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Lachhman Dass Aggarwal Vs. Punjab National Bank, Etc. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberWrit Petition No. 1076 of 1971
Judge
Reported inILR1978Delhi192; 1979LabIC211
ActsCode of Civil Procedure (CPC), 1908 - Order 23, Rule 3
AppellantLachhman Dass Aggarwal
RespondentPunjab National Bank, Etc.
Advocates: A.B. Saharia,; C.K. Mahajan,; Y.P. Rao,;
Cases ReferredCottage Industries v. The Presiding Officer
Excerpt:
.....such an order--whether it is rest judicata.; the respondent-bank reverted the petitioner form the post of a manager to the post of an accountant. the petitioner filed a writ petition which was dismissed on 7-4-1971 as not pressed because the respondent's counsel gave an undertaking 'that the case be remitted to the staff committee for holding an inquiry. the petitioner will be supplied all the necessary documents and a full inquiry will be held by the committee'. the petitioner wrote to the bank that a s a result of the above order the petitioner's reversion order stood quashed, hence his status as branch manager be restored. as the respondent-bank did not agree to the request of the petitioner, he moved a fresh writ petition. the following points were considered :; 1. when can an order..........the order, dated 26-11-1970 be quashed; (b) that the petitioner be treated as continuing in his post to manager and be promoted in that post in the usual course; and (e) that he be declared entitled to all rights, benefits and privileges as such manager. (4) in considering the primary questions arising above, it is not necessary to set out the various grounds on which the legality of the order of 26-11-1970 was impugned by the petitioner and reliefs claimed above were based. on 3-3-1971 a division bench of this court issued notice to the bank to show cause why the writ petition should not be admitted. the respondent was also asked to produce the relevant rules on 6-4-1971 for which date the case was fixed. on 6-4-1971 the petitioner appeared by mr. k. p. bhandari. the respondent.....
Judgment:

V.S. Deshpande, J.

(1) When can an order be said to be based on a compromise between the parties to a writ petition on the analogy of order Xxiii Rule 3, Civil Procedure Code? What terms can be implied in such an order Does such an order operate as rest judicata These questions arise at the threshold of this writ petition.

(2) The petitioner is an employee of the respondent Bank. Staff circular No. 20, dated 28th October, 1952, issued by the Bank governed the relationship between the petitioner and the respondent Bank. As a result of sub-section (9) of Section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, this order (circular No. 20) made by the Bank is to be deemed to be regulations made by the Bank under sub-section (1) of section 19 prescribing the duties and conduct of officers or other employees of the Bank in its new status after the coming into force of the Act. The relationship is, thereforee, governed by a statutory regulation. The relevant regulation is as follows :

'The Staff Committee shall administer all punishments including dismissals. Before an employee is punished, he shall be faced with a charge-sheet and his Explanationn thereto shall be duly considered to find out the extent of his fault, if any. The punishment shall be commensurate with the offence in the background of the history of the employee.'

On 30-6-1970 the Bank issued a show cause notice to the petitioner detailing complaints received by the Bank against him and also the result of the investigations carried into these complaints by the Inspector of the Bank and called upon the petitioner to submit his Explanationn. The petitioner submitted his Explanationn on 23-7-1970. By their letter dated 26-11-1970 the Bank informed the petitioner that the Staff Committee did not find the Explanationn satisfactory and held that the charge-sheet issued to him detailing the complaints against him had been for the most part substantiated. The Bank thereupon reverted the petitioner from the post of a Manager to the post of an accountant and told him that his case would be reviewed after three years.

(3) Civil Writ 261 of 1971 was filed by the petitioner against the Bank praying for the following reliefs :

(a) that the order, dated 26-11-1970 be quashed; (b) that the petitioner be treated as continuing in his post to Manager and be promoted in that post in the usual course; and (e) that he be declared entitled to all rights, benefits and privileges as such Manager.

(4) In considering the primary questions arising above, it is not necessary to set out the various grounds on which the legality of the order of 26-11-1970 was impugned by the petitioner and reliefs claimed above were based. On 3-3-1971 a Division Bench of this court issued notice to the Bank to show cause why the writ petition should not be admitted. The respondent was also asked to produce the relevant rules on 6-4-1971 for which date the case was fixed. On 6-4-1971 the petitioner appeared by Mr. K. P. Bhandari. The respondent appeared by Miss Uma Mehta. who stated that Mr. C. B. Aggarwala, senior counsel for the Bank was unwell. The case was adjourned to 7-4-1971. On that date the following order was passed :

'Learned counsel for the respondents stated that the case may be remitted to the Staff Committee for holding an inquiry. The petitioner will be supplied all the necessary documents and a full inquiry will be held by the Staff Committee. In the circumstances, the petition is not pressed and is dismissed with the direction given above.'

