w w w . L a w y e r S e r v i c e s . i n

M/s. Veritaz Health Care Ltd. v/s State of U.P.

    Writ-C No. 13247 of 2017
    Decided On, 15 May 2017
    At, High Court of Judicature at Allahabad
    For the Appellant: Vijay Kumar Singh, Chandra Prakash Yadav, Advocates. For the Respondent: C.S.C., Amit Saxena, Advocate.

Judgment Text
1. This writ petition has been filed by the employer against the award of the Labour Court, Bareilly, dated 14.10.2016 in Adjudication Case No. 7 of 2014 in the matter of M/s Veritaz Health Care Ltd. and its workman - Subhash Chandra Jha (hereinafter referred to as respondent). By that award the Labour Court had granted relief (to the respondent) of reinstatement with full back wages.

2. Pleadings in the instant case were completed at the fresh stage itself, and, therefore, the writ petition is being decided at the stage of admission itself, with the consent of parties.

3. Briefly, undisputed facts of the case are, the petitioner is an incorporated company engaged in the manufacture and sales of pharmaceutical products. By appointment letter dated 20.5.2012, it appointed the respondent - Sri Shubhash Chandra Jha on the post of Regional Sales Manager, on probation. The terms and conditions of his employment were annexed as 'Annexure-B' to the appointment letter. Upon completion of probation, the respondent was confirmed on 31.1.2013. From the period 20.5.2012 to 16.10.2013 the respondent worked at Bareilly in U.P. By an order dated 16.10.2013 issued by the petitioner from its Hyderabad Office, he was transferred to Hyderabad w.e.f. 1.11.2013 and he was relieved from Bareilly w.e.f 29.10.2013.

4. While the respondent admittedly did not join at Hyderabad, initially Conciliation proceedings and later an industrial dispute was raised at his instance, wherein the Government of Uttar Pradesh made the following reference to the Labour Court, Bareilly. It was registered as Adjudication Case No. 7 of 2014.


5. Before the Labour Court the petitioner as also the respondent filed their written statements and rejoinder statements. Also, they led evidence, both oral and documentary.

6. The Labour Court, in the above proceedings framed three additional issues; the first issue framed was whether the respondent was a 'workman' as defined under the U.P. Industrial Disputes Act, 1947; second, whether the act of transferring the respondent was an act of unfair labour practise and; third, whether the dispute had arisen inside the territorial limit of the Labour Court at Bareilly.

7. Based on the findings of the Labour Court on the aforesaid additional issues, it answered the reference in favour of the workman and against the employee. It has thus held that the respondent who was a Regional Manager is a 'workman' and that the dispute had arisen within the territorial jurisdiction of the Labour Court, at Bareilly and further the act of transfer of the respondent was an unfair labour practise. Accordingly, the award of the reinstatement with full back wages has been framed.

8. Heard Sri Vijay Kumar Singh along with Sri Chandra Prakash Yadav, learned counsel for the petitioner and Sri Amit Saxena, learned counsel for the respondents.

9. Sri Vijay Kumar Singh, learned counsel for the petitioner has first submitted that no industrial dispute ever arose because the respondent is not a 'workman'. He submits that the respondent had been appointed on the post Regional Sales Manager whose terms and conditions of service, as per the appointment letter read with annexures annexed thereto made it clear that the nature of the duty performed by him was predominantly managerial and/or supervisory or administrative. For this purpose he relies on clauses 1, 2 and 3 of Annexure-A to the appointment letter which read as below:-

"1. We are pleased to appoint you as a Regional Sales Manager on Probation and you will be reporting to Zonal Sales Manager. You will be on probation for a period of Eight month (s) and the company will extend the probation period, if your performance is not satisfactory. During the period of probation, your services are liable to be terminated without any notice pay in lieu of notice.

2. Your principal responsibilities will be as enumerated below. Kindly note that this is not exhaustive and merely illustrative. We would welcome your own articulation of any further contributions you can make in addition to what has been outlined by the company. Further, as an organisation, we focus more on the outcomes and we will endeavour to have a performance management system that gives you a very clear idea of the expectations of the management and also how you have fared vis-a-vis these expectations.

