Wrongful Termination

MANU/DE/2024/2013 IN THE HIGH COURT OF DELHI RFA 622/2004 Decided On: 02.07.2013 Appellants: Satpal Yadav Vs. Respondent: M/s. Cambata Aviation Pvt. Ltd. Hon'ble Judges/Coram: Rajiv Sahai Endlaw, Endlaw , J. Counsels: For Appellant/Petitioner/Plaintiff: Mr. Arun Bhardwaj, Bhardwaj , Adv. For Respondents/Defendant: Mr. Davinder Singh, Singh, Sr. Adv. and Mr. Saurabh Tiwari, Tiwari , Advocate Subject: Service Catch Words Mentioned IN Acts/Rules/Orders: Constitution Of India - Article 12 Disposition: Appeal dismissed JUDGMENT Rajiv 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 of employment and against the principles of natural justice and thus null and void; (ii) for recovery of Rs. 16 lakhs as damages for wrongful termination of termination of 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 of Ground Handling Ground Handling 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 andemployees andemployees   have 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 t he appointment letter under which his services had been terminated was not applicable to this kind of arbitrary, illegal, mala fide and wrongful termination  termination  that 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 common employment  employment  conditions which would include termination of employment only employment only on good grounds, grounds, 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 i ts 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 i llegal 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 the employee is employee is promoted subsequently. It was yet further held that the respondent Company had given valid explanation for not terminating the services of the appellant on the ground of 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 Article 12 of the Constitution of India and that the status of the appellant was different from that of employees  employees  working with Government or Government Bodies within the meaning of Article 12 of 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

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 i ts 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 i llegal 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 the employee is employee is promoted subsequently. It was yet further held that the respondent Company had given valid explanation for not terminating the services of the appellant on the ground of 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 Article 12 of the Constitution of India and that the status of the appellant was different from that of employees  employees  working with Government or Government Bodies within the meaning of Article 12 of 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 Management finds that you are surplus to requirements, 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 the ground of ground  of misconduct or on the ground of ground of 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 common employmentconditions" employmentconditions" 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 common employment conditions" employment conditions" 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 the employment of employment of the appellant appell ant 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 said ground was urged urg ed 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 the employees. employees. 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 the ground of ground  of misconduct or on the ground of ground of 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. Balakrishna MANU/SC/0026/2001 : AIR 2001 SC 625 and Pavanendra Narayan Verma Vs. Sanjay Gandhi P.G.I. Of Medical Sciences MANU/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 terminatedemployee terminatedemployee in  in the counter affidavit by way of defence to a challenge to challenge to termination made by the terminated employee do employee do 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 Vaghela MANU/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 of employment of the appellant with the respondent Company and thegrounds urged to impugn the said employment are 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. © Manupatra Information Solutions Pvt. Ltd.

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MANU/DE/1446/2012 Equivalent Citation: 2012VIAD(Delhi)455, 190(2012)DLT185, 2012LLR608 IN THE HIGH COURT OF DELHI RFA No. 294/2004 Decided On: 20.03.2012 Appellants: Ge Capital Transportation Financial Services Ltd. Vs. Respondent: Shri Tarun Bhargava Hon'ble Judges/Coram: Hon'ble Mr. Justice Valmiki J. Mehta Counsels: For Appellant/Petitioner/Plaintiff: Mr. Divjyot Singh, Advocate with Mr. Gurpreet Singh, Advocate For Respondents/Defendant: Mr. Arya Girdhari, Advocate Subject: Contract Catch Words Mentioned IN Acts/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 226 Cases Referred: Sh. Satya Narain Garg through his legal heirs v. DCM Ltd. & Ors., MANU/DE/7110/2011 : (187) 2012 DLT 25; S.S. Shetty v. Bharat Nidhi Ltd., 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 & Rings Limited & Ors., MANU/DE/0108/1998 : 74 (1998) DLT 455; Central Inland Water Transport Corporation Ltd. & Anr. Etc v. Brojo Nath Ganguly & Anr., MANU/SC/0439/1986 : AIR 1986 SC 1571; Binny Ltd. & Anr. v. V. Sadasivan & Ors. MANU/SC/0470/2005 : (2005) 6 SCC 657; D.C.M.Limited & Anr. v. Mahabir Singh Rana MANU/DE/3348/2009; S.M. Murray v. M/s. Fenner India Ltd. MANU/DE/0205/1986 : AIR 1986 Delhi 427 Citing Reference:

Affirmed 2 Discussed 2 Distinguished 1 Mentioned 3 Disposition: Appeal allowed

Case Note: Service - Maintainability - Compensation - Sections 14(1)(b) and (c) of Specific Relief Act, 1963 Trial Court decreed suit of Respondent/Plaintiff/employee against Appellant/Defendant/employer by which Appellant/defendant was directed to pay compensation amount of ` 10,87,294/- for unlawful termination of services and also held that there could be a specific performance of a contract for personal service - Hence, this Appeal - Whether, Suit filed 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 alternative employment when 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, hence suit was clearly barred and not maintainable - Even presuming there was breach of contract, at best reasonable damages could be granted and once there was a clause for termination of services by one month's notice, it could only be one month's notice which could be treated as reasonable damages inasmuch as parties understood period for obtaining of an alternative employment as 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, thus suit was 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 such damages as will compensate him for wrong that he has sustained." JUDGMENT Valmiki J. Mehta, J. 1. The challenge by 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 the suit of the respondent/plaintiff/employee against the appellant/defendant/ employer, and by which decree the appellant/defendant was directed to pay the compensation amount of 10,87,294/for unlawful termination of services. The amount of damages which 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 Finance Ltd. 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 Services Ltd. 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 the termination letter dated 28.2.2002. It was pleaded that the termination letter was violative of principles of natural justice besides being illegal and an infringement of the terms of the employment. The reliefs claimed in the suit were for declaration and injunction to seek continuation of employment and 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 the suit and pleaded that the suit was 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 delinquent employee  who took leave on his own without any sanction. `

3. After completion of pleadings, the trial Court framed the following issues:-

1. Whether the suit in the present form is maintainable? OPP 2. Whether the termination of the services of the plaintiff by the defendant is illegal and void? OPP 3. Whether the plaintiff is entitled to the reliefs prayed for? OPP 4. Relief. 4. With regard to issue No. 1 as to the maintainability of the suit, the trial Court held the suit to 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. the employment is 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 an employee  covered under the Industrial Disputes Act, 1947 the contractual employment can always be terminated in terms of the contract. Also, even assuming the termination is not as per the contract, at best the entitlement will be to claim damages which naturally flow out of the breach i.e. of the illegal termination of 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 Nidhi Ltd., 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 suchdamages as 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, the damages will 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 another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages. (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. DCM Ltd. & 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 Binny Ltd. & 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 to private employment. 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 of private employment, the employers are fully  justified in taking steps for termination of services, if it finds that the employee is not upto the mark. Principles applicable in public law domain do not apply with respect to employees in private employment. Employment in private  sector is governed by the terms and conditions of employment, and unless the termination is shown to be violation of the terms and conditions of employment, it cannot be said that the termination  is illegal. In the present case, in my opinion, since there was no fixed period of employment so 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 illegal termination of services, it is not possible to

grant damages as claimed inasmuch as the principle of mitigation of damages squarely applies. As per this principle of mitigation of damages enshrined in Section 73 of the Contract Act, 1872 even if an employee is illegally terminated from services, he cannot sit at home and he must take sufficient steps to procure alternative employment. The law in this regard is contained in the judgment of the Supreme Court reported as S.S. Shetty v. Bharat Nidhi Ltd., 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 such damages as 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, thedamages  will 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 another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages. (Chitty on Contracts, 21st Edition, Vol (2), p. 559 para. 1040). 13. If the contract of employment is for a specific term, the servant would in that event be entitled to damages  the 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. 234 at 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 of damages by way of seeking alternative employment. 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 after termination  by 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 of damages. 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 alternative employment. 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 of damages. 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 & Rings Limited & 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 Corporation Ltd. & 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 to private employment. This judgment, however, in my opinion, no longer lays down the correct law inasmuch as the Supreme Court recently in the case

of Binny Ltd. & Anr. v. V. Sadasivan & Ors. MANU/SC/0470/2005 : (2005) 6 SCC 657 has held that public policy principles cannot apply to private employment. 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 maintainable Public-policy principles can be applied to employment in public sector undertakings in appropriate cases. But the same principles cannot be applied toprivate bodies. 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 the employees of the private  sector. The service rules and regulations which are applicable to government employees or employees of 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 of employment  of workers by private  bodies 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 against private employers, 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 their employees cannot 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 of employees  and other matters. Their cases were purely governed by the contract of employment entered into between the employees  and 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 alternative employment when 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 service termination. Payment of one month's salary will be required in lieu of notice. However, GE Capital TFS Reserves the right to terminate your employment on grounds o policy misconduct of unsatisfactory job performance. 8. Whatever be the language of the prayer clauses of the plaint, and whatever be the ground of cause of action pleaded, the sum and substance of the cause of action in the plaint is for reemployment  and continuation of employment with 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 subject suit was 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, the suit was 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 Binny Ltd. (supra) and which specifically provides that in private contracts 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 reasonable damages can be granted and once there is a clause for termination of services by one month's notice, it can only be one month's notice which can be treated as reasonable damages inasmuch as parties understood the period for obtaining of an alternative employment as 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 Rana MANU/DE/3348/2009 and the second is S.M. Murray Vs. M/s. Fenner India Ltd. 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 fixed employment  till 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 theemployee was an employee under the Industrial Disputes Act, 1947. The employee in 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 illegal termination of contractual employment, there can only be granted reasonable damages i.e. salary for a few months till an alternative employment is 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 of employment was for a fixed period of five years and the suitwhich 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 illegal termination. 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 of wrongful termination of 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 Binny Ltd. (supra). The suit was 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. Suit of 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. `

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MANU/DE/0386/2012 IN THE HIGH COURT OF DELHI RFA (OS) No. 3/1999 Decided On: 25.01.2012 Appellants: Shriram Pistons & Rings Ltd. & Anr. Vs. Respondent: Shri T.S. Mokha Hon'ble Judges/Coram: Hon'ble Mr. Justice Pradeep Nandrajog and Hon'ble Ms. Justice Pratibha Rani Counsels: For Appellant/Petitioner/Plaintiff: Mr. T.K. Ganju,  Sr. Advocate with Mr. Sayeed Aqib & Mr. Aditya Ganju, Advs. For Respondents/Defendant: Mr. Rajinder Dhawan with Mr. D.D. Singh and Mr. B.S. Rana, Advs. with respondent in person Subject: Service Catch Words Mentioned IN Acts/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 Corporation Limited (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 311 Cases Referred: Central Inland Water Transport Corporation Ltd. & 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 Kiran MANU/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, Agra MANU/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 Narain MANU/SC/0052/1979 : AIR 1976 SC 888 : 1976 (2) SCC 58; S.S. Shetty Vs. Bharat Nidhi Ltd.MANU/SC/0080/1957 : AIR 1958 SC 12; Dayanand Sarup Vs. Smt. Bimla Rani 1981 LabIC 1009 HC; IOC Ltd. Vs. Amritsar Gas Service Ltd. 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 Rai MANU/SC/0668/1971 : AIR 1971 SC 1828; S.M.Murray Vs. M/s. Fenner IndiaLtd. AIR 1986 Del 427; Central Inland Water Transport Ltd & 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 Bank Ltd. Kumbakonam Vs. M. Parthasarathi 1988 1 law weekly 479; P.B.Ghayalod Vs. M/s Maruti Udyog Ltd. & Ors.MANU/DE/0021/1992 : AIR 1992 Delhi 145; Ajay Pasia v. Khalid Mujib Sehravardi MANU/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 Schravardi MANU/SC/0498/1980 : AIR 1981 SC 487; SBI vs. S.N.Goyal. Relevant MANU/SC/7605/2008 : 2008 (8) SCC 92; Sirsi Municipality by its President, Sirsi Vs. Cecelia Kom Francis Tellis MANU/SC/0066/1973 : AIR 1973 SC 855; Binny Ltd. & 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 888 Citing Reference:

