-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2030 OF 2003 Prabha D. Kannan, Dy. Manager (IFS), Emp.No.304221, 122, Shantivan, Oshiwara, Andheri (West), Mumbai 400 053. ... ... Petitioner Versus 1. Indian Airlines Ltd., having its address at Santacruz Airport, Vile Parle (E), Mumbai 400 099. 2. S.K. Ghorai, Regional Director, Indian Airlines, Santacruz Airport, Vile Parle (E), Mumbai 400 099. ... ... Respondents Mr.J.P. Cama, Senior Advocate with Mr.C.U.Balsara i/by M/s.Goenka Law Associates for petitioner. Mr.S.K.Talsania with Mr.K.B.Swamy, Ms.Chhaya Shah, Mr.V.M.Parkar and Ms.Pooja Kulkarni i/by M/s.Bhasin & Co. for respondents. ----- CORAM : H.L. GOKHALE & CORAM : H.L. GOKHALE & CORAM : H.L. GOKHALE & S.C.DHARMADHIKARI, JJ. S.C.DHARMADHIKARI, JJ. S.C.DHARMADHIKARI, JJ. DATE OF RESERVATION OF JUDGMENT : 1st July 2005 DATE OF RESERVATION OF JUDGMENT : 1st July 2005 DATE OF RESERVATION OF JUDGMENT : 1st July 2005 DATE OF PRONOUNCEMENT OF JUDGMENT:30th August 2005 DATE OF PRONOUNCEMENT OF JUDGMENT:30th August 2005 DATE OF PRONOUNCEMENT OF JUDGMENT:30th August 2005 JUDGMENT : (Per H.L.Gokhale, J.) JUDGMENT : (Per H.L.Gokhale, J.) JUDGMENT : (Per H.L.Gokhale, J.) 1. This Writ Petition by a former Deputy Manager (In Flight Services) of the 1st respondent-Indian Airlines Ltd. seeks to challenge her termination from service without any enquiry by an order dated 9th August 2002 passed by 1st respondent by invoking Regulation 13 of -2- their service regulations. The challenge to the order of termination is principally on two grounds viz. (a) that the concerned service regulations could not be invoked at the relevant time since they had lapsed and (b) assuming that they could be relied upon, Regulation 13 therefrom which was sought to be invoked, was clearly devoid of principles of natural justice and hence, was violative of Article 14 of the Constitution of India. 2. Brief facts leading to the present Petition are as follows:- . The petitioner, who joined the services of the 1st respondent-Indian Airlines initially as an Airhostess on 28th September 1977, was promoted from time to time and at the relevant time, was working as the Deputy Manager (In Flight Services) in the executive cadre. On 18th June 2002, she was operating on Flight IC 617 from Mumbai to Hyderabad. The petitioner’s luggage consisted of a hard top green colour delsey bag and a shoulder purse. After the Flight reached Hyderabad from Mumbai, the Flight was to go to Sharjah via Bangalore as Flight No.IC 961. When all the passengers including the crew had boarded the -3- Flight to Bangalore and when the Flight was about to take off, the plane was stopped and the petitioner was made to disembark by the Personnel of Central Industrial Security Force (CISF). The petitioner was brought back to the Hyderabad Airport where she was shown one green colour hard top delsey bag and was asked as to whether that was her bag, which she admitted of having left behind. When the bag was opened, it was found to contain the cash of Rs.22 Lakhs. Thereafter she was arrested by the Customs Authorities for carrying these unexplained currency notes worth Rs.22 Lakhs. When the Customs Authorities made an enquiry, she initially made a statement under Section 108 of the Customs Act admitting her offence in carrying the currency notes. She remained in custody thereafter until 3rd July 2002. Her husband was also arrested on the allegations of being involved in the transaction. On being released, she retracted the statement made by her earlier. She wanted to join back on duty but the Board of Directors of the 1st respondent-Indian Airlines was of the opinion that her continuance in the service was a grave security risk and was detrimental to the interest of the Company. The Company had lost confidence in her and, therefore, her services were -4- terminated by the impugned order dated 9th August 2002. This order reads as follows:- " Date : 09.08.2002 This is to inform you that the Board of Directors of Indian Airlines Ltd. has decided to terminate your services with immediate effect under Regulation 13 of Service Regulations applicable to you. Accordingly, your services stand terminated with immediate effect from 9.8.2002. Though you are not entitled to any notice or salary in lieu thereof in terms of Regulation 13, however, a cheque No.354551 dated 9.8.2002 for Rs.21,734/- is enclosed. The Finance Department has been advised to settle your accounts immediately. Sd/- (S.K. Ghorai) Regional Director " 3. It is this order of termination which is -5- challenged through this Writ Petition. This Petition is affirmed on 10th June 2003. The Petition was admitted on 7th October 2003. The respondents have filed their reply to oppose the Petition. It is material to note that after the termination of her services, the petitioner was paid her terminal dues consisting of provident fund of about Rs.12,74,000/- and gratuity of about Rs.2,22,000/-. The petitioner having challenged the order of termination, has returned this amount to the respondents on or about 15th August 2002. 