Holding

Company Paid Staff performing identical functions to government employees are entitled to equal treatment and regularisation, and there is no rational basis for their separate classification.

Summary

The Supreme Court examined the claim of Company Paid Staff employed in the offices of the Official Liquidator and Court Liquidator across several High Courts, who had served for 10‑25 years on low pay without permanent status or retirement benefits. They filed writ petitions seeking to be regularised as Central Government employees with equal pay and benefits, and the Calcutta and Kerala High Courts granted such relief. The Union of India appealed, arguing that these staff were appointed under Rules 308/309 of the Companies (Court) Rules, 1959 and were not government employees. The Court held that there is no rational basis for classifying these employees differently, as they perform identical duties to government staff, and therefore are entitled to equal treatment and regularisation. While dismissing the appeals and allowing the writ petition, the Court stayed the High Court orders for six months, directing the Government to frame an absorption scheme modelled on the 1978 Scheme, failing which the orders will stand confirmed.

Issues considered

Whether Company Paid Staff appointed under Rules 308 and 309 of the Companies (Court) Rules, 1959 are entitled to equal pay and regularisation as Central Government employees.
Whether the classification of such staff as a separate category is constitutionally valid under Article 39(d) of the Constitution.
Whether the High Court judgments granting regularisation should be set aside.

Legislation cited

Banking Regulation Act, 1949s. 38A
Companies Act, 1956
Companies (Court) Rules, 1959s. 308, s. 309
Constitution of Indias. Article 39(d)

Subjects

equal pay for equal workregularisation of servicecompany paid staffofficial liquidatorcourt liquidatorparity in employmentArticle 39(d)absorption schemecivil appeal

Judgment

A GOVT. OF INDIA AND ORS.
v.
COURT LIQUIDATOR'S EMPLOYEES ASSOCIATION AND ORS.

AUGUST 27, 1999

B [K. VENKATASWAMI AND A.P. MISRA, JJ.]

Service Law:
Parity in employment-Respondents working as Company Paid Staff in
C the office of the Official Liquidator/Court Liquidator for 10-25 years being
paid very low scale ofpay without any permanent or quasi-permanent status
vis-a-vis Government paid staff in the same office-Rationality of-Held, ...
there is no rational or reasonable basis for making classification between
the two groups of employees or denial of equal treatment, when they are
found to turn out the same and similar nature of work-The respondents
D cannot be denied the benefits and status which are enjoyed by their
counterparts employed in the office of Official Liquidator/Court Liquidator-
Judgments of the two High Courts directing the regularisation of the service
of the respondents and grant of benefits ofpay fixation and other allowances,
upheld-However, in the interest of justice, an opportunity given to the
E appellants to frame a scheme for absorption of Company Paid Staff modelled
on the 1978 Scheme of Department of Company Affairs and implement it
within six months-Companies (Court) Rules, 1959-Rules 308 and 309-
Equal pay for equal work-Constitution of India, 1950-Article 39(d).
In Civil Appeal No. 5642/94, the respondents were the employees in the
F office of the Court Liquidator in Calcutta High Court. Aggrieved by the
disparity in pay-scales and deprivation of allowances and retiral benefits vis-
a-vis the employees of the Central Government, they moved High Court by
filing a writ petition for grant of full status of permanent Central Govt.
employees and other benefits. The said petition was allowed by learned
Single Judge of the High Court. Aggrieved, the appellants preferred an
G appeal to th_e Division Bench of the High Court. The said appeal \\'.as dismissed
by the Division Bench thereby holding that there was no reasonable basis
for making classification or denial of equal treatment between the employees
of the Court Liquidator and the Official Liquidator when they were found to
turn out the same and similar nature of work. Hence the present appeal. The
H Company Paid Staff of the Official Liquidator of High Court of Madras was
62
-.__
GOVT. OF INDIA v. COURT LIQUIDATOR'S EMPLOYEES ASSON. 63
also allowed to implead/intervene in the present civil appeal. A
... In Civil Appeal 5677/94, the respondents were working as Estate
Clerks, known as Company Paid Staff in the office of the Official Liquidator,
High Court of Kerala, having been appointed by the Official Liquidator
pursuant to the orders of the High Court under Rules 308 and 309 of the
Companies (Court) Rules, 1959. The said respondents had been discharging B
their duties and functions identical to those of the staff employed by the
Central Government in the office of the Official Liquidator but their service
was not regularised. Aggrieved, the respondents moved the High Court by
filing a writ petition seeking absorption on a regular basis relying on an
earlier absorption of similarly situated Company Paid Staff as regularly paid
staff. The said petition was allowed directing the appellants to absorb Company
c
Paid Staff as regular lower division clerks in the office of the Official
Liquidator with effect from their respective dates of appointments as Estate
Clerks. Hence the present appeal. The Company Paid Staff in the office of
the Official Liquidator of High Court of Bombay was also allowed to intervene/
implead in the present appeal. D

