1. By this petition the petitioner seeks to challenge the validity of the order dated the 3rd September 1957, terminating his services under Regulation 48(a) of the Air-India Employees' Service Regulations. The relevant facts leading to the petition are as follows :
2. The petitioner joined the service of the 4th respondent-Air India Corporation as an Assistant Superintendent (Stores) in 1954. He was promoted as Deputy Superintendent (Purchase) in 1960. In 1964, he was given a further promotion as a Senior Deputy Superintendent (Purchase), and the last promotion he earned was in the year 1968 when he was posted as Purchase Manager. During this period, the petitioner also earned as cash award of Rs. 500 and was often associated with important decisions of technical nature.
3. One the 30th December, 1974, respondent No. 3 the Controller of Stores and Purchases, wrote a letter to the petitioner stating that further to the discussion he had with the petitioner, he was happy to inform the petitioner that it was proposed to depute him as Supplies Manger at London in the first week of February, 1975. By the said letter, the petitioner was also informed that this posting at London would be for a period of 2/3 years and the petitioner was asked to treat the said letter as an advance information so that he could make his domestic arrangements. The letter ended with best wishes from the third respondent. On the 9th February, 1975, the petitioner was given the order of his posting at London which mentioned, among other things, that his period of posting at London was three years. In pursuance of this order, the petitioner resumed his post at London. However, within about months of his resumption of the post, an order dated the 11th June, 1975 signed by the third respondent was served upon him terminating the posting with immediate effect, and asking him to hand over the charge to the local official, and to return to Bombay and report himself to the third respondent. On the expiry of his leave joining period, the petitioner returned to Bombay on the 22nd July 1975 and went to resume his duty on the next day, i.e., 23rd July, 1975. However on that day he was handed over a letter signed by the third respondent asking him to go on forced privilege leave for four weeks with immediate effect. When the said period of forced leave was about to expire, another letter dated the 22nd August, 1975 was served on him and the forced leave was extended for a period of 15 days. On the eve of the expiry of this extended leave, i.e. on the 4th September, 1975 the third respondent wrote a letter to the petitioner, asking him to see him at 9 a.m. on the next day, i.e., 5th September, 1975.
4. On the 5th September, 1975, the third respondent informed him that the Managing Director had already passed an order on the 3rd September, 1975, terminating his services under Regulation 48 of the Air-India Employees' Service Regulations (hereinafter referred to as the Service Regulations), with immediate effect. He also informed the petitioner that if the petitioner tendered his resignation, the order of termination would be withdrawn. The petitioner expressed his unwillingness to tender resignation. The order passed by the Managing Director on the 3rd September, 1975, was, however, not handed over to the petitioner. Therefore, by letter dated the 15th September, 1975, the petitioner requested for the said order, as well as the material, if any, on the basis of which the order was passed. On the 30th September, 1975, the third respondent sent to the petitioner the order dated the 3rd September, 1975 and also informed him that the termination of his service did not amount to punitive action and, therefore, there was no question of giving him an opportunity to defend himself. The termination order which was sent to him read as follows :
'I hereby terminate the services of Mr. S. S. Muley, Purchase Manager, under Regulation 48 of the Air-India Employees' Service Regulations. This order will be effective from the date of receipt of intimation hereof by him.
He will be given 30 days' pay and allowances as admissible to him in lieu of notice.'
'Against this order, the petitioner preferred a representation to the first respondent-Chairman of the Corporation making out a case that he had rendered a loyal and devoted service to the Corporation for about 20 years, and had risen to his position as a Purchase Manager by dint of hard work, that he was responsible for making valuable suggestions which had resulted in substantial savings to the Corporation; that he had also earned commendation and an award for his services and that his service record was unblemished and to the entire satisfaction of his superiors. It was then stated there that hence he was surprised to find that for reasons unknown to him, his services were terminated abruptly after recalling him from his posting at London which was of a very recent date and after forcing him to go on leave. He, therefore, pleaded that the Chairman should interfere in the matter and thus set, right an injustice done to him. The first respondent-Chairman by his letter dated the 27th October, 1975, replied to the petitioner as follows :
'I have carefully gone through the contents of your letter. I appreciate the efforts made by you during your service in the development of indigenous equipment for which the Management has also given you an award of Rs. 500.
I find that your services have been terminated under Regulation 48 of Air India Employees' Service Regulations and not by way of punitive action. In the circumstances, the question of my intervention does not arise and I therefore regret my inability to intervene in the decision taken by the Managing Director.
The petitioner thereafter filed the present petition on the 18th December, 1975.
5. In reply to the petition, the third respondent has filed his affidavit, and beyond stating that the order of termination of service was under Regulation 48 of the said Regulations and that the order was not founded on any misconduct on the part of the petitioner, it throws no light on the reasons which necessitated the termination of the petitioner's services.
