Madras High Court
D.Raja vs The Chief General Manager on 27 July, 2012
Author: Vinod K.Sharma
Bench: Vinod K.Sharma
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 27.07.2012
CORAM:
THE HONOURABLE MR.JUSTICE VINOD K.SHARMA
W.P.No.11880 of 2011 and
M.P.Nos.1 & 2 of 2011
D.RAJA ... PETITIONER
-vs-
1. THE CHIEF GENERAL MANAGER
APPELLATE AUTHORITY FOR OMRS)
STATE BANK OF INDIA, LOCAL HEAD OFFICE,
NUNGAMBAKKAM, CHENNAI
2. GENERAL MANAGER
APPOINTING AUTHORITY)
HUMAN RESOURCES DEPT.,
LOCAL HEAD OFFICE, CIRCLE TOP HOUSE,
POST BOX NO.737, 16, COLLEGE LANE
CHENNAI 6
3. CHIEF GENERAL MANAGER (RURAL BUSINESS)
STATE BANK OF INDIA, RURAL BUSINESS GROUP,
CORPORATE CENTRE, 8TH FLOOR,
STATE BANK BHAVAN, MADAMS CAMA ROAD
MUMBAI-21 ... Respondents
Prayer: Writ petition is filed under Article 226 of Constitution of India for issuance of a Writ in the nature of Certiorari, calling for the records from the 1st respondent relating to the order dated 17.3.2011 bearing reference No. Nil rejecting Appeal dated 16.4.2010 and 24.1.2011 read with the discharge order dated 30.3.2010 bearing reference No. HR.RC. 4790 letter of the 3rd respondent dated 26.7.2010 bearing reference No. RB/AC/SB/87 and quash the same as illegal arbitrary violative of principles of Natural Justice contrary to OMR Rules without jurisdiction and consequently direct the respondents 1 and 2 to reinstate the petitioner back in service as Officer Marketing and Recovery (Rural) as per the appointment order dated 10.3.2008 read with State Bank of India Officers marketing and Recovery (Rural) Service and Conduct Rules with backwages, continuity of service, annual increments, promotion to the higher grade and all other attendant benefits which the petitioner would have entitled had he been continued but for the impugned termination.
For Petitioner : Mr.N.G.R.Prasad
For M/s. Raw & Reddy
For Respondents : Mr.G.Masilamani, SC
For Mr.P.D.Audikesavalu
*****
O R D E R
The petitioner has invoked the extraordinary equitable jurisdiction of this Court, praying for issuance of a writ in the nature of Certiorari to quash the order dated 17.3.2011, vide which the appeal filed by petitioner against the order of discharge dated 30.3.2010 was ordered to be dismissed, with consequential relief of issuance of a writ in the nature of Mandamus, directing respondent nos. 1 & 2 to reinstate the petitioner back in service as Officer Marketing and Recovery (Rural).
2. The petitioner was appointed as Officer-Marketing and Recovery (Rural) and Technical Officer Rural (OMR) with the respondent Bank. The appointment was on contractual basis.
3. The paragraph nos. 2 & 3 of the letter of appointment read as under:
"2. Your appointment in the Bank will be purely contractual in nature, initially for 2 (two) years from the date of joining and the contract of appointment will be renewable on completion of contractual period depending on your performance, suitability and need of the Bank. Please note that you will be posted at rural branch(es) of the Bank and request for posting at any particular centre will not be entertained. However, your services are liable to be transferred to any branch / offices of the bank depending on the needs and exigencies of service an may not be restricted to any Circle / State.
3. Your service in the Bank will be governed by the Management Trainees / Executives Service and Conduct Rules, 2004, as modified by the Competent Authority for the Technical Officers/Officers Marketing and Recovery (Rural) and future amendments thereof and the instructions guidelines to be issued / other rules and regulations framed by the Bank from time to time and made specifically applicable to Technical Officers / Officers Marketing and Recovery (Rural)."
4. The service conditions during period of employment of the petitioner were governed by the State Bank of India's Officers-Marketing and Recovery (Rural) Service and Conduct Rules.
5. Rules 4.1, 7 and 20 of these Rules read as under:
"Rule 4.1: The appointment of Officers Marketing & Recovery (Rural) will be purely contractual in nature for a specified period. The contract will be renewable on completion of contractual period depending on the performance and suitability of the Officers Marketing & Recovery (Rural) at the Bank's discretion and need of the Bank.
Rule 7 Career Path:
The career progression of these Officers is proposed as under:
GRADE MINIMUM SERVICE ELIGIBILITY CRITERIA OMR-RURAL-S1 3 years as OMR-RURAL OMR-RURAL-S2 4 years as OMR-RURAL-S1 OMR-RURAL-S3 4 years as OMR-RURAL-S2 Consistent excellent performance rating would be an essential prerequisite for considering any officer for promotion. The decision in regard to promotion to a higher grade (OMR-Rural-S1, OMR-Rural-S2, OMR-Rural-S3) will be based on the Performance Appraisal Report of the officer and such other parameters / processes as may be decided by the Chief General Manager (RB-NF), Chief General Manager (HR) and General Manager (ABU). Besides performance, promotion to the next higher grade will also depend on the number of positions available and identified by the Bank depending on the Bank's needs and requirement. Mere serving in any assignment in any specific position or for a prescribed period shall not entitle any officer for automatic promotion to the next higher grade. DMD & CDO will be the Competent Authority to decide the number of vacancies in this regard.
