Contracts not Specifically Enforceable – Section 14 | Specific Relief Act



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2. Applicability of:

The Court may enforce specific performance where the suit is for the enforcement of a contract for the construction of any building or the execution of any work on land. A bare reading of Clause (c) of Section 14 (3) shows that it has no applicability. The building contract stipulated by Clause (c) of Section 14 (3) is not the type of the contract.

3. Competent to appoint:

A power to appoint ordinarily implies a power to determine the employment. It was observed by this Court that:

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“Power to appoint ordinarily carries with it the power to determine appointment, and a power to terminate may in the absence of restrictions express or implied be exercised, subject to the conditions prescribed in that behalf by the authority competent to appoint.“

4. Compulsion of law:

Even if a person has contracted with another to perform service and there is consideration for such service in the shape of liquidation of debt or even remuneration, he cannot be forced, by compulsion of law or otherwise, to continue to perform such service, as that would be forced labour within the inhibition of Article 23. This Article strikes at every form of forced labour even if it has its origin in a contract voluntar­ily entered into by the person obligated to provide labour or service.

5. Construction of building:

Section 14(3), provides that notwithstand­ing Clause (c) of sub-section (1), the Court may enforce specific perfor­mance where the suit is for the enforcement of a contract for the construc­tion of any building or the execution of any work on land. A bare reading of Clause (c) of Section 14 (3) shows that it has no applicability. The building contract stipulated by Clause (c) of Section 14 (3) is not the type of the contract with which Court is concerned in the present case.

6. Declaratory relief:

Section 34 is enough to open the corridors of the civil Courts to admit suits filed for a variety of declaratory reliefs.

7. Denial of:

Agreement provided for sale-deed only on willingness of both parties. Further provisions made for sum to be given in case of non­performance. Since, there was no obligation on seller to complete the sale transaction, consequently, specific performance denied and the sum stipulated in the agreement with interest was directed to be paid to plaintiff.

Where the plaintiff was always ready and willing to perform her part of contract but the seller defendant had committed breach in not carrying out the terms of the agreement. The appellant had agreed to take the flat on as is where basis without claiming any reduction in purchase price for any­thing incomplete in the building. It was held that asking appellant to pay an additional sum of Rs. 40,00,000/- would be too onerous and would amount to denying her specific performance, even if the price of it had increased during the pendency of litigation.

8. Determination of:

The University Act, the Statutes and the Ordi­nances do not lay down the conditions in which the appointment of the Vice-Chancellor may be determined; nor does the Act prescribe any limita­tions upon the exercise of the power of the Chancellor to determine the employment. But once the appointment is made in pursuance of a Statute, though the appointing authority is not precluded from determining the em­ployment, the decision of the appointing authority to terminate the appoint­ment may be based only upon the result of an enquiry held in a manner consistent with the basic concept of justice and fair-play. This Court ob­served:

“It is one of the fundamental rules of our constitutional set-up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would, therefore, arise from the very nature of the function intended to be performed; it need not be shown to be super-added. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice by ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of a law and impor­tance thereof transcends the significance of a decision in any par­ticular case.”

The power to appoint a Vice-Chancellor has its source in the University Act; investment of that power carries with it, the power to determine the employment; but the power is coupled with duty. The power may not be exercised arbitrarily; it can be only exercised for good cause, i.e. in the interests of the University and only when it is found after due inquiry held in manner consistent with the rules of natural justice, that the holder of the office is unfit to continue as Vice-Chancellor.

9. Enforced:

There are three exceptions to the general rule that con­tract of service cannot be enforced, viz.:

(1) Cases falling under Article 311 of the Constitution of India;

(2) Cases covered by the industrial law, and

(3) Cases in which a statutory body acts in breach of violation of the mandatory provisions of a statute.

10. Enforcement of:

Contract for employment is not specifically en­forceable, proper remedy is to sue for damages.

The declaration sought for by the appellant herein to enforce specific performance of personal service, cannot be granted and the suit as framed is not maintainable and thereby dismissed the suit.

