A.C. Gupta, J.
1. This second appeal by the defendant, Indian Airlines Corporation, arises out or a suit brought by one of their dismissed employees for a declaration that the order of dismissal was invalid, void and ineffective and that his services under the defendant should be deemed to be still subsisting. The plaintiff succeeded in both Court a below. The foots material for the purpose of this appeal are as follows.
2. The plaintiff was appointed originally by the Airways (India), Ltd., as a motor-driver on permanent basis at Calcutta in 1951 and worked as such until some time in August 1953 when the undertakings of certain existing sir companies including the Airways (India), Ltd., were taken over by the defendant-Corporation. The paid Corporation was brought into existence by the Air Corporations Act, 1953, referred to hereinafter as the Act, to provide for the establishment of Air Corporations, to facilitate the acquisition by the Air Corporations of undertakings belonging to certain existing air companies and generally to make farther and batter provisions for the operation of air transport services. Under the provisions of the Act, on the vesting of the Airways (India), Ltd., in Indian Airlines the plaintiff became an employee of the defendant-Corporation. On 13 January 1956 the plaintiff was suspended on charges of dishonesty and unauthorized use of Corporation's vehicle. An enquiry committee was constituted to investigate into the charges against him. The committee examined several witnesses and found the plaintiff guilty and recommended his dismissal from service. Accepting the recommendation, the Deputy Area Manager dismissed the plaintiff from service by an order, dated 6 February 1956. The plaintiff thereafter instituted the salt out of which the present appeal arises.
3. Plaintiff's case was that the departmental proceeding against him had been conducted in complete disregard of the regulations or standing orders made under Section 45 of the Act laying down the disciplinary procedure, According to the plaintiff, the chargesheet against him was if issued and the enquiry held by persons who had no authority to do any of time things under the said regulations and, further, that he was denied the opportunity to which he was entitled under the regulations to cross-examine some of the witnesses appearing against him in the enquiry. The power of the Deputy Area Manager to dismiss the plaintiff was however admitted. The Court of first instance accepted the plaintiff's contentions and gave him a decree declaring that his services were still subsisting with right to all emoluments and that the order of dismissal passed against him was invalid, void and ineffective. This decree was affirmed by the Court of appeal below.
4. It appears that in the Courts below there was some dispute as to whether the regulations on which the plaintiff relied applied to his case having regard to the fact that these regulations which were published in the official gezette on 25 February 1956, were issued on 6 February 1956, the very day on which the order of dismissal was passed It was argued on behalf of the defendant in the Courts below that the committee of enquiry having concluded its work and gent in its recommendations before the regulations had been issued, the question of complying with them did not arise. In reply, on behalf of the plaintiff it was pointed out that the notification relating to the regulations itself states that the regulations had come into force with effect from 6 October 1955. The Courts below accepting the plaintiff's contention held that the regulations issued on 6 February 1956 governed the plaintiff's case. Before us, Sri Pal who appeared for the appellant, Indian Airlines Corporation, stated that he would not question the findings that the said regulation applied to the plaintiff's case and that they were not followed in the enquiry preceding his dismissal. Sri Pal contended that even proceeding on the footing that the aforesaid regulations governed the case and that they had been disregarded, the plaintiff was not entitled to the declaration prayed for by him and granted by the Courts below, Sri Pal argued that the relation between the appellant-Corporation and its employees, specially of the class to which the respondent belonged, is that of ordinary master and servant and that the declaration given by the Courts below amounts in effect to enforcement of a contract of personal service which is barred under Section 21 of the Specific Relief Act, 1877. According to Sri Pal, the dismissal of the plaintiff being in breach of the regulations laying down the disciplinary procedure may be unlawful, but the only relief the plaintiff could claim under the law was recovery of damages. Thus the question for decision is this appeal its whether the plaintiff is entitled to gat the declaration that Courts below have granted or Section 21 of the Specific Relief Act is a bar.
