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Ganesh Chandra Mukherjee Etc., Etc. Vs. National Textile Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKolkata High Court
Decided On
Judge
Reported in(1983)ILLJ244Cal
AppellantGanesh Chandra Mukherjee Etc., Etc.
RespondentNational Textile Corporation and ors.
Cases ReferredSukhdev v. Bhagat Ram (supra
Excerpt:
- g.n. ray, j.1. these three rules are directed against orders passed by the chairman-cum-managing director, national textile corporation (west bengal, assam, bihar and orissa) ltd. terminating the services of the petitioners. as some common questions of law and fact are involved in all these rules, for the purpose of deciding the question of maintainability of the writ petitions at the instance of the respective petitioners, the above three rules have been taken up for hearing analogously and if the writ petitions are held maintainable the rules may be heard separately for assessment of the respective cases of the petitioners on merits. it is contended by the petitioners in all these rules that such terminations were made arbitrarily, capriciously and without giving the petitioners any.....
Judgment:

G.N. Ray, J.

1. These three Rules are directed against orders passed by the Chairman-cum-Managing Director, National Textile Corporation (West Bengal, Assam, Bihar and Orissa) Ltd. terminating the services of the petitioners. As some common questions of law and fact are involved in all these Rules, for the purpose of deciding the question of maintainability of the writ petitions at the instance of the respective petitioners, the above three Rules have been taken up for hearing analogously and if the writ petitions are held maintainable the Rules may be heard separately for assessment of the respective cases of the petitioners on merits. It is contended by the petitioners in all these Rules that such terminations were made arbitrarily, capriciously and without giving the petitioners any opportunity of being heard and without drawing any disciplinary proceeding against the respective petitioners. The petitioners contend that the petitioners are permanent employees and as such their services cannot be terminated arbitrarily and without starting any disciplinary proceeding.

2. Mr. Parthasarathi Sengupta, the learned Counsel appearing for the - National Textile Corporation Limited has raised a preliminary objection as to the maintainability of the writ petitions and has contended that the decision on the preliminary point is essentially necessary and it will not be proper to go into the merits of the cases because if the writ petitions are not maintainable in law and the petitioners are not entitled to get any relief whatsoever in the writ jurisdiction of this Court, the consideration of the cases on merits will be an exercise in futility. The learned Counsel appearing for the petitioners have, however, seriously disputed the said contention of Mr. Sengupta and have contended that it will be desirable to hear the matters both on the preliminary point and also on merits so that the Appeal Court may get the views of the trial Judge both on merits and also on the preliminary objections raised on behalf of the respondents. I was initially inclined to hear the writ petitions also on merits, but Mr. Sengupta has very strongly contended that the preliminary objections raised in the instant cases should be decided at the first instance so that there may not be any occasion for the Court to hear at length the merits of three different writ petitions involving different questions of fact and waste its valuable time. In the aforesaid facts and circumstances, the preliminary objections raised on behalf of the respondent have been taken up for consideration at the first instance. Mr. Sengupta, the learned Counsel for the Respondent National Textile Corporation Ltd., has contended that the National Textile Corporation Limited is a Government Company. The said company has been formed after some of the Textile Units had been nationalised by the Sick Textile Undertakings (Nationalisation) Act, 1974. Mr. Sengupta submits that the said National Textile Corporation Limited may be a 'State' within the meaning of Article 12 of the Constitution of India because of the instrumentality or the agency of the Government, but the provisions of Part II of the Constitution of India and also the provisions of Article 311 of the Constitution are not attracted to the company or to a 'State' within the meaning of Article 12 of the Constitution if the same is not State in its ordinary connotation. For this contention, Mr. Sengupta has referred to a Bench decision of the Patna High Court made in the case of Chairman, Bihar State Road Transport Corporation v. Dharmendra Nath Gupta reported in 1978 Lab. I.C. 1633. It has been held in the said decision that 'State' under Article 12 of the Constitution includes other authority for Part III. The provisions under Article 311 will not apply to the 'State' within the meaning of Article 12 if it is not a State constituting Federation or Union of States comprising Union of India. Mr. Sengupta has contended that an order of reinstatement of an employee can be passed only under three circumstances. If a statutory body violates any statutory provision relating to service conditions of an employee, then any order of termination of service passed in contravention of such statutory provisions becomes illegal and unenforceable in law and on that score alone, an order of reinstatement can be passed by a Court and/or by this Court in its constitutional writ jurisdiction. Similarly for violation of Article 311 of the Constitution in case of Govt. servant, an order of reinstatement may be made. Save as aforesaid, an Industrial Tribunal or Labour Court may also pass an order of reinstatement in certain cases. Mr. Sengupta has also contended that in all cases, ipso facto violation of a statutory provision does not entitle the person aggrieved to enforce statutory rights under the constitutional writ jurisdiction. If the statutory provision is incorporated in a contract between the parties then the statutory provisions become part of the terms of the contraband for specific performance of such contract, the High Court shall not entertain an application under Article 226 of the Constitution. Mr. Sengupta has contended that the petitioners have pleaded illegal termination of their contracts of service. Accordingly for enforcement of the contractual obligation the writ petition is not maintainable. For this contention, Mr. Sengupla has referred to a decision of the Supreme Court made in the case of Divisional Forest Officer v. Biswanath Tea Co. Ltd. reported in : [1981]3SCR662 . It has been held in the said decision that a statutory provision if incorporated in a lease or contract will lose its statutory powers and will become a part of the terms of the lease and the High Court in such circumstances, in the exercise of its extraordinary jurisdiction under Article 226, will not entertain petition either for specific performance or for damages. Mr. Sengupta has also contended that Article 311 of the Constitution has no manner of application to the servants of the private companies or the Government companies and for this contention, he has referred to a decision of the Allahabad High Court made in the case of New India Assurance Co. Ltd. v. R.N. Chaturvedi reported in 1978 Lab. I.C. 1349. It has been held in the said decision that Article 311 does not apply to servants of companies even though they may be Government companies or companies controlled by the Government. Mr. Sengupta has contended that reinstatement can be made under Article 311 of the Constitution if the dismissal or removal of a Government servant offends the said Article 311 and/or if an Industrial Tribunal or Court passes an order for reinstatement in some specific cases. Save as aforesaid, a personal service cannot be enforced even if the dismissal or removal is made in breach of the terms of the contract. Even in cases of public bodies, namely statutory corporations or other public institutions set up under a statute, the employees of such Corporations and/or organisations are not protected by the provisions of Article 311 of the Constitution. In this connection, Mr. Sengupta has referred to the Bench decision of the Bombay High Court made in the case of N. Fakirbhai Patel v. Reserve Bank of India reported in 1979-I L.L.J. 163. The Bombay High Court has held in the said decision that Article 311 of the Constitution is not attracted in cases of employees of the Reserve Bank of India because such employees do not hold any civil post under the statute. He contends that similar view has also been expressed by different High Courts in respect of employees of State Bank of India Mr. Sengupta has, therefore, contended that the service condition of the petitioner not being controlled by any statutory provisions and the concerned employees not holding any civil post, the orders of dismissal or removal, even if the same have violated the terms and conditions of service, cannot be challenged in the constitutional writ jurisdiction of this Court and the petitioners are also not entitled to ask for specific performance of such personal contract.

