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IN THE HIGH COURT OF ALLAHABAD
V. M. Sahai, J.
BAGESHWARI PRASAD SRIVASTAVA AND OTHERS - Appellant
Versus
STATE OF UTTAR PRADESH - Respondents
C. M. W. P. 17195 Of 1998
Decided On : 04/29/1999
RETIREMENT - RETRENCHMENT - ABSORPTION - EMPLOYEES OF GOVERNMENT COMPANY - UTTAR PRADESH ABSORPTION OF RETRENCHED EMPLOYEES OF GOVERNMENT OR PUBLIC CORPORATIONS IN GOVERNMENT SERVICE RULES, 1991 - INTERPRETATION - EMPLOYEES OF BHADOHI WOOLLENS LTD. ENTITLED TO ABSORPTION IN GOVERNMENT SERVICE.
Fact of the Case:
Employees of Bhadohi Woollens Ltd., a Government company that was winded up, sought absorption in government service under the Uttar Pradesh Absorption of Retrenched Employees of Government or Public Corporations in Government Service Rules, 1991 (Rules 1991). The company was wholly owned and controlled by the State and was considered an instrumentality of the State under Article 12 of the Constitution. The employees were appointed prior to October 1, 1986, and were continuously working when the company became sick and was recommended for winding up by the Board of Industrial and Financial Reconstruction (BIFR). The winding-up process was completed, and the assets were handed over to the Official Liquidator. The employees filed writ petitions seeking absorption in government departments in accordance with Rules 1991.
Finding of the Court:
The court held that the employees of the Government company were entitled to the benefit of absorption in government departments or corporations upon the winding up of the company. The court interpreted the definition of "retrenched employee" under Rules 1991 and found that the employees satisfied the substantive requirements of being retrenched employees. The court also held that the requirement of producing a retrenchment certificate from the appointing authority was a matter of procedure and could not deprive an employee of their basic right to absorption. The court further held that the managing director's letter to the government requesting absorption of all the employees could be construed as a retrenchment certificate.
Issues: 1. Whether employees of a Government company are entitled to the benefit of absorption in Government departments or corporations upon winding up of the company? 2. Whether the petitioners could be held to be retrenched employees? 3. Whether an employee satisfying all the requirements could still be denied the benefit of absorption on the ground that he did not possess a retrenchment certificate issued by the appointing authority/managing director?
Ratio Decidendi: 1. The court interpreted the Uttar Pradesh Absorption of Retrenched Employees of Government or Public Corporations in Government Service Rules, 1991 (Rules 1991) and held that the employees of a Government company on winding up would be retrenched employees and entitled to absorption in Government service in accordance with orders issued from time to time. 2. The court held that the employees satisfied the substantive requirements of being retrenched employees as defined under Rules 1991, as they were appointed prior to October 1, 1986, their appointment was in accordance with the procedure for recruitment, and they worked continuously till the company was winded up. 3. The court held that the requirement of producing a retrenchment certificate from the appointing authority was a matter of procedure and could not deprive an employee of their basic right to absorption. The court further held that the managing director's letter to the government requesting absorption of all the employees could be construed as a retrenchment certificate.
Final Decision: The court allowed the petition, quashed the impugned orders, and directed the respondents to absorb the petitioners/employees of Bhadohi Woollens Limited in Government service in accordance with their qualification in Class 3 and 4 posts forthwith. The court also held that other employees could approach the respondents within three months for absorption in Government service, and the respondents shall pass appropriate orders in light of this judgment.
( 1 ) THE short question that arises for consideration in this writ petition is whether the employees of Bhadohi Woollens Ltd. , a Government company (in brief company) which has been winded up. can be absorbed under the Uttar Pradesh Absorption of Retrenched Employees of government or Public Corporations in Government Service Rules, 1991 (in brief Rules 1991 ).
( 2 ) THE company was a 100% State-owned company. Its shares, in entirety, were held by U. P. State Textile Corporation Ltd. , Kanpur and U. P. Export Corporation Ltd. , Kanpur. In S. S. Verma v. G. M. Elgin Mills. 1989 (2) VPLBEC 179, it was held that even a Government company which is wholly owned and controlled by the State is an instrumentality of the State within the meaning of Article 12 of the Constitution. Since the company was owned and controlled by the two Government corporations, whose affairs were fully owned and controlled by the State, it was a Government company as defined in Article 12 of the Constitution, therefore, amenable to writ Jurisdiction of the Court.
( 3 ) THE petitioners, rather all the employees of the company were appointed prior to 1. 10. 1986. They were working with the company continuously when it became sick. On 27. 11. 1995, the board of Industrial and Financial Reconstruction (B. I. F. R.) on a reference made to it recommended to this Court for its winding up under Sick Industry [special Provisions) Act, 1985. The recommendation was accepted on 20. 2. 1996 and the company was winded up. The assets of the company were handed over to the Official Liquidator on 6. 4. 1996. On 18. 5. 1996, the Managing Director of the U. P. Textiles Corporation, who it is not denied was also the managing Director of the company, wrote a letter dated 18. 5. 1996 to the Principal Secretary, industrial Development Department of the Government that there were 323 employees of the company who, in consequence of winding up, were entitled to be absorbed in accordance with government orders. When nothing was done with regard to absorption, the employees filed two petitions being Writ Petition No. 13439 of 1997 and 24240 of 1997 seeking absorption in some other government department in accordance with Rules 1991. Since no counter-affidavit was filed in any of the petition, both the writ petitions were disposed of by judgment dated 15. 1. 1998 directing the respondents to consider the claim of absorption of the petitioners by a speaking order.
( 4 ) BY orders dated 28. 4. 1998 (Annexure-18 to the writ petition), the claim of absorption was rejected. It was held that a retrenched employee could not be absorbed on posts falling within the purview of Public Service Commission. So far absorption in Class III and IV posts was concerned, it was held that a retrenched employee could be given preference in direct recruitment provided he had been issued retrenchment certificates. But since no such certificate was issued in employees favour by the appointing authority of the company, they were not entitled to be absorbed in accordance with the absorption rules. It was also held that the company having closed down, the employees were not entitled to absorption.
( 5 ) I have heard Sri Ashok Khare, the learned counsel for the petitioner and Sri V. K. Rai the learned counsel for the State. On the facts stated above and, the arguments advanced the questions that arise for consideration are, whether the employees of a Government company are entitled to benefit of absorption in Government department or corporation on winding up of a company, whether the petitioners could be held to be retrenched employees and whether an employee satisfying alt the requirements could still be denied the benefit of absorption on the ground that he did not possess a retrenchment certificate issued by the appointing authority/managing director.
( 6 ) BEFORE taking up these issues, it is necessary to mention that the employees of the company had made a request to the managing director o
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