Author: Gupta Aryan Rajesh 

Edited By: Aneel Meghani

ABSTRACT

This is the Landmark case regarding the removal or termination of the employees from the corporations. In this case, three employees named Bhagat Ram, Sunil Kumar Mukherjee, and Sukhdev Singh were allegedly removed from the Industrial Finance Corporation of India (IFC), Life Insurance Corporation of India (LIC), and Oil and Natural Gas Commission (ONGC). They were not allowed to defend themselves nor given a chance to know their wrong or faults in the corporation why they were terminated and on which grounds. The major issue in this case is that the Statutory Corporations were considered a State under Article 12 of the Constitution of India and Employees can claim protection under Articles 14 and 16 of the Constitution of India. It was held that the statutory corporations come under the ambit of ‘Other Authority’ in Article 12 of the Constitution of India and their statutory provisions are binding on law. Therefore, decisions given contravene the statutory provisions that are considered void. Employees are not only allowed to get damages but are also entitled to continuance in service.

Keywords (Minimum 5): statutory corporations, removal of employees, article 14, article 16 of the constitution of India, ONGC, IFC, LIC, and nature of employment.  

CASE DETAILS 

INTRODUCTION AND BACKGROUND OF JUDGEMENT 

This landmark judgment was given by the five-judge bench of the Supreme Court of India on 21st February 1975. It addresses important questions that the statutory body comes under the purview of the State under Article 12 of the constitution of India and also discusses the principle of Natural Justice. Employees of different statutory bodies were terminated or removed without reasonable reason nor were they given a chance to rectify or hear the reason for the termination. Therefore, the Principle of Natural Justice is also violated in the termination or removal of employees.  

What is the Principle of Natural Justice?  

Basically, principle of Natural Justice is the fundamental rule of fairness which evolved through judicial decisions and precedents. Specifically, the principle of Natural Justice is not defined separately in the Act. Key Principles of Natural Justice which is violated in this case are:  

• Audi alteram partem – which says no one can be a judge in their case. Here it means that the person who was giving the decision can’t be a judge in his case. 

• Nemo judex in sua causa – which says No one can be a judge in their case. Here it means that the person who is giving the decision can’t be a judge in his case. 

This case was first filed through a writ petition in the different High Courts. Two High Courts dismissed the writ petition while one allowed the writ petition and quashed the termination of the employee. The appeal was filed by special leave petition in the Supreme Court of India, where the case was transferred to the five-judge bench of the Supreme Court of India as it involved the substantial question of law relating to the interpretation of the Constitution and it also dealt with the rights of the large section of the public employment. Supreme Court held that the employees are allowed in the service with the full payment of wages from the date of dismissal from employment. The Supreme Court of India in the instant case, i.e., Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanshi and Another (1975), provided clarity about the status of the public sector companies in India under Article 12 and the validity of delegated legislation under their respective statutes.1  

FACTS OF THE CASE 

Procedural Background of the Case 

1. In this case, employees from different corporations were terminated without giving them a chance for a hearing. The Industrial Finance Corporation of India (IFC) was instituted by the Industrial Finance Corporation Act, of 1948 (IFC Act) as a statutory corporation. Similarly, the Life Insurance Corporation of India (LIC) was established by the Life Insurance Corporation Act, 1956 (LIC Act) and the Oil and Natural Gas Commission (ONGC) governed by the Oil and Natural Gas Commission Act, 1959 (ONGC Act). The first employee is Bhagat Ram employed in the Industrial Finance Corporation of India (IFC), the second one is Sunil Kumar Mukherjee working in the Life Insurance Corporation of India (LIC) and the third employee is Sukhdev Sing employed in the Oil and Natural Gas Commission (ONGC). 
2. Bhagat Ram filed a writ petition before the Orissa High Court under section 226 of the constitution of India challenging his removal by IFC which was allowed and quashed the termination order. Similarly, Sunil Kumar Mukherjee and Sukhdev Singh also filed a writ petition before the Patna High Court and Punjab & Haryana High Court under section 226 of the Constitution of India challenging their removal order from LIC and ONGC. Their writ petition was dismissed from both of the High Courts. Statutory corporations and the employees then filed an appeal by way of special leave petition under section 136 of the Constitution of India before the Supreme Court of India.

Factual Background of the Case 

1. Bhagat Ram was appointed as an assistant manager in the Industrial Finance Corporation of India (IFC) in 1963. After a few years of working, he was removed from service in the year 1967 without being heard. 
2. Sunil Kumar Mukherjee was joined in the year 1964 by Life Insurance Corporation of India (LIC). He was terminated after four years following the internal departmental inquiry. 
3. Sukhdev Singh joined in Oil and Natural Gas Commission (ONGC) in the year 1967 as a field manager. He was also dismissed from service in 1971 without an inquiry as prescribed under the regulations. 

