PETITIONER:
EXECUTIVE COMMITTEE OF U.P. STATE WAREHOUSINGCORPORATION, LI
Vs.
RESPONDENT:
CHANDRA KIRAN TYAGI
DATE OF JUDGMENT:
08/09/1969
BENCH:
VAIDYIALINGAM, C.A.
BENCH:
VAIDYIALINGAM, C.A.
SHELAT, J.M.
CITATION:
1970 AIR 1244 1970 SCR (2) 250
1970 SCC (2) 838
CITATOR INFO :
RF 1971 SC1828 (10)
R 1972 SC1450 (4)
RF 1973 SC 855 (20,21,42)
O 1975 SC1331 (26,31,187,189)
R 1976 SC 888 (14,31)
F 1977 SC 747 (17)
RF 1980 SC 840 (7,8,10,11)
RF 1987 SC1422 (10)
RF 1989 SC 341 (11)
RF 1990 SC 415 (16)
RF 1991 SC1525 (10)
ACT:
Agricultural Produce (Development and Warehousing)
Corporation Act (28 of 1956), s. 54 and Regulations made
thereunder--Regulation 16(3)--Dismissal of employee without
following procedure--If employee entitled to reinstatement
or only damages--Specific Relief Act (1 of 1877). s. 21.
HEADNOTE:
Under s. 28 of the Agricultural Produce (Development and
Warehousing) Corporation Act, 1956, the appellant was
established as the Warehousing Corporation of the State of
U.P. Section 54 of the Act gives power to 'a Warehousing
Corporation to make regulations not inconsistent with the
Act and the Rules made thereunder and the regulations are to
provide for all matters for which provision is necessary or
expedient for the purpose of giving effect to the provisions
of the Act. Regulation 11 deals with termination of the
service of an employee other than by way of punishment,
while regulation 16 deals with penalties. Under regulation
16(3) an employee, on whom the punishment of dismissal is to
be imposed, has to be given an opportunity, of tendering his
explanation in writing, for cross-examining the witnesses
against him, and for producing evidence in his defence.
The respondent was a warehouseman in the employment of
the appellant. Certain charges were framed against him and
he was suspended pending enquiry into. the charges. After
receiving his explanation, the Enquiry Officer did not take
any evidence in respect of any charge. Instead, he met
various persons and collected information, and gave his
findings on the various charges on the basis of the
enquiries made by him and the records. Even the information
so collected was not put to the respondertl. On the basis
of those findings of the Enquiry Officer the respondent was
dismissed from service. He. filed a suit challenging the
order of dismissal on the ground that there was a violation
of regulation 16(3) and prayed for a declaration that the
order'was null and void and that he was entitled to be
reinstated with full pay and other emoluments. On the
questions whether: (1) the dismissal was not in accordance
with regulation 16(3); and (2) the relationship being one of
personal service the respondent was entitled to the
declaration for reinstatement.
HELD: (1) The termination of the respondents service
was not under regulation 11, but under regulation 16; and
the procedure prescribed by regulation 16(3) was not
followed by the Enquiry Officer in the present case.
(2) A declaration to enforce a contract of personal
service will not normally be granted. The! exceptions are:
(i) appropriate cases of public servants who have been
dismissed from service in contravention of Art. 311; (ii)
dismissed workers under industrial and labour law; and (iii)
when a statutory body has acted in breach of a mandatory
obligation imposed by a statue. [267 G]
251
In the present case, a breach has been committed by the
appellant of regulation 16(3) as the procedure indicated
therein was not followed. The order of dismissal however was
passed by the authority who could pass the order.' Such an
order made in breach of the regulations would only be
contrary to the terms and conditions of relationship between
the appellant (employer) and the respondent (employee), but,
it would not be in breach of any statutory obligation,
because, the Act does not guarantee any statutory status to
the respondent, nor does it impose any obligation on the
appellant in such matters. Therefore, the violation of
regulation 16(3) as alleged and established in this case,
could only result in the order of dismissal being held to be
wrongful, and in consequence making the appellant liable for
damages, but could not have the effect of treating the
respondent as still in service or entitling him to
reinstatement. [271 B--E]
Dr. S, B. Dutt v. University of Delhi, [1959] S.C.R.
1235 and S.R. Tewari v. District Board, Agra, [1964]3 S.C.R.
55, followed.
Life Insurance Corporation of India v. Sunil Kumar
Mukherjee, [1964] 5 S.C.R. 528, distinguished.
Vine v. National Dock Labour Board, [1956] Barber v.
Manchester Hospital Board, [1958] 1 All E.R.322 and
Francis v. Municipal Councillors etc. [1962] 3 All
E.R.633, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 559 of 1967.
Appeal by special leave from the judgment and decree
dated October 25, 1966 of the Allahabad High Court in Second
Appeal No. 4275 of 1965.
S.T. Desai, Naunit Lal and D.N. Misra, for the appellant.
B.R.L. lyengar, S.K. Mehta, and K.L. Mehta, for the
respondents.
The Judgment of the Court was delivered by
Vaidialingam, J. This appeal, by special leave, by
the defendant-appellant, is directed against the decree and
judgment, dated October 25, 1966 of the Allahabad High Court
in Second Appeal No. 4275 of 1965 holding that the order,
dated March 10, 1964 passed against the respondent
dismissing him from service, null and void and that he is
entitled to. be reinstated with full pay and emoluments.
