# P. P. GUPTA v. UNION (Mathew,/,)

- **Citation:** [1974] 1 S.C.R. 304
- **Court:** Supreme Court of India
- **Decided:** 1973-08-02
- **Bench:** K. Mathew, M. H. Beg
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-p-gupta-v-union-mathew-5972
- **Pages:** 5

## Headnote

. Termination of. ser~ice-Reso/ution of Board of Directors terniinating ser~
vice of employee invalid because meeting not properly called-Ratification of
-termination at a subsequent properly convened meeting relates back to date of
act ratified and makes termination effective-Nott:e of termination-One month's
.notice, sufficiency of.
The appellant was appointed Secretary of the respondenf company in 1942.
Later he was promoted as General Manager. By a resolution dated December
16, 1953 the Board of Directors of the company decided to terminate the services
of the appellant.
By a telegram and a letter dated December 17, 1953 addressed
to the appeilant the Chairman of the Board of Directors ferminatcd the serYices
of the appellant.
Subsequently at a meeting held on December 23, 1953 the
Board of Directors confirmed the minutes of the meeting held on December t 6,
1953- and the action of the Chairman in terminating the services of the appellant
by his let~er and telegram dated December 17, 1953. The appellant filed a suit
challenging his dismissal and also ·claimed that he was entitled to
18
months'
notice before termination of his services.
The trial Court and the High Court
decided against the appeilant. In appeal by certificate to this Court the questions
for consideration were : (i) whether the termination of the appeilant's
service
was valid and (ii) whether the appellant was bound by the company's rules which
provided for termination of the service of employees after one month's notice.
Dismissing the appeal,
HELD : (i) Notice to all the Directors of a meeting of the Board of Directors
was essential for the validity of any resolution passed at the meeting. As admitA
B
c
D
tedly no notice! was given of the meeting on December 16, 1953 to one of the
E
Directors, the resolution passed terminating the services of the
appellant was
invalid.
[307 D-E]
But the resolution of the Board of Directors to confirm the action of the
Chairman to terminate the services of the appellant by his telegram and letter
dated December 17, 1953, would show that the Board ratified the action of the
(~hairman. Even if it be assumed that the telegram and the letter terminating
the services of the appellant by the Chairman was in pursuance to the invalid
resolution of the Board of Directors passed on December 16, 1953 to terminate
F
his services, it \vould not follow that the action of the Chairman could not be
ratified in a regularly convened meeting of the
Board of Directors.
E\'en
assuming that the Chairman was not legally authorised to terminate the services
of the appellant, he was acting on .behalf of the Company in doing so. because
he purported to act in pursuance of the invalid resolution. Therefore it
\Vas
open to a regularly constituted. meeting of the Board of Directors to ratify
1
th~t
action which, though unauthonsed, was done on behalf o~ the compa~y. h.atification would always relate back to the date of the act ratified and so 1t must be
held that the services of the appe1lant were validly terminated on Dece1nber 17.
G
1953.
[307 G-308 CJ
(ii) The rules which provided for one month's notice in case of termination
of services of all employees would apply to the appellant as
well.
The rules
expressly purported to bind a1l the employees of the respondent-company. There
\Vas no reason to hold that the appellant !Vas not an employee of the respond~nt
company. The appellant had himself rehed on the rules.
It was therefore idle
to contend that the rules did not bind him. The contention of the appellant that
H
he was entitled to 18 months' notice must be rejected. [308 D-E]
CJVTL APPELLATE JURISDICTION : Civil Appeal No. 1333 (N) of
1967.
)
P. P. GUPTA v. UNION (Mathew,/,)
305
A
From the Judgment and Decree dated the 25th November, 1966
of the Delhi High Court in Regular First Appeals Nos. 89-D and
104-D of 1956.
"
.
V. S. Desai, Ravinder Rana, 0. P. Ra~a and Uma Mehta, for •Jie
appellants.
B. Sen, Suresh Sethi, R. K. Maheshwari and B. P. Mahe

## Text

J04
PARMESHWARI PRASAD GUPTA
'·
THE UNION OF INDIA
August 2, 1973
(K, K. MATHEW AND M. H. BEG, JJ.J
. Termination of. ser~ice-Reso/ution of Board of Directors terniinating ser~
vice of employee invalid because meeting not properly called-Ratification of
-termination at a subsequent properly convened meeting relates back to date of
act ratified and makes termination effective-Nott:e of termination-One month's
.notice, sufficiency of.