Discussed

15 Mentioned 5 Disposition: Appeal allowed Case Note: Service Termination - Present Appeal filed against decree of suit for declaration that termination was illegal and for damages or reinstatement with full back wages Held, Single Judge had granted relief of declaration that clause 10 of agreement was void and consequently notice of termination also fails relying on case law decided by Supreme Court in matter of Central Inland Water Transport Corporation Ltd & 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 of private employment where 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 allowed JUDGMENT Pratibha Rani, J. 1. The appellant-company M/s. Shriram Pistons & Rings Ltd. impugned the judgment and decree dated 27th May, 1998, passed by the learned Single Judge, in a suit filed by the respondent herein, (plaintiff in the suit), who was their ex-employee  in managerial capacity, seeking declaration that his termination was unconstitutional, illegal and mala fide and without authority. In addition, respondent also sought the relief of damages for 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 of employment, 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 masterservant 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 vide termination order 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 Works Ltd., probably a sister concern of the appellant) 3. After completing the pleadings, following issues were settled by learned Single Judge: `

(i) Whether suit is not maintainable against Defendant No. 3" (ii) Whether Defendant No.2 is a separate legal entity and if not to what effect" (iii) Whether the suit is bad for misjoinder of parties" (iv) Whether the termination  of 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 of termination of his service' (vi) Whether the claim for declaration is barred under the provisions of the Specific Relief Act' (vii) Whether the plaintiff is entitled to damages and 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 and termination to 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 Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly & Anr. AND Central Inland Water Transport Corporation Ltd. & 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 of termination fails to the ground. 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 of termination  order is void, the plaintiff would be entitled to the declaration and as a consequence damages. I have no hesitation in granting a decree declaring that the notice of termination P-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 of termination dated 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 the suit. (vi) directing the dismissal of the suit against 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 the private character or otherwise of the appellant, has rendered a verdict against the appellant. The contentions of the appellant company in appeal, is that it is a private company 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 Article 311 of 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 upon MANU/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 Nidhi Ltd.; 1981 Lab IC 1009 HC titled as Dayanand Sarup Vs. Smt. Bimla Rani; MANU/SC/0513/1991 : 1991 (1) SCC 533 titled as IOC Ltd. Vs. Amritsar Gas Service Ltd. 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 the termination with nothing to suggest that it was a usual practice in case of all the employees. 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 a suit challenging the validity and legality of termination of service, two aspects are involved i.e. (a) the justification and legality of termination of service; and (2) relief which is to be granted to employee concerned. As far as aspect (a) is concerned, there is no bar on the jurisdiction of the Court. The nature of employment viz. whether he was employed in a statutory corporation or he was a workman as defined in Section 2 (s) of I.D. Act or he was in privateemployment is relevant. Such declaration have been granted by the Courts and in this connection, reliance have been placed on AIR 1980 SC 60 titled 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, and AIR 1986 Del 427 titled as S.M.Murray Vs. M/s. Fenner India Ltd. (iii) Placing reliance on judgment of Apex Court in MANU/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 of termination of 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 Section 617 of Companies Act and the relief of declaration and damages have rightly been granted to the respondent and he was also entitled to get the relief of reinstatement. (vi) Referring to Section 21 IPC clause 12, it has been submitted that the employees of Government company cannot be said to be employee of a privateemployer 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 Section 23 of the Contract Act. (vii) On the basis of judgment of Apex Court in MANU/SC/0439/1986 : AIR 1986 SC 1571 titled Central Inland Water Transport Ltd & 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 Article 14 of the Constitution of India and Section 23 of the Contract Act, which is applicable to both Government as well as private concerns, the suit has 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 as MANU/SC/0439/1986 : AIR 1986 SC 1571 Central Inland Water Transport Ltd  & Anr. Vs. Brozo Nath Ganguli & Anr. and MANU/SC/0031/1991 : AIR 1991 SC 101 titled Delhi Transport Corporation Vs. DTC Mazdoor Congress & Ors., to private companies 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. and 1988 1 law weekly 479 titled as The Central Co-operative Bank Ltd. 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 case MANU/DE/0021/1992 : AIR 1992 Delhi 145 titled P.B.Ghayalod Vs. M/s Maruti Udyog Ltd. & 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 Udyog Ltd. & Ors., (Supra), the question that arose for decision was whether respondent No.1 i.e. M/s Maruti Udyog Ltd. is an "authority" under the control of Government of India and as such an "instrumentality" within the domain of Article 12 of 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 Article 12 of 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 the ground of being void, illegal and in contravention of provisions of Article 14 of the Constitution of India and opposed to public policy and also void under Sec.23 of 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 Sehravardi MANU/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 Article 12 of 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 Udyog Ltd. is not an instrumentality of State or an "authority" for purpose of Article 12 of 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 Article 12 of the Constitution and termination invoking 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 Udyog Ltd. & Ors., (Supra), and cannot be termed as "instrumentality" of State or "authority" nor termination invoking 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 or employee of such company enjoy the statutory status or protection of Article 311 of the Constitution. A company registered under the Companies Act and carrying on trading business is a private enterprise to make profit through its business activities. Respondent was appointed as Manager (Administration) and was in the private employment. 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 l etter Ex.P1. 16. It needs to be highlighted that in Central Inland Water Transport Ltd. 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 Article 14 of 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 Article 12 of the Constitution of India, only then the said company would be an instrumentality of the State and thus Article 14of 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 as MANU/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, a suit was 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 for wrongful dismissal and the Apex Court held that to this limited extent, 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 India Ltd. (Supra) relied upon by learned counsel for the

respondent pertains to the suit for damages and injunction against dispossession from the premises allotted to the employee during the course of employment, 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 Transport Ltd & 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 the employee, 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 Article 311 of 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 and employee. 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 of employment or the law governing the contract of employment is a separate and sui generis body of rules. The crucial question then is as to what is the effect of repudiation of the contract of employment by the employer. If an employer repudiates the contract of employment by dismissing his employee, can the employee refuse 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 a wrongful repudiation 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 to wrongful repudiation of the contract of employment" The trend of the decisions seems to be that it does not. It seems to be generally recognized that wrongful repudiation of the contract of employment by the employer effectively terminates the employment : thetermination being wrongful entitles the employee to claim damages, but the employee cannot refuse to accept the repudiation and seek to treat the contract of employment as continuing. What is the principle behind this departure from the general rule of law of contract' The reason seems to be that a contract of employment is 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 the employee can only claim damages for wrongful breach of the contract. Now a contract of employment is 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 th e 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 the termination of the contract of employment (by dismissal or otherwise) is found to be illegal or in breach, the remedy of the employee is only to seek damages and not specific performance. Courts will neither declare such terminationto be a nullity nor declare that the contract of employment  subsists 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 Article 311 of the Constitution of India (or any law made under Article 309); (ii) where a workman having the protection of Industrial Disputes Act, 1947 is wrongly terminated from service; and (iii) where an employee of 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 public employment governed by statutory rules and private employment governed purely by contract. The test for deciding the nature of relief -damages or reinstatement with consequential reliefs -is whether the employment is 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 the employment is governed by a statute or statutory rules, a declaration that the termination is null and void and that theemployee should 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 claiming damages  unless the case of such employee  falls under any of the exceptions referred to above. Whether in the relationship of Master and Servant, the termination can be declared as nullity, was answered by the Apex Court in MANU/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 of employment. Any breach of contract in such a case is enforced by a suit for wrongful dismissal and damages. Just as a contract of employment is not capable of specific performance similarly breach of contract of employment is not capable of founding a declaratory judgment of subsistence of employment. A declaration of unlawful termination and restoration to service in such a case of contract of employment  would 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 reliefs 17. The third category of cases of master and servant arises in regard to the servant in the employment of the State or of other public or local authorities or bodies created under statute. 18. Termination or dismissal of what is described as a pure contract of master and servant is not declared to be a nullity however wrongful  or illegal it may be. The reason is that dismissal in breach of contract is remedied by damages. 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 of termination or 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. Termination of 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 the employee placed at managerial level. The termination order Ex.P2 did not contain any adverse finding. It was a termination simplicitor under clause 10 of terms and conditions of appointment of respondent. 25. In case of private employee, a contract of personal services cannot ordinarily be specifically enforced. The Court would not be imposing an employee  on the employer and enforce contract of personal services. An employer cannot be forced to take an employee when there is complete loss of faith between the two or can be inferred from the averments made in this case. The claim of damages i.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 is termination upon serving a particular period of notice e.g. three months notice, the damages will ordinarily be wages for that period. He cannot claim compensation in respect of the injuries to his feelings by such termination or the problems faced in finding another job. 26. On the issue of award of damages till the date of attaining superannuation, the respondent was an employee  of a private  company 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 of private employment. 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 Bank Ltd. Kumbakonam Vs. M. Parthasarathi (supra), failed to appreciate that those reports applied to undertakings, corporations or Government bodies but notprivate companies. 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, termination simplicitor 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 theemployment or 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 but termination order 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 of termination also fails relying on the case law Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly & Anr. AND Central Inland Water Transport Corporation Ltd. & 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 Appell ant company and to consider whether the judgment of Supreme Court in Central Inland Water Transport Corporation Ltd. & 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 Bank Ltd. Kumbakonam Vs. M. Parthasarathi (supra) could not have been relied upon in case of private employer terminating the services of its employee invoking the terms of the contract, it would be advantageous to refer to the  judgment of Apex Court in MANU/SC/0470/2005 : AIR 2005 SC 3202 Binny Ltd. & Anr. Vs. V.Sadasivan & Ors. In Binny Ltd.'s case (Supra), the termination was challenged by employees and apart from other judgments, applicability of Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly & Anr. (Supra) and Delhi Transport Corporation Vs. DTC Mazdoor Congress & Ors.' (Supra), was also discussed in detail in case of private employment where 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 in MANU/SC/0439/1986 : (1986) II LLJ 171 SC Central Inland Water Transport Corporation Ltd. 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 Corporation Limited (Service, Discipline and Appeal) Rules, 1979 was void and illegal and violative of Article 14 of the Constitution and it was also void in view Section 23 of the Contract Act. This Court held that Rule 9(1) was violative of Article 14 as it was against the public policy as the employer had absolute power to terminate the service of an employeegiving three months notice. This Court held that this was an absolute arbitrary power given to the corporation and termination of the respondent employees by 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 of employment  and the service rules which gave absolute and arbitrary power to terminate the service of theemployees were illegal. It may be also noticed that the termination clause 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 Section 23 of the Contract Act as it was opposed to public policy to terminate the services of the employee without conducting an enquiry even on theground of misconduct. The public policy principles can be applied to the employment in public sector undertaking in appropriate cases. But the same principles cannot be applied to private bodies. 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 the employees of private sector. The service rules and regulations which are applicable to govt.employees or employees of 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 Article 12 of the Constitution. Both in Central Inland and DTC cases, the decision of the public sector undertaking was under challenge and 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 Article 12 of 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 all termination simplicitor clauses providing for termination on 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 Binny Limited in their entirety. Clause (9) contemplates an inquiry in a case of termination  for misconduct. Thus there is a provision for natural justice in case of termination involving 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 their employees  cannot be said to have any element of public policy. Their cases were purely governed by the contract of employment entered into between the employees and the employer. It is not appropriate to construe those contracts as opposed to the principles of public policy and thus void and illegal under Section 23 of the Contract Act. In contractual matters even in respect of public bodies, the principles of judicial review nave got limited application. 31. In view of the ratio laid down by the Apex court in Binny Ltd. & Anr. Vs. V.Sadasivan & Ors. (Supra), no doubt is left regarding the applicability of Central Inland Water Transport Corporation Ltd. & 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 aprivate company. 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/7110/2011 Equivalent Citation: 187(2012)DLT25, 187(2012)DLT25, 2012(127)DRJ216 IN THE HIGH COURT OF DELHI RFA No. 556/2002 Decided On: 05.12.2011 Appellants: Shri Satya Narain Garg through his Legal Heirs Vs. Respondent: DCM Ltd. & Others Hon'ble Judges/Coram: Hon'ble MR. Justice Valmiki J. Mehta Counsels: For Appellant/Petitioner/Plaintiff: Mr. S.P. Mittal with Mr. Nitin Nayyar, Advocates For Respondents/Defendant: Mr. Sanjeev Anand with Mr. Vikram Singh and Mr. Abhas Kumar, Advocates Subject: Contract Catch Words Mentioned IN Acts/Rules/Orders: Specific Relief Act; Companies Act - Section 630; Contract Act, 1872 - Section 23; Contract Act, 1872 - Section 73; Code of Civil Procedure, 1908 (CPC) - Section 96 Cases Referred: S.S. Shetty v. Bharat Nidhi Ltd., MANU/SC/0080/1957 : AIR 1958 SC 12; Collier v. Sunday Referee Publishing Co. Ltd., 1940 ALL. E.R. 234 (A); Tarlochan Singh Mokha v. M/s. Shriram Pistons & RingsLimited & Ors., MANU/DE/0108/1998 : 74 (1998) DLT 455; Central Inland Water Transport Corporation Ltd. & 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; Praga Tools Corpn. v. C.A. Imanual, MANU/SC/0327/1969 : (1969) 1 SCC 585; VST Industries Ltd. v. Workers' Union,(2001) 1 SCC 298 : 2001 SCC (L&S) 227; G.M., Kisan Sahkari Chini Mills Ltd. v. Satrughan Nishad, MANU/SC/0795/2003 : (2003) 8 SCC 639; Federal Bank Ltd. v. Sagar Thomas, MANU/SC/0769/2003:  (2003) 10 SCC 733; Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly, MANU/SC/0439/1986 : (1986) 3 SCC 156 : 1986 SCC (L&S) 429 : (1986) 1 ATC 103; Delhi Transport Corpn. v. D.T.C. Mazdoor Congress, MANU/SC/0031/1991 : 1991 Supp (1) SCC 600 : 1991 SCC (L&S) 1213; Shri Anadi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, MANU/SC/0028/1989 : (1989) 2 SCC 691 Disposition: Appeal dismissed Case Note: Service - Termination - Trial Court dismissed suit of deceased Plaintiff for declaration and damages for wrongful termination of services Hence, this Appeal Whether, termination of Appellant was illegal - Held, merely because two views are possible, Court would not interfere with conclusion arrived at by Court, unless conclusion was illegal or perverse or causes grave injustice - In case of private employment, employers were fully justified in taking steps for termination of services, if it found that employee was not upto mark - Principles applicable in public law domain did not apply with respect to employees in private employment - Employment in private sector was governed by terms and conditions of employmentand unless termination was shown to be violation of terms and conditions of employment, it could not be said that termination was illegal - Services of Plaintiff were terminated as in spite of counseling and notice his performance did not improve - In private employment, in fact there need not be any valid reason for termination and where there was no fixed period of employment there could be termination simplicitor, Public law principles do not apply to private employment - If