3. Mr. N.C. Chakraborty, the learned Counsel appearing for the petitioner in Civil Rule No. 56(W) of 1981 has contended that employees of the Statutory corporation and/or Government Companies and other statutory bodies cannot be equated with employees of the private concern and even assuming that they do not hold any civil post under any statute, the statutory corporations, the Government companies and other public bodies are under an obligation to enforce the rules and/or norms framed or set by them relating to service conditions of their employees and if any order of dismissal or removal is made in contravention of such rules or norms, the employee can make an application under Article 226 of the Constitution and ask for cancellation of the said order passed in breach of such rules and/or norms. In this connection, Mr. Chakraborty has referred to a decision of the Supreme Court made in the case of Calcutta Dock Labour Board v. Jaffar Imam reported in 1965-II L.L.J. 112. For violation of the provisions of the Calcutta Dock Workers (Regulation of Employment) Schemes, a writ petition was moved by the aggrieved employees and the Supreme Court held in the said decision that the writ petition was maintainable for enforcement of the breach of the provisions of the said scheme. Mr. Chakraborty has also referred to a decision of the Supreme Court made in the case of Sirsi Municipality v. C.K. Francis Tellis reported in 1973-I L.L.J. 226. The Supreme Court has also held that a writ petition is maintainable for violation of the rules framed in exercise of the powers conferred on the Municipality by the statute. Reliance has also been made by Mr. Chakraborty to the decision of the Supreme Court made in the case of Sukhadev Singh v. Bhagatram Sardar reported in 1975-I L.L.J. 399. It has been held in the said decision that employees of the Oil and Natural Gas Commission, Life Insurance Corporation of India. The Finance Corporation of India are employees of the statutory bodies and are entitled to a declaration against their dismissal if such orders of dismissal or removal are in contravention of statutory provisions although such employees are not servants of the Union or the State Government. Mr. Chakraborty has also referred to a bench decision of this Court made in the case of M.N. De v. B.N. Mukherjee reported in (1974) 78 Cal W.N. 100. The Division Bench of this Court has held in the said decision that a petition under Article 226 of the Constitution is maintainable; although the source of the right was initially a contract, the party injured by the breach of such contract by arbitrary and unlawful action on the part of the public authority invested with statutory powers is entitled to file a writ petition and his remedy is not confined to a suit. Mr. Chakraborty has relied on a decision of the Supreme Court made in the case of Managing Director, U.P. Warehousing Corporation v. Vijay Narayan Vajpayee reported in 1980-II L.L.J. 222. The Supreme Court has observed in the said case that the authority of the rule that an employee of a statutory body even if it be owned and managed by the Government does not enjoy the statutory status appears to have been eroded by the later decisions of the Supreme Court, particularly by the pronouncement in Sukhdev Singh's case (supra). Mr. Chakraborty has also strongly relied on a later decision of the Supreme Court made in the case of Som Prakash Rekhi v. Union of India reported in 1981-I L.L.J. 79. It has been held in the said decision that if the statutory corporation, body or other authority is an instrumentality or agency of the Government, it would be an 'authority' and therefore 'State' within the meaning of Article 12 of the Constitution and as such is subject to the same constitutional limitations as Government. The Supreme Court has further observed in the said decision the commensense signification of the expression 'other authorities under the control of the Government of India' is plain and there is ho reason to make exclusions on sophisticated grounds such as that the legal person must be a statutory corporation, must have power to make laws, must be created by and not under a statute and so on. Mr. Chakraborty has, there-tore, contended that if without holding any departmental enquiry or giving any opportunity to the concerned employee, the employee of a public body or statutory corporation is dismissed or removed from service, such employee has certainly a right to ask for quashing the said order of dismissal or removal in the constitutional writ jurisdiction of this Court, Mr. Chakraborty has also contended that as a matter of fact, the writ petition by an employee suspended by the National Textile Corporation of India, namely, the employer in the instant Rules, has been entertained by this Court and in support of his contention he has referred to a decision of this Court made in the case of Surendra Nath Banerjee v. Union of India reported in (1981) 85 Cal W.N. 51. This Court has specifically held that a writ petition by a suspended employee of the National Textile Corporation is maintainable.

