No Acts & Articles mentioned in this case
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23
rd
DAY OF SEPTEMBER 2021
PRESENT
THE HON'BLE Mr. JUSTICE ARAVIND KUMAR
AND
THE HON'BLE Mr. JUSTICE PRADEEP SINGH YERUR
WRIT APPEAL NO.4393 OF 2016 (S-DIS)
BETWEEN:
MS.JAYASHREE GURURAJ
D/O.H.S.GURURAJA RAO
AGED ABOUT 45 YEARS
R/AT 341, ADARSH PALM RETREAT
BELLANDUR OUTER RING ROAD
BENGALURU-560 095 ... APPELLANT
(BY SRI H.S.GURURAJ RAO, SENIOR COUNSEL A/W
SRI N.RAVINDRANATH KAMATH, ADVOCATE)
AND:
1. CISCO SYSTEMS (INDIA)
PRIVATE LIMITED
(A COMPANY INCORPORATED
UNDER THE COMPANIES ACT, 1956)
LOCATED AT CISCO SYSTEMS (INDIA)
PRIVATE LIMITED SEZ UNIT
CESSNA BUSINESS PARK
KADUBEESANAHALLI VILLAGE
VARTHUR HOBLI
SARJAPUR, MARATHALLI
OUTER RING ROAD
BENGALURU-560 103
KARNATAKA, INDIA
THROUGH ITS MANAGING DIRECTOR
CISCO SYSTEMS (INDAI) PVT. LTD.
2. MR.PARVESH SETHI
SENIOR VICE PRESIDENT
CISCO SYSTEMS, USA
2
CISCO SYSTEMS (INDIA)
PRIVATE LIMITED SEZ UNIT
CESSNA BUSINESS PARK
KADUBEESANAHALLI VILLAGE
VARTHUR HOBLI
SARJAPUR, MARATHALLI
OUTER RING ROAD
BENGALURU-560 103
KARNATAKA, INDIA
3. MR.SANJAY PAL
VICE PRESIDENT
CISCO SYSTEMS, USA
CISCO SYSTEMS (INDIA)
PRIVATE LIMITED SEZ UNIT
CESSNA BUSINESS PARK
KADUBEESANAHALLI VILLAGE
VARTHUR HOBLI
SARJAPUR, MARATHALLI
OUTER RING ROAD
BENGALURU-560 103
KARNATAKA, INDIA
4. MS.SEEMA NAIR, DIRECTOR, HR
CISCO SYSTEMS (INDIA)
PRIVATE LIMITED SEZ UNIT
CESSNA BUSINESS PARK
KADUBEESANAHALLI VILLAGE
VARTHUR HOBLI
SARJAPUR, MARATHALLI
OUTER RING ROAD
BENGALURU-560 103
KARNATAKA, INDIA ... RESPONDENTS
(BY SRI PRASHANTH V.G., ADVOCATE FOR R1, R3 & R4;
NOTICE TO R2 IS DISPENSED WITH
VIDE ORDER DATED 22.02.2017)
***
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF
THE KARNATAKA HIGH COURTS ACT, 1961 PRAYING TO SET
ASIDE THE ORDER DATED 06.10.2016 PASSED IN
WP.NO.19726/2015 BY THE LEARNED SINGLE JUDGE OF
THIS COURT AND ETC.
THIS WRIT APPEAL HAVING HEARD AND RESERVED
FOR PRONOUNCEMENT OF JUDGMENT 13.09.2021 COMING
3
ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY,
PRADEEP SINGH YERUR J. , DELIVERED THE FOLLOWING:
J U D G M E N T
Appellant lays a challenge to the order of the
learned Single Judge dated 06.10.2016 in
WP.No.19726/2015 (S-DIS) whereby the writ petition
came to be dismissed.
Brief facts of the case
:
2. Appellant herein was petitioner before the
learned Single Judge and had sought for the following
reliefs:
“1. A writ of mandamus or any other appropriate
writ or direction declaring the term 12(c)(ii)
of the contract of employment as illegal,
arbitrary, unreasonable, unconscionable,
unfair, contrary to public policy and Section
23 of the Indian Contract Act and
unconstitutional and consequently set aside
the order of termination dated 24.04.2015
by restoring the petitioner’s status as
permanent employee holding the post of
Senior Director in Cisco Systems (India)
Pvt.Ltd. with all consequential benefits.
2.
Grant costs,
3.
Grant such other relief and reliefs as this
Hon’ble Court deems fit, proper and
4
necessary in the circumstances of the case
and in the interests of justice and equity.”
3. It is the case of appellant that she holds B.S.
in Computer Engineering, M.S. in Computer Science and
MBA from Ohio State University, USA. She worked in
Senior position in USA, UK and India in reputed
Companies like AT & T, Bell Lamps, Lucent
Technologies, Hewlett Packard. Having regard to her
meritorious service in the above said organization and
excellent education qualifications in top Universities in
USA, she was appointed as Senior Director, AS
(Advance Services) at respondent No.1-Company
(CISCO) vide offer letter/Contract of Employment dated
15.05.2012 vide Annexure-A.
