http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7

CASE NO.:

Appeal (civil) 3079 of 2000

PETITIONER:

JAWAHAR LAL SAZAWAL & ORS.

Vs.

RESPONDENT:

STATE OF J & K & ORS.

DATE OF JUDGMENT: 27/02/2002

BENCH:

S. Rajendra Babu & Ruma Pal

JUDGMENT:

RUMA PAL, J.

The appellants in this appeal have sought to assert

their status as employees of the State Government of

Jammu and Kashmir with the same rights, privileges and

benefits available to other State employees. The High

Court has denied the appellants' claims on the ground that

they had voluntarily surrendered their status as

Government servants in 1963 under Article 207 of the

Jammu and Kashmir Civil Service Regulations, 1956

(referred to hereafter as the Regulations) and that in any

event their claim was barred by delay and laches.

It is not in dispute that each of the appellants had

been appointed prior to 1963 as permanent Government

servants under the Jammu and Kashmir Civil Services

(Classification, Control and Appeal) Rules, 1956 (hereafter

referred to as 'the Rules') and were serving in different

capacities in industrial units which were being run by the

Department of Commerce and Industries of the State

Government.

In 1963, the State Government formed a Board of

Directors for the administration of these industrial units by

its order No. 189/C of 1963 dated 10th August 1963. The

Board of Directors was constituted by-

i) Prime Minister - Chairman

ii) Sh.Karnail Singh, - Vice-Chairman

Hon. Advisory to

Govt. for Planning

and Industries

iii) Sh.S.M.Agha,IAS - Managing Director

iv) Sh. Amar Singh, IAS Member (Ex-officio)

Director of Industries

v) Sh.S.A.S. Qadir,IAS - do-

Registrar Cooperatives

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7

vi) Sh. Ghulam Ahmad - do-

Financial Controller

The order also provided for the the re-designation of the

officers Incharge of the industrial concerns as Managers in the

respective concerns. All Managers were placed under the

overall control of the Managing Director and the Board of

Directors.

On 3rd October 1963, the Jammu and Kashmir Industries

Ltd., the respondent No. 2 herein (hereinafter referred to as

the company) was incorporated as a private limited company

under the provisions of the Companies Act, 1977. The main

object of the company as mentioned in Clause III (a) of its

Memorandum of Association was :

"To run, manage, administer the State

Industrial Undertakings as may be

notified by the Governor in a manner as

would ensure their economic working" .

On 8th October 1963, the Governor issued

instructions by which some industrial undertakings of the

State Government including the three in which the

appellants had been appointed were "notified to be

entrusted to the company in pursuance of clause III (a) of

the Memorandum of Association of the Company". The

effect of this 'entrustment' of the Industrial undertakings

to the Company will be discussed after completing the

narration of facts. It only needs to be noted at this stage

that even after this "entrustment" the appellants continued

working in the industrial undertakings in which they were

initially appointed and continued to enjoy the same

benefits of service with regard to emoluments, leave and

pension as other Government employees.

In 1966, a notification was issued by the Governor

introducing Note 6 which amended Rule 52 of the Rules

and sought to provide that thenceforward the employees

of the erstwhile Sericulture Department who were entitled

to pensionary and other benefits as government servants

were to be treated as employees of the Company.

This was challenged in 1968 by some of the

employees of the Sericulture Department who had, like the

appellants herein, been permanently appointed to

industrial units under the State Government before

formation of the Company. The main submission of the

petitioners in that case was that their services had only

been entrusted to the Company and that they continued to

enjoy the same status as other Government servants. The

challenge was upheld by a Division Bench of the High

Court of Jammu and Kashmir in Sheik Ghulam Quadir

& Ors. v. State of Jammu & Kashmir & Others . It

was held that "the conditions of service of a Government

servant could not be terminated altogether except under

and in accordance with Article 126 of the Jammu and

Kashmir Constitution nor could the nature of his service

be converted from one form to another resulting in a

complete transformation of the character of the service. It

was said:

" In the instant case if the petitioners are

to be treated as employees of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7

company the character and nature of

their service is completely changed and

they would cease to enjoy the immunity

and protection given to them by S.126

of the State Constitution; and if a

Government servant who is entitled to

protection under section 126 is suddenly

deprived of this protection without any

notice then such an action cannot but be

held to be either as a termination of his

service or a reduction in rank."

