Calcutta High Court
Asim Talukdar vs Axis Bank Ltd. & Ors on 11 April, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
ORIGINAL SIDE
Present:
The Hon'ble Justice Krishna Rao
CS 64 of 2011
Asim Talukdar
Vs.
Axis Bank Ltd. & Ors.
Mr. Rupak Ghosh
Mr. Debmalya Ghosal
Mr. R.K. Basu
... for the plaintiff.
Mr. Jayanta Mitra, Sr. Adv.
Mr. S.P. Majumder
Mr. A.K. Seal
Mr. A.K. De
Ms. Nilanjana Adhya
...For the defendants.
Heard on : 22.12.2022, 06.01.2023, 09.02.2023, 20.02.2023
Judgment on : 11.04.2023
Krishna Rao, J.:-
The plaintiff has filed the instant suit challenging the order of
dismissal of the plaintiff from service dated 19th November, 2010 and prayed
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for reinstatement in service with all back wages along with enhancement
and prerequisites.
1. FACTS OF THE CASE:
The plaintiff was appointed as Manager in the Axis Bank Limited
previously known as UTI Bank Limited by an order dated 15th May, 2002
and was posted in one of the branches of Kolkata. In the year 2004, the
plaintiff was promoted to the post of Assistant Vice-President and was
transferred to Siliguri Branch. The plaintiff was again promoted to the post
of Vice President and was transferred to Shayambazar Branch.
The defendant bank had received a complaint from one customer of
the bank of Siliguri Branch and the defendant bank had conducted
investigation of Siliguri Branch as well as Shyambazar Branch. During the
investigation, the plaintiff was placed under suspension by order dated 30th
October, 2009. After investigation, it was found that the plaintiff while
posted as Branch Head of Siliguri Branch and Shyambazar Branch, the
plaintiff had not conducted his duty as per the system and procedure laid
down by the bank. It was also found that the plaintiff did not effectively
supervise the appearance of the bank and had furnished incorrect and
improper instructions to the colleagues. It was also found that the plaintiff
has also committed various irregular and fraudulent acts.
On receipt of investigation report, the defendant bank had initiated
disciplinary proceedings against the plaintiff by issuing show cause notice
dated 3rd May, 2010 and the said notice was received by the plaintiff on 6th
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May, 2010. The plaintiff has submitted reply. The Disciplinary Committee
had considered the reply submitted by plaintiff but found not satisfactory.
By an order dated 19th November, 2010, the defendant bank had dismissed
the plaintiff from service in terms of Rule 11.1(b) wrongly typed as (b) it is to
be (a) of the Bank Staffs Rule.
Being aggrieved with the order of dismissal, the plaintiff had preferred
an appeal before the Appellate Authority and by an order dated 28th April,
2011, the appeal was rejected.
2. SUBMISSIONS OF THE PLAINTIFF:
Mr. Rupak Ghosh, Learned Advocate, representing the plaintiff
submits that when the plaintiff was posted at Siliguri Branch, at the
relevant point of time the said Branch of the bank was utterly mismanaged
and was major source of concern for the higher authorities of the defendant
bank and thus the plaintiff was assigned with the task of improving the
dismal condition prevailing in the Siliguri Branch. Mr. Ghosh submits that
the plaintiff being the Head of the Siliguri Branch with effect from 12th June,
2004 to 7th June, 2008, the plaintiff worked immensely hard to improve the
condition of the bank.
Mr. Ghosh submits that as a result of hard work of the plaintiff within
the short span of time, the business of the said Branch of the defendant
bank rose sharply and improvement in level of efficiency in the service
rendered to its customers. The said Branch was rewarded with audit rating
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of "AA" and the said rating was retained by the said branch of the bank in
two subsequent audits held in 2006 and 2008 respectively.
Mr. Ghosh submits that on 30th June, 2009, the plaintiff had received
an email from the defendant bank and at that point of time, the plaintiff was
posted as Vice President of Shyambazar Branch wherein the plaintiff was
directed to visit Siliguri Branch to assist investigation being carried out by
one Shri Dipanjan Chaterjee, Vice President (Audit Compliance) and
accordingly on 1st July, 2009, the plaintiff visited Siliguri Branch to assist
the investigation. Mr. Ghosh submits that in course of investigation, it was
transpired that during the last six months tenure of the plaintiff as Branch
Head at Siliguri and even thereafter money from the account of M/s Nanu
Shome & Co. had been transferred to different accounts of another customer
namely Ms. Swati Goutam at the instance of Abhishek Vats Singh. It also
transpired that the said Abhishek Vats Singh took some amount from Swati
Gautam which he did not deposit in her account. He submits that in none of
such transfers, the plaintiff had any role to play. Most of the transactions
complained of were during the period when the plaintiff had left Siliguri and
Somnath Sen was the Branch Head.