(5) On 15-4-1971 the petitioner wrote to the Bank that as a result of the order of the Division Bench dated 7-4-1971, the order of reversion of the petitioner stood quashed and his status as Branch Manager restored with retrospective effect. The petitioner requested the Bank to kindly issue to him posting orders 'in the light of the above judgment'. The petitioner sent two reminders on 5-5-1971 and 5-6-1971. The Bank, however, replied on 16-6-1971 that the directions given by the High Court would be complied with and that the petitioner would be supplied with all the necessary documents and further that his contention that consequent upon the orders of the High Court his status as Manager stood restored retrospectively was entirely misconceived. Further requests by the petitioner for being restored to the post of the Branch Manager not being acceded to by the Bank, the present writ petition was filed by the petitioner for the following reliefs :

(1) a declaration that on the expiry of two years from the date of the petitioner's appointment as an officiating Branch Manager, the petitioner is automatically confirmed in that post; (2) that his reversion by at non-speaking order without due inquiry in violation of rules of natural justice should be declared void; (3) no fair and impartial inquiry could be held in an atmosphere of bias and prejudice created by the continuance in force of the order of reversion and that the petitioner was entitled to the arrears of pay and allowances, etc.; (4) respondent No. 4, the inspector who investigated the complaint against petitioner, was biased and, thereforee, the petitioner should be restored to the post of a Branch Manager; (5) The Bank and its officers should be restrained from proceeding with the enquiry as per the order dated 7-4-1971 till the petitioner is first reinstated to his post as Branch Manager; and (6) the respondent should be directed to hold the enquiry against the petitioner in accordance with law,

(6) The petition was resisted by the Bank pointing out that it was a: matter of grace that the Bank agreed to hold a fuller inquiry into the charges against the petitioner and that his contention that as a result of the order of the Division Bench, dated 7-4-1971, the petitioner stood restored to his post as Branch Manager was misconceived. The allegations of the petitioner that the inquiry held against him was contrary to natural justice and, thereforee, the order of reversion was bad were also denied.

(7) On 3-2-1972 the petitioner made an application to the learned single Judge before whom the writ petition was pending for the stay of the proceedings of the fresh and fuller inquiry against him. The learned single Judge (Sachar J.) on 3-3-1972 ordered that the pass I inquiry may continue but the inquiry officer will not pass the final order till the disposal of the writ petition. Later the petition came up before one of us (V. S. Deshpande J.), who referred it to a Division Bench because the law as it stood then was uncertain. On the one hand, the staff circular No. 20 became regulations deemed to have been framed by the Bank under section 19(1) read with section 19(3) of the Baking Companies (Acquisition and Transfer of Undetakings) Act No. 5 of 1970. On the other hand, the decisions of the Supreme Court in Executive Committee of U.P. State Warehousing Corporation v. Chandra Kiran Tyagi, : (1970)ILLJ32SC . and Indian Airlines Corporation v. Sukhdeo Rai, : (1971)ILLJ496SC , and a Full Bench decision of this court in Dr. Mohd. Khan Durrany v. The Principal, Shivaji College (1970) 2 Delhi 414, made it doubtful if the petitioner could establish that the petition was maintainable on the ground that statutory rights of the petitioner were contravened by the illegality of the reversion order.

(8) When the petition came up for final hearing before us, Mr. A. B. Saharya, learned counsel for the petitioner, pointed out that the sub-sequent decision of the Supreme Court in Sukhdev Singh and others v. Bhagatralm Sardar Singh Raghuvanshi and another, : (1975)ILLJ399SC ; has overruled the decisions in the Executive Committee of U.P. State Warehousing Corporation's and Indian Airlines cases referred to above, and the very basis of the reference had disappeared. He, thereforee, submitted that his argument would be two-fold. Firstly, the effect of the order of the Division Bench, dated 7-4-1971 disposing of the writ petition No. 261 of 1971, had the effect or reinstating the petitioner in his post of Branch Manager and awarding him all [he consequential benefits. Secondly, in the alternative, the inquiry proceeding the impugned order of reversion was vitiated by violation of natural justice was, thereforee, bad and she said order may, thereforee, be quashed and the reliefs which were sought by (lie petitioner in, the previous writ petition and the reliefs prayed for in the present, writ petition be granted to the petitioner. We pointed out to the learned counsel that if the first contention of the petitioner did not succeed we will have to consider the question whether the order, dated 7-4-1971. was rest judicata between the parties and if so whether the present writ petition itself was barred by rest judicatal. In that event we would be precluded from considering the merits of the case of the petitioner, namely, his contention that the order of reversion was bad and that it should be quashed and that he should be restored to his position as a Branch Manager.

