DELHI TRANSPORT CORPORATION v. D.T.C. MAZDOOR CONGRESS

Citation: [1990] SUPP. 1 S.C.R. 142

Court: Supreme Court of India

Bench: SABYASACHI MUKHERJI, B.C. RAY, L.M. SHARMA, P.B. SAWANT, K. RAMASWAMY

Case summary

Contract Act, 1872: Section 23-Contract providing for termination of service without notice and holding of enquiry-Whether enforceable.

Judgment text

DELHI TRANSPORT CORPORATION v. D. T. C. MAZDOORCONGRESS SEPTEMBER 4, 1990 [SABYASACHI MUKHARJI, CJ. , B. C. RAY, LALIT MOHAN SHARMA, P. B. SAWANT AND K. RAMASWAMY, JJ. ] Service Law: Delhi Road Transport Act, 1950: Section 53/Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952-Regulation 9(b)/Shastri Award-Para 522/District Board Rules, 1926, Part V-Rule 1(1)/Indian Airlines Employees' Regulations-Regulation JJ/Air India Employees' Regulations-Regulation 48-Validity of-Termination of service of permanent employee without assigning any reasons and holding enquiry-Whether arbitrary, unfair, unjust, unreasonable and opposed to public policy- Whether violative of Articles 12, 14, 16, 19, 31 and 311(2) of the Constitution of India, principles of natural justice arrd Section 23 of Contract Act, 1872-Statutory corporations-Power to terminate services ofemployees without holding enquiry-Validity of.

Contract Act, 1872: Section 23-Contract providing for termination of service without notice and holding of enquiry-Whether enforceable. Constitution of India, 1950: Articles 14, 16, 19(l) (g), 21 and 3l1(2)-Termination of service of an employee without assigning reasons and holding enquiry-Whether violative ofFundamental Rights and principles ofnatural justice-Regulations/Rules-Validity of. Article 141: Expressions "declared" and "found or made"-Scope and ambit of. ' Interpretation of Statutes: Internal aid to construction-Doctrine of reading down-Scope and Applicability of-Provision illegal and invalid-Whether could be validated by reading down-Where provision clear and unambiguous-Whether permissible to read down into the provision something which was not intended. Public Policy vis-a-vis constitutionality of statute-Whether public policy can. be drawn from the Constitution-Whether constitutional \...

policy provides an aid-Role and purpose of constitutional interpretation by apex i:ourt. D. T. C. v. D. T. C. MAZDOOR CONGRESS 143 Administrative Law-Discretionary power-Exercise of-Limitations-Absence ofarbitrary power-Fi;st essential ofRule ofLaw. Respondents No. 2 to 4, regular employees of the appellant Delhi Transpori Corporation, were served with termination notices under Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952 by the appellant Corporation on the ground that they became inefficient in their work and started inciting other members not to perform their duties. The three respondents and their Union, respondent No. 1 filed writ petition in High Court, challenging the constitutional validity of Regulation 9(b), which gave the management right to terminate the services of an employee by giving one month's notice or pay in lieu thereof.

The Division Bench of the High Court struck down the Regulation, holding that the Regulation gave absolute, unbridled and arbitrary powers to the management to terminate the . services of any permanent or temporary employee, and •uch power was violative of Article 14 of the Constituiion. Hence, the Corporation filed ihe appeal before this Court, by special leave. The validity of similar provmons in Para 522 of the Shastri Award, rule l(i) ofthe District Board Rules 1926, Part V, Regulation 13 of Indian Airlines Employees' Service Regulations, Regulation 48 of Air India Employees' Service Regulations and also the clause in the contract of appointment in -respect of employees of Zilla Parishad and the New India Assurance Co1npany) also came up f~r consideration in the connected appeals and applications filed before this Court.

It was contended on behalf of the Delhi Transport Corporation that there was sufficient guideline in Regulation 9(b) and the power of termination, properly read, would not be arbitrary or violative of Article 14 of the Constitution, that the Court would be entitled to obtain guidance from the preamble, the policy and the purpose of the Act and the power conferred under it and to see that the power was exercised only for that purpose, that even a term like 'public interest' could be sufficient guidance in the matter of retirement of a government employee, and such a provision could be read into a statute even when it was not otherwise expressly there, that it was well-settled that the Court would sustain the presumption of constitutionality by considering matters of common knowledge and to assume every slate of facts which could be ronceived and could even read down the section, if it became necessary to uphold the validity of the provision, that the underlying rationale of this rule of interpretation, or th~ doctrine of reading down of a staiilte being that when a legislature, whose powers were not unlimited, enacted a statute, it was aware of its limitations, and in the absence of express intention or clear language to the contrary, it must be presumed to have implied into the statute the requisite limitations and conditions to immunise it from the virus of unconstitutionality, that · since every legislature intended to act within its powers, in a limited Government, the legislature would attempt to function within its limited powers and it would not be expected to have intended to transgress its limits, that the guidelines for the exercise of the power of termination simpliciter under Regulation 9(b) could be found in the statutory provisions of the 1950 Act under which the regulations had been framed.

the preamble; Sections 19, 20 and 53, the context of Regulation 9(b) read with Regulations 9(a) and 15, that even for the exercise ofthis power, reasons could be recorded although they need not he communicated which would ensure a check on the arbitrary exercise of power and effective judicial review in a given case. ensuring efficient running of services and in public interest and the regulations in question were parallel to, but not identical with, the exceptions carved out under proviso to Article 311(2), that even the power of termination simipliciter under Regulation 9(b) could only be exercised in circumstances other than those in Regulation 9(a), i. e.

not where the foundation of the order was "misconduct', the exercise of such power could only be for purposes germane and relevant to the statute, that the principles of natural justice or holding of an enquiry is neither a universal principle of justice nor inOexiable dogma and the principles of natural justice were not incapable of exclusion in a given situation, if importing the right to be heard has the effect of paralysing the administrative process or the need for promptitude or the urgency of the situation so demands, natural justice could he avoided; that the words "where it is not reasonably practicable to hold an enquiry" may be imported into the regulation, that where termination took place by the exclusion of audi alteram partem rule in circumstances which were circumscribed and coupled with the safeguard of recording of reasons which were germane and relevant, then the termination would not render the regulation unreasonable or arbitrary, and if the regulation was read in this manner it could not be said that the power was uncanalised or unguided, that under ordinary law of "master and servant" the Corporation was empowered by the Contract of Service to terminate the services of its employees.

in terms thereof; the Declaration in Brojo Nath's case that such a contract was void under section 23 of the Indian Contract Act or opposed to public policy offending the Fundamental Rights and the Directive Principles was not. sound in law: as a master, the t:orporation had unbridled right D. T. C. v. D. T. C. MAZDOOR CONGRESS 145 to terminate the contract in the interests of efficient functioning of the Corporation or to maintain discipline among its employees, and if the termination, was found to be wrongful, the only remedy available to the employees was to claim damages for wrongful termination but not a declaration as was granted in Brojo Nath's case. On behalf. of "the workmen/intervenors, it was submitted that provision of any rule that service would be liable to termination on .

notice for the period prescribed therein contravened Article 14 of the Constitution, as arbitrary and uncontrolled power was left in the authority to select at its will any person against whom action would he taken; that Articles 14, 19 and 21 were inter-related and Article 21 did not exclude Article 19 and even if there was a law providing a procedure for depriving a person of personal liberty and there was, consequently. no infringement of fundamental right conferred by Article 21, such law in so far as it abridged or took away any fundamental right under Article 19 would have to meet the challenge of that Article, that violation Of principle of natural justice by State action was violation of Article 14 which could be excluded only in exceptional circumstances, and.

