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AMICUS AI
Citation Codes
Equivalent Citations
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Case Number
Advocates
  • For Appellant.— Sri B.S Gnanadesikan.
  • Sri D. Raju and Government Pleader.
Judges
  • Sri M.N Chandurkar, C.J
  • Sri K. Venkataswami, J.
Acts
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • For Appellant.— Sri B.S Gnanadesikan.
  • Sri D. Raju and Government Pleader.
Judges
  • Sri M.N Chandurkar, C.J
  • Sri K. Venkataswami, J.
Acts
See more information ...
Smart Summary

Structured Summary of the Court's Opinion

Factual and Procedural Background

The appellant was initially appointed temporarily as a messenger in the Food Corporation of India (FCI) on 3 February 1965. He was discharged on 22 June 1966 with effect from 29 June 1966, then reappointed on 2 July 1966 on a temporary basis. He was transferred to Avadi on 20 August 1967 and, on the same day, received intimation that he was likely to be ousted by the first week of September 1967. He was relieved of his duties from 6 September 1967 by a separate order.

The appellant appealed to the Additional Commissioner for Workmen's Compensation, Madras, under Section 41(2) of the Tamil Nadu Shops and Establishments Act, 1947 (the Act), which permits appeal where there was no reasonable cause for dispensing with services or where the employee was not guilty of misconduct. Section 41(3) makes the authority's decision final and binding.

The Additional Commissioner held the termination to be valid but directed payment of wages in lieu of notice. The appellant challenged that order by filing a petition under Article 226 of the Constitution, contending that the termination was illegal because employees junior to him had been retained. The Single Judge held that (i) the temporary employee had been terminated after giving two weeks' notice in accordance with the contract, and (ii) although the Additional Commissioner's direction to pay one month's wages was technically incorrect, the Single Judge would not interfere so as to deprive the appellant of that benefit. This appellate challenge concerns the Single Judge's order.

Legal Issues Presented

  1. Whether the provisions of the Tamil Nadu Shops and Establishments Act, 1947 apply to the Food Corporation of India, i.e., whether FCI is an "establishment under the Central Government" for the purpose of Section 4(1)(c) of the Act, thereby rendering Section 41(2) appeals incompetent.
  2. Whether the termination of the appellant's services was illegal or arbitrary because juniors were retained while the appellant was dismissed and no reasonable cause was disclosed.
  3. Whether a temporary appointment continued for more than one year results in the employee being deemed permanent where the service rules do not provide for deemed permanency.

Arguments of the Parties

Appellant's Arguments

  • When employees junior to the appellant were retained in service, the employer failed to show any reasonable cause for terminating the appellant, and no such cause was disclosed in the counter-affidavit; therefore, the termination is illegal.
  • A temporary appointment by the Food Corporation of India cannot validly exceed one year; since the appellant had served for more than one year, he should be deemed to have become permanent.

Respondent (Food Corporation of India)'s Arguments

  • Section 4(1)(c) of the Tamil Nadu Shops and Establishments Act exempts establishments "under" the Central Government; the FCI is an establishment under the Central Government, so the Act does not apply and the appeal under Section 41 was incompetent.
  • The termination was effected under the Staff Regulations, 1971 (framed under Section 48 of the Food Corporation Act, 1954), which are statutory; the Corporation thereby had express power to terminate under those regulations and was not required to disclose additional reasons for selecting particular employees for termination.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Workmen of Food Corporation of India v. Food Corporation of India [1985—II L.L.N 20] Held that the Food Corporation of India is an instrumentality of the State within the expression "other authority" in Article 12. The court relied on that decision's findings about the nature and control of FCI (capital, Board acting under Central Government instructions, profits to Government, annual reports to Government) to support the conclusion that FCI is an establishment under the Central Government for Section 4(1)(c) purposes, making the Act inapplicable.
Raman (C.V.) v. Bank of India, Southern Region [1984—II L.L.N 336] Interpreted Section 4(1)(c) and the meaning of "under" as "subject to the authority or control of"; applied the principle of deep and pervasive control to nationalised banks to hold them exempt. The court adopted the Division Bench's interpretation of "under" and the application of the principle of government control to conclude that if an establishment is subject to governmental control (deep and pervasive), it falls within Section 4(1)(c) and is exempt from the Act.
Manager, Government Branch Press, Mercara v. D.B. Belliappa [1979 — I L.L.N 324] Where a temporary government servant's service is terminated without giving any reason while juniors are retained, and termination is not for misconduct or unsuitability separating him from his peers, the termination may be arbitrary. The court acknowledged this principle but distinguished the present case on the basis that FCI has express statutory termination powers under the Staff Regulations, 1971; accordingly, mere retention of others did not render the termination arbitrary absent mala fides.

