# M. HIDAYATULLAH v. RAMASWAMI AND

- **Citation:** [1966] 3 S.C.R. 486
- **Court:** Supreme Court of India
- **Decided:** 1966-02-07
- **Case number:** Civil Appeal No. 530 of 1964
- **Bench:** P. B. Gajendragadkar, c. J. K. N. WA1'Cl!OO, M. Hidayatullah, V. Ramaswami, P. Saita1'Arayana Raju
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-hidayatullah-v-ramaswami-and-3577
- **Pages:** 14

## Headnote

Corutitutlon of India Art. 357(2)-"tllingJ done or omitr•d re be
done"--Scope of.
: Bank of l'mia/a Reg11latlon and Management Order, 1954-validity of.
Rule 27 of Staff R11les framed thereunder-Whether violative of Art. 31 !-
Whether staO rules infringe Art. 14. Corporation-Whether niajoriJy ca"
exercise po11-ers of.
Patia/a Stale Reg11/ations-Applied to Bank employees by "ext<nsion"-
JVht1ther extension executive acr.
On March 4, 1953, the President of India assumed powers of tbe
Government of PEPSU (which in.eluded Patiala) under Article 356 of
i11 Constitution. On February 27, 1954, in exercise of the powers vested
in him by the Proclamation, the President issued the Bank of Patiala
Regulation and Management Order 1954, to provide for the heller regulation and management of the Bank.
By virtue of the power. conferred
upon it by Clause 4( 1) (iii) of the Regulation Order, the Board of
Directors of tho Banlt framed certain Staff Rules.
Rule 27 of which provided for compulsory retirement of employees of the Bank. ---
Tho appellanf, who was an employee of the Patiala State Bank wa•
compulsorily retired hy an order of the Board under Rule 27 passed
in June 1958.
He challenged the order in a suit mainly on the ground
that Rule 27 was illegal and void.
The Trial Court granted a decree
.ubstantially allowing the appellant's claim but on appeal, this decree W3'
set aside by the High Coun.
In the appeal to this Coun, it was contended on behalf of the appellant, Infer alio, (i) that though the Regulation Order [Clause 4(l)(iii) of
which delegated power to the Board of Directors of the Bank to frame
staff rules) was made on February 27, 1954, it was not publi,hed in
the Gazette until March 14, 1954, hy which time, in view of the revocation of the proclamation on ~1arch 7, 1954. the powers of the Prc~i~
dent to make rules governing the service conditions of Government servants in the State had lapsed and the delegation by the President to the
Board of the Power to frame rules had ipso facto come to an end. The
Bo&Td therefore, bad no authority to frame the Slaff Rules on Moreb
25, 1954 and to enforce them from April l, 1954; that in any event
the Regulation Order v:ac; in effect and sub!itance a legislalive Act and, in
,;.,w of the provisions of Anicle 3 57 (2), its operation could not extend
beyond the period of one year specified in that Anicle;
(ii) that prior
to the promulgation of the Regulation Order in 1954 the Patiala State
Regulations and other rules or orders. except the pension rules. made
by the Ruler of Patiala. were applicable to the staff of the Patiala State
Bank; the Staff Rules sought to supersede the provisions of the Patiala
State Regulations and rules made by the Board. of Directota c~uld not
abrogate the Regulations promulgated by the Rulor who exerciae6 the
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RAM PRASAD v. PUNJAB (Raju, J.)
487
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powers of the Legislature; (iii) that Rule 27 was unconstitutional as it
offended the guarantee under Anicle 311 of the Constitution and the
Staff Rules were also violativ·o of Article 14; (v) that the Board which
promulgated the Staff Rules had not been properly constituted inasmuch
as some of the Directors were not present at the meeting.
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HELD :
(i) Although the Regulation Order was made on February
27, 1954 and was not published in the Gazette until March 14, 1954,
the order itself provided for its commencement on the date on which it
was made and it therefore came in to operation on February 27, 1954,
i.e., before the termination of the President's Rule in PEPSU.
On a consideration of the provisions of the Regulation Order, it is
manifest that those provisions were made for the better regulation and
management of the affairs of the Bank and it would be an absurdity to
hold that some of the pro;isions would cease to be in operation after
the period of one year specified in Art. 357(2);
all the clauses of the
Regulation Order, including Clause 4(1)(iii), come within the

## Text

SURI RAM PRASAD (DECEASED) BY HIS LEGAi.
A
REPRESENTATIVE
I'.