The Court also rejected the arguments of the

respondents based on Article 207 of the Regulations that

consequent upon the formation of the Company the

Sericulture Department was abolished and that the

services of the Government employees had been

transferred to the Company. The Court found that there

was nothing on record to show that the petitioners had in

fact been discharged from Government service nor was

any notice given to them in this regard nor were they

given any option to take compensation or to opt to be

appointed under the Company. The procedure under

Article 207 of the Regulations not having been followed,

the impugned notification could not be sustained. The

amending note was accordingly struck down and a writ of

mandamus was issued directing the respondents to place

the petitioners in the same position as they were before the

impugned amendment was made. The decision of the

High Court was rendered in 1969.

On 24th July 1972, a second writ petition filed by

some other employees of the Government Silk Weaving

Factory: Ghulam Mohamad & Ors. v. State of J & K &

Ors. ( W.P 107/1967) seeking a declaration that the

petitioners continued as Government servants was

disposed of without any reference to the earlier decision

in Ghulam Quadir's case in the following terms:

" It is now well settled that a writ for a

mere declaration does not lie. It is also

well established that unless there is a

demand and refusal a petition for issue

of a writ is not maintainable.

In the present case there is no

allegation that any demand for grant of

a right which is available to the

petitioner has been denied by the State.

The petitioner not having retired

and the occasion for State refusing to

treat the petitioner as a Government

employee not having arisen, the

present petition is, in our opinion

premature. It is accordingly dismissed.

This will not, however, preclude

the petitioner from seeking appropriate

remedy in case the right claimed by

him is denied by the Government at a

later stage."

In the meanwhile the Company framed its own

service rules which were entitled ' J&K Industries Service

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7

Regulations' (hereinafter referred to as the Industries

Regulations). Nevertheless the appellants along with other

similarly situated employees continued to be given

benefits of revision of grades and dearness allowance

which were paid to the other Government servants of the

State. Thus, when the revision of pay scales of

Government employees was made on the basis of the 1973

Chatterjee Wage Committee Report, the appellant's

salaries were also revised. An attempt to deny the

appellants dearness allowance on par with the civil

servants was aborted when instructions were issued in

1974 granting them the dearness allowance at the same

rates as other Government servants. This state of affairs

continued till 1979.

In 1979 the State Government set up another

Committee to examine the wage structure of employees of

Public Sector Corporations. The Committee which came

to be known as the Rajan Committee, submitted its final

report in 1980. The report was accepted by a decision of

the Cabinet on 22nd April, 1980. On the basis of this

Cabinet decision the Governor issued an order on 26th

April, 1980 pursuant to which the Company issued two

orders both dated 8th May, 1980 one relating to the cost of

living allowance and the second relating to fixation of

wages. A third order was issued by the company on 10th

November,1980 seeking to lay down that the leave of

regular employees of the Company would be allowed "as

per the Factories Act and not as per Leave Rules of the

Corporation which were applicable to them in the past".

All three orders in effect denied the employees like the

appellants parity of service conditions with Government

employees.

In 1981 the appellants challenged the orders dated 8th

May, 1980 and 10th November, 1980 under Article 32 of

the Constitution before this Court. According to the

appellants when the matter was heard on 22nd March,

1982, this Court was of the view that the appellants should

approach the High Court first. As such the appellants

withdrew the writ petition under Article 32 and

immediately filed a writ petition under Article 226 before

the High Court (SWP 236/82) challenging the order of the

Governor dated 26.4.1980 as well as the orders dated

8.5.80 and 10.11.80 and asking for a direction on the

respondents:

".to treat the petitioners as

Government employees and deem the

petitioners and their co-employees

governed by Service Rules and

Regulations which are applicable to the

State employees and the petitioners be

held entitled to the same salary,

emoluments D.As, leave etc. as would

be available to the government servants

under the State Government".

Some other employees, who are not appellants

before us, filed a similar writ petition before the High

Court (SWP No. 287/82). Yet a third group of employees

filed a writ petition : Waryam Chand vs. State of J & K

- (SWP No. 549/83) raising the same issues.

Waryam Chand's (SWP 549/83) case came to be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7

listed separately and was dismissed by a Single Judge on

29.6.88. The other two writ petitions (SWP 236/82 and

SWP 287/82) were placed before another Learned Judge

who referred the issue for consideration by a larger bench.

In 1998, the Division Bench dismissed both the writ

petitions by the order impugned before us.

The impugned decision directly conflicts with the

earlier decision of the same High Court in Ghulam

Quadir's case (supra) on the issue as to the status of

Government employees like the appellants. The decision

in Ghulam Quadir has remained unchallenged by the

State respondents till today and was binding on the Court.

In the absence of some distinguishing feature it should

have been followed. It was not even referred to. We

could have allowed the appeal before us on this short

ground, but since the issue raised affects a large number of

employees, it is necessary to decide the issue on merits.

