S. Ravindra Bhat, J.
1. In these writ proceedings the validity and legality of a communication issued by the Government of NCT (hereafter referred to as 'NCT') in exercise of powers under Section 60 of the Delhi Electricity Reforms Act, 2000 (hereafter 'DERA') and Rule 12 of the Delhi Electricity Reforms Transfer Scheme Rules, 2001 (hereafter called the 'Scheme') has been challenged.
2. The DERA was enacted, as its long title indicates, for the constitution of an Electricity Commission, restructuring of the electricity industry by rationalization of generation, transmission, distribution and supply of electricity, increasing avenues for participation for private sector in the electricity industry and for taking measures conducive to development and management of the electricity industry in an efficient, commercial, economic and competitive manner in the National Capital Territory of Delhi. To achieve this end, the Act and the Scheme adopted a three step procedure whereby the Government of NCT, after enforcement of DERA, in exercise of its obligation and power under Section 14, incorporated separate companies, segregating the different functions of electricity generation, transmission and distribution. By operation of Section 15, the Government was empowered to transfer rights and liabilities immediately before the effective date to itself. Thereafter as a third step, under Section 15, interest in property rights and the liabilities of the existing statutory Board i.e., Delhi Vidyut Board (hereafter referred to as 'DVB') could be transferred to the Companies established under Section 14.
3. The Act came into force on 3.11.2000. Soon thereafter the Government of NCT constituted or incorporated separate companies; one was for the purpose of electricity transmission (Delhi TRANSCO LTD). The Delhi Power Supply Company Ltd., a respondent in these proceedings was the holding company. The distribution activities of the erstwhile DVB were transferred to the three DIS. The petitioner is one of the DISCOMS.
4. In view of impending reforms, and to allay any fears or apprehensions in the minds of its employees, the DVB and the Government of NCT entered into Tripartite Agreements with employees Groups and Unions on 28.10.2000 and 9.11.2000. These Agreements, inter alia, assured the employees that existing terms and conditions of service would be left undisturbed, and their services would be taken over by the transferee-companies. The tripartiteagreement also assured that a pension fund would be created, to cater to and service post retiral terminal and pensionary benenfits.
5. On 15.11.2001 by an order the Government of NCT classified personnel working of DVB in five groups on 'as is where is' after considering relevant factors such as place of work, suitability, etc Appendix A set out the personnel to be transferred to the services of GENCO ('IPGCL') i.e Industrial Generation Company Ltd., Appendix B set out to the personnel to be transferred to the services of DELHI TRANSCO LTD ('DTL'); Appendix C set out the personnel to be transferred to the services of DISCOM 1 i.e. BSES Yamuna Power Ltd. ('BYPL'), Appendix D included persons to be transferred to the services of DISCOM 2 BSES Rajdhani Power Ltd ('BRPL') and Appendix E set out to be transferred to the services of DISCOM-3 i.e. North Delhi Power Ltd ('NDPL').
6. As mentioned in the earlier part of the judgment, the Government of NCT had incorporated separate companies and segregated electricity activity into generation, transmission and distribution/ supply. The holding company in respect of these was DPL. The Government of NCT in accordance with its policies invited bids for ownership of the distribution companies. This was on its assessment that private participation in electricity distribution activity at that stage was appropriate. Accordingly the shareholding in the three DISCOM to the tune of 51% was acquired privately.
7. On 20.11.2001, the Transfer Scheme Rules were notified; they were, however, brought into force on 1.7.2002. Rules 4,5,8 and 9 classified the various assets and liabilities and proceedings into Schedules A to G, to be then allocated amongst successor companies including the Holding Company Delhi Power Company. Rule 6 provided for transfer of personnel and their services from DVB directly to the five successor entities. Rule 11 set out the principle that transfers were to operate by fiction of law with effect from 1.7.2002 and Rule 12 enabled the Govt. of NCT to decide any future dispute, difference or issue regarding the transfers under the Scheme.
8. In exercise of powers under DERA, the NCT notified binding policy directions, enabling restructuring of DVB and privatization of three DISCOMS. On 26.6.2002 the Transfer Scheme was amended and a new provision namely, Rule 8(3) was incorporated. With effect from 1.7.2002 the Transfer Scheme Rules were brought into force. Simultaneously successful private bidders acquired 51% shareholding and management/control of the three DISCOMS namely, BSES Rajdhani Power Ltd. (hereafter BSES) BSES Rajdhani Power Ltd.; BSES Yamuna Power Ltd and North Delhi Power Ltd.(NDPL).
9. With the coming into force of the Transfer Scheme all assets, liabilities and contracts, agreements, entitlements of the erstwhile DVB based on to the designated successor companies. For the purposes of this judgment could be necessary to notice at this stage, the various relevant provisions of the Act and the Transfer Scheme. They are extracted below. Rule 2 is the definition clause. Its relevant provisions area extracted below :
2(j) 'holding company' means Delhi Power Company Limited', a company incorporated under the Companies Act, 1956 (1 of 1956) with the principal object of holding shares in GENCO, TRANSCO and DISCOMS and liabilities of the Board;
(k) 'liabilities' include all liabilities, debts, duties, obligations and other outgoing including contingent liabilities, statutory liabilities and government levies of whatever nature, which may arise in regard to dealings before the date of the transfer in respect of the specified undertakings;
(l) 'personnel' means workmen, employees, staff and officers of the Board by whatever name called, and includes trainees and those on deputation from the Board to other organization and institutions;
(n) 'proceedings' include all proceedings of whatever nature, suits, appeals, complaints, petitions, applications, conciliatory, arbitration-whether civil or criminal or otherwise
10. Rules 3 and 4, which outline the scheme for transfer of assets and liabilities, read as follows:
'3 (1) On and from the date of the transfer to be notified for the purpose, all the assets, liabilities and proceedings of the Board shall stand transferred to and vest in, the Government absolutely and in consideration there of the loans, subventions and obligations of the Board tot he Government shall stand extinguished and cancelled, which shall be in full and final settlement of all claims whatsoever of the Board.
(2)Nothing in Sub-rule (1) shall apply to rights, responsibilities, and obligations in respect of the personnel and personnel related mattes, which have been dealt in the manner provided under Rule 6.
'4. Classification of undertakings- (1) The assets, liabilities and proceedings transferred to the government under Sub-rule (1) of Rule 3 shall stand classified as under:
(a) Rights and interest in Pragati Power Project as set out in Schedule 'A'
(b) Generation Undertaking as set out in Schedule 'B'
(c) Transmission Undertaking as set out in Schedule 'C'
(d) Distribution Undertaking as set out in Schedule 'D'
(e) Distribution Undertaking as set out in Schedule 'E'
(f) Distribution Undertaking as set out in Schedule 'F'
(g) Holding Company with assets and liabilities as set out in Schedule 'G'
(2) If the assets classified are subject to security documents or arrangements in favor of third parties for any financial assistance or obligation taken by the Board and the liabilities, in respect thereof are to be classified in different transferees, the Government may, by order to be issued for the purpose, provide for the apportionment of the liabilities secured by such assets between the different transferees and upon such apportionment, the security shall be applicable to the apportioned liability only'.
