Delhi High Court

Akhilesh Kumar Verma vs Maruti Udyog Ltd. & Ors. on 26 September, 2011

Author: V. K. Jain

         THE HIGH COURT OF DELHI AT NEW DELHI

%                    Judgment Reserved on: 14.09.2011
                     Judgment Pronounced on: 26.09.2011

+ CS(OS) No. 1917/1995

Akhilesh Kumar Verma                       ..... Plaintiff
                  Through: Mr. A.K.Verma, Plaintiff-in-
                  person

                             versus

Maruti Udyog Ltd. & Ors.                 ..... Defendants
                   Through: Mr. H.L.Raina, Advocate for
                   D-1, 2 & 5

CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

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 Digest?

V.K. JAIN, J


1.          The plaintiff was employed as an Executive with

defendant No. 1- Company in June, 1984 and was promoted

as Sr. Executive in the year 1989.          The plaintiff was

dismissed from service of defendant No.1 vide order dated

27th June, 1992.     The allegations in the plaint is that the

defendant No.2 Shri R.C.Bhargava, Managing Director of


CS(OS)No.1917/1995                                  Page 1 of 39
 defendant        No.1    company        and     defendant    No.3        Shri

D.S.Gupta, Divisional Manager (Marketing & Sales) of this

company        were     involved   in    irregularities     and     corrupt

practices and wanted the plaintiff to cooperate with them

and when he declined to do so, they became hostile toward

him.     On 16th May, 1989, the plaintiff was transferred to

Gurgaon in the Transport Planning and Dispatch Section of

the Vehicle Dispatch Department and made to report to a

person of equivalent level. Neither any work nor a seat was

allotted to him for 10 months and thereafter, he was asked

to sit with Assistants and Supervisors, whereas his junior

was sitting in officers‟ row. This, according to the plaintiff

was done to humiliate him.              This is also the case of the

plaintiff that on 11th January, 1990 an attempt was made

by defendant No.5 Shri A. Nandy, DGM to assault him in

the factory premises and he had to lodge a report in this

regard with the police as well as the Industry Minister. It is

also    alleged that a          number     of   articles    appeared         in

newspapers           exposing   corruption      and   irregularities         in

defendant No.1-company and the role of defendants No. 2 &

3 in those corruptions and irregularities. An FIR was also

registered by CBI in this regard. Suspecting that it was the

CS(OS)No.1917/1995                                                Page 2 of 39
 plaintiff who was behind CBI inquiry, the defendants

decided to transfer him to Bombay and a transfer order

dated     17th       April,   1990   was   accordingly   issued.           A

representation made by the plaintiff for cancellation of

transfer was rejected. A Civil Suit was filed by the plaintiff

in this regard but he was not able to get any interim relief.

Despite request of the plaintiff no arrangement was made by

defendant No.1-company for his travel to Bombay for joining

the Regional Office to which he had been transferred. He

was rather given a charge-sheet alleging unauthorized

absence and disobedience of the orders. On 29th January,

1991 he was relieved from the factory of defendant No.1 and

he joined Bombay office on 30th January, 1991. Since the

wife of the plaintiff fell sick he proceeded to Delhi after

submitting a leave application.              When he joined back

Bombay on 1st April, 1991 he was not assigned any work

and was asked to go to Jawahar Lal Nehru Port Trust,

Raigarh without assigning any work to him. He was posted

at Jawahar Lal Nehru Port Trust, Raigarh vide order dated

6th April, 1991 but no work was allotted to him even at

Raigarh.      Since no work was assigned to the plaintiff he

proceeded on leave but the leave was not sanctioned.                       A

CS(OS)No.1917/1995                                          Page 3 of 39
 charge-sheet dated 5th August, 1991 was then served on

him on 7th August, 1991 alleging unauthorized absence and

disobedience of orders of the superiors.      The plaintiff was

given 10 days time to file reply to the charge-sheet.

However, even before expiry of 10 days time stipulated in

the    charge-sheet,   inquiry   was   instituted    against     the

plaintiff.

2.           During pendency of the inquiry, defendant No.4

who was appointed as the Inquiry Officer told the plaintiff

that the inquiry was merely an eye-wash and he had, in any

case, to submit a report against him. The dismissal order

has been challenged by the plaintiff primarily on the

grounds that, 1) the Inquiry Officer, who was under

pressure of defendants No. 2 & 3 was prejudiced against

him and had stated that the inquiry was only a formality, 2)

the domestic inquiry was used as a smokescreen to give a

pre-determined verdict against the plaintiff, and 3) the

inquiry was conducted in violation of principles of natural

justice. The plaintiff has sought quashing of the domestic

inquiry and his reinstatement in service and in the

alternative damages amounting to Rs.24,35,303/- which

includes Rs.63,944/- towards gratuity.              The aforesaid

CS(OS)No.1917/1995                                      Page 4 of 39
 amount has been claimed on the basis of last drawn salary

and admissible allowances. The plaintiff has also claimed a

sum of Rs.1,00,000/- towards harassment and mental

agony and Rs.2,00,000/- for his defamation on account of

illegal and arbitrarily dismissal.

