KAILASH SINGH versus THE MANAGING COMMITTEE, MAYO COLLEGE, AJMER & ORS.
[2018] 10 S.C.R. 881, Supreme Court of India, 2018
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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KAILASH SINGH
v.
THE MANAGING COMMITTEE, MAYO COLLEGE,
AJMER & ORS.
(Civil Appeal No. 6409 of 2017)
AUGUST 31, 2018
[KURIAN JOSEPH AND SANJAY KISHAN KAUL, JJ.]
Rajasthan Non-Government Educational Institutions Act,
1989:
s.18 – Dismissal of service – By unaided non-Governmental
educational institution (respondent) – By unanimous resolution
passed by Board of Governors – Dismissal order challenged by
appellant-employees – Education Tribunal directed reinstatement
of the employees – Single Judge of High Court upheld the order of
reinstatement – Division Bench of High Court held that the
management lost confidence in the appellant-employees, and non-
compliance of second Proviso clause (iii) to s.18 was only a technical
defect – Relief of reinstatement was modified to compensation
equalling five years salary on the basis of last pay and allowances
drawn by them on the date of termination of service together with
all retiral benefits – Appeal by the employees – Held:In the case of
private institution, relationship between the management and the
employees is contractual in nature – Relationship between the
parties is one of contract – Conduct of the appellant-employees
have resulted in loss of confidence – There can be no question of
reinstatement in such case – The only remedy is by determining the
compensation as there was violation of provisions of s.18 in not
obtaining consent of Director of Education in writing –
Compensation amount is enhanced.
Allowing
the appeals, the Court
HELD: 1. Persons employed in educational institutions right
from Class IV staff to the highest level have a far greater
responsibility on account of the nature of activity which takes
place in these institutions – Education.  There are students of all
ages, starting from younger ones to older teenagers, who are
studying and living in these campuses.  It is a different kind of
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‘Gurukul’.  Thus, anything which is done, as would cause an
adverse impact on the mind of these young people, is something
which cannot be approved, even if it is claimed as a right to make
certain demands. The mode and methodology of making demands
in these educational institutions cannot be at par with an industrial
establishment, where workmen agitate for their rights.  This is
also in the background of the Management apparently claiming
that they were not averse to the principal demand of bonus, but
that they were waiting for the necessary Government decision,
in that behalf. [Para 16]  [890-D-F]
2.1 There was a complete lack of confidence in the
employees, by the Board of Governors.  The decision by the Board
of Governors, which is really the Managing Committee as defined
under Section 18 of the Rajasthan Non-Government Educational
Institutions Act, 1989 was a unanimous one as provided in sub-
clause (iii) of the second proviso to Section 18 of the said Act,
and even the required salary was paid, albeit in two instalments.
However, the Management did commit a legal default in not
obtaining the consent of the Director of Education in writing. The
College in question is a recognised institution but is not financially
aided in any manner by the Central or the State Government.
[Para 18]  [891-B-C, D]
2.2  In the case of private unaided educational institutions,
its essence is in the autonomy that the institution
must enjoy in
its management and administration.  Thus, while in a government-
aided institution, the Government may have a greater say in the
administration, while in the case of unaided institutions, maximum
autonomy in day-to-day administration is to be with the private
unaided institution.  In the case of a private institution, the
relationship between the management and the employees is
contractual in nature.  The facts of the present case are covered
by the master-servant relationship.  The relationship between
the parties is one of contract.  The present case is one where the
conduct of the appellants cannot be said to be such that would
not result in loss of confidence. [Paras 19, 22 and 27] [891-G;
892-B-C; 894-E-F; 897-C]
2.3 There can be no question of reinstatement in such a
case, but the only remedy is by determining the compensation to
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be paid to the appellants, in view of the Management not having
complied with the legal requirement of obtaining the consent of
the Director of Education in writing. [Para 18]  [891-E]
2.4 The principle of awarding adequate compensation in the
form of back-wages, keeping in mind aggravating and mitigating
circumstances would, thus, have to be observed.  The amount
cannot be measly, nor can it be a bonanza.  The High Court, in its
wisdom, awarded the compensation of five (5) years’ back-wages
on the last pay drawn.  Not only that, an additional benefit was
conferred by providing for provident fund and retiral dues, to be
calculated on the premise as if the services would be continued
till the appellants attained the age of superannuation. Such
principle cannot be said to be fallacious or wrong, so as to call for
interference.  However, it would not be appropriate to determine
the amount on the basis of the last pay and allowances drawn.
