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WP 19726/2015 1
® IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 06TH DAY OF OCTOBER, 2016 BEFORE
THE HON’BLE MR.JUSTICE B.S.PATIL W.P.No.19726/2015 (S-DIS) BETWEEN: Ms.Jayshree Gururaj, D/o. H.S.Gururaja Rao, Aged about 45 years, Residing at 341, Adarsh Palm Retreat, Bellandur Outer Ring Road, Bangalore – 560 013.
… PETITIONER
(By Sri H.S.Gururaj Rao, Senior Counsel for Sri Harikrishna S.Holla, Adv.)
AND:
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, Bangalore, Karnataka – 560 103, India, Through its Managing Director, Cisco Systems (India) Pvt. Ltd.
Mr.Parvesh Sethi, Senior Vice President, Cisco Systems, USA, Cisco Systems (India) Private Limited SEZ Unit, Cessna Business Park, Kadubeesanahalli Village, Varthur Hobli, Sarjapur Marathalli Outer Ring Road, Bangalore, Karnataka – 560 103, India.
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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, Bangalore, Karnataka – 560 103, India.
Ms.Seema Nair, Director, HR, Cisco Systems (India), Private Limited SEZ Unit, Cessna Business Park, Kadubeesanahalli Village Varthur Hobli, Sarjapur Marathalli Outer Ring Road, Bangalore, Karnataka – 560 103, India.
… RESPONDENTS
(By Sri J.Sagar Assts. – A.Murali, Adv. for R1, R3 & R4 Respondent No.2 is deemed to be served v/o. dtd. 3.12.15)
This writ petition is filed under Articles 226 of the Constitution of India, praying to declare the term 12(c)(ii) of the contract of employment as illegal, arbitrary, unreasonable, unconscionable, unfair, contrary to public policy and Section23 of the Indian Contract Act and unconstitutional and consequently, set aside the order of termination dated 24.04.2015 at Annexure-D by restoring the petitioner’s status as a permanent employee holding the post of Senior Director in Cisco Systems (India) Pvt. Ltd. with all consequential benefits.
This petition, having been reserved for orders on 28.06.2016, coming on for pronouncement this day, the Court made the following:
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ORDER
Petitioner was appointed as Senior Director (Advanced Services) in respondent No.1 – Cisco Systems (India) Private Limited on 15.05.2012. Respondent No.1 is a Company incorporated under the provisions of the Companies Act, 1956. It is a private limited company and has a Special Economic Zone unit (for short, ‘SEZ’ unit) operating from its place of business at Marathalli Outer Ring Road, Bengaluru.
Petitioner joined her duties on 23.07.2012. Respondent No.3 – Mr.Sanjay Pal is the Vice President of respondent No.1 – Company. Petitioner alleges that he harassed and humiliated her on 15.10.2014 when they met each other and on 16.10.2014 in the public leadership meeting. It is further alleged that harassment of the petitioner was continued by respondent No.3. As per petition averments, respondent No.3 threatened and humiliated petitioner on 24.01.2015 because she had raised the issue of violations in the business transaction.
Petitioner narrates several instances of harassment and humiliation by respondent No.3.
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It is urged that petitioner was orally coerced to exit from the Company by respondent No.3. Respondent No.4 who is the Director (Human Resource) of respondent No.1 – Company allegedly acted in aid of the said design. Petitioner claims to have issued legal notice questioning the attempt made to oust her from respondent No.1 – Company. Despite outstanding and meritorious service record, she was allegedly harassed and berated by respondent No.3. It is urged that he used his influence as Vice President Cisco Systems in USA to ensure termination of service of petitioner by relying upon a term in the contract of employment.
In this background, petitioner has challenged the order dated 24.04.2015 terminating her services. She has sought for a declaration declaring that clause 12(c) (ii) of the contract of employment as illegal, unfair and contrary to public policy as per Section 23 of the Indian Contract Act apart from being unconstitutional. She has also sought for setting aside the order of termination and for restoration of her status as permanent employee in respondent No.1 – Company, with all consequential benefits.