(9) The issues sat out at the commencement of this judgment are. thereforee, first; considered as below :

Question 1 : Whether the order dated 7-4-1971 was an order based on a compromise between the parties analogous to an order which may be passed under Order Xxiii Rule 3, Civil Procedure Code A bare perusal of the said order would show that - (1) The learned counsel for the Bank stated that the case may be remitted to the Staff Committee for holding an inquiry and that the petitioner would be supplied all :hc necessary documents and a full inquiry would be held by the Staff Committee; (2) In view of that statement the petitioner did not press the petition; and (3) The court, thereforee, dismissed the writ petition with the direction that a fresh and full inquiry be held as offered by the Bank which offer was accepted by the petitioner.

(10) The relevant part of Order Xxiii Rule 3, Civil Procedure I Code, as it stood on 7-4-1971, read as follows :

''Where if is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the suit.'

In our view, the order dated 7-4-1971 squarely falls within the purview of Order Xxiii Rule 3. The respondent Bank made an offer which was in the nature of compromise. For, part of the grievance of the petitioner that the inquiry held against him was bad was met by the offer that a fresh and full inquiry would be held and documents would be Supplied to the petitioner, for they had been refused in the previous inquiry. The Bank did not agree to reinstate the petitioner in the post of a Branch Manager. The Bank thus agreed to meet the petitioner half-way, which is the essence of the compromise. Had the petitioner not agreed to this proposal, the court would have had no jurisdiction to dispose of the writ petition in terms of the agreement between the parties. The order of the court is based entirely on the agreement of parties. It could not stand by itself. We would like to point out that the words ''the petition is not pressed' would mean that the offer of the Bank was acceptable to the petitioner and he did not, thereforee, insist on the writ petition being heard on merits. We would also point out that the words 'the petition..... is dismissed' would have to be understood as meaning that the petition is 'disposed of'. In Harjit Singh Obra v. Baljit Singh (1974) Delhi 571(5), also a learned single Judge of this court had purported to dismiss the suit after recording the statements of the parties in terms of which the suit was disposed of. Since the dismissal of the suit would mean that no relief at all was granted to the plaintiff, a Division Bench of this court held that such a dismissal would be in contradiction with the statements of the parties and could not be ordered by the court in exercise of the power given to it by order Xxiii Rule 3, Civil Procedure Code. That rule required that a decree or order in terms of the compromise had to be passed by the court. The Division Bench in Harjit Singh Obra case, thereforee, held that such a contradiction would be avoided if the words 'suit is dismissed' were construed to mean that the suit was dismissed in respect of the original relief claimed in the plaint. Such a construction would enable effect to be given to the order of the court in terms of the compromise. The ratio of that decision would apply to the contradiction of the order dated 7-4-1971.

11. Question 2 : A compromise order or decree under Order Xxiii Rule 3, Civil Procedure Code, is based on a compromise which is a contract between the parties. It is settled law that a term on which the contract is silent can be implied into the contract only if such implication is necessary to give business efficacy to the contract. As has been said, the terms to be so implied must be such that if the parties were to be asked whether they had such a term in mind, the reply should be 'of course, because without assuming the existence of such a term we could not have entered into such a contract'. It has been argued by Mr. Saharya that the restoration of the petitioner to the post of a Branch Manager is necessarily implied in the agreement between the parties and should, thereforee, be deemed to be an implied term of that agreement and should be given effect to by this court. We are unable to accept this contention. If an order on merits is passed setting aside a disciplinary inquiry as being vitiated by violation of natural justice, ordinarily, the court passing such an order would have also quashed the order of reversion based on the result of such an inquiry. But it is pointed out by the Full Bench in Indian Institute of Technology v. Mangat Singh 1973 Delhi 6, as follows :

'Reinstatement need not follow necessarily whenever it is found by court that the termination of the services of an employee of a statutory corporation a nullity. The two ate to be distinguished from each other. One set of circumstances in which the two would be separated is stated by Lord Boid in Malloch v. Aberdeen Corporation at page 1284 of the report in the following words :- If, then, the respondents were in branch of duty in denying the appellant a hearing, what is his remedy? It was argued that it would not be right to reduce the resolution of dismissal because that would involve the reinstatement of the appellant-in effect granting specific implement of his contract of employment which the law does not permit : But that would not be the effect : There would be no reinstatement. The result would be to hold that the appellant's contract of employment had never been terminated and it would be open to the respondents at any time hereafter to dismiss him if they choose to do so and did so in a lawful manner. Unless they choose to do that the appellant's contract of employment would continue.' The statutory corporation has, thereforee, a locus penitential to correct the mistake made by it and to follow the correct procedure in terminating the employment of the concerned employee even after the previous termination has been set aside by the court. It is only if the Corporation does not wish to do so that reinstatement would follow.

