# 5 S.C.R. 1039 NORTH DELHI POWER LIMITED v. GOVT. OF NATIONAL CAPITAL TERRITORY OF DELHI & ORS

- **Citation:** [2010] 5 S.C.R. 1039
- **Court:** Supreme Court of India
- **Decided:** 2010-05-03
- **Case number:** Civil Appeal No. 4269 of 2006
- **Bench:** V.S. Sirpurkar, Surinder Singh Nijjar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/5-s-c-r-1039-north-delhi-power-limited-v-govt-of-national-capital-territory-of-26994
- **Pages:** 42

## Headnote

Service Law:
A
8
c
Re-organization of Delhi Vidyut Board (DVB) - Statutory
transfer scheme - Tripartite agreements between Govt. of
National Capital Territory of Delhi, DVB and DVB Joint Action
Committee (consisting of various Unions etc.) -
DVB
unbundle(} into private companies including appellantsD
DISCOMs w.e.f 1-7-2002 -All employees transferred - Plea
of appellants that they had no liability relating to employees, ..
who ceased to be employees of the erstwhile Delhi Electric
Supply Undertaking (predecessor of DVB) prior to 1-7-2002
on account of their retirement, removal, dismissal or E
compulsory retirement in accordance with· the provisions of
the Act - Held: The plea is not tenable - The Rules indicated
that the liability was innate and accepted by the appellantsDISCOM S - Appellants, being the transferee companies,
had taken over the liabilities of the erstwhile staff a/so - Delhi
F
Electricity Reforms Act, 2000 - ss. 14, 15, 16, 57 and 60 -
Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 -
rr.3, 6, 8 and 12.
·
From 1-7-2002, Delhi Vidyut Board (DVB) was
unbundled into private companies including the G
appellants DISCOMs. Another company called DPCL
(holding company) was also constituted with the aim and
object of holding shares in the DISCOMs.
1039
H
1040
SUPREME COURT REPORTS
(2010] 5 S.C.R.
A
Since the employees of DVB had displayed their
apprehension and reservations to the effect that on
emergence of the private companies their services may
not be protected, therefore, these employees were taken
into confidence by assuring them that their services will
B be protected by entering into Tripartite Agreements
which were executed between Government of National
Capital Territory of Delhi (GNCTD), DVB and DVB Joint
Action Committee (which consisted of various Unions as
well as Junior Engineer Officer Association).
C
The question which arose for consideration in the
present appeals was whether the appellants DISCOMs
are responsible for meeting the liabilities relating to
employees, who ceased to be the employees of the
erstwhile Delhi Electric Supply Undertaking (predecessor
D of DVB) prior to 1-7-2002 on account of their retirement,
removal, dismissal or compulsory retirement in
accordance with the provisions of the Delhi Electricity
Reforms Act, 2000.
E
Dismissing the appeals, the Court
HELD: 1.1. It is difficult to accept the contention that
any prejudice was caused to the appellants DISCOMS.
On the other hand, the question of liability seems to have
been thrashed very minutely by the High Court in the light
F of the provisions of the Delhi Electricity Reforms Act,
2000, the Delhi Electricity Reforms (Transfer Scheme)
Rules, 2001, Tripartite Agreements and the other
agreements including the bid documents. It cannot be
said that clothing appellant-NDPL with a liability regarding
G the personnel who were retired, compulsorily retired or
otherwise dead, dismissed etc. could be termed 'as
"additional liability". In fact the reading of the said Rules
and, more particularly, Rule 6(8) would indicate that
liability was innate and accepted by the DISCOMS. [Paras
H 21 and 23] [1065-E-F; 1066-C]
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1041
ORS.
2. Rule 6(8) not only specifies the employment A
related matters but also clarifies what those matter~
would be which include pension and any superannuation
fund or special fund created or existing for the benefit of
the personnel and the existing pensioners. The words
'existing pensioners' are extremely important. A plain
B
reading of this Rule would leave no manner of doubt in
respect of the liability having been transferred to
transferee company and the NDPL is certainly the one.
The language is broad enough to include all dismissed,
dead, retired and compuisorily retired employees. As if c
that was not sufficient, sub-Rule (9) requires the
Government to make appropriate arrangements in terms
of the Tripartite Agreements in regard to the fund of
terminal benefits to the ex

## Text

_Characters 0–39,943 of 81,376. This is a partial read: ask again with offset=39943 for what follows._

[2010) 5 S.C.R. 1039
NORTH DELHI POWER LIMITED
v.
GOVT. OF NATIONAL CAPITAL TERRITORY OF DELHI &
ORS.
(Civil Appeal No. 4269 of 2006)
MAY 03, 2010 -
[V.S. SIRPURKAR AND SURINDER SINGH
NIJJAR, JJ.]
