Sat Pal Sabharwal vs The Himachal Pradesh Financial Copporation and Others

R.S. Pathak, C.J.—By this and the connected writ petitions the Petitioner, Shri S.P. Sabharwal, prays for the queshing of the order removing him from service in the Himachal Pradesh Financial Corporation and the order of the Board of Directors dismissing his appeal, and he also questions the appointment of Shri Gobind Sahai Diwan, Shri Narinder Nath Diwan and Shri Ramesh Chand Sood to the offices held by them in the Corporation.

The Punjab State Financial Corporation was established under the State Financial Corporations Act, 1951, and the Petitioner was employed therein. With the reorganisation of Punjab under the Punjab Reorganisation Act, 1966, a scheme was prepared u/s 69 of that Act. The scheme provided for the reorgnisation of the Purjab Financial Corporation and the constitution of three new Financial Corporations, the Haryana Financial Corporation, the Himachal Pradesh Financial Corporation and the Delhi Financial Corporation for the State of Haryana the Union Tenitory of Himachal Pradesh and the Union territories of Delhi and Chandigarh respectively. Some members of the staff of the Punjab Financial Corporation were allotted to the respective Corporations, and the staff Regulations, mutatis mutandis, continued to be the Regulations of the four Financial Corporations. Paragraph XVIII (c) declared that with effect from April 1, 1967, the Board of Directors of the Himachal Pradesh Financial Corporation would consist of three Directors nominated by the Administrator of Himachal Pradesh, one of whom would be nominated as Chairman, a Managing Director appointed by the Himachal Pradesh Administration, and certain other Directors.

In pursuance of the aforesaid Scheme and acting u/s 3(1) of the State Financial corporations Act, 1951 (hereinafter referred to as "the Act"), the Himachal Pradesh Administration issued a notification dated March 31, 1967 establishing the Himachal Pradesh Financial Corporation (hereinafter referred to as "the Corporation") with effect from April 1, 1967. By another notification of the same date the Lieutenant Governor appointed Shri Gobind Sahai, Deputy Director of Industries, Himachal Pradesh as "the first Managing Director of Himachal Pradesh Financial Corporation with effect from 1st April, 1967, on ad hoc basis, in addition to his own duties. Simultaneously, a third notification, also of March 31, 1967, was issued u/s 10 of the Act notifying the first constitution of the Board of Directors of the Corporation. The appointment of Shri Gobind Sahai was made purportedly u/s 10(t) of the Act.

The Petitioner, who was a confirmed Assistant in the Punjab Financial Corporation, was allotted to the Union Territory of Himachal Pradesh under the Scheme of reorganisation. He represented to the Central Government that he should be allotted to Punjab or Haryana, but the request was not granted. The Petitioner says that due to his long illness he could not report for duty to the corporation until March 8, 1968, and that when he did so the Corporation did not permit him to join on the ground that he was not an employee of the Corporation. However, after his representation to the Central Government, he was permitted to join the Corporation with effect from October 9, 1968. Sometime thereafter, disciplinary action was taken against the Petitioner resulting in his removal from service by an order dated May 9, 1969, made by Shri Gobind Sahai as Managing Director of the Corporation. An appeal by the Petitioner was dismissed by the Board of Directors of the Corporation by their order dated June 10, 1969. After removal of the Petitioner from service promotions were made to the posts of Assistant Accountant, Accountant and Senior Accountant in the Corporation. In addition to the order removing him from service and the order dismissing his appeal these promotions also have been assailed by the Petitioner.

The three writ petitions were heard and dismissed by us on December 23, 1974. Subsequently, on review applications filed by the Petitioner, the judgments were set aside, and the writ petitions were restored for fresh consideration. In view of the voluminous material on the record, the Petitioner has filed a note of arguments in each case, and in his submissions he has confined himself to those notes.

Before considering the merits of the writ petitions it will be appropriate to dispose of an objection raised by learned Counsel for the Respondents to the maintainability of these writ petitions. It is urged that the Petitioner does not enjoy any statutory right and the Corporation is not bound by any statutory obligation in regard to the matters in controversy between the parties. It is pointed out that the (Staff) Regulations, 1961, which admittedly govern the rights and obligations of the parties, cannot be described as statutory provisions having the force of law, the breach of which could entitle the Petitioner to relief under Article 226 of the Constitution. To our mind, the objection is without force in view of the law laid down by the Supreme Court in Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance Corporation, , The Supreme Court had before it a number of appeals one of which concerned the Industrial Finance Corporation. In the appeal relating to the Corporation the majority took the view that the Regulations framed under the Industrial Finance Corporation Act had statutory force, that the authorities functioning there under were statutory authorities and the employees of the Corporation enjoyed statutory status, that there was a statutory obligation on the statutory authorities not to deviate from the conditions of service, that any deviation could be enforced by the legal sanction of judicial declaration, which could invalidate actions staken in violation of the rules and regulations. It was observed that the statutory regulations imposed restrictions on the employer and the employee with no option to vary the conditions, and that whenever individual rights were affected by a decision taken under statutory powers, the court would presume the existence of a duty to observe compliance with the rules and regulations imposed by statute and with the rules of natural justice. It was specifically laid down that the employees of the Corporation were entitled to a declaration of being in employment when their dismissal or removal was in contravention of statutory provisions. The Industrial Finance Corporation was held to be an "authority" within the meaning of Article 12 of the Constitution.

Now what is true of the Industrial Finance Corporation is, in our opinion, also true of the Himachal Pradesh Financial Corporation. The relevant provisions of the State Financial Corporations Act are in paramateria with the Corresponding provisions of the Industrial Finance Corporation Act. An attempt has been made to show that there is a difference between Section 43 of the Industrial Finance Corporation Act and the corresponding Section 48 of the State Financial Corporations Act. It is pointed out that whereas Section 43(2)(k) of the Central Act refers to the power of the Board to make regulations providing for "the duties and conduct of officers and servants and agents of the Corporation", there was no such provision in Section 48 of the State Act, and therefore while the regulations framed under the Central Act could have the force of law the regulations framed under the State Act did not enjoy statutory status. The distinction sought to be drawn is founded in fallacy. The mere omission to specifically include such a clause in the Act does not detract from the general power of the Board u/s 48(1) of the Act to make regulations covering the recruitment and promotion, and the conditions of service, including "the duties and conduct of officers and servants and agents of the Corporation." The particular provisions set forth in Section 48(2) are merely illustrative of the scope included in the general provision incorporated in Section 48(1). On the view taken by the Supreme Court in Sukhdev Singh (supra), it is apparent that these petitions are maintainable under Article 226 of the Constitution. The objection raised on behalf of the Respondents to the maintainability of these writ petitions is rejected.

The three writ petitions may now be considered individually on the merits.

Civil Writ Petition No. 87 of 1969:

The Petitioner prays for the quashing of the order dated May 9, 1969, removing him from service and the order dated July 1, 1969, communicating the dismissal of his appeal against the removal order, and for a direction that he be considered as continuing in service with the right to be paid his consequent pay and allowances. A further consequential relief prayed for is that he be considered for promotion before and after May 9, 1969, with resulting benefit of salary if found fit for promotion. He also prays for the quashing of the order dated March 31, 1967, appointing Shri Gobind Sahai as Managing Director and, if the Court thinks it necessary, for a declaration that the related order constituting the Board of Directors is invalid. In addition, he prays for a direction to the Corporation to make payment to him of his pay and allowances for the period April 1, 1967, to October 8, 1968. Finally, he prays for a writ in the nature of quo warranto against the third Respondent, Shri Narinder Nath Diwan, in respect of he post held by him in the Corporation.

The validity of the order dated May 9, 1969, removing the Petitioner form service is considered first. The order is assailed on a number of grounds.

