# [1970] 2 S.C.R. 250

- **Citation:** [1970] 2 S.C.R. 250
- **Court:** Supreme Court of India
- **Decided:** 1969-09-08
- **Case number:** Civil Appeal No. 559 of 1967
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1970-2-s-c-r-250-4779
- **Pages:** 20

## Headnote

250
EXECUTIVE COMMITTEE OF U.P. STATE WAREHOUSING
A
CORPORATION, LIMITED
l'.
CHANDll.A KIRAN TYAGI
September 8, 1969
(J.M. SHELAT AND C. A. VAIDIALINGAM, JJ.l
-A'"'ricultural Produce (Derelop111c111 and Warehousing)
Corporatio11
Act l23 of 1956), s. 54 t11ul
}~£'g11/a1ions 11ullfe
1hereu11der-Reg11lo1iu11
16(3 )-Dis1nissal of e111p/oyce wilhout follvwi11g proc<'d11re-lf e111ployce
enritled to rei11state11u•11t or only da111ages-Specific J{e/icf Act ( l uf
1877}, s. 21.
Under s. 28 of the Agricultural Produo~ (Development and \Van:-
housing) Corporation Act, 1956, the appellant v.1as established as the
Warehousing Corporation of the State of U.P. Section 54 of the Act
gives power to a Warehousing Corporation to n1akc regulations not inconsistent with the Act and the Rules made thereunder 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.
Regulatil)n 11 deals with termination of the service <Jf an cn1ploycc 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 \vitncsscs against hin1,
and for producing evidence in his defence.
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 anv evidence in respect of any charge. lnste~ul
he met various persons and collected information, and gave his findings
on the various charges on the basis of the enquiries n1ade hy hin1 nn<l
the records.
Even the information so collected was not put to the respondent.
On the basis of those findings of the Enquiry Otli.ccr the 1csPondent °"''as dismissed fron1 ·service.
He filed a snit
ch~11lenging the
o.rdcr of dismiss~{ on the ground that there was a violation of regulation
16(3) and prayed for a declaration that the or<lcr was null and void and
that he \Vas entitled tt. be re-instated \Vith full pay and other en1olume.nts.
On the questions whether : (1) the disn1issal \Vas not in accordance-
\"'ith regulation 16(3): and (2) the relationship being one of personal
service the respondent \Vas entitled to the declaration {or rcinstatcn1cnt.
HELD : (1) The tcrn1ination of the rcsp-...11H.1ent's service v;as nnt
under regulation 11, hut under regulation 16; and the procedure prescribed by rcguh1tion lf(J) was not follO\l.'ed by the Enquiry Olllcer in
the present case.
B
c
D
E
F
G
(2) A declaration to enforce a contract of personal service ·will not
norma\ly be granted.
The' e}l.ceptions arc : (i) appropriate
c~1scs of
public servants who have been dis1nisse<l fron1 service in contravention
I{
of Art. 311; (ii) disn1issed workers un<lcr industrial and l;:ihour la\\'; <ind
(iii) when a statutory bo<ly has acted in breach of a n1311datory ohliga~
tion imposed by a statue. [267 G]
A
B
c
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WAREHOUSING CORP. v. TYAGI (Vaidia/ingam, J.)
251
Jn the present case, a breach has been committed by the appellant
of reoulation 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 orde·r made in breach of the regulations would
only be c·ontrary 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 e~tablished in this case, could only result
in the order of dismissal being held to be wrongful, and in conse.quence~
making the appellant liable for damages. but could not have the e

## Text

_Characters 0–39,925 of 54,804. This is a partial read: ask again with offset=39925 for what follows._

250
EXECUTIVE COMMITTEE OF U.P. STATE WAREHOUSING
A
CORPORATION, LIMITED
l'.
CHANDll.A KIRAN TYAGI
September 8, 1969
(J.M. SHELAT AND C. A. VAIDIALINGAM, JJ.l
-A'"'ricultural Produce (Derelop111c111 and Warehousing)
Corporatio11
Act l23 of 1956), s. 54 t11ul
}~£'g11/a1ions 11ullfe
1hereu11der-Reg11lo1iu11
16(3 )-Dis1nissal of e111p/oyce wilhout follvwi11g proc<'d11re-lf e111ployce
enritled to rei11state11u•11t or only da111ages-Specific J{e/icf Act ( l uf
1877}, s. 21.
