Supreme Court Upholds Deputation and Absorption in NOIDA: Shripal Bhati vs. State of UP (29 January 2020)

Date of the Judgment: 29 January 2020

Citation: 2020 INSC 72

Judges: Justice Mohan M. Shantanagoudar and Justice Krishna Murari

Can an authority appoint an employee on deputation and later absorb them, even if the service regulations specify direct recruitment and promotion as primary modes of appointment? The Supreme Court of India addressed this question in a case concerning the New Okhla Industrial Development Authority (NOIDA). The Court examined the legality of appointing an individual on deputation and subsequently absorbing them into a permanent position, considering the relevant service regulations and the powers of the State Government. The judgment was delivered by a two-judge bench comprising Justice Mohan M. Shantanagoudar and Justice Krishna Murari, with Justice Krishna Murari authoring the opinion.

Case Background

The case involves Shripal Bhati and another appellant, who were working as Assistant Project Engineers (Electrical) in NOIDA. The dispute arose when respondent no. 4, an employee of U.P. Power Corporation Ltd., was appointed as Project Engineer (Electrical) in NOIDA on deputation for three years, based on a request by the State Government on 13 February 2014. This was followed by an order on 19 February 2014, allowing respondent no. 4 to join the post. Later, on 16 February 2015, respondent no. 2 recommended the absorption of respondent no. 4. Aggrieved by this, the appellants filed a Writ Petition in the High Court of Judicature at Allahabad, challenging the deputation and proposed absorption.

During the pendency of the Writ Petition, respondent no. 4 was absorbed as Project Engineer (Electrical) on 7 May 2015. The appellants then amended their petition to include a challenge to this absorption order. The High Court dismissed the Writ Petition on 8 February 2017, leading the appellants to appeal to the Supreme Court.

Timeline

Course of Proceedings

The appellants filed a Writ Petition in the High Court of Judicature at Allahabad, challenging the appointment of respondent no. 4 on deputation and his subsequent absorption. The High Court dismissed the petition, leading to the appeal before the Supreme Court. The High Court’s decision was based on the interpretation of the NOIDA Service Regulations, 1981, and the court’s view that the appellants lacked the necessary qualifications for promotion to the post of Project Engineer.

Legal Framework

The case is governed by the U.P. Industrial Development Act, 1976, which empowers the State Government to constitute authorities for industrial development. Section 5 of the Act of 1976 grants the Authority the power to appoint officers and employees, subject to the control and restrictions of the State Government. Section 19 of the Act of 1976 allows the Authority to make regulations with the State Government’s approval.

The New Okhla Industrial Development Authority Service Regulations, 1981, framed under Section 19 of the Act of 1976, govern the service conditions of NOIDA employees. Regulation 16 of the 1981 Regulations outlines the sources of recruitment:

“16. (1) Recruitment to any post under the Authority may be made from any of the sources –
(a) by direct recruitment;
(b) by promotion from amongst the employees occupying post carrying a lower scale through a departmental test or an interview of selection or in any other manner specified by the Authority.
(c) by deputation or re-employment or on contractual basis.
(d) from any other source as approved by the Authority.”

Regulation 16(2) specifies the percentage of posts to be filled by direct recruitment and promotion for Groups A, B, and C. Regulation 2 of the 1981 Regulations addresses the applicability of the regulations and states:

“2. These regulations shall apply to every whole time employee of the Authority except a person working with the Authority on deputation from the Union Government or any State Government or a Local Authority or a Corporation or any other organization, by whatever name called, and such a person shall continue to be governed by the rules applicable to him in relation to his service under his parent department or organization, by whatever name called unless such person is absorbed in the service of the Authority as a regular employee.”

The U.P. Absorption Rules, 1984, framed under Article 309 of the Constitution of India, allow for the absorption of government servants in undertakings where they are on deputation. Rule 5 of the U.P. Absorption Rules, 1984 states that a government servant can apply for absorption before the expiry of three years of deputation or before attaining 53 years of age. Additionally, the “Uttar Pradesh Rajya Vidyut Parishad Ke Sewako Ka Sashan Evam Anya Upkarmo Me Samvilayan Viniyam 1987” (1987 Regulations), framed under Section 79(c) of the Electricity Supply Act, 1948, allows for the absorption of employees of the corporation in the service of State Government or other undertakings.

Section 41 of the U.P. Urban Planning and Development Act, 1973, which is applicable to the Act of 1976 by virtue of Section 12 of the said Act, provides for control by the State Government and states:

“41. Control by State Government :-
(1) The [Authority),the Chairman or the (Vice-Chairman] shall carry out such directions as may be issued to it from time to time by the State Government for the efficient administration of this Act.
(2) If in, or in connection with, the exercise of its powers and discharge of its functions by the [Authority, the Chairman or the Vice-Chairman) under this Act any dispute arises between the authority, the Chairman or the Vice-Chairman) and the State Government the decision of the State Government on such dispute shall be final.
(3) The State Government may, at any time, either on its own motion or on application made to it in this behalf, call for the records of any case disposed of or order passed by the [Authority or the Chairman) for the purpose of satisfying itself as to the legality or propriety of any order passed or direction issued and may pass such order or issue such direction in relation thereto as it may think fit:
Provided that the State Government shall not pass an order prejudicial to any person without affording such person a reasonable opportunity of being heard.
(4) Every order of the State Government made in exercise of the powers conferred by this Act shall be final and shall not be called in question in any court.”