It is contended that the removal order is invalid because it was made by Shri Gobind Sahai in his purported capacity of Managing Director when in law his appointment as Managing Director was invalid. There is no dispute that the (Staff) Regulations, 1961, applied to the Petitioner. He was, at the relevant time a permanent Assistant in the Himachal Pradesh Financial Corporation. Under Regulation No. 41(2) an employee can be removed from service by an order signed by the Managing Director. The Petitioner says that the appointment of Shri Gobind Sahai was not in accordance with the Act inasmuch as Section 17(1)(a) declares that the Managing Director shall "be a whole-time officer of the Financial Corporation", and Shri Gobind Sahai did not satisfy that requirement. It is pointed out that in terms of the appointment order dated March 31, 1967, Shri Gobind Sahai was appointed as Managing Director of the Corporation "in addition to his own duties" as Deputy Director of Industries, Himachal Pradesh. In reply, the Respondents say that the requirement of Section 17(1)(a) is directory only and not mandatory, and that the appointment was an ad hoc appointment merely, intended to subsist until a regular appointment was made.

Now, under the several clauses of Section 17(1), the Managing Director is to be a whole-time officer of the Corporation, he is to perform such duties as the Board may, by regulation, entrust or delegate to him, he is to hold office for a term not exceeding four years as may be specified by the State Government, he is eligible for re-appointment, and he is entitled to receive such salary and allowances as the Board, with the previous approval of the State Government, may determine. These provisions of Section 17(1) are in the nature of statutory conditions of service between the Corporation and the Managing Director. It is apparent that the requirement that the Managing Director should be a whole-time officer of the Corporation, is of mandatory character. It must be remembered that the Corporation is in tended to be run on business principles. That is clear from Section 24 of the Act. In its essential character, it is a banking organisation. The business transacted by it is detailed in Section 25 of the Act. The Managing Director is the Chairman of the Executive Committee, by virtue of Section 18, and therefore he is vested with heavy responsibilities and duties concerning the operation of the organisation. The very fact that parliament considered it necessary to specifically lay down that the Managing Director shall be a whole-time officer of the Corporation indicates that it considered this an essential requirement. When Section 17(1)(a) of the Act contemplates that the Managing Director shall be a whole-time officer of the Financial Corporation it implies that he shall not ''perform the duties of any other office. The Respondents say that the decision to constitute the Himachal Pradesh Financial corporation was taken during the last week only of March 1967, and hence there was little time left for appointing a Managing Director on a regular basis. The appointment was therefore made on an ad hoc basis. And as the volume of work in the beginning was expected to be insufficient for a whole-time officer, Shri Gobind Sahai was appointed to function as Managing Director along with his other duties as Deputy Director of Industries, Himachal Pradesh Government. Subsequently, it is pointed out, he was appointed on a regular basis as Managing Director with effect from April, 1 1971. To my mind, whatever the circumstances, the statute required strict compliance, and if Shri Gobind Sahai had to be appointed Managing Director on an ad hoc basis he should have been appointed as a whole-time officer of the Corporation. There was nothing to prevent compliance with the statutory requirement of appointing a whole-time officer, even conceding that the hurried circumstances did not enable compliance with other statutory requirements such as consultation with the Reserve Bank of India. In making his appointment in ''the terms set forth in the order of March 31, 1967, the Himachal Pradesh Administration contravened Section 17(1)(a) of the Act. The appointment, being against the provisions of the statute, was a void appointment. In University of Kashmir and Ors. v. Dr. Mohd. Yasin 1974 (1) S.L.R. 608, the Supreme Court observed that where a power was circumscribed by specific limitations, the exercise of the power in excess of those limitations would result in an ultra vires order.

The Respondents also support the validity of the appointment order dated March 31, 1967 on the submission that it was made under the scheme prepared u/s 69 of the Punjab Reorganisation Act, which, it is pointed out, is binding on the Corporation by virtue of Section 69(4) of that Act. The submission is of no assistance to the Respondents. The Scheme provided for the constitution of three new Financial Corporations, one of them being the Himachal Pradesh Financial Corporation Paragraph XVIII (c) detailed the constitution of the Board of Directors of that Corporation. Three Directors were to be nominated by the Administrator of the Union Territory of Himachal Pradesh, one of whom was to be nominated as Chairman. The Managing Director was to be nominated by the Himachal Pradesh Administration. The remaining Directors, whether nominated or elected, of the existing Punjab Financial Corporation (excepting the Directors nominated by the Governments of Punjab and Haryana, and the Administrations of Delhi and Chandigarh to the Board of Directors of the Financial Corporations constituted for those territories) were to be the Directors of the Himachal Pradesh Financial Corporation for the unexpired period of their term of office. It will be noticed that this constitution of the Board of Directors of the Corporation proceeds along the lines set forth in Section 10 of the State Financial Corporations Act. It is true that Section 69(4) of the Punjab Reorganisation Act declares that the scheme shall, notwithstanding anything to the contrary contained in any law for the time being in force, be binding on the Corporation affected by the scheme. That provision operates only where any inconsistency exists between the provisions of the scheme and the provisions of such other law. There being no inconsistency with the provisions of Section 10 of the State Financial Corporations Acts, there is no reason why the provisions of the State Financial Corporations Act should not apply in their entirety to the Board of Directors of the Himachal Pradesh Financial Corporation envisaged by this scheme. When paragraph XVIII (c) refers to a Managing Director appointed by the Himachal Pradesh Administration, it refers to a Mana-ing Director whose appointment is made by the Himachal Pradesh Administration in accordance with the provisions of the State Financial Corporations Act. Both Section 10(f) and Section 17 of the Act are fully applicable to the appointment of a Managing Director of the Himachal Pradesh Financial Corporation contemplated under the Scheme. In the circumstances, the contention of the Respondents that paragraph XVIII of the Scheme overrides Section 17 of the Act must be rejected.

The appointment order dated March 31, 1967 in respect of Shri Gobind Sahai is also attacked by the Petitioner on the ground that the appointment was made without consulting the Reserve Bank, and therefore Section 10(f) was not satisfied. Section 10(f) provides that the Board of Directors shall include a Managing Director "appointed by the State Government in consultation with the Reserve Bank". It is conceded by the Respondents that the appointment order of March 31, 1967 was not made in consultation with the Reserve Bank. The reason given again is that the appointment had to be made immediately and there was no time to consult the Reserve Bank. It is urged that the requirement of consultation with the Reserve Bank is directory and not mandatory. I am inclined to hold in favour of the Respondents on this point. In respect of Article 320(3) of the Constitution, which contains language more insistent than that before us, the Supreme Court laid down in Ram Gopal Chaturvedi Vs. State of Madhya Pradesh, that the requirement of consultation with the State Public Service Commission was not mandatory and did not afford the Government servant concerned any cause of action. Reliance was placed on State of U.P. Vs. Manbodhan Lal Srivastava, Similarly in L. Hazari Mal Kuthiala Vs. The Income Tax Officer, Special Circle, Ambala Cantt., the provision for consultation contemplated by Section 5(5) of the Patiala Income Tax Act with the Central Board of Revenue was held by the Supreme Court to be directory only and it was observed that the omission to effect such consultation would not render void the action complained of.

Learned Counsel for the Respondents also attempted to show us that the appointment of Shri Gobind Sahai as Managing Director had in fact received the concurrence of the Reserve Bank. A letter dated August 7, 1967, was placed before us. By that letter, it appears, the Reserve Bank concurred with the appointment of Shri Gobind Sahai as Managing Director as a whole-time officer of the Corporation. There is nothing to suggest that the Reserve Bank concurred with the initial ad hoc appointment of Shri Gobind Sahai made by the order dated March 31, 1967. However, in the view that the requirement of consultation with the Reserve Bank is directory only, nothing turns on the contents of that letter.

On the finding that the order dated March 31,1967 appointing Shri Gobind Sahai as Managing Director is in violation of Section 17(1)(a) of the State Financial Corporations Act and, therefore, a void order, the order removing the Petitioner from service must be considered to be without jurisdiction and void. The Supreme Court, in Municipal Corporation, Indore v. Niyamatulla AIR 1971 SC. 97, held that the order dismissing the Respondent was passed by a person who was proved not to have been invested with the powers of the Municipal Commissioner, who alone could make the order of dismissal, and therefore the order could not be treated as an act done under the statute, and consequently the Respondent''s suit was governed by Article 120 of the Limitation Act, 1908. Inasmuch as the appointment of Shri Gobind Sahai was void, he was not a Managing Director when he made the order dated May 9,1969, removing the Petitioner from service, and therefore the removal, being effected by a person without legal authority, must also be considered void.

