Warehousing Corp. v. Tyagi

250 EXECUTIVE COMMITTEE OF U.P. STATE WAREHOUSING A CORPORATION, LIMITED l'. CHANDll.A KIRAN TYAGI _September_ 8, 1969 (J.M. SHELAT AND C. A. VAIDIALINGAM, JJ.l _-A'"'ricultural Produce_ _(Derelop111c111_ _and_ _Warehousing)_ _Corporatio11_ _Act_ l23 _of_ 1956), _s._ 54 _t11ul_ }~£'g11/a1ions _11ullfe_ _1hereu11der-Reg11lo1iu11_ 16(3 _)-Dis1nissal_ _of_ _e111p/oyce_ _wilhout_ _follvwi11g_ _proc<'d11re-lf_ _e111ployce_ _enritled to_ _rei11state11u•11t_ _or_ _only_ _da111ages-Specific J{e/icf_ _Act_ ( l _uf_ 1877}, _s._ _21._ Under s. 28 of the Agricultural Produo~ (Development and \Van:housing) Corporation Act, 1956, the appellant v. [1] as established as the Warehousing Corporation of the State of U.P. Section 54 of the Act gives power to a Warehousing Corporation to n1akc regulations not inconsistent with the Act and the Rules made thereunder and the regulations are to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the. provisions of the Act. Regulatil)n 11 deals with termination of the service <Jf an cn1ploycc other than by way of punishment, while regulation 16 deals with penalties. Under regulation 16(3) an employee, on whom the punishment of dismissal is to be imposed, has to be given an opportunity, of tendering his explanation in writing, for cross-examining the \vitncsscs against hin1, and for producing evidence in his defence. B #### c D E F G The respondent was a warehouseman in the employment of the appellant. Certain charges were framed against him and he was suspended pending enquiry into the charges. After receiving ·his explanation, the Enquiry Officer did not take anv evidence in respect of any charge. lnste~ul he met various persons and collected information, and gave his findings on the various charges on the basis of the enquiries n1ade hy hin1 nn<l the records. Even the information so collected was not put to the respondent. On the basis of those findings of the Enquiry Otli.ccr the 1csPondent °"''as dismissed fron1 ·service. He filed a snit ch~11lenging the o.rdcr of dismiss~{ on the ground that there was a violation of regulation 16(3) and prayed for a declaration that the or<lcr was null and void and that he \Vas entitled tt. be re-instated \Vith full pay and other en1olume.nts. On the questions whether : (1) the disn1issal \Vas not in accordance\"'ith regulation 16(3): and (2) the relationship being one of personal service the respondent \Vas entitled to the declaration {or rcinstatcn1cnt. HELD : (1) The tcrn1ination of the rcsp-...11H.1ent's service v;as nnt under regulation 11, hut under regulation 16; and the procedure prescribed by rcguh1tion lf(J) was not follO\l.'ed by the Enquiry Olllcer in the present case. (2) A declaration to enforce a contract of personal service ·will not norma\ly be granted. The' e}l.ceptions arc : (i) appropriate c~1scs of public servants who have been dis1nisse<l fron1 service in contravention I{ of Art. 311; (ii) disn1issed workers un<lcr industrial and l;:ihour la\\'; <ind (iii) when a statutory bo<ly has acted in breach of a n1311datory ohliga~ tion imposed by a statue. [267 G] A B #### c **D** WAREHOUSING CORP. _v._ TYAGI _(Vaidia/ingam,_ J.) 251 Jn the present case, a breach has been committed by the appellant of reoulation 16(3) as the procedure indicated therein was not followed. The order of dismissal however was passed by the authority who could **pass** **the** **order.** **Such** **an** **orde·r** **made in breach** **of** **the regulations would** **only** **be** **c·ontrary** **to the** **terms** **and conditions** **of** **relationship between** the appellant (employer) and the respondent (employee), but, it would **not** **be** **in** **breach of any statutory obligation. because,** _**the**_ _**Act**_ _**does not**_ _**guarantee any statutory status**_ _**to**_ _**the respondent,**_ **nor does** **it** **impose any** **obligation on** **the** **appellant in** **such** **matters.** **Therefore, the violation** **of** **regulation 16(3)** **as** **alleged** **and** e~tablished **in** **this** **case, could only result** **in** **the** **order** **of** **dismissal being** **held** **to** **be** **wrongful,** **and** **in** conse.quence~ **making** **the** **appellant liable for damages. but could not have the effect** **of** **treating the respondent** **as** **still in service** **or** **entitling** **llim** **to reinstate-** ment. [271 B-E] _Dr._ S. _B._ _Dutt_ v. _Univmity_ _of_ _f)elhi,_ [1959] S.C.R. 1235 and S. _R._ _Trn·ori_ v. _District Board, Agra,_ [1964]3 S.C.R. _55,_ followed. _**Life fnsurance--Corporation of India**_ **v.** _**Sunil**_ _**Kun?ar**_ _**Mukherjee,**_ **[1964J** 5 S. C. R. 528, distinguished. #### Vine v. Notional Dock Labour Board, • [1956] 3 All E.R. ~39, _Barber_ v. _Manchester Hospital Board,_ [1958] 1 All E.R. 322 anc _Francis_ v. _Mrmicipal Councillors etc._ [1962] 3 All E.R. 633, referred to. CIVIL APPELLATE JURISDICTION : Civil Appeal No. _559_ of 1967. Appeal by special leave from the judgment and decree dated **E** October 25, 1966 of the Allahabad High Court in Second Appeal No. 4275 of ~965. _S. T. Desai, Naunit Lal_ and _D._ _N. Misra •._ for !he appellant. F **G** **H** _B._ _R._ _L._ _Iyengar,_ _S._ _K. Mehta,_ and _K._ _L._ _Meltta,_ for the respondents, T1'.e Judgment of the Court was delivered by **Vaidialwgam,** **J'.** This appeal, by special leave, by the defendant-appellant, is directed agamst the decree and judgment, dated October 25, 1966 of the Allahabad High Court in Second ###### Apeal No. 4275 ?f 1965 holding that the order, dated March 10, 1964 passed agamst the respondent dismissing him from service is null a11d void and that he is entitled to be reinstated with futi pay and emoluments. The rcspondent-r'aintifI originally entered service with the appellant as a Technical Assistant in November 1958 and later he was promoted to the post of Warehouseman on October 15 1959. He was confirmed in 1962 in the said post. Certai~ char~es ':"ere framed a_gainst the respondent and pending the enquiry mto those charges he was placed under rnspension on 252 SUPREME COURT REPORTS [1970] 2 SCR. September 9, 1963. After an enquiry the respondent was found guilty and in consequence dismissed from service of the appellant by order dated March 10, 1964. The respondent instituted (i\"il Suit No. 201 of 1964 challenging the order of dismissal. According to him the various allegations made against hini were vague and had not been established and there has been no proper enquiry conducted against him. The enquiry, according to him, was contrary to the princi!'les of natural justice without giving him an opportunity to place his defence and it was also h~ld i~ disregard of cl. 16 of the Regulations framed by the appellant. He also claimed that he was entitled to the protection under Art. 311 of the Constitution. On these allegaiions