Mr. Ghosh submits that the relationship between the plaintiff and the
defendant bank is of employer and employee in terms of the order of
appointment issued by the defendant to the plaintiff. He submits that the
order of appointment dated 28th July, 2003 was served upon the plaintiff
after 14 months from the date of joining, the bank by the plaintiff. Mr.
Ghosh submits that the punishment of dismissal awarded to the plaintiff as
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per the service rule of the defendant which has put stigma on the plaintiff
due to which the plaintiff will not get any job in any other bank. Mr. Ghosh
submits that the complaint letter did not allege that the plaintiff is in any
manner involved in the said activities and there is no evidence to prove
financial or reputational loss sustained by the defendant. He submits that
no police complaint was lodged and there is no proof that the alleged
irregularity occurred during the incumbency of the plaintiff. Mr. Ghosh
referring the evidence of D.W.2 submits that there is an evidence on record
to show that the plaintiff is not involved in the alleged incident.
Mr. Ghosh submits that the target of Siliguri Branch had already been
achieved by the plaintiff and the performance of the Branch Head is
measured by cumulative daily average balance and not on year end balance.
He submits that the defendant has not produced any evidence to prove the
case against the plaintiff. Mr. Ghosh submits that the defendants have not
produced the cheque purchase register. He submits that the defendant
witness no.2 confirmed that non-existent cheque cannot be purchased. He
submits that as per show cause notice allegation against the plaintiff is
purchase of non-existent cheque but in the written notes of argument, the
defendants have alleged that credit afforded before receipt of the cheque
which is a new allegation. He submits that the cheque was purchased
strictly following the procedure and the bank has earned income as per the
extent rule which is evident from the statement of account of Mr. Nanu
Shome.
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Mr. Ghosh submits that the original TOD receipts were handed over to
the bank by the customer. Mr. Ghosh relied upon the evidence of DW-2 and
DW-3 and submits that the said witnesses have admitted that they did not
search or check personally. Mr. Ghosh submits that there was no complaint
from the customer with regard to loss of money. He submits that question of
inflating the business figure does not arise because transferring from one
saving bank account to another saving bank account would not add any
overall to the saving bank accounts. He further submits that achievements
of Branch Head was neither considered on the last of the calendar year nor
considered on the last day of financial year.
Mr. Ghosh submits that defendants could not produce any evidence
that opening of imprest account is irregular. He submits that no irregularity
is pointed out in any of audit or inspection. He submits that accounts are
opened at Central Processing Unit at Mumbai after through audits scrutiny.
Neither Central processing unit auditor nor concurrent auditors have ever
pointed out any irregularity. Mr. Rajendra was the Project Manager of
Valacha Engineering and had made frequent transactions as the company
had authorised him to do the said transactions by the letter dated 22nd May,
2007. He submits that the defendants have not produced any evidence that
the transactions were done by the plaintiff.
Mr. Ghosh submits that as per show casue notice as many as 529
TODs were granted by the plaintiff out of which after the investigation, the
defendant bank could allege irregularities in 12 cases only that is only
2.26% cases and 97.74% cases of the plaintiff was a regular in granting
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TODs. He submits that the plaintiff has granted temporary overdrafts after
fulfilling the conditions of relevant circular. Mr. Ghosh submits that nature
of allegation is based upon non-availability of certain documents. He
submits that when a loan is alive every document is kept carefully within
fire proof Cabinet but after it was repaid in full, documents are shifted to the
record room where anyone can have the access. He submits that two years
after leaving the branch, the Branch Head cannot be held responsible for
non-availability of records. Mr. Ghosh relied upon the evidence of DW-1 and
submits that the said witness admitted that for non-availability of record,
previous Branch Head cannot be held responsible.
Mr. Ghosh submits that the document execution register and recital
register have been verified and found in order. He submits that the next
incumbent had checked all the records before releasing the plaintiff. He
submits that even in the alleged irregular cases, all dues have been
recovered by the bank along with interest which was confirmed by DW-2 in
his evidence. Mr. Ghosh submits the plaintiff has never exceeded delegated
power while granting TOD as per the procedure. He further submits that in
the letter dated 27th June, 2007, it is mentioned that maximum delegated
power in this case is Rs. 4 lakhs while the account statement of Auto Links
shows that TOD was granted for Rs. 3,21,237.40/- which is below 4 lakhs.