4. Since the respondents terminated the petitioner’s services by invoking Regulation 13, it is material to note that the same is framed under Section 45(2)(b) of the Air Corporations Act, 1953 which has been since repealed under Section 11 of the Air Corporations (Transfer of Undertakings and Repeal) Act, 1994. This second Act came into force from 29.1.1994. The relevant service Regulation 13(a) Regulation 13(a) Regulation 13(a) reads as follows:- " 13 (a) The services of an employee may be terminated without assigning any reason to him / her and without any prior notice but only on the following grounds not -6- amounting to misconduct under the Standing Orders, namely: (i) If he/she is, in the opinion of the Corporation (now Company) (the Board of Directors of Indian Airlines) incompetent and unsuitable for continued employment with the company and such incompetence and unsuitability is such as to make his / her continuance in employment detrimental to the interest of the company. OR If his/her continuance in employment constitutes, in the opinion of the Corporation (now Company) (the Board of Directors of Indian Airlines), a grave security risk making his/her continuance in service detrimental to the interests of the Corporation (now Company). OR If in the opinion of the Corporation (now Company) (Board of Directors of Indian Airlines) there is such a justifiable lack -7- of confidence which having regard to the nature of duties performed, would make it necessary in the interest of the Corporation (now Company) to immediately terminate his / her services. " 5. As stated above, the first submission of the petitioner has been that in view of the repeal of the Air Corporations Act, 1953, the regulations thereunder did not survive and could not be invoked by the respondents. The petitioner relied upon a judgment of the Apex Court in the case of Air India vs. Union of India & ors. Air India vs. Union of India & ors. Air India vs. Union of India & ors. reported in (1995) 4 Supreme Court Cases 734 (1995) 4 Supreme Court Cases 734 (1995) 4 Supreme Court Cases 734 in her support. It was pointed out that in paragraph 8 of that judgment, the Apex Court has in terms held that if subordinate legislation was to survive the repeal of the parent statute, the repealing statute must say so in so many words. Inasmuch as there is no such specific provision, the said regulations ceased to be effective on 29.1.1994. The respondents, on the other hand, relied upon Section 8(1) of the 1994 Act which reads as follows:- " 8. Provisions in respect of officers and other employees of corporations-- -8- (1) Every officer or other employee of a corporation (except a Director of the Board, Chairman, Managing Director or any other person entitled to manage the whole or a substantial part of the business and affairs of the corporation) serving in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in a company by virtue of this Act, become, as from the appointed day, an officer or other employee, as the case may be, of the company in which the undertaking has vested and shall hold his shall hold his shall hold his office or service therein by the same office or service therein by the same office or service therein by the same tenure, at the same remuneration, upon the tenure, at the same remuneration, upon the tenure, at the same remuneration, upon the same terms and conditions, with the same same terms and conditions, with the same same terms and conditions, with the same obligations obligations obligations and with the same rights and privileges as to leave, passage, insurance, superannuation, provident fund, other funds, retirement, pension, gratuity and other benefits as he would have held under the corporation if its undertaking had not vested in the company and shall continue to do so as an officer or other -9- employee, as the case may be, of the company or until the expiry of a period of six month from the appointed day if such officer or other employee opts not to be the officer or other employee of the company, within such period. " (Emphasis supplied) It was, therefore, submitted on behalf of the respondents that as far as the officers and the employees of the respondents were concerned, their services continued to be on the same terms and conditions and with the same obligations. Therefore, although the principal Act was repealed, the provisions under the regulations could certainly be invoked. 