therefore, a clause which authorised the employer to terminate the services of an employee, whose contract of service was for indefinite period or till the age of retirement, by serving notice, and which did not contain any guidance for the exercise of the power and without recording reasons for such termination, violated the fundamental rights guaranteed under Articles 14, 19(1)(g) and 21 and principles of natural justice and wa• void under Section 2(g) of the Indian Contract Act, 1872, and unforceahle under Section 2(h); that since audi alteram partem was a requirement of Article 14, and conferment of arbitrary power itself was contrary to Article 14, the rule in question could not be sustained as valid; that the Constitutional guarantees under Articles 14 and 21 were for all persons and there could be no basis for making a distinction between 'workmen' to whom the Industrial Disputes Act and other industrial laws applied and those who were outside their purview, and the law applicable to the former could only add to and not detract from the rights guaranteed by Part III of the Constitution; that the power to terminate the services of a person employed to serve indefinitely or till the age of retirement could be exercised only in cases of proved misconduct or exceptional circumstances having regard to the Constitutional guarantee available under Article 14, 19(l)(g) and 21 and unless the exceptional circumstances were spelt out, the power to terminate the services would cover both permissible and impermissible grounds rendering it wholly invaiid, particularly because, the requirement of audi alteram partem which was a part of the gliaraiitee of Article 14 was sought to be excluded, and there could be no guidance available in the body of the law itself, since the purpose for which an undertaking was established and the provisions dealing with the same in the law could provide no guidance regarding exceptional circumstnaces under which alone the power could be exercised, that the question involved, in the instant cases was not the exercise of power which an employer possessed to terminate the services of his employee, but the extent of that power; that provisions of Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952, could not be rendered constitutional by reading the requirement of recording reasons and confining it to cases where it was not reasonably practicable to hold an enquiry and reading it down further as being applicable to only exceptional cases would not be permissible construction and proper; that the Regulation conferred arbitrary power of leaving it to the DTC Management to pick and choose, either to hold an enquiry or terminate the services for the same misconduct and there was nothing in the provisions of the Act or the regulations from which the Management could find any guidance and, therefore, in order to conform to the constitutional guarantees contained in Articles 14, 19(l)(g) and 21, the regulation would have to make a distinction between cases where services were sought to be terminated for misconduct and cases of termination on grounds other than what would constitute misconduct; that regulation 9(b) deliberately conferred wide power of termination of service without giving reasonable opportunity to an employee even if he was regular or permanent employee, in addition to regulation 15 which provided for dismissal or removal after a disciplinary enquiry, thus, the intention of the regulation-making authority was clear and unambiguous; the provision was not capable of two interpretations, and consequently, the question of reading down did not arise, and reading down in the instant cases involved' not interpretation of any single word in regulation 9(b) but adding a whole clause to it, which amounted to rewriting the provisions, which courts had refused to make up for the on1ission of the legis.

lature, and would inevitably drain out Article 14 of its vitality, and the right to equality which was regarded as a basic feature of the Constitution, and subject permanent employees of the DTC to a tremendous sense of insecurity which is against the philosophy and scheme of the Constitution, that unless the provision of the Constitution itself excluded the principles of natural justice, they continued to be applicable as an integral part of the right to equality guaranteed by the Constitution, that as the employees of the DTC were not Government employees, Article 311(2) was not applicable, and Article 14 fully applied to them, includ- -... ing the principles of natural justice. D. T. C. v. D. T. C.

MAZDOOR CONGRESS 147 On behalf of the Indian Airlines Corporation and the Air India, which filed intervention applications, it was submitted that there had been distinction between the discharge simpliciter and dismissal from service by way of punishment, that the effect of the judgments of this Court in the Central Inland Water's case and West Bengal's case was to take away the right of the employer to terminate. the services of an employee by way of discharge simpliciter, that this Court had recognised the existence of the inherent right of an employer to terminate the services of an employee in terms of the contract.

of employment and also under the various labour enactments, that a plain reading of the amended Regulation 13 of the Indian Airlines Employees' Regulations and a cumulative reading of the amended regulations 48 and 44 of the Air India Employees Service Regulations clearly established that the vice, if any, of arbitrariness had been completely removed and that the power to terminate had been vested with the Board of Directors, and not with any individual, and sufficient guidelines made available to the Board to exercise the restricted and limited power available to the employer under these regulations, On behalf of another intervenor, New India Assurance Co,, it was sub1nitted that the Central Inland Water's case was erroneous, insofar as it made complete negation of power of the employer to terminate and rendered the termination illegal even where the employer had made all the necessary investigation and had given hearing to the employee concerned before making the order, and took in even private employment; therefore, the judgment of this Court should be read down and made applicable prospectively, In Civil Appeal No, 4073 of 1986 it was contended on behalf of the Bank employee whose services were terminated under para 522 of the Shastri Award, that mere failure of the employee to mention the loan taken by him from another branch of the Bank, which was repaid subsequently, had deprived him of his livelihood, and his services were .

terminated without charge of 'misconduct' and without an enquiry, and paragraph 522 of the. Shastri Award gave no indication as to on what conditions this arbitrary uncontrolled power .

could be used to get rid of one or more permanent employees for ''efficient management of Banks" on subjective opinions or suspicion not tested in enquiry into facts, and that this provision ,provided for "insecurity of tenure" for lakhs of permanent employees; Articles 14, l9(l)(g) and 21 and the integrated protection of these Fundamental Rights excluded the ''doctrine of pleasure" and insisted on security of tenure "during good behaviour", and the right to livelihood could not be rendered precari- ous or reduced to a "glorious uncertainty", that no principle of interpretation permitted reading down a provision so as to make it into a different provision altogether different from what was intended by the legislature or its delegate, and there could not be any reading down which was contrary to the principles of interpretation; that if two provisi(Jns existed, firstly to remove from service after holding an enquiry on a charge of 'misconduct' and secondly, without serving a charge-sheet or holding an enquiry, all provisions for holding enquiry would be rendered otiose and would be reduced to a mere redundancy, that the Court had a duty to correct wrongs even if orders had been made which were later found to be violative of any fnndamental right and to recall its orders- to avoid injustice; that substantive provision of para 522 could not be controlled or curtailed effectively so as to confine its operation within narrow constitutional limits; that it was not the duty of the court to condone the constitutional delinquencies of those limited by the Constitution if they arrogated uncontrolled unconstitutional powers, which were neither necessary nor germane for supposed efficiency of services in the Banks as a business enterprise, and that in a system governed by rule of law, discretion when conferred upon executive authorities must be confined within clearly defined limits.

' In Civil Appeal No. lllS of 1976, the appellant-employee of the Zila Parishad contended that his services were terminated on account of the vindictiveness of some of the employees of the respondent, and without enquiry. The employer submitted that the termination order was passed on the basis of the condition in the mutually agreed terms of contract of appointment, and resolution passed by the Board, and that Rule l(i) of District Board Rules, 1926, Part V gave right to both the parties to terminate the employment on one month's notice. On the questions (i) whether Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952, was arbitrary.

illegal, discriminatory and violative of audi a/teran1 partem and so constitutionally invalid and void; and (ii) whether the Regulation could be interpreted and read down in such a manner as to hold that it was not discriminatory, or arbitrary and did not confer unbriddled and uncanalised power on the authority to terminate the service of an employee, including a permanent employee, without any reason whatsoever, Dismissing Civil Appeal No. 2876 of 1986 (appeal by the Delhi Transport Corporation), allowing Civil Appeal No. lllS of 1976, and directing other matters to be placed before a Division Bench, in ac- D. T. C. v. D. T. C. MAZDOOR CONGRESS 149 cordance with the majority decision (per Ray, Sharma, Sawant and K. Ramaswamy, JJ. ) this Court, · HELD: Per Ray, J. : I.

I Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952 which confers powers on the authority to terminate the services of a permanent and confirmed employee by issuing a notice terminating the services or by making payment in lieu of notice without assigning any reasons in the order and without. giving any opportunity of hearing to the employee before passing the orders is wholly arbitrary, uncanalised and unrestricted violating principles of natural justice as well as Article 14 of the Constitution. There is no guideline in the Regulations or in the Delhi Road Transport Authority Act, 1950 as to when or in which cases and circumstances this power of termination by giving notice or pay in lieu thereof can be exercised. [264G, 285C] 1.

2 Government Companies or Public Corporations which carry on trade and business activity of State being State instrnmentalities, are State within the meaning of Article 12 of the Constitution and as such they are subject to the observance of fundamental rights embodied in Part III as well as to conform to the directive principles in Part JV of the Constitution. Jn other words, the Service Regulations or Rules framed by them are to be tested by the touchstone of Article 14 of the Constitution. Furthermore, the procedure prescribed by their Rules or Regulations must be reasonable, fair and just and not arbitrary, fanciful and unjust. [264H, 265A:Bl 1.

