Important point
A writ of mandamus can be issued against a private body which is not a State within the meaning of Article 12 of the Constitution but there must be a public law element and it cannot be exercised to enforce purely private contracts entered into between the parties.

Headnote:Constitution of India—Article 226—Industrial Disputes Act, 1947—Sections 25F and 25N—Termination of service—Writ petition—Maintainability —Whether reliefs as prayed could have been granted by the High Court—Each of the respondents was working as member of the management staff of the appellant company, which was engaged in manufacture of cloth—Respondents were originally appointed in appellant company in various jobs such as clerks, Machine Overlookers, Supervisors etc. —Respondents’ case that from 1981 onwards, appellant company started insisting on them to be designated as management staff with the object of avoiding payment of overtime wages—Respondents signed an agreement with the management acceding to the request of appellant company, but they continued to perform the same duties as before—Appellant’s case that water had entered the mill premises causing serious damage to the plant and machinery—Order of termination was issued to respondents invoking clause 8 of the agreement entered into by respondents with the appellant company—As per clause 8 of the agreement, Management had a right to terminate the services without assigning any reason by just giving one month’s notice or salary in lieu thereof—Respondents filed writ petition seeking direction for reinstatement alleging that clause 8 of the agreement was void and illegal—Whether respondents were entitled to seek a writ of mandamus as appellant was a private company—Whether High Court was justified in holding that in proceedings under Article 226, respondents would not be entitled to get relief of reinstatement.
       Held : A writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel the public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action. Sometimes, it is difficult to distinguish between public law and private law remedies. (Para 29)
       A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. But nevertheless it may be noticed that the Government or Government authorities at all levels is increasingly employing contractual techniques to achieve its regulatory aims. It cannot be said that the exercise of those powers are free from the zone of judicial review and that there would be no limits to the exercise of such powers, but in normal circumstances, judicial review principles cannot be used to enforce the contractual obligations. When that contractual power is being used for public purpose, it is certainly amenable to judicial review. The power must be used for lawful purposes and not unreasonably. The decision of the employer in these two cases to terminate the services of their employees cannot be said to have any element of public policy. Their cases were purely governed by the contract of employment entered into between the employees and the employer. It is not appropriate to construe those contracts as opposed to the principles of public policy and thus void and illegal under Section 23 of the Contract Act. In contractual matters even in respect of public bodies, the principles of judicial review have got limited application. (Paras 30 and 31)
       Applying these principles, it can very well be said that a writ of mandamus can be issued against a private body which is not a State within the meaning of Article 12 of the Constitution and such body is amenable to the jurisdiction under Article 226 of the Constitution and the High Court under Article 226 of the Constitution can exercise judicial review of the action challenged by a party. But there must be a public law element and it cannot be exercised to enforce purely private contracts entered into between the parties. We are unable to perceive any public element in the termination of the employees by the appellant in Civil Appeal No. 1976 of 1998 and the remedy available to the respondents is to seek redressal of their grievance in civil law or under the labour law enactments especially in view of the disputed questions involved as regards the status of employees and other matters. So also, in the civil appeal arising out of SLP (Civil) No. 6016 of 2002, the writ petition has been rightly dismissed by the High Court. We see no merit in the contention advanced by the appellant therein. The High Court rightly held that there is no public law element and the remedy open to the appellant is to seek appropriate relief other than judicial review of the action taken by the respondent company. (Paras 32 and 33)

Judgment

K.G. Balakrishnan, J.—Leave granted in SLP (C) No. 6016/2002 and the appeal is heard along with Civil Appeal No. 1976/1998. In these two appeals, common questions of law arise for consideration.

2. In Civil Appeal No. 1976/1998, narration of brief facts is necessary to understand whether the reliefs as prayed for by respondents 2 to 36 could have been granted by the High Court. Each of the respondents was working as member of the management staff of the appellant company, which was engaged in the manufacture of cloth. The respondents were originally appointed in the appellant-company in various jobs such as Clerks, Machine Overlookers, Supervisors, etc. According to these respondents, from 1981 onwards, the appellant company started insisting on them to be designated as management staff with the object of avoiding payment of overtime wages. The respondents signed an agreement with the Management acceding to the request of the appellant company, but they continued to perform the same duties as before. The appellant company contended that there was incessant rain in the night of 12.6.1996 when the entire company premises was flooded with water and it caused serious damage to the plant and machinery and finished-stock and the appellant company stayed all the operations and informed the Commissioner of Labour that water had entered the mill premises causing serious damage to the plant and machinery and management had no other alternative but to suspend the operations of the mill. Order of termination was issued to the respondents invoking Clause 8 of the agreement dated 12.3.1991 entered into by the respondents with the appellant company. As per Clause 8 of the agreement, the Management had a right to terminate the services without assigning any reason by just giving one month's notice or salary in lieu thereof. Appellant contended that all these respondents were drawing salary of more than Rs. 1,600/- per month and they were not 'workmen' under the Industrial Disputes Act, 1947. The respondents filed Writ petition No. 11862/1996 for a Declaration that Clause 8 of the Agreement read with Order of termination dated 31.7.1996 issued by the appellant company was void and illegal and violative of Section 23 of the Indian Contracts Act. The respondents had also contended that the agreement entered into by the respondents with the appellant company was violative of Article 21 of the Constitution and the closure of the mill was against Section 25F and 25N of the Industrial Disputes Act, 1947, and they sought for a direction to reinstate them in service with continuity of service and all consequential benefits. The appellant-company contended that the Writ Petition was not maintainable as the appellant company was a private body; therefore, the question of granting the declaration sought would not arise. It was also contended that there was alternative efficacious remedy available to them and therefore, the discretionary jurisdiction under Article 226 of the Constitution of India should not be exercised. The appellant company also contended that the respondents were not entitled to seek a Writ of Mandamus as the appellant was a private company and the decision of the appellant company to terminate the services of the respondents is not liable to be the subject matter of judicial review. According to the appellant company, they were neither 'public authorities' nor their action involved public law element, for which remedy of Writ of Mandamus was available. The Writ Petition was considered by the Division Bench of the Madras High Court. The Court held that Clause 8 of the agreement entered into between the respondents 2 to 36 and the appellant was void and unenforceable against the respondents as being violative of Section 23 of the Indian Contracts Act. Reliance was placed on Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, (1986) 3 SCC 156 and the High Court ultimately held that in

Click Here to Read the rest of this document

2005 Supreme(SC) 1007

Important pointA writ of mandamus can be issued against a private body which is not a State within the meaning of Article 12 of the Constitution but there must be a public law element and it cannot be exercised to enforce purely private contracts entered into between the parties.

Cases Referred (9)

Important point
A writ of mandamus can be issued against a private body which is not a State within the meaning of Article 12 of the Constitution but there must be a public law element and it cannot be exercised to enforce purely private contracts entered into between the parties.