JUDGMENT
Anil Dev Singh, J.
(1) This is a Letters Patent Appeal against the judgment of the learned Single Judge dated April 9, 1992 (in Civil Writ Petition No-1158/87). The controversy relates to the removal of the respondent from the service of the appellant company while he was holding the post of Director (Marketing) in the latter organisation. The facts giving rise to the appeal are as under “BUREAU of Public Enterprises, Department of Expenditure, Ministry of Finance, Government of India, New Delhi has an Industrial Management Pool which is constituted under a Scheme called Industrial Management Pool Scheme’ (for short IMP’). The Scheme inter- alia provides for creating a pool of officers from where the Ministries having industrial Undertakings could draw upon for the purpose of filling their senior managerial posts in the Public Enterprises run directly by the Government or by Corporations or Companies in which the Government has a controlling interest. Selections to the Pool are required to be made on the recommendations of a Recruitment Board subject to the recommendations being placed before the U.P.S.C. as the appointments are required to be made in consultation with the Commission.”
(2) On July 16, 1959 the respondent joined the Industrial Management Pool in Grade Viii, after his selection in accordance with the method of recruitment laid down in the aforesaid Scheme. The respondent earned his promotions from time to time and was eventually promoted to Grade-I in the Pool, carrying the scale of Rs.2500-Rs.2750, with effect from August 1, 1983 and started drawing substantive pay of Rs.2750.00 per month with effect from the same date. At the time of his promotion to Grade-I in the Pool, the respondent was working as Advisor (Marketing) Ministry of Health and Family Welfare, which post was equivalent to the post of a Joint Secretary. The respondent was also holding the post of Chief Executive of the Contraceptive Marketing Organisation. This post he was hold ing from January 1, 1980 in addition to his post of Advisor to the Ministry of Health and Family Welfare. On March 21, 1985, shortly before his five years term as Advisor (Marketing) in the Ministry of Health & Family Welfare was to expire, the respondent made a representation to the Cabinet Secretary and Chairman, Industrial Management Pool Board requesting him that till alternative post was made available to him, he should be allowed to continue as Advisor (Marketing) or he should be allowed to hold the post of the Chief Executive of the Contraceptive Marketing Organisation on full time basis. The reason advanced in the writ petition for sending the representation was that there were no reserved posts for the officers of I.M.P. Cadre and these officers were shown against shadow posts, while holding appointments in the Government/public enterprises. Thereafter the Director General of Pool of Public Enterprises by his letter dated April 1, 1985 to the Secretary Ministry of Health and Family Welfare, pointed out that the appellant’s placement in the Public Sector should only be at the Board level considering his seniority in the I.M.P. and having regard to the fact that for the last five years he was holding a position in the Ministry of Health and Family Welfare which was equivalent to that of a Joint Secretary. It was urged therein that since the appellant’s selection to a Public Enterprise will take some time, the Government should consider respondent’s continuation as a Chief Executive of the Contraceptive Marketing Organisation in his existing Grade for a period of two months. Since there was no response to the said proposal of the Director General of Public Enterprises, the respondent had to go on leave.
(3) By letter of the Public Enterprises Selection Board dated April 15, 1985, the respondent was informed that he was being considered for selection to the post of Director (Marketing) Indian Drugs and Pharmaceutical Limited ( for short “IDPL”) in the scale of Rs.3500-Rs.4000. Thereafter the respondent is said to have met the then Cabinet Secretary and drawn his attention to the fact that he had three and. a half years pensionable service left in the I.M.P. and also to para 12 of the Scheme so that he does not lose about three and half years of pensionable service by his absorption in the IDPL.
(4) By letter dated May 1, 1985 Joint Secretary, Government of India, Ministry of Chemical and Fertilisers informed the respondent that the Government was considering to appoint him as Director (Marketing), Idpl in the maximum scale of pay of Rs.3500-100-4000(revised) on immediate absorption basis. He also requested the respondent to communicate his assent. Responding to the letter of the Joint Secretary.the respondent by his letter dated May 2,1985 to him specifically referred to para 12 of the Scheme and the Resolution No.F-21(12)/E.O./56 dated November 12, 1957 and requested that while serving in the Idpl, he should remain as an officer of the Imp cadre.
