TMI Blog1975 (12) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... e Agra University and as a consequence thereof the College agreed to be governed by the provisions of the Agra University Act and the statutes and ordinances made thereunder. With the establishment of the Meerut University some time in the year 1965 the Vaish Degree College got affiliated to the Meerut University. The plaintiff/respondent was appointed as Principal of the College on permanent basis with effect from July 1, 1964 and his appointment as Principal was formally approved by the Vice-Chancellor of the Agra University. Two years later it appears that differences arose between the Executive Committee of the College and the plaintiff/respondent resulting in allegations and counter allegations and culminating in a notice served by the Executive Committee on October 24, 1966 on the plaintiff/respondent directing him not to discharge the duties of the Principal and another letter was sent to defendant No. 4 a member of the staff of the College to officiate as Principal in place of the plaintiff/respondent. This was fol lowed up by a counter-notice by the plaintiff/respondent to the Executive Committee that the notice sent to him was illegal and the respondent also asked defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statutory body and therefore was not bound by the statutes and the provisions of the University Acts although as a matter of convention it had agreed to follow the same. The defendant/appellant also denied the allegations of the plaintiff/respondent that the Executive Committee had entered into any agreement or contract of service with the plaintiff/respondent. The defendant further alleged that as the plaintiff/respondent remained habitually and perpetually absent from his duties without the permission of the concerned authority the defendant/appellant was compelled to dispense with the services of the plaintiff/respondent. In fact the plea taken by the defendant was that the plaintiff himself by his remaining perpetually absent from duties abandoned the service and had put an end to the contract of service and therefore he could not be heard to say that the contract of service still subsisted. The Trial Court of Munsif, Kairana, framed a number of issues and after considering the evidence and the circumstances, found-(i) that the plaintiff had failed to prove that he ever executed any agreement with the defendant/appellant; and (ii) that the defendant/appellant was not a st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udge decreeing the plaintiff's suit with the modification that the suit was decreed only against defendants 2, 4, 6 7 but dismissed as against defendants 1 5. Hence this appeal by special leave before us. Mr. Gupte learned counsel for the appellant submitted before us that it was not necessary to go into the complicated facts of the case, because he adumbrated three propositions of law before us which in his opinion were sufficient to decide the case. In the first place it was contended that the finding of the Full Bench which formed the basis of the judgment of the High Court appealed against that the defendant/appellant was a statutory body was legally erroneous; secondly the counsel submitted that even if the appellant was a statutory body as no agreement was executed between the respondent and the appellant the statutes passed by the University would not apply and the termination of the services of the respondent would be governed by the usual master and servant relationship; and thirdly, it was contended that it is well settled that the courts do not enforce a contract of personal service in the absence of special circumstances as laid by several decisions of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hagatram Sardar Singh Raghuvanshi Others this Court clearly pointed out as to what constitutes a statutory body. In this connection my Lord A. N. Ray, C.J., observed as follows: A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the statute. It is a body created in accordance with the provisions of the statute. It is, therefore, clear that there is a well marked distinction between a body which is created by the statute and a body which after having come into existence is governed in accordance with the provisions of the statute. In other words the position seems to be that the institution concerned must owe its very existence to a statute which would be the fountain-head of its powers. The question in such cases to be asked is, if there is no statute would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body, but if the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of convention bound to follow the statutory provisions of the Act would not clothe the Managing Committee with a statutory status or character. In fact the adoption of the statutes was agreed to by the appellant Executive Committee for the better governance, administration and extension of the educational activities of the institution. In fact an identical argument which forms the basis of the judgment of the Full Bench of the High Court had been advanced before this Court and rejected outright. For instance in Sabhajit Tewary v. Union of India ors the question was whether the Council of Scientific and Industrial Research which was a society registered under the Societies Registration Act, as the present appellant is, was a statutory body. It was urged that because the Council of Scientific and Industrial Research had government nominees as the President of the body and derived guidance and financial aid from the Government, it was a statutory body A. N. Ray, C.J., rebutted these arguments and observed as follows: The Society does not have a statutory character like the Oil and Natural Gas Commission, or the Life Insurance Corporation or Industrial Finance Corporation. