Pawan Kumar Dalmia vs M/S. Hcl Infosystems Ltd. & Ors.
2012 Latest Caselaw 1688 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+            RFA Nos.180/2004, 235/04 & 239/04

%                                              13th March, 2012

1.    RFA No.180/2004

PAWAN KUMAR DALMIA                         ..... Appellant
               Through:            Ms. Neelima Tripathi, Adv.

                   versus


M/S. HCL INFOSYSTEMS LTD. & ORS.                 ..... Respondents

Through: None.

2.    RFA No.235/2004

MRS. MANJU DALMIA & ANR.                   ..... Appellants
                 Through:          Ms. Neelima Tripathi, Adv.

                   versus


M/S. HCL INFOSYSTEMS LTD.                  ..... Respondent
                  Through:        None.

3.    RFA No.239/2004

MRS. MANJU DALMIA                               ..... Appellant
                 Through:          Ms. Neelima Tripathi, Adv.

                   versus


M/S. HCL INFOSYSTEMS LTD.                  ..... Respondent
                  Through:        None.




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

 To be referred to the Reporter or not?                         Yes


VALMIKI J. MEHTA, J (ORAL)

1. All the three appeals are being disposed of by this common

judgment inasmuch as the issue in all the three appeals is same viz. whether

the appellant in RFA No.180/04 Sh. Pawan Kumar Dalmia was or was not

terminated from the services of the defendant No.1/respondent No.1-

company-M/s. HCL Infosystems Ltd., and if there is termination of

services, whether the services were validly terminated. The claim in the

suit, which has been dismissed by the impugned judgment which is under

challenge in RFA No.180/2004 was towards salary from June, 1999 till

filing of the suit on 31.5.2002 on the ground that Sh. Pawan Kumar Dalmia

was not validly terminated from services and therefore liability of

defendant No.1/respondent No.1 towards payment of salary continues. The

suit which has been dismissed by the impugned judgment which is the

subject matter of RFA No.235/2004 was a suit filed by Mrs. Manju Dalmia,

wife of Sh. Pawan Kumar Dalmia, making Sh. Pawan Kumar Dalmia as

plaintiff No.2 claiming that the premises belonging to the wife-Mrs. Manju

Dalmia were taken on self-lease, and since the services of Sh. Pawan

Kumar Dalmia are not terminated or not legally terminated, liability to pay

the rental charges for the premises taken on self-lease of house No.F-106,

Prashant Vihar, Delhi-85 continues. I am using the expression "self-lease"

because the plaintiff No.1/appellant No.1 is the wife of plaintiff

No.2/appellant No.2/employee and for whom the premises were taken on

lease by the defendant No.1/respondent No.1. The impugned judgment

which is the subject matter of RFA No.239/2004 dismissed the suit of the

wife of Sh. Pawan Kumar Dalmia wherein she claimed that since the

services were not validly terminated, the Maruti Zen Car continued to be on

hire and thus the hire charges for such car were liable to be paid as Sh.

Pawan Kumar Dalmia continued to be legally employed and for which

employment the car was taken on hire by the defendant No.1/respondent

No.1.

