Pradeep Kumar Raghav v. Telecommunication Consultants India Ltd.

11. It is settled law that contract of personal service cannot be specifically enforced in light of Section 14 of the Specific Relief Act, 1963,save and except if it falls under certain exceptions as discussed in, inter alia, the decision of the Hon’ble Supreme Court in Executive Committee of Vaish Degree College v. Lakshmi Narain reported as (1976) 2 SCC 58:

12. The Hon’ble Supreme Court in SBI v. S.N. Goyal reported as (2008) 8 SCC 92, reiterated the said legal positionas follows:

13. Since neither of the aforesaid three exceptions apply to the present case, the contract of personal service cannot be sought to be specifically enforced by the appellant herein.

14. Therefore, the first issue is answered in the negative.

15. Even otherwise, in our view, the argument advanced on behalf of the appellant that before termination a notice was required to be served in terms of clause 12/13 of the subject contract, is fallacious. The present is a case where the contractual employment of the appellant with the respondent came to an end by efflux of time simpliciter and no notice was required to be served in terms of the subject contract. Issue No.2

16. No doubt a writ court is entitled to judicially review termination order passed by a public authority in terms of the contract so as to determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality. However, the scope of such review is not pervasive. In this behalf reference may be made to the decision of the Hon’ble Supreme Court in Gridco (supra), wherein it was observed as follows:

24. It was contended that the decision to terminate the contractual employment was not a fair and reasonable decision having regard to the fact that the respondent had performed well during his tenure and the requirement of the Corporation to have a Chief General Manager (HR) continued to subsist. In substance, the contention urged on behalf of the respondent was that this Court should reappraise and review the material touching the question of performance of the respondent as Chief General Manager (HR) as also the question whether the Corporation's need for a General Manager (HR) had continued to subsist. We regret our inability to do so.

25. It is true that judicial review of matters that fall in the realm of contracts is also available before the superior courts, but the scope of any such review is not all pervasive. It does not extend to the Court substituting its own view for that taken by the decision-making authority. Judicial review and resultant interference is permissible where the action of the authority is mala fide, arbitrary, irrational, disproportionate or unreasonable but impermissible if the petitioner's challenge is based only on the ground that the view taken by the authority may be less reasonable than what is a possible alternative. The legal position is settled that judicial review is not so much concerned with the correctness of the ultimate decision as it is with the decisionmaking process unless of course the decision itself is so perverse or irrational or in such outrageous defiance of logic that the person taking the decision can be said to have taken leave of his senses.

26. In Shrilekha Vidyarthi v. State of U.P. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212: 1991 SCC (L&S) 742] the State Government had by a circular terminated the engagement of all the Government Counsel engaged throughout the State and sought to defend the same on the ground that such appointments being contractual in nature were terminable at the will of the Government. The question of reviewability of administrative action in the realm of contract was in that backdrop examined by this Court. The Court also examined whether the personality of the State Government undergoes a change after the initial appointment of the Government Counsel so as to render its action immune from judicial scrutiny. The answer was in the negative.

27. The Court held that even after the initial appointment had been made and even when the matter is in the realm of contract, the State could not cast off its personality and exercise a power unfettered by the requirements of Article 14 or claim to be governed only by private law principles applicable to private individuals. The Court observed: (Shrilekha Vidyarthi case [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212: 1991 SCC (L&S) 742], SCC pp. 235-36, para 20)

28. Recognising the difference between public and private law activities of the State, this Court reasoned that unlike private individuals, the State while exercising its powers and discharging its functions, acts for public good and in public interest. Consequently every State action has an impact on the public interest which would in turn bring in the minimal requirements of public law obligations in the discharge of such functions. The Court declared that to the extent, the challenge to State action is made on the ground of being arbitrary, unfair and unreasonable hence offensive to Article 14 of the Constitution, judicial review is permissible. The fact that the dispute fell within the domain of contractual obligations did not, declared this Court, relieve the State of its obligation to comply with the basic requirements of Article 14.

