Sunday 14 February 2021

Forced Resignation - Not Valid

Forced Resignation - Not Valid

RESIGNATION - WHEN OBTAINED UNDER PRESSURE - NOT VALID

An undertaking was obtained by employer that an employee will achieve the desired target, otherwise the same will be treated as his resignation. The circumstances made it clear that the said letter was obtained by exercising pressure on the petitioner possibly on the threat of termination of his service. Any arbitrary or unreasonable act on the part of the respondent which would result in termination of services of the petitioner who had become a permanent employee in the establishment would suffer from the vice of arbitrariness, unreasonableness and discriminatory in nature and violative of rights guaranteed to the petitioner under Article 14 of the Constitution of India.

P.A. Babu Jayaprakash vs. Mg. Director, Karnataka Soaps and Detergents Ltd., Bangalore and Others, 2003 LLR 387 (Karn. HC).

Karnataka High Court
P.A. Babu Jayaprakash vs The Managing Director, Karnataka ... on 7 January, 2003
Equivalent citations: 2003 (97) FLR 293, 2003 (1) KarLJ 541, (2003) IILLJ 884 Kant
Author: P V Shetty
Bench: P V Shetty

ORDER P. Vishwanatha Shetty, J.

1. The petitioner in this petition who was formerly working as Sales Supervisor in the establishment of 1st respondent-Karnataka Soaps and Detergents Limited (hereinafter referred to as 'the Company'), has in this petition called in question the correctness of the order dated 18th February, 1999 passed by the 3rd respondent, a copy of which has been produced as Annexure-E to this petition; and also has prayed for a direction to the respondents to reinstate the petitioner to duty with all consequential benefits including full back wages from the date of order, Annexure-E till the date of reinstatement in the service.

2. Facts in few, which are not in serious dispute, may be stated as hereunder:

The petitioner was appointed as Sales Supervisor by the 1st respondent-Company by means of its appointment order dated 19th August, 1988, a copy of which has been produced as Annexure-A to this petition, pursuant to the interview held by the Selection Committee constituted for the post of 'Sales Supervisor' on 11th August, 1988. On completion of the period of probation, by means of its order dated 30th August, 1990/1st September, 1990, the 1st respondent-Company informed the petitioner that he had satisfactorily completed his period of probation on 28th February, 1990 and his services were confirmed in the post of Sales Supervisor with effect from 1st March, 1990. When the petitioner was thus discharging his duties as a Sales Supervisor, according to the claim made by the petitioner, he was allowed entire area of North Kerala consisting of the Districts of Trichur, Malappuram, Palakat, Calicut, Wynad, Kannur and Kasargod, and his target for sale of products produced by the 1st respondent-Company was initially fixed at Rs. 11 lakhs per month and the petitioner used to achieve more than 85% of the target fixed by the respondents and the same was considered as a very good performance on the part of the petitioner. It is the further claim of the petitioner in the petition that in the month of April 1998 one Mr. D.N. Vasanthkumar took over as Regional Manager of Madras Branch and on his assumption of office as Regional Manager, he started harassing the petitioner as well as other Sales Supervisors without any justification; and he also reduced the area of operation of the petitioner to one-third of the original area allotted to him by restricting his operations to the Districts of Malappuram, Calicut and Wynad and the target fixed was increased from Rs. 11 lakhs to Rs. 12 lakhs per month. It is his further assertion in the petition that it was impossible to achieve the target thus fixed in any method of sales promotion employed; and that the 2nd respondent issued a memo dated 8th January, 1999 to the petitioner, a copy of which has been produced at Annexure-C to the petition, notifying that the performance of the petitioner from April 1998 till end of December 1998 was very poor when compared to the performance of the same territory in the previous year and thereby the petitioner had failed to achieve the target given to him and as such why action should not be taken against him for his failure and non-performance; and on 19th January, 1999 the 2nd respondent got the signature of the petitioner in a blank resignation letter by force and threat of dire consequences, a copy of which has been produced as Annexure-D to the petition, treating the said letter as letter of resignation of the petitioner from the services of the 1st respondent-Company, if the petitioner fails to till up the sales commitment and collection in a sum of Rs. 12.50 lakhs for the month of January 1999. It is also the case of the petitioner that by means of order, Annexure-E, dated 18th February, 1999, he was relieved from services by the 1st respondent-Company on the ground that the letter of resignation given by him was accepted. It is further stated that the appeal filed by the petitioner challenging the correctness of order, Annexure-E and for reinstatement in the services of the 1st respondent-Company, was not considered by the Appellate Authority.

