Executive Committee of U.P. State
Warehousing Corporation, Vs. Chandra Kiran Tyagi  INSC 221 (8 September
08/09/1969 VAIDYIALINGAM, C.A.
CITATION: 1970 AIR 1244 1970 SCR (2) 250 1970
SCC (2) 838
CITATOR INFO :
RF 1971 SC1828 (10) R 1972 SC1450 (4) RF 1973
SC 855 (20,21,42) O 1975 SC1331 (26,31,187,189) R 1976 SC 888 (14,31) F 1977 SC
747 (17) RF 1980 SC 840 (7,8,10,11) RF 1987 SC1422 (10) RF 1989 SC 341 (11) RF
1990 SC 415 (16) RF 1991 SC1525 (10)
Agricultural Produce (Development and
Warehousing) Corporation Act (28 of 1956), s. 54 and Regulations made there
under--Regulation 16(3)--Dismissal of employee without following procedure--If
employee entitled to reinstatement or only damages--Specific Relief Act (1 of
1877). s. 21.
Under s. 28 of the Agricultural Produce
(Development and Warehousing) Corporation Act, 1956, the appellant was
established as the Warehousing Corporation of the State of U.P. Section 54 of
the Act gives power to 'a Warehousing Corporation to make regulations not
inconsistent with the Act and the Rules made there under and the regulations
are to provide for all matters for which provision is necessary or expedient
for the purpose of giving effect to the provisions of the Act. Regulation 11
deals with termination of the service of an employee other than by way of
punishment, while regulation 16 deals with penalties. Under regulation 16(3) an
employee, on whom the punishment of dismissal is to be imposed, has to be given
an opportunity, of tendering his explanation in writing, for cross-examining
the witnesses against him, and for producing evidence in his defense.
The respondent was a warehouseman in the
employment of the appellant. Certain charges were framed against him and he was
suspended pending enquiry into. the charges. After receiving his explanation,
the Enquiry Officer did not take any evidence in respect of any charge.
Instead, he met various persons and collected information, and gave his
findings on the various charges on the basis of the enquiries made by him and
the records. Even the information so collected was not put to the responders.
On the basis of those findings of the Enquiry Officer the respondent was
dismissed from service. He. filed a suit challenging the order of dismissal on
the ground that there was a violation of regulation 16(3) and prayed for a
declaration that the order was null and void and that he was entitled to be
reinstated with full pay and other emoluments. On the questions whether: (1) the
dismissal was not in accordance with regulation 16(3); and (2) the relationship
being one of personal service the respondent was entitled to the declaration
HELD: (1) The termination of the respondents
service was not under regulation 11, but under regulation 16; and the procedure
prescribed by regulation 16(3) was not followed by the Enquiry Officer in the
(2) A declaration to enforce a contract of
personal service will not normally be granted. The! exceptions are:
(i) appropriate cases of public servants who
have been dismissed from service in contravention of Art. 311; (ii) dismissed
workers under industrial and labour law; and (iii) when a statutory body has
acted in breach of a mandatory obligation imposed by a statue. [267 G] 251 In
the present case, a breach has been committed by the appellant of regulation
16(3) as the procedure indicated therein was not followed. The order of
dismissal however was passed by the authority who could pass the order.' Such
an order made in breach of the regulations would only be contrary to the terms
and conditions of relationship between the appellant (employer) and the
respondent (employee), but, it would not be in breach of any statutory
obligation, because, the Act does not guarantee any statutory status to the
respondent, nor does it impose any obligation on the appellant in such matters.
Therefore, the violation of regulation 16(3) as alleged and established in this
case, could only result in the order of dismissal being held to be wrongful,
and in consequence making the appellant liable for damages, but could not have
the effect of treating the respondent as still in service or entitling him to
reinstatement. [271 B--E] Dr. S, B. Dutt v. University of Delhi,  S.C.R.
1235 and S.R. Tewari v. District Board, Agra,
Life Insurance Corporation of India v. Sunil
Kumar Mukherjee,  5 S.C.R. 528, distinguished.
Vine v. National Dock Labour Board, 
Barber v. Manchester Hospital Board,  1 All E.R.322 and Francis v.
Municipal Councilors etc.  3 All E.R.633, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 559 of 1967.
Appeal by special leave from the judgment and
decree dated October 25, 1966 of the Allahabad High Court in Second Appeal No.
4275 of 1965.
S.T. Desai, Naunit Lal and D.N. Misra, for
B.R.L. lyengar, S.K. Mehta, and K.L. Mehta,
for the respondents.
The Judgment of the Court was delivered by
Vaidialingam, J. This appeal, by special leave, by the defendant-appellant, is
directed against the decree and judgment, dated October 25, 1966 of the
Allahabad High Court in Second Appeal No. 4275 of 1965 holding that the order,
dated March 10, 1964 passed against the respondent dismissing him from service,
null and void and that he is entitled to. be reinstated with full pay and
The respondent-plaintiff originally entered
service with the appellant as a Technical Assistant in November 1958 and later
he was promoted to the post of Warehouseman on October 15, 1959. He was
confirmed in 1962 in the said post. Certain charges were framed against the
respondent and pending the enquiry into those charges he was placed under
suspension on 252 September 9, 1963. After an enquiry the respondent was found
guilty and in consequence dismissed from service of the appellant by order
dated March 10, 1964. The respondent instituted Civil Suit No. 201 of 1964
challenging the order of dismissal. According to him the various allegations
made against him were vague and had not been established and there has been no
proper enquiry conducted against him. The enquiry, according to him, was
contrary to the principles of natural justice without giving him an opportunity
to place his defence and it was also held in disregard of cl.
