Citation Codes

Equivalent Citations

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Case Number

C.R.P.PD Nos. 1729 and 1730 of 2006 and M.Ps 1+1 of 2006

Attorney(S)

Mr. Sathish Parasaran, Advocate for Petitioner.
Mr. M.S Krishnan & Ms. P.T Asha for M/s. Sarvabhauman Associates, Advocate for Respondent.

Judges

S. Ashok Kumar, J.

Acts

Section 9 of the Code of Civil Procedure
ARTICLE 227 CONSTITUTION OF INDIA
Section 14(b) of the Specific Relief Act
SECTION 41 SPECIFIC RELIEF ACT
Order 7, Rule 11, C.P.C
SPECIFIC RELIEF ACT
COMPANIES ACT 1956
Section 9, C.P.C

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Smart Summary

Summary of the Judgment — Civil Revision Petitions Nos. 1729 & 1730 of 2006

Factual and Procedural Background

The matter arises from two Civil Revision Petitions under Article 227 of the Constitution of India challenging orders of the District Munsif, Coimbatore in relation to O.S. No. 2690 of 2006. The respondent (plaintiff in the trial court) filed O.S. No. 756 of 2006 and later O.S. No. 2690 of 2006 seeking a permanent injunction restraining the employer (the petitioner/revision petitioner — M/s. Bannari Amman Sugars Ltd. and its Employees Thrift and Credit Society) from conducting any domestic enquiry into alleged misappropriation and from interfering with his personal liberty. The respondent had been employed as an Office Assistant since 1986. He submitted a resignation on 3-11-2005 which the employer did not accept because it proposed to frame charges of misappropriation (alleged advances totalling Rs. 2,30,208.58 with Rs. 95,400/- remaining payable). The respondent sought adjustment of dues against gratuity. The employer sent show-cause notices and, on 18-11-2006, framed charges. The respondent filed O.S. No. 2690 of 2006 and an interlocutory application I.A. No. 2235 of 2006 for a temporary injunction restraining the domestic enquiry. The Trial Court granted an ad-interim injunction for a limited period. C.R.P. No. 1729 of 2006 challenged the interim injunction; C.R.P. No. 1730 of 2006 sought to strike off the plaint in O.S. No. 2690 of 2006 as not maintainable.

Legal Issues Presented

Whether a suit for permanent injunction restraining an employer from conducting a domestic disciplinary enquiry (and thereby effectively enforcing continued employment) is maintainable, particularly where the dispute concerns alleged misappropriation and resignation that was not accepted.
Whether the Trial Court had jurisdiction to entertain O.S. No. 2690 of 2006 and to grant ad-interim injunction restraining the employer from conducting a domestic enquiry.
Whether a revision under Article 227 is maintainable in the presence of available alternative statutory remedies (such as filing an application to vacate injunction or appeal), or whether Article 227 may be invoked where the very jurisdiction of the Trial Court to maintain the suit is in issue.

Arguments of the Parties

Revision Petitioner (Employer) — Summary of Arguments

The petitioner is a registered company and the respondent was an Office Assistant who took advances for official expenses; the company alleges misappropriation of funds.
The respondent's resignation was not accepted because of proposed disciplinary action; an amount remained payable by the respondent (Rs. 95,400/-) and the company sought to adjust dues against gratuity.
The respondent's suit for permanent injunction is an attempt to thwart a disciplinary enquiry and is not maintainable because it seeks to enforce a contract of personal service, which is barred by Section 41 of the Specific Relief Act.
The Court cannot enforce specific performance of contracts of personal service (relying on Section 14(b) of the Specific Relief Act) and therefore Section 9 CPC jurisdiction should not be invoked to take the suit on file.
The Trial Court erred in granting the ex parte ad-interim injunction; the plaint ought to be struck off and Order 7 Rule 11 CPC should have been used to reject the plaint.