Under s. 28 of the Agricultural Produo~ (Development and \Van:-
housing) Corporation Act, 1956, the appellant v.1as established as the
Warehousing Corporation of the State of U.P. Section 54 of the Act
gives power to a Warehousing Corporation to n1akc regulations not inconsistent with the Act and the Rules made thereunder 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.
Regulatil)n 11 deals with termination of the service <Jf an cn1ploycc 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 \vitncsscs against hin1,
and for producing evidence in his defence.
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 anv evidence in respect of any charge. lnste~ul
he met various persons and collected information, and gave his findings
on the various charges on the basis of the enquiries n1ade hy hin1 nn<l
the records.
Even the information so collected was not put to the respondent.
On the basis of those findings of the Enquiry Otli.ccr the 1csPondent °"''as dismissed fron1 ·service.
He filed a snit
ch~11lenging the
o.rdcr of dismiss~{ on the ground that there was a violation of regulation
16(3) and prayed for a declaration that the or<lcr was null and void and
that he \Vas entitled tt. be re-instated \Vith full pay and other en1olume.nts.
On the questions whether : (1) the disn1issal \Vas not in accordance-
\"'ith regulation 16(3): and (2) the relationship being one of personal
service the respondent \Vas entitled to the declaration {or rcinstatcn1cnt.
HELD : (1) The tcrn1ination of the rcsp-...11H.1ent's service v;as nnt
under regulation 11, hut under regulation 16; and the procedure prescribed by rcguh1tion lf(J) was not follO\l.'ed by the Enquiry Olllcer in
the present case.
B
c
D
E
F
G
(2) A declaration to enforce a contract of personal service ·will not
norma\ly be granted.
The' e}l.ceptions arc : (i) appropriate
c~1scs of
public servants who have been dis1nisse<l fron1 service in contravention
I{
of Art. 311; (ii) disn1issed workers un<lcr industrial and l;:ihour la\\'; <ind
(iii) when a statutory bo<ly has acted in breach of a n1311datory ohliga~
tion imposed by a statue. [267 G]
A
B
c
D
WAREHOUSING CORP. v. TYAGI (Vaidia/ingam, J.)
251
Jn the present case, a breach has been committed by the appellant
of reoulation 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 orde·r made in breach of the regulations would
only be c·ontrary 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 e~tablished in this case, could only result
in the order of dismissal being held to be wrongful, and in conse.quence~
making the appellant liable for damages. but could not have the effect
of treating the respondent as still in service or entitling llim to reinstatement.
[271 B-E]
Dr. S.
B. Dutt v. Univmity of f)elhi, [1959] S.C.R. 1235 and S. R.
Trn·ori v. District Board, Agra, [1964]3 S.C.R. 55, followed.
Life fnsurance--Corporation of India v. Sunil Kun?ar Mukherjee, [1964J
5 S. C. R. 528, distinguished.
·
•
Vine v. Notional Dock Labour Board,
[1956]
3 All
E.R.
~39,
Barber v. Manchester Hospital Board,
[1958] 1 All
E.R.
322
anc
Francis v. Mrmicipal Councillors etc. [1962] 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
E
October 25, 1966 of the Allahabad High Court in Second Appeal
No. 4275 of ~965.
F
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H
S. T. Desai, Naunit Lal and D. N. Misra •. for !he appellant.
B. R. L. Iyengar, S. K. Mehta, and K. L. Meltta, for the respondents,
T1'.e Judgment of the Court was delivered by
Vaidialwgam, J'.
This appeal, by special leave, by the
defendant-appellant, is directed agamst the decree and judgment,
dated October 25, 1966 of the Allahabad High Court in Second
Apeal No. 4275 ?f 1965 holding that the order, dated March 10,
1964 passed agamst the respondent dismissing him from service
is null a11d void and that he is entitled to be reinstated with futi
pay and emoluments.
The rcspondent-r'aintifI 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.
Certai~
char~es ':"ere framed a_gainst the respondent and pending the
enquiry mto those charges he was placed under rnspension on
252
SUPREME COURT REPORTS
[1970] 2 SCR.
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 (i\"il
Suit No. 201 of 1964 challenging the order of dismissal.
According to him the various allegations made against hini 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 princi!'les of natural justice without giving
him an opportunity to place his defence and it was also h~ld i~
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 allegaiions 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 lev•lled 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 not 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 costs.
