2006 (4) TMI 541 - SC - Indian Laws

Challenged the termination order from the service - passed by the Managing Director - HELD THAT -In the present case the Managing Director s order dismissing the respondent from the service was admittedly ratified by the Board of Directors on 20th February 1991 and the Board of Directors unquestionably had the power to terminate the services of the respondent. On the basis of the authorities noted it must follow that since the order of the Managing Director had been ratified by the Board of Directors such ratification related back to the date of the order and validated it. Thus this appeal is allowed the impugned judgment and order of the High Court is quashed and the dismissal order dated 25.1.1991 is upheld.

Summary

Issues:
1. Competency of the authority to terminate employment.
2. Validity of ratification of an invalid act.
3. Application of precedents in similar cases.

Issue 1: Competency of the authority to terminate employment
The respondent was dismissed from service by the Managing Director of the appellant company. However, it was argued that the Managing Director did not have the authority to terminate the respondent's services as the Board of Directors had not empowered him to do so for employees earning above a certain threshold. The High Court held that the Managing Director was not competent to terminate the respondent's services, rendering the dismissal order invalid.

Issue 2: Validity of ratification of an invalid act
The appellant argued that the subsequent ratification by the Board of Directors validated the Managing Director's dismissal order. The Supreme Court held that ratification can validate an initially invalid act. Citing precedents like Parmeshwari Prasad Gupta case, the Court emphasized that ratification relates back to the date of the act and validates it. Therefore, the ratification by the Board of Directors made the dismissal order valid retrospectively.

Issue 3: Application of precedents in similar cases
The Court distinguished the present case from the Krishna Kumar case, where the removal was held invalid due to the subordinate officer's lack of authority. In contrast, in the current case, the Managing Director's order was ratified by the Board of Directors, which had the authority to terminate the respondent's services. The Court upheld the dismissal order, emphasizing the importance of ratification by a competent authority to validate an act retrospectively.

In conclusion, the Supreme Court allowed the appeal, quashed the High Court's judgment, upheld the dismissal order dated 25.1.1991, and ruled that there would be no costs incurred. The judgment clarified the principles of ratification of invalid acts and the significance of authority in employment termination decisions.