3. Brief description of the principal responsibilities you will be required to fulfil:

(a) As a Regional and accountable for the marketing operations and overall performance under your jurisdiction. Your responsibility includes:

i. Planning, allocation and achievement of Budgets & Targets, as per norms formulated by the company.

ii. Assisting your superiors in formulation and implementation of marketing strategies.

iii. Evaluating the various problems, including that of Industrial relations, and recommending solutions to your superiors.

iv. Monitor stock-holding of each Stockists and C&F Agent as also collection of "outstanding payments" from Authorised Stockists and take remedial steps in the event of abnormality.

v. To impart training and conduct briefing, sales and review meetings."

10. He then relies on clause B of Annexure A to the letter of appointment which is reads as below:-

"13. You will be required to achieve performance targets/results as determined by the company from time to time and fulfilling these requirements and expectations of the company is a condition of your employment......"

11. He then relies on the definition of Section 2(d) of The Sales Promotion Employees (Conditions of Service) Act, 1976 (hereinafter referred to as the SPE Act) to submit that the respondent is not a workman because he had been engaged primarily in managerial or administration capacity and in any case he has to be held to have worked in supervisory capacity as a Regional Sales Manager. Section 2(d) of the SPE Act (as amended w.e.f. 6.5.1987) reads :

(d) "sales promotion employees" means any person by whatever name called (including an apprentice) employed or engaged in any establishment for hire or reward to do any work relating to promotion of sales or business, or both, but does not include any such person-

(i) who, being employed or engaged in a supervisory capacity, draws wages exceeding sixteen hundred rupees per mensem; or

(ii) who is employed or engaged mainly in a managerial or administrative capacity;

12. According to Sri Singh, in discharge of his primary, managerial or administrative or in the least supervisory function, the respondent may, at times, incidentally have worked with the sales promotion employees i.e. the Medical Representatives/Sales Managers which work may be described to be that of a sales promotion employee. However, in his capacity as a Regional Manager, the respondent could never be held to be a workman as primarily he never worked as a sales promotion employee. In support of his submission, he relies on judgment of this Court in the case of M/s Pfizer Ltd. v. State of U.P reported in 2010 (4) ADJ 331.

13. That was a case of an employee who had been promoted as an Area Sales Manager, in a pharmaceutical establishment. He was held to be falling within the exception of Section 2(d)(i) of the SPE Act and therefore not a workman. Specifically he relies in paragraphs 23 to 33 wherein this Court made a detailed discussion on the meaning to be given to the words supervisory capacity and managerial and administration capacity. After relying on various discussion of the Supreme Court, that the Court had concluded in paragraph 34 as below:-

"34. In my considered view, 'tact and independence' are the key words to judge the nature of work performed by an employee. It was not denied or disputed by the respondent no. 3, either before the Tribunal or before this Court, that he had with him the Medical Service Representatives who were not of the same rank and designation. They were reporting about the work and conduct to him being Medical Service Representatives. The letters (Ex. 22 to 25) written by him do show that the engagement of respondent no. 3 involves initiation of disciplinary proceedings etc. and as such he had supervision and control over the Medical Service Representatives. It, therefore, follows that the respondent no. 3 falls in the exception category i.e. Section 2(d)(1) of 1976 Act, being employed in supervisory capacity."

14. On the strength of the aforesaid judgment Sri Singh would submit that similarly in the instant case, it is not disputed that the respondent was working in a managerial and administrative capacity or in the alternative supervisory capacity inasmuch as two Area Sales Managers were reporting to him in respect of business of the petitioner in their respective areas falling in the region being administered by the respondent. Further, those Area Sales Managers were supervising the work of ten Medical Representatives/Sales Managers who alone were working as sales promotion employees.

15. He relied on evidence led before the Labour Court. During the course of oral evidence it had been stated on behalf of the petitioner employer (by EW-1) that there were two area managers and ten medical representatives working under the respondent at Bareilly. According to that statement, the medical representative also known as Sales Officer would report to the Area Manager and the Area Manager would in turn report to the Regional Manager i.e. the respondent. According to that statement, the Sales Officer would work for sales promotion whereas the Area Manager and the Regional Manager would supervise the working of the Sales Officer. Also EW-2 the Regional Sales Manager was examined by the petitioner who explained the working and responsibility of the Regional Manager. He stated that the Regional Manager does not work independently in the field and that if a Regional Manager is required to work in the field, he goes with the Area Sales Manager and the Sales Officer/Medical Representatives.