3 The 'audi alteram partem' rule which, in essence, enforces the equality clause in Article 14 of the Constitution is applicable not only to quasi-judicial orders but to administrative orders affecting prejudicially the party-in-question unless the application of the rule has been expressly excluded by the Act or Regulation or Rule which is not the case here. Rules of natural justice do no supplant but supplement the Rules and Regulations. Moreover, the Rule ofLaw, which permeates the Constitution of India, demands that it has to be obse. -ved both substantially and procedurely. Rule of law posits that the power to be exercised in a manner which is just, fair and reasonable and not in an unreasonable, capricious or arbitrary manner leaving room for dis- ,.. crimination.

[2650-E] Regulation 9(b) does not expresssly exclude the application of the 'audi a/teram partem' rule and as such the order of termination of service of a permanent employee cannot be passed by simply issuing a month's notice or pay in lieu thereof without recording any reason in the order and without giving any hearing to the employee to controvert the allegation on the basis ofwhich the purported order is made. [265F] 1. 4 Considering from all these aspects Regnlation 9(b) is illegal and void, as it is arbitrary, discriminatory and without any guidelines for exercise of the power. It confers unbridled, uncanalised and arbitrary power on the authority to terminate the services of a permanent employee without recording any reasons and without conforming to the principles of natnral justice. It is also void under Section 23 of the Contract Act, as being opposed to public policy and also ultra vires of Article 14 of the Constitution. [265E, 265B-C, 266G] Moti Ram Deka Etc. v.

General Manager, NEF Railways, Maligaon, Pandu, Etc. , [1964] 5 SCR 683; Parshotam Lal Dhingra v. Union '? f India, [1958] SCR 828; Shyam Lal v. The State of Uttar Pradesh and Anr. , [1955] SCR 26; Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar & Ors. , [1959] SCR 279; Jyoti Pershad v. The Administrator for the Union Territory of Delhi, [1962] 2 SCR 125; State of Orissa v. Dr. (Miss) Binapani Devi & Ors. , [1967] 2 SCR 625; A. K. Kraipak & Ors. v. Union of India and Ors. , [1969] 2 SCC 262; Union of India v. Col. J. N. Sinha and Anr. , [1971] I SCR 791; Air India Corporation v. V. A. Rebello & Anr. , AIR 1972 S. C. 1343; The Workmen of Sudder Office Cinnamara v. The Management, [1971] 2 Lab LJ 620; Tata Oil Mills Co. Ltd. v. Workmen & Anr. , [1964] 2 SCR 125; Maneka Gandhi v. Union of India, [1978] 2 SCR 621; E. P. Royappa v. State of Tamil Nadu and Anr. , [1974] 2 SCR 348; Municipal Corporation of Greater Bombay v. Malvenkar & Ors. , [1978] 3 SCR 1000; Manohar P.

Kharkherand Anr. v. Raghuraj & Anr. , [1981] 2 LLJ 459; L. Michael & Anr. v. Johnaton Pumps India Ltd. , [1975] 3 SCR 489; Sukhdev Singh & Ors. v. Bhagat Ram Sardar Singh Raghuvanshi & Anr. , [1975] I SCC 421; S. S. Muley v. J. R. D. Tata & Ors. , [1979] 2 SLR 438; West Bengal State Electricity Board & Ors. v. Desh Bandhu Ghosh and Ors. , [1985] 3 SCC 116; Workmen ofHindustan Steel Ltd. andAnr. v. Hindustan Steel Ltd. and Ors. , [1985) 2 SCR 428; O. P. Bhandari v. Indian Tourism Development Corporation Ltd. & Ors. , [1986] 4 SCC 337; Central Inland Water Transport Corporation Ltd. & Anr. v. Brojo Nath Gaizguly & Anr. , [1986] 3 SCC 156 and Delhi Transport Undertakingv. Balbir Saran Goel, [1970] 3 SCR 757, referred to. 2. 1 An Act can be declared to be valid wherein any tenn has been ; l D. T. C. v. D. T. C. MAZDO()R CONGRESS 151 used which per se seems to be without jurisdiction, but can be read down in order to make it constitutionally valid by separating and exclu.

ding the part which is invalid or by interpreting the word in such a fashion as to make it constitutionally valid and within jursidictioin of the legislature which passed the said enactment, by reading dowu the provisions of the Act. This however, does not under any circumstances, mean that where the plain and literal meaning that follows from a bare reading of the provisions of the Act, Rule or Regulations that it confers arbitrary uncanalised, unbridled unrestricted power to terminate the services of a permanent employee without recording any reasons for the same and without adhering to the princples of natural justice and equality before the law as envisaged in Article 14 of the Constitution, it can be read dowu to save the said provision from constitutional invalidity, by bringing or adding words in the said legislation, such as saying that it implies that reasons for the order oftennination have to be recorded. [271C-F] 2.

2 In interpreting the provisions of an Act, it is not premissible where the plain language of the provision gives a clear and unambiguous meaning that it can be interpreted by reading dowu and presuming certain expressions in order to save it from constitutional invalidity. Therefore, it is impossible to hold by reading dowu the provisions of Regulation 9(b) framed under section 53 of the Delhi Road Transport Act, 1950 read with Delhi Road Transport (Amendment) Act, 1971 that the said provision does not confer arbitrary, unguided, unrestricted and uncanalised power without any guidelines on the authority to terminate the services of an employee without conforming to the principles of natural justice and equality as envisaged in Article 14 of the Constitution of India. [271F-H, 272A] Union of India & Anr. v. Tulsiram Patel & Ors. , [1985] Supp. 2 SCR 131; Roshan Lal Tandon v. Union of India, [1968] 1 SCR 185; Commissioner of Sales Tax, Madhya Pradesh, Indore. & Ors. v.

Radha/crishan & Ors. , [1979] 2 SCC 249; In Re The Hindu Women's Rights to Property Act, 1937, and the Hindu Women's Rights to Property (Amendment) Act, 1938 and in Re a Special Reference under Section 2 13 of the Government of India Act, 1935, [1941] FCR 12; R. M. D. Chamarbaugwalla v. The Union of India, [1957] SCR 930; R. L. Arora v. State of Uttar Pradesh & Ors. , [1964] 6. SCR 784 and The Mysore State Electricity Board v. Bangalore Woollen, Cotton and Silk Mills Ltd. & Ors. , [1963] Supp. 2 SCR 127, Jagdish Pandey v. The Chancellor ofBihar & Anr. , [1968] 1SCR231, referred to. H. N. Seervai: Constitutional Law ofIndia, Third Edition, p. 119, referred. to. Per Sharma, J. J~ J The rights of the l? arties in the present cases cannot be governed by the general principle of master and servant, and the management cannot have unrestricted and unqualified power of terminating the services of the employees.

In the interest of efficiency of the public bodies, however, they should have the authority to terminate the employment of undesirable, inefficient, corrupt, indolent and disobedient employees, but it must be exercised fairly, objectively and independently; and the occasion for the exercise must be delimited with precision and clarity. Further, there should be adequate reason for the use of such a power, and a decision in this regard has to be taken in a manner which should show fairness, avoid arbitrariness and evoke credibility. And this is possible only when the law lays down detailed guidelines in unambiguous and precise terms so as to avoid the danger of misinterpretation of the situation. An element of uncertainty is likely to lead to grave and undesirable consequences. Clarity and precision are. therefore, essential for the guidelines. [272D-F] J.

2 Regulation 9(h) of the Delhi Road Transport Authority (Condition of Appointment and Service) Regulation, 1952 cannot, therefore, be upheld for lack of adequate and appropriate guidelines. [272G] Per Sa want, J. J. l. There is need to minimise the scope of the arbitrary use of power in all walks of life. It is inadvisable to depend on the good sense of the individuals, however high-placed they may be. It is all the more improper and unde. sirable to expose the precious rights like the rights of life, liberty and property to the vagaries of the individual whims and fancies. It is trite to say that individuals are not and do not become wise because tI;tey occupy high seats of power, and good sense, circumspection and fairness do not go with the posts, however high they may he. There is only a complaisant presumption that those who occupy high posts have a high sense of responsibility. The presumption is neither legal nor rational.

History does not support it and reality does not warrant it. In particular, in a society pledged to uphold the rule oflaw, it would he both unwise and impolitic to leave any aspect of its life to be governed by discretion when it can conveniently and easily be covered by the rule oflaw. [276E-F] • 1. 2 Beyond the self-deluding and self-asserting righteous presumption, there is nothing to support the 'high authority' theory. This D. T. C. v. D. T. C. MAZDOOR CONGRESS 153 theory undoubtedly weighed with some authorities for some time in the past. But its unrealistic pretensions were soon noticed and it was buried without even so much as an ode to it. [278A-B] 1. 3 The employment under the public undertakings is a public employment and a public property. It is not only the undertakings but also the society which has a stake in their proper and efficient working. Both discipline and devotion are necessary for efficiency.

