JUDGMENT
B.L. Hansaria, C.J.
1. The petitioner impugns Annexure-1 dated 28-5-1991 by which he was informed by opp. party No. 2 M/s. Orissa Textile Mills Ltd. (hereinafter referred to as ‘ the Company’ also the Mills’) that he would no more be required as Legal Adviser with effect from 1-6-1991. His case is that he was an employee of the Company and the impugned communications amount to termination of service which had been ordered without complying with the principles of natural justice, and so, he seeks reinstatement.
2. Two points in the main need our determination :
(1) Whether the petitioner was an employee of the Mills or was mere retainer as Legal Adviser?
(2) Whether a direction to reinstate, even if the present be a case of termination of service as an employee, can be issued ?
3. To answer the first question, some broad facts may be noted. The petitioner was provisionally appointed as a Junior Retained Lawyer vide Annexure 2 dated 19/20 November, 1975 on a monthly retaining fee of Rs. 100/- with effect from 1st December, 1975 Then, he came to be appointed as a Junior Legal Adviser in the Company vide Annexure 3 dated 26-7-1976 on the term and conditions mentioned in that document. Two of these terms deserve notice :
(1) That he was required to devote “whole time” to attend the duties entrusted to him from time to time including appearance and conducting the Company’s affairs in the law Courts.
(2) He was also required to maintain strict secrecy and not to divulge or disclose or make public except under legal obligation in the affairs or matters of the Company, which may come to his Knowledge during the course of his engagement” in the Company.
Annexure A/2 dated 24-1-1983, an office order No. 1259 of the Company, states that the management was pleased to retain the petitioner as the Company’s Legal Adviser. The professional fee for legal advice was fixed at Rs. 1000/- per month. By office order No. 764 dated January 1, 1984, the petitioner was engaged as a “whole-time” Legal Adviser on a monthly remuneration of Rs. 1900/-. This document also states that the petitioner will not take up “any other outside cases” without specific prior permission from the Mills.
4. On the aforesaid broad facts, let it be seen whether the petitioner was merely a retainer of the Company or its employee. As to when master and servant relationship comes into existence has been a subject-matter of various decisions of the apex Court. We may first refer to the Constitution Bench decision in State of U. P. v. A. N. Singh, AIR 1965 SC 360, in which the question for determination was as to when a Tahsildar appointed by the Government Treasurer was entitled to the protection of Article 311 of the Constitution. The question as to when master and servant relationship comes into existence was dealt in paragraph 8 by stating below :
“Whether in a given case the relationship of master and servant exists is a question of fact, which must be determined on a consideration of all material and relevant circumstances having a bearing on that question. In general, selection by the employer, coupled with payment by him of remuneration or wages, the right to control the method of work and a power to suspend or remove from employment are indicative of the relation of master and servant. But co-existence of all these indicia is not predicated in every case to make the relation one of master and servant. In special classes of employment a contract of service may exist, even in the absence of one or more of these indicia. But ordinarily the right of an employer to control the method of doing the work, and the power of superintendence and control may be treated, as strongly indicative of the relation of master and servant, for that relation imports the power not only to direct the doing of some work also the power to direct the manner in which the work is to be done. If the employer has the power, prims facie, the relation is that of master and servant.”
(Emphasis ours)
5. In the similar vein is the decision of another Constitution Bench decision in State of Assam v. Kanak Chandra, AIR 1967 SC 884, in paragraphs 9 and 10 of which the present aspect has been dealt with while considering as to whether a Mauzadar holds a civil post under the State under Art. 311 of the Constitution, It was stated in paragraph 9 that the existence of relationship of employment was indicated by the State’s right to select and appoint the holder of the post, its rights to suspend and dismiss him, its right to control the manner and method of his doing the work and the payment by it of his wages or remuneration. It was then stated that the relationship of master and servant may be established by the presence of all or some of these indicia in conjunction with other circumstances and is a question of fact in each case. In paragraph 10 it was stated that for a Mauzadar to be governed by Art. 311, a post must exist and a post under the State is an office or position to which duties in connection with the affairs of the State are attached, In paragraph 12, the submission of the counsel for the State that a Mauzadar does not draw a salary was answered by saying that a post outside the regularly constituted service need not necessarily carry a definite rate of pay. The fact that the post of a Mauzadar carries with it a remuneration by way of commission on collection of government dues was held to be sufficient in this regard.
