PETITIONER: K. T. CHANDY Vs. RESPONDENT: MANSA RAM ZADE DATE OF JUDGMENT11/12/1973 BENCH: DWIVEDI, S.N. BENCH: DWIVEDI, S.N. CHANDRACHUD, Y.V. CITATION: 1974 AIR 642 1974 SCR (2) 650 1974 SCC (1) 414 ACT: Contempt of Court-Suit by employee against employer- Dismissal of employee in exercise of right to terminate as per contract of service-When does not amount to contempt. HEADNOTE: The respondent was employed in a company. The contract of service Provided for, the termination of service by giving three months notice or three months pay ,in lieu thereof without assigning any cause. The company gave him a notice that it was found that his performance and conduct have not been good and that he had not proved useful to the company. He was therefore advised to try for alternative employment. He was informed that he would be released from the company at his request on payment by him of the amount under a bond executed by him with some concession. The respondent thereupon filed a suit claiming various reliefs. He, did not ask for an interim injunction restraining the appellant and the company from terminating his service during the pendency of the suit, nor did the appellant and the company give any such undertaking. The company gave the respondent notice terminating his service with effect from the date of the service of the notice and granted him three months' pay. The High Court hold that the act of giving the second notice amounted to con. tempt of court because, as a result of the termination some of the reliefs Prayed for would become infructuous and that would amount to obstruction or interference with due course of justice. Allowing the appeal to this Court, HELD Where a party to a suit terminates the service of the adversary party in the honest exercise of his rights under the contract of service and in the absence of any interim injunction or undertaking,, the act would not constitute contempt of court. [653 B-C] (a) A combined reading of the two notices shows that the appellant had terminated the service in the honest exercise of the right vested in the company by the contract of service. The order did not threaten the respondent to withdraw the whole or part of the suit. [653 C] (b)The circumstance that one or more of the reliefs claimed in the plaint had become infructuous on account of the termination would not establish contumacy, because the respondent was free amend his plaint and ask for an appropriate relief. [653 D] (c) The fact that the appellant had tendered an unconditional apology in the High Court is not a ground for this Court refusing to interfere, because, (i) the High Court had in fact held that appellant has committed contempt though it did not award punishment because of the apology and(ii)the High Court had directed the appellant to pay cost to the respondent. [654 B] Taka Qim Goakar v. R. V. Shakla, [1968] 3 S.C.R. 422, fang Bahadur Singh v. Baij Nath rewari, [1969] 1 S.C.R. 13 Cand Malojirao Shitole v. C. G. Matkar, A.I.R 1953 M. B. 245, referred to. Pratap ginirh v. Gurbaksh Sinqh, [1962] Supp. 2 S.C.R. 838, and Govind Sahl v. State of U. P. [1969] 1 S.C.R. 176, distinguished. 651 JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 129
of 1970.
Appeal by Special leave from-the Judgment and order dated
the 24th July, 1969 of the Calcutta High Court in Criminal
Misc. Case No. 179 of 1969.
D. -Mukherjee, and DN. Mukherjee, for the appellant.
S.B. Wad, for the respondent.
The Judgment of the Court was delivered by
DWIVEDI, J. Seemingly it is a small case. It has not hit
the headlines in the news-media. Nor it has gripped the
public mind. The pecuniary stake is trivial. A tiny sum of
Rs. 200/- is payable as costs by the appellant. However,
this case brings in to the flash-point an issue of great
consequence to liberty of contract: Where to draw the
dividing line between the area of contempt of court and the
are of opration of contractual rights.
The appellant is the Chairman of the Hindustan Steel Limited
(hereinafter referred to as the Company). The respondent
was employed in the Company on a contract of service. The
contract provided for termination of his service by giving
three months’ notice or three months’ pay in lieu thereof
and without assigning any cause. On February 21, 1968, the
Company gave him this notice : “It is found that your
performance and conduct in this plant have not been good and
that you have not proved useful for the Company. You are
hereby advised to note this position and also to try for
alternative employment elsewhere. You may be released from
this company at your request on payment of the amount
required under the bond executed by you on pro-rota basis as
a very special case taking into account the period of
service that may be rendered by you at the time of release.
in other words, if you choose to leave the service of the
company before expiry of bond period, you will be required
to pay the company a sum not exceeding Rs. 20,000/- reduced
by the amount calculated on pro-rota basis in respect of the
service you may render after completion of your training.”
Soon thereafter he rushed to the Court. On May 27, 1968 he
instituted a suit in the Court of the Second Munsif,
Asansol. The material reliefs claimed in the plaint are:
(1) a declaration that the notice dated
February 21, 1968 is illegal, bad, mala fide,
without jurisdiction, void and inoperative and
is not binding on the plaintiff;
(2) a declaration that the charge sheet
dated July 1, 1966, confidential character
report, dated April 27, 1967, are ultra vires,
unenforceable, illegal, unsustainable, mala
fide and opposed to rules and natural justice
and are not binding on the plaintiff;
(3) a declaration that the plaintiff is
entitled to promotion to the next higher
grade, namely, foreman, from October 10, 1966;
652
(4) a mandatory injunction directing the
defendant to promote the plaintiff to the
grade of foreman; and
(5) a permanent injunction restraining the
defendant from giving effect to the notice
dated February 21, 1968.
He did not ask the Munsif to grant an interim injunction
restraining the appellant and the Company from terminating
his service during pendency of his suit. So no such interim
injunction was operating at the relevant time. Nor did the
appellant and the Company give an undertaking to refrain
from terminating his service during pendency of the suit.
Forgetting the suit for a moment, there was no impediment in
their way of terminating his service according to the
contract. And on February 26, 1968, the Company gave him
this notice; “(T)he services of the ( respondent) are hereby
terminated with effect from the date of service of this
order on him and payment of three months’ pay in lieu of
notice in terms of clause (vi) of his appointment
letter…… dated January 29, 1962.”
