Contracts of service with the State can be examined for unconscionable terms, and judicial review under Article 226 is not barred by arbitration clauses.

JUDGMENT :

Manoj Kumar Gupta, J.

1. The present reference to Larger Bench has been made for deciding the following questions :

"(i) Whether a contract of service purely governed by its terms and conditions, can be subjected to examination, even when it is not challenged and willingly accepted by the contractual employee at the time of entry into the service, and writ jurisdiction be invoked when remedy under the contract is by a specific clause for invoking arbitration?

(ii) Whether the judgment rendered by the Division Bench of this Court in Rajesh Bhardwaj and others Vs. Union of India and others reported in (2019 2 ADJ 830) lays down the law correctly or the judgment of the Division Bench of this Court in Prem Chandra Gupta vs. State of U.P. and 4 others (Special Appeal No.104 of 2021, rendered on 14.06.2021) should be followed?"

2. Heard Shri Samir Sharma, learned Senior Advocate assisted by Shri Himanshu Agrawal, Shri Ajay Mishra and Shri Bhawesh Pratap Singh, learned counsel for the petitioner and Shri Kunal Ravi Singh, learned Chief Standing Counsel, Shri Bipin Bihari Pandey, learned Chief Standing Counsel, Shri Rajiv Singh, learned Standing Counsel, Shri Ayush Mishra and Shri Sunil Kumar Mishra, learned counsel for the respondents.

Backdrop

3. The writ petitioner was engaged on contractual basis as Conductor by U.P. State Road Transport Corporation (the first respondent) on 27.09.2011. The contract of service was renewed from time to time and there was no complaint against his conduct. On 27.05.2020, his contract was terminated, without giving opportunity of hearing to him on the ground that in an inspection made by Enforcement Team in the bus on Kanpur- Maitha Road, the petitioner was found carrying nine passengers without tickets. No show cause notice or charge-sheet was issued to him and straight away the termination order was passed.

Reference to Larger Bench –

4. The Division Bench hearing the writ petition noticed conflict in two previous Division Bench judgments of this Court, namely, Rajesh Bhardwaj vs. Union of India , 2019 (2) ADJ 830 and Prem Chandra Gupta vs. State of U.P. and 4 others , Special Appeal No. 104 of 2021 decided on 14.06.2021 and therefore made the instant reference.

5. In Rajesh Bhardwaj, the petitioner was appointed as Manager (C& P) on 30.03.2010 in CUPGL, a joint venture of Gas Authority of India Limited and Bharat Petroleum Corporation Limited on probation of one year. He was placed under suspension on 24.05.2013 and a charge-sheet was served on him on 24.05.2013. On 01.08.2013, his services were terminated. He challenged the termination order on the ground that it was punitive in nature and therefore, principles of natural justice should have been followed but which, according to him, had not been followed. The writ petition was contested by CUPGL on the ground that the Central Government or State Government have no stake in the company; it does not perform any governmental work and therefore, is not amenable to writ jurisdiction. Moreover, the services of the petitioner were not governed by any statutory provision but by a contract and therefore, no reinstatement can be directed.

6. Four issues w