The calculation should be based on the actual pay and allowances
liable to be drawn for the years in question, dependent on the
period for which this amount is to be calculated. [Paras 30, 31
and 32]   [898-B-E]
2.5 The Court is inclined to enhance the compensation a
little more, and grant damages in the form of salary and allowances
payable for a period of eight (8) years, of the actual amounts, in
both the cases, after adding the respective provident fund amounts
and other retiral dues while simultaneously deducting
electricity,
water and occupation charges, etc., as calculated by the
management, as per the impugned order of the Division Bench.
To put a quietus to this long-drawn dispute, the amounts of
compensation are quantified and fixed at Rs. 25 lakhs, in the case
of appellant ‘K’ and at Rs. 18 lakhs in the case of appellant ‘J’.
[Para 35]  [899-B-C]
2.6 The Court is not inclined to grant future salary and
allowances to appellant ‘K’, merely because he has not been
granted reinstatement, with further years of his service still
remaining.  Paying future salary and allowances, in cases of such
non-reinstatement of an employee, would amount to conferring a
bonanza on an employee, and would not lead to compensation
per an acceptable formula. [Para 36]  [899-D-E]
KAILASH SINGH v. THE MANAGING COMMITTEE, MAYO
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T.M.A. Pai Foundation & Ors. v. State of Karnataka &
Ors. (2002) 8 SCC 481 : [2002] 3 Suppl. SCR 587;
Sirsi Municipality v. Cecelia Kom Francis Tellis (1973)
1 SCC 409 : [1973] 3 SCR 348 – followed.
Vidya Ram Misra v. Managing Committee, Shri Jai
Narain College (1972) 1 SCC 623 : [1972] 3 SCR 320;
S.S. Shetty v. Bharat Nidhi Ltd. [1958] SCR 442; Raju
Chand v. Zonal Director Nehru Yuva Kendra Sangathan,
Chandigarh & Ors. (2016) 14 SCC 534; O.P. Bhandari
v. Indian Tourism Development Corporation Ltd. (1986)
4 SCC 337 : [1986] 3  SCR 923 – relied on.
Deepali Gundu Surwase v. Kranti Junior Adhyapak
Mahavidyalaya (D.ED.) & Ors. (2013) 10 SCC 324 :
[2013] 9 SCR 1; J.K. Synthetics Ltd. V. K.P. Agrawal &
Anr. (2007) 2 SCC 433 : [2007] 2 SCR 60; Hindustan
Tin Works Private Limited v. Employees of Hindustan
Tin Works Private Limited (1979) 2 SCC 80 : [1979]  1
SCR 563; Surendra Kumar Verma v. Central Government
Industrial Tribunal-cum-Labour Court, New Delhi
(1980) 4 SCC 443; Central Academy Society v.
Rajasthan Non-Government Educational Institutions
Tribunal, Jaipur & Ors. 2010 (3) ILR (Raj) 450 –
referred to.
Case Law Reference
2010 (3) ILR (Raj) 450
referred to
Para 9
[2002] 3 Suppl. SCR 587
referred to
Para 9
[1972] 3 SCR 320
relied on
Para 20
[1973] 3 SCR 348
relied on
Para 21
[1986] 3 SCR 923
referred to
Para 24(i)
[2013] 9  SCR 1
referred to
Para 24(ii)
[2007] 2 SCR 60
referred to
Para 24(ii)
[1979] 1 SCR  563
referred
to
Para 24(ii)
(1980) 4 SCC 443
referred to
Para 24(ii)
[1958] SCR 442
relied on
Para 25(i)
(2016) 14 SCC 534
relied on
Para 25(iii)
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6409
of 2017.
From the Judgment and Order dated  03.10.2013 of the High Court
of Judicature for Rajasthan, Jaipur Bench, Jaipur in D. B. Special Appeal
No. 592 of 2002.
WITH
C.A. No. 6410/2017
Colin Gonsalves, K. N. Bhatt, Sr. Advs., Prashant Bhushan, Govind
Jee, Devesh Agnihotri, T. Sudhakar, Omannakuttan KK, Ms. Pragya P.
Singh, Ms. Jyoti Mendiratta, Anuj Bhandari, Manmeet Kapur, Ms. Ruchi
Kohli, Yash Mishra, Ms. Nidhi Jaswal, Sarad Kumar Singhania, Advs.
for the appearing parties.
The Judgment of the Court was delivered by
SANJAY KISHAN KAUL, J. 1. The Mayo College, Ajmer is
an educational institution founded in 1875 by Sir Richard Southwell
Bourke, the 6th Earl of Mayo, who was also the Viceroy of India from
1868 to 1872.  It is one of the oldest educational institutions which was
set up as a public boarding school, offering admission to the then elite.
This character of the institution changed in the post-independence era,
but it continued to be a prestigious centre of learning.  The Mayo College
is an unaided, non-governmental educational institution receiving no grant
either from the State or the Central Government and is affiliated to the
Central Board of Secondary Education, New Delhi, for purposes of
students taking that examination to pass the 12th standard.