The trial Court held that the plaintiff was not entitled to the
protection under Art. 311 of the Constitution.
But it held that
in conduct;ng the enquiry, the Enquily Officer did not· comply
with the provisions of sub-cl. (3) of cl. 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 entdetl :n
the further relief claimed by him, viz., of reinstatement with lull
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 ~·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 inciTectivc
and de.creed the suit with costs.
The appellant challenged this decision in appeal before the
Civil Judge, Mainpuri, in Civil Appeal No. 69 of 1965.
The
respondent filed a Memorandum of Cross Objections chal!enging
the decree of the trial Court C:~clining his relief for reinstatement
with full pay.
The learned Civil Judge, by his decree and
judgment dated September 4, 1951 dismissed the apepal and
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WAREHOUSING CORP. v. TYAGI (Vaidialingam, J.)
253
allowed the Memorandum of Cross-Objections liled 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 decre.es of. both the lower
Courts before the Allahabad High Court m
Second
Appeal
No. 4275 of 1965. The High Court has, by its judgment dated
October 25, 1966 dismissed the appeal.
It a.greed
with
the
findings recorded by the two S!-lboi:dinate Court~ that the enquiry
proceedings are· vitiated by a v10lat10n of the pnnciples of natural
justice and also not being m . accordance. with Regulat10n
no. 16(3). Regarding the declaration for
remstatement,
the
High Court was of the view that the rules and the Regulations
framed under the Agricultural Produce
(Development mu/
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 : (I) A full and fair opportunity was
given to the respondent in the enquiry held against him and there
has been no violation of Reg~lation 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 ~nforced. 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,
pomted out that the findmgs that the enquiry held was not in
accordance with Regulanon no. 16(3) and that there has been
a violation of the principles of natural justice, are
conrnn-cnt
findmgs recorded by all the Courts and those findings are fully
sup~orted by the ev1den~e on record.
Regarding rhc secc;nd content10n, Mr. Iyengar pomted out that when an order of dismissal
has been pas~ed in violation of a statutory provision-as in this
case the _R~gul~tions-a declaration granted in favour of the respondent 1s JUst1fied.
. The first contention raise? by Mr. Desai relates to the quesIIOn as to w~ether the enquiry held against the plaintiff was in
accordance with sub-cl. ( 3) of Regulation 16 of the Regulations
framed by the appellant and whether the enquiry is vitiated by
254
SUPREME COURT REPORTS
[I 970] 2 S.C.R.
a Yiolation of the principles of natural. justice.
All the Courts
have held that the respondent is not entitled to
the
protection
under Art. 3 1 I of the Constitution. Therefore the only question
for consideration is whether the enquiry has been properly c~n
ducted in accordance with Regulation no. 16 (3).
As pointed
out by Mr. Jycngar. the findings on facts on this point have b.c:en
recorded concurrenily by all the Courts as against '.he a~i)el!ant.
lt 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 irv:orporation and
re_'.:ubtion
of
corporations for the purpose of development and warehousing of
agricultural prcduce on cooperative principles and
for
matters
connected
therewith.
Section 2
defines
certain
expressions.
including ·aopropriatc 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
St:l!c 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 Corroration for
the State of Uttar Pradesh, established under this section.
Sectitm 34 lays down the functions of a State Warehousing Corpora,
tion.
Section 35 provides fclr the composition of the Executive
Committee of a
State Warehousing Corporation.
Section 52
~ives power to the appropriate Government to
make
rules
to
c·arry out the purposes of the Act
and sub-s. (2 l
deals with
the various matters in respect of which rules
may be
frnmed
without prejudice to the generality of the power
contained
in
sub-s. (I).
Sub-s. ( 3)
provides
that
all
rules
made
bv
tl1e appropriate Government under s. 52 shall. as soon as ma\·
be after thev are made, be laid before both Houses of Parliamerit
or the Legislature ()f the State :1s the case may b~. Section 53
gives power to the Board to make regulations ,not inconsistent
with the Act and the n11es made thereunder. and those regulatiP•Js may provide for all matters for which provision is ncce~sary
,,,. 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
A
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·-
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B
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WAREl{OUSING CORP. v. TYAG! (Vaidialingam, J.)
255
framed.
Section 54 gives power to the Warehousing Corporations 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 !he 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 ot the Regulations.
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 discipline.
