# ~ OFFICIAL LIQUIDATOR v. DAYANAND AND OTHERS

- **Citation:** [2008] 15 S.C.R. 331
- **Court:** Supreme Court of India
- **Decided:** 2008-11-04
- **Case number:** Civil Appeal No. 2985 of 2007
- **Bench:** 8.N. Agrawal, Harjit Singh Bedi, G.S. Singhvi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/official-liquidator-v-dayanand-and-others-23923
- **Pages:** 97

## Headnote

..
,_ 'r
Service Law:
c
Companies (Court) Rules, 1959:
rr. 308 and 309 -
Persons engaged by Official
Liquidators and paid from company fund -
Claiming
regularization, and parity in salary and allowances as paid to
D
employees appointed by Government of India against
sanctioned posts - Scheme framed by Government of India
in 1999 on the model of the 1978 Scheme for absorption of
suitable and eligible company paid staff against 50% of
vacancies in direct recruitment quota of Group 'C' posts -
Challenged, and absorption of all the company paid staff
E
..
sought - HELD: Company paid staff constitute a separate and
distinct class - In view of nature of their employment, they are
entitled neither to absorption against sanctioned posts, as of
.,..
right, nor to parity in pay scales and allowances admissible
to regular employees - The 1999 Scheme does not suffer
F
from any infirmity - However, failure on the part of the
Government of India to frame. a similar scheme for absorption
of company paid staff in Group 0 posts has resulted in
unintended discrimination qua one section of company paid
employees -
Therefore, Government of India directed to
G
frame a Scheme for absorption of eligible and suitable
company paid employees in Group 0 posts on the model of
.i
the 1999 Scheme - Keeping in view the huge escalation of
living cost, Official Liquidators are directed to mdve the Courts
331
H
332
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A concerned for increasing the emoluments of the Company
paid staff -
Such requests would be sympathetically
considered subject to availability of funds - Principle of equal
pay for equal work - Constitution of India, 1950 - Articles 14
and 16.
B
Regularization -
HELD: In Uma Devi's 1 case the
Constitution Bench of Supreme Court has laid down that there
is no fundamental right in those who have been employed on
daily wages, temporarily or on contractual basis, to claim
C absorption in service -:- The law laid down in Uma Devi's case
is binding on all courts including Supreme Court till the same
is overruled by a larger Bench - The observation of a twoJudge Bench of Supreme Court in Pooran Chand Pandey's2
case that the decision in Uma Devi's case cannot be applied
to a case where regularization has been sought for on the
-D ground of Article 14 of the Constitution was not called for and
the same should be read as obiter and not binding -
Precedent - Constitution of India, 1950 - Article 141.
JUDICIAL DISCIPLINE - Held: Is sine qua non for
E ef+ective and efficient functioning ·of judicial system as also
for sustaining the system - Benches of High Courts and
Supreme Court ignoring decisions area-ordinate Benches or
larger Benches and High Courts bypassing law laid down by
Supreme Court illustrate non-adherence to rule of judicial
F discipline - Disrespect to constitutional ethos and breach of
discipline have grave impact on credibility of judicial institution
and encourages chance litigation - Predictability and certainty
is the hallmark of judicial jurisprudence - Stare decisis.
G
ADMINISTRATIVE LAW:
..judicial Review - Policy decision by Government to -·
create/abolish posts or cadres - HELD: Power of judicial
1.
State of Kamataka v. Uma Devi, [2006] 3 SCR.
H
2.
UP. SEB. v. Pooran Chand Pandey, [2007] 10 SCR 920.
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
333
_,-1
review can be exercised in such matters only if it is shown that A
the action of the employer is contrary to any constitutional or
statutory provisions or is patently arbitrary or vitiated by ma/a
fides - In the instant case, directions given by High Courts
for creation of supernumerary posts to facilitate absorption of
company paid staff are unsustainable and are set aside.
B
Legitimate Expectation - Held: At the root of legitimate
expectation is the constitutional principle of rule of law, which '
~
requires regularity, predictability and certainty in government
'r
dealings with public - In the instant case, there is nothing to , c
show that any comp

## Text

_Characters 0–39,988 of 189,370. This is a partial read: ask again with offset=39988 for what follows._

[2008] 15 S.C.R. 331
~
OFFICIAL LIQUIDATOR
A
v.
DAYANAND AND OTHERS
(Civil Appeal No. 2985 of 2007)
NOVEMBER 4, 2008
B
[8.N. AGRAWAL, HARJIT SINGH BEDI AND
G.S. SINGHVI, JJ.]
..
,_ 'r
Service Law:
c
Companies (Court) Rules, 1959:
rr. 308 and 309 -
Persons engaged by Official
Liquidators and paid from company fund -
Claiming
regularization, and parity in salary and allowances as paid to
D
employees appointed by Government of India against
sanctioned posts - Scheme framed by Government of India
in 1999 on the model of the 1978 Scheme for absorption of
suitable and eligible company paid staff against 50% of
vacancies in direct recruitment quota of Group 'C' posts -
Challenged, and absorption of all the company paid staff
E
..
sought - HELD: Company paid staff constitute a separate and
distinct class - In view of nature of their employment, they are
entitled neither to absorption against sanctioned posts, as of
.,..
right, nor to parity in pay scales and allowances admissible
to regular employees - The 1999 Scheme does not suffer
F
from any infirmity - However, failure on the part of the
Government of India to frame. a similar scheme for absorption
of company paid staff in Group 0 posts has resulted in
unintended discrimination qua one section of company paid
employees -
Therefore, Government of India directed to
G
frame a Scheme for absorption of eligible and suitable
company paid employees in Group 0 posts on the model of
.i
the 1999 Scheme - Keeping in view the huge escalation of
living cost, Official Liquidators are directed to mdve the Courts
331
H
332
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A concerned for increasing the emoluments of the Company
paid staff -
Such requests would be sympathetically
considered subject to availability of funds - Principle of equal
pay for equal work - Constitution of India, 1950 - Articles 14
and 16.