2. For the sake of convenience, reference is made to the facts

which are subject matter of RFA No.180/2004, and which is the main suit

filed by the employee-Sh. Pawan Kumar Dalmia. The facts of the case are

that the appellant-Sh. Pawan Kumar Dalmia was appointed as a Company

Secretary-cum-Manager (legal) by the defendant No.1/respondent No.1-

company under an appointment letter dated 1.2.1993 (Ex.PW1/1). The

appellant was appointed as a Company Secretary-cum-Manager (Legal) on

the terms and conditions of this appointment letter dated 1.2.1993. Some

of the relevant terms of this appointment letter are contained in para 20 of

the impugned judgment. Besides other terms, one term of appointment is

clause No.11 which provides that services of the appellant can be

terminated by serving a two months‟ notice or without any notice if the

appellant is found guilty of misconduct. The appellant pleaded that in

February, 1999, he was told that he would be given a special assignment by

the company and therefore he was not required to attend the office on day

to day basis. It was further stated in the plaint by the appellant that his new

assignment will be told to him in due course and the legal and secretarial

work assigned to him was withdrawn. The payment of salary of the

appellant/plaintiff was stopped from May, 1999. The appellant/plaintiff

claimed that his services were not terminated by the defendant

No.1/respondent No.1-company and he continued to be in employment

with the defendant No.1/respondent No.1-company. It was pleaded by the

appellant that his appointment was a „statutory appointment‟ and therefore

unless the same is statutorily terminated, he continued to be in service. The

appellant/plaintiff claims to have served a legal notice dated 9.6.2001 and

thereafter filed the subject suit for recovery of ` 12,80,036/- alongwith the

claim of interest. I may state that in the suit which is the subject matter of

RFA No.239/2004, the amount claimed is ` 3,23,795/- alongwith interest

for use of the Maruti Zen Car. The amount claimed in the suit which is the

subject matter of RFA No.235/04 is ` 4,22,943/- towards the rental

charges.

3. The defence of the defendant No.1/respondent No.1-company

was that the services of the plaintiff/appellant had been terminated w.e.f.

15.6.1999 vide resolution of the company dated 9.3.1999. It was pleaded

that the appellant/plaintiff was communicated about the resolution dated

9.3.1999 vide a letter dated 5.4.1999 and the full and final settlement of the

accounts was forwarded to the plaintiff/appellant by the letter dated

15.7.1999. It may be noted that the termination was thus by a two months

notice period as the resolution is of March, 1999, and the termination is

w.e.f. June, 1999.

4. After completion of pleadings, the trial Court framed the

following issues:-

"1. Whether the suit of the plaintiff is not maintainable for want of registration of the lease agreement? OPD

2. Whether the plaintiff no.2 was removed from the post of the company secretary and removed from the services of the defendant as alleged in para no.1 of the WS. If so, its effect? OPD.

3. Whether the plaintiff is entitled to the suit amount as claimed? OPD

4. Whether the plaintiff is entitled to the interest. If so at what rate? OPP.

5. Relief."

5. The main issue which was argued before the trial Court, and

which is also the only issue argued before me, was issue No.2. Under this

head, various sub-issues have also been argued. The arguments as raised

on behalf of the appellant in this Court can be crystallized as under:-

(i) The resolution of the defendant No.1/respondent No.1

company dated 9.3.1999 was a fabricated resolution inasmuch as the said

resolution was not signed by Mr. Shiv Nadar, Chairman of the defendant

No.1-company and since the appellant-Sh. Pawan Kumar Dalmia was

appointed by the Chairman of the company pursuant to Article 124 of the

Articles of Association, his services could only be terminated by the

Chairman. As per Section 383A of the Companies Act, 1956, the

appointment of Sh. Pawan Kumar Dalmia was a statutory appointment, and

such statutory appointment could only be terminated statutorily i.e. only by

the Chairman of the defendant No.1/respondent No.1-company. Since Sh.

Pawan Kumar Dalmia was appointed by the Chairman, his services could

not be terminated by a person in rank less than the Chairman i.e. the

services of Sh. Pawan Kumar Dalmia could not be terminated by the Board

of Directors of the defendant No.1/respondent No.1-company.

(ii) The written statement was not filed by the duly authorized

person and therefore the same could not be looked into.

(iii) There was no authority in the witness, who appeared on behalf

of the defendant No.1/respondent No.1-company and therefore his

evidence has to be discarded.

6. Before proceeding to discuss and decide the issues as have

been urged on behalf of the appellant, I find that all these issues which

were raised before the Trial Court, and which were decided against the

appellant by the Trial court, were really in a manner of speaking wholly

unnecessary. This I say so because the appointment of Sh. Pawan Kumar

Dalmia/appellant is a contractual appointment. Merely because Section

383A of the Companies Act, 1956 requires appointment of a secretary, the

appointment of a secretary of a company, so appointed, cannot be a

statutory appointment. The expression "statutory appointment" has a

specific connotation, i.e. appointed person‟s appointment is governed by

the terms and conditions of the statute itself. It is not disputed by the

appellant that his appointment is pursuant to the Ex.PW1/1 dated 1.2.1993

and which contains the terms and conditions of the appointment. The

entire case therefore as argued on behalf of the appellant, of statutory

appointment, is wholly misconceived and was liable to be rejected as such.