2. The present unfortunate dispute involves the Managing
Committee of the School (respondent No.1), with the Principal arrayed
as the 2nd
respondent.  The dispute in the two Civil Appeals before us
concerns two employees of this institution, who have served for a number
of years, but apparently irreconcilable differences had arisen on account
of the alleged conduct of the employees.  The two employees are Kailash
Singh (Civil Appeal No.6409/2017) and Jeffry Jobard (Civil Appeal
No.6410/2017).
3. Kailash Singh began his employment as a Class IV employee
on 4.1.1984 and was promoted after a decade’s service as an LDC
from 1.2.1994 and posted in the Library.  Jeffry Jobard began his career
as an LDC itself, from 1.7.1985.  The services of both Kailash Singh
KAILASH SINGH v. THE MANAGING COMMITTEE, MAYO
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and Jeffry Jobard were terminated simultaneously on 9.11.2000, on
account of conducts attributed to them, which created an extremely
undesirable situation in the respondent school.
4. It may be appropriate to refer to the ground reality which
resulted in the termination of the appellants, though it is not of great
importance now in view of subsequent developments.  Both the
appellants, in different capacities, were associated with the activities of
Mayo College Employees Union and are stated to have been instrumental
in setting up the ‘Sangarsh Samiti Mayo College, Ajmer’, under the
banner of which they demanded bonus.  The stand of Respondent No. 1
was that such bonus was payable only as per the orders of the Government
and the Board of Governors was willing to consider the same, subject to
such orders being passed.  The Sangarsh Samiti organised protest
meetings at the gate of the Mayo College on 19.10.2000 and resolved to
hold a general meeting and dharna on 22.10.2000, on the issue of non-
grant of bonus. Additionally, a threat was held out to go on a general
strike from 23.10.2000, if their demands were not met.  The Samiti,
steered by the appellants, started with their movement on 20.10.2000,
and on 22.10.2000, a general notice was issued to all employees, reiterating
the stand of the establishment that the Board of Governors was awaiting
the decision of the Government.  The employees were warned that any
such
“movement” was totally illegal because no employees’ union had
given any legal notice in that behalf, and a warning to not tolerate
absenteeism on 23.10.2000 and 24.10.2000 was held out.  Since the
Board was awaiting the announcement by the Government, it was
informed to the workers that the management would take a call on the
issue on 23.10.2000, and that the workers should not indulge in any
disruptive activity.
5. The appellants, despite the same, are stated to have gone ahead
with their threat, and at the time when the Annual Function of the Mayo
College was being held on 23/24.10.2000, instigated other staff members
not to go to work and created disturbances, causing grave embarrassment
to the Institution.  It appears that loudspeakers were used and
inappropriate adjectives were used for the management, so much so
that the traditional dinner scheduled for 24.10.2000 had to be cancelled,
resulting in a loss of face for the management.
6. It is the aforesaid incidents which led to the show cause notice
being issued to both the appellants on 3.11.2000 to which they replied on
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6.11.2000.  The appellants defended their actions by claiming that they
had a right to organise dharnas and protests, as a constitutional right,
and that strike and sloganeering should not be stopped.  The adjectives
used of Murdabad, etc. are adjectives of common parlance in such
agitations and cannot be said to be derogatory, and that a proper inquiry
should be held qua their conduct.  The non-payment of bonus was claimed
to be an “administrative fanaticism”.
7. A unanimous resolution was passed by the Board of Governors
on 7/8.11.2000 to terminate the services of the appellants, and they were
so dismissed on 9.11.2000 by issuance of letters of the even date.  It
may be noted that in a subsequent communication, Jeffry Jobard, vide
letter dated 14.11.2000 sought to slightly back-track from the issue by
claiming that he was not part of the Samiti, and that at the relevant time
was, in fact, a mere spectator of the meetings.
8. The termination of the services of the appellants resulted in
their approaching the Educational Tribunal, set up under the Rajasthan
Non-Government Educational Institutions Act, 1989 (hereinafter referred
to as the ‘said Act’).  The crucial aspect on which the Management
erred was the non-compliance of Section 18, which reads as under:
“18. Removal, dismissal or reduction in rank of
employees.- Subject to any rules that may be made in this behalf,
no employee of a recognised institution shall removed, dismissed
or reduced in rank
unless he has been given by the management
a reasonable opportunity of being heard against the action
proposed to be taken:
Provided that no final order in this regard shall be passed unless
prior approval of the Director of Education or an officer authorised
by him in this behalf has been obtained:
Provided further that this section shall not apply, -
(i) to a person who is dismissed or removed on the ground of
conduct which led to his conviction on a criminal charge, or
(ii) where it is not practicable or expedient to give that employee
an opportunity of showing cause, the consent of Director of
Education has been obtained in writing before the action is taken,
or
KAILASH SINGH v. THE MANAGING COMMITTEE, MAYO
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(iii) Where the managing committee is of unanimous opinion that
the services of an employee cannot be continued without
prejudice to the interest of the institution, the  services of such
employee are terminated after giving him six months’ notice or
salary in lieu thereof and the consent of the Director of Education
is obtained in writing.”