16 of the Regulations framed by the
appellant. He also claimed that he was entitled to the protection under Art.
311 of the Constitution. On these allegations
the plaintiff prayed for a declaration that the order, dated March 10, 1964
.dismissing him from service, was null and void and that he was entitled to be
reinstated with full pay and other emoluments.
The appellant-defendant, in its written
statement, pleaded that the enquiry into the charges leveled .against the
plaintiff was made properly and in compliance with the provisions of the
Regulations and the plaintiff-respondent had been given full opportunity to
participate. in the enquiry which he also did. The appellant pleaded that the'
respondent was no.t entitled to the protection of Art. 311 of the Constitution.
It also pleaded that the order of dismissal passed against the respondent was
perfectly justified and that the suit was false and had to be dismissed with
The trial Court held that the plaintiff was
no.t entitled to the protection under Art. 311 of the Constitution. But it held
that in conducting the enquiry, the Enquiry Officer did not comply with the
provisions of sub-cl. (3) of el. 16 of the Regulations framed by the appellant
and that there had been a violation of the rules of natural justice. In
consequence the trial Court held that the order dismissing the plaintiff was
illegal; but in considering the question as to whether the plaintiff was also
entitled to the further relief claimed by him, viz., of reinstatement with full
pay and emoluments, the trial Court was of opinion that in view of s. 21 of the
Specific Relief Act, 1877 the plaintiff was not entitled to that relief.
Ultimately the Trial Court granted a
declaration, by its judgment dated March 24, 1965 that the order of dismissal
dated March 10, 1964 was void and ineffective and decreed the suit with costs.
The appellant challenged this decision in
appeal before the Civil Judge, Manipuri, in Civil Appeal No. 69 of 1965.
The respondent filed a Memorandum of Cross
Objections challenging the decree of the trial Court declining his relief for
reinstatement with full pay. The learned Civil Judge, by his decree and
judgment dated September 4, 1951 dismissed the appeal and 253 allowed the
Memorandum of Cross-Objections filed by the respondent. The result was that the
plaintiff's suit was decreed, granting both the reliefs as prayed for by him.
The appellant again challenged the decrees of
both the lower Courts before the Allahabad High Court in Second Appeal No. 4275
of 1965. The High Court has, by its judgment dated October 25, 1966 dismissed
the appeal. It agreed with the findings recorded by the two Subordinate Courts
that the enquiry proceedings are vitiated by a violation of the principles of
natural justice and also not being in accordance with Regulation no. 16 ( 3 ).
Regarding the declaration for reinstatement,
the High Court was of the view that the rules and the; Regulations framed under
the Agricultural Produce (Development and Warehousing) Corporations Act, 1956
(Act 28 of 1956) (hereinafter called the Act) had statutory force and that as
there had been a violation of Regulation no. 16 ( 3 ) , the plaintiff was
entitled to the declaration.
Mr. S.T. Desai, learned counsel for the
appellant Corporation raised two contentions: (1 ) A full and fair opportunity
was given to the respondent in the enquiry held against him and there has been
no violation of Regulation no. 16(3). The finding on this point by the High
Court and the Subordinate Courts is erroneous. (2) Even on the basis that the
enquiry is vitiated by non-complianCe with the provisions of Regulation no. 16(3)
framed by the Corporation, the relief declaring that the plaintiff is entitled
to be reinstated in service with full pay should not have been granted as by
doing so the Courts have departed from the normal rule that the specific
performance of a contract of personal service will not be enforced.
In any event, counsel urged that there are
no. special circumstances justifying the grant of that relief in this case.
Mr. B.R.L.Iyengar, learned counsel for the
respondent, pointed out that the findings that the enquiry held was not in
accordance with Regulation no. 16(3) and that there has been a violation of the
principles of natural justice, are concurrent findings recorded by all the
Courts and those:
findings are fully supported by the evidence
Regarding the second contention, Mr. Iyengar
pointed out that when an order of dismissal has been passed in violation of a
statutory provision--as in this case the Regulations--a declaration granted in
favour of the respondent is justified.
The first contention raised by Mr. Desai
relates to the:
question as to whether the enquiry held
against the plaintiff was in accordance with sub-el. ( 3 ) of Regulation 16 of
the Regulations framed by the appellant and whether the enquiry is vitiated by
254 a violation of the principles of natural justice. All the Courts have held
that the respondent is not entitled to the protection under Art. 311 of the
Constitution. Therefore the only question for consideration is whether the
enquiry has been properly conducted in accordance with Regulation no.
16(3). As pointed out by Mr. Iyengar, the
findings on facts on this point have been recorded concurrently by all the
Courts as against the appellant.
It is now necessary to briefly refer to some
of the provisions of the Act under which the appellant has been constituted and
is functioning, as also the Regulations framed by the Board. The Act is one to
provide for the incorporation and regulation of corporations for the purpose of
development and warehousing of agricultural produce on cooperative principles
and for matters connected therewith. Section 2 defines certain expressions,
including 'appropriate Government', 'Board', 'Central Warehousing Corporation',
'prescribed', 'State Warehousing Corporation' and 'Warehousing Corporation'.
The expression 'Board' means the National Co-operative Development and
Warehousing Board established under s. 3.
