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Chilakamarri Lakshminarasimhacharyulu Vs. the MclaurIn High School, Cocanada by Manager Rev. Eric L. Quirk - Court Judgment

LegalCrystal Citation
SubjectService
CourtChennai
Decided On
Reported in(1941)2MLJ270
AppellantChilakamarri Lakshminarasimhacharyulu
RespondentThe MclaurIn High School, Cocanada by Manager Rev. Eric L. Quirk
Cases ReferredSalt v. Power Plant Co. Ltd.
Excerpt:
.....plaintiff's services was wrongful because it amounted to a breach of the contract ex. though the contract merely says, permanent' and though the word 'permanent' may in a proper case be taken to mean for life, nevertheless, in the matter of appointment of teachers in schools, it is the general usage, so to say, for the educational institutions not to continue to employ teachers who have passed the age of sixty, the ordinary age of superannuation being fifty-five, those who are over fifty-five being kept on till sixty in case the management is of opinion that they are fit to perform their duties efficiently. it would seem that even the lower court was thus of opinion that there was a growing incapacity to teach though the lower court appears to have also thought that but for that..........of contract by the defendant, or, in other words, whether the dismissal of the plaintiff by the manager of the school was wrongful and if so, what is the amount of damages to which the plaintiff is entitled.3. so far as the first question is concerned, a similar question arises in a connected appeal, appeal no. 30 of 1939, in which the contract of service or employment is couched in similar language. in the present case, as observed already, the suit-was dismissed, but in the connected case, the suit was decreed, the court which passed that decree being the district judge of east godavari. in other words, in these two cases, two courts have taken different views as to the interpretation to be placed on the contract and also as regards the actual financial position at the time when the.....
Judgment:

Pandrang Row, J.

1. This is an appeal from the decree dated 9th September, 1937, of the Subordinate Judge of Cocanada in O.S. No. 22 of 1935 on his file. The suit was for damages estimated at Rs. 10,000 for wrongful dismissal of the plaintiff from his appointment as First Assistant in the defendant School, namely, The McLaurin High School, Cocanada, which is represented in the litigation by its manager. The suit was dismissed with costs by the Court below and the plaintiff is the appellant before us.

2. Two questions arise for determination in this appeal, namely, whether there was a breach of contract by the defendant, or, in other words, whether the dismissal of the plaintiff by the manager of the school was wrongful and if so, what is the amount of damages to which the plaintiff is entitled.

3. So far as the first question is concerned, a similar question arises in a connected appeal, Appeal No. 30 of 1939, in which the contract of service or employment is couched in similar language. In the present case, as observed already, the suit-was dismissed, but in the connected case, the suit was decreed, the Court which passed that decree being the District Judge of East Godavari. In other words, in these two cases, two Courts have taken different views as to the interpretation to be placed on the contract and also as regards the actual financial position at the time when the services of the teachers were dispensed with. It seems desirable that we should deal with the appeals separately though in some respects the questions are the same in both the appeals. The plaintiff is a trained graduate who was employed in 1912 when the defendant school was started. He was then on a temporary basis. On 1st July, 1927, the position was changed to his advantage, a contract being signed between him and the manager on that day giving him the status of a permanent employee. The important portion of the contract is as follows:

This is a permanent appointment and will not ordinarily be terminated by the Manager for reasons other than that of such conduct or unsatisfactory work as, in his opinion, unfits the teacher for his post; or by the teacher except for reasons which, in his opinion, make it impossible for him to continue in the school. In either case three month's notice shall be given to the other party by the party that terminates the agreement.

4. The order of communication which terminated the services of the plaintiff is dated 24th January, 1934 (Ex. F). It runs as follows:

Due to the stress of extraordinary financial circumstances I hereby give you three months' notice that the agreement made between you and the manager of the McLaurin High School, Cocanada on July, 1st, Year nil, is terminated from to day and that your appointment to the staff of this school ends 30th April, 1934.

5. This letter was sent by the Manager, Mr. Quirk, D. W. 3, and it purports to have been sent under the authority of the C. B. Mission Conference, 3rd January, 1934. Before this final notice terminating the plaintiff's services, there was some previous correspondence which may be briefly referred to. On 18th October, 1933, the then manager, Mr. Wilton, wrote a letter (Ex. C) which runs as follows:

Owing to the financial stringency a reduced scale of salaries throughout the Mission will come into force from 1st January, 1934. According to that scale we can offer you Rs. 90 per month without further increments.

