K RAVINDRANATH Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) These writ petitions are filed by the employees of the erstwhile M/s. Andhra Pradesh Scooters Limited. In these writ petitions, the petitioners - employees have questioned the validity of the actions of the respondents to close down the A.P. Scooters Limited and in terminating or seeking to terminate their services and for direction to the respondent to take necessary steps to absorb their services in the Departments of the Government by protecting their pay- scales, seniority and continuity in service in accordance with the guidelines issued by the Government of Andhra Pradesh, General Administration (PE.1) Department in Letter No.3 48/PE.1/90-1, dated 25-5-1991, directing the governmental authorities to lend financial assistance to the A.P. Scooters Limited for revival of the company, to accommodate all the employees of the A.P. Scooters Limited in Government departments in the event of winding-up of that company etc. The petitioners have also by way of amendments questioned the constitutionality of the provisions of Sections 2 and 3 of the A.P. Prohibition of Absorption of Employees of State Government Public Sector Undertakings into Public Service Act, 1997 (Act 14 of 1997) (for short 'the Act'). In addition to these reliefs, in W.P.No.150 of 2000, a direction is sought to the respondents to extend the benefit of Voluntary Retirement Scheme (VRS) to the employees of Scooters Limited on reasonable terms and direct payment of amounts under such VRS and other terminal benefits to the employees, if their services cannot be absorbed in other departments of the Government.

(2.) The background facts leading to the filing of these writ petitions be noted briefly as under: M/s. A.P. Scooters Limited was originally incorporated in August, 1974, for manufacture of two wheeler scooters in technical collaboration with "Scooters India Limited", a Government of India Undertaking, Lucknow. In view of huge losses and in view of erosion of its net-worth completely. the Managing Director of Company reported its sickness to Board for Industrial and Financial Reconstruction (BIFR) under the provisions of Sick Industries (Special Provisions) Act, 1985 (SICA). The BIFR declared the Company sick under the said Act and appointed the Industrial Development Bank of India (IDBI) as the Operating Agency for working out a revival package for the Company. As no promoter came forward to take over the Company the BIFR in its hearing held on 21-7-1993 held that all the efforts made for locating an alternative associate promoters" have not yielded any results and that concrete proposals have not made for revival of the unit. The BIFR also held that the Company has no market for its product and has been burdened with huge debt through which it cannot survive. Hence, the BIFR came to a prima facie conclusion, that the Sick Industrial Company i.e., M/s. Andhra Pradesh Scooters Limited should be wound-up under the provisions of Section 20 of SICA Act, 1985. Accordingly, the BIFR directed issue of a Public Notice fixing 23-9-1993 for considering objections/ suggestions relating to the proposed winding-up along with alternative proposals, if any, from any one interested in that regard. The BIFR in its hearing held on 23-9-1993 had observed that there was no viable proposal to rehabilitate the Company. The BIFR further observed that the Company was given ample opportunity but could not submit any viable scheme to revive the Company. No alternative proposal for rehabilitation of the Company was received from any other party. No valid objection to the winding-up notice was also received. The State Government was not agreeable for any further involvement in the rehabilitation of the Company. Banks/ Financial Institutions too had no objection to the winding-up of the Company. The BIFR recorded its final opinion that it is just and equitable that Sick Industrial Company i.e., M/s. Andhra Pradesh Scooters Limited should be wound-up and forwarded its opinion to this Court for necessary action on 1-10-1993. At this stage, the Bombay High Court on a suit filed by the IDBI in Civil Suit No. 1778 of 1992 for the recovery of the loan amounts advanced by it to the sick industry in its order dated 25-11-1993 has appointed the IDBI as Official Receiver to take charge of the movable and immovable properties of the Company and the Official Receiver took charge on 14-1-1994. As the matter stood thus, this Court with reference to the opinion tendered by the BIFR Limited by its order dated 18-8-1994 ordered for winding- up of M/s. Andhra Pradesh Scooters Limited and appointed Official Liquidator to take into his custody all the properties and assets of the Company but the Official Liquidator could not proceed further as per the direction of this Court because of the Receiver appointed by the Bombay High Court.

(3.) As a consequence of the closure and winding up of the Andhra Pradesh Scooters Limited, the employees of the erstwhile Andhra Pradesh Scooters Limited were rendered jobless. It appears that on behalf of Associations/Unions of the employees as well as the management of the Andhra Pradesh Scooters Limited, the Government directed the Heads of the Public and Statutory Corporations to find out whether the erstwhile employees of the Andhra Pradesh Scooters Limited could be accommodated in their Corporations. In pursuance of these Government orders issued from time to time, some of the employees of the Andhra Pradesh Scooters Limited were given jobs in certain Corporations. There is no necessity to refer to each individual Government directions issued to the Heads of the Departments of the State Government and the Chiefs of State Government Public Sector Undertakings and Corporations from time to time. Suffice it to state that in pursuance of these instructions issued by the Government to the Public Sector Undertakings and Corporations, some of the erstwhile employees were given jobs and others remained jobless. At this stage, the Andhra Pradesh State Legislature realising the problems arising from the persistent demands from the employees of various State Government Public Sector Undertakings for absorption into the service under the State on the ground that the Public Sector Undertakings wherein they were working have become sick or are closed and thinking that if all such requests were acceded to, it would violate mandates of Articles 14 and 16 of the Constitution and the Service Rules governing recruitment to the posts in the service under the State initially promulgated an Ordinance - A.P. Prohibition of Absorption of Employees of State Government Public Sector Undertakings into Public Service Ordinance, 1996 - A.P. Ordinance No. 25/96 prohibiting absorption of employees of Public Sector Undertakings into the public service. The said Ordinance was replaced by A.P. Prohibition of Absorption of Employees of State Government Public Sector Undertakings into Public Service Act, 1997 (Act 14 of 1997). Having regard to the provisions of the Act, the services of some of the erstwhile employees of the Andhra Pradesh Scooters Limited who were given jobs in pursuance of administrative instructions of the Government were sought to be terminated. Further, the respondent Public Sector Undertakings also refused to consider the pending requests of the erstwhile employees of the Andhra Pradesh Scooters Limited to absorb their services in pursuance of the administrative instructions earlier issued by the Government and Heads of the Departments of the Government in the light of the provisions of the Act. Under those circumstances, these writ petitions were filed in this court seeking various reliefs referred to above. When the Ordinance No. 25 of 1996 became the Act, the constitutional validity of Sections 2 and 3 of the Act was also assailed by amending the prayers in the writ petitions.