Gujarat High Court
Malti Mehta & vs Education Multimedia Research Centre & ... on 14 July, 2017
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/2760/2006 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 2760 of 2006
[On note for speaking to minutes of order dated 15/06/2017 in
C/SCA/2760/2006 ]
==========================================================
MALTI MEHTA & 1....Petitioner(s)
Versus
EDUCATION MULTIMEDIA RESEARCH CENTRE & 4....Respondent(s)
==========================================================
Appearance:
MR AJ YAGNIK, ADVOCATE for the Petitioner(s) No. 1 - 2
DELETED for the Respondent(s) No. 4
MR MITUL K SHELAT, ADVOCATE for the Respondent(s) No. 5
MR S N THAKKAR, ADVOCATE for the Respondent(s) No. 1
MRS VD NANAVATI, ADVOCATE for the Respondent(s) No. 2 - 3
RULE SERVED for the Respondent(s) No. 1 - 3
==========================================================
CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 14/07/2017
ORAL ORDER
1. After rendition of the judgment dated 15.6.2017 in Special Civil Application No.2760 of 2006, original petitioner has taken out a note dated 4.7.2017, by way of Speaking to Minutes, and has stated, inter alia, that:
"Whilst disposing of the captioned matter the Hon'ble Court allowed the prayer of the Petitioner for regularization of payscale from the date of the Petitioner's appointment as adhoc appointee i.e. from Page 1 of 3 HC-NIC Page 1 of 29 Created On Fri Aug 18 10:53:30 IST 2017 1 of 29 C/SCA/2760/2006 ORDER the year 2000.
Inadvertently, the Hon'ble Court while passing the order dated 15.6.2017, in paragraph 21 of the order the Hon'ble Court has stated, "The competent authority of the respondent will reconsider the case of the petitioners in light of the foregoing discussion and will pass appropriate order in respect of the salary to be paid to the petitioners for the period from May, 2005 to 2005."
Due to this inadvertent oversight, the undersigned is constrained to write this speaking to minutes note to your goodself for consideration and request you to put the matter before the Hon'ble Judge for his perusal and kind indulgence."
2. The said note is circulated for orders under office note dated 11.7.2017.
3. Mr.Joshi, learned advocate for Mr.Yagnik, learned advocate for the petitioners is present.
Mr.Thakkar and Ms.Shelat, learned advocates for the respondents are present.
4. Heard learned advocates for the parties.
5. Learned advocate for the petitioners referred to paragraphs No.9 and 13 of the judgment dated 15.6.2017 and submitted that instead of mentioning 'May 2000 to 2006', inadvertently in paragraph No.21(a) 'May 2005 to 2006' is mentioned. The said error is required to be Page 2 of 3 HC-NIC Page 2 of 29 Created On Fri Aug 18 10:53:30 IST 2017 2 of 29 C/SCA/2760/2006 ORDER corrected.
6. After considering the said submission, learned advocates for respondents No.1 and 5 have not objection against the request mentioned in the Note dated 4.7.2017.
7. In this view of the matte, the office is directed to delete the words 'May 2005 to 2006' from last line of paragraph No.21(a) of the judgment dated 15.6.2017 in Special Civil Application No.2760 of 2006 and substitute the said words by words 'May 2000 to September 2006'.
8. Appropriate and necessary corrections shall be carried out in the judgment dated 15.6.2017.
Thereafter the office shall issue fresh certified copy of the judgment to the concerned parties.
With the aforesaid clarification, the office note is disposed of.
(K.M.THAKER, J.)
Bharat
Page 3 of 3
HC-NIC Page 3 of 29 Created On Fri Aug 18 10:53:30 IST 2017
3 of 29
C/SCA/2760/2006 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 2760 of 2006 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.M.THAKER ========================================================== 1 Whether Reporters of Local Papers may be allowed Yes to see the judgment ?
2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of No the judgment ?
4 Whether this case involves a substantial question of No law as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== MALTI MEHTA & 1....Petitioner(s) Versus EDUCATION MULTIMEDIA RESEARCH CENTRE & 4....Respondent(s) ========================================================== Appearance:
MR AJ YAGNIK, ADVOCATE for the Petitioner(s) No. 1 - 2 DELETED for the Respondent(s) No. 4 MR MITUL K SHELAT, ADVOCATE for the Respondent(s) No. 5 MR S N THAKKAR, ADVOCATE for the Respondent(s) No. 1 MRS VD NANAVATI, ADVOCATE for the Respondent(s) No. 2 - 3 RULE SERVED for the Respondent(s) No. 1 - 3 ========================================================== CORAM: HONOURABLE MR.JUSTICE K.M.THAKER Date : 15/06/2017 Page 1 of 26 HC-NIC Page 4 of 29 Created On Fri Aug 18 10:53:30 IST 2017
4 of 29 C/SCA/2760/2006 JUDGMENT ORAL JUDGMENT
1. Heard Mr. Ishan Joshi,learned advocate for Mr. A.J. Yagnik, learned advocate for the petitioners, Ms. V.D. Nanavati, learned advocate for respondent nos. 2 and 3 and Mr. Thakkar, learned advocate for respondent no.1.