Respondent (Employee / Plaintiff in Trial Court) — Summary of Arguments

The respondent had worked with the company since 1986 and sought adjustment of dues against gratuity by letter dated 22-2-2006.
The respondent alleged that the company had impliedly accepted his resignation and therefore he was no longer an employee when he filed O.S. No. 2690 of 2006.
The respondent argued that the petitioner/ employer had alternative statutory remedies (vacate injunction petition or appeal) and therefore the revision petition was not maintainable; he relied on A. Venkatasubbiah Naidu v. S. Chellappan (2000) for the principle that revision should not be entertained where an alternative statutory remedy exists.
The respondent maintained that the remedy of the petitioner lies in vacating the injunction or appealing, and that the lower court correctly entertained the suit and granted interim relief.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
A. Venkatasubbiah Naidu v. S. Chellappan, 2000 (4) CTC 358; AIR 2000 SC 3032	That a revision need not be entertained against an order where an alternative statutory remedy is available to the aggrieved party.	The respondent relied on this authority to argue that the petitioner should have exhausted alternative remedies (vacate injunction petition or appeal) instead of invoking Article 227. The Court considered the precedent but held that the contention based on this principle could not be sustained as a general bar to revision where the very jurisdiction of the Trial Court to maintain a suit (here, a suit that would effectively enforce personal service and restrain disciplinary action) is in question. The Court therefore did not apply the precedent to dismiss the revision on that ground.

Court's Reasoning and Analysis

The Court examined the factual matrix and applied established legal principles concerning suits that seek to restrain disciplinary proceedings and those that effectively enforce contracts of personal service.

Employment status and resignation: The Court noted that the respondent had been employed since 1986 and that although he submitted a resignation dated 3-11-2005 and later sought adjustment of dues against gratuity, the employer did not accept the resignation because it alleged misappropriation and proposed disciplinary proceedings. Thus, according to the employer, the employer-employee relationship subsisted.
Nature of relief sought: The Court emphasized that a suit for permanent injunction restraining an employer from conducting a domestic enquiry would, in substance, amount to enforcing continuation in personal service, which is barred by law. The Court referred to the principle that courts do not enforce contracts of personal service and cited Section 41 of the Specific Relief Act to the effect that injunctions cannot be granted in such contexts.
Section 14(b) Specific Relief Act: The Court relied on the statutory bar that contracts dependent upon personal qualifications or volition of the parties, or those running into minute or numerous details, cannot be specifically enforced. The Court applied this to the present facts and observed an inherent right of the employer (master) to punish or terminate service based on disciplinary findings; judicial intervention at this stage to restrain an enquiry would interfere with managerial discretion.
Prematurity of relief: The Court held that the injunction was premature because only show-cause notices had been issued and disciplinary proceedings had not matured; as a matter of principle, an injunction against initiation or continuance of departmental proceedings is not warranted at the show-cause stage (even in writ jurisdiction), making the ad-interim injunction illegal.
Jurisdictional challenge and Article 227: The Court accepted that when the very jurisdiction of the Trial Court to entertain a suit is in issue (for instance, when a suit is not maintainable because it seeks to enforce personal service), the High Court may exercise its supervisory jurisdiction under Article 227. The Court explained that the respondent's reliance on the authority that discourages revision where alternative remedies exist did not preclude invoking Article 227 to challenge the foundational maintainability of the suit.
Proper remedy and procedural notes: The Court observed that ordinarily Order 7 Rule 11 CPC should be used to challenge and reject a plaint that discloses no cause of action or is otherwise barred; the employer had contended that the plaint ought to have been struck off on that basis. The Court effectively treated the revision petition as a vehicle to consider whether the plaint was maintainable and whether the Trial Court erred in granting interim relief which was an offshoot of an allegedly non-maintainable suit.

Holding and Implications

Holding: C.R.P. No. 1730 of 2006 is allowed by striking off the plaint in O.S. No. 2690 of 2006 as not maintainable. Consequently, C.R.P. No. 1729 of 2006 is also allowed, as it challenged the ad-interim injunction granted in the interlocutory application arising from the main suit. The connected miscellaneous petitions are closed. There will be no order as to costs.