The respondent-plaintiff originally entered service
with the appellant as a Technical Assistant in November
1958 and later he was promoted to the post of Warehouseman
on October 15, 1959. He was confirmed in 1962 in the said
post. Certain charges were framed against the respondent
and pending the enquiry into those charges he was placed
under suspension on
252
September 9, 1963. After an enquiry the respondent was
found guilty and in consequence dismissed from service of
the appellant by order dated March 10, 1964. The respondent
instituted Civil Suit No. 201 of 1964 challenging the order
of dismissal. According to him the various allegations
made against him were vague and had not been established and
there has been no proper enquiry conducted against him. The
enquiry, according to him, was contrary to the principles
of natural justice without giving him an opportunity to
place his defence and it was also held in disregard of cl.
16 of the Regulations framed by the appellant. He also
claimed that he was entitled to the protection under Art.
311 of the Constitution. On these allegations the plaintiff
prayed for a declaration that the order, dated March 10,
1964 .dismissing him from service, was null and void and
that he was entitled to be reinstated with full pay and
other emoluments.
The appellant-defendant, in its written statement,
pleaded that the enquiry into the charges leveled .against
the plaintiff was made properly and in compliance with the
provisions of the Regulations and the plaintiff-respondent
had been given full opportunity to participate. in the
enquiry which he also did. The appellant pleaded that the’
respondent was no.t entitled to the protection of Art. 311
of the Constitution. It also pleaded that the order of
dismissal passed against the respondent was perfectly
justified and that the suit was false and had to be
dismissed with costs.
The trial Court held that the plaintiff was no.t
entitled to the protection under Art. 311 of the
Constitution. But it held that in conducting the enquiry,
the Enquiry Officer did not comply with the provisions of
sub-cl. (3) of el. 16 of the Regulations framed by the
appellant and that there had been a violation of the rules
of natural justice. In consequence the trial Court held
that the order dismissing the plaintiff was illegal; but in
considering the question as to whether the plaintiff was
also entitled to the further relief claimed by him, viz., of
reinstatement with full pay and emoluments, the trial Court
was of opinion that in view of s. 21 of the Specific Relief
Act, 1877 the plaintiff was not entitled to that relief.
Ultimately the Trial Court granted a declaration, by its
judgment dated March 24, 1965 that the order of dismissal
dated March 10, 1964 was void and ineffective and decreed
the suit with costs.
The appellant challenged this decision in appeal before
the Civil Judge, Manipuri, in Civil Appeal No. 69 of 1965.
The respondent filed a Memorandum of Cross Objections
challenging the decree of the trial Court declining his
relief for reinstatement with full pay. The learned Civil
Judge, by his decree and judgment dated September 4,
1951 dismissed the appeal and
253
allowed the Memorandum of Cross-Objections filed by the
respondent. The result was that the plaintiff’s suit was
decreed, granting both the reliefs as prayed for by him.
The appellant again challenged the decrees of both the
lower Courts before the Allahabad High Court in Second
Appeal No. 4275 of 1965. The High Court has, by its
judgment dated October 25, 1966 dismissed the appeal. It
agreed with the findings recorded by the two Subordinate
Courts that the enquiry proceedings are vitiated by a
violation of the principles of natural justice and also
not being in accordance with Regulation no. 16 ( 3 ).
Regarding the declaration for reinstatement, the High
Court was of the view that the rules and the; Regulations
framed under the Agricultural Produce (Development and
Warehousing) Corporations Act, 1956 (Act 28 of 1956)
(hereinafter called the Act) had statutory force and that as
there had been a violation of Regulation no. 16 ( 3 ) ,
the plaintiff was entitled to the declaration.
Mr. S.T. Desai, learned counsel for the appellant
Corporation raised two contentions: (1 ) A full and fair
opportunity was given to the respondent in the enquiry held
against him and there has been no violation of Regulation
no. 16(3). The finding on this point by the High Court and
the Subordinate Courts is erroneous. (2) Even on the
basis that the enquiry is vitiated by non-complianCe with
the provisions of Regulation no. 16(3) framed by the
Corporation, the relief declaring that the plaintiff is
entitled to be reinstated in service with full pay should
not have been granted as by doing so the Courts have
departed from the normal rule that the specific performance
of a contract of personal service will not be enforced.
In any event, counsel urged that there are no. special
circumstances justifying the grant of that relief in this
case.
Mr. B.R.L.Iyengar, learned counsel for the respondent,
pointed out that the findings that the enquiry held was not
in accordance with Regulation no. 16(3) and that there has
been a violation of the principles of natural justice, are
concurrent findings recorded by all the Courts and those:
findings are fully supported by the evidence on record.
Regarding the second contention, Mr. Iyengar pointed out
that when an order of dismissal has been passed in violation
of a statutory provision–as in this case the Regulations–a
declaration granted in favour of the respondent is
justified.
The first contention raised by Mr. Desai relates to the:
question as to whether the enquiry held against the
plaintiff was in accordance with sub-el. ( 3 ) of Regulation
16 of the Regulations framed by the appellant and whether
the enquiry is vitiated by
254
a violation of the principles of natural justice. All the
Courts have held that the respondent is not entitled to the
protection under Art. 311 of the Constitution. Therefore the
only question for consideration is whether the enquiry has
been properly conducted in accordance with Regulation no.
16(3). As pointed out by Mr. Iyengar, the findings on facts
on this point have been recorded concurrently by all the
Courts as against the appellant.
It is now necessary to briefly refer to some of the
provisions of the Act under which the appellant has been
constituted and is functioning, as also the Regulations
framed by the Board. The Act is one to provide for the
incorporation and regulation of corporations for the
purpose of development and warehousing of agricultural
produce on cooperative principles and for matters
connected therewith. Section 2 defines certain
expressions, including ‘appropriate Government’, ‘Board’,
‘Central Warehousing Corporation’, ‘prescribed’, ‘State
Warehousing Corporation’ and ‘Warehousing Corporation’. The
expression ‘Board’ means the National Co-operative
Development and Warehousing Board established under s. 3.
