- (1.) R. A. Sharma, J. Whether the U. P. Financial Corporation (here in after referred to as the Corporation) can fix pay scales remunerations of its employees without approval of the State Government and without amending the relevant regula tions is the only question involved in the instant case.
(2.) THE Government of U. P. appoints pay commission from time to time for revision of pay scales of the employees of Government and public undertakings of the State. In 1986-87 the State Government constituted a Committee, known as SAMTA SAMITI (here in after referred to as the Committee) for revising the pay scales of its employees as well as the employees of public undertaking of the State. The Com mittee submitted its report recommending revision of pay scales. The State Govern ment issued directions vide order dated 28. 10. 1989 read with order dated 30. 1. 1990 for implementation of the recommenda tions of the Committee. The Corporation accordingly on 30. 3. 1990 passed a resolu tion accepting the pay scales recommended by the Committee. However, later on the Corporation by majority passed another resolution on 23. 2. 1991 enhancing the pay scales of its employees over and above the pay scales recommended by the Committee. The Government, however, did not approve the enahncement and directed the Corpora tion not to pay the salary to its employees pursuant to its later resolution dated 23. 2. 1991. Being aggrieved by the said Government order the petitioner, which is an association, formed by the employees of the Corporation, has filed this writ petition. During the pendency of this writ petition in this Court, the Government has approved substantially the resolution of the Corpora tion passed on 23. 2. 1991. An application was accordingly moved by the Government praying for dismissal of the writ petition as infructuous. But as the resolution of the Corporation passed on 23. 2. 1991 has not been accepted in to the by the Government, the petitioner has pressed this writ petition for decision on merit. Learned Counsel for the petitioners has made the following submissions in sup port of the writ petition: " (i) The Corporation, being an autonomous body, is entitled to fix pay scales of its employees without the Government's interference; (ii) Regulations 7 (2) and 63 of the U. P. Financial Corporation (Staff) Regulations (here in after referred to as the Regulations), which provide for fixation of pay scales of the employees of the Corporation, should be read down so as to confine their operation to the initial fixation of the pay scales. (iii) The resolution of the Corporation dt. 23. 2. 91 should be treared an order under Regula tion 4 (b) dispensing with the compliance of the Regulations 7 (2) & 63; and (iv) pay scale is not a matter of policy under Section 30 the State Financial Corporation Act, 1951 (here in after referred to as the Act) and, therefore, the Corporation is not bound by any direction or order issued by the Government in connection there with. " Learned Additional Advocate General, ap pearing on behalf of the State of U. P. has disputed the above contentions, parties have exchanged affidavits. We have heard the learned Counsel for the parties. The Corporation has been estab lished by the Government of U. P. under Section 3 of the Act. The provisions of the Act clearly indicate that although the Cor poration to some extnt has the autonomous status, but its entire financial functions and powers are controlled and regulated by the State Government. This is clear from the provisions of the Act referred to here in below. The authorised capital of the Cor poration is fixed by the State Government under sub-Section (1) of Section 4 of the Act. Under sub- Section (2) of the same section "the authorised capital shall be divided into such number of fully paid up shares of the same face value and shall be issued to the parties mentioned in sub- sec tion (3) at such time and in such manner" as the State Government may determine. Sub section (3) of Section 4 empowers the State Government to determine the distribution of shares among the State Government. , the Reserve Bank of India. , the Development Bank, Scheduled Banks etc. Section 4-A gives power to State Government in con sultation with the Development Bank to specify the unissued capital of the Corpora tion for issue of special class of shares. Under Section 6 of the shares of the cor poration are guaranteed by the State Government as to re-payment of principal and payment of annual dividends. Under Section 7 bonds and debentures issued by the Corporation are also guaranteed by the State Government. Sub-Section (3) of Sec tion 7 empowers the Corporation to borrow money from the State Government. Section 8 enables the Corporation to accept from the State Government or with the approval of the State Government, the Development Bank and the Reserve Bank, a local authority or any other person deposits repayable after the expiry of prescribed time. Section 9 vests general superinten dence, direction and management of the affairs and business' of the Corporation in the Board of Directors. Section (10) provides for the constitution of the Board of Directors, according to which four Direc tors are nominated by the State Govern ment, one Director is