Mehar Singh, J.@mdashThis is a petition under Article 226 of the Constitution.
2. The Petitioner, S. Mohan Singh, was appointed on 14-12-1944, Economic Adviser in the former Patiala State under the orders of the Ruler with a starting pay of Rs. 1,000/- P.M. in the grade of Rs. 1,000-100-1,500, and the order stated that he shall also act as Managing Director of the Patiala State Bank for which he shall be paid a salary of Rs. 500/- P.M. by the Bank. One of the terms, of his appointment was that the appointment was , to be for five years in the first instance and after the expiration of that period he was to be treated as continuing in the service of the State on the salary he would be getting at the time and on the same terms and conditions except the period of service, but subject to his employment being terminable by three months'' notice on either side-Although the Petitioner has omitted to state this, fact in the petition, the post and office of the Economic Adviser in the former Patiala State was; abolished on 26-4-1948, and the Petitioner continued in the post of the Managing Director of Patiala. State Bank on the pay, grade, and privileges he was then enjoying in the combined work as Economic Adviser and Managing Director of the Patiala State Bank.
This was the position on 15-8-1948 on which date the Patiala and East Punjab States Union was formed. On 21-9-1949, the term of office of the'' Petitioner as Managing Director of the Bank of Patiala was extended for a further period of five years with effect from 15-11-1949, and one of the conditions of his employment was that the same would be terminable by three months'' notice on either side. The Petitioner avers that in September,. 1951, the then Finance Minister initiated a proposal for dispensing with his services by giving him a notice of three months, and that the proposal was circulated by the Finance Minister among, his colleagues, but since there was no basis for the action proposed, the proposal was eventually dropped.
On 15-12-1953, the Finance Secretary wrote to him that the Government had decided to terminate his services immediately and to give him three months'' pay in lieu of notice in the terms of his contract. The letter says:
Government have given full consideration to the explanation which you submitted at the meeting held on the 12th December, 1953, with the Board of Directors regarding the purchase of Punjab Bonds. They are in agreement with the Board of Directors that your explanations are very-unsatisfactory and that your retention in service-is contrary to the public interest. They have, accordingly, decided to terminate your services immediately and to give you three months'' pay in lieu of notice to which you are entitled under your contract. I am authorized to, and do hereby, give you notice of termination of your contract accordingly. Should you, however, prefer to give notice to Government of your desire to terminate your contract, Government will accept that and withdraw the notice now given to you. Government will still be willing to give you three months pay as in the case of notice given by Government to you under the contract.
You are directed to hand over charge immediately on receipt of this letter, to S. Santokh Singh, who has been instructed to receive charge from you. A formal report of your handing over charge may kindly, be made to me.
The Petitioner says that the order terminating his services was not, in fact, made by the Govern ment, that such an order could only be made either by the President or by the Rajpramukh and if it has been made by the Adviser to the Rajpramukh, it is unauthorized and ultra vires, and that in spite of the fact that shelter is taken toy the Finance Secretary in his letter of a term in the contract, the order terminating his services is virtually an order removing him from service ,and since no opportunity to show cause against his proposed removal from service was given to .him, as contemplated by Article 311 of the Constitution, so his removal from service is illegal and without jurisdiction, and further that that order ,is mala fide, oppressive, and has been made for ulterior motive to punish him for his reluctance to oblige certain officials and influential persons by refraining to take suitable action against his subordinates and in the discharge of his official duties. He, therefore, prays:
That writs of certiorari, or prohibition and mandamus or any other appropriate writ or order or direction be issued against the Respondent Government quashing their order mentioned in the Finance Secretary''s first letter of 15-12-1953 restraining them from giving effect to that order, directing them to allow the Petitioner to continue to work as Managing Director of the Bank and declaring that he still holds that position.
Before the reply on behalf of the State was put in the Petitioner made an application on 18-12-1953, in which he has urged two additional grounds in support of his petition and they are (i) that if he is not a government servant, the order of the Government terminating his services is liable to toe quashed for this reason alone and no other question in the case need be gone into. Because "if the Petitioner is not a Government servant, the ''Government have no jurisdiction to order the termination of his services and the order they have made is ultra vires, and (ii) that the order terminating his services violates the provisions of Article 310 of the Constitution.
3. The learned Advocate-General, Dewan Chetan Dass, has put in reply to the petition on be-half of the Respondent, the PEPSU State, in which it is admitted (hat the Petitioner was appointed Economic Adviser to the Government of former Patiala State on 14-12-1944, but it is stated that the order appointing him virtually provided that as Managing Director he shall be paid a salary of Rs. 500/- P.M. by the Bank and in other mat-ters also his position as Managing Director of the Bank was kept separate from his position as Economic Adviser to the former Patiala State. The terms and conditions of service of the Petitioner under the order of 14-12-1948, as referred to by the Petitioner in his petition are admitted, but it is pointed out that the post of the Economic Adviser was abolished on 2G-4-1948, and for about three and a half years'' service as Economic Adviser the Petitioner was paid a gratuity of Rs. 3,900/- according to the Service Regulations applicable to him. Thus, it is said, the Petitioner ceased to be in the service of the Slate and became exclusively an employee of the Bank as Managing Director.
The extension of the term of office of the Petitioner by the PEPSU Government as Managing Director of the Bank of Patiala for a period of five years with effect from 15-11-1949, is also admitted, but it is stated that one of the terms of . the contract was that the Petitioner''s service was terminable by three months'' notice and that that term remained operative till the day his service was terminated. It is not denied that in September, 1851, the then Finance Minister of Pepsu did propose termination of Petitioner''s service by giving turn three months'' salary in lieu of notice and the ''proposal was circulated among his colleagues and ultimately the papers were merely ordered to be recorded on 28-1-1952. It is then stated in reply that on 15-12-1953, the Finance Secretary, on behalf of the Government, issued a letter intimating to the Petitioner that his services were terminated on payment of three months'' salary in lieu of notice in the terms of his contract of service and the events which led to that are:
At the request of the Government of Pepsu an inspection of books and Accounts of the Bank of Patiala was carried- out by officers of Reserve Bank of India between 11th and 28th September, 1951. Their report was received on 8-11-1951. The report was then sent to the Adviser to His Highness the Rajpramukh on 22-4-1952 and was not received back from his successor, the Counselor, until 2-1-1953. The report was sent to the Petitioner on 24-1-1953 for his comments thereon. After a pressing reminder from the Government the Petitioner submitted his comments on 23-5-1953.
An important issue raised in the inspection report was the purchase of Punjab Bonds of the value of over Rs. 30,00,000/- by the Petitioner in September-October, 1947, i.e., soon after partition of the country and their subsequent sale in June-July, 1948, resulting in a loss of about Rs. 70,000/-. The inspection report pointed out in a note to the Board that the Petitioner had stated in June, 1948, that the Punjab Bonds had been purchased long before partition and were considered excellent scraps. The report further pointed out that these scrips had become the liability of the West Punjab (Pakistan Government) under the Indian Independence (Rights, Property and Liability) Order, 1947, as notified on 14-8-1947, in the Government of India Gazette. In his comments the Petitioner admitted that the Punjab Bonds had been purchased after partition and not long before it as stated by him in his note to the Board dated 29-6-1948. He regretted this and attributed the misstatement to the inadvertence on the part of the office.
In his note dated 22-10-51 submitted by him to the Board of Directors the Petitioner submitted inter alia that he had purchased the bonds after due consultation with the Chief Accountant of the Reserve Bank of India and Superintendent of Securities, Imperial Bank of India, Bombay. This was in justification of the transaction pertaining to the purchase of the Punjab Bonds which was otherwise highly indiscreet and reckless. Inquiries were made from the said authorities and it transpired that no such consultation had taken place. The information from the Reserve Bank of India was received on 7-1-52 and from the Imperial Bank of India, Bombay, on 5-2-1952. The inspection report of the Reserve Bank of India and the comments of the Petitioner thereon, as also the letters received from the Reserve Bank of India and Imperial Bank of India referred to above were all placed before the Board of Directors at their Meeting held on 6-9-1953, (this date is not correct and in a later affidavit of the Finance Secretary it has been given as 3-9-1953). The Petitioner was present at this meeting and heard. The Board of Directors found:
(i) That the Petitioner should have known that the bonds were the liability of the West Punjab Government (Pakistan) and that in view of the conditions prevailing at that time he should have exercised more prudence and caution in their purchase.
