Judgment

DWIVEDI, J. :- Seemingly it is a small case. It has not hit the headlines in the news media. Nor it has gripped the public mind. The pecuniary stake is trivial. A tiny sum of Rs. 200/- is payable as costs by the appellant. However, this case brings into the flash point an issue of great consequence to liberty of contract: Where to draw the dividing line between the area of Contempt of court and the area of operation of contractual rights.

2. The appellant is the Chairman of the Hindustan Steel Limited (hereinafter referred to as the Company). The respondent was employed in the Company on a contract of service. The contract provided for termination of his service by giving three months notice or three months; pay in lieu thereof and without assigning any cause. On February 21, 1968, the Company gave him this notice :

"It is found that your performance and conduct in this plant have not been good and that you have not proved useful for the Company. You are hereby advised to note this position and also to try for alternative employment elsewhere. You may be released from this company at your request on payment of the amount required under the bond executed by you on pro-rata basis as a very special case taking into account the period of service that may be rendered by you at the time of release. In other words, if you choose to leave the service of the company before expiry of bond period, you will be required to pay the company a sum not exceeding Rs. 20,000/- reduced by the amount calculated on pro-rata basis in respect of the service you may render after completion of your training."

3. Soon thereafter he rushed to the Court. On May 27, 1968 he instituted a suit in the Court of the Second Munsif, Asansol. The material reliefs claimed in the plaint are :

(1) a declaration that the notice dated February 21, 1968 is illegal, bad, mala fide, without jurisdiction, void and inoperative and is not binding on the plaintiff;

(2) a declaration that the charge sheet dated July 1, 1966, confidential character report dated April 27, 1967, are ultra vires, unenforceable, illegal, unsustainable, mala fide and opposed to rules and natural justice and are not binding on the plaintiff;

(3) a declaration that the plaintiff is entitled to promotion to the next higher grade, namely, foreman, from October 10, 1966;

(4) a mandatory injunction directing the defendant to promote the plaintiff to the grade of foreman; and

(5) a permanent injunction restraining the defendant from giving effect to the notice dated February 21, 1968.

He did not ask the Munsif to grant an interim injunction restraining the appellant and the Company from terminating his service during pendency of his suit. So no such interim injunction was operating at the relevant time. Nor did the appellant and the Company give an undertaking to refrain from terminating his service during pendency of the suit. Forgetting the suit for a moment, there was no impediment in their way of terminating his service according to the contract. And on February 26, 1968, the Company gave him this notice: "(T)he services of the (respondent) are hereby terminated with effect from the date of service of this order on him and payment of three months pay in lieu of notice in terms of cl. (vi) of his appointment letter....... dated January 29, 1962."

4. The Calcutta High Court (R. N. Dutt and B. Banerji JJ.) has held that the act of giving this notice amounts to contempt of court. The learned Judges said:

"It seems that he (plaintiff) was more or less non-suited...... There is no doubt that since his services have been terminated. some of the reliefs which were prayed for in the suit could become infructuous. On these considerations, we think that the action of the Chairman in terminating the services of the (plaintiff) ...... does amount to obstruction or interference with due course of justice in the petitioner s suit before the Munsif........... and so it amounts to contempt of the said court."

5. When ask