1990 (9) TMI 334 - SC - Indian Laws

Temporary staff may be dismissed without inquiry but termination substance must be examined; Regulation 9(b) void under Arts.14,16(1),19(1)(g),21

The SC held that while temporary employees may be dismissed without inquiry, the substance of termination orders must be examined to prevent mala fide or ... Termination of service by notice or pay in lieu without inquiry - natural justice / audi alteram partem - arbitrariness and Article 14 (equality) - Article 21 - right to livelihood - security of tenure of permanent public employees - unconscionable bargain and public policy under section 23 of the Contract Act - doctrine of reading down / statutory construction to save constitutionality - distinction between termination simpliciter and dismissal as punitive measureTermination of service by notice or pay in lieu without inquiry - arbitrariness and Article 14 (equality) - security of tenure of permanent public employees - distinction between termination simpliciter and dismissal as punitive measure - Validity of a statutory/regulatory power permitting termination of permanent employees by giving notice or pay in lieu without holding any inquiry - HELD THAT: - The Court examined regulations (exemplified by Regulation 9(b) of the Delhi Road Transport Regulations) that permit termination of permanent employees by one month's notice or pay in lieu without any requirement of inquiry or hearing. Applying settled constitutional principles, the majority held that such provisions confer an uncanalised, unguided and arbitrary power apt to produce discriminatory and whimsical results and thus offend the guarantees of equality under Article 14 and the related constitutional protections (including Article 16(1), Article 19(1)(g) and Article 21 to the extent they protect livelihood). The Court surveyed precedents (including Moti Ram Deka, West Bengal State Electricity Board, Central Inland Water Transport Corporation and Hindustan Steel decisions) and commercial/contractual doctrines (unconscionable bargains/public policy) and concluded that a rule empowering 'hire and fire' simpliciter over permanent employees, without prescribed circumstances or procedural safeguards, is constitutionally objectionable. The Court also emphasised that where a termination order in form is a discharge simpliciter but in substance is punitive or colourable, tribunals/courts may look behind the form to its substance. The majority therefore declared the impugned type of regulation invalid to the extent that it permits termination of permanent employees without appropriate guidance and safeguards.Such rules conferring the power to terminate permanent employees by notice/pay without inquiry are constitutionally invalid as arbitrary and discriminatory and incompatible with security of tenure and the principles of natural justice.Doctrine of reading down / statutory construction to save constitutionality - natural justice / audi alteram partem - Article 14 - reasonableness - Whether the offending provisions can be 'read down' by the Court (by implying limitations, reasons-recording etc.) so as to render them constitutionally valid - HELD THAT: - The Court considered the submissions that courts should read into such regulations limiting conditions (for example, confinement to circumstances where an inquiry is not reasonably practicable; requirement to record reasons; exercise only for purposes germane to the statute) so as to save them. The majority rejected such expansive judicial re-writing where the statutory language is clear and unambiguous and where reading down would require extensive additions or would effectively remake the rule. The Court held that the doctrine of reading down is available only in limited circumstances and cannot be used to supply multiple substantive safeguards not reflected in the clear terms of the provision; where the provision unambiguously confers unfettered power the Court must strike it down rather than reconstruct it. (The judgment records a contrary view by the Chief Justice, who would have read in limitations and thus upheld the provision in certain circumstances; that view did not prevail.)The Court will not read into a clear, unambiguous grant of unguided power sweeping limitations or procedural safeguards that amount to remaking the rule; reading down cannot be used to convert a manifestly arbitrary provision into a constitutional one.Remedy in pending proceedings and prospective effect - distinction between reopened final adjudications and pending lis - Consequences of the ruling for past and pending terminations and the appropriate treatment of matters already adjudicated or pending - HELD THAT: - The Court directed that where disputes about terminations are still pending adjudication, the deciding forums must re examine exercise of the termination power in the light of the legal principles stated by the Court (i.e., whether the statutory power was exercised within constitutionally permissible limits and with required safeguards). If the exercise complied with those principles, the termination will stand; if not, consequences such as reinstatement or damages may follow. By contrast, final past terminations in which no lis is pending will not be reopened; the Court declared the new rule to operate prospectively for settled matters. Several specific appeals were directed to appropriate benches for disposal in accordance with these directions.Pending proceedings to be re-examined under the principles stated; finalised past terminations not reopened (prospective application as indicated).Final Conclusion: The Court held that statutory or regulatory clauses empowering employers (public corporations and similar State instrumentalities) to terminate permanent employees merely by giving notice or pay in lieu, without any canalising guidance or procedural safeguards, are constitutionally invalid as arbitrary and contrary to the principles of equality, security of tenure and natural justice; courts will not rewrite clear statutory language by extensive 'reading down' to manufacture safeguards, but pending disputes must be re examined in the light of the principles stated while final past determinations not then litigated will remain undisturbed. Issues Involved:1. Constitutional validity of the right of the employer to terminate the services of permanent employees without holding any inquiry.2. Whether Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952 violates Articles 14, 16, 19(1)(g), and 21 of the Constitution.3. Applicability of the doctrine of reading down to save the regulation from unconstitutionality.Summary:1. Constitutional Validity of Termination Without Inquiry:The Supreme Court examined whether clauses permitting employers to terminate permanent employees by giving reasonable notice or pay in lieu of notice, without holding any inquiry, are constitutionally valid. The Court emphasized that the right to livelihood is an integral part of the right to life under Article 21 and that any procedure depriving someone of this right must be just, fair, and reasonable.2. Violation of Articles 14, 16, 19(1)(g), and 21:Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952 was scrutinized for its compliance with the Constitution. The Court held that this regulation, which allows termination without any reason or inquiry, confers arbitrary and unbridled power on the employer, violating the principles of natural justice and Articles 14, 16(1), 19(1)(g), and 21. The Court reiterated that public employment is a public property, and employees are entitled to security of tenure and protection against arbitrary termination.3. Doctrine of Reading Down:The Court discussed whether the regulation could be read down to imply that the power to terminate services should be exercised only under certain circumstances and for valid reasons. However, it concluded that the language of Regulation 9(b) is clear and unambiguous, and it is not permissible to read into it any limitations or conditions. The Court emphasized that the doctrine of reading down cannot be used to distort the clear intention of the legislature and that the regulation must be struck down as it stands.Conclusion:The Supreme Court dismissed the appeal, upholding the High Court's decision that Regulation 9(b) is unconstitutional. The Court emphasized that any law or rule empowering an employer to terminate the services of a permanent employee must conform to the principles of natural justice and the fundamental rights guaranteed by the Constitution.