Sunday, 4 April 2021

Whether the court can declare that a private employee's service continues and is entitled to get all consequential benefits?

 9. Through the present petition the petitioner seeks enforcement of a contract of service. The law on the issue is no more res integra. Subject to well defined categories of exceptions, the law and more particularly provisions of Specific Relief Act, do not contemplate enforcing a service contract, as that would amount to specific performance of a contract. In this context I may usefully rely on a passage from Halsbury’s Laws of England, Fourth Edition, Volume 44, which is as under:-


“407. Contracts for personal work or services.— A judgment

for specific performance of a contract for personal work or

services is not pronounced, either at the suit of the employer

or the employee. The court does not seek to compel persons

against their will to maintain continuous personal and

confidential relations. However, this rule is not absolute and

without exception. It has been held that an employer may be

restrained from dismissing an employee in breach of contract

if there is no loss of confidence between employer and

employee or if (at least in a contract of employment to carry

out a public duty) the employee has been dismissed in a

manner which does not comply with statutory or contractual

regulations governing dismissal. No court may, whether by

way of an order for specific performance of a contract of

employment or an injunction restraining a breach or

threatened breach of such a contract, compel an employee to

do any work or attend at any place for the doing of any work.

This principle applies not merely to contracts of employment,

but to all contracts which involve the rendering of continuous

services by one person to another, such as a contract to work

a railway line ….”

10. Supreme Court in several judgments has observed that a Court would normally not give a declaration that a contract subsists and the employee, after removal from service, can be deemed to be in service against the consent of the employer, subject to three broad exceptions (i) where a public servant is removed in contravention of Article 311 of the Constitution of India; (ii) where the worker is reinstated on being dismissed under the Industrial Law; and (iii) where a statutory body

violates mandatory provisions of a Statute.

11. The only remedy thus available to such an employee, who is

discontinued from service, if aggrieved, is to sue for damages and this is evident from reading the provisions of Section 14 read with Section 41 of the Specific Relief Act.

8. In view of the aforesaid judgments, the following

conclusions in law emerge:-

(i) A contract of private employment is not similar to the

public employment and in such private employment there is

no scope of applicability of the principles of administrative

law/public law.

(ii) A contract of employment which provides termination of

services by one month's notice, then, at best the employee

will only be entitled to one month's pay in terms of the

employment contract. An employee is not entitled to any

relief of continuation in services or pay with consequential

benefits for alleged remaining period of services till the date

of his superannuation.

(iii) As per the provision of Section 14(1)(c) of the Specific

Relief Act, 1963, a contract which is determinable in nature

cannot be specifically enforced. Since the service contract in

the present case is determinable by one month's notice there

does not arise the question of giving of any reliefs which

tantamount to enforcement of a determinable contract. As

per Section 14(1)(b), a contract of personal service cannot

be enforced when the employer is not the Government or

“State” as per Article 12 of the Constitution of India.

Plaintiff has in fact received one month's pay and therefore

his claim will stand satisfied in law and he is not entitled to

any reliefs as prayed for in prayer clauses in the suit.”

 IN THE HIGH COURT OF DELHI AT NEW DELHI

  W.P.(C) 7196/2020

DEEPAK WANKHEDE  Vs INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY 

CORAM:

HON'BLE MS. JUSTICE JYOTI SINGH

Date of Decision:09.11.2020

1. Petitioner was employed as a Driver by Respondent No.4 to work

in Indian Renewable Energy Development Agency (hereinafter referred

to as IREDA) in June 2012. He was attached with Director (Finance),

IREDA. IREDA/Respondent No.1 is a Company owned by the

Government of India and under the administrative control of Ministry of

New and Renewable Energy, while Respondent No. 4 is an Agency for

engaging manpower and outsourcing the work. Respondent No.1 deploys

outsourced/temporary staff through manpower agencies empanelled with

it and had accordingly empanelled Respondent No.4.

2. As per the case set up by the Petitioner, he was hired by

Respondent No.4 and attached to Director (Finance) till he retired in

April 2020. On 06.05.2020 Respondent No.2 was appointed as the new

Chairman and Managing Director of Respondent No.1. Petitioner has

worked continuously for eight years since June 2012 without any

complaint and has been removed without any just cause or even a

sufficient notice period after the appointment of Respondent No.2. He

was verbally informed on 29.05.2020 by the Manager (HR) that his

services were no longer required and he need not come to office with

effect from 01.06.2020.