'State Warehousing Corporation' (the
appellant is one such) means a Warehousing Corporation for a State established
under s. 28. Section 3 provides for the establishment by the Central Government
of a Corporation by the name of National Co-operative Development and
Warehousing Board. Section 17 provides for the Central Government establishing
a Corporation by the name of Central Warehousing Corporation. Section 28
provides for the State Government establishing a Warehousing Corporation for
the State. As pointed out earlier, the appellant is the Warehousing Corporation
for the State of Uttar Pradesh, established under this section. Section 34 lays
down the functions of a State Warehousing Corporation. Section 35 provides for
the; composition of the Executive Committee of a State Warehousing Corporation.
Section 52 gives power to the appropriate Government to make rules to carry out
the purposes of the Act and sub-s. (2) deals with the various matters in
respect of which rules may be framed without prejudice to the generality of the
power contained in sub-s. ( 1 ). Sub-s. (3 ) provides that all rules made by
the appropriate Government under s. 52 shall, as soon as may be after they are
made, be laid before both Houses of Parliament or the Legislature of the State
as the case may be. Section 53 gives power to the Board to make regulations not
inconsistent with the Act and the rules made thereunder, and those regulations
may provide for all matters for which provision is necessary or expedient for
the purpose of giving effect to the provisions of the Act.
Apart from the generality of this power,
sub-s. (2) specifies the various matters regarding which regulations may be 255
framed. Section 54 gives power to the Warehousing Corporations to make
regulations. not inconsistent with the Act and the rules made there under, and
those regulations may provide for a11 matters for which provision is necessary
or expedient for the purpose of giving effect to the provisions of the Act.
Apart from this general power, sub- s. (2) enumerates the various matters in
respect of which regulations can be framed. Under s. 54 the appellant
Corporation had framed regulations. Those regulations. are the Uttar Pradesh
State Warehousing Corporation Regulations, 1961 (hereinafter called the
Regulations). We shall now proceed to consider the provisions of the
Clause 1 (3) of the Regulations provides that
the Regulations. shall apply to all employees of the Corporation and to the
personnel employed on contract in respect of all matters not regulated by the
contract. Clause 2 defines the various expressions. Chapter II of the
Regulations deals with the appointing authority, probation and termination of
service. Regulation 11 deals with termination of service. Chapter IV deals with
Subcl. ( 1 ) of regulation 16 provides for
the imposition of penalties as against an employee found guilty of the various
acts mentioned therein. Sub-cl. (3) of regulation 16, which is relevant for the
present purpose, is as follows:
"(3) No punishment other than that
specified in sub-para (1)(a), (1)(b) or (1)(c) shall be imposed on any employee
without giving him an opportunity for tendering an explanation in writing and
cross examining the witnesses against him, if any, and of producing evidence in
Provided that punishment to an employee on
deputation from the Central Government , a State Government or a Government
Institution shall be imposed only in accordance with the procedure and rules
laid down in this behalf in his parent service." Sub-paras (1)(a), (1) (b)
and (1) (c) referred to therein are the penalties of (a) fine; (b) censure; and
(c) postponment or stoppage of increments or promotion. In this case as the
punishment imposed is one of dismissal of the appellant should have followed
the procedure indicated in sub-cl. (3) of regulation 16 extracted above.
Under this sub-clause, it has to be noted
that an employee on whom a punishment other than that specified therein is to
be imposed, has to. be given an opportunity of tendering his explanation in
writing and cross-examining witnesses against him, if any, and producing
evidence in defence. The grievance of the respondent regarding the conduct of
the 256 enquiry, apart from other objections, is 'that materials collected by
the Enquiry Officer behind his back were not made: known to him and that
information had been taken into account for holding him guilty. His further
objection is that he did not get any opportunity to adduce evidence in his
defence and that the various persons from whom information had been gathered by
the Enquiry Officer were not tendered for cross-examination by him. It is not
necessary for us to go elaborately into the various proceedings connected with
the giving of the charge-sheet, the explanation offered by the appellant and
the final conclusions arrived at by the Enquiry Officer on the basis of which
the respondent has been dismissed from service. As pointed out by Mr. Iyengar,
all the Courts have concurrently held that the enquiry is vitiated and has been
held contrary to regulation 16(3 ). It is enough therefore, in the
circumstances, to note that the Enquiry Officer Sri F.A. Abbasi who has given
evidence has admitted that he did not take in evidence in respect of any charge
and that he considered the records as sufficient for giving findings on the
charges. He has also admitted that he met various persons and collected
information and that information has been incorporated in his enquiry report.
He has further admitted that the information so collected by him was not put to
the plaintiff, and has stated that he based his findings in the report against
the respondent on the basis of the enquiries made by him of the police and
other persons. In the: face of these admissions, it is idle for Mr. Desai to
urge before us, that the findings of the High Court and the Subordinate Courts
that there has been a violation of regulation 16(3) in the enquiry proceedings
cannot be sustained. IOn the other hand, we are of opinion that the finding is
amply .justified by the evidence on record.