6. In support of the challenge to the validity of the termination order, Mr. Shetye, the learned counsel, for the petitioner has raised four contentions. His first contention is that the Service Regulations of a statutory Corporation have the force of law and a termination of service in breach thereof gives rise to the right of reinstatement. His second contention is that the said Regulation 48 under which the petitioner's services were terminated is violative of Arts. 14 and 16, inasmuch as the power given by the said Regulation is unguided, uncanalised and arbitrary. In any case, according to him, the impugned order has been passed in the arbitrary exercise of the said power. According to his third contention the said Regulation 48 is bad in law also because it does net provide for the observance of the rules of natural justice before an order of termination of service is made thereunder. The last contention is that the present order of termination of service was made in colourable exercise of the power and was mala fide, and this Court should go behind the said order and after scrutinising the same should strike it down. In reply to these contentions, Mr. Joshi, the learned counsel appearing for the respondents, did not dispute the proposition that the Service Regulations of a statutory corporation have a force of law and that the termination of service in broach thereof gives rise to the relief of reinstatements. However, he submitted that the right to the relief of reinstatement does not spell out security or protection of employment which is available to a Government servant and, therefore, an employee of a statutory Corporation cannot be elevated to the position of a Government servant in respect of the security of employment. With regard to the second contention. Mr. Joshi submitted that the power under the said Regulation 48 was a power of termination simpliciter of the services of an employee. This power was to be exercised by high ranking officials and it was expected that such officials will use the power bona fide, fairly and in the just exercise of their duties. Merely because there is a possibility of the abuse of the said power, the conferment of the power itself is not bad in law. If an order made under the said Regulation is unsupportable in any given case, it is the said order which can be challenged in a Court of law and not the power vested by the said Regulation. His reply to the third contention was that if the power granted under Regulation 48 is valid, then there is no question of observing the principles of natural justice for such an observance will defeat the very purpose for which the power is granted. As regards the last contention advanced on behalf of the petitioner, Mr. Joshi replied that it was for the petitioner to make out a case of mala fides and of colourable exercise of power. The petitioner had led no foundation in the petition in support of his case in that behalf and hence there is no question of making a probe by the Court into the true nature of the order. Alternatively, he submitted that he had instructions at this stage, to produce the relevant flies before the Court to show that the order was not mala fide and that the same was passed for valid reasons and that the Court could look into the said files to find out the true nature of the order. In support of the rival contentions, both the sides relied upon several authorities.
7. The first contention raised on behalf of the petitioner has not been contested by Mr. Joshi in view of the decision of the Supreme Court reported in Sukhdey Singh v. Bhagatram, : (1975)ILLJ399SC , which has reversed the earlier law on the point and has held that an employee of a statutory corporation like the fourth respondent has a statutory status and he is entitled to a declaration that he is in employment when he is dismissed or removed from service in breach of the service rules which have a statutory force. Therefore, if it is held in the present case that the order of termination of the service is in contravention of the said regulations, the petitioner will be entitled to the relief of reinstatement in service and not merely to that of damages which was the law prior to the said decision. It is, therefore, not necessary to discuss this contention any further. This is the view of the majority of the Judges. One of the learned Judges, viz., Mathew, J., who delivered a concurring but a separate opinion, has, however, something more to say with regard to the nature of the employment under a statutory corporation and in paragraph 116 of the judgment, the learned Judge has stated in this connection as follows :
'Even assuming that the regulations have no force of law, I think since the employment under these Corporations is public employment, an employee would get a status which would enable him to obtain declaration for continuance in service if he was dismissed or discharged contrary to the regulations.'
'8. In paragraph 119 of the judgment, the learned Judge has added on the same point, as follows :
'I think that employment under public corporations of the nature under consideration here is public employment and therefore the employees should have the protection which appertains to public employment.'
'It is true as contended on behalf of the respondents that assuming that these observations made by Mathew, J., are to the effect that the protection to be given to the employees under a public corporation should be on the same par as that given to the Government servants, since the majority has not taken that view, and on the other hand is at pains to point out that such employees are not Government servants, the observations should not be relied upon to conclude that the Supreme Court has laid down that the security of employment enjoyed by the Government servants is also extended to the employees of the statutory corporations as contended on behalf of the petitioner. In this connection, Mr. Joshi pointed out that the employment of Government servants is secured by Art. 311 of the Constitution itself. Since the pleasure of the President or the Governor as the case may be, is controlled by the provisions of the said Article, any Service Regulation which takes away such protection becomes void because it comes in direct conflict with the said constitutional provision. However, there is no constitutional protection given to the employees of a statutory Corporation. Hence a corporation is at liberty to make regulations negativing the security of employment. In fact, argued Mr. Joshi, the Service Regulation of a statutory corporation providing for termination of service of an employee is a part and parcel of the other regulations governing his service conditions. Therefore, it is not possible to accept the contention of the petitioner that the employees under a statutory corporation enjoy the same status as that enjoyed by the Government servants. There is no difficulty in accepting the proposition that there is this difference between a Government servant and an employee under a statutory corporation. As pointed out earlier, the majority of the Judges in the aforesaid judgment have in terms emphasized this difference in the status of the two employees. To what extent the security of employment has been denied to an employee of a statutory corporation will depend upon the service regulations applicable to him and no general proposition can be laid down in that behalf. However, since this contention has a bearing on the other contentions advanced, it is necessary to remember in this connection that the earlier position in law, viz., that the terms and conditions of employment were merely a matter of contract between a statutory Corporation and its employees, has been clearly given a go bye, and it has now been firmly established that these terms and conditions which are framed under the statute creating the Corporation have a force of law and a breach of them creates an enforceable right.
