{"id":199019,"date":"2005-08-08T00:00:00","date_gmt":"2005-08-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/binny-ltd-anr-vs-v-sadasivan-ors-on-8-august-2005"},"modified":"2017-06-15T20:24:35","modified_gmt":"2017-06-15T14:54:35","slug":"binny-ltd-anr-vs-v-sadasivan-ors-on-8-august-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/binny-ltd-anr-vs-v-sadasivan-ors-on-8-august-2005","title":{"rendered":"Binny Ltd. & Anr vs V. Sadasivan & Ors on 8 August, 2005"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Binny Ltd. & Anr vs V. Sadasivan & Ors on 8 August, 2005<\/div>\n
Author: K Balakrishnan<\/div>\n
Bench: K.G. Balakrishnan, P. Venkatarama Reddi<\/div>\n
           CASE NO.:\nAppeal (civil)  1976 of 1998\n\nPETITIONER:\nBinny Ltd. & Anr.\t\t\t\t\t\t\t\n\nRESPONDENT:\nV. Sadasivan & Ors.\t\t\t\t\t         \n\nDATE OF JUDGMENT: 08\/08\/2005\n\nBENCH:\nK.G. Balakrishnan & P. Venkatarama Reddi \n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T
\nWITH<\/p>\n
CIVIL APPEAL NO.  4839 OF 2005
\n(Arising out of SLP (C ) No. 6016 of 2002)<\/p>\n
Mr. D.S. Veer Ranji\t\t\t\t\t\t\tAppellant<\/p>\n
Versus<\/p>\n
CIBA Specialty Chemicals (I) Ltd. & Ors.\t\t\t…Respondents<\/p>\n
K.G. BALAKRISHNAN, J.\n<\/p>\n
\tLeave  granted in SLP(C ) No. 6016\/2002 and the appeal is heard
\nalong with Civil Appeal No. 1976\/1998.  In these two appeals, common
\nquestions of law arise for consideration.\n<\/p>\n
In Civil Appeal No. 1976\/1998, narration of brief facts is necessary to
\nunderstand whether the reliefs as prayed for by respondents 2 to 36 could
\nhave been granted by the High Court.  Each of the respondents was working
\nas member of the management staff of the appellant company, which was
\nengaged in the manufacture of cloth.  The respondents were originally
\nappointed in the appellant-company in various jobs such as Clerks, Machine
\nOverlookers, Supervisors, etc.  According to these respondents, from 1981
\nonwards, the appellant company started insisting on them to be designated
\nas management staff with the object of avoiding payment of overtime wages.
\nThe respondents signed an agreement with the Management acceding to the
\nrequest of the appellant company, but they continued to perform the same
\nduties as before.  The appellant company contended that there was incessant
\nrain in the night of 12.6.1996 when the entire company premises was
\nflooded with water and it caused serious damage to the plant and machinery
\nand finished-stock and the appellant company stayed all the operations and
\ninformed the Commissioner of Labour that water had entered the mill
\npremises causing serious damage to the plant and machinery and
\nmanagement had no other alternative but to suspend the operations of the
\nmill.  Order of termination was issued to the respondents invoking Clause 8
\nof the agreement dated 12.3.1991 entered into by the respondents with the
\nappellant company.  As per clause 8 of the agreement, the Management had
\na right to terminate the services without assigning any reason by just giving
\none month’s notice or salary in lieu thereof.  Appellant contended that all
\nthese respondents were drawing salary of more than Rs. 1,600\/- per month
\nand they were not ‘workmen’ under the Industrial Disputes Act, 1947.  The
\nrespondents filed Writ petition No. 11862\/1996 for a Declaration that Clause
\n8 of the Agreement read with Order of termination dated 31.7.1996 issued
\nby the appellant company was void and illegal and violative of Section 23 of
\nthe Indian Contracts Act.  The respondents had also contended that the
\nagreement entered into by the respondents with the appellant company was
\nviolative of Article 21 of the Constitution and the closure of the mill was
\nagainst Section 25F and 25N of the Industrial Disputes Act, 1947, and they
\nsought for a direction to reinstate them in service with continuity of service
\nand all consequential benefits.  The appellant-company  contended that the
\nWrit Petition was not maintainable as the appellant company was a private
\nbody; therefore, the question of granting the declaration sought would not
\narise.  It was also contended that there was alternative efficacious remedy
\navailable to them and therefore, the discretionary jurisdiction under Article
\n226 of the Constitution of India should not be exercised.  The appellant
\ncompany also contended that the respondents were not entitled to seek a
\nWrit of Mandamus as the appellant was a private company and the decision
\nof the appellant company to terminate the services of the respondents is not
\nliable to be the subject matter of judicial review.  According to the appellant
\ncompany, they were neither ‘public authorities’ nor their action involved
\npublic law element, for which remedy of Writ of Mandamus was available.