6. We may next refer to Paradip Port Trust v. Their Workmen, AlR 1977 SC 36. in which the question for determination was as to when a legal representative can be regarded as an employee. Determination of this question had become necessary to decide as to whether an advocate could be allowed to represent the appellant before the Industrial Tribunal in view of what has been stated in Section 36 of the Industrial Disputes Act. Division Bench of three learned Judges opined that if a legal practitioner is appointed as an officer of the management and is in its pay and control and is not a practising advocate, he can do so. On facts, it was found that the advocate (who happened to be Shri T. Misra of this Bar) could not claim to be an officer of the Port Trust because he was a legal consultant. It was noted in paragraph 25 that Shri Misra was neither in the pay of the Company nor under its control and enjoyed freedom as any other legal practitioner to accept cases from other parties the only condition in this regard being that “he will not appear in any suit or appeal against the Port, unless he has ascertained from the Chairman that his service on behalf of the Port will not be required.” As to this condition it was observed that it showed that although Shri Misra was a retainer with fixed fees for appearance in cases, “there is no absolute ban to appear even against the Port”, which condition was not said to be at all consistent with the position of an officer of the appellant.
7. Shri Nanda has referred to a Single Judge decision of the Punjab and Haryana High Court in Indian Sulphacide Industries v. Labour Court, (1992) 65 FLR 705, in which a practising advocate engaged by a company on retainarship basis was not hold to be a workman Under Section 2(s) of the Industrial Disputes Act, 1947. At page 707, the learned Judge noted some decisions including that of the Supreme Court in Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishments, (1973) 27 FLR 350, in which the case law was re-examined and the Court found that the control over the working of the employee was not only an important factor but in many cases a decisive factor in order to determine whether the relationship of master and servant exists. While applying the ratio of the judgments, the learned Judge stated that there was no element of relation of employer and employee between the parties, inter alia, because the respondent himself had conceded that he was appearing before the High Court Judges and the Tribunals, which was taken to be the implied admission that he was a practising advocate.
8. Finally, reference may be made to another Single Judge decision of the Allahabad High Court in Jay Shree Tyres and Rubber Products v. K. C. Shrivastav, 1992 LIC 2263, in which a doctor appointed by the factory on “retainership basis” was not regarded as a workman, because he was not working under the supervision, control and direction of th8 factory and had also no fixed regular duty hours.
9. Let us see whether on the basis of what has been noted regarding the legal position, the petition, the petitioner can be regarded as an employee of the Company. The first fact which may be mentioned in this connection is that the petitioner was to devote his whole time in working for the Company. Then, he could not take up “any other outside case” without specific prior permission from the Company. Another important aspect is that the petitioner was being paid a lumpsum amount of Rs. 1900/- irrespective of the number of cases in which he had appeared or which he conducted. These three factors go a long way to establish the case of the petitioner. It may be pointed out that in Paradip Port Trust case, the condition was that the incumbent would not appear in any suit or appeal against the Port, whereas in the present case the petitioner could not appear in any outside case. So, he had virtually no freedom left which distinguishes this case from that of Paradip Port Trust. Shri Nanda, however, submits that the fact that the petitioner was “appearing” in some cases of which mention has been made in Annexure 6/1 also would show that he was “conducting his practice” and not really serving the company which aspect of the matter had been taken note of in Indian Sulphacide’s case (supra) by the Punjab and Haryana High Court because of which the advocate was not regarded to be a workman. As to this, we should like to point out that the petitioner was appointed as a Junior Legal Adviser for his “appearance” on behalf of the company as would appear from condition No. 3, of which mention has been made in Annexure 3. So, from the use of the word “appearance” in Annexure 6/1, it cannot be said that it was a part practice of the petitioner and not an employee of the company. Further, as regards independent practice of the petitioner, there is absolutely nothing on record to show that, apart from the cases of the company, he had conducted any case of an outsider ;so he was really not in practice, which aspect had weighed with the apex Court in Paradip Port Trust case and with the Punjab and Hariyana High Court not to hold the incumbents as employees.