16. He then relied of paragraphs 14 and 15 of the written statement filed by the Management as quoted below:-

'14. That the company has appointed Regional Sales Manager to work in field in order to Promote Sales and Canvass the Pharmaceutical Products & Supervise the Medical Representatives engaged by the company, who are required to call on doctors, acquaint them of the efficacy of the products detailed and to motivate them to prescribe the products of the company. The Medical Representatives employed by the company are required to visit with Mr. Jha then it is the responsibility of Mr. Jha to motivate the medical Representative to visit Doctors, Hospitals Nursing Homes, Stockists and Chemists and the Company provides Medical feed back information about the market conditions and movement of the company's Products vis-a-vis competition in the market. The Medical Representatives employed by the Company are required to make efforts of getting 'Prescription Demand" for the company products. The work performed by the Medical Representatives is purely of Sales Promotion that is to canvass, promote and boost the sales of the Pharmaceutical Products of the Company they are governed by the work norms as applicable from time to time. Mr. Jha supervise, monitors and controls their work & they are reporting to him.

15. That at the outset, that Mr. Subhash Chandra Jha Regional Manager is working in Managerial & Administrative Capacity and not a workman under the provision of the I.D. Act and he is already drawing a Salary of Rs. 33,745/-. It is also submit that transfer is an incident and condition of service as in his appointment letter."

17. According to Sri Singh, the Labour Court has misdirected itself and wrongly relied on chosen parts of statements of management witness, which portions of the cross examination statements of the Zonal Manager EW-1 and the Regional Manager EW-2 have been read to state that the Regional Manager worked like a Medical Representative and that he had no power to make appointment or pay wages to anyone and that the Regional Manager also meet doctors in connection with sales promotion work.

18. Further, he would submit, the Labour Court has completely misdirected itself in placing reliance on the oral evidence led on behalf of respondent wherein it was stated that he did not have the power to appoint, transfer, suspend and promote any employee. This he submits it has been specifically considered by this court in the case of Pfizer Ltd. (supra) and thereafter it was held in that case that the work done by such an employee would be supervisory in nature. The finding of the Labour Court is therefore contrary to law and, therefore, the award is vitiated.

19. On the other hand Sri Amit Saxena would submit that the finding of the Labour Court is wholly correct. He relied on paragraphs 6 and 14 (extracted above) of the written statement of the management. In paragraph 6 it has been stated :-

"6. That Shri Subhash Chandra Jha is not a workman as defined in Industrial dispute Act inasmuch as that he was only a Regional Sales Manager, Supervision of Medical Representative for and was engaged to promote and to canvass the Sales of Pharmaceutical Products by calling on the Doctors, Hospitals, Dealer, dispensaries Distributors and Stockiest etc."

20. He submits that the Management itself admitted that the respondent was engaged to promote and to canvass the sales of pharmaceutical products by calling on Doctors, Hospitals, Dealers, Dispensaries, Distributors and, Stockiest etc. He then relies on the terms of appointment letter itself which according to Sri Saxena provide for the duties of the respondent. According to him the duties of the respondent were such as were pre-dominantly of sales promotion employee and not managerial and or a person engaged in supervisory capacity. He thus, relies on clause 3(a) of Annexure-A to the appointment letter (extracted above) to submit that the respondent was primarily responsible and accountable for marketing operations. According to him, marketing operations are pre-dominantly acts of sales promotion. He also relies on the cross examination statements referred to above to submit that the respondent was only engaged in work of sales promotion. In respect of the judgment of this Court in the case of Pfizer Ltd. (supra) he submits, the same was rendered in the facts of that case.

21. Having considered the submissions so advanced, I find that from the pleadings made before the Labour Court as extracted above, it was clear that the petitioner did plead in para 15 that the respondent was appointed in managerial capacity. That pleading had to be read along with paragraph 14 of the written statement wherein the petitioner described the work performed by the petitioner - to work in the field (i) in order to promote sales and canvass products supervise, motivate, monitor, control the work of Medical Representatives who were to call on doctors. These pleadings were then to be read with other evidence led wherein the terms and conditions of appointment of respondent should have been read in entirety together with the oral evidence. Neither clause 3(a) nor any other individual clause of that Annexure-A to the appointment letter nor stray statements made during cross examination of management witnesses could be read in isolation to determine the nature of work for which the respondent had been appointed.

