Paragraph numbers below are the court’s original numbering, recovered from the source text.
19. In paragraph 16 of the judgment as extracted above this Court held that “the conditions of service of employees, in our considered view, do not constitute the functions of the Vikas Parishad”. This Court also considered Sections 93 and 95 of the 1965 Act. This Court held that the Vikas Parishad is vested with the right to make regulations, so as to extend to its employees a scheme in the nature of pension/family pension and gratuity scheme. Ultimate directions were issued in paragraph 21 to the following effect: “21. It is also necessary for us to determine the consequence of the State of Uttar Pradesh, having approached this Court, to assail the impugned judgment dated 16-1-2009. This Court having entertained the petition filed by the appellant, passed interim directions on 7-8-2012, which had the effect of staying the implementation of the directions issued by the High Court, namely, of staying the implementation of the Notification dated 19-5-2009. As a result, the employees governed by the Notification dated 19- 5-2009, were paid their retiral dues under the Contributory Provident Fund Scheme. Since we have now affirmed the impugned judgment of the High Court, dated 16-1-2009, it is apparent that all the eligible employees of the Vikas Parishad will be governed by the Notification dated 19-5-2009. They will therefore be entitled to the pensionary benefits from the date of their retirement. Undoubtedly, they have been denied the said retiral benefits, consequent upon the interim orders passed by this Court, at the behest of the State of Uttar Pradesh. In the above view of the matter, we direct the Vikas Parishad to release the pensionary benefits to the retired employees governed by the Notification dated 19-5-2009, within three months from today. While determining the pensionary benefits payable to the eligible retired employees up to date, if it is found that any of the retired employees is entitled to financial dues in excess of those already paid under the Contributory Provident Fund Scheme, the said employee(s) will be paid interest on the said amount @ 9% p.a. The burden of the aforesaid interest component on the differential amount will be discharged by the Vikas Parishad in the first instance. The same shall, however, be recovered from the State of Uttar Pradesh, who is solely responsible for the interest ordered to be paid to the employees concerned.”
20. Learned Advocate-General submitted that the view as expressed by this Court in paragraph 16 that conditions of service employees do not constitute the functions of the Vikas Parishad and directions issued on 13.09.2005 and 12.07.2007 could not have been issued by the State Government are the views expressed by this Court without considering the relevant statutory provisions of 1965 Act. Under Section 8 of 1965 Act, the Board may appoint officers and servants of the Board subject to such control and restrictions as may from time to time be imposed by the State Government, by special or general orders. Thus, the appointments are to be made under the control of the State Government which clearly indicate that State can issue special or general orders with regard to appointments which can very well include conditions of service of the employees to be appointed. He submits that Section 92 of the Act occurring in Chapter X provides for control of State Government on Board and other local authority. It is further submitted that Section 94(2)(nn) empowers the State to make rules on any matter for which regulation may be made by the Board under Section 95. Thus, the State Government had power to make rules when the Board can make regulation with regard conditions of service of the officers and servants of the Board, the power has clearly been conceded to State Government to make rules with regard to conditions of service of officers and servants of the Board. It is submitted that in Preetam Singh’s case the attention of the Bench is not invited to Sections 8, 92 and 94(2)(nn) nor the aforesaid provisions have been considered in the judgment and had the Court adverted to the aforesaid provisions it could not have held that conditions of service of the employees do not constitute the functions of the Vikas Parishad. He further submits that Entry 41 of STATE OF U.P. & ORS. v. VIRENDRA KUMAR & ORS. [ASHOK BHUSHAN, J.] List II of the VIIth Schedule of the Constitution empowers the State Legislature to frame law on public services and State has also executive power on all subjects where it has legislative power, thus, the State can exercise its executive power with regard to public services which include service conditions of the employees.
21. He further submits that functions of the Board as contemplated under Section 15 are vide enough and there are other functions entrusted to the Board in the provisions of the Act and when the Board is empowered to make regulations it is also one of its functions. It is submitted that the view expressed in the Preetam Singh’s case in paragraph 16 is per incuriam as it has been expressed without considering relevant statutory provisions of Section 1965 Act as noticed above. It is further submitted that the direction issued by the State Government would prevail over Pension Regulations framed by the Board on 19.05.2009.
22. It is further submitted that the State while implementing 6th Pay Commission’s Report had implemented with regard to the employees of Board by giving actual benefits w.e.f. 21.01.2010. He submits that the State Government has ample jurisdiction to issue directions with regard to the service conditions of the employees, officers of the Board and contrary view in Preetam Singh’s case needs to be re-considered.