4. Mr. Samir Mukherjee, the learned Counsel appearing for the petitioner in the Civil Rule No. 10396 (W) of 1980 has also supported the argument of Mr. Chakraborty appearing in the other Civil Rule and has also contended that if a procedure has been laid down by a public body for regulating the conditions of service of its employees it is immaterial if such procedure or rule is statutory or not. He also contends that although the source of right may be a contract even then against an unjust action of a public body invested with statutory rights, a writ petition is maintainable and for this contention, he refers to the decision of the Supreme Court made in the case of Divisional forest Officer, South Khery v. Ram Sanehi reported in : AIR1973SC205 . Mr. Mukherjee has also relied on some of the observations of the Supreme Court made in the case of Ramana Dayaram Shetty v. The International Air Port Authority of India reported in 1979-II L.L.J. 217 to the effect that public bodies cannot act arbitrarily and in contravention to norms or rules of procedure laid down by them.

5. Mr. Majumdar, the learned Counsel appearing for the petitioner in Civil Rule No. 8515 (W) of 1980 has also adopted the arguments advanced by Mr. Chakraborty and Mr. Mukherjee and he strongly relied on the observation made by the Supreme Court in the cases of Som Prakash Rekhi v. Union of India (supra) and Sukhdev Singh v. Bhagatram Sardar (supra). Mr. Majumdar has contended that when the Government is gradually entering the field of trade and other commercial activities by forming statutory corporations and/or Government Companies, it will be improper and illegal to keep such employees out of bound of the writ jurisdiction of this Court simply on the ground that the employees of such Corporation or agencies of the Government are not Government employees in its ordinary sense and the rules framed by such public bodies for controlling the service conditions of their employees are not statutory rules.

