Avas Vikas Sansthan (in short 'the AVS') was registered as a Society under the Societies Registration Act, 1860 on 17.11.1988. The objects of the society were to collect information regarding low cost technology for construction of houses, undertake field studies for development of appropriate low cost building materials, undertake construction works, imparting practical training etc. The AVS began to incur heavy losses and could not pay its employees their salaries after 1.12.1998. The Rajasthan Government decided that, in view of the financial and administrative conditions of the AVS, it should be dissolved and the State Government directed the appellant-the Rajasthan Housing Board to take immediate steps to liquidate the AVS. The State Government also directed that the employees of the AVS would be adjusted on priority on the vacant posts of Municipal Boards, Municipal Councils, Jaipur Development Authority and other local bodies whenever posts fell vacant on the retirement of the employees of such local bodies. By the resolution of the AVS dated 26.3.1999, the AVS was dissolved.

The case before the Supreme Court is about the employees right to their job. The Supreme Court considered various pleas and the law and observed,

Power to Abolish Civil Posts

It is settled law that the power to abolish any civil post is inherent in every sovereign government and such abolition will not entail any right on the person holding the abolished post the right to re-employment or to hold the same post. In the present case, the State Government was benevolent enough to float a scheme to absorb such employees whose posts were abolished. Therefore, in our opinion, the arguments advanced by the counsel for the respondents with regard to unfairness meted out to the employees of Avas Vikas Sansthan hold no water.

With regard to 604 employees of the AVS, it was argued that the State of Rajasthan had no legal obligation to offer alternative employment to the erstwhile employees of the AVS. But the State of Rajasthan in all fairness did frame a scheme and offered employment in other local bodies of the government. Thus, the terms and conditions of such alternative employment cannot be challenged. We are of the opinion, that the decision of the High Court granting relief of re-employment with pay protection, seniority and pension is erroneous. We, therefore, direct the State of Rajasthan to strictly adhere to and implement its decision to offer employment in other local bodies in letter and spirit.

We further make it clear that all the erstwhile employees, if not already employed, should be employed in the local bodies as per the scheme formulated by the Government of Rajasthan in a war footing.

Pay Protection

On the question of Pay Protection claimed by the respondents, it is seen from the Cabinet decision of 18.05.1999 that "no pay protection should be granted to the employees". The same was conveyed by the Rajasthan Housing Board vide letter dated 01.06.1999. This decision was taken after considering the views of the Finance Department. So the undertaking by the employees when they were absorbed into other local bodies had the same stipulation. This being so, such claim for pay protection, at this late stage, cannot be made. Thus, considering the categorical condition that the employees will not be given any pay protection, and moreover due to the absence of any legal right for pay protection to the employees of the AVS, such claims, in our opinion, cannot be sought for.

With regard to the claim of the respondents for counting services rendered in the AVS, the Cabinet decision of 18.05.1999 specifically states that "the benefit of post service is not to be counted for any purpose". The same was conveyed by the Rajasthan Housing Board letter dated 01.06.1999. Therefore the undertaking by the employees when they were absorbed into other local bodies had the same stipulation; therefore at this late stage such claim for counting services rendered in the AVS for the pension and other retiral benefits, in our opinion, cannot be made.

Since the employees of the AVS are not treated as government servants, they are not entitled to claim the benefit of Government Order dated 25.01.1995, which is specifically applicable only to government employees and the benefit of the 5th Pay Commission Report also stands inapplicable as this was not a claim that was sought by the respondents at any stage in any court that had entertained this matter. Also the Rajasthan Civil Services (Absorption of Surplus Personnel) Rules, 1969 will not apply as such to these employees of the AVS as they clearly do not fall within the definition of Surplus Personnel as defined in the Rajasthan Civil Services (Absorption of Surplus Personnel) Rules, 1969.

As regards the question of whether Rajasthan Housing Board can be considered 'State' under Article 12 of the Constitution, no serious arguments were made by either counsel for the parties and, therefore, we are not expressing any opinion on the same and decide the other issues on the basis of the arguments advanced.

Rights of Daily Wagers

With regard to the appointment of 46 daily wage employees after the dissolution of the Society, we hold that, in the facts and circumstances of this case there is no right on the part of any employee to be reemployed. Also daily wage employees, cannot, by any stretch of imagination, be put on par with regular employees under any law prevalent as of date. The finding of the Division Bench that they can be treated on par with regular employees and be given various reliefs is wrong and erroneous under law. Therefore, we are not granting any relief to the daily wage employees as their claim is not justified under law. However, the Government of Rajasthan may sympathetically consider absorption of these employees in the vacancy available if any in future by giving them preference to other new applicants in any of their local bodies etc. subject to the following conditions:

1. The employees will be entitled to salary/wages from the date of their re-employment and shall not claim for any past period;

2. The employees will not be entitled to pay protection, benefit of GO dated 25.01.1992, 5th Pay Commission and the service rendered by the employees will not be considered for pension and/or other retiral benefits;

3. The appointment of Degree holder/Diploma holder Engineers shall be on the post of Junior Engineer on the minimum scale of pay;

4. The appointment of employees of Administrative Department would be on the post of Junior Clerk on the minimum scale of pay;

5. The appointment would be subject to suitability and physical fitness;

6. The alternative employment would be granted subject to availability of vacancy preferably within a period of 3 months.

If they are absorbed in future the same will be treated as a fresh employment and employees/appointees will be governed by the rules and regulations of the absorbing Department if they are found suitable.

POWER TO ABOLISH POSTS AS A MEASURE OF ECONOMY:

It is well settled that the power to abolish a post which may result in the holder thereof ceasing to be a Government Servant has got to be recognized. The measure of economy and the need for streamlining the administration to make it more efficient may induce any State Government to make alterations in the staffing pattern of the civil services necessitating either the increase or the decrease in the number of posts or abolish the post. In such an event, a Department which was abolished or abandoned wholly or partially for want of funds, the Court cannot, by a writ of mandamus, direct the employer to continue employing such employees as have been dislodged.

FAIRNESS IN ACTION:

In our opinion, the State of Rajasthan has acted fairly and benevolently though the State has no constitutional and legal obligation to offer alternative employment to the employees of the AVS upon abolition of posts. Consequent to the liquidation of the AVS itself, it had framed a scheme to adjust the employees in other local bodies by relaxing the rules of such bodies and terms and conditions were fixed without financial economic compulsions of the State. The present case is one of liquidation of an organisation and consequent abolition of post in the said organisation.

(See 2006-HRIOL-05-SC-SERVICE in 'Laws 4 U')