Ferdino I. Rebello, C.J.@mdashThe State, aggrieved by order dated 23.3.2010 passed in Writ Petition No. 10464 of 2009, has preferred this appeal. The learned Single Judge in the order has noted that the Government Order dated 9th March 2004, on the basis of which the notice was issued to the writ petitioner respondent (hereinafter referred to as the ''respondent'') retiring him at the age of 58 years, had already been quashed, and that fact has been noticed by the Division Bench in its order dated 7.10.2009 passed in Writ Petition No. 51679 of 2009 and, accordingly, quashed the notice dated 29.12.2008, and held that the respondent would be entitled to continue up to the age of 60 years, and shall also be paid salary in lieu thereof.
2. In Writ Petition No. 51679 of 2009, the learned Division Bench, after noting the contention urged on behalf of the petitioner therein that the Government Order dated 9th March, 2004 had been quashed by judgment and order dated 8th September, 2009 in Writ Petition No. 39043 of 2006 (Jai Indra Dutt Sharma v. State of U.P. and others) and other connected petitions, granted interim relief in favour of the petitioner in the said writ petition.
3. Writ Petition No. 39043 of 2006 was disposed of by a learned Single Judge of this Court relying on the judgment of another learned Single Judge of Lucknow Bench in the case of Kalika Prasad v. Sate of U.P. and others (Writ Petition No. 45 (SS) of 2005), wherein it was held that the age of retirement of the employees of DRDA would be 60 years. The learned Single Judge in Kalika Prasad (supra) relied on Rule 56 of the Fundamental Rules. The appellants had relied on the Government Order dated 9.3.2004. The learned Single Judge proceeded to hold that the provisions contained in Fundamental Rules, legislated under Article 309 of the Constitution of India, have got statutory force, and that it is settled law that the executive instructions cannot alter or modify a statutory rule and, accordingly, held that Government Order dated 9.3.2004 is not sustainable, as Rule 56 of the Fundamental Rules would be applicable in respect of the employees of DRDA. In this appeal, correctness of this view has been called in question.
4. To understand the controversy, we may note a few aspects. The respondent herein is working in the DRDA, which was earlier created in each district of the State under the directions of the Government of India for ensuring effective implementation of rural development programmes. Formal creation of DRDA was contemplated under the Office Memorandum of the Government of India dated 24.10.1980, which provided that DRDA will be created as a Society in each district. The State Government, vide Government Order dated 24.11.1980, created DRDAs in each district. The Central Government issued an Office Memorandum dated 10.3.1981 pursuant to which all DRDAs prepared almost identical Byelaws. As regards the structure of DRDAs, District Magistrates are the Head of each DRDA and total funding is being done by the Central Government and State Government in the ratio of 7030. Applying the test of funding and pervasive control which the State have over the DRDAs, there can be no dispute that the DRDA is a State within the meaning of Article 12 of the Constitution of India. [See Anoop Rai Jain and others v. State of U.P. and others, Writ Petition No. 458 (SB) of 2000 of Lucknow Bench, decided on, 24.12.2009].
The question for our consideration is, whether the employees of DRDA are Government employees and are holding civil post in the civil services of the State to make applicable Rule 56 of the Fundamental Rules.
5. Before dealing with the issue, we may frame two questions, which have been raised and are required to be answered:
(1) Considering the Byelaws of the Society and more specifically Byelaws 19 and 20 (h) read with Government Notification dated March 17,1994, was it open to the State Government to have issued the Government Order dated 9.3.2004 fixing the age of retirement of the employees of DRDA as 58 years?
(2) Whether the employees of DRDA are holding civil posts and/or are Government employees of the State, in order to make applicable Rule 56 of the Fundamental Rules and, consequently, would they be governed by Government Notification dated 28.11.2001, whereby the age of retirement of the Government servants has been fixed as 60 years under Rule 56 of the Fundamental Rules?
6. On behalf of the State, it has been submitted that the employees of DRDA are employees of that Society and are not Government employees and, therefore, they would be governed by the conditions of service, which has been notified under Government Notification dated 17th March 1994, as amended by Government Order dated 9.3.2004.
