Case Note & Summary
The appeal arose from a suit for specific performance of an agreement executed by Western Coalfields Limited, a State instrumentality under Article 12 of the Constitution, with the natural guardian of a minor landowner. In 1988, the appellant acquired agricultural land belonging to the respondent No.1 (then a minor) for an open cast mine. Pursuant to its policy of providing employment to land losers in addition to compensation, an agreement dated 22-07-1990 was entered into, promising employment to the minor upon attaining majority. After attaining majority, the respondents sought enforcement, but the appellants refused, leading to a legal notice and later a suit for specific performance. The trial court dismissed the suit, holding the agreement unenforceable as it was not under the Land Acquisition Act. The first appellate court reversed the decision, finding the agreement valid and not barred by limitation, and decreed specific performance, directing the appellants to provide suitable employment. The appellants then filed a second appeal before the High Court, raising the substantial question of law whether the agreement, being a contract of personal service, could be specifically enforced under Section 14 of the Specific Relief Act, 1963. The appellants relied on Supreme Court judgments emphasizing the non-enforceability of personal service contracts. The respondents countered that exceptions exist, particularly when the employer is a State or its instrumentality, and thus the bar under Section 14 did not apply. The High Court analyzed the legal position, noting that the prohibition under Section 14 is not absolute. Referring to the three exceptions recognized in K.K. Saksena v. International Commission on Irrigation and Drainage, the court found that when the employer is an instrumentality of the State, the employment ceases to have a private law character and attains a status, thereby falling outside the scope of the bar. Since Western Coalfields Limited is such an instrumentality, the promise made under its policy to a land loser was enforceable. The court answered the substantial question in favour of the respondents, dismissed the appeal, and confirmed the decree of specific performance without costs.
Headnote
A) Contract Law - Specific Performance of Personal Service Contract - Exception to Section 14 - Specific Relief Act, 1963, Section 14 - The court held that although a contract of personal service is ordinarily not specifically enforceable, exceptions exist where the employer is an instrumentality of the State under Article 12 of the Constitution. As Western Coalfields Limited is a State instrumentality, the agreement to provide employment to the respondent, a land loser, fell within the exception and was enforceable. The employment ceased to have private law character and attained status due to the State's acquisition policy. Held, the decree of specific performance was valid. (Paras 12-16)
Issue of Consideration
Whether the agreement dated 22-07-1990 could be specifically enforced especially when it was a contract of personal service in the light of provisions of Section 14 of the Specific Relief Act, 1963?
Final Decision
Appeal dismissed. The impugned judgment and order of the District Judge-1, Kelapur in Regular Civil Appeal No.66 of 2012, decreeing the suit for specific performance, was confirmed. The substantial question of law was answered in favour of the respondents against the appellants. No order as to costs.
Law Points
- Section 14 of Specific Relief Act
- 1963 does not absolutely bar specific performance of contract of personal service
- exceptions exist when employer is State or instrumentality under Article 12 of Constitution
- or employee is workman under Industrial Disputes Act
- 1947
- contract of employment ceases to have private law character and attains status
- policy of State in providing employment to land losers for acquisition is enforceable.