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 relevunt for the present purpose, is as follows :
"(3) No punishment other than that specified in
sub-para (l)(a), (l)(b) or (l)(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 defence :
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
25f.
SUPREME COURT REPORTS
[1970] 2 S.C.R.
enquiry, apart from other objections, is that materials collected
ty 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 de'~nce and that
the various persons from whom information had been gathered
hy 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 O.'ficer 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 cjrcumstances, 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
cluirges.
He has also admitted that he met various persons and
·collected information and that information has iieen !acorporated
in hi.s 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.
On 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 uniler
regulation 16.
We have no hesitation in rejecting this contention. Regulation 11, as we have already pointed out, is ;n
Chapter JI, and deals with termination of service simpliciter and,
even in such circumstances, it provides in the case of a perma.
nent employee that his ·services can be terminated only after
apprising the employee of the reasons therefor 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 {)Ur
-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
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WAREHOUSING CORP. v. TYAGI (Vaidialingam, J.)
257
an enquiry and then dismissed the employ~e 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 iillowance during
the period of suspension. The order of suspension must be related'
to regulation 17 and the grant of subsistence allowance must be
rdcrred 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 a•·e no special circumstances existing in this case justifying the grant of such a declaration.
Mr. Desai developed his contentions as follows : The relationship between the apix;llant 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 circutrrstances, it was urged, the jurisdiction to
grant
a
declaration which will result in continui' f of service is granted·
onl'y under very special circumstances which require the departure
from the general rule that a contract of service will
not be
specifically enforced.
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 marrdatory nature.
Hence a termination of service by an employer even in breach of ~~nditions
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
~ranted as there are no special circumstances warranting the
grant of such a relief in this case.
Counsel pointed out that the
"2 58
SuPREME COURT REPORTS
(1970] 2 S.C.R.
respondent entered service only in Noveml:>er 1958 and he has
b(:en removed from service in 1964 and it is not claim~d 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 declara-
. tion 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. 0ne of the matters in
respect
of
which regulations may be framed is in regard to the conditions
ot 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 employee~. 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 regula-
-iions, according to Mr. Iyengar, having b~cn 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
-•'.le findings recorded by all the Courts, it is clear that there has
·been a violation of cl. ( 3) oi regulation i 6, 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 ~herefore, there
are sufficient circumstances for departing from the normal rule
1hat a contract of personal service will not be specifically enforced.
The question as to when and under what circumstances a
reiief by way of declaration regarding continuity of f.ervice, after
nolding that an order of dismissal is void or ultra vires, can be
given, has been considered both in 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('). This
·decision has also been referred to by this Court in some of its
d~cisions, to which we shall refer presently.
'foe case before the
House of Lords in the decision referred to above arose under the
foliowing circumstances.
The plaintiff was a
registered
docl,-
(1) [1956] 3 All E.R. 939.
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WAREHOUSING CORP. v. TYAGI (Vaidia/ingam,. J.)
259
worker employed in the reserve pool by the National Dock Labour
Board under a scheme set up i:nder the Uock Workers (Regulation 6f Employment) Order, 1947. In 1948,_ the Nation~! B0ard,
approved the delegation of powers to d1sc1phnary committees set
up by local boards.
The plaintiff failed to obey a va)id order
to report for work with a company of stevedores and, m consequence, the local board ins•ructed their disciolinary 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 daiming 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 beth damages and declration; 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 declaratkn
_granted by the trial Judge was properly made a; 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,
?hserves at p. 943 that the discretion in granting a declaratory
E Judgment should not be exercised save for good reason and then
summarising the reasons for granting the declaration, states at
p. 944:
F
G
"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
i~
breach of contract.
Here, the removal of the plaintiff's
name from the reg!ste~ being, in law, a nullity, he continued to h~ve the nght to be treated as a registered dock
worker with all the benefits which,
by statute
that
st~tus conferred on him.
It is, therefore, righc that,
With the _bac.kground ~f this scheme, t!i.e court should
declare his pghts."
H
. At p. 948, Lord Keith of Avonholm states :
. "This is. not a straightforward relationship of master
and ~ervant. Normally, and apar, from the interven-
260
SUPREME COURT REPORTS
[1970] 2 S.C.R.
tion 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 actings here complained of were a nullity, Mr. Vine (hereinatter 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 sen :ces 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 a.gain 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('). 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 services 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)°[1958] I All E.R. 322.