7. On the other hand, on behalf of the respondent, reliance has been placed on Rule 7 B of the Financial Hand Book (Volume 2, Par II to IV), which reads as under:
"7B. Government servant for purposes of these rules, means a person appointed to a civil post or a civil service under the State Government in India, and serving in connection with the affairs of the Uttar Pradesh, whose conditions of service has been or may be prescribed by the Governor under Section 241 (2) (b) of the Act."
Then, it is submitted as under:
"1. Requirement for having a Government Servant under the above rules is that a person appointed to a Civil Post or holding the Civil Post, if there is a Master and Servant relationship of the employees with the State Government and the existence of this relationship is indicated by the State''s right to select and appoint the holder of the post, its right to suspend and dismiss him, its right to control the manner and method of his doing the work and the payment by it of his wages or remuneration. A relationship of Master and Servant may be established by the person of all or some of these indicia.
2. The District Rural Development Agency has been established by the State Government for the purposes of District Rural Development about 25 years ago, the District Magistrate of the concerned District is the Chairman of the same.
3. The Program of the District Rural Development is controlled and supervised by the Chief Development Officer. The Agency is run with the Financial Assistance of the State and Central Government, it is maintained and controlled by the Officers of the Indian Administrative Services employed and posted as District Magistrate and Chief Development Officer.
4. District Rural Development Agency is under pervasive control of the State Government and is directly linked with object and goal sought to be achieved by the State under Constitutional obligation imposed upon it by means of the Directive Principle of the State Policy.
5. There is a right to appoint, right to suspend, right to terminate, right to promote, payment of salary is by the State Government, hence they hold the Civil Post and are Government Servant under Rule 56 of the Fundamental Rules.
6. After the amendment in Fundamental Rule 56 for enhancement of the age of retirement of Government Servants from 58 to 60 years was made applicable to the employees of DRDA under Clause 10 (2) of Circular issued by the Government dated 17.3.1994 which has been modified vide Government Order dated 9.3.2004 which is not permissible and there is no such jurisdiction vest with the State Government."
Placing reliance on several judgments, it is submitted that the employees of DRDA are holding civil posts and, consequently, their age of retirement would be 60 years.
8. At the outset, we may reproduce subPara 10 of Para 2 of the guidelines issued under Government Notification dated 17th March, 1994. The English translation given to us, reads as under:
"2 (10) The other matters which are not covered especially with these Guidelines or Special orders and pertaining to the persons appointed in the District Rural Development Agencies will be regulated by such rules, regulations and orders which generally apply to the Government Servants serving with regard to the State affairs."
It is further submitted on behalf of the appellants that in the absence of any specific byelaws or rules, the conditions of service of persons appointed in the DRDA will be governed by conditions of service generally applicable to Government servants serving with regard to the State affairs. It is, therefore, submitted that once the Government has issued notification dated 9.3.2004, from that, date the age of retirement of the employees of DRDA is to be 58 years. These notifications, it is submitted, have been issued by the State Government pursuant to the powers conferred under Byelaw 20 of the Byelaws, which reads as under:
"20. In particular and without prejudice to the generality of the foregoing provisions, the Governing Body may:
(a)....................................
(b)...................
(h) Subject to the direction, if any, of the Government of India/State Government appoint such staff as may from time to time be necessary for carrying out day to day affairs of the Society."
It is, thus, submitted that the power to appoint staff would carry with it the power to make rules or issue directions in the matter of conditions of service. It is on that basis the guidelines were issued by Government Notification dated 17.3.1994. Once that be the case, it is submitted that the age of retirement of employees employed by DRDAs would be 58 years. We may mention that we have referred to the Byelaws of the Allahabad DRDA.
The notification of March 17,1994, it is submitted, notes that the DRDA has been registered as a Society and the staff is not governed by the service rules framed under Article 309 of the Constitution of India and, as such, the State Government has decided to issue general guidelines, which are contained in the said notification. There was no provision, at that time, providing for the age of retirement on superannuation and, consequently, considering Guideline 2(10) of the Government Notification dated 17th March 1994, the rules applicable to Government employees in the matter of superannuation were to be applicable to the employees of DRDA, which earlier was 58 years but by Government Notification dated 28.11.2001, had been increased to 60 years and subsequently has been reduced to 58 years. The notification, it is submitted, only incorporated the conditions of service. In these circumstances, it is submitted, that the judgment in Kalika Prasad (supra), which has held that Rule 56 of the Fundamental Rules would apply in respect of employees of DRDA and that the directions being in the nature of administrative instructions, are illegal, does not lay down the correct law.