3. Grievance of the Petitioner is that while there is a requirement of

Drivers and the record of the Petitioner is unblemished, his services have

been illegally and arbitrarily discontinued. This is substantiated by the

fact that two new Drivers have been hired by the Respondents and that

too on a pay scale higher than what was being given to the Petitioner.

4. It is argued by learned counsel for the Petitioner that the

Respondents have erroneously stated in their reply dated 05.06.2020 to

the legal notice sent by the Petitioner that since the Director (Finance) has

retired, the services of the Petitioner are no longer required, whereas the

fact is that the Petitioner was hired for employment with Respondent

No.1 and not specifically for Director (Finance). This is fortified by the

identity card of the Petitioner.

5. It is further argued that the sudden removal of the Petitioner has

left him in a state of penury and he is the sole bread earner of his family.

On account of the Pandemic Covid-19 the Petitioner will find it difficult

to get employment elsewhere.

6. Mr. Patnaik on the other hand submits that the Petitioner was hired

as a Driver through Respondent No.4 and attached to the Director

(Finance), on contract basis, and there is no privity of contract between

Respondent Nos.1 to 3 and the Petitioner. Learned counsel for

Respondents further argues that under the law a contract of service is

unenforceable and therefore the present petition seeking directions to the

Respondents to reinstate the Petitioner is not maintainable.

7. Dr. P. Sreenivasan, General Manager (Human Resources), is

present in Court. He reiterates that the Petitioner was hired through an

Agency for Director (Finance) and his services are no longer required. He

submits that the employment of the Petitioner was on contract basis and

there is no provision under which his services can be continued, as

Respondent No.1 is a Company controlled by the Government of India

and bound by its Rules and Regulations for employing the Drivers.

Despite the fact that the Petitioner was not working during the Pandemic,

special powers were invoked and exercising the discretion, salary of the

Petitioner has been released upto May, 2020. He submits that it is not

possible for Respondent Nos. 1 to 3 to accede to the request of Petitioner,

as it would be beyond the jurisdiction of the said Respondents.

8. I have heard learned counsels for the Petitioner and the

Respondents.

9. Through the present petition the petitioner seeks enforcement of a

contract of service. The law on the issue is no more res integra. Subject

to well defined categories of exceptions, the law and more particularly

provisions of Specific Relief Act, do not contemplate enforcing a service

contract, as that would amount to specific performance of a contract. In this context I may usefully rely on a passage from Halsbury’s Laws of England, Fourth Edition, Volume 44, which is as under:-


“407. Contracts for personal work or services.— A judgment

for specific performance of a contract for personal work or

services is not pronounced, either at the suit of the employer

or the employee. The court does not seek to compel persons

against their will to maintain continuous personal and

confidential relations. However, this rule is not absolute and

without exception. It has been held that an employer may be

restrained from dismissing an employee in breach of contract

if there is no loss of confidence between employer and

employee or if (at least in a contract of employment to carry

out a public duty) the employee has been dismissed in a

manner which does not comply with statutory or contractual

regulations governing dismissal. No court may, whether by

way of an order for specific performance of a contract of

employment or an injunction restraining a breach or

threatened breach of such a contract, compel an employee to

do any work or attend at any place for the doing of any work.

This principle applies not merely to contracts of employment,

but to all contracts which involve the rendering of continuous

services by one person to another, such as a contract to work

a railway line ….”

10. Supreme Court in several judgments has observed that a Court

would normally not give a declaration that a contract subsists and the

employee, after removal from service, can be deemed to be in service

against the consent of the employer, subject to three broad exceptions (i)

where a public servant is removed in contravention of Article 311 of the

Constitution of India; (ii) where the worker is reinstated on being

dismissed under the Industrial Law; and (iii) where a statutory body

violates mandatory provisions of a Statute.

11. The only remedy thus available to such an employee, who is

discontinued from service, if aggrieved, is to sue for damages and this is

evident from reading the provisions of Section 14 read with Section 41 of the Specific Relief Act.

12. A similar question came up before a Coordinate Bench of this

Court in Shri L.M. Khosla vs. Thai Airways International Public

Company Limited and Anr. 2012 SCC OnLine Del 4019 where the

issues framed by the Court were as under:-

“1. Whether the continuance of the plaintiff in the

employment of defendant was vested and inherent right until

the date of superannuation?

