VENKATARAMIAH - (1.) WITH effect from 1-1-1948 a number of princely States which were situated within the territories of the present State of Orissa were merged with the Province of Orissa as it then existed. On such merger the High Schools within the said princely States also came under the jurisdiction of the Province of Orissa. The said High Schools belonged to two categories - namely 'A' type schools which were full-fledged High Schools which were actually sending candidates for the matriculation examination and 'B' type schools which were incomplete schools not sending candidates for the matriculation examination. On the said High Schools being taken over by the Province of Orissa, the teachers serving in the said High Schools came under the control of the Government of Orissa. It then became necessary to make an order to regulate the services of the said teachers. The Government of Orissa in the Education Department issued a letter dt. 5-1-1949 to the Director of Public Instruction on the subject. The relevant portion thereof is extracted below : "In the States the High Schools other than those at District Headquarters mentioned above will be of two types. The complete High Schools will be 'A' type High Schools and the incomplete High Schools 'B' type High Schools. The 'A' type schools will be similar to Government High Schools other than those at District Headquarters. The services of the staff of such High Schools will be pensionable and transferable and the teachers will get pay and dearness allowances at the rates prescribed for Government servants. Government will bear the whole of the recurring and non-recurring costs. 'B' type High Schools will be Government managed. The staff will get pay and allowances at rates prescribed for Government servants. The. Headmasters of those schools will be in the upper division of the S. E. S. The services of those teachers will not be pensionable. They will have the benefits of the Contributory Provident Fund to which Government will contribute at the rate of Re.-/1/- in the rupee of the salary. As regards recurring expenses of those schools Government will meet the difference between the standard cost and income from fees and other local subscriptions. As regards non-recurring expenditure Government will meet two-thirds of the cost. The standard cost for the 'B' type Government managed High Schools will consist of the following items :- (a) ... (b) The total contribution on Provident Fund deposited at the rate of Re.-/l/- in the rupee, and (c) ... The Inspector of Schools will be the managing agent on behalf of the Government and the Headmaster will be the correspondent of a 'B' type Government managed High School."
(2.) THE appellant was appointed as an Assistant Teacher on a pay of Rs. 70.00 per month in the pay scale of Rs. 70-140 plus admissible dearness allowance in one of the 'B' type High Schools by the Inspector of Schools on 15-6-1953 after the commencement of the Constitution of India. He continued to work as an Assistant Teacher in one or the other of the 'B' type High Schools to which he was transferred until Aug. 1, 1964 when the State Government published a rationalisation scheme for integrating the services of the teachers in different types of High Schools in the State of Orissa, namely, Zilla Schools, 'A' type Government High Schools, 'B' type High Schools, ex-District Board High Schools and ex-Anchal High Schools hereinafter collectively referred to as integrated High Schools. THE relevant part of the scheme reads thus :- "No.18027-E Government of Orissa, Education Department Resolution 1st Aug., 1964 Sub :- Rationalisation of High Schools in the State. Government have under their own management quite a few types of High Schools in which conditions of service of the employees vary from category to category. This ununiformity in the patterns and in the conditions of service has not only evoked public criticism but also created certain administrative difficulties and tends to lowering of standards in the institutions. It is for these reasons that Government had for some time past under their consideration the question of rationalisation of the following different types of High Schools in the State whose number is noted against each. JUDGEMENT_553_SUPP1_1987Html1.htm After careful consideration Government have now decided that the five types of High Schools mentioned above should be converted into a single type of Govt. School with effect from 1/06/1964. Since the employees of the 'B' type High Schools are in receipt of pay and allowances on the scales applicable to Government servants the question of fixation of their pay and allowances does not arise. THEy will continue to draw their salary that they are drawing on the date of conversion. In respect of the incumbents of 'B' type High Schools who are governed by the contributory provident fund rules, their subscriptions, if any, in the fund together with the Government contribution on the date of conversion may either be refunded to them or be credited to the General Provident Fund account to be opened afresh according to their option and all the employees may be brought under the Orissa General Provident Fund Rules. After conversion Government shall not contribute anything towards the Employees' Contributory Provident Fund. All the employees of 'B' type High Schools will be brought over to pensionable service from the date of conversion of the Schools into Government Schools. THE seniority of the 'B' type, ex-District Board and ex-Anchal Schools as among themselves will be determined by their length of continuous service in their respective cadres in the old Schools. But for the purpose of reckoning their seniority in Government service, their services will be counted from the date of conversion of the Schools into Government schools ... .." (underlining by us) Aggrieved by the terms of the rationalisation scheme referred to above relating to (i) the Contributory Provident Fund and (ii) the seniority of teachers who were working in 'B' type High Schools, the appellant filed a writ petition in the High Court of Orissa questioning the discriminatory treatment meted out to him and other teachers in 'B' type High Schools. The appellant contended that even though he had been appointed in a 'B' type High School he should be treated as having entered the service under the State Government on 15-6-1953 when he was appointed as an Assistant Teacher in a 'B' type High School, that the clause in the scheme of 1964 which provided that for the purpose of reckoning seniority in Government service the services of teachers in 'B' type High Schools would be counted from the date of conversion of the schools into Government schools which had the effect of wiping of the previous service put in by them in the said schools was discriminatory and that the terms relating to the Contributory Provident Fund were invalid. The petition was resisted by the State Government pleading inter alia that the decision of the Government dt. 5-1-1949 being an 'act of State' its effect could not be challenged by the appellant even though he had entered service in the year 1953. The High Court upheld the validity of the scheme and dismissed the writ petition. It, however, recommended to the Government to modify the terms relating to the Provident Fund Scheme applicable to the teachers of 'B' type High Schools. Aggrieved by the judgment of the High Court, the appellant has filed this appeal by special leave. It is urged on behalf of the appellant that the State Government was wrong in treating him as having entered the service under the State Government only from 1/06/1964 although he had been appointed by the Inspector of Schools in the year 1953. It is argued that merely because the appellant was appointed in a 'B' type High School which once belonged to a princely State he could not be denied the benefits available to all other teachers in Government service. It is further submitted that the case of the Government that the Government was running 'B' (type) schools as merely agents was wholly untenable.