9. We may refer to the judgment of Badloo Ram and another v. State of U. P. and others, Writ Petition No. 2280 (SS) of 2006, decided on 19.4.2006. In the said case, the learned Judge was considering the issue, whether the DRDA is State within the meaning of Article 12 of the Constitution of India. The learned Court, after considering the material, was pleased to observe that there is deep and pervasive control of the State on the DRDA with respect to administrative functions and its other functions and that is why the DRDA is an instrumentality of the State under Article 12 of the Constitution of India, and is amenable to writ jurisdiction. This judgment, thus, holds that the DRDA is ''State'' within the meaning of Article 12, This by itself cannot result in drawing an inference that employees of DRDA are Government employees. This view was ratified in Anoop Jain (supra).
The learned Judge in Kalika Prasad (supra), has also noted para 2 of Circular dated 17th March, 1994, wherein under subpara (10), there is a stipulation that the employees of DRDA would be governed by Rules, Regulations and Orders which are applicable with respect to the employees working in the affairs of the State Government and in view of that, has held that F.R. 56 would apply.
10. With this background, we may proceed to answer the first question. Counsel for the respondent has not come up with the plea that the employees of DRDA, per se, are Government employees, but his argument is that they are holding civil posts and, consequently, Rule 56 of the Fundamental Rules would apply.
11. There is no dispute that the DRDAs are registered as Societies under the Societies Registration Act. DRDAs are registered for each District. The Byelaws provide for a Governing Body. The powers of the Governing Body has been set out under Byelaw 19 of the Byelaws. Byelaw 20 provides for other powers conferred on the Governing Body. Byelaw 35 provides the manner in which the Society can sue or be sued. The Memorandum of Association of DRDA provides for Working Committee of the Governing Body, which consists of officers, who hold office in the Working Committee, by virtue of their posts in Government service. The members of the Society hold the post of Chairman or Members or the Executive Director by virtue of the posts they hold in Government service. By virtue of these Byelaws, the Governing Body can appoint staff subject to the directions issued by the Central Government/State Government. The State Government issued Notification dated 17th March, 1994 which provided for the conditions of service of the employees in respect of employees of DRDA. Once the State Government has issued directions in exercise of its power, the Governing Body is bound by the said directions in the matter of appointment of staff. The power to appoint also includes the power to terminate and/or superannuate. The subsequent direction of 9.3.2004 has also been issued by the State Government and would be relatable with the power that it has, under Byelaw 20 (h) of the Byelaws. Considering the findings recorded by the learned Single Judge in Badloo Ram (supra) and the findings recorded by the Division Bench, to which the learned Judge who decided Badloo Ram (supra) was a Member, being Writ Petition No. 458 (SB) of 2000, Anoop Rai Jain and others v. State of U. P. and others, decided on, 24th December, 2009, there can be no dispute that the Society is an instrumentality of the State and, therefore, falling under the expression "State� within the meaning of Article 12 of the Constitution of India, but its employees cannot be said to be employees of the State in view of the Byelaws including Byelaw 20 (h).
The learned Judge in Kalika Prasad (supra), has not discussed the reason as to why F.R. 56 is applicable. If F.R. 56 was applicable because of Guideline No. 2(10) of Government Notification dated 17th March, 1994, then it was within the competence of the State Government to also have issued the Government Order dated 9.3.2004. In these circumstances, considering the Government Notification dated 9.3.2004, the age of superannuation of employees of DRDA would be 58 years from that date. Question (1) is answered in the affirmative.
12. Having answered the first question, the next question that we have to really answer is, whether an employee of DRDA is holding a civil post and is a Government servant, to make applicable Rule 56 of the Fundamental Rules, and to that extent can the Government Order dated 9.3.2004 be said to be illegal or arbitrary?
