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The Warehousing Corporations Act, 1962
The Punjab Reorganisation Act, 1966
Section 17 in The Warehousing Corporations Act, 1962
Section 17 in The Punjab Reorganisation Act, 1966
Section 16 in The Punjab Reorganisation Act, 1966

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Punjab-Haryana High Court
The Punjab Ware-House Field ... vs The State Of Punjab And Ors. on 20 July, 1994
Equivalent citations: (1994) 108 PLR 237
Author: G Singhvi
Bench: G Singhvi



JUDGMENT
 

G.S. Singhvi, J.

1. This petition has been filed by the Punjab Ware-house Field Employees Union and seven employees holding the posts of Warehouse Manager, Godown Assistant and Technical Assistant in the service of Punjab State warehousing Corporation (for short the Corporation) and who are posted at different godowns of the Corporation situated in the State of Punjab. The conditions of service of these and others who are members of petitioner No.1 are governed by the provisions contained in the Punjab State Warehousing Staff Regulations, 1960 which have been framed by the Government of Punjab in exercise of its power under Section 34 of the Agricultural Produce (Development and Warehousing Corporation) Act, 1956. The respondent-Corporation has been constituted under the Warehousing Corporation Act, 1962 (Central Act). Its functioning are governed by the provisions of 1962 Act as well as the State Warehousing Act, 1957 which has been enacted by the Punjab Assembly and various rules and regulations framed under the Act, 1962 and the Act of 1957. One set of such rules is Punjab Warehouse Rules, 1958.

2. The respondent-Corporation stores the goods on behalf of different depositors which include private as well as public bodies. Public bodies like MARKFED, PUNSUP, FCI and also Punjab Food and Civil Supplies Department are among the depositors with the respondent-Corporation. These agencies procure food grains from various sources and the Corporation stores these food-grains and other goods in its stores. The Corporation recovers storage charges from the depositors.

3. In the petition, the petitioners have questioned the action of respondent No. 2 in effecting recoveries from the employees for their alleged failure to provide 'storage gain' at the rate of 1 percent per bag on the wheat stocks of depositors like PUNSUP, MARKFED as also Food and Supplies Department, Punjab. They have also sought a writ of mandamus against respondent No. 2 for strict compliance of provision of Section 17 of 1957 Act and Rule 28 of 1958 rules. Petitioners have also prayed for quashing of circular (annexure P/12) dated 27.3.1989 as well as agreements entered into by the Corporation with depositors in so far as they provide for storage gain at the rate of 1 percent. Case set up by the petitioners is that in terms of Section 17 of 1957 Act read with Rule 28 of the 1958 Rules, a Warehouseman is not responsible for the loss of weight or bulk by dryage or shrinkage or gain in weight or bulk by the absorption of moisture within the limits specified in Appendix 'A' and Appendix 'B' to these rules but the respondent-Corporation is on the basis of agreements entered into by it with various depositrs insisting upon the Warehouse-man to provide minimum 1% gain in wheat and is effecting recovery from the employees in all those cases where gain in the wheat stored in the godown is less than 1%. Petitioners have contended that the Corporation cannot proceed against them on account of alleged failure of the petitioners and other employees to achieve the target of gains in terms of agreements entered by the respondent-Corporation with its depositors or their failure to fulfil the conditions specified in Annexure P/20 which is in the form of a draft notification prepared by the respondent-Corporation and which has not been accepted by the State Government so far.

4. The respondents have contested the writ petition by stating that with the introduction of new technology, various new methods of preservation and storage of stocks, the terms and conditions were settled with the depositors from time to time. They have further stated that the warehouse Manager and other staff working under M/s Control are not being held responsible for losses caused by natural calamities. However, as per the agreements entered into with the depositing agencies, the Corporation is required to provide 1% gain in these stocks on account of moisture and this condition contained in the agreements, is neither arbitrary or against public policy. It has been stated by the respondent-Corporation that PUNSUP, MARKFED and Food and Supplies Department are taking 1-1/2 per cent gain from their own staff and, therefore, the Corporation has to provide atleast 1% gain to them in order to remain in business of depositing the goods. Further plea of the respondent-Corporation is that disciplinary action is being taken against the employees for their failure on various counts and in all cases where penalty is imposed, the employees have failed to file appeal under the relevant statute.