3.          The suit has been contested by defendant No.1, 2

& 5. They have taken a preliminary objection that since the

plaintiff had earlier filed a suit seeking declaration and

permanent injunction against his transfer, the present suit

on the same cause of action is barred by the principle of

estoppels and is liable to be dismissed.            Another

preliminary objection taken by the contesting defendants is

that since a contract of service, being personal in nature is

not enforceable, the suit is not maintainable in the present

form and is barred under the provisions of Specific Relief

Act. On merits, the contesting defendants have denied the

allegations made against them. As regards the incident of

11th January, 1990 it is alleged that the plaintiff was found

sitting in computer terminal room without any authorization

and was asked by defendant No.5 not to create indiscipline

in the department whereupon plaintiff abused him and

alleged that he did not have a proper seat. Defendant No.5

CS(OS)No.1917/1995                                 Page 5 of 39
 thereafter raised his hand to point towards the office where

the plaintiff had been allotted seat. The plaintiff thereupon

lost him temper and used abusive language against

defendant No.5 alleging attempt to assault.             Regarding

allocation of work and seat in the factory premises, it is

alleged that the plaintiff was informed that he had been

allotted a seat in the Vehicle Dispatch and Transport Billing

Section but he was not satisfied with the seat allotted to

him, which he claimed was not in accordance with his

status and seniority, though in fact, the defendants have

adopted      Japanese   culture   of   sitting   in   open    office.

Regarding transfer of the plaintiff to Bombay, it is claimed

that as per the contract of service, the plaintiff could have

been transferred in the exigencies of the work and the

transfer was made accordingly.          The plaintiff was then

posted at Nhana Sheva Port to render assistance to the

Manager which the defendant No.1-company had appointed

to look after its operations there. It is also alleged that the

plaintiff was avoiding orders of his transfer to Bombay and a

charge-sheet dated 31st December, 1990 was issued to him

when he did not report for duty at the Regional Office till

19th November, 1990. It is further, alleged that the plaintiff

CS(OS)No.1917/1995                                       Page 6 of 39
 was unauthorizedly absent from the duty from 23 rd April,

1990 to 30th April, 1990 and 1st May, 1990 to 19th

November, 1990. He did not comply with the order of his

superiors to report at Jawahar Lal Port Trust at Raigarh and

came to Delhi on 11th February, 1991 without getting his

leave sanctioned.      He remained unauthorizedly absent till

30th March, 1991. It is also claimed that the Inquiry Officer

was an independent person and was not prejudiced against

the plaintiff and the inquiry was conducted in accordance

with law following the principles of natural justice.

4.          The following issues were framed on the pleadings

of the parties:

              1. Whether because of the suspicion of
                 defendant No.1 that the plaintiff had
                 made revelations of its malpractices, the
                 plaintiff was harassed and illegally
                 dismissed by defendant No.1? - OPP
              2. Whether the domestic enquiry report
                 dated 21st May, 1992 is illegal, motivated
                 and liable to be declared null and void? -
                 OPP
              3. Whether the dismissal order dated 27 th
                 June, 1992 is illegal, motivated and liable
                 to be declared null and void? - OPP
              4. Whether the plaintiff is entitled to any
                 amount of compensation from the
                 defendants? - OPP
              5. Whether the suit of the plaintiff is not


CS(OS)No.1917/1995                                      Page 7 of 39
                  maintainable in the present form and
                 barred under the Specific Relief Act? -
                 OPD
              6. Relief.

Issue No.5

5.          Admittedly, the suit instituted previously by the

plaintiff was with respect to his transfer whereas it is

dismissal of the plaintiff from the service which has been

challenged in the present suit. The case of the contesting

defendants is that the application of the plaintiff for grant of

an interim injunction in that suit was dismissed not only by

the trial Court but also by the first Appellate Court.          The

inquiry report was not the subject matter of the previously

instituted suit and therefore, the Court in which the

previous suit was filed was not called upon to adjudicate on

the validity of the dismissal of the plaintiff from service. The

present suit is therefore not barred by the principle of

estoppel. The issue is decided against the defendants and

in favour of the plaintiff.

Issues No. 1, 2 & 3

6.          In his affidavit by way of evidence, the plaintiff has

stated that during pendency of the domestic inquiry and

even after its completion, the Inquiry Officer (Defendant

CS(OS)No.1917/1995                                      Page 8 of 39
 No.4) had told him several times that the inquiry was merely

an eyewash and that in any case he had to make a report

against him.         The telephonic conversations were tape

recorded by him and are contained in his representation

Exh. PW-1/51. The Inquiry Officer despite being a party to

the suit has not filed any Written Statement contesting the

suit nor have the contesting defendants examined him as a

witness. Thus, the deposition of the plaintiff with respect to

- what conversation took place between him and the Inquiry

Officer remains virtually unrebutted.         It would be pertinent

to note here that only one witness Shri A.S.Sharma has

been     examined     by   the   contesting    defendants.        Mr.