9. What is of paramount importance in the present petition is the contention of the petitioner that Regulation 48 violates Arts. 14 and 16 of the Constitution, inasmuch as it confers upon the authority an unguided, uncanalised and absolute power to terminate an employee's service. In order to appreciate the merits of this contention it is necessary to refer to some of the relevant regulations and the context in which the said Regulation 48 appears. Chapter VII of the said Regulations deals with 'conduct and discipline' and enumerates several misconducts for which a disciplinary action can be taken. Regulation 43 in the said Chapter then mentions the varying punishments for different misconducts. Among the punishments so mentioned, are the punishments of removal from service and of dismissal. Explanation to Regulation 43 states that termination of service of an employee under Regulation 48, among other things, shall not be deemed to be removal from service or dismissal within the meaning of Regulation 43. Regulation 44 prescribes the procedure for awarding punishments and states that no punishment under Regulation 43 except the punishment of censure, shall be awarded to an employee unless he has been informed in writing of the alleged misconduct and has been afforded an adequate opportunity of defending himself in accordance with the procedure laid down in that behalf in Schedule II of the said Regulations. The Schedule II which deals with 'procedure for disciplinary action' lays down a detailed procedure for investigation, issuance of charge-sheet, holding of an enquiry and submission of report of the enquiry committee, passing of a final order on the basis of the report, the decision of the competent authority on the report and the manner of awarding punishment, if any. Regulation 45 provides for an appeal except in cases where the punishment imposed is that of 'censure' and also names the authorities to which such appeals are to be preferred. Then follows Chapter VIII which is headed 'cessation of service.' This Chapter contains Regulations 46 to 49. Regulation 46 deals with retiring age, which is 58 years except in cases mentioned in cls. (a), (b), (c) and (d) of sub-cls. (i) of the said Regulation. Sub-clause (ii) thereof makes provision for premature retirement. Regulation 47 deals with extension of service. The impugned Regulation 48 is headed as 'termination' and the last Regulation 49 in the Chapter deals with resignation. It will now be convenient to reproduce the impugned Regulation 48 which is as follows :
'48. Termination : The services of an employee may be terminated without assigning any reason, as under :
(a) of a permanent employee by giving him 30 days' notice in writing or pay in lieu of notice;
(b) of an employee on probation by giving him 7 days' notice in writing or pay in lieu of notice;
(c) of a temporary employee by giving 24 hours' notice in writing or pay in lieu of notice.
Explanation : For the purposes of this Regulation, the word 'pay' shall include all emoluments which would be admissible if he were on privilege leave.'
'We are concerned in this petition only with clause (a) of the impugned Regulation. Hence the decision will be confined to the said clause only.
10. A survey of the Regulation in Chapters VII and VIII shows that the said Regulations classify termination of the services of an employee in six categories, namely, removed from service, dismissal, retirement on superannuation, premature retirement, termination without assigning any reason and resignation. Retirement on superannuation, premature, compulsory retirement, termination without assigning any reason and resignation have been described by the said Regulation as 'cessation of service' while removal from service and dismissal have been included in the Chapter dealing with the 'termination of service on misconduct.' Normally, therefore, a permanent employee in the 4th respondent-Corporation is entitled to continue in service till he attains the age of 58 years, unless his services are terminated either on account of misconduct, premature retirement, resignation or on account of the exercise of power under clause (a) of the impugned Regulation 48. His removal or dismissal from service can be only after an enquiry into misconduct and will be subject to the right of an appeal. So also, his services cannot be brought to an end by compulsory retirement unless he attains the age of 55 years or completes 25 years' continuous service. The termination of his service under clause (a) of the said Regulation 48 can however be brought about at any time without any enquiry and without assigning any reason. Clause (a) of the said Regulation states that the services of a permanent employee may be terminated without assigning any reason after giving 30 days' notice in writing or pay in lieu of such notice. There is neither qualifying age, nor qualifying service nor qualifying circumstances for the exercise of the said powers. There are also no guidelines given to the authority exercising the said powers as to when the said powers should and should not be used. The power conferred under the said Regulation is in unconditional and absolute terms. The only distinguishing feature between the said termination of service and dismissal or removal from service is that the former is included in the Chapter dealing with 'cessation of service' while the latter finds place in the Chapter on 'conduct and discipline' and, therefore, the said termination of services can be said to be otherwise than on account of a misconduct of an employee. Since the exercise of the power is not circumscribed in any manner, the authority desirous of getting rid of an employee is at liberty to make use of this power in an unrestricted manner. Even if, for example, an employee can properly be proceeded against, by resorting to powers under Regulations 43 and 44, the authority can instead take action under the impugned regulation, there being no guidance given anywhere as to the circumstances in which the said summary and extraordinary powers be exercised. The authorities have an uninhibited choice in that behalf and their action falls beyond the pale of challenge. Even an authority desiring to make use of its powers honestly has no guidance in the said regulations as to when a resort to one rather than to the other power be made. Not to say of the abuse of the power. The consequence of placing this untrammelled power in the hands of the authorities is that an employee can be asked to go home for no reason whatsoever, and the tenure of the services of the employee is made dependent upon the passing whims and vagaries of those in authority for the time being. There is, therefore, no doubt that the power conferred by clause (a) of the impugned regulation, being unguided and uncanalised is capable of being used arbitrarily and also unreasonably. An employee in the 4th respondent-Corporation has always this sword of Democles hanging over his head from the date he enters service, and he may be thrown out of the employment at any moment without his ever coming to know the reasons for the same. What is worse, he cannot even challenge it for want of knowledge of the reasons which led to his removal.