‘State Warehousing Corporation’ (the appellant is one
such) means a Warehousing Corporation for a State
established under s. 28. Section 3 provides for the
establishment by the Central Government of a Corporation by
the name of National Co-operative Development and
Warehousing Board. Section 17 provides for the Central
Government establishing a Corporation by the name of
Central Warehousing Corporation. Section 28 provides for
the State Government establishing a Warehousing Corporation
for the State. As pointed out earlier, the appellant is the
Warehousing Corporation for the State of Uttar Pradesh,
established under this section. Section 34 lays down the
functions of a State Warehousing Corporation. Section 35
provides for the; composition of the Executive Committee of
a State Warehousing Corporation. Section 52 gives power to
the appropriate Government to make rules to carry out the
purposes of the Act and sub-s. (2) deals with the
various matters in respect of which rules may be framed
without prejudice to the generality of the power contained
in sub-s. ( 1 ). Sub-s. (3 ) provides that all rules
made by the appropriate Government under s. 52 shall, as
soon as may be after they are made, be laid before both
Houses of Parliament or the Legislature of the State as the
case may be. Section 53 gives power to the Board to make
regulations not inconsistent with the Act and the rules made
thereunder, and those regulations may provide for all
matters for which provision is necessary or expedient for
the purpose of giving effect to the provisions of the Act.
Apart from the generality of this power, sub-s. (2)
specifies the various matters regarding which regulations
may be
255
framed. Section 54 gives power to the Warehousing
Corporations to make regulations. not inconsistent with the
Act and the rules made thereunder, and those regulations may
provide for a11 matters for which provision is necessary or
expedient for the purpose of giving effect to the
provisions of the Act. Apart from this general power, sub-
s. (2) enumerates the various matters in respect of which
regulations can be framed. Under s. 54 the appellant
Corporation had framed regulations. Those regulations. are
the Uttar Pradesh State Warehousing Corporation Regulations,
1961 (hereinafter called the Regulations). We shall now
proceed to consider the provisions of the Regulations.
Clause 1 (3) of the Regulations provides that the
Regulations. shall apply to all employees of the Corporation
and to the personnel employed on contract in respect of all
matters not regulated by the contract. Clause 2 defines
the various expressions. Chapter II of the Regulations
deals with the appointing authority, probation and
termination of service. Regulation 11 deals with
termination of service. Chapter IV deals with discipline’.
Subcl. ( 1 ) of regulation 16 provides for the
imposition of penalties as against an employee found guilty
of the various acts mentioned therein. Sub-cl. (3) of
regulation 16, which is relevant for the present purpose, is
as follows:
“(3) No punishment other than that
specified in sub-para (1)(a), (1)(b) or (1)(c)
shall be imposed on any employee without
giving him an opportunity for tendering an
explanation in writing and cross examining the
witnesses against him, if any, and of
producing evidence in defence:
Provided that punishment to an employee on
deputation from the Central Government
, a State
Government or a Government Institution shall
be imposed only in accordance with the
procedure and rules laid down in this behalf
in his parent service.”
Sub-paras (1)(a), (1) (b) and (1) (c) referred to therein
are the penalties of (a) fine; (b) censure; and (c)
postponment or stoppage of increments or promotion. In
this case as the punishment imposed is one of dismissal
of the appellant should have followed the procedure
indicated in sub-cl. (3) of regulation 16 extracted above.
Under this sub-clause, it has to be noted that an employee
on whom a punishment other than that specified therein is to
be imposed, has to. be given an opportunity of tendering his
explanation in writing and cross-examining witnesses
against him, if any, and producing evidence in defence. The
grievance of the respondent regarding the conduct of the
256
enquiry, apart from other objections, is ‘that materials
collected by the Enquiry Officer behind his back were not
made: known to him and that information had been taken into
account for holding him guilty. His further objection is
that he did not get any opportunity to adduce evidence in
his defence and that the various persons from whom
information had been gathered by the Enquiry Officer were
not tendered for cross-examination by him. It is not
necessary for us to go elaborately into the various
proceedings connected with the giving of the charge-sheet,
the explanation offered by the appellant and the final
conclusions arrived at by the Enquiry Officer on the basis
of which the respondent has been dismissed from service. As
pointed out by Mr. Iyengar, all the Courts have
concurrently held that the enquiry is vitiated and has been
held contrary to regulation 16(3 ). It is enough therefore,
in the circumstances, to note that the Enquiry Officer Sri
F.A. Abbasi who has given evidence has admitted that he did
not take in evidence in respect of any charge and that he
considered the records as sufficient for giving findings on
the charges. He has also admitted that he met various
persons and collected information and that information has
been incorporated in his enquiry report. He has further
admitted that the information so collected by him was not
put to the plaintiff, and has stated that he based his
findings in the report against the respondent on the basis
of the enquiries made by him of the police and other
persons. In the: face of these admissions, it is idle for
Mr. Desai to urge before us, that the findings of the High
Court and the Subordinate Courts that there has been a
violation of regulation 16(3) in the enquiry proceedings
cannot be sustained. IOn the other hand, we are of opinion
that the finding is amply .justified by the evidence on
record.