A.S.Sharma, obviously cannot have any knowledge of

conversation between the plaintiff and the Inquiry Officer

and has admitted that he had no personal knowledge about

this case and was depositing on the basis of the record of

the company. He has also admitted that he did not know as

to what discussion defendants No. 3, 4, 5 & 6 had with the

plaintiff.    The plaintiff has also placed on record the tape

alleged to be containing conversation between him and the

Inquiry Officer. Though, the voice if any, in the tapes has

not been compared by any expert with the voice sample of

CS(OS)No.1917/1995                                        Page 9 of 39
 the defendant No.4 that, to my mind, would not make much

difference since defendant No.4 despite being a party to the

suit has not come forward to controvert the transcript of the

conversation as mentioned in Exh. PW-1/51.           As per the

transcript the Inquiry Officer stated as under:

              "Report to mujhe aapke khilaf hi banana
              hai, aapke khilaf enquiry hi issi liye
              institute hui hai, varna charges hi kya
              hain."

            This conversation between the plaintiff and the

Inquiry Officer clearly indicates that the inquiry was

conducted with a pre-decided mind and the Inquiry Officer

who was an employee of defendant No.1-company was

under instructions to submit a report against the plaintiff,

irrespective of the merit of the charge against him. Since,

the Inquiry Officer had during the pendency of the inquiry

itself, decided to submit a report against the plaintiff it is

obvious      that    he   was   biased   against   the    plaintiff,

presumably, on account of the pressure from his superiors

to submit a report detrimental to the plaintiff. If the Inquiry

Officer was biased against the plaintiff and was conducting

the inquiry proceedings with a pre-decided mind, the

inquiry proceedings as well as the findings recorded by the

CS(OS)No.1917/1995                                       Page 10 of 39
 Inquiry Officer became tainted and vitiated. If the inquiry

proceedings and the findings recorded by the Inquiry Officer

were vitiated on account of bias, which the Inquiry Officer

had against the plaintiff, the dismissal of the plaintiff based

on such an inquiry report also becomes vitiated in law and

is liable t be quashed on this ground alone.

7.          Exh. PW-1/50 is the communication dated 21st

May, 1992 whereby a copy of the inquiry report was

supplied to the plaintiff and he was advised to make

representation against it, if he so desired, within 04 days of

receipt of the communication.        Exh. PW-1/D1 which is a

document field by the contesting defendants is a draft for

approval (DFA) dated 21st May, 1992.         Exh. PW-1/52 is a

replica of Exh. PW-1/D1. Not a single sentence in paras 1-5

of dismissal order Exh. PW-1/52 is different from DFA Exh.

PW-1/D1. Para 02 of DFA dated 21st May, 1992 Exh. PW-

1/D1 and dismissal order dated 27th June, 1992 Exh. PW-

1/52 reads as under:

              The Competent Authority, after having
              gone through the proceedings of the
              enquiry, the report of the Enquiry Officer
              and other connected papers, including
              your representation against the findings of
              the Enquiry Officer has concurred with the

CS(OS)No.1917/1995                                     Page 11 of 39
               findings of the Enquiry Officer.


            Admittedly,     the   representation          against      the

communication dated 21st May, 1992 Exh. PW-1/50 was

submitted by the plaintiff only on 9th June, 1992. The very

fact that a draft order referring to the representation of the

plaintiff against the finding of the Inquiry Officer and

conveying the concurrence of the Competent Authority with

the findings of the Inquiry Officer after considering the

representation of the plaintiff, had been prepared on 21 st

May, 1992 indicates that the Competent Authority had

already      taken    a    decision,   even      before     receipt      of

representation from the plaintiff against the Inquiry Report,

to dismiss him from service, which, in turn, indicates that

the Competent Authority was biased against the plaintiff

and     had      decided   even   before      the   receipt     of     the

representation of the plaintiff, to accept the findings of the

Inquiry Officer to dismiss him from service.                  Had the

Competent Authority not been acting with a biased mind,

the draft order referring to the representation of the plaintiff

against the findings of the Inquiry Officer and conveying

concurrence of the competent authority with the findings of


CS(OS)No.1917/1995                                            Page 12 of 39
 the Inquiry Officer, would not have been prepared on 21st

May, 1992 itself.    It would also be pertinent to note here

that the person who prepared DFA Exh. PW-1/D1 has not

been produced in the witness box to explain why this kind

of draft was prepared and kept on the file even before

receipt of representation of the plaintiff against the findings

recorded by the Inquiry Officer and possibly even before

serving the communication dated 21st May, 1992 Exh.PW-

1/50 on the plaintiff. This is yet another ground on which

the dismissal of the plaintiff from service of defendant No.1

is liable to be quashed.

8.          Ex.PW-1/44 is the chargesheet dated August 05,

1991, issued to the plaintiff by Regional Manager (West) of

defendant No. 1. Vide this chargesheet, he was called upon

to submit his explanation within 10 days of receipt of the

chargesheet. The plaintiff received this chargesheet on

August 07, 1991, as is evident from his explanation dated

August 13, 1991 (Ex.PW-1/45).       Ex.PW-1/46 is the note

initiated on August 16, 1991 for appointment of an Inquiry

Officer, to conduct inquiry into charges against the plaintiff.