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any of the rules. This is a case which is almost on all fours with the facts of the present case because there the case was whether the school after being recognised by the Government for the purpose of grant was bound to observe the rules. In Indian Airlines Corporation v. Sukhdeo Rai, it was observed as follows: The fact, therefore, that the appellant- Corporation was one set up under and was regulated by Act XXVII of 1953 would not take away, without anything more, the relation ship between it and its employees from the category of purely master and servant relationship. The Full Bench of the Allahabad High Court, however, appears to have placed great reliance on the decisions of this Court in Prabhakar Ramakrishna Jodh v. A.L. Pande Anr. where this Court held that the Governing Body of the College in that case was a statutory body. In this connection, this Court observed as follows: On the other hand, we are of opinion that the provisions of Clause 8 of the ordinance relating to security of the tenure of teachers are part and parcel of the teachers' service conditions and, as we have already pointed out, the provisions of the 'College Code' in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex-officio in the Managing Committee. There is, therefore, world of difference between the nature and manner of the establishment of the Governing Body under the University of Saugar Act and the Managing Committee in the instant case. Further more, this case was noticed and discussed by a later judgment of this Court in Vidya Ram Mishra v. Managing Committee, Shri Jai Narain College and was distinguished. Speaking for the Court, Mathew, J., observed as follows: When once this Court came to the conclusion that the 'College Code' had the force of law and conferred rights on the teachers of affiliated colleges, the right to challenge the order terminating the services of the appellant, passed in violation of clause 8(vi) (a) of the 'College Code' in a proceeding under Article 226 followed 'as the night the day` and the fact that the appellant had entered into a contract was considered as immaterial. * * * * On a plain reading of statute 151, it is clear that only provides that the terms and conditions mentioned therein must be incorporated in the contract to be entered into between the college and the teacher concerned. It does not say that the terms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the statutes of the Agra University Act. Thus in view of the decisions of this Court regarding the circumstances under which the institution can be treated as a statutory body we are unable to agree with the view taken by the Allahabad High Court that the Executive Committee was a statutory body merely be cause it was affiliated to the University or was regulated by the provisions of the University Act or the statutes made thereunder. We accordingly hold that the decision of the Full Bench of the Allahabad High Court on this point is legally erroneous and must be overruled. This brings us to the next point for consideration as to whether or not the plaintiff/respondent's case fell within the exceptions laid down by this Court to the general rule that the contract of personal service is not specifically enforceable. In this connection as early as 1964, in S.R. Tewari v. District Board, Agra and Anr., this Court observed as follows: 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. But this rule is subject to certain well recognized exceptions. It is open to the Courts in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here this Court observed as follows: The law as settled by this Court is that no declaration r to enforce a contract of personal service will be normally granted. The well recognised exceptions to this rule are (1) where a public servant has been dismissed from service in contravention of Art. 311; (2) where reinstatement is sought of a dismissed worker under the industrial law by labour or industrial tribunals; (3) where a statutory body has acted in breach of a mandatory obligation imposed by statute; In the Sirsi Municipality's case the matter was exhaustively reviewed and Ray, J., (as he then was) observed as follows: The cases of dismissal a servant fall under three broad heads, purely by contract of employment. Any breach of contract in such a case is enforced by a suit for wrongful dismissal and damages. Just as a contract of employment is not capable of specific performance similarly breach of contract of employment is not capable of founding a declaratory judgment of subsistence of employment. A declaration of unlawful termination and restoration to service in such a case of contract of employment would be indirectly an instance of specific performance of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of servant of the State or of local authorities or statutory bodies, courts have declared in appropriate cases the dismissal to be invalid if the dismissal is contrary to rules of natural justice or if the dismissal is in violation of the provisions of the statute. Assuming for the sake of arguments, but not deciding that this decision has extended the scope of the exceptions, so that the appellant Executive Committee though a non- statutory body will still be bound by the statutory provisions of law, let us see what is the position. It would appear that under s. 25-C (2) of the Agra University Act corresponding to similar provisions in Kanpur and Meerut Universities Act