\nThe Writ Petition was considered by the Division Bench of the Madras High
\nCourt.  The Court held that Clause 8 of the agreement entered into between
\nthe respondents 2 to 36 and the appellant was void and unenforceable
\nagainst the respondents as being violative of Section 23 of the Indian
\nContracts Act.  Reliance was placed on Central Inland Water Transport
\nCorporation Ltd. Vs. Brojo Nath Ganguly (1986) 3 SCC 156 and the
\nHigh Court ultimately held that in the proceedings under Article 226,  the
\nrespondents herein would not be entitled to get the relief of  reinstatement
\nand back wages and the  court granted only a declaratory relief to the effect
\nthat the termination order was illegal and the respondents had to work out
\nan appropriate remedy before the appropriate forum.\n<\/p>\n
In the appeal arising out of SLP (Civil) No. 6106\/2000, the appellant
\nwas employed as a Corporate Legal Manager with the 1st respondent
\ncompany, which is a private limited company engaged in the manufacture of
\nchemicals.  The services of the appellant were terminated with effect from
\n1.6.1998. The appellant sought for the issue of a Writ or other appropriate
\nOrder to quash or set aside the Termination Order dated 1.6.1998.  He also
\nsought for a Writ of Mandamus directing the respondents to allow the
\nappellant to report for work in the same grade and pay-scale to which he was
\noriginally employed.  The respondent company contended that the Writ
\nPetition was not maintainable as the respondent company was a private
\nemployer and the appellant was working under a private contract of
\nemployment.  The Writ Petition filed by the appellant was referred to a larger
\nBench in view of the important question of law raised by the parties and the
\nFull Bench of the Bombay High Court elaborately considered the question and
\nheld that the appellant was not entitled to the remedy sought for and the
\nWrit Petition was not maintainable.  The Full Bench held that by terminating
\nthe services of the appellant, the Company was not discharging any public
\nfunction and, therefore, the action sought to be challenged by the appellant
\nwas not amenable to the jurisdiction of judicial review.\n<\/p>\n
We heard the learned Counsel on either side.  Reference was made to
\nvarious decisions on the subject.\n<\/p>\n
The contention of the appellant in Civil Appeal No. 1976\/1998 was that
\nthe decision of the High Court invoking the extraordinary jurisdiction under
\nArticle 226 of the Constitution was incorrect and that the Court should not
\nhave interfered with the decision of a private limited company and that the
\npowers under Article 226 cannot be invoked against a private authority who
\nis discharging its functions on the basis of the contract entered into between
\nthe employer and the employees.  It was contended that the remedy
\navailable to the workers was only ordinary civil litigation.  It was also
\ncontended that there was no public law element in the action taken by the
\nappellant against the employees and, therefore, the public law remedy of
\njudicial review had no application.\n<\/p>\n
Employees who are respondents in that appeal contended that their
\ncontract with the appellant was per se illegal and void as it was opposed to
\nSection 23 of the Indian Contracts Act. It was argued that under similar
\ncircumstances, this court had given direction to redress the grievances of the
\nemployees.  Reference was made to Central Inland Water Transport
\nCorporation Ltd. Vs. Brajo Nath Ganguly (1986) 3 SCC 156 and it was
\ncontended by the respondent employees that the decision to terminate their
\nservices was based on a specific clause in the contract which by itself is void
\nin view of Section 23 of the Indian Contracts Act.  Therefore, the High Court
\nwas justified in giving a declaratory relief in their favour.\n<\/p>\n
In Civil Appeal arising out of SLP(Civil) No. 6016 of 2002, the appellant
\ncontended that the action of the respondent was illegal and void and his
\nservices should not have been terminated by the employer.  According to the
\nappellant, even if the decision-making authority is a private body or not an
\n‘authority’ coming within the purview of Article 12 of the Constitution, on
\nwider issues, the jurisdiction of the High Court under Article 226 can be
\ninvoked to set aside the illegal act and to protect the fundamental rights of
\nthe aggrieved party.  The learned Counsel for the respondent representing
\nthe company submitted that the appellant had been rightly discharged from
\nthe services and the company being a private authority was not amenable to
\nthe writ jurisdiction of the High Court.   It was submitted that under the
\npowers of judicial review by the High Court, a public action alone could have
\nbeen challenged and the decision to terminate the service of an employee on
\nthe ground that his services were unsatisfactory does not have any public law
\nelement and, therefore, the High Court has rightly rejected the contentions
\nadvanced by the appellant therein.\n<\/p>\n
We have carefully considered the various contentions urged by the
\nparties on either side.   In order to decide the question, it is necessary to
\ntrace the history of   law relating to judicial review of public actions.\n<\/p>\n
Superior Court’s supervisory jurisdiction of judicial review is invoked
\nby an aggrieved party in myriad cases.  High Courts in India are empowered
\nunder Article 226 of the Constitution to exercise judicial review to correct
\nadministrative decisions and under this jurisdiction High Court can issue to
\nany person or authority, any direction or order or writs for enforcement of
\nany of the rights conferred by Part III or for any other purpose.  The
\njurisdiction conferred on the High Court under Article 226 is very wide.
\nHowever, it is an accepted principle that this is a public law remedy and it is
\navailable against a body or person performing public law function.  Before
\nconsidering the scope and ambit of public law remedy in the light of certain
\nEnglish decisions, it is worthwhile to remember the words of Subha Rao J.