23. Shri Nikhil Majithia learned counsel appearing for the respondents submits that the question as to whether the State Government has power to issue directions to Parishad with regard to the service conditions of its employees has been correctly answered by this Court in Preetam Singh’s case. He submits that there is no error in the judgment of this Court requiring any reconsideration. It is submitted that none of the conditions for making reference to a larger Bench is satisfied in the facts of the present case. Mere non-consideration of any statutory provision is no ground to refer the question to a larger Bench. The central question in the Preetam Singh’s case was that powers of the State to issue directions with regard to service conditions of the employees of the Board which has been discussed elaborately and answered. Non- consideration of a limb of argument which could have been raised before the Court and has not been raised and decided is not a ground for making reference. Referring to Section 92 of the Act he submits that direction under Section 92 shall relate to functions of the Board as enumerated in Section 15 which does not include any direction pertaining to conditions of service of officers and servants of the Board. In Civil Appeal of Preetam Singh the State in its pleading has referred to Section 94(2)(nn) of 1965 Act. It is further submitted that issue of validity and legality of Government Orders dated 13.09.2005 and 12.07.2007 attained finality by the order of this Court in Preetam Singh’s case judgment and their validity cannot be gone into in these proceedings. This Court is not exercising any review jurisdiction as far as Preetam Singh’s case judgment is concerned and therefore the question of determining the validity and legality of the Government Orders dated 13.09.2005 and 12.07.2007 is not available to this Court in the present proceedings.
24. Shri P.K. Jain, learned counsel appearing for the respondents submitted that the State has the right to issue directions only in respect of the functions assigned to the Board under Section 15 of the 1965 Act and the conditions of service of the employees do not constitute the functions of the Vikas Parishad. He submits that all the respondents have retired long ago but their pensions have not yet been paid causing great prejudice to them. The State has the right to issue directions only to the Vikas Parishad under Section 15 of the 1965 Act. The conditions of service of the employees do not constitute the functions of the Vikas Parishad.
25. We have considered the submissions of the parties and perused the records.
26. This Court in the judgment in Preetam Singh after considering the provisions of U.P. State Control Over Public Corporation Act, 1975 and some provisions of the 1965 Act laid down following: (1) The conditions of service of the employees do not constitute the functions of the Vikas Parishad. (2) The State Government can issue directions on question of policy only with regard to the specified functions as contemplated by Section 15 of the 1965 Act. (3) The conditions of the service of employees not being functions of Board under Section 15 of the Act, the State Government has no jurisdiction to issue directions regarding pension/family pension and gratuity of the employees of the Parishad. STATE OF U.P. & ORS. v. VIRENDRA KUMAR & ORS. [ASHOK BHUSHAN, J.]
27. It has been submitted by the learned Advocate-General that the above proposition does not lay down the correct law. The Bench hearing Preetam Singh’s case has not considered other relevant provisions of the 1965 Act and has fell in error in holding that the conditions of service of the employees is neither the function of the Parishad nor the function of the State Government.
28. In Preetam Singh’s case, this Court has extracted Section 15 of the 1965 Act and held that the conditions of the service of the employees is not the function of the Parishad. We may first consider as to whether the above view taken in the Preetam Singh’s case is correct or not.
29. Chapter III of the 1965 Act deals with the functions and powers of the Board. It is true that Section 15 does not include conditions of the service of the employees as one of the functions of the Board but Section 15(1) begins with words “subject to the provisions of this Act and the rules and regulations”, thus, functions of the Board as enumerated in Section 15 are subject to the provisions of 1965 Act. Thus, functions of the Board as enumerated in Section 15 are not exhaustive and have to be read along with functions of the Board as per other provisions of the Act, rules and regulations. Section 8 of the Act is an appropriate illustration for the present purpose. Section 8 provides for appointment of officers and servants. Section 8 of the Act is as follows: “8. Appointment of officers and servants.- (1)Subject to such control and restrictions as may from time to time be imposed by the State Government, by special or general orders, the Board may appoint such officers and servants as it considers. necessary for the efficient performance of its functions. (2) The Board may, with the previous approval of the State Government, appoint a servant of the Central or the State Government or of a local authority on any of the posts under it on such terms and conditions as may be agreed upon.”