He submits that the review notes never mentioned that the branch had
exceeded its power rather, advised as precautionary measure not to exceed
the delegated power. He submits that the ratification was sent to the
controlling office for allowing 10 days in place of seven days as per the
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extent guidelines and Eastern Zonal Office had approved the same and thus
it cannot be termed as irregular.
Mr. Ghosh submits that from the evidence, it shows that in earlier
occasions TODs in saving accounts have been duly revived by the
controlling office and no adverse comment was evident on any of such
review notes. Mr. Ghosh submits that there is no shortage on the alleged
date and no irregularity has ever been pointed out in any of audit/
inspection/ concurrent audit. Mr. Ghosh submits that the defendant has
not been able to produce any single complaint from any of the account
holder against the plaintiff. Mr. Ghosh submits that payments were in fact
processed/authorised by CapHub of the defendant bank which was situated
at Mumbai and was not done at Siliguri Branch. Without original bills,
payments would not have been authorised by CapHub. The custody of the
bills would be payments Hub, Mumbai.
Mr. Ghosh submits that the show cause notice wherein disciplinary
proceeding was initiated against the plaintiff, no document was annexed
with the said show cause notice and accordingly, the plaintiff had made a
request to the defendant for supply of document to rebut the allegations
made against the plaintiff but no documents were supplied to the plaintiff
and no opportunity of hearing was given to the plaintiff and without
supplying the document, the defendant bank had passed the impugned
order by dismissing the plaintiff from service and thus the impugned order
is required to be set aside and the plaintiff is required to be reinstated with
all benefits.
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3. SUBMISSIONS ON BEHALF OF THE DEFENDANTS:
Mr. Jayanta Mitra, Learned Senior Advocate, along with Mr. SP
Majumder, Advocate representing the defendant bank submits that after the
proper investigation, the bank had issued the show cause notice to the
plaintiff. As per the request made by the plaintiff, the Disciplinary
Committee provided the document to the plaintiff and also allowed the
plaintiff to inspect the documents by visiting Siliguri Branch. After
submission of reply, personal hearing was also provided to the plaintiff and
thereafter the Disciplinary Committee had taken the decision which was
communicated to the plaintiff.
Mr. Mitra, learned Senior Advocate along with Mr. S.P. Majumder,
learned Advocate submits that the suit filed by the plaintiff is not
maintainable under law as under Section 14(1)(c) of the Specific Relief Act,
1963 as it stood (prior to amendment of 2018) now Section 14(d), a contract
which is in its nature determinable cannot be specifically enforced. He
submits that the appointment letter dated 28th July, 2003 which shows that
the service could be terminated upon one notice and the said term is
available in the UTI Bank Staff Rules Clause 3 as also Axis Bank Staff Rules
Clause 3.5.
Mr. Mitra submits that once the plaintiff is seeking reinstatement with
back wages then how could the plaintiff claim damage and compensation up
to the date of his retirement. He submits that the suit was filed on 23 March
2011 and the Appellate Authority rejected the appeal on 28th April, 2011 but
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plaintiff has not challenged order of Appellate Authority which remained
unchallenged.
Mr. Mitra submits that the charges against the plaintiff was for
irregularities in various accounts of several constituents of the Siliguri
Branch of the Bank. He further submits that the charges also included that
the acts of the plaintiff is deliberately and in violation of norms and
procedure of the Regulation of the bank. He submits that it is now settled
law that if the rules provide for a particular procedure for disciplinary
proceeding, it is sufficient that procedure be followed and it is not necessary
to import larger consideration of compliance with the principle of natural
justice. He submits that Rule 16 provides for a shortened procedure for
giving opportunity and that procedure appears to have been followed.
Mr. Mitra submits that even if the dismissal is bad, the bank being
private employer, the plaintiff be entitled only for one month pay as
damages. He further submits that it is not at all necessary when show cause
has been issued stating the charges, audit report is to be disclosed.
Mr. Mitra submits that the misconduct of the plaintiff came to light
after the plaintiff was promoted and transferred from Siliguri Branch to
Shyambazar Branch. He submits that the investigation report are to find the
facts, there is no provision in the rules of the bank to supply the same along
with the show cause notice. He further submits that during proceeding, the
plaintiff had never prayed for supply of preliminary investigation report.
