Holding

Specific performance of a contract of service, such as reinstatement or back wages, cannot be granted except in rare and exceptional cases, so the High Court's order was set aside.

Summary

Ram Pyare Pandey was appointed as a temporary Junior Clerk in the Integrated Rural Development Agency, a society registered under the Societies Registration Act, and was terminated within a month. He sued for a declaration that the termination violated Rule 13(b) of the agency's own rules, which required one month's notice, and sought reinstatement with back wages. The trial court dismissed the suit, the High Court reversed the decision and ordered reinstatement, holding the termination illegal. The Supreme Court allowed the appeal, holding that the relationship was a ordinary master‑servant contract and that specific performance (reinstatement or back wages) of a contract of service is not ordinarily available, except in rare cases. Consequently, the High Court's order was set aside and no reinstatement or back wages were awarded.

Issues considered

The termination order violated Rule 13(b) of the agency's rules requiring one month's notice.
Whether a court can order reinstatement and back wages in a private society employment contract.
Whether specific performance of a contract of service is permissible under Indian law.

Legislation cited

Societies Registration Act
Specific Relief Acts. 14, s. 41

Subjects

contract of employmentspecific performancereinstatementback wagesprivate societymaster‑servant relationshiptermination noticeSocieties Registration Act

Judgment

INTEGRATED RURAL DEVELOPMENT AGENCY A
\'.

RAM PYARE PANDEY

FEBRUARY 24, 1995

[J.S. VERMA AND K.S. PARIPOORNAN, J.J.) B

Se1vice Law-Contract of employme11t-Tenni11atio11 of se1vic~Relief
of reinstatenzellt or backwages cannot be granted except in rare and exceptional
cases-<:laim for damages-Maintainable.
'•'I,- - c
The respondent-plaintiff was appointed as Junior Clerk in the In-
tegrated Rural Development Agency, a body registered under the Societies
Registration Act, having its own Articles of Association. His service was
terminated. He filed a suit and prayed for the grant of a declaration that
the temination order was illegal and void and it was passed in violation of
the rules governing the appellant. The suit was dismissed. The Court held D
that the appointment of the respondent was temporary and the termina-
tion order was not illegal or void. Appeal filed against the order was
dismissed. The plaintiff filed Second Appeal. The High Court quashed the
order of termination while holding that the termination of the service of
the respondent was against the mandate of Rule 13 (b) and so it was illegal. E
The concurrent judgments of the courts below were reversed. The High
Court directed reinstatement of the respondent in service with arrears of
salary from the date of termination. This appeal had been filed against the
judgment of the High Court.

/ Allowing the appeal, this Court F

HELD 1.1. The Intergrated Rural Development Agency is one
registered under Societies Registration Act. It has its own Articles of
Association. It has framed its own rules thereunder. The relationship
between the Ag~ncy and the respondent was based on contract and was G
purely one of master and servant. [324-F]

1.2. In the ordinary case of master and servant, the repudiation or
-(
the wrongful dismissal puts an end to the contract, and a claim for
damages arises. There cannot be specific performance of a contract of
service. Such relief can be granted on sound legal principles only in rare H
321
322 SUPREME COURT REPORTS [1995) 2 S.C.R.

A and exceptional cases. [324-H, 325-C]
Vine v. National Dock Labour Board, (1956) 1 AER 1; Nandganj
S.eh01i Sugar Co. Ltd. Rai Bareli and Anr. v. Bad1i Nath Dixit and Ors.,
q991] 3 SCC 54 and Ridge v. Baldwin, (1963) 2 AER 66 (HL), referred to.

B 13. In the instant case, the relief of reinstatement could not be
granted. By affording the relief of reinstatment or backwages, the courts
will, in fact, be granting specific performance of contracts of service, which
can be done only in the exceptional or rare cases. (326-B] .

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3006 of
C 1995.
-y-
I

From the Judgment and Order dated 22.3.93 of the Allahabad High
Court in S.A. No. 2163 of 1983.