(5) On July 24, 1985 the President of India in pursuance of Article 74(l)(c) of the Articles of Association of the Idpl appointed the respondent as Director Marketing of the said organisation in the scale of Rs.3500-4000 (revised) on an immediate absorption basis, initially for the period of two years. In the order it was stated that the terms and conditions of the appointment would be issued separately. Thereafter, the Government of India, Ministry of Finance.’Bureau of Public Enterprises by its letter dated September 10,1985 to the Pay and Accounts officer, Ministry of Finance, Department of Expenditure conveyed the sanction of the President of India to the permanent absorption of the respondent, on the post of Director (Marketing) in Schedule “C” scale of pay i.e. Rs.3500-100-4000 with effect from July 25, 1985 on the terms and conditions specified therein. It is noteworthy that the condition of permanent absorption of the respondent is not hedged by any limitations and none of the terms and conditions specified therein diluted or limited the period of his appointment for a particular period of time.A copy of this letter was endorsed to the respondent as well. Subsequently, on September 19,1985 the Government of India notified the retirement of the respondent from the Industrial Management Pool of the Government of India, Bureau of Public Enterprises, Ministry of Finance on his permanent absorption in Idpl with effect from July 24, 1985. Two months later, on November 20,1985 the Government of India, Ministry of Industry, Department of Chemical and PetroChemicals while conveying to the Chairman and Managing Director, Idpl sanction of the President to the appointment of the respondent as Director (Marketing) Idpl with effect from July 25, 1985 (FN) on the terms and conditions specified therein limited the period of appointment of the respondent for two years in the first instance. However, even before the end of the period of two years the respondent was removed from the service of the Idpl by the order issued in the name of the President of India dated April 6, 1987 with immediate effect on payment of three months’ salary in lieu of three months notice. This order was challenged in the writ petition. The writ petition came to be decided by the learned single Judge by his judgment and order dated April 9,1992, whereby the order of removal of the respondent was set aside and he was deemed to have continued in service till the. date of passing of the judgment. Besides, the respondent was held entitled to all the consequential benefits accruing to him as a result of setting aside of the order of his removal. The learned single Judge found the order of removal to be bad in law for the following reasons : 1. The termination though couched in an innocuous language cast stigma on the appellant; 2. The order was passed by way of punishment. 3. That there was total non-application of mind by the authority passing the order of removal. 4. The order suffered from the vice of arbitrariness. 5. The order was violative of the principles of natural justice. The learned single Judge was also of the opinion that the age of superannuation of the respondent was 58 years.
(6) It is this order of the learned single Judge which has been impugned before us.
(7) Learned counsel for the parties raised several points but it is not necessary to go into them as ultimately the counsel concentrated on the factual aspect of the matter, namely. Whether or not the order of removal of the respondent from the service of the Idpl was passed without considering the relevant material.