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Mr. Mitra submits that by letter dated 15th July, 2010 directed the
plaintiff to collect the statement of accounts from the Vice President (HR)-
East and as regard other documents the bank was of the view that those
documents are not relevant. He submits that plaintiff has not been able to
show how the same are relevant and how the plaintiff has been prejudiced
for non-disclosure of the said document.
Mr. Mitra submits that as per the RBI circular dated 10th July, 2009
manipulation of books of account is fraud. He submits that in case of
deposit of any cheque by constituent, there should be either deposit slip or
letter but for the out station cheque neither any deposit slip nor any
recording in bank's records. So for all purposes the same is non-existing
cheque.
Mr. Mitra submits that during evidence, the bank has brought on
record with respect of all documents and all the documents have been
exhibited from which the allegation labelled against the plaintiff is duly
proved and as such the suit filed by the plaintiff is liable to be dismissed.
4. ISSUES FOR CONSIDERATION:
i. Is the suit is maintainable in its present form and prayer?
ii. Is this Court having jurisdiction to try, entertain and determine the
instant suit were the entire cause of action has arisen outside the
jurisdiction of this Court?
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iii. Was the plaintiff guilty of misconduct for utter mismanagement as
Branch Head of the defendant No.1 between 12th June, 2004 and 7th June,
2008 as indicated in show cause notice dated 3rd May, 2010 ?
iv. Is the plaintiff guilty of the charges levelled against him in the purported
show cause notice dated 3rd May, 2010?
v. Are the charges levelled against the plaintiff in the purported show cause
notice dated 3rd May, 2010 proved?
vi. Is the purported order of suspension dated 30th October, 2009 bad,
illegal and unreasonable ?
vii. Is the order of dismissal dated 19th November, 2010 bad, illegal,
unreasonable and in violation of principle of natural justice ?
viii. Whether the plaintiff is entitled to receive employers contribution in the
provident fund of gratuity on being dismissed from service ?
ix. Is the plaintiff entitled to salary for more than one month in terms of his
appointment?
x. Whether or not the plaintiff is entitled to a decree as prayed in the plaint ?
xi. To what other reliefs the plaintiff is entitled ?
5. EVIDENCE OF THE PLAINTIFF:
The plaintiff has examined himself as PW-1 and altogether 46
documents were exhibited as Exhibits- A to TT. The plaintiff has not
adduced any further evidence.
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6. EVIDENCE OF THE DEFENDANTS:
The defendant has examined two witnesses as DW-1 and DW-2
namely Subimal Saha and Somnath Sen respectively. During the cross-
examination of the plaintiff and examination-in-chief of the defendants
witness, the defendants have exhibited altogether 63 documents as Exhibits
1 to 63.
7. DECISION WITHN REASONS:
Issue nos. (i) and (ii) are on the point of maintainability and
jurisdiction of this Court and thus this Court has taken up both the issue
together first.
By an order dated 15th May, 2002, the plaintiff was offered
appointment as Manager. In the said offer of appointment the following
conditions were prescribed:
"If any declaration, statement or information
given by you at any time, if to be false or untrue, or if
any material information is suppressed, if services
liable to be terminated forthwith without any notice or
compensation in new thereof and at any time during or
even after completion of the probation period.
If, after you join the Bank's service, it comes to
the notice of the bank that you had been, prior to joining
the Bank's services, convicted of any act involving moral
turpitude, your service is liable to be terminated without
any notice or compensation in lieu thereof. Alternatively,
if your service are not so terminated, you shall be liable
to such disciplinary measures as the Bank shall deem
fit and any penalty may be imposed upon you."
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Subsequently by letter dated 28th July, 2003, the plaintiff was
appointed as manager on the terms and conditions mentioned in the said
order by supersession of offer of appointment in the order of appointment
there are altogether nine conditions were imposed out of which two
conditions i.e. Condition nos. 4 and 8 are relevant in the present suit which
reads as follows:
"4. You will be governed by the Bank's Staff
Rules and/or other rules relating to conduct, discipline
etc., that are applicable or may become applicable from
time to time to the employees of the bank.
8. Notwithstanding what is provided in the Staff
Rules and the above paragraphs, your services, after
confirmation, may be terminated by the bank by giving
one month's notice on salary in lieu thereof without
assigning any reasons therefor. Similarly after
confirmation, you may resign from the bank's service,
subject to acceptance of your resignation by the
competent authority, by giving notice of one month's
salary in lieu thereof."