THE STATE OF PUNJAB
February 7, 1966
[P. B. GAJENDRAGADKAR, c. J. K. N. WA1'Cl!OO,
M. HIDAYATULLAH, V. RAMASWAMI AND
P. SAITA1'ARAYANA RAJU, JJ.]
Corutitutlon of India Art. 357(2)-"tllingJ done or omitr•d re be
done"--Scope of.
: Bank of l'mia/a Reg11latlon and Management Order, 1954-validity of.
Rule 27 of Staff R11les framed thereunder-Whether violative of Art. 31 !-
Whether staO rules infringe Art. 14. Corporation-Whether niajoriJy ca"
exercise po11-ers of.
Patia/a Stale Reg11/ations-Applied to Bank employees by "ext<nsion"-
JVht1ther extension executive acr.
On March 4, 1953, the President of India assumed powers of tbe
Government of PEPSU (which in.eluded Patiala) under Article 356 of
i11 Constitution. On February 27, 1954, in exercise of the powers vested
in him by the Proclamation, the President issued the Bank of Patiala
Regulation and Management Order 1954, to provide for the heller regulation and management of the Bank.
By virtue of the power. conferred
upon it by Clause 4( 1) (iii) of the Regulation Order, the Board of
Directors of tho Banlt framed certain Staff Rules.
Rule 27 of which provided for compulsory retirement of employees of the Bank. ---
Tho appellanf, who was an employee of the Patiala State Bank wa•
compulsorily retired hy an order of the Board under Rule 27 passed
in June 1958.
He challenged the order in a suit mainly on the ground
that Rule 27 was illegal and void.
The Trial Court granted a decree
.ubstantially allowing the appellant's claim but on appeal, this decree W3'
set aside by the High Coun.
In the appeal to this Coun, it was contended on behalf of the appellant, Infer alio, (i) that though the Regulation Order [Clause 4(l)(iii) of
which delegated power to the Board of Directors of the Bank to frame
staff rules) was made on February 27, 1954, it was not publi,hed in
the Gazette until March 14, 1954, hy which time, in view of the revocation of the proclamation on ~1arch 7, 1954. the powers of the Prc~i~
dent to make rules governing the service conditions of Government servants in the State had lapsed and the delegation by the President to the
Board of the Power to frame rules had ipso facto come to an end. The
Bo&Td therefore, bad no authority to frame the Slaff Rules on Moreb
25, 1954 and to enforce them from April l, 1954; that in any event
the Regulation Order v:ac; in effect and sub!itance a legislalive Act and, in
,;.,w of the provisions of Anicle 3 57 (2), its operation could not extend
beyond the period of one year specified in that Anicle;
(ii) that prior
to the promulgation of the Regulation Order in 1954 the Patiala State
Regulations and other rules or orders. except the pension rules. made
by the Ruler of Patiala. were applicable to the staff of the Patiala State
Bank; the Staff Rules sought to supersede the provisions of the Patiala
State Regulations and rules made by the Board. of Directota c~uld not
abrogate the Regulations promulgated by the Rulor who exerciae6 the
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RAM PRASAD v. PUNJAB (Raju, J.)
487
A
powers of the Legislature; (iii) that Rule 27 was unconstitutional as it
offended the guarantee under Anicle 311 of the Constitution and the
Staff Rules were also violativ·o of Article 14; (v) that the Board which
promulgated the Staff Rules had not been properly constituted inasmuch
as some of the Directors were not present at the meeting.
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HELD :
(i) Although the Regulation Order was made on February
27, 1954 and was not published in the Gazette until March 14, 1954,
the order itself provided for its commencement on the date on which it
was made and it therefore came in to operation on February 27, 1954,
i.e., before the termination of the President's Rule in PEPSU.
On a consideration of the provisions of the Regulation Order, it is
manifest that those provisions were made for the better regulation and
management of the affairs of the Bank and it would be an absurdity to
hold that some of the pro;isions would cease to be in operation after
the period of one year specified in Art. 357(2);
all the clauses of the
Regulation Order, including Clause 4(1)(iii), come within the purview
of the saving clause in Anicle 357(2) which preserves the validity of
"things done or omitted to be done" before the expiratwn of tho period
of one year after the proclaimation has ceased to operate and the Regulation Order therefore continued to be in operation after the expiration
of that year.
[494 B-H]
Foster v. Pritchard [1857) 2 L.J. Ex. 215; referred to.
