Bar & Bench: Allahabad: Sunday, December
02, 2018.
The Allahabad High Court recently
observed that employees of State entities cannot always invoke Article 226
jurisdiction to obtain reliefs in cases protesting the termination of their
services.
A Division Bench comprising Justices
Sudhir Agarwal and Ifaqat Ali Khan clarified that the extent to which a High
Court can exercise its writ jurisdiction under Article 226 of the Constitution
in such matters would depend on whether the employee’s service conditions are
governed by a statute or if it is simply in the nature of a contract.
The Court was dealing with writ petitions
filed by two former employees contending that they had been wrongfully
terminated from their managerial posts by the Central Uttar Pradesh Gas Limited
(CUPGL). They were terminated from service by CUPGL after an inquiry into
allegations of financial and operational irregularities, by giving them one
month salary in lieu of the notice period.
Contesting the case brought by the two
employees, CUPGL argued that the petitions were not maintainable as CUPGL does
not fall within the category of “State” under Article 12 of the Constitution.
To buttress this contention, the following points were raised,
“Neither Central Government nor State
Government has any stake in CUPGL; no financial commitment or liability in
CUPGL has been undertaken by any of the Government; it does not perform any
Governmental work and is not supported and financed by either of the
Governments.“
A Central Information Commission order
passed in 2016, rejecting an Right to Information (RTI) request on the ground
that CUPGL does not fall within the ambit of the RTI Act was also cited in this
regard.
However, the Court disagreed in view of
the fact that the control of CUPGL rested with three State entities i.e. Bharat
Petroleum Company Limited (‘BCPL’, holding 25% shares), Gas Authority of India
Limited (‘GAIL’, holding 25% shares) and Indraprasth Gas Limited (‘IGL’,
holding 50% shares). As noted in the judgment,
“… it cannot be doubted that its
functional control is in the hands of Public Sector Companies like, BPCL, GAIL
and IGL. Clause 120 of Article of Association of CUPGL shows that so long as
holding is equal, both i.e. BPCL and GAIL will have equal representation in the
Board. Chairman of Board of CUPGL shall be either a whole time Director of GAIL
or Chairman or Managing Director of BPCL or his nominee.
Therefore, GAIL and BPCL both have
pervasive control in CUPGL. Since holding Companies are Central Government
Companies, which have pervasive control, and BPCL having already been held to
be ‘State’ within the meaning of Article 12 of Constitution, we do not find any
hesitation in holding that CUPGL is an instrumentality of State and within the
ambit of term ‘other authorities’ under Article 12 of Constitution of India it
is a ‘State’ within Article 12.“
Nevertheless, the Court went on to hold
that it cannot provide any relief to the petitioners under Article 226, given
that the nature of their employment was contractual. Merely because the
petitioners were employed by a State entity, it does not confer upon them the
status of a statutory government employee, the Court observed.
“…CUPGL even if taken to be a ‘State’
within the meaning of Article 12 of Constitution, this by itself would not mean
that petitioner can claim status of a Government Servant or holding a post
governed by ‘status’. Nature of engagement/ appointment of petitioner is not to
be governed by ‘status’ but by a ‘contract of service’ entered into between
master and servant.“
There was no statute governing the
conditions of their employment. Further, that they held managerial posts also
meant that they were not governed by any standing orders passed under the
Industrial Employment (Standing Orders) Act, 1946.
“It is not in dispute that terms and
conditions are not governed by any Statute or statutory provision or by any
provision made under any authority of Statute. Petitioner being in the Cadre of
Manager, his terms and conditions are also not governed by Standing Orders made
by Employer with respect to employees governed by provisions of Industrial
Employment (Standing Orders) Act, 1946 (hereinafter referred to as “Act,
1946”). In these circumstances, in the cases like petitioner, consistently it
has been laid down that employment is simply a part of contract.”
Explaining the difference between an
employee conferred with a ‘status’ (such as government employees) and those who
are employed under a contract, the Court said,
“…In the language of jurisprudence, ‘status’
is a condition of membership of a group, whereof powers and duties are
exclusively determined by law and not by agreement between the parties
concerned. Thus, where appointment and conditions of service are governed by
Statute, relationship of ’employer’ and ’employee’ is that of ‘status’ and not
a mere contract. However, in other cases, it is purely a contract of service
resulting in a relationship of ordinary master and servant.“
In cases involving only a contractual
relationship, the Court is barred from reinstating employee, considering the
provisions of the Specific Relief Act, 1963. As noted in the judgment,
“If employment is terminated or contract
of service is terminated, Court shall not grant relief of reinstatement, i.e.
specific performance of contract of personal service, as it is barred by the
provisions of Specific Relief Act, 1963 (hereinafter referred to as “Act,
1963”) and, therefore, no remedy under Article 226 shall be available since
employee, if complains about wrongful termination of service, then must avail
remedy in common law by claiming damages…
In the present case also, relationship of
employment between petitioner and CUPGL is purely and simply an ordinary
contract of service which is not governed by any statute or statutory
provision. In such cases, a contract of service cannot be sought to be enforced
by Court of law by giving relief of reinstatement or continuance in employment
as this relief is barred under Act, 1963.“
It was also not the case of the two
petitioners that the terms of their contract were unconstitutional or it was an
unlawful contract in terms of Section 23 of the Indian Contract Act, 1872.
In view of these observations, the Court
dismissed the two petitions, holding,
“In view of discussions made hereinabove,
no relief, as sought for, can be granted to petitioners. Both the writ
petitions lack merits and are, accordingly, dismissed.“
The respondent was represented by
Advocates Pranjal Mehrotra, Siddhartha and Yashovardhan Swarup. Advocates
Pushkar Mehrotra, NK. Singh and Sameer Sharma appeared for the petitioners.
(copy of order)
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