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Clause 12(c) in the contract of employment reads as under: “c. After successful completion of the probationary period, your employment may be terminated at any time,
(i)…………………………………..
(ii) by the Company giving you 30 days’ written notice or by paying you an amount equal to 30 days’ fixed salary, less any applicable or required tax or other deduction”
This clause in the contract of employment has been questioned contending inter alia that the same was obtained by the respondent – company in the standard form from the petitioner and was contrary to Section 23 of Indian Contract Act being opposed to public policy, unreasonable, unfair, oppressive, contrary to the doctrine of un-conscionability and also to the provisions of Special Economic Zones Act, 2005 (for short, ‘SEZ Act’). Sri Gururaj Rao, learned Senior Counsel appearing for the petitioner urges that impugned order of termination dated 24.04.2015 is unenforceable, void and liable to be set aside.
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A preliminary objection has been raised with regard to maintainability of the writ petition against a private company registered under the Companies Act. Learned Senior Counsel has urged several contentions by taking me through several judgments of the Apex Court and various provisions of SEZ Act, interalia contending that writ petition is maintainable. It is urged by him that respondent – Company has set up SEZ Unit in the processing zone. As contemplated under the SEZ Act and Rules framed thereunder, the Company is an instrumental agency of the State. The Central Government was earlier operating export processing zones and free trade zones. Later, the export processing zones were converted into SEZs under the provisions of the Customs Act, 1962, the Special Economic Zones (SEZ) Rules, 2003 and Special Economic Zones (Customs Procedure) Regulation, 2003; the day-to-day operation of SEZ and its units including import, export, inter-unit transfer, etc. were governed by these Rules.
It is urged that Central Government introduced SEZ Act with an object to provide for establishment, development and management of Special Economic Zones for promotion of exports and for matters connected therewith or incidental
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thereto. Therefore, it followed that the newly created SEZ units were performing governmental functions like those established and created prior to the enactment of SEZ Act. Hence, though respondent – Company was a private company, it was carrying on governmental function under the provisions of SEZ Act which were carried on by the units in existence earlier.
Learned Senior Counsel has dealt with the procedure prescribed for establishment of SEZ Unit, guidelines for notifying SEZs as contained in SEZ Act that require Central Government to be guided by promotion of exports of goods and services, creation of employment opportunity, etc. It is, therefore, urged that acquisition of foreign exchange being a governmental function, respondent – Company had been engaged in discharging governmental and public function, hence, it is an instrumentality of State.
He refers to Section 12(2)(d) of the Act to contend that Development Commissioner monitors performance of the Units in SEZ. Attention of the Court is invited to Section 14(f) of the Act, wherein Approval Committee is enjoined with powers and functions to manage and supervise compliance of conditions subject to which letter of approval or permission has been
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granted to the developer or entrepreneur. Section 7 of the Act which provides for exemption from taxes, duties or cess for goods or services exported or imported by a unit in SEZ has been emphasized. Reliance is also placed on Sections 26 & 27 of the Act, wherein special fiscal provisions for SEZs have been made. Reference is also made to Section 50 of the Act which deals with power of the State Government to grant exemption to the units for the purpose of giving effect to the provisions of SEZ Act. Rules 53 and 54 of the Special Economic Zones Rules, 2006 which stipulate that unit shall achieve foreign exchange for certain period from the commencement of production and for monitoring its performance by the approval committee respectively are also referred to point out that units established under SEZ are discharging public functions and are controlled and regulated by the authorities under SEZ Act.
Attention of the Court is invited to an undertaking furnished in Form-H which is a bond-cum-legal undertaking for SEZ unit. As per the said undertaking, the unit has undertaken to abide by the provisions of the Act and Rules and also the orders made thereunder.
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Sri Gururaj Rao, learned Senior Counsel has relied upon the judgment of the Apex Court in the case of THE LORD KRISHNA SUGAR MILLS LIMITED & ANOTHER Vs. THE UNION OF INDIA & ANOTHER – 1960 SCR (1) 226, wherein it is held that power of Parliament to make laws in relation to creation of foreign exchange was manifest in Entry No.36 of Union List; if interpreted widely, the said entry would embrace within itself not only laws relating to control of foreign exchange, but also to its acquisition to better economic stability of the country. He, therefore, urges that as the respondent – Company is expected to earn foreign exchange, it has been discharging governmental/public function.
