1997 (5) TMI 345 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Nature and termination of the petitioner's employment.
3. Compliance with principles of natural justice.
4. Authority of ANIIDCO under Article 12 of the Constitution.
5. Arbitrary and unbridled power of termination.

Issue-wise Detailed Analysis:

1. Maintainability of the writ petition:
The respondent raised a preliminary objection arguing that ANIIDCO is not a 'State' or 'Authority' under Article 12 of the Constitution. The court referred to several Supreme Court judgments, including Ramana Dayaram Shetty v. International Airport Authority of India, which expanded the definition of 'authority' to include corporations set up by the government to carry out public functions. The court concluded that ANIIDCO, being wholly owned and controlled by the government, is an instrumentality of the State and thus falls under Article 12, making the writ petition maintainable.

2. Nature and termination of the petitioner's employment:
The petitioner was appointed as General Manager of ANIIDCO with terms indicating permanent employment. Despite this, his service was terminated abruptly without cause or hearing, purportedly during a probation period. The court found this claim invalid as the appointment letter did not mention any probation period and explicitly stated the petitioner would be a regular and permanent employee.

3. Compliance with principles of natural justice:
The termination was executed without giving the petitioner an opportunity to defend himself, violating the principles of natural justice. The court emphasized that even administrative actions must adhere to the principles of natural justice, as established in Delhi Transport Corpn. v. D.T.C. Mazdoor Congress and other judgments. The court held that the termination was arbitrary and lacked procedural fairness.

4. Authority of ANIIDCO under Article 12 of the Constitution:
The court examined the constitution, composition, and functions of ANIIDCO, noting that it was wholly owned by the government and performed public functions. This pervasive state control and the nature of its activities classified ANIIDCO as an instrumentality of the State under Article 12. Consequently, ANIIDCO's actions were subject to constitutional scrutiny, including adherence to fundamental rights and principles of natural justice.

5. Arbitrary and unbridled power of termination:
The court scrutinized the clause in ANIIDCO's Articles of Association that allowed the board of directors to remove employees at their discretion. This clause was deemed arbitrary and contrary to Article 16 of the Constitution, which ensures equality of opportunity in public employment. The court referenced the Supreme Court's stance in Delhi Transport Corpn. v. D.T.C. Mazdoor Congress, which invalidated similar clauses for being unjust and arbitrary.

Conclusion:
The court set aside the termination order, deeming it illegal and arbitrary. The petitioner was reinstated with full benefits, as the termination violated the principles of natural justice and was executed under an arbitrary clause. The writ petition was allowed, and the petitioner was deemed to be in continuous service without any break.