In Halsbury’s Laws of England, Fourth Edition, Volume 44, at page 407, it is stated:

“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 of specific performance of a contract of employment or an injunction restrain­ing a breach or threatened breach of such a contract, compel an employee to do any work or attend at any place for the doing of any work.

This 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”

The Supreme Court observed that:

“….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-recognized 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 of violation of the manda­tory provisions of the statute.”

A contract of employment cannot ordinarily be enforced by or against an employer. The remedy is to sue for damages.

In the absence of any statutory requirement, Courts do not ordinarily force an employee 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; statutory body acting in breach of statutory obliga­tions, and the like.

The respondent knew very well that his service contract was with the private management. In 1964 itself learned Munsif while dismissing the first suit had hold that his contract of employment could not specifically be enforced. He was then obliged to place his services on the market to miti­gate the damage. But he did nothing of the kind.

In 1968 he joined legal profession and he is still not out of it. He has not disclosed his professional income. In fairness he ought to have disclosed his income to the Court since it is in his personal knowledge. Instead, he seems to have urged before the High Court that the professional income is not relevant for con­sideration. The High Court while accepting the submission went a step fur­ther and observed:

“That joining the legal fraternity can never be said to be employment and could not disentitle the respondent to claim his arrears of sal­ary”. Legal profession may not be considered as an employment but the income from profession or avocation if not negligible, cannot be ignored while determining damages or back wages for payment. It must also be taken into consideration. In S.N. Saiyad v. Baroda Municipal Corporation, Baroda, AIR 1984 SC 1829, the Court gave deduction of even a small income of Rs. 150/- per month earned by the worker turned advocate while awarding backwages upon rein­statement.

In the light of all these facts and circumstances and the authorities it seems that it would be sufficient if the respondent is given salary for three years on account of damages.

Once the employer is a statutory body and is a State and in the matter of passing an order of dismissal of an employee it did not follow the manda­tory provisions of the rules and regulations and the order was passed in gross violation of principle of natural justice, then the third exception to the general principle that contract of personal service cannot ordinarily be spe­cifically enforced.

11. Enforcement of service:

Suit for declaration of continuance in service holding termination to be bad in law is not being for enforcement of service contract. Irrespective of effect nature of suit determinable on plaint. Provisions of Act not exhaustive of all kinds of specific relief. Suit outside the contours of Chapter II of the Act not precluded. However, termination, being in accordance with terms of appointment letter is justified.

12. Exception:

Where the District Co-operative Bank being authority of State had passed order dismissing employee without following manda­tory provisions of Rules and Regulations and without following principles of natural justice. Held, that declaratory suit by employee that order of his removal was illegal, null and void laid before Civil Court was maintainable notwithstanding contract of employment.

13. Expiry of period:

On expiry of period of lease, mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying ‘assent’ to the continuance of the lessee even after expiry of lease period.

14. Grant of:

On the basis of three established principles for grant of temporary injunction e.g., prima facie case, balance of convenience and irreparable loss, it would not be appropriate to interfere with the order of the High Court at the present stage of the suit and disturb the working of the mine by the new contractors who have already commenced operations from June 2003 and, an alleged, entered into business commitments for supply of iron ore to different parties in and outside India.

After considering the comparative merit of the case of either parties and their rival claims, we have formed an opinion that the High Court ought not to have granted unconditional order of temporary injunction by ignor­ing the huge investments which have been made by the old contractor to operate the mine under an existing arrangement and alleged renewal of the contract by their mutual conduct.

In the course of hearing, on behalf of the old contractor, learned Coun­sel has handed over to us in writing the proposed terms and conditions on which it seeks restoration of possession of the mine and permission to operate the same. The proposed terms suggested by the appellants have been opposed by the new contractors and their response in writing has also been placed before us.

Taking tentatively the figures mentioned by the new and old contractors in their proposed terms and responses submitted orally and in writing indicating the extent of investments and estimated profits, Supreme Court consider it appropriate to modify the impugned order of grant of temporary injunction passed by the High Court by imposing the following conditions:

(1) As a pre-condition for further operating the mine, the new con­tractors shall furnish a Bank Guarantee or a Solvent Security to the satisfaction of the Trial Court in the sum of Rupees Five Crores towards the estimated investments already made by the old contractor in the mine from the year 1984 in prospecting, developing, digging bore holes, removal of rejection, making benches, putting up infrastructural facilities, acquiring surface rights, to dump rejects, cost of shifting of school, electrification, research and development etc. The Bank guarantee or solvent security as the case may be, to the satisfaction of the trial Court shall be furnished within a period of four weeks from today.