13. The submission on behalf of the respondent to contend that the employees are holding civil posts is by placing reliance on several judgments of the Supreme Court which have set out the tests indicating when a post can be said to be a civil post.
Reliance was firstly placed on the judgment of the Supreme Court in State of Assam v. Kanak Chandra Dutta, AIR 1967 SC 884. In the said case, the issue before the Supreme Court was, whether a Mauzadar in the Assam Valley holds a civil post under the State of Assam? In Assam, there was a Scheme known as the "Mauzadari system of collecting revenue prevailing in the Assam Valley. The revenue charge of a Mouza and the responsibility for the whole revenue of it in the first instance rested with the Mauzadar. Every Mauzadar before his appointment had to execute a written agreement (kabuliyat) in the prescribed form and is also required to furnish security to the satisfaction of the Deputy Commissioner. The Mauzadar is a public servant whose primary duty was to collect land revenue and other Government dues. He was responsible for collection of polltax, housetax, tauzibahir revenue, grazing fees and forest dues and other powers including the power of attachment and sale of movables under Section 69 of the Assam Land and Revenue Regulation, 1886. At the same time, Mauzdar could own tea garden and other landed property and engage himself in trade or politics, but if any of his extraneous occupations interfered seriously with his primary duties as a Mauzadar, the Deputy Commissioner was required to consider as to whether he should be retained in his office. It is in that context, the Supreme Court framed the questions and we may gainfully reproduce the same:
"(9) THE question is whether a Mauzadar is a person holding a civil post under the State within Article 311 of the Constitution. There is no formal definition of "post" and "civil post". The sense in which they are used in the Services Chapter of Part XIV of the Constitution is indicated by their context and setting. A civil post is distinguished in Article 310 from a post connected with defence; it is a post on the civil as distinguished from the defence side of the administration, an employment in a civil capacity under the Union or a State, see marginal note to Article 311. In Article 311, a member of a civil service of the Union or allIndia service or a civil service of a State is mentioned separately, and a civil post means a post not connected with defence outside the regular civil services. A post is a service or employment. A person holding a post under a State is a person serving or employed under the State, see the marginal notes to Arts. 309,310 and 311. The heading and the subheading of Part XIV and Chapter I emphasise the element of service. There is a relationship of master and servant between the State and a person said to be holding a post under it. The existence of this relationship is indicated by the State''s right to select and appoint the holder of the post, its right to suspend and dismiss him, its right to control the manner and method of his doing the work and the payment by it of his wages or remuneration. A relationship of master and servant may be established by the presence of all or some of these indicia, in conjunction with other circumstances and it is a question of fact in each case whether there is such a relation between the State and the alleged holder of a post.
(10) In the context of Articles 309, 310 and 311, a post denotes an office. A person who holds a civil post under a State holds "office" during the pleasure of the Governor of the State, except as expressly provided by the Constitution, see Article 310. A post under the State is an office or a position to which duties in connection with the affairs of the State are attached, an office or a position to which a person is appointed and which may exist apart from and independently of the holder of the post. Article 310(2) contemplates that a post may be abolished and a person holding a post may be required to vacate the post, and it emphasizes the idea of a post existing apart from the holder of the post. A post may be created before the appointment or simultaneously with it. A post is an employment, but every employment is not a post. A casual labourer is not the holder of a post. A post under the State means a post under the administrative control of the State. The State may create or abolish the post and may regulate the conditions of service of persons appointed to the post."
(Emphasis supplied)
The Supreme Court, considering the tests, held that Mauzadars are holding civil posts.
Reliance was next placed on the judgment in the case of Superintendent of Post Offices v. P.K. Rajamma, AIR 1977 SC 1677. In the said case, the issue pertained to extradepartmental agents connected with the postal department. Again, the question arose, whether the extradepartmental agent was holding a post under the administrative control of the State. In the said case, considering the rules, the Supreme Court held that the extradepartmental agent is in a post which exists "apart from" the person who happens to fill it at any particular time, and though such a post is outside the regular civil services, there is no doubt it is a post under the State. The Court held that the test laid down in Kanak Chandra Dutta (supra) had been satisfied.