6. It is material to note in this behalf that the Appeal to the Apex Court in that matter arose from the judgment of a Division Bench of the Delhi High Court (Per Kirpal, J. as he then was in that Court) in the case of Air India vs. Union of Air India vs. Union of Air India vs. Union of India & ors. reported in 1991 Labour and India & ors. reported in 1991 Labour and India & ors. reported in 1991 Labour and Industrial Cases page 451 Industrial Cases page 451 Industrial Cases page 451. The Deputy Chief Labour Commissioner, Delhi had framed the standing orders for the employees who came in the category of workmen. The standing orders were framed under -10- the provisions of Industrial Employment (Standing Orders) Act, 1946. Air India had challenged the applicability of this Act in the said Writ Petition. The Division Bench in terms held that the Air Corporations Act would not be said to be a special Act and could not be regarded as obliterating the applicability of the Industrial Employment (Standing Orders) Act. The Petition filed by the Air India was, therefore, dismissed. This judgment was rendered on 27th August 1990. An Appeal therefrom was carried to the Apex Court and it came to be decided on 18th July 1995. This judgment has been reported as stated above in (1995) 4 SCC 734 (Air India vs. Union of India & (1995) 4 SCC 734 (Air India vs. Union of India & (1995) 4 SCC 734 (Air India vs. Union of India & ors) ors) ors). By the time, this Appeal came to be decided, the Air Corporations Act, 1953 had come to be repealed and the new Act had come into force on 29.1.1994. One of the objections raised by the Counsel appearing for the Air India employees was that the Act having now been repealed, the regulations no longer survived. It is in this context that the above referred observations were made in paragraph 8, namely, that unless the Repealing Statute specifically stated so, the subordinate legislation did not survive. Therefore, in paragraph 10, the Court held that the regulations ceased to be effective from -11- 29.1.1994. 7. However, what is stated by the Apex Court in para-9 (of S.C.C.) of its judgment is relevant for our purpose. This para-9 reads as follows:- " 9. Section 8 of the 1994 Act does not in express terms save the said Regulations, nor does it mention them. Section 8 only protects the remuneration, Section 8 only protects the remuneration, Section 8 only protects the remuneration, terms and terms and terms and conditions and rights and conditions and rights and conditions and rights and privileges of those who were in Air privileges of those who were in Air privileges of those who were in Air India’s employment when the 1994 Act came India’s employment when the 1994 Act came India’s employment when the 1994 Act came into force. into force. into force. Such saving is undoubtedly "to quieten doubts" of those Air India employees who were then in service. What is enacted in Section 8 does not cover those employees who joined Air India’s service after the 1994 Act came into force. The limited saving The limited saving The limited saving enacted in Section 8 does not, in our opinion, extend to the said Regulations. " (Emphasis supplied) Thus, the position is clear, namely, that although the regulations ceased to be effective on 29th January 1994, Section 8 did protect the terms and -12- conditions, the obligations and the rights and privileges of those who were in Air India’s employment and they continued to remain the same. As observed by the Apex Court in para-9, it was "to quieten doubts" of the employees then in service. The petitioner was undoubtedly in service at that time and had received her promotions under the Service Regulations and at the time of the impugned order she belonged to the executive cadre. She continued to avail of the benefits under the Service Regulations and her obligations thereunder also continued to be the same as also the terms and conditions of her service. The service regulations of Air India and Indian Airlines are identical. This being the position, it could not be said that it was impermissible for the respondents to invoke regulation 13(a) only because the Air Corporations Act, 1953 had been repealed. 