10. The petitioner’s work was thus being fully controlled by the company (1) he has to devote whole time and(2) he cannot take up any outside case without prior permission. The result was, he ceased to be a legal practitioner and was appearing and conducting the cases of the company only. As its Law Officer ? What else ?
11. Shri Nanda, however, submits that the petitioner being an advocate cannot be a salaried employee as long as he is in practice, because of what has been stated in Rule 49 of the Bar Council of India Rules. There are two answers to this. Firstly as already indicated, we do not regard the petitioner to be in “practice”, and secondly, the second paragraph of Rule 49 states that nothing in Rule 49 shall apply to a Law Officer, inter alia, of any Public Corporation despite his being a full-time salaried employee.
12. Shri Nanda then contends that the petitioner cannot be said to be an “officer” as defined in Section 2(3) of the Indian Companies Act, 1956 because of which he is not one of the persons who can appear on behalf of the company. This submission is not much relevant because the appointment order as at Annexure 3 has specifically authorised the petitioner to appear on behalf of the company.
13. Shri Nanda would not leave the matter at this as he pursues by submitting that the term in Annexure 3 that the petitioner shall maintain absolute secrecy relating to the affairs and matters of the company which has come to his knowledge would indicate that the company had Section 126 of the Evidence Act in mind which prohibits a barrister, an attorney, pleader or vakil to disclose any communication to him in the course and for the purpose of his employment as such indicating that the petitioner was taken to be one of the types of persons mentioned in Section 126. This is too far-fetched an argument and cannot deflect the intention of the company to treat the petitioner as its employee by fully controlling his work for the reasons stated above.
14. The final attempt to whittle down the status of the petitioner as an employee is that he is not one of the persons visualised by Order 3 of the Code of Civil Procedure who alone can appear in a case because the petitioner can neither be said to be a party in person nor recognised agent. This submission has also not persuaded us to hold that the petitioner was not an employee about which we are otherwise satisfied from the terms and conditions of the appointment which speak about full control over the working of the petitioner which is a very important and almost decisive test in this regard.
15. Shri Nanda continues and contends that there was no post of Legal Adviser, as would appear from the further affidavit filed on 10-12-1992 supported by some documents. Some reference is also made to the fact that the petitioner was being paid on vouchers being submitted by him relating to the various expenses incurred by him in connection with Court cases and also his monthly consolidated remuneration. As to this payment, Shri Patnaik appearing for the petitioner draws our attention to the use of the word ‘salary’ in Annexures M-2/1 and N-2/1 etc. Though in Kanak Chandra’s case (AIR 1967 SC 884) the apex Court had stated in paragraph 10 that a post must exist before any person can be given the protection of Art. 311 relying on which observation some reliance is sought to be placed by Shri Nanda to contend that the petitioner was not in the service of the company. In Kanak Chandra’s case, the necessity of the existence of the post was, however, mentioned, because in that case the question was whether the Mauzadar can be said to be holding a ‘civil’ post, of which Art. 311 speaks. Kanak Chandra’s case cannot be taken to be a decision to hold that if in any concern a post does not exist, the incumbent cannot be regarded as a servant or employee of that concern.