\nexpressed in relation to the powers conferred on the High Court under Article
\n226 of the Constitution in Dwarkanath Vs. Income Tax Officer 1965(3)
\nSCR 536 at pages 540-41:\n<\/p>\n
“This article is couched in comprehensive phraseology and it ex
\nfacie confers a wide power on the High Courts to reach injustice
\nwherever it is found.  The Constitution designedly used a wide
\nlanguage in describing the nature of the power, the purpose for
\nwhich and the person or authority against whom it can be
\nexercised. It can issue writs in the nature of prerogative writs as
\nunderstood in England; but the scope of those writs also is
\nwidened by the use of the expression “nature”, for the said
\nexpression does not equate the writs that can be issued in India
\nwith those in England, but only draws an analogy from them.
\nThat apart, High Courts can also issue directions, orders or writs
\nother than the prerogative writs.  It enables the High Court to
\nmould the reliefs to meet the peculiar and complicated
\nrequirements of this country.  Any attempt to equate the scope
\nof the power of the High Court under Article 226 of the
\nConstitution of India with that of the English Courts to issue
\nprerogative writs is to introduce the unnecessary procedural
\nrestrictions grown over the years in a comparatively small
\ncountry like England with a unitary form of Government into a
\nvast country like India functioning under a federal structure.
\nSuch a construction defeats the purpose of the article itself.”\n<\/p>\n
The Writ of Mandamus lies to secure the performance of a public or a
\nstatutory duty.  The prerogative remedy of mandamus has long provided the
\nnormal means of enforcing the performance of public duties by public
\nauthorities.  Originally, the writ of mandamus was merely an administrative
\norder from the sovereign to subordinates.  In England, in early times, it was
\nmade generally available through the Court of King’s Bench, when the
\nCentral Government had little administrative machinery of its own. Early
\ndecisions show that there was free use of the writ for the enforcement of
\npublic duties of all kinds, for instance against inferior tribunals which refused
\nto exercise their jurisdiction or against municipal corporation which did not
\nduly hold elections, meetings,  and so forth.  In modern times, the
\nmandamus is used to enforce statutory duties of public authorities.   The
\ncourts always retained the discretion to withhold the remedy where it would
\nnot be in the interest of justice to grant it.  It is also to be noticed that the
\nstatutory duty imposed on the public authorities may not be of discretionary
\ncharacter.  A distinction had always been drawn between the public duties
\nenforceable by mandamus that are statutory and duties arising merely from
\ncontract.  Contractual duties   are enforceable as matters of private law by
\nordinary contractual remedies such as damages, injunction, specific
\nperformance and declaration.  In the Administrative Law  (Ninth Edition)
\nby Sir William Wade and Christopher Forsyth, (Oxford University Press)
\nat page 621, the following opinion is expressed:\n<\/p>\n
“A distinction which needs to be clarified is that between public
\nduties enforceable by mandamus, which are usually statutory,
\nand duties arising merely from contract.  Contractual duties are
\nenforceable as matters of private law by the ordinary
\ncontractual remedies, such as damages, injunction, specific
\nperformance and declaration.  They are not enforceable by
\nmandamus, which in the first place is confined to public duties
\nand secondly is not granted where there are other adequate
\nremedies.  This difference is brought out by the relief granted in
\ncases of ultra vires.  If for example a minister or a licensing
\nauthority acts contrary to the principles of natural justice,
\ncertiorari and mandamus are standard remedies.  But if a trade
\nunion disciplinary committee acts in the same way, these
\nremedies are inapplicable: the rights of its members depend
\nupon their contract of membership, and are to be protected by
\ndeclaration and injunction, which accordingly are the remedies
\nemployed in such cases.”\n<\/p>\n
Judicial review is designed to prevent the cases of abuse of power and
\nneglect of duty by public authorities.  However, under our Constitution,
\nArticle 226 is couched in such a way that a writ of mandamus could be issued
\neven against a private authority.  However, such private authority must be
\ndischarging a public function and that the decision sought to be corrected or
\nenforced must be in discharge of a public function.  The role of the State
\nexpanded enormously and attempts have been made to create various
\nagencies to perform the governmental functions.  Several corporations and
\ncompanies have also been formed by the government to run industries and
\nto carry on trading activities.  These have come to be known as Public Sector
\nUndertakings.  However, in the interpretation given to Article 12 of the
\nConstitution, this Court took the view that many of these companies and
\ncorporations could come within the sweep of Article 12 of the Constitution.