6. Mr. Sengupta, however, in reply to the said contentions of Mr. Chakraborty, Mr. Mukherjee and Mr. Majumdar, has contended that the Supreme Court has not expressly held in any of the decisions that a writ petition is maintainable for enforcing a contract qua contract. Mr. Sengupta has also contended mat the decisions relied on by the learned Counsel appearing for the respective petitioners can be distinguished from the facts and circumstances involved in the instant writ petitions. Referring to the decision of the Dock Labour Board's case (supra) relied on by Mr. Chakraborty, Mr. Sengupta has contended that in the said case, the statutory body, viz., Dock Labour Board framed statutory rules and for infringement of such statutory rules the writ petition was held maintainable, but in the instant case, the National Textile Corporation has not framed any rule in exercise of its statutory power for governing the service conditions of the petitioners. Referring to the decisions of the Supreme Court made in the case of Divisional Forest Officer, South Khery (AIR 1973 SC 205) Mr. Sengupta has contended that an improper exercise of power by a public body in the threshold of a contract was challenged on the ground of arbitrariness and violation of norms laid down by such public bodies. In the said case, the contract was not entered upon and as such there was no occasion for the Supreme Court to decide that even for the enforcement of the term of contract qua contract, the intervention by the writ Court was called for, Mr. Sengupta has contended that at the very threshold of contract or at the time of entry into the field of consideration of person with whom the Government can contract, the State, no doubt, acts purely in its executive capacity and at the same time bound to act reasonably and fairly and without discrimination but after the State or its agents have entered into the field of ordinary contract, the rules arc-no longer governed by the constitutional powers but they become matters of contract inter se. When the dealings enter into the realm of contract, the question of violation of Article 14 or any other constitutional provisions does not arise. Mr. Sengupta has contended that in the matter of appointment and/or dealing with the private individual, the public bodies and/or the statutory corporations are required to act fairly and reasonably and any arbitrariness in the dealings of such public bodies can certainly be questioned as violation of equality guaranteed under Article 14 of the Constitution, but when a contract is entered between such public body and an individual, it goes into the realm of contract and for enforcement of such contract, the constitutional writ jurisdiction cannot be availed of. He contends that the employees, namely, the petitioners in the instant Rules, are not governed by any statutory rules framed for the purpose of governing the service conditions of the said employees, but the public bodies have offered certain terms of service and the petitioners on acceptance of such terms, have entered into the service. The service conditions of such employees, therefore, are matters of contract and breach of such contract cannot be enforced in the writ jurisdiction. Referring to the Sirsi Municipality's case relied on by Mr. Chakraborty (supra), Mr. Sengupta has contended that the decision made in the said case can also be distinguished. In the aforesaid case, the Supreme Court has highlighted that if a statutory body frames rules under the powers given by the statute, then such rules also limit the powers of the statutory body. In the instant case, there is no provision empowering the National Textile Corporation authorities to frame rules for governing the service conditions of its employees and as such there is no occasion for violation of any statutory rules or regulations. Mr. Sengupta has also contended that in Sukhdev Singh's case (supra), the Supreme Court has noted that the statutory bodies had authority to frame rules and regulations for governing the service conditions of the employees and when such statutory bodies are required to frame rules and regulations, such rules and regulations will also have the force of law and their employees must be held to have a status and they can complain against dismissal or removal in breach of such statutory provisions. Accordingly, the said decision is not applicable to the facts and circumstances of the instant rules. Referring to the decision of the Supreme Court made in U.P. Warehousing Corporation's case (supra), Mr. Sengupta has contended that in that case also the regulation framed by the statutory body gave employees of such statutory body a status and it was held by the Supreme Court that the statutory bodies were bound by the regulation framed by them in exercise of statutory powers and they had no free hand in framing any other condition of service. Referring to para 14 of the said decision, Mr. Sengupta has contended that Regn.16 was on the anvil requiring to comply with certain formalities and procedures and as such Regn.16 was framed in exercise of the statutory powers to frame regulation. It was only in such circumstances when statutory Regn.16 was on the anvil, a departure from the procedure referred to in Regn.16 was not allowed by the Supreme Court and a complaint of violation of such procedure was entertained in the writ jurisdiction. Mr. Sengupta has contended that Supreme Court in U.P. Warehousing Corporation's case has not laid down any broad proposition of law that any breach of contract of service by a public body will amount to breach of statutory provision thereby enabling the person aggrieved by such violation to maintain a writ petition. Mr. Sengupta has submitted that such broad proposition was not laid down by the Supreme Court will be apparent from the fact that to uphold the maintainability of the writ petition in U.P. Warehousing Corporation's case the Supreme Court had to refer to the said Regn.16, Mr. Sengupta has also referred to the decision of this Court made in the case of M.N. Dey (supra) and he contends that in that case also this Court has not held that a pure and simple term of contract between a public body and an individual can be enforced in the constitutional writ jurisdiction. In the said decision, after the nationalisation of the Calcutta National Medical College, all existing terms of contract gained a statutory protection and for enforcing such statutory protection on a complaint of breach of such contract a writ petition was moved before this Court and only under such circumstances, the writ petition was held to be maintainable. Referring to the decision of the Supreme Court made in the case of Som Prakash Rekhi (supra), Mr. Sengupta has contended that the said decision can also be distinguished from the facts and circumstances of the instant rules. In Som Prakash Rekhi's case, the Supreme Court has protected the right of the employee of the Bharat Petroleum Corporation Ltd. to get pension and gratuity because the obligation of the Bharat Petroleum Corporation Ltd., a public body, to pay pension and gratuity was a statutory obligation and having regard to Section 10 of the Burmah Shell (Acquisition of Undertakings in India) Act, such statutory obligation to pay pension and gratuity and the statutory continuation of a pre-existing liability to pay pension etc. could not have been avoided by the said corporation. Referring to the decision of this Court made in Surendra Nath Banerjee's case (supra), Mr. Sengupta contends that in the said decision, this Court has decided that the National Textile Corporation in a 'State' within the meaning of Article 12 of the Constitution and the conditions of service of the employees before the undertakings were taken over, were protected by the Act itself. The employees in the instant case were not employees prior to the taking over of the undertakings but they became employees of the National Textile Corporation after the same was formed. Their service conditions were not framed under any statutory provisions. Accordingly their service conditions remained in the realm of contract. Mr. Sengupta has also submitted that the International Airport Authority's case (supra) has not decided the issues raised in the instant case, namely, whether or not for enforcing a pure and simple term of contract not having any sanctity under any statute an application in the constitutional writ jurisdiction of the High Court is maintainable. In this connection, Mr. Sengupta has also referred to a decision of this Court made in the case of Reserve Bank of India Employees Association v. Union of India reported in 1979 (1) Cal LJ 513. It has been held in the said decision that if a statutory body is acting in a private and contractual capacity, the reliefs under the writ jurisdiction cannot be attracted. The Court has held that Reserve Bank of India (Staff) Regulations, 1948 has no statutory force but it remains in the realm of contract accepted and agreed upon by the employer and the employees. Mr. Sengupta has also relied on a decision of the Supreme Court made in the case of Lekh Raj Khurana v. Union of India reported in : [1971]3SCR908 . A five Judges' Bench of the Supreme Court has held in the said decision that non-applicability of the rules of natural justice in the absence of protection under Article 311 cannot be questioned under the general law of master and servant.

