1999 (8) TMI 801 - HC - Companies Law

Summary

Issues Involved:
1. Whether the plaintiff is entitled to a declaration that their employment continues post-termination.
2. Whether the plaintiff is entitled to an injunction restraining the defendants from acting on the termination letter.
3. Whether the plaintiff is entitled to payment of monthly salary from January 1999 onwards.
4. The applicability of specific performance and injunction in contracts of personal service under the Specific Relief Act.

Issue-Wise Detailed Analysis:

1. Declaration of Continued Employment:
The plaintiff sought a declaration that their employment continued post-termination and claimed entitlement to work and salary. The court examined the legal precedents and statutory provisions, particularly focusing on the Specific Relief Act. The court noted that while declaratory reliefs can be granted under Section 34 of the Act, they are limited by Section 14, which generally precludes specific performance of contracts of personal service. The court referenced the Supreme Court judgment in *Ashok Kumar Srivastav v. National Insurance Co. Ltd.*, which clarified that a suit for declaration and mandatory injunction for reinstatement is maintainable under certain conditions but reiterated that the relief of specific performance is not typically available for personal service contracts.

2. Injunction Against Termination:
The plaintiff also sought an injunction to prevent the defendants from acting on the termination letter. The court discussed the principles governing injunctions in employment contracts, emphasizing that injunctions cannot be granted to enforce a contract of personal service unless it falls within specific exceptions. The court cited the Supreme Court's rulings in *Nandganj Sihori Sugar Co. Ltd. v. Badri Nath Dixit* and *Executive Committee of Vaish Degree College v. Lakshmi Narain*, which established that an injunction cannot be granted to prevent the breach of a contract that cannot be specifically enforced. The court concluded that the plaintiff's case did not meet the criteria for these exceptions, such as statutory violations or public duty.

3. Payment of Monthly Salary:
The plaintiff requested payment of their monthly salary from January 1999 onwards. The court reiterated that the primary remedy for wrongful termination in personal service contracts is damages, not specific performance or reinstatement. The court referenced the legal principle that damages are the appropriate remedy for breach of employment contracts, as stated in *S.R. Tiwari v. District Board* and other precedents. Therefore, the court found no basis to grant the plaintiff's request for ongoing salary payments.

4. Specific Performance and Injunction in Personal Service Contracts:
The court extensively analyzed the applicability of specific performance and injunctions in personal service contracts under the Specific Relief Act. The court highlighted that Section 14(1)(a) precludes specific performance of such contracts, and Section 41(e) prevents injunctions to enforce contracts that cannot be specifically performed. The court referred to the commentary by Robert Upex and legal precedents to emphasize that personal service contracts are generally not enforceable through specific performance due to the personal and confidential nature of the employer-employee relationship. The court concluded that the plaintiff's case did not present the "special circumstances" required to deviate from this general rule.

Conclusion:
The court dismissed the notice of motion, finding no merit in the plaintiff's claims. The court held that the plaintiff's remedies, if any, lie in a claim for damages rather than reinstatement or ongoing salary payments. The judgment reaffirmed the established legal principles that specific performance and injunctions are not typically available for personal service contracts, except under specific statutory or exceptional circumstances.