State of Kerala v. Dr. S. Shanavas Salma Manzil & Steel Industries Forging Ltd

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **&** **THE HONOURABLE MR. JUSTICE C.PRATHEEP KUMAR** **MONDAY, THE 19[TH] DAY OF FEBRUARY 2024 / 30TH MAGHA, 1945** **WA NO.1438 OF 2023** **JUDGMENT IN WP(C) 18701/2018 OF HIGH COURT OF KERALA DATED 15.3.2023** **-----------------** ## **- APPELLANT/1ST RESPONDENT IN WPC :** STATE OF KERALA REPRESENTED BY UNDER SECRETARY, INDUSTRIES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 034. ASOK M.CHERIAN, ADDL. ADVOCATE GENERAL SABEENA P. ISMAIL, GOVERNMENT PLEADER ## **- RESPONDENTS/PETITIONER AND 2ND RESPONDENT IN WPC :** 1 DR.S.SHANAVAS SALMA MANZIL, EDAKKULANGARA, KARUNAGAPPALY, KOLLAM - 690 523. 2 STEEL INDUSTRIES FORGING LTD ATHANI P.O., THRISSUR - 680 581 REPRESENTED BY ITS MANAGING DIRECTOR BY ADVS. ENOCH DAVID SIMON JOEL SAJI VARGHESE T. G S.SREEDEV(K/1219/2006) RONY JOSE(K/705/2012) LEO LUKOSE(K/001131/2016) KAROL MATHEWS SEBASTIAN ALENCHERRY(K/126/2010) DERICK MATHAI SAJI(K/1901/2021) MARIAM MATHAI(M-92) THIS WRIT APPEAL HAVING COME UP FOR FINAL HEARING ON 08.02.2024, THE COURT ON 19.02.2024 DELIVERED THE FOLLOWING: **W.A. No.1438 of 2023** **2** ## **ANU SIVARAMAN, J. & C. PRATHEEP KUMAR, J.** **== = = = = = = = = = = = = = = = = = = = W.A. No.1438 of 2023 = = = = = = = = = = = = = = = = = = = = = Dated this the 19th day of February, 2024** ## **JUDGMENT** ## **Anu Sivaraman J.** 1. The writ petitioner, who was initially a permanent employee of the TRACO Cables, a public sector company under the State of Kerala, had filed the writ petition challenging Ext.P13 communication and directing the respondents to pay the subsistence allowance due to the petitioner for the suspension period from 11.01.2013 to 23.09.2015. There was a further prayer to consider and dispose of Exts.P11 and P12 representations in accordance with Ext.P6 Rules. The contention was that by Ext.P13, the representation preferred by the writ petitioner was rejected on the ground that he was not entitled to claim subsistence allowance under Ext.P6 Rules. It is stated that the writ petitioner was appointed as Managing Director of the 2[nd] respondent-company by the 1[st] respondent in the year 2011 by Ext.P1 dated 03.12.2011. 2. On the basis of complaints received by the 1[st] respondent, the writ petitioner was placed under suspension by Ext.P2 order **W.A. No.1438 of 2023** **3** dated 11.01.2013. After more than six months, he was served with memo of charges with a statement of allegations as evidenced by Ext.P3 dated 28.06.2013. Ext.P4 reply was submitted, but no further steps were taken. It is stated that while so, the pay and allowances of the writ petitioner were fixed by Ext.P5 order dated 05.09.2014 and it was stated that any amount drawn in excess by the petitioner shall be recovered from his subsistence allowance. Ext.P6 Conduct, Discipline and Appeal Rules for managerial and supervisory personnel of the 2[nd] respondent were produced by the writ petitioner, who sought subsistence allowance in terms of the said Rules. Representations preferred before the 2[nd] respondent as well as the 1[st] respondent were produced. By Ext.P10, the writ petitioner was reinstated in service in compliance with Ext.P9 judgment of this Court. Though Exts.P11 and P12 representations were submitted seeking payment of subsistence allowance, it was rejected by Ext.P13 letter dated 27.03.2018 stating that subsistence allowance was not payable since there is no provision for payment of subsistence allowance to the Managing Director of the 2[nd] respondent. The writ petitioner produced Ext.P15 to show that Managing Director of the Kerala State Textile Corporation had been granted subsistence allowance. **W.A. No.1438 of 2023** **4** 3. A counter affidavit was filed on behalf of the 1[st] respondent stating that the petitioner was appointed as Managing Director of the company and held the post at the pleasure of the Government. It was specifically contended that the writ petitioner was not an employee as defined by Ext.P6 Rules and therefore, he would not be entitled to subsistence allowance. It was further stated at paragraph Nos.8 and 9 of the counter affidavit as follows: “8. It is correct to say that by Exhibit P10 order, the petitioner was posted as MD of MALCOTEX, pending disciplinary proceedings and on 04.10.2016, he was relieved from the said post. It is submitted that Vigilance Department has further advised not to appoint the petitioner in any PSUs or in any sensitive post other than the parent unit. Accordingly, the Government vide order in GO.