Mr. Adarsh Kumar Khanna vs Union Of India & Ors.
2011 Latest Caselaw 895 Del

            *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                       Date of decision: 15th February, 2011.

+                           W.P.(C) No.16309/2006

%        MR. ADARSH KUMAR KHANNA              ........Petitioner
                     Through: Ms. Pragya Ohri, Mr. Manu
                              Aggarwal & Mr. R.M. Karanjawala,
                              Advocates.
                                   Versus
         UNION OF INDIA & ORS.                             ..... Respondents
                      Through:            Mr. Ravinder Agarwal, Adv. for R-1
                                          UOI.
                                          Ms. Shweta Bharti, Ms. Sangmitra
                                          Sawant, Mr. Shantanu & Mr.
                                          Neelesh Singh, Advocates for R-2.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may
         be allowed to see the judgment?                    Yes

2.       To be referred to the reporter or not?             Yes

3.       Whether the judgment should be reported            Yes
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The writ petition impugns the letter dated 10th March, 2006

purportedly of the respondent no.2 Mother Dairy Fruit & Vegetables Pvt.

Ltd. repudiating/cancelling the appointment of the petitioner as Managing

Director and seeks mandamus to the respondents to pay compensation

equivalent to salary for the unserved period of employment. Notice of the

writ petition was issued. Though the writ petition was accompanied with

an application for interim relief but no interim relief was granted. The

pleadings have been completed and the counsels for the parties have been

heard.

2. The petitioner claims to be a leading Dairy Technologist, qualified

from the National Dairy Research Institute, Karnal, Haryana and having

served M/s Hindustan Lever Ltd. and M/s Britannia Industries Ltd. in the

Dairy Sector. The petitioner, vide letter dated 30th April, 2004 was

appointed as the Managing Director of M/s Mother Dairy Foods

Processing Ltd. on the terms and conditions contained therein and for a

period of five years from 30th April, 2004. The petitioner while serving as

the Managing Director of M/s Mother Dairy Foods Processing Ltd., on 2 nd

September, 2005 i.e. after about one and a half years only of his

appointment, suffered a major paralytic stroke and was hospitalized and

thereafter confined to the house. M/s Mother Dairy Foods Processing Ltd.

continued to pay the salary/emolument of the petitioner. However, the said

M/s Mother Dairy Foods Processing Ltd. vide letter dated 10 th March, 2006

impugned in this writ petition repudiated/cancelled the contract with the

petitioner with effect from 6th March, 2006.

3. The aforesaid termination is challenged averring the same to be in

contravention of Articles 21, 14 & 19(1)(g) of the Constitution of India, as

being in violation of Section 47 of the Persons with Disabilities (Equal

Opportunities, Protection of Rights and Full Participation) Act, 1995

(Disabilities Act), as being arbitrary and in contravention of the principles

of natural justice.

4. Though the appointment of the petitioner as Managing Director as

well as the letter dated 10 th March, 2006 was with/by M/s Mother Dairy

Foods Processing Ltd. but the said company was not impleaded as a

party/respondent in the writ petition as field in October, 2006. Rather,

pleadings in the writ petition were as if the appointment of the petitioner as

Managing Director was with respondent no.2 M/s Mother Dairy Fruit &

Vegetables Pvt. Ltd. The National Dairy Development Board (NDDB)

was impleaded as the respondent no.3 in the writ petition.

5. Upon objection being taken by the respondents no.2 & 3 in this

regard i.e. that the company with which the petitioner was appointed as the

Managing Director had not been impleaded, an application being CM

No.13491/2008 was filed by the petitioner for impleadment of the said M/s

Mother Dairy Foods Processing Ltd. as respondent no.4 and which was

allowed on 18th January, 2010. However, the respondent no.2 M/s Mother

Dairy Fruit & Vegetables Pvt. Ltd. thereafter filed CM No.20997/2010 for

recall of the order dated 18th January, 2010 pleading that M/s Mother Dairy

Foods Processing Ltd. already stood merged with the respondent no.2 M/s

Mother Dairy Fruit & Vegetables Pvt. Ltd. Vide order dated 6th December,

2010, the order dated 18th January, 2010 was recalled and the memo of

parties as originally filed, was ordered to be the correct memo of parties.

