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MANU/DE/2024/2013IN THE HIGH COURT OF DELHIRFA 622/2004Decided
On:02.07.2013Appellants:Satpal YadavVs.Respondent:M/s. Cambata
Aviation Pvt. Ltd.Hon'ble Judges/Coram:Rajiv Sahai Endlaw,
J.Counsels:For Appellant/Petitioner/Plaintiff: Mr.Arun Bhardwaj,
Adv.For Respondents/Defendant: Mr.Davinder Singh, Sr. Adv. and
Mr.Saurabh Tiwari, AdvocateSubject:ServiceCatch WordsMentioned
INActs/Rules/Orders:Constitution Of India - Article
12Disposition:Appeal dismissedJUDGMENTRajiv Sahai Endlaw, J.1. The
appeal impugns the judgment dated 20th August, 2004 of the learned
Additional District Judge dismissing the suit filed by the
appellant, (i) for declaration that the letter dated 8th October,
1991 of the then respondent No. 2 Mr. K.K. Aggarwal, General
Manager of the respondent No. 1 Company terminating the services of
the appellant is illegal, mala fide, wrongful, arbitrary,
unconstitutional, unreasonable, without authority and in violation
of the terms ofemploymentand against the principles of natural
justice and thus null and void; (ii) for recovery of Rs. 16 lakhs
as damages forwrongfulterminationof services of the appellant; and,
(iii) for interest. Notice of the appeal was issued and the Trial
Court record requisitioned. The appeal was admitted for hearing
vide order dated 6th July, 2006. Vide subsequent order dated 21st
November, 2007, the name of the then respondent No. 2 Mr. K.K.
Aggarwal was struck off from the array of parties. The counsels
have been heard and the records perused.2. The appellant had filed
the suit pleading that the respondent Company was engaged in the
business ofGroundHandling Agent of airlines at the Airport; that
the appellant was appointed in the respondent No. 1 Company as an
Office Boy with effect from 1st October, 1973 initially on
probation and his services were confirmed with effect from 30th
November, 1973; that the appellant was promoted and given
increments from time to time; that the appellant was promoted with
effect from 28th May, 1974 as Office Clerk, with effect from 21st
September, 1981 as Supervisor, with effect from 8th September, 1990
as Duty Officer and with effect from 30th November, 1990 as
Assistant Airport Manager; that there is no age of superannuation
in the respondent No. 1 Company andemployeeshave continued till the
age of 70 years; that the respondent No. 1 Company vide letter
dated 8th October, 1991, with reference to para 3 of the
appointment letter dated 1st October, 1973 terminated the services
of the appellant with immediate effect. It was the plea of the
appellant that para 3 of the appointment letter under which his
services had been terminated was not applicable to this kind of
arbitrary, illegal, mala fide andwrongfulterminationthat the power
thereunder could be used only in exceptional circumstances against
misconduct. Alternatively, it was the plea of the appellant that
the said paragraph was to be applicable only as long as the
appellant was an Office Boy and after confirmation and promotion
from the post of Office Boy to a higher post, the terms of the said
appointment letter would not be applicable and the appellant would
have to be governed by the general, reasonable and fair
commonemploymentconditions which would include termination
ofemploymentonly on goodgrounds, after due notice and charge sheet
followed by enquiry. The appellant thus contended that the
termination without charge sheet and enquiry was illegal. It was
further the plea of the appellant that his appointment was by the
Director, Delhi Operations of the respondent Company, the
termination was affected by the then respondent No. 2 Mr. K.K.
Aggarwal who was only a General Manager and not a Director and the
termination was illegal for this reason also. The amount of Rs. 16
lakhs was claimed as damages on the basis of the amount which the
appellant would have earned by serving in the respondent Company
till December, 2015.3. The respondent and Mr. K.K. Aggarwal
aforesaid contested the suit by filing a written statement pleading
that the contract of the respondent Company with the appellant was
a contract of personal service which was not specifically
enforceable and qua which no declaration was maintainable; that
there was information available with the respondent which
implicated the appellant and owing whereto the respondent Company
lost faith in the appellant; however, since imputing misconduct of
the appellant would have affected the future prospects of the
appellant, the respondent Company as per its policy resorted to
discharge simpliciter of the services of the appellant; that the
respondent Company is not required to justify its action of
terminating the services of the appellant.4. On the pleadings of
the parties, the following issues were framed by the suit Court:i)
Whether the termination of the services of the plaintiff is illegal
and wrongful?ii) Whether the suit is not maintainable?iii) To what
relief the plaintiff is entitled?5. The suit Court after recording
of evidence held, (a) that the appointment letter dated 1st
October, 1973 issued by the respondent Company to the appellant and
proved as Ex. DW 1/3 empowered the respondent Company to terminate
the services of the appellant at any time without assigning any
reason and without giving any notice and merely by giving one
month's salary in lieu of notice; (b) that in the termination
letter dated 8th October, 1991 proved as Ex. CW/15, there was no
whisper of any charge of misconduct or otherwise against the
appellant and it was a case of termination simpliciter; (c) that
there was thus no breach of the terms and conditions of appointment
and the termination was valid. The plea of the appellant that the
appointment after completion of probation and promotion was not
governed by the appointment letter dated 1st October, 1973 was
rejected and it was held that it was not necessary that after every
promotion a fresh appointment letter has to be issued and that the
terms of appointment would remain the same, even if theemployeeis
promoted subsequently. It was yet further held that the respondent
Company had given valid explanation for not terminating the
services of the appellant on thegroundof misconduct. Accordingly,
the termination of the services of the appellant was held to be
legal and valid and in accordance with the service agreement Ex. DW
1/3. Qua Issue No. 2, the suit court held that the respondent
Company is not a State and the relief of declaration cannot be
granted against a company which is neither a Government, Government
Company, Government Instrumentality, Statutory Corporation nor an
authority within the meaning of Article12of the Constitution of
India and that the status of the appellant was different from that
ofemployeesworking with Government or Government Bodies within the
meaning of Article12of the Constitution on India. It was yet
further held that in the case of illegal termination of a
contractual relationship of master and servant, since such a
contract is not specifically enforceable, damages if any and not
declaration is the remedy. Accordingly, the suit filed by the
appellant was held to be not maintainable; axiomatically the suit
was dismissed.6. The counsel for the appellant has drawn attention
to some of the clauses of the appointment letter dated 1st October,
1973 Ex. DW 1/3 and the senior counsel for the respondent to
others. The relevant clauses of the appointment letter are as
under:You will be on probation for three months. On the completion
of the same and if your service are found satisfactory, of which
the Management will be the sole judge, you will be confirmed. Your
services are liable to be terminated at any time, even before the
expiry of the probationary period without assigning any reason, and
without giving any notice.The Management may however, extend the
period of probation for a further specified period and thereby
offer further opportunity of satisfy the Management as to your
usefulness to the Company. On confirmation, your services can be
terminated on giving one month's notice or one month's pay in lieu
of notice and without assigning any reason.If any act of misconduct
is alleged against you the management shall take such action
against you as it might find necessary. The Management may in the
case of serious misconducts hold an inquiry and even suspend you,
pending inquiry. You shall not claim any payment for the suspension
period.In case the Management finds that you are surplus to
requirements, the Management shall terminate your service on
payment to you of such compensation as provided under law.
Management in that event shall not be obliged to follow the rule of
Last come First go.In the event of your wishing to terminate your
service with the Company, you shall given the Company at least 30
days notice in writing.It may be mentioned that though the
paragraphs of the appointment letter are not numbered but the first
of the clauses reproduced above is para 2 of the appointment letter
and the second clause reproduced above is para 3 of the letter. It
may further be mentioned that the impugned judgment has referred
only to para 2 of the letter and has not made any reference to para
3 aforesaid, though the termination vide letter dated 8th October,
1991 Ex. CW/15 has been affected thereunder.7. The contention of
the counsel for the appellant is that the services of the appellant
could be terminated "at any time....without assigning any reason"
under para No. 2 aforesaid (which as aforesaid is the only
paragraph of the appointment letter referred to in the judgment)
only during the period of probation and, after the completion of
probation and especially after 18 years of service, the services of
the appellant could be terminated only under the other two clauses
aforesaid i.e. on thegroundof misconduct or on thegroundof the
appellant being surplus to the requirement of the respondent
Company. It is further contended that though the respondent Company
in the termination letter did not assign any reason but
subsequently in the written statement in the suit took the plea of
having lost confidence in the appellant and which demonstrates that
the termination of the appellant was for the reason of misconduct
but the respondent Company neither served any charge-sheet nor held
any enquiry nor gave an opportunity to the appellant to defend
himself. It is thus contended that the judgment of the Trial Court
is erroneous.8. Before noticing the argument of the respondent
Company, it may be highlighted that the argument of the appellant
before the Suit Court was to the contrary. There the contention of
the appellant was that his services were no longer governed by the
terms and conditions of the appointment letter dated 1st October,
1973 Ex. DW 1/3 but by "general, reasonable and fair
commonemploymentconditions" as specifically recorded in the
impugned judgment under Issue No. 1 in para 6. On enquiry the
counsel for the appellant informs that it is not the plea of the
appellant in the memorandum of appeal that the said argument of the
counsel for the appellant has been wrongfully recorded. It has also
been enquired from the counsel for the appellant whether the
appellant has proved any "general, reasonable and fair
commonemploymentconditions" of the respondent Company. The answer
again is in the negative. What emerges therefore is that save for
the appointment letter on the basis whereof the argument before
this Court has been addressed, there are no other terms and
conditions pleaded of theemploymentof the appellant with the
respondent Company.9. The senior counsel for the respondent Company
on the other hand has argued that the services of the appellant
were terminated in 1991 and the suit was filed only in March, 1992;
that the claim of Rs. 16 lakhs for emoluments to be earned upto
December 2015 was in any case not maintainable; that the respondent
Company terminated the services of the appellant in exercise of its
contractual right to terminate the services without assigning any
reason.10. The counsel for the appellant in rejoinder has raised
the argument of the termination of services being by an officer
junior in rank to the officer of the respondent Company, who had
appointed the appellant.11. As far as the contention of the
appellant of termination having been effected by an officer junior
in rank to the officer appointing the appellant is concerned, on
enquiry, it is stated that the Suit Court has not rendered any
finding on the plea of the appellant. However, on further enquiry
whether the appellant in the memorandum of appeal has pleaded that
the saidgroundwas urged and not decided, the counsel for the
appellant fairly states that no such pleading has been made. The
senior counsel for the respondent Company has responded to the said
contention by drawing attention to the resolution dated 7th March,
1990 of the Board of Directors of the respondent Company proved as
DW 1/2 authorising the then respondent No. 2, General Manager to
exercise the power of termination qua theemployees. In view of the
same, no merit is found in the said contention.12. I am unable to
accept the contention of the appellant, of para 2 supra of the
appointment letter making the services of the appellant 'liable to
termination at any time even before the expiry of probationary
period, without assigning any reason and without giving any notice'
being applicable only during the period of probation and not
thereafter. Merely because the words "even before the expiry of
probationary period" are used would not limit the right conferred
by the respondent Company thereunder unto itself to terminate the
services without assigning any reason and without giving any
notice, to the period of probation.13. Be that as it may, the
termination affected by the respondent Company was under para 3 as
aforesaid and not under para 2 and which para 3 has escaped the
attention of the Suit Court. Even if there were to be any ambiguity
in para 2, the same is unequivocally removed in para 3 by observing
that "on confirmation, your services can be terminated on giving
one month's notice or one month's pay in lieu of notice and without
assigning any reason".14. Thus post probation, the services of the
appellant were terminable under three clauses; firstly, by one
month's notice or paying salary in lieu thereof and without
assigning any reason; secondly, if misconduct was alleged against
the appellant by holding enquiry; and, thirdly, if the services of
the appellant were to become surplus to the requirements of the
respondent Company, by payment of compensation. I have repeatedly
enquired from the counsel for the appellant as to how such
multifarious contractual rights of the respondent Company could be
limited and as to how the respondent Company in spite thereof can
be said to be entitled to only to terminate the services if the
appellant was guilty of misconduct or if his services become
surplus and which interpretation would have the effect of making
para 3 of the appointment letter entitling the respondent Company
to terminate the services with one month's notice or one month's
pay in lieu thereof without assigning any reason, redundant. The
accepted rule of interpretation of deeds and documents is to first
attempt to give a harmonious construction thereto and even if the
same is not possible, the earlier clause prevails over the latter.
