Contempt – Directions issued to Bihar Govt. for trained teachers – Adjourned for implementation report

Nand Kishore Ojha Vs. Anjani Kumar Singh 8 September 2010)

Judgment

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION CONTEMPT PETITION (CIVIL) NO. 297 OF 2007 IN SPECIAL LEAVE PETITION (C) NO.22882 OF 2004 Nand Kishore Ojha ...

Petitioner Anjani Kumar Singh ...

Respondent

O R D E R

ALTAMAS KABIR, J.

1.     As indicated in our order dated 9th December, 2009, this Contempt Petition has a background of alleged breach of an undertaking given on 18th January, 2006 and the order passed on the basis thereof on 23rd January, 2006 in SLP(C)Nos.22882- 2 22888 of 2004. The said undertaking related to the commitment made by the State of Bihar to recruit and fill in the vacant posts of teachers in Primary Schools with trained teachers. The undertaking given by the State of Bihar is in that context and reads as follows :

"That in the meantime, it has been decided that trained teachers be recruited on the vacant posts available in the State of Bihar. The Bihar Elementary Teachers Appointment Rules, 2003 having been quashed by the Patna High Court, new recruitment rules are contemplated to facilitate recruitment of trained teachers in a decentralized manner, by giving them age relaxation as ordered by the High Court.

That Chapters 6 and 7 of the Bihar Education Code relating to oriental education and hostels and messes will be kept in mind, as directed by the Patna High Court, while making recruitment of teachers.

That it is respectfully submitted that since the number of available trained teachers in the State is expected to be less than the available vacancies, no test for 3 selection is required to that extent, a reference to this Bihar Public Service Commission for initiating the process of recruitment of trained teachers may not be necessary, and the order of this Hon'ble Court and of the Patna High Court in this regard may be modified"

2.     The said application made for withdrawal of the Special Leave Petition was disposed of by this Court on 23rd January, 2006 on the basis of the submissions made therein.

3.     Subsequently, when the State of Bihar failed to abide by its commitments and assurances, the petitioner herein, Nand Kishore Ojha, filed Contempt Petition 297 of 2006, which was disposed of on 19th March, 2007 by the following order :

"In view of the categorical statement now made that the priority will be given to the trained teachers in appointment and also the clarification made in paragraphs 19 to 22 of the aforesaid affidavit dated 7.2.2007, we direct the State of Bihar to implement the undertaking given by the State of Bihar earlier and also now by the present affidavit dated 7.2.2007 in letter 4 and spirit by appointing the trained teachers on priority basis."

4.     Once again on the failure of the State Government to appoint trained teachers as Assistant Teachers in the vacant sanctioned posts carrying a pay-scale, in breach of the undertaking and the assurances given by the Government, the present Contempt Petition was filed. Many applications were made in the Contempt Petition by the trained teachers similarly situated, for being impleaded as parties to the proceedings. Ultimately, the learned Attorney General appeared before us on 25th August, 2009 and assured us that it was not the intention of the State of Bihar to resile from the undertaking given on its behalf, but that the situation had changed over the years, since the undertaking had been given and had become much more complex than was thought of at that point of time.

Since no workable solution could be suggested which could satisfy the undertaking given by the State Government and, at the same time, to cause minimum 5 amount of disruption in implementing the same, this Court took note of an advertisement for appointment of Primary Teachers, which was published in December, 2003 and had been struck down by the High Court, for the limited purpose of determining the total number of vacancies which were shown as 34,540. In order to put a quietus to the entire issue, we accepted the figure relating to the vacancies to the posts shown in the advertisement to meet the claims of the trained teachers who were, at the relevant point of time, available for being appointed on a regular basis. Accordingly, notwithstanding the number of trained teachers available, this Court directed that the available 34,540 vacancies shown in the advertisement for appoint of Primary Teachers to be filled up with the said number of trained teachers as a one-time- measure to give effect to the undertaking which had been given on 18th January, 2006 and 23rd January, 2006. This Court also adjourned the Contempt 6 Petition for implementation of the said order passed by us and for a report to be submitted on the next date as to the result of the discussions held between the petitioner and the concerned authorities.

5.     Pursuant to the above directions, the matter was taken up on 6th May, 2010, when an Additional Affidavit affirmed by the Contemnor, Shri Anjani Kumar Singh, was shown to us. The deponent indicated that he was the Principal Secretary, Human Resource Development Department, Government of Bihar, and it was mentioned in paragraph 4 of the said Affidavit that 34,540 posts of Assistant Teachers had been created as a one-time-measure for appointment in Elementary Schools of the State of Bihar and to facilitate the process of recruitment, the Bihar Special Elementary Teachers' Recruitment Rules, 2010, had been prepared and had been approved by the State Cabinet on 2nd February, 2010.

7 On the said basis, it was averred that by creating 34,540 posts of Assistant Teachers, the State of Bihar had complied with the directions given by this Court on 9th December, 2009 as a one-time- measure.

6.     Mr. P.K. Shahi, learned Advocate General for the State of Bihar, took us to the Bihar Special Elementary Teachers' Recruitment Rules, 2010, hereinafter referred to as "the 2010 Rules", and pointed out that the same had been framed to give effect to the undertakings given by the State of Bihar and the orders passed by this Court from time to time. The learned Advocate General, therefore, submitted that in view of such compliance, the contempt proceedings were liable to be dropped.

