KAILASH SINGH versus THE MANAGING COMMITTEE, MAYO COLLEGE, AJMER & ORS. on 31 August 2018

[2018] 10 S.C.R. 881

KAILASH SINGH

v.

THE MANAGING COMMITTEE, MAYO COLLEGE,AJMER & ORS.

(Civil Appeal No. 6409 of 2017)

AUGUST 31, 2018

[KURIAN JOSEPH AND SANJAY KISHAN KAUL, JJ.]

Rajasthan Non-Government Educational Institutions Act,1989:

s.18 – Dismissal of service – By unaided non-Governmentaleducational institution (respondent) – By unanimous resolutionpassed by Board of Governors – Dismissal order challenged byappellant-employees – Education Tribunal directed reinstatementof the employees – Single Judge of High Court upheld the order ofreinstatement – Division Bench of High Court held that themanagement lost confidence in the appellant-employees, and non-compliance of second Proviso clause (iii) to s.18 was only a technicaldefect – Relief of reinstatement was modified to compensationequalling five years salary on the basis of last pay and allowancesdrawn by them on the date of termination of service together withall retiral benefits – Appeal by the employees – Held:In the case ofprivate institution, relationship between the management and theemployees is contractual in nature – Relationship between theparties is one of contract – Conduct of the appellant-employeeshave resulted in loss of confidence – There can be no question ofreinstatement in such case – The only remedy is by determining thecompensation as there was violation of provisions of s.18 in notobtaining consent of Director of Education in writing –Compensation amount is enhanced.

Allowing the appeals, the Court

HELD: 1. Persons employed in educational institutions rightfrom Class IV staff to the highest level have a far greaterresponsibility on account of the nature of activity which takesplace in these institutions – Education. There are students of allages, starting from younger ones to older teenagers, who arestudying and living in these campuses. It is a different kind of

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A‘Gurukul’. Thus, anything which is done, as would cause anadverse impact on the mind of these young people, is somethingwhich cannot be approved, even if it is claimed as a right to makecertain demands. The mode and methodology of making demandsin these educational institutions cannot be at par with an industrialestablishment, where workmen agitate for their rights. This isBalso in the background of the Management apparently claimingthat they were not averse to the principal demand of bonus, butthat they were waiting for the necessary Government decision,in that behalf. [Para 16] [890-D-F]

2.1 There was a complete lack of confidence in theCemployees, by the Board of Governors. The decision by the Boardof Governors, which is really the Managing Committee as definedunder Section 18 of the Rajasthan Non-Government EducationalInstitutions Act, 1989 was a unanimous one as provided in sub-clause (iii) of the second proviso to Section 18 of the said Act,Dand even the required salary was paid, albeit in two instalments.However, the Management did commit a legal default in notobtaining the consent of the Director of Education in writing. TheCollege in question is a recognised institution but is not financiallyaided in any manner by the Central or the State Government.[Para 18] [891-B-C, D]E

2.2 In the case of private unaided educational institutions,its essence is in the autonomy that the institution must enjoy inits management and administration. Thus, while in a government-aided institution, the Government may have a greater say in theadministration, while in the case of unaided institutions, maximumFautonomy in day-to-day administration is to be with the privateunaided institution. In the case of a private institution, therelationship between the management and the employees iscontractual in nature. The facts of the present case are coveredby the master-servant relationship. The relationship betweenGthe parties is one of contract. The present case is one where theconduct of the appellants cannot be said to be such that wouldnot result in loss of confidence. [Paras 19, 22 and 27] [891-G;892-B-C; 894-E-F; 897-C]

2.3 There can be no question of reinstatement in such aHcase, but the only remedy is by determining the compensation to be paid to the appellants, in view of the Management not havingcomplied with the legal requirement of obtaining the consent ofthe Director of Education in writing. [Para 18] [891-E]

2.4 The principle of awarding adequate compensation in theform of back-wages, keeping in mind aggravating and mitigatingcircumstances would, thus, have to be observed. The amountcannot be measly, nor can it be a bonanza. The High Court, in itswisdom, awarded the compensation of five (5) years’ back-wageson the last pay drawn. Not only that, an additional benefit wasconferred by providing for provident fund and retiral dues, to becalculated on the premise as if the services would be continuedtill the appellants attained the age of superannuation. Suchprinciple cannot be said to be fallacious or wrong, so as to call forinterference. However, it would not be appropriate to determinethe amount on the basis of the last pay and allowances drawn.The calculation should be based on the actual pay and allowancesliable to be drawn for the years in question, dependent on theperiod for which this amount is to be calculated. [Paras 30, 31and 32] [898-B-E]