6. The counsel for the petitioner has during the hearing confined the

arguments only under the Disabilities Act. Attention is invited to Section

47 thereof which prohibits dispensation of service or reduction in rank of

an employee who acquires disability during his service. It is contended

that owing to the said provision, the petitioner is entitled to compensation

equivalent to the emoluments due to him for the remaining period of five

years for which he was appointed as the Managing Director.

7. Per contra, the counsel for the respondent no.2 M/s Mother Dairy

Fruit & Vegetables Pvt. Ltd. in which now M/s Mother Dairy Foods

Processing Ltd. in which the petitioner was the Managing Director has

amalgamated, has argued:-

(i) that the writ petition is liable to be dismissed merely on the

ground that the company in which the petitioner was the Managing

Director and which was in existence on the date of the filing of the

writ petition was not even impleaded as a respondent and the

application for impleadment was also filed belatedly. It is urged that

the amalgamation of M/s Mother Dairy Foods Processing Ltd. into

the respondent no.2 M/s Mother Dairy Fruit & Vegetables Pvt. Ltd.

after the institution of the writ petition would be of no avail.

(ii) that no basis for the argument under the Disabilities Act to

which the arguments are now confined has been laid in the writ

petition; there is nothing to show that the petitioner has suffered the

disability within the meaning of the said Act. Attention is invited to

the Rule 4 of the Persons with Disabilities (Equal Opportunities,

Protection of Rights and Full Participation) Rules, 1996 (Disabilities

Rules) prescribing the authorities entitled to issue a Disability

Certificate. It is urged that no Disability Certificate has at any time

been produced or shown before this Court also.

(iii) attention is next invited to Section 3 of the Disabilities Act

providing for the constitution of the Central Co-ordination

Committee and it is contended that the grievance if any under the

Disabilities Act, is to be made before the said Committee and not by

way of this writ petition.

(iv) it is contended that emoluments of nine months have already

been paid to the petitioner without the petitioner performing his

duties as Managing Director and no further payment can be directed

to be made on sympathetic grounds.

(v) it is contended that the petitioner as Managing Director was

not an employee so as to entitle to benefit of Section 47 of the

Disabilities Act. Reliance in this regard is placed on para 7 of Shri

Ram Prasad Vs. Commissioner of Income Tax AIR 1973 SC 637.

8. The counsel for the petitioner in rejoinder has urged that the

petitioner as Managing Director was also an employee; that the Disabilities

Act is a Social Welfare Legislation and purposive interpretation to

provisions thereof has to be given. Reliance in this regard is placed on the

observations of the House of Lords in Kammins Ballrooms Co. Ltd. Vs.

Zenith Investments (TORQUAY) Ltd. 1971 AC 850. Reference is also

made to Kumari Shrilekha Vidyarthi Vs. State of U.P. (1991) 1 SCC 212

(para 22) to contend that irrespective of the relationship of the petitioner

with M/s Mother Dairy Foods Processing Ltd. being contractual, the said

company being a state within the meaning of Article 14 of the Constitution

of India, its obligations to the petitioner partake a public character. It is

contended that no prejudice whatsoever has been caused to the respondents

by non-impleadment of M/s Mother Dairy Foods Processing Ltd. at the

time of institution of the writ petition.

9. Having considered the matter, I am of the view that even if the

provisions of the Disabilities Act were to be held to be applicable, the

petitioner still would not be entitled to compensation equivalent to the

balance period of his employment as Managing Director and which is the

only relief claimed. A perusal of the letter dated 30 th April, 2004 of

appointment of the petitioner shows that though the period of appointment

was for a period of five years from 30th April, 2004 but Clause 7(b) thereof

provided that the employment could be terminated by either party giving to

the other party three months notice or the company paying three months

remuneration in lieu thereof. The petitioner thus had no right/certainty of

continuance as a Managing Director for five years from 30 th April, 2004,

for him to be entitled to compensation equivalent to the unserved/balanced

period. Clause 7(b) (supra) did not entitle such termination by three

months notice or remuneration in lieu thereof subject to any specific

exigencies. The employment of the petitioner was liable to be terminated

at mere whim and fancy of the M/s Mother Dairy Foods Processing Ltd.,

without even stating any reasons.

10. A perusal of the letter dated 10 th March, 2006 of

repudiation/cancellation impugned in this writ petition shows that M/s

Mother Dairy Foods Processing Ltd. had invoked the aforesaid Clause 7(b)

only for repudiating/cancelling the appointment of the petitioner.