Service Law:
A
8
c
Re-organization of Delhi Vidyut Board (DVB) - Statutory
transfer scheme - Tripartite agreements between Govt. of
National Capital Territory of Delhi, DVB and DVB Joint Action
Committee (consisting of various Unions etc.) -
DVB
unbundle(} into private companies including appellantsD
DISCOMs w.e.f 1-7-2002 -All employees transferred - Plea
of appellants that they had no liability relating to employees, ..
who ceased to be employees of the erstwhile Delhi Electric
Supply Undertaking (predecessor of DVB) prior to 1-7-2002
on account of their retirement, removal, dismissal or E
compulsory retirement in accordance with· the provisions of
the Act - Held: The plea is not tenable - The Rules indicated
that the liability was innate and accepted by the appellantsDISCOM S - Appellants, being the transferee companies,
had taken over the liabilities of the erstwhile staff a/so - Delhi
F
Electricity Reforms Act, 2000 - ss. 14, 15, 16, 57 and 60 -
Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 -
rr.3, 6, 8 and 12.
·
From 1-7-2002, Delhi Vidyut Board (DVB) was
unbundled into private companies including the G
appellants DISCOMs. Another company called DPCL
(holding company) was also constituted with the aim and
object of holding shares in the DISCOMs.
1039
H
1040
SUPREME COURT REPORTS
(2010] 5 S.C.R.
A
Since the employees of DVB had displayed their
apprehension and reservations to the effect that on
emergence of the private companies their services may
not be protected, therefore, these employees were taken
into confidence by assuring them that their services will
B be protected by entering into Tripartite Agreements
which were executed between Government of National
Capital Territory of Delhi (GNCTD), DVB and DVB Joint
Action Committee (which consisted of various Unions as
well as Junior Engineer Officer Association).
C
The question which arose for consideration in the
present appeals was whether the appellants DISCOMs
are responsible for meeting the liabilities relating to
employees, who ceased to be the employees of the
erstwhile Delhi Electric Supply Undertaking (predecessor
D of DVB) prior to 1-7-2002 on account of their retirement,
removal, dismissal or compulsory retirement in
accordance with the provisions of the Delhi Electricity
Reforms Act, 2000.
E
Dismissing the appeals, the Court
HELD: 1.1. It is difficult to accept the contention that
any prejudice was caused to the appellants DISCOMS.
On the other hand, the question of liability seems to have
been thrashed very minutely by the High Court in the light
F of the provisions of the Delhi Electricity Reforms Act,
2000, the Delhi Electricity Reforms (Transfer Scheme)
Rules, 2001, Tripartite Agreements and the other
agreements including the bid documents. It cannot be
said that clothing appellant-NDPL with a liability regarding
G the personnel who were retired, compulsorily retired or
otherwise dead, dismissed etc. could be termed 'as
"additional liability". In fact the reading of the said Rules
and, more particularly, Rule 6(8) would indicate that
liability was innate and accepted by the DISCOMS. [Paras
H 21 and 23] [1065-E-F; 1066-C]
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1041
ORS.
2. Rule 6(8) not only specifies the employment A
related matters but also clarifies what those matter~
would be which include pension and any superannuation
fund or special fund created or existing for the benefit of
the personnel and the existing pensioners. The words
'existing pensioners' are extremely important. A plain
B
reading of this Rule would leave no manner of doubt in
respect of the liability having been transferred to
transferee company and the NDPL is certainly the one.
The language is broad enough to include all dismissed,
dead, retired and compuisorily retired employees. As if c
that was not sufficient, sub-Rule (9) requires the
Government to make appropriate arrangements in terms
of the Tripartite Agreements in regard to the fund of
terminal benefits to the extent it is unfunded on the date
of transfer from the Board. A glance at the sub-rules 9(a)
D
and 9(b) is sufficient to come to the conclusion that the
liabilities have undoubtedly been transfarred to the
DISCOMS which include both NDPL as well as the BSES.
No employees were ever transferred to the DPCL. All
transferees came only to the DISCOMS like the NDPL
under the transfer scheme. The High Court has correctly
E
interpreted these Rules and has correctly come to the
conclusion that the liabilities would rest with the
DISCOMS including NDPL and BSES. [Paras 26, 27 and
28) [1068-A-D; 1069-A-D]
3.1. The purpose of Rule 8(3) is to cap any liability
arising out of litigation, suits, claims etc. either pending
on the date of transfer and/ or arising due to events prior
to the date of transfer to be born.e by the relevant DISCOM
F
1, DISCOM 2 or DISCOM 3, respectively. The nature of the
G
liability and its being imposed on the DISCOMS alone is
as clear as sunshine. To that extent, there can be no
doubt that it includes all the liabilities including the
liabilities on account of the personnel. The capping of the
liability was at the instance of the DISCOMS only. They
H
104~
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A were more aware of the language brought in. They w~re
also aware of the liabilities which arose, particularly, in
view of Rule 6 (8) and they had open eyedly accepted
Rule 8(3). They cannot now find fault with the
constitutfionality of the provisioixs. [Paras 29 and 31]
B [1069-F-H; 1070-A-G; 1071-A]
3.2. The suggestion that the non obstante clause in
Rule 8(3) if widely construed, would render the clause
unconstitutional, is not acceptable. The language of the
clause is clear, unambiguous and must be given its
C natural meaning. If such a meaning is given, any other
interpretation is not possible except the one rendered by
the High Court. The constitutionality of Rule 8(3) cannot
be doubted under any circumstances. [Paras 30 and 31]
[1070-B-C; G]
D
M. Rathinaswami & Ors. v. State of Tamil Nadu & Ors.
2009 (5) SCC 625; /CIC/ Bank Ltd. v. SIDCO Leathers Ltd.
