VIDYUT KARMACHARI SANGH Vs. STATE OF CHHATTISGARH

JUDGEMENT

(1.) Invoking the jurisdiction of this Court under Article 226 of the Constitution of India the petitioners herein seek to challenge the impugned circulars/notifications dtd. 10/2/2016 and 18/4/2016 issued by respondents No.3 to 7, whereby directions have been issued for deductions in leave encashment amount payable to the petitioners after their superannuation, if prescribed amount exceeds, in accordance with the provisions contained in Sec. 10 (10AA) (ii) of the Income Tax Act, 1961 (hereinafter called as "IT Act"). The respondents No.3 to 7 have further held that exemption is applicable only to the Central Government and the State Government employees and it will not be grantable to the employees belonging to respondents No.3 to 7 companies.

(2.) The petitioners have filed this writ petition stating inter-alia that the State Government has formed five companies of the Chhattisgarh State Electricity Board i.e. respondents No.3 to 7 by way of gazette notification dtd. 31/3/2010 and these companies came into force w.e.f. 1/1/2009. It has also been pleaded that after formation of these companies, the State Government has nominated the Chairman of the said Company and also nominated Managing Directors of the companies and the State Government has full and effective control over the said companies as the State Government is having entire share capital and thus, the State Government has effective control over the functions of the said companies and service terms and conditions are applicable to the same like the State Government employees. For initiation of departmental enquiry, the companies have adopted and made applicable the provisions of the Chhattisgarh Civil Services (Classification, Control and Appeal) Rules, 1966 and also Chhattisgarh Civil Services (Pension) Rules, 1976 and fundamental rules. The State Government is also empowered to frame transfer scheme for transfer of the officers and employees to transferee on the vesting of properties, rights and liabilities in such transferee as contained under Sec. 133 of the Electricity Act. Therefore, it has been claimed that circulars/notifications dtd. 10/2/2016 and 18/4/2016 issued by respondents No.3 to 7 be quashed and the respondent authorities be directed to grant full exemption in payment of leave encashment amount to the petitioners under the provisions of Sec. 10 (10AA) (ii) of the IT Act and amount already deducted in leave encashment be paid to them with 12% interest per annum.

(3.) Mr.R.K.Kesharwani, learned counsel appearing for the petitioners, would submit that before constitution of the aforesaid companies, officers/servants of respondents No.3 to 7 companies were treated as State Government employees and no deductions were made on their superannuation in payment of leave encashment amount and now the impugned circulars have been made in most arbitrary and capricious manner directing for deduction of Income Tax in payment of leave encashment amount. He would further submit that the respondents-companies are governed by the State Government and the State Government is having 100% share capital and having complete executive and administrative control over these companies, therefore, the respondents No.3 to 7 companies are the State within the meaning of Article 12 of the Constitution of India. He would rely upon the judgment of the Supreme Court in the matters of Mysore Paper Mills Ltd. Vs. Mysore Paper Mills Officers Association and Another 1 and Balmer Lawri and Company Limited Vs. Partha Sarthi Sen Rai 2 to buttress his submission that respondents No.3 to 7/companies are the "State" within the meaning of Article 12 of the Constitution of India and therefore, they are entitled to be treated at par with the employees of the State Government and are entitled to get similar treatment like employees of the Central Government and the State Government. Therefore, the impugned notifications deserve to be quashed being arbitrary and violative of Article 14 and 16 of the Constitution of India.