Reliance is placed on the judgment of the Apex Court in the case of SENIOR DIVISIONAL COMMERCIAL MANAGER, SOUTH CENTRAL RAILWAYS & OTHERS Vs. S.C.R. CATERERS, DRY FRUITS, FRUIT JUICESTALLS WELFARE ASSOCIATION & ANOTHER – (2016) 3 SCC 582 to contend that generating employment includes job security and respondent – company could not give it in one hand and take away the same from the other.
It is necessary to notice here that the said judgment in S.C.R.Caterers’s case arose in the context of allotment of State
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largesse, wherein it has been laid down that approach of the State should be reasonable, fair, non-arbitrary and non- discriminatory and shall be aimed at protecting the right to means of livelihood and freedom of occupation of small business units which completely depend upon earnings from their petty business and be conscious about rising unemployment and implementation of constitutional philosophy of egalitarian society which provides opportunity to everybody to live a life of dignity.
In paragraph 32 of the said judgment, the Apex Court, while dealing with evolving concept of social justice has held that keeping in view the evolving concept of social justice, members of the respondent (S.C.R. CATERERS, DRY FRUITS, FRUIT JUICESTALLS WELFARE ASSOCIATION) who were the licensees, were entitled to continue their petty business, hence action of the railways in not granting renewal of licence was found arbitrary, unreasonable, unfair and discriminatory.
Reliance is also placed on the judgment of the Apex Court in the case of ZEE TELEFILMS LIMITED AND ANOTHER Vs. UNION OF INDIA AND OTHERS – (2005) 4 SCC 649, wherein the Apex Court, while dealing with Article 12 of Constitution and the question
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whether Board of Control for Cricket in India was a State, applied the test laid down in PRADEEP KUMAR BISWAS Vs. INDIAN INSTITUTE OF CHEMICAL BIOLOGY - (2002) 5 SCC 111.
In paragraph 33 of the said judgment, the Apex Court (per majority) has held as under:
“When a private body has exercised its public functions, even if it is not a State, the aggrieved person has a remedy not only under the ordinary law, but also under the Constitution by way of writ petition under Article 226.
Therefore, merely because a non- governmental body exercises some public duty, that by itself would not suffice to make such body a State for the purpose of Article 12. In the instant case, the activities of the Board (BCCI) do not come under the guidelines laid down by the Court in PRADEEP KUMAR BISWAS case. Hence, there is force in the contention of Mr.Venugopal that this petition under Article 32 of the Constitution is not maintainable”.
However, the minority view expressed in the said case was that the Constitution being an ongoing document, it should be interpreted liberally. Interpretation of Article 12, having regard to the exclusive control and management of the sport of cricket by the Board and enormous power exercised by it, calls for a new approach; the Constitution, should be interpreted in
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the light of our whole experience and not merely in that of what was the State of the law at the commencement of the Constitution.
Reliance is next placed on the judgment of the Apex Court in the case of BOARD OF CONTROL FOR CRICKET IN INDIA Vs. CRICKET ASSOCIATION OF BIHAR & OTHERS – (2015) 3 SCC 251. Paragraphs 31 to 34 of the judgment have been particularly brought to the notice of the Court to contend that though in ZEE TELEFILMS LIMITED case, the Apex Court found that BCCI was not discharging State functions, the Court recognized the fact that Board was discharging some duties like selection of Indian Cricket team, controlling the activities of players, which activities were akin to public duties or State functions, so that if there was any breach of a constitutional or statutory obligation or rights of other citizens, aggrieved party was entitled to seek redress under the ordinary law or by way of writ petition under Article 226 of the Constitution which was much wider than Article 32. Observations of the Apex Court in ZEE TELEFILMS LIMITED case - (2005) (4) SCC 649 made at page 682 paragraph 31 were quoted with approval to the following effect :– “Be that as it may, it cannot be denied that the Board does discharge some duties like the selection of an
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Indian Cricket Team, controlling the activities of the players and others involved in the game of cricket. These activities can be said to be akin to public duties or State functions and if there is any violation of any constitutional or statutory obligation or rights of other citizens, the aggrieved party may not have a relief by way of a petition under Article 32. But that does not mean that the violator of such right would go scot-free merely because it or he is not a State. Under the Indian jurisprudence there is always a just remedy for the violation of a right of a citizen. Though the remedy under Article 32 is not available, an aggrieved party can also seek a remedy under the ordinary course of law or by way of a writ petition under Article 226 of the Constitution, which is much wider than Article 32.”