4. During the period of her tenure at respondent
No.1-Company, appellant had won several laurels, to
state a few, she was rated “Outstanding” for both the
years of her employment (financial year 2013 and
2014). She was nominated for ‘Emerging Leaders’ for
CISCO leadership forum and identified as top talent in
an independent Services Assessment published in
5
January, 2015. In this regard, appellant received
accolades from Global Executive Talent HR Leader,
Ms.Cassandra Frangos on November 22, 2013
recognising the leadership qualities demonstrated by
the appellant in seven weeks development program fo r
high potential Senior Directors across a wide array of
functions in CISCO. In January, 2015, appellant was
confirmed as being a top talent Senior Director among
nearly 180 high potential global Senior Directors in
CISCO services after an in-depth independent
assistance.
5. The appellant’s contribution to respondent
No.1-Company was vital element of success of the
Company which guided the team of CISCO to
accomplish well targeted goals and achievements.
6. This being the state of affairs, the services of
appellant came to be terminated by CISCO on
24.04.2015 vide Annexure-D.
7. Being aggrieved by the said termination,
appellant filed the aforesaid writ petition seeking
6
aforesaid reliefs. After service of notice and appearance
of respondent No.1-Company namely, CISCO and its
Directors, a preliminary objection came to be raised by
respondent No.1-Company regarding the maintainabili ty
of writ petition itself on the ground that the respondent
is a private Company registered under the Companies
Act, 1956 and that it would not come within the amb it
Article 12 and would not be amenable to the writ
jurisdiction under Article 226 of the Constitution of
India. On this ground, CISCO sought for dismissal of the
writ petition.
8. After hearing the parties, the main question
that devolved before the learned Single Judge was,
whether respondent No.1-Company namely, CISCO can
be held to be discharging public functions which is
otherwise to be discharged by the Government or its
instrumentalities so that writ under Article 226 of the
Constitution could be invoked against its action of
termination of service of its officer. Having considered
the rival submissions of the learned Senior Counsel, the
learned Single Judge adverting to the points urged
7
therein with regard to the factual aspects and the
questions of law did not find merit in the contentions
raised by the appellant-petitioner and accordingly,
rejected the same and held that first respondent-
Company being a private Company involved in the
business of economic activities cannot be said to be
discharging any public or Governmental functions in
carrying on its business. Hence, the writ petition
challenging the order of termination of the appellant-
petitioner who was working as a Senior Director is not
maintainable. Reserving liberty to the appellant-
petitioner to move the Civil Court to seek appropriate
remedy under civil law dismissed the writ petition,
which is the subject matter of this appeal.
Contentions of the learned Senior Counsel for the
appellant:
9. It is vehemently contended by
Sri H.S.Gururaja Rao, learned Senior Counsel appearing
on behalf of Sri N.Ravindranath Kamath that–
(a) The learned Single Judge erred in holding that
the writ petition is not maintainable ignoring the fact
8
that writ petition was heard on merits after having been
admitted by issuing rule-nisi and posting for further
hearing. Hence, the learned Single Judge committed an
error in dismissing the writ petition on maintainability
despite it having been admitted. Learned Senior Counsel
relies on Rule 13 of the Writ Proceedings Rules, 1977
incorporated in the High Court of Karnataka to buttress
his arguments that once the matter is admitted, it is the
bounden duty of the learned Single Judge to have
decided the matter on merits rather than dismissing the
same on the ground of maintainability.
(b) Learned Senior Counsel contends that the
impugned order denies justice to the deprived appellant
of her livelihood resulting from the failure to exercise
jurisdiction under Article 226 of the Constitution of India
where there is violation of Articles 14 and 21 of the
Constitution of India.
(c) It is further contended by the learned Senior
Counsel that the learned Single Judge erred in deciding
the maintainability of the petition without considering
the binding judgment of the Apex Court in the case of
9
Charu Khurana v. Union of India reported in
(2015)1 SCC 192 wherein it was held that a writ
petition for issue of writ of mandamus for private body
not performing public function/Governmental functions/
public duties for declaring Clause 12(c)(ii) of the
Contract of Employment invoked for terminating
services as illegal and unconstitutional is maintainable
which deprives livelihood guaranteed by Article 21 of
the Constitution of India.
(d) Learned Senior Counsel further contends that
the learned Single Judge has failed to consider the SEZ
unit is created by the statute wherein respondent No.1-
Company CISCO is carrying on economic activities an d
the same falls under the category of State within the
definition of State as held by the Apex Court in the case
of Pradeep Kumar Biswas v. Indian Institute of
Chemical Biology and Others reported in (2002)5
SCC 111. He further contends that the financial
assistance flowing to the SEZ and exemption of tax
granted under Sections 7, 26, 27 & 50 of the SEZ Ac t,
2005 leads to the conclusion that it falls under the State
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10
as defined in Article 12 of the Constitution of India,
more so, when the SEZ unit performs public functions
and public utility services cannot enter into a contract
opposed to law and public policy. Therefore, he
contends that the respondent cannot be said to be n ot
performing public functions and public utility services.
(e) Learned Senior Counsel further contends that
Clause 12(c)(ii) of the Contract of Employment against
public policy and termination of services of the
employee could be examined under the writ jurisdiction
where the Contract of Employment is contrary to
Section 23 of the Contract Act for violating the public
policy and Articles 12 and 21 of the Constitution of
India. He relies on the judgment in the case of Central
Inland Water Transport Ltd., and another etc. v.