The career path as outlined above may be reviewed by the CHRC and make necessary change(s) as it deems fit. The modalities for promotion of OMR-RURAL against available identified positions will be as under:
Promotion to Modalities for selection Promoting Authority OMR-RURAL-S1 Performance appraisal reports
-CGM of the Circle for officers posted in Circles.
OMR-RURAL-S2 Performance appraisal reports
- same as above -
OMR-RURAL-S3 Performance appraisal reports + interview by a Committee
- same as above -
20. TERMINATION OF APPOINTMENT 20.1These Officers are being recruited by the Bank for skilled / identified jobs and therefore, their continuance in the Bank's service on contract inter alia will be incumbent upon the needs of the Bank. As such their service can be terminated at any time by giving due notice / pay in lieu thereof.
20.2The Bank may at its sold discretion terminate the contractual appointment by giving one month's notice or one months gross emoluments in lieu thereof to the Officer during the first year of contract of service and thereafter by giving 3 months notice or 3 months gross emoluments in lieu thereof. The gross monthly emoluments would mean the total monthly emoluments on Cost to Bank basis.
The decision in this respect would be taken by the Appointing Authority on the recommendations of the Departmental Head under whom the Officer is working. The Officer has the option to appeal against this order to the Appellate Authority within 15 days of passing the order.
The option to terminate the contract of service of the Officer would be exercised whenever the Appointing Authority is satisfied by record and recommendations that it is not in the interest of the Bank to continue the appointee on Bank's contractual service and would interalia include the following circumstance.
The Officer has not been attending to his / her duties in the Bank for a continuous period of 30 days after exhausting all leave due to him / her or is unauthorizedly absent for a continuous period of 30 days, without any sanctioned leave, or after his / her request for leave or extension of leave has been refused in writing.
In case any Officer is not sanctioned annual increment / raise consecutively for 2 years his contractual appointment may be terminated at Bank's discretion as it will be deemed that he has not rendered satisfactory performance.
20.3During the first year of contract of service, an Officer may leave the Bank's service and terminate the contract from his side, by giving one month's notice or one month gross emoluments in lieu thereof, in writing subject to approval by the Competent Authority. The gross one month emolument would mean the total monthly emoluments on Cost to Bank basis. In the event of resignation / termination of service, no variable pay shall be paid for the broken period when an officer resigns before completion of calendar quarter for payment of variable pay. In other words, variable pay may be paid only after the assessment the officer's performance at the end of stipulated period as above.
20.4After completion of one year an Officer may terminate the contract of service from his side by giving a notice of three months, in writing or three months gross emoluments in lieu thereof. In the event of resignation / termination of service, no variable pay shall be paid for the broken period when an Officer resigns before completion of calendar quarter for payment of variable pay. In other words, variable pay may be paid only after the assessment the officer's performance at the end of stipulated period as above.
20.5No Officer will be deemed to have left the Bank's service unless the Bank communicates its approval for termination of contract of service in writing.
20.6The notice period of one / three months may be reduced or waived by the Bank at its discretion depending on the facts and circumstances of the case.
20.7No privilege leave can be taken during the notice period."
6. It is submitted by the petitioner;
i)That in the first budget year, the petitioner brought in deposits of Rs.59.26 lakhs accounting for 79% achievements and as regards non-performing assets, his recovery rate was 125%, but in the matter of advances, his achievement was only 29%. The petitioner was issued show cause on his failure to achieve the target in the matter of advances. The petitioner in his explanation explained that he was new to the area and that the then Branch Manager was not in favour of giving agriculture advances, nor accepted advances brought by him, being a contract officer. The explanation of petitioner was accepted and he was allowed to continue.
ii)That in view of the problems, pointed out by petitioner, the control of processing the proposals given by the OMRs was shifted to the Rural Central Processing Centre. The performance of petitioner, therefore improved vastly and his achievement of advances was 83%, deposits 167% and non performing assets recovery 133%. The petitioner, therefore achieved the target in the next year.
iii)That his services were terminated vide order dated 30.03.2010 without giving him any opportunity of hearing and without considering his achievement for the second year. This submission is incorrect, as admittedly, services of the petitioner were not terminated, but he was relieved from duty on expiry of his contractual period of service.
iv)That according to the circular dated 18.08.2010 with reference to the earlier circular dated 28.07.2010, it was decided that the employee, who achieved 60% of the target for the year 2009-2010, could be permanently absorbed and even this 60% target was not inflexible. The submission of petitioner is that in spite of he having achieved 83%, his case was not considered for permanent absorption / for extension of his contract of service.
v)That he was entitled to permanent absorption for having achieved more than 60% of the target during the year 2009-2010, but inspite of this, the petitioner was discharged on 30.03.2010, and order was served on the petitioner on 08.04.2010.
