Case: Nandganj Sihori Sugar Co. Ltd., Rae Bareli And Anr Vs. Badri Nath Dixit And Ors

THOMMEN, J. 1. This appeal is by defendants 1 and 2 in a suit for mandatory injunction. The appellants are officers of Nandganj Sihori Sugar Co. Ltd., Rae Bareli, of which defendant 3, the U.P. State Sugar Corporation Ltd. (respondent 2 herein) is the holding company. The State of Uttar Pradesh (respondent 3) is defendant 4. The plaintiff, Badri Nath Dixit (respondent 1), instituted the suit for mandatory injunction to enforce a contract alleged to have been entered into between the plaintiff and defendants 1 and 2 for appointment of the plaintiff to the post of Instrumentation Foreman in the defendants company, and for consequential reliefs. The plaintiff contended that he had been sponsored by the Chairman and Managing Director of defendant 3, by his letters dated October 18, 1982 and December 14, 1982, for appointment by defendants 1 and 2 as an Apprentice Engineer in terms of a scheme formulated by the Government of India, but such appointment was not made by defendants 1 and 2. The plaintiff prayed for an injunction compelling defendants 1 and 2 to appoint him to the post of Instrumentation Foreman, which post, according to him, was at the time of the suit lying vacant. In effect, what the plaintiff seeks is a decree to compel the specific performance of a contract of personal service2. Defendants 1 to 3 filed a joint written statement denying the allegations. They stated that there was no contract, as alleged, and there was no vacancy for any post to which the plaintiff was qualified to be appointed. They further stated that the plaintiff had been conditionally offered appointment as a Fitter Trade Apprentice, subject to his possessing the requisite qualifications and his selection by the Apprentice Board, Kanpur. The plaintiff was not qualified and was, therefore, not selected. They further contended that neither as an Apprentice nor as Instrumentation Foreman was the plaintiff qualified to be appointed. The suit was dismissed by the trial court. However, on appeal by the plaintiff it was decreed by the learned Additional District Judge who directed defendant 1 to appoint the plaintiff to the post of Apprentice Engineer under the scheme sponsored by the Government of India. This decree was confirmed in appeal by the High Court by the impugned judgment. The High Court further held that the plaintiff was entitled to be appointed to the post of Instrumentation Foreman with effect from the date on which the former incumbent of that post had resigned 3. Counsel for the appellants (defendants 1 and 2) submits that there is no evidence of the alleged contract having been entered into by the defendants with the plaintiff; nor is there any evidence of a scheme of the Government of India which entitled the plaintiff to be appointed to any post in the defendants company. Counsel states that, in any view, the plaintiff was not qualified for appointment as an Apprentice and much less to the higher post of Instrumentation Foreman 4. The plaintiffs counsel, however, submits that the letters addressed by defendant 3 in his capacity as Chairman and Managing Director of the holding company to defendants 1 and 2, the officers of the subsidiary company, made it obligatory on the part of the latter of appoint the plaintiff in terms of the Government of India scheme. It was so found by the first appellate court and the High Court. That finding is not liable to be impeached in the present proceeding. He says that the defendants are, therefore, liable to be compelled by means of a mandatory injunction to honour the offer held out by them to the plaintiff, who is entitled to enforce the contract founded on such offer by seeking specific performance of it 5. We are surprised that the first appellate court and the High court should have proceeded on the assumption that any enforceable contract existed. Neither from the plaint nor from the evidence is it possible to identify any concluded contract to which the plaintiff is a party or which the plaintiff can enforce. The defendants deny the existence of any contract or any other relationship which gives the plaintiff any cause of action against the defendants. There is no specific plea or evidence as regards the particulars of the alleged scheme of the Government of India in terms of which the plaintiff seeks relief. Whether it is a statutory scheme, and if so what are the provisions relied on by the plaintiff, and whether a duty is cast on the defendants and a benefit conferred on persons like the plaintiff, is neither pleaded nor spoken to in evidence. Assuming that any such scheme existed or any such contract bound the parties, to have decreed a suit for specific performance of a contract of personal service, on the facts alleged by the plaintiff, was to violate all basic norms of law. Courts do not ordinarily enforce performance of contracts of a personal character, such as a contract of employment. In the words of Jessel, M.R. : (Rigby v. Connol, 1880 (14) Ch(D) 482, 487 : 28 WR 650; see Cheshire, Fifoot and Furmstons Law of Contract, 11th edn., p. 614)"The courts have never dreamt of enforcing agreements strictly personal in their nature, whether they are agreements of hiring and service, being the common relation of master and servant..." 