Shri L.M. Khosla vs Thai Airways International ...
2012 Latest Caselaw 4555 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           CS(OS)No.673/1997

%                                                          1st August, 2012



SHRI L.M. KHOSLA                                     ..... Plaintiff
                            Through:     Mr. Gautam Anand, Advocate with
                                         Mr. Mridul Gupta, Advocate.

                      Versus


THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED AND
ANR.                                  ..... Defendants
                  Through: Mr. Mudit Sharma, Advocate with Mr.
                           Sanjay Gupta, Advocate.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J. MEHTA


    To be referred to the Reporter or not?              Yes.


VALMIKI J. MEHTA, J (ORAL)



1.

Issues in this suit were framed way back on 3.11.1997 and an

additional issue was framed on 26.10.2010. These issues read as under:-

"Issues framed on 3.11.1997:-

1. Whether the continuance of the plaintiff in the employment of defendant was vested and inherent right until the date of superannuation?

2. Whether there is privity of contract between defendant no.2 and the plaintiff?

3. Whether the termination of the plaintiff was as per the terms of contract of employment?

4. Whether the plaintiff was entitled to automatic promotions and revisions of salaries as claimed by him?

5. Whether the plaintiff is entitled to damages and compensation as claimed alongwith interest and if so at what rate and for which period?

6. Relief.

Additional issue framed on 26.10.2010:

Whether the defendant is entitled to protection under Section 85 CPC? OPD"

In view of the discussion below there is no requirement of evidence and the

suit can be disposed of on facts admitted by the plaintiff.

2. The plaintiff was an employee of the defendant No.1-company

and he was terminated from the services of the defendant No.1-company by

giving a one month‟s pay in lieu of one month‟s notice for termination of

services. The plaintiff has filed the suit challenging his termination and has

claimed various reliefs which are as under:-

"(A) To pass a decree for money awarding compensation to plaintiff and against defendants liable jointly and severally in the sum of ` 71,81,306/- as claimed in para 26 above (detailed and digested in Annexure „H‟ (COLLY) or such other amount as adjudged by Hon‟ble Court together with interest pendentelite and future at a rate of 24% per annum or such rate as allowed by Hon‟ble Court. (B) To award such further amount of compensation ordered/evaluated in terms of enquiry ordered by Hon‟ble Court relating to plaintiff‟s entitlement for salary level as prayed for in para 25 above.

IN ALTERNATIVE TO ABOVE:

To declare that plaintiff‟s employment as Manager Liaison and Customer Services with defendant company was not validly terminated by defendants under defendant No.2‟s letter dated 12.9.1995 (annexed as part of ANNEXURE „G‟) and the same is illegal, invalid, void and a nullity alongwith declaring that the plaintiff‟s employment with defendant company is determinable only upon plaintiff attaining the age of superannuation viz. 58 years i.e. on the ending of 30.4.2004 with all benefits/entitlements in tact/attached thereto.

(C) To award costs of the suit in favour of plaintiff and against the defendants 1 and 2 liable jointly and severally. (D) To pass such other or further orders as deemed just, fit and proper in the circumstances of the case."

3. The issues with respect to whether an employee under a private

employment can file a suit seeking continuation of services with consequential

benefits of pay etc and disentitlement of the employer to terminate the services

have been decided by me in three judgments as under:-

(i) Shri Satya Narain Garg through his legal heirs Vs. DCM

Limited and Ors. in RFA No.556/2002 decided on 5.12.2011.

(ii) GE Capital Transportation Financial Services Ltd. Vs. Shri

Tarun Bhargava in RFA No.294/2004 decided on 20.3.2012. An S.L.P.

against this judgment has been dismissed by the Supreme Court on 3.8.2012 in

S.L.P. No.21723/2012.

(iii) Pawan Kumar Dalmia Vs. M/s. HCL Infosystems Ltd. and Ors.

in RFA Nos.180/2004, 235/2004 and 239/2004 decided on 13.3.2012.

