1

AFR

RESERVED

Court No. - 40

Case :- SPECIAL APPEAL DEFECTIVE No. - 646 of 2021

Appellant :- U.P. Power Corporation Ltd And 4 Others

Respondent :- Anil Kumar Sharma And Another

Counsel for Appellant :- Abhishek Srivastava,Krishna

Agarawal,Sr. Advocate

Counsel for Respondent :- C.S.C.,R.K. Mishra

Hon'ble Manoj Misra,J.

Hon'ble Jayant Banerji,J.

(Delivered by Hon'ble Jayant Banerji, J.)

1.The application seeking exemption for filing the certified

copy of the order is allowed.

2.The appellant-respondents have filed this intra court appeal

against the judgement and order of the learned Judge dated

23.7.2021 passed in Writ-A No. 6544 of 2021 (Anil Kumar Sharma

Vs. State of U.P. and others) by means of which the writ petition

has been allowed holding that denial of pension to the petitioner as

well as continuation of departmental proceedings against him by

taking recourse to Article 351-A of the Civil Service Regulations

1

is arbitrary.

Background of the case:

3.The aforesaid writ petition was filed seeking directions to the

respondents to pay the retiral benefits like Gratuity, G.P.F., Leave

Encashment etc. and arrears of pension alongwith interest and to

pay the regular pension to the petitioner as and when it is due.

Further relief was sought for granting provisional pension.

4.The case of the respondent-petitioner in the writ petition was

that he was initially appointed on 4.6.1974 on a permanent regular

1CSR

2

post of Patrolman and was lastly promoted to the post of Junior

Engineer in the year 2014. He retired on 31.12.2018 from the post

of Junior Engineer from the office of the Superintendent Engineer,

Vidyut Vitaran Mandal, Amroha, after attaining the age of

superannuation. He did not receive any retiral benefits/dues like

GPF, gratuity, leave encashment, pension or even provisional

pension. It was submitted that while in service he was suspended

by means of the order dated 22.11.2018 passed by the Managing

Director of the Paschimanchal Vidyut Vitaran Nigam Limited

2

on a

solitary complaint but, by an order dated 28.12.2018, he was

reinstated in service and on 31.12.2018, he retired. Prior to his

suspension, a two member committee was constituted for inquiring

into the matter, which found no evidence against him. It was stated

that post retirement, two chargesheets were served on the petitioner

on 7.11.2019 against which the petitioner submitted his

reply/explanation on 21.12.2019. On 22.5.2020, the statement of

the petitioner was recorded by the inquiry officer, who submitted

his report to the higher authority, who was not satisfied with the

inquiry report and a re-inquiry was ordered. The petitioner was

again asked to submit his statement along with evidence and his

statement was again recorded on 23.9.2020. It was stated that the

proceedings were pending before the Authorities and he was not

being paid his retiral dues despite repeated representations.

5.From perusal of the order-sheet of the writ petition, it

appears that on the request of the parties, on 15.7.2021, the learned

Judge directed the case to be listed on the next day, that is,

16.7.2021. On 16.7.2021, after hearing the learned counsel for the

petitioner and the learned counsel appearing for the respondent

nos. 2 and 3, a part of the order was dictated but, subsequently, on

request made by the learned counsel for the respondents the

learned Judge permitted them to make a mention in the open Court

2PVVNL

3

on 22.7.2021. On 22.7.2021, the matter was taken up on board, the

learned counsel were heard and the case was directed to be listed

on the next date (23.7.2021) for further arguments. On 23.7.2021,

after hearing the learned counsel for the parties, the impugned

judgement and order was passed.

6.From the record of the writ petition it appears that on

16.7.2021, a compilation running into 112 pages was filed on

behalf of the respondent nos. 4 to 6 enclosing copies of various

judgements, inquiry reports, suspension order and records of the

departmental proceedings/correspondence. It also appears from the

record that that a 'short counter affidavit' running into 162 pages

was filed on behalf of the respondent nos. 4 to 6.

7.Before the learned Judge, it was submitted that on the basis

of the preliminary inquiry, the petitioner was placed under

suspension by an order dated 22.11.2018. The suspension order

was revoked on 28.12.2018 specifying that it was being revoked on

the account of retirement of the petitioner which was on

31.12.2018. It was submitted by the respondents therein that

sanction was accorded by the Managing Director for continuing

disciplinary proceedings against the petitioner. By a letter dated

1.5.2019, a show cause notice was served on the petitioner along

with two chargesheets. That in terms of circular of the Board dated

21.6.1991 and a resolution of the Board of Directors dated

2.8.2007, the Managing Director was authorized to grant sanction

as envisaged under Regulation 351-A of the Civil Service

Regulations. It was submitted therein that the petitioner was not

entitled to payment of pension and at best he could apply for

provisional pension in accordance with Article 351-AA and 919-A

of the CSR.

8.The learned Judge, while noticing that the main prayer of the

petitioner being for payment of pension, observed that it was

4

intrinsically linked to the pending disciplinary proceedings against

the petitioner and the same could not be decided

without considering the merit of the pending disciplinary

proceedings viz.-a-viz. the bar created under Article 351-A of the

CSR. The Court, further, observed that the validity of the

departmental proceedings were considered in the light of the

specific defence taken by the counsel for the respondents justifying

the withholding of the pension in view of the pending departmental

proceedings. While strictly interpreting the phrase 'authority of law'

as used in Article 300-A of the Constitution of India, in view of the

fact that Article 351-A of the CSR prescribes for deprivation of

property of a citizen, and in that sense it is an 'ex-propriatory'

legislation, the learned Judge held that any liberal interpretation

given to a law which is basically 'ex-propriatory' in nature would

be in clear violation of Article 300-A of the Constitution of India

and would militate against the spirit of that Article. The learned

Judge, thus held that on the date of his retirement on 31.12.2018,

the petitioner was neither under suspension nor any chargesheet

was served upon him or issued to him as the suspension order

dated 22.11.2018 stood revoked vide order dated 28.12.2018 and

as the chargesheet admittedly was served after the date of

retirement, thus, no proceeding could have been initiated against

the petitioner except with sanction of the Governor and after

satisfying the test of clause (i) to (iii) of proviso (a) to Article 351-

A of the CSR.