2.5 The Court is inclined to enhance the compensation alittle more, and grant damages in the form of salary and allowancespayable for a period of eight (8) years, of the actual amounts, inboth the cases, after adding the respective provident fund amountsand other retiral dues while simultaneously deducting electricity,water and occupation charges, etc., as calculated by themanagement, as per the impugned order of the Division Bench.To put a quietus to this long-drawn dispute, the amounts ofcompensation are quantified and fixed at Rs. 25 lakhs, in the caseof appellant ‘K’ and at Rs. 18 lakhs in the case of appellant ‘J’.[Para 35] [899-B-C]

2.6 The Court is not inclined to grant future salary andallowances to appellant ‘K’, merely because he has not beengranted reinstatement, with further years of his service stillremaining. Paying future salary and allowances, in cases of suchnon-reinstatement of an employee, would amount to conferring abonanza on an employee, and would not lead to compensationper an acceptable formula. [Para 36] [899-D-E]

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[2018] 10 S.C.R.

AT.M.A. Pai Foundation & Ors. v. State of Karnataka &Ors. (2002) 8 SCC 481 : [2002] 3 Suppl. SCR 587;Sirsi Municipality v. Cecelia Kom Francis Tellis (1973)1 SCC 409 : [1973] 3 SCR 348 – followed.

Vidya Ram Misra v. Managing Committee, Shri JaiBNarain College (1972) 1 SCC 623 : [1972] 3 SCR 320;S.S. Shetty v. Bharat Nidhi Ltd. [1958] SCR 442; RajuChand v. Zonal Director Nehru Yuva Kendra Sangathan,Chandigarh & Ors. (2016) 14 SCC 534; O.P. Bhandariv. Indian Tourism Development Corporation Ltd. (1986)4 SCC 337 : [1986] 3 SCR 923 – relied on.CDeepali Gundu Surwase v. Kranti Junior AdhyapakMahavidyalaya (D.ED.) & Ors. (2013) 10 SCC 324 :[2013] 9 SCR 1; J.K. Synthetics Ltd. V. K.P. Agrawal &Anr. (2007) 2 SCC 433 : [2007] 2 SCR 60; HindustanTin Works Private Limited v. Employees of HindustanDTin Works Private Limited (1979) 2 SCC 80 : [1979] 1SCR 563; Surendra Kumar Verma v. Central GovernmentIndustrial Tribunal-cum-Labour Court, New Delhi(1980) 4 SCC 443; Central Academy Society v.Rajasthan Non-Government Educational InstitutionsETribunal, Jaipur & Ors. 2010 (3) ILR (Raj) 450 –referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6409of 2017.

From the Judgment and Order dated 03.10.2013 of the High Courtof Judicature for Rajasthan, Jaipur Bench, Jaipur in D. B. Special AppealNo. 592 of 2002.

WITH

C.A. No. 6410/2017

Colin Gonsalves, K. N. Bhatt, Sr. Advs., Prashant Bhushan, GovindJee, Devesh Agnihotri, T. Sudhakar, Omannakuttan KK, Ms. Pragya P.Singh, Ms. Jyoti Mendiratta, Anuj Bhandari, Manmeet Kapur, Ms. RuchiKohli, Yash Mishra, Ms. Nidhi Jaswal, Sarad Kumar Singhania, Advs.for the appearing parties.

The Judgment of the Court was delivered by SANJAY KISHAN KAUL, J. 1. The Mayo College, Ajmer isan educational institution founded in 1875 by Sir Richard SouthwellBourke, the 6[th] Earl of Mayo, who was also the Viceroy of India from1868 to 1872. It is one of the oldest educational institutions which wasset up as a public boarding school, offering admission to the then elite.This character of the institution changed in the post-independence era,but it continued to be a prestigious centre of learning. The Mayo Collegeis an unaided, non-governmental educational institution receiving no granteither from the State or the Central Government and is affiliated to theCentral Board of Secondary Education, New Delhi, for purposes ofstudents taking that examination to pass the 12[th] standard.

2. The present unfortunate dispute involves the ManagingCommittee of the School (respondent No.1), with the Principal arrayedas the 2[nd] respondent. The dispute in the two Civil Appeals before usconcerns two employees of this institution, who have served for a numberof years, but apparently irreconcilable differences had arisen on accountof the alleged conduct of the employees. The two employees are KailashSingh (Civil Appeal No.6409/2017) and Jeffry Jobard (Civil AppealNo.6410/2017).