(ii) The Patiala State Regulations were applied to the employees of
the St•te Bonk of Patiala as a result of an "extension" mado by the
Maharaja pursuant to the executive powers vested in him.
The act of
extension being as executive act it could be changed by a similar executive
act.
What was changed or superseded was the extension and not the
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rules. [497 BJ
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(iii) There was no force in the contention that Rule 27 offended Article
311 or that the Staff Rules were violative of Anicle 14. [498 F1
Motiram Deka v. N. E. Frontier Railway [1964] 5 S.C.R. 683, and
Lachhman Das v. State of Punjab [1963) 2 S.C.R. 353; referred to.
(iv) The High Court had rightly held that under the law governing
corporations, a majority of the members of the Corporation is entitled
to exercise the powers of the Corporation and that the rule regarding corporations is equally applicable to a company. The Board was, therefore, properly constituted at the time w)len the Staff Rules were promulgated. [499
Al
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 530 of
1964.
Appeal from the judgment and decree dated December 19,
1962 of the Punjab High Court in Regular First Appeal No. 78 of
1961.
C. B. Aganva/a, K. P. Bhandari and R. Gopa/akrishnan, for the
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appellant.
Bishan Narain, K. S. Chawla and R. N. Sachthey, for the respondents.
488
SUPREME COURT REPORTS
[I 966] 3 s.c.ll.
The Judgment of the Court was delivered by
Satyaoarayana Raju, J. This appeal, on certificate granted by
the High Court of Punjab, arises out of a suit filel! by one Ram
Prasad, against the State of Punjab, for a declaration that the
order of compulsory retirement passed by the latter against him
was invalid.
Ram Prasad originally entered service as a Clerk, in the year
1924, in the Patiala Saddar Treasury in what was then the Patiala
State. He was subsequently transferred in the same capacity to
the Patiala State Bank on February 27, 1984 Bk and was confirmed
in his appointment. On September I, 1985 Bk, he was promoted
to the next higher grade on the establishment of the Patiala State
Bank. Thereafter, he was promoted a~ Manager and posted to
the Bhatinda branch of the Bank on April I, 1944. On April I,
1949 he was promoted as Selection Grade Manager by the Board
of Directors of the Bank in the grade of Rs. 340-20-500-525-700.
On September 23, I 953 he was compulsorily retired from service
but was subsequently reinstated by the Government on June 10,
1954 since the order was legally defective. On June 11, 1958 the
Board passed an order compulsorily retiring him from service.
Ram Prasad challenged the order of compulsory retirement
passed by the Board on various grounds, by means of a suit instituted in the Court of the Subordinate Judge, Patiala. He pleaded
that the order of compulsory retirement amounted to 'dismissal
or removal' from service within the meaning of art. 311 of the
Constitution. He further maintained that r. 27 of the Bank of
Patiala (Staff) Rules, 1954, hereinafter termed the Staff rules, under
which the order of compulsory retirement was made, was illegal
and void. The order was also challenged on the ground that it
was ma/a fide.
The substantial relief claimed by him in the suit
was a declaration that r. 27 of the Staff rules was wholly unconstitutional, null and void for the reasons stated by him.
The respondent contested the suit contending inter alia that
the order of compulsory retirement was passed by the Board of
Directors of the Bank under rules which were legal and constitutionally valid and governed the employees of the Bank.
The Subordinate Judge, Patiala, framed appropriate issues.
He found all but two issues in favour of the appellant and granted
a decree substantially allowing the claims made by him. The
respondent thereupon filed an appeal in the High Court of Punjab
which allowed the appeal and set aside the judgment of the Subordinate Judge.
During the pendency of the appeal in the High
Court Ram Prasad died and his widow was brought on record as
his legal representative.
However, it will be convenient to refer
to Ram Prasad as the appellant.
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RAM PRASAD v. PUNJAB (Raju, !.)
489
Before entering into the merits of the appeal, it would be
convenient to refer very briefly to the historical background of
the legislation. The Patiala State Regulations were first promulgated in the year 1908 and governed the employees of the
State in matters relating to pay, allowances, leave, pension and
travelling allowances. The Regulations were revised and re-published in the year 1931. Subsequently, they were again revised and
re-issued as the Patiala Services Regulations in the year 1947.