Court's Reasoning and Analysis

The court proceeded in the following analytical steps, reflecting the reasoning stated in the opinion:

  1. Applicability of the Tamil Nadu Shops and Establishments Act: The court accepted the Food Corporation of India's argument that Section 4(1)(c) exempts establishments "under the Central and State Governments." It treated the phrase "under" as broad — meaning "subject to the authority or control of" — following the Division Bench decision in Raman (C.V.) v. Bank of India. The court examined factual indicia (as referenced in Workmen of Food Corporation of India v. FCI) — initial capital provided by the Central Government, managerial obligation to follow Central Government policy instructions, requirement to pay annual net profit to Central Government, and obligation to submit annual reports to the Central Government — and concluded these circumstances showed FCI was completely under Central Government control.
  2. Jurisdiction of the Appellate Authority: Because FCI was held to be an establishment under the Central Government, the court concluded that the Tamil Nadu Act did not apply to it. Consequently, the appeal remedy under Section 41(2) of the Act could not be invoked by the appellant and the Additional Commissioner for Workmen's Compensation lacked jurisdiction to adjudicate the validity of the termination.
  3. Challenge based on retention of juniors: Although the inapplicability of the Act could render the point unnecessary, the court addressed the contention. It observed that Staff Regulations, 1971 (framed under Section 48 of the Food Corporation Act, 1954) provide express power to terminate employees appointed on an ad hoc/temporary basis by giving notice. Regulation 19(2) prescribes notice periods or pay in lieu for different categories. Regulation 7(3) permits ad hoc temporary appointments for periods not exceeding one year. Given these statutory/regulatory provisions, the court held that termination under regulation 19, exercised pursuant to the Corporation's statutory regulations, would not be arbitrary merely because other employees were retained, unless mala fides were proven.
  4. Claim of deemed permanency after one year: The court held that deemed permanence must be provided for by service rules themselves. In the absence of service rules granting the status of a deemed permanent employee, mere continuation beyond one year does not convert a temporary appointment into a permanent status.
  5. Outcome reasoning: On the combined basis that (a) the Act did not apply to FCI, (b) FCI had statutory termination powers under the Staff Regulations, and (c) there was no provision making temporary continuation beyond one year confer permanence, the court found no substance in the appeal.

Holding and Implications

Holding: The appeal is DISMISSED.

Implications and direct effects:

  • The court held that the Food Corporation of India is an establishment under the Central Government for the purposes of Section 4(1)(c) of the Tamil Nadu Shops and Establishments Act, 1947, rendering the Act inapplicable to FCI and making an appeal under Section 41(2) of the Act incompetent in this case.
  • The Additional Commissioner for Workmen's Compensation therefore had no jurisdiction to decide the validity of the appellant's termination under the Act.
  • The termination of the appellant's services was permissible under the Staff Regulations, 1971 (framed under Section 48 of the Food Corporation Act, 1954), which provide express authority to terminate temporary/ad hoc employees on the specified notice terms; mere retention of junior employees does not render such a statutory termination arbitrary in the absence of proved mala fides.
  • The court ruled that continuation of a temporary appointment beyond one year does not alone create a deemed permanent status unless the service rules expressly provide for such deemed permanency.
  • No order as to costs was made in the appeal.

The opinion applies existing authorities to the facts of this case; it does not purport to lay down a novel legal principle beyond that application.

Show full summary ...

    Damodaran (P.C) v. Regional Manager, Food Corporation Of India, Madras, And Others

    Chandurkar, C.J:— The appellant who was initially appointed temporarily as a messenger in the Food Corporation of India on 3 February, 1965, was discharged on 22 June, 1966, with effect from 29 June, 1966. He was reappointed on 2 July, 1966, also on temporary basis and was transferred to Avadi on 20 August, 1967. On the same day, he was also given intimation that he was likely to be ousted by the end of the first week of September 1967, and accordingly he was relieved of his duties from 6 September, 1967, by a separate order.

    2. The appellant approached the Additional Commissioner for Workmen's Compensation, Madras, by way of an appeal under S. 41(2) of the Tamil Nadu Shops and Establishments Act, 1947 (Tamil Nadu Act, 36 of 1947) (hereinafter referred to as the Act). Sub-section (2) of S. 41 of the Act gives a right to a person employed in an establishment to appeal to such authority as may be prescribed either on the ground that there was no reasonable cause for dispensing with his services or on the ground that he had not been guilty of misconduct as held by the employer. Sub-section (3) of S. 41 makes the decision of the authority final and binding on both the employer and the person employed.