6. In the joint written statement filed by defendants 1 to 3, representing the holding and subsidiary companies, the alleged contract has been clearly denied. We fail to see how the letters addressed by the Chairman of the holding company to the officers of the subsidiary company advising the appointment of the plaintiff to a post which he was found to be not qualified to hold could have resulted in any contract between the defendants of the one part and the plaintiff of the other part. Assuming that the letters written by the Chairman of the holding company were in the nature of a direction which a subsidiary company was compelled to carry out, we fail to see how on the facts of this case, the plaintiff, who had no privity whatever to a contract, assuming there was a contract, could enforce any right under it. In the first place, the letters sent by the Chairman of the holding company are merely in the nature of an advice giving rise to no contractual relationship. Even if the advice is taken to be of the character of a direction which the subsidiary company is bound to comply with, any obligation arising from such direction is not enforceable at the instance of a total stranger. The chairman was in no sense acting as a trustee of the plaintiff and no relationship of a fiduciary character whatever is alleged or proved to have existed between them. Assuming that the then Chairman was personally interested in the plaintiff, that was not an interest which is legally enforceable against the defendants. Such predilection on the part of the Chairman of a holding company, whatever be its impact on the subsidiary company, does not give rise to any actionable claim. There is no evidence, whatsoever, as to the existence of a government scheme, apart from a reference to it in the Chairmans letter. The plaintiff has not shed any light upon it. The defendants have not admitted any such scheme. Even if a scheme existed, there is no evidence that it was enforceable at the instance of a person seeking its benefit. Nor has the plaintiff pleaded estoppel or adduced any evidence to support any such contention 7. In the absence of any specific plea or evidence as regards the nature and other particulars of the scheme, it is preposterous that the courts below should have thought it fit to issue a mandatory injunction to compel the performance of the alleged contract of service in terms of or pursuant to an unknown scheme. Subject to certain well defined categories of exceptions, the law does not permit, and the Specific Relief Act does not contemplate, the enforcement of a contract of a personal nature by a decree for specific performance. The facts of this case do not fall within the exceptions. Assuming that the facts alleged by the plaintiff to be true - as stated earlier, there is no evidence whatever to support them - the plaintiff is not entitled to any relief other than damages in the event of his being in a position to prove that he has been damnified by reason of the defendants failure to carry out the obligations arising under what he calls a contract 8. In Halsburys Laws of England (4th edn. Volume 44, at para 407) it is stated "407. Contracts for personal work or services. - A judgment for specific performance of a contract for personal work or services is not pronounced, either at the suit of the employer or the employee. The court does not seek to compel persons against their will to maintain continuous personal and confidential relations. However, this rule is not absolute and without exception. It has been held that an employer may be restrained from dismissing an employee in breach of contract if there is no loss of confidence between employer and employee or if (at least in a contract of employment to carry out a public duty) the employee has been dismissed in a manner which does not comply with statutory or contractual regulations governing dismissal. No court may, whether by way of an order for specific performance of a contract of employment or an injunction restraining a breach or threatened breach of such contract, compel an employee to do any work or attend at any place for the doing of any workThis principle applies not merely to contracts of employment, but to all contracts which involve the rendering of continuous services by one person to another, such as a contract to work a railway line ..." 