11. It is no argument in support of such arbitrary power, that the power is vested in high ranking officials and they are not expected to use the same arbitrarily and capriciously. This argument ignores that even high ranking officials need some guidance as to when they are expected to use the said powers and they should not be left to speculate in the matter. The prevalence of the rule of law cannot be made dependent upon the pious hope, that individuals entrusted with its enforcement will always act justly and fairly. As long as power has to be exercised through a human agency, which is subject to all the frailties, whatever the position it occupies, it is not only dangerous but irrational to entrust it with such arbitrary and absolute power. The maintenance of the rule of law depends among other things on minimising the scope of the use of discretionary and arbitrary powers and regulating such power wherever possible. It is only when it is either unnecessary or impossible to do so that the regulation of such powers may be dispensed with or justified. It is difficult to see as to how and in what circumstances the power to terminate an employee's service without laying down even a bare guideline of the conditions under which it can be exercised, can be justified. An employee's service can be terminated only for some reason which has relation to or a bearing upon his employment, and not for no reason whatsoever. These reasons may be divided into two categories one consisting of misconducts enumerated in the service regulations and the other of reasons which do not amount to misconduct such as where it is in the public interests or in the interests of administration that it is necessary to terminate the services or an employee. The later category may include various situations such as loss of confidence, unsuitability, etc. The misconduct in their turn may be of three types, first where an enquiry can be held, second where an enquiry is unnecessary and the last where for some valid reasons it is not feasible to hold an enquiry or it is not in the public interests or in the interests of administration to hold it. It is not necessary to consider cases falling under the first category, for obviously in such cases the impugned regulation will not come into play. As regards the second category, there are cases where the misconduct of the employee is already proved such as where he has admitted the misconduct of where he has been convicted by a competent Court of law and there is no need to hold a further departmental enquiry. Here again, the impugned regulation will have no application. It is argued that it is while dealing with the third class of cases of misconduct and the second category of the reasons that an employer requires such powers as are vested by the impugned regulation. This argument, however, ignores that this need does not explain the absence of indication of the circumstances under which alone the power can be exercised. If the power under the impugned regulation is intended to be exercised only in such circumstances, there is nothing to prevent the regulation from saying to prevent the regulation from saying so. The impugned regulation, as it stands today, however, fails to qualify the exercise of the power conferred by it even by such broad conditions. The result is the authorities are free to exercise the power in any of the aforesaid cases. It is then contended that it is not possible to envisage and enumerate the various situations which may arise from time to time necessitating the use of such power. I am afraid that this argument also does not stand the test of scrutiny since it confuses, the broad guidelines with particularisation of the circumstances. As the regulation stands, even such broad guidelines are wanting with the result that it depends on the sweet will of the authorities concerned whether an employee should be thrown out of employment under regulations in Chapter VII or under the impugned regulation.
12. As is evidenced by Art. 311 of the Constitution which provides for the dismissal, removal or reduction in rank of a Government servant, even the Constitution envisages circumstances when it may not be possible to hold an enquiry before an action against a Government servant is taken. These circumstances mentioned in cls. (b) and (c) of the second proviso to clause (2) of the said Article, broadly stated, are (i) where it is not reasonably practical to hold an enquiry or (ii) where it is not expedient to hold such enquiry in the interest of the security, of the State. Thus, even in a case of the termination of the services of a Government servant, it is possible to lay down in broad terms the circumstances under which alone an enquiry may be dispensed with. There is no reason why even such broad guidelines cannot be incorporated in the impugned regulation. In the absence of any guidelines whatsoever the arbitrary use of the extraordinary power is writ large upon the impugned regulation. The present is a case where there is a total absence of guidelines.
13. In this connection, I may refer with advantage to the decision of the Supreme Court in Moti Ram v. N. E. Frontier Railway : (1964)IILLJ467SC . In this case the Supreme Court was called upon to decide the validity of Regulation 148(3) and Regulation 149(3) of the Indian Railway Code which were pari materia with the impugned regulation in present case. The rule provided for the termination of service of permanent railway servants by giving notice of varying periods depending upon the nature of employment. The exercise of power under the said rule also did not provide for any guidelines. In other words, the effect of the said rule was that the services of an employee could be terminated at any time by merely giving a notice of the prescribed period. While attacking this rule, it was contended on behalf of the employee that the rule conferred absoluty, unguided and uncanalised power on the authority. The majority of the learned Judges who struck down the said rule, however, observed that since they had come to the conclusion that the second attack based on Art. 14, namely, that it spelt out discrimination between one Government servant and another Government servant ought to be sustained, they did not propose to express any opinion on that part of the controversy between the parties. However, Das Gupta, J., while delivering his separate but concurring judgment dealt with this aspect of the argument and came to the conclusion which is contained in paragraphs 112 and 113 of the said judgment and is as follows :
'112. - It is necessary now to consider the second ground urged by the appellants, viz., that R. 148(3) contravenes Art. 14 of the Constitution. Two contentions are urged in support of this ground. First, it is urged that the Rule gives no guidance to the authority who would take action on it as regards the principle to be followed in exercising the power. Secondly, it is urged that the Rule discriminates between railway servants and other public servants. In my opinion, there is considerable force in the first contention. Classifying the statutes which may come up for consideration on a question of its validity under Art. 14 of the Constitution, in : 1SCR279 this Court observed under the third class of such statutes thus :
'A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the Court will not strike down the law out of hand only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification'.
'113. Applying the principle laid down in the above case to the present Rule, I find on scrutiny of the Rule that it does not lay down any principle or policy for guiding the exercise of discretion by the authority who will terminate the service in the matter of selection or classification. Arbitrary and uncontrolled power is left in the authority to select at its will any person against whom action will be taken. The Rule, thus enables the authority concerned to discriminate between two railway servants to both of whom R. 149(3) equally applied by taking action in one case and not taking it in the other. In the absence of any guiding principle in the exercise of the discretion by the authority the Rule has, therefore, to be struck down as contravening the requirements of Art. 14 of the Constitution'.
It is true that Justice Shah who delivered a dissenting judgment while dealing with this aspect of the matter held 'that power to exercise discretion was not necessarily to be assumed to be a power to discriminate unlawfully, and possibility of abuse of power will not invalidate the conferment of power. Conferment of power had necessarily to be coupled with the duty to exercise its bona fide, and for effectuating the purpose and policy underlying the rules which provided for the exercise of the power'. After making this observation the learned Judge stated 'if in the scheme of the rules, a clear policy relating to the circumstances in which the power was to be exercised is discernible, the conferment of power must be regarded as made in furtherance of the scheme and was not open to attack as infringing the equality clause'. In other words, Justice Shah came to the conclusion that in the scheme of the said rules, namely, the rules contained in the Indian Railway Establishment Code, a policy relating to the circumstances under which the power given by Rule 148(3) was to be exercised, was discernible and hence the learned Judge did not join the majority in holding that Rule 148(3) was invalid. It is, therefore, legitimate to conclude relying on this authority that where the power granted is uncontrolled and unguided and there is nothing in the scheme to indicate the circumstances under which such power is to be exercised, such power is bad in law being violative of the equality guaranteed by Arts. 14 and 16 of the Constitution.