The petitioner preferred appeal against the order of discharge, but as no reply was received, the petitioner filed W.P.No.13991 of 2010, to challenge the termination (even though there was no termination). Though no appeal was competent in view of the orders passed by this Court, the appeal could be treated as representation against non renewal. The respondents considered the appeal / representation of petitioner and passed impugned order.
vi)That after filing of writ petition by petitioner, that the respondent Bank took a decision to absorb OMRs on rolls as Specialist Officer. This circular was issued on 20.07.2010. It is submitted that in case the services of petitioner would not have been wrongly terminated, then he could have been absorbed under the said circular. It is also submitted, that if the Bank would have re-examined the case of petitioner, then also he is entitled to permanent absorption based on his performance for the year 2009-2010.
vii)That on 04.01.2011, the writ petition filed by petitioner was disposed of by this Court with direction to the 1st respondent to dispose of appeal filed by petitioner within one month. It was also directed, that in case of request of personal hearing, the same be also considered. The petitioner was given personal hearing on 18.02.2011 and thereafter, the appeal filed by petitioner was rejected vide order dated 17.03.2011.
7. The petitioner challenged the order of discharge as well as the order on appeal, on the ground:
a)That the orders are illegal, arbitrary and contrary to the circular dated 14.07.2010 and 18.08.2010. The orders are also said to be violative of Article 14 and 16 of the Constitution of India.
b)That the reasons given by the appellate authority in rejecting the appeal are non existence, as the petitioner had replied to show cause notice, by giving reasons for not achieving the target. The explanation was accepted, therefore, the performance for the first year could not be basis to discharge the petitioner, as the petitioner had achieved the target of 83% as against 60% as mentioned in the circular dated 28.07.2010 and 18.08.2010.
c)That his case should have been re-examined in terms of circular dated 18.08.2010, therefore, the impugned order is discriminatory, as the employees who had achieved less target than the petitioner were allowed to continue beyond the financial year ending 31.03.2010.
d)That Rule 7 of the Service Rules provides for career path, therefore, the petitioner was entitled to be given the benefit under the said rule. The career path for OMRs shows, and that the posts are all permanent and therefore, there was no justification to terminate the service of petitioner.
8. The writ petition is opposed by raising preliminary objection, that the petition is devoid of merit and that the petitioner is guilty of suppressing the vital and material facts, therefore, is not entitled to invoke the equitable writ jurisdiction of this Court. The stand of respondents is that, the petitioner was appointed as OMR on contract basis for a period of two years from 31.03.2008 to 30.03.2010. As the petitioner had failed to achieve the stipulated target of 60% for the budge year 2009-2010, he was not eligible for renewal of the contract of service and accordingly, the petitioner was discharged on expiry of the period of contract.
9. The petitioner preferred an appeal to the 1st respondent for extension of his contract for further period and during the said period filed W.P.No.13991 of 2010.
10. The writ was disposed of by this Court, by directing the respondent to dispose of the appeal filed by petitioner and in pursuance thereto, the order dated 17.03.2011 was passed.
11. It is the stand of respondent Bank, that the petitioner had achieved 75% of target for advances and 125% target for deposits, and that the petitioner was appointed for two years with stipulation that his contract could be extended depending on the performance of the Officer and the needs of the Bank. The petitioner does not have legal right of continuing in employment after expiry of two years in absence of extension of contract.
12. It is further stand of respondents, that the performance of petitioner was reviewed and it was noticed that the petitioner had achieved 23.56% of his target for the ending year 31.03.2009, which was much below the minimum target, therefore, it was decided not to renew the contract. Along with petitioner, the contract of 11 other Officers was not renewed.
13. It is also the stand of respondents, that the circular letter issued by the Corporate Centre, extension of contract was applicable to those Officers, who had achieved minimum 60% of the target for each year, but the petitioner had not achieved the target for one year, though he succeeded in achieving the target in the next year.
14. It is the stand of respondents, that the petitioner having been appointed on contract basis, is governed by the terms of his contract, therefore, it was open to the respondents to decline renewal of the contract.
15. In reply to the stand of petitioner, that in view of the circular letters dated 14.07.2010 and 18.08.2010 he was entitled to permanent absorption, it is stated, that these circulars are applicable only to the employees, who were in service on 14.07.2010, but the petitioner had ceased to be in service on 31.03.2010, therefore, was not covered under the circulars, as these circulars had no retrospective operation.
16. The stand of the respondents is that, the petitioner was governed by the terms of his contract and it was for the respondent Bank to renew the contract on assessment of the work and conduct of petitioner. The petitioner was discharged from service on expiry of the contract period after considering his performance, therefore, has no legal right to claim renewal of contract.
17. Learned counsel appearing on behalf of the petitioner vehemently contended, that the reading of the appointment letter of petitioner shows that though it was a contractual appointment, but the word used was initially for two years from the date of joining with stipulation, that appointment will be renewable on completion of contractual period, depending upon the performance, suitability and need of the Bank. Therefore, it was not a contract for two years as stated by the respondents.