In clause 3.4 of the Staff Rules of UTI Bank (now Axis Bank Limited)
also the above condition is prescribed which reads as follows :
"3.4. Notwithstanding what is provided in these
rules, the service of an officer in the Bank can be
terminated by the Bank by giving one month notice on
salary in lieu thereof without assigning any reasons
thereof."
The defendants have dismissed the plaintiff from service by an order
dated 19th November, 2010 by invoking the provisions of Clause 11.1 (6) but
the defendants have wrongly mentioned this sub Clause (6) but it should be
sub Clause 11.1(a).
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Clause 11 and 11.1 of Staffs Rule reads as follows:
"11. Penalties.
11.1. For violation of any of the Rules contained
herein or any orders issued by the bank or any other
reason considered appropriate by the disciplinary
authority, an officer shall be liable for any of the
following penalties:-
a) Dismissal from service
b) Reduction to lower cadre or salary."
Section 14(1)( c) of the Specific Relief Act,1963 reads as follows:
"14. Contract not to specifically enforceable:-
(1) The following contracts cannot be specifically
enforced, namely:-
( c) a contract which is in its nature determinable."
Section 14(d) of the Specific Relief (Amendment) Act, 2018 reads as
follows:
"14. The following contracts cannot be specifically
enforced namely:-
(d) a contract which is in its nature determinable."
The Counsel for the plaintiff relied upon Section 22(3)(e) of the
Banking Regulation Act and submits that the Axis Bank is a scheduled
commercial bank, original incorporated as UTI Bank and promoted by Unit
Trust of India, Life Insurance Corporation, Gen insurance Corporation all of
which are government of India institutions and is a body corporate as per
Section 2(11) of the Companies Act, 2013 and is run by professional
16
management of impersonal nature and thus the employment contract by the
bank cannot be viewed as normal contract of personal nature.
Prayer (a) and prayer (b) of the plaint reads as follows:
"a). A decree declaring that the purported order of
dismissal of the plaintiff from the service of the
defendant bank dated 19th November, 2010 is bad, void
ab initio, nonest in the eye of law and not binding on the
plaintiff and the service of the plaintiff in the defendant
bank is still subsisting and reinstatement of services
with all back wages along with enhancement and
prerequisites.
b). A decree for arrears of salary, prerequisites and
emoluments, damages etc. for a sum of
Rs.3,98,13,685.34/- only payable by the defendants to
the plaintiff as pleaded in paragraph 45, 45C and 47
above."
In the case reported in 1962 SCC Online Cal 223 (Sushil Kumar
Chakraborty -vs- The Director of Postal Services and Others), this Court
held that:
"11. It is now settled law that if the Rules provide
for a particular procedure for disciplinary action, it is
sufficient if that procedure be followed and it is not
necessary to import larger considerations of
compliance with the principles of natural justice in
such matters. Rule 16 provides for a shortened
procedure for giving opportunity and that procedure
appears to have been followed. The first grievance
made on behalf of the petitioner, therefore, must fail."
In the case reported in (1976) 2 SCC 58 (Executive Committee of
Vaish Degree College, Shamli & Others -vs- Lakshminaraynan and
Others), the Supreme Court held that :
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"18. On a consideration of the authorities mentioned
above, it is, therefore, clear that a contract of personal service
cannot ordinarily be specifically enforced and a court normally
would not give a declaration that the contract subsists and the
employee, even after having been removed from service can be
deemed to be in service against the will and consent of the
employer. This rule, however, is subject to three well
recognised exceptions -- (i) where a public servant is sought to
be removed from service in contravention of the provisions of
Article 311 of the Constitution of India; (ii) where a worker is
sought to be reinstated on being dismissed under the
Industrial Law; and (iii) where a statutory body acts in breach
or violation of the mandatory provisions of the statute.
31. I will first take up the first part of the question. On this
part, there was no dispute between the parties that the
requirements of Statute 30 were not complied with by the
appellant in terminating the service of the first respondent.