Having referred to the above view of the Apex Court in ZEE TELEFILMS LIMITED case, in paragraphs 33 & 34 the Apex Court in BOARD OF CONTROL FOR CRICKET IN INDIA Vs. CRICKET ASSOCIATION OF BIHAR & OTHERS – (2015) 3 SCC 251 has observed as under :- “33. The majority view thus favours the view that BCCI is amenable to the writ jurisdiction of the High Court under Article 226 when it is not “State” within the meaning of Article 12. The rationale underlying that view if we may say with utmost respect lies in the “nature of duties and functions” which BCCI performs. It is common ground that the respondent Board has a complete sway over the game
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of cricket in this country. It regulates and controls the game to the exclusion of all others. It formulates rules, regulations, norms and standards covering all aspects of the game. It enjoys the power of choosing the members of the national team and the umpires. It exercises the power of disqualifying players which may at times put an end to the sporting career of a person. It spends crores of rupees on building and maintaining infrastructure like stadia, running of cricket academies and supporting State associations. It frames pension schemes and incurs expenditure on coaches, trainers, etc. It sells broadcast and telecast rights and collects admission fee to venues where the matches are played. All these activities are undertaken with the tacit concurrence of the State Government and the Government of India who are not only fully aware but supportive of the activities of the Board. The State has not chosen to bring any law or taken any other step that would either deprive or dilute the Board’s monopoly in the field of cricket. On the contrary, the Government of India has allowed the Board to select the national team which is then recognized by all concerned and applauded by the entire nation including at times by the highest of the dignitaries when they win tournaments and bring laurels home. Those distinguishing themselves in the international arena are conferred highest civilian awards like the Bharat Ratna, Padma Vibhushan, Padma Bhushan and Padma Shri apart from sporting awards instituted by the Government. Such is the passion for this game in this country that cricketers
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are seen as icons by youngsters, middle aged and the old alike. Any organization or entity that has such pervasive control over the game and its affairs and such powers as can make dreams end up in smoke or come true cannot be said to be undertaking any private activity.
The functions of the Board are clearly public functions, which, till such time the State intervenes to takeover the same, remain in the nature of public functions, no matter discharged by a society registered under the Registration of Societies Act. Suffice it to say that if the Government not only allows an autonomous/private body to discharge functions which it could in law take over or regulate but even lends its assistance to such a non- government body to undertake such functions which by their very nature are public functions, it cannot be said that the functions are not public functions or that the entity discharging the same is not answerable on the standards generally applicable to judicial review of State action. ”
Thus, the Apex Court has ruled in the above case that though BCCI may not be a ‘State’ under Article 12 of the Constitution, it would be certainly amenable to writ jurisdiction under Article 226 of the Constitution of India.
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Dealing with the amendment brought to Regulation 6.2.4 of BCCI Regulations facilitating and validating award of franchise by permitting the administrator having any commercial interest in any event organized by the BCCI, in paragraph 90, the Apex Court observed that validity of the said amendment could be examined from the stand point of its being opposed to public policy. Further, dealing with the ambit and scope of expression ‘public policy’ and referring to several other earlier judgments of the Apex Court including CENTRAL INLAND WATER TRANSPORT CORPORATION LIMITED & ANOTHER Vs. BROJO NATH GANGULY & ANOTHER – (1986) 3 SCC 156 and OIL AND NATURAL GAS CORPORATION LIMITED Vs. SAW PIPES LIMITED –
(2003) 5 SCC 705, the apex court has held in paragraph 96 that public policy was not a static concept; it varied with times and from generation to generation; what was in public good and public interest could not be opposed to public policy and vice versa; any rule, contract or arrangement that actually defeated or tended to defeat the high ideals of fairness and objectivity in the discharge of public functions, no matter by a private non- governmental body would be opposed to public policy. The Apex Court, applying the said test to the regulation 6.2.4 of BCCI Regulations to the extent it permitted, protected and even
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perpetuated situations where the administrators could have commercial interests in breach or in conflict with the duty they owed to BCCI or to the people at large was held to be against public policy and hence, illegal.
