Holding

A contract of personal service cannot be specifically enforced except in the three recognized exceptions, and since none apply, the reliefs sought are barred.

Summary

Pearlite Liners Pvt Ltd. transferred the respondent, a trainee accountant later promoted, from its head office to a sales office. The employee refused to comply, was absent, and a chargesheet was issued. She filed a suit seeking a declaration that the transfer order was void, that she remained in service, and an injunction restraining the company from holding an enquiry. The trial court dismissed the suit for lack of jurisdiction, the appellate court affirmed, but the Karnataka High Court remanded the case for trial on merits. The Supreme Court held that a contract of personal service cannot be specifically enforced except in three statutory exceptions, none of which applied, and therefore the reliefs were barred. Consequently, the High Court’s order was set aside, the lower courts’ decisions restored, and the suit rejected. The appeal was allowed.

Issues considered

Whether a contract of personal service can be specifically enforced under the Specific Relief Act
Whether the reliefs sought (declaration of continued service and injunction restraining enquiry) are permissible
Whether any of the three statutory exceptions (public servant under Article 311, reinstatement under the Industrial Disputes Act, statutory body breach) apply
Whether the civil court had jurisdiction to entertain the suit

Legislation cited

Code of Civil Procedure, 1908s. Order 7 Rule 11(d)
Constitution of Indias. 311
Industrial Disputes Act, 1947
Specific Relief Act, 1963s. 14

Subjects

specific performancepersonal service contractspecific relief actemployment lawtransfer orderinjunctionjurisdictioncivil procedurepublic employmentindustrial disputes act

Judgment

A MIS. PEARLITE LINERS PVT. L ro. i'\
v.
MANORAMA SIRS!

JANUARY 6, 2004

B [BRIJESH KUMAR AND ARUN KUMAR, JJ.]

'r I
Specific Relief Act, 1963-Section 14-Contract for personal service-
No wrillen contract-Employee challenging transfer order, seeking declaration
that she continued to be in service of employer and injunction restraining
c company ji'om holding enquiry-Trial Court and also lower appellate court
holding suit not maintainable-However, High Court directing suit to be
decided on merits-Enforcement of contract-Permissibility of-Held:
Enforcement ofsuch contract 1101 permissible under law-Employer cannot be
forced to take such employee with whom relation having reached a point of
D complete loss of.faith-Also it is not a case of public employment to auract
Article 31 I of Constitution or case under Industrial Disputes Act nor the
,.
employer is a statutmy body for attracting enforcement of contract-Further,
none o.f1he reli<::f sought in the plaint can be granted under law-Thus, High ...
Court erred in directing suit to be decided on merits--Suit which is bound to
be dismissed for want ofjurisdiction ofcourt, should not be allowed to continue
E and go for trial--// should be thrown at the threshold-Code ofCivil Procedure,
1908-0rder 7, Rule I J(d)-Constitution of India, 1950 Article 311-Jndustrial
Disputes Act, I 947.

Appellant company appointed respondent as a trainee accountant.
She was transferred from head office to sales office. She did not comply
F
with the transfer order and remained unauthorisedly absent from work.
,.:.
Company issued chargesheet. Respondent filed suit challenging the
transfer order and also seeking declaration that she continued to be in
service of the company and injunction restraining the company from
holdin·g enquiry against her. Trial Court held that court had no
G jurisdiction to entertain the suit as it was not maintainable and rejected
the plaint. Lower appellate court dismissed the appeal. However, High
Court .holding that the company failed to prove that the suit was not
maintainable, remanded it to trial court for being decided on merits. Hence
the present appeal.
.,..- .
H 266
PEARLITE LINERS PVT. LTD. 1·. MANORAMA SIRS! 267
rt Appellant-company contended that the prayers in the suit seeking A
reinstatement of the respondent as an employee of the appellant company
amounts to specific performance of a contract of personal service which
is specifically barred under the provisions of the Specific Relief Act.