the plaintiff prayed for a declaration that the order, dated March 10, 1964 dismissing him from service, was null and void and that he was entitled to be reinstated with full pay and other emoluments. The appellant-defendant, in its written statement, pleaded that the enquiry into the charges lev•lled against the plaintiff was made properly and in compliance with the provisions of the Regulations and the plaintiff-respondent had been given full opportunity to participate in the enquiry which he also did. The appellant pleaded that the respondent was not entitled to the protection of Art. 311 of the Constitution. It also pleaded that the order of dismissal passed against the respondent was perfectly justified and that the suit was false and had to be dismissed with costs. The trial Court held that the plaintiff was not entitled to the protection under Art. 311 of the Constitution. But it held that in conduct;ng the enquiry, the Enquily Officer did not· comply with the provisions of sub-cl. (3) of cl. 16 of the Regulations framed by the appellant and that there had been a violation of the rules of natural justice. In consequence the trial Court held that the order dismissing the plaintiff was illegal; but in considering the question as to whether the plaintiff was also entdetl :n the further relief claimed by him, _viz.,_ of reinstatement with lull pay and emoluments, the trial Court was of opinion that in view of s. 21 of the Specific Relief Act, 1877 the plaintiff was not entitled ~·that relief. Ultimately the Trial Court granted a declaration, by its judgment dated March 24, 1965 that the order of dismissal dated March 10, 1964 was void and inciTectivc and de.creed the suit with costs. The appellant challenged this decision in appeal before the Civil Judge, Mainpuri, in Civil Appeal No. 69 of 1965. The respondent filed a Memorandum of Cross Objections chal!enging the decree of the trial Court C:~clining his relief for reinstatement with full pay. The learned Civil Judge, by his decree and judgment dated September 4, 1951 dismissed the apepal and A B #### c D E F G H A B #### c D E F G H WAREHOUSING CORP. _v._ TYAGI _(Vaidialingam,_ _J.)_ 253 allowed the Memorandum of Cross-Objections liled by the respondent. The result was that the plaintiff's suit was decreed, granting both the reliefs as prayed for by him. The appellant again challenged the decre.es of. both the lower Courts before the Allahabad High Court m Second Appeal No. 4275 of 1965. The High Court has, by its judgment dated October 25, 1966 dismissed the appeal. It a.greed with the findings recorded by the two S!-lboi:dinate Court~ that the enquiry proceedings are· vitiated by a v10lat10n of the pnnciples of natural justice and also not being m . accordance. with Regulat10n no. 16(3). Regarding the declaration for remstatement, the High Court was of the view that the rules and the Regulations framed under the _Agricultural Produce_ _(Development_ _mu/_ _Warehousing) Corporations Act,_ 1956 (Act 28 of 1956) (hereinafter called the Act) had statutory force and that as there had been a violation of Regulation no. 16(3), the plaintiff was entitled to the declaration. Mr. S. T. Desai, learned counsel for the appellant Corporation raised two contentions : (I) A full and fair opportunity was given to the respondent in the enquiry held against him and there has been no violation of Reg~lation no. 16(3). The finding on this point by the High Court and the Subordinate Courts is erroneous._ (2) Even on the basis that the enquiry is vitiated by non-compliance with the provisions of Regulation no. 16 _(_ _3)_ framed by the Corporation, the relief declaring that the plaintiff is entitled to be reinstated in service with full pay should not have been granted as by doing so the Courts have departed from the normal rule that the specific performance of a contract of personal service will not be ~nforced. In any event, counsel urged that there are no special circumstances justifying the grant of that relief in this case. . Mr. B. R. L. Iyengar, learned counsel for the respondent, pomted out that the findmgs that the enquiry held was not in accordance with Regulanon no. 16(3) and that there has been a violation of the principles of natural justice, are conrnn-cnt findmgs recorded by all the Courts and those findings are fully sup~orted by the ev1den~e on record. Regarding rhc secc;nd content10n, Mr. Iyengar pomted out that when an order of dismissal has been pas~ed in violation of a statutory provision-as in this case the _R~gul~tions-a declaration granted in favour of the respondent 1s JUst1fied. . The first contention raise? by Mr. Desai relates to the quesIIOn as to w~ether the enquiry held against the plaintiff was in accordance with sub-cl. ( 3) of Regulation 16 of the Regulations framed by the appellant and whether the enquiry is vitiated by **254** SUPREME COURT REPORTS [I 970] 2 S.C.R. a Yiolation of the principles of natural. justice. All the Courts have held that the respondent is not entitled to the protection under Art. _3_ 1 I of the Constitution. Therefore the only question for consideration is whether the enquiry has been properly c~n­ ducted in accordance with Regulation no. 16 (3). As pointed out by Mr. Jycngar. the findings on facts on this point have b.c:en recorded concurrenily by all the Courts as against '.he a~i)el!ant. lt is now necessary to briefly refer to some of the provisions of the Act under which the appellant has been constituted and is functioning. as also the Regulations framed by the Board. The Act is one to provide for the irv:orporation and re_'.:ubtion of corporations for the purpose of development and warehousing of agricultural prcduce on cooperative principles and for matters connected therewith. Section 2 defines certain expressions. including ·aopropriatc Government'. 'Board'. 'Central Warehousing Corporation'. 'prescribed'. 'State Warehousing Corporation· and 'Warehousing Corporation·. The expression 'Board" means the National Co-operative Development and Warehousing Board established under s. 3. 