Meanwhile, in April 1941, these Regulations were made applicable
expressly to the Bank staff of the Patiala State Bank by the Maharaja, with the exception of the rules relating to pension. On August
20, 1948, Patiala became a constituent unit of the Patiala and
East Punjab States Union (PEPSU). On the formation of the
Union, the Patiala Services Regulations were made applicable
to the entire territories of the Union by Ordinance No. I of 2005
Bk. Therefore the Patiala Services Regulations continued to
govern the members of the Patiala State Services even after they
became integrated into the PEPSU Services.
On March 4, 1953, the President of India assumed the powers
of the Government of PEPSU, in exercise of the powers conferred
on him by art. 356 of the Constitution.
On February 27, 1954, the President, in exercise of the powers
vested in him in relation to PEPSU by the Proclamation, issued
the Bank of Patiala Regulation and Management Order, 1954,
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hereinafter called the Regulation Order, to provide for the better
regulation and management of the affairs of the said Bank. We
will have occasion to refer to the material clauses of this Order at
a later stage.
By virtue of the powers conferred upon it by cl. 4(l)(iii) of
the Regulation Order, the Board of Directors of the Bank framed
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the Staff rules. Rule 27 of these rules, at the relevant date, was
in the following terms :
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"An employee shall retire at fifty five years of age provided that
(i) the Bank may, at its discretion and without giving
any reasons, retire any employee from the Bank's service
after he has completed the age of fifty years or the service
of twenty five years whichever happens first and no -claim
to special compensation on this account will be entertained;
(ii) the Bank retains the absolute right to retire any
employee after he has completed JO years of service without giving any reasons and no claim to special compensation on this account will be entertained. This right will
not be exercised except when it is the interest of the Bank
490
SUPREME COURT REPORTS
[1966] 3 S.C.R.
to dispense with the further services of an employee such
as on account of inefficiency, dishonesty, corruption or
infamous conduct.
Explanation I :
The action under proviso (ii) is intended to be taken :
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(a) Against an employee whose efficiency is impaired but
against whom it is not desirable to make formal charge of
inefficiency or, who has ceased to 1'c fully efficient that is,
the value of the empl0yee is clearly incommensurate with
the pay which he draws. It is not the intention to use the
provision as a financial weapon that is to say the provision
shall be used only in case of employees who are considered
unfit for retention on personal as opposed to financial grounds;
{b) In cases where reputation for corruption, dishonesty or
infamous conduct is clearly established even though no specific instance is likely to be proved under those rules.
The arguments advanced by Mr. Agarwala, learned counsel
for the appellant, have covered a wide ground, but, in the main,
he has impugned the validity of r. 27 set out above.
His contentions may be briefly summarised as follows :
(I) Prior to the promulgation of the Regulation Order
in 1954, the Patiala State Regulations and other Rules or
Orders, except the pension rules, made by the Ruler of Patiala,
were applicable to the staff of the Patia!a State Bank. The
Staff rules were made by the Board of Directors of the Bank
by virtue of the delegation made in its favour under cl. 4(l)(iii)
of the Regulation Order.
The delegation in favour of
the Board lapsed on March 7, 1954 with the termination of
the President's rule in PEPSU. Thereafter, the Board had
no authority or power or jurisdiction to approve of the Staff
rules on March 25, 1954 and to enforce them from April I,
1954. (2) The Board. assuming the delegation in its favour
to be valid, was not vested with the power to make rules regarding compulsory retirement of the servants of the Bank. (3) The
Staff rules seek to supersede the provisions of Regulation IX
of the Patiala State Regulations. Rules made by the Board
cannot abrogate the Regulations promulgated by the Ruler
who exercised the powers of the legislature. ( 4) The Board
which promulgated the Staff Rules had not been properly
constituted inasmuch as all the Directors were not present
at the meeting.
However, the main ground on which the validity of the staff
rtIJes is challenged is that the Regulation Order, though made on
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RAM PRASAD v. PUNJAB (Raju, J.)
491
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February 27, 1954, was published in the Gazette only on March 14,
1954, that by reason of the revocation of the Proclamation issued
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by the President the power of the President to make rules governing the service conditions of Government servants in the State
had lapsed and that the delegation by the President to the Board
power to frame rules ipso facto came to an end when the ProclamaB
tion was revoked, on the principle that the delegate's power comes
to an automatic end by reason of the principal's power having
lapsed .
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Mr. Bishan Narain, learned counsel for the respondent-State,
countered these arguments and maintained that the Staff Rules
were valid.
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We may initially set out the relevant facts with regard to the
Proclamation of Emergency by the President and its revocation.