(2) The new contractors shall, by the end of every month, deposit in the Trial Court as sum of Rupees 50/- per metric ton, on the basis of payment slips of trucks and monthly returns submitted to the statutory mine authorities, on each quantity of ore ex­tracted and exported by them, in order to reimburse, in the event of dismissal of the suit, the loss of estimated profit caused to the old contractor.

(3) The amounts aforementioned to be deposited in respect of the quantities of ore extracted and exported shall be kept by the Trial Court, when deposited, in fixed deposit in a nationalised Bank so that they earn current rate of interest. The amounts shall be paid on final decision of the suit by the Trial Court to the party held entitled to it.

(4) At the conclusion of the trial and decision of the suit, the Trial Court shall pass consequential orders for payment of the amount covered by the Bank Guarantee or solvent security and the amounts periodically deposited for the ore extracted and ex­ported in the manner directed above.

(5) As admitted by the parties, the quantity of iron ore already ex­tracted during period of working by the old contractor is stacked at the site in the mining area. Without going into the dispute of extent of quantity of iron ore extracted and stacked at site and its value, we direct that the old contractor “shall be allowed to collect and transport the same in accordance with the then ex­isting terms of the written contract between the old contractor and the mining-lease-owner.

In collecting and transporting the aforementioned quantity of iron ore, the old contractor shall follow not only the terms of the contract but also all statutory provisions and rules regulating the extraction and transporta­tion of minerals. It shall also submit necessary statutory returns and clear dues, if any, of statutory Authorities in accordance with law. In order of allow the old contractor to take away the iron ore extracted by it and stacked at the site, the trial Court shall appoint a Commissioner to be assisted by a statutory min­ing authority to supervise the work.

The decision in Vine v. National Dock Labour Board, 1957 AC 488, illustrates a case where the Court would grant a declaration of nullity That was a case of lack of power in the Board to delegate its disciplinary function to a committee which dismissed the employee, an action which was held ultra vires, and therefore, a nullity.

A similar consequence also follows where the appointment is to an office or status, such as the Vice-Chancellorship of a University, where this Court held that the tenure of office held by the appellant could not be terminated without informing him of the allegations made against him and without hearing him or giving him an opportunity to give an explanation.

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; statutory body acting in breach of statutory obligations, and the like.

The Supreme Court on aspects of personal contract observed as fol­lows:

“…..an application for mandamus will not lie for an order for rein­ statement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a Company towards its workmen or to resolve any private dispute.”

It was further observed that the Company being a non-statutory body incorporated under the Companies Act, no statutory or public duty was imposed on it, which could be secured by means of mandamus.

A declaration to enforce a contract of personal service according to the above decisions is not to be normally granted and the well-recognised ex­ceptions have been noted. There may be cases in which no enforcement of a contract of personal service is prayed for as a relief, but a case may proceed on the basis that the dismissal could only be done in terms of a statute and as that had not been done it was a nullity from which the result followed that the respondent continued in service. In considering the case of the High Commissioner for India v. I.M. Lall, AIR 1948 PC 121, the Su­preme Court in the Delhi University’s case, AIR 1958 SC 1050, observed:

“All that the Judicial Committee did in this case was to make a dec­laration of the statutory invalidity of an act which is entirely different from enforcing a contract of personal service.”

Where suit for declaration of transfer order as void was filed and also for declaration that the plaintiff continued in service, reliefs amounting to enforcement of contract of personal service could not be granted.

15. Grant of damages:

The regulations contain the terms and condi­tions which govern the relationship between the Corporation and its em­ployees. Though made under the power conferred by the statute, they merely embody the terms and conditions of service in the Corporation but do not constitute a statutory restriction as to the kind of contracts which the Cor­poration can make with its servants or the grounds on which it can termi­nate them.