'State Warehousing Corporation' (the appellant is one such) means a Warehousing Corporation for a St:l!c established under s. 28. Section 3 provides for the establishment by 'the Central Government of a Corporation by the name of National Co-operative Development and Warehousing Board. · Section 17 provides for the Central Government establishing a Corporation by the name of Central Warehousing Corporation. Section 28 provides for the State Government establishing a Warehousing Corporation for the State. As pointed out earlier. the appellant is the Warehousing Corroration for the State of Uttar Pradesh, established under this section. Sectitm 34 lays down the functions of a State Warehousing Corpora, tion. Section 35 provides fclr the composition of the Executive Committee of a State Warehousing Corporation. Section 52 ~ives power to the appropriate Government to make rules to c·arry out the purposes of the Act and sub-s. (2 l deals with the various matters in respect of which rules may be frnmed without prejudice to the generality of the power contained in sub-s. (I). Sub-s. ( 3) provides that all rules made bv tl1e appropriate Government under s. 52 shall. as soon as ma\· be after thev are made, be laid before both Houses of Parliamerit or the Legislature ()f the State :1s the case may b~. Section 53 gives power to the Board to make regulations,not inconsistent with the Act and the n11es made thereunder. and those regulatiP•Js may provide for all matters for which provision is ncce~sary ,,,. expedient for- the purpose of giving effect to the provisions of the Act. Apart from the generality of this power. sub-s. (2) specifies the various matters regarding which regulations may be A B #### c **D** **E** F G **H** · A B #### c D E F G H WAREl{OUSING CORP. _v._ TYAG! _(Vaidialingam,_ _J.)_ 255 framed. Section 54 gives power to the Warehousing Corporations to make regulations not inconsistent with the Act and the rules made thereunder, and those regulations may provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of !he Act. Apart from this general power, sub-s. (2) enumerates the various matters in respect of which regulations can be framed. Under s. 54 the appellant Corporation had framed regulations. Those regulations are the Uttar Pradesh State Warehousing Corporation Regulations, 1961 (hereinafter called the Regulations). We shall now proceed to consider the provisions ot the Regulations. Clause 1 (3) of the Regulations provides that the Regulations shall apply to all employees of the Corporation and to the personnel employed on contract in respect of all matters not regulated by the contract. Clause 2 defines the various expressions. Chapter II of the Regulations deals with the appointing authority, probation and termination of service. Regulation 11 deals with termination-of service. Chapter IV deals with discipline. Subcl (1) of regulation 16 provides for the imposition of penalties as against an employee found guilty of the various acts mentioned therein. Sub-cl. ( 3) of regulation 16, which is relevunt for the present purpose, is as follows : "(3) No punishment other than that specified in sub-para (l)(a), (l)(b) or (l)(c) shall be imposed on any employee without giving him an opportunity for tendering an explanation in writing and cross examining the witnesses against him, if any, and of produc ing evidence in defence : Provided that punishment to an employee on deputation from the Central Government, a State Government or a Government Institution shall be imposed only in accordance with the procedure and rules laid down in this behalf in his parent service."' Sub-paras (1 ) (a), (1 ) ( b) and (1) ( c) referred to therein are the penalties of (a) fine; (b) censure; and (c) postponment or stoppage of increments or promotion. In this case as the punishment imposed is one of dismissal of the appellant ·should have followed the procedure indicated in sub-cl. (3) of regulation 16 extracted above. Under this sub-clause, it has to be noted that an employee on whom a punishment other than that specified therein is to be imposed, has to be given an opportunity of tendering his explanation in writing and cross-examining witnesses against him, if any, and producing evidence in defence. The grievance of the respondent regarding the conduct of the 25f. SUPREME COURT REPORTS [1970] 2 S.C.R. enquiry, apart from other objections, is that materials collected ###### ty the Enquiry Officer behind his back were not made known to him and that information had been taken into account for holding him guilty. His further objection is that he did not .get any opportunity to adduce evidence in his de'~nce and that the various persons from whom information had been gathered hy the Enquiry Officer were not tendered for cross-examination by him. It is not necessary for us to go elaborately into the various proceedings connected with the giving of the charge-sheet, the explanation offered by the appellant and the final conclusions .arrived at by the Enquiry O.'ficer on the basis of which the res pondent has been dismissed from service. As pointed out by Mr. Iyengar, all the Courts have concurrently held that the enquiry _is_ vitiated and has been held contrary to regulation 16(3). It is enough therefore, in the cjrcumstances, to note that the Enquiry Officer Sri F. A. Abbasi who has given evidence has admitted that he did not take in evidence in respect of any charge and that he considered the records as sufficient for giving findings on the cluirges. He has also admitted that he met various persons and ·collected information and that information has iieen !acorporated in hi.s enquiry report. He has further admitted that the information so collected by him was not put to the plaintiff, and has :stated that he based his findings in the report against the res pondent on the basis of the enquiries made by him of the police and other persons. In the face of these admissions, it is idle for Mr. Desai to urge before us, that the findings of the High Court .and the Subordinate Courts that there has been a violation of regulation 16(3) in the enquiry proceedings cannot be sustained. On the other hand, we are of opinion that the finding is amply justified by the evidence on record. Mr. Desai made a feeble attempt to sustain the order dated March 10, 1964 as one passed under regulation 11 and not uniler regulation 16. We have no hesitation in rejecting this contention. Regulation 11, as we have already pointed out, is ;n Chapter JI, and deals with termination of service simpliciter and, even in such circumstances, it provides in the case of a perma. nent employee that his ·services can be terminated only after apprising the employee of the reasons therefor and asking him to furnish explanation and after consideration of the explanation and then giving the employee a final notice to show cause against the proposed termination of service. This clause, in {)Ur -opinion, deals with a termination, other. than by way of punish ment, and the procedure indicated therein is quite simple. On the other hand, regulation 16 appears in Chapter IV dealing with ·discipline. An order of dismissal passed after following the procedure indicated therein, attaches a stigma on the employee concerned. Having issued a charge-sheet and made a farce of A B ##### c D E F G B A B #### c D E F G H WAREHOUSING CORP. _v._ TYAGI _(Vaidialingam,_ J.) 257 an enquiry and then dismissed the employ~e after holding him guilty, cannot certainly be considered to be termination of .the employee's service under regulation 11. That action was taken by way of disciplinary proceedings is clear from the fact