3. The respondents have filed their statement of objections on 12th August, 2002, and in the statement of objections it was denied that the letter of resignation of the petitioner was obtained by force and threat as alleged by the petitioner as false; and it is asserted that the said allegation is an afterthought.

4. Sri S.B. Mukkannappa, learned Counsel appearing for the petitioner challenging the correctness of the letter, Annexure-D and order, Annexure-E submitted that the letter, Annexure-D, dated 19th January, 1999 cannot be treated as a letter of resignation given by the petitioner resigning from the services of the 1st respondent-Company and as such the respondents have seriously erred in law in relieving the petitioner from the services of the 1st respondent-Company. Elaborating this submission, the learned Counsel pointed out that the 1st respondent being a Government of Karnataka Company and an instrumentality of State within the meaning of Article 12 of the Constitution of India, the 1st respondent-Company is required to act in a fair and reasonable manner while dealing with its employees. He pointed out that the signature of the petitioner was obtained in a blank paper by use of force and threat. It is his submission that original of letter, Annexure-D clearly indicates that the said letter was not given by the petitioner voluntarily on his own volition. He further pointed out that when nineteen days having already elapsed on the date on which the petitioner is purported to have given the letter, Annexure-D, it was impossible to expect that the petitioner would be able to fill up the target for sale of the products of the 1st respondent-Company of the value of Rs. 12.50 lakhs for the month of January during the remaining twelve days period. He further pointed out that the 1st respondent-Company being the instrumentality of the State cannot be permitted to get rid of the services of its employee by getting a letter of resignation stating that if he does not fulfil the target given to him, the letter of commitment given could be treated as a letter of resignation from the services of the company. It is his submission that the letter, Annexure-D should be declared as illegal and void in Jaw on the ground that the action of 1st respondent-Company in securing such a letter is arbitrary, unreasonable, unfair and opposed to public policy and violative of the rights guaranteed to the petitioner under Articles 14 and 21 of the Constitution of India. In support of his submission, he relied upon the judgment of the Hon'ble Supreme Court in the case of Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath Ganguly and Anr., He also relied upon the Division Bench decision of the Patna High Court in the case of Assistant Branch Manager, L.I.C. of India v. Shanti Swamp Sharma, 1981 (1) SLR 195 (Pat.). He also pointed out that though the petitioner has preferred an appeal challenging the order impugned, the same has not been considered by the Appellate Authority.

5. However, Sri Muralidharan, learned Counsel appearing for the respondents strongly supported the impugned order and pointed out that since the petitioner had voluntarily tendered his resignation, the respondents have accepted the same and relieved him from the services and as such the petitioner is not entitled for the relief sought for by him in this petition. It is his submission that the allegation of the petitioner that the petitioner was forced and threatened to put his signature in a blank paper is incorrect; and since the petitioner has voluntarily tendered resignation to the post of Sales Supervisor held by him in the 1st respondent-Company, the conduct of the petitioner totally disentitles him from any equitable relief at the hands of this Court. So far as the case of the petitioner that the appeal filed by the petitioner is not considered by the Appellate Authority is concerned, he pointed out that since the services of the petitioner was not terminated in terms of the regulations/rules of the 1st respondent-Company and his services came to be relieved on account of his letter of resignation, the appeal filed by the petitioner was not maintainable and as such it was not considered by the Appellate Authority.