Main question, therefore, revolves on the issue whether the respondent – company can be held to be discharging public function which is otherwise required to be discharged by the Government or its instrumentality so that a writ petition under Article 226 of the Constitution of India could be maintained against its action of termination of service of its officer.
The Apex Court in ZEE TELEFILMS LIMITED AND ANOTHER Vs. UNION OF INDIA AND OTHERS – (2005) 4 SCC 649, stated that Article 12 must receive a purposive interpretation as by reason of Part-III of the Constitution a charter of liberties against oppression and arbitrariness of all kinds of repositories of power has been conferred – the object being to limit and control power wherever it was found. A body exercising significant functions of public importance would be an authority in respect of these functions. In those respects it would be same as executive Government established under the Constitution and
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the establishments of organization funded or controlled by the Government. It is further held in paragraph 76 that it was not that every body or association which was regulated in its private functions became a ‘State’. What mattered was the quality and character of functions discharged by the body and the State Control following therefrom. It is further held that when law provided for a general control over a business in terms of the statute and not in respect of the body in question, it would not be a ‘State’. In this regard, the Apex Court has drawn sustenance from the judgments in the case of FEDERAL BANK LTD. Vs. SAGAR THOMAS – (2003) 10 SCC 733; K.R.ANITHA Vs. REGIONAL DIRECTOR, ESI CORPORATION – (2003) 10 SCC 303 and G.BASSI REDDY Vs. INTERNATIONAL CROPS RESEARCH INSTITUTE – (2003) 4 SCC 225.
It is thus evident that while a body discharging public function could be amenable to judicial review under Article 226 of the Constitution, merely because the law provides for a general control over the business of a body as per the provisions of a statute, unless the body itself was not generally controlled and supervised as per the provisions of the statute, it would not be a ‘State’.
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In the case of BOARD OF CONTROL FOR CRICKET IN INDIA Vs. CRICKET ASSOCIATION OF BIHAR & OTHERS – (2015) 3 SCC 251, the Apex Court, after referring to the judgment in the case of ZEE TELEFILMS LIMITED AND ANOTHER Vs. UNION OF INDIA AND OTHERS – (2005) 4 SCC 649, has held that functions of the Cricket Board were clearly public functions and the entity discharging the said functions would be subject to judicial review.
By applying the principles laid down in the aforementioned judgments of the Apex Court, if we examine the instant case, it cannot be said that the respondent – company is discharging public or Governmental functions in carrying out its business activities. The respondent – company is a private company. Composition of the company and its management is not, in any manner, regulated or controlled by the Central or the State Government or by its undertakings. The Chairman, Vice-chairman and Managing Director of the company are required to be appointed as per Articles of Association produced at Annexure-E. The same does not envisage any control of the State.
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The only reason why it is contended before this Court that respondent – company discharges public function is on the strength of the provisions contained in SEZ Act and the rules framed thereunder. Establishment of SEZ unit has been provided under Chapter II of the Act (Act 28 of 2005). Section 3 provides for establishment of SEZ by the Central Government, State Government or by any person jointly or severally for manufacturing of goods or rendering services or for both or as a Free Trade and Warehousing Zone. Interested person intending to set up such economic zone can make a proposal to the State Government concerned. The Board to whom the proposal would be forwarded would consider the same and communicate the same to the Government. Thereafter, as per Section 4 of SEZ Act, the developer concerned is required to follow certain procedure. Section 5 lays down guidelines for notifying SEZ. The Central Government shall keep in mind the objective such as generation of additional economic activities, promotion of exports of goods and services, promotion of investment from domestic and foreign sources, creation of employment, development of infrastructure, etc. These guidelines which the Central Government will have to keep in mind while notifying
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any area as SEZ cannot be construed to attribute character of public functions to units established under SEZ.
