Holding

Allocation of the erstwhile Punjab State Electricity Board employees must be done under Section 67(3) of the Punjab Re‑organisation Act, 1966, and they were on deputation to Chandigarh, not absorbed by its administration.

Summary

The Electricity Employment Union and two employees challenged the Central Administrative Tribunal's finding that, after the Punjab Re‑organisation Act, 1966, their services were allocated to the Punjab State Electricity Board and they were merely on deputation to the Union Territory of Chandigarh. They argued that Section 83 of the Act deemed them absorbed by Chandigarh and that letters from the Government of India constituted binding directions under Sections 67(3) or 84. The Supreme Court held that the allocation of employees of the erstwhile Punjab State Electricity Board could only be effected under Section 67(3) of the Act, not under Sections 82, 83 or 84, and that the letters were merely expressions of opinion, not statutory directions. Consequently, the employees remained on deputation to Chandigarh and were not absorbed into its administration. The Court dismissed the appeals and ordered each party to bear its own costs.

Issues considered

Whether the services of employees of the erstwhile Punjab State Electricity Board should be allocated under Section 67(3) of the Punjab Re‑organisation Act, 1966, or under Sections 82, 83 or 84.
Whether letters from the Government of India constitute directions under Section 67(3) or Section 84 of the Act.
Whether Section 83 can deem employees absorbed by the Union Territory of Chandigarh merely because they were working there on the appointed day.

Legislation cited

Electricity (Supply) Act, 1948

Subjects

Punjab Re‑organisation Actemployee allocationdeputationSection 67Section 82Section 83Section 84Union Territory of Chandigarhservice lawCentral Administrative Tribunal

Judgment

ELECTRICITY EMPLOYMENT UNION ETC. A
v.
UNION OF INDIA AND ORS.

AUGUST 29, 2000

[V.N. KHARE AND S.N. PHUKAN, JJ.] B

Service Law:

Punjab Re-organization Act, 1966-Sections 67, 82, 83 and 84-
Erstwhile State of Punjab split into States of Punjab and Haryana and Union C
Territories of Chandigarh and Himachal Pradesh-Employees of erstwhile
Electric fly Board working in Union Territory of Chandigarh-Held, services
of employees are allocated to Punjab State Electricity Board working on

-- deputation in the Union Territory.

The erstwhile State of Punjab was split into States of Punjab and
D

Haryana and Union Territories of Chandigarh and Himachal Pradesh (which
subsequently became a State) with the passing of Punjab Re-organization Act,
1966. However, the erstwhile Punjab State Electricity Board continued to
function in the successor States. Subsequently, a new State Electricity Board E
was constituted by the successor State of Punjab. Appellants were employees
of the erstwhile Board wgrking in Union Territory of Chandigarh. The
appellants claimed that with the passing of the Act, their services were deemed
to be allocated to the Union Territory under Section 83 of the Act The Central
Administrative Tribunal rejected the claims of the appellants and held that as
per the agreements entered into among the successor States under section F
67(3) of the Act, their services were allocated to the Board of State of Punjab
and that they were working on deputation in the Union Territory.

In appeal to this Court, the appellants contended that their services were
deemed to have been absorbed under the administration of the Union Territory
as they were working there on the date of re-organisation in view of section G
83 of the Act; that certain letters exchanged between the Government oflndia
and the Union Territory indicate that there were directions to treat the
employees of the erstwhile State of Punjab as employees of the Union
Territory, which are binding; that such directions were deemed to be issued
under Section 84 of the Act. H
2 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A <Respondents contended that a.s per.the report of the Committee, which
was constituted for appointment of staff and posts of the erstwhile Punjab State ......
Electricity Board among the successor States, the persons who were posted
in the Union Territory should be allowed to continue on deputation.