Arguments

Appellants’ Arguments:

• The appellants argued that Regulation 16(2)(i) of the 1981 Regulations specifies that 66% of Group ‘A’ posts should be filled by direct recruitment and the remaining 34% by promotion. They contended that the post of Project Engineer (Electrical), a Group ‘A’ post, could not be filled by deputation.
• The appellants relied on a 2005 Recruitment and Promotion Policy of NOIDA, which stipulated that the post of Project Engineer should be filled 100% by promotion. They argued that this policy superseded the earlier provisions allowing for deputation.
• The appellants contended that respondent no. 4, being an employee of U.P. Power Corporation, was not a government employee and therefore could not be absorbed under the U.P. Absorption Rules, 1984, which apply only to government servants.

Respondents’ Arguments:

• The respondents argued that Regulation 16(1)(c) of the 1981 Regulations explicitly allows for recruitment by deputation. They contended that the provision should be read in its entirety, not in isolation.
• The respondents stated that the 2005 policy was never implemented as it was inconsistent with the 1981 Regulations. The State Government had directed NOIDA to ensure that its policies were consistent with the 1981 Regulations.
• The respondents argued that the absorption of respondent no. 4 was valid under the U.P. Absorption Rules, 1984, and the 1987 Regulations, which allow for the absorption of employees of the corporation in the service of State Government or other undertakings.
• The respondents argued that the appellants lacked the necessary qualifications for promotion to the post of Project Engineer, as they did not have the required 8 years of experience as Assistant Project Engineers at the time of appointment and absorption of respondent no. 4. They contended that the appellants therefore lacked locus standi to challenge the appointment and absorption.

[TABLE] of Submissions

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the recruitment of respondent no. 4 on the post of Project Engineer (Electrical) on deputation and his subsequent absorption on the said post is permissible under NOIDA Service Regulations, 1981.
2. Whether the appellants are eligible for being promoted to the post on which respondent no. 4 has been appointed and whether the appellant’s right of promotion gets eclipsed by absorption of respondent no. 4 and in case the appellants were not found eligible for promotion whether any challenge to appointment or absorption of respondent no. 4 would be maintainable at their behest.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Court considered the following authorities:

Cases:

• Jasbhai Motibhai Desai Vs. Roshan Kumar, Haji Bashir Ahmed & Ors. [AIR 1976 SC 578] – The Supreme Court of India – This case was cited to support the principle that a person must suffer a personal injury to be considered aggrieved and have locus standi.
• Jamil Ahmed Vs. Industrial Development Commissioner and Principal Secretary & Ors. [2004 (13) SCC 736] – The Supreme Court of India – This case was cited to support the view that an employee absorbed into NOIDA cannot be left in a state where they are neither an employee of the Authority nor of their parent department.

Statutes and Regulations:

• U.P. Industrial Development Act, 1976 – This act provides the legal framework for the constitution of authorities for industrial development.
• New Okhla Industrial Development Authority Service Regulations, 1981 – These regulations govern the service conditions of NOIDA employees.
• U.P. Absorption Rules, 1984 – These rules provide for the absorption of government servants in undertakings where they are on deputation.
• Uttar Pradesh Rajya Vidyut Parishad Ke Sewako Ka Sashan Evam Anya Upkarmo Me Samvilayan Viniyam 1987 – These regulations allow for the absorption of employees of the corporation in the service of State Government or other undertakings.
• Electricity Supply Act, 1948 – Section 79(c) of this act empowers the State Electricity Board to make regulations for the absorption of employees.
• U.P. Urban Planning and Development Act, 1973 – Section 41 of this act provides for control by the State Government over the Authority.