\nAt the same time, there are private bodies also which may be discharging
\npublic functions.  It is difficult to draw a line between the public functions and
\nprivate functions when it is being discharged by a purely private authority.  A
\nbody is performing a “public function” when it seeks to achieve some
\ncollective benefit for the public or a section of the public and is accepted by
\nthe public or that section of the public as having authority to do so.  Bodies
\ntherefore exercise public functions when they intervene or participate in
\nsocial or economic affairs in the public interest.  In a book on Judicial
\nReview of Administrative Action (Fifth Edn.) by de Smith, Woolf &
\nJowell in Chapter 3 para 0.24,  it is stated thus:\n<\/p>\n
“A body is performing a “public function” when it seeks to
\nachieve some collective benefit for the public or a section of the
\npublic and is accepted by the public or that section of the public
\nas having authority to do so.  Bodies therefore exercise public
\nfunctions when they intervene or participate in social or
\neconomic affairs in the public interest.  This may happen in a
\nwide variety of ways. For instance, a body is performing a public
\nfunction when it provides “public goods” or other collective
\nservices, such as health care, education and personal social
\nservices, from funds raised by taxation.  A body may perform
\npublic functions in the form of adjudicatory services (such as
\nthose of the criminal and civil courts and tribunal system).  They
\nalso do so if they regulate commercial and professional activities
\nto ensure compliance with proper standards.  For all these
\npurposes, a range of legal and administrative techniques may be
\ndeployed, including: rule-making, adjudication (and other forms
\nof dispute resolution); inspection; and licensing.\n<\/p>\n
Public functions need not be the exclusive domain of the
\nstate.  Charities, self-regulatory organizations and other
\nnominally private institutions (such as universities, the Stock
\nExchange, Lloyd’s of London, churches) may in reality also
\nperform some types of public function.  As Sir John Donaldson
\nM.R. urged, it is important for the courts to “recognise the
\nrealities of executive power” and not allow “their vision to be
\nclouded by the subtlety and sometimes complexity of the way in
\nwhich it can be exerted”.  Non-governmental bodies such as
\nthese are just as capable of abusing their powers as is
\ngovernment.”\n<\/p>\n
In Regina Vs. Panel on Take-overs and Merges, Ex parte Datafin
\nPlc. And another (1987) 1 Queen’s Bench Division 815, a question arose
\nwhether the Panel of Take-overs and Mergers had acted in concert with other
\nparties in breach of the City Code on Take-overs and Mergers.  The panel
\ndismissed the complaint of the applicants.  Though the Panel on Take-over
\nand Mergers was purely a private body, the Court of Appeal held that the
\nsupervisory jurisdiction of the High Court was adaptable and could be
\nextended to any body which performed or operated as an integral part of a
\nsystem which performed public law duties, which was supported by public
\nlaw sanctions and which was under an obligation to act judicially, but whose
\nsource of power was not simply the consent of those over whom it exercised
\nthat power; that although the panel purported to be part of a system of self-
\nregulation and to derive its powers solely from the consent of those whom its
\ndecisions affected, it was in fact operating as an integral part of a
\ngovernmental framework for the regulation  of financial activity in the City of
\nLondon, was supported by a periphery of statutory powers and penalties, and
\nwas under a duty in exercising what amounted to public powers to act
\njudicially; that, therefore, the court had jurisdiction to review the panel’s
\ndecision to dismiss the applicants’ complaint; but that since, on the facts,
\nthere were no grounds for interfering with the panel’s decision, the court
\nwould decline to intervene.\n<\/p>\n
Lloyd L.J., agreeing with the opinion expressed by Sir John
\nDonaldson M.R. held :\n<\/p>\n
“I do not agree that the source of the power is the sole test
\nwhether a body is subject to judicial review, nor do I so read
\nLord Diplock’s speech.   Of course the source of the power will
\noften, perhaps usually, be decisive.  If the source of power is a
\nstatute, or subordinate legislation under a statute, then clearly
\nthe body in question will be subject to judicial review.  If at the
\nend of the scale, the source of power is contractual, as in the
\ncase of private arbitration, then clearly the arbitrator is not
\nsubject to judicial review.\n<\/p>\n
In that decision, they approved the observations made by Lord
\nDiplock in Council of Civil Service Unions vs. Minister for the Civil
\nService (1985) A.C. 374, 409 wherein  it was held :\n<\/p>\n
“.for a  decision to be susceptible to judicial review the decision-
\nmaker must be empowered by public law (and not merely, as in
\narbitration, by agreement between private parties) to make
\ndecisions that, if validly made, will lead to administrative action or
\nabstention  from action by an authority endowed by law with
\nexecutive powers which have one or other of the consequences
\nmentioned in the preceding paragraph.   The ultimate source of
\nthe decision-making power is nearly always nowadays a statute or
\nsubordinate legislation made under the statute; but in the
\nabsence of any statute regulating the subject matter of the
\ndecision the source of the decision-making power may still be the
\ncommon law itself, i.e., that part of the common law that is given
\nby lawyers the label of ‘the prerogative.’  Where this is the source
\nof decision-making power, the power is confined to  executive
\nofficers of central  as distinct from local government and in
\nconstitutional practice is generally exercised by those holding
\nministerial rank”\n<\/p>\n
It  is also pertinent to refer to Sir John Donaldson M.R.  in that
\nTake-Over Panel  case :\n<\/p>\n
“In all the reports it is possible to find enumerations of factors
\ngiving rise to the jurisdiction, essential or as being exclusive of
\nother factors.   Possibly the only essential elements are what
\ncan be described as a public element, which can take many
\ndifferent forms, and the exclusion from the jurisdiction of bodies
\nwhose sole source of power is a consensual submission to is
\njurisdiction.”\n<\/p>\n
The above guidelines and principles applied by English courts cannot
\nbe fully applied to Indian conditions when exercising jurisdiction under Article
\n226 or 32 of the Constitution.   As already stated, the power of the High
\nCourts under Article 226 is very wide and these powers have to be exercised
\nby applying the constitutional provisions and judicial guidelines and violation,
\nif any, of the fundamental rights guaranteed in Part III of the Constitution.