8. The second submission of the petitioner has been that the above-referred regulation is ultra vires Article 14 of the Constitution of India inasmuch as the 1st respondent being a statutory Corporation is an Authority which must observe the principles of fair play and justice in its functions vis-a-vis the employees as well. No -13- enquiry has been held against the petitioner to prove any of the allegations against her. She had no opportunity to defend herself against the allegations made against her. The opportunity was denied with respect to establishing of the allegations and also with respect to the punishment. No opportunity was afforded to her to make any representation either before the impugned decision or thereafter, and hence, the decision was violative of the principles of natural justice. 9. Mr.Cama, learned Counsel appearing for the petitioner, firstly, relied upon a judgment of a learned Single Judge of this Court (P.B. Sawant, J. as he then was in this Court) in the case of S.S. Muley vs. J.R.D. Tata reported in 1980 S.S. Muley vs. J.R.D. Tata reported in 1980 S.S. Muley vs. J.R.D. Tata reported in 1980 Labour and Industrial Cases page 11 Labour and Industrial Cases page 11 Labour and Industrial Cases page 11. The relevant Regulation 48(a) provided as follows:- " 48. Termination : The services of an employee may be terminated without assigning any reason, as under:- (a) of a permanent employee by giving him -14- 30 days’ notice in writing or pay in lieu of notice; (b) . . . . . . . . . (c) . . . . . . . . . " The petitioner in that case was a Purchase Manager in Air India and his services were terminated by invoking the said regulation without any enquiry. The learned Single Judge held that the said regulation was void for infringing Article 14 of the Constitution of India. The learned Judge reached his conclusion for the reason that there was no guidance given any where in the impugned regulation for the exercise of the power conferred by it, that it placed untrammelled power in the hands of the Authorities, that it was an arbitrary power which was conferred and that it did not make any difference whether it was to be exercised by high ranking officials. In West Bengal State West Bengal State West Bengal State Electricity Board & ors. vs. Desh Bandhu Ghosh & Electricity Board & ors. vs. Desh Bandhu Ghosh & Electricity Board & ors. vs. Desh Bandhu Ghosh & ors. reported in (1985) 3 SCC page 116 ors. reported in (1985) 3 SCC page 116 ors. reported in (1985) 3 SCC page 116, the Apex Court agreed with this reasoning and conclusion in para-4 thereof. In the submission of Mr.Cama, the same principles will have to be applied to the present regulation. -15- 10. Central Inland Water Transport Corporation Central Inland Water Transport Corporation Central Inland Water Transport Corporation Limited & anr. vs. Brojo Nath Ganguly & anr. Limited & anr. vs. Brojo Nath Ganguly & anr. Limited & anr. vs. Brojo Nath Ganguly & anr. reported in (1986) 3 Supreme Court Cases page 156 reported in (1986) 3 Supreme Court Cases page 156 reported in (1986) 3 Supreme Court Cases page 156, the Apex Court was concerned with Rule 9 of the Corporation’s Service, Discipline and Appeal Rules, 1979. Sub-rule (i) thereof provided that the employment of a permanent employee shall be subject to termination of three months’ notice on either side. Sub-rule (ii) thereof provided that the services of a permanent employee can be terminated on the grounds of services no longer being required in the interest of the Company without assigning any reasons. In para-98 of the judgment, the Apex Court held that Rule 9(i) can aptly be called "the Henry VIII clause" since it conferred an absolute, arbitrary and unguided power upon the Corporation. In paragraphs 108 and 109 of the judgment, it referred to the judgment in S.S. Muley’s case (supra) and approved the view taken therein. In another judgment in the case of Manohar P. Kharkhar vs. Raghuraj Manohar P. Kharkhar vs. Raghuraj Manohar P. Kharkhar vs. Raghuraj reported in (1981) 2 LLJ 459 reported in (1981) 2 LLJ 459 reported in (1981) 2 LLJ 459, a Division Bench of the Bombay High Court had taken the exactly contrary view with respect to the very Regulation 48. The Apex Court held that Kharkhar’s case (supra) was wrongly decided. It held that Rule -16- 9(i) in the case before it, did not provide for a hearing or holding of an enquiry and, therefore, the same was ultra vires Article 14 of the Constitution of India. It further held that the said clause was contrary to Section 23 of the Contract Act for being opposed to public policy. 