7.     Appearing for the Petitioners in Contempt Petition No.297 of 2007, Mr. R.P. Bhatt, learned Senior Advocate, submitted that although apparently it would appear that by the creation of 34,540 8 posts, the undertakings given on behalf of the State of Bihar and the orders passed by this Court had been duly complied with, in real fact, the same did not reflect the true state of affairs in view of the framing of the 2010 Rules which were in breach and not in compliance with the said undertakings. In particular, it was pointed out that Rule 4 of the said Rules provided that only those candidates who had passed training upto 1st December, 2003, could apply, which effectively debarred those trained teachers who passed training thereafter and were intended to be covered by the order of 6th May, 2010, for appointment as primary teachers. It was also submitted by Mr. Bhatt that teachers who had completed physical education training had not been included in the definition of the expression "training", as provided in Rule 2(iv), although they too were to be covered by the order passed on 6th May, 2010, and the earlier orders.

8.     Mr. L. Nageshwar Rao, learned Advocate, who appeared for some of the Special Leave Petitioners, submitted that the provision for reservation in Rule 6 of the aforesaid Rules would also result in the exclusion of a large number of trained teachers from the general category, since it was not expected that the total number of posts reserved would be filled from amongst trained teachers belonging to the reserved category. Mr. Rao also pointed out that the provision of Rule 9 were also prejudicial to the Petitioners, who even after their appointment would not be paid their salaries unless their certificates were found to be correct.

Mr. Rao Submitted that such a condition could result in an indefinite delay in paying the salaries of the persons appointed.

9.     Some of the other learned Advocates appearing for the other Petitioners and those candidates who had been permitted to intervene in these 1 proceedings on the basis of their various applications, echoed the submissions made by Mr. Bhatt and Mr. Rao. All of them in one voice have reiterated the submission that all the 34,540 posts which have been created would have to be filled up without leaving any vacancies on the plea of reservation, as had been undertaken by the learned Advocate General for the State of Bihar, Mr. Shahi.

10.  We have carefully considered the submissions made on behalf of the respective parties with regard to the affidavit of compliance filed on behalf of the State of Bihar and have also considered the submissions of the learned Advocate General for the State of Bihar with regard to the 2010 Rules.

11.  While we appreciate the fact that the number of posts shown in the advertisement published in 2003 amounting to 34,540 have been created to be filled up by trained teachers, it must be said that it was never our intention that the conditions of the advertisement itself, which had been struck down by the High Court, were to be followed by the Bihar State Government. We had made it very clear in our order that we had referred to the advertisement only for the purpose of determining the number of vacancies which would be required to be filled up from amongst the trained teachers. It was very clearly our intention that all the 34,540 posts were to be filled up with trained teachers who were waiting for appointment, in order of seniority. The question of keeping some of the posts vacant on account of non-availability of reserved candidates was never the criterion in the order passed by us on 9th December, 2009. We must add that we are not for a moment suggesting that candidates from the reserved category should not be accommodated as per the reservation policy. What we intended was that after the number of candidates from the reserved category had been accommodated, 1 the rest of the posts were to be filled up from amongst the candidates from the general category.

12.  Having regard to the above, we once again direct that the said 34,540 posts, which have been created, be filled up from amongst the trained teachers in order of seniority after providing for appointment of candidates belonging to the reserved category as a one-time measure as indicated in our earlier orders and as also mentioned in the additional affidavit affirmed on behalf of the State of Bihar.

13.  We would like it to be appreciated by the State of Bihar that these directions should be complied with within 31st August, 2010, without further delay. Let this matter stand adjourned till 8th September, 2010 at 3.30 p.m. for filing of compliance report.

................................................J. (ALTAMAS KABIR)

................................................J.

Service Law – Appointment - Employment exchange -A Physically Handicapped be denied appointment on Class-III post despite her selection by the Competent Authority

Union of India & Ors. Vs. Pritilata Nanda, 2010(7) SCALE 269 = AIR 2010 SC 2821 = (2010) 8 SCR 733 [Decided on 16 July 2010]

Judgment

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.5646 OF 2010 (Arising out of SLP (C) No.12866 of 2009) Union of India and others .... Appellants Versus Miss Pritilata Nanda .... Respondent O R D E R Leave granted.

The only question which arises for consideration in this appeal filed by the Union of India and four functionaries of South Eastern Railway against the order of the Division Bench of Orissa High Court is whether respondent - Miss Pritilata Nanda, who is physically handicapped, could be denied appointment on Class III post despite her selection by the competent authority only on the ground that she did not get her name sponsored by an employment exchange.

Since the inception of mankind, many lacs have suffered from different types of physical handicaps (today about 600 million people suffer from such handicaps), but many of them overcame all kinds of handicaps and achieved distinctions in various fields.

Sarah Bernhardt - French actress was disabled by a knee injury.