As already stated, by notification dated March 4, 1953, the Pre-
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sident, in exercise of the powers conferred by art. 356 of the Constitution, assumed all functions of the government of the State of
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PEPSU and all powers vested in or exercisable by the Rajpramukh
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of the State. The Notification declared that the powers of the
legislature of the State shall be exercisable by or under the autho-
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rity of Parliament.
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By an order made by the President on the same date,
the
President issued a direction that all the functions of the GovernE
ment of the State of PEPSU and all the powers vested and exercisable by the Rajpramukh of the State under the Constitution or under
any other law in force in the State shall, subject to the superintendence, direction and control of the President, be exercised by
the Rajpramukh of the said State who was to act on the advice of
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the Adviser appointed by the President in that behalf.
By notification dated March 21, 1954, in exercise of the powen
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conferred by cl. (2) of art. 356 of the Constitution, the President
revoked the Proclamation issued by him under the said article on
March 4, 1953.
When a proclamation is made under art. 356, it will be open
to the President to specify in such proclamation (a) that he will
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himself exercise all or any of the functions of the Govt. of the State
or all or any of the powers vested in or exercisable by the Governor
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or any body or authority in the State other than the Legislature of
the State; (b) declare that the powers of the Legislature of the
State shall be exercisable by or under the authority of Parliament.
When a declaration is made to this effect by the President, it shall
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be competent fo~ Parliament to direct that the legislative power
of the State Legislature shall be exercised by the President himself or by any other authority to whom such power may be delegated by the President under art. 357 (1 ). Art, 357(2) provides that
492
SUPREME COURT REPORTS
[1966] 3 S.C.R.
any law made in exercise of the power of the legislature of the
Sta.te by Parliament or the President or other authority referred
to m sub-cl. (a) of cl. ( 1) which Parliament or the President or such
other authority would not, but for the issue of a Proclamation
under art. 356, have lx.-en competent to make shall, to the extent
of the incompetency, cease to have effect on the expiration of a
period of one year after the Proclamation has ceased to operate,
but Cl. (2) of Article 357 makes an exception ........... .in the
case of things done or omitted to be done before the expiry of the
period of one year. It is argued firstly that the Regulation Order
was not made before the date of revocation of the Proclamation.
It is said that the Order, though purporting to have been made
on February 27, 1954 was not published in the Gazette till March 14,
1954.
It is doubtless true that the Regulation Order, though made
on February 27, 1954, was not published in the Official Gazette
till March 14, 1954. But cl. l(b) of the Order provides that it
shall come into force at once and repeal all the previous Orders
and instructions in so far as they are inconsistent with the pro·
visions of the Regulation Order. By reason of the fact that the
Order itself provides for its commencement as the date on which
it was made, it is clear that the Order came into operation on February 27, 1954, though it was published at a later date. The Order
was therefore made before the date of termination of the President's
rule in PEPSU.
Now, it is contended by learned counsel for the appellant
that the Regulation Order is in effect and substance a legislative act
and that its operation could not extend beyond the period specified
in art. 357(2). It may be initially stated that this contention was
not raised in the Courts below and there was no pleading or any
issue covering that contention. Further, there is nothing on record
to show that no order was passed during the period of one year
provided by art. 357(2) extending the life of the Regulation Order
beyond that period.
Coming to the contention, the question is whether, on a fair
construction of all its provisions and its intendment, the Regulation
Order comes within the scope of the expression 'things done' occurring in art. 357(2). In Craies On Statute Law, Sixth Edition,
it is pointed out at p. 415 that if an Act is repealed with a proviso
'except as to things done under it' the proviso will receive a _liberal
interpretation. In Foster v. Pritchard(') it was contended, with respect to an action tried after the passing of the County Courts Act,
1856, that the trespass committed by the defendant under colour of
the process of the Court was not 'an act done under' th~ repealed
section, but, said the Court, 'there can be no doubt that 1t was the
(I) [1857] 26 L. J. Ev. 215.
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llAM PRASAD v. PUNJAB (Raju, J.)
493
intention of the legislature that the words in this proviso as to
acts done under the repealed statutes should be construed in an
extensive sense'. It is therefore open to the Court to find, on a
fair construction of all the provisions of the Regulation Order
which must be read as an integrated whole, whether they were
intended to continue to be in force after the period specified in
art. 357(2). It therefore becomes necessary to examine the provisions of the Regulation Order.