To ensure both, the service conditions of those who work for them must b I. I The question of security of work is of most importance. If a person 'does not have the feeling that he belongs to an organisation engaged in promotion, he will not put forward his best effort to produce more. That sense of belonging arises only when he feels that he will not he turned out of employment the next day at the whim of the management. Therefore, as far as possible security of work should be assured to the employees so that they may contribute to the maximisation of production. [300D-E] Daily Rated Casual Labour v. Union of India, [! 988] J SCR 598 = [1988] I sec 122at130-131, referred to. ' ,.. J. 2 A permanent employee of a statutory authority, corporation or instrumentality under Article 12 has a lien on the post till he attained superannuation or compulsorily retired or service is duly terminated in accordance with the procedure established by law.

Security of tenure enures the benefit of pension. on retirement. Dismissal, removal or termination of his/her service for inefficiency, corruption or other mis- ... conduct is by way of penalty. He/She has a right to security of tenure which is essential to inculcate a sense of belonging to the service or organisation and involvement for maximum production or efficient D. T. C. v. D. T. C. MAZDOOR CONGRESS 157 service. It is also a valuable right which is to be. duly put an end to only as per valid law. [300A-G] Roshan Lal Tandon v. Union of India, [1968] 1 SCR 185 at 195-196; Calcutta Dock Labour Board v. Jaffar Imam, [1965] 3 SCR 463 and Sini Municipality v. Cecelia Korn Francis Tallis, [1973] 3 SCR 348, referred to. 1. 3 The right to life, a bask human nght, assured by Article 21 of the Constitution comprehends some thing more than mere. animal existence; it does not only mean physical existence, but includes basic human dignity.

The right to public employment and its concomitant right to livelihood receive their succour and nourishment under the canopy of the protective umbrella ofArticles 14, 16(1), 19(l)(g) and 21. [296A, 297B] Munn v. Illinois, [1876] 94 US I13 and 154, referred to. Kharak Singh v. State of U. P. , [1964] 1SCR332; Olga Tellis v. Bombay Municipal Corporation, [1985] 2 Suppl. SCR page 51 at 79; Menaka Gandhi v. Union of India, [1978] 2 SCR 621; State of Maharashtra v. Chander Bhan, [1983] 3 SCR 387=Affi 1983 SC 803 and Board of Trustees, Port of Bombay v. Dilip Kumar, [1983] 1 SCR ·,, 828, referred to. 1. 4 The arbitrary, unbridled and naked power of wide discretion to dismiss a pennanent employee without any guidelines or procedure would tend to defeat the constitutional purpose of equality and allied purposes.

Therefore, when the Constitution assures dignity of the individual and the right to livelihood, the exercise of power hy the executive should be combined with adequate safeguards for the rights of the employees against any arbitrary and capricious use of those powers. Workmen of Hindustan Steels Ltd. v. Hindustan Steel Ltd. & Ors. , [1985] 2 SCR 428 and Francis Cora/lie v. U. T. of Delhi, [1981] i SCR 516 = Am 1981SC746, referred to. 1. 5 It . is well settled constitutional law that different Articles in _ che Chapter on Fundamental Rights and the Directive Principles in Part IV of the Constitution must be read as an integral and ·incorporeal whole with possible overlapping with the subject-matter of what is to be protected by its various provisions, particularly the FundairtentHf Rights. The fundamental rights, proteded by Part Ill of the Constltu· lion, out of which Articles 14.

19 and 21 are the lnost freqlientiy invoked to test the validity of executive as well as legislative actions when these actions are subjected to judicial scrutiny, are necessary means to devlop one's own personality and to carve out one's own life in the 1nanner one likes best. subject to reasonable restrictions imposed in the paramount interest of the society and to a just, fair and reasonable procedure. The effect of restriction or deprivation and not of the form adopted to deprive the right is the conclusive test. Thus, the right to a public employment is a constitutional right under Article 16(1). All matters relating to employment include the right to continue in service till the employee reaches superannuation or his service is duly terminated in accordance with just, fair and reasonable procedure prescribed under the provisions of the Constitution or the Rules made under proviso to Article 309 of the Constitution or the statutory provision or the Rules.

regulations or instructions having statutory flavour 1nadc thereunder. Rut the relevant provisions must be conformable to the rights guaranteed in Parts Ill & I\ of the Constitution.. Article 21 guarantees the right to live which includes right to livelihood, to many, the assured tenure of' service is the source. [311G; 312G-H, 313A-B] R. C Cooper v. Union of India, [1970] 3 SCR 530; Minerva Mills Ltd. v. 'union ofIndia, [! 981] I SCR 206 and Union of India & Anr. v. Tulsiram Patel & Ors. , [1985] Suppl. 2 SCR 131at233 referred to. I. 6 Article 14 is the general principle while Art. 3ll(2) is a special provision applicable to all civil services under the State. Article 311(2) embodies the principles of natural justice but proviso to clause (2) of Art. 311 excludes the operation of principles of natural justice engrafted in Art. 311(2) as an exception in the given circumstances enumerated in these clans"-' of the proviso to Art. 311(2) of the Constitution.

Article 14 read with Articles 16(1) and 311 are to be harmoniously interpreted that the proviso to Art. 311(2) excludes the application of the principles of natural justice as an exception; and the applicability of Article 3II(2) must, therefore, be circumscribed to the civil services and to be construed accordingly. In respect of all other employees covered by Article 12 of the Constitution the dynamic role of Article 14 and other relevant Articles like 21 must be allowed to have full play "·ithout any inhibition. unless the statutory rules themselves, consistent with the mandate of' Articles 14, 16, 19 and 21 provide, expressly, such an exception. [317F-H, 3ISA] Union ofIndia & Anr. v. Tu/siram Patel & Ors. , [1985] Suppl. 2 SCR 131 at 233; A. K. Kraipak & Ors. etc. v. Union of India & Ors. , [1970] 1 SCR 457 and Union of India v. Col. J. N. Sinha & Ors. , [1971] l SCR 791, referred to. D. T. C. '· D. T. C. MAZDOOR CONGRESS 159 J.

7 Article 19(1)(g) empowers every citizen right to avocation or profession etc. , which includes right to be continued in employment under the State unless the tenure is validly terminated and consistent with the scheme enshrined in the fundamental rights of the Constitution. Whenever there is arbitrariness in State action,. ---whether it be of the Legislature or of the Executive or of an authority under Article 12. Articles 14 and 21 spring into action and strike down such an action. The concept of reasonableness and non-arbitrariness pervades the entire constitutional spectrum and is a golden thread which runs through the whole fabric ofthe Constitution. [3158-D] J. 8 Thus, Article 14 read with 16(1) accords right to an equality or an equal treatment consistent with principles of natural justice. Any law made or actiou taken by the employer, corporate statutory or instrumentality under Article 12 must act fairly and reasonably.

Right to fair treatment is an essential inbuilt of natural justice. Exercise of unbridled and uncanalised discretionary power impinges upon the right of the citizen; vesting of discretion is no wron~ provided it. is exercised purpo5ively, judiciously and without prejudice. Wider the discretion, the greater the chances of abuse. Absolute discretion is destructive of freedom than of man's inventions. Absolute discretion marks the beginning of the end of the liberty. The conferment of absolute power to dismiss a permanent employee is antithesis to justness or fair treatment. The exercise of discretionary power wide of mark would bread arbitrary, unreasonable or unfair actions and would not be consistent with reason and justice. [3208-D] J.

9 The right to public employment which includes right to continued public employment till the employee is superannuated as per rules or compulsorily retired or duly terminated in accordance with the procedure established by law is an integral part of right to livelihood which in turn is an integral part of right to life. assured by Art. 21 of the Constitution. Any procedure prescribed to deprive such a right to livelihood or continued employment must be just, fair and reasonable procedure and conformable,to the mandate of Articles 14 and 21. In other words, an employee in a public. employment also must not be arbitrarily, unjustly or unreasonably deprived of his/her livelihood which is ensured iit continued einploy_ment till it is terminated in accordance with just, fair and reasonable procedure. Otherwise any law or rule in violation thereof is void. [320E-F] A. K. Kraipak & Ors. etc. v. Union ofIndia & Ors. , [1970] l SCR 457; Union of India v. Col. J. N. Sinha and Anr.