Her leg was amputated in 1914 but she continued to work on stage until just before her death. Beethoven was deaf when he composed his 9th symphony. Winston Churchill, Walt Disney, Thomas Edison, Albert Einstein, Alexander Graham Bell, Nelson Rockefeller, George Washington and many others had learning disability. Stevie Wonder who was blinded during his childhood became world famous pianist and singer. Brail, who was a blind, had the distinction of inventing script for the blind. With the aid of brail script, a large number of physically handicapped (blind) made tremendous achievement in life. Dr. Hellen Keller who was blind became an international figure because despite her handicap, she discovered the world through her finger tips. Her achievements of difficult goals and her loving kindness made her life an inspiration for countless people all over the world. Expressing his admiration for Dr. Hellen Keller, Eleanor Roosevelt wrote "in her life and happiness in life, Miss Keller has taught an unforgettable lesson to the rest of us who would not have had such difficulties to overcome. Ralph Barton Perry in his introduction to Dr. Keller's book `The Story of My Life' wrote "it is true that Hellen Keller is handicapped as indeed, who is not but that which distinguishes her is not her handicap but the extent to which she has overcome it and even profited by it. She calls for sympathy and understanding and not pity. No one can know her or read her without feeling admiration and gratitude. Soordas and Milton, both of whom were blind made poetry great by their brilliance and richness of thoughts and language. Edison, a great scientist and inventor was deaf. Byron, a great poet of England and Taimoor Leng, Mangolian warrior were lame. Maharaja Ranjit Singh, a great warrior and administrator was handicapped in eye sight. Mr. Mukat Behari Lal, a renowned and eminent advocate of the country, who became blind at a young age acquired phenomenal memory and argued cases after cases with extraordinary brilliance. He also remained member of Parliament for two decades and did not face any difficulty in discharging his role in that capacity.

The framers of the Constitution recognized the necessity of providing assistance to the physically challenged by making it obligatory for the State, within the limits of its economic capacity and development, to make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. (Article 41).

In Jacob M. Puthuparambil and others v. Kerala Water Authority and others (1991) 1 SCC 28, this Court highlighted the importance of both, Part III and Part IV of the Constitution in the following words:

"The Preamble of our Constitution obligates the State to secure to all its citizens social and economic justice, besides political justice. By the Forty-second Amendment, the Preamble of the Constitution was amended to say that ours will be a socialistic democracy. In furtherance of these promises certain fundamental rights were engrafted in Part III of the Constitution. The Constitution guarantees `equality', abhors discrimination, prohibits and penalises forced labour in any form whatsoever and extends protection against exploitation of labour including child labour. After extending these guarantees, amongst others, the Constitution makers proceeded to chart out the course for the governance of the country in Part IV of the Constitution entitled `Directive Principles of State Policy'. These principles reflect the hopes and aspirations of the people. Although the provisions of this part are not enforceable by any court, the principles laid down therein are nevertheless fundamental in the governance of the country and the State is under an obligation to apply them in making laws. The principles laid down therein, therefore, define the objectives and goals which the State must endeavour to achieve over a period of time. Therefore, whenever the State is required to make laws it must do so consistently with these principles with a view to securing social and economic freedom so essential for the establishment of an egalitarian society. This part, therefore, mandates that the State shall strive to promote the welfare of the people by minimising the inequalities in income and eliminating inequalities in status, facilities and opportunities; by directing its policy towards securing, amongst others, the distribution of the material resources of the community to subserve the common good; by so operating the economic system as not to result in concentration of wealth; and by making effective provision for securing the right to work as also to public assistance in cases of unemployment, albeit within the limits of its economic capacities.

There are certain other provisions which enjoin on the State certain duties, e.g. securing to all workers work, a living wage, just and humane conditions of work, a decent standard of life, participation in management, etc. which are aimed at improving the lot of the working classes. Thus the Preamble promises socio-economic justice, the fundamental rights confer certain justiciable socio-economic rights and the Directive Principles fix the socio-economic goals which the State must strive to attain. These three together constitute the core and conscience of the Constitution."

In last about six decades, the Parliament and State Legislatures have enacted several laws for giving effect to the provisions contained in Part IV of the Constitution but implementation of these legislations has been extremely tardy and intended beneficiaries of such legislations have to struggle hard and, at times, seek intervention of the Court for getting their dues.

In one of her lectures, Dr. Hellen Keller said: Science may have found a cure for most evils; but it has found no remedy for the worst of them all - the apathy of human beings. This appeal is one of many cases illustrative of lack of sensitivity on the part of those entrusted with the task of doing justice on the administrative side which is sine qua non for good governance. The respondent, who suffers from paralysis of lower limbs, has become a victim of constitutionally flawed approach adopted by the officers of South Eastern Railway and has been deprived of her legitimate right to be appointed on a Class III post. The respondent appears to have become so frustrated that even though she succeeded in convincing the High Court to issue a direction to the competent authority to appoint her on a Class III post with retrospective effect, she has not thought it proper to appear and contest this appeal filed against order dated 5.8.2008 passed by the Division Bench of Orissa High Court in O.J.C. No.9958/2001.

In response to notification / advertisement dated 31.1.1987 issued by the office of Railway Divisional Manager, South Eastern Railway, Khurda Road, the respondent applied for appointment as Class III employee. At the relevant time, she possessed the qualification of B.A. (Economics with Hons.) and was registered with Employment Exchange, Pun with registration No.CW/750/87 (Code No.XOI/30).

The competent authority entertained the respondent's application and allowed her to appear in the written test held on 2.7.1989. On being declared successful in the written test, the respondent was called for viva voce test. She was finally selected and her name was placed at serial No. 11 in the merit list.

Notwithstanding this, she was not appointed against one of the advertised posts and those placed at Sl. Nos.12 and 13 were offered appointment. The respondent represented her grievance before the higher authorities of South Eastern Railway, but without success.

She then filed O.A. No. 112 of 1996 in Cuttack Bench of the Central Administrative Tribunal (for short, `the Tribunal'). The Tribunal passed an interim order and made it clear that any future appointment of physically handicapped candidate will be subject to the result of the O.A. During the pendency of the case, the respondent's father was informed by General Manager, South Eastern Railway, Caluctta that his daughter's case would be considered only if the O.A. is withdrawn. Thereupon, the respondent withdrew O.A. No. 112 of 1996. However, her candidature was not considered necessitating filing of O.A. No. 198 of 1997 in which she prayed for issue of a direction to the concerned authorities of South Eastern Railway to appoint her on a class III post. In the counter filed by the appellants herein, it was pleaded that even though the respondent had been selected, she was not offered appointment because her candidature had not been sponsored by any special employment exchange or any ordinary employment exchange.