22. Here, I find that it was an undisputed fact between the parties that the respondent was appointed on the post of Regional Sales Manager and that there were two grades of employees working under him. The first grade of employees working directly under the respondent were the two Area Managers and the second grade of employees working under the respondent were the ten Medical Representatives described as Sales Managers. Thus, admittedly it had been proved before the Labour Court there was a team of employees of the petitioner, working under the respondent to achieve a particular end. It is also not disputed that the Medical Representatives who were engaged directly and wholly in promoting the sales of products manufactured by the petitioner. They were meeting the doctors in the field to promote the sales of the petitioner. It was not the case of the respondent that the terms and conditions of service of Medical Representatives/ Sales Managers appointed by the petitioner were the same or similar to those of a Regional Sales Manager.

23. The question, therefore, arose, before the Labour Court as to the status of the employees working in the two grades above the Medical Representatives. In the case of Pfizer Ltd. (supra) which was also a case of a pharmaceutical industry, this Court had discussed the status of an Area Manager i.e. who was working directly above the Medical Representative. In facts of that case applying the law as laid down by the Supreme Court, the Court had concluded that the work of area manager in the case of Pfizer Ltd. (supra) was of supervisory capacity. It was then to be seen whether in the present case, the respondent, who was working on one grade above the Area Manager, was a sales promotion employee and, therefore, a workman. In this regard, in face of pleadings made by the petitioner read in entirety it could not have been inferred that the respondent was not working in a managerial and administrative capacity or in a supervisory capacity or purely as a sales promotion employee. In S.K. Maini v. Carona Sahu Limited (1994) 3 SCC 510 it was held a manager or an administrative officer is generally invested with the power of supervision in contradistinction to the stereotype work of a clerk. That was a case of the employee being a shop incharge who had been given various powers and functions that are not involved in the facts of this case. In C. Gupta v. Glaxo Smithkline Pharmaceuticals Ltd. (2007) 7 SCC 171 it was held nomenclature of post is not of any consequence but it is the nature of work that is relevant. In Burmah Shell Oil Storage & Distribution Co. of India v. Burmah Shell Management Staff Association AIR 1971 SC 922, the Supreme Court held, if the work assigned to the employee was primarily supervisory with wages paid above the statutory limit, the employee was not a workman. Applying that test, this Court in the case of Pfizer Ltd (supra) held Area Sales Manager, to be supervisory in nature.

24. Coming to the evidence, in this regard clause 3(a)(i); (iii); (iv) and; (v) of the terms and conditions of service of the respondent were relevant. The respondent was in the first place made fully responsible and accountable by the petitioner for marketing operations and over all performance. The term 'marketing operation' neither itself established that the petitioner was primarily engaged for sales promotion nor it could be read in isolation under clause 3(a). The respondent, a Regional Sales Manager was admittedly made responsible and accountable for (i) marketing operations and (ii) over all performance under his jurisdiction. Thus, the respondent was given the responsibility to over see the marketing operations of the petitioner in his 'region' being the territory or area of business placed under him and was made accountable for the over all marketing operations in that area/region. He was also made responsible and accountable for over all performance of persons working under him in that area/territory. As has been discussed above, the persons working under the respondent would include the Area Managers and the Medical Representatives.

25. According to documentary evidence on record, while assigning the responsibilities to the Regional Sales Manager under clause 3 (a) of the terms and conditions of service, the work of planning, allocation and achievement of budgets and targets as per norms of the petitioner was assigned to the respondent. Here also, achievement of budgets and targets could not be read in isolation or independent of the work of planning and allocation. In any case it could not be read to mean a mere division of work or amount into equal parts. This work, by very nature would be a managerial function. While achievement of budgets and targets in pharmaceutical industry may incidentally involve sales promotion, the work of planning and allocation would clearly and exclusively be a managerial function.

26. Again, evaluation of various problems including those of industrial relations and recommendation of solution could not be an exercise of sales promotion. It would be a managerial assignment that had been given to the respondent. Similarly, imparting training and conducting briefing together with sales and review meeting is not a simple step to promote sales. It involves an understanding of different facets and facts of human agencies as also their interactions. Then, merely because the respondent was required to achieve performance targets etc. did not and it could not be looked at in isolation to conclude that the respondent was primarily engaged in sales promotion and not in managerial and or supervisory activity.