7. Another reason for the Trial Court to have dismissed the suit

without much ado, was that the appointment letter dated 1.2.1993

specifically provides for termination of services of the appellant/Sh.Pawan

Kumar Dalmia by serving of a two months‟ notice, i.e . the services could

be terminated on a no fault basis by giving two months‟ salary or a two

months‟ notice. The contract for employment therefore was determinable

in nature. As per Section 14(1)(c) of the Specific Relief Act, 1963,

contracts which are in their nature determinable cannot be specifically

enforced. Though the reliefs which have been claimed in the suit are for

recovery of monies, effectively, the reliefs if granted would mean

continuation of employment of Sh. Pawan Kumar Dalmia even though the

defendant no.1/respondent no.1-company has pleaded that his services

were terminated. Since the services could be determined by a two months‟

notice period or a two months‟ pay, the subject suits in fact which

effectively seek continuation of employment or re-employment would be

barred by Section 14(1)(c) of the Specific Relief Act, 1963. Making of a

claim therefore for salary of three years as also the claim towards rental

charges and the hire charges of the car on the basis of alleged continuity of

employment were clearly misconceived and barred by law.

8. Let me now turn to each of the arguments as urged on behalf

of the appellant.

9. One of the arguments urged on behalf of the appellant is that

the written statement was not signed by a duly authorized person and

therefore the same could not have been looked into. This argument is a

wholly frivolous argument because the legal position in this regard is well

settled after the decision of the Supreme Court in the case of United Bank

of India vs. Naresh Kumar & Ors. AIR 1997 SC 3 and which is that suits

which are filed by companies should not be dismissed on technical

grounds, once those suits are contested to the hilt, i.e. right till the end. The

ratio of the judgment in the case of United Bank of India (supra) will also

squarely apply even where a company is a defendant i.e. to the facts of the

present case as the defences contained in the written statement of a

company cannot be ignored on a mere technical plea of lack of authority in

the person inasmuch as all the suits have been contested to the hilt,

evidence led by both the parties, witnesses of both the parties have been

extensively cross examined and thereafter the matter was argued in detail

resulting in passing of the final judgments in these suits. I may for the

sake of completeness state that there is an original power of attorney

available in the file, and so also noted by the trial Court, which allows the

contesting of the suits by one Mr. H. N .Mathur and the written statement

bears the signature of said Mr. H. N. Mathur.

10. One other argument urged on behalf of the appellant was that

the witness who deposed on behalf of the defendant no.1/respondent no.1-

company was not authorized by any board resolution to give evidence.

This argument is misconceived inasmuch as evidence of a person is

governed by the Evidence Act, 1872, and any person who is aware of the

facts of the case and whose evidence would be a relevant evidence in terms

of the Evidence Act, 1872, is competent to depose. A witness can depose

as per facts in his knowledge or as per records. There is no provision in the

Companies Act, 1956 or in the Evidence Act, 1872 which requires that a

witness who appears on behalf of the company can only depose if there is a

resolution of the Board of Directors of the company permitting him to

depose on behalf of the company. This argument of the appellant is

therefore rejected.

11. The main argument raised on behalf of the appellant is with

respect to the fact that Sh.Pawan Kumar Dalmia was not terminated from

services under the resolution dated 9.3.1999 inasmuch as the language of

the resolution does not talk of termination of services. Another reason

for disputing the termination of services is that the appointment of Sh.

Pawan Kumar Dalmia was by the Chairman of the defendant

no.1/respondent no.1-company, Sh. Shiv Nadar and since Sh.Shiv Nadar

was not present in the 83rd Board meeting on 9.3.1999, the termination of

services, assuming the same to have been brought about by the resolution

dated 9.3.1999, is illegal. It is also argued that the appointment of

Sh.Pawan Kumar Dalmia being by a Chairman, a person lesser in rank than

the Chairman cannot terminate the services of Sh. Pawan Kumar Dalmia,

i.e. even the Board of Directors of the respondent no.1/defendant no.1-

company cannot terminate the services of Sh.Pawan Kumar Dalmia which

could be terminated only by the Chairman, Sh.Shiv Nadar. It is also argued

that the letter dated 15.7.1999 mentioning the factum of termination of

services and making a full and final settlement was never received by

Sh.Pawan Kumar Dalmia. Reliance has been placed on behalf of the

appellant on the following judgments:

i) Haryana Seeds Development Corporation Ltd. & Ors. Vs.