B
Regularization -
HELD: In Uma Devi's 1 case the
Constitution Bench of Supreme Court has laid down that there
is no fundamental right in those who have been employed on
daily wages, temporarily or on contractual basis, to claim
C absorption in service -:- The law laid down in Uma Devi's case
is binding on all courts including Supreme Court till the same
is overruled by a larger Bench - The observation of a twoJudge Bench of Supreme Court in Pooran Chand Pandey's2
case that the decision in Uma Devi's case cannot be applied
to a case where regularization has been sought for on the
-D ground of Article 14 of the Constitution was not called for and
the same should be read as obiter and not binding -
Precedent - Constitution of India, 1950 - Article 141.
JUDICIAL DISCIPLINE - Held: Is sine qua non for
E ef+ective and efficient functioning ·of judicial system as also
for sustaining the system - Benches of High Courts and
Supreme Court ignoring decisions area-ordinate Benches or
larger Benches and High Courts bypassing law laid down by
Supreme Court illustrate non-adherence to rule of judicial
F discipline - Disrespect to constitutional ethos and breach of
discipline have grave impact on credibility of judicial institution
and encourages chance litigation - Predictability and certainty
is the hallmark of judicial jurisprudence - Stare decisis.
G
ADMINISTRATIVE LAW:
..judicial Review - Policy decision by Government to -·
create/abolish posts or cadres - HELD: Power of judicial
1.
State of Kamataka v. Uma Devi, [2006] 3 SCR.
H
2.
UP. SEB. v. Pooran Chand Pandey, [2007] 10 SCR 920.
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
333
_,-1
review can be exercised in such matters only if it is shown that A
the action of the employer is contrary to any constitutional or
statutory provisions or is patently arbitrary or vitiated by ma/a
fides - In the instant case, directions given by High Courts
for creation of supernumerary posts to facilitate absorption of
company paid staff are unsustainable and are set aside.
B
Legitimate Expectation - Held: At the root of legitimate
expectation is the constitutional principle of rule of law, which '
~
requires regularity, predictability and certainty in government
'r
dealings with public - In the instant case, there is nothing to , c
show that any competent authority had ever given any
assurance to company paid staff that they wo 11ld get absorbed ,
against sanctioned posts or that there would be no abolition
of posts meant to be filled by direct recruitment- On the other
hand, they knew that their employment would come to an end
D
on expiry of the tenure specified in the Jetter of appointment
or on cessation of liquidation proceedings -
Therefore,
doctrine of legitimate expectation cannot be invoked.
In the offices of Official Liquidators attached to
·different High Courts there were two categories of E
emplo}1ees: (i) those recruited in terms of rules framed
under the proviso to Article 309 of the Constitution of
India, against the posts sanctioned by the Department of
Company Affairs, Government of India,\ and paid salary
r·
and allowances from the Consolidated Fu'nd of India; and
F
(2) the persons engaged by the Official Liquidators
pursuant to sanction accorded by the Court concerned
under Rule 308 of the Companies (Court) Rules, 1~9 and
paid from the company fund. In the year 1978, Ministry
of Law, Justice and Company Affairs, Government of G
India framed a Scheme providing for absorption of
~
suitable and eligible company paid staff to lhe extent of
.....
50% of vacancies in direct recruitment quota of Group C
posts.
Writ petitions were filed by the Company paid staff H
334
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A
before the Calcutta High Court and the Kerala High Court
claiming, inter alia, status of and parity in salary and
allowances with permanent Central Government
employees appointed in the office of Official Liquidators.
Both the High Courts held in favour of the writ petitioners.
B Appeals were filed before the Supreme Court by the
Government of India and the Official Liquidators. A writ
petition, numbered as W.P.(C) No. 473/88, filed by the
Company paid staff engaged by the Official Liquidator
attached to the Delhi High Court was also transferred to
c the Supreme Court and heard alongwith the appeals. The
Court3 while dismissing the appeals filed by the
Government of India and allowing the writ petition of the
company paid staff, stayed operation of the judgments of
the High Courts and the order in the writ petition, and
0
gave opportunity to the Central Government to absorb
the company paid staff by framing a Scheme modeled on
the line of the 1978 Scheme within six months. The
Government of India framed and notified the new scheme
called the '1999 Scheme' for absorption of the company
E
paid staff against 50% of vacancies in direct recruitment
quota. The authorities concerned undertook the exercise
of absorption of the company paid staff. Meanwhile writ
petitions were filed in the Calcutta High Court claiming
absorption of all the company paid staff in the regular
F
cadres and to treat them at par with Central Government
employees. A similar writ petition was filed before the
Delhi High Court wherein a further prayer was made for
absorption of company paid staff in Group D posts also.
The High Courts held in favour of the writ petitioners
observing that the Supreme Court in the earlier decision
G had given directions to absorb all the company paid staff.
Aggrieved, the Official Liquidators filed the instant
appeals.
3.
Govt. of India and Ors. v. Court Liquidator's Employees Association and
H
Others. (1999) 2 Suppl. SCR 62 = [1999) 8 SCC 560.