9.Further, discarding the contention of the learned counsel for

the respondents that in view of the relevant circulars and the

resolution of the Board of Directors of the company, the word

'Governor' specified under Article 351-A of the CSR was

substituted by the 'Board' and thereafter by the 'Managing

Director', the learned Judge held that the CSR has been framed in

5

pursuance of the powers conferred under Article 309 of the

Constitution of India and can be modified/amended only by the

amendment in the CSR and not by issuance of circular or by a

company resolution and, therefore, the sanctioning authority

specified as 'Governor' in the CSR cannot be read as 'Managing

Director' of a corporation except when it is amended in accordance

with law. The learned Judge, thus, held that no disciplinary

proceeding was instituted against the petitioner prior to the date of

his retirement and no sanction of Governor as required under

Article 351-A of the CSR exists for initiating disciplinary

proceedings against the petitioner after his retirement. A mandamus

was accordingly issued.

10.We have heard Shri G.K. Singh, learned Senior Advocate

assisted by Shri Abhishek Srivastava and Shri Krishna Agrawal for

the appellants; Shri R.K. Mishra for the respondent no. 1; and the

learned Standing Counsel for the proforma respondent no. 2 and

perused the record.

Submissions of the learned counsel:

11.The contention of the learned Senior Advocate appearing for

the appellant-respondents is that in the writ petition, there was no

prayer for quashing the departmental proceedings or challenging

the order dated 22.12.2018, whereby, the suspension of the

petitioner was conditionally revoked. Therefore, the Court ought

not to have dwelt on the issue of the validity of the sanction and

the enquiry proceeding itself, without calling upon the appellant-

respondents to file a comprehensive counter affidavit. He contends

that the order of suspension was passed and the charge-sheet was

issued by the competent authority and that due sanction as

envisaged under Article 351-A of the CSR was granted by the

Managing Director of the Uttar Pradesh Power Corporation

6

Limited

3

. He contends that there was adequate material on record

to demonstrate that PVVNL is a company subsidiary to UPPCL

and incorporated under the Companies Act, 1956. UPPCL was

itself incorporated as a company pursuant to Section 13 of Chapter

IV of the Uttar Pradesh Electricity Reforms Act, 1999

4

. It is

contended that licence has already been granted by the Uttar

Pradesh Regulatory Commission (established under Section 3 of

the Reforms Act) to PVVNL under sub-section (5) of Section 13 of

the Reforms Act. It is stated that U.P. State Electricity Board was

constituted under Section 5 of the Electricity Supply Act, 1948

5

.

Under Section 23 of the Reforms Act, the Board's properties,

powers, functions, duties and personnel were transferred and

vested in the State Government pursuant to sub-section (1) thereof.

Thereafter, the same have been re-vested by the State Government

in the UPPCL in accordance with a Scheme known as the Uttar

Pradesh Electricity Reforms Transfer Scheme, 2000

6

. It is

contended that the Transfer Scheme was framed pursuant to sub-

section (4) of Section 23 of the Reforms Act. Under sub-section (7)

of Section 23 of the Reforms Act, the terms and conditions of the

transferred personnel are to be determined in accordance with the

Transfer Scheme. It is contended that the petitioner-respondent was

transferred and absorbed in UPPCL in terms of the Transfer

Scheme. That under sub-clause (10) of clause 6 of the Transfer

Scheme, till such time Regulations governing the conditions of

service of personnel transferred under the Transfer Scheme are

framed, the existing service conditions of the Uttar Pradesh State

Electricity Board

7

shall mutatis mutandis apply. It is contended that

the Uttar Pradesh State Electricity Board (Officers and Servants)

3UPPCL

4Reforms Act

5Supply Act, 1948

6Transfer Scheme

7Board

7

(Conditions of Service) Regulations, 1975

8

govern the conditions

of service of officers and servants of the Board and since fresh

Regulations are yet to be framed, the Regulations of 1975 govern

the service conditions of the personnel employed under the UPPCL

and PVVNL. He contends that in view of the Regulation of 1975,

the authority competent to sanction departmental proceedings post

retirement of the petitioner-respondent is the Managing Director of

UPPCL. That after the constitution of the UPPCL and the vesting

of properties etc. of the Board by the State Government under the

provisions of the Reforms Act, the UPPCL and the PVVNL, being

Companies incorporated under the Companies Act, are corporate

and independent entities entitled to take decisions and delegate

powers by way of resolutions passed in meetings of the Board of

Directors of the respective Companies. He contends that no

statutory amendment is required in Article 351-A of the CSR for

replacing the word “Governor” by the “Managing Director”. It is

his further contention that the order revoking the suspension of the

petitioner-respondent on 28.12.2021 was conditional and given the

provisions of Article 351A of the CSR, since the petitioner-

respondent was placed under suspension prior to date of his

retirement, departmental proceedings were deemed to have been

instituted against the petitioner-respondent prior to his retirement.

It is, therefore, contended that on both counts, the learned Judge

has not decided the writ petition correctly.

12.In support of his contentions, the learned counsel has

relied upon judgments of the Supreme Court in the case of

Prahlad Sharma vs. State of U.P. & Ors.

9

and State of Uttar

Pradesh & Ors. vs. Z.U. Ansari

10

as well as a Division Bench

judgment of this Court in Rajeev Kumar Jauhar vs. State of

8Regulation of 1975

9(2004) 4 SCC 113

10(2016) 16 SCC 768

8

U.P.

11

.

13.Shri R.K. Mishra, learned counsel for the petitioner-

respondent has vehemently argued that under the facts and

circumstances of the present case, the pension of the petitioner-

respondent cannot be withheld and administrative Circulars and

resolutions do not have the force of law and as such the learned

Judge has correctly decided the writ petition. In support of his

argument, the learned counsel has referred to a judgment of the

Supreme Court in the case Dr. Hira Lal vs. State of Bihar &

Ors.

12

.

Discussion:

14.While considering the judgment passed by the learned Judge,

we deem it fit to proceed with the discussion on the following

points :-

(i)Whether the learned Judge ought not to have proceeded with

the matter without there being proper reliefs sought in the petition

and without calling for a detailed counter affidavit?

(ii)Whether the Managing Director of the UPPCL was

competent to sanction departmental proceedings under the

provisions of Article 351-A of the CSR? And,

(iii)Whether the appellant-respondents were justified in

initiating the departmental proceedings against the petitioner-

respondent in view of Article 351-A of the CSR?