\nIn the matter of employment  of workers by  private bodies on the basis of
\ncontracts entered into between them, the courts had been reluctant to
\nexercise the powers of judicial review and whenever the powers were
\nexercised as against private employers,  it was solely done  based  on  public
\nlaw element involved therein.\n<\/p>\n
This view was expressly stated by this Court in various decisions and
\none of the earliest decisions is  The Praga Tools Corporation vs. Shri C.A.
\nImanual and Others<\/a> (1969) 1 SCC 585     In this case, the appellant
\ncompany was a  company incorporated under the Indian Companies Act and
\nat the material time the Union Government and the Government of Andhra
\nPradesh held 56 per cent and 32 per cent of its shares respectively.
\nRespondent workmen filed a writ petition under Article 226 in the High Court
\nof Andhra Pradesh challenging the validity of an agreement entered into
\nbetween the employees and the company,  seeking a writ of mandamus or
\nan order or direction restraining the appellant  from  implementing the said
\nagreement.    The  appellant  raised objection as to the maintainability of  the
\nwrit petition.   The  learned  Single Judge  dismissed the petition.  The
\nDivision Bench held  that  the  petition was not  maintainable  against the
\ncompany.   However, it granted a declaration in favour of three workmen,
\nthe validity of which was challenged before this Court.  This Court held at
\npages 589-590 as under:\n<\/p>\n
“.that the applicant for a mandamus should have a legal and
\nspecific  right to enforce the performance of those dues.
\nTherefore, the condition precedent for the issue of mandamus is
\nthat there is in one claiming it a legal right to the performance
\nof a legal duty by one against whom it is sought.   An order of
\nmandamus is, in form, a command directed to a person,
\ncorporation or any inferior tribunal requiring him or them to do s
\nparticular thing therein specified which appertains to his or their
\noffice and is in the nature of a public duty.   It is, however, not
\nnecessary that the person or the authority on whom the
\nstatutory duty is imposed need  be a public official or an official
\nbody.   A mandamus can issue, for instance, to an official of a
\nsociety to compel him to carry out the terms of the statute
\nunder or by which the society is constituted or governed and
\nalso to companies or corporations to carry out duties placed on
\nthem by the statutes authorizing their undertakings.   A
\nmandamus would also lie against a company constituted by a
\nstatute for the purpose of  fulfilling public responsibilities [Cf.
\nHalsbury’s Laws of England (3rd Ed.), Vol.II p 52 and onwards].\n<\/p>\n
The company  being a  non-statutory body and one incorporated
\nunder the Companies Act there was neither a statutory  nor a
\npublic duty imposed on it by a statute in respect of which
\nenforcement could be sought by means of a mandamus, nor
\nwas there in its workmen any  corresponding legal right  for
\nenforcement of any such statutory or public duty.   The High
\nCourt, therefore, was right in holding that no writ petition for  a
\nmandamus or an order in the nature of mandamus could lie
\nagainst the company.”\n<\/p>\n
It was also observed that when the High Court had held that the writ
\npetition was not maintainable, no relief of a declaration as to invalidity of  an
\nimpugned agreement  between the company and its employees could be
\ngranted and that the High Court committed an error in granting  such a
\ndeclaration.\n<\/p>\n
In VST Industries Limited vs. VST Industries Workers’ Union &
\nAnr.<\/a> (2001) 1 SCC 298,  the very same question came up for consideration.
\nThe appellant-company was engaged in the manufacture and sale of
\ncigarettes.   A petition was filed by the first  respondent  under Article 226 of
\nthe Constitution seeking a writ of mandamus to treat the members of the
\nrespondent Union, who were employees  working in the canteen of the
\nappellant’s factory,    as employees of the appellant and for grant of
\nmonetary and other consequential benefits.   Speaking  for the Bench,
\nRajendra Babu, J.,  (as he then was),  held as follows :\n<\/p>\n
“7.  In de Smith, Woolf  and Jowell’s Judicial Review of
\nAdministrative Action, 5th Edn., it is noticed that not all the
\nactivities of the private bodies are subject to private law, e.g.,
\nthe activities by  private bodies may be governed by the
\nstandards of public when its decisions are subject to duties
\nconferred by statute or when by virtue of the function it is
\nperforming or possible its dominant position in the market, it is
\nunder an implied duty to act in the public interest.    By way of
\nillustration, it is noticed that a private company selected to run
\na prison although motivated by commercial profit should be
\nregarded, at least in relation to some of its activities, as subject
\nto public law because of the nature of the function it is
\nperforming.   This is because the prisoners,  for whose custody
\nand care it is responsible, are in the prison in consequence of an
\norder of the court, and the purpose and nature of their
\ndetention is a matter of public concern  and interest.    After
\ndetailed discussion, the learned authors have summarized the
\nposition with the following propositions :\n<\/p>\n
(1)\tThe test of a whether a body is performing a public
\nfunction, and is hence amenable to judicial review,
\nmay not depend upon the source of its power or
\nwhether the body is ostensibly a “public” or a
\n“private” body.\n<\/p>\n
(2)\tThe principles of judicial review prima facie govern the
\nactivities of bodies performing public functions.\n<\/p>\n
(3)\tHowever,  not all decisions taken by  bodies in the
\ncourse of their public functions are the subject matter
\nof judicial review.  In the following two situations
\njudicial review will not normally be appropriate even
\nthough the body may be performing a public function<\/p>\n
(a) Where some other branch of the law more
\nappropriately governs the dispute between the parties.
