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1997 Supreme(Raj) 958

RAJASTHAN HIGH COURT
P.P.Nadlekar, J.
Kamal Auto Engineering Works Pvt. Ltd. - Appellant
Versus
Mahendra Kumar Parekh - Respondent
Civil Regular First Appeal No. 156 of 1991 (Against judgment passed by P.K. Tiwari, Dist. Judge Udaipur in C.O.S. No. 76 of 1988.
Decided On : 16-01-1997

An employer is liable to pay compensation for wrongful termination of employment without providing the required notice period, as per the terms of the employment contract.

Headnote:

EMPLOYMENT LAW - TERMINATION OF EMPLOYMENT - INDUSTRIAL DISPUTES ACT, 1947 - SECTION 2(S) - INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946 - SECTION 10 - WRONGFUL TERMINATION - NOTICE PERIOD - COMPENSATION - DAMAGES - INTERPRETATION OF CONTRACTUAL TERMS - ASSESSMENT OF DAMAGES.

Fact of the Case:

The plaintiff, an employee of Udaipur Cement Works, was approached by the defendant-appellant, Kamal Auto Engineering Works Pvt. Ltd., to join the firm as Chief Executive Officer. The plaintiff resigned from Udaipur Cement Works and joined the defendant-firm based on an agreement that provided a five-year term of employment, a monthly salary of Rs. 3,000/-, and other benefits. The agreement allowed for termination of services by either party with six months' notice. However, the defendant-firm terminated the plaintiff's services without notice, leading to a lawsuit.

Finding of the Court:

The court found that the plaintiff's services were terminated without giving the required six months' notice, in violation of the terms of the employment agreement. The court also found that the plaintiff had worked until 6-9-1987, contrary to the defendant's claim that he had left the job on his own.

Issues: 1. Whether the plaintiff was entitled to six months' salary as compensation for wrongful termination without notice. 2. Whether the plaintiff was entitled to damages for mental pain and suffering, and loss of face.

Ratio Decidendi: 1. The court held that the plaintiff was entitled to six months' salary as compensation for wrongful termination, as per the terms of the employment agreement. The court found that the defendant-firm had failed to provide the required notice period, and thus breached the contract. 2. The court held that the plaintiff had failed to prove the allegations of damages, mental pain and suffering, and loss of face, and therefore dismissed the claim for damages.

Final Decision: The court dismissed the appeal filed by the defendant-appellant and also dismissed the cross-objection filed by the plaintiff-respondent. No order was made as to costs.

JUDGMENT

1. - Respondent Mahendra Kumar filed suit against the defendant-appellant Kamal Auto Engineering Works Pvt. Ltd., Udaipur claiming relief for the recovery of the following amounts:

"1. Salary at the rate of Rs. 3,000/- for July, August and up to 15th September 1987

7,500.00

2. Amount of annual-grade-increment at the rate of Rs. 200/- for May, June, July, August and up to 15th September 1987

900.00

3. House-rent at the rate of 500/- per month for the period from July up to 15-9-1987

1,200.00

4. Conveyance allowance at the rate of Rs. 200/- per month

500.00

5. One month's Ex-gratia Payment

3,000.00

6. 45 days' salary in lieu of leave

4,800.00

Total:

17,950.00

In addition, the plaintiff claimed Rs. 23,400/- for illegal termination vide notice published in the Rajasthan Patrika. The plaintiff claimed interest at the rate of 18% amounting to Rs. 3,721.50 ps. and, further claimed Rs. 50,000/ - as damages. Thus the plaintiff claimed in total Rs. 95,071.50 ps but confined the claim in contest to Rs. 50,9001- for the sake of valuation and undertook to pay the extra court-fee in case recovery of the amount of damages was decreed so as to increase the decretal-amount beyond the confined claim.

2. The suit was filed on the allegations that the plaintiff was an employee of Udaipur Cement Works, Udaipur, he was approached by the defendant-firm's Managing Director Azad Lodha to join the defendant-firm as Chief Executive Officer. On the request of the Managing Director 4nd on his persuasion, the plaintiff resigned from the Udaipur Cement Works and joined the defendant-firm. As per the agreement entered into, the defendant-appellant on 19-4-1986 issued an appointment-order. giving appointment to the plaintiff for five years on a monthly salary of Rs. 3,000/- with other' benefits. Under the terms of appointment, the plaintiff's services could have been terminated by giving six month's notice. The plaintiff was not given any notice and the defendant-firm terminated the plaintiff -s services by publishing a notice on 15-9-1987 in the Rajasthan Patrika with effect from 7-9-1987. As the services were terminated contrary to the terms of the agreement without payment of salary, the plaintiff filed this suit.

3. According to the defence, the plaintiff-respondent had joined the services of his own. In fact, he was given employment only because he was a close relation of the Managing Director of the Firm, Shri Azad Lodha. The plaintiff's work was never satisfactory and he was given warning for the said time to time. He himself stopped coming to the factory since 4-9-1987 and, therefore, his services were terminated by publication of the notice dated 15-9-1987. The defendant-appellant has made a counter-claim as the plaintiff caused damages to the firm. According to the defendant, a loader of the Rajasthan State Mineral Development Corporation, Udaipur came for over-hauling and repairs to the company, which was sent to the Allied Engineering Services, Udaipur. The plaintiff manipulated the pay-order to be sent directly to the Allied Engineering Services and thus caused damage to the company which had already spent a suns of Rs. 3,017.28 ps. towards the repairs. The plaintiff further entered wrong figures in the job-cards and has caused loss to the company to the tune of Rs. 2,273;'-. Although the plaintiff has not purchased medicines but he has claimed reimbursement and caused loss of Rs. 379/ - to the company. On these allegations, the defendant pressed counter-claim for a sum of R,. 12,196.28 ps. It is, however, admitted by the company in the written-statement that the salary of the plaintiff for the months of August, 1987 and 3 days of September 1987 was withheld by the company fox the adjustment of the loss caused to the company by the plaintiff. Thus the plaintiff is not entitled to any decree.

4. The tri






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