The Respondents say that the Petitioner had acquiesced to the appointment of Shri Gobind sahai by the order dated March 31, 1957, having continued in service in the Corporation during a period when Shri Gobind Sahai was functioning as Managing Director pursuant to that order, and therefore he should not be permitted to challenge the appointment order. The submission must be rejected. The Petitioner''s substantive challenge is directed against the order removing him from service, and his conduct is relevant insofar as it affects his right to relief against that order. If in the course of considering the grant of relief against that order, it is found by the Court that the order was made by a person who had no authority to make it inasmuch as the appointment of such person is ultra vires, there is nothing to preclude the Court from holding the latter order to be void and therefore, ignoring it altogether, to hold that the removal of the Petitioner was made by a person without authority.

Another ground of attack by the Petitioner against the removal order may also be considered. On April 7, 1969, Shri Gobind Sahai issued a statement of charges against the Petitioner and called up on him to submit a reply byway of defence. It was proposed to take action under (Staff) Regulation No. 41(2). The first charge stated that he had disobeyed the order of the Managing Director and thus contravened Regulation No. 26. The second charge stated that he had wilfully absented himself from duty and thus contravened Regulation No. 33. On April 14, 1969, the Petitioner submitted his reply denying the charges. Thereafter on April, 21, 1969 Shri Gobin Sahai issued a memorandum reciting his conclusion that the Petitioner was not fit to be retained in the service of the Corporation and stating that, therefore, it was proposed to impose on him the penalty of removal from service under Regulation No. 41, and the Petitioner was given an opportunity to represent against the proposed penalty. The Petitioner filed his representation on May 5, 1969 contesting the validity of the proposed penalty. On may 9, 1969, Shri Gobind Sahai passed on order declaring that as the Petitioner was "indolent, in subordinate, disobedient and his activities are detrimental to the interest of the Corporation and he is persistently guilty of breach of discipline", he was removed from the service of the Corporation. The Petitioner contends that the removal order is invalid because he was not given a reasonable opportunity to defend himself against the charges and an enquiry, as contemplated by law, was not made into the charges framed against him. Further, in the memorandum dated April 21, 1969, the penalty of dismissal was proposed in respect of charges beyond the two charges originally framed. In respect of those additional charges, it is said, no opportunity was given to him to reply in defence on the merits to show that they were without foundation it is urged that the rules of natural justice were violated. According to the Respondents, the Board of Directors decided on March 21, 1969, to constitute a Special Sub-Committee of three Directors to go into the details of the memorandum of the Managing Director and other documents which related to various disciplinary cases against the Petitioner. It appears that Shri Gobind Sahai was a member of the Sub-Committee. It is claimed that the Sub-Committee went through the memoranda and thereafter called for full details of all the cases initiated against the Petitioner along with replies received therein. On April 16, 1969, the Sub-Committee examined all the papers and came to the conclusion that the Petitioner had been neglecting his official duties and was liable for disciplinary action. The Sub-Committee decided that he should be served with a notice to show cause why his services should not be terminated. It is stated that all the disciplinary cases, including the case on which two charges were framed on April 7, 1969, were mentioned in the memorandum dated April 21, 1969, in which the Petitioner was asked to show cause against the penalty of removal from service. It is said that in all those other cases also, the Petitioner had filed his replies, and they were considered by the Sub-Committee. It is urged further that the Petitioner was not entitled to two opportunities, one to show cause against the charges framed and a second to show cause against a proposed penalty.

Regulation 41(1) provides for disciplinary action against an employee, and one of the penalties is removal from service. Regulation 41(2) contemplates the imposition of such a penalty by an order of the Managing Director, and that "no such order shall be passed without the charge or charges being formulated in writing and given to the said employee so that he shall have reasonable opportunity to answer them in writing or in person, as he prefers, and in the latter case his defence shall be taken down in writing and read to him". Regulation 41(3) empowers the Managing Director to delegate the conduct of the enquiry against an employee, required under Sub-regulation (2), to such officer or officers of the Corporation as he may nominate in writing in that behalf. It is clear that what is contemplated by Regulation 41 is an enquiry into the allegations made against an employee before a penalty is imposed on him. Such an enquiry must follow the framing of the charges and their communication to the employee, and the reply tendered by him. To effect a proper enquiry, it is necessary that the employee should be informed of the evidence against him and he should be allowed to produce evidence in rebuttal.

The Petitioner relies on Dewan Singh v. State of Haryana 1976 (2) S.L.R. 229 . In that case Section 124(2) of the Panchayat Samities and Zila Parishads Act, 1961 contemplated an enquiry into the conduct of a servant of the Panchayat Samiti or Zila Parishad. The Supreme Court held that the reasonable opportunity contemplated in Section 124(2) implied more than notifying him of the charges and considering his reply thereto. It was observed that a reasonable opportunity to rebut the alegations had not been afforded to him. We have also been referred to Mafatlal Naraindas Barot Vs. Divisional Controller, State Transport Corporation and Another, . The Municipal Corporation, Indore (supra), Prakash Chand Maheshwari and Another Vs. The Zila Parishad, Muzaffarnagar and Others, and Sirsi Municipality by its President Sirsi Vs. Cecelia Kom Francis Tellis, But these cases may be noticed only briefly. In Mafatlal Narandas Barot (supra) no opportunity at all to show cause against a disciplinary action was given. In Municipal Corporation, Indore (supra) the Supreme Court affirmed that the order of dismissal against the employee had been passed by a person not authorised in that behalf. Prakash Chand Maheshwari (supra) is a case where no question arose of disciplinary action against an employee, it relates to the validity of the imposition of tax. In Sirsi Municipality (supra) the services of the employee were terminated, in contravention of Rule 143 of the Sirsi Municipality Rules inasmuch as no defence of the employee was recorded and the dismissal was without a written order.

In the instant case, it will be noticed that two charges were framed on April 7, 1969. Thereafter, additional charges were mentioned in the memorandum dated April 21, 1969. Those were charges which had been framed at an earlier stage and to which the Petitioner had submitted his replies. But we have been unable to discover any material on the record showing that the evidence in support of all the charges was put to the Petitioner and the enquiry held contemplated that the Petitioner would be allowed an opportunity to adduce evidence in rebuttal. The record is wholly deficient in that respect, and it seems difficult to hold that the essential requirements of an enquiry into charges which could result in a penalty were fully complied with.

The Petitioner challenges the validity of the proceedings before the Special Sub-Committee on the ground that he was not afforded an opportunity to participate in those proceedings. Reliance is placed on Khem Chand Vs. The Union of India (UOI )and Others, and State of Gujarat Vs. R.G. Teredesai and Another, , Ghanshyam Das Shrivastava Vs. State of Madhya Pradesh, . State of Maharashtra Vs. Bhaishankar Avalram Joshi and Another, and Uttar Pradesh Government Vs. Sabir Hussain, In our opinion, when the enquiry was entrusted to the special Sub-Committee the Petitioner was entitled to participate in that proceeding. He would then have been in a position to know fully what was the evidence relied on against him and to produce before the Special Sub-Committee the material on which he relied. It is urged for the Respondents that the Petitioner did not ask for any documents. He could have done so, it seems to us, if he had been allowed participation in the proceedings before the Special Sub-Committee. The material before us does not show that participation by the Petitioner in the proceedings was envisaged when the Special Sub-Committee was constituted and the charges against the Petitioner were referred to it.

It is urged by the Petitioner that the recommendations of the Special Sub-Committee should have been supplied to the Petitioner inasmuch as they guided and influenced the "show cause" notice served on him. Reliance is placed on Mafatlal Narandas Barot (supra). In that case a copy of the document was specifically required to be given to the employee. We have also been referred to State of Gujarat Vs. R.G. Teredesai and Another, , State of Maharashtra Vs. Bhaishankar Avalram Joshi and Another, and Uttar Pradesh Government Vs. Sabir Hussain, . It is true that these cases required the consideration of Article 311(2) of the Constitution, which, does not in terms apply in the present case. The Petitioner was an employee of a statutory corporation and cannot be said to be a member of a Civil Service of the Union or of an All India Service, or of a Civil Service of a State, or to be holding a civil post under the Union or a State. But the principles of natural justice require that when the recommendations of the Special Sub-Committee were considered relevant in issuing the "show cause" notice, a copy should have been supplied to the Petitioner.