Point No.(i)

15.As far as the first point is concerned, it is evident from the

record that the issue of payment of pension and other retiral dues or

the entitlement thereof is intrinsically linked to the departmental

proceedings that were initiated against the petitioner-respondent.

11(2007) 2 AWC 1726

12(2020) 4 SCC 346

9

The validity of the sanction accorded by the Managing Director of

the UPPCL is an issue of jurisdiction which goes to the root of the

matter and, therefore, the consideration of the case by the learned

Judge on the limited aspect of the validity of the sanction is

appropriate. Whether the cause to sanction existed, could only have

been seen after analyzing whether departmental proceedings could

be deemed to have been instituted in view of the Explanation to

Article 351-A of the CSR. As stated above, the appellant-

respondents had filed a short counter affidavit and a compilation

of several documents pertaining to the departmental proceedings

and judgements of various courts. It has not been pointed out what

other document was required to be 'filed' for adjudication apart

from what was already on record of the writ petition. Under the

circumstances, the learned Judge had correctly proceeded to decide

the case on the basis of material on record.

Point No.(ii)

16.Coming to the second point regarding the competence of the

Managing Director of UPPCL to sanction the departmental

proceedings, the background leading to the constitution of the

corporate entities, namely, UPPCL and PVVNL is required to be

seen.

17.Under the Supply Act of 1948, the State Electricity Boards

were required to be constituted under Section 5 thereof. The term

of office and conditions of service of the members of the Board

were specified in Section 8 and removal or suspension of members

of the Board was provided in Section 10. The Board was ordained

to be a body corporate, by the name notified, under Section 12

having perpetual succession and a common seal with power to

acquire and hold property both movable and immovable and could

sue and be sued by the said name. Section 79 of the Supply Act of

1948 enabled the Board, by notification in the official gazette, to

10

make Regulations with respect to the matters specified therein,

sub-section (c) of which reads as follows:-

“79. Power to make regulations.- The Board may,

by notification in the Official Gazette, make

regulations not inconsistent with this Act and the

rules made thereunder to provide for all or any of

the following matters, namely : -

(a) .......................

(b) .......................

(c) the duties of officers and other employees of the

Board, and their salaries, allowances and other

conditions of service;

…...........…..............

….............................

….............................”

18.The Regulations of 1975 were made in exercise of the power

conferred by sub-section (c) of Section 79 of Supply Act of 1948

on the Board. Regulation 2 of the Regulations of 1975 reads as

follows:-

“2. All matters relating to conduct and discipline

(including matters relating to punishment) and to

termination, reversion and compulsory retirement

of persons appointed:

(a) to the Board,

(b) Government servants who were

originally employed under the State

Government and after resignation were

absorbed in the service of the Board in

pursuance of State Government order

No.3670-E/71-XXIII-PB, dated July 1,

1971, the Board may initiate or recommence

any disciplinary proceedings in respect of

their acts and omissions during the period

when they were employed under the State

Government except in cases where

disciplinary proceedings were finally

concluded on merits while they were so

employed under the Government.

(c) Such servants of the Board as are

workman employed in any industrial

establishment under the control of the

Board, notwithstanding any thing contained

in any other law for the time being in force;

11

shall be regulated mutatis mutandis and subject

to any other regulation for the time being

inforce (including Regulations 1-A and above

and 3, 4 and 6 below) by rules and orders for the

time being in force and applicable to

corresponding categories of Government

Servants under the rule making control of the

Governor of Uttar Pradesh with the substitution

of references in such rules to the Governor or

the State Government by reference to the

Board.” (emphasis supplied)

19.Relevant provisions of Section 23 of the Reforms Act are as

follows:-

“23. Transfer of the Board's properties, powers,

functions, duties and personnel. - (1) On and

from the date specified in a transfer scheme,

prepared and notified by the State Government, to

give effect to the objects of this Act, hereinafter

referred to as the appointed date in this Act, all

properties, and all interests, rights and liabilities of

the Board therein shall vest in the State

Government.

(2) The properties, interest, rights and liabilities

vested in the State Government under sub-section

(1), shall be revested by the State Government, in

the Power Corporation and in a generating

company in accordance with the transfer scheme so

notified along with such other property, interest,

rights and liabilities of the State Government, as

may be specified in such scheme, on such terms

and conditions as may be determined by the State

Government.

….........

(4) The State Government may, after consultation

with the generating company or the power

corporation, hereinafter referred to in this section as

transferor, may, require transferor to draw up a

transfer scheme to vest in a person hereinafter

referred to in this section as transferee, any of the

functions including distribution function, property,

interest, right or liability which may have been

vested in the transferor under this section and notify

the same as statutory transfer scheme under this

Act. The transfer scheme to be notified under this

sub-section shall have the same effect as the

transfer scheme under sub-section (2).

…...........

12

(7) The State Government, may provide in any of

the transfer schemes framed under this section for

the transfer of personnel to the Power Corporation

or a company subsidiary to the Power Corporation

or a generating Company, on the vesting of

properties, rights and liabilities in the Power

Corporation or a company subsidiary to the Power

Corporation or a generating company, as a part of

the undertakings transferred under this section and

on such transfer the personnel shall hold office or

service under the Power Corporation or a company

subsidiary to it or a generating company, as the

case may be, on terms and conditions that may be

determined in accordance with the transfer scheme

subject however to the following namely :

(a) terms and conditions of service of the

personnel shall not be less favourable to the

terms and conditions which were applicable

to them immediately before the transfer;

(b) the personnel shall have continuity of

service in all respects; and

(c) all benefits of service accrued before the

transfer shall be fully recognised and taken

into account for all purposes including the

payment of any or all terminal benefits :

Provided that, notwithstanding anything

contained in any other law for the time being

in force, and except as provided in the

transfer scheme and in this Act, the transfer

shall not confer any right on the personnel so

transferred to any compensation or

damages :

Provided further that the posts in the Board

of all the personnel whose services are to be

so transferred shall stand abolished with

effect from the date of transfer.

Explanation. - For the purposes of this section and

the transfer scheme, the expression "personnel"

means all persons who on the appointed date are

the employees of the Board and who under the

transfer scheme are given the option to join service

under the control of the transferee.”

