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Issues Involved:
1. Whether Regulation 16.14 is arbitrary and as such ultra vires Article 14 of the Constitution of India. 2. Whether three months' notice or pay in lieu of the notice period was required to be given under Regulation 16.14. 3. The termination order having been passed by the Managing Director who was an authority subordinate to the Board of Directors which appointed Sharma, the order was bad on that ground. 4. Whether the impugned order is violative of rules of natural justice so much so that the ground of taking part in active politics was not mentioned in the show cause notice whereas it was relied upon in the termination order. 5. Whether the period of absence, which was prior to the date of coming into force of the amended Regulation 16.14, could be taken into consideration for invoking ground (c) of the Regulation. Summary: 1. Regulation 16.14 and Article 14 of the Constitution of India: The court found no arbitrariness in Regulation 16.14. The regulation addresses four different eventualities: (a) abolition of post, (b) medical unfitness, (c) unauthorized absence, and (d) participation in active politics. The provision of a show cause notice serves as a sufficient safeguard against arbitrary action. The regulation is within the competence of the management and does not violate Article 14 of the Constitution. 2. Notice Requirement under Regulation 16.14: The court disagreed with the Division Bench of the High Court that three months' notice or pay in lieu thereof was required for Sharma under Regulation 16.14. The regulation clearly states that such notice is only necessary for grounds (a) and (b). For grounds (c) and (d), a 15-day notice to explain the conduct satisfactorily is sufficient. 3. Authority of the Managing Director to Terminate Services: Sharma was appointed by the Board of Directors, but the powers to appoint officers of Sharma's category were delegated to the Managing Director on September 12, 1974. Therefore, the Managing Director became the appointing authority and was legally competent to terminate Sharma's services. Employees of the company are not civil servants and do not enjoy the protection of Article 311(1) of the Constitution of India. 4. Violation of Rules of Natural Justice: The court found that grounds (c) and (d) in Regulation 16.14 are sufficient to terminate an employee's services. Although the termination order mentioned taking part in active politics without prior notice, the order could still be supported on the ground of unauthorized absence. The court cited precedents stating that if an order can be supported on one lawful ground, it is not for the courts to consider whether that ground alone would have weighed with the authority. 5. Retrospective Application of Amended Regulation 16.14: The court held that the amended Regulation 16.14, which included grounds (c) and (d), could not operate retrospectively. The period of unauthorized absence considered in the show cause notice was prior to the amendment date (April 20, 1983). Therefore, using this period as a ground for termination was illegal. The notice served on Sharma was thus invalid, and the termination order could not be sustained. Conclusion: The termination order was set aside, and Sharma was entitled to sixty percent of the back-wages. Money already received by Sharma under court orders would be adjusted, and any excess would not be recovered. Civil Appeal 3154/85 was allowed to the extent indicated, and Civil Appeal 3155/85 filed by the company was dismissed. There was no order as to costs.
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