The next contention of the Petitioner is that Regulation 41(3) provides for an enquiry by an officer or officers of the Corporation, and the Directors who constituted the Special Subcommittee cannot be described as officers of the Corporation. It may be possible to say, having regard to Regulation 7(1), that a Director of the Corporation is not an officer. Officers are envisaged as members of the permanent staff of the Corporation. The Directors contemplated by Section 10 of the State Financial Corporations Act do not fall in that category. But the mere circumstance that Directors, and not officers, of the Corporation had conducted the enquiry cannot vitiate the proceedings. It can be presumed that an enquiry by the Directors stands on a higher footing than an enquiry by mere officers. The State Financial Corporations Act and the Regulations recognise a higher status in the Directors than they accord to officers of the Corporation, and we do not see why an enquiry conducted by the Directors should be regarded as a contravention of Regulation 41(3). This point is decided against the Petitioner.

Finally, it is contended by the Petitioner that the "show cause" notice and the removal order gave no reasons for holding that the explanation tendered by the Petitioner was not satisfactory. We are referred to Mahabir Prasad Santosh Kumar Vs. State of Uttar Pradesh and Others, The The State of Punjab and Others Vs. Bakhtawar Singh and Others, and B.D. Gupta Vs. State of Haryana, The principal object of the requirement that a quasi-judicial order should state the reasons underlying it is the need for positive evidence that the authority passing the order has applied his mind to all relevant matters before making the order, and that the person against whom it is made should know why it has been made. That is the basis of the rule enunciated by the Supreme Court in the three cases mentioned above. In Mahabir Prasad (supra), the Supreme Court found no evidence that an attempt was made by the authority to reach a conclusion according to law and justice. In The State of Punjab etc. (supra) the order did not disclose that the Minister had applied his mind to the material on the record, and what were the charges found established against the aggrieved party. So also, in Shri B.D. Gupta (supra), the Supreme Court was unable to hold that all the relevant facts and circumstances had been considered when making the impugned order. In the present case, the facts show that Shri Gobind Sahai was a member of the Special Sub-Committee which considered all the cases against the Petitioner and he had examined the material in respect of them, and it was thereafter that he issued the memorandum dated April 21, 1969, and subsequently made the order dated May 9, 1969. The order dated May, 1969, whereby the Petitioner was removed from service, is a speaking order. The findings are clearly given. The Petitioner was found indolent, insubordinate, disobedient and his activities were described as detrimental to the interests of the Corporation, besides the fact that he was persistently guilty of breach of discipline. It is a very different order from that considered in all the three cases relied on by the Petitioner.

It is now appropriate to deal with the Petitioner''s challenge to the appellate order made by the Board of Directors. Against the order dated May 9, 1969, the Petitioner filed an appeal. An appeal lay under Regulation 43(b) of the (Staff) Regulations, 1961. The memorandum of appeal was filed on May 21, 1969, and a supplementary memorandum of appeal was filed on May 29, 1969. Both appeals were dismissed by the Board of Directors on June 10, 1969, and this was communicated to the Petitioner by Shri Gobind Sahai by his letter dated July 1, 1969. A perusal of the grounds in the two memoranda of appeal fails to show that the Petitioner took any objection to the removal order on the ground that it had been made by Shri Gobind Sahai when he had not been validity appointed Managing Director. The Petitioner contends that as it was made by a person without authority it is open to him to challenge it directly in this Court, and his omission to take the ground in appeal cannot bar him from doing so. In our opinion, the Petitioner is right. The removal order was made by Shri Gobind Sahai, and on that date he could not in law be described as the Managing Director of the Corporation. The order is a nullity. In the circumstances, the removal order cannot be said to have merged in the appellate order. It is open to the Petitioner to challenge the removal order directly. See State of U.P. vs. Mohammad Nooh AIR 1958 S.C. 86, The Petitioner also relies on Mafatlal Narandas Barot (supra), The Municipal Corporation, Indore (supra), and Uttar Pradesh Government (supra), but it does not appear that the Supreme Court considered this point in those cases.

It is urged by the Petitioner that the appellate order is not a speaking order. In regard to that contention, it may be pointed out that there is no appellate order on the record before us. What has been filed by the Petitioner is a letter dated July 1, 1969, from Shri Gobind Sahai intimating that the appeals have been dismissed. No attempt has been made by the Petitioner to secure the filing of the appellate order itself. Consequently, it is not possible to say whether the appellate order was not a speaking order.

We are of opinion that the order of May 9, 1969, removing the Petitioner from service is void on the ground that Shri Gobind Sahai, who made it, was not in law Managing Director of the Corporation, and further because the enquiry held into the charges against the Petitioner was vitiated by a breach of the principles of natural justice. This part of the case must be disposed of in favour of the Petitioner.

It is urged by learned Counsel for the Respondents that inasmuch as the appeals filed by the Petitioner challenged the validity of the enquiry proceeding, and the appeals were dismissed by the Board of Directors the question as to the validity of that proceeding stood concluded by the order made by the Board. Any defect in the constitution of the Board by reason of Shri Gobind Sahai, who made the order under appeal, being member of it is cured, it is said, by Section 14(3) of the Act. Section 14(3) declares:

(3) No act or proceeding of the Board shall be questioned on the ground merely of the existence of any vacancy in or any defect in the constitution of the Board.

It seems to us that this protective provision cannot be (availed of. In the memorandum of appeal filed by him the Petitioner had specifically raised objection to Gobind Sahai being member of the Board when his appeal was disposed of. The ground was clearly stated in the memorandum of appeal. It is obvious that a person who has made an order cannot sit in appeal over it. It is also an elementary principle of law that such a person cannot be a member of an appellate body before whom the order is questioned. The principle is so deeply rooted in legal jurisprudence and considerations of fair play that very strong and clear statutory language is required to displace it. Now, how far does the protection envisaged by Section, 14(3) extend? In the case of a defect in the constitution of Board, no act or proceeding of the Board shall be questioned on the ground of such defect if the fact of the defect is discovered afterwards. That is the reasonable construction to place on Section 14(3). It could never have been intended by Parliament, when enacting the provision, that a Board should proceed to transact business if it was already conscious of a defect in its constitution. That being so, the appellate order must be struck down on the principles laid down by the Court of Appeal in England in Kanssen v. Rialto (West End) Ltd. (1944) 1 A.E.R 751, affirmed by the House of Lords in Morris v. Kanseen (1946) 1 A.E.R. 586, principles which to our mind, apply with full force, to the case before us.

Accordingly, the appellate order dated June 10, 1969, must be held invalid.

The Petitioner, having succeeded in showing that the order removing him from service is void, is entitled to be considered as continuing in the service of the Corporation on the date of the removal order. It will now be for the Corporation to pass further orders in accordance with the powers entrusted to it under the Act and the Regulations in order so give effect to this declaration and grant such benefits as the Petitioner may be entitled to in law.

There is a prayer that the Petitioner be promoted to higher posts in the Corporation, wherever higher posts were filled up before and after the removal of the Petitioner by the order dated May 9, 1969. Promotions are governed by Regulation 23 of the (Staff) Regulations, 1961. Regulation 23 provides:

All appointments and promotions shall be made at the discretion of the Corporation and, notwithstanding any seniority in a grade, no employee shall have a right to be appointed or promoted to any particular post or grade.

It is clear that the matter rests entirely in the discretion of the Corporation, and therefore no writ, direction or order is called for.