Brojonath Ganguly and another reported in (1986)3
SCC 156 which was affirmed by the Constitution Bench
of the Hon’ble Apex Court. The substance of argumen ts
of the learned Senior Counsel on this point is that
respondent No.1-Company having opted for SEZ unit in
the SEZ area carved out by the Central Government
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11
under the provision of SEZ Act, 2005 and the Rules
made thereunder, and the approval granted to it is a
statutory order made by the State Government. The
economic activities specified in the LOA of the
respondent consists of acquiring foreign exchange,
generation of employment etc. which are admittedly
Governmental functions, which makes SEZ unit
performing Governmental functions and duties and
clothes it with public character performing public
functions and duties.
(f) Learned Senior Counsel further contends that
the learned Single Judge has failed to appreciate that
respondent No.1-Company was performing public utili ty
services which could not have entered into a Contract of
Employment clause like 12(c)(ii) which is opposed to
principles of natural justice and the same is arbitrary,
unconstitutional, unfair and unreasonable. He further
contends that the learned Single Judge has failed to
take into consideration what professor wade and
professor Forsyth in a book on Administrative Law had
opined that a judicial review can be invoked to question
- 12
12
when the contracting authority has exceeded its powers.
In the present case, clause 12(c)(ii) being inconsistent
with Section 23 of the Contract Act, which is opposed to
public policy, is amenable to writ jurisdiction to set-right
the wrong caused to the appellant-petitioner.
(g) Learned Senior Counsel relies on the following
judgments in support of his case:
i)
Central Inland Water Transportation Ltd.
and another etc. v. Brojonath Ganguly and
another reported in (1986)3 SCC 156;
ii) Delhi Transport Corporation v.
D.T.C.Mazdoor Congress reported in (1991)
Supp(1) SCC 600;
iii) U.P.State Co-operative Land Development
Bank Limited v. Chandra Bhan Dubey and
others reported in (1991)1 SCC 741;
iv) United India Insurance Co.Ltd v. Manubhai
Dharamsinhabhai Gajera reported in AIR
2009 SC 446;
v) Harjinder Singh v. Punjab State Ware
Housing Corporation reported in (2010)1
SCR 591;
vi) Charu Khurana v. Union of India reported in
(2015)1 SCC 192;
- 13
13
vii) Joseph Shine v. Union of India reported in
(2019)3 SCC 39;
viii)
Santosh Mittal v. State of Rajasthan
reported in (2005)4 SCC 771;
ix) LIC of India and another v. Consumer
Education and Research Centre and others
reported in (1995)5 SCC 482;
x)
ABL International Ltd. & Another v. Export
Credit Guarantee Corporation of India
Limited & Others reported in (2004)3 SCC
553;
xi)
Air India Statutory Corporation v. United
Labour Union and Others reported in
(1997) 9 SCC 377;
xii)
Zee Telefilms v. Union of India reported in
(2005)4 SCC 649;
xiii)
Board of Control for Cricket (BCCI) in
India v. Cricket Association of Bihar
reported in (2015)4 SCC 251;
xiv)
Calcutta Gas Company v. State of West
Bengal reported in 1962 SCR Supp(1);
xv)
Pradeep Kumar Biswas v. Indian Institute
of Chemical Biology and others reported in
(2002)5 SCC 111;
xvi)
Unnikrishnan J.P. and others v. State of
A.P. & others reported in 1993 SCC(1) 645;
- 14
14
xvii) K.S.Puttaswamy v. Union of India reported
in (2017)10 SCC 1;
Contentions of the learned counsel for the
respondents:
10. Per contra, learned counsel appearing on
behalf of respondents contends that the appellant-
petitioner is an employee of respondent No.1-Compan y
having been appointed by virtue of an appointment
letter dated 15.05.2012 and thereafter, due to the
reasons stated in the letter dated 24.04.2015 vide
Annexure-D, the services of the appellant-petitioner
came to be terminated by following clause-12 of the
Contract of Employment with regard to termination and
paid one month salary in lieu of notice of termination
which was stipulated as per the contract between the
parties. Learned counsel further contends that it is this
termination of employment of the appellant-petitioner
that is questioned in the writ petition which having been
rejected is impugned in this appeal.
(a) Learned counsel contends that primarily the
writ petition is not maintainable as the appellant-
- 15
15
petitioner and respondent No.1-Company are governed
by contractual obligations. He further contends that
respondent No.1-Company is a private Company
registered under the Companies Act, 1956 which does
not receive any funds either directly or indirectly from
the State Government and neither does it perform an y
public duty or public functions to come within the ambit
of Article 12 of the Constitution of India and hence, the
said writ petition would not be amenable to be writ
jurisdictions under Article 226 of the Constitution of
India.
(b) Learned counsel further contends that merely
because respondent No.1-Company is established unde r
the SEZ, it would not come within the purview of
receiving or having received funds or privileges from the
State Government. No doubt, it is true that CISCO h as
set up its office established under the SEZ but that by
itself would not mean that every unit established under
the SEZ Act in its precincts would be construed to
receive or have received funds from the State
Government for its establishments and its functioning.
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16
He further contends that even if the Company is
established under the SEZ Act and carries on
commercial activity having impact on the economy, it
cannot be treated to be performing public function or
public duty.