Since the plaintiff was given 10 days from the date of the

receipt of the chargesheet to submit his explanation with

CS(OS)No.1917/1995                                   Page 13 of 39
 respect to the acts of misconduct imputed to him, defendant

No. 1 ought to have waited for at least 10 clear days from

the date of delivery of the chargesheet on him, before

initiating a proposal for appointment of the Inquiry Officer.

It is noted in the proposal Ex.PW-1/46 that the plaintiff had

not cared to reply to the chargesheet, but, the note does not

indicate the date on which the chargesheet was served on

him nor does it refer to the time given to the plaintiff to

submit his explanation in the matter. It would be pertinent

to note here that the proposal Ex.PW-1/46 does not refer to

response of the plaintiff dated August 13, 1996, which was

delivered in the office of defendant No. 1 on August 16,

1991, as is evident from the endorsement made on the

document. Therefore, it cannot be said that the proposal for

appointment of the Inquiry Officer was initiated after receipt

of the response of the plaintiff and after taking the same

into consideration. Had defendant No. 1 bothered to verify

the date of service of chargesheet on the plaintiff and waited

for 10 days from the date of service of the chargesheet on

him, it would have been possible for it to consider the

explanation from the plaintiff before taking any decision on

the question of holding an inquiry into the charges against

CS(OS)No.1917/1995                                  Page 14 of 39
 him. The fact that a proposal for appointment of the Inquiry

Officer was initiated even before expiry of the time given to

the plaintiff to respond to the chargesheet is yet another

indicator that defendant No. 1, somehow or the other,

wanted to get rid of the plaintiff at the earliest possible and

that is why it did not bother to await the response of the

plaintiff or to wait for at least 10 days from the date the

chargesheet was served on him.

9.          One of the cardinal principles of natural justice is

that the deciding authority must be fair impartial and

without any bias. The bias can be personal pecuniary and

official.    The test to determine whether the decision was

influenced by bias or not, is as to whether there was a real

likelihood of bias even though such bias, has not in fact

taken place.         In The Secretary to the Government,

Transport Department, Madras v. Munuswamy Mudaliar

and Ors. AIR 1988 SC 2232, it was observed in the context

of an Arbitrator that a pre-deposition to decide for and

against one party without proper regard to the true merits of

the dispute is bias. If the Inquiry Officer had, even before

examining the merits of the charge against the plaintiff,

decided/agreed to submit a report against him, this would

CS(OS)No.1917/1995                                    Page 15 of 39
 indicate a pre-disposition to decide against the plaintiff and

therefore would constitute bias. Of course, there must be a

reasonable apprehension of such a pre-disposition and that

apprehension needs to be based on cogent material. If the

Inquiry Officer tells a person that he has to submit a report

against him, this would definitely give rise to a reasonable

apprehension in the mind of the person facing inquiry that

he cannot expect to get a fair report from such an Inquiry

Officer and therefore would be a case of the Inquiry Officer

being bias against him.     Though, there is no evidence to

show that the plaintiff had, during the inquiry proceedings,

made a request to the Competent Authority to remove the

Inquiry Officer, that, to my mind, would not be sufficient to

reject the allegation of bias when the Inquiry Officer despite

being a party to the suit has chosen not to contest the suit

and the contesting defendants have also not examined him

as a witness, to controvert the plea of bias taken in the

plaint.

            In Jai Inder Singh v. Union of India & Ors. 1994

(29) DRJ (DB), the show-cause notice dated 27th November,

1992, asking him to submit his reply before 10 th December,

1992 was dispatched on 16th December, 1992 whereas the

CS(OS)No.1917/1995                                  Page 16 of 39
 order had been signed on 11th December, 1992 thus, the

show-cause           notice   was   actually   dispatched   after    the

dismissal order had already been passed.                Under these

circumstances, it was held that the appointing authority

was pre-determined to pass the order of dismissal without

waiting for the reply to the show-cause notice issued by it

and such an order being in violation of principles of natural

justice could not be sustained. In the case before this Court

thus, the order of dismissal of service was signed only after

receipt of reply from the plaintiff. The fact that a draft order

referring to the representation of the plaintiff against the

report of the Inquiry Officer and conveying concurrence of

the Competent Authority to the findings recorded by him

was found in the file of defendant No.1 company and the

dismissal order is a replica of that draft order clearly

indicates a pre-disposition on the part of the Competent

Authority to dismiss the plaintiff from service.

10.         It was contended by the learned Counsel for the

contesting defendants that since a contract of service being

personal in nature cannot be specifically enforced, the Court

cannot direct reinstatement of the plaintiff nor can it award

compensation on account of his dismissal from service. In

CS(OS)No.1917/1995                                          Page 17 of 39
 this regard he has relied upon clause 8 of the terms and

conditions on which the plaintiff was appointed which

provided that the service of the plaintiff, on confirmation,

was liable to be terminated by giving 03 months‟ notice by

either party or pay plus dearness allowance in lieu of such

notice, or, in case of shorter notice, pay plus dearness

allowance for the period falling short of 03 months‟ period.

He has also contended that since defendant No.1 is not

„State‟ within the meaning of Article 12 of the Constitution

of India, the plaintiff did not enjoy protection of Article 311

of the Constitution of India.    In support of his contention

that defendant No.1 is not „State‟ within the meaning of

Article 12 of the Constitution of India, the learned Counsel

for the contesting defendants relied upon decision of this

Court in P.B.Ghayalod v. M/s Maruti Udyog Ltd. & Ors.