14. The stand taken by the respondents throughout, right from the date of the order, demonstrates vividly the unconcerned manner which such power can be used.
15. Mr. Joshi, for the respondents tried to derive support to his stand from some authorities which it will now be convenient to discuss. In Pannalal Binjrai v. Union of India, A.I.R. 1957 S.C. 379 the provision of S. 5(7A) Income-tax Act, 1922 which conferred right on the Commissioner of Income-tax and he Central Board of Revenue to transfer a case of an assessee from one Income-tax Officer to another was challenged on the ground that it was violative of Art. 14 of the Constitution, among others. While upholding the said provision the Supreme Court held that the infringement of a right under S. 64(1) and (2) given to the assessee to be assessed by the Income-tax Officer of the particular area where he resided or carried on his business, by an order of transfer under the impugned provision of S. 5(7A) of the Act, was not a material infringement. It is only a deviation of a minor character from the general standard and did not necessarily involve a denial of equal rights for the simple reason that even after such transfer the case is dealt with under the normal procedure which is prescribed in the Act. There is no differential treatment meted out to the assessee and hence there was no scope for the argument that the particular assessee was discriminated against with reference to others similarly situated. The Court further held that the cases of the assessees which came for assessment before the income-tax authorities were of various types and no one case is similar to another. There were complications introduced by the very nature of the business which was carried on by the assessees and there might be, in particular cases, such widespread activities and large ramifications or interrelated transactions as might require for the convenient and efficient assessment of income-tax the transfer of such cases from one Income-tax Officer to another. In such cases the Commissioner of Income-tax or the Central Board of Revenue, as the case may be, had to exercise its discretion with due regard to the exigencies of tax collection. Such discretion would necessarily have to be vested in the authority concerned and merely because the case of a particular assessee is transferred from the Income-tax Officer of an area to the officer of another area that fact will not by itself be sufficient to characterize the exercise of the discretion as discriminatory. There was no fundamental right in an assessee to be assessed in a particular area or locality and the right conferred upon the assessee under S. 64(1) and (2) of the Act was not an absolute right but was subject to the exigencies of tax collection. There was also the further fact that the inconvenience to the assessee was sought to be minimised by the authority concerned transferring the case of the assessee to the Income-tax Officer who was the nearest to the area where the assessee, normally ought to have been assessed. There was also the provision that at the request of the assessee the examination of accounts or evidence to be taken should be in a place convenient to him. According to the Court the power was guided and controlled by the purpose which was to be achieved by the Act itself, viz., the charge of income-tax and the more convenient and efficient collection thereof. It was in this context that the Supreme Court observed that the impugned power was discretionary and not necessarily discriminatory and abuse of power could not be easily assumed where the discretion was vested in such high officials. There was a presumption that public officials would discharge their duties honestly and in accordance with the rules of law. The Court, however, hastened to add that the said presumption could not be stretched too far and could not be carried to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain individuals or Corporations to hostile and discriminatory treatment. There may be cases where improper execution of power will result in injustice to the parties. However, according to the Court the possibility of such discriminatory treatment could not necessarily invalidate the legislation and where there was an abuse of such power, the parties aggrieved were not without ample remedies under the law. What will be struck down in such cases will not be the provision which invests the authorities with such power but the abuse of the power itself. The Court then stated that there was a broad distinction between discretion which has to be exercised with regard to a fundamental right and some other right which is given by the statute. If the statute deals with a right which is not fundamental, the statute can take it away but the statute cannot take away a fundamental right. Where a discretion is given in the matter affecting a fundamental right, the discretion must be controlled by clear rules so as to come within the category of reasonable restrictions. The Court then observed that the discretion vested has to be looked at from two points of view, viz., (1) does it admit of the possibility of any real and substantial discrimination, and (2) does it impinge on a fundamental right guaranteed by the Constitution Article 14 can be invoked only when both these conditions are satisfied.
16. What is more, in this very case, the Court observed that it would be prudent if the principles of natural justice are followed, where circumstances permit, before any order of transfer under the said S. 5(7A) of the Act was made and notice was given to the party affected and he was afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced, however briefly, to writing. According to the Court this would also help the Court in determining the bona fides of the order that is passed if and when the same is challenged in Court as mala fide or discriminatory. The Court hoped that the Income-tax Officer would observe the said procedure wherever feasible.
17. Mr. Joshi relied upon the observations made in the above case, viz., the power was discretionary and not necessarily discriminatory, and abuse of power could not be easily assumed where the desecration was vested in high officials who were presumed to act honestly and in accordance with the rules of law. He also relied upon this authority to contend that in such cases what is to be struck down is not the power that is vested but an order in a particular case, if it is found to have been made by abuse of the said power.