7. Mr. Chakraborty, after the aforesaid reply of Mr. Sengupta has also added with the leave of the Court that the principle of natural justice is applicable to all public bodies and non-observance of the principle of natural justice can be complained in the writ jurisdiction so far as the public bodies are concerned. For this contention, he has relied on a decision of the Supreme Court made in the case of S.L. Kapoor v. Jagmohan reported in : [1981]1SCR746 . In the said decision, the Supreme Court has held that although opportunity of hearing as provided for in Section 16 of the Punjab Municipal Act has not been expressly given in 5.238(1) of the Punjab Municipal Act empowering the concerned authority to supersede a Municipal Committee before its full term, the principle of natural justice is still attracted and as the Municipal Committee has certainly right to serve for the complete term unless superseded, the principle of audi alteram partem is applicable before taking any action of supersession under Section 238(1) of the Punjab Municipal Act. Mr. Mukherjee has also, with the leave of the Court, relied on an unreported decision of the Madhya Pradesh High Court made in the case of Yog Raj Sachdeva v. National Textile Corporation (M.P.) Ltd. Misc. Petition No. 144 of 1980. In the said decision, the termination of service of the petitioner Yog Raj Sachdeva came up for consideration before the Madhya Pradesh High Court and it appears that the said Yog Raj Sachdeva was appointed as a Spinning Master in Kalyanmal Mills Limited and he was confirmed in the said Mills. Thereafter, under the Sick Textile Undertaking (Nationalisation) Ordinance, 1972 which was eventually replaced by the Sick Textile Undertaking (Taking over of Management) Act, 1972, the said Kalyanmal Mills Limited vested in the Central Government and ultimately became an unit of the National Textile Corporation (M.P.) Limited. It appears that the petitioner was subsequently transferred as the Production Manager of the New Bhopal Textiles Limited and thereafter was transferred on promotion to Hira Mills as its General Manager. On 1st of April, 1976, the National Textile Corporation (M.P.) Ltd., Bhopal brought into force the 'National Textile Corporation (Madhya Pradesh) Limited Employees Conduct, Discipline and Appeal Rules, 1976. The appointment of the petitioner as General Manager, Hira Mills being for a period of 5 years, terminable by a three months' notice on either side, the petitioner objected to the said condition. The petitioner was thereafter transferred to Swadeshi Cotton & Flour Mills, Indore, but the service condition of the petitioner remained unchanged and the petitioner received a letter and along with it a pro forma of option was sent to him asking the petitioner to exercise option within one week from the date of the receipt of the letter. It was stated in the said letter that in case the option was not received within the prescribed period, the petitioner would be deemed to have elected to be governed by the revised scale of pay on and from 1st October, 1979. It was also stated that the petitioner could also be governed by the rules, regulations and other service conditions prescribed and presently applicable to the employees of the Corporation and as amended/altered/revised from time to time. The petitioner sent the proforma duly filled stating therein that he had agreed to exercise the option that after electing the National Textile Corporation's scale, he should be governed by the rules, regulations and other service conditions of the Corporation. Thereafter, by an order dated 6th/7th June, 1980, the petitioner's service was terminated by giving a crossed cheque of three months' payment in lieu of 3 months' notice and the legality and authority of the said order was challenged before the Madhya Pradesh High Court. It was contended that the National Textile Corporation being a company incorporated under the Companies Act, was not amenable to writ jurisdiction and the service of the petitioner being contractual, and not statutory, his remedy did not lie in the writ jurisdiction and even after exercising the option, the service conditions of the petitioner remained contractual in character and the petitioner had no right to continue in the service. The Madhya Pradesh High Court has held that under Section 16 of the said Sick Undertakings (Nationalisation) Act, 1974, every person referred to in Sub-section (1) and Sub-section (2) of Section 14 shall, where any sick textile undertaking or any part thereof is transferred under the said Act to a Subsidiary Textile Corporation, on and from the date of such transfer, become an employee of the Subsidiary Textile Corporation and the provisions of Sections 14 and 15 shall apply to such employees as they apply to an employee of the National Textile Corporation. Section 14 of the said Act provides that every person who is not a workman within the meaning of the Industrial Disputes Act, 1947 and who has been, immediately before the appointed day, employed in a Sick Textile Undertaking shall, in so far as such person is employed in connection with the Sick Textile Undertaking which has vested in the National Textile Corporation, become as from the appointed day, an employee of the National Textile Corporation and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matter as he would have held the same under the Sick Textile Undertaking if it had not vested in the National Textile Corporation and shall continue to do so unless and until his employment in the National Textile Corporation is duly terminated or until his remuneration, terms and conditions of employment are duly altered by the National Textile Corporation. The Madhya Pradesh High Court has held in the said decision that the petitioner was a person falling within Sub-section (2) of Section 14 read with Section 16 of the said Act. The Madhya Pradesh High Court has also held in the said case that the order of termination of the service of the petitioner was solely based on the condition of 3 months' notice but such condition of service as referred to in Annexure 'J' stood superseded with the exercise of the option by the petitioner. Accordingly, the impugned order was illegal and not authorised by law as envisaged by Section 16 read with Section 14(2) of the said Act of 1974. In para 9 of the said decision, the Madhya Pradesh High Court has made an observation to the following effect:

Before parting with this order, this is to be stated that although in the Return, the respondent has set out a plea that the petitioner's petition cannot be entertained under Article 226 of the Constitution of India, yet in view of the ratio of 1975-I L.L.J. 399 Sukhdev Singh v. Bhagatram 1979-II L.L.J. 217 Ramana Dayaram Shetty v. LA. Authority of India 1980-II L.L.J. 222 U.P. Warehousing Corporation v. Vijay Narayan Vajpayee 1981-I L.L.J. 79 (Som Prakash v. Union of India); and 1981-I L.L.J. 103 (Ajay Hasia v. Khalid Mujib), Mr. Chafekar, the learned Counsel for the respondent stated not to press the plea on the point.

It also appears that a special leave petition against the said decision of the Madhya Pradesh High Court was dismissed by the Supreme Court but the Supreme Court has not given any independent judgment on merits.

8. Mr. Majumdar, the learned Counsel appearing for the Petitioner in Civil Rule No. 8515 (W) of 1980 has also added later on that in U.P. Warehousing Corporation's case (supra), Mr. Justice Chinappa Reddy has observed that some element of public employment is all that is necessary to take the employee beyond the reach of the Rule which denies access to a Court to enforce a contract of employment and denies him the protection of Articles 14 and 16 of the Constitution. Mr. Sengupta in reply to the aforesaid further submissions of the learned Counsel for the petitioners has contended that S.L. Kapur'a case (supra) relied on by Mr. Chakraborty can be distinguished in the facts of the instant case. In the said decision, the supersession of a Municipal Committee before the full term without giving them any opportunity of being heard was held to be violative of principle of natural justice and there was no occasion for the Supreme Court to consider the enforcement of contractual rights. Mr. Sengupta has also contended that the decision of the Madhya Pradesh High court relied on by Mr. Samir Mukherjee appearing for the petitioner in Civil Rule No. 10396 (W) of 1980 can also be distinguished. In the said decision, the Madhya Pradesh High Court set aside the order of dismissal on the ground that the order of dismissal violated the statutory provisions of Sections 14 and 16 of the said Act of 1974 and Madhya Pradesh High Court has not considered the question now being raised before this Court about the maintainability of the writ petition for enforcing the contractual obligation. He also submits that this question was not required to be considered by the Madhya Pradesh High Court because the learned Counsel for the respondent Mr. Chafekar, did not press the plea on the point in view of certain decisions of the Supreme Court referred to in para 9 of the judgment since quoted earlier. The Madhya Pradesh High Court has not made any observation of its own on the said decisions of the Supreme Court and has not also considered the question independently. Referring to the observation of Mr. Justice Chinappa Reddy in U.P. Warehousing Corporation's case (supra) since relied on by Mr. Majumdar appearing for the petitioner in Civil Rule No. 8515(W) of 1980, Mr. Sengupta has contended that the same was a general and passing observation made by Mr. Justice Chinappa Reddy, but the contention raised in the instant case by way of preliminary objection was not considered and decided by the Supreme Court in the said decision.

9. After hearing the learned Counsel for the parties and after giving my anxious consideration to the questions of law raised in the instant rules, it appears to me that previously the right of the employees serving under public institutions other than the Government were recognized in a limited way. The Supreme Court had earlier held that the rules framed by the statutory corporation were not statutory rules and for departure of such rules framed by the statutory bodies governing the service conditions of their employees, such employees could not come and complain against such departure in the constitutional writ jurisdiction of the High Court. The service conditions of the said employees still remained in the realm of contract and their remedy lay in damages. Later on, appreciating the growth of public undertakings involving large number of citizens, the Supreme Court has widened the scope of constitutional writ jurisdiction in the matter of employment of employees serving public bodies. In Sirsi Municipality's case (supra), the Supreme Court has pointed out that for departure of rules framed by the Municipality which is a statutory body in exercise of its rule making power an employee can come and complain against violation of such rules framed by such statutory bodies. The 'status' of employees of public bodies was given recognition in later decisions also and it is now a settled law that for violation of rules and regulations framed by the Public Bodies in exercise of statutory power, an employee of a public body can maintain a writ petition and order of reinstatement can also be passed if removal or dismissal of such an employee is passed in violation of the rules and regulations framed by such public bodies. Even then there is still another class of employee who though serve institutions which are instrumentalities and/or agencies of the Government their service conditions are not governed by any rules and regulations framed by such public bodies in exercise of power given to such public bodies under a statute. In such circumstances, the question still remains to be decided as to whether or not the employees of such public bodies also hold any status. In the instant case, the National Textile Corporation is undoubtedly a public body and an instrumentality of the Government and as such 'State' within the meaning of Article 12 of the Constitution. So far as the employees of the undertakings which were taken over by the Government and thereafter the management was transferred to the National Textile Corporation are concerned, they are protected because of the provisions of the Undertakings Act by which existing terms and conditions of service were protected. But there are some other class of employees of such Corporation who have not become employees of the Corporation because of the taking over of management of some of the Textile Units but such employees have been employed after the formation of the Corporation itself. The statutory protection of the employees coming under the management of the Corporation is not available to such employees. The petitioners are employees who have been appointed by the National Textile Corporation directly and they were not employees of the Textile Units, the management of which was taken over under a statute. It also appears that the Corporation has not yet framed any rule and regulation under any rule making power given under a statute regarding these employees. As a result, these employees are not governed by any rule and regulation governing their service conditions framed in exercise of any statutory provision and the terms and conditions of service of such employees are only domestic rules. In this context, a preliminary objection has now been raised on behalf of the National Textile Corporation Limited that such employees whose service conditions have not been framed in exercise of any power to frame rules and regulations governing the service conditions, under a statute and whose service conditions also have not been protected under any statute cannot enforce specific performance of the service contract by maintaining a writ petition before a High Court. Mr. Sengupta, in my view, has rightly contended that the Supreme Court and other Courts have so far held that the employees of the public bodies also hold a status when their service conditions are framed in exercise of some powers under a statute and for breach of such conditions of service, a writ petition is maintainable by such employees asking for specific performance of personal service. But it does not appear that expressly the Supreme Court has decided as yet a case where the service conditions of an employee of a public body is not governed by any provisions of statute or the service conditions have not been framed in exercise of any power under a statute to frame rules and regulations governing the service of such employees. Mr. Sengupta has rightly pointed out that in Sukhdev Singh's case (supra), the Supreme Court has considered a case when the public body had framed rules governing service conditions of its employees in exercise of a statutory power requiring such body to frame rules and regulations. The Supreme Court has, in this context held that the rules and regulations framed by the statutory bodies required to frame such rules and regulations, have the force of law and their employees have a statutory status and as such they can complain against dismissal or removal in breach of such statutory provisions. It, however, appears to me that the Supreme Court in recent judgments has given sufficient indications that it will not be proper to keep large number of employees now being employed in public undertakings out of pale of the writ jurisdiction simply on the score that their conditions of service are governed by domestic rules of contract between the parties. Some of the observations made by the Supreme Court in the case of International Airport Authority's case (supra) may be referred to in this connection. In para 13 of the said decision, the Supreme Court has observed to the following effect:

Now, it is obvious that the Government which represents the executive authority of the State, may act through its instrumentality or agency of natural persons or it may employ the instrumentality or agency of juridical persons to carry out its functions. In early days, when the government had limited functions, it could operate effectively through natural persons constituting its civil service and they were found adequate to discharge governmental functions, which were of traditional vintage. But as the tasks of the Government multiplied with the advent of the welfare State, it began to be increasingly felt that the framework of civil service was not sufficient to handle the new tasks which were often of specialised and highly technical character. The inadequacy of the civil service to deal with these new problems came to be realised and it became necessary to forge a new instrumentality or administrative device for handling these new problems. It was in these circumstances and with a view to supplying this administrative need that the public corporation came into being as the third arm of the Government.