4. In the judgment in the case of Shri Satya Narain Garg (supra), I

have referred to the recent judgment of the Supreme Court in the case of

Binny Ltd. & Anr. Vs. V. Sadasivan & Ors. (2005) 6 SCC 657 and which

holds that public policy principles or administrative law principles do not

apply to private employment. The relevant paras in the judgment in Shri

Satya Narain Garg (supra) read as under:-

"7. Merely because two views are possible, this Court will not interfere with the conclusion arrived at by the Trial Court, unless the conclusion is illegal or perverse or causes grave injustice. In case of private employment, the employers are fully justified in taking steps for termination of services, if it finds that the employee is not upto the mark. Principles applicable in public law domain do not apply with respect to employees in private employment. Employment in private sector is governed by the terms and conditions of employment, and unless the termination is shown to be violation of

the terms and conditions of employment, it cannot be said that the termination is illegal. In the present case, in my opinion, since there was no fixed period of employment so far as the deceased plaintiff is concerned, the deceased plaintiff could have been terminated from services even by a simplicitor notice, assuming even if the services of the deceased plaintiff were upto the mark. Further, even if there is illegal termination of services, it is not possible to grant damages as claimed inasmuch as the principle of mitigation of damages squarely applies. As per this principle of mitigation of damages enshrined in Section 73 of the Contract Act, 1872 even if an employee is illegally terminated from services, he cannot sit at home and he must take sufficient steps to procure alternative employment. The law in this regard is contained in the judgment of the Supreme Court reported as S.S. Shetty v. Bharat Nidhi Ltd., AIR 1958 SC 12. Paras 12 and 13 of this judgment are relevant and the same read as under:

12. 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 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 feelings 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 Edition, Vol (2), p. 559 para. 1040).

13. 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., 1940-4 ALL. E.R. 234 at p.237 (A). 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."

xxxx xxxx xxxx xxxx

9. Surely, these types of self-serving averments cannot be held as discharge of onus of proof of mitigation of damages. The statement made by the deceased plaintiff is bereft of any details as to which companies or firms or persons he applied to, and on which dates, and for what position, and for what salary and also the details as to why he could not obtain the alternative employment. I am, therefore, of the opinion that the deceased plaintiff, even assuming he was wrongly terminated from services, failed to prove that he had taken sufficient steps for mitigation of damages."

5. In the case of GE Capital Transportation Financial (supra), I

have referred to the earlier judgment in the case of Shri Satya Narain Garg

(supra), and also the fact that contracts which are determinable in nature

cannot be specifically enforced as per Section 14(1)(c) of the Specific Relief

Act, 1963. I have also referred to the fact that if the contract of employment

provides for one month‟s notice, then, the maximum entitlement of damages

of an employee who alleges illegal termination is one month‟s pay. Paras 10

to 12 of the judgment in the case of GE Capital Transportation Financial

(supra) are relevant and the same read as under:-

"10. In fact, the subject suit was also barred by Section 14(1)(c) of the Specific Relief Act, 1963 which provides that the contract which is in its nature determinable, cannot be specifically enforced. I have referred to the fact that the contract was determinable by a one month‟s notice as per clause 7 of the terms and conditions of the letter dated 21.4.1998 and therefore the contract which was determinable by one month‟s notice cannot be specifically enforced. What cannot be done directly cannot be done indirectly i.e. if there cannot be specific performance of the contract, there cannot be declaration and injunction to continue such a service contract. Section 41(e) of the Specific Relief Act, 1963 provides that injunction will not be granted to prevent breach of the contract, performance of which could not be specifically enforced.

11. Therefore, looking at the matter from the point of view of the contract of personal service not being enforceable under Section 14(1)(b) of the Specific Relief Act, 1963, the contract being determinable in nature and hence cannot be enforced as per Section 14(1)(c) of the Specific Relief Act, 1963 or that injunction could not be granted to prevent breach of a contract which cannot be specifically enforced, the suit was clearly barred and not maintainable. The judgment of the trial Court does not refer to the binding provisions of Sections 14(1)(b), (c) and 41(e) of the Specific Relief Act, 1963. To complete the discussion on this aspect, I would once again refer to the recent judgment of the Supreme Court in the case of Binny Ltd. (supra) and which specifically provides that in private contracts i.e. in strict contractual matters, there does not arise the issue of applicability of Administrative Law principles.

12. I have already stated above that even presuming there was breach of contract, at best reasonable damages can be granted and once there is a clause for termination of services by one month‟s notice, it can only be one month‟s notice which can be treated as

reasonable damages inasmuch as parties understood the period for obtaining of an alternative employment as a one month‟s notice period-vide SS shetty's case (supra)"

As already stated above, an S.L.P. filed against this judgment has

been dismissed.