(3.) IT is no doubt true that the 'B' type High Schools were formerly in the princely States and that on the merger of the States the then Government of the Province of Orissa passed an order on 5-1-1949 stating that the 'B' type High Schools would be governed and managed by the Inspector of Schools on behalf of the Government and the Headmasters would be the correspondents of 'B' type Government managed High Schools. IT is also true that till the commencement of the Constitution the position of 'B' type High Schools and the teachers working in them were being regulated in accordance with the terms contained in the order dated 5-1-1949. But on the commencement of the Constitution all the territories which immediately before the commencement of the Constitution were either comprised in the Province of Orissa or were being administered as if they formed part of that Province became and constituted the State of Orissa (vide entry No. 10 in the First Schedule to the Constitution.) The State Government was under an obligation to discharge its executive functions with respect to education by virtue of entry 11 of the Seventh Schedule to the Constitution as it then existed in respect of all the schools including 'B' type schools. A High School which once belonged to the princely States became a Government High School with effect from the commencement of the Constitution and it could not be anything else. The Inspector of Schools could no longer function as the managing agent on behalf of the State Government and the 'B' type High School could no longer be a 'Government managed High School'. The teachers working therein became teachers holding posts under the Government since there was no other authority which owned the 'B' type High Schools after Jan., 26, 1950 because there were no territories within the State of Orissa which could be considered as territories administered by the Government as if they formed a part of the State which was the case until Jan., 26, 1950. Though the princely States were subject to the paramountcy of the British Crown, they were considered to be foreign States by the British Indian Provinces. Any action taken in respect of them or their subjects by the British Indian Provinces was an act of State but its effect could not be extended beyond 26/01/1950 because after that date there was no longer any foreign Government. The princely States had gone out of existence. IT is well settled that the doctrine of an 'act of State' cannot be pleaded by a State as a defence against its own citizens. An 'act of State' is an act done in relation to a foreigner by the sovereign power of a country or its agent either previously authorised or subsequently ratified. Such an act cannot be questioned or made the subject of legal proceedings in any Court of law. But such a situation would not arise between the State Government and a citizen like the appellant who joined service after the commencement of the Constitution. It is appropriate to refer here to the decision of the House of Lords in Johnstone v. Pedlar, (1921) 2 AC 262 in which the nature of an 'act of State' arose for consideration. Lord Atkinson observed at pages 278-279 thus : "The best definition, I think, of an act of State, as well as the descriptions of the consequences flowing from it is that given in the judgment of Lord Kingsdown in the case of Secretary of State for India v. Kamachee Boye Sahaba. (1859) 13 Moo P C 22. In that case, the Rajah of Tanjore, a native independent sovereign, who was, by virtue of certain treaties, under the protection of the East India Company, in exercise of their sovereign power and in trust for the British Government, seized the Raj of Tanjore and the whole property of the deceased Rajah as an escheat, on the ground that the dignity of the Raj was extinct for want of a male heir, and that this property lapsed to the British Government. It was held first, as it was held in Buron v. Denman, (1848) 2 Exch 167, that an act done by an agent of the Government, though in excess of his authority, on being ratified and adopted by the Government, was of the same authority as if it had originally been directed by the Government, that the effect of the ratification is, in the language of Parke B. in Buron v. Denman (Ibid. 188-9), this, that it only leaves a remedy against the Crown (such as it is), and exempts from all liability the person who commits the trespass, and, second, that the seizure made by the British Government acting as a sovereign power through its delegate, the East India Company, was an act of State to inquire into the propriety of which a municipal Court had no jurisdiction. Lord Kingsdown, in delivering the judgment of the Privy Council, said (13 Moo PC 77, 86) : "Acts done in the execution of these sovereign powers were not subject to the control of the municipal courts, either of India or Great Britain." ;