That being so, and the Corporation having undoubtedly the power to dismiss its employees, the dismissal of the respondent was with jurisdic­tion, and although it was wrongful in the sense of its being in breach of the terms and conditions which governed the relationship between the Corpo­ration and the respondent it did subsist. The present case, therefore, did not fall under any of the three well-recognized exceptions, and therefore, the respondent was only entitled to damages and not to the declaration that his dismissal was null and void.

16. Holding over:

In the instant case, there is a renewal clause in the contract prescribing a particular period and mode of renewal which was ‘an agreement to the contrary’ within the meaning of Section 1 16 of the Trans­fer of Property Act. In the face of specific Clauses (7) and (9) for seeking renewal there could be no implied renewal by ‘holding over’ on mere ac­ceptance of the rent offered by the lessee. In the instant case, option of renewal was exercised not in accordance with the terms of renewal clause that is before expiry of lease.

It was exercised after expiry of lease and the lessee continued to remain in use and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee over­stayed on the leased premises. The lessee, in the above circumstances, could not claim that he was ‘holding over’ as a lessee within the meaning of Section 116 of the Transfer of Property Act.

So far as the cross suit for specific performance of agreement of renewal of lease filed by the lessee is concerned, there are concurrent findings of all the Courts that the option for renewal was exercised after the expiry of the lease period. The option for renewal exercised was, therefore, contrary to terms of Clause (9) of the lease agreement.

The clauses of renewal requir­ing fixation of terms and conditions for renewed period of lease mutually or in the alternative through village Mukhia and Panchas are uncertain and incapable of specific performance. After legal notice of renewal, the lessor did not send any positive reply and instead filed a suit for ejectment, there­fore, these no mutual consent for renewal.

The forum agreed to for decid­ing dispute was through local Mukhia and Panchas of the village. The re­newal clauses of the agreement were vague and incapable of specific per­formance. The Mukhia and Panchas were not named in the agreement and the method of choosing either of the two forums was not specified.

The cross suit filed by the lessor for specific performance of the agree­ment of renewal was rightly dismissed throughout. The original period of lease expired on 19.7.1977 and the suit for ejectment on the ground of expiry of the lease was filed on 16.6.1978 which was well within the period of limitation and rightly decreed.

17. Jurisdiction of Court:

The jurisdiction of the Court to decree spe­cific relief is discretionary and must be exercised on sound and reasonable grounds “guided by judicial principles and capable of correction by a Court of appeal”. This jurisdiction cannot be curtailed or taken away by merely fixing a sum even as liquidated damages. We think that this is made per­fectly clear by the provisions of Section 20 of the old Act (corresponding to Section 23 of the Act of 1963) so that the Courts has to determine, on the facts and circumstances of each case before it whether specific performance of a contract to convey a property ought to be granted.

18. Laws made by Central Government:

Where the Court was deal­ing with a bye-law made by the Central Government under powers con­ferred on it by the Forward Contracts (Regulation) Act, 1952 which compul­sorily amended the bye-laws of the association recognized under the Act and which vested certain powers on authorities external to the association. The bye-law in question was not limited in its application to the members of the association but to all those who entered into forward contracts and were governed by its bye-laws. But all rules and regulations made by au­thorities in pursuance of a power under a statute do not necessarily have the force of law.

19. Legality of:

Section 14 of the Punjab General Clauses Act 1 of 1898, provides:

“Where by any Punjab Act, a power to make any appointment is conferred then unless a different intention appears, the authority having power to make the appointment shall also have power to suspend or dismiss any person appointed whether by itself or any other authority by it in exercise of that power.”

It was also urged that whereas provision was made by Clause 6 of the Annexure to Ordinance XI that the services of the teachers may be sum­marily determined on the ground of misconduct there was no such provi­sion for determination of the employment of the Vice-Chancellor and that also indicated an intention to the contrary within the meaning of Section 14 of the Punjab General Clauses Act.

It is true, the office of the Vice-Chancel­lor of a University is one of great responsibility and carries with it consider­able prestige and authority. But Court was unable to hold that a person appointed as Vice-Chancellor is entitled to continue in office for the full period of his appointment even if it turns out that he is physically decrepit, mentally infirm or grossly immoral.

