both the writ petitioners filed appeals against the orders of termination and the same are pending before the Board of Directors of the appellant company. Therefore, we decline to enter into the question whether the impugned terminations were justified in the facts and circumstances of the case and whether the requirements for invoking the power under Regulation 13 (a) were satisfied. Since the appellate authority seized with the said issue, we deem it appropriate to direct to dispose of the appeals preferred by the writ petitioners following due process of law as expeditiously as possible preferably within a period of eight weeks from the date of receipt of this order. Accordingly, the common order passed by the learned Single Judge dated 28.08.2012 is hereby set aside and both the Writ Appeals are allowed with the above direction to dispose of the appeals preferred by the writ petitioners.


THE HON'BLE Ms. JUSTICE G. ROHINI AND THE HON'BLE SRI JUSTICE C.PRAVEEN KUMAR                

WRIT APPEAL No.1107 OF 2012 and Batch    

05.10.2012

In W.A.No.1107 OF 2012:

M/s. Air India Limited formerly National Aviation Company of India Limited) (a
Central Government Corporation), rep. By its Chairman and Managing Director,
Corporate Office at Air India Building, Nariman Point, Mumbai, and another.    

S.P.D. Sudhakar

In W.A.No.1110 of 2012:

1.M/s. Air India Limited (formerly National Aviation Company of India Limited)
(a Central Government Corporation), rep. By its Chairman and Managing Director,
Corporate Office at Air India Building, Nariman Point, Mumbai, and another.    

And

Y.V. Raju

 Counsel for the petitioners        :    Mrs. V.Uma Devi

 Counsel for respondent         :     Sri M.Surendar Rao

(GIST:

(HEAD NOTE:  

? Cases cited:
1 (2006) 11 SCC 67
1 (1995) 4 SCC 734

WRIT APPEAL No.1107 OF 2012 AND WRIT APPEAL No.1110 OF 2012          

COMMON JUDGMENT: (Per G. Rohini, J)            