there was violation of the terms of employment while terminatingemployment and thus termination was illegal, employee was only entitled to reasonable damages by applying principle of mitigation of damages - Plaintiff, assuming his services were illegally terminated, failed to show steps taken to obtain alternative employment and hence was rightly held disentitled to damages Ratio

Decidendi

"Principles applicable in public to employees in private employment."

law

domain

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JUDGMENT Valmiki J. Mehta, J. 1. The challenge  by means of this Regular First Appeal filed under Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the impugned judgment dated 26.4.2002 passed by the Trial Court. By the impugned judgment, the suit of the deceased plaintiff (now represented by his legal heirs appellants) for declaration and damages for wrongful termination of services was dismissed. 2. The facts of the case are that the plaintiff joined the defendant No.1/DCM Ltd. as a Clerk in the accounts section on 1.4.1960. As a benefit arising out of the employment, the plaintiff was let out quarter No.5, U.F. Mill Gate, DCM Quarters, DCM Road, Bara Hindu Rao, Delhi i n January 1975 and for which rent was being deducted by the respondent No.1. The plaintiff claims to have been promoted as an officer w.e.f. 1.1.1985 and was also honoured with a long service certificate on 21.4.1986. The plaintiff then pleaded that his services were assigned to another unit of the same group known as M/s. Shriram Industrial Enterprises Ltd. w.e.f. 1.4.1990. Plaintiff further pleaded that he was given increments in the job. It is then pleaded that a settlement was arrived at between the respondent No.1 and its workmen before this Court in Civil Writ Petition No.2476/1988 on 1.10.1993 and as per which all the workmen were bound to vacate their quarters in their occupation by 31.10.1993. Disputes arose when the deceased plaintiff failed to vacate the quarter. The deceased plaintiff claimed that his services were sought to be terminated, not on account of any inefficiency on his part, but only as he refused to vacate the quarter. The services of the deceased plaintiff were terminated on 22.9.1993. The subject suit for declaration /injunction, therefore came to be filed in which a decree was also prayed for  4,99,116/- being the monetary claim for alleged illegal termination. 3. The respondent No.1 contested the suit and stated that the suit was filed as a counterblast to the company having initiated criminal proceedings against the deceased plaintiff. It was also pleaded that in spite of termination of the licence of the deceased plaintiff with respect to the quarter which he was occupying, the deceased plaintiff failed to vacate although he was bound by the judgment rendered by the High Court in Civil Writ Petition No.2476/1988. It was then pleaded by the respondent No.1 that the deceased plaintiff was given numerous opportunities to improve his performance and work and only on his failure to do so his services were terminated. 4. After completion of pleadings, the Trial Court framed the following issues: `

(i) Whether the pltf. is entitled to a decree in the sum of 4,99,116/- and if so, the rate of interest to which he is entitled? OPP (ii) Whether the pltf. is entitled to a declaration that the letter dt.22.9.1993 terminating his service is illegal and void? OPP `

(iii) Whether the plaint discloses no cause of action and is barred under the Specific Relief Act? OPD (iv) Whether the suit has been filed as counterblast to the criminal proceedings initiating against the pltf? OPD (v) Relief. 5. The main issues before the Trial Court were issues No.1 and 2 as to whether the services of the plaintiff were validly terminated. The Trial Court has held that the services of the deceased plaintiff were validly terminated by giving the following observations:

I have considered the rival contentions. First of all it is to be seen by the Court whether the termination of the pltf. on 22.9.93 vide Ex.P6 was illegal and unjustified

solely with a view to punish the pltf. for not vacating the quarter. The pltf. has admitted in his cross examination that deft. company instituted a complaint u/s 630 of Companies Act. Sec. 630 of Companies Act reads as under:(1) If any officer or employee of a company (a) wrongfully obtains possession of any property of a company; or (b) having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorized by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. (2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years. Although the details of filing the complaint or where it is still pending or stands decided are not available on record but it becomes very clear that deft. company was proceeding in accordance with law to take back the possession of the quarter allotted to the pltf. Although the pltf. had been claiming himself to be the tenant in respect of the quarter allotted to him but in cross examination he admitted the execution of licence deed Ex.PW1/D2 in respect of the said quarter which makes the status of the pltf. in respect of the suit property very clear. The judgment of Hon'ble High Court dt. 1.10.93 Ex. DW1/5 further shows that in respect of the quarters in occupation of the employees of the DCM, the company was not resorting to the practice of terminating the services of those employees who refused to vacate the quarter but took recourse to law and got the possession only through Court orders. Hence there is no force in the contention of the pltf. that his services have been terminated only because he refused to vacate the quarter allotted to him. The pltf. has also admitted in his cross examination that the deft. company asked him to vacate the quarter in 1986 as well as in 1991-92. In view of this admission of the pltf. and subsequent letters of recommendation and increments granted to him are sufficient to establish that refusal of the pltf. not to vacate the quarter was never linked by the management with his services so as to take the extreme step of terminating his services just on this third ground. The letter dt. 1.5.92 Ex.P7 goes in favour of the pltf. to the extent that deft. was not having any kind of malice towards the pltf. for his refusal to vacate the quarter and as late as 1.5.92 his performance during the period 1991-92 was reported to be satisfactory and he was also informed that his next appraisal will be due on 1.4.93. It was only after 1.4.93 when the performance of the pltf. was found not to be satisfactory and he was given a chance to improve his performance but when he failed to improve his performance that the report dt. 23.7.93 was given by Departmental Head and signed by Personnel Head on 26.7.93 to the effect that Mr. S.N. Garg's performance has been deteriorating continuously over the last two years inspite of numerous attempts at counseling, in view of this he may be discharged. Ex.DW1/4 further shows that General Manager (HRD) on the basis of last performance appraisal of the pltf. done in the last week of July, 1993, again required Senior Manager, Taxation & Finance Department to give the performance of the pltf. for the month of July - August, 1993. The document Ex.DW1/4 shows that again it was opined that there was no change in the contents or the observations made for the period April to June, 1993. It was also suggested that the pltf. may be discharged from the services with immediate effect and after reviewing the performance of the pltf. for sufficient time giving him a chance to improve, the pltf. was discharged from the services of the