29. The Court said: (Shrilekha Vidyarthi case [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212: 1991 SCC (L&S) 742], SCC pp. 236-37, para 22)

31. Taking note of the decision of this Court in Shrilekha Vidyarthi case [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212: 1991 SCC (L&S) 742] this Court held that (Issac Peter case [Excise Commr. v. Issac Peter, (1994) 4 SCC 104], SCC p. 125, para 26) there was“no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State), for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be the State”. The Court said: (Issac Peter case [Excise Commr. v. Issac Peter, (1994) 4 SCC 104], SCC p. 125, para 26)

32. In conclusion, the Court made it clear that the opinion expressed by it was only in the context of contracts entered into between the State and its citizens pursuant to public auction, floating of tenders or by negotiation. The Court considered it unnecessary to express any opinion about the legal position applicable to contracts entered into otherwise than by public auction, floating of tenders or negotiation.

33. In State of Orissa v. Chandra Sekhar Mishra [(2002) 10 SCC 583: 2003 SCC (L&S) 878], the respondent had been appointed as a Homeopathic Medical Officer whose services were subsequently terminated by issue of a notice. While rejecting the challenge to the termination order, the Court observed: (SCC p. 583, para 4) “4. … When the respondent was only a contractual employee, there could be no question of his being granted the relief of being directed to be appointed as a regular employee.”

34. We may also refer to the decision of this Court in Satish Chandra Anand v. Union of India [AIR 1953 SC 250] where the petitioner, an employee of the Directorate General of Resettlement and Employment, was removed from the contractual employment after being served a notice of termination. The contract of service in that case was initially for a period of five years which was later extended. A five-Judge Bench hearing the matter, dismissed the petition, challenging the termination primarily on the ground that the petitioner could not prove a breach of a fundamental right since no right accrued to him as the whole matter rested in contract and termination of the contract did not amount to dismissal, or removal from service nor was it a reduction in rank. The Court found it to be an ordinary case of a contract being terminated by notice under one of its clauses.

35. The Court observed: (Satish Chandra case [AIR 1953 SC 250], AIR p. 252, paras 10-11)

36. In Parshotam Lal Dhingra v. Union of India [AIR 1958 SC 36] this Court followed the view taken in Satish Chandra case [AIR 1953 SC 250]. Any reference to the case law on the subject would remain incomplete unless we also refer to the decision of the Constitution Bench of this Court in DTC v. Mazdoor Congress [1991 Supp (1) SCC 600: 1991 SCC (L&S) 1213] where this Court was dealing with the constitutional validity of Regulation 9(b) that authorised termination on account of reduction in the establishment or in circumstances other than those mentioned in Clause (a) to Regulation 9(b) by service of one month's notice or pay in lieu thereof. Sawant, J. in his concurring opinion held that the provision contained the much hated rules of hire and fire reminiscent of the days of laissez faire and unrestrained freedom of contract and that any such rule would have no place in service conditions.

37. To the same effect was an earlier decision of this Court in Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly [(1986) 3 SCC 156: 1986 SCC (L&S) 429: (1986) 1 ATC 103] where the Court had refused to enforce an unfair and unreasonable contract or an unfair and unreasonable clause in a contract entered into between parties who did not have equal bargaining power.

38. A conspectus of the pronouncements of this Court and the development of law over the past few decades thus show that there has been a notable shift from the stated legal position settled in earlier decisions, that termination of a contractual employment in accordance with the terms of the contract was permissible and the employee could claim no protection against such termination even when one of the contracting parties happened to be the State. Remedy for a breach of a contractual condition was also by way of civil action for damages/compensation. With the development of law relating to judicial review of administrative actions, a writ court can now examine the validity of a termination order passed by public authority. It is no longer open to the authority passing the order to argue that its action being in the realm of contract is not open to judicial review.

39. A writ court is entitled to judicially review the action and determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action, no matter the action is in the realm of contract. Having said that we must add that judicial review cannot extend to the Court acting as an appellate authority sitting in judgment over the decision. The Court cannot sit in the armchair of the Administrator to decide whether a more reasonable decision or course of action could have been taken in the circumstances. So long as the action taken by the authority is not shown to be vitiated by the infirmities referred to above and so long as the action is not demonstrably in outrageous defiance of logic, the writ court would do well to respect the decision under challenge.