9. When we say that the Management erred, it is so, as, in any
eventuality, the consent of the Director of Education had to be obtained
in writing, which was not so obtained, which proved fatal to the
Management. We may add that insofar as the first proviso to Section 18
of the said Act is concerned, a Full Bench of the Rajasthan High Court,
in Central Academy Society v. Rajasthan Non-Government
Educational Institutions Tribunal, Jaipur & Ors.1 opined that for an
unaided institution the said proviso would not apply in view of the law
enunciated in the case of T.M.A. Pai Foundation & Ors. v. State of
Karnataka & Ors.2.  However, even in case of institutions like Mayo
College (unaided institution), the second proviso clause (iii) stared the
management in the face; that while in case of a unanimous opinion of
the Managing Committee (Board of Governors in the present case), the
services of employees could be terminated when such services were
prejudicial to the interest of the institution, they were required to be
given six (6) months’ notice or salary in lieu thereof and the consent
of
the Director of Education had to be obtained in writing.  The appellants
were paid three (3) months’ salary initially and subsequently the rest of
the amount was deposited in their bank accounts, but the consent of the
Director of Education was not obtained.
10. The aforesaid position led to an adverse order by the Tribunal
on 10.1.2002.  The Management approached the High Court and the
learned Single Judge, vide judgment dated 16.7.2002, referring to Section
18 of the said Act held that the same was not complied with and even
otherwise the relationship between the parties could not be said to have
been strained beyond the point of no return.  Thus, the direction of the
Tribunal for reinstatement was upheld.
11.  The aforesaid took the battle to the Division Bench, with the
Management preferring an appeal, where it was opined that this was a
case where the Management had lost confidence in the appellants, that
1 2010 (3) ILR (Raj) 450.
2 (2002) 8 SCC 481
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there had been a unanimous decision of the Board, but the consent of
the Director of Education had not been obtained and, thus, there was
only a technical defect.  In terms of this judgment dated 3.10.2013, the
relief was modified to compensation equalling five (5) years’ salary on
the basis of last pay and allowances drawn by them on the date of
termination of their services, together with provident fund and all retiral
benefits by construing them to be otherwise in service till they attained
the age of superannuation. It may also be noted here that by that date
Jeffry Jobard had superannuated on 30.9.2013.  These two persons have
apparently continued to occupy the premises, and have used the civic
facilities without paying charges. Thus, the Division Bench also opined
that they must vacate the premises within a period of one (1) month of
such payment being made.
12. The Management of Mayo College reconciled itself to this
verdict and did not prefer any appeal. However, the appellants were
aggrieved by the quantification of compensation, in both the cases, while
in case of Kailash Singh, even in respect of non-restoration of his
employment.
13. We have heard learned senior counsel/counsel appearing for
the parties.
14. On behalf of the appellants, an impassioned plea was made
that they have been unjustly deprived of their employment and must be
re-employed and fully compensated for the same. By claiming full
compensation, it was pleaded that whatever be
the total benefits payable
right till the age of superannuation must be paid, in the case of Jeffry
Jobard, while in the case of Kailash Singh, he should be paid till date and
should be re-employed, as his services would continue till 2026. The
monetary compensation to the fullest extent was claimed on the basis of
judicial pronouncements that full back-wages should be the rule.  On the
other hand, learned senior counsel for the Management pleaded that in a
prestigious educational institution, the environment cannot be permitted
to be vitiated in this fashion by the appellants, who behaved irresponsibly
causing grave damage to the reputation of the institution.  It was pleaded
that the principles applicable to a factory or an industrial establishment
cannot be made applicable to an educational institution, insofar as the
extent of discipline is concerned, and the mode and manner of protests
cannot be identically based.  The effect of the conduct of the appellants
would have a direct impact on the young students, who are studying in
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the institution, and the embarrassment was aggravated by the presence
of the parents on the special day.  It was further pleaded that a technical
non-compliance with the provision of the said Act cannot be extended to
this extent, and that it is because of such technical non-compliance that
the Management had, in principle, agreed to accept the verdict of the
Division Bench, by not agitating the matter further.  He also submitted
that the compensation awarded by the Division Bench was adequate,
and that in any case, an amount of Rs.5 lakhs each, towards the award
amount had already been paid in pursuance to interim orders passed by
this Court on 1.5.2017.