Mr. Desai made a feeble: attempt to sustain the order
dated March 10, 1964 as one passed under regulation 11 and
not under regulation 16. We have no hesitation in rejecting
this contention. Regulation 11, as we have already pointed
out, is in Chapter II, and deals with termination of service
simpliciter and, even in such circumstances, it provides in
the case of a permanent employee that his services can be
terminated only after apprising the employee of the reasons
therefore and asking him to furnish explanation and
after consideration of the explanation and then giving the
employee a final notice to. show cause against the
proposed termination of service. This clause, in our
opinion, deals with a termination, other than by way of
punishment, and the procedure indicated therein is quite
simple. On the other hand, regulation 16 appears in
Chapter IV dealing with discipline. An order of dismissal
passed after following the procedure indicated therein,
attaches a stigma on the employee concerned. Having issued
a charge-sheet and made a farce of
257
an enquiry and then dismissed the employee after holding him
guilty, cannot certainly be considered to be termination of
the employee’s service under regulation 11. That action was
taken by way of disciplinary proceedings. is clear from the
fact that an order suspending the respondent, pending the
enquiry, was passed on November 9, 1963. The same order
further directed that the respondent will receive only
subsistence allowance during the period of suspension. The
order of suspension must be related to regulation 17 and the
grant of subsistence allowance must be referred
to .regulation 18, both of which occur in Chapter IV
relating to discipline. Therefore it follows that the first
contention of Mr. S.T. Desai cannot be accepted.
Mr. Desai next urged that even on the basis that the
order of dismissal had been passed in violation of
regulation 16(3), the decree granting a declaration for
reinstatement of the respondent with full pay and emoluments
is illegal as amounting to enforcing a contract of
personal service. Alternatively Mr. Desai urged that in
any event there are no special circumstances existing in
this. case justifying the grant of such a declaration.
Mr. Desai developed his contentions as follows: The
relationship between the appellant and the respondent is
that of a master and servant. A breach of regulation 16(3)
will at the most result in the order of dismissal being
wrongful. The remedy, if any, of the aggrieved party in
such a case will only be a claim for damages for breach of
contract. The counsel further urged that Courts have.
jurisdiction to declare the decision of a statutory body
given in violation of a mandatory statutory obligation
relating to dismissal of a ‘servant as ultra vires and void.
Even in such circumstances, it was urged, the jurisdiction
to grant a declaration which will result in continuity of
service is granted only under very special circumstances
which require the departure from the general rule that a
contract of service will not be specifically enforced.
According to the counsel, the rules framed under s. 52 of
the Act by the appropriate Government may have statutory
force and effect if they are of such-a nature as to require
mandatory compliance; but, according to him, the regulations
framed by a Warehousing Corporation do not create any such
statutory obligation of a mandatory nature. Hence a
termination of service by an employer even in breach of
conditions of service laid down by the regulations would
only attract the general law of master and servant and
cannot result in a declaratory decree about continuity of
service being granted. In any event, the counsel urged that
a declaration should not have been granted as there are no
special circumstances warranting the grant of such a
relief in this case. Counsel pointed out that the
258
respondent entered service only in November 1958 and he has
been removed from service in 1964 and it is not claimed by
the respondent that he will not be able to take up service
elsewhere. In short, according to Mr. Desai, the grant of
the. relief of declaration by way of reinstatement is
erroneous.
Mr. B.R.L. Iyengar, learned counsel for the
respondent, urged that the regulations have been framed by
the Warehousing Corporation under s.. 54. One of the
matters in respect of which regulations may be framed is
in regard to the conditions of service of the employees
of a Warehousing Corporation. It is by virtue of that power
that the regulations–called Staff regulations-have been
framed. By virtue of cl. (3) of regulation 1, they apply to
all employees. of the Corporation and to the personnel
employed on contract in respect of all matters not regulated
by the contract. Those. regulations deal with various
matters relating to the service conditions of the employees.
Chapter IV deals with discipline and cl. (3) of regulation
16 makes it imperative and obligatory on the Corporation
to comply with ‘those provisions before punishment other
than those punishments specified therein is imposed against
an employee. The regulations, according to Mr. Iyengar,
having been framed under the Act, have statutory effect and
they impose statutory obligation of a mandatory nature
on the appellant Corporation in respect of the procedure to
be adopted for taking disciplinary action. On the findings
recorded by all the’ Courts, it is clear that there has been
a violation of cl. (3) of regulation 16, in which case it
follows that the respondent was entitled to get a
declaration that the order of dismissal is void and of
no effect. Counsel also pointed out that the respondent’s
services have been arbitrarily and mala fide terminated by
the appellant and ;therefore, there are sufficient
circumstances. for departing from the normal rule that a
contract of personal service will not be specifically
enforced.
The question as to when and under what circumstances a
relief by way of declaration regarding continuity of
service, after holding that an order of dismissal is void or
ultra vires, can be given, has been considered both m
England and here. The leading decision of the House of
Lords which is generally invoked in support of the view that
such a declaration can be granted is the decision in Vine’
v. National Dock Labour Board(1). This decision has also
been referred to by this Court in some of its decisions, to
which we shall refer presently. The case before the House
of Lords in the decision referred to above arose under the
following circumstances. The plaintiff was a registered
dock
(1) [1956] 3 All E.R. 939.
259
worker employed in the reserve pool by the National Dock
Labour Board under a scheme set up under the Dock Workers
(Regulation of Employment) Order, 1947. In 1948, the
National Board, approved the delegation of powers to
disciplinary committees set up by local boards. The
plaintiff failed to obey a valid order to report for work
with a company of stevedores and, in consequence, the local
board instructed their disciplinary committee to hear the
case. The disciplinary committee, having heard the case,
gave notice in writing to the plaintiff terminating his
employment. The plaintiff instituted the action claiming
damages for wrongful dismissal and also prayed for a
declaration that the order of dismissal was illegal, ultra
vires and invalid. The Court of first instance granted both
damages and declaration; but on appeal, by the National
Board, the Court of Appeal struck out the declaration
granted to the plaintiff. The plaintiff appealed to
the House of Lords against the striking out of the
declaration and the National Board cross-appealed against
the finding that the: dismissal was invalid and also against
the award of damages. The House of Lords held that the
declaration granted by the trial Judge was properly made as
the order of dismissal was a nullity since the local board
had no power to delegate its. disciplinary functions. The
cross-appeal filed by the National Board was dismissed.