Implications:

Direct effect on the parties: The plaint in O.S. No. 2690 of 2006 is struck off; the ad-interim injunction granted by the Trial Court is set aside. The employer is not restrained by the Trial Court's order from proceeding with disciplinary action, subject of course to any proper statutory or legal remedies the respondent may pursue in the appropriate forum at the appropriate time.
Legal principle applied: The Court reaffirmed that courts will not ordinarily grant reliefs that amount to enforcing contracts of personal service, and that injunctions restraining disciplinary proceedings are not appropriate at the stage of mere show-cause notices. The High Court may invoke Article 227 where the maintainability or the very jurisdiction of the Trial Court to entertain a suit is in question.
No broader precedent beyond the case: The opinion addresses the specific question of maintainability of a suit seeking to restrain disciplinary action and the propriety of interim injunction in that factual context. The judgment does not purport to lay down a broad new principle beyond applying existing statutory bars (Specific Relief Act provisions) and the supervisory jurisdiction under Article 227. Therefore, no novel or sweeping precedent was declared beyond the conclusions reached on the facts of this case.

End of summarised opinion based exclusively on the provided judgment text.

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Bannari Amman Sugars Limited, Rep. By Its Chairman, No. 1212, Trichy Road, Coimbatore-641 018 Petitioner v. R. Sakthivel

Prayer: Civil Revision Petition filed under Article 227 of the Constitution of India against the order dated 24-11-2006 passed by the District Munsif, Coimbatore in I.A No. 2235 of 2006 in O.S No. 2690 of 2006.

Prayer: Civil Revision Petition filed under Article 227 of the Constitution of India seeking to strike off the plaint in O.S No. 2690 of 2006 on the file of the learned District Munsif, Coimbatore.

JUDGMENT

1. Aggrieved over the fair and decreetal order dated 24-11-2006 passed by the District Munsif, Coimbatore in I.A No. 2235 of 2006 in O.S No. 2690 of 2006, C.R.P No. 1729 of 2006 has been filed. While so, C.R.P No. 1730 of 2006 has been preferred to strike off the plaint itself on the ground that the suit itself is not maintainable.

2. Brief facts of the case are as follows:

The respondent originally filed O.S No. 756 of 2006 against (1) M/s. Bannari Amman Sugars Ltd. rep. by its Executive President and (2) M/s. Bannari Amman Sugars Employees, Thrift and Credit Society, rep. by its Secretary, for permanent injunction restraining the defendants from in anyway interfering with his day to day life and personal liberties either by causing danger to the person or otherwise under the guise of collecting money due to them. Thereafter the petitioner sent a letter dated 7-4-2006 requesting the respondent to remit a sum of Rs. 2,30,208.50 which has been received as advance by the respondent within seven days from the date of receipt of the letter. The respondent filed a Petition in Crl.O.P No. 23432 of 2006 and obtained an order of anticipatory bail on the ground that he resigned his job and gave consent letter to recover the misappropriated amount of Rs. 2 lakhs by adjusting the same from the retirement benefits. The petitioner-Company sent show cause notice to the respondent on 23-9-2006, for which the respondent sent a detailed reply dated 27-9-2006 stating that in order to get over the directions of the Honourable High Court as an after thought the petitioner has issued show cause notice seeking explanation from the ex-employee, who has already resigned from the service long back. The petitioner sent a show cause notice dated 29-9-2006 directing the respondent to show cause why disciplinary action should not be taken against him for committing the misappropriation. The petitioner has also sent a letter on 12-10-2006 to the respondent stating that it is true that on 3-11-2005 the respondent has submitted a letter of resignation to the employer, but the same was not accepted and that the resignation would be considered only after the respondent clearing the charge of fraud played by him and for which the respondent has sent a reply dated 19-10-2006 denying the allegations levelled against him and subsequent to that the petitioner sent a letter dated 18-11-2006 stating that charges have been framed against him. Thereafter, the respondent filed the present Suit O.S No. 2690 of 2006 for permanent injunction restraining the revision petitioner-defendant from holding any domestic enquiry. The respondent has also filed an Application in I.A No. 2235 of 2006 praying for a temporary injunction restraining the petitioner from conducting any domestic enquiry till the disposal of the Suit. The Trial Court granted ad-interim injunction for a limited period. Challenging the same, C.R.P No. 1729 of 2006 has been preferred and C.R.P No. 1730 of 2006 has been preferred stating that the Trial Court has no jurisdiction to entertain the very Suit.