Even if it were to be so, para 3 entitling the respondent Company
to terminate the services without assigning any reason with one
month's notice or one month's pay in lieu thereof would prevail
over the latter paragraph permitting termination on thegroundof
misconduct or on thegroundof services of the appellant becoming
surplus.15. Faced therewith, the counsel for the appellant has
urged that the respondent Company in the written statement to the
suit having averred the termination to be owing to misconduct,
contractually was bound to hold an enquiry and having not done so,
the termination is bad and stigmatic.16. I am unable to agree. The
Supreme Court in Krishna Devaraya Education Trust Vs. L.A.
BalakrishnaMANU/SC/0026/2001: AIR 2001 SC 625 and Pavanendra
Narayan Verma Vs. Sanjay Gandhi P.G.I. Of Medical
SciencesMANU/SC/0705/2001: AIR 2002 SC 23, though relating to cases
of probation, has held that if the dispensation is simpliciter,
merely because the employer, upon such dispensation being
challenged before the Court, explains the reason for such
dispensation, cannot turn the dispensation from being simpliciter
to stigmatic for it to be held that dispensation without holding
enquiry is bad. It was further held that in order to amount to a
stigma, the termination order must be in a language which imputes
something and allegations made against the terminatedemployeein the
counter affidavit by way of defence to achallengeto termination
made by the terminatedemployeedo not change the nature and
character of the order of termination.17. In the present case, even
in the written statement, the respondent has not elaborated or
imputed any misconduct on the appellant and has merely pleaded that
on the basis of the information received, it was not possible for
the respondent No. 1 Company to continue to repose confidence in
the appellant who was employed at a sensitive position at the
Airport and since any punitive action against the appellant would
have had adverse consequence for the appellant and may have
affected his future prospects, the respondent Company as per its
policy decided to exercise its right of simpliciter termination of
the services. The said explanation has been given merely in defence
to the plea taken by the appellant in the plaint of the termination
being attributable to the change of hands in the management from
Sindhis to Parsis and with motive and attempt to employ a Parsi in
the place of the appellant.18. It is worth mentioning that in any
case it is not the case of the appellant that the appellant
suffered any adverse consequence owing to the said plea taken by
the respondent Company in the written statement or that the
respondent Company has in any manner published having lost
confidence in the appellant. The termination, therefore, remains a
simpliciter one.19. Before parting with this case, I may record
that when during the course of hearing it was brought to the notice
of the counsel for the appellant that there was no security of
tenure in privateemployment(as observed by the Supreme Court in
para 14 of Union Public Service Commission Vs. Girish Jayanti Lal
VaghelaMANU/SC/8003/2006: (2006) 2 SCC 482) as that of the
appellant with the respondent was and it was not the case of the
appellant that the appellant was a workman, the counsel for the
appellant had sought to urge that the promotion of the appellant
from Office Boy to Assistant Manager was only nominal; however the
counsel fairly admits that there is no foundation for such a case
in the pleadings or in the evidence. Rather, the case built up by
the appellant is to the contrary.20. I am therefore of the view
that the termination of the services of the appellant was in
accordance with the contract ofemploymentof the appellant with the
respondent Company and thegroundsurged to impugn the
saidemploymentare not available to the appellant. Once it is held
that the termination is not illegal, the question of the appellant
being entitled to any damages does not arise. There is no merit in
the appeal; the same is dismissed; however in the facts and
circumstances, with no order as to costs.Decree sheet be drawn up.
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MANU/DE/1446/2012Equivalent Citation:2012VIAD(Delhi)455,
190(2012)DLT185, 2012LLR608IN THE HIGH COURT OF DELHIRFA No.
294/2004Decided On:20.03.2012Appellants:Ge Capital Transportation
Financial ServicesLtd.Vs.Respondent:Shri Tarun BhargavaHon'ble
Judges/Coram:Hon'ble Mr. JusticeValmiki J. MehtaCounsels:For
Appellant/Petitioner/Plaintiff: Mr.Divjyot Singh, Advocate with
Mr.Gurpreet Singh, AdvocateFor Respondents/Defendant: Mr.Arya
Girdhari, AdvocateSubject:ContractCatch WordsMentioned
INActs/Rules/Orders:Specific Relief Act, 1963 - Section
14(1),Specific Relief Act, 1963 - Section 41;Industrial Disputes
Act, 1947;Contract Act, 1872 - Section 23,Contract Act, 1872 -
Section 73;Constitution of India - Article 12;Code of Civil
Procedure, 1908 (CPC) - Section 96,Code of Civil Procedure, 1908
(CPC) - Section 226Cases Referred:Sh. Satya Narain Garg through his
legal heirs v. DCMLtd. & Ors.,MANU/DE/7110/2011: (187) 2012 DLT
25;S.S. Shetty v. Bharat NidhiLtd.,MANU/SC/0080/1957: AIR 1958 SC
12;Collier v. Sunday Referee Publishing Co.Ltd.,1940 4 ALL. E.R.
234;Tarlochan Singh Mokha v. M/s. Shriram Pistons &
RingsLimited& Ors.,MANU/DE/0108/1998: 74 (1998) DLT 455;Central
Inland Water Transport CorporationLtd. & Anr. Etc v. Brojo Nath
Ganguly & Anr.,MANU/SC/0439/1986: AIR 1986 SC 1571;BinnyLtd.
& Anr. v. V. Sadasivan & Ors.MANU/SC/0470/2005: (2005) 6
SCC 657;D.C.M.Limited& Anr. v. Mahabir Singh
RanaMANU/DE/3348/2009;S.M. Murray v. M/s. Fenner
IndiaLtd.MANU/DE/0205/1986: AIR 1986 Delhi 427Citing Reference:
Affirmed2
Discussed2
Distinguished1
Mentioned3
Disposition:Appeal allowedCase Note:Service - Maintainability -
Compensation - Sections 14(1)(b) and (c) of Specific Relief Act,
1963 - Trial Court decreedsuitof
Respondent/Plaintiff/employeeagainst Appellant/Defendant/employer
by which Appellant/defendant was directed to pay compensation
amount of ` 10,87,294/- for unlawfulterminationof services and also
held that there could be a specific performance of a contract for
personal service - Hence, this Appeal - Whether,Suitfiled by
Respondent/Plaintiff could be maintainable - Held, no evidence at
all had been led by Respondent/Plaintiff as to steps taken by him
to get alternativeemploymentwhen he was terminated at age of 34
years - Further as per admitted contractual terms contained in
letter of appointment, services of Respondent/Plaintiff could be
terminated by a one month's notice - However contract of personal
service not being enforceable under Section 14(1)(b) of Act, 1963,
contract being determinable in nature and hence could not be
enforced as per Section 14(1)(c) of Act, 1963 or that injunction
could not be granted to prevent breach of a contract which could
not be specifically enforced, hencesuitwas clearly barred and not
maintainable - Even presuming there was breach of contract, at best
reasonabledamagescould be granted and once there was a clause
forterminationof services by one month's notice, it could only be
one month's notice which could be treated as
reasonabledamagesinasmuch as parties understood period for
obtaining of an alternativeemploymentas a one month's notice period
- Thus impugned judgment granting one month's salary for each of
balance years of 26 years i.e. salary for 26 months was clearly
illegal and violative, thussuitwas also not maintainable in terms
of Sections 14(1)(b) and (c) of Act, 1963 read with Section 41(e)
thereof - Appeal allowed.