30. Section 8 as extracted above indicates that appointment of officers and servants is also one of the functions of the Board. Supposing Board does not appoint any officer and servant can it carry out functions as entrusted by the Act on it, answer is obviously no. Thus, appointment of officers and servants is one of the functions of the Board and when power of appointment is given, power of laying down the conditions of service is implicit in it. In case where there are no rules or regulations for laying down terms and conditions of officers and employees of the Board, the Board can regulate the terms and conditions even by the executive orders. In Preetam Singh’s case attention of this Court was not drawn on the expression “subject to the provisions of the Act, rules and regulations” which was expression of extreme importance and clearly intended to amplify and add other functions to the Board as provided in the Act, rules and regulations. Provisions of Section 8(2) of 1965 Act indicates that the Board with the previous approval of the State Government appoint a servant of the Central or the State Government or of a local authority or any of the posts under it on such terms and conditions as may be agreed upon.
31. Thus, in case of appointment under Section 8(2) terms and conditions of appointment has to be laid down although with the agreement as agreed upon. Section 8(2) is clearly indicative that terms and conditions of the appointment are not alien to the functions of the Board. Section 95(1) which empowers the Board to frame regulations is as follows: “Power to make regulations.- (1) The Board may, by notification in the Gazette, make regulations providing for – (a)……………………… ……………………… (f) the conditions of service of officers and servants of the Board; (g)…………………… ……………………”
32. As noted above Section 15(1) begins with the words “subject to the provisions of this Act and the rules and regulations”, thus, when Section 95(1)(f) provides making regulations by the Board for providing the conditions of officers and servants of the Board, making regulations on the above subject is also a function of the Board. Section 95, thus, has to be read in functions of the Board as contemplated by Section 15. The function contemplated by regulations has also to be added which is simple and plain meaning of the provision. The Bench deciding Preetam Sigh’s case did not refer to Section 8, Section 95(1)(f) and without adverting to the relevant provisions which clearly indicate that conditions STATE OF U.P. & ORS. v. VIRENDRA KUMAR & ORS. [ASHOK BHUSHAN, J.] of service of the employees is also a function of the Board, the Bench deciding Preetam Singh’s case fell in error in holding that conditions of service do not constitute functions of the Board which opinion is not as per the provisions of the 1965 Act. Thus, the above opinion expressed by the Bench in Preetam Singh’s case is without referring to Section 8, Section 95(1)(f).
33. We may also refer to Section 92 which deals with control of the State Government over the Board and other local authorities. Section 92(2) is relevant for the present case. Section 92 of the Act has also not been referred. It was contended before us that the directions of the State Government pertaining to service conditions of employees are not contemplated by Section 92(2). Section 92(2) has its operation for carrying out the purpose of this Act. The words “purpose of this Act” are vide enough which encompass in itself the appointment of officers and staff of the Board. Hence, the State Government can as well issue directions under Section 95(2) regarding appointment of officers and servants. Section 92 has also not been considered in Preetam Singh’s case.
34. In view of the above, we are of the considered opinion that the Bench in Preetam Singh’s judgment in laying down that conditions of service of the employees do not constitute the functions of the Vikas Parishad erred, it having not considered other provisions of Sections 8, 92, 95(1)(f) and the expression subject to the provisions of this Act, rules and regulations as occurring in Section 15(1).
35. In event the functions of the Board includes conditions of the service of the employees of the Board the State Government shall have jurisdiction under 1975 Act as well under 1965 Act to issue directions to the Board with regard to appointment of officers and servants of the Board, the control and restrictions by the State Government are expressly provided in Section 8(1) when the appointment of officers and servants by the Board is expressly subject to control and restrictions as may from time to time be imposed by the State Government, it cannot be said that the State Government had no jurisdiction to issue directions regarding service conditions of the employees. The State Government has been given express rule making power with regard to all subject where regulations may be made by the Board under Section 95. Section 94(1) and (2)(nn) provides as follows: “94. Power to make Rules.- (1) The State Government may, by notification in the Gazette, make rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for – (a)………… ………… (nn) any matter for which regulation may be made by the Board under Section 95; …………………”
36. As noted above, the Board has power to frame regulations regarding conditions of service of officers and servants of the Board, the State Government shall have power to make rules on the above subject. Further, by virtue of Section 95(2) rules by the State has overriding effect. Section 95(2) is as follows: “Section 95(2) If any regulation is repugnant to any rule than the rule whether made before or after the regulation shall prevail and the regulation shall to the extent of the repugnancy be void.”
37. The above section is also indicative that there is no lack of jurisdiction in the State regarding service conditions of the officers and the servants of the Board. The State Legislature have legislative competence under Entry 41 List 5 of the VIIth Schedule of the Constitution, it has also the executive power to issue orders by virtue of Article 162 of the Constitution. The State, thus, can exercise its jurisdiction under Article 162 to issue executive orders regulating the conditions of service of the officers and servants employed in the affairs of the State.
