1. The appellant in this appeal has called in question the correctness of the order dated 3rd August, 2000 made in Writ Petition No. 30751 of 1995.
2. The respondent in this appeal is a former Wing Commander in the Indian Air Force. On his retirement, his services were taken on contract basis by the appellant by means of an appointment order dated 29th September, 1992, a copy of which has been produced as Annexure-B to this appeal. Along with the appointment order, the terms and conditions of the appointment were also issued to the respondent, a copy of which has been produced as Annexure-A to this appeal. While paying the salary to the respondent in terms of the order of appointment, the appellant deducted the amount equivalent to the pension paid to the respondent on his retirement from service from the Indian Air Force. Aggrieved by the said action of the appellant, the respondent filed Writ Petition No. 30751 of 1995 before this Court out of which this appeal arises. In the impugned order, the learned Single Judge, on consideration of the appointment order and the bye-laws governing the service conditions of the respondent, took the view that the appellant was not entitled to deduct the amount equivalent to the pension received by the respondent out of the salary payable to him. Aggrieved by the said order, as noticed by us earlier, this appeal is filed.
3. Mrs. K. Shubha Ananthi, learned Counsel appearing for the appellant challenging the correctness of the impugned order made two submissions. Firstly, she submitted that the learned Single Judge ought to have rejected the writ petition on the ground that the appellant neither being a State nor an instrumentality of the State, the writ petition was not maintainable. In support of this submission, she relied upon the decision of this Court in the case of Ms. Geetha and Ors. v. Union of India and Anr., Writ Petition Nos. 24125 to 24127 of 1990, DD: 9-3-1994 wherein, this Court has taken the view that the appellant was not an instrumentality of the State. Secondly, she submitted that since in the appointment order it is made clear that the respondent would be bound by the terms of the bye-laws and the recruitment rules of the appellant; and since the bye-laws and the recruitment rules provide that the terms and conditions of service will be on the pattern of Government of India in respect of the matters not specifically provided in the bye-laws, the appellant was justified in deducting the amount equivalent of the pension received while disbursing the salary payable to the respondent. In support of this submission, she also relied upon the decision of the Supreme Court in the case of V.S. Mallimath v. Union of India and Anr., : [2001]2SCR567
4. In the light of the rival submissions made by the learned Counsel appearing for the appellant, the two questions that would arise for consideration in this appeal are:
(i) Whether the conclusion reached by the learned Single Judge that the appellant is an instrumentality of the State, is erroneous in law?
(ii) Whether the appellant was justified in deducting the amount equivalent to the pension paid to the respondent while disbursing his salary?
Regarding First Question.--It is not in dispute that the appellant is an autonomous body constituted under the Societies' Registration Act, 1860. The objects of the appellant-Society as set out in Clauses 3.1 and 3.2 of the Memorandum of Association read as hereunder:
'3.1 To undertake initially design, development and engineering of digital electronic switching system technology and subsequently of telemetric technology, products and services by.--
(i) its own direct effort at the national level;
(ii) consultancy, advice, raw technology procurement etc., from within the country and abroad, and
(iii) following, assisting, working with, cooperating and making use of activities in the related fields at other research and development institutions, universities and industries in the country and abroad.
3.2 To undertake as part of its own direct effort at the national level, the development of the next generation of digital Electronic Switching System (ESS) as per the requirements of Government of India using state-of-the-art concepts which are (i) relevant and appropriate to our country, and (ii) internationally competitive and subsequently to undertake further research and development for introduction of Integrated Services Digital Network. The system to be developed shall initially cater to the present needs of the country for the plain ordinary telephone services, but will have in-built flexibility for the future introduction in a phased manner of the emerging Telemetric services like integrated voice and data conferencing, telex, videotex, facsimile, electronic mail, voice mail etc. The indigenous digital ESS technology so developed will be used to establish the third and subsequent switching factories proposed by the Government'.