& Others 2006 (10) SCC 452; Ramdev Food Products (P)
Ltd. v. Arvindbhai Rambhai Patel 2006 (8) SCC 726; Madan
Mohan Pathak & Anr. v. Union Of India & Ors. 1978 (2) SCC
E 50; Venture Global Engineering v. Satyam Computer
Services Ltd. & Anr. 2008 (4) SCC 190 and Shin-Etsu
. Chemical Co. Ltd. v. Aksh Optifibre.Ltd. & Anr. 2005 (7) SCC
234, distinguished.
F
4. The argument raised that the liability in respect of
existing pensioners would devolve on the Holding
company, i.e. DPCL and not on the appellant is clearly
incorrect. The transfer of personnel and all the principles
are governed by Rule 6 alone. As provided in Rule 6(2),
G there are lists wherein the personnel have been classified
into five groups based on the principle of "as is where
is", where a specific reference is to be found to GENCO,
TRANSCO and three DISCOMS. Very significantly, there
is no reference to DPCL. Thus, no employee was
transferred to DPCL. This is in· case of the existing.
H employees. Sub Rule (8), however, takes into sweep not
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1043
ORS.
•l
only the existing employees, who find the reference in the
lists prepared under Rule 6(2), but also makes a reference
to the employment related matters including provident
fund, gratuity fund, pension and _any superannuation
fund or special fund created or existing for the benefit of
personnel and the existing pensioners. There was no
question of existing pensioners being covered under the
lists prepared under Rule 6(2). By using the words
"existing pensioners" and by providing that the relevant
transferee would stand substituted for the Board for all
purposes and all the rights, powers and obligations of the
Board in relation to any and all such matters, the
legislative intention is very clearly displayed to the effect
that the existing pensioners on the day of transfer were
also covered and stood transferred to the DISCOMS and
A
B
c
not to DPCL and it is only the transferee DISCOM, who
0
would substitute for the Board. Once these Rules are
read in proper perspective, there is hardly any doubt
about the liability of DISCOMS in respect of existing
pensioners on the day of transfer. There can be no
dispute that those who retired and those who were
serving with the Board would stand transferred in
respect of their liabilities etc. to the successor company.
The High Court has correctly appreciated this position.
[Paras 32 and 33] [1072-G-H; 1072-A, E-H; 1073-A-C]
E
5.1. Under Rule 12(1 ), a finality is given to the
F
decision of the Government in respect of any doubt,
dispute, difference or issue as regards the transfers under
these Rules. The Rule provides that under any such
eventuality, the decision of the Government shall be final
subject to the provisions of the Act. Sub Rule (2) of Rule
G
12 provides that the Government may, by order, publish
in the Official Gazette, make such provisions, not
inconsistent with the provisions of the Act, which
provisions may appear to be necessary for removing the
difficulties arising in implementing the transfers under
H
1044
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A these Rules. Section 57 of the Act is also clear and
provides power to the Government to remove any
difficulties. [Para 34] [1073-C-F]
5.2. As an answer to the. letter received from Delhi
TRANSCO Ltd., a 100 per cent Government company,
8 seeking clarifications from the Government with respect
to the competent authority/new entity to deal with
vigilance/disciplinary/court cases in relation to the
employees of erstwhile DVB who could not become part
of any of the companies on 01.07.2002 in terms of the
C Rules, the Government had issued a letter to Delhi
TRANSCO Ltd., The letter pertained to removal of doubts,
disputes and differences under the provisions of the
Rules and issue of .clarificatory order of the Government
under Rule 12. It was then conveyed that the vigilance,
D disciplinary and Court cases in respect of employees .of
the then DVB who could not become part of any of the
companies, namely, DPCL, Delhi TRANSCO, lndraprastha
Power Generation Co. Ltd., BSES Yamuna Power Ltd.,
BSES Rajdhani Power Ltd. and NDPL on 01.07.2002 i.e.
E on the date of restructuring due to retirement/dismissal I
removal/ compulsory retirement shall be processed and
decided by such company which would have been the
controlling authority of the employee but for their
retirement/dismissal/removal/ compulsory retirement etc ..
F It is absolutely cle_ar that by this letter the whole liability
was put on the head of the DISCOMS. [Para 34] [1074-BG]
5.3. The argument made that the Government had
already exhausted its power under Rule 12(1) while
G taking the earlier decision dated 17.09.2002 and, hence,
it had lost the power to pass any fresh orders, is clearly
incorrect. There can be no finality in the matter of removal
doubts or the removal difficulties and also taking the
decisions under Rule 12(1). The argument that once the
H Government has exercised the powers unde.r the Rule
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1045
ORS.
