Punjab-Haryana High Court
Central Bank Of India And Others vs Manmohan Singh on 9 January, 2013
Author: Surya Kant
Bench: Surya Kant
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
Letters Patent Appeal No.2222 of 2011(O&M)
Date of Decision : January 09, 2013
Central Bank of India and others .....Appellants
versus
Manmohan Singh .....Respondent
CORAM : HON'BLE MR.JUSTICE SURYA KANT.
HON'BLE MR.JUSTICE R.P.NAGRATH.
Present : Mr.Aalok Jagga, Advocate, for the appellants.
Mr.Satya Pal Jain, Senior Advocate, with
Mr.Dheeraj Jain and Mr.Vijay Kumar Chaudhary, Advocates,
for the respondent.
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1. Whether Reporters of Local papers may be allowed to see the
judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
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Surya Kant, J. (Oral)
This letters patent appeal has been preferred by the Central Bank of India against the order dated 19.7.2011 passed by learned Single Judge allowing the respondent's writ petition in part to the extent that he has been awarded lump-sum compensation of Rs.4.0 lacs.
2] The facts may be noticed briefly. 3] The appellant-bank engaged the respondent as a Collection
Agent under the 'Central's Mini Deposit Scheme' and a formal agreement to this effect was executed between the parties on 30.08.1980 (Annexure P-1), Clause-1 whereof is to the following effect:-
"...1. The Agency shall commence from the date of execution of these presents and shall continue to remain in force until terminated by the bank at its discretion without any notice and/or without assigning any reason LPA No.2222 of 2011 (O&M) [2] and by the authorized collection agent giving 3 months' notice of his intention to terminate this agreement...."
4] The respondent continued to work for the appellant-Bank till the year 1996 without any interruption and the amounts collected and deposited by him during those years are mentioned by the learned Single Judge in para No.6 (year-wise) of the order under challenge. It does appear that the respondent's contract was not renewed after the year 1996 though it was never suspended or terminated as is evident from the following extracts of a communication dated 20.10.1998 (Annexure P2) sent by the Senior Manager of the appellant-bank to its Zonal Office:-
"...... We may further add that our branch has been computerized w.e.f. 11.07.1998 and the rain statement of services of CA will enable us for canvassing deposits from small depositors under CHDS Scheme. The re-introduction of CHDS Scheme will bring a large number of clientele in context with our branch after which they will certainly be attracted to Bank with us for other facilities also.
We again recommend that we may be permitted to allow Sh.Manmohan Singh ACA to resume work of collection of CHDC AICS whose Agency has not yet been suspended......"
5] It further appears that since the respondent was not permitted to work as Collection Agent, he served a justice demand notice on the appellant-bank on 3.3.1990 (Annexure P-4) and in its reply dated 1.4.1999 (Annexure P-5) to the said justice demand notice, the bank came up with the following plea:-
".....In reply to para No.3, it may be submitted that the Agent created in favour of your client Manmohan Singh has since been terminated, your client has not right to continue with his work after the termination of Agency. The submissions made here in are therefore irrelevant....." (emphasis applied) LPA No.2222 of 2011 (O&M) [3] 6] The respondent immediate thereafter approached this Court challenging termination of his agency (in the year 1999) and as has been noticed at the outset, learned Single Judge has allowed the writ petition in part awarding a lump-sum compensation of Rs.4.0 lacs "for the unlawful termination of services in the manner done".
7] Learned Single Judge has held that:-
"..... An agency is terminable at will if there exists no interest in the subject matter of Agency. Section 202 of the Contract Act refers to an Agency which is coupled with interest and protects against unilateral termination of an agency who has an interest. The interest could be even minimal as in this case, the petitioner as an agent was entitled to a remuneration of 2% of the collections which he was making. The reliance on the provisions under the agreement allowing for termination without notice or the agent's undertaking not to dispute any action of the Bank cannot therefore avail and they must only be taken as inoperative, being oppressive and what is perceived by Courts in some of the cases, as Henry VIII clause. There could be no doubt that if the status of the petitioner as an agency would still be seen under the particular facts as in the position of a master and servant, the termination summarily without affording to the petitioner the protection which the Industrial Disputes Act, 1947 would provide, shall entitle the petitioner to contend that the termination was not valid in law......"