\nIn such a case, that   branch of the law and its
\nremedies should and normally  will be applied; and<\/p>\n
(b)  Where there is a contract between the litigants.
\nIn such a case the express or implied terms of the
\nagreement should normally govern the matter.   This
\nreflects the normal approach of English law, namely,
\nthat the terms of a contract will normally govern the
\ntransaction, or other relationship between the parties,
\nrather than the general law.   Thus, where a special
\nmethod of resolving disputes (such as arbitration or
\nresolution by private or domestic tribunals) has been
\nagreed upon by the parties (expressly or by necessary
\nimplication),  that regime, and not judicial review, will
\nnormally govern the dispute.\n<\/p>\n
Applying the above principles, this Court held that the High Court
\nrightly held that it had no jurisdiction.\n<\/p>\n
Another decision on the same subject is General Manager, Kisan
\nSahkar Chini Mills Limited, Sultanpur, UP vs. Satrughan Nishad and
\nOrs.<\/a>  (2003) 8 SCC 639.   The appellant was a cooperative society and was
\nengaged in the manufacture of sugar.    The respondents were the workers of
\nthe appellant  and they filed various writ petitions contending that they had
\nto be treated as permanent workmen.   The appellant challenged the
\nmaintainability of those writ petitions and applying the principles enunciated
\nin VST Industries’ case (supra),  it was held by this Court that the High
\nCourt had no jurisdiction to entertain an application under Article 226 of the
\nConstitution as the mill was engaged in the manufacture and sale of sugar
\nwhich would not involve any public function.\n<\/p>\n
In Federal Bank Limited vs. Sagar Thomas & Ors.<\/a>    (2003) 10
\nSCC 733,  the respondent was  working as a Branch Manager of the appellant
\nBank.   He was suspended and there was a disciplinary enquiry wherein he
\nwas found guilty and  dismissed from service.  The respondent challenged his
\ndismissal by filing a writ petition.   The learned Single Judge held that the
\nFederal Bank was performing a public duty and as such it  fell within the
\ndefinition of “other authorities” under Article 12 of the Constitution.  The
\nappellant bank preferred an appeal, but the same was dismissed and the
\ndecision of the Division Bench was challenged before this Court.   This Court
\nobserved that a private company carrying on business as a scheduled bank
\ncannot be termed as carrying on statutory or public duty and it was therefore
\nheld  that any business or commercial activity, whether it may be banking,
\nmanufacturing units or related to any other kind of business  generating
\nresources, employment, production and resulting in circulation of money
\nwhich do have an impact on the economy of the country in general,   cannot
\nbe classified as one falling in the category  of those  discharging duties or
\nfunctions of a public nature.    It was held that that the jurisdiction of the
\nHigh Court under Article 226 could not have been invoked in that case.\n<\/p>\n
The counsel for the respondent in Civil Appeal No. 1976 of 1998 and
\nfor the appellant in the civil appeal arising out of SLP(Civil) No. 6016 of 2002
\nstrongly contended that irrespective of the nature of the body, the writ
\npetition under Article 226 is maintainable  provided such body is discharging
\na public function or statutory function and that the decision itself has the
\nflavour of public law element and they relied on the decision of this Court in
\nAndi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti
\nMahotsav Smarak Trust & Ors. Vs.  V.R. Rudani & Ors  (1989) 2 SCC\n<\/p>\n
691.   In this case, the appellant was a Trust running a science college
\naffiliated to the Gujarat University under Gujarat University Act, 1949.  The
\nteachers working in that college were paid in the pay scales recommended by
\nthe University Grants Commission and the college was an aided institution.
\nThere was some dispute between the University  Teachers Association and
\nthe University regarding the fixation of their pay scales.  Ultimately, the
\nChancellor  passed an award and this award was accepted by the State Govt.