6. In the light of the rival contentions advanced by the learned Counsels appearing for the parties, the only question that would arise for consideration in this petition is as to whether the letter, Annexure-D, dated 19th January, 1999 given by the petitioner could be termed as a letter of resignation voluntarily given by the petitioner and on that basis it was permissible for the respondents to relieve the petitioner from services as per order, Annexure-E, dated 18th February, 1999?

7. The original letter of resignation, Annexure-D, dated 19th January, 1999 made available to me by the learned Counsel appearing for the respondents indicate that it is a typed letter. However, the target for the month of January (i.e., Rs. 12.50 lakhs) the petitioner was required to fulfil was left blank and written in ink at two places. It is useful to extract the said letter which reads as hereunder:

"Date: 19-1-1999 Place: Chennai To The Regipnal Manager, Karnataka Soaps and Detergents Limited, Chennai.

Dear Sir, The target accepted by me is Rs. 12.50 lakhs for the month of January 1999. Further, after detailed consideration, my commitment for sales and collection is Rs. 12.50 lakhs for January 1999.

In case, I do not achieve the commitment for collections, you may treat this as my resignation letter and relieve me from the services of the Company.

Yours faithfully Sd/-

HQ: Calicut"

8. As it could be seen from the letter, Annexure-D, the same was given on 19th January, 1999 and on the said date, the petitioner had accepted the target fixed at Rs. 12.50 lakhs and also has agreed for sales and in collection of Rs. 12.50 lakhs for the month of January 1999.

9. It is not in dispute that the petitioner is a permanent employee in the 1st respondent-Company and his services could be terminated only in terms of regulations of the company. Merely because the petitioner has not been able to achieve the target given to him by the 1st respondent, in my view, cannot be a ground to terminate the services of the petitioner. No doubt, Clause 10 of the letter of appointment given to the petitioner, a copy of which has been produced as Annexure-A, to the writ petition empowers either the petitioner or the 1st respondent- Company to terminate the contract of appointment of the petitioner after giving three months' notice or salary in lieu thereof. The similar terms provided in the contract of appointment has been held to be illegal by Hon'ble Supreme Court in the case of Central Inland Water Transport Corporation Limited, supra. In the said decision, the Hon'ble Supreme Court at paragraphs 95, 98 and 99 has observed thus:

"Paragraph 95.--We will now test the validity of Rule 9(i) by applying to it the principle formulated above. Each of the contesting respondents was in the service of the Rivers Steam Navigation Company Limited and on the said Scheme of Arrangement being sanctioned by the Calcutta High Court, he was offered employment in the Corporation which he had accepted. Even had these respondents not liked to work for the Corporation, they had not much of a choice because all that they would have got was "all legitimate and legal compensation payable to them either under the Industrial Disputes Act or otherwise legally admissible". These respondents were not covered by the Industrial Disputes Act for they were not workmen but were officers of the said company. It is, therefore, difficult to visualize what compensation they would have been entitled to get unless their contract of employment with their previous employers contained any provision in that behalf. So far as the original terms of employment with the Corporation are concerned, they are contained in the letters of appointment issued to the contesting respondents. These letters of appointment are in a stereotype form. Under these letters of appointment, the Corporation could without any previous notice terminate their service, if the Corporation is satisfied on medical evidence that the employee was unfit and was likely for a considerable time to continue to be unfit for the discharge of his duties. The Corporation, could also without any previous notice dismiss either of them, if he was guilty of any insubordination, intemperance or other misconduct, or of any breach of any rules pertaining to his service or conduct or non-performance of his duties. The above terms are followed by a set of terms under the heading "Other Conditions". One of these terms stated that "You shall be subject to the service rules and regulations including the conduct rules". Undoubtedly, the contesting respondents accepted appointment with the Corporation upon these terms. They had, however, no real choice before them. Had they not accepted the appointments, they would have at the highest received some compensation which would have been probably meagre and would certainly have exposed themselves to the hazard of finding another job".

