Supreme Court settles employee allocation between Andhra Pradesh and Telangana State Road Transport Corporations: Andhra Pradesh State Road Transport Corporation & Ors. vs. V.V. Brahma Reddy & Anr. (2024) INSC 663 (06 September 2024)

Introduction

Date of the Judgment: 06 September 2024
Citation: 2024 INSC 663
Judges: Pamidighantam Sri Narasimha, J., Pankaj Mithal, J.
Can employees of a state transport corporation be permanently allocated to a successor state based on where they were serving on the date of bifurcation, or should they be allocated based on their initial place of appointment? The Supreme Court of India recently addressed this question in a dispute arising from the bifurcation of the Andhra Pradesh State Road Transport Corporation (APSRTC). This case clarifies the applicability of specific sections of the Andhra Pradesh Reorganisation Act, 2014, concerning the allocation of employees of Public Sector Undertakings. The judgment was delivered by a bench comprising Justice Pamidighantam Sri Narasimha and Justice Pankaj Mithal, with Justice Pamidighantam Sri Narasimha authoring the opinion.

Case Background

Prior to the bifurcation of the erstwhile State of Andhra Pradesh, the Andhra Pradesh State Road Transport Corporation (APSRTC) operated as a unified entity. On June 2, 2014, the State of Telangana was formed, leading to the bifurcation of the APSRTC. The Telangana State Road Transport Corporation (TSRTC) was established on June 2, 2015, to serve the newly formed state, while APSRTC continued to operate in the residual Andhra Pradesh. The respondents in this case were Class III and Class IV employees, including conductors, drivers, and shramiks, who were initially appointed in zones that now fall within the State of Telangana between 2014 and 2017. These employees were temporarily deputed to zones that are now part of Andhra Pradesh. These deputations were extended multiple times, even after the bifurcation of the corporations, while awaiting final guidelines for permanent allocation of employees. The core issue in this case revolves around the validity of the repatriation orders issued by APSRTC, which directed these employees to return to their original zones of appointment in Telangana.

Timeline

Course of Proceedings

The respondents initially challenged the repatriation orders issued by the APSRTC in the High Court of Andhra Pradesh. A single judge allowed their writ petitions on November 10, 2017, setting aside the repatriation orders on the grounds that guidelines for allocation of employees had not been finalized after the bifurcation of the two corporations. The APSRTC then filed writ appeals, bringing the Agenda Note of August 16, 2017, and its approval on August 24, 2017, to the notice of the division bench. The division bench, on April 18, 2018, suspended the single judge’s order and directed the employees to report to their parent zones under TSRTC, noting that the guidelines for allocation had been jointly finalized. However, in a later hearing, the High Court took a different view and directed the permanent allocation of the respondents to their deputational posts in Andhra Pradesh, drawing an analogy with Section 77(2) of the Andhra Pradesh Reorganisation Act, 2014. This order was then appealed to the Supreme Court.

Legal Framework

The Supreme Court examined two key sections of the Andhra Pradesh Reorganisation Act, 2014: Section 77 and Section 82.

Section 77 of the Act pertains to the allocation of state government employees between the successor states. It states:

“Section 77. Provisions relating to other services.— (1) Every person who immediately before the appointed day is serving on substantive basis in connection with the affairs of the existing State of Andhra Pradesh shall, on and from that day provisionally continue to serve in connection with the affairs of the State of Andhra Pradesh unless he is required, by general or special order of the Central Government to serve provisionally in connection with the affairs of the State of Telangana:
Provided that every direction under this sub-section issued after the expiry of a period of one year from the appointed day shall be issued with the consultation of the Governments of the successor States.
(2) As soon as may be after the appointed day, the Central Government shall, by general or special order, determine the successor State to which every person referred to in sub-section (1) shall be finally allotted for service, after consideration of option received by seeking option from the employees, and the date with effect from which such allotment shall take effect or be deemed to have taken effect:
Provided that even after the allocation has been made, the Central Government may, in order to meet any deficiency in the service, depute officers of other State services from one successor State to the other:
Provided further that as far as local, district, zonal and multi-zonal cadres are concerned, the employees shall continue to serve, on or after the appointed day, in that cadre:
Provided also that the employees of local, district, zonal and multi-zonal cadres which fall entirely in one of the successor States, shall be deemed to be allotted to that successor State:
Provided also that if a particular zone or multi-zone falls in both the successor States, then the employees of such zonal or multi-zonal cadre shall be finally allotted to one or the other successor States in terms of the provisions of this sub-section.
(3) Every person who is finally allotted under the provisions of sub-section (2) to a successor State shall, if he is not already serving therein, be made available for serving in the successor State from such date as may be agreed upon between the Governments of the successor States or, in default of such agreement, as may be determined by the Central Government: Provided that the Central Government shall have the power to review any of its orders issued under this section.”

Section 82 of the Act, on the other hand, deals with the employees of Public Sector Undertakings, corporations, and other autonomous bodies. It states:

“Section 82. Provision for employees of Public Sector Undertakings, etc.—On and from the appointed day, the employees of State Public Sector Undertakings, corporations and other autonomous bodies shall continue to function in such undertaking, corporation or autonomous bodies for a period of one year and during this period the corporate body concerned shall determine the modalities for distributing the personnel between the two successor States.”

The court noted that Section 77 applies specifically to state government employees, while Section 82 mandates that the corporations themselves determine the modalities for distributing their employees between the successor states.

Arguments

Appellant (APSRTC) Arguments:

• The High Court incorrectly applied Section 77 of the Andhra Pradesh Reorganisation Act, 2014, which pertains to state government employees, to the employees of the APSRTC.
• Section 82 of the Act correctly governs the allocation of employees of Public Sector Undertakings.
• The Agenda Note dated August 16, 2017, formulated by the APSRTC and TSRTC, clearly states that Class III and Class IV employees are recruited at the regional level and belong to the corporation in which the region falls after bifurcation.
• The Agenda Note was approved on August 24, 2017 and has not been challenged, making it final.
• The respondents have already reported to their parent zones in TSRTC following the interim order of the High Court dated April 18, 2018.

Respondent (Employees) Arguments:

• The High Court’s analogy with Section 77 was correct in allocating employees to the successor state where they were serving on the appointed date.
• The Agenda Note dated August 24, 2017, only pertains to the allocation of state-cadre employees and does not cover Class III and Class IV employees.
• Modalities for allocation of Class III and Class IV employees have not been decided as required under Section 82 of the Act.

TSRTC (Supporting Appellant):

• Supported the arguments of the appellant (APSRTC).
• Confirmed that TSRTC was ready and willing to accept the employees who were sought to be repatriated by APSRTC.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the High Court’s reliance on Section 77 of the Andhra Pradesh Reorganisation Act, 2014, was correct, given that it applies to state government employees, and whether Section 82, which relates to employees of Public Sector Undertakings, governs the services of the respondents.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal provisions:

• Section 77 of the Andhra Pradesh Reorganisation Act, 2014: This section pertains to the allocation of state government employees between the successor states.
• Section 82 of the Andhra Pradesh Reorganisation Act, 2014: This section pertains to the allocation of employees of Public Sector Undertakings, corporations, and other autonomous bodies.

The Court did not rely on any case laws in the judgment.

Judgment

How each authority was viewed by the Court?