18. It was also the contention of learned counsel for the petitioner, that the contract of service of petitioner stipulated, that his services will be governed by the State Bank of India Officers marketing and Recovery (Rural) Service and Conduct Rules.
19. The contention of learned counsel for the petitioner was that, according to Rule 4.1, the appointment of petitioner, though purely contractual, but was renewable on completion of contractual period, depending upon his performance and suitability, though the Bank's discretion and need.
20. The learned counsel for the petitioner referred to Rule 7, to contend that the appointment of petitioner was subject to career path, therefore, it was not open to the respondents to treat the petitioner as purely contractual employee to discharge him on completion of contractual period of two years, without subjectively considering his right of renewal of contract.
21. Learned counsel for the petitioner also referred to Rule 20 to contend, that the services of petitioner could be terminated in the first year by giving one month notice and three months after expiry of one year. This could only be done on the conditions given under Rule 20. The case of petitioner did not fall in any of the conditions stipulated under Rule 20, therefore, order of discharge was violative of Rule 20.
22. It was also vehemently contended, by the learned counsel for the petitioner, that the order passed in appeal further shows that the contract of petitioner was not renewed by taking into consideration the performance of only first year and by ignoring the performance for the 2nd year, which shows that the impugned order was totally arbitrary and outcome of non application of mind.
23. In support of the contentions, learned counsel for the petitioner referred to the impugned order dated 17.03.2011, wherein it has been pointed out that the achievement of petitioner in the first year was 23.53%. It was thus contended, that the subsequent circular issued by the respondent Bank shows, that the achievement of 60% was sufficient for regularisation of service. Whereas the achievement of petitioner for the second year was 83%. the impugned action of the respondent in no renewing the contract, therefore, amounted to arbitrary exercise of powers.
24. Learned counsel for the petitioner also referred to interim order passed by this Court in W.P.No.20736 of 2009, wherein, while allowing the interlocutory application in case of employees, who after completion of new contract period were given benefit of career path / grade and their services were subsequently terminated. This Court, while deciding the interim application, held that;
"4. As far as the above argument of the learned Senior Counsel appearing for the respondent Bank is concerned, I am not able to accept the same. It is an admitted fact that the appointment of the petitioner was on contract basis. But, at the same time, it was not an appointment on contract simplicitor, but certain benefits were assured to the petitioner and based on the said order, the petitioner had joined the service of the respondent Bank. Further, when it is the stand of the respondent Bank that the terms of the appointment is binding on the employee, certainly, it has to be held that it is binding on the respondent Bank also and having given certain benefits of advancement in career to the employee, while appointing him on contract basis, subject to certain conditions and when that employee had complied with those conditions eve as per the orders of the respondent Bank, in my opinion, the Bank cannot unilaterally take a decision to modify it without passing any orders to that effect and without informing the employee concerned. When the terms of the contract is binding on both the parties, the Bank cannot take a stand that it will give effect only to the first portion of the appointment order and as far as the other portion namely, the career path scheme is concerned, it is not bound by the terms of contract. Whether this action of the Bank is right or wrong can be decided only at the time of final disposal of the writ petition. But, even according to the learned Senior Counsel, the 1st petitioner was receiving a salary of Rs.3 lakhs per annum and suddenly, he has been ousted from job, which in my opinion, has to be seen not as an oral order or termination simplicitor or ousting simplicitor, but has to be seen with respect to Article 21 of the Constitution of India. Certainly, this will have an impact not only on the 1st petition, but also on those who depend on him. It is not the case of the respondent Bank that the performance of the 1st petitioner is not good or as on date, the post held by him has been abolished or somebody else has been appointed in his place. Apart from this, here is a case where an assurance has been given under the terms of appointment with regard to career advancement and the Bank cannot unilaterally take a decision without informing the 1st petitioner with regard to the same. Further, subsequent to the filing of this writ petition, wherein the benefit of career path scheme has been claimed, orally, the 1st petitioner has not been permitted to work on the ground of expiry of contract. This conduct of the respondent Bank, in preventing the petitioner from continuing in service on the ground of expiry of the contract ignoring the other portion of the appointment order, is, in my opinion, prima facie illegal and arbitrary. Consequently, since the post held by the 1st petitioner is vacant, he is also overaged and an order has been passed by the Division Bench of this Court to keep two posts vacant, I am of the opinion that the petitioner is entitled to the relief sought for in this M.P. Accordingly, M.P.No.1 of 2009 is allowed."
(this is the contention noted as learned counsel for the petitioner made repeated reference to this order, though the interim order passed by this Court cannot be treated to be a binding precedent. Otherwise also career path / grade was applicable after three years of service, whereas petitioner was relieved on completion of contractual period.)
25. Learned counsel for the petitioner vehemently contended, that though the petitioner has wrongly termed the order of discharge as termination, but in fact the petitioner has challenged the action of the respondents in not renewing the contract in an arbitrary manner. It was contended, that it is well settled law, that executive action must be informed by reasons and must not be arbitrary, as arbitrariness is opposed to the principle of equality, enshrined under Article 14 of the Constitution of India.