"Paragraph 98.--Rule 9(i) confers upon the Corporation the power to terminate the service of a permanent employee by giving him three months' notice in writing or in lieu thereof to pay him the equivalent of three months' basic pay and dearness allowance. A similar regulation framed by the West Bengal State Electricity Board was described by this Court in West Bengal State Electricity Board and Ors. v Desk Bandhu Ghosh and Ors., as:

"... a naked 'hire and fire' rule, the time for banishing which altogether from employer-employee relationship is fast approaching. Its only parallel is to be found in the Henry VIII clause so familiar to administrative lawyers" ".

"Paragraph 99.--No apter description of Rule 9(i) can be given than to call it "the Henry VIII clause". It confers absolute and arbitrary power upon the Corporation. It does not even state who on behalf of the Corporation is to exercise that power. It was submitted on behalf of the appellants that it would be the Board of Directors. The impugned letters of termination, however, do not refer to any resolution or decision of the Board and even if they did, it would be irrelevant to the validity of Rule 9(i). There are no guidelines whatever laid, down to indicate in what circumstances the power given by Rule 9(i) is to be exercised by the Corporation. No opportunity whatever of a hearing is at all to be afforded to the permanent employee whose service is being terminated in the exercise of this power. It was urged that the Board of Directors would not exercise this power arbitrarily or capriciously as it consists of responsible and highly placed persons. This submission ignores the fact that however highly placed a person may be, he must necessarily possess human frailties. It also overlooks the well-known saying of Lord Acton, which has now almost become a maxim, in the Appendix to his "Historical Essays and Studies", that "power tends to corrupt, and absolute power corrupts absolutely". As we have pointed out earlier, the said rules provide for four different modes in which the services of a permanent employee can be terminated earlier than his attaining the age of superannuation, namely, Rule 9(i), Rule 9 (ii), the Sub-clause (iv) of Clause (b) of Rule 36 read with Rules 38 and 37. Under Rule 9(ii) the termination of service is to be on the ground of "Services no longer required in the interest of the Company". Sub-clause (iv) of Clause (v) of Rule 36 read with Rule 38 provides for dismissal on the ground of misconduct. Rule 37 provides for termination of service at any time without any notice if the employee is found guilty of any of the acts mentioned in that rule. Rule 9(i) is the only rule which does not state in what circumstances the power conferred by that rule is to be exercised. Thus, even where the Corporation could proceed under Rule 36 and dismiss an employee on the ground of misconduct after holding a regular disciplinary inquiry, it is free to resort instead to Rule 9(i) in order to avoid the hustle of an inquiry. Rule 9(i) thus confers an absolute, arbitrary and unguided power upon the Corporation. It violates one of the two great rules of natural justice - the audi alteram partem rule. It is not only in cases to which Article 14 applies that the rules of natural justice come into play. As pointed out in Union of India v Tulsiram Patel, , "The principles of natural justice are not the creation of Article 14. Article 14 is not their begetter but their constitutional guardian". That case has traced in some detail the origin and development of the concept of principles of natural justice and of the audi alteram, partem rule of Tulsiram Patel's case, supra. They apply in diverse situations and not only to cases of State action. As pointed out by O. Chinnappa Reddy, J., in Swadeshi Cotton Mills v Union of India, they are implicit in every decision-making function, whether judicial or quasi-judicial or administrative. Undoubtedly, in certain circumstances the principles of natural justice can be modified and, in exceptional cases, can even be excluded as pointed out in Tulsiram Patel's case, supra, Rule 9(i), however, is not covered by any of the situations which would justify the total exclusion of the audi alteram partem rule".

