2006 Supreme(SC) 1090

2006(9) Supreme 639
SUPREME COURT OF INDIA
(From Bombay High Court)
S.B. Sinha and Dalveer Bhandari, JJ.
Indian Airlines Ltd. - Appellant
versus
Prabha D. Kanan - Respondent
Civil Appeal No. 4767 of 2006
(Arising out of SLP (C) No. 22189 of 2005)
With
Civil Appeal No. 4768 of 2006
(Arising out of SLP (C) No. 6997 of 2006)
Decided on 10-11-2006
Counsel for the Parties :
For the Appearing Parties : Arun Jaitley, Uday U. Lalit, Sr. Advocates, Lalit Bhasin, Ms. Nina Gupta, Ms. Shweta Chadha, Ms. Akanksha, Ms. Bina Gupta, Anant Bhushan Kanade, Ravi Goenka and Aribam Guneshwar Sharma, Advocates.

IMPORTANT POINT
Regulation 13 of the Indian Airlines (Flying Crew) Service Regulations is not unconstitutional.

Headnote:SERVICE LAW - Air Corporation Act, 1953 - Section 53 - Air Corporations (Transfer of Undertakings and Repeal) Act, 1994 - Indian Airlines (Flying Crew) Service Regulations - Regulation 13 - Constitutional validity - Termination of services of an employee without holding enquiry - Respondent joined service of the Corporation as an Air Hostess in 1977 - She was promoted as Deputy Manager - While on duty, she was arrested for carrying Indian currency amounting to Rs. 22,07,978/- along with foreign currency - Her husband on basis of her statement was also arrested - She is said to have made a confessional statement before the Custom Authorities - Her services were terminated invoking Regulation 13 of the Regulations by the Board of Directors of the Corporation - Writ petition filed challenging validity of Regulation 13 - While rendering Regulation 13 as ultra vires, the High Court held that considering serious allegations against respondent, Board of Directors not to be directed to reinstate such an employee - High Court held that she has to be compensated monetarily - Whether Regulation 13 can be held as unconstitutional - (No) - Whether Regulation13 is applicable in case of respondent - (No) - Whether considering facts and circumstances of the case relief of compensation granted in favour of respondent is justified - (Yes).

       Held : Respondent was holding a very high ranking post. She was incharge of a flight. Admittedly, a suit case was found which was booked by her, which, however, remained unclaimed. The Custom Authorities found the same. Only Respondent was singled out as the owner of the suit case. It is not in dispute that the suit case contained a large sum of money including foreign currencies. Whoever be the owner thereof did not make any declaration is regard thereto. Rs. 22 lakhs were recovered. She was arrested only on her confession. Thereafter only, the impugned order was passed.(Para 27)

       Evidently, there is no provision for appeal since the decision is taken by the highest authority of the corporate entity, viz., Board of Directors which includes the Chairman also. Appellant is a body corporate. No appeal can be made against the order passed by the Chairman and the Board of Directors. The order being passed by a highest authority, the question of providing for appeal would not arise. Even in Tulsiram Patel (1985) 3 SCC 398, this Court held that no appeal would be available from an order passed by the President of India. Regulation 13 is invoked when the termination of the services is effected by reason of some act on the part of the employee which does not amount to misconduct. It can be invoked:

       (i)where an employee is rendered incompetent and unsuitable.

       (ii)where continuance in employment may also constitute a grave security risk.

       (iii)where there is justifiable lack of confidence.

       (iv)where lack of confidence must have a direct correlation to the nature of duties performed.

       (v)where the Board must consider it to be necessary in the interest of the Corporation to immediately terminate the services of the employee concerned.

       The provisions, therefore, provide for inbuilt safeguards. (Para 29)

       A judicial review of such an order would be maintainable. In a case of judicial review, where no appeal is provided for, the High Court in exercise of its jurisdiction under Article 226 of the Constitution of India would not confine its jurisdiction only to the known tests laid down therefor, viz., illegality, irrationality, procedural impropriety. It has to delve deeper into the matter. It would require a deeper scrutiny.(Para 36)

       We may notice that keeping in view the situational changes and, particularly, outsourcing of the sovereign activities by the State, this Court has been expanding the scope of judicial review. It includes the misdirection in law, posing a wrong question or irrelevant question and failure to consider relevant question. On certain grounds judicial review on facts is also maintainable. Doctrine of unreasonableness has now given a way to doctrine of proportionality.(Para 37)

       So far as the justifiability of the impugned order is concerned, we are of the opinion that the following facts are required to be taken into consideration. (Para 41)

       Respondent was holding a post of trust and confidence. She had been issued a Red Airport Entry Pass which gave unrestricted access to all civil airports in India and flying to other countries on the network of Indian Airlines. Any doubt on the integrity of the person holding such a post of trust and confidence may shake the confidence of the employer. If such activities are permitted, the same in a given case may provide for risk not only to the aircraft but also to a large section of people. The subjective satisfaction of the Board of Directors was based on the confession she made and the evidences collected by the Directorate of Enforcement. The fact that subsequently she had been exonerated or she had been discharged from the criminal case may not be of much significance as the validity of the order must be judged having regard to the fact situation as was obtaining on the day on which the same was passed. We have noticed in the final order dated 13th December, 2005, the Custom Excise and Service Tax Appellate Tribunal, South Zonal Branch at Bangalore exonerated Respondent.(Para 42)

       However, having regard to the fact that there was no evidence as to why she carried the suit case from Mumbai or she had been handed over the suitcase at Hyderabad and keeping in view the nature of investigation carried out by the Customs Authorities, the penalties imposed on her under Section 114 (i) of the Customs Act was held to be not sustainable.(Para 43)

       True, loss of confidence cannot be subjective but there must be objective facts which would lead to a definite inference of apprehension in the mind of the employer regarding trustworthiness of the employee and which must be alleged and proved. But, then all the criteria mentioned therein are present in the instant case.(Para 47)

       The question which now arises is as to whether the Regulation 13 is applicable to the case of Respondent. Section 45 of the 1953 Act provides for regulation making power of the Corporation. It extends to the terms and conditions of service of officers and other employees of the Corporation other than the Managing Director and officers of any other categories referred to in Section 44 of the 1953 Act. Regulations were framed pursuant to or in furtherance of the said regulation making power. Regulation 13, as it stood earlier, did not contain any power in the Board of Directors to terminate the services of an employee. Regulation 13 speaks of lack of confidence. Regulation 13 came into force with effect from 1.3.1993. Respondent indisputably was appointed prior thereto.(Para 48)

       We, therefore, hold that although Regulation 13 is not unconstitutional but the same is not applicable in case of Respondent. However, we are furthermore of the opinion that in the peculiar facts and circumstances of this case and keeping in view the fact that she had put in 20 years of service she be paid eight years salary towards both back wages as well as for loss of employment in future. This will be on the basis of her last drawn basic pay and dearness allowance. The Corporation will pay Respondent the amount refunded by her towards the provident fund and gratuity at the rate of interest provided under the Statutes governing them. The relief granted to Respondent shall, in our opinion, subserve the interest of justice.(Para 54)