Absence of a provision setting up proce­dure for determining the employment of the Vice-Chancellor in the Act or the Statutes or Ordinance does not, in Courts judgment, lead to the infer­ence that the tenure of office of Vice-Chancellor is not liable to be deter­mined.

The Court must have regard to interests of students as well as the institution. It is not unimportant to note that the respondent was out of teaching for over 25 years. He seems to have taught Chemistry for one or two years in 1962 and 1963. Thereafter, he did not teach Chemistry at any time in any College. In 1964-65 he diverted his attention and sought admis­sion in L.L.B. Degree Course.

In 1968, he enrolled himself as an Advocate and since then concentrated only in law Courts. In this gap of twenty-five years he must have clearly lost touch with Chemistry as well as art of teach­ing. It must have been also deeply buried and disintegrated under the new acquisition of his legal knowledge. Reinstatement of such a person seems to be unjustified and uncalled for.

20. Mala fide:

In the very scheme of our educational set-up at the University level, the post of Vice-Chancellor is of very great importance, and if the Chancellor was of the view after making due enquiry that a person of the antecedents of the appellant was unfit to continue as Vice-Chancellor it would be impossible, unless the plea that the Chancellor acted maliciously or for a collateral purpose is made out, for the High Court to declare that order ineffective. The plea that the Chancellor acted mala fide was raised, but was not pressed before the High Court. The appeal therefore, fails.

21. Not permissible in law:

Contract for employment being of per­sonal nature, hence, Courts do not ordinarily enforce it. Remedy of the party aggrieved is to sue for damage. Thus, suit for enforcement of contract for employment, riot maintainable.

22. Mull and void—Grant of:

The appellant-plaintiff was an employee of M/s. Empire of India and Ceylone Tea Co. Pvt. Ltd., Calcutta. The Man­ager of the Company who was defendant No. 2 served a notice on the appellant-plaintiff asking him to explain certain charges of misconduct. In the course of domestic inquiry held by the management, the appellant- plaintiff was ultimately dismissed from service.

According to the appellant- plaintiff the order of dismissal is contrary to the provision of the Standing Orders framed under Industrial Employment (Standing Orders) Act, 1946 and on this ground he sought the relief of declaration that the dismissal is null and void and inoperative as he was not guilty of any misconduct as no enquiry was conducted, the dismissal was bad in accordance with the Stand­ing Orders. He also sought the relief of back wages and injunction not to give effect to the order of dismissal.

The Trial Court came to the conclusion that the Civil Court has the jurisdiction to try the suit and the suit is not barred because of Section 14 (1) (b) of the Specific Relief Act. Against this order of the Trial Court a revision petition was taken to the High Court and by the impugned judg­ment the High Court held that the nature of relief which was sought by the appellant-plaintiff was such which could only be granted under the Indus­trial Disputes Act and, therefore, the Civil Court had no jurisdiction to try the suit.

It is clear that wherever the jurisdiction of the Civil Court is expressly or impliedly barred, the Civil Court will have no jurisdiction. It could not be disputed that a contract of employment for personal service could not be specifically enforced and it is also clear that except the industrial law, under the law of contract and the civil law, an employee whose services are termi­nated could not seek the relief of reinstatement or back wages. At best he could seek the relief of damages for breach of contract.

The manner in which the relief has been framed by the appellant-plaintiff in this case, although he seeks a declaration and injunction but in substance it is noth­ing else than the relief of reinstatement and back wages. The relief could only be available to a workman under the Industrial Disputes Act.

It is not disputed that the Industrial Disputes Act was applicable to the present case and it is also not disputed that the Industrial Employment (Standing Orders) Act was also applicable. It is also not in dispute that the inquiry for misconduct was conducted against the appellant in accordance with the Standing Orders and the main plea which was raised by the appel­lant-plaintiff was that the inquiry was not strictly in accordance with the Standing Orders. It is in this context that the High Court came to the conclusion that the Civil Court will have no jurisdiction to try the present suit.