If you desire to enter into a contract with the Mission on this basis and to continue in your present capacity, please intimate the same below.

6. It must be mentioned in this connection that the pay that the plaintiff was entitled to get under his contract even in 1927 was Rs. 125 a month. Subsequent to Ex. C there was a reminder and a request for more time to make a decision by the plaintiff and finally a reply was sent by the plaintiff on 15th December, 1933. The material part of it runs as follows:

I beg to state that during the period of financial stringency, I agree to a reduction of my salary in the maximum cut of 121/2 per cent. which is usual in all institutions public or private. Kindly consider the possibility of a contract on that basis, in the absence of which, the original contract stands.

7. The final notice was in answer to this letter from the plaintiff, terminating the services of the plaintiff with effect from 30th April, 1934. Later on on 23rd April, 1934, the plaintiff wrote again to the manager protesting against the termination of his services and again expressing his willingness to submit to a cut of 12| per cent. during the period of financial depression and threatening a suit in case his offer was not accepted. The final reply sent to the plaintiff by the manager is Ex. H which stated that there was no breach of contract committed by the management and that on account of extraordinary financial conditions the management was constrained to make the changes and terminate his services. (Vide Ex. H dated 30th June, 1934.) The suit was instituted on 29th March, 1935.

8. The defendant's main defence, as disclosed in the correspondence, is that the termination of the services of the plaintiff was necessitated by the plaintiff's refusal to accept the reduced salary of Rs. 90 a month, which reduction in its turn was necessitated by the extraordinary financial stringency that prevailed at the time. Apart from their income in the shape of fees and Government grant, the maintenance of the school was possible only with the addition of a grant from the Mission whose head office is at Toronto, Canada. It is the case of the defendant that the first intimation they had of this extraordinary financial stringency was a cablegram sent unofficially by the Chairman of the Mission, Dr. MacNeill, on 14th March, 1933, which was to the following effect:

Foreign Board facing unprecedented financial crisis : severe reductions likely near future : earnestly suggest missionary leaders consult immediately and submit to Board recommendations of voluntary reduction in salaries and work effective at earliest possible date. This message purely personal and unofficial.