Viscount Kilmuir, L.C., in considering the question
regarding the grant of declaration, observes at p. 943
that the discretion in ,,ranting a declaratory judgment
should not be exercised save for good reason and then,
summarising the reasons for granting the declaration, states
at p. 944:
“First, it follows from the fact that the
plaintiff’s dismissal was invalid that his
name was never validly removed from the
register, and he continued in the employ of
the National Board. This is an entirely
different situation from the ordinary master
and servant case. There, if the master
wrongfully dismisses the servant, either
summarily or by giving insufficient notice,
the employment is effectively terminated,
albeit in breach of contract. Here, the
removal of the plaintiff’s name from the
register being, in law, a nullity, he
continued to have the fight to be treated as a
registered dock worker with all the benefits
which, by statute, that status conferred on
him. It is, therefore, right that with the
background of this scheme, the court should
declare his rights.”
At p. 948, Lord Keith of Avonholm states:
“This is not a straightforward
relationship of master and servant. Normally,
and apart from the interven-
260
tion of statute, there would never be a
nullity in terminating an ordinary contract of
master and servant. Dismissal might be in
breach of contract and so unlawful but could
only sound in damages.
Here we are concerned with a statutory
scheme of employment …. The scheme gives
the dock worker a status. Unless registered,
he is deprived of the opportunity of
carrying on what may have been his lifelong
employment as a dock worker, and he has a
right and interest to challenge any unlawful
act that interferes with this, status. If
the actings here complained of were a nullity,
Mr. Vine (hereinafter called ‘the plaintiff’),
in my opinion, has a clear right to have that
fact declared by the court.”
It will be noted that the House of Lords, in the
decision referred to above, have emphasized that orders
striking off the plaintiff from the: register was not
considered a simple case of a master terminating the
services of the servant, but, on the other hand, was treated
as one affecting the status of the plaintiff and whose
services have been terminated by an authority which had no
power to so terminate and, as such, the order was treated as
void. The House of Lords have also emphasised that due to
the intervention o.f the statute which safeguards the right
of the dock worker, the order not being in accordance with
the statute, must be treated as a nullity. It was under
those circumstances that the House of Lords restored the
decree of the Court of first instance granting a declaration
regarding the continuity of service of the plaintiff
therein. It must again be emphasised that the order, the
validity of which was considered by the House of Lords, was
treated as a nullity.
The question whether a dismissed employee can ask for a
declaration that his. employment had never been validly
terminated, again came up for consideration in Barber v.
Manchester Hospital Board(1). In that case a Regional
Hospital Board passed an order terminating the plaintiffs
employment as a medical consultant in the hospital. The
plaintiff brought an action against the Board claiming
declaration that his employment had never been validly
determined and he also claimed damages for breach of
contract or wrongful dismissal. The Court held that the
plaintiff’s contract with the Board was. one between master
and servant and the order of termination of his services.
could not be treated as a nullity. In this view the
plaintiff’s claim for a declaration that his employment
had never been validly determined was not granted; but the
plaintiff was awarded damages
(1) [1958] 1 All E.R. 322.
261
for breach of contract. It was contended on behalf of the
plaintiff that when passing the order terminating his
services the procedure indicated in cl. 16 of the terms and
conditions of service of hospital medical staff has been
violated by :he original hospital Board and therefore the
order of termination never became effective and the
plaintiff continued to be still in service as the order was
a nullity. On behalf of the plaintiff reliance was placed
on the decision in Vine’s Case(1). Repelling this
contention, Barry, J., observes, at p. 331:
“… I am unable to equate this case to
the circumstances which were being considered
by the Court of Appeal and the House of Lords
in Vine v. National Dock Labour Board(1).
There the plaintiff was working under a
code which had statutory powers, and, clearly,
in those circumstances, all the lords of
appeal who dealt with the case in the House of
Lords took the view that the case could not be
dealt with as though it were an ordinary
master and servant claim in which the rights
of the parties were regulated solely by
contract. Here, despite the strong statutory
flavor attaching to the plaintiff’s contract,
I have reached the conclusion that in
essence it was an ordinary contract between
master and servant and nothing more.”
In this view the Court finally held that the plaintiff’s
only remedy was to recover damages as for breach of
contract.
A similar question regarding the right of a dismissed
employee to get a declaration of his right to continue in
employment came up for consideration before the Privy
Council in Francis v. Municipal Councillors etc.(“‘).
The plaintiff in that case was in the service of the
Municipal Councillors of Kuala Lumpur and, by s. 16(5) of
the Municipal Ordinance (Extended Application) Ordinance,
1948, the President had power to dismiss him. The plaintiff
was dismissed. The Privy Council held that the plaintiff
had been wrongly dismissed and that his remedy lay in a
claim for damages. The plaintiff sought a further
declaration that he had a right to continue in employment
notwithstanding the order of dismissal. Rejecting this
claim the Privy Council observed, at p. 637:
“In their Lordships’ view, when there has
been a purported termination of a contract of
service a declaration to the effect that the
contract of service still subsists will rarely
be made. This is a consequence of the
general principle of law that the courts will
not grant
(1)(1956) 3 E.R. 939.
(2) [1962] 3 All E.R. 633.
CI/70–5
262
specific performance of contracts of service.
Special circumstances will be required before
such a declaration is made and its making will
normally be in the discretion of the court.
In their Lordships’ view there
are no
circumstances in the present case which would
make it either just or proper to make such a
declaration.”