[TABLE] of Authorities

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Jasbhai Motibhai Desai Vs. Roshan Kumar, Haji Bashir Ahmed & Ors. [AIR 1976 SC 578]*: The Court relied on this case to determine that the appellants lacked locus standi as they had not suffered any personal injury.
• Jamil Ahmed Vs. Industrial Development Commissioner and Principal Secretary & Ors. [2004 (13) SCC 736]*: The Court cited this case to support the view that an employee absorbed into NOIDA cannot be left in a state where they are neither an employee of the Authority nor of their parent department.
• The Court interpreted the U.P. Industrial Development Act, 1976 as providing the legal basis for the constitution of NOIDA.
• The Court interpreted the New Okhla Industrial Development Authority Service Regulations, 1981 as the governing regulations for the service conditions of NOIDA employees and as allowing for recruitment by deputation.
• The Court considered the U.P. Absorption Rules, 1984 as providing the framework for the absorption of government servants.
• The Court considered the Uttar Pradesh Rajya Vidyut Parishad Ke Sewako Ka Sashan Evam Anya Upkarmo Me Samvilayan Viniyam 1987 as allowing for the absorption of employees of the corporation in the service of State Government or other undertakings.
• The Court considered Section 79(c) of the Electricity Supply Act, 1948 as providing the power to make regulations for absorption of employees.
• The Court considered Section 41 of the U.P. Urban Planning and Development Act, 1973 as providing for the control of State Government over the Authority.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following considerations:

• Harmonious Interpretation of Regulations: The Court emphasized the need to read Regulation 16 of the 1981 Regulations in its entirety. It noted that while Regulation 16(2) specifies percentages for direct recruitment and promotion, Regulation 16(1)(c) explicitly allows for recruitment by deputation. The Court held that these provisions must be read harmoniously and not in isolation.
• Validity of Deputation: The Court found that deputation is a recognized source of recruitment under the 1981 Regulations. This was a key factor in upholding the initial appointment of respondent no. 4.
• Validity of Absorption: The Court held that the absorption of respondent no. 4 was valid under the U.P. Absorption Rules, 1984, and the 1987 Regulations. The Court noted that the 1987 Regulations specifically allow for the absorption of employees of the corporation in the service of State Government or other undertakings.
• Locus Standi of Appellants: The Court found that the appellants lacked the necessary qualifications for promotion to the post of Project Engineer at the time of appointment and absorption of respondent no. 4. As such, the Court held that the appellants had no locus standi to challenge the appointment and absorption.
• State Government’s Authority: The Court acknowledged the State Government’s power to issue directions under Section 41 of the U.P. Urban Planning and Development Act, 1973, and its authority to order the absorption of respondent no. 4.

[TABLE] of Sentiment Analysis

Fact:Law Ratio:

Logical Reasoning:

The Court considered alternative interpretations but rejected them. The Court rejected the appellant’s argument that Regulation 16(2)(i) prohibits deputation, stating that the provision must be read in conjunction with Regulation 16(1)(c). The Court also rejected the appellant’s reliance on the 2005 Recruitment Policy, noting that it was never implemented. The Court concluded that the appointment and absorption of respondent no. 4 were valid under the applicable laws and regulations.

The decision was reached based on a thorough analysis of the relevant regulations, the powers of the State Government, and the principle that a person must suffer a personal injury to have locus standi.

“It is well settled that a provision is required to be read in whole and not in part and in isolation to the other parts of the provision. The entire provision is required to be read out harmoniously.”

“Once the deputation as a source of recruitment is available under the Rules of Recruitment, we do not see any impediment in assuming the power of absorption of a deputationist with the Authority by necessary intendment or implication, under Act of 1976 and 1981 Regulations framed thereunder.”

“In the light of above discussion, it is demonstrably clear that the appellant has not been denied or deprived of a legal right. He has not sustained injury to any legally protected interest. In fact, the impugned order does not operate as a decision against him, much less does it wrongfully affect his title to something. He has not been subjected to a legal wrong. He has suffered no legal grievance. He has no legal peg for a justiciable claim to hang on. Therefore, he is not a ‘person aggrieved’ and has no locus standi to challenge the grant of ‘No Objection Certificate’.”

Key Takeaways

• Service regulations should be read harmoniously, not in isolation.
• Deputation can be a valid mode of recruitment if explicitly allowed in the regulations.
• Absorption of employees on deputation is permissible under relevant rules and regulations.
• A person must suffer a personal injury to have locus standi to challenge an appointment or absorption.
• State Government has the power to issue directions for efficient administration of the Act.

The judgment clarifies the interplay between different provisions of service regulations and the powers of the State Government in matters of appointment and absorption. It also underscores the importance of locus standi in legal challenges.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of the case is that deputation is a valid mode of recruitment under the NOIDA Service Regulations, 1981, and that the absorption of a deputationist is permissible under relevant rules and regulations. This judgment reinforces the principle that service regulations must be interpreted harmoniously and that a person must have locus standi to challenge an appointment or absorption. There is no change in previous positions of law.

Conclusion

The Supreme Court dismissed the appeal, upholding the High Court’s decision. The Court held that the appointment of respondent no. 4 on deputation and his subsequent absorption as Project Engineer (Electrical) in NOIDA were valid under the NOIDA Service Regulations, 1981, and other relevant rules. The Court also found that the appellants lacked the necessary qualifications for promotion and therefore had no locus standi to challenge the appointment and absorption. The judgment emphasizes the importance of a harmonious interpretation of service regulations and the need for a personal injury to establish locus standi in legal challenges.