Mr. Desai made a feeble: attempt to sustain
the order dated March 10, 1964 as one passed under regulation 11 and not under
regulation 16. We have no hesitation in rejecting this contention. Regulation
11, as we have already pointed out, is in Chapter II, and deals with
termination of service simpliciter and, even in such circumstances, it provides
in the case of a permanent employee that his services can be terminated only
after apprising the employee of the reasons therefore and asking him to furnish
explanation and after consideration of the explanation and then giving the
employee a final notice to. show cause against the proposed termination of
service. This clause, in our opinion, deals with a termination, other than by
way of punishment, and the procedure indicated therein is quite simple. On the
other hand, regulation 16 appears in Chapter IV dealing with discipline. An
order of dismissal passed after following the procedure indicated therein,
attaches a stigma on the employee concerned. Having issued a charge-sheet and
made a farce of 257 an enquiry and then dismissed the employee after holding
him guilty, cannot certainly be considered to be termination of the employee's
service under regulation 11. That action was taken by way of disciplinary
proceedings. is clear from the fact that an order suspending the respondent,
pending the enquiry, was passed on November 9, 1963. The same order further
directed that the respondent will receive only subsistence allowance during the
period of suspension. The order of suspension must be related to regulation 17
and the grant of subsistence allowance must be referred to .regulation 18, both
of which occur in Chapter IV relating to discipline. Therefore it follows that
the first contention of Mr. S.T. Desai cannot be accepted.
Mr. Desai next urged that even on the basis
that the order of dismissal had been passed in violation of regulation 16(3),
the decree granting a declaration for reinstatement of the respondent with full
pay and emoluments is illegal as amounting to enforcing a contract of personal
service. Alternatively Mr. Desai urged that in any event there are no special
circumstances existing in this. case justifying the grant of such a
Mr. Desai developed his contentions as
follows: The relationship between the appellant and the respondent is that of a
master and servant. A breach of regulation 16(3) will at the most result in the
order of dismissal being wrongful. The remedy, if any, of the aggrieved party
in such a case will only be a claim for damages for breach of contract. The
counsel further urged that Courts have.
jurisdiction to declare the decision of a
statutory body given in violation of a mandatory statutory obligation relating
to dismissal of a 'servant as ultra vires and void.
Even in such circumstances, it was urged, the
jurisdiction to grant a declaration which will result in continuity of service
is granted only under very special circumstances which require the departure
from the general rule that a contract of service will not be specifically
According to the counsel, the rules framed
under s. 52 of the Act by the appropriate Government may have statutory force
and effect if they are of such-a nature as to require mandatory compliance;
but, according to him, the regulations framed by a Warehousing Corporation do
not create any such statutory obligation of a mandatory nature. Hence a
termination of service by an employer even in breach of conditions of service
laid down by the regulations would only attract the general law of master and
servant and cannot result in a declaratory decree about continuity of service
being granted. In any event, the counsel urged that a declaration should not
have been granted as there are no special circumstances warranting the grant of
such a relief in this case. Counsel pointed out that the 258 respondent entered
service only in November 1958 and he has been removed from service in 1964 and
it is not claimed by the respondent that he will not be able to take up service
elsewhere. In short, according to Mr. Desai, the grant of the. relief of
declaration by way of reinstatement is erroneous.
Mr. B.R.L. Iyengar, learned counsel for the
respondent, urged that the regulations have been framed by the Warehousing
Corporation under s.. 54. One of the matters in respect of which regulations
may be framed is in regard to the conditions of service of the employees of a
Warehousing Corporation. It is by virtue of that power that the
regulations--called Staff regulations-have been framed. By virtue of cl. (3) of
regulation 1, they apply to all employees. of the Corporation and to the
personnel employed on contract in respect of all matters not regulated by the
contract. Those. regulations deal with various matters relating to the service
conditions of the employees.
Chapter IV deals with discipline and cl. (3)
of regulation 16 makes it imperative and obligatory on the Corporation to
comply with 'those provisions before punishment other than those punishments
specified therein is imposed against an employee. The regulations, according to
Mr. Iyengar, having been framed under the Act, have statutory effect and they
impose statutory obligation of a mandatory nature on the appellant Corporation
in respect of the procedure to be adopted for taking disciplinary action. On
the findings recorded by all the' Courts, it is clear that there has been a
violation of cl. (3) of regulation 16, in which case it follows that the
respondent was entitled to get a declaration that the order of dismissal is
void and of no effect. Counsel also pointed out that the respondent's services
have been arbitrarily and mala fide terminated by the appellant and ;therefore,
there are sufficient circumstances. for departing from the normal rule that a
contract of personal service will not be specifically enforced.
The question as to when and under what
circumstances a relief by way of declaration regarding continuity of service,
after holding that an order of dismissal is void or ultra vires, can be given,
has been considered both m England and here. The leading decision of the House
of Lords which is generally invoked in support of the view that such a
declaration can be granted is the decision in Vine' v. National Dock Labour
Board(1). This decision has also been referred to by this Court in some of its
decisions, to which we shall refer presently. The case before the House of
Lords in the decision referred to above arose under the following
circumstances. The plaintiff was a registered dock (1)  3 All E.R. 939.
259 worker employed in the reserve pool by
the National Dock Labour Board under a scheme set up under the Dock Workers
(Regulation of Employment) Order, 1947. In 1948, the National Board, approved
the delegation of powers to disciplinary committees set up by local boards. The
plaintiff failed to obey a valid order to report for work with a company of
stevedores and, in consequence, the local board instructed their disciplinary
committee to hear the case. The disciplinary committee, having heard the case,
gave notice in writing to the plaintiff terminating his employment. The
plaintiff instituted the action claiming damages for wrongful dismissal and
also prayed for a declaration that the order of dismissal was illegal, ultra
vires and invalid. The Court of first instance granted both damages and
declaration; but on appeal, by the National Board, the Court of Appeal struck
out the declaration granted to the plaintiff. The plaintiff appealed to the
House of Lords against the striking out of the declaration and the National
Board cross-appealed against the finding that the: dismissal was invalid and
also against the award of damages. The House of Lords held that the declaration
granted by the trial Judge was properly made as the order of dismissal was a
nullity since the local board had no power to delegate its. disciplinary
functions. The cross-appeal filed by the National Board was dismissed.
