Case: Executive Committee Of U.P. State Warehousingcorporation, Vs. Chandra Kiran Tyagi

Section 11 (2) of the Insurance Act, will prevail, but the provisions of the Central Government Order will have to be subject to Section 11 (2) of the Insurance Act. Next in order come the regulations of the Life Insurance Corporation under Section 49 and those regulations must not be inconsistent with the Insurance Act or the rules framed thereunder.27. This Court held that the Circular issued by the Corporation, which had the effect of a regulation passed by it under Section 49 of the Insurance Act, must be read along with the provisions of Sections 11 (1) and 11 (2) of the Insurance Act and Clause 10 of the Order issued by the Central Government, and so, read, the conclusion reached by this Court was that a termination of service of an officer, contemplated under the circular issued by the Life Insurance Corporation can be effected only in the manner prescribed by Clause 10 of the order issued by the Central Government. In view of the fact that Clause 10 of the order issued by the Central Government had not been complied with, the order terminating the services of the employees was held to be invalid.28. It will be seen that the services, as pointed out by this Court of the employees whose cases were under consideration, had been crystallized by the statute-the Insurance Act-in Ss. 11 (1) and 11 (2); By virtue of the powers conferred by Section 11 (2), the Central Government issued the order on December 30, 1957. Clause 10 of this order had clearly indicated the procedure to be adopted for terminating the services of such employees. Therefore the employees had their rights safeguarded by the Insurance Act read with the order issued by the Central Government and it cast a statutory obligation on the Life Insurance Corporation to adopt a particular procedure if the services of those employees were to be terminated. By not complying with the provisions of Clause 10 of the order of the Central Government, which is really related to Section 11 of the Insurance Act, the Life Insurance Corporation must be considered to have acted in gross violation of the mandatory provisions of the statute. Therefore it was not as if that the employees were there seeking to enforce a contract of personal service, but their grievance which was accepted by the Court was that the order terminating their services was a nullity as it had not been effected in terms of the statute. In our opinion, therefore, this decision does not support the contention of the respondent.29. Mr. Iyengar referred us also to the decision of this Court in The State of Uttar Pradesh v. Babu Ram Upadhya, 1061-2 SCR 679 = (AIR 1961 SC 751 ) but that decision need not detain us because that deals with a member of the public service who has been given protection under the Constitution. Such cases stand apart.30. Mr. Iyengar referred us to a decision of a learned Single Judge of the Gujarat High Court reported as Tata Chemicals Ltd. v. Kailash, AIR 1964 Guj 265 . The question that arose for consideration was regarding the validity of an order of dismissal by an employer of an employee contrary to the standing orders. The learned Judge has expressed the view that a breach of the standing orders constitutes a breach of a statutory provision and therefore the order of dismissal is a nullity. It is not necessary for us to consider the correctness of that decision because the dispute between the parties in that case arose under Industrial Law and we have already pointed out that one of the exceptions to the Common Law is under Industrial Law where Labour and Industrial Tribunals have jurisdiction to compel an employer to employ a worker whom he does not desire to employ.31. Having due regard to the principles discussed above, we are of opinion that the High Court was not justified in granting the declaration that he order dated March 10, 1964 dismissing the respondent from service is null and void and that he is entitled to be reinstated in service with full pay and other emoluments. As pointed out by us, the regulations are made under the power reserved to the Corporation under Section 54 of the Act. No doubt they lay down the terms and conditions of relationship between the Corporation and its employees. An order made breach of the regulations would be contrary to such terms and conditions, but would not be in breach of any statutory obligation, as was the position which this Court had to deal with in the Life Insurance Corporation case, 1964-5 SCR 528 = (AIR 1964 SC 847 ). In the instant case, a breach has been committed by the appellant of regulation 16 (3) when passing the said order of dismissal, inasmuch as the procedure indicated therein has not been followed. The Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters. As to whether the rules framed under Section 52 deal with any such matters, does not arise for consideration in this case as the respondent has not placed any reliance on the rules and he has rested his case only on regulation 16 (3). It is not in dispute that, in this case, the authority who can pass an order of dismissal has passed the same.Under those circumstances, a violation of regulation 16 (3), as alleged and established in this case, can only result in the order of dismissal being held to be wrongful and, in consequence, making the appellant liable for damages. But the said order cannot be held to be one which has not terminated the service, albeit wrongfully or which entitles the respondent to ignore it and ask for being treated as still in service. We are not concerned with the question of damages, because no such claim has been made by the respondent in these proceedings.