The appellant was appointed Secretary of the respondenf company in 1942.
Later he was promoted as General Manager. By a resolution dated December
16, 1953 the Board of Directors of the company decided to terminate the services
of the appellant.
By a telegram and a letter dated December 17, 1953 addressed
to the appeilant the Chairman of the Board of Directors ferminatcd the serYices
of the appellant.
Subsequently at a meeting held on December 23, 1953 the
Board of Directors confirmed the minutes of the meeting held on December t 6,
1953- and the action of the Chairman in terminating the services of the appellant
by his let~er and telegram dated December 17, 1953. The appellant filed a suit
challenging his dismissal and also ·claimed that he was entitled to
18
months'
notice before termination of his services.
The trial Court and the High Court
decided against the appeilant. In appeal by certificate to this Court the questions
for consideration were : (i) whether the termination of the appeilant's
service
was valid and (ii) whether the appellant was bound by the company's rules which
provided for termination of the service of employees after one month's notice.
Dismissing the appeal,
HELD : (i) Notice to all the Directors of a meeting of the Board of Directors
was essential for the validity of any resolution passed at the meeting. As admitA
B
c
D
tedly no notice! was given of the meeting on December 16, 1953 to one of the
E
Directors, the resolution passed terminating the services of the
appellant was
invalid.
[307 D-E]
But the resolution of the Board of Directors to confirm the action of the
Chairman to terminate the services of the appellant by his telegram and letter
dated December 17, 1953, would show that the Board ratified the action of the
(~hairman. Even if it be assumed that the telegram and the letter terminating
the services of the appellant by the Chairman was in pursuance to the invalid
resolution of the Board of Directors passed on December 16, 1953 to terminate
F
his services, it \vould not follow that the action of the Chairman could not be
ratified in a regularly convened meeting of the
Board of Directors.
E\'en
assuming that the Chairman was not legally authorised to terminate the services
of the appellant, he was acting on .behalf of the Company in doing so. because
he purported to act in pursuance of the invalid resolution. Therefore it
\Vas
open to a regularly constituted. meeting of the Board of Directors to ratify
1
th~t
action which, though unauthonsed, was done on behalf o~ the compa~y. h.atification would always relate back to the date of the act ratified and so 1t must be
held that the services of the appe1lant were validly terminated on Dece1nber 17.
G
1953.
[307 G-308 CJ
(ii) The rules which provided for one month's notice in case of termination
of services of all employees would apply to the appellant as
well.
The rules
expressly purported to bind a1l the employees of the respondent-company. There
\Vas no reason to hold that the appellant !Vas not an employee of the respond~nt
company. The appellant had himself rehed on the rules.
It was therefore idle
to contend that the rules did not bind him. The contention of the appellant that
H
he was entitled to 18 months' notice must be rejected. [308 D-E]
CJVTL APPELLATE JURISDICTION : Civil Appeal No. 1333 (N) of
1967.
)
P. P. GUPTA v. UNION (Mathew,/,)
305
A
From the Judgment and Decree dated the 25th November, 1966
of the Delhi High Court in Regular First Appeals Nos. 89-D and
104-D of 1956.
"
.
V. S. Desai, Ravinder Rana, 0. P. Ra~a and Uma Mehta, for •Jie
appellants.
B. Sen, Suresh Sethi, R. K. Maheshwari and B. P. Maheshwari, for
B the respondent.
The Judgment of the Court was delivered byMATHEW, J.-This appeal by certificate is directed against the
Decree of the High Court of Delhi dated November 25, 1966, passed
in Regular First Appeals No 89-D of 1956 and No. 104-D of 1956,
c both arising from Suit No. 282 of 1954 instituted by the plaintifIappellant for "
declaration that he
continued to be the
General
Manager of the Fire Insurance Company in question and that ~h~ purported termination of his services was inoperative, and claiming a
sum of Rs. 37,352.30 from the defendant on account of his arrears
of pay etc., or in the alternative, for a sum of Rs. 1,63,8201- as
money 'due to him by way of bonus, gratuity, etc., as detailed in the
D
plaint.