9. It would seem that immediately on the receipt of this cable, a few missionaries met at Cocanada on 27th March, 1933, and they seem to have straightaway decided to propose at the regular Conference in July, that there should be a 'downward revision of salary schedules of the more highly paid Indian workers', It would appear from the evidence that this description would take in every Indian worker paid more than Rs. 21 a month. It will at once be seen that this proposal which was ultimately carried into effect after approval by the Conference in July and subsequent approval by the Home Board on 25th October, 1933, went very much further than the information before the meeting justified, because, what the cablegram had stated was that recommendations in respect of voluntary reductions of salaries and work should be made as soon as possible and there was no suggestion as to the extent of the reduction that would be necessary and no hint of any lowering of salaries even in the case of existing and permanent employees. In any case, this proposal seems to have met with the approval of the Conference .in July, 1933. At the same time, so far as the missionaries themselves are concerned, their proposal was that there should be a cut in salaries. Between these two dates, there was a meeting of the Home Board early in May, 1933 at which a statement of the financial position of the mission was read and a copy of the statement was forwarded to the missionaries in India. It is however unnecessary to go into the question of the financial condition of the Mission in Canada because it was admitted by both the parties in the Court below that what the Court had to consider was, not the financial condition of the Home Board but the financial condition of the Indian branch of the Mission in 1933 and the early part of 1934. It is obvious that so far as any reduction in the salaries or expenditure of any other kind in India was concerned, there could be a necessity to effect it only; if there was an anticipated reduction in the income of the Indian branch. In short, unless there had been or there was going to be a serious reduction in the contribution made by the Home Board to the Indian branch of the Mission, there would not have been any necessity to effect any economies or make any reductions in salary. Unfortunately, so far as this aspect of the case is concerned, there is very little evidence as to the information that was before the school authorities (including in this phrase not merely the Manager but also the Conference which appears to have exercised some power of supervision over the school finances) when they decided to put into force the reduced scale of salaries even in the case of existing permanent employees and authorised the giving of a notice like Ex. F to the plaintiff. So far as Ex. C dated 18th October, 1933 is concerned, it would appear that it was sent even before the Home Board had approved the scheme of reduced salaries being-applied even to existing employees, for the communication sent by the Home Board after their meeting in May, 1933, was substantially to the effect that alternative budgets should be sent for the year 1934 on the basis of a reduction in the grant from the Home Board of 121/2 per cent. and 162/3| per cent. respectively and a note was added to the effect that at that moment the best that could be done was to limit the reduction to 121/2 per cent. but that it might be necessary to make the larger reduction of 16| per cent. In short, the information which the Conference had before it in July, 1933, was that in all probability there would be a reduction in the grant from the Home Board to the extent of 21/2 per cent. and that the reduction might be even as much as 16f per cent; in other words, that the reduction was likely to be 1/8th and might even have to be 1/6th. The actual reduction made in the salaries by the scheme approved by the Conference in July, was however much more drastic, because, in some cases the reduction was as much as 38 per cent. and the average was 22 per cent. It is clear therefore that the scheme went very much beyond what the situation required. There is, moreover, no clear evidence as to whether the threatened reduction by 121/2| per cent. or 16| per cent. was actually made in the budget of 1934. It is extraordinary, but the fact remains, that there is no clear evidence to show what was the actual reduction made by the Home Board in their contribution for the year 1934. No communication or paper has been put before us from which it can be seen at a glance what the contribution by the Home Board was in 1933 and what it was in 1934. No doubt, in respect of the High School, with which we are concerned in this case, there is the evidence of the Manager given in cross-examination to the effect that the monthly contribution in 1933 was Rs. 548 and the contribution in 1934 was Rs. 439-11-1. This, however, is not sufficient, because, it is admitted that the High School is only one of several institutions which have, so to say, a common finance. The Manager himself admits that though separate accounts were kept, the finance of all the institutions is treated as one unit. In his own words:

The accounts of the two schools, the High School and the Training School are kept separate but are grouped together for institutional finances.

10. Again, he stated in his examination-in-chief that the:

Mission makes a grant in the name of the defendant school but it is divided into four heads, the defendant school, the Training School, the Manual Training School and the Hostel.

11. These figures, namely, the grants made by the Mission in Canada for all these four institutions for the year 1933 and for the year 1934 are not before us, because the figures given by the Manager in his cross-examination relate only to the grant actually allocated to the High School proper by the local authorities here. It is, therefore, not inaccurate to say that there is no evidence before us to show what was the actual reduction in the grant made by the Board in Canada in its contribution to the Indian branch for the year 1934. Assuming however that the threatened cut in the grant which was foreshadowed in the cable and in the proceedings of the Board in Canada, was sufficient to justify the need for a reduction of salaries, it would have justified the imposition of a cut of 121/2| per cent. or so. The Manager himself, in his letter to the Director of Public Instruction (Ex. XX) admitted that to meet the 121/2| per cent. Mission cut, a 121/2| per cent. cut on the Mission institutions would have been sufficient to meet the expected deficit for 1934. He also admitted in that letter that for 1934 only a 121/2 per cent. cut was made on the Indian work but nevertheless a more drastic reduction was made in the salaries because the Conference

decided to make a permanent new scale which should meet the situation with which the Mission was faced.

12. In his evidence also, the Manager, as D. W. 3, admits that during 1934 the cut on the institutions was only 121/2 per cent. This discussion of the evidence is sufficient to show that while a case could be made out for reduction in salaries to the extent of 121/2| per cent. either in the shape of compulsory reduction or of voluntary cuts, there was no need to make a more drastic reduction of salary even in the case of existing employees and in particular of employees who enjoyed the privilege of being permanent employees with contracts in their favour.

13. This leads us to the question of the interpretation of the contract in this case. The two words in the contract which are relied upon are the words 'permanent' and 'ordinarily', which are found in the following sentence:

This is a permanent employment and will not ordinarily be terminated by the Manager for reasons other than that of such conduct or unsatisfactory work.