B
Dismissing the appeals, the Court

HELD: 1.1. The Government oflndia, by a letter, only conveyed the
opinion of the Law Ministry and asked for the views of the Union Territory of
.
-
Chandigarh. In view of the language of the letter, it cannot be treated as
direction issued under section 67(3) of the Punjab Reorganisation Act. This '""'
letter shows that the appellants were on deputation to the Union Territory of
c Chandigarh which demolishes the contention of the appellants that they have
been absorbed by the Union Territory of Chandigarh. Moreover as within one
year, there was an agreement regarding allocation of employees of the
erstwhile Punjab State Electricity Board between the successor States, the

D
Government of India could not have exercised the power of issuing direction
as envisaged under section 67(3) of the Act. Such allocation of employees of
the erstwhile Punjab State Electricity Board could be done only urider section
-
67(3) and not under Section 82 of the Act and no direction could be issu.ed by
the Central Government in respect of such employees under the above section.
[10-F-H; 11-A)

E 1.2. The object of Section 83 of the Act was to allow the holder of any ..
post or office in the erstwhile State of Punjab to continue to discharge the
function of the said post or office on the date the successor States were formed,
,_
otherwise for every such post or office it would have been necessary for the
successor States to pass orders re-appointing the holder of the post or office
to continue to discharge his function. The members of the erstwhile Punjab
F
State Electricity Board cannot claim deemed absorption under this ~ection
• merely because on the date the successor States were formed, they were
working within the geographical limits of the Union Territory of Chandigarh.
[11-D-E]

G Mohd. Yakub v. The Union of India & Ors., AIR (1971) Delhi 45 FB,
relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 10705 of 1996.

From the Judgment and Order dated 17.7.95 of the Central administrative
H Tribunal, Chandigarh in O.A No. 580-Ch. of 1986.
ELECTRICITY EMPLOYMENT UNION v. U.0.1. [PHUKAN, J.) 3
WITH A
./
Civil Appeal No. 10706of1996.
WITH

- Civil Appeal No. 10707of1996.

P.P. Rao, Ashok Sharma, K.R Nambiar, Ashok Kumar Sharma Nabhewal,
R.D. Upadhyay, Srinath Singh, B.M. Sharma, T.N. Singh, Ms Kamini Jaiswal,
B

K.C. Pandey, Arvind Singh, A.P. Chhabra, Harinder Mohan Singh, K.V.
Viswanathan, Ms. S. Janani and R.S. Sodhi for the appearing parties.

._. The Judgment of the Court was delivered by
c
PHUKAN, J. These three appeals are directed against the judgment
dated 17th July 1995 of the Central Administrative Tribunal, Chandigarh.
Three applications fil<:d before the Tribunal by the Electricity Employment
~

/ Union, Shri Bal Krishan and Shri Harjinder Singh Brar were disposed of by
the common judgment as the question of fact and law were same. The D
Tribunal dismissed all the three applications and hence these appeals.

By the Punjab Recognization Act, 1966 (for short 'the Act') the erstWhile
State of Punjab was reorganised and the successor States were States of
Punjab and Haryana, Union Territories of Chandigarh and Himachal Pradesh,
which subsequently became a State. The erstwhile Punjab State Electricity E
Board continued to function in the areas in which it was functioning before
the reorganisation of the State of Punjab. Subsequently a new State Electricity
Board (for short 'Board') was constituted by the successor Stllte of Punjab
and it is not disputed that the members of the appellant Electricity Employment
Union and other two appellants were employees of the erstwhile Board. The
claim of the present appellants is that as on the date the successor State of F
Punjab was formed they were working within the geographical limits of the
Union Territory of Chandigarh, their services were deemed to have been
allotted to the said Union Territory by operation of the provisions of the Act.
It may be stated that Union Territory of Chandigarh did not constitute a
separate Board under the Electricity Supply Act of 1948 and functions of the G
Board were being carried on by the department of the administration. The
Tribunal did not accept the said contentions and held that by virtue of the
provisions of the Act their services were allotted to the Board and were
working on deputation under the Union Territory of Chandigarh.