16. The fact that the petitioner has not been shown to be an employee in some of the communications, or for that matter, the payment made to him was described as ‘salary’ in some documents does not enable us to decide the case either way, because sometimes words are used without realising the legal connotation of the same, and a case of the present nature cannot be decided merely by labels put on ‘he contents. What has rather to be looked into is the heart of the matter, for which purpose external face does not count.
16-A. Keeping in view all the facts and circumstances of the case, we hold that the petitioner was an employee of the company.
17. The next question is whether an order of reinstatement can be passed in a case of the present nature. Under the common law, the Court cannot ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. That is also the effect of the provision contained in Section 14 of the Specific Relief Act. But then, the law has carved out some exceptions in this regard. This view was first propounded in S.R. Tiwari v. District Board, Agra, AIR 1964 SC 1680, in which the three exceptions mentioned were : (i) where a public servant is sought to be removed from service in contravention of the provision contained in Art. 311 of the Constitution ; (ii) where a worker is dismissed and an Industrial Court orders for reinstatement : and (iii) where an employee of a statutory body has been dismissed in breach or violation of a statutory provision. To the same effect are the decisions in U. P. State Warehousing Corporation v. C. K. Tyagi, AIR 1970 SC 1244 and Indian Airlines Corporation v. Sukhdeo Rai, AIR 1971 SC 1828. The matter was exhaustively dealt in Sirsi Municipality v. C. K. P. Tellis, AIR 1973 SC 855, following which in Executive Committee of Vaish Degree College v. Lakshmi Narain, AIR 1976 SC 888: Deepak Kumar Biswas v. Director of Public Instruction, AIR 1987 SC 1422 and Sri Anadi Mukta Sadguru v. V.R. Rudani, AIR 1989 SC 1607, the same view was taken.
18. Shri Patnaik appearing for the petitioner has taken pains to submit that apart from the three aforesaid exceptions, if the employment be in the nature of public employment, order for reinstatement would be permissible. This submission is largely based on the judgment of Mathew. J. in Sukhdev Singh v. Bhagatram, AIR 1975 SC 1331. in which case the Constitution Bench was seized with the case of some employees of the Oil and Natural Gas Commission, Life Insurance Corporation and Industrial Finance Corporation, and the point for consideration was whether in case of dismissal of employees of such entities, order of reinstatement can be passed. Mathew, J. in his concurring judgment brought in the concept of public employment as the entities in question were public corporations which were regarded as the third arm of the Government (see paragraphs 74 and 86). It was, then stated in paragraph 87 that a Public Corporation is a legal entity established normally by Parliament and always under legal authority, usually in the form of a special statute. In paragraph 89, it was thereafter stated that in under-developed and poor countries, the motivation for the creation of Public Corporation plays a larger part, to “which effect Industrial Policy was formulated in 1948, so also in 1956. In such corporations, the element of personal relationship between employer and employee loses meaning and it is because of this that the traditional concept of non-enforcement of personal service loses its significance.
19. A perusal of what has been stated in paragraph 113 makes it very clear that the learned Judge when he spoke about public employment and took a view that persons engaged in such employments can seek declaration for continuance in service, the corporations which were before the Court were in mind, and not any and every corporation registered under the Companies Act. It is regarding employees of these corporations that it was stated in paragraph 117 that the corporate employers are impersonal and the service under them cannot be taken to be as mere contract of personal service, which was the reason under the common law and is the reason under the Specific Relief Act not to specifically enforce the same. The difficulty in finding employment was also taken note of in this regard. In paragraph 118, the learned Judge quoted what Lord Wilberforce stated in Malloch v. Aberdeen Corporation, (1971) 1 WLR 1578, in which the law relating to pure master and servant relationship was confined to those cases in which there was no element of public employment. It was then stated in paragraph 119 that employment under public corporations of the nature under consideration is public employment.