The controversy merely centered round the question whether the termination of service in breach of the requirements of Statute 30 rendered the termination 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 unless accepted, in other words, the contracting party faced with a wrongful repudiation may opt to refuse to accept the repudiation and may hold the repudiation to a continuance of his contractual obligation. But does this rule apply to wrongful repudiation of the contract of employment? The trend of the decisions seems to be that it does not: It seems to be generally recognised that wrongful repudiation of the contract of employment by the employer effectively terminates the employment : the termination being wrongful, 18 entitles the employee to claim damages, but the employee cannot refuse to accept the repudiation and seek to treat the contract of employment as continuing. What is the principle behind this departure from the general rule of law of contract? The reason seems to be that a contract of employment is not ordinarily one which is specifically enforced. If it cannot be specifically enforced, it would be futile to contend that the unaccepted repudiation is of no effect and the contract continues to subsist between the parties. The law in such a case, therefore, adopts a more realistic posture and holds that the repudiation effectively terminates the contract and the employee can only claim damages for wrongful breach of the contract. Now a contract of employment is not specifically enforced because ordinarily it is a contract of personal service and, as pointed out in the first illustration to clause (b) of Section 21 of the Specific Relief Act, 1877, a contract of personal service cannot be specifically enforced. Of course this illustration has now been omitted in the new Specific Relief Act, 1963 and what would be the effect of such omission may be a point which may require consideration someday by this Court. But for the purpose of this case, I will proceed on the assumption that even under the new Act, the law is the same and it frowns on specific enforcement of a contract of personal service. Now what is the rationale behind this principle? That is found stated in the locus classicus of Fry, L.J. in De Francesco v. Barnum :
"For my own part, I should be very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining continuous personal relations with one another to continue those personal relations. I have a strong impression and a strong feeling that it is not in the interest of making that the 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 19 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 owner of a small workshop or trade or business and his servant. The conditions have now vastly changed and these doctrines have to be adjusted and reformulated in order to suit needs of a changing society. We cannot doggedly hold fast to these doctrines which correspond to the social realities of an earlier generation far removed from ours. We must rid the law of these anachronistic doctrines and bring it in accord "with the felt necessities of the time". It is interesting to note that in Fray's classic work on Specific Performance, contracts of service appear in a small group under the sub-heading "Where enforced performance would be worse than non-performance". We may ask ourselves the question : for whom it would be worse and for whom it would be better. Where, in a country like ours, large numbers of people are unemployed and it is extremely difficult to find employment, an employee who is discharged from service may have to remain without means of subsistence for a long period of time. Damages equivalent to one or two months' wages would be poor consolation to him. They would be wholly insufficient to sustain him during the period of unemployment upon his discharge. The provision for damages for wrongful termination of service was adequate at a time when an employee could without difficulty find other employment within the period of reasonable notice for which damages were given to him. But in conditions prevailing in our country, damages are a poor substitute for reinstatement : they fall far short of the redress which the situation requires. To deny reinstatement to an employee by refusing specific performance in such a case would be to throw him to the mercy of the employer : it would enshrine the power of wealth by recognising the right of the employer to fire an employee by paying him damages which the employer can afford to throw away but which would be no recompense to the employee. It is, therefore, necessary and I venture to suggest, quite possible, within the limits of the doctrine that a contract of personal service cannot be specifically enforced, to take the view that in case of employment under a statutory body or public authority where there is ordinarily no element of personal relationship, the employee may refuse to accept the repudiation of the contract of employment by the statutory body or public authority and seek reinstatement on the basis that the repudiation is ineffective and the contract is continuing. That is in effect what happened in the case of McClelland v. Northern Ireland General Health Service Board [(1957) 1 WLR 594 : (1957) 2 All ER 129] . The 20 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 respondent 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 nullity and the plaintiff continued in service of the defendant Board. This was a case of a pure contract of master and servant and yet the House of Lords held that the termination of employment of the plaintiff by the defendant Board which was not accepted by the plaintiff was ineffective and the plaintiff was entitled to a declaration that she continued in service. It should thus be possible to hold that even if a statutory body or public authority terminates the service of an employee in breach of a contractual obligation, the employee could disregard the termination as ineffective and claim a declaration that his service is continuing. But this would be a somewhat novel and unorthodox ground which has not been recognised by any decision of this Court so far and moreover I do not think that, on facts, this is a proper case in which it would really be applicable and hence I do not propose to finally pronounce upon it."
In the case reported in (1987) 2 SCC 252 (Dipak Kumar Biswas -vs-
Director of Public Instruction and Others), the Hon'ble Supreme Court held that:
"12. The law enunciated in these decisions stand fully attracted to this case also. Even though the Lady Keane Girls College may be governed by the statutes of the University and the Education Code framed by the Government of Meghalaya and even though the college may be receiving financial aid from the Government it would not be a statutory body because 21 it has not been created by any statute and its existence is not dependent upon any statutory provision.
