Delhi High Court
Prakash Vati Sawhney vs Life Insurance Corporation Of India And ... on 26 April, 1971
JUDGMENT D.K. Kapur, J.
1. This is a regular second appeal at the instance of the plaintiff whose suit has been dismissed by both courts below on a preliminary issue regarding the maintainability of the suit.
2. The facts of the case are that the plaintiff, Shrimati Parkash Vati Sawhney, claimed that she was an insurance agent of the New India Insurance Company Ltd. and her services were transferred to the Life Insurance Corporation of India which was established on 1st September, 1956, on the same terms and conditions as before. It was further alleged that her agency was declared inoperative in view of the decision that the personal agencies standing in the names of relatives of the organizing officers of the Corporation could not be allowed to continue. It was stated in the plaint that the sealing of her agency was illegal, ultra vires, unconstitutional, mala fide, capricious and contrary to the principles of natural justice and restricted her rights to pursue her profession which she had been carrying on independently since 1949. It was accordingly claimed by her that the letter dated, 30th October, 1956, which terminated her agency with effect from 1st November, 1956, was invalid and she prayed for a declaration that the order dated 30th October, 1956, was ultra vires and unconstitutional, etc.
3. A preliminary objection was raised by the Life Insurance Corporation of India claiming that the suit of the plaintiff was not maintainable and no declaration could be granted to compel the Corporation to accept the personal services of the plaintiff. The plaintiff relied on the fact that her suit was governed by Section 42 of the Specific Relief Act, which is now Section 34 of the Act of 1963, and claimed that her suit was maintainable. The objection of the defendant prevailed in both courts below and the suit was dismissed. The lower appellate court has decided the question of maintainability of the suit by reference to Section 21 of the Specific Relief Act, which is now Section 14 of the Act of 1963, and has held that the declaration claimed by the plaintiff amounted to enforcing a contract for personal services and, therefore, could not be granted. The plaintiff has appealed to this court.
4. It is well settled that a contract of personal service cannot be specifically performed. One of the leading cases on this question is Warner Brothers Pictures Inc. v. Nelson [1936] 3 All E.R. 160 (K.B.) in which the distinction between a negative covenant and a positive covenant enforceable by a suit for specific performance was pointed out. In that case, Mrs. Nelson otherwise known as Miss Bette Davis had entered into a contract with Warner Brothers to appear in films for that company but was seeking to infringe the contract by appearing for some rival companies. The film company, therefore, brought a suit for a declaration that her contract dated 27th December, 1934, was valid and for an injunction to restrain the defendant from acting for any other company in breach of the contract. The said injunction was granted on the ground that, although the court would not enforce the services of the defendant by a decree for specific performance, the court could prevent the defendant from breaking the contract by granting an injunction. The court, in other words, could prohibit the breach of contract though it might not be able to enforce the contract.
5. The present case to my mind is not a suit to enforce the agency contract, but is a suit claiming a declaration that the termination of the same is ultra vires which is quite a different thing.
6. This distinction has been brought out in a judgment of the Supreme Court, which has been cited before me by the respondent, in Dr. S. Dutt v. University of Delhi, . The appellant in that case, Dr. Dutt, had been granted an award which stated that his dismissal from service had not affected his status and he still continued to be a Professor of the University. This was held to be an enforcement of the contract of personal service and therefore contrary to Section 21(b) of the Specific Relief Act, 1887. In the discussion, their Lordships pointed out the difference between the award given in favor of Dutt and the decision given by the Privy Council in High Commissioner for India v. I.M. Loll . It was held that the Judicial Committee had only accepted the claim of the plaintiff in that case on the ground that the order dismissing the respondent was void and inoperative and this did not amount to a declaration enforcing a contract of personal service but proceeded on the basis that the dismissal could only be effected according to the statute and if made otherwise was a nullity.
7. Therefore, the distinction which has been made by the Supreme Court is between an attempt to enforce the contract and an attempt to have an order terminating the contract declared null and void. If the order is declared to be null and void it would still be a declaration to the effect that the person continued to be in service but it would not proceed on the basis of an enforcement of the contract but on the basis that there had in fact been no order terminating the contract. It seems to me that the latter situation is satisfied by the appellant in the present case. She does not claim that her contract cannot be terminated but that the termination of her agency on the ground that she is related to one of the organizing officers of the Life Insurance Corporation is ultra vires of the Constitution of India. She may or may not succeed in this claim, but if she does, then the order will be declared to be null and void and the agency will be deemed to continue which is exactly the same situation as occurred in I.M. Lull's case.
8. I do not for a moment say that the plaintiff has a good case or bad case regarding her claim but I cannot hold that she is disentitled to agitate the constitutional invalidity of the order terminating her services in the civil court. Whether or not her fundamental rights apply to a situation like the present or whether the order of the Life Insurance Corporation is subject to a constitutional challenge under the fundamental rights chapter of the Constitution, is a question I need not go into at this stage. All I have to see is that such a dispute can be raised in the civil court and can be the subject-matter of a declaration under Section 42 of the Specific Relief Act, 1887, now Section 34 of the Act of 1963.
9. In the circumstances, I need not refer to the many other cases which have been cited on behalf of the parties because the question whether or not the plaintiff is entitled to the declaration claimed by her is a matter which will have to be decided by the trial court on the merits of the case. To hold that a suit is not maintainable is to say that there is no possibility of the appellant succeeding under any circumstances which is something I find difficult to say at this stage.
10. In the circumstances, I hold that the present suit is maintainable and remand the case back to the trial court for decision on the merits. The parties will bear their own costs in this court and in the courts below.