It is not in dispute that the dispute which was raised by the appellant- plaintiff fell within the ambit of the definition of ‘industrial dispute’ as de­fined in Section 2 (k) of the Industrial Disputes Act. It is also not in dispute that the dispute can be taken up by conciliation officer under Section 12.

Industrial Disputes Act not only confers the right on a worker for rein­statement and back wages if the order of termination or dismissal is not in accordance with the Standing Orders, but also provides a detailed proce­dure and machinery for getting this relief. Under these circumstances there is an apparent implied exclusion of the jurisdiction of the Civil Court. In Dhulabhai v. State of M.P., AIR 1969 SC 78, a Five-Judges Bench of this Court considered the language of Section 9 and the scope thereof in re­spect of exclusion of jurisdiction and it was observed:

“Where there is no express exclusion the examination of the rem­edies and the scheme of the particular Act to find out the intend­ment becomes necessary and the result of the inquiry may be deci­sive. In the latter case, it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the Tribunals so con­stituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not.”

It is, therefore, clear that the scheme of the Industrial Disputes Act clearly excludes the jurisdiction of the Civil Court by implication in respect of remedies which are available under this Act and for which a complete procedure and machinery has been provided in this Act.

23. Owner and servant—Relationship:

Though the Corporation was a statutory body, the relations between it and its employees were governed by contract and were of master and servant and not subject to any statutory obligation, although the Corporation had framed under its power employee’s Act and regulations containing conditions of service in the Corporation.

24. Performance by Court:

Where the contract is such that sum stipu­lated may be substituted for the performance of act of the election of the person by whom money is to be paid and it is satisfied by payment of money there is no ground to compel specific performance by Court.

25. Permissibility:

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 recognized 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 the statute.

26. Question of:

A contract of employment cannot ordinarily be en­forced by or against an employer. The remedy is to sue for damages. 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 of 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.

It is a case of a University professor, who was involved in a number of disputes with the University. By an agreement, the parties referred their mutual grievances for investigation by ‘S’ and ‘B’ agreeing to accept their decision as final and binding. The decision of ‘S’ and ‘B’ went substantially against the professor. Thereupon, the professor took a proceeding under Section 38 of the Arbitration Act, 1940 for setting aside the decision of ‘S’ and B’ on the ground that there was no arbitration agreement and hence the two referees had no jurisdiction to act or to make an award.

During the pendency of that proceeding, the University terminated the professor’s ser­vice in view of the findings of the two referees against him. About a year thereafter, the professor’s application under Section 33 was dismissed by the subordinate Judge, Delhi, and the professor preferred an appeal to the High Court, which also was unsuccessful.

Thereafter, the professor com­menced on another arbitration proceeding under the provision of Section 45 of the Delhi University Act and nominated the late Professor M.N. Saha, the celebrated scientist, as an arbitrator and called upon the University to nominate another arbitrator. The University, however, declined to nomi­nate another arbitrator on its behalf, and the result was that professor Saha acted as the sole arbitrator despite the University’ objection to his jurisdic­tion to act as such, and made an award which was in favour of the Profes­sor.

In the award, the finding given was that the professor had been wrong­fully dismissed, that his dismissal was ultra vires, mala fide and had no effect on his status and that he still continued to be a professor of the University. This award was sought to be made a rule of the Court. The University took various objections to the award, but the Subordinate Judge overruled them and passed a decree making the award a rule of the Court.

In appeal, however, the High Court set aside the decree, holding that it was not open to the arbitrator to grant the professor a declaration that he was still a professor in the University, inasmuch as such a declaration amounted to a specific enforcement of a contract of personal service which was for­bidden by Section 21 of the Specific Relief Act and, therefore, the award disclosed an error on the face of it. This decision of the High Court was upheld by the Supreme Court with the following observation:

“We are in entire agreement with the view expressed by the High Court. There is no doubt that a contract of personal service cannot be specifically enforced. Section 21, Clause (b) of the Specific Relief Act, 1877 corresponding to Section 14 (6) of the new Specific Relief Act, 1963 and the second illustration under this clause given in the section makes it so clear that further elaboration of the point is not required.. It seems to us that the present award does purport to enforce -a contract of personal service when it states that the dis­missal of the appellant ‘has no effect on the status’ and ‘he still continues to be a professor of the University’.”

