Dainik Bhaskar vs Deepak Raj and Others

Mahesh Grover, J.—This appeal by the defendant is directed against the judgment of the First Appellate Court dated 4.2.2008.

Briefly stated the facts of the case are that plaintiff-respondent filed a suit for declaration to the effect that termination letter dated 7.10.2003 issued by the appellant be declared null and void. He pleaded that he was appointed as Marketing Executive with the appellant and was placed on probation for a period of six months vide appointment letter dated 19.11.2002 at a monthly salary of Rs. 3500/-. After having successfully completed the probation he was granted an increment of Rs. 290/- but his services were terminated wrongly without issuance of notice and without complying with the terms of the appointment letter accoring to which one month''s notice was a pre-requisite for resorting to such an action. As a consequential relief he prayed for permanent injunction and also for grant of mandatory injunction.

The appellant contested the suit and pleaded that the order of termination was validly passed and in accordance with the terms of the appointment letter and that issuance of notice was not a pre-requisite. Both the parties went to trial on the following issues:

i) Whether the services of the plaintiff have been terminated illegally and malafidely in violation of the statutory provisions and in contravention of the principles of natural justice, as alleged? OPP.

ii) Whether the plaintiff is entitled to the relief of declaration as sought for by him alongwith the relief of consequential benefits of pay and allowances etc. as alleged? OPP.

iii) Whether the plaintiff has no locus standi and or cause of action to file the present suit? OPD.

iv) Whether the civil court has no jurisdiction to try and decide the matter in dispute? OPD.

v) Whether the suit is not maintainable in the present form? OPD.

vi) Whether the plaintiff has concealed the true and material facts from the court and the suit is liable to be dismissed on this socre only? OPD.

Vii) Whether the suit is false and frivolous and is liable to be dismissed, as alleged? OPD.

viii) Relief.

The learned Trial Court while determining the controversy concluded that the termination order Ex P2 is illegal, null and void but declined to grant consequential relief of reinstatement on the ground that it was specifically barred u/s 14 of the Specific Relief Act. However, the learned Trial Court observed further that terms of the appointment required one month''s notice as a pre-requisite for passing the order of termination and granted the plaintiff one month salary in lieu therof. The suit was accordingly decreed partially in the aforesaid terms. Plaintiff-respondent dis-satisfied with the order filed the appeal before the First Appellate Court who upset the findings of the learned Trial Court, to hold that once the conclusion had been arrived at that the termination order was bad then as a corollary to it the consequential benefits had to be granted to the plaintiff-respondent.

In Regular Second Appeal, the learned Counsel for the appellant has referred to the provisions of Section 14 of the Specific Relief Act and has relied upon the judgment of the Apex Court titled as State Bank of India and Others Vs. S.N. Goyal, to contend that in the matters of private employment, the Civil Court could not direct the enforcement of a contract in a suit for declaration and the only remedy was u/s 14 of the Specific Relief Act. It is contended that Trial Court has rightly concluded this aspect of the matter by relying upon judgment of the Apex Court and also the judgment of this Court but the First Appellate Court has not answered this aspect of the matter at all which has resulted in a perverse finding.

It has been contended that in view of the facts and controversy the following question of law arises for the consideration of this Court:

Whether in a suit for declaration simplicitor the Court could have granted consequential relief of reinstatement and grant of other benefits in matters which pertain to private employment in total dis-regard to the provisions of Section 14 of the Specific Relief Act or not?

The learned Counsel for the respondent on the other hand pleaded that once the Court has concluded that the order of termination is bad then the requisite benefits such as reinstatement and the grant of monetary benefits necessarily have to flow from such a conclusion. I have heard learned Counsel for the parties and have perused the impugned judgments.

Section 14 of the Specific Relief Act is reproduced as below:

Contracts not specifically enforceale - (1) the following contracts cannot be specifically enforced, namely -

(a) a contract for the non-performance of which compensation in money is an adequate relief;

(b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;

(c) a contract which is in its nature determinable;

(d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise.

(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it sues in respect of any subject he has contracted to refer, the existence of such contract shall bar the suit.

(3) Notwithstanding anything contained in Clause (a) or Clause (c) or Clause (d) of Sub-section (1), the court may enforce specific performance in the following cases:

(a) where the suit is for the enforcement of a contract, -

(i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once: Provided that where only a part of the loan has been advanced the lendor is willing to advance the remaining part of the loan in terms of the contract; or

(ii) to take up and pay for any debentures of a company; (b) where the suit is for,-

(i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership; or

(ii) the purchase of a share of a partner in a firm; (c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:

Provided that the following conditions are fulfilled, namely -

(i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work;

(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and

(iii) the defendant has, in persuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.

The Hon''ble Apex Court in State Bank of India''s case (supra) has observed as under:

Question (i) - Enforcement of a contract of personal service.

Where the relationship of master and servant is purely contractual, it is well settled that a contract of personal service is not specifically enforceable, having regard to t he bar contained in Section 14 of the Specific Relief Act, 1963. Even if the termination of the contract of employment (by dismissal or otherwise) is found to be illegal or in breach, the remedy of the employee is only to seek damages and not specific performance. Courts will neither declare such termination to be a nullity nor declare that the contract of employment subsists nor grant the consequential relief of reinstatement. The three well-recognised exceptions to this rule are:

(i) where a civil servant is removed from service in contravention of the provisions of Article 311 of the Constitution of India (or any law made under Article 309);

(ii) where a workman having the protection of the Industrial Disputes Act, 1947 is wrongly terminated from service; and

(iii) where an employee of a statutory body is terminated from service in breach or violation of any mandatory provision of a statute or statutory rules. There is thus a clear distinction between public employment governed by statutory rules and private employment governed purely by contract. The test for deciding the nature of relief - damages or reinstatement with consequential reliefs - is whether the employment is governed purely by contract or by a statute or statutory rules. Even where the employer is a statutory body, where the relationship is purely governed by contract with no element of statutory governance, the contract of personal service will not be specifically enforceable. Conversely, where the employer is a nonstatutory body, but the employment is governed by a statute or statutory rules, a declaration that the termination is null and void and that the employee should be reinstated can be granted by courts. (Vide S.B. Dutt (Dr.) v. University of Delhi, U.P. Warehousing Corporation v. Chandra Kiran Tyagi, Sirsi Municipality v. Cecelia Kom Francis Tellis, Vaish Degree College v. Lakshmi Narain, J. Tiwari v. Jwala Devi Vidya Mandir and Dipak Kumar Biswas v. Director of Public Instruction)

It is clear from the above reproduced observations of the Hon''ble Apex Court that such a relief could not have been granted as has been granted by the First Appellate Court for the simple reason that concededly the employment of the plaintiff-respondent with the appellant was contractual and private in nature. The Civil Court was therefore precluded from granting the relief of reinstatement alongwith other monetary benefits in view of the provisions of Section 14 of the Specific Relief Act.

Learned Counsel for the respondent states that the reinstatement and other monetary benefits are in the nature of damages and therefore, the First Appellate Court was right in granting the relief. I am afraid such a contention is totally mis-placed. The prayer of the plaintiff-respondent is not to that effect. He has not categorically stated that he is seeking damages on account of termination rather he was seeking reinstatement and other consequential relief on account of his termination.

Question of law is therefore answered as above and the appeal is accepted and judgement of the First Appellate Court is set aside while that of the learned Trial Court is restored.