11. Rule 5 provides for devolution of rights and interests to various successor companies. It is extracted below :
'5 (1) Subject to the terms and conditions contained in these rules- (a) the rights and interests in the Pragati Power Project forming part of Schedule 'A' shall stand transferred to, and vest in, the PPCL, on and from the date of the transfer appointed for the purpose;
(b) the undertaking forming part of the Generation Undertaking as set out in Schedule 'B', shall stand transferred to, and vest in, the GENCO, on and from the date of the transfer appointed for the purpose
(c) the undertaking forming part of the Transmission Undertaking, as set out in Schedule 'C' shall stand transferred to, and vest in, the TRANSCO on and from the date of the transfer appointed for the purpose;
(d) the undertaking forming part of Distribution Undertaking as set out in Schedule 'D', shall stand transferred to, and vest in, DlSCOM 1, on and from the date of the transfer appointed for the purpose;
(e) the undertaking forming part of Distribution Undertaking as set out in Schedule 'E', shall stand transferred to, and vest in, DlSCOM 2, on and from the date of the transfer appointed for the purpose;
(f) the undertaking forming part of Distribution Undertaking as set out in Schedule 'F', shall stand transferred to, and vest in, DlSCOM 3, on and from the date of the transfer appointed for the purpose; (g) the assets and liabilities as set out in Schedule 'G', shall vest in the holding company, on and from the date of the transfer appointed for the purpose
(2)On such transfer and vesting of the undertakings in terms of Sub-rule (1) the respective transferee shall be responsible for all contracts, rights, deeds, schemes, bonds, agreements and other instruments of whatever nature, relating to the respective undertaking and assets and liabilities transferred to it, to which the Board was party, subsisting or having effect on the date of the transfer, in the same manner as the Board was liable immediately before the date of the transfer, and the same shall be in force and effect against or in favor of the respective transferee and maybe enforced effectively as if the respective transferee had been a party thereto instead of the Board.
12. Rule 6 deals with transfer of personnel; it reads as follows:
'6. Transfer of Personnel- (1) The transfer of personnel to the transferee shall be subject to the terms and conditions contained in Section 16 of the Act.
(2) By order No. F. 11/99/2001-Power/PF-III/2849dated the 15th November, 2001 of the government hereinafter referred to as 'the said order', the personnel have been classified into five groups based on the principle of 'as is where is' basis, the place of work, suitability, experience and other relevant consideration as under:
a) Personnel to be transferred to the services of GENCO, as detailed in Appendix 'A' to the said Order.
b) Personnel to be transferred to the services to TRANSCO, as detailed in Appendix 'B' to the said Order.
c) Personnel to be transferred to the services of DISCOM 1, as detailed in Appendix 'C' to the said Order.
d) Personnel to be transferred to the services of DISCOM 2, as detailed in Appendix 'D' to the said Order.
e) Personnel to be transferred to the services of DISCOM 3, as detailed in Appendix 'E' to the said Order.
3) With effect from the date of the transfer to be appointed for the purpose, the personnel shall stand transferred to, and absorbed in, the GENCO, TRANSCO and DISCOMS, as the case may be, in accordance with the said Order made by the Government without any further Act, deed or thing to be done by the Board, the Government, the transferee's or the personnel, as the case may be.
4) The Government shall constitute a committee within two months from the date of the transfer to receive representations from the personnel if any, in regard to any grievance on the permanent absorption in the transferee's and make recommendations in regard to such matters. The government shall be entitled to pass such orders as it may consider appropriate based on the recommendations of the committee including the transfer of the personnel to another transferee and to provide that any personnel transferred to a transferee under Sub-rule (3) shall be deemed to have been transferred to, and absorbed in, another transferee specified by the Government from the date of the transfer appointed for the purpose.
5) The transfer of personnel to the transfers shall be subject to any orders that may be passed by the Courts or Tribunals in any of the proceedings pending on the date of the transfer.
6) Subject to the provisions of these rules, the personnel transferred to a transferee shall cease to be in the servile of the Board and shall not assert or claim any benefit of service under the Board.
7) Subject to the provisions of the Act and these rules, the transferees may frame regulations governing the conditions of service of the personnel transferred to the transferee's under these rules which shall not in any way be less favorable or inferior to those applicable to them immediately before the transfer and till such time, the existing servile conditions of the Board shall mutates mutants apply.
8) Subject to Sub-rule (9) below, in respect of all statutory and other schemes and employment-related matters including the provident fund, gratuity fund, pension and any superannuation fund or special fund created or existing for the benefit of the personnel and the existing pensioners, the relevant transferee shall stand substituted for the Board for all purposes and all the rights, powers and obligations of the Board in relation to any and all such matters shall become those of such transferee and the services of the personnel shall be treated as having been continuous for the purpose of the application of this Sub-rule.
9) The government shall make appropriate arrangements as provided in the tripartite agreements in regard to the funding of the terminal benefits to the extent it is unfounded on the date of the transfer from the Board. Till such arrangements are made, the payment falling due to the existing pensioners shall be made by the TRANSCO, subject to appropriate adjustments with other transferees.
For the purpose of this sub-rule, the term-
a) 'existing pensioners' means all the persons eligible for the pensions on the date of the transfer from the Board and shall include family members of the personnel as per the applicable scheme; and
b) 'terminal benefits' means the gratuity, pension, dearness and other terminal benefits to the personnel and existing pensioners.
10) On the effective date of transfer all the existing welfare schemes, like the scheme for Death Relief Fund, DESLU Engineers benevolent Fund Scheme, or similar schemes which are in operation in the Board shall be continued by the transferees on the same terms and conditions and shall be given full effect and shall not be discontinued on account of deficiency in funds to maintain such schemes.
11) All proceedings including disciplinary proceedings pending against the personnel prior to the date of the transfer from the Board to the transferees, or which may relate to misconduct, lapses or acts of commission or omission committed before the date of the transfer, shall not abate and may be continued by the relevant transferee.
12) The personnel transferred to the transferees, shall be deemed to have entered into agreements with the respective transferee's to repay loans, advances and other sums due or otherwise perform obligations undertaken by them to the Board which remain outstanding as on the date of the transfer, on the same terms and conditions as contained in the agreements or arrangements with the Board.
13) The employees of the Government or the Central Government working under the Board, who are assigned to electricity generation, transmission, sub- transmission, distribution and supply-related or any other activities of the Board shall not be governed by these rules except that such employees shall continue to work on deputation in the transferee to whom they have been assigned under the said Order of the Government on the same terms and conditions as were in the Board till such time the services are required by the transferee or till the expiry of the period of deputation whichever is earlier.
xxx xxx xxxRule 8 deals with the liabilities in relation to pending suits, and proceedings; it provides as follows:
8. Pending Suits, Proceedings(1) All proceedings of whatever nature by or against the Board pending on the date of the transfer shall not abate or discontinue or otherwise in any way prejudicially be affected and the proceedings may be continued, prosecuted and enforced, by or against the transferee to whom the same are assigned in accordance with these rules.
(2) The proceedings mentioned in Sub-rule (1) may be continued in the same manner and to the same extent as it would or might have been continued, prosecuted and enforced by or against the Board if the transfers specified in these rules had not been made.
(3)Notwithstanding anything contained in these rules including the schedules, the liabilities arising out of litigation, suits, claims, etc, pending on the date of the transfer and/ or arising due to events prior to the date of the transfer shall be borne by the relevant distribution company viz DISCOM 1, DISCOM 2 and DISCOM 3 respectively, subject to a maximum of Rs. 1 crore per annum. Any amount above this shall be to the account of the Holding Company in the event for any reason the Commission does not allow the amount to be included in the revenue Requirement of the DISCOM
13. The relevant provisions of the Act are as follows:
Section 15 - Reorganisation of Delhi Vidyut Board and transfer of properties, functions and duties thereof
(1) With effect from the date on which a transfer scheme prepared by the Government to give effect to the objects and purposes of this Act, is published or such further date as may be specified by the Government (hereinafter referred to as 'the effective date'), any property, interest in property, rights and liabilities which immediately before the effective date belonged to the Board shall vest in the Government.