(ii) That the purchase was not authorised by the competent authority, i.e., the Board.
(iii) That the Petitioner had made misstatements that the securities had been purchased long before the partition and further that before purchasing them he had consulted the Chief Accountant of Reserve Bank of India and the Superintendent of Securities, Imperial Bank of India, Bombay.
Before taking any action on the findings of the Board of Directors in the Punjab Bonds matter, the Adviser to His Highness the Rajpramukh called a meeting of the Board of Directors at his residence on 12-12-1953. The notice for the meeting was issued on 2-12-1953 and an intimation was sent to the Petitioner on the same date. On 4-12-1953 a copy of the findings of the Board of Directors of ? September, 1953, was also sent to the Petitioner on his request. The Chairman, Shri P.K. Wattal, Finance Secretary to the Government and all the four Directors including the Petitioner were present. The Punjab Bonds case was discussed in the presence of the Petitioner who had the opportunity to express himself on the matter. The Board of Directors reiterated their earlier findings of September, 1953. When the matter came to the stage of taking decision, the Petitioner left the meeting of his own. The Adviser to His Highness the Rajpramukh invited the views of the Board of Directors on the action to be taken. They unanimously expressed the view that the explanations furnished by the Petitioner were unsatisfactory and that his retention in the service was contrary to public interest. It was accordingly decided to terminate his services immediately and to give him three months'' salary in lieu of notice.
It was also decided that if the Petitioner preferred to give a notice to the Government he should be allowed to do so in which case the notice given by the, Government to him would be withdrawn. The proceedings of the meeting were recorded by Shri B.K. Wattal, Finance Secretary to the Government, and confirmed by the Adviser to his Highness the Rajpramukh on 14-12-1953. Notice was accordingly issued to the Petitioner on 15-12-1953 in accordance with the orders of the Adviser to His Highness the Rajpramukh. The proceedings of the meeting were also circulated to the Board of Directors and confirmed by them.
The position taken by the Respondent is that the order terminating the Petitioner''s services was made by the Government, that the Adviser to His Highness the Rajpramukh was duly competent to order the termination of the Petitioner''s services and the order made by him is valid and operative, that Article 311 of the Constitution has no application to the case of the Petitioner because he was neither a member of the Civil Service of the State nor did he hold Civil Post under the State being an employee of the Bank of Patiala, that his services were terminated according to the terms of his service, that the mere fact that it has been stated in the communication made to the Petitioner that his services were being terminated in public interest does not alter the position nor does it attract the operation of Article 311 of the Constitution and so the order being perfectly legal the Petitioner was not entitled to an opportunity under the said Article as his claims, and that the termination of his services in the terms of his contract was not mala fide, oppressive and with ulte-''rior motive.
The further objections to the petition are that the Petitioner has suppressed facts material and relevant, to the decision of the issues which arise for determination and therefore is not entitled to the exercise of extraordinary and discretionary powers of the High Court under Article 226 of the Constitution, that there is no infringement of any of the fundamental rights or a legally recognized and well established right in the Petitioner, that the order terminating the Petitioner''s services is executive in nature and a writ of certiorari cannot legally issue and there is no occasion for issue of writ of prohibition or mandamus, that the Petitioner''s claim for the issue of any other order, writ or direction", without stating what exact order or direction or writ the Petitioner seeks, is not entertain able, and that the Petitioner has the alternative remedy by way of suit. In the end the prayer is that the petition may be dismissed with costs.
4. There are four main questions for decision in this case and these are - (i) Whether the Petitioner was holding a Civil Post under the Pepsu State (ii) Whether the termination of the services of the Petitioner in the terms of his contract of service, but at the same time alleging misconduct on the part of the Petitioner as the reason for the same, is removal within the scope of Article 311 of the Constitution? (iii) Whether or not notice in the terms of the contract terminating the services of the Petitioner was given by competent authority, that is, the Government? (iv) Whether the Respondent having taken notice of the misconduct of the Petitioner previously in September, 1951, and having filed the case and having continued the Petitioner in service, cannot terminate his ser vices, as has been done in this case, on account of waiver or condonation?
5. In his petition, and the affidavit accompanying it, the Petitioner has taken the position that he was taken into the former Patiala State service and after the formation of PEPSU he continued in Government service till he was given notice terminating his services. He has not specifically said that he holds a Civil Post under the State and, even after the reply on behalf of the State that he was neither in the Civil Service of the State, nor was he holding a Civil Post under the State, he has not in his subsequent affidavit taken the stand that'' he holds a Civil Post under the state. During the arguments his learned Counsel, R. B. Badri Dass, frankly conceded that the Petitioner was not in the Civil Service of the State, but he urged that he was holding a Civil Post under the state.
6. The term ''Civil Post'' is not defined in the Constitution, but it appears to have been used as distinguished from a ''defence post'' having regard to Articles 310 and 311 of the Constitution. It has been so held in -
Now, the expression ''Civil Post'' is not defined in the Constitution of India. Reading, however, Articles 310 and 311 together, the conclusion is inescapable that the expression ''Civil Post'' as used in Art, 311 means''''a post or office on the civil side of the administration'' as distinguished from ''post connected with defence.
Same view has been taken in -''Yusuf Ali Khan'' v. Province of Punjab'' AIR 1950 Lah 59 (B). The argument of the learned Advocate-General is that the post of the Managing Director of the Bank of Patiala has no concern with the civil administra-tration and that,, therefore, it is not a Civil Post. The learned Counsel for the Petitioner has contended that the Bank of Patiala is owned and con trolled by the State Government and so the post of the Managing Director is a Civil Post as that expression is used in Article 311 of the Constitution.
7. To appreciate the position of the Bank of Patiala in relation to the Government of the State it is necessary to go into the history of its institution. The Patiala State Bank was started by an order of the then Ruler of former Patiala State sometime in 1918. The Financial Secretary of that State while making proposal to the Ruler for the formation of the Bank remarked that "the proposals'' for the budget will be submitted when your , Highness'' sanction to the above (scheme for the Bank) is received." The proposal was approved by the Ruler and it is, therefore, apparent that in the beginning the institution was a State institution of which even the budget was to be approved by the Ruler. The earlier scheme of the Patiala State Bank was revised in 1930.
In the proposal for revision of the constitution of the Bank, as submitted to the Ruler, it was pointed out - (a) that the Bank was regarded as a department of the Government, and (b) that .the entire capital of the Bank had. been found by the State and it was, therefore, essential that the State should continue to play a very import ant part in the detailed control of the Bank, and it was proposed (i) that the Bank should no longer be. regarded as a State department because it was difficult, to run it as an office purely on business lines and (ii) that the Finance Minister should be given large powers of control as Minister In charge of the Bank. With these recommendations was submitted new draft; constitution for the Bank.
In so far as it is material for the purpose of this case, the matters that need special notice in that constitution, which was approved by the Ruler on 21-8-1930, are (a) that the Ruler was to receive an annual balance-sheet of the Bank with report on the working of the Bank during the year, (b) . that in a Board of Directors of six, the Chairman was the Prime, Minister of the State and of the remaining five Members one was Finance Minister of the State, the other was the Managing Director of the Bank appointed by the Ruler of the State, and the other three were nominated by the Ruler . out pf whom two were non-officials, (c) that, among other functions and powers given to the Board, it was given power to pass the annual budget estimates of the Bunk, (d) that the chairman and Minister In charge, though Ministers of the former Patiala State, were given fees also for being Directors of the Bank, and (e) that the Finance Minister of the former Patiala State was made Minister Incharge of the Bank.
This constitution made rather unsatisfactory attempt at separation of the Patiala State Bank from the administration of the former Patiala State, but its provisions left it completely under the control and management of the Government of the State.