45(1991) DLT 381 (DB).

            In the facts and circumstances of this case, I find

no merit in the contention that even if the Court finds that

dismissal of the plaintiff from service is bad in law being

vitiated by bias on the part of the Inquiry Officer and the

Competent Authority who dismissed him from service, the

Court can neither order his reinstatement nor award him

CS(OS)No.1917/1995                                    Page 18 of 39
 compensation in lieu of the reinstatement in service.        No

doubt, since defendant No.1 is a private company and is not

„State‟ within the meaning of Article 12 of the Constitution

of India as was held by this Court in the case of

P.B.Ghayalod (supra) and since the plaintiff is not a

workman, defendant No.1 could in exercise of powers

conferred by clause 8 of the terms and conditions of

appointment, have terminated the services of the plaintiff by

giving 03 months‟ notice or pay plus dearness allowance in

lieu of such notice. But, defendant No.1-company chose not

to proceed under the above referred clause and rather

decided to hold a departmental inquiry against the plaintiff.

Clause 12 of the terms and conditions on which the plaintiff

was appointed provided that he would be governed by all

rules and regulations of service and standing orders and

instructions of the company which were in force at that time

and which could be framed in future for employees of his

category and his acceptance of the appointment order

carried that it is express agreement to abide by all such

rules, regulations, standard orders etc.    Once defendant

No.1 decided to hold an inquiry against the plaintiff after

giving charge-sheet to him, it is not open to it to rely upon

CS(OS)No.1917/1995                                 Page 19 of 39
 clause 8 of the terms and conditions on which the plaintiff

was appointed and say that even if his dismissal from

service was wrong, he is not entitled to more than 03 moths‟

pay and dearness allowance. Dismissal from service on the

basis of an adverse finding recorded by the Inquiry Officer

carries a stigma attached to it and therefore, cannot be

treated at par with a termination simplicitor under a

termination clause such as clause 8 of the terms and

conditions of appointment of the plaintiff.

11.         The learned Counsel for the contesting defendants

has relied upon Vaish Degree College, Shamli & Ors. v.

Lakshmi Narain & Ors. AIR 1976 SC 888, Pearlite Liners

(P) Ltd. v. Manorama Sirsi (2004) 3 SCC 172 & Sanjay

Gupta (Dr.) v. Shroff's (Dr.) Charity Eye Hospital 2002 VII

AD (Delhi) 580.

12.         In Vaish Degree College (supra), the Executive

Committee of the appellant college passed a resolution

terminating          the   services   of   the   plaintiff/respondent.

However, even before the formal resolution terminating his

services could be passed, the plaintiff filed a suit for an

injunction restraining the defendants from interfering with

his duties as the Principal of the college. The injunction

was refused to the plaintiff by the trial Court but was

granted by the first Appellate Court. The decision of the

first Appellate Court was affirmed by the High Court. The

decision of the first Appellate Court and the High Court was

however set aside by the Supreme Court. During the course

of the judgment Supreme Court held that a contract of

personal service cannot ordinarily be specifically enforced, a

Court normally would not give a declaration that the

contract subsists and the employee, even after having been

removed from service cannot be deemed to be in service

against the will and consent of the employer. This rule,

however, is subject to three well recognized exceptions - (i)

where a public servant is sought to be removed from service

in contravention of the provisions of Article 311 of the

Constitution of India; (ii) where a worker is sought to be

reinstated on being dismissed under the Industrial Law; and

(iii) where a statutory body acts in breach or violation of the

mandatory provisions of the statute.

There is no dispute with respect to the proposition

of law laid down in the above referred case and in fact,

during the course of arguments, the plaintiff also did not

press for his reinstatement and sought only

compensation/damages for his wrongful dismissal from

service. Nowhere has Supreme Court said in the case of

Vaish Degree College (supra) that even if an employee of a

private employer, who is neither a public servant nor a

worker is dismissed from service on the basis of an inquiry

held in violation of the principles of natural justice and even

if the order of dismissal is passed by an Authority who is

biased against the employee, Civil Court cannot grant

compensation to him for his wrongful dismissal from

service.

In Pearlite Liners (P) Ltd. (supra), the respondent

was transferred from the Head Office of the appellant

company to Shimoga. She filed a suit seeking declaration

that the transfer order was illegal and void and also sought

an injunction restraining the defendants from holding any

inquiry against her on the ground that she had not

complied with the transfer order. The trial Court held that

Civil Court had no jurisdiction to entertain the suit and the

plaint was liable to be rejected. The plaintiff could not

succeed in the first Appeal but succeeded in the second

appeal before the High Court. It was contended on behalf of

the appellant that the plaintiff/respondent was seeking her

reinstatement as an employee of the appellant company

which amounted to specific performance of a contract of

personal service and that was specifically barred under the

provisions of Specific Relief Act. Noticing that the case

before it was a case of private employment, which normally

would be governed by the terms of the contract between the

parties and further noticing that there was no averment that

the transfer order was in violation of any term of

employment of the plaintiff/respondent, Supreme Court

noted that even though it was a case of private employment,

the management proposed to hold an inquiry against the

plaintiff. It was observed that in case of such

insubordination termination of service would be a possibility

and such a decision purely rests within the discretion of the

management. It was further observed that an injunction

against a transfer order or against holding a departmental

inquiry in the facts of the case by the Court would be

imposing an employee on the employer and enforcement of a

contract of personal service, which is not permissible in law.