Clause 4 provides that all the incomes, earnings, movable and/or immovable properties of the Society shall be solely utilised and applied towards the promotion of the objects only as set forth in the Memorandum of Association and no portion thereof shall be paid or transferred directly or indirectly by way of dividends, bonus, profit or any manner, whatsoever to the members of the Society or to any person or persons claiming through any one or more of the members. No member of the Society shall have any personal claim on any movable and/or immovable properties of the Society or make any profit, whatsoever, by virtue of his membership. Clause 5 of the Memorandum of Association sets out the first members of the Governing Council on whom the management of the Society was entrusted. As it could be seen from Clause 5, the Minister for Communications and the Minister for Electronics were made as the Chairman and Vice-Chairman respectively of the Governing Council. The Cabinet Secretary, the Secretary for Finance, the Secretary for Electronics and the Secretary for Communications were made as Members of the Governing Council. Further, in addition to the Members of the Governing Council referred to above, the Additional Director, Telecom Research Centre, the Joint Secretary, Department of Electronics, Government of India and the Senior Research Scientist, T.I.F.R., have subscribed their signatures to the Memorandum of Association. The rules known as 'the Rules and Regulations of Centre for Development of Telemetrics' (hereinafter referred to as 'the Rules') framed by the appellant also clearly indicate that the entire management of the appellant is entrusted to the officers of the Government of India. A reading of the Memorandum of Association and the Rules of the appellant clearly show that the appellant came to be established as a wing of the Government of India by giving it an autonomous status. The management of the appellant is entrusted as noticed by us earlier to the Governing Council consisting of the Ministers in the Union Ministry and various Secretaries of the Government of India. Rule 21 of the Rules provides that the properties and funds of the Centre shall vest in the Council and shall consist of (a) Recurring grants made by the Government of India through the Ministry of Communications and Department of Electronics jointly on equal basis; (b) Any other grants made by the Government of India/State Governments. Clause 24 of the Rules further mandates that the Council shall frame the Annual Budget before the end of March and forward copies thereof to the Government of India. Clause 25 of the said Rules provides that the Council shall submit a report on the working of the Centre annually to the Government of India; and such Report shall contain particulars regarding the work of the Centre during the previous year and shall be accompanied by a balance sheet duly audited showing the income and expenditure of the Centre during the said year. Rule 26 of the Rules which provides for alteration of the existing rules provides that the modification of the Rules would come into effect only from the date notified by the Government of India. Rule 27 of the Rules which provides for dissolution of the Society provides that the appellant could be dissolved in accordance with the provisions of the Societies' Registration Act after obtaining previous sanction from the Government of India. As noticed by us earlier, the several provisions in the Memorandum of Association and the Rules clearly show that the entire control of the appellant is being exercised either through the Ministers of the Union Ministry or the Secretaries of the Government of India who are entrusted with the responsibility of managing the Society. Therefore, from the nature of the control, the authorities who are entrusted with the management of the appellant and the nature of duty it discharges, we are of the view that the appellant is undoubtedly an instrumentality of the State. Therefore, we are of the view that the learned Judge was fully justified in taking the view that the appellant is an instrumentality of the State. The Hon'ble Supreme Court in the case of Ajay Hasia v. Khalid Mujib Sehravardi and Ors., : (1981)ILLJ103SC has laid down the criteria to decide whether an institution is an authority or an instrumentality or agency of the State. It is useful to refer to the observation made by the Hon'ble Supreme Court at paragraphs 11 and 15 of the judgment which read as follows.--
'11. We may point out that it is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government company or a company formed under the Companies Act, 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute. Whatever be its genetical origin, it would be an 'authority' within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a company or society and in a given case it would have to be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression 'authority' in Article 12.