3. Heard the learned counsel appearing for the petitioner as well as the learned counsel appearing for the respondent.

4. The learned counsel appearing for the petitioner would submit that the petitioner is a Registered Company under the Companies Act 1956 and the respondent was an Office Assistant, entrusted with duties like booking travel tickets for the Directors of the petitioner-Company, staff members and guests, for which, he was taking advances from the Company from time to time and filing vouchers and on 3-11-2005 he submitted his resignation, but since there was a proposal by the petitioner-Company to frame charge against the respondent for misappropriation of funds, the resignation letter was not accepted and a reply was sent by the respondent on 14-3-2006 to the petitioner stating that a sum of Rs. 2,30,208.58 was taken by him as advance for official expenses on various dates but the sum was not entirely utilised for the said purpose and the same was not brought to the notice of the petitioner that a sum of Rs. 95,400/- was still payable by the respondent and in such circumstances, the respondent by letter dated 22-2-2006 requested the petitioner to adjust the gratuity amount payable to him. He would further contend that the respondent has filed O.S No. 756 of 2006 seeking for a permanent injunction with ulterior motive to thwart the disciplinary enquiry proposed to be initiated by the petitioner-Company.

5. Learned counsel for the revision petitioner also submitted that it is significant to note that the respondent's wife and Mrs. S. Vijayalakshmi and Mrs. R. Bhuvaneswari, wives of P. Samidurai and K. Rajendran respectively, who were working as sales officers in the Sales Department of the petitioner-Company have opened a partnership firm in the name and style of Kumaran Dhall Traders and they were purchasing sugar from the petitioner-Company on extending credit facility from the petitioner-Company and thereby manipulating the accounts, they were able to misappropriate huge quantum of sugar in connivance with the respondent and the two Sales Officer who are the husbands of the partners of the said partnership firm. On verification of the accounts, it was found that as on 18-6-2005, a huge amount of Rs. 40,88,024/- was due from the said partnership firm to the petitioner-Company and the respondent herein and that the two Sales Officers had manipulated the accounts of the petitioner-Company.

6. The learned counsel appearing for the petitioner would further contend that the Trial Court ought not to have granted ex parte order of interim injunction and the Trial Court has grossly erred in passing the impugned interim order when the Suit itself is not maintainable and as per Section 41 of the Specific Relief Act, an injunction cannot be granted in favour of the respondent restraining the revision petitioner from conducting a domestic enquiry more particularly, when the respondent is seeking to enforce a contract for personal services. It is also submitted that there is a specific bar under Section 14(b) of the Specific Relief Act, since the Court cannot enforce the specific performance of its material terms. He would further contend that the respondent cannot invoke the common law remedy available under the Specific Relief Act and hence the Trial Court cannot invoke its jurisdiction under Section 9, C.P.C and since the Trial Court has wrongly exercised its jurisdiction in taking the Plaint on its file, the Plaint is liable to be struck off from the file of the Trial Court.