We have heard Mr. P.P. Rao, learned senior counsel for the appeJJants H
4 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A and Ms. Kamini Jaiswal, learned counsel for the respondents.
For appreciating the contention of the parties, we may refer to the
relevant provisions of the Act. For the present purpose, parts VI, VII & IX
of the Act are relevant.

·B Part VI of the Act deals· with apportionment of assets and liabilities of
the erstwhile State of Punjab.

Part VII deals with certain Corporations. Sec. 67 which is relevant for
our purpose and is quoted below:-
c "67 Provisions as to certain Corporations-( I) The following bodies
corporate constituted for the existing State of Punjab, nainely:

(a) the State Electricity Board constituted under the Electricity Supply
Act 1948; and
D (b) the State Warehousing Corporation established under the
Warehousing Corporations Act, 1962.
shall, on and from the appointed day, continue to function in those
areas in respect of which they were functioning immediately before
that day subject to the provisions of this section and to such directions
E as may, from time to time, be issued by the Central Govt.
(2) Any directions issued by the Central Govt. under sub-section (I)
· in respect of the Board or the Corporation may, include a direction
that the Act under which the Board or the Corporation was constituted
shall, in its application to that Board or Corporation, have effect
p subject to such exceptions and modifications as the Central Govt.
thinks fit.
(3) The Board or the Corporation referred to in sub-section (I) shall
cease to function as from, and shall be deemed to be dissolved on,
the 1st day of November, 1967, or such earlier date as the Central
Govt. may, by order, appoint, and upon such dissolution, its assets,
G
rights and liabilities shall be apportioned between the successor
States in such manner as may be agreed upon among them within
· one year of the dissolution of the Board or the Corporation, as the
case may be, or if no agreement is reached, in such manner as the
Central Govt. may, by order, determine.
H (emphasis supplied)
ELECTRICITY EMPLOYMENT UNION v. U.0.1. [PHUKAN, J.] 5
(4) Nothing in the proceeding provisions of this section shall be A
construed as preventing the Government of any of the successor
States from constituting at any time on or after the appointed day, a
State Electricity Board or a State Warehousing Corporation for that
State under the provisions of the Act relating to such Board or
Corporation; and if such a Board or a Corporation is so constituted B
in any of the successor States before the dissolution of the Board or
the Corporation referred to in sub-section ( l ), -
(a) provision may be made by order of the Central Govt. enabling the
new Board or the new Corporation to take over from the existing
Board or Corporation all or any of its undertakings, assets, rights C
and liabilities in that State, and
(b) upon the dissolution of the existing Board or Corporation, any
assets, rights and liabilities which would otherwise have passed
to that State by or under the provisions of sub-section (3) shall
pass to the new Board or new Corporation instead of to that
State." D
In Part IX, legislature has made provisions for allocation of members of
All India Services and other services who were serving in connection with
the affairs of the erstwhile State of Punjab. It will be pertinent to reproduce
relevant provisions, namely, Sections 82, 83 and 84.
E
"82 Provisions relating to other Services - (1) Every person who
immediately before the appointed day is serving in connection with
the affairs of the existing State of Punjab shall, on and from that day
provisionally continue to serve in connection with the affairs of the
State of Punjab unless he is required, by general or special order of F
the Central Govt., to serve provisionally in connection with the affairs
of any other successor State.

(2) As soon as may be after the appointed day, the Central Govt. shall,
by general or special order, determine the successor State to which
every person referred to in sub-section (I) shall be finally allotted for G
service and the date with effect from which such allotment shall take
effect or be deemed to have taken effect."

"83. Provisions as to continuance of officers in the same posts-
Every person who immediately before the appointed day is holding or
discharging the duties of any post or office in connection with the H
6 SUPREME COURT REPORTS [2000) SUPP. 3 S.C.R.