that an order suspending the respondent, pending the enquiry, was passed on November 9, 1963. The same order further directed that the respondent will receive only subsistence iillowance during the period of suspension. The order of suspension must be related' to regulation 17 and the grant of subsistence allowance must be rdcrred to regulation 18, both of which occur in Chapter IV relating to discipline. Therefore it follows that the first contention of Mr. S. T. Desai cannot be accepted. Mr. Desai next urged that even on the basis that the order· of dismissal had been passed in violation of regulation 16 ( 3), the decree granting a declaration for reinstatement of the respondent with full pay and emoluments is illegal as amounting to enforcing a contract of personal service. Alternatively Mr. Desai urged that in any event there a•·e no special circumstances existing in this case justifying the grant of such a declaration. Mr. Desai developed his contentions as follows : The relationship between the apix;llant and the respondent is that of a master and servant. A breach of regulation 16 ( 3) will at the most result in the order of dismissal being wrongful. The remedy, if any, of the aggrieved party in such a case will only be a claim for damages for breach of contract. The counsel further urged that Courts have jurisdiction to declare the decision of a statutory body given in violation of a mandatory statutory obligation relating to dismissal of a· servant as _ultra vires_ and void. Even in such circutrrstances, it was urged, the jurisdiction to grant a declaration which will result in continui' _f_ of service is granted· onl'y under very special circumstances which require the departure from the general rule that a contract of service will not be specifically enforced. According to the counsel, the rules framed under s. 52 of the Act by the appropriate Government may have statutory force and effect if they are of such a nature as to require mandatory compliance; but, according to him, the regulations framed by a Warehousing Corporation do not create any such statutory obligation of a marrdatory nature. Hence a termination of service by an employer even in breach of ~~nditions of service laid down by the regulations would only attract the general law of master and servant and cannot result in a declaratory decree about continuity of service being granted. In any event, the counsel urged that a declaration should not have been ~ranted as there are no special circumstances warranting the grant of such a relief in this case. Counsel pointed out that the "2 58 SuPREME COURT REPORTS (1970] 2 S.C.R. respondent entered service only in Noveml:>er 1958 and he has b(:en removed from service in 1964 and it is not claim~d by the respondent that he will not be able to take up service elsewhere. In short, according to Mr. Desai, the grant of the relief of declara. tion by way of reinstatement is erroneous. Mr. B. R. L. Iyengar, learned counsel for the respondent, urged that the regulations have been framed by the Warehousing Corporation under s. 54. 0ne of the matters in respect of which regulations may be framed is in regard to the conditions ot service of the employees of a Warehousing Corporation. It is :by virtue of that power that the regulations-called Staff regulations-have been framed. By virtue of cl. (3) of regulation 1, they apply to all employees of the Corporation and to the personnel employed on contract in respect of all matters not regulated 'by the contract. Those regulations deal with various matters relating to the service conditions of the employee~. Chapter IV -.deals with discipline and cl. ( 3) of regulation 16 makes it imperative and obligatory on the Corporation to comply with ·those provisions before punishment other than those punishments -specified therein is imposed against an employee. The regula-iions, according to Mr. Iyengar, having b~cn framed under the . Act, have statutory effect and they impose statutory obligation of :.a mandatory nature on the appellant Corporation in respect of the procedure to be adopted for taking disciplinary action. On -•'.le findings recorded by all the Courts, it is clear that there has ·been a violation of cl. ( 3) _oi_ regulation i 6, in which case it follows that the respondent was entitled to get a declaration that the order of dismissal is void and of no effect. Counsel also pointed out that the respondent's services have been arbitrarily ·and _mala_ _fide_ terminated by the appellant and ~herefore, there are sufficient circumstances for departing from the normal rule 1hat a contract of personal service will not be specifically enforced. The question as to when and under what circumstances a reiief by way of declaration regarding continuity of f.ervice, after nolding that an order of dismissal is void or _ultra vires,_ can be given, has been considered both in England and here. The leading decision of the House of Lords which is generally invoked in support of the view that such a declaration can be granted is the decision in _Vine_ v. _National Dock Labour Board(')._ This ·decision has also been referred to by this Court in some of its d~cisions, to which we shall refer presently. 'foe case before the House of Lords in the decision referred to above arose under the foliowing circumstances. The plaintiff was a registered docl, (1) [1956] 3 All E.R. 939. A B ### c D E F G H WAREHOUSING CORP. _v._ TYAGI _(Vaidia/ingam,._ _J.)_ 259 worker employed in the reserve pool by the National Dock Labour Board under a scheme set up i:nder the Uock Workers (Regulation 6f Employment) Order, 1947. In 1948,_ the Nation~! B0ard, approved the delegation of powers to d1sc1phnary committees set up by local boards. The plaintiff failed to obey a va)id order to report for work with a company of stevedores and, m conse B quence, the local board ins•ructed their disciolinary committee to hear the case. The disciplinary committee, having heard the case, gave notice in writing to the plaintiff terminating his employment. The plaintiff instituted the action daiming damages for wrongful dismissal and also prayed for a declaration that the order of dismissal was illegal, _ultra vires_ and invalid. The Court ## c of first instance granted beth damages and declration; but on appeal, by the National Board, the Court of Appeal struck out the declaration granted to the plaintiff. The plaintiff appealed to the House of Lords against the striking out of the declaration and the National Board cross-appealed against the finding that the dismissal was invalid and also against the award of damages. The House of Lords held that the declaratkn D _granted by the trial Judge was properly made a; the order of dismissal was a nullity since the local board had no power to delegate its disciplinary functions. The cross-appeal filed by the National Board was