3. Kailash Singh began his employment as a Class IV employeeon 4.1.1984 and was promoted after a decade’s service as an LDCfrom 1.2.1994 and posted in the Library. Jeffry Jobard began his careeras an LDC itself, from 1.7.1985. The services of both Kailash Singh A

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Aand Jeffry Jobard were terminated simultaneously on 9.11.2000, onaccount of conducts attributed to them, which created an extremelyundesirable situation in the respondent school.

4. It may be appropriate to refer to the ground reality whichresulted in the termination of the appellants, though it is not of greatBimportance now in view of subsequent developments. Both theappellants, in different capacities, were associated with the activities ofMayo College Employees Union and are stated to have been instrumentalin setting up the ‘Sangarsh Samiti Mayo College, Ajmer’, under thebanner of which they demanded bonus. The stand of Respondent No. 1was that such bonus was payable only as per the orders of the GovernmentCand the Board of Governors was willing to consider the same, subject tosuch orders being passed. The Sangarsh Samiti organised protestmeetings at the gate of the Mayo College on 19.10.2000 and resolved tohold a general meeting and dharna on 22.10.2000, on the issue of non-grant of bonus. Additionally, a threat was held out to go on a generalDstrike from 23.10.2000, if their demands were not met. The Samiti,steered by the appellants, started with their movement on 20.10.2000,and on 22.10.2000, a general notice was issued to all employees, reiteratingthe stand of the establishment that the Board of Governors was awaitingthe decision of the Government. The employees were warned that anysuch “movement” was totally illegal because no employees’ union hadEgiven any legal notice in that behalf, and a warning to not tolerateabsenteeism on 23.10.2000 and 24.10.2000 was held out. Since theBoard was awaiting the announcement by the Government, it wasinformed to the workers that the management would take a call on theissue on 23.10.2000, and that the workers should not indulge in anyFdisruptive activity.

5. The appellants, despite the same, are stated to have gone aheadwith their threat, and at the time when the Annual Function of the MayoCollege was being held on 23/24.10.2000, instigated other staff membersnot to go to work and created disturbances, causing grave embarrassmentGto the Institution. It appears that loudspeakers were used andinappropriate adjectives were used for the management, so much sothat the traditional dinner scheduled for 24.10.2000 had to be cancelled,resulting in a loss of face for the management.

6. It is the aforesaid incidents which led to the show cause noticeHbeing issued to both the appellants on 3.11.2000 to which they replied on 6.11.2000. The appellants defended their actions by claiming that theyhad a right to organise dharnas and protests, as a constitutional right,and that strike and sloganeering should not be stopped. The adjectivesused of Murdabad, etc. are adjectives of common parlance in suchagitations and cannot be said to be derogatory, and that a proper inquiryshould be held qua their conduct. The non-payment of bonus was claimedto be an “administrative fanaticism”.

7. A unanimous resolution was passed by the Board of Governorson 7/8.11.2000 to terminate the services of the appellants, and they wereso dismissed on 9.11.2000 by issuance of letters of the even date. Itmay be noted that in a subsequent communication, Jeffry Jobard, videletter dated 14.11.2000 sought to slightly back-track from the issue byclaiming that he was not part of the Samiti, and that at the relevant timewas, in fact, a mere spectator of the meetings.

8. The termination of the services of the appellants resulted intheir approaching the Educational Tribunal, set up under the RajasthanNon-Government Educational Institutions Act, 1989 (hereinafter referredto as the ‘said Act’). The crucial aspect on which the Managementerred was the non-compliance of Section 18, which reads as under:

“18. Removal, dismissal or reduction in rank ofemployees.- Subject to any rules that may be made in this behalf,no employee of a recognised institution shall removed, dismissedor reduced in rank unless he has been given by the managementa reasonable opportunity of being heard against the actionproposed to be taken:

Provided that no final order in this regard shall be passed unlessprior approval of the Director of Education or an officer authorisedby him in this behalf has been obtained:

Provided further that this section shall not apply, -

(i) to a person who is dismissed or removed on the ground ofconduct which led to his conviction on a criminal charge, or

(ii) where it is not practicable or expedient to give that employeean opportunity of showing cause, the consent of Director ofEducation has been obtained in writing before the action is taken,or A

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A(iii) Where the managing committee is of unanimous opinion thatthe services of an employee cannot be continued withoutprejudice to the interest of the institution, the services of suchemployee are terminated after giving him six months’ notice orsalary in lieu thereof and the consent of the Director of Educationis obtained in writing.”B