2. In present petition, the petitioner has prayed, inter alia, that:
"18(B) Declare that action and decision of respondents in not giving regular pay scale of Rs.8000 27510,500 of ProducerI to the petitioners after their adhoc promotion as such in the year 2000 is arbitrary, discriminatory, irrational, violative of Promotion Policy and therefore, violative of Articles 14, 16 and 21 of the Constitution of India and hence illegal and unconstitutional;
(C) Direct the respondents to pay to the petitioners pay scale of Rs.8,00027510,500 from the date of their adhoc promotion to the post of ProducerI along with all the consequential monetary and other reliefs; AND be further pleased to direct the respondents to pay arrears of difference in salary in salary till actual payment with interest at the rate of 10% per annum within a stipulated period of time."
3. The facts involved in and the dispute raised in present petition are in narrow campus.
3.1 It is not in dispute that both the petitioners were working as "Production Assistant" and the pay scale attached to said Page 2 of 26 HC-NIC Page 5 of 29 Created On Fri Aug 18 10:53:30 IST 2017 5 of 29 C/SCA/2760/2006 JUDGMENT post was Rs. 6,50020010,500.
3.2 It is also not in dispute that in or around May, 2000, the petitioners came to be appointed/ promoted to the post of ProducerI. 3.3 It is also not in dispute that at the relevant time pay scale attached to the post of ProducerI was Rs.8,00027513,500.
3.4 It is also not in dispute that the petitioners came to be appointed/ promoted as ProducerI in May, 2000, vide Order dated 30.5.2000.
3.5 From the said order dated 30.5.2000, it comes out that the said appointment/ promotion was granted on adhoc basis and subject to approval/sanction by UGC.
3.6 It is also not in dispute that in the said order dated 30.5.2000, it was clarified that they will be paid salary in the pay scale of 6,500 20010,500 i.e. same payscale which was attached to the post of Production Assistant.
3.7 It is also not in dispute that the petitioners continued to work as such i.e. as Page 3 of 26 HC-NIC Page 6 of 29 Created On Fri Aug 18 10:53:30 IST 2017 6 of 29 C/SCA/2760/2006 JUDGMENT ProducerI on adhoc basis until October/ November, 2006.
3.8 It is given out by learned advocate for respondent no.1 that somewhere in January, 2005, an advertisement inviting application for appointment to the post of ProducerI was issued and present petitioners had submitted their respective applications.
3.9 It is also given out that the applications by petitioners were considered and during selection process both the petitioners came to be selected for the post of ProducerI and accordingly they came to be appointed on regular basis on the said post with effect from 13.10.2006.
4. In this background, the petitioners have prayed for above quoted relief. The said relief are prayed of on the strength of below mentioned averments in the petition:
"3. The respondent no.1 is Educational Multimedia Research Centre at Ahmedabad, Gujarat University. It is funtionally autonomous department of the Gujarat University. The respondent no.2 is a Vice Chancellor of Gujarat University and the respondent no.3 is the Gujarat University represented by its Registrar. The Gujarat University is established by and under the Page 4 of 26 HC-NIC Page 7 of 29 Created On Fri Aug 18 10:53:30 IST 2017 7 of 29 C/SCA/2760/2006 JUDGMENT Gujarat University Act.
The respondent no.4 is a nodal agency constituted by respondent no.5. It is an agency through which all the 17 EMRCs in India are connected to respondent UGC. The respondent no.5 is University Grants Commission, a statutory body established by and under the University Grants Commission Act. Therefore, writ petition under Article 226 is maintainable against the respondents. Respondent UGC provides 100% grant to the respective 17 Universities since the beginning to meet all the expenditure of all the EMRCs. The fund is allocated to the Universities, the respondent Gujarat University in the present case and through which all the payments are made to respective EMRC. Now, by the latest Memorandum of Understanding attempts are being made out to change the working relationship among the signatories of the Memorandum of Understanding namely the respondent Gujarat University, respondent UGC and respondent CEC. Respondent Gujarat University, respondent CEC and respondent UGC are in joint control of respondent EMRC since 1998. Prior thereto, it was only respondent Gujarat University which was in exclusive control of the respondent EMRC treating it was one of its departments.
Petitioners were appointed in the year 1984 by the respondent Gujarat University when EMRC was one of its departments. Their appointments letters are selfexplanatory. The petitioners, therefore, state that essentially it is the Gujarat University which is their employer.