The next point for consideration is the Petitioner''s claim to salary for the period April 1, 1967, to October 8, 1968. On the constitution of the Himachal Pradesh Financial Corporation on April 1, 1967, the Petitioner was allotted from that date to that Corporation. The case of the Petitioner is that although he was required to report for duty in the Himachal Pradesh Financial Corporation on April 3, 1967, he was "unable to do so because of illness, which extended into the month of July, 1967. On July 11, 1967, it appears, an order was made re-alloting him to the Haryana Financial Corporation. Pursuant to that order, he reported for duty to the latter Corporation on August 1, 1967, but was not permitted to enter upon his duties. Thereafter he filed a writ petition in the Punjab and Haryana High Court seeking an enforcement of the order re-allotting him to the Haryana Financial Corporation, but meanwhile that order was withdrawn and therefore the original order allotting him to the Himachal Pradesh Financial Corporation stood restored. Thereupon he reported for duty on March 8, 1968, to the Himachal Pradesh Financial Corporation and was allowed to join on October 9, 1968, only. The Petitioner says that in the circumstances he is entitled to be considered as having been in the employment of the Himachal Pradesh Financial Corporation throughout from April 1, 1967, and is entitled to salary for that period. He refers us to his application dated May 4, 1968, addressed to the Deputy Secretary to the Government of India, Ministry of Finance, whereby he had prayed for a direction to the Himachal Pradesh Financial Corporation to permit him to join duty therein. On August 27, 1968, a Note was prepared in the Ministry of Law, Government of India, affirming that at all material times the Petitioner remained an employee of the Himachal Pradesh Financial Corporation, and that whatever may be the position with regard to his pay during the period preceding March 8, 1968, on which date he reported for duty to the Himachal Pradesh Financial Corporation, the said Corporation was bound to employ and pay him thereafter. It was bound to do so in fulfillment of its obligations under the Scheme. It appears that on this the Government of India wrote to the Himachal Pradesh Administration on September 4, 1968, advising the Corporation to take the Petitioner in employment at an early date and to settle the matter. On January 20, 1969, a letter was despatched by the Government of India to the Himachal Pradesh Financial Corporation, enclosing a copy of the Note recorded by the Ministry of Law, and conveying the legal advice that the Corporation was bound to pay the Petitioner his salary from March 8, 1968 to October 8, 1968. It also expressed the opinion that salary for the period of leave, April 1, 1967 to July 31, 1967, was also apparently payable by the Corporation. The question whether salary was payable for the period August 1, 1967 to March 7, 1968, was left open. According to the Respondents the matter regarding treatment of the period of absence of the Petitioner from April 1, 1967 to August 8, 1968 was placed before the Board of Directors on March 21, 1969, and this matter was referred to a Special Sub-Committee. The Sub-Committee met on April 10, 1969, and decided that a reference be made to the Reserve Bank of India, Bombay, for their opinion, and in case the legal advice received from the Government of India was accepted by the Reserve Bank the Petitioner would be paid his salary with effect from March 8,1968. The period April 1, 1967 to March 7, 1968, it decided, should be treated as leave without pay. It is said that the advice of the Reserve Bank was received on August 8, 1969, and the matter was placed before the Board on August 29, 1969, but before the Board could take a decision the instant writ petition was filed by the Petitioner and the matter became sub-fadice. On the aforesaid material, it appears that the period April 1, 1967, to March 7, 1968, is being treated by the Corporation as leave without pay. The Corporation has yet to decide whether the Petitioner is entitled to salary for the period March 8, 1968 to October 8, 1968. In regard to the claim of salary for the period April 1, 1967 to March 7, 1968, the Petitioner relies on Union of India vs. Baij Nath 1972 S.L.R. 382, We do not see how that decision can help the Petitioner. It was held by the Delhi High Court there that the employee was entitled to full pay and allowances for the period of suspension because no valid order had been made under Fundamental Rule 54(1). In the present case, the Corporation has decided to treat the absence of the Petitioner during that period as leave without pay, and nothing has been shown to indicate that the decision is invalid. The Petitioner has referred us to Bihar State Road Transport Corporation Vs. State of Bihar and Others, but in that case the Supreme Court only said that the employee was entitled to his wages in the absence of any valid termination of his services. In regard to the claim of the Petitioner for the period March 8, 1968 to October 8, 1968, we are clear that the Petitioner is entitled to salary for that period. The Petitioner knocked at the doors of the Corporation seeking admission to perform his duties as an employee of the Corporation. He was denied that right, and was allowed to join only on October 9, 1968. It was not his fault that he did not work for that period; he was not allowed to do so wrongly by the Corporation. He is therefore entitled to an order directing the Corporation to pay him salary for the period March 8, 1968 to October 8, 1968. It is pointed out by learned Counsel for the Respondents that the Corporation has not refused to pay the Petitioner salary for that period, and inasmuch as there has been no refusal by the Corporation to pay the salary no direction should be issued by this Court. From what has been narrated earlier, it is apparent that the manner in which the Corporation has proceeded to consider the Petitioner''s claim to salary for the period mentioned above does not inspire confidence, and it is appropriate that a direction should issue in order to remove all uncertainty in the matter.

Finally, the Petitioner prays for a writ in the nature of quo warranto against Shri Narinder Nath Diwan, challenging his appointment to the post held by him in the Corporation.

Shri Narinder Nath was an employee in the Industries Department of the Himachal Pradesh Government. He was placed on deputation with the Corporation, and was appointed Assistant Accountant in the Corporation with effect from April 1, 1969. Thereafter he was appointed to the post of Accountant with effect from May 10, 1969, with the approval of the Board of Directors. On August 29, 1970, the Board of Directors decided on the permanent absorption of some members of the staff, including Shri Narinder Nath. An offer was made by the Corporation to him for appointment in the Corporation as an Accountant on a permanent basis. Shri Narinder Nath accepted the offer and submitted his resignation from Government service on May 1, 1971, for acceptance with effect from July 3, 1971, on which date he completed ten years of service with the State Government. The State Government accepted the resignation with effect from July 3, 1971, although the order of acceptance was issued on September 1, 1971. Accordingly, Shri Gobind Sahai, as Managing Director, made an order appointing Shri Narinder Nath, in the permanent service of the Corporation with effect from July 3, 1971. Thereafter, on December 4, 1972, the Board of Directors of the Corporation decided to promote Shri Narinder Nath to the post of Senior Accountant (now designated as Development Officer), and Shri Gobind Sahai, as Managing Director, issued the order dated December 4,1972, appointing Shri Narinder Nath to that post. It appears that before the permanent absorption of Shri Narinder Nath with effect from July 3, 1971, he was treated as if he was on probation notwithstanding that he was in fact still on deputation with the Corporation and enjoyed a lien to his post in the State Government. These facts are set out in the return dated June 15, 1974, filed by Shri Narinder Nath.

It is contended by the Petitioner that the appointment of Shri Narinder Nath was in contravention of Regulation 2(2). Regulation 2(2) has nothing to do with the matter. The provision deals with a case where there is a special contract between the Corporation and an employee at variance with the terms and conditions set forth in the Regulations. In the present case, Shri Narinder Nath was initially a Government servant on deputation with the Corporation. Subsequently his service stood terminated in the State Government on July 3, 1971, and he was appointed on a permanent basis with the Corporation with effect from that date. His appointment on that date was in the nature of direct recruitment in the Corporation. He was apparently treated as on probation for the period immediately preceding the date of his permanent absorption in the service of the Corporation and the question is whether his entry into permanent service on July 3,1971, was under a valid appointment order.

In the main, two methods of appointment in the service of the Corporation are contemplated by the Regulations to posts of a permanent character. One is by direct recruitment, and the other is by promotion. Chapter II of the Regulations relates to officers and employees directly recruited in the service of the Corporation. It appears from Regulation 15 that in all cases, whether officer or employee, it is necessary that a direct recruit be placed on probation. Regulation 15(1) provides that an officer shall be required to be on probation for a minimum period of one year and a maximum period of three years. Regulation 15(2) provides that an employee, not covered by Regulation 15(1), shall on his first appointment in the service of the Corporation be required to be on probation for at least six months. These are the provisions of Chapter II on which reliance is placed by the Respondents with reference to their case that Shri Narinder Nath was placed on probation before being absorbed in the permanent service of the Corporation.