Viscount Kilmuir, L.C., in considering the
question regarding the grant of declaration, observes at p. 943 that the
discretion in ,,ranting a declaratory judgment should not be exercised save for
good reason and then, summarising the reasons for granting the declaration,
states at p. 944:
"First, it follows from the fact that
the plaintiff's dismissal was invalid that his name was never validly removed
from the register, and he continued in the employ of the National Board. This
is an entirely different situation from the ordinary master and servant case.
There, if the master wrongfully dismisses the servant, either summarily or by
giving insufficient notice, the employment is effectively terminated, albeit in
breach of contract. Here, the removal of the plaintiff's name from the register
being, in law, a nullity, he continued to have the fight to be treated as a
registered dock worker with all the benefits which, by statute, that status
conferred on him. It is, therefore, right that with the background of this
scheme, the court should declare his rights." At p. 948, Lord Keith of
"This is not a straightforward
relationship of master and servant. Normally, and apart from the intervention
of statute, there would never be a nullity in terminating an ordinary contract
of master and servant. Dismissal might be in breach of contract and so unlawful
but could only sound in damages.
Here we are concerned with a statutory scheme
of employment .... The scheme gives the dock worker a status. Unless
registered, he is deprived of the opportunity of carrying on what may have been
his lifelong employment as a dock worker, and he has a right and interest to
challenge any unlawful act that interferes with this, status. If the acting’s
here complained of were a nullity, Mr. Vine (hereinafter called 'the
plaintiff'), in my opinion, has a clear right to have that fact declared by the
court." It will be noted that the House of Lords, in the decision referred
to above, have emphasized that orders striking off the plaintiff from the:
register was not considered a simple case of a master terminating the services
of the servant, but, on the other hand, was treated as one affecting the status
of the plaintiff and whose services have been terminated by an authority which
had no power to so terminate and, as such, the order was treated as void. The
House of Lords have also emphasised that due to the intervention of the statute
which safeguards the right of the dock worker, the order not being in
accordance with the statute, must be treated as a nullity. It was under those
circumstances that the House of Lords restored the decree of the Court of first
instance granting a declaration regarding the continuity of service of the
plaintiff therein. It must again be emphasised that the order, the validity of
which was considered by the House of Lords, was treated as a nullity.
The question whether a dismissed employee can
ask for a declaration that his. employment had never been validly terminated,
again came up for consideration in Barber v.
Manchester Hospital Board(1). In that case a
Regional Hospital Board passed an order terminating the plaintiffs employment
as a medical consultant in the hospital. The plaintiff brought an action
against the Board claiming declaration that his employment had never been
validly determined and he also claimed damages for breach of contract or
wrongful dismissal. The Court held that the plaintiff's contract with the Board
was. one between master and servant and the order of termination of his
could not be treated as a nullity. In this
view the plaintiff's claim for a declaration that his employment had never been
validly determined was not granted; but the plaintiff was awarded damages (1)
 1 All E.R. 322.
261 for breach of contract. It was contended
on behalf of the plaintiff that when passing the order terminating his services
the procedure indicated in cl. 16 of the terms and conditions of service of
hospital medical staff has been violated by :he original hospital Board and
therefore the order of termination never became effective and the plaintiff
continued to be still in service as the order was a nullity. On behalf of the
plaintiff reliance was placed on the decision in Vine's Case(1). Repelling this
contention, Barry, J., observes, at p. 331:
"... I am unable to equate this case to
the circumstances which were being considered by the Court of Appeal and the
House of Lords in Vine v. National Dock Labour Board(1).
There the plaintiff was working under a code
which had statutory powers, and, clearly, in those circumstances, all the lords
of appeal who dealt with the case in the House of Lords took the view that the
case could not be dealt with as though it were an ordinary master and servant
claim in which the rights of the parties were regulated solely by contract.
Here, despite the strong statutory flavor attaching to the plaintiff's
contract, I have reached the conclusion that in essence it was an ordinary
contract between master and servant and nothing more." In this view the
Court finally held that the plaintiff's only remedy was to recover damages as
for breach of contract.
A similar question regarding the right of a
dismissed employee to get a declaration of his right to continue in employment
came up for consideration before the Privy Council in Francis v. Municipal
The plaintiff in that case was in the service
of the Municipal Councillors of Kuala Lumpur and, by s. 16(5) of the Municipal
Ordinance (Extended Application) Ordinance, 1948, the President had power to
dismiss him. The plaintiff was dismissed. The Privy Council held that the
plaintiff had been wrongly dismissed and that his remedy lay in a claim for
damages. The plaintiff sought a further declaration that he had a right to continue
in employment notwithstanding the order of dismissal. Rejecting this claim the
Privy Council observed, at p. 637:
"In their Lordships' view, when there
has been a purported termination of a contract of service a declaration to the
effect that the contract of service still subsists will rarely be made. This is
a consequence of the general principle of law that the courts will not grant
(1)(1956) 3 E.R. 939.
(2)  3 All E.R. 633.
CI/70--5 262 specific performance of
contracts of service.
