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2024 Supreme(All) 2472
IN THE HIGH COURT OF ALLAHABAD
ARUN BHANSALI, CJ, MANOJ KUMAR GUPTA, VIKAS BUDHWAR, JJ.
Arvind Singh – Appellant
Versus
U.P. State Road Transport Corporation And 2 Others – Respondent
WRIT - A No. - 14886 of 2022
Decided on : 20-12-2024
Important Points
Subject
Employment Law - Contractual Employment
Act Referred
Headnote
(B) Contractual Employment - The court held that contracts of service can be subjected to examination for unfairness even if not challenged at the outset. Ascertaining unconscionable practices is essential for fairness in public contracts. (Paras 8, 36)
Facts of the case:
The appellant entered into a contract as a Conductor with the U.P. State Road Transport Corporation, which was renewed until termination in May 2020 due to alleged misconduct without opportunity for defense. The case highlighted conflicts in precedents relating to writ maintainability.
Findings of Court:
It was concluded that contracts involving the State must adhere to public welfare principles under Article 14, and terms may be challenged regardless of prior acceptance. Disputes could be litigated in writ jurisdiction despite existing arbitration clauses. (Paras 12, 20, 36)
Issues: The key questions included whether writ jurisdiction is available for contractual disputes when terms are not statutory and whether arbitration clauses restrict such access. (Para 1)
Ratio Decidendi: The Bench reaffirmed that contracts with the State that are presumed unconscionable are reviewable under Article 14, and arbitration provisions in contracts do not inherently preclude claims to judicial review on these grounds. (Paras 36)
Result: The reference was answered in favor of maintaining writ jurisdiction even in the face of arbitration agreements and emphasized the importance of fair contractual terms when involving the State.
For the Appellant : Bhawesh Pratap Singh
For the Respondent: Awadhesh Kumar Saxena
| Table of Content |
|---|
| 1. questions referred to larger bench regarding employment contracts. (Para 1 , 2 , 3 , 4) |
| 2. examines relevance of prior judgments on contractual employment. (Para 5 , 6 , 7) |
| 3. terms of employment are subject to judicial scrutiny. (Para 8 , 9 , 10) |
| 4. bound by principles of fairness in service contracts. (Para 11 , 12 , 13 , 14) |
| 5. unconscionable contract terms can be struck down. (Para 15 , 16 , 17) |
| 6. judicial review applies even in contractual relations. (Para 18 , 19 , 20) |
| 7. state actions must comply with article 14 obligations. (Para 21 , 22 , 23) |
| 8. no absolute bar on judicial review due to arbitration clauses. (Para 24 , 25 , 26) |
| 9. judicial discretion in matters involving arbitration clauses. (Para 30 , 35) |
| 10. conclusions on legality of terms and arbitration provisions. (Para 36 , 38) |
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
