Holding

The Supreme Court held that the suit is maintainable under Section 34 of the Specific Relief Act and that the High Court’s decision in the writ petition operates as res judicata, precluding the respondent from re‑litigating the maintainability issue.

Summary

A.K. Srivastav was appointed as a probationary Inspector with National Insurance Company Ltd. on conditions that he achieve a premium target within twelve months, failing which his service could be terminated without notice. After failing to meet the target, the company served a notice of termination, and Srivastav filed a suit for a declaratory decree that the termination was illegal and that he remained in service. The trial court decreed in his favour; the decree was executed, challenged in a writ petition, and the High Court upheld the decree and held the suit maintainable under Section 34 of the Specific Relief Act. The company appealed, and the High Court, relying on res judicata, barred re‑litigation of the maintainability issue and ultimately dismissed the suit on the merits of the termination. Srivastav appealed to the Supreme Court, which held that (i) a suit for declaratory relief is maintainable under Section 34 and is not barred by Section 14, and (ii) a decision in a writ petition under Articles 226/32 operates as res judicata, preventing the respondent from re‑agitating the maintainability question. The Supreme Court dismissed the appeal, leaving the High Court’s dismissal of the suit undisturbed.

Issues considered

Whether a suit for a declaratory decree that a termination of service is illegal is maintainable under Section 34 of the Specific Relief Act, 1963 and not barred by Section 14.
Whether a decision rendered in a writ petition under Article 226/32 of the Constitution constitutes res judicata in subsequent civil proceedings between the same parties.
Whether the termination order violated the contractual terms requiring one month's notice or pay in lieu thereof.
Whether the suit is barred under the Industrial Disputes Act.

Legislation cited

Code of Civil Procedure, 1908s. 11
Specific Relief Act, 1963s. 14, s. 34

Subjects

Specific Relief Actdeclaratory reliefmaintainabilityres judicataservice terminationprobationary employmentCivil Procedure Codewrit petitionArticle 226Article 32

Judgment

ASH OK KUMAR SRIV ASTAV A
v.
NATIONAL INSURANCE COMPANY LTD. AND ORS.

APRIL 27, 1998

[DR. A.S. ANAND AND K.T. THOMAS, JJ.) B

Specific Relief Act, 1963 :

Ss. 14 and 34-Suit for a decree declaring that notice of termination
ofservices ofplaintiff was illegal and he continued in service-Maintainability C
of-Defendant raising the plea that suit was for enforcement of a. contract
of employment and was not maintainable-Held, maintainability of a suit
cannot be adjudged from the effect which the decree may cause-It can be
determined on the basis of ostensible pleadings made and the stated relieft
claimed in the plaint.
D
Code of Civil Procedure, 1908 :

S.11-Res judicata-Held, a decision on an issue raised in a writ
petition under Article 226 or Article 32 of the Constitution would also
operate as res judicata between the same parties in subsequent judicial E
proceedings-Constitution of India-Articles 226 and 32.

Service Law :

Termination of service-Plaintiff appointed as Inspector on probation
in National Insurance Company on certain terms and condition including F
that within the prescribed period he would achieve the targeted amount of
premium, which the plaintiff failed to achieve-Notice of termination of
service issued-Plaintiff filing a suit for a decree declaring that the notice
was illegal and he continued in service-Held, in view of terms and conditions
of employment incorporated in the letter of appointment, the suit was rightly
dismissed by the High Court. G
Maxim: ''nemo debet bis vexari pro una et eadem causa ''-Applicability
of

The appellant was appointed as Inspecto~ in the employment of National
Insurance Company Ltd., the respondent, on 19.9.1980. The terms and H
1199
1200 SUPREME COURT REPORTS [ 1998] 2 S.C.R.

A conditions of employment stated that initially the appellant would be on
probation for 12 months and in order to be eligible for promotion as
Probationary Inspector (Grade-I) he was required to achieve the target of
premium amount prescribed, and unless a letter appointing him as
Probationary Inspector (Grade-I) was issued by the Company before the
B expiry of initial probationary period or the extended probationary period, his
services \\Ould stand automatically terminated. His service was also liable to
be termin:ated without assigning any reason during probationary period. On
13.3.1982 the appellant was served with notice of termination of his service
stating th:at he failed to achieve the targeted premium amount.