Company w.e.f. 22.9.93. In these circumstances I do not find any illegality in the order Ex.P6 vide which pltf. was discharged from the services of the company. So far as the contention of ld. counsel for the pltf. regarding business being run by the son of the pltf. that this part of evidence of the deft company is not only beyond pleadings but also not proved from any documentary evidence that the son of the pltf. is carrying on any such business at Anand Parbat. The oral testimony of DW1 and DW2 in this regard cannot be believed. Keeping in view that the deft has no where taken the plea that the pltf. was putting more attention to the business of his son, this argument has no relevance to decide the matter in issue regarding the alleged illegal termination of the pltf. that how the letter dated 1.5.92 could be given to the pltf. if his performance was not satisfactory, I feel that this letter rather goes in favour of the deft to show the fair manner in which the deft was dealing with its employee i.e. the pltf. If there was any ill-will or bias against the pltf., the Management would not have given a rise in the salary of the pltf. w.e.f. 1.1.92. Since this increment was based on the satisfactory performance of the pltf. during the year 1991-92 it shows that Management was judging the performance of the employees  on the basis of their work and conduct and not for any extraneous consideration like not vacating the quarter. In these circumstances, I am of the view that there is no illegality in the act of the deft in discharging the pltf. from the services of the deft Co. Hence pltf. is not entitled to any declaration as prayed for. As the pltf. is not entitled to any declaration to the effect that termination of his services vide letter dated 22.9.93 be declared illegal, in-operative and void ab initio, there is no question of pltf. being entitled to any amount towards damages. Both these issues are decided against the pltf. (underlining added) 6. A reading of the aforesaid conclusions shows that the deceased plaintiff though claimed to be a tenant in the quarter, however, he admitted to the execution of the licence deed, Ex. PW1/D2 with respect to the quarter, and which established that the deceased plaintiff was only a licensee. With respect to the contention that the services of the deceased plaintiff were terminated for not vacating the quarter, the Trial Court has given a finding that the respondent No.1/defendant No.1 got vacated the quarters from various employees, including the deceased plaintiff by due process of law only through court orders. The Trial Court finally has referred to the performance appraisal reports and the counseling given to the deceased plaintiff to hold that in spite of reviewing the performance, and giving sufficient time to improve, the deceased plaintiff did not improve his performance and, therefore, his services were terminated. The Trial Court has referred to the appraisal report Ex.DW1/4 to show that in spite of notice plaintiff had failed to improve his performance and, therefore, his services were validly terminated. 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 of private employment, the employers are fully justified in taking steps for termination of services, if it finds that the employee is not upto the mark. Principles applicable in public law domain do not apply with respect to employees in private employment. Employment in private sector is governed by the terms and conditions of employment, and unless the termination is shown to be violation of the terms and conditions of employment, it cannot be said that the termination is illegal. In the present case, in my opinion, since there was no fixed period of employment so 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 illegal termination of services, it is not possible to grant damages as claimed inasmuch as the principle of mitigation of damages squarely applies. As per this principle of mitigation of damages  enshrined in Section 73 of the Contract Act, 1872 even if an employee is illegally terminated from services, he cannot sit at home and he must take sufficient steps to procure alternative employment. The law in this regard is contained in the judgment of the Supreme Court reported as S.S. Shetty v. Bharat Nidhi Ltd., 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 such damages as 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, the damages  will 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 another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages. (Chitty on Contracts, 21st Edition, Vol (2), p. 559 para. 1040). 13. If the contract of employment is for a specific term, the servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of miti gation in the salary of which the master had deprived him. (Vide Collier v. Sunday Referee Publishing Co. Ltd., 1940 ALL. E.R. 234 at 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 of damages by way of seeking alternative employment." 8. 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 alternative employment:

I did not join any service after termination by 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 of damages. 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 alternative employment. 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 mi tigation of damages. 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., 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 Corporation Ltd. & 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 to privateemployment. This judgment, however, in my opinion, no longer lays down the correct law inasmuch as the Supreme Court recently in the case of Binny Ltd & Anr. v. V. Sadasivan & Ors.MANU/SC/0470/2005 : (2005) 6 SCC 657 has held that public policy principles cannot apply to private employment. 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 maintainable Public-policy principles can be applied to employment in public sector undertakings in appropriate cases. But the same principles cannot be applied to privatebodies. 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 the employees of the private sector. The service rules and regulations which are applicable to government employees oremployees of 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 of employment of workers by private bodies 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 against private employers, it was solely done based on the public law element involved therein. (Para 16)

Praga Tools Corpn. v. C.A. Imanual, MANU/SC/0327/1969 : (1969) 1 SCC 585; VST Industries Ltd. v. Workers' Union, (2001) 1 SCC 298 : 2001 SCC (L&S) 227; G.M., Kisan Sahkari Chini Mills Ltd. v. Satrughan Nishad, MANU/SC/0795/2003 : (2003) 8 SCC 639; Federal Bank Ltd. v. Sagar Thomas, MANU/SC/0769/2003 : (2003) 10 SCC 733, followed Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly, MANU/SC/0439/1986 : (1986) 3 SCC 156 : 1986 SCC (L&S) 429 : (1986) 1 ATC 103; Delhi Transport Corpn. v. D.T.C. Mazdoor Congress, MANU/SC/0031/1991 : 1991 Supp (1) SCC 600 : 1991 SCC (L&S) 1213, explained and distinguished Shri Anadi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, MANU/SC/0028/1989 : (1989) 2 SCC 691, distinguished The decision of the employers in the preset cases to terminate the services of their employees cannot 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 of employees and other matters. Their cases were purely governed by the contract of employment entered into between theemployees and 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) 11. Thus the following conclusions emerge:

(i) The services of the plaintiff were terminated as in spite of counselling and notice his performance did not improve. (ii) In private employment, in fact there need not be any valid reason for termination and where there is no fixed period of employment there can betermination simplicitor. Public law principles do not apply to private employment. (iii) If there is violation of the terms of employment while terminating employment and thus termination is illegal, the employee is only entitled to reasonabledamages  by applying the principle of mitigation of damages. The plaintiff, assuming his services were illegally terminated, failed to show steps taken to obtain alternative employment and hence was rightly held disentitled to damages. 12. In view of the above, I do not find any merit in the appeal, which is accordingly dismissed, leaving the parties to bear their own costs. Trial court record be sent back. © Manupatra Information Solutions Pvt. Ltd. Go to top

MANU/DE/2960/2011 Equivalent Citation: 2011VIIIAD(Delhi)91 IN THE HIGH COURT OF DELHI RFA 360/2006 Decided On: 22.07.2011 Appellants: J.K. Shah Vs. Respondent: Birla Cotton Spinning and Weaving Mills Ltd. and Anr. Hon'ble Judges/Coram: Kailash Gambhir, J. Counsels: For Appellant/Petitioner/Plaintiff: Party-in-Person For Respondents/Defendant: Atul Shankar Mathur, Shruti Verma and Ankur Sangal, Advs. Subject: Company Catch Words Mentioned IN Acts/Rules/Orders: Specific Relief Act, 1963 - Section 14(1); Companies Act - Section 383A; Contract Act ; Factories Act, 1948 - Section 49, Factories Act, 1948 - Section 50, Factories Act, 1948 - Section 112;Employees State Insurance Act, 1948 ; Employees State Insurance Act, 1952 ; Uttar Pradesh Industrial Housing Act, 1955 ; Factories Rules ; Registration Act ; Stamp Act ;Industrial Disputes Act; Code of Civil Procedure, 1908 (CPC) - Section 96; Gratuity Rules ; Uttar Pradesh Factories Welfare Officers' Rules, 1955 - Rule 8, Uttar Pradesh Factories Welfare Officers' Rules, 1955 - Rule 10,Uttar Pradesh Factories Welfare Officers' Rules, 1955 - Rule 11, Uttar Pradesh Factories Welfare Officers' Rules, 1955 - Rule 15, Uttar Pradesh Factories Welfare Officers' Rules, 1955 - Rule 17;Constitution of India - Article 226, Constitution of India - Article 311 Cases Referred: President, Sirsi v. Cecelia Kom Francis Tellis MANU/SC/0066/1973 : AIR1973 SC 855; Indian Oil Corporation Ltd. v. Amritsar Gas Service and Ors. MANU/SC/0513/1991 : JT 1990 (4) SC 601; Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. MANU/SC/0667/1975 : (1975) 1 SCC 421; Sirsi Municipality by its President, Sirsi v. Cecelia Kom Francis Tellis MANU/SC/0066/1973 : AIR 1973 SC 855; Prem Narain Srivastava v. Kanpur Chemical Works (WPC 4947/1972); Synthetics & Chemicals Ltd. v. G.C. Kumar; Sukhdev Singh and Ors. v. Bhagatram Sardar Singh RaghuvanshiMANU/SC/0667/1975 : 1975 (1) SCC 421; Roshan Lal v. Union of India MANU/SC/0328/1967 : AIR 1967 SC 1889; Union of India v. Kewal Krishna Mittal MANU/DE/0289/1983 : 25 (1984) DLT 24;Tarlochan Singh v. Shriram Priston 1998 IV AD (Del) 225; Muni Lal Talwar v. Chemo Pharma Laboratories Ltd. Suit No. 352/75; Indian Railway Construction Co. Ltd. v. Ajay Kumar MANU/SC/0166/2003: JT 2003 (2) SC 295; Gammon India Ltd. v. Niranjan Das MANU/SC/0237/1983 : (1984) 1SCC 509; Workmen of Hindustan Levers Limited v. Hindustan Levers Ltd. MANU/SC/0212/1984 : AIR 1984 SC 1683; S.K. Verma v. Industrial Tribunal MANU/SC/0316/1980 : AIR 1981 SC 422; Hindustan Tin Works v. Its employers MANU/SC/0272/1978 : AIR 1979 SC 75 Citing Reference:

Discussed 7

Distinguished 9 Case Note: Service - Termination - Trial Court held that although Respondent company had withheld legal dues of Appellant, but Appellant had also retained quarter after his license to occupy flat had come to an end after termination of his service and hence, Appellant was liable to lose interest on his dues - Hence, this Appeal - Whether, services of Plaintiff as company secretary were validly terminated by Defendants - Held, employment of Appellant was not by virtue of any statute and thus was in the realm of private employment - Relation between Appellant and Respondent was master and servant relationship, in nature of private employment and his wrongful termination could have entitled him only for grant of suitable damages and undeniably to all his legitimate claims arising out of his illegal termination - Further, Appellant, who was appointed as a Secretary with Respondent company, did not enjoy any statutory status - His post of Company Secretary could not be treated to be in nature of public employment - Therefore, he was not entitled to be proceeded against after setting up a proper enquiry before terminating his services Appellant had succeeded in establishing that his services were terminated illegally - Appeal disposed off. Service - Entitlement of Interest - Whether, Plaintiff was entitled to interest - Held, Provident fund was not a bounty or grace by employer but was legitimate right of employee who renders years of selfless service to any company - It was a social security measure, which had been introduced so that employees have something to fall back on after retirement - Withholding of said amount by employer would lead to rendering object of such a scheme nugatory and a setback to concept of social justice engrafted in Constitution - Therefore,employee could not be deprived of provident fund amount in any circumstance and it was duty of employer that amount was released at earliest after cessation of service ofemployee so that employee could at least cherish fruit of his labour and did not have to run from pillar to post for his rightful claim - Respondent company which had caused enormous delay in giving necessary clearance for release of dues because of which payment of dues could not be made - Therefore, Appellant was entitled to amount of interest @8% p.a. on principal amount of his provident fund due from October 1982 to October, 2008 Appeal disposed off. Ratio

Decidendi

"Contract of personal service shall not be specifically enforced either by master or servant." JUDGMENT Kailash Gambhir, J. 1 By this appeal filed under Section 96 of the Code of Civil Procedure, 1908 the Appellant seeks modification of the judgment and decree dated 28.02.2006 passed by the learned Trial Court in thesuit filed by the Appellant to challenge his illegal termination of service by the Respondent No. 1, which was decreed in favour of the Appellant along with special damages to the tune of Rs. 60,000/- in lieu of his reinstatement, salary, leave pay and notice alongwith the amount of gratuity of Rs. 54,000/- for 18 years of service and also entitlement to a no objection certificate to enable him to get released all his dues in provident fund as per rules. 2 Brief facts of the case relevant for deciding the present appeal are that the Appellant was appointed by the Respondent company on 18.7.63 on probation for three months at a monthly salary of Rs. 250/- per month where he served in various capacities such as Accountant, Commercial Law Officer, Assistant Finance and Management etc. and on 24.8.1976 he was appointed as the Company Secretary of the Respondent Company. The Appellant claims that in November, 1976 he got an offer for a job with a Malaysian Co. on a salary of M. Dollars 1700 which was approved by the Govt. of India but the Chairman of the Respondent Company did not relieve him. The case of the Appellant is that in April 1981, he gave an opinion that on shares received from a "Birla Trust" for transfer, adequate stamp duty was not paid to have the shares transferred which was ignored by the Chairman of the