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
335
""....-t
Allowing the appeals, the Court
A
......,,,,
HELD: 1.1. This Court in the earlier case of Court
Liquidator's Employees Association* not only gave an
opportunity to the Government of India to frame and
implement a new scheme modeled on the 1978 Scheme , B
but also stayed the operation of the orders impugned in
the appeals and the one passed in the writ petition. It ·
•
would not be correct to say that this Court endorsed the
\--
directions given by the Calcutta High Court and the '
Kerala High Court for absorption of company paid staff c
without any rider. [Para 32] [379-C, D, E]
*Govt. of India and Ors. v. Court Liquidator's Employees
Association and Others, [1999] 2 Suppl. SCR 62 = [1999] ,
8 sec 560, referred to
D
1.2. The use of the words "failing which the
...
judgments under appeal and the order in WP (C) No.4731
88 will stand confirmed" in paragraph 25 of the judgment
in Court Liquidators' Employees Association case, leaves no
manner of doubt that the orders passed by the High
E
Courts and the one passed by this Court in the writ
...
petition were to become effective only if the Government
of India had not framed new scheme modeled on the
1978 Scheme. Government of India not only framed and
..,.
notified the 1999 Scheme within the time given by the
Court, but also issued guidelines for implementation of F
·-
the same. Therefore, the orders passed by the Calcutta
High Court and the Kerala High Court and the direction
given by this Court in the writ petition will be deemed to
have become ineffective and inoperative and the
respondents cannot derive any benefit from those orders G
and directions. [Para 32] [379-F, G, H; 380-A]
2.1. The respondents are not entitled to absorption
against the sanctioned posts in Group C of the
Department of Company Affairs, Government of India, as
H
336
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A of right. It is not in dispute that the respondents were
engaged by the Official Liquidators pursuant to the
sanction accorded by the Courts concerned under Rule
308 of the Companies (Court) Rules 1959 and, from the
inception of their employment, they are being paid from
B the fund created by disposal of the assets of the
companies in liquidation. They were neither selected in
accordance with the procedure prescribed by the rules
framed under the proviso to Article 309 of the
Constitution nor were they appointed against the posts
c sanctioned by the Government of India. It is thus clear that
the company paid staff constitute a separate and distinct
class. Therefore, they cannot be heard to complain
violation ofArticles 14 and 16 of the Constitution on the ·
ground that even after having worked for more than one
0
decade, they have not been absorbed in the regular
cadre, under the Government. [Para 34, 35 and 92] [381C;-382-A-D; 425-F, G]
2.2. In Secretary, State of Karnataka v. Uma Devi* the
Constitution Bench of this Court has held that there is no
E fundamental right in those who have been employed on
daily wages or temporarily or on contractual basis, to
claim absorption in service. The Constitution Bench
clarified that the earlier decisions which run counter to
the principles settled by it stood denuded of their status
I
F
as precedents. [Paras 52 and 54] [396-D; 398-C]
*State of Karnataka v. Uma Devi, [2006] 3 SCR 953 =
[2006] 4 SCC 1; A. Umarani v. Registrar, Cooperative
Societies, [2004] 7 SCC 112; Jawaharlal Nehru
G
Technological University v. T. Sumalatha (Smt.) and Others,
[2003] 10 SCC 405; Director, Institute of Management
Development, U.P. v. Pushpa Srivastava, [1992] 3 SCR
+ .
J
712 = [1992] 4 SCC 33; Dr. M.A. Haque and Others v. Union
~ ,
of India and Others, [1993] 2 SCR 1 = [1993] 2 sec 213; J
& K Public Service Commission v. Dr. ·Narinder Mohan,
H [1993) 3 Suppl. SCR 900 = [1994] 2 sec 630; Dr.
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
337
Arundhati Ajit Pargaonkar v. State of Maharashtra, [1994]
A
Suppl. 3 SCC 380; Union of India v. Kishan Gopa/ Vya$,
(1996] 7 SCC 134; Union of India v. Moti Lal, [1996] 2 SCR
727 = [1996] 7 SCC 481; Hindustan Shipyard Ltd. v. Dr. P.
Sambasiva Rao, [1996] 7 SCC 499; State of H.P. v. Sures/1
Kumar Verma, [1996] 1 SCR 972 = [1996] 7 SCC 562; Dr.
B
Surinder Singh Jamwal v. State of J&K, [1996] 3 Suppl. SCR
663 = [1996] 9 SCC 619; E. Ramakrishnan v. State of Kera/a,
[1996] 5 Suppl. SCR 533 = [1996] 10 SCC 565; Union of
India and Others v. Bishambar Dutt, [1996] 7 Suppl. SCR
650 = [1996] 11SCC341; Union oflndia v. MahenderSingh, c
[1996] 9 Suppl. SCR 199 = [1997] 1 sec 247; P.
Ravindran and Others v. Union Territory of Pondicherry anti
Others, [1996] 7 Suppl. SCR 1S8 = [1997] 1 SCC 350;
Ashwani Kumar and Others v. State of Bihar and Others,
[1997] 2 SCC 1; Santosh Kumar Verma and Others v. State
D
of Bihar and Others, [1997] 2 sec 713; State of U.P. and
Others v. Ajay, (1997] 4 SCC 88; Patna University v. Dr. Arnita
Tiwari, [1997] 7 SCC 198; Madhyamik Shiksha Parishad v.
Anil Kumar Mishra, [2005] 5 SCC 122; Delhi Deve/opme:nt
Horticulture Employees' Union v. Delhi Administration, Delhi,
[1992] 1 SCR 565 = [1992] 4 sec 99, relied on.
E .
Narender Chadha v. Union of India, [1986] 1 SCR:
211 = [1986] 2 SCC 157; Dhirendra Chamoli v. State of U.P.l
[1986) 1 SCC 637; Surinder Singh and Another v. Engineerin-Chief, CPWD and Others, [1986) 1 SCC 639; H. C.
F
Puttaswamy v. Hon'ble Chief Justice of Karnataka High Court,
Bangalore, [1990) 2 Suppl. SCR 552 = [1991) 2 .Supp.
SCC 421; Bhagwati Prasad v. Delhi State Mineral
Development Corporation, [1990] 1 SCC .361; Jacob M.
Puthuparambil v. Kera/a Water Authority, [1991] 1 SCC 28;
G
State of Haryana v. Piara Singh, [1992) 4 SCC 118; Randhir
Singh v. Union of India, (1982) 3 SCR 298 = [1982] 1 SCC
618; R.N. Nanjundappa v. T. Thimmiah, [1972]-tSCC 409l
Daily Rate Casual Labour v. Union of India, (1988] 1 SCR !