12(1 ), the power gets exhausted and the decision
A
becomes final and binding on all the parties, including the
Government, is clearly incorrect. The argument that there
is no further power under the Rule in the Government to
issue any letter dated 21.01.2004, is also an incorrect
argument. Nothing stopped the Government from taking
B
any decision and it has taken a clearest possible decision
by letter dated 21.01.2004 which is binding on all the
parties. This is apart from the fact that the Government
has not dealt with the subject in its earlier decision dated
17.09.2002 as regards the controversy which has fallen c
for consideration in this matter. [Para 42] [1079-C-F]
Case Law Reference
2009 (5) sec 625
distinguished
Para 30
2006 (1 o) sec 452
distinguished
Para 31
2006 (8) sec 726
distinguished
Para 31
1978 (2) sec 50
distinguished
Para 31
2008 (4) sec 190
distinguished
Para 31
2005 (7) SCC 234
distinguished
Para 31
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4269 of 2010.
From the Judgment & Order dated 30.03.2006 of the High
Court of Delhi at New Delhi in LPA No. 98 of 2005.
WITH
C.A. No. 4270 of 2006.
P.P. Malhotra, ASG, P.P. Rao, Sudhir Nandrajog, P.S.
D
E
F
Patwalia, Jayant Nath, Anupam Verma, Abhay Kumar,
G
Abhishek Munot, Ashish Kumar, Vibha Datta Makhija, Mansoor
Ali Shoket, A. Ahlawat, Rani Chhabra, S.K. Dubey, Rakesh K.
Sharma, Jamal Akhtar, Ashok Gurnani (for Rachna Gupta),
Devashish Bharuktia for the appearing parties.
The Judgment of the Court was delivered by
H
1046
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A
V.S. SIRPURKAR, J. 1. This judgment shall dispose of
the two appeals being CA No. 4269 of 2006 and CA No. 4270
of 2006. Civil Appeal No.4269/2006 has been filed on behalf
of North Delhi Power Limited and Civil Appeal No.4270 of 2006
has been filed by BSES Rajdhani Limited. Since a common
B question falls for consideration in both the appeals,_ the same
are disposed of by this common judgment. The question can
be framed as under:
c
D
"Whether the appellants are responsible· for meeting the
liabilities relating to employees who ceased to be the
employees of erstwhile Delhi Electric Supply Undertaking
(Predecessor of Delhi Vidhyut Board - DVB) prior to
1. 7 .2002 on account of their retirement, removal, dismissal
or compulsory retirement in accordance with the provisions
of Delhi Electric Reforms Act, 2000?"
By the impugned judgment dated 30.3.2006 passed by the
Delhi High Court, the High Court has held that the appellants
alone would be responsible to meet such liabilities.
2. In order to understand the nature of controversy and the
E ramifications thereof, some facts common to both these
appeals would be necessary.
Common Facts:
3. The L:egislative Assembly of the National Capital
F Territory of Delhi passed the Act on 23.11.2000 being Delhi
Electric Reforms Act, 2000 (hereinafter called the "Act, 2000").
This Act came into force on 8.3.2001. The Preamble of this Act
reads as under:
G
H
"An Act to provide for the constitution of an Electricity
Commission, restructuring of the electricity industry
(rationalization of generation, transmission, distribution and
supply of electricity}, increasing avenues for participation
of private sector in the electricity industry and generally for
taking measures conducive to the development and
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1047
QRS. [V.S. SIRPURKAR, J.]
management of the electricity industry in an efficient,
A
commercial, economic and competitive manner in the
National Capital Territory of Delhi and for matter connected
therewith or incidental thereto.
BE it enacted by the Legislative Assembly of the National
8
Capital Territory of Delhi in the Fifty-first year of the
Republic of India as follows:"
Section 2 pertains to definitions of relevant terms used in
the Act and sub-section (1) contains the definitions clauses.
Sub-sections (2) and (3) of Section 2 run as under:
C
"(2)
Words and expressions used but not defined in this
Ac~ and defined in the Electricity (Supply) Act, 1948
(Central Act 54 of 1948) have the meanings
respectively assigned to them in that Act.
D
(3)
Words and expressions used but not defined either
in this Act or in the Electricity (Supply) Act, 1948
(Central Act 54 of 1948) and defined in the Indian
Electricity Act, 1910 (Central Act 9 of 1910) have
the meanings respectively assigned to them in that
E
Act."
Thus the definitions of relevant terms under Electricity
(Supply) Act, 1948 and Electricity Act, 1910 were incorporated
in the Act, 2000. Section 3 of the Act, 2000 provides for
F
establishment of Delhi Electricity Regulatory Commission. The
functions of this Commission are provided in Section 11. Some
of the functions, amongst others, as provided in Section 11 (1)
are as under:
"(c)
to regulate power, purchase and procurement
G
process of the licensees and transmission utilities
including the price at which the power shall be
procured from the generating companies,
generating stations or from other sources for
transmission, sale, distribution and supply in the
H
1048
SUPREME COURT REPORTS
[2010] ~ S.C.R.