The Executive Director (SR) of M/s. Air India Limited, Chennai, by his
proceedings dated 26.5.2010, informed the respondents in these two appeals that
their services were terminated with immediate effect under Regulation 13 (a) of
the Service Regulations of Indian Airlines (for short, 'Service Regulations').
The said communication was admittedly based on the order dated 26.5.2010 passed
by the Chairman & Managing Director of the National Aviation Company of India
Limited (NACIL) terminating the service of the respondents herein on the ground
that the respondents, who are the office bearers of All India Aircraft Engineers
Association (AIAEA), had destabilised the functioning of the company by
instigating and leading the other employees to join the strike on a flimsy
ground and that the company had lost confidence in them due to their actions and
the potential to cause harm to the company in future as well.
Aggrieved by the same, the respondents herein filed W.P.Nos.492 and 1623 of
2011. Both the said writ petitions were allowed by a learned Single Judge by
common order dated 28.8.2011 and the impugned orders of termination were set
aside. Hence these two writ appeals by M/s. Air India Limited.
        We have heard Ms. V. Uma Devi, advocate, representing             Sri K.
Srinivasa Murthy, the learned counsel for the appellants and Sri M. Surender
Rao, the learned counsel appearing for the respondent in W.A.No.1107 of 2012 and
Sri Vedula Venkata Ramana, the learned Senior Counsel representing M/s.
Bharadwaj Associates for the respondent in W.A.No.1110 of 2012.
The respondents herein (hereinafter referred to as 'the writ petitioners') were
appointed in the erstwhile Indian Airlines, a Corporation constituted under the
Air Corporations Act, 1953. By reason of Section 11 of the Air Corporations
(Transfer of Undertakings and Repeal) Act, 1994 (for short, 'the Repeal Act,
1994') the Air Corporations Act, 1953, stood repealed w.e.f. 29.1.1994.
Thereafter, the Indian Airlines Corporation was renamed as the Indian Airlines
Limited, having been registered as a company under the provisions of the
Companies Act, 1956.  Subsequently, in the year 2007 it amalgamated with
National Aviation Company of India Limited (NACIL) as per the scheme approved by
the Government of India, Ministry of Corporate Affairs.
The petitioner in W.P.No.1623 of 2011 was working as  a Chief Pharmacist
(Special Grade) and the petitioner in W.P.No.492 of 2011 was working as a Chief
Aircraft Engineer.  It is not in dispute that by the date of the impugned orders
of termination the petitioner in W.P.No.1623 of 2011 was the Regional Secretary
of the Air Corporations Employees Union (ACEU), Hyderabad and the
petitioner in W.P.No.492 of 2011 was the General Secretary of All India Aircraft
Engineers Association (AIAEA).
 The orders of termination dated 26.5.2010 were assailed in the writ petitions
primarily on the ground that the Service Regulations which were framed in
exercise of the power conferred by Section 42 (2) (b) of the Air Corporations
Act, 1953 were no longer in existence and therefore the termination of services
of the writ petitioners invoking Regulation 13 (a) of the said Regulations was
illegal.  Even assuming that the said Regulations were in force,  it was
contended that the Board of Directors alone was competent to exercise the power
conferred under Regulation 13 (a) and therefore the impugned orders of
termination which were  passed by the Chairman & Managing Director were without
jurisdiction.
Air India Limited filed counter-affidavits contending that notwithstanding the
repeal of the Air  Corporations Act, 1953, the Service Regulations are
applicable to those who joined service prior  to Repeal Act, 1994 as clarified
by the Supreme Court in INDIAN AIRLINES LIMITED v. PRABHA D KANAN [(2006) 11 SCC      
67].  It was explained that the appellant - M/s. Air India Limited is no longer
a Statutory Corporation, but it is a Company registered under the Companies Act,
1956 and its management and other functions are governed by its Memorandum and  
Articles of Association read with Section 630 of the Companies Act, 1956 and
that the Service Regulations were adopted as an interim arrangement by the Board
of Directors of the National Aviation Company of India Limited (NACIL), the
predecessor-in-interest of Air India Limited, in its meeting held on 28.2.2007
so as to apply the same to the employees of the erstwhile Indian Airlines
Limited till such time their rules & regulations were framed.  It was also
pleaded that the Chairman and Managing Director was delegated the powers to take
a decision on behalf of the Board of Directors of the NACIL in terms of the
delegation of powers to meet any emergency when urgent action was called for
subject to the decision and/or ratification by the Board of Directors of the
company.  Thus, it was contended that the allegation that the Chairman &
Managing Director was not competent was untenable.
In the additional counter-affidavit filed on behalf of Air India Limited, it was
further explained that in terms of the powers conferred under Article 132 (25) &
(29) of the Articles of Association of NACIL the company in its 12th Board
meeting held on 29.5.2008 approved the Instrument of Delegation of
Administrative Powers and as per clauses 3.2 & 3.3 of the said Instrument of
Delegation the Chairman & Managing Director can exercise the powers vested with
the Board.  It was also stated that the order of termination passed by the
Chairman & Managing Director dated 26.5.2010 under Regulation 13 (a) of the
Service Regulations was subject to the decision and/or ratification by the Board
of Directors of the company and that the Board in its 32nd meeting held on
25.7.2010 had ratified the action taken by the Chairman & Managing Director
having regard to the circumstances under which the action was taken by the
Management.
In the light of the distinction drawn by the Supreme Court in INDIAN AIRLINES
LIMITED v. PRABHA D KANAN [(2006) 11 SCC 67] between those employees who joined      
Air India's service prior to the Repeal Act of 1994 and after the said Repeal
Act came into force, the learned Single Judge proceeded on the assumption that
the Service Regulations are applicable to the writ petitioners since they  were
appointed long before the Repeal Act, 1994.  However on merits it was held that
under Regulation 13 (a) of the Service Regulations the power was conferred on
the Board of Directors alone to terminate the services of an employee after
forming an opinion as required therein and initiate action thereupon and that
such statutory power could not be delegated or exercised by any subordinate
authority. It was also held by the learned Single Judge that the mere fact that
the Board of Directors had ratified the action of the Chairman & Managing
Director of the company in its subsequent meeting held on 25.7.2010 would not
have the effect of curing or validating the inherently illegal exercise of power
by the Chairman & Managing Director of the company invoking Regulation 13 (a) of
the Service Regulations.  Thus the impugned orders of termination dated
26.5.2010 were set aside and the writ petitions were allowed.
The order passed by the learned Single Judge is sought to be assailed by Ms. V.
Uma Devi, the learned counsel for the appellant reiterating the contention that
as per clause 3.3 of the Instrument of Delegation of Administrative Powers which
was approved by NACIL on 29.5.2008, the Chairman & Managing Director is
empowered to take a decision on behalf of the Board of Directors to meet any
emergency subject to ex-post-facto approval of the Board.  According to the
learned counsel it is in exercise of the said power conferred under clause 3.3,
the impugned orders of termination dated 26.5.2010 came to be passed by the
Chairman & Managing Director.  Since the action taken by the Chairman & Managing
Director was subsequently ratified by the Board of Directors of the company in
its meeting held on 25.7.2010, the learned counsel for the appellant contended
that the impugned orders of termination  cannot be held to be without
jurisdiction.
We have also heard Sri M. Surender Rao and Sri Vedula Venkata Ramana, the  
learned counsel appearing for the respondents/writ petitioners.
 As already noticed, the Air Corporations Act, 1953 under which the erstwhile
Indian Airlines Corporation was constituted, stood repealed w.e.f. 29.01.1994.
During the subsistence of the Air Corporations Act, 1953, the Indian Airlines
Corporation in exercise of the powers conferred by Section 45 (2) (b) of the
said Act with the previous approval of the Central Government  made the
Regulations governing the terms and conditions of service of different
categories of its employees.
Regulation 13 (a) of the Service Regulations under which the services of an
employee may be terminated without any prior notice reads as under:
"13(a). The services of an employee may be terminated without assigning any
reasons to him/her and without any prior notice but only on the following
grounds not amounting to misconduct under the Standing Orders, namely:
(i) If he/she is, in the opinion of the Corporation (the Board of Directors of
Indian Airlines) incompetent and unsuitable for continued employment with the
Corporation and such incompetence and unsuitability is such as to make his/her
continuance in employment detrimental to the interest of the Corporation;
OR
(ii) if his/her continuance in employment constitutes, in the opinion of the
Corporation (the Board of Directors of Indian Airlines), a grave security risk
making his/her continuance in service detrimental to the interests of the
Corporation;
OR
(iii) if in the opinion of the Corporation (the Board of Directors of Indian
Airlines) there is such a justifiable lack of confidence which, having regard to
the nature of duties performed, would make it necessary in the interest of the
Corporation, to immediately terminate his/her services."