nominated by the Reserve Bank of Indiaand two Directors are nominated by the Development Bankand only one Director is elected in the specified manner. Clause (f) of the same section empowers the State Government to appoint a Managing Director of the Cor poration. Section 13 gives power to the State Government to remove a Director. Under Section 18 the Executive Committee of the Corporation consists of the Managing Director, who shall be the Chairman of the Committee and four Directors elected by the nominated Directors, two of whom shall be from the Directors nominated by the State Government. In view of the provisions contained in Section 22, the Corporation can fix its head office, other offices and the agencies at such places as may be specified by the State Government. Section 23 gives power to the Corporation to determine by regulations the conditions of service and remunerations of its employees. Section 48 provides that regulation can be framed by the Board only after consultation with the Reserve Bank and with the previous sanc tion of the State Government. The State Government has also specific role under Section 35-A in the matter of establishment of a special reserve fund. The report of the inspection made by the Development Bank is to be sent to the State and Central Governments under Section 37-A. Under sub- section (4) of the said section State Government has been empowerd to issue instructions to the Corporation after con sidering the inspection report. Under Section 38 of the Corporation has to furnish to the State Government, Development Bank and the Reserve Bank, such statement and return in such form as the State Govern ment, Development Bank and Reserve Bank may require from time to time. S. 45 gives power to the State Government to place the Corporation in liquidation.
(3.) IT is thus apparent that the control of the State Government in the financial af fairs of the Corporation is pervasive right from the time or its birth till the date of its death under Section 45 of the Act. The Cor poration has limited freedom in the finan cial matters. IT, therefore, does not have unfettered power to fix and revise the pay scales of its employees Section 23, which permits the Corporation to determine by Regulations the pay scales of its employees is reproduced below: "23. Officers and other employees of the Fin ancial Corporation.-The Financial Corporation may appoint such officers, advisers and employees as it considers necessary for the efficient perfor mance of its functionsand determine, by regula tions, their conditions of appointment and service and the remuneration payable to them: Provided that the State Government may, in consultation with and after obtaining the advice of the Development Bank, specify the class or categories of posts in respect of which appoint ments may be made by the Board on such remuneration and other conditions of service as the Board may determineand no regulation made under this Act shall apply to such posts in respect of matters so determined by the Board. Determination or conditions of service of the employees of the Corporation and the remuneration payable to them has be fixed by regulations, which can be framed under Section 48" after consultation with the Reserve Bank and with the previous sanction of the State Govern ment. " Sub-section (1) of Section 48 is also reproduced below: "48. Power of Board to make regultions.- (1) The Board may after consultation with the Reserve Bank and with the previous sanction of the State Government, make regulations not in consistent with this Act and the rules made there under to provide- for all matters for which provision in necessary of expedient or the purpose of giving effect to the provisions of this Act. " Corporation, therefore, cannot fix the pay scale remuneration of its employees except by regulations. Regulations framed under Section 48 are of the nature of subordinate legislation and, therefore, they can be enacted only in the manner and subject to the conditions laid down by Section 48. Previous sanction of the State Government and the consultation with Reserve Bank are con ditions precedent for framing these regulations. But the position is different, if a case falls under the proviso to Section 23, because in such a case the Corporation can make appointment in respect of such class or categories of posts are may be specified by the State Government on such remuneration, as the Corporation may deter mine. But the proviso in applicable only to a case where the State Government, has specified categories of posts. IT is not disputed that in the instant case the proviso is not applicable. The power conferred by an Act can be exercised from time to time an occasion requires. This is well known rule of inter pretation contained in Section 14 of the General Clauses Act. Therefore, power to fix the pay scales of the employees conferred on the Corporation by Section 23, includes the power to refix revise the pay scales from time to time. But such a power can be exer cised by the Corporation subject to the con ditions, as are contained in Section 23. Hence the Corporation can revise the pay scales of its employees only be regulations, which cannot be framed except with the previous sanction of the State Government.;