- In Writ Petition (C) No. 473/88, the Company Paid Staff in the office
of the Official Liquidator of High Court of Delhi, claimed regularisation/
absorption on the basis of their proper selection and possession of requisite
qualification and the long experience in the Department.
E
On behalf of the appellants, it was contended that the Company Paid
Staff cannot be absorbed/regularised as they were not employed by the
Government in accordance with the rules; that they knew their appointments
were only temporary and that their pay was not from the consolidated fund.

On behalf of the writ petitioners, it was contended that the petitioners F
were better qualified than the regularly appointed staff; that their duty hours
were more and they were assigned more onerous and tedious work under the
threat of termination of their employment at any time; that they were employed
in a permanent office of the Official Liquidator and the duties which they
were performing were not of transitory nature; that their claim for
G
regularisation/absorption were not merely on the basis of their having
completed more than 240 days, but on the basis of their proper selection and
possession of requisite qualification and the long experience in the
r Department; that the Central Government was also keen to regularise the
'
service of Company Paid Staff on priority basis and sought for complete data
from the Official Liquidator in this regard; that in spite of passing of more H
64 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A than a decade, the Official Liquidator had not sent the requisite details to
the Government.

Dismissing the Appeals and allowing the Writ Petition, the Court

HELD: 1.1. In the office of Official Liquidator, there are two kinds of
B staff. One kind of staff is the employees of the Central Government appointed
under the Central Company Law (Service) Rules, 1956. The other kind of
staff is appointed by the Official Liquidator under the orders of the Company
Judges under Rules 308 and 309 of the Company Rules at the instance of ',.
'-

the Official Liquidator, The staff appointed under Rules 308 and 309 is
called 'Company Paid Starr. Similarly, to assist the Court Liquidator in the
C matter of winding up of Banking Companies, the Court Liquidator is
empowered to appoint the staff under Rules 308 and 309 of the Company ,Jo<-

Court Rules, 1959. The grievances of Company Paid Staff appointed by the
Court Liquidator and the Company Paid Staff appointed by the Official
Liquidator are identical and what applies to one, equally applies to other
D category. The Company Paid Staff working both under the Court Liquidator
and the Official Liquidator are grossly under paid and they have no retiral
benefits even after working for 10-25 years. Their services are neither
regularised nor they are given the status of Government employees. There
is no reasonable basis for making classification or denial of equal treatment
between the Company Paid Staff and employees of the Central Government
E employed in the office of the Court Liquidator and Official Liquidator, when
they are found to turn out the same and similar nature of work. The
respondents are entitled to be equally treated and cannot be denied the
benefits and status which are enjoyed by their counterparts employed in the
Office of Official Liquidator and Court Liquidator.
F - [71-A-C; 74-C-D; 66-B-CJ
1.2. In the interest of justice and to balance the equities between the
parties, an opportunity is given to the appellants to frame a scheme for
absorption of Company Paid Staff modelled on the 1978 Scheme of Department
of Company Affairs and implement it within six months, The operation of the
G judgement of the High Court under appeal and the order in writ petition are
stayed for a period of six months to enable the appellants to frame the
Scheme as aforesaid and to give effect to it, failing which the judge~ent
under appeal and the order in writ petition will stand confirmed. (75-B-C}

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5642 of 1994
H Etc.
GOVT. OF INDIA v. COURT LIQUID A TOR'S EMPLOYEES ASSON. [K. VENKATASWAMI, J.) 65
From the Judgment and Order dated 18.3.93 of the Calcutta High Court A
in Matter No. 756of1991.