, [1971] 1 SCR 791; Fertilizer Corporation Kamgar Union (Regd. ), Sindri & Ors. v. Union of India & Ors. , [1981] 2 SCR 52 at 60-61; S. S. Muley v. J. R. D. Tata, [1979] 2 SLR 438 (Bombay); Superintendent of Post Office v. K. Vasayya, [1984] 3 Andhra Pradesh Law Journal 9; West Bengal Electricity Board & Ors. v. D. B. Ghosh & Ors. , [1985] 2 SCR 1014; Workmen of Hindustan Steel Ltd. & Anr. v. Hindustan Steel Ltd. & Ors. , [1985] 2 SCR 428; O. P. Bhandari v. Indian Tourism Development Corpn. Ltd. & Ors. , [1986] 4 SCC 337; A. P. S. R. T. Corpn. v. Labour Court, AIR 1980 A. P. 132; R. M. D. Chamarbaugwalla v. State of Punjab, fi957] SCR 930; Kanhialal v. District Judge & Ors. , [1983] 3 SCC 32; ,M. K. A1 Indeed, it was noted in S. S. Muley v. J. R. D.

Tata, [1979] 2 SLR 438 by this Court that, Justice Sawant, of Bombay High Court had considered at great length Regulation 48(a) of the Air India Employees' Service Regulations which conferred similar power on the Corporation as Regulation 34 confers on the Board in the present case. The learned Judge therein (Sawant, J. ) had struck down that Regulation. Reliance had also been placed on another decision of the Bombay High Court in the case of Manohar P. Kharkhar v. Raghuraj, [1981] 2 LLJ 459. This Court found it difficult to accept the reasoning therein. In that view of the matter the appeal was dismissed. Refe. rence in this connection may also be made to the decision of this Court in Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath Ganguly and Anr. , [1986] 3 SCC 156. There the appellant-Corporation was a Government company incorporated under the Companies Act. The majority shares of the Corporation were held by the States of West Bengal and Assam.

Article 51 of the Articles of Association of the Corporation conferred upon the President of India power to issue directions/instructions regarding affairs and cond1ict of the business of the Corporation or of the Directors thereof as also regarding exercise and performance of its functions pertaining to national security and public interest. Article 51-A of the I . D. T. C. v. D. T. C. MAZDGL'b'. CONGRESS [MUKHARJI, CJ. ] 181 said articles entitled the President to call for returns, accounts etc. of the Corporation. Articles 14, 15, 16, 17 and 37 conferred on the President power to appoint and remove Chairman and the Board of Directors of the Corporation. Articles 41 and 42 were regarding the President's control over the working of the Corporation.

Article 47 provided for appointment of the auditors of the Corporation to be made by the Central Government on the advice of the Comptroller and Auditor-General of India and the nature of control to be ex~rcised by the Comptroller and Auditor-General in the matter of audit and accounts. Since another company namely the Rivers Steam Navigation Co. Ltd. was carrying on the same business as the Corporation was doing, a Scheme of Arrangement was entered into between the Corporation and that Company for dissolution of the latter and taking over of its business and liabilities by the· former.

The Scheme, inter alia, stipulated that the Corporation shall take as many of the existing staff or labour as were possible and that those who could not be taken over · shall be paid by the transferor company all moneys due to them under the law and all legitimate and legal compensations payable to them either under Industrial Disputes Act or otherwise legally admissible and that such moneys shall be provided by the Government of India to the transferor Company who would pay these dues. The Calcutta High Court approved the Scheme. Each of the respondents therein were in the service of the said company. Their seryices were taken over by the Corporation after the High Court's sanction to the Scheme of Arrangement. While the respondent Ganguly therein was appointed as the Deputy Chief Accounts Officer and was later promoted as Manager (Finance), the respondent Sengupta was appointed as Chief Engineer (River Services) and was later promoted as General Manager (River Services).

Their appointment letters were in stereotype forms under which the Corporation could without any previous notice terminate their services, if. the Corporation was satisfied that the employee was unfit medically or if he was guilty of any insubordination, intemperance or other misconduct, or of any breach of any rules pertaining to this service or conduct or non-performance of his duties. The letters of appointment further stipulated that they would have been subject to the rules and regulations of Corporation. Rule 9(i) of the Corporation's Service, Discipline and Appeal Rules of 1979 had provided that the services of permanent employee could be terminated on. three months' pay plus DA to the employee or on deduction of a like amount from his salary as the case might be in lieu of the notice. By confidential letter the re5pondent Ganguly was asked to reply within 24 hours to the allegations of negligence made against him.

After having his representation and detailed reply, a notice under Rule 9(i) was served on him terminating his services with immediate effect by paying three months' pay. Similarly a charge-sheet was issued to the respondent Sengupta intimating that a disciplinary inquiry was proposed against him under the Rules and calling upon him to file his written statement of defence. Sengupta denied the charges made against him and asked for inspection of documents and copies of statements of witnesses mentioned in the said charge-sheet. But a notice was serviced on him under Rule 9(i) terminating his services with immediate effect of paying three months' salary. Both Ganguiy and Sengupta filed Writ Petitions before High Court. A Division Bench of that Court allowed the same. The Corporation filed appeals before this Court.

The main questions for determination therein were (i) whether the appellant-Corporation was an instrumentality of the State so as to be covered by Article 12 and 36 of the Constitution and (ii) whether an unconscionable term in a contract of employment entered into with the Corporation was void under Section 23 of the Contract Act and violative of Article 14 of the Constitution and as such whether Rule 19(i) which formed part of the contract of employment between the Corporation and its employees to whom the said Rules applied, was void? This Court confirmed the judgment of the High Court with modification in the declaration made and dismissed the Corporation's appeal to this Court. This Court held that the appellant was State within the meaning of Article 12 of the Constitution.

This Court further held that an unconscionable bargain or contract is one which is irreconcilable with what is right or reasonable or \he terms of which are so unfair and unreasonable that they shock the conscience of the Court. This Court was of the view that the doctrine of distributive justice is another jurisprudential concept which has affected the law of contracts. According to that doctrine, distributive fairness and justice in the possession of wealth and property could be achieved not only by taxation and regulatory control of private and contractual transactions even though this might involve some sacrifice of individual liberty. This Court referred to articles 38 and 39 of the Constitution so far as the test of reasonableness was concerned. The test of reasonableness or fairness of a clause in a contract where there was inequality of bargaining power is another theory recognised in the sphere of law of contacts.

It was reiterate_d in that decision that the Courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or a clause in the contract. Reference was made to the observations of Lord Dipiock in A. Schroeder Music Publishing Co. Ltd. v. Macaulay (formerly Jnstone), [1974] 1W. L. R. 1308 and that test was: 1-1 -- D. T. C. v. D. T. C. MAZDOOR CONGRESS [MUKHARJI, CJ. ] 183 "Whether the restrictions are both reasonably necessary for the protection of the legitimate interests of the promisee and commensurate with the benefits secured to the promiser under the contract? For the purpose of this test all the provisions of the contract must be taken into consideration. " Justice Madon of this Court in the said decision found that this was in consonance with right and reason, intended to-secure social and economic justice and conformed to the mandate of the equality clause in Article 14 of the Constitution.

It was further recognised ihat there might be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The Court must judge each case on its own facts and circumstances. The above principle would apply, this Court reiterated, where the inequality of bargaining power is the result of the disparity in the economic strength of the contracting parties ot where the inequality is the result of circumstances, whether of the creation of the parties or not or where the weaker party is in a position in which he could obtain goods or services or means of livelih ,. circumstances of these cases, we have proceeded on that basis and we are of the opinion that it is the correct basis. The exercise of such power under regulations similar to the one impugned which has been upheld in various types of cases are instructive in their variety.

It may "' be mentioned that the exercise of power under the very same Regulation 9(b) :. Vas upheld by the Court in a matter, wherein in an action by the employee of D. T. C. , this Court in Delhi Transport Corporation Undertaking v. Balbir Saran. Goel, (1970] 3 SCR 757 at 764 held that even if the employees of the respondent thought that he was a cantankerous man and it was not desirable to retain him in service it , · was open to them to terminate his services in terms of Regulation 9(b) ' and it was not necessary to dismiss by way of punishment for misconduct. Reliance was placed on this decision by the High Court in the Judgment under appeal. The High Court in our opinion rightly pointed out, however, that the decision was on a different basis and could not be availed of in deciding controversy involved in the present determination. In Air India Corporation, Bombay v. V. A. Rebe/low & Anr.