4. The petitioner no. 1 and 2 were appointed as Production Assistant in the EMRC, Ahmedabad by the respondent Gujarat University on 16.10.1984. They both were confirmed by letter of respondent Vice Chancellor dated 09.01.1986 based on the approval of the Executive Council of Gujarat University. Xerox copies of the appointment and confirmation letters of petitioner no.1 and 2 are annexed hereto and marked as ANNEXUREA collectively.
5. The petitioner no.1 and 2 are highly educated and have excellent track record. Though they were appointed as Production Assistant, they have been working as ProducerI since the beginning Collectively, both of them have produced maximum number of programmes for EMRC, Ahmedabad. With due respect to other producers, who have been appointed as such from the very beginning, the track record of the petitioners suggest that their contribution is comparatively much more. Type copies of biodata of petitioner no.1 and 2 along with the list of the programmes produced by them are annexed hereto and marked as ANNEXUREB Page 5 of 26 HC-NIC Page 8 of 29 Created On Fri Aug 18 10:53:30 IST 2017 8 of 29 C/SCA/2760/2006 JUDGMENT collectively.
6. The petitioners stated that EMRC, Ahmedabad has five sanctioned post of ProducerI, as against that only three posts have been filled up and two posts are lying vacant since the beginning.
7. The petitioners state that looking to their educational qualification, excellent performance in the backdrop of eligibility criteria given for ProducerI and keeping in mind that two posts of ProducerI were lying vacant, the petitioners were given adhoc promotion to the post of ProducerI in the year 2000.
Xerox copies of orders of promotion of petitioner no.1 and 2 given in the year 2000 are annexed hereto and marked as ANNEXUREC collectively. The petitioners state that respondent UGC has till date to their best information not disapproved their adhoc promotion.
8. For the reasons best known to respondents, though petitioners were promoted from the post of Production Assistant to the post of ProducerI, their pay scale was kept the same. They were not given one of the essential benefits of promotion of rise in the pay scale from Rs.6,50020010,500 to Rs. 8,00027513,500.
One of the reasons for denying the regular pay scale of ProducerI could be that petitioners were given higher pay scale as Production Assistant. However, it was not so and even otherwise, this cannot be the reason for denying the regular pay scale. The petitioners have, thereafter, made number of representations for redressal of their grievances in this respect, but till date there has been no response from the respondents at all. The petitioners have, with their limited understanding of law, stated in their representations that their case also should be considered on the ground of equal pay for equal work.
Xerox copies of some of the representations made by the petitioners to the respondents for being given the pay scale of ProducerI after their adhoc promotion as such in the year 2000 till date are annexed hereto and marked ANNEXURED collectively. "
5. The limited question which arises for consideration in this petition is that whether the petitioners would be entitled for salary in pay scale of Rs. 800027513,500 i.e. the scale Page 6 of 26 HC-NIC Page 9 of 29 Created On Fri Aug 18 10:53:30 IST 2017 9 of 29 C/SCA/2760/2006 JUDGMENT attached to the post of ProducerI during the period they worked as such on adhoc basis.
6. Mr. Joshi, learned advocate for the petitioners reiterated facts and contentions stated in the petition and submitted that though petitioners were promoted/ appointed to higher post, same salary was continued and they were not paid higher salary and that therefore the relief should be granted. Any other submission is not made.
7. Mr. Thakkar, learned advocate for respondent no.1 relied on the appointment order dated 20.5.2000 whereby the petitioners came to be appointed/ promoted on adhoc basis to the post of ProducerI and on strength of the said document, he submitted that petitioners had consciously and with full knowledge accepted the appointment on adhoc basis and had accepted salary in pay scale of Rs.6,50020010,500 and that therefore after having accepted the said post on adhoc basis and Page 7 of 26 HC-NIC Page 10 of 29 Created On Fri Aug 18 10:53:30 IST 2017 10 of 29 C/SCA/2760/2006 JUDGMENT after having accepted said pay scale, the petitioners, now, cannot turn around and claim that they should be paid salary in the pay scale of Rs.8,00027513,500. It is also contended that their appointment was only adhoc and not on regular basis and it was subject to approval / sanction by UGC, which the respondent no.1 never received. It is also contended that the petitioners accepted the terms and conditions of their appointment to the post of ProducerI on adhoc basis without objection and that, therefore, the petitioners' action viz.
Subsequently raising such demand is unjustified.
8. In light of the fact that at the relevant time the pay scale attached to the post of ProducerI was Rs.8,00027513,500, there was no justification for not granting salary to the petitioners in pay scale attached to the post of ProducerI and/ or in paying salary to the Petitioners in the same scale which was attached to their original post i.e. Production Assistant.