(8) During the hearing we asked the appellant to produce the service record of the respondent which was produced by them. It consisted of two confidential rolls of the respondent, one recorded by Shri Gajendra Singh and the other recorded by Shri N.S.P.Chawla, both Ex.Chairmen and Managing Directors of the appellant company. Besides it contained office nothings and some correspondence. Perusal of the record also revealed that the appointing authority took into consideration one of the uncommunicated CRs of the respondent recorded for the period from July 24, 1985 to May 31,1986 for the purposes of his removal. The facts regarding the recording of the CRs and his ultimate removal are necessary to be noticed for resolution of the controversy. These are as follows :
(9) At the time the respondent joined the Idpl Shri K. Gajendra Singh was the Chairman and Managing Director of the organisation. Shri K. Gajendra Singh worked in the organisation till May 31, 1986 when he left the same to take charge of a post in the Indian Foreign Service. Thereafter from June 1, 1986 till September 1986 Shri N.S.P. Chawla was the Chairman and Managing Director of the appellant company. After Shri Chawla’s exit from the organisation Shri K. Venkataramanan became the Chairman and Managing Director of the company on September 29,1986.The removal of the respondent from the service of the Idpl was during .the tenure of Shri Venkataramanan. It appears that Shri T.P.Subrahmanyan, Deputy Secretary, Ministry of Industry, Department of Chemicals and PetroChemicals by his letter dated August 20, 1986 to Shri N.S.P. Chawla, Ex- Chair man and Managing Director of the appellant company, requested for a report on .the performance of the respondent as Director (Marketing) IDPL. This request seems to have been “made on the ground that Shri N.S.P. Chawla, erstwhile Chairman and-Managing Director of the Idpl, had seen the performance of the respondent during his tenure in the company. Shri Chawla by his letter dated September 8,1986 to Shri T.P.Subrahmanyan, Deputy Secretary, Ministry of Industry.Department of Chemicals and PetroChemicals gave his assessment with regard to the performance of the respondent. In his opinion, the good performance of the marketing Division of Idpl in the year 1985-86 was attributable to the Management abilities and leadership qualities of the respondent. In this regard this is what he said : “The performance of Marketing Division and in turn of Director (Marketing ) can be evaluated, by and large, on the basis of sales of formulations, turn the following reasons :- i) Over 75% of the total manpower strength of Marketing Division is directly or indirectly engaged in the marketing operations of formulations. ii) Around 65% of the total turnover of the company comprises of forumulations. Further, the performance can be most objectively and rigidly evaluated from the trend of trade sales of formulations for the following facts: i) The trade market of formulations is highly competitive and Idpl has no inherent strength or advantage for operating in this market. ii) The profitability in trade is relatively the highest. The detailed sales performance of Idpl for the last three years is enclosed. .” It may be noted that more efforts are being made to increase the sale of bulk drugs where the realisation is quick, which enables the company to rotate the scare working capital in a better way and as far as formulations are concerned, the emphasis has been to increase the trade sales and less dependence on institutional sales. This objective has been fulfillled because the trade sales have gone up from Rs.30.78 crores in 1984-85 to Rs.36.12 crores in 1985-86 -an increase of about 17.4%. As far as exports are concerned, the same has been less during the year 1985-86 as compared to the year 1984-85 because of availability of Sulphadimidine of Chinese origin in the market at a very low price and it was not possible for the Company to match this price. The price of Folic Acid has fell down in the international market and it was not possible to match the same. The performance in other areas regarding reduction in inventory and realisation of the sales proceeds have also been quite encouraging. There has been improvement in these two fronts as compared to the earlier years. From the above, it may be noted that the performance of Marketing Division was better in 1985-86 than that of the earlier two years. Shri Vikramajit took over as Director(Marketing) of Idpl in July,1985. Thus,the aforesaid encouraging performance of the Marketing Division in 1985-86 can be attributed to the Management abilities and leadership qualities of Shri Vikramajit. In short, it can be concluded that his performance has been very good in the first year of his tenure as Director (Marketing) of IDPL. We have not so far received the Cr dossier of Shri Vikramajit from the Ministry of Health Ministry & Family Welfare. They may be approached for it.” Along with the letter of Shri N.S.P.Chawla sales performance of Idpl for the period 1983-84 to 1985-86 were sent for the purpose of comparison. Sub- sequently, Shri K.Gajendra Singh, who was the Chairman and Managing Director of Idpl till May 31, 1986, was also asked to write the Cr of the respondent for the period July 24,1985 to May 31,1986. The view of Shri K.Gajendra Singh was diametrically opposite to the opinion of Shri Chawla about the performance of the respondent as Director (Marketing) IDPL. The performance report of the respondent written’by Shri Gajender Singh is as follows : “IDPL’SMarketing Division is the most critical and not so well functioning Division. Shri Vikramajit, I am afraid, does not measure up to the task. His permanent obsession seems to be looking for alibies for working not done, guided by some of his subordinates. He spends more time denigrating other Divisions like Production and Finance, even to the detriment of the image of the IDPL. He stubbornly refused to let the Marketing Division be integrated as an organ whole of the Company despite my best efforts. My pleas, oral and written, available in records, did not succeed, IDPL’s Marketing Division’s performance in 1985-86 was in spite of his presence as other Directors had to pitch in. I myself repeatedly saw Chief Ministers, Chief Secretaries, Ministers and Secretaries. In many cases,Director (Marketing) did not even follow up. I am convinced that there is no justification for his being considered for the Chief Executive’s job.”