The Regulation Order provides that the management, control,
supervision and direction of the affairs and business of the Bank
shall vest in a Board constituted as provided in cl. 3(1). There
can be no doubt that the management, control, supervision and
direction of the affairs and business of the Bank are matters which
were provided for not for a limited period but for an unspecified
period even beyond the period of one year as provided by art.
357(2). Clause 4(1) is important. It provides that the Board
shall pass the half-yearly balance-sheets and annual budget estimates and frame rules for the day to day working of the Bank.
We may, for the present, omit cl. 4(l)(iii). Sub-cl. (iv) provides
that the Board may grant advances and fix limits upto which bills
of exchange drawn by individual constituents may be accepted
and frame rules in that behalf. Sub-cl. (v) provides for the Board
framing rules regarding the Provident Fund for employees of the
Bank, and sub-cl. (vi) for sanctioning expenditure and framing
rules for its sanction by the Managing Director and other officers
of the Bank. Under sub-cl. (vii), the Board shall invest the funds
of the Bank in Government Securities, shares, debentures and other
securities and sell them; under sub-cl. (viii), the Board shall borrow
moneys and negotiate, transfer, sell, endorse, renew, pledge or
mortgage Government promissory notes and other securities for
the purpose of taking overdrafts and demand loans on their security;
under sub-cl. (ix) issue instructions for the guidance of the Managing Director and require him to submit to the Board all information
regarding the transactions of the Bank. Lastly, under sub-cl. (x) the
Board shall delegate to the Managing Director, or subject to the
Managing Director's supervision, to any of the other employees
of the Bank any of the aforesaid powers. Clause 5 provides that
the Board shall comply with such general or special directions as
may from time to time be issue.d by the State Government.
Clause 6. provides for the meetings of the Board being held
at least once m every three months or at such shorter intervals as
the Chairman may decide and cl. 7 specifies the powers of the
Managing Director. Clause 8 provides for the conduct of the
business of the Bank. Clause 9 provides for the applicability of
some of the provisions of the Banking Companies Act to the Bank.
Clause JO provides for the audit of the accounts of the Bank and
cl. 11 provides that the Board shall, at the end of every calendar
SUPREME COURT REPOJ.TS
(1966] 3 S.C.R.
year, submit to the State Government the annual balance-sheet
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of the Bank accompanied by a report on the working of the Bank
and that the Board shall submit to the State Government such
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other information concerning the affairs of the Bank as may from
time to time be required by the State Government.
....
On a consideration of the provisions of the Regulation Order
iet out above, it is manifest that those provisions have been made
as is stated in the preamble to the Order, for the better regulation
and management of the affairs of the Bank. Indeed, cl. 3 of the
Order provides for the constitution of a Board of Directors for
the management, control, supervision and direction of the affairs
and business of the Bank. The matters provided, barring cl. 4(1)
(iii), relate to the day-to-day administration of the affairs of the
Bank. It is impossible to say that the matters provided for in
the Order would cease to be in operation after the period of one
year. It will result in an absurdity to hold, for instance, that
provisions like the one for sanction of expenditure, would cease
to be in operation after the period of one year.
We may now deal with cl. 4(1) (iii) which provides that the
Board shall appoint, remove, dismiss and lay down the general
conditions of service of the employees of the Bank other than
the Managing Director and frame rules in that behalf. It is pursuant to the powers vested in it under this clause that the Board
of Directors of the Bank made the Staff rules, including r. 27 whose
validity is questioned. The expression 'things done' occurring in
art. 357(2), in our opinion, must receive a liberal and extensive
construction. As already indicated, all the clauses of the Regulation Order must be read together as an integrated whole and
we have to find, on a construction of all the clauses, whether· they
were intended to continue beyond the period of one year provided
by art. 357(2). In the context in which cl. 4(1) (iii) occurs, it is
not unreasonable to construe the power to make rules vested in
the Board under that clause as 'things done' within the meaning
of art. 357(2). There can be no doubt about the intention to
preserve and continue the rules even after the period of one year
after the cessation of the Emergency so that there may not be any
hiatus in the administration of the affairs of the Bank.
It must therefore be held that all the clauses of the Regulation Order, including cl. 4(1) (iii), come within the purview of
the saving clause occurring in art. 357(2) of the Constitution and
that they continue to be in operation after the period specified in
that article.
On this conclusion it follows that the delegation made by
the President in favour of the Board of Directors of the Bank
under the Regulation Order did not lapse on the terminatio of
the President's rule in PEPSU.
It is therefore unnecessary to
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RAM PRASAD v. PUNJAB (Raju, !.)