40. Applying the above principles to the case at hand, we have no hesitation in saying that there is no material to show that there is any unreasonableness, unfairness, perversity or irrationality in the action taken by the Corporation. The Regulations governing the service conditions of the employees of the Corporation, make it clear that officers in the category above E-9 had to be appointed only on contractual basis.

41. It is also evident that the renewal of the contract of employment depended upon the perception of the management as to the usefulness of the respondent and the need for an incumbent in the position held by him. Both these aspects rested entirely in the discretion of the Corporation. The respondent was in the service of another employer before he chose to accept a contractual employment offered to him by the Corporation which was limited in tenure and terminable by three months' notice on either side. In that view, therefore, there was no element of any unfair treatment or unequal bargaining power between the appellant and the respondent to call for an oversympathetic or protective approach towards the latter.

42. We need to remind ourselves that in the modern commercial world, executives are engaged on account of their expertise in a particular field and those who are so employed are free to leave or be asked to leave by the employer. Contractual appointments work only if the same are mutually beneficial to both the contracting parties and not otherwise.

43. In the result, we allow this appeal, set aside the impugned judgment and order passed by the Division Bench of the High Court of Orissa dismissing Writ Appeal No. 11 of 2003. We, however, direct that the salary and allowances if any paid to Respondent 1 pursuant to the impugned judgment shall not be recovered from him. The parties shall bear their own costs in this Court as also in the courts below.” (Emphasis supplied)

17. Even though it has been the stand of the respondent that the PAN African E Network Project as well as the Oman Project are not in operation, which position has been sought to be disputed by the appellant; the same would be of no consequence.

18. Having considered the facts and circumstances of the present case, in our view, the action taken by the respondent in not extending the service of the appellant does not seem to be illegal, perverse, unreasonable, unfair or irrational, so as to require the interference of this Court.

19. Merely because one Mr. Gaurav Kumar Gupta, who is stated to be similarly placed as the appellant; however is not a party hereto, has been offered an extension from 01.07.2017 to 30.06.2018; the same would not advance the case of the appellant.

20. Contractual appointments work only if the same are mutually beneficial to both the contracting parties. The appellant having been engaged on a contractual basis for a fixed term cannot now in judicial review question the perception of the respondent management about his usefulness and the decision of the latter to not extend his contract further. The appellant was well aware when he took up the employment that it was for a limited term and depending on need extendable from time to time at the discretion of the respondent.

21. We in judicial review are not required to decide whether in the given circumstances the action of the respondent in not extending his contract further and relieving him from his duties was absolutely necessary or a more appropriate course could have been taken. In light of the dictum of the Hon’ble Supreme Court in Gridco (supra), it is settled that Courts in judicial review are not supposed to act as an appellate authority sitting in judgment over the termination order.

22. Therefore, we are unable to agree with the appellant that the decision of the respondent in not extending his contract was arbitrary, unfair and unreasonable and, hence, offensive to Article 14 of the Constitution of India. Issue No.3

23. Insofar as the plea of the appellant in relation to reinstatement is concerned, it would be relevant to observe that since for the reasons discussed hereinbefore there cannot be specific performance of the subject contract, in view of Section 41(e) of the Specific Relief Act, 1963. Even an injunction cannot be granted to prevent the breach thereof, thereby, reinstating the employee.

24. For the sake of reference, Section 41 of the Specific Relief Act, 1963 is reproduced hereinbelow:

25. Furthermore, there is no question of the appellant being regularized against the posts advertised by the respondent merely because he qualifies the minimum eligibility criteria or because he worked with the latter as a contractual employee for certain duration.

26. Before parting we would also like to make a mention of the conduct of the counsel for the appellant during the course of the hearing. Mr. Shankar

27. The present appeal is dismissed.

28. No order as to costs.

SIDDHARTH MRIDUL (JUDGE)

DEEPA SHARMA (JUDGE) MAY 07, 2018 dn /ap