STATE OF TAMIL NADU AND ORS. versus V.S. BALAKRISHNAN AND ORS. ETC.

Citation: [1994] SUPP. 1 S.C.R. 739 · Decided: 18-07-1994 · Supreme Court of India · Bench: KULDIP SINGH, YOGESHWAR DAYAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

STATE OF TAMIL NADU AND ORS. 
v. 
V.S. BALAKRISHNAN AND ORS. ETC. 
JULY 18, 1994 
[KULDIP SINGH AND YOGESHWAR DAYAL, JJ.] 
Service Law: Deputation/Foreign Service-Benefits of Liberalised Pen-
sion Rules-Employees transfe"ed from Dairy Development Department to 
Dairy Development Corporatiott-Subsequently Corporation replaced by a 
Cooperative Federatiolt""'-Govt. issuing GO 1921 granting benefits from the 
date Federation came into being or from date of continuance service whichever 
is late..-Benefits of Liberalised Pension Rules-Entitlement to-Paras 3(c) 
and 3(f) of the GO struck doWtt-All other provisions upheld. 
A 
B 
c 
The Tamil Nadu Dairy Development Corporation was incorporated 
on May 4, 1972 to carry on the production, collection and distribution of D 
milk throughout the State. The appellant-State directed the transfer of 
certain posts in various cadres of the Diary Development Department to 
the Corporation. The incumbents were to be treated on deputation/foreign 
service to the Corporation. 
The question of absorbing the employees in the said corporation was 
under consideration. In the meanwhile the State Government issued 
G0.731 dated May 21, 1973 providing for the terminal benefits to Its 
employees who had opted to join the service of Small Scale Industries 
Development Corporation Limited. 
By G.O. 378 dated April 18, 1975, the State Government decided to 
extend the benefits of GO 731 to all Government servants who were 
permanently absorbed in any of the public sector undertakings. 
E 
F 
The Government servants working in the Dairy Development Cor-
poration were asked to exercise the option either for permanent absorption G 
or for reversion back to State Government. In the meantime Government 
took a decision to keep GO 378 in abeyance since the Corporation was 
likely to be replaced by a Cooperative Federation. Thus, the action in 
respect or the options obtained from the employees of the Corporation was 
dropped. 
H 
739 
740 
SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R. 
A 
G.O. 731 and GO 378 were amended by GO 284 dated March 31, 1980 
B 
and the employees to whom the aforesaid GOs were applicable, were disal-
lowed simulaneous withdrawal of pension and it was provided that they 
would be entitled to pension for the period they served the Government only 
after their requirement from the Government Undertakings. The benefit of 
commutation or pension, if not availed earlier was to be available only on 
retirement from the Public Sector Undertaking. The employees of the In-
dustries Corporation filed writ petitions before the High Court claiming 
that they were entitled to the benefits on their permanent absorption in the 
Industries Corporation. They also contended that after their options had 
been accepted the denial of benefits was wholly arbitrary and violative of the 
C 
doctrine of Promissory estoppel. The High Court allowed the writ petitions 
and directed that the petitioners were entitled to the benefits under GO 731. 
' 
The Dairy Development Corporation was replaced by the Tamil 
Nadu Cooperative Milk Producers Federation with effect from February 
D 1, 1981. All· the employees of the said Corporation inducing those who were 
no deputation/foreign service were transferred. 
E 
Finally, the Tamil Nadu Government issued GO 1921 dated Novem-
ber 8, 1983 providing for the terminal benefits to the Government servants 
who were working with the Dairy Development Corporation and thereafter 
with the Federation on deputation/foreign service. The benefits were to be 
made available from February 1,1981 or from the date of continuous 
service of the deputationist in the Federation whichever was later. This was 
challenged before the High Court by way of writ petitions by the employees 
working on deputation/foreign service with the Federation. These petitions 
F 
were later on transferred to the State Administrative Tribunal. Some 
original applications were also filed before the Tribunal challenging the 
said GO. The Tribunal allowed the applications, Against which the State 
Government has preferred the present appeals. 
On behalf of the employees, it was contended that all the employees 
G were continuing on deputation/foreign service with the Federation and as 
such were Government servants and that their status as civil servants 
cannot be terminated unless they are given options to be absorbed as 
permanent employees of the Federation. It was also argued that the 
options given by

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