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2016 Supreme(Del) 4025
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAJMI WAZIRI, J.
JAIVEER SRIVASTAVA - Petitioner
Versus
UNION OF INDIA & ORS. - Respondents
W.P.(C) 10530/2016, CM APPL. 41307/2016 (stay)
Decided On : 07-11-2016
For the Petitioner: Mr. K. Varghese, Mr. Mathew K., Mr. V. Shyamohan, Mr. Nitin Walia, Ms. Soumya Sharma, Ms. Smrithi Sunesh and Mr. Deepak Grover.
For the Respondent: Mr. Ajay Digpaul, Mr. P.S. Narsima, with Mr. Ritin Rai and Mr. Aabhas Kshetarpal.
The court upheld the termination of employment based on the terms of the contract and the acceptance of payment in lieu of notice.
Headnote:
Termination - Employment Contract - Companies Act, 1956 - Conduct, Discipline and Appeal Rules - [Companies Act, 1956, Conduct, Discipline and Appeal Rules]
Fact of the Case:
The petitioner, appointed as Chairman and Managing Director of a company, was terminated from the post without a hearing. The petitioner argued breach of principles of natural justice and stigmatic removal.
Finding of the Court:
The court found that the termination was in accordance with the terms of the employment contract and there was no illegality in it. The court also noted that the petitioner had accepted three months' salary in lieu of notice.
Issues: Breach of principles of natural justice, stigmatic removal, constitutional validity of the termination clause
Ratio Decidendi: The termination of employment was found to be in accordance with the contract terms, and the petitioner had accepted the payment in lieu of notice. The court did not entertain the challenge to the constitutional validity of the termination clause as it was not raised in the petition.
Final Decision: The petition was dismissed for lack of merit.
NAJMI WAZIRI, J.
1. Mr. Ajay Digpaul and Mr. Ritin Rai, Advocates, who appear on service of advance copy state that the matter may be heard and disposed off finally.
2. At joint request, the case is taken up for final hearing.
3. The petitioner is aggrieved by order dated 02.11.2016 whereby he has been removed from the post of Chairman and Managing Director of respondent no.3 i.e. Fertilizers and Chemicals Travancore Limited (FACT) with immediate effect. The petitioner was appointed to the said post on a contractual basis for a period of five years by order of respondent no.1, dated 12.02.2013. The terms and conditions of employment were incorporated in letter dated 16th October, 2014 from respondent no. 1 to respondent no. 3. Clause 1.1 of the said letter reads as under:
“(1.1) Period:- His appointment will be for a period of five years w.e.f. 01.04.2013 (F.N.) in the first instance or till the date of superannuation or until further orders, whichever event occurs earlier and in accordance with the provisions of the Companies Act, 1956 as amended. The appointment may, however, be terminated even during this period by either side on 3 months’ notice or on payment of three month salary in lieu thereof.”
4. It is the petitioner’s case that although the government had the option to terminate the services with three months’ notice, nevertheless, Clause 1.15 [Conduct, Discipline and Appeal Rules] of the same document, as framed by the FACT would apply in the present case. It reads as under:
“(1.15) Conduct, Discipline and Appeal Rules:-
(1.15.1) The Conduct, Discipline and Appeal Rules framed by the FACT in respect of their non-workmen category of staff would also mutatis mutandis apply to him with the modification that the Disciplinary Authority in his case would be the President of India.
(1.15.2.) The Government also reserves the right not to accept his resignation if the circumstances so warrant i.e. the disciplinary proceedings are pending or a decision has been taken by the Competent Authority to issue a charge sheet to him.”
5. The petitioner is aggrieved by the manner in which he has been removed without being given a hearing. Therefore, it is contended by the learned counsel for the petitioner that there is breach of principles of natural justice and the removal of the petitioner is stigmatic. He submits that insofar as the Conduct, Discipline and Appeal Rules are applicable to the petitioner, he should have been given a Show Cause Notice and should have been removed only after an inquiry was conducted. He relies upon a Division Bench judgment of this Court in M. Gopalakrishnaiah v. Union of India, C.W.P. 3157 of 1993, decided on 10.05.1994 wherein an identical clause apropos the removal of the petitioner from the post of Executive Director was examined. However, the Court is of the view that that case related to the removal of the Executive Director (ED) of a Bank who was sought to be removed on the basis of allegations of financial irregularity of an officer junior to the ED. The latter was not directly involved in the transactions for which the junior officer was charged.
6. In the present case, there is no dispute that a CBI inquiry was instituted against the petitioner pursuant to allegations of allowing cartelization for a tender bid for the sale of gypsum and after the preliminary inquiry a FIR was lodged by the CBI; the government has prima facie found that the petitioner was in collusion with those who participated in the cartelization of the tender; this cartelization was to the detriment of the financial interests of the respondent – Corporation.
7. Mr. P.S. Narsima, ASG, the learned Senior Advocate for the respondent no.3 submits that the terms of the contract have been duly complied with insofar as it provided both the parties the right to terminate the contractual employment by service of 3 months’ notice or on payment of three month salary in lieu thereof. He submits that the petitioner was “removed” from ser
