S.P. DUBEYversusM.P.S.R.T. CORPN. AND ANR.

                               S.P. DUBEY
A                                   v.
              ' '     M.P.S.R.T. CORPN. AND ANR.

                             OCTOBER 23, 1990

B             [KULDIP SINGH AND S.C. AGRAWAL, JJ.]

          Road Transport Corporation Act, 1950: S. 34/M. P. State Road
    Transport'Corporation Employees Service Regulations. 1964: Regula-
    tion 59-Private company taken over and merged with Corporation-
    Age of Superannuation of existing staff at 60 years specifically pro-
    tected-Whether amenable ta State Service Rules-Whether Regulation
c   can override the directions issued under the Act.

          The age of superannuation for the employees of the private trans-
    port company in which the appellant was initially employed was 60
    years_ When the said company was taken over by the State on August
D   31, 1955, the notification specifically provided that the existing staff
    would not be adversely affected with regard to terms and conditions of
    service. Again, when the services of the staff of the taken-over company
    were transferred to the respondent-Corporation established under s. 3
    of the Road Transport Corporation Act, 1950, the memorandum dated
    May 4, 1962 recited the same assurance. A resolution passed by the
E   Board of Directors of the Corporation on the same day also reiterated
    the said assurance. Subsequently, when the State Government issued
    directions on October 29, 1963 to the Corporation under s. 34 of the Act
    the said assurance was embodied therein too. However, Regulation 59
    of the M.P. State Road Transport Corporation Employees Service
    Regulations, 1964 framed by the Corporation under s. 45(2)(c) of the
F   Act provided that the employees of the Corporation were liable to com-
    pulsory retirement on the date of their completion of 58 years of age
    unless specifically permitted to continue.

          When the appellant was sought to.be retired from service in terms
    of Regulation 59 of the said Regulations on attaining the age of 58 years
G   with effect from June 30, 1984 by a notice dated May 25, 1983, he
    challenged it by a petition under Article 226/227 of the Constitution. It
    was dismissed by the High Court on the view that on August 31, 1955
    when the appellant became State Government employee his age of
    superannuation came to be governed by the statutory rules under Arti·
    cle 309 of the Constitution and the age of retirement of the State
H   servants under the said rules being 58 years the appellant was rightly
    retired.
                                       328
                       S.P. DUBEY v. M.P.S.R.T.C.                    329

      Allowing the appeal, the Court;                                       A

      HELD: 1. The appellant was entitled to continue in service upto
the age of 60 years.                                .      ·

                                                     a
     2.1 When. the State Government takes over private company B
and gives an assurance that conditions of· service of the existing staff.
would not be adversely affected, it is but fair that the State Government
should honour the same.

      2.2 In the instant case, the appellant was in service of the com·
pany from 1947 to August 30, 1955 in which the age of superannuation
of the employees was 60 years. The company was taken over by the            c
State Government with effect from August 31, 1955 by a notification of
the same date which specifically stated that the existing staff of the ·
company would not be adversely affected with regard to their condi-
tions of service. The State Service Rules which fixed the age of superan·
nuation at 58 years could not thus be made applicable to the appellant
                                                                          D
and other employees of the taken-over company.

      3. Furthermore, the said assurance was also incOrporated in the
directions issued by the State Government to the Corporation under
s. 34 of the Act. The Corporation could not frame regulations contrary
to the said directions and the age of superannuation which the appellant
                                                                            E
was enjoying under the State Government could not be altered to bis
disadvantage by the Corporation. Regulation 59 framed by the Corpo-
ration was, therefore, not applicable to the appellant.

     The General Manager, Mysore State Road TranSport Corporation
v. Devraj Urs and Anr.; [1976] 2 SCC 862, referred to.
                                                                            F
      4. Since the appellant bad already attained the age of 60 years, be
was only entitled to two years emoluments. The respondents are
directed to pay the same to him within three months. [334B)

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1731
                                                                            G
of 1986.

     From the Judgment and Order dateq 26.4.1985 of the Madhya
Pradesh High Court in Misc. Petition No. 1729 of 1984.

      Avadh Behari and S.K. Gambhir for the Appellant.                      H
         330         SUPREME COURT REPORTS                  [1990] Supp. 2 S.C.R.

              Rameshwar Nath, V.S. Dabir, Rajinder Narain for the Res-
     A
         pondents.