Another judgment on which reliance has been placed is the judgment in State of Gujarat and another v. Raman Lal Keshav Lal Soni and others, AIR 1984 SC 161. In the said case, the question for consideration before the Supreme Court was, whether the Members of the Gujarat Panchayat Service are Government servants. The Supreme Court observed that there were enough indicators that they are Government servants and that the Court did not propose and indeed it is neither politic nor possible to lay down any definitive test to determine when a person may be said to hold a civil post under the Government. Several factors may indicate the relationship of master and servant. None may be conclusive. On the other hand, no single factor may be considered absolutely essential. The presence of all or some of the factors, such as the right to select for appointment, the right to appoint, the right to terminate the employment, the right to take other disciplinary action, the right to prescribe the conditions of service, the nature of the duties performed by the employees, the right to control the employee''s manner and method of the work, the right to issue directions and the right to determine and the source from which wages or salary are paid and a host of such circumstances, may have to be considered to determine the existence of the relationship of master and servant. In each case, it is a question of fact whether a person is a servant of the State or not. After considering this, the Court observed that the Government servants do not cease to be Government servants merely because, for the time being, they are allotted to different Panchayat Institutions and paid out of the funds of those institutions. On the facts of the said case, the Supreme Court held that Panchayat Service constituted under Section 203 of the Gujarat Panchayats Act is a civil service of the State and that the members of the service are Government servants.
In State of U.P. v. Chandra Prakash Pandey and others, 2001 (2) AWC 1399 (SC), the question was, whether the Kurk Amins appointed by District Magistrates on commission basis for realization of outstanding dues of Cooperative Societies, can be treated to be employees of the State Government holding civil posts under the State of U.P. Considering the said question, this Court had taken the view that Kurk Amins held civil posts and had become Government servants and that had attained finality pursuant to judicial verdict, as the correctness of the same was not challenged by the State. Reference was then made to the judgment in Shri Kanak Chandra Dutta (Supra) as to when a person can be said to be holding a civil post.
Reference was also made in the judgment in State of West Bengal and others v. Kaberi Khastagir and others, (2009) 3 SCC 68, wherein the issue was, whether the staff employed under the centrally sponsored scheme, namely, Integrated Child Development Scheme in West Bengal, were employees of the appellant State. After considering various aspects, the Court recorded a finding as set out in paragraphs 31, which reads as under:
"31. Having considered the submissions made on behalf of the respective parties, we find ourselves unable to agree with the reasoning either of the learned Single Judge or the Division Bench of the High Court in holding that the writ petitioners were project employees in respect of the ICDS Project and not employees of the State Government and that their services were coterminous with the Project. Para 35 of the Scheme clearly provides that though ''the same was a Centrally sponsored scheme, its implementation was left to the respective State Governments with 100% financial assistance from the Central Government for inputs other than supplementary nutrition which was identified as the responsibility of the State Government. In fact, Para 47 of the Scheme, which has been extracted hereinabove, in no uncertain terms makes it very clear that even though funds for the Scheme would be provided by the Central Government, the staff would be borne on the appropriate cadres of the States which would sanction the posts in the appropriate corresponding State pay scale. In the face of such provision it is difficult to accept that the writ petitioners were project workers and not employees of the State Government."
The finding of the Supreme Court was that they were employees of the State Government.
14. We may also refer to the judgment in State of Assam v. Barak Upatyaka D.U. Karmachari Sanstha, (2009) 5 SCC 694. Before the Supreme Court, the State Government had preferred an appeal against the order of the High Court, whereby the State Government was directed to sanction financial assistance by way of grantinaid to Cachar and Karimganj District Milk Producers'' Cooperative Union Ltd. (CAMUL) to enable CAMUL to make regular payment of monthly salaries, allowances as also the arrears to its employees. We may refer to the following paragraphs of the said judgment, which read as under:
"9. The various averments of the respondent in the writ petition about allpervasive financial, administrative and functional control of CAMUL by the State Government, even if assumed to be true, may at best result in CAMUL being treated as "State" within the meaning of that expression under Article 12 of the Constitution of India. If it is a "State", in case of violation of any of the fundamental rights of its employees, by CAMUL as employer, the employees were entitled to claim relief against CAMUL, by taking recourse to a writ petition under Article 226 of the Constitution of India. But the fact that a corporate body or cooperative society answers the definition of "State" does not make it the "State Government", nor will the employees of such a body, become holders of civil posts or employees of the State Government. Therefore the fact that CAMUL may answer the definition of "State" does not mean that the State Government is liable to bear and pay the salaries of its employees.