26. In support of this contention, learned counsel for the petitioner relied upon the judgment of the Hon'ble Supreme Court in ABL International Ltd and another vs. Export Credit Guarantee Corporation of India Ltd. and others, (2004) 3 SCC 553, wherein the Hon'ble Supreme Court has been pleased to lay down as under:
"52. On the basis of the above conclusion of ours, the question still remains why should we grant the reliefs sought for by the appellants in a writ petition when a suitable efficacious alternate remedy is available by way of a suit. The answer to this question, in our opinion, lies squarely in the decision of this Court in the case of Shrilekha Vidyarthi12 wherein this Court held: (SCC pp. 235-37, paras 20-22 & 24) The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of the State activity. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, the State cannot thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more. The personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot coexist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the preamble. Therefore, total exclusion of Article 14 non-arbitrariness which is basic to rule of law from State actions in contractual field is not justified. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals.
Unlike the private parties the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions.
53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs 16 lakhs. On facts we have found that the terms of the policy do not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when the Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner."
27. Learned counsel for the petitioner also placed reliance on the judgment of the Hon'ble Supreme Court in Harjinder Singh vs. Punjab State Warehousing Corporation, (2010) 3 SCC 192, wherein the Hon'ble Supreme Court observed as under:
"30. Of late, there has been a visible shift in the courts' approach in dealing with the cases involving the interpretation of social welfare legislations. The attractive mantras of globalisation and liberalisation are fast becoming the raison d'jtre of the judicial process and an impression has been created that the constitutional courts are no longer sympathetic towards the plight of industrial and unorganised workers. In large number of cases like the present one, relief has been denied to the employees falling in the category of workmen, who are illegally retrenched from service by creating by-lanes and side-lanes in the jurisprudence developed by this Court in three decades. The stock plea raised by the public employer in such cases is that the initial employment/engagement of the workman/employee was contrary to some or the other statute or that reinstatement of the workman will put unbearable burden on the financial health of the establishment. The courts have readily accepted such plea unmindful of the accountability of the wrong doer and indirectly punished the tiny beneficiary of the wrong ignoring the fact that he may have continued in the employment for years together and that micro wages earned by him may be the only source of his livelihood."
28. By relying upon these judgments, the learned counsel for the petitioner vehemently contended, that it is the duty of the Court to interpret the social welfare legislations to protect the rights of the employee and to interpret the provisions of contract of petitioner in a manner, that in view of the performance of the second year, he was entitled to renewal of contract automatically. The impugned orders therefore are outcome of misinterpretation of the contract and rules.
29. Finally, reliance was placed on the judgment of the Hon'ble Supreme Court in Western Indian Batch Company Ltd. and Workmen, 1973 II LLJ 403, to contend that terms of the agreement cannot be enforced against the employee, as they are not equally placed to enter into contract. The learned counsel for the petitioner, therefore, contended, that discharge of petitioner is totally arbitrary, therefore, cannot be sustained in law, as the respondents have failed to apply their mind to the terms of the contract stipulating extension of period, which would have entitled the petitioner to regularization under the subsequent circulars, issued by the respondents.
30. The writ petition is opposed by the learned Senior Counsel appearing on behalf of the respondents, by vehemently contending, that the petitioner was admittedly appointed on contract basis for a period of two years, and has been discharged on expiry of the period of contract, and that the petitioner has no legal right to claim renewal of the contract, as it was for the Bank to consider the question of renewal, depending on the performance and requirement of the Bank.
31. Learned Senior Counsel for the respondents referred to Rule 4 of the Service Rules, which stipulate, that extension was at the sole discretion of the respondent.
32. Learned Senior Counsel also contended, that the petitioner cannot take any advantage of Rule 7 or Rule 20, as the petitioner was not eligible for career path, nor his services were terminated to attract Rule 20 as contended by the learned counsel for the petitioner.
33. The contention of learned Senior Counsel for the respondent was that the appeal was not competent against the order of discharge, but in obedience to the orders passed by this Court, the matter was considered and the appeal filed by the petitioner was dismissed, as the Bank on assessment of his work and the target of two years did not find it appropriate to renew the contract of service. The Bank has taken a decision by taking into consideration the performance of the petitioner.
34. On consideration, I find that this writ petition has no force. It cannot be disputed, that the executive action must be informed by reasons and cannot be arbitrary. It also cannot be disputed, that arbitrary action is hit by Article 14 of the Constitution of India. It is well settled law, that even in the matter of contracts, it is not open to the State or its agency to act in an arbitrary manner as held in E.P.Royappa vs. State of Tamil Nadu, 1974 (4) SCC 3, Mrs.Maneka Gandhi vs. Union of India, 1978 (1) SCC 248, Ramana Dayaram Shetty vs. The International Airport Authority of India, AIR 1979 SC 1628, M/s.Kasturi Lal Lakshmi Reddy vs. State of J&k, AIR 1980 SC 1992 and Haji T.M.Hassan Rawther vs. Keral Financial Corporation, 1980 (1) SCC 166.