5. The law relating to master and servant is well-settled. Ordinarily a master is free to terminate his servant's employment but if the dismissal is in contravention of the contract of service, the master is liable to pay damages for breach of contract. Specific performance of a contract of service is not permissible under the law. The position is the same where instead of an individual a statutory body is the master and the rights of the employer and the employee rest entirely on contract. If however, there is any provision in the statute regulating the relation between the parties end their rights are not left entirely at the contractual level, the statutory provision must be observed. A statutory body has to Act within the four corners of the statute that has brought it into existence; when it acts in excess of Its authority or in disregard of its statutory obligations, the Act is ultra vires and void and the Courts have certainly the power to declare it an such, though the declaration may have indirectly the effect of enforcing a contract of personal service. On tills point Sri Chowdhuri appearing for the respondent referred to the decision of the Supreme Court in S.R. Tewari v. District Board, Agra, and Anr. 1964-I LLJ. 1, The Supreme Courts on a consideration of the authorities, states the position as follows (at p. 4):. Under the common law the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. Bat this rule is subject to certain well-recognized exceptions. It is open to the Courts in an appropriate case to declare that a public servant who is dismissed from service is contravention of Article 311 continued to remain in service even though by so doing the State is in effect forced to continue to employ the servant whom it does not desire to employ. Similarly under the industrial law, jurisdiction of the labour and industrial tribunals to compel the employer to employ a worker whom he does not desire to employ, is recognized. The Courts are also invested with the power to declare invalid the Act of a statutory body, if by doing the Act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something which it does not desire to do.... It must be pointed out that the powers of a statutory body are always subject to the statute which has constituted it, and must be exercised consistently with the statutes and the Courts Save, in appropriate cases, the power to declare an action of the body illegal or ulira virus, even if the action relates to datermination of employment of a servant....
The passage quoted above must be taken to have settled the law on the point.
6. Sri Pal referred to the case of Ram Babu Rathaur v. Divisional Manager, Life Insurance Corporation of India : AIR1961All502 , in support of his contention that Section 21 of the Specific Relief Act is a bar to the declaration that the plaintiff has asked for. This was a care originating on an application under Article 226 of the Constitution. The petitioner who was employed as a Field Officer, in the Life Insurance Corporation, on being dismissed from service moved the High Court for a writ of certiorari quashing the order of dismissal and a writ of mandamus directing the Corporation to treat him as in service on the allegation that his dismissal was in disregard of the staff regulations and also because he had not been given a reasonable opportunity to defend himself againest the charges. This application was dismissed in limine but by as elaborate judgment, giving reasons. One reason among others given by tae learned Judge is that a mesa disregard of the staff regulations would not be actionable and the remedy of the petitioner was by way of departmental appeals and representations and not by an action in a Court of law even if the role disregarded were statutory. This position is deduced from two decisions of the Privy Council in R.T. Rangachari v. Secretary of State and Venkata Rao v. Secretary of State 0043/1936 , which lay down that the Crown's right to dismiss at pleasure is absolute and unfettered by any statutory guarantee given to the servant, Another reason for rejecting the writ petition was that in the absence of any statutory provision to the contrary, the general law of master and servant governed this relation between the Life Insurance Corporation and its employees and, as such, Section 21(6) of the Specific Relief Act is a bar to any attempt seeking, directly or indirectly, the enforcement of a contract of personal service. Sri Pal claimed that the Allahabad case has been approved by the Supreme Court in S.R. Tewari v. District Board, Agra, and Anr. 1964-I L. L J. 1 (vide supra), and argued that on a parity of reasoning with Ram Babu Rathaur case : AIR1961All502 (vide supra) it must be held that regulations framed under Section 45 of the Act did not confer an actionable right and, farther, that the general law of master and servant applied between the parties attracting the bar of Section 21 of the Specific Relief Act against the declaration asked for. It is true that in the aforesaid decision of the Suprema Court the Allahabad case has been cited and the Supreme Court has approved as a general proposition the finding that is the absence of any statutory obligation imposed on the Corporation in that behalf, the relation between the Corporation and its employees is governed by contract. It does not appear, however, that the Supreme Court has approved of the other reason mentioned in Bom Babu Rathaur case : AIR1961All502 (vide supra) which is founded on the right of the British Crown to dismiss civil sevants at pleasure. With respect, the analogy of the Crown's right to dismiss at pleasure which on the authority of the two Privy Council decisions referred to in the Allahabad case would appear to be absolute and unfettered even by any statutory guarantee given to the servant, seems hardly apposite is considering the relation between a statutory Corporation and its employees. If the Corporation's power to dismiss its employees bad been similar to that of she British Crown and breach of the regulations framed under the Act were not actionable, than no suit would be maintainable against the Corporation even for damages. Though Sri Pal relied on the Allahabad decision, it seemed to us that he was not prepared to go to the laugth of suggesting that no action whatsoever lay against a statutory Corporation for wrongful termination of service. As the law stands today, the position of the Government servants in this country does not also seam to be as precarious as made out in R.T. Rangachari v. Secretary of State (vide supra) or Venkata Rao v. Secretary of State 0043/1936 (vide providing for the terms and conditions of service of officers add other employees of the Corporation other than the General Manager and officers of any other categories referred to in Section 44.
