Case: H.L. Trehan And Ors. Etc Vs. Union Of India And Ors. Etc

2. The Caltex [Acquisition of Shares of Caltex (India) Ltd. and of the Undertaking in India of Caltex (India) Ltd.] Act 17 of 1977, hereinafter referred to as the Act, was enacted by the Union Parliament and came into force with effect from April 23, 1977. The Act provides for the acquisition of shares of CORIL and for the acquisition and transfer of the right, title and interest of Caltex (India) Ltd. in relation to its Undertakings in India with a view to ensuringd distribution and utilisation of petroleum products3. Under Section 3 of the Act, the shares in the capital of the CORIL stood transferred to and vested in the Central Government on the appointed day being December 30, 1976. Under Section 5, the right, title and interest of Caltex (India) Ltd. in relation to its Undertakings in India stood transferred to and vested in the Central Government on the appointed day. Section 9 of the Act provides that the Central Government may be a notification direct that the right, title and interest and the liabilities of Caltex (India) Ltd. in relation to any of its Undertakings in India shall, instead of continuing to vest in the Central Government, vest in the Government Company either on the date of the notification or on such earlier or later date not being a date earlier than the appointed day, as may be specified in the notification. Section 11(2) provides that subject to rules made in this behalf under Section 23, every wholetime officer or other employee of CORIL would on the appointed day continue to be an officer or other employee of CORIL on the same terms and conditions and with the same rights to pension, gratuity and other matters as are admissible to him immediately before that day and shall continue to hold such office unless and until his employment under CORIL is duly terminated or until his remuneration and conditions of service are duly altered by that company4. The Chairman of the Board of Directors of CORIL issued the impugned circular dated March 8, 1978, inter alia, stating therein that consequent upon the take over of the Caltex (India) Ltd. by the government, the question of rationalisation of the perquisites and allowances admissible to Management Staff had been under consideration of the Board for some time, and that as an interim measure, the Board had decided that the perquisites admissible to the Management Staff should be rationalised in the manner stated in the said circular5. At this stage, it may be mentioned that by the Caltex Oil Refinery (India) Ltd. and Hindustan Petroleum Corporation Ltd. Amalgamation Order, 1978 which was published in the Gazette of India, Extraordinary, dated May 9, 1978, the Undertaking of CORIL was transferred to and vested in Hindustan Petroleum Corporation Ltd. which thus became a government Company referred to in Section 9 of the Act6. After the issue of the said circular, the respondents 1 to 4, who were some of the employees of CORIL, filed a writ petition in the Delhi High Court being Civil Writ Petition No. 426 of 1978 challenging the legality and validity of the impugned order. It was submitted by the said respondents that under the said circular the terms and conditions of service of the employees of CORIL had been substantially and adversely altered to their prejudice7. At the hearing of the said writ petition before the High Court it was contended on behalf of respondents 1 to 4 that the notification issued under Section 9 of the Act vesting the management of the Undertakings of Caltex (India) Ltd. in CORIL was ultra vires subsection (1) of Section 9. It was contended that the provision ofsubsection (1) of Section11 of the Act offended against the provisions of Articles 14, 19 and 31 of the Constitution of India and, as such, it should be struck down. Further, it was contended that there was no valid classification between the contracts referred to in Section 11(1) and Section 15 of the Act. It was urged that unguided and arbitrary powers had been vested in the official bysubsection (1) of Section11 for the alteration of the terms and conditions of service of the employees. Besides the above contentions, another contention was advanced on behalf of respondent 1 to 4, namely, that the employees not having been given and opportunity of being heard before altering to their prejudice the terms and conditions of service, the impugned circular should be struck down as void being opposed to the principles of natural justice8. All the contentions except the last contention of respondents 1 to 4 were rejected by the High Court. The High Court, however, took the view that as no opportunity was given to the employees of CORIL before the impugned circular was issued, the Board of Directors of CORIL acted illegally and in violation of the principles of natural justice. In that view of the matter, the High Court quashed the impugned circular. Hence this appeal by special leave

Court's reasoning:
11. One of the contentions that was urged by respondents 1 to 4 before the High Court at the hearing of the writ petition, as noticed above, is that unguided and arbitrary powers have been vested in the official bysubsection (1) of Section11 for the alteration of the terms and conditions of service of the employees. It has been observed by the High Court that although the terms and conditions of service could be altered by CORIL, but such alteration has to be made duly as provided insubsection(2) of Section 11 of the Act. The High Court has placed reliance upon the ordinary dictionary meaning of the word duly which, according to Concise Oxford Dictionary, means rightly, properly, fifty and according to Strouds Judicial Dictionary, 4th edn., the word duly means done in due course and according to law. In our opinion, the word duly is very significant and excludes any arbitrary exercise of power under Section 11(2). It is now a well established principle of law that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a government servant without complying with the rules of natural justice by giving the government servant concerned an opportunity of being heard. Any arbitrary or whimsical exercise of power prejudicial affecting the existing conditions of service of a government servant will often against the provision of Article 14 of the Constitution. Admittedly, the employees of CORIL were not given an opportunity of hearing or representing their case before the impugned circular was issued by the Board of Directors. The impugned circular cannot, therefore, be sustained as it offends against the rules of natural justiceIn our opinion, the post decisional opportunity of hearing does not sub serve the rules of natural justice. The authority who embarks upon al hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such al opportunity. In this connection, we may refer to a recent decision of this Court in K. I. Shepherd v. Union of India ((1987) 4 SCC 431 : 1987 SCC (L&S) 438)We may now point out that the learned Single Judge for the Kerala High Court had proposed an hearing to meet the situation but that has been vacated by the Division Bench. For the reasons we have indicated, there is no justification to think of al hearing. On the other hand the normal rule should apply, It was also contended on behalf of the respondents that the excluded employees could not represent and their case could be examined. We do not think that would meet the ends of justice. They have already been thrown out of employment and having been deprived of livelihood they must be facing serious difficulties. There is no justification to throw them out of employment and then give them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action. It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose13. The view that has been taken by this Court in the above observation is that once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose. Thus, even if any hearing was given to the employees of CORIL after the issuance of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution. The High Court, in our opinion, was perfectly justified in quashing the impugned circular