dismissed. Viscount Kilmuir, L.C., in considering the question regarding the grant of declaration, ?hserves at p. 943 that the discretion in granting a declaratory E Judgment should not be exercised save for good reason and then summarising the reasons for granting the declaration, states at p. 944: A B ## c D F G "First, it follows from the fact that the plaintiff's dismissal was invalid that his name was never validly removed from the register, and he continued in the employ of the National Board. This is an entirely different situation from the ordinary master and servant case. There, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice the employment is effectively terminated; albeit i~ breach of contract. Here, the removal of the plaintiff's name from the reg!ste~ being, in law, a nullity, he continued to h~ve the nght to be treated as a registered dock worker with all the benefits which, by statute that st~tus conferred on him. It is, therefore, righc that, With the _bac.kground ~f this scheme, t!i.e court should declare his pghts." H . At p. 948, Lord Keith of Avonholm states : . "This is. not a straightforward relationship of master and ~ervant. Normally, and apar, from the interven 260 SUPREME COURT REPORTS [1970] 2 S.C.R. tion of statute, there would never be a nullity in terminating an ordinary contract of master and servant. Dismissal might be in breach of contract and so unlawful but could only sound in damages. Here we are concerned with a statutory scheme of employment. . . . The scheme gives the dock worker a status. Unless registered, he is deprived of the opportunity of carrying on what may have been his lifelong employment as a dock worker, and he has a right and interest to challenge any unlawful act that interferes with this status. If the actings here complained of were a nullity, Mr. Vine (hereinatter called 'the plaintiff'), in my opinion, has a clear right to have that fact declared by the court." It will be noted that the> House of Lords, in the decision referred to above, have emphasized that orders striking off the plaintiff from the register was not considered a simple case of a master terminating the services of the servant, but, on the other hand, was treated as one affecting the status of the plaintiff and whose sen :ces have been terminated by an authority which had no power to so terminate and, as such, the order was treated as void. The House of Lords have also emphasised that due to the intervention of the statute which safeguards the right of the dock worker, the order not being in accordance with the statute, must be treated as a nullity. It was under those circumstances that the House of Lords restored the decree of the Court of first instance granting a declaration regarding the continuity of service of the plaintiff therein. It must a.gain be emphasised that the order, the validity of which was considered by the House of Lords, was treated as a nullity. The question whether a dismissed employee can ask for a declaration that his employment had never been validly terminated, again came up for consideration in _Barber_ v. _Manchester_ _Hospital Board(')._ In that case a Regional Hospital Board passed an order terminating the plaintiffs employment as a medical consultant in the hospital. The plaintiff brought an action against the Board claiming declaration that his employment had never been validly determined and he also claimed damages for breach of contract or wrongful dismissal. The Court ·held that the plaintiff's contract with the Board was one between master and servant and the order of termination of his services could not be treated as a nullity. In this view the plaintiff's claim for a declaration that his employment had never been validly determined was not granted; but the plaintiff was awarded damages (1)°[1958] I All E.R. 322. A B #### c D E F G H A B ### c **D** WAREHOUSING CORP. v. TYAGI _(Vaidialingam, ].)_ 261 for breach of contract. It was contended Jn behalf of the plaintiff that when passing the order terminating his . services the procedure indicated in cl. 16 of the te~ms and cond1tion~ of service of hospital medical staff has been v10lated by the ongmal hospital Board and therefore the order of termmat1on never became effective and the plaintiff continued to be still in service as the order was a nullity. On behalf of the plaintiff reliance was placed on the decision in _Vine's Case(')._ Repelling this contention, Barry, J., observes, at p. 331 : ·• ... I am unable to equate this case to the circumstances which were being considered by the Court of Appeal and the House of Lords in _Vine_ v. _National_ _Dock Labour Board(')._ There the plaintiff was working under a code which had statutory powers, and, clearly, in those circumstances, all the lords of appeal who dealt with the case in the House of Lords took the view that the case could not be dealt with as though it were an ordinary master and servant claim in which the rights of the parties were regulated solely by contract. Here, despite the strong statutory flavour attaching to the plain.tiff's contract, I have reached the conclusion that in essence it was an ordinary contract **between master and servant** **and** **nothing more."** E .In this ivew the Court finally held that the plaintiff's only remedy was to recover damages as for breach of contract. F **G** H A similar question regarding the right of a dismissed employee to get a declaration of his right to continue in employment came up fct consideration before the Privy .Council fa .. _Francis_ v. _Municipal Councillors etc.(')._ The plaintiff in that case was in the service of the Municipal Councillors of Kuala Lumpur and, bys. 16(5) of the Municipal Ordinance (Extended Application) Ordinance, 1948, the President had power to dismiss him. The plaintiff was dismissed. The Privy Council held that the plaintiff had been wrongly diswissed and that his remedy lay in a claim for damages. The plaintiff sought a further declaration that he had ~ ri.ght to co~tin?e in ~mployment notwithstanding the order of d1sm1ssal. Reiectmg this claim the Privy Council observed, at p. 637: "In their Lordships' view, when there has been a purported termination of a contract of service a declaration to the effect that the contract •Jf service still subsists will rarely be made. This is a consequence of the general principle of law that the courts will not grant (1) (1956) 3 E.R. 939. (2) [1962] 3 All F.R. 6JJ. 2Sup Cl/70-5 262 SUPREME COURT REPORTS [1970] 2 s.c.R. specific perform.ance of c.ontracts of service. Special circumstances wdl be reqmred before such a ueclarat1011 is made and its making wili normally be in the discretion of the court. In their Lordships' view there are no circumstances in the present case which would make it either just or proper to make such a declaration." The Privy Council distinguished