Wrongful Terminations claims - Remedies that can be availed by an aggrieved employee

By Simran Nandwani and Moksh Roy

A non-workman (managerial) whose aggrieved by the termination of his services has remedies under the applicable employment law and the employment contract. The remedies available to an aggrieved employee in Mumbai and Delhi is governed by the following:

(i)?For Delhi - Delhi Shops and Establishments Act, 1954?(hereinafter referred “DSE Act”)

Under the said act the employer is required to give a notice of one month in writing, or wages in lieu of such notice at the time of termination of services of an employee. However, such a notice is not required where the services of an employee are being terminated for misconduct. Provided that such an employee has been given an opportunity to explain the charge or charges alleged against him in writing.

A non-workman employee aggrieved by termination may approach the Magistrate. If the Magistrate is satisfied that an employee had been dismissed without any reasonable cause or discharged without proper notice or pay in lieu of such a notice, the Magistrate may award one month’s salary as compensation along with the prescribed fine (graded between Rs. 25 (USD 0.30) to Rs. 250 (USD 3)).

(ii)?For Mumbai

Mumbai does not have a legislation which governs the termination of services of a non-workman. However, the Bombay High Court in the matter of Chander Shekhar Malhotra v. Nirlon Ltd. (Notice of Motion No. 1420 of 1999 in Suit No. 2121 of 1999) while deciding a dispute relating to the termination of employment of an employee who was working in a managerial position opined as follows:

“3. The short controversy before this Court is as to whether or not the plaintiff can be granted the reliefs as prayed for in the Notice of Motion, i.e. a direction to the defendants to permit the plaintiff to join duty and to pay the salary of the plaintiff from month to month…

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5 . Mr. Tulzapurkar, however, has submitted that the matter is squarely covered by a judgement of the Supreme Court in the case of Nandganj Sihori Sugar Co. Ltd., Rae Bareli & another v. Badrinath Dixit and others, reported in MANU/SC/0350/1991 :[1991]2SCR468 . The learned Counsel has relied upon paragraphs 8, 9, 10, 11 and 12 of the aforesaid judgement. These paragraphs are as follows :

"8. In Halsbury's Laws of England (4th Edn., Volume 44, at para 407) it is stated:

"407 Contracts for personal work or services - A judgement for specific performance of a contract for personal work or services is not pronounced, either at the suit of the employer or the employee. The Court does not seek to compel persons against their will to maintain continuous personal and confidential relations. However, this rule is not absolute and without exception. It has been held that an employer may be restrained from dismissing an employee in breach of contract if there is no loss of confidence between the employer and employee or it (at least in a contract of employment to carry out a public duty) the employee has been dismissed in a manner which does not comply with statutory or contractual regulations governing dismissal. No Court may, whether by way of an order for specific performance of a contract of employment or an injunction restraining a breach or threatened breach of such a contract, compel an employee to do any work or attend at any place for the doing of any work.

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7. I have considered the arguments put forward by the learned Counsel at length. In my view, the law has been settled with regard to the grant of declaration and mandatory injunction in the case of contracts for personal service by the Supreme Court in a number of cases .?Two of those cases are S.R. Tiwari v. The District Board, Agra, reported in MANU/SC/0223/1963 : (1964)ILL J1SC and Executive Committee of Vaish Degree College, Shamli and others v. Lakshmi Narain and others, reported in MANU/SC/0052/1979 : (1976)IILL J163SC . In Vaish Degree College, the Supreme Court has held as under :

"The relief of declaration and injunction under the provisions of Specific Relief Act is purely discretionary and the plaintiff cannot claim it as of right."

It is further held that the contract of personal service cannot ordinarily be specifically enforced and the Court normally would not give a declaration that the contract subsists. An employee even after having been removed from service cannot be deemed to be in service against the will and the consent of the employers. Thereafter the Supreme Court has recognised three exceptions viz. (i) where a public servant is sought to be removed from service in contravention of provisions of Article 311 of the Constitution of India, (ii) Where the workers are sought to be reinstated on being dismissed under the Industrial Law, (iii) Where a statutory body acts in breach or violation of the mandatory provisions of the statute. This law has been reiterated by the Supreme Court in the case of Badrinath Dixit (supra). In paragraph 10 of the aforesaid judgement it is held as follows:?