The law on the subject has been explained by their Lordships of the Supreme Court in the following terms:

“Under the common law the Court will not ordinarily force an em­ployer to retain the services of an employee whom he no longer wishes to employ. But this rule is subject to certain well-recognized exceptions. It is open to the Courts in an appropriate case to de­clare that a public servant who is dismissed from service in contra­vention of Article 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ the servant whom it does not desire to employ. Similarly under the In­dustrial law, jurisdiction of the labour and industrial Tribunals to compel the employer to employ a worker, whom he does not desire to employ, is recognized. The Courts are also invested with the power to declare invalid the act of a statutory body, if by doing the act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something, which it does not desire to do. It must be pointed out that the powers of a statutory’ body are always subject to the statute which has constituted it, and must be exercised consistently with the statute, and the Courts have, in appropriate cases the power to declare an action of the body illegal or ultra vires, even if the action relates to termination of employment of a servant.”

The jurisdiction exercised under Specific Relief Act is both legal and equitable. The father entered into an agreement of sale when the sons were major. In his oral evidence, plaintiff states that one of the sons took part ‘ the negotiations of sale. In this appeal, learned Counsel appearing submits that the sons were not parties to the suit in trial Court and the statement of plaintiff against them cannot be accepted without availability of any oppor­tunity to lead evidence in rebuttal.

It is difficult to believe that the suns had no knowledge of the execu­tion of the sale agreement by their father. Even after institution of suit, no attempt was made by the sons to approach the authorities under the Act of 1953 for getting get their names recorded on the lands as joint owners. In such circumstances, they cannot be heard to say that the father was not competent to execute the agreement of sale and it is not binding on them.

27. Re-conveyance.—Time is essence of contract:

The law is well settled that the time is an essence of the contract in the case of a re-convey­ance, since it being a concession or a privilege given to the seller to re­purchase the property under the agreement.

28. Registered deed:

In the instant case, dispute was raised whether a document registered deed of mortgage was by conditional sale or sale with condition of repurchase. The intention is to be gathered from docu­ment and if not possible then by an extraneous enquiry. Oral evidence could be permitted in case of ambiguity in the language by registered docu­ment.

29. Reliability of:

Section 92 of Evidence Act applies when party wants to rely on terms of document. No oral evidence contrary to express terms of document could be admitted.

30. Relief:

There is a long established rule of Courts that service con­tract cannot be specifically enforced. There are, however, three exceptions which have been adverted to, in very many cases. In Vaish Degree College v. Lakshmi Narain, AIR 1976 SC 888, after examining a large number of authorities the Court rounded off the conclusion:

“On a consideration of the authorities mentioned above, it is, there­fore, clear that 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 the statute.

This decision has been affirmed in Smt. J. Tiwari v. Smt. Jawala Devi Vidya Mandir, AIR 1981 SC 122, and reiterated in Deepak Kumar Biswas v. The Director of Public Instructions, AIR 1987 SC 1422, and adverted to in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvaran Jayanti Mahotsav Samarak Trust v. V.R. Rudani, AIR 1989 SC 1607. These authorities say that a college owned by a private body though, recognised by or affiliated to statutory body since not enacted by or under a statute and the dismissed employee of such institution cannot get specific performance of service contract.

31. Renewal of contract:

The contention advanced is that after expiry of the term of the contract, under some ad hoc arrangements with the owner, even if the old contractor might have made some extractions of ore and paid price that cannot be held to be an act of renewal of the contract. The mining lease owner by an express notice sent in writing has refused to renew and terminated the contract of the old contractor.

Thereafter, he has entered into a written contract on higher price with the new contractors. The old contractor, therefore, has no right in presenti to remain in posses­sion of the mine and to operate it. According to learned Counsel for the new contractors, there is no counter suit filed by the old contractor to spe­cifically enforce any alleged agreement of renewal of the contract and such relief cannot be legally granted in view of the bar contained in Clause (c) of sub-section (1) of Section 14 of the Specific Relief Act which provides that a ‘contract in its nature determinable’ is unenforceable.