By an order dated 3.5.2001, the Tribunal dismissed O.A. No.198/1997 by observing that respondent's candidature was not sponsored by any employment exchange. The Tribunal distinguished the judgments of this Court in Excise Superintendent, Malkapatnam, Krishna District, A.P. v. K.B.N. Visweshwara Rao and others (1996) 6 SCC 216 and of the Orissa High Court in Susanta Kumar Kar v. Registrar (Judicial), Orissa High Court, Cuttack, 83(1997) CLT 335 by making the following observations:

"In support of his contention the learned counsel for the petitioner has relied on the decision of the Hon'ble High Court of Orissa in the case of Susanta Kumar Kar vs. Registrar (Judicial), Orissa High Court, Cuttack, 83(1997) CLT 335. In that case, going by the decision of the Hon'ble Supreme Court ion the case of Excise Superintendent, Malkapatnam, Krishna District, Andhra Pradesh vs. KBN Viweshwara Rao and others, 19965 (7) SCC 201, the Hon'ble High Court have held that for the post of Junior Assistant in the High Court of Orissa, compulsory sponsoring arrangement by employment exchange, if insisted upon, affects interests of those candidates who have not been able to register their names or are awaiting to be so registered, and therefore, the opposite parties were directed to consider the cases of those candidates who have applied directly to the High Court. IN the instant case, the respondents in their counter have stated that applications were invited in 1987 and written test held on 2.7.1989 and viva voce was held on 28.8.1989 and 6.11.1989. Thus, the selection process in this was undertaken much before the decision of the Hon'ble Supreme Court and therefore the law as laid down by the Hon'ble Supreme Court in the above case is not applicable to the present case. We accept the above stand of the respondents."

The respondent challenged the aforesaid order in O.J.C. No.9958/2001. The Division Bench of the High Court referred to the pleadings of the parties and observed:

"In view of the aforesaid stand taken by the Railway authority, the averments made by the petitioner remain uncontroverted and are affirmed.

The recruitment process started in the year 1987 through an advertisement and thereafter, written test and viva voce test were held in the year 1989 and the select list of candidates was published on 14.1.1992. It is indeed necessary to note the very sorry state of affairs of the manner in which the authorities concerned are dealing with the life and livelihood of common citizens. It needs to be reiterated that whereas physical handicapped candidates are required to be approached with a more compassionate manner, the authorities seem to have acted in a callous and heartless manner.

Once the petitioner's application was accepted by the authorities and she was allowed to appear in the written and viva voce tests and after name find mention at serial No.11 of the merit list, it was no longer open to the authorities concerned to raise any question relating to petitioner's application for the purpose of dis-entitling her from the benefit of issuing her with an appointment letter. We consider it to be a gross abuse of the statutory power. In the case at hand, the plight of the petitioner is writ large in the averments contained in the writ application and accompanying documents and unfortunately, the utter callous attitude of the authorities are writ large in the counter affidavit filed on behalf of Opp. Party No.5. It is indeed unfortunate that a physically handicapped female candidate who had applied in the year 1989 and more than 20 years have lapsed by now, has been denied appointment by the Railway authorities which is none else, but the Union of India, which is supposed to be an ideal employer."

The Division Bench then referred to the two judgments on which reliance was placed by the respondent and observed:

"It is reiterated herein that once the Court has held that compulsory sponsoring arrangement by Employment Exchange, if insisted upon, affects interest of those candidates who have not been able to register their names or are awaiting to be so registered, the same principle is final and binding on all courts and Judicial Tribunals and would apply fully to any pending case. We are of the view that the Tribunal, in the present case has approached the subject in pedantic manner by treating the aforesaid judgment has only prospective operation even though the challenge was pending before it even after the judgments were pronounced both by the Hon'ble Supreme Court and the High Court. It is averred by the petitioner and not denied by the Opp. Parties that the petitioner had registered her name in the Employment Exchange, Puri and had been granted a Registration number. Apart from it, all necessary certificates in support of her being a handicapped candidate has been appended to her application along with her certificates of educational qualification.

We are of the view that the petitioner satisfied all requirements of the advertisement inviting applications by the Railways and after accepting her application and ultimately preparing a select list which contained her name, not issuing appointment letter to her amounts to travesty of justice."

The Division Bench finally allowed the writ petition in the following terms:

"In view of the discussions made herein above, the writ application is allowed and the order impugned under Annexure-1 is quashed and we direct Opp. Parties 4 and 5 to issue the petitioner with necessary letter of appointment and such appointment shall be given effect to from the date on which her juniors have been given appointment. We further direct that the petitioner shall also be entitled to full back wages and seniority. The letter of appointment be issued to the petitioner within a period of 30 (thirty) days from the date of this judgment and all arrears be computed and paid to the petitioner within a period of six months from today."

Shri Mohan Jain, learned Additional Solicitor General referred to the advertisement issued by the office of Divisional Railway Manager to show that the names of the candidates were required to be sponsored by any special or ordinary employment exchange and argued that the appellants rightly refused to appoint the respondent because her name had not been sponsored by the employment exchange. Learned Additional Solicitor General further argued that even though the application of the respondent was entertained without insisting on sponsoring her name by the employment exchange and her name was included in the merit list, she did not acquire a to be appointed against the advertised post and the High Court committed serious error by ordaining her appointment with retrospective effect along with monetary benefits.