9. As stated by this Court in Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain ( 1976 (2) SCC 58 : 1976 SCC(L&S) 176) : (SCC p. 71, para 18) "... a contract of personal service cannot ordinarily be specifically enforced and a court normally would not give a declaration that the contract subsists and the employee, even after having been removed from service can be deemed to be in service against the will and consent of the employer. This rule, however, is subject to three well recognised exceptions - (i) where a public servant is sought to be removed from service in contravention of the provisions of Article 311 of the Constitution of India; (ii) where a worker is sought to be reinstated on being dismissed under the Industrial Law; and (iii) where a statutory body acts in breach or violation of the mandatory provisions of statute." * 10. A contract of employment cannot ordinarily be enforced by or against an employer. The remedy is to sue for damages. (See Section 14 read with Section 41 of the Specific Relief Act; see Indian Contract and Specific Relief Acts by Pollock and Mulla, 10th edn., page 983). The grant of specific performance is purely discretionary and must be refused when not warranted by the ends of justice. Such relief can be granted only on sound legal principles. In the absence of any statutory requirement, courts do not ordinarily force an employer to recruit or retain in service an employee not required by the employer. There are, of course, certain exceptions to this rule, such as in the case of a public servant dismissed from service in contravention of Article 311 of the Constitution; reinstatement of a dismissed worker under the Industrial Law; a statutory body acting in breach of statutory obligations, and the like (S.R. Tiwari v. District Board, Agra 1964 AIR(SC) 1680 : 1964 (3) SCR 55 : 1964 (1) LLJ 1 ); Executive Committee of U.P. State Warehousing Corporation v. C.K. Tyagi ( 1969 (2) SCC 838 : 1970 (2) SCR 250 ); Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain ( 1976 (2) SCC 58 : 1976 SCC(L&S) 176); see Halsburys Laws of England, 4th edn., Volume 44, paragraphs 405 to 420) 11. On the facts of this case, the High Court was clearly wrong in issuing a mandatory injunction to appoint the plaintiff. Even if there was a contract in terms of which the plaintiff was entitled to seek relief, the only relief which was available in law was damages and not specific performance. Breach of contract must ordinarily sound in damages, and particularly so in the case of personal contracts. Assuming that a contractual relationship arose consequent upon the letters addressed by defendant 3 to defendant 1, the plaintiff was a total stranger to any such relationship, for, on the facts of this case, no relationship of a fiduciary character existed between the plaintiff and defendant 3 or other defendants. Neither on principles of law or equity nor under any statute did the plaintiff acquire an enforceable right by reason of the letters exchanged between defendants 1 and 3. The plaintiff had no privity of any kind to their relationship. No collateral contract to which the plaintiff was a party did arise on the facts of this case. At no time was defendant 3 acting as an agent of the plaintiff. There is no express or implied contract which is enforceable by the plaintiff. (See Halsburys Laws of England, 4th edn., Volume 9, paragraphs 334 to 342) 12. The plaintiffs counsel suggests that the claim is justifiable on the basis of legitimate expectations for appointment. There is no specific plea or evidence to support any such contention. Whatever expectations might have arisen from the letters of defendant 3, they could not have in law given rise to any right enforceable by specific performance

Decision:
0[ds]11. On the facts of this case, the High Court was clearly wrong in issuing a mandatory injunction to appoint the plaintiff. Even if there was a contract in terms of which the plaintiff was entitled to seek relief, the only relief which was available in law was damages and not specific performance. Breach of contract must ordinarily sound in damages, and particularly so in the case of personal contracts. Assuming that a contractual relationship arose consequent upon the letters addressed by defendant 3 to defendant 1, the plaintiff was a total stranger to any such relationship, for, on the facts of this case, no relationship of a fiduciary character existed between the plaintiff and defendant 3 or other defendants. Neither on principles of law or equity nor under any statute did the plaintiff acquire an enforceable right by reason of the letters exchanged between defendants 1 and 3. The plaintiff had no privity of any kind to their relationship. No collateral contract to which the plaintiff was a party did arise on the facts of this case. At no time was defendant 3 acting as an agent of the plaintiff. There is no express or implied contract which is enforceable by the plaintiff.The plaintiffs counsel suggests that the claim is justifiable on the basis of legitimate expectations for appointment. There is no specific plea or evidence to support any such contention. Whatever expectations might have arisen from the letters of defendant 3, they could not have in law given rise to any right enforceable by specific performance