(Rt) No. 469/2017/ID dated 25.03.2017 has permitted the petitioner to re-join in his parent unit (Traco Cable Company Ltd) wherein he has lien. Presently he is serving as Manager (Civil) at TRACO Cables, Thiruvalla Unit, which is his parent organization. In addition, another vigilance inquiry was also initiated against the petitioner for irregularities in lifting scrap from Chitoor Co-operative Sugar factory based on the inspection report of inspection wing (Finance Department) and further recommended not to post him in any PSUs. Moreover, CC.No.4/2014 is pending trial before the CBI Special Court, Ernakulam for criminal conspiracy, cheating, corruption and causing loss to the tune of Rs. 78 lakhs to the Government of India. 9. It is submitted that Exhibit P13 is legal. As employee has been defined under Rule 2.4 to mean a person in the employment of the company other than the casual or **W.A. No.1438 of 2023** **5** contingent staff or workmen as defined in Industries Disputes Act, but includes a person on deputation to the company. The CDA rules highlighted in the writ petition vide Exhibit P6 belongs to Steel Industries Kerala Limited (SILK). Moreover, separate clause 2.6 has been provided specifically for MD and chairman of the company. Hence petitioner is not an employee of the company and is not entitled to subsistence allowance. The petitioner is not exonerated and not awarded any punishment as mentioned in clause 22 and 23 of CDA rules of the company. There is no inaction on part of the respondents and proper reply was given regarding the same.” 4. A reply affidavit and an additional counter affidavit were also filed. 5. The learned Single Judge, after considering the contentions advanced, held that the writ petitioner was originally an employee of a State Government Undertaking, that is, the TRACO Cables and that he was appointed as Managing Director of the 2[nd] respondent on deputation. It was, therefore, held that the Government ought to have recalled him from the post of Managing Director and then placed him under suspension. He was, therefore, directed to be treated as an employee of the TRACO Cables and subsistence allowance was directed to be paid within one month. The State is in appeal against the said judgment. **W.A. No.1438 of 2023** **6** 6. It is contended by the learned Additional Advocate General who appears for the appellant that the appointment of the writ petitioner as Managing Director of the 2[nd] respondent cannot be said to be an appointment by deputation in the real sense of the word. It is submitted that even though the officer was repatriated to the TRACO Cables, his appointment as Managing Director was an independent appointment at the pleasure of the Governor and cannot be equated to a deputation in the real sense of the word. It is, therefore, contended that the finding of the learned Single Judge that the writ petitioner ought to have been repatriated to the TRACO Cable Company and then placed under suspension and that he would then be entitled to subsistence allowance in accordance with the Rules prevailing in the said Company were completely misconceived. It is stated that in any view of the matter, the TRACO Cable Company was not a party to the writ petition and such findings could not have been entered without them on the party array. It is further contended that the mentioning of subsistence allowance in Ext.P5 order, by which, the pay and allowances were fixed will not confer any right on the writ petitioner to claim subsistence allowance. Further, it is contended that in the light of the definition of employee in Ext.P6, it is crystal clear that the writ petitioner was not an employee and **W.A. No.1438 of 2023** **7** was not entitled to subsistence allowance in terms of Ext.P6 Rules. 7. The learned Additional Advocate General places reliance on the decisions of the Apex Court in **Trojan and Company** v. **RM. N.N. Nagappa Chettiar** [(1953) 1 SCC 456], **Union of India and another** v. **Shardindu** [(2007) 6 SCC 276], **Bharat Amratlal Kothari and another** v. **Dosukhan Samadkhan Sindhi and others** [(2010) 1 SCC 234] and **M/s.Rajasthan Art Emporium** v. **Kuwait Airways & anr.