18. I have already given a gist of the nature, the context and the purpose of the impugned power in that case in the words of the Court itself and have shown that the Court had firstly come to the conclusion that there was no absolute right given to the assessee and that there was no material infringement of the said right, the infringement being only of a deviation of a minor character. There was no denial of equal rights and the procedure to be followed in assessment was the same even when the case was transferred to another Income-tax Officer and at the request of the assessee the documents can be produced and evidence can be taken in a place convenient to the assessee. The power was guided and controlled by the purpose which was to be achieved, viz., the convenient and efficient collection of the income-tax. It was in this context that the Court had made the observations relied upon by Mr. Joshi. To tear away the observations from the context of the findings given is to present a distorted picture of the ratio decadently of the said case. It must also further be remembered that in this case itself the Court has made a distinction between a mere statutory right and a fundamental right and has in terms observed that if the discretion vested admits of the possibility of a real and substantial discrimination where a fundamental right is involved then Art. 14 can be invoked to attack such power. Lastly, it must not be forgotten that in spite of the fact that the Court held that the power conferred by S. 5(7A) could not be challenged as discriminatory, it has given a guideline to the authorities as to the manner in which it should be exercised and has in terms directed that before a case of an assessee is transferred from one Income-tax Officer to another, principles of natural justice should be followed and the assessee should be afforded reasonable opportunity of being heard in the matter. What is more, the authority passing an order of transfer is exhorted to reduce its reasons for such transfer to writing so that the bona fides of the order could be looked into when the same is challenged in a Court of law.
19. In the present case, the petitioner has challenged the impugned order of termination of his service on the ground that the impugned Regulation violates his fundamental right under Art. 14 of the Constitution and that the regulation is fraught with the possibility of a real and substantial discrimination. There are no guidelines given anywhere in the service regulations as to the purpose for which the said power is to be exercised and the impugned regulation also does not require compliance with the principles of natural justice. On the other hand, the impugned regulation empowers the authorities to remove an employee at any time and for no reason and the authorities are not required to give any reasons for passing the order in exercise of the said power. For this purpose, I am of the view that the above authority instead of helping the respondents helps the petitioner.
20. In Chinta Lingam v. Govt. of India, : 2SCR871 . The challenge was to the control order issued under S. 3(2)(d) of Essential Commodities Act, 1955 imposing restrictions on movement of rice and paddy. What was actually argued on behalf of the petitioners in that case was that in the absence of provision of appeal or revision against the order passed by the District Collector or the Deputy Commissioner of Civil Supplies to whom the powers were delegated by the State Government, the delegation of power was excessive. The Court, while considering this argument, pointed out that the permit was to be granted either by the State Government or by responsible officers of the rank of the District Collector or the Deputy Commissioner of Civil Supplies. It was conceded on behalf of the petitioners that if the State Government alone had the power to issue the permits, the challenge on the ground of unreasonableness of the restrictions would not be available. The Court held that there was no bar to anyone of the aggrieved party approaching the State Government by means of a representation for a final decision even if the matter had been dealt with by the District Collector or the Deputy Commissioner of Civil Supplies in the first instance and the permit had been refused or wrongly withheld by those officers. Hence according to the Court, the absence of the provision for appeal or revision could be of no consequence. It is in fills context that the Court referred to its earlier decision. viz., : 1SCR233 (supra) and another decision : 1SCR274 and quoted with approval the observation that the power was discretionary but it was not necessarily discriminatory, and abuse of power could not be easily assumed. The Court also added the further observation made in the said earlier cases that there was, moreover, a presumption that public officials would discharge their duties honestly and in accordance with the rules of law. I am unable to understand as to how this case takes the respondents any further. As stated earlier, these observations have to be read in the context of their peculiar facts. Thus read they cannot be construed to mean that such conferment of power will in no case be violative of the guarantee of equality under the Constitution. In fact, in paragraph 7 of this decision itself it has been pointed out by the Court, referring to its earlier decision. viz., : 2SCR627 , that the power under S. 3(2)(d) of the Act in question did not suffer from the vice of excessive delegation because the Central Government had been given sufficient and proper guidance for exercising its powers in effectuating the policy of the statute.
21. In Maganlal Chhagganlal v. Greater Bombay Municipality, A.I.R. 1974 S.C. 2000, it was Ss. 105A and 195B of the Bombay Municipal Corporation Act which were under challenge on the ground that the Municipal Commissioner was given uncontrolled power to proceed against the occupants of the municipal property either under the said provision or by way of a suit in a civil Court. The Court came to the conclusion that the two procedures were not substantially different and there was a sufficient guidance in the Act itself as to when one of the two procedures was to be adopted. It is in the context of these findings recorded by the Court that the Court made an observation that the provisions could not be struck down on the fanciful theory that power would be exercised in an unrealistic fashion. In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal. It is not fancied possibility but the real risk of discrimination that the Court must take into account. The Court further observed that considering the object with which the special procedures were enacted by the Legislature, it could not be said that the difference between the two procedures was so unconscionable as to attract the vice of discrimination. Read in their proper context, I am afraid that instead of helping the respondents the aforesaid observations really help the petitioner in that in the present case there is no guideline whatsoever in the service regulations. On the other hand, there is a real risk of discrimination between one employee and the other in the absence of guidelines.