In our opinion, there is no merit in the arguments of the learned Additional Solicitor General. In the first place, we consider it necessary to observe that the condition embodied in the advertisement that the candidate should get his/her name sponsored by any special employment exchange or any ordinary employment exchange cannot be equated with a mandatory provision incorporated in a statute, the violation of which may visit the concerned person with penal consequence. The requirement of notifying the vacancies to the employment exchange is embodied in the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 (for short, `the 1959 Act'), but there is nothing in the Act which obligates the employer to appoint only those who are sponsored by the employment exchange. Section 4 of the 1959 Act, which provides for notification of vacancies to employment exchanges reads as under:

"4(1) After the commencement of this Act in any State or area thereof, the employer in every establishment in public sector in that State or area shall, before filling up any vacancy in any employment in that establishment, notify that vacancy to such employment exchanges as may be prescribed.

(2) The appropriate government may, by notification in the Official Gazette, require that from such date as may be specified in the notification, the employer in every establishment in private sector or every establishment pertaining to any class or category of establishments in private sector shall, before filling up any vacancy in any employment in that establishment, notify that vacancy to such employment exchanges as may be prescribed, and the employer shall thereupon comply with such requisition.

(3) The manner in which the vacancies referred to in sub-section (1) or sub-section (2) shall be notified of the employment exchanges and the particulars of employments in which such vacancies have occurred or are about to occur shall be such as may be prescribed.

(4) Nothing in sub-sections (1) and (2) shall be deemed to impose any obligation upon any employer to recruit any person through the employment exchanges to fill any vacancy merely because that vacancy has been notified under any of those sub- sections."

A reading of the plain language of Section 4 makes it clear that even though the employer is required to notify the vacancies to the employment exchanges, it is not obliged to recruit only those who are sponsored by the employment exchanges. In Union of India v. N. Hargopal (1987) 3 SCC 308, this Court examined the scheme of the 1959 Act and observed:

"It is evident that there is no provision in the Act which obliges an employer to make appointments through the agency of the Employment Exchanges.

Far from it, Section 4(4) of the Act, on the other hand, makes it explicitly clear that the employer is under no obligation to recruit any person through the Employment Exchanges to fill in a vacancy merely because that vacancy has been notified under Section 4(1) or Section 4(2). In the face of Section 4(4), we consider it utterly futile for the learned Additional Solicitor General to argue that the Act imposes any obligation on the employers apart from notifying the vacancies to the Employment Exchanges."

xxx xxx xxx xxx "It is, therefore, clear that the object of the Act is not to restrict, but to enlarge the field of choice so that the employer may choose the best and the most efficient and to provide an opportunity to the worker to have his claim for appointment considered without the worker having to knock at every door for employment. We are, therefore, firmly of the view that the Act does not oblige any employer to employ those persons only who have been sponsored by the Employment Exchanges."

(emphasis supplied) In K.B.N. Visweshwara Rao's case, a three-Judge Bench of this Court considered a similar question, referred to an earlier judgment in Union of India v. N. Hargopal (supra) and observed:

"It is common knowledge that many a candidate is unable to have the names sponsored, though their names are either registered or are waiting to be registered in the employment exchange, with the result that the choice of selection is restricted to only such of the candidates whose names come to be sponsored by the employment exchange. Under these circumstances, many a deserving candidate is deprived of the right to be considered for appointment to a post under the State. Better view appears to be that it should be mandatory for the requisitioning authority/ establishment to intimate the employment exchange, and employment exchange should sponsor the names of the candidates to the requisitioning departments for selection strictly according to seniority and reservation, as per requisition. In addition, the appropriate department or undertaking or establishment should call for the names by publication in the newspapers having wider circulation and also display on their office notice boards or announce on radio, television and employment news bulletins; and then consider the cases of all the candidates who have applied. If this procedure is adopted, fair play would be subserved. The equality of opportunity in the matter of employment would be available to all eligible candidates."

By applying the ratio of the above noted judgments to the case in hand, we hold that the concerned authorities of the South Eastern Railway committed grave illegality by denying appointment to the respondent only on the ground that she did not get her name sponsored by an employment exchange.

The issue deserves to be considered from another angle. It was neither the pleaded case of the appellants before the Tribunal and the High Court nor any evidence was produced by them to prove that notification/advertisement dated 31.1.1987 was sent to all the employment exchanges including the special employment exchanges in the State of Orissa. Before this Court also, no document has been produced to show that the advertisement was circulated to the employment exchanges in the State. In this backdrop, it is not possible to approve the stance of the appellants that the respondent was not appointed because she did not get her candidature sponsored by an employment exchange.

We also agree with the High Court that once the candidature of the respondent was accepted by the concerned authorities and she was allowed to participate in the process of selection i.e., written test and viva voce, it was not open to them to turn around and question her entitlement to be considered for appointment as per her placement in the merit list on the specious ground that her name had not been sponsored by the employment exchange.

In our considered view, by denying appointment to the respondent despite her selection and placement in the merit list, the appellants violated her right to equality in the matter of employment guaranteed under Article 16 of the Constitution.

However, there is a small aberration in the operative part of the impugned order. While the High Court was fully justified in directing the appellants to appoint the respondent from the date persons lower in merit were appointed, but it is not possible to confirm the direction given for payment of full salary with retrospective effect. In our view, the High Court should have directed the appellants to notionally fix the pay of the respondent with effect from the date person placed at Sl. No.12 at the merit list was appointed and give her all monetary benefits with effect from that date.