598 = [198~] 1 SCC 122; Bhagwati Prasad v. DeJhi State
H
338
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A Mineral Development Corporaiion, [1990] 1 SCC 361;
Dharvvad District P. W.D. Literate Daily Wage Employees
Association and others v. State of Karnataka and others,
(1990] 1 SCR 544 = (1990] 2 sec 396 and State of
Haryana v.· Piara Singh, [1992] 4 SCC 118, held
B inapplicable.
2.3. By virtue of Article 141 of the Constitution, the
judgment in Uma Devi's case is binding on all the courts
including this Court till the same is overruled by a larger
Bench. However, a two-Judges Bench of this Court in
C Pooran Chand Pandey's case has attempted to dilute the
Constitution Bench judgment by suggesting that the said
decision cannot be applied to a case where regularization
has been sought for in pursuance of Article 14 of the
Constitution and that the same is in conflict with the ·
D judgment of the seven-Judges Bench in Maneka Gandhi's
case.4 This was not called for. In view of the facts in
Pooran Chande Pandey's case, the two-Judges Bench
-.,
had no occasion to make any adverse comment on the
binding character of the Constitution Bench judgment in
E Uma Devi's case. Therefore, the comments and
observations made in Pooran Chandra Pandey's case
should be read as obiter and the same should neither be
treated as binding by the High Courts, Tribunals and
other judicial fora nor should they be relied upon or made
F basis for bypassing the principles laid down by the
-"f
Constitution Bench in Uma Devi's case.
(Paras 57, 59
and 71] (400-H; 401-A-D; 403-B, 0, E; 411-E]
UP. SEB v. Pooran Chand Pandey, [2007] 10 SCR 920
G = [2007] 11 sec 92, overruled.
Indian Drugs and Pharamaceuticals Ltd. v. Workmen
(2007] 1 SCC 408; Gangadhar Pillai v. Siemens Ltd., [2007]
1 SCC 533; Kendriya Vidya/aya Sangathan v. L. V.
H 4. Maneka Gandhi v. Union of India, [1978] 2 SCR 621 [1978] 1 SCC 248.
OFFICIAL LIQUIDATOR v. DAY ANAND AND ORS.
339
Subramanyeswara, [2007] 5 SCC 326; Hindustan A
Aeronautics Ltd. v. Dan Bahadur Singh, [2007] 6 SCC 207,
referred to.
State of Orissa v. Sudhanshu Sekhar Misra, AIR (1968)
SC 647; State of Gujarat v. Ambica Quarry Works, [1987] 1 8
SCC 213; Bhavnagar University v. Palitana Sugar Mill Pvt.
Ltd., [2003] 2 SCC 111 and Bharat Petroleum Ltd. v. N.R.
Viramani, [2004] 8 SCC 579, cited.
2.4.There have been several instances of different
1
Benches of the High Courts not following the judgments/ C
orders of coordinate and even larger Benches. In some
cases, the High Courts have gone to the extent of
ignoring the law laid down by this Court without any
tangible reason. Likewise, there have been instances in
which smaller Benches of this Court have either ignored D
or bypassed the ratio of the judgments of the larger
Benches including the Constitution Benches. These
cases are illustrative of non-adherence to the rule of
judicial discipline. Discipline is sine qua non for effective
and efficient functioning of the judicial system as also for E
sustaining the system. Therefore, it has become
necessary to reiterate that disrespect to constitutional
ethos and breach of discipline have grave impact on the
credibility of judicial institution and encourages chance
litigation. Predictability and certainty is an important
! F
hallmark of judicial jurisprudence and increase in the
frequency of conflicting judgments of the superior
judiciary will do incalculable harm to the system
inasmuch as the courts at the grass root will not be able
to decide as to which of the judgments lays down the G
correct law and which one should be followed. [Para 60
and 70] [403-F, G; 410-D, E, F]
Mahadeolal Kanodia v. Administrator General of W.B.
1960 (3) SCR 578; Lala Shri Bhagwan v. Ram Chandra AIR
1965 SC 1767; Union of India v. Raghubir Singh 1989 (2)
H
340
SUPREME COURT REPORTS
[2008] 15 S.C.R.
;·
A
SCC 754; Sundarjas Kanya/al Bhatija and others v. Collector,
I
)-
Thane 1989 (3) SCC 396; Dr. Vijay Laxmi Sadho v. Jagdish
2001 (2) SCC 247; Pradip Chandra Parija and others v.
Pramod Chandra Patnaik and others 2002 (1) SCC 1; Bharat
Petroleum Corpn. Ltd. v. Mumbai Shramik Sangha 2001 (4)
:..
B
SCC 448; State of Bihar v. Kalika Kuer and others 2003 (5)
~
r
SCC 448; State of Punjab v. Devans Modern Breweries Ltd.
,
I
2004 (11) SCC 26; Central Board of Dwaoodi Bohra
Community v. State of Maharashtra 2005 (2) SCC 673; State
I
of UP. and others v. Jeet S. Bisht and another 2007 (6) SCC
~
586; UP. Gram Panchayat Adhikari Sangh v. Daya Ram
>'~
c
Saroj 2007 (2) SCC 138; Gair Board, Ernaku/am v. Indira
Devi P.S. 1998 (3) SCC 259 and Coir Board, Ernakulam,
Kera/a State v. Indira Devai P.S. 2000 (1) SCC 224, relied
on.
~
D
3.1. The 1999 Scheme does not suffer from any legal
or constitutional infirmity insofar as it provides for
lb
absorption of the company paid staff only to the extent
~
of 50% vacancies in direct recruitment quota of Group C
posts. Since the 1999 Scheme was framed by the
E
Government of India in furtherance of the opportunity
given by this Court and no deviation is shown to have
been made from 1978 Scheme insofar as Group 'C' posts
are concerned, the same cannot be dubbed as arbitrary,
irrational or unreasonable, simply because all the
F
company paid staff who were in position as on 27 .8.1999
~
may not get absorbed in the regular cadre. [Para 38 and
; .