Ratio Decidendi
"Master who wrongfully dismisses his servant is bound to pay him
suchdamagesas will compensate him for wrong that he has
sustained."JUDGMENTValmiki J. Mehta, J.1. Thechallengeby means of
this Regular First Appeal (RFA) filed under Section 96 of Code of
Civil Procedure, 1908 (CPC) is to the impugned judgment of the
trial Court dated 31.1.2004 decreeing thesuitof the
respondent/plaintiff/employeeagainst the appellant/defendant/
employer, and by which decree the appellant/defendant was directed
to pay the compensation amount of`10,87,294/- for
unlawfulterminationof services. The amount ofdamageswhich were
calculated were one month's salary for each year of balance
services till the date of retirement of the respondent/plaintiff,
and which was found to be 26 years as the respondent/plaintiff was
about 34 years of age when his services were terminated and the
retirement age was 60 years. The facts of the case are that the
respondent/plaintiff was appointed as Business Officer with M/s
Shri Ram Fibres FinanceLtd. in the year 1990. After completion of
probation, the services of respondent were confirmed on 15.1.1991.
The services of the appellant were subsequently governed by the
terms and conditions of the appointment letter dated 21.4.1998
issued by the subsequent employer i.e. M/s. GE Capital
Transportation Financial ServicesLtd. The respondent/plaintiff
claimed that he had to do some interior work in his flat and for
which he had no other option but to take leave in November, 2001,
and which leave was never refused. It was further pleaded in the
plaint that on return from leave to the Ludhiana office on
21.1.2002, he was asked to join at Gurgaon and no work was assigned
to him on his joining at Gurgaon. It was pleaded that he was paid
salary for January and February, 2002 and his services were
terminated by means of theterminationletter dated 28.2.2002. It was
pleaded that theterminationletter was violative of principles of
natural justice besides being illegal and an infringement of the
terms of theemployment. The reliefs claimed in thesuitwere for
declaration and injunction to seek continuation ofemploymentand for
salary for the period for which it was not paid and to be continued
up to the retirement age of 60 years.2. The appellant/defendant
contested thesuitand pleaded that thesuitwas in fact barred under
the Specific Relief Act, 1963. It was pleaded that the services of
the respondent/plaintiff were validly terminated. It was contended
on behalf of the appellant/defendant that the services of the
respondent/plaintiff had to be terminated as he was a
delinquentemployeewho took leave on his own without any sanction.3.
After completion of pleadings, the trial Court framed the following
issues:-1. Whether thesuitin the present form is maintainable?
OPP2. Whether theterminationof the services of the plaintiff by the
defendant is illegal and void? OPP3. Whether the plaintiff is
entitled to the reliefs prayed for? OPP4. Relief.4. With regard to
issue No. 1 as to the maintainability of thesuit, the trial Court
held thesuitto be maintainable. The trial Court has referred to
various judgments of the Supreme Court to hold that there can be a
specific performance of a contract for personal service.In my
opinion, the trial court has clearly misdirected itself inasmuch as
wherever parties are strictly governed by contractual rights and
obligations i.e. theemploymentis purely a contractual one, i.e. not
being under the Government or "State" under Article 12 of the
Constitution of India, and also not of anemployeecovered under the
Industrial Disputes Act, 1947 the contractualemploymentcan always
be terminated in terms of the contract. Also, even assuming
theterminationis not as per the contract, at best the entitlement
will be to claimdamageswhich naturally flow out of the breach i.e.
of the illegalterminationof contract.5. The law in this regard is
contained in the judgment of the Supreme Court in the case of S.S.
Shetty Vs. Bharat NidhiLtd.,MANU/SC/0080/1957: AIR 1958 SC 12. Para
12 of this judgment of the Supreme Court reads as under:-12. The
position as it obtains in the ordinary law of master and servant is
quite clear. The master who wrongfully dismisses his servant is
bound to pay him suchdamagesas will compensate him for the wrong
that he has sustained.They are to be assessed by reference to the
amount earned in the service wrongfully terminated and the time
likely to elapse before the servant obtains another post for which
he fitted. If the contract expressly provides that it is terminable
upon, e.g., a month's notice, thedamageswill ordinarily be a
month's wages.......No compensation can be claimed in respect of
the injury done to the servant's feelings by the circumstances of
his dismissal, nor in respect of extra difficulty of finding work
resulting from those circumstances. A servant who has been
wrongfully dismissed must use diligence to seek anotheremployment,
and the fact that he has been offered a suitable post may be taken
into account in assessing thedamages.(Chitty on Contracts, 21st
Edn., Vol (2), p. 559 para 1040).6. I have also had an occasion to
consider this very aspect in the recent judgment in the case of Sh.
Satya Narain Garg through his legal heirs Vs. DCMLtd. &
Ors.,MANU/DE/7110/2011: (187) 2012 DLT 25. In this judgment of Sh.
Satya Narain Garg (supra) I have referred to the recent judgment of
Supreme Court in the case of BinnyLtd. & Anr. v. V. Sadasivan
& Ors.MANU/SC/0470/2005: (2005) 6 SCC 657 in support of the
proposition that public policy/administrative law principles do not
apply toprivateemployment. Paras 7 to 10 of the judgment in the
case of Sh. Satya Narain Garg are relevant and the same read as
under:-7. Merely because two views are possible, this Court will
not interfere with the conclusion arrived at by the Trial Court,
unless the conclusion is illegal or perverse or causes grave
injustice. In case ofprivateemployment, the employers are fully
justified in taking steps forterminationof services, if it finds
that theemployeeis not upto the mark. Principles applicable in
public law domain do not apply with respect
toemployeesinprivateemployment.Employmentinprivatesector is
governed by the terms and conditions ofemployment, and unless
theterminationis shown to be violation of the terms and conditions
ofemployment, it cannot be said that theterminationis illegal. In
the present case, in my opinion, since there was no fixed period
ofemploymentso far as the deceased plaintiff is concerned, the
deceased plaintiff could have been terminated from services even by
a simplicitor notice, assuming even if the services of the deceased
plaintiff were upto the mark. Further, even if there is
illegalterminationof services, it is not possible to grantdamagesas
claimed inasmuch as the principle of mitigation ofdamagessquarely
applies. As per this principle of mitigation ofdamagesenshrined in
Section 73 of the Contract Act, 1872 even if anemployeeis illegally
terminated from services, he cannot sit at home and he must take
sufficient steps to procure alternativeemployment. The law in this
regard is contained in the judgment of the Supreme Court reported
as S.S. Shetty v. Bharat NidhiLtd.,MANU/SC/0080/1957: AIR 1958 SC
12. Paras 12 and 13 of this judgment are relevant and the same read
as under:12. The position as it obtains in the ordinary law of
master and servant is quite clear. The master who wrongfully
dismisses his servant is bound to pay him suchdamagesas will
compensate him for the wrong that he has sustained.They are to be
assessed by reference to the amount earned in the service
wrongfully terminated and the time likely to elapse before the
servant obtains another post for which he fitted. If the contract
expressly provides that it is terminable upon, e.g., a month's
notice, thedamageswill ordinarily be a month's wages... ... ... No
compensation can be claimed in respect of the injury done to the
servant's feelings by the circumstances of his dismissal, nor in
respect of extra difficulty of finding work resulting from those
circumstances. A servant who has been wrongfully dismissed must use
diligence to seek anotheremployment, and the fact that he has been
offered a suitable post may be taken into account in assessing
thedamages.(Chitty on Contracts, 21st Edition, Vol (2), p. 559
para. 1040).13. If the contract ofemploymentis for a specific term,
the servant would in that event be entitled todamagesthe amount of
which would be measured prima facie and subject to the rule of
mitigation in the salary of which the master had deprived him.
(Vide Collier v. Sunday Referee Publishing Co.Ltd.,1940 4 ALL. E.R.
234at p.237 (A). The servant would then be entitled to the whole of
the salary, benefits, etc., which he would have earned had he
continued in the employ of the master for the full term of the
contract, subject of course to mitigation ofdamagesby way of
seeking alternativeemployment.7. A reference to the evidence led on
behalf of the deceased plaintiff shows that the following is the
only evidence which is led to show efforts made for
alternativeemployment:I did not join any service afterterminationby
defdt No. 1. I am not doing any job since 22.9.93 as I could not
find any job despite my efforts.9. Surely, these types of
self-serving averments cannot be held as discharge of onus of proof
of mitigation ofdamages. The statement made by the deceased
plaintiff is bereft of any details as to which companies or firms
or persons he applied to, and on which dates, and for what
position, and for what salary and also the details as to why he
could not obtain the alternativeemployment. I am, therefore, of the
opinion that the deceased plaintiff, even assuming he was wrongly
terminated from services, failed to prove that he had taken
sufficient steps for mitigation ofdamages.10. One issue argued
before this Court on 17.11.2011 was with regard to a decision of a
learned Single Judge of this Court in the case of Tarlochan Singh
Mokha v. M/s. Shriram Pistons & RingsLimited&
Ors.,MANU/DE/0108/1998: 74 (1998) DLT 455, wherein a learned Single
Judge of this Court has, relying upon the decision of the Supreme
Court in the case of Central Inland Water Transport CorporationLtd.
& Anr. Etc v. Brojo Nath Ganguly & Anr,MANU/SC/0439/1986:
AIR 1986 SC 1571, held that public policy principles contained and
explained in the Brojo Nath Ganguly's case will also apply
toprivateemployment. This judgment, however, in my opinion, no
longer lays down the correct law inasmuch as the Supreme Court
recently in the case of BinnyLtd. & Anr. v. V. Sadasivan &
Ors.MANU/SC/0470/2005: (2005) 6 SCC 657 has held that public policy
principles cannot apply toprivateemployment. Head note "E of the
judgment succinctly brings out the ratio in this regard and the
same reads as under:E. Constitution of India - Art. 226 -
Maintainability - Generally - Relief, held, cannot be granted once
writ petition is held to be not maintainablePublic-policy
principles can be applied toemploymentin public sector undertakings
in appropriate cases. But the same principles cannot be applied
toprivatebodies. There are various labour laws which curtail the
power of the employer from doing any anti-labour activity.