the particular circumstances that existed before the House of Lords in _Vine's case_ (') and finally held at p. 638 : "In their Lordships' view the ;ircumstances of the present case are not comparable with those in _Vine's_ _case_ (') and are not such as to make it appropriate to give a declaratory judgment in the manner contended for on behalf of the appellant. The appellant's employment must be treate4 as having in fact come to and end on Oct. 1, 1957 and the appellant's remedy lay in a claim for damages." From a review of the English decisions, referred to above, the position emerges as follows : The law relating to master and servant is clear. A · contract for personal service will not be enforced by an order for specific performance nor will it be open for a servant to refuse to accept the repudiation of a contract of service by his master and say that the contract has never beoo terminated. The remedy of the employee is a claim for damages for wrongful dismissal or for breach of contract. This is the normal rule and that was applied in _lfarber's case_ (") and _Francis'_ _case_ ('). But, when a statutory status is given to an employee and there has been a violation of the provisions of the statute while tenninating the services of such an employee, the latter will be eligible to get the relief of a declaration that the order is null and void and that he. continues to be in servfre, as it will not then be a mere case of a master terminating the services of a servant. This was the position in _Vine's_ _case.(')_ The question has also been considered by this Court in certain decisions, to which we w\ll immediately refer. In _Dr._ S. _B. Dutt_ v. _University_ _of Delhi(')_ this Court had to consider the legality of an award directing that an order of dismissal _was-ultra vires,_ _ma/a fide_ and of no effect and that the appellant in - that case continued to be a Professor of the University. The appellant, Dr. Dutt, who was a Professor in the University of Delhi, was dismissed from service by the latter. He referred the dispute regarding his dismissal and certain other disputes to arbitration, (t) [1956]13 All E.R. 939. (2) [1958] I All E.R. 322. (3) [1962]3 All E.R. 633. (4) [19591 S.C.R. 1235. A B ##### c D E F G H A B ### c D E F G H WAREHOUSING CORP. _v._ TYAGI _(Vaidialingam,_ _J.)_ 263 under s. 45 of the Delhi University Act. An award was made which decided that the appellant"s "'dismissal was _11/tra_ _vire>,_ _ma/a_ _fide,_ and has no effect on his status. He still continues to be a professor of the University"". The said award was made a rule of Court by the Subordinate Judge cf Delhi. The Universtt) of Delhi challenged this decision on appeal and the Punjab High CcLrt, which ultimately heard the appeal, set aside the award on the ground that such a declaration amountd to specific enforcement of a contract of personal service forbidden by s. 21 of the Specific Relief Act and therefore disclosed an error on the face of the award. On appeal, this Ccurt, agreeing with the reasoning of the High Court, observed at p. 1242 : "There is no doubt that a ·:ontract of personal service cannot be specifically enforced. Section 21, cl. (b) of the Specific Relief Act, 1877, and the second illustration under this clause .given in the section make it so clear that further elaboration of the point is not required. It seems to us that the present award does purport to enforce a contract of personal service when it states that the dismissal of the appellant 'has no effect on his status', and 'he still continues to be a Professor of the University'. When a decree is passed according :o the award, which if the award is unexceptionable, has to be done under s. 17 of the Arbitration Act aftet it has been filed in Court, that decree will direct that the award be carried out and hence direct that the appellant be treated as still in the s(lrvice of the respondent. It would then enforce a contract of personal service, for the appellant claimed to be a profes;or under a contract of personal service, and so offend s. 21 ( b) .•· On behalf of the appellant, reliance w~s placed on the deci;ion of the Judicial Committee in _The_ _High_ _Commissioner_ _for_ _India_ v. _I. M. Lall_ ( [1] ) in support of the contention that a declaration :hat the appellant continued in service under the U:iiversit" of Delhi in spite of the order of dismissal was a declaration '~hich the law permitted to be made and was :iot therefor~ erroneous. Dealing with this contention and referrincr to the decision-of :he Judicial Committee, this Court observed ~t p. 1244 : '.'That was not a case based on a contract of personal service ... The declaration d;d not enforce a contract o~ p~rsonal service but proceeded on the basis that the d1sm1ssal could only be effected in :erms of the statute an~ as that had not been done, it was a nullity, from ~hi~h ~he res~lt followed that the respondent had contmued m service. All that the Judicial Committee did (I) (194~) L.R. 75 I.A. 225. 26•1 SUPREME COURT REPORTS [1970) 2 S.C.R. in this case was to make a declaration of a statutory invalidity of an act, which is a thing entirely different from enforcing a contract of personal service." Holding that 'it was not the appellant's case before the arbitrator that the dismissal was _ultra_ _vires_ the statute or otherwise a r.:illity', this Court ultimately confirmed the judgment of the High Court setting aside the award. The jurisdiction of the Courts to grant a declaration in a particular case that an order of dismissal is void and that the dismissed employee continues to remain in service, again came up for consideration before thi> Court in _S._ _R._ _Tewari_ v. _District_ _Board,_ _Agra(')._ In that ca!le, the appellant's service as an Engineer under the District Board, Agra, was terminated by the latter, after giving salary for three months in lieu of notice. The appellant, after having unsuccessfully appealed against the order of termination to the State Government, initiated proceedings under Art. 226 before the Allahabad High Court for a writ of _certioran_ for quashing the order of the District Board dismissing him from service and also sought a writ in the nature of _mandamus_ commanding the District Board and the State of Uttar Pradesh to treat him as the lawfully appointed engineer, and not to give effect to the order terminating his .service. The High Court dismissed the writ petition holding that the employee bad been properly dismissed from service. The employee came up to this Court ·in appeal. On behalf of the District Board, the respondent therein, it was contended that the remedy of the appellant, if any, was only to institute a suit for damages for wrongful termination or employment ancl that he was no! entitled to pray for a declaration that the termination of employment was unlawful and a consequential order for restoration in service. The decision in _Dr._ _Dutt's_ _case_ (2) among other decisions, was relied on in support of this contention. This Court negatived that contention and stated the position in law as follows : •·under the common law the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. But this rule is subject to certain well recognized exceptions. It is open to the Courts in an appropriate case to declare that a public servant who is dismissed from service in contravention of Art. 