22. In Maneka Gandhi v. Union of India, (1973) 1 S.C.C. 248, again, the Court came to the conclusion that there were sufficient guidelines given to the authorities for impounding the passport and it was against this finding that the Court held that the power conferred under S. 10(3)(c) of the Passport Act was not violative of the equality clause under the Constitution. It will be worthwhile to quote the relevant observations made by the Court in this context :
'The discretion vested in the Passport Authority, and particularly in the Central Government, is thus unfettered and unrestricted and this is plainly in violation of Art. 14. Now, the law in well-settled that when a statute vests unguided and unrestricted power in an authority to affect the rights or a person without laying down any policy or principle which is to guide the authority in exercise of this power, it would be affected by the vice of discrimination since it would leave it open to the authority to discriminate between persons and things similarly situated. But here it is difficult to say that the discretion conferred on the Passport Authority is arbitrary or unfettered. There are four grounds set out in S. 10(3)(c) which would justify the making of an order impounding a passport. We are concerned only with the last ground denoted by the words 'in the interests of the general public', for that is the ground which is attacked as vague and indefinite. We fail to see how the ground can, by any stretch of argument, be characterised as vague or undefined. The words 'in the interests of the general public' have a clearly well defined meaning and the Courts have often been called upon to decide whether a particular action is 'in the interests of the general public' or in 'public interest' and no difficulty has been experienced by the Courts in carrying out this exercise. These words are in fact borrowed ipsissima verbs from Art. 19(5) and we think it would be nothing short of heresy to accuse the constitution makers of vague and loose thinking. The Legislature performed a scissor and paste operation in lifting these words out of Art. 19(5) and introducing them in S. 10(3)(c) and if these words are not vague and indefinite in Art. 19(5), it is difficult to see how they can be condemned to be such when they occur in S. 10(3)(c). How can S. 10(3)(c) be said to incur any constitutional infirmity on account of these words when they are no wider than the constitutional provision in Art. 19(5) and adhere loyally to the verbal formula adopted in the Constitution We are clearly of the view that sufficient guidelines are provided by the words 'in the interests of the general public' and the power conferred on the Passport Authority to impound a passport cannot be said to be unguided or unfettered. Moreover, it must be remembered that the exercise of this power is not made dependent on the subjective opinion of the Passport Authority as regards the necessity of exercising it on one more of the grounds stated in, the section, but the Passport Authority is required to record in writing a brief statement of reasons for impounding the passport and save in certain exceptional circumstances, to supply a copy of such statement to the person affected, so that the person concerned can challenge the decision of the Passport Authority in appeal and the appellate authority can examine whether the reasons given by the Passport Authority are correct, and if so, whether they justify the making of the order impounding the passport. It is true that when the order impounding a passport is made by the Central Government, there is no appeal against it, but it must be remembered that in such case the power is exercised by the Central Government itself and it can safely be assumed that the Central Government will exercise the power in a reasonable and responsible manner. When power is vested in a high authority like the Central Government, abuse of power cannot be lightly assumed. And in any event, if there is abuse of power, the arms of the Court are long enough to reach it and to strike it down. The power conferred on the Passport Authority to impound a passport under S. 10(3) cannot, therefore, be regarded as discriminatory and it does not fall foul of Art. 14. But every exercise of such power has to be tested in order to determine whether it is arbitrary or within the guidelines provided in S. 10(3)(c).'
23. The aforesaid observations go a very long way in supporting the contention of the petitioner in the present case, viz., that the impugned regulation does not incorporate even such broad guidelines as are found in S. 10(3)(c) of the Passport Act, 1967. It is legitimate to presume from the aforesaid observations that if in S. 10(3)(c) of the Passport Act. 1967 the provisions of which were under review in the aforesaid decision, there was no indication of even such broad guideline as 'in the interests of the general public' the said provisions would have been struck down being violative of the equality guaranteed by the Constitution.
24. Mr. Joshi then relied upon the following decisions and contended that the power to terminate an employee's service without assigning any reason is not necessarily invalid.
25. In Union of India v. J. N. Sinha, : (1970)IILLJ284SC it was a case of compulsory retirement. It must be remembered that the rules of compulsory retirement contained in Fundamental Rule 56(j) themselves state the power to retire a Government servant compulsorily could be exercised only if the proper authority was of the opinion that it was 'in the interests of public' to do so. Moreover, such retirement could not be made unless the Government servant had put in the minimum service. It is for this purpose that the Court there held that the rule was not bad on the ground that it conferred an arbitrary power of retirement and that there were sufficient safeguards for an employee in the said Rule.
26. In Air India Corporation, Bombay v. V. A. Rebello, : (1972)ILLJ501SC although the very regulation, viz. Regulation 48 which is challenged in the present case figured, the validity of the said Regulation was not challenged and what was actually challenged was whether the complainant there was a workman and whether the order was of a discharge simpliciter or of dismissal. In that case, the Court found while upholding the dismissal, that the reasons for dismissal were actually disclosed by the authorities in their written statement filed before the Tribunal on merits and those reasons dispend with the holding of an enquiry and the order passed was that of a simple termination of service. It is difficult to understand as to how this authority helps the respondents in any way.
27. In : (1970)ILLJ367SC and : 2SCR1026 , the employees involved were temporary Government servants and according to the terms of contract or service rules, their services could be dispensed with without assigning any reason. Their services were put an end to by orders which were those of simple termination of service. The Court held that since the temporary employees could be removed from service by a simple termination of their service, the orders did not suffer from any invalidity. It must be remembered that in all these cases there were valid reasons for terminating the employees' services and at the first available opportunity the record of the reasons was placed before the Court. These authorities, therefore, in no way assist the respondents in the present case.
28. A review of the aforesaid decisions, therefore, fortifies the conclusion to which I have arrived, viz., that in the absence of any guidelines, the provisions of clause (a) of Regulation 48 are patently arbitrary and discriminatory, and, therefore, violative of the provisions of Arts. 14 and 16 of the Constitution.
29. Assuming that I am wrong in holding that Regulation 48(a) is void on account of its contravention of Arts. 14 and 16 of the Constitution. I am further of the view that in the present case there is nothing on record to show as to why the second respondent had resorted to the extraordinary power under the impugned regulation for terminating the petitioner's services, instead of terminating his services by following the normal procedure under Chapter VII of the said Regulations. In this connection, a reference may be made to the relevant averments made by the third respondent in his affidavit-in-reply, to the petition. In paragraph 3 of the said affidavit, the third respondent has stated as follows :
'Paragraph 3 : The order of termination of the petitioner's service is a bona fide order of termination simpliciter passed in exercise of the power under Regulation 48 of Air-India Employees' Service Regulations and is not by way of punishment. It does not cast any stigma on the petitioner nor has it occasioned any civil consequences to the petitioner nor has he been deprived of any retirement benefits. The order of the termination of service is not founded on any misconduct on the part of the petitioner. It is in form and substance an order of termination simpliciter under Regulation 48.'