14. It is not necessary to consider the exception of bad conduct or work, because it is not the case of the defendant that the dismissal or termination of services in this case was on account of unsatisfactory work or conduct. Throughout, the reason for the act complained of by the plaintiff has been the extraordinary financial circumstances which faced the Mission in India. Mr. Govindarajachari for the plaintiff-appellant relies on a comparatively recent ruling of the Court of Appeal in England in Salt v. Power Plant Co. Ltd. (1936) 3 A.E.R. 322. The agreement in that case contained the following relevant words:

In the absence of such notice the engagement to remain in force as a permanent one subject to your continuing to perform your duties to the satisfaction of the directors.

15. It was argued in that case on behalf of the company that the word 'permanent' was used in the same sense as a permanent civil servant as opposed to a temporary civil servant and that the use of the word was compatible with the employment being from year to year. This argument was repelled by the Court of Appeal which observed that actually this argument amounted to saying that permanent does not mean permanent but means an engagement which can be determined at any time by notice expiring on 31 st December, or at any other time in the year, and it was held that the words mean that the plaintiff in the suit was to have a permanent employment, that is employment for life, subject to the proviso contained in the agreement, namely, his continuing to perform his duties to the I satisfaction of the directors. In the present case, there is not only the use of the word 'permanent', but also the additional words which have been quoted above which provide so to say against termination of the employment. In substance, omitting the cases of dismissal for bad conduct or work, the words are : this is a permanent appointment and will not ordinarily be terminated by the Manager. Unless the word 'ordinarily' is given such a meaning as to nullify the effect of the word 'not' preceding it, it is impossible to interpret the contract in the way pressed before us by the learned Advocate-General, namely, that in spite of the appointment being declared to be permanent and in spite of the words which provide that the appointment will not ordinarily be terminated by the Manager, nevertheless, if the management at any time in its opinion thought that the circumstances were other than ordinary, it could validly terminate the appointment and the Court would have no right to canvass the reasons which led the management to form the opinion that the circumstances were other than ordinary or required the termination of the services. We are unable to accept such an interpretation of the contract in the present case. 'Ordinarily', no doubt, must be given its full force but the meaning of this word as well as of all words in ordinary use must be their ordinary meaning. It means, in our opinion, that in other than ordinary circumstances, or, to put it differently, in exceptional or special or unusual or extraordinary circumstances the management shall not be prevented by the contract in doing what these extraordinary or unusual circumstances required ; and the management's right to terminate the services must be a right which can be made the subject of examination by a Court. It is more or less on this basis that the case proceeded in the Court below, that the reason given for the act complained of, namely, the extraordinary financial stringency, must be established by the defendant and must be shown to have necessitated the termination of the services. As the lower Court put it, it is not every financial stringency that would come under the definition of 'ordinary' but it must be of a sufficiently grave character and what has to be considered in the present case is, whether the financial stringency was of such grave character as to necessitate directly a revision of the scales of pay and indirectly the termination of the contract with the plaintiff. This appears to us to interpret the contract in a reasonable and correct way. The 'extreme' contentions on both sides appear to be extreme in reality. They were put forward before us as extreme contentions and they do not deserve to be regarded in any better light. On the one side, it was argued that it was for the management to decide whether the circumstances had changed and thus to terminate the services at their discretion and that their act could not be questioned in a Court of law. On the other side, it was contended that the word 'ordinarily' practically meant nothing and that actually the management had no right to terminate the services except on the grounds of bad conduct or work. We dismiss both these contentions as not being supported by the language found in the contract.