20.In exercise of powers conferred under sub-sections (1) and

(2) of Section 23 of the Reforms Act, the Transfer Scheme was

framed. Under sub-clause (h) of Clause 2 of the Transfer Scheme,

the transferree has been defined to mean the UPPCL, the U.P.

13

Rajya Vidyut Utpadan Nigam Limited

13

and the U.P. Jal Vidyut

Utpadan Nigam Limited, in whom the undertaking or undertakings

are vested in terms of the provisions of sub-sections (2) and (7) of

Section 23 of the Reforms Act. With regard to transfer of

personnel, sub-clause (1) of clause 6 of the Transfer Scheme makes

it subject to the terms and conditions contained in sub-section (7)

of Section 23 of the Reforms Act. Sub-clause (5) of Clause 6 of the

Transfer Scheme reads as follows:-

“The personnel classified in Schedule-G

shall transferred to and absorbed in UPPCL on as is

where is basis, namely, that they will continue to

serve in the place where they are posted on the date

of the transfer and they will become an employee

of UPPCL.”

21.Schedule-G of the Transfer Scheme names the Units wherein

the personnel of the specified offices of the Board alongwith all

personnel of subordinate offices and Units of the Board would

stand transferred to UPPCL on the date of the transfer.

22.Sub-clause (10) of Clause 6 of the Transfer Scheme reads as

follows:-

“Subject to the provisions of the Act and this

Scheme, the Transferree shall frame regulations

governing the conditions of service of personnel

transferred to the transferee under this Scheme and

till such time, the existing service conditions of the

Board shall mutatis mutandis apply.”

23.On consideration of the aforesaid provisions of the Supply

Act of 1948, Regulations of 1975, Reforms Act, and the Transfer

Scheme, it is evident that the conditions of service of officers and

servants of the Board and the UPPCL/PVVNL are regulated by the

Regulation of 1975 which is in force as provided under sub-clause

(10) of Clause 6 of the Transfer Scheme framed under the Reforms

13UPRVUNL

14

Act, and, by rules and orders for the time in force and applicable to

the corresponding categories of government servants under the rule

making control of the Governor of Uttar Pradesh with the

substitution of references in such rules to the Governor or the State

Government by reference to the Board / UPPCL / PVVNL.

24.It is pertinent to mention here that in the Electricity Act,

2003, the Reforms Act is saved by virtue of sub-section (3) of

Section 185 thereof.

25.The term ‘mutatis mutandis’ has been explained by the

Supreme Court in the case of Prahlad Sharma (supra). In that

case before the Supreme Court, challenge was made to a judgment

and order passed by the High Court which had allowed the writ

petition preferred by the appellant. The Managing Director of the

U.P. State Agro Industrial Corporation had imposed the penalty of

dismissal against Prahlad Sharma. The appellate authority of the

Corporation had partly allowed the appeal and ordered

reinstatement with observations. Against the order of the appellate

authority directing reinstatement, the Corporation invoked the

revisional power of the State by filing a revision under Rule 13 of

the Government Servant (Discipline and Appeal) Rules, 1999

14

which was allowed. The High Court observed that by means of a

resolution, the Corporation had mutatis mutandis adopted the

Rules, 1999 and hence the State Government had power to

entertain the revision under Rule 13 of the Rules, 1999. The order

of the High Court as well as the order passed by the State

Government in revision were set aside by the Supreme Court after

analysing the term ‘mutatis mutandis’ appearing in the resolution

of the Corporation whereby the Rules, 1999 were adopted. The

Supreme Court observed as follows:-

“11.The expression "mutatis-mutandis", itself

implies applicability of any provision with

necessary changes in points of detail. The rules

14Rules, 1999

15

which are adopted, as has been done in the present

case, make the principles embodied in the rules

applicable and not the details pertaining to

particular authority or the things of that nature. In

the present case, we find that the High Court has

found that the U.P. Rules of 1999 have been

adopted mutatis-mutandis. Therefore, in our view,

the revisional power which has been vested in the

state government in respect of the employees of the

State may be exercisable by an authority parallel or

corresponding thereto in the Corporation in regard

to employees of the Corporation..”

26.Therefore, in terms of sub-clause (10) of clause 6 of the

Transfer Scheme, the Regulations of 1975 would, mutatis

mutandis, apply to the personnel of UPPCL / PVVNL.

Accordingly, the reference to the Governor of the State appearing

in Article 351-A of the CSR, would, in the case of the appellant-

respondents, be referable to the Managing Director of the UPPCL.

27.Another judgment cited by the learned counsel for the

appellant-respondents in the matter of Rajeev Kumar Jauhari

(supra) can be referred with profit. In that case, the issue was

before the High Court whether the U.P. Rajya Vidyut Utpadan

Nigam Absorption Regulations, 2006 framed by the UPRVUNL

was illegal, arbitrary and ultra vires. One of the issues urged on

behalf of the petitioner therein was that UPRVUNL can only

change the conditions of service by framing statutory Regulations

and not the Regulations, which are non-statutory. While rejecting

that argument, the Court observed as follows:

“32. Sri Khare lastly sought to argue that Section

23(7) of the Reforms Act, 1999 read with Clause 3

(10) of the Transfer Scheme, 2000 use the word

'Regulation' and therefore, UPRVUNL can only

change the condition of service by framing

statutory Regulations and not the Regulations,

which are non statutory In our view, this

submission is to be noted for rejection only.

UPRVUNL is not a statutory body, but a Company

registered under the Companies Act. It is not

16

disputed that the employment and contract of the

petitioners which was earlier with a statutory

autonomous body, namely, UPSEB, stood

transferred to UPRVUNL and now it is

UPRVUNL, who is empowered to determine the

conditions of service of its employees. The manner

in which such provision can be made would be

governed by the Article of Association of such

Company and when the Company itself is not

statutory, to expect such company to frame

statutory Regulations for governing its employees

is wholly untenable. The effect of transfer of

service from statutory body to a non statutory body,

namely, a company registered under the Company

Act, would deprive the statutory protection

available to the employees and now the matter

would be governed by ordinary law of contract.