P.P. Malhotra, (Tapas Ray) (NP), K. Sukumaran, T.L.V. Iyer, Rajiv Sharma,
Y.P. Mahajan, (P. Parmeswaran) for Ms. Sushma Suri, R.D. Upadhyay, R.C.
Pandey, Ranjan Mukherjee, N. Sudhakaran, E.M.S. Anam, Fazlin Anam, Ms.
Radha Rangaswamy, Ms. A. Subhashini, Subhash Sharma, M.R. Vij, Ms. Indira B
Jaisingh, S.R. Bhat, Ms. Hetu Arora, Ms. Anita Shenoy, Yashank Adhyaru
and Sanjay R. Hegde for the appearing parties.

The Judgment of the Court was delivered by

K. VENKAT ASWAMI, J. The respondent Nos. 2 to 64 in Civil Appeal
c
No. 5642/94 are the employees in the office of the Court Liquidator in the
Calcutta High Court. Aggrieved by the disparity in pay-scales and deprivation
of allowances and retiral benefits, they moved matter No. 756 of 1991 before
a learned Single Judge of the Calcutta High Court. They claimed that they
must be treated as employees of the Central Government and should be given D
full status of permanent Central Government employees on the expiry of 360
days of joining their service besides regular pay-scales with avenues for
promotion, pension, provident fund and other service benefits on the basis
of their length of service.

The learned Single Judge of the Calcutta High Court ruled that writ E
petitioners/respondent Nos. 2 to 64 herein should be given the full status of
permanent Central Government employees on the expiry of 360 days of their
joining the service. However, the learned Judge restricted the arrears for a
period of three years prior to the date of the said judgment. The learned Judge
safeguarded the right with reference to their fitment in the appropriate scale F
and the benefit of promotion having due regard to the length of service.
Likewise, the learned Judge ordered their entitlement for pension, provident
fund, gratuity again with regard to their length of service.

Aggrieved by the order of the learned Single Judge, the appellants
' . preferred an appeal ~o the Division Bench of the Calcutta High Court. G
. The learned Judges, after carefully considering the rival submissions,
found that respondent Nos. 2 to 64 had been working for the last 20-25 years.
Their service was neither regularised nor they were given the status of
Government employees; their pay-scales were not inconformity with that of
the pay-scales of their counterparts in various other Departments/Offices; H
66 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A that they were given very low scale of pay without any permanent or quasi-
permanent status and they were required to retire on attaining the age of 58
years but empty handed. The Division Bench also found that the appellants
could not substantiate the contention that the respondents were not in work
of perennial nature and as such cannot be absorbed as Central Government
employees. The learned Judges further found that there was no reasonable
B basis for making classification or denial of equal treatment between the
employees of the Court Liquidator ;µid the OfH.cial Liquidator when they were
found to tum out the same and similar nature of work. Ultimately, the learned
Judges found that the respondents herein could not be denied the benefits
and status which were enjoyed by their counterparts employed in the office
C of Official Liquidator. It was further held that there was no rational basis for
making .classification between the two groups of employees and therefore, the
resp~ndents were entitled .to be equally treated and all the benefits as were
conferred and enjoyed by the employees attached to the office of Official
Liquidator should be extended to them as well. In the light of the findings as
. noticed above, the Division Bench dismissed the appeal preferred by the
D appellants. Hence, the present appeal. I