(emphasis supplied)

10. Therefore, in the light of the law laid down by the Hon'ble Supreme Court, it is not permissible for the 1st respondent-Company to terminate the services of the petitioner even by giving three months notice or salary in lieu of notice. Further, it is not the case of the respondents as well that the services of the petitioner came to be terminated in exercise of the power conferred on it under Clause 10 of the order of appointment. Admittedly, the petitioner came to be relieved from the services of the 1st respondent-Company on the ground that he had resigned from his services. Even assuming that the petitioner had not achieved the target fixed by the 1st respondent-Company for earlier period, i.e., from April 1998 to December 1998, it is not permissible for the respondents to seek a letter in terms of Annexure-D from the petitioner. If the petitioner fails to keep up the commitment in promoting the sales and on that account if it is proved there is negligence or such other misconduct on his part which would enable the 1st respondent-Company to terminate the services of the petitioner, it may be open to do so. However, this could be done, provided the regulations of the company permits the termination of services of its employee or taking of such disciplinary action against an employee, if the employee concerned fails to fulfil the target fixed to such an employee. These are all matters required to be considered by the Disciplinary Authority in terms of the regulation of the company. These can be done only on the basis of an enquiry held after giving an opportunity to the delinquent official. It is not permissible for the 1st respondent-Company to resort to secure an undertaking, like the one as it had done in letter, Annexure-D, and treat the said undertaking as a letter of resignation on the ground that the petitioner has failed to keep up the undertaking. As rightly pointed out by the learned Counsel for the petitioner, the 1st respondent-Company being an instrumentality of the State in all its actions, it is expected to act in a fair and reasonable manner. It is not permissible for the 1st respondent-Company to resort to a method of terminating the services of the petitioner, even assuming that the petitioner did not keep up the commitment or fulfilling the target, by securing the letter of resignation like Annexure-D. The said approach or the procedure followed by the 1st respondent-Company, in my considered view, runs counter to public policy. The letter, Annexure-D cannot be considered in the eye of law as an unconditional letter of resignation. The facts and circumstances of the case also indicate that the said letter could not have been written voluntarily by the petitioner on his own volition. It is also necessary to point out that the letter, Annexure-D is dated 19th January, 1999. Almost two-third of the month was over on the date when the said letter was given. It is highly unfair to fix a target of Rs. 12.50 lakhs on the petitioner after, nearly two-third of the month was over and take a letter that if the petitioner fails to keep up the said target fixed, the letter given could be treated as a letter of resignation. It is necessary to point out that the memo, Annexure-C given to the petitioner indicates that for the previous year from April 1998 to December 1998 at no point of time the sales had reached Rs. 12 lakhs. In fact the target fixed itself was less than Rs. 12.50 lakhs. In this connection, it is useful to extract relevant portion of the memo, Annexure-C which reads as follows:

".... your monthwise target and achievement are as given below.--

Month Target Achievement April 1998 8.00 5.30 May 1998 7.90 7.30 June 1998 5.10 5.10 July 1998 not legible August 1998 not legible September 1998 not legible October 1998 10.50 5.60 November 1998 10.95 3.08 December 1998 10.75 1.50..."

11. It is also pertinent to note that while in Annexure-C the target fixed for the month of December 1998 states that it was Rs. 10.75 lakhs and achievement was Rs, 1.50 lakhs, in the letter dated 9th February, 1999 written by the Regional Manager, it is stated that as against the target of Rs. 12.50 lakhs, the petitioner has achieved the target of Rs. 2.09 lakhs. It is useful to extract the contents of the said letter: "From To Regional Manager, General Manager, Chennai. Marketing, Bangalore. Ref: KSDL/MDS/98-99/189 Date: 9-2-1999 Sub: Non-performance of Mr. P.A. Babu Jayaprakash, Sales Supervisor, Kerala.


We would like to bring to your kind notice that we have informed/warned Mr. P.A. Babu Jayaprakash, Sales Supervisor, Kerala through several letters, to achieve the given target, without fail. But it is found that he had not planned to achieve the targets given to him and had failed to achieve the targets during all the months of the year 1998-99.

We hereby given below the target given to Mr. P.A. Babu Jayaprakash, for the month of December 1998 and his actual achievement.

Target: 12.50 lakhs Achievement: 2.09 lakhs.

