w w w . L a w y e r S e r v i c e s . i n



P. Ramachandran v/s Hindustan Paper Corporation, Calcutta

    Regular Second Appeal No. 407 of 2010 (DEC)

    Decided On, 07 June 2017

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE L. NARAYANA SWAMY

    For the Appearing Parties: G.K. Bhat, T. Suryanarayana, Advocates.



Judgment Text

L. Narayana Swamy, J.

1. Initially, the appellant herein had approached this court in W.P.No.30660/2004 and sought for a declaration that he has been working as a permanent officer of respondent No. 1 Hindustan Paper Corporation Ltd., Head Office at Calcutta, having retained his permanent lien against the post of Senior Laboratory Assistant - Grade I. The said writ petition came to be disposed of on 01.03.2004 with an observation that the petitioner has to approach for redressal of remedy in terms of civil law. That order was challenged before the Division Bench of this court in W.A. No. 2607/2004 and the writ appeal also came to be dismissed on 11.10.2004 confirming the order in W.P.No.30660/2004 dated 01.03.2004.

2. Hence, he filed a suit in O.S.No.184/2004 on the file of the Civil Judge (Junior Division), at Srirangapatna and the said suit also came to be dismissed. Against which he preferred an appeal in RA No. 73/2007 on the file of the Civil Judge (Senior Division) and JMFC, at Srirangapatna. It also came to be dismissed. Therefore he is before this court in this second appeal.

3. The appellant states that he joined the office/establishment of the first respondent/defendant in the year 1986. The second respondent/defendant - Mandya National Paper Mills Ltd., (for short ' MNPM- ) published an internal advertisement dated 14.03.1991 called upon the employees who are interested to seek transfers to the MNPM, that accordingly, the appellant-plaintiff was transferred to the second respondent company by orders dated 21.11.1991, initially for a period of six months and thereafter it was extended. The appellant has made several representations seeking repatriation to his parental company, i.e., first respondent company. Instead of considering his request for repatriation, made the appellant to continue in the second respondent MNPM till 2002. In the meanwhile, the second respondent company wound up in the year 2002. Hence he had approached this court in the above said writ petition and the writ appeal seeking repatriation to the first respondent company. The same was not considered.

4. Learned counsel for the appellant submitted that the trial court has committed an error in not allowing the suit wherein the appellant - plaintiff had made a prayer for declaring that he is the employee of the first respondent company in a supervisor cadre and also to reinstate him in the employment with effect from 12.09.2000 with continuity of service, protection of seniority and all other consequential benefits and other reliefs.

5. On service of notice, the first respondent/defendant filed written statement contending that the second respondent/defendant company is a separate company. The appellant-plaintiff was transferred to the second respondent/company on his own request, it was not treated as a normal transfer and the plaintiff was not allowed any transfer benefit. After joining the services of the second respondent/defendant company, the appellant was governed by the rules and regulations of the second defendant company. The appellant was drawing the salary from the second respondent/defendant and he was under the direct and pervasive control of the second defendant company. It is also submitted that plaintiff-appellant being a non-executive, unit cadre employee and upon his transfer, he was on the rolls of the second respondent/defendant company. Further it was denied that the lien is not automatic and no lien was granted to the appellant-plaintiff at any point of time. It is also submitted that the office order dated 26.11.1991 referred to by the appellant was regarding extending the benefit of new pay scales to the employees of second respondent/defendant company including the appellant-plaintiff also. The benefit of new pay scales for the period from 01.01.1987 to 31.12.1991 was extended to the employees of the second respondent/defendant company prior to the reference of the said company to the BIFR. For the above reason all the employees of second respondent/defendant company cannot claim that the first defendant company is their employer. It is also denied that the appellant continued to submit confidential report to the first respondent/defendant. The appellant-plaintiff also filed a rejoinder resisting the contents of the written statement.

6. On the basis of the pleadings, the trial court framed the following issues:

1. "Whether the plaintiff proves that the 1st defendant transferred the plaintiff with a condition that plaintiff would continue as the employee of 1st defendant?

2. Whether the plaintiff proves that the 1st defendant has refused to repatriate the plaintiff back to their company?

3. Whether the 1st defendant proves that 2nd defendant is a separate company having separate legal entity?

4. Whether the 2nd defendant proves that the suit is not maintainable without complying Section 446(1) of Companies Act?

5. Whether the plaintiff is entitled for declaration and consequential reliefs as prayed for?

6. What order or decree?"

Out of the above, issue Nos. 1 and 5 were answered in the negative, issue Nos. 2 and 3 were not considered and issue No. 4 was answered accordingly and the suit came to be dismissed and the same was confirmed by the first appellate court in RA No. 73/2007.