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ (I) [1%4] 3 S.C.R. _SS._ (2) [1959] S.C.R. 123f. A B # _c_ D E F G H A B ## c D B F G WAREHOUSING CORP. _v._ TYAGI _(Vaidialingam,_ _J.)_ 265 ihe servant whom it does not desire to employ. Similarly under the industrial law, jufisdiction of the labour and industrial tribunals to compel the employer to employ a worker, whom he does not desire to employ, is recognized. The Courts are also invested with the power to declare invalid the act of a statutory body, if by doing the. act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something which it does not desire to do." _Vine's_ _Case(')_ which was relied on before the Court was distinguished on the ground that the purported order of dismissal therein which was set aside was a nullity since the local Board in that case ha.d no power to delegate its disciplinary function. Again, the decision in _Dr._ _Dutt's Case(_ _[2 ]_ _)_ was stated to be not a case in which the invalidity of an act done by the University on the ground that it infringed a statutory provision fell to be determined and the rights and obligations of the parties rested in contract and therefore the award was declared to be one contrary to the rule contained in s. 21 (b) of the Specific Relief Act and hence void. This Court, wound up the discussion in _Tewari's_ _Case(')_ as follows, at p. 62 : "The jurisdiction to declare the decision of the Board as _ultra vires_ exists, though it may be exercised only when the Court is satisfied that departure is called for from the rule that a contract of service will not ordinarily be specifically enforced." On facts, this Court held that the order of dismissal of the appellant before them was proper and justified. From the two decisions of tins Court, referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. But there are certain well-recognized exceptions to this rule and they are : To grant such a declaration in appropriate· cases regarding ( 1) A public servant, who has aeen dismissed from service in contravention of Art. 311. (2) Reinstatement of a dismissed worker under Industrial Law by Labo;.ir or Industrial Tribunals. (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute. The . case of the respondent berore us does not come under H either th~ first or the second category. The question then is : Is .he enutled to relief under the third category ? (2) [1956] 3 All E.R. 939. (2) [1959] s.c.R.1236. (3) [1964]3 S.C.R. _55._ 266 SUPREME COURt REPORTS [1970]'2 S.C.R. Mr. S. T. Desai pointed out that by .the appellant conducting A an enquiry and passing an order of dismissal in violation of regulation 16 ( 3), it cannot .be stated that it h.as acted in breach of any mandatory provision of the Act resulting in the order being declared as void or _ultra vires._ The non-compliance with the regulations, at the most, will result in the order of dismissal being wrongful attracting the normal rule in such matters of B making the appellant liable for damages. Even otherwise, this is net a proper case for grant of the declaration asked for by the plaintiff. In our opinion, the position taken up by Mr. Desai finds support in the decisions referred to above. Mr. B. R. L. Iyengar, lea!ned counsel for the respondent, placed considerable reliance on the decision of this Court in C _Life Insurance Corporation of India_ v. _Sunil Kumar Mukher-_ _jee(')._ According to him, in that case, an order of termination of service passed by the Life Insurance Corporation of India, terminating the services of certain employees in breach of regulations framed by it under s. 49 of the Life Insurance Corporation Act, 1956 (Act XXXI of 1956) (hereinafter called the Insu·ance D Act) has been held to be void. Therefore counsel urges that applying the same analogy, a breach of regulations in· the case before us has the same effect as the breach of a statutory obligation ~nd, if so, the High Court was jus;ified in granting the declarntion asked for. We are of opinion that the decision relied on by Mr. Iyengar does not lay down any §Uch proposition. E In that decision, in respect of certain officers governed by s. 11 ( 1) and 11 (2) of the Insurance Act, certain orders terminating their services were passed by the Life Insurance Corporation of India. The orders were challenged by the employees on the ground that they were passed contrary to els. lO(a) and lO(b) of the order passed by the Central Government under s. 11 ( 2) of the Insur- F ance Act, which is called the blue order. The contention on behalf of the Life Insurance Corporation was that the orders were passed in accordance with the regulations framed by the Life Insurance Corporation under s. 49 of the Insurance Act, read with cl. 11 of the blue order. The High Court held that the orders of dismissal were in breach of els. IO(a) and lO(b) of the blue order, and therefore the orders were invalid. The result, G of the grant of this relief was that the employees continued to be, in service. This Court confirmed the decision of the High Court, and having considered the rights conferred by s. 11 ( 1) and 11 (2) of the Insurance Act, held that the employees of the Insurers whose controlled business had been taken over, became employees of the Life Insurance Corporation and that their H terms nnd conditions of service continued until they were altered (f) [1964] _5_ S.C.R. 528 WAREHOUSING CORP. _v._ TYAGI _(Vaidialingam, J.)