Secondly, this Court acting under Article 226 has a discretion in granting the relief of reinstatement. If circumstances justify, the court may simply declare that the termination of service was ultra virus and yet leave the employee merely a remedy in damages and refuse the relief of re-instatement to him. For instance, when an employee has no right to the post held by him and the employer corporation has the right to terminate his service simply by giving notice, the court will not issue a futile writ granting reinstatement. For, the effect of such writ would be immediately nullified by the corporation by simply terminating the service of the temporary employee by a notice. We agree with She following statement of law by Professor S.A. de Smith in his 'Judicial Review of Administrative Action' Second Edition, page 582, on this point :-

'In some cases the courts have refused applications for mandamus to restore to office persons who have been irregularly removed, on the ground that the remedy might be of no use to the applicant, because it would still be open to the competent authority to remove him by a proper procedure'. Thirdly, the conduct of a particular applicant and his motives in seeking the relief of reinstatement would also have to be scrutinised and if the applicant does not come to the cote with clean hands, reinstatement may be refused to him. Fourthly, the court will still have to see in each particular case whether the relationship between the employer and the employee is dominantly contractual or statutory. As observed by Professor Smith at 510, 'the courts may still be disinclined to award declaratory relief in a case where the relationship, although regulated by statute, approximates to an ordinary contractual relationship between 'employer and employee. Barber v. Manchester Regional Hospital Board 1958 1 Wlr 181 Vidyodaya University Council v. Silva 1965 1 Wlr 77(8), and Francis v. Kaula Lampur Municipal Councillors 1962 1 Wlr 141(9).'

The petitioner in his position as officiating Branch Manager was in the position of a temporary employee in respect of that post as he did not have a right to hold that post. The above reasoning of the Full Bench will, thereforee, apply to his case. It is to be noted that the petitioner has nowhere alleged that there was any express agreement between the parties on 7-4-1971 that the petitioner was to be reinstated in his post as a Branch Manager. His argument is that this is to be deemed to be the effect of the said order. In our view, a fresh and fair inquiry could be offered to the petitioner by the Bank without doing the whole-hog in reinstating him. The mere fact that the general practice of the court may be to restore a person to his previous position when an enquiry is quashed and a new inquiry is ordered does not necessarily imply that this must have been in the minds of the parties when they entered into the agreement before the court. For, conduct of parties is not necessarily governed by the practice of the courts. Further, in law it was quite possible and legal that a fresh inquiry could be held without reinstatement and that though ordinarily punishment follows inquiry, a fresh inquiry need not result in the quashing of the punishment, but the result of the fresh inquiry may be awaited for passing the final order setting aside the punishment or upholding the punishment or modifying it. Since the regulations framed or deemed to have been framed by a nationalised Bank under sec. 19 of Act No. 5 of 1970 were not 'law', but conditions of service which were dominantly contractual according to the then ruling law laid down by the Supreme Court in : (1970)ILLJ32SC and : (1971)ILLJ496SC , the petitioner might have agreed to the compromise without insisting on a decision of his writ petition on merits. Applying the rules of the law of contract, we are of the view thereforee that the reinstatement of the petitioner is not an implied term of the order dated 7-4-1971.

12. Question 3 : A compromise order is an order which affects the merits of the case between the parties. It may not decide the merits in the way they are presented by the contending parties, but it does so in the way agreed to by the parties by way of compromise. It is settled law that within the terms of the compromise it has the same effect of rest judicata and is an order passed in victim on merits by the court. It is to be distinguished from an order dismissing a writ petition as withdrawn. An order dismissing the petition as withdrawn in not rest judicata because it does not decide the merits of the case either as presented by the parties or as agreed on a compromise between them. The effect of an order passed by the court when the petition is not pressed by the petitioner on merits is the same as an order passed on merits of the case. This was so observed by a Division Bench of this court in Ashoka Marketing Ltd. v. Shri B. D. Gupta and another, (1975) Delhi 659, at 665 paragraph 10, relying on Super Surgical Company v. S. Desikan, : (1969)IILLJ140Mad , and referring to Management of Natra), Cottage Industries v. The Presiding Officer, Labour Court 1972 LIC 390.

(11) Explanationn V to section 11, Civil Procedure Code, puts the matter beyond doubt. It says,-'any relief claimed in the plaint which is not expressly granted by the decree shall, for the purposes of this section be deemed to have been refused.' The petitioner had prayed for quashing the order of reversion and for reinstating him in the position of a Branch Manager in his writ petition No. 261 of 1971. These reliefs which had been expressly asked were not granted to him by the D order of 7-4-1971. They are, thereforee, deemed to have been refused. The effect is the same as if these reliefs were refused by an order on merits, instead an order was passed on a compromise.

(12) In view of our findings above it is not open for us to consider the case of the petitioner on merits because in our view the order dated 7-4-1971 dismissed the previous writ petition of the petitioner on merits as per the agreement between the parties. The petitioner cannot, thereforee, file a fresh writ petition on the same cause of action.

FORthe above reasons, the writ petition is dismissed with no order as to costs. S. J.


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