13. If the salaries are not paid, the remedy of the employees of CAMUL is to proceed against CAMUL, in accordance with law, by approaching the forum under the appropriate labour legislation or the Cooperative Societies Act. But a trade union representing the employees of a cooperative society cannot, by filing a writ petition, require the Government to bear and pay the salaries of the employees of the cooperative society, howsoever pervasive, the control of the State Government, over such society. Nor is any right created to demand the continuance of financial assistance to a cooperative society, on the ground that such assistance has been extended by the Government, for several years.
14.The respondent has not been able to show any right in the employees of CAMUL against the State Government, or any obligation on the part of the State Government with reference to the salaries/emoluments of employees of CAMUL either under any statute or contract or otherwise.
23. What clearly holds the field at present is the principle laid down and reiterated by the Constitution Bench of this Court in Steel Authority of India Ltd. v. National Union Waterfront Workers, (2001) 7 SCC 1, wherein this Court categorically held: (SCCp. 27, Para 37)
"37. We wish to clear the air that the principle, while discharging public functions and duties the Government companies/corporations/societies which are instrumentalities or agencies of the Government must be subjected to the same limitations in the field of public law constitutional or administrative law as the Government itself, does not lead to the inference that they become agents of the Centre/State Government for all purposes so as to bind such Government for all their acts, liabilities and obligations under various Central and/or State Acts or under private law."
From this judgment, it follows that merely because an Association falls under the expression "instrumentality of the State'' within the meaning of Article 12 of the Constitution, it would not make them Government employees.
15. In General Manager, Uttaranchal Jal Sansthan v. Laxmi Devi and others, (2009) 7 SCC 205, the issue was, whether daily wagers employees in Uttaranchal Jal Sansthan were Government servants and whether dependents of such daily wagers would be entitled to appointment under the DyinginHarness Rules. After considering the Rules, the Supreme Court observed that the daily wagers are not Government servants.
16. Considering the above referred judgments and the material on record, it will be clear that firstly the DRDA is a Society registered under the Societies Registration Act. Its funding is 70 percent from the Central Government and 30 percent from the State Government. The members of the Society and also the Working Committee are basically persons holding the posts in Government service, mostly in the State Government and some in the Central Government, as the object is of rural development. Byelaw 20 (h) recognizes that the staff are to be appointed by the Governing Body. The accounts are to be approved by the Governing Body in its annual general meeting. Suits are to be filed against the Society. Thus, though there may be funding by the Central/State Governments and control by the State Government, nonetheless they are employees of the Society. Some posts are filled up on transfer by the Governor and in respect of others, appointments are to be made by the Chief Executive Officer, who is the District Magistrate. Considering the tests laid down in Kanik Chandra Dutta (supra), we are clearly of the opinion that the tests laid down in the judgment of the Supreme Court are not satisfied. Once it is held that they are the employees of DRDA and are not holding civil posts in the service of State, Rule 56 of the Fundamental Rule would not apply to them.
17. In the light of that, we are clearly of the opinion that the appeal filed by the State will have to be allowed. The employees of DRDA after 9.3.2004 will have to retire at the age of 58 years. Consequently, we hold that the view taken by the learned Single Judge in the case of Kalika Prasad (supra) that Rule 56 of the Fundamental Rules would apply so far as the employees of DRDA are concerned, does not lay down the correct law and, hence, we overrule the judgment in Kalika Prasad (supra) and all other judgments, which have taken a similar view.
18. Accordingly, the appeal is allowed. The judgment of the learned Single Judge dated 23.3.2010 in Writ Petition No. 10464 of 2009 is set aside. Writ Petition No. 10464 of 2009 is dismissed. Rule discharged.