15.  Both sides cited certain judicial precedents in support of their
case, which we shall proceed to discuss hereafter.
16. On having delved into the submissions of both sides, as well
as perusing the judgments which are before us, we cannot lose sight of
the fact that we are dealing with an educational institution of great
eminence.  Persons employed in educational institutions right from Class
IV staff to the highest level have a far greater responsibility on account
of the nature of activity which takes place in these institutions – Education.
There are students of all ages, starting from younger ones to older
teenagers, who are studying and living in these campuses.  It is a different
kind of ‘Gurukul’.  Thus, anything which is done, as would cause an
adverse
impact on the mind of these young people, is something which
we find difficult to approve, even if it is claimed as a right to make
certain demands.  The mode and methodology of making demands in
these educational institutions cannot be at par with an industrial
establishment, where workmen agitate for their rights.  This is also in
the background of the Management apparently claiming that they were
not averse to the principal demand of bonus, but that they were waiting
for the necessary Government decision, in that behalf.
17. On the threats being held out by the so-called Sangarsh
Samiti, the Management had warned and cautioned the employees
against creating a scene, especially when there were important functions
on the anvil, where the parents of the wards would be participating.  We
may add that an annual day is always an important day in an educational
institution, with active participation of parents.  It is of great significance
even to the passing out batch of students, and the sensitivity of the parents
and children should have been kept in mind while asserting such rights,
by the employees.  This appears not to have been done.
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18. We may hasten to add that, of course, in the given situation no
inquiry appears to have been done, but the response of the appellants to
the show cause notice issued by the Board of Governors, itself shows as
to what transpired and reveals the stand of the appellants.  All this led to
a complete lack of confidence in the employees, by the Board of
Governors.  The decision by the Board of Governors, which is really the
Managing Committee as defined under Section 18 of the said Act, was
a unanimous one as provided in sub-clause (iii) of the second proviso to
Section 18 of the said Act, and even the required salary was paid, albeit
in two instalments.  However, the Management did commit a legal default
in not obtaining the consent of the Director of Education in writing, which
has caused this long drawn legal battle.  At the cost of repetition, we
may re-emphasise that the Mayo College is a recognised institution but
is not financially aided in any manner by the Central or the State
Government, and the first proviso to Section 18 of the said Act has
already been read down, and in our opinion, rightly so, in view of the 11
Judges Bench decision in T.M.A. Pai Foundation & Ors. v. State of
Karnataka & Ors.,3 dealing exclusively with educational institutions,
and a portion thereof, separately dealing with unaided educational
institutions, as pointed out by learned senior counsel for the Management,
Mr. K.N. Bhatt, under the heading of “Private Unaided
Non-Minority
Educational Institutions”. We have no hesitation in concluding that there
can be no question of reinstatement in such a case, but the only remedy
is by determining the compensation to be paid to the appellants, in view
of the Management not having complied with the legal requirement of
obtaining the consent of the Director of Education in writing.
19. We seek to buttress our conclusion with the following judicial
pronouncements.  In a seminal judgment in T.M.A. Pai Foundation &
Ors. v. State of Karnataka & Ors.,4 an essential distinction is sought to
be made in the case of private unaided educational institutions, opining
that its essence is in the autonomy that the institution must enjoy in its
management and administration. Thus, while in a government-aided
institution, the Government may have a greater say in the administration,
while in the case of unaided institutions, maximum autonomy in day-to-
day administration is to be with the private unaided institution.  This was
held to be equally applicable to the teaching faculty and the members of
3 Supra.
4 Supra.
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staff, for maintaining excellence in education. In para 63 of the said
judgment, the Bench took note of the grievance that wherever cases of
misconduct are committed by teachers and members of the staff, for
which disciplinary action is taken, the rules framed by the Government
are against the Management, which inter alia require prior permission
from a governmental authority, before initiation of disciplinary
proceedings.  The most relevant observation in para 64 is “In the case of
a private institution, the relationship between the management and the
employees is contractual in nature.” We may, however, add that
thereafter the importance of a domestic inquiry, in accordance with the
principles of natural justice, has also been emphasised.  But then, in the
present case, the show cause notice and the response to it, themselves
seem to lend credence to the allegation of inappropriate behaviour of the
appellants.  The subsequent endeavour of Jeffry Jobard, through a
communication to back-out, cannot really aid him to a large extent.