7. Learned counsel for the appellant submits that the action of the first respondent/defendant in not repatriating the appellant is arbitrary on its part. Secondly, both the courts below have lost sight in dismissing the suit. He submits that appellant - plaintiff has examined himself as DW1 and he has deposed that he was appointed as a permanent employee in the first respondent/defendant company-establishment and second respondent/defendant company is a subsidiary to the first defendant company. His transfer was only for a period of six months and he continued to work in the second defendant company and his lien continued till his superannuation.

After transfer, when period of six months completed, the appellant has made request for repatriation. The same has not been considered. During the continuation of his tenure in the second defendant/respondent's company, the first defendant continued to be its employer and the status, rank salary and all its service conditions are applicable. Under these circumstances, both the courts have committed an error in not decreeing the suit.

Further, learned counsel for the appellant submits that first defendant except filing written statement, has not chosen to examine any person or any of its employee and also has not chosen to cross-examine the appellant-plaintiff. But the appellant has relied and got marked his representation/application made to the first defendant company for his transfer which is at Ex.P1. The transfer order is at Ex.P3. Pay scale letter is at Ex.P7. Ex.P9 is his service copy. Ex.P14 is the certified copy of the writ petition and Ex.P 15 is the certified copy of the order.

8. Learned counsel for the first respondent/defendant company submitted to dismiss this appeal on the ground that the appellant himself has made a request for transfer to the second respondent-defendant company and his request was considered. Accordingly, in the transfer order he was denied any benefit on the ground that transfer was purely on his request. The appellant has accepted the transfer and he has been released from the establishment of the first respondent/defendant company. In the circumstances the question of continuation of lien over the first defendant company by the appellant plaintiff or the status as a lien of the plaintiff does not arise for any consideration. Therefore, both the courts below have concurrently held against the appellant and the appellant has not made out any substantial question of law for consideration.

9. I have heard the learned counsel for both the parties. This court while admitting this appeal has formulated the following substantial question of law for consideration.

Whether the transfer made to the respondent No. 2 by the respondent No. 1 is a fresh appointment or the respondent No. 1 retains its relationship as an employer of the appellant or the appellant has a lien of appointment in first respondent?"

10. Before proceeding further, this court is of the view that it is necessary to examine the case of the plaintiff for the reason that the appellant approached this court in W.P. No. 30660/2004 and W.P. 2607/2004 seeking relief of declaration seeking to declare that he is the employee of the first respondent/defendant company in a supervisor cadre and also to reinstate him in the employment w.e.f. 12.09.2000 with continuity of service, protection of seniority and all other consequential benefits and other reliefs. The said writ petition and writ appeal came to be dismissed reserving liberty to the petitioner to approach the civil court. Accordingly he has approached the civil court. At this juncture, it is pertinent to disclose that the first respondent/defendant - Hindustan Paper Corporation Ltd., is a Government of India Enterprise. Either the plaintiff or the defendants have not relied on the memorandum of understanding /Memorandum of Association or its Registration under the provisions of the Companies Act.

11. Be that as it may. The first respondent/defendant has admitted that it is a Government of India enterprise coming under the provisions of the Ministry of Government of India Enterprises. Its Managing Director, Head of the department are appointed by the Government. No material is produced by either of the parties to that effect. Though this court has not declared whether the first defendant is the Government of India Enterprise, but on the basis of the materials available on record, it is a State for the purpose of the present case. In order to say so, this court refers to the judgment of the Hon'ble Supreme Court reported in1981 (1) SCC 722 : (AIR 1981 SC 487) in the case of ' Ajay Hasia and Khalid Mujib Sehravardi and others" where it has held as under:-

"The test for determining as to when a corporation can be said to be an instrumentality or agency of Government may be culled out from the judgment in the International Airport Authority's case. They are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression ' other authorities', it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government with the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. The relevant tests gathered from the decision in theInternational Airport Authority's case (AIR 1979 SC 1628)may be summarized as:- (i) ' One thing is clear that if the entire share capital of the corporation is held by Government it would go a long way towards indicating that the Corporation is an instrumentality or agency of Government. (ii) ' Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.- (iii) ' It may also be a relevant factor whether the corporation enjoys monopoly status which is the State conferred or State protected.- (iv) ' Existence of ' deep and pervasive State control may afford an indication that the Corporation is a state agency or instrumentality.- (v) ' If the functions of the corporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation an instrumentality or agency of Government.- (vi) ' Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government.' [96F-H, 97A-D] It is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The enquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government company or a company formed under the Companies Act, 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute. Whatever be its genetical origin, it would be an "authority" within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a company or society and in a given case it would have to be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression "authority" in Article"

12. By examining the case of the first respondent/defendant company in the light of the above said judgment, it is held that at most, it appears like a State. When such being the case, the writ petition in W.P. No. 30660/2004 could have been allowed. But the writ petition as well as the writ appeal have been dismissed. The first defendant is an instrumentality of the State. Since it satisfies the conditions stipulated in the judgment referred to above, at this juncture, instead of disposing this case with a liberty to the appellant to prefer a writ petition I hold that under Section 151, CPC this court has got inherent power to entertain this appeal and as such, I proceed further to dispose of this matter on merits.