A affairs of the existing State of Punjab in any area which on that day
falls within any of the successor States shall continue to hold the
same post or office in that successor State and shall be deemed, on
and from that, to have been duly appointed to the post or office by
the Govt. of, or other appropriate authority in that, successor State:

B Provided that nothing in this section shall be deemed to prevent a
competent authority on or after the appointed day from passing in
relation to such person any order affecting his continuance in such
post or office."

"84. Power of Central Government to give directions-The Central
c Government may give such directions to the State Govt. of Punjab and
Haryana and to the Administrators of the Union Territory ofHimachal
Pradesh and Chandigarh as may appear to it to be necessary for the
purpose of giving effect to the foregoing provisions of this Part and
the State Government and the Administrators shall comply with such
directions."
D
The Administrative Tribunal held that the allocation of the employees
of the erstwhile State of Punjab among the successor States would be governed
by sub-section (3) of Sec. 67 of the Act. Relying on the documents produced
before the Tribunal by the respondents, it was held that there was an agreement
E among the successor States regarding such allocation including the present
appellants and by virtue of the said agreement, the present appellants were
allocated to the Board and they were allowed to continue to work on deputation
under the administration of Union Territory of Chandigarh. It is not disputed
that erstwhile Punjab State Electricity Board was dissolved on 2nd May, 1967
and the present Board was constituted 011 the same day. According to the
F Tribunal, the above agreement of allotment of the employees were arrived at
within one year from the above date i.e. 2nd May, 1967 as required underc sub-
section (3) of Sec. 67 of the Act and, therefore, rejected the contentions of
the appellants that the Central Government could issue directions for allotment
of the employees under sub-section (3) of Sec. 67.

G First point to be decided is whether allocation of the services of the
employees of the erstwhile Punjab State Electricity Board was to be done
under Sec. 67 as held by the Tribunal or under Sec. 82 of the Act or deemed
to have been allocated to Union Territory of Chandigarh under other provisions
of the Act, as urged by Mr. Rao, learned senior counsel for the appellants.

H The Union Territory of Chandigarh is a successor State as defined in
ELECTRICITY EMPLOYMENT UNION v. U.0.1. [PHUKAN, J.] 7
Sec. 2(m) read with Sec. 2(n) of the Act. A
Part VI of the Act as stated above deals with apportionment of assets
and liabilities of the erstwhile State of Punjab. This part is not applicable for
apportionment of assets and liabilities of the existing Punjab State Electricity

- Board, as there is specific provision for this purpose viz. Sec. 67 and moreover
the Board has a separate legal entity. B

According to sub-section (3) of Sec 67 of the Act assets, rights and
liabilities of the erstwhile Punjab State Electricity Board shall be apportioned
between successor States in such manner as may be agreed upon within one
year of the date of dissolution of the erstwhile Board, failing which Central C
Government was empowered to determine apportionment of such assets,
rights and liabilities. As there is no other specific provision in the Act for
allocation of the services of the employees of the erstwhile Punjab State Electricity
Board, whether under this sub-section such allocation could be done?

This question was considered by Delhi High Court in Mohd. Yakub v. D
The Union of India and Others, AIR (1971) Delhi 45. A Division Bench of
Delhi High Court referred the following two questions to the Full Bench,
namely:-

"(1) Whether the employees of the Punjab State Electricity Board are
persons serving in connection with the affair of the Punjab State who E·
could be allocated to the successor States under Sec. 82 of the Punjab
Reorganisation Act.

(2) Whether the employees of the said Board constituted its assets
or liabilities which were liable to be apportioned between the successor
States under sub-sections (3) and (4) of Sec. 67 of the Punjab F
Recognisation Act."