Sufficient safeguards are made in the labour law enactments to
protect the interests of theemployeesof theprivatesector. The
service rules and regulations which are applicable to
governmentemployeesoremployeesof public sector undertakings stand
on a different footing and they cannot be tested on the same
touchstone or enforced in the same manner. (Para 26)In the matter
ofemploymentof workers byprivatebodies on the basis of contracts
entered into between them, the courts have been reluctant to
exercise the powers of judicial review and whenever the powers were
exercised as againstprivateemployers, it was solely done based on
the public law element involved therein.(Para 16)The decision of
the employers in the preset cases to terminate the services of
theiremployeescannot be said to have any element of public policy
and the remedy available to the respondents is to seek redressal of
their grievance in civil law or under the labour law enactments,
especially in view of the disputed questions involved as regards
the status ofemployeesand other matters. Their cases were purely
governed by the contract ofemploymententered into between
theemployeesand the employer. It is not appropriate to construe
those contracts as being opposed to the principles of public policy
and thus as void and illegal under Section 23 of the Contract Act,
1872. (Para 31)7. In the present case, admittedly no evidence at
all has been led by the respondent/plaintiff as to steps taken by
him to get alternativeemploymentwhen he was terminated at the age
of 34 years. Further, as per the admitted contractual terms
contained in the letter of appointment dated 21.4.1998, Ex.P9, the
services of the respondent/plaintiff could be terminated by a one
month's notice. This para 7 of the letter dated 21.4.1998 reads as
under:-7. One month's notice will be required in writing from
either side in case of servicetermination. Payment of one month's
salary will be required in lieu of notice. However, GE Capital TFS
Reserves the right to terminate youremploymentongroundsof policy
misconduct of unsatisfactory job performance.8. Whatever be the
language of the prayer clauses of the plaint, and whatever be
thegroundof cause of action pleaded, the sum and substance of the
cause of action in the plaint is for re-employmentand continuation
ofemploymentwith service benefits till the age of 60 years. In
effect, therefore there is sought specific performance of the
contractual services and which is impermissible in law. I may note
that the contracts of personal service are only enforceable where
the employer is a Government company or an arm of the State as per
Article 12 of the Constitution of India. As per Section 14(1)(b) of
the Specific Relief Act,1963, a contract for personal service
cannot be enforced.9. In fact, the subjectsuitwas also barred by
Section 14(1)(c) of the Specific Relief Act, 1963 which provides
that the contract which is in its nature determinable, cannot be
specifically enforced. I have referred to the fact that the
contract was determinable by a one month's notice as per clause 7
of the terms and conditions of the letter dated 21.4.1998 and
therefore the contract which was determinable by one month's notice
cannot be specifically enforced. What cannot be done directly
cannot be done indirectly i.e. if there cannot be specific
performance of the contract, there cannot be declaration and
injunction to continue such a service contract. Section 41(e) of
the Specific Relief Act, 1963 provides that injunction will not be
granted to prevent breach of the contract, performance of which
could not be specifically enforced.10. Therefore, looking at the
matter from the point of view of the contract of personal service
not being enforceable under Section 14(1)(b) of the Specific Relief
Act, 1963, the contract being determinable in nature and hence
cannot be enforced as per Section 14(1)(c) of the Specific Relief
Act, 1963 or that injunction could not be granted to prevent breach
of a contract which cannot be specifically enforced, thesuitwas
clearly barred and not maintainable. The judgment of the trial
Court does not refer to the binding provisions of Sections
14(1)(b), (c) and 41(e) of the Specific Relief Act, 1963. To
complete the discussion on this aspect, I would once again refer to
the recent judgment of the Supreme Court in the case of BinnyLtd.
(supra) and which specifically provides that inprivatecontracts
i.e. in strict contractual matters, there does not arise the issue
of applicability of Administrative Law principles.11. I have
already stated above that even presuming there was breach of
contract, at best reasonabledamagescan be granted and once there is
a clause forterminationof services by one month's notice, it can
only be one month's notice which can be treated as
reasonabledamagesinasmuch as parties understood the period for
obtaining of an alternativeemploymentas a one month's notice
period-vide SS shetty's case (supra).12. Learned counsel for the
respondent/plaintiff places heavy reliance on two judgments of the
two learned Single Judges of this Court. The first judgment is the
judgment in the case of D.C.M.Limited& Anr. Vs. Mahabir Singh
RanaMANU/DE/3348/2009and the second is S.M. Murray Vs. M/s. Fenner
IndiaLtd.MANU/DE/0205/1986: AIR 1986 Delhi 427. It was argued on
behalf of the learned counsel for the respondent/plaintiff that
since the retirement age is mentioned as 60 years in the letter
dated 21.4.1998, it would mean that there is automatically a
fixedemploymenttill 60 years.In my opinion, the arguments which
have been urged on behalf of the respondent/plaintiff have no
merits. The judgments which have been relied upon on behalf of the
respondent/plaintiff also do not apply to the facts of the present
case. So far as the judgment in the case of Mahabir Singh Rana
(supra) is concerned, I may note that possibly the said judgment is
a judgment where theemployeewas anemployeeunder the Industrial
Disputes Act, 1947. Theemployeein the case of Mahabir Singh Rana
(supra) was employed in the mill as a Weaving Apprentice and was
working as an Assistant Weaving Master when his services were
terminated. The judgment in the case of Mahabir Singh Rana (supra)
also possibly cannot be said to lay down a good law inasmuch as the
said judgment ignores the binding judgment of the Supreme Court in
the case of S.S. Shetty (supra) and which specifically provides
that in case of illegalterminationof contractualemployment, there
can only be granted reasonabledamagesi.e. salary for a few months
till an alternativeemploymentis obtained and one month if the
services are terminable by one month's notice. I have already noted
that in the facts of the present case, the parties had agreed that
one month's notice period was a sufficient notice period. So far as
the judgment in the case of S.M. Murray (supra) is concerned the
same does not apply to the facts of the present case and is
distinguishable because in the said case the contract
ofemploymentwas for a fixed period of five years and thesuitwhich
was decreed in the said case was for the amount of salary and
consequential benefits which were only for the balance period of
five years and services for which period could not be performed
because of earlier illegaltermination. This is made clear by a
reading of para 28 of the said judgment and as per which the salary
has been granted from the date ofwrongfulterminationof service
agreement i.e. 21.4.1984 till it was to expire in its normal course
i.e. 16.2.1986 i.e. the balance period of service of five years.13.
In view of the above, the appeal has to succeed. The impugned
judgment granting one month's salary for each of the balance years
of 26 years i.e. the salary for 26 months is clearly illegal and
violative of the judgment of the Supreme Court in the case of S.S.
Shetty (supra) and BinnyLtd. (supra). Thesuitwas also not
maintainable in terms of Sections 14(1)(b) and (c) of the Specific
Relief Act, 1963 read with Section 41(e) thereof.14. Appeal is
therefore accepted. Impugned judgment and decree dated 31.1.2004 is
set aside.Suitof the respondent/plaintiff will stand decreed only
for one month's salary alongwith interest thereon @ 9% per annum
simple till today. Counsel for the respondent/plaintiff agrees that
one month's salary in the present case was`41,819/-, a figure which
is given in para 35 of the impugned judgment. Parties are left to
bear their own costs. Decree sheet be prepared. Trial Court record
be sent back.15. Since the decretal amount of`10,87,294/- has been
deposited in this Court, and which amount has been put in a fixed
deposit, it is directed that the respondent/plaintiff be paid the
amount due to him as per this judgment out of the amount deposited
in this Court and the accrued interest thereon i.e. the amount
of`41,819/- with interest @ 9% simple from 1.3.2002 till date. The
balance amount thereafter remaining, be refunded back to the
appellant. Registry shall issue the necessary cheques in favour of
respective parties within a period of four weeks from today.
Manupatra Information SolutionsPvt.Ltd.
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MANU/DE/0386/2012IN THE HIGH COURT OF DELHIRFA (OS) No.
3/1999Decided On:25.01.2012Appellants:Shriram Pistons &
RingsLtd. & Anr.Vs.Respondent:Shri T.S. MokhaHon'ble
Judges/Coram:Hon'ble Mr. JusticePradeep Nandrajogand Hon'ble Ms.
JusticePratibha RaniCounsels:For Appellant/Petitioner/Plaintiff:
Mr.T.K. Ganju, Sr. Advocate with Mr.Sayeed Aqib& Mr.Aditya
Ganju, Advs.For Respondents/Defendant: Mr.Rajinder Dhawanwith
Mr.D.D. Singhand Mr.B.S. Rana, Advs. with respondent in
personSubject:ServiceCatch WordsMentioned
INActs/Rules/Orders:Specific Relief Act, 1877 - Section
21;Companies Act, 1956 - Section 617;Industrial Dispute Act, 1947 -
Section 2;Indian Penal Code (IPC) - Section 21;Contract Act -
Section 23;Specific Relief Act, 1963 - Section 14;Central Inland
Water Transport CorporationLimited(Service, Discipline and Appeal)
Rules, 1979 - Rule 9(1);Constitution of India - Article
12,Constitution of India - Article 14,Constitution of India -
Article 309,Constitution of India - Article 311Cases
Referred:Central Inland Water Transport CorporationLtd. & Anr.
Vs. Tarun Kanti Sengupta & Anr.MANU/SC/0439/1986: AIR 1986 SC
1571;Delhi Transport Corporation Vs. DTC Mazdoor Congress &
Ors.MANU/SC/0031/1991: AIR 1991 SC 101;Executive Committee of U.P.
State Warehousing Corp. Vs. Chandra KiranMANU/SC/0499/1969: AIR
1970 SC 1244;Dr. S. Dutt Vs. University of DelhiMANU/SC/0131/1958:
AIR 1958 SC 1050;S.R.Tewari Vs. District Board,
AgraMANU/SC/0223/1963: AIR 1964 SC 1680;Smt.J.Tiwari Vs. Smt.