, (1972] 3 SCR 606, this Court dealing with the power of the Air India to terminate the services of a person who was alleged to have misbehaved with air hostesses, observed on page 616 of the report that the anxiety of the Legislature to effectively achieve the object of duly protecting the workmen against victimisation of unfair labour practice consistently with the preservation of the employer's bona fide right to maintain discipline and efficiency in the industry for securing the maximum production in peaceful, harmonious atmos_phere is obvious from the D. T. C. v. D. T. C. MAZDOOR CONGRESS IMUKHARJI, CJ. ] 189 overall scheme of these sections. This Court on page 620 of the report observed that the record merely disclosed that the appellant had suspicion about the complainant's suitability for the job in which he was employed and this led to loss of confidence in him with the result that his services were terminated under Regulation 48.

Loss of confidence in such circumstances could not be considered to be mala fide, it was held. Similarly in Municipal Corporation of Greater Bombay v. P. S. Malvenkar & Ors. , [1978] 3 SCR 1000 at page 1006, where it was alleged that the services of an employee of Bombay Municipal Corporation were unsatisfactory, this Court held that the powers of dismissal after an inquiry and the powers of simpliciter termination are to distinct and independent powers and as far as possible neither should be construed so as to emasculate the other or to render it ineffective. One is the power to punish an employee for misconduct while the other is the power to terminate simpliciter the service of an employee without any other adverse consequence.

It may be mentioned that the case of civil servants is, however, governed by their special constitutional position which accords them status; the legal relationship (between the Government and its servants) is something entirely different, something in the nature of status. It is much more than a purely contractual relationship voluntarily entered into between the parties. The duties of state are fixed by the law and in the enforcement of these duties society has an interest. In the language of jurisprudence status is a condition of membership of a group of which powers and duties are exclusively determined by law and not by agreement between the parties concerned. See the observations of this Court in Roshan Lal Tandon v. Union of India, [1968] I SCR 185 at 195 D-E. But even then the services of a temporary civil servant (although entitled to the protection of Article 311 of the Constitution) is subject to termination by notice.

But beside the above, the government may find it necessary to terminate the services of a temporary servant if it is not satisfied with his conduct or his suitability for the job and/or his work. See. the observations of this Court in Champak Lal Chiman Lal Shah v. The Union of India, [1964] 5 SCR 190 at 204. The services of a temporary government servant, further. may be terminated on one month's notice whenever the government thinks it necessary or expedient to do so for administrative reasons. It is impossible, this Court observed, to define before hand all the circumstances in which the discretion can be exercised. The discretion was necessarily left to the Government. See observations of this. Court in Ram Copa/ Chaturvedi v. State of M. P. , [1970] 1SCR472 at 475. The atoresaid position of a government servant has been analysed in depth by the decision of this Court in Union of India v.

Tutsi Ram Patel, (supra), where it was reiterated that the doctrine of pleasure is not a relic of the feudal ages or based upon any special preroga· tive of the. Crown but is based on public interest and for the public good because it is as much in public interest and for public good that government servants who are inefficient, dishonest or corrupt or have become a security risk should not continue in service and that the protection afforded to them by the Acts and the Rules made under Article 309 and by Article 311 of the Constitution be not abused by them to the detriment of the public interest and public good. It was reiterated on page 190 of the report that if in a situation as envisaged in one of the three clauses of the second proviso to Clause (2) of Article 311 arises and the relevant clause is properly applied and the disciplinary inquiry dispensed with, the concerned government servant cannot be heard to complain that he is deprived of his livelihood.

This Court reiterated that the livelihood of an individual is a matter of great concern to him and his family but his livelihood is a matter of his private interest where such livelihood is provided by the public,exchequer and the taking away of such livelihood is in the public interest and for the public good, and the former must yield to the latter public policy, it was reiterated, requires, public interest needs and public good demands that there should be such a doctrine. It was further reiterated that the rules of natural justice are not immutable but flexible. These rules can be adopted and modified by statutes and statutory rules and also by the constitution of the Tribunal which has to decide a particular matter and the rules by which such Tribunal is governed. Not only, can the principles of natural justice be modified but in exceptional cases they can even be excluded. See the observations of this Court at page 237 G of the aforesaid report.

Reference was also made to the observations of this Court at pages 214-215 of the aforesaid report. Thus, the Constitution Bench laid down that even where a government servant enjoys constitutional status there can be exclusion of inquiry in the cases prescribed for termination of employment. It must, however, be borne in mind that in some recent cases this Court has taken the view that a regulation providing for the termination of the service of an employee of the public corporation by notice only or pay in lieu thereof is invalid under Article 14 of the Constitution. We have referred to the decisions of the Workmen of Hindustan· Steel's case (supra); West Bengal State Electri~ity Board's case (supra) and Central Inland Water Transport Corporation's case (supra). Mr. D. T. C. v. D. T. C. MAZDOOR CONGRESS [MUKHARJI, CJ.

] 191 Ashok Desai, learned Solicitor General of India submitted that the decisions in the West Bengal State Electricity Board's (supra) and Central Inland Water Transport Cprporation's case (supra) were incorrectly decided and the, decision proceeded on the theory of unconscionable bargains and that termination by notice is against public policy. He, how;wer. drew our attention to Gheru Lal Parekh v. Mahadeodas Maiya & Others, [1959) Supp. 2 SCR 406 and 440 where it was held. that though theoretically it may be permissible to evolve a new head under exceptional circumstances in a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads of avoidance of such clauses in these days. Furthermore, as stated above, learned Solicitor General submitted that in the ordinary law of contrac\ t~rmination of employment by reasonable notice on ~i\hH si\! ~ has never been regarded as unconscionable. Therefore, the.

l@arned Solicitor General submitted that this part of the above judgments was erroneous and should be overruled. It must, however, be noted that in a later judgment of this Court, which followed this line of reasoning, it was recognised that a public corporation requires protection from employees who are inefficient or those who lacked probity or even made faulty policy decisions. Reference was made to the decision of this Court in O. P. Bhandari v. I. T, /), c;. ~ Ors,, [1986) 4 SCC 337 where this Court held that so far as some of the higher placed employees are concerned (described as 'gold ~ollar' e1T1ployees) public sector undertakings may be exposed to irreversible damage on account of faulty policy decisions or on account of lack of efficiency or probity of such employees and its very existence might be endangered beyond recall.

A public corporation may not be able to cut the dead wood and get rid of a managerial cadre employee in case he is considered to be wanting in performance or integrity. Reference may be made to page 343 paragraph 5 (supra) of the report. It may be mentioned that in Moti Ram Deka's case (supra) at p. 707 of the said report, a similar rule was considered by seven learned Judges in the context of government servants in Railway. The majority judgment did not express opinion on the ,question of the Railway rule being bad on th~ ground of unguided and uncanalised power. In his judgment, Mr. Justice Das Gupta held that the rule gave no guidance and was, therefore, violative of Article 14. (See page 769 of the report). On this point Mr.

Justice Shah, as the learned Chief Justice then was, in his judgment observed at page 799-800 of the aforesaid report: "In considering the validity of an order an assumption that the power may be exercised ma/a fide and on that ground discrimination may be practised is wholly out of place. Because of the absence of specific directions in Rule 148 governing the exercise of authority conferred thereby, the power to terminate employment cannot be regarded as an arbitrary power exercisable at the sweet will of the autho- 'rity, when having regard to the nature of the employment :and the service to be rendered, the importance of the efficient functioning of the rail transport in the scheme of our public economy, and the status of the authority invested with the exercise of power would appropriately be exer- . cised for the protection of public interest on grounds of ~administrative convenience.

Power to exercise discretion is ·not necessarily to be assumed to be a power which will ·invalidate the conferment of power. Conferment of power has necessarily to be coupled with the duty to exercise it bona fide and for effectuating the purpose and policy underlying the rules which provide for the exercise of the power. If in the scheme of the rule, a clear policy relating · to the circumstances in which the power is to be exercised is , discernible, the conferment of power must be regarded as being made in furtherance of the scheme, and is not open f to attack as infringing the equality clause. It may be remembered that the rules relating to termination of employment of temporary servants and those on probation, and . even those relating to compulsory retirement generally do not lay down any specific directions governing the exercise of the powers conferred thereby.