(10) On receipt of the confidential report of the respondent from Shri K. Gajendra Singh, the Chairman and Managing Director by his letter dated December 9,1986 forwarded the same to Shri T.P.Subiahmanyan, Deputy Secretary with the request that the confidential report be put .up before the Secretary, Ministry of Industry, Department of Chemicals and PetroChemicals, Shastri Bhavan, New Delhi. It is significant to note that the performance report given by Shri Chawla was ‘not sent to the Secretary. When this was pointed out to the learned counsel for the appellant he submitted that it was not necessary to put up the report given by Shri Chawla as he had seen the work and performance of the respondent for a short period of three months, i.e. June 1,1986 to September 29,1986, which period was not sufficient to assess the performance of an officer. He also submitted that according to the instructions of the Government as contained in Swamy’s Compilation on Seniority and Promotion of Central Government Servants (incorporating orders received up to June 1989), confidential reports not be written by the reporting officer who has sufficient experience of the work and conduct of the officer reported upon, before writing an assessment of the work of an officer.
(11) We have considered the submission of the learned counsel for the appellant. There is a fallacy in his argument. These instructions apply to the recording of the confidential reports for judging the work and conduct of officers reported upon for the purpose of their promotion. Usually a single Cr is not taken into consideration for judging the overall merit of an officer for the purpose of his promotion. Surely in case of an officer whose continuance in service depends upon a single Cr these instructions will not be applicable. Even otherwise the argument of the learned counsel for the appellant is fallacious in view of the very instructions of the Government on which reliance has been placed. At this stage it would be apprpriate to extract the aforesaid instructions : “RECORDSfor Consideration of Promotion- Confidential Reports: 4. Period and frequency of reporting: In every Department confidential reports should be recorded annually preferably for the period covered by the financial year. There is no objection to two or more independent reports being written for the same year by different reporting officers in the event of a change in the reporting officer during the course of a year provided that no report should be written unless a reporting officer has at least three months’experience on which to base his report. In such cases, each report should indicate precisely the period to which it relates and the reports for the earlier part or parts of the year should be writen at the time of the transfer or immediately thereafter and not deferred till the end of the year. The responsibility for obtaining.confidential reports in such cases should be that of the Head of the Department or the Office. In respect of each of these officers, a report should ( in the first week of April of each year) be written in the apporopriate form by the prescribed reporting officer giving a brief opinion regarding the general work and conduct of the officer concerned. When the reporting officer or the officer to be reported upon, is transferred or deputed elsewhere tot a period of more than three months, the reporting officer should write a report indicating the period covered by it. The reporting officer should have at least three months’ experience of the work and conduct of the officer reported upon before writing or attempting to write an assessment of the work of an officer. A report must, however, be writen at the end of the year. If the period of observation happens to be less than three months, this fact only need to be indicated in the report”.