20. We may also note that were the appellants to file a civil suit,
the evidence would have been recorded, and the matter gone into a
greater detail in a factual context.  This is relevant from both aspects of
seeking restoration of services and quantification of damages.  The
significant aspect is that there should not be specific performance of a
master-servant contract of service, and
damages should be the
appropriate remedy.  We may refer to Vidya Ram Misra v. Managing
Committee, Shri Jai Narain College,5 where in para 4, it was observed
as under:
“4. It is well settled that, when there is a purported termination
of a contract of service, a declaration that the contract of service
still subsisted would not be made in the absence of special
circumstances, because of the principle that courts do not
ordinarily enforce specific performance of contracts of service
(see Executive Committee of U.P. State Warehousing
Corporation Ltd. v. Chandra Kiran Tyagi [AIR 1970 SC 1244 :
(1970) 2 SCR 250 : (1970) 1 SCJ 790] and Indian Airlines
Corporation v. Sukhdeo Rai [AIR 1971 SC 1828] ). If the master
rightfully ends the contract, there can be no complaint. If the
master wrongfully ends the contract, then the servant can pursue
a claim for damages. So even if the master wrongfully dismisses
the servant in breach of the contract, the employment is effectively
5  (1972) 1 SCC 623.
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terminated. In Ridge v. Baldwin [(1965) 2 WLR 935 (HL)] Lord
Reid said in his speech:
“The law regarding master and servant is not in doubt. There
cannot be specific performance of a contract of service, and
the master can terminate the contract with his servant at any
time and for any reason or for none. But if he does so in a
manner not warranted by the contract he must pay damages
for breach of contract. So the question in a pure case of master
and servant does not at all depend on whether the master has
heard the servant in his own defence; it depends on whether
the facts emerging at the trial prove breach of contract. But
this kind of case can resemble dismissal from an office where
the body employing the man is under some statutory or other
restriction as to the kind of contract which it can make with its
servants, or the grounds on which it can dismiss them.”
21. The aforesaid view is also adopted by the Constitution Bench
in Sirsi Municipality v. Cecelia Kom Francis Tellis6.  We may usefully
extract the observations in the following paragraphs:
“15. The cases of dismissal of a servant fall under three broad
heads. The first head relates to relationship of master and servant
governed purely by contract of employment. Any breach of
contract in such a case is enforced by a suit for wrongful dismissal
and damages. Just as a contract of employment is not capable
of specific performance similarly breach of contract of
employment is not capable of
finding a declaratory judgment of
subsistence of employment. A declaration of unlawful termination
and restoration to service in such a case of contract of employment
would be indirectly an instance of specific performance of
contract for personal services. Such a declaration is not
permissible under the Law of Specific Relief Act.
16. The second type of cases of master and servant arises under
Industrial Law. Under that branch of law a servant who is
wrongfully dismissed may be reinstated. This is a special
provision under Industrial Law. This relief is a departure from
the reliefs available under the Indian Contract Act and the Specific
Relief Act which do not provide for reinstatement of a servant.
6 (1973) 1 SCC 409
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17. The third category of cases of master and servant arises in
regard to the servant in the employment of the State or of other
public or local authorities or bodies created under statute.
18. Termination or dismissal of what is described as a pure
contract of master and servant is not declared to be a nullity
however wrongful or illegal it may be. The reason is that dismissal
in breach of contract is remedied by damages. It (sic.)7 the case
of servant of the State or of local authorities or statutory bodies,
courts have declared in appropriate cases the dismissal to be
invalid if the dismissal is contrary to rules of natural justice or if
the dismissal is in violation of the provisions of the statute. Apart
from the intervention of statute there would not be a declaration
of nullity in the case of termination or dismissal of a servant of
the State or of other local authorities or statutory bodies.
19. The courts keep the State and the public authorities within
the limits of their statutory powers. Where a State or a public
authority dismisses an employee in violation of the mandatory
procedural requirements or on grounds which are not sanctioned
or supported by statute the courts may exercise jurisdiction to
declare the act of dismissal to be a nullity. Such implication of
public employment is thus distinguished from private employment
in pure cases of master and servant.”
22. The facts of the present case are
covered by the master-
servant relationship, i.e., the first category.  There is no adjudication by
invocation of a reference to the Industrial Disputes Act, 1947.  Thus, the
remedy would only be in damages.
23. Now, turning to the aspect of quantification of damages, which
is the real bone of contention.  What we have to examine is whether the
approach adopted by the Division Bench and its conclusion, would give
rise to a finding that justifiable compensation has been arrived at, or
otherwise.