35. At the same time, it is also well settled law, that it is for the parties to fix the duration of contractual appointment and the Courts cannot interfere to make appointment to run beyond the period postulated in contract, as it will amount to rewriting the contract, which is impermissible in law, as the system of appointment having limited life span, comes to an end admittedly by efflux of time.
36. This view finds support from the judgment of the Hon'ble Supreme Court in Director, Institute of Management Development, U.P. vs. Pushpa Srivastava (Smt), (1992) 4 SCC 33.
37. It is also well settled law that it is not possible for the Court to process the contract of personal service in exercise of jurisdiction of Article 226 and 227 of the Constitution of India. It is not possible for this Court to exercise jurisdiction under Article 226 and hold that inspite of the contract having come to an end by efflux of time, the employees can be reinstated in service. Reference in support of this can be made to the judgment in Hindustan Educational Society vs. Kaleem SK Gulam Nabi, 1997 (2) SCT 555.
38. In view of the settled law, the petitioner cannot challenge the order of discharge dated 30.03.2010, specially when the subsequent circular do not give any legal right to the petitioner for regularization, as the circulars did not have retrospective operation, and were applicable only to the employees, who were in service on 14.07.2010. The challenge to discharge dated 30.03.2010 deserves to fail.
39. Now, we are left with the question, whether the action of the respondents, as held in the appellate Court order, refusing to renew the contract of petitioner can be said to be arbitrary to direct the respondents to re-consider the case of petitioner afresh, as it is not possible for this Court to issue direction to the respondents to renew the contract, as the Court cannot in exercise of writ jurisdiction rewrite the contract.
40. The answer to this question also is to be in negative. The Hon'ble Supreme Court in Gridco Limited and another vs. Sri Sadananda Doloi and others, 2012 (1) SCT 563, considered the following question:
"If the appointment was contractual, was the termination thereof vitiated by any legal infirmity to call for interference under Article 226 of the Constitution?"
This question was answered as under:
"Re: Question No.2
16. This question has to be answered in two distinct parts. The first part relates to the aspect whether the order passed by the appellant-Corporation is amenable to judicial review and if so what is the scope of such review. The second part of the question is whether on the standards of judicial review applicable to it, the order of termination is seen to be suffering from any legal infirmity. Before we refer to certain decisions of this Court that have dealt with similar issues in the past we may at the outset say that there was no challenge either before the High Court or before us as to the competence of the authority that passed the termination order. There was indeed a feeble argument that the order was mala fide in character but having regard to the settled legal position regarding the proof of mala fides and the need for providing particulars to substantiate any suchplea, we are of the view that the charge of mala fide does not stand scrutiny. Neither before the learned Single Judge nor before the Division Bench was the ground based on mala fides seriously argued by the respondent. What was contended on behalf of the respondent was that the appellant-Corporation did not act fairly and objectively in taking the decision to terminate the arrangement. It was contended that the decision to terminate the contractual employment was not a fair and reasonable decision having regard to the fact that the respondent had performed well during his tenure and the requirement of the Corporation to have a Chief General Manager (HR) continued to subsist. In substance, the contention urged on behalf of the respondent was that this Court should reappraise and review the material touching the question of performance of the respondent as Chief General Manager (HR) as also the question whether the Corporation's need for a General Manager (HR) had continued to subsist. We regret our inability to do so. It is true that judicial review of matters that fall in the realm of contracts is also available before the superior courts, but the scope of any such review is not all pervasive. It does not extend to the Court substituting its own view for that taken by the decision-making authority. Judicial review and resultant interference is permissible where the action of the authority is mala fide, arbitrary, irrational, disproportionate or unreasonable but impermissible if the petitioner's challenge is based only on the ground that the view taken by the authority may be less reasonable than what is a possible alternative. The legal position is settled that judicial review is not so much concerned with the correctness of the ultimate decision as it is with the decision-making process unless of course the decision itself is so perverse or irrational or in such outrageous defiance of logic that the person taking the decision can be said to have taken leave of his senses.
17. In Shrilekha Vidyarthi & Ors. v. State of U.P. & Ors. (1991) 1 SCC 212, the State Government had by a circular terminated the engagement of all the government counsels engaged throughout the State and sought to defend the same on the ground that such appointments being contractual in nature were terminable at the will of the government. The question of reviewability of administrative action in the realm of contract was in that backdrop examined by this Court. The Court also examined whether the personality of the State Government undergoes a change after the initial appointment of government counsels so as to render its action immune from judicial scrutiny. The answer was in the negative. The Court held that even after the initial appointment had been made and even when the matter is in the realm of contract, the State could not cast off its personality and exercise a power unfettered by the requirements of Article 14 or claim to be governed only by private law principles applicable to private individuals. The Court observed:
"we are also clearly of the view that this power is available even without that element on the premise that after the initial appointment, the matter is purely contractual. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist."