Page 8 of 26
HC-NIC Page 11 of 29 Created On Fri Aug 18 10:53:30 IST 2017
11 of 29
C/SCA/2760/2006 JUDGMENT
9. From the facts of this case, it has emerged that before the petitioners came to be appointed/ promoted to the post of ProducerI in May, 2000 they were working as Production Assistant and the salary attached to the Production Assistant was Rs.6,50020010,500. Meaning thereby, even when the petitioners came to be appointed/ promoted to the post of ProducerI and despite the fact that during the period from May, 2000 to October/ November, 2006, they were required to work and they actually worked on higher post i.e. ProducerI, they were not paid salary in the scale attached to the post of ProducerI but the respondents paid salary to the petitioners in pay scale attached to the post of Production Assistant.
10. As mentioned above, on strength of the order dated 20.5.2000 it is contended that the petitioners had accepted the said condition.
Page 9 of 26
HC-NIC Page 12 of 29 Created On Fri Aug 18 10:53:30 IST 2017
12 of 29
C/SCA/2760/2006 JUDGMENT
The sole document on which reliance is placed is order dated 20.05.2000 and solitary defence is that the petitioners had accepted (1) said order and (2) the promotion/ appointment on higher post i.e. ProducerI; and (3) the payscale (which was clearly mentioned in said order) and that they had accepted condition without objection.
11. However, what is pertinent to note is the fact that (1) though petitioners were appointed/ promoted to higher post; (2) however their salary continued to be in the payscale attached to lower/ their original post (3) though the petitioners were required to work as ProducerI and though they performed and discharged duties and responsibilities of higher post they were paid salary of lower post/ original post; and (4) most important is the fact that the respondents, neither at the time when the petitioners came to be appointed/ promoted nor subsequently i.e. during entire tenure when they worked as ProducerI nor during pendency of petition the Page 10 of 26 HC-NIC Page 13 of 29 Created On Fri Aug 18 10:53:30 IST 2017 13 of 29 C/SCA/2760/2006 JUDGMENT respondent offered or could make out any special or strong justification for not paying salary in the payscale attached to the post on which the petitioners were appointed/ promoted and they discharged the duties.
A State, in absence of any special and strong reason and justification, cannot deny to an employee the salary of the post where he is required to work ( on his appointment/ promotion) i.e. he should be paid salary for duties he performs and responsibilities he discharged. If an employee is required to discharge duties and functions of higher post (either on appointment/ promotion even for short period he would be eligible for the salary of th post where he is required to work ( the post where he actually discharges the duty).
It is pertinent that the petitioners were not given additional charge of other/ higher post.
Such is not even the case of the respondents.
Even the respondents have not setup or made out such case/ defence. Further, during entire tenure Page 11 of 26 HC-NIC Page 14 of 29 Created On Fri Aug 18 10:53:30 IST 2017 14 of 29 C/SCA/2760/2006 JUDGMENT the petitioners were not paid charge allowance or additional pay.
12. In present case, the issue before the respondent was whether it can deprive or deny an employee the salary in the pay scale attached to the post on which he is required to work and whether it can pay salary to the employee in pay scale attached to lower post though the employee is required to work on higher post.
13. In present case, most important facts are (a) not for short period, but for almost 6 years they were required to work on the post they were appointed/ promoted; (b) for such long period the petitioners were made to work at Salary in the Scale attached to lower post; and (c) the only ground on which the right to receive salary of the post on which employee performed duty for almost 6 years was that the promotion/ appointment was subject to approval by UGC.
Page 12 of 26
HC-NIC Page 15 of 29 Created On Fri Aug 18 10:53:30 IST 2017
15 of 29
C/SCA/2760/2006 JUDGMENT
If the respondent did not get approval then appropriate action could have been taken in accordance with Rules, however for the period during which the petitioner performed duties on higher post, they would be entitled for salary attached to said post.
In present case, besides aforesaid aspects another fact which deserves to be kept in focus is that the petitioners worked on said higher post for almost 6 years. The salary of said post could not and should not have been denied to the petitioner, more so for such long period.
14. The respondents have also failed to make out any special ground for denying said ground to the petitioners.
15. If the condition is arbitrary, unconscinable, unreasonable then merely because an employee was obliged to accept the said condition, it cannot deter the Court to interfere in the matter and Page 13 of 26 HC-NIC Page 16 of 29 Created On Fri Aug 18 10:53:30 IST 2017 16 of 29 C/SCA/2760/2006 JUDGMENT set aside such arbitrary, unconscinable and unreasonable condition.