(12) According to the aforesaid instructions every confidential report is required to.be recorded annually, preferably for the period covered by the financial year. But if it is not possible to record the Cr covered by the financial year as in the case of the respondent, since he joined the appellant company in July 1985, the same must be recorded in the manner which will be fair to the officer and will do justice to him. The Cr considered for the removal of the respondent was recorded by Shri K. Gajendca Singh for the period from July 24; 1985 to May 31, 1986 which is not in accordance with the said instructions, not having been recorded for the financial year. Since recording of the Cr for the period covered by the financial year was not feasible it is correct that the Cr cannot be attacked on that ground. As is also evident the Cr was not recorded for full one year but was recorded for the period of ten months which is again not inconformity with the instructions. The Cr recorded by Shri N.S.P. Chawla should have also been sent to the Secretary for appropriate action as he was the reporting officer of the respondent for a period of at least three months out of which two months were part of the first year of the service of the respondent. It cannot be denied that Shri N.S.P.Chawla was one of the reporting officers of the respondent as during the course of the first year of the respondent’s service, the latter worked under him and Shri K. Gajendra Singh. Instructions permit two or more reports being written for the same year by different reporting officers in the event of change in the reporting officer during the course of a year. Shri Chawla also had sufficient experience of the work and conduct of the respondent as he was able to watch his performance for a period of more than three months before he demitted office of the Chairman and Managing Director of the appellant company. As would be evident the confidential report recorded by Shri N.S.P. Chawla about the performance of the respondent is based upon official data and should have been sent Along with the report of Shri K. Gajendra Singh to the appointing authority. During the course of the arguments learned counsel for the appellant was not able to say whether Shri K. Gajendra Singh requested for any data to be supplied to him for the purpose of judging the performance of the respondent. It may be pointed out that Shri K. Gajendra Singh left the organisation on May 31,1986 and he wrote the confidential report of the appellant on December 5, 1986. It is needless to point out that human memory, being what it is, fades with lapse of time and unless the memory was revived by material which could have served the same, it was hardly possible for Shri K. Gajendra Singh to have given any objective assessment of the work and conduct of the respondent. It was not only necessary but was also highly desirable for the recording officer to have consulted the official record before writing the Cr of the respondent. The appellant was not able to invite our attention to any letter of Shri K. Gajendra Singh asking for any official record or data before writing the Cr of the respondetanor was it able to place any document to show that the appellant had sent the requisite material to Shri K.Gajendra Singh. It is also not disputed by the learned counsel for the appellant that no monthly reports about the performance of the marketing division which functioned under the respondent were sent to Shri K.Gajendra Singh. Without the requisite data, how any reporting officer could objectively assess the performance of an officer is something which is beyond our comprehension. Besides the Cr recorded by Shri K.Gajendra Singh on December 5, 1986 is not in consonance with his previous views, about the performance of the respondent when he was the Chairman and Managing Director of the IDPL. There are two communications of Shri K.Gajendra Singh to the respondent in which he has spoken very highly about the performance of the respondent as Director (Marketing) IDPL. First is a letter dated November 6, 1985 from Shri K. Gajendra Singh to the respondent, which reads as follows : “KINDLYrefer to your monthly d.o. No.1DP/Dir.(M)/85-86/170 dated 5th November,1985 regarding the performance of Marketing Division. Kindly accept my congratulations for consistently good performance during the last 7 months which has resulted in higher sales and higher realisations as compared to the same period of last year. I had also conveyed my satisfaction and congratulations to you on earlier occasions during the Director’s meetings. I agree that sales could have been made, but for production constraints, the reasons for which are well known to you. We are passing through a crticial time, but with the efforts put up by all members of the organisation, I am quite confident that we will overcome the various constrtains and problems. As you might have noticed, even the production has considerably picked up during the last two months and is in fact better than for the same period of 1984. I am sure under your able stewardship, the Marketing Division will do even better than what they have done so far. Keep up the good work.”
Second is the letter dated January 8,1986 which is to the following effect: “KINDLYrefer to your monthly d.o letter No. 1DP/Dir(M)/C-52/199 dated 6th January, 1986 regarding.Marketing Division’s performancec of sales made and realisations achieved. My congratulations” I hope the same level will be maintained. If not surpassed for the month of January, 1986. It is imperative that we improve our performance every month. The. other points mentioned in your letter are under examination and necessary corrective action will be taken.”