(c) Learned counsel contends that to come within
the ambit of writ jurisdiction, the parties will have to be
an instrumentality of the State or receiving funds either
directly or indirectly from the State. If they do not come
under these two categories, then it should be providing
public duty and public functions to fall under the writ
jurisdiction. He further contends that the writ
jurisdiction is pre-eminently a public law remedy and it
would not be available to those persons espousing the
cause of private remedy, private wrongs or enforcement
of contractual obligations.
(d) Learned counsel further contends that in the
present case on hand, admittedly, appellant-petitioner
has filed the writ petition seeking to declare clause
12(c)(ii) of the Contract of Employment as illegal,
arbitrary, unreasonable, unconscionable, unfair,
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17
contrary to public policy and also contrary to Section 23
of the Indian Contract Act; further seeking to declare it
as unconstitutional and consequently, to set aside order
of termination dated 24.04.2015 by restoring the
appellant-petitioner’s status as permanent employee of
respondent No.1-Company; and further seeking all
consequential benefits arising thereof. He further
contends that the very prayer made is ex facie apparent
that the appellant-petitioner is seeking to enforce
contractual obligations against a private Company to set
aside her termination and to restore her position as an
employee of respondent No.1-Company. This prayer of
the appellant-petitioner cannot be granted in a writ
jurisdiction under Article 226 of the Constitution of India
and therefore, a preliminary objection was raised with
regard to the maintainability of the writ itself and rightly
so the learned Single Judge accepted the same and
dismissed the writ petition.
(e) Learned counsel contends that the remedy
under Article 226 of the Constitution of India would not
be available to the appellant-petitioner also on the
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18
ground that there is an alternative efficacious remedy
available before the appropriate legal forum which
liberty has been granted by the learned Single Judge
while dismissing the writ petition. He further contends
that admittedly, respondent No.1-Company is not a
State neither is it performing public function or public
duty nor is it a statutory body established under any of
the statutes. Respondent No.1 being a private Company
would certainly be not amenable to the writ jurisdiction
under Article 226 of the Constitution of India.
(f) It is further contended by the learned counsel
that the appellant is making a desperate attempt to
indirectly achieve something which is directly prohibited
under the law. According to him, the services of
appellant has been terminated and as stated earlier,
appellant is seeking for reinstatement which is again
prohibited by law and is traceable to Section 14 of the
Specific Relief Act, 1963. The only remedy available to
the appellant would be to seek compensation for
damages, if any.
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19
(g) Learned counsel further contends that the
three essential requirements to come within the
jurisdiction of Article 226 of the Constitution of India the
respondents should be State or an instrumentality of
State, a statutory authority, a private authority
discharging public function or public duty which is not
forthcoming in the present case on hand. Learned
counsel further contends that the appellant has
extensively argued to the effect that respondent No.1-
Company since situated in the SEZ under the Special
Economic Zone Act is amenable to writ jurisdiction as it
is discharging public functions. This argument according
to the learned counsel is far-fetched as every Company
is registered under the statutes like Companies Act,
Partnership Act, Limited Liability Partnership Act, Indian
Contract Act and Special Economic Zone Act etc. Merely
because, respondent No.1-Company is registered unde r
the Companies Act, 1956, it would not qualify to be
discharging statutory functions namely, public function
or public duty for the purpose of Article 226 of the
Constitution of India.
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20
(h) Learned counsel further contends that all
these aspects have been elaborately dealt with by the
learned Single Judge in a well considered and reasoned
order and has rightfully dismissed the writ petition. On
the basis of these submissions, he prays for dismissal of
this appeal.
(i) Learned counsel appearing on behalf of
respondents relies on the following judgments in
support of his case:
i) Federal Bank Limited v. Sagar Thomas and
Others reported in (2003)10 SCC 733;
ii) KK Saksena v. International Commission
on Irrigation and Drainage reported in
(2015)4 SCC 670;
iii) Ramakrishna Mission v. Kago Kunya
reported in (2019)16 SCC 303;
iv)
Commissioner, Lucknow Division v.
Kumari Prem Lata Misra reported in
(1976)4 SCC 486;
v) State Bank of India and Others v.
S.N.Goyal reported in (2008)8 SCC 92;
vi) Naresh Kumar v. Hiroshi Maniwa and Ors.,
reported in 224(2015)DLT 586;
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vii) State of Tamil Nadu v. K.Shyam Sunder
and Others reported in (2011)8 SCC 737;
11. Having heard Sri H.S.Gururaja Rao, learned
Senior Counsel appearing on behalf of appellant and
Sri Prashanth V.G., learned counsel appearing on behalf
of respondents, the points that arise for consideration
before us would be-
“(i) Whether the impugned order passed
by the learned Single Judge in
dismissing the writ petition on the
ground of maintainability calls for
any interference?
(ii) What order?”
RE.POINT NO.(i):
Admitted facts of the case:
12. It is not in dispute that appellant-petitioner
was appointed as a Senior Director, AS (Advanced
Services) in respondent No.1-Company on 15.05.2012.
It is also not in dispute that respondent No.1 is a Private
Limited Company registered under the provisions of the
Companies Act, 1956 operating one of its units coming
under the Special Economic Zone area. It is also not in
dispute that neither the Company is created by any
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22
statute of the State nor is it receiving any funds from
the State either directly or indirectly. It is also an
admitted fact that the appellant-petitioner is bound by
contractual obligations securing her employment
agreement binding her to the terms and conditions
stipulated therein, which is a binding contract between
both parties and the same is not disputed.
