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Bank Of Baroda Ltd. v. Jeewan Lal Mehrotra .
Factual and Procedural Background
The respondent was appointed as a cash clerk in the appellant Bank’s Kanpur branch on April 1, 1949. In July 1955, while working in the Cash Department as a “Receipter and Receiving Clerk,” a cash shortage of Rs 1000 was detected on July 2, 1955. The respondent asserted that the shortage related to the cash of one B.N. Shukla (Assistant Cashier), but Shukla allegedly created suspicion against the respondent.
The Bank instituted an internal inquiry, conducted by the Agent of the Bank’s Lucknow branch as Inquiry Officer, who found the respondent guilty of the charges relating to the disappearance of Rs 1000. The respondent’s services were terminated on October 1, 1956.
In September 1957, the respondent filed a civil suit alleging the inquiry was illegal on various grounds, seeking (i) a declaration that the dismissal was null and void and that he continued in service, and (ii) recovery of Rs 1650 as arrears of salary for October 1, 1956 to August 31, 1957. The trial court (Munsif) dismissed the suit, holding inter alia that a proper inquiry had been held.
On first appeal, the First Additional Civil Judge, Kanpur allowed the appeal principally because certain witnesses were not produced before the Inquiry Officer, yet their earlier statements were relied upon without giving the respondent an opportunity to cross-examine them. The suit was decreed. The Bank’s second appeal was dismissed by the High Court through a brief order agreeing that reliance on untested statements of two unexamined witnesses made the inquiry not legal and proper.
The matter reached the Supreme Court by special leave. The Supreme Court also noted that the first appellate court’s decree sheet was “somewhat unusual and vague,” though it appeared the suit had been decreed in its entirety even if not expressly stated.
Legal Issues Presented
- Whether, on the facts of the case, the civil courts could grant a declaration effectively enforcing a contract of personal service by declaring the respondent’s dismissal null and void and treating him as continuing in service.
Arguments of the Parties
Appellant's Arguments
- The case was one of termination of service after giving three months’ notice, governed by the ordinary law of master and servant.
- Even if the termination/dismissal were illegal, the respondent’s remedy would lie in damages; he could not obtain a declaration that he continued in service.
- As settled by the Supreme Court, courts normally do not grant declarations enforcing a contract of personal service, subject only to recognized exceptions.
- The respondent’s case did not fall within any recognized exception (Article 311; industrial law reinstatement; breach of mandatory statutory obligation by a statutory body).
- The appellant did not press the challenge to the monetary decree for Rs 1650.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| U.P Warehousing Corpn. Ltd. v. Chandra Kiran Tyagi (1969) 2 SCC 838 | Cited for the recognized exception that reinstatement/declaratory relief may be available where a statutory body acts in breach of a mandatory obligation imposed by statute (an exception to the general rule against enforcing personal service contracts). | The Court treated it as illustrative of the third exception but held the respondent’s case did not fall within any exception; hence declaratory relief enforcing continued service was impermissible. |
Court's Reasoning and Analysis
The Supreme Court focused on the nature of the relief granted by the courts below. It accepted the appellant’s submission that the dispute was governed by the ordinary master-and-servant law, where the normal remedy for wrongful/illegal termination is damages rather than a declaration compelling or implying continuation in service.
The Court stated the settled principle that “no declaration to enforce a contract of personal service will be normally granted.” It then listed the well-recognised exceptions:
- Dismissal of a public servant in contravention of Article 311.
- Reinstatement of a dismissed worker under industrial law by labour/industrial tribunals.
- Breach of a mandatory statutory obligation by a statutory body (with reference to U.P Warehousing Corpn. Ltd. v. Chandra Kiran Tyagi).
Applying these principles, the Court held that the respondent’s case did not fall under any exception. Consequently, the lower courts acted “contrary to law” in granting a declaration that the dismissal was null and void and that the respondent continued in service. The Court therefore refused to uphold the declaratory part of the decree.