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Sub-paras (1) (a), (1) (b) and (1) (c) referred to therein are the penalties of (a) fine; (b) censure; and (c) postponement or stoppage of increments or promotion. In this case as the punishment imposed is one of dismissal the appellant should have followed the procedure indicated in sub-clause (3) of Regulation 16 extracted above. Under this sub-clause, it has to be noted that an employee on whom a punishment other than that specified therein is to be imposed, has to be given an opportunity of tendering his explanation in writing and cross-examining witnesses against him, if any, and producing evidence inis enough therefore, in the circumstances, to note that the Enquiry Officer Sri. F. A. Abbasi who has given evidence has admitted that he did not take in evidence in respect of any charge and that he considered the records as sufficient for giving findings on the charges. He has also admitted that he met various persons and collected information and that information has been incorporated in his enquiry report. He has further admitted that the information so collected by him was not put to the plaintiff, and has stated that he based his findings in the report against the respondent on the basis of the enquiries made by him of the police and otherthe face of these admissions, it is idle for Mr. Desai to urge before us that the findings of the High Court and the Subordinate Courts that there has been a violation of regulation 16 (3) in the enquiry proceedings cannot besustained. On the other hand, we are of opinion that the finding is amply justified by the evidence onthe other hand, regulation 16 appears in Chapter IV dealing with discipline. An order of dismissal passed after following the procedure indicated therein, attaches a stigma on the employee concerned. Having issued a charge-sheet and made a farce of an enquiry and then dismissed the employee after holding him guilty, cannot certainly be considered to be termination of the employees service under regulation 11. That action was taken by way of disciplinary proceedings is clear from the fact that an order suspending the respondent, pending the enquiry, was passed on November 9, 1963. The same order further directed that the respondent will receive only subsistence allowance during the period of suspension. The order of suspension must be related to Regulation 17 and the grant of subsistence allowance must be referred to regulation 18, both of which occur in Chapter IV relating toit follows that the first contention of Mr. S. T. Desai cannot be accepted.From the two decisions of this Court, referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. But there are certain well-recognised exceptions to this rule and they are: To grant such a declaration in appropriate cases regarding (1) a public servant, who has been dismissed from service in contravention of Article 311. (2) Reinstatement of a dismissed worker under Industrial Law by Labour or Industrial Tribunals. (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute.24. The case of the respondent before us does not come under either the first or the secondour opinion, the position taken up by Mr. Desai finds support in the decisions referred toare of opinion that the decision relied on by Mr. Iyengar does not lay down any such proposition.Having due regard to the principles discussed above, we are of opinion that the High Court was not justified in granting the declaration that he order dated March 10, 1964 dismissing the respondent from service is null and void and that he is entitled to be reinstated in service with full pay and other emoluments. As pointed out by us, the regulations are made under the power reserved to the Corporation under Section 54 of the Act. No doubt they lay down the terms and conditions of relationship between the Corporation and its employees. An order made breach of the regulations would be contrary to such terms and conditions, but would not be in breach of any statutory obligation, as was the position which this Court had to deal with in the Life Insurance Corporation case, 1964-5 SCR 528   = (AIR 1964 SC 847  ). In the instant case, a breach has been committed by the appellant of regulation 16 (3) when passing the said order of dismissal, inasmuch as the procedure indicated therein has not been followed. The Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters. As to whether the rules framed under Section 52 deal with any such matters, does not arise for consideration in this case as the respondent has not placed any reliance on the rules and he has rested his case only on regulation 16 (3). It is not in dispute that, in this case, the authority who can pass an order of dismissal has passed the same.Under those circumstances, a violation of regulation 16 (3), as alleged and established in this case, can only result in the order of dismissal being held to be wrongful and, in consequence, making the appellant liable for damages. But the said order cannot be held to be one which has not terminated the service, albeit wrongfully or which entitles the respondent to ignore it and ask for being treated as still in service. We are not concerned with the question of damages, because no such claim has been made by the respondent in these proceedings.