12. Further, the office note dated 26th February available in the records at Note Sheet at No. 287 shows that the petitioner in his fax message had indicated that letter of resignation was obtained forcibly from him and as such it may be treated as cancelled. However, the office note at No. 288 states that since the letter of resignation was accepted prior to the receipt of the fax message sent by the petitioner, protesting that the letter, Annexure-D was obtained forcibly, it was not permissible for the petitioner to withdraw the letter of resignation. It is useful to extract the office note at Nos. 287 and 288, which reads as hereunder:

"287. Meanwhile we have received a fax message addressed to G.M(A) I/c stating that his resignation is obtained forcibly as such it may be treated as cancelled. We may seek the opinion of GM(M) for taking further action in this regard. For kind perusal and orders.

288. An employee has legal right to withdraw his resignation during notice period and prior to approval of the Competent Authority accepting such resignation letter. In the case of Sri P.A. Babu Jayaprakash, resignation letter dated 19-1-1999 has been accepted by the Competent Authority and he has been relieved with immediate effect".

13. Further, by means of registered letter dated 25th February, 1999, a copy of which has been produced as Annexure-H to the petition, the petitioner had written to the 2nd respondent stating that his letter of resignation was obtained by a point of threat and as such it was invalid and inoperative and nothing but amounts to unfair practice and his consent was not given free. Along with the said letter, the petitioner has returned the cheque sent to him to the respondents for a sum of Rs. 23,526/- towards three months salary in lieu of notice. It is also necessary to point out that if it was a voluntary letter of resignation submitted by the petitioner, it was unnecessary for the respondents to pay three months salary in lieu of notice. As noticed by me earlier, the target fixed was written in ink. The signature of the petitioner was obtained in a printed letter. All these clearly support the case of the petitioner that the letter, Annexure-D was not given by the petitioner voluntarily on his own volition. It is impossible to believe or conceive that the petitioner who is permanent employee in the 1st respondent-Company, when there is lot of unemployment problem, would give up the right to continue in the services of the 1st respondent-Company. Therefore, it is clear that letter, Annexure-D was not given by the petitioner voluntarily and the target fixed came to be inserted subsequently. Otherwise, there was no need to write the target in hand in ink. Therefore, on this ground alone the letter, Annexure-D is liable to be quashed. Further, apart from the said ground, the order Annexure-E is also liable to be nullified on the ground that the same is opposed to public policy.

14. In my view, the principle enunciated by the Hon'ble Supreme Court in the case of Central Inland Water Transport Corporation Limited, supra, can be applied with equal force with regard to the letter of resignation Annexure-D given by the petitioner. In this connection, it is useful to refer to the observation made by the Hon'ble Supreme Court in the case of Central Inland Water Transport Corporation Limited, supra, at paragraphs 90 and 93 of the judgment which reads as hereunder:

"Paragraph 90.... The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14. This principle is that the Courts will not enforce and will when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No Court can visualize different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today's complex world of giant corporations with their vast infrastructural organisations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The Court must judge each case on its own facts and circumstances".

"Paragraph 93.... It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the Court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our Courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the Court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution".

15. As observed by me earlier at no stretch of imagination the said letter can be treated as an unconditional letter of resignation and also a voluntary letter of resignation given. The circumstances indicated above makes it more than clear that the said letter was obtained by exercising pressure on the petitioner, possibly on the threat of termination of his service by relying upon Regulation 14(4) of the Regulations or Clause 10 of the order of appointment in the background of memo, Annexure-C issued to the petitioner. The respondent being an instrumentality of the State, as observed by the Hon'ble Supreme Court in Ramana Dayaram Shetty v International Airport Authority of India, AIR 1979 SC 1626, 1979-II-LLJ-217 (SC) in all its activities and actions should be fair and reasonable. Any arbitrary or unreasonable act on the part of the respondent which would result in termination of services of the petitioner who had become a permanent employee in the establishment of the 1st respondent-Company would suffer from the vice of arbitrariness, unreasonableness and such an action can be dubbed as discriminatory in nature and violative of right guaranteed to the petitioner under Article 14 of the Constitution of India. In this connection, it is useful to refer to the observation made by Hon'ble Supreme Court in the case of International Airport Authority of India, supra, at paragraphs 20 and 21 of the judgment which read as hereunder:

"Paragraph 20.--Now, obviously where a Corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, but subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such Corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes as its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance.