495
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consider the decisions bearing on the question of the extent of the
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authority or power of a delegatee.
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Learned counsel for the appellant has contended that the
Patiala Services Regulations were existing law made by the Maharaja
and it was not competent for the President to make the Regulation
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Order empowering the Board of Directors of the Bank to supersede
those Regulations. The learned Judges of the High Court held
that the President was competent to promulgate the Regulation
Order under art. 309 read with arts. 330 and 372 of the Constitution. Having regard to the conclusion reached by us, that the
Regulation Order was validly made, we consider it unnecessary
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to go into the larger question whether the Regulation Order had
the force of rules framed under art. 309.
It is then contended that the Patiala State Regulations governing the conditions of service of public servants were laws made
by the erstwhile ruler of Patiala and could not be changed to the
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disadvantage of such public servants. The rules, as published
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on February 17, 1930 contain the following, in Part I, Chapter I,
Preliminary, under the heading 'Right of Changing Rules' :
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"I. The rules contained in these Regulations may not
be modified or departed from except under the orders of the
Ijlas-i-Khas based upon a report of the Finance Minister.
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4. The rules in these regulations apply to all officers
holding appointments in the Patiala State, except in so far
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as they are over-ridden by distinct provision in any formal
agreement entered into with the State by any officer."
It is not the appellant's case that there was any formal agreement
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between him and the State of Patiala that the rules shall not be
changed during the period of his service.
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The Patiala Services Regulations, Vol. I, published in 1947,
preserved the right of the Maharaja to change the rules. Ruic
1.7, of Chapter I, reads :
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"Right of changing rules : The rules contained in these
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Regulations shall not be modified or departed from except
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under the orders of the ljlas-i-Khas based upon a report of
the Finance Minister."
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Rule 1.7 of the 1947 Regulations corresponds to rr. I and 4 of the
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1930 Regulations. The contention of the appellant that the rules
could not be changed is not therefore sustainable. They can
certainly be changed by an authority competent to change them
as is evident from Exhibit P. 8, dated July 19, 1940. The chang;
10 Sup. CI/66-19
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SUPREME COURT REPORTS
(1966] 3 S.C.R.
was in fact effected by the Maharaja in his administrative capacity.
Exhibit P-8 is as follows :
"The Patiala State Bank is a State Department governed
by its Constitution laid down by the Ijlas-i-Khas, but being
at the same time autonomous as regards its accounts, which
are kept on commercial basis, it has become necessary to
define how far tbe rules applying to other State Departments and the Patiala State Regulations shall apply to the
Bank. The Board of Directors think and recommend that
the internal management of the Bank shall be subject to rules
and regulations framed by them subject to the following exceptions :-
(a) The P. S. R. shall apply to the Bank Staff with
the e~ception of the pension rules, but instead thereof
will have the benefit of a contributory Provident Fund,
as already established.
(c) The Bank service shall be recognised as State
service for the purposes of employment in State service
of suitable candidates among the descendants of Bank
employees.
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The Chairman of the Board of Directors put up a note to the Maha·
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raja of Patiala underneath :
"I respectfully request that the recommendations of the
Board of Directors of the Bank, as stated above, may graciously
be sanctioned."
On this, the Finance Committee re-commended as follows :
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"The Finance Committee recommends that
(I) Reque~ts of the Chairman, Board of Directors,
at (c), (e), (f) and (g) may be sanctioned.
(2) The request at (a) may be sanctioned adding the
following 'and other State Rules or orders' after 'Patiala
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State Regulations' in the first line.
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This recommendation was made by the Revenue Minister and the
Finance Minister who constituted the members of the Finance
Committee. On this the Cabinet supported the recommendations
of the Finance Committee and submitted the Slime to the Maharaj a.
These recommendations were accepted by the Maharaja on April 8,
1941.
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RAM PRASAD v. PUNJAB (Raju, /.)
49,7
It may be noted that the Order issued by the Maharaja on
July 19, 1940, viz., Ex-P. 8 quoted above, is headed : 'Precis'.
It states that by reason of the fact that the Patiala State Bank is
an autonomous department it became necessary to define how far
the rules applying to other State departments and the Patiala State
Regulations applied to the Bank. It was specifically stated in the
recommendation made by the Board of Directors that the internal
management of the Bank shall be subject to rules and regulations
framed by them. Two important exceptions were made and those
were that the Patiala State Regulations shall apply to the Bank
staff with the exception of the pension rules, but that the staff
shall have the benefit of a contributory provident fund and that
the Bank service shall be recognized as a State service for the purposes of employment in State service of suitable candidates from
among the descendants of the Bank employees.
