TaxTMI 
TaxTMI 
2005 (8) TMI 685
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....he appellant company started insisting on them to be designated as management staff with the object of avoiding payment of overtime wages. The respondents signed an agreement with the Management acceding to the request of the appellant company, but they continued to perform the same duties as before. The appellant company contended that there was incessant rain in the night of 12.6.1996 when the entire company premises was flooded with water and it caused serious damage to the plant and machinery and finished-stock and the appellant company stayed all the operations and informed the Commissioner of Labour that water had entered the mill premises causing serious damage to the plant and machinery and management had no other alternative but to suspend the operations of the mill. Order of termination was issued to the respondents invoking Clause 8 of the agreement dated 12.3.1991 entered into by the respondents with the appellant company. As per clause 8 of the agreement, the Management had a right to terminate the services without assigning any reason by just giving one month's notice or salary in lieu thereof. Appellant contended that all these respondents were drawing salary of ....
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....ppeal arising out of SLP (Civil) No. 6106/2000, the appellant was employed as a Corporate Legal Manager with the 1st respondent company, which is a private limited company engaged in the manufacture of chemicals. The services of the appellant were terminated with effect from 1.6.1998. The appellant sought for the issue of a Writ or other appropriate Order to quash or set aside the Termination Order dated 1.6.1998. He also sought for a Writ of Mandamus directing the respondents to allow the appellant to report for work in the same grade and pay-scale to which he was originally employed. The respondent company contended that the Writ Petition was not maintainable as the respondent company was a private employer and the appellant was working under a private contract of employment. The Writ Petition filed by the appellant was referred to a larger Bench in view of the important question of law raised by the parties and the Full Bench of the Bombay High Court elaborately considered the question and held that the appellant was not entitled to the remedy sought for and the Writ Petition was not maintainable. The Full Bench held that by terminating the services of the appellant, the Company....
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....t the appellant had been rightly discharged from the services and the company being a private authority was not amenable to the writ jurisdiction of the High Court. It was submitted that under the powers of judicial review by the High Court, a public action alone could have been challenged and the decision to terminate the service of an employee on the ground that his services were unsatisfactory does not have any public law element and, therefore, the High Court has rightly rejected the contentions advanced by the appellant therein. We have carefully considered the various contentions urged by the parties on either side. In order to decide the question, it is necessary to trace the history of law relating to judicial review of public actions. Superior Court's supervisory jurisdiction of judicial review is invoked by an aggrieved party in myriad cases. High Courts in India are empowered under Article 226 of the Constitution to exercise judicial review to correct administrative decisions and under this jurisdiction High Court can issue to any person or authority, any direction or order or writs for enforcement of any of the rights conferred by Part III or for any other purpose....
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....ee use of the writ for the enforcement of public duties of all kinds, for instance against inferior tribunals which refused to exercise their jurisdiction or against municipal corporation which did not duly hold elections, meetings, and so forth. In modern times, the mandamus is used to enforce statutory duties of public authorities. The courts always retained the discretion to withhold the remedy where it would not be in the interest of justice to grant it. It is also to be noticed that the statutory duty imposed on the public authorities may not be of discretionary character. A distinction had always been drawn between the public duties enforceable by mandamus that are statutory and duties arising merely from contract. Contractual duties are enforceable as matters of private law by ordinary contractual remedies such as damages, injunction, specific performance and declaration. In the Administrative Law (Ninth Edition) by Sir William Wade and Christopher Forsyth, (Oxford University Press) at page 621, the following opinion is expressed: "A distinction which needs to be clarified is that between public duties enforceable by mandamus, which are usually statutory, and duties arisin....
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..... In a book on Judicial Review of Administrative Action (Fifth Edn.) by de Smith, Woolf & Jowell in Chapter 3 para 0.24, it is stated thus: "A body is performing a "public function" when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest. This may happen in a wide variety of ways. For instance, a body is performing a public function when it provides "public goods" or other collective services, such as health care, education and personal social services, from funds raised by taxation. A body may perform public functions in the form of adjudicatory services (such as those of the criminal and civil courts and tribunal system). They also do so if they regulate commercial and professional activities to ensure compliance with proper standards. For all these purposes, a range of legal and administrative techniques may be deployed, including: rule-making, adjudication (and other forms of dispute resolution); inspection; and licensing. ....
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.... the power will often, perhaps usually, be decisive. If the source of power is a statute, or subordinate legislation under a statute, then clearly the body in question will be subject to judicial review. If at the end of the scale, the source of power is contractual, as in the case of private arbitration, then clearly the arbitrator is not subject to judicial review. In that decision, they approved the observations made by Lord Diplock in Council of Civil Service Unions vs. Minister for the Civil Service (1985) A.C. 374, 409 wherein it was held : " .for a decision to be susceptible to judicial review the decision- maker must be empowered by public law (and not merely, as in arbitration, by agreement between private parties) to make decisions that, if validly made, will lead to administrative action or abstention from action by an authority endowed by law with executive powers which have one or other of the consequences mentioned in the preceding paragraph. The ultimate source of the decision-making power is nearly always nowadays a statute or subordinate legislation made under the statute; but in the absence of any statute regulating the subject matter of the decision the source....