The Full Bench replied the question No. 2 in the affirmative. The Full Bench
speaking through the Chief Justice Khanna (as he was then) considered the
word 'liability' occurring in sub-section (3) of Sec. 67 with reference to the G
dictionary meaning and held as follows:

"Keeping the above connotation of the word "liability" in view, we
have no doubt in our mind that the employment of the employees of
the Electricity Board did constitute the liability of the Electricity Board.
The services of the employees of the Electricity Board like respondents H
8 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A 4 to 6 having not been terminated by the Board they had a right to
be retained in the employment of the Board and this fact created a
corresponding liability of the Board to keep them in employment. This
liability in terms of sub-section (3) of Section 67 of the Punjab
Reorganisation Act, had to be apportioned between the successor
States as has been done in the present case."
B
The contention raised that the word 'liability' as used in Sec. 67 has reference
to only those liabilities which are mentioned in Part VI of the Act, was
rejected. The word 'liable' referred to in that part are of public debts, refund
of taxes collected in excess, deposits, provident fund, pension and those
C arising out of contracts and actionable wrongs.

In view of the above answer to question No. 2, the Full Bench was of
the opinion that it was not necessary to answer question No. I and in other
words Sec. 82 of the Act would not apply for allocation of the services of
the employees of the erstwhile Punjab State Electricity Board.
D
We are of the opinion that the views expressed by the Full Bench that
allocation of services of the employees of the erstwhile Punjab State Electricity
Board among the successor States could be done under sub-section (3) of
Sec 67 and not under Sec. 82 of the Act are correct.

E Mr. Rao, learned senior counsel has urged that State Electricity Board
being an instrumentality of the State the employees of the Board should be
treated as persons serving in connection with the affairs of the erstwhile State
of Punjab and, therefore, their services could be allocated among the successor
States under Sec. 82 of the Act. This contention needs no consideration in
F view of our above decision.

A committee was constituted for apportionment of the staff and posts
of the erstwhile Punjab State Electricity Board among the successor States.
The decisions of the Committee which are relevant for the present appeals are
extracted below:
G
"I. For the Union Territory of Chandigarh, staff may be found by
deputation from Punjab & Haryana. For the present the existing staff
posted there should be allowed to continue on available posts.

2. For assessing requirements of staff for each territory, it was decided
H that reliance may be placed on the following principles:-
ELECTRICITY EMPLOYMENT UNION v. U.0.1. [PHUKAN, J.] 9

(1) All existing posts which are solely concerned with the affairs of A
the particular State/Territory shall be allocated to the concerned
State/Territory.

(2) The Committee has accordingly allocated to the following
categories of staff to the Boards of Punjab & Haryana States and
to Himachal Pradesh:- B
(a) All Gazetted Officers.

(b) All Non-Gazetted Head Office Staff.

(c) Non-Gazetted Circle Cadre Staff engaged in common works. C
Separate lists of staff allocated to Punjab & Haryana Boards and
Himachal Pradesh, category wise, are added."

The representatives of the Government of India and the successor
States who were members of the Committee signed the above minutes. D

The decision of the Committee regarding allocation of staff to the Union
Territory of Chandigarh was that the persons who were posted within the
geographical area of the Union Territory of Chandigarh were allowed to
continue on deputation and in future other members of the staff would be
found by deputation from the Electricity Board of the States of Punjab and E
Haryana.

According to Mr. Rao the above decisions were not acted upon and,
therefore, there was no. allocation of staff. Our attention was drawn by the
learned counsel for the respondent to the letter of April, 1968 (Annexure R- F
II annexed to the counter) from the Secretary, Punjab State Electricity Board,
Patiala to the Chief Engineer of Union Territory Administration, Chandigarh.
By the said letter a copy of the above report of the Committee was sent to
the Chief Engineer and his attention was also drawn that the lists showing
the allocation of members of the staff of erstwhile Board made by the above
Committee to Electricity Boards of Punjab and Haryana were forwarded to him G
by letter dated 28th September, 1967 (Annexure R-V annexed to the counter)
for notifying the allocations to all concerned for inviting representations, if
any. He was also informed that all posts whether vacant or newly created
under the Chandigarh Administration were to be filled up by taking persons
on deputation in the ratio indicated in the letter.
H
10 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A The above correspondences have established that the decisions taken
by the Committee were duly acted upon and as urged on behalf of the
respondents, appellants were allocated to the Punjab State Electricity Board
and they were allowed to work on deputation under the Administration of
Union Territory of Chandigarh.