13. The appellant, however, placed reliance on another decision of this Court in I.P. Gupta v. Model Inter College [(1984) 3 SCC 384 : 1984 SCC (L&S) 555 : (1984) 3 SCR 752] . In that case Shri I.P. Gupta who was appointed as Principal of the college on probation for one year was placed on further probation for one more year. During the period of the extended probation his services were terminated. Although the order of termination was innocuous in its terms it was accompanied by an enclosure containing the resolution of the Managing Committee with a reference therein to an adverse report given by the Manager against the Principal. It was, therefore, contended that the order of termination cast a stigma on the Principal and hence his services ought not to have been terminated without due notice and enquiry. It was this contention which was the principal issue in that case. Dealing with that contention this Court found that the college was an institution recognised under the Intermediate Education Act and was governed by the provisions of the Act and the regulations made thereunder and that Regulations 35 to 38 prescribed the procedure to be followed before the services of an employee can be terminated by way of punishment. The management, however, did not follow the procedure prescribed by the regulations which were virtually the same as provided by Article 311(2) of the Constitution. This Court, therefore, held that the principles which should govern the case should be the same as those underlying Article 311(2). It was in that view of the matter this Court allowed the appeal and restored the judgment of the Single Judge of the High Court declaring that the appellant continued to be in the service of the college and that he was entitled to all the benefits flowing from the declaration including the salary and allowances as if there was no break in his service. The facts of the abovesaid case are clearly distinguishable because the case pertained to termination of service by way of disciplinary action. In the instant case there is no such violation of the provisions of any Act or any regulations made thereunder. This is a case where the first respondent had proceeded on the erroneous assumption that the Assam Aided College Employees Rules, 1960 and the Assam Aided College Management Rules, 1965 had been adopted by the State of Meghalaya and therefore, the appellant's appointment was in contravention of the rules and consequently he should decline to approve the appointment of the appellant. No doubt his action has been held to be wrongful but even so it is not in contravention of any statutory provisions or regulations or procedural rules. We are, therefore, unable to accept the 22 appellant's contention that he should be granted a declaration that he continues to be in the service of the college and that he is entitled to all the benefits flowing from the declaration."
In the case reported in 2002 SCC Online CaL 7 (British Airways PLC -vs- Barunendra Nath Basu), this Court held that:
"22. As per the case made out in the plaint, the appellant company is a company incorporated under the laws of the United Kingdom. It is neither a statutory authority nor a Government Company within the meaning of section 617 of the Companies Act, 1956. A suit to enforce a contract of personal service would not, therefore, be maintainable against the appellant company since the plaintiff is not a public servant whose removal would attract the provisions of Article 311 of the Constitution, nor is he a workman within the meaning of the Industrial Disputes Act, 1947, nor is the appellant company a statutory body which has acted in breach of the mandatory provisions of the statute. It is not necessary to consider any other material other than the pleadings contained in the plaint and the reliefs prayed for in order to arrive at the aforesaid conclusion. The reliefs prayed for in the suit are designed to continue the contractual relationship of master and servant between the plaintiff/respondent and the appellant company, which the latter wishes to repudiate on the findings of the Enquiry Officer in the disciplinary proceedings against the plaintiff/respondent. In view of section 14 of the Specific Relief Act, 1963, on injunction can be issued which has the effect of forcing an unwilling employer to retain the personal services of an employee. The remedy, if any, of an employee in such circumstances is a claim for damages for wrongful dismissal or breach of contract."
In the case reported in (2003) 10 SCC 733 (Federal Bank Ltd. -vs-
Sagar Thomas and Others), the Supreme Court held that:
"32. Merely because Reserve Bank of India lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth 23 having due regard to the interests of the depositors etc. as provided under Section 5(c)(a) of the Banking Regulation Act does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activity in banking and these companies are to act according to these provisions failing which certain consequences follow as indicated in the Act itself. As to the provision regarding acquisition of a banking company by the Government, it may be pointed out that any private property can be acquired by the Government in public interest. It is now a judicially accepted norm that private interest has to give way to the public interest. If a private property is acquired in public interest it does not mean that the party whose property is acquired is performing or discharging any function or duty of public character though it would be so for the acquiring authority.
33. For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or a company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor put any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case of disciplinary action being taken against its employee by the appellant Bank. The respondent's service with the Bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed."