In the said paragraph, the Supreme Court also quoted with approval the observation of Mr. Justice Mathew in the case of Sukhdev v. Bhagat Ram (supra) that such federal corporations would ex-hypothesi be agencies of the Government. The Supreme Court in para 14 of the decision in the International Airport Authority's case has specifically laid down that 'a Corporation may be created in one or two ways. It may be either established by a statute or incorporated under a law such as the Companies Act 1956 or the Societies Registration Act, 1860. Where a Corporation is wholly controlled by Government not only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of Government.' The Supreme Court in the said decision has also discussed at length the various steps by which the instrumentality or agency of the State Government can be found out. In para 20 of the said decision the Supreme Court has observed to the following effect:

Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance.

In Som Prakash Rekhi's case (supra) the Supreme Court has observed in para 37 of the said decision to the following effect:

The conclusion is impeccable that if the corporate body is but an 'instrumentality or agency' of Government, then Part III will trammel its operations. It is a case of quasi-governmental beings, not of non-State entities. We have no hesitation to hold that where the chemistry of the corporate body answers the test of 'State' above outlined, it comes within the definition in Article 12. In our constitutional scheme where the commanding heights belong to the public sector of the national economy, to grant absolution to governmental companies and their ilk from Part III may be perilous. The Court cannot connive at a process which eventually makes fundamental rights as rare as 'roses in December, ice in June,' as Lord Byron lamented in English Bards and Scottish Reviewers.

In para 40 of the said decision it has been observed to the following effect:

The finale is reached when the cumulative effect of all the relevant factors above set out is assessed and once the body is found to be an instrument or agency of Government, the further conclusion emerges that it is 'State' and is subject to the same constitutional limitations as Government.

In Som Prakash Rekhi's case (supra), the Supreme Court has observed that common sense significance of the expression 'other authorities under the control of Government of India' is clear and there is no reason to make exclusions on sophisticated grounds that legal person must be a statutory corporation, must have power to make law, must be created by and not under a statute and so on. Mr. Justice Chinnappa Reddy has also observed to the effect that some element of public employment is all that is necessary to take the employee beyond the reach of the Rule which denies access to a Court to enforce contract of employment and denies him the protection of Articles 14 and 16 of the Constitution. Even assuming that such observation was only a passing remark and not necessary for the decision of the case of Som Prakash Rekhi when the right of pension and gratuity had statutory protection, the obiter dictum of the Supreme Court must be taken note of with utmost respect and may also be considered as an answer to a proposition of law. It may be noted in this connection that in U.P. Warehousing Corporation's case (supra) the Regn.16 was not enforced at the relevant time but the same was only on the anvil. Prior to the enforcement of the said Regn.16 the condition of service undoubtedly remained a matter of contract between the parties but still then the Supreme Court has held that the Regulations framed by the statutory body gives its employees a status and the statutory body is bound by the Regulation and has no free hand in framing the condition of service. It has also been observed by the Supreme Court that the rules of natural justice require that the respondent should give a reasonable opportunity to the employee concerned to deny his guilt, to defend himself and to establish his innocence. It, therefore, appears that having held that U.P. Warehousing Corporation was a public body required to act in accordance with the rules and regulations framed by it governing the service conditions of its employees, it was not permissible to have a departure from such rules of service and to deny natural justice to its employees before taking any action. The observations of the Supreme Court quoted hereinbefore clearly indicate that the public body, which is a 'State' within the meaning of Article 12, cannot act arbitrarily and capriciously and it is bound to follow the principles of natural justice and such public body cannot be permitted to depart from the rules and regulations framed by it whether in exercise of any power under a statute or otherwise.

In my view, oven in the matter of contractual condition of service, a public body being a 'State' within the meaning of Article 12 cannot act arbitrarily or capriciously and/or dismiss or remove an employee at its sweet will. An employee of such public body can, therefore, maintain a writ petition to show that the action of such public bodies is illegal and violative of Articles 14 and 16 of the Constitution.

10. In the aforesaid circumstances, it cannot be contended that for removal or dismissal of service of the petitioners, a writ petition is not maintainable on the face of it and it cannot also be contended that in no circumstances, the petitioners can ask for specific performance of service contract or a mandate from this Court directing the employer to take back petitioners after quashing the order of dismissal or removal. If the petitioners can establish that the orders of dismissal or removal have been passed arbitrarily and without any reason and in violation of condition of service by which the employer is bound then, the writ Court can pass appropriate direction. It may be emphasised that the service contract of employees of a public body cannot infringe the fundamental right of such employees to have protection against arbitrariness and unequal treatment. The preliminary objection raised on behalf of the respondent company is, therefore, negatived and the Rules must be disposed of on merits. Let the Rules be placed for hearing on merits separately.


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