\nas well as  the University and the University directed to pay the teachers as
\nper the award.  The appellants refused to implement the award and the
\nrespondents filed a writ petition seeking a writ of mandamus and in the writ
\npetition the appellants contended that the college managed by the  Trust was
\nnot an “authority” coming within the purview of Article 12 of the Constitution
\nand therefore the writ petition was not maintainable.   This plea  was
\nrejected  and this Court held that the writ of mandamus would lie against a
\nprivate individual and the words “any person or authority” used in Article 226
\nare  not to be confined  only to statutory authorities and instrumentalities of
\nthe State and they may cover any  other person or body performing public
\nduty.   The form of the body concerned is not very much relevant.   What is
\nrelevant is the nature of the duty imposed on the body.   The duty must be
\njudged in the light of positive obligation owed by the person or authority to
\nthe affected  party.   No matter by what means the duty is imposed, if a
\npositive obligation exists, mandamus cannot be denied.\n<\/p>\n
The above decision cannot be applied to the facts of this case.   It is
\nimportant to note that the college was an aided institution and imparting
\neducation to students.   These  facts are specifically stated in paragraph 15
\nof the judgment.  It was in this background that this  Court held that there
\nwas a  public law element in the matter involved therein and  that the college
\nauthorities were bound to pay salary and allowances to the teachers.   The
\nsaid case did  not emanate from a contract of employment between the
\nworkers and the private body.    For that reason,  the Rudani’s case cannot
\nbe applied to the facts of the present case.\n<\/p>\n
Two other decisions relied upon by the appellant to argue that  the
\nwrit petition was maintainable are the  decisions reported in (1986)3 SCC
\n156  Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo
\nNath Ganguly & Anr.  (supra) and in 1991 Supp(1) SCC 600 Delhi
\nTransport Corporation vs. DTC Mazdoor Congress & Ors.   The Central
\nInland<\/a> case was extensively relied on.  In this case, the appellant
\ncorporation was a Govt. company incorporated  under the Companies Act and
\nthe majority of the shares were held by the Union of India and remaining
\nshares were held by the State of West Bengal.   Each of the respondents in
\nthe two appeals was in the service of the said company.  A notice under Rule
\n9(1) was served on  them and their services were terminated with immediate
\neffect by paying three months pay.   They filed writ petitions before the High
\nCourt and the Division Bench allowed the same.    The appellant corporation
\nfiled an appeal before this Court.   The main thrust of the argument of the
\nrespondents was  that Rule 9(1)  of Central Inland Water Transport
\nCorporation Limited (Service, Discipline and Appeal) Rules, 1979 was  void
\nand illegal and violative  of Article 14 of the Constitution and it was  also void
\nin view Section 23 of the Contract Act.  This Court held that Rule 9(1) was
\nviolative of Article 14 as it was against the public policy as the employer had
\nabsolute power to terminate the service of an employee giving three months
\nnotice.    This Court held that this was an absolute arbitrary power given to
\nthe corporation and termination of the respondent employees by invoking
\nRule 9(1) was illegal.\n<\/p>\n
It is important to understand the real dicta laid down in the
\nbackground of the facts involved therein.     The appellant was a public sector
\nundertaking and in that view of the matter it was held that the contract of
\nemployment and the  service rules which gave absolute  and arbitrary power
\nto terminate the  service of the employees were illegal.   It may be also
\nnoticed that the termination clause was referred to in the context of the
\ncontract read as a whole  and no enquiry was contemplated under the rules
\neven in the case of allegation of misconduct and it was held to be violative
\nof the principles of natural justice.   It was also held to be violative of Section
\n23 of the Contract Act as it was opposed to public policy to terminate the
\nservices of the employee without conducting an enquiry even on the ground
\nof misconduct.   The public policy principles can be applied to the
\nemployment in public sector undertaking in appropriate cases.  But the same
\nprinciples cannot be applied to private bodies. There are various labour laws
\nwhich curtail the power of the employer from doing any anti-labour activity.
\nSufficient safeguards are made in the labour law enactments to protect the
\ninterests of the employees of private sector.   The service rules and
\nregulations which are applicable to govt. employees or employees of public
\nsector undertakings stand on a different footing and they cannot be tested on
\nthe same touchstone or enforced in the same manner.  Therefore, the
\ndecision rendered by this Court in Central Inland case is of no assistance to
\nthe respondents in Civil Appeal No. 1976 of 1988 or to the appellants in the
\ncivil appeal arising out of SLP(Civil) No. 6016 of 2002.\n<\/p>\n
In the second case also , namely,  the Delhi Transport Corporation
\nVs. DTC Mazdoor Congress & Ors. 1991 Supp.(1) SCC 600,  the appellant
\nwas a public sector undertaking and the main controversy was about the
\nterm “other authorities” under Article 12 of the Constitution.    Both in
\nCentral Inland and DTC cases, the decision of the public sector undertaking
\nwas under challenge and the question raised was whether the principles of
\nnatural justice and fairness are to be applied.  It was held that this Court has
\ngot jurisdiction to consider this question by invoking the principles of judicial
\nreview.    But it would be noticed that in both the cases, it was a public
\nsector undertaking coming within the purview of “other authorities” under
\nArticle 12 of the Constitution.\n<\/p>\n
In this context, it must be noted that the High Court purported to
\napply the ratio in the above two decisions on the assumption that all
\ntermination simplicitor clauses providing for termination on giving notice will
\nbe per se invalid.  But the High Court has not examined clauses (8) & (9) of
\nthe Agreement between Management and the Staff of Binny Limited in their
\nentirety.  Clause (9) contemplates an inquiry in a case of termination for
\nmisconduct.  Thus there is a provision for natural justice in case of
\ntermination involving misconduct and stigma.  In such a case, whether the
\nratio of the decisions in DTC and Central Inland cases would apply or not,
\nwas not examined by the High Court.  This is an additional reason why the
\ndeclaration by the High Court should not be allowed to stand.\n<\/p>\n
Thus, it can be seen that a writ of mandamus or the remedy under
\nArticle 226 is pre-eminently a public law remedy and is not generally
\navailable as a remedy against private wrongs.   It is used for enforcement of
\nvarious rights of the public or to compel the public\/statutory authorities to
\ndischarge their duties and to act within their bounds.   It may be used to do
\njustice when there is wrongful exercise of power or a  refusal to perform
\nduties.   This  writ is admirably equipped to serve as a  judicial control over
\nadministrative actions.   This writ could also be issued against any private
\nbody or person, specially in view of the words used in Article 226 of the
\nConstitution.   However, the scope of  mandamus is limited to enforcement of
\npublic duty.     The scope of mandamus is determined by the nature of the
\nduty to  be enforced, rather than the identity of the authority against whom
\nit is sought.   If the private body is discharging a public function and the
\ndenial of any right is in connection with the public duty imposed on such
\nbody, the public law remedy can be enforced.   The duty cast on the public
\nbody may be either statutory or otherwise and the source of such power is
\nimmaterial, but, nevertheless, there must be the public law element in such
\naction.   Sometimes, it  is difficult to distinguish between public law and
\nprivate law remedies.     According to Halsbury’s Laws of England  3rd ed.