11. The question which thus arises is whether M/s Mother Dairy Foods

Processing Ltd. could under Section 47 of the Disabilities Act be

compelled to continue with the petitioner as Managing Director for five

years or be compelled to pay the emoluments for the balance period of five

years when it was entitled otherwise to terminate the employment. In this

regard it may be noticed that Section 47 of the Disabilities Act does not

have a non-obstantive clause viz. "notwithstanding anything to the contrary

contained in any contract.....". Section 47 of the Disabilities Act is not

intended to create a new contract between an employer and an employee.

It only prohibits dispensation with service for the reason of disability.

However, if an employer otherwise under the contract of employment with

the employee, is entitled to dispense with the services of the employee

owing to the same being terminable merely by giving three months notice,

Section 47 of the Act cannot come in the way of the said termination.

Section 47 of the Act is a protection for a situation where an employer

otherwise was not entitled to terminate the employment but became

entitled to so terminate the employment for the reason of disability having

been suffered by the employee and the employee being unable to perform

the tasks for which he is employed.

12. The Supreme Court recently in Dalco Engineering Private Ltd. v.

Shree Satish Prabhakar Padhye AIR 2010 Supreme Court 1576 had an

occasion to consider the provisions of the Disabilities Act. Before the

Supreme Court also, argument was raised that the Act being a Socio-

economic Legislation should be interpreted liberally. While agreeing with

the said contention, the Supreme Court held that the said argument was

with a caveat that the Courts cannot obviously expand the application of a

provision in a Socio-economic legislation by judicial interpretation, to

levels unintended by the Legislature or in a manner which militates against

the provisions of the statute itself or against any constitutional limitation.

It was further held that express limitations placed by the Socio-economic

statutes cannot be ignored so as to include in its application, those who are

clearly excluded by the statute itself.

13. If the arguments of the petitioner herein were to be accepted, the

same would tantamount to this Court re-writing the contract between the

parties and doing away from the said contract, a right which the employer

had reserved unto itself, to without furnishing any reason terminate the

employment. The same is not permitted, as aforesaid.

14. Though the writ petition is liable to be dismissed on this finding

alone but propriety demands that the other arguments raised be also dealt

with.

15. The first other question which arises is whether non-impleadment at

the time of institution of the writ petition of M/s Mother Dairy Foods

Processing Ltd. is fatal to the writ petition. In my opinion, no. The

petitioner even at the time of filing of the writ petition was lying paralyzed.

The writ petition on his behalf has been filed by his wife and who could

not be expected to be in the full know of the affairs. It is otherwise not

disputed that both respondent no.2 M/s Mother Dairy Fruit & Vegetables

Pvt. Ltd. as well as M/s Mother Dairy Foods Processing Ltd. are the

subsidiaries of the respondent no.3 NDDB. The mistake in not impleading

M/s Mother Dairy Foods Processing Ltd. at the time of institution of writ

petition can thus be not fatal. Moreover, the application for impleadment

was allowed and which order was recalled only owing to the M/s Mother

Dairy Foods Processing Ltd. having since merged in the respondent no.2

M/s Mother Dairy Fruit & Vegetables Pvt. Ltd.

16. The nest question raised is of whether a Managing Director can be

an employee. The Supreme Court in Ram Prasad (supra) relied upon by

the respondent no.2 M/s Mother Dairy Fruit & Vegetables Pvt. Ltd. has

held that whether a Managing Director is an employee or not, can be

determined only from the Articles of Association of the company employer

and the terms of employment and there is no hard and fast Rule. Though

neither of the parties has placed before this Court the Articles of M/s

Mother Dairy Foods Processing Ltd. but the petitioner admittedly was not

a promoter of the said company and had no financial stake therein or in

profits save to the extent of his remuneration under his letter of

appointment. The petitioner was a professional in comparison to

entrepreneur Managing Director. A perusal of the appointment letter

shows that the petitioner in the matter of leave, travelling concession,

medical benefits, use of company‟s car and telephone at residence etc. was

to be governed by the Rules of the Company; he was not entitled to engage

himself in any other activity. The letter of appointment itself at several

places intended the petitioner as Managing Director to be in the

employment of the company. The Supreme Court in ESI Corporation Vs.

Apex Engineering (Pvt.) Ltd. (1998) 1 SCC 86 has held that a Managing

Director by himself cannot be said to be the owner of the factory which

belongs to the company and particularly when the Managing Director was

to work under the directions of the entire body of Directors, as is the case

in the present case also.