This becomes more clear when further changes . in its constitution were proposed by the then Prime Minister of the former Patiala State on 29-6-1940. He was also Chairman of the Board of Directors of the Bank at the time. He remarked . that
the Patiala State Bank is a State department governed by its constitution laid down by the Ijlas-i-Khas, but being at the same time autono mous as regards its accounts, which are kept on commercial basis, it has become necessary to define how far the rules apply to other State departments and the Patiala State Regulations shall apply to the Bank
and then followed a number of proposals which included the application of the Patiala State Ser-'' vice Regulations to the Bank staff, with the exception of pension rules, the recognition of the Bank service as State service for the purpose of giving preference for employment to the descendants of the Bank employees, and the use of service postage stamps by the Bank like other State departments.
This proposal, was sanctioned by the Ruler with certain modifications and one of the modifications was that the annual gratuity to be paid to the Bank employees at the time of the Dussehra festival was to be debated to the budget of Deorhi Mualla as in the case of other employees of the State. The Deorhi Mualla was a department of the State Government. These changes in the constitution of the Patiala State Bank in the year 1940 leave no doubt at all that the Bank was a State commercial concern owned by the State and controlled and managed by the State Government. The Ruler by his order of 22-4-1944, passed the following order with regard to the Minister In charge of the Bank:
The powers and functions .of the Minister in charge of the Patiala State Bank shall merge into those of the Chairman, Board of Directors of the Patiala State Bank and there shall be no Minister in charge of the Patiala State Bank.
But the Chairman of the Bank was the Prime Minister according to the constitution already approved. So the effect of this order was only to make the Prime Minister as Minister in charge of the Bank for all practical purposes. This order '' did not make any substantial change in the position and status of the Bank qua the Government of the former Patiala State. In 1947 the then Prime Minister of the former Patiala State made a proposal for conferment of "gazette status on the employees of the Patiala State Bank" carrying certain specified grades. This proposal was approved by the Ruler on 21-5-1947, with this order:
The powers of appointment, dismissal, promotion and suspension etc., of gazetted Bank officials shall remain reserved to us as in the case of gazetted officers in State service.
So by this time'' hardly any distinction was left in the status of gazetted Bank officials and gazetted State officers. By Anr. order of 19-5-1948, the Ruler changed the name of the Bank from the ''Patiala State Bank'' to ''The Bank of Patiala''. On 15-8-1948, the State of PEPSU came into being. The then Prime Minister on 31-8-1948, moved to obtain approval of the Rajpramukh that "the Bank of Patiala which was an institution of the Patiala State, now automatically becomes an institution of the Union". This was duly approved on that very date. On 25-1-1950, the Secretary of the Bank wrote to the Finance Secretary Pepsu about the share of the State Government in the profits of the Bank in these words:
The existing formula by which the Government receives its share out of the profits of the Bank is, first Rs. 50,000/- plus 25 per cent. of the remainder every half year. The. Board has agreed to revise it to Rs. 1,00,000/- every half year plus 25 per cent. of the remainder. I shall be glad if you will kindly convey the confirmation of this revised formula so that distribution of profits in respect of the half year ended 30th September, 1949, may be made accordingly and the Government''s share paid.
To this the Finance,Secretary replied on 3-2-1950, saying:
I am directed to convey the approval of Government to the revised formula for the sharing of the profits of the Bank of Patiala, between the Government and the Bank..........
Hitherto the Chairman of the Board of Directors had been the Prime Minister of the State but by an order of 9-2-1952, the Rajpramukh sanctioned appointment of the Secretary Finance Department as the Chairman of the Board of Directors of the Bank of Patiala, thus replacing the Prime Minister as Chairman of the Board of Directors by the Finance Secretary. It has to be noted that all orders of the Rajpramukh after 15-8-1948, in relation to the Bank of Patiala, whatever may be said as regards the nature of similar orders before that date as made by the Ruler of the former Patiala State, must be considered as executive orders unless specifically appearing to be legislative orders, which is not the case with regard to any such order. By a Government notification of 18-6-1953, distributing work amongst the Secretaries to the Government, the Bank of Patiala is shown in the charge of the Finance Secretary. It is clear
(a) that the Bank of Patiala is owned by and its entire assets are the property of Pepsu State;
(b) that the control and management of its affairs have been substantially in the hands of the State Government;
(c) that before the formation of Pepsu, a Minister of former Patiala State - whether the Finance Minister or the Prime Minister and at one time both - had charge and control of it, and after that it has been under the charge of the Finance Secretary;
(d) that its employees, above certain specified grades of pay, are having the status of gazetted officials, as the gazetted State officers, whose appointments have been in the hands of the State Government and it follows that they can be dismissed by the same authority;
(e) that in the beginning it was a department of the State and attempts at its separation from the State administration still left it an integral part of the same; and
(f) that after the formation of the Pepsu the Government has, by executive orders, been making changes in its constitution, and the manner and method of handling and utilisation of its profits.
These considerations lead unmistakably to one result at least, and that is that the Bank of Patiala is not an independent and separate legal entity. The learned Counsel for the Petitioner, therefore, rightly pressed that it is not an institution which may be said to be a corporation or a distinct legal person. About the nature of corporate bodies Sir Frederick Pollock in the Principles of Control, twelfth edition, at pages 91 and 92 says:
The necessary marks of legal corporate existence are a recognized collective name (which however need not be expressly conferred at the outset), and capacity to sue, be sued, and do other acts in the law, in that name. Perpetual succession, that is, the existence of a body in-dependent of the natural life of any one or more members, and a common seal to authenticate the corporate acts, are consequences or incidents of incorporation rather than primary constituents. A corporation legally qualified to act as such can exist only with the sanction of the State, which may be expressed in England by a royal character or by statute ...... The holders of ecclesiastical benefices and dignities are said, by an analogy which is of no great antiquity, to be "corporations sole" By a still more doubtful extension of the analogy, the Crown is said to be a corporation sole; and the same description has been applied by statute to the holders of a certain number of public offices, sometimes for specially limited purposes with resulting complications or anomalies.
Of the two primary constituents of incorporation although the Bank: has been given the name of the Bank of Patiala, but there is nothing to show that it has capacity to sue, be sued and do other acts in the law, in that name. It is a matter of extreme doubt and complexity to conclude from the history of its constitution that it has been sanctioned by the State as a corporate body. I have no doubt that the Bank of Patiala is not a corporation and is not a distinct and separate legal entity. That being so, whatever may be the internal arrangements made by the State Government, it cannot be divorced from the administrate for its control and management, it cannot be divorced from the administrative set-up of the State.
8. The learned Advocate-General stressed that a post can only be said to be a Civil Post if (a) it is connected with the civil administration, (b) it belongs to a department of the Government, and (c) its emoluments are provided in the civil estimates, budget of the State and axe drawn from the consolidated fund. The Bank of Patiala not being a separate and independent legal entity, as stated, it is not easy to understand how it is not connected with the civil administration of the State. Once it is found that it is connected with the civil administration of the State, it follows that it must belong to one pr other departments of the State and in fact it is under the charge of the Finance Secretary. It being a commercial concern, it is for the Government to provide how its business shall be run internally and what part of it shall be open to discussion before the Legislature in consideration of the civil estimates.
It has been shown that before the formation of Pepsu the Ruler of former Patiala State, among other matters, reserved to himself to have the balance-sheet of the Bank for his consideration. If he left the budget estimate of the Bank to a subordinate authority, like the Board of Directors in this case, that, in my opinion, would not make the Bank a separate entity as distinct from the civil administration of the State merely because since the formation of Pepsu the Government has not seen its way to make a change in what, was provided by the then Ruler in this behalf and bring the budgetary aspect of the Bank for consideration as a part of the civil estimates.
He also urged that the post of the Managing Director of the Bank of Patiala cannot be considered a Civil Post because in the appointments in the Bank, Public Service Commission was never consulted, until lately, the Patiala Service Regulations were specially applied to its service and otherwise they would have applied without any special order, and the first appointment order of the Petitioner permitted him two separate pays for two separate posts which does not happen under Service Regulations. As regards the last point, the order of appointment having been made by the then Ruler, it was within his powers to make an order not consistent with the prevailing Service Regulations. . As regards the other two points, the Bank being a commercial concern, the authorities could not possibly treat its employees in the same way as ordinary government servants and refer the appointments to the Public Service Commission or apply the whole set of Patiala Service Regulations because these would have been considerable impediment in the proper and successful working of the Bank. Besides, it was within the powers of the Ruler to make a special case of a State run institution as the Bank. The Pepsu Government has only continued the state of affairs. as it existed before its formation.