J.K.Aggarwal, 1989 (65) Company Cases (P&H) 95 - for the proposition

that since the appointment was by a Chairman, termination could also be

only by the Chairman.

ii) Municipal Corporation of Delhi vs.Chattarbhuj Bhushan Sharma,

133 (2006) DLT 581 - for the proposition that an inferior authority cannot

terminate the services of a person.

iii) Jyotsna Raina vs.Tamilnadu Handicrafts Development

Corporation Ltd. & Anr., MANU/DE/0733/1991 - for the proposition of

lack of powers in an inferior authority to terminate the employment.

iv) Amal Kumar Mukherjee And Another vs. Clarian Advertising

Service Ltd. & Ors., 1982 (52) Company Cases 315 - for the proposition

that unless the minute book containing the resolution of the Board of

Directors is bound and handwritten, the same cannot be relied upon.

v) Union of India & Ors. vs. Dinanath Shantaram Karekar & Ors.,

1998 (4) Scale 659 and Green View Radio Service vs. Laxmibai Ramji &

Anr., 1990 (4) SCC 497 - for the proposition that where the document is

sent by registered post, it is to be taken as service only when the postal

article is tendered to the addressee and the presumption of service is

rebuttable.

12. Before I would give my conclusions, I would like to reproduce

the findings, reasoning and conclusions of the Trial Court, inasmuch as, I

generally agree with the same, besides giving my additional reasons. The

relevant portions of the impugned judgment dealing with the arguments of

the appellant in this regard read as under:-

"8. The plaintiff tendered his affidavit Ex. PW1/A and reiterated the facts as contained in the plaint. He proved the letter of appointment Ex. PW1/1, letter of defendant dt. 20.2.95 Ex.PW1/2, letter dt. 1.10.99 (Ex. PW1/3) and the postal receipt

Ex. PW1/4, letter dt. 8.5.01 (Ex. PW 1/5) and the receipt Ex. PW1/6, notice dt. 9.5.01 (Ex. PW1/7) and the postal receipt Ex. PW1/8 & Ex. PW1/9, the letter dt. 10.5.99 (Ex. PW1/10) and the postal receipt Ex. PW1/11, Letter dt. 31.3.98 (Ex. PW1/12), letter dt. 5.10.99 (Ex. PW1/13) and letter dt. 15.10.99 (Ex. PW1/14). The copy of Board Agenda of the meeting held on 9.3.99 was proved as Ex. PW1/15.

8(repeat). In the cross-examination, the plaintiff admitted that in the month of Feb. 1999, the Secretarial and legal work were withdrawn from him as he was to be given some special assignment. The company did not disclose as to what was the special assignment. He was not relieved from the post of company secretary w.e.f. Feb. 1999. There were more than 4 company secretaries with the defendant. As a company secretary he used to attend the meeting of Board of Director of the defendant. He was delivered the agenda of the Board meeting No. 92. He had attended that board meeting. He being the company secretary had prepared the agenda for the next meeting i.e. 83rd meeting. Ex. PW1/15 was the copy of the agenda. It was prepared by him. The plaintiff denied the suggestion that he was relieved w.e.f. 9.3.99 by the defendant from the post of company secretary and DGM (legal). He had not received any letter from the defendants about his having relieved from the post of company secretary and DGM (Legal) working with the defendants. He was not able to attend the office of the defendants as he was not allowed to attend the office. From July 199, the defendant is not allowing him, to attend the office. During the period of May, June and July 1999, he had attended the office of the defendant. Mr. Taneja had intimated him that his secretarial work had been given to Mr. Radha Krishanan. He (Plaintiff) had received the salary till April 1999. He had not been delivered the copy of 83 rd meeting of the Board of defendant No. 1. The plaintiff admitted that for the removal of the company secretary, the company i.e. defendant in the present case, needs to file a form 32 prescribed under the company Act alongwith the copy of the Board resolution passed by the Board, with the Registrar of the company. The witness denied the suggestion that this procedure had been complied with by the company (defendant). During the period of three years, he had been pursuring the defendants

to release his salary and to give his special assignment. He had not taken any loan from the defendants. He was given advance. He had taken the housing advance amounting to ` 7 lacs. This advance was too deducted from his salary and it was deducted upto April 1999. He had appeared before the Arbitrator in the proceedings with regard to the Housing Advance filed by the defendant. He has not received any letter dt. 5.4.99 from the defendants. He denied the suggestion that vide letter dt. 3.5.99, he had been informed by Mr. Taneja that he (witness) had been relieved from the service w.e.f. 15.5.99. He did not receive any letter dt. 15.7.99. The witness was then suggested the defence.