E
F
The respon.:ent Company had filed a suit against the appellant for
t)1e recovery of Rs. 1,10,0001- being Suit No. 306·of 1954 in which
the Company was granted a decree for Rs. 5,1591916 with proportionate costs. First Appe?l·No. 88-D of 1956 before the High Court
was the appeal by the Company against the rejection of the rest of
its claim in Suit No. 306 of 1954. We are not concerned with that
appeal. Regular First Appeal No. 89-D uf 1956 was the Company's
appeal against the award of decree for Rs. 73,936/15/9.passed in
favour of the appellant.
Regular First Appeal No. 104"D of 1956
was the appellant's appeal against the rejection of his other claims
in his suit.
The High Court dismissed First Appeals No. 88-D of
1956 and 104-D of 1956 but partially allowed First Appeal No. 89-lJ
of 1956.
.
The appellant was appointed as the Secretary of the respondentCompany on October 16, 1942. His pay was fixed at Rs. 1,0001p.m. free of income tax. Later on, he was promoted as the General
Manager of the Company.
On November 21, 1953, the appellant
sent an application for leave to the Chairman of the Board of Directors
G
but no reply was received by him.. He thereafter sent another application for 8 months' leave
on the 16th of December, 1953.
On
December 17, 1953, the appellant rec_eived a telegram from the Chairman of the Board of Directors stating· that the services of the appellant
had been terminated by the Company and that he should stop attend- .
ing the office. A registered letter to the same effect from the Chairman
H
was also received by him.
The allegation of the appellant in the plaint was that his services
had i;iot bee~ validly terminated by the respondent-Company and that
he still contmued as the General Manager of, the Company and was
306
SUPREME COURT REPORTS
[ 1974] l S.C.R.
entitled to recover the sum already mentioned from the respondent.
In the alternative, the appellant claimed,
among other things, 18
months' salary as due to him on the basis that he was entitled to 18
months' notice before terminating his services.
In the written statement, the respondent-Company contended that
the Chairman validly terminated the
services of th~ appellant on
December 17, 1953 in pursuance to a resolution passed by the Board
of Directors on the 16th, and that subsequently, that resolution ancl
the action of the Chairman terminating the services had been confirmed by a meeting, of the Board of Directors held on December 23,
1953, and, therefore, the services of the appellant were validly terminated.
The respondent-Company also contended that the appellant
was in no event etitled to 18 months' notice as claimed by him but only
to one month's notice and, therefore, he was entitled to get only one
month's salary in lieu of notice under that head.
The trial court found that the meeting of the Board of Directors
held on December 16, 1953 was valid, that the services of the appel·
!ant were validly terminated by telegram and Jetter c:.f the Chairman
dated December 17, 1953 addressed to the appellant, that even if it
be assumed that the meeting of the Board of Directors held on December 16, 1953 was irregular, the resolution of the Board of Directors
terminating the servir.es of the appellant on the 16th and the action
of the Chairman in actually terminating the services were ratified by
A
c
D
the Board of Directors_ by its resolution of December 23, 1953, and,
therefore, the services of the appellant were legally and validly terminated. It further held that the rnles framed by the Cot\lpany, namely, . E
exhibits D-3 and D-4 would govern th~ appellant and that he was
entitled, under clause (6) of exhibit D-3 0,nly to one month's notice
for terminating his services although the Court found that if the appel·
!ant was not bound by the rules, he would have been entitled
to
12 months' notice before the termination of his services.
The findings of the trial court in these respects were confirmed in
appeal by the High Court
'
In this appeal only two points were argued by counsel for the
appellant ·: (,1) that the services of the
appellant were not validly
terminated and, therefqre, he was entitled to a declaration that he
continued to be the General Manager of the Company and to claim
the amount speCified in the plaint; and' (2) that, in any event, the
appellant was entitled to 12 months' notice before his services were
terminated and as only one month's notice was Jliven, he was entitled
to 11 months' pay in addition to what was awarded under. this head.
As regards the first point, it was said that the meeting of the Board
of Directors dated December 16, 1953 was not properly convened for
the reason that notice of the meeting was not given to all the Directors.
The trial court fQund that one of the Directors, viz., Mr. B, P. Khaitan,
was not given n'Jtice of the meeting of the B.oard of Directors held on
December 16, 1953, and that he was not present at the meeting when
the resolution to terminate the services of the appellant was passed.