Special circumstances will be required before
such a declaration is made and its making will normally be in the discretion of
In their Lordships' view there are no
circumstances in the present case which would make it either just or proper to
make such a declaration." The Privy Council distinguished the particular
circumstances that existed before the House of Lords in Vine's case (1) and
finally held at p. 638:
"In their Lordships' view the
circumstances of the present case are not comparable with those in Vine's case
(1) and are not such as to make it appropriate to give a declaratory judgment
in the manner contended for on behalf of the appellant. The appellant's
employment must be treated as having in fact come to and end on Oct. 1, 1957
'and the appellant's remedy lay in a claim for damages." From a review of
the English decisions, referred to above, the position emerges as follows: The
law relating to master and servant is clear. A contract for personal service
will not be enforced by an order for specific performance nor will it be open
for a servant to refuse to accept the repudiation of a contract of service by
his master and say that the contract has never been terminated.
The remedy of the employee is a claim for
damages for wrongful dismissal or for breach of contract. This is the normal
rule and that was applied in Barber's case (2) and Francis' case (2). But, when
a statutory status is given to an employee and there has been a violation of
the provisions of the statute while terminating the services of such an
employee, the latter will be eligible to get the relief of a declaration that
the order is null and void and that he continues to be in service, as it will
not then be a mere case of a master terminating the services of a servant.
This was the position in Vine's case.(1) The
question has also been considered by this Court in certain decisions, to which
we will immediately refer. In Dr. S.B. Dutt v. University of Delhi(4) this
Court had to consider the legality of an award directing that an order of
dismissal was ultra vires, mala fide and of no effect and that the appellant in
that case continued to be a Professor of the University. The appellant, Dr.
Dutt, who was a Professor in the University of Delhi, was .dismissed from
service by the latter. He referred the dispute regarding his dismissal and
certain other disputes to arbitration, (1)  3 All E.R. 939. (2)  1
All E.R. 322.
(3)  3 All E.R. 633. (4)  S.C.R.
263 under s. 45 of the Delhi University Act.
An award was made which decided that the appellant's "dismissal was ultra
vires, mala fide, and has no effect on his status. He still continues to be a
professor of the University". The said award was made a rule of Court by
the Subordinate Judge of Delhi. The University of Delhi challenged this
decision on appeal and the Punjab High Court, which ultimately heard the
appeal, set aside the award on the ground that such a declaration amounted to
specific enforcement of a contract of personal service forbidden by s. 21 of
the Specific Relief Act and therefore disclosed an error on the face of the
award. On appeal, this Court, agreeing with the reasoning of the High Court,
observed at p. 1242:
"There is no doubt that a contract of
personal service cannot be specifically enforced. Section 21, cl. (b) of the Specific
Relief Act, i 877, and the second illustration under this clause given in the
section make it so clear that further elaboration of the point is not required.
It seems to us that the present award does purport to enforce a contract of
personal service when it states that the dismissal of the appellant 'has no
effect on his status', and 'he still continues to. be a Professor of the
University'. When a decree is passed according to the award, which if the award
is unexceptionable, has to be done under s. 17 of the Arbitration Act after it
has been flied in Court, that decree will direct that the award be carried out
and hence direct that the appellant be treated as still in the service of the
respondent. It would then enforce a contract Of personal service, for the
appellant claimed to be a professor under a contract of personal service, and
21 (b)?' On behalf of the appellant, reliance
was placed on the decision of the Judicial Committee in The High Commissioner
for India v. I. M. Lall (1) in support of the contention that a declaration
that the appellant continued in service under the University of Delhi in spite
of the order of dismissal was a declaration which the law permitted to be made
and was not therefore erroneous. Dealing with this contention and referring to
the decision of the Judicial Committee, this Court observed at p. 1244:
"That was not a case based on a contract
of personal service... The declaration did no.t enforce a contract of personal
service but proceeded on the basis that the dismissal could only be eff ected
in terms of the statute and as that had not been done, it was a nullity, from
which the result followed that the respondent had continued in service. All
that the Judicial Committee did (1) (1948) L.R. 75 I.A. 225.
264 in this case was to make a declaration of
a statutory invalidity of an act, which is a thing entirely different from
enforcing a contract of personal service." Holding that 'it was not the
appellant's case before the arbitrator that the dismissal was ultra vires the
statute or otherwise a nullity', this Court ultimately confirmed the judgment
of the High Court setting aside the award.
The jurisdiction of the Courts to grant a
declaration in a particular case that an order of dismissal is void and that
the dismissed employee continues to remain in service, again came up for
consideration before this Court in S.R. Tewari v. District Board, Agra(1). In
that case, the appellant's service as an Engineer under the District Board,
Agra, was terminated by the latter, after giving salary for three months in
lieu of notice. The appellant, after having unsuccessfully appealed against the
order of termination to the State Government, initiated proceedings under Art.
226 before the Allahabad High Court for a writ of certiorari for quashing the
order of the District Board dismissing him from service and also sought a writ
in the nature of mandamus commanding the District Board and the State of Uttar
Pradesh to treat him as the lawfully appointed engineer, and not to give effect
to the order terminating his service. The High Court dismissed the writ
petition holding that the employee had been properly dismissed from service.
The employee came up to this Court in appeal. On behalf of the District Board,
the respondent therein, it was contended that the remedy of the appellant, if
any, was only to institute a suit for damages for wrongful termination of
employment and that he was not entitled to pray for a declaration that the
termination of employment was unlawful and a consequential order for
restoration in service. The decision in Dr. Dutt's case (2) among other
decisions, was relied on in support of this contention. This Court negatived
that contention and stated the position in law as follows:
"Under the common law the Court will not
ordinarily force an employer to retain the services of an employee whom he no
longer wishes to employ. But this rule is subject to certain well recognized
exceptions. It is open to the Courts in an appropriate case to declare that a
public servant who is dismissed from service in contravention of Art. 311
continues to remain in service, even though by so doing the State is in effect
forced to continue to employ (1)  3 S.C.R. 55.