13. Admittedly, the employment of appellant-
petitioner came to be terminated by issuance of notice
of termination dated 24.04.2015 (Annexure-D) and sh e
was paid one month salary in lieu of the notice period in
accordance to the terms and conditions of the
termination clause of the employment agreement. For
better understanding, the same is extracted
hereinbelow:
“April 24, 2015
Ms.Jayashree Gururaj
Emp.No.841567
341, Adarsh Palm Retreat
Bellandur Outer Ring Road
Bangalore, Karnataka-560 103
Dear Jayshree,
Termination of Employment
Further to our meeting on February 19,
2015 and subsequent discussion on April 1,
2015, I confirm that Cisco Systems India
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23
Pvt., Ltd is terminating your employment
with it with immediate effect. Cisco will
pay one month of your salary in lieu of
notice of termination in accordance with
your contract of employment.
You will receive any payments which are
required by law to be paid to you, such as
payments for any accrued but unused
annual leave and any earned but unpaid
remuneration up to and including today.
Please ensure that you take steps to
immediately return any Cisco property you
have in your possession. You will need to
sign the termination checklist to
acknowledge this has taken place. You are
required to reach out to your point of
contact Ms. Sonali Ramaiah
(sonarama@cisco.com
) immediately
towards completing the necessary
separation formalities.
I remind you that Cisco requires that you
observe your obligations that survive the
termination of your employment, including
your obligations contained in the
‘Proprietary Information and Inventions
Agreement’ signed by you.
Yours sincerely
Sd/-
Seema Nair
Director-HR”
14. Learned Senior Counsel appearing on behalf of
the appellant-petitioner, in his erudite submission has
canvassed several Doctrines namely, a Doctrine of
inequality of bargaining power, a Doctrine of Public
Policy, a Doctrine of legitimate expectation and Doctrine
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24
of unexpected repudiation. Thereafter, learned counsel
has brought to our attention the characteristics of public
function, public utility services, the legality, validity of
termination. Learned counsel also vehemently
submitted that there is violation and infringement of the
rights of the appellant provided under the Constitution
of India, namely, the right to work, right to dignity and
the obligations of the State under the Constitution.
Learned Senior counsel has also argued extensively with
regard to the writ petition being maintainable and the
role of Courts in dispensation of justice.
15. It is vehemently canvassed by learned
Senior Counsel that respondent No.1-Company is set up
in the Special Economic Zone which is a creature of the
Central Government with an object to provide for an
establishment, development and management of
Special Economic Zones for promotion of exports and
for matters connected therewith.
16. It is the argument of the learned Senior
Counsel that initially, the Central Government was
operating export processing zones and free trade zones
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25
which was later converted into SEZs. under the
provisions of Customs Act, 1962, the Special Econom ic
Zones (SEZ) Rules, 2003 and Special Economic Zones
(Customs Procedure) Regulations, 2003; the day-to-day
operations SEZ and its units including import and
export, inter-unit transfer etc. were governed by these
Rules. Learned Senior Counsel took us to the elaborate
procedure for establishment of SEZ units, its guidelines
and the establishment of respondent No.1-Company
within the SEZ zone, the implication of foreign exchange
earned from the promotion of goods and services, the
creation of employment opportunity with an intention to
draw an inference that respondent No.1-Company bein g
engaged in discharge of Governmental and public
functions and thereby it would come within the ambit of
instrumentality of State. Reliance is placed by the
learned Senior counsel to the Seven Judge Bench
Judgment of Hon’ble Apex Court in the case of
PRADEEP KUMAR BISWAS (supra) and specifically to
paragraphs - 45 and 46, which reads thus:
“45. These objects which have been
incorporated in the Memorandum of
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Association of CSIR manifestly demonstrate
that CSIR was set up in the national interest
to further the economic welfare of the society
by fostering planned industrial development
in the country. That such a function is
fundamental to the governance of the
country has already been held by a
Constitution Bench of this Court as far back
as in 1967 in Rajasthan Electricity Board v.
Mohan Lal where it was said:
"The State, as defined in Art.12,
is thus comprehended to include bodies
created for the purpose of promoting
the educational and economic interests
of the people".
46. We are in respectful agreement
with this statement of the law. The
observations to the contrary in Chander
Mohan Khanna v. NCERT relied on by the
learned Attorney-General in this context, do
not represent the correct legal position.”
17. It is not in dispute that respondent No.1-
Company is performing its economic/commercial
activities within the SEZ zone under the SEZ Act. But,
learned Senior Counsel has not brought to our attention
any material to show that respondent No.1-Company i s
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27
a creature of State or any statute coming within the
purview of the State or that it is performing any public
function or public duty in the course of its day-to-day
activities. In the case of PRADEEP KUMAR BISWAS
(supra), the Hon’ble Apex Court has held that CSIR was
set up in the national interest to further economic
welfare of the society and that at paragraph-51 of the
said Judgment it is stated as follows:
“51. The control of the Government in
the CSIR is ubiquitous. The Governing Body
is required to administer, direct and control
the affairs and funds of the Society and shall,
under Rule 43, have authority “to exercise all
the powers of the Society subject
nevertheless in respect of expenditure to
such limitations as the Government of India
may from time to time impose”. The aspect
of financial control by the Government is not
limited to this and is considered separately.