    3. The authority, however, held that the termination was valid; but directed payment of wages in lieu of notice to be given.

    4. The appellant herein challenged this order of the authority in a petition filed under Art. 226 of the Constitution of India on the ground that persons junior to the appellant having been retained in service, the termination of service of the appellant herein was illegal. The learned Single Judge (Mohan, J.) who heard the writ petition found that the services of the appellant herein who was a temporary employee have been terminated after giving two weeks' notice which was strictly in accordance with the terms of the contract. However, he found that though the direction of the Additional Commissioner for Workmen's Compensation to the employer to pay one month's wages to the appellant herein was technically not correct, he would not interfere with the said order so as to deprive the appellant herein of the benefit which he earned at the hands of the Additional Commissioner for Workmen's Compensation. This order of the learned Judge is challenged in this appeal.

    5. Sri Gnanadesikan, learned counsel for the appellant, has raised the following two grounds:

    Firstly, according to him, when all the employees who were jounior to the appellant were still retained in service, the employer has failed to show any reasonable cause necessitating termination of the appellant's services, and since no such reasonable cause has been disclosed in the counter-affidavit, the order of termination must be held to be illegal; and

    secondly, according to the learned counsel, no temporary appointment can be made by the Food Corporation of India for more than one year, and since the appellant had put in more than one year's service, he must be deemed tohave become permanent.

    6. The case which is put forward by the Food Corporation of India is that in view of the provisions of S. 4(1) (c) of the Act, the provisions of the Act are not applicable in the case of the Food Corporation of India and, therefore, the appellant's appeal under S. 41 of the Act was really incompetent. The other argument advanced on behalf of the Food Corporation of India is that the termination of the employment of the appellant herein has been brought about expressly in terms of the Staff Regulations, 1971, which are statutory regulations and, therefore, it was not necessary for the Food Corporation of India to disclose any further reason as to why some other persons have been retained and the appellant's services alone were terminated.

    7. It appears to us that the argument advanced on behalf of the Food Corporation of India that the provisions of the Tamil Nadu Shops and Establishments Act, 1947, are not applicable to the establishment of the Food Corporation of India has to be accepted. The material part of S. 4(1) of the Act reads as follows:

    “4.Exemptions.— (1) Nothing contained in this Act shall apply to—

    (c) establishments under the Central and State Governments, local authorities, the Reserve Bank of India, a railway administration operating any railway as defined in Cl. (20) of Art. 366 of the Constitution and cantonment authorities”.

    Clauses (d) to (f) of Sub-sec. (1) of S. 4 and Sub-sec. (2) of S, 4 of the Act are not relevant for our purpose.

    8. So far as the Food Corporation of India is concerned, if it is shown that it is an establishment under the Central Government, then it is clear that having regard to the provisions in S. 4 (1) (c) of the Act, the provision for appeal in S. 41 of the Act could not be invoked by the appellant herein because the provisions of the Act themselves are inapplicable to the establishment of the Food Corporation of India. The constitution and the nature of the establishment of the Food Corporation of India, has been considered by the Supreme Court in Workmen of Food Corporation of India v. Food Corporation of India [1985—II L.L.N 20], and it was held that the Food Corporation of India is an instrumentality of the State within the expression “other authority” in Art. 12. In Para. 16 of the judgment, the Supreme Court has referred to the following circumstances to come to the conclusion that the Food Corporation of India is an instrumentality of the State:

    (1) Section 5 provides for the initial capital and for acquiring power to increase the capital in such manner as the Central Government or the State Government as the case may be, may determine, initial capital being provided by the Central Government.

    (2) The management of the Corporation is to vest in a Board of Directors and the Board of Directors in discharging its functions shall act amongst others according tothe instructions on questions of policy as may be given by the Central Government.

    (3) The annual net profit of the Food Corporation of India has to be paid to the Central Government.

    (4) Every Food Corporation has to submit to the Central Government an annual report of its working and affairs and the same has to be laid before the Houses of Parliament.

    The above circumstances will clearly indicate that the Food Corporation of India is completely under the control of the Central Government. Any instruction on questions of policy issued by the Central Government are statutorily required to be implemented by the Board of Directors, and even the annual net profit of the Food Corporation of India has to be paid to the Central Government. If the affairs of the Corporation are thus wholly controlled by the Central Government, it is clear that the establishment of the Food Corporation of India will be under the Central Government. It is necessary to point out that Cl. (c) of S. 4(1) of the Act uses the phraseology “establishment under the Central and State Governments”. The phraseology is not “establishment of the Central Government and the State Government”. By the use of the word “under” the scope of Cl. (c) of S. 4(1) of the Act is made much wider, and if it is shown that the Central Government or the State Government exercises control over an establishment, then such an establishment will be said to be under the Central Government or the State Government, as the case may be.