(13) The above letters of Shri K. Gajendra Singh clearly show that he was satisfied with the performance of the respondent and had expressed his appreciation for his work and conduct. These letters also do not seem to have been brought to his notice before recording the Cr of the respondent on December 5, 1986. From the perusal of the record and various office nothings we also find that the Cr recorded by Shri K.Gajendra Singh was sent to the Minister of State for Chemical and PetroChemicals and ultimately to the Appointments Committee of the Cabinet (for short ” ACC”). It was solely on the basis of this Cr that the respondent was removed from service of the appellant company. As is manifest Cr recorded by Shri K. Gajendra Singh had a serious impact on the service career of the respon dent. It is well settled that the Administrative Authorities must act fairly as their decisions can make or mar the career or the destiny of the persons who are affected by the same. It seems to us that the appellant did not observe the rules of fair play as it suppressed the report of Shri N.S.P.Chawla, Ex.Chairman and Managing Director of Idpl under whom the respondent had worked as Director (Marketing) and w,hose report was based upon official data. Even according to the instructions referred heretofore Shri N.S.P. Chawla was qualified to record the Cr as he fulfillled the criteria of having seen the performance of the respondent for a period of more than three months. It is significant to note that the Deputy Secretary, Ministry of Chemicals and PetroChemicals, himself sought theconfidential report about the performance of the respondent from Shri N.S.P. Chawla. This shows that Shri N.S.P. Chawla was not considered to be disqualified from recording the Cr of the respondent and yet the C.R. recorded by him was not sent to the Minister of State, Ministry of Chemicals and PetroChemicals or the Acc on whose decision the respondent was removed from service. The views of Shri Chawla are also not mentioned in the nothings of the various officers dealing with the file.
(14) We are not unjustified in assuming that the service record of the respondent in Industrial Management Pool must have been without blemish and meritorious as he was promoted, from time to time, from Grade Vii to Grade 1. In this context non consideration of the Cr of the respondent written by Shri N.S.P.Chawla, Ex.Chairman and Managing Director of the Idpl assumes greater significance. Basically the removal of the respondent from the appellant’s service was found on single Cr recorded by Shri K.Gajendra Singh which Cr contradicted his previous two aforesaid letters in which the respondent was congratulated for his performance as Director (Marketing) IDPL.
(15) Since the relevant material was excluded from consideration the appointing authority acted unfairly and unreasonably. In case the Cr recorded by Shri N.S.P.Chawla had been brought to the attention of the Minister of State and Acc for aught we know their decision might have been different. Even copies of the aforesaid two letters of Shri K.Gajendra Singh were not sent to the Minister of State for Chemicals and .Fertilisers and the ACC. In this way the material which was favorable to the respondent was not considered.
(16) The argument of the learned counsel for the appellant is that under Article 74 (i)(c) of the Articles of Association, the appellant has an unfettered right to terminate the services of the respondent has no force. Article 74(i)(c) reads as under : “74(I)(C)The President shall have the power to remove any Director including the Chairman, Deputy Chairman, if any, the Managing Director and Functional Director (s) from office at any time in his absolute discretion;”
(17) The power conferred on the authority to terminate the services may seem to be unlimited but it is well settled that the power has to be exercised in a fair and reasonable manner. Fairness in action is anessential part of the administrative justice. However, wide the power of the State under a statute rule or a bye-law may be, it is always required to be exercised in a manner that is procedurally fair. The principle of fairness in action is implied in all executive power. Power under Article 74(i)(c) of the Articles of Association is undoubtedly drastic and it is only by procedural fairness that it can be rendered tolerable. A decision of an Administrative authority wh ich offends the rule of fairness in action is outside the jurisdiction of the decision making authority. Lord Russell in Fairmaount Investments Ltd Vs. Secretary of State for the Environment 1976 (1) W.L.R. 1255 at 1263, basing his decision on the aforesaid principle, held as follows : “……For it is to be implied, unless the contrary appears, what Parliament does not authorise by the Act the exercise of powers in breach of the ” principles of natural justice, and that Parliament does by the Act require, in the particular procedures, compliance with those principles.”