C The appellant filed a suit for declaration that the notice of termination
was illegal and void and he continued to be in service with all benefits flowing
from the post. The respondent-company filed a written statement contending,
inter alia, that the suit was not maintainable under s. 34 of the Specific
Relief Act. 1963. Later, the suit was proceeded with ex-parte and was decreed.
The appellant sought execution of the decree, which was unsucessfully resisted
D by the respondent- company on the ground including that the decree was
unenforceable and void as the same was passed without jurisdiction. The
order of the execution court was challenged by the respondent-company in
a writ petition before the High Court, which dismissed the writ petition
holding th:at the decree was passed by a court having jurisdiction and the suit
E was maintainable under s. 34 of the Act. The respondent-company then filed
a first appeal challenging the decree and, on dismissal of the appeal, it filed
a second appeal before the High Court. The High Court held that the question
whether tllie suit was maintainable under s.34 of the Act had finally been
decided in the writ petition and the said decision would operate as res
judicata. However, the second appeal was allowed by the High Court holding
F that the termination order was not vitiated for non-payment of one month's
pay in lien of notice and the appellant was not entitled to continae as a
Probationary Inspector.

Aggrieved, the plaintiff filed the present appeal.

G It wa1s once again contended for the respondent-company that the suit I
was not maintainable u/s 34 of the Specific Relief Act. It was argued that
in the writ petition the order passed in execution proceedings was challenged
and, therefore, the decision rendered in the writ petition would only remain
in realm of execution and it would not preclude the parties to the suit from
raising such issues over again when the very decree itself is challenged in
H appeal. The counsel for the respondent alternatively contended that the relief
A.K. SRlYASTAVv. N.l.C. LTD. 1201
claimed, if granted, would result in specific enforcement of a contract of A
employment and in view of s. 14(1) of the Act, a contract of employment would
not be specifically enforceable since non-performance of it could be
compensated by molley.

Dismissing the app!i!al, this Court
B
HELD: 1. In view of the terms and conditions of employment of the
appcll~nt in~orpora!ed in the letter of appointment, the conclusion of the
High Court that the suit is liable to be dismissed does not warrant any
interference. Admittedly, the appellant has no case that respondent-company
has issued any latter appointing him as "'Probationary lnspertor (Grade-I)
"before the expiry of the initial period of 12 months nor has he a case that c
initial period of probation was further extended at any time. (1208-C]

2. A decision en an issue raised in a writ petition under Article 226
or Article 32 of the Constitution would also operate as res judicata betweeu
the same parties in subsequent judicial proceedings. The only exception is D
that the ruh: of res judicata would not operate to the detriment or impairment
of a fundamental right. The High Court in the Judgment dismissing the writ
petition recorded a clear finding that the suit for declaration is maintainable
before t!Je civil court. Though Explanation Vll added to s.11 cpc may not
stricto sensu apply to the trial stage, it must gain application there to. It is
immaterial that the writ petition was filed only subsequently because the E
findings made therein became final as no appeal was filed against the judgment.
The basic idea in the rule of res judicate has sprouted from the maxim
"nemo debet bis vexa'ri proun.ict eadem cause" (no man should be vexed twice
over for the same causes. The respondent now cannot re-agitate the question
regarding maintainabliltiy of the suit under s.34 of the Specific Relief Act, F
1963. (1204-E; 1205-D-Fl

Daryao & Ors. v. State of U.P. & Ors .. (1962( l SCR 574; The
Amalgamated Coalfields Ltd. v. The Janapada Sabha, Chhindwara, (19631
Suppl.-1SCR172; G.K. Shacma & Ors. v. S.D. Sharma & Ors., (19861 Suppl.
sec 239 and Y.B. Patil & Ors. v. Y.L. Patil, (197614sec66, relied on. G
3.1. It cannot be said that the suit was for enforcement of a contract
of employment. The appellant was appointed on certain terms. Termination
),- of his employment purportedly in terms of the same contract is challenged
by him by praying for a declaration that such termination is invalid and,
therefore, he continues in the same employment Maintainability of a suit H
!
·-"
1202 SUPREME COURT REPORTS [1998] 2 S.C.R.

