Supreme Court Upholds Employer's Dismissal as Valid and Denies Declaration of Continuance of Service. Termination in Breach of Regulations Framed Under Section 45 of the Air Corporation Act, 1953 Does Not Render Dismissal Void When Employment Is Purely Master and Servant, Even for a Statutory Corporation.

Case Note & Summary

The dispute arose out of the dismissal of an employee by a statutory corporation. Prior to August 1953, the respondent was employed as a motor driver in Airways (India) Ltd. Upon the enactment of the Air Corporation Act, 1953, the existing air companies, including Airways (India) Ltd., were taken over by the appellant, Indian Airlines Corporation, and the respondent became its employee. On January 13, 1956, the respondent was suspended on certain charges. After an enquiry, he was dismissed by order dated February 6, 1956. The respondent filed a suit alleging that the enquiry had been conducted in breach of the procedure laid down by the Regulations made by the Corporation under Section 45 of the Air Corporation Act, 1953, and therefore the dismissal was illegal and void. The trial court accepted the contention and granted a declaration that his service continued as the order dismissing him was null and void. The first appellate court affirmed the decree. In second appeal before the High Court, it was conceded that the Regulations applied and that the procedure for terminating service was not complied with. The Corporation contended that the only relief to which the respondent was entitled was damages, and that a declaration could not be granted. The High Court rejected that contention, holding that the Corporation was under a statutory obligation to observe the procedure laid down in the Regulations, and that the order of dismissal was illegal and void, so the respondent continued in employment. The Corporation appealed to the Supreme Court by certificate. The core legal issue was whether a declaration that the contract of service still subsisted could be granted when termination was in breach of procedural safeguards provided in regulations, particularly in the context of a statutory corporation. The appellant argued that the relationship was purely master and servant, that regulations did not create statutory restrictions, and that only damages were available. The respondent argued that the corporation was under a statutory obligation to follow the procedure, and breach rendered the dismissal void. The Supreme Court, after reviewing authorities such as Francis v. Municipal Councillors of Kuala Lumpur, Barber v. Manchester Regional Hospital Board, Ridge v. Baldwin, Vine v. National Dock Labour Board, Bool Chand v. The Chancellor, Vidyodaya University v. Silva, and others, held that the general rule is that courts do not grant specific performance of contracts of service, and a declaration that the contract still subsists will not be made absent special circumstances. This rule applies even when the authority appointing the employee acted under statutory authority, because the relationship remains contractual, as between master and servant. Exceptions exist where the action is ultra vires or where the appointment is to an office or status. The Court found that the respondent's employment was not to an office or status, and neither the Act nor the rules made under Section 44 imposed any obligation or restriction on the power of the Corporation to terminate employment or any procedural safeguards subject to which only such power could be exercised. The regulations framed under Section 45 merely embodied terms and conditions of service and did not constitute a statutory restriction as to the kind of contracts the Corporation could make or the grounds on which it could terminate them. The Court reaffirmed three well-recognised exceptions where a declaration would be issued: cases of public servants falling under Article 311(2) of the Constitution, cases falling under industrial law, and cases where acts of statutory bodies are in breach of a mandatory obligation imposed by a statute. The present case fell under none of these exceptions. The Court held that the dismissal was with jurisdiction, and although wrongful in the sense of being in breach of the terms and conditions which governed the relationship, the respondent was only entitled to damages and not to a declaration that his dismissal was null and void. Accordingly, the appeal was allowed and the declaration granted by the trial court and upheld by the High Court was set aside.

Headnote

Issue of Consideration

Final Decision

Appeal allowed. The declaration granted by the trial court and upheld by the High Court was set aside. The respondent was entitled only to damages for wrongful termination, not to a declaration that his dismissal was null and void.

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