I am of the view that these considerations, urged by the learned Advocate-General, are no indication that the post of the Managing Director cannot be said to be a Civil Post.
Another argument of the learned Advocate-General was that considering the meanings given to the expression ''State'' in Articles 12 and 308 of the Constitution, an institution like the Bank of Patiala cannot be within the scope of the Articles in Part XIV (Services under the Union and the States) of the constitution. Article 12 appears in Part III (Fundamental Rights) of the Constitution and provides:
In, this part, unless the context otherwise requires, "the state" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.
And Article 303 of the Constitution (appearing in Part XIV) provides:
In this Part, unless the context otherwise requires, the expression "State" means a State specified in Part A or Part B of the First Schedule.
The scope of Article 12 is obviously wider as com-pared to Article 303. It was urged that the status" and position of the Bank of Patiala is covered by the words "or other authorities within the territory of India" as appearing in Article 12, and that being so such authorities come within the meaning of the expression "State" under Article 12 but not under Article 303. The argument is valid enough except for the assumption that the Bank of Patiala is an authority of the type to which Article 12 makes reference. I consider that the words "other authorities" mentioned in that Article have reference to independent authorities having origin in a statute or other law. This cannot be said of the Bank of Patiala as constituted at present.
9. In so faras the individual position of the Petitioner as the Managing Director of the Bank is concerned, he was appointed by the then Ruler of former Patiala State in 1944 as the Economic-Adviser and to act as the Managing Director of the Bank, and the post of the Economic Adviser was abolished by the same authority in 1948 and the Petitioner was continued in the second post, and after formation of the Union it was the. Pepsu Government that extended the term of the Petitioner as Managing Director for a further period of live years on certain terms and conditions in 1949, when in 1952 he went on leave and in the leave arrangement his substitute was appointed that was under the orders of the Rajpramukh, and in the end his services have been terminated by the authority of the State Government. So that throughout he has been directly under and subject to the orders of the Government of the State.
The learned Advocate-General pointed out that when the post of the Economic Adviser was abo- lished in 1948, the Petitioner on 28-10-1949, was '' allowed a sum of Rs. 3,900/- as gratuity, admissible under the Patiala Service Regulations, for his service as Economic Adviser, and that that payment ended the Government service of the Petitioner, and that thereafter he only continued to be the servant of the Bank. The original order . of appointment of the Petitioner by the then Ruler in 1944 had this as one of the terms and conditions of his appointment:
He shall be entitled on retirement from the State service to pension or gratuity as may be admissible to him on the basis of the length of his service provided that as Managing Director of the State Bank, he will have the benefit of the Provident Fund in accordance with the Bank rules.
So it was under this part of his contract of service that the Petitioner obtained the amount of gratuity and apparently in accordance with the orders of the Ruler appointing him. It was open, and that is exactly what was done, to the then Government in 1944 not to make provision for pension for bank employees but to make an alternative provision for Provident Fund. The fact that the Ruler of the time permitted benefit of gratuity or pension in relation to service under one post and Provident fund in relation to service under Anr. post to the Petitioner is no reason to support the argument that the post of the Managing Director of the Batik had no concern with the civil administration of the State.
10. The Bank of Patiala is, thus, a commercial concern of the Pepsu Government, financed, managed, .and controlled by the Government, though in'' its internal management the Government obtains full and complete assistance from'' the Board of Directors set up by it for the more; efficient and business-like running of the Bank,; and the present arrangements do not make it an'' independent and distinct legal entity or corporation, and so it cannot be divorced from the civil administration of the State Government. The '' position and status of the Petitioner in relation to the Bank have already been explained. In - ''R. Venkata Rao v. Secretary of State'' AIR 193T PC 31 (C), a Reader in the Government Press, Madras, was accepted to hold an office in the Civil Service of the Crown of India within the scope of Section 240(1) of the Government of India Act, 1935. Section 240(1) of that Act made provision parallel to Article 311 of the Constitution. In -
the word ''civil'' used before the word ''post'' in SV 240(1) is clearly meant to distinguish posts in the Defence Forces. The words ''Civil Post'' cannot be confined merely to posts which are borne on the cadre of any regularly constituted service. All posts held by any public servant if the posts did not belong to the. Military Department or the Defence Forces, must be deemed to be civil posts under the Crown.
The same meaning attaches to the expression ''Civil Post'' as used in Articles 310 and 311 of the Constitution. In view of the considerations stated; above, it is abundantly clear that the Managing Director of the Bank of Patiala holds a Civil Post as that expression is used in the said Articles.
11. The next question under consideration is the effect of the imputation of misconduct to the Petitioner in the notice terminating his Services in the terms of his contract. The position taken by R. B. Badri Dass was that the Petitioner was given no opportunity to explain his personal position and conduct in relation to the Punjab Bonds trans action before decision was taken by the Government to terminate his services and that after that decision had been taken the Petitioner was not, within the meaning of Article 311(2) of the Constitution, given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him, that is, the termination of his service, which, according to the case of the Petitioner, is said to amount the meaning of said Article.'' On behalf of the State it is not denied that after decision had been taken to terminate the service of the Petitioner no opportunity of showing cause against that action was given to the Petitioner, but the contention on behalf of the State is that Article 311 of the Constitution has no application to the present case in which the termination of the service is in actaordance with the conditions and terms of service contract of the Petitioner. As regards the first allegation on behalf of the Petitioner the State has joined issue and the learned Advocate-General stated that, though 110 regular or formal enquiry was held, the Petitioner was in fact given due and adequate opportunity to explain his personal position and conduct in relation to the Punjab Bonds transaction not only at the meeting, dated 3-9-1953, of the Board of Directors of the Bank, but also at the second meeting of the Board of Directors, including the Petitioner, with the Adviser, when the aspects of the report of the Reserve Bank of India concerning the Punjab Bonds transaction were discussed and also the position and conduct of the Petitioner with regard to that transaction. This was on 12-12-1953.
His Lordship then considered the affidavits filed by the parties along with other documents in the proceeding and held that:
It was proved that both on 3-9-1953 and 12-12-1953 the Petitioner had ample opportunity to explain his own position and conduct in relation to the Punjab Bonds transaction and did avail of that opportunity. The first allegation on his behalf that he was never given such an opportunity must, therefore, be rejected.
His Lordship also held that it was not true that the Petitioner had no opportunity to explain his position and conduct in relation to the Punjab Bonds transaction at the meeting of 12-12-1953, though it was true, a fact not controverter on behalf of the Respondent, that after it had been decided to terminate the service of the Petitioner in the terms of his contract he was not given an opportunity to show cause against such proposed action.
12. The learned Counsel for the Petitioner, R.B. Badri Dass, argued that the order of the Government, dated 21-9-1949, extending the term of office of the Petitioner as Managing Director of the Bank for a further period of five years with effect from; 15-11-1949, was merely an order of the Government so extending his term of office and did- not amount to a contract between the Petitioner and the Government because the Petitioner never became a party to it. This order was conveyed to the Petitioner by the Finance Secretary''s letter of 21-9-1949. By His letter, dated 22-9-1949, the Petitioner objected to the terms of extension of his office first with regard to the statement as to his grade of pay and secondly with regard to the fixation of his term of office for Anr. five years with a provision of three months'' notice on either side for the termination of the service. The Finance Secretary in his letter, dated 23-9-1949, informed the Petitioner accepting his objection about the grade of his pay and said nothing about the second objection by the Petitioner. Thereafter the Petitioner has, knowing all this, continued in service as Managing Director of the Bank, and it is apparent that he has accepted the contract of service with the Government on terms and conditions as conveyed to him in the Finance Secretary''s letter of 21-9-1949, as modified by the latter''s second'' letter of 23-9-1949. This contention is, therefore, without force.