Let us now give the facts in Civil Appeal No. 5677/94. This appeal is
preferred against the judgment dated 27.8.93 of the Division Bench of the
Kerala High Court in O.P. no. 9732 of 1990-H. The contesting respondents,
E who were the petitioners in the High Court, were working as Estate Clerks,
otherwise known as Company Paid Staff (hereinafter referred to as Company
Paid Staff') in the office of the Official Liquidator, High Court ofKerala. It is
not in dispute that the said Company Paid Staff were working in the office
of the Official Liquidator continuously and without any break for years
together. They were appointed by the Official Liquidator pursuant to the
F orders of the High Court under Rules 308 and 309 of the Companies (Court)
Rules, 1959. It is also common ground that the Company Paid Staff had been
discharging their duties and functions identical to those of the staff employed
by the Central Government in the office of the Official Liquidator. The Company
Paid Staff moved the High Court seeking absorption on a regular basis. They
G brought to the notice of the Court that on an earlier occasion ·on 1.7.78
similarly situated Company Paid Staff were absorbed as regularly paid staff.

The petition was opposed by the appellants (respondents before the
High Court) contending that the Company Paid ~taff were not employed by
the Government; that their employment was of casual nature; that they were
H paid out of the funds of the Companies in liquidation and not from the
GOVT. OF INDIA r. COURT LIQUIDATOR'S EMPLOYEES ASSON. [K. VENKATASWAMI, J.] 67

consolidated fund of India; that such appointments were made by the Official A
Liquidator to meet administrative exigencies to discharge the functions entrusted
to him as Official Liquidator and that, therefore, they cannot claim regularisation
or absorption in the Government service.

The High Court, on the basis of the pleadings and arguments raised
before it, considered two questions, namely, (a) whether the continuous B
employment of petitioners enable them to claim regularisation in service and
other benefits; (b} whether the principle of equal pay for equal work' applies
to them. The learned Judges, after referring to a number of decisions of this
Court, found that the Company Paid Staff were appointed according to law
and by a qualified Central Government functionary and that their appointments C
were regular and proper; that the claim of the Company Paid Staff was
justified; that they had been in employment for periods ranging from five to
ten years; that it has not been pointed out that any of the Company Paid Staff
is unsuitable for the post now held by him; that the respondents (appellants
herein) have not made out any case that the services of the Company Paid
Staff are no longer required in the discharge of the functions of the Official D

- Liquidator; that there is no reason why a precedent of absorption on 1.7.78
should not be adopted in the case of the Company Paid Staff, who were under
'the expectation' that their services would also be regularised in due course
and that in the course of the judgment the learned Judges have observed that
during the pendency of the petition the court by an order dated 24.9.91 had E
expressed the hope that considering the human problem involved the
authorities to take a practical view of the matter and take a step similar to that
was taken in the year 1978, so that justice could be meted out to the Company
Paid Staff, many of whom were in service for more than a decade. The learned
Judges, after referring to the answers given by the concerned authorities,
found that the stand of the first respondent before them in not considering F
the claim of the Company Paid Staff for regularisation was unfair and was not
justifiable in the circumstances and especially in view of the precedent of
regularising the service of similarly situated employees in the years 1978. The
learned Judges further observed that the Company Paid Staff also deserved
similar treatment as meted out to the similarly situated employees in the year G
1978 and, therefore, were entitled to regularisation of their services in the
establishment of the Official Liquidator. Ultimately, the learned Judges allowed
the petition and directed the appellants herein to absorb Company Paid Staff
as regular Lower Division Clerks in the office of the Official Liquidator with
effect from their respective dates of appointments as Estate Clerks. There was
a further direction given by the Court to grant benefits of pay fixation and H
68 SUPREME COURT REPORTS (1999] SUPP. 2 S.C.R.

A all admissible allowances to the Company Paid Staff. The arrears of salary and
other allowances due to them on such regularisation shall be computed and
paid without delay. There was a further direction to reckon the arrears from
the date of the original petition.