9. The defendants have examined G.P. Kalra DW1. He tendered his affidavit Ex. DW1/A. Vide resolution Ex. DW1/1, he was authorized to depose. He also proved the postal receipt dt. 7.4.99 (Ex. DW1/2), the letter dt. 3.5.99 (Ex. DW1/3), copy of the full and final settlement of the accounts (Ex. DW1/4), copy of the form 32 (Ex. DW1/5), copy of letter of intimation dt. 16.4.99 to the Delhi Stock Exchange Ex. DW1/6 & Ex. DW1/7 is the reply of the legal notice. The resolution dt. 9.3.99 was signed by Mr. Shiv Nadar, chairman of the meeting.

10. In the cross-examination, it was suggested to him that the resolution dt. 9.3.9 had been fabricated. The witness had brought the original minute book containing the 83 rd resolution dt. 9.3.99. Photostat copy of the resolution is Ex. DW1/1. The witness was directed to file Photostat copies of the pages from 939 to 943 of the original minute book. That was collectively marked as Mark „A‟. The witness had not brought any authority letter or resolution passed by the defendants authorizing him to depose in this case. He deposed that he had been authorized by Mr. M.L. Taneja the Vice President. The witness denied that the documents placed on record by him are forged one.

Xxx xxx xxx

12. Arguments had been concluded on 27.11.03. However, since it had been argued on behalf of the plaintiff that the resolution dt. 9.3.99 is a forged one, therefore, I had directed counsel for the defendants to produce the original minute book.

Here I would like to mention that the evidence was not recorded in my presence and, therefore, I had not opportunity to see the original minute book. The or4iginal minute book was produced before me 13.12.03. I had signed the pages of Resolution No. 83 & 84. I directed the counsel for the defendants to place on record photocopies of the proceedings of 83 & 84 meetings. The copies were then placed on record. A complete set was also given to the counsel for the plaintiff.

Xxx xxx xxx

24. Ex. PW 1/1 is the appointment letter. It bears the signature of managing director and contains terms and conditions of the appointment. It is not in dispute that on the basis of Ex. PW 1/1, the plaintiff had joined the service. One of the conditions of Ex. PW 1/1 was that the company was entitled to take disciplinary action which may result in termination of the plaintiff with or without notice or compensation.

25. Article 124 of Memorandum & Article of Association lays down that the appointment was to be made by the Chairman with the approval of the board. Sec. 193 Companies Act provides as to in what manner the minutes of the proceedings are to be maintained. It had been vehementally argued by counsel for the plaintiff that since Mr. Shiv Nadar was not present in the 83rd meeting, therefore, the 83rd meeting had not been presided over by him as chairman and in such a situation the removal of the plaintiff was not as per law. This argument, on the fact of it, appeared to be formidable but when analysed in view of Sec. 193 Companies Act, it fall to the ground. In order to satisfy myself I had directed the defendants to place on record the correct photo stat copies of the resolutions bearing No. 83 and 84. The copies of both these resolutions were placed on record on 13.12.03. In fact the photo stat copy of 83rd resolution was already on record as it was ordered to be filed at the time of recording of statement of DW 1 and it was exhibited as Ext. DW 1/1 (Mark A). Sec. 193 (1A) (a) of Co. Act makes it clear that each page of the minute book is to be initialed or signed and the last page of the record of proceedings of each meeting in such book is to be dated and signed in case

