R.R. PILLAI (DEAD) THROUGH LRS. versus COMMANDING OFFICER HQ S.A.C. (U) AND ORS.

Citation: [2009] 7 S.C.R. 118 · Decided: 28-04-2009 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off
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Judgment (excerpt)

[2009) 7 S.C.R. 118 
A 
R.R. PILLAI (DEAD) THROUGH LRS. 
V. 
COMMANDING OFFICER HQ S.A.C. (U) AND ORS. 
Civil Appeal No. 3495 of 2005 
8 
APRIL 28, 2009 
(DR. ARIJIT PASAYAT, P. SATHASIVAM AND AFTAB 
ALAM, JJ.) 
Service Law: 
c 
Rules regulating the Terms and Conditions of Service of 
Civilian Employees of Air Force Unit Run Canteen paid out of 
non public funds: 
Rules 2, 4 and 24 - Status of an employee of Unit Run 
Cf;mteen in Aimed Forces - Held: They do not get the status 
D of Government employees at any stage - On the peculiar facts 
of the case direction issued for payment of Rs.2 lakhs to the 
family of the deceased employee - Regulations for the Air 
Force, 1964, para 1454. 
E 
A reference was made to the three-Judge Bench as 
regards the correctness of the decision in Union of India 
vs. Mohd. Aslam [2001 (1) SCC 720]. 
Disposing of the appeals, the Court 
HELD : 1. In As/am's case a Bench of this court 
F proceeded on incorrect factual premises inasmuch as 
after noticing that the URCs are not funded from the 
Consolidated Fund of India, it went wrong in concluding 
that the URCs are funded by CSD as well as the articles 
were supplied by the CSD. Unfortunately, it did not notice 
G that no such funding is made by the CSD. Further, only 
refundable loans can be granted by the CSD to URCs at 
the rate of interest laid down by it from time to time upon 
.. 
the application of URCs seeking financial assistance. 
URCs can also take from other Non-Public Funds. Further 
H 
118 
R.R. PILLAI (DEAD) THROUGH LRS. V. 
119 
COMMANDING OFFICER HQ SAC. (U) AND ORS. 
observation regarding supply is also not correct. URCs, A 
in fact, purchase articles from CSD depots and it is not an 
automatic supply and relation between URCs and CSDs 
is that of buyer and seller and not of principal and the 
agent. This Court further went wrong in holding that 
URCs are parts of CSDs when it has been clearly stated B 
that URCs are purely private ventures and their employees 
are by no stretch of imagination employees of the 
Government or CSD. [Para 8] [123-G-H; 124-A-B] 
1.2 There was no statutory obligation on the part of 
the Central Government to provide canteen services to c 
-
its employees. The profits generated from the URCs are 
-< 
not credited to the Consolidated Funds, but are 
distributed to the Non Public Funds which. are used by 
the units for the welfare of the troops. As per para 1454 of 
-; 
the Regulations for the Air Force, 1964 the losses incurred D 
by the non public funds are not to be borne by the State. 
[Para 8] [124-C-D] 
Union of India v. Mohd. Aslam 2001 (1) SCC 720- affirmed. 
Union of India and Anr v. Chote Lal 1999 (1) SCC 554 -
E 
dissented from. 
Kona Prabhakara Rao v. M. Seshagiri Rao and Anr 1982 
.. 
(1) SCC 442; Satrucharla Chandrasekhar Raju v. Vyricherla 
JI 
Pradeep Kumar Dev and Anr 1992 (4) SCC 404 and Chandra 
Raha and Ors. V Life Insurance Corporation of India 1995 F 
Supp (2) SCC 611 - referred to. 
1.3 The factors highlighted to distinguish Chotelal's 
case are without any material. There was no scope for 
-
making any distinction factually between Aslam's case G 
--
and Chotelelal's case, Aslam's case was not correctly 
• 
decided. [Para 9] [124-E] 
2. The question whether the URC can be treated as 
an instrumentality of the State does not fall for consi-
deration as that aspect has not been considered by CAT 
H 
120 
SUPREME COURT REPORTS 
[2009] 7 S.C.R. 
A or the High Court. Apparently, on that score alone the 
appeal could have been dismissed. But it is found that 
the High Court placed reliance on Rule 24 to deny the effect 
of the appointment. From Rule 4 read with Rule 2 it is clear 
classification that all employees are first on probation and 
B they shall be treated as temporary employees. After 
completion of five years they might be declared as 
permanent employees. They do not get the status of the 
Government employees at any stage. In As/am's case 
CAT's order was passed in 1995. By that time 1999 Rules 
.. 
c were not in existence and 1984 rules were operative. 
[Para 10] [124-F-H; 125-A] 
Union of India vs. Mohd. Aslam 2001 (1) SCC 720 -
referred to. 
-
D 
3. It is to be noted that financial assistance is given, 
but interest and penal interest are charged. The URCs can 
' 
also borrow from financial institutions. The reference is 
answered by holding that employees of URCs are not 
government servants. [Para 11) [125-A-B] 
-
E 
4. Present appellant had questioned valid
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