27. The oral testimony led by the parties also did not bring to light anything contrary to the documentary evidence. Thus, the oral testimony did not, in any way suggest that the respondent was not working according to the terms and conditions contained in Annexure-A to his appointment letter or that he was working contrary to those terms and conditions primarily to make sales promotion.

28. Thus in view of the above, the findings recorded by the Labour Court that the respondent was a sales promotion employee are clearly perverse and also contrary to the tests laid down by the Supreme Court, as noted above and as followed by this Court in the case of Pfizer. The relevant pleading and evidence on record have not been considered by the Labour Court while concluding that the respondent was a sales promotion employee. In the face of clear evidence of the respondent having been appointed on a managerial and administrative capacity primarily involving supervisory function, it could never be said that the respondent was a workman. Applying those tests, it is clear, that the conclusion of the Labour Court i.e. respondent a Regional Sales Manager was a workman is perverse, besides the fact, that by applying the wrong tests, the Labour Court has committed a patent error of law.

29. Coming to the second question, that goes to the root of the matter with regard to the territorial matter though in view of the above conclusion, the same is not necessary to be answered, yet a brief discussion on the same is warranted in view of the arguments advanced on that issue.

30. In this regard Sri Singh has submitted that by the transfer order the respondent workman had been relieved from his headquarter at Bareilly w.e.f. 29.10.2013, which order had been issued from the Hyderabad office of the petitioner. Thereafter in view of the fact that the termination order was issued on 26.11.2013 from Hyderabad occasioned by the fact that the respondent did not join service at Hyderabad, he submits that no part of the dispute, if any, arising from such termination occurred inside the territory of U.P. In this regard, he relies on Full Bench decision of this Court in the case of Rajendra Kumar Mishra v. Union of India reported in (2005) 1 UPLBEC 108. In that case an army personnel had been court marshalled and thus dismissed from service a Calcutta in respect of a misconduct committed at Calcutta. He challenged the same by filing a writ at Allahabad. Upon reference the Full Bench of this Court held, merely because the petitioner resided at Balia, inside Uttar Pradesh, it did not give rise to jurisdiction at Allahabad. In The Anglo French Drug Company (Eastern) Ltd. v. Presiding Officer, Labour Court reported in Civil Misc. Writ Petition No. 16337 of 1987 the respondent employee who had been appointed a Medical Representative and posted at Allahabad had been terminated by the Bombay office of the employer. The reference made by the Government of U.P. was resisted by the employer on the ground that it did not have any office inside the State of U.P. A division bench of this Court found it had not been shown that the services of the employee in that case were not being controlled and supervised by any officer having an office in U.P. Therefore, mere service of the termination order inside the State of U.P., it was held did not confer competence on the Government of U.P. to make a reference of the Industrial Dispute in U.P.

31. On the other hand, Sri Amit Saxena would submit that substantial part of the cause of action giving rise to the reference had arisen inside the territory of U.P. and, therefore, the reference was validly made. In this regard he submits that in the conciliation proceedings the petitioner had itself submitted before the Assistant Labour Officer, vide its order dated 01.11.2013 that it had granted thirty days time from the date of that letter to the respondent to join at Hyderabad. The said letter has been annexed with the counter affidavit filed by the respondent as Annexure-5. It is not disputed by the petitioner. In view of that letter, Sri Saxena would submit that the termination dated 26.11.2013 was issued to the petitioner while he was, as is admitted to the petitioner, entitled to continue at Bareilly within the State of U.P. He then relies on the judgments of the Supreme Court in the cases of Shri Rangavilas Motors (1967) 14 FLR 332 para 15; Bikash Bhushan Ghosh and others v. Novartis India Limited and anr. (2007) 131 FLR 1183 para 12; Nand Ram v. Garware Polyster Ltd. (2016) 149 FLR 306 and a judgment of this Court in the case of Sri Baidyanath Ayurved Bhawan Ltd. v. Presiding Officer, Industrial Tribunal reported in (2007) 114 FLR para 21.