F
G
H
A
B
c
D
E
F
G
H
P. P. GUPTA v. UNION (Mathew, J.)
307
Now, it cannot be disputed that notice to all the Directors of a
meeting of the Board of Directors was essential for the validity of any
resolution passed at the meeting and that as, admittedly. no notice was
given to Mr. Khaitan, one of the Directors of the Company, the resolution passed terminating the services of the appellant was invalid.
Article 109 of the Articles of Association of the Company provides
as follows :-
"109. When meeting td be convened-A Director may
at any time summon meeting of the Directors by serving
every Director with at least 72 hours' notice in writing.
through the officer of the Company authorized to receive
such notice who shall arrange to convene the meeting".
In Hasbury's Laws of England, Vol. 9, p. 46, it has been stated that
it is essential that notice of the meeting and of the business to be transacted should be given to all persons entitled to participate and that if
a member whom it is reasonably possible to summon is not summoned,
the meeting will not be duly convened, even though the omission i&
accidental or due to the !act that the member has informed the officer
whose duty it is to serve notice that he need not serve notice on him.
In Volume 6 at p. 315' article 626, it is stated that a meeting of the
directors is not duly convened unless due notice has been given to all
the directors, and the business put through at a meeting not duly
convened is invalid.
To put it in other words, as the meeting of the Board of Directors
held on December 16, 1953, was invalid, so the resolution to terminate the services of the plaintiff was inoperative.
Then, tho question for consideration is, what is the effect of the
confirmation -0f the minutes of the meeting of the Board of Director~
held on December 16, 1953 and the action of the Chairman in terminating the services of the appellant by his telegram and letter dated
December 17, 1953, in. pursuance to the invalid resolution of the
Board of Directors to terminate his services, in the meeting of the
Board of Directors held on December 23, 1953?
The agenda of the meeting of the Board of Directors held on
December 23, 1953 shows that one item of business was the confir•
mation of the minutes of the meeting of the
Directors held on
Decemb~r 16, 1953. The confirmation of the minutes of the meeting
of the Directors held on December 16, 1953, would not in any way
show that the Board of Directors adopted the resolution to terminate
the services of the appellant passed on December 16, 1953. It only
shows that the Board passed the minutes of the proceedings of the
meeting held on December 16, 1953. But the resolution of the Board
of Directors to confirm the action of the Chairman to terminate the
services of the appellant by his telegram and letter dated December
17, 1953, would show that the Board ratified the action of the Chairman. Even if it be assumed that the telegram and the letter termina!ling the services of the appellant by the Chairman was in pursuance to
the invalid resolution of the Board of Directors passed on December
308
SUPREME COURT REPORTS
[1974] 1 S.C.R.
16, 1953 to terminate his services, it would not follow that the action
of the Chairman could not be ratified in a regularly convened meeting
of the Board of Directors. The point is that even assuming that the
Chairman was not legally authorised to terminate the services of the
appellant, he was acting on behalf of the Company in doing so, because,
he
purported to act in pursuance of the invalid resolution.
Therefore, it was open to a regularly constituted meeting of the Board
of Directors to ratify that action which, though unauthorised, was
done on behalf of the Company.
Ratification would always relate
back to the date of the act ratified and so it must be held that the
services of the appellant were validly terminated on December 17,
1953.
The appellant was not entitled to the declaration prayed for
by him and the trial court as well as the High Court was right in
dismissing the claim.
The second point for consideration is whether the appellant was
entitled to 18 months' notice before his services were terminated as
claimed by him. The trial Court found that the rules of the Company,
viz., exhibits D-3 and D-4 were binding Ol) the appellant and that rule
6 of exhibit D-3 which provides for one month's notice in case of
termination of services of all employees would apply to the appellant
a~ well. The High Court confirmed that finding.
The rules expressly
purport to bind all the employees of the respondent-Company. There
is no reason to hold that the appellant was not an employee of the
respondent-Company.
Besides, the appellant himself has relied u~on
these rules for the purpose of computation of the amount due to him
on account of bonus, provident fund, etc.
In these circumstances it
is idle to contend that the rules did not bind him. In this view, it is
quite unnecessary to consider the question whether, apart from the
rules, one month's notice was reasonable in the circumstances of the
case.
There is no merit in this appeal. We dismiss it but in the circumstances we make no order as to costs.
G.C.
Appeal dismissed ..
A
B
c
D