As could be seen, Regulation 13(a) can be invoked when the services are sought
to be terminated by reason of some act on the part of the employee which does
not amount to misconduct.  The grounds upon which the power can be invoked are
(i) where an employee is rendered incompetent and unsuitable; (ii) where
continuance in employment may also constitute a grave security risk (iii) where
there is justifiable lack of confidence; (iv) where lack of confidence has a
direct correlation to the nature of duties performed; (v) where the Corporation
is of the opinion that it is necessary in the interest of the Corporation to
immediately terminate the services of the employee.
It is no doubt true that the power conferred under Regulation 13 (a) which
excludes the audi alteram partem rule and results in termination of services of
an employee has serious consequences. However the provision itself provided for
in-built safeguards and the power conferred thereunder can be exercised only on
formation of an opinion as to the existence of the circumstances specified
therein.
Having considered all the said aspects in detail, the Supreme Court in INDIAN
AIRLINES LIMITED v. PRABHA D. KANAN1 upheld its Constitutional validity and  
declared that the said provision cannot be held to be arbitrary or
discriminatory.
However the question that requires consideration in the present case is whether
the Chairman & Managing Director of the appellant company can invoke the power
so conferred expressly on the Board of Directors under Regulation 13(a).
As noticed above, the case of the appellant is that by virtue of the powers
delegated to the Chairman & Managing Director under clause 3.3 of the Instrument
of Delegation, he is competent to exercise the power under Regulation 13 (a)
subject to ex-post-facto approval by  the Board of Directors.
On the other hand, the contention on behalf of the respondents/writ petitioners
is that the general delegation of the administrative powers of the Board of
Directors upon the Chairman & Managing Director cannot be extended to the power
specifically conferred on the Board of Directors by the statutory regulations.
The same submission was canvassed in the writ petitions and the learned Single
Judge having accepted the said contention held:
"Thus, as matters stand, Regulation 13(a) of the Service Regulations posits that
the highest authority of the company viz. its Board of Directors alone should
exercise the power conferred thereby, after forming a considered opinion that
one of the conditions therein was made out warranting removal of an employee
from service without following the due procedure. Trite to state, given the
extensive and lethal amplitude of this power, it was entrusted to the highest
administrative collective body, the Board of Directors of the company, to
exercise the same wisely. This Regulation partook of statutory flavour, having
been framed in exercise of powers conferred by Section 45 of the Act of 1953.
        Once the statute required a particular thing to be done in a particular
manner, then it should be done either in that manner or not at all [STATE OF
MAHARASHTRA v. JALGAON MUNICIPAL COUNCIL (2003) 9 SCC 731)].          