A
National Capital Territory of Delhi;
B
c
D
E
(d)
to promote competition, efficiency and economy in
the activities of the electricity industry to achieve the
objects and purposes of this Act;
(e)
to aid and advise the government in matters
concerning electricity generation, transmission,
distribution and supply in the National Capital
Territory of Delhi;
(h)
to promote competitiveness and make avenues for
participation of private sector in the electricity
industry in the National Capital Territory of Delhi and
also to ensure a fair deal to the customers;
(k)
to regulate the assets, properties and interest in
properties concerned or related to the electricity
industry in the National Capital Territory of Delhi
including the conditions governing entry into, and
exit from the electricity industry in such manner as
to safeguard the public interest;
(I)
to issue licences for transmission, bulk supply,
distribution or supply of electricity and determine
the conditions to be included in the licences;"
F
4. Under Section 14 of the Act, 2000, the subject of
incorporation of companies for the purposes of generation,
transmission or distribution of electricity was dealt w,ith~ Subsections (1), (2) and (6) of Section 14, which are relevant for
our purposes provide as under:
G
"14(1)
The government may, as soon as may be after
the commencement of this Act, cause one or more
companies to be incorporated and set up under the
provisions of the Companies Act, 1956 (Central
Act 1 of 1956) for the purpose of generation,
H
transmission or distribution of electricity. including
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1049
ORS. [V.S. SIRPURKAR, J.]
companies engaged in more than one of the said
A
activities in the National Capital Territory of Delhi
and may transfer the existing generating stations or
the transmission system or distribution system, or
any part of the transmission system or distribution
system, to such company or companies.
B
14(2) The government may designate any company set
up under sub-section (1) to be the principal
company to undertake all planning and coordination
c
in regard to generation or transmission or both; and
such company shall undertake works connected
with generation or transmission and determine the
requirements of the territory in consultation with the
other companies engaged in generation or
transmission for the National Capital Territory of
Delhi, the Commission, the Regional Electricity
D
Board and the Central Electricity Authority and any
other authority under any law in force for the time
being! or any other government concerned.
14(6) The government may convert the conipanies set up
under this Act to joint venture companies through a
process of disinvestment, in accordance with the
transfer scheme prepared under the provisions of
this Act."
Section 15 of the Act, 2000 provides for Reorganisation
of Delhi Vidyut Board and transfer of properties, functions and
duties thereof. Sub-sections (3), (6), (7) and (9) of Section 15,
which are relevant for purposes provide:
E
F
"15(3)
Such of the rights and powers to be exercised
G
by the Board under the Electricity (Supply) Act,
1948 (Central Act 54 of 1948), as the government
may, by notification in the official gazette, specify,
shall be exercisable by a company or companies
established as the case may be, under Section 14,
H
A
B
c
1050
SUPREME COURT REPORTS
[2010],5· S.C.R.
for the purpose of discharge of the functions and
duties with which it is entrusted.
15(6) A transfer scheme may -
(a)
provide for the formation of subsidiaries, joint
venture, companies or other schemes of divisions,
amalgamation, merger, reconstruction or
arrangements;
(b)
define the property, interest in property, rights and
liabilities to be allocated -
(i)
by specifying or describing the property, rights and
liabilities in question,
(ii)
by referring to all the property, interest in property,
D
rights and liabilities comprised in a specified part
of the transferor's undertaking, or
E
F
G
H
(iii)
partly in one way and partly in the other:
Provided that the property, interest in property,
rights and liabilities shall be subject to such further
transfer as the government may specify;
(c)
provide that any rights, or liabilities specified or
described in the scheme shall be enforceable by
or against the transferor or the transferee;
(d)
impose on any licensee an obligation to enter into
such written agreements with, or execute such other
instruments in favour of any other subsequent
licensee as may be specified in the scheme;
(e)
make such supplemental, incidental and
consequential provisions as the transferor licensee
considers appropriate including provision
specifying the order in which any transfer or
transaction is to be regarded as taking effect;
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1051
ORS. [V.S. SIRPURKAR, J.]
(f)
provide that the transfer shall be provisional subject
A
to the provisions of Section 18.
15(7) All debts and obligations incurred, all contracts
entered into and all matters and things done by, with
or for the Board, or a company or companies
established as the case may be, under Section 14
B
or generating company or distribution company or
companies before a transfer scheme becomes
effective shall, to the extent specified in the relevant
transfer scheme, be deemed to have been incurred,
C
entered into or done by, with or for the government
or the transferee and all suits or other legal
proceedings instituted by or against the Board or
transferor, as the case may be, may be continued
or instituted by or against the government or
concerned transferee, as· the case may be.
D
15(9) The Board shall cease to exist with the transfer of
functions and duties specified and with the transfer
of assets as on the effective date."
Section 16 is extremely important which deals with the
subject of Personnel. It provides:
E
"(1) · The government may by a transfer scheme provide
for the transfer of the personnel from the Board to
(2)
a company or companies established as the case
F
may be, under Section 14 and distribution
companies (hereinafter referred to as "transferee
company or companies") on the vesting of
properties, rights and liabilities in a company or
companies established, as the case may be, under
G
Section 14 or the distribution companies.
Upon such transfers the personnel shall hold office
in the transferee company on terms and conditions
th~t may be specified in the transfer scheme
H
A
B
1052
SUPREME COURT REPORTS
[2010] 5 S.C.R.
subject, however, to the following, namely:
(a)
that the terms and conditions of the service
applicable to them in the transferee company shall
not in any way, be less favourable than or inferior
to those applicable to them immediately before the
transfer;
(b)
that the personnel shall have continuity of seNice
in all respects; and
c
(c)
that the benefits of service accrued before the
transfer shall be fully recognized and taken in
account for all purposes including the payment of
any and all terminal benefits."
