2006 (11) TMI 299 - SC - Indian Laws

Supreme Court Upholds Compensation Increase in Flying Crew Case

Indian Airlines Ltd Versus Prabha D. Kanan

Indian Airlines Ltd Versus Prabha D. Kanan - 2007 AIR 548, 2006 (8) Suppl. SCR 1027, 2006 (11) SCC 67, 2006 (10) JT 334, 2006 (12) SCALE 58 Issues Involved:1. Constitutionality and validity of Regulation 13 of the Indian Airlines (Flying Crew) Service Regulations.2. Applicability of Regulation 13 to the respondent's case.3. Justifiability of the termination order.4. Quantum of compensation for the respondent.Detailed Analysis:1. Constitutionality and Validity of Regulation 13:The primary issue in this case was the constitutionality and/or validity of Regulation 13 of the Indian Airlines (Flying Crew) Service Regulations. Regulation 13 allows for the termination of an employee without assigning any reasons but only on specific grounds such as incompetence, unsuitability, grave security risk, or justifiable lack of confidence. The court examined various precedents, including the Central Inland Water Transport Corporation Limited case and Delhi Transport Corporation case, which dealt with similar provisions and their compliance with natural justice and Article 14 of the Constitution. The court held that Regulation 13, though stringent, is not unconstitutional as it contains inbuilt safeguards and is invoked by the highest authority, i.e., the Board of Directors. The court emphasized that the provision does not debar an employee from being reappointed and is intended to protect the interests of the company.2. Applicability of Regulation 13 to the Respondent's Case:The court also addressed whether Regulation 13 was applicable to the respondent, who joined the service before the regulation came into force. The court referred to the Air India v. Union of India case, which held that regulations framed under the 1953 Act ceased to be effective after the enactment of the 1994 Act. Consequently, the court found that Regulation 13 did not apply to the respondent's case as it was not saved by Section 8 of the 1994 Act. Despite this, the court decided to uphold the relief granted by the High Court in the interest of justice.3. Justifiability of the Termination Order:The court examined the circumstances leading to the respondent's termination. The respondent, an Air Hostess, was arrested for carrying a large sum of undeclared currency, which was considered a serious breach of trust. The Board of Directors terminated her services under Regulation 13, citing justifiable lack of confidence. The court held that the subjective satisfaction of the Board was based on the respondent's confession and the evidence collected by the Directorate of Enforcement. The court noted that the subsequent exoneration in the criminal case did not affect the validity of the termination order, which was based on the facts available at the time of the decision.4. Quantum of Compensation:The High Court had directed that the respondent be compensated with six years' salary for both back wages and loss of future employment, considering her long service and the circumstances of her termination. The Supreme Court modified this compensation to eight years' salary, taking into account her 20 years of service. The court also directed the Corporation to pay the amount refunded by the respondent towards provident fund and gratuity with interest as per the governing statutes. This relief was deemed appropriate to balance the interests of justice.Conclusion:The Supreme Court held that while Regulation 13 is not unconstitutional, it does not apply to the respondent's case due to the repeal of the 1953 Act. However, the court upheld the High Court's decision to compensate the respondent, modifying the quantum to eight years' salary. The appeals were allowed in part, and no costs were imposed.