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WAREHOUSING CORP. v. TYAGI (Vaidialingam, ].)
261
for breach of contract.
It was contended Jn behalf of the
plaintiff that when passing the order terminating
his . services
the procedure indicated in cl. 16 of the te~ms and cond1tion~ of
service of hospital medical staff has been v10lated by the ongmal
hospital Board and therefore the order of
termmat1on
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('). 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(').
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 flavour attaching to the plain.tiff's contract, I have reached the
conclusion that in essence it was an ordinary contract
between master and servant and nothing more."
E .In this
ivew
the
Court finally held that the plaintiff's only
remedy was to recover damages as for breach of contract.
F
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A similar question regarding the right of a dismissed employee
to get a declaration of his right to continue in employment came
up fct consideration before the Privy .Council fa .. Francis
v.
Municipal Councillors etc.(').
The plaintiff in that case was in
the service of the Municipal Councillors of Kuala Lumpur and,
bys. 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 diswissed and that his remedy lay in a claim
for damages.
The plaintiff sought a further declaration that he
had ~ ri.ght to co~tin?e in ~mployment notwithstanding the order
of d1sm1ssal.
Reiectmg 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 •Jf 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) [1962] 3 All F.R. 6JJ.
2Sup Cl/70-5
262
SUPREME COURT REPORTS
[1970] 2 s.c.R.
specific perform.ance of c.ontracts of service.
Special
circumstances wdl be reqmred before such a ueclarat1011
is made and its making wili normally be in the discretion of the court.
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 (') and finally
held at p. 638 :
"In their Lordships' view the ;ircumstances of the
present case are not comparable with those in Vine's
case (') 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 treate4 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 beoo
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 lfarber's case (") and Francis'
case ('). But, when a statutory status is given to an employee
and there has been a violation of the provisions of the statute
while tenninating 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 servfre, 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.(')
The question has also been considered by this Court in certain
decisions, to which we w\ll immediately refer.
In Dr. S. B. Dutt
v. University of Delhi(') this Court had to consider the legality
of an award directing that an order of dismissal was-ultra vires,
ma/a 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,
(t) [1956]13 All E.R. 939.
(3) [1962]3 All E.R. 633.
(2) [1958] I All E.R. 322.
(4) [19591 S.C.R. 1235.
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WAREHOUSING CORP. v. TYAGI (Vaidialingam, J.)
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under s. 45 of the Delhi University Act.
An award was made
which decided that the appellant"s "'dismissal
was
11/tra vire>,
ma/a 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 cf Delhi.
The Universtt)
of Delhi challenged this decision on appeal and the Punjab High
CcLrt, which ultimately heard the appeal, set aside the award
on the ground that such a declaration amountd 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 Ccurt, agreeing with the
reasoning of the High Court, observed at p. 1242 :
"There is no doubt that a ·:ontract of
personal
service cannot be specifically enforced.
Section
21,
cl. (b) of the Specific Relief Act, 1877, 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
:o the award, which if the award is unexceptionable,
has to be done under s. 17 of the Arbitration Act aftet
it has been filed in Court, that decree will direct that the
award be carried out and hence direct that the appellant be treated as still in the s(lrvice of the respondent. It
would then enforce a contract of personal service, for the
appellant claimed to be a profes;or under a contract
of personal service, and so offend s. 21 ( b) .•·
On behalf of the appellant, reliance w~s placed on the deci;ion
of the Judicial Committee in The High Commissioner for India v.
I. M. Lall ( 1) in support of the contention that a declaration :hat
the appellant continued in service under the U:iiversit" of Delhi
in spite of the order of dismissal was a declaration
'~hich the
law permitted to be made and was :iot
therefor~ erroneous.
Dealing with this contention and referrincr to the decision-of :he
Judicial Committee, this Court observed ~t p. 1244 :
-
'.'That was not a case based on a contract of personal
service ... The declaration d;d not enforce a contract
o~ p~rsonal service but proceeded on the basis that the
d1sm1ssal could only be effected in :erms of the statute
an~ as that had not been done, it was a nullity, from
~hi~h ~he res~lt followed that the respondent had contmued m service.
All that the Judicial Committee did
(I) (194~) L.R. 75 I.A. 225.
26•1
SUPREME COURT REPORTS
[1970) 2 S.C.R.
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 r.:illity', 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 thi>
Court in S. R. Tewari
v.
District Board, Agra('). In that ca!le, 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.