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2018 (11) TMI 1407 - HC - Companies LawCorrectness of termination orders of petitioners from employment - unlawful termination and restoration to service - preliminary objection raised on behalf of respondent-employer is that writ petition is not maintainable as it is not a State within the meaning of Article 12 of Constitution - Whether CUPGL can be said to be State within the meaning of Article 12 of Constitution? - Held that - Position of CUPGL in the case in hand, it cannot be doubted that its functional control is in the hands of Public Sector Companies like, BPCL, GAIL and IGL. Clause 120 of Article of Association of CUPGL shows that so long as holding is equal, both i.e. BPCL and GAIL will have equal representation in the Board. Chairman of Board of CUPGL shall be either a whole time Director of GAIL or Chairman or Managing Director of BPCL or his nominee. Therefore, GAIL and BPCL both have pervasive control in CUPGL. Since holding Companies are Central Government Companies, which have pervasive control, and BPCL having already been held to be State within the meaning of Article 12 of Constitution, we do not find any hesitation in holding that CUPGL is an instrumentality of State and within the ambit of term other authorities under Article 12 of Constitution of India it is a State within Article 12. Question-(1), therefore, is answered accordingly. Relationship between Government (employer) and Government Servant (employee) is not like an ordinary contract of service between a master and servant. The legal relationship is something entirely different, something in the nature of status. In the language of jurisprudence, status is a condition of membership of a group, whereof powers and duties are exclusively determined by law and not by agreement between the parties concerned. Thus, where appointment and conditions of service are governed by Statute, relationship of employer and employee is that of status and not a mere contract. However, in other cases, it is purely a contract of service resulting in a relationship of ordinary master and servant. In the present case also, relationship of employment between petitioner and CUPGL is purely and simply an ordinary contract of service which is not governed by any statute or statutory provision. In such cases, a contract of service cannot be sought to be enforced by Court of law by giving relief of reinstatement or continuance in employment as this relief is barred under Act, 1963. In Vidya Ram Misra Vs. Managing Committee, Shri Jai Narain College (1972 (1) TMI 110 - SUPREME COURT) Court said that it is well settled that when there is a termination of a contract of service, a declaration that the contract of service still subsists would not be made in the absence of special circumstances, because of the principle that Courts do not ordinarily enforce specific performance of contract of service.
Issues Involved:
1. Whether CUPGL can be said to be 'State' within the meaning of Article 12 of the Constitution? 2. Whether the writ petition is maintainable in the matter of termination of service of an employee of CUPGL when terms and conditions are not governed by any statutory provisions and are purely within the realm of contract? 3. Whether relief of reinstatement can be granted to petitioners when terms and conditions of employment are not governed by statutory provisions, if the order of termination is said to be vitiated in law? 4. Whether the order of termination is illegal or bad in law? Issue-wise Detailed Analysis: 1. Whether CUPGL can be said to be 'State' within the meaning of Article 12 of the Constitution? The court examined whether CUPGL qualifies as a 'State' under Article 12, considering its shareholding and control. CUPGL, a joint venture of BPCL, GAIL, and IGL, is functionally controlled by these public sector companies. BPCL and GAIL, being Central Government companies, have pervasive control over CUPGL. The court referenced the criteria established in previous judgments, including the extent of government control and the nature of functions performed by the entity. Given that BPCL and GAIL hold equal representation in CUPGL's Board, and the pervasive control by these entities, the court concluded that CUPGL is an instrumentality of the State and thus falls within the ambit of 'other authorities' under Article 12. 2. Whether the writ petition is maintainable in the matter of termination of service of an employee of CUPGL when terms and conditions are not governed by any statutory provisions and are purely within the realm of contract? The court noted that even if CUPGL is considered a 'State', the employment terms are governed by a contract and not by statutory provisions. The petitioners' employment was not governed by any statutory rules but by a contract of service. The court reiterated that specific performance of a contract of personal service is generally not enforceable under the Specific Relief Act, 1963. Thus, the writ petition challenging the termination of service based on contractual terms is not maintainable. 3. Whether relief of reinstatement can be granted to petitioners when terms and conditions of employment are not governed by statutory provisions, if the order of termination is said to be vitiated in law? The court emphasized that in cases where employment is purely contractual and not governed by statutory provisions, the remedy for wrongful termination is typically damages rather than reinstatement. The court cited various precedents where reinstatement was not granted in cases of contractual employment. Given that the petitioners' employment was not governed by statutory rules, the court held that reinstatement could not be granted even if the termination was found to be wrongful. 4. Whether the order of termination is illegal or bad in law? The petitioners argued that the termination was punitive and violated principles of natural justice, as they were not given a proper opportunity to defend themselves. The respondents contended that an independent inquiry was conducted, and the termination was based on the findings and loss of confidence. The court noted that the terms and conditions of employment were not challenged as being arbitrary or violative of Article 14. Given the contractual nature of the employment and the absence of statutory governance, the court found no grounds to declare the termination illegal or to grant reinstatement. Conclusion: The court concluded that CUPGL is a 'State' under Article 12 but dismissed the writ petitions on the grounds that the employment was contractual and not governed by statutory provisions. The relief of reinstatement was not granted, and the petitions were dismissed for lack of merit.
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