(18) Therefore the implied condition of fairness in executive actions and decisions cannot be transgressed or violated except on pain of invalidity of such actions and decisions. The court will assume the requirement of rule of fairness as an in- built condition for the exercise of the executive power. In that view of the matter Article 74 (i)(c) of the Articles of Association cannot be construed as conferring absolute and arbitrary power on the authority to terminate the service of the respondent without having to act fairly and reasonably. It is no doubt true that efficiency of the organisation must be maintained and there has to be a mechanism like Article 74 (i)(c) of the Articles of Association to rid the company of dead wood. But by acting in conformity with the principles of fair play, the efficiency of the organisation is not compromised as a fair and reasonable action of the employer fosters mutual understanding and respect between the employee and the employer and also reduces friction in the organisational machinery. Justice and efficiency go hand in hand and are not opposed to each other.
(19) Having regard to the above discussion, we uphold the decision of the learned single Judge striking down the order of removal of the respondent from service, though for different reasons as set out above. This does not, however, complete our task as the other point which needs to be considered is whether the respondent stood permanently absorbed in the Idpl and would have gone up to the age of 58 years or his term was for a mere period of two years. While searching for an answer to this .question, it must be kept in view that when the respondent retired from the Imp Cadre on his permanent absorption in the Idpl, he still had about three and a half years of service left in the Government of India as undisputcdiv he would have superannuated on reaching the age of 58 years. It seems to us that the respondent wanted to salvage his remaining unserved period of three and a half years of service. Letter of the respondent dated May 2,1985 to the Joint Secretary, Ministry of Chemicals and PetroChemicals appears to be an attempt in that direction. By this letter the respondent requested that he should be excluded from the purview of absorption order. This request of the respondent was in response to the letter of the Joint Secretary.Government of lndia,Ministry of Chemicals and Fertilisers dated May 1, 1985 whereby the respondent was informed that he was being considered for appointment as Director (Marketing) on immediate absorption basis. It was in this background that letter of Government of India dated September 10,1985,communicating the terms and conditions of his appointment to Pay and Accounts Officer, Ministry of defense, Department of Expenditure and to the respondent has to be understood. This letter specifically provides for the permanent absorption of the respondent in the service of the appellant company from the forenoon of July 25, 1985.
(20) One of the other clauses, which needs to be noticed states that the amounts of pro rata death-cum-retirement gratuity would be disbursable to the respondent in addition to his pay in Idpl from the date of his permanent absorption. On settlement of the terms and conditions of the respondent in aforesaid manner the Government of India, Ministry of Finance, Bureau of Public Enterprises by its notification dated September 19,1985 permitted the retirement of the respondent from service of the Government of India. This notification reads as under: “THEPresident is pleased to permit Shri Vikramjit a permanent Grade I (Rs.2500- 125/D-2750) officers of the Industrial Management Pool to retire from Government of India service on his permanent absorption in indian Drugs and Pharaceuticals Limited w.e.f. the afternoon of the 24th July,1985”.
(21) Reading of the letter of the Government of India dated September 10,1985 and notification dated September 19,1985 and keeping in view the request of the respondent contained in his letter dated May 2, 1985 we are of the confirmed view that the respondent was permanently absorbed in the IDPL. It was not disputed by the appellant that a person permanently absorbed in the service of Idpl normally retires at the age .of 58 years. The appellant’s counsel, however, laid stress on the order of appointment of the respondent dated July 24, 1985/in which it was stated that the President was pleased to appoint the respondent on immediate absorption basis, initially for a period of two years and contended that the respondent was appointed only for two years and the benefit of service till the age of .58 years was not available to him. We find no force in the submission of the learned counsel for the appellant. The order of appointment dated July 24,1985 cannot be read in isolation and stood modified by the letter of the Government of India dated September 10,1985 and its notification dated September 10,1985. Both from the letter and the notification it is manifest that there was no condition limiting the service of the respondent to a period” ‘of two years. As already pointed out the letter dated September 10,1985 expressly stated that the respondent was being permanently absorbed from the forenoon of July 25, 1985. The letter of the Government of India dated September 10,1985 did not place a restriction of two years as noticed earlier. Similarly in the notification dated September 19,1985 it is unreservedly stated that the respondent was permitted to retire from the service of the Government of India on his permanent absorption in IDPL.