A cannot he adjudged from the effect which the decree may cause. It can be
determined on the basis of the ostensible pleadings made and t!Je stated
reliefs claimed in the plaint. 11206-C-DI

3.2. Specific Relief Act, 1963 is not restricted to specific performance
of contracts as the statute governs powers of the court in granting specific
B reliefs in a variety of fields. Even so, the Act does not cover all specific
reliefs conceivable. Even the wide language contained in s.34 did not exhaust
the powers of the court to grant declaratory reliefs and it is enough to open
the corridors of civil courts to admit suits filed for a variety of declaratory
reliefs. The mere fact that a suit which is not maintainable under s.14 of the
C Act is not to persist with its disability of non-admission to civil courts even
outside the contours of Chapter II of the Act.11206-G; 1207-A-C]

Hungerford Investment Trust ltd. v. Haridas Mudhra & Ors., 11972] 3
SCC 684; Veruareddi Ramaraghave Reddy & Ors. v. Konduru Seshu Reddy
& Ors., 119661 Suppl. SCR 270; Mis Supreme General Films Exchange Ltd.
D v. His Highness Maharaja Sir Brijnath Singji Dea of Malhar & Ors., 119751
2 SCC 530 and Ram Das Khatavu v. Atlas Mills, AIR (1931) Born. 151,
referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2284 of
E 1998.

From the Judgment and Order dated I 7.1.97 of the Allahabad High Court
in S.A. No. 235 of 1996.

R.K. Jain, Rakesh K. Sharma and Surya Kant for the Appellant.
F
Rajinder Dhawan, (Amit Vidyarthi) for Ms. Minakshi vij, for the
Respondents.

Th<' Judgment of the Court was delivered by

G THOMAS, J. Special leave granted.

Appellant claims to be still in the service of National Insurance Company
Limited (respondent) as a probationary Inspector on a contention that the
order pas:;ed by the respondent on 13.3.1982 terminating his probation is bad
in law. He succeeded in the trial court where he filed the suit for a declaratory
H decree and also in the first appellate court, but he was non-suited by the High
)
A.K. SRIVASTAV v. N.!.C. LTD. [THOMAS, J.] 1203
Court in the second appeal filed by the respondent. Hence he has come up A
in this Court with this appeal.

Appellant was appointed as Inspector on probation at Khalidabad under
the Gorakhpur branch of the respondent Company with effect from 19.9.1980,
initially for a period of twelve months subject to certain conditions. On
13.3.1982 respondent-company served upon him thirty days notice of B
termination of his service on the premise that appellant failed to achieve the
targeted premium amount.

Appellant filed the suit in the Munsifs Court Gorakhpur for a decree
declaring that the said notice of termination is illegal and void and that he C
continues to be in service of the Company with all the benefits flowing from
the post. Respondent-company contested the suit by filing a written statement
in which it was contended, inter alia, that the suit is not maintainable under
Section 34 of the Specific Relief Act (for short 'the Act') and that the notice
of termination of the appellant is legal and valid.
D
However, respondent-company did not participate during evidence stage
. ,._ and hence the trial court proceeded with the suit ex-parte and a decree was
passed in terms cf the plaint on 25.1.1991. Appellant took out execution
proceedings in which he claimed a sum of Rs. 1,02,861 as arrears of pay due
to him from the date of notice of termination. Respondent resisted the execution
by putting-forth various contentions including that the decree in unenforceable E
and void as the -same was passed without jurisdiction. The execution court
has repelled all such objections by its order dated 7.9 .1991.

Respondent challenged the said order by means of a writ petition filed
under Articles 226 and 227 of the Constitution. High Court of Allahabad
dismissed the writ petition holding that the decree was passed by a court F
having jurisdiction and, that the suit was maintainable under Section 34 of the
Act.

It was thereafter that the respondent-company preferred a first appeal
before the Court of Civil Judge (Senior Division) Gorakhpur challenging the G
decree of the trial court. When that appeal was dismissed respondent-company
preferred a second appeal before the High Court of Allahabad. Four questions
were formulated by the respondent-Company in the second appeal and pressed
them into service as substantial questions of law. They are : (1) Whether the
termination order is violative of the contractual term that one month's notice
or pay in lieu thereof is sine qua non; (2) whether appellant is entitled to H
1204 SUPREME COURT REPORTS [1998] 2 S.C.R.

A reinstatement without entering upon a finding that there was statutory violation;
(3) whether the suit is barred under the Industrial Disputes Act; (4) whether
the suit is barred under section 34 of the Act.

High Court did not permit the respondent-Company to pursue with the
last two questions on the premise that those questions were tmally decided
B in the writ petition and such decision will operate as a bar of res judicata.
However, learned Single Judge of the High Court proceeded to consider the
other two questions and held that non-payment of one month's pay in lieu
of the notic1! would not vitiate the termination order and that at any ;ate,
appellant is :10t entitled to continue as a Probationary Inspector. Resultantly,
C the High Court reversed the decree of the trial court and dismissed the suit.