It was also observed that an employer cannot be forced to

take an employee with whom relations have reached a point

of complete loss of faith between the two. In the present

case, the plaintiff is no more pressing for his reinstatement.

The only prayer being pressed by him is for grant of

compensation/damages for his wrongful dismissal from

service and such a relief, to my mind can definitely be

granted by the Civil Court in an appropriate case.

In Sanjay Gupta (supra), the appellant who was a

medical officer with the respondent filed a Writ Petition

seeking quashing of the clause whereby the management

had reserved right to terminate the services of its employees

by giving one month‟s notice and also sought a direction to

the respondent not to alter their service conditions and to

regularize the services of petitioner No.2. It was held that if

termination of services of the appellant was illegal, his

remedy was to file a suit for damages the Writ Petition was

dismissed as not maintainable. This Judgment is of no help

to the contesting defendants since the plaintiff is not

pressing for his reinstatement in service.

13. In N.P.Mathai v. The Federal Bank Ltd. (decided

on 6th November, 1992 by High Court of Kerala)

MANU/KE/0322/1992 the appellant was Manager in

Trivendrum Branch of the defendant bank. His services

were terminated by the bank and one month‟s salary in lieu

of notice was given to him while terminating his service.

The case of the appellant was that the termination order

was a penal action which had not preceded by an inquiry

and therefore was invalid. This was also his contention that

the contract of service did not empower the defendant to

terminate his services without sufficient reasons and his

services were to endure till superannuation. The appellant

sought a declaration that he continued to be in services.

Alternatively, he claimed damages by way of compensation

for wrongful termination of his services. He was 44 years old

at the time when his services were terminated and had he

continued in service, he would have superannuated on

reaching the age of 60 years. However, before the High

Court the appellant did not press for reinstatement and the

compensation claimed by him was also reduced. The

defendant however, contended that it had got the right to

terminate the services of the plaintiff under Rule 28 and the

termination was in accordance with said Rule. This was

also the case of the plaintiff before the Court that the action

taken by the defendant was without bona fides and he had

been removed from service because he was a stumbling

block in the way of promotion and prospects of brother of

Chairman of the defendant bank. The defendant contended

that the principles of natural justice could not be imported

in the matter of enforcing the contract and were not

applicable to termination of a contract by one of the parties

to the contract. The High Court on an analysis of the facts

and circumstances of the case was of the view that the

plaintiff‟s services were terminated for an alleged

misconduct and the termination order was passed to avoid

an inquiry which the bank was bound to do under its own

Code and therefore was in reality, a disciplinary action. The

Court therefore directed payment of compensation to the

plaintiff for a wrongful termination of his services.

In M.S.Gurushankariah v. G.V.Hallikeri & Ors.

(decided on 29th May, 1973 by High Court of Mysore)

1973(2) Mys.L.J 39 , the appellant/plaintiff was appointed

as "Course Director" with respondent No.30. His services

were terminated. As per the terms of appointment he was

to agree to work for a period of at least 03 years. The

appellant filed a suit claiming salary of the balance period of

03 years during which he was preventing from service on

account of his wrongful dismissal after less than 06 months

of service. The suit was decreed. The appellant/plaintiff

before the High Court challenged the quantum of damages

awarded by the Court below claiming that it was too low and

deserved to be enhanced. The trial Court had awarded only

03 months‟ salary to the appellant by way of damages.

Observing that an employee, who was under a contract

wherein the period of employment had been expressly

stipulated, would be entitled to salary he would have drawn

during the unexpired portion of such stipulated period of

employment, subject, of course, to the rule of mitigation of

damages, the High Court doubled the amount of damages

awarded to the plaintiff/appellant.

14. For the reasons given in the preceding paragraphs

I hold that since the inquiry and consequent terminal of the

plaintiff from service was vitiated in law on account of a

reasonable apprehension of the Inquiry Officer and the

Competent Authority, who passed the orders of dismissal

being biased against him, he is entitled to appropriate

compensation from defendant No.1 though is not entitled to

reinstatement in service. The issues are decided

accordingly.

15. Coming to the quantum of compensation as noted

earlier, the plaintiff has claimed Rs. 24,35,303/- towards

damages for wrongful dismissal from service. The amount

of damages claimed by the plaintiff has been based on the

last drawn salary and admissible allowances till the date on

which he would have superannuated, had he not been

dismissed from service. The amount includes Rs.63,944/-

towards gratuity. He has also claimed Rs.1,00,000/-

towards harassment and mental agony and Rs.2,00,000/-

for his defamation on account of illegal and arbitrarily

dismissal.