The Governing Body also has the power to
frame, amend or repeal the bye-laws of CSIR
but only with the sanction of the Government
of India. Bye-law 44 of the 1942 Bye-laws
had provided “any alteration in the bye-laws
shall require the prior approval of the
Governor General in Council”.”
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28
18. It is also stated in paragraph-54 that
employees of CISR are governed by Central Civil
Services (Classification, Control and Appeals) Rules and
the Central Civil Services (Conduct) Rules. Apart from
the other financial aid provided by the State and direct
control of the State the Hon’ble Apex Court held that
CSIR to be amenable to the writ jurisdiction as a State
or other authority under Article 12 of the Constitution of
India.
19. It would be relevant to mention here that
seven Judges Bench of the Hon’ble Apex Court was
deciding the matter based on the reference made by the
two Judges of the Hon’ble Apex Court in view of the
earlier judgment in the case of Sabhajit Tewary v.
Union of India reported in (1975)1 SCC 485 , which
required consideration in view of the fact that the said
Constitution Bench judgment stood for over a quarter
century. It would also be relevant to mention here that
the Constitution Bench of the Hon’ble Apex Court held in
the case of Sabhajit Tewary (supra) has held that
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writ petition/application was not maintainable against
CSIR as it was not an ‘authority’ within the meaning of
Article 12 of the Constitution of India. In the ratio of
5:2, the seven Bench judgment of the Hon’ble Apex
Court held that CSIR to be falling well within the ambit
of Article 12 of the Constitution of India and accordingly
overruled the earlier judgment in the case of Sabhajit
Tewary (supra) which existed over a quarter century
based on the essential requirements stated above.
20. Under the above said facts and circumstances
of the case, it is hard to accept the contentions of the
learned Senior Counsel for the appellant-petitioner that
merely because respondent No.1-Company is located
within the SEZ zone, it would come within the purview
of performing public function or public duty. Hence, the
said contention is negatived.
21. It is also vehemently canvassed by learned
Senior Counsel appearing for appellant that any
covenant enumerated in the employment contract
contrary to the public policy would be in violation of
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Section 23 of the Indian Contract Act and therefore, it
would infringe the fundamental rights provided under
Articles 14 and 21 of the Constitution of India. In the
present case on hand, admittedly, parties are governed
by contractual obligations enumerated in the
employment agreement which is binding on the partie s.
Any violation of the said contractual obligations,
conditions and its infraction cannot be decided in the
writ jurisdiction as disputed questions of fact are
involved. This contention of the learned Senior Counsel
for the appellant-petitioner that the portion of the
covenant in the contract being opposed to public policy
could be gone into in writ jurisdiction is far-fetched and
the same cannot be entertained. Accordingly, said
contention is negatived.
22. Admittedly, in the present case, the
appellant having been appointed in respondent No.1 -
Company in a senior position and thereafter, her
employment having been terminated based on the
covenants stipulated in the employment contract wou ld
squarely come within the four corners of the contractual
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obligation between two parties, i.e., appellant and
respondent No.1 – Company. Admittedly, respondent
No.1 – Company is a private limited Company which i s
not a creature of any statute and neither is it receiving
any funds from the Government or any statutory
authorities.
23. In the present case, the appellant who is
aggrieved by her termination from the employment
would have remedy for redressal of her grievance
before appropriate forum of civil jurisdiction but not
under Article 226 of Constitution of India. It is trite law
that when there is alternative efficacious remedy
available, the appellant would be bound to seek
redressal of her grievance before the appropriate forum
and would not be entitled to by-pass statutory
provisions as the same will enable appellant to defeat
the provisions of statute in the matter of limitation,
payment of Court fee or any other penalty or condition
so imposed to seek such redressal. Therefore, when
there is alternative efficacious remedy, appellant has no
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inherent right to approach this Court under Article 226
of the Constitution of India.
24. Having heard the elaborate submissions of the
learned counsel and having gone through the records
and voluminous authorities relied upon by the learned
counsel for the appellant and respondent, we have to
see whether respondent No.1 – Company would come
within the ambit of Article 12 of the Constitution of India
and whether it is amenable to Article 226 of the
Constitution of India.
25. In the case of PRADEEP KUMAR BISWAS
(supra), a Seven Judge Bench of the Hon’ble Apex
Court while dealing with the similar question considered
whether Indian Institute of Chemical Biology would fall
within the definition of State or other Authority under
Article 12 of the Constitution of India, the test
propounded for determining when the corporation will
be an instrumentality or agency of the Government a s
stated in the case of RAMANNA DAYARAM SHETTY
vs. INTERNATIONAL AIRPORT AUTHORITY OF
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INDIA reported in (1979) 3 SCC 489 , were
summarized as follows:
“(1) One thing is clear that if the entire
share capital of the corporation is held by
Government, it would go a long way
towards indicating that the corporation is an
instrumentality or agency of Government.
(2) Where the financial assistance of the
State is so much as to meet almost entire
expenditure of the corporation, it would
afford some indication of the corporation
being impregnated with governmental
character.
(3) It may also be a relevant factor whether
the corporation enjoys monopoly status
which is State conferred or State protected.
(4) Existence of deep and pervasive State
control may afford an indication that the
corporation is a State agency or
instrumentality.