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....objection as to the maintainability of the writ petition. The learned Single Judge dismissed the petition. The Division Bench held that the petition was not maintainable against the company. However, it granted a declaration in favour of three workmen, the validity of which was challenged before this Court. This Court held at pages 589-590 as under: " .that the applicant for a mandamus should have a legal and specific right to enforce the performance of those dues. Therefore, the condition precedent for the issue of mandamus is that there is in one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus is, in form, a command directed to a person, corporation or any inferior tribunal requiring him or them to do s particular thing therein specified which appertains to his or their office and is in the nature of a public duty. It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the statute under or by which the society is cons....
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....elation to some of its activities, as subject to public law because of the nature of the function it is performing. This is because the prisoners, for whose custody and care it is responsible, are in the prison in consequence of an order of the court, and the purpose and nature of their detention is a matter of public concern and interest. After detailed discussion, the learned authors have summarized the position with the following propositions : (1) The test of a whether a body is performing a public function, and is hence amenable to judicial review, may not depend upon the source of its power or whether the body is ostensibly a "public" or a "private" body. (2) The principles of judicial review prima facie govern the activities of bodies performing public functions. (3) However, not all decisions taken by bodies in the course of their public functions are the subject matter of judicial review. In the following two situations judicial review will not normally be appropriate even though the body may be performing a public function (a) Where some other branch of the law more appropriately governs the dispute between the parties. In such a case, that branch of the law and its r....
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....r it may be banking, manufacturing units or related to any other kind of business generating resources, employment, production and resulting in circulation of money which do have an impact on the economy of the country in general, cannot be classified as one falling in the category of those discharging duties or functions of a public nature. It was held that that the jurisdiction of the High Court under Article 226 could not have been invoked in that case. The counsel for the respondent in Civil Appeal No. 1976 of 1998 and for the appellant in the civil appeal arising out of SLP(Civil) No. 6016 of 2002 strongly contended that irrespective of the nature of the body, the writ petition under Article 226 is maintainable provided such body is discharging a public function or statutory function and that the decision itself has the flavour of public law element and they relied on the decision of this Court in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust & Ors. Vs. V.R. Rudani & Ors (1989) 2 SCC 691. In this case, the appellant was a Trust running a science college affiliated to the Gujarat University under Gujarat University Act, 1949. The teachers....
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....door Congress & Ors. The Central Inland case was extensively relied on. In this case, the appellant corporation was a Govt. company incorporated under the Companies Act and the majority of the shares were held by the Union of India and remaining shares were held by the State of West Bengal. Each of the respondents in the two appeals was in the service of the said company. A notice under Rule 9(1) was served on them and their services were terminated with immediate effect by paying three months pay. They filed writ petitions before the High Court and the Division Bench allowed the same. The appellant corporation filed an appeal before this Court. The main thrust of the argument of the respondents was that Rule 9(1) of Central Inland Water Transport Corporation Limited (Service, Discipline and Appeal) Rules, 1979 was void and illegal and violative of Article 14 of the Constitution and it was also void in view Section 23 of the Contract Act. This Court held that Rule 9(1) was violative of Article 14 as it was against the public policy as the employer had absolute power to terminate the service of an employee giving three months notice. This Court held that this was an absolute arbitra....
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....it would be noticed that in both the cases, it was a public sector undertaking coming within the purview of "other authorities" under Article 12 of the Constitution. In this context, it must be noted that the High Court purported to apply the ratio in the above two decisions on the assumption that all termination simplicitor clauses providing for termination on giving notice will be per se invalid. But the High Court has not examined clauses (8) & (9) of the Agreement between Management and the Staff of Binny Limited in their entirety. Clause (9) contemplates an inquiry in a case of termination for misconduct. Thus there is a provision for natural justice in case of termination involving misconduct and stigma. In such a case, whether the ratio of the decisions in DTC and Central Inland cases would apply or not, was not examined by the High Court. This is an additional reason why the declaration by the High Court should not be allowed to stand. Thus, it can be seen that a writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public ....
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....he services of their employees cannot be said to have any element of public policy. Their cases were purely governed by the contract of employment entered into between the employees and the employer. It is not appropriate to construe those contracts as opposed to the principles of public policy and thus void and illegal under Section 23 of the Contract Act. In contractual matters even in respect of public bodies, the principles of judicial review have got limited application. This was expressly stated by this Court in State of U.P. vs. Bridge & Roof Co. (1996) 6 SCC 22 and also in Kerala State Electricity Board vs. Kurien E. Kalathil (2000) 6 SCC 295. In the latter case, this Court reiterated that the interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily, the remedy is not a writ petition under Article 226. Applying these principles, it can very well be said that a writ of mandamus can be issued against a private body which is not a State within the meaning of Article 12 of the Constit....