\nVol. 30, page-682, “a public authority is a body not necessarily a county
\ncouncil, municipal corporation or other local authority which has public
\nstatutory duties to perform and which perform the duties and carries out its
\ntransactions for the benefit of the public and not for private profit.”   There
\ncannot be any general definition of public authority or public action.  The
\nfacts of each case decide the point.\n<\/p>\n
A contract would not become statutory simply because it is for
\nconstruction of a public utility and it has been awarded by a statutory body.
\nBut nevertheless it may be noticed that the Government or Government
\nauthorities at all levels is increasingly employing contractual techniques to
\nachieve its regulatory aims.  It cannot be said that the exercise of those
\npowers are free from the zone of judicial review and that there would be no
\nlimits to the exercise of such powers, but in normal circumstances, judicial
\nreview principles cannot be used to enforce the contractual obligations.
\nWhen that contractual power is being used for  public purpose, it is certainly
\namenable to judicial review.   The power must be used for lawful purposes
\nand not  unreasonably.\n<\/p>\n
  The decision of the employer in these two cases to terminate the
\nservices of their employees cannot be said to have any element of public
\npolicy.   Their cases were purely governed by the contract of employment
\nentered into between the employees and the employer.   It is not appropriate
\nto construe those contracts as opposed to the principles of public policy and
\nthus void and illegal under Section 23 of the Contract Act.  In contractual
\nmatters even in respect of public bodies, the principles of judicial review have
\ngot limited application.    This was expressly stated by this Court in State of
\nU.P. vs. Bridge & Roof Co.<\/a> (1996) 6 SCC 22 and also in Kerala State
\nElectricity Board vs. Kurien  E. Kalathil<\/a> (2000) 6 SCC 295.    In the
\nlatter case,  this Court reiterated that the interpretation and implementation
\nof a clause in a contract cannot be the subject matter of a writ petition.
\nWhether the contract envisages actual payment or not is a question of
\nconstruction of contract.  If a term of a contract is violated, ordinarily, the
\nremedy is not a writ petition under Article 226.\n<\/p>\n
\tApplying these principles, it can very well be said that  a writ of
\nmandamus can be issued against  a private body which is not a State within
\nthe meaning of Article 12 of the Constitution and such body is amenable to
\nthe jurisdiction under Article 226 of the Constitution and the High Court
\nunder Article 226 of the Constitution can exercise judicial review of the action
\nchallenged by a party.   But there must be a public law element and it cannot
\nbe exercised to  enforce purely  private contracts entered into  between the
\nparties.\n<\/p>\n
\tWe are unable to  perceive any public law element in the termination
\nof the employees  by the appellant in Civil Appeal No. 1976 of 1998 and the
\nremedy available to the respondents is to seek redressal of their grievance in
\ncivil law or under the labour law enactments especially in view of the
\ndisputed questions involved as regards the status of employees and other
\nmatters.   So also, in the civil appeal arising out of SLP(Civil) No. 6016 of
\n2002, the writ petition has been rightly dismissed by the High Court.    We
\nsee no merit in the contention advanced by the appellant therein.   The High
\nCourt rightly held that there is no public law element and the remedy open to
\nthe appellant is to seek appropriate relief other than judicial review of the
\naction taken by the respondent company.\n<\/p>\n
\tIn the result, we set aside the declaration ordered by the High Court
\nand allow Civil Appeal No. 1976 of 1998 to the extent indicated above.   Civil
\nAppeal arising out of SLP (Civil) No. 6016 of 2002 is dismissed leaving open
\nthe right of the appellant to seek redressal of his grievance before other
\nappropriate forum.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Binny Ltd. & Anr vs V. Sadasivan & Ors on 8 August, 2005 Author: K Balakrishnan Bench: K.G. Balakrishnan, P. Venkatarama Reddi CASE NO.: Appeal (civil) 1976 of 1998 PETITIONER: Binny Ltd. & Anr. RESPONDENT: V. Sadasivan & Ors. DATE OF JUDGMENT: 08\/08\/2005 BENCH: K.G. Balakrishnan & P. Venkatarama Reddi JUDGMENT: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-199019","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nBinny Ltd. & Anr vs V. 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