In the case reported in (1979) 4 SCC 160 (Smt. J.Tiwari -vs- Smt. Jwala Devi Vidya Mandir & Ors.), the Supreme Court held that :
24"5. Exhibit 1 is an agreement dated January 1, 1953 between the appellant and Respondent 1. Clause 10 of tliat agreement reads thus:
When the Principa1/Headmaster/Headmistress has been confirmed, neither the Principa1/ Headmaster/ Headmistress nor the Committee subject to the provision of clause 7, shall terminate this agreement except by giving to the other three calendar months' notice in writing to take effect from the eighth day of the succeeding month, or by paying to the other a sum equivalent to three times thp monthly salary which the Principa1/ Headmaster/ Headmistress is then earning.
clause 7 which is referred to in clause 10 confers power on the Committee of the institution to dismiss the Principal or the Headmistress on the ground of insubordination, deliberate neglect of duty, serious misconduct and the commission of an act which constitutes a criminal offence. It may be assumed for the purpose of argument that the resolution dated May 24, 1958 which was passed by the Executive Committee of Respondent 1 terminating the services of the appellant is unlawful for want of three calendar months' notice as provided in clause 10 of the agreement. By the second paragraph of clause 10, which it is unnecessary to extract fully, it is provided that before giving a notice of termination to the Principal, the Society should consult the Inspectors of Schools, should give full reasons for discharging the Principal and that the notice of termination "should only be valid" if the Inspectress approves of it. We may further assume that since this procedure was not followed by the Society, the older terminating the appellant's service is unlawful. But the appellant is an employee of a private institution and their mutual rights, and obligations are governed by the terms of the contract, Ex. 1, which was entred into by them in 1953. Since under those terms the appellant's services were liable to be terminated on three months' notice, all that she would be entitled to, even if the dismissal is wrongful, is a decree for damages and not an order of reinstatement or declaration that notwithstanding the termination of her services she continued to be in service. The judgment of this Court in Executive Committee of Vaish Degree College, Shamli v. Lakshmi .Narain is a direct authority for this conclusion."
A contract of private employment is not similar to the public employment and in such private employment there is no scope of 25 applicability of the principles of administrative law or public law. A contract of employment which provides for termination of services by one month's notice, then, at best the employee will only be entitled to one month's pay in terms of the employment contract. An employee is not entitled to any relief of continuation in services or pay with consequential benefit for alleged remaining period of service till the date of the superannuation.
As per the provisions of Section 14(1)(c) of the Specific Relief Act,1963, a contract which is determinable in nature cannot be specifically enforced.
Since the service contract in the present case is determinable by one month's notice, there does not arise the question of giving any reliefs which tantamount to enforcement of a determinable contract. As per Section 14(1)(c), a contract of personal service cannot be enforced when the employer is not the Government or "State" as per Article 12 of the Constitution of India.
Learned counsel for the defendant argued that the prayers in the suit seek reinstatement of the plaintiff as an employee of the defendant bank which really amount to a specific performance of contract of personal service which is specifically barred under the provisions of the Specific Relief Act. It is a well-settled principle of law that the contract of personal service cannot be specifically enforced and the Court will not give a declaration that the contract subsists and the employee continues to be in service against the will and consent of the employer. This general rule of law is subject to the well-recognised exceptions: (i) where a public servant is sought to be removed from service in contravention of the provisions of Article 311 of the 26 Constitution of India, (ii) where a worker is sought to be reinstated on being dismissed under the industrial law and (iii) where the statutory body acts in breach of violation of the mandatory provisions of the statue.
The present case does not fall in any of the three exceptions. It is neither a case of public employment so as to attract Article 311 of the Constitution of India nor is a case under the Industrial Disputes Act. The defendant is not a statutory body. There is a statue governing the service conditions. The present case is a private employment normally would be governed by the terms of the contract between the parties. Since there is no written contract between the parties, the dispute cannot be resolved with reference to any terms and conditions governing the relationship between the parties. The plaintiff has neither pleaded nor has there been any effort on his part to show that the impugned order of dismissal was in violation of any terms of his employment.
The law relating to master and servant is clear. A contract for personal service will not be enforced by an order of specific performance nor will it be open for the servant to refuse to accept the repudiation of a contract of service by his master and say that the contract has never been terminated.
The remedy of the employee is a claim for damages for wrongful dismissal or for breach of contract.
8.CONCLUSION:
In view of the settled position of law, this Court held that the suit filed by the plaintiff is not maintainable under law and accordingly the issues no.27
(i) and (ii) are decided against the plaintiff. As the suit is not maintainable, this Court has not gone into the further issues.
C.S. No. 64 of 2011 is thus dismissed. Decree be drawn accordingly.
(Krishna Rao, J.)