         As the power under Regulation 13(a) of the Service Regulations was
entrusted to the Board of Directors of the company in the capacity of being its
highest authority, the Board alone was expected to form an opinion as required
therein and initiate action thereupon. Such statutory power could not be
delegated or exercised by any subordinate authority."

Having given our careful consideration to the submissions made by the learned
counsel on either side, we find it difficult to sustain the order under appeal
for the following reasons.
        The Air Corporations Act, 1953, under which the Service Regulations were
framed stood repealed with effect from 29.01.1994 by reason of Section 11 of the
Air Corporations (Transfer of Undertakings and Repeal) Act, 1994 which came into
force on 29.01.1994.   The question whether the Regulations framed under the Air
Corporations Act, 1953 continue to be effective after the repeal of the Air
Corporations Act, 1953 fell for consideration in AIR INDIA v. UNION OF INDIA2.
After considering the effect of Section 8 of the Repeal Act  of 1994 which
contained a saving clause, the Supreme Court held that the Service Regulations
ceased to be effective on 29.01.1994.
The relevant paras from the said decision may be extracted:
"9.     Section 8 of the 1994 Act does not in express terms save the said
Regulations, nor does it mention them. Section 8 only protects the remuneration,
terms and conditions and rights and privileges of those who were in Air India's
employment when the 1994 Act came into force. Such saving is undoubtedly "to
quieten doubts" of those Air India employees who were then in service. What is
enacted in Section 8 does not cover those employees who joined Air India's
service after the 1994 Act came into force. The limited saving enacted in
Section 8 does not, in our opinion, extend to the said Regulations.
10.     Holding as we do that the said Regulations ceased to be effective on 29-1-
1994, the very foundation of Air India's case no longer exists. No consideration
of other arguments is, therefore, necessary."

        In a later decision in INDIAN AIRLINES LIMITED v. PRABHA D KANAN (1 supra)  
in which the Constitutional validity of Regulation 13 of the Service Regulations
was upheld, it was reiterated that the judgment in AIR INDIA LIMITED v. UNION OF
INDIA (2 supra) was binding.
Therefore, so far as the question as to whether the Service Regulations are
saved notwithstanding the repeal of the Air Corporations Act, 1953 is concerned,
there is no ambiguity and it is clear that the said Regulations no longer
survived.
It is no doubt true that in INDIAN AIRLINES LIMITED v. PRABHA D KANAN (1 supra)  
a distinction was drawn between the employees who joined Air India's service
before the Repeal Act of 1994  and thereafter and the Service Regulations were
held to be applicable to the respondent therein.  However as we could see the
question whether the Service Regulations continue to have the statutory force or
not was neither argued nor decided in the said case.
Therefore, the said question needs consideration in the light of the finding
recorded in AIR INDIA LIMITED v. UNION OF INDIA (2 supra) that the Service
Regulations are not saved by Section 8 of the Repeal Act of 1994 and that they
ceased to be effective on 29.01.1994 i.e., the date on which the Air
Corporations Act, 1953 stood repealed.  Indisputably therefore, the Service
Regulations do not have any statutory force with effect from 29.01.1994.
So far as the appellant herein is concerned, after the repeal of the Air
Corporations Act, 1953, the appellant company is no longer a statutory
corporation.  After the Repeal Act of 1994 came into force, the Indian Airlines
Corporation was renamed as the Indian Airlines Limited having been registered as
a company under the provisions of the Companies Act, 1956 and its management and  
other functions are governed by its Memorandum and Articles of Association.  It
is explained in the counter-affidavits filed on behalf of the appellant company
that the Service Regulations were adopted as an interim arrangement by the Board
of Directors of the National Aviation Company of India Limited (NACIL), the
predecessor-in-interest of Air India Limited, in its meeting held on 28.2.2007
so as to apply the same to the employees of the erstwhile Indian Airlines
Limited till such time their rules & regulations were framed.
In this scenario, the learned counsel for the appellant submits that the Service
Regulations are being applied to the services of the employees of the appellant
company like any other terms & conditions governing their services and thus the
power under Regulation 13 (a) was invoked by the Chairman & Managing Director
for terminating the services of the petitioners in exercise of the powers
delegated under clause 3.3 of the Instrument of Delegation.  Reiterating that
the Service Regulations lost their statutory flavour, the learned counsel for
the appellant would submits that the action of the Chairman & Managing Director
in invoking the power under Regulation 13 (a) as a delegatee of the Board of
Directors cannot be held to be illegal or without jurisdiction.
We find merit in the said submission.
Clause 3 of the Instrument of Delegation which was approved by the Board of
Directors on 29.05.2008 and has come into force with effect from 7.7.2008, reads
as under:
"3. GENERAL CONDITIONS OF DELEGATION:        
3.1     Board of Directors of NACIL shall have full powers subject to the
provisions of Companies Act, 1956, Memorandum of Association & Articles of
Association and directives received from Govt. of India from time to time.
3.2     Chairman & Managing Director/Managing Director subject to provisions of
Companies Act, 1956, Memorandum of Association & Articles of Association and
directives received from Govt. of India from time to time and as per policies,
rules, regulations and Budgets as approved by the Board of Directors and
Principles of Financial Propriety and subject to general supervision and control
by the Board of Directors is authorized to exercise all or any of the powers
vested in the Board for the management and administration of the Company, except
on the matters in respect of which prior approval of Board of Directors is
necessary.
3.3     Chairman & Managing Director/Managing Director may within the ambit of
operational necessity and efficiency or to meet any emergency and when urgent
action is called, take decision on behalf of the Board provided, however, that a
report be made to the Board for its ex-post-facto approval. (emphasis supplied)"