Paragraph 21.--This rule also flows directly from the doctrine of equality embodied in Article 14. It is now well-settled as a result of the decisions of this Court in E.P. Royappa v. State of Tamil Nadu and Anr., and Smt. Maneka Gandhi v Union of India and Anr., that Article 14 strikes at arbitrariness in State action and ensures fairness and equality must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory; it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must confirm to some standard or norm which is rational and non-discriminatory...".

16. Therefore, the impugned letter of resignation, Annexure-D obtained from the petitioner is liable to be declared as illegal and void in law both on the ground it is opposed to public policy and also had emanated on account of arbitrary and unreasonable action on the part of the respondents.

17. One other ground on the basis which the order, Annexure-E requires to be quashed is on the ground that the same came to be passed in disregard to the principles of natural justice. As noticed by me earlier, in letter, Annexure-D the petitioner has made a commitment to fill up the target and sales collection in a sum of Rs. 12.50 lakhs. Therefore, the question is, even if the letter, Annexure-D is to be treated as the letter of resignation on the ground that the petitioner has not achieved target and thereby fulfilled the commitment made by him, the petitioner should have been heard before issuing relieving order, Annexure-E terminating the services of the petitioner. Even if the letter, Annexure-D is held as valid, it only enables the 2nd respondent-Regional Manager to treat the said letter as letter of resignation and relieve the petitioner from the services of the 1st respondent-Company, in case he does not achieve the target regarding sales and collection in a sum of Rs. 12.50 lakhs. It is a conditional letter of resignation. Further, the language used is that the 2nd respondent 'may' treat the letter as letter of resignation. Therefore, the discretion is conferred on the respondents either to treat the letter, Annexure-D as the letter of resignation in the event of petitioner not being able to fulfil the target accepted by him or not to do so. Under those circumstances, in my considered view, the discretion conferred on the respondents to treat the letter, Annexure-D as letter of resignation; and also that being a conditional letter of resignation, it would imply in it that an opportunity is required to be given to the petitioner before the respondents takes a decision to treat the said letter as a letter of resignation. The circumstances under which the petitioner was not able to keep up the commitment made by him; the circumstances under which he gave the letter; whether it is permissible for the respondents in the facts and circumstances of the case, to treat the said letter, as the letter of resignation, is a matter which is required to be considered by the respondents after hearing the petitioner and giving an opportunity to him. Admittedly, the same has not been done. If only the petitioner were to be heard before issuing the relieving order, Annexure-E, what decision the 1st respondent-Company would have taken, cannot be guessed at this stage. Therefore, I am of the view that order, Annexure-E is also liable to be quashed on the ground that the same came to be passed in disregard to the principles of natural justice.

18. However, the next question is as to whether the respondents should be directed to pay full back wages to the petitioner? Having regard to the facts and circumstances of the case and that the petitioner, being an experienced Sales Supervisor, would have been able to earn some income from the date of his termination from service, it would be fair and reasonable only to order 50% of the back wages as against full claim made by the petitioner.

19. In the light of what is stated above, I make the following:

ORDER

1. The letter, Annexure-D, dated 19th January, 1999 and the order, Annexure-E, dated 18th February, 1999 are hereby quashed and the 1st respondent-Company is directed to reinstate the petitioner to duty with all consequential benefits including back wages awarded at 50% from the date of his relieving from services till the date of his reinstatement with continuity of service.

2. The 1st respondent-Company is given four weeks' time from today to comply with the direction so far as the reinstatement is concerned and is given six weeks' time from today to settle the back wages and all other benefits.

20. In terms stated above, this petition is allowed. Rule issued is made absolute. However, no order is made as to costs.

No comments: