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TMI Blog1969 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... er an enquiry the respondent was found A guilty and in consequence dismissed from service of the appellant by order dated March 10, 1964. The respondent instituted Civil Suit No. 201 of 1964 challenging the order of dismissal. According to him the various allegations made against him were vague and had not been established and there has been no proper enquiry conducted against him. The enquiry, according to him, was contrary to the principles of natural justice without giving him an opportunity to place his defence and it was also held in disregard of Clause 16 of the Regulations framed by the appellant. He also claimed that he was entitled to the protection under Article 311 of the Constitution. On these allegations the plaintiff prayed for a declaration that the order, dated March 10, 1964 dismissing him from service, was null and void and that he was entitled to be reinstated with full pay and other emoluments. 3. The appellant-defendant, in its written statement, pleaded that the enquiry into the charges leveled against the plaintiff was made properly and in compliance with the provisions of the Regulations and the plaintiff-respondent had been given full opportunity to part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Produce (Development and Warehousing) Corporations Act, 1956 (Act 28 of 1956)(hereinafter called the Act) had statutory force and that as there had been a violation of Regulation no. 16(3), the plaintiff was entitled to the declaration. 7. Mr. S. T. Desai, learned Counsel for the appellant Corporation railed two contentions: (1) A full and fair opportunity was given to the respondent in the enquiry held against him and there has been no violation of Regulation No. 16(3), The finding on this point by the High Court and the Subordinate Courts is erroneous,. (2) Even on the basis that the enquiry is vitiated by non-compliance with the provisions of Regulation no. 16(3) framed by the Corporation, the relief declaring that the plaintiff is entitled to be reinstated in service with full pay should not have been granted as by doing so the Courts have departed from the normal rule that the specific performance of a contract of personal service will not be enforced. In any event, counsel urged that there are no special circumstances justifying the grant of that relief in this case. 8. Mr. B. R. L. Iyengar, learned Counsel for the respondent, pointed out that the findings that the enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the State Government establishing a Warehousing Corporation for the State. As pointed out earlier, the appellant is the Warehousing Corporation for the State of Uttar Pradesh, established under this section. Section 34 lays down the functions of a State Warehousing Corporation. Section 35 provides for the composition of the Executive Committee of a State Warehousing Corporation. Section 52 gives power to the appropriate Government to make rules to carry out the purposes Of the Act and Sub-section (2) deals with the various matters in respect of which rules may be framed without prejudice to the generality of the power contained in Sub-section (1). Sub-section(3) provides that all rules made by the appropriate Government under Section 52 shall, as soon as may be after they are made, be laid before both Houses of Parliament or the Legislature of the State as the case may be. Section 53 gives power to the Board to make regulations not inconsistent with the Act and the rules made thereunder, and those regulations may provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act. Apart from the generality of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... punishment other than that specified therein is to be imposed, has to be given an opportunity of tendering his explanation in writing and cross-examining witnesses against him, if any, and producing evidence in defence. The grievance of the respondent regarding the conduct of the enquiry, apart from other objections, is that materials collected fry the Enquiry Officer behind his back were not made known to him and that information had been taken into account for holding him guilty. His further objection is that he did not get any opportunity to adduce evidence in his defence and that the various, persons from whom information had been gathered by the Enquiry Officer were not tendered for cross-examination by him. It is not necessary for us to go elaborately into the various proceedings connected with the giving of the charge-sheet, the explanation offered by the appellant and the final conclusions arrived at by the Enquiry Officer on the basis of which the respondent has been dismissed from service. As pointed out by Mr. Iyengar, all the Courts have concurrently held that the enquiry is vitiated and has been held contrary to Regulation 16(3). It is enough therefore, in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted that the respondent will receive only subsistence allowance during the period of suspension. The order of suspension must be related to Regulation 17 and the grant of subsistence allowance must be referred to Regulation 18, both of which occur in Chapter IV relating to discipline. Therefore it follows that the first contention of Mr. S. T. Desai cannot be accepted. 13. Mr. Desai next urged that even on the basis that the order of dismissal had been passed in violation of Regulation 16(3), the decree granting a declaration for reinstatement of the respondent with full pay and emoluments is illegal as amounting to enforcing a contract of personal service. Alternatively Mr. Desai urged that in any event there are no special circumstances existing in this case justifying the grant of such a declaration. 14. Mr. Desai developed his contentions as follows The relationship between the appellant and the respondent is that of a master and servant. A breach of Regulation 16(3) will at the most result in the order of dismissal being wrongful. The remedy, if any, of the aggrieved party in such a case will only be a claim for damages for breach of contract. The counsel further urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those provisions before punishment other than those punishments specified therein is imposed against an employee. The regulations, according to Mr. Iyengar, having been framed under the Act, have statutory effect and they impose statutory obligation of a mandatory nature on the appellant Corporation in respect of the procedure to be adopted for taking disciplinary action. On the findings recorded by all the Courts, it is clear that there has been a violation of Clause (3) of Regulation 16, in which case it follows that the respondent was entitled to get a declaration that the order of dismissal is void and of no effect. Counsel also pointed out that the respondent's services have been arbitrarily and mala fide terminated by the appellant and therefore, there are sufficient circumstances for departing from the normal rule that a contract of personal service will not be specifically enforced. 16. The question as to when and under what circumstances a relief by way of declaration regarding continuity of service, after holding that an order of dismissal is void or ultra vires, can be given, has been considered both in England and here. The leading decision of the House of Lords ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice, the employment is effectively terminated, albeit in breach of contract. Here, the removal of the plaintiff's name from the register being, in law, a nullity, he continued to have the right to be treated as a registered dock worker with all the benefits which, by statute, that status conferred on him. It is, therefore, right that, with the background of this scheme, the court should declare his rights. 17. At p. 948, Lord Keith of Avonholm states : This is not a straightforward relationship of master and servant. Normally, and apart from the intervention of statute, there would never be a nullity in terminating an ordinary contract of master and servant. Dismissal might be in breach of contract and so unlawful but could only sound in damages. Here we are concerned with a statutory scheme of employment.... The scheme gives the dock worker a status. Unless registered, he is deprived of the opportunity of carrying on what may have been his lifelong employment as a dock worker, and he has a right and interest to challenge any unlawful act that interferes with this status. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective and the plaintiff continued to be still in service as the order was a nullity. On behalf of the plaintiff reliance was placed on the decision in Vine's Case (1956) 3 E.R.939 Repelling this contention, Barry, J., observes, at p. 331 : ...I am unable to equate this case to the circumstances which were being considered by the Court of Appeal and the House of Lords in Vine v. National Dock Labour Board (1956) 3 E.R. 939 There the plaintiff was working under a code which had statutory powers, and, clearly, in those circumstances, all the lords of appeal who dealt with the case in the House of Lords took the view that the case could not be dealt with as though it were an ordinary master and servant claim in which the rights of the parties were regulated solely by contract. Here, despite the strong statutory flavour attaching to the plaintiff's contract, I have reached the conclusion that in essence it was an ordinary contract between master and servant and nothing more. In this view the Court finally held that the plaintiff's only remedy was to recover damages as for breach of contract. 20. A similar question regarding the right of a dismissed employee to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssal or for breach of contract. This is the normal rule and that was applied in Barber's case [1958] 1 All E.R.322 and Francis' case [1962] 3 All E.R. 633 But, when a statutory status is given to an employee and there has been a violation of the provisions of the statute while terminating the services of such an employee, the latter will be eligible to get the relief of a declaration that the order is null and void and that he continues to be in service, as it will not then be a mere case of a master terminating the services of a servant. This was the position in Vine's case [1956] 3 All E.R.939 22. The question has also been considered by this Court in certain decisions, to which we will immediately refer. In Dr. S.B. Dutt v. University of Delhi [1959] S.C.R.1235 this Court had to consider the legality of an award directing that an order of dismissal was ultra vires, mala fide and of no effect and that the appellant in that case continued to be a Professor of the University. The appellant, Dr. Dutt, who was a Professor in the University of Delhi, was dismissed from service by the latter. He referred the dispute regarding his dismissal and certain other disputes to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not enforce a contract of personal service but proceeded on the basis that the dismissal could only be effected in terms of the statute and as that had not been done, it was a nullity, from which the result followed that the respondent had continued in service. All that the Judicial Committee did in this case was to make a declaration of a statutory invalidity of an act, which is a thing entirely different from enforcing a contract of personal service. 