Chapter III of the Regulations deals with appointment by promotion. Regulation 21 provides for the maintenance of a record of service in respect of each employee. Regulation 22 provides for the determination of seniority of employees. Regulation 23 provides that appointments and promotions shall be made at the discretion of the Corporation. Regulation 24 provides for reversion. It is beyond dispute that the concept of promotion necessarily implies that the promoted employee is already in the service of the Corporation. He must be in service in the eye of law, and if he claims to be in service on the basis of an order of appointment which is void, it must be held that the order promoting him to the higher post is also invalid. If he has no legal status when holding the inferior post, he is not an employee of the Corporation, and therefore having regard to the concept of promotion he cannot in law be said to be promoted to a superior post.

Now inasmuch as the appointment of Shri Narinder Nath to the post of Accountant with effect from July 3, 1971, must be regarded in the nature of direct recruitment, the provisions of Regulation 15(1) come into play and it is necessary that he should have been on probation for the period mentioned in that provision. However, he was still on deputation until July 3, 1971, when he severed his connection with the State Government. Therefore, he cannot be said to be on probation upto that date. He could be on probation only if he had ended his employment in the State Government and was then appointed as a direct recruit on probation. But assuming that he could be validly appointed on probation even while on deputation, as is his case, the order appointing him on deputation must have been made by Shri Gobind Sahai as Managing Director before April 1, 1971., having regard to the period of probation contemplated by Regulation 15 and bearing in mind that the period of probation must be considered to have ended on July 3, 1971, when he was substantively appointed. It has been held already that for the period prior to April 1, 1971, Shri Gobind Sahai cannot be regarded as a validly appointed Managing Director. Therefore, the order appointing Shri Narinder Nath on probation must be held void. If that order is void, the order appointing him substantively with effect from July 3, 1971, is also void. Accordingly, considered as a case of direct recruitment it must be deemed in law that on July 3, 1971, Shri Narinder Nath did not become an employee of the Corporation. Considered as a Government servant on deputation, his service in the Corporation on that basis came to an end on July 3, 1971, when he terminated his connection with the State Government. Whichever way the matter is looked at, it seems inescapable that Shri Narinder Nath ceased to be, in law, in the service of the Corporation on July 3, 1971. The law could not recognise him as an employee of the Corporation from that date. That position continued on December 4, 1972. Accordingly, when an order was made on that date purporting to promote him from the post of Accountant to Senior Accountant (Development Officer), that order was without legal effect. It was intended as an order of promotion, and there could be no promotion of a person who on the date of the order was not an employee of the Corporation.

It is submitted by learned Counsel for the Respondents that having regard to the stand taken by the Petitioner in paragraph 5 of his reply to C.M.P. No. 331 of 1973 in this writ petition he cannot be allowed to maintain that the appointment of Shri Gobind Sahai by the order dated March 31, 1967, is invalid. We are referred to the statement in that paragraph that "in view of C.W.P. No. 75 of 1971 the writ of quo warranto prayed for against Shri Dewan Gobind Sahai in this writ petition is in fructuous now". This submission is made by the Respondents both in respect of the Petitioner''s prayer for quashing the order dated May 9, 1969, removing him from service and the appointment order of Shri Narinder Nath. Now a perusal of the reliefs claimed in the writ petition discloses that a number of specifically defined reliefs were claimed. One of them only was a writ in the nature of quo warranto against Shri Gobind Sahai challenging his appointment as Managing Director. By other reliefs the Petitioner specifically prayed for the guashing of the removal order and a writ in the nature of quo warranto challenging the appointment of Shri Narinder Nath. It is also evident from the contents of the writ petition that the common ground underlying both challenges is the invalidity alleged in the appointment of Shri Gobind Sahai as Managing Director by the order dated March 31, 1967. Besides, it will also be noticed that in paragraph 5 of the reply in C.M.P. No. 331 of 1973 mentioned above the Petitioner, while stating that his relief for a writ in the nature of quo warranto against Shri Gobind Sahai had become infructuous, nevertheless maintained: "However, the writ petition of quo warranto against Shri N. N. Dewan Respondent No. 3 is maintainable". It is apparent that while the Petitioner can be said to have abandoned his specific prayer for a writ in the nature of quo warranto challenging the validity of the appointment of Shri Gobind Sahai, he did not abandon any of the grounds on the basis of which he challenged the validity of his removal order and of the order appointing Shri Narinder Nath.

It is urged by learned Counsel for the Respondents that a collateral attack against the appointment of Shri Gobind Sahai by the order dated March 31, 1967, is not permissible. It is contended that therefore the alleged invalidity of the appointment of Shri Gobind Sahai cannot be made a ground of attack for challenging the removal order of the Petitioner and the appointment of Shri Narinder Nath. The contention appears to be without substance. If the appointment of Shri Gobind Sahai is void, it can be ignored in the eye of law and it is open to the Petitioner to maintain that the person removing the Petitioner from service and making the order appointing Shri Narinder Nath in the Corporation was a person without authority and therefore the orders made by him are void.

Learned Counsel for the Respondents then contends that the Petitioner is not entitled to challenge the order dated May 9, 1967, removing him from service nor the appointment of Shri Narinder Nath to the various posts held by him on the ground of laches. It is pointed out that in both matters the case of the Petitioner proceeds on the basis that the order dated March 31, 1967, appointing Shri Gobind Sahai as Managing Director is invalid. It is urged that this writ petition was filed over two years after that order was made. The contention is easily disposed of. It has been shown that the order dated March 31, 1967, is a void order. The Petitioner was aggrieved by that order only when he was removed from service by the order dated May 9, 1967. So also that question arose in the case against Shri Narinder Nath only when the latter was appointed purportedly on probation as an Accountant in May, 1969. Subsequent appointments concerning him were made during the pendency of the writ petition. In respect of the challenge to his removal order and to the appointment of Shri Narinder Nath the Petitioner was entitled to show that the order dated March 31, 1967, appointing Shri Gobind Sahai was a void order and must therefore be ignored when considering whether Shri Gobind Sahai was entitled to function as Managing Director. We are unable to hold that the reliefs sought by the Petitioner are barred by laches.

It is also suggested by learned Counsel for the Respondents that the Petitioner has been guilty of suppression of facts, and therefore relief should be denied to him. It is pointed out that the Petitioner has not referred to the fact that he had filed a writ petition (No. 2704 of 1967) in the Punjab and Haryana High Court for his allotment to the Punjab Financial Corporation or the Haryana Financial Corporation, and he also omitted to mention that he had filed a writ petition in May, 1969 before the Himachal Bench of the Delhi High Court in which he prayed substantially for the same reliefs as those claimed in the instant writ petition. Having considered the matter carefully, we do not find it possible to hold that the Petitioner has been guilty of suppression of material facts. The writ petition filed in the Punjab and Haryana High Court was concerned with matters entirely different from those involved in the instant writ petition. The writ petition filed in 1969 was withdrawn by the Petitioner on the ground that it was premature inasmuch as his appeal was pending against the order removing him from service. Nothing can be said to have been decided in that writ petition, and the Petitioner is not precluded from raising the points which he has, and in claiming the reliefs which he presses for, in the instant writ petition.

Learned Counsel for the Respondents next says that the Petitioner, by reason of his record while in the service of the Corporation, should not be reinstated in the Corporation. We are referred to the Memoranda dated March 27, 1953, May 24/31, 1965, and April 11, 1969, copies of which are annexed to the writ petition and, it is said, they reflect poorly on the character and qualities of the Petitioner as an employee. These documents have been considered carefully by us, but the material contained therein does not, in our opinion, constitute sufficient reason for denying relief to the Petitioner.