               The Judgment of the Court was delivered by

               KULDIP SINGH, J. S.P. Dubey, employed with the Madhya
     B   Pradesh State Road Transport Corporation, was retired from service
         on his attaining the age of 58 years. He claims that the age of superan-
         nuation was 60 years and as such his retirement at 58 was illegal.

               We may state the necessary facts. Dubey joined service as a
         junior clerk with the Central Provinces Transport Service Limited
         (hereinafter called the company) in the year 1947. The Board of
     c   Directors of the company by a resolution dated July 30, 1954 fixed the
         age of superannuation of all its employees except the drivers as 60
         years. The company was purchased and taken <Iver by the State of
         Madhya Pradesh by a notification dated August 31, 1955. The relevant
         part of the said notification is as under:
     D
                     "The undertaking will as from the 31st August, 1955 be
                     entitled 'The Central Provinces Transport Services (under
                     Government Ownership)". So far as the public is con-
                     cerned there will be no change or interruption in the course
                     of business and the continuity of operation will not be dis-
     E               turbed and the existing staff will not be adversely affected
                     with regard to terms and conditions of their services. The
                     statutory instrument to be made in due course will provide,
                     among other things that all the rights and liabilities of the
                     Central Provinces Transport Services Ltd. will become the
                     rights and liabilities of the Central Provinces Transport
     F               Services (Under Government ownership) and from a legal
                     point of view the staff, customers and contractors can look
                     to the Central Provinces Transport Services (Under
..                   Government ownership) to discharge alll the obligations
                     and exercise all the rights that at present rest wi.th the Cent-
                     ral Provinces Transport Service Ltd., Rules for the conduct
     G               of business of the above constituted Board of Management
                     are being published separately."

               It is thus obvious that the Government continued to maintain the
         Central Provinces Transport Services as a separate entity. The condi-
         tions of service, of the staff of the taken-over company, were specifi-
     H   cally protected.
                      '
            S.P. DUBEY v. M.P.S.R.T.C. (KULDIP SINGH, J.]          331

      The State of Madhya Pradesh was reorganised under the States
Reorganisation Act, 1956.. The Central Government, hy a notification A
dated February 28, 1961, extended the provisions of Road Transport
Corporation Act, 1958 (hereinafter called 'the Act') to the State of
Madhya Pradesh with effect from April 1, 1961. Thereafter the
Madhya Pradesh Government acting under Section 3 of the Act
established the Madhya Pradesh State Road Transport Corporation B
(hereinafter called Corporation) with effect from May 21, 1962. The
Madhya Pradesh Government issued two memorandums on May 4,
1962. By one memorandum the services of the concerned employees
including Dubey ·were transferred to' the Corporation and by the
second it was clarified that the said transfer was subject to the condi-
tions that their service would be treated as uninterrupted and their
pay-scales and conditions of service would not be affected. On the C
same day and Board of Directors of the Corporation passed a resolu-
tion to the following effect:

           "Resolved that the services of the employees employed
           under M.B.R. and C.P.T.S. on 31.5.1962 are transferred to D
           the Corporation temporarily until further orders from
           1.6.1962 on the following conditions:

           1. The pay scale and conditions of service are not affected
           by the transfer.
                                                                         E
           2. The transfer will not be considered as interruption of
           services.

                3. In case.of employees coming under the category of
           workman as defined under the Industrial Disputes Act,
           1947, the Corporation in the event of retrenchment will pay F
           compensation on the basis that the services had been con-
           tinued and had not affected by transfer."

      The State Government issued directions dated October 29, 1963
to the Corporation under Section 34 of the Act. Relevant part of the
directions is as under:                                              G

           "The members of the staff of the Madhya Bharat Road-
           ways and Central Provinces Transport Services, who have
           opted to serve under the Corporation in pursuance of the
           notices issued to them by the Commerce and Industry
           Department or any authority of the Madhya Bharat Road-        H
                                                                              \
    332         SUPREME COURT REPORTS              [1990] Supp. 2 S.C.R.