15. It is in the light of this discussion that we must now proceed to examine whether the Society in the present case is an 'authority' falling within the definition of 'State' in Article 12. Is it an instrumentality or agency of the Government? The answer must obviously be in the affirmative if we have regard to the Memorandum of Association and the Rules of the Society. The composition of the Society is dominated by the representatives appointed by the Central Government and the Governments of Jammu and Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Government. The monies required for running the college are provided entirely by the Central Government and the Government of Jammu and Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments. The Rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and the accounts of the Society have also to be submitted to both the Governments for their scrutiny and satisfaction. The Society is also to comply with all such directions as may be issued by the State Government with the approval of the Central Government in respect of any matters dealt with in the report of the Reviewing Committee. The control of the State and the Central Governments is indeed so deep and pervasive that no immovable property of the Society can be disposed of in any manner without the approval of both the Governments. The State and the Central Governments have even the power to appoint any other person or persons to be members of the Society and any member of the Society other than a member representing the State or Central Government can be removed from the membership of the Society by the State Government with the approval of the Central Government. The Board of Governors, which is in charge of general superintendence, direction and control of the affairs of Society and of its income and property is also largely controlled by nominees of the State and the Central Governments. It will thus be seen that the State Government and by reason of the provision for approval, the Central Government also, have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Governments and to use the words of Ray, C.J., in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr., : (1975)ILLJ399SC the voice is that of the State and the Central Governments and the hands are also of the State and the Central Governments. We must, therefore, hold that the Society is an instrumentality or the agency of the State and the Central Governments and it is an 'authority' within the meaning of Article 12'.
5. In the light of the above conclusion, we are of the view that the decision rendered by the learned Single Judge of this Court in the case of Ms. Geetha, supra, does not lay down the correct law. In the said decision, the learned Single Judge has not considered the Memorandum of Association and the rules of the appellant and has not assigned any reason in support of his conclusion that the appellant is not an instrumentality of the State. Therefore, we are of the view that the learned Counsel for the appellant cannot derive any assistance from the said decision and we have no hesitation to hold that the view taken by the learned Single Judge in the case of Ms. Geetha, supra, does not lay down the correct law.
Regarding Second Question.--Now, the next question that would arise for consideration is as to whether the appellant was justified in deducting the amount equivalent to the pension paid to the respondent out of the salary payable to him. As noticed by us earlier, the only contention urged by the learned Counsel for the appellant challenging the correctness of the order impugned is that since the appointment of the respondent is made subject to the bye-laws, rules and regulations and administrative orders of the Society; and Rule 12 of the recruitment rules provides that all the terms and conditions of service of the employees of the appellant will be on the pattern of Government of India Regulations, the appellant was entitled to deduct the amount equivalent to the pension received by the respondent out of the salary payable to him. In our view, this contention is devoid of any merit for reasons more than one. Firstly, as found by the learned Single Judge the terms and conditions of the appointment order clearly specifies that the respondent was appointed in the pay scale of Rs. 4500-15-5700 with Basic Pay of Rs. 5,550/- along with Dearness Allowance of Rs. 2,905/- p.m., City Compensatory Allowance of Rs. 100/- p.m., House Rent Allowance of Rs. 1,000/-p.m. etc., and therefore, the respondent is entitled to the remuneration fixed in the appointment order. It is useful to extract the relevant portion of the appointment order where the emoluments payable to the respondent is set out, which reads as hereunder:
'Terms and conditions
Pay scale and allowances
Scale of Pay4500-150-570Basic PayRs. 5550Dearness AllowanceRs. 2905 p.m
(varies with price index)City Compensatory AllowanceRs. 100 p.m.House Rent AllowanceRs. 1000 p.m.Leased AccommodationRental limit Rs. 3900 p.m. on recovery of Rs. 300 p.m. (subject to lease agreement and its terms and conditions)
Other benefits
1. You will be entitled to benefits such as reimbursement of medical expenses, leave travel concession, house building/conveyance advance subsidy, reimbursement for membership of professional bodies, long-term advance, subsidised transport/conveyance reimbursement, gratuity, contributory provident fund, leave and encashment thereof etc., as per rules of the Centre'.