Merely because the object of the statute in enabling the Central Government to notify SEZ or an additional area to be included in the SEZ is to generate additional economic activities or promote export of goods and services, investment from domestic and foreign sources and also to create employment opportunities, it cannot be said that once such units are established by private individuals they discharge governmental functions and have to be regarded as units discharging public functions.
Discharge of functions as SEZ units may ultimately result in generation of additional economic activities or promotion of export of goods and services, investment from domestic and foreign sources and also creation of employment opportunities but that does not mean that said units discharge governmental functions so as to make them a body that discharges public functions. In that way, every individual, entrepreneur or a private company engaged in carrying on any business as its economic activity would be helping in generating additional economic activities, promoting of export of goods and services,
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investment from domestic and foreign sources, creation of employment opportunities, development of infrastructural facilities, but such entrepreneurs or private companies cannot be termed as persons or companies engaged in discharging public functions or Governmental functions.
Similarly, merely because these units established under the SEZ Act are exempted from taxes, duties and cess payable and that Development Commissioner monitors the performance of a developer or the unit in SEZ as per Section 12(2) or for that matter, approval Committee monitors and supervises compliance of conditions subject to which letter of approval or permission was granted to the developer or entrepreneur in terms of Section 14(1)(f) of SEZ Act, it would not, in any manner, impart the characteristic feature of public duty required to be discharged by the units.
Likewise, special fiscal provisions for SEZ made under Section 26 of SEZ Act and applications of provisions of Income Tax Act with certain modifications in relation to developers and entrepreneurs as provided under Section 27 and the deeming provisions enacted under Section 53 stating that SEZ shall be deemed to be a territory outside the customs territory of India
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for certain purposes will not make the units established under SEZ as bodies performing public functions.
Similarly provisions contained under Section 50 enabling the State Government to grant exemption from taxes, levies and duties to the developer or the entrepreneur also cannot be construed to enjoin these bodies with public functions. It may be true that effective discharge of their functions by these bodies may advance economic status and improve foreign exchange of the country. But, that is not the criteria to decide whether the body is engaged in discharging public functions.
As already referred to above, the Apex Court in the case of BOARD OF CONTROL FOR CRICKET IN INDIA Vs. CRICKET ASSOCIATION OF BIHAR & OTHERS – (2015) 3 SCC 251, has held that functions of the Board were clearly public functions inasmuch as the Government of India had allowed the Board to select the national team which was to be recognized by all concerned and applauded by entire nation when they win tournaments and bring laurels home and those distinguishing themselves in the international arena were conferred with highest civilian award apart from supporting awards instituted by the Government. It was thus held that nature of passion the game has evoked
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country wide and having regard to the nature of duties and functions discharged by the Board, it had to be held that the Board was discharging public functions.
In the instant case, the respondent – company is engaged in carrying on its business which is purely its economic activity. In that process its actions are governed by the statute namely, SEZ Act. Certain rights and obligations are conferred on the units established under SEZ. If they effectively function, it will not only further their economic interest, but also helps the economy of the nation. That does not mean that each unit permitted to be established under SEZ by private entrepreneurs/companies shall be regarded as bodies enjoined with public functions. Therefore, the inescapable conclusion is that present writ petition filed seeking relief against a private company cannot be held to be maintainable.
Question whether terms of contract entered into between the respondent – company and the petitioner at the time petitioner joined service of the company are sustainable in law? Whether they are against public policy and therefore, do not constitute a valid contract as per Section 23 of the Indian Contract Act are matters that cannot be gone into in this
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proceeding. It is open for the petitioner to agitate her grievance before the appropriate forum.