32. In Shri Rangavilas Motors case, the Supreme Court applied the test where did the dispute arise ? In that case the workman had been transferred from Bangalore to Krishnagiri where the head office of the company/employer was situate. Hence, though the transfer order had been passed in Krishnagiri, the dispute was held to have arisen at Bangalore -where that order was to operate. Accordingly, the reference of the dispute at Bangalore was upheld. Relying on this judgement, Shri Saxena would submit, here also, though the termination order was passed at Hyderabad, it was to operate at Bareilly. Hence the reference made at Bareilly was proper. In rejoinder, Shri. Singh would, on the other hand submit, since the workman had been relieved from Bareilly on 29.10.2013, and the termination order was passed thereafter on 26.11.2013 at Hyderabad, the dispute, if any arose wholly at Hyderabad.

33. Then, relying on the judgment of the Supreme Court in the case of Bikash Bhushan Ghosh and others v. Novartis India Limited and anr. (2007) 131 FLR 1183, Shri Saxena would further submit, because the legality of the transfer order was also in question and in any case because admittedly the termination order was served on the respondent at Bareilly, he would submit, for both these reasons the reference made at Bareilly by the Government of U.P. was valid.

34. Then, Shri Saxena relies on another judgment of the Supreme Court in the case of Nand Ram v. Garware Polyster Ltd. (2016) 149 FLR 306. That was a case where the management at Aurangabad first took a decision to transfer the workman from Aurangabad to Pondicherry and then to close the unit at Pondicherry. It was then held, that while industrial dispute of termination from service could validly be raised at Pondicherry, however, in such a case, it does not mean that the adjudication proceedings initiated at Aurangabad, where the management took a decision to close the Pondicherry unit, were without jurisdiction.

35. Shri. Saxena would therefore submit, despite all erudition, the division bench of this Court, in the case of The Anglo-French Drug Company (Eastern) Ltd. (supra), unfortunately, may not offer the correct principle to be applied to the facts of this case. He would submit, for the purpose of determining the place where a dispute arose, it is not the only deci

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sive factor to examine whether control and supervision over the workman is inside the State where such dispute is referred for adjudication. According to him the law as laid down by the division bench is directly in conflict with that laid down and applied by the Supreme Court. According to him the reference of the dispute made inside U.P. did not suffer from any defect, though it cannot be denied that a similar reference could have been made at Hyderabad, but that was matter of choice with the respondent. 36. Lastly, this Court, in the case of Shree Baidyanath Ayurvedh Bhawan Ltd. v. Presiding Officer reported in (2007) 114 FLR 21, has, after applying the test laid down by the Supreme Court in the case of Shri Ranga Vilas Motors (P) Ltd. (supra), upheld a reference made inside U.P. in case of a workman who had been transferred from Naini, Allahabad to Kolkata but who it was claimed had not been allowed to join at Kolkata. 37. Thus, it is now settled beyond any doubt, that in matters of industrial disputes, the principle of part cause of action does apply and there is no rule, that only one of the two or more States will be competent to make a reference. It will depend on the facts of each case. Also, it may have to be borne in mind, how much or which part of the cause of action arose inside the State where a reference happens to be made. Also, in case of two reference arising in two different states involving the same set of facts or cause of action, different tests may have to be evolved to see which of the two reference arose first or which of the reference is more comprehensive or which may require to be decided first or which would suite the parties. However, those considerations do not arise at present. 38. In view of the fact that the termination letter was admittedly issued before expiry of time allowed to the respondent to join at Hyderabad, it cannot be said that the dispute arose outside the territorial jurisdiction of U.P. Thus, in view of the law discussed above, the dispute could have been canvassed both inside the State of U.P. as also at Hyderabad. As such the findings of the Labour Court on the issue of territorial jurisdiction cannot be faulted. 39. However, in view of the first conclusion that the respondent was not a workman, the third issue of unfair labour practise, on which arguments have not been advanced, is not required to be gone into inasmuch as the respondent not being a workman, there is no case of unfair labour practise. 40. Accordingly, the writ petition is allowed. The finding and the award of the Labour Court is quashed to the extent the Labour Court has concluded that the respondent was a sales promotion employee and, therefore, a workman. In the admitted position of facts evidence and law, the respondent was working in a managerial and or supervisory capacity. Accordingly, the reference ought to have been answered against the workman and in favour of the employer. 41. The writ petition is thus allowed. The award of the Labour Court, Bareilly dated 14.10.2016 in Adjudication Case 7 of 2014 is quashed. 42. No order as to costs.