13. On behalf of the Petitioner it was further urged that the contract of service of the Petitioner-has not provided for compensation in the event of termination of his service before the expiry of the period of his service and so the contract is not valid being contrary to the provisions of Article 310(2) of the Constitution. Article 310 is as;'' below
(1) Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the Union or of. an all-India service or holds any post connected with defence or any civil post under the Union holds office during pleasure of the president, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor or, as the case may be, the Raipramukh of the state.
(2) Notwithstanding that a person holding a civil post under the Union or a State holds-office during the pleasure of the President or, as the case may be, of the Governor or Rajpramukh of the state, any contract under which a person, not being a member of a defence service or of an all-India or of a civil service of the Union or a State, is appointed under this Constitution to hold such a post may, if the President or the Governor or the Rajpramukh, as the case may be, deems it necessary in order to-secure the services of a person having special qualifications, provide for the payment to him of compensation, if before the expiration of an agreed period that post is abolished or he is, for reasons not connected with any misconduct on his part, required to vacate that post.
It is clear that under Article 310(1) every person who t is in the civil employment of the Government holds office during pleasure and normally even a contract cannot override the principle embodied in this sub-article, it, therefore, follows that in the case of even contract service termination of service before the expiry of the period fixed in the contract would not entitle the public servant to claim compensation or. damages for such termination of his services'' earlier than the period provided in the contract. However, to this in Article 310(2) is provided a specific exception that in spite of such, a public servant holding office at pleasure, the contract may have provisions for payment of compensation in the event of the post being abolished or service being prematurely terminated, before the period stated in the contract, but that must be-for reasons not connected with any misconduct on his part. Article 310(2) is an enabling provision and gives power to the Government engaging a public servant on contract to provide in the contract for compensation in certain contingencies, but it cannot be read as making a mandatory provision that where no clause as to the payment of compensation in those contingencies is to be found in the contract, then the contract must be considered as invalid being contrary to Article 310(2). There is nothing in this sub-article to support the argument urged by the learned Counsel for the Petitioner.
In this connection reference was made to ''Lord Leconfield v. Thornely'' 1926 AC 10 (E), but that case has no application to the present case-because there the tenure of office of clerk of the peace of a county was during good behaviour and the provision in the contract of appointment for ihe termination of the appointment on notice was, therefore, held by the House of Lords to be in-effective to determine the tenure of office of the clerk of the peace of a county and the reason was that the holder of the office could not be removed from his office save for misbehaviour. The present is not a case of tenure of office during good behaviour but that at pleasure, it may now be taken as settled by the authority of the Supreme Court that a provision in a contract of service that the service would be prematurely terminable, according to the condition of notice as provided in the contract, before the agreed period of service in the contract is valid.
In -
It was also stressed on behalf of the Petitioner that the meaning of Article 310(2) is that where termination of the service under a special contract of service is clue to the misconduct of the public servant, the provisions of Article 311 of the Constitution come into play. I do not read any such meaning in Article 310(2) and, the way I look at it, it is clear that that Article makes an exceptional provision for a clause as regards compensation in a contract of service, in the event of premature termination of service before the agreed period, to the general rule stated in Article 310(1) that every -person holding office as a civil post under or in any civil service of the Government holds the same at pleasure, but that any such provision for compensation in the contract of service will not be , operative where termination of service is due to the misconduct of the public servant. Article 310(2) appears to me to go no further, and does not admit of the meaning which the learned Counsel for the Petitioner would read in it. The question of the applicability of Article 311 of the Constitution where service of a public servant is terminated on notice in the terms of his contract of service, but with an allegation of misconduct, is the third point for consideration in this case.
14. It has already been shown on the" authority of the Supreme Court ftiat where service is terminated in the terms of the contract on notice Art" 311 of the Constitution has no application for sU Ch -termination is neither dismissal nor removal with, in the scope of that Article. The learned Counsel for the Petitioner argued that once, while terminating the services of public servant with due'' notice according to the terms of the contract, an allegation of misconduct is also made against him, the termination of the service amounts to removal within the meaning of Article 311. In support of this argument reliance is placed on three reported cases. The first case is - ''M. V. Vichoray v. State of Madhya Pradesh'' AIR 1952 Nag 288 (G), but in this case an officer officiating in a higher post was reverted to his original post in the normal course and not by way of penalty and on this it was held that it was not a case of reduction in rank. It was also remarked that
on the other hand, where reversion is ordered as penalty it amounts to reduction in rank because such a reversion is apt to stand in the way of a Government servant in securing his promotion In the normal course.
There was no question of termination of service or action being taken with due notice according to the contract of service as- that was not a case of such service.
The second case is - ''Bhojraj v. Chief Secretary, Govt. of Saurashtra, Rajkot'' AIR 1952 Sau 40 (II), in which, after suspension, the Petitioner was served with a charge-sheet containing several instances of criminal breaches of trust alleged to have been committed by him; but before any enquiry was held, his services were terminated with immediate effect. No notice, according to the conditions of his service, was given terminating his service. It has been observed at p. 42 of this authority:
Rule 33 of the Bombay Civil Services Conduct, Discipline and Appeal Rules prescribes penalties, which may be imposed on a Government servant. They include reduction, removal from service and dismissal. Explanation C to the Rule says that the discharge of a Government servant engaged under a contract in accordance with the terms of a contract is not removal or dismissal within the meaning of Rule 33. This explanation clearly contemplates the removal of such a temporary servant by way of punishment and if the removal is intended as a penalty the provisions of Rule 55 are clear that the removal, cannot be ordered before the inquiry as prescribed by that Rule is made. The question has therefore to be decided whether the removal was by way of a penalty or merely under the contract of employment. This question is one of intention to be gathered from the circumstances of each case.
It may be that the Government might not have strictly adhered to the terms of the contract in terminating the employment. But if the paramount intention of the Government was to end the contract and not to punish the servant, the latter cannot demand that he should have been dealt with Under Rule 55. The Government does not act capriciously and they must have sound reasons for removing their servant. In terminating his employment, the Government might have been influenced by the Government Servant''s incapacity or neglect of duty. But that element can scarcely enter into consideration if the Government merely terminated the contract. The Government is undoubtedly acting within their rights under the contract the servant has no cause of action against them. But if the '' intention underlying his removal is to punish him, then Rule 55 comes into operation and the Government servant should be given an opportunity of defending himself if he so desires......
The charge-sheet clearly informed, him (the Petitioner) that it was proposed to take action .against him and punish him Under Rule 33. These facts clearly indicate that the action which was proposed to be taken against the Petitioner was not under the terms of his employment but as a punishment. His removal was not in accordance with the terms of his employment as he was not given a month''s notice; even if after serving the charge-sheet, the Petitioner had been discharged after notice, the termination of his employment would not have amounted to a penalty under Explanation (c) of Rule 33.
In the present case the letter of the Finance Secretary leaves no doubt as to the intention of the Government that the service of the Petitioner, S. Mohan Singh, has been terminated according to his contract of service by notice, and upon this consideration alone this authority has no application; but it rather goes against the present Petitioner inasmuch as it has been maintained in it that in spite of giving charge-sheet to a public servant, which would only contain allegations of misconduct, if his service is terminated on notice in accordance with the terms of his contract, such termination'' of service does not amount or removal or dismissal.
The third case is - ''Tribhuwannath Pandey v. Govt. of the Union of India'' AIR 1953 Nag 138 (I), in which a probationer''s service was terminated on the charge of his work, during the period of his probation, having been found to be unsatisfactory; but the Service Rules applicable provided
that the discharge of a probationer, whether during or at the end of his probation, for some specific fault or on account of his unsuitability for the service, amounts to removal or dismissal within the meaning of this rule (Rule 49).
Thus the case was covered by a specific service rule and there was no escape but to come to the conclusion that in the circumstances of that case termination of the services of the Petitioner on the allegations of unsatisfactory service amounted to removal or dismissal. This authority has, therefore, no application to the facts of the present case. The consideration of the three cases relied upon on behalf of the Petitioner shows that they do not advance his case to any extent. At this stage Anr. case may also be taken note of and that is -
In those circumstances the argument on behalf of the Respondent in that, case that the services of the Petitioner were terminable on specified notice according to the terms of his service and the notice given under the Railway Services (Safeguarding of National Security) Rules, 1949, should be taken as notice terminating the services of the Petitioner according to the conditions of his service was not accepted. Thus this was not a case in which services of the Petitioner had been terminated on due notice according to the terms and conditions of his service and on this ground the case is clearly distinguishable from the facts of the present case. The consequence is that the learned Counsel for the Petitioner has failed to substantiate by authority the argument put, forth by him.