Section 57 of the Act, 2000 which deals with the Power
D to remove difficulties reads as under:
"(1)
If any difficulty arises in giving effect to the
provisions of this Act or rules, regulations, schemes
or orders made thereunder, the government may,
E
by order published in the Official Gazette, make
such provisions, not inconsistent with the provisions
of this Act as may appear to it to be necessary or
expedient for removing the difficulty:
F
Provided that no order shall be made under this
section after the expiry of two years from the date
of the commencement of this Act.
(2)
Every order made under this section shall be laid,
as soon as may be after it is made before the
G
Legislative Assembly of the National Capital
Territory of Delhi."
5. In accordance with the above provisions a Transfer
Scheme called "Delhi Electricity Reforms (Transfer Scheme)
H Rules, 2001" (hereinafter referred to as "the Scheme, 2001 ")
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1053
ORS. [V.S. SIRPURKAR, J.]
came into existence. Rule 2 of the Scheme, 2001 deals with
A
the definitions of various terms. Relevant Clauses (b), (c), (h)
and (k) of Rule 2 read as under:
"(b)
"assets" includes all rights, interests and claims of
whatever nature as well as block or blocks of assets
B
of the Delhi Vidyut Board;
(c)
"Board" means the Delhi Vidyut Board constituted
under Section 5 of the Electricity (Supply) Act, 1958
(54 of 1948);
(h)
"DISCOMS" means and includes DISCOM 1,
DISCOM 2 and DISCOM 3 collectively.
c
(k)
"liabilities" include all liabilities, debts, duties,
obligations and other outgoings including
D
contingent liabilities, statutory liabilities and
government levies of whatever nature, which may
arise in regard to dealings before the date of the
transfer in respect of the specified undertakings;"
Rule 3 of the Scheme, 2000 provides for transfer of assets,
etc., of the Board to the Government as defined in Rule 2(c)
above. It provides that all the assets, liabilities and proceedings
of the Board shall stand transferred to and vest in the
government absoiutely. Sub-Rule (2) of Rule 3 is significant and
provides as under:
"3(2) Nothing in Sub-rule (1) shall apply to rights,
responsibilities and obligations in respect of the
personnel and personnel related mattes, which have
been dealt in the manner provided under Rule 6."
Rule 4 is connected only to Rule 3(1) and has nothing to
do with Rule 3(2) which deals with the personnel which subject
is exclusively dealt with in Rule 6. Sub-rule (8) of Rule 6 is very
significant and runs as under:
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1054
SUPREME COURT REPORTS
[2010] 5 S.C.R.
A
"6(8) Subject to sub-rule (9) below, in respect of all
statutory and other schemes and employment
related matters, including the provident fund,
gratuity fund, pension and any superannuation fund
or special fund created or existing for the benefit
B
of the personnel and the existing pensioners, the
relevant transferee shall stand substituted for the
Board for all purposes and all the rights, powers
and obligations of the Board in relation to any and
all such matters shall become those of such
c
transferee and the services of the personnel shall
be treated as having been continuous for the
purpose of the application of this sub-rule."
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Sub-rule (9) of Rule 6 provides:
"6(9) The government shall make appropriate
arrangements as provided in the tripartite
agreements in regard to the funding of the terminal
benefits to the extent it is unfunded on the date of
the transfer from the Board. Till such arrangements
are made, the payment falling due to the existing
pensioners shall be made by the TRANSCO,
subject to appropriate adjustments with other
transferees.
For the purpose of this sub-rule, the term -
(a)
"existing pensioners" mean all the persons eligible
for the pension as on the date of the transfer from
the Board and shall include family members of the
personnel as per the applicable scheme; and
(b)
"terminal benefits" mean the gratuity, pension,
dearness and other terminal benefits to the
personnel and existing pensioners."
6. It is an admitted case that while the government was
H contemplating unbundling of Delhi Vidyut Board (hereinafter
NORTH DELHI POWER LIMITED v. GOVT. OF NCT & 1055
ORS. [V.S. SIRPURKAR, J.]
referred to as "DVB") for handing over the distribution of A
electricity to private companies as also·for restructuring the
electricity industry and rationalization of generation,
transmission and supply of electricity by increasing the avenues
for participation of private sector in the electricity industry in the
National Capital Territory of Delhi, the erstwhile employees of
B
the DVB displayed their apprehension ano reservations to the
effect that on emergence of the private companies their
services-may not be protected. Therefore, these employees
were taken into confidence by assuring them that their services
will be protected by entering into Tripartite Agreements which c
were executed on 28.10.2000 and 9.11.2000 between
. Government of National Capital Territory of Delhi ("GNCTD"),
, DVB and Delhi Vidyut Board Joint Action Committee. The said
'-committee consisted of various Unions as well as Junior
·Engineer Officer Association. Under these Tripartite
Agreements, the existing pensioners as well as the employees
were protected. All the existing welfare schemes and benefits
to the retired employees were allowed to continue.