of minutes or proceedings of a meeting of Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting. Ld. counsel for the plaintiff has tried to make mountain out of a mole hill in view of the photo stat copy ex. DW 1/1 (mark A) of the resolution dated 9.3.1999 i.e. the 83rd resolution. In this document (mark A) Ex. DW 1/1 Ajay Chaudhary was mentioned as the chairman. Ld. Counsel for the plaintiff wanted to take this particular fact to be sufficient to conclude that this resolution was fabricated as Shiv Nadar was not present on 9.3.99 and he had later on signed the same. It is not in dispute that Shiv Nadar was the chairman of the company. Therefore in view of Sec. 193 (1 A) (a) Companies Act he had signed the 83rd resolution at the time of the meeting dated 20.4.99 on which date 84 th meeting of the board of director had been convened. The photo stat copy of the 84th meeting of Board of Directors shows that it was attended by Shiv Nadar. Therefore, in view of Sec. 193 (1A) (a) of Companies Act, he was entitled to sign the minutes of the 83 rd meeting. Thus, there is no material to hold that the minute book had been fabricated later on. The original minute book had been produced at the time of recording of statement of G.P. Kalra DW 1. The evidence had been recorded by my ld. predecessor. When the defendants were directed to produce the photo stat copy of the minute book containing the entries of 83 rd and 84th meeting, the same had been produced before on 13.12.2003. I had also perused the original minute book containing the minutes of 83rd and 84th meeting. The minute book appeared to be properly maintained in accordance with Sec. 193 of Companies Act and there did not appear anything to raise suspicion.

26. Resolution 82 of Table A of Schedule 1 of the regulations for management of a company limited by shares lays down that a manager of secretary may be appointed by the board for such term, at such remuneration upon such condition as it may think fit and any manager or secretary so appointed may be removed by the board. It was argued by ld. counsel for the plaintiff that the plaintiff could not have been removed without approval of the share holders of which a general body meeting should have been convened. I do not agree with

him. The plaintiff had been appointed by the board of the company. The board had convened its meeting on 9.3.99. The appointment of the plaintiff and his removal was by board of directors. It was as per the law. No fault whatsoever can be found. Since the appointment of the plaintiff was by the board of director of the company, therefore, in view of regulation 82 he could have been removed by the board of directors. Here I would like to refer the judgment Haryana Seeds Development Corporation (Supra) which has been pressed into service by counsel for the plaintiff. In that case the termination orders were passed by the managing director and not by the board of directors. However, this judgment is distinguishable on the facts. In the present case, the plaintiff had been removed by board of directors in the 83rd meeting dated 9.3.99.

Xxx xxx xxx

28. One of the arguments of counsel for the plaintiff was that the written statement had not been filed by an authorized person. A perusal of the file reveals that a power of attorney had been executed by K.R. Radhakrishanan, company secretary for and on behalf of defendant no. 1 by order of the board of defendant no. 1 in favour of H.N. Mathu8r, D.K. Singh and Sanjiv Sharma. The W.S. bears signature of H.N. Mathur. Therefore, the W.S. had been filed by a duly authorized person." (emphasis added)

13. A reference to the resolution dated 9.3.1999, Ex.DW1/1 shows

that the same could have been better worded, however, it is clear from the

resolution that the services of the appellant/Sh.Pawan Kumar Dalmia were

indeed terminated. No doubt, the expression "was being assigned different

responsibilities" can be read in a manner as if the services were not

terminated, however, it can also be interpreted to mean that the services

were terminated but he would be given different employment i.e. different

responsibilities. This I say so because the actual resolution specifically

states that the appointment of Sh. Pawan Kumar Dalmia was rescinded

with immediate effect. The relevant part of this resolution reads as under:-

"5. CONSIDERATION OF APPOINTMENT OF MR. K.R. RADHAKRISHNAN AS COMPANY SECRETARY The chairman informed the Board that Mr. Pawan Dalmia, DGM (Legal) and Company Secretary was being assigned different responsibilities. As such he shall not longer hold office of the Company Secretary of the Organisation with effect from March 9, 1999.

It was therefore, proposed to appoint Mr. K.R. Radhakrishnan, a qualified Company Secretary, having the requisite experience, as Secretary of the Company with effect from 9th March, 1999. The Board considered and passed the following resolution: "RESOLVED that the appointment of Mr. Pawan K. Dalmia as Secretary of the Company be and is hereby rescinded with immediate effect."

RESOLVED further that Mr. S. Bhattacharya, Director be and is hereby authorised to communicate to Mr. Pawan Dalmia, the rescission of his appointment as Company Secretary." "RESOLVED further that pursuant to Article 124 of the Articles of Association of the Company read with Section 383 A of the Companies Act, 1956, Mr. K.R. Radhakrishnan be and is hereby appointed as Secretary of the Company with effect from 9th March, 1999."