The remaining submissions of learned Counsel for the Respondents may be noticed. He urges that a writ in the nature of quo warranto against Shri Narinder Nath should be denied because the various offices held by Shri Narinder Nath cannot be described as public offices, that no writ should be granted when the same appointment can be made again in respect of the same person, and lastly because in the public interest the validity of the acts of Shri Narinder Nath already performed in office which affect a large number of persons who are not parties to this writ petition, should not, by the issue of such writ be allowed to be prejudiced. On the facts of the instant case none of the considerations suffice to deny the grant of a writ in the nature of quo warranto. It has already been observed that after the decision of the Supreme Court in Sukhdev Singh (Supra) the offices held by Shri Narinder Nath must be regarded as public offices. Further, it is not possible to say with conclusive certainty that if the appointment orders of Shri Narinder Nath are quashed, they will necessarily be repeated in the terms in which they were made. The reliance placed on Smt. Indira Nehru Gandhi Vs. Shri Raj Narain and Another, and P.L. Lakhanpal v. Ajit Nath Ray AIR 1975 Del 66, is misconceived. It has not been shown to us how the decision of the Supreme Court in the former case is relevant. So far as the latter case is concerned, it is clear that the issue of a writ in the nature of quo warranto was considered futile by the Delhi High Court because as a result of the resignation of the three Judges of the Supreme Court who were senior to Mr. Justice A.N. Ray, the latter became the seniormost puisne Judge and, therefore, even on the case set up by the Petitioner he would have been entitled to appointment as Chief Justice of India. As regards the submission that the acts of Shri Narinder Nath while holding office should not be allowed to suffer by the issue of the writ claimed by the Petitioner, it has not been shown by learned Counsel for the Respondents that those acts will become invalid on the appointment orders being struck down.

While concluding the judgment in this writ petition, it may be mentioned that learned Counsel for the Respondents has relied on some observations made in the judgments delivered in this case in the first instance ILR 1975 (Him) 99. Inasmuch as those judgments have been recalled by our order dated January 16, 1976, allowing the review petitions filed by the Petitioner, no reliance can legitimately be placed on those observations. It must be deemed that those judgments do not exist.

In our opinion, the Petitioner is entitled to an order quashing the order dated May 9, 1969, made by Shri Gobind Sahai removing him from the service of the Corporation, and the order dated June 10, 1969, of the Board of Directors of the Corporation dismissing the Petitioner''s appeal, and to an order directing the Corporation to treat the Petitioner as continuing in service on the date of the removal order. In consequence thereof, the Corporation will consider and pass appropriate orders in accordance with law in regard to the Petitioner, including orders in respect of such benefits as he may be entitled to. The Petitioner is also entitled to an order directing the Corporation to pay him his full pay and allowances for the period March 8, 1968 to October 8, 1968. A writ in the nature of quo warranto shall also issue quashing the appointment of the third Respondent, Shri Narinder Nath Dewan to the posts of Accountant and Senior Accountant (Development Officer) held by him in the Corporation. No such writ need be issued in respect of the post of Assistant Accountant, as that was held on deputation, and cannot in law be said to be of any relevance as Shri Narinder Nath has left the service of the State Government. These are the only reliefs which may be granted to the Petitioner.

Civil Writ Petition No. 98 of 1970;

By this writ petition, the Petitioner prays for a writ in the nature of quo warranto against Shri Ramesh Chand Sud challenging the validity of his appointment to the office held by him in the Himachal Pradesh Financial Corporation.

Shri Ramesh Chand Sud, cited as the third Respondent in this writ petition, was an employee of the Himachal Pradesh Government. The Government placed him on deputation with the Himachal Pradesh Financial Corporation and he was appointed Assistant Accountant in the Corporation with effect from May 1, 1967. He proceeded on long leave in March, 1969. During his absence on leave the Board of Directors of the Corporation, in a meeting held on August 29, 1969, decided to promote Shri Ramesh Chand from the post of Assistant Accountant to the post of Accountant with effect from May 8, 1969, and to further promote him to the post of Senior Accountant with effect from September 8, 1969, on his return from leave, and that he was to be on probation of one year from that date with a view to consider him for permanent absorption in that post in the Corporation. On September 10, 1969, Shri Gobind Sahai, as Managing Director, issued an order giving effect to the decision of the Board reached in the aforesaid meeting. A copy of the order is Annexure R. 6 to the affidavit of Shri Gobind Sahai dated November 10, 1972. On March 20, 1970, the Board of Directors decided to absorb Shri Ramesh Chand permanently in the service of the Corporation and subsequently on August 29, 1970, the Board revised the pay scales with effect from September 1, 1970 and decided to permanently absorb Shri Ramesh Chand as Senior Accountant in the revised scales of pay. Pursuant to the decision of the Board, Shri Gobind Sahai, Managing Director, made an offer to Shri Ramesh Chand for his permanent absorption in the service of the Corporation. The offer was accepted by Shri Ramesh Chand, and he submitted his resignation from Government service on February 16, 1971, the resignation to take effect from May 1, 1970. The resignation was accepted by the State Government on March 24, 1971, with effect from May 1, 1970. According to Shri Ramesh Chand, he stood permanently absorbed in the service of the Corporation with effect from May 1, 1970. Subsequently the Board of Directors, in a meeting held on December 10, 1971, decided to promote Shri Ramesh Chand from the post of Senior Accountant to the post of Secretary on a temporary basis for one year and an order was made accordingly. Thereafter the Board, in its meeting held on December 4, 1972, decided to regularise the promotion of Shri Ramesh Chand to the post of Secretary with effect from December 10, 1971. Shri Gobind Sahai, as Managing Director, issued necessary orders from time to time relating to the permanent absorption of Shri Ramesh Chand in the service of the Corporation and to his promotion from one post to another.

The Petitioner has raised a number of grounds in support of his writ petition. Many of them correspond closely to the grounds taken by him in Civil Writ Petition No. 87 of 1969 in respect of the case against Shri Narinder Nath. The Petitioner contends that the appointment orders in respect of Shri Ramesh Chand made by Shri Gobind Sahai as Managing Director before April 1, 1971, are invalid because the order appointing a Managing Director on March 31, 1967, was invalid, and those appointments being invalid, subsequent appointments made by way of promotion will also be invalid. It is also urged that no valid appointment could be made with a view to permanent absorption so long as Shri Ramesh Chand remained on deputation, and subsequent appointments made on permanent absorption of Shri Ramesh Chand in the Corporation would consequentially be invalid. It is also contended that the Regulations do not provide for absorption of officers on deputation but for direct recruitment and there is no scheme for transfer of Government servants to the service of the Corporation.

There appears to be some difficulty in appreciating whether the appointments of Shri Ramesh Chand as Senior Accountant and thereafter as Secretary were made directly by the Board of Directors or by Shri Gobind Sahai, as Managing Director, with the approval of the Board of Directors. The position is not clear from the material on the record. It is not necessary, however, to pursue this matter further. It seems that the other contentions raised by the Petitioner will suffice to dispose of his claim to relief. In substance, those contentions amount to this. The only way in which Shri Ramesh Chand could be inducted into the permanent service of the Corporation was by direct recruitment. That is apparently what was meant when the Board of Directors spoke of his permanent absorption in the Corporation. As the Petitioner rightly contends, there is no other way. The direct recruitment of permanent absorption took place, according to the Respondents, on May 1, 1970. In other words, Shri Ramesh Chand was appointed by way of direct recruitment to the post of Senior Accountant with effect from that date. Now, Regulation 15 requires that an officer or employee directly recruited must serve on probation for the period prescribed therein. On the facts before us, it appears that the Board decided that Shri Ramech Chand should be on probation for one year from September 8, 1969, in the post of Senior Accountant. The probation envisaged can possibly have been of some assistance only if it can be treated as probation in the light of the Regulations. The appointment on probation on September 8, 1969, was, however, invalid ab initio because Shri Ramesh Chand was still on deputation at the time, and the Regulations do not contemplate an officer on deputation being placed on probation. As has been observed in Civil Writ Petition No. 87 of 1969, Regulation 15 envisages a directly recruited officer or employee being placed on probation. An officer or employee is first directly recruited, then placed on probation, and Ion the expiry of the period of probation it is decided whether he should be confirmed. A Government servant on deputation cannot be placed on probation. Clearly, the order placing Shri Ramesh Chand on deputation in the post of Senior Accountant with effect from September 8, 1969, is void. In law, therefore, Shri Ramesh Chand was never on deputation in the post of Senior Accountant. That being so, his appointment in that post with effect from May 1, 1970, intended by way of permanent or substantive appointment, cannot be recognised. It has already been said that direct recruitment in the Corporation requires a period of probation, and then follows confirmation in the post. It is not possible to escape the conclusion that the appointment of Shri Ramesh Chand in the post of Senior Accountant is contrary to the Regulations and therefore void. Consequently, his appointment to the post of Secretary, being in the nature of a promotion, must, for the reasons already set forth in regard to Shri Narinder Nath in Civil Writ Petition No. 87 of 1969, also be declared invalid. On the date when Shri Ramesh Chand was purportedly promoted to the post of Secretary, he was not in law an employee of the Corporation. His period of deputation had come to an end with effect from May 1, 1970, and he had not in law been directly recruited in the service of the Corporation. In the result, the Petitioner is entitled to a writ in the nature of quo warranto quashing the appointment of Shri Ramesh Chand in the post of Senior Accountant and of Secretary held by him in the Corporation. It is not necessary to consider the validity of his appointment in the post of Assistant Accountant or Accountant because those appointments were made when he was still on deputation, and in view of this leaving Government employment, those appointments are no longer relevant. On be half of the Respondents the same points were raised in defence as in the matter of appointment of Shri Narinder Nath in Civil Writ Petition No. 87 of 1969. For the reasons contained in the judgment on that writ petition, those points must also fail here.