7. After the Act and the scheme came on the anvil, as a
first step of privatization, the Request for Qualification (RFQ)
Documents for privatization of electricity distribution in Delhi
was' floated on 15.2.2001 giving in detail the status of the DVB,
the\ftianner of the privatization where it was specifically
proV:{deti· that DVB is being offered to private companies as a
going concern on business valuation method, transferring all the
past, present and future liabilities including that of existing
employees as well as the retirees. The details of the employees
D
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F
as on 1.1.2000 were also provided. Para 11.6 of the RFQ
Document mentions about the fact that apart from existing
employees which were 24,634 in number as on 1.1.2000, there
G
were about 9200 retired employees. The aforementioned
transfer scheme was notified on 21.11.2001. Under the scheme
the distribution companies, generation, transmission and
holding companies were identified. At the time when the bids
were put in by the companies who were in consideration and
H
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SUPREME COURT REPORTS
[2010] 5 S.C.R.
A the negotiations were on, the DISCOMS put in revised bids.
The present appellants which were South-West Delhi Electricity
Distribution Company Ltd. (now known as BSES Rajdhani
Power Ltd.), as also North-West Delhi Distribution Company
Ltd. (now known as NDPL) were amongst those who submitted
B the revised bids documents. Their demand was that the
contingent liability arising out of any event including any legal
proceedings prior to the transfer should be limited to Rs.1 crore
per annum considered individually or collectively during the first
five years. Based on that sub-rule (3) in Rule 8 came to be
c added in the Scheme, 2001 on 26.6.2002 which is as under:
D
E
"Notwithstanding anything contained in these Rules
including the schedules, the liabilities arising out of
litigation, suits, claims, etc., pending on the date of the
transfer and/or arising due to events prior to the date of
the transfer shall be borne by the relevant distribution
company, viz., DISCOM 1, DISCOM 2 and DISCOM 3
respectively, subject to a maximum of Rs.1 crore per
annum. Any amount above this shall be to the account of
the holding company in the event for any reason the
Commission does not allow the amount to be included in
the revenue requirement of the DISCOM."
Resultantly from 1.7.2002, the DVB unbundled into six
companies, they being DISCOM 1 (BSES Yamuna Power Ltd.),
F DISCOM 2 (BSES Rajdhani Power Ltd.)-appellant and
DISCOM 3 (North Delhi Power Ltd.)-appellant, Delhi Power
Supply Company Ltd. (TRANSCO) and generation company
(GENCO). Another company called "DPCL" (holding company)
was also constituted with aims and objects to hold shares in
G the aforementioned DISCOM companies. The said DPCL holds
49% shares in DISCOM 1, 2 and 3 and holds 100% shares in
GENCO and TRANSCO. For all practical purposes DVB
ceased to exist from 1.7.2002.
8. There are various schedules attached to the Scheme,
H 2001. The distribution undertaking its assets, liabilities and
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1057
ORS. [V.S. SIRPURKAR, J.]
proceedings concerning the distribution areas are specified in
A
Part Ill of Schedule H. Relevant Schedules are Part I for
DISCOM 1, BSES and Part Iii for OISCOM 3, NDPL.
9. Rule 12 of the Scheme, 2001 provides that the decision
of the Government shall be final and sub-Rule (1) stipulates that
B
if any doubt, dispute, difference or issue shall arise in regard
to the transfers under these Rules, subject to the provisions of
the Act, the decision of the government thereon, shall be final
and binding on all parties.
10. On the backdrop of these legal provisions it will now
C
be proper to see the individual facts in the two appeals.
11. The Letters Patent Appeal filed by the appellant before
the High Court was dismissed. It so happened, that respondent
No.3 herein Shri K. R. Jain, who was an erstwhile employee of
D
the Delhi Electric Supply Undertaking (DESU), superannuated
from service on 31.07.1996. Eventually, Delhi Vidyut Board
(DVB) became successor of Delhi Electricity Supply
Undertaking (DESU). NDPL was incorporated on 04.07,2001
and inherited the distribution undertaking on 01.07.2002 along
with the assets, liabilities, personnel and proceedings in
pursuance of statutory transfer scheme notified by the
Government pursuant to Sections 14-16 and 60 of the Delhi
Electricity Reforms Act, 2000. It was mt.:ch before that, that
respondent No. 3 was superannuated. His pension was paid
from the Terminal Benefit Fund, 2002 of DVB. The DVB had
floated Time Bound Terminal Scale Scheme by its Office Order
dated 23.07.1997 and Resolution No. 216 dated 16.07.1997.
Claiming that though he had superannuated on 31.07.96, still
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he was covered by the scheme, respondent No.3 filed a Writ
Petition No. 2337 of 2004 seeking appropriate direction
G
against Delhi Government, Delhi Power Co. Ltd. and Delhi
Power Supply Company and claimed benefits arising out of the
Scheme. Significantly enough, NDPL was not made a party nor
was there any claim against it. This Writ Petition was allowed
by the Learned Single Judge, holding that respondent No.3 was
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SUPREME COURT REPORTS
[2010] 5 S.C.R.
