Judgement

THAKKAR, J.:- A CAT - scan of this appeal reveals three problems, viz :-

I. Whether a rule or regulation framed by a public sector undertaking which is an authority under the control of Government of India and is a State within the parameters of Article 12 of the Constitution of India empowering the employer to terminate the services of an employee by giving notice of the prescribed period or payment of salary for the notice period in lieu of such notice is constitutional?

II. If it is unconstitutional, whether the employee whose services are terminated under the said rule or regulation is always and invariably entitled to reinstatement? Whether option to pay compensation in lieu of reinstatement can be given to the employer in fit cases?

III. What would be the appropriate amount to be reasonably awarded in lieu of reinstatement?

2. These are the questions which call for answers in this appeal. (By Special Leave arising out of W. P. No. 2329 of 1984 dismissed by the High Court of Delhi summarily by its order dated 26-9-1984).

3. Undisputed are the following facts, the same being incapable of being disputed:-

(1) The respondent Corporation (I. T. D. C.) is State within the parameters of Article 12 of the Constitution of India it being an instrumentality of the State as per the law enunciated by this Court in Central Inland Water Transport Corporation Limited v. Brojo Nath Ganguly and Central Inland Water Transport Corporation Limited v. Tarun Kanti Sengupta (1986) 3 SCC 156.

(2) Appellant was an employee of the Respondent Corporation holding the post of Manager of Hotel Ranjit, New Delhi, at the material. time when his services were terminated by the impugned order (Annexure P-10, Memorandum No. P-B (OP)-22 dated 18th September, 1984.)

(3) Services of the Appellant were terminated in exercise of powers under Rule 31(v) of the ITDC Conduct Discipline and Appeal Rules 1978, (ITDC Rules) by giving pay for 3 months, in lieu of 3 months notice*1 under the said rule.

* 1. Memorandum No. P-B (OP) - 22 dated 18th September, 1984.

"Please be advised that your services are no longer required hence stand terminated with immediate effect.

In accordance with rule No. 31 (v) of ITDC Conduct, Discipline and Appeal Rules 1978, you are hereby paid three months pay in lieu of notice and a cheque No. 089988 dated 189-84 drawn on State Bank of India, New Delhi, representing a sum of Rs. 7,950/- (Rupees Seven Thousand Nine Hundred and Fifty only) is enclosed."

4. Rule 31 (v) of the I. T. D. C. Rules, the constitutional validity of which is questioned from the platform of Articles 14 and 16 (1) of the Constitution of India, provides:-

"31. Termination of services

The services of an employee may be terminated by giving such notice or notice pay as may be prescribed in the contract of service in the following manner:-

i) to iv) x x x x x x x x

v) of an employee who has completed his probationary period and who has been confirmed or deemed to be confirmed by giving him 90 days notice or pay in lieu, thereof."

This rule cannot co-exist with Articles 14 and 16 (1) of the Constitution of India. The said rule must therefore die, so that the fundamental rights guaranteed by the aforesaid constitutional provisions remain alive. For, otherwise, the guarantee enshrined in articles 14 and 16 of the Constitution can be set at naught simply by framing a rule authorizing termination of an employee by merely giving a notice. In order to uphold the validity of the rule in question it will have to be held that the tenure of service of a citizen who takes up employment with the State will depend on the pleasure or whim of the competent authority unguided by any principle or policy. And that the services of an employee can be terminated even though there is no rational ground for doing so, even arbitrarily or capriciously. To uphold this right is to accord a "magna carta" to the authorities, invested with these powers to practise uncontrolled discrimination at their pleasure