(2) The Government may transfer such property, interest in property, rights and liabilities to any company or companies established under Section 14 for the purpose in accordance with the transfer scheme prepared thereforee.
(3) Such of the rights and powers to be exercised by the Board under the Electricity (Supply) Act, 1948 (54 of 1948), as the Government may, by notification in the Official Gazette, specify, shall be exercisable by a company or companies established as the case may be, under Section 14, for the purpose of discharge of the functions and duties with which it is entrusted.
(4) Notwithstanding anything contained in this Section or any other Act, where--
(a) the transfer scheme involves the transfer of any property or rights to any person or undertaking not wholly owned by the Government, the scheme shall give effect to the transfer only after asset valuation;
(b) where any transaction of any description is effected in pursuance of a transfer scheme, it shall be binding on all persons including third parties, even if such persons have not consented to it.
(5) The Government may require any transmitting or distributing company established under the provisions of Sub-section (1) of Section 14 (hereinafter referred to as 'the transferor licensee'), or any generating company to draw up a transfer scheme to vest in a further licensee or licensees (the 'transferee licensee or licensees'), or any generating company, any property, interest in property, rights and liabilities which have been vested in the transferor licensee or generating company, as the case may be, under this section and publish the same in the Official Gazette. The transfer scheme to be notified under this sub-section shall have the same effect as a transfer scheme under Sub-section (2).
(6) A transfer scheme may--
(a) provide for the formation of subsidiaries, joint venture companies or other schemes of division, amalgamation, merger, reconstruction or arrangements;
(b) define the property, interest in property, rights and liabilities to be allocated--
(i) by specifying or describing the property, rights and liabilities in question,
(ii) by referring to all the property, interest in property, rights and liabilities comprised in a specified part of the transferors undertaking, or
(iii) partly in the one way and partly in the other: Provided that the property, interest in property, rights and liabilities shall be subject to such further transfer as the Government may specify;
(c) provide that any rights or liabilities specified or described in the scheme shall be enforceable by or against the transferor or the transferee;
(d) impose on any licensee an obligation to enter into such written agreements with, or execute such other instruments in favor of any other subsequent licensee as may be specified in the scheme;
(e) make such supplemental, incidental and consequential provisions as the transferor licensee considers appropriate including provision specifying the order in which any transfer or transaction is to be regarded as taking effect;
(f) provide that the transfer shall be provisional subject to the provisions of Section 18.
(7) All debts and obligations incurred, all contracts entered into and all matters and things done by, with or for the Board, or a company or companies established as the case may be, under Section 14 or generating company or distribution company or companies before a transfer scheme becomes effective shall, to the extent specified in the relevant transfer scheme, be deemed to have been incurred, entered into or done by, with or for the Government or the transferee and all suits or other legal proceedings instituted by or against the Board or transferor, as the case may be, may be continued or instituted by or against the Government or concerned transferee, as the case may be.
(8) In the event a licensee is required to vest any part of its undertakings in another licensee pursuant to Sub-section (5), the Government shall amend the transferee license in accordance with Section 24 or revoke its license in accordance with Section 23.
(9) The Board shall cease to exist with the transfer of functions and duties specified and with the transfer of assets as on the effective date.
(10) The exercise by a licensee of any of Board's rights and powers may be made on such conditions as shall be specified in the transfer scheme including a condition that such rights and powers shall be exercised by the licensee only with the approval of the Commission/Government.
Section 16- Provisions relating to personnel-(1) The Government may by a transfer scheme provide for the transfer of the personnel from the Board to a company or companies established as the case may be, under Section 14 and distribution companies ('hereinafter referred to as ' transferee company or companies') on the vesting of properties, rights and liabilities in a company or companies established as the case may be, under Section 14 or the distribution companies.
(2) Upon such transfers the personnel shall hold office in the transferee company on terms and conditions that may be specified in the transfer scheme subject, however, to the following, namely:
(a) that the terms and conditions of the service applicable to them in the transferee company shall not in any way, be less favorable than or inferior to those applicable to them immediately before the transfer;
(b) that the personnel shall have continuity of service in all respects; and
(c) that the benefits of service accrued before the transfer shall be fully recognized and taken in account for all purposes including the payment of any and all terminal benefits'.
14. The petitioners in these proceedings rely on a letter/ office order dated 30.9.2002. By that office order, issued by the Delhi Power Supply Company a clarification was issued that all liabilities towards arrears of pay and allowances to retirees on account of revision of pay/ court orders for the period up to 30.6.2002 would be borne and paid by the holding company.
15. On 21.1.2004 the Government of NCT issued the impugned order in exercise of its power under Rule 12. The said order reads as follows:
OF NCT OF DELHI
(DEPARTMENT OF POWER)
DELHI SECRETARIAT : 8TH LEVEL, B-WING
IP ESTATE, NEW DELHI
No. E(1) (94)/2003/Power 202 Dated January 21, 2004
To, The Director (HR)
Delhi Transco Ltd.,
Shakti Sadan, Kotla Road,
New Delhi ' 110 002
Sub : Removal of doubt, dispute and difference under the provisions of Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 and issue of clarificatory order by the Govt. under Rule 12.
Sir,
A reference has been received from Delhi Transco Ltd., seeking clarification from Govt. with respect to the competent authority new entity to deal with vigilance/disciplinary/Court cases in relation to the employees of erstwhile DVB who could not become part of any of companies on 1.7.20 in terms of Delhi Electricity Reform (Transfer scheme) Rules, 2001.
In exercise of the powers conferred by Section 60 read with Section 15 and 16 of the Delhi Electricity Reform Act, 2000 (Delhi Act No. 2 of 2001) and Rule 12 of Delhi Electricity Reform (Transfer Scheme) Rules 2001 made there under and in supersession of directions issued vide No. 11 (94)/2003/Power/ 1 03 dated 09.01.2004, it is hereby ordered and clarified to avoid any ambiguity in certainty to deal with such cases, that could not become part of any of the Companies, namely Delhi Power Co. Ltd., Delhi Transco Ltd., Indraprastha Power Generation Co. Ltd., BSES Yamuna Power Ltd. BSES Rajdhani Power Ltd., and North Delhi Power Ltd., on 01.07.2002 on the date of restructuring due to retirement/dismissal/removal compulsory retirement etc shall be proceed and decided by such Company who would have been the controlling authority of the employee but for their retirement/removal/dismissal/compulsory retirement etc as per Schedule 'b' 'C' 'D' 'E' and F of Delhi Electricity Reforms (Transfer Scheme) Rules 2001.