A entitled to avail the benefits under Time Bound Promotional
Scale Scheme (TBPS) and that DVB had unjustly denied him
his dues. Holding the present appellant as a successor,
Mandamus was issued against the appellant who was not a
party and was not given an opportunity of hearing. This was
B based on the statement of an advocate appearing for
respondent Nos. 1 and 2 herein to the effect th.§!t it was the
appellant-petitioner who was the successor and was as such
responsible to implement the judgment dated 23.03.2904.
12. On 23.11.2004 an application was filed for recall/
C modification of the judgment before the Learned Single Judge
of the Delhi High Court. This application was, however, allowed
holding that:
(a)
respondent No.3 had retired from DVB on 31.07.96
D
from Ashok Vihar
(b)
All liabilities of DVB, other than those specifically
transferred in terms of Schedules 'B' to 'F' of the
Transfer Scheme shall be the liability of the holding
E
company.
(c)
In terms of the Rule 6 (2) and (8) of the transfer
scheme, only such proceedings were transferred to
successor companies as were pending on
01.07.2002. Since no proceedings were pending
F
qua the entitlements of respondent No.3, hence it
was the holding company and- not the present
appellant who would be liable to pay the arrears
and other entitlements of respondent No. 3 under
the TBPS Scheme.
G
13. Respondent No.1 and.2 filed a Letters Patent Appeal
against the modified order of the Learned Single Judge dated
23.11.2004 vide LPA No. 98/2005. This appeal came to be
allowed by the Division Bench of the High Court. The High
H Court held that the appellant-petitioner alone was responsible
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1059
ORS. [V.S. SIRPURKAR, J.]
for the payments claimed by respondent No.3.
14. The second matter has emanated out of the judgment
and order dated 25.05.2006 wherein the Learned Single Judge
of the High Court has dismissed the Writ Petition filed by the
appellant-petitioner being Writ Petition No. 5110 of 2005
[BSES Rajdhani Power Ltd. v. Govt. of NCT of Delhi & Another].
A
B
By that Writ Petition, validity and legality of the letter dated
21.01.2004 issued by the Government of NCT of Delhi was
challenged. By this letter, a clarification was issued by the
Government to the effect that vigilance/ disciplinary/ Court
C
cases in respect of employees of erstwhile DVB, who could not
become part of any of the companies on the date of
restructuring due to retiremenUdismissal/removal/compulsory
retirement shall be processed and decided by the successor
company like the appellant-petitioner who would have been the
controlling authority of the employees but for their retiremenU
D
removal/dismissal/compulsory retirement as per the Schedule
in the Transfer Scheme. In pursuance of this letter, all the cases
were forwarded with records involving employees who, due to
their retiremenUsuspension/ termination or death were allegedly
not transferred to DISCOMS on 01.07.2002. This was resisted
by DISCOMS including the appellant nMein on the ground that
such employees who were not tran§fetr~d to.them were in fact
liability of the holding company. Representations were sent
against this clarificatory letter dated 21.01.2004. Such
representations were sent even by NDPL. However, in K.R.
Jain's case, the Division Bench deciding the LPA, took the view
that such employees were the liability of the transferee
DISCOMS like NDPL or, as the case may be, the BSES.
Relying on that judgment, the Writ Petition of the petitioner was
dismissed by judgment dated 25.05.2006 by the Learned
Single Judge of the High Court. Since it would have been futile
for the appellant to go to the Division Bench, it has straightaway
moved this Court by way of the present appeal.
15. In the impugned judgment, the whole history of the
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[2010] 5 S.C.R.
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legislation was traced by the Division Bench and after noting
Rules 2 (k}, {n) and (I), and Rule 3 along with Rule 12, it was
observed that the assets and liabilities as given in Schedule A
to G to different companies did not relate to the liabilities
regarding the personnel vide Rule 3 (2). Rule 6 was noted to
B be dealing with· the responsibilities of the personnel and a
categorical finding was recorded that the Schedules under Rule
4 were not helpful to determine the liabilities in respect of the
personnel, even if they were retired personnel and pensioners.
Noting Section 16 of the DERA, 2000 and Rule 6 of the DERR,
C 2001 and, more particularly, noting Rule 6 (8), the High Court
chose not to agree with the contentions raised before it that the
responsibility of the NDPL was only with respect to those
personnel who had been transferred to the NDPL as per the
list mentioned in Appendix E. It located the following categories
[} of the personnel required to be dealt with:
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"16. There would be-the following categories of
personnel required to.b~ dealt with:
(a)
existing employees of DVB 011 the date of
transfer scheme who were on roll and
working;
(b)
employees under suspension and facing
disciplinary/ departmental proceedings at the
time of the transfer scheme.
(c)
employees terminated, dismissed as a
consequence of departmental proceedings
and who had initiated litigation/cases,
proceedings against DVB and such
proceeding/ litigation was pending at the
time of disbanding of DVB.
{d)
retired employees who after retirement filed
cases in courts claiming some benefits or
dues, and such cases were pending at the
NORTH DELHI POWER LIMITED v. GOVT. OF NCT &1061
ORS. [V.S. SIRPURKAR, J.]
time of the transfer scheme.
(e)
retired/dismissed employees of DVB who
filed court cases after the transfer scheme
. and such case got decided in their favour."
There is no dispute in respect of personnel at (a). However,
Mr.