6. In the present case, the plaintiff himself relies upon the terms and

conditions of employment issued by the original employer and then

reconfirmed by the defendant No.1, in the letters dated 27.7.1970 and

30.9.1974. Defendant No.1 is the company which subsequently took over the

original/erstwhile employer of the plaintiff. It could not be disputed that in

terms of these letters the services after the probation period of the plaintiff can

be terminated by giving one month‟s notice or one month‟s pay in lieu of

notice. Since the letters containing the terms of employment are small letters

and the terms are relevant, I seeks to reproduce the same in entirety. These

letters read as under:-

        "                               Mr. L.M. Khosla,
                                        B-5/14, Model Town,
                                        Delhi-9
                           JS/IG        27th July, 1970.
     Dear Sir,

With reference to your application dated the 2nd June, 1970, and your subsequent interview, we have pleasure in confirming your employment with Scandinavian Airlines System, New Delhi in the capacity of the

Documentation Assistant-cum-Reservation Clerk. Your employment will commence Ist August, 1970, subject to a three month probation period and medical examination.

Your salary during the probation period is fixed at ` 650/- (Rupees six hundred and fifty only) per month. On confirmation your salary will be ` 700/- (Rupees seven hundred only) per month.

The above salary is inclusive of all allowance and dearness except for fixed Housing Assistance Allowance which is in your case ` 45/- (Rupees forty-five only) per month.

If for any reason your services are terminated or you decide to terminate your employment during the probation period, either side will be entitled to give 24 hours notice and salary calculated on daily basis will be paid up to date of termination. After confirmation one month‟s notice from either side.

You will be entitled to eighteen working days leave per year. The time to be accepted by the Company, taking into consideration the convenience of work. You will also be entitled to join the Local Employees Provident Fund after completion of one year‟s continuation service.

Kindly confirm the above terms by signing and returning to us the copy hereof.

Yours faithfully, SCANDINAVIAN AIRLINES

J. Svane-Christensen District Manager.

   xxxx                           xxxx        xxxx              xxxx

   Your ref.        Your letter          Our ref.               Calcutta
                                           SP/IP     30 September 1974
      Dear Mr. Khosla,

This is to confirm that Thai International will take over from SAS the administrative responsibilities of this office as of October 01, 1974. As of same date you are thus in the employ of Thai International under

the very same terms and conditions-including acquired seniority-as those now enjoyed by you during your employment with SAS.

Best regards,

Sven Palm Area Manager"

It is not disputed before me that the defendant No.1 has given one

month‟s pay to the plaintiff in lieu of the notice period of one month.

Therefore, the plaintiff is not entitled to any other compensation or damages

or moneys from the defendant No.1.

7. In the case of Pawan Kumar Dalmia (supra) observations

similar to those made by me in the case of Shri Satya Narain Garg (supra)

were made. Paras 15 and 16 of the judgment in the case of Pawan Kumar

Dalmia (supra) are relevant and the same read as under:-

"15. Finally, I must add that even at best if the termination of services of Sh. Pawan Kumar Dalmia was a breach of contract, parties admittedly being governed by contractual relations, the maximum effect of the so called illegal termination would have been an entitlement to salary of two months and admittedly the appellant-

Sh. Pawan Kumar Dalmia on his own showing has received salary till May, 1999. In any case, the complete statement of account with respect to full and final settlement was given vide Ex.DW1/4 dated 15.7.1999. I cannot agree with the arguments as raised on behalf of the appellant that this letter dated 15.7.1999 was not served on the appellant/plaintiff inasmuch as this letter is accompanied by the AD card which shows receipt of the postal article by a person one "Sarita". It is not disputed that the letter dated 15.7.1999 has been

sent to the correct address by the postal department, and therefore, defendant No.1/respondent No.1 discharged the onus of proof by filing the AD card. If the appellant wanted to dispute the receipt of the letter dated 15.7.1999, onus of proof was upon him to summon the record from the post office to show that there was no delivery of article at the stated address, however, the appellant did not do so, and would not have done so inasmuch as the stand that the registered letter dated 15.7.1999 was not received was a stand which was false to his knowledge inasmuch as the letter dated 15.7.1999 has been sent to the admitted address of the appellant, and which is also the address being the self-leased premises. In view of the aforesaid, the judgments in the case of Green View Radio Service (supra) and Dinanath Shantaram (supra) therefore do not have application to the facts of the present case. Merely denying by the appellant/plaintiff that he has no family member of the name of „Sarita‟ is neither here nor there as such a person „Sarita‟ could have been a servant or any other person found or otherwise living at the address which is admittedly the address of the appellant/plaintiff.