Normally, the transfer of contract involves the

consent of the employees also, but in the present

case, the petitioner's contract has been transferred

to UPRVUNL by statute itself and, therefore, the

employees have no role and their consent is not

required. The only rider on the power of transferee

employer is that the service condition whenever

changed would not be less beneficial and will not

deprive past benefits accrued to the transferred

employees before transfer, that is, to the extent

provided under Section 23(7) of the Reforms Act,

1999. The protection under Section 23(7) neither

continue the status of the transferred employee with

the new companies as statutory nor otherwise has

any other role except to prevent employer from

exercising its ordinary powers available in

Common Law, which would be contrary to the

protection given under Section 23(7) of the

Reforms Act, 1999. For all other purposes, the

transferee company is free to formulate its policies

and enter into contract or lay down terms and

conditions of its employees in the manner, it find

best suited for the efficient functioning of the

company. Merely for the reason that the State

Government is 100% share holder of the company

does not identify the company itself with the State

Government. In Shrikant v. Vasantrao

15

, the Court

held in para 24 (sic) that in the matter of a company

where the entire share capital is held by the State

Government, yet it cannot be identified with the

State Government and is always entitled to act and

proceed in a manner a company function. This

principle was recognized as long back as in 1970

15(2006) 2 SCC 682

17

also by a Constitution Bench in R.C. Cooper v.

Union of India

16

, and at page 584, the Apex Court

held- "A company registered under the Companies

Act is a legal person, separate and distinct from its

individual members. Property of the Company is

not the property of the shareholders. A shareholder

has merely an interest in the Company arising

under its Article of Association measured by a sum

of money for the purpose of liability, and by a share

in the profit. "

…........

34. Thus we hold that a Company can determine

terms and conditions of its employees as provided

under Article of Association but since the Article of

Association of a Company is neither a Rule nor

Regulation and has no statutory force the

conditions determined thereunder would also be not

statutory. The UPRVUNL thus have the power to

determine terms and conditions of its employees by

making provisions in exercise of powers under

provisions of Article of Association read with

Companies Act.”

28.Another case that was cited by the learned counsel for the

appellant-respondents was a judgment of the Supreme Court in the

case of Z.U. Ansari (supra). The issue therein was whether the

powers vested in a Governor for sanctioning departmental

proceedings by Regulation made under Article 309 of the

Constitution of India can be delegated to a Minister under Rules

for Allocation of Business framed under Article 166(3) of the

Constitution of India. However, no reliance can be placed upon

that case inasmuch as due to the difference in opinion between the

two Judges, the matter was referred to a Larger Bench.

29.Reference, at this stage, may be made to Article 309 of the

Constitution of India:

“309. Recruitment and conditions of service of

persons serving the Union or a State :

Subject to the provisions of this Constitution,

Acts of the appropriate Legislature may regulate

the recruitment, and conditions of service of

16AIR 1970 SC 564

18

persons appointed, to public services and posts in

connection with the affairs of the Union or of any

State:

Provided that it shall be competent for the

President or such person as he may direct in the

case of services and posts in connection with the

affairs of the Union, and for the Governor of a State

or such person as he may direct in the case of

services and posts in connection with the affairs of

the State, to make rules regulating the recruitment,

and the conditions of service of persons appointed,

to such services and posts until provision in that

behalf is made by or under an Act of the

appropriate Legislature under this article, and any

rules so made shall have effect subject to the

provisions of any such Act.”

30.Under Article 309 of the Constitution, authority has been

given to the Governor of the State or to such person, he may direct

in the case of service and posts in connection with the affairs of the

State, to make rules regulating the recruitment, and the conditions

of service of person appointed, to such service and posts until

provision in that behalf is made by or under an Act of the

appropriate Legislature under that Article, and any rules so made

shall have effect subject to the provisions of any such Act.

However, the authority to the Governor has been given by means

of a proviso. Article 309 itself enables Acts of the appropriate

Legislature to regulate the recruitment, and conditions of service of

persons appointed, to public services and posts in connection with

the affairs of the Union or of any State, which is subject to the

provisions of the Constitution of India and qualified by the proviso.

31.Article 351-A of the CSR reads as follows:

“351-A. The Governor reserves to himself the right of withholding or

withdrawing a pension or any part of it, whether permanently or for a

specified period and the right of ordering the recovery from a pension of the

whole or part of any pecuniary loss caused to Government, if the pensioner is

found in departmental or judicial proceedings to have been guilty of grave

mis-conduct, or to have caused, pecuniary loss to government by misconduct

or negligence, during his service, including service rendered on re-

employment after retirement;

19

Provided that--

(a) such departmental proceedings, if not instituted while the officer

was on duty either before retirement or during re-employment--

(i) shall not be instituted save with the sanction of the

Governor,

(ii) shall be in respect of an event which took place not

more than four years before the institution of such

proceedings, and

(iii) shall be conducted by such authority and in such

place or places as the Governor may direct and in

accordance with the procedure applicable to

proceedings on which an order of dismissal from

service may be made.

(b) judicial proceedings, if not instituted while the officer was on duty

either before retirement or during re-employment, shall have been

instituted in accordance with sub-clause (ii) of clause (a), and

(c) the Public Service Commission, U.P., shall be consulted before

final orders are passed.

Provided further that of the order passed by the Governor relates to a

cash dealt with under the Uttar Pradesh Disciplinary Proceedings,

(Administrative Tribunal) Rules, 1947, it shall not be necessary to

consult Public Service Commission.

Explanation-- For the purposes of this article--

(a) departmental proceedings shall be deemed to have been instituted

when the charges framed against the pensioner are issued to him, or, if

the officer has been placed under suspension from an earlier date, on

such date; and

(b) judicial proceedings shall be deemed to have been instituted :

(i) in the case of criminal proceedings, on the date on which a

complaint is made, or a charge-sheet is submitted to a criminal

court; and

(ii) in the case of civil proceedings, on the date on which the

plaint is presented or, as the case may be, an application is

made, to a civil court.

Note:- As soon as proceedings or the nature referred to in this article

are instituted the authority which institutes such proceedings shall without

delay intimate the fact to the Audit Officer concerned.”

20

32.On record is the so-called 'sanction' accorded by the

Managing Director of UPPCL to the departmental proceedings to

be initiated against the petitioner-respondent. Therefore, taking

into account the provisions of the Supply Act of 1948, the

Regulations of 1975, the Reforms Act and the Transfer Scheme, it

is clear that UPPCL and PVVNL are separate corporate entities

and are entitled to conduct their business by means of duly passed

resolutions in the meetings of the Board of Directors. It is iterated

that the UPPCL is empowered to frame Regulations relating to

conditions of service of its personnel under sub-clause (10) of

Clause 6 of the Transfer Scheme and till such time the Regulations

are not framed, the Regulations framed by the erstwhile Board

(including the Regulations of 1975) shall mutatis mutandis apply.