2. Whether there is privity of contract between defendant

no.2 and the plaintiff?

3. Whether the termination of the plaintiff was as per the

terms of contract of employment?

4. Whether the plaintiff was entitled to automatic promotions

and revisions of salaries as claimed by him?

5. Whether the plaintiff is entitled to damages and

compensation as claimed alongwith interest and if so at

what rate and for which period?

6. Relief.”

13. Relevant paras of the judgment are as under:-

“4. In the judgment in the case of Shri Satya Narain

Garg (supra), I have referred to the recent judgment of the

Supreme Court in the case of Binny Ltd. v. V.

Sadasivan (2005) 6 SCC 657 and which holds that public

policy principles or administrative law principles do not

apply to private employment. The relevant paras in the

judgment in Shri Satya Narain Garg (supra) read as under:-

“7. Merely because two views are possible, this Court

will not interfere with the conclusion arrived at by the

Trial Court, unless the conclusion is illegal or perverse

or causes grave injustice. In case of private employment,

the employers are fully justified in taking steps for

termination of services, if it finds that the employee is not

upto the mark. Principles applicable in public law

domain do not apply with respect to employees in private

employment. Employment in private sector is governed

by the terms and conditions of employment, and unless

the termination is shown to be violation of the terms and

conditions of employment, it cannot be said that the

termination is illegal. In the present case, in my opinion,

since there was no fixed period of employment so far as

the deceased plaintiff is concerned, the deceased plaintiff

could have been terminated from services even by a

simplicitor notice, assuming even if the services of the

deceased plaintiff were upto the mark. Further, even if

there is illegal termination of services, it is not possible

to grant damages as claimed inasmuch as the principle of

mitigation of damages squarely applies. As per this

principle of mitigation of damages enshrined in Section

73 of the Contract Act, 1872 even if an employee is

illegally terminated from services, he cannot sit at home

and he must take sufficient steps to procure alternative

employment. The law in this regard is contained in the

judgment of the Supreme Court reported as S.S.

Shetty v. Bharat Nidhi Ltd., AIR 1958 SC 12. Paras 12

and 13 of this judgment are relevant and the same read

as under:

12. The position as it obtains in the ordinary law of

master and servant is quite clear. The master who

wrongfully dismisses his servant is bound to pay him

such damages as will compensate him for the wrong

that he has sustained.

“They are to be assessed by reference to the

amount earned in the service wrongfully

terminated and the time likely to elapse before

the servant obtains another post for which he

fitted. If the contract expressly provides that it

is terminable upon, e.g., a month's notice, the

damages will ordinarily be a month's wages…

… … No compensation can be claimed in

respect of the injury done to the servant's

feelings by the circumstances of his dismissal,

nor in respect of extra difficulty of finding work

resulting from those circumstances. A servant

who has been wrongfully dismissed must use

diligence to seek another employment, and the

fact that he has been offered a suitable post

may be taken into account in assessing the

damages.” (Chitty on Contracts, 21st Edition,

Vol (2), p. 559 para. 1040).

13. If the contract of employment is for a specific

term, the servant would in that event be entitled to

damages the amount of which would be measured

prima facie and subject to the rule of mitigation in the

salary of which the master had deprived him.

(Vide Collier v. Sunday Referee Publishing Co. Ltd.,

1940-4 ALL. E.R. 234 at p.237 (A). The servant would

then be entitled to the whole of the salary, benefits,

etc., which he would have earned had he continued in

the employ of the master for the full term of the

contract, subject of course to mitigation of damages

by way of seeking alternative employment.”

xxxx xxxx xxxx xxxx

9. Surely, these types of self-serving averments cannot

be held as discharge of onus of proof of mitigation of

damages. The statement made by the deceased

plaintiff is bereft of any details as to which companies

or firms or persons he applied to, and on which dates,

and for what position, and for what salary and also

the details as to why he could not obtain the

alternative employment. I am, therefore, of the

opinion that the deceased plaintiff, even assuming he

was wrongly terminated from services, failed to prove

that he had taken sufficient steps for mitigation of

damages.”