15. The learned Advocate-General, with reference to a number, of reported cases, contended that there was no logic in the argument advanced on behalf, of the Petitioner in this behalf, and that, even though an allegation of misconduct is made, but the termination of the service on. notice is in accordance with the conditions and the terms of the contract of service, there is no case of removal or dismissal within the scope of Article 311. The cases relied upon by him are now considered. In -
It will be noticed that the applicant was a item horary employee whose contract of service laid down that his services were liable to terminate with one month''s notice. One month''s notice was duly given to him and in accordance with the conditions of service, his services would terminate upon the expiry of period specified in the notice. From 26-5-1951 the applicant cannot claim to remain as an employee of the State. He would no longer after that date hold a ''civil Post'' - it is conceded that he is not a member of the civil service of the State or of the Union. Article 311 applies only to a case in which a person is dismissed or removed or reduced in rank.. These are technical words used in cases in which a person''s services are terminated for misconduct. They do not apply to cases in which a person''s period of service determines in accordance with the conditions of his service. It is not so much a question of the post being held temporarily or it being of a permanent nature; the real question is whether a person''s services are being dispensed with'' before his normal period of service has terminated by reason of misconduct on his part, or otherwise.
If a person''s services are sought to be-terminated before the period of his service has expired, on account of some "misconduct then, whether the employee is temporary or permanent, the procedure prescribed in Article 311 has to be followed unless of course the case falls'' '' within-any one of the three provisos to Clause (2), ,If, on the other, hand,. ,a person''s services are sought to be terminated at the expiry" of the term for which he was engaged, or at the expiry of the period of notice by which, in accordance with the conditions of his service, his services could be terminated, there is no question of dismissal, removal or reduction in rank and Article 311 does not come into operation.
Article 311 not being applicable to a case of this kind, it is not necessary to decide whether the reasons given in the notice, for not giving opportunity to the applicant to show cause against the termination of his services, were sufficient or not, within the meaning of proviso (b) to Article 311(2).
In spite of the withdrawal of the allegation of misconduct in the arguments it was urged in this case that reasons given for the statement, that it was not reasonably of showing cause in accordance with the insufficient but this argument was rejected on the ground that Article 311 has no application to such a case; and thus it is clear that allegation of misconduct did not attract the provisions of that Article. Reference has already been made to - ''AIR 1952 Sau 40 (H)'', in which it has been observed at page 42, that 4h.o Petitioner''s removal was not in accordance with the terms of his employment as he was not given a month''s notice even if after serving the charge-sheet, the Petitioner had been discharged after a notice, the termination of his employment would not have amounted to a penalty under Explanation c to Rule 33. In that case Explanation C to Rule 33 of Bombay Rules was held to contemplate the removal of a temporary servant by way of punishment and if the removal was intended as a penalty it could not be order- ed before enquiry prescribed according to the rules. Even this case makes it clear that in spite of an allegation of misconduct in a charge-sheet, given to. a public servant, if his service is terminated with due notice in the terms of the contract, such termination of service does not amount to re-moval.
In - ''N.S. Kohli v. State of Punjab'', reported as 52 Pun L R 9 (1) (notes) (L), a copy of the judgment of which was produced by the learned Advocate-General during the hearing, the appli-cant''s service was terminated on one month''s pay in lieu Of notice according to the terms and con-ditions of his service, but because of certain allegations made by him against his superior officers the Punjab Government thought it fit to issue a press note, about three or four weeks after giving notice to the Petitioner terminating his service, stating
that the Petitioner was recently discharged from "service on the expiry of his probationary period '' because Government considered him unfit for confirmation.
A copy of this press note was attached by the Petitioner with his affidavit to the High Court, and it was contended that Article 311 of the Constitution applied to the case and the procedure provided in it had not been followed; Weston C. J. observed:
I am quite unable, however, to accept that this Article of the Constitution has application to cases of contract service whereby a person is employed by Government on the express condition that his services are terminable by so much notice.
He further observed that
it is necessary when there exists a contract between a master and servant as to the period of notice that any reason for giving the notice should be stated,
Although in''" this case the Petitioner himself Invited publicity about his misconduct but the argument on his behalf, that the real reason for termination of his service by notice in the terms of his contract was misconduct of the Petitioner and therefore such termination was dismissal or removal under Article 311 of the Constitution, was rejected.
This case was followed in -
Section 240(3) of the Government of India Act, corresponding to Article 311(2), Constitution of India, has no application to cases of contract service where a person is employed by Government on the express condition that his services are terminable by so much notice. Hence, where the contract of service under which a person was employed by the Government provided for the termination of his service by one month''s notice by either party, his discharge with one month''s pay in lieu of notice cannot be regarded as dismissal within the meaning of Sub-section (3) of Section 240.
In this case also the reason, which was the alleged misconduct of the public servant, was ignored when service had been terminated by one month''s pay in lieu of notice in accordance with the terms of the contract of service. These two cases have again been followed in -
In my opinion, where a person is employed on a temporary basis it is open to the State to terminate his services either at'' the expiry of the period mentioned in the contract or where no period is mentioned then by giving him one month''s notice or of such period as is required by the contract, or without any notice where the contract expressly mentions that no notice is necessary. The reason which motivates an action being taken is not in my opinion relevant.
In -
In that case the Petitioner was an Inspector in the Civil Supplies Department appointed to a temporary post. He was suspended till the result of an enquiry by the Anti-Corruption Department with regard to certain complaints against him. He appears to have claimed one month''s salary in lieu of notice. It was urged in that case that Article 3ll(2) applied to it and termination of the service being in contravention of the same was illegal and inoperative. The learned Judges observed:
The fact that he (Petitioner) was suspended at the request of the Anti-Corruption Department and that pending investigation into certain com- plaints against him, he was under suspension when his services were terminated, does not make the order passed by the Government in the valid exercise of its rights to discharge the Petitioner, an order of his removal from service. Where I to concede to the argument that the termination of the applicant''s services amounts to his removal from service, I should be holding, in fact, that a temporary employee can be discharged from service only on grounds of misconduct or indiscipline and this could mean over- riding the express condition on which a person is employed temporarily. Once it is recognised that the Government has a right to terminate the services of a temporary employee on giving him one month''s notice would not even make it a removal from service, when the Government servant claims one month''s salary in lieu of notice is admitted. For, it in lieu of notice the government servant is paid one month''s pay it cannot be said that any penalty has been inflicted on him.
It was, therefore, hald that when a temporary Government servant is discharged without giving him one month''s notice but with one month''s pay in lieu of it, the termination of his services cannot be regarded as removal within the meaning of Article 311(2).
In - ''M.R. Bakshi v. K.N. Saksena'' AIR 1954 A11 5 (Q), the Petitioner''s service had been terminated with one month''s notice in the terms of his service and one of the arguments on his be Half was that the real reason for the termination of his service was that were certain complaints of miscounduct against him and so the termination of his service by notice really amounted to an order of dismissal, but the argument was rejected with the remarkes:
If the application was appointed as a temporary servant, the contract of service providing that the service was terminable on one month''s notive and that contract of service has been terminated in accordance with its terms, the action of opposite party being in accordance with the terms of the contract. It cannot be said that the opposite party had done anything illegal or that the rights of the applicant under the contract of service had, in any way, been affected."
In that case, thus, the argument that the termination of service by notice really amounted to an order of dismissal because the reason for the same were complaints of misconduct was repelled.
The last case is -
a holder of a civil post under the state may be said to have been dismissed or removed if his services are terminated; against his will and before the expiry of the period of his service. The service of a holder of civil post may be termi nated by one month''s notice in accordance with the conditions of his service. Similarly there may be a termination of service where the service is for a fixed period, say a period of one year. In such cases there is no dismissal or removal within the meaning of Article 311. The expression ''dismissal'' or ''removal'' would cover only cases where there is a forced termination'' of service before the efpiry of the period prescribed for its termination in the usual course, either due to misconduct, inefficiency or any other reasons. It has to be a premature termina tion and against the will of the holder of the post.