7. On the contrary, the learned counsel appearing for the respondent would contend that the respondent was working as an Office Assistant with the petitioner-Company from the year 1986 and by letter dated 22-2-2006, the respondent requested the petitioner-Company as against the allegation of misappropriation of Company fund, to adjust his dues towards the loan amount borrowed from the Employees Thrift and Credit Society from and out of the gratuity payable to him. Considering the fact that the petitioner-Company had already impliedly accepted the respondent's resignation and in view of the fact that the respondent was no longer an employee, the respondent had filed O.S No. 2690 of 2006 on the file of the District Munsif, Coimbatore and that as against the order of interim injunction passed in I.A No. 2235 of 2006, this Civil Revision Petition is not maintainable since the remedy of the petitioner-Company lies only by way of filing either a vacate Injunction or by way of an Appeal before the District Court challenging the order of injunction. In support of his plea the learned counsel appearing for the respondent pressed into service a judgement in the case of A. Venkatasubbiah Naidu v. S. Chellappan, 2000 (4) CTC 358: AIR 2000 SC 3032, wherein the Supreme Court held that a Revision need not be entertained against any order where an alternative statutory remedy is available to the aggrieved party. In the instant case, the petitioner-Company can by filing vacate injunction Petition or by filing an Appeal seek the reliefs but without exhausting this alternative statutory remedy, the petitioner-Company has straight away come by way of this Civil Revision Petition. The petitioner should have filed a Petition under Order 7, Rule 11, C.P.C before the lower Court to reject the Plaint. At the same time, for sufficient reasons, an aggrieved party can invoke the jurisdiction of this Court under Article 227 of the Constitution of India, where the very jurisdiction of the Trial Court in maintaining the Suit is involved.

8. Admittedly, the respondent was working as an Office Assistant with the petitioner-Company from the year 1986 and by letter dated 22-2-2006 the respondent requested the petitioner-Company as against the allegation of misappropriation of Company fund, to adjust his dues towards the loan amount borrowed from the Employees Thrift and Credit Society from out of the gratuity payable to him, since there was a proposal by the petitioner-Company to frame charge against the respondent for misappropriation of funds. However, it is evident that the resignation letter was not accepted stating that a sum of Rs. 2,30,208.58 was taken by him as advance for official expenses on various dates but the said sum has not been utilised in its entirety for the purpose for which it was availed and a sum of Rs. 95,400/- is still payable by him, therefore the petitioner's letter dated 22-2-2006 requesting to adjust the gratuity amount payable to him was rejected and the disciplinary proceedings were initiated.

9. The contention of the respondent that a revision need not be entertained against any order where an alternative statutory remedy is available to the aggrieved party and the petitioner-Company can by filing a vacate injunction Petition or by filing an Appeal seek his reliefs but without exhausting such alternative statutory remedy, the petitioner-Company has straight away come by way of this Civil Revision Petition is not maintainable cannot be sustained in view of the fact that the respondent as long as he continues to be an employee of the Management cannot restrain the disciplinary action by instituting a suit and a revision would very well lie before this Court questioning the jurisdiction of the Trial Court in entertaining the Suit. 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, the misappropriation is proved, there is possibility for termination of his service. Such a decision purely rests within the discretion of the management. If the management feels that the plaintiff is not complying with its directions it has a right to hold an enquiry against him. The management cannot be restrained from exercising its discretion in this behalf. Ultimately, if an injunction against the employer restraining it from conducting an enquiry is granted, it would indirectly mean that the Court is permitting the plaintiff in continuing with his employment with the defendant Company. The relationship between the parties is not based on a written contract between two private parties. Therefore, a Suit for permanent injunction would amount to enforcing a contract of personal service which is barred under the law.