14. Further, this 83rd resolution has been confirmed by the 84th

resolution which is signed by Mr. Shiv Nadar, the Chairman of the

defendant No.1/respondent No.1-company. Though Mr. Shiv Nadar was

not present when the 83rd resolution was passed, however, he has also

confirmed the 83rd resolution of Board of Directors by being present at the

84th resolution when the 83rd resolution came up for confirmation and

signatures i.e. the Chairman has confirmed the termination of services of

the plaintiff/appellant. Of course, I am referring to the argument of the

appellant/plaintiff that Sh. Pawan Kumar Dalmia could only be terminated

by the Chairman, only out of deference to the arguments inasmuch as there

is no provision of Company Law or the Contract Act, 1872 which requires

that an employee of a company cannot be terminated by a person lesser in

authority than by whom he was appointed. A company operates through

Board of Directors and the Board of Directors had passed a resolution

terminating the employment. It cannot therefore be argued that there is no

termination of services of Sh. Pawan Kumar Dalmia. The trial Court has

also accordingly held as per para 26 of the impugned judgment reproduced

above. Also, even as per Article 124, the appointment is by the Chairman

with the approval of Board of Directors i.e. the Board of Directors is

supreme, and therefore the Board of Directors cannot be argued as lacking

in authority to terminate the services of a Secretary.

In fact, in my opinion, it is not open to Sh. Pawan Kumar

Dalmia to raise an issue with respect to lack of presence of Sh. Shiv Nadar

or lack of authority in Board of Directors to terminate his services

inasmuch as the present is not a case where there is a dispute with respect

to shareholders inter se or Directors of a Board of a company inter se.

Admittedly, there has never been a subsequent Board of Directors‟

resolution or a General Body Meeting of the defendant No.1/respondent

No.1-company challenging the termination of services of appellant-Sh.

Pawan Kumar Dalmia. Therefore, the trial Court was justified in holding

that services of the appellant-Sh. Pawan Kumar Dalmia were terminated,

and further, in my opinion, the appellant had no locus standi to question the

validity of resolution of Board of Directors of the defendant

No.1/respondent No.1-company inasmuch as right to question such Board

of Directors‟ resolution with regard to its authenticity or contents is only of

the Board of Directors itself or of the General Body of shareholders of such

a company and admittedly there is no question to the 83rd resolution by the

Board of Directors subsequently or by the General Body of shareholders of

the defendant No.1/respondent No.1-company.

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.

17. The facts of the present cases show an unnecessary attempt by

the appellants to pursue and file these frivolous cases. Either the appellants

have not been correctly advised, or if they have been so advised, they were

being unduly obdurate in seeking reliefs which were not justified either in

facts or in law, considering the fact that Sh. Pawan Kumar Dalmia besides

being the Secretary was also the Manager (legal) as per the appointment

letter. Even after conclusion of arguments, when the appellants and their

counsel were put to notice of Section 14(1)(c) of the Specific Relief Act,

1963, as also of the contractual nature of appointment and the maximum

entitlement to the normal damages under Section 73 of the Contract Act,

1872 (even assuming the same could be claimed) being of only two

months‟ salary, however, the appellant insisted the appeals to be disposed

of on merits. The Supreme Court in the recent judgment of

Ramrameshwari Devi and Others v. Nirmala Devi and Others (2011) 8

SCC 249 has held that it is high time that Courts must impose actual costs

to discourage frivolous litigations. The Supreme Court in the case of

Ramrameshwari Devi (supra) has made reference in various paragraphs to

actual costs incurred by the opposite party because of false and frivolous

litigations. The Supreme Court has mandated that it is high time that actual

costs be awarded. Earlier, a Division Bench of three Judges of the

Supreme Court in the case of Salem Advocates' Bar Association Vs.

Union of India (2005)6 SCC 344 has also held that actual costs must now

be imposed. I am also empowered to impose actual costs by virtue of

Volume V of the Punjab High Court Rules and Orders (as applicable to

Delhi) Chapter VI Part I Rule 15.

18. In view of the facts as stated above, and the wholly frivolous

nature of litigations which have no basis in facts and law, and also

considering the costs incurred by the respondent No.1/defendant No.1-

company, the appeals are dismissed with costs of ` 25,000/- for each of the

appeals. Trial Court records be sent back.

VALMIKI J. MEHTA, J MARCH 13, 2012 ak/Ne