LEGAL ISSUES RAISED

1. Are statutory corporations considered as states under the ambit of Article 12 of the Constitution of India? 
2. Whether the regulations framed under the statutory act through delegation have the force of law and are binding on the parties? 
3. Whether employees of the statutory corporation claim protection under Article 14 and Article 16 of the Constitution of India? 
4. Whether dismissing an employee contrary to the regulation framed under the specific Act would merely entitle damages or a declaration of continuance of service? 

PETITIONER/ APPELLANT’S ARGUMENTS 

1. The counsels for Petitioner/ Appellant submitted that any order for the removal contrary to these statutes which having a force of law is void and the employees are not only entitled to damages but also entitled to the continuance of service. 

RESPONDENT’S ARGUMENTS 

1. The counsels for Respondent submitted that regulations were not law and contractual in nature as well as it is a matter of internal management of the corporation. Therefore they argued that the breach of these regulations would grant damages not the continuance in service to an employee. 
2. The counsels for Respondent also submitted that as per Section 12 of ONGC Act as well as IFC Act and Section 23 of LIC Act, they have the power to appoint employees and regulate their service in the corporations. 

RELATED LEGAL PROVISIONS 

1. Article 12: – “In this part, unless the context otherwise requires, “the State” includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.”
2. Article 14 (Equality before law): “The State shall not deny to any person  equality before the law or the equal protection of the laws within the territory of India. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.”
3. Article 16 (Equality of opportunity in matters of public employment): “There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.”
4. Article 311 (Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State):                          “No person who is a member of a civil service of the Union or an all-India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed.                                                                                                                                  No such person as aforesaid shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges.”

JUDGEMENT 

RATIO DECIDENDI 

1. The Supreme Court of India referred to specific sections of the IFC Act, LIC Act, and ONGC Act to determine the statutory provisions that are violative of the order given by the corporations. Sections 31 and 32 of the ONGC Act, Section 43 of the IFC Act, and Sections 48 and 49 of the LIC Act talk about the Power to Make Rules and Regulations regarding the conditions of service of the employees. Statutory corporations such as IFC, LIC, and ONGC are considered as states under the ambit of Article 12 of the Constitution of India and they are also bound to follow the statutory provisions. Therefore these corporations are responsible for the nonregulation of the provisions of the Statutory Acts and are also bound to follow the provisions of Articles 14 and 16 of the Constitution of India. 
2. This case is Rajasthan State Electricity Board, Jaipur v. Mohan Lal & Ors. (1967) was taken into consideration to determine that the Statutory Corporation falls under Article 12 of the Constitution of India. The Supreme Court in the case held that the authorities created by the constitution or statutes have the power to make rules, laws, and regulations considered as State under the Article 12 of Constitution of India.6 
3. Regulations framed under the IFC Act, LIC Act, and ONGC Act have the force of law and hence they are bound under the Constitution of India. Any action taken by these corporations against the compliance of Statutory Acts is enforceable in a court of law. The order was given against the statutory provisions so employees are not only entitled to damages but also required for the continuance in service. 

GUIDELINES  

1. In this case In this case court held that the statutory corporations are considered as states under the ambit of Article 12 of the Constitution of India. Therefore in their internal matters, they are bound to follow the Fundamental Rights such as the principle of Natural justice of Natural justice. 

OVERRULING JUDGMENTS

No, any past judgment was overruled in this case.

CONCLUSION& COMMENTS 

This case was a landmark case in the preview that the statutory corporation is also considered a State under the head of “Other Authorities” in Article 12 of the Constitution of India and they are also bound to follow the rules framed under the Act of that statutory corporation. This case will be taken as a reference in the matter of allegedly removal or termination of the employees from the statutory corporation. The court also ruled that the basic principles of fairness and natural justice must be applied when terminating employees. This case is also important in the point of view that the employee can seek protection under Articles 14, 16, and 311 of the Constitution of India. If any decision taken or order given is non-compliance with the statutory provisions by the corporations then the same decision or order is considered void. 

REFERENCES 

1. Important Cases Referred 

1. Rajasthan State Electricity Board, Jaipur v. Mohan Lal & Ors. (1967) 

1. Important Statutes Referred 

1. Oil and Natural Gas Commission Act, 1959 (ONGC Act) 

1. Industrial Finance Corporation Act, 1948 (IFC Act) 

1. Life Insurance Corporation Act, 1956 (LIC Act) 

1. 1. Constitution of India, 1950