Aggrieved by the decision of the High Court, the appellants have ·
B preferred this appeal.
Writ Petition (C) No. 473 of 1988 is preferred by the Company Paid Staff
in the office of the Official, Liquidator, High Court of Delhi. The petitioners
claim that they are better qualified than the regularly appointed staff, their
duty hours are more and they are assigned more onerous and tedious work
C · under the threat of termination of their employment at any time. They are
employed in a permanent office of the Official Liquidator and the duties which
they are performing are not of transitory nature. Their claim for regularisation/
absorption are not merely on the basis of their having completed more than
240 days, but on the basis of their proper selection and possession of
D requisite qualification and the long experience in the Department. Factually,
it is. claimed that their appointments were made on the basis of advertisement
in the National dailies and by subsequent selection by the Official Liquidator.
It is stated that the Registrar of the Delhi High Court directed the Official
Liquidator to take up the matter of absorption with the Central Government
on the basis of seniority in service. It is also brought to our notice that the
E Central Government was also keen to regularise the service of Company Paid
Staff on priority basis. Accordingly, the Government of India vide its letter
dated 24.3.88 sought for complete data from the Official Liquidator, Delhi. The
Official Liquidator was called upon to furnish the required details on or before
15.4.88. In spite of passing of more than a decade, the Official Liquidator has
not sent the requisite details to the Government of India. The petitioners have
F complailled that the appellants have deliberately concealed about the number
of Posts sanctioned in the office of the Official Liquidator, New Delhi. The
appellants must be compelled to disclose whether number of permanent posts
sanctioned initially was ever increased keeping in view the heavy increase of
work in the office of the Official Liquidator. The grievances in substance are
G similar to the one placed by similarly situated employees in the High Court
of Kerala, which we have noticed earlier. The stand taken by the respondents
in this Writ Petition is also similar to the stand taken by the authorities before

-
the Kerala High Court. Hence, what applies to the Company Paid Staff of the
Kerala High Court will also apply to the petitioners in this petition.

H In I.A. No.5 of 1998, the Company Paid Staff in the office of the Official
GOVT. OF INDIA 1•. COURT LIQUIDATOR'S EMPLOYEES ASSON. [K. VENKA TASW AMI, J.] 69

Liquidator, High Court of Bombay sought to intervene/implead in Civil Appeal A
No.5677 /94 to support the case of the contesting respondents in that appeal.
They have also brought to our notice the similar matter pending in the High
Court of Bombay and interim orders passed thereon.

In I.A. No. 9of1998, the Company Paid Staff in the office of the Official
Liquidator, High Court of Madras, have sought to implead/intervene in Civil B
Appeal No.5642/94. This Court by an order dated 24.3.98 allowed I.A. Nos.
5 and 9 of 1998. It was also brought to our notice that the similar issue is
pending before the Madras High Court.