92] [384-E, F; 425-G, H]
3.2. However, it appears that from 1985 onwards
G employees were also appointed who could be eligible for
absorption in Group D posts. The Government of India
should have, while framing the 1999 Scheme, taken
cognizance of the presence of such staff and made
>-.
appropriate provision for their absorption. Its failure to do
H
so has certainly resulted in unintended discrimi.nation
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
341
--~ ··qua one section of the company paid staff. The A
,.,.
Government of India is, therefore, directed to frame a
scheme, modeled on the 1999 Scheme, also for
absorption of eligible and suitable employees against
Group D posts. [Para 93) [426-F, G; 427-A, BJ
4.1. The decision taken by the Government of India 8
to reduce the number of posts in direct recruitment quota
;
and consequential abolition of posts in the Department
).·
of Company Affairs is not vitiated by arbitrariness or
violation of the doctrine of equality or malafides. The plea c
of the respondents that the Government of India has in
the garb of implementing the policy decision taken in 2001
abolished a large number of posts in the direct
recruitment quota thus making the 1999 Scheme
redundant, cannot be accepted. The respondents have
D
neither assailed the decision of the Government to
abolish the posts on the ground of malafides nor could
they show that the exercise undertaken by the Screening
Committee to reduce the number of posts in regular
cadre of Department of Company Affairs is vitiated by
arbitrariness or non-application of mind or the same is E
influenced by extraneous reasons. [Para 29,40 and 92]
[376-G, H; 377-A; 387-E, F; 426-A, B]
4.2. Creation and abolition of posts, formation and
~
structuring/ restructuring of cadres, prescribing the F
source and mode of recruitment and qualifications and
criteria of selecUon etc. are matters which fall within the
exclusive domain of the employer. Although the decision
of the employer to create or abolish posts or cadres or
to prescribe the source or mode of recruitment and lay G
down the qualification etc. is not immune from judicial
review, the Court will always be extremely cautious and
..l.
circumspect in tinkering with the exercise of discretion
by the employer. The Court cannot sit in appeal over the
judgment of the employer and ordain that a particular post H
or number of posts be created or filled by a particular
., .,
342
SUPREME COURT REPORTS
[2008] 15 S.C.R
A
mode of recruitment. The power of judicial review can be
exercised in such matters only if it is shown that the
action of the employer is contrary to any constitutional
or statutory provisions or is patently arbitrary or vitiated
by malafides. In the instant case, the directions given by
B
the High Courts for creation of supernumerary posts to
facilitate absorption of the company paid staff are
unsustainable and are set aside. [Para 41 and 46] [387G, H; 388-A, B; 390-B]
Secretary, State of Karnataka v. Uma Devi 2006(3) SCR
C
953=2006 (4) SCC 1; State of Haryana v. Navneet Verma
2007 (11) SCR 762 = 2008 (2) SCC 65; M. Ramanatha Pillai
v. State of Kera/a 1974 (1) SCR 515 = 1973 (2) SCC 650;
Kedar Nath Bahi v. Stat~ of Punjab 1974 (3) SCC 21; State
of Haryana v. Des Raj Sangar 1976 (2) SCR 1034 = 1976
D (2) SCC 844; Dr. N. C. Singhal v. Union of India 1980 (3) SCR
44 = 1980 (3) SCC 29; Avas Vikas Sanghathan v. Engineers
Association 2006 (3) SCR 516 = 2006 (4) SCC 132;
Divisional Manager, Aravali Golf Club and another v.
Chander Hass and another 2007 (12) SCR 1084 =(2008) 1
E
SCC 683 and Delhi Development Horticulture Employees
Union v. Delhi Administration, Delhi and others 1992 (4) SCC
99, relied on.
5.1. The doctrine of legitimate expectation cannot be
F
invoked for sustaining the directions given by the High
Courts of Calcutta and Delhi for creation of
supernumerary posts to facilitate absorption of all
company paid staff in the regular cadres. At the roof of
the principle of legitimate expectation is the constitutional
principle of rule of law, which requires regularity,
G predictability and certainty in government's dealings with
the public. There is nothing on record to show that any
competent authority of the Government of India had ever
given any assurance much less made a promise to the
respondents that they would get absorbed against the
H sanctioned posts or that there would be no abolition of
\
·"'{
I
' •
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
343
''"""'
posts meant to be filled by direct recruitment. As a matter A
••"
of fact, the respondents joined as company paid staff
knowing fully well that they were being employed as
additional staff in connection with the liquidation
proceedings and on the basis of sanction accorded by
the Court concerned and further that they will have no B
right to seek absorption. They also knew that their
employment will come to an end on the expiry of the
I
tenure specified in the letter/order of appointment or on
r
cessation of the liquidation proceedings. Further, there
is nothing in the language of Rule 308 of the 1959 Rules c
from which it can be inferred that those employed as
additional staff in connection with the liquidation
proceedings will, in future, be absorbed in the regular
cadres. [Para 77, 78 and 90] [415-D, E, F; 416-C; 424-G;
426-C]
D
State of Karnataka v. Uma Devi 2006 (3) SCR 953;
Navjyoti Coop. Group Housing Society v. Union of India 1992
(4) SCC 477; Food Corporation of India v. Kamdhenu Cattle
Feed Industries 1993(1) SCC 71; Union of India and Ors. v.