In the present case the termination of the services of the Petitioner, S. Mohan Singh, being on payment of three months'' pay in lieu of notice in the terms of the contract is termination under the contract and in the usual course and so to such a case Article 311 has no application.
16. The consideration of the cases referred to above leads to the conclusion that it is settled that termination of service with due notice or payment of salary in lieu of due notice in accordance with the terms of the contract of service does not attract the provisions of Article 311 of the Constitution, as such termination does not amount to dismissal, or removal but is valid , being pursuant to the contract between the parties and further that the reason which leads to the giving of such a notice is irrelevant. It follows that even an allegation of misconduct, whether or not specifically stated, for such termination of service in the terms and conditions of the contract of service does not amount to dismissal or removal and in such cases Article 311 of the Constitution has no application. Therefore, merely because in the present case it has been stated in the notice served on the Petitioner that his services were being terminated on payment of three month''s salary in lieu of notice in the terms of his contract of service and in the public interest does not mean that that termination amounts to removal or dismissal of the Petitioner and so he has no case under Article 311 of the Constitution. This argument on behalf of the Petitioner has, therefore, to be rejected.
17. The third question'' is whether the order terminating'' the service of the Petitioner by notice in the terms of his contract was not made by the Government? The President by the Proclamation, dated 4-3-1953, took over the administration of the Servant the contract of service providing that Government, of Pepsu State under Article 356 of the the service was terminable on one month''s notice Constitution, Sub-article (1) of that Article pro- vides that on receipt of a report from the Governor or Rajpramukh of a State or otherwise, if the President is satisfied that a situation has arisen in which the Government of the State cannot be carried on in accordance with the provisions of the Constitution, the President may by Proclamation -
(a) assume to himself all or any of the functions of the'' Government of the state and all or any of the powers vested in or exercisable by the Governoror Rajpramukh, as the case may He or any body or authority in the State other than the Legislature of the State;
(b) declare that the powers of the Legislature of the State shall be exercisable by or under the authority of Parliament;
(c) make such incidental and consequential pro-visions'' as appear to the President to be necessary or desirable for giving effect to the objects of the Proclamation, including pro-visions for suspending in whole or in part the operation of any provisions of this Constitution relating to any body or authority in the State;"
The President in exercise of these powers made the among Ors. , ; provisions in the Pro-(a)assume to myself as President of India all functions of the Government of the said State and all powers vested in or exercisable by the Rajpramukh of that State;
(c) make the following incidental and consequential provisions which appear to me to be necessary or desirable for giving effect to objects of this Proclamation namely;
(1) in the exercise of the functions and powers assumed to himself by virtue of Clause (a) of this Proclamation, it should be lawful for the ''President to act to such extent as he thinks fit through the Rajpramukh of the said State.
These provision make it abundantly clear that the discretion to a t through the Rajpramukh is only "to such extent as he (The President) thinks fit"
In exercise of this power on the same date the President made the following Order:
In pursuance of Sub-clause'' (i) of Clause (c) of the Proclamation issued on this the fourth day of March, 1953, by the President under Article 356 of the Constitution of India the President is pleased to direct that all the functions of the Government of the State of Patials and East Punjab States Union and all the powers vested direcor exercisable by the Rajpramukh of that State under the Constitution or under any law by the President by virtue of Clause (a) of the said Proclamation, shall subject to the superintended, direction and control of the Rajpramukh of the said State who will act on the advice of the Adviser appointed by the President in the behalf.
It is at once clear that by this order all the powers ''vesting in the President have not been made exercisable by the Rajpramukh unrestricted and without limitation; indeed the order itself provides that the exervise of such powers by the Rajpramukh shall be "subject" to the superintendence, direction and control of the President" and on the advice of nthje Adviser appointed by the President and the Order enjoins that the Rajpramukh will act on such advice. On 26-9-1953, the President was pleased to make the Rules of Exective Business of the Government of Patiala and East Punjab States Union. The rules are authenticated by the Chief Secretary to Pepsu government Rule 11 of those rules provides:
Except as otherwise provided by any rule or order, cases shall ordinarily be disposed of by or under the authority of the Adviser who may, by means of standing orders, give such directions as he thinks fit for the disposal of cases.
There is Rule 6(a) which enumerates the type of cases which shall be submitted to the Rajpramukh through the adviser before issue of orders.
18. The first argument on behalf of the Petitioner is that the President,''1 "having by the Order, dated 4-3-1953; -provided that''-all powers'' vesting in him and exercisable by him shall be exercised by the Rajpramukh, had no power, to make Rules for final -disposal of cases by the Adviser, because under Clause (c)(i) of the ''Proclamation the President is empowered only to act through the Rajpramukh and thus through-nobody else. It was said that the; President can, only act either himself or through the Rajpramukh, and where the President is to act through: other authorities a-specific provision must be made as would appear; to be the case under Articles 239(1) and 243(1) of the Constitution. It does not seem to have been appreciated that in making the Rules of Executive Business of the Government of Pepsu the President was acting himself.
It was urged that when'' approving the Proclamation the Parliament intended that the President should act either himself or through the Rajpramukh and nobody else, and if it had been provided that he may act through the Adviser then.'' the Parliament may not have approved the Proclamation as, laid before it. It appears to have been forgotten that the Proclamation and the Order providing the exercise of the powers of, the President by the Rajpramukh were ,before the Parliament when the Proclamation was approved and, as stated, the Order clearly provides that the exercise of the President''s powers by the Rajpramukh shall be "subject to the superintendence did control of the President". This is a specific enough. There is little doubt um in was before the Parliament that in exercising the powers vested in and exercisable by the President under the Proclamation, the President had by Order reserved to himself the power of superintendence, direction and control is unlimited and unrestricted in any sense. It was, therefore within the scope of the powers of the Rules of Exective Business of the Government of Pepsu for the disposal of the powers by the Rajpramukh on behalf of the President must therefore be subject to such direction issued by the President.
It was stated on behalf of the Petitioner that in this way the powers were given to the Rajpramukh by the Order of the Present and to a considerable extent taken away by the Business Rules, but this contention proceeds on a misconception of the manner in which the executive business of the Governmenrt is attended to and finally disposed of. The Business Rules are consistent with the Order of the President making provision for exercise of his powers by the Rajpramukh and I see no inconsistency or contradiction between the two. It is provided in Article 154(1) of the Constitution that
that exective power of the State shall be vested in the governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution."
This provision has been advisedly made in the Constitution because the head of the State being a constitutional head, it is not possible for him to act personally nor is it desirable in the interest of public that he should do so and normally and in ordinary circumstances the xonstitutional head of the State acts through officers subordinate to him, In - ''emperor c. Sibnath Banerji'' AIR 1945 PD 156 (s), it has been held that:
the Home Minister is an officer subordinate to the Governor within the meaning of Section 49(1) of the Government of India Act, 1935.
Section 49(1) of the Government'' of India "Act made similar provision as Article 154(1) of the Constitution. The position of the Adviser under the Order, dated 4-3-1953 of the President is analogous to that of a Minister in the ordinary constitutional set up. He must therefore be regarded ''officer subordinate'' within the scope of Article 154(1) of the Constitution, and the President, or the Rajpramukh exercising the powers on behalf of the President, acts in accordance with the constitution when he exercises the executive power of the State through such a subordinate officer to him as the Adviser.
It was next contended that by Clause (c) (ii) of the Proclamation some provisions of the Constitution including Clause (3) of Article 166 of the Constitution:were suspended and so the President had no power to make the Business Rules. Clause (3) of Article 166 is in these words:
The Governor shall make rules for the more convenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business in so far as it is not business with respect to which the -Governor is by or under this Constitution required to act in his discretion.