B Our attention was drawn by Mr. Rao to the letter dated I I th Feb. 1982
from the Ministry of Home Affairs to the Home Secretary, Union Territory
Chandigarh. By this letter, the Govt. of India conveyed the views of the .
Ministry of Law, Government of India that employees of the erstwhile State
of Punjab allocated to the successor States including the Union Territory of
C Chandigarh were wrongly treated as on deputation as they were to be absorbed
by the administration as employees of the Union Territory of Chandigarh. By
this letter only the views of the Union territory administration were sought
for. Our attention was also drawn to the letter dated 14th Oct. 1983 from the
Home Secretary, Union Territory Administration, Chandigarh to Chief Engineer
by which attention of the Chief Engineer was drawn to the above letter of the
D Government of India dated I I th Feb. I 982 and he was requested to inform the
Home Department regarding steps taken. Drawing our attention to the provision
of sub-section (3) of Sec. 67 Mr. Rao learned senior counsel has urged that
these directions given by the Government of India under the above provisions
of the Act were binding on all authorities.
E
By the above letter the Govt. of India only conveyed the opinion of the
Law Ministry and asked for the views of the Union Territory of Chandigarh.
In view of language of the letter it cannot be treated as the direction issued
under sub-section (3) of Sec 67 of the Act. In fact this letter would show that
the appellants were on deputation to the Union Territory of Chandigarh and
F it demolishes the submission of Mr. Rao that the appellants have been
absorbed by the Union Territory of Chandigarh. Moreover as within one year
there was an agreement regarding allocation of employees of the erstwhile
Punjab State Electricity Board between the successor States the Government
of India could not have exercised the power of issuing direction as envisaged
G under sub-section (3) of Sec. 67.

Next contention of Mr. Rao was that the above directions could be
deemed to have been issued under Section 84 of the Act. Section 84 finds
place in chapter IX under the heading 'provisions as to services'. These
services under Sections 8 I and 82 were All India Services and other services
H of the State. Under Section 84, Central Government is empowered to give
ELECTRICITY EMPLOYMENT UNION v. U.O.I. [PHUKAN, J.] 11
direction to give effect to the provisions of this part. As we have already held A
that such allocation of employees of the erstwhile Punjab State Electricity
Board could be done only under sub-section (3) of Section 67 and not under
Section 82, no direction could be issued by the Central Government in respect
of such employees under the above section.

According to Mr. Rao learned senior counsel, in view of Sec. 83 of the B
Act the appellants were deemed to have been absorbed under the
administration of the Union Territory of Chandigarh as they were working
within the geographical area of the said Union Territory on the date of re-
organisation of the erstwhile State of Punjab. This section provides that every
person who immediately before the appointed day was holding or discharging C
duties of any post or office in connection with the affairs of the erstwhile
State of Punjab in any area which on the appointed day became the area of
any successor States would continue to hold the same post or office in that
successor State and would be deemed to have been duly appointed to the
post or office. The object of this Sec. was to allow the holder of any post
or office in the erstwhile State of Punjab to continue to discharge the function D
of the said post or office on the date the successor States were formed
otherwise for every such post or office it would have been necessary for the
successor States to pass orders re-appointing the holder of the post or office
to continue to discharge his function.

Keeping in view the purpose for which Sec. 83 was enacted, we hold
E
that members of the erstwhile Punjab. State Electricity Board could not claim
deemed absorption under this section merely because on the date the
successor States were formed, they were working within the geographical
limits of the Union Territory of Chandigarh.
F
For the reasons stated above we do not find any merit in these appeals.

In the result appeals are dismissed and parties are directed to bear their
own cost.

B.S. Appeals dismissed. G

I