Jawala Devi Vidya Mandir & Ors.MANU/SC/0473/1979: AIR 1981 SC
122;Executive Committee of Vaish Degree College, Shamli &
Ors..Vs. Lakshmi NarainMANU/SC/0052/1979: AIR 1976 SC 888 : 1976
(2) SCC 58;S.S. Shetty Vs. Bharat NidhiLtd.MANU/SC/0080/1957: AIR
1958 SC 12;Dayanand Sarup Vs. Smt. Bimla Rani1981 LabIC
1009HC;IOCLtd. Vs. Amritsar Gas ServiceLtd.MANU/SC/0513/1991: 1991
(1) SCC 533;Sitaram Kanshi Ram Konda Vs. Pigment Cakes &
Chemical Manufacturing Co.AIR 1980 SC 60;Indian Airlines
Corporation Vs. Sukhdeo RaiMANU/SC/0668/1971: AIR 1971 SC
1828;S.M.Murray Vs. M/s. Fenner IndiaLtd.AIR 1986 Del 427;Central
Inland Water TransportLtd& Anr. Vs. Brozo Nath Ganguli &
Anr.MANU/SC/0439/1986: AIR 1986 SC 1571;Delhi Transport Corporation
Vs. DTC Mazdoor Congress & Ors.MANU/SC/0031/1991: AIR 1991 SC
101;The Central Co-operative BankLtd. Kumbakonam Vs. M.
Parthasarathi1988 1 law weekly 479;P.B.Ghayalod Vs. M/s Maruti
UdyogLtd. & Ors.MANU/DE/0021/1992: AIR 1992 Delhi 145;Ajay
Pasia v. Khalid Mujib SehravardiMANU/SC/0498/1980: (1981) I LLJ 103
SC;R. D. Shetty v. The International Airport Authority of India
:MANU/SC/0048/1979: (1979) II LLJ 217 SC;Ajay Hasai Vs. Khalid
Mujib SchravardiMANU/SC/0498/1980: AIR 1981 SC 487;SBI vs.
S.N.Goyal. RelevantMANU/SC/7605/2008: 2008 (8) SCC 92;Sirsi
Municipality by its President, Sirsi Vs. Cecelia Kom Francis
TellisMANU/SC/0066/1973: AIR 1973 SC 855;BinnyLtd. & Anr. Vs.
V.Sadasivan & Ors.MANU/SC/0470/2005: AIR 2005 SC 3202;Vaish
Degree College Shamli & Ors. Vs. Lakshmi Narain &
Ors.MANU/SC/0052/1979: AIR 1976 SC 888Citing Reference:
Discussed15
Mentioned5
Disposition:Appeal allowedCase Note:ServiceTermination- Present
Appeal filed against decree ofsuitfor declaration
thatterminationwas illegal and fordamagesor reinstatement with full
back wages Held, Single Judge had granted relief of declaration
that clause 10 of agreement was void and consequently notice
ofterminationalso fails relying on case law decided by Supreme
Court in matter of Central Inland Water Transport
CorporationLtd& Anr Vs Brojo Nath Ganguly & Anr - Single
Judge had preferred not to enter into discussion on issue about
constitution of Appellant company and to consider that judgment of
Supreme Court in above case could be made applicable to facts of
present case where relationship was purely contractual Said above
case was also discussed in detail in case ofprivateemploymentwhere
specific performance of contract was sought to be enforced
challenging clause 9 which was similar to clause 10 in present case
- Law as enunciated by Apex court on issue requiring determination
in this case, had not only been ignored but also misinterpreted and
misapplied by Single Judge - Thus impugned judgment passed by
Single Judge was liable to be set aside - Consequently Appeal
allowedJUDGMENTPratibha Rani, J.1. The appellant-company M/s.
Shriram Pistons & RingsLtd. impugned the judgment and decree
dated 27th May, 1998, passed by the learned Single Judge, in
asuitfiled by the respondent herein, (plaintiff in thesuit), who
was their ex-employeein managerial capacity, seeking declaration
that histerminationwas unconstitutional, illegal and mala fide and
without authority. In addition, respondent also sought the relief
ofdamagesfor`4 lacs and/or reinstatement with full back wages and
benefit.2. The facts are not in dispute. Most of the documents
produced during evidence by the parties are also not in dispute. So
instead of mentioning the case of the respondent and the appellant
separately, as averred in the plaint or defence taken in the
written statement, succinctly stated the facts are that the
appellant company employed the respondent as Administration
Manager. He was issued an appointment letter dated 25th September,
1980 Exhibit P-1, containing the terms and conditions ofemployment,
as per Clause 10 whereof, the respondent could serve the master
servant relationship i.e. resign after giving three months" notice
or the appellant could severe the master-servant relationship by
terminating service of the respondent after giving three months"
notice or salary in lieu thereof. The respondent continued to serve
the appellant till his services were terminated
videterminationorder Exhibit P-2 dated 21st March, 1985, invoking
Clause 10 of the appointment letter, referred to above. It is not
in dispute that respondent was paid the notice pay by his employer
i.e., appellant company, as required under Clause 10 of the terms
and conditions of the appointment, contained in Exhibit P-1.
Subsequently other dues, after necessary adjustments, were also
paid to the respondent.(N.B. in the appeal and at few other places
a confusion has been created with reference to Ex.PW-1/1, which is
an appointment letter dated 16th October 1979, appointing
respondent as an "Officer" in J.Engineering WorksLtd., probably a
sister concern of the appellant)3. After completing the pleadings,
following issues were settled by learned Single Judge:(i)
Whethersuitis not maintainable against Defendant No. 3" (ii)
Whether Defendant No.2 is a separate legal entity and if not to
what effect" (iii) Whether thesuitis bad for misjoinder of parties"
(iv) Whether theterminationof respondent's services by Defendant
No.1 was illegal and if so, to what effect" (v) Whether the
plaintiff is stopped from challenging the validity ofterminationof
his service' (vi) Whether the claim for declaration is barred under
the provisions of the Specific Relief Act' (vii) Whether the
plaintiff is entitled todamagesand if so, to what amount' (viii)
Whether Defendants have paid`57,204.25 and other dues to the
plaintiff' (ix) To what relief the plaintiff is entitled'4. The
learned Single Judge, in view of discussion in para 36 and 37 of
the impugned judgment, while declaring Clause 10 of the appointment
letter andterminationto be void, in para 49 of the impugned
judgment, granted the reliefs, which are extracted below :36.
Whatsoever may be the contentions of the parties, the sole question
for determination is "Whether the first defendant could invoke
clause 10 and terminate the services of the plaintiff'' In the
light of the law laid down by the Supreme Court in Central Inland
Water Transport CorporationLtd. & Anr. Vs. Brojo Nath Ganguly
& Anr. AND Central Inland Water Transport CorporationLtd. &
Anr. Vs. Tarun Kanti Sengupta & Anr.MANU/SC/0439/1986: AIR 1986
SC 1571 which is followed by the Supreme Court 1991 in "Delhi
Transport Corporation Vs. DTC Mazdoor Congress &
Ors'.MANU/SC/0031/1991: AIR 1991 SC 101, the clause relied on by
the defendants is void in law and consequently, the notice
ofterminationfails to theground.37. The first defendant is a
company registered under the Companies Act, 1956. The question
whether the first defendant is a Government Company or not and
whether the services of the plaintiff were terminated because he
belongs to a particular community, would not at all be relevant and
I do not deem it proper and necessary to decide those questions.
When the notice ofterminationorder is void, the plaintiff would be
entitled to the declaration and as a consequencedamages. I have no
hesitation in granting a decree declaring that the notice
ofterminationP-2 is void in law and is not enforceable at the
instance of the defendants against the plaintiff.49. On issue No.7,
I find that the plaintiff would be entitled to the sum
of`5,82,785.75 :(i) declaring that the notice ofterminationdated
the 21st of March, 1985 (Ex.P2) as null and void.(ii) declaring
that the plaintiff is deemed to have been in service of the first
defendant till he attained the age of superannuation on
31.01.1994.(iii) directing defendants 1 & 2 to pay the
plaintiff the sum of`5,82,795.75.(iv) directing defendants 1 &
2 to pay the interest to the plaintiff @ 15% p.a. on the sum
of`5,82,795.75 w.e.f. 1.2.1994 till the date of payment.(v)
directing the defendants 1 & 2 to pay the plaintiff the costs
of thesuit.(vi) directing the dismissal of thesuitagainst the third
defendant without costs.5. As is to be noted from para 37 of the
impugned decision, the learned Single Judge has held that it was
irrelevant whether the appellant company was a government company
and without deciding theprivatecharacter or otherwise of the
appellant, has rendered a verdict against the appellant. The
contentions of the appellant company in appeal, is that it is
aprivatecompany and since the respondent was serving the company in
managerial capacity, provisions of Industrial Dispute Act were not
applicable to him and he was not covered under any of the
exceptions recognized by law pertaining to service i.e. (i) where a
public servant is sought to be removed from service in
contravention of the provisions of Article311of the Constitution of
India; (ii) where a worker is sought to be reinstated on being
dismissed under the Industrial Law; and (iii) where a statutory
body acts in breach of violation of the mandatory provisions of the
statute.6. Learned counsel for the appellant has relied
uponMANU/SC/0499/1969: AIR 1970 SC 1244 titled as Executive
Committee of U.P. State Warehousing Corp. Vs. Chandra
Kiran;MANU/SC/0131/1958: AIR 1958 SC 1050 titled as Dr.S.Dutt Vs.
University of Delhi;MANU/SC/0223/1963: AIR 1964 SC 1680 titled as
S.R.Tewari Vs. District Board, Agra;MANU/SC/0473/1979: AIR 1981 SC
122 titled as Smt.J.Tiwari Vs. Smt. Jawala Devi Vidya Mandir &
Ors.;MANU/SC/0052/1979: 1976 (2) SCC 58 titled as Executive
Committee of Vaish Degree College, Shamli Vs. Lakshmi
Narain;MANU/SC/0080/1957: AIR 1958 SC 12 titled as S.S. Shetty Vs.
Bharat NidhiLtd.;1981 Lab IC 1009 HCtitled as Dayanand Sarup Vs.
