2021 (3) TMI 484 - HC - Companies Law

Maintainability of petition - Determination of Contractual agreement - it is contended that the 2 nd respondent-Company neither being a Government Company nor being an instrumentality of the State, the Writ Petition is otherwise also not maintainable - HELD THAT - The answering respondent is a Private Limited Company incorporated under the law relating to Companies; there is no material placed on record to show that it answers the description of Government Company as defined u/s 617 of the erstwhile Companies Act, 1956 or the corresponding provision of the Companies Act, 2013; this apart, no prima facie evidence is placed to substantiate the contention that the said Company fills the character of State or its instrumentality fitting into the definition given under Article 12 of the Constitution of India - the Writ Petition is misconceived. The contents of the letter of appointment keep beyond the pale of any doubt that appointment of the petitioner was purely contractual in substance; where the determination of services is occasioned by the terms of the contract or anything done under the terms, it does not become actionable in law, subject to all just exceptions into which the argued case of the petitioner does not fit - there is no choate cause of action for maintaining an action in law and more particularly, for invoking extraordinary jurisdiction of this Court, as rightly contended by the other side. The vehement argument of the learned counsel for the petitioner that the removal is stigmatic in character and therefore, an enquiry ought to have been held before issuing the impugned removal order, is bit difficult to countenance; arguably, had the answering respondent been an instrumentality of the State, perhaps different factors would have entered the fray of consideration; even otherwise, it is open to the answering respondent- Company, assuming that it is an instrumentality of the State, to have the services of managerial personnel purely on contract basis, when it is admitted that there are no Recruitment Rules having binding effect - there is some material which suggests that the impugned termination of the contract for service is preceded by some allegations, is arguably true; but that per se does not exclude the respondent-Company from invoking the conditions of contract entered into by the petitioner; as already mentioned, had the contract in question graduated to a legal status as it happens in Public Service Jurisprudence, the matter would have been different, since the infraction of the conditions of service are treated under the Service Rules which usually have abundant public law character; it is needless to mention that if the impugned action or anything done preceding the same, amounts to some other cause of action, it is open to the petitioner to litigate on it. Petition dismissed.

Issues:
1. Maintainability of the Writ Petition against a Private Limited Company.
2. Nature of the petitioner's appointment and the validity of the termination.
3. Requirement of an enquiry before issuing a removal order.
4. Allegations preceding the termination and their relevance to the contractual obligations.

Analysis:

1. Maintainability of Writ Petition:
The High Court examined whether the Writ Petition against a Private Limited Company was maintainable. It was determined that the company did not fall under the definition of a Government Company or an instrumentality of the State. The Court referenced legal provisions and the decision in Ramana Dayaram Shetty vs The International Airport to establish that the company did not meet the criteria under Article 12 of the Constitution of India. Consequently, the Writ Petition was deemed misconceived and not maintainable.

2. Nature of Appointment and Termination Validity:
The Court analyzed the terms of the petitioner's appointment, which was contractual in nature. Conditions in the appointment letter allowed the company to terminate the services by providing a three-month notice or emoluments in lieu of notice. The Court highlighted that the petitioner had accepted a substantial sum without protest, indicating no actionable cause of action. It was concluded that the termination was in line with the contractual terms, and the petitioner's argument lacked legal basis for invoking the Court's extraordinary jurisdiction.

3. Requirement of Enquiry for Removal Order:
The petitioner argued that a stigmatic removal required an enquiry before issuing the removal order. However, the Court reasoned that in the absence of the company being an instrumentality of the State, contractual appointments could be terminated without a formal enquiry. Reference was made to the decision in Life Insurance Corporation of India Vs Escorts Ltd. to emphasize that judicial review of State actions is limited to public law domain matters, not private law issues like contractual obligations.

4. Allegations Preceding Termination and Contractual Obligations:
The Court acknowledged that the termination was preceded by allegations, but clarified that such allegations did not exempt the company from invoking contractual conditions. The Court differentiated public service jurisprudence from contractual obligations, stating that the breach of service conditions is typically governed by Service Rules with public law characteristics. The Court dismissed the petitioner's reliance on a previous case involving an instrumentality of the State, as the present case lacked similar legal grounds.

In conclusion, the Writ Petition was dismissed for lacking merit, with costs awarded to the respondent. The judgment highlighted the distinction between public law and private law matters in contractual appointments and emphasized the importance of adhering to contractual obligations in such cases.

← Previous Next →