(2)  S.C.R. 1236.
265 the servant whom it does. not desire to
employ. Similarly under the industrial law, jurisdiction of the labour and
industrial tribunals to. compel the employer to employ a worker, whom he does
not desire to employ, is recognized. The Courts are also invested with the power
to declare invalid the act of a statutory body, if by doing the act the body
has acted in breach of a mandatory obligation imposed by statute, even if by
making the declaration the body is compelled to do something which it does not
desire to do." Vine's Case(1) which was relied on before the Court was
distinguished on the ground that the purported order of dismissal therein which
was set aside was a nullity since the local Board in that case had no power to
delegate its disciplinary function. Again, the decision in Dr. Dutt's Case(2)
was stated to be not case in which the invalidity of an act done by the
University on the ground that it infringed a statutory provision fell to be
determined and the rights and obligations of the parties rested in contract and
therefore the award was declared to be one contrary to the rule contained in s.
21(b) of the Specific Relief Act and hence void. This Court, wound up the
discussion in Tewari's Case(3) as follows, at p. 62:
"The jurisdiction to declare the
decision of the Board as ultra vires exists, though it may be exercised only
when the Court is satisfied that departure is called for from the rule that a
contract of service will not ordinarily be specifically enforced." On
facts, this Court held that the order of dismissal of the appellant before them
was proper and justified.
From the two. decisions of this Court,
referred to above, the position in law is that no declaration to enforce a
contract of personal service will be normally granted.
But there are certain well-recognized
exceptions to this rule and they are: To grant such a declaration in
appropriate cases regarding (1) A public servant, who has been dismissed from
service in contravention of Art. 311.
(2) Reinstatement of a dismissed worker under
Industrial Law by Labour or Industrial Tribunals. (3) A statutory body when it
has acted in breach of a mandatory obligation, imposed by statute.
The case of the respondent before: us does
not come under either the first or the second category. The question then is:
Is he entitled to relief under the third category ? (2)  3 All E.R. 939.
(2)  S.C.R. 1236.
(3)  3 S.C.R. 55.
266 Mr. S.T. Desai pointed out that by the
appellant conducting an enquiry and passing an order of dismissal in violation
of regulation 16(3), it cannot be stated that it has acted in breach of any
mandatory provision of the Act resulting in the order being declared as void or
ultra vires. The non-compliance with the regulations, at the most, will result
in the order of dismissal being wrongful attracting the normal rule in such
matters of making the appellant liable for damages. Even otherwise., this is
not a proper case for grant of the declaration asked for by the plaintiff. In
our opinion, the position taken up by Mr. Desai finds support in the decisions
referred to above.
Mr. B.R.L. Iyengar, learned counsel for the
respondent, placed considerable reliance on the decision of this Court in Life
Insurance Corporation of India v. Sunil Kumar Mukherjee(1). According to him,
in that case, an order of termination of service passed by the Life Insurance
Corporation of India, terminating the services of certain employees in breach
of regulations framed by it under s. 49 of the Life Insurance Corporation Act,
1956 (Act XXXI of 1956) (hereinafter called the Insurance Act) has been held to
be void. Therefore counsel urges that applying the same analogy, a breach of
regulations in the case before us has the same effect as the breach of a
statutory obligation and, if so, the High Court was justified in granting the
declaration asked for. We are of opinion that the decision relied on by Mr.
Iyengar does not lay down any such proposition. In that decision, in respect of
certain officers governed by s. 11 (1 ) and 11 (2) of the Insurance Act,
certain orders terminating their services were passed by the Life Insurance
Corporation of India. The orders were challenged by the employees on the ground
that they were passed contrary to cls. 1O(a) and 10(b) of the: order passed by
the Central Government under s. 11 (2) of the Insurance Act, which is called
the blue order. The contention on behalf of the Life Insurance Corporation was
that the orders were passed in accordance with the regulations framed by the
Life Insurance Corporation under s. 49 of the Insurance Act, read with. cl. 11
of the blue order. The High Court held that the orders of dismissal were in
breach of cls. 10(a) and 10(b) of the blue order, and therefore the orders were
invalid. The result of the grant of this relief was that the employees
continued to be in service. This Court confirmed the decision of the High
Court, and having considered the rights conferred by s. 11 (1 ) and 11 (2) of
the Insurance. Act, held that the employee:s of the Insurers whose controlled
business had been taken over, became employees of the Life Insurance
Corporation and that their terms. and conditions of service continued until
they were altered (1)  5 S,C.R. 528 267 by the Central Government and
that if the alteration made by the Central Government was not acceptable, they
were entitled to' leave the employment of the Corporation and for payment of
compensation as provided by s.. 11(2). In exercise of the powers conferred
under s. 11(2) of the Insurance Act, the Central Government issued an order,
known as the Life Insurance Corporation Field Officers (Alteration of
Remuneration and other Terms and Conditions of Service) Order, 1957 on December
30, 1957. In 1962, the designation 'Field Officer' was changed into
'Development Officer'. Clauses 10(a) and 10(b) of this order have been set out
by this Court in the above decision. CI. 11 of this order prescribed that the
pay and allowances of the officers concerned Was to be determined in .
accordance with the principles that may be: laid down by the Life Insurance
Corporation by regulations made under s. 49 of the Insurance Act. The Life
Insurance Corporation, as envisaged under el. 11 of the order, framed
regulations under s. 49 of the Insurance Act, dealing with various matters. It.
also issued a circular which was made part of the regulations and it was the
basis of this circular that the Life Insurance Corporation took action and
terminated the services of the employees concerned.