13. The appellant, basically is an employee of the first respondent /defendant. In order to say so, the appointment order is produced and got marked as Ex.P8. The appointment order says that:-

Appellant is appointed as "Laboratory Assistant (GR-I) in Hindustan Paper Corporation Ltd., Nagoon Paper Project, Jagiroad, Assam. We are pleased to offer you this appointment on the following terms and conditions". Among those, condition No. 5 is ' Your service shall be liable to transfer to any department/section of the Project or to any office of the Corporation/Project or its subsidiary company wherever it may be situated in any part of India."

The very terms of the appointment order states that appellant is subjected to transfer. As such he made a request to the first defendant to transfer to its subsidiary company situated in Belagula - Mandya National Papers Limited which is a subsidiary of Hindustan Papers Corporation, Government of India. By reading the appointment order and its service conditions instructions, it is disclosed that without any doubt, any appointment made by the first respondent, more particularly this appellant is subject to transfer anywhere, any section, any department and anywhere in India. Accordingly, the appellant has made a request for his transfer and his request was considered and he was transferred to the second respondent defendant company. The transfer order dated 21.11.1981 is marked as Ex.P4 and it reads as under:-

In pursuance of the letter No. MNPM: 08:2176 "91 dated 06.09.1991 of Dy. Manager (P&A), MNPM, Shri. Ramachandran, Sr. Laboratory Assistant (R1-1254) is hereby transferred to MNPM, Belagula, in his existing capacity, pay and scale of pay. He is released from NPM w.e.f 22.09.1991 to enable him to report M.D., MNPM for his duties. This issues with the approval of the Competent Authority."

Further, another office order has been produced as Ex. P5. Wherein it is clarified that:-

"the appellant will not be entitled to any transfer benefits since he has been transferred at his own request" .

By reading Exs. P4 and P5, it is clear that appellant has been transferred for a period of six months and the transfer is subject to regulation and the definition of the word ' transfer-it reveals that the first respondent/defendant would control the appellant and appellant remains as its employee. During the period of transfer, the appellant continues his lien over the first defendant. What was the salary drawn by the appellant in the first respondent/defendant's office, his status, rank, terms and conditions will continue during the period he worked/works for the second defendant office.

After the completion of six months, the appellant has approached this court in W.P. No. 19337/2000 which came to be disposed of on 12.06.2000. In said writ petition he made a prayer for repatriation to the first defendant as the second defendant is closed from 01.07.2000. The writ petition had been disposed of directing the petitioner therein who is the appellant to make a representation for transfer to the first defendant and for appropriate order. He also made further representations to the first defendant. But the same have not been considered. Hence, he approached this court in W.P. No. 30660/2004 and W.A. No. 2607/2004 same came to be disposed of directing the appellant to avail his remedy under the civil law. But the original suit in O.S.No.184/2004 and the regular appeal filed in RA No. 73/2007 came to be dismissed. Hence he filed the present appeal.

In order to substantiate the fact that the appellant is having the right of lien on first defendant, it is relevant to examine Ex.P10 dated 20.03.1997, which is an office order issued from the first respondent/defendant in confirming the appointment of the appellant. It reads as:

"Consequent upon satisfactory completion of his probation, Shri. Rajagopola Ramachan-dran, Tkt, NO, HPC/Jrd/R1 1254 has been confirmed as Laboratory Assistant Gr-I in the scale of pay of Rs. 655,25,760,30,1150/- with effect from forenoon of 16.03.1987."

This itself discloses that the appointment of the appellant has been confirmed in the first defendant establishment against pay scale with a subsequent benefits extended to the appellant. It is clear that he gets a right of lien in respect of the first defendant on transferring to the second defendant. In the transfer order, what has been referred is ' he is released for the purpose of reporting at the second defendant company. The word "released" also does not carry any technical meaning. But he has been released only to report at second defendant for a period of six months. That means to say, he has to come back or to get repatriation once an order of transfer is made by the first defendant. It was the duty of first defendant to make/pass an order for repatriation but no such order is made at any time. It cannot be said that the appellant has lost his right of lien over the first respondent/defendant and he has to get repatriation to the first defendant and he has got a right to continue till his superannuation. The first defendant has not passed any repatriation order or no order for relieving or dismissal or any kind of such orders. In the circumstances, the appellant has established the fact that he is an employee or servant for the first respondent who stands to continue till his retirement as an employee. Hence it is held that substantial question of law formulated by this court on 24.03.1995 is answered accordingly.

