The court emphasized that in cases of private employment, termination of services can be compensated with reasonable damages as per the contractual terms, and the employee must mitigate damages by seeking alternative employment.

1. The challenge by means of this Regular First Appeal (RFA) filed under Section 96 of Code of Civil Procedure, 1908 (CPC) is to the impugned judgment of the trial Court dated 31.1.2004 decreeing the suit of the respondent/plaintiff/employee against the appellant/defendant/ employer, and by which decree the appellant/defendant was directed to pay the compensation amount of Rs. 10,87,294/- for unlawful termination of services. The amount of damages which were calculated were one month’s salary for each year of balance services till the date of retirement of the respondent/plaintiff, and which was found to be 26 years as the respondent/plaintiff was about 34 years of age when his services were terminated and the retirement age was 60 years.

2. The facts of the case are that the respondent/plaintiff was appointed as Business Officer with M/s Shri Ram Fibres Finance Ltd. in the year 1990. After completion of probation, the services of respondent were confirmed on 15.1.1991. The services of the appellant were subsequently governed by the terms and conditions of the appointment letter dated 21.4.1998 issued by the subsequent employer i.e. M/s. GE Capital Transportation Financial Services Ltd. The respondent/plaintiff claimed that he had to do some interior work in his flat and for which he had no other option but to take leave in November, 2001, and which leave was never refused. It was further pleaded in the plaint that on return from leave to the Ludhiana office on 21.1.2002, he was asked to join at Gurgaon and no work was assigned to him on his joining at Gurgaon. It was pleaded that he was paid salary for January and February, 2002 and his services were terminated by means of the termination letter dated 28.2.2002. It was pleaded that the termination letter was violative of principles of natural justice besides being illegal and an infringement of the terms of the employment. The reliefs claimed in the suit were for declaration and injunction to seek continuation of employment and for salary for the period for which it was not paid and to be continued up to the retirement age of 60 years.

3. The appellant/defendant contested the suit and pleaded that the suit was in fact barred under the Specific Relief Act, 1963. It was pleaded that the services of the respondent/plaintiff were validly terminated. It was contended on behalf of the appellant/defendant that the services of the respondent/plaintiff had to be terminated as he was a delinquent employee who took leave on his own without any sanction.

4. After completion of pleadings, the trial Court framed the following issues:-

“1. Whether the suit in the present form is maintainable? OPP

2. Whether the termination of the services of the plaintiff by the defendant is illegal and void? OPP

3. Whether the plaintiff is entitled to the reliefs prayed for? OPP

4. Relief.”

5. With regard to issue No.1 as to the maintainability of the suit, the trial Court held the suit to be maintainable. The trial Court has referred to various judgments of the Supreme Court to hold that there can be a specific performance of a contract for personal service.

In my opinion, the trial court has clearly misdirected itself inasmuch as wherever parties are strictly governed by contractual rights and obligations i.e. the employment is purely a contractual one, i.e. not being under the Government or “State” under Article 12 of the Constitution of India, and also not of an employee covered under the Industrial Disputes Act, 1947 the contractual employment can always be terminated in terms of the contract. Also, even assuming the termination is not as per the contract, at best the entitlement will be to claim damages which naturally flow out of the breach i.e. of the illegal termination of contract.

6. The law in this regard is contained in the judgment of the Supreme Court in the case of S.S. Shetty Vs. Bharat Nidhi Ltd., AIR 1958 SC 12. Para 12 of this judgment of the Supreme Court reads as under:-

“12. The posit