Yours faithfully,
[V.V.V.J. Rajashekhar]
Deputy Secretary (Power)
16. The petitioners in these proceedings is BSESR, one of the DISCOMS. It has impugned the above order as illegal and arbitrary. It alleged that the Government of NCT could not have sought recourse to Rule 12. It is alleged that liabilities towards employees who were not in the employment of DVB as on 1.7.2002 could not be fastened on to the successor companies. The petitioner has relied on various provisions of the Transfer Scheme, such as Rule 6 and the concerned Schedules in support of this submission. It is also alleged that under Rule 6 of the Transfer Scheme read with Section 16 the petitioners are liable only in respect of employees who stood transferred with effect from 1.7.2002. However, those persons or employees who did not find mention in any of the Appendices or not find mention in any of the list of employees prepared and whose services were transferred in terms of the Scheme could not be the subject matter of any liability. In other words, it was contended that past employees or proceedings in relation to dismissed or retrenched employees were never intended to be liabilities of the petitioner company.
17. It is alleged that Section 16 and Rule 6 are the only provisions under the Scheme which deal with transfer and entitlement of personnel. They form an exhaustive code and deal with all situations that were in the contemplation of the rule making authority. Now by way of a clarification, in exercise of Rule 12, it is not open to the Government of NCT to fasten liability which was never visualized at the time of the transfer.
18. The petitioners have relied upon Section 57 to say that it is the only provision, vesting the Government with some semblance of power under the Act to remove difficulties. Such power, it is contended had to be exercised within the express bounds of the provision and in the only manner prescribed, namely, through order published in the official gazette and within the expiry of two years from the date of the commencement of the Act. The notified letter, it is alleged, is contrary to the entire scheme as no liability on account of pending proceedings in relation to personnel not included in the Schedules or lists who were transferred as on 1.7.2002, could be fastened on; recourse to Rule 12 has been, thereforee, attacked as arbitrary. It is also alleged that any variation of terms too has to be accordance with the Act by virtue of Section 18.
19. The respondents, Government of NCT, TRANSCO and the Delhi Power Company Ltd (the holding company) have objected to the controversies raised, and stated that the issues pertain to contractual obligations, relating to assets, and personnel, for which writ jurisdiction is not an appropriate remedy. It is averred that at the stage of reorganization of DVB, bids were submitted by the interested parties, viz the petitioners herein, NDPL and other successor companies of DVB. While the bid of the petitioner and NDPL were under consideration, certain communications emanated from the petitioners as well as NDPL by their letters dated 14.05.2002 and 17.05.2002 respectively. Reliance has been placed on conditions in the letters, which stipulated a cap of Rs. 1 crore per annum on the liabilities arising out of litigation, suits claims etc. pending on the date of take over. It is alleged that based on these revised bids Rule 8 (3) was incorporated in Delhi Electricity Reforms (Transfer Scheme) Rule 2001.
20. The respondents aver and contend that the Share holders Agreement, entered into at the time of transfer, through Clause 4.4 too, put a cap of Rs. 1 crore per annum with respect to liabilities arising out of litigation, suits, claims etc pending on the appointed date and or arising due to events prior to appointed date. Such liabilities to the extent of Rs. 1 Crore had to be borne by the concerned persons annually.
21. It is averred that after unbundling of Delhi Vidyut Board on 01.07.2002 under DERA, the Scheme was framed, exercising powers under Section 15, 16 and 60 of the Act.. In terms of Rule 6 of the scheme, employees of erstwhile DVB were transferred on as is where basis to the five companies except the holding company. All personal related matters are to be dealt with under Rule 6 and Rule 3 (2) of transfer scheme. In respect to all other matters and employee related matters including their provident fund, gratuity etc., whether existing or created, the successors stood substituted for the Board for all the purposes and all the rights, powers, obligations of the Board devolved on the transferees.
22. It is averred that regarding those who were in service as on the date of unbundling the details of such employees was provided by the Govt. order dated 15.11.2001; it forms part of the transfer scheme. However, the Scheme describes the on going liabilities of the predecessor Board. Rule 8 has been pressed into service; it deals with contingent liabilities which may accrue and become payable as part of the on going business. Rule 8 is an exception to the general provisions relating to liabilities related to on going business which may accrue and become payable as a part of the on going business or may crystallize after the transfer date. The object it is alleged, is to deal with financial claims against DVB as on the date of transfer which will go along with the undertakings transferred and which liabilities are disputed. These claims and counter claims stood transferred from the transferor of the undertaking to the transferee in the normal course as a part of the going concern of the undertaking. As per Rule 8 (1) and (2) it will be passed on to five entities. It was difficult to either estimate or crystallize the quantum of such liability on the transfer date. The open ended liability was put under a cap of Rs. 1 crore per annum.
23. It was contended that under Rule 12, for any dispute with respect to implementation of the scheme or its provisions, the decision of the government is final. The transfer stipulated that pending suits shall be defended by the transferee to whom the same are assigned. On the other hand, transfer of employees was on as is where is basis. Most of the employees where ever they were working have gone to the Company under whose jurisdiction that field of work was assigned, under the Scheme.
Submissions on behalf of the Petitioners
24. Mr. Sandeep Sethi, learned senior counsel submitted that the scheme of the Act and the Transfer scheme, particularly Sections 14-16 read with Rules 4-6, 8, 9 read with Schedules D, E, and F, indicated that the transfer of assets and liabilities was dealt with differently, in relation to properties and other assets, on the one hand, and personnel on the other. The scheme of devolution of assets and liabilities in relation to properties, contracts and assets, and liabilities relating to such things, differed substantially with those in relation to personnel. This was clear in the differential treatment of the two; personnel were dealt with separately, in terms of Rules 6 and Section 16. Both, read together constituted a complete code, and were special provisions. To the extent they did not provide, or cast liability in relation to any other class or category of personnel, the scheme could not create any further liability.
25. It was contended that the Balance sheets, in relation to each DISCOM made it crystal clear that all conceivable liabilities and contingencies had been thought of, including the liabilities relating to personnel. thereforee, the DISCOMs, particularly the petitioner could not be made a party to pending suits or proceedings, in relation to past transactions with personnel, or past personnel, who had been terminated from services by DVB before the appointed date in the transfer scheme. They could also not be saddled with any unforeseen financial or other liabilities in relation to disputes raised by such personnel, or those whose services had been taken over by the DISCOMs, in relation to claims for past periods, prior to 1-7-2002.
26. It was contended by counsel that the respondents cannot take recourse to a general provision in Rule 8 of DERA, as it deals with only litigation in respect of the cases between DVB and consumers / contractors / third parties and not those cases between DVB and its retired employees, or those who had been terminated, or visited with penalty, and had approached the courts for relief. This was because the DISCOMs were never put to notice about existence of such proceedings, and were not even in existence when many of those disputes arose, and were instituted in courts of law, or tribunals/ for under the Industrial Disputes Act, or other adjudicatory bodies. Saddling such liabilities would have serious implications on the petitioner, and lead to their core activities becoming unviable.
27. It was contended that the scheme of Rule 6 made it abundantly clear that the conditions of service of transferred personnel were the subject matter of continuing liability; even the rule had made provision for succession, and power in relation to pending disciplinary proceedings of such employees, and none else. In this view, and in the absence of any mention in the schedules relating to the DISCOMs, pertaining to issues of liability of DVB regarding pending proceedings initiated by dismissed or retired employees, the DISCOMS could not be made successors, or to answer such contingent liabilities.
28. The impugned letter was attacked as unlawful. It was submitted that the Government had a transitional, one time power to issue directions and clarifications, under Section 57 within two years of the coming into force of the Act. That power could be exercised only within the period stipulated, and in accordance with a prescribed procedure, i.e by publication in the Official Gazette. Neither of conditions was complied with by the impugned letter. thereforee, recourse to Rule 12, by the Govt of NCT was neither permissible nor lawful. It was submitted that the only lawful or permissible method of clarifying an ambiguity, assuming there to be one, under the DERA, was under Section 57. Counsel relied upon the proposition that where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all, and that other methods of performance are forbidden. He relied upon the decisions in Nazir Ahmed v. King Emperor ; Dhananjay Reddy v. State of Karnataka AIR 2001 SC 1512.
