The termination based on Clause 10 of the appointment letter was held to be void in law and not enforceable, and the respondent was entitled to damages and reinstatement. The court also found that the appellant company was not a government company and the principles laid down by the Supreme Court in Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly & Anr. AND Central Inland Water Transport Corporation Ltd. & Anr. Vs. Tarun Kanti Sengupta & Anr. were not applicable to private companies.

PRATIBHA RANI, J.

1. The appellant-company M/s. Shriram Pistons & Rings Ltd. impugned the judgment and decree dated 27th May, 1998, passed by the learned Single Judge, in a suit filed by the respondent herein, (plaintiff in the suit), who was their ex-employee in managerial capacity, seeking declaration that his termination was unconstitutional, illegal and mala fide and without authority. In addition, respondent also sought the relief of damages for `4 lacs and/or reinstatement with full back wages and benefit.

2. The facts are not in dispute. Most of the documents produced during evidence by the parties are also not in dispute. So instead of mentioning the case of the respondent and the appellant separately, as averred in the plaint or defence taken in the written statement, succinctly stated the facts are that the appellant company employed the respondent as Administration Manager. He was issued an appointment letter dated 25th September, 1980 Exhibit P-1, containing the terms and conditions of employment, as per Clause 10 whereof, the respondent could serve the masterservant relationship i.e. resign after giving three months’ notice or the appellant could severe the master-servant relationship by terminating service of the respondent after giving three months’ notice or salary in lieu thereof. The respondent continued to serve the appellant till his services were terminated vide termination order Exhibit P-2 dated 21st March, 1985, invoking Clause 10 of the appointment letter, referred to above. It is not in dispute that respondent was paid the notice pay by his employer i.e., appellant company, as required under Clause 10 of the terms and conditions of the appointment, contained in Exhibit P 1. Subsequently other dues, after necessary adjustments, were also paid to the respondent.(N.B. in the appeal and at few other places a confusion has been created with reference to Ex.PW-1/1, which is an appointment letter dated 16th October 1979, appointing respondent as an “Officer” in J. Engineering Works Ltd., probably a sister concern of the appellant)

3. After completing the pleadings, following issues were settled by learned Single Judge:-

“(i) Whether suit is not maintainable against DefendantNo.3? (ii) Whether Defendant No.2 is a separate legal entity and if not to what effect? (iii) Whether the suit is bad for misjoinder of parties? (iv) Whether the termination of respondent’s services by Defendant No.1 was illegal and if so, to what effect? (v) Whether the plaintiff is stopped from challenging the validity of termination of his service? (vi) Whether the claim for declaration is barred under the provisions of the Specific Relief Act? (vii) Whether the plaintiff is entitled to damages and if so, to what amount? (viii) Whether Defendants have paid ` 57,204.25 and other dues to the plaintiff? (ix) To what relief the plaintiff is entitled?”

4. The learned Single Judge, in view of discussion in para 36 and 37 of the impugned judgment, while declaring Clause 10 of the appointment letter and termination to be void, in para 49 of the impugned judgment, granted the reliefs, which are extracted below :-

“36. Whatsoever may be the contentions of the parties, the sole question for determination is “Whether the first defendant could invoke clause 10 and terminate the services of the plaintiff?” In the light of the law laid down by the Supreme Court in Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly & Anr. AND Central Inland Water Transport Corporation Ltd. & Anr. Vs. Tarun Kanti Sengupta & Anr. AIR 1986 SC 1571 which is followed by the Supreme Court 1991 in “Delhi Transport Corporation Vs. DTC Mazdoor Congress & Ors”. AIR 1991 SC 101, the clause relied on by the defendants is void in law and consequently, the notice of termination fails to the ground.

37. The first defendant is a company registered under the Companies Act, 1956. The question whether the first defendant is a Government Company or not