The Privy Council distinguished the particular circumstances
that existed before the House of Lords in Vine’s case (1)
and finally held at p. 638:
“In their Lordships’ view the
circumstances of the present case are not
comparable with those in Vine’s case (1) and
are not such as to make it appropriate to give
a declaratory judgment in the manner contended
for on behalf of the appellant. The
appellant’s employment must be treated as
having in fact come to and end on Oct. 1, 1957
‘and the appellant’s remedy lay in a claim for
damages.”
From a review of the English decisions, referred to
above, the position emerges as follows: The law relating to
master and servant is clear. A contract for personal
service will not be enforced by an order for specific
performance nor will it be open for a servant to refuse to
accept the repudiation of a contract of service by his
master and say that the contract has never been terminated.
The remedy of the employee is a claim for damages for
wrongful dismissal or for breach of contract. This is the
normal rule and that was applied in Barber’s case (2) and
Francis’ case (2). But, when a statutory status is given to
an employee and there has been a violation of the provisions
of the statute while terminating the services of such an
employee, the latter will be eligible to get the relief of a
declaration that the order is null and void and that he
continues to be in service, as it will not then be a mere
case of a master terminating the services of a servant.
This was the position in Vine’s case.(1)
The question has also been considered by this Court in
certain decisions, to which we will immediately refer. In
Dr. S.B. Dutt v. University of Delhi(4) this Court had to
consider the legality of an award directing that an order of
dismissal was ultra vires, mala fide and of no effect and
that the appellant in that case continued to be a
Professor of the University. The appellant, Dr. Dutt, who
was a Professor in the University of Delhi, was .dismissed
from service by the latter. He referred the dispute
regarding his dismissal and certain other disputes to
arbitration,
(1) [1956] 3 All E.R. 939. (2) [1958] 1 All E.R. 322.
(3) [1962] 3 All E.R. 633. (4) [1959] S.C.R. 1235.
263
under s. 45 of the Delhi University Act. An award was made
which decided that the appellant’s “dismissal was ultra
vires, mala fide, and has no effect on his status. He still
continues to be a professor of the University”. The said
award was made a rule of Court by the Subordinate Judge of
Delhi. The University of Delhi challenged this decision on
appeal and the Punjab High Court, which ultimately heard the
appeal, set aside the award on the ground that such a
declaration amounted to specific enforcement of a contract
of personal service forbidden by s. 21 of the Specific
Relief Act and therefore disclosed an error on the face of
the award. On appeal, this Court, agreeing with the
reasoning of the High Court, observed at p. 1242:
“There is no doubt that a contract of
personal service cannot be specifically
enforced. Section 21, cl. (b) of the
Specific Relief Act, i 877, and the second
illustration under this clause given in the
section make it so clear that further
elaboration of the point is not required. It
seems to us that the present award does
purport to enforce a contract of personal
service when it states that the dismissal o.f
the appellant ‘has no effect on his status’,
and ‘he still continues to. be a Professor of
the University’. When a decree is passed
according to the award, which if the award is
unexceptionable, has to be done under s. 17 of
the Arbitration Act after it has been flied in
Court, that decree will direct that the award
be carried out and hence direct that the
appellant be treated as still in the service
of the respondent. It would then enforce a
contract Of personal service, for the
appellant claimed to be a professor under a
contract of personal service, and so offends.
21 (b)?’
On behalf of the appellant, reliance was placed on the
decision of the Judicial Committee in The High Commissioner
for India v. I. M. Lall (1) in support of the contention
that a declaration that the appellant continued in service
under the University of Delhi in spite of the order of
dismissal was a declaration which the law permitted to be
made and was not therefore erroneous. Dealing with this
contention and referring to the decision of the Judicial
Committee, this Court observed at p. 1244:
“That was no.t a case based on a
contract of personal service… The
declaration did no.t enforce a contract of
personal service but proceeded on the basis
that the dismissal could only be eff
ected in
terms of the statute and as that had not been
done, it was a nullity, from which the result
followed that the respondent had continued in
service. All that the Judicial Committee did
(1) (1948) L.R. 75 I.A. 225.
264
in this case was to make a declaration of a
statutory invalidity of an act, which is a
thing entirely different from enforcing a
contract of personal service.”
Holding that ‘it was not the appellant’s case before
the arbitrator that the dismissal was ultra vires the
statute or otherwise a nullity’, this Court ultimately
confirmed the judgment of the High Court setting aside the
award.
The jurisdiction of the Courts to grant a declaration in
a particular case that an order of dismissal is void and
that the dismissed employee continues to remain in service,
again came up for consideration before this Court in S.R.
Tewari v. District Board, Agra(1). In that case, the
appellant’s service as an Engineer under the District
Board, Agra, was terminated by the latter, after giving
salary for three months in lieu of notice. The appellant,
after having unsuccessfully appealed against the order of
termination to the State Government, initiated proceedings
under Art. 226 before the Allahabad High Court for a writ of
certiorari for quashing the order of the District Board
dismissing him from service and also sought a writ in the
nature of mandamus commanding the District Board and the
State of Uttar Pradesh to treat him as the lawfully
appointed engineer, and not to give effect to the order
terminating his service. The High Court dismissed the writ
petition holding that the employee had been properly
dismissed from service. The employee came up to this Court
in appeal. On behalf of the District Board, the respondent
therein, it was contended that the remedy of the
appellant, if any, was only to institute a suit for
damages for wrongful termination of employment and that he
was not entitled to pray for a declaration that the
termination of employment was unlawful and a consequential
order for restoration in service. The decision in Dr.