_ 267 A A by the Central Government and that if the alteration made by the Central Government was not acceptable, they were entitled to- leave the employment of the Corporation an_\i for payment of compensation as provided by s. 11(2). fu exercise of the powers conferred under s. 11 ( 2) of the Insurance Act, the Central Government issued an order, known as the Life Insur B ance Corporation Field Officers (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1957 on December 30, 1957. In 1962, the designation 'Field Officer' was changed into 'Development Officer'. Clauses lO(a) and lO(b) of this order have been set out by this Court in the above deck sion. Cl. 11 of this order prescribed that the pay and allowances ### c of the officers concerned was to be determined in accordance wit!i the principles that may be laid down by the Life Insurance Corporation by regulations made under s. 49 of the Insurance Act. The Life Insurance Corporation, as envisaged under cl. 11 of the order, framed regulations under s. 49 of the Insurance Act, dealing with various matters. It also issued a circular which was made part of the regulations and it was D on the basis of this circular that the Life Insurance Corporation took action and terminated the services of the employees concerned. This Co_!!rt beld that the provisions contained in s. 11 (2) of the Insurance Act are paramount and over-ride any contrary provisions contained in the order issued by the Central B ### c E F G ll Government or the regulations framed by the Life Insurance Corporation. Next to the Insurance Act, the rules framed by the Central Government, which include the order issued under ss. 11 (2) of the Insurance Act, will prevail, but the provisions of the Central Government Order will have to be subject to s. 11 (2) of the Insurance Act. Next in order come the regulations of the Life Insurance Corporation under s. 49 and those regulations must not be inconsistent with the Insurance Act or the rules framed thereunder . . This Court held that the Cir~ular issued by the CJrporation, which had the effect of a regulation passed by it under s. 49 of the Insurance Act, must be read along with the provisions of . ss. 11 ( 1) and 11 (2) of the Insurance Act and cl. 10 of the order issued by the Central Government; and so read the conclusion reached by this Court was that a termination ~f service of an officer, contemplated under the circular issued by the Life In~ur##### ~ Corporation can be effected only in the manner prescribed by cl. 10 of the order issued by the Central Government. In Vlew of the fact that cl. 10 of the order issued by the Central Govern~ent had not been complied with, the order terminating the services of the employees was held to be invalid. It will be seen that the services, as pointed out by this Court, of the employees whose cases were under consideration, had been 268 SUPREME COURT REPORTS [1970) 2 S.C.R. crystallized by the statute-the Insurance Act-in s. 11 ( l) and 11(2); By virtue of the powers conferred bys. 11(2), the,central Government issued the order on December 30, 1957. Cl. IO of this order had clearly indicated the procedure to be adopted for terminating the services of such employees. Therefore, the employees had their rights safeguarded by the Insurance_ Act read with the order issued by the Central Government and 11 cast a statutory obligation on the Life Insurance Corporation to adopt a particular procedure if the serv!ces ~f those e~~loyees 11 ere to be terminated. By not cgmplymg with the provmons of d. IO of the order of the Central Government, which is really related to s. 11 of the Insurance Act, the !..ife Insurance Corporation must be considered to have acted iu gross violation of the mandatory provisicns of the statute. Therefore, it was not as if that the employees were there seeking to enforce a contract of personal service., but their grievance which was accepted by the Court, was that the. order terminating their services was a nullity as it had not been effected in terms of the statute. In our opinion, therefore, this decision does not support the contention _of_ the respondent. Mr. Iyengar referred us also to the decision of this Court in _The State_ _of_ _Uttar Pradesh_ v. _Babu_ _Ram_ _Upadhya_ ( [1 ] ) .but that decision need not detain us because that deals with a member of the public service who has been given pLtection under the Constitution. Such cases stand apart. Mr. Iyengar referred us to a decision of a [1 ] _Jrned Sin~le Judge of the Gujarat High Court reported as _Tata Chemicals Ltd._ v. _Kai/ash(")._ The question that arose for consideration \>as regarding the validity of an order of dismis>al by an employer of an employee contrary to the standing orders. The learned Judge has expressed tbe view that a breach of the standing orders constitutes a breach of a statutory provision and therefore the order of dismissal is a nullity. It is not necessary for us to consider the correctness of that decision because the dispute between the parties in that case arose under Industrial Law and we have already pointed out that one of the exceptions to the Common Law is under Industrial Law where Labour and Industrial Tribunals have jurisdiction to compel an employer to employ a worker whom he does not desire to employ. Having due regard to the principles discussed above. we are of opinion that the High Court was not justified in granting the declaration that the order dated March IO. 1964 dismissing the (I) [1961] 2 S.C.R. 679. **(2) A.LR. 1964** **Guj1rr1t** **265.** A B #### c D E F G **ff** A B ##### c D E F WAREHOUSING CORP. _v._ TYAGI _(Vaidialingam,_ J.) 269 respondent from service is null and void and that he is entitled to be reinstated in service with full pay and other emoluments. As pointed out by us, the regulations are made under the power reserved to the Corporation unde.r s. 54 of the Act. No doubt they lay down the terms and conditions of relationship between the Corporation and it~ employees. An order made in breach of the regulations would be contrary to such terms and conditions, but would not be in breach of any statutory obligation, as wa~ the position which this Court had to deal with in the _Life_ _Insurance_ _Corporation_ _Case(')._ In the instant case, a breach has been committed by the appellant of regulation 16(3) when passing the said order of dismissal, inasmuch as the procedure indicated therein has not been followed. The Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters. As to whether the rules framed under s. 52 deal with anv such matters, does not arise for consideration in this case as ·the respondent has not pl~ced any reliance on the rules and he has rested his case only on regulation 16(3). It is not in dispute that, in this case, the authority who can pass an order of dismissal has passed the same. Jnder those circumstances a violation of regulation 16 ( 3 J, as llleged and established in this case, can only result in the order )f dismissal being held to _be_ wrongful and, in consequence, naking the appellant liable for damages. But the said order cannot be held to be one which has not terminated the service, 1lbeit wrongfully, or which entitles the respondent to ignore it ind ask for being treated as still in service. We are not concerned with the question of damages, because no such claim has been made by the respondent in these proceedings. In this view, the judgment and the decree of the High Court. in so far as they declare that the order dated March 1 O, 1964 is n~ll. and void and that the respondent continues to be in the service of the appella.nt, are set aside and this appeal allowed, to that extent. In the mcumstances of the case, there will be no order as to costs. V.P.S. _Avpeal allowed._ (I) [1964] _5_ S.C.R. 528.