The reason is obvious: the appointing authority must in all these cases be left with discretion to determine employment having regard to the exigencies of the . service, suitability of the employee for absorption or continuance in the cadre, and the larger interest of the public being served by retaining the public servant concerned in service. " Learned Solicitor General submitted that the question is whether it is the very existence of power which is bad or the exercise is bad in any specific case. It was submitted that the Court would be entitled to obtain guidance from the preamble, the policy and the purpose of the Act and the power conferred under it and to see that the power is exercised only for that purpose. It was submitted that even if a statute. makes no clarification Court would ascertain if the statute laid down any principle or policy. In such a case, the statute will be upheld although a given exercise may be struck down in particular cases. See D. T. C. v. D. T. C.

MAZDOOR CONGRESS [MUKHARJl, CJ. ] 193 the observations of this Court in Shri Ram Krishna Dalmia v. Justice Tandolkar, (1959] SCR 279 at 299. The guidance in the statute for the exercise of discretion may be found from the preamble read in the light of surrounding circumstances or even from the policy or the purpose of the enactment or generally from the object sought to be achieved. See the observations of this Court in Jyoti Rrasad v. The Administrator for the Union Territory of Delhi, (1962] 2 SCR 125 at 139. Even a term like 'public interest' can be sufficient guidance in the matter of retirement of a government employee. See the observations of this Court in Union ofIndia v. Col. J. N. Sinha & Anr. , (1970] 2 SCC 458 at 461 and such a provision can be read into a statute even when it is not otherwise expressly there. Learned Solicitor General draw our attention to the observations of. this Court in N. C. Dalwadi v. State of Gujarat, (1987] 3 SCC 611paragraphs9 and. JO at page 619.

It is well settled and the learned Solicitor General made a point of it that the Court will sustain the presumption of constitutionality by considering matters of common knowledge and to assume every state of facts which can be conceived and can even read down the section, it was submitted, if it becomes necessary to uphold the validity of the provision. Reliance was placed on the decision of this Court in Commissioner of Sales Tax, M. P. , Indore & Ors. v. Radhakrishan & Ors. , I1979J 2 sec 249 at 257. In the case of Olga Tellis & Ors. etc. v. Bombay Municipal Corporation & Ors. , (1985] Suppl. 2 SCR 51 at 89 this Court has held that considering the scheme. of the act, a. section which enabled the Cqmmissioner to remove encroachment without notice must be read to mean that notice would be given unless circumstances are such that it is not reasonably practicable to give it.

This Court further held that the discretion is to be exercised in a reasonable manner so as to comply with the constitutional mandate that the procedure accompanying the performance of a public act must be fair and reasonable. We must lean in favour of that interpretation because it helps to sustain the validity , · ofthe law. Learned Solicitor General submitted that the appeal involved herein the power of Delhi Transport Corporation (a statutory corporation) regarding termination of service simpliciter under Regulation 9(b). These Regulations were framed as mentioned under Section 53 of the Delhi Road Transport Authority Act, 1950. The said Act was replaced by the Delhi Municipal Corporation Act, 1957 but the regulations have been saved and even though in 1971 a new Corporation, viz. the Delhi Transport Corporation (the af>pellant}, was' constituted 194 SUPREME COURT REP0KfS [1990] Supp. 1 S. C. R. under the Road Transport Corporation Act, 1950, the regulations have been continued. .

The guidelines for the exercise of such power, according to the Solicitor General, could be found in the statutory provisions of th~ 1950 Act under which the rejlulations have been framed, the pream" ble; Sections 19 and 20 (equiValent to Secttons 18 and 19 of the Road Transport Corporation Act, 1950); Section 53 (equivalent to Section 45 of the Road Transport Corporation Act, 1950); the context of Regulation 9(b) read with 9(a) and 15. Even for the exercise of this power, reasons could be recorded although they need ncit be com" municated. This will ensure according to the Solicitor General, a check on the arbitrary exercise of power and effective judicial review in a given case. The present regulations are parallel, to b11t not identical with, the exceptions carved out under Article 311(2) pmvisg. H was submitted that even the power of termination simpliciter under Regu" lation 9(b) can only be exercised in circumstances other than those in Regulation 9(a), i. e.

, not where the foundation of the order is 'miscon" duct'. The exercise of such power can only be for purposes germane and relevant to the statute. It was submitted by the learned Solicitor General that these would include several cases which have been held by Courts to give rise to termination simplicitllr in~luding where the employee shows such incompetence or unsuitability as to m!! ke his continuance in employment detrimental in the interest of the Corpora, tion, where the continuance of the employee is a grave se~μrity risk making his continuance detrimental in the interest of the Corporation, if there is a justifiable lack of confidence which makes it necessary in the interest of the Corporation to immediately terminate the services. These are illustrative and not exhaustive.

It was submitted by the learned Solicitor General that the a15ove guidelines of recording reasons and confining action under Regulation 9(b) for purposes germane and relevant to the statute would prevent arbitrary action by the Corporation while enabling it to run its services efficiently and in public interest. Thus, there is no vice of arbitrariness in the regulation. The judgment of the High Court, therefore, cannot and should not be upheld according to the learned Solicitor General. In Civil Appeal No. 2876 of 1986, the learned Attorney General urged that the settled rule judicially evolved in matters of constitu, tional adjudication is that in order to sustain the constitutloMlity of legislation, the words of a statute may be qualified, its operation limited and conditions, limitations and obligations may be implied or ,; D. T. C. v. D. T. C. MAZDOOR CONGRESS [MUKHARJI, CJ. ] read into the statute in order to make it conform to constitutional requirements.

The underlying rationale, according to the learned Attorney General, of this rule of interpretation, or the doctrine of reading down of a statute is that when a legislature, whose powers are not unlimited, enacts a statute, it is aware of its limitations, and in the absence of express intention ~r clear language to the contrary, it must . be presumed to have implied into the statute the requisite limitations and conditions to immunise it from the virus of unconstitutionality. From what the learned Attorney General submitted and what appears to be the correct that every legislature intends to act within its powers. Therefore, in a limited Government, the legislature attempts to function within its limited powers. It would not, therefore, be expected to have intended to transgress its limits. In Re The Hindu Women's Rights to Property Act, [194I]FCR 12, the question before the Federal Court was about the meaning of the word 'property' in the Act.

The Court limited the operation of the word 'property' to property other than agricultural land because otherwise the Central Legislature would have had no competence to enact the statute. The Court observed at pages 26 and 27 of the Report as follows: "No doubt if the Act does affect agricultural land in the Governors' Provinces, it was beyond the competence of the Legislature to enact it: and whether or not it does so much depend upon the meaning which is to be given to the word 'property' in the Act. If that word necessarily and inevitably comprises all forms of property, including agricultural land, then clearly the Act went beyond the powers of the Legislature; but when a Legislature with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely· be that it is using it with reference to that kind of property with respect to which. it is competent to legislate and to no other.

The question is thus one of construction, and unless the Act is to be regarded as wholly meaningless and ineffective, the Court is bound to construe the word 'property' as referring only to those forms of property with respect to which the Legislature which enacted the Act was competent to legislate; that is to say, the property other than agricultural land ...... " See also the observations of Chief Justice Gwyer at pages 27 to 29 of the Report on how legislations of legislature with limited powers should be construed. See also the observations of this Court in il.. M. D. [1990] Supp. 1 S. C. R. Chamarbaugwalla v. Union of India, [1957] SCR 930, at p. 935 and 938. There section 2(d) of Prize Competitions Act, 1955 defined 'prize competition' as meaning any competition in which prizes are offered for the solution of any puzzle. As defined, the statute covered not only competition in which success depended on chance but also those which involved substantial degree of skill.

It was conceded that the Act would be violative of Article 19(1)(g) of the Constitution if competitions which involved substantial degree of skill were included in the statutory defintion. See the observations of this Court at p. 935 of the report. ' This Court rejected the argument of the petitioners therein that since the language of the definition of prize competition was wide and unqualified, it was not open to the Court to read into it a limitation which was not there. This principle was reiterated and applied by this Court in the case of Kedar Nath Singh v. State of Bihar, [1962) Supp. (2) SCR 769. The question before this Court was about the validity of s. 124A of the Indian Penal Code. This Court in order to sustain the validity of the section on the touch-stone of Article 19(1)(a) of the Constitution of India, limited its application only to acts involving intention or tendency to create disorder, or disturbance of law and order, or incitement to violence.