9. When we say that the Management erred, it is so, as, in anyeventuality, the consent of the Director of Education had to be obtainedin writing, which was not so obtained, which proved fatal to theManagement. We may add that insofar as the first proviso to Section 18of the said Act is concerned, a Full Bench of the Rajasthan High Court,Cin Central Academy Society v. Rajasthan Non-GovernmentEducational Institutions Tribunal, Jaipur & Ors.[1] opined that for anunaided institution the said proviso would not apply in view of the lawenunciated in the case of T.M.A. Pai Foundation & Ors. v. State ofKarnataka & Ors.[2]. However, even in case of institutions like MayoDCollege (unaided institution), the second proviso clause (iii) stared themanagement in the face; that while in case of a unanimous opinion ofthe Managing Committee (Board of Governors in the present case), theservices of employees could be terminated when such services wereprejudicial to the interest of the institution, they were required to begiven six (6) months’ notice or salary in lieu thereof and the consent ofEthe Director of Education had to be obtained in writing. The appellantswere paid three (3) months’ salary initially and subsequently the rest ofthe amount was deposited in their bank accounts, but the consent of theDirector of Education was not obtained.

10. The aforesaid position led to an adverse order by the TribunalFon 10.1.2002. The Management approached the High Court and thelearned Single Judge, vide judgment dated 16.7.2002, referring to Section18 of the said Act held that the same was not complied with and evenotherwise the relationship between the parties could not be said to havebeen strained beyond the point of no return. Thus, the direction of theGTribunal for reinstatement was upheld.

11. The aforesaid took the battle to the Division Bench, with theManagement preferring an appeal, where it was opined that this was acase where the Management had lost confidence in the appellants, that 1 2010 (3) ILR (Raj) 450.H2 (2002) 8 SCC 481

there had been a unanimous decision of the Board, but the consent ofthe Director of Education had not been obtained and, thus, there wasonly a technical defect. In terms of this judgment dated 3.10.2013, therelief was modified to compensation equalling five (5) years’ salary onthe basis of last pay and allowances drawn by them on the date oftermination of their services, together with provident fund and all retiralbenefits by construing them to be otherwise in service till they attainedthe age of superannuation. It may also be noted here that by that dateJeffry Jobard had superannuated on 30.9.2013. These two persons haveapparently continued to occupy the premises, and have used the civicfacilities without paying charges. Thus, the Division Bench also opinedthat they must vacate the premises within a period of one (1) month ofsuch payment being made.

12. The Management of Mayo College reconciled itself to thisverdict and did not prefer any appeal. However, the appellants wereaggrieved by the quantification of compensation, in both the cases, whilein case of Kailash Singh, even in respect of non-restoration of hisemployment.

13. We have heard learned senior counsel/counsel appearing forthe parties.

14. On behalf of the appellants, an impassioned plea was madethat they have been unjustly deprived of their employment and must bere-employed and fully compensated for the same. By claiming fullcompensation, it was pleaded that whatever be the total benefits payableright till the age of superannuation must be paid, in the case of JeffryJobard, while in the case of Kailash Singh, he should be paid till date andshould be re-employed, as his services would continue till 2026. Themonetary compensation to the fullest extent was claimed on the basis ofjudicial pronouncements that full back-wages should be the rule. On theother hand, learned senior counsel for the Management pleaded that in aprestigious educational institution, the environment cannot be permittedto be vitiated in this fashion by the appellants, who behaved irresponsiblycausing grave damage to the reputation of the institution. It was pleadedthat the principles applicable to a factory or an industrial establishmentcannot be made applicable to an educational institution, insofar as theextent of discipline is concerned, and the mode and manner of protestscannot be identically based. The effect of the conduct of the appellantswould have a direct impact on the young students, who are studying in AB

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Athe institution, and the embarrassment was aggravated by the presenceof the parents on the special day. It was further pleaded that a technicalnon-compliance with the provision of the said Act cannot be extended tothis extent, and that it is because of such technical non-compliance thatthe Management had, in principle, agreed to accept the verdict of theDivision Bench, by not agitating the matter further. He also submittedBthat the compensation awarded by the Division Bench was adequate,and that in any case, an amount of Rs.5 lakhs each, towards the awardamount had already been paid in pursuance to interim orders passed bythis Court on 1.5.2017.

15. Both sides cited certain judicial precedents in support of theirCcase, which we shall proceed to discuss hereafter.

16. On having delved into the submissions of both sides, as wellas perusing the judgments which are before us, we cannot lose sight ofthe fact that we are dealing with an educational institution of greateminence. Persons employed in educational institutions right from ClassDIV staff to the highest level have a far greater responsibility on accountof the nature of activity which takes place in these institutions – Education.There are students of all ages, starting from younger ones to olderteenagers, who are studying and living in these campuses. It is a differentkind of ‘Gurukul’. Thus, anything which is done, as would cause anEadverse impact on the mind of these young people, is something whichwe find difficult to approve, even if it is claimed as a right to makecertain demands. The mode and methodology of making demands inthese educational institutions cannot be at par with an industrialestablishment, where workmen agitate for their rights. This is also inthe background of the Management apparently claiming that they wereFnot averse to the principal demand of bonus, but that they were waitingfor the necessary Government decision, in that behalf.

