. The Act enacted in 1976 is a recent enactment. The true construction of several provisions including Section 19 of the Act are being agitated before this Court and the Supreme Court. As pointed out by Craies on Statute Law (Sixth Edition) at pages 80 to 82 of Chapter 5 Construction where the meaning is plain- contemporaneo expositio ought, rarely, if ever to be applied to modern Acts. On this principle which is unexceptionable and sound, it is unsafe to invoke the principle to the construction of the first proviso to Section 19 (3) of the Act. Even otherwise, every one of the principles bearing on contemporanea expositio succinctly set out by craies under that heading do not justify us to invoke the principle to the construction of the first proviso to Section 19 (3) of the Act. 3. The termination of employees in excess of the category-wise ratio was not barred by the doctrine of equitable estoppel or promissory estoppel. The actions of the KSRTC being in conformity with law, the doctrine of equitable estoppel had no application at all. The claim of the respondents based on the doctorine of promissory estoppel is wholly misconceived and has no merit whatsoever. 4. The regularisation of conductors who are not absorbable under the Act, does not render the decision of the KSRTC for not absorbing those in excess of the ratio of other categories discriminatory and violative of Articles 14 and 16 of the Constitution. The conductors belong to a separate and distinct class and they cannot be compared to the respondents who belonged to a separate and distinct class of employees. In that view also the separate and distinct treatment meted out to conductors cannot be a ground for the respondents to contend that the very same treatment should be meted out to them also.
Final Decision: The appeals were allowed, the orders of the High Court were set aside, and the writ petitions were dismissed.

Puttaswamy, J.

( 1 ) AS the questions that arise for determination in these cases are common, we propose to dispose of them by a common Judgment.

( 2 ) THE Karnataka State Road Transport Corporation (KSRTC) constituted and functioning under the Road Transport Corporation Act of 1950 (Central Act No. 64 of 1950) by itself or in combination of some of its officers like the General Manager, Deputy General Manager (Administration) are the appellants in these appeals directed against the common order made on 30-6-1981 by Rama Jois, J. in Writ Petitions Nos. 16754 of 1980 and connected cases followed by other learned Judges in other Writ Petitions decided on 2-7-1981, 21-7-1981 and 10-8-1981 filed under Article 226 of the Constitution by the respondents herein except the State of karnataka who were the petitioners. Any reference made hereafter to the KSRTC must, therefore, be treated as referring to the appellants who were the respondents in the Writ Petitions filed before this Court. The State of Karnataka which is only a formal respondent in these appeals and the Writ Petitions will not be referred to hereafter.

( 3 ) ON 30-1-1976 the Governor of Karnataka in exercise of the powers conferred by Clause (1) of article 213 of the Constitution, promulgated the Karnataka Contract Carriages (Acquisition) ordinance of 1976 (Karnataka Ordinance No. 7 of 1976) ('ordinance') inter alia providing for acquisition of contract carriage permits and contract carnage vehicles held and owned by the contract carriage operators of the State and their transfer to the KSRTC. The Ordinance came into force from 30-1-1976 and under the several notifications issued thereto by Government there was acquisition of permits and vehicles and their transfer to the KSRTC.

( 4 ) THE Ordinance was replaced by the Karnataka Contract Carriages (Acquisition) Act of 1976 (Karnataka Act 21 of 1976) ('the Act') which was given retrospective effect from 30-1-1976 (vide Section 1 (3) of the Act ). While Sub-section (1) of Section 31 of the Act repealed the ordinance, Subsection (2) of the same provided for savings of anything done or any action taken under the Ordinance. On 20-9-1976 this Court struck down the Act, But, the Supreme Court on appeal since reported as The State of Karnataka and Anr.-v.- Ranganatha Reddy and Anr. , AIR1978 SC 215 , (1977 )4 SCC471 , [1978 ]1 SCR641 reversing the decision of this Court upheld the validity of the Act.

( 5 ) IN terms of Section 20 (3) of the Ordinance the services of the respondents and several others working in different capacities and 730 conductors working with ex-contract carriage operators bad been absorbed by the KSRTC from 30-1-1976 and thereafter.

( 6 ) BEFORE the KSRTC as many as 8416 persons or even more staked their claims for absorption, under the Act. On an indepth examination, the KSRTC rejected the claims of a large number of persons as spurious, the validity of which was challenged by many, one of whom was one Sri M. S. Shivananda of Chickmagalur before this Court in Writ Petition No. 10203 of 1977. On 26-7-1978 a Division Bench of this Court consisting of Malimath, J. (as His Lordship then was) and Kudoor, J. dismissed the said Writ Petition following which the other Writ Petitions were also dismissed, the correctness of which was challenged by them before the Supreme Court in civil Appeal No. 2411 of 1978 and connected cases. Apart from those appeals, several others also challenged the actions of the KSRTC before the Supreme Court under Article 42 of the constitution. On 18-9-1971 the Supreme Court dismissed the said appeals and Writ Petitions and upheld the decision of this Court which is since reported as M. S. Shivananda v. KSRTC, AIR1980 SC 77 , [1979 (39 )FLR452 ], (1980 )I LLJ77 SC , (1980 )1 scc149 , [1980 ]1 SCR684 , 1979 (11 )UJ893 (SC ).

( 7 ) ON 12-3-80 the KSRTC examined the question of absorption of displaced employees of ex-contract carrige operators under the Act on its Sub. No. 7 and by its

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