Dutt’s case (2) among other decisions, was relied on in
support of this contention. This Court negatived that
contention and stated the position in law as follows:
“Under the common law the Court will not
ordinarily force an employer to retain
the services of an employee whom he no
longer wishes to employ. But this
rule is
subject to certain well recognized
exceptions. It is open to the Courts in an
appropriate case to declare that a public
servant who is dismissed from service in
contravention of Art. 311 continues to remain
in service, even though by so doing the State
is in effect forced to continue to employ
(1) [1964] 3 S.C.R. 55.
(2) [1959] S.C.R. 1236.
265
the servant whom it does. not desire to
employ. Similarly under the industrial law,
jurisdiction of the labour and industrial
tribunals to. compel the employer to employ
a worker, whom he does not desire to employ,
is recognized. The Courts are also invested
with the power to declare invalid the act of a
statutory body, if by doing the act the body
has acted in breach of a mandatory obligation
imposed by statute, even if by making the
declaration the body is compelled to do
something which it does not desire to do.”
Vine’s Case(1) which was relied on before the Court was
distinguished on the ground that the purported order of
dismissal therein which was set aside was a nullity since
the local Board in that case had no power to delegate its
disciplinary function. Again, the decision in Dr. Dutt’s
Case(2) was stated to be not case in which the invalidity
of an act done by the University on the ground that it
infringed a statutory provision fell to be determined and
the rights and obligations of the parties rested in contract
and therefore the award was declared to be one contrary to
the rule contained in s. 21(b) of the Specific Relief Act
and hence void. This Court, wound up the discussion in
Tewari’s Case(3) as follows, at p. 62:
“The jurisdiction to declare the decision
of the Board as ultra vires exists, though it
may be exercised only when the Court is
satisfied that departure is called for from
the rule that a contract of service will not
ordinarily be specifically enforced.”
On facts, this Court held that the order of dismissal of
the appellant before them was proper and justified.
From the two. decisions of this Court, referred to
above, the position in law is that no declaration to enforce
a contract of personal service will be normally granted.
But there are certain well-recognized exceptions to this
rule and they are: To grant such a declaration in
appropriate cases regarding (1) A public servant, who has
been dismissed from service in contravention of Art. 311.
(2) Reinstatement of a dismissed worker under Industrial Law
by Labour or Industrial Tribunals. (3) A statutory body when
it has acted in breach of a mandatory obligation, imposed by
statute.
The case of the respondent before: us does not come
under either the first or the second category. The question
then is: Is he entitled to relief under the third category
?
(2) [1956] 3 All E.R. 939. (2) [1959] S.C.R. 1236.
(3) [1964] 3 S.C.R. 55.
266
Mr. S.T. Desai pointed out that by the appellant
conducting an enquiry and passing an order of dismissal in
violation of regulation 16(3), it cannot be stated that it
has acted in breach of any mandatory provision of the Act
resulting in the order being declared as void or ultra
vires. The non-compliance with the regulations, at the
most, will result in the order of dismissal being wrongful
attracting the normal rule in such matters of making the
appellant liable for damages. Even otherwise., this is not
a proper case for grant of the declaration asked for by the
plaintiff. In our opinion, the position taken up by Mr.
Desai finds support in the decisions referred to above.
Mr. B.R.L. Iyengar, learned counsel for the respondent,
placed considerable reliance on the decision of this Court
in Life Insurance Corporation of India v. Sunil Kumar
Mukherjee(1). According to him, in that case, an order of
termination of service passed by the Life Insurance
Corporation of India, terminating the services of certain
employees in breach of regulations framed by it under s. 49
of the Life Insurance Corporation Act, 1956 (Act XXXI of
1956) (hereinafter called the Insurance Act) has been held
to be void. Therefore counsel urges that applying the same
analogy, a breach of regulations in the case before us has
the same effect as the breach of a statutory obligation and,
if so, the High Court was justified in granting the
declaration asked for. We are of opinion that the decision
relied on by Mr. Iyengar does not lay down any such
proposition. In that decision, in respect of certain
officers governed by s. 11 (1 ) and 11 (2) of the Insurance
Act, certain orders terminating their services were passed
by the Life Insurance Corporation of India. The orders were
challenged by the employees on the ground that they were
passed contrary to cls. 1O(a) and 10(b) of the: order passed
by the Central Government under s. 11 (2) of the Insurance
Act, which is called the blue order. The contention on
behalf of the Life Insurance Corporation was that the
orders were passed in accordance with the regulations framed
by the Life Insurance Corporation under s. 49 of the
Insurance Act, read with. cl. 11 of the blue order. The
High Court held that the orders of dismissal were in breach
of cls. 10(a) and 10(b) of the blue order, and therefore the
orders were invalid. The result of the grant of this relief
was that the employees continued to be in service. This
Court confirmed the decision of the High Court, and
having considered the rights conferred by s. 11 (1 ) and 11
(2) of the Insurance. Act, held that the employee:s of the
Insurers whose controlled business had been taken over,
became employees of the Life Insurance Corporation and
that their terms. and conditions of service continued until
they were altered
(1) [1964] 5 S,C.R. 528
267
by the Central Government and that if the alteration made by
the Central Government was not acceptable, they were
entitled to’ leave the employment of the Corporation and for
payment of compensation as provided by s.. 11(2). In
exercise of the powers conferred under s. 11(2) of the
Insurance Act, the Central Government issued an order,
known as the Life Insurance Corporation Field Officers
(Alteration of Remuneration and other Terms and Conditions
of Service) Order, 1957 on December 30, 1957. In 1962, the
designation ‘Field Officer’ was changed into ‘Development
Officer’. Clauses 10(a) and 10(b) of this order have
been set out by this Court in the above decision. CI. 11 of
this order prescribed that the pay and allowances of the
officers concerned Was to be determined in . accordance
with the principle.s that may be: laid down by the Life
Insurance Corporation by regulations made under s. 49 of the
Insurance Act. The Life Insurance Corporation, as
envisaged under el. 11 of the order, framed regulations
under s. 49 of the Insurance Act, dealing with various
matters. It. also issued a circular which was made part of
the regulations and it was the basis of this circular
that the Life Insurance Corporation took action and
terminated the services of the employees concerned.