20. From the above, it is clear that even Mathew, J. wanted those employments to be characterised as public employments in which the employees were working under public corporations of the type which were under consideration in the above case. What Chinnappa Reddy, J, stated in paragraph 22 of U P. Warehousing Corporation v. Vijay Narain, AIR 1980 SC 140, which is also referred by Shri Patnaik, does not advance the matter because the learned Judge in that paragraph was also speaking about some element of public employment in which case the employee would have been beyond the reach of the rule which denies him access to a Court to enforce the contract of employment.
21. Let us see whether the petitioner’s service under the company at hand can be characterised as public employment. For this purpose, we have to know what is the type and composition of the company. There is no dispute that it is one which has been registered under the Companies Act and is not a creature of any special statute. Though Shri Patnaik has in passing referred in this connection to the Sick Textile Undertakings (Nationalisation) Act, 1974, that Act has no application because the company is not one which has been mentioned in the first schedule to the Act, to which alone that Act applies as per the definition of ”sick textile undertaking” given in Section 2(1)(f) of that Act.
22. Some strength is also sought to be derived from the enactment named the Orissa Textile Mills Ltd. (Acquisition of Shares) Act, 1983. A perusal of this Act shows that the shares of the company were acquired with a view to securing proper management of the affairs of the company. So, the effect of this Act is that the share-holding now vests in the State Government. This does not change the character of the company and it cannot be said that it had become a public corporation of the type Justice Mathew mentioned in Sukhdev Singh’s case. The vesting of the ownership of a company in the State Government does not at all change the character of the company, namely, it being one registered under the Companies Act. So, we hold that the present was not a case of public employment, and even the view of Mathew. J. does not assist the petitioner.
23. Shri Patnaik argues in the alternative that the company should be taken to be a statutory body. As to which body can be so characterised had also been the subject-matter of discussion in Sukhdev Singh’s case itself in paragraph 25 of which Ray, C. J. stated as below :
“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.”
This matter was further examined in Vaish Degree College (supra) and this is what was stated in paragraph 9 in this connection :
“………the position seems to be that the institution concerned must own its very existence to a statute which would be the fountain-head of its powers. The question in such cases to be asked is, if there is no statute, would the institution have any legal existence ? If the answer is in the negative, then undoubtedly it is a statutory body, but if the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory provisions, it cannot be said to be a statutory body.”
There cannot be any doubt that a company which is merely registered for some purposes under the Companies Act does not owe its existence to the Companies Act. It merely is governed by some provisions of the Companies Act. If the submission of Shri Patnaik were to be taken to its logical conclusion, even partnership firms registered under the Indian Partnership Act, 1932 shall have to be regarded as statutory bodies, which would render this concept almost meaningless and reduce its significance to a vanishing point.
24. In view of the above, we cannot hold that the company at hand is a statutory body. The first requirement of the third exception, therefore, does not exist. As to the second requirement, which is violation of any statutory provision, we would, however, say that in view of this Court’s decision in Basanti Mohanty v. State of Orissa, 72 (1991) CLT 127, violation of natural justice would satisfy this part of the requirement inasmuch as natural justice now has been accepted to be a part of Article 14 of the Constitution because of which violation of natural justice would be Violation of Art. 14 which would mean violation not only of statutory provision but of constitutional provision also, which stands on a higher pedestal. May it be stated that Special Leave Petition filed against the judgment of this Court in Basanti Mohanty has been dismissed by the Hon’ble Supreme Court.
25. Thus, though in the present case, of the two requirements of the third exception (which alone is attracted in the present case), the second is fulfilled, the first is not. But then, for this exception to operate, both the requirements must be satisfied. This being not so, we cannot order for reinstatement in the present case, as a writ Court is not the proper forum to award damages in case of even wrongful termination.
26. We are, therefore, constrained to dismiss the petition, leaving it open to the petitioner to seek redress of his grievance, if so advised, in the Civil Court, which, on being approached, would pass such orders as would be legal and just.
B.N. Dash, J.
27. I agree.