(22) In short, the letter of the Government of India dated September 10,1985 and the notification dated September 19,1985 have to be understood in the light of the fact that in case the respondent would have remained in the service of the Government of India he would have served up to the age of 58 years. It is, however. true that on November 20,1985 Government of India, Ministry of Chemicals and PetroChemicals wrote to the Chairman and Managing Director of Idpl conveying the terms and conditions of appointment of the respondent in the Idpl in which one of the clauses was relating to the appointment of the respondent for a period of two years with effect from July 25,1985. The Government of India having once conveyed the sanction of the President to the permanent absorption of the respondent in Idpl by its letter dated September 10,1985, it could not thereafter unilaterally change the period of appointment of the respondent by limiting and restricting it to a period of two years in the first instance, especially when the respondent was retired from service of the Government of India on the basis of his permanent absorption in the IDPL. The respondent could not be subsequently put to a disadvantage by limiting his appointment in the Idpl to two years when in the service of the Government of India he could serve up to the age of 58 years. What was the advantage to the respondent in accepting the appointment in the Idpl if his service was only for a period of two years in contrast to his remaining service of about three and a half years in the Government of India? When the letter of November 20,1985 talks of permanent absorption of the respondent in service of the Idpl, would mean that the respondent was not being appointed on temporary basis or for a particular period of time. The words “permanent absorption” have been used in con- tradistinction to ” temporary appointment or the appointment limited by a period of time which falls short of the age of superannuation. Therefore from the foregoing discussion it clearly follows that the respondent’s age of superannuation in the Idpl was 58 years. As the writ petition came to be decided after the respondent attained the age of 58 years, learned single Judge was right in holding that the respondent would be deemed to have remained in service of the Idpl till December 31, 1988, the date of his superannuation. Once the respondent passed the age of retirement during the pendency of the writ petition, there is no point in asking the appellant to decide the matter afresh after taking into consideration both the CRs of the respondent recorded by Shri K. Gajendra Singh and Shri N.S.P. Chawla and other relevant material. Therefore the order of the learned Single Judge needs no modification on this score as well.
(23) Learned counsel for the appellant submitted that the principle laid down in Central Inland Water Transport Corporation Limited and another Vs. Brojo Nath Canguly and another and Delhi Transport Corporation Vs. D.T.C. Maz- door Congress & Others, was not applicable to the case in hand as the respondent did not fall in the category of employees to which those decisions would be’applicable and the learned single Judge therefore was not correct in relying upon the same. Since we have found the order of removal of the respondent from the service of the appellant company to be otherwise bad in law, we do not consider it necessary to go into that question. Accordingly,the question is left open to be decided in an appropriate case.
(24) It will also not be necessary for us to consider the difference between an employee of the company and a nominee director, who is appointed by a shareholder to act on the board of the company , the view which we have already taken, though the learned counsel for the appellant relying upon the decision of Supreme Court in Life Insurance Corporation of India Vs. Escorts Ltd. and others urged that the respondent was a nominee of the Government of India which was the only share holder and as such he could be removed at any point of time by the Government of India. We may,however, clarify that it cannot be disputed that the respondent could be removed from service of the Idpl by the President of India acting under Article 74(i)(c) of the Articles of Association. But that power, as already held, had to be exercised reasonably and fairly.
(25) Before parting’ with the case, we may also notice two other submissions ofarned counsel for the respondent. The first submission was that the confidential report which was the foundation of the order of his removal from the service of the appellant company was not communicated to the respondent and such removal based on an uncommunicated confidential report was in violation of the principles of natural justice. Reliance was placed by the learned counsel on the decision of the ‘Supreme Court in Jayanti Kumar Sinha Vs. Union of India and others, . The second submission was that the order of removal of the respondent from service of the appellant was passed because of the mala fides of Shri Venkataramanan, Chairman and Managing Director of the Company. We do not consider it necessary to examine these submissions of the learned counsel for the respondent in view of the fact that we have already held the removal of the respondent to be illegal and not conforming to the conditions of fair play.
(26) Having regard to the above, the appeal has no merit and is accordingly dismissed but with no order as to costs.