24. Mr. Colin Gonsalves, learned senior counsel appearing for
Jeffry Jobard and Mr. Prashant Bhushan, counsel for Kailash Singh,
have both sought to canvass that the only adequate compensation can
be full back-wages, till the date of retirement.  In this behalf, they referred
to the following judicial pronouncements:
7 To be read as ‘In’.
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(i) O.P. Bhandari v. Indian Tourism Development Corporation
Ltd.8  The factual matrix is dealing with the employer-employee
relationship in a public sector undertaking to which Article 12 of
the Constitution of India is attracted.  It was observed that
reinstatement may not invariably follow as a consequence of
holding that an order of termination of service of an employee is
void.  In that context, it was observed that reinstatement should
be the rule for the ‘blue collar’ workmen and ‘white collar’
employees, other than those belonging to the managerial or to a
similar high level cadre, and compensation in lieu thereof, is an
exception.  However, this judgement also notes that the
relationship between the parties, having been strained beyond a
point of no return, granting the salary and allowances which would
accrue to the employee till the future date of superannuation
was held to be too high a compensation.  The object, it was
observed, would not be for the Court to confer a bonanza on the
employee, but to compensate him by adopting the appropriate
formula.
(ii) Deepali Gundu Surwase v. Kranti Junior Adhyapak
Mahavidyalaya (D.ED.) & Ors.9: Full back-wages along with
reinstatement and continuity of service were held applicable in
cases where the employee or workman was not at all guilty of
any misconduct, especially where it had been clearly averred
that the employee was not gainfully employed.  The matter
pertains to a teacher with regards to her
contractual appointment
where principles of Industrial Disputes Act were imported in the
award of damages.
 The attention of the Court was also drawn to para 38.7, where
it recorded the observations made in J.K. Synthetics Ltd. V.
K.P. Agrawal & Anr.10 that on reinstatement the employee/
workman cannot claim continuity of service, as a right, is contrary
to the ratio of the judgments of three Judge Benches in
Hindustan Tin Works Private Limited v. Employees of
Hindustan Tin Works Private Limited11 and Surendra Kumar
Verma v. Central Government Industrial Tribunal-cum-
8 (1986) 4 SCC 337
9 (2013) 10 SCC 324
10 (2007) 2 SCC 433
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Labour Court, New Delhi12, and thus, cannot be treated as good
law.
 The judgment emphasises on the restoration of an employee
to the position held before dismissal, removal or termination from
services, once the employer’s action has been found to be illegal.
Since the employee is deprived of sustenance for himself and
his family, it has been observed that the employee should get full
back-wages unless it can be proved that the employee was
gainfully employed during that period.  In order to support this
proposition, various judicial pronouncements have been referred
to, but which are in the context of adjudication under the Industrial
Disputes Act, 1947.  The proposition laid out, thus, is that where
there is a wrongful termination of service, reinstatement with
continuity of service and back-wages is the normal rule. A litigant
ought not to be penalised, it was so observed, for the delays of
the system.  However, mitigating and aggravating aspects, such
as length of service and nature of misconduct can be taken into
account while determining so.
25. We may now turn to the cases relied upon by the learned
senior counsel for the respondents:
i. S.S. Shetty v. Bharat Nidhi Ltd.13: The position obtaining in
the ordinary law of master-servant was clarified as one of
established practice that where a master wrongfully dismisses
his servant, he is bound to pay him such damages as would
compensate him for the wrong that
he has sustained.  In case
the employment is for a specific term, the servant would, in that
event be entitled to damages, the amount of which would be
measured prima facie and subject to the rule of mitigation in the
salary of which the master had deprived him.
ii. Sirsi Municipality v. Cecelia Kom Francis Tellis:14 The
judgment has already been discussed as aforesaid in respect of
dismissal in contractual matters.
iii. Raju Chand v. Zonal Director Nehru Yuva Kendra
Sangathan, Chandigarh & Ors.:15 One of us (Kurian, J.) has
12 (1980) 4 SCC 443
13 1958 SCR 442
14 Supra.
15 (2016) 14 SCC 534
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been a party to this judgment, where in case of a driver on daily
wages (or temporary basis), the management lost confidence in
him, and monetary compensation was held to be appropriate
remedy.
26. In the conspectus of the aforesaid discussion, we now turn to
the crucial issue of adequacy of compensation to be awarded to the
appellants.
27. We have already noticed that by the very nature of the
respondent-Institution, which is completely unaided, and keeping in mind
the principle enunciated in T.M.A. Pai Foundation v. State of
Karnataka,16 the only conclusion is that the relationship between the
parties is one of contract.  The present case is one where the conduct of
the appellants cannot be said to be such that would not result in loss of
confidence.  The factual matrix in the context of the show cause notice
and the replies to it itself clarified the position.  However, the issue remains
that the respondent-Institution failed in the legal compliance of the second
proviso to Section 18 of the said Act and must bear the consequences of
the same.
28. It is also true that the direction of attack, on behalf of the
appellants, in the proceedings in the courts below was qua restoration
of their services.  No clarity has emerged on the issue, in the absence of
any evidence led, on the employment, if any, of these appellants.  But no
affidavit has also really been filed stating that they were not gainfully
employed.  We may note that both the appellants have
been residing in
the accommodation provided by the respondent-Institution, practically
free of charge.