Smt. Bimla Rani;MANU/SC/0513/1991: 1991 (1) SCC 533 titled as
IOCLtd. Vs. Amritsar Gas ServiceLtd. and;MANU/SC/7605/2008: 2008
(8) SCC 92 titled as SBI Vs. S.N. Goyal in support of his
contentions.7. On behalf of respondent, in addition to oral
submissions, written submissions alongwith citations have also been
filed on 20.01.2012. In the written submissions, after mentioning
the facts of the case, the following submissions have been made
:(i) Performance appraisal Ex.D22 was made basis of
theterminationwith nothing to suggest that it was a usual practice
in case of all theemployees. The performance appraisal Ex.D22 is
vague and lack in specific particulars. The signatures of Chairman
have been forged on Ex.D21 (noting and directions of the
Chairman).(ii) In asuitchallenging the validity and legality
ofterminationof service, two aspects are involved i.e. (a) the
justification and legality ofterminationof service; and (2) relief
which is to be granted toemployeeconcerned. As far as aspect (a) is
concerned, there is no bar on the jurisdiction of the Court. The
nature ofemploymentviz. whether he was employed in a statutory
corporation or he was a workman as defined in Section2 (s)of I.D.
Act or he was inprivateemploymentis relevant. Such declaration have
been granted by the Courts and in this connection, reliance have
been placed onAIR 1980 SC 60titled as Sitaram Kanshi Ram Konda Vs.
Pigment Cakes & Chemical Manufacturing Co.,MANU/SC/0668/1971:
AIR 1971 SC 1828 titled as Indian Airlines Corporation Vs. Sukhdeo
Rai, andAIR 1986 Del 427titled as S.M.Murray Vs. M/s. Fenner
IndiaLtd.(iii) Placing reliance on judgment of Apex Court
inMANU/SC/0052/1979: AIR 1976 SC 888 titled Vaish Degree College
Shamli & Ors. Vs. Lakshmi Narain & Ors., this Court has
jurisdiction to go into the validity of justification
ofterminationof services of the respondent.(iv) The respondent
being Sikh, victimized post 1984 riots.(v) In view of admission of
the appellant that 54% of the shares are held by financial
institutions, it has rightly been held to be a Government Company
within the meaning of Section617of Companies Act and the relief of
declaration anddamageshave rightly been granted to the respondent
and he was also entitled to get the relief of reinstatement.(vi)
Referring to Section21IPC clause 12, it has been submitted that
theemployeesof Government company cannot be said to beemployeeof
aprivateemployer even if such a Government Company may not be a
State or other Government authority. Clause 10 of the appointment
letter being punitive in nature would not be applicable in such a
case which has also been declared void and not enforceable by
learned Single Judge as the same is opposed to public policy and
void as per Section23of the Contract Act.(vii) On the basis of
judgment of Apex Court inMANU/SC/0439/1986: AIR 1986 SC 1571 titled
Central Inland Water TransportLtd& Anr. Vs. Brozo Nath Ganguli
& Anr. wherein the regulations similar to Clause 10 of the
appointment letter of the respondent was held to be void being
violative of Article14of the Constitution of India and Section23of
the Contract Act, which is applicable to both Government as well
asprivateconcerns, thesuithas been rightly decreed.8. We have
carefully considered the contentions raised at the bar and also
gone through the impugned judgment and the Trial Court Record.9.
The questions of law which thus arise for consideration before us
relate to the applicability of law declared in the decisions
reported asMANU/SC/0439/1986: AIR 1986 SC 1571 Central Inland Water
TransportLtd& Anr. Vs. Brozo Nath Ganguli & Anr.
andMANU/SC/0031/1991: AIR 1991 SC 101 titled Delhi Transport
Corporation Vs. DTC Mazdoor Congress & Ors., toprivatecompanies
substantial shares whereof are held by financial institutions.10.
In para 47 of the impugned judgment, the learned Single Judge held
the appellant company to be a corporate body and that principles
laid down by Supreme Court in AIR 1976 SC 888 titled as Executive
Committee of Vaish Degree College, Shamli & Ors. Vs. Lakshmi
Narain & Ors. and1988 1 law weekly 479titled as The Central
Co-operative BankLtd. Kumbakonam Vs. M. Parthasarathi of Madras
High Court, would apply.11. There is clear enunciation of law by
this Court on this aspect in the caseMANU/DE/0021/1992: AIR 1992
Delhi 145 titled P.B.Ghayalod Vs. M/s Maruti UdyogLtd. & Ors.
(The date of decision is 11.09.1991). The instant case has been
decided much thereafter on 27.05.1998. In the case P.B.Ghayalod Vs.
M/s Maruti UdyogLtd. & Ors., (Supra), the question that arose
for decision was whether respondent No.1 i.e. M/s Maruti UdyogLtd.
is an "authority" under the control of Government of India and as
such an "instrumentality" within the domain of Article12of the
Constitution of India.12. In the above noted case, the case of the
petitioner was that respondent No.1 was a Government Company as
defined under the Companies Act and became a deemed public company.
The joint venture agreement was signed with Suzuki Motor Company
with equity participation in between Government of India and Suzuki
Motor Company in the ratio of 60 : 40. The petitioner claimed that
the respondent No.1 company is completely under the control of
respondent No.2 under the Ministry of Industries and thus a "State"
being an "authority" within the territory of India and under the
control of the Government of India within the meaning of
Article12of the Constitution of India.13. The petitioner
P.B.Ghayalod was appointed as General Manager (Marketing &
Sales) vide appointment letter dated 07.05.1985 which contained
condition No.6 to the effect that his services would be terminated
by a three months notice without assigning any reason. The services
of the petitioner were terminated on 14.09.1990 in terms of Clause
6 of the appointment letter which was challenged on thegroundof
being void, illegal and in contravention of provisions of
Article14of the Constitution of India and opposed to public policy
and also void under Sec.23of the Contract Act. While answering the
question referred to above, in para 8 and 9 of the judgment, it was
observed as under :8. The above question came up for decision
before their Lordships of the Supreme Court in a case entitled Ajay
Pasia v. Khalid Mujib SehravardiMANU/SC/0498/1980: (1981) I LLJ 103
SC wherein their Lordships cited with approval the observations in
their own earlier judgment reported in R. D. Shetty v. The
International Airport Authority of India :MANU/SC/0048/1979: (1979)
II LLJ 217 SC. When does such a corporation become an
instrumentality or agency of Government" Is the holding of the
entire share capital of the Corporation by Government enough or is
it necessary that in addition there should be a certain amount of
direct control exercised by Government and, if so, what should be
the nature of such control Should the functions which the
corporation is charged to carry out possesses any particular
characteristic or feature or is the nature of the functions
immaterial Now, one thing is clear that if the entire share capital
of the Corporation is held by Government, it would go a long way
towards indicating that the corporation is an instrumentality or
agency of Government. But, as is quite often the case, a
corporation established by Statute may have no shares or
shareholders, in which case it would be a relevant factor to
consider whether the administration is in the hands of a Board of
Directors appointed by Government though this consideration also
may not be determinative, because even where the Directors are
appointed by government, they may be completely free from
governmental control in the discharge of their functions. What then
are the tests to determine whether a corporation established by
statute or incorporated under law is an instrumentality or agency
of Government. It is not possible to formulate an inclusive or
exhaustive test which would adequately answer this question. There
is no cut and dried formula, which would provide the correct
division of corporation into those which are instrumentalities or
agencies of Government and those which are not.9. Their Lordships
after considering the entire case law laid down the following
principles in order to determine as to whether a particular
corporation is an instrumentality or agency of Government within
the meaning of Article12of the Constitution of India in the above
said case:MANU/SC/0498/1980: (1981) I LLJ 103 SC (supra).(1) One
thing is clear that if the entire share capital of the corporation
is held by Government it would go a long way towards indicating
that the corporation is an instrumentality or agency of
Government;(2) Where financial assistance of the State is so much
as to meet the almost entire expenditure of the corporation it
would afford same indication of the corporation being impregnated
with governmental character.(3) It may also be a relevant factor,
whether the corporation enjoys monopoly status which is the State
conferred or State protected;(4) Existence of "deep and pervasive
State control" may afford an indication that the corporation is a
State agency or instrumentality;(5) If the functions of the
corporation are of public importance and closely related to
governmental functions it would be a relevant factor in classifying
the corporation as an instrumentality or agency of Government;(6)
Specifically, if a department of a Government is transferred to a
corporation it would be a strong factor supportive of this
inference of the corporation being an instrumentality or agency of
Government.14. This Court held that M/s Maruti UdyogLtd. is not an
instrumentality of State or an "authority" for purpose of
Article12of the constitution. From the judgment referred to above,
it is clear that mere share holding is not the determining criteria
to hold any company to be a Government Company for purpose of
Article12of the Constitution andterminationinvoking clause 6 of
appointment letter was held to be valid.15. Reverting to the facts
of the present case, the appellant company by no means satisfy the
criteria laid down in para 9 of the judgment of P.B.Ghayalod Vs.
M/s Maruti UdyogLtd. & Ors., (Supra), and cannot be termed as
"instrumentality" of State or "authority" norterminationinvoking
clause 10 of appointment letter could be declared void. Unlike the
statutory corporation/bodies whose activities are strictly governed
by various statutory enactments and rules and regulations framed
thereunder, a company incorporated under the Companies Act is not a
creation of Statute. Rather this is formed in accordance with the
Statute i.e. Companies Act. Thus, such company cannot be treated as
statutory body, none of the beneficiary oremployeeof such company
enjoy the statutory status or protection of Article311of the
Constitution. A company registered under the Companies Act and
carrying on trading business is aprivateenterprise to make profit
through its business activities. Respondent was appointed as
Manager (Administration) and was in theprivateemployment. He was
not enjoying any statutory status and not entitled to be proceeded
against after setting up inquiry before invoking clause 10 of the
terms and conditions of appointment letter Ex.P1.16. It needs to be
highlighted that in Central Inland Water TransportLtd. case (supra)
the Supreme Court did not hold that a Government company per se
would be an instrumentality of the State and thus would be bound,
in its actions, whether contractual or not, to act within the
confines of Article14of the Constitution of India. The Supreme
Court held that where a corporation, including a company, acquires
the status of an "authority" within the meaning of Article12of the
Constitution of India, only then the said company would be an
instrumentality of the State and thus Article14of the Constitution
of India would apply. The test on which it had to be determined:
Whether the Government company was an instrumentality of the State
were the well known principles culled out in the decision reported
asMANU/SC/0498/1980: AIR 1981 SC 487 Ajay Hasai Vs. Khalid Mujib
Schravardi.17. We find that case law Sitaram Kanshi Ram Konda Vs.