29. It was contended that the provisions relating to personnel, found in Sections 16 and 6 signaled a clear legislative intention to treat liabilities in relation to personnel differently from other liabilities, and assets. These provisions, and the absence of any mention of previous employees, proceedings relating to terminated, retrenched or retired employees, implied that there was no intention to create liabilities in relation to such matters, as far as DISCOMS were concerned. Counsel relied upon the decisions in R.S. Raghunath v. State of Karnataka : AIR1992SC81 and Aswinini Kumar Ghosh v. Arabinda Bose : [1953]4SCR1 , to say that Rule 8, particularly Rule 8(3) could not cut down the clear terms and intendment of the law maker, not to fasten liability in relation to, or arising from pending proceedings, or orders regarding those who had ceased to be employees of DVB prior to the cut off date, viz. 1-7-2002.
Contentions of the Respondents
30. Mr. P. P. Malhotra, the learned Additional Solicitor General, argued on behalf of the respondents. It was submitted that a combined reading of Rule 5(2), Rule 8, 8(3) and 12, along with Sections 15, 16 establish that services of personnel transferred were dealt with by Rule 6 and Section 16 whereas all the past liabilities, including those relating to personnel who had ceased to be in the service of DVB as on the appointed date, viz 1-7-2002, particularly in relation to pending proceedings, fell to the share of respective DISCOMs who had taken over activities in different regions, to the extent that such personnel had worked in those areas, prior to the cessation of their services.
31. It was urged that the Act became effective in November 2001, but the Transfer Scheme was brought into force with effect from 1-7-2002. The provision in Rule 8(3) was inserted, after consultations with all the DISCOMs; its intention was to clarify that all liabilities were to fall to the share of DISCOMs.
32. It was urged by the respondents that under the Share holder's agreement, entered to at the time of transfer, by Clause 4.4 a cap of Rs. 1 crore per annum was placed on liabilities arising out of litigation, suits, claims etc pending on the appointed date and or arising due to events prior to that date. Those were to be borne by DISOMS subject to a maximum of Rs. 1 crore. This put the controversy beyond the pale of doubt. The DISCOMS were liable in respect of proceedings arising out of termination, or any service disputes raised by erstwhile employees of DVB; the DISCOMs also had to defend such proceedings.
33. The respondents disputed that the impugned letter was beyond authority of law, and contravened the conditions prescribed in Section 57. It was urged that the terms of the statute itself were clear, in that all liabilities including the liabilities pertaining to termination, retirement, retrenchment, etc pertained to the respective DISCOMs; they could not shrug off their obligations, by stating that the impugned letter amounted to a clarification, issued beyond the four corners of Section 57. It was urged that Section 57 and Rule 12 operated in different fields. The former was a power to remove difficulties, in case of ambiguity or genuine uncertainty in the working of provisions of DERA. However the latter was an enabling, consequential provision, empowering the Government to issue appropriate orders. The two powers were distinct and separate. There was no question of the Government invoking the former power, because there was no doubt, ambiguity or difficulty. By the impugned letter, the intention of the Scheme and provisions of DERA were sought to be effectuated.
34. It was submitted that the provision of Section 8(3) was introduced by way of amendment, and in the absence of a challenge to it, or indeed to any other provision, the DISCOMs could not dispute their liabilities which were clear in terms of the Act and the transfer scheme.
35. After judgment was reserved in this case, the Division Bench delivered its judgment, in Govt. Of NCT v. K.R. Jain LPA No 98/2005 (decided on 30-3- 2006). The court was dealing with the issue of past liabilities of another DISCOM, i.e the NDPL, specifically in relation to a retired employee, not covered by Section 16 or Rule 6. The Court held as follows:
17.It is evident from Section 16 DERA and Rule 6 DERA that except for Rule 6 , (8) (9) and(11), these provisions deal with the existing working personnel of DVB at the time of transfer. Rule 6 (11) read with 2(n) shows that it is in respect of those employees regarding whom proceedings were pending in the court. The proceedings could be of any character or nature as defined in Rule 2(n) and not only necessarily disciplinary proceedings. However, disciplinary proceedings were included but Rule 6 (11) is not limited only to those proceedings which arose out of disciplinary actions. In our opinion, these proceeding could be in respect of reinstatement dues or claims of more salary or allowances filed by existing or erstwhile employees and pending before courts, tribunals etc. The employees of category (b) and (c) are taken care of by Rule 6(11). While Rule 6 (11) is in respect of proceedings concerning employees of the erstwhile DVB, Rule 8 DERR generally covers all kinds of pending suits and proceedings. Rule 8 reads as under:
8-Pending Suits, Proceedings (1) All proceedings of whatever nature by or against the Board pending on the date of the transfer shall not abate or discontinue or otherwise in any way prejudicially be affected and the proceedings may be continued, prosecuted and enforced, by or against the transferee to whom the same are assigned in accordance with these rules.
(2) The proceedings mentioned in Sub-rule (1) may be continued in the same manner and to the same extent as it would or might have been continued, prosecuted and enforced by or against the Board if the transfers specified in these rules had not been made.
(3) Notwithstanding anything contained in these rules including the schedules, the liabilities arising out of litigation, suits, claims, etc, pending on the date of the transfer and/ or arising due to events prior to the date of the transfer shall be borne by the relevant distribution company viz DISCOM 1, DISCOM 2 and DISCOM 3 respectively, subject to a maximum of Rs. 1 crore per annum. Any amount above this shall be to the account of the Holding Company in the event for any reason the Commission does not allow the amount to be included in the revenue Requirement of the DISCOM'.
18. It is argued by learned Counsel for the appellant that legal proceedings filed by Shri K.R. Jain giving rise to liability were covered by Rule 8. Rule 8 (1) is an omnibus rule and makes no exception in respect of any kind of legal proceedings. However, Rule 8 (3) limits the liability of three DISCOM transferee companies to the tune of Rs. 1 crore. The respondent company NDPL can only refuse to pay the amount as ordered by the court if the total liability in that year has crossed Rs. One crore. If the total liability has not crossed Rs. 1 crore, NDPL cannot escape its liability. It is not the case of NDPL that the liability in that year exceeded one crore.
19. The contention of Raj Birbal, Sr. Adv. for the respondent is that Rule 8 of DERR covers litigations only in respect of the cases between DVB and consumers / contractors / third parties and not those cases which were between DVB and its retired employees.
20. This contention of Mr. Raj Birbal cannot be accepted. There is no reason to read in the rule what is not there. 'All proceedings of whatever nature' in Rule 8 (1) cannot be read as ' All proceedings'- between DVB and customer / contractor / third persons.' 'All proceedings of whatever nature ' shall include those proceedings pending in respect of retired / terminated / prematurely or compulsory retired employees.