5. The argument of Shri Nijjar learned counsel for the petitioners is that when statutory provisions has been made for determination of storage gain and storage losses in the contents of wheat stored in the stores of the Corporation, the Corporation cannot hold the employees responsible for storage gain less than the percentage specified in the rules. Shri Nijjar argued that the Corporation does not have any legal authority to amend or alter the provisions in the Punjab Warehouse Rules, 1958 and, therefore, by issuing administrative instructions or taking policy decisions, the Corporation cannot hold employees responsible for alleged violation of such instructions. He further argued that merely because the Corporation has entered into an agreements with the depositors it cannot enforce such conditions against the petitioners and other employees. Shri Nijjar argued that on the strength of draft notification which the Corporation has sent to the Government for publication, the action cannot be taken against the petitioners for alleged breach of the provisions of draft notification. Mr. Mattewal learned counsel appearing for the respondent-Corporation very fairly stated that the Corporation is not enforcing the provisions of the draft notification. He has emphatically stated that till amendments are made in the rules, the Corporation will not enforce the provisions contained in the draft notification. He further argued that the action is being initiated against the employees strictly in accordance with the provisions of the staff regulation and any employee who is aggrieved with the order of punishment has a right to prefer appeal to the Higher authority. He submitted that the petitioners have rushed to the court without any genuine grievance. Mr. Mattewal submitted that the Corporation has to adopt a realistic approach for continuing its business and if it was not to provide appropriate storage gain to the depositors it will loose business from the depositors and that will not be in the interest of service and public interest.

6. Sections 18 and 19 of the Warehouse Corporation Act, 1962 contain provisions for creation of establishments of the State Warehousing Corporation and share capital/share holders or such Corporation. Chapter II of the Punjab Warehouse Act, 1957 contains provisions of licensing of warehouseman and chapter III thereof provides for duties of a Warehouseman. Section 17 which finds mention in this Chapter speaks of liability of warehouseman for shortage or excess in goods stored. Rule 28 of the Punjab Warehouses Act, 1957 provides that the warehouseman shall not be responsible for the loss of weight or bulk by the absorption of moisture within the limits specified in Appendix A and Appendix B. Since all these provisions are relevant for the purpose of this judgment, they are being quoted below:

"18. (1) The State Government may, by notification in the official Gazette and with the approval of the Central Warehousing Corporation, establish a Warehousing Corporation for the State under such name as may be specified in the notification.

(2) A State Warehousing Corporation established under Sub-section (1) shall be a body Corporated by the name notified under that Sub-section, having perpetual succession and a common-seal with power to acquire, hold and dispose of property and to contract and may, by the said name, sue and be sued.

(3) The head office of a State Warehousing Corporation shall be at such place within the State as may be notified in the official Gazette.

(4) Notwithstanding anything contained in Sub-sections (1), (2) and (3), it shall not be necessary for the State Government to establish a Corporation under Sub-section (1) where, under Clause (g) of Sub-section (2) of Section 43, a Corporation is deemed to be established for that State under this Act.

19. (1) The authorised capital of a State Warehousing Corporation shall be such sum not exceeding two crores of rupees as may be prescribed, divided into shares of the face value of one hundred rupees each, of which such number as may be determined by the Corporation in consultation with the State Government shall be issued in the first instance and the remaining shares may be issued from time to time, as and when the Corporation may deem fit after consultation with the Central Warehousing Corporation and with the sanction of the State Government.

