The court's decision emphasized the validity of the State Act and the importance of regulations requiring the Corporation to consult the Public Service Commission, highlighting the statutory authority of the Managing Director and the obligation to act in accordance with the Commission's advice.

1. The petitioners were at the time of filing the Original Petition employees of the Kerala Financial Corporation, the 2nd respondent (hereinafter called the Corporations.) The Corporation is one established under the State Financial Corporation Act, 1951 (Central Act 53 of 1951). They were in service at the time from twelve to eighteen months as Assistants and Typists. The appointments were made provisionally through the Employment Exchange. This according to the petitioners is the usual method of appointment and the temporary appointments so made used to be confirmed in due course. The Managing Director had made the appointments. It is alleged that ever since its inception the appointment of the staff of the Corporation was being mad by the Managing Director for classes B and C consisting of Assistants, Clerks, Stenographers, Typists and subordinate staff as per powers conferred on him by the Act and Regulations framed thereunder. It is asserted by the petitioners in this proceedings that all members of the staff who like the petitioners were originally appointed on a temporary basis up to and inclusive of 24th July 1970 have been made permanent and with respect to others whose appointments were between 24th April 1970 and 16th June 1972 Corporation has initiated steps for making them permanent. The dates of appointment of the petitioners are from 16th June 1972.

2. The petitioners approached this Court with this Original Petition on the allegation that in violation of the established practice, the Corporation is subjecting the petitioners to hostile discrimination and are taking steps to terminate their provisional appointment. These steps are being initiated on the basis that the Corporation is bound to implement the direction contained in a recently enacted legislation'the Kerala Public Service Commission (Additional Functions as respects certain Corporations and Companies) Act, 1970 (Act XIX or 970)' which came into force on 30th November 1970, which provides that the Kerala Financial Corporation may consult the Kerala Public Service Commission on all matters relating to recruitment of its employees. The said Act was preceded by an Ordinance of the same name, namely the Kerala Public Service Commission (Additional Functions as respects certain Corporations and Companies) Ordinance, 1970 (IV of 1970) which came into force on 25th April 1970.

3. It is pointed out in the petition that out of ten persons appointed on temporary basis like the petitioners after promulgation of the said Ordinance, six have already been made permanent and the remaining four are awaiting orders of permanency as referred to earlier. The Managing Director had recommended to the Government by letter No. S.I. (A) (P) 4631, dated 9th July 1973 to make permanent the petitioners also. The petitioner's complaint is that the first respondent, the State of Kerala is assuming an illegal jurisdiction over the Corporation and forcing the Corporation to terminate the services of the petitioners and to appoint candidates selected by the Public Service Commission and advised for appointment in pursuance of Kerala Act XIX of 1970 Petitioners bring to the notice of the Court that S.23 of the State Financial Corporations Act, (the Corporation being one constituted under S.3 of the said Act) enjoins that appointment of staff should be nude by the Corporation itself and that the conditions of appointment and service must be determined by regulations framed thereunder. Under such delegated legislation, staff regulations had been framed in 1967 which consequently have the force of law and are statutory in character. Clause.9 of the said regulations provides that all employees under the categories of classes B and C roust be appointed by the Managing Director.

4. Petitioners' contention is that the State Act cannot make any provisions compelling the KFC. to make appointments through the Public Service Commission and thus abdicate its statutory functions. As per