17. On the threats being held out by the so-called SangarshSamiti, the Management had warned and cautioned the employeesagainst creating a scene, especially when there were important functionsGon the anvil, where the parents of the wards would be participating. Wemay add that an annual day is always an important day in an educationalinstitution, with active participation of parents. It is of great significanceeven to the passing out batch of students, and the sensitivity of the parentsand children should have been kept in mind while asserting such rights,Hby the employees. This appears not to have been done.

18. We may hasten to add that, of course, in the given situation noinquiry appears to have been done, but the response of the appellants tothe show cause notice issued by the Board of Governors, itself shows asto what transpired and reveals the stand of the appellants. All this led toa complete lack of confidence in the employees, by the Board ofGovernors. The decision by the Board of Governors, which is really theManaging Committee as defined under Section 18 of the said Act, wasa unanimous one as provided in sub-clause (iii) of the second proviso toSection 18 of the said Act, and even the required salary was paid, albeitin two instalments. However, the Management did commit a legal defaultin not obtaining the consent of the Director of Education in writing, whichhas caused this long drawn legal battle. At the cost of repetition, wemay re-emphasise that the Mayo College is a recognised institution butis not financially aided in any manner by the Central or the StateGovernment, and the first proviso to Section 18 of the said Act hasalready been read down, and in our opinion, rightly so, in view of the 11JudgesBench decision in T.M.A. Pai Foundation & Ors. v. State ofKarnataka & Ors.,[3] dealing exclusively with educational institutions,and a portion thereof, separately dealing with unaided educationalinstitutions, as pointed out by learned senior counsel for the Management,Mr. K.N. Bhatt, under the heading of “Private Unaided Non-MinorityEducational Institutions”. We have no hesitation in concluding that therecan be no question of reinstatement in such a case, but the only remedyis by determining the compensation to be paid to the appellants, in viewof the Management not having complied with the legal requirement ofobtaining the consent of the Director of Education in writing.

19. We seek to buttress our conclusion with the following judicialpronouncements. In a seminal judgment in T.M.A. Pai Foundation &Ors. v. State of Karnataka & Ors.,[4] an essential distinction is sought tobe made in the case of private unaided educational institutions, opiningthat its essence is in the autonomy that the institution must enjoy in itsmanagement and administration. Thus, while in a government-aidedinstitution, the Government may have a greater say in the administration,while in the case of unaided institutions, maximum autonomy in day-to-day administration is to be with the private unaided institution. This washeld to be equally applicable to the teaching faculty and the members of 3 Supra.

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Astaff, for maintaining excellence in education. In para 63 of the saidjudgment, the Bench took note of the grievance that wherever cases ofmisconduct are committed by teachers and members of the staff, forwhich disciplinary action is taken, the rules framed by the Governmentare against the Management, which inter alia require prior permissionfrom a governmental authority, before initiation of disciplinaryBproceedings. The most relevant observation in para 64 is “In the case ofa private institution, the relationship between the management and theemployees is contractual in nature.” We may, however, add thatthereafter the importance of a domestic inquiry, in accordance with theprinciples of natural justice, has also been emphasised. But then, in theCpresent case, the show cause notice and the response to it, themselvesseem to lend credence to the allegation of inappropriate behaviour of theappellants. The subsequent endeavour of Jeffry Jobard, through acommunication to back-out, cannot really aid him to a large extent.

20. We may also note that were the appellants to file a civil suit,Dthe evidence would have been recorded, and the matter gone into agreater detail in a factual context. This is relevant from both aspects ofseeking restoration of services and quantification of damages. Thesignificant aspect is that there should not be specific performance of amaster-servant contract of service, and damages should be theappropriate remedy. We may refer to Vidya Ram Misra v. ManagingECommittee, Shri Jai Narain College,[5] where in para 4, it was observedas under:

“4. It is well settled that, when there is a purported terminationof a contract of service, a declaration that the contract of servicestill subsisted would not be made in the absence of specialFcircumstances, because of the principle that courts do notordinarily enforce specific performance of contracts of service(see Executive Committee of U.P. State WarehousingCorporation Ltd. v. Chandra Kiran Tyagi [AIR 1970 SC 1244 :(1970) 2 SCR 250 : (1970) 1 SCJ 790] and Indian AirlinesGCorporation v. Sukhdeo Rai [AIR 1971 SC 1828] ). If the masterrightfully ends the contract, there can be no complaint. If themaster wrongfully ends the contract, then the servant can pursuea claim for damages. So even if the master wrongfully dismissesthe servant in breach of the contract, the employment is effectively H5 (1972) 1 SCC 623.