Allowing the appeal, the Court
B
HELD: I.I. It is well settled principle of law that a contract of
_,.. personal service cannot be specifically enforced and a court will not give
I ·. a declaration that the contract subsists and the employee continues to be
in service against the will and consent of the employer. This general rule
of law is subject to three well recognized exceptions-(i) where a public C
servant is sought to be removed from service in contravention of the
provisions of Article 311 of the Constitution; (ii) where a worker is sought
to be reinstated on being dismissed under the Industrial Law; and (iii)
where a statutory body acts in breach of violation of the mandatory
provisions of the statute. 1270-E-G]
D
Executive Committee of Vaish Degree College, Sham/i and Ors. v.
Lakshmi Narain and Ors., 119761 2 SCC 58, referred to.
)I
1.2. The instant case is not a case of public employment so as to
attract Article 311 of the Constitution of India; neither the case is under
the Industrial Disputes Act nor the appellant-company is a statutory body, E
there is no statute governing service conditions, thus does not fall in any
of the three exceptions. It is a case. of private employment which normally
would be governed by the terms of the contract between the parties. Since
there is no written contract between the parties, the dispute cannot be
resolved with reference to any terms and conditions governing the
relationship between the parties. Declaration that she continued to be in F
~ service and an injunction against a transfer order and against holding a
) departmental enquiry in a suit would amount to imposing an employee
on an employer or to enforcement of a contract of personal service, which
is not permissible under the law. An employer cannot be enforced to take
an employee with whom relations have reached a point of complete loss G
of faith between the two. 1270-H; 271-A-EI

1.3. Unless there is a term to the contrary in the contract of service,
' ....., a transfer order is a normal incidence of service. Non-compliance of
transfer order by the respondent amounts to refusal to obey the orders
passed by superiors for which employer can reasonably be expected to take H
268 SUPREME COURT REPORTS (2004] I S.C.R.

A appropriatE, action against the concerned employee. Therefore, a r1
declaration that the transfer order is illegal and void cannot be granted.
Further, the declaration that she continues to be in service of the appellant
company amounts to enforcing a contract of personal service which is
barred under the law. Regarding the permanent injunction sought to
B restrain the respondent from holding an enquiry against her, if the
management feels that the respondent is not complying with its directions
it has a right to decide to hold an enquiry against her, the management
cannot be restrained from exercising its discretion in this behalf; Grant 't' 1
of these would indirectly mean that the Court is assisting the respondent
in continuing with her employment with the appellant company, which is
C enforcing a contract of personal service. Thus, none of the reliefs sought
in the plaint can be granted to the respondent under the law. Further,
regarding the question as to whether such suit which is bound to be
dismissed for want of jurisdiction of a Court, such suit should be thrown
at the threshold, reliefs prayed for should not be granted and such a suit
should not be tried at all. Thus, High Court erred in directing the suit to
D be tried on merits. 1272-C-H]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5348 of2002.

From the Judgment and Order dated 28.8.200 I of the Karnataka High
Court in R.S.A. No. 687 of 2000.
E
Rajeev Dhavan, S.N. Bhat, D.P. Chaturvedi and Rishi Raj Baruah for
the Appellant.

Ms. l<iran Suri for the Respondent.

F The Judgment of the Court was delivered by

ARUN KUMAR, J. The respondent filed a suit for declaration and
permanent injunqion against the appellant with the following prayers :

"(a) declaring that the transfer order of the plaintiff dated 11.1.86
G issued by the secretary of the first defendant company from its Head
Office to the Shankar Rice Mill Godown, Shimoga belonging to M/
s. Bharath Founders is illegal void and inoperative and further declare
that the plaintiff is to be in the service of the first defendant company ,..- .
and she is entitled to all the emoluments including her salary.

H (b) for permanent injunction restraining the defendants from
PEARLITE LINERS PVT.LTD. 1·. MANORAMA SIRS! [ARUN KUMAR, J.] 269
1i' holding any enquiry against the plaintiff on the ground that she has A
not complied with the order of transfer dated J 1.1.86 and she is
guilty of insubordination etc. as stated in the articles of charges dated
17-1-87 and enquiry indicated in the notice dated 2-2-87."