10. At the first instance, the respondent has filed O.S No. 756 of 2006 seeking for a permanent injunction with ulterior motive to thwart a disciplinary enquiry that was contemplated by the petitioner-Company. It is significant to note that the respondent's wife and Mrs. S. Vijayalakshmi and Mrs. R. Bhuvaneswari, wives of P. Samidurai and K. Rajendran respectively, who were working as sales officers in the sales department of the petitioner-Company have opened a partnership firm in the name and style of Kumaran Dhall Traders and they were purchasing sugar from the petitioner-Company on extending credit facility from the petitioner-Company and by manipulating the accounts, they were able to misappropriate huge quantum of sugar in connivance with the respondent and the two sales officer who are the husbands of the partners of the said partnership firm. On verification of the accounts, it was found that as on 18-6-2005, a huge amount of Rs. 40,88,024/- was due from the said partnership firm to the petitioner-Company and the respondent herein and the two officers had manipulated the accounts of the petitioner-Company thereby the respondent committed misappropriation of the funds from the petitioner-Company. In such a circumstances, the petitioner-Company cannot be restrained to take disciplinary action against the respondent by way of filing a Suit for permanent injunction. Therefore, this Court can invoke under Article 227 of the Constitution of India to interfere with the affairs as the Suit itself is not maintainable. In this case, the respondent admitted that he misappropriated the petitioner-Company fund and by sending his resignation stated that the amount may be deducted from the retirement benefit. Therefore the Trial Court ought not to have granted ex parte order of interim injunction and the Trial Court has grossly erred in passing the impugned interim order when the Suit itself is not maintainable. Further, as per Section 41 of the Specific Relief Act, an injunction cannot be granted in favour of the respondent restraining the revision petitioner from conducting a domestic enquiry more particularly, when the respondent is seeking to enforce a contract for personal services.

11. Further, there is a bar under Section 14(b) of the Specific Relief Act which mandates that the contract, which runs into such minute or numerous details or it is so dependent on the personal qualifications or volition of the parties or otherwise of the nature that the Court cannot enforce the specific performance of its material terms, such contracts cannot be specifically enforceable. There is an inherent right of the master to punish the servant and terminate its service of contract for personal service will remain value only if the servant discharges his duties to the satisfaction of his master. Further, the relief sought for in the Suit is premature and that too even before the commencement of the domestic enquiry as only a show cause notice has been issued to the respondent as against a show cause notice, no injunction can be granted even in the writ jurisdiction and therefore the ad interim injunction granted by the Trial Court is illegal. Further, as already held, the revision petitioner being a private establishment and the Suit for permanent injunction as against the initiation of the departmental proceedings would amount to enforcing a contract of personal service which is not permissible under the law.

12. Further, as rightly pointed out by the learned counsel for the revision petitioner, the respondent cannot invoke the common law remedy available under the Specific Relief Act and hence the Trial Court cannot invoke its jurisdiction under Section 9 of the Code of Civil Procedure to take the Suit on its file since the employer and employee relationship still exists according to the revision petitioner/Management and the resignation letter has not been accepted till this date. Therefore, in the above circumstances, the plaint filed by the respondent for permanent injunction restraining the petitioner from conducting any enquiry with regard to the misappropriation, which is not denied by the respondent, is liable to be rejected on the ground that the management cannot be restrained from exercising its discretion in this behalf unless and until it is proved that the employer and employee relationship has come to an end. Therefore, it is axiomatic that if the petitioner-Company takes any disciplinary action against the respondent, he has to ventilate his grievance by approaching the proper forum at the appropriate time and not by way of filing the Suit restraining the petitioner from exercising its right. Therefore it is a fit case where this Court has to invoke the jurisdiction of this Court under Article 227 of the Constitution of India to reject the plaint on the ground that the suit itself is not maintainable and the respondent has alternative remedy before the appropriate authority against the action taken by the petitioner Company, which relates to employer and employee relationship.

13. In view of the above, C.R.P No. 1730 of 2006 is allowed striking off the plaint in O.S No. 2690 of 2006, pending on the file of the learned District Munsif Court, Coimbatore, as not maintainable. Consequently, C.R.P No. 1729 of 2006 is also allowed as it arises challenging the order of ad interim injunction passed in the Interlocutory Application which is only an offshoot of the main Suit. Consequently the connected Miscellaneous Petitions are closed. There will be no order as to costs.

Bannari Amman Sugars... v. R. Sakthivel