16. In this context reference can be had to the observation in the case of Central Inland Water Transport Corporation v/s. Brij Nath Ganguly (AIR 1986 SC 1571) wherein Hon'ble Apex Court observed that:
"76. Under S.19 of the Contract Act, when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. It is not the case of either of the contesting Respondents that there was any coercion brought to bear upon him or that any fraud or misrepresentation had been practised upon him. Under section 19A, when consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused and the Court may set aside any such contract either absolutely or if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just. Sub sec. (1) of S. 16 defines "Undue influence" as follows :
"16. 'Undue influence' defined. (1) A contract is said to be induced by 'undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other."
The material provisions of subsee. (2) of S. 16 are as follows :
"(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another
(a) where he holds a real or apparent authority over the other .........."
We need not trouble ourselves with the other sections of the Contract Act except Ss. 23 and 24. Section 23 states that the consideration or object of an agreement is lawful unless inter alia the Court regards it as opposed to public policy. This section further provides that every agreement of which the object or consideration is unlawful is void. Under S. 24, if any part of a single Page 14 of 26 HC-NIC Page 17 of 29 Created On Fri Aug 18 10:53:30 IST 2017 17 of 29 C/SCA/2760/2006 JUDGMENT consideration for one or more objects, or any one or any part of any one of several considerations for a single object is unlawful, the agreement is void. The agreement is, however, not always void in its entirety for it is well settled that if several distinct promises are made for one and the same lawful consideration, and one or more of them be such as the law will not enforce, that will not of itself prevent the rest from being enforceable. The general rule was stated by Willes, J., in Pickering v. Ilfracombe Ry. Co. (1868) 3 CP 235 (at page 250) as follows :
"The general rule is that, where you cannot sever the illegal from the legal part of a covenant, the contract is altogether void; but where you can sever them, whether the illegality be created by statute or by the common law, you may reject the bad part and retain the good".
77. Under which head would an unconscionable bargain fall? If it falls under the head of undue influence, it would be voidable but if it falls under the head of being opposed to public policy, it would be void. No case of the type before us appears to have fallen for decision under the law of contracts before any court in India nor has any case on all fours of a Court in any other country been pointed out to us. The word "unconscionable" is defined in the Shorter Oxford English Dictionary, Third Edition, Volume II, page 2288, when used with reference to actions. etc. as "showing no regard for conscience; irreconcilable with what is right or reasonable". An unconscionable bargain would, therefore, be one which is irreconcilable with what is right or reasonable.
78. Although certain types of contracts were illegal or void, as the case may be, at Common Law, for instance, those contrary to public policy or to commit a legal wrong such as a crime or a tort, the general rule was of freedom of contract. This rule was given full play in the nineteenth century on the ground that the parties were the best judges of their own interests, and if they freely and voluntarily entered into a contract, the only function of the Court was to enforce it. It was considered immaterial that one party was economically in a stronger bargaining position than the other; and if such a party introduced qualifications and exceptions to his liability in clauses which are today known as "exemption clauses" and the other party accepted them, then full effect would be given to what the parties agreed. Equity, however, interfered in many cases of harsh or unconscionable bargains, such as, in the law relating to penalties, forfeitures and mortgages. It also interfered to set aside harsh or unconscionable contracts for salvage services rendered to a vessel in distress, or unconscionable contracts with expectant heirs in which a person, usually a moneylender. gave ready cash to the heir in return for the property which he expects to inherit and thus to get such property at a gross undervalue. It also interfered with harsh or Page 15 of 26 HC-NIC Page 18 of 29 Created On Fri Aug 18 10:53:30 IST 2017 18 of 29 C/SCA/2760/2006 JUDGMENT unconscionable contracts entered into with poor and ignorant persons who had not received independent advice (See Chitty on Contracts, Twentyfifth Edition, Volume I, paragraphs 4 and 516).
82. It would appear from certain recent English cases that the Courts in that country have also begun to recognize the possibility of an unconscionable bargain which could be brought about by economic duress even between parties who may not in economic terms be situate differently (See, for instance, Occidental Worldwide Investment Corpn. V. Skibs A/S Avanti (1976), 1 Lloyd's Rep. 293, North Ocean Shipping Co. Lid. v. Hyundai Construction Co. Ltd. (1979) QB 705, Pao On v. Lau Yin Long (1980) AC 614 and Universe Tankships of Monrovia v. International Transport Workers Federation (1981) ICR 129, reversed in (1982) 2 WLR 803, and the commentary on these cases in Chitty on Contracts, Twentyfifth Edition, Volume 1, paragraph 486).