16. It would follow from what has been already stated regarding the facts of the case, that even the existence of an extraordinary financial stringency has not been clearly established. Even assuming that there was a financial stringency, which was brought to the notice of the Indian branch by the Home Board in March, 1933, the stringency was not sufficiently stringent to necessitate a permanent and unduly drastic reduction in the salaries of the existing permanent staff. There was in particular no reason why the remedy that was found to be sufficient and proper in the case of the missionaries themselves should not have been considered sufficient to meet the needs of the situation in the case of what are described as the more highly paid Indian workers, who are not more highly paid than the missionaries themselves. It is contended before us that the local authorities preferred to make a greater reduction in the salary of the Indian employees than the needs of the situation demanded, with the idea that the economies thereby effected would make their own sacrifice a little less than what it might otherwise have to be. We are not prepared to go to the length of saying that this was done with this object, though it is impossible to reject the contention entirely that some such impression might have had its effect on the final decision of the Conference. It is also possible as argued, though there is no evidence on the subject, that with the reduced salaries it was thought possible to get sufficiently qualified persons for the work owing to the increase in the number of unemployed' qualified men. Whatever the other motives might have been, we are prepared to assume that the motives of those who effected the reduction complained of in this case were not other than honest. We are unable to say that the defendant has satisfied us that there was such an extraordinary financial stringency as made it necessary to make a drastic reduction of the kind that the plaintiff complains of. In other words, there was no justification or need for reducing the salary of the plaintiff by as much as 28 per cent. especially when he had offered, even before the final notice was given to him, to submit to a cut of 121/2 per cent. We are therefore satisfied that in this case the termination of the plaintiff's services was wrongful because it amounted to a breach of the contract Ex. A.

17. The only other question relates to the quantum of damages. The plaintiff's exact date of birth is not given in the evidence but it is clear, and the fact is admitted, that he was 53 years old when he was given notice of termination of his services. Though the contract merely says, 'permanent' and though the word 'permanent' may in a proper case be taken to mean for life, nevertheless, in the matter of appointment of teachers in schools, it is the general usage, so to say, for the educational institutions not to continue to employ teachers who have passed the age of sixty, the ordinary age of superannuation being fifty-five, those who are over fifty-five being kept on till sixty in case the management is of opinion that they are fit to perform their duties efficiently. This usage prevailing in the educational world must be deemed to be part of the contract and it is impossible in our opinion to regard the contract as being one for life having regard to the conditions and usages known to both the parties at the time of the contract. It is not necessary to elaborate this aspect of the case because the plaintiff himself has not made the claim that the contract gives him an appointment for life. He has claimed only on the basis that he would have been entitled under the contract to continue in service till sixty and he does not contend that even during this period he cannot be sent away if found to be not fit for work. The lower Court has found that the plaintiff would have been entitled under the contract to continue till he was 60 years old. There is a qualification introduced by the Court below to this finding. In paragraph 44 of the judgment which contains the finding, the lower Court observes as follows:

I hold that plaintiff is physically fit to continue in service till he completed 60 years of age. I hold that but for the plaintiff's growing incapacity to teach, he could have continued in service till he completed 60 years.

18. It must be remembered in this connection that the first finding is to some extent an attempt to forecast the future, because the plaintiff had not attained the age of 60 when the lower Court pronounced its judgment and it was certainly impossible for the lower Court to hold that he is physically fit to continue till he completed 60 years of age. In fact, no one can be so positive about anyone's health and even continued existence. It would seem that even the lower Court was thus of opinion that there was a growing incapacity to teach though the lower Court appears to have also thought that but for that growing incapacity he could have continued till he completed 60. It is obvious that under the contract if the growing incapacity for service really made the plaintiff unfit to perform his duties efficiently, his services could have been terminated by the management. There is also the statement of the Manager as D. W. 3 to the effect that the plaintiff was never a good teacher in his subject and it would appear that the inspection reports by the Government educational authorities were not quite favourable to him. The inspection reports show that from 1928 adverse remarks were being made about the teaching in history. Having regard to the facts in this case, it is extremely unlikely that the plaintiff would have been retained in service by the Manager after he attained fifty-five years. The chances of his retention upto sixty were so remote that it is not possible in our opinion to allow him damages on the basis that he would have continued in service till he completed 60 years. Under the circumstances, damages have to be calculated on the basis that he was likely to have continued in service only till he completed fifty-five years. Having regard to this important consideration and having in mind the other circumstances as well--which bear on the question of damages, we are of opinion that damages to the extent of Rs. 3,000 would be a reasonable compensation for the breach of contract : established in this case. There would be a decree accordingly for this amount against the properties of the institution, the appeal being allowed to this extent. The plaintiff-appellant will have his proportionate costs on this amount in this Court and in the Court below to be paid by the defendant. The decree amount will bear interest at 6 per cent. per annum from this date until the date of realisation.


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