17. I therefore hold the petitioner to be an employee of M/s Mother

Dairy Foods Processing Ltd. since merged in the respondent no.2 M/s

Mother Dairy Fruit & Vegetables Pvt. Ltd.

18. The only other argument raised for excluding the applicability of the

Disabilities Act was that Section 47 of the Act prohibits only an

"establishment" which is defined in Section 2(k) of the Act as meaning a

corporation established by or under a Central, Provincial or State Act or an

authority or body owned or controlled or aided by the Government or a

local authority or a Government Company as defined in Section 617 of the

Companies Act, 1956 and including Departments of Government. It was

contended that neither M/s Mother Dairy Foods Processing Ltd. nor the

respondent no.2 M/s Mother Dairy Fruit & Vegetables Pvt. Ltd. can be said

to be a corporation established by or under a Central Act or controlled or

aided by the Government or a Local Authority or a Government Company

within the meaning of Section 617 of the Companies Act, 1956.

19. The Supreme Court in Dalco Engineering Private Ltd. (supra) has

negated the argument that since all companies are incorporated under the

Companies Act, they would be a corporation established by or under a

Central Act. It was held that the words "a corporation established by or

under a Central, Provincial or State Act" is a standard term used in several

enactments to denote a statutory corporation established or brought into

existence by or under a statute; a company incorporated under the

Companies Act is not created by the Companies Act but comes into

existence in accordance with the provisions of the Act; that the word

"established" refers to coming into existence by virtue of an enactment.

From the caption/marginal note of Section 47 of the Act describing the

purport of the Section as non-discrimination in Government employment,

it was held that private employers are excluded from the applicability

thereof. It was however held that the word "Government" is used in the

caption broadly to refer to „State‟ as defined in Section 12 of the

Constitution.

20. The matter thus has to be decided in the light of the law as aforesaid

laid down. The counsel for the respondent no.2 M/s Mother Dairy Fruit &

Vegetables Pvt. Ltd. informs that both M/s Mother Dairy Foods Processing

Ltd. and M/s Mother Dairy Fruit & Vegetables Pvt. Ltd. are the

subsidiaries of respondent no.3 NDDB. Undoubtedly, respondent no.3

NDDB has been established by or under the National Dairy Development

Board (NDDB) Act, 1987. It is however contended that M/s Mother Dairy

Foods Processing Ltd. and M/s Mother Dairy Fruit & Vegetables Pvt. Ltd.

however were not established under the said Act and are incorporated

companies and merely because their entire shareholding was/is held by the

respondent no.3 NDDB would not make them a corporation established

under the NDDB Act.

21. A perusal of the NDDB Act however shows that Section 43 thereof

empowers the NDDB to, for implementation of any of its objectives and

subject to the previous approval of the Central Government form one or

more companies either by itself or in conjunction with any of the

subsidiary or with any other undertaking. No arguments by either counsels

on the said aspect, were addressed. However, in view of the admission, of

both M/s Mother Dairy Foods Processing Ltd. as well as M/s Mother Dairy

Fruit & Vegetables Pvt. Ltd. being the subsidiaries of respondent no.3

NDDB, I have no doubt that they have been formed in exercise of powers

under Section 43 of the NDDB Act. That being the position, they would

certainly be a corporation established by or under the NDDB Act and

hence an establishment within the meaning of Section 2(k) of the Act and

the provisions of Section 47 of the Disabilities Act, would thus apply to

M/s Mother Dairy Foods Processing Ltd. as well as the M/s Mother Dairy

Fruit & Vegetables Pvt. Ltd.

22. The aforesaid also falls from the judgment aforesaid in Dalco

Engineering Private Ltd. which has held that the benefit of Section 47 of

the Disabilities Act is intended to be restricted to employees of an

enumerated establishment which fall within a State under Article 12. M/s

Mother Dairy Foods Processing Ltd. and M/s Mother Dairy Fruit &

Vegetables Pvt. Ltd. would fall within the definition of State under Article

12 of the Constitution of India and hence would be an establishment for

this reason also.

23. No other argument was raised. Though sympathies remain with the

petitioner, but I am unable to grant any relief in law. The writ petition is

therefore dismissed but with no order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) FEBRUARY 15, 2011 bs (Corrected and released on 28th February, 2011)