16. The judgments cited on behalf of the appellant in the cases of Jyotsna Raina (supra) and Municipal Corporation of Delhi (supra) will not apply inasmuch as the employment in this case is a contractual employment and is not a statutory appointment or an employment under a statutory corporation or a company which is "state" under Article 12 of Constitution of India. The issue of a person being terminated by an authority inferior to the person who appointed such person is relevant in proceedings under Services Law or where there is an issue of violation of Article 14 of the Constitution, but definitely not in employments which are contractual employments and governed by contractual terms and conditions. In any case, Board of Directors is a superior authority than a Chairman of a company and hence in the present facts it is not that termination can be said to be by an inferior authority to the appointing authority. The judgment in the case of Haryana Seeds Development Corporation (supra) also has no application to the facts of the present case inasmuch as in the said case, the Court was concerned with termination of services of a Company Secretary by a

Managing Director and not by the Board of Directors as has been done in the present case. In fact, a reference to the judgment in the case of Haryana Seeds Development Corporation (supra) shows that Board of Directors of a company can surely terminate the services of a Company Secretary. Trial Court has also referred to and rightly distinguished this judgment in para 26 of the impugned judgment reproduced above. The judgment relied upon in the case of Amal Kumar Mukherjee (supra) with respect to the argument that the minute book of a company ought to be bound and written in hand, is to be read in the context of the facts of the said case wherein there were disputes inter se shareholders of a company and in such circumstances, the issue had arisen with respect to manipulation of the minute book of the company. In the present case, there is no dispute inter se shareholders or inter se Directors of the Board of the company and therefore the judgment in the case of Amal Kumar Mukherjee (supra) will have no application to the facts of the present case, especially for the reasons stated above that there is no subsequent resolution of the Board of Directors or any resolution in the General Body meeting of defendant No.1/respondent No.1- company questioning or rescinding the termination of services of the appellant-Sh. Pawan Kumar Dalmia."

8. In view of the aforesaid judgments, the following conclusions in

law emerge:-

(i) A contract of private employment is not similar to the public

employment and in such private employment there is no scope of applicability

of the principles of administrative law/public law.

(ii) A contract of employment which provides termination of services

by one month‟s notice, then, at best the employee will only be entitled to one

month‟s pay in terms of the employment contract. An employee is not entitled

to any relief of continuation in services or pay with consequential benefits for

alleged remaining period of services till the date of his superannuation.

(iii) As per the provision of Section 14(1)(c) of the Specific Relief

Act, 1963, a contract which is determinable in nature cannot be specifically

enforced. Since the service contract in the present case is determinable by one

month‟s notice there does not arise the question of giving of any reliefs which

tantamount to enforcement of a determinable contract. As per Section

14(1)(b), a contract of personal service cannot be enforced when the employer

is not the Government or "State" as per Article 12 of the Constitution of India.

Plaintiff has in fact received one month‟s pay and therefore his

claim will stand satisfied in law and he is not entitled to any reliefs as prayed

for in prayer clauses in the suit.

9. In view of the above, the issues framed in this case are disposed

of as under:-

Issue No.1 dated 3.11.1997

10. This issue is decided against the plaintiff because a private

employee has no vested or inherent right to continue in services till

superannuation, once the employee has received the necessary compensation

in terms of the contract of services and which is one month‟s pay in the facts

of the present case.

Issue No.2 dated 3.11.1997

11. This issue is decided against the plaintiff because the defendant

No.2 is only an employee of the defendant No.1 and therefore there is no

liability of the defendant No.2. In any case, since there is no liability of the

defendant No.1 and the suit is being dismissed in view of the aforesaid

observations there can be no decree even against defendant No.2.

Issue No.3 dated 3.11.1997

12. Since the plaintiff has received one month‟s notice pay in terms

of the contract of services dated 27.7.1970 and 30.9.1974, the termination of

the services of the plaintiff/employee was in accordance with terms of contract

of employment.

Issue No.4 dated 3.11.1997

13. This issue is answered against the plaintiff in view of decisions

on issue Nos.1 and 3 above.

Issue Nos.5 and 6 dated 3.11.1997

14. Plaintiff is not entitled to any of the reliefs claimed in the suit as

the plaintiff has received one month‟s notice pay as per the terms of contract

of service vide letters dated 27.7.1970 and 30.9.1974.

Issue framed on 26.10.2010

15. This issue is not being pressed by the defendants inasmuch as the

suit is otherwise being dismissed.

Relief

16. In view of the above, the suit is dismissed, leaving the parties to

bear their own costs. Decree sheet be prepared.

VALMIKI J. MEHTA, J AUGUST 01, 2012 Ne