32. Rights of third persons:

Since the law prohibits the specific per­formance of a contract of personal service, any wrongful termination of the service of the employee by his employer would not entitle the employee to a declaration that his status remained unaffected, he still continued in ser­vice and he be reinstated to his post of employment.

But where the em­ployee bases his claim on the breach of some statutory provision which governed and regulated the conditions of his service he will be entitled to a declaration that his status remains unaffected, he still continues in service and he be reinstated as in doing so, the Court of law does not enforce a contract of personal service but the Court declares that the act of removal from service was statutorily invalid.

In sum, it can be stated that there may be bodies which are statutory and which are non-statutory. Statutory bodies may perform statutory func­tions and may perform non-statutory function. When statutory bodies per­form statutory functions their acts will be amenable to judicial review by the Court. When statutory bodies perform non-statutory functions their acts may not be amenable to judicial review by the Court. When non-statutory bodies perform non-statutory functions, their acts will not be subject to judicial review by the Court, but when they perform statutory functions there is no valid reason why it not be held that their actions will be ame­nable to judicial review by the Court inasmuch as non-statutory bodies when performing statutory functions will be nothing else than mere instrumentali­ties acting under the Statute which imposes duties upon it affecting the rights of third persons and parties.

33. Sale deed:

In this case, if the agreement had not stipulated as to what is to happen in the event of the sale not going through, then perhaps the plaintiff could have asked the Court for a decree of specific perfor­mance but here the parties to the agreement had agreed that even if the seller did not want to execute the sale-deed he would only be required to refund the amount of Rs. 1,000/- plus pay Rs. 500/- in addition thereto. There was thus no obligation to complete the sale transaction. The agree­ment is very categorical in envisaging that a sale-deed is to be executed only if both the parties agree to do so and in the event of any one of them resiling from the same there was to be no question of the other party being compelled to go ahead with the execution of the sale-deed.

34. Sustainability of:

The order of attachment of property without deciding objections on merit was not sustainable in law.

35. Termination of:

Normally and apart from the intervention of stat­ute there would never be a nullity in terminating an ordinary contract of master and servant. The termination was in breach of statutory obligation under an order framed by the Central Government under provisions of Sec­tion 11 (2) of the Life Insurance Corporation Act, 1956 and was set aside.

36. Title when did pass vide registered Sale deed:

Merely because part of the sale consideration, which was agreed to be paid in future, was not paid, it cannot be said that the title did not pass vide registered sale deed, particularly when possession was also handed over to the vendees at the time of execution of the registered sale deed. In such a situation, the only remedy available to the vendor was to sue for consideration.

37. Validity of:

The Agricultural Produce (Development and Warehous­ing) Corporation Act, XXVIII of 1956, with which the Court there was con­cerned, provided for the incorporation and regulation of Corporations for development and warehousing of an agricultural produce on co-operative principles. Section 28 empowered State Governments to set up such Cor­porations.

Section 52 authorised the appropriate Government to make rules and Sections 53 and 54 gave power to the Board set up under the Act and the Corporations respectively to make regulations consistently with the pro­visions of the Act and the Rules. The respondent therefore, was dismissed from service without following the procedure laid down in Regulation 16 (3). There was no question or doubt about the power of the Corporation to terminate his service. The question was, whether a declaration to the effect that the termination was invalid and void on the ground of non-compliance of Regulation 16 (3), could be granted in the suit filed by the respondent. This Court, after examining a number of decisions, followed the decision in S.R. Tewari v. District Board, Agra, AIR 1964 SC 1680, which laid down that there were only three well-recognized exceptions to the general rule under the law of master and servant where such a declaration would be issued, namely, (1) cases of public servants falling under Article 311 (2) of the Constitution, (2) cases falling under the industrial law, and (3) cases where acts of statutory bodies are in breach of a mandatory obligation imposed by a statute, and held that the case before it did not fall under any one of the said three exceptions, that the dismissal was wrongful inasmuch as it was in breach of the terms and conditions of employment embodied in the regulations and not one of breach of a statutory restriction or obligation, subject to which only the power to terminate the relationship depended.

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