The administration having been taken over by the President and there being no Minister, it became imperative that this provision should be suspended and so it was. But the suspension of this provision cannot be taken to control the power reserved by the President for superintendence, direction and control of the exercise of his powers by the . Rajpramukh and it is in pursuance of this power Of superintendence, direction and control that the President has issued the Business Rules. In fact, I consider, that the power of superintendence, direction and control as reserved to himself by the President is much wider power than the power under Article 186(3) of the Constitution. It cannot, be that the power of superintendence, direction and control must be read as limited only to specific and individual cases, there being nothing to suggest any such limitation or in fact any limitation upon that power. It certainly is large enough power to enable the President to give direction in the shape of Rules of Business.
In this connection it was further stressed that the previous Rules of Business made under Article 166(3) by the Rajpramukh continued in force until amended or substituted by the President, but it was further said that the President could only do. that by a statute. Once Sub-clause (3) of Article 166 was suspended, it is not easy to appreciate how any rules made under that provision can be considered, as not suspended at the same time and remain in force in spite of suspension of the power under which they were issued. If at all those rules could ever remain in force that could only be by an express provision keeping them in force and there is no such express provision. In my opinion the old Rules of Business issued under Sub-clause (3) of Article 166 were immediately suspended as soon as Article 166(3) was suspended. It has already been explained that the President reserved to himself the powers of superintendence, direction and control in the exercise of his powers by the Rajpramukh and in exercise of that power he had .. every-right to issue direction in the nature of Business Rules, and, therefore, no statute was required for the making of such Rules.
A third contention in this behalf was that the President could not make such Rules without the advice of the Ministry at the Centre in view of Article 74 of the Constitution and such Rules to-be valid" - should''/have been ''authenticated under Article 77(2),'' of the Constitution to a Secretary to the Central Government. The argument would have had validity if those Rules had been made under Article 77(3) of the Constitution, but the Rules were not made under that Article and, so no question of their be ing made on the advice of the Ministry at''the Centre arises and for the same reason no question of their authentication by a Secretary to the, Central Government arises. The Rules were issued by the President in exercise of his power of superintendence direction and control as reserved to himself under the Order making provision for the exercise of his powers by the Rajpramukh in relation to the State of Pepsu of which the administration has been taken over by the President under Article 356 of the Constitution. The President was, therefore, acting within the scope of the Constitution when making the Business Rules. With regard to the question of authentication on 5-3-1953, by Notification No. 32-PA, issued under the signatures of the Joint Secretary in the Ministry of States, the Persident was pleased, in relation to the Government of Pepsu, to make the following rule under Clause (2) of Article 166 of the Constitution:
Order and other instruments made and executed in the name of the President shall be authenticated by the signature of a Secretary, an Additional Secretary, a Joint Secretary, a Deputy'' Secretary, an Under Secretary or an Assistant Secretary to the Government of the Patiala and East Punjab States Union.
Under this rule the Chief Secretary to Pepsu Government has authenticated the Rules of Executive '' Business and the authentication of the same can- not be questioned on the ground that the Rules were not made by the President. The connected argument was that under Article 166(2) only an order or instrument can be authenticated and the Rules, of Executive Business is neither.
Similar argument advanced in relation to a parallel provision in Section 59(2) of the Government of India Act was rejected in -
The word ''order'' used in Sub-section (2) of Section 59 is without any adjective and qualification. It refers not only to executive orders but also to orders which may be legislative in their nature. ; The fact that Section 59 occurs in Chap. II the head- . ing of which is "The Provincial Executive" cannot restrict the word ''order'' occurring in Sub-section (2) of Section 59 only to mere executive orders. It is a well established principle of interpretation that headnotes of sections and chapters cannot cut down the express meanings of the words occurring in the section. It is also a well known practice that statutory rules, regulations and notifications are issued by the Government in this country not under the signature of Governor personally but under the signature of the Secretaries to the Government.
If rules or regulations could be issued and authenticated by a secretary to Government under Sub-section (2) of Section 59 (same provision as in Article 166(2), I can see no reason why the Rules of Executive Business in this, case have not been validly and properly authenticated under Article 166(2) of the Constitution. There is obviously no force in this argument.
The consequence is that by the very Order by the President made provision that the powers vested In and exercisable by him under the Proclamation shall be exercised by the Rajpra-mukh, the President reserved to himself the over-all power of superintendence, direction and control in the exercise of his powers by the Rajpramukh in the Pepsu State, and pursuant to that reserved power he issued the Rules of Executive Business for the conduct and disposal of such business by officer, subordinate to him. The Rules of Business derive their authority and validity from the same Order of the President from which the Rajpramukh derives his power to exercise the President''s powers under the Proclamation. The emphasis is upon, the powers of the President to govern the State within the scope of Article 356 and the Proclamation approved, by the Parliament. The President has acted within those powers and it has to be realized that all that is being done at present in Pepsu is being done by the President through his agencies and .everybody else acts on behalf of the President and has no personal power beyond that conferred by the president. The Rajpramukh is one such agency,. but the very Order whereby _ the Rajpramukh.. is given the powers to act on behalf of the President leaves the President un-" controlled and with unlimited power to make and issue orders and rules and regulations of any kind and nature ,in the discharge of his duties and powers of superintendence, direction and control. The President, therefore, has issued the Rules . of Executive Business within the scope of his powers and they are valid Rules and not ultra vires the powers of the President. So Rule 11 of the Rules of Executive Business is a valid rule and any action taken under and within the scope of this rule is an action by the Government ac-cording to law.
There. was half-hearted attempt to argue that the letter of the Finance Secretary to the Petitioner terminating the latter''s service on payment of three months'' salary in lieu of notice was not issued ''in the name of the President but in the narne of the Government. It is true that It would have been more appropriate to issue it in the name of the President, but when it is issued in the name of the Government it means quite clearly hat it is issued in the name of the President. The Pepsu General Clauses Act (Act 7 of 1953) de-fines Government'' or ''The Government'' in Clause 20 of Section 3 to "include both the Central Government and any. State Government". Clause 47 of the name section provides "that ''State Government'' shall mean, in relation to anything done or to be done after the commencement of the Constitution, the Rajpramukh". Clause (c)(v) of the Proclamation provides that any reference in the Constitution to the Rajpramukh shall in relation to Pepsu State be construed as a reference to the President. when all these provisions are read together it is that ''Government'' is for all practical purposes at present synonymous with ''The President'', and so there is no flaw in the order of the Govern-conveyed by the Finance Secretary to the Petitioner.
19. In the light of the discussion above on various aspects of the third question involved in his case I am clearly and definitely of the opinion the order terminating the service of the pettin the terms of his contract by giving him months'' salary in lieu of notice was an made by the Government of this State and order made validly and according to law.
20. The last question for consideration is that condonation. The Petitioner did, not in so many words; take this stand in his petition. But he did say in Para (5) of the petition that in September, 1951", the then Finance Minister of the Government Inflated a proposal for dispensing with his services by giving, him a, three months'' notice and circulated it among his colleagues, but since there was no basis for the action proposed, the proposal was eventually dropped.. The reply of the Respondent, to this is that it is correct that such a proposal was made by the then, Finance '' Minister, but that at that time only part of the facts about the Punjab Bonds1 transaction were available and the whole case, as now available, was not before the Finance Minister at that time1 or his colleagues. , Therefore, the case for waiver or condonation cannot be sustained,- because on the previous occasion the whole material was not available for final attitude.
In the view that has been taken that the termination of the service of the Petitioner in the terms of his contract is valid according to the contract and does not amount to removal or dismissal and further that the reason or motive for such termination, whether stated or not, is irrelevant, it becomes unnecessary to consider the question of waiver or condonation. The reason is quite simple, because termination of the service of the Petitioner is according to his contract of service and it makes no difference for what reason the Government is doing so. It is only if cognizance of such reason could be taken that this argument could stand on the basis of the same reason having been available previously and not having been made the basis of removal or dismissal. Otherwise if this argument was admissible in a case of the present type then it would amount to nullification of the terms and conditions of the contract between the parties. Where the service under the contract is, thus, terminated according to the terms and conditions of the contract no outside consideration, whether in the shape of waiver or condonation, can be taken to so modify the contract '' as to make such termination not according to the contract. The argument, therefore, fails.
21. In consequence, the petition is dismissed. It is certified under Article 132(1) of the Constitution that the case involves a substantial question of law as to the interpretation of the constitution.
Kesho Ram Passey, C.J.
22. I agree.