18. Recognizing the difference between public and private law activities of the State, this Court reasoned that unlike private individuals, the State while exercising its powers and discharging its functions, acts for public good and in public interest. Consequently every State action has an impact on the public interest which would in turn bring in the minimal requirements of public law obligations in the discharge of such functions. The Court declared that to the extent, the challenge to State action is made on the ground of being arbitrary, unfair and unreasonable hence offensive to Article 14 of the Constitution, judicial review is permissible. The fact that the dispute fell within the domain of contractual obligations did not, declared this Court, relieve the State of its obligation to comply with the basic requirements of Article 14. The court said :
"This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions."
(emphasis supplied)
19. In Assistant Excise Commissioner & Ors. v. IssacPeter & amp; Ors. (1994) 4 SCC 104, the dispute related to supply of additional quantities of arrack demanded by the license-holder. Supply of arrack was, however, controlled by the Government and the entire transaction relating to the supply and sale of arrack was based on licenses granted under the relevant rules to persons who emerged successful in a public auction. The Government claimed that the only obligation cast upon it under the Rules was to provide the monthly quota of arrack to each license-holder, supply of additional quantity being discretionary with the authorities. The license-holders, on the other hand, argued that supply of additional quantity was implicit in the conditions of the license. In support they relied upon the past practice and argued that if the supply is limited to the monthly quota only it would not be possible for the license holder to pay even the license fee. The license-holders questioned the refusal of the State Government to issue additional quantities of arrack as unfair and unreasonable. This court, however, rejected that contention and held:
"Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the Rule of Law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasi-judicial, the doctrine of fairness is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the express terms of the contract between the parties. This is so, even if the contract is governed by statutory provisions, i.e., where it is a statutory contract or rather more so." (emphasis supplied)
20. Taking note of the decision of this Court in Shrilekha Vidyarthi's case (supra), this court held that there was no room for invoking the doctrine of fairness and reasonableness against one party to the contract, for the purpose of altering or adding to the terms and conditions of the contract merely because it happens to be the State. The Court said :
"It was a case of termination from a post involving public element. It was a case of non-government servant holding a public office, on account of which it was held to be a matter within the public law field. This decision too does not affirm the principle now canvassed by the learned Counsel (that being of incorporating the doctrine of fairness in contracts where State is a party). We are, therefore, of the opinion that in case of contracts freely entered into with the State, like the present ones, there is no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State), for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be the State. In such cases, the mutual rights and liabilities of the parties are governed by the terms of the contracts (which may be statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of tenders or by negotiation. There is no compulsion on anyone to enter into these contracts. It is voluntary on both sides." (emphasis supplied)
21. In conclusion, the Court made it clear that the opinion expressed by it was only in the context of contracts entered into between the State and its citizens pursuant to public auction, floating of tenders or by negotiation. The court considered it unnecessary to express any opinion about the legal position applicable to contracts entered into otherwise than by public auction, floating of tenders or negotiation.
22. In State of Orissa v. Chandra Sekhar Mishra (2002) 10 SCC 583, the respondent had been appointed as a Homeopathic Medical Officer whose services were subsequently terminated by issue of a notice. While rejecting the challenge to the termination order, the Court observed "when the respondent was only a contractual employee, there could be no question of his being granted the relief of being directed to be appointed as a regular employee."
23. We may also refer to the decision of this court in Satish Chandra Anand v. Union of India (AIR 1953 SC 250), where the petitioner, an employee of the Directorate General of Resettlement and Employment, was removed from contractual employment after being served a notice of termination. The contract of service in that case was initially for a period of five years which was later extended. A five-Judge Bench hearing the matter, dismissed the petition, challenging the termination primarily on the ground that the petitioner could not prove a breach of a fundamental right since no right accrued to him as the whole matter rested in contract and termination of the contract did not amount to dismissal, or removal from service nor was it a reduction in rank. The Court found it to be an ordinary case of a contract being terminated by notice under one of its clauses. The Court observed :
"10. There was no compulsion on the Petitioner to enter into the contract he did. He was as free under the law as any other person to accept or reject the offer which was made to him. Having accepted, he still had open to him all the rights and remedies available to other persons similarly situated to enforce any rights under his contract, which has been denied to him, assuming there are any, and to pursue in the ordinary Courts of the land, such remedies for a breach as are open to him to exactly the same extent as other persons similarly situated. He has not been discriminated against and he has not been denied the protection of any laws which others similarly situated could claim...
11. ...
The Petitioner has not been denied any opportunity of employment or of appointment. He has been treated just like any other person to whom an offer of temporary employment under these conditions was made. His grievance when analysed, not one of personal differentiation but is against an offer of temporary employment on special terms as opposed to permanent employment. But of course the State can enter into contracts of temporary employment and impose special terms in each case, provided they are not inconsistent with the Constitution, and those who chose to accept those terms and enter into the contract are bound by them, even as the State is bound." (emphasis supplied)
24. In Parshotam Lal Dhingra v. Union of India (AIR 1958 SC 36), this court followed the view taken in Satish Chandra's case (supra). Any reference to the case law on the subject would remain incomplete unless we also refer to the decision of the Constitution Bench of this court in Delhi Transport Corporation v. D.T.C.Mazdoor Congress & Ors. (1991) supp (1) SCC 600, where this Court was dealing with the constitutional validity of Regulation 9 (b) that authorized termination on account of reduction in the establishment or in circumstances other than those mentioned in clause (a) to Regulation 9 (b) by service of one month's notice or pay in lieu thereof. Sawant, J. in his concurring opinion held that the provision contained the much hated rules of hire and fire reminiscent of the days of laissez faire and unrestrained freedom of contract and that any such rule would have no place in service conditions.