Learned counsel for the respondent-company once again canvassed for
acceptance of the argument that the suit is not maintainable in view of Section
34 of the Act. But in view of the clear finding rendered by the High Court
in the judgment dismissing the writ petition that such a suit for declaration
D is maintainable before a civil court, the first appellate court did not go into
that question.

In the :;econd appeal, respondent's counsel repeated •he contention but
learned Single Judge of the High Court, who disposed of the second appeal,
E did not allow the respondent to re-agitate the said question on the premise
that the deci~;ion rendered in the writ petition on that point would operate as
res judicata. Undeterred by such repeated repudiation of the contemion,
learned counsel for the respondent made an endeavour to convince us that
the suit is not maintainable on the same ground.

F It is wdl r.eigh settled that a decision on an issue raised in writ petition
under Article 226 or Article 32 of the Constitution would also operate as res
judicata between the same parties in subsequent judicial proceedings. The
only exception is that the rule of res judicata would not. operate to the
detriment or impairment of a fundamental right. A Constitution Bench of this
G Court has c.or·.sidered the applicability of rule of res judicata in writ proceedings
under Article 32 ot the Constitution i11 Daryao & ors. v. Stat,, of UP. & ors.
[1962] I SCR 574 and it was held that the basis on which the rule rests is
founded on consideration of public policy and it is in the interest of public
at large that a finality should attach to the binding decision pronounced by
a court of competent jurisdiction and it is also in the public interest that
H individuals should not be vexed twice over in the same kind of litigation.
)

A.K. SRIVASTAVv. N.l.C. LTD. [THOMAS, J.j 1205

This was reiterated by another Constitution Bench of this Court in The A
-<- Amalgamated Coalfields Ltd. v. The Janapada Sabha, Chhindwara, [1963)
Suppl. I SCR 172. The following is the' rat.io : "Therefore, there can be no
doubt that the general principle of res judicata applies to writ petitions filed
under Art. 32 or Art. 226. It is necessary to emphasise that the application
of the doctrine of res judicata to the petitions filed under Art.32 does not in B
any way impair or affect the content of the fundamental rights guaranteed to
the citizens of India.

Though the above has now become an a accepted legal position vide
G.K. Sharam & Ors. v. S.D. Sharma & Ors, [1986) Suppl. SCC 239, the
contention raised here is that since the writ petition was in challenge of an C
order passed in execution of a decree, the decisions rendered in such writ
petition would only remain in the realm of execution and they would not
preclude the parties.to the suit from raising such issues over again when the
very decree itself is challenged in appeal. The Explanation VII, added to
Section 11 of the Code of Civil Procedure as per CPC Amendment Act I 04
of 197 6 reads thus : D
"The provisions of this section shall apply to a proceeding for the
execution of a decree and references in this section to any suit, issue
of former suit shall be construed as references respectively, to a
proceeding for the execution of the decree, question arising in such E
proceeding and a former proceeding for the execution of that decree."

Though the said explanation may not stricto sensu apply to the trial
stage, the principle couched in it must gain application thereto. It is immaterial
that the writ petition was filed only subsequently because the findings made
therein became final as no appeal was filed against the judgement. The basic F
idea in the rule of res judicata has sprouted from the maxim "nemo debet bis
vexari pro una et eadem causa" (no man should be vexed twice over for the
same cause).'in YB. Patil & ors., v. YL. Patil, [1976] 4 SCC 66 a three-Judge
Bench of this Court considered the effect of a decision rendered in a writ
petition at subsequent stages of the same !is. It held : " The principles of res
judicata can be invoked not only in separate subsequent proceedings, they G
also get attracted in subsequent stage of the same proceedings. Once an
order made in the course of a proceeding becomes final, it would be binding
at the subsequent stage of that proceeding."

Thus, the legal position is clear and the respondent cannot now re-
agitate the question regarding maintainability of the suit under Section 34 of H
1206 SUPREME COURT REPORTS [1998] 2 S.C.R.

A the Act. However, learned counsel adopted an alternative contention before
us that the suit is in effect one for specific enforcement of a contract and such
a suit is not conceived under Section 14 of the Act and hence it is not
maintainable. According to the learned counsel, the reliefs claimed in the suit,
if granted, would result in specific enforcement of a contract of employment.
B Section 14(1 )(a) of the Act makes it clear that a contract of employment is not
specifically enforceable since non performance of it can be compensated by
money, contended the counsel.
T
The said contention is based on a fallacious premise that the suit was
for enforcement of a contract of employment. Respondent was appointed on
C certain terms and pursuant to such appointment he worked within the scope
of such employment. Termination of his employment purportedly in terms of
the same contract is challenged by him by praying for a declaration that such
termination is invalid and therefore, he continues in the same employment.
Maintainability of a suit cannot be adjudged from the effect which the decree
may cause. It can be determim:d on the basis of the ostensible pleadings
D made and the stated reliefs claimed in the plaint.