Tiffs Court held that the provisions contained in s. 11(2)
of the Insurance Act are paramount and over-ride any
contrary provisions contained in the order issued by the
Central Government or the regulations framed by the Life
Insurance Corporation. Next to the Insurance Act, the rules
framed by the Central Government, which include the order
issued under ss. 11 (2) of the Insurance Act, will prevail,
but the provisions of the Central Government Order will
have to be subject to s. 11 (2) of the Insurance Act. Next
in order co.me the regulations of the Life Insurance
Corporation under s. 49 and those regulations must not be
inconsistent with the Insurance Act or the rules framed
thereunder.
This Court held that the Circular issued by the Corporation,
which had the effect of a regulation passed by it under s.
49 of the Insurance Act, must be read along with the
provisions of ss. 11 ( 1 ) and 11 (2 ) of the Insurance Act
and cl. 10 of the order issued by the Central Government;
and so read, the conclusion reached by this Court was that a
termination of service of an officer, contemplated under the
circular issued by the Life Insurance Corporation can be
effected only in the manner prescribed by cl. 10 of the
order issued by the Central Government. In view of the
fact that cl. 10 of the order issued by the Central
Government had not been complied with, the order terminating
the services of the employees was held to be invalid.
It will be seen that the services, as pointed out by
this Court, of the employees whose cases were under
consideration, had been
268
crystallized by the statute–the Insurance Act–in s. 11 (1
) and 11 (2); By virtue of the powers conferred by s. 11
(2), the Central Government issued the order on December 30,
1957. CI. 10 of this order had clearly indicated the
procedure to be adopted for terminating the services of such
employees. Therefore, the employees had their rights safe
guarded by the Insurance Act read with the order issued by
the Central Government and it cast a statutory obligation on
the Life Insurance Corporation to adopt a particular
procedure if the services of those employees were to be
terminated. By not complying with the provisions of el. 10
of the order of the Central Government, which is really
related to s. 11 of the Insurance Act, the Life Insurance
Corporation must be considered to have acted in gross
violation of the mandatory provisions of the statute.
Therefore, it was not as if that the employees were there
seeking to. enforce a contract of personal service, but
their grievance which was accepted by the Court, was that
the order terminating their services was a nullity as it had
not been effected in terms of the statute. In our opinion,
therefore, this decision does not support the
contention of the respondent.
Mr. Iyengar referred us also to the decision of this
Court in The State of Uttar Pradesh v. Babu Ram Upadhya(1)
but that decision need not detain us because that deals with
a member of the public service who has been given
protection under the Constitution. Such cases stand apart.
Mr. Iyengar referred us to a decision of a learned
Single Judge of the Gujarat High Court reported as Tata
Chemicals Ltd. v. Kailash(2). The question that arose for
consideration was regarding the validity of an order of
dismissal by an employer of an employee contrary to’ the
standing orders. The learned Judge has expressed the view
that a breach of the standing orders constitutes a breach of
a statutory provision and therefore the order of dismissal
is a nullity. It is not necessary for us to consider the
correctness of that decision because the dispute between
the parties in that case arose under Industrial Law and we
have already pointed out that one of the exceptions to the
Common Law is under Industrial Law where Labour and
Industrial Tribunals have jurisdiction to compel an employer
to employ a worker whom he does not desire to employ.
Having due regard to the principles discussed above. we
are of opinion that the High Court was not justified in
granting the declaration that the order dated March 10, 1964
dismissing the
(I) [1961] 2 S.C.R. 679. (2) A.I.R. 1964 Gujarat 265.
269
respondent from service is null and void and that he is
entitled to be reinstated in service with full pay and other
emoluments. As pointed out by us, the regulations are made
under the power reserved to. the Corporation under s. 54 of
the Act. No doubt they lay down the terms and conditions of
relationship between the Corporation and its employees. An
order made in breach of the regulations would be contrary to
such terms and conditions, but would not be in breach of any
statutory obligation, as was the position which this Court
had to deal with in the Life Insurance Corporation Case(1).
In the instant case, a breach has been committed by the
appellant of regulation 16(3) when passing the said order of
dismissal, inasmuch as the procedure indicated therein
has not been followed. The Act does not guarantee any
statutory status to the respondent, nor does it impose any
obligation on the appellant in such matters. As to whether
the rules framed under s. 52 deal with any such matters,
does not arise for consideration in this case as the
respondent has not placed any reliance on the rules and he
has rested his case only on regulation 16(3). It is not
in dispute that, in this case, the authority who can pass
an order of dismissal has passed the same. Under those
circumstances a violation of regulation 16(3), as alleged
and established in this case, can only result in the order
of dismissal being held to be wrongful and, in
consequence, making the appellant liable for damages. But
the said order cannot be held to be one which has not
terminated the service, albeit wrongfully, or which entitles
the respondent to ignore it and ask for being treated as
still in service. We are not concerned with the question of
damages, because no such claim has been made by the
respondent in these proceedings.
In this view, the judgment and the decree of the High
Court. in so far as they declare that the order dated March
10, 1964 is null and void and that the respondent continues
to be in the service of the appellant, are set aside and
this appeal allowed, to that extent. In the circumstances
of the case, there will be no order as to costs.
V.P.S. Appeal allowed.
(1) [1964] 5 S.C.R. 528.
270