In DELHI TRANSPORT CORPORATION vs DTC MAZDOOR CONGRESS case, the employment of a few employees of Delhi Transport Corporation was terminated, under Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952 which led to these employees and their union filing a Writ petition challenging the constitutional validity of the Regulation. The case of Delhi Transport Corporation v. D.T.C. Mazdoor Congress dealt with the question whether an employer’s right to terminate the services of permanent employees without holding an investigation in certain circumstances with reasonable notice or pay instead of notice is constitutionally valid.
BENCH: Mukharji Sabyasachi (CJ), Ray B.C. (J), Sharma L.M. (J), Sawant P.B., Ramaswamy K.
RELEVANT PROVISIONS:
- Section 2(g) of the Indian Contract Act, 1872
- section 23 of the Indian Contract Act, 1872
FACTS
- The appellant, i.e., the Delhi Transport Corporation issued termination notices to the respondents who were employees of the Corporation, under Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952, on the grounds that they had become inefficient in their work and had incited other members to refuse to perform their duties.
- The three respondents and their union, filed a writ petition in the Delhi High Court challenging the constitutional validity of Regulation 9(b), which gave management the right to terminate an employee’s services by giving one month’s notice or pay instead of notice.
- The High Court declared the Regulation unconstitutional, ruling that it gave management absolute, unrestricted, and arbitrary powers to terminate the services of any permanent or temporary employee, which violated Article 14 of the Constitution. Hence, the Corporation appealed before the Supreme Court.
ISSUES
- Whether Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952 was arbitrary, unlawful, discriminatory, and in violation of audi alteram partem, and thus constitutionally invalid and void?
- Whether the Regulation could be interpreted and read down in such a way as to hold that it was not discriminatory or arbitrary and that it did not vest unbridled and uncanalized power on the Corporation to terminate an employee’s service, including a permanent employee, for any reason?
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CONTENTIONS
- The appellant contended that there was sufficient guidance in Regulation 9(b), and the power of termination, properly read, would not be arbitrary or in violation of Article 14 of the Constitution, and 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 ensure that the power was exercised only for that purpose, that 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.
- The appellant corporation further argued that the Contract of Service empowered it to terminate the services of its employees in terms thereof under the ordinary law of “master and servant”; such a contract was void under section 23 of the Indian Contract Act or contrary to public policy, infringing on the Fundamental Rights and the Directive Principles, and was not legal. As a master, the Corporation had unrestricted authority to terminate the contract in the interests of the Corporation’s efficient operation or to maintain employee discipline, and if the termination was wrongful, the employees’ only recourse was to seek damages for wrongful termination.
- The respondents contended that any rule that stated that service could be terminated on notice for the period specified was in violation of Article 14 of the Constitution, because it gave the authority arbitrary and unrestrained power to choose anyone it wanted to take action against. The respondents stated that Articles 14, 19, and 21 were inter-linked and Article 21 does not preclude Article 19. Thus, even if a law provided for the deprivation of a person’s personal liberty and thus no infringement of the fundamental right conferred by Article 21, such law, where it abridged or took away any fundamental right under Article 19, would have to face the challenge of Article 19.
- The respondents argued that the state action violated the principle of natural justice, which violated Article 14. Thus, a clause that enabled an employer to terminate the services of an employee whose contract of service was for an indefinite period or until retirement age, and which did not include any guidance for exercising the power or recording reasons for such termination, violated the fundamental rights guaranteed under Articles 14,19(1)(g) and 21of the Constitution, as well as principles of natural justice and stood void under Section 2(g) of the Indian Contract Act, 1872.
RATIO DECIDENDI
Justice Sabyasachi Mukharji: A violation of a principle of natural justice leads to arbitrariness, which is the same as discrimination; discrimination violates Article 14 when it results from State action, so a violation of a principle of natural justice by a State action violates Article 14.
Article 14 is not the sole repository containing the principles of natural justice. It ensures that any law or government action that violates them will be overturned. The principles of natural justice apply not only to legislation and State action but also to any tribunal, authority, or body of men charged with deciding a matter that does not fall within the definition of ‘State’ in Article 12. The principles of natural justice demand that it decides such a matter fairly and impartially in such a case.
DECISION
The Supreme Court ruled that the subsequent Rules and Regulations enacted in the exercise of powers granted by Section 53 of the Delhi Transport Act, 1950, do not provide a reasonable justification for terminating the services of its employees and that they also violate Article 14 of the Indian Constitution.
It was held that the ‘audi alteram partem’ rule, which essentially enforces the equality clause in Article 14 of the Constitution, applies not only to quasi-judicial orders but also to administrative orders that affect the party in question prejudicially unless the application of the rule is expressly excluded by the Act, Regulation, or Rule.
The rules of natural justice supplement rather than supplant the Rules and regulations. Rule of Law, which pervades the Indian Constitution, requires that it be followed both substantively and procedurally. The rule of law propounds that power should be exercised in a just, fair, and reasonable manner, rather than in an arbitrary manner that allows for discrimination. The appeal was thus dismissed.
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CONCLUSION
The Supreme Court, in Delhi Transport Corporation v. D.T.C. Mazdoor Congress, upheld constitutionalism and constitutional values by ruling that the Regulation that empowered the Delhi Transport Corporation to terminate the employment of permanent employees by giving them one month’s notice without assigning a reason or providing an opportunity to be heard, was inconsistent with the principles of natural justice and violated of Article 14, for being arbitrary.
This case remains a notable precedent in cases pertaining to Contract Law and Constitutional Law.
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