This Court held that it was well settled that if certain provisions of law construed in one way would make them consistent with the Constitution, and another interpretation would render them unconstitutional, the Court would lean in favour of the former construction. The provisions of the sections read as a whole, along with the explanations, make it reasonably clear that the sections aim at rendering penal only such activities as would be intended, or have a tendency, to create disorder or disturbance of public peace by resort to violence. Reference may also be made to the decision of this Court in R. L. Arora v. State of Uttar Pradesh, [1964) 6 SCR 784 where the question was about the Constitutionality of section 41(aa) of the Land Acquisition (Amendment) Act, 1962. This Court upheld the validity of the section following the principle of interpreting the said rule in a way which would be consistent with the Constitution. See the observations of this Court at p.

797 of the said report. The technique of reading down has been adopted in numerous cases to sustain the validity of the provision. For example, in Jagdish Pandey v. The Chancellor, University of Bihar & Anr. , [1968) I SCR 231, at pages 236-37, this Court made resort to section 4 of the Bihar State Universities Act, 1962. It was observed that section 4 so read literally it did appear to give uncanalised powers to the Chancellor to D. T. C. v. D. T. C. MAZDOOR CONGRESS [MUKHARJI, CJ. ] 197 do what he liked on the recommendation of the Commission with respect to teachers covered by it. But this Court was of the opinion that the legislature did not intend to give such an arbitrary power to the Chancellor and was of the opinion that s. 4 should be read down and if it is read down, there was no reason to hold that the legislature was conferring a naked arbitrary power on the Chancellor and that power cannot be struck down as discriminatory under Article 14 of the Constitution.

See the observations of this Court in Sunil Batra v. Delhi Administration & Ors. , I1978) 4 SCC 494. There the constitutionality of s. 30, sub-section (2) and section 56 of the Prisons Act, 1894 was in question. Krishna Iyer, J, speaking for this Court at p. 511, para 34, of the report observed that the Court does not '. rush in' to demolish provisions where judicial endeavour, amelioratively interpretational, may achieve both constitutionality and compassionate resurrection. This salutary strategy, the learned Judge observed, of sustaining the validity of the law and softening its application was of lovely dexterity. · The semantic technique of updating the living sense of a dated legislation is, in our, view, prefectly legitimate. Semantic readjustments are necessary to obviate alegicidal sequel and a validation-oriented 0 approach becomes the philosophy of statutory construction sometimes. Similar observations were made in N. C. Dalwadi v. State of Gujarat, (supra).

In Tinsukhia Electric Supply Co. Ltd. v. State of Assam & Ors. , [1989) 3 SCC 709, this Court upheld the validity of sections 9 and 10 of the Act by reading in several matters by necessary implication in order to sustain the validity of the sections. In Charan Lal Sahu & Ors. v. Union ofIndia, [1989) Supp. SCALE J, at pages 53 and 54, paras 101 as well asp. 61, para 114, it was observed that this principle of reading down has been adopted in U. S. Supreme Court in several cases. See also United States ofAmerica v. Edward A. Rumely, 97 Lawyers Edition 770 at 775. The principle as enunciated in Rumely's case (supra) has been approved by this Court in Shah & Co. v. State of Maharashtra, [1967) 3 SCR 466 at 477-78. This principle of reading down or placing limited construction has been adopted by courts in England in deciding the validity of bye-laws and regulations. See Reg. v. Sadlers Co. , 10 H. L. C. 404, at 460 and 463 and Faramus v. Film Artists Association, 196 2 QB 527 at 542.

The courts must iron out the creases, as said Lord Denning in Seaford Court Estates, [1949) 2 KB 481. This Court has also on numerous occasions followed this practice. See the observations of this Court in M. Pentiah and Ors. v. Veera- Mallappa and Ors. , [1961) 2 SCR 295; Bangalore Water Srtpply and Sewerage Board etc. v. A. Rajappa & Ors. , [1978] 3 stR 207. See aiso H. M. Seervai's 'Constitutional Law of India', 3rd Edn. VoL I, pages 119-120. In the background of this, the learned Attorney General also drew our attention that the present regulation, as mentioned hereinbefore, should be read and construed in the said manner and the reasons and conditions of its exercise can be spelt out and it may be so construed. He submitted that it sould be spelt out that the regulation requires rea5ons to be there, reasons which are germane and relevant. The principles of natural justice or holding of an enquiry is neither a universal principle of justice nor inf! exiable dogma.

The principles of natural justice are not incapable of exclusion in a given situation. For example, Article 311(2) of the Constitution which essen· ti ally embodies the concept of natural justice, itself contemplates th. at there may be situations which warrant or permit the non-applicability of the principles underlying Article 311(2) of the Constitution. Reference may be made to the second proviso to Article 311 of the Constitution. This court has also recognised that the rule of audi alteram partem can be excluded where having regard to the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its application and even ~arrants its exclusion. If importing the right to be heard has the effect of paralysing the administrative process or the need for promptitude or the urgency of the situation so demands, natural justice could be avoided.

See the observations of this Court in Maneka Gandhi's case at p. 681 of the report (supra). This Court in Tulsi Ram Patel's case (supra) had in terms ruled that not only, therefore, can the principles of natural justice be modified but in exceptional cases they can even be excluded. But the principles of natural justice must not be displaced save in exceptional cases. Consequently, the learned Attorney General submitted that the words "where it is not reasonably practicable to hold an enquiry" may be imported into the regulations. •It was submitted by the learned Attorney General that the exclusion of audi alteram partern rule in circumstances which are circumscribed and coupled with the safeguard of recording of reasons which are germane and relevant, the termination in such a situation would not render the regulation unreasonable or arbitrary.

Then it could not be said that the power was uncanalised or unguided if "the regulation is construed and read down in the manner indicated above, according to the learned Attorney General. The reading down, the learned Attorney General conceded cannot, however, be done where there was no valid reason and where it would be contrary to proclaimed purpose. See the observations of this Court in Minerva Mills Ltd. & Ors. v. Union ofIndia & Ors. ; [1981] J SCR 206, at p. 239 and 259. H. On behalf of the workmen of the respondent DTC, Shri i I, D. T. C. v. D. T. Cc MAZDOOR CONGRESS [MUKHARJI, CJ. ) 199 Ramamurthi, submitted that tlie Constitutional questions of great public importance arising in the present appeal, have to be examined in the light of the law laid down by the Full Court in the case of R. C. Cooper v. Union of India, [1970] 3 SCR 530 at 577 and by larger Constitution Benches in the cases of Maneka Gandhi v. Union ofIndia (supra), Moti Ram Deka v.

Union of India (supra), State of West ·Bengal v. Union of India, (supra) and the Constitution Bench deci- . sions in the cases of Olga Tellis and Others v. Bombay. Municipal Corporation and Others, (supra), Fertilizer Corporation Kamgar Union (Regd. ) Sindri and Others v. Union ofIndia and Others, [1981] 2 SCR at 60-61, Union of India v. Tulsiram Patel and Others (supra), Sukhdev Singh & Others v. Bhagat Ram Sardar Singh Raghuvanshi and Another (supra) and Ajay Hasia etc. v. Khalid Mujib Sehravardi & Ors. etc. , [1981] 2 SCR 79 at 100-102. According to Shri Ramamurthi these decisions are authority for the following propositions: (a) The declarations in the provisions contained in the Fundamental Rights Chapter involve an obligation imposed not merely upon the "State" but upon all persons to respect the rights declared, unless the context indicates otherwise, against every person or agency seeking to infringe them. See the observations of this Court in State of West Bengal v.

Union of India, [1964] 1SCR 371 at page 438: · (b) Part III of the Constitution weaves a pattern of guarantee on the texture of basic human rights. The guarantees delimit the protection of th0se rights in their allotted field. They do not attempt to enunciate distinct right. [See R. C. Cooper's case (supra( at p. 577 of the report]. The extent of protection against impairment of a fundamental right is determined not by the object of the Legislature nor by the form o. fthe action, but by · its direct operati6n upon the individual's rights. (c) Any person who is deprived of his right to livelihood except according to just and fair procedure established by law can challenge the deprivation as offending the right to life, conferred by Article