Pigment Cakes & Chemical Manufacturing Co., (Supra) relied upon
the respondent has no application to the facts of the present case
for the reason that in a case pertaining to industrial dispute,
asuitwas filed before the Civil Court in respect of certain
unjustifiable and illegal actions on the part of employer which
were in the nature of industrial dispute and apart from that, in
the alternative, he also prayed for awarding compensation
forwrongfuldismissal and the Apex Court held that to
thislimitedextent, the matter could be examined by Civil Court.
Here, in the given case, the appellant being appointed in
managerial capacity, services being terminated as per contract, the
jurisdiction of Civil Court to deal with the matter is not in
question.18. Case law S.M.Murray Vs. M/s. Fenner IndiaLtd. (Supra)
relied upon by learned counsel for the respondent pertains to
thesuitfordamagesand injunction against dispossession from the
premises allotted to theemployeeduring the course ofemployment,
thus, having no applicability to the facts of the present case.19.
The applicability of other three judgments Indian Airlines
Corporation Vs. Sukhdeo Rai (Supra); Central Inland Water
TransportLtd& Anr. Vs. Brozo Nath Ganguli & Anr. (Supra),
and Executive Committee of Vaish Degree College, Shamli Vs. Lakshmi
Narain (Supra) shall be considered hereinafter at the appropriate
stage.20. Reliance on judgment Executive Committee of Vaish Degree
College Shamli & Ors. Vs. Lakshmi Narain & Ors. (Supra),
does not promote the case of the respondent. Rather in that case in
para 18, it was held as under :18. On a consideration of the
authorities mentioned above, it is, therefore, clear that a
contract of personal service cannot ordinarily be specifically
enforced and a court normally would not give a declaration that the
contract subsists and theemployee, even after having been removed
from service can be deemed to be in service against the will and
consent of the employer. This rule, however, is subject to three
well recognized exceptions - (i) where a public servant is sought
to be removed from service in contravention of the provisions of
Article311of the Constitution of India; (ii) where a worker is
sought to be reinstated on being dismissed under the Industrial
Law; and (iii) where a statutory body acts in breach or violation
of the mandatory provisions of the statute.21. This view of ours is
further fortified by observation made by Justice Bhagwati (as his
Lordship then was) in the concurring judgment in Executive
Committee of Vaish Degree College, Shamli Vs. Lakshmi Narain
(Supra) in para 31, which is extracted below :31. ...There are two
distinct classes of cases which might arise when we are considering
the relationship between employer andemployee. The relationship may
be governed by contract or it may be governed by statute or
statutory regulations. When it is governed by contract, the
question arises whether the general principles of the law of
contract are applicable to the contract ofemploymentor the law
governing the contract ofemploymentis a separate and sui generis
body of rules. The crucial question then is as to what is the
effect of repudiation of the contract ofemploymentby the employer.
If an employer repudiates the contract ofemploymentby dismissing
hisemployee, can theemployeerefuse to accept the dismissal as
terminating the contract and seek to treat the contract as still
subsisting" The answer to this question given by general contract
principles would seem to be that the repudiation is of no effect
unless accepted, in other words, the contracting party faced with
awrongfulrepudiation may opt to refuse to accept the repudiation
and may hold the repudiation to a continuance of his contractual
obligation. But does this rule apply towrongfulrepudiation of the
contract ofemployment" The trend of the decisions seems to be that
it does not. It seems to be generally recognized
thatwrongfulrepudiation of the contract ofemploymentby the employer
effectively terminates theemployment:
theterminationbeingwrongfulentitles theemployeeto claimdamages, but
theemployeecannot refuse to accept the repudiation and seek to
treat the contract ofemploymentas continuing. What is the principle
behind this departure from the general rule of law of contract' The
reason seems to be that a contract ofemploymentis not ordinarily
one which is specifically enforced. If it cannot be specifically
enforced, it would be futile to contend that the unaccepted
repudiation is of no effect and the contract continues to subsist
between the parties. The law in such a case, therefore, adopts a
more realistic posture and holds that the repudiation effectively
terminates the contract and theemployeecan only
claimdamagesforwrongfulbreach of the contract. Now a contract
ofemploymentis not specifically enforced because ordinarily it is a
contract of personal service and, as pointed out in the first
illustration to clause (b) of Section 21 of the Specific Relief
Act, 1877, a contract of personal service cannot be specifically
enforced. Of course this illustration has not been omitted in the
new Specific Relief Act, 1963 and what would be the effect of such
omission may be a point which may require consideration someday by
this Court. But for the purpose of this case, I will proceed on the
assumption that even under the new Act, the law is the same and it
frowns on specific enforcement of a contract of personal
service.22. The legal position in this regard was again cleared in
the case,MANU/SC/7605/2008: 2008 (8) SCC 92 titled SBI vs.
S.N.Goyal. Relevant para 17 of the judgment is extracted below :17.
Where the relationship of master and servant is purely contractual,
it is well settled that a contract of personal service is not
specifically enforceable, having regard to the bar contained in
Section 14 of the Specific Relief Act, 1963. Even if
theterminationof the contract ofemployment(by dismissal or
otherwise) is found to be illegal or in breach, the remedy of
theemployeeis only to seekdamagesand not specific performance.
Courts will neither declare suchterminationto be a nullity nor
declare that the contract ofemploymentsubsists nor grant the
consequential relief of reinstatement. The three well recognized
exceptions to this rule are:(i) where a civil servant is removed
from service in contravention of the provisions of Article311of the
Constitution of India (or any law made under Article309);(ii) where
a workman having the protection of Industrial Disputes Act, 1947 is
wrongly terminated from service; and(iii) where anemployeeof a
statutory body is terminated from service in breach or violation of
any mandatory provision of a statute or statutory rules.There is
thus a clear distinction between publicemploymentgoverned by
statutory rules andprivateemploymentgoverned purely by contract.
The test for deciding the nature of relief -damagesor reinstatement
with consequential reliefs -is whether theemploymentis governed
purely by contract or by a statute or statutory rules. Even where
the employer is a statutory body, where the relationship is purely
governed by contract with no element of statutory governance, the
contract of personal service will not be specifically enforceable.
Conversely, where the employer is a non-statutory body, but
theemploymentis governed by a statute or statutory rules, a
declaration that theterminationis null and void and that
theemployeeshould be reinstated can be granted by courts.23. Here
the case of the respondent was not covered under any of the
exceptions referred to in the cases noted above. It is settled
legal position that contract of personal services cannot be
specifically enforced either by the Master or the Servant. The
legal remedy in such relationship is only by way of
claimingdamagesunless the case of suchemployeefalls under any of
the exceptions referred to above. Whether in the relationship of
Master and Servant, theterminationcan be declared as nullity, was
answered by the Apex Court inMANU/SC/0066/1973: AIR 1973 SC 855
titled as Sirsi Municipality by its President, Sirsi Vs. Cecelia
Kom Francis Tellis. The relevant paras 15 to 18 are extracted below
:15. The cases of dismissal of a servant fall under three broad
heads. The first head relates to relationship of master and servant
governed purely by contract ofemployment. Any breach of contract in
such a case is enforced by asuitforwrongfuldismissal anddamages.
Just as a contract ofemploymentis not capable of specific
performance similarly breach of contract ofemploymentis not capable
of founding a declaratory judgment of subsistence ofemployment. A
declaration of unlawfulterminationand restoration to service in
such a case of contract ofemploymentwould be indirectly an instance
of specific performance of contract for personal services. Such a
declaration is not permissible under the Law of Specific Relief
Act.16. The second type of cases of master and servant arises under
Industrial Law. Under that branch of law a servant who is
wrongfully dismissed may be reinstated. This is a special provision
under Industrial Law. This relief is a departure from the
reliefs17. The third category of cases of master and servant arises
in regard to the servant in theemploymentof the State or of other
public or local authorities or bodies created under
statute.18.Terminationor dismissal of what is described as a pure
contract of master and servant is not declared to be a nullity
howeverwrongfulor illegal it may be. The reason is that dismissal
in breach of contract is remedied bydamages. In the case of servant
of the State or of local authorities or statutory bodies, courts
have declared in appropriate cases the dismissal to be invalid if
the dismissal is contrary to rules of natural justice or if the
dismissal is in violation of the provisions of the statute. Apart
from the intervention of statute there would not be a declaration
of nullity in available under the Indian Contract Act and the
Specific Relief Act which do not provide for reinstatement of a
servant. the case ofterminationor dismissal of a servant of the
State or of other local authorities or statutory bodies.24. Since
the respondent was not a workman, the appellant company could in
exercise of powers conferred by Clause 10 of the terms and
conditions of appointment, have terminated the services of
respondent by giving notice or paying in lieu of such
notice.Terminationof service on the basis of adverse finding do
carry a stigma, but in the instant case, the performance appraisals
are internal process to assess the efficiency, utility and
administrative as well managerial skill of theemployeeplaced at
managerial level. Theterminationorder Ex.P2 did not contain any
adverse finding. It was aterminationsimplicitor under clause 10 of
terms and conditions of appointment of respondent.25. In case
ofprivateemployee, a contract of personal services cannot
ordinarily be specifically enforced. The Court would not be
imposing anemployeeon the employer and enforce contract of personal
services. An employer cannot be forced to take anemployeewhen there
is complete loss of faith between the two or can be inferred from
the averments made in this case. The claim ofdamagesi.e. salary,
till respondent would have attained the age of superannuation by
learned Single Judge is not sustainable in law. This is for the
reason that if a contract expressly provides that it
isterminationupon serving a particular period of notice e.g. three
months notice, thedamageswill ordinarily be wages for that period.