KAILASH SINGH v. THE MANAGING COMMITTEE, MAYOCOLLEGE, AJMER & ORS. [SANJAY KISHAN KAUL, J.]

terminated. In Ridge v. Baldwin [(1965) 2 WLR 935 (HL)] LordReid said in his speech:

“The law regarding master and servant is not in doubt. Therecannot be specific performance of a contract of service, andthe master can terminate the contract with his servant at anytime and for any reason or for none. But if he does so in amanner not warranted by the contract he must pay damagesfor breach of contract. So the question in a pure case of masterand servant does not at all depend on whether the master hasheard the servant in his own defence; it depends on whetherthe facts emerging at the trial prove breach of contract. Butthis kind of case can resemble dismissal from an office wherethe body employing the man is under some statutory or otherrestriction as to the kind of contract which it can make with itsservants, or the grounds on which it can dismiss them.”

21. The aforesaid view is also adopted by the Constitution Benchin Sirsi Municipality v. Cecelia Kom Francis Tellis[6]. We may usefullyextract the observations in the following paragraphs:

“15. The cases of dismissal of a servant fall under three broadheads. The first head relates to relationship of master and servantgoverned purely by contract of employment. Any breach ofcontract in such a case is enforced by a suit for wrongful dismissaland damages. Just as a contract of employment is not capableof specific performance similarly breach of contract ofemployment is not capable of finding a declaratory judgment ofsubsistence of employment. A declaration of unlawful terminationand restoration to service in such a case of contract of employmentwould be indirectly an instance of specific performance ofcontract for personal services. Such a declaration is notpermissible under the Law of Specific Relief Act.

16. The second type of cases of master and servant arises underIndustrial Law. Under that branch of law a servant who iswrongfully dismissed may be reinstated. This is a specialprovision under Industrial Law. This relief is a departure fromthe reliefs available under the Indian Contract Act and the SpecificRelief Act which do not provide for reinstatement of a servant.

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17. The third category of cases of master and servant arises inregard to the servant in the employment of the State or of otherpublic or local authorities or bodies created under statute.

18. Termination or dismissal of what is described as a purecontract of master and servant is not declared to be a nullityhowever wrongful or illegal it may be. The reason is that dismissalin breach of contract is remedied by damages. It (sic.)[7] the caseof servant of the State or of local authorities or statutory bodies,courts have declared in appropriate cases the dismissal to beinvalid if the dismissal is contrary to rules of natural justice or ifthe dismissal is in violation of the provisions of the statute. Apartfrom the intervention of statute there would not be a declarationof nullity in the case of termination or dismissal of a servant ofthe State or of other local authorities or statutory bodies.

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19. The courts keep the State and the public authorities withinthe limits of their statutory powers. Where a State or a publicDauthority dismisses an employee in violation of the mandatoryprocedural requirements or on grounds which are not sanctionedor supported by statute the courts may exercise jurisdiction todeclare the act of dismissal to be a nullity. Such implication ofpublic employment is thus distinguished from private employmentEin pure cases of master and servant.”

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22. The facts of the present case are covered by the master-servant relationship, i.e., the first category. There is no adjudication byinvocation of a reference to the Industrial Disputes Act, 1947. Thus, theremedy would only be in damages.

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23. Now, turning to the aspect of quantification of damages, whichis the real bone of contention. What we have to examine is whether theapproach adopted by the Division Bench and its conclusion, would giverise to a finding that justifiable compensation has been arrived at, orotherwise.

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24. Mr. Colin Gonsalves, learned senior counsel appearing forJeffry Jobard and Mr. Prashant Bhushan, counsel for Kailash Singh,have both sought to canvass that the only adequate compensation canbe full back-wages, till the date of retirement. In this behalf, they referredto the following judicial pronouncements:

H7 To be read as ‘In’.

KAILASH SINGH v. THE MANAGING COMMITTEE, MAYOCOLLEGE, AJMER & ORS. [SANJAY KISHAN KAUL, J.]