of 1965 which runs thus: Every decision by the Management of an affiliated college, other than a college maintained by Government, to dismiss or remove from service a teacher shall be reported forthwith to the Vice-Chancellor and subject to provisions to be made by the Statutes shall not take effect until it has been approved by the Vice- Chancellor. it was incumbent on the Executive Committee of the College to have taken the previous approval of the Vice-Chancellor before terminating the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make such a declaration. Further more under similar circumstances though the dismissal of the employee was by an authority which was not competent to dismiss him, namely, the Municipal Council, their Lordships of the Privy Council refused to grant the declaration in view of the peculiar facts and circumstances of the case which caused hardship. The Privy Council in A. Francis v. Municipal Councillors of Kuala Lampur(1) observed as follows: Accepting, however, the decision of the Court of Appeal, which, as has been pointed out, has not been the subject of any cross-appeal, the position on Oct. 1 was that the removal of the appellant was a removal by the council and not by the president. The council were his employers, but having regard to the provisions of the ordinance their termination of his service constituted wrongful dismissal. Their Lordships consider that it is beyond doubt that on Oct. 1, 1957, there was de facto a dismissal of the appellant by his employers, the respondents. On that date he was excluded from the council's premises. Since then he has not done any work for the council. In all these circumstances it seems to their Lordships that the appellant must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as follows: It must be remembered that the declaration claimed under s. 42 lies entirely within the judicial discretion of the Court and is to be exercised with caution according to the exigencies of a particular case. A party cannot, as of right claim such a declaration, because such a relief is more in the nature of an equitable relief than a legal remedy. It has been repeatedly held that a Court should be circumspect as to the declaration it makes, and futile declarations should be always avoided. Apart from these decisions it would appear that s. 20(1) of the Specific Relief Act clearly codifies this principle and may be extracted as follows: 20. (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. Similarly s. 34 of the Specific Relief Act also gives a discretion to the Court to give a declaration of the legal character. Section 34 runs thus: Any person entitled to any legal character, or to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) That consequent upon the declaration the appellant would have to pay a very huge amount running into a lakh of rupees or perhaps more as a result of which the appellant and the institution would perhaps be completely wiped out and this would undoubtedly work serious injustice to the appellant because it is likely to destroy its very existence. (4) It is true that the plaintiff/respondent is not at fault, but the stark realities, hard facts and extreme hardship of the case speak for themselves. (5) It appears that by virtue of the interlocutory orders passed by this Court, the appellant has already deposited ₹ 9,000/- before the High Court which was to be withdrawn by the respondent after giving security, and a further sum of ₹ 9,100/- being the salary of 13 months has also been deposited by the appellant before the Trial Court under the orders of this Court. It is also stated by counsel for the appellant that the appellant has deposited ₹ 3,000/- more. We feel that in the circumstances the respondent may be permitted to keep these amounts with him and he will not be required to refund the same to the appellant. The amount of deposit in the High Court, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination null and void so as to entitle the first respondent to a declaration that he continues in service or it amounted merely to a breach of contract giving rise to a claim for damages. Let me first examine this question on principle before turning to the decided cases. There are two distinct classes of cases which might arise when we are considering the relationship between employer and employee. The relationship may be governed by contract or it may be governed by statute or statutory regulations. When it is governed by contract, the question arises whether the general principles of the Law of Contract are applicable to the contract of employment or the law governing the contract of employment is a separate and sui generis body of rules. The crucial question then is as to what is the effect of repudiation of the contract of employment by the employer. If an employer repudiates the contract of employment by dismissing his employee, can the employee refuse to accept the dismissal as terminating the contract and seek to treat the contract as still subsisting ? The answer to this question given by general contract principles would seem to be that the repudiation is of no effect un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule of specific performance should be extended to such cases. I think the Courts are bound to be jealous, lest they should turn contracts of service into contracts of slavery; and therefore, speaking for myself, I should lean against the extension of the doctrine of specific performance and injunction in such a manner. This rationale obviously can have application only where the contract of employment is a contract of personal service involving personal relations. It can have little