A             · ,ways and Central Provinces Transport Serviee shall be
                 employed by the Corporation subject to such regulations as
                 may be made by it under Section 45(2)(c) of'the Road·
                 ·Transport Corporation Act, 1950 (Central Act LXIV of
                  1950), and subject to such assurance as may• have been
                 given to them by the State Govetnment."
B
          The Corporation framed regulations· called '"The Madhya
    Pradesh State Road Transport Corporation Employees Service Regu-
    lations, 1964." Regulation 59 .which provided the age of superannua-
    tion was as under:

               "Employees of the State Transport are liable· to compul-
c              sory retirement on the date of their completion of fifty
               eight years· of age unless specifically permitted by the
               Corporation to continue in service for a specified period
               thereafter, but he must not be retained after the age of 60
               years, without the sanction of State Government."
D
           The corporation issued a notice dated· May 25, 1983 to Dubey
    informing him that he was due to retire from service on J.tne 30, 1984
    on .attaining the age of 58 years. He challenged the said notice by way
    of a writ petition under Article 226/227 of the Constitution of India
    before the Madhya Pradesh High Court at Jabalpur. The High Court
E   by its judgment dated April 26, 1985 dismissed the writ petition. The
    present appeal by way of special leave petition is against the judgment
    of the High Court.

           The High Court, following its earlier Division Bench judgment,
    came to the conclusion ·that on August 31, 1955 when the appellant
F   became State Government employee his age of superannuation came
    to be governed by the statutory rules under Article 309 of the Con-
    stitution of India operating in respect of the Government employees of
    the State of Madhya Pradesh and the age of retirement of the State
    servants under the saio rules being 58 years the appellant was rightly
    retired.
G
          The appellant was in service of the company from 1947 to August
    30, 1955. Admittedly, the age of superannuation of the company-
    employees was 60 years. The Government of Madhya Pradesh took
    over the company with effect from August 31, 1955 by a notification of
    the same date. The notification specifically stated that the existing
H   staff of the ·company would not be adversely affected with regard,!~
            .S.P. DUBEY v. M.P.S.R.T.C [KULDIP SINGH, J.J             333

their .conditions of service. It _is.no doubt correct that on August 31,
 1955 rules were operaHng in respect of the State Government emp-
                                                                             A
loyees according to which the age of superannuation was.58 years but
 the persons who were service with the company were taken into
 Government serving with. a specific assurance that their conditions of
 se.rvice were not to be adversely affected. _When the State Government
 takes over a private company and gives an assurance of the types it is      B
.but fair that _the State Government should honour the same. Thus; the
 State Service rules which fixed. the age of superannuation at 58 years
could not be made applicable to the appellant and other employees of
the taken-over company. We, therefore, do not agree with the reason-
 ing of the High Court.

      It was then urged that on the transfer of appellant's service to the   c
Corporation he was governed by the Regulations framed by the
Corporation under the Act and Regulation 59 provided 58 years as the
age of superannuation. We do not agree with the contention. The
State Government issued directions nuder Section 34 of the Act which
we have reproduced above. The said directions are binding on the             D
corporation. This Court in The General Manager, Mysore State. Road
Transport Corporation v. Devraj Urs and another, [1976] 2 SCC 862
interpreting Section 34 of the Act held as under:

            "Directions given by the State Government are binding on
            the corporation and it ~annot depart from any general E
            instructions issued under sub-section (1) of Section 34
            except with the previous permission of the State Govern-
            ment. Such instructions have the force of law .... There-
            fore breach of the directions given by State Government in
            the matter of disciplinary action against the respondents
            was a breach of the statutory duty and made the action of · F
            the corporation amenable to the jurisdiction of the High
            Court under Article 226 of the Constitution".

      The State Government and also the'Corporation had given assu-
rance to the appellant and other employees who were transferred to
the Corporation that their conditions of service would not be adversely      G
affected. The said assurance was ·incorporated in the directions issued
under the Act. The Corporation cannot frame regulaHons contrary to
the directions issued by the State Government under Section 34 of the
Act. The age of superannution which the appellant was enjoying under
the State Government could not be altered to his disadvantage by the
                                                                             H
    334        SUPREME COURT REPORTS               [1990] Supp. 2 S.C.R.

A   Corporation. We are, therefore, of the view that Regulation 59 framed
    by ·the Corporation was not applicable to the appellant. He was
    entitled to continue in service upto the age of 60 years.

         We, therefore, allow the appeal with costs and set aside the
    judgment of the High Court. The appellant has already attained the
B   age of 60 years. He is only entitled to two years emoluments. The
    respondent• are directed to pay the same to the appellant within three
    months from today. We quantify the costs as Rs.5,000.

    P.S.S.                                                Appeal allowed.