Tiffs Court held that the provisions
contained in s. 11(2) of the Insurance Act are paramount and over-ride any
contrary provisions contained in the order issued by the Central Government or
the regulations framed by the Life Insurance Corporation. Next to the Insurance
Act, the rules framed by the Central Government, which include the order issued
under ss. 11 (2) of the Insurance Act, will prevail, but the provisions of the
Central Government Order will have to be subject to s. 11 (2) of the Insurance
Act. Next in order come the regulations of the Life Insurance Corporation under
s. 49 and those regulations must not be inconsistent with the Insurance Act or
the rules framed there under.
This Court held that the Circular issued by
the Corporation, which had the effect of a regulation passed by it under s.
49 of the Insurance Act, must be read along
with the provisions of ss. 11 ( 1 ) and 11 (2 ) of the Insurance Act and cl. 10
of the order issued by the Central Government;
and so read, the conclusion reached by this
Court was that a termination of service of an officer, contemplated under the
circular issued by the Life Insurance Corporation can be effected only in the
manner prescribed by cl. 10 of the order issued by the Central Government. In
view of the fact that cl. 10 of the order issued by the Central Government had
not been complied with, the order terminating the services of the employees was
held to be invalid.
It will be seen that the services, as pointed
out by this Court, of the employees whose cases were under consideration, had
been 268 crystallized by the statute--the Insurance Act--in s. 11 (1 ) and 11
(2); By virtue of the powers conferred by s. 11 (2), the Central Government
issued the order on December 30, 1957. CI. 10 of this order had clearly
indicated the procedure to be adopted for terminating the services of such
employees. Therefore, the employees had their rights safe guarded by the
Insurance Act read with the order issued by the Central Government and it cast
a statutory obligation on the Life Insurance Corporation to adopt a particular
procedure if the services of those employees were to be terminated. By not
complying with the provisions of el. 10 of the order of the Central Government,
which is really related to s. 11 of the Insurance Act, the Life Insurance
Corporation must be considered to have acted in gross violation of the
mandatory provisions of the statute.
Therefore, it was not as if that the
employees were there seeking to. enforce a contract of personal service, but
their grievance which was accepted by the Court, was that the order terminating
their services was a nullity as it had not been effected in terms of the
statute. In our opinion, therefore, this decision does not support the
contention of the respondent.
Mr. Iyengar referred us also to the decision
of this Court in The State of Uttar Pradesh v. Babu Ram Upadhya(1) but that
decision need not detain us because that deals with a member of the public
service who has been given protection under the Constitution. Such cases stand
Mr. Iyengar referred us to a decision of a
learned Single Judge of the Gujarat High Court reported as Tata Chemicals Ltd.
v. Kailash(2). The question that arose for consideration was regarding the
validity of an order of dismissal by an employer of an employee contrary to'
the standing orders. The learned Judge has expressed the view that a breach of
the standing orders constitutes a breach of a statutory provision and therefore
the order of dismissal is a nullity. It is not necessary for us to consider the
correctness of that decision because the dispute between the parties in that
case arose under Industrial Law and we have already pointed out that one of the
exceptions to the Common Law is under Industrial Law where Labour and Industrial
Tribunals have jurisdiction to compel an employer to employ a worker whom he
does not desire to employ.
Having due regard to the principles discussed
above. we are of opinion that the High Court was not justified in granting the
declaration that the order dated March 10, 1964 dismissing the (I)  2
S.C.R. 679. (2) A.I.R. 1964 Gujarat 265.
269 respondent from service is null and void
and that he is entitled to be reinstated in service with full pay and other
emoluments. As pointed out by us, the regulations are made under the power
reserved to. the Corporation under s. 54 of the Act. No doubt they lay down the
terms and conditions of relationship between the Corporation and its employees.
An order made in breach of the regulations would be contrary to such terms and
conditions, but would not be in breach of any statutory obligation, as was the
position which this Court had to deal with in the Life Insurance Corporation
In the instant case, a breach has been
committed by the appellant of regulation 16(3) when passing the said order of
dismissal, inasmuch as the procedure indicated therein has not been followed.
The Act does not guarantee any statutory status to the respondent, nor does it
impose any obligation on the appellant in such matters. As to whether the rules
framed under s. 52 deal with any such matters, does not arise for consideration
in this case as the respondent has not placed any reliance on the rules and he
has rested his case only on regulation 16(3). It is not in dispute that, in
this case, the authority who can pass an order of dismissal has passed the
same. Under those circumstances a violation of regulation 16(3), as alleged and
established in this case, can only result in the order of dismissal being held
to be wrongful and, in consequence, making the appellant liable for damages.
But the said order cannot be held to be one which has not terminated the
service, albeit wrongfully, or which entitles the respondent to ignore it and
ask for being treated as still in service. We are not concerned with the
question of damages, because no such claim has been made by the respondent in
In this view, the judgment and the decree of
the High Court. in so far as they declare that the order dated March 10, 1964
is null and void and that the respondent continues to be in the service of the
appellant, are set aside and this appeal allowed, to that extent. In the
circumstances of the case, there will be no order as to costs.
V.P.S. Appeal allowed.
(1)  5 S.C.R. 528.