23. Holding that 'it was not the appellant's case before the arbitrator that the dismissal was ultra vires the statute or otherwise a nullity', this Court ultimately confirmed the judgment of the High Court setting aside the award. 24. The jurisdiction of the Courts to grant a declaration in a particular case that an order of dismissal is void and that the dismissed employee continues to remain in service, again came up for consideration before this Court in S. R. Tewari v. District Board, Agra (1964)ILLJ1SC . In that case, the appellant's service as an Engineer under the District Board, Agra, was terminated by the latter, after giving salary for three months in lieu of notice. The appellant, after having unsucc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to delegate its disciplinary function. Again, the decision in Dr. Dutt's Case [1959]1SCR1236 : [1959]1SCR1236 was stated to be not a case in which the invalidity of an act done by the University on the ground that it infringed a statutory provision fell to be determined and the rights and obligations of the parties rested in contract and therefore the award was declared to be one contrary to the rule contained in Section 21(b) of the Specific Relief Act and hence void. This Court, wound up the discussion in Tewari's Case (1964)ILLJ1SC : (1964)ILLJ1SC as follows, at p. 62 : The jurisdiction to declare the decision of the Board as ultra vires exists, though it may be exercised only when the Court is satisfied that departure is called for from the rule that a contract of service will not ordinarily be specifically enforced. On facts, this Court held that the order of dismissal of the appellant before them was proper and justified. 25. From the two decisions of this Court, referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. But there are certain well-recognized exceptions to this rule a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d contrary to Clause 10(a) and 10(b) of the order passed by the Central Government under Section 11(2) of the Insurance Act, which is called the blue order. The contention on behalf of the Life Insurance Corporation was that the orders were passed in accordance with the regulations framed by the Life Insurance Corporation under Section 49 of the Insurance Act, read with Clause 11 of the blue order. The High Court held that the orders of dismissal were in breach of Clause 10(a) and 10(b) of the blue order, and therefore the orders were invalid. The result of the grant of this relief was that the employees continued to be in service. This Court confirmed the decision of the High Court, and having considered the rights conferred by Section 11(1) and 11(2) of the Insurance Act, held that the employees of the Insurers whose controlled business had been taken over, became employees of the Life Insurance Corporation and that their terms and conditions of service continued until they were altered by the Central Government and that if the alteration made by the Central Government was not acceptable, they were entitled to leave the employment of the Corporation and for payment of compensatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Central Government. In view of the fact that Clause 10 of the order issued by the Central Government had not been complied with, the order terminating the services of the employees was held to be invalid. 30. It will be seen that the services, as pointed out by this Court, of the employees whose cases were under consideration, had been crystallized by the statute-the Insurance Act-in Section 11(1) and 11(2); By virtue of the powers conferred by Section 11(2), the Central Government issued the order on December 30, 1957. Clause 10 of this order had clearly indicated the procedure to be adopted for terminating the services of such employees. Therefore, the employees had their rights safeguarded by the Insurance Act read with the order issued by the Central Government and it cast a statutory obligation on the Life Insurance Corporation to adopt a particular procedure if the services of those employees were to be terminated. By not complying with the provisions of Clause 10 of the order of the Central Government, which is really related to Section 11 of the Insurance Act, the Life Insurance Corporation must be considered to have acted in gross violation of the mandatory pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, a breach has been committed by the appellant of Regulation 16(3) when passing the said order of dismissal, inasmuch as the procedure indicated therein has not been followed. The Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters. As to whether the rules framed under Section 52 deal with any such matters, does not arise for consideration in this case as the respondent has not placed any reliance on the rules and he has rested his case only on Regulation 16(3). It is not in dispute that, in this case, the authority who can pass an order of dismissal has passed the same. Under those circumstances a violation of Regulation 16(3), as alleged and established in this case, can only result in the order if dismissal being held to be wrongful and, in consequence, making the appellant liable for damages. But the said order cannot be held to be one which has not terminated the service, albeit wrongfully, or which entitles the respondent to ignore it and ask for being treated as still in service. We are not concerned with the question of damages, because no such claim has been made by the respondent in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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