Further it is beneficial to refer the decision rendered by the Hon'ble Supreme Court in the case of "Bihar State Water Development Corporation, v. Arun Kumar Misra and others,"reported in AIR 1997 SC 2185at paragraph No. 5, it is observed as under:

"5. It is an admitted position that when the first respondent was initially sent on deputation to the Bihar State Water Development Corporation, he was allowed to retain the lien in the parent Department and the same was to continue until the lien was duly terminated only on his confirmation in the Irrigation Development Corporation. No evidence is placed before us to show that his lien in the Irrigation Department was terminated nor is he confirmed in the Corporation. Since the Bihar State Water Development Corporation was wound up, as he was holding lien in the post in the parent Department, he was required to be repatriated to the parent Department. No such step was taken."

In view of the above, this court is of the view that substantial question of law raised in this appeal is to be answered in favour of the appellant.

Further, the first respondent/defendant is governed by its own Conduct, Discipline and Appeal Rules. Therefore, any employee's transfer, deputation, absorption, etc., are governed by the said Rules. But none of the Rules have been cited by the first respondent/ defendant by following such Rules. The appellant has produced and got marked Ex.P1. As said earlier, the first defendant/respondent has its own Conduct, Discipline and Appeal Rules and they shall come into force w.e.f 26.09.1974. These Rules apply to all the employees of first respondent/defendant including the employees appointed by the President/Central Government. Accordingly, Rule 2(m) defines "Appointing Authority" , that means an authority empowered to make appointments to the class or a grade and 2(n) 'Management' means the Board of Directors, Chairman and/or Managing Directors/Heads of Divisions/Departments and/or other Officer of the Corporation. The words 'Disciplinary Authority' means the authority specified under Rule 31. It specifically says that in case, if the borrowed authority decides to initiate any action against any employee which it has borrowed, it should be informed to the lending authority all the circumstances leading to the order of suspension, termination etc., This itself further shows that on deputation or transfer to other department or establishments, the borrowed departments does not have any control over the person who is on deputation or transfer. Except this provision there is no such other provision in Conduct, Discipline and Appeal Rules of the first respondent/defendant. In the absence of the same, refusing to repatriate the appellant after completion of six months that too after representation made pursuant to the order made by this court in the writ petition referred to above shows that the first defendant has committed an error and that action is arbitrary to its maximum.

14. Under these circumstances, on the basis of the above discussion, it is held that the plaintiff - appellant has the right of lien over the first respondent defendant and the order of transfer transferring the appellant to the second respondent/defendant is not a fresh appointment. It is only a transfer with lien on the appellant by the first defendant and all the service conditions, status, promotion are retained by it. The appellant is also entitled to get the salary since it was protected, having the same status before his transfer to the second defendant.

Please Login To View The Full Judgment!

Therefore, these are all the aspects which were not examined by the courts below. The issues framed by the trial court as well as the points formulated by the first appellate court are not answered on the basis of the materials made available and also the evidence of PW1. 15. At this juncture, it is relevant to refer to the conduct of defendants 1 and 2. On service of notice, they entered appearance and filed written statement. Thereafter they have not even taken a risk to cross-examine PW1. In case, if the appellant did not have any lien or he has been terminated, it was for the first defendant to establish the same by producing or relying on any document or examining any of the employee working under it. No such effort has been made. Therefore, it is placed on record that the appellant has established his right of lien and he has further reestablished that order of transfer is not a fresh appointment and further he is an employee of the first defendant till his superannuation. 16. The appellant has made a prayer in the original suit for a declaration that first defendant is his employer, and he is an employee of the first defendant. The said prayer has been established. In view of this, it is clear that right of lien by the appellant with the first respondent/defendant continues till his retirement and the appellant has been paid salary by the second defendant till its closure in the year 2002. Thereafter he is deemed to be returned to the first defendant and continued his services till his superannuation in the first defendant. 17. It is further declared that first defendant is duty bound to pay the consequential monetary benefits to the appellant till his retirement. Injustice has been caused to the appellant by not repatriating, resulting in deprival of his monetary benefits. Therefore, since this is a Regular Second Appeal, this court cannot go on computing and calculate the salary and monetary benefits of the appellant. It will be appropriate and it will suffice to direct and declare that the appellant has to get 18% interest on computation of his arrears of salary and other monetary benefits till its realization. 18. Accordingly, the appeal stands allowed. The judgment and decree passed in O.S.No.184/2004 by the Civil Judge (Junior Division), at Srirangapatna which has been confirmed by the Civil Judge (Senior Division) and JMFC, at Srirangapatna in RA No. 73/2007 are hereby set aside with costs. Suit is decreed as above. 19. Registry is directed to draw the decree in view of the judgment made above.
O R