2005 (8) TMI 749 - SC - Indian Laws

Summary

Issues Involved:
1. Maintainability of writ petitions under Article 226 against private companies.
2. Applicability of public law principles to private employment contracts.
3. Validity of termination clauses under Section 23 of the Indian Contract Act.
4. Jurisdiction of High Courts in enforcing private contractual obligations.

Issue-wise Detailed Analysis:

1. Maintainability of Writ Petitions under Article 226 Against Private Companies:
The Supreme Court examined whether writ petitions are maintainable against private companies under Article 226 of the Constitution. The appellant companies argued that they are private entities and not amenable to writ jurisdiction, as their actions do not involve any public law element. The respondents contended that their contracts were void under Section 23 of the Indian Contract Act and violative of Article 21 of the Constitution. The Court reiterated that Article 226 is a public law remedy and is generally not available for private wrongs. It can be invoked against private bodies only if they discharge public functions. The Court held that the termination of employees by private companies did not involve any public law element, and hence, the writ petitions were not maintainable.

2. Applicability of Public Law Principles to Private Employment Contracts:
The Court discussed the scope of judicial review in the context of private employment contracts. It was argued that even if the decision-making authority is a private body, the High Court's jurisdiction under Article 226 can be invoked to set aside illegal acts affecting fundamental rights. The Court held that judicial review is designed to prevent abuse of power by public authorities, and its scope is limited in private contractual matters. The Court emphasized that public law remedies like mandamus are primarily for enforcing public duties and cannot be used to enforce private contractual obligations.

3. Validity of Termination Clauses under Section 23 of the Indian Contract Act:
The respondents argued that the termination clauses in their employment contracts were void under Section 23 of the Indian Contract Act as they were against public policy. The Court referred to previous judgments, including Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, where similar termination clauses were held void. However, the Court distinguished these cases, noting that the earlier cases involved public sector undertakings, whereas the present cases involved private companies. The Court held that the principles of public policy applicable to public sector undertakings cannot be extended to private bodies. The termination clauses in private contracts were found not to be opposed to public policy under Section 23.

4. Jurisdiction of High Courts in Enforcing Private Contractual Obligations:
The Court examined whether High Courts can enforce private contractual obligations under Article 226. It was argued that the High Court's jurisdiction should be invoked to address grievances arising from private contracts. The Court held that disputes arising from private contracts should be resolved through civil litigation or under labor law enactments. The Court emphasized that the remedy under Article 226 is not appropriate for enforcing private contractual obligations, as it is a public law remedy.

Conclusion:
The Supreme Court set aside the High Court's declaration that the termination clauses were void and unenforceable. It held that the writ petitions were not maintainable as the actions of the private companies did not involve any public law element. The Court allowed the appeal in Civil Appeal No. 1976 of 1998 and dismissed the appeal in SLP (Civil) No. 6016 of 2002, leaving open the right of the appellant to seek redressal through other appropriate forums.