5. In the case of GE Capital Transportation

Financial (supra), I have referred to the earlier judgment in

the case of Shri Satya Narain Garg (supra), and also the fact

that contracts which are determinable in nature cannot be

specifically enforced as per Section 14(1)(c) of the Specific

Relief Act, 1963. I have also referred to the fact that if the

contract of employment provides for one month's notice,

then, the maximum entitlement of damages of an employee

who alleges illegal termination is one month's pay. Paras 10

to 12 of the judgment in the case of GE Capital

Transportation Financial (supra) are relevant and the same

read as under:-

“10. In fact, the subject suit was also barred by Section

14(1)(c) of the Specific Relief Act, 1963 which provides

that the contract which is in its nature determinable,

cannot be specifically enforced. I have referred to the fact

that the contract was determinable by a one month's

notice as per clause 7 of the terms and conditions of the

letter dated 21.4.1998 and therefore the contract which

was determinable by one month's notice cannot be

specifically enforced. What cannot be done directly

cannot be done indirectly i.e. if there cannot be specific

performance of the contract, there cannot be declaration

and injunction to continue such a service contract. Section

41(e) of the Specific Relief Act, 1963 provides that

injunction will not be granted to prevent breach of the

contract, performance of which could not be specifically

enforced.

11. Therefore, looking at the matter from the point of view

of the contract of personal service not being enforceable

under Section 14(1)(b) of the Specific Relief Act, 1963, the

contract being determinable in nature and hence cannot

be enforced as per Section 14(1)(c) of the Specific Relief

Act, 1963 or that injunction could not be granted to

prevent breach of a contract which cannot be specifically

enforced, the suit was clearly barred and not

maintainable. The judgment of the trial Court does not

refer to the binding provisions of Sections 14(1)(b), (c)

and 41(e) of the Specific Relief Act, 1963. To complete the

discussion on this aspect, I would once again refer to the

recent judgment of the Supreme Court in the case of Binny

Ltd. (supra) and which specifically provides that in private contracts i.e. in strict contractual matters, there

does not arise the issue of applicability of Administrative

Law principles.

12. I have already stated above that even presuming there

was breach of contract, at best reasonable damages can

be granted and once there is a clause for termination of

services by one month's notice, it can only be one month's

notice which can be treated as reasonable damages

inasmuch as parties understood the period for obtaining

of an alternative employment as a one month's notice

period-vide SS shetty's case (supra)”

As already stated above, an S.L.P. filed against this

judgment has been dismissed.

xxxx xxxx xxxx xxxx

8. In view of the aforesaid judgments, the following

conclusions in law emerge:-

(i) A contract of private employment is not similar to the

public employment and in such private employment there is

no scope of applicability of the principles of administrative

law/public law.

(ii) A contract of employment which provides termination of

services by one month's notice, then, at best the employee

will only be entitled to one month's pay in terms of the

employment contract. An employee is not entitled to any

relief of continuation in services or pay with consequential

benefits for alleged remaining period of services till the date

of his superannuation.

(iii) As per the provision of Section 14(1)(c) of the Specific

Relief Act, 1963, a contract which is determinable in nature

cannot be specifically enforced. Since the service contract in

the present case is determinable by one month's notice there

does not arise the question of giving of any reliefs which

tantamount to enforcement of a determinable contract. As

per Section 14(1)(b), a contract of personal service cannot

be enforced when the employer is not the Government or

“State” as per Article 12 of the Constitution of India.

Plaintiff has in fact received one month's pay and therefore

his claim will stand satisfied in law and he is not entitled to

any reliefs as prayed for in prayer clauses in the suit.”

14. This law applies with greater vigour in the case of writ jurisdiction where disputed questions of law cannot be adjudicated. In the facts of the present case it is an admitted position that the petitioner was not an employee of respondent No.1, but was hired through an agency/

Respondent No.4. This was not an employment which conferred any right

upon the petitioner to continue, on the threshold of a regular employment

or even an ad-hoc appointment and was purely a contract of personal

service, through an outsourced agency.

15. In view of the settled law this Court in a writ jurisdiction cannot

give any direction to reinstate the petitioner and continue his services.

16. There is no merit in the petition and the same is accordingly

dismissed.

17. Ms. Sweety Chauhan learned counsel for the Petitioner, at this

stage, submits that she may be given the liberty to resort to remedies

under the Industrial Disputes Act, 1947.

18. Liberty is granted to the Petitioner to approach an appropriate

Forum, to ventilate his grievances, in accordance with law.

(JYOTI SINGH)

JUDGE

NOVEMBER 9, 2020

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