21. It is further argued that if this liability had been of the employees, Rule 8 (3) would not have limited the liability only to DISCOMS to one crore and it would have mentioned TRANSCO and GENGO also. This arguments also must be rejected since the limit of one crore was fixed at the representation of DISCOMS , only in respect of them. The Court has to read the provision as it exists and cannot read what is not there.
xxx xxx xxx25. From the scheme of the Act and Rules it is clear that not only the assets and liabilities were transferred to the transferee company, the entire past and future litigation was also transferred to the transferee company, be that litigation in respect of employees , consumers and other parties. The scheme of the rules provided that all corresponding employees were transferred by way of forming a list in respect of the employees who were working in the respective areas. All employees who were under suspension or termination and in respect of whom any kind of proceedings as defined in Rule 2(n) were pending at different stages were also specifically made the responsibility of the transferee companies under Rule 6 ( 11).
26. Rule 5 (2) specifically provided that the transferee company shall be responsible for all contracts, rights, deeds, schemes, bonds, agreements and other instruments of whatever nature relating to the respective undertaking and assets and liabilities transferred to it. Section 15 of the Act specifically provided that after the coming into effect of the transfer scheme all debts and obligations incurred ,all contracts entered into, and all matters with or for the Board, or a company or companies established as the case may be, shall be deemed to have been incurred into and done by the transferee company. It is specifically provided that all suits and other legal proceedings instituted by or against the Board or the transferee company as the case may be , may be continued or instituted by or against the Government or the concerned transferee company.
27. In view of the above provisions, there is no escape from concluding that even in all those suits which were pending or filed by the retired employees in the court claiming for their service benefits, thereby creating liability of DVB, the respective transferee company, transferee company shall be substituted instead of DVB.
28. The question arises as to how it will be decided and to which transferee company shall be responsible for the erstwhile employee. In order to determine as to which company shall be responsible for retired/terminated employee, it would be considered as if the employee had not retired or dismissed, then to which company, he would have been transferred. Rule 12(1) provides ' (1) If any doubt dispute, difference or issue shall arise in regard to the transfers under these rules, subject to the provisions of the Act, the decision of the government thereon, shall be final and binding on all parties.' The government in exercise of its power under Rule 12(1) give decision vide letter dated 21.1.04. The letter dated 21.1.04 reads as under:
GOVERNMENT OF NCT OF DELHI
(DEPARTMENT OF POWER)
DELHI SECRETARIATE 8TH LEVEL, B-WING
I.P ESTATE, NEW DELHI
No. F.11(94)/2003 Power/202
dated January 21/22,2004
To
The Director (ILR)
Delhi Transco Ltd.
Shakti Sadan, Kotla Road,
New Delhi.
Sub: Removal of doubt, dispute and difference under the provisions of Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 and issue of clarificatory order by the Govt. under Rule 12.
Sir,
A reference has been received from Delhi Transco Ltd, seeking clarifications from the Govt with respect to the competent authority new entity to deal with vigilance/disciplinary/court cases in relation to the employees of erstwhile DVB who could not become part of any of the Companies on 1.7.02 in terms of Delhi Electricity Reform (Transfer Scheme) Rules, 2001 due to retirement /dismissal /removal /compulsorily retirement by the then DVB
In exercise of the powers conferred by Section 60 read with Sections 15 and 16 of the Delhi Electricity Reform Act, 2000 (Delhi Act No. 2 of 2001) and Rule 12 of Delhi Electricity Reform (transfer Scheme ) Rules, 2001 made there under and in supersession of directions issued vide No. F.11(94)/2003/Power/103, dated 9.1.2004, it is hereby ordered and clarified to avoid any ambiguity in certainty to deal with such cases, that vigilance/disciplinary/ court cases in respect of employees of then DVB who could not become part of any of the companies, namely Delhi Power Co. Ltd,. Delhi Transco Ltd, Indraprastha Power Generation Co. Ltd, BSES Yamuna Power Ltd, BSES Rajdhani Power Ltd and North Delhi Power Ltd on 01.07.2002 on the date of restructuring due to retirement /dismissal/ removal /compulsorily retirement, etc shall be processed and decided by such company who would have been the Controlling Authority of the employee but for their requirement /removal /dismissal /compulsorily retirement, etc as per schedule 'B', 'C', 'D', 'E' and 'F 'of Delhi Electricity Reform (Transfer Scheme) Rules, 2001.
Yours faithfully,
Sd/-
(Y.V.V.J. Rajasekhar)
Deputy Secretary (Power)
29. We hold that it would be NDPL which would be responsible for the payment of the amount as per the directions of the learned Single Judge to respondent No1 and not the Delhi Power Company Ltd. The order of the learned Single Judge is set aside and the appeal is allowed.
36. As is evident from the above extract of the judgment, the Division Bench was of the opinion that the provisions of the DERA and the Scheme operated to devolve liabilities upon the DISCOMs, in respect of liabilities of the erstwhile DVB. The liabilities also pertained to former employees, or those who had ceased to be in employment before 1-7-2002, as well the liabilities arising out of pending legal proceedings, in relation to such former employees, (whether retired, or terminated,) or in relation disputes raised by existing 'taken over' employees, whose contracts had transferred to the various DISCOMS.
37. Judicial discipline and propriety dictates that with the judgment of the Division Bench, particularly since the issues raised in these proceedings were specifically dealt with and decided, this Court cannot take a contrary view. However, since certain additional points had been urged, in these proceedings, principally relating to the validity of the impugned letter, as well as the manner in which liabilities are to be allocated, they would have to be considered and dealt with. For reasons to be presently discussed, the conclusion cannot be any different from the findings of the Division bench.
38. The discussion by the Division Bench, particularly para 16, of the judgment, shows that the court was conscious of the different categories of disputes which existed in relation to terminated/dismissed employees of the erstwhile DVB, and the other class of liabilities, arising from court proceedings in future, after 1-7-2002. The court, after noticing the various conceivable types of disputes, held that the scheme of the Act, and the Rules (i.e. Transfer Scheme) pointed out to liability of the respective DISCOMS, and not the Delhi Power Company.
39. I am of the opinion that the circumstance that personnel related liabilities were dealt with in Rules 6 and 16 does not exhaust the class of existing, and contingent liabilities of the DISCOMS. If the legislative intent had been to exclusively deal with existing employees, and transfer only their services, leaving all other personnel related liabilities, and contingent liabilities, including those on account of pending proceedings, to be borne by the holding company, surely that intention would have manifested itself in clearer terms. Also, the such intention, even if not forthcoming in positive terms, must be the inevitable consequence, having regard to the scheme of the enactment, and the rules.
40. Section 15 enables the reorganization of DVB into separate companies. Section 15(7) reads as follows:
(7) All debts and obligations incurred, all contracts entered into and all matters and things done by, with or for the Board, or a company or companies established as the case may be, under Section 14 or generating company or distribution company or companies before a transfer scheme becomes effective shall, to the extent specified in the relevant transfer scheme, be deemed to have been incurred, entered into or done by, with or for the Government or the transferee and all suits or other legal proceedings instituted by or against the Board or transferor, as the case may be, may be continued or instituted by or against the Government or concerned transferee, as the case may be.
Rule 5(2) reads as follows:
(2)On such transfer and vesting of the undertakings in terms of Sub-rule (1) the respective transferee shall be responsible for all contracts, rights, deeds, schemes, bonds, agreements and other instruments of whatever nature, relating to the respective undertaking and assets and liabilities transferred to it, to which the Board was party, subsisting or having effect on the date of the transfer, in the same manner as the Board was liable immediately before the date of the transfer, and the same shall be in force and effect against or in favor of the respective transferee and maybe enforced effectively as if the respective transferee had been a party thereto instead of the Board.