Before proceeding further, it is advantageous to have a minimal
background fact relating to the origin of both the offices of the Official C
Liquidator and the Court Liquidator in the High Courts. We may at once point
out that though Section 38A of the Banking Regulation Act, 1949 provides
for appointment of Court Liquidator in the matter of liquidation of banking
companies, the office of the Court Liquidator was sanctioned only for the
. Calcutta High Court and it is stated that no other High Court has a Court D
Liquidator. Winding up and liquidation of business of companies had been
viewed by the Government as an inevitable results in certain cases. The
Companies Act, 1913 as well as 1956 provided for winding up of companies
under the control and supervision of Courts except in the case of voluntary
winding up, which is of insignificant in number. The matter of winding up of
companies and securing public interest was vested with the High Court and E
the Central Government was expected to aid this power of winding up as part
of sovereign functions of the State. Upto the period of 1949, the legislature
did not maintain any distinction between the banking and non-banking
companies under the Companies Act, 1913 and the grounds and procedure
for winding up of banking and non-banking companies were the same. The F
distinction between the banking company and the non-banking company
broadly speaking, is that a banking company is a company which deals with
banking business and a non-banking company, on the other hand, deals with
the non-banking business. The general law applicable to both categories of
companies is the Companies Act.
G
The provisions of law relating to banking companies up to the year
1949 formed a subsidiary portion of the general law applicable to companies
as contained in the Indian Companies Act, 1913. The Government of India
considered that a separate legislation was necessary for the regulation of
banking in India. Accordingly the Banking Regulation Act, 1949 (initially, the
Act was called 'The Banking Companies Act') [hereinafter called the '1949 H
70 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A Act'] was enacted by the Parliament. This 1949 Act, as seen from Section 2
of the said Act was in addition to and not in derogation of the Companies
Act, 1913 or 1956.
Even under the 1949 Act there was no Court Liquidator till the Act was
amended in 1953 by inserting Section 38A. It is stated that the Central
B Government had appointed a Court Liquidator under Section 38A for the
Calcutta High Court. It is further stated that in no other High Court in India
the Central Government had appointe~ a Court Liquidator. In the year 1976,
the Court Liquidator (Class-I Post) (High Court of Calcutta) Recruitment
Rules, 1976 were notified and published on 14.8.1976. Again in the year 1989
another notification dated 5.9.1989 was issued under Article 309 of the
C Constitution of India by framing the,Court Liquidator (Group 'A' Post) (High
Court of Calcutta) Recruitment Rules, 1989. Under these 1989 Rules, there
were two posts, one post of Court Liquidator and two posts of Assistant
Court Liquidator. The post of Court Liquidator was abolished on 10.12.1993
and as far as the post of Assistant Court Liquidators, as on date only one
D post remains and the other post has been abolished. To ·assist the Court
Liquidator in the matter of winding up of Banking Companies, the High Court
of Calcutta enabled the Court Liquidator to appoint the staff under Rules 308
and 309 of the Company Court Rules, 1959. The salaries for the staff so
appointed were paid from the assets of the Banking company under liquidation;
Those staff appointed by the Court Liquidator under the orde1:. of the High .-
E Court of Calcutta are the contesting respondents in Civil Appeal No. 5642 of
1994.
Let us now consider the case of the Company Paid Staff appointed by
the Official Liquidator under the orders of the High Court. It may be noted
that under the Companies Act, 1913 there was no post of Official Liquidator.
F Under 1913 Act, the matters relating to winding up of the Company were
administered by the Courts and the administration of_ the Companies was
entrusted to the respective States. Different High Courts framed their own
procedure and rule regarding winding up of the Companies. There was no
uniformity in the matter among the High Courts in framing the Rules. It is only
' ..
G after the coming into force of the 1956 Act that uniform position has been
brought upon. Under the 1956 Act, an Official Liquidator is appointed by the
Central Government under Section 448 of the Act. Under Article 309 of the
Constitution of India, the Recruitment Rules were made for the post of Official
Liquidator, Assistant Official Liquidator and staff of the Company Law Board.
Those rules were called 'Department of Company Law Administration (Classes-
H I, II and III Posts) Recruitment Rules, 1962, the Central Company Law Service
GOV1. OF INDIA r. COURT LIQUIDATOR'S EMPLOYEES ASSON. [K. VENKATASWAMI, J.] 7}

Rules 1956 and Central Company Law Service Rule, 1997 '. The Companies A
(Court) Rules, 1959 were framed by the Supreme Court. In the office of Official
Liquidator there are two kinds of staff. One kind of staff is the employees of
the Central Government appointed under the Central Company Law Service
Rules, 1956. The other kind of staff is appointed by the Official Liquidator
under the orders of the Company Judges under Rules 308 and 309 of the
Company Rules at the instance of the Official Liquidator. The staff appointed B
under Rules 308 and 309 is called 'Company Paid Staff. The Company Paid
Staff appointed by the Official Liquidator are the contesting respondents in
Civil Appeal No.5677 of 1994 and also the petitioners in Writ Petition (C) No.
473of1988.

The grievances of Company Paid Staff appointed by the Court Liquidator
c
and the company paid staff appointed by the Official Liquidator are identical
and what applies to op.e, equally applies to other category.