A.K. Srivastava for the Appellant.
D
S.A. Gilani and P.K. Jain for the Respondent.

The Judgment of the Court was delivered by

PARIPOORNAN, J. Special leave granted.
E
2. The defendant in O.S. No. 1204 of 1981, in Munsiff Court No. 3,
Deoria, is the appellant. The plaintiff in the suit is the respondent. The
appellant - Integrated Rural Development Agency - is a body registered
under the Societies Registration Act. It has its own Articles of Association.
F The respondent-plaintiff was appointed as Junior Clerk in the Integrated
Rural Development Agency on 14.5.1980 against a permanent vacancy. His
service was terminated on 6.6.1980. Thereupon, the respondent filed a suit
and prayed for the grant of a declaration that the termination order was
illegal and void and it was passed in violation of the rules governing the
appellant. The learned Munsiff held that the appointment of the respon-
G dent was temporary and the termination order was not illegal or void and
dismissed the suit. The respondent-plaintiff filed an appeal before the VI
Additional District Judge, Deoria-Civil Apeal No. 186of1982. By judg-
ment dated 29.4.1983 the appeal was dismissed. Thereafter, the respondent
plaintiff filed Second Appeal No. 2163 of 1983 in the High Court of
H Allahabad. Katju, J., By Judgment dated 22.3.1993, held that the termina-
INIEGRATEDRURALDEV.AGENCY v. RP.PANDEY[PARIPOORNAN,J.) 323

tion of the service of the respondent was against the mandate of Rule 13(b) A
and so the termination order dated 6.6.1980 was illegal. The concurrent
judgments of the courts below were reversed and the learned Judge further
directed that the appellant will be reinstated in service and also will be
entitled to arrears of salary from the date of termination. Aggrieved by the
aforesaid judgment of the learned Single Judge the Integrated Rural B
Development Agency - defendant in the suit - has filed this appeal by
special leave.

3. We heard Mr. A.K. Srivastava, learned counsel for the appellant
and Mr. S.A. Gilani, learned counsel for the respondent.
~- c
'{ 4. The order of appointment of the respondent is quoted at page 21
of the paper book, which is as under :-

"S/shri Mohan Prasad and Gorakh Nath on being promoted to the
posts of Stenographer and Accountant respectively, the following
employees who are working as work-charged for the last four D
months are hereby appointed as Clerks in the pay-scale of Rs.
200-320 with effectfrom 14.5.1980. They shall be entitled to receive
Dearness Ailowance and other allowances as approved by the
Government. Their appointment is temporary and their services can
be tenninated at any time. E

1. Shri Ram Pyare Pandey S/o Late Kushahar Pandey, r/o Vil-
lage Pipraich, P.O. Deoria.

2. Shri Krishan Kumar Shukla, s/o Shri Ram Subnag Shukla, r/o
) Sindhi Mill Colony, Deoria. F

Sd/-
District Development Officer/
Project Officer, Deoria."

(Sri Ram Pyare Pandey is the respondent herein). G

In exercise of the powers vested under section 20 (a) of the Articles of
Association, the Governing Body of the appellant had framed its OWi} rules
regarding the conduct of business and office procedure. Rule 13 of the said
. rules is to the following effect :- H
324 SUPREME COURT REPORTS [1995] 2 S.C.R.