83. Another jurisprudential concept of comparatively modern origin which has affected the law of contracts is the theory of "distributive justice". According to this doctrine, distributive fairness and justice" in the possession of wealth and property can be achieved not only by taxation but also by regulatory control of private and contractual transactions even though this might involve some sacrifice of individual liberty. In Lingappa Pochanna Appelwar v. State of Maharashtra, (1985) 1 SCC 479 : (AIR 1985 SC 389), this Court, while upholding the constitutionality of the Maharashtra Restoration of Lands to Scheduled Tribes Act 1974, said (at page 493) (of SCC) : (at p. 398 of AIR) :
"The present legislation is a typical illustration of the concept of distributive justice, as modern jurisprudents know it. Legislators, Judges and administrators are now familiar with the concept of distributive justice. Our Constitution permits and even directs the State to administer what may be termed distributive justice'. The concept of distributive justice in the sphere of law making connotes, inter alia, the removal of economic inequalities and rectifying the injustice resulting from dealings or transactions between unequals in society. Law should be used as an instrument of distributive justice to achieve a fair division of wealth among the members of society based upon the principle: 'From each according to his capacity, to each according to his needs'. Distributive justice comprehends more than achieving lessening of inequalities by differential taxation, giving debt relief or distribution of property owned by one to many who have none by imposing ceiling on holdings, both agricultural and urban, or by direct regulation of contractual transactions by forbidding certain transactions and, perhaps, by requiring others. It also means that those who have been deprived of their Page 16 of 26 HC-NIC Page 19 of 29 Created On Fri Aug 18 10:53:30 IST 2017 19 of 29 C/SCA/2760/2006 JUDGMENT properties by unconscionable bargains should be restored their property. All such laws may take the form of forced redistribution of wealth as a means of achieving a fair division of material resources among the members of society or there may be legislative control of unfair agreements."
(Emphasis supplied) When our Constitution states that it is being enacted in order to give to all the citizens of India "JUSTICE, social, economic and political", when clause (1) of Art. 38 of the Constitution directs the State to strive to promote the welfare of the people by securing and protecting as effectively as it may be social order in which social, economic and political justice shall inform all the institutions of the national life, when clause (2) of Art. 38 directs the State, in particular, to minimize the inequalities in income, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations, and when Art. 39 directs the State that it shall, in particular, direct its policy towards securing that the citizens, men and women equally, have the right to an adequate means of livelihood and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment and that there should be equal pay for equal work for both men and women, it is the doctrine of distributive justice which is speaking through these words of the Constitution.
89. As seen above, apart from judicial decisions, the United States and the United Kingdom have statutorily recognized, at least in certain areas of the law of contracts, that there can be unreasonableness (or lack of fairness, if one prefers that phrase) in a contract or a clause in a contract where there is inequality of bargaining power between the parties although arising out of circumstances not within their control or as a result of situations not of their creation. Other legal systems also permit judicial review of a contractual transaction entered into in similar circumstances. For example, section 138(2) of the German Civil Code provides that a transaction is void "when a person" exploits "the distressed situation, inexperience, lack of judgmental ability, or grave weakness of will of another to obtain the grant or promise of pecuniary advantages........ which are obviously disproportionate to the performance given in return." The position according to the French law is very much the same.
90. Should then our courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of nineteenthcentury theories? Should the strong be permitted to push the weak to the Page 17 of 26 HC-NIC Page 20 of 29 Created On Fri Aug 18 10:53:30 IST 2017 20 of 29 C/SCA/2760/2006 JUDGMENT wall? Should they be allowed to ride roughshod over the weak? Should the courts sit back and watch supinely while the strong trample under foot the rights of the weak? We have a Constitution for our country. Our judges are bound by their oath to "uphold the Constitution and the laws". The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Art. 14. This principle is that, the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the. contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today's complex world of giant corporations with their vast infrastructural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its, own facts and circumstances.
91. It is not as if our civil courts have no power under the existing law. Under section 31(1) of the Specific Relief Act, 1963 (Act No. 47 of 1963), any person against whom an instrument is void or voidable, and who has Page 18 of 26 HC-NIC Page 21 of 29 Created On Fri Aug 18 10:53:30 IST 2017 21 of 29 C/SCA/2760/2006 JUDGMENT reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable, and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.
92. Is a contract of the type mentioned above to be adjudged voidable or void? If it was induced by undue influence, then under section 19A of the Indian Contract Act, it would be voidable. It is, however, rarely that contracts of the types to which the principle formulated by us above applies are induced by undue influence as defined by S. 16(1) of the Contract Act, even though at times they are between parties one of whom holds a real or apparent authority over the other. In the vast majority of cases, however, such contracts are entered into by the weaker party under pressure of circumstances, generally economic, which results in inequality of bargaining power. Such contracts will not fall within the four corners of the definition of "undue influence" given in section 16(1). Further, the majority of such contracts are in a standard or prescribed form or consist of a set of rules. They are not contracts between individuals containing terms meant for those individuals alone. Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party with superior bargaining power with a large number of persons who have far less bargaining power or no bargaining power at all. Such contracts which affect a large number of persons or a group or groups of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest. To say that such a contract is only voidable would be to compel each person with whom the party with superior bargaining power had contracted to go to court to have the contract adjudged voidable. This would only result in multiplicity of litigation which no court should encourage and would also not be in the public Interest. Such a contract or such a clause in a contract ought, therefore, to be adjudged void. While the law of contracts in England is mostly judgemade, the law of contracts in India is enacted in a statute, namely, the Indian Contract Act, 1872. In order that such a contract should be void, it must fall under one of the relevant sections of the Indian Contract Act. The only relevant provision in the Indian Contract Act which can apply is S. 23 when it states that "The consideration or object of an agreement is lawful, unless ... the court regards it as ......opposed to public policy."