We have already set out the findings of the Calcutta High Court and
the Kerala High Court on the basis of the pleadings presented before them. D
Having regard to the human problem involved, the Kerala High Court
asked the Central Government to come forward with an amicable solution.
Finding that there was no proper response, the High Court decided the case
on merits. When the case was heard by us, it was felt that an other opportunity
should be given to the Central Government to come forward with a practical E
solution. With that view, an interim order was passed on 14.1.1988 in the
following terms:

"In all these cases, the common question that arises for consideration
is whether the persons appointed by the Official Liquidator/Court
Liquidator under the orders of respective High Court under Rules 308/ F
309 of the Companies (Court) Rules, 1959 are entitled to equal pay and
regularisation as the employees appointed by the Central Government
in the office of the Official Liquidator. Learned senior counsel appearing
for the appointees brought to our notice the findings of the High
Courts rendered on the basis of the materials placed before them. G
They are broadly stated that the appointees were discharging identical
duties and functions as that of regular employees in the office of the
Official Liquidator; that they have been continuously without break
working for a period ranging from l 0 to 25 years; that they have been
paid only a fixed salary without any benefit of pension, gratuity; that
such employees appointed upto I. 7 .1978 had been regularised by the H
72 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A Government; that though the Central Government appreciated the.
human problem involved in these matters and came forward hefore the
Kerala High Court to amicably settle the issue ultimately has shown
an unsympathetic attitude and that in the light of the severaljudgmehts
of the Supreme Court, the appointees are entitled to regularisation arid
salaries as paid to the regular employees in the office of the Official
B Liquidator at least from three years prior to the date of the judgment
of the Single Judge of the Cakutta High Court and in the Kerala cases
from the date of appointment.

On the other hand, Mr. Malhotra, learned senior counsel appearing for
the Union of India, submitted that the appointees were not appointed
c by the Government and they were not paid salaries from the
consolidated fund. On the other hand, they were paid salaries from the
concerned companies under liquidation. In certain High Courts, there
are Official Liquidators and Court Liquidators appointed under Section
38A of Banking (Regulation) Act. The Banking Companies under
D liquidation originally were 75, now only there are 32 banking companies
under liquidation. The appointment under Court orders are not for a
permanent department like Official Liquidator's Office and, therefore,
the appointees cannot demand regularisation and payment of equal
salary as that of salaries paid to regular employees in the office of the
Official Liquidator.
E
The hard reality is that the appointees are continued on the basis
of fixed salary without any retiral benefits such as pension and gratuity
for more than 25 years and the functions they are discharging are
similar to the one discharged by the employees in the office of the
Official Liquidator without getting equal treatment. In the
F
circumstances, before rendering a decision on merits by the Court Mr.
Malhotra, learned senior counsel, desired that the government be
given an opportunity to consider the matter in the light of the findings
rendered by the High Courts and to come forward with an acceptable
solution.
G
The matters are adjourned by four weeks."

In response to the above order, the appellants through its Under Secretary
to the Government of India, Ministry of Finance, Department of Company
Affairs, New Delhi, have filed an additional affidavit setting out the
H circumstances leading to the filing of the appeal and after referring to the

/
GOVT. OF INDIA v. COURT LIQUIDATOR'S EMPLOYEES ASSON. [K. VENKATASWAMI, J.) 73
Absorption Scheme of November, 1978, it is stated in paragraphs 14 to 16 as A
follows:

"14. That in pursuance to the order dated 14.01.98, the Government
considered various options to find out an acceptable solution in
regard to the Company Paid Staff. The following three options were
discussed: B
(i) One option that was discussed was to repeat scheme for
absorption of Company Paid Staff as was done through the 1978
Scheme of Department of Company Affairs. There are certain
practical problems in following this course of action. As per the
1978 scheme such absorption is possible to the extent of 50% C
only under the direct recruitment quota in the appropriate grade.
As the position obtains in the Department of Company Affairs,
there is lack of adequate number of vacancies in the aforesaid
category (direct recruitment) for the purpose to facilitate
absorption of all these Company Paid Staff in the Department of D
Company Affairs .
.(ii) The second alternative that was discussed was to continue the
present arrangement without absorption of these Company Paid
Staff. In. such a situation, their salaries and service conditions
could suitably be revised by the Hon'ble Company Judges with E
reference to funds available with the OLs in the various High
Courts. According to information gathered, most of the OLs
attached to various High Courts have annual surpluses. The
balances in the funds maintained by many OLs are substantial;
and
F
(iii) The third option that was discussed was to grant them age
relaxation and ask them to sit in the open competitive examination

-
as a one time measure. This would give them a general opening
not re.stricted to jobs in these two Departments.