Company and as a result, the shares could not be transferred up to the date of closing of the share transfer books due to which Sh. R.C. Maheshwari, part time Director of the Respondent Company asked the Appellant to tender his resignation. That on refusal by the Appellant to give his resignation, the Respondent communicated to the Appellant vide its communication dated 06.01.1982, the termination of his service with immediate effect and also vide notice dated 20.08.1982 required the Appellant to quit and vacate Quarter No. 7184, Mandelia Road, Kamla Nagar, Delhi -110007 which was allotted to the Appellant at a monthly license fee of Rs. 15. The Appellant replied to this notice challenging his termination on the grounds that the termination of his service was made arbitrarily, with malafide intention and contrary to the principles of natural justice. Consequently the Appellant filed a suit seeking declaration that the termination of his service as Secretary is void abinitio and inoperative and also sought consequential relief's claiming payment of salary, contribution to P.F., leave with pay, gratuity, annual increment and other benefits, facilities and perks from 6th January 1982 up to the date of decree being the Secretary of the Respondent company. In addition, the Appellant sought exemplary damages and also all retirement benefits such as pension for life on the same basis on which the Respondent company paid pension to the Secretaries appointed before the Appellant in the Respondent company. The Appellant also sought leave with pay of Rs. 17,200/for the period of 171 and half days relating to unavailed leave along with interest on all claims. The learned Trial Court in the judgment dated 28.2.2006 held that the termination  of the Appellant is invalid and unlawful and the Appellant was entitled to payment of wages in lieu of notice of one year and as there was no possibility of his being reinstated in service due to the passage of long time of 24 years, therefore the Appellant was entitled to be compensated by way of payment of special damages of Rs. 60,000/- in lieu of his reinstatement in service, salary, leave pay and notice pay and the amount of gratuity of Rs. 54,000/- for 18 years of service. In addition, the Appellant was also held entitled for no objection certificate to enable him to seek release of all his dues in provident fund as per rules. In respect of the issue of awarding interest to the Appellant, the Ld. Trial Court held that although the Respondent company had withheld the legal dues of the Appellant, but the Appellant had also retained quarter No. 7184 after his license to occupy the flat had come to an end after termination of his service and hence it was held that the Appellant was liable to lose i nterest on his dues. Feeling aggrieved, the Appellant has preferred the present appeal seeking modification of the impugned judgment and decree dated 28.02.2006. 3. Assailing the judgment and decree, the Appellant appearing in person contended that since the learned trial court had held that no resolution was passed by the Board of the Respondent company for terminating the service of the Appellant, hence the Appellant as per law continued as the Secretary of the Respondent company upto 28.02.2006 and was thus legally entitled to salary and all benefits from 6.1.1982 to 28.02.2006. The Appellant further claimed that the learned Trial Court erred in awarding a paltry sum of Rs. 60,000/- as special damages towards all his claims. As per the Appellant, he was entitled to notice pay for 12 months amounting to Rs. 36,000/- plus leave with pay amounting to Rs. 17,200/- and thus out of Rs. 60,000 , only Rs. 6,800/- was actually awarded as special damages. The Appellant claims that there should be adjustment for inflation as due to fall in value of rupee for the time consumed in final disposal of litigation makes the compensation demanded years ago insufficient and hence the quantum must be liberal. The Appellant also claims that had his service not been terminated, he would have been getting lacs of rupees per annum which are being paid to the Appellant's juniors and hence he claims suitable compensation for loss of promotional opportunities. The Appellant further submitted that despite the fact the learned Trial Court held that the Agenda of retirement of Company Secretary in the meeting of Board of directors was converted into termination of service because the Respondent could not retire the Appellant before 30 years of service or before attaining the retirement age of 55 years but still denied the claim of the Appellant towards his pensionary dues on the same basis as were payable to Sh. M.C. Bagaria and Sh. M.D. Dalmia, who had previously worked as Secretaries of the Respondent. The Appellant also claimed interest @ 15% p.a. from 6.1.1982 to the date of payment as he stated that the learned Trial Court wrongly held that the Appellant was liable to lose interest as he retained the said quarter allotted to him beyond his tenure of service. The Appellant also claimed that the counter claim of the Respondent company for recovery of the said quarter is not admissible due to the fact that an individual director cannot without a specific resolution of the Board of Directors institute a suit, which fact has been overlooked by the learned trial court. 4. On the other hand, the claim set up by the Respondent company before the Trial Court was that the Appellant on being appointed as Secretary had become quarrelsome, dictatorial and had started working according to his whims and fancies and that it became extremely difficult for others to work

with him due to which the management of the Respondent company lost confidence in the Appellant and terminated his services. 5. Opposing the present appeal, Mr. Atul Shanker Mathur, learned Counsel appearing for the Respondent company submitted that the Appellant had challenged the findings of the learned Trial Court on the ground that it had not reinstated the Appellant despite holding the termination of the Appellant as illegal. Counsel for the Respondent however claims that the Supreme Court in its  judgment in Sirsi Municipality by its President, Sirsi v. Cecelia Kom Francis Tellis MANU/SC/0066/1973 : AIR1973 SC 855 has clearly held that a contract of employment if breached is not capable of specific performance and can only be enforced by a suit for damages and therefore such a declaration is not permissible under the Specific Relief Act as a result of which the Appellant cannot be granted any reinstatement with back wages. Counsel also submitted that that the only relief which could be granted was the award of compensation for the period of notice i.e. 30 days and not for a period of 12 months which was claimed by the Appellant and granted by the learned Trial Court. In support of his argument, counsel relied upon the decision of the Supreme Court in M/s Indian Oil Corporation Ltd. v. Amritsar Gas Service and Ors. MANU/SC/0513/1991 : JT 1990 (4) SC 601 where it was held that on the wrongful termination of distributorship, as the agreement was revocable by either party by giving 30 days notice, the compensation could be awarded only for that period of 30 days and not more. The counsel further argued that the Appell ant had wrongfully claimed to be a statutory employee under the provisions of Section 383A of the Companies Act as the section does not provide for the mode and manner of appointment of a Company Secretary and/or his relationship with the Company and/or his salary and terms of service etc and in the absence of such a stipulation, the relationship between the Company Secretary and the Company is governed by the terms of his employment contract with the company and the provisions of Section 383A of the Companies Act will have no application. In support of his argument, counsel relied upon the judgment of the Supreme Court in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. MANU/SC/0667/1975 : (1975) 1 SCC 421. The counsel thus urged that the Appellant has been granted much more than what was sought in his amended plaint and the entire decretal amount has been paid, on this ground alone, the appeal is liable to be dismissed. 6. I have heard learned Counsel for the parties and given my thoughtful consideration to the pleas raised by them. 7. The suit for declaration and consequential relief was filed by the Appellant against the Respondent company to claim the following relief's:

18. It is, therefore, prayed that a declaratory decree be passed in favour of the plaintiff and against the defendant declaring that the determination by the defendantcompany of the services of the plaintiff as Secretary of the defendant company is abinitio void and inoperative and contrary to the terms of appointment and the plaintiff continues to be in the service of the defendant-company as Secretary of the defendant company. The plaintiff is also entitled to the following consequential relief's, which follow the declaratory decree to be passed in favour of the plaintiff. (a) The payment of salary, contribution to PF, leave with pay, gratuity, annual increments and other benefits facilities and perks, from 6th Jan 1982 upto the date of the decree during which period the plaintiff was/is entitled to the benefits being the Secretary of the defendant-company. In case the Hon'ble Court comes to the conclusion that it is not possible to grant the prayer as contained in clause No. (a) above, then in the alternative, the plaintiff prays that having regard to contumacious conduct of defendantcompany, exemplary damages as the court deems fit may be awarded and the plaintiff may be held entitled to all the retirement benefits such as pension for life on the same basis on which the defendant-company has paid pension to Shri M.C. Bagaria and Shri M.D. Dalmia who worked as Secretary to the defendant company before the present plaintiff and right to continue to use the accommodation in his possession till his life on the same basis on which it was allowed to Shri M.C. Bagaria, Secretary of the defendant-company who retired

in 1956. AND/OR (b) That in case this Hon'ble Court comes to the conclusion that it is not possible to accept the prayer for the relief's as aforesaid, and the court holds that there has been valid determination of service by the defendant-company, then in the alternative, the plaintiff claims the following relief's: (i) Rs.500/- on account of salary from 1st January, 1982 to 5th January, 1982. (ii) Salary Rs. 36,000/- for 12 months on account of notice pay. (iii) Rs. 54,000/- on account of gratuity equal to 18 months salary for services rendered from 18th July, 1963 to 6th Jan, 1982 as per Gratuity Rules of the defendant-company, which were approved in the Meeting of the Board of Directors of the defendant-company held on 19th October, 1974 and on the basis of which the defendant-company has arranged actuarial valuation of gratuity liability from Mr. K.A. Pandit, an approved Actuary of Bombay and claimed deduction in respect thereof in its income tax Returns. A copy of the Gratuity Rules is annexed with the plaint marked. Annexure -3. Leave with pay Rs. 17,200/- for the period of 17 1 1/2 days relating to unavailed leave. Directions to the defendant-company to issue No Objection Certificate to Birla Brothers Pvt. Ltd., Provident Fund Institution for paying accumulations along with interest. 8. The said suit was contested by the Respondent company and besides refuting the case of the Appellant on merits, the Respondent also raised a counter claim to seek recovery of possession of the Quarter bearing No. 7184, Mandelia Road, Kamla Nagar, Delhi -110007 granted by the Respondent company to the Appellant during the course of his employment besides seeking money decree for a sum of Rs. 3,60,000/- and also mesne profits @Rs.10,000/- p.m. w.e.f date of filing of the counter claim. Based on the pleadings of the parties the learned trial court framed the following issues.

1. Whether the suit has been properly valued for the purpose of court fee? 2. Whether no resolution dated 6th January, 1982 was passed by the Board of Directors of the plaintiff for terminating the services of the plaintiff. 3. If issue No. 2 is affirmed was the resolution invalid? 4. Whether the services of the plaintiff as company secretary were validly terminated by the defendants? 5. On account about his pay, gratuity and leave etc, is the plaintiff entitled from the defendants? 6. Is the plaintiff entitled to the issuance of no objection certificate from the defendants in respect of the provident fund claimed by the plaintiff as prayed for in the prayer clause of the plaint? 7. Whether the plaintiff is entitled for exemplary damages? If so, to what extent? 8. Whether the plaintiff is entitled to interest. If so, at what rate? Thereafter, on 20.5.86, the following additional issue No. 9 was framed:

Issue No. 9: Whether the suit  is not maintainable in view of the provisions of law

contained in Section 14(1)(b) of Specific Relief Act, 1963? Thereafter, on 22.02.2006 on the following additional issues were framed: I.A. Whether the defendant No. 1 is entitled to possession of the premises presently in occupation of the plaintiff. 1.B. Whether the defendant No. 1 is entitled to damage /mense profit? If so, at what rate and for what period? 1.C. If issues 1-A and 1-B are decided against defendant No. 1, whether defendant No. 2 is entitled to both or any of the aforesaid two relief's? 9. The grievance raised by the Appellant in the present appeal primarily is that he was not granted full relief by the learned trial court in lieu of reinstatement and for compensation and other consequential relief's claimed by him in terms of payment of his unpaid salary, contribution to provident fund, leave encashment, gratuity, annual increments and other benefits etc. The Appellant also felt aggrieved on account of the fact that although the learned trial court has decided all the issues in his favour but still denied the appropriate relief to him. The Appellant also argued that once the trial court found his termination illegal then it ought to have allowed his reinstatement with all consequential benefits and relief's arising there from. The Appellant also argued that the burden is on the employer to establish the circumstances which would permit a departure from the normal rule of payment of full back wages. The Appellant also submitted that with the said finding of the learned trial court holding the termination  of the Appellant as illegal and void, the Appellant should have been treated as in deemed service till completion of 30 years of service or on attaining the age of 55 years which was the age of retirement for the said post of the Appellant. The Appellant also argued that he had served the Respondent company with a most unblemished record for a period of almost 20 years but the learned trial court has not granted adequate damages  by not only ignoring the clean service record of the Appellant but also by not exercising its discretion in a judicious manner. The Appellant also argued that the learned trial court has illegally deprived the Appellant of the interest amount @15% p.a. on all his over dues w.e.f. 6.1.82 till the date of actual payment. The Appellant also argued that the learned trial court has wrongly equated the said amount of interest payable to the Appellant with the license fee of the premises under the occupation of the petitioner as it was the right of the Appellant to retain the said accommodation till the completion of his tenure and at the least till all the terminal benefits were paid by the Respondents. 10. It is a settled legal position that the contract of personal service cannot be specifically enforced either by the master or the servant. The legal remedy in a contractual relationship between the master and servant is only by way of claiming the damages unless the case of such a dismissed employee  falls under any of the three exceptions i.e. (i) where such an employee is a public servant and he has been dismissed from service in contravention of Article 311 of the Constitution of India; (ii) such an employee is protected under the Industrial and Labour Laws and is entitled to claim his reinstatement under the Statutes; (iii) where a statutory body has acted in breach of statutory obligation imposed by a Statute. The Hon'ble Apex Court in the case of Sirsi Municipality by its President, Sirsi v. Cecelia Kom Francis Tellis MANU/SC/0066/1973 : AIR 1973 SC 855 while dealing with a case of a dismissed employee of municipality enunciated the legal principles concerning the said different kinds of employment in terms of following paras:

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 of employment. Any breach of contract in such a case is enforced by a suit for wrongful dismissal and damages. Just as a contract of employment is not capable of specific performance similarly breach of contract of employment is not capable of founding a declaratory judgment of subsistence of employment. A declaration of unlawful termination and restoration to service in such a case of contract of employment  would 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 relief's available under the Indian Contract Act and the Specific Relief Act which do not provide for reinstatement of a servant. 17. The third category of cases of master and servant arises in regard to the servant in the employment of the State or of other public or local authorities or bodies created under statute. 18. Termination or dismissal of what is described as a pure eon-tract of master and servant is not declared to be a nullity however wrongful  or illegal it may be. The reason is that dismissal in breach of contract is remedied by damages. 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 the case of termination or dismissal of a servant of the State or of other local authorities or statutory bodies. 19. The courts keep the State and the public authorities within the limits of their statutory powers. Where a State or a public authority dismisses an employee in violation of the mandatory procedural requirements or an grounds  which are not sanctioned or supported by statute the courts may exercise jurisdiction to declare the act of dismissal to be a nullity. Such implication of public employment is thus distinguished from private employment in pure cases of master and servant. Thus it is clear from the aforesaid that the nature of employment of the Appellant is not by virtue of any statute and thus is in the realm of private employment. 11. The Appellant laid much stress on his argument that he was appointed as Secretary of the Respondent company in terms of Section 383A of the Companies Act by the Board of Directors of the company and therefore the said Office of Secretary being a creation of the Statute, therefore the Appellant had acquired a statutory status from which he could not be removed without following the mandate of Article 311 of the Constitution of India. The Appellant also placed strong reliance on the  judgment of the Allahabad High Court in Prem Narain Srivastava v. Kanpur Chemical Works (WPC 4947/1972) where the Hon'ble High Court while dealing with a case of a Labour Welfare Officer appointed in a private company was held to be enjoying a statutory status and his termination by the employer company was held to be in utter disregard of the statutory status. The said argument taken by the Appellant is wholly fallacious due to a total misreading of the said judgment. The following paras of the said judgment would make the distinction between a private employment and a public employment amply clear.

15. The relevant criterion for determining whether a writ of mandamus can issue or an order of termination of service can be quashed are not whether the employing authority is a statutory body or not. The proper tests to be applied are whether in a particular case there is an element of public employment and the petitioner holds an office or enjoys a statutory status which is capable of protection. Where the relationship between the parties is that of master and servant, certainly the remedy would be a suit for damages and not a petition under Article 226 of the Constitution. The substance the same proposition were also emphasized in a Division Bench decision of this Court in Synthetics & Chemicals Ltd. v. G.C. Kumar (10) Speaking for the Court Dwivedi, J, after reviewing all the English and Indian Authorities held that the following principles emerged: (1) Mandamus may issue to a trading corporation to compel it to do its duty which is of a public nature. (2) A duty is of a public nature if it is imposed by charter, common law or statute. (3) Mandamus may issue to restore a person to a corporate office if the office is

of a public nature. (4) The office is of a public nature if it is created by a statute and the duties of the office effect the general public or a section thereof. (5) Article 226 empowers the High Court to issue a writ in the nature of mandamus. The power may be exercised, keeping in regard the broad and fundamental principles which guide the issue of mandamus. 16. Applying the above proposition to the facts of the present case there appears to be no doubt that the petitioner enjoyed a statutory status and hisemployment was of a public nature. The conditions of service of Labour Welfare Officers are governed by the Factories Act, 1948 and the rules framed there under. Section 49 of the Act reads as under: Section 59.  Welfare Officers. (1) every factory wherein five hundred or more workers are ordinarily employed the occupiers shall employ in the factory such number of welfare officers as may be prescribed. (2) The State Government may prescribe the duties, qualifications and conditions of service of officers employed under Sub-section (1). The State Government has framed the U.P. Factories Welfare Officers' Rules, 1955, in exercise of the powers conferred by Sections 49, 50 and 112 of the Factories Act, 1948. The rules therefore have the force of a statute and are to be deemed a part of the Act. Rule 8 provides that the Welfare Officer "shall have the status of an officer of the factory". His appointment must be on permanent basis vide Rule 10. His probation and confirmation are strictly governed by the provisions in the rules 10 and 11. Various punishments and penalties are prescribed by Rule 15 and the duties of a Welfare Officer are also defined by Rule 17. Evidently a Welfare Officer cannot be made to perform any duties according to the choice of the management but he can be assigned only those duties which are expressly provided by the rules. A list of his duties is contained in Rule 17. The said rule says that the duties of a Welfare Officer shall be: (a) to promote harmonious relations and act a liaison officer between the workers and the management; (b) to get the grievances and complaints of workers with regard to their working conditions redressed as expeditiously as possible; (c) to bring the breaches of Labour Laws and orders and statutory obligations concerning the health, safety and welfare of the workers to the notice of the manager or occupier, and to take suitable steps for the provision of amenities, such as canteens, shelters for rest, creaches, adequate latrine facilities, drinking water etc.; (d) to study the temper of the workers by friendly contact with them (inside and outside the precincts of the establishment) and bring the cases of discontent likely to result in dispute or strained relations, to the notice management, with a view to maintaining harmonious relations: (e) to encourage the formation of: (i) Joint Production Works Committees, (ii) Works Committees\1,

(iii)Co-operatives, (iv)Safety-First Committees, and (v) Welfare Committees and to assist the management in the proper maintenance of discipline, and in the promotion of all measures designed to improve the lost of workers. (f) To organize and supervise labour welfare work and to see that statutory requirements with regard to working conditions are enforced; (g) To advise the management in matters requiring special knowledge of labour conditions and labour welfare and to take suitable steps to improve the living conditions of workers; (h) To maintain a natural attitude during legal strikes or lock-outs; (i) To exercise a restraining influence over workers in going in illegal strike and over management in declaring illegal lock-out, to help in preventing sabotage and other illegal activities; (j) To detect and check bribery and corruption and to bring such cases to the notice of the management of the factory; (k) To make representation to the authorities concerned to regard to conditions of roads, bridges etc. used by labour in proceedings to and from their work; and (l) To look after the implementation and due enforcement of the provisions of (i) The Employees State Insurance Act, 1948; (ii) The Employees  State Insurance Act, 1952 and the scheme framed there under; (iii)The U.P. Industrial Housing Act, 1955; (iv)The National Small Savings Scheme; (v) The National Small Savings Scheme framed by the Central Board of workers Education." The above catalogue of the duties of a Welfare Officer leaves no rook for doubt that not only he holds an office but that it is a public office and his functions are replete with all the elements of a public employment. In fact, his duties embody a High concept of a social justice. He has to act as the Liasion Officer between the workers and the management. He has to endeavour to secure real welfare and amenities to the workers in the modern industrial setup and in so discharging his functions he has certainly in a measure to act as a curb on the management which has to be kept within bounds. In these circumstances it cannot be contended with force that a Labour Welfare Officer functions on the will of the employer. On the contrary, his office is created by the Act. It is of a permanent nature and it is a public office. If, therefore, a Labour Welfare Officer has a right to continue in his post until he attains the age of superannuation and the management or the private company chooses to terminate his service prior to that contingency or without complying with the

statutory procedure, the officer is entitled to ask for a writ of mandamus. He has a legal right to the office and the management is under an statutory obligation to retain him in office. As it would be evident from the aforesaid paragraphs of the said judgment the Labour Welfare Officer was held to be enjoying his statutory protection because of the fact that his service conditions were governed by the Factories Act and Rules framed thereunder. 12. So far the position of the Company Secretary appointed under Section 383A of the Companies Act is concerned, no such statutory rules and regulations have been framed under the Companies Act which governs the service conditions of a Company Secretary. A fine distinction between the Rules and Regulations framed by the statutory corporations and by the companies incorporated under the Companies Act has been enunciated in the Constitutional Bench judgment of the Apex Court in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi MANU/SC/0667/1975 : 1975 (1) SCC 421. The relevant paras are reproduced as under:

25. The Additional Solicitor General submitted that regulations could not have the force of law because these regulations are similar to regulations framed by a company incorporated under the Companies Act. The fallacy lies in equating rules and regulation of a company with rules and regulations framed by a statutory body. A company makes rules and regulations in accordance with the provisions of the Companies Act. A statutory body on the other hand makes rules and regulations by and under the powers conferred by the Statutes creating such bodies. Regulations in Table-A of the Companies Act are to be adopted by a company. Such adoption is a statutory requirement. A company cannot come into existence unless it is incorporated in accordance with the provisions of the Companies Act. A company cannot exercise powers unless the company follows the statutory provisions. The provision in the Registration Act requires registration of instruments. The provisions in the Stamp Act contain provisions for stamping of documents. The non-compliance with statutory provisions will render a document to be of no effect. The source of the power for making rules and regulations in the case of Corporation created by a statute is the statute itself. A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the statute. It is a body created in accordance with the provisions of the statute. .... 33. There is no substantial difference between a rule and a regulation inasmuch as both are subordinate legislation under powers conferred by the statute. A regulation framed under a statute applies uniform treatment to every one or to all members of some group or class. The Oil and Natural Gas Commission, the Life Insurance Corporation and Industrial Finance Corporation are all required by the statute to frame regulations inter alia for the purpose of the duties and conduct and conditions of service of officers and other employees. These regulations impose obligation on the statutory authorities. The statutory authorities cannot deviate from the conditions of service. Any deviation will be enforced by legal sanction of declaration by courts to invalidate actions in violation of rules and regulations. The existence of rules and regulations under statute is to ensure regular conduct with a distinctive attitude to that conduct as a standard. The statutory regulations in the cases under consideration give the employees  a statutory status and impose restriction on the employer and the employee with no option to vary the conditions. An ordinary individual in a case of master and servant contractual relationship enforces breach of contractual terms. The remedy in such contractual relationship of master and servant is damages because personal service is not capable of enforcement. In cases of statutory bodies, there is no personal element whatsoever because of the impersonal

character of statutory bodies. In the case of statutory bodies it has been said that the element of public employment or service. and the support of statute require observance of rules and regulations. Failure to observe requirements by statutory bodies is enforced by courts by declaring dismissal in violation of rules and regulations be void. This Court has repeatedly observed that whenever a man's rights are affected by decision taken under statutory powers, the Court would presume the existence of a duty to observe the rules of natural justice and compliance with rules and regulations imposed by statute. .... 39. A public authority is a body which has public or statutory duties to perform and which performs those duties and carries out its transactions for the benefit of the public and not for private  profit. Such an authority is not precluded from making a profit for the public benefit. (See Halsbury's Laws of England 3rd. Ed. Vol. 30 paragraph 1317 at p.682). 13. It would be thus seen that unlike the statutory corporations whose activities are strictly governed by various statutory enactments and rules and regulations framed there under, a company incorporated under the Companies Act is not a creation of the statute i tself but comes into existence in accordance with the provisions of a Statute i.e. the Companies Act. Such a company incorporated under the Companies Act therefore cannot be treated as a statutory body and any beneficiary of such a company be it Director, Managing Director or Company Secretary cannot be treated to be in the nature of public employment enjoying the protection of the Article 311 of the Constitution of India. None of the employees of such an incorporated company can be taken to be enjoying the statutory status where any action of removal for dismissal can only be undertaken by following any statutory rules and regulations when none such exists. 14. Applying the aforesaid legal principles, it would be quite manifest that the Appellant who was appointed as a Secretary with the Respondent company did not enjoy any statutory status and his post of Company Secretary cannot be treated to be in the nature of public employment and therefore he was not entitled to be proceeded against after setting up a proper enquiry before terminating his services. Therefore the following judgments cited by the Appellant in this regard will not be applicable to the case at hand: 1 Roshan Lal v. Union of India MANU/SC/0328/1967 : AIR 1967 SC 1889 2 Union of India v. Kewal Krishna Mittal MANU/DE/0289/1983 : 25 (1984) DLT 24

3 Tarlochan Singh v. Shriram Priston 1998 IV AD (Del) 225 4 M/s Muni Lal Talwar v. Chemo Pharma Laboratories Ltd.(Suit  No. 352/75 decided on 8.5.1987, Delhi High Court) 5 Indian Railway Construction Co. Ltd. v. Ajay Kumar MANU/SC/0166/2003 : JT 2003 (2) SC 295 The Appellant being a Company Secretary is not covered under the definition of "workmen" nor was any such case set up by the Appellant and therefore, the case of the Appellant is also not covered under the Industrial Disputes Act. The following judgments cited by the Appellant in this context would therefore not be applicable to the case:

1 Gammon India Ltd. v. Niranjan Das MANU/SC/0237/1983 : (1984) 1SCC 509 2 Workmen of Hindustan Levers Limited v. Hindustan Levers Ltd. MANU/SC/0212/1984 : AIR 1984 SC 1683 3. S.K. Verma v. Industrial Tribunal MANU/SC/0316/1980 : AIR 1981 SC 422 4. Hindustan Tin Works v. Its employers MANU/SC/0272/1978 : AIR 1979 SC 75 Thus the case of the Appellant is covered only in the 3rd category i.e. master and servant relationship, in the nature of private employment and his wrongful termination  could have entitled him only for the grant of suitable damages and undeniably to all his legitimate claims arising out of his illegal termination. 15. So far the question of illegal termination  of the Appellant is concerned, the learned trial court

clearly took a view that the Appellant had succeeded in establishing that his services were terminated illegally on 6.1.1982. So far the award of damages and grant of consequential relief's in favour of the Appellant is concerned, this Court does not find any infirmity in the final relief's granted by the learned trial court. The learned trial court has allowed payment of wages i n lieu of notice of one year. The trial court has also awarded special damages of Rs. 60,000/- in lieu of reinstatement in service. The trial court has also allowed an amount of Rs. 54,000/- towards the gratuity for 18 years of service rendered by the Appellant. The trial court also found the Appellant entitled t o a no objection certificate by the Respondent company to claim his provident fund dues. I am not inclined to interfere with the said findings of the learned trial court. 16. As would be evident from the order dated 26.2.2008 passed by this Court, during the course of the present appeal, a decretal amount of Rs. 1,14,000/- was paid by the Respondent to the Appellant alongwith costs of Rs. 6068/- to be paid by the Respondent to the Appellant within one week. The record of the proceeding sheets further shows that the Appellant was also paid a sum of Rs. 1,59,261.60 towards his provident fund dues along with interest, which can be seen from the order dated 23.10.2008 which was claimed as insufficient by the Appellant . There is some dispute between the parties with regard to the payment of interest on the amount of provident fund dues and this matter was also sent for mediation but to no avail. Due to the said dispute with regard to interest, the Appellant perhaps is still retaining the possession of the quarter bearing No. 7184, Mandelia Road, Kamla Nagar, Delhi allotted in his favour by the Respondent company. So far the finding of the learned trial court on the Issue No. 8 with regard to entitlement of interest is concerned, this Court is not inclined to interfere with the findings of the learned trial court as the trial court has granted adjustment of the amount of license fee/damages paid by the Appellant for his illegally occupying the said premises after cessation of his employment vis-à-vis the amount of interest payable by the Respondent on the amount of Rs. 60,000/- awarded by the trial court towards the damages and the gratuity amount of Rs. 54,000/-. 17. It has been clearly held by the learned trial court while deciding issue No. 8 that there is no dispute with regard to the fact that the Appellant had applied to the Provident Fund Institution for Payment of his dues. It is also apparent from the various letters placed on record by the Appellant, written to him by the Provident Fund Institution, that the Respondent company was not giving the necessary clearance, which is a necessary formality for payment of the Provident Fund dues. Admittedly, the Respondent paid an amount of Rs. 1,59,261.60 on 16.10.08 towards Provident Fund dues to the Appellant pursuant to the orders of this Court. It is a settled legal position that Provident fund is not a bounty or grace by the employer but is the legitimate right of the employee who renders years of selfless service to any company. It is a social security measure which has been introduced so that the employees have something to fall back on after retirement. Withholding of the said amount by the employer would lead to rendering the object of such a scheme nugatory and a setback to the concept of social justice engrafted in the Constitution. Therefore, the employee cannot be deprived of the provident fund amount in any circumstance and it is the duty of the employer that the said amount is released at the earliest after the cessation of the service of the employee so that the employee can at least cherish the fruit of his labour and does not have to run from pillar to post for his rightful claim . In the present case, it is clearly the Respondent company which has caused enormous delay in giving the necessary clearance for the release of the dues because of which the payment of the dues could not be made and therefore this Court is not inclined to accept the contention of the counsel for the Respondent that the controversy relating to the provident fund dues can be settled by the Appellant directly with the provident fund institution. 18. In the light of the above, the Appellant is entitled to the amount of interest @8% p.a. on the principal amount of his provident fund due from October 1982 to October, 2008 . The Respondent company is hereby directed to pay the said amount of interest to the Appellant within one month from the date of this order. 19. In the aforesaid terms, the appeal stands disposed off. © Manupatra Information Solutions Pvt. Ltd. Go to top

MANU/DE/2314/2009 Equivalent Citation: 165(2009)DLT58, (2010)IILLJ25Del, 2010(4)SLR645 IN THE HIGH COURT OF DELHI CS(OS) 2188 of 2003 and IA No. 4895/06 Decided On: 07.09.2009 Appellants: A.N. Shukul Vs. Respondent: Philips India and Ors. Hon'ble Judges/Coram: S. Muralidhar, J. Counsels: For Appellant/Petitioner/plaintiff: Naresh Kaushik, Satish Dayanandan and Aditi Gupta, Advs For Respondents/Defendant: Sujata Mehra and Hemant Phalpher, Advs. Subject: Service Catch Words Mentioned IN Acts/Rules/Orders: Indian Contract Act, 1872 - Section 23; Companies Act, 1956 - Section 617; Constitution of India Article 12, Constitution of India - Article 14 Cases Referred: Avineshwar Sawhney v. J.K. Industries Limited 152 (2008) DLT 712; Central Inland Water Transport Corporation Limited v. Brojo Nath Ganguly (1986) 3 SCC 156; Juliana Loiseau v. British High Commission;Shri R. Sen Gupta v. May and Baker India Limited; Y.K. Sethi v. BASF India Ltd. 2009 (6) AD (Del) 605 Citing Reference:

Discussed 3 Distinguished 1 Mentioned 1 Case Note: Civil - Termination - plaintiff disputed that Defendant no. 1 had terminated his service on the basis of a policy which was never made public - It was reiterated that the termination was illegal and arbitrary - Hence, this Appeal - Whether the termination of services of plaintiff was legal and valid and whether the withdrawal of duties was illegal, unjustified and sudden - Held, plaintiff had appointed an had been periodically promoted till the post of Management Group 6 - There was no change in the terms and conditions, those contained in the letter dated 3rd June 1994 by which the plaintiff was promoted to Management Group 7 were relevant - It was not as if the terminationhappened all of a

sudden - If the verbal communication to plaintiff on 2nd August 2002 was taken to be a notice issued, and then requirement of three months advance notice was clearly satisfied plaintiff received the entire benefits as per the calculation of dues together with ex gratia amount - Dispensing the services of plaintiff became necessary on account of the changed economic scenario - Hence, it could not be arbitrary or unreasonable - Appeal dismissed. Civil - Damages - Whether plaintiff was entitled to a decree for damages and whether the suit for declaration and damages was maintainable - Held, it was possible suit seeking damaged on account of wrongful termination could be maintained - However, plaintiff had unable to prove his case - Thus, the issues was against plaintiff, the question of award of damages did not arose - Appeal dismissed. Ratio Decidendi: "If the termination of an employee is wrongful, then he is liable for damages." 