In the result, the appeal is dismissed. However, the operative part of the impugned order is modified in the following terms:

(1) The concerned competent authority of the South Eastern Railway shall, within a period of two weeks from today, issue order appointing the respondent on a Class III post. The appointment of the respondent shall be made effective from the date person placed at Sl. Nos.12 in the merit list was appointed. The pay of the respondent shall be notionally fixed with effect from that date and she shall be given actual monetary benefits with effect from 5.9.2008 i.e., the date specified in the order passed by the High Court.

(2) The pay of the respondent shall also be fixed in the revised pay scales introduced from time to time and she be paid arrears within a period of four months.

(3) The seniority of the respondent among Class III employees shall be fixed by placing her below the person who was placed at Sl. No.10 in the merit list.

(4) If during the intervening period, any person junior to the respondent has been promoted on the next higher post, then her candidature shall also be considered for promotion and on being found suitable, she shall be promoted with effect from the date any of her junior was promoted and she be given all consequential benefits.

(5) The General Manager, South Eastern Railway is directed to ensure that the respondent is not victimised by being posted in a remote area.

(6) Since the respondent has been deprived of her rights for almost 21 years, we direct the appellants to pay her cost of Rs.3,00,000/-. The amount of cost shall be paid within 2 months from today.

The Divisional Railway Manager, South Eastern Railway, Khurda Road shall send compliance report to this Court on or before 22nd November, 2010. The Registry shall bring the report to the notice of the Court by listing the case on judicial side.

Copies of this order be sent to General Manager, South Eastern Railway, Garden Reach, Calcutta, Divisional Railway Manager (P), Khurda Road, Jatni, District Khurda and respondent, Miss Pritilata Nanda, D/o Mr. Nityananda Nanda, Nanda Nivas-II, Dutta Tola, Post Office/District - Puri, Orissa.

........................................J. [G.S. Singhvi]

...........................................J. [Asok Kumar Ganguly]

New Delhi July 16, 2010.

Consumer - Deficiency in service – Loan disbursement

M.D., Maharashtra State Finan.Corp. & Ors. Vs. Sanjay Shankarsa Mamarde (2010) 7 SCC 489 [9 July 2010]

Judgment

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7189 OF 2002 Managing Director, -- Appellants Maharashtra State Financial Corporation & Ors.

VERSUS Sanjay Shankarsa Mamarde -- Respondent

D.K. JAIN, J.:

1.     Challenge in this appeal, filed under Section 23 of the Consumer Protection Act, 1986 (for short "the Act"), by the Maharashtra State Financial Corporation (hereinafter referred to as "the Corporation"), is to the final order, dated 7th January, 2002, passed by the National Consumer Disputes Redressal Commission, New Delhi (for short "the Commission") in Original Petition No. 9 of 1995. By the impugned order, the Commission has accepted the complaint preferred by the respondent (hereinafter referred to as "the complainant") against the Corporation and has directed the Corporation to pay to the complainant an amount of Rs.4,84,457/- as compensation, within a period of two months from the date of the order and in case of default, to pay interest at the rate of 18% per annum from the date of order till actual payment.

2.     Succinctly put, the material facts giving rise to the present appeal are as follows:

The complainant approached the Corporation for sanction of loan for his hotel project at Amravati. As per the project report, the capital outlay was of Rs.74.45 lakhs. The means of finance envisaged in the project report were as follows:

i) Proprietor's capital : Rs.16.80 lakhs ii) Term loan from : Rs.30.00 lakhs Corporation iii) Special Capital : Rs.21.30 lakhs Incentive from SICOM iv) Unsecured loans : Rs. 6.35 lakhs Total : Rs.74.45 lakhs 2 3.The Complainant's loan proposal was approved by the Executive Committee of the Corporation on 27th May, 1992, sanctioning a term loan of Rs.30 lakhs to the complainant. Accordingly, a sanction letter along with terms and conditions of the loan was issued to the complainant on 2nd July, 1992.

3.     The material conditions of loan were as follows:

"(a) The loan shall be utilised exclusively for the project as per the scheme approved by MSFC and the specific purposes for which the same is sanctioned.

(b) The loan shall be disbursed by MSFC in one lump sum or in installments as and when the said purposes are fulfilled or at the entire discretion of the Corporation or may be refused if in the opinion of the Corporation, the purpose for which the full loan has been sanctioned are not properly fulfilled.

(c) The loan will be disbursed either for acquisition of fixed assets under the said scheme or for reimbursement of funds utilised for acquisition of fixed assets taken for security under the said scheme.

(d) A minimum margin of 55% over all on fixed assets shall be maintained during the currency of the loan.

(e) The loan shall be repaid within a period of 8 years by 13 half yearly installments commencing from the end of 2nd year of disbursement of the first installment of the loan. The amount of each installment repayable being about 1/13 of the amount sanctioned regardless of the amount disbursed.

(f) The interest shall be charged @ 22% p.a. and the same shall be payable quarterly on the total loan and the same shall be charged from the date of disbursement of first installment of the loan."

Additionally, it was also agreed that the loan amount would be disbursed depending on the progress of the work in accordance with a set time schedule. The progress of the construction work was required to be evaluated by the valuer approved by the Corporation.