** [2023 SCC online SC 1461]. 8. The learned counsel appearing for the 1[st] respondent, on the other hand, contends that a specific ground had been raised in the writ petition to the effect that similarly placed Managing Directors of other State Government Undertakings had been granted subsistence allowance by the Government during the very same period in identical circumstances. It is submitted that Ext.P15 order read along with Ext.P5 would make it clear that subsistence allowance was being habitually granted to persons appointed as Managing Directors when they are placed under suspension. **W.A. No.1438 of 2023** **8** ## 9. We have considered the contentions advanced. It is true that Ext.P6 defines 'employee' as follows: _“2.4 'Employee' means a person employed by the Company in a supervisory/managerial capacity and shall include an employee who has retired or resigned and against whom disciplinary proceedings are pending or initiated and also a person on deputation but does not include workmen as defined in the Industrial Disputes Act, 1947”_ 10.Further, the 'Managing Director' is specifically included in the definition of management under the said Rules. Therefore, the contention of the writ petitioner that he is entitled to subsistence allowance in terms of Ext.P6 Rules cannot be accepted. The learned Additional Advocate General vehemently argued that it is only on termination of the appointment as Managing Director that the question of repatriation to the parent organization would arise and that while a person who has been appointed as Managing Director was under suspension, there is absolutely no provision for grant of subsistence allowance to him. We could have agreed with the said argument. However, it is clear from Ext.P5 that there was some contemplation of grant of subsistence allowance to the petitioner since the order fixing the pay and allowances of the writ petitioner as Managing Director of the 2[nd] respondent specifically states that any excess will be recovered from his subsistence allowance. Even though it is contended by **W.A. No.1438 of 2023** **9** the learned Additional Advocate General that Ext.P5 cannot be taken as an admission of the contention of the writ petitioner that subsistence allowance is payable, we notice that Ext.P15 order by which subsistence allowance has been granted to a similarly placed Managing Director of another public-sector undertaking under the State of Kerala during the very same period also stands unexplained. Apart from stating that the same can only be seen as a wrong order, the Additional Advocate General could not submit any explanation as to why the writ petitioner who is identically situated has not been granted the benefit. Further, it is stated by the learned counsel for the petitioner that substantial payments have been made by the appellant towards subsistence allowance due since a Contempt of Court Case had been moved by the petitioner. 11. Having considered the contentions advanced and in the light of Exts.P5 and P15, we are of the opinion that the contention of the petitioner that subsistence allowance was liable to be paid to him even though it is not provided in Ext.P6 cannot be said to be a totally fanciful contention. It appears that the Government has been granting subsistence allowance even to persons appointed as Managing Director of State Government Undertakings as **W.A. No.1438 of 2023** **10** evidenced by Ext.P15. It is clear that payment of such allowance was at least in contemplation since Ext.P5 also speaks of recovery of excess from the subsistence allowance payable to the writ petitioner. True, the appointment of the petitioner as Managing Director cannot be said to be a deputation in the real sense of the term, it would be an independent appointment during the pleasure of the Government as contended by the Additional Advocate General. However, in view of the fact that it is admitted that there was a practice of grant of subsistence allowance to persons identically situated like the petitioner, we are of the opinion that the recovery of amounts already paid would not be justified. 12. The writ appeal is, therefore, ordered directing that amounts already paid as subsistence allowance on the strength of the judgment of the learned Single Judge shall not be recovered. ## **Sd/-** ## **Anu Sivaraman, Judge** **Sd/-** ## **C. Pratheep Kumar, Judge** Jvt/14.2.2024