A "13. PERIOD OF THE OFFICE OF THE EMPLOYEES :
'

The period of office of an employee of the Agency shall no~ be
detennined until :-

(a) His resignation has been accepted in writing by the authority
B competent to his successor or

(b) The services of the Employee can be terminated with one
months notice from either side."

r
C Katju, J ., after having held that notwithstanding the terms of appointment
order to the effect that the services of the respondent can be terminated
· at any time, rule 13(b), quoted above, requires one month's notice to be
r
given before termination and that the rule should prevail, which re~ders
the termination order dated 6.6.1980 illegal and void. In consequence, the ·
learned Judge directed reinstatement of the respondent in service, with
D arrears of salary. We are of the view that the respondent is not entitled to
either reinstatement or arrears of salary from the date of termination. The
learned single Judge was wholly in error in affording the relief of reinstate-
ment and back wages. We will state our reasons for the aforesaid con-
clusion.
E 5. The appellant - Integrated Rural Development Agency - is one
registered under Societies Registration Act. It has its own Articles of
Association. It has framed its own rules thereunder. There is no plea or
material or proof that the appellant - Integrated Rural Development
Agency - is one constituted under statute or is owned or controlled by the
F State Government or an instrumentality of the State. The relationship
between the appellant - Integrated Rural Development Agency - and the
\_
respondent is based on contract and is purely one of master and servant.
As stated by Jenkins, L.J., in his dissenting judgment, in Vine v. National
Dock Labour Board, (1956) 1AER1, which was approved in appeal by the
G House of Lords in 1956 3 AER 939 :

"In the ordinary case of master and servant, however, the
repudiation or the wrongful dismissal puts an end to the contract,
and a claim for damages arise. It is necessarily a claim for damages
and nothing more The nature of the bargain is such that it can be
H nothing more."
INIEGRATEDRURALDEV.AGENCY v. RP.PANDEY[PARIPOORNAN.J.) 325

Delivering the judgment of three member Bench of this Court in Nandganj A
Silwri Sugar Co. Ltd. Rae Bareli and another v. Badli Nath Dixit and others,
[1991) 3 SCC 54, Thommen, J. stated the law thus :-

"A contract of employment cannot ordinarily be enforced by
or against an employer. The remedy is to sue for damages (See B
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 ordinari- C
ly force an employer to recruit or retain in service an employee
not requried by the employer. There are, of course, certain excep-
tions 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 dif>missed worker under the Industrial Law; a D
statutory body acting in breach of statutory obligations, and the
like. (S.R. Tiwari v. District Board, Agra, AIR (1964) SC 1680;
Executive Committee of U.P. State Warehousing Corporation v. C.K
Tyagi, [1969] 2 SCC 838; Executive Committee of Vaish Degree
College, Shamli v. Lakshmi Narain, [1976] 2 SCC 58; see Halsbury's
Laws of England, 4th edn., Volume 44, paragraphs 405 to 420." E

Similarly in Ridge v. Baldwin, (1963) 2 AER 66 (H.L.), Lord Reid stated
the law emphatically thus :-

I "The law regarding master and servant is not in doubt. There F
cannot be specific performance of a contract of service and the
master can terminate the contract with his servant at any time and
for any reason or for none. But if he does so in a manner not
warranted by the contract he must pay damages for breach of
contract. So the question in a pure case of master and servant does
not at all depend on whether the master has heard the servant in G
his own defence : it depends on whether the facts emerging at the
trial prove breach of contract. But this kind of case can resemble
dismissal from an office where the body employing the man is under
some statutory or other restriction as to the kind of contract which
it can make with its servants, or the grounds on which it can dismiss H
326 SUPREME COURT REPORTS [1995] 2 S.C.R.
I

A them."

In the light of the above principles, it follows that the relief of reinstatement
could not be granted in the present case. By affording the relief of
reinstatement or backwages, the courts will, in fact, be granting specific
performance of contracts of service, which can be done only in the excep-
B tional or rare cases referred to in the Judgment of this Court in Nandgaj
Sihori Sugar Co. Ltd., Rae Bareli and another v. Badrinath Dixit and others
(supra).

6. In the result, the relief of reinstatement of the respondent in
service and also arrears of salary from the date of termination, are im-
C proper and unjustified in law. The reliefs so granted are hereby set aside;
The appeal is allowed. In the circumstances, there shall be no order as to
costs.

A.G. Appeal allowed.

\