Haryana Concast Ltd. (A Govt. Undertaking) vs Subhash Chand

G.S. Singhvi, J.—This appeal is directed against order dated 5.12.1990 passed by the learned Single Judge vide which he allowed C.W.P. No. 6316 of 1988 and quashed the termination of the services of Respondent-Subhash Chand.

The facts necessary for deciding the appeal are that the Respondent was appointed as ad hoc Senior Mechanical Engineer in the service of the Appellant on 7.8.1986. His services were regularised w.e.f. 1.1.1987. After successful completion of the period of probation, he was confirmed in the service. By an order dated 29.6.1988. his service was terminated on the ground that the same was not required. The Respondent challenged that order by contending that Clause 3 of the letter of appointment relied upon by the Company for terminating his service was ultra vires to Articles 14 and 16 of the Constitution of India and the termination of his service was vitiated due to violation of the rule of audi alteram partem.

In the written statement filed on behalf of the Appellant, the very maintainability of the writ petition was questioned on the ground that it was a non-governmental company and was not amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. On merits, it was averred that the services of the Respondent had been terminated in accordance with the conditions embodied in the contract of employment. It was further averred that the Respondent had misbehaved with the senior officers and. therefore, after considering the entire record, the Board of Directors decided to dispense with his service by invoking Clause-3 of the letter of appointment.

After hearing the parties, the learned Single Judge allowed the writ petition and quashed order dated 29.6.1988.

The Appellant has challenged the impugned order mainly on the ground that the learned Single Judge has erred in holding that it falls within the definition of other authority under Article 12 of the Constitution of India. The other ground on which the Appellant has assailed the impugned order is that the learned Single Judge has wrongly applied the ratio of the Supreme Court''s decision in Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, to the facts of the Respondent''s case.

We have heard Learned Counsel for the Respondent and perused the record. The objection raised, by the Appellant to the maintainability of the writ petition filed by the Respondent was based mainly on the premise that his findings are not controlled by the State Government and that majority of its funds were received/collected from sources other than the government. In our opinion, the allocation of shares of the Appellant to non-governmental agencies or public cannot be itself be treated as a ground for holding that the Appellant does not fall within the ambit of the term ''State'' under Article 12 of the Constitution of India. The Appellant has not controverted the fact that it is a government undertaking and its Chairman and Managing Director are appointed by the government. It has also not controverted the fact that the State Government has the power to give directions on policy matters and that its functions are integrally connected with the State activities. Therefore, keeping in view the law laid down by the Supreme Court in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, ; Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and Others, Som Parkash Rekhi v. Union of India,4 AIR 1981 SC 212; and Central Inland Water Transport Corporation Ltd. and Anr. v. Brojo Nath Ganguly and Anr. (supra), we hold that the finding recorded by the learned Single Judge on the issue of maintainability of the writ petition does not call for interference.

The question which remains to be considered is whether the view taken by the learned Single Judge on the constitutionality of Clause 3 of the letter vide which the Respondent was appointed in the service of the Appellant is vitiated by any legal error. For this purpose, it will be useful to refer to the reasons assigned by the learned Single Judge for holding that Clause 3 of the appointment letter is ultra vires to the Constitution. The same are as under:

I find that the impugned order. Annexure P.5, is solely based on Clause 3 of the appointment letter, which gave right to the Company to terminate'' the services of a permanent employee by giving him three months notice. A similar matter had come up before the Supreme Court in Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, , wherein a similar clause which was in the rule was struck down as opposed to public policy and being void u/s 23 of the Contract Act it was also observed that such a condition could not be binding of the on prayer as that was a contract between two unequals On the party of the reasoning Clause of the appointment older is held to be void and the Respondent Company could not upon not upon the same.

Though in the impugned order, Annexure P.5, it has been mentioned that the services of the Petitioner are being terminated as not longer required, but the Petitioner has brought on record m advertisement dated 11th July, 1988, wherein the Respondent-Company had advertised the post of Senior Mechanical Engineer from which post the Petitioner had been removed. So, it was not a case where the company did not wish to fill the post at all. If there was anything wrong with the Petitioner''s work and conduct, a departmental enquiry or show cause notice should have been issued to the Petitioner and if found guilty, the Petitioner''s services could be terminated. Nothing of the sort has been done in the present case.

In our opinion, the reasons assigned by the learned Single Judge for declaring Clause 3 of the appointment letter to be void are consistent with the law laid down by the Supreme Court and do not call for interference. We may only add that the decision of the two Judges Bench in Brojo Nath Ganguly''s case (supra) has been approved by a Constitution Bench in Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress and Others,

The Appellant''s plea that the services of the Respondent had been terminated due to his acts of misbehaviour shows that is management had taken the punitive action in the garb of Clause-3 of the letter of appointment. Therefore, in addition to the reason assigned by the learned Single Judge, we hold that the termination of the services of the Respondent was liable to be invalidated on the ground of violation of rule of audi alteram partem.

In Managing Director, Uttar Pradesh Warehousing Corporation and Another Vs. Vijay Narayan Vajpayee, their Lordships of the Supreme Court held that even though. Article 311 is not applicable to the services of employees of agencies and instrumentalities of the State, the policy underlying that Articles is certainly applicable in their cases and action taken by the employer can be nullified on the ground of violation of the rules of natural justice.

For the reasons mentioned above, the appeal is dismissed.

The cross objections filed by the Respondent for modifying the impugned order in so far as it denies the benefit of full back wages also deserves to be dismissed because no evidence was produced by the Respondent before the learned Single Judge that after the termination of service, he was out of employment or had no definite source of livelihood. Therefore, the direction given for payment of 50% back wages only cannot be termed as arbitrary requiring interference by the Appeal Bench.

Hence, the cross objection is dismissed.

Sd/- M.M. Kumar, J.