8] Having held so, learned Single Judge referred to the decision of Hon'ble Supreme Court in Indian Bank Association versus Workman of Syndicate Bank, (2001) 3 SCC 36 and took notice of the detail of collections made by the respondent from the year 1978 till 6.2.1996 and LPA No.2222 of 2011 (O&M) [4] the corresponding commission earned by him @ 2% on such collections. Learned Single Judge in penultimate paragraph concluded thus:-
"..... He had worked for at least 17 years in full and the form of termination as found expressed in the reply came about three years later. Going by the average income earned in the last year of his effective work, I am of the view that the appropriate compensation that could be granted to him would be Rs.4,00,000/- (50% of annual wages x No.of years of service) to fulfill all claims in lieu of the services which he demands by the petition. The amount of compensation is for the unlawful termination of services in the manner done. The same shall be paid by the respondents within a period of eight weeks from the date of receipt a copy of the order failing which the amount shall attract interest at the rate of 6% from the date of this order till the date of payment......"
9] Three-fold contentions have been raised on behalf of the appellant-bank. Firstly, it is argued that learned Single Judge ought not to have relied upon Section 202 of the Contract Act as the same could be invoked only "in the absence of an express contract". Since there was admittedly an express contract entered into between the parties on 30.8.1980 (Annexure P-1) and Clause-1 it expressly permitted the appellant-bank to terminate the respondent's Agency "at its discretion without any notice and/or without assigning any reason", hence Section 202 of the Contract Act was not attracted. Secondly, it is urged that the termination of respondent's agency could not be held to have violated provisions of the Industrial Disputes Act, 1947 as it was a case of non- renewal of contract within the meaning of Section 2 (oo) (bb) of the Act which does not amount to 'retrenchment', and thirdly if at all anything was admissible to the respondent, he could be held entitled to gratuity at LPA No.2222 of 2011 (O&M) [5] the rate of 15 days commission for each completed year of service as granted by the Hon'ble Supreme Court in Indian Bank Association's case (supra).
10] Mr.Satya Pal Jain, learned senior counsel for the respondent, on the other hand, submits at the outset that the respondent's Agency was never terminated by the appellant-bank as no notice or order terminating the Agency has been produced on record or sent to the respondent. He maintained that the compensation awarded by learned Single Judge is much less than what has been expressly approved by the Hon'ble Supreme Court in Indian Bank Association's case (supra) while dismissing the banks' appeals and upholding the award passed by Industrial Tribunal which was also approved by the jurisdictional High Court. He argued that the respondent served as Collection Agent for over 17 years and the bank, keeping the length of service in view, cannot be permitted to take shelter behind Clause-1 of the agreement which entitles the bank to terminate the agency unilaterally and without assigning any reason.
11] In our considered view, the appeal is devoid of any merit and must fail though for slightly modified reasons assigned hereinafter.
12] Section 202 of the Contract Act reads as follows:-
"202. Termination of agency where agent has an interest in subject matter:- Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest."
(emphasis applied) 13] Learned Single Judge though rightly observed to the extent that the respondent had an interest in the agency, hence it could not be terminated unilaterally to the prejudice of such interest, none-the-less the clause contained in Section 202 of the Act, i.e., "in the absence of an express contract" does give leverage to the bank. In the instant case, there LPA No.2222 of 2011 (O&M) [6] exists an express contract between the parties dated 30.8.1980 (Annexure P-1) which enables the bank to terminate the respondent's agency unilaterally and without assigning any reason. In view of Clause-1 of the agreement, it cannot be said in literal sense that Section 202 of the Contract Act was violated by the Bank.
14] However, the question whether Section 202 of the Contract Act was violated or not, in our considered view, does not arise for consideration. We say so for the reason that if a Statute or a binding agreement obligates the parties to act in a particular manner, such act must be performed in that manner only. Since the agency was created by way of an express written agreement it could be terminated by invoking Clause-1 but by passing a written order only. No such order was passed or conveyed to the respondent. Our conclusion to this effect is fortified by the communication sent by a senior functionary of the bank as late as on 20.10.1998 (Annexure P-2) wherein it is clearly recited that the respondent's agency had not been even suspended. The appellant-bank thus acted contrary to the binding agreement between the parties and prevented the respondent from performing his duties as a Collection Agent.