Therefore, the finding of the learned Judge cannot be sustained,

whereby it was held that the resolution authorising the Managing

Director to exercise the powers relating to Article 351-A of the

CSR cannot be accepted as the CSR can be modified/amended by

amendment in the CSR in respect of the service in the State and not

by issuance of Circulars or Company resolutions.

33.The judgment cited by the learned counsel for the petitioner-

respondent in the matter of Dr. Hira Lal is not applicable under

the facts and circumstances of the present case. That judgment

refers to administrative Circulars and a Government resolution

issued by the State of Bihar for withholding part of pension,

whereas the Bihar Pension Rules 1950 did not prohibit payment of

full pension and gratuity to a retired government servant against

whom criminal proceedings were pending. The Supreme Court

noticed that the Bihar Pension Rules were amended on 19.07.2012

by the Governor of Bihar in exercise of powers under Article 309

of the Constitution. It was held that the pension amount that was

withheld after superannuation of the officer till 19.07.2012 is liable

to be paid to the appellant. In that case before the Supreme Court,

21

the authority of any Corporation to frame Regulations by means of

resolutions was not in issue and, therefore, the aforesaid case is

distinguishable on facts and is of no assistance to the petitioner-

respondent.

34.Thus, under the circumstances, there was no occasion to

obtain sanction of the Governor and no question of delegation of

power by the Governor in favour of the Managing Director of the

UPPCL for the Managing Director to exercise his discretion to

sanction in exercise of power Article 351-A of the CSR. Moreover,

with regard to the case in hand, given the statutory provisions

narrated above, the observation of the learned Judge that the

sanctioning authority specified as 'Governor' in the CSR cannot be

read as 'Managing Director' of a corporation except when it is

amended in accordance with law cannot be sustained. Therefore,

the judgment and order of the learned Judge, to this extent, is set

aside.

Point No. (iii)

35.Now we may examine the third point that whether the

appellant-respondents were justified in initiating the departmental

proceedings against the petitioner-respondent in view of Article

351-A of the CSR.

36.The order of suspension dated 22.11.2018 as well the order

dated 22.12.2018 conditionally reinstating the respondent-

petitioner are on record of the writ petition. It is admitted that the

age of superannuation of the respondent-petitioner was 31.12.2018.

The order of suspension of 22.11.2018 was passed by the

Managing Director, PVVNL, Meerut in his capacity as the

Competent Authority. The letter dated 22.12.2018 whereby the

suspension of the respondent-petitioner was conditionally revoked,

which appears on page 214 of the affidavit, is an office

22

memorandum signed by the Managing Director of PVVNL,

Meerut in which the allegations against the respondent-petitioner

are cited and the second paragraph of the office memorandum,

which is the operative part, is as follow:-

“श्री अनिनिल क

ुमार तत्कालीनि अनवर अनिभियन्ता

(िनिलित)म्बित), िवद्युत निगरीय िवतरण

खण्ड-अनष्ठम, निोएडा सम्बिद्ध सम्प्रतित िवद्युत िवतरण मण्डल, अनमरोहा के िदिनिांक

31.12.2018 को सेवािनिवृत्त होनिे के दृष्टिष्टिगत एतदिद्वारा सेवा म

े पुनिरपदिस्थािपत कर

कायारलय मुख्य अनिभियन्ता (िवतरण), मुरादिाबिादि क्षेत, मुरादिाबिादि म

े इस प्रतितबिन्ध के

साथ तैनिात िकया जाता है िक प्रतचलिलत जांचल प्रतिक्रिया म

े जो भिी िनिणरय िलया

जायेगा, उनि पर लागू होगा।”

“Shri Anil Kumar, former Junior Engineer (under

suspension), Electricity Urban Distribution Division- 8,

NOIDA, presently attached to Electricity Distribution

Division, Amroha, in view of his retirement on 31.12.2018,

is hereby restored to his post in service and is being posted in

the office of the Chief Engineer (Distribution), Moradabad

Circle, Moradabad with the condition that in the ensuing

inquiry proceeding whatever decision is taken, it would be

applicable to him.”

(translated to English by Court)

37.It is an admitted fact that no chargesheet was served upon

the petitioner before his retirement on 31.12.2018. Therefore, it is

required to be seen whether the condition imposed in the

revocation of suspension of the petitioner, by means of the office

memorandum dated 22.12.2018 could be construed as deemed

suspension.

38.Article 351-A of the CSR enables the Governor to withhold

or withdraw a pension or any part of it, whether permanently or for

a specified period, and, of ordering the recovery from a pension of

the whole or part of any pecuniary loss caused to Government, if

the pensioner is found in the departmental or judicial proceedings

23

to have been guilty of grave misconduct, or to have caused,

pecuniary loss to Government by misconduct or negligence during

his service, including service rendered on re-employment after

retirement. This enabling provision is qualified by the first proviso,

Clause (a) of which provides three mandatory conditions, in order

to institute departmental proceedings, if not instituted while the

officer was on duty either before retirement or during re-

employment. The first condition prohibits the institution of such

departmental proceedings save with the sanction of the Governor.

The second condition is that the departmental proceedings should

be in respect of an event which took place not more than four years

before the institution of such proceedings. The third condition is

that such departmental proceedings should be conducted by such

authority and in such place or places as the Governor may direct

and in accordance with the procedure applicable to the proceedings

on which the order of dismissal from service may be made. The

purport of Clause (a) of the first proviso is that each of the

aforesaid three conditions have to be satisfied for instituting

departmental proceedings where the employed person has retired.

Explanation (a) to the Article 351-A of the CSR creates a legal

fiction with regard to the date of institution of disciplinary

proceedings, the purport of which is that the departmental

proceedings shall be deemed to have been instituted when (i) the

charges framed against the pensioner are issued to him, or, (ii) if

the officer has been placed under suspension from an earlier date,

on such date.