Hindustan Development Corporation and Ors. 1993(3) SCC
E
499; Punjab Communications Ltd. v. Union of India 1999(4)
SCC 727; J.P. Bansal v. State of Rajasthan 2003(5) SCC 134;
Dr. Chancha/ Goyal (Mrs.) v. State of Rajasthan 2003(3) SCC
485; Ku/deep Singh v. Govt. of NCT of Delhi 2006(5) SCC
)r702 and Ram Pravesh Singh v. State of Bihar 2006(8) SCC
F
I
381, referred to.
The Authority of Law by J. Raz, (1979) Ch. 11, referred
to.
Council of Civil Services Union v. Minister of the Civil
Service 1985 AC 374 (HL), referred to.
G
5.2. The 1978 Scheme as also the 1999 Scheme are
merely illustrative of compassionate approach adopted
by the Government of India to facilitate absorption of the
company paid staff against the sanctioned posts to the H
344
SUPREME COURT REPORTS
[2008] 15 S.C.R.
iA extent of 50% of vacancies in the direct recruitment
>-
quota. These schemes cannot be read as a charter of
~
legitimating the claim of the company paid staff for
absorption in the Government service de hors the
availability of vacancies, more so, when the Government
B has taken a rational policy decision to reduce direct
recruitment to various services in a phased manner.
[Para 90] .[424-H; 425-A, B]
6.1. The respondents are not entitled to have their
\
~
pay fixed in the regular scales and other monetary
c benefits at par with regular employees working under the
Official Liquidators. The approach of the High Courts that
similarity in the nature of work of the company paid staff
on the one hand and regular employees on the other, is
by itself sufficient for invoking the principle of equal pay
D for equal work, is clearly erroneous. The respondents
were employed/engaged by the Official Liquidators ·
pursuant to the sanction accorded by the Court under
"""'(
Rule 308 of the 1959 Rules and they are paid salaries and
allowances from the company fund. They were neither
E appointed against sanctioned posts nor they were paid
out from the Consolidated Fund of India. Therefore, the
mere fact that they were doing work similar to the regular
employees of the office of the Official Liquidators cannot
be treated as sufficient for applying the principle of equal
F
pay for equal work. The directions given by the High
-<(
Courts for bringing about parity between the company
paid staff and regular employees· in the matter of pay,
allowances etc. are set aside. [Para 72, 76, 92 and 95]
[414-C-G; 426-D; 427-G]
G
Kishori Mohan/al Bakshi v. Union .of India AIR 1962 SC
1139; Jaipa/ v. State of Haryana 1988 (3) SCC 354;
Federation of All India Customs and Central Excise
Stenographers (Recognized) Union v. Union of India 1988 (3)
)..
SCC 91; Mewa Ram Kanojia v. A.1.1.M.S. 1989 (2) SCC 235;
H
V. Markandeya v. State of A.P. 1989 (3) SCC 191; Harbans
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
345
Lal and others v. State of Himachal Pradesh and others 1989
A
(4) SCC 459; State of UP. and others v.J.P. Chaurasia and
others 1989 (1) SCC 121; Griha Kalyan Workers' Union v.
Union of India 1991 (1) SCC 619; Ghaziabad Development
Authority v. Vikram Chaudhary 1995 (5) SCC 210; State of
Haryana and others v. Jasmer Singh and others 1996 (11)
B
SCC 77; State of Haryana v. Surinder Kumar 1997 (3) SCC
633; Union of India v. K. V. Baby 1998 (9) SCC 252; State of
Orissa v. Bairam Sahu 2003 (1) SCC 250; Utkal University
v. Jyotirmayee Nayak 2003 (4) SCC 760; State of Haryana
and another v. Tilak Raj and others 2003 (6) sec 123; Union c
of India v. Tarit Ranjan Oas 2003 (11) SCC 658; Apangshu
Mohan Lodh v. State of Tripura 2004 (1) SCC 119; State of
Haryana v. Charanjit Singh 2006 (9) SCC 321; Canteen
Mazdoor Sabha v. Metallurgical & Engineering Consultants
(India) Ltd. 2007 (7) sec 71 o, relied on.
D
Randhir Singh v. Union of India 1982 (3) SCR
298 =1982 (1) SCC 618; Dhirendra Chamoli v. State of UP.
1986 (1) SCC 637; Surinder Singh and Another v. Engineerin-Chief, CPWO and Others 1986 (1) SCC 639; Daily Rate
Casual Labour v. Union of India 1988 (1) SCR 598 = 1988
E
(1) SCC 122; Oharwad District P. WO. Literate Daily Wage
Employees Association and others v. State of Karnataka and
others 1990 (1) SCR 544 = 1990 (2) SCC 396 and Jaipal v.
State of Haryana 1988 (3) SCC 354, cited.
6.2. However, the salaries and allowances payable to
.the ·company paid staff should be suitably increased in
the wake of huge escalation of living cost. The Official
Liquidators attached to various High Courts are directed
fi
to move the Courts concerned for increasing the
G
emoluments of the company paid staff. Such a request
should be sympathetically considered and the
emoluments of the company paid staff be suitably
enhanced and paid subject to availability of funds.
[Para 94] [427-D, E, F]
H
346
SUPREME COURT REPORTS
[2008] 15 S.C.R.
..,._,
A
Case Law Reference:
.,,,
1986 (1) SCR 211
·held inapplicable
para 6
1986 (1) sec 637
held inapplicable
para 6
B
1986 (1) sec 639
held inapplicable
para 6
1990 (2) Suppl. SCR 552
held Inapplicable
para 6
1990 (1) sec 361
held inapplicable
para 6
.. ,
'f'
1991 (1) sec 28
held inapplicable
para 6
c
1992 (4) sec 99
held inapplicable
para 6
1992 (4) sec 118
held inapplicable
para 6
I ...