15] Assuming that, the reply to legal notice dated 1.4.1999 (Annexure P-5) sent by the appellant-bank amounts to termination of the respondent's agency, there can indeed be no quarrel that the respondent in that event shall be entitled to monetary benefits in terms of the Award dated 22.12.1988 passed by the Industrial Tribunal, the operative part whereof has been reproduced by the Hon'ble Supreme Court in para-4 of its report in Indian Bank Association's case (supra). While upholding that award, the jurisdictional High Court approved the directions of the Tribunal "regarding payment of full back wages, conveyance allowance, gratuity, etc....", as noticed by their Lordships in the following paragraph:-
"....Before the High Court it has been conceded that relief of being absorbed as regular staff of the banks in clerical cadre was not available to be granted. On LPA No.2222 of 2011 (O&M) [7] this concession the High Court set-aside the directions of the Tribunal to absorb the Deposit Collectors as regular staff. The High Court, however, upheld the other directions of the Tribunal regarding payment of full back wages, conveyance allowance, gratuity etc..."
16] It may also be profitable to refer the contents of the Tribunal's award dated 22.12.1988 as are hereby extracted from para-4 of the cited decision:-
"....All those Deposit Collectors and Agents who are below the age of 45 years on 3.10.1980 (the date of the first reference of this industrial dispute) shall be considered for regular absorption for the post of clerks and cashiers if they are matriculates and above including qualified graduates and postgraduates. They may be taken to banks services as regular employees if they pass the qualifying examinations conducted by the banks. Those who are absorbed shall be treated on a par with regular clerical employees of the Bank. Those who have qualified 8th class and below matriculations shall be considered for absorption as sub-staff by conducting qualifications examination.
As regards the Deposit Collectors and Agents who are above 45 years of age on the date 3.10.1980 and also those who are unwilling to be absorbed in regular banks service shall be paid the full back wage of Rs.750.00 per month linked with a minimum deposit of Rs.7500.00 per month and they should be paid incentive remuneration at 2% for collection of over and above 7500.00 per month and they should also pay uniform conveyance of Rs.50 per month for deposit of less than Rs.10,000.00 and Rs.100.00 per LPA No.2222 of 2011 (O&M) [8] month for deposits of more than Rs.10,000.00 up to or above Rs.30,000.00 per month they should be paid gratuity of 15 days' commission for each year of service rendered......"
17] A co-joint reading of the reproduced paragraphs leaves no room to doubt that not only the Deposit Collectors or Agents, like the respondent, were held entitled to full back wages for the period they were deprived to serve due to wrongful termination of their agencies, additional service benefits like gratuity, conveyance allowance etc. were also granted to them depending upon the age of such agents as on 3.10.1980 and the total deposits secured by them for their respective banks. In fact, 15 days' commission for each year of service was granted as an additional benefit to the Deposit Collectors or Agents, wherever it was admissible, subject to fulfillment of conditions. 18] Since the appellant-bank itself has come up with the plea that the agency of the respondent was terminated, there can be no escape but to hold that the respondent is entitled to the consequential service benefits as were granted and/or approved in the case of similarly placed agents by the Hon'ble Supreme Court in Indian Bank Association's case (supra).
19] We have also considered the lump-sum compensation determined by learned Single Judge, viz the Industrial Tribunal's award or the High Court directions approved in Indian Bank Association's case (supra). Keeping in view the following factors that; (i) the respondent served as a Collection Agent for over 17 years; (ii) his last earning in the year 1995 alone was about Rs.50,000/-; (iii) he was apparently more than 45 years old at the time of alleged termination of his agency; (iv) he promptly approached this Court in the year 1999 itself; (v) learned Single Judge has not awarded any interest to the respondent from the date of termination of his agency in the year 1990 onwards even after holding that his agency was illegally terminated; (vi) the compensation awarded by learned Single Judge is otherwise not on the higher side, that we do LPA No.2222 of 2011 (O&M) [9] not find any merit in this appeal which is accordingly dismissed with cost of Rs.10,000/-.
(SURYA KANT)
JUDGE
January 09, 2013 (R.P.NAGRATH)
Mohinder JUDGE