    9. The scope of S. 4(1)(c) of the Act was recently considered by a Division Bench of this Court in Raman (C.V) v. Bank of India, Southern Region[1984—II L.L.N 336]. The Division Bench held that the control of the Government of India over the nationalised banks is enormous and hence such banks are exempted from the Tamil Nadu Shops and Establishments Act, 1947. In that decision, it was argued before the Division Bench that S. 4(1)(c) of the Act contemplates an establishment which is a department of the Government. This argument was rejected with the observation in Para. 59, at page 360 that:

    “… If really that was the intention of the law makers, nothing would have been easier than to state a department of a Government, under S. 4 (1) (c) of the Shops Act…”

    Dealing with the meaning of the word “under” the Division Bench took the view that the meaning of the word “under” was “subject to the authority or control of” and the Bench further held that if the nationalised bank is subject to the authority or control of the Government of India, which is the meaning of the word “under”, the principle of deep and pervasive control may be applied in considering S. 4(1)(c) of the Shops Act.

    10. Having regard to the nature and establishment of the Food Corporation of India as indicated above, we are inclined to take the view that the establishment of the Food Corporation of India is under the Central Government and will, therefore, be exempted from the provisions of the Act in view of the provision of S. 4(1)(c) of the Act. Consequently, the appeal provision in S. 41(2) of the Act could not have been invoked by the appellant herein and the appellate authority has no jurisdiction to deal with the validity of the termination order passed against the appellant herein.

    11. So far as the contention that persons junior to the appellant have been retained in service and the Food Corporation of India should have given reasons for the termination of the services of the appellant is concerned, it appears to us that though in view of the inapplicability of the Act, it may not arise, the said contention has to be negatived in view of the Staff Regulations, 1971. Undoubtedly, the Supreme Court in Manager, Government Branch Press, Mercara v. D.B Belliappa [1979 — I L.L.N 324], has taken the view that where the services of a temporary Government servant were terminated without giving any reason, while some other employees junior to him were retained in service and his services are not terminated on the ground of unsatisfactory conduct or his unsuitability for the job and/or for his work being unsatisfactory or for a like reason which marks him off a class apart from other temporary servants who have been retained in service, the termination of service would become arbitrary. We are, however, dealing with the express power which is reserved by the Corporation under the Staff Regulations of 1971. These regulations are framed in exercise of the powers conferred by S. 48 of the Food Corporation Act, 1954. Regulation 19 deals with termination of service and discharge. Regulation 19 (2) reads as follows:

    “19. (2) The services of any employee appointed under Sub-cl. (b) or Sub-cl. (c) of Cl. (3) of regulation 7 may be terminated by the competent authority on giving him:

    (a) 30 days' notice or pay in lieu thereof in case of an employee belonging to category I or category II; and

    (b) 7 days' notice or pay in lieu thereof in the case of employees belonging to category III or category IV”.

    12. Regulation 7(3) enables the Corporation to make appointments to any post in the Corporation on an ad hoc basis on a purely temporary basis for a period not exceeding one year. There are other modes of appointment with which we are not concerned. Regulation 19, therefore, is an express statutory power to terminate the employment of a person appointed on an ad hoc basis by giving the necessary notice. Where such power is exercised, there isno question of the termination becoming arbitrary, unless of course, mala fides are proved. The mere fact that some other persons are allowed to continue in employment is, therefore, not a ground on which the order of termination of service of the appellant herein could be challenged.

    13. The last argument advanced on behalf of the appellant is that a person can be appointed on a purely temporary basis only for a period not exceeding one year and that since the appellant had been in employment for more than one year, he should be deemed to have become permanent. This argument cannot also be accepted. The status of a deemed permanent employee has to be provided for by the service rules themselves, and if there are no service rules which provide for the status of a deemed permanent employee, such a status cannot be claimed merely on the ground that the temporary employee has been continued beyond the period of one year. In this view of the matter, there is no substance in the appeal. The appeal fails and it is accordingly dismissed. However, there will be no order as to costs in this appeal.

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    Comments

    Damodaran (P.C) v. Regional Manager, Food Corporation Of India, Madras, And Others
    (Jul 9, 1985)