relevance to conditions of employment in modern large-scale industry and enterprise or statutory bodies or public authorities where there is professional management of impersonal nature. It is difficult to regard the contract of employment in such cases as a contract of personal service save in exceptional cases. There is no reason why specific performance should be refused in cases of this kind where the contract of employment does not involve relationship of personal character. It must be noted that all these doctrines of contract of service as personal, non-assignable, unenforceable, and so on, grew up in an age when the contract of service was still frequently a personal relation between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement on the basis that the repudiation is ineffective and the contract is continuing. That is in effect what happened in the case of McClalland v. Northern lreland General Health Service Board(1). The plaintiff's contract in this case was really one of master and servant, the only special condition being that her post had been advertised as permanent and pensionable and it provided specific reasons, such as gross misconduct and inefficiency, for which she might be dismissed. The defendant Board introduced a rule after her appointment that women employees must resign on marriage and since the plaintiff got married, the respondents terminated her service by giving what they thought was a reasonable notice. The plaintiff contended that the defendant Board was not entitled to terminate her service and claimed a declaration that the purported termination was null and void and she continued in service. The House of Lords held that the contract was exhaustive as regards the reasons for which the defendant-Board could terminate the service of the plaintiff and since none of those reasons admittedly existed, the termination of service of the petitioner by the defendant-Board was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been done, it was a nullity, from which the result followed that the respondent had continued in service. All that the Judicial Committee did in this case was to make a declaration of a statutory invalidity of an act, which is a thing entirely different from enforcing a contract of personal service. Where, for example, the termination is outside the powers of a statutory body either because the statutory body has no power to terminate the employment or because the termination is effected in breach of a mandatory obligation imposed by law which prescribes that the termination shall be effected only in a particular manner and no other, it would be a nullity and the employee would be entitled to ignore it and ask for being treated as still in service. such was the case in Life Insurance Corporation of India v. Sunil Kumar Mukherjee(3) where an order of termination of service of certain employee by the Life Insurance Corporation in breach of clauses 10(a) and 10(b) of an order passed by the Central Government under s. 11(g) of the Life Insurance Corporation Act, 1956, was held to be null and void on the ground that it was not effected in terms of clauses 10(a) and 10(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Reinstatement of a dismissed worker under Industrial Law or Labour or Industrial Tribunals. (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute. This statement of law was reaffirmed again by this Court in Indian Airlines Corporation v. Sukhdeo Rai (3) and Bank of Baroda v. Jewan Lal Mehrotra(4). Now, two questions immediately arise for consideration on this statement of law. The first is, what is the 'statutory body' contemplated in these decisions, and the second is, are the three exceptions formulated by this Court intended to be exhaustive ? When we are trying to understand what is the 'statutory body' which this Court had in mind when it laid down this statement of law, it must be remembered that a statement of law enunciated by this Court must be read in the light of the principle which it seeks to effectuate and it should not be construed as if it were a section. The third exception is intended to cover cases where by reason of breach of mandatory obligation imposed by law, as distinct from contract, the termination of service is null and void so that there is in law no repudiation at all. That is the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... til they were embodied in the contract between the principal or teacher on the one hand and the affiliated college on the other as in Vidya Ram Mishra v. Managing Committee, Shri Jai Narain Conege(3). I take the view that on the second part of the question the case of the first respondent is well founded. It was common ground between the parties that at the material time the Statute which was applicable to the appellant was the Kanpur and Meerut Universities Act, 1965. Section 28, sub-s. (3) of this Act declares that every decision by the management of an affiliated college to dismiss or remove from service a teacher shall be reported forthwith to the Vice-Chancellor and subject to the provisions contained in the Statutes shall not take effect unless it has been approved by the Vice-Chancellor. The language of this section is absolute and peremptory and leaves no doubt as to its meaning and effect. It provides in terms clear and unambiguous that the termination of service of a teacher by the management shall not take effect, that is, it shall be ineffective and inoperative unless the Vice-Chancellor on being informed has approved of it. When this section, which is a law made by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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