11. The third judgment relied upon by Mr.Cama was in the case of Delhi Transport Corporation vs. Delhi Transport Corporation vs. Delhi Transport Corporation vs. D.T.C. Mazdoor Congress & ors. reported in 1991 D.T.C. Mazdoor Congress & ors. reported in 1991 D.T.C. Mazdoor Congress & ors. reported in 1991 Supp (1) Supreme Court Cases 600 Supp (1) Supreme Court Cases 600 Supp (1) Supreme Court Cases 600. Regulation 9(b) of Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations was under challenge in that matter. It provided for termination due to reduction of establishment or in the circumstances other than those mentioned in Regulation 9(a) by one month’s notice. (Regulation 9(a) provided for termination on completion of probation, misconduct or on completion of specific period or contract). The Apex Court, by majority judgment, held the said regulation to be arbitrary, unfair and offending Article 14 of the Constitution amongst others. 12. Mr.Cama then relied upon other judgments to submit that hearing and compliance of natural justice was must in proceedings concerning the -17- actions against the employees. Thus, he relied upon a judgment in the case of D.K. Yadav vs. D.K. Yadav vs. D.K. Yadav vs. J.M.A. Industries Ltd. reported in (1993) 3 J.M.A. Industries Ltd. reported in (1993) 3 J.M.A. Industries Ltd. reported in (1993) 3 Supreme Court Cases 259 Supreme Court Cases 259 Supreme Court Cases 259 where the Apex Court held that the principles of natural must be read into the Standing Orders concerned. Similar is the view in the case of Basudeo Tiwary vs. Sido Kanhu Basudeo Tiwary vs. Sido Kanhu Basudeo Tiwary vs. Sido Kanhu University & ors. reported in (1998) 8 SCC 194 University & ors. reported in (1998) 8 SCC 194 University & ors. reported in (1998) 8 SCC 194 where the Court held that in the sphere of public employment it was well settled that an action by the employer against an employee must be fair, just and reasonable and notice and hearing are essential components thereof. Mr.Cama thereafter relied upon a judgment in the case of Uptron India Uptron India Uptron India Ltd. vs. Shammi Bhan & anr. reported in (1998) Ltd. vs. Shammi Bhan & anr. reported in (1998) Ltd. vs. Shammi Bhan & anr. reported in (1998) 6 Supreme Court Cases 538 6 Supreme Court Cases 538 6 Supreme Court Cases 538 where the Apex Court held that the principles of natural justice had to be read into the relevant Standing Orders. 13. Mr.Talsania, learned Counsel appearing for the respondents, rebutted these arguments by submitting that the regulation involved in the present case was quite different from the regulations which were concerned in the earlier mentioned cases of S.S. Muley (supra), Air India S.S. Muley (supra), Air India S.S. Muley (supra), Air India (supra), Central Inland Water Transport (supra), Central Inland Water Transport (supra), Central Inland Water Transport Corporation (supra) and Delhi Transport Corporation (supra) and Delhi Transport Corporation (supra) and Delhi Transport -18- Corporation (supra) Corporation (supra) Corporation (supra). All of them provided for a simple termination by giving a notice of a specified period of one month or three months or pay in lieu thereof at the highest. There was no guidance given any where in the impugned regulation as to when power conferred by it was to be exercised. The present regulation provided for the circumstances wherein the action could be taken. In his submission, that made a difference. He submitted that in the case of S.S. Muley (supra), the learned Single Judge had held Regulation 48(a) as arbitrary for absence of any guidelines (para-28 of the judgment). With respect to the necessity of such guidelines, the learned Judge observed in para-11 as follows:- " It is difficult to see as to how and in what circumstances the power to terminate an employee’s service without laying down even a bare guideline of the conditions under which it can be exercised, can be justified. An employee’s service can be terminated only for some reason which has relation to or a bearing upon his employment, and not for no reason whatsoever. These reasons may be divided into two categories, one consisting of -19- misconducts enumerated in the service regulations and the other of reasons which do not amount to misconduct such as where it is in the public interest or in the interests of administration that it is necessary to terminate the services of an employee. The later category may include various situations such as loss of confidence, unsuitability etc. The misconduct in their turn may be of three types, first where an enquiry can be held, second where an enquiry is unnecessary and the last where for some valid reasons it is not feasible to hold an enquiry or it is not in the public interests or in the interests of administration to hold it. It is not necessary to consider cases falling under the first category, or obviously in such cases the impugned regulation will not come into play. As regards the second category, there are cases where the misconduct of the employee is already proved