The appellant while denying the averments contained in the plaint took
an objection that the Civil Court had no jurisdiction to try the suit. The trial B
court framed various issues in the suit. The relevant issue for the present
t'i purpose is :

"Issue No 5 : whether defendant No. I proves that this Court has
no jurisdiction to try .the suit."
c
The trial court decided the said issue in favour of the defendant and
held that the court had no jurisdiction to entertain the suit as it was not
maintainable and the plaint was liable to be rejected. The appeal filed by the
respondent-plaintiff against the said judgment of the trial court remained
unsuccessful. The judgment of the trial court on Issue No.5 was affirmed by
the appellate court while dismissing the appeal. The respondent plaintiff filed D
a regular second appeal against these judgments. The appeal succeeded. The
)t High Court held that the defendant had failed to prove that the suit was not
maintainable before the Civil Court. The trial court was directed to dispose
of the suit on merits in accordance with law. The defendant has filed the
present appeal against the judgment of the High Court. E
Briefly the facts are :

That the plaintiff was appointed by the defendant Company in the year
1976 on a monthly salary of Rs. 535 as a trainee accountant. She was promoted
as an Officer with a monthly salary of Rs. 1605. On I Ith January, 1986, the F
-4.. plaintiff was transferred from the head office of the defendant Company to
) its sales-office-cum-godown located at Shanker Rice Mill Compound,
Shimoga. The said office is within the same city. However, according to the
plaintiff the location of the office was not good and no amenities for the staff
were available at ihe said office. The plaintiff did not comply with the said
transfer order and continued to be unauthorisedly absent from work. On 17th G
January, 1987, a charge sheet was issued to the plaintiff to which she did not
give any reply. The present suit was filed on 12th February, 1987. According
i .._,
to the defendant the prayers in the suit really amount to enforcement of a
contract for personal service, a relief which a civil court cannot grant.
~ H
270 SUPREME COURT REPORTS (200~] I S.C.R.

A Therefore the legal question for consideration which arises is :

''Can a contract of service be specifically enforced?"

The relationship between the parties.is based on a contract between two
private parties. Admittedly, there is no written contract. If there had been a
B written contract, it would have contained terms and conditions governing the
relationship between the parties. lnspite of absence of a written contract
governing the relationship between the parties, respondent-plaintiff challenged r1
the transfer order by filing the present suit. She raised several grounds in this
behalf including that the transfer was illegal as it was to a different Company.
The transfer was to a lower post which means it is by way of punishment.
C Further accor.ding to the plaintiff the place to which she had been transferred
was not suitable to work at. The defendant denied all these allegations in the
written statement. Apart from challenge to the transfer order, the plaintiff
sought a declaration that she continued to be in service of the defendant and
was entitled to all emoluments including salary. Further an injunction was
D prayed to restrain the defendant from holding inquiry against the plaintiff.
Significantly, no prayer for damages for breach of contract was made in the
suit.

Learned counsel for the appellant argued that the prayers in the suit
seek reinstatement of the plaintiff as an employee of the defendant Company
E which really amounts to specific performance ofa contract of personal service
which is specifically barred under the provisions of the Specific Relief Act.
It is a well settled principle of law that a contract of personal service cannot
be specifically enforced and a court will not give a declaration that the
contract subsists and the employee continues to be in service against the will
F and consent of the employer. This general rule of law is subject to three well
recognised exceptions---{i) where a public servant is sought to be removed
from service in contravention of the provisions of Article 311 of the
Constitution of India; (ii) where a worker is sought to be reinstated on being
dismissed under the Industrial Law; and (iii) where a statutory body acts in
breach of violation of the mandatory provisions of the statute. [Per Executive
G Commi//ee of Vaish Degree College, Shamli and Ors. v. lakshmi Narain and
Ors., [19"i6) 2 SCC 58.

The present case does not fall in any of the three exceptions. It is y'
neither a case of public employment so as to attract Article 311 of the
Constitution of India nor the case is under the Industrial Disputes Act. The
PEARLITE LINERS PVT.LTD. 1·. MANORA MA SIRS! [ARUN KUMAR, J] 271
.1-t
defendant is not a statutory body. There is no statuie governing her service A
conditions. The present is a case of private employment which normally
would be governed by the terms of the contract between the parties. Since
there is no written contract between the parties, the dispute cannot be resolved
with reference to any terms and conditions governing the relationship between
the parties. The plaintiff has neither pleaded nor there has been any effort on
B
her part to show that the impugned transfer order was in violation of any
term of her employment. In the absence of a term prohibiting transfer of the
(i
employee, prima facie the transfer order cannot be called in question. The
plaintiff has not complied with the transfer order as she never reported for
work at the place where she was transferred. As a matter of fact, she also
stopped attending the office from where she was transferred. Non-compliance c
of the transfer order by the plaintiff amounts to refusal to obey the orders
passed by superiors for which the employer can reasonably be expected to
take appropriate action against the concerned employee. Even though it is a
case of private employment, the management proposed to hold an enquiry
against the delinquent officer, that is, the plaintiff. In case of su.ch D
insubordination, termination of service would be a possibility. Such a decision
purely rests within the discretion of the management. An injunction against
a transfer order or against holding a departmental enquiry in the facts of the
present case would clearly amount to imposing an employee on an employer,
or to enforcement of a contract of personal service, which is not permissible
under the law. An employer cannot be forced to take an employee with E
whom relations have reached a point of complete loss of faith between the
two.