40. Rule 8 gives effect to Section 15(7). It is a specific provision under the Act dealing with legal proceedings; it contains that the reorganisation of DVB would not affect the pending proceedings. Rule 8(3) in my opinion assumes criticality in the context of the present debate. It provides as follows:
(3) Notwithstanding anything contained in these rules including the schedules, the liabilities arising out of litigation, suits, claims, etc, pending on the date of the transfer and/ or arising due to events prior to the date of the transfer shall be borne by the relevant distribution company viz DISCOM 1, DISCOM 2 and DISCOM 3 respectively, subject to a maximum of Rs. 1 crore per annum. Any amount above this shall be to the account of the Holding Company in the event for any reason the Commission does not allow the amount to be included in the revenue Requirement of the DISCOM
41. A combined reading of the provisions, viz Sections 15(7), 16, with Rules 5(2), 6(7) to (11) and 8 of the DERA and the Transfer Scheme show that personnel related issues, to the extent they related to existing employees, were dealt with separately; the Govt of NCT, in keeping with its commitment under the Tripartite Agreements, framed rules to enable continuity of services, and ensuring protection of pay and existing conditions of services, to those whose services were transferred to the respective DISCOMS. However, the liabilities, in relation to past employees, such as those who had retired, and had approached the court, for some relief pertaining to their service, or who had been terminated or dismissed from services, and who had approached the courts, were dealt with as general liabilities.
42. The Division Bench held that Rule 6(11), as it refers to one category of employees, i.e those facing disciplinary proceedings, or other proceedings, in relation to such matters, covers the field, and the DISCOM would be liable to the extent of its operation. It has also relied upon Rule 8. In addition, I would also rely on Section 15(7) and Rule 8(3). These specific provisions, cast liabilities, in unambiguous terms, relating to legal proceedings.
43. It is one of the cardinal rules of statutory interpretation that the Court must give words and expressions used in the statute, their plain and natural meaning, unless such an interpretation leads to manifestly absurd results. In keeping with this canon of construction, it has been held that the intention of the legislature should be primarily gathered from the language used. Resultantly, the Court should consider the expressions used, as well as what has not been said (Ref. Mohammad Alikhan v. Commissioner of Wealth Tax AIR 1997 SC 1165; Institute of Chartered Accountants of India v. Price Water House AIR 1998 SC 74 and J.P. Bansal v. State of Rajasthan AIR 2003 SCW 1848.
44. In view of the above discussion, I am of the opinion that full and plain meaning must be given to the expressions 'all suits and other legal proceedings' occurring in Section 15(7), as well as 'all proceedings... which may relate to misconduct, lapses or acts of commission committed before the date of the transfer' (Rule 6(11); 'All proceedings of whatsoever nature by or against the Board pending on the date of the transfer' (Rule 8[1]) and 'the liabilities arising out of litigation, suits, claims etc pending on the date of the transfer and/or arising due to events prior to the date of transfer '[Rule 8(3)]. This would also be as noted by the Division Bench ' in accord with the wide import of the definition of 'liabilities' under Rule 2(k). That expression includes contingent liabilities.
45. As far as the submission that the Act and rules provided for transfer of liabilities, only to the extent they were provided for, and since there is no mention of past-personnel related liabilities in the schedules (read with Rules 4 and 5) goes, a close look at the schedules belies the contention. Each of the schedules relating to the DISCOMS (D and F) is identically phrased and contains an identical scheme. The opening words are 'Distribution undertakings shall comprise of all the assets, liabilities and proceedings' fully described in paras I to IV. Para IV is titled 'Miscellaneous' and comprehended contracts, agreements, interests and arrangements (clause -I). Clause 6 mentions proceedings exclusively or primarily related to distribution activities, or undertakings or assets referred in paras I to III.
46. The express reference to proceedings, coupled with contracts, agreements, etc in schedules D E and F, in my considered opinion, lend content to the expression proceedings, and wide import, to Section 15, Rule 6(11) and 8(1) as also 8(3). Thus all past employee related proceedings, to the extent they concerned the activities of DISCOMS, have to be succeeded to by them.
47. It had been contended at one stage that even if the Act and scheme were to be construed as casting liabilities upon DISCOM in respect of pending proceedings initiated by former employees, or in relation to past events, schematically, the Rules were incapable of being worked out. The contention was that by its nature, location of liabilities of such past employees could not be fastened upon the DISCOMS. I see an inherent fallacy in this arguments. One, it is not liabilities arising out of all employees or judgment in cases of all employees, which has to be satisfied; it is only in relation to those working in distribution related activities of the erstwhile DVB. Such activities have been clearly delineated. Two, as far as location of liabilities, inter se, between DISCOMS is concerned, territoriality has been fixed by the zones, indicated in Schedule H.
48. In this context, it would be noteworthy to follow the precept, so aptly put by a Constitution Bench of the Supreme Court that Courts must ensure that statutes are construed so as to give effect to their provisions, than to the contrary, in Tinsukhia Electric Supply Co. Ltd. v. State of Assam : AIR1990SC123 :
It is thereforee, the court's duty to make what it can of the statute, knowing that statutes are meant to be operative and not inept and nothing short of impossibility should allow a court to declare a statute unworkable
49. Schedule F deals with the liabilities of the holding company. It provides inter alia, for 'take over' of contingent liabilities which were not provided for in the schedules pertaining to DISCOMS. At first blush, this express provision may be suggestive of legislative intent to saddle contingent liability on the holding company. On deeper analysis, however, this approach is incorrect. Unlike schedules D, E and F which being with express mention of liabilities, and proceedings, Schedule G is altogether silent about pending proceedings. Surely, there was no intention to create a hiatus between proceedings, and liabilities. If the contention about the holding company having to shoulder all liabilities, relating to former/retired employees were to be accepted, a piquant situation would arise, in that either the carriage of pending proceedings would go unattended, or be with the respective DISCOMS. The difference in structure as between Schedule D, E and F, on the one hand, and Schedule G on the other, fortifies the conclusion that the 'undertaking' in relation to 'proceedings' and 'liabilities' in so far as distribution activities of DVB are concerned, fell to the concerned DISCOMS.
50. It has been held that though schedules to an enactment are part of the main statute, and are arranged so, for the sake of convenience, yet in the case of conflict between the provisions of the substantive part and the schedule, the substantive provision acquires primacy (see Aphali Pharmaceuticals v. State of Maharashtra : 1989(44)ELT613(SC) ). In view of this principle of construction, the conclusion that provisions of Rules 6(11), 8 (1) and 8(3) have to prevail, is inescapable.
51. That brings me to a discussion as to whether the impugned letter was an impermissible and ultra virus exercise of power, beyond the four corners of Section 57. A textual interpretation of the provision would seem to support the contention. However, as explained above, no provision of the Act has been varied, nor has any fresh liability, which was not visualized, been created, by the impugned letter. There can be no dispute about the proposition in Nazir Ahmed's case, that where a statute mandates an particular procedure, that has to be followed, and no other method of performing that act is permissible. However, as explained in the preceding part of this judgment, a conjoint reading of Sections 15 and 16 lead to the conclusion that the statute itself envisioned assignment of liabilities to various successor entities or companies. thereforee, there was no question of the Government using powers under Section 57.