38. A Constitution Bench of this Court in Rai Sahib Ram Jawaya Kapur and others vs. The State of Punjab, AIR 1955 SC 549, had occasion to examine Article 162 of the Constitution. Following was laid down in paragraph 7: “(7)………Article 162, with which we are directly concerned in this case, lays down : STATE OF U.P. & ORS. v. VIRENDRA KUMAR & ORS. [ASHOK BHUSHAN, J.] “Subject to the provisions of this Constitution, the executive power of a State shall extend to the matters with respect to which the Legislature of the State has power to make laws : Provided that in any matter with respect to which the Legislature of a State and Parliament have power to make laws, the executive power of the State shall be subject to, and limited by, the executive power expressly conferred by this Constitution or by any law made by Parliament upon the Union or authorities thereof.” Thus under this article the executive authority of the State is executive in respect to matters enumerated in List II of Seventh Schedule………”
39. The Constitution Bench further held that executive function comprises both the determination of the policy as well as carrying it into execution. In paragraph 13 the Constitution Bench laid down: “(13) The limits within which the executive Government can function under the Indian Constitution can be ascertained without much difficulty by reference to the form of the executive which our Constitution has set up. Our Constitution, though federal in its structure, is modelled on the British Parliamentary system where the executive is deemed to have the primary responsibility for the formulation of governmental policy and its transmission into law though the condition precedent to the exercise of this responsibility is its retaining the confidence of the legislative branch of the State. The executive function comprises both the determination of the policy as well as carrying it into execution. This evidently includes the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, the direction of foreign policy, in fact the carrying on or supervision of the general administration of the State.”
40. This Court in A.B. Krishna and others vs. State of Karnataka and others, (1998) 3 SCC 495, had laid down that it is the primarily the legislature, namely, Parliament or the State Legislature Assembly, in whom power to make law regulating the recruitment and conditions of service of persons appointed to public services and posts, in connection with the affairs of the Union or the State, is vested.
41. When the power to make law regulating the recruitment and conditions of service of persons is vested in the State Legislature it has ample jurisdiction to exercise executive power by issuing orders under Article 162.
42. The regulations dated 19.05.2005 regarding pension/family pension and gratuity scheme which have been relied in the Preetam Singh’s case itself contemplates that pension/family pension and gratuity scheme as admissible to officers and servants of the Government shall also apply to Board. The regulations clearly mention that the Government orders shall also be admissible to the officers and employees of the Board and at serial No.5 following was included “all orders of financial department of U.P. as relief to pension/family pension and gratuity”. When the Regulations 2009 itself contemplates issuance of Government order regulating pension/family pension and gratuity which was to be made applicable to the officers and servants of the Board, it does not appeal to reason that the State Government has no power to issue orders pertaining to pension/family pension and gratuity.
43. Due to the above reasons we are of the view that with regard to three aspects i.e. (1), (2) and (3) as noted above, the judgment in Preetam Singh’s case needs reconsideration. We formulate following questions to be considered by a larger Bench: (1) Whether the judgment of this Court in Preetam Singh’s case laying down that conditions of service of officers and employees do not constitute the functions of the U.P. Avas Evam Vikas Parishad lays down the correct law more so when the judgment does not refer to provisions of Sections 8, 92, 94(2)(nn)of the 1965 Act ? (2) Whether the view expressed in Preetam Singh’s judgment that functions of the U.P. Avas Evam Vikas Parishad are only the specific functions enumerated in Section 15 of 1965 Act which does not include the service conditions of employees of the Board lays down the correct law ? Whereas the functions of the Board referred to in other provisions of Act, Rules and Regulations as has been expressly provided in Section 15(1) by use of expression “subject to the provisions of this Act and the Rules and Regulations” shall also be functions of the Board which induces service conditions of officers and employees as per Section 95(1)(f) of the 1965 Act. STATE OF U.P. & ORS. v. VIRENDRA KUMAR & ORS. [ASHOK BHUSHAN, J.] (3) Whether the State Government had no jurisdiction to issue directions regarding service conditions of officers and employees of the U.P. Avas Evam Vikas Parishad under the provisions of the 1965 Act and 1975 Act and all other enabling powers with the State Government ?
44. Let the papers of these cases be placed before the Hon’ble the Chief Justice for constituting a larger Bench. We also request the Hon’ble Chief Justice to constitute the larger Bench on an earlier date looking into the fact that issues which are to be answered in the present SLPs are the issues pertaining to mostly retired employees whose payment of arrears of pension/family pension and gratuity are involved. Divya Pandey Referred to larger Bench.