(2) Of the share capital issued in the first instance and of any subsequent issue of such capital, the Central Warehousing Corporation shall, in any case where the State Government has subscribed for fifty percent of such capital, subscribe for the remaining fifty percent of the capital. Section 17 of chapter III in Punjab Warehouse Act, 1957

17.(1) For the purpose of Sub-section (1) of Section 15 and of Section 16, loss of weight or bulk by dryage or shrinkage within prescribed limits and gain in weight by absorption of moisture within such limits shall not be deemed to amount to deterioration.

(2) If there is any excess in the goods stored in warehouse by absorption of moisture or other cause the warehouseman shall not be entitled thereto.

(3) If there is any shortage in the goods stored in warehouse by dryage or other causes beyond his control the warehouseman shall not be responsible therefor.

(4) In the event of a dispute arising as to whether such shortage or excess is due to dryage or absorption of moisture or is due to other causes beyond the control of the warehouseman, the matter shall be referred to the appellate-authority referred to in Section 29 whose decision thereon shall be final and binding."

Rule 28 of Punjab Warehousing Rules, 1958 "28. The warehouseman, shall not be responsible for the loss of weight or bulk by dryage or shrinkage or gain in weight or buik by the absorption of moisture within the limits specified in Appendix A and Appendix B of these rules."

7. Appendix 'A' reference of which has been made in Rule 28 specifies the maximum percentage of loss in weight or bulk due to dryage or shrinkage. In respect of wheat this appendix speaks of maximum loss of 1% in a period of two months, 1-1/2 percent in four months, 2 percent in six months and 2-172 percent in one year. Appendix 'B' specifies the maximum percentage of gain in weight or bulk due to absorption of moisture. For wheat the maximum percentage of gain is 1%. Further, this gain in weight is allowed for absorption of moisture during the monsoon months of July to October and not for all the months in a year. A perusal of the above referred provisions goes to show that the respondent-Corporation is a creature of statute. The Central Government and the State Government hold 50% share in the Corporation. The Central Act as well as State Act empowers the Government to frame rules and various rules including the rules of 1958 as well as the Punjab State Warehousing Corporation Staff Regulation, 1960 have been framed in the exercise of statutory powers vesting in the Government or the State Warehousing Corporation. These provisions contained in the rates as well as the regulations have the force of law. Rule 28 read with Appendix-A and Appendix-B clearly provides that if percentage of loss or gain within the limits specified in the statute, the warehouse man shall not be responsible. It is thus dear that if the loss of weight or bulk by dryage or shrinkage in the quantity of wheat stored is within the limits specified in Annexure A, the warehouse man cannot be held responsible. Similarly for the gain in weight or bulk due to absorption of moisture in the months from July to October is within the limits specified in Appendix B, the warehouseman cannot be held responsible.

8. Although regulation 17 of the Punjab State Warehousing Corporation Staff Regulations, 1960 empowers the Corporation to punish an employee who commits breach of the regulations of the Corporation or is otherwise guilty of negligence, inefficiency or indolence in performance of his duties or knowingly doing anything detrimental to the interest of the Corporation or in conflict with its instructions or who commits breach of discipline or who is guilty of any other Act or misconduct while punishing a employee for loss in weight or bulk due to dryage or shrinkage or gain in weight or bulk due to absorption of moisture, the Corporation has to act in accordance with the provision of Section 17 of 1957 Act read with Rule 28 and Appendix-A and Appendix-B. What has happened in this, case is that the employees have been served with a show cause notice like Annexure P/8 for allegedly showing less storage gain than the fixed norm of 1 kg per quintal and they are being charged with the allegation of causing loss to the Corporation. Actions are being taken against the employees under regulation 17(l)(a) of 1960 Regulations, which empowers the Corporation to effect recovery from the pay of the whole or part of the pecuniary loss to the Corporation by the employee. The show cause notice and the statement of allegations served upon the employees which are available on record at Annexures P/8 to P/ll uniformally contain allegations against the employees that they have shown less storage gain than the fixed norm of 1 kg. per quintal. A careful scrutiny of all these notices and allegations levelled against the employees clearly shows that the employees have been charged with the allegation of having committed violation of the provisions of Section 17 of 1957 Act read with Rule 28 of Rules 1958 and Appendix-B. Why the Corporation has done so is apparent from a perusal of letter Annexure P/12 dated 273.1989. In this letter which the Managing Director, of the Corporation wrote to various District Managers, Warehouse Managers including Technical Assistants and Godown Assistants, it has been reiterated that the Corporation will have to provide storage gain at the rate of 1 kg. per bag in respect of what stock and for any less storage gain, these officers/employees will be held responsible. To be precise, the contents of this letter are quoted below:

"Corporation will have to provide storage gain @ 1 kg. per bag in respect of wheat stock and for any less storage gain, DM/TO/WM/TA/GA etc. will be held responsible."

A perusal of Annexures P/13, P/14 and P/15 further shows that the Corporation had taken administrative decisions to hold the employees responsible who] fail to show storage gain less than 1 kg. per quintal of wheat Although teamed counsel appearing for both the parties are in agreement on the issue that the revised norms as contained in the draft notification is itself indicative of the fact that the Corporation was conscious of the difficulty faced by it in holding the employees responsible for storage gain, in case it was less than 1 kg. per quintal. When the Corporation's functioning is regulated by the statutory provisions and Rule 28 read with Appendix-B speaks of storage gain of 1% in weight or bulk due to absorption of moisture during the monsoon months of July to October, the Corporation is bound by these statutory provisions and it can proceed against the employees by way of disciplinary action only if there is a violation of these statutory provisions. The administrative instructions or policy decisions taken by the Corporation which are inconsistant with the provisions contained in the statutory rules cannot be made use for proceeding against the employee. The principle of law that administrative authorities or executive functionaries cannot issue administrative instructions or guidelines which run contrary to the statutory provisions is well settled and does not require an elaborate examination. Thus it is held that the action of the Corporation in taking action against the employees on the premises that they have failed to provide storage gain of 1 kg. per quintal of wheat stored in the warehouse of the Corporation is unsustainable in law.

9. Shri Nijjar learned counsel argued that the agreements entered into by the Corporation with the depositors are contrary to Section 31 of the Act. He made strenuous efforts to persuade this court to declare these agreements as null and void. However, 1 find no merit in this submission of learned counsel for the petitioners for the simple reason that the parties with whom the respondents-Corporation entered into an agreements are not before the Court and I find no justification what-so-ever for recording any finding adverse to the interest of those who are not before the court and who have not been given opportunity of hearing.

10. Judgment of this court in Inspectorate Staff Union, Food and Supplies Deptt. Punjab v. State of Punjab, (1994-2) 107 P.L.R. 27 on which learned counsel for the respondent has placed reliance does not really help the respondents' case. That was a case in which the petitioner-Union had claimed that recovery of assumed gain in weight of wheat should not be made from the staff. The Court held that when the norms have been fixed on the basis of expert and chemical reports, the employees cannot claim that they are immune against the action by the employer for the recovery of this gain in the weight of wheat due to moisture. A close reading of that decision shows that the court was not concerned with the situation where norms have been fixed by a statute and action was taken against the employees on the basis of administrative instructions/decisions which were inconsistent with the statutory rules. Therefore, the decision relied upon by learned counsel for the respondent cannot be made basis for upholding the action taken by the respondent against the employees for alleged less gain in the weight or bulk of the wheat due to moisture.

11. In the result, the writ petition is allowed and the action initiated by the recovery of the alleged less storage gain is declared illegal. Annexures P/8 to P/11 are declared illegal and are hereby quashed. This order shall, however, not prevent the respondent-Corporation from taking disciplinary action against the employees of the Corporation for violating the existing provisions contained in Punjab Warehousing Corporation Act, 1957, Punjab Warehouse Rules 1958 or any other provision of law. This shall also not preclude the respondent-Corporation from taking appropriate measures for amendment of Appendix 'A' or Appendix 'B' referred to in Rule 28 of 1958 rules. Costs made easy.