Civil Writ Petition No. 75 of 1971:

In this writ petition, the Petitioner prays for a writ in the nature of quo warranto against Shri Gobind Sahai challenging his appointment as Managing Director of the Himachal Pradesh Financial Corporation. Although certain other reliefs have also been prayed for in the writ petition, that is the only relief claimed now in the written note filed in this case.

Shri Gobind Sahai, as has been mentioned above, was Deputy Director of Industries, Himachal Pradesh, when on March 31, 1967, he was appointed Managing Director of the Himachal Pradesh Financial Corporation in addition to his own duties with effect from April 1, 1967. Subsequently, on March 30,1971, a notification was issued by the Governor of Himachal Pradesh appointing Shri Gobind Sahai on deputation as Managing Director of the Corporation for a period of three years in the first instance. The appointment purported to have been made in consultation with the Reserve Bank of India as required by Section 10(f) of the State Financial Corporations Act. The period of deputation was stipulated at a maximum of three years, liable to extension for a further period of one year. The deputation was regarded as a transfer on foreign service. The appointment of Shri Gobind Sahai is challenged on the ground that the deputation was not in accordance with Fundamental Rule 111 of the Fundamental and Supplementary Rules inasmuch as the duties to be performed after the transfer were not such as should, for public reasons, be rendered by a Government servant and there was no public reason requiring that the duties of the post of Managing Director of the Corporation should be performed by a Government servant. The Petitioner submits that Section 14(1A) of the State Financial Corporations Act could have been employed for making an appointment on deputation but in the present case the conditions of Section 14(1A) were not satisfied. It was never intended, the Petitioner says that u/s 10(f) of the Act a Government servant should be appointed as Managing Director of the Corporation on a "whole-time substantive deputation basis" even though in consultation with the Reserve Bank. The Petitioner says that Section 17(2) of the Act, which empowers the State Government to remove the Managing Director from office, plainly indicates that a deputation appointment is not contemplated by the Act. According to him, a deputation appointment is a transfer only and not an appointment, and he relies on Oriental Metal Pressing Works (P.) Ltd. Vs. Bhaskar Kashinath Thakoor and Another, It is further urged that the maximum period of appointment of a Managing Director is, according to Section 17(1)(c) of the Act, a period of four years, and this period was exceeded when Shri Gobind Sahai, who had been appointed earlier as Man aging Director on March 31,1967, was appointed again in the same office for a period of three years on March 30,1971. For all these reasons, it is contended that Shri Gobind Sahai has no right to hold the office of Managing Director of the Corporation.

Having carefully considered the matter, in our opinion there is no force in any of the contentions raised by the Petitioner. There is nothing in Section 10(f) or Section 17 of the Act which precludes an appointment by the State Government of a Government servant on deputation to the post of Managing Director of the Corporation. A Government servant maybe placed on deputation entirely at the disposal of the State Government for appointment to a post in the Corporation. When the appointment is made by the Corporation, he is a whole-time officer of the Corporation. Unlike the appointment order dated March 31, 1967, Shri Gobind Sahai was not appointed, by the order dated March 30, 1971, to the office of Managing Director of the Corporation in addition to any duties in the State Government. His entire time was placed at the disposal of the Corporation, and as Managing Director he functioned as a whole time officer of the Corporation. The Petitioner refers us to Section 17(2) of the Act, under which the State Government has power to remove the Magnaging Director from office. Nothing in this provision, however, precludes the appointment of a Government servant on deputation. A Government servant holding the office of Managing Director may, u/s 17(2), be removed from the office of the Man aging Director, and in that event he will revert to his parent department where he holds alien. So far as Section 14(1A) also of the Act is concerned, the Petitioner is not on sound ground. Any person maybe appointed u/s 14(1A) in the circumstances mentioned in that provision. He may be a Government servant on deputation or he may not. That, however, does not mean that independently of Section 14(1A) and without reference to it a Government servant on deputation cannot be appointed as Managing Director u/s 10(f) read with Section 17 of the Act.

As regards the contention that Fundamental Rule 111 contemplates the transfer on foreign service of a Government servant only for public reasons and there was no public reason requiring that Shri Gobind Sahai be sent on deputation to the Corporation, it seems clear, having regard to what has been said in the majority view of the Supreme Court in Sukhdev Singh (supra), that the transfer must be regarded for public reasons. It may also be added that nowhere in the writ petition does the Petitioner appear to have taken the ground that no public reason existed for the transfer on deputation of Shri Gobind Sahai to the Corporation.

The Petitioner says that the transfer of a Government servant is distinct from his appointment, and that a "deputation" appointment is a transfer only. We are referred to Oriental Metal Pressing Works [P.) Ltd. (supra) where a distinction has been made by the Supreme Court between the expressions "transfer" and "appointment". The contention is wholly misconceived. The transfer of Shri Gobind Sahai was made when he was placed on deputation by the State Government with the Corporation. His appointment followed, and it was made when he was appointed as Managing Director of the Corporation. The two acts are separate and distinct, and cannot be confused together.

Finally, the submission of the Petitioner that the total period during which a person can be appointed as Managing Director of the Corporation is four years, including the period of re-appointment, may be noticed. Section 17(1)(c) provides that the Managing Director shall "hold office for such term not exceeding four years as the State Government may specify and be eligible for re-appointment". What Section 17(1)(c) means is that a person may be appointed as a Managing Director for a term not exceeding four years, and he may be re-appointed for a further term not exceeding four years. It does not mean, and was never intended to mean, that a person cannot be Managing Director of the Corporation for more than four years in all.

In the circumstances, there is no force in this writ petition, and it must be rejected.

Accordingly, the three writ petitions are disposed of as follows:

Civil Writ Petition No. 87 of 1969:

The writ petition is allowed insofar as the order dated May 9, 1969 made by Shri Gobind Sahai removing the Petitioner from the service of the Himachal Pradesh Financial Corporation, and the Order dated June 10, 1969 made by the Board of Directors of the Corporation dismissing the Petitioner''s appeal are quashed. The Corporation is directed to treat the Petitioner as continuing in service on the date of the removal order. The Corporation will now pass orders in accordance with law in order to give effect to this declaration and grant such benefits as the Petitioner may be entitled to in law. The Corporation is also directed to pay to the Petitioner his full pay and allowances for the period March 8, 1968 to October 8, 1968. A writ in the nature of quo warranto is granted quashing the appointment of the third Respondent, Shri Naririder Nath Diwan, to the posts of Accountant and Senior Accountant (Development Officer) held by him in the Corporation. There is no order as to costs.

Civil Writ Petition No. 98 of 1970:

The writ petition is allowed. A writ in the nature of quo warranto shall issue quashing the appointment of Shri Ramesh Chand Sud to the post of Senior Accountant and of Secretary in the Corporation. No order as to costs.

Civil Writ Petition No. 75 of 1971:

The writ petition is dismissed with no order as to costs.

S.D.B.

Writ petition No. 87 allowed.

Writ petition No. 98 allowed.

Writ petition No. 75 dismissed.