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Judgment
M.N. Chandurkar, C.J.—The appellant who was initially appointed temporarily as a messenger in the Food Corporation of India on
3.2.1965 was discharged on 22.8.1966 with effect from 29.6.1966. He was re-appointed on 2.7.1966 also on temporary basis and was
transferred to Avadi on 20.8.1967. On the same day, he was also given intimation that he was likely to be ousted by the end of the first week of
September, 1967, and accordingly he was relieved of his duties from 6.9.1967 by a separate order.
The appellant approached the Additional Commissioner for Workmen''s Compensation, Madras by way of an appeal u/s 41(2) of the Tamil
Nadu Shops and Establishment Act, 1947 (Tamil Nadu Act XXXVI of 1947) (hereinafter referred to as the Act). Sub-section (2) of Section 41
of the Act gives a right to a person employed in an establishment to appeal to such authority as may be prescribed either on the ground that there
was no reasonable cause for dispensing with his services or on the ground that he had not been guilty of misconduct as held by the employer. Sub-
section (3) of Section 41 makes the decision of the authority final and binding on both the employer and the person employed.
The authority, however, held that the termination was valid; but directed payment of wages in lieu of notice to be given.
The appellant herein challenged this order of the authority in a petition filed under Article 226 of the Constitution of India on the ground that
persons junior to the appellant having been retained in service, the termination of service of the appellant herein was illegal. The learned single
Judge (Mohan, J.) who heard the writ petition found that the services of the appellant herein who was a temporary employee have been terminated
after giving two weeks'' notice which was strictly in accordance with the terms of the contract. However, he found that though the direction of the
Additional Commissioner for Workmen''s Compensation to the employer to pay one month''s wages to the appellant herein was technically not
correct, he would not interfere with the said order so as to deprive the appellant herein of the benefit which he earned at the hands of the
Addiitional Commissioner for Workmen''s Compensation. This order of the learned Judge is challenged in this appeal.
Mr. B.S. Gnanadesikan, learned Counsel for the appellant has raised the following two grounds. Firstly, according to him, when all the
employees who were junior to the appellant were still retained in service, the employer had failed to show any reasonable cause necessitating
termination of the appellant''s services, and since no such, reasonable cause has been disclosed in the counter affidavit, the order of termination
must be held to be illegal. Secondly according to the learned Counsel no temporary appointment can be made by the Food Corporation of India
for more than one year, and since the appellant had put in more than one year''s service, he must be deemed to have'' become permanent.
The case which is put forward by the Food Corporation of India is that in view of the provisions of Section 4(1)(c) of the Act, the provisions of
the Act are not applicable in the case of the Food Corporation of India and therefore the appellant''s appeal u/s 41 of the Act is really incompetent.
The other argument advanced on behalf of the Food Corporation of India is that the termination of the employment of the appellant herein has been
brought about expressly in terms of the Staff Regulations, 1971 which are statutory regulations and therefore it was not necessary for the Food
Corporation of India to disclose any further reason as to why some other persons have been retained and the appellant''s services alone were
terminated.
It appears to us that the argument advanced on behalf of the Food Corporation of India that the provisions of the Tamil Nadu Shops and
Establishments Act, 1947 are not applicable to the establishment of the Food Corporation of India has to be accepted. The material part of
Section 4(1) of the Act reads as follows:
Section 4 Exemptions: (1) Nothing contained in this Act shall apply to--
(a)...
(b)...
(c) establishments under the Central and State Governments, local authorities, the Reserve Bank of India, a railway administration operating any
railway as defined in Clause (20) of Article 366 of the Constitution and cantonment authorities.
Clauses (d), (e) and (f) of Sub-section (1) of Section 4 and Sub-section (2) of Section 4 of the Act are not relevant for our purpose.
So far as the Food Corporation of India is concerned, if it is shown that it is an establishment under the Central Government, then it is clear that
having regard to the provisions in Section 4(1)(c) of the Act, the provision for appeal in Section 41 of the Act could not be invoked by the
appellant herein because the provisions of the Act themselves are inapplicable to the establishment of the Food Corporation of India. The
constitution and the nature of the establishment of the Food Corporation of India, has been considered by the Supreme Court in Workmen of The
Food Corporation of India Vs. Food Corporation of India, and it was held that the Food Corporation of India is an instrumentality of the State
within the expression ""other authority"" in Article 12. In paragraph 16 of the judgment, the Supreme Court has referred to the following
circumstances to come to the conclusion that the Food Corporation of India is an instrumentality of the State:
(1) Section 5 provides for the initial capital and for acquiring power to increase the capital in such manner as the Central Government or the State
Government as the case may be may determine, initial capital being provided by Central Government.
(2) The management of the Corporation is to vest in a board of Directors and the Board of Directors in discharging its functions shall act amongst
others according to the instructions on questions of policy as may be given by the Central Government.
(3) The annual net profit of the Food Corporation of India has to be paid to the Central Government.