Though Specific Relief Act widens the spheres of the civil court its
preamble shows that the Act is not exhaustive of all kinds of specific reliefs.
"An Act to define and amend the law relating to certain kinds of specific
E relief'. It is well to remember that the Act is not restricted to specific
performanc,e of contracts as the statute governs powers of the court in
granting specific reliefs in a variety of fields. Even so, the Act does not cover
all specific reliefs concievable. Its preceding enactment (Specific Relief Act,
1877) was held by the courts in India as not exhaustive. Vide Ramdas Khatavu
s. Atlas Mills, AIR (1931) Born. 151. In Hungerford Investment Trust ltd. v.
F Haridas Mundhra & Ors., [ 1972] 3 SCC 684 this Court observed that Specific
Relief Act, 1963, is also not an exhaustive enactment and it does not consolidate
the whole law on the subject. "As the preamble would indicate, it is an Act
'to define an.d amend the law relating to certain kinds of specific relief. It does
not purport to lay down the law relating to specific relief in all its remifications."

G Chapter II contains a fasciculus of rules relating to specific performance
of contracts. Section 14 falls within that chapter and it points to contracts
which are no specifically enforceable. Powers of the Court to grant declaratory
reliefs are adumbrated in Section 34 of the Act which falls under Chapter VI
of the Act. It is well to remember that even the wide language contained in
H Section 34 did not exhaust the powers of the court to grant declaratory reliefs.
A.K. SRIVASTAVv. N.I.C. LTD. [THOMAS,J.] 1207
In Veruareddi Ramaraghava Reddy & ors. v. Konduru Seshu Reddy & ors., A
[1966] Suppl. SCR 270 and in Mis Supreme General Films Exchange Ltd. v.
His Highness Maharaj a Sir Brijnath Singhji Dea of Maihar & ors,. [ 1975] 2
SCC 530 this Court while interpreting the corresponding provision in the
preceding enactment of 1877 (Section 42) has observed that "Section 42
merely gives statutory recognition to a well-recognised type of declaratory
relief and subjects it to a limitation, but it cannot be deemed to exhaust every B
kind of declaratory relief or to circumscribe the jurisdiction of courts to give
declarations of right in appropriate cases falling outside Section 42."

The position remains the same under the present Act also. Hence the
mere fact that a suit which is not maintainable under Section 14 of the Act C
is not to persist with its disability of non admission to civil courts even
outside the contours of Chapter II of the Act. Section 34 is enough to open
the corridors of civil courts to admit suits filed for a variety of declaratory
reliefs.

Now the more important question is, whether appellant is entitled to D
declaration that be continues to be in the employment of respondent-company.
High Court held that he is not because the contract of employment does not
entitle him to continue.

Terms and conditions of employment of the appellant have been
incorporated in the letter of appointment dated 2.12.1980. It contains the E
following:

(1) Initially he would be on probation for a period of 12 months and
during that period be has to achieve a premium of at least Rs. 75,000
to become eligible for promotion as Probationary Inspector, Grade I. F
(2) If appellant falls short of the said target, respondent - company
reserved its right to extend the period of probation by another 12
months provided the following conditions are satisfied.

(a) He should have produced a premium amount of Rs. 50,000 during
the first 12 months period. G
(b) A request should be made by the appellant in writing for the
purpose of getting extension of the period of probation.

(c) The company has discretion to decide whether such request
should be granted or not. H
1208 SUPREME COURT REPORTS (1998] 2 S.C.R.

A (.3) Unless a letter appointing him as Probationary Inspector (Grade -
I) is issued by the company, before the expiry of the initial probationary
)-.
period or the extended probationary period (as the case may be) his
service shall stand automatically terminated.

(4) His service is also liable to be terminated without assigning any
B reason during probationary period and/or extended period.

Appellant has no case that respondent-company has issued any letter
'y
appointing him as "Probationary Inspector (Grade -!)" before the expiry of
'
the initial period of 12 months nor has he a case that initial period of probation
was forth er extended at any time.
c
The above being the admitted position, appellant cannot get a declaration
that he continues to be in service. Hence the conclusion of the High Court
that the suit is liable to be dismissed does not warrant any interference.

In the result, we dismiss this appeal. No costs.
D
R.P. Appeal dismissed.

..,.._
'