93. The Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy"
are incapable of precise definition. Public policy, however, is not the policy of a particular government. It Page 19 of 26 HC-NIC Page 22 of 29 Created On Fri Aug 18 10:53:30 IST 2017 22 of 29 C/SCA/2760/2006 JUDGMENT connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which, were once considered against public policy are now being upheld by the courts and similarly where there has been a wellrecognized head of public, policy,the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from Inventing a new head of public policy. There are two schools of thought "the narrow view" school and "the broad view" school. According to the former, courts cannot create new heads of public policy whereas the latter countenances judicial lawmaking in this area. The adherents of "the narrow view" school would not invalidate a contract on the ground of public policy unless that particular ground had been well established by authorities. Hardly ever has the voice of the timorous spoken more clearly and loudly than in these words of Lord Davey in Janson v. Driefontein Consolidated Mines, Limited (1902) AC 484, 500, "Public policy is always an unsafe and treacherous ground for legal decision." That was in the year 1902. Seventyeight years"
earlier, Burrough, J., in Richardson v. Mellish (1824) 2 Bing 229, 252 SC 130 ER 294, 303, and (182434) All ER Reprint 258, 266. described public policy as "a very unruly horse, and when once you get astride it you never know where it will carry you." The Master of the Rolls, Lord Denning, however, was not a man to shy away from unmanageable horses and in words which' conjure up before our eyes the picture of the young Alexander the Great Taming Bucephalus, he said in Enderby Town Football Club Ltd. v. Football Association Ltd. (1971) Ch 591, 606, "With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles." Had the timorous always held "the field, not only the doctrine of public policy but even the Common Law or the principles of Equity would never have evolved. Sir William Holdsworth in his "History of English Law", Volume III, page 55, has said :
"In fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them."
It is thus clear that the principles. governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must Page 20 of 26 HC-NIC Page 23 of 29 Created On Fri Aug 18 10:53:30 IST 2017 23 of 29 C/SCA/2760/2006 JUDGMENT in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution.
101. The Corporation is a large organization. It has offices in various parts of West Bengal, Bihar and Assam as shown by the said Rules, and possibly in other States also. The said Rules form part of the contract of employment between the Corporation and its employees who are not workmen. These employees had no powerful workmen's Union to support them They had no voice in the framing of the said Rules. They had no choice but to accept the said Rules as part of their contract of employment. There is gross disparity between the Corporation and its employees, whether they be workmen or officers. The Corporation can afford to dispense with the services of an officer. It will find hundreds of others to take his place but an officer cannot afford to lose his job because if he does so, there are not hundreds of jobs waiting for him. A clause such as clause (i) of Rule 9 is against right and reason. It is wholly unconscionable. It has been entered into between parties between whom there is gross inequality of bargaining power. Rule 9(i) is a term of the contract between the Corporation and all its officers. It affects a large number of persons and it squarely falls within the principle formulated by us above. Several statutory authorities have a clause similar to Rule 9(i) in their contracts of employment. As appears from the decided cases, the West Bengal State Electricity Board and Air India International have it. Several Government companies apart from the Corporation (which is the First Appellant before us) must be having it. There are 970 Government companies with paidup capital of Rs. 16,414.9 crores as stated in the written arguments submitted on behalf of the Union of India. The Government and its agencies and instrumentalities constitute the largest employer in the country. A clause such as Rule 9(i) in a contract of employment affecting large sections of the public is harmful and injurious to the public interest for it tends to create a sense of insecurity in the minds of those to whom it applies and consequently it is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it is void under section 23 of the Indian Contract Act.