7. The sections referred to above are the only provisions we need consider to be able to answer the question that has arisen in this case. In terms of Section 20, as from the appointed date, i.e., 1 August 1953, the respondent became an employee of the appellant-Corporation in grade III category. In accordance with the provisions of that section the respondent held his post under the Corporation initially on his original terms and conditions until they were altered by the Corporation. The regulations made under Section 46 prescribe the conditions of service including provisions relating to disciplinary matters. These regulations which admittedly governed the case of the respondent must be taken to have replaced his original terms and conditions of service in respect of matters covered by the regulations. Admittedly, again, the disciplinary procedure laid down in the regulations was disregarded in the enquiry preceding the respondent's dismissal. Now the question is : Is the Corporation under a statutory obligation to follow the procedure prescribed by the regelations Do the regulations have a statutory force and, if not, is there any other provision in the Act imposing on the Corporation a duty to follow the procedure set out in the regulations Sri Pal argued that the regulations have no force of law and referred to a decision of the Madras High Court in V. Ramiah v. State Bank of India, Madras 1963-II L.LJ. 304 relying specially on the following observations in the judgment (at p. 323):. It cannot be said that wherever a statutory authority acts under or in exercise of power statutorily given to it, such act has the force of law. For instance, no one will say that the terms and conditions of a contract entered into by a statutory body in exercise or its statutory contractual power constitute anything more than a contract:...
8. According to Sri Pal, the regulations form a part of the contractual terms and conditions of service and cannot be treated as rules having the force of law. With respect, we agree with the observations of the Madras High Court Quoted above, bat the question here is whether the regulations have statutory effect or they embody only certain contractual terms determined by the Corporation in exercise of its powers under the statute. Sri Chowdhuri for the respondent submitted that it is not necessary in this case to decide whether the regulations have the same effect as statutory rules as, according to him, Sub-section (2) of Section 8 casts a clear duty on the Corporation to comply with the said terms and conditions. Under Section 8(2) an employee of the Corporation is subject to such conditions of service and entitled to such remuneration and privileges as may be determined by the regulations. It thus appears that Section 8(2) makes the terms and conditions contained in the regulations binding between the Corporation and its employees, even assuming that the regulations by themselves have no statutory force. We think, therefore, that Sri Chowdhuri was right in his submission that by virtue of Section 8(2), the rights of the parties receive a statutory recognition and do not rest merely in contract ; we do not find any other reason for the enactment of Sub-section (2) of Section 8, Sri Pal argued that the object of enacting Sub-section (2) of Section 8 was not to invest the contractual terms of service with statutory sanctity but only to confer on the Corporation the power to determine the conditions of service of its employees who are appointed after the Corporation has come into existence. Sri Pal submitted that while Section 20 prescribes the conditions of service of those who were originally employed by the existing air companies and subsequently absorbed in the Corporation, Sub-section (2) of Section 8 provides for the determination by the Corporation of the conditions of service of its employees appointed for the first time after the Corporation has been established; according to Sri Pal, but for Sub-section (2) of Section 8 the Corporation would have no right in that behalf. We do not think this argument is correct. Section 8(1) and Sections 44(2)(a) and 45(2)(b) together contain all the provisions necessary for fixing the conditions of service of the different categories of employees appointed after the Corporation has come into being. Considering the matter carefully, it seems to us that Sub-section (2) of Section 8 was enacted, as supra). Even is England it cannot now be said that the jaw regarding the tenure of Crown's servants was completely stated in the aforesaid two decisions of the Judicial Committee. This aspect of the matter, however, need not detain us because Sri Pal built his argument mainly on the proposition that in