39.There is no dispute about the fact that the stringent

provisions of Article 351-A of the CSR purport to enable the

authority concerned to impose major penalty on a pensioner

whereby the pensioner is visited with grave civil consequences. As

such, given the mandate of Article 300-A of the Constitution of

24

India there is little scope of interpreting the provisions of Article

351-A of the CSR liberally or equitably. The appellant-respondents

have proceeded on the presumption that once the respondent-

petitioner was placed under suspension during the period of his

service then, even if the suspension is revoked prior to retirement,

the provisions of Explanation (a) of the CSR would enure to their

benefit. In our opinion, this presumption and interpretation is

fallacious. It has been held by the Supreme Court that a legal

fiction is created only for some definite purpose and it is to be

limited for the purpose for which it was created and should not be

extended beyond that legitimate field

17

. For Explanation (a) of the

CSR to be applicable the incumbent must be under suspension

from a date prior to his retirement and continue to be under

suspension till the date of his retirement.

40.To further test the extent of operability of the aforesaid

Explanation (a), a situation may arise where the charges framed

against a pensioner are issued to him during his service and

thereafter, those charges are withdrawn conditionally prior to his

retirement and a fresh chargesheet is issued after retirement, and it

is claimed by the employer that since charges framed against the

pensioner were issued on a date prior to his retirement, therefore,

the departmental proceedings would be deemed to have been

instituted. That situation also would result in absurdity which

cannot be the purpose of the legal fiction created in Explanation (a)

to Article 351-A of the CSR.

41.Under the circumstances, we find that the learned Judge was

justified in holding that on the date of his retirement on

31.12.2018, the respondent-petitioner was not under suspension

and, so as a corollary, departmental proceedings could not be

deemed to have been instituted against the respondent-petitioner.

17Bengal Immunity Co. Ltd. Vs. State of Bihar (AIR 1955 SC 661)

25

42.We may now proceed to look into the three conditions

appearing in Clause (a) of the first proviso to Article 351-A of the

CSR, having regard to the fact situation of the present case.

Annexure No. 2 to the writ petition was a letter dated 5.11.2019

issued to the respondent-petitioner by the Inquiry Officer-cum-

Superintendent Engineer stating that the copies of the approved

charge-sheets were being enclosed and directing that detailed and

clear reply/submissions to the charge-sheets along with the

evidence be submitted within 15 days of the receipt of the letter. A

perusal of the enclosures to the aforesaid letter dated 5.11.2019

reveals that it contains note sheets containing office orders and

other enclosures. The office comments and orders are on

consecutive pages which also includes narration of two charge-

sheets. The first charge-sheet appears on page 94 of the affidavit

filed alongwith this appeal. The first charge against the respondent-

petitioner is that he had concealed correct facts and had obtained

appointment under the dying in harness rules to the post of

Patrolman and joined on 04.06.1975 by playing fraud. That he was

well aware that minimum age of appointment was 18 years

whereas the entries in the service book and the date of birth

reflected in his High School certificate was 15.12.1958 and at the

time of his appointment, his age was less by 1 year 6 months and

11 days than the minimum prescribed age and that he was not

eligible for the post. The second charge is that the respondent-

petitioner and his brother Yogendra Sharma, by concealing material

facts, both obtained appointment under the dying in harness rules

whereas only one person of the family could be granted

appointment. The second charge-sheet contains five charges, each

of which pertain to theft of electricity and other charges, apparently

pertaining to his periods of posting from 1.10.2017 to 2.1.2018 and

from 3.1.2018 to 20.11.2018.

26

On perusal of the aforesaid note sheet it appears that the

notings/comments therein and narration of the charge-sheets were

made with a view to obtain sanction of the competent authority for

departmental proceedings.

43.On page 98 of the affidavit is a note put up by various

officials for obtaining sanction for departmental proceedings.

However, a fresh proposal was sought as is evinced from a hand

written note on that page of 12.4.2019. Thereafter, a fresh note

dated 15.4.2019 was put up in which it was stated that the authority

who could grant sanction for departmental proceedings against the

retired respondent-petitioner, was the Managing Director of

UPPCL in view of Article 351-A of the CSR. The last paragraph of

this note that appears on page 99 of the affidavit is marked on the

margin with the Devanagari alphabet “क”. After referring to the

two charge-sheets, the aforesaid last paragraph on page 99 of the

affidavit states that after obtaining sanction under Article 351-A of

the CSR from the Managing Director of the UPPCL, the same be

sent to the Managing Director under the directions of the

Corporation with regard to the final proceedings against the

respondent-petitioner, and that the matter be placed as soon as

possible before the Director of UPPCL. Below this note, there is a

handwritten note of an Under Secretary dated 5.4.2019 stating

"क

ृपया उपरोक्तत पाश्तोिकत अनंश

'क' पर िवचलार कर प्रतवन्ध िनिदिेशक महोदिया का

अननिुमोदिनि प्रताप्त करनिा चलाहे।" Translated it reads to the effect that please

deliberate over the aforesaid part marked as “क” and obtain the

sanction of the Managing Director. Below this note are several

signatures, apparently by some officials, as well as the signature of

the Managing Director of UPPCL which was appended on

24.4.2019. It is clear from this document that the signature of the

Managing Director of UPPCL, who is the Authority competent to

27

sanction the disciplinary proceedings under condition (i) of Clause

(a) of the first proviso to Article 351-A of the CSR, has been made

only on the basis of bald signatures of subordinate officials and

some brief recommendations. There appears nothing on record to

demonstrate that the Managing Director of the UPPCL had

accorded sanction either by approving the note put before him or

by recording sanction. The signature of the Managing Director

appears to have been made by the authority as a perfunctory duty

rather than as a mark of sanction after due application of mind.

It is noticed that in the notings there is no discussion or

deliberation whatsoever with regard to the fact whether the

departmental proceedings against the petitioner could be instituted

in view of the first proviso to Article 351-A of the CSR. The

'comments and orders' appearing on the note sheets are mere

narrations of the undated complaint received against the petitioner

with regard to his initial appointment, the misconduct committed

by him by illegally energizing tubewells, etc.; the various letters

issued by the authorities; and the narration of the two charge-sheets

along with the evidence pertaining to each charge-sheet. It was,

therefore, incumbent on the Managing Director to apply her mind

to the fact whether departmental proceedings could be initiated

against the petitioner in view of the first proviso to Article 351-A,

which, was evidently not done.