4.     The said conditions were accepted by the complainant.

Pursuant to complainant's request vide his letter dated 2nd 4 September, 1992, undertaking to bring entire 100% capital;

filing his banker's confirmation for grant of bridge loan against subsidy i.e. (SCI) and load sanction letter from MSEB, before availing of the next disbursement, the first installment of the loan of Rs.2,90,000/- was released by the Corporation to the complainant. On the same day, the complainant issued a cheque in the sum of Rs.30,000/- towards up-front fees to the Corporation. However, the said cheque of Rs.30,000/- was dishonoured when presented for payment. By their letter dated 15th December, 1992, the Corporation intimated the complainant that despite the release of first installment of Rs.2.90 lakhs, he had neither submitted papers for further disbursements nor reported progress of the project and had also failed to submit Chartered Accountant's certificate showing his investment. Subsequently, a valuation report dated 7th January 1993, showing that a total amount of Rs.6,97,057/- (Rs.5,02,099/- as per previous valuation + Rs.1,94,958/- as per present valuation) had been spent on the construction of the hotel was filed by the complainant.

According to the Corporation, despite the fact that the complainant had failed to submit complete documents, second 5 installment of Rs.87,000/- was released to him on 19th January 1993, after adjusting therefrom the amount of interest due in terms of the conditions of loan.

5.     Vide their letter dated 5th March, 1993, the Corporation requested the complainant to inform them about the progress of the project and avail the balance loan limit by submitting valuation report, Chartered Accountant's certificate towards further investment made by him for creation of fixed assets.

According to the Corporation, since they had learnt that there was a proposal for laying a railway line between Amravati and Narkhed which was likely to affect the hotel project and the complainant had also defaulted in payment of interest despite repeated requests by them vide their letters dated 10th December 1993 and 24th February, 1994, they did not release further installments of the loan sanctioned to the complainant.

On the contrary, the stand of the complainant was that although by June 1993, he had spent Rs.27,25,510/- but no evaluation was done by the valuer of the Corporation and all his request for release of further installments fell on deaf ears.

All the time, the Corporation insisted on a written assurance 6 from the railway authorities that the proposed Amravati and Narkhed railway line would not be passing through the hotel project site, before releasing the balance loan amount.

6.     Finally, vide their letter dated 5th September, 1994, the Corporation informed the complainant that the entire balance unavailed term loan of Rs.26.23 lakhs had been treated as cancelled. The said intimation was followed by a legal notice dated 18th October, 1994 by the Advocate of the Corporation, wherein it was alleged that the complainant had failed to pay the interest on the amount already disbursed to him; as on 31st March, 1994 he was in arrears by more than Rs.1 lakh as interest and he had also failed to give any alternative proposal for the hotel project as the project at the existing site was likely to be affected by new railway track from Amravati to Narkhed. The complainant was called upon to repay the entire loan amounting to Rs.5,19,726/-, the outstanding amount as on 23rd September,1994, within fifteen days from the date of receipt of the said notice.

7.     It appears from the impugned order that by his letter dated 15th September 1994, the complainant protested to the recall 7 of loan sanctioned to him. It is stated that the complainant pointed out that though a number of installments of the loan had fallen due to be paid to the complainant, it was only as late as on 29th July, 1994, that he was asked to submit a letter from the competent authority regarding the status of the railway line and that he promptly submitted a certificate issued by the Commissioner, Amravati Division affirming that there was no proposal of Amravati - Narkhed line.

8.     Having failed to get any favourable response from the Corporation, on 17th January 1995, the complainant filed a complaint with the Commission. It seems that during the pendency of the complaint before the Commission, the Corporation retraced their steps and proposed to renew the loan on certain conditions, which were not acceptable to the complainant.

9.     As already stated, the Commission has accepted the complaint and has come to the conclusion that there was no justifiable ground for the Corporation to deny disbursement of loan to the complainant. According to the Commission, having sanctioned the loan and then stopping its 8 disbursement without any cause amounted to deficiency in service on the part of the Corporation. However, keeping in mind the passage of time, the Commission did not find it expedient to direct the Corporation to release further installments of the loan, sanctioned as far back as in July 1992.

10.  Being aggrieved by the award of compensation, the Corporation has preferred this appeal.

11.  We have heard Mr. Santosh Paul, learned counsel appearing for the Corporation and Mr. Manish Pitale, learned counsel appearing for the complainant.

12.  Learned counsel appearing for the Corporation submitted that in the instant case there was no deficiency in service as defined in Section 2(g) of the Act. The learned counsel argued that the Commission has exceeded its jurisdiction in examining the administrative decision of the Corporation to recall the loan as it felt that having regard to the past conduct of the complainant it was not in the interest of the Corporation to disburse the balance amount of loan to him. Relying on the 9 Naini Oxygen & Acetylene Gas Ltd. & Anr.1, it was submitted that unless the action of the Corporation was held to be mala fide, even a wrong decision taken by it was not open to challenge as it is not for the Courts or a third party to substitute its decision, however more prudent, commercial or businesslike it may be, for the decision of the Corporation.

Reliance was also placed on another decision of this Court in & Anr.2, to contend that in commercial matters the Court should not risk their judgments for the judgments of the bodies to whom that task is assigned. It was asserted that since the Corporation was of a bona fide belief that the entire hotel project of the complainant may get affected because of the proposed railway line and further there were defaults on the part of the complainant to discharge his liability towards quarterly installments of interest, the decision of the Corporation not to disburse further installments cannot be termed as mala fide or unreasonable and, therefore, there was no question of any deficiency in the service of the Corporation towards the complainant.