Though number of judgments including the judgment in the case of CENTRAL INLAND WATER TRANSPORT CORPORATION LIMITED & ANOTHER Vs. BROJO NATH GANGULY & ANOTHER – (1986) 3 SCC 156 are cited by learned Senior Counsel appearing for the petitioner regarding the alleged illegality and impermissibility of having such a term in the service contract which enables an employer to terminate his employee by giving a month’s notice or by paying amount equal to 30 days fixed salary, this Court cannot examine the same, having regard to the view taken by me holding that the writ petition is not maintainable.
Learned counsel for the respondent is right and justified in contending that respondent – company which has established the unit under SEZ is engaged in carrying on commercial activity and even if its activity has an impact on the economy, it cannot be treated as a public function on the basis that regulatory measures have been envisaged as per the provisions of the SEZ Act. He is right and justified in placing reliance on the judgments of the Apex Court in the case of FEDERAL BANK LTD. Vs. SAGAR THOMAS – (2003) 10 SCC 733 and
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BINNY LTD. AND ANOTHER Vs. V.SADASIVAN AND OTHERS – (2005) 6 SCC 657.
The Apex Court in BINNY LTD. AND ANOTHER Vs. V.SADASIVAN AND OTHERS – (2005) 6 SCC 657 has held that principles of judicial review cannot be applied in the matter of employment of employees by private bodies on the basis of contracts entered into between them, unless a public law element is involved and hence, in such cases, redressal has to be sought under civil law or under labour laws. The Apex Court while dealing with the meaning of the expression ‘public law’ has made reference to a book on Judicial Review of Administrative Action, (5th Edition) by de Smith, Woolf and Jowell in Chapter 3, paragraph 0.24, wherein it is stated as under: “A body is performing a ‘public function’ when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. …..”
It, therefore, emerges that remedy under Articles 226 is pre- eminently public law remedy and is not generally available as remedy against private wrongs. The scope of writ of mandamus is limited to enforce public duty. If private bodies discharging
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public function and denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial as long as public law element is present in such action.
In the case of FEDERAL BANK LTD. Vs. SAGAR THOMAS –
(2003) 10 SCC 733, the Apex Court has held that a company registered under the Companies Act for the purposes of carrying on any trade or business is a private enterprise to earn livelihood and to make profits out of such activities. Even though a private banking company with all freedom that it has, has to act in a manner that it may not be in conflict with or against the fiscal policies of the State and for such purposes guidelines are provided by Reserve Bank so that a proper fiscal discipline to conduct its affairs in carrying on its business is maintained, nonetheless, such regulatory measures to keep a check and provide guidelines and to control the affairs of the private companies do not make them bodies which discharge public functions. It only remains a private body of a company.
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In the case of K.K.SAKSENA Vs. INTERNATIONAL COMMISSION ON IRRIGATION AND DRAINAGE AND OTHERS – (2015) 5 SCC 670, the Apex Court, while dealing with the question whether International Commission on Irrigation and Drainage (ICID) was a ‘State’ and whether a writ could be issued against ICID, has held that ICID was fundamentally performing its duties in the realm of collection of data, research, holding of seminars, organizing studies, promotion of the development and systematic management of sustained irrigation and drainage systems, publication of newsletter, pamphlets and bulletins and its role extended beyond the territorial boundaries of India. Thus, the activities undertaken by ICID did not actually partake the nature of public duty or State actions. In paragraph 49 of the judgment, the Apex Court has held as under: “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 under writ jurisdiction. In Praga Tools Corpn. Vs. C.A. Imanual (1969) 1 SCC 585), 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
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essentially of a private character. That was a case where the employees concerned was seeking reinstatement to an office.”
It is, therefore clear that respondent - Company being a private company is involved in its business and economic activities. It is not discharging any public or governmental functions in carrying on its business. Statutory regulation of its business as per the provisions of the SEZ Act will not make its activities in carrying on its business a public duty. Hence, writ petition challenging the order of termination of petitioner who was working as a Senior Director is not maintainable. Petitioner has to seek remedy under the Civil Law.
Reserving liberty to the petitioner to move the Civil Court, this writ petition is dismissed.
Sd/- JUDGE PKS