44.In the ninth edition of the Black's Law Dictionary the verb

'sanction' is defined as to approve, authorize or support. Clause (a)

(i) of the first proviso to Article 351-A of the CSR places a

complete bar on institution of departmental proceedings without

the sanction of the Governor (in the present case, the Managing

Director of UPPCL). That is to say that the authority has to apply

its mind and deliberate on the matter, on the basis of the facts

appearing on record, whether to grant sanction or not, for

28

institution of departmental proceedings. Therefore, the import of

the word 'sanction' so appearing actually indicates a decision

authorising departmental proceedings after consideration of the

material on record and application of mind thereon. It does not

mean that the sanctioning authority has to see the material and

evidence threadbare and pass judgement. The authority has only to

be satisfied that the basis for departmental proceedings exist

entailing sanction. Therefore, in the present case, the Managing

Director was required to consider, prima facie, not only the charges

framed and the evidence available, but also whether the

departmental proceedings were in respect of an event which took

place not more than four years before the institution of the

proceedings {Clause (a) (ii) of the first proviso to Article 351-A of

the CSR}. The Managing Director, while according sanction, may

direct that the departmental proceedings shall be conducted by

which authority and in which place or places {Clause (a) (iii) of the

first proviso to Article 351-A of the CSR}, the mandate, however,

being that the departmental proceedings shall be conducted in

accordance with the procedure applicable to proceedings on which

an order of dismissal from service may be made.

The contents of the first charge-sheet reveal that it pertains to

an alleged mis-conduct of the petitioner at the time of his initial

appointment. Therefore, there cannot be any valid sanction to the

departmental proceedings in respect of the first charge-sheet

against the petitioner. The consolidated notings pertained to both

the charge-sheets and a single signature of the sanctioning

authority appears at the end, which without anything further,

cannot imply sanction.

45.The word 'sanction' has been used in statutes on criminal

law, for example, in Section 197 of the Code of Criminal

Procedure and in Section 19 of the Prevention of Corruption Act.

29

Though seeking aid of statutes pertaining to criminal law in

interpreting a word in service law is fraught with pitfalls, however,

for want of other appropriate aids to construction, some

judgements may be referred to.

46.In the case of State of Bihar and another Vs. P.P. Sharma,

IAS and another,

18

while referring to the sanction for prosecution

to be accorded under Section 197 of the Cr.P.C., this Court held as

follows:

“67. It is equally well settled that before granting sanction the

authority or the appropriate Government must have before it the

necessary report and the material facts which prima facie

establish the commission of offence charged for and that the

appropriate Government would apply their mind to those facts.

The order of sanction only is an administrative act and not a

quasi-judicial one nor is a lis involved. Therefore, the order of

sanction need not contain detailed reasons in support thereof as

was contended by Sri Jain. But the basic facts that constitute the

offence must be apparent on the impugned order and the record

must bear out the reasons in that regard. The question of giving

an opportunity to the public servant at that stage as was

contended for the respondents does not arise. Proper application

of mind to the existence of prima facie evidence of the

commission of the offence is only a precondition to grant or

refuse to grant sanction.”

47.Similarly, in the case of Manshukhlal Vithaldas Chauhan

Vs. State of Gujrat

19

, the Court has held as under:

“19. Since the validity of "sanction" depends on the

applicability of mind by the sanctioning authority to the facts of

the case as also the material and evidence collected during

investigation, it necessarily follows that the sanctioning

authority has to apply its own independent mind for the

generation of genuine satisfaction whether prosecution has to

be sanctioned or not. The mind of the sanctioning authority

should not be under pressure from any quarter nor should any

external force be acting upon it to take decision one way or the

other. Since the discretion to grant or not to grant sanction vests

absolutely in the sanctioning authority, its discretion should be

shown to have not been affected by any extraneous

consideration. If is shown that the sanctioning authority was

unable to apply its independent mind for any reason whatsoever

181992 Supp (1) SCC 222

19(1997) 7 SCC 622

30

or was under an obligation or compulsion or constraint to grant

the sanction, the order will be bad for the reason that the

discretion of the authority "not to sanction" was taken away

and it was compelled to act mechanically to sanction the

prosecution.”

48.While considering the requisites of validity sanction under

Section 19 under the Prevention of Corruption Act, 1988, the

Supreme Court in the case of State (Anti-Corruption Branch),

Govt. of NCT of Delhi and another Vs. Dr. R.C. Anand and

another

20

, opined that the sanctioning authority has only to see

whether the facts disclosed in the complaint prima facie disclose

commission of an offence or not, and, that all the relevant facts has

been considered by the sanctioning authority which implies

application of mind. The Supreme Court went on to observe that

the order of sanction must ex-facie disclose that the sanctioning

authority had considered the evidence and other material placed

before it.

49.A perusal of page 99 of this appeal on which reliance is

placed by the appellant in an attempt to show sanction of the

departmental proceeding, does not ex-facie disclose that the

Managing Director had applied its mind to the material on record

in the light of the first proviso to Article 351-A of the CSR and had

sanctioned departmental proceedings. The sanction as envisaged in

Article 351-A of the CSR dons the Managing Director of UPPCL

with the mantel of the Governor to accord sanction to such

departmental proceedings after noticing that the ingredients for

institution of such departmental proceedings exist. It should not be,

as in the manner it appears on the record of the present case. Here

the Managing Director has neither accepted the proposal for

departmental enquiry nor has approved or sanctioned the

departmental enquiry. He had just put his signature on the page,

which by itself cannot be taken as grant of sanction in view of the

20(2004) 4 SCC 615

31

fact situation of the instant case.

Conclusion:

50.Having considered the case in its entirety and after perusal of

the record, in our opinion on the basis of the discussion above, the

alleged sanction for departmental proceedings granted by the

Managing Director of UPPCL under Article 351-A of the CSR is

no sanction in the eyes of law and is, therefore, declared invalid.

51.However, this cannot preclude the appellant-respondents

from instituting departmental proceedings after obtaining a valid

sanction if so permissible in law. But till a valid sanction is granted

for departmental proceedings, the directions issued by the learned

Judge for payments of retiral dues, etc. calls for no interference.

52.Subject to the above, the appeal is dismissed.

Order Date :- 23.10.2021

A. V. Singh/SK