        A plain reading of clause 3.3 shows that the Chairman & Managing Director
is competent to take a decision on behalf of the Board of Directors to meet any
emergency and when urgent action is called for, however such decision is
subjected to the ex-post-facto approval by the Board of Directors.
        As rightly submitted by the learned counsel for the appellant the Service
Regulations are being applied to the services of the employees of the appellant
company not in the form of statutory regulations. In fact, as held in AIR INDIA
LIMITED v. UNION OF INDIA (2 supra), the said Regulations lost their statutory
force w.e.f. 29.01.1994.
        Once it is held that the Service Regulations lost the statutory force and
they are merely adopted by the appellant company to govern the services of its
employees for the time being,  there is no justifiable reason to hold that the
delegation of powers of the Board of Directors upon the Chairman & Managing
Director under clause 3.3 of the Instrument of Delegation cannot be extended to
the power conferred under Regulation 13 (a).
It may be true that the exercise of power under Regulation 13 (a) has serious
consequences and it requires to be exercised on formation of an opinion by the
Board of Directors which is the highest authority of the company.  However
clause 3.3 of the Instrument of Delegation itself  imposed safeguards by
requiring ex-post-facto approval by the delegator.  Therefore, wherever the said
power is invoked by the Chairman & Managing Director in exercise of the powers
delegated under clause 3.3 of the Instrument, it is mandatory to submit a report
to the Board of Directors for its ex-post-facto approval.   Non-observance of
the said condition will make the order of the Chairman and Managing Director
void ab initio.   We may also mention that the power conferred under Regulation
13(a) itself is not unguided or unbridled and it can be invoked only in certain
circumstances and on the grounds specified therein.
        Hence in our considered opinion the Chairman & Managing Director is
competent to invoke the power under Regulation 13 (a) of the Service Regulations
subject to ex-post-facto approval by the Board of Directors. Since the action of
the Chairman & Managing Director was subsequently ratified by the Board of
Directors on 25.7.2010, the impugned orders of termination cannot be held to be
illegal on any ground whatsoever.
   The decision relied upon by the learned counsel for the petitioners in V.C.,
BANARAS HINDU UNIVERSITY v. SHRIKANTH in which the action of the Vice-Chancellor      
in terminating the services of the employee was held to be a nullity on the
ground that the Executive Council alone was competent to exercise the said power
has no relevance to the case on hand in view of clause 3.3 of the Instrument of
Delegation under which the powers of the Board of Directors of the appellant
company have been expressly delegated to the Chairman & Managing Director.
        It is brought to our notice that both the writ petitioners filed appeals
against the orders of termination and the same are pending before the Board of
Directors of the appellant company. Therefore, we decline to enter into the
question whether the impugned terminations were justified in the facts and
circumstances of the case and whether the requirements for invoking the power
under Regulation 13 (a) were satisfied. Since the appellate authority seized
with the said issue, we deem it appropriate to direct to dispose of the appeals
preferred by the writ petitioners following due process of law as expeditiously
as possible preferably within a period of eight weeks from the date of receipt
of this order.
Accordingly, the common order passed by the learned Single Judge dated 
28.08.2012 is hereby set aside and both the Writ Appeals are allowed with the
above direction to dispose of the appeals preferred by the writ petitioners.
No costs.
_________________  
Justice G. Rohini
_________________________  
Justice C.Praveen Kumar
Date:  05.10.2012

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