The Court held that Section 77 of the Andhra Pradesh Reorganisation Act, 2014 was not applicable to the case at hand as it pertained to State Government employees, while the respondents were employees of a Public Sector Undertaking. The Court relied on Section 82 of the Andhra Pradesh Reorganisation Act, 2014* as the relevant provision for the allocation of employees of Public Sector Undertakings and held that the modalities for allocation were to be decided by the Corporation. The Court further held that the Agenda Note dated 16.08.2017 was valid and clearly allocated Class III and IV employees.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the statutory framework established by the Andhra Pradesh Reorganisation Act, 2014. The Court emphasized the distinction between state government employees, governed by Section 77, and employees of Public Sector Undertakings, governed by Section 82. The Court found that the High Court erred in applying Section 77 by analogy, and instead, the specific provisions of Section 82 and the subsequent Agenda Note prepared by the corporations should have been considered. The Court also took into account the fact that the employees had already been repatriated to their parent zones as per the interim order of the High Court, which was consistent with the correct interpretation of the law. The Court emphasized the importance of adhering to the statutory mandate and the modalities determined by the corporations themselves for the allocation of their employees.

The Court’s reasoning was based on a clear interpretation of the relevant legal provisions, the specific nature of the employment of the respondents, and the actions taken by the corporations in accordance with the law. The Court’s decision was rooted in the principle of statutory interpretation, emphasizing that specific provisions must be applied to specific scenarios.

The Supreme Court stated, “From the text of these provisions, it is evident that Section 77 applies to state government employees. Section 82 clearly states that the Corporations shall determine the modalities for distributing their employees between the successor states.”

The Court further noted, “Upon going through the Agenda Note, we find that the Board has decided that Class III and Class IV employees, who are appointed at the regional level, are to be allocated to the Corporation in which the region falls after bifurcation.”

The Court also observed, “In this view of the matter, following the statutory mandate of Section 82 read with the Agenda Note dated 16.08.2017, the respondents will continue their employment in the same region, which is under the present TSRTC.”

Key Takeaways

• Employees of Public Sector Undertakings are not governed by the same rules of allocation as state government employees during state reorganization.
• The specific provisions of the Andhra Pradesh Reorganisation Act, 2014, particularly Section 82, must be strictly followed for the allocation of employees of Public Sector Undertakings.
• Corporations have the autonomy to determine the modalities for distributing their employees between successor states.
• The Agenda Note formulated by the APSRTC and TSRTC, allocating Class III and Class IV employees based on their region of initial appointment, is valid and binding.
• Employees are to be allocated to the corporation in which the region of their initial appointment falls after bifurcation, irrespective of where they were serving on the date of bifurcation.

Directions

The Supreme Court set aside the judgment of the High Court of Andhra Pradesh dated 21.11.2019 and dismissed the writ petitions filed by the respondents dated 10.11.2017. The Court upheld the repatriation orders issued by the APSRTC, directing the respondents to return to their parent zones under the TSRTC.

Development of Law

The ratio decidendi of this case is that the employees of Public Sector Undertakings are governed by Section 82 of the Andhra Pradesh Reorganisation Act, 2014, and not Section 77, which applies to state government employees. The judgment clarifies that the modalities for allocation of employees of Public Sector Undertakings are to be determined by the corporations themselves. This decision reinforces the principle of statutory interpretation, emphasizing that specific provisions must be applied to specific scenarios. It also clarifies the autonomy of Public Sector Undertakings in managing their personnel during state reorganization.

Conclusion

The Supreme Court’s judgment in Andhra Pradesh State Road Transport Corporation & Ors. vs. V.V. Brahma Reddy & Anr. clarifies the legal framework for allocating employees of Public Sector Undertakings following the bifurcation of Andhra Pradesh. The Court held that the High Court erred in applying Section 77 of the Andhra Pradesh Reorganisation Act, 2014, which pertains to state government employees, to the employees of APSRTC. Instead, Section 82 of the Act, which governs employees of Public Sector Undertakings, was deemed applicable. The Court upheld the validity of the Agenda Note formulated by APSRTC and TSRTC, which allocated Class III and Class IV employees based on their region of initial appointment. The judgment underscores the principle that specific statutory provisions must be applied to specific scenarios, and that Public Sector Undertakings have the autonomy to determine the modalities for distributing their employees during state reorganization.