the absence of any statutory provision to the contrary, ordinary law of master and servant would regulate the relation between the Corporation and its servants. As a proposition this is unimpeachable. In Ram Babu Rathaur case A.I.R. 1961 All. 602 (vide supra) while laying down this proposition, the Court proceeded on the footing that the Life Insurance Corporation Act, 1956, did not impose any obligation on the Corporation in the matter of terminating the services of Field Officers of whom Ram Babu Rathaur, the petitioner in that case, was one. Incidentally, in Life Insurance Corporation of India v. Sunil Kumar Mukerjee and Ors. 1961-I L.L.J. 442, termination of service by the Life Insurance Corporation of certain Field Officers was held by the Supreme Court to be invalid not having been made in accordance with Clause 10 of the Life Insurance Corporation Field Officers (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1957, issued under Section 11(2) of the Life Insurance Corporation Act. Bat even if the Life Insurance Corporation Act contained no such provision, it is difficult to see how that advanced the appellant's case. is order to succeed, the appellant must show that the Air Corporations Act, 1953, does not contain any provision qualifying or controlling the contractual relation of the parties. It is, therefore, necessary to examine the relevant provisions of the Act to ascertain the position.
9. Under Section 3 of the Act, two Corporations known as ' Indian Airlines ' and ' Air India International' were established. Section 16 provider that from the ' appointed date' ' there shall be transferred to and vest in:
(a) Indian Airlines, the undertakings of all the existing air companies (other than Air India International, Ltd.), and
(b) Air India International, the undertaking of the Air India International, Ltd.
In terms of this section, from 1 August 1953 the undertaking of Airways (India,), Ltd., vested in the Indian Airlines Corporation. Under Section 20, barring certain exceptions which are not relevant for the purpose of this appeal, every officer or other employee of an existing air company employed by that company prior to 1 July 1952 and Still in its employment immediately before the appointed date became from that date an officer or other employee, as the case may be, of the Corporation in which the undertaking had vested. The section further provides, inter alia, that such officer or employee of the Corporation would carry wish him his original terms and conditions of service until these were duly altered, by the Corporation, Section 8 of the Act employers the two Corporations to appoint officers and other employees and provides for fixation of their conditions of service. The relevant portion of Section 8 is as follows:
(1) For the purpose of enabling it efficiently to discharge its functions under this Act, each of the Corporations shall appoint a General Manager and subject to such rules as may be prescribed in this behalf, may also appoint such number of other officers and employees as it may think necessary:
Provided that the appointment of the General Manager and such other categories of officers as may be specified after consultation with the Chairman in such rules shall be subject to the approval of the Central Gavernment.
(2) Subject to the provisions of Section 20, every person employed by each of the Corporation shall be subject to such conditions of service and shall be entitled to such remunerations and privileges &9 may be determined by regulations made by the Corporation by which he is employed.
Section 44 authorizes the Central Government to maka rules to provide for among other matters the terms and conditions of service of the General Managers of the two Corporations, and such other categories of officers as may be specified from time to time under Section 8(1). Section 45 empowers each of the Corporations to make regulations with the previous approval of the Central Government Sri Chowdhuri contended, to ensure that the conditions of service embodied in the regulations would be compiled with.
10. We have, therefore, come to the conclusion that before dismissing the respondent the appellant-Corporation was under a statutory obligation to observe the conditions and follow the procedure prescribed in that behalf by the regulations. Having regard to the admitted fact that the aforesaid provisions bad been disregarded in the enquiry preceding the respondent's dismissal, the impugned order of dismissal must be held to be invalid, and in our view the Courts below were justified in granting the declaration asked for by the respondent). This appeal, therefore, must fail and is accordingly dismissed with costs.
K.C. Sen, J.
1. I agree.