(i) O.P. Bhandari v. Indian Tourism Development CorporationLtd.[8] The factual matrix is dealing with the employer-employeerelationship in a public sector undertaking to which Article 12 ofthe Constitution of India is attracted. It was observed thatreinstatement may not invariably follow as a consequence ofholding that an order of termination of service of an employee isvoid. In that context, it was observed that reinstatement shouldbe the rule for the ‘blue collar’ workmen and ‘white collar’employees, other than those belonging to the managerial or to asimilar high level cadre, and compensation in lieu thereof, is anexception. However, this judgement also notes that therelationship between the parties, having been strained beyond apoint of no return, granting the salary and allowances which wouldaccrue to the employee till the future date of superannuationwas held to be too high a compensation. The object, it wasobserved, would not be for the Court to confer a bonanza on theemployee, but to compensate him by adopting the appropriateformula.

(ii) Deepali Gundu Surwase v. Kranti Junior AdhyapakMahavidyalaya (D.ED.) & Ors.[9]: Full back-wages along withreinstatement and continuity of service were held applicable incases where the employee or workman was not at all guilty ofany misconduct, especially where it had been clearly averredthat the employee was not gainfully employed. The matterpertains to a teacher with regards to her contractual appointmentwhere principles of Industrial Disputes Act were imported in theaward of damages.

The attention of the Court was also drawn to para 38.7, whereit recorded the observations made in J.K. Synthetics Ltd. V.K.P. Agrawal & Anr.[10] that on reinstatement the employee/workman cannot claim continuity of service, as a right, is contraryto the ratio of the judgments of three Judge Benches inHindustan Tin Works Private Limited v. Employees ofHindustan Tin Works Private Limited[11] and Surendra KumarVerma v. Central Government Industrial Tribunal-cum- 8 (1986) 4 SCC 337

9 (2013) 10 SCC 324

10 (2007) 2 SCC 433

11 (1979) 2 SCC 80

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[2018] 10 S.C.R.

ALabour Court, New Delhi[12], and thus, cannot be treated as goodlaw.

The judgment emphasises on the restoration of an employeeto the position held before dismissal, removal or termination fromservices, once the employer’s action has been found to be illegal.BSince the employee is deprived of sustenance for himself andhis family, it has been observed that the employee should get fullback-wages unless it can be proved that the employee wasgainfully employed during that period. In order to support thisproposition, various judicial pronouncements have been referredto, but which are in the context of adjudication under the IndustrialCDisputes Act, 1947. The proposition laid out, thus, is that wherethere is a wrongful termination of service, reinstatement withcontinuity of service and back-wages is the normal rule. A litigantought not to be penalised, it was so observed, for the delays ofthe system. However, mitigating and aggravating aspects, suchDas length of service and nature of misconduct can be taken intoaccount while determining so.25. We may now turn to the cases relied upon by the learnedsenior counsel for the respondents:

i. S.S. Shetty v. Bharat Nidhi Ltd.[13]: The position obtaining inthe ordinary law of master-servant was clarified as one ofEestablished practice that where a master wrongfully dismisseshis servant, he is bound to pay him such damages as wouldcompensate him for the wrong that he has sustained. In casethe employment is for a specific term, the servant would, in thatevent be entitled to damages, the amount of which would beFmeasured prima facie and subject to the rule of mitigation in thesalary of which the master had deprived him.

ii. Sirsi Municipality v. Cecelia Kom Francis Tellis:[14] Thejudgment has already been discussed as aforesaid in respect ofdismissal in contractual matters.

Giii. Raju Chand v. Zonal Director Nehru Yuva KendraSangathan, Chandigarh & Ors.:[15] One of us (Kurian, J.) has 12 (1980) 4 SCC 44313 1958 SCR 44214 Supra.15 (2016) 14 SCC 534H

been a party to this judgment, where in case of a driver on dailywages (or temporary basis), the management lost confidence inhim, and monetary compensation was held to be appropriateremedy.

26. In the conspectus of the aforesaid discussion, we now turn tothe crucial issue of adequacy of compensation to be awarded to theappellants.

27. We have already noticed that by the very nature of therespondent-Institution, which is completely unaided, and keeping in mindthe principle enunciated in T.M.A. Pai Foundation v. State ofKarnataka,[16] the only conclusion is that the relationship between theparties is one of contract. The present case is one where the conduct ofthe appellants cannot be said to be such that would not result in loss ofconfidence. The factual matrix in the context of the show cause noticeand the replies to it itself clarified the position. However, the issue remainsthat the respondent-Institution failed in the legal compliance of the secondproviso to Section 18 of the said Act and must bear the consequences ofthe same.