(4) Every Food Corporation has to submit to the Central Government an annual report of its working and affairs and the same has to be laid
before the Houses of Parliament.
The above circumstances will clearly indicate that the Food Corporation of India is completely under the control of the Central Government.
Any instruction on questions of policy issued by the Central Government are statutorily required to be implemented by the Board of Directors, and
even the annual net profit of the Food Corporation of India has to be paid to the Central Government. If the affairs of the Corporation are thus
wholly controlled by the Central Government, it is clear that the establishment of the Food Corporation of India will be under the Central
Government. It is necessary to point out that Clause (c) of Section 4(1) of the Act uses the phraseology ""establishments under the Central and
State Governments''. The phraseology is not ""establishment of the Central Government and the State Government."" By the use of the word
''under'', the scope of Clause (c) of Section 4(1) of the Act is made much wider, and if it is shown that the Central Government or the State
Government exercises control over an establishment, then such an establishment will be said to be under the Central Government or the State
Government as the case may be.
The scope of Section 4(1)(c) of the Act was recently considered by a Division Bench of this Court in C.V. Raman and Ors. v. Bank of India,
Southern Region (1984) 2 L.L.J. 34. The Division Bench held that the Control of the Government of India over the Nationalised Banks is
enormous and hence such banks are exempted from the Tamil Nadu Shops and Establishments Act, 1947. In that decision, it was argued before
the Division Bench that Section 4(1)(c) of the Act contemplates an establishment which is a department of the Government. This argument was
rejected with the observation that ""if really that was the intention of the law-makers, nothing would have been easier than to start a department of a
Government, u/s 4(1)(c) of the Shops Act."" Dealing with the meaning of the word ''under'', the Division Bench took the view that the meaning of
the word ''under'' was ''subject to the authority or control of, and the Bench further held that if the Nationalised bank is subject to the authority or
control of the Government of India which is the meaning of the word ''under'', the principle of deep and pervasive control may be applied in
considering Section 4(1)(c) of the Shops Act.
Having regard to the nature and establishment of the Food Corporation of India as indicated above, we are inclined to take the view that the
establishment of the Food Corporation of India is under the Central Government and will therefore be excepted from the provisions of the Act in
view of the provision in Section 4(1)(c) of the Act. Consequently, the appeal provision in Section 41(2) of the Act could not have been invoked by
the appellant herein and the appellate authority has no jurisdiction to deal with the validity of the termination order passed against the appellant
herein.
So far as the contention that persons junior to the appellant have been retained in service and the Food Corporation of India should have given
reasons for the termination of the services of the appellant is concerned, it appears to us that though in view of in applicablity of the Act, it may not
arise, the said contention has to be negatived in view of the Staff Regulations, 1971. Undoubtedly, the Supreme Court in The Manager,
Government Branch Press and Another Vs. D.B. Belliappa, has taken the view that where the services of a temporary Government servant were
terminated without giving any reason, while some other employees junior to him were retained in service and the services are not terminated on the
ground of unsatisfactory conduct or his unsuitability for the job and/or for his work being unsatisfactory or for a like reason which marks him off a
class apart from other temporary servants who have been retained in service, the termination of service would become arbitrary. We are however
dealing with the express power which is reserved by the Corporation under the Staff Regulation of 1971. These regulations are framed in exercise
of the powers conferred by Section 45 of the Food Corporation Act, 1964. Regulation 19 deals with termination of service and discharge.
Regulation 19(2) reads as follows:
Regulation 19(2): ""The services of any employee appointed under Sub-clause (b) or Sub-clause (c) of Clause (3) of Regulation 7 may be
terminated by the competent authority on giving him:
(a) 30 days'' notice pay in lieu thereof in case of an employee belonging to category I or category II.
(b) 7 days'' notice or pay in lieu thereof in the case of employees belonging to category III or category IV.
Regulation 7(3) enables the Corporation to make appointments to any post in the Corporation on an ad hoc basis on a purely temporary basis for
a period not exceeding one year. There are other modes of appointment with which we are not concerned. Regulation 19 thereof is an express
statutory power to terminate the employment of a person appointed on an ad hoc basis by giving the necessary notice. Where such power is
exercised, there is no question of the termination becoming arbitrary, unless of course mala fides are proved. The mere fact that some other
persons are allowed to continue in employment is therefore not a ground on which the order of termination of service of the appellant herein could
be challenged.
The last argument advanced on behalf of the appellant is that a person can be appointed on a purely temporary basis only for a period not
exceeding one year and that since the appellant had been in employment for more than one year, he should be deemed to have become permanent.
This argument cannot also be accepted. The status of a deemed permanent employee has to be provided for by the service rules themselves, and if
there is no service rule which provides for the status of a deemed permanent employee, such a status cannot be claimed merely on the ground that
the temporary employee has been continued beyond the period of one year. In this view of the matter, there is no substance in the appeal. The
appeal fails and it is accordingly dismissed.
However, there will be no order as to costs in this appeal.