1988 (11) TMI 347 - SC - Indian Laws

Summary

Issues Involved:
The issues involved in this case include the legality and validity of a circular issued by the Board of Directors of a Government Company, the alteration of terms and conditions of service of employees, compliance with principles of natural justice, and the quashing of the impugned circular by the High Court.

Legality and Validity of Circular:
The case involved a circular issued by the Board of Directors of a Government Company, following the takeover of another company by the Government. The High Court quashed the circular as it adversely affected the employees' terms and conditions of service without giving them an opportunity to be heard. The High Court held that the Board acted illegally and in violation of natural justice principles by not providing a hearing to the employees before issuing the circular.

Compliance with Principles of Natural Justice:
The respondents contended that the circular altered their terms and conditions of service prejudicially, without giving them an opportunity to be heard. The High Court emphasized the significance of the word "duly" in the relevant section, indicating that any alteration of service conditions must be done properly and in accordance with the law. The High Court ruled that the lack of a pre-decisional hearing violated the rules of natural justice, leading to the quashing of the circular.

Post-Decisional Hearing and Natural Justice:
The Court rejected the argument that a post-decisional hearing suffices for compliance with natural justice. Citing a previous case, the Court highlighted that once a decision is made, there is a tendency to uphold it, and a post-decisional representation may not serve the purpose of justice. Therefore, any hearing provided after the impugned circular was issued did not rectify the lack of natural justice in the initial decision-making process.

Conclusion:
The Supreme Court dismissed the appeals, upholding the High Court's decision to quash the impugned circular. The Court affirmed that the circular's issuance without providing a pre-decisional hearing violated the principles of natural justice, emphasizing the importance of due process in altering employees' terms and conditions of service.