The Court also recorded that the appellant did not press for reversal of the decree relating to Rs 1650, indicating that the Supreme Court’s interference was confined to the declaratory relief.
Holding and Implications
ALLOWED: The appeal was allowed and the declaratory part of the decree was set aside. There was no order as to costs in the Supreme Court.
As a direct consequence, the respondent could not obtain a declaration treating him as continuing in the Bank’s service. The decision left intact the monetary component since reversal of the Rs 1650 decree was not pressed. The opinion applies the settled rule against enforcing contracts of personal service through declaratory relief and indicates no broader new precedent beyond that application on the given facts.
A.N Grover, J.— This is an appeal by special leave from a judgment of the Allahabad High Court. The facts may be stated. The respondent was appointed as a cash clerk in the appellant's branch at Birhana Road, Kanpur, on April 1,1949. In July, 1955, he was working in the Cash Department as a ‘Receipter and Receiving Clerk’. On July 2, 1955, it was detected that there was a shortage of Rs 1000 in the cash. According to the respondent this shortage had occurred in the cash of one B.N Shukla who was the Assistant Cashier. However, B.N Shukla created a suspicion against the respondent. The appellant instituted an inquiry. The Inquiry Officer was the Agent of the Bank at its Lucknow branch. He found that the respondent was guilty of the charges which had been preferred against him in respect of the disappearance of Rs 1000. On October 1, 1956, the services of the respondent were terminated. He instituted a suit in September, 1957, alleging that the inquiry held against him was illegal for various reasons. He claimed a declaration that his dismissal was null and void and that he was still in the service of the Bank. He further laid claim to the recovery of Rs 1650 being the arrears of salary from October 1, 1956 to August 31, 1957. The Bank contested the suit. The learned Munsif dismissed the suit holding, inter alia, that a proper inquiry had been held into the charges made against the respondent. The respondent preferred an appeal to the First Additional Civil Judge, Kanpur. That appeal was allowed principally on the ground that certain witnesses had not been produced before the Inquiry Officer but their statements recorded at some prior stage had been taken into consideration by the Inquiry Officer without the respondent having any opportunity of cross-examining them. The suit was consequently decreed. The appellant filed a second appeal which was disposed of by a brief order by the learned Single Judge of the High Court. He agreed with the view of the first appellate court that two witnesses had not been examined by the Inquiry Officer and their statements had been taken into consideration. The Inquiry was, for that reason, not legal and proper.
2. The decree which was passed by the first appellate court is some what unusual and vague. In the decree sheet all that was stated was “therefore it is ordered and decreed that this appeal be allowed with costs. The judgment and decree of the lower court be set aside and that a sum of Rs 271 as detailed below be paid by the respondent to the appellant on account of the costs of the appeal”. It would, however, appear that the court decreed the suit in its entirety although that is not expressly stated.
3. The main point that has been urged on behalf of the appellant is that the present case was one of termination of service after giving of three months' notice and the ordinary law of master and servant applied. Although in case of illegal termination or dismissal the respondent could have claimed damages but he could not ask for or be granted a declaration that he should be treated as if he was still in service. The law as settled by this court is that no declaration to enforce a contract of personal service will be normally granted. The well-recognised exceptions to this rule are (1) where a public servant has been dismissed from service in contravention of Article 311, (2) where re-instatement is sought of a dismissed worker under the industrial law by labour or industrial tribunals, (3) where a statutory body has acted in breach of a mandatory obligation imposed by statute vide U.P Warehousing Corpn. Ltd. v. Chandra Kiran Tyagi (1969) 2 SCC 838, (1970) 20 FLR 17, 1970 Fac LR 339. The case of the respondent did not come under any of the above exceptions. Therefore in granting a declaration of the nature sought by the respondent the courts acted contrary to law and that part of the decree could not be upheld. On behalf of the appellant, the reversal of the decree for Rs 1650 has not been pressed.
4. The appeal is allowed and the declaratory part of the decree is hereby set aside. There will be no order as to costs in this court.
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