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Issues Involved:
I. Constitutionality of Rule 31(v) of the ITDC Conduct Discipline and Appeal Rules, 1978. II. Entitlement to reinstatement or compensation if the rule is unconstitutional. III. Appropriate amount of compensation in lieu of reinstatement. Detailed Analysis: I. Constitutionality of Rule 31(v) of the ITDC Conduct Discipline and Appeal Rules, 1978 The primary issue was whether Rule 31(v) of the ITDC Conduct Discipline and Appeal Rules, 1978, which allows termination of an employee by giving notice or payment in lieu thereof, is constitutional under Articles 14 and 16(1) of the Constitution of India. The court held that such a rule is unconstitutional as it is arbitrary and discriminatory. The rule allows termination without any rational ground, enabling the authority to act on whims, personal likes, and dislikes, or other prejudiced considerations. This violates the fundamental rights guaranteed under Articles 14 and 16(1), which ensure equality before the law and equal opportunity in public employment. The court cited previous judgments, including State Electricity Board v. D.B. Ghosh and Central Inland Water Transport Corporation Limited v. Brojo Nath Ganguly, where similar rules were struck down for being arbitrary and capable of vicious discrimination. II. Entitlement to Reinstatement or Compensation The court then addressed whether an employee whose services are terminated under an unconstitutional rule is always entitled to reinstatement. The judgment clarified that reinstatement is not an automatic consequence of declaring a termination void. For 'blue-collar' and 'white-collar' employees, reinstatement would generally be the rule, with compensation being an exception. However, for high-level managerial cadre employees, the court emphasized a broader perspective considering national interest and the success of public sector undertakings. The court acknowledged that public sector undertakings must not be compelled to retain personnel in whom they have lost trust or faith. Therefore, the court has the discretion to sculpt the relief, allowing the employer the option to pay reasonable compensation instead of reinstating the employee. III. Appropriate Amount of Compensation in Lieu of Reinstatement In determining the appropriate compensation, the court considered the appellant's claim for full salary and allowances until retirement, which was more than eight years away. The court found this unreasonable as it would result in a 'bonanza' rather than fair compensation. The court decided that compensation equivalent to 3.33 years' salary, including allowances based on the last drawn pay, would be reasonable. This amount, if invested at the prevailing interest rate, would yield 50% of the appellant's annual salary and allowances, providing financial security without working. Additionally, the appellant could seek other employment, and the corpus of the lump sum would remain intact. The court directed the respondent corporation to either reinstate the appellant with full back wages or pay the compensation as determined, along with provident fund and retirement benefits. Conclusion The court declared Rule 31(v) of the ITDC Conduct Discipline and Appeal Rules, 1978, unconstitutional and void. It provided the respondent corporation with the option to either reinstate the appellant with full back wages or pay compensation equivalent to 3.33 years' salary. The court also addressed the tax implications of the lump sum payment and directed the corporation to assist the appellant in obtaining relief under Section 89 of the Income-tax Act. The appeal was allowed, and the High Court's order was set aside.
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