GOVERNMENT OF ANDHRA PRADESH AND ORS. versus V.S.R. MURTHY AND ORS.

Citation: [2001] SUPP. 3 S.C.R. 127 · Decided: 18-09-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

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Judgment (excerpt)

GOVERNMENT OF ANDHRA PRADESH AND ORS. 
v. 
V.S.R. MURTHY AND ORS. 
SEPTEMBER 18, 2001 
[S. RAJENDRA BABU AND D.P. MOHAPATRA, JJ.J 
Service Law : 
Absorption-Andhra Pradesh Absorption of Employees of State 
Government Public Sector Undertakings into Public Service Act, 1997-Public 
Sector Undertakings become 'sick'-Decision by government to absorb surplus 
employees of the undertakings-Modalities of placement of the employees 
completed by government-Subsequent enactment prohibiting the absorption-
Held, Act having been enacted after completion of modalities of placement 
would not be applicable on the employees in the present case-Plea that 
employees could be retrenched u/s. 25F of Industrial Disputes Act, since the 
Public Sector Undertakings had become 'sick'-Held, Undertaking becoming 
'sick' is irrelevant since the employees had become Government employees-
Industrial Disputes Act, 1947. 
During pendency of certain proceedings before Board of Industrial 
and Financial Reconstruction (BIFR), pursuant to a settlement and an 
MOU, appellant-State considered the modalities regarding 1486 surplus 
employees of Hyderabad Allwyn Ltd. (HAL) a public sector undertaking, 
in various Government Departments and State level public enterprises 
and created supernumerary posts. 
In the meanwhile, in a scheme published by BIFR it was provided 
that the appellant-State had completed the modalities of placement of 1486 
employees and that the transfer of the surplus employees would be 
completed before sanction of the scheme. The scheme, thereafter, was 
sanctioned by BIFR. 
Thereafter, high power committee, advised the appellant-State against 
absorption of surplus staff of public sector undertakings. Appellant-State, 
issued notification mentioning difficulties in regularisation of surplus 
employees and provided for voluntary retirement scheme. 
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Appellant-State promulgated ordinance prohibiting the absorption 
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127 
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128 
SUPREME COURT REPORTS 
[2001) SUPP. 3 S.C.R. 
and subsequently it was replaced by Andhra Pradesh Absorption of 
Employees of State Government Public Sector Undertakings into Public 
Service, 1997. 
Writ Petitions challenging the Ordinance and the Act were allowed 
by High Court. It declared that the Ordinance or the Act would not affect 
the rights of the parties since they are protected under BIFR scheme and 
since surplus employees had already been absorbed by the State; and that 
BIFR scheme could not be deferred by a legislation. Rejecting the c6ntention 
of the State that employees being workmen, their services could be 
retrenched under Section 25 of Industrial Disputes _Act on account of the 
industry having become sick, it observed that workmen having become 
employees of the State, industry becoming sick would be irrelevant. 
In appeal to this Court, appellant, contended that since in case of 
Mis. Allwyn Watches Ltd., which was covered by BIFR scheme whose 
employees had been given voluntary retirement, similarly BIFR ought to 
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have allowed the Government to modify the scheme by giving voluntary 
retirement to the employees of HAL; and that absorption of employees by 
the Government would be a drain to the public exchequer. Respondents 
contended that since the surplus employees of HAL were already absorbed, 
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the Act had no applicat~on on them. 
Dismissing the appeal, the Court 
HELD : 1. When the A.P. Absorption of Employees of State 
Government Public Sector Undertakings into Public Service Act, 1997 was 
made effective from 26.11.1996, the Act cannot have any application to the 
present employees at all. It may be for the purpose of convenience or for 
other reasons, the Government may have placed them in supernumerary 
posts or other kinds of posts. The scheme having been already sanctioned 
by BIFR; it must be taken that the employees in different establishments 
have been identified and their placement in the various Government 
Departments and the public sector undertakings is complete. It is not 
necessary to look into any other document. The reports of the various 
Committees and the Government orders issued thereon will have no 
relevance at all. When the necessary material had been placed before 
BIFR and it had gone into the same and thereafter sanctionl!d the scheme 
in the manner stated above, the finding recorded by the High Court that 
the surplus employees of HAL have been absorbed in the services of the 
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GOVT. OF A.P. 

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