52. Section 57 is a power, the species of which exists in several enactments, particularly where the legislation is new, and the lawmakers realize that there may be unforeseen situations which would have to be dealt with. The executive authority, in such cases, is armed with the power to remove difficulties, by issuing orders, not inconsistent with express provisions. It has been held by the Supreme Court that in exercise of similar powers, a permanent mechanism can be put in place (see Munishwar Dutt Pandey v. Ranjeet Tiwari : AIR1997SC1571 ). Viewed from this perspective, the issuance of the impugned letter cannot be traced to the power under Section 57.
53. The Act was brought into force by a Notification dated 8.3.2001. However, it merely outlined the scheme of unbundling. The actual statutory steps to effectuate the legislative mandate were put into place with effect from 1.7.2002, when the transfer scheme was brought into force. Rule 12 enables the Government, in the event of doubts or disputes, or issues arising in regard to the transfers under the rules, to take decisions. Such decisions are to be necessarily within the four corners of the DERA. The petitioners had relied upon a communication of the Delhi Power Company Ltd., issued some time in 2002, and contented that it reflected the understanding of DPL, that liabilities and pending proceedings were to fall to the share of the holding company. Apart from the disclaimer on behalf of the DPL, in these proceedings, on the ground that such a communication had been issued without authority and on the concerned officials understanding of the rules, I am of the opinion that the views of some officials, even expressed through Circulars, do not bind statutory authorities. At any rate the Courts, where ever appropriate occasions arise would have to interpret the meaning of the provisions as they exist and for that purpose, seek such aid as is permissible for the task, and are not in any way bound by the interpretations contained in letters or Circulars. In the preceding part of the judgment, the correct interpretation has been explained in the light of Sections 15, 16 as well as Rules 6 and 8. thereforee, the contention that the Delhi Power Supply Company had at some stage professed one interpretation, would not be conclusive.
54. There can be no hard and fast rule of construction as to the liability of a successor entity, in relation to business, or industrial activities, of a 'taken over' unit, particularly in relation to employer related issues. In Anakapalle Coop. Agricultural and Industrial Society Ltd. v. Workmen 1963 Supp (1) SCR 730, the Supreme Court held as follows:
The question as to whether a purchaser of an industrial concern can be held to be a successor-in-interest of the vendor will have to be decided on a consideration of several relevant facts. Did the purchaser purchase the whole of the business' Was the business purchased a going concern at the time of the sale transaction' Is the business purchased carried on at the same place as before' Is the business carried on without a substantial break in time' Is the business carried on by the purchaser the same or similar to the business in the hands of the vendor' If there has been a break in the continuity of the business, what is the nature of the break and what were the reasons responsible for it' What is the length of the break' Has goodwill been purchased' Is the purchase only of some parts and the purchaser having purchased the said parts purchased some other new parts and started a business of his own which is not the same as the old business but is similar to it' These and all other relevant factors have to be borne in mind in deciding the question as to whether the purchaser can be said to be successor-in-interest of the vendor for the purpose of industrial adjudication. It is hardly necessary to emphasise in this connection that though all the facts to which we have referred by way of illustration are relevant, it would be unreasonable to exaggerate the importance of any one of these facts or to adopt the inflexible rule that the presence or absence of any one of them is decisive of the matter one way or the other. If industrial adjudication were to insist that a purchaser must purchase the whole of the property of the vendor concern before he can be regarded as a successor-in-interest, it is quite likely that just an insignificant portion of the property may not be the subject-matter of the conveyance and it may be urged that the exclusion of the said fraction precludes industrial adjudication from treating the purchaser as a successor-in- interest. Such a plea, however, cannot be entertained for the simple reason that in deciding this question, industrial adjudication will look at the substance of the matter and not be guided solely by the form of the transfer. What we have said about the entirety of the property belonging to the vendor concern, will apply also to the goodwill which is an intangible asset of any industrial concern. If goodwill along with the rest of the tangible property has been sold, that would strongly support the plea that the purchaser is a successor-in- interest; but it does not follow that if goodwill has not been sold, that alone will necessarily show that the transferee is not a successor-in-interest. The decision of the question must ultimately depend upon the evaluation of all relevant factors and it cannot be reached by treating any one of them as of over-riding or conclusive significance.
55. In the later decision, reported as Bhagwan Dass Chopra v. United Bank of India : (1988)ILLJ427SC , the Court emphasized the need to adopt certain principles, on the issue, as follows:
is, however, necessary to evolve a reasonable procedure to deal with cases where a devolution of interest takes place during the pendency of a proceeding arising under the Industrial Disputes Act, 1947. In the circumstances it is reasonable to hold that in every case of transfer, devolution, merger, takeover or a scheme of amalgamation under which the rights and liabilities of one company or corporation stand transferred to or devolve upon another company or corporation either under a private treaty, or a judicial order or under a law the transferee company or corporation as a successor-in-interest becomes subject to all the liabilities of the transferor company or corporation and becomes entitled to all the rights of the transferor company or corporation subject to the terms and conditions of the contract of transfer or merger, the scheme of amalgamation and the legal provisions as the case may be under which such transfer, devolution, merger, takeover or amalgamation as the case may be may have taken place. It follows that subject to such terms it becomes liable to be imp leaded or becomes entitled to be imp leaded in the place of or in addition to the transferor company or corporation in any action, suit or proceeding filed against the transferor company or corporation by a third party or filed by the transferor company or corporation against a third party and that whatever steps have already taken place in those proceedings will continue to operate against and be binding on the transferee company or corporation in the same way in which they operate against a person on whom any interest has devolved in any of the ways mentioned in Rule 10 of Order 22 of the Code of Civil Procedure, 1908 subject of course to any terms in the contract of transfer or merger, scheme of amalgamation or other relevant legal provisions governing the transaction under which the transferee company or corporation has become the successor-in-interest of the transferor company or corporation.
The contribution placed upon provision of DERA and the rules accords with the principles laid down in the above directions.
56. That leaves me to consider the question of whether the express provisions in Rule 6 and Section 16 spell out an intention that these were special provisions applicable to all class of employees and thereforee the non obstinate clause, contained in Rule 8 (3) has to be read down. Counsel for the petitioner had stated that the special provisions would prevail and the liability sought to be imported by Rule 8, cannot apply. The well-settled position that a non obstinate clause cannot control but has to be read in the context of the enacting provisions of the statute in my opinion does not detract from my conclusions. Here as discussed in the preceding paragraphs, Section 15(7), Rule 5(2); Rule 6(11) and Rule 6(1) manifest the intention to assign liability to the transferee organizations. thereforee, Rule 8(3) does not create any new liability or obligation; it expresses the intention manifestly in clear terms. This interpretation harmonizesthe facial conflict sought to be highlighted on behalf of the petitioners.
57. In the light of the above discussion, I hold as follows:
(a) By virtue of various provisions of DERA and the transfer scheme, the DISCOMS are successor entities in relation to liabilities and proceedings as well as contingent liabilities, in respect of employee related/past employee related claims, issues and orders that are not covered by Sections 16 and Rule 6;
(b) The petitioner would be a successor entity in relation to pending proceedings as also claims for satisfaction of liabilities arising prior to 1.7.2002 in respect of such past employees, or employee related claims which arose for such past period, after coming into force of the transfer scheme. Such liabilities would be determinable having regard to the distribution activity as per the relevant schedule to the transfer scheme;]
(c) the impugned letter is neither illegal nor arbitrary and was issued in valid exercise of Rule 12
58. For the foregoing reasons, the relief's claimed in the petition cannot be granted. The writ petition is accordingly dismissed with no orders as to costs.