6. Therefore, when the appointment order specifies the emoluments including the salary payable to the respondent, in our view, it is not permissible for the appellant to contend that the pension amount received by the respondent should be excluded out of the salary payable to him. The appointment of the respondent is a contract appointment. When the terms of the appointment order issued clearly specifies the terms regarding the emoluments payable to the respondent, it would be highly unjust, unfair and unreasonable to deny the benefit of the emoluments fixed in the appointment order on the ground that the terms of the appointment order states that the appointment of the respondent is made subject to the bye-laws, rules and regulations and administrative orders of the Centre and such other rules or orders that may be in force from time to time. While the respondent may be bound by the bye-laws, rules and regulations and administrative orders of the Centre that may be issued from time to time, so far as his other service conditions are concerned, however, with regard to the emoluments payable to him, the appellant is bound by the stipulations set out in the appointment order issued to the respondent. If the intention of the appellant was to deduct the pension amount received by the respondent out of the salary payable to him, nothing would have been easier than to state the same in the appointment order issued to him. Secondly, Rule 12 of the Recruitment Rules of the appellant relied upon by the learned Counsel for the appellant, in our view, cannot override the terms and conditions of the appointment order issued to the respondent, wherein the emoluments payable to the respondent was specified. In this connection, it is useful to refer to Clause 5 of the appointment order (Annexure-A) relied upon by the learned Counsel for the appellant and also Rule 12 of the Recruitment Rules of the Centre, which read as hereunder:
'Clause 5 of the Appointment Order:
5. You will be governed by the bye-laws, rules and regulations and administrative orders of the Centre and any such other rules/orders that may be in force from time to time'.
'Rule 12.--All other terms and conditions of service will be on the pattern of Government of India'.
No doubt, Clause 5 of the appointment order provides that the appellant is governed by the bye-laws, rules and regulations and administrative orders of the Centre and such other rules/orders, that may be in force from time to time. In our considered view, the said clause cannot be understood as meaning it would have the effect of reducing the emoluments fixed in the appointment order on the ground Rule 12 of the Recruitment Rules extracted above provides that the terms and conditions of the respondent would be oh the pattern of Government of India, in the absence of appointment order specifically providing that the pension amount received by the respondent would be deducted out of the salary payable to him. Clause 5 has to be understood as meaning the other terms and conditions not specifically provided in the appointment order would be governed by the bye-laws and the rules and regulations of the appellant. Further, Rule 12 of the Recruitment Rules extracted above is meant to be followed by the appellant while recruiting its staff and providing for terms and conditions while making such recruitment. In the absence of a specific stipulation in the appointment order that out of the salary payable to the respondent, the amount equivalent to the pension received by him is entitled to be deducted by the appellant, in our view, the appellant cannot deduct the amount equivalent to pension received by the respondent only on the basis of Rule 12 of the Recruitment Rules referred to above. In the light of the above conclusion reached by us, we are of the view that the decision of the Hon'ble Supreme Court in the case of V.S. Mallimath, supra, has no application to the facts of the present case. In the said decision, the question that came up for consideration was whether the pension received by Justice Mallimath as a retired Chief Justice of Kerala High Court could be deducted from his salary as a Member of the National Human Rights Commission. Proviso given to Rule 3(b) of the National Human Rights Commission Chairperson and Members (Salaries, Allowance and Other Conditions of Service) Rules, 1993 provides that a Member of the Commission, if he is in receipt of pension other than disability or wound pension in respect of any previous service under the Government of the Union or of the Government of the State, then salary in respect of service as a Member is reduced. While considering the said question, the Hon'ble Supreme Court took the view that service rendered by him as a Chief Justice of a High Court should be treated as service rendered in connection with the affairs of the Union and as such, the pension received by Justice Mallimath in respect of the service rendered by him as Chief Justice was required to be deducted out of his salary as a Member of the Human Rights Commission in view of the proviso given to Rule 3(b) of the Rules referred to above. In our view, the said decision has no application to the facts of the present case.
7. Further, it is also necessary to point out that it is not the case of the appellant that the remuneration of the respondent fixed is equivalent to the last salary drawn by the respondent at the time of his retirement. Under these circumstances, if the appellant took the services of the respondent in terms of the emoluments fixed in the appointment order (Annexure-A), it is not permissible for the appellant to refuse to pay the actual emoluments fixed in the appointment order on the ground that the appellant is entitled to deduct the pension amount received by the respondent. Therefore, we do not find any error in the order passed by the learned Single Judge.
8. Therefore, this appeal is liable to be rejected. Accordingly, it is rejected. However, no order is made as to costs.