Let us now examine the prayers in the suit in the light of averments
contained in the plaint. It is stated in Para 6 of the plaint that the Secretary F
of the Company warned her about her timings and issued a memo about her
, J.. attendance. He demanded her resignation on 15th December, 1983. She did
) not resign as per the request. It is fu11her stated in Para 7 that "she was
discriminated against in the matter of providing incentives in May,
1985 .............. She gave a representation to the Directors establish.men! to. G
consider this aspect of the matter. Secretary in his reply dated 23rd May,
1985 abused her that she was not working properly .......... " In Para 8, it is
stated that the Secretary fu11her issued her a notice stating that she had not
worked for two years. Then follows the impugned transfer order dated I Ith
~
January, 1986. The plaintiff has further alleged that her representation against
the said transfer order was not considered. This was followed by a notice to H
272 SUPREME COURT REPORTS [2004) I S.C.R.

A conduct a11 enquiry against the plaintiff. In the background of such facts, the T \
plaintiff has in the suit made the following prayers :

"(a) Declaring that the impugned transfer order is illegal, void
and inoperative.

B (b) The plaintiff continues to be in service of the defendant
Company and is entitled all emoluments including salary; and

(c) Pemianent injunction restraining the defendant from holding -r \
an enquiry against the plaintiff.

C The question arises as to whether in the background of facts already
stated can such reliefs be granted to the plaintiff. Unless there is a term to
the contrary in the contract of service, a transfer order is a normal incidence
of se~vice. Further it is to be considered that if the plaintiff does not comply
with the transfer order it may ultimately lead to termination of service.
D Therefore, a declaration that the transfer order is illegal and void in fact
amounts to imposing !he plaintiff on the defendant inspite of the fact that the
plaintiff allegt:dly does not obey order of her superiors in the Management
of the defendant Company. Such a relief cannot be granted. Next relief sought
in the plaint is for a declaration that she continues to be in service of the
defendant Company. Such a declaration again amounts to enforcing a contract
E of personal service which is barred under the law. The third relief sought by
the plaintiff is a permanent injunction to restrain the defendant from holding
an enquiry against her. If the management feels that the plaintiff is not
complying with its directions it has a right to decide to hold an enquiry
against her. The management cannot be restrained from exercising its discretion
F in this behalf. Ultimately, this relief if granted would indirectly mean that the
cou11 is assisting the plaintiff in continuing with her employment with the
defendant Company, which is nothing but enforcing a contract of personal
service. Thus, none of the reliefs sought in the plaint can be granted to the
plaintiff under the law. The question then arises as to whether such a suit
should be allowed to continue and go for trial. The answer in our view is
G clear, that is, such a suit should be thrown at the threshold. Why should a suit
which is bound to be dismissed for want of jurisdiction of a comt to grant
the reliefs prayed for, to be tried at all? Accordingly, we hold that the trial
court was absolutely right in rejecting the plaint and the lower appellate court
rightly affirmed the decision of the trial comt in this behalf. The High Court
H was clearly in en-or in passing the impugned judgment whereby the suit was
PEARLITE LINERS PVT. LTD. v. MANORAMA SIRS! [ARUN KUMAR, J.] 273

•--t restored and remanded to the trial court for being decided on merits. The A
judgment of the High Comt is hereby set aside and the judgments of the
courts below, that is, the trial court and the lower appellate court are restored.
The plaint in the suit stands rejected.

The appeal is allowed. The parties are, however, left to bear their
respective costs. B

11 N.J. Appeal allowed.

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