25. To the same effect was an earlier decision of this Court in Central Inland Water Transport Corporation Ltd. & Anr. v. Brojo Nath Ganguly & Anr. (1986) 3 SCC 156, where the Court had refused to enforce an unfair and unreasonable contract or an unfair and unreasonable clause in a contract entered into between parties who did not have equal bargaining power.
26. A conspectus of the pronouncements of this court and the development of law over the past few decades thus show that there has been a notable shift from the stated legal position settled in earlier decisions, that termination of a contractual employment in accordance with the terms of the contract was permissible and the employee could claim no protection against such termination even when one of the contracting parties happened to be the State. Remedy for a breach of a contractual condition was also by way of civil action fordamages/compensation. With the development of law relating to judicial review of administrative actions, a writ Court can now examine the validity of a termination order passed by public authority. It is no longer open to the authority passing the order to argue that its action being in the realm of contract is not open to judicial review. A writ Court is entitled to judicially review the action and determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action, no matter the action is in the realm of contract. Having said that we must add that judicial review cannot extend to the Court acting as an appellate authority sitting in judgment over the decision. The Court cannot sit in the arm chair of the Administrator to decide whether a more reasonable decision or course of action could have been taken in the circumstances. So long as the action taken by the authority is not shown to be vitiated by the infirmities referred to above and so long as the action is not demonstrably in outrageous defiance of logic, the writ Court would do well to respect the decision under challenge.
27. Applying the above principles to the case at hand, we have no hesitation in saying that there is no material to show that there is any unreasonableness, unfairness, perversity or irrationality in the action taken by the Corporation. The Regulations governing the service conditions of the employees of the Corporation, make it clear that officers in the category above E-9 had to be appointed only on contractual basis.
28. It is also evident that the renewal of the contract of employment depended upon the perception of the management as to the usefulness of the respondent and the need for an incumbent in the position held by him. Both these aspects rested entirely in the discretion of the Corporation. The respondent was in the service of another employer before he chose to accept a contractual employment offered to him by the Corporation which was limited in tenure and terminable by three months' notice on either side. In that view, therefore, there was no element of any unfair treatment or unequal bargaining power between the appellant and the respondent to call for an over-sympathetic or protective approach towards the latter. We need to remind ourselves that in the modern commercial world, executives are engaged on account of their expertise in a particular field and those who are so employed are free to leave or be asked to leave by the employer. Contractual appointments work only if the same are mutually beneficial to both the contracting parties and not otherwise."
41. The reading of the judgment of the Hon'ble Supreme Court shows, that the writ Court is entitled to judicial review of the action by State or its agencies even in contract matter and determine, whether there was any illegality, perversity, unreasonableness, unfairness or irrationality, that would vitiate the action, but judicial review cannot extend to the Court acting an an appellate authority sitting in judgment over the decision.
42. This Court cannot sit in the arm chair of the Administrator to decide whether a more reasonable decision or course of action could have been taken in the given circumstances.
43. When the settled law is applied, the plea of the petitioner cannot be accepted, as it was for the Bank to see overall performance and requirement of the Bank to see whether the contract was to be extended or not. The action of the respondents in taking into view the total performance of petitioner, as was done in the case of other 11 employees, cannot be said to be suffering from any illegality, perversity, unreasonableness, nor it can be said to be irrational for terming it to be hit by Article 14 of the Constitution of India, as contended by the learned counsel for the petitioner. The decision cannot be interfered with only on the ground, that other view was also possible, as this Court does not sit in appeal over the decision of the Bank.
44. For the reasons stated above, finding no merits in this writ petition, it is ordered to be dismissed, but with no order as to costs.
45. Connected miscellaneous petitions are closed.
ar To
1. THE CHIEF GENERAL MANAGER APPELLATE AUTHORITY FOR OMRS) STATE BANK OF INDIA, LOCAL HEAD OFFICE, NUNGAMBAKKAM, CHENNAI
2. GENERAL MANAGER APPOINTING AUTHORITY) HUMAN RESOURCES DEPT., LOCAL HEAD OFFICE, CIRCLE TOP HOUSE, POST BOX NO.737, 16, COLLEGE LANE CHENNAI 6
3. CHIEF GENERAL MANAGER (RURAL BUSINESS) STATE BANK OF INDIA, RURAL BUSINESS GROUP, CORPORATE CENTRE, 8TH FLOOR, STATE BANK BHAVAN, MADAMS CAMA ROAD MUMBAI 21