16. While reserving judgment on 14th September, 2011

I directed the contesting defendants to file within 03

working days, a statement showing the amount which

defendant No.1 would have paid to the plaintiff as gross

emoluments and gratuity had he remained in service till

that day in the same rank in which he was placed at the

time of his dismissal from service. Unfortunately, neither

the statement in terms of the directions of the Court has

been filed nor the contesting defendants filed an application

seeking more time for this purpose. The plaintiff was also

directed to file an affidavit stating his gross income from the

date he was dismissed from the service till the day the

judgment was reserved. The plaintiff has in his affidavit

stated that he had no income in the year 1992-93, 1993-94

and 1994-95 and had income of Rs.72,11,430/- from 1995-

96 till 2011-2012. During the course of arguments, the

contention of the plaintiff was that he should be paid the

salary which the person who was placed in the same rank in

which he was placed at the time of his dismissal from

service was paid by defendant No.1, between the date of his

dismissal from service and the date of the decree, after

deducting from it the amount earned by him during this

period. I however, find it difficult to accept the claim of the

plaintiff. No employee has a vested right to be promoted.

He has a right only to be considered against the post for

which he becomes eligible for promotion. The promotion to

a post, particularly in the case of a private employer

depends upon several factors including his individual

performance, his performance qua his peers, the confidence

of the employer in him, the results shown and the targets

achieved by him in the work assigned to him, financial

health and performance of the employer company etc. etc.

Therefore, it cannot be said with a reasonable certainty that

the plaintiff would have been granted one or more

promotion had he not been dismissed from service. Also, it

cannot be said as to what salary defendant No.1 would have

paid to the plaintiff had he been given promotion, in case he

had continued in its employment.

In Shri S.P.Bhatnagar v. Indian Oil Corporation

1994 III AD (Delhi) 898, a judgment relied upon by the

plaintiff himself, the case of the plaintiff was that his junior

Mr. S.B.Budhiraja was promoted and appointed Managing

Director of the defendant Corporation and on account of his

clean and meritorious track record and performance, but for

the criminal proceedings initiated against him by the

defendant, he legitimately expected to have been promoted

to the post of Managing Director in the year 1974 and

therefore was entitled to all the benefits of that post

including higher pay and allowances etc. The claim was

disputed by the defendant on the ground that Managing

Director was a selection post and no person can claim it has

a right. The claim of the plaintiff was rejected by a Division

Bench of this Court.

17. The plaintiff has in support of claim for the whole

of the period he would have continued in service of

defendant No.1, for his wrongful dismissal has relied upon

the decision of Supreme Court in S.S. Shetty v. Bharat

Nidhi Ltd. (1958) SCR 442. In that case, the appellant

before the Supreme Court was discharged from service on

the ground that he had become surplus. An industrial

dispute was thereupon referred by the Central Government

to the Industrial Tribunal at Calcutta for adjudication. The

order of discharge of the appellant was held to be illegal and

he was directed to be reinstated with wages from the date of

discharge. The respondent however, failed to implement the

decision of the Labour Appellate Tribunal within the

prescribed period. Thereupon, the appellant before the

Supreme Court claimed a sum of Rs. 47,738/- from the

respondent as compensation. The Tribunal awarded a sum

of Rs.1,000/- to him. The appeal filed by him having been

dismissed by Labour Appellate Tribunal, he approached

Supreme Court by way of Special Leave. Supreme Court,

after considering all the circumstances of the case,

computed the benefit of reinstatement at Rs.12,500/- and

awarded that amount to the appellant, during the course of

judgment, Supreme Court inter alia observed as under:

The position as it obtains in the ordinary law of master and servant is quite clear.

The master who wrongfully dismisses his servant is bound to pay him such damages as will compensate him for the wrong that he has sustained. "They are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he is fitted. If the contract expressly provides that it is terminable upon, e.g., a month's notice, the damages will ordinarily be a month's wages..................No compensation can be claimed in respect of the injury done to the servant's feeling by the circumstances of his dismissal, nor in respect of extra difficulty of finding work resulting from those circumstances. A servant who has been wrongfully dismissed must use diligence to seek another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages." (Chitty on Contracts, 21st Ed., Vol. (2), p.559 para. 1040).

If the contract of employment is for a specific term, the servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of mitigation in the salary of which the master had deprived him. (Vide Collier v. Sunday Referee Publishing Co., Ltd.). The servant would then be entitled to the whole of the salary, benefits etc. which he would have earned had he continued in the employ of the master for the full term of the contract,

subject of course to mitigation of damages by way of seeking alternative employment.

Such damages would be recoverable by the servant for his wrongful dismissal by the master only on the basis of the master having committed a breach of the contract of employment. If, however, the contract is treated as subsisting and a claim is made by the servant for a declaration that he continues in the employ of the master and should be awarded his salary, benefits, etc., on the basis of the continuation of the contract, the servant would be entitled to a declaration that he continues in the employ of the master and would only be entitled to the payment of salary, benefits, etc., which accrued due to him up to the date of the institution of the suit.