The Calcutta High Court (R.N. Dutt and B. Banerji JJ.). has
held that the act of giving this notice amounts to, contempt
of court. The learned Judges said: “It seems that he
(plaintiff) was more or less non-suited. ..There is no doubt
that since his services have been terminated, some of the
reliefs which were prayed for in the suit could become
infructuous. On these considerations, we think that the
action of the Chairman in terminating the services of the
(plaintiff) …. does amount to obstruction or interference
with due course of justice in the petitioner’s suit before
the Munsif …. and- so it amounts to contempt of the said
court.”
When asked, counsel for the respondent could not cite any
decision holding a Muslim husband’s act of divorcing his
wife during pendency of her suit for future maintenance as
contempt of court. The divorce completely aborts her suit.
It is true that the law of contempt of court is essential
for keeping the administration of justice pure and
undefiled. It is also well to remember that our society is
also interested in the fulfillment of a man’s expectations
under a contract. To that end we have a law of contract in
our country. Assigning an unlimited and undefined area to
either of them would unduly curtail the area of the other.
Each should have a viable area so that ‘ justice may hold
high her head and contract is not cribbed and cramped. But
what is the yardstick to measure their area of operation.
It has been held that ‘initiation in good faith’ of a
departmental’ enquiry under the Customs Act by the Custom
authorities on the basis of facts which are the subject of a
criminal prosecution under that Act against the appellant
would not amount to contempt as the authorities’ are acting
bona fide and discharging their statutory duties.’ (Ruka Ram
G. Geokar v. R. N. Shukla.1 see also Jang Bahadur Singh v.
Baij Nath Tewari).2 In another case it was held that the
issue of a notification under the Abolition of Jagirs Act
for resumption of Jagirs during pendency of a jagirdar’s
writ petition for restraining such resumption-is not
contempt, because the Government was acting bona fide in the
exercise of its statutory rights. (See
(1) [1968] 3 S.C.R. 422.
(2) [1969] 1 S.C.R.. 134..
653
Malojirao Shitole v. C. G. Matkar)(1) These cases establish
that bona fide exercise of a statutory right by a party to a
proceeding is not contempt in the absence of an interim
injunction against or undertaking by that party. There
appears to be so sound’ reason why this principle should not
extend to the exercise of rights under a contract.
The rights of a party under a contract are his legal rights.
In our view bonafide or honest exercise of a right under a
contract should be the yardstick for allocating their
respective area to contempt and it gives to each its proper
sphere. So where a party to a suit,, as here,. terminates
the service of the adversary party in the honest exercise of
his rights under the contract of service and in the absence
of any interim injunction or undertaking, his act would not
constitute contempt of court. We are satisfied from a
combined reading of the two notices relating to termination
of service that the appellant had terminated the service of
the respondent in the honest exercise of the right vested in
the Company by the contract of service. So he has not
committed contempt of the Munsif’s Court.
The order terminating his service does not threaten the
respondent to withdraw the whole or part of his suit. The
mere circumstance that one or more of the reliefs claimed in
the plaint have become infructuous on account of the
termination order would not establish contumacy. The
respondent is free to amend his plaint and ask for a relief
against the termination order.
Counsel for the respondent has relied on Pratap Singh V.
Gurbakah Singh(4) and Gobind Sahai v. State of U.P.(5) These
cases are clearly distinguishable on facts. In the first
case a Government employee had instituted a suit as well as
a writ petition against the Government in respect of his
service conditions. Thereupon the appropriate authority
started a departmental proceeding against the employee. The
charge sheet stated that he had gone to a court of law
before exhausting all his departmental remedies and that his
action was contrary to official propriety and subversive of
good discipline. This charge was framed on the strength of
a circular letter issued by the Chief Secretary of the
Government on June 25, 1953. It emphasised that “any
attempt by a Government servant to seek a decision on such
issues in a court of law without first exhausting the normal
official channels of redress could only be regarded as
contrary to official propriety and subversive of good
discipline and could well justify the initiation of
disciplinary action against him. This Court held that the
authorities have committed contempt of court. In the second
case while the respondent’s suit challenging the election of
his opponent to a committee of a political party was
pending, the appellant letters expelling him from the party
on the strength of an earlier resolution of the party which
barred reference of such disputes to a law court and
provided for summary removal of any member who initiated a
suit. This Court held that the action of expulsion amounted
to contempt of court. It ‘should be observed that in both
cases the complainant had a right to institute a legal
proceeding in a law court for redress of his grievance.
This legal right
(1) A.I.R. 1953 MB 245.
(2) [1962] Supp. 2 SCR 838.
(3) [1969] 1 SCR. 176.
654
could be taken away only by a valid law. But there was no
such law in operation. So neither the officers of the
Government nor the political party had a legal right to take
any action for punishing the /suitor for his mere ‘act of
instituting a legal proceeding in a law court. In our case
the- appellant had a right under the contract to terminate,
the service of the respondent.
Counsel for the respondent has submitted-that as the
appellant had tendered an unconditional apology. in the High
Court, we should not interfere with the High Court’s order.
We are unable to appreciate the submission. Apology goes to
sentence and may be accepted only upon a finding that
contempt has been committed. The High Court has in fact
held that the appellant has committed contempt. But it has
accepted his apology and refrained from awarding any
punishment. Moreover, the appellant has been directed to
pay Rs. 200/as costs to the respondent. So the appellant
is entitled to have the order of the High Court set aside.
We allow the appeal and set aside the order of the High
Court.
V.P.S.
Appeal allowed.
A02SCI/74-2500-28-5-75-GIPP.
655