Case Note & Summary
The dispute arose out of a writ petition filed by respondent D.K. Jain, an officer of the Indian Audit and Accounts Service, who was appointed as Director (Finance) of Fertilizer Corporation of India Ltd. on 8 June 1982 for a fixed tenure of five years or till superannuation, whichever was earlier, under Article 66(1) read with Article 69 of the Corporation's Articles of Association. The respondent joined the Corporation on 17 July 1982. On 21 June 1983, the Assistant Comptroller and Auditor General issued a notification stating that consequent upon his permanent absorption in the Fertilizer Corporation of India Ltd. in public interest with effect from 17 July 1982, the respondent was deemed to have retired from government service under Rule 37 of the Central Civil Services (Pension) Rules, 1972. However, no order of permanent absorption was ever issued by the Corporation itself. On 12 November 1984, the Government of India appointed the respondent as Director (Finance) of Cement Corporation of India Ltd. for a period of two years under Article 95 of that Corporation's Articles of Association. The respondent sought a five-year term in Cement Corporation, stating that a two-year term would be a disadvantage, but the appointment remained for two years. On 22 November 1984, the Fertilizer Corporation released him with effect from 24 November 1984, and later, on 3 December 1984, he was relieved from service with effect from the afternoon of 5 December 1984. The respondent voluntarily relinquished charge on 5 December 1984 and assumed charge in Cement Corporation of India on 6 December 1984. On 20 January 1986, the President terminated his services as Director (Finance) of Cement Corporation of India and removed him from its Board under Article 95(d). The respondent then wrote to the Fertilizer Corporation seeking reinstatement, claiming that permanent absorption was a material condition precedent to his appointment and that the Corporation should take him back. The Corporation refused, stating that his employment had ceased when he was relieved on 5 December 1984 and that he had voluntarily left to join Cement Corporation. The respondent filed a writ petition before the High Court, which allowed it on 24 September 1990, directing the Corporation to take him back as Director (Finance) with effect from 20 April 1986 or to appoint him to an equivalent post with all consequential benefits. The Corporation appealed to the Supreme Court. The appellant argued that the respondent was never permanently absorbed; the appointment order was clear and unambiguous about the five-year tenure; the respondent voluntarily relinquished his post; and the notification of deemed retirement did not bind the Corporation. The respondent argued that permanent absorption was a condition precedent and that the President had sanctioned it, so he was entitled to return. The Supreme Court held that the appointment was for a fixed tenure and that no order of permanent absorption existed. The Court observed that the respondent's own communication after removal showed he understood the appointment as fixed tenure. The Court concluded that after voluntarily leaving the Corporation to join Cement Corporation, the respondent had no right to return upon termination from Cement Corporation. Accordingly, the Supreme Court allowed the appeal, set aside the High Court judgment, and held that the respondent was not entitled to reinstatement in the Fertilizer Corporation of India.
Headnote
A) Service Law - Public Sector Undertaking Appointments - Fixed Tenure vs Permanent Absorption - Articles of Association of Fertilizer Corporation of India Ltd., Article 66(1), Article 69; Central Civil Services (Pension) Rules, 1972, Rule 37 - The respondent was appointed as Director (Finance) for a fixed tenure of five years or till superannuation, whichever was earlier; no order of permanent absorption was ever issued by the Fertilizer Corporation of India; a government notification retiring the respondent from Indian Audit and Accounts Service on the ground of permanent absorption in the Corporation did not by itself create permanent employment in the Corporation - Held that the appointment remained a fixed tenure appointment and the respondent could not claim permanent absorption or a right to return after leaving the post (Paras not mentioned). B) Service Law - Voluntary Relinquishment and Right to Reinstatement - Articles of Association of Fertilizer Corporation of India Ltd., Article 66; Articles of Association of Cement Corporation of India Ltd., Article 95 - The respondent voluntarily relinquished charge of Director (Finance) in the Fertilizer Corporation and joined Cement Corporation of India; upon termination from Cement Corporation, he had no right to return to the Fertilizer Corporation because his own action had brought the earlier tenure to an end - Held that the High Court erred in directing reinstatement; the appeal was allowed and the High Court judgment was set aside (Paras not mentioned).
Issue of Consideration
Whether respondent D.K. Jain was permanently absorbed in Fertilizer Corporation of India and entitled to reinstatement after removal from Cement Corporation of India; whether High Court was correct in directing reinstatement despite voluntary relinquishment and fixed tenure appointment; whether government notification of deemed retirement on permanent absorption bound the Corporation.
Final Decision
Appeal allowed; High Court judgment dated 24.9.1990 set aside; respondent not entitled to reinstatement in Fertilizer Corporation of India as Director (Finance) or equivalent post. The Court held that the appointment was for a fixed tenure and the respondent voluntarily left the Corporation, thereby relinquishing any right to return.
Law Points
- Fixed tenure appointment under Articles of Association cannot be converted into permanent absorption by government notification
- voluntary relinquishment of post extinguishes right to return
- no permanent absorption order by corporation
- respondent understood appointment as fixed tenure
- notification of deemed retirement under Central Civil Services (Pension) Rules does not bind corporation