In S.P.Bhatnagar (supra), the appellant was placed

under suspension and was dismissed from service on the

basis of finding recorded in a departmental inquiry held

against him. A suit was filed by him challenging his

dismissal and seeking reinstatement or in the alternative

Rs.50,000/- as damages for wrongful dismissal. The

learned Additional District Judge awarded a sum of

Rs.2250/- to him as damages. He filed an appeal before

this Court and during pendency of the appeal he filed an

application for additional evidence enhancing his claim for

damages from Rs.50,000/- to Rs.25,32,750/-. The

application was however, dismissed. The Division Bench

which disposed of the appeal held that the inquiry held

against the plaintiff was bad in law and the finding arrived

at therein was perverse based on no evidence. It was held

that he was entitled to declaration that he continued in

service till he attained the age of superannuation on 28th

July 1994 and to full back-wages and other benefits from

the date of dismissal. The Court directed the defendant to

compute them along with all retirement benefits including

pension etc. A decree in those terms was passed

accordingly. In an appeal filed by the respondent, it was

agreed that the plaintiff was not entitled to reinstatement

but was entitled to get damages on the ground of wrongful

dismissal in view of the fact that he had already attained the

age of superannuation. Supreme Court directed the parties

to lead evidence, to determine quantum of damages. After

remand by Supreme Court the plaintiff sought a decree for

Rs.71,46,268/-. The Division Bench noted that as per the

reply affidavit of the defendant/respondent the plaintiff was

entitled to a sum of Rs.605142.27 towards pay and

allowance. This figure was arrived at on the basis of the

revised pay on account of revision of the pay scales firstly

on 1.8.1974 and then on 1.8.1882. The aforesaid amount

was awarded by this Court to the plaintiff as damages. His

claim for compensation for harassment and mental torture

was negated by this Court. While doing so, this Court relied

upon the decision of Supreme Court in S.S.Shetty (supra)

wherein it was held that no compensation can be claimed in

respect of injury done to the servant‟s feelings by the

circumstances of the dismissal.

18. I, however, notice that there has been some shift in

the approach of the Apex Court, with respect to payment of

back wages, in case the dismissal of the employee from

service is found to be bad in law. In P.G.I of Medical

Education and Research Chandigarh v. Raj Kumar (2001)

2 SCC 54, Supreme Court observed as under:

Payment of back-wages having a discretionary element involved in it has to be dealt with, in the facts and circumstances of each case and no straight-jacket formula can be evolved, though, however, there is statutory sanction to direct payment of back-wages in its entirely. As regards the decision of this Court in Hindustan Tin Works (P) Ltd.

be it noted that though broad guidelines, as regards payment of back-wages, have

been laid down by this Court but having regard to the peculiar facts of the matter, this Court directed payment of 75% back-

wages only.

In U.P. State Brassware Corporation Ltd. & Anr.

v. Udai Narain Pandey AIR 2006 SC 586 Supreme Court

inter alia observed as under:

A person is not entitled to get something only because it would be lawful to do so. If that principle is applied, the functions of an industrial court shall lose much of its significance.

The changes brought about by the subsequent decisions of this Court probably having regard to the changes in the policy decisions of the government in the wake of prevailing market economy globalization, privatization and outsourcing is evident.

In Allahabad Jal Sansthan v. Daya Shankar Rai

and Anr. (2005) IILLJ 847 SC, Supreme Court inter alia

observed as under:

We have referred to certain decisions of this Court to highlight that earlier in the event of an order of dismissal being set aside, reinstatement with full back-wages was the usual result. But now with the passage of time, it has come to be realized that industry is being compelled to pay the workman for a period during which he apparently contributed little or nothing at

all, for a period that was spent unproductively, while the workman is being compelled to go back to a situation which prevailed many years ago when he was dismissed. It is necessary for us to develop a pragmatic approach to problems dogging industrial relations. However, no just solution can be offered but the golden mean may he arrived at.

In Kendriya Vadyalaya Sangathan & Anr. v.

S.C.Sharma (2005) IILJ 153 SC, Supreme Court granted

only 25% of total back-wages to the respondent. In

Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya &

Anr. (2002) IILLJ 1156 SC, Supreme Court awarded 50% of

the back-wages till the date of reinstatement of the

respondent. In U.P. State Electricity Board v. Laxmi Kant

Gupta 2009 LLR 1, Supreme Court referring to its decision

in U.P. State Brassware Corporation Ltd. (supra) and

Haryana State Electronics Development Corporation v.

Mamni AIR 2006 SC 2427 interalia observed as under:

Thus it is evident that there has been a shift in the legal position which has been modified by this Court and now there is no hard and fast principle now that on the termination of service being found to be illegal, the normal rule is re-instatement with back-wages. Compensation can be awarded instead, at the discretion of the

Labour Court, depending on the facts and circumstances of the case.

The proposition of law, which emerges from these

judgments, is that even if the dismissal of an employee from

service is illegal, he is not entitled to whole of the back-

wages as a matter of right, and the Court needs to award a

suitable compensation after considering all the facts and

circumstances of the case before it.

19. Taking into consideration all the facts and

circumstances of the case including the fact that the

plaintiff has been practicing as an Advocate of this Court

seems to be doing well as is evident from the income

disclosed in his affidavit, I am of the view that the ends of

justice would be met if the plaintiff is awarded an all