15. The Government has considered the above thre.;: alternatives and G
is of the view that out of the said solutions, proposals at Nos. (ii) and
(iii) of para 14 can be considered subject to the orders of this Hon'ble
Court.

16. I further say and submit that the precedent of regularisation of the
Company Paid Staff referred to in the judgment of the Hon'ble High H
74 SUPREME COURT REPORTS [1999) SUPP. 2 S.C.R.

A Court relates to only those staff which was absorbed in pursuance of
1978 scheme. There has beeq no regularisation, except for the cases
of absorption falling under said 1978 Scheme."

We have already set out at more than one place about the findings of
the Calcutta High Court and the Kerala High Court rejecting the contention
B put forward on behalfofthe Union di-India that the Company Paid Staff were
only appointed as per the order of the concerned Company Judge and the
salaries were fixed by the Company Judge; that their appointments were
purely on temporary basis and solely for the purpose of the work ofliquidation
proceedings under the charge of the Official Liquidator and that, therefore,
C they cannot be absorbed as regular Government servants. Both the High
Courts have found that the Company Paid Staff had been discharging the
duties years together without any break identical to that of the government
paid staff in the same Liquidator's Office. It was also found that the Company
Paid Staff working both under the Court Liquidator and the Official Liquidator
were grossly under paid and they have no retiral benefits even after working
D for 10-25 years.

In view of the peculiar facts of these cases and the positive findings
of the High Courts with which we concur, we are unable to agree with the
contention of the learned senior counsel for the appellants that the company

E
paid staff cannot be absorbed/regular.ised as they were not employed by the
Government in accordance with the rules; that they knew their appointment
l
..
were only temporary and that their pay was not from the consolidated fund.

Undoubtedly, counsel on both sides cited numerous authorities of this
Court on earlier occasions sustaining the orders of absorption and setting
F aside the orders of absorption. We do not consider it necessary to refer to
those decisions inasmuch as the facts presented before us and the findings
rendered by the High Courts speak for themselves. As a matter of fact, the
Government had considered as one of the options to absorb the Company
Paid Staff as was done through the 1978 Scheme of Department of Company
Affairs.
G
In the circumstances, we are satisfied that the orders of the High Court
challenged in these appeals do not call for any interference having regard to
the facts presented before the High Courts. Accordingly, we dismiss the
appeals with no orders as to costs.

H In view of the above, the Writ Petition is allowed as the relief prayed
GOVT.OFINDIAv. COURTLIQUIDATOR'SEMPLOYEESASSON. [K. VENKATASWAMI,J.) 75

for is similar to the one claimed by the contesting respondents/Company Paid A
Staff in the connected Civil Appeals, without costs.

However, we want to give an opportunity to the appellants in the
interest of justice and to balance the equities between the parties to come
forward to accept and act on the first option given in the additional affidavit,
as extracted above, and absorb the Company Paid Staff working both under B
the Court Liquidator in the Calcutta High Court and the Official Liquidator in
other High Courts by framing a Scheme modelled on the 1978 Scheme within
six months. In other words, we stay the operation of the judgment of the High
Courts under appeal and the order in W.P. (C) No. 473/1988 for a period of
six months to enable the appellants to frame the Scheme as suggested above C
and to give effect to it, failing which the judgments under appeal and the
order in W.P. (C) No. 47311988 will stand confirmed.

The Appeals, Writ Petition and the I.As. are disposed of accordingly.

M.P. Appeals and Petition disposed of.