29. We cannot lose sight of the fact that the present case is not
one under the Industrial Disputes Act, 1947.  This in turn would have
required factual matrix to be established in different aspects, which is
not what has happened.  Thus, the principles of the Industrial Disputes
Act, 1947 cannot be, ipso facto, imported into a factual matrix of the
present nature, for, as a consequence of the illegality in the termination
of the services of the appellants, compensation has to be granted.  The
methodology of calculation would be based on the principle of wrongful
termination of an employee, under the master-servant relationship.  This,
in turn, would import into it the requirement of the appellants endeavouring
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to mitigate their losses.  In fact, in this context, we may observe that the
claim for back-wages has apparently been raised for the first time only
in the present proceedings, arising from the manner in which the High
Court dealt with the matter, where it granted some compensation.
30. The principle of awarding adequate compensation in the form
of back-wages, keeping in mind aggravating and mitigating circumstances
would, thus, have to be observed.  The amount cannot be measly, nor
can it be a bonanza.  The High Court, in its wisdom, awarded the
compensation of five (5) years’ back-wages on the last pay drawn.  Not
only that, an additional benefit was conferred by providing for provident
fund and retiral dues, to be calculated on the premise as if the services
would be continued till the appellants attained the age of superannuation.
31. We have no reason to find that such an aforesaid principle
can be said to be fallacious or wrong, so as to call for our interference,
except to the extent discussed hereafter.
32. We are firstly of the view that it would not be appropriate to
determine the amount on the basis of the last pay and allowances drawn.
The calculation should be based on the actual pay and allowances liable
to be drawn for the years in question, dependent on the period for which
this amount is to be calculated.
33. In order to better understand, and come to an appropriate
figure, we had asked both the
parties to give their calculations. The
Management has given its calculations based on the impugned judgment,
which includes the salary calculations for five (5) years on the last pay
and allowances drawn, while gratuity and provident fund benefits are
taken till the date of retirement.  There are deductions made on account
of electricity dues, house rent and certain other smaller accounts.  On
the other hand, the appellants have given their broad calculations, taking
the monthly emoluments payable in different years, right up to date, and
even beyond that if the employment was to continue, as in the case of
Kailash Singh.
34. We are not going into the exactitude of the calculations, but,
broadly speaking, the final amount payable to Jeffry Jobard, as per the
impugned order, would be approximately Rs.7.75 lakhs.  If the
emoluments, as opined by us as aforesaid, are taken into account, for
five (5) years, it would be approximately Rs.9.75 lakhs.  In the case of
Kailash Singh, the amount as per the calculations of the Management
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would be approximately Rs.21 lakhs, while calculated as aforesaid would
be approximately in the same range.
35. On having carefully examined the aforesaid issue and the
calculations before us, we are inclined to enhance it a little more, and
grant damages in the form of salary and allowances payable for a period
of eight (8) years, of the actual amounts, in both the cases, after adding
the respective provident fund amounts and other retiral dues while
simultaneously deducting electricity, water and occupation charges, etc.,
as calculated by the management, as per the impugned order of the
Division Bench. To put a quietus to this long-drawn dispute, we have
quantified and fixed the amounts. The net impact is an all-inclusive
compensation of Rs. 25 lakhs, in the case of Kailash Singh and Rs. 18
lakhs in the case of Jeffry Jobard.  Needless to say, the amount of Rs.5
lakhs, already paid to the appellants, in pursuance to the directions of
this Court, is liable to be adjusted from the said amounts payable.
36. We are not inclined to grant future salary and allowances to
Kailash Singh, merely because he has not been granted reinstatement,
with further years of his service still remaining.  In fact, in O.P. Bhandari
v. Indian Tourism Development Corporation Ltd.,17 this plea of paying
future salary and allowances, in cases of such non-reinstatement of an
employee, was rejected as it would amount to conferring a bonanza on
an employee, and would not lead to
compensation per an acceptable
formula.
37. We are, thus, inclined to modify the impugned order to the
aforesaid extent, and direct the respondent-Institution to pay the
aforementioned amounts within a maximum period of two (2) months
from today, after adjusting the amount already paid.
38. The appellants are required to vacate the premises within a
maximum period of one (1) month of the amount being so paid.
39. The appeals are accordingly allowed, leaving the parties to
bear their own costs.
Kalpana K. Tripathy                                                                               Appeals allowed.
17  Supra.
KAILASH SINGH v. THE MANAGING COMMITTEE, MAYO
COLLEGE, AJMER & ORS. [SANJAY KISHAN KAUL, J.]