He cannot claim compensation in respect of the injuries to his
feelings by suchterminationor the problems faced in finding another
job.26. On the issue of award ofdamagestill the date of attaining
superannuation, the respondent was anemployeeof aprivatecompany
appointed in managerial capacity and their mutual rights and
obligations were governed by the terms and conditions of the
appointment letter Ex.P1. The case of the respondent was covered
under the first category i.e. Master and Servant relationship, in
the nature ofprivateemployment. Since under Clause 10 of Ex.P1
respondent's services could be terminated on three months? notice
or pay in lieu thereof, all that he was entitled was notice pay and
other legitimate dues.27. Learned Single Judge while declaring
clause 10 of the appointment letter as void relying on
pronouncements Executive Committee of Vaish Degree College, Shamli
& Ors. Vs. Lakshmi Narain & Ors. (supra) and The Central
Co-operative BankLtd. Kumbakonam Vs. M. Parthasarathi (supra),
failed to appreciate that those reports applied to undertakings,
corporations or Government bodies but notprivatecompanies. Clause
10 of appointment letter Ex.P1 permitted the appellant to terminate
the services of the respondent by giving three months' notice or
notice pay in lieu without assigning any reason.
Thus,terminationsimplicitor is not violation of the terms and
conditions of the appointment letter nor in violation of principle
of natural justice.28. A feeble attempt has been made by the
respondent to make it a case of victimization post 1984 riots. It
is a matter of record and admission by respondent that so long as
he remained in theemploymentor even thereafter in various
communications, there was no mention of victimization on account of
religion. It was for the first time made while serving legal
notice. Learned Single Judge while dealing with this aspect, in
para 37 of the judgment has considered it to be not relevant and
did not deem it proper and necessary to decide this question. In
order to deal with this contention, suffice it to refer that as per
para 9 of the written statement, Manager (Administration) Head
Office of the appellant Mr. I.J.S. Sethi himself is a Sikh and
serving the appellant. The contention of appellant that he was
appointed by the Chairman butterminationorder has been issued by
the Manager or forgery of signature on Ex.P21 is without any
substance in view of his own admission that his services have been
terminated after the approval of the Chairman.29. The learned
Single Judge had granted the relief of declaration that clause 10
of the agreement Ex.P1 is void and consequently notice
ofterminationalso fails relying on the case law Central Inland
Water Transport CorporationLtd. & Anr. Vs. Brojo Nath Ganguly
& Anr. AND Central Inland Water Transport CorporationLtd. &
Anr. Vs. Tarun Kanti Sengupta & Anr. and "Delhi Transport
Corporation Vs. DTC Mazdoor Congress & Ors'.(Supra). (Para 36
of the impugned judgment). Learned Single Judge has preferred not
to enter into discussion on the issue about the constitution of the
Appellant company and to consider whether the judgment of Supreme
Court in Central Inland Water Transport CorporationLtd. & Anr.
Vs. Brojo Nath Ganguly & Anr. (Supra) and Delhi Transport
Corporation Vs. DTC Mazdoor Congress & Ors.' (Supra), could be
made applicable to the facts of this case where the relationship
was purely contractual.30. To support our view that cases Executive
Committee of Vaish Degree College, Shamli & Ors. Vs. Lakshmi
Narain & Ors. (supra) and The Central Co-operative BankLtd.
Kumbakonam Vs. M. Parthasarathi (supra) could not have been relied
upon in case ofprivateemployer terminating the services of
itsemployeeinvoking the terms of the contract, it would be
advantageous to refer to the judgment of Apex Court
inMANU/SC/0470/2005: AIR 2005 SC 3202 BinnyLtd. & Anr. Vs.
V.Sadasivan & Ors. In BinnyLtd.'s case (Supra),
theterminationwas challenged byemployeesand apart from other
judgments, applicability of Central Inland Water Transport
CorporationLtd. & Anr. Vs. Brojo Nath Ganguly & Anr.
(Supra) and Delhi Transport Corporation Vs. DTC Mazdoor Congress
& Ors.' (Supra), was also discussed in detail in case
ofprivateemploymentwhere specific performance of the contract was
sought to be enforced challenging clause 9 which was similar to
clause 10 in the present case. In para 25 to 28 and 31 of the
judgment, the Apex Court has held as under :-25. Two other
decisions relied upon by the appellant to argue that the writ
petition was maintainable are the decisions reported
inMANU/SC/0439/1986: (1986) II LLJ 171 SC Central Inland Water
Transport CorporationLtd. and Anr. v. Brojo Nath Ganguly and Anr.
(supra) and in Delhi Transport Corporation v. PTC Mazdoor Congress
and Ors. The Central Inland case was extensively relied on. In this
case, the appellant corporation was a Govt. company incorporated
under the Companies Act and the majority of the shares were held by
the Union of India and remaining shares were held by the State of
West Bengal. Each of the respondents in the two appeals was in the
service of the said company. A notice under Rule 9(1) was served on
them and their services were terminated with immediate effect by
paying three months pay. They filed writ petitions before the High
Court and the Division Bench allowed the same. The appellant
corporation filed an appeal before this Court. The main thrust of
the argument of the respondents was that Rule 9(1) of Central
Inland Water Transport CorporationLimited(Service, Discipline and
Appeal) Rules, 1979 was void and illegal and violative of
Article14of the Constitution and it was also void in view
Section23of the Contract Act. This Court held that Rule 9(1) was
violative of Article14as it was against the public policy as the
employer had absolute power to terminate the service of
anemployeegiving three months notice. This Court held that this was
an absolute arbitrary power given to the corporation
andterminationof the respondentemployeesby invoking Rule 9(1) was
illegal.26. It is important to understand the real dicta laid down
in the background of the facts involved therein. The appellant was
a public sector undertaking and in that view of the matter it was
held that the contract ofemploymentand the service rules which gave
absolute and arbitrary power to terminate the service of
theemployeeswere illegal. It may be also noticed that
theterminationclause was referred to in the context of the contract
read as a whole and no enquiry was contemplated under the rules
even in the case of allegation of misconduct and it was held to be
violative of the principles of natural justice. It was also held to
be violative of Section23of the Contract Act as it was opposed to
public policy to terminate the services of theemployeewithout
conducting an enquiry even on thegroundof misconduct. The public
policy principles can be applied to theemploymentin public sector
undertaking in appropriate cases. But the same principles cannot be
applied toprivatebodies. There are various labour laws which
curtail the power of the employer from doing any anti-labor
activity. Sufficient safeguards are made in the labour law
enactments to protect the interests of theemployeesofprivatesector.
The service rules and regulations which are applicable to
govt.employeesoremployeesof public sector undertakings stand on a
different footing and they cannot be tested on the same touchstone
or enforced in the same manner. Therefore, the decision rendered by
this Court in Central Inland case is of no assistance to the
respondents in Civil Appeal No. 1976 of 1988 or to the appellants
in the civil appeal arising out of SLP(Civil) No. 6016 of 2002.27.
In the second case also, namely, the Delhi Transport Corporation v.
DTC Mazdoor Congress and Ors., the appellant was a public sector
undertaking and the main controversy was about the term "other
authorities" under Article12of the Constitution. Both in Central
Inland and DTC cases, the decision of the public sector undertaking
was underchallengeand the question raised was whether the
principles of natural justice and fairness are to be applied. It
was held that this Court has got jurisdiction to consider this
question by invoking the principles of judicial review. But it
would be noticed that in both the cases, it was a public sector
undertaking coming within the purview of "other authorities" under
Article12of the Constitution.28. In this context, it must be noted
that the High Court purported to apply the ratio in the above two
decisions on the assumption that allterminationsimplicitor clauses
providing forterminationon giving notice will be per se invalid.
But the High Court has not examined Clauses (8) & (9) of the
Agreement between Management and the Staff of BinnyLimitedin their
entirety. Clause (9) contemplates an inquiry in a case
ofterminationfor misconduct. Thus there is a provision for natural
justice in case ofterminationinvolving misconduct and stigma. In
such a case, whether the ratio of the decisions in DTC and Central
Inland cases would apply or not, was not examined by the High
Court. This is an additional reason why the declaration by the High
Court should not be allowed to stand.29. ...30. ...31. The decision
of the employer in these two cases to terminate the services of
theiremployeescannot be said to have any element of public policy.
Their cases were purely governed by the contract
ofemploymententered into between theemployeesand the employer. It
is not appropriate to construe those contracts as opposed to the
principles of public policy and thus void and illegal under
Section23of the Contract Act. In contractual matters even in
respect of public bodies, the principles of judicial review nave
gotlimitedapplication.31. In view of the ratio laid down by the
Apex court in BinnyLtd. & Anr. Vs. V.Sadasivan & Ors.
(Supra), no doubt is left regarding the applicability of Central
Inland Water Transport CorporationLtd. & Anr. Vs. Brojo Nath
Ganguly & Anr. (Supra) and Delhi Transport Corporation Vs. DTC
Mazdoor Congress & Ors.' (Supra), only on the undertakings,
corporations and Government companies and not aprivatecompany.32.
We are of the considered view that the law as enunciated by the
Apex court and this Court on the issue requiring determination in
this case, has not only been ignored but also misinterpreted and
misapplied by learned Single Judge. Thus, the impugned judgment and
decree dated 27.05.1998 passed by learned Single Judge is liable to
be set aside. Consequently, the appeal is allowed. The parties
shall bear their own costs.
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MANU/DE/7110/2011Equivalent Citation:187(2012)DLT25,
187(2012)DLT25, 2012(127)DRJ216IN THE HIGH COURT OF DELHIRFA No.
556/2002Decided On:05.12.2011Appellants:Shri Satya Narain Garg
through his Legal HeirsVs.Respondent:DCMLtd. & OthersHon'ble
Judges/Coram:Hon'ble MR. JusticeValmiki J. MehtaCounsels:For
Appellant/Petitioner/Plaintiff: Mr.S.P. Mittalwith Mr.Nitin Nayyar,
Advocates