28. It is also true that the direction of attack, on behalf of theappellants, in the proceedings in the courts below was qua restorationof their services. No clarity has emerged on the issue, in the absence ofany evidence led, on the employment, if any, of these appellants. But noaffidavit has also really been filed stating that they were not gainfullyemployed. We may note that both the appellants have been residing inthe accommodation provided by the respondent-Institution, practicallyfree of charge.

29. We cannot lose sight of the fact that the present case is notone under the Industrial Disputes Act, 1947. This in turn would haverequired factual matrix to be established in different aspects, which isnot what has happened. Thus, the principles of the Industrial DisputesAct, 1947 cannot be, ipso facto, imported into a factual matrix of thepresent nature, for, as a consequence of the illegality in the terminationof the services of the appellants, compensation has to be granted. Themethodology of calculation would be based on the principle of wrongfultermination of an employee, under the master-servant relationship. This,in turn, would import into it the requirement of the appellants endeavouring 16 Supra.

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Ato mitigate their losses. In fact, in this context, we may observe that theclaim for back-wages has apparently been raised for the first time onlyin the present proceedings, arising from the manner in which the HighCourt dealt with the matter, where it granted some compensation.

30. The principle of awarding adequate compensation in the formBof back-wages, keeping in mind aggravating and mitigating circumstanceswould, thus, have to be observed. The amount cannot be measly, norcan it be a bonanza. The High Court, in its wisdom, awarded thecompensation of five (5) years’ back-wages on the last pay drawn. Notonly that, an additional benefit was conferred by providing for providentfund and retiral dues, to be calculated on the premise as if the servicesCwould be continued till the appellants attained the age of superannuation.

31. We have no reason to find that such an aforesaid principlecan be said to be fallacious or wrong, so as to call for our interference,except to the extent discussed hereafter.

D32. We are firstly of the view that it would not be appropriate todetermine the amount on the basis of the last pay and allowances drawn.The calculation should be based on the actual pay and allowances liableto be drawn for the years in question, dependent on the period for whichthis amount is to be calculated.

E33. In order to better understand, and come to an appropriatefigure, we had asked both the parties to give their calculations. TheManagement has given its calculations based on the impugned judgment,which includes the salary calculations for five (5) years on the last payand allowances drawn, while gratuity and provident fund benefits aretaken till the date of retirement. There are deductions made on accountFof electricity dues, house rent and certain other smaller accounts. Onthe other hand, the appellants have given their broad calculations, takingthe monthly emoluments payable in different years, right up to date, andeven beyond that if the employment was to continue, as in the case ofKailash Singh.G34. We are not going into the exactitude of the calculations, but, G34. We are not going into the exactitude of the calculations, but,broadly speaking, the final amount payable to Jeffry Jobard, as per theimpugned order, would be approximately Rs.7.75 lakhs. If theemoluments, as opined by us as aforesaid, are taken into account, forfive (5) years, it would be approximately Rs.9.75 lakhs. In the case ofKailash Singh, the amount as per the calculations of the ManagementH

would be approximately Rs.21 lakhs, while calculated as aforesaid wouldbe approximately in the same range.

35. On having carefully examined the aforesaid issue and thecalculations before us, we are inclined to enhance it a little more, andgrant damages in the form of salary and allowances payable for a periodof eight (8) years, of the actual amounts, in both the cases, after addingthe respective provident fund amounts and other retiral dues whilesimultaneously deducting electricity, water and occupation charges, etc.,as calculated by the management, as per the impugned order of theDivision Bench. To put a quietus to this long-drawn dispute, we havequantified and fixed the amounts. The net impact is an all-inclusivecompensation of Rs. 25 lakhs, in the case of Kailash Singh and Rs. 18lakhs in the case of Jeffry Jobard. Needless to say, the amount of Rs.5lakhs, already paid to the appellants, in pursuance to the directions ofthis Court, is liable to be adjusted from the said amounts payable.

36. We are not inclined to grant future salary and allowances toKailash Singh, merely because he has not been granted reinstatement,with further years of his service still remaining. In fact, in O.P. Bhandariv. Indian Tourism Development Corporation Ltd.,[17] this plea of payingfuture salary and allowances, in cases of such non-reinstatement of anemployee, was rejected as it would amount to conferring a bonanza onan employee, and would not lead to compensation per an acceptableformula.

37. We are, thus, inclined to modify the impugned order to theaforesaid extent, and direct the respondent-Institution to pay theaforementioned amounts within a maximum period of two (2) monthsfrom today, after adjusting the amount already paid.

38. The appellants are required to vacate the premises within amaximum period of one (1) month of the amount being so paid.

39. The appeals are accordingly allowed, leaving the parties tobear their own costs.

Kalpana K. Tripathy Appeals allowed.

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