(5) If the functions of the corporation are of
public importance and closely related to
governmental functions, it would be a
relevant factor in classifying the corporation
as an instrumentality or agency of
Government.
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(6) Specifically, if a department of
Government is transferred to a corporation,
it would be a strong factor supportive of this
inference of the corporation being an
instrumentality or agency of Government.”
26. In view of the aforestated authoritative
decision rendered by Seven Judge Bench of the Hon’b le
Apex Court, contentions raised contrary to same cannot
be eschewed.
27. The appellant will invariably have to satisfy
the above stated essential requirements to fall within
the ambit of Article 12 of the Constitution of India and
being first respondent to be amenable to the writ
jurisdiction under Article 226 of the Constitution of
India. As we have already held above respondent No.1 -
Company is a private limited company, which is not a
creature of statute and it does not have any deep or
pervasive control by the Government, neither does it
have any dominance of the State financially, functionally
or administratively, it would not a State or
instrumentality of State to fall within the scope of Article
12 of the Constitution of India. In the absence of all
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these aspects and there being no control of the
Government or any statutory authority over responde nt
No.1 – Company, it cannot be said that respondent No.1
- Company would come within the ambit of Article 12 of
the Constitution of India merely because it was set up in
Software Economic Zone under the SEZ Act 2005.
Hence, contention of learned counsel for appellant that
respondent No.1 - Company would come within the
ambit of Article 12 of the Constitution of India cannot be
sustained and accordingly, it is negatived.
28. The other contention raised by learned
counsel for appellant is to the effect that respondent
No.1 - Company is an authority performing public
function or public duty. It is no doubt true that a
private body can be held to be amenable to writ
jurisdiction under Article 226 of the Constitution of India
when it performs public function or public duty, but the
same comes with a rider that such organization will
have to show and establish that it is in-effect
discharging public function or public duty and such
function must be closely related to those functions
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36
which are performed by the State in its sovereign
capacity.
29. This aspect of the matter was elaborately
dealt in the case of Federal Bank (supra) at
paragraph-29, which was relied upon by the learned
counsel for the respondents and also in the cases of
Ramakrishna Mission (supra) at paragraphs-31 and
32 and K.K.Saksena (supra) at paragraphs-49 and 53.
30. In the case of Federal Bank (supra), it has
been held:
“29.There are a number of such
companies carrying on the profession of
banking. There is nothing which can be said
to be close to the governmental functions. It
is an old profession in one form or the other
carried on by individuals or by a group of
them. Losses incurred in the business are
theirs as well as the profits. Any business or
commercial activity, may be banking,
manufacturing units or related to any other
kind of business generating resources,
employment, production and resulting in
circulation of money are no doubt, are such
which do have impact on the economy of the
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37
country in general. But such activities cannot
be classified one falling in the category of
discharging duties, functions of public nature.
Thus the case does not fall in the fifth
category of cases enumerated in the case of
Ajay Hasia (supra). Again we find that the
activity which is carried on by the appellant is
not one which may have been earlier carried
on by the government and transferred to the
appellant company. For the sake of argument
even if it may be assumed that one or the
other test as provided in the case of Ajay
Hasia (supra) may be attracted that by itself
would not be sufficient to hold that it is an
agency of the State or a company carrying on
the functions of public nature. In this
connection, observations made in the case of
Pradeep Kumar Biswas (supra) quoted earlier
would also be relevant.”
31. In the case of Ramakrishna Mission
(supra), the Hon’ble Apex Court has held:
“31. Having analysed the circumstances
which were relied upon by the State of
Arunachal Pradesh, we are of the view that in
running the hospital, Ramakrishna Mission
does not discharge a public function.
Undoubtedly, the hospital is in receipt of
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38
some element of grant. The grants which are
received by the hospital cover only a part of
the expenditure. The terms of the grant do
not indicate any form of governmental control
in the management or day to day functioning
of the hospital. The nature of the work which
is rendered by Ramakrishna Mission, in
general, including in relation to its activities
concerning the hospital in question is purely
voluntary.
32. Before an organisation can be held
to discharge a public function, the function
must be of a character that is closely related
to functions which are performed by the
State in its sovereign capacity. There is
nothing on record to indicate that the hospital
performs functions which are akin to those
solely performed by State authorities. Medical
services are provided by private as well as
State entities. The character of the
organisation as a public authority is
dependent on the circumstances of the case.
In setting up the hospital, the Mission cannot
be construed as having assumed a public
function. The hospital has no monopoly
status conferred or mandated by law. That it
was the first in the State to provide service of
a particular dispensation does not make it an
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'authority' within the meaning of Article 226.
State governments provide concessional
terms to a variety of organisations in order to
attract them to set up establishments within
the territorial jurisdiction of the State. The
State may encourage them as an adjunct of
its social policy or the imperatives of
economic development. The mere fact that
land had been provided on a concessional
basis to the hospital would not by itself result
in the conclusion that the hospital performs a
public function. In the present case, the
absence of state control in the management
of the hospital has a significant bearing on
our coming to the conclusion that the hospital
does not come within the ambit of a public
authority.”
32. In the matter of K.K.Saksena (supra), it
came to be held:
“49. There is yet another very
significant aspect which needs to be
highlighted at this juncture. Even if a body
performing public duty is amenable to writ
jurisdiction, all its decisions are not subject to
judicial review, as already pointed out above.