"10. A contract of employment cannot ordinarily be enforced by or against an employer. The remedy is to sue for damages, (See section 14 read with section 41 of the Specific Relief Act; see Indian Contract and Specific Relief Acts by Pollock and Mulla, 10th Edn., page 983). The grant of specific performance is purely discretionary and must be refused when not warranted by the ends of justice. Such relief can be granted only on sound legal principles. In the absence of any statutory requirement, courts do not ordinarily force an employer to recruit or retain in service an employee not required by the employer. There are, of course, certain exceptions to this rule, such as in the case of a public servant dismissed from service in contravention of Article 311 of the Constitution; reinstatement of a dismissed worker under the Industrial law; a statutory body acting in breach of statutory obligations, and the like,? (S.R. Tiwari v. District Board, Agra; Executive Committee of U.P. State Warehousing Corporation v. C.K. Tyagi; Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain, See Halsbury's Laws of England, 4th Edn., Volume 44, paragraphs 405 to 420)."

8 . Thus, it becomes clear that in the absence of any statutory requirement, the courts do not ordinarily force an employer to recruit or retain in service an employee not required by the employer. In my view, the aforesaid ratio laid down by the Supreme Court has not been expanded by the latest judgment of the Supreme Court in the case of Ashok Kumar Srivastav. The Supreme Court has rather held any (sic) in paragraphs 18 and 19 of the judgement, that the declaration which can be granted under section 34 is subject to the limits placed by section 14 of the Specific Relief Act.

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11. In my view, the observations made in paragraph 16 of the judgment, clearly show that the Supreme Court has distinguished the spheres in which section 14 and section 34 of the Specific Relief Act operate. Apart from this, section 41(e) of the Specific Relief Act specifically provides that injunction cannot be granted to prevent the breach of a contract, the performance of which would not be specifically enforced. Thus, even if a declaration could be granted under section 34 of the Specific Relief Act, no relief of injunction could be granted in view of section 14(1)(a), (b) read with 41(e). In Vaish Degree College the Supreme Court has clearly held that a contract of employment?cannot ordinarily be enforced by or against an employer. The remedy is to sue for damages. This is so because the provisions of section 14(1)(a) would be applicable after the declaration is given under section 34 of the Specific Relief Act, to the effect that the contract of personal service is subsisting. Section 41 specifically provides that an injunction cannot be granted to prevent breach of a contract, the performance of which would not be specifically enforced. The effect of a declaration under section 34 is that, it states what the rights of the parties are, without containing any coercive order. The declaration is not a direction for specific enforcement of the contract. The Court merely declares that the contract having been illegally terminated continues to subsist. The specific performance of the contract by way of a permanent injunction can only be granted, if the provisions of section 14 read with section 41 are not applicable. Otherwise, the remedy of the plaintiff lies in a claim for damages.”

B.???Analysis?

In view of the findings of the Bombay High Court and the Supreme Court above?it becomes clear that in the absence of any statutory requirement, the courts do not ordinarily force an employer to recruit or retain in service an employee who is not required by the employer. There are three exceptions to this rule:

(i) where a public servant is sought to be removed from service in contravention of provisions of Article 311 of the Constitution of India;

(ii) Where the workers are sought to be reinstated on being dismissed under the Industrial Law;

(iii) Where a statutory body acts in breach or violation of the mandatory provisions of the statute.

C.???Conclusion?

Therefore, it is clear that an employment contract with a non-workman (managerial) cannot be specifically enforced in Mumbai and Delhi against an employer. A non-workman whose services have been terminated cannot be said to be in service against the will of the employer.?

The only remedy available to an aggrieved employee working under the category of non-workman is to sue for damages.

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