It is clear from this averments, that according to the respondents the order was of termination simpliciter, and the said termination was not on account of any misconduct on the part of the petitioner. The further averments in paragraph 20, of the said affidavit which are in reply to the contentions of the petitioner in paragraphs 27 and 28 of the petition are also worth noting. In paragraph 27 of the petition, the petitioner has made the following two important submissions :
'The petitioner states and submits that in the present case the category of circumstances set out in the earlier paragraphs of the petition would clearly establish that there could be no material before the second respondent-company for passing the impugned order under Regulation 48 of the Air India Employees' Service Regulation x x x x x x x x x x x x x x x x x x x x The petitioner states and submits that there is no tangible basis for passing the impugned order and the power has not been exercised by the second respondent objectively, the good faith, honestly and with due care and prudence.'
While replying to these averments together with the averments in paragraph 28, the third respondent has nowhere denied the allegation of the petitioner that there was no material before the authorities for passing the impugned order. The third respondent has satisfied himself by denying only that there was no tangible basis for passing the impugned order and then by making a general denial that the correctness of the rest of the submissions made in the said paragraph 27 were denied by him. This is apart from the fact that the whole tenor of the affidavit-in-reply is that since the action has been taken under Regulation 48, it was a proper and valid action and it could not be challenged by the petitioner. There is further not even a whisper anywhere, i.e., either in the impugned order terminating the service or even in the said affidavit-in-reply that there were some reasons which impelled the authorities to resort to the abnormal and extraordinary powers under the impugned regulation and which prevented them from resorting to the normal procedure for terminating the petitioner's services. There is thus nothing on record to show that there were any special reasons for resorting to the impugned regulation. The absence of such reasons is sufficient to hold that the use of the power under the impugned regulation is unjustifiable and arbitrary. Mr. Joshi for the respondents while on his legs, replying to the contentions advanced on behalf of the petitioner, for the first time offered to show to the Court the files which, according to him, made out the reasons for resorting to the impugned regulation. It was certainly neither fair to the petitioner-employee nor to the Court that without laying any foundation for the fact that any such special reasons existed, the respondents be allowed to show, at this stage, the so-called reasons which impelled them to resort to the impugned regulation. I, therefore, did not allow him to do so. According to me, the respondents cannot be permitted to justify their action at this belated stage by allowing them to rely upon the so-called reasons. The petitioner has no opportunity to meet the said ground made out for the first time and which is inconsistent with the case of the respondents so far. The only justification offered by the respondents for their action was that they had powers to terminate the petitioner's services under the impugned regulation and that they had done so under the said powers. The termination of the service was not founded on any misconduct on the part of the petitioner and that it was an act of a termination simpliciter. What is more, when the petitioner specifically averred, as pointed out above, that there was no material whatsoever before the respondents for passing the impugned order, the respondents have not chosen to traverse the allegation except by way of a general denial. This itself spells out the high-handed and the arbitrary manner in which the impugned order has been passed. It will, therefore, have to be held that the impugned order has been passed arbitrarily and without justifiable reasons. On this ground also the impugned order is liable to be quashed.
30. As regards the third contention, viz., that the impugned order has been passed in breach of the principles of natural justice, it may at once be stated that if the Regulation 48(a) as it stands is valid, then the impugned order cannot be struck down on this ground. As is laid down in Union of India v. J. N. Sinha, (supra) the principles of natural justice, cannot be elevated to the status of fundamental rights. The Legislature can by express or implied provision do away with them. If the power under the impugned Regulation 48(a) is meant to be used in circumstances where it is not practicable to follow the principles of natural justice, then it will defeat the very purpose for which the regulation is made if it is held that the impugned order is bad for breach of the said principles. If, therefore, I were to uphold the validity of the impugned regulation, notwithstanding its arbitrary conferment of power, it would not have been possible to strike down the impugned order on this ground.
31. The last ground on which the impugned order is challenged is that the same is mala fide and in colourable exercise of the power. In support of his contention all that the petitioner has alleged is that the management wanted to promote one R. J. Kamal, a Stores Manager, junior to him, to the post of Assistant Controller and hence his services were terminated and actually the said Kamal was promoted thereafter. This allegation has been replied to by the respondent by pointing out in their affidavit-in-reply that while posting the petitioner at London, he was given a choice between the said posting and the said promotion. The petitioner chose the former and thereafter two employees V. R. Hegde and P. D. Marathe were promoted to the said post on the 1st March, 1975 and the said Kamal was promoted on the 1st December, 1975, all the three by the Selection Committee from among the eligible candidates. At the time of the selection of the said Kamal, the petitioner was not in service. In view of this position, I find that the petitioner has not succeeded in making good his allegation that the impugned order was passed with a view to accommodate the said Kamal in the promotional post. There was no other allegation made to substitute the charge that the impugned order was mala fide or made in colourable exercise of the power. I, therefore, find no substance in the said contention.
32. The result is clause (a) of Regulation 48 of the said Regulations is hereby stuck down being violative of Arts. 14 and 16 of the Constitution. The impugned order of termination of petitioner's service is struck down both because it is passed under the said invalid regulation as well as on the ground that it is arbitrary, and discriminatory and, therefore, violative of the petitioner's rights under the said Articles.
33. The petition is, therefore, allowed and the Rule is made absolute for the aforesaid reasons in terms of prayers (a) and (b). As a consequence of the setting aside the impugned order, the petitioner will be entitled to reinstatement in service with continuity of service and all consequential benefits following therefrom. The respondents to pay the costs of the petition.