Disposition: Application dismissed JUDGMENT S. Muralidhar, J. 1. This suit seeks a declaration that the termination of the services of the plaintiff by the Defendants was illegal and seeks a consequential mandatory injunction directing the Defendants to pay the plaintiff damages to the tune of Rs. 46,74,655/-. 2. The plaintiff joined the services of Defendant No. 1 Philips India Limited on 26th April 1971 as an Assistant. On 2nd July 1974 he got promoted from Grade EA-3 to EA-4 and on 4th January 1982 to the next Grade EA-5. He was promoted to Management Group-7 on 3rd June 1994. He was ultimately promoted to Management Group-6 on 15th May 1995. According to the plaintiff he was called by the Branch Head, Defendant No. 2 on 2nd August 2002 and informed that he would have to quit the service within the next three months. According to the plaintiff, "he was shocked and depressed". He informed the Branch Head that his financial commitments at that stage was such that it would not be possible for him to do so. On 9th September 2003 he was called by the Branch Service Head as well as by the General Manager (Service) to the office situated at Okhla, New Delhi and told that if he did not resign on his own, his services would be terminated unceremoniously and he would not be given any benefits in such eventuality. The plaintiff alleged that thereafter all work was taken away from him and he was not allowed to discharge his duties. He was made to sit in a corner and while away his time throughout the day resulting in deep humiliation and anxiety. Finally, the plaintiff served a legal notice dated 14th December 2002 on Defendant No. 1 protesting about the impending illegal action being contemplated against him. Soon thereafter on 19th December 2002 the Defendant No. 1 issued an order terminating the services of the plaintiff without assigning any reason. A cheque for the terminal dues was enclosed. It is stated by the plaintiff that there was an error in this as well since the terminal dues were calculated on the basis of the basic pay instead of the gross salary thus resulting in a short payment of Rs. 88,800/-. A representation dated 9th January 2003 was made by the plaintiff requesting reinstatement. Thereafter, the present suit was filed for the aforementioned reliefs. 3. In the written statement it is pointed out by Defendant No. 1 that the relationship between the plaintiff and Defendant No. 1 was purely contractual and that the plaintiff's services were terminated in terms of the said contract. There was no cause of action that had arisen in favour of the plaintiff and against the Defendants. In terms of Clause 3(c) of the appointment letter dated 26th April 1971 it was stipulated that "either party may terminate your service by giving one months notice or wages/salary in lieu thereof." Clause 5 of the promotion letter dated 3rd June 1994 by which the plaintiff was promoted to Management Group 6 stated that his services could be terminated "by either party giving the other three months written notice or salary in lieu thereof." It is accordingly stated that after enjoying the benefit of service the plaintiff cannot not seek to challenge the contract entered into by him. On facts it was submitted that the Defendant Company went through the process of reorganization and reconstruction in keeping with the highly competitive changed economic scenario and rapid changes in electronic technology. In these changed circumstances, the services of the plaintiff were no longer required. He was informed in August 2002 that he could not be retained in service and that he would be given pay for three months in lieu of notice in accordance with the terms of employment so that he could make alternate suitable arrangements. It is further pointed out that the Defendant No. 1 had taken into account the possible hardship that the plaintiff might face and he had therefore been an ex gratia amount of Rs. 2,50,000 as part of the terminal dues.

4. In his replication the plaintiff disputed that the Defendant No1 had terminated his services on the basis of a policy since such policy which was never made public. According to the plaintiff his acceptance of the three months? pay along with dues and ex gratia payment amounting to Rs. 6,54,561/- (after deduction to tax) had been under protest as evidenced from his representation dated 9th January 2003. It was reiterated that the termination was illegal and arbitrary. It is further contended that the plaintiff was discriminated vis-à-vis another employee, Mr. K.B.C. Nair who was permitted to opt for the Voluntary Retirement Scheme (VRS?) declared by the Defendant No. 1 purely on medical grounds. Mr.Nairs terminal benefits were calculated on the basis of gross salary and no the basic pay as in the case of the plaintiff. The plea of down-sizing was denied as Defendant No. 1 had advertised for the post on which the plaintiff was working. 5. On the basis of the above pleadings, this Court on 7th December 2004 framed the following issues:

1. Whether the termination of services of the plaintiff by the Defendant is legal and valid? OPP 2. Whether there was withdrawal of duties of the plaintiff and is so whether the withdrawal of duties was illegal, unjustified and sudden? OPP 3. Whether the plaintiff is entitled to a decree for damages as prayed for in the plaint? OPP 4. Whether the present suit for declaration and damages is maintainable? OPD 5. Whether the plaintiff is entitled to any damages? If so, the amount of damages? OPP 6. Relief. 6. The affidavit by way of evidence was filed by the plaintiff on 4th April 2005 and by the Defendants on 4th October 2005. The plaintiff filed the further amended affidavit on 10th March 2006. The plaintiff examined himself as PW 1. The Defendants tendered the evidence of one witness DW 1 Mr.Yashpal Mehndiratta, Deputy Manager, HR of Defendant No. 1. Issue Nos. 1 and 2 7. Both these issues touch upon the validity of the termination of the services of the plaintiff by the Defendant No. 1. The fact of the plaintiff having being appointed on 26th April 1971 and having been periodically promoted till the post of Management Group 6 is not in dispute. At the time of termination  of his services the plaintiff was working at the post of Management Group 6. The letter dated 15th May 1995 by which promotion was granted to that post has been marked as Ex.P-7. While informing the plaintiff of his revised pay and benefits, it was stated therein that "other benefits which you are presently entitled to, will continue." The plaintiff's salary was further revised on 1st April 1999, 25th April 2000, 6th April 2001 and 1st April 2002. 8. Considering the fact that there was no change in the terms and conditions, those contained in the letter dated 3rd June 1994 by which the plaintiff was promoted to Management Group 7 are relevant. Clause 5 of the said letter stated that "your services may be terminated by either party giving the other three months written notice or salary in lieu". It was submitted by learned Counsel for the plaintiff that thetermination was stigmatic since at that age and stage the plaintiff would be unable to get anotheremployment. He submitted that Mr. Nair was offered retirement under the VRS and paid terminal dues on the basis of his gross salary whereas and the plaintiff was discriminated against by being summarily removed from his services. 9. It was urged that the terminal Clause in the appointment letter has to be understood in the context of the immediate preceding Clause 4 which talks of retirement For easy convenience Clauses 4 and 5 are reproduced as under:

4. The age of superannuation from the Company's service normally is 60 years provided, however, the Company shall have absolute discretion to retire you at any time without assigning any reason after your attain the age of 58 years and for the purpose of determining this, the age recorded with the company at the time of appointment shall be considered as final and conclusive.

5. Your services may be terminated by either party giving the other three months written notice or salary in lieu. 10. It is submitted that this Court in Avineshwar Sawhney v. J.K. Industries Limited 152 (2008) DLT 712 (DB) in similar circumstances set aside the termination on the ground that subjective satisfaction of the employer for terminating the services of the employee  was not sufficient. Such subjective satisfaction had to be an objective consideration. Independent of the above arguments learned Counsel for the plaintiff submits that in view of the judgment of the Supreme Court in Central Inland Water Transport CorporationLimited v. Brojo Nath Ganguly (1986) 3 SCC 156 Clause 5 would be void in terms of Section 23 of the Indian Contract Act 1872 ('Act') and therefore, cannot form the basis of the termination of the services of the plaintiff. It is submitted that although the said decision was rendered in the context of a public sector undertaking (PSU), the principles would govern private sector employment as well. It is submitted that if the termination was wrongful then damages should follow. 11. On the other hand it is contended by learned Counsel for Defendant No. 1 that the terms of the contract were strictly complied with by it and therefore the suit must fail. Reference is made to the  judgment in Juliana Loiseau v. British High Commission to urge that the relief sought in the plaint is incapable of being granted. 12. At the outset it must be noticed that there i s no prayer made by the plaintiff seeking a declaration that Clause 5 of the conditions of service under which the termination  has been brought about is void in terms of Section 23 of the Act. In fact no such issue has also been framed. Therefore, ordinarily this Court is not really called upon to determine if Clause 5 is void. Even assuming that such question can be raised at the time of arguments, this Court observes that the reliance upon the  judgment in Central Inland Water Transport Corporation Limited v. Brojo Nath Ganguly is misplaced. The very first paragraph of the said judgment sets out the context in which it was rendered. The two issues which the Supreme Court formulated in the said case were: 1) Whether a Government company as defined in Section 617 of the Companies Act, 1956, is "the State" within the meaning of Article 12 of the Constitution?

2) Whether an unconscionable term in a contract of employment is void under Section 23 of the Indian Contract Act, 1872, as being opposed to public policy and, when such a term is contained in a contract of employment  entered into with a Government company, is also void as infringing Article 14 of the Constitution in case a Government company is "the State" under Article 12 of the Constitution? It is obvious therefore that the aforementioned decision has to be read in the context of employment  in the public sector and not in the private  sector. This Court has in Shri R. Sen Gupta v. May and Baker India Limited  (decided on 6th February 2009) also declined to entertain a challenge  to a similar Clause governing the employment in the private  sector. In Y.K. Sethi v. BASF India Ltd. 2009 VI AD (Del) 605, this Court held that in the absence of the plaintiff laying factual foundation, the Court cannot examine the question of invalidity of a Clause in the contract. Here too no such factual foundation has been laid. 13. In Avineshwar Sawhney v. J.K. Industries Limited, the evidence led revealed that the terminationwas account of the management losing confidence in the employee and in his capacity to discharge his duties. Further the employee there was held to have been inefficient as a Production Manager since he could not improve the quality and productivity. The trial Judge had accepted the statement of the witness of the Management to this effect. The Division Bench in those circumstances observed that "mere statement of the witness of the respondent is treated as gospel truth by the learned Single Judge with the remarks that it was the 'subjective satisfaction' of the respondent. Such subjective satisfaction had to be on objective considerations." It was further observed that in view of the stand taken by the employer about the quality of the production of the employee, "the burden lay on the respondent to place on record necessary material to show that the quality as well as quantity of production had gone down during the period when the appellant was in charge of the production on the basis of which opinion was formed that he had become ineffective as Production Manager. Mere ipse dixit of the respondent in this behalf would not suffice." It was in those circumstances that the termination was held to be bad in law. 14. In the considered view of this Court the facts of the present case are entirely different. Thetermination in the instant case cannot be viewed as being stigmatic. The letter dated 19th December 2002 terminating the services of the plaintiff reads as under:

This is to advise you that the Management has decided to terminate your service with effect from the close of business hours on 19th December 2002 and after this date and time, you will cease to be an employee  of the Company. However, under the name of employment, you will be paid a sum equivalent to 3 month's salary in lieu of notice. By a copy of this letter, we are advising Salaries Department to settle your dues as per the following details. Enclosed Annexure -1 specifies payment of "long term benefits" and "guidelines to settlement of dues" 30 days monthly salary for December 2002 3 months' salary including monthly allowances One time ex-gratia of Rs. 2,50,000 subject to tax Basic salary for 256 days in lieu of PL accumulations. 15. In the written statement it has been explained that the said decision was taken on account of the reorganisation and reconstruction that the Defendant No. 1 had to undertake on account of the highly competitive changed economic scenario and rapid changes in electronic technology. The plaintiff was therefore sounded out in August 2002 that he would have to leave. He never objected to the terms and conditions. This is plain from the foll owing reply given by him during the cross-examination:

The terms and conditions of the documents Ex.P1, P3 to P6 were signed after going through their contents. I did not make any representation objecting any terms and conditions of documents Ex.P1, P3 to P6 and D6 in writing. Mrs. Shivani Rao had called me in the office on 2nd August 2002. After 2-8-2002 I did not make any representation in writing to the management (vol.) Mrs. Shivani Rao spoke to me verbally to leave the company as I had already attained the age of around 53. Thereafter I asked from her as to what is the reason for that, then she replied that she cannot say more as this is the policy of the company. Since I did not receive anything from management in writing, so I did not make any representation to senior management in writing. I was called on 9th September 2002 in the office by Mr. N.K. Gupta when I was working in the field where Mr. Sudhir Kohli, Mr. R.P. Singh, General Manager (Personnel) were also present there. They had asked me on that day to leave the company as this is the policy of the company. I do not remember exact location as to where I was present at the time of receiving phone call from Mr. N.K. Gupta. I was looking after the South Delhi market and East Delhi market but I was present in the South Delhi market at that time. I do not make any representation even after 9th September 2002 in writing as I was conveyed verbally. I have gone through the plaint as well as replication before signing the same. From 16-9-02 onwards all my works were withdrawn by Mr. N K Gupta. I asked Mr. N K Gupta as to why it is being happened to me, he replied that 'whatsoever I had conveyed to you that is as per the instructions of Mr. Sudhir Kohli.