Only those decisions which have public
element therein can be judicially reviewed
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40
under writ jurisdiction. In The Praga Tools
Corpn. v. C.A. Imanual, as already discussed
above, this Court held that the action
challenged did not have public element and
writ of mandamus could not be issued as the
action was essentially of a private character.
That was a case where the concerned
employee was seeking reinstatement to an
office.
53. In the present case, though we
have held that ICID is not discharging any
public duty, even otherwise, it is clear that
the impugned action does not involve public
law element and no “public law rights” have
accrued in favour of the appellant which are
infringed. The service conditions of the
appellant are not governed in the same
manner as was the position in Anadi Mukta
Sadguru.”
33. In the present case on hand, admittedly, the
appellant is seeking for an order to set aside the order
of termination of her service passed by respondent
No.1-Company and consequentially for reinstatement
and for damages. It is no doubt true that if a person is
under the employment of the State or the Government
or any of the instrumentality or agency of the State
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41
where the employment is terminated, the aggrieved
person would certainly come under the ambit of the writ
jurisdiction, but in the matter of employment in a
private Company which has nothing to do with the State
or the Government or not coming under the control o f
the State, such Company would certainly not be
amenable to the writ jurisdiction.
34. It is trite law that primarily, the appellant will
have to satisfy the aforestated requirement to come
within the ambit of Article 12 of the Constitution of India
to be amenable under Article 226 of the Constitution of
India. This aspect of the matter was elaborately dealt in
the case of State Bank of India (supra) wherein the
Hon’ble Apex Court has held in paragraph-17 as under:
“17. Where the relationship of master
and servant is purely contractual, it is well
settled that a contract of personal service is
not specifically enforceable, having regard to
the bar contained in section 14 of the Specific
Relief Act, 1963. Even if the termination of
the contract of employment (by dismissal or
otherwise) is found to be illegal or in breach,
the remedy of the employee is only to seek
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damages and not specific performance.
Courts will neither declare such termination
to be a nullity nor declare that the contract of
employment subsists nor grant the
consequential relief of reinstatement. The
three well recognized exceptions to this rule
are:
(i) where a civil servant is
removed from service in contravention
of the provisions of Article 311 of the
Constitution of India (or any law made
under Article 309);
(ii) where a workman having the
protection of Industrial Disputes Act,
1947 is wrongly terminated from
service; and
(iii) where an employee of a
statutory body is terminated from
service in breach or violation of any
mandatory provision of a statute or
statutory rules.
There is thus a clear distinction between
public employment governed by statutory
rules and private employment governed
purely by contract. The test for deciding the
nature of relief-damages or reinstatement
with consequential reliefs-is whether the
employment is governed purely by contract
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or by a statute or statutory rules. Even
where the employer is a statutory body,
where the relationship is purely governed by
contract with no element of statutory
governance, the contract of personal service
will not be specifically enforceable.
Conversely, where the employer is a non-
statutory body, but the employment is
governed by a statute or statutory rules, a
declaration that the termination is null and
void and that the employee should be
reinstated can be granted by courts. (Vide
S.B.Dutt (Dr.) v. University of Delhi,
U.P.Warehousing Corpn. v. Chandra Kiran
Tyagi, Sirsi Municipality v. Cecelia Kom
Francis Tellis, Vaish Degree College v.
Lakshmi Narain, J. Tiwari v. Jwala Devi Vidya
Mandir and Dipak Kumar Biswas v. Director of
Public Instruction.)”
35. In view of the above judgment, it is clear
that without any ambiguity, with regard to the facts of
the present case where the appellant was employed in a
private Company and her services having been
terminated by payment of one month salary is purely a
contract of private employment which is nowhere similar
to being a public employment. Therefore, the appellant
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cannot seek remedy under the Public Law, when her
contract of employment is private in nature. Ofcourse,
the appellant would have remedy elsewhere but not
under the writ jurisdiction under Article 226 of the
Constitution of India.
36. In view of the above authoritative
judgments of the Hon’ble Apex Court juxtaposed with
the facts of the present case, it is clearly apparent that
respondent No.1 - Company would not fall under the
following categories:
a.
It is not a State or instrumentality or agency of
the State;
b.
It is not a creature of any statute;
c.
It does not come under the control of the State
either financially or administratively;
d.
It does not perform any public function or public
duty and there is absence of public law element;
e.
It does not come under the category or definition
of ‘any other authority’;
37. In view of the above elaborate discussion and
taking into consideration the voluminous authorities
submitted by the parties, we are of the considered view
that respondent No.1-Company cannot be termed to fa ll
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within the definition of Article 12 of the Constitution of
India and accordingly, it would not be amenable to a
writ jurisdiction under Article 226 of the Constitution of
India, as it is not a State nor does it come within the
purview of an instrumentality of State or agency of
State. Hence, the order of the learned Single Judge
would not call for interference.
RE.POINT NO.(ii):
For aforesaid reasons, we are of the view that
appeal lacks merit and we do not find any cogent reason
to interfere with the order passed by the learned Single
Judge. Hence, we proceed to pass the following:
ORDER
i)
Writ Appeal is dismissed;
ii)
Order dated 06.10.2016 passed in
WP.No.19726/2015 is affirmed;
iii)
No order as to costs.
Sd/-
JUDGE
Sd/-
JUDGE
LB/VK:
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