1968 (6) TMI 40 - HC - Companies Law

Summary

Issues Involved:
1. Whether the posts held by the petitioners under Hindusthan Steel Ltd. can be considered "civil posts under the Union" within the meaning of Article 311 of the Constitution.
2. Whether Article 311(2) of the Constitution was complied with in the termination of the petitioners' services.
3. Whether the petitioners' services were terminated in accordance with the terms of their service contracts.

Issue-wise Detailed Analysis:

1. Whether the posts held by the petitioners under Hindusthan Steel Ltd. can be considered "civil posts under the Union" within the meaning of Article 311 of the Constitution:

The court examined whether the petitioners' positions in Hindusthan Steel Ltd., a government-owned company, could be considered civil posts under the Union of India, thus attracting Article 311 of the Constitution. The court noted that Hindusthan Steel Ltd. is a company formed under the Companies Act, 1956, with all shares owned by the President of India and his secretaries. Despite this, the company maintains a separate legal entity distinct from the government. The court cited Supreme Court decisions, such as Valjibhai v. State of Bombay and Andhra Pradesh State Road Transport Corporation v. Income-tax Officer, which established that government-controlled companies are not departments of the government and their employees are not government employees. The court concluded that the petitioners' posts do not qualify as civil posts under the Union, as Hindusthan Steel Ltd. is a separate legal entity.

2. Whether Article 311(2) of the Constitution was complied with in the termination of the petitioners' services:

The petitioners argued that their termination violated Article 311(2), which provides procedural safeguards for civil servants. The court referenced the Supreme Court's decision in Guru Gobinda Basu v. Sankari Prasad Ghosal, which distinguished between "office of profit under the Government" and "holder of a post or service under the Government." The court emphasized that Article 311(2) applies to individuals in a master-servant relationship with the government. Since the petitioners were employees of a company and not the government, Article 311(2) did not apply. The court also noted that the President's involvement in appointments and removals did not alter the petitioners' status as company employees.

3. Whether the petitioners' services were terminated in accordance with the terms of their service contracts:

In C.R. 1864(W)/67, the petitioner argued that his termination did not comply with the terms of his service contract. The court reiterated that Article 311(2) and Article 226 are not applicable to enforce contractual service disputes. Instead, such disputes must be resolved under general contract law. The court cited cases like Satish Chandra v. Union of India and Boolchand v. Kurukshetra University, which established that contractual service disputes should be pursued through appropriate legal forums, not constitutional remedies. Consequently, the petitioner's claim was dismissed on the grounds that it was a contractual issue, not a constitutional one.

Conclusion:

The court discharged both rules, concluding that the petitioners' posts were not civil posts under the Union, Article 311(2) was not applicable, and the service terminations were matters of contract law. The petitioners were advised to seek remedies through other legal avenues. The court also refused a certificate for leave to appeal to the Supreme Court, stating that the issues had been settled by previous Supreme Court decisions and did not involve substantial constitutional questions.