On the merits we may start by reaffirming the

statement of the law laid down by this Court in Roshan

Lal Tandon V. Union of India that:

"once appointed to his post or office the

Government servant acquires a status

and his rights and obligations are no

longer determined by consent of both

parties, but by statute or statutory rules

which may be framed and altered

unilaterally by the Government."

No statute or statutory rules have been drawn to our

attention by which the permanent posts held by the

appellants were abolished. The High Court held that the

appellant's status had been determined under Article 207

of the Regulations . The conclusion is based on an

erroneous interpretation of the Article. To start with the

High Court ignored Article 1-(a) of the Regulations which

clarifies that these

" Regulations are intended to define

the conditions under which Salaries,

Leave, Pension, Travelling or other

allowances are earned by Service in

the Civil Departments and in what

manner they are calculated. They do

not deal otherwise than indirectly and

incidentally with matters relating to

recruitment, promotion, official

duties, discipline or the like."

(Emphasis supplied)

Article 207 is contained in Chapter XVII of the

Regulations which deals with the conditions of grant of

pension. It was, in this context that the Article had been

framed. It deals with pension and its computation. It does

not purport to determine status at all. It reads:

"207. If an officer is selected for

discharge owing to the abolition of his

permanent post he shall, unless he is

appointed to another post the

conditions of which are deemed to be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7

at least equal to those of his own, have

the option

(a) of taking any compensation

pension or gratuity to which

he may be entitled for the

service he has rendered; or

(b) of accepting another

appointment on such pay as

may be offered and

continuing to count his

previous service for pension."

It is clear that the Article does not itself provide

for the procedure for abolition of a permanent post nor the

mode of appointment to another post nor for the manner

in which the employee has to exercise the option. It only

provides for the consequences of a permanent post being

abolished, the consequence being that the employee shall

have the option of accepting another appointment in which

event he can count his previous service for the purpose of

calculating the qualifying period for pension. Since there

was in fact no abolition of the Government posts under

Article 207, there was no question of the appellants

exercising any option or surrendering their status under

that Article at all. The reliance by the High Court on

Article 207 to decide the appellants status was, in the

circumstances wholly misplaced.

The High Court also proceeded on the erroneous

assumption, namely, that as a consequence of the "order

dated 8th October 1963 all the Government industrial

undertakings stood abolished with the formation of the

Company". Firstly what is referred to as an 'order' by the

High Court was not an "order" at all but an "instruction"

under Article 89 of the Articles of Association of the

Company. It had no statutory force. Neither the

Government Industrial Undertakings nor the posts of its

employees could be abolished by such an instruction.

The Governor could not in exercise of powers under the

Articles of Association of the Company abolish industrial

units belonging to the State Government and then transfer

the undertakings to the Company. It would amount to an

unilateral taking over of the industrial units by the

Company without any instrument of transfer being

executed by the State Government either in the form of an

agreement or Statute. In fact and in law there was no

abolition of the posts held by the appellants and none was

intended.

There is nothing in the instructions which could

remotely be construed as an order abolishing the posts

held by the appellants. Had the appellants been appointed

as employees of the Company they should have been

issued letters of appointment by the Company. No

appointment letter was issued to any of the appellants by

the Company. The irresistible conclusion is that the

appellants were and continue to be servants of the State

Government and as permanent residents of the State of

Jammu and Kashmir are entitled under Section 10 of the

State Constitution to be treated on par with other

Government servants in keeping with Article 14 and 16 of

the Constitution of India. By the impugned orders, the

State Government has sought to deny the appellants such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7

equality. The impugned orders cannot, therefore, be

constitutionally sustained and must consequently be

quashed.

But should the appellants be denied their right to

relief because of the finding of delay and laches by the

High Court? We think not. The narration of facts clearly

show that there was in fact no delay or laches on the part

of the appellants. Till 1972 at least, the High Court in

Ghulam Mohamad's case (supra) found the State had not

denied parity of status and the employees were granted the

right to challenge any denial of status if and when it took

place. The appellants were in fact treated on par with

other Government employees till the impugned orders

were issued on the basis of the 1980 Wage Committee

Report. These were challenged in 1981 before this Court

and in 1982 before the High Court by the appellants. The

fact that the High Court took 16 years to dispose of the

matter cannot operate against the appellants. The dismissal

of the writ petitions on the ground of delay and laches is,

in the circumstances, unsustainable.

The decision of the High Court is accordingly set aside

and the appeal is allowed by granting relief to the

appellants as prayed for in their writ petition. Costs to be

paid by the respondent-State to the appellants jointly

assessed at Rs.15000/-( Rupees fifteen thousand only).

.J.

(S. Rajendra Babu)

..J.

(Ruma Pal)

February 27, 2002