1999 (2) Suppl. SCR 62 referred to
para 9
D
2006 (3) SCR 953
relied on
para 29
1982 (3) SCR 298
held inapplicable
para 29
1986 (1) sec 637
held inapplicable
para 29
E
2007 (10) SCR 920
overruled
para 29
2007 (11) SCR 762
relied on
para 42
1974 (1) SCR 515
relied on
para 42
1976 (2) SCR 1034
relied on
para 42
<
F
1980 (3) SCR 44
relied on
para 42
2006 (3) SCR 516
relied on
para 42
2007 (12) SCR 1084
relied on
para 44
G
1992 (4) sec 99
relied on
para 49
1988 (1) SCR 598
held inapplicable
para 49
1990 (1) SCR 544
held inapplicable
para 49
H
1992 (1) SCR 565
held inapplicable
para 49
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
347
.
-'(
1992 (3) SCR 712
relied on
para 51
A
, 1993 (2) SCR 1
relied on
para 51
1993 (3) Suppl. SCR 900
relied on
para 51
1994 Suppl. (3) sec 380 relied on
para 51
6
1996 (7) sec 134
relied on
para 51
• r
1996 (2) SCR 727
relied on
para 51
1996 (7) sec 499
relied on
para 51
c
1996 (1) SCR 972
relied on
para 51
1996 (3) Suppl. SCR 663 relied on
para 51
1996 (5) Suppl. SCR 533 relied on
para 51
1996 (7) Suppl. SCR 650 relied on
para 51
D
t r
1996 (9) Suppl. SCR 199
relied on
para 51
1996 (7) Suppl. SCR 158
relied on
para 51
1997 (2) sec 1
relied on
para 51
E
1997 (2) sec 113
relied on
para 51
1997 (4) sec 88
relied on
para 51
.)>-
1997 (7) sec 198
relied on
para 51
----" ( •
F
2005 (5) sec 122
relied on
para 51
2004 (7) sec 112
relied on
para 52
1912 (1) sec 409
relied on
para 52
1992(4) sec 118
held inapplicable
para 52
G
2003 (1 o) sec 405
relied on
para 55
2001 (1) sec 408
referred to
para 57
2001 (1) sec 533
referred to
para 57
H
348
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A
2001 (5) sec 326
referred to
para 57
.~ ~.
2001 (6) sec 201
re{erred to
para 57
AIR 1968 SC 647
cited
para 58
,.
B
1987 (1) sec 213
cited
para 58
2003 (2) sec 111
cited
para 58
2004 (8) sec 579
cited
para 58
•
"'(-'
1960 (3) SCR 578
relied on
para 60
c
AIR 1965 SC 1767
relied on
para 61
1989 (2) sec 754
relied on
para 62
1989 (3) sec 396
relied on
para 63
D
2001 (2) sec 247
relied on
para 64 .
2002 (1) sec 1
relied on
para 65
--(
2001 (4) sec 448
relied on
para 65
E
2003 (5) sec 448
relied on
para 66
2004 (11) sec 26
relied on
para 66
2005 (2) sec 673
relied on
para 66
2001 (6) sec 586
relied on
para 67
-f
F
)-'
2001 (2) sec 138
relied on
para 68
•
1998 (3) sec 259
relied on
para 69
2000 (1) sec 224
relied on
para 69
G
AIR 1962 SC 1139
relied on
para 73
1988 (3) sec 354
relied on
para 73
,}...
1988 (3) sec 91
relied on
para 73
H
1989 (2) sec 235
relied on
para 73
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
349
,_J ~
1989 (3) sec 191
relied on
para 73
A
1989 (4) sec 459
relied on
para 73
1989 (1) sec 121
relied on
para 73
1991 (1) sec 619
relied on
para 73
B
1995 (5) sec 210
relied on
para 73
~
1996 (11) sec 11
relied on
para 73
-,.-
1997 (3) sec 633
relied on
para 73
c
1998 (9) sec 252
relied on
para 73
2003 (1) sec 250
relied on
para 73
I
2003 (4) sec 760
relied on
para 73
2003 (6) sec 123
relied on
para 73
o·
..J
r
2003 (11) sec ssa
relied on
para 73
~
2004 (1) sec 119
relied on
para 73
2006 (9) sec 321
relied on
para 73
E
2001 (7) sec 11 o
relied on
para 73
1985 AC 374 (HL)
referred to
para 80
.
~
1992 (4) sec 477
referred to
para 81
F
( t
1993(1) sec 11
referred to
para 82
--;
1993(3) sec 499
referred to
para 83
1999(4) sec 121
referred to
para 727
2003(5) sec 134
referred to
para 134 <S
2003(3) sec 485
referred to
para 86
~
2006(5) sec 102
referred to
para 88
2006(8) sec 381
referred to
para 89
H
350
SUPREME COURT REPORTS
[2008] 15 S.C.R..
A
CIVIL APPELLATE JURISDICTION : Civil Appeal No. __
B
2985 of 2007.
From the final Judgment and Order dated 19.9.2005 of the
High Court of Delhi at New Delhi in LP.A. No. 808 of 2003.
WITH
Civil Appeal Nos. 2986, 2987, 2988, 2989, 2990 of 2007,
>-
6455 and 6456 of 2008.
1
P.P. Malhotra, A.S.G., Brijender Chahar, Bhaskar P. Gupta,
C
R. Venkataramani, Colin Gonsalves, Ravindra Kumar, Rekha
Pandey, Jyoti Chahar, Shivalok Yashobardhan, Jagbir Singh
Malik, B.K. Prasad, P. Parmeswaran, D.S. Mahra, Naveen R.
Nath, Subhash Chandra Birla, Subrat Birla, Pijush K. Roy, G.
Ramakrishna Prasad, Sudarshan Rajan, P. Narasimhan, Aljo
D
K. Joseph, Sanjoy Kumar Ghosh, D.P. Mukherjee,
Pukhrambam Ramesh Kumar, David A., Jai Singh, Jyoti
~
Mendiratta, Aparna Bhat, Jyoti Singh, Ankur Chhiber and
-1
Sudarshan Rajan for the appearing parties.