1 (1995) 2 SCC 754 2 (2002) 3 SCC 496 10

13.  Supporting the impugned judgment, learned counsel appearing for the complainant, on the other hand, submitted that in the absence of any stipulation in the conditions of loan for stopping the disbursement on account of default in the payment of interest on time, the action of the Corporation in not releasing the remaining installments on the stipulated dates not only affected the hotel project, it also caused a huge loss to the complainant as he was deprived of the special capital incentive by SICOM. It was argued that the non release of the installments on the specious plea that there was a proposal for a railway line was mala fide inasmuch as there was no such proposal.

14.  The short question arising for consideration is whether the Commission was correct in holding that there has been deficiency in service provided by the Corporation to the complainant on account of their failure to release the balance loan amount?

15.  Clause (o) of Section 2 of the Act defines "service" to mean:- 11 "service" means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;"

The use of the words `any' and `potential' in the context these have been used in clause (o) indicates that the width of the clause is very wide and extends to any or all actual or potential users. The legislature has expanded the meaning of the word further by extending it to every such facilities as are available to a consumer in connection with banking, financing etc.

Undoubtedly, when the bank or financial institutions advance loans, they do render `service' within the meaning of the clause.

In that behalf, there is no dispute.

16.  "Deficiency" under clause (g) of Section 2 of the Act means:- "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been 12 undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;"

It is manifest from the language employed in the clause that its scope is also very wide but no single test as decisive in the determination of the extent of fault, imperfection, nature and manner of performance etc. required to be maintained can be laid down. It must depend on the facts of the particular case, having regard to the nature of the `service' to be provided.

17.  Therefore, in so far as the present case is concerned, in order to examine whether there was a deficiency in service by the Corporation, it has to be seen if there was any inadequacy in the quality, nature and manner of performance which was required to be maintained by the Corporation in terms of their letter dated 2nd July, 1992, conveying the sanction of loan to the complainant. As noted above, the Corporation was obliged to disburse to the complainant a loan of Rs.30 lakhs in installments on complainant's furnishing the progress report of the project. Although, no specific information with regard to the actual dates for release of the installments of the loan amount are forthcoming, yet it can be gathered from the 13 correspondence on record that the loan amount was to be disbursed periodically (perhaps half yearly), on the basis of the report of the approved valuer on the progress of the project. It is evident from Corporation's letters dated 5th March, 1993, 10th December, 1993, 24th February, 1994 and 29th July, 1994 that the complainant not only failed to furnish the progress report, he also did not discharge his liability towards interest, as demanded from him from time to time. As already stated, even the cheque in the sum of Rs.30,000/- issued by the complainant to the Corporation on 2nd September, 1992 towards up-front fee was returned unpaid by his bankers. In Corporation's letter dated 24th February, 1994 it was alleged that the complainant had not only failed to pay interest, it was also found on inspection on couple of occasions by the Regional Manager that during the last four months there was no further progress in implementation of the project. It is significant that these allegations and details of interest due from the complainant had not been seriously disputed by the complainant either before the Commission or in the counter affidavit filed by him in this appeal. In the background of the factual scenario as emerging from the material on record, we 14 are convinced that there was no shortcoming or inadequacy in the service on the part of the Corporation in performing its duty or discharging its obligations under the loan agreement.

The Corporation was constrained not to release the balance installments and recall the loan on account of stated defaults on the part of the complainant himself. Non release of loan amount was not because of any deficiency on the part of the Corporation but due to complainant's conduct and therefore, the failure of the Corporation to render `service' could not be held to give rise to claim for recovery of any amount under the Act.

18.  We also find substance in the contention of learned counsel for the Corporation that unless the action of a financial institution is found to be mala fide, even a wrong decision taken by it is not open to challenge, as the wisdom of a particular decision is normally to be left to the body authorized Oxygen & Acetylene Gas Ltd. & Anr. (supra) this Court had observed that a Corporation being an independent autonomous statutory body having its own constitution and rules to abide 15 by, and functions and obligations to discharge, in the discharge of its functions, it is free to act according to its own right. The views it forms and the decisions it takes would be on the basis of the information in its possession and the advice it receives and according to its own perspective and calculation. In such a situation, more so in commercial matters, the court should not risk their judgments for the judgments of the bodies to which that task is assigned. It was held that: (SCC p. 761, para 21) "Unless its action is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the courts or a third party to substitute its decision, however more prudent, commercial or businesslike it may be, for the decision of the Corporation. Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable".

19.  Having considered the matter in the light of the correspondence exchanged between the Corporation and the complainant, we have no hesitation in holding that there has not been any deficiency in the service the Corporation was required to provide to the complainant. In our opinion, the Commission was not correct in coming to the aforestated conclusion. We are of the view that the complainant being 16 himself a defaulter right from inception of his dealing with the Corporation, when his cheque in the sum of Rs. 30,000/- got dishonoured, coupled with persistent defaults in discharging his liability to the Corporation towards interest, despite repeated demands, he cannot be permitted to plead at the later stage that he suffered on account of deficiency in service by the Corporation because of non-disbursement of balance installments of loan by them. As was observed by this Court in Jagdamba Oil Mills (supra), while not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness. Fairness cannot be a one-way street. Where the borrower has no genuine intention to repay and adopts pretexts and ploys to avoid payment like in the present case, he cannot make the grievance that the Corporation was not acting fairly, even if requisite procedures have been followed.

20.  For the foregoing reasons, we allow the appeal; set aside the order passed by the Commission and dismiss the complaint filed by the complainant. Amount deposited in terms of order dated 19th July, 2004 shall be released to the Corporation on 17 maturity of the fixed deposit. There shall, however, be no order as to costs.

..................................J. (D.K. JAIN)

..................................J. (H.L. DATTU)

NEW DELHI;

JULY 9, 2010.