The Finance Committee, as provided in rr. 1-7 ot the rules,
recommended that the request might be sanctioned. The Cabinet
supported the recommendation of the Finance Committee. On
this, the Maharaja made an endorsement : "We approve the recommendation of the Cabinet". This was dated April II, 1941.
It is therefore clear that the extension of the rules governing
the conditions of service of Government servants to the employees
of the State Bank of Patiala was the result of 'an extension' made
by the Maharaja pursuant to the executive power vested in him.
The act of extension being an executive act, there can be no doubt
that it could be changed by a similar executive act. Therefore it is
clear that what was changed or superseded was the extension and
not the rules.
It is contended on behalf of the appellant that r. 27 of the
Staff rules is not valid since it vi6lates the constitutional guarantee
under art. 311 of the Constitution. We may here refer to the
position in law with regard to a rule providing for compulsory
retirement. In Moti Ram Deka v. N. E. Frontier Railway(!) where
the decisions on the question were reviewed it was stated :
"The next decision in the same volume is the State of
Bombay v. Saubhag Chand M. Doshi, (1958) S.C.R. 571 =A.l.R.
1957 S.C. 892. This was a case of compulsory retirement
under r. 165-A of the Bombay Civil Services Rules as amended
by the Saurashtra Government. In so far as this case dealt
with the compulsory retirement of a civil servant, it is unnecessary to consider the Rule in question or the facts relating
to the compulsory retirement of the civil servant. It is of
interest to note that in dealing with the question as to whether
(1) [1964] 5 S.C.R. 683, 715=AIR 1964 S.C. 600,613.
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498
SUPREME COURT REPORTS
(1966] 3 S.C.R.
compulsory retirement amounted to removal or not, the tests
which were applied were in regard to the loss of benefit already
accrued and stigma attached to the civil servant. It is, however, significant that in considering the objection based on
the contravention of Art. 311(2), Venkatarama Aiyar J., took
the precaution of adding that 'questions of the said character
coul<;i arise only when the rules fix both an age of superannuauon and an age for compulsory retirement and the services
o_f a civil servant arc tenninated between these two points of
time. But where there is no rule fixing the age of compulsory
retirement, or if there is one and the servant is retired before
in~ age prescribed therein, then that can be regarded only
as <llsm1ssal or removal within art. 311(2)'. It would be
noucee1 tnat the rule providing for compulsory retirement was
upne1e1 on tne ground that such compulsory retirement does
not amount to removal under art. 311(2) because it was another
mode of retirement and it could be enforced only between
the period of age of superannuation prescribed and after the
minimum period of service indicated in the rule had been
put in. If, however, no such minimum period is prescribed
by the rule of compulsory retirement, that according to the
judgment, would violate art. 311(2) and though the termination of a servant's services may be described as compulsory
retirement, it would amount to dismissal or removal within
the meaning of art. 311(2). With respect, we think that this
statement correctly represents the true position in law".
The validity of r. 27 cannot, in the instant case, be assailed on this
ground.
It is then argued that the Staff rules are invalid because they
offend art. 14. The ground of complaint is that different rules
govern different public servants in the same State and that they
are bad because they are discriminatory. This Court has held in
a series of decisions culminating in the judgment of this Court
in Lachhman Dass v. State of Punjab (1) that after the enactment of
the States Reorganisation Act, 1956, different Acts in different parts
of the same State could be sustained on the ground that the differentiation arises from geographical classification based on historical
reasons. The contention raised by the learned counsel therefore
fails.
There remains a minor contention which is that the Staff rules
were not properly made by the Board of Directors. It is stated
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that cl. 3 of the Regulation Order, which provides for a minimum
number of six members, was not complied with and that since
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the Staff rules were made by four members instead of six, they
(I) Jl963] 2 S.C.R. 353-A.I.R. 1963 S.C. 222.
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RAM PRASAD v. PUNJAB (Raju, !.)
499
were invalid. As pointed out by the learned Judges of the High
Court, under the law governing corporations a majority of the
members of the corporation is entitled to exercise the powers of
the corporation and that the rule regarding corporations is equally
applicable to a company. We are in agreeme11t with this vi<1w.
As a result of the conclusions reached ;by us, this appeal mu st
fail and is dismissed. In the circumstances of the case there will
be no order as to costs .
Appeal dismi3Hd.