,_
E
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted in S.L.P. (C)
Nos.12798/2005 and 13838/2006.
2. These appeals are directed against the orders of
f
Calcutta and Delhi High Courts, whereby directions have been
issued to the appellants herein to absorb the persons employed
by the Official Liquidators attached to those High Courts under
Rule 308 of the Companies (Court) Rules, 1959 (for short 'the
1959 Rules') against the posts sanctioned by the Government
G
of India, Department of Company Affairs.
FACTS
3. For the sake of convenience, we have culled out the
facts from the pleadings of Writ Petition No.1387 of 2001 filed
H
by Tapas Chakraborty and 109 others in Calcutta High Court,
~.
j
I
OFFICIAL LIQUIDATOR v. DAY ANAND AND ORS.
351
[G.S. SINGHVI, J.]
·• --(
.. Writ Petition No.2728 of 2001 filed by Smt. Daya Dua and Aothers in Delhi High Court, the record of these appeals and
documents filed/produced by the learned counsel for the parties
during the pendency of the appeals. These are:
(i)
There are two categories of employees in the
B
offices of the Official Liquidators attached to
different High Courts. The first category comprises
•
of the employees who are appointed against the:
...,...
posts sanctioned by the Government of India,·
Department of Company Affairs. They are recruited c
in accordance with the procedure prescribed in the
rules framed under proviso to Article 309 of the
Constitution and the doctrine of equality enshrined
in Articles 14 and 16 and are paid salaries and
allowances from the Consolidated Fund of India.
The second category comprises of the;Persons D
employed/engaged by the Official Liquidators
pursuant to the sanction accorded by the concerned
Court under Rule 308 of the 1959 Rules. The
employees falling in this category are described as
company paid staff. They are paid salaries and
E
allowances from the fund created by disposal of the
assets of the companies in liquidation.
(ii)
For Calcutta High Court, the Central Government
.,,...
had appointed a Court Liquidator under Section
F
I
~
38A of the Banking Regulation Act, 1949, as
amended in 1953. He used to employ staff under
Rule 308 of the 1959 Rules in connection with
liquidation of banking companies. The salaries of
such staff were paid from the assets of the banking: G
companies under liquidation.
(iii)
In the year 1978, the Government of India, Ministry
of Law, Justice and Company Affairs vide its letter
dated 27.11.1978 circulateG a scheme (hereinafter
1
described as 'the 1978 Scheme') for absorption of H
352
B
c
SUPREME COURT REPORTS
[2008] 15 S.C.R.
company paid staff against Group C posts in the
subordinate offices of the Department of Company
Affairs. That scheme envisaged consideration of
the cases of company paid staff, who were in
position on 31.3.1978 and who possessed the
educational qualifications prescribed for the post
against which they were to be absorbed. It was also
provided that absorption of the company paid staff
will be limited to 50% vacancies in direct
recruitment quota of Group C posts.
4. Sixty-three employees working under the Court
Liquidator attached to Calcutta High Court filed writ petition for
grant of the status of permanent Central Governrnent employee
with effect from the date of completion of 360 days of service
besides regular pay scales with avenues for promotion apart
D
from pension, provident fund and other service benefits on the
basis of their length of service.
5. The learned Single Judge of Calcutta High Court
allowed the writ petition in terms of the prayer made. The appeal
E
preferred by the appellants herein was dismissed by the
Division Bench, which noted that even though the writ
petitioners had been working for last 20 to 25 years, neither
their services were regularized nor they were paid at par with
similar employees of other departments/offices and they were
F
retired at the age of 58 years without any financial benefit. The
Division Bench held that the appellants have failed to
substantiate their plea that the employees appointed by the
Court Liquidator were not engaged for doing work of perennial
nature and that there was no reasonable basis for
G. discriminating the Court Liquidator's staff vis-a-vis the regular
employees of the office of Official Liquidator.
6. The company paid staff (Estate Clerks) engaged by the
Official Liquidator attached to the High Court of Kera la also filed
writ petition claiming parity with the government employees
H
appointed in the office of the Official Liquidator. The Division
" .
-~( .
l
\
OFFICIAL LIQUIDATOR v. DAYANAND AND ORS.
353
[G.S. SINGHVI, J.]
.~
Bench of that High Court took cognizance of the fact that there A
'
were two sets of employees under the Official Liquidator - (1)
employees appointed by the Central Government, and (2)
employees (14 in number) appointed by the Official Liquidator
between 1980 and 1989 under Rule 308 of the 1959 Rules;
that all the employees were doing the same work but were
B
being paid different salaries and held that there was no rational
basis for according unequal treatment to similarly situated
r
employees. The Division Bench then referred to the 1978
-,,..
Scheme, judgments of this Court in Narender Chadha v. Union
of India [1986 (2) SCC 157], Dhirendra Chamoli v. State of c
U.P. [1986 (1) SCC 637], Surinder Singh and Another v.
Engineer-in-Chief, CPWD and Others [1986 (1) SCC 639],
H.C. Puttaswamy v. Hon'ble Chief Justice of Karnataka High
Court, Bangalore [1991 (2) Supp. SCC 421], Bhagwati Prasad
v. Delhi State Mineral Development Corporation [1990 ( 1)
D
SCC 361], Jacob M. Puthuparambil v. Kera/a Water Authority
[1991 (1) SCC 28], Delhi Development Horticulture
Employees' Union v. Delhi Administration, Delhi [1992 (4)
SCC 99], State of Haryana v. Piara Singh [1992 (4) SCC 118]
and held that the petitioners are entitled to be absorbed as
E
regular Lower Division Clerks in the office of the Official
Liquidator from the date of their initial appointment. Accordingly,
a direction was issued to the respondents in the writ petition
to absorb the Estate Clerks against the regular posts of Lower
Division Clerks and pay them salary in the regular pay scale
F
~
with consequential benefits.
7.