110. We were invited by learned counsel for the Appellants to peruse the judgment in that case. and we did so with increasing astonishment. Though the said judgment bears the date September 18, 1981, we were unable to make out Page 21 of 26 HC-NIC Page 24 of 29 Created On Fri Aug 18 10:53:30 IST 2017 24 of 29 C/SCA/2760/2006 JUDGMENT whether it was a judgment given in the year 1981 or in the year 1881 or even earlier. We find ourselves wholly unable to agree with the view taken by the Division Bench. Apart from the factual aspects of the case, as to which we say nothing, we find every single conclusion reached by the Division Bench and the reasons given in support thereof to be wholly erroneous. The Division Bench overlooked that it was not dealing with a case of a nonspeaking order but with the validity of a regulation. The meaning given by it to the expression "without assigning any reason" was wrong and untenable. Starting with this wrong premise, it has gone from one wrong premise to another. In the light of what we have said earlier about the principles of public policy evolved, and tested by the principle which we have formulated, the said Regulation 48(a) could never have been sustained. In West Bengal State Electricity Board's case (AIR 1985 SC 722), a threeJudge Bench of this Court said as follows (at page 119) (of SCC : (at P. 724 of AIR) :
"The learned counsel for the appellant relied upon Manohar P. Kharkhar v. Raghuraj (1983 Lab IC 350) ( Bom) to contend that Regulation 48 of the Air India Employees' Service Regulations was valid. It is difficult to agree with the reasoning of the Delhi High Court that because of the complexities of modem administration and the unpredictable exigencies arising in the course of such administration it is necessary for an employer to be vested with such powers as those under Regulation 48. We prefer the reasoning of Sawant, J. of the Bombay High Court and that of the Calcutta High Court in the judgment under appeal to the reasoning of the Delhi High Court."
The mention of the Delhi High Court in the above passage is a slip of the pen, for it was the Bombay High Court which decided the case. We are in respectful agreement with what has been stated in the above passage. The Makalu case was wrongly decided and requires to be overruled. We are, however, informed that an appeal against that judgment is pending in this Court and rather than overrule it here, we leave it to the Bench 'which hears that appeal to reverse it."
17. In light of said observations it emerges that on same analogy the condition imposed by the respondent in the order appointing/ promoting the petitioners on higher post viz. Post of Producer I must be held arbitrary and unreasonable. The Page 22 of 26 HC-NIC Page 25 of 29 Created On Fri Aug 18 10:53:30 IST 2017 25 of 29 C/SCA/2760/2006 JUDGMENT condition in question compelled the petitioner to perform duties of higher post at same salary, which they were entitled for prior to the appointment / promotion on higher post. The respondent, as mentioned above, have failed to make out strong and special reason for which the petitioners were denied the salary attached to the post to which they came to be appointed/ promoted and they were paid salary attached to lower post for almost 6 years.
18. In this view of the matter, the condition on which the respondents placed reliance to oppose the petitioners' claim cannot rescue the respondents nor can it justify the action. When the condition itself is unjust and arbitrary. The condition which, in itself, is patently unjust and arbitrary cannot justify action taken on strength of / based on it (i.e. on such arbitrary condition). Therefore, both the defence and the action, should fail.
Page 23 of 26
HC-NIC Page 26 of 29 Created On Fri Aug 18 10:53:30 IST 2017
26 of 29
C/SCA/2760/2006 JUDGMENT
19. Learned advocate for respondent no.1 placed reliance on the decision in case of State of Haryana v. Haryana Veternaty & A.H.T.S Association and another (AIR 2000 SC 3020).
However, on examination of the facts involved in the said decision, it comes out that the facts involved in the case on hand are materially different. In the said decision, the concerned petitioner claimed that his service during the period of adhoc appointment should be taken into account for determining eligibility for selection grade. But the said demand, would, depend on the Rules and Regulations of the establishment which prescribe conditions/qualification for entitlement for selection grade.
20. In light of foregoing discussion and for reasons mentioned above, the Court is of considered view that the petitioners are entitled for salary in pay scale attached to the post of ProducerI for the period during which they were required to work and they actually worked on the Page 24 of 26 HC-NIC Page 27 of 29 Created On Fri Aug 18 10:53:30 IST 2017 27 of 29 C/SCA/2760/2006 JUDGMENT post of ProducerI, even though they worked on said post on adhoc basis.
21. In this view of the matter, following order is passed:
a. The competent authority of the respondent will reconsider the case of the petitioners in light of the foregoing discussion and will pass appropriate order in respect of the salary to be paid to the petitioners for the period from May, 2005 to 2006.
b. Above exercise will be completed within period of 3 weeks from the date of receipt of certified copy of this order.
(c) The arrears required to be paid, if any, shall be paid within two weeks after the competent authority passes final order.
22. With aforesaid direction and clarification, the petition is allowed. Rule is made absolute.
Page 25 of 26 HC-NIC Page 28 of 29 Created On Fri Aug 18 10:53:30 IST 2017 28 of 29 C/SCA/2760/2006 JUDGMENT (K.M.THAKER, J.) saj Page 26 of 26 HC-NIC Page 29 of 29 Created On Fri Aug 18 10:53:30 IST 2017 29 of 29